1
OFFER TO PURCHASE FOR CASH
ALL OUTSTANDING SHARES OF COMMON STOCK
OF
TRION, INC.
AT
$5.50 NET PER SHARE
BY
TI ACQUISITION CORP.,
AN INDIRECT WHOLLY OWNED SUBSIDIARY OF
FEDDERS CORPORATION
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK
CITY TIME, ON WEDNESDAY, AUGUST 11, 1999, UNLESS THE OFFER IS EXTENDED.
THE OFFER IS BEING MADE PURSUANT TO AN AGREEMENT AND PLAN OF MERGER, DATED
AS OF JULY 12, 1999, BY AND AMONG FEDDERS CORPORATION ("PARENT"), TI ACQUISITION
CORP. ("PURCHASER") AND TRION, INC. (THE "COMPANY"). THE BOARD OF DIRECTORS OF
THE COMPANY BY A UNANIMOUS VOTE OF THOSE PRESENT AT THE MEETING APPROVED THE
MERGER AGREEMENT AND THE TRANSACTIONS CONTEMPLATED THEREBY, INCLUDING THE OFFER
AND THE MERGER (EACH AS DEFINED HEREIN), AND DETERMINED THAT THE OFFER AND THE
MERGER ARE FAIR TO, AND IN THE BEST INTERESTS OF, THE COMPANY'S SHAREHOLDERS AND
RECOMMENDS THAT THE SHAREHOLDERS ACCEPT THE OFFER AND TENDER THEIR SHARES
PURSUANT TO THE OFFER.
THE OFFER IS CONDITIONED UPON, AMONG OTHER THINGS, THERE BEING VALIDLY
TENDERED AND NOT WITHDRAWN PRIOR TO THE EXPIRATION DATE (AS DEFINED HEREIN) THAT
NUMBER OF SHARES WHICH, WHEN ADDED TO THE SHARES BENEFICIALLY OWNED BY PARENT OR
PURCHASER (IF ANY), REPRESENTS AT LEAST EIGHTY PERCENT (80%) OF THE SHARES
OUTSTANDING ON A FULLY DILUTED BASIS ON THE DATE SHARES ARE ACCEPTED FOR
PAYMENT. THE OFFER IS ALSO SUBJECT TO THE OTHER CONDITIONS SET FORTH IN THIS
OFFER TO PURCHASE. SEE SECTION 14.
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IMPORTANT
Any shareholder desiring to tender all or any portion of such shareholder's
Shares (as defined herein) should either (i) complete and sign the enclosed
Letter of Transmittal (or a facsimile thereof) in accordance with the
Instructions in the Letter of Transmittal, have such shareholder's signature
thereon guaranteed (if required by Instruction 1 to the Letter of Transmittal),
mail or deliver the Letter of Transmittal (or a facsimile thereof) and any other
required documents to the Depositary (as defined herein) and either deliver the
certificates for such Shares to the Depositary or tender such Shares pursuant to
the procedure for book-entry transfer set forth in Section 3 of this Offer to
Purchase or (ii) request such shareholder's broker, dealer, commercial bank,
trust company or other nominee to effect the transaction for such shareholder.
Any shareholder whose Shares are registered in the name of a broker, dealer,
commercial bank, trust company or other nominee must contact such broker,
dealer, commercial bank, trust company or other nominee to tender such Shares.
Any shareholder who desires to tender Shares and whose certificates
evidencing such Shares are not immediately available, or who cannot comply with
the procedures for book-entry transfer on a timely basis, or who cannot deliver
all required documents to the Depositary prior to the expiration of the Offer,
may tender such Shares by following the procedures for guaranteed delivery set
forth in Section 3 of this Offer to Purchase.
Questions and requests for assistance or for additional copies of this
Offer to Purchase, the Letter of Transmittal, the Notice of Guaranteed Delivery
and other related materials may be directed to the Information Agent or to the
Dealer Manager at their respective addresses and telephone numbers set forth on
the back cover of this Offer to Purchase. Additional copies of this Offer to
Purchase, the Letter of Transmittal, the Notice of Guaranteed Delivery and the
other tender offer materials may also be obtained from brokers, dealers,
commercial banks or trust companies.
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The Dealer Manager for the Offer is:
TM Capital Corp. Logo
July 15, 1999
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TABLE OF CONTENTS
INTRODUCTION................................................ 1
THE OFFER................................................... 4
1. Terms of the Offer................................... 4
2. Acceptance for Payment and Payment................... 5
3. Procedures for Tendering Shares...................... 6
4. Withdrawal Rights.................................... 8
5. Certain U.S. Federal Income Tax Consequences......... 9
6. Price Range of the Shares; Dividends................. 10
7. Effect of the Offer on the Market for the Shares;
Stock Listing; Exchange Act Registration; Margin
Regulations.......................................... 10
8. Certain Information Concerning the Company........... 11
9. Certain Information Concerning Parent and
Purchaser.............................................. 13
10. Sources and Amount of Funds.......................... 14
11. Background of the Offer; Purpose of the Offer and the
Merger; the Merger Agreement and Certain Other
Agreements........................................... 14
12. Plans for the Company; Other Matters................. 28
13. Dividends and Distributions.......................... 30
14. Conditions to the Offer.............................. 30
15. Certain Legal Matters................................ 32
16. Fees and Expenses.................................... 35
17. Miscellaneous........................................ 36
SCHEDULE I
INFORMATION CONCERNING DIRECTORS AND EXECUTIVE OFFICERS OF
PARENT AND PURCHASER...................................... I-1
ANNEX A
Text of Subchapter 25E of the Pennsylvania Business
Corporation Law........................................... A-1
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To the Holders of Common Stock of
Trion, Inc.:
INTRODUCTION
TI Acquisition Corp., a Pennsylvania corporation ("Purchaser") and an
indirect wholly owned subsidiary of Fedders Corporation, a Delaware corporation
("Parent"), hereby offers to purchase all outstanding shares of common stock,
par value $0.50 per share (the "Shares"), of Trion, Inc., a Pennsylvania
corporation (the "Company"), at a price of $5.50 per Share, net to the seller in
cash, without interest (the "Offer Price"), upon the terms and subject to the
conditions set forth in this Offer to Purchase and in the related Letter of
Transmittal (which, as amended or supplemented from time to time, collectively
constitute the "Offer").
Tendering shareholders of record who tender Shares directly will not be
obligated to pay brokerage fees or commissions or, except as set forth in
Instruction 6 of the Letter of Transmittal, stock transfer taxes on the purchase
of Shares by Purchaser pursuant to the Offer. Shareholders who hold their Shares
through a bank or broker should check with such institution as to whether they
charge any service fees. Purchaser will pay all fees and expenses of TM Capital
Corp. ("TM Capital"), which is acting as the Dealer Manager (in such capacity,
the "Dealer Manager"), American Stock Transfer and Trust Company which is acting
as the Depositary (in such capacity, the "Depositary") and X.X. Xxxx & Co., Inc.
("XX Xxxx"), which is acting as Information Agent (in such capacity, the
"Information Agent"), incurred in connection with the Offer and in accordance
with the terms of the agreements entered into between Purchaser and/or Parent
and each such person. See Section 16.
THE BOARD OF DIRECTORS OF THE COMPANY (THE "COMPANY BOARD OF DIRECTORS") BY
A UNANIMOUS VOTE OF THOSE PRESENT AT THE MEETING APPROVED THE MERGER AGREEMENT
AND THE TRANSACTIONS CONTEMPLATED THEREBY, INCLUDING THE OFFER AND THE MERGER,
AND DETERMINED THAT THE OFFER AND THE MERGER ARE FAIR TO, AND IN THE BEST
INTERESTS OF, THE COMPANY'S SHAREHOLDERS AND RECOMMENDS THAT THE SHAREHOLDERS
ACCEPT THE OFFER AND TENDER THEIR SHARES PURSUANT TO THE OFFER.
Xxxxxx Xxxxxxxx & Co. ("Xxxxxx Xxxxxxxx"), financial advisor to the
Company, has delivered to the Company Board of Directors its opinion, dated as
of July 12, 1999 (the "Financial Advisor Opinion"), to the effect that, as of
such date and based upon and subject to certain assumptions and matters stated
therein, the consideration to be received by the holders of Shares (other than
Parent and its affiliates if at all) in the Offer and the Merger was fair, from
a financial point of view, to such holders. A copy of the Financial Advisor
Opinion is attached as an exhibit to the Company's Solicitation/Recommendation
Statement on Schedule 14D-9 (the "Schedule 14D-9"), which has been filed by the
Company with the Securities and Exchange Commission (the "Commission") in
connection with the Offer and which is being mailed to holders of Shares
herewith. Holders of Shares are urged to, and should, read the Financial Advisor
Opinion carefully.
THE OFFER IS CONDITIONED UPON, AMONG OTHER THINGS, THERE BEING VALIDLY
TENDERED AND NOT WITHDRAWN PRIOR TO THE EXPIRATION DATE THAT NUMBER OF SHARES
WHICH, WHEN ADDED TO THE SHARES BENEFICIALLY OWNED BY PARENT OR PURCHASER (IF
ANY), REPRESENTS AT LEAST 80% OF THE SHARES OUTSTANDING ON A FULLY DILUTED BASIS
ON THE DATE SHARES ARE ACCEPTED FOR PAYMENT (THE "MINIMUM CONDITION"). THE OFFER
IS ALSO SUBJECT TO THE OTHER CONDITIONS SET FORTH IN THIS OFFER TO PURCHASE. SEE
SECTION 14. As used in this Offer to Purchase, "fully diluted basis" takes into
account the exercise of all outstanding options and other rights and securities
exercisable into Shares. The Company has represented and warranted to Parent and
Purchaser that, as of July 12, 1999, there were 7,161,247 Shares issued and
outstanding and 391,524 Shares were issuable pursuant to the exercise of
outstanding options (the "Company Options"). The Merger Agreement provides,
among other things, that the Company will not, without the prior written consent
of Parent, change the authorized or issued capital stock of the Company or any
subsidiary of the Company, grant any stock option or right to purchase shares of
capital stock of the Company or any subsidiary of the Company, or issue any
security
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convertible into such capital stock. See Section 11. Based on the foregoing and
assuming the issuance of 391,524 Shares issuable upon the exercise of
outstanding Options, Purchaser believes that the Minimum Condition will be
satisfied if 6,042,217 Shares are validly tendered and not withdrawn prior to
the Expiration Date.
The Offer is being made pursuant to an Agreement and Plan of Merger, dated
as of July 12, 1999 (the "Merger Agreement"), by and among Parent, Purchaser and
the Company. Pursuant to the Merger Agreement and the Pennsylvania Business
Corporation Law, as amended (the "PBCL"), as soon as practicable after the
completion of the Offer and satisfaction or waiver, if permissible, of all
conditions to the consummation of the Merger, including the purchase of Shares
pursuant to the Offer (sometimes referred to herein as the "consummation" of the
Offer) and the approval and adoption by the shareholders of the Company of (i)
an amendment to section 6 of the Company's articles of incorporation (the
"Articles Amendment") which amendment will delete the requirement in the
Company's articles of incorporation that a merger of the Company with an
existing shareholder or its affiliates receive the approval of a majority of the
shares not held by such shareholder and its affiliates, and (ii) the Merger
Agreement (if required by applicable law), Purchaser will be merged with and
into the Company (the "Merger") and the Company will be the surviving
corporation in the Merger (the "Surviving Corporation"). At the effective time
of the Merger (the "Effective Time"), each Share then outstanding, other than
Shares held by (i) the Company or any of its subsidiaries, (ii) Parent or any of
its subsidiaries including Purchaser, and (iii) shareholders who properly
perfect their dissenters' rights under the PBCL, will be converted into the
right to receive $5.50 in cash or any higher price per Share paid in the Offer
(the "Merger Consideration"), without interest. The Merger Agreement is more
fully described in Section 11.
The Company has entered into a Stock Option Agreement, dated as of July 12,
1999 (the "Company Option Agreement"), with Parent and Purchaser pursuant to
which the Company has granted to Parent an irrevocable option (the "Stock
Option") to purchase up to the number of fully paid and nonassessable Shares
equal to 19.9% of the Shares issued and outstanding immediately prior to the
grant of the Stock Option, at a purchase price of $5.50 per Share, exercisable
upon the occurrence of certain events. The Company Option Agreement is described
more fully in Section 11 below.
Parent and Purchaser have entered into Shareholder Agreements dated as of
July 12, 1999 (the "Shareholder Agreements"), with the directors of the Company
(the "Director Shareholders"), pursuant to which each of such Director
Shareholders has agreed, among other things, (1) to tender to Purchaser pursuant
to the Offer at $5.50 per share, all Shares beneficially owned by such Director
Shareholder (719,764 Shares in the aggregate) which will result in the Parent
and its affiliates beneficially owning 10.1% of the outstanding Shares, (2) to
grant to Parent an option exercisable under certain circumstances to purchase
the Shares beneficially owned by such Director Shareholder, and (3) to vote all
Shares beneficially owned by such Director Shareholder in favor of the Merger
Agreement and against all other acquisition proposals. See Section 11 below.
The Merger Agreement provides that, upon the purchase by Purchaser of at
least a majority of the Shares pursuant to the Offer and from time to time
thereafter, Parent shall be entitled to designate such number of directors,
rounded up to the next whole number, on the Company Board of Directors so that
the percentage of Parent's nominees on the Company Board of Directors equals the
percentage of outstanding Shares beneficially owned by Parent and its
affiliates. The Company will, at such time, upon the request of Purchaser
promptly use its best efforts to take all action necessary to cause such persons
designated by Parent to be elected to the Company Board of Directors, if
necessary, by increasing the size of the Company Board of Directors or securing
resignations of its incumbent directors or both.
Under Section 1924 of the PBCL, if a corporation owns at least 80% of the
outstanding shares of each class of another corporation, the corporation owning
such stock can effect a "short-form" merger with that corporation without any
action or vote on the part of the other shareholders of such other corporation
(a "short-form merger") if its board of directors adopts the merger. If the
Minimum Condition is satisfied and Purchaser purchases at least 80% of the
outstanding Shares, then under the PBCL, the Merger could be approved without
any action or vote on the part of Company's other shareholders. However, section
6 of the
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Company's articles of incorporation provides that a merger or consolidation of
the Company with any person (or any affiliate of such person) that owns any
shares of any class of equity security of the Company requires the approval of a
majority of the voting securities of the Company not owned by such person and
its affiliates. The Company's articles of incorporation provides that section 6
thereof may be amended by the affirmative vote of 80% of the voting securities
of the Company entitled to vote thereon at a meeting called for that purpose. If
the Minimum Condition is satisfied and Purchaser purchases at least 80% of the
outstanding Shares, Purchaser will be able to effect the Articles Amendment and
delete section 6 from the Company's articles of incorporation without any action
or vote on the part of the other shareholders of the Company. Following the
approval of the Articles Amendment, Purchaser will be able to effect a
short-form merger without any further action or vote on the part of the other
shareholders of the Company. Parent presently intends to effect a short-form
merger if permitted to do so under the PBCL. The Merger Agreement is more fully
described in Section 11.
Although under the terms of the Merger Agreement, Parent and Purchaser may
waive the Minimum Condition, they do not currently intend to do so and Parent
and Purchaser may terminate the Merger Agreement if the Minimum Condition is not
satisfied. In addition, the Merger Agreement provides that Purchaser may extend
the Offer if the Shares tendered and not withdrawn pursuant to the Offer are
less than 80% of the outstanding Shares. Even if Parent and Purchaser waive the
Minimum Condition and they do not own 80% of the outstanding Shares, following
consummation of the Offer, Parent and Purchaser could seek to purchase
additional shares in the open market or otherwise in order to reach the 80%
threshold required to approve the Articles Amendment and employ a short-form
merger under the PBCL. The per share consideration paid for any Shares so
acquired may be greater or less than that paid in the Offer. See Section 12.
THIS OFFER TO PURCHASE AND THE RELATED LETTER OF TRANSMITTAL CONTAIN
IMPORTANT INFORMATION AND SHOULD BE READ CAREFULLY BEFORE ANY DECISION IS MADE
WITH RESPECT TO THE OFFER.
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THE OFFER
1. TERMS OF THE OFFER.
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, and not withdrawn in accordance with
Section 4. The term "Expiration Date" shall mean 12:00 Midnight, New York City
time, on Wednesday, August 11, 1999, unless and until Purchaser, in accordance
with the terms of the Merger Agreement, shall have extended the period of time
during which the Offer is open, in which event the term "Expiration Date" shall
mean the latest time and date at which the Offer, as so extended by Purchaser,
shall expire. In the Merger Agreement, Parent and Purchaser have agreed that if
all conditions to Purchaser's obligation to accept for payment and pay for
Shares pursuant to the Offer are not satisfied on the scheduled Expiration Date,
Purchaser may, in its sole discretion, extend the Offer.
The Offer is conditioned upon the satisfaction of the Minimum Condition,
the expiration or termination of all waiting periods imposed by the
Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of 1976, as amended (the "HSR
Act"), and the other conditions set forth in Section 14. If such conditions are
not satisfied prior to the Expiration Date, Purchaser reserves the right,
subject to the terms of the Merger Agreement and subject to complying with
applicable rules and regulations of the Commission, to (i) decline to purchase
any Shares tendered in the Offer and terminate the Offer and return all tendered
Shares to the tendering shareholders, (ii) waive any or all conditions to the
Offer and, to the extent permitted by applicable law, purchase all Shares
validly tendered, (iii) extend the Offer and, subject to the right of
shareholders to withdraw Shares until the Expiration Date, retain all Shares
which have been tendered during the period or periods for which the Offer is
extended or (iv) amend the Offer.
The Merger Agreement requires Purchaser to accept for payment and pay for
all Shares validly tendered and not withdrawn pursuant to the Offer if all
conditions to the Offer are satisfied on the Expiration Date. However, if,
immediately prior to the scheduled Expiration Date, all conditions to the Offer
are not satisfied, Purchaser may, at its own discretion, extend the Offer.
Any extension, amendment or termination of the Offer will be followed as
promptly as practicable by public announcement thereof, the announcement in the
case of an extension to be issued no later than 9:00 a.m., New York City time,
on the next business day after the previously scheduled Expiration Date in
accordance with Rules 14d-4(c), 14d-6(d) and 14e-1(d) under the Securities
Exchange Act of 1934, as amended (the "Exchange Act"). As used in this Offer to
Purchase, "business day" has the meaning set forth in Rule 14d-1 under the
Exchange Act. Without limiting the obligation of Purchaser under such Rules or
the manner in which Purchaser may choose to make any public announcement,
Purchaser currently intends to make announcements by issuing a press release to
the Dow Xxxxx News Service.
If Purchaser extends the Offer, or if Purchaser (whether before or after
its acceptance for payment of Shares) is delayed in its purchase of, or payment
for, Shares or is unable to pay for Shares pursuant to the Offer for any reason,
then, without prejudice to Purchaser's rights under the Offer, the Depositary
may retain tendered Shares on behalf of Purchaser, and such Shares may not be
withdrawn except to the extent tendering shareholders are entitled to withdrawal
rights as described in Section 4. However, the ability of Purchaser to delay the
payment for Shares which Purchaser has accepted for payment is limited by Rule
14e-1(c) under the Exchange Act, which requires that a bidder pay the
consideration offered or return the securities deposited by, or on behalf of,
holders of securities promptly after the termination or withdrawal of the Offer.
If Purchaser makes a material change in the terms of the Offer or the
information concerning the Offer or waives a material condition of the Offer,
Purchaser will disseminate additional tender offer materials and extend the
Offer to the extent required by Rules 14d-4(c), 14d-6(d) and 14e-1 under the
Exchange Act. The minimum period during which the Offer must remain open
following material changes in the terms of the Offer or information concerning
the Offer, other than a change in price or a change in percentage of securities
sought, will depend upon the facts and circumstances then existing, including
the relative materiality of the changed terms or information. In a public
release, the Commission has stated its view that an offer must
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remain open for a minimum period of time following a material change in the
terms of the Offer and that waiver of a material condition, such as the Minimum
Condition, is a material change in the terms of the Offer. The release states
that an offer should remain open for a minimum of five (5) business days from
the date a material change is first published, or sent or given to security
holders and that, if material changes are made with respect to information not
materially less significant than the offer price and the number of shares being
sought, a minimum of 10 business days may be required to allow adequate
dissemination and investor response. The requirement to extend the Offer will
not apply to the extent that the number of business days remaining between the
occurrence of the change and the then-scheduled Expiration Date equals or
exceeds the minimum extension period that would be required because of such
amendment. If, prior to the Expiration Date, Purchaser increases the
consideration offered to holders of Shares pursuant to the Offer, such increased
consideration will be paid to all holders whose Shares are purchased in the
Offer whether or not such Shares were tendered prior to such increase.
The Company has provided Purchaser with the Company's shareholder lists and
security position listings for the purpose of disseminating the Offer to holders
of Shares. This Offer to Purchase and the related Letter of Transmittal will be
mailed to record holders of Shares and will be furnished to brokers, dealers,
banks and similar persons whose names, or the names of whose nominees, appear on
the shareholder lists or, if applicable, who are listed as participants in a
clearing agency's security position listing, for subsequent transmittal to
beneficial owners of Shares.
2. ACCEPTANCE FOR PAYMENT AND PAYMENT.
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 and will pay for, as soon as
practicable after the Expiration Date, all Shares validly tendered prior to the
Expiration Date and not properly withdrawn in accordance with Section 4.
For purposes of the Offer, Purchaser will be deemed to have accepted for
payment, and thereby purchased, Shares properly tendered to Purchaser and not
withdrawn, if, as and when Purchaser gives oral or written notice to the
Depositary of Purchaser's acceptance for payment of such Shares. 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 shareholders for the purpose of receiving payment from Purchaser and
transmitting payment to tendering shareholders. 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 for such Shares (or a timely Book
Entry Confirmation (as defined below) with respect thereto), (ii) a Letter of
Transmittal (or 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 (as defined below) and (iii) any other documents required by the
Letter of Transmittal. Accordingly, payment may be made to tendering
shareholders at different times if delivery of the Shares and other required
documents occur at different times. The per share consideration paid to any
holder of Shares pursuant to the Offer will be the highest per share
consideration paid to any other holder of such Shares pursuant to the Offer.
UNDER NO CIRCUMSTANCES WILL INTEREST BE PAID ON THE PURCHASE PRICE TO BE PAID BY
PURCHASER FOR THE SHARES, REGARDLESS OF ANY EXTENSION OF THE OFFER OR ANY DELAY
IN MAKING SUCH PAYMENT.
The Purchaser expressly reserves the right, in its sole discretion, to
delay acceptance for payment of, or payment for, Shares in order to comply in
whole or in part with any applicable law. If Purchaser is delayed in its
acceptance for payment of, or payment for, Shares or is unable to accept for
payment or pay for Shares pursuant to the Offer for any reason, then, without
prejudice to Purchaser's rights under the Offer (including such rights as are
set forth in Sections 1 and 14) (but subject to compliance with Rule 14e-1(c)
under the Exchange Act), the Depositary may, nevertheless, on behalf of
Purchaser, retain tendered Shares, and such Shares may not be withdrawn except
to the extent tendering shareholders are entitled to exercise, and duly
exercise, withdrawal rights as described in Section 4.
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If any tendered Shares are not purchased pursuant to the Offer for any
reason, or if certificates are submitted representing more Shares than are
tendered, certificates evidencing Shares not tendered or not accepted for
purchase will be returned to the tendering shareholder, or such other person as
the tendering shareholder shall specify in the Letter of Transmittal, as
promptly as practicable following the expiration, termination or withdrawal of
the Offer. In the case of Shares delivered by book-entry transfer into the
Depositary's account at the Book-Entry Transfer Facility (as defined below)
pursuant to the procedures set forth in Section 3, such Shares will be credited
to such account maintained at the Book-Entry Transfer Facility as the tendering
shareholder shall specify in the Letter of Transmittal, as promptly as
practicable following the expiration, termination or withdrawal of the Offer. If
no such instructions are given with respect to Shares delivered by book-entry
transfer, any such Shares not tendered or not purchased will be returned by
crediting the account at the Book-Entry Transfer Facility designated in the
Letter of Transmittal as the account from which such Shares were delivered.
Purchaser reserves the right to transfer or assign, in whole or, from time
to time, in part, to one or more of its affiliates, the right to purchase Shares
tendered pursuant to the Offer, but any such transfer or assignment will not
relieve Purchaser of its obligations under the Offer and will in no way
prejudice the rights of tendering shareholders to receive payment for Shares
validly tendered and accepted for payment pursuant to the Offer.
3. PROCEDURES FOR TENDERING SHARES.
Valid Tender. For Shares to be validly tendered pursuant to the Offer,
either (i) a properly completed and duly executed Letter of Transmittal (or
facsimile thereof), together with any required signature guarantees or, in the
case of a book-entry transfer, an Agent's Message, and any other required
documents, must be received by the Depositary at one of its addresses set forth
on the back cover of this Offer to Purchase prior to the Expiration Date and
either certificates evidencing tendered Shares must be received by the
Depositary at one of such addresses or such Shares must be delivered to the
Depositary pursuant to the procedures for book-entry transfer set forth below
and a Book-Entry Confirmation must be received by the Depositary, in each case
prior to the Expiration Date, or (ii) the tendering shareholder must comply with
the guaranteed delivery procedures described below.
Book-Entry Transfer. The Depositary will establish an account with respect
to the Shares at The Depository Trust Company (the "Book-Entry Transfer
Facility") 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
Book-Entry Transfer Facility's system may make book-entry delivery of Shares by
causing the Book-Entry Transfer Facility to transfer such Shares into the
Depositary's account 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 into the Depositary's account at the
Book-Entry Transfer Facility, the Letter of Transmittal (or facsimile thereof),
properly completed and duly executed, with any required signature guarantees, or
an Agent's Message, and any other required documents must, in any case, be
transmitted to, and 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 shareholder must comply with the guaranteed delivery procedures
described below. The confirmation of a book-entry transfer of Shares into the
Depositary's account at the Book-Entry Transfer Facility as described above is
referred to herein as a "Book-Entry Confirmation."
DELIVERY OF THE LETTER OF TRANSMITTAL AND ANY OTHER REQUIRED DOCUMENTS TO THE
BOOK-ENTRY TRANSFER FACILITY WILL NOT CONSTITUTE DELIVERY TO THE DEPOSITARY.
The term "Agent's Message" means a message transmitted by the Book-Entry
Transfer Facility to, and received by, the Depositary and forming a part of a
Book-Entry Confirmation, which states that such Book-Entry Transfer Facility has
received an express acknowledgment from the participant in such Book-Entry
Transfer Facility tendering the Shares that such participant has received and
agrees to be bound by the terms of the Letter of Transmittal and that Purchaser
may enforce such agreement against such participant.
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THE METHOD OF DELIVERY OF SHARES, THE LETTER OF TRANSMITTAL AND ALL OTHER
REQUIRED DOCUMENTS, INCLUDING DELIVERY THROUGH THE BOOK-ENTRY TRANSFER FACILITY,
IS AT THE ELECTION AND RISK OF THE TENDERING SHAREHOLDER. SHARES WILL BE DEEMED
DELIVERED ONLY WHEN ACTUALLY RECEIVED BY THE DEPOSITARY (INCLUDING, IN THE CASE
OF A BOOK-ENTRY TRANSFER, BY BOOK-ENTRY CONFIRMATION). IF DELIVERY IS BY MAIL,
REGISTERED MAIL WITH RETURN RECEIPT REQUESTED, PROPERLY INSURED, IS RECOMMENDED.
IN ALL CASES, SUFFICIENT TIME SHOULD BE ALLOWED TO ENSURE TIMELY DELIVERY.
Signature Guarantees. No signature guarantee is required on the Letter of
Transmittal (i) if the Letter of Transmittal is signed by the registered
holder(s) (which term, for purposes of this Section, includes any participant in
the Book Entry Transfer Facility's systems whose name appears on a security
position listing as the owner of the Shares) of Shares tendered therewith and
such registered holder has not completed either the box entitled "Special
Delivery Instructions" or the box entitled "Special Payment Instructions" on the
Letter of Transmittal or (ii) if such Shares are tendered for the account of a
financial institution (including most commercial banks, savings and loan
associations and brokerage houses) that is a participant in the Security
Transfer Agents Medallion Program, the New York Stock Exchange Medallion
Signature Guarantee Program or the Stock Exchange Medallion Program (each, an
"Eligible Institution" and, collectively, "Eligible Institutions"). In all other
cases, all signatures on Letters of Transmittal must be guaranteed by an
Eligible Institution. See Instructions 1 and 5 to the Letter of Transmittal. If
the certificates for Shares are registered in the name of a person other than
the signer of the Letter of Transmittal, or if payment is to be made, or
certificates for Shares not tendered or not accepted for payment are to be
returned, to a person other than the registered holder of the certificates
surrendered, then the tendered certificates for such Shares must be endorsed or
accompanied by appropriate stock powers, in either case, signed exactly as the
name or names of the registered holders or owners appear on the certificates,
with the signatures on the certificates or stock powers guaranteed as aforesaid.
See Instruction 5 to the Letter of Transmittal.
Guaranteed Delivery. If a shareholder desires to tender Shares pursuant to
the Offer and such shareholder's certificates for Shares are not immediately
available or the procedures for book-entry transfer cannot be completed on a
timely basis or time will not permit all required documents to reach the
Depositary prior to the Expiration Date, such shareholder's tender may be
effected if all the following conditions are met:
(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 provided by Purchaser, is received by
the Depositary, as provided below, prior to the Expiration Date; and
(iii) the certificates for (or a Book-Entry Confirmation with respect
to) such Shares, together with a properly completed and duly executed
Letter of Transmittal (or facsimile thereof), with any required signature
guarantees, or, in the case of a book-entry transfer, an Agent's Message,
and any other required documents, are received by the Depositary within
three trading days after the date of execution of such Notice of Guaranteed
Delivery. A "trading day" is any day on which the Nasdaq National Market
(the "Nasdaq National Market"), operated by the National Association of
Securities Dealers, Inc. (the "NASD"), is open for business.
The Notice of Guaranteed Delivery may be delivered by hand to the
Depositary, transmitted by telegram or mailed to the Depositary and must include
a guarantee by an Eligible Institution in the form set forth in such Notice of
Guaranteed Delivery.
The valid tender of Shares pursuant to one of the procedures described
above will constitute a binding agreement between the tendering shareholder and
Purchaser upon the terms and subject to the conditions of the Offer.
Appointment. By executing the Letter of Transmittal as set forth above
(including delivery through an Agent's Message), the tendering shareholder will
irrevocably appoint designees of Purchaser as such shareholder's
attorneys-in-fact and proxies in the manner set forth in the Letter of
Transmittal, each with full
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power of substitution, to the full extent of such shareholder's rights with
respect to the Shares tendered by such shareholder and accepted for payment by
Purchaser and with respect to any and all non-cash dividends, distributions,
rights, other Shares or other securities issued or issuable in respect of such
Shares on or after July 12, 1999 (collectively, "Distributions"). All such
proxies will be considered coupled with an interest in the tendered Shares. Such
appointment will be effective if, as and when, and only to the extent that,
Purchaser accepts for payment Shares tendered by such shareholder as provided
herein. All such powers of attorney and proxies will be irrevocable and will be
deemed granted in consideration of the acceptance for payment by Purchaser of
Shares tendered in accordance with the terms of the Offer. Upon such
appointment, all prior powers of attorney, proxies and consents given by such
shareholder with respect to such Shares (and any and all Distributions) will,
without further action, be revoked and no subsequent powers of attorney,
proxies, consents or revocations may be given by such shareholder (and, if
given, will not be deemed effective). The designees of Parent will thereby be
empowered to exercise all voting and other rights with respect to such Shares
(and any and all Distributions), including, without limitation, in respect of
any annual or special meeting of the Company's shareholders (and any adjournment
or postponement thereof), actions by written consent in lieu of any such meeting
or otherwise, as each such attorney-in-fact and proxy or his substitute shall in
his sole discretion deem proper. Purchaser reserves the right to require that,
in order for Shares to be deemed validly tendered, immediately upon Purchaser's
acceptance for payment of such Shares, Purchaser must be able to exercise full
voting, consent and other rights with respect to such Shares (and any and all
Distributions), including voting at any meeting of shareholders.
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 will be final and binding. Purchaser reserves the absolute right
to reject any or all tenders of any Shares determined by it not to be in proper
form or the acceptance for payment of which, or payment for which, may, in the
opinion of Purchaser's counsel, be unlawful. Purchaser also reserves the
absolute right, in its sole discretion, subject to the provisions of the Merger
Agreement, to waive any defect or irregularity in any tender of Shares of any
particular shareholder, whether or not similar defects or irregularities are
waived in the case of other shareholders. No tender of Shares will be deemed to
have been validly made until all defects or irregularities relating thereto have
been cured or waived. None of Purchaser, Parent, the Dealer Manager, 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. Subject to the terms of the
Merger Agreement, Purchaser's interpretation of the terms and conditions of the
Offer in this regard (including the Letter of Transmittal and the instructions
thereto) will be final and binding.
Backup Withholding. Under the "backup withholding" provisions of federal
income tax law, unless a tendering registered holder, or its assignee (in either
case, the "Payee"), satisfies the conditions described in Instruction 10 of the
Letter of Transmittal or is otherwise exempt, the cash payable as a result of
the Offer may be subject to backup withholding tax at a rate of 31% of the gross
proceeds. To prevent backup withholding, each Payee should complete and sign the
Substitute Form W-9 provided in the Letter of Transmittal. See Instruction 10 to
the Letter of Transmittal.
4. WITHDRAWAL RIGHTS.
Except as otherwise provided in this Section 4 or as provided by applicable
law, tenders of Shares are irrevocable. Shares tendered pursuant to the Offer
may be withdrawn pursuant to the procedures set forth below at any time prior to
the Expiration Date and, unless theretofore accepted for payment and paid for by
Purchaser pursuant to the Offer, may also be withdrawn at any time after
September 12, 1999.
To be effective, a written or telegraphic notice of withdrawal must be
timely received by the Depositary at one of its addresses set forth on the back
cover 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 the Shares to be
withdrawn, if different from the name of the person who tendered the Shares. If
certificates evidencing Shares to be withdrawn have been delivered or otherwise
identified to the Depositary, then, prior to the physical release of such
certificates, the serial numbers shown on such certificates must be submitted to
the Depositary and, unless such Shares have been
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tendered by an Eligible Institution, the signatures on the notice of withdrawal
must be guaranteed by an Eligible Institution. If Shares have been delivered
pursuant to the procedures for book-entry transfer as set forth in Section 3,
any notice of withdrawal must also specify the name and number of the account at
the Book-Entry Transfer Facility to be credited with the withdrawn Shares and
otherwise comply with such Book-Entry Transfer Facility's procedures.
Withdrawals of tendered Shares may not be rescinded, and any Shares
withdrawn will thereafter be deemed not validly tendered for purposes of the
Offer. However, withdrawn Shares may be retendered by again following one of the
procedures described in Section 3 at any time prior to the Expiration Date.
All questions as to the form and validity (including time of receipt) of
notices of withdrawal will be determined by Purchaser, in its sole discretion,
which determination will be final and binding. None of Purchaser, Parent, 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 U.S. FEDERAL INCOME TAX CONSEQUENCES.
The following is a general summary of certain U.S. federal income tax
consequences of the Offer and the Merger relevant to a beneficial holder of
Shares whose Shares are tendered and accepted for payment pursuant to the Offer
or whose Shares are converted to cash in the Merger (a "Holder"). The discussion
is based on the Internal Revenue Code of 1986, as amended (the "Code"),
regulations issued thereunder, judicial decisions and administrative rulings,
all of which are subject to change, possibly with retroactive effect. The
following does not address the U.S. federal income tax consequences to all
categories of Holders that may be subject to special rules (e.g., holders who
acquired their Shares pursuant to the exercise of employee stock options or
other compensation arrangements with the Company, holders who perfect their
appraisal rights under the PBCL, foreign holders, insurance companies,
tax-exempt organizations, dealers in securities and persons who have acquired
the Shares as part of a straddle, hedge, conversion transaction or other
integrated investment), nor does it address the federal income tax consequences
to persons who do not hold the Shares as "capital assets" within the meaning of
Section 1221 of the Code (generally, property held for investment). Holders
should consult their own tax advisors regarding the U.S. federal, state, local
and foreign income and other tax consequences of the Offer and the Merger.
The receipt of cash for Shares pursuant to the Offer or the Merger will be
a taxable transaction for U.S. federal income tax purposes and may also be a
taxable transaction under applicable state, local and foreign income and other
tax laws. In general, a Holder who sells Shares pursuant to the Offer or
receives cash in exchange for Shares pursuant to the Merger will recognize gain
or loss for federal income tax purposes equal to the difference, if any, between
the amount of cash received and the Holder's adjusted tax basis in the Shares
sold pursuant to the Offer or surrendered for cash pursuant to the Merger. Gain
or loss will be determined separately for each block of Shares (i.e., Shares
acquired at the same cost in a single transaction) tendered pursuant to the
Offer or surrendered for cash pursuant to the Merger. Such gain or loss will be
long-term capital gain or loss if the Holder has held the Shares for more than
one (1) year at the time of the consummation of the Offer or the Merger. Capital
gains recognized by an individual investor (or an estate or certain trusts) upon
a disposition of a Share that has been held for more than one year generally
will be subject to a maximum tax rate of 20% or, in the case of a Share that has
been held for one year or less, will be subject to tax at ordinary income rates.
Certain limitations apply to the use of capital losses.
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6. PRICE RANGE OF THE SHARES; DIVIDENDS.
The Shares are traded through the Nasdaq National Market under the symbol
"TRON". The following table sets forth, for each of the fiscal quarters
indicated, the high and low reported sales price per Share on the Nasdaq
National Market.
HIGH LOW
----- -----
Fiscal Year Ended December 31, 1997
First Quarter ended March 31, 1997........................ $6.25 $3.88
Second Quarter ended June 30, 1997........................ 5.38 3.50
Third Quarter ended September 30, 1997.................... 5.50 3.94
Fourth Quarter ended December 31, 1997.................... 5.88 4.13
Fiscal Year Ended December 31, 1998
First Quarter ended March 31, 1998........................ $6.88 $4.56
Second Quarter ended June 30, 1998........................ 6.88 5.00
Third Quarter ended September 30, 1998.................... 6.88 3.25
Fourth Quarter ended December 31, 1998.................... 4.88 2.50
Fiscal Year Ending December 31, 1999
First Quarter ended March 31, 1999........................ $4.63 $2.75
Second Quarter ended June 30, 1999........................ 4.94 3.38
Third Quarter through July 14, 1999....................... 5.38 4.50
On July 12, 1999, the last full trading day prior to the public
announcement of the execution of the Merger Agreement, the last reported closing
sales price of the Shares on the Nasdaq National Market was $4.81 per Share. On
July 14, 1999, the last full trading day prior to the commencement of the Offer,
the last reported sales price of the Shares on the Nasdaq National Market was
$5.31 per Share. Shareholders are urged to obtain a current market quotation for
the Shares.
The Company issued a $0.02 cash dividend each quarter from February 1997
through May 1998. In addition, under the terms of the Merger Agreement, the
Company is not permitted to declare or pay dividends with respect to the Shares
without the prior written consent of Parent; Parent does not intend to consent
to any such declaration or payment.
7. EFFECT OF THE OFFER ON THE MARKET FOR THE SHARES; STOCK LISTING; EXCHANGE ACT
REGISTRATION; MARGIN REGULATIONS.
Market for the Shares. 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, depending upon the number of
Shares so purchased, could adversely affect the liquidity and market value of
the remaining Shares held by shareholders. Purchaser cannot predict whether the
reduction in the number of Shares that might otherwise trade publicly would have
an adverse or beneficial effect on the market price for, or marketability of,
the Shares or whether it would cause future market prices to be greater or less
than the Offer Price.
Nasdaq Quotation. Depending upon the number of Shares purchased pursuant
to the Offer, the Shares may no longer meet the requirements of the NASD for
continued inclusion on the Nasdaq National Market, which requires that an issuer
have at least 500,000 publicly held shares, held by at least 300 round lot
shareholders, with a market value of at least $1,000,000, have at least two
market makers, have a minimum bid price of $1 and have either (A) net tangible
assets of at least $2,000,000; (B) a market capitalization of at least
$35,000,000; or (C) net income of $500,000 in the most recently completed fiscal
year or in two of the last three most recently completed fiscal years. If the
Nasdaq National Market was to cease to publish quotations for the Shares, it is
possible that the Shares would continue to trade in the over-the-counter market
and that price or other quotations would be reported by other sources. The
extent of the public market for such Shares and the availability of such
quotations would depend, however, upon such factors as the number of
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shareholders 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
lesser than the Offer Price.
Exchange Act Registration. 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
neither listed on a national securities exchange nor held by 300 or more holders
of record. Termination of registration of the Shares under the Exchange Act
would substantially reduce the information required to be furnished by the
Company to its shareholders and to the Commission and would make certain
provisions of the Exchange Act no longer applicable to the Company, such as the
short-swing profit recovery provisions of Section 16(b), the requirement of
furnishing a proxy statement pursuant to Section 14(a) in connection with
shareholders' meetings and the related requirement of furnishing an annual
report to shareholders and the requirements of Rule 13e-3 under the Exchange Act
with respect to "going private" transactions. Furthermore, 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 Rule 144A
promulgated under the Securities Act of 1933, as amended (the "Securities Act"),
may be impaired or eliminated.
Margin Regulations. The Shares are presently "margin securities" under the
regulations of the Board of Governors of the Federal Reserve System (the
"Federal Reserve Board"), which status has the effect, among other things, of
allowing brokers to extend credit on the collateral of the Shares. Depending
upon factors similar to those described above regarding stock exchange listing
and market quotations, it is possible that, following the Offer, the Shares
would no longer constitute "margin securities" for the purposes of the margin
regulations of the Federal Reserve Board and therefore could no longer be used
as collateral for loans made by brokers. In addition, if registration of the
Shares under the Exchange Act were terminated, the Shares would no longer
constitute "margin securities."
Parent currently intends to seek delisting of the Shares from the Nasdaq
National Market and the termination of the registration of the Shares under the
Exchange Act as soon after the completion of the Offer as the requirements for
such delisting and termination are met. If the Nasdaq National Market listing
and the Exchange Act registration of the Shares are not terminated prior to the
Merger, then the Shares will be delisted from the Nasdaq National Market and the
registration of the Shares under the Exchange Act will be terminated following
the consummation of the Merger.
8. CERTAIN INFORMATION CONCERNING THE COMPANY.
General. The information concerning the Company contained in this Offer to
Purchase, including that set forth below under the caption "Selected 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. None of Parent, Purchaser or the Dealer Manager assumes
responsibility for the accuracy or completeness of the information concerning
the Company contained in such documents and records or for any failure by the
Company to disclose events which may have occurred or may affect the
significance or accuracy of any such information but which are unknown to
Parent, Purchaser or the Dealer Manager.
The Company is engaged in the design, manufacture, distribution and sale of
equipment to improve indoor air quality. The Company sells its products for use
in residences, commercial facilities, industrial facilities, hospitals,
restaurants, general manufacturing, ships and submarines. The Company uses a
range of technologies to collect airborne contaminants, including high
efficiency particulate arrestance and ultra low particulate arrestance
filtration technologies, electrostatic precipitators and media filtration to
eliminate airborne pollutants and micron size contaminants.
Selected Financial Information. Set forth below is certain consolidated
financial information with respect to the Company, excerpted or derived from the
Company's Annual Reports on Form 10-K for the
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fiscal years ended December 31, 1998 and its Quarterly Report on Form 10-Q for
the quarter ended March 31, 1999, each as filed with the Commission pursuant to
the Exchange Act.
More comprehensive financial information is included in such reports and in
other documents filed by the Company with the Commission. The following summary
is qualified in its entirety by reference to such reports and other documents
and all of the financial information (including any related notes) contained
therein. Such reports, documents and financial information may be inspected and
copies may be obtained from the Commission in the manner set forth below.
TRION, INC.
SELECTED CONSOLIDATED FINANCIAL INFORMATION
THREE MONTHS ENDED
(UNAUDITED) FISCAL YEARS ENDED
--------------------- ------------------------------------------
MARCH 31, MARCH 31, DECEMBER 31, DECEMBER 31, DECEMBER 31,
1999 1998 1998 1997 1996
--------- --------- ------------ ------------ ------------
(IN THOUSANDS, EXCEPT PER SHARE DATA)
INCOME STATEMENT DATA:
Net sales.................................. $14,857 $15,981 $57,214 $65,150 $62,401
Income (loss) before income taxes.......... 646 417 (2,178) 2,713 1,614
Net income (loss).......................... 435 271 (1,196) 2,051 1,112
Earnings (loss) per share:
Basic.................................... 0.06 0.04 (0.17) 0.29 0.16
Diluted.................................. 0.06 0.04 (0.17) 0.29 0.16
BALANCE SHEET DATA:
Total assets............................... $37,887 $39,201 $39,201 $42,192 $40,796
Total liabilities.......................... 16,019 17,660 17,660 19,325 19,754
Total Shareholders' equity................. 21,868 21,541 21,541 22,867 21,042
Other Financial Information. During the course of the discussions between
Parent and the Company that led to the execution of the Merger Agreement, the
Company provided Parent with certain information about the Company and its
financial performance which is not publicly available. The information provided
included financial projections for the Company as an independent company (i.e.,
without regard to the impact to the Company of a transaction with Parent), which
information is summarized as set forth below:
FISCAL YEAR ENDED
-----------------
DECEMBER 31, 1999
-----------------
(IN THOUSANDS,
EXCEPT PER SHARE
DATA)
Net sales................................................... $61,080
Operating income............................................ 3,907
Net income.................................................. 1,747
Earnings per share.......................................... 0.24
---------------
The foregoing information was prepared by the Company solely for internal
use and not for publication or with a view to complying with the published
guidelines of the Commission regarding projections or with the guidelines
established by the American Institute of Certified Public Accountants and are
included in this Offer to Purchase only because they were furnished to Parent.
The foregoing information is "forward-looking" and inherently subject to
significant uncertainties and contingencies, many of which are beyond the
control of the Company, including industry performance, general business and
economic conditions, changing competition, adverse changes in applicable laws,
regulations or rules governing environmental, tax or accounting matters and
other matters. Although the Company has informed Parent and Purchaser that it
believes the assumptions used in preparing this information were reasonable when
made, such assumptions are inherently subject to significant uncertainties and
contingencies which are impossible to predict and beyond the
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Company's control. One cannot predict whether the assumptions made in preparing
the foregoing information will be accurate, and accordingly, there can be no
assurance, and no representation or warranty is made, that actual results will
not vary materially from those described above. The inclusion of this
information should not be regarded as an indication that Parent, Purchaser, the
Company or anyone who received this information considered it a reliable
prediction of future events, and this information should not be relied on as
such. None of Parent, Purchaser, the Dealer Manager, or the Company assumes any
responsibility for the validity, reasonableness, accuracy or completeness of the
projections, and the Company has made no representation to Parent or Purchaser
regarding the financial information described above. The projections have not
been adjusted to reflect the effects of the Merger.
Available Information. The Company is subject to the informational filing
requirements of the Exchange Act and, in accordance therewith, is obligated to
file reports, proxy statements and other information with the Commission
relating to its business, financial condition and other matters. Information as
of particular dates concerning the Company's directors and officers, their
remuneration, options granted to them, the principal holders of the Company's
securities and any material interests of such persons in transactions with the
Company is required to be disclosed in proxy statements distributed to the
Company's shareholders and filed with the Commission. Such reports, proxy
statements and other information should be available for inspection at the
public reference facilities of the Commission at 000 Xxxxx Xxxxxx, X.X.,
Xxxxxxxxxx, X.X. 00000, and at the regional offices of the Commission located at
Seven World Trade Xxxxxx, Xxxxx 0000, Xxx Xxxx, XX 00000 and Citicorp Center,
000 Xxxx Xxxxxxx Xxxxxx, Xxxxx 0000, Xxxxxxx, XX 00000. Copies of such
information should be obtainable by mail, upon payment of the Commission's
customary charges, by writing to the Commission's principal office at 000 Xxxxx
Xxxxxx, X.X., Xxxxxxxxxx, X.X. 00000. The Commission also maintains a website on
the internet at xxxx://xxx.xxx.xxx that contains reports, proxy statements and
other information relating to the Company which have been filed via the
Commission's XXXXX System.
9. CERTAIN INFORMATION CONCERNING PARENT AND PURCHASER.
Parent and Purchaser. Parent is a Delaware corporation and is a publicly
traded company. Fedders North America, Inc., a wholly owned subsidiary of
Parent, manufactures and sells air conditioners and dehumidifiers, principally
for use in the U.S. residential market. The Company's products are marketed
under the XXXXXXX, XXXXXXX QUIET KOOL and AIRTEMP brand names primarily to
national and regional retail chains, home improvement centers and buying groups,
as well as distributors and, under private label, to retailers and other
original equipment manufacturers, including other room air conditioner
manufacturers. Through Fedders International, Parent is investing much of its
planning and resources to penetrate the much larger and rapidly growing
international market for room air conditioners.
Purchaser is a newly incorporated Pennsylvania 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. All of the outstanding
capital stock of Purchaser is owned indirectly by Parent. Until immediately
prior to the time Purchaser purchases Shares pursuant to the Offer, it is not
anticipated that Purchaser will have any significant assets or liabilities or
engage in any significant activities other than those incident to its formation
and capitalization and the transactions contemplated by the Offer and the
Merger.
The principal offices of Parent and Purchaser are located at 000
Xxxxxxxxxxxx Xxxx, Xxxxxxx Xxxxxx, Xxx Xxxxxx 00000-0813. The telephone number
of Parent and Purchaser at such location is (000) 000-0000.
For certain information concerning the executive officers and directors of
Parent and Purchaser, see Schedule I.
Except as set forth in this Offer to Purchase, none of Purchaser, Parent
or, to the best knowledge of Purchaser or Parent, any of the persons listed on
Schedule I, or any associate or majority owned subsidiary of any of the
foregoing, beneficially owns or has a right to acquire any Shares, and none of
Purchaser, Parent or, to the best of knowledge of Purchaser or Parent, any of
the persons or entities referred to above, or any of the respective executive
officers, directors or subsidiaries of any of the foregoing, has effected any
transaction in the Shares during the past sixty (60) days.
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Except as set forth in this Offer to Purchase, none of Purchaser or Parent
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 the voting of any securities of the Company, joint ventures, loan or
option arrangements, puts or calls, guarantees of loans, guarantees against loss
or the giving or withholding of proxies.
Except as set forth in this Offer to Purchase, none of Purchaser, Parent,
any of their respective affiliates, or, to the best knowledge of Purchaser or
Parent, any of the persons listed on Schedule I, has had, since January 1, 1996
any business relationships or transactions with the Company or any of its
executive officers, directors or affiliates that would be required to be
reported under the rules of the Commission. Except as set forth in this Offer to
Purchase, since January 1, 1996 there have been no contacts, negotiations or
transactions between Purchaser, Parent, any of their respective affiliates or,
to the best knowledge of Purchaser or Parent, any of the persons listed on
Schedule I, and the Company or its affiliates concerning a merger, consolidation
or acquisition, tender offer or other acquisition of securities, election of
directors or a sale or other transfer of a material amount of assets.
Available Information. Parent is subject to the informational filing
requirements of the Exchange Act and, in accordance therewith, is obligated to
file reports, proxy statements and other information with the Commission
relating to its business, financial condition and other matters. Information as
of particular dates concerning Parent's directors and officers, their
remuneration, options granted to them, the principal holders of Parent's
securities and any material interests of such persons in transactions with
Parent is required to be disclosed in proxy statements distributed to Parent's
stockholders and filed with the Commission. Purchaser is a privately-held
company and is generally not subject to the informational filing requirements of
the Exchange Act, and is generally not required to file reports, proxy
statements and other information with the Commission relating to its businesses,
financial condition and other matters. Pursuant to Rule 14d-3 under the Exchange
Act, Parent and Purchaser have filed with the Commission the Schedule 14D-1,
together with exhibits, including this Offer to Purchase and the Merger
Agreement, which provides certain additional information with respect to the
Offer. The Schedule 14D-1 and any amendments thereto, including exhibits, should
be available for inspection and copies should be obtainable at the public
reference facilities of the Commission at 000 Xxxxx Xxxxxx, X.X., Xxxxxxxxxx,
X.X. 00000. Copies of such information should also be obtainable (i) by mail,
upon payment of the Commission's customary charges, by writing to the
Commission's principal office at 000 Xxxxx Xxxxxx, X.X., Xxxxxxxxxx, X.X. 00000,
and at the regional offices of the Commission located at Seven World Trade
Center, Xxxxx 0000, Xxx Xxxx, XX 00000 and Citicorp Center, 000 Xxxx Xxxxxxx
Xxxxxx, Xxxxx 0000, Xxxxxxx, XX 00000 and (ii) by accessing the Commission's
website on the internet at xxxx://xxx.xxx.xxx.
10. SOURCES AND AMOUNT OF FUNDS.
The Offer is not conditioned upon any financing arrangements. The total
amount of funds required by Purchaser to consummate the Offer and the Merger,
including the fees and expenses of the Offer and the Merger, is estimated to be
approximately $48 million. Purchaser will obtain all such funds from Parent in
the form of capital contributions and/or loans. Parent will provide such funds
through available cash on hand.
11. BACKGROUND OF THE OFFER; PURPOSE OF THE OFFER AND THE MERGER; THE MERGER
AGREEMENT AND CERTAIN OTHER AGREEMENTS.
Contacts with the Company; Background of the Offer.
One of Parent's strategic objectives has been the acquisition of domestic
non-room air conditioner businesses that are counter-seasonal or non-seasonal to
the room air conditioner business.
On August 14, 1998, the Company entered into a merger agreement with XxXxxx
Xxxxxx Holdings PLC ("XxXxxx Xxxxxx") providing for the acquisition of all of
the outstanding stock of the Company at a price of $7.27 per share. On October
15, 1998, the Company and XxXxxx Xxxxxx announced that they had mutually
terminated the merger agreement. On November 4, 1998, the Company announced that
the Company Board of Directors had determined not to pursue a sale of the
Company pending year-end results but that the
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Company Board of Directors would consider unsolicited expressions of interest it
might receive from third parties.
On November 10, 1998, Xxx Xxxxxxxx, Xx., Vice Chairman and Chief Executive
Officer of Parent, sent a letter to Xxxxxx X. Xxxxxxxxx, President and Chief
Executive Officer of the Company, indicating Parent's possible interest in
acquiring the Company. The Company's financial advisor, Xxxxxx Xxxxxxxx
communicated to Parent that the Company was reviewing its alternatives and would
respond in due course.
On February 3, 1999, the Company announced its results for the 1998 fiscal
year. Also on that day, Xx. Xxxxxxxx, Xx. sent another letter to Xx. Xxxxxxxxx
and the Company Board of Directors, reiterating Parent's interest in acquiring
the Company. On February 25, 1999, Parent and the Company signed the
Confidentiality Agreement (as hereinafter defined) and on March 4, 1999, Parent
retained TM Capital as its financial advisor in connection with the proposed
acquisition of the Company.
On March 17, 1999, the Company Board of Directors announced it had decided
to pursue strategic alternatives, including the possible sale of the Company.
The Company also announced that it had retained Xxxxxx Xxxxxxxx as its financial
advisor.
On March 29, 1999, Xxxxxx Xxxxxxxx provided Parent with a descriptive
memorandum regarding the Company and requested expressions of interest by April
13, 1999. On April 13, 1999, Xxxxxx provided a preliminary expression of
interest in acquiring the Company for a cash price in the range of $5.50 per
share.
On May 5, 1999, Xx. Xxxxxxxx, Xx. and Xx. Xxxxxx X. Xxxxxxx, Xx., Executive
Vice President, Acquisitions and Alliances of Parent and representatives of TM
Capital met with Xx. Xxxxxxxxx, Xx. Xxxxxx Xxxxxx and other members of
management of the Company and representatives of Xxxxxx Xxxxxxxx at the
Company's Sanford, North Carolina facility. The parties discussed the Company's
business, Xxxxxx's and the Company's common strategies and various synergistic
opportunities between the two companies.
On May 12, 1999, Xxxxxx Xxxxxxxx requested that Parent submit a proposal
for the acquisition of the Company by June 2, 1999.
On May 19, 1999, members of Parent's management and the Company's
management visited the Company's Envirco subsidiary in Albuquerque, New Mexico.
On May 24 and May 25, 1999, members of Parent's senior management and
representatives of TM Capital conducted a due diligence review of certain
information regarding the Company in a data room at the offices of the Company's
counsel in Raleigh, North Carolina. From May 24, 1999 through July 8, 1999,
members of Parent's management and its representatives continued to conduct a
due diligence review of information regarding the Company.
In a letter dated June 2, 1999 from Xx. Xxxxxx X. Xxxxxxx, Xx. of Parent to
the Company, Parent indicated to the Company that it was prepared to consider
the acquisition of 100% of the common stock of the Company at a price of $5.50
in cash per share, subject to the satisfactory completion of Parent's due
diligence and the negotiation of definitive documentation. On June 8, 1999,
Xxxxxx Xxxxxxxx contacted Parent and TM Capital to request an increase in the
price proposed by Xxxxxx. On June 9, 1999, Xxxxxx indicated to Xxxxxx Xxxxxxxx
that it might be prepared to offer $5.65 per share, subject to the satisfactory
completion of its due diligence and the negotiation of definitive documentation.
On June 11, 1999, Xx. Xxxxxxxx, Xx. met with Xx. Xxxxxxxxx for further
discussions about a potential transaction.
From June 9 through July 8, 1999, members of senior management of Parent,
its financial and legal advisors and senior members of the Company's management
and its financial and legal advisors conducted negotiations regarding the terms
of a proposed tender offer and merger and members of Parent's management and its
representatives conducted further due diligence.
On July 8, 1999, after completion of Parent's due diligence, TM Capital
notified Xxxxxx Xxxxxxxx orally and on July 9, 1999 Xx. Xxxxxxxx, Xx. delivered
a letter to the Company Board of Directors, in each case communicating Parent's
offer to purchase all of the outstanding shares of common stock of the Company
at a
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purchase price of $5.50 in cash upon the terms and conditions set forth in the
Merger Agreement previously negotiated by the parties and their respective
counsel. Also on July 9, 1999, representatives of Parent and representatives of
the Company discussed via telephone the results of Xxxxxx's due diligence
investigation and Xxxxxx's rationale for its proposed $5.50 per share price.
On July 12, 1999, Xxxxxx Xxxxxxxx called TM Capital to inform Parent that
the Company Board of Directors (by a unanimous vote of those directors present)
accepted Parent's proposal, authorized the execution of the Merger Agreement and
the Company Option Agreement and agreed to recommend that the Company's
shareholders accept the Offer and tender their shares pursuant thereto. The
Merger Agreement, the Company Option Agreement and the Shareholder Agreements
were all executed on July 12, 1999 and Parent and the Company issued a joint
press release announcing the Offer and the execution of the Merger Agreement.
On July 15, 1999, pursuant to the terms of the Merger Agreement, Parent and
Purchaser commenced the Offer.
Purpose of the Offer and the Merger. The purpose of the Offer and the
Merger is to enable 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 and is intended to increase the likelihood that the Merger
will be effected. The purpose of the Merger is to acquire all of the outstanding
Shares not purchased pursuant to the Offer.
Merger Agreement
The following is a summary of certain provisions of the Merger Agreement.
This summary is not a complete description of the terms and conditions of the
Merger Agreement and is qualified in its entirety by reference to the full text
of the Merger Agreement, which is incorporated herein by reference and a copy of
which has been filed with the Commission as an exhibit to the Schedule 14D-1.
The Merger Agreement may be examined, and copies obtained, as set forth in
Sections 8 and 9 of this Offer to Purchase.
The Offer. The Merger Agreement provides for the making of the Offer as
provided in this Offer to Purchase.
The Company Board of Directors. The Merger Agreement provides that Parent
shall be entitled to designate a number of directors, rounded up to the next
whole number, of the Company Board of Directors equal to the product of the
total number of directors on the Company Board of Directors (giving effect to
the directors designated by Parent) multiplied by a fraction of which the
numerator shall be the number of Shares which Parent and its subsidiaries
(including Purchaser) beneficially own at that time, and the denominator shall
be the total number of Shares then outstanding. The Directors so designated by
Parent shall take office immediately after (i) the purchase of and payment for
any Shares by Parent or any of its subsidiaries as a result of which Parent and
its subsidiaries owns beneficially at least a majority of then outstanding
Shares and (ii) compliance with Section 14(f) of the Exchange Act and Rule 14f-1
promulgated thereunder, whichever shall occur later. In furtherance thereof, the
Company shall, upon request of Parent, use its best efforts promptly either to
increase the size of the Company Board of Directors or to secure the
resignations of such number of its incumbent directors, or both, as is necessary
to enable such designees of Parent to be so elected or appointed to the Company
Board of Directors, and the Company shall take all actions available to the
Company to cause such designees of Parent to be so elected or appointed. At such
time, the Company shall, if requested by Parent, also take all action necessary
to cause persons designated by Parent to constitute the same percentage (rounded
up to the next whole number) as is on the Company Board of Directors of (i) each
committee of the Company Board of Directors, (ii) each board of directors (or
similar body) of each of the Company's subsidiaries and (iii) each committee (or
similar body) of each such board.
The Merger Agreement provides that the Company will promptly take, at its
expense, 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 the
prior paragraph, including mailing to shareholders the information required by
such Section 14(f) and Rule 14f-1 as is necessary to enable Parent's designees
to be elected or appointed to the
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Company Board of Directors immediately after the purchase of and payment for any
Shares by Parent or any of its subsidiaries as a result of which Parent and its
subsidiaries own beneficially at least a majority of then outstanding Shares.
Parent or Purchaser will supply the Company all information with respect to
either of them and their nominees, officers, directors and affiliates required
to be disclosed by Section 14(f) and Rule 14f-1. The provisions of the Merger
Agreement related to these Commission filings are in addition to and shall not
limit any rights which Purchaser, Parent or any of their Affiliates may have as
a holder or beneficial owner of Shares as a matter of law with respect to the
election of directors or otherwise. The term "Affiliate" has the meaning as set
forth in Rule 12b-2 of the Exchange Act.
The Merger Agreement provides that in the event that Xxxxxx's designees are
elected or appointed to the Company Board of Directors, until the Effective
Time, the Company Board of Directors shall have at least two directors who were
directors as of the date of the Merger Agreement and who are not employees of
the Company ("Independent Directors"), provided that, in such event, if the
number of Independent Directors shall be reduced below two for any reason
whatsoever, the remaining Independent Director shall be entitled to designate
persons to fill such vacancies who shall be deemed to be Independent Directors
or, if no Independent Director then remains, the other directors shall designate
two persons to fill such vacancies who shall not be shareholders, affiliates or
associates of Parent or Purchaser, and such persons shall be deemed to be
Independent Directors. In the event that Parent's designees constitute a
majority of the directors on the Company Board of Directors, the affirmative
vote of a majority of the Independent Directors shall be required after the
acceptance for payment of Shares pursuant to the Offer and prior to the
Effective Time, to (a) amend or terminate the Merger Agreement by the Company,
(b) exercise or waive any of the Company's rights, benefits or remedies
hereunder if such exercise or waiver materially and adversely affects holders of
Shares other than Parent or Purchaser, or (c) take any other action under or in
connection with the Merger Agreement if such action materially and adversely
affects holders of Shares other than Parent or Purchaser; provided, that if
there shall be no such directors, such actions may be effected by unanimous vote
of the entire Company Board of Directors.
The Merger. The Merger Agreement provides that, upon the terms and subject
to the conditions thereof and in accordance with the PBCL, Purchaser will be
merged with and into the Company and the separate corporate existence of
Purchaser will thereupon cease, and the Company will be the surviving
corporation in the Merger. At the Effective Time of the Merger, each Share then
outstanding, other than Shares held by (i) the Company, (ii) Parent or any of
its wholly owned subsidiaries including Purchaser, and (iii) shareholders who
properly perfect their dissenters' rights under the PBCL, will be converted into
the right to receive $5.50 in cash or any higher price per Share paid in the
Offer, without interest.
Options. The Merger Agreement provides that immediately prior to the
Effective Time, each holder of a Company Option will be entitled to receive from
the Company, and shall receive, except as discussed below, in settlement of each
Company Option an option to purchase shares of Parent's Class A Stock (a "Parent
Option"). All Company Options shall terminate as of the Effective Time. Parent
shall grant, as of the Effective Time, to the holder of any Company Option, a
Parent Option. With respect to such Parent Options (i) the number of shares of
Parent Class A Stock subject to such Parent Option will be determined by
multiplying the number of shares constituting the Company Option by the Option
Exchange Ratio (as defined below), rounding any fractional share up to the
nearest whole share, and (ii) the exercise price per share of such Parent Option
will be determined by dividing the exercise price per share applicable to the
Company Option by the Option Exchange Ratio, and rounding the exercise price
thus determined up to the nearest whole cent. Except as provided above, the
converted or substituted Parent Options shall be subject to the same terms and
conditions (including, without limitation, expiration date, vesting and exercise
provisions) as were applicable to the Company Options immediately prior to the
Effective Time; provided, however, that (i) all Company Options shall vest and
become fully exercisable immediately prior to the Effective Time and (ii) any
Company Option that qualifies as an incentive stock option (an "ISO") under
Section 422 of the Code, shall, to the extent permitted by applicable law, be
adjusted so that the resulting Parent Option qualifies as an ISO. The term
"Option Exchange Ratio" means (x) the Offer Price divided by (y) the average of
the closing prices of Parent Class A Stock on the New York Stock Exchange during
the ten trading days preceding the fifth trading day prior to the date of the
closing of Merger (the "Closing Date"). Each holder of
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a Company Option that does not qualify as an ISO shall also have the right
(which right shall be exercised at least 5 days prior to the Closing Date by
written notice to Company) to elect, in lieu of the right to acquire a Parent
Option, to convert, at the Effective Time, all or a portion of his or her
Company Options which have not been exercised and which have not expired prior
to the Effective Time into the right to receive an amount equal to the product
of (i) the excess, if any, of the Offer Price (excluding any interest,
regardless of when paid) over the exercise price per Share of such Company
Option and (ii) the number of shares constituting such Company Option less any
applicable withholding taxes.
The Merger Agreement provides that, except as may be otherwise agreed to by
Parent and the Company, all stock option plans established by the Company or any
of its subsidiaries shall terminate as of the Effective Time and the provisions
in any other plan, program or arrangement providing for the issuance or grant of
any other interest in respect of the capital stock of Company or any its
subsidiaries shall be deleted, terminated and of no further force or effect as
of the Effective Time. If and to the extent necessary or required by the terms
of the plans governing Company Options or pursuant to the terms of any Company
Option granted thereunder, prior to the Effective Time, the Company shall (i)
obtain the consent of each holder of outstanding Company Options and (ii) amend
the terms of the applicable plan under which the Company Option was granted, in
each case as is necessary to give effect to the foregoing treatment of such
Company Options.
Representations and Warranties. In the Merger Agreement, the Company has
made customary representations and warranties to Parent and Purchaser with
respect to, among other things, corporate organization, good standing, authority
to enter into the Merger Agreement and the Company Option Agreement, shareholder
vote required to approve the Merger, capitalization and ownership of Shares,
subsidiaries, filings with the Commission and financial statements, books and
records, owned and leased real property, encumbrances, condition of assets,
accounts receivable, inventory, no undisclosed liabilities, taxes, no material
adverse change, employee benefits, compliance with all legal requirements,
governmental authorizations, legal proceedings, orders, absence of certain
changes and events, applicable contracts, no defaults, insurance, environmental
matters, employees, labor relations, compliance, intellectual property assets,
certain payments, relationship with related persons, brokers or finders, receipt
of the financial advisor opinion, Year 2000, products liability, recalls and
information in tender offer documents and proxy statement.
In the Merger Agreement, each of Parent and Purchaser has made customary
representations and warranties to the Company with respect to, among other
things, corporate organization, authority to enter into the Merger Agreement and
the Company Option Agreement, no pending legal or governmental proceeding,
brokers or finders, and information in tender offer documents and proxy
statement.
Operation of the Business. The Merger Agreement provides that after the
date of the Merger Agreement and prior to the Effective Time, and except (i) as
set forth in a schedule to the Merger Agreement or (ii) as agreed to in writing
by Parent, the Company will:
(a) conduct the business of the Company and its subsidiaries only in
the ordinary course of business (including managing the working capital of
the Company and its subsidiaries in accordance with past practice and
custom);
(b) use its best efforts to preserve intact the current business
organization of the Company and its subsidiaries, keep available the
services of the current officers, employees and agents of the Company and
its subsidiaries and maintain the relations and good will with suppliers,
customers, landlords, creditors, employees, agents and others having
business relationships with the Company and its subsidiaries;
(c) inform Parent concerning operational matters of the Company or any
of its subsidiaries of a material nature; and
(d) otherwise report periodically to Parent concerning the status of
the business, operations and finances of the Company and its subsidiaries.
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Negative Covenants. The Merger Agreement provides that after the date of
the Merger Agreement and prior to the Effective Time and except as expressly
contemplated by the Merger Agreement or in a schedule thereto or as agreed to in
writing by Parent:
(a) the Company will not take any action or fail to take any action as
a result of which certain specified changes or events occur or are
reasonably likely to occur;
(b) neither the Company nor its subsidiaries will permit any insurance
policy naming it as a beneficiary or a loss payable payee to be cancelled
or terminated without notice to Parent, except policies providing coverage
for losses not in excess of $50,000;
(c) neither the Company nor any of its subsidiaries will enter into
any contract or transaction relating to the purchase of assets other than
in the ordinary course of business consistent with prior practices;
(d) neither the Company nor any of its subsidiaries will pay,
repurchase, discharge or satisfy any of its claims, liabilities or
obligations (absolute, accrued, asserted or unasserted, contingent or
otherwise), other than the payment, discharge or satisfaction in the
ordinary course of business and consistent with past practice, of claims,
liabilities or obligations reflected or reserved against in, or
contemplated by, the consolidated financial statements (or the notes
thereto) of the Company and its consolidated subsidiaries;
(e) neither the Company nor any of its subsidiaries will adopt a plan
of complete or partial liquidation, dissolution, merger, consolidation,
restructuring, recapitalization or other reorganization of the Company or
any of its subsidiaries (other than the Merger);
(f) neither the Company nor any of its subsidiaries will (i) change
any of the accounting methods used by it unless required by GAAP or (ii)
make any election relating to taxes, change any election relating to taxes
already made, adopt any accounting method relating to taxes, change any
accounting method relating to taxes unless required by GAAP, enter into any
closing agreement relating to taxes, settle any claim or assessment
relating to taxes or consent to any claim or assessment relating to taxes
or any waiver of the statute of limitations for any such claim or
assessment;
(g) neither the Company nor any of its subsidiaries will take, or
agree to commit to take, any action that would or is reasonably likely to
result in any of the conditions to the Offer or to the Merger not being
satisfied, or would make any representation or warranty of the Company
contained herein inaccurate in any respect at, or as of any time prior to,
the Effective Time, or that would materially impair the ability of the
Company, Parent, Purchaser or the holders of Shares to consummate the Offer
or the Merger in accordance with the terms of the Merger Agreement or
materially delay such consummation; and
(h) neither the Company nor any of its subsidiaries will enter into an
agreement, contract, commitment or arrangement to do any of the foregoing,
or to authorize, recommend, propose or announce an intention to do any of
the foregoing.
Shareholders' Meetings. Following the acceptance for payment and purchase
of Shares by Purchaser pursuant to the Offer, the Company shall take all action
necessary in accordance with the PBCL, the Company's articles of incorporation
and by-laws (the "By-laws") and the Exchange Act to effect the Articles
Amendment. The Articles Amendment requires the approval of at least 80% of the
voting securities of the Company entitled to vote thereon at a meeting called
for that purpose. If the Minimum Condition is satisfied and Purchaser purchases
at least 80% of the outstanding Shares, Purchaser will be able to effect the
Articles Amendment and delete section 6 from the Company's articles of
incorporation without any action or vote on the part of the other shareholders
of the Company. The Merger Agreement provides that in order to effect the
Articles Amendment, the Company will, in accordance with applicable law, (i)
duly call, give notice of, convene and hold a special meeting of its
shareholders as promptly as practicable following the acceptance for payment and
purchase of Shares by the Purchaser pursuant to the Offer for the purpose of
considering and taking action upon the approval of the Articles Amendment; (ii)
if required, prepare and file with the Commission a preliminary proxy or
information statement relating to the Articles Amendment and use its best
efforts to obtain and furnish the information required to be included by the
Commission in such proxy
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statement and, after consultation with Parent, respond promptly to any comments
made by the Commission with respect to such proxy statement and cause a
definitive proxy or information statement, including any amendment or supplement
thereto to be mailed to the Company's shareholders; (iii) include in the proxy
statement the recommendation of the Company Board of Directors that shareholders
of the Company vote in favor of the approval of the Articles Amendment; and (iv)
use its best efforts to solicit proxies in favor of the Articles Amendment from
holders of Shares and take all other action necessary or, in the reasonable
opinion of Xxxxxx, advisable to secure any vote or consent of shareholders
required by the PBCL, the Company's articles of incorporation and the By-laws to
effect the Articles Amendment. Following approval of the Articles Amendment and
if the Minimum Condition has been satisfied and Purchaser purchases at least 80%
of the outstanding Shares, then at the election of the Purchaser, a short-form
merger could be effected without any action or vote on the part of the other
shareholders of the Company.
In the event that Purchaser does not acquire 80% of the outstanding Shares,
then a shareholder vote will be required to approve the Merger. Pursuant to the
Merger Agreement, if required by applicable law in order to consummate the
Merger, the Company will (i) duly call, give notice of, convene and hold a
special meeting of its shareholders as promptly as practicable following the
acceptance for payment and purchase of Shares by Purchaser pursuant to the Offer
for the purpose of considering and taking action upon the approval of the Merger
and the adoption of the Merger Agreement; (ii) prepare and file with the
Commission a preliminary proxy or information statement relating to the Merger
and the Merger Agreement and use its best efforts to obtain and furnish the
information required to be included by the Commission in the proxy statement
and, after consultation with Parent, to respond promptly to any comments made by
the Commission with respect to the preliminary proxy or information statement
and cause a definitive proxy or information statement, including any amendment
or supplement thereto to be mailed to its shareholders, provided that no
amendment or supplement to such proxy or information statement will be made by
the Company without consultation with Parent and its counsel; (iii) include in
the proxy statement the recommendation of the Company Board of Directors that
shareholders of the Company vote in favor of the approval of the Merger and the
adoption of the Merger Agreement; and (iv) use its best efforts to solicit from
holders of Shares proxies in favor of the Merger and take all other action
necessary or, in the reasonable opinion of Parent, advisable to secure any vote
or consent of shareholders required by the PBCL, the Company's articles of
incorporation and the By-laws to effect the Merger.
No Solicitation. Pursuant to the Merger Agreement, the Company has agreed
that it will not (and the Company will cause the representatives of the Company,
each of its subsidiaries and each affiliate of the Company, not to), directly or
indirectly, encourage, solicit, participate in or initiate discussions or
negotiations with, or provide any information to, any Person or group (other
than Parent, any of its affiliates or representatives) concerning any proposal
or offer to acquire all or a substantial part of the business or properties of
the Company or any of its subsidiaries or any capital stock of the Company or
any of its subsidiaries, whether by merger, tender offer, exchange offer, sale
of assets or similar transactions involving the Company or any subsidiary,
division or operating or principal business unit of the Company (such proposal
or offer hereinafter referred to as an "Acquisition Proposal"). However, nothing
shall prohibit the Company or the Company Board of Directors from (i) taking and
disclosing to the Company's shareholders a position with respect to a tender or
exchange offer by a third party pursuant to Rules 14d-9 and 14e-2 promulgated
under the Exchange Act, or (ii) making such disclosure to the Company's
shareholders as, in the good faith judgment of the Company Board of Directors,
after receiving advice from outside counsel, is required under applicable law,
provided that the Company may not, except as detailed below, withdraw or modify,
or propose to withdraw or modify, its position with respect to the Offer or the
Merger or approve or recommend, or propose to approve or recommend any
Acquisition Proposal, or enter into any agreement with respect to any
Acquisition Proposal. Upon execution of the Merger Agreement, the Company will
immediately cease any existing activities, discussions or negotiations with any
parties conducted heretofore with respect to any of the foregoing.
Notwithstanding the foregoing, prior to the time of acceptance of Shares for
payment pursuant to the Offer, the Company may furnish information concerning
its business, properties or assets to any corporation, partnership, person or
other entity or group pursuant to appropriate confidentiality agreements, and
may negotiate and participate in discussions and negotiations with such entity
or group concerning an Acquisition Proposal if: (x) such entity or group has
submitted a Superior Proposal (as defined below); and
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(y) in the opinion of the Company Board of Directors such action is required to
discharge the Company Board of Director's fiduciary duties to the Company's
shareholders under applicable law, determined only after receipt of a written
opinion from independent legal counsel to the Company that the failure to
provide such information or access or to engage in such discussions or
negotiations would cause the Company Board of Directors to violate its fiduciary
duties to the Company's shareholders under applicable law. The term "Superior
Proposal" means an unsolicited bona fide proposal by a Person (as defined in the
Merger Agreement) to acquire, directly or indirectly, for consideration
consisting of cash and/or securities, all of the Shares then outstanding or all
or substantially all of the assets of the Company or to acquire, directly or
indirectly, the Company by merger or consolidation, and otherwise on terms which
the Company Board of Directors determines in good faith to be more favorable to
the Company's shareholders than the Offer and the Merger (based on the advice of
the Company's independent financial advisor that the value of the consideration
provided for in such proposal is superior to the value of the consideration
provided for in the Offer and the Merger), which is not subject to the receipt
of any necessary financing, and which, in the good faith reasonable judgment of
the Company Board of Directors, is reasonably likely to be consummated.
The Company has further agreed to immediately notify Parent of the
existence of any proposal, discussion, negotiation or inquiry received by the
Company, and the Company will immediately communicate to Parent the terms of any
proposal, discussion, negotiation or inquiry which it may receive (and will
immediately provide to Parent copies of any written materials received by the
Company in connection with such proposal, discussion, negotiation or inquiry)
and the identity of the party making such proposal or inquiry or engaging in
such discussion or negotiation. The Company will promptly provide to Parent any
non-public information concerning the Company provided to any other party which
was not previously provided to Parent. The Company will keep Parent informed of
the status and details of any such Acquisition Proposal and of any amendments or
proposed amendments to any Acquisition Proposal and will promptly (but in no
case later than 24 hours) notify Parent of any determination by the Company
Board of Directors that a Superior Proposal has been made.
Pursuant to the Merger Agreement, except as set forth below, neither the
Company Board of Directors nor any committee thereof will (i) withdraw or
modify, or propose to withdraw or modify, in a manner adverse to Parent or
Purchaser, the approval or recommendation by such Board of Directors or any such
committee of the Offer, the Merger Agreement or the Merger, (ii) approve or
recommend or propose to approve or recommend, any Acquisition Proposal or (iii)
enter into any agreement with respect to any Acquisition Proposal.
Notwithstanding the foregoing, prior to the time of acceptance for payment of
Shares pursuant to the Offer, the Company Board of Directors may withdraw or
modify its approval or recommendation of the Offer, the Merger Agreement or the
Merger, approve or recommend a Superior Proposal, or enter into an agreement
with respect to a Superior Proposal, in each case at any time after the fifth
business day following Parent's receipt of written notice from the Company
advising Parent that the Company Board of Directors has received a Superior
Proposal which it intends to accept, specifying the material terms and
conditions of such Superior Proposal, identifying the person making such
Superior Proposal, but only if the Company will have caused its financial and
legal advisors to negotiate with Parent to make such adjustments in the terms
and conditions of the Merger Agreement as would enable the Company to proceed
with the transactions contemplated herein on such adjusted terms.
Insurance and Indemnification. For three (3) years after the Effective
Time, Parent and Purchaser will maintain officers' and directors' liability
insurance covering the persons who are presently covered by the Company's
officers' and directors' liability insurance policies with respect to actions
and omissions occurring prior to the Effective Time, on terms which are not
materially less favorable than the terms of such current insurance in effect for
the Company on the date hereof provided, however, that in no event will Parent
or the surviving corporation in the Merger be required to expend in excess of
120% of the annual premium currently paid by the Company for such coverage; and
provided further, that, if the premium for such coverage exceeds such amount,
Parent or the surviving corporation in the Merger shall purchase a policy with
the greatest coverage available for such 120% of the aggregate annual premiums
paid by the Company in 1999.
For three (3) years after the Effective Time, Parent and Purchaser will
maintain the rights to indemnification of officers and directors provided for in
the By-laws as in effect on the date hereof,
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with respect to indemnification for acts and omissions occurring prior to the
Effective Time, including without limitation, the transactions contemplated by
the Merger Agreement.
Conditions to the Merger. The respective obligation of each party to
effect the Merger will be subject to the satisfaction at or prior to the
Effective Time of each of the following conditions, any and all of which may be
waived in whole or in part by the Company, Parent or Purchaser, as the case may
be, to the extent permitted by applicable law: (i) the Merger Agreement shall
have been approved and adopted by the requisite vote of the holders of Shares,
if required by applicable law, in order to consummate the Merger; (ii) no
statute, rule or regulation shall have been enacted or promulgated by any
Governmental Body (as defined below) which prohibits the consummation of the
Merger; and there shall be no order or injunction of a court of competent
jurisdiction in effect precluding consummation of the Merger; (iii) Parent,
Purchaser or their affiliates shall have purchased Shares pursuant to the Offer;
and (iv) the applicable waiting period under the HSR Act shall have expired or
been terminated. "Governmental Body" shall mean any: (a) nation, state, county,
city, town, village, district or other jurisdiction of any nature; (b) federal,
state, local, municipal, commonwealth, possession, foreign or other government;
(c) governmental or quasi-governmental authority of any nature (including any
governmental agency, branch, department, official or entity and any court or
other tribunal); or (d) body exercising, or entitled to exercise, any
administrative, executive, judicial, legislative, police, regulatory or taxing
authority or power of any nature.
The obligations of Parent and Purchaser to consummate the Merger shall be
subject to the satisfaction on or prior to the Closing Date of each of the
following conditions, any and all of which may be waived in whole or in part by
the Parent and Purchaser, to the extent permitted by applicable law: (i) all
actions required by the Company with respect to the Company stock option plans,
including obtaining the consent of each holder of a Company Option and amending
the terms of the plans have been taken; (ii) all of the representations and
warranties of the Company shall be true in all material respects on the date of
the Merger Agreement and as of the Effective Time; (iii) the Company shall have
complied in all material respects with its obligations under the terms of the
Merger Agreement; and (iv) the Articles Amendment shall have been approved by
the holders of the requisite number of shares required by the PBCL and the
Company's articles of incorporation.
Termination. The Merger Agreement, and any related transactions may be
terminated or abandoned at any time prior to the Effective Time, whether before
or after shareholder approval:
(a) By the mutual written consent of Parent and the Company; provided,
however, that if Parent shall have a majority of the directors pursuant to
the applicable provisions of the Merger Agreement, such consent of the
Company may only be given if approved by the Independent Directors or if
there are no Independent Directors, then by a unanimous vote of the entire
Company Board of Directors.
(b) By either of Parent or the Company: (i) if (x) the Offer shall
have expired without any Shares being purchased pursuant thereto or (y)
Purchaser shall not have accepted for payment any Shares pursuant to the
Offer by December 31, 1999; provided, however, that the right to terminate
the Merger Agreement under this clause (b) (i) shall not be available to
any party whose failure to fulfill any obligation under the Merger
Agreement has been the cause of, or resulted in, the failure of Purchaser
to purchase the Shares pursuant to the Offer on or prior to such date; or
(ii) if any Governmental Body shall have issued an order, decree or ruling
or taken any other action (which order, decree, ruling or other action the
parties hereto shall use their reasonable efforts to lift), which
permanently restrains, enjoins or otherwise prohibits the acceptance for
payment of, or payment for, Shares pursuant to the Offer or the Merger and
such order, decree, ruling or other action shall have become final and
non-appealable.
(c) By the Company: (i) if Parent, Purchaser or any of their
affiliates shall have failed to commence the Offer on or prior to five (5)
business days following the date of the initial public announcement of the
Offer; provided, that the Company may not terminate the Merger Agreement
pursuant to this clause (c) (i) if the Company is at such time in material
breach of its obligations under the Merger Agreement; (ii) in connection
with entering into a definitive agreement in accordance with the applicable
provisions of the Merger Agreement, provided that the Company has complied
with all provisions thereof, as described above under "No Solicitation" and
that the Company makes simultaneous payment to Parent of the Termination
Fee (as defined and discussed below); or (iii) if Parent or
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Purchaser shall have terminated the Offer or the Offer expires without
Parent or Purchaser, as the case may be, purchasing any Shares pursuant
thereto; provided that the Company may not terminate the Merger Agreement
under this clause (c)(iii) if the Company is in material breach of the
Merger Agreement or the Company Option Agreement.
(d) By Parent: (i) if, due to an occurrence, not involving a breach by
Parent or Purchaser of their obligations under the Merger Agreement, which
makes it impossible to satisfy any of the conditions set forth in Section
14 below, Parent, Purchaser, or any of their affiliates shall have failed
to commence the Offer on or prior to the fifth business day following the
date of the initial public announcement of the Offer; (ii) (A) if, prior to
the purchase of Shares by Purchaser pursuant to the Offer, the Company
Board of Directors shall have withdrawn, modified or changed in a manner
adverse to Parent or Purchaser its approval or recommendation of the Offer,
the Merger Agreement or the Merger or shall have recommended an Acquisition
Proposal or (B) there shall have been a material breach under any provision
of the Merger Agreement summarized under "No Solicitation" above, including
but not limited to the Company having executed an agreement in principle or
definitive agreement relating to an Acquisition Proposal or similar
business combination with a person or entity other than Parent, Purchaser
or their affiliates; (iii) if prior to the purchase of Shares pursuant to
the Offer, the Company shall have breached any representation, warranty,
covenant or other agreement contained in the Merger Agreement which would
give rise to the failure of a condition set forth in Section 14 below; (iv)
any Person or "group" (as defined in Section 13(d)(3) of the Exchange Act),
other than Parent, Purchaser or their affiliates or any group of which any
of them is a member, shall have acquired beneficial ownership (as
determined pursuant to Rule 13d-3 promulgated under the Exchange Act) of
15% or more of the Shares or any such Person or group shall have announced
its intention to acquire 15% or more of the Shares and the Company Board of
Directors has failed to recommend against acceptance of such announcement
(including by taking no position with respect to such announcement); (v) if
the Company receives an Acquisition Proposal from any Person (other than
Parent or Purchaser), and the Company Board of Directors takes a neutral
position or makes no recommendation with respect to such Acquisition
Proposal after a reasonable amount of time (and in no event more than five
(5) business days following such receipt) has elapsed for the Company Board
of Directors to review and make a recommendation with respect to such
Acquisition Proposal; or (vi) if Parent or Purchaser shall have terminated
the Offer in accordance with the terms of the Merger Agreement without
Parent or Purchaser purchasing any Shares thereunder, provided that Parent
or Purchaser is not in material breach of the Merger Agreement.
Termination Fee; Expenses. Pursuant to the Merger Agreement, if (x) the
Company enters into an agreement which accepts or implements a Superior
Proposal; (y) the Company terminates or abandons the Merger Agreement, the
Offer, the Merger and the transactions contemplated thereby (the
"Transactions"), in connection with a termination of the Merger Agreement
pursuant to clause (c)(ii) under the heading "Termination" above; or (z) Parent
terminates or abandons the Transactions pursuant to clauses (d)(ii), (iv) or (v)
under the heading "Termination" above, then the Company will pay to Parent an
amount equal to $2 million (the "Termination Fee"). The Termination Fee will be
paid in same day funds concurrently with the execution of an agreement referred
to in clause (x) above or any termination or abandonment referred to in clauses
(y) or (z) above, whichever occurs first. If the Merger Agreement is terminated
by Parent pursuant to clause (d)(iii) under the heading "Termination" above and
at the time of such termination, (i) the Company has not paid the Termination
Fee, and (ii)Parent is not in material breach of the Merger Agreement, then the
Company will pay to Parent, at the time of termination, an amount equal to
Parent's actual and reasonably documented out-of-pocket fees and expenses
incurred by Parent and Purchaser in connection with the Transactions including,
without limitation, the fees and expenses payable to all banks, investment
banking firms, and other financial institutions and Persons and their respective
agents and counsel incurred in connection with acting as Parent's or Purchaser's
financial advisor with respect to, or arranging or committing to provide or
providing any financing for, the transactions (the "Expenses"). In addition, if
(a) the Merger Agreement is terminated by Parent pursuant to clauses (d)(i),
(iii) or (vi) under the heading "Termination" above and prior thereto there
shall have been publicly announced another Acquisition Proposal, (b) the Merger
Agreement is terminated by the Company pursuant to clause (c)(iii) under the
heading "Termination" above and prior thereto there shall have been publicly
announced another Acquisition
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Proposal or (c) either the Company or Parent terminates or abandons the
Transactions pursuant to clause (b)(i) under the heading "Termination" above and
prior thereto there shall have been publicly announced another Acquisition
Proposal, and, in each such case, at the time of such termination (i) the
Company has not paid the Termination Fee, and (ii) Parent is not in material
breach of the Merger Agreement and within 12 months after such termination the
Company shall enter into an agreement with respect to an Acquisition Proposal,
then concurrently with the consummation of the transactions contemplated by such
agreement the Company will pay an amount equal to the difference between the
Termination Fee and the Expenses, previously paid (if any).
Company Option Agreement
The following is a summary of certain provisions of the Company Option
Agreement. This summary is not a complete description of the terms and
conditions of the Company Option Agreement and is qualified in its entirety by
reference to the full text of the Company Option Agreement, which is
incorporated herein by reference and a copy of which has been filed with the
Commission as an exhibit to the Schedule 14D-1. The Company Option Agreement may
be examined, and copies obtained, in the manner set forth in Sections 8 and 9 of
this Offer to Purchase.
Grant of Option. The Company Option Agreement provides for the grant by
the Company to Parent of an irrevocable option (the "Stock Option") to purchase
up to 19.9% of the number of Shares (the "Option Shares") issued at the time of
the grant of the Stock Option, at a price of $5.50 per Share (the "Exercise
Price"), payable in cash in accordance with the terms of the Company Option
Agreement.
Exercise of Option. The Company Option Agreement provides that the Stock
Option may be exercised by Parent, in whole or in part, at any time or from time
to time after the Merger Agreement becomes terminable pursuant to a Triggering
Event (as defined below). For the purposes of the Company Option Agreement,
"Triggering Event" means any termination of the Merger Agreement which entitles
Parent to the Termination Fee under the Merger Agreement.
Cash Payment. If, at any time during the period commencing on the
occurrence of a Triggering Event and ending on the termination of the Stock
Option in accordance with the provisions of the Company Option Agreement, Parent
sends to the Company a notice indicating Parent's election to exercise its right
(the "Cash-Out Right") described in this paragraph, then the Company shall pay
to Parent, in exchange for the cancellation of the Stock Option with respect to
such number of Option Shares as Parent specifies an amount in cash equal to the
amount by which (A) the highest of (i) the price per share of the Shares at
which a tender offer or exchange offer therefor has been made, (ii) the highest
price per share of the Shares to be paid by any third party pursuant to an
agreement with the Company, (iii) the highest closing price per Share within the
six-month period immediately preceding the date Parent sent to the Company its
notice to exercise its right and (iv) in the event of a sale of all or a
substantial portion of the Company's assets, the sum of the price paid in such
sale for such assets and the current market value of the remaining assets of the
Company divided by the number of Shares outstanding at the time of such sale,
exceeds (B) the Exercise Price, multiplied by the number of shares for which the
Stock Option is then exercised.
If the aggregate amount received by Parent from (i) the Termination Fee and
Expenses pursuant to the applicable provisions of Merger Agreement, (ii) amounts
from the sale or other disposition of the Option Shares, and (iii) amounts paid
pursuant to the Company Option Agreement as described in the above paragraph,
are in excess of the sum of (A) $2,000,000 plus (B) the aggregate amounts paid
by Parent to purchase any Option Shares, then Parent, at its sole election,
shall either (1) reduce the number of Option Shares, (2) deliver to the Company
for cancellation Option Shares previously purchased by Parent, (3) pay cash to
the Company or (4) any combination thereof, so that the amount received by
Parent pursuant to clauses (i), (ii) and (iii) above shall not exceed the sum of
the amounts in clauses (A) and (B) above after taking into account the foregoing
actions.
Termination of Option. The Company Option Agreement provides that the
Stock Option will terminate upon the earlier of: (i) the purchase of Shares
pursuant to the Offer; (ii) twelve months after the date on which a Triggering
Event occurs; or (iii) the termination of the Merger Agreement in accordance
with its terms prior to the occurrence of a Triggering Event, unless, in the
case of clauses (ii) and (iii), Parent could
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be entitled to receive the Termination Fee following such time of termination
upon the occurrence of certain events, in which case the Stock Option will not
terminate until the later of (x) twelve months following the time such fees
become payable and (y) the expiration of the period in which Parent has such
right to receive the Termination Fee.
Registration Rights. The Company Option Agreement provides that Parent,
within three years, may, by written notice to the Company, request that the
Company register under the Securities Act all or any part of the Shares
beneficially owned by Parent in order to permit the sale or other disposition of
such securities pursuant to (a) a shelf registration or (b) a bona fide, firm
commitment underwritten public offering.
Adjustment upon Changes in Capitalization. The Company Option Agreement
provides that in the event of any change in the Shares by reason of stock
dividends, stock splits, reverse stock splits, mergers (other than the Merger),
recapitalizations, combinations, exchange of shares or similar transaction, the
type and number of shares or securities subject to the Stock Option, and the
Exercise Price per share, will be adjusted appropriately and proper provision
will be made so that Parent will receive upon exercise of the Stock Option the
number and class of shares or other securities or property that Parent would
have received with respect to the Shares if the Stock Option had been exercised
immediately prior to such event or the record date therefor, as applicable.
The Shareholder Agreements
Concurrently with the execution and delivery of the Merger Agreement, each
of the Director Shareholders entered into a Shareholder Agreement pursuant to
which each Director Shareholder has agreed to tender in the Offer all Shares
beneficially owned by such Director Shareholder (719,764 Shares in the
aggregate) which will result in the Parent and its affiliates beneficially
owning 10.1% of the outstanding Shares.
Each Shareholder Agreement provides that, within five business days of the
commencement of the Offer, each Director Shareholder will tender to the
Depositary all of the Shares required to be tendered pursuant to the applicable
Shareholder Agreement. Subject to applicable law, a Director Shareholder may not
withdraw any Shares so tendered by him; provided, however, that a Director
Shareholder may decline to tender his Shares, or may withdraw Shares tendered by
him, if the Purchaser amends the Offer to (a) reduce the Offer Price to less
than $5.50 per Share in cash; (b) reduce the number of Shares subject to the
Offer; (c) change the form of consideration payable for Shares pursuant to the
Offer; or (d) amend or modify any term or condition of the Offer in a manner
adverse to the shareholders of the Company.
Under the Shareholder Agreements, each Director Shareholder grants to
Parent an option to purchase the Shares beneficially owned by such Director
Shareholder at a purchase price per Share of $5.50 or such higher price as may
be offered in the Offer. Provided all waiting periods under the HSR Act and the
rules and regulations thereunder applicable to the purchase of Shares pursuant
an option shall have expired or been terminated and there shall otherwise be no
legal restriction on the exercise of an option, an option may be exercised by
Parent in whole or in part at any time prior to the date 60 days after the
Expiration Date or termination of the Offer if (a) the Director Shareholder who
granted such option fails to comply with any of his obligations under his
Shareholder Agreement or withdraws a tender of its Shares in violation of the
provisions of his Shareholder Agreement or (b) the Offer is not consummated
because of the failure to satisfy any of the conditions to the Offer described
in Section 14 (other than as a result of any action or inaction on the part of
the Parent or the Purchaser which constitutes a breach of the Merger Agreement).
Under the Shareholder Agreements the Purchaser may allow the Offer to
expire without accepting for payment or paying for any Shares, on the terms set
forth in the Offer, and may allow the option to expire without exercising the
option and purchasing all or any Shares pursuant to such exercise. If all Shares
validly tendered and not withdrawn are not accepted for payment and paid for in
accordance with the terms of the Offer or pursuant to the exercise of the
option, they shall be returned to the applicable Director Shareholders whereupon
they shall continue to be held by such Director Shareholder subject to the terms
of the applicable Shareholder Agreement.
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Each of the Director Shareholders have agreed in the Shareholder Agreements
(a) to revoke any and all previous proxies granted by such Director Shareholders
with respect to the Shares beneficially owned by such Director Shareholders and,
for so long as the Merger Agreement remains in effect; (b) to vote the number of
Shares beneficially owned by such Director Shareholder, in favor of the Articles
Amendment, the Merger Agreement, the Merger and the transactions contemplated
thereby, and (c) to oppose and vote such number of Shares against any
Acquisition Proposal. The Director Shareholders have further agreed not to
solicit, initiate or knowingly encourage any Acquisition Proposal.
Each Shareholder Agreement will expire and be of no further force or effect
if (a) the conditions to the Purchaser's obligations to accept for payment and
pay for Shares pursuant to the Offer shall have been satisfied and the Purchaser
fails to promptly accept for payment and promptly pay for all Shares validly
tendered and not withdrawn pursuant to the Offer or (b) the Purchaser amends the
Offer to (i) reduce the Offer Price to less than $5.50 per Share in cash; (ii)
reduce the number of Shares subject to the Offer; (iii) change the form of
consideration payable for Shares pursuant to the Offer; or (iv) amend or modify
any term or condition of the Offer in a manner adverse to the shareholders of
the Company. Each Shareholder Agreement will also terminate upon the earlier of
(i) the close of business on March 1, 2000 or (ii) the Effective Time.
In the case of the Shareholder Agreement of Xx. Xxxxx X. Xxxxxx, the
parties thereto have acknowledged that a portion of the Shares subject to such
agreement are pledged to various persons and Xx. Xxxxx'x obligations under his
Shareholder Agreement are subject to any applicable restrictions in the pledge
agreements with such persons.
Confidentiality Agreement
The following is a summary of certain provisions of the Confidentiality
Agreement entered into on February 25, 1999 by Parent and the Company (the
"Confidentiality Agreement"). This summary is not a complete description of the
terms and conditions of the Confidentiality Agreement and is qualified in its
entirety by reference to the full text of the Confidentiality Agreement, which
is incorporated by reference and a copy of which has been filed with the
Commission as an exhibit to the Schedule 14D-1. The Confidentiality Agreement
may be examined, and copies obtained, as set forth in Sections 8 and 9 of this
Offer to Purchase.
Pursuant to the terms of the Confidentiality Agreement, the Company and
Parent agreed to provide, among other things, for the confidential treatment of
their discussions regarding a possible business combination and the exchange of
certain confidential information concerning the Company. Parent further agreed
that, without the prior written consent of the Company, Parent would not hire
any employee of the Company for a period of two years beginning as of February
25, 1999.
Employment Agreements
The following is a summary of certain provisions of the employment
agreements entered into on July 12, 1999 between Xxxxxx and Xxxxxx X. Xxxxxxxxx
(the "Xxxxxxxxx Agreement") and the Company and Xxxxxx X. Xxxxxx (the "Xxxxxx
Agreement" and together with the Xxxxxxxxx Agreement, the "Employment
Agreements"). This summary is not a complete description of the terms and
conditions of the Employment Agreements and is qualified in its entirety by
reference to the full text of the Employment Agreements, which are incorporated
by reference and copies of which have been filed with the Commission as exhibits
to the Schedule 14D-1. The Employment Agreements may be examined, and copies
obtained, as set forth in Sections 8 and 9 of this Offer to Purchase.
As a condition to Xxxxxx's entering into the Merger Agreement, on July 12,
1999, Parent and the Company entered into the Employment Agreements.
Xxxxxxxxx Agreement. The Xxxxxxxxx Agreement replaces and supercedes
Xxxxxxxxx'x existing employment agreement with the Company, including the change
of control provisions thereof. The effectiveness of the Xxxxxxxxx Agreement is
conditioned upon the consummation of the Offer. Pursuant to the Xxxxxxxxx
Agreement, Xxxxxxxxx will serve as a Senior Vice President of Parent and as
Chairman and Chief Executive
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Officer of Parent's Indoor Air Quality unit until August 31, 2002. The Xxxxxxxxx
Agreement will be automatically extended for an additional year as of August 31,
2002 and on each anniversary thereof unless either party gives written notice of
termination at least 180 days prior to any such date.
The Agreement provides for a base salary of $214,000 per year (the
"Xxxxxxxxx Base Salary"), subject to review and adjustment by the Board of
Directors of Parent or the compensation committee of Parent. Xxxxxxxxx'x
compensation will also include an annual discretionary incentive bonus equal to
50% of the Xxxxxxxxx Base Salary based on the performance of the Indoor Air
Quality unit and certain individual performance targets established by the chief
executive officer of Parent. In addition, Xxxxxxxxx will receive as incentive
compensation an amount equal to 1/4% of the total purchase price of
acquisitions of businesses included in the Indoor Air Quality unit.
Pursuant to the Xxxxxxxxx Agreement, at the Effective Time, Xxxxxxxxx will
be granted options to purchase 100,000 shares of the Class A Stock of Parent at
an exercise price equal to the closing price of the Class A Stock on such date.
The Xxxxxxxxx Agreement provides that one third of the options will vest each
year on the anniversary date of the Xxxxxxxxx Agreement.
In the event of Xxxxxxxxx'x death, disability or resignation or discharge
by Parent other than a termination without "cause" (as defined in the Xxxxxxxxx
Agreement) or resignation with "good reason" (as defined in the Xxxxxxxxx
Agreement), Parent will pay Xxxxxxxxx: (i) all accrued obligations including the
Xxxxxxxxx Base Salary through the date of termination, and (ii) all accrued
benefits under Xxxxxx's retirement, incentive or other benefit plans. In the
event of a termination without cause or resignation with good reason, (i) Parent
will pay Xxxxxxxxx all accrued obligations including the Xxxxxxxxx Base Salary
through the date of termination; (ii) Parent will pay Xxxxxxxxx a lump sum equal
to the balance of the Xxxxxxxxx Base Salary and any incentive compensation then
in effect for the remainder of the term of the Xxxxxxxxx Agreement; (iii) an
amount equal to the maximum contributions that could have been made by Parent on
Xxxxxxxxx'x behalf to all defined contribution plans of Parent on the same basis
as in effect on the date of termination of the Xxxxxxxxx Agreement for the
remainder of the term of the Xxxxxxxxx Agreement shall be paid to the trustees
of such plan(s); however, in the event any such plan(s) will not allow such
payment, Parent will pay to Xxxxxxxxx a lump sum in cash equal to the total
amount not accepted by such plan(s); (iv) Xxxxxxxxx shall be entitled to receive
all benefits accrued by him under the retirement, incentive or other benefit
plans in which Xxxxxxxxx was participating; (v) Parent will pay all premiums
under COBRA for Xxxxxxxxx and his dependents if they elect coverage and (vi) in
the event Xxxxxxxxx is so terminated or resigns during the initial three year
term of the Xxxxxxxxx Agreement, any unvested Parent stock options granted
Xxxxxxxxx pursuant to the Xxxxxxxxx Agreement shall vest immediately and
Xxxxxxxxx shall have 30 days to exercise such options.
Monsma Agreement. The Monsma Agreement replaces and supercedes Xxxxxx'x
existing change of control agreement with the Company. The effectiveness of the
Monsma Agreement is conditioned upon the consummation of the Offer. Pursuant to
the Monsma Agreement, Monsma will serve as a Vice President and Chief Financial
Officer of the Company until August 31, 2002. The Monsma Agreement will be
automatically extended for an additional year as of August 31, 2002 and on each
anniversary thereof unless either party gives written notice of termination at
least 90 days prior to any such date.
The Agreement provides for a base salary of $113,400 per year (the "Monsma
Base Salary"), subject to review and adjustment by the Company. Xxxxxx'x
compensation will also include an annual discretionary bonus equal to 35% of the
Monsma Base Salary which will be based on the performance of the Company and
certain individual performance targets established by the chief executive
officer of Parent's Indoor Air Quality unit. In addition, Monsma will receive as
incentive compensation an amount equal to 1/8% of the total purchase price of
acquisitions of businesses by the Company.
Pursuant to the Monsma Agreement, at the Effective Time, Monsma will be
granted options to purchase 25,000 shares of the Class A Stock of Parent at an
exercise price equal to the closing price of the Class A Stock on such date. The
Monsma Agreement provides that one third of the options will vest each year on
the anniversary date of the Monsma Agreement.
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In the event of Xxxxxx'x death, disability or resignation or discharge by
the Company other than a termination without "cause" (as defined in the Monsma
Agreement) or resignation with good reason (as defined in the Monsma Agreement),
the Company will pay Monsma: (i) all accrued obligations including the Monsma
Base Salary through the date of termination, and (ii) all accrued benefits under
the Company's retirement, incentive or other benefit plans. In the event of a
termination without cause or resignation with good reason, (i) the Company will
pay Monsma all accrued obligations including the Monsma Base Salary through the
date of termination; (ii) the Company will pay Monsma a lump sum equal to the
balance of the Monsma Base Salary and any incentive compensation then in effect
for the remainder of the term of the Monsma Agreement; (iii) an amount equal to
the maximum contributions that could have been made by the Company on Xxxxxx'x
behalf to all defined contribution plans of the Company on the same basis as in
effect on of the date of termination of the Monsma Agreement for the remainder
of the term of the Monsma Agreement shall be paid to the trustees of such
plan(s); however, in the event any such plan(s) will not allow such payment, the
Company will pay to Monsma a lump sum in cash equal to the total amount not
acceptable by such plan(s); (iv) Monsma shall be entitled to receive all
benefits accrued by him under the retirement, incentive or other benefit plans
in which Monsma was participating; (v) the Company will pay all premiums under
COBRA for Monsma and his dependents if they elect coverage and (vi) in the event
Monsma is so terminated or resigns during the initial three year term of the
Monsma Agreement, any unvested Parent stock options granted Monsma pursuant to
the Monsma Agreement shall vest immediately and Monsma shall have 30 days to
exercise such options.
12. PLANS FOR THE COMPANY; OTHER MATTERS.
Plans for the Company
If, as and to the extent that Purchaser acquires control of the Company,
Parent and Purchaser intend to conduct a detailed review of the Company and its
assets, corporate structure, capitalization, operations, properties, policies,
management and personnel and to consider and determine what, if any, changes
would be desirable in light of the circumstances which then exist. Such changes
could include, among other things, changes in the Company's business, corporate
structure, articles of incorporation, By-laws, capitalization, management or
dividend policy.
Following consummation of the Merger, Parent currently intends to effect a
merger (the "Reincorporation Merger") of the Company with a subsidiary of Parent
that is incorporated in the State of Delaware as a result of which the Company
will be incorporated in the State of Delaware.
The Merger Agreement provides that, upon the purchase of and payment for
any Shares by Parent or any of its subsidiaries pursuant to the Offer, Parent
shall be entitled to designate such number of directors, rounded up to the next
whole number, on the Company Board of Directors to the product of the total
number of directors on such Company Board of Directors (giving effect to the
directors designated by Parent pursuant to this sentence) multiplied by an
amount of which the numerator is the number of Shares which Parent and its
subsidiaries own and the denominator is the total number of Shares outstanding.
See Section 11. Assuming the Minimum Condition is satisfied and Purchaser
purchases Shares pursuant to the Offer, Parent intends to promptly exercise such
rights by causing the Company to elect to the Company Board of Directors Messrs.
Xxx Xxxxxxxx, Xx., Xxxxxx Xxxxxxx, Xx., Xxxxxxx Xxxxxxxx, Xxxx Xxxxxx, Xxxxxx
Xxxxxxxxx and Xxxxxx Xxxxxx. Information with respect to such directors is
contained in Schedule I hereto and in the Information Statement required by Rule
14f-1 under the Exchange Act included as Annex I to the Schedule 14D-9. The
Merger Agreement provides that the directors of Purchaser and the officers of
the Company at the Effective Time of the Merger will, from and after the
Effective Time, be the directors and officers, respectively, of the Surviving
Corporation.
Purchaser or an affiliate of Purchaser may, following the consummation or
termination of the Offer, seek to acquire additional Shares through open market
purchases, privately negotiated transactions, a tender offer or exchange offer
or otherwise, upon such terms and at such prices as it shall determine, which
may be more or less than the price to be paid pursuant to the Offer. Purchaser
and its affiliates also reserve the right to dispose of any or all Shares
acquired by them, subject to the terms of the Merger Agreement.
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Except as disclosed in this Offer to Purchase, and except for the
Reincorporation Merger and as may be effected in connection with the integration
of operations referred to above, neither Parent nor Purchaser has any present
plans or proposals that would result in an extraordinary corporate transaction,
such as a merger, reorganization, liquidation, relocation of operations, or sale
or transfer of a material amount of assets, involving the Company or any of its
subsidiaries, or any material changes in the Company's capitalization, corporate
structure, business or composition of its management or the Company Board of
Directors.
Appraisal Rights. Notwithstanding anything in the Merger Agreement to the
contrary, any issued and outstanding Shares held by persons who object to the
Merger and comply with all the provisions of the PBCL concerning the right of
holders of Shares to dissent from the Merger and require appraisal of their
Shares ("Dissenting Shareholder") will not be converted into the right to
receive the Offer Price, without interest, pursuant to the Merger Agreement, but
will be converted into the right to receive such consideration as may be
determined to be due to such Dissenting Shareholder pursuant to the PBCL;
provided, however, that the Shares outstanding immediately prior to the
Effective Time and held by a Dissenting Shareholder who will, after the
Effective Time, withdraw his demand for appraisal or lose his right of
appraisal, in either case pursuant to the PBCL, will be deemed to be converted
as of the Effective Time into the right to receive the Offer Price, payable to
the holder thereof, without interest. The Company will give Parent (i) prompt
notice of any written demands for appraisal of the Shares received by the
Company and (ii) the opportunity to direct all negotiations and proceedings with
respect to any such demands. The Company will not, without the prior written
consent of Parent, voluntarily settle or compromise any such demands.
In addition to the appraisal rights discussed above, shareholders also have
certain rights ("Subchapter 25E Rights") under Subchapter 25E of the PBCL
("Subchapter 25E") which will become applicable prior to the Effective Time in
the event that the Purchaser (or a group of related persons, or any other person
or group of related persons) were to acquire Shares representing at least 20% of
the voting power of the Company, in connection with the Offer or otherwise (a
"Control Transaction"). In such event, shareholders of the Company would have
the right to demand "fair value" of such shareholders' Shares and to be paid
such fair value upon compliance with the requirements of Subchapter 25E. Under
Subchapter 25E, "fair value" may not be less than the highest price per share
paid by the controlling person or group at any time during the 90-day period
ending on and including the date of the Control Transaction, plus an increment,
if any, representing any value, including, without limitation, any proportion of
value payable for acquisition of control of the Company, that may not be
reflected in such price. Purchaser believes that the Offer Price represents fair
value of the Shares within the meaning of Subchapter 25E. Subchapter 25E Rights
would attach immediately upon consummation of a Control Transaction and require
that any shareholder seeking such appraisal must make a demand for fair value
within a reasonable time after the notice to shareholders that a Control
Transaction has occurred is given by the controlling person or group in
accordance with Subchapter 25E, which time period may be specified in such
notice, as well as comply with the other procedures of Subchapter 25E.
Subchapter 25E Rights are available only with respect to shares of a registered
corporation held by a shareholder after the occurrence of a Control Transaction;
accordingly, Subchapter 25E Rights would not be available with respect to any
Shares tendered in the Offer and accepted for payment. The foregoing summary of
rights under Subchapter 25E is qualified in its entirety by reference to the
full text of Subchapter 25E, which is attached hereto as Annex A.
THE FOREGOING SUMMARY OF THE RIGHTS OF DISSENTING SHAREHOLDERS UNDER THE
PBCL DOES NOT PURPORT TO BE A COMPLETE STATEMENT OF THE PROCEDURES TO BE
FOLLOWED BY SHAREHOLDERS DESIRING TO EXERCISE ANY APPRAISAL RIGHTS AVAILABLE
UNDER THE PBCL. THE PRESERVATION AND EXERCISE OF APPRAISAL RIGHTS REQUIRE STRICT
ADHERENCE TO THE APPLICABLE PROVISIONS OF THE PBCL.
Rule 13e-3. 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. Xxxxxxxxx
believes, however, that Rule 13e-3 will not be applicable to the Merger because
it is anticipated that the Merger would be effected within one year following
consummation of the Offer and in the Merger shareholders would receive the same
price per Share as paid in
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the Offer. If Rule 13e-3 were applicable to the Merger, it would require, 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 shareholders in such a transaction, be filed
with the Commission and disclosed to minority shareholders prior to consummation
of the transaction.
13. DIVIDENDS AND DISTRIBUTIONS.
As described above, the Merger Agreement provides that from the date of the
execution of the Merger Agreement until the Effective Time, without the prior
written consent of Parent, the Company will not: (a) change the authorized or
issued capital stock of the Company or any subsidiary of the Company; (b) grant
any stock option or right to purchase shares of capital stock of the Company or
any subsidiary of the Company; (c) issue any security convertible into such
capital stock; (d) grant any registration rights with respect to such capital
stock; (e) purchase, redeem, retire or otherwise acquire any shares of any such
capital stock (nor shall any subsidiary of the Company do so); or (f) declare or
pay any dividend or other distribution or payment in respect of shares of any
such capital stock.
14. CONDITIONS TO THE OFFER.
Notwithstanding any other provisions of the Offer, and in addition to (and
not in limitation of) Purchaser's rights to extend and amend the Offer at any
time in its sole discretion (subject to the provisions of the Merger Agreement),
Purchaser shall not be required to accept for payment or, subject to any
applicable rules and regulations of the Commission, including Rule 14e-1(c)
under the Exchange Act (relating to Purchaser's obligation to pay for or return
tendered Shares promptly after termination or withdrawal of the Offer), pay for,
and may delay the acceptance for payment of or, subject to the restriction
referred to above, the payment for, any tendered Shares, and may terminate or
amend the Offer as to any Shares not then paid for, if (i) any applicable
waiting period under the HSR Act has not expired or terminated, (ii) the Minimum
Condition has not been satisfied, or (iii) at any time on or after the date of
the Merger Agreement and before the Expiration Date, any of the following events
shall occur or shall be determined by Purchaser to have occurred:
(a)(i) there shall be threatened, instituted or pending any suit,
action or proceeding by any Governmental Body or (ii) there shall be
instituted or pending any suit, action or proceeding before any court which
in the good faith judgement of Parent and Purchaser is likely to result in
any change or effect (or any development that, insofar as can reasonably be
foreseen, is likely to result in any change or effect) that is materially
adverse to the business, properties, assets, prospects, financial condition
or results of operations of the Company and its subsidiaries taken as a
whole or the ability of the Company to consummate the Merger Agreement, the
Company Option Agreement, the Offer, the acquisition of shares pursuant to
the Offer, the Shareholder Agreements, the Company Option Agreement and the
Merger (a "Material Adverse Effect" or "Material Adverse Change"), in each
case of (i) or (ii), (A) seeking to prohibit or impose any limitations on
Parent's or Purchaser's ownership or operation (or that of any of their
respective subsidiaries or Affiliates) of all or a material portion of
their or the Company's businesses or assets, or to compel Parent or
Purchaser or their respective subsidiaries and Affiliates to dispose of or
hold separate any material portion of the business or assets of the Company
or Parent and their respective subsidiaries, in each case taken as a whole,
(B) challenging the acquisition by Parent or Purchaser of any Shares under
the Offer or pursuant to the Company Option Agreement or the Shareholder
Agreements seeking to restrain, prohibit or delay the making or
consummation of the Offer or the Merger or the performance of any of the
other transactions contemplated by the Merger Agreement, the Company Option
Agreement or the Shareholder Agreements, or seeking to obtain from the
Company, Parent or Purchaser any damages that are material in relation to
the Company and its subsidiaries taken as a whole, (C) seeking to impose
material limitations on the ability of Parent or Purchaser, or rendering
Parent or Purchaser unable, to accept for payment, pay for or purchase some
or all of the Shares pursuant to the Offer and the Merger, (D) seeking to
impose limitations on the ability of Purchaser or Parent effectively to
exercise full rights of ownership of the Shares, including, without
limitation, the right to vote the Shares purchased by it on all matters
properly presented to the Company's
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shareholders, (E) seeking to restrict any future business activity by
Parent or Purchaser, including, without limitation, requiring the prior
consent of any person or entity (including any Governmental Body) to future
transactions by Parent or Purchaser, or (F) which otherwise is reasonably
likely to have a Material Adverse Effect on the Company or, as a result of
the Transactions, Parent and its subsidiaries; or
(b) there shall be any statute, rule, regulation, judgment, order or
injunction enacted, entered, enforced, promulgated or deemed applicable to
the Offer or the Merger, or any other action shall be taken by any
Governmental Body, other than the application to the Offer or the Merger of
applicable waiting periods under the HSR Act, that is reasonably likely to
result, directly or indirectly, in any of the consequences referred to in
clauses (A) through (F) of paragraph (a) above; or
(c) there shall have occurred (i) any general suspension of trading
in, or limitation on prices for, securities on the NYSE or on the Nasdaq
(excluding (A) suspensions or limitations resulting solely from physical
damage or interference with such exchanges not related to market conditions
and (B) limitations on price fluctuations in effect on the date of the
Merger Agreement), or (ii) a declaration of a banking moratorium by federal
or state authorities or any suspension of payments in respect of banks in
the United States (whether or not mandatory) imposed by federal or state
authorities on the extension of credit by lending institutions in the
United States; or
(d) there shall have occurred any Material Adverse Change (or any
development that, insofar as reasonably can be foreseen, is reasonably
likely to result in any Material Adverse Change); or
(e) the Company Board of Directors or any committee thereof (i) shall
have withdrawn, modified or changed in a manner adverse to Parent or
Purchaser its approval or recommendation of the Offer, the Merger Agreement
or the Merger, (ii) shall have recommended the approval or acceptance of an
Acquisition Proposal from, or similar business combination with, a person
or entity other than Parent, Purchaser or their Affiliates, (iii) shall
have executed an agreement in principle or definitive agreement relating to
an Acquisition Proposal from, or similar business combination with, a
person or entity other than Parent, Purchaser or their Affiliates or (iv)
upon request of Purchaser, shall fail to reaffirm its approval or
recommendation of the Offer, the Merger Agreement, or the Merger; or
(f) the Company shall have breached or failed to perform any of its
agreements under the Company Option Agreement or breached any of its
representations and warranties in such agreement or such agreement shall
not be valid, binding and enforceable, except for such breaches or failures
or failures to be valid, binding and enforceable that do not materially and
adversely affect the benefits expected to be received by Parent and
Purchaser under the Merger Agreement or the Company Option Agreement; or
(g) any Person or "group" (as defined in Section 13(d)(3) of the
Exchange Act), other than Parent, Purchaser or their affiliates or any
group of which any of them is a member, shall have acquired beneficial
ownership (as determined pursuant to Rule 13d-3 promulgated under the
Exchange Act) of 15% or more of the Shares or any such Person or group
shall have announced its intention to acquire 15% or more of the Shares and
the Company Board of Directors has failed to recommend against acceptance
of such announcement (including by taking no position with respect to such
announcement); or
(h) any of the representations and warranties of the Company set forth
in the Merger Agreement that are qualified as to materiality shall not be
true and correct and any such representations and warranties that are not
so qualified shall not be true and correct in any material respect, in each
case as of the date of the Merger Agreement and as of the scheduled
expiration of the Offer; or
(i) the Company shall have breached or failed to perform or to comply
with any obligation, agreement or covenant of the Company to be performed
or complied with by it under the Merger Agreement; except, in each case
where the failure to perform or comply with such obligations, agreements or
covenants, does not, individually or in the aggregate, have a Material
Adverse Effect on the Company or a Material Adverse Effect on the ability
of the Company to consummate the Offer or the Merger; or
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(j) all consents necessary to the consummation of the Offer or the
Merger including, without limitation, consents from parties to loans,
contracts, leases or other agreements and consents from governmental
agencies, whether federal, state or local shall not have been obtained,
other than consents the failure to obtain which would not have a Material
Adverse Effect; or
(k) the Employment Agreements shall not be in full force and effect
and either Xxxxxxxxx or Monsma shall have denied or disaffirmed his
obligation under his respective Employment Agreement; and
(l) the Merger Agreement shall have been terminated in accordance with
its terms;
which in the reasonable good faith judgment of Parent or Purchaser, in any such
case, and regardless of the circumstances (including any action or inaction by
Parent or Purchaser) giving rise to such condition makes it inadvisable to
proceed with the Offer and/or with such acceptance for payment of or payment for
Shares.
The foregoing conditions are for the sole benefit of Parent and Purchaser,
may be waived by Parent or Purchaser, in whole or in part, at any time and from
time to time in the sole discretion of Parent or Purchaser. The failure by
Parent or Purchaser at any time to exercise any of the foregoing rights shall
not be deemed a waiver of any such right and each such right shall be deemed an
ongoing right which may be asserted at any time and from time to time.
15. CERTAIN LEGAL MATTERS.
General. Except as described in this Section 15, based on information
provided by the Company, neither the Company, Purchaser nor Parent is aware of
any license or regulatory permit that appears to be material to the business of
the Company and its subsidiaries, taken as a whole, that might be adversely
affected by the acquisition of Shares by Parent or Purchaser pursuant to the
Offer, the Merger or otherwise or any approval or other action by any
governmental, administrative or regulatory agency or authority, domestic or
foreign, that would be required prior to the acquisition of Shares by Purchaser
pursuant to the Offer, the Merger or otherwise. Should any such approval or
other action be required, Purchaser and Parent presently contemplate that such
approval or other action will be sought, except as described below under "State
Takeover Laws." While, except as otherwise described in this Offer to Purchase,
Purchaser does not presently intend to delay the acceptance for payment of, or
payment for, Shares tendered pursuant to the Offer pending the outcome of any
such matter, there can be no assurance that any such approval or other action,
if needed, would be obtained or would be obtained without substantial conditions
or that failure to obtain any such approval or other action might not result in
consequences adverse to the Company's business or that certain parts of the
Company's business might not have to be disposed of, or other substantial
conditions complied with, in the event that such approvals were not obtained or
such other actions were not taken or in order to obtain any such approval or
other action. If certain types of adverse action are taken with respect to the
matters discussed below, Purchaser could decline to accept for payment, or pay
for, any Shares tendered. See Section 14 for certain conditions to the Offer,
including conditions with respect to governmental actions.
State Takeover Laws. A number of states throughout the United States have
enacted takeover statutes that purport, in varying degrees, to be applicable to
attempts to acquire securities of corporations that are incorporated or have
assets, shareholders, executive offices or places of business in such states. In
Xxxxx x. MITE Corp., the Supreme Court of the United States held that the
Illinois Business Takeover Act, which involved state securities laws that made
the takeover of certain corporations more difficult, imposed a substantial
burden on interstate commerce and therefore was unconstitutional. In CTS Corp.
v. Dynamics Corp. of America, however, the Supreme Court of the United States
held that a state may, as a matter of corporate law and, in particular, those
laws concerning corporate governance, constitutionally disqualify a potential
acquirer from voting on the affairs of a target corporation without prior
approval of the remaining shareholders, provided that such laws were applicable
only under certain conditions.
The Pennsylvania Takeover Disclosure Law ("PTDL") purports to regulate
certain attempts to acquire a corporation which (1) is organized under the laws
of Pennsylvania or (2) has its principal place of business and substantial
assets located in Pennsylvania. In Crane Co. x. Xxx, 509 F. Supp. 782 (E.D. Pa.
1981), the
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United States District Court for the Eastern District of Pennsylvania
preliminarily enjoined, on grounds arising under the United States Constitution,
enforcement of at least the portion of the PTDL involving the pre-offer waiting
period thereunder. Section 8(a) of the PTDL provides an exemption for any offer
to purchase securities as to which the board of directors of the target company
recommends acceptance to its shareholders, if at the time such recommendation is
first communicated to shareholders the offeror files with the Pennsylvania
Securities Commission ("PSC") a copy of the Schedule 14D-1 and certain other
information and materials, including an undertaking to notify security holders
of the target company that a notice has been filed with the PSC which contains
substantial additional information about the offering and which is available for
inspection at the PSC's principal office during business hours. The Company
Board of Directors by the unanimous vote of those present at the meeting has
approved the transactions contemplated by the Merger Agreement and recommended
acceptance of the Offer and the Merger to the Company's shareholders. While
reserving and not waiving its right to challenge the validity of the PTDL or its
applicability to the Offer, Purchaser is making a Section 8(a) filing with the
PSC in order to qualify for the exemption from the PTDL. Pursuant to Section 10
of the PTDL, Purchaser will submit the appropriate $100 notice filing fee along
with the Section 8(a) filing. Additional information about the Offer has been
filed with the PSC pursuant to the PTDL and is available for inspection at the
of the PSC office at Eastgate Office Building, 0000 Xxxxx 0xx Xxxxxx,
Xxxxxxxxxx, XX 00000-0000, during business hours.
Chapter 25 of the PBCL contains other provisions relating generally to
takeovers and acquisitions of certain publicly owned Pennsylvania corporations
such as the Company that have a class or series of shares entitled to vote
generally in the election of directors of the Corporation registered under the
Exchange Act (a "registered corporation"). The following discussion is a general
and highly abbreviated summary of certain features of such chapter, is not
intended to be complete or to completely address potentially applicable
exceptions or exemptions, and is qualified in its entirety by reference to
Chapter 25 of the PBCL.
In addition to other provisions not applicable to the Offer or the Merger,
Subchapter 25D of the PBCL includes provisions requiring approval of a merger of
a registered corporation with an "interested shareholder" in which the
"interested shareholder" is treated differently from other shareholders, by the
affirmative vote of the shareholders entitled to cast at least a majority of the
votes that all shareholders other than the interested shareholder are entitled
to cast with respect to the transaction without counting the votes of the
interested shareholder. This disinterested shareholder approval requirement is
not applicable to a transaction (i) approved by a majority of disinterested
directors, (ii) in which the consideration to be received by shareholders is not
less than the highest amount paid by the interested shareholder in acquiring his
shares, or (iii) effected without submitting the merger to a vote of
shareholders as permitted in Section 1924(b)(1)(ii) of the PBCL. Xxxxxxxxx
currently believes that the disinterested shareholder approval requirement of
Subchapter 25D will not be applicable to the contemplated Merger because of
prior approval of the disinterested members of the Company Board of Directors.
Shareholders will also have certain rights under Subchapter 25E of the PBCL
which will become applicable prior to the Effective Time in the event of a
Control Transaction. In such event, shareholders of the Company would have the
right to demand "fair value" of such shareholders' Shares and to be paid such
fair value upon compliance with the requirements of Subchapter 25E. Under
Subchapter 25E, "fair value" may not be less than the highest price per share
paid by the controlling person or group at any time during the 90-day period
ending on and including the date of the Control Transaction, plus an increment,
if any, representing any value, including, without limitation, any proportion of
value payable for acquisition of control of the Company, that may not be
reflected in such price. Purchaser believes that the Offer Price represents fair
value of the Shares within the meaning of Subchapter 25E. Subchapter 25E Rights
would attach immediately upon consummation of a Control Transaction and require
that any shareholder seeking such appraisal must make a demand for fair value
within a reasonable time after the notice to shareholders that a Control
Transaction has occurred is given by the controlling person or group in
accordance with Subchapter 25E, which time period may be specified in such
notice, as well as comply with the other procedures of Subchapter 25E.
Subchapter 25E Rights are available only with respect to shares of a registered
corporation held by a shareholder after the occurrence of a Control Transaction;
accordingly, Subchapter 25E Rights would not be available with respect to any
Shares tendered in the Offer and accepted for payment. The foregoing summary of
rights under
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Subchapter 25E is qualified in its entirety by reference to the full text of
Subchapter 25E, which is attached hereto as Annex A.
Subchapter 25F of the PBCL prohibits under certain circumstances certain
"business combinations," including mergers and sales or pledges of significant
assets, of a registered corporation with an "interested shareholder" for a
period of five years. Subchapter 25F exempts, among other things, business
combinations approved by the board of directors prior to a shareholder becoming
an interested shareholder and transactions with interested shareholders who
beneficially owned shares with at least 15% of the total voting power of a
corporation on March 23, 1988 and remain so. The Company has represented to the
Purchaser that Subchapter 25F is not applicable to the contemplated Merger.
Subchapter 25G of the PBCL, relating to "control-share acquisitions,"
prevents under certain circumstances the owner of a control-share block of
shares of a registered corporation from voting such shares unless a majority of
both the "disinterested" shares and all voting shares approve such voting
rights. Failure to obtain such approval may result in a forced sale by the
control-share owner of the control-share block to the corporation at a possible
loss. The Company has opted out of Subchapter 25G in the By-laws and has
represented to the Purchaser that Subchapter 25G is not applicable to the
transactions contemplated by the Merger Agreement.
Subchapter 25H of the PBCL, relating to disgorgement by certain controlling
shareholders of a registered corporation following attempts to acquire control,
provides that under certain circumstances any profit realized by a controlling
person from the disposition of shares of the corporation to any person
(including to the corporation under Subchapter 25G or otherwise) will be
recoverable by the corporation. The Company has opted out of Subchapter 25H in
the By-laws and has represented to the Purchaser that Subchapter 25H is not
applicable to the transactions contemplated by the Merger Agreement.
Subchapter 25I of the PBCL entitles "eligible employees" of a registered
corporation to a lump sum payment of severance compensation under certain
circumstances if the employee is terminated, other than for willful misconduct,
within 90 days before voting rights lost as a result of a control-share
acquisition are restored by a vote of disinterested shareholders. Subchapter 25J
of the PBCL provides protection against termination or impairment under certain
circumstances of "covered labor contracts" of a registered corporation as a
result of a "business combination transaction" if the business operation to
which the covered labor contract relates was owned by the registered corporation
at the time voting rights are restored by shareholder vote after a control-share
acquisition. The Company has represented to Purchaser that Subchapters 25I and
25J are not applicable to the transactions contemplated by the Merger Agreement.
Section 2504 of the PBCL provides that the applicability of Chapter 25 of
the PBCL to a registered corporation having a class or series of shares entitled
to vote generally in the election of directors registered under the Exchange Act
or otherwise satisfying the definition of a registered corporation under Section
2502(l) of the PBCL shall terminate immediately upon the termination of the
status of the corporation as a registered corporation. Purchaser intends to seek
to cause the Company to terminate the registration of the Shares under the
Exchange Act as soon after consummation of the Offer as the requirements for
termination of the registration of the Shares are met.
Except for the filing pursuant to Section 8(a) of the PTDL described above,
neither Purchaser nor Parent has currently complied with any state takeover
statute or regulation; however Purchaser intends to comply with Subchapter 25E
of the PBCL to the extent it is applicable upon consummation of the Offer.
Purchaser reserves the right to challenge the applicability or validity of any
state law purportedly applicable to the Offer or the Merger and nothing in this
Offer to Purchase or any action taken in connection with the Offer or the Merger
is intended as a waiver of such right. If it is asserted that any state takeover
statute is 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 or the
Merger, Purchaser might be required to file certain information with, or to
receive approvals from, the relevant state authorities, and Purchaser might be
unable to accept for payment or pay for Shares tendered pursuant to the Offer,
or be delayed in consummating the Offer or the Merger. In such case, Purchaser
may not be obligated to accept for payment or pay for any Shares tendered
pursuant to the Offer.
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Antitrust. The Offer and the Merger are subject to the HSR Act, which
provides that certain acquisition transactions may not be consummated unless
certain information has been furnished to the Antitrust Division of the
Department of Justice (the "DOJ") and the Federal Trade Commission (the "FTC")
and certain waiting period requirements have been satisfied.
The waiting period under the HSR Act with respect to the Offer will expire
at 11:59 p.m., New York City time, on the fifteenth day after the date Parent's
form was filed unless early termination of the waiting period is granted.
However, the DOJ or the FTC may extend the waiting period by requesting
additional information or documentary material from Parent or the Company. If
such a request is made, such waiting period will expire at 11:59 p.m., New York
City time, on the tenth day after substantial compliance by Parent with such
request. Only one extension of the waiting period pursuant to a request for
additional information is authorized by the HSR Act. Thereafter, such waiting
period may be extended only by court order or with the consent of Parent. In
practice, complying with a request for additional information or material can
take a significant amount of time. In addition, if the DOJ or the FTC raises
substantive issues in connection with a proposed transaction, the parties
frequently engage in negotiations with the relevant governmental agency
concerning possible means of addressing those issues and may agree to delay
consummation of the transaction while such negotiations continue. The Purchaser
will not accept for payment Shares tendered pursuant to the Offer unless and
until the waiting period requirements imposed by the HSR Act with respect to the
Offer have been satisfied. See Section 14.
The FTC and the DOJ frequently scrutinize the legality under the Antitrust
Laws of transactions such as Purchaser's acquisition of Shares pursuant to the
Offer and the Merger. At any time before or after Purchaser's acquisition of
Shares, the DOJ or the FTC could take such action under the Antitrust Laws as it
deems necessary or desirable in the public interest, including seeking to enjoin
the acquisition of Shares pursuant to the Offer or otherwise seeking divestiture
of Shares acquired by Purchaser or divestiture of substantial assets of Parent
or its subsidiaries. Private parties, as well as state governments, may also
bring legal action under the Antitrust Laws under certain circumstances. Based
upon an examination of information provided by the Company relating to the
businesses in which Parent and the Company are engaged, Parent and Purchaser
believe that the acquisition of Shares by Purchaser will not violate the
Antitrust Laws. Nevertheless, there can be no assurance that a challenge to the
Offer or other acquisition of Shares by Purchaser on antitrust grounds will not
be made or, if such a challenge is made, of the result. See Section 14 for
certain conditions to the Offer, including conditions with respect to litigation
and certain government actions.
As used in this Offer to Purchase, "Antitrust Laws" shall mean and include
the Xxxxxxx Act, as amended, the Xxxxxxx Act, as amended, the HSR Act, the
Federal Trade Commission Act, as amended, and all other Federal and state
statutes, rules, regulations, orders, decrees, administrative and judicial
doctrines, and other laws that are designed or intended to prohibit, restrict or
regulate actions having the purpose or effect of monopolization or restraint of
trade.
16. FEES AND EXPENSES.
TM Capital is serving as Dealer Manager in connection with the Offer and
has provided certain financial advisory services to Purchaser and Parent in
connection with the Offer and the Merger pursuant to an engagement letter, dated
March 3, 1999 (the "Engagement Letter") and a Dealer Manager Agreement, dated
July 15, 1999 (the "Dealer Manager Agreement"). Pursuant to the Engagement
Letter, Parent has agreed to pay a fee of approximately $525,000 for a tender
offer or merger between Parent and the Company be consummated, $100,000 of which
is payable upon the initiation of the Offer. Parent has also agreed to reimburse
TM Capital for its reasonable out-of-pocket expenses, including the legal fees
incurred in connection with its engagement; however, such expenses shall not
exceed $10,000 without prior notification of Parent. Parent has agreed to
indemnify TM Capital and certain related persons against certain liabilities and
expenses, including certain liabilities under the federal securities laws.
Purchaser and Parent have retained XX Xxxx to serve as the Information
Agent and American Stock Transfer and Trust Company to serve as the Depositary
in connection with the Offer. The Information Agent
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may contact holders of Shares by personal interview, mail, telephone, telex,
telegraph and other methods of electronic communication and may request brokers,
dealers, commercial banks, trust companies and other nominees to forward the
Offer materials to beneficial holders. The Information Agent and the Depositary
will each receive reasonable and customary compensation for their services, be
reimbursed for certain reasonable out-of-pocket expenses and be indemnified
against certain liabilities in connection with their services, including certain
liabilities and expenses under the federal securities laws.
Except as set forth above, neither Parent nor Purchaser will pay any fees
or commissions to any broker or dealer or other person or entity in connection
with the solicitation of tenders of Shares pursuant to the Offer. Brokers,
dealers, banks and trust companies will be reimbursed by Purchaser for customary
mailing and handling expenses incurred by them in forwarding the Offer materials
to their customers.
17. MISCELLANEOUS.
Purchaser is not aware of any state where the making of the Offer is
prohibited by administrative or judicial action pursuant to any valid state
statute. If Purchaser becomes aware of any valid state statute prohibiting the
making of the Offer or the acceptance of the Shares pursuant thereto, Purchaser
shall make a good faith effort to comply with such statute or seek to have such
statute declared inapplicable to the Offer. If, after such good faith effort,
Purchaser cannot comply with such state statute, the Offer will not be made to
(nor will tenders be accepted from or on behalf of) holders of Shares in such
state. In any jurisdiction the securities, blue sky or other laws of which
require the Offer to be made by a licenced broker or dealer, the Offer is being
made on behalf of the Purchaser by the Dealer Manager or one or more registered
brokers or dealers licenced under the laws of such jurisdiction.
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATION ON BEHALF OF PARENT OR PURCHASER NOT CONTAINED HEREIN OR IN THE
LETTER OF TRANSMITTAL AND, IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATION
MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED.
Purchaser and Parent have filed with the Commission the Schedule 14D-1
pursuant to Rule 14d-3 under the Exchange Act, together with exhibits,
furnishing certain additional information with respect to the Offer. In
addition, the Company has filed with the Commission the Schedule 14D-9 pursuant
to Rule 14d-9 under the Exchange Act, setting forth its recommendation with
respect to the Offer and the reasons for its recommendation and furnishing
certain additional related information. Such Schedules and any amendments
thereto, including exhibits, should be available for inspection and copies
should be obtainable in the same manner set forth in Sections 8 and 9 of this
Offer to Purchase (except that such material will not be available at the
regional offices of the Commission).
TI Acquisition Corp.
July 15, 1999
36
39
SCHEDULE I
INFORMATION CONCERNING DIRECTORS AND EXECUTIVE OFFICERS OF
PARENT AND PURCHASER
1. DIRECTORS AND EXECUTIVE OFFICERS OF PARENT. The following table sets
forth the name and present principal occupation or employment, and material
occupations, positions, offices or employments for the past five years, of each
director and executive officer of Parent. Unless otherwise indicated, each such
person is a citizen of the United States of America and the business address of
each such person is c/o Fedders Corporation, 000 Xxxxxxxxxxxx Xxxx, Xxxxxxx
Xxxxxx, XX 00000. Unless otherwise indicated, each occupation set forth opposite
an individual's name refers to employment with Parent. Unless otherwise
indicated, each such person has held his or her present occupation as set forth
below, or has been an executive officer at Parent for the past five years.
PRESENT PRINCIPAL OCCUPATION OR EMPLOYMENT;
NAME MATERIAL POSITIONS HELD DURING THE PAST FIVE YEARS
---- --------------------------------------------------
XXXXXXXXX XXXXXXXX Xx. Xxxxxxxx has been Chairman of the Board of Parent
Director since 1945 since 1945.
XXX XXXXXXXX, XX. Xx. Xxxxxxxx, Xx. has been Vice Chairman, President and
Director since 1965 Chief Executive Officer of Parent since 1988.
XXXXXXX X. XXXXXXX Xx. Xxxxxxx has been a director of Parent from 1980 to
Director since 1980 1987. He was reelected as a director in 1989. Xx. Xxxxxxx
is Chairman of Parent's Finance Committee and a member of
the Audit and Compensation Committees. Xx. Xxxxxxx is also
a director of CSM Environmental Systems, Inc.
XXXXX X. XXXXX Xx. Xxxxx has been a director of Parent since 1998. Dr.
Director since 1998 Xxxxx has been President of the Polytechnic University for
the last four years. Prior to that, Xx. Xxxxx was Xxxx of
the College of Engineering and Applied Sciences at Arizona
State University. Xx. Xxxxx is a member of the Finance and
Nominating Committees.
XXXXXX XXXXXXXX Xx. Xxxxxxxx has been a director of Parent since 1961. Mr.
Director since 1961 Xxxxxxxx was a Senior Vice President of Parent until his
retirement on August 31, 1992, and President of NYCOR,
Inc. until its merger into Parent on August 13, 1996. Xx.
Xxxxxxxx is a member of the Executive and Finance
Committees.
C.A. XXXX Xx. Xxxx has been a director of Parent since 1996. Mr.
Director since 1996 Xxxx was a Vice President of Parent for more than 20 years
until his retirement in August 1992, with responsibilities
in a number of areas during that time, including
marketing, treasury and international sales and sourcing.
He was also a director of NYCOR, Inc. until its merger
into Parent on August 13, 1996.
XXXXXX X. XXXXXX Xx. Xxxxxx is a member of the law firm of Xxxxxxx, Cellar,
Director since 1977 Spett & Modlin, P.C., which renders legal services to
Parent from time to time. Xx. Xxxxxx is also a director of
General DataComm Industries, Inc. and Trans-Lux
Corporation. Xx. Xxxxxx is Chairman of the Compensation
Committee and a member of the Executive and Audit
Committees.
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40
PRESENT PRINCIPAL OCCUPATION OR EMPLOYMENT;
NAME MATERIAL POSITIONS HELD DURING THE PAST FIVE YEARS
---- --------------------------------------------------
XXXXXXXX X. XXXX Xx. Xxxx is President Emeritus of Xxxxxxx University. Dr.
Director since 1967 Xxxx has been a director of Parent since 1967. Xx. Xxxx is
also a director of Ironworkers' Savings Bank. Xx. Xxxx is
Chairman of the Audit Committee.
X.X. XXXXXXXXXX Xx. Xxxxxxxxxx has been a director of Parent since 1982.
Director since 1982 Xx. Xxxxxxxxxx was Senior Vice President and Secretary of
Parent until his retirement on August 31, 1996. Xx.
Xxxxxxxxxx served in various capacities with Parent for
over 39 years, including human resources and legal. Xx.
Xxxxxxxxxx is a member of the Audit and Finance
Committees.
XXXXXXX X. XXXXX Xx. Xxxxx has been a director of Parent since 1994. Mr.
Director since 1994 Xxxxx'x principal occupation for the past two and one half
years has been as President of Xxxxx Tree Co., an importer
of Christmas items and garden furniture. Prior to that,
Xx. Xxxxx was President of Boulderwood Corporation. Xx.
Xxxxx is a member of the Compensation and Nominating
Committees.
XXXXXX X. XXXXXXX, XX. Xx. Xxxxxxx, Xx. has been Executive Vice President,
Acquisitions and Alliances of Parent since January 1999.
Prior to that he had been Executive Vice President,
Finance and Administration and Chief Financial Officer of
Parent since 1993. Xx. Xxxxxxx joined Parent in 1980 and
has served as internal auditor, plant controller,
corporate controller and Vice President, Finance.
XXXXXXX XXXXXXXX Xx. Xxxxxxxx has been Vice President and Chief Financial
Officer of Fedders North America, Inc. and Parent since
July 1, 1999. Xx. Xxxxxxxx also served as Senior Vice
President of Fedders International, Inc. from 1998 until
being elected to his current position. Xx. Xxxxxxxx joined
the Fedders organization in 1990 and has held various
positions with Parent and certain subsidiaries including:
Assistant Director of Sourcing, Sales Manager, Director of
Sales and Marketing, Vice President of Sales and Managing
Director of the Singapore office of Fedders International,
Inc.
XXXXXXX X. XXXXX Xx. Xxxxx has been Chairman and Chief Executive Officer of
the air conditioning unit of Parent since May 1, 1999. Xx.
Xxxxx is also a Senior Vice President of Parent. Xx. Xxxxx
rejoined Fedders North America, Inc. in 1977 after a brief
break in service and has served in various capacities with
Fedders North America, Inc. including: Vice President,
Purchasing; Vice President, Materials Management; and Vice
President, Materials Management/Global Purchasing. He
served as Vice President of Global Purchasing for Parent
from December 1997 until May 1999.
XXXX X. XXXXXX Xx. Xxxxxx was elected Senior Vice President and Secretary
of Parent in August 1996. Previously he was Vice
President, Finance, General Counsel and Chief Financial
Officer of NYCOR, Inc. Prior thereto, he was Vice
President and General Counsel of Parent from 1989 to 1992.
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PRESENT PRINCIPAL OCCUPATION OR EMPLOYMENT;
NAME MATERIAL POSITIONS HELD DURING THE PAST FIVE YEARS
---- --------------------------------------------------
XXXXXX X. XXXXXX Xx. Xxxxxx has been Group Vice President of Parent and
Chief Operating Officer of Fedders North America since
July 1997. He was elected to the position of President of
Fedders North America in September 1998. Prior to joining
Parent, Xx. Xxxxxx was employed by Frigidaire Corporation
for approximately 20 years, most recently as Group Vice
President of the Frigidaire Home Products Company, Home
Comfort Division and the Electrolux Global Home Comfort
Products Division.
XXXX X. XXXXX Xx. Xxxxx was elected Vice President of Parent and
President of Fedders International, Inc. in April 1993.
Prior thereto he held various sales and marketing
positions with Parent for more than 20 years.
XXXXXX XXXXXX Xx. Xxxxxx was elected Vice President of Parent and
President of Rotorex Companies, Inc. in January 1997. He
joined Parent in 1991 as Vice President, Corporate
Quality. Prior thereto Xx. Xxxxxx was Corporate Director
of Quality for Welbilt Corporation.
XXX XXXXXXXX XXX Xx. Xxx Xxxxxxxx XXX was elected Vice President of Parent
in August 1996. He has been President of Melcor since 1995
and was Vice President of Business Planning and
Development of NYCOR, Inc. from 1992 to August, 1996.
XXXXXX X. XXXXXXX Xx. Xxxxxxx joined Parent in 1992 as Senior Counsel. He
was promoted to General Counsel of Parent in 1994 and Vice
President in 1995. Prior to joining Parent, Xx. Xxxxxxx
was Vice President, General Counsel and Secretary of
Information Science, Incorporated, a manufacturer of
computer software.
XXXXXX X. XXXXX Xx. Xxxxx was elected Controller of Parent in April 1995.
Previously he was Controller of Fedders North America
since 1992. Prior thereto he was Controller of Xxxxxxx
Quiet Kool.
XXXXX XXXXXXXXXX Xx. XxXxxxxxxx was elected Treasurer of Parent in October
1998. Previously she was Assistant Treasurer of Parent
since 1989. Prior thereto she held various cash management
positions with Parent.
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2. DIRECTORS AND EXECUTIVE OFFICERS OF PURCHASER. The following table sets
forth the name and present principal occupation or employment, and material
occupations, positions, offices or employments for the past five years, of each
director and executive officer of Purchaser. Unless otherwise indicated, each
such person is a citizen of the United States of America and the business
address of each such person is c/o TI Acquisition Corp., 000 Xxxxxxxxxxxx Xxxx,
Xxxxxxx Xxxxxx, XX 00000. Unless otherwise indicated, each occupation set forth
opposite an individual's name refers to employment with Parent. Unless otherwise
indicated, each such person has held his present occupation as set forth below,
or has been an executive officer at Parent, or the organization indicated, for
the past five years.
PRESENT PRINCIPAL OCCUPATION OR EMPLOYMENT;
NAME MATERIAL POSITIONS HELD DURING THE PAST FIVE YEARS
---- --------------------------------------------------
XXX XXXXXXXX, XX. Chief Executive Officer of Purchaser. See Part I of this
Schedule.
XXXXXX X. XXXXXXX, XX. Executive Vice President of Purchaser. See Part I of this
Schedule.
XXXXXXX XXXXXXXX Vice President of Purchaser. See Part I of this Schedule.
XXXX X. XXXXXX Treasurer and Secretary of Purchaser. See Part I of this
Schedule.
XXXXXX X. XXXXXXX Assistant Secretary of Purchaser. See Part I of this
Schedule.
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ANNEX A
PENNSYLVANIA BUSINESS CORPORATION LAW OF 1988
CHAPTER 25
SUBCHAPTER E. CONTROL TRANSACTIONS
2541 APPLICATION AND EFFECT OF SUBCHAPTER. -- (a) General rule. -- Except
as otherwise provided in this section, this subchapter shall apply to a
registered corporation unless: (1) the registered corporation is one described
in section 2502(1)(ii) or (2) (relating to registered corporation status):
(2)the bylaws, by amendment adopted either: (i) by March 23, 1984; or (ii) on or
after March 23, 1988, and on or before June 21, 1988; and, in either event, not
subsequently rescinded by an article amendment, explicitly provide that this
subchapter shall not be applicable to the corporation in the case of a
corporation which on June 21, 1988, did not have outstanding one or more classes
or series of preference shares entitled, upon the occurrence of a default in the
payment of dividends or another similar contingency, to elect a majority of the
members of the board of directors (a bylaw adopted on or before June 21, 1988,
by a corporation excluded from the scope of this paragraph by the restriction of
this paragraph relating to certain outstanding preference shares shall be
ineffective unless ratified under paragraph (3)); (3) the bylaws of which
explicitly provide that this subchapter shall not be applicable to the
corporation by amendment ratified by the board of directors on or after December
19, 1990, and on or before March 19, 1991, in the case of a corporation: (i)
which on June 21, 1988, had outstanding one or more classes or series of
preference shares entitled, upon the occurrence of a default in the payment of
dividends or another similar contingency, to elect a majority of the members of
the board of directors; and (ii) the bylaws of which on that date contained a
provision described in paragraph (2); or (4) the articles explicitly provide
that this subchapter shall not be applicable to the corporation by a provision
included in the original articles, by an article amendment adopted prior to the
date of the control transaction and prior to or on March 23, 1988, pursuant to
the procedures then applicable to the corporation, or by an article amendment
adopted prior to the date of the control transaction and subsequent to March 23,
1988, pursuant to both: (i) the procedures then applicable to the corporation;
and (ii) unless such proposed amendment has been approved by the board of
directors of the corporation, in which event this subparagraph shall not be
applicable, the affirmative vote of the shareholders entitled to cast at least
80% of the votes which all shareholders are entitled to cast thereon. A
reference in the articles or bylaws to former section 910 (relating to right of
shareholders to receive payment for shares following a control transaction) of
the act of May 5, 1933 (P.L. 364, No. 106), known as the Business Corporation
Law of 1933, shall be a reference to this subchapter for the purposes of this
section. See section 101(c) (relating to references to prior statutes).
(b) Inadvertent transactions. -- This subchapter shall not apply to any
person or group that inadvertently becomes a controlling person or group if that
controlling person or group, as soon as practicable, divests itself of a
sufficient amount of its voting shares so that it is no longer a controlling
person or group.
(c) Certain subsidiaries. -- This subchapter shall not apply to any
corporation that on December 23, 1983, was a subsidiary of any other
corporation.
2542 DEFINITIONS. -- The following words and phrases when used in this
subchapter shall have the meanings given to them in this section unless the
context clearly indicates otherwise:
"Control transaction." The acquisition by a person or group of the
status of a controlling person or group.
"Controlling person or group." A controlling person or group as
defined in section 2543 (relating to controlling person or group).
"Fair value." A value not less than the highest price paid per share
by the controlling person or group at any time during the 90-day period
ending on and including the date of the control transaction plus an
increment representing any value, including, without limitation, any
proportion of any value payable for acquisition of control of the
corporation, that may not be reflected in such price.
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"Partial payment amount." The amount per share specified in section
2545 (c)(2) (relating to contents of notice).
"Subsidiary." Any corporation as to which any other corporation has
or has the right to acquire, directly or indirectly, through the exercise
of all warrants, options and rights and the conversion of all convertible
securities, whether issued or granted by the subsidiary or otherwise,
voting power over voting shares of the subsidiary that would entitle the
holders thereof to cast in excess of 50% of the votes that all shareholders
would be entitled to cast in the election of directors of such subsidiary,
except that a subsidiary will not be deemed to cease being a subsidiary as
long as such corporation remains a controlling person or group within the
meaning of this subchapter.
"Voting shares." The term shall have the meaning specified in section
2552 (relating to definitions).
2543 CONTROLLING PERSON OR GROUP. -- (a) General rule. -- For the purpose
of this subchapter, a "controlling person or group" means a person who has, or a
group of persons acting in concert that has, voting power over voting shares of
the registered corporation that would entitle the holders thereof to cast at
least 20% of the votes that all shareholders would be entitled to cast in an
election of directors of the corporation.
(b) Exceptions generally. -- Notwithstanding subsection (a): (1) A person
or group which would otherwise be a controlling person or group within the
meaning of this section shall not be deemed a controlling person or group
unless, subsequent to the later of March 23, 1988, or the date this subchapter
becomes applicable to a corporation by bylaw or article amendment or otherwise,
that person or group increases the percentage of outstanding voting shares of
the corporation over which it has voting power to in excess of the percentage of
outstanding voting shares of the corporation over which that person or group had
voting power on such later date, and to at least the amount specified in
subsection (a), as the result of forming or enlarging a group or acquiring, by
purchase, voting power over voting shares of the corporation. (2) No person or
group shall be deemed to be a controlling person or group at any particular time
if voting power over any of the following voting shares is required to be
counted at such time in order to meet the 20% minimum: (i) Shares which have
been held continuously by a natural person since January 1, 1983, and which are
held by such natural person at such time. (ii) Shares which are held at such
time by any natural person or trust, estate, foundation or other similar entity
to the extent the shares were acquired solely by gift, inheritance, bequest,
devise or other testamentary distribution or series of these transactions,
directly or indirectly, from a natural person who had acquired the shares prior
to January 1, 1983. (iii) Shares which were acquired pursuant to a stock split,
stock dividend, reclassification or similar recapitalization with respect to
shares described under this paragraph that have been held continuously since
their issuance by the corporation by the natural person or entity that acquired
them from the corporation or that were acquired, directly or indirectly, from
such natural person or entity, solely pursuant to a transaction or series of
transactions described in subparagraph (ii), and that are held at such time by a
natural person or entity described in subparagraph (ii). (iv) Control shares as
defined in section 2562 (relating to definitions) which have not yet been
accorded voting rights pursuant to section 2564(a) (relating to voting rights of
shares acquired in a control-share acquisition). (v) Shares, the voting rights
of which are attributable to a person under subsection (d) if: (A) the person
acquired the option or conversion right directly from or made the contract,
arrangement or understanding or has the relationship directly with the
corporation; and (B) the person does not at the particular time own or otherwise
effectively possess the voting rights of the shares. (vi) Shares acquired
directly from the corporation or an affiliate or associate, as defined in
section 2552 (relating to definitions), of the corporation by a person engaged
in business as an underwriter of securities who acquires the shares through his
participation in good faith in a firm commitment underwriting registered under
the Securities Act of 1933. (3) In determining whether a person or group is or
would be a controlling person or group at any particular time, there shall be
disregarded voting power arising from a contingent right of the holders of one
or more classes or series of preference shares to elect one or more members of
the board of directors upon or during the continuation of a default in the
payment of dividends on such shares or another similar contingency.
(c) Certain record holders. -- A person shall not be a controlling person
under subsection (a) if the person holds voting power, in good faith and not for
the purpose of circumventing this subchapter, as an agent,
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bank, broker, nominee or trustee for one or more beneficial owners who do not
individually or, if they are a group acting in concert, as a group have the
voting power specified in subsection (a), or who are not deemed a controlling
person or group under subsection (b).
(d) Existence of voting power. -- For the purposes of this subchapter, a
person has voting power over a voting share if the person has or shares,
directly or indirectly, through any option, contract, arrangement,
understanding, conversion right or relationship, or by acting jointly or in
concert or otherwise, the power to vote, or to direct the voting of, the voting
share.
2544 RIGHT OF SHAREHOLDERS TO RECEIVE PAYMENT FOR SHARES. -- Any holder of
voting shares of a registered corporation that becomes the subject of a control
transaction who shall object to the transaction shall be entitled to the rights
and remedies provided in this subchapter.
2545 NOTICE TO SHAREHOLDERS. -- (a) General rule. -- Prompt notice that a
control transaction has occurred shall be given by the controlling person or
group to: (1) Each shareholder of record of the registered corporation holding
voting shares. (2) To the court, accompanied by a petition to the court praying
that the fair value of the voting shares of the corporation be determined
pursuant to section 2547 (relating to valuation procedures) if the court should
receive pursuant to section 2547 certificates from shareholders of the
corporation or an equivalent request for transfer of uncertificated securities.
(b) Obligations of the corporation. -- If the controlling person or group
so requests, the corporation shall, at the option of the corporation and at the
expense of the person or group, either furnish a list of all such shareholders
to the person or group or mail the notice to all such shareholders.
(c) Contents of notice. -- The notice shall state that: (1) All
shareholders are entitled to demand that they be paid the fair value of their
shares. (2) The minimum value the shareholder can receive under this subchapter
is the highest price paid per share by the controlling person or group within
the 90-day period ending on and including the date of the control transaction,
and stating that value. (3) If the shareholder believes the fair value of his
shares is higher, that this subchapter provides an appraisal procedure for
determining the fair value of such shares, specifying the name of the court and
its address and the caption of the petition referenced in subsection (a)(2), and
stating that the information is provided for the possible use by the shareholder
in electing to proceed with a court-appointed appraiser under section 2547.
There shall be included in, or enclosed with, the notice a copy of this
subchapter.
(d) Optional procedure. -- The controlling person or group may, at its
option, supply with the notice referenced in subsection (c) a form for the
shareholder to demand payment of the partial payment amount directly from the
controlling person or group without utilizing the court-appointed appraiser
procedure of section 2547, requiring the shareholder to state the number and
class or series, if any, of the shares owned by him, and stating where the
payment demand must be sent and the procedures to be followed.
2546 SHAREHOLDER DEMAND FOR FAIR VALUE. -- (a) General rule. -- After the
occurrence of the control transaction, any holder of voting shares of the
registered corporation may, prior to or within a reasonable time after the
notice required by section 2545 (relating to notice to shareholders) is given,
which time period may be specified in the notice, make written demand on the
controlling person or group for payment of the amount provided in subsection (c)
with respect to the voting shares of the corporation held by the shareholder,
and the controlling person or group shall be required to pay that amount to the
shareholder pursuant to the procedures specified in section 2547 (relating to
valuation procedures).
(b) Contents of demand. -- The demand of the shareholder shall state the
number and class or series, if any, of the shares owned by him with respect to
which the demand is made.
(c) Measure of value. -- A shareholder making written demand under this
section shall be entitled to receive cash for each of his shares in an amount
equal to the fair value of each voting share as of the date on which the control
transaction occurs, taking into account all relevant factors, including an
increment representing a proportion of any value payable for acquisition of
control of the corporation.
(d) Purchases independent of subchapter. -- The provisions of this
subchapter shall not preclude a controlling person or group subject to this
subchapter from offering, whether in the notice required by section
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2545 or otherwise, to purchase voting shares of the corporation at a price other
than that provided in subsection (c), and the provisions of this subchapter
shall not preclude any shareholder from agreeing to sell his voting shares at
that or any other price to any person.
0000 XXXXXXXXX XXXXXXXXXX. -- (a) General rule. -- If, within 45 days (or
such other time period, if any, as required by applicable law) after the date of
the notice required by section 2545 (relating to notice to shareholders), or, if
such notice was not provided prior to the date of the written demand by the
shareholder under section 2546 (relating to shareholder demand for fair value),
then within 45 days (or such other time period, if any, required by applicable
law) of the date of such written demand, the controlling person or group and the
shareholder are unable to agree on the fair value of the shares or on a binding
procedure to determine the fair value of the shares, then each shareholder who
is unable to agree on both the fair value and on such a procedure with the
controlling person or group and who so desires to obtain the rights and remedies
provided in this subchapter shall, no later than 30 days after the expiration of
the applicable 45-day or other period, surrender to the court certificates
representing any of the shares that are certificated shares, duly endorsed for
transfer to the controlling person or group, or cause any uncertificated shares
to be transferred to the court as escrow agent under subsection (c) with a
notice stating that the certificates or uncertificated shares are being
surrendered or transferred, as the case may be, in connection with the petition
referenced in section 2545 or, if no petition has theretofore been filed, the
shareholder may file a petition within the 30-day period in the court praying
that the fair value (as defined in this subchapter) of the shares be determined.
(b) Effect of failure to give notice and surrender certificates. -- Any
shareholder who does not so give notice and surrender any certificates or cause
uncertificated shares to be transferred within such time period shall have no
further right to receive, with respect to shares the certificates of which were
not so surrendered or the uncertificated shares which were not so transferred
under this section, payment under this subchapter from the controlling person or
group with respect to the control transaction giving rise to the rights of the
shareholder under this subchapter.
(c) Escrow and notice. -- The court shall hold the certificates surrendered
and the uncertificated shares transferred to it in escrow for, and shall
promptly, following the expiration of the time period during which the
certificates may be surrendered and the uncertificated shares transferred,
provide a notice to the controlling person or group of the number of shares so
surrendered or transferred.
(d) Partial payment for shares. -- The controlling person or group shall
then make a partial payment for the shares so surrendered or transferred to the
court, within ten business days of receipt of the notice from the court, at a
per-share price equal to the partial payment amount. The court shall then make
payment as soon as practicable, but in any event within ten business days, to
the shareholders who so surrender or transfer their shares to the court of the
appropriate per-share amount received from the controlling person or group.
(e) Appointment of appraiser. -- Upon receipt of any share certificate
surrendered or uncertificated share transferred under this section, the court
shall, as soon as practicable but in any event within 30 days, appoint an
appraiser with experience in appraising share values of companies of like nature
to the registered corporation to determine the fair value of the shares.
(f) Appraisal procedure. -- The appraiser so appointed by the court shall,
as soon as reasonably practicable, determine the fair value of the shares
subject to its appraisal and the appropriate market rate of interest on the
amount then owed by the controlling person or group to the holders of the
shares. The determination of any appraiser so appointed by the court shall be
final and binding on both the controlling person or group and all shareholders
who so surrendered their share certificates or transferred their shares to the
court, except that the determination of the appraiser shall be subject to review
to the extent and within the time provided or prescribed by law in the case of
other appointed judicial officers. See 42 Pa.C.S. Sections 5105(a)(3) (relating
to right to appellate review) and 5571(b) (relating to appeals generally).
(g) Supplemental payment. -- Any amount owed, together with interest, as
determined pursuant to the appraisal procedures of this section shall be payable
by the controlling person or group after it is so determined and upon and
concurrently with the delivery or transfer to the controlling person or group by
the court (which shall make delivery of the certificate or certificates
surrendered or the uncertificated shares transferred to it to
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the controlling person or group as soon as practicable but in any event within
ten business days after the final determination of the amount owed) of the
certificate or certificates representing shares surrendered or the
uncertificated shares transferred to the court, and the court shall then make
payment, as soon as practicable but in any event within ten business days after
receipt of payment from the controlling person or group, to the shareholders who
so surrendered or transferred their shares to the court of the appropriate
per-share amount received from the controlling person or group.
(h) Voting and dividend rights during appraisal proceedings. --
Shareholders who surrender their shares to the court pursuant to this section
shall retain the right to vote their shares and receive dividends or other
distributions thereon until the court receives payment in full for each of the
shares so surrendered or transferred of the partial payment amount (and,
thereafter, the controlling person or group shall be entitled to vote such
shares and receive dividends or other distributions thereon). The fair value (as
determined by the appraiser) of any dividends or other distributions so received
by the shareholders shall be subtracted from any amount owing to such
shareholders under this section.
(i) Powers of the court. -- The court may appoint such agents, including
the transfer agent of the corporation, or any other institution, to hold the
share certificates so surrendered and the shares surrendered or transferred
under this section, to effect any necessary change in record ownership of the
shares after the payment by the controlling person or group to the court of the
amount specified in subsection (h), to receive and disburse dividends or other
distributions, to provide notices to shareholders and to take such other actions
as the court determines are appropriate to effect the purposes of this
subchapter.
(j) Costs and expenses. -- The costs and expenses of any appraiser or other
agents appointed by the court shall be assessed against the controlling person
or group. The costs and expenses of any other procedure to determine fair value
shall be paid as agreed to by the parties agreeing to the procedure.
(k) Jurisdiction exclusive. -- The jurisdiction of the court under this
subchapter is plenary and exclusive and the controlling person or group and all
shareholders who so surrendered or transferred their shares to the court shall
be made a party to the proceeding as in an action against their shares.
(l) Duty of corporation. -- The corporation shall comply with requests for
information, which may be submitted pursuant to procedures maintaining the
confidentiality of the information, made by the court or the appraiser selected
by the court. If any of the shares of the corporation are not represented by
certificates, the transfer, escrow or retransfer of those shares contemplated by
this section shall be registered by the corporation, which shall give the
written notice required by section 1528(f) (relating to uncertificated shares)
to the transferring shareholder, the court and the controlling shareholder or
group, as appropriate in the circumstances.
(m) Payment under optional procedure. -- Any amount agreed upon between the
parties or determined pursuant to the procedure agreed upon between the parties
shall be payable by the controlling person or group after it is agreed upon or
determined and upon and concurrently with the delivery of any certificate or
certificates representing such shares or the transfer of any uncertificated
shares to the controlling person or group by the shareholder.
(n) Title to shares. -- Upon full payment by the controlling person or
group of the amount owed to the shareholder or to the court, as appropriate, the
shareholder shall cease to have any interest in the shares.
2548 COORDINATION WITH CONTROL TRANSACTION. -- (a) General rule. -- A
person or group that proposes to engage in a control transaction may comply with
the requirements of this subchapter in connection with the control transaction,
and the effectiveness of the rights afforded in this subchapter to shareholders
may be conditioned upon the consummation of the control transaction.
(b) Notice. -- The person or group shall give prompt written notice of the
satisfaction of any such condition to each shareholder who has made demand as
provided in this subchapter.
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Facsimile copies of the Letter of Transmittal, properly completed and duly
executed, will be accepted. The Letter of Transmittal, certificates for Shares
and any other required documents should be sent or delivered by each shareholder
of the Company or his broker, dealer, commercial bank, trust company or other
nominee to the Depositary, at the applicable address set forth below:
The Depositary for the Offer is:
AMERICAN STOCK TRANSFER AND TRUST COMPANY
Attention: Reorganization Department
000-000-0000
By Mail: By Hand: By Hand or Overnight Courier:
00 Xxxx Xxxxxx 00 Xxxx Xxxxxx 00 Xxxx Xxxxxx
46th Floor 46th Floor 46th Floor
New York, New York 00000 Xxx Xxxx, Xxx Xxxx 00000 Xxx Xxxx, Xxx Xxxx 00000
Any questions or requests for assistance or additional copies of this Offer
to Purchase, the Letter of Transmittal, the Notice of Guaranteed Delivery and
the other tender offer materials may be directed to the Information Agent at the
address and telephone number set forth below. Shareholders may also contact
their broker, dealer, commercial bank, trust company or other nominee for
assistance concerning the Offer.
The Information Agent for the Offer is:
X.X. Xxxx & Co., Inc.
00 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Banks and Brokers Call Collect: (000) 000-0000
All Others Call Toll-Free: 0-000-000-0000
The Dealer Manager for the Offer is:
TM CAPITAL CORP
One Battery Park Xxxxx, 00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
(000) 000-0000
(Call Collect)
