<PAGE> 1
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON JULY 2, 1997
================================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
---------------------
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
---------------------
CORE INDUSTRIES INC
(Name of Subject Company)
---------------------
UD NEVADA CORP.
AND
UNITED DOMINION INDUSTRIES LIMITED
(Bidder)
---------------------
COMMON STOCK, $1.00 PAR VALUE
(Title of Class of Securities)
---------------------
218675106
(CUSIP Number of Class of Securities)
---------------------
RICHARD L. MAGEE, ESQ.
SECRETARY
UD NEVADA CORP.
UNITED DOMINION INDUSTRIES LIMITED
2300 ONE FIRST UNION CENTER
301 SOUTH COLLEGE STREET
CHARLOTTE, NORTH CAROLINA 28202-6039
TELEPHONE: (704) 347-6800
(Name, Address and Telephone Number of Person Authorized to Receive Notices
and Communications on Behalf of Bidder)
COPY TO:
STEPHEN M. LYNCH, ESQ.
ROBINSON, BRADSHAW & HINSON, P.A.
1900 INDEPENDENCE CENTER
101 NORTH TRYON STREET
CHARLOTTE, NORTH CAROLINA 28246
TELEPHONE: (704) 377-2536
---------------------
CALCULATION OF FILING FEE
<TABLE>
<S> <C>
TRANSACTION VALUATION AMOUNT OF FILING FEE
$285,437,500* $57,088
</TABLE>
[ ] 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.
Amount Previously Paid:
-------------------------------------------------------------------------
Form or Registration No.:
------------------------------------------------------------------------
Filing Party:
--------------------------------------
Date Filed:
--------------------------------------
================================================================================
*NOTE: THE TRANSACTION VALUE IS CALCULATED BY MULTIPLYING $25.00, THE PER SHARE
TENDER OFFER PRICE, BY 11,417,480, THE SUM OF 10,752,608, THE NUMBER OF
OUTSTANDING SHARES OF COMMON STOCK; AND 664,872, THE NUMBER OF SHARES OF
COMMON STOCK SUBJECT TO OUTSTANDING OPTIONS EXERCISABLE WITHIN 60 DAYS OF
THE DATE HEREOF.
<PAGE> 2
<TABLE>
<S> <C> <C>
- ------------------------------------
CUSIP
No. 218675106 SCHEDULE 14D-1 and SCHEDULE 13D
- ------------------------------------
- ------------------------------------------------------------------
1 NAME OF REPORTING PERSONS
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSONS
UD Nevada Corp.
- ------------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) []
(b) []
- ------------------------------------------------------------------
3 SEC USE ONLY
- ------------------------------------------------------------------
4 SOURCE OF FUNDS
BK, WC
- ------------------------------------------------------------------
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS
IS REQUIRED PURSUANT TO ITEM 2(e) or 2(f) []
- ------------------------------------------------------------------
6 CITIZENSHIP OR PLACE OF ORGANIZATION
Nevada
- ------------------------------------------------------------------
7 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH
REPORTING PERSON
0
- ------------------------------------------------------------------
8 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (7)
EXCLUDES CERTAIN SHARES []
- ------------------------------------------------------------------
9 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (7)
0.0%
- ------------------------------------------------------------------
10 TYPE OF REPORTING PERSON
CO
- ------------------------------------------------------------------
</TABLE>
<PAGE> 3
<TABLE>
<S> <C> <C>
- ------------------------------------
CUSIP
No. 218675106 SCHEDULE 14D-1 and SCHEDULE 13D
- ------------------------------------
- ------------------------------------------------------------------
1 NAME OF REPORTING PERSONS
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSONS
United Dominion Industries Limited
- ------------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) []
(b) []
- ------------------------------------------------------------------
3 SEC USE ONLY
- ------------------------------------------------------------------
4 SOURCE OF FUNDS
BK, WC
- ------------------------------------------------------------------
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS
IS REQUIRED PURSUANT TO ITEM 2(e) or 2(f) []
- ------------------------------------------------------------------
6 CITIZENSHIP OR PLACE OF ORGANIZATION
Canada
- ------------------------------------------------------------------
7 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH
REPORTING PERSON
0
- ------------------------------------------------------------------
8 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (7)
EXCLUDES CERTAIN SHARES []
- ------------------------------------------------------------------
9 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (7)
0.0%
- ------------------------------------------------------------------
10 TYPE OF REPORTING PERSON
CO
- ------------------------------------------------------------------
</TABLE>
<PAGE> 4
This Tender Offer Statement on Schedule 14D-1 (this "Statement") relates to
the offer by UD Nevada Corp., a Nevada corporation ("Purchaser") and an indirect
wholly owned subsidiary of United Dominion Industries Limited, a corporation
organized under the laws of Canada ("Parent"), to purchase all outstanding
shares (the "Shares") of Common Stock, par value $1.00 per share (the "Common
Stock"), of Core Industries Inc, a Nevada corporation (the "Company"), at a
price of $25.00 per Share, net to the seller in cash, without interest thereon,
upon the terms and subject to the conditions set forth in Purchaser's Offer to
Purchase dated July 2, 1997 (the "Offer to Purchase") and in the related Letter
of Transmittal (which, as amended from time to time, together constitute the
"Offer"), copies of which are attached hereto as Exhibits (a)(1) and (a)(2),
respectively.
This Statement also constitutes a statement on Schedule 13D with respect to
the acquisition by Purchaser and Parent of beneficial ownership of the Shares.
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 Core Industries Inc, a Nevada
corporation, which has its principal executive offices at P.O. Box 2000, 500
North Woodward Avenue, Bloomfield Hills, Michigan 48304.
(b) The equity securities being sought are all the outstanding shares of
Common Stock, par value $1.00 per share, of the Company. The information set
forth in the Introduction and Section 1 ("Terms of the Offer; Expiration Date")
of the Offer to Purchase is incorporated herein by reference.
(c) The information concerning the principal market in which the Shares are
traded and certain high and low sales prices for the Shares in such principal
market set forth in Section 6 ("Price Range of Shares; Dividends") of the Offer
to Purchase is incorporated herein by reference.
ITEM 2. IDENTITY AND BACKGROUND.
(a)-(d) and (g) This Statement is filed by Purchaser and Parent. The
information concerning the name, state or other place of organization, principal
business and address of the principal office of each of Purchaser and Parent,
and the information concerning the name, residence or business address, present
principal occupation or employment and the name, principal business and address
of any corporation or other organization in which such employment or occupation
is conducted, material occupations, positions, offices or employments during the
last five years and citizenship of each of the executive officers and directors
of Purchaser and Parent are set forth in the Introduction, Section 8 ("Certain
Information Concerning Purchaser and Parent") and Schedule I of the Offer to
Purchase and are incorporated herein by reference.
(e) and (f) During the last five years, none of Purchaser or Parent, and,
to the best knowledge of Purchaser and Parent, none of the persons listed in
Schedule I of the Offer to Purchase has been (i) convicted in a criminal
proceeding (excluding traffic violations or similar misdemeanors) or (ii) 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 future violations of, or prohibiting activities
subject to, federal or state securities laws or finding any violation of such
laws.
ITEM 3. PAST CONTACTS, TRANSACTIONS OR NEGOTIATIONS WITH THE SUBJECT COMPANY.
(a) The information set forth in Section 8 ("Certain Information Concerning
Purchaser and Parent") and Section 10 ("Background of the Offer; Contacts with
the Company; the Merger Agreement") of the Offer to Purchase is incorporated
herein by reference.
(b) The information set forth in the Introduction, Section 7 ("Certain
Information Concerning the Company"), Section 8 ("Certain Information Concerning
Purchaser and Parent"), Section 10 ("Background of the Offer; Contacts with the
Company; the Merger Agreement") and Section 11 ("Purpose of the Offer; Plans for
the Company After the Offer and the Merger") of the Offer to Purchase is
incorporated herein by reference.
4
<PAGE> 5
ITEM 4. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION.
(a)-(c) The information set forth in Section 9 ("Financing of the Offer and
the Merger") of the Offer to Purchase is incorporated herein by reference.
ITEM 5. PURPOSE OF THE TENDER OFFER AND PLANS OR PROPOSALS OF THE BIDDER.
(a)-(e) The information set forth in the Introduction, Section 10
("Background of the Offer; Contacts with the Company; the Merger Agreement") and
Section 11 ("Purpose of the Offer; Plans for the Company After the Offer and the
Merger") of the Offer to Purchase is incorporated herein by reference.
(f) and (g) The information set forth in Section 13 ("Effect of the Offer
on the Market for Shares, NYSE Listing and Exchange Act Registration") of the
Offer to Purchase is incorporated herein by reference.
ITEM 6. INTEREST IN SECURITIES OF THE SUBJECT COMPANY.
(a) and (b) The information set forth in Section 8 ("Certain Information
Concerning Purchaser and Parent") of the Offer to Purchase is incorporated
herein by reference.
ITEM 7. CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS OR RELATIONSHIPS WITH RESPECT TO
THE SUBJECT COMPANY'S SECURITIES.
The information set forth in the Introduction, Section 8 ("Certain
Information Concerning Purchaser and Parent"), Section 10 ("Background of the
Offer; Contacts with the Company; the Merger Agreement") and Section 11
("Purpose of the Offer; Plans for the Company After the Offer and the Merger")
of the Offer to Purchase is incorporated herein by reference.
ITEM 8. PERSONS RETAINED, EMPLOYED OR TO BE COMPENSATED.
The information set forth in the Introduction and Section 16 ("Fees and
Expenses") of the Offer to Purchase is incorporated herein by reference.
ITEM 9. FINANCIAL STATEMENTS OF CERTAIN BIDDERS.
The information set forth in Section 8 ("Certain Information Concerning
Purchaser and Parent") of the Offer to Purchase is incorporated herein by
reference.
ITEM 10. ADDITIONAL INFORMATION.
(a) The information set forth in Section 10 ("Background of the Offer;
Contacts with the Company; the Merger Agreement") of the Offer to Purchase is
incorporated herein by reference.
(b)-(c) and (e) The information set forth in Section 15 ("Certain Legal
Matters and Regulatory Approvals") of the Offer to Purchase is incorporated
herein by reference.
(d) The information set forth in Section 13 ("Effect of the Offer on the
Market for the Shares, NYSE Listing and Exchange Act Registration") of the Offer
to Purchase is incorporated herein by reference.
(f) The information set forth in the Offer to Purchase, the Letter of
Transmittal and the Agreement and Plan of Merger, dated as of June 25, 1997,
among Parent, Purchaser and the Company, copies of which are attached hereto as
Exhibits (a)(1), (a)(2) and (c)(1), respectively, is incorporated herein by
reference.
5
<PAGE> 6
ITEM 11. MATERIAL TO BE FILED AS EXHIBITS.
<TABLE>
<S><C> <C>
(a)(1) Form of Offer to Purchase dated July 2, 1997.
(a)(2) Form of Letter of Transmittal.
(a)(3) Form of Notice of Guaranteed Delivery.
(a)(4) Form of Letter from Merrill Lynch, Pierce, Fenner & Smith
Incorporated and Furman Selz LLC to Brokers, Dealers,
Commercial Banks, Trust Companies and Nominees.
(a)(5) Form of Letter from Brokers, Dealers, Commercial Banks,
Trust Companies and Nominees to Clients.
(a)(6) Form of Guidelines for Certification of Taxpayer
Identification Number on Substitute Form W-9.
(a)(7) Summary Advertisement as published in The Wall Street
Journal on July 2, 1997.
(a)(8) Press release issued by Parent on June 26, 1997.
(a)(9) Press release issued by the Company on June 26, 1997.
(a)(10) Form of Letter from Putnam Investments to participants in
Core Industries Inc. 401(k) Plans, with transmittal
instructions.
(b)(1) Commitment letter dated June 24, 1997, from Royal Bank of
Canada in favor of Parent and United Dominion Industries,
Inc.
(c)(1) Agreement and Plan of Merger, dated as of June 25, 1997,
among Parent, Purchaser and the Company.
(c)(2) Confidentiality Agreement dated October 2, 1996, between the
Company and United Dominion Industries, Inc.
(c)(3) Letter agreement dated June 20, 1997, between the Company
and Parent regarding payment of certain fees.
(d) None.
(e) Not applicable.
(f) None.
</TABLE>
6
<PAGE> 7
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.
UD NEVADA CORP.
By: /s/ RICHARD A. BEARSE
------------------------------------
Name: Richard A. Bearse
Title: Senior Vice President
By: /s/ RICHARD L. MAGEE
------------------------------------
Name: Richard L. Magee
Title: Secretary
July 2, 1997
7
<PAGE> 8
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.
UNITED DOMINION INDUSTRIES LIMITED
By: /s/ RICHARD A. BEARSE
------------------------------------
Name: Richard A. Bearse
Title: Senior Vice President
By: /s/ RICHARD L. MAGEE
------------------------------------
Name: Richard L. Magee
Title: Vice President, Law
July 2, 1997
8
<PAGE> 9
EXHIBIT INDEX
<TABLE>
<CAPTION>
PAGE IN
SEQUENTIAL
EXHIBIT NUMBERING
NO. SYSTEM
- ------- ----------
<S> <C> <C>
(a)(1) Form of Offer to Purchase dated July 2, 1997................
(a)(2) Form of Letter of Transmittal...............................
(a)(3) Form of Notice of Guaranteed Delivery.......................
(a)(4) Form of Letter from Merrill Lynch, Pierce, Fenner & Smith
Incorporated and Furman Selz LLC to Brokers, Dealers,
Commercial Banks, Trust Companies and Nominees..............
(a)(5) Form of Letter from Brokers, Dealers, Commercial Banks,
Trust Companies and Nominees to Clients.....................
(a)(6) Form of Guidelines for Certification of Taxpayer
Identification Number on Substitute Form W-9................
(a)(7) Summary Advertisement as published in The Wall Street
Journal on July 2, 1997.....................................
(a)(8) Press release issued by Parent on June 26, 1997.............
(a)(9) Press release issued by the Company on June 26, 1997........
(a)(10) Form of Letter from Putnam Investments to participants in
Core Industries Inc. 401(k) Plans, with transmittal
instructions.
(b)(1) Commitment letter, dated June 24, 1997, from Royal Bank of
Canada in favor of Parent and United Dominion Industries,
Inc.........................................................
(c)(1) Agreement and Plan of Merger, dated as of June 25, 1997,
among Parent, Purchaser and the Company.....................
(c)(2) Confidentiality Agreement dated October 2, 1996, between the
Company and United Dominion Industries, Inc.................
(c)(3) Letter agreement dated June 20, 1997, between the Company
and Parent regarding payment of certain fees................
</TABLE>
<PAGE> 1
OFFER TO PURCHASE FOR CASH
ALL OUTSTANDING SHARES OF COMMON STOCK
OF
CORE INDUSTRIES INC
AT
$25.00 NET PER SHARE
BY
UD NEVADA CORP.
AN INDIRECT WHOLLY OWNED SUBSIDIARY OF
UNITED DOMINION INDUSTRIES LIMITED
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK
CITY TIME, ON WEDNESDAY, JULY 30, 1997, UNLESS THE OFFER IS EXTENDED.
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 OF COMMON STOCK, $1.00 PAR VALUE PER SHARE, OF THE COMPANY (THE "SHARES")
THAT WOULD REPRESENT AT LEAST A MAJORITY OF THE VOTING POWER OF THE SHARES
OUTSTANDING ON A FULLY DILUTED BASIS AT THE EXPIRATION OF THE OFFER, (II) ANY
WAITING PERIOD UNDER THE HSR ACT (AS DEFINED HEREIN) APPLICABLE TO THE PURCHASE
OF SHARES PURSUANT TO THE OFFER HAVING EXPIRED OR HAVING BEEN TERMINATED PRIOR
TO THE EXPIRATION OF THE OFFER AND (III) THE SATISFACTION OF CERTAIN OTHER TERMS
AND CONDITIONS. SEE SECTION 14.
THIS OFFER (THE "OFFER") IS BEING MADE IN CONNECTION WITH THE AGREEMENT AND
PLAN OF MERGER, DATED AS OF JUNE 25, 1997 (THE "MERGER AGREEMENT"), AMONG UNITED
DOMINION INDUSTRIES LIMITED, UD NEVADA CORP., AND CORE INDUSTRIES INC (THE
"COMPANY"). THE BOARD OF DIRECTORS OF THE COMPANY HAS UNANIMOUSLY APPROVED THE
OFFER, THE MERGER (AS DEFINED HEREIN) AND THE MERGER AGREEMENT, HAS DETERMINED
THAT THE OFFER AND THE MERGER ARE FAIR TO, AND IN THE BEST INTERESTS OF, THE
COMPANY AND THE COMPANY'S STOCKHOLDERS AND RECOMMENDS THAT HOLDERS OF SHARES
ACCEPT THE OFFER AND TENDER THEIR SHARES PURSUANT TO THE OFFER.
---------------------
IMPORTANT
Any stockholder of the Company desiring to tender Shares should either (i)
complete and sign the Letter of Transmittal or a facsimile thereof in accordance
with the instructions in the Letter of Transmittal and deliver the Letter of
Transmittal with the Shares and all other required documents to the Depositary
(as defined herein) or follow the procedure for book-entry transfer set forth in
Section 3 or (ii) request such stockholder's broker, dealer, commercial bank,
trust company or other nominee to effect the transaction for the stockholder.
Stockholders having Shares registered in the name of a broker, dealer,
commercial bank, trust company or other nominee must contact such person if they
desire to tender their Shares.
Any stockholder of the Company who desires to tender Shares and whose
certificates representing such Shares are not immediately available or who
cannot comply with the procedures for book-entry transfer on a timely basis must
tender such Shares pursuant to the guaranteed delivery procedure set forth in
Section 3.
Questions and requests for assistance may be directed to Merrill Lynch,
Pierce, Fenner & Smith Incorporated or Furman Selz LLC, each a Dealer Manager,
or to MacKenzie Partners, Inc., the Information Agent, at their respective
addresses and telephone numbers set forth on the back cover of this Offer to
Purchase. Additional copies of the Offer to Purchase, the Letter of Transmittal,
the Notice of Guaranteed Delivery and other related materials may be obtained
from the Information Agent or from brokers, dealers, commercial banks and trust
companies.
---------------------
The Dealer Managers for the Offer are:
MERRILL LYNCH & CO. FURMAN SELZ
July 2, 1997
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<C> <S> <C>
INTRODUCTION................................................ 1
1. Terms of the Offer; Expiration Date......................... 2
2. Acceptance for Payment and Payment for Shares............... 3
3. Procedures for Tendering Shares............................. 4
4. Withdrawal Rights........................................... 6
5. Certain Federal Income Tax Consequences..................... 7
6. Price Range of Shares; Dividends............................ 8
7. Certain Information Concerning the Company.................. 8
8. Certain Information Concerning Purchaser and Parent......... 11
9. Financing of the Offer and the Merger....................... 14
10. Background of the Offer; Contacts with the Company; the
Merger Agreement............................................ 16
11. Purpose of the Offer; Plans for the Company After the Offer
and the Merger.............................................. 25
12. Dividends and Distributions................................. 27
13. Effect of the Offer on the Market for the Shares, NYSE
Listing and Exchange Act Registration....................... 27
14. Certain Conditions of the Offer............................. 28
15. Certain Legal Matters and Regulatory Approvals.............. 30
16. Fees and Expenses........................................... 33
17. Miscellaneous............................................... 34
Schedule I. Directors and Executive Officers of Parent and
Purchaser
</TABLE>
i
<PAGE> 3
To the Holders of Common Stock of
CORE INDUSTRIES INC:
INTRODUCTION
UD Nevada Corp., a Nevada corporation ("Purchaser") and an indirect wholly
owned subsidiary of United Dominion Industries Limited, a corporation organized
under the laws of Canada ("Parent"), hereby offers to purchase all outstanding
shares (the "Shares") of Common Stock, par value $1.00 per share (the "Common
Stock"), of Core Industries Inc, a Nevada corporation (the "Company"), at a
price of $25.00 per Share, net to the seller in cash, without interest thereon,
upon the terms and subject to the conditions set forth in this Offer to Purchase
and in the related Letter of Transmittal (which, as amended from time to time,
together constitute the "Offer").
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 with respect to the purchase of Shares by
Purchaser pursuant to the Offer. Purchaser will pay all charges and expenses of
Merrill Lynch, Pierce, Fenner & Smith Incorporated ("Merrill Lynch") and Furman
Selz LLC ("Furman Selz"), which are acting as Dealer Managers for the Offer (in
such capacity, collectively, the "Dealer Managers"), Harris Trust and Savings
Bank (the "Depositary") and MacKenzie Partners, Inc. (the "Information Agent")
incurred in connection with the Offer. See Section 16.
THE BOARD OF DIRECTORS OF THE COMPANY (THE "BOARD") HAS UNANIMOUSLY
APPROVED THE OFFER, THE MERGER (AS DEFINED BELOW) AND THE MERGER AGREEMENT (AS
DEFINED BELOW), HAS DETERMINED THAT THE OFFER AND THE MERGER ARE FAIR TO, AND IN
THE BEST INTERESTS OF, THE COMPANY AND THE COMPANY'S STOCKHOLDERS AND RECOMMENDS
THAT HOLDERS OF SHARES ACCEPT THE OFFER AND TENDER THEIR SHARES PURSUANT TO THE
OFFER.
Goldman, Sachs & Co. ("Goldman Sachs"), the Company's financial advisor,
has delivered to the Company's Board of Directors its written opinion that the
consideration to be received by the stockholders of the Company pursuant to each
of the Offer and the Merger is fair to such stockholders. A copy of the opinion
of Goldman Sachs is contained in the Company's Solicitation/Recommendation
Statement on Schedule 14D-9 (the "Schedule 14D-9"), which is being mailed to
stockholders herewith.
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 THAT WOULD REPRESENT AT LEAST A MAJORITY OF THE VOTING POWER OF THE
SHARES ON A FULLY DILUTED BASIS AT THE EXPIRATION OF THE OFFER (THE "MINIMUM
CONDITION"), WHICH CONDITION MAY NOT BE WAIVED BY PURCHASER, (II) ANY WAITING
PERIOD UNDER THE HSR ACT (AS DEFINED BELOW) APPLICABLE TO THE PURCHASE OF SHARES
PURSUANT TO THE OFFER HAVING EXPIRED OR HAVING BEEN TERMINATED PRIOR TO THE
EXPIRATION OF THE OFFER AND (III) THE SATISFACTION OF CERTAIN OTHER TERMS AND
CONDITIONS CONTAINED IN THIS OFFER TO PURCHASE. SEE SECTION 14, WHICH SETS FORTH
IN FULL THE CONDITIONS TO THE OFFER.
The Offer is being made pursuant to an Agreement and Plan of Merger, dated
as of June 25, 1997 (the "Merger Agreement"), among Parent, Purchaser and the
Company. The Merger Agreement provides that, among other things, as soon as
practicable after the purchase of Shares pursuant to the Offer and the
satisfaction of the other conditions set forth in the Merger Agreement and in
accordance with the relevant provisions of the General Corporation Law of the
State of Nevada ("Nevada Law"), Purchaser will be merged with and into the
Company (the "Merger"). Following consummation of the Merger, the Company will
continue as the surviving corporation (the "Surviving Corporation") as an
indirect wholly owned subsidiary of Parent. Notwithstanding the foregoing,
Parent may elect at any time prior to the fifth business day immediately
preceding the date on which the proxy statement for the Company's stockholders'
meeting with respect to the Merger is mailed initially to the Company's
stockholders, to merge the Company into Purchaser or another direct or indirect
wholly owned
<PAGE> 4
subsidiary of Parent. In such event, the parties have agreed to execute an
appropriate amendment to the Merger Agreement in order to reflect the foregoing
and to provide, as the case may be, that Purchaser or such other wholly owned
subsidiary of Parent shall be the Surviving Corporation. 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 Purchaser,
Parent, the Company or any wholly owned subsidiary of Parent or the Company and
any Shares that are held by stockholders who have properly exercised their
rights of dissent with respect to such Shares in accordance with Nevada Law)
will be cancelled and converted automatically into the right to receive $25.00
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 Section 10. As used in this Offer to Purchase, "outstanding Shares
on a fully diluted basis" shall mean Shares outstanding and Shares purchasable
upon the exercise of outstanding options to purchase Shares.
The Merger Agreement provides that, promptly upon the purchase by Purchaser
of Shares pursuant to the Offer and from time to time thereafter, Purchaser
shall be entitled to designate up to such number of directors, rounded up to the
next whole number, on the Company's Board of Directors (the "Board") as will
give Purchaser representation on the Board equal to the product of the total
number of directors on the Board (giving effect to the directors to be elected
as described in the following sentence) multiplied by the percentage that the
aggregate number of Shares then beneficially owned by Purchaser and its
affiliates following such purchase bears to the total number of Shares then
outstanding. In the Merger Agreement, the Company has agreed to take all actions
necessary to cause Purchaser's designees to be elected as directors of the
Company, including increasing the size of the Board or securing the resignations
of incumbent directors or both.
The consummation of the Merger is subject to the satisfaction or waiver of
certain conditions, including, if required by Nevada Law, the approval and
adoption of the Merger Agreement by the requisite vote of the stockholders of
the Company. See Section 10. If required under the Company's Articles of
Incorporation and Nevada Law, the affirmative vote of the holders of a majority
of the outstanding Shares is required to approve and adopt the Merger Agreement
and the Merger.
The Company has advised Purchaser that as of June 19, 1997, 10,722,931
Shares were issued and outstanding and that (i) no Shares were held by the
subsidiaries of the Company, and (ii) 696,049 Shares were reserved for future
issuance to present or former employees or directors pursuant to employee and
director stock options granted pursuant to the Company's stock option plans. As
a result, as of the date of this Offer to Purchase, the Minimum Condition would
be satisfied if Purchaser acquired pursuant to the Offer 5,709,491 Shares.
THIS OFFER TO PURCHASE AND THE RELATED LETTER OF TRANSMITTAL CONTAIN
IMPORTANT INFORMATION WHICH SHOULD BE READ CAREFULLY BEFORE ANY DECISION IS MADE
WITH RESPECT TO THE 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
hereinafter defined) and not withdrawn as permitted by Section 4. The term
"Expiration Date" means 12:00 midnight, New York City time, on Wednesday, July
30, 1997, unless and until Purchaser, in its sole discretion, 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.
Purchaser expressly reserves the right (but will not be obligated), in its
sole discretion, at any time and from time to time, to extend for any reason,
including the occurrence of any of the conditions specified in Section 14, the
period of time during which the Offer is open, 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 stockholder to withdraw his or her Shares. See
Section 4. There can be no assurances that Purchaser will exercise its right to
extend the Offer.
Subject to the applicable regulations of the Securities and Exchange
Commission (the "Commission"), Purchaser also expressly reserves the right, in
its sole discretion, at any time and from time to time, (i) to delay acceptance
for payment of, or, regardless of whether such Shares were theretofore accepted
for payment,
2
<PAGE> 5
payment for, any Shares pending receipt of any regulatory approval specified in
Section 15, (ii) to terminate the Offer and not accept for payment any Shares
upon the occurrence of any of the conditions specified in Section 14 and (iii)
to waive any condition (provided that Purchaser may not waive the Minimum
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. The Merger Agreement provides that
Purchaser will not (i) decrease the price per Share payable pursuant to the
Offer, (ii) change the form of consideration payable pursuant to the Offer,
(iii) reduce the number of Shares to be purchased in the Offer, (iv) impose
conditions to the Offer in addition to those set forth in Section 14, or (v)
change the Minimum Condition. Purchaser acknowledges that (i) Rule 14e-1(c)
under the Securities Exchange Act of 1934, as amended (the "Exchange Act"),
requires Purchaser to pay the consideration offered or return the Shares
tendered promptly after the termination or withdrawal of the Offer and (ii)
Purchaser may not delay acceptance for payment of, or payment for (except as
provided in clause (i) of the first sentence of this paragraph), any Shares upon
the occurrence of the conditions specified in Section 14 without extending the
period of time during which the Offer is open.
Any such extension, delay, termination, waiver or 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 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 stockholders 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 Purchaser makes a material change in the terms of the Offer or the
information concerning the Offer, Purchaser will extend the Offer to the extent
required by Rules 14d-4(c) and 14d-6(d) under the Exchange Act.
Subject to applicable law, if, prior to the Expiration Date, Purchaser
should decide to increase the consideration being offered in the Offer, such
increase in the consideration being offered will be applicable to all
stockholders whose Shares are accepted for payment pursuant to the Offer and,
if, at the time notice of any such increase in the consideration being offered
is first published, sent or given to holders of such Shares, the Offer is
scheduled to expire at any time earlier than the period ending on the tenth
business day from and including the date that such notice is first so published,
sent or given, the Offer will be extended at least until the expiration of such
ten-business-day period.
The Company has provided Purchaser with the Company's stockholder 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 and
other related materials will be mailed to record holders of Shares whose names
appear on the Company's stockholder 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 stockholder 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 accept for payment all Shares validly tendered prior to the Expiration Date
and not withdrawn promptly after the later to occur of (i) the Expiration Date,
(ii) the expiration or termination of any applicable waiting periods under the
Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (the "HSR
Act"), and (iii) the satisfaction or waiver of the other conditions to the Offer
set forth in Section 14, and will promptly pay for all Shares accepted for
payment subject to the expiration or termination of any applicable waiting
periods under the HSR Act. Subject to applicable rules of the Commission,
Purchaser expressly reserves the right to delay acceptance for payment of, or
payment for, Shares pending receipt of any regulatory approvals specified in
Section 15 or in order to comply in whole or in part with any other applicable
law.
In all cases, payment for Shares tendered and accepted for payment pursuant
to the Offer will be made only after timely receipt by the Depositary of (i) the
certificates evidencing such Shares (the "Share Certificates") or
3
<PAGE> 6
timely confirmation (a "Book-Entry Confirmation") of a book-entry transfer of
such Shares into the Depositary's account at The Depository Trust Company or the
Philadelphia Depository Trust Company (each, a "Book-Entry Transfer Facility"
and, collectively, the "Book-Entry Transfer Facilities") pursuant to the
procedures set forth in Section 3, (ii) 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 below) in connection
with a book-entry transfer and (iii) any other documents required under 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 the
Purchaser may enforce such agreement against such participant.
On July 7, 1997, Parent anticipates filing with the Federal Trade
Commission (the "FTC") and the Antitrust Division of the Department of Justice
(the "Antitrust Division") a Premerger Notification and Report Form under the
HSR Act in connection with the purchase of Shares pursuant to the Offer.
Accordingly, it is anticipated that the waiting period under the HSR Act
applicable to the Offer will expire at 11:59 p.m., New York City time, on
Tuesday, July 22, 1997. Prior to the expiration or termination of such waiting
period, the FTC or the Antitrust Division may extend such waiting period by
requesting additional information or documentary material from Parent. If such a
request is made with respect to the purchase of Shares in the Offer, the waiting
period will expire at 11:59 p.m., New York City time, on the tenth calendar day
after substantial compliance by Parent with such a request. Thereafter, the
waiting period may only be extended by court order. The waiting period under the
HSR Act may be terminated prior to its expiration by the FTC and the Antitrust
Division. Parent will request early termination of the waiting period, although
there can be no assurance that this request will be granted. Pursuant to the
Merger Agreement, Purchaser may, but need not, extend the Offer until the
applicable waiting period under the HSR Act shall have expired or been
terminated. See Section 15 for additional information regarding the HSR Act.
For purposes of the Offer, Purchaser will be deemed to have accepted for
payment (and thereby purchased) Shares validly tendered and not withdrawn as, if
and when Purchaser gives oral or written notice to the Depositary of Purchaser's
acceptance for payment of such Shares pursuant to the Offer. Upon the terms and
subject to the conditions of the Offer, payment for Shares accepted for payment
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 payments from Purchaser and transmitting such payments to
tendering stockholders whose Shares have been accepted for payment. Under no
circumstances will interest on the purchase price for Shares be paid, regardless
of any delay in making such payment.
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
stockholder (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 Section 3, 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. In order for a holder of Shares
validly to tender Shares pursuant to the Offer, the Letter of Transmittal (or a
facsimile thereof), properly completed and duly executed, together with any
required signature guarantees, or an Agent's Message in connection with a
book-entry delivery of Shares, and any other documents required by the Letter of
Transmittal, must be received by the Depositary at one of its addresses set
forth on the back cover of this Offer to Purchase and either (i) the Share
Certificates evidencing tendered Shares must be received by the Depositary at
such address or such 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 (ii)
the tendering stockholder must comply with the guaranteed delivery procedures
described below.
THE METHOD OF DELIVERY OF SHARE CERTIFICATES AND ALL OTHER REQUIRED
DOCUMENTS, INCLUDING DELIVERY THROUGH ANY BOOK-ENTRY TRANSFER FACILITY, IS AT
THE
4
<PAGE> 7
OPTION AND RISK OF THE TENDERING STOCKHOLDER, AND THE DELIVERY WILL BE DEEMED
MADE ONLY WHEN ACTUALLY RECEIVED BY THE DEPOSITARY. 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.
Book-Entry Transfer. The Depositary will establish accounts with respect
to the Shares at the Book-Entry Transfer Facilities for purposes of the Offer
within two business days after the date of this Offer to Purchase. Any financial
institution that is a participant in the system of any Book-Entry Transfer
Facility may make a book-entry delivery of Shares by causing such Book-Entry
Transfer Facility to transfer such Shares into the Depositary's account at such
Book-Entry Transfer Facility in accordance with such Book-Entry Transfer
Facility's procedures for such transfer. However, although delivery of Shares
may be effected through book-entry transfer at a Book-Entry Transfer Facility,
the Letter of Transmittal (or a facsimile thereof), properly completed and duly
executed, together with any required signature guarantees, or an Agent's Message
in connection with a book-entry transfer, and any other required documents,
must, in any case, be received by the Depositary at one of its addresses set
forth on the back cover of this Offer to Purchase prior to the Expiration Date,
or the tendering stockholder must comply with the guaranteed delivery procedure
described below. DELIVERY OF DOCUMENTS TO A BOOK-ENTRY TRANSFER FACILITY DOES
NOT CONSTITUTE DELIVERY TO THE DEPOSITARY.
Signature Guarantees. Signatures on all Letters of Transmittal must be
guaranteed by a firm that is a member of the New York Stock Exchange Medallion
Signature Guarantee Program, or by any other "eligible guarantor institution,"
as such term is defined in Rule 17Ad-15 under the Exchange Act (each of the
foregoing being referred to as an "Eligible Institution"), except in cases where
Shares are tendered (i) by a registered holder of Shares who has not completed
either the box entitled "Special Payment Instructions" or the box entitled
"Special Delivery Instructions" on the Letter of Transmittal or (ii) for the
account of an Eligible Institution. If a Share Certificate is registered in the
name of a person other than the person who or which signs 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 by an Eligible Institution.
See Instructions 1 and 5 of the Letter of Transmittal.
Guaranteed Delivery. If a stockholder desires to tender Shares pursuant to
the Offer and such stockholder's Share Certificates evidencing such Shares are
not immediately available or such stockholder cannot deliver the Share
Certificates and all other required documents to the Depositary prior to the
Expiration Date, or such stockholder cannot complete the procedure for delivery
by book-entry transfer on a timely basis, such Shares may nevertheless be
tendered, provided that all the following conditions are satisfied:
(i) such tender is 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 Purchaser, is
received prior to the Expiration Date by the Depositary as provided below;
and
(iii) the Share Certificates (or a Book-Entry Confirmation) evidencing
all tendered Shares, in proper form for transfer, in each case together
with the Letter of Transmittal (or a facsimile thereof), properly completed
and duly executed, with any required signature guarantees (or, in the case
of a book-entry transfer, an Agent's Message), and any other documents
required by the Letter of Transmittal are received by the Depositary within
three trading days on the New York Stock Exchange after the date of
execution of such Notice of Guaranteed Delivery.
The Notice of Guaranteed Delivery may be delivered by hand or mail or
transmitted by facsimile transmission to the Depositary and must include a
guarantee, in the form set forth in the form of Notice of Guaranteed Delivery
made available by Purchaser, by a firm which is a member of a registered
national securities exchange or of the National Association of Securities
Dealers, Inc. or which is a commercial bank or trust company having an office or
correspondent in the United States that is a member in good standing of the
5
<PAGE> 8
Securities Transfer Agents Medallion Program, the New York Stock Exchange
Medallion Signature Guarantee Program or the Stock Exchange Medallion Program.
In all cases, payment for Shares tendered and accepted for payment pursuant
to the Offer will be made only after timely receipt by the Depositary of the
Share Certificates evidencing such Shares, or a Book-Entry Confirmation of the
delivery of such Shares, and the Letter of Transmittal (or a facsimile thereof),
properly completed and duly executed, with any required signature guarantees
(or, in the case of a book-entry transfer, an Agent's Message), and 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 tender
of Shares will be determined by Purchaser in its sole discretion, which
determination shall be final and binding on all parties. Purchaser reserves the
absolute right to reject any and all tenders determined by it not to be in
proper form or the acceptance for payment of which may, in the opinion of its
counsel, be unlawful. Purchaser also reserves the absolute right to waive any
condition of the Offer (other than the Minimum Condition) or any defect or
irregularity in the tender of any Shares of any particular stockholder, whether
or not similar defects or irregularities are waived in the case of other
stockholders. No tender of Shares will be deemed to have been validly made until
all defects and irregularities have been cured or waived. None of Purchaser,
Parent, the Dealer Managers, 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 incur any liability for failure to give any such
notification. Purchaser's interpretation of the terms and conditions of the
Offer (including the Letter of Transmittal and the instructions thereto) will be
final and binding.
Other Requirements. By executing the Letter of Transmittal as set forth
above, a tendering stockholder irrevocably appoints designees of Purchaser as
such stockholder's proxies, each with full power of substitution, in the manner
set forth in the Letter of Transmittal, to the full extent of such stockholder's
rights with respect to the Shares tendered by such stockholder and accepted for
payment by Purchaser (and with respect to any and all dividends, distributions,
Shares and other securities declared, paid or distributed in respect of such
Shares on or after June 22, 1997). All such proxies shall be considered coupled
with an interest in the tendered Shares. Such appointment will be effective
when, and only to the extent that, Purchaser accepts such Shares for payment.
Upon such acceptance for payment, all prior proxies given by such stockholder
with respect to such Shares (and such dividends, distributions, Shares and other
securities) will be revoked without further action, and no subsequent proxies
may be given nor any subsequent written consent executed by such stockholder
(and, if given or executed, will not be deemed to be effective) with respect
thereto. The designees of Purchaser will, with respect to the Shares for which
the appointment is effective, be empowered to exercise all voting and other
rights of such stockholder as they in their sole discretion may deem proper at
any annual or special meeting of the Company's stockholders or any adjournment
or postponement thereof, by written consent in lieu of any such meeting or
otherwise. Purchaser reserves the right to require that, in order for Shares to
be deemed validly tendered, immediately upon Purchaser's payment for such
Shares, Purchaser must be able to exercise full voting rights with respect to
such Shares (and such other Shares and securities).
The acceptance for payment by Purchaser of Shares pursuant to any of the
procedures described above will constitute a binding agreement between the
tendering stockholder and Purchaser upon the terms and subject to the conditions
of the Offer.
UNDER THE FEDERAL INCOME TAX LAWS, THE DEPOSITARY WILL BE REQUIRED TO
WITHHOLD 31 PERCENT OF THE AMOUNT OF ANY PAYMENTS MADE TO CERTAIN STOCKHOLDERS
PURSUANT TO THE OFFER. TO PREVENT SUCH BACKUP FEDERAL INCOME TAX WITHHOLDING
WITH RESPECT TO PAYMENT TO CERTAIN STOCKHOLDERS OF THE PURCHASE PRICE OF SHARES
PURCHASED PURSUANT TO THE OFFER, EACH SUCH STOCKHOLDER MUST PROVIDE THE
DEPOSITARY WITH SUCH STOCKHOLDER'S CORRECT TAXPAYER IDENTIFICATION NUMBER AND
CERTIFY THAT SUCH STOCKHOLDER IS NOT SUBJECT TO BACKUP FEDERAL INCOME TAX
WITHHOLDING BY COMPLETING THE SUBSTITUTE FORM W-9 IN THE LETTER OF TRANSMITTAL.
SEE INSTRUCTION 9 OF THE LETTER OF TRANSMITTAL.
4. WITHDRAWAL RIGHTS. Tenders of Shares made pursuant to the Offer are
irrevocable except that such Shares may be withdrawn by the tendering
stockholder at any time prior to the Expiration Date and, unless
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<PAGE> 9
theretofore accepted for payment by Purchaser pursuant to the Offer, may also be
withdrawn by such stockholder at any time after August 30, 1997. 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 stockholders are
entitled to withdrawal rights as described in this Section 4. 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 or facsimile transmission
notice of withdrawal must be timely received by the Depositary at one of its
addresses 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 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 Section 3, any notice of withdrawal must
also specify the name and number of the account of the Book-Entry Transfer
Facility to be credited with the withdrawn Shares, in which case a notice of
withdrawal will be effective if delivered to the Depositary by any method of
delivery described in the first sentence of this paragraph. Withdrawals of
Shares may not be rescinded. 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 Section 3.
All questions as to the form and validity (including time of receipt) of
any notice of withdrawal will be determined by Purchaser, in its sole
discretion, whose determination will be final and binding. None of Purchaser,
Parent, the Dealer Managers, the Depositary, the Information Agent or any other
person will be under any duty to give notification of any defects or
irregularities in any notice of withdrawal or incur any liability for failure to
give any such notification.
5. CERTAIN FEDERAL INCOME TAX CONSEQUENCES. The receipt of cash for Shares
pursuant to the Offer or in the Merger will be a taxable transaction for federal
income tax purposes and may also be a taxable transaction under applicable
state, local or foreign tax laws. In general, a stockholder will recognize gain
or loss for federal income tax purposes equal to the difference between the
amount of cash received in exchange for the Shares sold and such stockholder's
adjusted tax basis in such Shares. For federal income tax purposes, such gain or
loss will be capital gain or loss if the Shares are capital assets in the hands
of such stockholder, and will be long-term capital gain or loss if such Shares
have been held for more than one year. A stockholder's ability to deduct capital
losses may be limited.
Withholding. Unless a stockholder complies with certain reporting and/or
certification procedures or is an exempt recipient under applicable provisions
of the Internal Revenue Code of 1986, as amended, and Treasury Regulations
promulgated thereunder, such stockholder may be subject to backup withholding at
a rate of 31% with respect to any consideration received pursuant to the Offer
and the Merger. See Section 3. Stockholders should consult their brokers to
ensure compliance with such procedures. Foreign stockholders should consult with
their own tax advisors regarding withholding taxes.
THE FOREGOING DISCUSSION MAY NOT BE APPLICABLE TO CERTAIN TYPES OF
STOCKHOLDERS, INCLUDING FINANCIAL INSTITUTIONS, BROKER-DEALERS, STOCKHOLDERS WHO
ACQUIRED SHARES PURSUANT TO THE EXERCISE OF EMPLOYEE STOCK OPTIONS OR OTHERWISE
AS COMPENSATION, INDIVIDUALS WHO ARE NOT CITIZENS OR RESIDENTS OF THE UNITED
STATES AND FOREIGN CORPORATIONS.
THE FEDERAL INCOME TAX DISCUSSION SET FORTH ABOVE IS INCLUDED FOR GENERAL
INFORMATION ONLY AND IS BASED UPON PRESENT LAW. STOCKHOLDERS ARE URGED TO
CONSULT THEIR TAX ADVISORS WITH RESPECT TO THE SPECIFIC TAX CONSEQUENCES OF THE
7
<PAGE> 10
OFFER AND THE MERGER TO THEM, INCLUDING THE APPLICABILITY AND EFFECT OF ANY
STATE, LOCAL AND FOREIGN TAX LAWS.
6. PRICE RANGE OF SHARES; DIVIDENDS. The Shares are listed and principally
traded on the New York Stock Exchange. The following table sets forth, for the
fiscal quarters indicated, the high and low sales prices per Share on the New
York Stock Exchange as reported by the Dow Jones News Service since September 1,
1994 and the cash dividends per share declared during such periods.
<TABLE>
<CAPTION>
QUARTERLY
CASH
HIGH LOW DIVIDENDS
------- ------- ---------
<S> <C> <C> <C>
Fiscal 1995:
First Quarter....................................... $11.125 $ 8.625 $ .06
Second Quarter..................................... . 12.50 9.50 .06
Third Quarter....................................... 12.625 10.00 .06
Fourth Quarter...................................... 12.625 9.75 .06
Fiscal 1996:
First Quarter....................................... 14.00 11.00 .06
Second Quarter...................................... 14.50 12.125 .06
Third Quarter....................................... 15.875 13.625 .06
Fourth Quarter...................................... 15.75 11.50 .06
Fiscal 1997:
First Quarter....................................... 14.50 12.125 .06
Second Quarter...................................... 17.25 14.25 .06
Third Quarter....................................... 18.125 12.75 .06
Fourth Quarter (through June 30, 1997).............. 24.75 13.75 .06
</TABLE>
On June 25, 1997, the last full trading day prior to the announcement of
the execution of the Merger Agreement and of Purchaser's intention to commence
the Offer, the closing price per Share as reported on the New York Stock
Exchange was $23.25. On June 13, 1997, the last full trading day prior to the
Company's announcement that it was engaged in discussions with a third party
relating to a possible sale of the Company, the closing price per Share as
reported on the New York Stock Exchange was $19.75. On June 30, 1997, the
closing price per Share as reported on the New York Stock Exchange was $24.75.
STOCKHOLDERS ARE URGED TO OBTAIN A CURRENT MARKET QUOTATION FOR THE SHARES.
7. 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, Parent nor
the Dealer Managers assume 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 that may have occurred or may affect the significance or accuracy of any
such information but that are unknown to Purchaser or Parent or the Dealer
Managers.
General. The Company is a Nevada corporation with its principal executive
offices located at P.O. Box 2000, 500 North Woodward Avenue, Bloomfield Hills,
Michigan 48304. The Company is engaged principally in the manufacture of
specialty products for commercial and industrial use. The Company operates in
three segments: Fluid Controls and Construction Products; Test, Measurement and
Control; and Farm Equipment.
Fluid Controls and Construction Products. Fluid Controls and Construction
Products cover a broad range from specialty valves and pipeline strainers for
various fluid control applications to metal stampings and hinges and mechanical
contracting. This group serves the heating, ventilation and air conditioning
market as well as the chemical and petrochemical processing industry, oil and
gas industry, the irrigation industry, the paper and food processing industry,
the commercial construction market, and general industry.
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<PAGE> 11
Test, Measurement and Control. The Test, Measurement and Control group is
the Company's second largest segment. The Company believes it is the leading
producer of selected electrical test, measurement and control products. Sales
are primarily made through dealers and manufacturers' representatives in the
United States and abroad. This group serves the electrical, construction, and
maintenance markets, the heating, ventilation and air conditioning industry,
factory automation companies, computer and telecommunications manufacturers, and
general industry.
Farm Equipment. The Farm Equipment segment is made up of short line
products for the farm industry. The Company believes it is the leading producer
of tillage equipment in the High Plains region and a leading manufacturer of
grain augers. Sales are made through dealers and distributors primarily in the
High Plains and Midwest United States, as well as in Canada.
Financial Information. Set forth below is certain selected 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 year ended August 31, 1996 and
unaudited financial statements contained in the Company's Quarterly Reports on
Form 10-Q for the periods ended February 28, 1997 and March 1, 1996
(collectively, the "Company's Reports"). More comprehensive financial
information is included in the Company's Reports 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.
CORE INDUSTRIES INC
AND SUBSIDIARIES
SELECTED CONSOLIDATED FINANCIAL INFORMATION
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
SIX MONTHS ENDED
YEAR ENDED AUGUST 31, ------------------------
---------------------- FEBRUARY 28, MARCH 1,
1996 1995 1997 1996
--------- --------- ------------ --------
(UNAUDITED)
<S> <C> <C> <C> <C>
INCOME STATEMENT DATA:
Net sales..................................... $230,157 $187,897 $116,255 $104,759
Cost of sales................................. 149,772 121,088 76,217 70,121
Earnings from continuing operations........... 12,940 10,693 6,628 5,272
Income (loss) from discontinued operations.... -- (6,865) -- --
Net earnings.................................. $ 12,940 $ 3,828 $ 6,628 $ 5,272
Net earnings (loss) per share:
Continuing operations....................... $1.24 $1.09 $.62 $.52
Discontinued operations..................... -- (.70) -- --
Net earnings per share...................... 1.24 .39 .62 .52
</TABLE>
<TABLE>
<CAPTION>
AT AT
---------------------------------- ----------------------------------
AUGUST 31, 1996 AUGUST 31, 1995 FEBRUARY 28, 1997 MARCH 1, 1996
--------------- --------------- ----------------- -------------
(UNAUDITED)
<S> <C> <C> <C> <C>
BALANCE SHEET DATA:
Working capital.................. $ 72,616 $ 80,325 $ 76,505 $ 78,907
Total assets..................... 172,949 147,043 183,818 189,582
Long-term debt (less current
portion)....................... 24,520 32,609 28,410 32,543
Total stockholders' equity....... 102,644 81,013 107,859 96,739
</TABLE>
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<PAGE> 12
In connection with Parent's review of the Company and in the course of the
negotiations between the Company and Parent described in Section 10, the Company
provided Parent with certain business and financial information, including
financial data representing pro forma historical statements of earnings as if
(i) entities acquired by the Company since September 1, 1992 had been acquired
as of that date and (ii) entities either divested after that date or being
considered for divestment had been divested as of that date. Parent and
Purchaser have been advised by the Company that such financial data was prepared
by the Company without consideration of the impact of pro forma adjustments for
purchase accounting or certain other adjustments required by generally accepted
accounting principles. Such combined pro forma data included sales of $171.2
million, $190.7 million, $218.0 million and $237.0 million and earnings before
interest and income taxes of $16.9 million, $19.2 million, $23.1 million and
$25.9 million for the fiscal years ended August 31, 1993, 1994, 1995 and 1996,
respectively.
The Company has advised Parent and Purchaser that it does not as a matter
of course make public forecasts as to future performance or earnings. However,
in connection with Parent's due diligence review of the Company described in
Section 10, the Company provided to Parent and Purchaser certain projections
relating to the Company's forecasted operating results for its fiscal years
ending August 31, 1997, 1998 and 1999. Parent and Purchaser have been advised
that such information was prepared by the Company solely as part of the
Company's annual planning process, independent of the Company's potential sale
to Parent or Purchaser. Such projections included forecasts of sales of $272.5
million, $319.7 million and $357.5 million, earnings before interest and income
taxes of $29.3 million, $34.1 million and $38.7 million and net earnings of
$16.2 million, $18.8 million and $21.4 million for the fiscal years ending
August 31, 1997, 1998 and 1999, respectively.
PROJECTED INFORMATION OF THIS TYPE IS BASED ON ESTIMATES AND ASSUMPTIONS
THAT ARE INHERENTLY SUBJECT TO SIGNIFICANT ECONOMIC AND COMPETITIVE
UNCERTAINTIES AND CONTINGENCIES, ALL OF WHICH ARE DIFFICULT TO PREDICT AND MANY
OF WHICH ARE BEYOND THE COMPANY'S CONTROL. THESE FORWARD-LOOKING STATEMENTS ARE
SUBJECT TO CERTAIN RISKS AND UNCERTAINTIES THAT COULD CAUSE ACTUAL RESULTS TO
DIFFER MATERIALLY FROM THESE PROJECTIONS. THESE PROJECTIONS REFLECT NUMEROUS
ASSUMPTIONS, ALL MADE BY MANAGEMENT OF THE COMPANY, WITH RESPECT TO INDUSTRY
PERFORMANCE, GENERAL BUSINESS, ECONOMIC, MARKET AND FINANCIAL CONDITIONS AND
OTHER MATTERS INCLUDING ASSUMED INTEREST EXPENSE AND EFFECTIVE TAX RATES
CONSISTENT WITH HISTORICAL LEVELS FOR THE COMPANY, ALL OF WHICH ARE DIFFICULT TO
PREDICT, MANY OF WHICH ARE BEYOND THE COMPANY'S CONTROL AND NONE OF WHICH WERE
SUBJECT TO APPROVAL BY PARENT OR PURCHASER. ACCORDINGLY, THERE CAN BE NO
ASSURANCE THAT THE PROJECTED RESULTS WILL BE REALIZED OR THAT ACTUAL RESULTS
WILL NOT BE SIGNIFICANTLY HIGHER OR LOWER THAN THOSE SET FORTH ABOVE. IN
ADDITION, THESE PROJECTIONS WERE NOT PREPARED WITH A VIEW TO PUBLIC DISCLOSURE
OR COMPLIANCE WITH THE PUBLISHED GUIDELINES OF THE COMMISSION OR THE GUIDELINES
ESTABLISHED BY THE AMERICAN INSTITUTE OF CERTIFIED PUBLIC ACCOUNTANTS REGARDING
PROJECTIONS AND FORECASTS AND ARE INCLUDED IN THIS OFFER TO PURCHASE ONLY
BECAUSE SUCH INFORMATION WAS MADE AVAILABLE TO PARENT BY THE COMPANY. NONE OF
PARENT, PURCHASER, THE COMPANY OR THEIR FINANCIAL ADVISORS OR ANY OTHER ENTITY
OR PERSON ASSUMES ANY RESPONSIBILITY FOR THE ACCURACY OR VALIDITY OF THE
FOREGOING PROJECTIONS. NONE OF PARENT, PURCHASER, THE COMPANY AND ANY OF THEIR
FINANCIAL ADVISORS HAS MADE, OR MAKES, ANY REPRESENTATION TO ANY PERSON
REGARDING THE INFORMATION CONTAINED IN THESE PROJECTIONS AND NONE OF THEM
INTENDS TO UPDATE OR OTHERWISE REVISE THESE PROJECTIONS TO REFLECT CIRCUMSTANCES
EXISTING AFTER THE DATE WHEN MADE OR TO REFLECT THE OCCURRENCE OF FUTURE EVENTS
EVEN IN THE EVENT THAT ANY OR ALL OF THE ASSUMPTIONS UNDERLYING THESE
PROJECTIONS ARE SHOWN TO BE IN ERROR.
The Shares are listed on the New York Stock Exchange and are registered
pursuant to Section 12(b) of the Exchange Act. Accordingly, the Company is
subject to the informational filing requirements of the Exchange Act
10
<PAGE> 13
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 to 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
stockholders 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 Judiciary Plaza, 450 Fifth Street,
N.W., Washington, D.C. 20549, and also should be available for inspection at the
Commission's regional offices located at Seven World Trade Center, 13th Floor,
New York, New York 10048 and 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 customary fees. Requests
should be directed to the Commission's Public Reference Branch, Judiciary Plaza,
450 Fifth Street, N.W., Washington, D.C. 20549. Such material may also be
accessed electronically by means of the Commission's home page on the Internet
(http://www.sec.gov). Such information may also be inspected and copied at the
offices of the New York Stock Exchange at 20 Broad Street, New York, New York
10005.
8. CERTAIN INFORMATION CONCERNING PURCHASER AND PARENT. Purchaser is a
newly incorporated Nevada 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 c/o
United Dominion Industries Limited, 2300 One First Union Center, 301 South
College Street, Charlotte, North Carolina 28202. Purchaser is an indirect wholly
owned subsidiary of Parent.
Until immediately prior to the time that Purchaser will purchase 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. Because Purchaser is newly formed and has minimal
assets and capitalization, no meaningful financial information regarding
Purchaser is available. Notwithstanding any other provision contained in this
Offer to Purchase or the Letter of Transmittal, at any time prior to the payment
for Shares accepted for payment in the Offer, Purchaser may assign its right to
purchase Shares to Parent or any direct or indirect wholly owned subsidiary of
Parent.
All outstanding shares of Purchaser's capital stock are owned by United
Dominion Industries, Inc., a Delaware corporation and a direct wholly owned
subsidiary of Parent. Parent is a corporation organized under the laws of
Canada. The principal offices of Parent and United Dominion Industries, Inc. are
located at 2300 One First Union Center, 301 South College Street, Charlotte,
North Carolina 28202. As its principal business, Parent and United Dominion
Industries, Inc. manufacture diversified engineered products primarily for
industrial and commercial customers worldwide. Such business is organized in
five divisions: Industrial Products, Compaction, Flair, Door Products and
Specialty Products. Industrial Products serves selected markets with engineered
equipment and products for heating, cooling, fluid handling, heat exchange, food
processing and aerospace applications. Compaction manufactures rollers, landfill
compactors, tampers and pavement recyclers. Flair manufactures compressed air
filtration, purification and dehydration equipment. Door Products produces side-
hinged steel doors and frames. Specialty Products serves selected markets with
products ranging from loading dock and material handling equipment to
specialized air supply and heating equipment.
On June 26, 1997, Parent entered into an Agreement and Plan of Merger (the
"Imo Merger Agreement") with UD Delaware Corp., a Delaware corporation and an
indirect wholly owned subsidiary of Parent ("UD Delaware"), and Imo Industries
Inc., a Delaware corporation ("Imo"), pursuant to which, among other things, UD
Delaware has agreed, on the terms and subject to the conditions set forth
therein, to make an offer to purchase all outstanding shares of common stock of
Imo (together with certain associated rights to purchase shares of preferred
stock of Imo) and to merge UD Corp. with and into Imo. Additionally, pursuant to
the Imo Merger Agreement and on the terms and subject to the conditions set
forth therein, Parent has agreed to commence a tender offer to purchase certain
outstanding publicly held indebtedness of Imo. The Offer is not conditioned upon
any of the transactions contemplated by the Imo Merger Agreement, and there is
no assurance that any of such transactions will be consummated.
11
<PAGE> 14
The name, citizenship, residence or business address, principal occupation
or employment, and five-year employment history for each of the directors and
executive officers of Purchaser and Parent and certain other information are set
forth in Schedule I hereto.
The common shares (without par value) of Parent are listed on The Toronto
Stock Exchange, the Montreal Exchange and the New York Stock Exchange and are
registered pursuant to Section 12(b) of the Exchange Act. Parent is subject to
the information and reporting requirements of the Exchange Act and in accordance
therewith is required to file periodic reports and other information with the
Commission relating to its business, financial condition and other matters.
Certain information, as of particular dates, concerning Parent's business,
principal physical properties, capital structure, material pending legal
proceedings, operating results, financial condition, directors and officers,
their remuneration, stock options granted to them, the principal holders of
Parent's securities, any material interests of such persons in transactions with
Parent and other matters is required to be disclosed in reports distributed to
Parent's shareholders and filed with the Commission. Such reports and other
information may be inspected and copied at the Commission's public reference
facilities in the same manner as set forth with respect to the Company in
Section 7, except that, in general, reports filed by Parent with the Commission
may not be accessed electronically. Such information is also available for
inspection at the New York Stock Exchange, 20 Broad Street, New York, New York
10005.
Except as described in this Offer to Purchase, including Schedule I hereto,
(i) none of Purchaser, Parent nor, to the best knowledge of Purchaser and
Parent, any of the persons listed in Schedule I to this Offer to Purchase, or
any associate or majority-owned subsidiary of Purchaser, Parent or any of the
persons so listed, beneficially owns or has any right to acquire, directly or
indirectly, any Shares and (ii) neither Purchaser nor Parent nor, to the best
knowledge of Purchaser and Parent, any of the persons or entities referred to
above, nor any director, executive officer or subsidiary of any of the
foregoing, has effected any transaction in the Shares during the past 60 days.
Except as otherwise described in this Offer to Purchase, none of Purchaser,
Parent nor, to the best knowledge of Purchaser and Parent, any of the persons
listed in Schedule I to this Offer to Purchase, has any contract, arrangement,
understanding or relationship with any other person with respect to any
securities of the Company, including, but not limited to, any contract,
arrangement, understanding or relationship concerning the transfer or voting of
such securities, joint ventures, loan or option arrangements, puts or calls,
guaranties of loans, guaranties against loss, guaranties of profits, division of
profits or loss or the giving or withholding of proxies. Except as set forth in
this Offer to Purchase, since September 1, 1993, neither Purchaser nor Parent
nor, to the best knowledge of Purchaser and Parent, any of the persons listed on
Schedule I hereto, has had any business relationship or transaction with the
Company or any of its executive officers, directors or affiliates that is
required to be reported under the rules and regulations of the Commission
applicable to the Offer. Except as set forth in this Offer to Purchase, since
September 1, 1993, there have been no contacts, negotiations or transactions
between any of Purchaser, Parent, or any of their respective subsidiaries or, to
the best knowledge of Purchaser and Parent, any of the persons listed in
Schedule I to this Offer to Purchase, on the one hand, and the Company or its
affiliates, on the other hand, concerning a merger, consolidation or
acquisition, tender offer or other acquisition of securities, an election of
directors or a sale or other transfer of a material amount of assets.
Financial Information. Set forth below are certain selected consolidated
financial data relating to Parent and its subsidiaries (i) at or for the years
ended December 31, 1996 and 1995 that have been excerpted or derived from the
audited consolidated financial statements of Parent and its subsidiaries at such
dates and for the fiscal years then ended contained in the Parent's Annual
Report on Form 10-K for the year ended December 31, 1996 filed with the
Commission and (ii) at or for the three months ended March 31, 1997 and 1996
that have been excerpted or derived from the unaudited consolidated financial
statements of Parent and its subsidiaries at such dates and for the three-month
periods then ended contained in the Parent's Quarterly Reports on Form 10-Q for
the periods ended March 31, 1997 and 1996 filed with the Commission. More
comprehensive financial information is included in such reports and other
documents filed by Parent with the Commission. The following summary is
qualified in its entirety by reference to these reports and all financial
statements and the related notes therein.
The financial statements of Parent have been prepared in accordance with
generally accepted accounting principles applicable in Canada ("Canadian GAAP"),
which practices are described in the notes to such
12
<PAGE> 15
statements. Canadian GAAP differs in certain significant respects from generally
accepted accounting principles applicable in the United States ("U.S. GAAP"). A
summary of the principal differences between U.S. GAAP and Canadian GAAP and the
necessary adjustments to reconcile Canadian GAAP net income to U.S. GAAP net
income is set forth below. Amounts reflected in the financial statements of
Parent are stated in United States dollars.
UNITED DOMINION INDUSTRIES LIMITED
SELECTED CONSOLIDATED FINANCIAL DATA
(IN MILLIONS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
AT OR FOR THE AT OR FOR THE
YEAR ENDED THREE MONTHS
DECEMBER 31, ENDED MARCH 31,
-------------------- --------------------
1996 1995 1997 1996
-------- -------- -------- --------
(UNAUDITED)
<S> <C> <C> <C> <C>
INCOME STATEMENT DATA:
Sales....................................... $1,888.8 $1,805.0 $420.3 $422.1
Income from continuing operations........... 94.9 77.3 11.2 10.8
Income from discontinued operations......... -- 1.3 -- --
Net income.................................. 94.9 78.5 11.2 10.8
Preferred share dividends................... -- (2.9) -- --
Earnings applicable to common shares........ 94.9 75.6 11.2 10.8
BALANCE SHEET DATA:
Total assets................................ $1,618.3 $1,502.0 $1,569.9 $1,481.8
Working capital............................. 362.4 284.1 350.1 312.6
Total current assets........................ 754.8 678.5 694.7 660.0
Total current liabilities................... 392.4 394.5 344.7 347.4
Total liabilities........................... 797.0 884.1 751.9 738.8
Total shareholders' equity.................. 821.3 617.9 818.0 743.0
EARNINGS PER COMMON SHARE:
Continuing operations....................... $2.13 $1.88 $.25 $.26
Discontinued operations..................... -- .03 -- --
Net earnings................................ 2.13 1.91 .25 .26
Weighted average number of shares
outstanding.............................. 44,513 39,529 45,240 42,361
</TABLE>
Principal Differences Between Canadian and United States Generally Accepted
Accounting Principles. The financial information provided above was prepared in
accordance with Canadian GAAP, which differs in certain significant respects
from U.S. GAAP. These differences relate principally to the following items, and
the necessary adjustments are set out below.
Canadian GAAP allows for the reduction of stated capital of outstanding
common shares with a corresponding offset to deficit. This reclassification,
which Parent made in 1990, is not permitted by U.S. GAAP and would result in an
increase in capital stock and a reduction in retained earnings at December 31,
1996 and 1995 and at March 31, 1997 and 1996 of $128,093,000. Canadian GAAP also
permits expenses related to the issue of capital stock, net of income taxes, to
be deducted from retained earnings while U.S. GAAP requires such expenses to be
deducted from the proceeds of stock issuances credited to capital stock. This
reclassification would reduce capital stock and increase retained earnings by
$20,905,000 at March 31, 1997, December 31, 1996 and March 31, 1996 and
$17,427,000 at December 31, 1995.
Under Canadian GAAP, the discount rate used for computing the benefit
obligation and the service and interest cost components of net periodic pension
expense represents management's best estimate of the long-term rate of return on
pension fund assets; whereas, under U.S. GAAP the discount rate reflects the
rate at which pension benefits can be effectively settled at the date of the
financial statements.
13
<PAGE> 16
U.S. GAAP requires accruing the cost of providing post-retirement benefits
other than pensions to employees and their beneficiaries (e.g., health care
benefits) during the years that the employee renders the necessary service.
Parent records expense on a "pay-as-you-go" basis for benefits paid on behalf of
retired employees. At March 31, 1997, the accumulated benefit obligation not
recorded by Parent totaled approximately $9,000,000.
In 1996, Parent recognized certain tax benefits related to prior year
acquisitions that under U.S. GAAP would have reduced goodwill.
U.S. GAAP requires the use of an asset and liability approach to accounting
for income taxes; whereas, Canadian GAAP requires the use of the deferral
method.
The following table reflects the impact on Parent's net income and net
earnings per share of complying with U.S. GAAP as it pertains to the items noted
above.
<TABLE>
<CAPTION>
YEAR ENDED THREE MONTHS
DECEMBER 31, ENDED MARCH 31,
------------------ ------------------
1996 1995 1997 1996
------- ------- ------- -------
(IN THOUSANDS, EXCEPT PER SHARE DATA)
(UNAUDITED)
<S> <C> <C> <C> <C>
Net income:
Canadian GAAP................................... $94,920 $78,519 $11,171 $10,805
U.S. GAAP....................................... 84,319 75,672 10,727 10,093
Net earnings per share:
Canadian GAAP................................... 2.13 1.91 .25 .26
U.S. GAAP....................................... 1.89 1.84 .24 .24
</TABLE>
The following is a reconciliation of net income under Canadian GAAP to net
income under U.S. GAAP.
<TABLE>
<CAPTION>
YEAR ENDED THREE MONTHS
DECEMBER 31, ENDED MARCH 31,
------------------ ------------------
1996 1995 1997 1996
------- ------- ------- -------
(IN THOUSANDS)
(UNAUDITED)
<S> <C> <C> <C> <C>
Net income under Canadian GAAP.................... $94,920 $78,519 $11,171 $10,805
Increased (decreased) by:
Gain on sale of business..................... (4,440) -- -- --
Pension expense.............................. (1,198) (1,832) (300) (458)
Postretirement benefits...................... (963) (1,015) (240) (254)
Income taxes................................. (4,000) -- 96 --
------- ------- ------- -------
Net income under U.S. GAAP.............. $84,319 $75,672 $10,727 $10,093
======= ======= ======= =======
</TABLE>
U.S. GAAP generally requires the use of the equity method of accounting for
investments in joint ventures. Accordingly, Parent's proportionate share of its
joint ventures' assets, liabilities, sales and expenses would not be reflected
in the above financial data under U.S. GAAP. This change in presentation would
not affect net income.
The application of U.S. GAAP discussed above would result in increases in
other (non-current) assets of approximately $17,000,000 and other liabilities of
approximately $36,000,000 and decreases in current assets of approximately
$23,000,000, current liabilities of approximately $16,000,000, long-term debt of
$8,000,000 and total shareholders' equity of approximately $18,000,000 as of
March 31, 1997.
9. FINANCING OF THE OFFER AND THE MERGER. The total amount of funds
required by Purchaser to consummate the Offer and the Merger and to pay related
fees and expenses and prepay certain indebtedness of the Company is estimated to
be approximately $330 million. Purchaser will obtain all of such funds from
Parent and its affiliates. Affiliates of Parent currently intend to provide such
funds from cash on hand and funds available pursuant to new credit facilities
(the "New Credit Facilities") in the aggregate amount of $800 million for which
Parent and United Dominion Industries, Inc. (together, the "Borrower") have
received a commitment (the "Commitment") from the Royal Bank of Canada (New York
Branch) ("RBC"). It is anticipated that the initial borrowings under the New
Credit Facilities will be used, among other things, to provide a portion of the
funds
14
<PAGE> 17
required to consummate the Offer and the Merger, to provide a portion of the
funds necessary to consummate the transactions contemplated by the Imo Merger
Agreement, to pay related fees and expenses and to repay outstanding balances
under existing credit facilities of Parent and its affiliates (the "Existing
Credit Facilities") established pursuant to a $300,000,000 Amendment and
Restatement of the Credit Agreement and Guaranty dated as of June 20, 1996 among
Parent and United Dominion Industries, Inc., as obligors, RBC, as agent, and
certain financial institutions signatory thereto, as lenders, as amended. At
June 30, 1997, the aggregate outstanding principal balance under the Existing
Credit Facilities was approximately $19 million.
The New Credit Facilities will consist of two components: a $650 million
five-year revolving credit facility, including a $75 million sub-limit for the
issuance of standby letters of credit (the "Five-Year Facility"), and a $150
million 364-day revolving credit facility (the "Bridge Facility"). Borrowings
under the New Credit Facilities will be available in all freely available
currencies, including U.S. Dollars and German Deutsche Marks, subject to certain
limitations. Interest will be payable, at the Borrower's option, at (i) the
higher of a U.S. reference lender's prime interest rate or the federal funds
rate plus 0.50% per annum, (ii) the interbank offered rate for Eurodollar
deposits of 1, 2, 3, 6, 9 or 12 months plus a margin, or (iii) the interbank
offered rate for Euro-Deutsche Mark deposits of 1, 2, 3, 6, 9 or 12 months plus
a margin. The New Credit Facilities will require the payment of a quarterly
facility fee ranging from 0.08% to 0.125% per annum on the aggregate commitments
under the Five-Year Facility and from 0.06% to 0.10% per annum on the aggregate
commitments under the Bridge Facility, and will also require payment of a
utilization fee of 0.05% per annum on the daily average of all outstanding
balances if utilization exceeds 50% of the aggregate commitments, if the
Parent's public debt is not rated at or above certain rating levels and if the
highest pricing margin then applies. The New Credit Facilities will not be
secured by collateral. RBC has the right to syndicate all or a portion of the
New Credit Facilities.
The definitive credit agreement for the New Credit Facilities is expected
to provide for various representations, warranties and covenants of Parent. The
covenants are expected to be typical for a facility of this type, to include,
without limitation, customary affirmative covenants designed to ensure the
continued existence of Parent, the sound operation of its businesses and the
business of its subsidiaries, the proper maintenance and insurance of
properties, the provision of financial statements, the payment of debts and
taxes and continued compliance with applicable law, and customary negative
covenants regarding, on a consolidated basis, (i) additional indebtedness, (ii)
asset dispositions and expenditures, (iii) financial ratios, (iv) contingent
liabilities, (v) loans and advances, (vi) liens and security interests, (vii)
dividends and purchases of stock and (viii) transactions with affiliates. Such
negative covenants with respect to asset dispositions and liens are expected to
expressly except from their coverage the sale, disposition, pledge or
encumbrance by Parent or any of its subsidiaries of "margin stock" as defined in
Regulation U of the Federal Reserve Board to the extent the fair market value of
margin stock exceeds 25% of the fair market value of the property and assets
(including the margin stock) of Parent or such subsidiary.
Under the definitive credit agreement, Parent will agree to hold the agent
and each of the lenders harmless against any and all losses, liabilities,
claims, damages and expenses incurred or suffered by it arising out of or by
reason of any transaction financed with the proceeds of any borrowing and any
investigation, litigation or proceeding relating to the transactions
contemplated thereby.
The funding of the New Credit Facilities will be subject to customary
conditions, including, among other things, the execution of satisfactory
documentation and the receipt of all necessary governmental approvals, and in
addition will be subject to the satisfaction of the Minimum Condition. Although
Parent expects that the New Credit Facilities will be available to provide funds
for the consummation of the Offer and the Merger in accordance with their
respective terms, there can be no assurance that the New Credit Facilities will
be consummated.
The foregoing summary is subject to the preparation and completion of a
definitive credit agreement for the New Credit Facilities and is qualified in
its entirety by reference to the Commitment, a copy of which has been filed as
an exhibit to the Tender Offer Statement on Schedule 14D-1/13D (the "Schedule
14D-1") filed by Purchaser and Parent with the Commission in connection with the
Offer.
Parent anticipates that indebtedness incurred through borrowings under the
New Credit Facilities will be repaid from a variety of sources, which may
include, but may not be limited to, funds generated internally by Parent and its
subsidiaries (including, following the Merger, funds generated by the Surviving
Corporation), bank
15
<PAGE> 18
financing, and the public or private sale of debt or equity securities. No
decision has been made concerning the method Parent will employ to repay such
indebtedness. Such decision will be made based on Parent's review from time to
time of the advisability of particular actions, as well as on prevailing
interest rates and financial and other economic conditions and such other
factors as Parent may deem appropriate.
10. BACKGROUND OF THE OFFER; CONTACTS WITH THE COMPANY; THE MERGER
AGREEMENT.
Background of the Offer; Contacts with the Company. In August 1996, a
financial advisor under general engagement by Parent contacted Richard A.
Bearse, Parent's Senior Vice President, to arrange a meeting between Mr. Bearse
and Harold M. Marko, a director and Chairman Emeritus of the Company. On
September 5, 1996, Mr. Bearse met with Mr. Marko to discuss Parent's business
and desire to acquire attractive companies with strong market positions in
proprietary engineered products. On October 9, 1996, Mr. Bearse and William R.
Holland, Parent's Chairman and Chief Executive Officer, met with the Company's
senior management, including David R. Zimmer, the Company's President and Chief
Executive Officer, to discuss interest in a possible business combination. As a
condition to holding this meeting, the Company requested that Parent enter into
a confidentiality agreement. On October 2, 1996, Parent, through its wholly
owned subsidiary United Dominion Industries, Inc., entered into a
confidentiality agreement with the Company agreeing to keep certain information
confidential and not to take certain action to obtain control of the Company.
See "Confidentiality Agreement" in this Section 10.
On November 7, 1996, Parent delivered a draft letter of intent outlining a
proposal for Parent to acquire the Company. Later in November, the Company
advised Parent that it had engaged Goldman Sachs as its financial advisor. For
the next several months, representatives of Parent had occasional contact with
the Company and Goldman Sachs regarding Parent's acquisition proposal. On May
12, 1997, Mr. Zimmer, Lawrence J. Murphy, the Company's Executive Vice
President, and Mark J. MacGuidwin, the Company's Vice President -- Finance and
Chief Financial Officer, along with representatives of Goldman Sachs, met with
representatives of Parent's senior management, including Mr. Holland and Mr.
Bearse. Following this meeting, on May 14, 1997, Parent delivered, to Goldman
Sachs, Parent's expression of interest and a draft letter of intent outlining
the material terms of a proposed acquisition of the Company. Shortly thereafter,
Goldman Sachs advised representatives of Parent that although the Company did
not wish to enter into a letter of intent it encouraged Parent to proceed with
developing a formal proposal. Beginning May 22, 1997, representatives of Parent
visited various Company locations to conduct on-site review of the Company's
businesses and to conduct due diligence examinations. In addition,
representatives of the Company and Parent, their financial advisors and legal
counsel commenced negotiation of the definitive terms of the Merger Agreement.
During the business day of June 16, 1997, the Company publicly announced
that it was engaged in discussions with a third party relating to a possible
sale of the Company. The per share closing price of the Shares on the New York
Stock Exchange on the day of the announcement was $23.25, an increase of $3.50
from the per share closing price on the prior trading day. On June 20, 1997,
Parent and the Company entered into a letter agreement providing that if the
Company's Board of Directors did not approve the Merger Agreement on or before
June 25, 1997, an authorized officer of the Company did not execute and deliver
the Merger Agreement to Parent on before June 25, 1997 or the Company rescinded
its agreement to the Merger Agreement prior to the execution thereof by Parent,
then the Company would pay promptly to Parent, as liquidated damages, a fee of
$10,000,000 plus out-of-pocket expenses of up to $3,000,000, unless Parent's
Board of Directors had not approved the Merger Agreement, or an authorized
officer of Parent had not executed and delivered the Merger Agreement, by 11:59
p.m. on June 25, 1997. See "Fee Agreement" in this Section 10.
On June 25, 1997, upon being advised that the Company's Board of Directors
had approved the Merger, the Offer and the other transactions contemplated by
the Merger Agreement, Parent's Board of Directors approved the Merger Agreement.
The Merger Agreement was executed by Parent, Purchaser and the Company on the
evening of June 25, 1997, and a press release announcing the execution of the
Merger Agreement was issued on the morning of June 26, 1997.
The Merger Agreement. The following is a summary of the Merger Agreement,
a copy of which has been filed as an Exhibit to the Schedule 14D-1 filed by
Purchaser and Parent with the Commission in connection with the Offer. Such
summary is qualified in its entirety by reference to the Merger Agreement.
16
<PAGE> 19
The Offer. The Merger Agreement provides for the commencement of the Offer
as promptly as reasonably practicable, but in no event later than five business
days after the initial public announcement of the execution of the Merger
Agreement. The obligation of Purchaser to accept for payment Shares tendered
pursuant to the Offer is subject to the satisfaction of the Minimum Condition
and certain other conditions that are described in Section 14 hereof. Purchaser
and Parent have agreed with the Company that no change in the Offer may be made
that decreases the price per Share payable in the Offer, that changes the form
of consideration payable in the Offer, that reduces the number of Shares to be
purchased in the Offer, that imposes conditions to the Offer in addition to
those set forth in Section 14 hereof, or that changes the Minimum Condition.
The Merger. The Merger Agreement provides that, upon the terms and subject
to the conditions thereof, and in accordance with Nevada Law, at the Effective
Time, Purchaser shall be merged with and into the Company. As a result of the
Merger, the separate corporate existence of Purchaser will cease and the Company
will continue as the Surviving Corporation and as an indirect wholly owned
subsidiary of Parent. Notwithstanding the foregoing, Parent may elect at any
time prior to the fifth business day immediately preceding the date on which the
Proxy Statement (as hereinafter defined) is mailed initially to the Company's
stockholders, to merge the Company into Purchaser or another direct or indirect
wholly owned subsidiary of Parent. In such event, the parties agreed to execute
an appropriate amendment to the Merger Agreement in order to reflect the
foregoing and to provide, as the case may be, that Purchaser or such other
wholly owned subsidiary of Parent shall be the Surviving Corporation.
Upon consummation of the Merger, each issued and then outstanding Share
(other than any Shares owned by Purchaser, Parent, the Company or any wholly
owned subsidiary of Parent or the Company and any Shares that are held by
stockholders who have properly exercised their rights of dissent with respect to
such Shares in accordance with Nevada Law) shall be cancelled and converted
automatically into the right to receive the Merger Consideration. Pursuant to
the Merger Agreement, each share of common stock, par value $.01 per share, of
Purchaser issued and outstanding immediately prior to the Effective Time shall
be converted into and exchanged for one share of common stock, par value $.01
per share, of the Surviving Corporation.
The Merger Agreement provides that the directors of Purchaser immediately
prior to the Effective Time will be the initial directors of the Surviving
Corporation and that the officers of the Company immediately prior to the
Effective Time will be the initial officers of the Surviving Corporation. The
Merger Agreement provides that, unless otherwise determined by Parent prior to
the Effective Time, and subject to the requirements described below with respect
to indemnification, at the Effective Time, the Articles of Incorporation of the
Company, as in effect immediately prior to the Effective Time, shall be the
Articles of Incorporation of the Surviving Corporation and shall be amended and
restated to conform to the Articles of Incorporation of Purchaser as in effect
immediately prior to the Effective Time; provided, however, that, at the
Effective Time, Article I of the Articles of Incorporation of the Surviving
Corporation shall be amended to read as follows: "The name of the corporation is
Core Industries Inc" and the Articles of Incorporation of the Surviving
Corporation shall be amended if required to comply with the requirements
described below with respect to indemnification. The Merger Agreement also
provides that the Bylaws of Purchaser, as in effect immediately prior to the
Effective Time, will be the Bylaws of the Surviving Corporation.
Company Stockholders' Meeting; Proxy Statement. Pursuant to the Merger
Agreement, unless not required under Nevada Law, the Company shall duly call,
give notice of, convene and hold a special meeting of its stockholders as soon
as practicable following consummation of the Offer for the purpose of
considering and taking action on the Merger Agreement and the transactions
contemplated thereby (the "Stockholders' Meeting"). The Merger Agreement
provides that, unless not required under Nevada law, the Company shall, as soon
as practicable following consummation of the Offer, file with the Commission
under the Exchange Act, and use its best reasonable efforts to have cleared by
the Commission, a proxy statement and related proxy materials (the "Proxy
Statement") with respect to the Stockholders' Meeting and shall cause the Proxy
Statement to be mailed to stockholders of the Company at the earliest
practicable time. The Company has also agreed, subject to the fiduciary duties
of the Board under applicable law as advised in writing by counsel, to include
in the Proxy Statement the unanimous recommendation of the Board that the
stockholders of the Company approve and adopt the Merger Agreement and the
transactions contemplated thereby and to use its best reasonable efforts to
obtain
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<PAGE> 20
such approval and adoption. Parent and Purchaser have each agreed to vote all
Shares beneficially owned by them in favor of the Merger.
Conduct of Business. Pursuant to the Merger Agreement, the Company has
covenanted and agreed that, between the date of the Merger Agreement and the
election or appointment of Purchaser's designees to serve on the Company's Board
of Directors (the "Purchaser's Election Date"), unless Parent shall otherwise
agree in writing, each of the Company and its Subsidiaries (as defined in the
Merger Agreement) shall conduct its business only in, and the Company and the
Subsidiaries shall not take any action except in, the ordinary course of
business and in a manner consistent with past practice; and the Company shall
use its best efforts to preserve substantially intact the business organization
of the Company and the Subsidiaries, to keep available the services of the
current officers, employees and consultants of the Company and its Subsidiaries
and to preserve the current relationships of the Company and the Subsidiaries
with customers, suppliers and other persons with which the Company or any
Subsidiary has significant business relations. The Merger Agreement also
provides that, except with the prior written consent of Parent or as
contemplated by the Merger Agreement, neither the Company nor any Subsidiary
shall, between the date of the Merger Agreement and the Purchaser's Election
Date, directly or indirectly do, or propose to do, any of the following: (a)
amend or otherwise change its Articles of Incorporation or Bylaws or equivalent
organizational documents; (b) issue, sell, pledge, dispose of, grant, encumber,
or authorize the issuance, sale, pledge, disposition, grant or encumbrance of
(i) any shares of capital stock of any class of the Company or any Subsidiary,
or any options, warrants, convertible securities or other rights of any kind to
acquire any shares of such capital stock, or any other ownership interest
(including, without limitation, any phantom interest), of the Company or any
Subsidiary (except for the issuance of a maximum of 696,049 Shares issuable
pursuant to employee and director stock options outstanding on the date thereof)
or (ii) any assets of the Company or any Subsidiary, except for sales in the
ordinary course of business and in a manner consistent with past practice; (c)
declare, set aside, make or pay any dividend or other distribution, payable in
cash, stock, property or otherwise, with respect to any of its capital stock,
except for such declarations, set asides, and payment of cash dividends declared
at times and in amounts consistent with the Company's current dividend policy
($.06 per Share per quarter); (d) reclassify, combine, split, subdivide or
redeem, purchase or otherwise acquire, directly or indirectly, any of its
capital stock; (e) (i) acquire (including, without limitation, by merger,
consolidation, or acquisition of stock or assets or any other business
combination) any corporation, partnership, other business organization or any
division thereof or any material amount of assets other than in the ordinary
course of business; (ii) incur any indebtedness for borrowed money or issue any
debt securities or assume, guarantee or endorse, pledge in respect of or
otherwise as an accommodation become responsible for the obligations of any
person, or make any loans or advances, except in the ordinary course of business
and consistent with past practice; (iii) enter into any contract or agreement
other than contracts or agreements entered into in the ordinary course of
business, consistent with past practice and which require payments by the
Company or its Subsidiaries in an aggregate amount of less than U.S. $250,000;
(iv) terminate, cancel or request any material change in, or agree to any
material change in, any of certain specified material contracts and with respect
to all other material contracts, except in the ordinary course of business
consistent with past practice; (v) authorize any single capital expenditure
(excluding software development activity) which is in excess of U.S. $250,000 or
capital expenditures which are, in the aggregate, in excess of U.S. $1,000,000
for the Company and its Subsidiaries taken as a whole; or (vi) enter into or
amend any contract, agreement, commitment or arrangement with respect to any
matter described in this clause (e); (f) increase the compensation payable or to
become payable to its officers or employees, except for increases in accordance
with past practices in salaries or wages of employees of the Company or any
Subsidiary who are not officers of the Company, or grant any severance or
termination pay to, or enter into any employment or severance agreement with,
any director, officer or other employee of the Company or any Subsidiary, or
establish, adopt, enter into or amend any collective bargaining, bonus, profit
sharing, thrift, compensation, stock option, restricted stock, pension,
retirement, deferred compensation, employment, termination, severance or other
plan, agreement, trust, fund, policy or arrangement for the benefit of any
director, officer or employee or circulate to any employee any details of any
proposal to adopt or amend any such plan; (g) take any action, other than
reasonable and usual actions in the ordinary course of business and consistent
with past practice, with respect to accounting policies or procedures
(including, without limitation, procedures with respect to the payment of
accounts payable and collection of accounts receivable); (h) make any tax
election or settle or compromise any material federal, state, local or foreign
income tax liability;
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<PAGE> 21
(i) pay, discharge or satisfy any claim, liability or obligation (absolute,
accrued, asserted or unasserted, contingent or otherwise), other than the
payment, discharge or satisfaction, in the ordinary course of business and
consistent with past practice, of liabilities reflected or reserved against on
the Company's consolidated balance sheet included in its Quarterly Report on
Form 10-Q for the period ended February 28, 1997 or subsequently incurred in the
ordinary course of business and consistent with past practice; or (j) settle or
comprise any pending or threatened suit, action or claim that is material or
which relates to any of the transactions contemplated by the Merger Agreement;
or (k) announce an intention, enter into any formal or informal agreement, or
otherwise make a commitment, to do any of the foregoing or any action that would
result in any of the conditions to the Offer not being satisfied (other than as
contemplated by the Merger Agreement).
Designation of Directors. The Merger Agreement provides that, promptly
upon the purchase by Purchaser of Shares pursuant to the Offer, and from time to
time thereafter, Purchaser shall be entitled to designate up to such number of
directors, rounded up to the next whole number, on the Board as shall give
Purchaser representation on the Board equal to the product of the total number
of directors on the Board (giving effect to the directors elected pursuant to
the following sentence) multiplied by the percentage that the aggregate number
of Shares beneficially owned by Purchaser or any affiliate of Purchaser at such
time bears to the total number of Shares then outstanding. Pursuant to the
Merger Agreement, the Company agrees, at such time of purchase, to promptly take
all actions necessary to cause Purchaser's designees to be elected as directors
of the Company, including increasing the size of the Board or securing the
resignations of incumbent directors or both. The Merger Agreement also provides
that, at such times, the Company shall use its best efforts to cause persons
designated by Purchaser to constitute the same percentage as persons designated
by Purchaser shall constitute of the Board of (a) each committee of the Board
(some of whom may be required to be independent as required by applicable law or
requirements of the New York Stock Exchange), (b) each board of directors of
each Subsidiary and (c) each committee of each such board, in each case only to
the extent permitted by applicable law. Notwithstanding the foregoing, the
Merger Agreement provides that until the time Purchaser acquires a majority of
the then outstanding Shares on a fully diluted basis, the Company shall use its
best efforts to ensure that all the members of the Board and each committee of
the Board and such boards and committees of the Subsidiaries as of the date
thereof who are not employees of the Company shall remain members of the Board
and of such boards and committees.
Amendments. The Merger Agreement provides that following the election or
appointment of Parent's designees in accordance with the immediately preceding
paragraph and prior to the Effective Time, any amendment of the Merger Agreement
or the Articles of Incorporation or Bylaws of the Company, any termination of
the Merger Agreement by the Company, any extension by the Company of the time
for the performance of any of the obligations or other acts of Parent or
Purchaser or any waiver of any of the Company's rights thereunder will require
the concurrence of a majority of those directors of the Company then in office
other than directors designated by Purchaser or directors who are employees of
the Company or, if no such directors are then in office, no such amendment,
termination, extension or waiver shall be effected which is materially adverse
to the holders of Shares (other than Parent and its subsidiaries).
Access to Information; Confidentiality. Pursuant to the Merger Agreement,
from the date of the Merger Agreement to the consummation of the Offer, the
Company agreed to, and to cause its Subsidiaries and the officers, directors,
employees, auditors and agents of the Company and its Subsidiaries to, afford
the officers, employees and agents of Parent and Purchaser complete access at
all reasonable times to the officers, employees, agents, properties, offices,
plants and other facilities, books and records of the Company and each
Subsidiary and to furnish Parent and Purchaser with all financial, operating and
other data and information as Parent or Purchaser, through its officers,
employees or agents, may reasonably request. Parent and Purchaser agreed in the
Merger Agreement to keep such information confidential in accordance with the
confidentiality agreement, dated October 2, 1996 (the "Confidentiality
Agreement"), between Parent and the Company. Pursuant to the Merger Agreement,
the Company, Parent and Purchaser agreed, from the date of the Merger Agreement
to the completion of the Offer, to the extent permitted by applicable law, to
cooperate reasonably with each other to effect an orderly transition including,
without limitation, with respect to communications with the Company's customers
and employees.
No Solicitation of Transactions. The Company has agreed that neither the
Company nor any Subsidiary shall, directly or indirectly, through any officer,
director, agent or otherwise, solicit, initiate or encourage the
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<PAGE> 22
submission of any proposal or offer from any person relating to any acquisition
or purchase of all or any material portion of the assets of, or any equity
interest in, the Company or any material Subsidiary or any business combination
with the Company or any material Subsidiary or participate in any negotiations
regarding, or furnish to any other person any information with respect to, or
otherwise cooperate in any way with, or assist or participate in, facilitate or
encourage, any effort or attempt by any other person to do or seek any of the
foregoing. Notwithstanding the foregoing, the Merger Agreement permits the Board
to furnish information to, or enter into discussions or negotiations with, any
person in connection with an unsolicited (from the date of the Merger Agreement)
proposal in writing by such person to acquire the Company pursuant to a merger,
consolidation, share exchange, business combination or other similar transaction
or to acquire all or substantially all of the assets of the Company or any of
its Subsidiaries, if, and only to the extent that, (a) the Board, after
consultation with independent legal counsel (which may include its regularly
engaged independent legal counsel), determines in good faith that such action is
required for the Board to comply with its fiduciary duties to stockholders
imposed by Nevada Law and (b) prior to furnishing such information to, or
entering into discussions or negotiations with, such person, the Company uses
its reasonable best efforts to obtain from such person an executed
confidentiality agreement on terms no less favorable to the Company than those
contained in the Confidentiality Agreement (or obtained a confidentiality
agreement prior to the date of the Merger Agreement). Pursuant to the Merger
Agreement, the Company agreed to immediately cease and cause to be terminated
all existing discussions or negotiations with any parties conducted prior to the
date of the Merger Agreement with respect to any of the foregoing. Moreover, the
Company agreed (x) to notify Parent promptly if any such proposal or offer, or
any inquiry or contact with any person with respect thereto, is made and (y) not
to release any third party from, or waive any provision of, any confidentiality
or, subject to the fiduciary duties of the Board, standstill agreement to which
the Company is or may become a party.
Treatment of Stock Options; Deferred Director Fees. The Merger Agreement
provides that each outstanding option to purchase Shares granted under the
Company's 1978 Stock Option Plan, 1988 Stock Option Plan, 1988 Director
Discounted Stock Option Plan, 1991 Director Discounted Stock Option Plan and
1993 Performance Incentive Plan (the "Stock Option Plans") shall, immediately
prior to the Effective Time, become exercisable regardless of the vesting
schedule contained in any stock option agreement or in any of the Stock Option
Plans and shall be canceled at the Effective Time. In the event that any
unexercised option is canceled by the Company, each holder of a canceled option
shall be entitled to receive, at the Effective Time or as soon as practicable
thereafter, from the Company, in consideration for the cancellation of such
option, an amount (subject to any applicable withholding tax) in cash equal to
the product of (a) the number of Shares previously subject to such option and
(b) the excess, if any, of the Merger Consideration over the exercise price per
Share previously subject to such option. The Merger Agreement also provides
that, at the Effective Time, the Company shall pay to each individual who served
as a director of the Company prior to the Effective Time any and all deferred
director fees owed to such individual.
Indemnification and Insurance. Pursuant to the Merger Agreement, the
Articles of Incorporation and Bylaws of the Surviving Corporation are required
to contain provisions no less favorable with respect to indemnification than are
set forth in Article VI of the Bylaws of the Company, which provisions shall not
be amended, repealed or otherwise modified for a period of six years from the
Effective Time in any manner that would affect adversely the rights thereunder
of individuals who at any time to and including the Effective Time were
directors, officers, employees, fiduciaries or agents (collectively
"Representatives") of the Company in respect of acts or omissions occurring at
or prior to the Effective Time (including, without limitation, the matters
contemplated by the Merger Agreement), unless such modification shall be
required by law. Moreover, from and after the Purchaser's Election Date, the
Merger Agreement prohibits the amendment, repeal or other modification of the
indemnification and advancement of expenses provisions of Article VI of the
Bylaws of the Company or the Articles of Incorporation or Bylaws of any of its
Subsidiaries in any manner that would adversely affect the rights thereunder of
Representatives of the Company or its Subsidiaries in respect of actions or
omissions occurring at or prior to the Effective Time (including, without
limitation, the matters contemplated by the Merger Agreement), unless such
modification is required by law.
The Merger Agreement also provides that prior to the Effective Time, the
Company shall, and after the Effective Time, the Surviving Corporation shall, to
the fullest extent permitted under applicable law, indemnify and hold harmless,
each present and former Representative of the Company and each Subsidiary
(collectively, the
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<PAGE> 23
"Indemnified Parties") against all costs and expenses (including reasonable
attorneys' fees), judgments, fines, losses, claims, damages, liabilities and
settlement amounts paid in connection with any claim, action, suit, proceeding
or investigation (whether arising before or after the Effective Time), whether
civil, criminal, administrative or investigative, arising out of or pertaining
to any action or omission in their capacity as a Representative, whether
occurring before or after the Effective Time, for a period of six years after
the date of the Merger Agreement (and shall pay any expenses in advance of the
final disposition of any such action or proceeding to each Indemnified Party to
the fullest extent permitted under Nevada Law, and, with respect to Indemnified
Parties who are or were directors or officers of the Company, upon receipt from
the Indemnified Party to whom expenses are advanced of any undertaking to repay
such advances required under Nevada Law).
Pursuant to the Merger Agreement, the Company, from and after the date of
the Merger Agreement and to and including the Effective Time, and the Surviving
Corporation, from the Effective Time until six years thereafter, each agreed to
use its best efforts to maintain in effect, if available, the current directors'
and officers' liability insurance policies 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 not materially less
favorable) with respect to matters occurring on or prior to the Effective Time;
provided, however, that in no event shall the Surviving Corporation be required
to expend more than an amount per year equal to 250% of current annual premiums
paid by the Company for such insurance (which annual premiums the Company has
represented in the Merger Agreement to be approximately $110,000).
The Merger Agreement provides that in the event the Company or the
Surviving Corporation or any of their respective successors or assigns (a)
consolidates with or merges into any other person and shall not be the
continuing or surviving corporation or entity of such consolidation or merger or
(b) transfers all or substantially all of its properties and assets to any
person, then, and in each such case, proper provision shall be made so that the
successors and assigns of the Company or the Surviving Corporation, as the case
may be, or at Parent's option, Parent, shall assume the obligations described
above. The Merger Agreement provides that the obligations described above shall
survive the Effective Time.
Employee Benefits. Pursuant to the Merger Agreement, for a period of one
year from the Effective Time, Parent has agreed to, or to cause the Company or
the Surviving Corporation to, maintain the employee benefit plans (other than
the Stock Option Plans) which the Company maintains for the benefit of, or which
are open to, a majority of the employees of the Company on the terms in effect
on the date of the Merger Agreement, or such other plans, arrangements or
programs as will provide employees with benefits that in the aggregate are
substantially equivalent to, and no less favorable than, those provided under
the employee benefit plans (other than the Stock Option Plans) as in effect on
the date of the Merger Agreement.
In addition, Parent shall, or shall cause the Surviving Corporation to,
assume and agree to perform certain specified agreements (the "Change of Control
Agreements") in the same manner and to the same extent that the Company is
required to perform such agreements. Under the Change of Control Agreements,
each of certain key employees of the Company is entitled to receive certain
benefits from the Company if a "Change in Control" (defined to include the
acquisition by any third party of 40% or more of the combined voting power of
the Company's then outstanding securities) occurs and if the covered employee's
employment is, within two years following the Change in Control, either
terminated by the Company without cause or the covered employee resigns from the
employ of the Company for any of certain specified reasons, including, among
other things, the assignment to the covered employee of any duties inconsistent
in any respect with the covered employee's position, a reduction by the Company
in the covered employee's base salary, and in the case of certain of such key
employees, the voluntary termination of employment by the covered employee
during a specified period following any Change in Control.
The benefits to which covered employees are entitled in the foregoing
circumstances include the payment to the covered employee, in a lump sum in cash
within 30 days after the date of termination, of a severance payment in an
amount equal to 100% of the covered employee's annual compensation, certain
outplacement services and, in most instances, the continuation of certain
employee benefits. In addition, in the foregoing circumstances each covered
employee will, for a period of two years, be obligated to consult with the
Company and not to compete with the Company, in connection with which the
Company must pay the covered employee 100% (200% in the
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case of certain of such key employees) of the covered employee's annual
compensation. The Change of Control Agreements are described more completely in
the Schedule 14D-9 being mailed to stockholders herewith.
Representations and Warranties. The Merger Agreement contains various
representations and warranties of the parties thereto, including representations
by the Company as to the Company's filings with the Commission, consolidated
financial statements of the Company and its Subsidiaries, the absence of certain
changes or events concerning the Company's business, compliance with law and
certain contracts, litigation, insurance, licenses and permits, employee benefit
plans, labor matters, ownership of assets, trademarks, patents and copyrights,
environmental matters, brokers, taxes, absence of certain business practices and
letters of credit, surety bonds and guarantees.
The Company also represented in the Merger Agreement that (a) the Board has
unanimously (i) 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 stockholders of the Company, (ii) approved and
adopted the Merger Agreement and the transactions, including, without
limitation, the Offer, the purchase of Shares pursuant to the Offer and the
Merger, contemplated thereby, (iii) taken all action to redeem the rights issued
to stockholders pursuant to the Rights Agreement dated September 16, 1987
between the Company and Harris Trust and Savings Bank, (iv) amended the
Company's Bylaws to provide that the provisions of Sections 78.378 to 78.3793 of
the Nevada Law shall not apply to the Company, and (v) recommended that the
stockholders of the Company accept the Offer and approve and adopt the Merger
Agreement and the transactions, including, without limitation, the Merger,
contemplated thereby and (b) approval of the Merger Agreement by the Board
constitutes approval of a "memorandum of understanding" setting forth the
principal terms of a transaction governed by, and within the meaning of, Article
Eleventh of the Company's Articles of Incorporation. Approval by the Board of
such a "memorandum of understanding" renders inapplicable to the Merger certain
provisions in the Company's Articles of Incorporation that would otherwise
require the approval of the Merger by the holders of not less than four-fifths
of the outstanding Shares. See Section 15.
Parent represented and warranted to the Company in the Merger Agreement,
among other things, that Parent has, or has commitments to obtain, sufficient
funds to permit Purchaser to acquire all the outstanding Shares in the Offer and
the Merger, evidence of which has been provided to the Company.
Conditions to the Merger. Under the Merger Agreement, 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 and only the
following conditions: (a) the Merger Agreement and the transactions contemplated
by the Merger Agreement shall have been approved and adopted by the affirmative
vote of the stockholders of the Company (unless the vote of the stockholders is
not required by Nevada Law); (b) any waiting period (and any extension thereof)
applicable to the consummation of the Merger under the HSR Act shall have
expired or been terminated; (c) no foreign, United States or state governmental
authority or other agency or commission or foreign, United States or state court
of competent jurisdiction shall have enacted, issued, promulgated, enforced or
entered any law, rule, regulation, executive order, decree, injunction or other
order (whether temporary, preliminary or permanent) which is then in effect and
has the effect of making the acquisition of Shares by Parent or Purchaser or any
affiliate of either of them or the consummation of the Merger illegal or
otherwise restricting, preventing or prohibiting the consummation of the
transactions contemplated by the Merger Agreement; and (d) Purchaser or its
permitted assignee shall have purchased all Shares validly tendered and not
withdrawn pursuant to the Offer; provided, however, that neither Parent nor
Purchaser shall be entitled to assert the failure of this condition if, in
breach of the Merger Agreement or the terms of the Offer, Purchaser fails to
purchase any Shares validly tendered and not withdrawn pursuant to the Offer.
Termination. The Merger Agreement may be terminated and the Merger and the
other transactions contemplated by the Merger Agreement may be abandoned at any
time prior to the Effective Time, notwithstanding any requisite approval and
adoption of the Merger Agreement and the transactions contemplated thereby by
the stockholders of the Company: (a) by mutual written consent duly authorized
by the Boards of Directors of Parent, Purchaser and the Company prior to
Purchaser's Election Date; (b) by Parent, Purchaser or the Company if (i) the
Effective Time shall not have occurred on or before December 31, 1997 (so long
as the party seeking such termination has not failed to fulfill any obligation
under the Merger Agreement, which failure has been the cause of, or resulted in,
the failure of the Effective Time to occur on or before such date) or (ii) any
court of
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competent jurisdiction in the United States or other governmental authority
shall have issued an order, decree, ruling or taken any other action
restraining, enjoining or otherwise prohibiting the Merger and such order,
decree, ruling or other action shall have become final and nonappealable; (c) by
Parent, upon approval of its Board of Directors, if (i) due to an occurrence or
circumstance that would result in a failure to satisfy any condition to the
Offer, Purchaser shall have (A) failed to commence the Offer within 30 days
following the date of the Merger Agreement, (B) terminated the Offer without
having accepted any Shares for payment thereunder or (C) failed to pay for
Shares pursuant to the Offer within 90 days following the commencement of the
Offer; unless such action or inaction under (A), (B) or (C) shall have been
caused by or resulted from the failure of Parent or Purchaser to perform in any
material respect any material covenant or agreement of either of them contained
in the Merger Agreement or the material breach by Parent or Purchaser of any
material representation or warranty of either of them contained in the Merger
Agreement or (ii) prior to the purchase of Shares pursuant to the Offer, the
Board or any committee thereof shall have withdrawn or modified in a manner
adverse to Purchaser or Parent its approval or recommendation of the Offer, the
Merger Agreement, the Merger or any other transaction contemplated by the Merger
Agreement or shall have recommended another merger, consolidation, business
combination with, or acquisition of, the Company or its assets or another tender
offer or exchange offer for Shares, or shall have resolved to do any of the
foregoing; or (d) by the Company, upon approval of the Board, if (i) due to an
occurrence or circumstance that would result in a failure to satisfy any
condition to the Offer, Purchaser shall have (A) failed to commence the Offer
within 30 days following the date of this Agreement, (B) terminated the Offer
without having accepted any Shares for payment thereunder or (C) failed to pay
for Shares pursuant to the Offer within 90 days following the commencement of
the Offer, unless such action or inaction under (A), (B), and (C) shall have
been caused by or resulted from the failure of the Company to perform in any
material respect any material covenant or agreement of it contained in the
Merger Agreement or the material breach by the Company of any material
representation or warranty of it contained in the Merger Agreement or (ii) prior
to the purchase of Shares pursuant to the Offer, the Board shall have withdrawn
or modified in a manner adverse to Purchaser or Parent its approval or
recommendation of the Offer, the Merger Agreement, the Merger or any other
transaction contemplated by the Merger Agreement in order to approve the
execution by the Company of a definitive agreement providing for the acquisition
of the Company or any of its assets by a sale, merger or other business
combination or in order to approve a tender offer or exchange offer for Shares
by a third party, in either case, as the Board determines in good faith that
such action is required for the Board to comply with its fiduciary duties to
stockholders, after consultation with its independent legal counsel and
financial advisers, and is on terms more favorable to the Company's stockholders
than the Offer and the Merger taken together; provided, however, that such
termination under clause (ii) above shall not be effective until the Company has
made payment to Parent of the Fee (as hereinafter defined) required to be paid
as described below and has deposited with a mutually acceptable escrow agent
U.S. $3.0 million for reimbursement to Parent and Purchaser of Expenses (as
hereinafter defined).
In the event of the termination of the Merger Agreement, the Merger
Agreement provides that it shall forthwith become void, and there shall be no
liability on the part of any party hereto, except under the provisions of the
Merger Agreement related to fees and expenses described below and
confidentiality and except for liability of any party for breach of the Merger
Agreement prior to its termination.
Fees and Expenses. The Merger Agreement provides that in the event that
(a) any person (including, without limitation, the Company or any affiliate
thereof), other than Parent or any affiliate of Parent, shall have become the
beneficial owner of more than 25% of the then outstanding Shares and the Merger
Agreement shall have been terminated and within 12 months of such termination a
Third Party Acquisition (as defined hereinafter) shall occur; or (b) any person
shall have commenced, publicly proposed or communicated to the Company a
proposal that is publicly disclosed for a tender or exchange offer for 25% or
more (or which, assuming the maximum amount of securities that could be
purchased, would result in any person beneficially owning 25% or more of the
then outstanding Shares) or otherwise for the direct or indirect acquisition of
the Company or all or substantially all of its assets for per Share
consideration having a value greater than the Per Share Amount and (i) the Offer
shall have remained open for at least 20 business days, (ii) the Minimum
Condition shall not have been satisfied and (iii) the Merger Agreement shall
have been terminated; or (c) the Merger Agreement is terminated pursuant to the
termination provisions described in clause (c)(ii) or (d)(ii) of the second
preceding paragraph, then, in any such event, the Company shall pay Parent
promptly (but in no event later than one
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business day after the first of such events shall have occurred) a fee of U.S.
$10.0 million (the "Fee"), which amount shall be payable in immediately
available funds, plus all Expenses (as hereinafter defined).
The Merger Agreement also provides that so long as neither Parent nor
Purchaser is in material breach of its obligations under the Merger Agreement,
if (a) the Merger Agreement is terminated as described in clause (c) of the
third preceding paragraph due to the material breach of the Company's
obligations under the Merger Agreement or (b) the Merger Agreement is terminated
as described in clause (c) of the third preceding paragraph because of the
failure of representations and warranties of the Company to be true and correct,
which failures in the aggregate have or are reasonably likely to have any change
or effect that is or is reasonably likely to be materially adverse to the
business, operations, condition (financial or otherwise), assets or liabilities
(including, without limitation, contingent liabilities) of the Company and its
Subsidiaries taken as a whole (a "Material Adverse Effect"), then, in either
case (a) or (b), the Company shall promptly reimburse Parent and Purchaser for
all Expenses.
"Expenses" is defined in the Merger Agreement to mean all out-of-pocket
expenses and fees up to U.S. $3.0 million in the aggregate (including, without
limitation, fees and expenses payable to all banks, investment banking firms,
other financial institutions and other persons and their respective agents and
counsel for arranging, committing to provide or providing any financing for the
transactions contemplated by the Merger Agreement or structuring such
transactions and all fees of counsel, accountants, experts and consultants to
Parent and Purchaser, and all printing and advertising expenses) actually
incurred or accrued by either of them or on their behalf in connection with the
transactions contemplated by the Merger Agreement, including, without
limitation, the financing thereof, and actually incurred or accrued by banks,
investment banking firms, other financial institutions and other persons and
assumed by Parent and Purchaser in connection with the negotiation, preparation,
execution and performance of the Merger Agreement, the structuring and financing
of the transactions contemplated by the Merger Agreement and any financing
commitments or agreements relating thereto. In the event that the Company shall
fail to pay the Fee or any Expenses when due, the term "Expenses" is deemed to
include the costs and expenses actually incurred or accrued by Parent and
Purchaser (including, without limitation, fees and expenses of counsel) in
connection with the collection under and enforcement of the fees and expenses
provision of the Merger Agreement, together with interest on such unpaid Fee and
Expenses, commencing on the date that the Fee or such Expenses became due, at a
per annum rate equal to the rate of interest publicly announced by Morgan
Guaranty Trust Company of New York, from time to time, in the City of New York,
as such bank's prime rate plus 1.00 percentage point.
"Third Party Acquisition" is defined in the Merger Agreement to mean the
occurrence of any of the following events: (i) the acquisition of the Company by
merger, consolidation or other business combination transaction by any person
other than Parent, Purchaser or any affiliate thereof (a "Third Party"); (ii)
the acquisition by any Third Party of all or substantially all of the assets of
the Company and its Subsidiaries, taken as a whole; (iii) the acquisition by a
Third Party of 50% or more of the outstanding Shares whether by tender offer,
exchange offer or otherwise; (iv) the adoption by the Company of a plan of
liquidation or the declaration or payment of an extraordinary dividend; or (v)
the repurchase by the Company or any of its Subsidiaries of 50% or more of the
outstanding Shares.
Except as set forth above, all costs and expenses incurred by Parent,
Purchaser and the Company in connection with the Merger Agreement and the
transactions contemplated by the Merger Agreement shall be paid by the party
incurring such expenses, whether or not any such transaction is consummated.
Confidentiality Agreement. The following is a summary of the
Confidentiality Agreement, a copy of which has been filed as an Exhibit to the
Schedule 14D-1 filed by Purchaser and Parent with the Commission in connection
with the Offer. Such summary is qualified in its entirety by reference to the
Confidentiality Agreement.
On October 2, 1996, Parent entered into the Confidentiality Agreement with
the Company. Under the Confidentiality Agreement, Parent agreed to use
information furnished by the Company or gathered by Parent by inspection of the
Company and its Subsidiaries that is not otherwise generally available to the
public (other than as a result of disclosure by Parent or its representatives)
(the "Evaluation Materials") exclusively for the purpose of evaluating an
acquisition transaction with the Company. In addition, Parent agreed not to
disclose any of the
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<PAGE> 27
Evaluation Materials other than under certain circumstances. Under the
Confidentiality Agreement, Parent agreed that for a period of two years from the
date of the Confidentiality Agreement neither it nor any of its affiliates would
in any manner, directly or indirectly: (a) effect or seek, offer or propose
(whether publicly or otherwise) to effect, or cause or participate in or in any
way assist any other person to effect or seek, offer or propose (whether
publicly or otherwise) to effect or participate in, (i) any acquisition of any
securities (or beneficial ownership thereof) or assets of the Company; (ii) any
tender or exchange offer, merger or other business combination involving the
Company; (iii) any recapitalization, restructuring, liquidation, dissolution or
other extraordinary transaction with respect to the Company; or (iv) any
"solicitation" of "proxies" (as such terms are used in the proxy rules of the
Commission) or consents to vote any voting securities of the Company; (b) form,
join or in any way participate in a "group" (as defined under the Exchange Act);
(c) otherwise act, alone or in concert with others, to seek to control or
influence the management, Board of Directors or policies of the Company, (d)
take any action which might force the Company to make a public announcement
regarding any of the types of matters set forth in (a) above; or (e) enter into
any discussions or arrangements with any third party with respect to any of the
foregoing. Parent also agreed under the Confidentiality Agreement that for a
period of one year from the date of the Confidentiality Agreement none of its
employees who gain access to the Evaluation Material and no employee resident in
its Charlotte, North Carolina corporate office directly or indirectly would
solicit to employ any of the current officers or employees of the Company
without obtaining the prior written consent of the Company.
Fee Agreement. The following is a summary of the letter agreement dated
June 20, 1997, between Parent and the Company (the "Fee Agreement"), a copy of
which has been filed as an Exhibit to the Schedule 14D-1 filed by Purchaser and
Parent with the Commission in connection with the Offer. Such summary is
qualified in its entirety by reference to the Fee Agreement.
Parent and the Company entered into the Fee Agreement on June 20, 1997,
which attached as an exhibit a draft copy of the Merger Agreement. Pursuant to
the Fee Agreement, Parent represented that it had completed its due diligence
investigation with respect to the Company and its assets, properties, claims,
liabilities and business, that Parent was satisfied with the results of such
investigation, that Parent had scheduled a meeting of its Board of Directors for
Wednesday, June 25, 1997 to consider approval of the Merger Agreement, and that
management of Parent would recommend that its Board approve the Merger
Agreement. The Company represented that it had scheduled a meeting of the Board
for not later than Tuesday, June 24, 1997, to consider approval of the Merger
Agreement, and that management of the Company would recommend that the Board
approve the Merger Agreement.
Pursuant to the Fee Agreement, the Company agreed that, in the event (i)
the Board did not approve the Merger Agreement on or before June 25, 1997, (ii)
an authorized officer of the Company did not execute and deliver the Merger
Agreement on or before June 25, 1997, or (iii) management of the Company
rescinded its agreement to the Merger Agreement prior to Parent's execution
thereof, then the Company would pay promptly to Parent, as liquidated damages, a
fee of $10,000,000 (the "Fee") plus all Expenses (as defined in the Merger
Agreement) up to a maximum of $3,000,000. The Fee Agreement also provides that,
notwithstanding the foregoing, the Fee Agreement would terminate without
liability accruing to either party if (a) the Board of Directors of Parent shall
not have approved the Merger Agreement by 11:59 p.m., Eastern Daylight Savings
Time on June 25, 1997, or (ii) an authorized officer of Parent shall not have
executed and delivered the Merger Agreement by 11:59 p.m., Eastern Daylight
Savings Time on such date. In the event either of such conditions were not
satisfied, the Company would have no obligation to pay the Fee or Expenses.
11. PURPOSE OF THE OFFER; PLANS FOR THE COMPANY AFTER THE OFFER AND THE
MERGER.
Purpose of the Offer. The purpose of the Offer and the Merger is for
Parent to acquire control of, and the entire equity interest in, the Company.
Upon consummation of the Merger, the Company will become an indirect wholly
owned subsidiary of Parent. The Offer is being made pursuant to the Merger
Agreement.
In the Merger Agreement, the Company has agreed, unless not required under
Nevada Law, to take all action necessary to convene a meeting of its
stockholders for the purpose of considering and taking action on the Merger
Agreement and the transactions contemplated thereby. Parent and Purchaser have
agreed that all Shares owned by
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them and their subsidiaries will be voted in favor of the Merger Agreement and
the transactions contemplated thereby.
If Purchaser purchases Shares pursuant to the Offer, the Merger Agreement
provides that Parent shall be entitled to designate representatives to serve on
the Company's Board of Directors in proportion to Purchaser's ownership of
Shares following such purchase. See Section 10. Purchaser expects that such
representation would permit Purchaser to exert substantial influence over the
Company's conduct of its business and operations.
In addition, under Nevada Law, the approval of the Board and the
affirmative vote of the holders of a majority of the outstanding Shares are
currently required to approve and adopt the Merger. Nevada Law has been amended,
effective October 1, 1997, to permit a Nevada corporation owning 90% or more of
the outstanding shares of another Nevada corporation to merge such partially or
wholly owned subsidiary into itself without the approval of the holders of the
subsidiary's stock. Thus, if Purchaser acquires 90% or more of the Shares
pursuant to the Offer and the Merger is restructured (as permitted pursuant to
the Merger Agreement) to provide for the merger of the Company with and into
Purchaser with the Purchaser surviving as the Surviving Corporation, no
affirmative vote of the holders of Shares would be required if the Effective
Time occurs after October 1, 1997.
Rights of Dissent; Going Private Transactions. Upon consummation of the
Merger, if, as of the record date fixed to determine the stockholders of the
Company entitled to receive notice of and to vote at the meeting of stockholders
of the Company to act upon the Merger, Shares are neither (i) listed on a
national securities exchange or designated as a national market system security
on an interdealer quotation system by the National Association of Securities
Dealers, Inc. (the "NASD") nor (ii) held of record by more than 2,000 holders,
holders of Shares who do not vote in favor of the Merger and who comply with
applicable statutory procedures under Nevada Law will be entitled to receive a
judicial determination and payment of the "fair value" (excluding any element of
value arising from the accomplishment or expectation of the Offer and Merger) of
their Shares (subject to certain exceptions). The value so determined could be
the same as, or more or less than, the price per Share offered pursuant to the
Offer or proposed to be paid in the Merger. However, if, as of such record date,
the Shares continue to be listed on the New York Stock Exchange, no rights of
dissent will be available to holders of the Shares.
The Commission has adopted Rule 13e-3 under the Exchange Act, which is
applicable to certain "going private" transactions and which may under certain
circumstances be applicable to the Merger or another business combination
following the purchase of Shares pursuant to the Offer in which Purchaser seeks
to acquire the remaining Shares not held by it. Purchaser believes, however,
that if the Merger is consummated within one year of the purchase of Shares
pursuant to the Offer, Rule 13e-3 will not be applicable to the Merger.
Purchaser believes that if the Merger is not consummated within one year of its
purchase of Shares pursuant to the Offer, Rule 13e-3 may be applicable to the
Merger. Rule 13e-3 requires, among other things, that certain financial
information concerning the Company and certain information relating to the
fairness of the proposed transaction and the consideration offered to minority
stockholders in such transaction be filed with the Commission and disclosed to
stockholders prior to consummation of the transaction.
Plans for the Company. It is currently expected that, following
consummation of the Offer, initially 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
review of the Company's business, operations, capitalization and management with
a view to maximizing the Company's potential in conjunction with Parent's
businesses. It is expected that the business and operations of the Company would
form an important part of Parent's future business plans.
Except as indicated in this Offer to Purchase, Parent does not have any
present plans or proposals that relate to or would result in an extraordinary
corporate transaction, such as a merger, reorganization or liquidation,
involving the Company or any Subsidiary, a sale or transfer of a material amount
of assets of the Company or any Subsidiary or any material change in the
Company's capitalization or dividend policy or any other material
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changes in the Company's corporate structure or business, or the composition of
the Board or the Company's management.
12. DIVIDENDS AND DISTRIBUTIONS. The Merger Agreement provides that the
Company shall not, between the date of the Merger Agreement and the Effective
Time, without the prior written consent of Parent, (a) issue, sell, pledge,
dispose of, grant, encumber, or authorize the issuance, sale, pledge,
disposition, grant or encumbrance of any shares of capital stock of any class of
the Company or any Subsidiary, or any options, warrants, convertible securities
or other rights of any kind to acquire any shares of such capital stock, or any
other ownership interest (including, without limitation, any phantom interest),
of the Company or any Subsidiary (except for the issuance of a maximum of
696,049 Shares issuable pursuant to employee and director stock options
outstanding on the date thereof), (b) declare, set aside, make or pay any
dividend or other distribution, payable in cash, stock, property or otherwise,
with respect to any of its capital stock, except for such declarations, set
asides, and payment of cash dividends declared at times and in amounts
consistent with the Company's current dividend policy ($.06 per Share per
quarter) or (c) reclassify, combine, split, subdivide or redeem, purchase or
otherwise acquire, directly or indirectly, any of its capital stock. See Section
10. If, however, the Company should, during the pendency of the Offer, (i)
split, combine or otherwise change the Shares or its capitalization, (ii)
acquire or otherwise cause a reduction in the number of outstanding Shares or
(iii) issue or sell any additional Shares (other than pursuant to outstanding
employee and director options, shares of any other class or series of capital
stock, other voting securities or any securities convertible into, or options,
rights, or warrants, conditional or otherwise, to acquire, any of the foregoing,
then, without prejudice to Purchaser's rights under Section 14, Purchaser may
(subject to the provisions of the Merger Agreement) make such adjustments to the
purchase price and other terms of the Offer (including the number and type of
securities to be purchased) as it deems appropriate to reflect such split,
combination or other change, acquisition, reduction, issuance or sale.
If, on or after June 22, 1997, the Company should declare or pay any
dividend on the Shares or make any other distribution (including the issuance of
additional shares of capital stock pursuant to a stock dividend or stock split,
the issuance of other securities or the issuance of rights for the purchase of
any securities) with respect to the Shares that is payable or distributable to
stockholders of record on a date prior to the transfer to the name of Purchaser
or its nominee or transferee on the Company's stock transfer records of the
Shares purchased pursuant to the Offer then, without prejudice to Purchaser's
rights under Section 14, (i) the purchase price per Share payable by Purchaser
pursuant to the Offer will be reduced (subject to the Merger Agreement) to the
extent any such dividend or distribution is payable in cash and (ii) any
non-cash dividend, distribution or right shall be received and held by the
tendering stockholder for the account of Purchaser and will be required to be
promptly remitted and transferred by each tendering stockholder to the
Depositary for the account of Purchaser, accompanied by appropriate
documentation of transfer. Pending such remittance and subject to applicable
law, Purchaser will be entitled to all the rights and privileges as owner of any
such non-cash dividend, distribution or right and may withhold the entire
purchase price or deduct from the purchase price the amount or value thereof, as
determined by Purchaser in its sole discretion.
13. EFFECT OF THE OFFER ON THE MARKET FOR THE SHARES, NYSE LISTING AND
EXCHANGE ACT REGISTRATION. The purchase of Shares by Purchaser pursuant to the
Offer will reduce the number of Shares that might otherwise trade publicly and
will reduce the number of holders of Shares, which could adversely affect the
liquidity and market value of the remaining Shares held by the public.
Depending upon the number of Shares purchased pursuant to the Offer, the
Shares may no longer meet the requirements of the New York Stock Exchange for
continued listing and may be delisted from the New York Stock Exchange and
deregistered under Section 12(b) of the Exchange Act. Parent intends to cause
the delisting by the New York Stock Exchange and deregistration of the Shares
following consummation of the Offer.
According to published guidelines, the New York Stock Exchange would
consider delisting the Shares if, among other things, the number of holders of
Shares should fall below 400 (or below 1,200, if trading volume falls below
100,000 Shares for the most recent 12 months), the number of publicly held
Shares (exclusive of holdings of officers, directors and their families and
other concentrated holdings of 10 percent or more ("NYSE Excluded Holdings"))
should fall below 600,000 or the aggregate market value of publicly held Shares
(exclusive of NYSE Excluded Holdings) should fall below $8,000,000. The Company
has advised Purchaser that, as of
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June 19, 1997, there were 10,722,931 Shares outstanding, held by approximately
1,700 holders of record. If, as a result of the purchase of Shares pursuant to
the Offer or otherwise, the Shares no longer meet the requirements of the New
York Stock Exchange for continued listing and the listing of the Shares is
discontinued, the market for the Shares could be adversely affected.
If the New York Stock Exchange were to delist the Shares, it is possible
that the Shares would continue to trade on another securities exchange or in the
over-the-counter market and that price or other quotations would be reported by
such exchange or through the Nasdaq Stock Market ("Nasdaq") or other sources.
The extent of the public market therefor and the availability of such quotations
would depend, however, upon such factors as the number of stockholders and/or
the aggregate market value of such securities remaining at such time, the
interest in maintaining a market in the Shares on the part of securities firms,
the possible termination of registration under the Exchange Act as described
below, and other factors. 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
Merger Consideration.
The Shares are currently "margin securities," as such term is defined under
the rules of the Board of Governors of the Federal Reserve System (the "Federal
Reserve Board"), which has the effect, among other things, of allowing banks to
extend credit on the collateral of such securities. Depending upon factors
similar to those described above regarding listing and market quotations,
following the Offer it is possible that the Shares might no longer constitute
"margin securities" for purposes of the margin regulations of the Federal
Reserve Board, in which event such Shares might no longer be eligible as
collateral for loans made by banks.
The Shares are currently registered under the Exchange Act. Registration of
the Shares under the Exchange Act may be terminated upon application of the
Company to the Commission if the Shares are not listed on a national securities
exchange and there are fewer than 300 record holders of the Shares. Termination
of registration of the Shares under the Exchange Act, assuming there are no
other securities of the Company subject to registration, would substantially
reduce the information required to be furnished by the Company to its
stockholders and to the Commission and would make certain provisions of the
Exchange Act, such as the short-swing profit recovery provisions of Section
16(b), the requirement of furnishing a proxy statement in connection with
stockholders' meetings pursuant to Section 14(a), and the requirements of Rule
13e-3 under the Exchange Act with respect to "going private" transactions, no
longer applicable to the Company. Furthermore, if the Purchaser acquires a
substantial number of Shares, the ability of "affiliates" of the Company and
persons holding "restricted securities" of the Company to dispose of such
securities pursuant to Rule 144 or 144A promulgated under the Securities Act of
1933, as amended, may be impaired or eliminated. If registration of the Shares
under the Exchange Act were terminated, the Shares would no longer be "margin
securities" or be eligible for NASDAQ reporting.
It is the present intention of the Parent to seek to cause the Company to
make an application for termination of registration of the Shares under the
Exchange Act as soon as possible following the Offer if the requirements for
termination of registration are met. If registration of the Shares under the
Exchange Act is not terminated prior to the Merger, registration of the Shares
under the Exchange Act will be terminated following the consummation of the
Merger.
14. CERTAIN CONDITIONS OF THE OFFER. Notwithstanding any other provision
of the Offer, Purchaser shall not be required to accept for payment or pay for
any Shares tendered pursuant to the Offer, and may terminate or amend the Offer
and may postpone the acceptance for payment of and payment for Shares tendered,
if (i) the Minimum Condition shall not have been satisfied, (ii) any applicable
waiting period under the HSR Act shall not have expired or been terminated prior
to the expiration of the Offer or (iii) at any time on or after the date of the
Merger Agreement, and prior to the acceptance for payment of Shares, any of the
following conditions shall exist:
(a) there shall have been instituted or be pending any action or
proceeding brought by any governmental, administrative or regulatory
authority or agency, domestic or foreign, before any court or governmental,
administrative or regulatory authority or agency, domestic or foreign, (i)
challenging or seeking to make illegal, materially delay or otherwise
directly or indirectly restrain or prohibit or make
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materially more costly the making of the Offer, the acceptance for payment
of, or payment for, any Shares by Parent, Purchaser or any other affiliate
of Parent pursuant to the Offer, or the consummation of any other
transaction contemplated by the Merger Agreement (collectively, the
"Transactions"), or seeking to obtain material damages in connection with
any such Transaction; (ii) seeking to prohibit or limit materially the
ownership or operation by the Company, Parent or any of their subsidiaries
of all or any material portion of the business or assets of the Company,
Parent or any of their subsidiaries, or to compel the Company, Parent or
any of their subsidiaries to dispose of or hold separate all or any
material portion of the business or assets of the Company, Parent or any of
their subsidiaries, as a result of the Transactions; (iii) seeking to
impose or confirm limitations on the ability of Parent, Purchaser or any
other affiliate of Parent to exercise effectively full rights of ownership
of any Shares, including, without limitation, the right to vote any Shares
acquired by Purchaser pursuant to the Offer, or otherwise on all matters
properly presented to the Company's stockholders, including, without
limitation, the approval and adoption of the Merger Agreement and the
Transactions contemplated thereby; or (iv) seeking to require divestiture
by Parent, Purchaser or any other affiliate of Parent of any Shares;
(b) there shall have been issued any injunction, order or decree by
any court or governmental, administrative or regulatory authority or
agency, domestic or foreign, resulting from any action or proceeding
brought by any person other than any governmental, administrative or
regulatory authority or agency, domestic or foreign, that (i) restrains or
prohibits the making of the Offer or the consummation of any other
Transaction; (ii) prohibits or limits ownership or operation by the
Company, Parent or Purchaser of all or any material portion of the business
or assets of the Company, taken as a whole, Parent or any of their
subsidiaries, or compels the Company, Parent or any of their subsidiaries
to dispose of or hold separate all or any material portion of the business
or assets of the Company, Parent or any of their subsidiaries, in each case
as a result of the Transactions; (iii) imposes limitations on the ability
of Parent or Purchaser to exercise effectively full rights of ownership of
any Shares, including, without limitation, the right to vote any Shares
acquired by Purchaser pursuant to the Offer, or otherwise on all matters
properly presented to the Company's stockholders, including, without
limitation, the approval and adoption of the Merger Agreement and the
Transactions; (iv) requires divestiture by Parent or Purchaser of any
Shares;
(c) there shall have been any action taken, or any statute, rule,
regulation, order or injunction enacted, entered, enforced, promulgated,
amended, issued or deemed applicable to (i) Parent, the Company or any
subsidiary or affiliate of Parent or the Company or (ii) any Transaction,
by any legislative body, court, government or governmental, administrative
or regulatory authority or agency, domestic or foreign, in the case of both
(i) and (ii) other than the routine application of the waiting period
provisions of the HSR Act to the Offer or the Merger, in each case that
results in any of the consequences referred to in clauses (i) through (iv)
of paragraph (b) above;
(d) there shall have occurred any change, condition, event or
development that has a Material Adverse Effect with respect to the Company;
(e) (i) the Board or any committee thereof shall have withdrawn or
modified in a manner adverse to Parent or Purchaser the approval or
recommendation of the Offer, the Merger or the Merger Agreement or approved
or recommended any takeover proposal or any other acquisition of Shares
other than the Offer and the Merger or (ii) the Board or any committee
thereof shall have resolved to do any of the foregoing;
(f) any representation or warranty of the Company in the Merger
Agreement shall not be true and correct with the effect that such failure
of any such representation or warranty to be true and correct, when taken
together with all other such failures of such representations and
warranties to be true and correct, in the aggregate has, or is reasonably
likely to have, a Material Adverse Effect; provided, however, that, for the
purpose of the foregoing condition, in determining whether any such
representation or warranty is true or correct, any qualification as to
materiality or Material Adverse Effect contained in any such representation
and warranty shall be deemed not to apply;
(g) the Company shall have failed to perform in any material respect
any material obligation or to comply in any material respect with any
material agreement or material covenant of the Company to be performed or
complied with by it under the Merger Agreement;
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(h) the Merger Agreement shall have been terminated in accordance with
its terms; or
(i) Purchaser and the Company shall have agreed that Purchaser shall
terminate the Offer or postpone the acceptance for payment of or payment
for Shares thereunder; which, in the sole judgment of Purchaser, in any
such case, and regardless of the circumstances (including any action or
inaction by Parent or any of its affiliates) giving rise to any such
condition, makes it inadvisable to proceed with such acceptance for payment
or payment.
The foregoing conditions are for the sole benefit of Purchaser and Parent
and may be asserted by Purchaser or Parent regardless of the circumstances
giving rise to any such condition or may be waived by Purchaser or Parent in
whole or in part at any time and from time to time in their sole discretion. The
failure by Parent or Purchaser at any time to exercise any of the foregoing
rights shall not be deemed a waiver of any such right; the waiver of any such
right with respect to particular facts and other circumstances shall not be
deemed a waiver with respect to any other facts and circumstances; and each such
right shall be deemed an ongoing right that may be asserted at any time and from
time to time.
15. CERTAIN LEGAL MATTERS AND 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 (see
Section 10), 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
the Subsidiaries, taken as a whole, that 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 that
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. Purchaser does
not currently intend, however, 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 in Section 14 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
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 in this Section 15.
See Section 14.
State Takeover Laws; Antitakeover Provisions in Articles of
Incorporation. The Company is incorporated in Nevada and is subject to the
provisions of the Nevada Law. Pursuant to Sections 78.378 to 78.3793 of the
Nevada Law (the "Nevada Control Share Acquisition Statute"), an "acquiring
person," who acquires a "controlling interest" in an "issuing corporation," may
not exercise voting rights on any "control share" unless such voting rights are
conferred by a majority vote of the disinterested stockholders of the issuing
corporation at a meeting of such stockholders. In the event that the control
shares are accorded full voting rights and the acquiring person acquires control
shares with a majority or more of all the voting power, any stockholder, other
than the acquiring person, who does not vote in favor of authorizing voting
rights for the control shares, is entitled to demand payment for the fair value
of such stockholder's shares, and the corporation must comply with the demand.
For purposes of the provisions under this subsection, "acquiring person" means
any person who, individually or in association with others, acquires or offers
to acquire, directly or indirectly, the ownership of outstanding voting shares
of an issuing corporation sufficient to enable the acquiring person,
individually or in association with others, directly or indirectly, to exercise
(i) one-fifth or more but less than one-third, (ii) one-third or more but less
than a majority, and/or (iii) a majority or more of the voting power of the
issuing corporation in the election of directors. Voting rights must be
conferred by a majority of the outstanding voting shares of disinterested
stockholders as each threshold is reached and/or exceeded.
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<PAGE> 33
"Control share" means those outstanding voting shares of an issuing
corporation which an acquiring person acquires or offers to acquire in an
acquisition or within 90 days immediately preceding the date when the acquiring
person became an acquiring person. "Issuing corporation" means a corporation
that is organized in Nevada, has 200 or more stockholders (at least 100 or whom
are stockholders of record and residents of Nevada) and does business in Nevada
directly or through an affiliated corporation.
The above provisions of the Nevada Control Share Acquisition Statute do not
apply if, before an acquisition is made, the Articles of Incorporation or Bylaws
of the Company in effect on the tenth day following the acquisition of a
controlling interest by an acquiring person provide that said provisions do not
apply. The Company has represented in the Merger Agreement that the Company's
Board of Directors has amended its Bylaws to provide that the provisions of the
Nevada Control Share Acquisition Statute do not apply to the Company.
Sections 78.411 to 78.444 of the Nevada Law (the "Nevada Business
Combination Statute") restrict the ability of a "resident domestic corporation"
to engage in any combination with an "interested stockholder" for three years
following the interested stockholder's date of acquiring the shares that caused
such stockholder to become an interested stockholder, unless the combination or
the purchase of shares by the interested stockholder on the interested
stockholder's date of acquiring the shares that caused such stockholder to
become an interested stockholder is approved by the board of directors of the
resident domestic corporation before that date.
If the combination was not previously approved, the interested stockholder
may effect a combination after the three-year period only if such stockholder
receives approval from a majority of the disinterested shares or the offer meets
certain fair price criteria.
For purposes of the above provisions, "resident domestic corporation" means
a Nevada corporation that has 200 or more stockholders. "Interested stockholder"
means any person, other than the resident domestic corporation or its
subsidiaries, who is (i) the beneficial owner, directly or indirectly, of 10% or
more of the voting power of the outstanding voting shares of the resident
domestic corporation, or (ii) an affiliate or associate of the resident domestic
corporation and, at any time within three years immediately before the date in
question was the beneficial owner, directly or indirectly, of 10% or more of the
voting power of the then outstanding shares of the resident domestic
corporation. The above provisions do not apply to corporations that so elect in
their articles of incorporation or in a charter amendment approved by a majority
of the outstanding voting shares of disinterested stockholders. Such a charter
amendment, however, would not become effective for 18 months after its passage
and could apply only to stock acquisitions occurring after its effective date.
The Company's Articles of Incorporation do not exclude the Company from the
restrictions imposed by such provisions.
The Company has represented in the Merger Agreement that the Company's
Board of Directors has approved the Offer, the Purchaser's purchase of Shares
pursuant to the Offer and the Merger. Accordingly, the Merger will not be
subject to the restrictions under the Nevada Business Combination Statute.
A number of other states have adopted laws and regulations applicable to
attempts to acquire securities of corporations that are incorporated, or have
substantial assets, stockholders, 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 could, 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 stockholders. The state
law before the Supreme Court was by its terms applicable only to corporations
that had a substantial number of stockholders in the state and were incorporated
there. Subsequently, in TLX Acquisition Corp. v. Telex Corp., a federal district
court in Oklahoma ruled that certain Oklahoma corporate governance statutes were
unconstitutional insofar as they applied to corporations incorporated outside
Oklahoma because they could subject such corporations to inconsistent
regulations. Similarly, in Tyson Foods, Inc. v. McReynolds, a federal district
court in Tennessee ruled that four Tennessee takeover statutes were
unconstitutional as applied to corporations incorporated outside Tennessee. This
decision was affirmed by the United States Court of Appeals for the Sixth
Circuit.
31
<PAGE> 34
In December 1988, a federal district court in Florida held in Grand Metropolitan
PLC v. Butterworth that the provisions of the Florida Affiliated Transactions
Act and the Florida Control Share Acquisition Act were unconstitutional as
applied to corporations incorporated outside of Florida.
The Company, directly or through subsidiaries, conducts business in a
number of states throughout the United States, some of which have enacted
takeover laws such as those described above. Purchaser does not know whether any
of these laws will, by their terms, apply to the Offer or the Merger and has not
necessarily 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. In the event 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 Section 14.
The Company's Articles of Incorporation provide that, except as described
below, the affirmative vote or consent of the holders of not less than
four-fifths of the outstanding shares of stock of the Company entitled to vote
in elections of directors ("Voting Stock"), voting as one class, is required to
adopt any agreement for, or to approve, the merger of the Company with or into
any other person or entity (the "Merging Entity") if, as of the record date for
the determination of stockholders entitled to notice thereof and to vote thereon
or consent thereto, such Merging Entity is, or at any time within the preceding
twelve months has been, the beneficial owner of five percent or more of the
outstanding Voting Stock of the Company. However, the Company's Articles of
Incorporation provide that the voting requirement described above shall not
apply if the Board by resolution shall have approved a memorandum of
understanding with the Merging Entity setting forth the principal terms of such
merger and such merger is substantially consistent therewith. The Articles of
Incorporation of the Company require that a majority of those members of the
Board voting in favor of the resolution described above be duly elected and
acting members of the Board prior to the time the Merging Entity became the
beneficial owner of five percent or more of the outstanding shares of Voting
Stock of the Company. The Company has represented in the Merger Agreement that
the Board has unanimously approved and adopted the Merger Agreement and the
transactions contemplated thereby and that approval of the Merger Agreement by
the Board constitutes approval of a "memorandum of understanding" setting forth
the principal terms of a transaction governed by, and within the meaning of,
Article Eleventh of the Company's Articles of Incorporation.
Antitrust. Under the HSR Act and the rules that have been promulgated
thereunder by the FTC, certain acquisition transactions may not be consummated
unless certain information has been furnished to the Antitrust Division and the
FTC and certain waiting period requirements have been satisfied. The acquisition
of Shares by Purchaser pursuant to the Offer is subject to such requirements.
See Section 2.
Pursuant to the HSR Act, on July 7, 1997, Parent anticipates filing a
Premerger Notification and Report Form in connection with the purchase of Shares
pursuant to the Offer with the Antitrust Division and the FTC. Under the
provisions of the HSR Act applicable to the Offer, the purchase of Shares
pursuant to the Offer may not be consummated until the expiration of a
15-calendar day waiting period following the filing by Parent. Accordingly, it
is anticipated that the waiting period under the HSR Act applicable to the
purchase of Shares pursuant to the Offer will expire at 11:59 p.m., New York
City time, on July 22, 1997, unless such waiting period is earlier terminated by
the FTC and the Antitrust Division or extended by a request from the FTC or the
Antitrust Division for additional information or documentary material prior to
the expiration of the waiting period. Pursuant to the HSR Act, Parent will
request early termination of the waiting period applicable to the Offer. There
can be no assurance, however, that the 15-day HSR Act waiting period will be
terminated early. If either the FTC or the Antitrust Division were to request
additional information or documentary material from Parent with respect to the
Offer, the waiting period with respect to the Offer would expire at 11:59 p.m.,
New York City time, on the tenth calendar day after the date of substantial
compliance by Parent with such request. Thereafter, the waiting period could be
extended only by court order. If the acquisition of Shares is delayed pursuant
to a request by the FTC or the Antitrust Division for additional information or
documentary material pursuant to the HSR Act, the Offer may, but need not, be
extended and, in any event, the purchase of and payment for Shares will
32
<PAGE> 35
be deferred until 10 days after the request is substantially complied with,
unless the extended period expires on or before the date when the initial 15-day
period would otherwise have expired, or unless the waiting period is sooner
terminated by the FTC and the Antitrust Division. Only one extension of such
waiting period pursuant to a request for additional information is authorized by
the HSR Act and the rules promulgated thereunder, except by court order. It is a
condition to the Offer that the waiting period applicable under the HSR Act to
the Offer expire or be terminated. See Section 2 and Section 14.
The FTC and the Antitrust Division frequently scrutinize the legality under
the antitrust laws of transactions such as the proposed acquisition of Shares by
Purchaser pursuant to the Offer. At any time before or after the purchase of
Shares pursuant to the Offer by Purchaser, the FTC or the Antitrust Division
could take such action under the antitrust laws as it deems necessary or
desirable in the public interest, including seeking to enjoin the purchase of
Shares pursuant to the Offer or seeking the divestiture of Shares purchased by
Purchaser or the divestiture of substantial assets of Parent, the Company or
their respective subsidiaries. Private parties and state attorneys general may
also bring legal action under federal or state antitrust laws under certain
circumstances. Based upon an examination of information available to Parent
relating to the businesses in which Parent, the Company and their respective
subsidiaries are engaged, Parent and Purchaser believe that the Offer will not
violate the antitrust laws. Nevertheless, there can be no assurance that a
challenge to the Offer on antitrust grounds will not be made or, if such a
challenge is made, what the result would be. See Section 14 for certain
conditions to the Offer, including conditions with respect to litigation.
Federal Reserve Board Regulations. The margin regulations promulgated by
the Federal Reserve Board place restrictions on the amount of credit that may be
extended for the purpose of purchasing margin stock (including the Shares) if
such credit is secured directly or indirectly by margin stock. Parent and
Purchaser believe that the financing of the acquisition of the Shares will be in
full compliance with or not subject to the margin regulations.
Other Foreign Approvals. The Company owns property and conducts business
in a number of foreign countries and jurisdictions. In connection with the
acquisition of the Shares pursuant to the Offer, the laws of certain of those
foreign countries and jurisdictions may require the filing of information with,
or the obtaining of the approval of, governmental authorities in such countries
and jurisdictions. The governments in such countries and jurisdictions might
attempt to impose additional conditions on the Company's operations conducted in
such countries and jurisdictions as a result of the acquisition of the Shares
pursuant to the Offer or the Merger. There can be no assurance that Purchaser
will be able to cause the Company or its subsidiaries to satisfy or comply with
such laws or that compliance or non-compliance will not have adverse
consequences for the Company or any subsidiary after purchase of the Shares
pursuant to the Offer or the Merger.
16. FEES AND EXPENSES. Neither Purchaser nor Parent, nor any officer,
director, stockholder, agent or other representative of Purchaser or Parent will
pay any fees or commissions to any broker, dealer or other person (other than
the Dealer Managers and the Information Agent) for soliciting tenders of Shares
pursuant to the Offer. Brokers, dealers, commercial banks and trust companies
and other nominees will, upon request, be reimbursed by Purchaser for customary
mailing and handling expenses incurred by them in forwarding materials to their
customers.
Merrill Lynch and Furman Selz are acting as Dealer Managers in connection
with the Offer and Merrill Lynch is providing certain financial advisory
services to Parent and Purchaser in connection with the Offer. Parent has agreed
to pay Merrill Lynch and Furman Selz reasonable and customary compensation for
such services. In addition, Parent has agreed to reimburse each of Merrill Lynch
and Furman Selz for its reasonable out-of-pocket expenses related to its
engagement, including the reasonable fees and expenses of counsel, and has
agreed to indemnify each of Merrill Lynch and Furman Selz and certain affiliated
persons against certain liabilities and expenses in connection with its
services, including, without limitation, certain liabilities under the federal
securities laws.
Purchaser and Parent have retained MacKenzie Partners, Inc. as the
Information Agent and Harris Trust and Savings Bank 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 stockholders to forward
materials relating to the Offer to beneficial owners.
33
<PAGE> 36
As compensation for acting as Information Agent in connection with the
Offer, MacKenzie Partners, Inc. will be paid reasonable and customary
compensation for its services, and will also be reimbursed for certain out-
of-pocket expenses and will be indemnified against certain liabilities and
expenses in connection with the Offer, including certain liabilities under the
federal securities laws. Purchaser will pay the Depositary reasonable and
customary compensation for its services in connection with the Offer, plus
reimbursement for out-of-pocket expenses, and will indemnify the Depositary
against certain liabilities and expenses in connection therewith, including
under the federal securities laws.
17. MISCELLANEOUS. The Offer is made only by this Offer to Purchase and
the related Letter of Transmittal and is not being made to (nor will tenders be
accepted from or on behalf of) holders of Shares in any jurisdiction in which
the Offer or the acceptance thereof would not be in compliance with the
securities, blue sky or other laws of such jurisdiction. However, Purchaser may,
in its discretion, take such action as it may deem necessary to make the Offer
in any jurisdiction and extend the Offer to holders of Shares in such
jurisdiction. In those jurisdictions where securities 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 Merrill Lynch, Pierce, Fenner & Smith Incorporated or
Furman Selz LLC or 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 PURCHASER, PARENT 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.
Pursuant to Rule 14d-3 of the General Rules and Regulations under the
Exchange Act, Parent and Purchaser have filed with the Commission the Schedule
14D-1, together with exhibits, furnishing certain additional information with
respect to the Offer. The Schedule 14D-1 and any amendments thereto, including
exhibits, may be inspected at, and copies may be obtained from, the same places
and in the same manner as set forth in Section 7 (except that they will not be
available at the regional offices of the Commission).
UD NEVADA CORP.
July 2, 1997
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<PAGE> 37
SCHEDULE I
DIRECTORS AND EXECUTIVE OFFICERS OF PARENT AND PURCHASER
The following table sets forth the name, business or residence address,
principal occupation or employment at the present time and during the last five
years, and the name, principal business and address of any corporation or other
organization in which such employment is conducted or was conducted of each
director and executive officer of Parent. Except for Messrs. Crossgrove, Grant,
McDonald, Stinson, Allan Taylor and George Taylor, who are citizens of Canada,
each of Parent's directors and executive officers is a citizen or permanent
resident of the United States. The business address of each executive officer of
Parent is 2300 One First Union Center, Charlotte, North Carolina 28202. Each
occupation set forth opposite a person's name, unless otherwise indicated,
refers to employment with Parent. Directors are indicated by an asterisk.
<TABLE>
<CAPTION>
PRINCIPAL OCCUPATION OR EMPLOYMENT AND
MATERIAL OCCUPATIONS FOR PAST FIVE YEARS,
BUSINESS (B) OR RESIDENCE (R) NAME, PRINCIPAL BUSINESS AND ADDRESS OF
NAME ADDRESS PRINCIPAL OFFICE OF EMPLOYER
---- ------------------------------------- -----------------------------------------
<S> <C> <C>
Donald N. Boyce*.................. (b) IDEX Corporation Chairman of the Board, President and
630 Dundee Rd., Ste. 400 Chief Executive Officer of IDEX
Northbrook, Illinois 60065 Corporation, a diversified manufacturing
company, from 1988 to present.
Hermann Buerger*.................. (b) Commerzbank AG Executive Vice President of Commerzbank
2 World Financial Center AG, a commercial bank, from 1989 to
New York, New York 10281 present.
James E. Courtney*................ (r) 1779 Venus Drive Chairman of the Board, First Independence
Sanibel, Florida 33957 Bank of Fort Myers, a commercial bank,
16740 San Carlos Blvd., Fort Myers,
Florida 33908-3954, from January 1, 1996
to present. President, The Mariner Group,
Inc., a real estate management and
development company, 12800 University
Drive, Suite 350, Fort Myers, Florida
33907, 1992-1995.
</TABLE>
35
<PAGE> 38
<TABLE>
<CAPTION>
PRINCIPAL OCCUPATION OR EMPLOYMENT AND
MATERIAL OCCUPATIONS FOR PAST FIVE YEARS,
BUSINESS (B) OR RESIDENCE (R) NAME, PRINCIPAL BUSINESS AND ADDRESS OF
NAME ADDRESS PRINCIPAL OFFICE OF EMPLOYER
---- ------------------------------------- -----------------------------------------
<S> <C> <C>
Peter A. Crossgrove*.............. (b) Southern Africa President and CEO, Southern Africa
Minerals Corporation Minerals Corporation, a diamond
141 Adelaide Street West exploration company, from 1994 to
Suite 1703 present. Chairman and Chief Executive
Toronto, Ontario M5H 3L5 Officer of Brush Creek Corporation, an
Canada investment holding company, 250 Yonge
Street, Toronto, Ontario M5B 1C8, Canada,
from 1993 to present. Acting CEO, Placer
Dome Inc., an international mining
company, Suite 3500, IBM Tower, Toronto-
Dominion Ctr., Toronto, Ontario M5K 1N3,
Canada, 1992-1993. President and Chief
Executive Officer of Itco Properties
Ltd., a wholly owned subsidiary of
Starlaw Holdings Limited, a company that
develops, purchases and holds real estate
in Canada and the U.S., Royal Bank Plaza,
Suite 1525, Toronto, Ontario M5J 2J2,
Canada, 1982-1992.
R. Stuart Dickson*................ (b) Ruddick Corporation Chairman of the Executive Committee,
2000 Two First Union Center Ruddick Corporation, an industrial
Charlotte, NC 28282 thread, regional supermarket and venture
capital holding company, 2000 Two First
Union Center, Charlotte, NC 28282, from
1994 to present. Chairman, Ruddick
Corporation, 1968-1994.
The Honorable James A. Grant,
P.C., Q.C.*..................... (b) Stikeman, Elliot Partner of Stikeman, Elliot, a law firm,
Suite 3900 from 1970 to present.
1155 Rene Levesque Blvd., West
Montreal, Quebec H3B 3V2 Canada
William R. Holland*............... Chairman since 1987, and Chief Executive
Officer since 1986.
Russell C. King, Jr.*............. (r) 2376E Dunwoody Crossing Retired since May 30, 1994. President and
Atlanta, Georgia 30338 Chief Operating Officer, Sonoco Products
Company, an international manufacturer of
packaging products, 1 North Second
Street, P.O. Box 160, Hartsville, SC
29551, 1990-1994.
H. John McDonald*................. (b) Black & McDonald Limited Chairman, Black & McDonald Limited, an
Suite 2800, 2 Bloor St. East international mechanical and electrical
Toronto, Ontario M4W 1A8 contracting company, since 1984.
Canada
</TABLE>
36
<PAGE> 39
<TABLE>
<CAPTION>
PRINCIPAL OCCUPATION OR EMPLOYMENT AND
MATERIAL OCCUPATIONS FOR PAST FIVE YEARS,
BUSINESS (B) OR RESIDENCE (R) NAME, PRINCIPAL BUSINESS AND ADDRESS OF
NAME ADDRESS PRINCIPAL OFFICE OF EMPLOYER
---- ------------------------------------- -----------------------------------------
<S> <C> <C>
Dalton D. Ruffin*................. (r) 2871 Galsworthy Dr. Retired since January 1, 1989.
Winston-Salem, NC 27106
William W. Stinson*............... (r) 1001 13th Avenue, SW Retired since May 1, 1996. Chairman of
Suite 750 Canadian Pacific Limited, a
Calgary, Alberta T2R 0L5 transportation, energy, real estate and
Canada hotel company, Suite 800, Place du
Canada, P.O. Box 6042, Station
Centre-ville, Montreal, Quebec H3C 3E4,
Canada, 1989-1996. Chief Executive
Officer, Canadian Pacific Limited,
1985-1996.
Allan R. Taylor*.................. (r) The Chedington Manor Retired since January 31, 1995. Chairman,
1 Chedington Place, Suite 2A Royal Bank of Canada, a financial
North York, Ontario institution, Royal Bank Plaza, Toronto,
M4N 3R4 Canada Ontario M5J 2J5, Canada, 1986-1995, Chief
Executive Officer, Royal Bank of Canada,
1986-1994.
George S. Taylor*................. (r) R.R. #3 Retired since December 31, 1995.
4675 Line 3 President and Chief Executive Officer,
St. Mary's, Ontario John Labatt Limited, a brewing company,
N4X 1C6 Canada Labatt House BCE Place, P.O. Box 811,
Suite 200-181 Bay St., Toronto, Ontario
M5J 2T3 Canada, 1992-1995. Executive Vice
President, John Labatt Limited,
1985-1992.
Jan K. Ver Hagen*................. President and Chief Operating Officer
since 1994. Vice Chairman, Emerson
Electric Co., a manufacturer of a broad
range of electrical and electronic
products, 8000 W. Florissant Ave., St.
Louis, Missouri 63136, 1988-1994.
Robert E. Drury................... Executive Vice President and Chief
Administrative Officer since 1995. Chief
Financial Officer, 1992-1995, and Senior
Vice President, 1993-1995. Vice
President, 1987-1993.
B. Bernard Burns, Jr.............. President of Door Products division since
1997. President of Building Products
segment, 1996-1997. General Counsel and
Secretary since 1992, and Senior Vice
President since 1993. Vice President,
1989-1993.
</TABLE>
37
<PAGE> 40
<TABLE>
<CAPTION>
PRINCIPAL OCCUPATION OR EMPLOYMENT AND
MATERIAL OCCUPATIONS FOR PAST FIVE YEARS,
BUSINESS (B) OR RESIDENCE (R) NAME, PRINCIPAL BUSINESS AND ADDRESS OF
NAME ADDRESS PRINCIPAL OFFICE OF EMPLOYER
---- ------------------------------------- -----------------------------------------
<S> <C> <C>
Richard A. Bearse................. Senior Vice President, Planning and
Development since 1996. President of
Building Products segment, 1995-1996.
President and Chief Executive Officer of
Flair Corporation, a manufacturer of air
and water filtration systems (and a
subsidiary of Parent), 4647 Southwest
40th Avenue, Ocala, Florida 34474-5799,
1991-1995.
Glenn A. Eisenberg................ Senior Vice President and Chief Financial
Officer since 1995. Vice President of
Planning and Development, 1992-1995.
Director of Corporate Finance and
Investor Relations, 1991-1992.
John G. MacKay.................... Executive Vice President -- Europe since
1996. Senior Vice President since 1995.
President and Chief Executive Officer,
The Marley Cooling Tower Company, a
manufacturer of cooling towers for power
generation, industrial, refrigeration and
HVAC applications (and a subsidiary of
Parent), 7401 West 129th Street, Overland
Park, Kansas 66213, 1995-1996. President
of Industrial Products segment, 1993-
1995.
Irvin B. Prude.................... Senior Vice President since 1995.
President, Building Products segment,
1993-1995. Senior Vice President,
1992-1993.
William Dries..................... Vice President since 1990. Controller
since 1988.
J. Milton Childress, II........... Vice President since 1996. Director of
Corporate Development, 1992-1996.
June P. Hassett................... Vice President since 1996. Director of
Taxes, 1991-1996.
Richard L. Magee.................. Vice President since 1996. Associate
General Counsel since 1993. Assistant
General Counsel, 1989-1993.
Thomas J. Snyder.................. Vice President since 1993. Treasurer
since 1991.
</TABLE>
38
<PAGE> 41
<TABLE>
<CAPTION>
PRINCIPAL OCCUPATION OR EMPLOYMENT AND
MATERIAL OCCUPATIONS FOR PAST FIVE YEARS,
BUSINESS (B) OR RESIDENCE (R) NAME, PRINCIPAL BUSINESS AND ADDRESS OF
NAME ADDRESS PRINCIPAL OFFICE OF EMPLOYER
---- ------------------------------------- -----------------------------------------
<S> <C> <C>
Timothy J. Verhagen............... Vice President since 1993. Vice President
and Associate General Counsel, The Marley
Company, a manufacturer of engineered
equipment for heating, fluid handling and
heat exchange applications (and a
subsidiary of Parent), 1900 Shawnee
Mission Parkway, Mission, Kansas 66205,
1985-1993.
C. Theodore Leinbach III.......... Assistant Vice President since 1996.
Director -- Accounting, 1993-1996.
Manager -- Accounting, 1989-1993.
</TABLE>
The directors of Purchaser are Messrs. Holland, Drury and Bearse. The
officers of Purchaser are as follows: William R. Holland, Chairman and Chief
Executive Officer; Robert E. Drury, Senior Vice President; Richard A. Bearse,
Senior Vice President; Richard L. Magee, Vice President and Secretary; Glenn A.
Eisenberg, Vice President and Treasurer; and J. Milton Childress, II, Vice
President.
39
<PAGE> 42
Facsimile copies of the Letter of Transmittal, properly completed and duly
executed, will be accepted. The Letter of Transmittal and certificates for
Shares and any other required documents should be sent or delivered by each
stockholder of the Company or such stockholder's broker, dealer, commercial
bank, trust company or other nominee to the Depositary at one of the addresses
set forth below.
The Depositary for the Offer is:
HARRIS TRUST AND SAVINGS BANK
<TABLE>
<S> <C> <C>
By Mail: By Overnight Courier: By Hand:
c/o Harris Trust Company of c/o Harris Trust Company of c/o Harris Trust Company of
New York New York New York
Wall Street Station 77 Water Street, 4th Floor Receive Window
P.O. Box 1010 New York, NY 10005 77 Water Street, 5th Floor
New York, NY 10268-1010 New York, NY
By Facsimile Transmission:
(for Eligible Institutions
Only)
(212) 701-7636
(212) 701-7637
Confirm by Telephone:
(212) 701-7624
</TABLE>
Questions and requests for assistance may be directed to the Information
Agent or the Dealer Managers at their respective addresses and telephone numbers
as set forth below. Additional copies of this Offer to Purchase, the Letter of
Transmittal, the Notice of Guaranteed Delivery and all other tender offer
materials may be obtained from the Information Agent. Stockholders may also
contact their brokers, dealers, commercial banks and trust companies or other
nominees for assistance concerning the Offer.
The Information Agent for the Offer is:
[MACKENZIE PARTNERS INC. LOGO]
156 Fifth Avenue
New York, New York 10010
(212) 929-5500 (Call Collect)
Call Toll Free: (800) 322-2885
The Dealer Managers for the Offer are:
MERRILL LYNCH & CO.
World Financial Center
North Tower
New York, New York 10281-1305
1-800-436-1019 (Toll Free)
(212) 449-8209 (Call Collect)
FURMAN SELZ
230 Park Avenue
New York, New York 10169
1-800-939-9991 (Toll Free)
<PAGE> 1
LETTER OF TRANSMITTAL
TO TENDER SHARES OF COMMON STOCK
OF
CORE INDUSTRIES INC
PURSUANT TO THE OFFER TO PURCHASE DATED JULY 2, 1997
OF
UD NEVADA CORP.
AN INDIRECT WHOLLY OWNED SUBSIDIARY OF
UNITED DOMINION INDUSTRIES LIMITED
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY
TIME, WEDNESDAY, JULY 30, 1997, UNLESS THE OFFER IS EXTENDED.
The Depositary for the Offer is:
HARRIS TRUST AND SAVINGS BANK
<TABLE>
<CAPTION>
By Mail: By Overnight Courier: By Hand:
<S> <C> <C>
c/o Harris Trust Company of c/o Harris Trust Company of c/o Harris Trust Company of
New York New York New York
Wall Street Station 77 Water Street, 4th Floor Receive Window
P.O. Box 1010 New York, NY 10005 77 Water Street, 5th Floor
New York, NY 10268-1010 New York, NY
By Facsimile Transmission:
(for Eligible Institutions Only)
(212) 701-7636
(212) 701-7637
Confirm by Telephone:
(212) 701-7624
</TABLE>
DELIVERY OF THIS LETTER OF TRANSMITTAL TO AN ADDRESS, OR TRANSMISSION OF
INSTRUCTIONS BY FACSIMILE, OTHER THAN AS SET FORTH ABOVE WILL NOT CONSTITUTE A
VALID DELIVERY TO THE DEPOSITARY. YOU MUST SIGN THIS LETTER OF TRANSMITTAL IN
THE APPROPRIATE SPACE THEREFOR PROVIDED BELOW AND COMPLETE THE SUBSTITUTE FORM
W-9 SET FORTH BELOW.
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 either if
certificates evidencing Shares (as defined below) are to be forwarded herewith
or, unless an Agent's Message (as defined in Section 2 of the Offer to Purchase
(as defined below)) is utilized, if delivery of Shares is to be made by
book-entry transfer to the Depositary's account at The Depository Trust Company
("DTC") or the Philadelphia Depository Trust Company ("PDTC") (each a
"Book-Entry Transfer Facility" and collectively, the "Book-Entry Transfer
Facilities") pursuant to the book-entry transfer procedure described in Section
3 of the Offer to Purchase. DELIVERY OF DOCUMENTS TO A BOOK-ENTRY TRANSFER
FACILITY DOES NOT CONSTITUTE DELIVERY TO THE DEPOSITARY.
Stockholders whose certificates evidencing Shares ("Share Certificates") are
not immediately available or who cannot deliver their Share Certificates and all
other documents required hereby to the Depositary prior to the Expiration Date
(as defined in Section 1 of the Offer to Purchase) or who cannot complete the
procedure for delivery by book-entry transfer on a timely basis and who wish to
tender their Shares must do so pursuant to the guaranteed delivery procedure
described in Section 3 of the Offer to Purchase. See Instruction 2.
<PAGE> 2
[ ] CHECK HERE IF SHARES ARE BEING DELIVERED BY BOOK-ENTRY TRANSFER TO THE
DEPOSITARY'S ACCOUNT AT ONE OF THE BOOK-ENTRY TRANSFER FACILITIES AND
COMPLETE THE FOLLOWING:
Name of Tendering Institution:
Check Box of Applicable Book-Entry Transfer Facility:
(CHECK ONE) [ ] DTC [ ] PDTC
Account Number: Transaction Code Number:
[ ] CHECK HERE IF SHARES ARE BEING TENDERED PURSUANT TO A NOTICE OF GUARANTEED
DELIVERY PREVIOUSLY SENT TO THE DEPOSITARY AND COMPLETE THE FOLLOWING:
Name(s) of Registered Holder(s):
Window Ticket No. (if any):
Date of Execution of Notice of Guaranteed Delivery:
Name of Institution that Guaranteed Delivery:
<TABLE>
- ------------------------------------------------------------------------------------------------------------------------
DESCRIPTION OF SHARES TENDERED
- ------------------------------------------------------------------------------------------------------------------------
NAME(S) AND ADDRESS(ES) OF REGISTERED HOLDER(S)
(PLEASE FILL IN, IF BLANK, EXACTLY AS NAME(S) APPEARS(S) ON SHARE CERTIFICATE(S) AND SHARE(S) TENDERED
SHARE CERTIFICATE(S) AND SHARE(S) TENDERED (ATTACH ADDITIONAL LIST, IF NECESSARY)
- ------------------------------------------------------------------------------------------------------------------------
TOTAL NUMBER
OF SHARES
SHARE REPRESENTED BY
CERTIFICATE SHARE NUMBER OF SHARES
NUMBER(S) CERTIFICATE(S)* TENDERED**
------------------------------------------------------
<S> <C> <C> <C>
------------------------------------------------------
------------------------------------------------------
------------------------------------------------------
TOTAL SHARES
- ------------------------------------------------------------------------------------------------------------------------
* Need not be completed by stockholders delivering Shares by book-entry transfer.
** Unless otherwise indicated, it will be assumed that all Shares evidenced by each Share Certificate delivered to the
Depositary are being tendered hereby. See Instruction 4.
- ------------------------------------------------------------------------------------------------------------------------
</TABLE>
NOTE: SIGNATURE(S) MUST BE PROVIDED BELOW.
PLEASE READ THE INSTRUCTIONS SET FORTH IN THIS LETTER OF TRANSMITTAL CAREFULLY.
<PAGE> 3
LADIES AND GENTLEMEN:
The undersigned hereby tenders to UD Nevada Corp., a Nevada corporation
("Purchaser") and an indirect wholly owned subsidiary of United Dominion
Industries Limited, a company organized under the laws of Canada, the
above-described shares of common stock, par value $1.00 per share (the
"Shares"), of Core Industries Inc, a Nevada corporation (the "Company"),
pursuant to Purchaser's offer to purchase all Shares at $25.00 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 July 2, 1997 (the "Offer to
Purchase"), receipt of which is hereby acknowledged, and in this Letter of
Transmittal (which, as amended from time to time, together constitute the
"Offer").
Subject to, and effective upon, acceptance for payment of 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, Purchaser all
right, title and interest in and to all the Shares that are being tendered
hereby and all dividends, distributions (including, without limitation,
distributions of additional Shares) and rights declared, paid or distributed in
respect of such Shares on or after June 22, 1997 (collectively,
"Distributions"), and irrevocably appoints the Depositary the true and lawful
agent and attorney-in-fact of the undersigned with respect to such Shares and
all Distributions, with full power of substitution (such power of attorney being
deemed to be an irrevocable power coupled with an interest), to (i) deliver
Share Certificates evidencing such Shares and all Distributions, or transfer
ownership of such Shares and all Distributions on the account books maintained
by a Book-Entry Transfer Facility, together, in either case, with all
accompanying evidences of transfer and authenticity, to or upon the order of
Purchaser, (ii) present such Shares and all Distributions for transfer on the
books of the Company and (iii) receive all benefits and otherwise exercise all
rights of beneficial ownership of such Shares and all Distributions, all in
accordance with the terms of the Offer.
The undersigned hereby irrevocably appoints Richard A. Bearse and Richard L.
Magee, and each of them, as the attorneys 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 or her sole discretion, deem proper
and otherwise act (by written consent or otherwise) with respect to all the
Shares tendered hereby which have been accepted for payment by Purchaser prior
to the time of such vote or other action and all Shares and other securities
issued in Distributions in respect of such Shares, which the undersigned is
entitled to vote at any meeting of stockholders of the Company (whether annual
or special and whether or not an adjourned or postponed meeting) or consent in
lieu of any such meeting or otherwise. This proxy and power of attorney is
coupled with an interest in the Shares tendered hereby, is irrevocable and is
granted in consideration of, and is effective upon, the acceptance for payment
of such Shares by Purchaser in accordance with the terms of the Offer. Such
acceptance for payment shall revoke all other proxies and powers of attorney
granted by the undersigned at any time with respect to such Shares (and all
Shares and other securities issued in Distributions in respect of such Shares),
and no subsequent proxy or power of attorney shall be given or written consent
executed (and if given or executed, shall not be effective) by the undersigned
with respect thereto. The undersigned understands that, in order for Shares to
be deemed validly tendered, immediately upon Purchaser's acceptance of such
Shares for payment, Purchaser must be able to exercise full voting and other
rights with respect to such Shares and all Distributions, including, without
limitation, voting at any meeting of the Company's stockholders then scheduled.
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 all Distributions, and that when such Shares are accepted for payment
by Purchaser, Purchaser will acquire good, marketable and unencumbered title
thereto and to all Distributions, free and clear of all liens, restrictions,
charges and encumbrances, and that none of such Shares and Distributions will be
subject to any adverse claim. The undersigned, upon request, shall execute and
deliver all additional documents deemed by the Depositary or Purchaser to be
necessary or desirable to complete the sale, assignment and transfer of the
Shares tendered hereby and all Distributions. In addition, the undersigned shall
remit and transfer promptly to the Depositary for the account of Purchaser all
Distributions in respect of the Shares tendered hereby, accompanied by
appropriate documentation of transfer, and, pending such remittance and transfer
or appropriate assurance thereof, Purchaser shall be entitled to all rights and
privileges as owner of each such Distribution and may withhold the entire
purchase price of the Shares tendered hereby, or deduct from such purchase price
the amount or value of such Distribution as determined by Purchaser in its sole
discretion.
No authority herein conferred or agreed to be conferred shall be affected
by, and all such authority shall survive, the death or incapacity of the
undersigned. All obligations of the undersigned hereunder shall be binding upon
the heirs, personal 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 will constitute the undersigned's acceptance of the terms
and conditions of the Offer. Purchaser's acceptance of such Shares for payment
will constitute a binding agreement between the undersigned and Purchaser upon
the terms and subject to the conditions of the Offer.
Unless otherwise indicated herein in the box entitled "Special Payment
Instructions," please issue the check for the purchase price of all Shares
purchased, and return all Share Certificates evidencing Shares not purchased or
not tendered in the name(s) of the registered holder(s) appearing above under
"Description of Shares Tendered." Similarly, unless otherwise indicated in the
box entitled "Special Delivery Instructions," please mail the check for the
purchase price of all Shares purchased and all Share Certificates evidencing
Shares not tendered or not purchased (and accompanying documents, as
appropriate) to the address(es) of the registered holder(s) appearing above
under "Description of Shares Tendered." In the event that the boxes entitled
"Special Payment Instructions" and "Special Delivery Instructions" are both
completed, please issue the check for the purchase price of all Shares purchased
and return all Share Certificates evidencing Shares not purchased or not
tendered in the name(s) of, and mail such check and Share Certificates to, the
person(s) so indicated. The undersigned recognizes that Purchaser has no
obligation, pursuant to the Special Payment Instructions, to transfer any Shares
from the name of the registered holder(s) thereof if Purchaser does not purchase
any of the Shares tendered hereby.
<PAGE> 4
------------------------------------------------------------
SPECIAL PAYMENT INSTRUCTIONS
(SEE INSTRUCTIONS 1, 5, 6 AND 7)
To be completed ONLY if the check for the purchase price of Shares
purchased or Share Certificates evidencing Shares purchased or Share
Certificates evidencing Shares not tendered or not purchased are to be
issued in the name of someone other than the undersigned.
Issue [ ] check [ ] certificates to:
Name
------------------------------------------------------
------------------------------------------------------------
(PLEASE TYPE OR PRINT)
Address
----------------------------------------------------
------------------------------------------------------------
(INCLUDE ZIP CODE)
------------------------------------------------------------
(TAXPAYER IDENTIFICATION OR SOCIAL SECURITY NO.)
SEE SUBSTITUTE FORM W-9 ON REVERSE SIDE
============================================================
SPECIAL DELIVERY INSTRUCTIONS
(SEE INSTRUCTIONS 1, 5, 6 AND 7)
To be completed ONLY if the check for the purchase price of Shares
purchased or Share Certificates evidencing Shares not tendered or not
purchased are to be mailed to someone other than the undersigned, or to
the undersigned at an address other than that shown under "Description of
Shares Tendered."
Mail check and/or certificate(s) to:
Name
------------------------------------------------------
------------------------------------------------------------
(PLEASE TYPE OR PRINT)
Address
----------------------------------------------------
------------------------------------------------------------
(INCLUDE ZIP CODE)
------------------------------------------------------------
<PAGE> 5
IMPORTANT
STOCKHOLDERS: SIGN HERE
(PLEASE COMPLETE SUBSTITUTE FORM W-9 ON REVERSE)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SIGNATURE(S) OF STOCKHOLDER(S)
Dated: ___________ , 1997
(Must be signed by registered holder(s) exactly as such registered
holder(s) name(s) appear(s) on Share Certificates or on a security position
listing or by a person(s) authorized to become registered holder(s) by
certificates and documents transmitted herewith. If signature is by a trustee,
executor, administrator, guardian, attorney-in-fact, officer of a corporation or
other person acting in a fiduciary or representative capacity, please provide
the following information and see Instruction 5.)
Name(s):
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
(PLEASE TYPE OR PRINT)
Capacity (Full Title):
- --------------------------------------------------------------------------------
(SEE INSTRUCTION 5)
Address:
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
(INCLUDE ZIP CODE)
Area Codes and Telephone Numbers:
- --------------------------------------------------------------------------------
HOME
----------------------------------------------------
BUSINESS
Taxpayer Identification or Social Security No.:
- --------------------------------------------------------------------------------
(COMPLETE SUBSTITUTE FORM W-9 ON REVERSE)
GUARANTEE OF SIGNATURE(S)
(IF REQUIRED -- SEE INSTRUCTIONS 1 AND 5)
Authorized Signature
- --------------------------------------------------------------------------------
Name:
- --------------------------------------------------------------------------------
(PLEASE TYPE OR PRINT)
Title:
- --------------------------------------------------------------------------------
Name of Firm:
- --------------------------------------------------------------------------------
Address:
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
(INCLUDE ZIP CODE)
- --------------------------------------------------------------------------------
(Area Code and Tel. No.) Dated:
------------------------------ -------------------
SPACE BELOW IS FOR USE BY FINANCIAL INSTITUTIONS ONLY.
FINANCIAL INSTITUTIONS: PLACE MEDALLION GUARANTEE IN SPACE BELOW
<PAGE> 6
INSTRUCTIONS
Forming Part of the Terms and Conditions of the Offer
1. GUARANTEE OF SIGNATURES. All signatures on this Letter of Transmittal
must be medallion guaranteed by a firm that is a member of the New York Stock
Exchange Medallion Signature Guarantee Program, or by any other "eligible
guarantor institution", as such term is defined in Rule 17Ad-15 under the
Securities Exchange Act of 1934, as amended (each of the foregoing being
referred to as an "Eligible Institution"), unless (i) this Letter of Transmittal
is signed by the registered holder(s) of the Shares (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)
tendered hereby and such holder(s) has (have) completed neither the box entitled
"Special Payment Instructions" nor the box entitled "Special Delivery
Instructions" on the reverse hereof or (ii) such Shares are tendered for the
account of an Eligible Institution. See Instruction 5.
2. DELIVERY OF LETTER OF TRANSMITTAL AND SHARE CERTIFICATES. This Letter
of Transmittal is to be used either if Share Certificates are to be forwarded
herewith or, unless an Agent's Message is utilized, if Shares are to be
delivered by book-entry transfer pursuant to the procedure set forth in Section
3 of the Offer to Purchase. Share Certificates evidencing all physically
tendered Shares, or a confirmation of a book-entry transfer into the
Depositary's account at a Book-Entry Transfer Facility of all Shares delivered
by book-entry transfer as well as a properly completed and duly executed Letter
of Transmittal (or facsimile thereof), 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 on the reverse hereof prior to the
Expiration Date (as defined in Section 1 of the Offer to Purchase). If Share
Certificates are forwarded to the Depositary in multiple deliveries, a properly
completed and duly executed Letter of Transmittal must accompany each such
delivery. Stockholders whose Share Certificates are not immediately available,
who cannot deliver their Share Certificates and all other required documents to
the Depositary prior to the Expiration Date or who cannot complete the procedure
for delivery by book-entry transfer on a timely basis may tender their Shares
pursuant to the guaranteed delivery procedure described 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
Purchaser, must be received by the Depositary prior to the Expiration Date; and
(iii) the Share Certificates evidencing all physically delivered Shares in
proper form for transfer by delivery, or a confirmation of a book-entry transfer
into the Depositary's account at a Book-Entry Transfer Facility of all Shares
delivered by book-entry transfer, in each case together with a Letter of
Transmittal (or a 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 New York Stock
Exchange trading days after the date of execution of such Notice of Guaranteed
Delivery, all as described in Section 3 of the Offer to Purchase.
THE METHOD OF DELIVERY OF THIS LETTER OF TRANSMITTAL, SHARE CERTIFICATES
AND ALL OTHER REQUIRED DOCUMENTS, INCLUDING DELIVERY THROUGH ANY BOOK-ENTRY
TRANSFER FACILITY, IS AT THE OPTION AND RISK OF THE TENDERING STOCKHOLDER, AND
THE DELIVERY WILL BE DEEMED MADE ONLY WHEN ACTUALLY RECEIVED BY THE DEPOSITARY.
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. By execution of this Letter of Transmittal
(or a facsimile hereof), all tendering stockholders waive any right to receive
any notice of the acceptance of their Shares for payment.
3. INADEQUATE SPACE. If the space provided herein under "Description of
Shares Tendered" is inadequate, the Share Certificate numbers, the number of
Shares evidenced by such Share Certificates and the number of Shares tendered
should be listed on a separate schedule and attached hereto.
4. PARTIAL TENDERS (NOT APPLICABLE TO STOCKHOLDERS WHO TENDER BY
BOOK-ENTRY TRANSFER). If fewer than all of the Shares evidenced by any Share
Certificate delivered to the Depositary herewith are to be tendered hereby, fill
in the number of Shares that are to be tendered in the box entitled "Number of
Shares Tendered." In such cases, new Share Certificate(s) evidencing the
remainder of the Shares that were evidenced by the Share Certificates delivered
to the Depositary herewith will be sent to the person(s) signing this Letter of
Transmittal, unless otherwise provided in the box entitled "Special Delivery
Instructions" on the reverse hereof, as soon as practicable after the expiration
or termination of the Offer. All Shares evidenced by Share Certificates
delivered to the Depositary will be deemed to have been tendered unless
otherwise indicated.
5. SIGNATURES ON LETTER OF TRANSMITTAL; STOCK POWERS AND ENDORSEMENTS. If
this Letter of Transmittal is signed by the registered holder(s) of the Shares
tendered hereby, the signature(s) must correspond with the name(s) as written on
the face of the Share Certificates evidencing such Shares without alteration,
enlargement or any other change whatsoever.
<PAGE> 7
If any Share tendered hereby is owned of record by two or more persons, all
such persons must sign this Letter of Transmittal.
If any of the Shares tendered hereby are registered in the names of
different holders, it will be necessary to complete, sign and submit as many
separate Letters of Transmittal as there are different registrations of such
Shares.
If this Letter of Transmittal is signed by the registered holder(s) of the
Shares tendered hereby, no endorsements of Share Certificates or separate stock
powers are required, unless payment is to be made to, or Share Certificates
evidencing Shares not tendered or not purchased are to be issued in the name of,
a person other than the registered holder(s), in which case, the Share
Certificate(s) evidencing the Shares tendered hereby must be endorsed or
accompanied by appropriate stock powers, in either case signed exactly as the
name(s) of the registered holder(s) appear(s) on such Share Certificate(s).
Signatures on such Share Certificate(s) and stock powers must be guaranteed by
an Eligible Institution.
If this Letter of Transmittal is signed by a person other than the
registered holder(s) of the Shares tendered hereby, the Share Certificate(s)
evidencing the Shares tendered hereby must be endorsed or accompanied by
appropriate stock powers, in either case signed exactly as the name(s) of the
registered holder(s) appear(s) on such Share Certificate(s). Signatures on such
Share Certificate(s) and stock powers must be guaranteed by an Eligible
Institution.
If this Letter of Transmittal or any Share Certificate or stock power is
signed by a trustee, executor, administrator, guardian, attorney-in-fact,
officer of a corporation or other person acting in a fiduciary or representative
capacity, such person should so indicate when signing, and proper evidence
satisfactory to Purchaser of such person's authority so to act must be
submitted.
6. STOCK TRANSFER TAXES. Except as otherwise provided in this Instruction
6, Purchaser will pay all stock transfer taxes with respect to the sale and
transfer of any Shares to it or its order pursuant to the Offer. If, however,
payment of the purchase price of any Shares purchased is to be made to, or Share
Certificate(s) evidencing Shares not tendered or not purchased are to be issued
in the name of, a person other than the registered holder(s), the amount of any
stock transfer taxes (whether imposed on the registered holder(s), such other
person or otherwise) payable on account of the transfer to such other person
will be deducted from the purchase price of such Shares purchased, unless
evidence satisfactory to Purchaser 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 Share Certificates
evidencing the Shares tendered hereby.
7. SPECIAL PAYMENT AND DELIVERY INSTRUCTIONS. If a check for the purchase
price of any Shares tendered hereby is to be issued, or Share Certificate(s)
evidencing Shares not tendered or not purchased are to be issued, in the name of
a person other than the person(s) signing this Letter of Transmittal or if such
check or any such Share Certificate is to be sent to someone other than the
person(s) signing this Letter of Transmittal or to the person(s) signing this
Letter of Transmittal but at an address other than that shown in the box
entitled "Description of Shares Tendered" on the reverse hereof, the appropriate
boxes on the reverse of this Letter of Transmittal must be completed.
8. QUESTIONS AND REQUESTS FOR ASSISTANCE OR ADDITIONAL COPIES. Questions
and requests for assistance may be directed to the Information Agent or the
Dealer Managers at their respective addresses or telephone numbers set forth
below. Additional copies of the Offer to Purchase, this Letter of Transmittal
and the Notice of Guaranteed Delivery may be obtained from the Information Agent
or from brokers, dealers, commercial banks or trust companies.
9. SUBSTITUTE FORM W-9. Each tendering stockholder is required to provide
the Depositary with a correct Taxpayer Identification Number ("TIN") on the
Substitute Form W-9 which is provided under "Important Tax Information" below,
and to certify, under penalties of perjury, that such number is correct and that
such stockholder is not subject to backup withholding of federal income tax. If
a tendering stockholder has been notified by the Internal Revenue Service that
such stockholder is subject to backup withholding, such stockholder must cross
out item (2) of the Certification box of the Substitute Form W-9, unless such
stockholder has since been notified by the Internal Revenue Service that such
stockholder is no longer subject to backup withholding. Failure to provide the
information on the Substitute Form W-9 may subject the tendering stockholder to
31 percent federal income tax withholding on the payment of the purchase price
of all Shares purchased from such stockholder. If the tendering stockholder has
not been issued a TIN and has applied for one or intends to apply for one in the
near future, such stockholder should write "Applied For" in the space provided
for the TIN in Part I of the Substitute Form W-9, and sign and date the
Substitute Form W-9. If "Applied For" is written in Part I and the Depositary is
not provided with a TIN within 60 days, the Depositary will withhold 31 percent
on all payments of the purchase price to such stockholder until a TIN is
provided to the Depositary.
IMPORTANT: THIS LETTER OF TRANSMITTAL (OR FACSIMILE HEREOF), PROPERLY
COMPLETED AND DULY EXECUTED, OR AN AGENT'S MESSAGE IN THE CASE OF A BOOK-ENTRY
DELIVERY (TOGETHER WITH ANY REQUIRED SIGNATURE GUARANTEES AND SHARE CERTIFICATES
OR CONFIRMATION OF BOOK-ENTRY TRANSFER AND ALL OTHER REQUIRED DOCUMENTS), OR A
PROPERLY COMPLETED AND DULY EXECUTED NOTICE OF GUARANTEED DELIVERY MUST BE
<PAGE> 8
RECEIVED BY THE DEPOSITARY PRIOR TO THE EXPIRATION DATE (AS DEFINED IN THE OFFER
TO PURCHASE).
IMPORTANT TAX INFORMATION
Under the federal income tax law, a stockholder whose tendered Shares are
accepted for payment is required to provide the Depositary (as payer) with such
stockholder's correct TIN on Substitute Form W-9 below. If such stockholder is
an individual, the TIN is such stockholder's social security number. If the
Depositary is not provided with the correct TIN, the stockholder may be subject
to a $50 penalty imposed by the Internal Revenue Service. In addition, payments
that are made to such stockholder with respect to Shares purchased pursuant to
the Offer may be subject to backup withholding of 31 percent (as described
below).
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, such individual must submit an Internal Revenue Service Form W-8,
signed under penalties of perjury, attesting to such individual's exempt status.
A Form W-8 may be obtained from the Depositary. See the enclosed Guidelines for
Certification of Taxpayer Identification Number on Substitute Form W-9 for
additional instructions.
If backup withholding applies, the Depositary is required to withhold 31
percent of any payments made to the stockholder. Backup withholding is not an
additional tax. Rather, the tax liability of persons subject to backup
withholding will be reduced by the amount of tax withheld. If withholding
results in an overpayment of taxes, a refund may be obtained from the Internal
Revenue Service.
PURPOSE OF SUBSTITUTE FORM W-9
To prevent backup withholding on payments that are made to a stockholder
with respect to Shares purchased pursuant to the Offer, the stockholder is
required to notify the Depositary of such stockholder's correct TIN by
completing the form below certifying (a) that the TIN provided on Substitute
Form W-9 is correct (or that such stockholder is awaiting a TIN), and (b) that
(i) such stockholder is exempt from backup withholding, (ii) such stockholder
has not been notified by the Internal Revenue Service that such stockholder is
subject to backup withholding as a result of a failure to report all interest or
dividends or (iii) the Internal Revenue Service has notified such stockholder
that such stockholder is no longer subject to backup withholding.
WHAT NUMBER TO GIVE THE DEPOSITARY
The stockholder is required to give the Depositary the social security
number or employer identification number of the record holder of the Shares
tendered hereby. If the Shares are in more than one name or are not in the name
of the actual owner, consult the enclosed Guidelines for Certification of
Taxpayer Identification Number on Substitute Form W-9 for additional guidance on
which number to report. If the tendering stockholder has not been issued a TIN
and has applied for a number or intends to apply for a number in the near
future, the stockholder should write "Applied For" in the space provided for the
TIN in Part I, and sign and date the Substitute Form W-9. If "Applied For" is
written in Part I and the Depositary is not provided with a TIN within 60 days,
the Depositary will withhold 31 percent of all payments of the purchase price to
such stockholder until a TIN is provided to the Depositary.
<PAGE> 9
PAYER'S NAME: HARRIS TRUST AND SAVINGS BANK
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C> <C> <C>
SUBSTITUTE PART I -- Taxpayer Identification Social Security Number
FORM W-9 Number -- For all accounts, enter taxpayer OR ------------------------
identification number in the box at right. Employer Identification Number
(For most individuals, this is your social
security number. If you do not have a (If awaiting TIN, write
number, see "Obtaining a Number" in the "Applied For")
enclosed Guidelines.) Certify by signing
and dating below. Note: If the account is
in more than one name, see the chart in the
enclosed Guidelines to determine which
number to give the payer.
---------------------------------------------------------------------------------------
DEPARTMENT OF THE TREASURY PART II --
INTERNAL REVENUE SERVICE For Payees Exempt From Backup Withholding, see the enclosed Guidelines and
complete as instructed therein.
---------------------------------------------------------------------------------------
PAYER'S REQUEST FOR TAXPAYER CERTIFICATION -- Under penalties of perjury, I certify that:
IDENTIFICATION NUMBER ("TIN")
(1) The number shown on this form is my correct Taxpayer Identification Number
(or I am waiting for a number to be issued to me), and
(2) I am not subject to backup withholding either because (a) I am exempt from
backup withholding, (b) I have not been notified by the Internal Revenue Service
(the "IRS") that I am subject to backup withholding as a result of failure to
report all interest or dividends, or (c) the IRS has notified me that I am no
longer subject to backup withholding.
CERTIFICATION INSTRUCTIONS -- You must cross out item (2) above if you have been
notified by the IRS that you are subject to backup withholding because of
underreporting interest or dividends on your tax return.
However, if after being notified by the IRS that you 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 item (2). (See also instructions
in the enclosed Guidelines.)
Signature Date
---------------------------------------- ----------------------
- --------------------------------------------------------------------------------------------------------------------------
NOTE: FAILURE TO COMPLETE AND RETURN THIS FORM MAY RESULT IN BACKUP WITHHOLDING OF 31 PERCENT OF ANY PAYMENT MADE TO
YOU PURSUANT TO THE OFFER. FOR ADDITIONAL DETAILS, PLEASE REVIEW THE ENCLOSED GUIDELINES FOR CERTIFICATION OF
TAXPAYER IDENTIFICATION NUMBER ON SUBSTITUTE FORM W-9.
- --------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE> 10
The Information Agent for the Offer is:
[MACKENZIE PARTNERS, INC. LOGO]
156 Fifth Avenue
New York, New York 10010
(212) 929-5500 (Call Collect)
CALL TOLL FREE: (800) 322-2885
The Dealer Managers for the Offer are:
MERRILL LYNCH & CO.
World Financial Center
North Tower
New York, New York 10281-1305
1-800-436-1019 (Toll Free)
(212) 449-8209 (Call Collect)
FURMAN SELZ
230 Park Avenue
New York, New York 10169
1-800-939-9991 (Toll Free)
July 2, 1997
<PAGE> 1
NOTICE OF GUARANTEED DELIVERY
FOR
TENDER OF SHARES OF COMMON STOCK
OF
CORE INDUSTRIES INC
(NOT TO BE USED FOR SIGNATURE GUARANTEES)
This Notice of Guaranteed Delivery, or one substantially in the form
hereof, must be used to accept the Offer (as defined below) (i) if certificates
("Share Certificates") evidencing shares of common stock, par value $1.00 per
share (the "Shares"), of the Company, are not immediately available, (ii) if
Share Certificates and all other required documents cannot be delivered to
Harris Trust and Savings Bank, as Depositary (the "Depositary"), prior to the
Expiration Date (as defined in Section 1 of the Offer to Purchase (as defined
below)) or (iii) if the procedure for delivery by book-entry transfer cannot be
completed on a timely basis. This Notice of Guaranteed Delivery may be delivered
by hand or mail or transmitted by facsimile transmission to the Depositary. See
Section 3 of the Offer to Purchase.
The Depositary for the Offer is:
HARRIS TRUST AND SAVINGS BANK
<TABLE>
<S> <C> <C>
By Mail: By Overnight Courier: By Hand:
c/o Harris Trust Company of c/o Harris Trust Company of c/o Harris Trust Company of
New York New York New York
Wall Street Station 77 Water Street, 4th Floor Receive Window
P.O. Box 1010 New York, NY 10005 77 Water Street, 5th Floor
New York, NY 10268-1010 By Facsimile Transmission: New York, NY
(for Eligible Institutions
Only)
(212) 701-7636
(212) 701-7637
Confirm by Telephone:
(212) 701-7624
</TABLE>
DELIVERY OF THIS NOTICE OF GUARANTEED DELIVERY TO AN ADDRESS OTHER THAN AS
SET FORTH ABOVE, OR TRANSMISSION OF INSTRUCTIONS VIA FACSIMILE TRANSMISSION
OTHER THAN AS SET FORTH ABOVE, WILL NOT CONSTITUTE A VALID DELIVERY TO THE
DEPOSITARY.
THIS FORM IS NOT TO BE USED TO GUARANTEE SIGNATURES. IF A SIGNATURE ON A
LETTER OF TRANSMITTAL IS REQUIRED TO BE GUARANTEED BY AN "ELIGIBLE INSTITUTION"
UNDER THE INSTRUCTIONS THERETO, SUCH SIGNATURE GUARANTEE MUST APPEAR IN THE
APPLICABLE SPACE PROVIDED IN THE SIGNATURE BOX ON THE LETTER OF TRANSMITTAL.
<PAGE> 2
Ladies and Gentlemen:
The undersigned hereby tenders to UD Nevada Corp., a Nevada corporation and
an indirect wholly owned subsidiary of United Dominion Industries Limited, a
corporation organized under the laws of Canada, upon the terms and subject to
the conditions set forth in the Offer to Purchase, dated July 2, 1997 (the
"Offer to Purchase"), and the related Letter of Transmittal (which, as amended
from time to time, together constitute the "Offer"), receipt of each of which is
hereby acknowledged, the number of Shares specified below pursuant to the
guaranteed delivery procedure described in Section 3 of the Offer to Purchase.
Number of Shares:
- -----------------------------------
Certificate Nos. (If Available):
- ------------------------------------------------------
Check one box if Shares will be delivered
by book-entry transfer:
[ ] The Depository Trust Company
[ ] Philadelphia Depository Trust Company
- ------------------------------------------------------
Name of Tendering Institution
Account No.
- ----------------------------------------
Signature(s) of Holder(s):
- ------------------------------------------------------
- ------------------------------------------------------
Dated:
- ------------------------------------ , 1997
Name(s) of Holders:
- ------------------------------------------------------
- ------------------------------------------------------
Please Type or Print
- ------------------------------------------------------
Address
- ------------------------------------------------------
Zip Code
- ------------------------------------------------------
Area Code and Telephone No.
GUARANTEE
(NOT TO BE USED FOR SIGNATURE GUARANTEE)
The undersigned, a firm which is a member of a registered national
securities exchange or of the National Association of Securities Dealers, Inc.
or which is a commercial bank or trust company having an office or correspondent
in the United States that is a member in good standing of the Securities
Transfer Agents Medallion Program, the New York Stock Exchange Medallion
Signature Guarantee Program or the Stock Exchange Medallion Program, guarantees
to deliver to the Depositary, at one of its addresses set forth above, Share
Certificates evidencing the Shares tendered hereby, in proper form for transfer,
or confirmation of book-entry transfer of such Shares into the Depositary's
account at The Depository Trust Company or the Philadelphia Depository Trust
Company, in each case with delivery of a Letter of Transmittal (or 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 the
case of a book-entry delivery, and any other required documents, all within
three New York Stock Exchange trading days of the date hereof.
<TABLE>
<S> <C>
- -----------------------------------------------------
Name of Firm -----------------------------------------------------
- ----------------------------------------------------- Authorized Signature
Address -----------------------------------------------------
- ----------------------------------------------------- Title
Zip Code Name: -----------------------------------------------
- ----------------------------------------------------- Please Type or Print
Area Code and Telephone No. Dated: , 1997
----------------------------------------
</TABLE>
DO NOT SEND SHARE CERTIFICATES WITH THIS NOTICE. SHARE CERTIFICATES
SHOULD BE SENT WITH YOUR LETTER OF TRANSMITTAL.
<PAGE> 1
<TABLE>
<S> <C>
MERRILL LYNCH & CO. FURMAN SELZ
World Financial Center 230 Park Avenue
North Tower New York, New York 10169
New York, New York 10281-1305 1-800-939-9991 (Toll Free)
1-800-436-1019 (Toll Free)
(212) 449-8209 (Call Collect)
</TABLE>
OFFER TO PURCHASE FOR CASH
ALL OUTSTANDING SHARES OF COMMON STOCK
OF
CORE INDUSTRIES INC
AT
$25.00 NET PER SHARE
BY
UD NEVADA CORP.
AN INDIRECT WHOLLY OWNED SUBSIDIARY OF
UNITED DOMINION INDUSTRIES LIMITED
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK
CITY TIME, ON WEDNESDAY, JULY 30, 1997, UNLESS THE OFFER IS EXTENDED.
July 2, 1997
To Brokers, Dealers, Commercial Banks,
Trust Companies and Other Nominees:
We have been appointed by UD Nevada Corp., a Nevada corporation
("Purchaser") and an indirect wholly owned subsidiary of United Dominion
Industries Limited, a corporation organized under the laws of Canada ("Parent"),
to act as Dealer Managers in connection with Purchaser's offer to purchase all
outstanding shares (the "Shares") of common stock, par value $1.00 per share
(the "Common Stock"), of Core Industries Inc, a Nevada corporation (the
"Company"), at a price of $25.00 per Share, net to the seller in cash, without
interest thereon, upon the terms and subject to the conditions set forth in
Purchaser's Offer to Purchase, dated July 2, 1997 (the "Offer to Purchase"), and
the related Letter of Transmittal (which, as amended from time to time, together
constitute the "Offer") enclosed herewith. Please furnish copies of the enclosed
materials to those of your clients for whose accounts you hold Shares registered
in your name or in the name of your nominee. The Offer is being made in
connection with the Agreement and Plan of Merger, dated as of June 25, 1997,
among Parent, Purchaser and the Company (the "Merger Agreement"). Holders of
Shares whose certificates for such Shares (the "Share Certificates") are not
immediately available or who cannot deliver their Share Certificates and all
other required documents to Harris Trust and Savings Bank (the "Depositary") or
complete the procedures for book-entry transfer prior to the Expiration Date (as
defined in the Offer to Purchase) must tender their Shares according to the
guaranteed delivery procedures set forth in Section 3 of the Offer to Purchase.
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 THAT WOULD REPRESENT AT LEAST A MAJORITY OF THE VOTING POWER OF THE
SHARES ON A FULLY DILUTED BASIS AT THE EXPIRATION OF THE OFFER, (II) ANY WAITING
PERIOD UNDER THE HSR ACT (AS DEFINED IN THE OFFER TO PURCHASE) APPLICABLE TO THE
PURCHASE OF
<PAGE> 2
SHARES PURSUANT TO THE OFFER HAVING EXPIRED OR HAVING BEEN TERMINATED PRIOR TO
THE EXPIRATION OF THE OFFER AND (III) THE SATISFACTION OF CERTAIN OTHER TERMS
AND CONDITIONS CONTAINED IN THE OFFER TO PURCHASE.
Enclosed for your information and use are copies of the following
documents:
1. Offer to Purchase, dated July 2, 1997;
2. Letter of Transmittal to be used by holders of Shares in accepting
the Offer and tendering Shares;
3. Notice of Guaranteed Delivery to be used to accept the Offer if the
Shares and all other required documents are not immediately available or
cannot be delivered to Harris Trust and Savings Bank (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;
4. A letter to stockholders of the Company from David R. Zimmer,
President and Chief Executive Officer of the Company, together with a
Solicitation/Recommendation Statement on Schedule 14D-9 filed with the
Securities and Exchange Commission by the Company;
5. A letter which may be sent to your clients for whose accounts you
hold Shares registered in your name or in the name of your nominee, with
space provided for obtaining such clients' instructions with regard to the
Offer;
6. Guidelines for Certification of Taxpayer Identification Number on
Substitute Form W-9; and
7. Return envelope addressed to the Depositary.
WE URGE YOU TO CONTACT YOUR CLIENTS AS PROMPTLY AS POSSIBLE. PLEASE NOTE
THAT THE OFFER AND WITHDRAWAL RIGHTS EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY
TIME, ON WEDNESDAY, JULY 30, 1997, UNLESS THE OFFER IS EXTENDED.
In all cases, payment for Shares accepted for payment pursuant to the Offer
will be made only after timely receipt by the Depositary of (i) certificates
evidencing such Shares (or a confirmation of a book-entry transfer of such
Shares into the Depositary's account at one of the Book-Entry Transfer
Facilities (as defined in the Offer to Purchase)), (ii) 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 (iii) any other required documents in accordance with the
instructions contained in the Letter of Transmittal.
If a holder of Shares wishes to tender Shares, but cannot deliver such
holder's certificates or other required documents, or cannot comply with the
procedure for book-entry transfer, prior to the expiration of the Offer, a
tender of Shares may be effected by following the guaranteed delivery procedure
described in Section 3 of the Offer to Purchase.
Purchaser will not pay any fees or commissions to any broker, dealer or
other person (other than the Dealer Managers, the Depositary and the Information
Agent as described in the Offer) in connection with the solicitation of tenders
of Shares pursuant to the Offer. However, Purchaser will reimburse you for
customary mailing and handling expenses incurred by you in forwarding any of the
enclosed materials to your clients. Purchaser will pay or cause to be paid any
stock transfer taxes payable with respect to 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
Merrill Lynch, Pierce, Fenner & Smith Incorporated or Furman Selz LLC or
MacKenzie Partners, Inc. (the "Information Agent") at their respective addresses
and telephone numbers set forth on the back cover page of the Offer to Purchase.
Additional copies of the enclosed material may be obtained from the
Information Agent, at the address and telephone numbers set forth on the back
cover of the Offer to Purchase.
Very truly yours,
MERRILL LYNCH, PIERCE, FENNER & SMITH FURMAN SELZ
INCORPORATED
<PAGE> 3
NOTHING CONTAINED HEREIN OR IN THE ENCLOSED DOCUMENTS SHALL AUTHORIZE YOU
OR ANY OTHER PERSON TO ACT ON BEHALF OF OR AS THE AGENT OF PARENT, PURCHASER,
THE COMPANY, THE DEALER MANAGERS, THE INFORMATION AGENT OR THE DEPOSITARY, OR OF
ANY AFFILIATE OF ANY OF THEM, OR AUTHORIZE YOU OR ANY OTHER PERSON TO USE ANY
DOCUMENT OR TO MAKE ANY STATEMENT ON BEHALF OF ANY OF THEM IN CONNECTION WITH
THE OFFER OTHER THAN THE ENCLOSED DOCUMENTS AND THE STATEMENTS CONTAINED
THEREIN.
<PAGE> 1
OFFER TO PURCHASE FOR CASH
ALL OUTSTANDING SHARES OF COMMON STOCK
OF
CORE INDUSTRIES INC
AT
$25.00 NET PER SHARE
BY
UD NEVADA CORP.
AN INDIRECT WHOLLY OWNED SUBSIDIARY OF
UNITED DOMINION INDUSTRIES LIMITED
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK
CITY TIME, ON WEDNESDAY, JULY 30, 1997, UNLESS THE OFFER IS EXTENDED.
July 2, 1997
To Our Clients:
Enclosed for your consideration are an Offer to Purchase, dated July 2,
1997 (the "Offer to Purchase"), and a related Letter of Transmittal (which, as
amended from time to time, together constitute the "Offer") in connection with
the offer by UD Nevada Corp., a Nevada corporation ("Purchaser") and an indirect
wholly owned subsidiary of United Dominion Industries Limited, a corporation
organized under the laws of Canada ("Parent"), to purchase all outstanding
shares of common stock, par value $1.00 per share (the "Shares"), of Core
Industries Inc, a Nevada corporation (the "Company"), at a price of $25.00 per
Share, net to the seller in cash, without interest thereon, upon the terms and
subject to the conditions set forth in the Offer. The Offer is being made in
connection with the Agreement and Plan of Merger, dated as of June 25, 1997,
among Parent, Purchaser and the Company (the "Merger Agreement"). Holders of
Shares whose certificates for such Shares (the "Share Certificates") are not
immediately available or who cannot deliver their Share Certificates and all
other required documents to Harris Trust and Savings Bank (the "Depositary") or
complete the procedures for book-entry transfer prior to the Expiration Date (as
defined in the Offer to Purchase) must tender their Shares according to the
guaranteed delivery procedures set forth in Section 3 of the Offer to Purchase.
WE ARE (OR OUR NOMINEE IS) 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.
We request instructions as to whether you wish to have us tender on your
behalf any or all of the Shares held by us for your account, upon the terms and
subject to the conditions set forth in the Offer.
Your attention is invited to the following:
1. The tender price is $25.00 per Share, net to the seller in cash
without interest.
2. The Offer is being made for all outstanding Shares.
3. The Board of Directors of the Company has unanimously approved the
Offer, the Merger (as defined in the Offer to Purchase) and the Merger
Agreement (as defined in the Offer to Purchase), has determined that the
Offer and the Merger are fair to, and in the best interests of, the Company
and the Company's stockholders and recommends that holders of Shares accept
the Offer and tender their Shares pursuant to the Offer.
4. The Offer and withdrawal rights will expire at 12:00 Midnight, New
York City time, on Wednesday, July 30, 1997, unless the Offer is extended.
<PAGE> 2
5. 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 that would represent at least a majority of the
voting power of the Shares on a fully diluted basis at the expiration of
the Offer, (ii) any waiting period under the HSR Act (as defined in the
Offer to Purchase) applicable to the purchase of Shares pursuant to the
Offer having expired or having been terminated prior to the expiration of
the Offer and (iii) the satisfaction of certain other terms and conditions
contained in the Offer to Purchase.
6. 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 with respect to the purchase of
Shares by Purchaser pursuant to the Offer.
If you wish to have us tender any or all of your Shares, please so instruct
us by completing, executing and returning to us the instruction form contained
in this letter. An envelope in which to return your instructions to us is
enclosed. If you authorize the tender of your Shares, all such Shares will be
tendered unless otherwise specified in your instructions. YOUR INSTRUCTIONS
SHOULD BE FORWARDED TO US IN AMPLE TIME TO PERMIT US TO SUBMIT A TENDER ON YOUR
BEHALF PRIOR TO THE EXPIRATION OF THE OFFER.
The Offer is made only by the Offer to Purchase and the related Letter of
Transmittal and is not being made to (nor will tenders be accepted from or on
behalf of) holders of Shares in any jurisdiction in which the Offer or the
acceptance thereof would not be in compliance with the securities, blue sky or
other laws of such jurisdiction. However, Purchaser may, in its discretion, take
such action as it may deem necessary to make the Offer in any jurisdiction and
extend the Offer to holders of Shares in such jurisdiction. In those
jurisdictions where securities 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
Merrill Lynch, Pierce, Fenner & Smith Incorporated or Furman Selz LLC or one or
more registered brokers or dealers licensed under the laws of such jurisdiction.
<PAGE> 3
INSTRUCTIONS WITH RESPECT TO
THE OFFER TO PURCHASE FOR CASH
ALL OUTSTANDING SHARES OF COMMON STOCK
OF
CORE INDUSTRIES INC
BY
UD NEVADA CORP.
The undersigned acknowledge(s) receipt of your letter and the enclosed
Offer to Purchase, dated July 2, 1997, and the related Letter of Transmittal
(which, as amended from time to time, together constitute the "Offer"), in
connection with the offer by UD Nevada Corp., a Nevada corporation and an
indirect wholly owned subsidiary of United Dominion Industries Limited, a
corporation organized under the laws of Canada, to purchase all outstanding
shares of common stock, par value $1.00 per share (the "Shares"), of Core
Industries Inc, a Nevada corporation.
This will instruct you to tender the number of Shares indicated below (or,
if no number is indicated below, all Shares) that 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
---------------------------------
Date:
- ---------------------------------------
SIGN HERE
Signature(s)
- --------------------------------------------------------------------------------
(Print Name(s))
- --------------------------------------------------------------------------------
(Print Address(es))
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
(Area Code and
Telephone Number(s))
- --------------------------------------------------------------------------------
(Taxpayer 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
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: e.g.,
000-00-0000. Employer identification numbers have nine digits separated by only
one hyphen: e.g., 00-0000000. The table below will help determine the number to
give the payer.
<TABLE>
<CAPTION>
- ------------------------------------------------------------
GIVE THE
SOCIAL SECURITY
FOR THIS TYPE OF ACCOUNT: NUMBER OF--
- ------------------------------------------------------------
<C> <S> <C>
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
trust account (grantor is also grantor-trustee(1)
trustee)
b. So-called trust account that is The actual owner(1)
not a legal or valid trust
under State law
- ------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
- ------------------------------------------------------------
GIVE THE
SOCIAL SECURITY
FOR THIS TYPE OF ACCOUNT: NUMBER OF--
- ------------------------------------------------------------
<C> <S> <C>
8. Sole proprietorship account The owner(4)
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. You may also enter your business or "doing
business as" name. Furnish the owner's social security number or the
employer identification number of the sole proprietorship.
(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 do not have a taxpayer identification number or you do not know your
number, obtain Form SS-5, Application for a Social Security Number Card (for
individuals), or Form SS-4, Application for Employer Identification Number (for
businesses and all other entities), at an office of the Social Security
Administration or the Internal Revenue Service.
To complete Substitute Form W-9, if you do not have a taxpayer identification
number, write "Applied For" in the space for the taxpayer identification number
in Part 1, sign and date the Form, and give it to the requester. Generally, you
will then have 60 days to obtain a taxpayer identification number and furnish it
to the requester. If the requester does not receive your taxpayer identification
number within 60 days, backup withholding, if applicable, will begin and will
continue until you furnish your taxpayer identification number to the requester.
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, or a custodial account under section 403(b)(7).
- 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 or a political subdivision, agency or instrumentality
thereof.
- An international organization or any agency or instrumentality thereof.
- A registered dealer in securities or commodities registered in the United
States or a possession of the United States.
- A real estate investment trust.
- A common trust fund operated by a bank under section 584(a).
- An entity registered at all times during the tax year 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 United
States 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 (i) this interest is $600 or more, (ii) the
interest is paid in the course of the payer's trade or business and (iii)
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 nonresident aliens.
- Payments on tax-free covenant bonds under section 1451.
- Payments made by certain foreign organizations.
- Payments made to a nominee.
EXEMPT PAYEES DESCRIBED ABOVE SHOULD FILE A SUBSTITUTE 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,
SIGN AND DATE THE FORM AND RETURN IT TO THE PAYER.
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 dividends,
interest, or other payments to give taxpayer identification numbers to payers
who must report the payments to IRS. The IRS uses the numbers for identification
purposes and to help verify the accuracy of your tax return. Payers must be
given the numbers whether or not recipients are required to file tax returns.
Payers must generally withhold 31% of taxable interest, dividends, 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 correct 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) CIVIL PENALTY FOR FALSE STATEMENTS WITH RESPECT TO WITHHOLDING.--If you make
a false statement with no reasonable basis which results in no imposition of
backup withholding, you are subject to a penalty of $500.
(3) CRIMINAL PENALTY FOR FALSIFYING INFORMATION.--If you falsify certifications
or affirmations, you are subject to criminal penalties including fines and/or
imprisonment.
FOR ADDITIONAL INFORMATION CONTACT YOUR TAX
CONSULTANT OR THE INTERNAL REVENUE SERVICE
Unless otherwise noted herein, all references to section numbers or to
regulations are references to the Internal Revenue Code of 1986, as amended, and
the regulations promulgated thereunder.
<PAGE> 1
- --------------------------------------------------------------------------------
This announcement is neither an offer to purchase nor a solicitation of an offer
to sell Shares. The Offer is made only by the Offer to Purchase dated July 2,
1997, and the related Letter of Transmittal and is not being made to (nor will
tenders be accepted from or on behalf of) holders of Shares in any jurisdiction
in which the Offer or the acceptance thereof would not be in compliance with the
securities, blue sky or other laws of such jurisdiction. However, the Purchaser
may, in its discretion, take such action as it may deem necessary to make the
Offer in any jurisdiction and extend the Offer to holders of Shares in such
jurisdiction. In those jurisdictions where securities 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 Merrill Lynch, Pierce, Fenner & Smith Incorporated or
Furman Selz LLC (the "Dealer Managers") or one or more registered brokers or
dealers licensed under the laws of such jurisdiction.
NOTICE OF OFFER TO PURCHASE FOR CASH
ALL OUTSTANDING SHARES OF COMMON STOCK
OF
CORE INDUSTRIES INC
AT
$25.00 NET PER SHARE
BY
UD NEVADA CORP.
AN INDIRECT WHOLLY OWNED SUBSIDIARY OF
UNITED DOMINION INDUSTRIES LIMITED
UD Nevada Corp., a Nevada corporation ("Purchaser") and an indirect wholly
owned subsidiary of United Dominion Industries Limited, a corporation organized
under the laws of Canada ("Parent"), is offering to purchase all outstanding
shares (the "Shares") of common stock, par value $1.00 per share (the "Common
Stock"), of Core Industries Inc, a Nevada corporation (the "Company"), at a
price of $25.00 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 July 2, 1997 (the "Offer to Purchase"), and in the related Letter of
Transmittal (which, as amended from time to time, together constitute the
"Offer"). Following the Offer, Purchaser intends to effect the Merger described
below.
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW
YORK CITY TIME, ON WEDNESDAY, JULY 30, 1997, UNLESS THE OFFER IS
EXTENDED.
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 THAT WOULD REPRESENT AT LEAST A MAJORITY OF THE VOTING POWER OF THE
SHARES ON A FULLY DILUTED BASIS AT THE EXPIRATION OF THE OFFER, (II) ANY WAITING
PERIOD UNDER THE HSR ACT (AS DEFINED IN THE OFFER TO PURCHASE) APPLICABLE TO THE
PURCHASE OF SHARES PURSUANT TO THE OFFER HAVING EXPIRED OR HAVING BEEN
TERMINATED PRIOR TO THE EXPIRATION OF THE OFFER AND (III) THE SATISFACTION OF
CERTAIN OTHER TERMS AND CONDITIONS CONTAINED IN THE OFFER TO PURCHASE.
The Offer is being made pursuant to an Agreement and Plan of Merger, dated
as of June 25, 1997 (the "Merger Agreement"), among Parent, Purchaser and the
Company. The Merger Agreement provides that, among other things, as soon as
practicable after the purchase of Shares pursuant to the Offer and the
satisfaction of the other conditions set forth in the Merger Agreement and in
accordance with relevant provisions of the General Corporation Law of the State
of Nevada ("Nevada Law"), Purchaser will be merged with and into the Company
(the "Merger"). Following consummation of the Merger, the Company will continue
as the surviving corporation (the "Surviving Corporation") as an indirect wholly
owned subsidiary of Parent. Notwithstanding the foregoing, Parent may elect at
any time prior to the fifth business day immediately preceding the date on which
the proxy statement with respect to the Company's stockholders' meeting with
respect to the Merger is mailed initially to the Company's stockholders, to
merge the Company into Purchaser or another direct or indirect wholly owned
subsidiary of Parent. In such event, the parties have agreed to execute an
appropriate amendment to the Merger Agreement in order to reflect the foregoing
and to provide, as the case may be, that Purchaser or such other wholly owned
subsidiary of Parent shall be the Surviving Corporation. 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 Purchaser,
Parent, the Company or any wholly owned subsidiary of Parent or the Company and
any Shares held by stockholders who shall have properly exercised their rights
of dissent with respect to such Shares in accordance with Nevada Law) will be
cancelled and converted automatically into the right to receive $25.00 in cash,
or any higher price that may be paid per Share in the Offer, without interest.
THE BOARD OF DIRECTORS OF THE COMPANY HAS UNANIMOUSLY APPROVED THE OFFER,
THE MERGER AND THE MERGER AGREEMENT, HAS DETERMINED THAT THE OFFER AND THE
MERGER ARE FAIR TO, AND IN THE BEST INTERESTS OF, THE COMPANY AND THE COMPANY'S
STOCKHOLDERS AND RECOMMENDS THAT HOLDERS OF SHARES ACCEPT THE OFFER AND TENDER
THEIR SHARES PURSUANT TO THE OFFER.
If required under the Company's Articles of Incorporation and Nevada Law,
the affirmative vote of the holders of a majority of the outstanding Shares is
required to approve and adopt the Merger Agreement and the Merger.
For purposes of the Offer, Purchaser will be deemed to have accepted for
payment (and thereby purchased) Shares validly tendered and not withdrawn as, if
and when Purchaser gives oral or written notice to Harris Trust and Savings Bank
(the "Depositary") of Purchaser's acceptance for payment of such Shares pursuant
to the Offer. Upon the terms and subject to the conditions of the Offer, payment
for Shares accepted for payment pursuant to the Offer will be made by deposit of
the
<PAGE> 2
purchase price therefor with the Depositary, which will act as agent for
tendering stockholders for the purpose of receiving payments from Purchaser and
transmitting such payments to tendering stockholders whose Shares have been
accepted for payment. Under no circumstances will interest on the purchase price
for Shares be paid, regardless of any delay in making such payment. In all
cases, payment for Shares tendered and accepted for payment pursuant to the
Offer will be made only after timely receipt by the Depositary of (i) the
certificates evidencing such Shares (the "Share Certificates") or timely
confirmation of a book-entry transfer of such Shares into the Depositary's
account at one of the Book-Entry Transfer Facilities (as defined in Section 2 of
the Offer to Purchase) pursuant to the procedures set forth in Section 3 of the
Offer to Purchase, (ii) 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 Section 2 of the Offer to Purchase) in
connection with a book-entry transfer, and (iii) any other documents required by
the Letter of Transmittal.
Purchaser expressly reserves the right (but will not be obligated), in its
sole discretion, at any time and from time to time, to extend for any reason,
including the occurrence of any of the conditions specified in Section 14 of the
Offer to Purchase, the period of time during which the Offer is open, by giving
oral or written notice of such extension to the Depositary. Any such extension
will be followed as promptly as practicable by public announcement thereof, such
announcement to be made no later than 9:00 a.m., New York City time, on the next
business day after the previously scheduled expiration date of the Offer. During
any such extension, all Shares previously tendered and not withdrawn will remain
subject to the Offer, subject to the rights of a tendering stockholder to
withdraw such stockholder's Shares. There can be no assurances that Purchaser
will exercise its right to extend the Offer.
If any of the conditions set forth in the Offer to Purchase that relate to
Purchaser's obligation to purchase the Shares are not satisfied by 12:00
Midnight, New York City time, on Wednesday, July 30, 1997 (or the latest time
and date at which the Offer, if extended by Purchaser, shall expire), Purchaser
may (i) extend the Offer and, subject to applicable withdrawal rights, retain
all tendered Shares until the expiration of the Offer as so extended, (ii)
subject to complying with applicable rules and regulations of the Securities and
Exchange Commission, accept for payment all Shares so tendered and not extend
the Offer, or (iii) terminate the Offer and not accept for payment any Shares
and return all tendered Shares to tendering stockholders.
Tenders of Shares made pursuant to the Offer are irrevocable except that
such Shares may be withdrawn at any time prior to 12:00 Midnight, New York City
time, on Wednesday, July 30, 1997 (or the latest time and date at which the
Offer, if extended by Purchaser, shall expire) and, unless theretofore accepted
for payment by Purchaser pursuant to the Offer, may also be withdrawn at any
time after August 30, 1997. For the withdrawal to be effective, a written or
facsimile transmission notice of withdrawal must be timely received by the
Depositary at one of its addresses set forth on the back cover page of the 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 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 (as defined in Section 3 of the Offer to Purchase), 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 Section 3 of the Offer to Purchase, any notice of withdrawal must also
specify the name and number of the account of the Book-Entry Transfer Facility
to be credited with the withdrawn Shares, in which case a notice of withdrawal
will be effective if delivered to the Depositary by any method of delivery
described in Section 4 of the Offer to Purchase. Withdrawals of Shares may not
be rescinded. All questions as to the form and validity (including the time of
receipt) of any notice of withdrawal will be determined by Purchaser, in its
sole discretion, whose determination will be final and binding.
The information required to be disclosed by Rule 14d-6(e)(1)(vii) of the
General Rules and Regulations under the Securities Exchange Act of 1934, as
amended, is contained in the Offer to Purchase and is incorporated herein by
reference.
The Company has provided Purchaser with the Company's stockholder list and
security position listings for the purpose of disseminating the Offer to holders
of Shares. The Offer to Purchase and the related Letter of Transmittal and other
related materials will be mailed to record holders of Shares whose names appear
on the Company's stockholder list and will be furnished to brokers, dealers,
commercial banks, trust companies and similar persons whose names, or the names
of whose nominees, appear on the stockholder list or, if applicable, who are
listed as participants in a clearing agency's security position listing for
subsequent transmittal to beneficial owners of Shares.
THE OFFER TO PURCHASE AND THE RELATED LETTER OF TRANSMITTAL CONTAIN
IMPORTANT INFORMATION THAT SHOULD BE READ CAREFULLY BEFORE ANY DECISION IS MADE
WITH RESPECT TO THE OFFER.
Questions and requests for assistance may be directed to the Dealer
Managers or the Information Agent at their respective addresses and telephone
numbers as set forth below. Purchaser will not pay any fees or commissions to
any broker or dealer or to any other person (other than the Dealer Managers and
the Information Agent) for soliciting tenders of Shares pursuant to the Offer.
Additional copies of the Offer to Purchase, the Letter of Transmittal and all
other tender offer materials may be obtained from the Information Agent or from
brokers, dealers, commercial banks and trust companies, and will be furnished
promptly at Purchaser's expense.
The Information Agent for the Offer is:
[MACKENZIE PARTNERS, INC. LOGO]
156 Fifth Avenue
New York, New York 10010
(212) 929-5500 (Call Collect) or
CALL TOLL FREE (800) 322-2885
The Dealer Managers for the Offer are:
<TABLE>
<S> <C>
MERRILL LYNCH & CO. FURMAN SELZ
World Financial Center 230 Park Avenue
North Tower New York, New York 10169
New York, New York 10281-1305 1-800-939-9991 (Toll Free)
1-800-436-1019 (Toll Free)
212-449-8209 (Call Collect)
</TABLE>
July 2, 1997
- --------------------------------------------------------------------------------
<PAGE> 1
EXHIBIT (a)(8)
[United Dominion Letterhead]
CONTACT--
Media - Nancy Spurlock (704) 347-6838 FOR IMMEDIATE RELEASE
Analysts - Michael Morgan (704) 347-6529
UNITED DOMINION TO ACQUIRE TWO
LEADING INDUSTRIAL MANUFACTURERS FOR $770 MILLION
CHARLOTTE, NC (June 26, 1997) -- United Dominion Industries Ltd. (NYSE,
TSE: UDI) today announced definitive agreements to acquire all the outstanding
stock of Core Industries, Inc. (NYSE: CRI) and Imo Industries Inc. (NYSE: IMD).
The consideration for the two transactions totals approximately $770 million,
and both transactions have the approval of the respective boards of directors.
William R. Holland, chairman and chief executive officer of United
Dominion, said these acquisitions complete United Dominion's transformation to
a top-tier company focused solely on the manufacture of proprietary engineered
products for worldwide industrial markets.
"The two transactions represent a milestone in our efforts to reshape
United Dominion's business mix and enhance margins and profitability,"
Mr. Holland said. "Both acquisitions meet our criteria in all respects. They
add leading industrial products to our business mix, vastly expand our current
product offerings and provide us with numerous opportunities for expansion
domestically and internationally."
Recently, United Dominion announced the divestiture of business units in
its Building Products Segment, including Varco-Pruden, Windsor Door, and its 50
percent interest in Centria. These
...more
<PAGE> 2
-2-
divestitures accounted for approximately $455 million of United Dominion's 1996
sales. The new acquisitions are expected to provide additional annual revenues
of approximately $750 million on a pro forma basis.
"Together with the expenditures for Flair Corporation in 1995, product
line acquisitions and these two transactions, we will have invested roughly the
$1 billion in engineered, manufactured products that we anticipated during our
Vision '99 strategic planning period," Mr. Holland said.
Core Industries produces specialized industrial products in three
segments; fluid control; test, measurement and control; and farm equipment.
Its products include Mueller strainers and check valves, FEBCO water backflow
prevention valves, Amprobe electrical test and refrigerant recovery
instruments, GSE/Air Gage fastening tools and gauging systems, and Sunflower
and Feterl/Richardton farm equipment. Headquartered in Bloomfield Hills, Mich.,
the company has 1,800 employees at 18 locations.
Imo Industries is a global manufacturer of pumps, power transmission
equipment, fluid sensors, motion control products and automotive components for
niche industrial markets. The company derives approximately 45 percent of its
revenues from international operations. Imo's businesses include Boston Gear, a
leading manufacturer of speed reducers and gears for the power transmission
industry; Imo Pump, the largest worldwide manufacturer of rotary screw pumps;
and Gems sensors, a leading manufacturer of liquid sensing, measurement and
control instruments; Morse Controls, a leading producer of remote control
systems for marine and industrial vehicle applications; and Roltra-Morse, a
manufacturer of automobile components, primarily in the Italian market.
Headquartered in Lawrenceville, N.J., the company has 3,700 employees worldwide
at 30 locations in the U.S., Europe and Asia.
...more
<PAGE> 3
-3-
Through a newly formed subsidiary, United Dominion will begin a tender
offer on or before July 3 for Imo's approximately 17.4 million common shares
(fully diluted) at a price of $6 per share. Simultaneously, United Dominion
will tender Imo's $155 million 11 3/4 percent subordinated debentures due 2006
at 120 percent of outstanding principal. Including the assumption of Imo's
other debt and closing expenses, total value of the transaction will be
approximately $440 million.
Similar arrangements will be made through another newly formed United
Dominion subsidiary to purchase Core Industries' 11.1 million common shares
(fully diluted) at a price of $25 per share. This transaction will total
approximately $330 million including assumed debt and closing expenses.
United Dominion also said that Core has agreed to pay United Dominion a
$10 million termination fee and that Imo has agreed to pay United Dominion an
$8 million termination fee, both subject to certain circumstances.
The Core offer is subject to the tender of a majority of the outstanding
shares and certain other conditions including the expiration or termination of
the waiting periods under the Hart-Scott-Rodino Antitrust Improvement Act of
1976. In the case of Imo, the offer is subject to the tender of a majority
of the principal amount of $155 million of subordinated debentures and more
than 80 percent of the outstanding shares and certain other conditions
including the expiration or termination of the waiting periods under the
Hart-Scott-Rodino Antitrust Improvement Act of 1976. The tender offers will be
followed by a merger in which each remaining share will be converted into the
right to receive the cash price per share paid in the offer. The stock tender
offers will be made only through offering documents, which will be filed
promptly with the Securities and Exchange Commission and mailed to Core and Imo
stockholders respectively.
...more
<PAGE> 4
-4-
After completing these transactions, United Dominion, a diversified
manufacturer of industrial and commercial products will have revenues of
approximately $2.4 billion and employ approximately 14,100 people at 92
locations in 18 countries.
# # #
NOTE TO EDITORS: IMO Industries has locations in Stockholm, Sweden; Monroe,
Louisburg, and Charlotte, N.C.; Columbia, Ky.; Warren, Mass.; Florence, Ky.;
Trenton, N.J.; Quincy, Mass.; York, Pa.; Plainville, Conn.; Basingstoke and
Basildon, England; Wetzikon, Switzerland; Hudson, Ohio; New Orleans, La.;
Sydney, Australia; Sarasota, Fla.; Heiligenhaus, Germany; Yokohama, Japan;
Singapore; Paris, France; Turin, Pisa, Altare, Isernia and Cassino, Italy; and
Sosnowiec, Poland.
Core Industries has locations in St. Pauls and Lumberton, N.C.; Fresno, Calif.;
Houston, Tex.; Singapore; Lynbrook, N.Y.; Farmington Hills, Bridgeport and
Livonia, Mich.; Denver, Colo.; Salem, S.D.; Richardton, N.D.; and Beloit and
Cawker City, Kan.
<PAGE> 1
EXHIBIT (a)(9)
Core Industries Inc
500 North Woodward
P.O. Box 2000
Bloomfield Hills, MI 48303-2000
Telephone: (248) 642-3400
FAX: (248) 642-6816
[Core Industries Logo]
NEWS RELEASE
FOR IMMEDIATE RELEASE Contact: Mark J. MacGuidwin
June 26, 1997 Telephone: (248) 901-1575
E-mail: [email protected]
CORE INDUSTRIES TO BE ACQUIRED
BY UNITED DOMINION INDUSTRIES
Core Industries Inc (CRI: NYSE) announced today that it has entered into a
definitive agreement pursuant to which all of the outstanding common stock of
Core will be acquired by United Dominion Industries Ltd. (UDI: NYSE, TSE).
Under the agreement, which has been unanimously approved by Core's board of
directors, United Dominion will commence a tender offer for all outstanding
common stock of Core for $25 per share in cash. The tender offer will be
followed by a merger in which any shares not acquired by United Dominion in the
tender offer will be acquired for the same amount of cash.
The tender offer will commence no later than Wednesday, July 2 and will be
conditioned on a majority of the outstanding shares of Core being tendered as
well as other customary conditions.
Goldman, Sachs & Co. has acted as financial advisor to Core in connection with
the transaction.
United Dominion Industries Ltd. is a diversified manufacturer of industrial and
commercial products.
Core Industries Inc manufactures specialty products in three segments: Fluid
Controls and Construction Products; Test, Measurement and Control; and Farm
Equipment.
Core's Internet address is http://www.core-ind.com
<PAGE> 1
OFFER TO PURCHASE FOR CASH
ALL OUTSTANDING SHARES OF COMMON STOCK
OF
CORE INDUSTRIES INC
AT
$25.00 NET PER SHARE
BY
UD NEVADA CORP.
AN INDIRECT WHOLLY OWNED SUBSIDIARY OF
UNITED DOMINION INDUSTRIES LIMITED
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK
CITY TIME, ON WEDNESDAY, JULY 30, 1997, UNLESS THE OFFER IS EXTENDED.
July 2, 1997
To Participants in the Core Industries Inc 401(k) Plans:
Enclosed for your consideration are the Offer to Purchase, dated July 2,
1997 (the "Offer to Purchase"), and a related Letter of Transmittal (which, as
amended from time to time, together constitute the "Offer"), in connection with
the offer by UD Nevada Corp., a Nevada corporation ("Purchaser") and an indirect
wholly owned subsidiary of United Dominion Industries Limited, a corporation
organized under the laws of Canada ("Parent"), to purchase all outstanding
shares of common stock, par value $1.00 per share (the "Shares"), of Core
Industries Inc, a Nevada corporation (the "Company"), at a price of $25.00 per
Share, net to the seller in cash, without interest thereon, upon the terms and
subject to the conditions set forth in the Offer. The Offer is being made in
connection with the Agreement and Plan of Merger, dated as of June 25, 1997,
among Parent, Purchaser and the Company (the "Merger Agreement").
WE ARE THE HOLDER OF RECORD OF SHARES HELD FOR YOUR ACCOUNT AS A
PARTICIPANT IN ONE OF MORE OF THE COMPANY'S 401(K) PLANS (COLLECTIVELY, THE
"PLAN"). A TENDER OF SUCH SHARES CAN BE MADE ONLY BY US AS THE HOLDER OF RECORD
IN ACCORDANCE WITH THE TERMS OF THE PLAN, TO THE EXTENT CONSISTENT WITH
APPLICABLE LAWS. THE LETTER OF TRANSMITTAL IS FURNISHED TO YOU FOR YOUR
INFORMATION ONLY AND CANNOT BE USED BY YOU TO TENDER SHARES HELD IN YOUR PLAN
ACCOUNT.
Accordingly, we request information as to whether you wish to have us
tender any or all of the Shares held in your Plan account, upon the terms and
conditions set forth in the Offer.
Please note the following:
1. The tender price is $25.00 per Share, net to the seller in cash,
without interest thereon.
2. The Offer is being made for all of the outstanding Shares.
3. The Board of Directors of the Company has unanimously approved the
Offer, the Merger (as defined in the Offer to Purchase) and the Merger
Agreement, has determined that the Offer and the Merger are fair to, and in
the best interests of, the Company and the Company's stockholders and
recommends that holders of Shares accept the Offer and tender their Shares
pursuant to the Offer.
<PAGE> 2
4. The Offer and withdrawal rights will expire at 12:00 Midnight, New
York City time, on Wednesday, July 30, 1997, unless the Offer is extended.
5. 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 that would represent at least a majority of the
voting power of the Shares on a fully diluted basis at the expiration of
the Offer, (ii) any waiting period under the HSR Act (as defined in the
Offer to Purchase) applicable to the purchase of Shares pursuant to the
Offer having expired or having been terminated prior to the expiration of
the Offer and (iii) the satisfaction of certain other terms and conditions
contained in the Offer to Purchase.
6. Shares in Plan accounts as to which we have not received
instructions from Participants will not be tendered in the Offer.
If you wish to have us tender any or all of the Shares held in your Plan
account, please so instruct us by completing, executing, detaching and returning
to Harris Trust and Savings Bank (the "Depositary") the instruction form
contained in this letter. An envelope to return your instruction to the
Depositary is enclosed. The Depositary will receive such instruction form on our
behalf and is hereby authorized and instructed to forward such instruction form
to us. If you authorize tender of your Shares, all such Shares will be tendered
unless otherwise indicated in such instruction form. PLEASE FORWARD YOUR
INSTRUCTIONS TO THE DEPOSITARY SO THAT THEY ARE RECEIVED BY THE DEPOSITARY NO
LATER THAN 5:00 P.M., NEW YORK TIME, ON MONDAY, JULY 21, 1997, TO ALLOW US AMPLE
TIME TO TENDER YOUR SHARES ON YOUR BEHALF PRIOR TO THE EXPIRATION OF THE OFFER.
The Offer is made only by the Offer to Purchase and the related Letter of
Transmittal and is not being made to (nor will tenders be accepted from or on
behalf of) holders of Shares in any jurisdiction in which the Offer or the
acceptance thereof would not be in compliance with the securities, blue sky or
other laws of such jurisdiction. However, Purchaser may, in its discretion, take
such action as it may deem necessary to make the Offer in any jurisdiction and
extend the Offer to holders of Shares in such jurisdiction. In those
jurisdictions where the securities 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 Merrill Lynch, Pierce, Fenner & Smith Incorporated, Furman Selz LLC
or one or more registered brokers or dealers licensed under the laws of such
jurisdiction.
Very truly yours,
Putnam Investments
2
<PAGE> 3
INSTRUCTION TO PUTNAM INVESTMENTS WITH RESPECT TO
THE OFFER TO PURCHASE FOR CASH
ALL OUTSTANDING SHARES OF COMMON STOCK
OF
CORE INDUSTRIES INC
The undersigned acknowledge(s) receipt of your letter and the enclosed
Offer to Purchase dated July 2, 1997 (the "Offer to Purchase"), and the related
Letter of Transmittal (which, as amended from time to time, together constitute
the "Offer"), in connection with the offer by UD Nevada Corp., a Nevada
corporation (the "Purchaser") and an indirect wholly owned subsidiary of United
Dominion Industries Limited, a corporation organized under the laws of Canada,
to purchase all outstanding shares of common stock, par value $1.00 per share
(the "Shares"), of Core Industries Inc, a Nevada corporation (the "Company").
This will instruct you to tender 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.
NOTE: Shares in Plan accounts as to which we have not received instructions
will not be tendered in the Offer.
Number of Shares to be Tendered:(1) SIGN HERE
--------------------------------------
--------------------------------------
Signature(s)
--------------------------------------
--------------------------------------
Print Name(s)
--------------------------------------
Area Code and Telephone Number(s)
--------------------------------------
Taxpayer Identification or
Social Security Number(s)
- ---------------
1Unless otherwise indicated, it will be assumed that all Shares held by us
for your account are to be tendered.
3
<PAGE> 1
EXHIBIT (B)(1)
June 24, 1997
Mr. Glenn A. Eisenberg
Senior Vice President and Chief Financial Officer
United Dominion Industries
2300 One First Union Center
301 South College Street
Charlotte, NC 28202-6039
Dear Glenn:
I am glad that we finally made it on Friday to meet with you and the rest
of the UDI team to review the proposed acquisitions of "Apple" and "Orange".
Following our discussions on Friday and this morning, we are pleased to submit
Royal Bank's firm offer to arrange a US$650 million five year revolving credit
facility and a US$150 million 364 day revolving credit facility. It is our
understanding that these facilities will be used to demonstrate UDI's ability to
finance a controlling interest in the shares of both "Apple" and "Orange".
The Royal Bank of Canada has fully underwritten both facilities, subject
only to satisfactory documentation which we expect would essentially mirror the
terms and conditions attached as well as those contained in your June 20, 1996
revolving credit facility (as amended). Pricing on the various facilities has
been significantly reduced however in order to bring the transaction in line
with current market conditions.
As was briefly discussed with you, we believe that the new facilities can
be syndicated to your existing bank group plus a select group of new lenders if
necessary to hedge the possibility that either some lenders are unable to commit
either at a higher level or due to potential conflicts. In any event, we feel
comfortable that the facility will be comfortably subscribed.
The fees that we propose to charge UDI in connection with the transaction
are contained in the attached fee letter. If you are in agreement with these
terms and conditions, please sign and return one copy of the summary term sheet
and fee letter. The second copies are for your records.
Thank you for your continued confidence in RBC and I very much look forward
to working with you and Tom on this and other deals over the next few years.
Please let me know should you have any questions or concerns.
Sincerely,
/s/ JOHN M. CRAWFORD
--------------------------------------
Senior Manager
<PAGE> 2
SUMMARY OF TERMS & CONDITIONS
FOR
UNITED DOMINION INDUSTRIES
BORROWERS: United Dominion Industries Limited., a Canadian
corporation and/or United Dominion Industries,
Inc., a Delaware corporation.
GUARANTOR-OBLIGOR: The obligations of each of the two Borrowers are
guaranteed by the other as well as by United
Dominion Holdings, Inc.
AGENT & ARRANGER: Royal Bank of Canada ("RBC").
FACILITY & AMOUNT: Syndicated Loan Facility and a Bridge Facility,
collectively the "Credit Facilities", up to an
aggregate of US $800 million.
Syndicated Loan Facility
Tranche 1: US$650 million, five year Revolving
Credit Facility
The Syndicated Loan Facility will be provided by
the Agent and a syndicate of Banks for the purpose
of acquiring "Apple" and "Orange", refinancing
certain existing "Apple" and "Orange" debt
including US$155mm of Senior Subordinated Debt and
all outstandings under UDI's existing US$300
million Revolving Credit Facility dated June 20,
1996, as amended, and for general corporate
purposes.
Bridge Facility
Tranche 2: US$150 million, 364 day Revolving Credit
Facility, provided by Royal Bank of Canada and a
select group of UDI lenders for general corporate
purposes.
AGENT'S INITIAL COMMITMENT: US$800 million.
BANKS: Syndicate of banks acceptable to the Borrowers and
the Agent.
CURRENCY AVAILABILITY: The Borrower will have the option to obtain funding
in all freely available currencies, including, but
not limited to, US Dollars and Deutschemarks.
Deutschemark loans shall not exceed the equivalent
of US$60 million.
BORROWING OPTIONS: At the Borrowers' option:
(i) Eurodollar Loans for 1, 2, 3, 6, 9 or 12
months,
(ii) Euro-Deutschemarks 1, 2, 3, 6, 9 or 12 months,
and
(iii) Base Rate Loans (higher of Prime or Fed Funds
plus 0.50%).
Each Bank will participate according to its
pro-rata share of allocated commitments of the
Syndicate Loan Facility.
APPLICABLE MARGIN: Refer to Exhibit I.
FACILITY FEE: Payable quarterly in arrears in accordance with
Exhibit I.
UTILIZATION FEE: Payable quarterly in arrears on daily average
outstandings, during the preceding three month
period, if the average outstandings are greater
than 50% of the Commitments in Level III only, in
accordance with Exhibit I.
INTEREST PAYMENT DATE: Eurodollar/Euro-deutschemark Loans: interest is
payable at the end of each Interest Period and, if
any Interest Period is longer than three months,
every three months (360 day basis).
<PAGE> 3
Base Rate Loans: interest is payable at the last
day of each calendar month (365/366 day basis).
COMPETITIVE BID OPTION: As per existing Credit Agreement dated June 20,
1996 as amended.
CONVERSION OPTION: At the Borrowers' option, any type of loan may be
converted to another type of loan with at least
three business days notice (or four days in the
case of Deutschemarks) prior to the requested
conversion date.
LETTER OF CREDIT OPTION: Up to $75 million availability under the facility
for issuance of Standby Letters of Credit. Letters
of Credit shall have an initial maturity of no more
than two years or the Termination Date, whichever
comes first. Issuing Bank shall be the Agent (or
other such Bank as may be agreed from time to time
by the Agent and the Borrowers). Upon issuance,
Letter of Credit obligations shall be shared
pro-rata by the Banks.
LETTER OF CREDIT FEE: As per existing Credit Agreement, as amended by
Exhibit I.
LETTER OF CREDIT ISSUING
FEE: The Agent agrees to act as Issuing Bank for a fee
of 0.10% per annum, payable quarterly in arrears on
the aggregate daily amount available for drawing
under such Letters of Credit.
DOCUMENTATION: Documentation will consist of an agreement, based
upon the Credit Agreement and Guaranty dated as of
June 20, 1996, as amended. Subject to negotiation
between the Agent and the Borrowers, and subject to
the approval of the Banks, the agreement will
contain cross-guarantees, representations and
warranties, conditions precedent, affirmative and
negative covenants including limitations on liens,
mergers and asset sales, events of default
including cross-default, yield protection and other
clauses customary to this type of facility.
CONDITIONS PRECEDENT: The following are conditions to the Effectiveness
of the Credit Facilities:
1. The Board of Directors of both Apple and Orange
have each approved the proposed acquisition;
2. The Board of Directors of UDI have approved both
proposed acquisitions.
3. Execution and delivery of satisfactory credit
agreement and other related documentation
embodying the structure, terms and conditions
contained herein.
4. Receipt of closing certificates, opinions of
counsel, and related documentation customary for
the type of transaction proposed.
The following are conditions to the initial
borrowing:
1. In the case of "Apple" only , the Borrower has
received sufficient acceptances of its tender
offer with respect to shares of "Apple" to
constitute legal control of the company.
2. In the case of "Orange" only, the Borrower has
received sufficient acceptances of its tender
offer with respect to shares of "Orange" to
constitute legal control of the company.
3. Repayment and cancellation of UDI's existing
US$300 million Revolving Credit Facility.
4. Receipt by the Agent of all fees and
reimbursable expenses payable to the Lenders
when due.
2
<PAGE> 4
5. No material change in the financial condition of
the Borrowers.
6. Receipt by the Agent of those certain fees and
expenses as detailed in the Fee Letter addressed
to the Borrowers, of even date.
The following are conditions of each borrowing
(including the initial borrowing):
1. No event of default or condition with which, the
giving of notice or the passage of time (or
both) would constitute an event of default shall
have occurred and be continuing;
2. Representations and warranties, as stated in
Article V of the Existing Credit Agreement and
incorporated herein by reference, are true and
correct in all material respects as of the date
of such borrowing.
FINANCIAL COVENANTS: The Credit Agreement will include, inter alia, the
following covenants:
(i) Fixed Charge Coverage Ratio shall not be less
than 2.5:1 at any time.
(ii) Consolidated Funded Debt shall not exceed 55%
of Consolidated Total Capitalization.
ASSIGNMENTS/PARTICIPATIONS: With consent of the Borrower (which shall not be
unreasonably withheld), Banks are permitted to sell
assignments or participations. Assignments shall be
in minimum amounts of $10 million; however if the
seller is not reducing commitments to zero said
commitment may not be reduced below $10 million.
Consent is not required for assignments to Federal
Reserve Banks.
EXPENSES: Borrower agrees to pay all reasonable out-of-pocket
expenses of the Agent, including fees and
disbursements of legal counsel, related to this
transaction.
REQUIRED BANKS: 67% of total commitments.
GOVERNING LAW: State of New York.
AGENT'S COUNSEL: Simpson Thacher & Bartlett
CLEAR MARKET: This offer is subject to there being no commercial
market borrowing or other transaction of a similar
nature for UDI or its consolidated subsidiaries
being syndicated among two or more financial
institutions from the date of acceptance of this
Summary until the execution of the Credit
Agreement.
CHANGE IN CIRCUMSTANCES: In the instance of a material adverse change in the
financial markets or the financial condition of the
Borrowers, this offer is subject to RBC's ability,
in its sole discretion, to reprice and restructure
the Facility in accordance with the then market
conditions.
ACCEPTANCE: This offer will remain open for acceptance until
the close of business on June 25, 1997, at which
time it will be deemed to have expired unless
accepted by UDI or otherwise extended by the Agent
at its sole discretion.
3
<PAGE> 5
This Summary of Terms and Conditions ("Summary") is for convenience of reference
only and shall not be considered to be exhaustive as to the final terms and
conditions which govern the financing. In the event of a conflict between the
provisions of this Summary and the Credit Agreement, the latter shall govern.
ROYAL BANK OF CANADA
/s/ JOHN CRAWFORD
--------------------------------------
By: John Crawford
Title: Senior Manager
We acknowledge and accept the terms and conditions outlined in this Summary
this 25th day of June, 1997.
UNITED DOMINION INDUSTRIES
/s/ Glenn Eisenberg /s/ Thomas J. Snyder
- -------------------------------- -----------------------------------
By: Glenn Eisenberg By: Thomas J. Snyder
Title: Senior Vice President and Title: Vice President and Treasurer
Chief Financial Officer
4
<PAGE> 6
EXHIBIT I
UNITED DOMINION INDUSTRIES
PRICING FOR THE 364 DAY BRIDGE FACILITY
<TABLE>
<CAPTION>
LEVEL I LEVEL II LEVEL III
------- -------- ---------
(ALL AMOUNTS IN BASIS POINTS)
<S> <C> <C> <C>
Consolidated Funded Debt to Capitalization <40% or >$40% & <#50% <50% or
- -
Ratio...................................... A- or A3 or BBB or Baa2 BBB- or Baa3
Facility Fee................................. 6.00 8.00 10.00
Applicable Margin............................ 19.00 27.00 35.00
Undrawn Cost................................. 6.00 8.00 10.00
(Facility Fee only):
Drawn Cost................................... 25.00 35.00 45.00
</TABLE>
PRICING GRID FOR: 5 YEAR REVOLVING CREDIT FACILITY
<TABLE>
<CAPTION>
LEVEL I LEVEL II LEVEL III
------- -------- ---------
(ALL AMOUNTS IN BASIS POINTS)
<S> <C> <C> <C>
Consolidated Funded Debt to Capitalization <40% or > $40% & <#50% 50% or
- -
Ratio...................................... A- or A3 or BBB or Baa2 BBB- or Baa3
Facility Fee................................. 8.00 10.00 12.50
Applicable Margin............................ 17.00 25.00 32.50
Undrawn Cost................................. 8.00 10.00 12.50
(Facility Fee only):
Drawn Cost................................... 25.00 35.00 45.00
</TABLE>
Note (1): In LEVEL III only, at all times when utilization of the Syndicated
Loan Facilities is greater than 50% and the Borrower is not rated by
either S&P (at BBB- or better) or Moody's (at Baa3 or better), an
additional 5.0 basis points will be added to the Drawn cost, resulting
in an adjusted Drawn cost of 50 basis points per annum.
<PAGE> 1
EXHIBIT (c)(1)
AGREEMENT AND PLAN OF MERGER
among
UNITED DOMINION INDUSTRIES LIMITED,
UD NEVADA CORP.
and
CORE INDUSTRIES INC
Dated as of June 25, 1997
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
ARTICLE I.
THE OFFER
<S> <C>
SECTION 1.01 The Offer........................................................1
SECTION 1.02 Company Action...................................................2
ARTICLE II.
THE MERGER
SECTION 2.01 The Merger.......................................................3
SECTION 2.02 Effective Time, Closing..........................................4
SECTION 2.03 Effect of the Merger.............................................4
SECTION 2.04 Articles of Incorporation; Bylaws................................4
SECTION 2.05 Directors and Officers...........................................4
SECTION 2.06 Conversion of Securities.........................................5
SECTION 2.07 Employee and Director Stock Options; Deferred Director Fees......5
SECTION 2.08 Surrender of Shares: Stock Transfer Books........................5
ARTICLE III.
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
SECTION 3.01 Organization and Qualification; Subsidiaries.....................7
SECTION 3.02 Articles of Incorporation and Bylaws.............................7
SECTION 3.03 Capitalization...................................................7
SECTION 3.04 Authority Relative to this Agreement.............................8
SECTION 3.05 No Conflict, Required Filings and Consents.......................8
SECTION 3.06 Compliance.......................................................9
SECTION 3.07 SEC Filings; Financial Statements................................9
SECTION 3.08 Absence of Certain Changes or Events............................10
SECTION 3.09 Absence of Litigation...........................................11
SECTION 3.10 Employee Benefit Plans..........................................11
SECTION 3.11 Labor Matters...................................................12
SECTION 3.12 Offer Documents; Schedule 14D-9; Proxy Statement................13
SECTION 3.13 Tangible Property; Real Property and Leases.....................13
SECTION 3.14 Trademarks, Patents and Copyrights..............................14
SECTION 3.15 Taxes...........................................................14
SECTION 3.16 Environmental Matters...........................................15
SECTION 3.17 Material Contracts..............................................16
</TABLE>
i
<PAGE> 3
<TABLE>
<S> <C>
SECTION 3.18 Insurance; Workers' Compensation................................16
SECTION 3.19 Certain Payments; Absence of Certain Business Practices.........16
SECTION 3.20 Licenses and Permits............................................16
SECTION 3.21 Letters of Credit, Surety Bonds, Guarantees.....................16
SECTION 3.22 Brokers.........................................................17
ARTICLE IV.
REPRESENTATIONS AND WARRANTIES OF PARENT AND PURCHASER
SECTION 4.01 Corporate Organization..........................................17
SECTION 4.02 Authority Relative to This Agreement............................17
SECTION 4.03 No Conflict; Required Filings and Consents......................17
SECTION 4.04 Financing.......................................................18
SECTION 4.05 Offer Documents; Proxy Statement................................18
SECTION 4.06 Due Diligence...................................................19
SECTION 4.07 Brokers.........................................................19
ARTICLE V.
CONDUCT OF BUSINESS PENDING THE MERGER
SECTION 5.01 Conduct of Business by the Company Pending the Merger...........19
ARTICLE VI.
ADDITIONAL AGREEMENTS
SECTION 6.01 Special Stockholders' Meeting...................................21
SECTION 6.02 Proxy Statement.................................................21
SECTION 6.03 Company Board Representation; Section 14(f).....................22
SECTION 6.04 Access to Information; Confidentiality..........................23
SECTION 6.05 No Solicitation of Transactions.................................23
SECTION 6.06 Employee Benefits Matters; Employment Agreements................24
SECTION 6.07 Directors' and Officers' Indemnification and Insurance..........24
SECTION 6.08 Notification of Certain Matters.................................25
SECTION 6.09 Further Action; Reasonable Best Efforts.........................25
SECTION 6.10 Public Announcements............................................26
SECTION 6.11 Confidentiality Agreement.......................................26
ARTICLE VII.
CONDITIONS TO THE MERGER
SECTION 7.01 Conditions to the Merger........................................26
</TABLE>
ii
<PAGE> 4
<TABLE>
<S> <C>
ARTICLE VIII.
TERMINATION, AMENDMENT AND WAIVER
SECTION 8.01 Termination.....................................................27
SECTION 8.02 Effect of Termination...........................................28
SECTION 8.03 Fees and Expenses...............................................28
SECTION 8.04 Amendment.......................................................30
SECTION 8.05 Waiver..........................................................30
ARTICLE IX.
GENERAL PROVISIONS
SECTION 9.01 Non-Survival of Representations, Warranties and Agreements......30
SECTION 9.02 Notices.........................................................30
SECTION 9.03 Certain Definitions.............................................31
SECTION 9.04 Severability....................................................32
SECTION 9.05 Entire Agreement, Assignment....................................32
SECTION 9.06 Parties in Interest.............................................32
SECTION 9.07 Specific Performance............................................33
SECTION 9.08 Governing Law...................................................33
SECTION 9.09 Headings........................................................33
SECTION 9.10 Counterparts....................................................33
</TABLE>
iii
<PAGE> 5
GLOSSARY OF DEFINED TERMS
<TABLE>
<CAPTION>
Location of
Definitions
-----------
<S> <C>
affiliate....................................................... Section 9.03(a)
Agreement....................................................... Preamble
Articles of Merger.............................................. Section 2.02
beneficial owner................................................ Section 9.03(b)
Blue Sky Laws................................................... Section 3.05(b)
Board........................................................... Recitals
business day.................................................... Section 9.03(c)
Certificates.................................................... Section 2.08(b)
Code............................................................ Section 3.10(a)
Company......................................................... Preamble
Competing Proposal.............................................. Section 8.03(a)(ii)
Confidentiality Agreement....................................... Section 6.04(c)
control......................................................... Section 9.03(d)
control by...................................................... Section 9.03(d)
Disclosure Schedule............................................. Section 3.01
Effective Time.................................................. Section 2.02
Environmental Law............................................... Section 3.16(a)
ERISA........................................................... Section 3.10(a)
ERISA Affiliate................................................. Section 3.10(a)
Exchange Act.................................................... Section 1.02(b)
Expenses........................................................ Section 8.03(c)
Fee............................................................. Section 8.03(a)
GAAP............................................................ Section 3.07(b)
Goldman, Sachs.................................................. Section 1.02(a)
Hazardous Substances............................................ Section 3.16(a)
HSR Act......................................................... Section 3.05(b)
Indemnified Parties............................................. Section 6.07(b)
Information Statement........................................... Section 3.12
IRS............................................................. Section 3.10(a)
Material Adverse Effect......................................... Section 3.01
Material Contracts.............................................. Section 3.17
Material Subsidiaries........................................... Section 3.01
Merger.......................................................... Recitals
Merger Consideration............................................ Section 2.06(a)
Minimum Condition............................................... Section 1.01(a)
Multiemployer Plan.............................................. Section 3.10(a)
Nevada Law...................................................... Recitals
1996 Balance Sheet.............................................. Section 3.07(c)
1997 Balance Sheet.............................................. Section 3.15
</TABLE>
iv
<PAGE> 6
<TABLE>
<S> <C>
Offer........................................................... Recitals
Offer Documents................................................. Section 1.01(b)
Offer to Purchase............................................... Section 1.01(b)
Parent.......................................................... Preamble
Paying Agent.................................................... Section 2.08(a)
Per Share Amount................................................ Recitals
person.......................................................... Section 9.03(e)
Proxy Statement................................................. Section 3.12
Purchaser....................................................... Preamble
Purchaser's Election Date....................................... Section 5.01
Qualified Plan.................................................. Section 3.10(a)
Schedule 14D-1.................................................. Section 1.01(b)
Schedule 14D-9.................................................. Section 1.02(b)
SEC............................................................. Section 1.01(b)
SEC Reports..................................................... Section 3.07(a)
Securities...................................................... Section 3.07(a)
Shares.......................................................... Recitals
Special Stockholders' Meeting................................... Section 6.01
Stock Option Plans.............................................. Section 2.07
Subsidiary...................................................... Section 3.01
subsidiary...................................................... Section 9.03(f)
Surviving Corporation........................................... Section 2.01
Tax or Taxes.................................................... Section 3.15(j)
Third Party..................................................... Section 8.03(e)
Third Party Acquisition......................................... Section 8.03(f)
Transactions.................................................... Section 3.04
Under Common Control with....................................... Section 9.03(d)
</TABLE>
v
<PAGE> 7
AGREEMENT AND PLAN OF MERGER, dated as of June 25, 1997 (this
"Agreement"), among UNITED DOMINION INDUSTRIES LIMITED, a corporation organized
under the laws of Canada ("Parent"), UD NEVADA CORP., a Nevada corporation and
an indirect wholly owned subsidiary of Parent ("Purchaser"), and CORE INDUSTRIES
INC, a Nevada corporation (the "Company").
W I T N E S S E T H:
WHEREAS, the Boards of Directors of Parent, Purchaser and the Company
have each determined that it is in the best interests of their respective
stockholders for Parent to acquire the Company upon the terms and subject to the
conditions set forth herein;
WHEREAS, in furtherance of such acquisition, it is proposed that
Purchaser shall make a cash tender offer (the "Offer") to acquire all the issued
and outstanding shares of common stock, par value U.S. $1.00 per share, of the
Company (the "Shares") for U.S. $25.00 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 withholding of
taxes, if applicable, upon the terms and subject to the conditions of this
Agreement and the Offer;
WHEREAS, the Board of Directors of the Company (the "Board"), including
all the disinterested directors on the Board, has unanimously approved the
making of the Offer and resolved and agreed to recommend that holders of Shares
tender their Shares pursuant to the Offer;
WHEREAS, also in furtherance of such acquisition, the Boards of
Directors of Parent, Purchaser and the Company have each approved the merger
(the "Merger") of Purchaser with and into the Company in accordance with the
General Corporation Law of the State of Nevada ("Nevada Law") following the
consummation of the Offer and upon the terms and subject to the conditions set
forth herein.
NOW, THEREFORE, in consideration of the foregoing and the mutual
covenants and agreements herein contained, and intending to be legally bound
hereby, Parent, Purchaser and the Company hereby agree as follows:
ARTICLE I.
THE OFFER
SECTION 1.01 The Offer. (a) Provided that this Agreement shall not have
been terminated in accordance with Section 8.01 and none of the events or
circumstances set forth in Annex A hereto shall have occurred or be existing,
Purchaser shall commence the Offer as promptly as reasonably practicable after
the date hereof, but in no event later than five business days after the first
public announcement of the execution hereof by all of the parties hereto. The
obligation of Purchaser to accept for payment and pay for Shares tendered
pursuant to the Offer shall be subject to the condition (the "Minimum
Condition") that at least the number of Shares that combined with the Shares
already owned by Parent, Purchaser or any of their affiliates shall constitute a
majority of the then outstanding
1
<PAGE> 8
Shares on a fully diluted basis (including, without limitation, all Shares
issuable upon the conversion of any convertible securities or upon the exercise
of any options, warrants or rights) shall have been validly tendered and not
withdrawn prior to the expiration of the Offer and also shall be subject to the
satisfaction of the other conditions set forth in Annex A hereto. Purchaser
expressly reserves the right to waive any such condition (other than the Minimum
Condition), to increase the price per Share payable in the Offer, and to make
any other changes in the terms and conditions of the Offer; provided, however,
that no change may be made which decreases the price per Share payable in the
Offer or which changes the form of consideration to be paid in the Offer or
which reduces the maximum number of Shares to be purchased in the Offer or which
imposes conditions to the Offer in addition to those set forth in Annex A hereto
or which changes the Minimum Condition. The Per Share Amount shall, subject to
applicable withholding of taxes, be net to the seller in cash, upon the terms
and subject to the conditions of the Offer. Subject to the terms and conditions
of the Offer (including, without limitation, the Minimum Condition), Purchaser
shall pay, as promptly as practicable after expiration of the Offer, for all
Shares validly tendered and not withdrawn.
(b) As soon as reasonably practicable on the date of commencement of
the Offer, Purchaser shall file with the Securities and Exchange Commission (the
"SEC") a Tender Offer Statement on Schedule 14D-1 (together with all amendments
and supplements thereto, the "Schedule 14D-1") with respect to the Offer and the
other Transactions (as hereinafter defined), which shall have been provided to
the Company and to which the Company shall not have reasonably objected. The
Schedule 14D-1 shall contain or shall incorporate by reference an offer to
purchase (the "Offer to Purchase") and forms of the related letter of
transmittal and any related summary advertisement (the Schedule 14D-1, the Offer
to Purchase and such other documents, together with all supplements and
amendments thereto, being referred to herein collectively as the "Offer
Documents"). Parent, Purchaser and the Company agree to correct promptly any
information provided by any of them for use in the Offer Documents which shall
have become false or misleading, and Parent and Purchaser further agree to take
all steps necessary to cause the Schedule 14D-1 as so corrected to be filed with
the SEC and the other Offer Documents as so corrected to be disseminated to
holders of Shares, in each case as and to the extent required by applicable
federal securities laws.
SECTION 1.02 Company Action. (a) The Company hereby approves of and
consents to the Offer and represents that (i) the Board, at a meeting duly
called and held on June 20, 1997, has unanimously (A) determined that this
Agreement and the transactions contemplated hereby, including each of the Offer
and the Merger, are fair to and in the best interests of the stockholders of the
Company, (B) approved and adopted this Agreement and the transactions,
including, without limitation, the Offer, the purchase of Shares pursuant to the
Offer and the Merger, contemplated hereby, (C) taken all action to redeem the
rights issued to stockholders pursuant to the Rights Agreement dated September
16, 1987 between the Company and Harris Trust and Savings Bank, (D) amended the
Company's Bylaws to provide that the provisions of Sections 78.378 to 78.3793 of
the Nevada Law shall not apply to the Company, and (E) recommended that the
stockholders of the Company accept the Offer and approve and adopt this
Agreement and the transactions, including, without limitation, the Merger,
contemplated hereby, (ii) approval of this Agreement by the Board constitutes
approval of a "memorandum of understanding" setting forth the principal terms of
a transaction governed by, and within the meaning of, Article Eleventh of the
Company's Articles of Incorporation, and (iii) Goldman, Sachs & Co. ("Goldman,
Sachs") has delivered to the Board an
2
<PAGE> 9
opinion to the effect that the consideration to be received by the holders of
Shares (other than Parent, Purchaser and their affiliates) pursuant to each of
the Offer and the Merger is fair to such holders of Shares. Subject only to the
fiduciary duties of the Board under applicable law as advised by the Company's
counsel, the Company hereby consents to the inclusion in the Offer Documents of
the recommendation of the Board described in the immediately preceding sentence.
The Company has been advised by each of its directors and executive officers
that they intend either to tender or cause to be tendered all Shares
beneficially owned by them to Purchaser pursuant to the Offer or to vote such
Shares in favor of the approval and adoption by the stockholders of the Company
of this Agreement and the transactions contemplated hereby.
(b) As soon as reasonably practicable on the date of commencement of
the Offer, the Company shall file with the SEC a Solicitation/Recommendation
Statement on Schedule 14D-9 (together with all amendments and supplements
thereto, the "Schedule 14D-9") containing, subject only to the fiduciary duties
of the Board under applicable law as advised by the Company's counsel, the
recommendation of the Board described in Section 1.02(a) and shall disseminate
the Schedule 14D-9 to the extent required by Rule 14d-9 promulgated under the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), and any other
applicable federal securities laws. The Company, Parent and Purchaser agree to
correct promptly any information provided by any of them for use in the Schedule
14D-9 which shall have become false or misleading, 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 holders of Shares, in each case as
and to the extent required by applicable federal securities laws.
(c) The Company shall promptly furnish Purchaser with mailing labels
containing the names and addresses of all record holders of Shares and with
security position listings of Shares held in stock depositories, each as of a
recent date, together with all other available listings and computer files
containing names, addresses and security position listings of record holders and
beneficial owners of Shares. The Company shall furnish Purchaser with such
additional information, including, without limitation, updated listings and
computer files of stockholders, mailing labels and security position listings,
and such other assistance as Parent, Purchaser or their agents may reasonably
request. Subject to the requirements of applicable law, and except for such
steps as are necessary to disseminate the Offer Documents and any other
documents necessary to consummate the Offer or the Merger, Parent and Purchaser
shall hold in confidence the information contained in such labels, listings and
files, shall use such information only in connection with the Offer and the
Merger and, if this Agreement shall be terminated in accordance with Section
8.01, shall deliver to the Company all copies of such information then in their
possession.
ARTICLE II.
THE MERGER
SECTION 2.01 The Merger. Upon the terms and subject to the conditions
set forth in Article VII, and in accordance with Nevada Law, at the Effective
Time (as hereinafter defined), Purchaser shall be merged with and into the
Company. As a result of the Merger, the separate corporate
3
<PAGE> 10
existence of Purchaser shall cease and the Company shall continue as the
surviving corporation of the Merger (the "Surviving Corporation"), and shall
continue to be governed by the laws of the State of Nevada. Notwithstanding
anything to the contrary contained herein, Parent may elect instead, at any time
prior to the fifth business day immediately preceding the date on which the
Proxy Statement (as defined in Section 3.12) is mailed initially to the
Company's stockholders, to merge the Company into Purchaser or another direct or
indirect wholly owned subsidiary of Parent. In such event, the parties agree to
execute an appropriate amendment to this Agreement in order to reflect the
foregoing and to provide, as the case may be, that Purchaser or such other
wholly owned subsidiary of Parent shall be the Surviving Corporation.
SECTION 2.02 Effective Time; Closing. As promptly as practicable after
the satisfaction or, if permissible, waiver of the conditions set forth in
Article VII, the parties hereto shall cause the Merger to be consummated by
filing this Agreement or articles of merger (in either case, the "Articles of
Merger") with the Secretary of State of the State of Nevada, in such form as is
required by, and executed in accordance with the relevant provisions of, Nevada
Law (the date and time of such filing being, collectively, the "Effective
Time"). Prior to such filing, a closing shall be held at the offices of
Robinson, Bradshaw & Hinson, P.A., 1900 Independence Center, Charlotte, North
Carolina 28246, or such other place as the parties shall agree, for the purpose
of confirming the satisfaction or waiver, as the case may be, of the conditions
set forth in Article VII.
SECTION 2.03 Effect of the Merger. At the Effective Time, the effect of
the Merger shall be as provided in the applicable provisions of Nevada Law.
Without limiting the generality of the foregoing, and subject thereto, at the
Effective Time, all the property, rights, privileges, powers and franchises of
the Company and Purchaser shall vest in the Surviving Corporation, and all
debts, liabilities, obligations, restrictions, disabilities and duties of the
Company and Purchaser shall become the debts, liabilities, obligations,
restrictions, disabilities and duties of the Surviving Corporation.
SECTION 2.04 Articles of Incorporation; Bylaws. (a) Unless otherwise
determined by Parent prior to the Effective Time, and subject to the
requirements of Section 6.07, at the Effective Time the Articles of
Incorporation of the Company, as in effect immediately prior to the Effective
Time, shall be the Articles of Incorporation of the Surviving Corporation and
shall be amended and restated to conform to the Articles of Incorporation of
Purchaser as in effect immediately prior to the Effective Time; provided,
however, that, at the Effective Time, Article I of the Articles of Incorporation
of the Surviving Corporation shall be amended to read as follows: "The name of
the corporation is CORE Industries Inc" and the Articles of Incorporation of the
Surviving Corporation shall be amended if required to comply with Section 6.07.
(b) The Bylaws of Purchaser, as in effect immediately prior to the
Effective Time, shall be the Bylaws of the Surviving Corporation until
thereafter amended as provided by law, the Articles of Incorporation of the
Surviving Corporation and such Bylaws.
SECTION 2.05 Directors and Officers. The directors of Purchaser
immediately prior to 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, and the officers of the
Company immediately prior to the Effective Time shall be the initial officers of
the
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Surviving Corporation, in each case until their respective successors are duly
elected or appointed and qualified.
SECTION 2.06 Conversion of Securities. At the Effective Time, by virtue
of the Merger and without any action on the part of Purchaser, the Company or
the holders of any of the Shares:
(a) Each Share issued and outstanding immediately prior to the
Effective Time (other than any Shares to be canceled pursuant to
Section 2.06(b)) shall be canceled and shall be converted automatically
into the right to receive an amount equal to the Per Share Amount in
cash (the "Merger Consideration"), payable, without interest, to the
holder of such Share, upon surrender, in the manner provided in Section
2.08, of the certificate that formerly evidenced such Share;
(b) Each Share owned by Purchaser, Parent or any direct or
indirect wholly owned subsidiary of Parent or of the Company
immediately prior to the Effective Time shall be canceled and retired
without any conversion thereof and no payment or distribution shall be
made with respect thereto; and
(c) Each share of common stock, par value U.S. $.01 per share,
of Purchaser issued and outstanding immediately prior to the Effective
Time shall be converted into and exchanged for one validly issued,
fully paid and nonassessable share of common stock, par value U.S.
$1.00 per share, of the Surviving Corporation.
SECTION 2.07 Employee and Director Stock Options; Deferred Director
Fees. (a) Each outstanding option to purchase Shares granted under the Company's
1978 Stock Option Plan, 1988 Stock Option Plan, 1988 Director Discounted Stock
Option Plan, 1991 Director Discounted Stock Option Plan and 1993 Performance
Incentive Plan (the "Stock Option Plans"), shall, immediately prior to the
Effective Time, become exercisable regardless of the vesting schedule contained
in any stock option agreement or in any of the Stock Option Plans and shall be
canceled at the Effective Time. In the event that any unexercised option is
canceled by the Company, each holder of a canceled option shall be entitled to
receive, at the Effective Time or as soon as practicable thereafter, from the
Company, in consideration for the cancellation of such option, an amount
(subject to any applicable withholding tax) in cash equal to the product of (i)
the number of Shares previously subject to such option and (ii) the excess, if
any, of the Merger Consideration over the exercise price per Share previously
subject to such option.
(b) At the Effective Time, the Company shall pay to each individual who
served as a Director of the Company prior to the Effective Time any and all
deferred director fees owed to such individual.
SECTION 2.08 Surrender of Shares: Stock Transfer Books. (a) Prior to
the Effective Time, Purchaser shall designate a bank or trust company to act as
agent (the "Paying Agent") for the holders of Shares in connection with the
Merger to receive the funds to which holders of Shares shall become entitled
pursuant to Section 2.06(a), and shall deposit with such Paying Agent an amount
sufficient to pay the aggregate Merger Consideration. Such funds shall be
invested by the Paying Agent as directed
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by the Surviving Corporation, provided that such investments shall be in
obligations of or guaranteed by the United States of America or of any agency
thereof and backed by the full faith and credit of the United States of America
or in commercial paper obligations rated A-1 or P-1 or better by Moody's
Investors Service, Inc. or Standard & Poor's Corporation, respectively.
(b) Promptly after the Effective Time, the Surviving Corporation shall
cause to be mailed to each person who was, at the Effective Time, a holder of
record of Shares entitled to receive the Merger Consideration pursuant to
Section 2.06(a) a form of letter of transmittal (which shall specify that
delivery shall be effected, and risk of loss and title to the certificates
evidencing such Shares (the "Certificates") shall pass, only upon proper
delivery of the Certificates to the Paying Agent) and instructions for use in
effecting the surrender of the Certificates pursuant to such letter of
transmittal. Upon surrender to the Paying Agent of a Certificate, together with
such letter of transmittal, duly completed and validly executed in accordance
with the instructions thereto, and such other documents as may be required
pursuant to such instructions, the holder of such Certificate shall be entitled
to receive in exchange therefor the Merger Consideration for each Share formerly
evidenced by such Certificate, and such Certificate shall then be canceled. No
interest shall accrue or be paid on the Merger Consideration payable upon the
surrender of any Certificate for the benefit of the holder of such Certificate.
If payment of the Merger Consideration is to be made to a person other than the
person in whose name the surrendered Certificate is registered on the stock
transfer books of the Company, it shall be a condition of payment that the
Certificate so surrendered shall be endorsed properly or otherwise be in proper
form for transfer and that the person requesting such payment shall have paid
all transfer and other taxes required by reason of the payment of the Merger
Consideration to a person other than the registered holder of the Certificate
surrendered or shall have established to the satisfaction of the Surviving
Corporation that such taxes either have been paid or are not applicable.
(c) At any time following the sixth month after the Effective Time, the
Surviving Corporation shall be entitled to require the Paying Agent to deliver
to it any funds which had been made available to the Paying Agent and not
disbursed to holders of Shares (including, without limitation, all interest and
other income received by the Paying Agent in respect of all funds made available
to it) and, thereafter, such holders shall be entitled to look to the Surviving
Corporation (subject to abandoned property, escheat and other similar laws) only
as general creditors thereof with respect to any Merger Consideration that may
be payable upon due surrender of the Certificates held by them. Notwithstanding
the foregoing, neither the Surviving Corporation nor the Paying Agent shall be
liable to any holder of a Share for any Merger Consideration delivered in
respect of such Share to a public official pursuant to any abandoned property,
escheat or other similar law.
(d) At the close of business on the day of the Effective Time, the
stock transfer books of the Company shall be closed and, thereafter, there shall
be no further registration of transfers of Shares on the records of the Company.
From and after the Effective Time, the holders of Shares outstanding immediately
prior to the Effective Time shall cease to have any rights with respect to such
Shares except as otherwise provided herein or by applicable law.
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ARTICLE III.
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company hereby represents and warrants to Parent and Purchaser
that:
SECTION 3.01 Organization and Qualification; Subsidiaries. Each of the
Company and each subsidiary of the Company (a "Subsidiary") is a corporation
duly organized, validly existing and in good standing under the laws of the
jurisdiction of its incorporation and has the requisite power and authority and
all necessary governmental approvals to own, lease and operate its properties
and to carry on its business as it is now being conducted, except where the
failure to be so organized, existing or in good standing or to have such power,
authority and governmental approvals would not, individually or in the
aggregate, have a Material Adverse Effect (as defined below). The Company and
each Subsidiary is duly qualified or licensed as a foreign corporation to do
business, and is in good standing, in each jurisdiction where the character of
the properties owned, leased or operated by it or the nature of its business
makes such qualification or licensing necessary, except for such failures to be
so qualified or licensed and in good standing that would not, individually or in
the aggregate, have a Material Adverse Effect. When used in connection with the
Company or any Subsidiary, the term "Material Adverse Effect" means any change
or effect that is or is reasonably likely to be materially adverse to the
business, operations, condition (financial or otherwise), assets or liabilities
(including, without limitation, contingent liabilities) of the Company and the
Subsidiaries taken as a whole. A true and complete list of all the Subsidiaries,
together with the jurisdiction of incorporation of each Subsidiary and the
percentage of the outstanding capital stock of each Subsidiary owned by the
Company and each other Subsidiary, is set forth in Section 3.01 of the
Disclosure Schedule, which has been delivered prior to the date of this
Agreement by the Company to Parent (the "Disclosure Schedule"). Except as
disclosed in such Section 3.01, the Company does not directly or indirectly own
any equity or similar interest in, or any interest convertible into or
exchangeable or exercisable for any equity or similar interest in, any
corporation, partnership, limited liability company, joint venture or other
business association or entity. The term "Material Subsidiaries" means the
Subsidiaries identified as Material Subsidiaries in Section 3.01 of the
Disclosure Schedule. The Subsidiaries that are not Material Subsidiaries are
not, individually and in the aggregate, material to the business, operations or
condition (financial or otherwise) of the Company and do not, individually and
in the aggregate, have any material assets or liabilities (including contingent
liabilities).
SECTION 3.02 Articles of Incorporation and Bylaws. The Company has
heretofore furnished to Parent a complete and correct copy of the Articles of
Incorporation and the Bylaws or equivalent organizational documents, each as
amended to date, of the Company and each Material Subsidiary. Such Articles of
Incorporation, Bylaws and equivalent organization documents are in full force
and effect. Neither the Company nor any Material Subsidiary is in violation of
any provision of its Articles of Incorporation, Bylaws or equivalent
organizational documents.
SECTION 3.03 Capitalization. The authorized capital stock of the
Company consists of 100,000 shares of preferred stock (none of which is issued
and outstanding) and 20,000,000 Shares. As of June 19, 1997, (i) 10,722,931
Shares are issued and outstanding, all of which are validly issued, fully paid
and nonassessable, (ii) no Shares are held by the Subsidiaries, and (iii)
696,049 Shares are
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reserved for issuance pursuant to stock options granted pursuant to the
Company's Stock Option Plans. Except as set forth in this Section 3.03 or
Section 3.03 of the Disclosure Schedule, there are no options, warrants or other
rights, agreements, arrangements or commitments of any character relating to the
issued or unissued capital stock of the Company or any Material Subsidiary or
obligating the Company or any Material Subsidiary to issue or sell any shares of
capital stock of, or other equity interests in, the Company or any Material
Subsidiary. Section 3.03 of the Disclosure Schedule sets forth a list, as of the
date hereof, of the names of each person holding options under the Stock Option
Plans, and the number of shares purchasable under, the exercise price of such
options and date such options were granted. All Shares subject to issuance as
aforesaid, upon issuance on the terms and conditions specified in the
instruments pursuant to which they are issuable, will be duly authorized,
validly issued, fully paid and nonassessable. Except as set forth in Section
3.03 of the Disclosure Schedule, there are no outstanding contractual
obligations of the Company or any Subsidiary to repurchase, redeem or otherwise
acquire any Shares or any capital stock of any Subsidiary or to provide funds
to, or make any investment (in the form of a loan, capital contribution or
otherwise) in, any Subsidiary or any other person. Each outstanding share of
capital stock of each Material Subsidiary is duly authorized, validly issued,
fully paid and nonassessable, and each such share owned by the Company or
another Subsidiary is free and clear of all security interests, liens, claims,
pledges, options, rights of first refusal, agreements, limitations on the
Company's or such other Subsidiary's voting rights, charges and other
encumbrances of any nature whatsoever.
SECTION 3.04 Authority Relative to this Agreement. The Company has all
necessary power and authority to execute and deliver this Agreement, to perform
its obligations hereunder and to consummate the transactions, including, without
limitation, the Merger, contemplated hereby (the "Transactions"). The execution
and delivery of this Agreement by the Company and the consummation by the
Company of the Transactions have been duly and validly authorized by all
necessary corporate action and no other corporate proceedings on the part of the
Company are necessary to authorize this Agreement or to consummate the
Transactions (other than, with respect to the Merger, the approval and adoption
of this Agreement by the affirmative vote of the stockholders of the Company to
the extent required by Nevada Law and the Company's Articles of Incorporation,
and the filing and recordation of appropriate merger documents as required by
Nevada Law). This Agreement has been duly and validly executed and delivered by
the Company and, assuming the due authorization, execution and delivery by
Parent and Purchaser, constitutes a legal, valid and binding obligation of the
Company.
SECTION 3.05 No Conflict; Required Filings and Consents. Except as set
forth in Section 3.05 of the Disclosure Schedule, (a) the execution and delivery
of this Agreement by the Company do not, and the performance of this Agreement
by the Company will not, (i) conflict with or violate the Articles of
Incorporation or Bylaws or equivalent organizational documents of the Company or
any Subsidiary, (ii) assuming that required filings under the HSR Act (as
hereinafter defined) are made by the appropriate parties, conflict with or
violate any law, rule, regulation, order, judgment or decree applicable to the
Company or any Subsidiary or by which any property or asset of the Company or
any Subsidiary is bound or affected or (iii) result in any breach of or
constitute a default (or an event which with notice or lapse of time or both
would become a default) under, or give to others any right of termination,
amendment, acceleration or cancellation of, or result in the creation of a lien
or other encumbrance of any nature on any property or asset of the Company or
any Material Subsidiary
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pursuant to, any note, bond, mortgage, indenture, contract, agreement, lease,
license, permit, franchise or other instrument or obligation to which the
Company or any Material Subsidiary is a party or by which the Company or any
Material Subsidiary or any property or asset of the Company or any Material
Subsidiary is bound or affected, except, in cases of (ii) and (iii), for any
such conflicts, violations, breaches, defaults or other occurrences which would
not, individually or in the aggregate, have a Material Adverse Effect.
(b) The execution and delivery of this Agreement by the Company do not,
and the performance of this Agreement by the Company will not, require any
consent, approval, authorization or permit of, or filing with, or notification
to, any governmental or regulatory authority, domestic or foreign, except (i)
for applicable requirements, if any, of the Exchange Act, state securities or
"blue sky" laws ("Blue Sky Laws") and state takeover laws, the pre-merger
notification requirements of the Hart-Scott-Rodino Antitrust Improvements Act of
1976, as amended, and the rules and regulations promulgated thereunder (the "HSR
Act"), and filing and recordation of appropriate merger documents as required by
Nevada Law, and (ii) where failure to obtain such consents, approvals,
authorizations or permits, or to make such filings or notifications, would not
prevent or delay consummation of the Offer or the Merger, or otherwise prevent
the Company from performing its obligations under this Agreement, and would not,
individually or in the aggregate, have a Material Adverse Effect.
SECTION 3.06 Compliance. Except as set forth in Section 3.06 of the
Disclosure Schedule and with respect to matters addressed in Section 3.16,
neither the Company nor any Subsidiary is in conflict with, or in default or
violation of, (i) any law, rule, regulation, order, judgment or decree
applicable to the Company or any Subsidiary or by which any property or asset of
the Company or any Subsidiary is bound or subject or (ii) any note, bond,
mortgage, indenture, contract, agreement, lease, license, permit, franchise or
other instrument or obligation to which the Company or any Subsidiary is a party
or by which the Company or any Subsidiary or any property or asset of the
Company or any Subsidiary is bound or affected, except for any such conflicts,
defaults or violations that would not, individually or in the aggregate, have a
Material Adverse Effect.
SECTION 3.07 SEC Filings; Financial Statements. (a) The Company has
filed all forms, reports and documents required to be filed by it with the SEC
since August 31, 1994, and has heretofore delivered to Parent, in the form filed
with the SEC, (i) its Annual Reports on Form 10-K for the fiscal years ended
August 31, 1994, 1995 and 1996, respectively, (ii) its Quarterly Reports on Form
10-Q for the periods ended November 30, 1996 and February 28, 1997, (iii) all
proxy statements relating to the Company's meetings of stockholders (whether
annual or special) held since August 31, 1994 and (iv) all other forms, reports
and other registration statements (other than Quarterly Reports on Form 10-Q not
referred to in clause (ii) above) filed by the Company with the SEC since August
31, 1994 (the forms, reports and other documents referred to in clauses (i),
(ii), (iii) and (iv) above being referred to herein, collectively, as the "SEC
Reports"). The SEC Reports (i) were prepared in accordance with the requirements
of the Securities Act of 1933, as amended (the "Securities Act"), and the
Exchange Act, as the case may be, and the rules and regulations promulgated
thereunder and (ii) did not, at the time they were filed (or at the effective
date thereof with respect to registration statements under the Securities Act),
contain any untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary in order to make the statements made
therein, in
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the light of the circumstances under which they were made, not misleading. No
Subsidiary is required to file any form, report or other document with the SEC.
(b) Each of the consolidated financial statements (including, in each
case, any notes thereto) contained in the SEC Reports was prepared in accordance
with United States generally accepted accounting principles applied on a
consistent basis ("GAAP") throughout the periods indicated (except as may be
indicated in the notes thereto) and each fairly presents the consolidated
financial position, results of operations and changes in stockholders equity and
cash flows of the Company and the consolidated Subsidiaries as at the respective
dates thereof and for the respective periods indicated therein (subject, in the
case of unaudited statements, to normal and recurring year-end adjustments which
were not and are not expected, individually or in the aggregate, to have a
Material Adverse Effect).
(c) Except as and to the extent set forth on the consolidated balance
sheet of the Company and the consolidated Subsidiaries as at August 31, 1996
including the notes thereto (the "1996 Balance Sheet"), in Section 3.07 of the
Disclosure Schedule, or in any SEC Report filed by the Company after August 31,
1996 neither the Company nor any Subsidiary has any liability or obligation of
any nature (whether accrued, absolute, contingent or otherwise) that would be
required to be reflected on a balance sheet, or in the notes thereto, prepared
in accordance with GAAP, except for liabilities and obligations incurred in the
ordinary course of business consistent with past practice since August 31, 1996,
which would not, individually or in the aggregate, be material in amount.
(d) The Company has heretofore furnished to Parent complete and correct
copies of all amendments and modifications (if any) that have not been filed by
the Company with the SEC to all agreements, documents and other instruments that
previously had been filed by the Company with the SEC and are currently in
effect.
SECTION 3.08 Absence of Certain Changes or Events. (a) Since February
28, 1997, except as set forth in Section 3.08(a) of the Disclosure Schedule or
as contemplated by this Agreement or disclosed in any SEC Report filed since
February 28, 1997 and prior to the date of this Agreement, the Company and the
Subsidiaries have conducted their businesses only in the ordinary course and in
a manner consistent with past practice and there has not been (i) any change in
the business, operations, properties, condition, assets or liabilities
(including, without limitation, contingent liabilities) of the Company or any
Subsidiary having, individually or in the aggregate, a Material Adverse Effect,
(ii) any damage, destruction or loss (whether or not covered by insurance) with
respect to any property or asset of the Company or any Subsidiary and having,
individually or in the aggregate, a Material Adverse Effect, (iii) any entry by
the Company or any Subsidiary into any commitment or transaction material to the
Company and the Subsidiaries taken as a whole, (iv) any increase in or
establishment of any bonus, insurance, severance, deferred compensation,
pension, retirement, profit sharing, stock option (including, without
limitation, the granting of stock options, stock appreciation rights,
performance awards or restricted stock awards), stock purchase or other employee
benefit plan, or any other increase in the compensation payable or to become
payable to any officers or key employees of the Company or any Subsidiary,
except in the ordinary course of business consistent with past practice, or (v)
any entering into, renewal, modification or extension of, any contract,
arrangement or agreement with any other party having, individually or in the
aggregate, a Material Adverse Effect.
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(b) Since August 31, 1996, except as set forth in Section 3.08(b) of
the Disclosure Schedule or as contemplated by this Agreement or disclosed in any
SEC Report filed since August 31, 1996 and prior to the date of this Agreement,
there has not been (i) any material change by the Company in its accounting
methods, principles or practices, (ii) any material revaluation by the Company
of any asset (including, without limitation, any writing down of the value of
inventory or writing off of notes or accounts receivable), (iii) any failure by
the Company to revalue any asset in accordance with GAAP, or (iv) any
declaration, setting aside or payment of any dividend or distribution in respect
of any capital stock of the Company (except for quarterly cash dividends of $.06
per Share) or any redemption, purchase or other acquisition of any of its
securities.
SECTION 3.09 Absence of Litigation. Except as set forth in Section 3.09
of the Disclosure Schedule or as disclosed in the SEC Reports filed prior to the
date of this Agreement, there is no claim, action, proceeding or investigation
pending or, to the knowledge of the Company, threatened against the Company or
any Subsidiary, or any property or asset of the Company or any Subsidiary,
before any court, arbitrator or administrative, governmental or regulatory
authority or body, domestic or foreign, which (i) individually or in the
aggregate, is reasonably likely to have a Material Adverse Effect or (ii) seeks
to, or is reasonably likely to, delay or prevent the consummation of any
Transaction. As of the date hereof, neither the Company nor any Subsidiary nor
any property or asset of the Company or any Subsidiary is subject to any order,
writ, judgment, injunction, decree, determination or award having, individually
or in the aggregate, a Material Adverse Effect.
SECTION 3.10 Employee Benefit Plans. (a) Section 3.10 of the Disclosure
Schedule contains a true and complete list of all "Qualified Plans" (as defined
below). Except as set forth in Section 3.10 of the Disclosure Schedule, no
Qualified Plan is a "defined benefit plan" within the meaning of Section 3(35)
of the Employee Retirement Income Security Act of 1974, as amended ("ERISA"),
and no Qualified Plan is subject to Part IV of ERISA. Each Qualified Plan is in
writing, and the Company has made available to Parent with respect to each
Qualified Plan (i) a copy of the trust or other funding arrangement, (ii) each
summary plan description and summary of material modifications, (iii) the most
recently filed Internal Revenue Service ("IRS") Form 5500, (iv) the most
recently received IRS determination letter and (v) the most recently prepared
financial statement. For purposes of this Agreement, "Qualified Plan" means each
"employee benefit plan" (within the meaning of Section 3(3) of ERISA) that is
sponsored by the Company or any entity which is considered one employer with the
Company (an "ERISA Affiliate") under Section 4001 of ERISA or Section 414 of the
Internal Revenue Code of 1986, as amended (the "Code") and that is intended to
be qualified under Section 401(a) of the Code, including without limitation any
"multiemployer plan" within the meaning of Section 3(37) of ERISA
("Multiemployer Plans").
(b) Other than the Qualified Plans, there is no other "employee benefit
plan" within the meaning of Section 3(3) of ERISA sponsored by the Company or
any ERISA Affiliate that covers a majority of the total employees of the Company
and its ERISA Affiliates.
(c) All Qualified Plans are in substantial compliance with ERISA.
Except as set forth in Section 3.10 of the Disclosure Schedule, each Qualified
Plan has received a favorable determination letter from the IRS, and there are
no circumstances likely to result in revocation of any such favorable
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determination letter. There is no material pending or, to the knowledge of the
Company, threatened litigation relating to the Qualified Plans. Neither the
Company nor any of the Subsidiaries has engaged in a transaction with respect to
any Qualified Plan that, assuming the taxable period of such transaction expired
as of the date thereof, insofar as may be reasonably foreseen, is likely to
subject the Company or any of the Subsidiaries to a tax or penalty imposed by
either Section 4975 of the Code or Section 502(i) of ERISA in an amount that
would be material.
(d) No liability under Subtitle C or D of Title IV of ERISA has been or
is expected to be incurred by the Company or any of the Subsidiaries with
respect to any ongoing, frozen or terminated Qualified Plan that is a
"single-employer plan", within the meaning of Section 4001(a)(15) of ERISA,
currently or formerly maintained by any of them or any ERISA Affiliate. Except
as with respect to any plan listed in Section 3.10 of the Disclosure Schedule,
neither the Company nor any of the Subsidiaries presently contribute to a
Multiemployer Plan, nor have they contributed to a Multiemployer Plan within the
past five calendar years. Neither the Company nor any Subsidiary has received
any written notice setting forth the amount of any material liability of the
Company or any Subsidiary under any Multiemployer Plan if it were to engage in a
complete withdrawal (as defined in Section 4203 of ERISA) or partial withdrawal
(as defined in Section 4203 of ERISA) from such Multiemployer Plan. No notice of
a "reportable event", within the meaning of Section 4043 of ERISA for which the
30 day reporting requirement has not been waived, has been required to be filed
for any Qualified Plan or by any ERISA Affiliate within the 12-month period
ending on the date hereof.
(e) All contributions required to be made under the terms of any
Qualified Plan have been timely made. No Qualified Plan has an "accumulated
funding deficiency" (whether or not waived) within the meaning of Section 412 of
the Code or Section 302 of ERISA. Neither the Company nor any of the
Subsidiaries has provided, or is required to provide, security to any Qualified
Plan pursuant to Section 401(a)(29) of the Code.
(f) Under each Qualified Plan which is a single-employer plan, as of
the last day of the most recent plan year ended prior to the date hereof, the
actuarially determined present value of all "benefit liabilities", within the
meaning of Section 4001(a)(16) of ERISA (as determined on the basis of the
actuarial assumptions contained in the Qualified Plan's most recent actuarial
valuation), did not exceed the then current value of the assets of such
Qualified Plan, and there has been no material change in the financial condition
of such Plan since the last day of the most recent plan year.
(g) The Company and the Subsidiaries do not have any unfunded
liabilities under pension, retirement or other employee benefit plans, programs
or arrangements maintained outside the United States by the Company or any of
the Subsidiaries for the employees thereof, the payment of which by the Company
or such Subsidiary, individually or in the aggregate, would have a Material
Adverse Effect.
SECTION 3.11 Labor Matters. Except as set forth in Section 3.11 of the
Disclosure Schedule, (i) there are no controversies pending or, to the knowledge
of the Company, threatened between the Company or any Subsidiary and any of
their respective employees, which controversies have or could have a Material
Adverse Effect; (ii) neither the Company nor any Subsidiary is a party to any
collective bargaining agreement or other labor union contract applicable to
persons employed by
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the Company or any Subsidiary, nor, to the knowledge of the Company, are there
any activities or proceedings of any labor union to organize any such employees;
(iii) neither the Company nor any Subsidiary has breached or otherwise failed to
comply with any provision of any such agreement or contract and there are no
grievances outstanding against the Company or any Subsidiary under any such
agreement or contract; (iv) there are no unfair labor practice complaints
pending against the Company or any Subsidiary before the National Labor
Relations Board or any current union representation questions involving
employees of the Company or any Subsidiary; and (v) there is no strike,
slowdown, work stoppage or lockout, or, to the knowledge of the Company, threat
thereof, by or with respect to any employees of the Company or any Subsidiary.
SECTION 3.12 Offer Documents; Schedule 14D-9; Proxy Statement. Neither
the Schedule 14D-9, any information supplied by the Company for inclusion in the
Offer Documents nor the information to be filed by the Company in connection
with the Offer pursuant to Rule 14f-1 promulgated under the Exchange Act (the
"Information Statement"), other than information provided by Parent or Purchaser
for inclusion therein, shall, at the respective times the Schedule 14D-9, the
Offer Documents, the Information Statement or any amendments or supplements
thereto are filed with the SEC or are first published, sent or given to
stockholders of the Company, 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 made therein, in the light of the
circumstances under which they are made, not misleading. The proxy statement to
be sent to the stockholders of the Company in connection with the Special
Stockholders' Meeting (as defined in Section 6.01 hereof) (such proxy statement,
as amended or supplemented, being referred to herein as the "Proxy Statement")
and the Information Statement shall not, at the date such document (or any
amendment or supplement thereto) is first mailed to stockholders of the Company,
with respect to the Information Statement at the time Shares are accepted for
payment in the offer, and with respect to the Proxy Statement at the time of the
Special Stockholders' Meeting and at the Effective Time, be false or misleading
with respect to any material fact, or omit to state any material fact required
to be stated therein or necessary in order to make the statements made therein,
in the light of the circumstances under which they are made, not misleading or
necessary to correct any statement in any earlier communication with respect to
the solicitation of proxies for the Special Stockholders' Meeting which shall
have become false or misleading. The Schedule 14D-9, the Information Statement
and the Proxy Statement shall comply in all material respects as to form with
the requirements of the Exchange Act and the rules and regulations thereunder.
SECTION 3.13 Tangible Property; Real Property and Leases. (a) The
Company and the Subsidiaries have sufficient title to all their tangible
properties and assets to conduct their respective businesses as currently
conducted or as contemplated to be conducted, with only such exceptions as,
individually or in the aggregate, would not have a Material Adverse Effect.
(b) No parcel of real property owned or leased by the Company is
subject to any governmental decree or order to be sold nor is being condemned,
expropriated or otherwise taken by any public authority with or without payment
of compensation therefor, nor, to the knowledge of the Company, has any such
condemnation, expropriation or taking been proposed.
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(c) All leases of real property leased for the use or benefit of the
Company or any Subsidiary to which the Company or any Subsidiary is a party
requiring rental payments in excess of U.S. $100,000 during the period of the
lease and all amendments and modifications thereto are in full force and effect
and have not been modified or amended, and there exists no default under any
such lease by the Company or any Subsidiary, nor any event which with notice or
lapse of time or both would constitute a default thereunder by the Company or
any Subsidiary, except as, individually or in the aggregate, would not have a
Material Adverse Effect.
SECTION 3.14 Trademarks, Patents and Copyrights. Except as set forth in
Section 3.14 of the Disclosure Schedule, the Company and the Subsidiaries own or
possess adequate licenses or other valid rights to use all patents, patent
rights, trademarks, trademark rights, trade names, trade dress, trade name
rights, copyrights, servicemarks, trade secrets, applications for trademarks and
for servicemarks, mask works, know-how and other proprietary rights and
information used or held for use in connection with the business of the Company
and the Subsidiaries as conducted since August 31, 1996, as currently conducted
or as contemplated to be conducted, and the Company is unaware of any assertion
or claim challenging the validity of any of the foregoing which, individually or
in the aggregate, could have a Material Adverse Effect. The conduct of the
business of the Company and the Subsidiaries as conducted since August 31, 1996,
as currently conducted and as contemplated to be conducted did not, does not and
will not conflict in any way with any patent, patent right, license, trademark,
trademark right, trade dress, trade name, trade name right, service mark, mask
work or copyright of any third party that, individually or in the aggregate,
could have a Material Adverse Effect. There are no infringements of any property
rights owned by or licensed by or to the Company or any Subsidiary which,
individually or in the aggregate, could have a Material Adverse Effect. Neither
the Company nor any Subsidiary has licensed or otherwise permitted the use by
any third party of any proprietary information on terms or in a manner which,
individually or in the aggregate, could have a Material Adverse Effect.
SECTION 3.15 Taxes. (a) The Company and the Subsidiaries have filed all
federal, state, local and foreign Tax returns and reports required to be filed
by them and have paid and discharged all Taxes shown as due thereon and have
paid all applicable ad valorem taxes as are due, other than (i) such payments as
are being contested in good faith by appropriate proceedings and (ii) such
filings, payments or other occurrences that, individually or in the aggregate,
could not result in the Company or any Subsidiary incurring liabilities in
excess of U.S. $100,000. The Company's federal consolidated income tax returns
for all periods ending on or after August 31, 1990 have been audited by the IRS.
Except as disclosed in Section 3.15 of the Disclosure Schedule, neither the IRS
nor any other taxing authority or agency, domestic or foreign, is now formally
proposing, or to the Company's knowledge informally proposing, any adjustment
relating to such returns or is now asserting or, to the knowledge of the
Company, threatening to assert against the Company or any Subsidiary any
deficiency or claim for additional taxes or interest thereon or penalties in
connection therewith. Neither the Company nor any Subsidiary has granted any
waiver of any statute of limitations with respect to, or any extension of a
period for the assessment of, any federal, state, county, municipal or foreign
income Tax which is currently in effect. The accruals and reserves for taxes
reflected in the Company's consolidated balance sheet (the "1997 Balance Sheet")
included in its Quarterly Report on Form 10-Q for the period ended February 28,
1997, as filed with the SEC, are adequate to cover all Taxes accruable through
such date (including interest and penalties, if any, thereon and any payments of
Taxes are being contested by the
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Company or any Subsidiary) in accordance with GAAP. Neither the Company nor any
Subsidiary has made an election under Section 341(f) of the Code.
(b) "Tax" or "Taxes" means any and all taxes, fees, levies, duties,
tariffs, imposts, and other charges of any kind (together with any and all
interest, penalties, additions to tax and additional amounts imposed with
respect thereto) imposed by any government or taxing authority, including,
without limitation: taxes or other charges on or with respect to income,
franchises, windfall or other profits, gross receipts, property, sales, use,
capital stock, payroll, employment, social security, workers' compensation,
unemployment compensation, or net worth; taxes or other charges in the nature of
excise, withholding, ad valorem, stamp, transfer, value added, or gains taxes;
license, registration and documentation fees; and custom duties, tariffs, and
similar charges.
SECTION 3.16 Environmental Matters. (a) For purposes of this Agreement,
the following terms shall have the following meanings: (i) "Hazardous
Substances" means (A) those substances defined as hazardous in or regulated as
hazardous under the following federal statutes and their state counterparts, as
each may be amended from time to time, and all regulations thereunder: the
Hazardous Materials Transportation Act, the Resource Conservation and Recovery
Act, the Comprehensive Environmental Response, Compensation, and Liability Act,
the Clean Water Act, the Safe Drinking Water Act, the Atomic Energy Act, the
Federal Insecticide, Fungicide, and Rodenticide Act and the Clean Air Act; (B)
any asbestos or asbestos-containing material, petroleum and petroleum products,
including crude oil and any fractions thereof, natural gas, natural gas liquids,
synthetic gas, polychlorinated biphenyls or radon; (C) any pollutant or
contaminant; or (D) any substance with respect to which a federal, state or
local agency requires environmental investigation, monitoring, reporting or
remediation; and (ii) "Environmental Law" means any federal, state or local law
relating to (A) releases or threatened releases of Hazardous Substances or
materials containing Hazardous Substances; (B) the manufacture, handling,
transport, use, treatment, storage or disposal of Hazardous Substances or
materials containing Hazardous Substances; or (C) otherwise relating to
pollution of the environment or the protection of human health.
(b) Except as described in Section 3.16 of the Disclosure Schedule or
with respect to matters described in oral or written reports provided to Parent
or Purchaser at any time prior to the time of execution of this Agreement by
Parent or Purchaser by environmental consultants retained by Parent or Purchaser
or in environmental due diligence reports prepared by Parent or Purchaser at any
time prior to the time of execution of this Agreement: (i) the Company and each
Subsidiary is in compliance with all applicable Environmental Laws, except for
noncompliance that individually or in the aggregate would not have a Material
Adverse Effect; (ii) the Company and each Subsidiary have obtained all permits,
licenses and other material governmental authorizations required under
applicable Environmental Laws, and are in compliance with the terms and
conditions thereof, except for failures to obtain or noncompliance that
individually or in the aggregate would not have a Material Adverse Effect; (iii)
neither the Company nor any of its Subsidiaries has received written notice of,
or, to the knowledge of the Company, is the subject of, any action, cause of
action, claim, investigation, demand or notice by any person or entity alleging
liability under or noncompliance with any Environmental Law that individually or
in the aggregate would have a Material Adverse Effect; and (iv) there is no
environmental condition on
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any of the properties currently or formerly owned or leased by the Company or
any Subsidiary that individually or in the aggregate would be reasonably likely
to have a Material Adverse Effect.
SECTION 3.17 Material Contracts. Section 3.17 of the Disclosure
Schedule lists each contract or agreement to which the Company or any of the
Material Subsidiaries is a party that involves payment of more than $100,000 and
that does not expire within one year of this Agreement or cannot be terminated
by the Company or the Material Subsidiary within one year of the date of this
Agreement without any liability to the Company or the Material Subsidiary (other
than any blanket purchase or sales order entered into in the ordinary course of
business or any equipment leases) (a "Material Contract"). Each Material
Contract is in full force and effect and is enforceable against the parties
thereto (other than the Company and the Material Subsidiaries) in accordance
with its terms and no condition or state of facts exists that, with notice or
the passage of time, or both, would constitute a material default by the Company
or any Material Subsidiary or to the knowledge of the Company, any third party
under such Material Contracts. The Company or the applicable Material Subsidiary
has duly complied in all material respects with the provision of each Material
Contract to which it is a party.
SECTION 3.18 Insurance; Workers' Compensation. Neither the Company nor
any Material Subsidiary has received any notice of cancellation with respect to
any of its insurance policies within the three years, where such cancellation,
individually or in the aggregate, would have a Material Adverse Effect.
SECTION 3.19 Certain Payments; Absence of Certain Business Practices.
To the knowledge of the Company, no employee or agent of the Company or any
Subsidiary, nor any other person acting on behalf of Company or any Subsidiary,
has within the past five (5) years violated the Foreign Corrupt Practices Act or
made or caused to be made any payments to government officials in violation of
the laws of the United States or any other jurisdiction. As of the date hereof,
neither the IRS nor any other federal, state, local or foreign government agency
or entity has notified the Company or any Company Subsidiary of any pending or
threatened investigation of any payment made by or on behalf of the Company or
any Company Subsidiary of, or alleged to be of, the type described in the
previous sentence.
SECTION 3.20 Licenses and Permits. The Company and each Material
Subsidiary have obtained all governmental licenses and permits (other than
governmental licenses and permits required under applicable Environmental Laws
or otherwise addressed in Section 3.16) necessary to conduct their respective
businesses in accordance with past practices except to the extent that the
failure to obtain and/or maintain such license or permit would not have a
Material Adverse Effect. Such licenses and permits are valid and in full force
and effect; no such licenses or permits will be terminated or materially
impaired or become terminable as a result of the Transactions contemplated by
this Agreement, except to the extent that the failure to obtain and/or maintain
such license or permit would not have a Material Adverse Effect.
SECTION 3.21 Letters of Credit, Surety Bonds, Guarantees. Section 3.21
of the Disclosure Schedule lists all letters of credit, performance or payment
bonds, guaranty arrangements and surety
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bonds of any nature involving amounts in excess of $100,000 relating to the
Company or any Subsidiary.
SECTION 3.22 Brokers. No broker, finder or investment banker (other
than Goldman, Sachs) is entitled to any brokerage, finder's or other fee or
commission in connection with the Transactions based upon arrangements made by
or on behalf of the Company. The Company has heretofore furnished to Parent a
complete and correct copy of all agreements between the Company and Goldman,
Sachs pursuant to which such firm would be entitled to any payment relating to
the Transactions.
ARTICLE IV.
REPRESENTATIONS AND WARRANTIES OF PARENT AND PURCHASER
Parent and Purchaser hereby, jointly and severally, represent and
warrant to the Company that:
SECTION 4.01 Corporate Organization. Each of Parent and Purchaser is a
corporation duly organized, validly existing and in good standing under the laws
of the jurisdiction of its incorporation and has the requisite power and
authority and all necessary governmental approvals to own, lease and operate its
properties and to carry on its business as it is now being conducted, except
where the failure to be so organized, existing or in good standing or to have
such power, authority and governmental approvals would not, individually or in
the aggregate, have a material adverse effect on the business or operations of
Parent and Purchaser and their respective subsidiaries, taken as a whole.
SECTION 4.02 Authority Relative to This Agreement. Each of Parent and
Purchaser has all necessary corporate power and authority to execute and deliver
this Agreement, to perform its obligations hereunder and to consummate the
Transactions. The execution and delivery of this Agreement by Parent and
Purchaser and the consummation by Parent and Purchaser of the Transactions have
been duly and validly authorized by all necessary corporate action and no other
corporate proceedings on the part of Parent or Purchaser are necessary to
authorize this Agreement or to consummate the Transactions (other than with
respect to the Merger, the filing and recordation of appropriate merger
documents as required by Nevada Law). This Agreement has been duly and validly
executed and delivered by Parent and Purchaser and, assuming the due
authorization, execution and delivery by the Company, constitutes a legal, valid
and binding obligation of each of Parent and Purchaser enforceable against each
of Parent and Purchaser in accordance with its terms.
SECTION 4.03 No Conflict; Required Filings and Consents. (a) The
execution and delivery of this Agreement by Parent and Purchaser do not, and the
performance of this Agreement by Parent and Purchaser will not, (i) assuming
that required filings under the HSR Act are made by appropriate parties,
conflict with or violate the Articles of Incorporation or Bylaws (or equivalent
documents) of either Parent or Purchaser, (ii) assuming that required filings
under the HSR Act are made by appropriate parties conflict with or violate any
law, rule, regulation, order, judgment or decree applicable to Parent or
Purchaser or by which any property or asset of either of them is bound or
affected, or (iii) result in any breach of or constitute a default (or an event
which with notice or lapse of
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time or both would become a default) under, or give to others any rights of
termination, amendment, acceleration or cancellation of, or result in the
creation of a lien or other encumbrance on any property or asset of Parent or
Purchaser pursuant to, any note, bond, mortgage, indenture, contract, agreement,
lease, license, permit, franchise or other instrument or obligation to which
Parent or Purchaser is a party or by which Parent or Purchaser or any property
or asset of either of them is bound or affected, except, in cases of (ii) and
(iii), for any such conflicts, violations, breaches, defaults or other
occurrences which would not, individually or in the aggregate, have a material
adverse effect on the business or operations of Parent or Purchaser and their
respective subsidiaries, taken as a whole.
(b) The execution and delivery of this Agreement by Parent and
Purchaser do not, and the performance of this Agreement by Parent and Purchaser
will not, require any consent, approval, authorization or permit of, or filing
with or notification to, any governmental or regulatory authority, domestic or
foreign, except (i) for applicable requirements, if any, of the Exchange Act,
Blue Sky Laws and state takeover laws, the HSR Act, and filing and recordation
of appropriate merger documents as required by Nevada Law and (ii) where failure
to obtain such consents, approvals, authorizations or permits, or to make such
filings or notifications, would not prevent or delay consummation of the Offer
or the Merger, or otherwise prevent Parent or Purchaser from performing their
respective obligations under this Agreement.
SECTION 4.04 Financing. Parent has, or has commitments to obtain,
sufficient funds to permit Purchaser to acquire all the outstanding Shares in
the Offer and the Merger, evidence of which has been provided to the Company.
SECTION 4.05 Offer Documents; Proxy Statement. The Offer Documents will
not, at the time the Offer Documents are filed with the SEC or are first
published, sent or given to stockholders of the Company, 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
made therein, in the light of the circumstances under which they are made, not
misleading. The information supplied by Parent for inclusion in the Information
Statement or the Proxy Statement will not, on the date such document (or any
amendment or supplement thereto) is first mailed to stockholders of the Company,
with respect to the Information Statement, at the time Shares are accepted for
payment in the Offer, and with respect to the Proxy Statement at the time of the
Special Stockholders' Meeting and at the Effective Time, contain any statement
which, at such time and in light of the circumstances under which it is made, is
false or misleading with respect to any material fact, or omits to state any
material fact required to be stated therein or necessary in order to make the
statements therein not false or misleading or necessary to correct any statement
in any earlier communication with respect to the solicitation of proxies for the
Special Stockholders' Meeting which shall have become false or misleading.
Notwithstanding the foregoing, Parent and Purchaser make no representation or
warranty with respect to any information supplied by the Company or any of its
representatives which is contained in any of the foregoing documents or the
Offer Documents. The Offer Documents shall comply in all material respects as to
form with the requirements of the Exchange Act and the rules and regulations
thereunder.
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SECTION 4.06 Due Diligence. Parent and Purchaser agree to conduct or
cause to be conducted no further environmental testing of facilities owned,
leased or operated by the Company or any of its Subsidiaries prior to the
Effective Time.
SECTION 4.07 Brokers. Parent and Purchaser agree to indemnify the
Company, and hold it harmless from, any brokerage, finder's or other fee or
commission in connection with the Transactions based upon arrangements made by
or on behalf of Parent or Purchaser.
ARTICLE V.
CONDUCT OF BUSINESS PENDING THE MERGER
SECTION 5.01 Conduct of Business by the Company Pending the Merger. The
Company covenants and agrees that, between the date of this Agreement and the
election or appointment of Purchaser's designees to the Board pursuant to
Section 6.03 upon the purchase by Purchaser of any Shares pursuant to the Offer
(the "Purchaser's Election Date"), unless Parent shall otherwise agree in
writing, the businesses of the Company and the Subsidiaries shall be conducted
only in, and the Company and the Subsidiaries shall not take any action except
in, the ordinary course of business and in a manner consistent with past
practice; and the Company shall use its best efforts to preserve substantially
intact the business organization of the Company and the Subsidiaries, to keep
available the services of the current officers, employees and consultants of the
Company and the Subsidiaries and to preserve the current relationships of the
Company and the Subsidiaries with customers, suppliers and other persons with
which the Company or any Subsidiary has significant business relations. By way
of amplification and not limitation, except as contemplated by this Agreement or
by Section 5.01 of the Disclosure Schedule, neither the Company nor any
Subsidiary shall, between the date of this Agreement and the Purchaser's
Election Date, directly or indirectly do, or propose to do, any of the following
without the prior written consent of Parent:
(a) amend or otherwise change its Articles of Incorporation or
Bylaws or equivalent organizational documents;
(b) issue, sell, pledge, dispose of, grant, encumber, or
authorize the issuance, sale, pledge, disposition, grant or encumbrance
of (i) any shares of capital stock of any class of the Company or any
Subsidiary, or any options, warrants, convertible securities or other
rights of any kind to acquire any shares of such capital stock, or any
other ownership interest (including, without limitation, any phantom
interest), of the Company or any Subsidiary (except for the issuance of
a maximum of 696,049 Shares issuable pursuant to employee and director
stock options outstanding on the date hereof) or (ii) any assets of the
Company or any Subsidiary, except for sales in the ordinary course of
business and in a manner consistent with past practice;
(c) declare, set aside, make or pay any dividend or other
distribution, payable in cash, stock, property or otherwise, with
respect to any of its capital stock, except for cash such
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declarations, set asides dividends declared at times and in amounts
consistent with the Company's current dividend policy ($.06 per Share
per quarter);
(d) reclassify, combine, split, subdivide or redeem, purchase
or otherwise acquire, directly or indirectly, any of its capital stock;
(e) (i) acquire (including, without limitation, by merger,
consolidation, or acquisition of stock or assets or any other business
combination) any corporation, partnership, other business organization
or any division thereof or any material amount of assets other than in
the ordinary course of business; (ii) incur any indebtedness for
borrowed money or issue any debt securities or assume, guarantee or
endorse, pledge in respect of or otherwise as an accommodation become
responsible for the obligations of any person, or make any loans or
advances, except in the ordinary course of business and consistent with
past practice; (iii) enter into any contract or agreement other than
contracts or agreements entered into in the ordinary course of
business, consistent with past practice and which require payments by
the Company or the Subsidiaries in an aggregate amount of less than
U.S. $250,000; (iv) terminate, cancel or request any material change
in, or agree to any material change in, any Material Contract set forth
in Section 3.17(a) of the Disclosure Schedule and with respect to all
other Material Contracts, except in the ordinary course of business
consistent with past practice; (v) authorize any single capital
expenditure (excluding software development activity) which is in
excess of U.S. $250,000 or capital expenditures which are, in the
aggregate, in excess of U.S. $1,000,000 for the Company and the
Subsidiaries taken as a whole; or (vi) enter into or amend any
contract, agreement, commitment or arrangement with respect to any
matter set forth in this Section 5.01(e);
(f) increase the compensation payable or to become payable to
its officers or employees, except for increases in accordance with past
practices in salaries or wages of employees of the Company or any
Subsidiary who are not officers of the Company, or grant any severance
or termination pay to, or enter into any employment or severance
agreement with, any director, officer or other employee of the Company
or any Subsidiary, or establish, adopt, enter into or amend any
collective bargaining, bonus, profit sharing, thrift, compensation,
stock option, restricted stock, pension, retirement, deferred
compensation, employment, termination, severance or other plan,
agreement, trust, fund, policy or arrangement for the benefit of any
director, officer or employee or circulate to any employee any details
of any proposal to adopt or amend any such plan;
(g) take any action, other than reasonable and usual actions
in the ordinary course of business and consistent with past practice,
with respect to accounting policies or procedures (including, without
limitation, procedures with respect to the payment of accounts payable
and collection of accounts receivable);
(h) make any tax election or settle or compromise any material
federal, state, local or foreign income tax liability;
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(i) pay, discharge or satisfy any claim, liability or
obligation (absolute, accrued, asserted or unasserted, contingent or
otherwise), other than the payment, discharge or satisfaction, in the
ordinary course of business and consistent with past practice, of
liabilities reflected or reserved against in the 1997 Balance Sheet or
subsequently incurred in the ordinary course of business and consistent
with past practice; or
(j) settle or comprise any pending or threatened suit, action
or claim that is material or which relates to any of the Transactions;
or
(k) announce an intention, enter into any formal or informal
agreement, or otherwise make a commitment, to do any of the foregoing
or any action that would result in any of the conditions to the Offer
not being satisfied (other than as contemplated by this Agreement).
ARTICLE VI.
ADDITIONAL AGREEMENTS
SECTION 6.01 Special Stockholders' Meeting. The Company, acting through
the Board, shall, in accordance with applicable law and the Company's Articles
of Incorporation and Bylaws, unless not required under applicable "short-form"
merger provisions of Nevada Law, (i) duly call, give notice of, convene and hold
a special meeting of its stockholders as soon as practicable following
consummation of the Offer for the purpose of considering and taking action on
this Agreement and the transactions contemplated hereby (the "Special
Stockholders' Meeting") and (ii) subject to its fiduciary duties under
applicable law as advised in writing by independent counsel, (A) include in the
Proxy Statement the unanimous recommendation of the Board that the stockholders
of the Company approve and adopt this Agreement and the Transactions, including,
without limitation, the Merger and (B) use its best reasonable efforts to obtain
such approval and adoption. At the Special Stockholders' Meeting (or by consent
if a stockholders meeting is not required), Parent and Purchaser shall cause all
Shares then owned by them and their subsidiaries to be voted in favor of the
approval and adoption of this Agreement and the Transactions, including, without
limitation, the Merger.
SECTION 6.02 Proxy Statement. As soon as practicable following
consummation of the Offer, the Company shall file the Proxy Statement with the
SEC under the Exchange Act, unless not required under applicable "short-form"
merger provisions of Nevada Law, and shall use its best reasonable efforts to
have the Proxy Statement cleared by the SEC. Parent, Purchaser and the Company
shall cooperate with each other in the preparation of the Proxy Statement, and
the Company shall notify Parent of the receipt of any comments of the SEC with
respect to the Proxy Statement and of any requests by the SEC for any amendment
or supplement thereto or for additional information and shall provide to Parent
promptly copies of all correspondence between the Company or any representative
of the Company and the SEC. The Company shall give Parent and its counsel the
opportunity to review the Proxy Statement prior to its being filed with the SEC
and shall give Parent and its counsel the opportunity to review all amendments
and supplements to the Proxy Statement and all responses to requests for
additional information and replies to comments prior to their being filed
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with, or sent to, the SEC. Each of the Company, Parent and Purchaser agrees to
use its best reasonable efforts, after consultation with the other parties
hereto, to respond promptly to all such comments of and requests by the SEC and
to cause the Proxy Statement and all required amendments and supplements thereto
to be mailed to the holders of Shares entitled to vote at the Special
Stockholders' Meeting at the earliest practicable time.
SECTION 6.03 Company Board Representation; Section 14(f). (a) Promptly
upon the purchase by Purchaser of Shares pursuant to the Offer, and from time to
time thereafter, Purchaser shall be entitled to designate up to such number of
directors, rounded up to the next whole number, on the Board as shall give
Purchaser representation on the Board equal to the product of the total number
of directors on the Board (giving effect to the directors elected pursuant to
this sentence) multiplied by the percentage that the aggregate number of Shares
beneficially owned by Purchaser or any affiliate of Purchaser at such time bears
to the total number of Shares then outstanding, and the Company shall, at such
time, promptly take all actions necessary to cause Purchaser's designees to be
elected as directors of the Company, including increasing the size of the Board
or securing the resignations of incumbent directors or both. At such times, the
Company shall use its best efforts to cause persons designated by Purchaser to
constitute the same percentage as persons designated by Purchaser shall
constitute of the Board of (i) each committee of the Board (some of whom may be
required to be independent as required by applicable law or requirements of the
New York Stock Exchange), (ii) each board of directors of each Subsidiary and
(iii) each committee of each such board, in each case only to the extent
permitted by applicable law. Notwithstanding the foregoing, until the time
Purchaser acquires a majority of the then outstanding Shares on a fully diluted
basis, the Company shall use its best efforts to ensure that all the members of
the Board and each committee of the Board and such boards and committees of the
Subsidiaries as of the date hereof who are not employees of the Company shall
remain members of the Board and of such boards and committees.
(b) The Company shall promptly take all actions required pursuant to
Section 14(f) of the Exchange Act and Rule 14f-1 promulgated thereunder in order
to fulfill its obligations under this Section 6.03 and shall include the
Information Statement containing such information with respect to the Company
and its officers and directors as is required under Section 14(f) and Rule 14f-1
as an annex to the Schedule 14D-9 to fulfill such obligations. Parent or
Purchaser shall supply to the Company and be solely responsible for any
information with respect to either of them and their nominees, officers,
directors and affiliates required by such Section 14(f) and Rule 14f-1.
(c) Following the election or appointment of designees of Purchaser
pursuant to this Section 6.03, prior to the Effective Time, any amendment of
this Agreement or the Articles of Incorporation or Bylaws of the Company, any
termination of this Agreement by the Company, any extension by the Company of
the time for the performance of any of the obligations or other acts of Parent
or Purchaser or waiver of any of the Company's rights hereunder shall require
the concurrence of a majority of the directors of the Company then in office who
neither were designated by Purchaser nor are employees of the Company or if no
such directors are then in office, no such amendment, termination, extension or
waiver shall be effected which is materially adverse to the holders of Shares
(other than Parent and its subsidiaries).
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SECTION 6.04 Access to Information; Confidentiality. (a) From the date
hereof to the consummation of the Offer, the Company shall, and shall cause the
Subsidiaries and the officers, directors, employees, auditors and agents of the
Company and the Subsidiaries to, afford the officers, employees and agents of
Parent and Purchaser complete access at all reasonable times to the officers,
employees, agents, properties, offices, plants and other facilities, books and
records of the Company and each Subsidiary, and shall furnish Parent and
Purchaser with all financial, operating and other data and information as Parent
or Purchaser, through its officers, employees or agents, may reasonably request.
(b) To the extent permitted by applicable law, in order to facilitate
the continuing operation of the Company by Parent and Purchaser from and after
the completion of the Offer without disruption and to assist in an achievement
of an orderly transition in the ownership and management of the Company, from
the date of this Agreement and until completion of the Offer, the Company,
Parent and Purchaser shall cooperate reasonably with each other to effect an
orderly transition including, without limitation, with respect to communications
with the Company's customers and employees.
(c) All information obtained by Parent or Purchaser pursuant to this
Section 6.04 shall be kept confidential, by Purchaser, by Parent and by any
other party which is to be afforded access pursuant to Section 6.04(a), in
accordance with the confidentiality agreement, dated October 2, 1996 (the
"Confidentiality Agreement"), between Parent and the Company.
SECTION 6.05 No Solicitation of Transactions. Neither the Company nor
any Subsidiary shall, directly or indirectly, through any officer, director,
agent or otherwise, solicit, initiate or encourage the submission of any
proposal or offer from any person relating to any acquisition or purchase of all
or any material portion of the assets of, or any equity interest in, the Company
or any Material Subsidiary or any business combination with the Company or any
Material Subsidiary or participate in any negotiations regarding, or furnish to
any other person any information with respect to, or otherwise cooperate in any
way with, or assist or participate in, facilitate or encourage, any effort or
attempt by any other person to do or seek any of the foregoing; provided,
however, that nothing contained in this Section 6.05 shall prohibit the Board
from furnishing information to, or entering into discussions or negotiations
with, any person in connection with an unsolicited (from the date of this
Agreement) proposal in writing by such person to acquire the Company pursuant to
a merger, consolidation, share exchange, business combination or other similar
transaction or to acquire all or substantially all of the assets of the Company
or any of its Subsidiaries, if, and only to the extent that, (i) the Board,
after consultation with independent legal counsel (which may include its
regularly engaged independent legal counsel), determines in good faith that such
action is required for the Board to comply with its fiduciary duties to
stockholders imposed by Nevada Law and (ii) prior to furnishing such information
to, or entering into discussions or negotiations with, such person the Company
uses its reasonable best efforts to obtain from such person an executed
confidentiality agreement on terms no less favorable to the Company than those
contained in the Confidentiality Agreement (or obtained a confidentiality
agreement prior to the date hereof). The Company immediately shall cease and
cause to be terminated all existing discussions or negotiations with any parties
conducted heretofore with respect to any of the foregoing. The Company shall
notify Parent
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<PAGE> 30
promptly if any such proposal or offer, or any inquiry or contact with any
person with respect thereto, is made. The Company agrees not to release any
third party from, or waive any provision of, any confidentiality or, subject to
the fiduciary duties of the Board, standstill agreement to which the Company is
or may become a party.
SECTION 6.06 Employee Benefits Matters; Employment Agreements. Annex B
hereto sets forth certain agreements among the parties hereto with respect to
the Plans and other employee benefits matters.
SECTION 6.07 Directors' and Officers' Indemnification and Insurance.
(a) The Articles of Incorporation and Bylaws of the Surviving Corporation shall
contain provisions no less favorable with respect to indemnification than are
set forth in Article VI of the Bylaws of the Company, which provisions shall not
be amended, repealed or otherwise modified for a period of six years from the
Effective Time in any manner that would affect adversely the rights thereunder
of individuals who at any time to and including the Effective Time were
directors, officers, employees, fiduciaries or agents of the Company in respect
of acts or omissions occurring at or prior to the Effective Time (including,
without limitation, the matters contemplated by this Agreement), unless such
modification shall be required by law. From and after the Purchaser's Election
Date, the Company shall not amend, repeal or otherwise modify the
indemnification and advancement of expenses provisions of Article VI of the
Bylaws of the Company or the indemnification or advancement of expenses
provisions in the Articles of Incorporation or Bylaws of any of the Subsidiaries
in any manner that would adversely affect the rights thereunder of individuals
who at any time to and including the Effective Time were directors, officers,
employees, fiduciaries or agents of the Company or any of the Subsidiaries in
respect of actions or omissions occurring at or prior to the Effective Time
(including, without limitation, the matters contemplated by this Agreement),
unless such modification is required by law. Any determinations made pursuant to
Section VI of the Bylaws of the Company, or analogous provisions of the Articles
of Incorporation or Bylaws of any of the Subsidiaries, with respect to the
appropriateness of indemnification shall be made in good faith.
(b) The Company shall, to the fullest extent permitted under applicable
law, indemnify and hold harmless, and, after the Effective Time, the Surviving
Corporation shall, to the fullest extent permitted under applicable law,
indemnify and hold harmless, each present and former director, officer,
employee, fiduciary and agent of the Company and each Subsidiary (collectively,
the "Indemnified Parties") against all costs and expenses (including reasonable
attorneys' fees), judgments, fines, losses, claims, damages, liabilities and
settlement amounts paid in connection with any claim, action, suit, proceeding
or investigation (whether arising before or after the Effective Time), whether
civil, criminal, administrative or investigative, arising out of or pertaining
to any action or omission in their capacity as an officer, director, employee,
fiduciary or agent, whether occurring before or after the Effective Time, for a
period of six years after the date hereof (and shall pay any expenses in advance
of the final disposition of any such action or proceeding to each Indemnified
Party to the fullest extent permitted under Nevada Law, and, with respect to
Indemnified Parties who are or were directors or officers of the Company, upon
receipt from the Indemnified Party to whom expenses are advanced of any
undertaking to repay such advances required under Nevada Law). In the event of
any such claim, action, suit, proceeding or investigation, (i) the Company or
the Surviving Corporation, as the case may be, shall pay the reasonable fees and
expenses of counsel selected by the Indemnified
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<PAGE> 31
Parties, which counsel shall be reasonably satisfactory to the Company or the
Surviving Corporation, promptly after statements therefor are received (subject
to the provision of an undertaking as set forth in the prior sentence, if
applicable) and (ii) the Company and the Surviving Corporation shall cooperate
in the defense of any such matter; provided, however, that neither the Company
nor the Surviving Corporation shall be liable for any settlement effected
without its written consent (which consent shall not be unreasonably withheld);
provided further that neither the Company nor the Surviving Corporation shall be
obligated pursuant to this Section 6.07(b) to pay the fees and expenses of more
than one counsel for all Indemnified Parties in any single action except to the
extent that two or more of such Indemnified Parties shall have conflicting
interests in the outcome of such action; and provided further that, in the event
that any claim for indemnification is asserted or made within such six-year
period, all rights to indemnification in respect of such claim shall continue
until the disposition of such claim.
(c) Each of the Company, from and after the date of this Agreement and
to and including the Effective Time, and the Surviving Corporation, from the
Effective Time until six years thereafter, shall use its best efforts to
maintain in effect, if available, the current directors' and officers' liability
insurance policies 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 not materially less favorable) with
respect to matters occurring on or prior to the Effective Time; provided,
however, that in no event shall the Surviving Corporation be required to expend
pursuant to this Section 6.07(d) more than an amount per year equal to 250% of
current annual premiums paid by the Company for such insurance (which annual
premiums the Company represents to be approximately $110,000).
(d) In the event the Company or the Surviving Corporation or any of
their respective successors or assigns (i) consolidates with or merges into any
other person and shall not be the continuing or surviving corporation or entity
of such consolidation or merger or (ii) transfers all or substantially all of
its properties and assets to any person, then, and in each such case, proper
provision shall be made so that the successors and assigns of the Company or the
Surviving Corporation, as the case may be, or at Parent's option, Parent, shall
assume the obligations set forth in this Section 6.07.
SECTION 6.08 Notification of Certain Matters. The Company shall give
prompt notice to Parent, and Parent shall give prompt notice to the Company, of
(i) the occurrence, or non-occurrence, of any event the occurrence, or
non-occurrence, of which causes any representation or warranty contained in this
Agreement to be untrue or inaccurate in any material respect and (ii) any
failure of the Company, Parent or Purchaser, as the case may be, to comply with
or satisfy any covenant, condition or agreement to be complied with or satisfied
by it hereunder; provided, however, that the delivery of any notice pursuant to
this Section 6.08 shall not limit or otherwise affect the remedies available
hereunder to the party receiving such notice..
SECTION 6.09 Further Action; Reasonable Best Efforts. Upon the terms
and subject to the conditions hereof, each of the parties hereto shall (i) make
promptly its respective filings, and thereafter make any other required
submissions, under the HSR Act with respect to the Transactions and (ii) use its
reasonable best efforts to take, or cause to be taken, all appropriate action,
and to do, or cause to be done, all things necessary, proper or advisable under
applicable laws and regulations to consummate
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<PAGE> 32
and make effective the Transactions, including, without limitation, using its
reasonable best efforts to obtain all licenses, permits (including, without
limitation, environmental permits), consents, approvals, authorizations,
qualifications and orders of governmental authorities and parties to contracts
with the Company and the Subsidiaries as are necessary for the consummation of
the Transactions and to fulfill the conditions to the Offer and the Merger and
(iii) except as contemplated by this Agreement, use its reasonable best efforts
not to take any action, or enter into any transaction, which would cause any of
its representations or warranties contained in this Agreement to be untrue or
result in a breach of any covenant made by it in this Agreement. In case at any
time after the Effective Time any further action is necessary or desirable to
carry out the purposes of this Agreement, the proper officers and directors of
each party to this Agreement shall use their reasonable best efforts to take all
such action.
SECTION 6.10 Public Announcements. Parent and the Company shall consult
with each other before issuing any press release or otherwise making any public
statements with respect to this Agreement or any Transaction and shall not issue
any such press release or make any such public statement prior to such
consultation, except as may be required by law or any listing agreement with a
national securities exchange or foreign securities exchange to which Parent or
the Company is a party.
SECTION 6.11 Confidentiality Agreement. The Company hereby waives the
provisions of the Confidentiality Agreement as and to the extent necessary to
permit the consummation of each Transaction. Upon the acceptance for payment of
Shares pursuant to the Offer, the Confidentiality Agreement shall be deemed to
have terminated without further action by the parties thereto.
ARTICLE VII.
CONDITIONS TO THE MERGER
SECTION 7.01 Conditions to the Merger. The respective obligations of
each party to effect the Merger shall be subject to the satisfaction at or prior
to the Effective Time of the following conditions:
(a) Stockholder Approval. This Agreement and the Transactions,
including, without limitation, the Merger, shall have been approved and
adopted by the affirmative vote of the stockholders of the Company
(unless the vote of the stockholders is not required by Nevada Law);
(b) HSR Act. Any waiting period (and any extension thereof)
applicable to the consummation of the Merger under the HSR Act shall
have expired or been terminated;
(c) No Order. No foreign, United States or state governmental
authority or other agency or commission or foreign, United States or
state court of competent jurisdiction shall have enacted, issued,
promulgated, enforced or entered any law, rule, regulation, executive
order, decree, injunction or other order (whether temporary,
preliminary or permanent) which is then in effect and has the effect of
making the acquisition of Shares by Parent or Purchaser or
26
<PAGE> 33
any affiliate of either of them or the consummation of the Merger
illegal or otherwise restricting, preventing or prohibiting
consummation of the Transactions; and
(d) Offer. Purchaser or its permitted assignee shall have
purchased all Shares validly tendered and not withdrawn pursuant to the
Offer; provided, however, that neither Parent nor Purchaser shall be
entitled to assert the failure of this condition if, in breach of this
Agreement or the terms of the Offer, Purchaser fails to purchase any
Shares validly tendered and not withdrawn pursuant to the Offer.
ARTICLE VIII.
TERMINATION, AMENDMENT AND WAIVER
SECTION 8.01 Termination. This Agreement may be terminated and the
Merger and the other Transactions may be abandoned at any time prior to the
Effective Time, notwithstanding any requisite approval and adoption of this
Agreement and the transactions contemplated hereby by the stockholders of the
Company:
(a) By mutual written consent duly authorized by the Boards of
Directors of Parent, Purchaser and the Company prior to Purchaser's
Election Date; or
(b) By Parent, Purchaser or the Company if (i) the Effective
Time shall not have occurred on or before December 31, 1997; provided,
however, that the right to terminate this Agreement under this Section
8.01(b) shall not be available to any party whose failure to fulfill
any obligation under this Agreement has been the cause of, or resulted
in, the failure of the Effective Time to occur on or before such date
or (ii) any court of competent jurisdiction in the United States or
other governmental authority shall have issued an order, decree, ruling
or taken any other action restraining, enjoining or otherwise
prohibiting the Merger and such order, decree, ruling or other action
shall have become final and nonappealable; or
(c) By Parent, upon approval of its Board of Directors, if (i)
due to an occurrence or circumstance that would result in a failure to
satisfy any condition set forth in Annex A hereto, Purchaser shall have
(A) failed to commence the Offer within 30 days following the date of
this Agreement, (B) terminated the Offer without having accepted any
Shares for payment thereunder or (C) failed to pay for Shares pursuant
to the Offer within 90 days following the commencement of the Offer;
unless such action or inaction under (A), (B) or (C) shall have been
caused by or resulted from the failure of Parent or Purchaser to
perform in any material respect any material covenant or agreement of
either of them contained in this Agreement or the material breach by
Parent or Purchaser of any material representation or warranty of
either of them contained in this Agreement or (ii) prior to the
purchase of Shares pursuant to the Offer, the Board or any committee
thereof shall have withdrawn or modified in a manner adverse to
Purchaser or Parent its approval or recommendation of the Offer, this
Agreement, the Merger or any other Transaction or shall have
recommended another merger, consolidation, business combination with,
or acquisition of, the Company or its assets or
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<PAGE> 34
another tender offer or exchange offer for Shares, or shall have
resolved to do any of the foregoing; or
(d) By the Company, upon approval of the Board, if (i) due to
an occurrence or circumstance that would result in a failure to satisfy
any of the conditions set forth in Annex A hereto, Purchaser shall have
(A) failed to commence the Offer within 30 days following the date of
this Agreement, (B) terminated the Offer without having accepted any
Shares for payment thereunder or (C) failed to pay for Shares pursuant
to the Offer within 90 days following the commencement of the Offer,
unless such action or inaction under (A), (B), and (C) shall have been
caused by or resulted from the failure of the Company to perform in any
material respect any material covenant or agreement of it contained in
this Agreement or the material breach by the Company of any material
representation or warranty of it contained in this Agreement or (ii)
prior to the purchase of Shares pursuant to the Offer, the Board shall
have withdrawn or modified in a manner adverse to Purchaser or Parent
its approval or recommendation of the Offer, this Agreement, the Merger
or any other Transaction in order to approve the execution by the
Company of a definitive agreement providing for the acquisition of the
Company or any of its assets by a sale, merger or other business
combination or in order to approve a tender offer or exchange offer for
Shares by a third party, in either case, as the Board determines in
good faith that such action is required for the Board to comply with
its fiduciary duties to stockholders, after consultation with its
independent legal counsel and financial advisers, and is on terms more
favorable to the Company's stockholders than the Offer and the Merger
taken together; provided, however, that such termination under this
clause (ii) shall not be effective until the Company has made payment
to Parent of the Fee (as hereinafter defined) required to be paid
pursuant to Section 8.03(a) and has deposited with a mutually
acceptable escrow agent U.S. $3.0 million for reimbursement to Parent
and Purchaser of Expenses (as hereinafter defined).
SECTION 8.02 Effect of Termination. In the event of the termination of
this Agreement pursuant to Section 8.01, this Agreement shall forthwith become
void, and there shall be no liability on the part of any party hereto, except as
set forth in Sections 8.03 and 9.01, and nothing herein shall relieve any party
from liability for any breach hereof.
SECTION 8.03 Fees and Expenses. (a) In the event that
(i) any person (including, without limitation,
the Company or any affiliate thereof), other than Parent or any
affiliate of Parent, shall have become the beneficial owner of more
than 25% of the then outstanding Shares and this Agreement shall have
been terminated pursuant to Section 8.01 and within 12 months of such
termination a Third Party Acquisition (as defined hereinafter) shall
occur; or
(ii) any person shall have commenced, publicly
proposed or communicated to the Company a proposal that is publicly
disclosed for a tender or exchange offer for 25% or more (or which,
assuming the maximum amount of securities that could be purchased,
would result in any person beneficially owning 25% or more of the then
outstanding Shares or otherwise for the direct or indirect acquisition
of the
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Company or all or substantially all of its assets for per Share
consideration having a value greater than the Per Share Amount and (x)
the Offer shall have remained open for at least 20 business days, (y)
the Minimum Condition shall not have been satisfied and (z) this
Agreement shall have been terminated pursuant to Section 8.01; or
(iii) this Agreement is terminated pursuant to
Section 8.01(c)(ii) or 8.01(d)(ii);
then, in any such event, the Company shall pay Parent promptly (but in no event
later than one business day after the first of such events shall have occurred)
a fee of U.S. $10.0 million (the "Fee"), which amount shall be payable in
immediately available funds, plus all Expenses (as hereinafter defined).
(b) Provided that neither Parent nor Purchaser is in material breach of
its obligations under this Agreement, if (i) this Agreement is terminated
pursuant to Section 8.01(c) due to the occurrence of the condition set forth in
paragraph (g) of Annex A or (ii) this Agreement is terminated pursuant to
Section 8.01(c) because of the occurrence of the condition set forth in
paragraph (f) of Annex A, then, in either case (i) or (ii), the Company shall
promptly reimburse Parent and Purchaser for all Expenses.
(c) "Expenses" means all out-of-pocket expenses and fees up to U.S.
$3.0 million in the aggregate (including, without limitation, fees and expenses
payable to all banks, investment banking firms, other financial institutions and
other persons and their respective agents and counsel for arranging, committing
to provide or providing any financing for the Transactions or structuring the
Transactions and all fees of counsel, accountants, experts and consultants to
Parent and Purchaser, and all printing and advertising expenses) actually
incurred or accrued by either of them or on their behalf in connection with the
Transactions, including, without limitation, the financing thereof, and actually
incurred or accrued by banks, investment banking firms, other financial
institutions and other persons and assumed by Parent and Purchaser in connection
with the negotiation, preparation, execution and performance of this Agreement,
the structuring and financing of the Transactions and any financing commitments
or agreements relating thereto.
(d) Except as set forth in this Section 8.03, all costs and expenses
incurred in connection with this Agreement and the Transactions shall be paid by
the party incurring such expenses, whether or not any Transaction is
consummated.
(e) In the event that the Company shall fail to pay the Fee or any
Expenses when due, the term "Expenses" shall be deemed to include the costs and
expenses actually incurred or accrued by Parent and Purchaser (including,
without limitation, fees and expenses of counsel) in connection with the
collection under and enforcement of this Section 8.03, together with interest on
such unpaid Fee and Expenses, commencing on the date that the Fee or such
Expenses became due, at a per annum rate equal to the rate of interest publicly
announced by Morgan Guaranty Trust Company of New York, from time to time, in
the City of New York, as such bank's prime rate plus 1.00 percentage point. In
addition, in connection with any other action or proceeding by any party hereto
against any other party hereto alleging a breach of a representation, warranty,
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<PAGE> 36
covenant or agreement set forth herein, the prevailing party in such action or
proceeding shall be entitled to recover costs and expenses actually incurred or
accrued (including, with limitation, fees and expenses of counsel) in connection
with the prosecution or defense (as the case may be) of such action or
proceeding.
(f) "Third Party Acquisition" means the occurrence of any of the
following events: (i) the acquisition of the Company by merger, consolidation or
other business combination transaction by any person other than Parent,
Purchaser or any affiliate thereof (a "Third Party"); (ii) the acquisition by
any Third Party of all or substantially all of the assets of the Company and its
Subsidiaries, taken as a whole; (iii) the acquisition by a Third Party of 50% or
more of the outstanding Shares whether by tender offer, exchange offer or
otherwise; (iv) the adoption by the Company of a plan of liquidation or the
declaration or payment of an extraordinary dividend; or (v) the repurchase by
the Company or any of its Subsidiaries of 50% or more of the outstanding Shares.
SECTION 8.04 Amendment. Subject to the limitations set forth in Section
6.03(c), this Agreement may be amended by the parties hereto by action taken by
or on behalf of their respective Boards of Directors at any time prior to the
Effective Time; provided, however, that, after the approval and adoption of this
Agreement and the transactions contemplated hereby by the stockholders of the
Company, no amendment may be made which would reduce the amount or change the
type of consideration into which each Share shall be converted upon consummation
of the Merger. This Agreement may not be amended except by an instrument in
writing signed by the parties hereto.
SECTION 8.05 Waiver. Subject to the limitations set forth in Section
6.03(c), at any time prior to the Effective Time, any party hereto may (i)
extend the time for the performance of any obligation or other act of any other
party hereto, (ii) waive any inaccuracy in the representations and warranties
contained herein or in any document delivered pursuant hereto and (iii) waive
compliance with any agreement or condition contained herein. Any such extension
or waiver shall be valid if set forth in an instrument in writing signed by the
party or parties to be bound thereby.
ARTICLE IX.
GENERAL PROVISIONS
SECTION 9.01 Non-Survival of Representations, Warranties and
Agreements. The representations, warranties and agreements in this Agreement
shall terminate at the Effective Time or upon the termination of this Agreement
pursuant to Section 8.01, as the case may be, except that the agreements set
forth in Articles II and IX and Section 6.07 shall survive the Effective Time
indefinitely and those set forth in Sections 6.04(c), 8.03 and Article IX shall
survive termination indefinitely.
SECTION 9.02 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,
telecopy, telegram or telex or by registered or certified mail (postage prepaid,
return receipt requested) to the respective parties at the following addresses
(or at
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such other address for a party as shall be specified in a notice given in
accordance with this Section 9.02):
if to Parent or Purchaser:
United Dominion Industries Limited
2300 One First Union Center
301 South College Street
Charlotte, North Carolina 28202-6039
Attention: Mr. Richard L. Magee
with a copy to:
Robinson, Bradshaw & Hinson, P.A.
101 North Tryon Street
Suite 1900
Charlotte, North Carolina 28246
Attention: Mr. Stephen M. Lynch
if to the Company:
CORE Industries Inc
500 North Woodward Avenue
Bloomfield Hills, Michigan 48304
Attention: Mr. Lawrence J. Murphy
with a copy to:
Honigman Miller Schwartz and Cohn
2290 First National Building
Detroit, Michigan 48226
Attention: Mr. Donald J. Kunz
SECTION 9.03 Certain Definitions. For purposes of this Agreement, the
term:
(a) "affiliate" of a specified person means a person who directly or
indirectly through one or more intermediaries controls, is controlled by, or is
under common control with, such specified person;
(b) "beneficial owner" with respect to any Shares means a person who
shall be deemed to be the beneficial owner of such Shares (i) that such person
or any of its affiliates or associates (as such term is defined in Rule 12b-2
promulgated under the Exchange Act) beneficially owns, directly or indirectly,
(ii) that such person or any of its affiliates or associates has, directly or
indirectly, (A) the right to acquire (whether such right is exercisable
immediately or subject only to the passage of time), pursuant to any agreement,
arrangement or understanding or upon the exercise of consideration rights,
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exchange rights, warrants or options, or otherwise, or (B) the right to vote
pursuant to any agreement, arrangement or understanding or (iii) that are
beneficially owned, directly or indirectly, by any other persons with whom such
person or any of its affiliates or associates or person with whom such person or
any of its affiliates or associates has any agreement, arrangement or
understanding for the purpose of acquiring, holding, voting or disposing of any
Shares;
(c) "business day" means any day on which the principal offices of the
SEC in Washington, D.C. are open to accept filings, or, in the case of
determining a date when any payment is due, any day on which banks are not
required or authorized to close in the City of New York;
(d) "control" (including the terms "controlled by" and "under common
control with") means the possession, directly or indirectly or as trustee or
executor, of the power to direct or cause the direction of the management and
policies of a person, whether through the ownership of voting securities, as
trustee or executor, by contract or credit arrangement or otherwise;
(e) "person" means an individual, corporation, partnership, limited
partnership, syndicate, person (including, without limitation, a "person" as
defined in Section 13(d)(3) of the Exchange Act), trust, association or entity
or government, political subdivision, agency or instrumentality of a government;
and
(f) "subsidiary" or "subsidiaries" of the Company, the Surviving
Corporation, Parent or any other person means an affiliate controlled by such
person, directly or indirectly, through one or more intermediaries.
SECTION 9.04 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 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 be consummated as originally contemplated to the
fullest extent possible.
SECTION 9.05 Entire Agreement, Assignment. This Agreement constitutes
the entire agreement among the parties with respect to the subject matter hereof
and supersedes, except as set forth in Sections 6.04(c) and 6.11, all prior
agreements and undertakings, both written and oral, among the parties, or any of
them, with respect to the subject matter hereof. This Agreement shall not be
assigned by operation of law or otherwise, except that Parent and Purchaser may
assign all or any of their rights and obligations hereunder to any affiliate of
Parent provided that no such assignment shall relieve the assigning party of its
obligations hereunder if such assignee does not perform such obligations.
SECTION 9.06 Parties in Interest. This Agreement shall be binding upon
and inure solely to the benefit of each party hereto, and nothing in this
Agreement, express or implied, is intended to or shall confer upon any other
person any right, benefit or remedy of any nature whatsoever under or by
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<PAGE> 39
reason of this Agreement, other than Section 6.07 (which is intended to be for
the benefit of the persons covered thereby and may be enforced by such persons).
SECTION 9.07 Specific Performance. The parties hereto agree that
irreparable damage would occur in the event any provision of this Agreement was
not performed in accordance with the terms hereof and that the parties shall be
entitled to specific performance of the terms hereof, in addition to any other
remedy at law or equity.
SECTION 9.08 Governing Law. Except to the extent that Nevada Law is
mandatorily applicable to the Offer, the Merger and the rights of the
stockholders of the Company, this Agreement shall be governed by, and construed
in accordance with, the laws of the State of North Carolina regardless of the
laws that might otherwise govern under applicable principles of conflicts of
laws.
SECTION 9.09 Headings. The descriptive headings contained in this
Agreement are included for convenience of reference only and shall not affect in
any way the meaning or interpretation of this Agreement.
SECTION 9.10 Counterparts. This Agreement may be executed in one or
more counterparts, and by the different parties hereto in separate counterparts,
each of which when executed shall be deemed to be an original but all of which
taken together shall constitute one and the same agreement.
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IN WITNESS WHEREOF, Parent, Purchaser and the Company have caused this
Agreement to be executed as of the date first written above by their respective
officers thereunto duly authorized.
UNITED DOMINION INDUSTRIES LIMITED
Attest:
By: /s/ William R. Holland
--------------------------------------------
/s/ Richard L. Magee Name: William R. Holland
- --------------------------- Title: Chairman and Chief Executive Officer
Name: Richard L. Magee
Secretary
By: /s/ Richard A. Bearse
--------------------------------------------
Name: Richard A. Bearse
Title: Senior Vice President
UD NEVADA CORP.
Attest:
By: /s/ William R. Holland
--------------------------------------------
/s/ Richard L. Magee Name: William R. Holland
- --------------------------- Title: Chairman and Chief Executive Officer
Name: Richard L. Magee
Secretary
By: /s/ Richard A. Bearse
--------------------------------------------
Name: Richard A. Bearse
Title: Senior Vice President
CORE INDUSTRIES INC
Attest:
By: /s/ David R. Zimmer
--------------------------------------------
/s/ Lawrence J. Murphy Name: David R. Zimmer
- --------------------------- Title: President and Chief Executive Officer
Name: Lawrence J. Murphy
Secretary
34
<PAGE> 41
ANNEX A
CONDITIONS TO THE OFFER
Notwithstanding any other provision of the Offer, Purchaser shall not
be required to accept for payment or pay for any Shares tendered pursuant to the
Offer, and may terminate or amend the Offer and may postpone the acceptance for
payment of and payment for Shares tendered, if (i) the Minimum Condition shall
not have been satisfied, (ii) any applicable waiting period under the HSR Act
shall not have expired or been terminated prior to the expiration of the Offer
or (iii) at any time on or after the date of this Agreement, and prior to the
acceptance for payment of Shares, any of the following conditions shall exist:
(a) there shall have been instituted or be pending any action
or proceeding brought by any governmental, administrative or regulatory
authority or agency, domestic or foreign, before any court or
governmental, administrative or regulatory authority or agency,
domestic or foreign, (i) challenging or seeking to make illegal,
materially delay or otherwise directly or indirectly restrain or
prohibit or make materially more costly the making of the Offer, the
acceptance for payment of, or payment for, any Shares by Parent,
Purchaser or any other affiliate of Parent pursuant to the Offer, or
the consummation of any other Transaction, or seeking to obtain
material damages in connection with any Transaction; (ii) seeking to
prohibit or limit materially the ownership or operation by the Company,
Parent or any of their subsidiaries of all or any material portion of
the business or assets of the Company, Parent or any of their
subsidiaries, or to compel the Company, Parent or any of their
subsidiaries to dispose of or hold separate all or any material portion
of the business or assets of the Company, Parent or any of their
subsidiaries, as a result of the Transactions; (iii) seeking to impose
or confirm limitations on the ability of Parent, Purchaser or any other
affiliate of Parent to exercise effectively full rights of ownership of
any Shares, including, without limitation, the right to vote any Shares
acquired by Purchaser pursuant to the Offer, or otherwise on all
matters properly presented to the Company's stockholders, including,
without limitation, the approval and adoption of this Agreement and the
transactions contemplated hereby; or (iv) seeking to require
divestiture by Parent, Purchaser or any other affiliate of Parent of
any Shares;
(b) there shall have been issued any injunction, order or
decree by any court or governmental, administrative or regulatory
authority or agency, domestic or foreign, resulting from any action or
proceeding brought by any person other than any governmental,
administrative or regulatory authority or agency, domestic or foreign,
that (i) restrains or prohibits the making of the Offer or the
consummation of any other Transaction; (ii) prohibits or limits
ownership or operation by the Company, Parent or Purchaser of all or
any material portion of the business or assets of the Company, taken as
a whole, Parent or any of their subsidiaries, or compels the Company,
Parent or any of their subsidiaries to dispose of or hold separate all
or any material portion of the business or assets of the Company,
Parent or any of their subsidiaries, in each case as a result of the
35
<PAGE> 42
Transactions; (iii) imposes limitations on the ability of Parent or
Purchaser to exercise effectively full rights of ownership of any
Shares, including, without limitation, the right to vote any Shares
acquired by Purchaser pursuant to the Offer, or otherwise on all
matters properly presented to the Company's stockholders, including,
without limitation, the approval and adoption of this Agreement and the
Transactions; (iv) requires divestiture by Parent or Purchaser of any
Shares;
(c) there shall have been any action taken, or any statute,
rule, regulation, order or injunction enacted, entered, enforced,
promulgated, amended, issued or deemed applicable to (i) Parent, the
Company or any subsidiary or affiliate of Parent or the Company or (ii)
any Transaction, by any legislative body, court, government or
governmental, administrative or regulatory authority or agency,
domestic or foreign, in the case of both (i) and (ii) other than the
routine application of the waiting period provisions of the HSR Act to
the Offer or the Merger, in each case that results in any of the
consequences referred to in clauses (i) through (iv) of paragraph (b)
above;
(d) there shall have occurred any change, condition, event or
development that has a Material Adverse Effect with respect to the
Company;
(e) (i) the Board or any committee thereof shall have
withdrawn or modified in a manner adverse to Parent or Purchaser the
approval or recommendation of the Offer, the Merger or the Agreement or
approved or recommended any takeover proposal or any other acquisition
of Shares other than the Offer and the Merger or (ii) the Board or any
committee thereof shall have resolved to do any of the foregoing;
(f) any representation or warranty of the Company in the
Agreement shall not be true and correct with the effect that such
failure of any such representation or warranty to be true and correct,
when taken together with all other such failures of such
representations and warranties to be true and correct, in the aggregate
has, or is reasonably likely to have, a Material Adverse Effect;
provided, however that, for the purpose of the foregoing condition, in
determining whether any such representation or warranty is true or
correct, any qualification as to materiality or Material Adverse Effect
contained in any such representation and warranty shall be deemed not
to apply;
(g) the Company shall have failed to perform in any material
respect any material obligation or to comply in any material respect
with any material agreement or material covenant of the Company to be
performed or complied with by it under the Agreement;
(h) the Agreement shall have been terminated in accordance
with its terms; or
(i) Purchaser and the Company shall have agreed that Purchaser
shall terminate the Offer or postpone the acceptance for payment of or
payment for Shares thereunder; which, in the sole judgment of
Purchaser, in any such case, and regardless of the circumstances
(including any action or inaction by Parent or any of its affiliates)
giving rise to any such condition, makes it inadvisable to proceed with
such acceptance for payment or payment
36
<PAGE> 43
The foregoing conditions are for the sole benefit of Purchaser and
Parent and may be asserted by Purchaser or Parent regardless of the
circumstances giving rise to any such condition or may be waived by Purchaser or
Parent in whole or in part at any time and from time to time in their sole
discretion. The failure by Parent or Purchaser at any time to exercise any of
the foregoing rights shall not be deemed a waiver of any such right; the waiver
of any such right with respect to particular facts and other circumstances shall
not be deemed a waiver with respect to any other facts and circumstances; and
each such right shall be deemed an ongoing right that may be asserted at any
time and from time to time.
37
<PAGE> 44
ANNEX B
For a period of one year from the Effective Time, Parent shall, or shall cause
the Company or the Surviving Corporation to, maintain the Plans (other than the
Stock Option Plans) which the Company maintains for the benefit of, or which are
open to, a majority of the employees of the Company on the terms in effect on
the date hereof, or such other plans, arrangements or programs as will provide
employees with benefits that in the aggregate are substantially equivalent to,
and no less favorable than, those provided under the Plans (other than the Stock
Option Plans) as in effect on the date hereof. In addition, Parent shall, or
shall cause the Surviving Corporation to, assume and agree to perform those
Change of Control Agreements listed in Schedule 6.06 of the Disclosure Schedule
in the same manner and to the same extent that the Company is required to
perform such agreements.
38
<PAGE> 1
EXHIBIT (C)(2)
October 2, 1996
STRICTLY CONFIDENTIAL
United Dominion Industries
2300 One First Union Center
Charlotte, NC 28202-6039
Attention:
Gentlemen:
In connection with your consideration of a possible negotiated transaction
with Core Industries Inc and/or its subsidiaries, affiliates and divisions
(collectively, the "Company"), you have requested information which is not
readily available to the general public concerning the Company. As a condition
to your being furnished such information, you agree to treat any information
concerning the Company which is furnished to you by the Company or on behalf of
the Company by its representatives, whether furnished before or after the date
of this letter agreement (herein collectively referred to as the "Evaluation
Material"), in accordance with the provisions of this letter agreement. For the
purposes of this letter agreement, the term "Evaluation Material" includes all
data, reports, interpretations, forecasts, audit reports and other records to
the extent that they include information concerning the Company which is not
readily available to the general public, and also includes all notes, analyses,
studies, compilations, interpretations or other documents prepared by you or by
your directors, officers, employees, representatives or advisors which contain,
reflect or are based upon, in whole or in part, the information furnished
pursuant to this letter agreement. The term "Evaluation Material" does not
include information which (i) was or becomes generally available to the public
other than as a result of a disclosure by you or your directors, officers,
employees, agents or advisors, or (ii) was or becomes available to you on a non-
confidential basis from a source other than the Company or its advisors provided
that such source is not to your knowledge bound by a confidentiality agreement
with the Company, or (iii) was within your possession prior to its being
furnished to you by or on behalf of the Company, provided that the source of
such information was not to your knowledge bound by a confidentiality agreement
with the Company in respect thereof.
(1) You hereby agree that the Evaluation Material will be used solely for
the purpose of evaluating a possible negotiated transaction between the Company
and you, and that such information will be kept confidential by you and your
directors, officers, employees, representatives and advisors; provided, however,
that (i) any such information may be disclosed to your directors, officers,
employees and your representatives or your advisors for the purpose of
evaluating a possible transaction between the Company and you (it being agreed
that such directors, officers, employees, representatives and advisors shall be
informed by you of the confidential nature of such information and you shall
cause them to treat such information confidentially and shall maintain a list of
those to whom such information has been disclosed which list you will present to
us upon request) and (ii) any disclosure of such information may be made to
which we consent in writing. In any event, you shall be responsible for any
breach of this letter agreement by any of your directors, officers, employees,
representatives or advisors and you agree, at your sole expense, to take all
reasonable measures (including but not limited to count proceedings) to restrain
such directors, officers, employees, representatives and advisors from
prohibited or unauthorized disclosure or use of the Evaluation Material.
(2) Without the prior written consent of the Company, except as required by
law or applicable stock exchange regulation, you will not, and will direct such
directors, officers, employees and representatives not to, disclose to any
person either the fact that discussions or negotiations are taking place
concerning a possible transaction between the Company and you or any or the
terms, conditions or other facts with respect to any such possible transaction,
including the status thereof. The term "person" as used in this letter agreement
shall be broadly interpreted to include without limitation the media and any
corporation, company, group, partnership, other entity or individual.
(3) You hereby acknowledge that you are aware, and that you will advise
your directors, officers, employees, agents, representatives and advisors who
are informed as to the matters which are the subject of this
<PAGE> 2
letter agreement, that the United States securities laws prohibit any person who
has material, non-public information concerning the matters which are the
subject of this letter agreement from purchasing or selling securities of a
company which may be a party to a transaction of the type contemplated by this
letter agreement or from communicating such information to any other person
under circumstances in which it is reasonably foreseeable that such person is
likely to purchase or sell such securities.
(4) In the event that you are requested or required (by oral questions,
interrogatories, requests for information or documents, subpoena, civil
investigative demand or similar process) to disclose any information supplied to
you in the course of your dealings with the Company or its representatives, it
is agreed that you will (i) provide the Company with prompt notice of such
request(s) and the documents requested thereby so that the Company may seek an
appropriate protective order and/or waive your compliance with the provisions of
this letter agreement and (ii) consult with the Company on the advisability or
taking legally available steps to resist or narrow such request. It is further
agreed that, if in the absence of a protective order or the receipt of a waiver
hereunder you are nonetheless, in the written opinion of your counsel, compelled
to disclose information concerning the Company to any tribunal or else stand
liable for contempt or risk other censure or penalty, you may disclose such
information to such tribunal without liability hereunder; provided, however,
that you shall give the Company written notice of the information to be so
disclosed as far in advance of its disclosure as is practicable and shall use
your best efforts to obtain an order or other reliable assurance that
confidential treatment will be accorded to such portion of the information
required to be disclosed as the Company designates.
(5) You hereby acknowledge that the Evaluation Material is being furnished
to you in consideration of your agreement that, for a period of three years from
the date hereof neither you nor any of your affiliates (as such term is defined
under the Securities Exchange Act of 1934, as amended (the "1934 Act")) will in
any manner, directly or indirectly: (a) effect or seek, offer or propose
(whether publicly or otherwise) to effect, or cause or participate in or in any
way assist any other person to effect or seek, offer or propose (whether
publicly or otherwise) to effect or participate in, (i) any acquisition of any
securities (or beneficial ownership thereof) or assets of the Company; (ii) any
tender or exchange offer, merger or other business combination involving the
Company; (iii) any recapitalization, restructuring, liquidation, dissolution or
other extraordinary transaction with respect to the Company; or (iv) any
"solicitation" of "proxies" (as such terms are used in the proxy rules of the
Securities and Exchange Commission) or consents to vote any voting securities of
the Company; (b) form, join or in any way participate in a "group" (as defined
under the 1934 Act); (c) otherwise act, alone or in concert with others, to seek
to control or influence the management, Board of Directors or policies of the
Company, (d) take any action which might force the Company to make a public
announcement regarding any of the types of matters set forth in (a) above; or
(e) enter into any discussions or arrangements with any third party with respect
to any of the foregoing. You also agree during such period not to request the
Company (or its directors, officers, employees or agents), directly or
indirectly, to amend or waive any provision of this paragraph (including this
sentence).
(6) You agree that you will have no discussion, correspondence, or other
contract concerning the Company or its securities or any transaction with or
concerning the Company or its securities except with the management of the
Company and its designated representatives or except as otherwise contemplated
by this letter agreement; provided, however, it is understood and agreed that
you may retain one or more third party advisors to do industry-wide studies to
gain information about the competitors and customers in the industry, including
the Company. In consideration of the Evaluation Material being furnished to you,
you hereby agree that, for a period of one year from the date hereof, none of
your employees who gain access to the Evaluation Material and no employee
resident in your Charlotte, NC corporate office, directly or indirectly will
solicit to employ any of the current officers or employees of the Company,
without obtaining the prior written consent of the Company. You further
acknowledge and agree that the Company reserves the right, in its sole and
absolute discretion, to reject any or all proposals and to terminate discussions
and negotiations with, or directly or indirectly involving, you at any time.
(7) At any time upon our request you shall promptly redeliver to the
Company all written material containing or reflecting any information contained
in the Evaluation Material (whether prepared by the Company or otherwise, and
whether in your possession or the possession of your directors, officers,
employees, or advisors, but except items prepared by you or your advisors) and
will not retain any copies, extracts or other reproductions in whole or in part
of such written material. All documents, memoranda, notes and other writings
whatsoever
2
<PAGE> 3
(including all copies, extracts or other reproductions), prepared by you or your
advisors based on the information contained in the Evaluation Material shall be
destroyed, promptly upon your determination to discontinue consideration of a
transaction with the Company, or upon request by the Company. The redelivery of
such material shall not relieve your obligation of confidentiality or other
obligations hereunder.
(8) Although we will endeavor to include in the Evaluation Material
information known to us which we believe to be relevant for the purpose of your
investigation, you understand that the Company makes no representation or
warranty as to the accuracy or completeness of the Evaluation Material. You
agree that neither the Company nor its representatives shall have any liability
to you or any of your representatives resulting from the use of the Evaluation
Material supplied by us or our representatives except pursuant to a
representation or warranty contained in a binding agreement between the Company
and you.
(9) It is further understood and agreed that no failure or delay by the
Company in exercising any right, power or privilege hereunder shall operate as a
waiver thereof nor shall any single or partial exercise thereof preclude any
other or further exercise of any right, power or privilege.
(10) It is further understood and agreed that money damages may not be a
sufficient remedy for any breach of this letter agreement by you or by any of
your agents or representatives and that the Company shall be entitled to seek
specific performance and injunctive or other equitable relief as a remedy for
any such breach, and you further agree to waive any requirement for the securing
or posting of any bond in connection with such remedy. Such remedy shall not be
deemed to be the exclusive remedy for your breach of this letter agreement, but
shall be in addition to all other remedies available at law or equity to the
Company. In the event of litigation relating to this letter agreement, if a
court of competent jurisdiction determines that you or any of your agents or
representatives have breached this letter agreement and such determination is
final, then you shall be liable to pay the Company the reasonable fees incurred
by the Company in connection with such litigation, including any appeal
therefrom.
(11) This letter agreement and all disputes arising from or relating to
this letter agreement shall be governed by and construed in accordance with the
internal laws of the State of Michigan, without giving effect to the principles
of conflict of laws thereof. You also hereby irrevocably and unconditionally
consent to submit to the jurisdiction of the courts of the State of Michigan for
any actions, suits or proceedings arising out of or relating to this agreement,
and further agree that service of any process, summons, notice or document by
U.S. registered mail to your address set forth above shall be effective service
of process for any action, suit or proceeding brought against you in any such
court. You hereby irrevocably and unconditionally waive any objection to the
laying of venue of any action, suit or proceeding arising out of this letter
agreement or the transactions contemplated hereby in the courts of the State of
Michigan or the United States of America located in the State of Michigan, and
hereby further irrevocably and unconditionally waive and agree not to plead or
claim in any such court that any such action, suit or proceeding brought in any
such court has been brought in an inconvenient forum.
This agreement and all obligations hereunder shall continue in effect in
accordance with its terms for a period of five (5) years from the date hereof or
until terminated in writing by the Company.
3
<PAGE> 4
If you are in agreement with the foregoing, please so indicate by signing
and returning one copy of this letter agreement, whereupon it will constitute
our agreement with respect to the subject matter hereof.
Very truly yours,
CORE INDUSTRIES INC
By: /s/ LAWRENCE J. MURPHY
------------------------------------
Its: Executive Vice President
Confirmed and Agreed to:
United Dominion Industries, Inc.
By: /s/ J. MILTON CHILDRESS
----------------------------------
Its: Vice President
4
<PAGE> 1
EXHIBIT (c)(3)
Core Industries Inc David R. Zimmer
500 North Woodward President and Chief Executive Officer
P.O. Box 2000
Bloomfield Hills, Michigan 48303-2000
(810) 901-1580 Fax (810) 642-6816
[Core Industries Logo]
June 20, 1997
United Dominion Industries Limited
2300 One First Union Center
301 South College Street
Charlotte, North Carolina 28202-6039
Attention: William R. Holland,
Chairman and Chief Executive Officer
Gentlemen:
This letter confirms certain understandings between United Dominion
Industries Limited ("UDI") and Core Industries Inc ("Core") regarding the
proposed merger of Core into an indirect wholly-owned subsidiary of UDI.
1. Attached to this letter, as Exhibit A, is an Agreement and Plan of
Merger, with Disclosure Schedule and Annexes (the "Merger
Agreement"), which has been negotiated by representatives of UDI
and Core.
2. UDI has completed its due diligence investigation with respect to
Core and its assets, properties, claims, liabilities and business,
and UDI is satisfied with the results of such investigation.
3. Core has scheduled a meeting of its Board of Directors for not
later than Tuesday, June 24, 1997, to consider approval of the
Merger Agreement. Management of Core will recommend that its Board
approve the Merger Agreement. UDI has scheduled a meeting of its
Board of Directors for Wednesday, June 25, 1997, to consider
approval of the Merger Agreement. Management of UDI will recommend
that its Board approve the Merger Agreement.
4. In the event that:
(i) the Board of Directors of Core does not approve the Merger
Agreement on or before June 25, 1997, or
(ii) an authorized officer of Core does not execute such
Agreement on behalf of Core and deliver such Agreement to UDI on or
before June 25, 1997, or
(iii) Core rescinds its agreement to the Merger Agreement
prior to the execution of the Merger Agreement by UDI,
<PAGE> 2
[Core Industries Logo]
then Core shall pay promptly to UDI, as liquidated damages, a fee
of $10,000,000 (the "Fee"), plus all Expenses (as defined in
Section 8.03(c) of the Merger Agreement) up to a maximum of
$3,000,000; provided, however, that this Agreement shall terminate
without liability accruing to either party if: (a) the Board of
Directors of UDI shall not have approved the Merger Agreement by
11:59 p.m. Eastern Daylight Savings Time on June 25, 1997; or
(b) an authorized officer of UDI shall not have executed such
Agreement on behalf of UDI and delivered such Agreement to Core by
11:59 p.m. Eastern Daylight Savings Time on such date. In the
event either of such conditions precedent is not satisfied, Core
shall have no obligation whatsoever to pay the Fee or Expenses.
5. For purposes of this letter agreement, the term "delivery" of the
Merger Agreement shall include transmission of an executed
signature page by telefacsimile, which the parties agree shall
evidence a party's intent to be bound by the Merger Agreement.
Please sign below to indicate UDI's agreement to the foregoing.
Very truly yours,
CORE INDUSTRIES INC
By: /s/ David R. Zimmer
-------------------------------------------
Its: President and Chief Executive Officer
-------------------------------------
Accepted and agreed to:
UNITED DOMINION INDUSTRIES LIMITED
By: /s/ Richard A. Bearse
-------------------------------
Its: Senior Vice President
By: /s/ Richard L. Magee
-------------------------------
Its: Vice President
--------------------------
Date: June 20, 1997
