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SCHEDULE 14A
(RULE 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES
EXCHANGE ACT OF 1934
(AMENDMENT NO. 1)
Filed by the registrant [X]
Filed by a party other than the registrant [ ]
Check the appropriate box:
[X] Preliminary proxy statement. [ ] CONFIDENTIAL, FOR USE OF THE COMMISSION ONLY (AS
PERMITTED BY RULE 14a-6(e)(2)).
[ ] Definitive proxy statement.
[ ] Definitive additional materials.
[ ] Soliciting material pursuant to Rule 14a-11(c) or Rule 14a-12.
▇▇▇▇▇ INCORPORATED
(NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
(NAME OF PERSON(S) FILING PROXY STATEMENT IF OTHER THAN THE REGISTRANT)
Payment of filing fee (check the appropriate box):
[ ] No fee required.
[X] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
(1) Title of each class of securities to which transaction applies:
Common Stock, $0.10 par value
(2) Aggregate number of securities to which transaction applies:
20,435,353
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
filing fee is calculated and state how it was determined):
The filing fee was determined based upon the product of (a) the
17,880,311 shares of common stock, par value $0.10 per share, proposed
to be acquired by the acquiror (which does not include the minimum of
2,555,042 shares which will be owned by the acquiror prior to the
merger), and (b) the merger consideration of $11.25 per share of common
stock, plus $5,036,707.62 payable to holders of options and warrants to
purchase shares of common stock in exchange for the cancellation of such
options and warrants (the "Total Consideration"). The payment of the
filing fee, calculated in accordance with Regulation 240.0-11 under the
Securities Exchange Act of 1934, as amended, equals one-fiftieth of one
percent of the Total Consideration.
(4) Proposed maximum aggregate value of transaction:
$206,190,206.62
(5) Total fee paid:
$41,238.04
[ ] Fee paid previously with preliminary materials.
[X] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the form or schedule and the date of its filing.
(1) Amount Previously Paid:
$41,276.55
(2) Form, Schedule or Registration Statement No.:
Schedule 13E-3
(3) Filing Party:
▇▇▇▇▇ Incorporated, Saw Mill Capital Fund II, L.P., Calendar Holdings,
Inc., Calendar Acquisition Corp., ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ and ▇▇▇▇ Train
(4) Date Filed:
March 24, 2000
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▇▇▇▇▇ INCORPORATED
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
May , 2000
TO THE SHAREHOLDERS OF ▇▇▇▇▇ INCORPORATED:
The Board of Directors of ▇▇▇▇▇ Incorporated (the "Company") cordially
invites you to attend the Annual Meeting of the Shareholders of the Company to
be held on , 2000 at 10:00 a.m., local time, at , ▇▇▇▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, and at any adjournment or postponement thereof (the "Annual
Meeting").
At the Annual Meeting, you will be asked to consider and vote on a proposal
to approve and adopt the Agreement and Plan of Merger, dated as of January 30,
2000, as amended (the "Merger Agreement"), by and among the Company, Saw Mill
Capital Fund II, L.P., a Delaware limited partnership ("Saw Mill"), Calendar
Holdings, Inc., a Delaware corporation and a wholly owned subsidiary of Saw Mill
("Parent"), Calendar Acquisition Corp., a Wisconsin corporation and a wholly
owned subsidiary of Parent ("Merger Sub"), ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ and ▇▇▇▇ Train (the
Chairman and Chief Executive Officer of the Company, respectively, and
collectively the "Management Shareholders"), as it may be amended from time to
time, which provides for the merger of Merger Sub with and into the Company,
with the Company as the surviving corporation (the "Merger").
If the Merger is approved, each outstanding share of the Company's $0.10
par value common stock (the "Common Stock") other than Common Stock owned by the
Company or its subsidiaries or by Merger Sub and Common Stock owned by
shareholders who have perfected their dissenters' rights in accordance with
Wisconsin law, will be converted into the right to receive $11.25 in cash
without interest (the "Merger Consideration"), and each outstanding option to
acquire a share of Common Stock will be converted into the right to receive an
amount per share equal to the Merger Consideration minus the exercise price per
share for each such option, without interest. The Merger and the Merger
Agreement are each described in the accompanying Proxy Statement and a copy of
the Merger Agreement is attached as ANNEX A to the Proxy Statement. The
Wisconsin dissenters' rights laws are described in the accompanying Proxy
Statement and a complete copy of such laws is attached as ANNEX C to the Proxy
Statement. Please read all of these materials carefully.
Because the Management Shareholders are each members of the Company's Board
of Directors and will retain a continuing ownership interest in the Company
following the Merger, the Board of Directors appointed a special committee of
the Board of Directors (the "Special Committee"), consisting of four members of
the Board of Directors who are not employees of the Company and who are not
affiliated with Saw Mill, to negotiate the Merger Agreement on behalf of the
Company, to consider the fairness of the proposed Merger to the Company and its
shareholders other than the Management Shareholders, Saw Mill, Parent, Merger
Sub and their respective affiliates (collectively, the "Public Shareholders"),
and to recommend to the full Board of Directors whether to proceed with the
proposed Merger. In connection with its review and consideration of the proposed
Merger, the Special Committee retained ▇▇▇▇▇▇ Brothers Inc. to act as its
independent financial advisor and ▇▇▇▇▇▇▇ ▇▇▇▇ & ▇▇▇▇▇▇▇▇▇ LLP to act as its
independent legal advisor. On January 29, 2000, ▇▇▇▇▇▇ Brothers Inc. delivered
its oral opinion, which was subsequently confirmed in writing, to the Special
Committee to the effect that, as of the date of its opinion, the Merger
Consideration of $11.25 in cash per share of Common Stock to be received in the
Merger by the Public Shareholders is fair to those shareholders from a financial
point of view. A copy of the opinion of ▇▇▇▇▇▇ Brothers Inc. is attached as
ANNEX B to, and a description of its opinion is included in, the accompanying
Proxy Statement.
THE SPECIAL COMMITTEE HAS UNANIMOUSLY RECOMMENDED THE MERGER TO THE BOARD
OF DIRECTORS AS BEING FAIR TO, AND IN THE BEST INTERESTS OF, THE COMPANY AND THE
PUBLIC SHAREHOLDERS. Based upon this recommendation, the Board of Directors has
approved the Merger Agreement and has determined that the Merger, the Merger
Agreement and the Merger Consideration, are fair to, and in the best interests
of, the Company and the Public Shareholders. Accordingly, the Board of Directors
recommends that the
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shareholders of the Company vote "FOR" the approval and adoption of the Merger
Agreement at the Annual Meeting.
Generally, the receipt of the Merger Consideration in exchange for shares
of Common Stock will be a taxable transaction to the Company's shareholders for
federal income tax purposes under the Internal Revenue Code of 1986, as amended,
and may also be a taxable transaction under applicable state, local, foreign and
other tax laws.
Approval and adoption of the Merger Agreement requires the affirmative vote
of the holders of a majority the outstanding shares of Common Stock in
accordance with applicable Wisconsin law. Under a voting agreement, the
Management Shareholders and certain of their affiliates have granted an
irrevocable proxy to Merger Sub which permits Merger Sub to vote all shares of
Common Stock owned by the Management Shareholders and such affiliates
(representing approximately 37.6% of the outstanding shares of Common Stock), in
favor of the adoption and approval of the Merger Agreement and the Merger.
At the Annual Meeting, you will also be asked to consider and vote on the
election of directors and to ratify the appointment of the accounting firm of
PricewaterhouseCoopers LLP as independent auditors of the Company. The election
of each nominee for director requires the affirmative vote of a majority of the
votes represented at the Annual Meeting at which a quorum is present. The Board
of Directors recommends that shareholders of the Company vote "FOR" each nominee
for election to the Board of Directors. The appointment of independent auditors
is not required to be submitted to a vote of shareholders; however, the Board of
Directors believes it appropriate as a matter of policy to request that the
shareholders ratify the appointment. If shareholder ratification is not
received, the Board of Directors will reconsider the appointment. The
ratification of independent auditors requires the affirmative vote of a majority
of the votes represented at the Annual Meeting at which a quorum is present. The
Board of Directors recommends that shareholders of the Company vote "FOR" the
ratification of the appointment of independent auditors of the Company.
ATTACHED IS A NOTICE OF THE ANNUAL MEETING OF SHAREHOLDERS AND A PROXY
STATEMENT CONTAINING A DISCUSSION OF THE BACKGROUND OF, REASONS FOR, AND TERMS
OF THE MERGER. WE URGE YOU TO READ AND CAREFULLY CONSIDER THE INFORMATION
PRESENTED IN THE ACCOMPANYING PROXY STATEMENT. WHETHER OR NOT YOU PLAN TO ATTEND
THE ANNUAL MEETING IN PERSON AND REGARDLESS OF THE NUMBER OF SHARES OF COMMON
STOCK YOU OWN, PLEASE COMPLETE, SIGN, DATE AND RETURN THE ENCLOSED PROXY CARD
PROMPTLY. IF YOU ATTEND THE ANNUAL MEETING, YOU MAY VOTE YOUR SHARES OF COMMON
STOCK PERSONALLY WHETHER OR NOT YOU HAVE PREVIOUSLY SUBMITTED A PROXY.
Very truly yours,
▇▇▇▇ Train
Chief Executive Officer
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▇▇▇▇▇ INCORPORATED
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
NOTICE OF THE ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON , 2000
May , 2000
TO THE SHAREHOLDERS OF ▇▇▇▇▇ INCORPORATED:
NOTICE IS HEREBY GIVEN that the Annual Meeting of Shareholders of ▇▇▇▇▇
Incorporated (the "Company") will be held on , 2000 at 10:00 a.m.,
local time, at , ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, and at any adjournment or
postponement thereof (the "Annual Meeting") for the following purposes:
1. To consider and vote on a proposal to approve and adopt the Agreement
and Plan of Merger, dated as of January 30, 2000, as amended (the "Merger
Agreement"), by and among the Company, Saw Mill Capital Fund II, L.P., a
Delaware limited partnership ("Saw Mill"), Calendar Holdings, Inc., a Delaware
corporation and a wholly owned subsidiary of Saw Mill ("Parent"), Calendar
Acquisition Corp., a Wisconsin corporation and a wholly owned subsidiary of
Parent ("Merger Sub"), ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ and ▇▇▇▇ Train (the Chairman and Chief
Executive Officer of the Company, respectively, and collectively the "Management
Shareholders"), as it may be amended from time to time, which, among other
things, provides for (a) the merger of Merger Sub with and into the Company,
with the Company as the surviving corporation (the "Merger"), and (b) the
conversion in the Merger of each outstanding share of common stock, par value
$0.10 per share (the "Common Stock") of the Company (other than (i) Common Stock
owned by the Company or its subsidiaries, (ii) Common Stock owned by Merger Sub
(including 2,437,262 shares of Common Stock currently owned by the Management
Shareholders to be contributed to Parent prior to the Merger) and (iii) Common
Stock owned by shareholders who have perfected their dissenters' rights in
accordance with Wisconsin law) into the right to receive $11.25 in cash without
interest (the "Merger Consideration"). A copy of the Merger Agreement is
attached as ANNEX A to the accompanying Proxy Statement and is incorporated into
this Notice by reference.
2. To elect a Board of Directors to hold office until the next Annual
Meeting of Shareholders or until their respective successors have been elected
or appointed.
3. To ratify the appointment of the accounting firm of
PricewaterhouseCoopers LLP as independent auditors of the Company for its fiscal
year 2000.
4. To consider any other matters that may properly be brought before the
Annual Meeting or any adjournment(s) or postponement(s) thereof.
THE BOARD OF DIRECTORS, AFTER RECEIVING THE UNANIMOUS RECOMMENDATION OF A
SPECIAL COMMITTEE OF INDEPENDENT DIRECTORS, HAS APPROVED THE MERGER AGREEMENT
AND HAS DETERMINED THAT THE MERGER AGREEMENT, THE MERGER AND THE MERGER
CONSIDERATION ARE FAIR TO, AND IN THE BEST INTERESTS OF, THE COMPANY AND ITS
SHAREHOLDERS OTHER THAN THE MANAGEMENT SHAREHOLDERS, SAW MILL, PARENT, MERGER
SUB AND THEIR RESPECTIVE AFFILIATES. THE BOARD OF DIRECTORS RECOMMENDS THAT THE
SHAREHOLDERS OF THE COMPANY VOTE "FOR" THE APPROVAL AND ADOPTION OF THE MERGER
AGREEMENT AT THE ANNUAL MEETING. In addition, the Board of Directors recommends
that the shareholders of the Company vote "FOR" all nominees for the Board of
Directors and "FOR" the ratification of PricewaterhouseCoopers LLP as the
Company's independent auditors.
Shareholders and beneficial shareholders who do not wish to accept the
Merger Consideration and who properly perfect dissenters' rights under Wisconsin
law are entitled to have a court determine the fair value of their shares. A
copy of the relevant provisions of Wisconsin law are attached as ANNEX C to the
accompanying Proxy Statement. These dissenters' rights are subject to a number
of restrictions and technical requirements described in ANNEX C and the attached
Proxy Statement.
Approval and adoption of the Merger Agreement requires the affirmative vote
of the holders of a majority of the outstanding shares of Common Stock in
accordance with Wisconsin law. The election of each nominee
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for director and the ratification of the appointment of independent auditors
each requires the affirmative vote of a majority of the votes represented at the
Annual Meeting at which a quorum is present. Only shareholders of record at the
close of business on , 2000 are entitled to notice of, and to vote at,
the Annual Meeting. During the ten day period prior to the Annual Meeting, any
shareholder may examine a list of the Company's shareholders of record, for any
purpose related to the Annual Meeting, during ordinary business hours at the
offices of the Company at ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇.
WE CANNOT COMPLETE THE MERGER UNLESS THE HOLDERS OF A MAJORITY OF THE
OUTSTANDING SHARES OF COMMON STOCK VOTE TO APPROVE THE MERGER AGREEMENT AT THE
ANNUAL MEETING. YOUR VOTE IS VERY IMPORTANT.
WE URGE YOU TO READ AND CAREFULLY CONSIDER THE INFORMATION PRESENTED IN THE
ACCOMPANYING PROXY STATEMENT. WHETHER OR NOT YOU PLAN TO ATTEND THE ANNUAL
MEETING IN PERSON AND REGARDLESS OF THE NUMBER OF SHARES OF COMMON STOCK YOU
OWN, PLEASE COMPLETE, SIGN, DATE AND RETURN THE ENCLOSED PROXY CARD PROMPTLY. IF
YOU ATTEND THE ANNUAL MEETING, YOU MAY VOTE YOUR SHARES OF COMMON STOCK
PERSONALLY WHETHER OR NOT YOU HAVE PREVIOUSLY SUBMITTED A PROXY.
By Order of the Board of Directors,
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Chairman
PLEASE DO NOT SEND ANY STOCK CERTIFICATES AT THIS TIME. YOU WILL RECEIVE
INSTRUCTIONS REGARDING THE SURRENDER OF YOUR STOCK CERTIFICATES AND RECEIPT OF
PAYMENT FOR YOUR SHARES OF COMMON STOCK AFTER THE MERGER HAS BEEN APPROVED AND
BECOMES EFFECTIVE.
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THE INFORMATION IN THIS PRELIMINARY PROXY STATEMENT
DATED MAY 10, 2000, WILL BE AMENDED OR COMPLETED
▇▇▇▇▇ INCORPORATED
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
MERGER PROPOSED -- YOUR VOTE IS IMPORTANT
PROXY STATEMENT FOR ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON , 2000
This Proxy Statement is being furnished to the holders of Common Stock, par
value $0.10 per share (the "Common Stock"), of ▇▇▇▇▇ Incorporated (the
"Company"), in connection with the solicitation of proxies by the Board of
Directors of the Company for use at the Annual Meeting of Shareholders of the
Company to be held on , 2000 at 10:00 a.m., local time, at
, ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, and at any adjournment or postponement
thereof (the "Annual Meeting").
At the Annual Meeting, shareholders of the Company will consider a proposal
to approve and adopt the Agreement and Plan of Merger, dated as of January 30,
2000, as amended (the "Merger Agreement"), by and among the Company, Saw Mill
Capital Fund II, L.P., a Delaware limited partnership ("Saw Mill"), Calendar
Holdings, Inc., a Delaware corporation and a wholly owned subsidiary of Saw Mill
("Parent"), Calendar Acquisition Corp., a Wisconsin corporation and a wholly
owned subsidiary of Parent ("Merger Sub"), ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ and ▇▇▇▇ Train (the
Chairman and Chief Executive Officer of the Company, respectively, and
collectively the "Management Shareholders"), as it may be amended from time to
time, providing for the merger of Merger Sub with and into the Company (the
"Merger"), with the Company as the surviving corporation (the "Surviving
Corporation"). The Merger Agreement is attached as ANNEX A to this Proxy
Statement.
The Merger will be completed on the terms and subject to the conditions set
forth in the Merger Agreement, as a result of which at the effective time of the
Merger (the "Effective Time"): (a) Merger Sub will be merged with and into the
Company and the separate existence of Merger Sub will cease; (b) the Company
will become a privately held corporation; (c) the Board of Directors of Merger
Sub will replace the Board of Directors of the Company; (d) each share of Common
Stock other than (i) Common Stock owned by the Company or its subsidiaries, (ii)
Common Stock owned by Merger Sub (including 2,437,262 shares of Common Stock
currently owned by the Management Shareholders to be contributed to Parent prior
to the Merger) and (iii) Common Stock owned by shareholders who have perfected
their dissenters' rights in accordance with Wisconsin law (collectively,
"Dissenting Shares"), will be converted into the right to receive $11.25 in cash
without interest (the "Merger Consideration"); and (e) each outstanding option
to acquire a share of Common Stock will be converted into the right to receive
an amount per share equal to the Merger Consideration minus the exercise price
per share for each such option, without interest (the "Option Consideration").
A majority of the outstanding shares of Common Stock must be voted in favor
of the Merger Agreement for the Merger Agreement and the Merger to be approved.
Under the Merger Agreement, Saw Mill, Parent and Merger Sub have agreed to vote
all shares of Common Stock beneficially owned by them, or with respect to which
they have the power, by agreement, proxy or otherwise, to cause to be voted, in
favor of the approval and adoption of the Merger Agreement and the Merger. In
addition, under a voting agreement, the Management Shareholders and certain of
their affiliates have granted an irrevocable proxy to Merger Sub which permits
Merger Sub to vote all shares of Common Stock owned by the Management
Shareholders and such affiliates (representing approximately 37.6% of the
outstanding shares of Common Stock), in favor of the adoption and approval of
the Merger Agreement and the Merger. Consequently, after taking into account the
Common Stock to be contributed to Merger Sub and the shares over which Merger
Sub has voting power
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under the Voting Agreement, Merger Sub will have voting power over shares
representing approximately 38.2% of the outstanding shares of Common Stock as of
the date of the Annual Meeting.
THE BOARD OF DIRECTORS, AFTER RECEIVING THE UNANIMOUS RECOMMENDATION OF A
SPECIAL COMMITTEE OF INDEPENDENT DIRECTORS, HAS APPROVED THE MERGER AGREEMENT
AND THE MERGER, AND HAS DETERMINED THAT THE MERGER AGREEMENT AND THE MERGER ARE
FAIR TO, AND IN THE BEST INTERESTS OF, THE COMPANY'S SHAREHOLDERS OTHER THAN
MERGER SUB, PARENT, SAW MILL, THE MANAGEMENT SHAREHOLDERS AND THEIR RESPECTIVE
AFFILIATES (COLLECTIVELY, THE "PUBLIC SHAREHOLDERS"). THE BOARD OF DIRECTORS
RECOMMENDS THAT THE SHAREHOLDERS OF THE COMPANY VOTE "FOR" THE APPROVAL AND
ADOPTION OF THE MERGER AGREEMENT AT THE ANNUAL MEETING. SEE "SPECIAL
FACTORS -- REASONS FOR THE MERGER; FAIRNESS OF THE MERGER."
At the Annual Meeting, you will also be asked to consider and vote on the
election of directors and to ratify the appointment of independent auditors of
the Company. The election of each nominee for director requires the affirmative
vote of a majority of the votes represented at the Annual Meeting at which a
quorum is present. The Board of Directors recommends that shareholders of the
Company vote "FOR" each nominee for election to the Board of Directors. The
appointment of independent auditors is not required to be submitted to a vote of
shareholders; however, the Board of Directors believes it appropriate as a
matter of policy to request that the shareholders ratify the appointment. If
shareholder ratification is not received, the Board of Directors will reconsider
the appointment. The ratification of independent auditors requires the
affirmative vote of a majority of the votes represented at the Annual Meeting at
which a quorum is present. The Board of Directors recommends that shareholders
of the Company vote "FOR" the ratification of the appointment of independent
auditors of the Company.
Shares of Common Stock are listed and traded on The Nasdaq National Market
("NASDAQ") under the symbol "JASN". On January 28, 2000, the last trading day
prior to the public announcement of the execution of the Merger Agreement, the
reported closing price of Common Stock on NASDAQ was $7.125 per share. On May
, 2000, the last trading day prior to the date of this Proxy Statement, the
reported closing price of Common Stock on NASDAQ was $ per share.
As used in this Proxy Statement, unless the context otherwise requires, the
term "the Company" refers to ▇▇▇▇▇ Incorporated and its subsidiaries. All
information regarding the Company and its subsidiaries in this Proxy Statement
has been supplied by the Company and not the Special Committee (as defined
herein). All information regarding Saw Mill, Parent and Merger Sub in this Proxy
Statement has been supplied by Saw Mill. All information regarding the
Management Shareholders has been supplied by the Management Shareholders.
This Proxy Statement and the accompanying form of proxy are first being
sent or given to shareholders of the Company on or about May , 2000.
NEITHER THE SECURITIES AND EXCHANGE COMMISSION (THE "COMMISSION") NOR ANY
STATE SECURITIES COMMISSION HAS APPROVED OR DISAPPROVED OF THE TRANSACTIONS
DESCRIBED HEREIN OR PASSED UPON THE FAIRNESS OR MERITS OF SUCH TRANSACTIONS OR
UPON THE ACCURACY OR ADEQUACY OF THE INFORMATION CONTAINED IN THIS DOCUMENT. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
YOU SHOULD RELY ONLY ON THE INFORMATION CONTAINED IN THIS DOCUMENT OR OTHER
DOCUMENTS TO WHICH WE HAVE REFERRED YOU. WE HAVE NOT AUTHORIZED ANYONE TO
PROVIDE YOU WITH INFORMATION THAT IS DIFFERENT.
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TABLE OF CONTENTS
PAGE
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INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE............. 5
FORWARD-LOOKING STATEMENTS.................................. 5
SUMMARY..................................................... 5
SELECTED CONSOLIDATED FINANCIAL DATA OF THE COMPANY......... 13
THE ANNUAL MEETING.......................................... 14
Purpose................................................... 14
Record Date; Voting Rights................................ 14
Required Vote............................................. 14
Proxies................................................... 15
PROPOSAL 1: MERGER OF THE COMPANY AND MERGER SUB............ 15
PARTIES TO THE MERGER....................................... 15
The Company............................................... ▇▇
▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇ and Merger Sub........................... 17
The Management Shareholders............................... 18
Past Transactions between the Company and Saw Mill........ 18
SPECIAL FACTORS............................................. 18
Purpose and Effects of the Merger......................... 18
Reasons for the Merger; Fairness of the Merger............ 19
Benefits and Detriments of the Merger to the Company, the
Management Shareholders and Public Shareholders........ 24
Reports, Opinions and Appraisals.......................... 26
Opinion of the Independent Financial Advisor to the
Special Committee...................................... 26
Accounting Treatment of the Merger........................ 33
Certain Tax Consequences of the Merger.................... 33
THE MERGER.................................................. 34
Merger Consideration; Cancellation of Common Stock........ 34
Background of the Merger.................................. 34
Recommendation of the Special Committee and the Board of
Directors.............................................. 38
Required Regulatory Approvals............................. 39
Interests of Certain Persons in the Merger................ 39
Financing for the Merger.................................. 42
Fees and Expenses......................................... 46
Conduct of the Company's Business if the Merger is Not
Completed.............................................. 47
Plans for the Company After the Merger.................... 47
Certain Projections of Future Operating Results........... 47
Legal Proceedings......................................... 48
RIGHTS OF DISSENTING SHAREHOLDERS........................... 48
THE MERGER AGREEMENT........................................ 50
General................................................... 50
Payment for Shares........................................ 50
Treatment of Company Stock Options........................ 51
Directors and Officers.................................... 51
Articles of Incorporation and By-laws..................... 51
Representations and Warranties............................ 51
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PAGE
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Vote of Saw Mill, Parent and Merger Sub................... 52
Third Party Transactions; Fiduciary Responsibilities...... 52
Indemnification and Insurance............................. 53
State Takeover Laws....................................... 53
Cooperation with Financing................................ 53
Equity Securities of the Company.......................... 54
Conduct of Business Pending the Merger.................... 54
Conditions to the Merger.................................. 55
Termination............................................... 56
Fees, Expenses and Other Payments......................... 57
PROPOSAL 2: ELECTION OF DIRECTORS........................... 58
Committees................................................ 58
Nominees for Election as Directors........................ 59
EXECUTIVE OFFICERS.......................................... 60
EXECUTIVE COMPENSATION...................................... 61
STOCK OPTIONS............................................... 62
COMPENSATION COMMITTEE REPORT............................... 62
STOCK PERFORMANCE........................................... 64
SECURITY OWNERSHIP.......................................... 64
PROPOSAL 3: RATIFICATION OF INDEPENDENT AUDITORS............ 66
SHAREHOLDER PROPOSALS FOR 2001 ANNUAL MEETING............... 66
INDEPENDENT PUBLIC ACCOUNTANTS.............................. 67
OTHER MATTERS............................................... 67
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE..... 67
PERSONS MAKING THE SOLICITATION; EXPENSES OF SOLICITATION... 67
ANNUAL REPORT............................................... 67
PROVISIONS FOR UNAFFILIATED SECURITY HOLDERS................ 67
ANNEX A -- AGREEMENT AND PLAN OF MERGER, AS AMENDED.........
ANNEX B -- OPINION OF ▇▇▇▇▇▇ BROTHERS INC. .................
ANNEX C -- WISCONSIN DISSENTERS' RIGHTS STATUTES............
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INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The Company incorporates by reference herein the following documents
previously filed by it with the Commission pursuant to the Securities Exchange
Act of 1934, and the rules and regulations promulgated thereunder (collectively,
the "Exchange Act"):
COMMISSION FILINGS PERIOD
------------------ ------
Annual Report on Form 10-K............... Year ended December 31, 1999
Current Report on Form 8-K............... January 30, 2000
All documents filed by the Company pursuant to Sections 13(a), 13(c), 14 or
15(d) of the Exchange Act after the date of this Proxy Statement and prior to
the date of the Annual Meeting shall be deemed to be incorporated by reference
in this Proxy Statement and to be a part of this Proxy Statement from the date
of filing of such documents. Copies of the documents incorporated by reference
in this Proxy Statement without exhibits are available without charge upon
written or oral request from the Corporate Secretary, ▇▇▇▇▇ Incorporated, ▇▇▇
▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, (telephone (414)
▇▇▇-▇▇▇▇). To obtain timely delivery, requests for copies should be made no
later than , 2000 (five business days before the date of the Annual
Meeting).
FORWARD-LOOKING STATEMENTS
When used in this Proxy Statement or in documents incorporated by reference
herein with respect to the Company, the words "estimate," "project," "intend,"
"expect" and similar expressions are intended to identify forward-looking
statements. Readers are cautioned not to place undue reliance on these
forward-looking statements, which speak only as of the date of this Proxy
Statement or as of the date of such other documents. Actual results may differ
materially from those contemplated in forward-looking statements and
projections. Important assumptions and factors that could cause actual results
to differ materially from those contemplated, projected, forecasted, estimated
or budgeted in, or expressed or implied by, projections and forward-looking
statements include industry trends, currency fluctuations, government fiscal and
monetary policy, the success of new product introductions, general economic and
business conditions in the markets the Company serves and actions of competitors
which may affect the Company's ability to obtain orders and the ability of the
Company to implement its plans. Other factors and assumptions not identified
above were also involved in the derivation of these forward-looking statements,
and the failure of such other assumptions to be realized, as well as other
factors, may also cause actual results to differ materially from those
projected. The Company assumes no obligation to update such forward-looking
statements or any projections to reflect actual results, changes in assumptions
or changes in other factors affecting such forward-looking statements.
SUMMARY
The following is a summary of some of the information in the Proxy
Statement. It is not meant to be comprehensive and does not contain all the
information that is important to you. We have included page references to direct
you to more complete information in the document. You should carefully read the
entire Proxy Statement and the other documents to which this Proxy Statement
refers to fully understand the merger and its consequences.
THE MERGER (See page 34) -- Calendar Holdings, Inc. will acquire ▇▇▇▇▇
Incorporated by merging its wholly owned
subsidiary, Calendar Acquisition Corp., into
▇▇▇▇▇. Calendar Holdings Inc. is referred to as
"Parent" and Calendar Acquisition Corp. as
"Merger Sub" throughout this proxy statement.
▇▇▇▇▇ will be the surviving corporation in the
merger and will be a wholly owned subsidiary of
Parent. Immediately after the Merger is
completed, Saw Mill Capital Fund II, L.P. will
own approximately 50% of the common stock of
Parent, on a fully diluted basis (which
percentage may be reduced as a result of the
issuance of warrants to providers of financing
for the merger), and ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ and ▇▇▇▇
Train, who are the Chairman and Chief Executive
Officer,
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respectively, of ▇▇▇▇▇ (and who we refer to throughout the Proxy Statement as
the "Management Shareholders") will own, in the aggregate, approximately 35% of
the common stock of Calendar Holdings, on a fully diluted basis (which
percentage may be reduced as a result of the
issuance of warrants to providers of financing
for the merger. On the date of this Proxy
Statement, Merger Sub owns less than 1%, and the
Management Shareholders and their affiliates own
approximately 37.6%, of the common stock of
▇▇▇▇▇. Below is a diagram of the merger which
indicates the relative ownership percentages, on
a fully diluted basis, of ▇▇▇▇▇ as of the date
of this Proxy Statement and immediately after
the merger.
OWNERSHIP PERCENTAGES AS OF THE DATE OF THIS PROXY STATEMENT
OWNERSHIP PERCENTAGES PROXY STATEMENT TABLE
OWNERSHIP PERCENTAGES AS OF IMMEDIATELY AFTER THE MERGER
OWNERSHIP PERCENTAGES MERGER TABLE
* These percentages may be reduced as a result of the issuance of warrants to
providers of financing for the Merger.
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WHY THE BOARD OF DIRECTORS
RECOMMENDS THAT YOU VOTE
FOR THE MERGER AGREEMENT
(See pages 22 and 38) -- THE BOARD OF DIRECTORS RECOMMENDS YOU VOTE IN
FAVOR OF THE MERGER AGREEMENT. In the opinion of
the board of directors, based upon the unanimous
recommendation of the special committee, the
terms and provisions of the merger agreement and
the proposed merger are fair to and in the best
interests of Jason's shareholders (other than
Saw Mill, the Management Shareholders and each
of their respective affiliates). THE BOARD OF
DIRECTORS HAS ACCORDINGLY RECOMMENDED THAT
SHAREHOLDERS VOTE "FOR" APPROVAL OF THE MERGER
AGREEMENT.
VOTE REQUIRED TO APPROVE
THE MERGER AGREEMENT (See
page 14) -- The holders of a majority of the outstanding
shares of Jason's common stock must vote to
approve the merger agreement. Saw Mill and the
Management Shareholders currently beneficially
own a total of approximately 38.2% of Jason's
common stock. The Management Shareholders have
authorized Saw Mill to vote their shares in
favor of the merger agreement. IF YOU DO NOT
VOTE YOUR SHARES, THE EFFECT WILL BE A VOTE
AGAINST THE MERGER. THE BOARD OF DIRECTORS, WITH
THE MANAGEMENT SHAREHOLDERS ABSTAINING,
UNANIMOUSLY RECOMMENDS VOTING "FOR" THE MERGER.
SAW MILL (See page 17) -- Saw Mill is a Delaware limited partnership. It
was formed for the purpose of providing a
portion of the financing for the merger.
PARENT AND MERGER SUB (See
page 17) -- Parent and Merger Sub are subsidiaries of Saw
Mill formed for the purpose of completing the
merger. Merger Sub will merge into ▇▇▇▇▇ in the
Merger and will cease to exist. Following the
Merger, Parent will hold 100% of the outstanding
common stock of ▇▇▇▇▇.
OPINION OF FINANCIAL
ADVISOR (See page 26) -- A special committee of Jason's Board of
Directors received a written opinion from ▇▇▇▇▇▇
Brothers. The written opinion states that the
merger consideration, as of January 29, 2000,
was fair from a financial point of view to the
holders of ▇▇▇▇▇ common stock, other than Saw
Mill, the Management Shareholders and their
respective affiliates.
WHAT YOU WILL RECEIVE IN
THE MERGER (See pages 1 and
34) -- Shareholders of ▇▇▇▇▇ (other than ▇▇▇▇▇ itself,
Merger Sub and shareholders who perfect their
dissenters' rights) will be entitled to receive
$11.25 in cash, without interest, for each share
of Jason's common stock. If you own stock
options of ▇▇▇▇▇, you will be entitled to
receive, for each stock option, the difference
between $11.25 and the exercise price of each
stock option, without interest, regardless of
whether the option is fully vested.
LOCATION, DATE AND TIME OF
ANNUAL MEETING (See page
14) -- The annual meeting will be on , 2000
at 10:00 a.m. local time at
Milwaukee, Wisconsin. If the meeting is
adjourned for any reason, we will give you
notice of the new date and time.
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PURPOSE OF THE MERGER (See
page 14) -- The purpose of the merger is to allow Saw Mill
and the Management Shareholders to acquire
▇▇▇▇▇. If the merger is completed, ▇▇▇▇▇ common
stock will cease to be publicly traded and
holders of common stock (other than ▇▇▇▇▇
itself, Merger Sub and shareholders who perfect
their dissenter's rights described elsewhere in
this Proxy Statement) will receive $11.25 in
cash per share.
INTEREST OF MANAGEMENT
SHAREHOLDERS (See page
39) -- The Management Shareholders have interests in
the merger that are different from your
interests as a shareholder. Collectively, the
Management Shareholders now beneficially own
7,687,812 shares of ▇▇▇▇▇ common stock
representing approximately 37.6% of the
outstanding common stock. In connection with the
merger, the Management Shareholders will
contribute a total of 2,437,262 shares of common
stock valued at an aggregate average of $10.13
per share to Parent in exchange for shares of
Parent. In exchange for their remaining
5,250,550 shares of ▇▇▇▇▇ common stock, the
Management Shareholders will receive the cash
consideration of $11.25 per share resulting in
an aggregate average value of approximately
$10.90 per share in cash and stock being
received by the Management Shareholders for
their shares of ▇▇▇▇▇ common stock in connection
with the Merger. The Management Shareholders
also will continue to serve in their positions
as executive officers of ▇▇▇▇▇ after the merger
and will enter into new employment agreements
with the surviving corporation. The Management
Shareholders have agreed to allow Saw Mill to
vote their shares in favor of the Merger.
INTEREST OF MEMBERS OF THE
SPECIAL COMMITTEE (See
page 40) -- The members of the special committee, which was
established to evaluate and negotiate the
merger, own shares of ▇▇▇▇▇ common stock and
options to acquire ▇▇▇▇▇ common stock. The
treatment of ▇▇▇▇▇ common stock and options
owned by members of this special committee is
identical to the treatment of ▇▇▇▇▇ common stock
and options owned by the other Public
Shareholders. If the merger is completed, the
members of this special committee will be
entitled to receive, in the aggregate,
$2,303,831 for their shares of ▇▇▇▇▇ common
stock and $484,073 for their options to acquire
▇▇▇▇▇ common stock.
CONDITIONS OF THE MERGER
(See page 55) -- A number of conditions must be satisfied before
any of the parties is obligated to complete the
merger, including:
- the merger must be approved by the holders of
a majority of the outstanding shares of ▇▇▇▇▇
common stock; and
- there must be no legal or judicial restraints
or prohibitions preventing completion of the
merger.
-- Additional conditions must be satisfied or
waived before either Saw Mill, Parent or Merger
Sub is obligated to complete the merger,
including:
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- The funding of the debt and equity financings
described in the Proxy Statement must have
occurred. This funding is subject to a number
of material conditions different than those
in the merger agreement;
- ▇▇▇▇▇ must have performed or complied with
all of its obligations and covenants set
forth in the merger agreement except where
failure to do so would not have a material
adverse effect on ▇▇▇▇▇;
- The representations and warranties made by
▇▇▇▇▇ in the merger agreement must be true
and correct except where the failure to be
true and correct would not have a material
adverse effect on ▇▇▇▇▇;
- Since December 31, 1998 no event shall have
occurred which would reasonably be expected
to have a material adverse effect on ▇▇▇▇▇;
and
- The shares held by shareholders who exercise
dissenters' rights must not exceed 10% of the
outstanding shares of ▇▇▇▇▇ common stock.
-- Additional conditions must be satisfied or
waived before ▇▇▇▇▇ is obligated to complete the
merger, including:
- Parent, Merger Sub and Saw Mill must have
performed or complied in all material
respects with all of their respective
obligations and covenants set forth in the
merger agreement.
TERMINATION OF THE MERGER
AGREEMENT (See page 56) -- All parties may agree at any time (including any
time after the annual meeting) to terminate the
merger agreement. In addition, either ▇▇▇▇▇ or
Saw Mill indirectly through Merger Sub may
terminate the merger agreement if:
- the merger has not been completed by August
31, 2000;
- a final court order or other governmental
action prohibits the merger; or
- the shareholder approval required to complete
the merger is not obtained.
-- ▇▇▇▇▇ ▇▇▇ also terminate the merger agreement
if:
- Saw Mill, Parent or Merger Sub materially
breaches a representation, warranty, covenant
or obligation set forth in the merger
agreement and such breach is not or cannot be
cured; or
- the board of directors of ▇▇▇▇▇ recommends
accepting an acquisition proposal other than
the merger in accordance with merger
agreement.
-- Saw Mill indirectly through Merger Sub may also
terminate the merger agreement if:
- ▇▇▇▇▇ materially breaches a representation,
warranty, covenant or obligation set forth in
the merger agreement and such breach is not
or cannot be cured; or
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- the board of directors of ▇▇▇▇▇ withdraws or
adversely modifies its recommendation of the
merger agreement or recommends that ▇▇▇▇▇
shareholders approve an acquisition proposal
other than the merger.
ACQUISITION PROPOSALS (See
page 52) -- The merger agreement permits ▇▇▇▇▇ to provide
information to and engage in discussions and
negotiations with third parties who may be
interested in proposing a transaction with ▇▇▇▇▇
if ▇▇▇▇▇ receives a bona fide inquiry or
proposal from a third party and the special
committee concludes in good faith that such
party is financially capable and that it has a
fiduciary duty to provide such information or
engage in such discussions or negotiations. The
merger agreement also contains limitations on
such activities if no third party proposal or
inquiry is made.
FEES AND EXPENSES (See page
57) -- Under the circumstances described above, ▇▇▇▇▇
will pay Saw Mill a termination or "break up"
fee equal to $6.7 million less certain expenses.
This fee is payable if, among other things, the
merger agreement is terminated by ▇▇▇▇▇ or Saw
Mill, through Merger Sub, because the board of
directors of ▇▇▇▇▇, based on a recommendation of
the special committee, withdraws its
recommendation of the merger agreement or
recommends a proposal for another transaction as
set out in detail in the merger agreement. The
termination fee is also payable if the merger
agreement is terminated under certain
circumstances and a transaction similar to the
merger, which was disclosed prior to the
termination, is completed within nine months of
the termination date.
CONFLICTS OF INTEREST (See
pages 18 and 39) -- ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ and ▇▇▇▇ Train, two of the six
members of the board of directors, have a
conflict of interest in recommending approval of
the merger agreement. If the merger occurs, ▇▇.
▇▇▇▇▇▇ and Mr. Train, together with Saw Mill,
will indirectly own Jason's common stock
following the merger and as a result will
receive the benefit of any future earnings,
growth and increased value of ▇▇▇▇▇ while you
will no longer receive any such benefit. ▇▇.
▇▇▇▇▇▇ and Mr. Train will also continue to serve
as officers of ▇▇▇▇▇ after the merger. Because
of this conflict, ▇▇. ▇▇▇▇▇▇ and Mr. Train
abstained from voting for the merger.
Consequently, the board of directors'
recommendation is based on the unanimous
recommendation of the special committee of
non-employee directors, which did not have a
conflict of interest in making the
recommendation.
BOARD OF DIRECTORS' ACTION
TO ENSURE THE PRICE PER
SHARE YOU WILL RECEIVE IN
THE PROPOSED MERGER IS
FAIR (See pages 19 and
38) -- The board of directors formed a special
committee consisting of four non-employee
directors to evaluate and negotiate the terms of
the merger agreement with Saw Mill and the
Management Shareholders. The special committee
independently selected and retained legal and
financial advisors to assist it in the
negotiation. The special committee received an
opinion from its financial advisor, on which the
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special committee and the entire board of directors relied, that as of the date
of the opinion, the $11.25 per share you will receive in the proposed merger is
fair to you from a financial point of view. This fairness opinion does not
extend to the Management Shareholders, Saw Mill
or their affiliates.
ADVANTAGES OF THE MERGER TO
YOU (See pages 18 and 26) -- In the merger, you will receive a cash premium
for your ▇▇▇▇▇ common stock over the market
price when the proposed merger was announced.
The merger consideration of $11.25 per share
represents a premium of 57.9% over the closing
market price of ▇▇▇▇▇ common stock on January
28, 2000, the last trading day before the
proposed merger was announced. You also will not
bear the risk of any decrease in the value of
▇▇▇▇▇.
DISADVANTAGES OF THE MERGER
TO YOU (See pages 18 and
26) -- Following the proposed merger, you will no
longer own stock of ▇▇▇▇▇ and will no longer
benefit from any earnings or growth of ▇▇▇▇▇.
Also, you may recognize a taxable gain as a
result of the Merger.
WHAT TO DO NOW -- Please ▇▇▇▇ your vote on, sign, date and mail
your proxy card in the enclosed return envelope
as soon as possible, so that your shares may be
represented and voted at the annual meeting.
RIGHTS YOU HAVE IF YOU
OPPOSE THE MERGER (See page
48) -- Shareholders who do not vote in favor of the
merger may dissent and obtain the fair value of
their shares, but only if they strictly comply
with all of the Wisconsin law procedures
explained on pages 43 to 44 and in Annex C to
this Proxy Statement.
WHO MAY VOTE ON THE MERGER
(See page 14) -- All shareholders of record as of the close of
business on , 2000 will be entitled to
notice of, and to vote at, the annual meeting.
DON'T SEND YOUR STOCK
CERTIFICATES NOW -- Don't send in your stock certificates now. After
the merger is completed, we will send you a
transmittal form and written instructions for
exchanging your share certificates for the cash
merger consideration of $11.25 per share.
SHARES HELD IN "STREET
NAME" -- If your shares of ▇▇▇▇▇ common stock are held in
"street name" by your broker, your broker will
ONLY vote your shares if you provide
instructions on how to vote. You should follow
the directions provided by your broker regarding
how to instruct your broker to vote your shares.
CHANGING YOUR VOTE
(See page 15) -- If you have signed and mailed back your proxy
card and want to change your vote, you may
either send a written revocation or another
signed proxy card with a later date to Jason's
transfer agent, before the meeting or simply
attend the annual meeting and vote in person.
COMPLETION OF THE MERGER
(See page 18) -- We are working toward completing the merger as
quickly as possible. If the merger agreement is
approved and the other conditions to the
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merger are satisfied, we expect to complete the merger shortly after the annual
meeting.
U.S. FEDERAL INCOME TAX
CONSEQUENCES OF THE
MERGER (See page 33) -- The cash you receive for your shares generally
will be taxable for U.S. federal income tax
purposes. To review the federal income tax
consequences to shareholders in greater detail,
see page 29.
OTHER MATTERS TO BE VOTED
ON AT THE ANNUAL MEETING
(See page 14) -- At the annual meeting you will also vote on the
election of directors to hold office until the
next annual meeting of shareholders, and you
will vote to ratify the appointment of
PricewaterhouseCoopers LLP as independent
auditors for the year 2000. If the merger is
completed, all of the directors of ▇▇▇▇▇ will be
replaced by the board of directors of Merger
Sub.
WHO CAN HELP ANSWER OTHER
QUESTIONS -- If you have more questions about the merger or
would like additional copies of this proxy
statement, you should contact the Corporate
Secretary of ▇▇▇▇▇ Incorporated, ▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ (telephone (▇▇▇) ▇▇▇-▇▇▇▇).
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SELECTED CONSOLIDATED FINANCIAL DATA OF THE COMPANY
OPERATING RESULTS(1)
(in thousands except per share data)
FOR THE YEAR ENDED
------------------------------------------------------------------------
DECEMBER 31, DECEMBER 25, DECEMBER 26, DECEMBER 27, DECEMBER 29,
1999 1998 1997 1996 1995
------------ ------------ ------------ ------------ ------------
Net sales............................ $423,865 $390,853 $338,666 $291,676 $275,199
Cost of sales........................ 323,841 303,568 264,766 226,070 214,657
-------- -------- -------- -------- --------
Gross profit......................... 100,024 87,285 73,900 65,606 60,542
Selling and administrative expense... 65,315 58,984 50,401 43,748 40,433
-------- -------- -------- -------- --------
Operating income..................... 34,709 28,301 23,499 21,858 20,109
Interest expense..................... (6,132) (6,661) (7,837) (7,375) (7,560)
Other income (expense)............... 660 1,272 1,410 211 (225)
-------- -------- -------- -------- --------
Income from continuing operations
before income taxes................ 29,237 22,912 17,072 14,694 12,324
Provision for income taxes........... (11,475) (8,937) (6,658) (5,730) (5,063)
-------- -------- -------- -------- --------
Income from continuing operations.... 17,762 13,975 10,414 8,964 7,261
Income (loss) from discontinued
operations, net of tax............. -- 1,278 1,813 (98) 4,270
-------- -------- -------- -------- --------
Net income........................... $ 17,762 $ 15,253 $ 12,227 $ 8,866 $ 11,531
======== ======== ======== ======== ========
Earnings per share -- basic
Income from continuing
operations...................... $ .87 $ .69 $ .52 $ .45 $ .36
Income (loss) from discontinued
operations...................... -- .06 .08 (.01) .21
-------- -------- -------- -------- --------
Net income......................... $ .87 $ .75 $ .60 $ .44 $ .57
======== ======== ======== ======== ========
Earnings per share -- diluted
Income from continuing
operations...................... $ .86 $ .66 $ .51 $ .44 $ .36
Income (loss) from discontinued
operations...................... -- .06 .08 (.01) .19
-------- -------- -------- -------- --------
Net income......................... $ .86 $ .72 $ .59 $ .43 $ .55
======== ======== ======== ======== ========
BALANCE SHEET DATA(1)
(in thousands)
DECEMBER 31, DECEMBER 25, DECEMBER 26, DECEMBER 27, DECEMBER 29,
1999 1998 1997 1996 1995
------------ ------------ ------------ ------------ ------------
Total assets......................... $311,897 $299,181 $263,285 $290,718 $254,986
Long-term debt....................... 70,208 62,849 85,631 134,467 110,067
Working capital, excluding net assets
of discontinued operations......... 44,785 45,092 36,803 45,123 33,234
Shareholders' equity................. 140,369 123,943 107,264 95,264 86,218
---------------
No cash dividends have been declared on the Common Stock for the years
presented.
(1) Historical amounts have been restated to reflect the reclassification of the
power generation businesses as discontinued operations.
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THE ANNUAL MEETING
PURPOSE
This Proxy Statement is being furnished to holders of shares of Common
Stock in connection with the solicitation of proxies by the Board of Directors
for use at the Annual Meeting. At the Annual Meeting, shareholders of the
Company will consider a proposal to approve and adopt the Merger Agreement, as
it may be amended from time to time, which provides for the Merger of Merger Sub
into the Company, with the Company as the Surviving Corporation. The Merger
Agreement is attached as ANNEX A to this Proxy Statement. In addition, at the
Annual Meeting, shareholders of the Company will be asked to consider and vote
on the election of directors and to ratify the appointment of independent
auditors of the Company.
THE BOARD OF DIRECTORS, AFTER RECEIVING THE UNANIMOUS RECOMMENDATION OF A
SPECIAL COMMITTEE OF INDEPENDENT DIRECTORS (THE "SPECIAL COMMITTEE"), HAS
APPROVED THE MERGER AGREEMENT AND THE MERGER, AND HAS DETERMINED THAT THE MERGER
AGREEMENT AND THE MERGER ARE FAIR TO, AND IN THE BEST INTERESTS OF, THE
COMPANY'S SHAREHOLDERS OTHER THAN MERGER SUB, PARENT, SAW MILL, THE MANAGEMENT
SHAREHOLDERS AND THEIR RESPECTIVE AFFILIATES (COLLECTIVELY, THE "PUBLIC
SHAREHOLDERS"). THE BOARD OF DIRECTORS RECOMMENDS THAT THE SHAREHOLDERS OF THE
COMPANY VOTE "FOR" THE APPROVAL AND ADOPTION OF THE MERGER AGREEMENT AT THE
ANNUAL MEETING. SEE "SPECIAL FACTORS -- REASONS FOR THE MERGER; FAIRNESS OF THE
MERGER." IN ADDITION, THE BOARD OF DIRECTORS RECOMMENDS THAT SHAREHOLDERS OF THE
COMPANY VOTE "FOR" EACH NOMINEE FOR ELECTION TO THE BOARD OF DIRECTORS AND "FOR"
RATIFICATION OF THE APPOINTMENT OF PRICEWATERHOUSECOOPERS LLP AS THE COMPANY'S
INDEPENDENT AUDITORS.
RECORD DATE; VOTING RIGHTS
Only holders of shares of Common Stock at the close of business on
, 2000 (the "Record Date") will be entitled to notice of, and to vote
at, the Annual Meeting. shares of Common Stock were outstanding on the
Record Date held by holders of record. Each share of Common Stock
entitles the registered holder thereof to one vote.
REQUIRED VOTE
The Wisconsin Business Corporation Law ("WBCL") requires that a majority of
the issued and outstanding shares of Common Stock must be voted in favor of the
Merger Agreement for the Merger Agreement to be approved. Under the Merger
Agreement, Saw Mill, Parent and Merger Sub have agreed to vote all shares of
Common Stock owned by them in favor of the approval and adoption of the Merger
Agreement and the Merger. In addition, under the Voting Agreement, as
hereinafter defined, the Management Shareholders and certain of their affiliates
have granted an irrevocable proxy to Merger Sub which permits Merger Sub to vote
all shares of Common Stock owned by the Management Shareholders and such
affiliates (representing approximately 37.6% of the outstanding shares of Common
Stock), in favor of the adoption and approval of the Merger Agreement and the
Merger. Consequently, after taking into account the shares of Common Stock that
will be contributed to Merger Sub and the shares over which Merger Sub has
voting power under the Voting Agreement Merger Sub will have voting power over
shares representing approximately 38.2% of the outstanding shares of Common
Stock as of the Annual Meeting. SEE "THE MERGER -- INTERESTS OF CERTAIN PERSONS
IN THE MERGER; VOTING AGREEMENT."
The Company's By-laws provide that a majority of the votes entitled to be
cast with respect to the election of members of the Board of Directors,
represented either in person or by proxy, shall constitute a quorum with respect
to such matter. If a quorum exists, the election of each nominee for director
requires the affirmative vote of a majority of the votes represented at the
Annual Meeting.
The appointment of independent auditors is not required to be submitted to
a vote of shareholders; however, the Board of Directors believes it appropriate
as a matter of policy to request that the shareholders ratify the appointment.
If shareholder ratification is not received, the Board of Directors will
reconsider the appointment. The ratification of independent auditors requires
the affirmative vote of a majority of the votes represented at the Annual
Meeting at which a quorum is present.
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Abstentions and broker non-votes (i.e., shares held by brokers in street
name, voting on certain matters due to discretionary authority or instructions
from the beneficial owner but not voting on other matters due to lack of
authority to vote on such matters without instructions from the beneficial
owner) will count toward the quorum requirement for purposes of the election of
directors and will have the effect of a vote against a proposal at the Annual
Meeting. The inspector of election appointed by the Board of Directors at the
Annual Meeting will determine the presence of a quorum and tabulate the results
of shareholder voting.
PROXIES
All shares of Common Stock represented by properly executed proxies that
are received in time for the Annual Meeting and which have not been revoked will
be voted in accordance with the instructions indicated in such proxies. If no
such instructions are indicated, such shares of Common Stock will be voted "FOR"
the approval and adoption of the Merger Agreement, "FOR" each nominee for
election to the Board of Directors and "FOR" ratification of the Company's
independent auditors. In addition, the persons designated in such proxies will
have the discretion to vote on matters incident to the conduct of the Annual
Meeting. If the Company proposes to adjourn the Annual Meeting, the person named
in the enclosed proxy card will vote all shares of Common Stock for which they
have authority, other than those that have been voted against the approval and
adoption of the Merger Agreement, in favor of such adjournment.
The grant of a proxy on the enclosed proxy card does not preclude a
shareholder from voting in person at the Annual Meeting. A shareholder may
revoke a proxy at any time prior to its exercise by delivering to the Secretary
of the Company, prior to the Annual Meeting, a written notice of revocation
bearing a later date or time than the proxy, delivering to the Secretary of the
Company a duly executed proxy bearing a later date or time than the revoked
proxy or attending the Annual Meeting and voting in person. Attendance at the
Annual Meeting will not in and of itself constitute the revocation of a proxy.
The Company will bear the cost of solicitation of proxies from its
shareholders. In addition to solicitation by mail, the directors, officers and
employees of the Company and its subsidiaries may solicit proxies from
shareholders of the Company by telephone, telegram or in person. Arrangements
will also be made with brokerage houses and other custodians, nominees and
fiduciaries for the forwarding of solicitation material to the beneficial owners
of shares of Common Stock held of record by such persons, and the Company will
reimburse such custodians, nominees and fiduciaries for their reasonable
out-of-pocket expenses.
PROPOSAL 1: MERGER OF THE COMPANY AND MERGER SUB
The description of the Merger and the Merger Agreement contained in this
Proxy Statement describes the material terms of the Merger Agreement but does
not purport to be complete and is qualified in its entirety by reference to the
Merger Agreement, a copy of which is attached to this Proxy Statement as ANNEX A
and incorporated herein by reference.
PARTIES TO THE MERGER
THE COMPANY
The Company is a diversified industrial manufacturing company with leading
positions in niche markets throughout the world. The Company operates in two
business segments: Motor Vehicle Products and Industrial Products. The Company
manufactures a wide range of products for numerous industries, and has
operations in the U.S. and 11 foreign countries.
The Company's Motor Vehicle Products business segment includes the
following three business groups serving different areas relating to motor
vehicles:
Automotive Acoustical Fiber Insulation. Janesville Products, established
in 1881, is the world's largest manufacturer of acoustical fiber insulation
for the automotive industry. Suroflex, the Company's German subsidiary, is
a manufacturer of acoustical fiber insulation for the European automotive
industry. Janesville U.K. produces acoustical fiber insulation for the U.K.
automotive industry.
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Specialty Nonwovens. Sackner Products, established in 1916, designs and
manufactures polyester-based products used predominantly for acoustical
insulation in the automotive and office furniture industries and as air
filters in a variety of applications. Sackner's automotive products, which
represent approximately half of its revenues, include door panel inserts
and interior acoustical trim applications.
Seating. Milsco Manufacturing, established in 1924, designs and
manufactures seating products for Harley-Davidson(R) motorcycles,
construction equipment and turf care vehicles. The Company has been the
sole supplier of Harley-Davidson(R) motorcycle seats for over 60 years.
The Company's Motor Vehicle Products business segment has capitalized on
the trend in the automotive industry toward larger vans and sport utility
vehicles as well as new requirements for acoustical materials that have higher
acoustical performance and lower weight, that are cost effective and
environmentally friendly. As a result, the Company has increased its average
dollar sales per vehicle produced in North America by 39% over the last five
years.
The Company's Industrial Products business segment is composed of two
business groups serving various industries:
The Industrial Consumables business group consists of two separate business
units.
- Industrial Brushes. The Company's industrial brush business unit
designs and manufactures a variety of industrial power, maintenance,
strip and mill brushes, used in numerous manufacturing applications.
This unit is composed of ▇▇▇▇▇▇ International and Sealeze and has been
operating for over 100 years.
- Industrial Buffs and Compounds. The Company's industrial buffs and
compounds business unit designs and manufacturers industrial buffs and
compounds used in a variety of industrial finishing applications.
JacksonLea, established in 1931, is the world's largest manufacturer of
industrial buffs and compounds.
Industrial Components. The ▇▇▇▇▇ Components business unit, established in
1919, produces custom-ordered stampings, assemblies, wire forms and
expanded metal products. This unit has capitalized on the trend of
manufacturing companies to outsource their component assembly operations.
This unit uses its design, engineering and manufacturing capabilities to
reduce its customers' manufacturing cost and increase customers'
manufacturing flexibility.
The Company was incorporated in 1985 and its principal executive offices
are located at ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇. The Company's phone number is (▇▇▇) ▇▇▇-▇▇▇▇. The Common Stock is the
Company's sole outstanding class of equity securities. As of the Record Date,
shares of Common Stock were outstanding.
Shares of Common Stock are listed and traded on The Nasdaq National Market
("NASDAQ") under the symbol "JASN". On January 28, 2000, the last trading day
prior to the public announcement of the execution of the Merger Agreement, the
reported closing price of Common Stock on NASDAQ was $7 1/8 per share. On
, 2000, the last trading day prior to the date of this Proxy
Statement, the reported closing price of Common Stock on NASDAQ was $
per share. The Company has not paid any dividends in the previous two fiscal
years. The Company's current financing arrangements restrict the payment of
dividends. The following table sets forth, for the periods indicated, the high
and low sales prices per share of Common Stock as reported on NASDAQ during each
fiscal quarter for the past two fiscal years
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HIGH LOW
--------- -----------
1998
First Quarter............................................... $10 3/4 $7 5/8
Second Quarter.............................................. 10 3/4 8 1/4
Third Quarter............................................... 8 3/4 6 1/2
Fourth Quarter.............................................. 8 5/8 7
1999
First Quarter............................................... $ 9 1/4 $7 1/4
Second Quarter.............................................. 9 1/4 6 3/4
Third Quarter............................................... 8 1/2 5 13/16
Fourth Quarter.............................................. 7 7/8 5 7/8
2000
First Quarter............................................... $11 $6
SAW MILL, PARENT AND MERGER SUB
Saw Mill is a Delaware limited partnership. The address and telephone
number of its principal business office is ▇▇ ▇▇▇ ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇,
▇▇▇ ▇▇▇▇ ▇▇▇▇▇, telephone number (▇▇▇) ▇▇▇-▇▇▇▇. Saw Mill was formed solely for
the purpose of investing in equity securities of Parent.
Parent is a Delaware corporation. The address of its principal business
office is ▇▇ ▇▇▇ ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, and its telephone
number is (▇▇▇) ▇▇▇-▇▇▇▇. Parent was formed solely for the purpose of holding
100% of the capital stock of Merger Sub and after the Merger, the Surviving
Corporation, as defined below. As of the date hereof, Saw Mill owns 100% of the
capital stock of Parent.
Merger Sub is a Wisconsin corporation. The address of its principal
business office is ▇▇ ▇▇▇ ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, and its
telephone number is (▇▇▇) ▇▇▇-▇▇▇▇. Merger Sub is a wholly owned subsidiary of
Parent and was formed solely for the purpose of merging with and into the
Company, at which time the separate corporate existence of Merger Sub will cease
and the Company will continue in existence as the Surviving Corporation.
▇▇▇▇▇▇ ▇. ▇▇▇▇▇ is the President of Saw Mill Capital L.L.C. ("SMC") and the
President, Secretary and Treasurer and sole director of Parent and Merger Sub.
▇▇. ▇▇▇▇▇ is a citizen of the United States. The address and telephone number of
▇▇. ▇▇▇▇▇'▇ principal business office is ▇▇ ▇▇▇ ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇, ▇▇▇
▇▇▇▇ ▇▇▇▇▇ and his telephone number is (▇▇▇) ▇▇▇-▇▇▇▇. ▇▇. ▇▇▇▇▇ is engaged
principally in the business of making private equity investments. ▇▇. ▇▇▇▇▇ was
a co-founder and Managing Director of Chase Capital from 1993 to 1996. He
founded and has been the Managing Partner of SMC since 1997. ▇▇. ▇▇▇▇▇ has been
a director of the Global Energy Equipment Group since 1998 and a director of
Vinings Industries since 1995.
Saw Mill Investments II, LLC is a Delaware limited liability company and is
the general partner of Saw Mill. The address of its principal business and
office is ▇▇ ▇▇▇ ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇. Saw Mill Investments II,
LLC was formed solely for the purpose of acting as the general partner of Saw
Mill.
During the last five years, none of Merger Sub, Parent, Saw Mill, or Saw
Mill Investments II, LLC or ▇▇. ▇▇▇▇▇ has been convicted in a criminal
proceeding, excluding traffic violations or similar misdemeanors, or was a party
to any civil proceeding of a judicial or administrative body as a result of
which such person was or is subject to a judgment, decree or final order
enjoining future violations of, or prohibiting or mandating activities subject
to, federal or state securities laws or finding any violation with respect to
such laws.
▇▇. ▇▇▇▇▇, in his individual capacity, directly owns 117,780 shares of
Common Stock (representing less than 1% of the outstanding shares of Common
Stock) as to which he has sole voting and dispositive power. ▇▇. ▇▇▇▇▇ acquired
indirect beneficial ownership of an additional 7,686,683 shares of Common Stock
upon the execution of the Voting Agreement. In the aggregate, as of the date
hereof, ▇▇. ▇▇▇▇▇ has direct or
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indirect beneficial ownership of 7,804,463 shares of Common Stock representing
approximately 38.2% of the total outstanding Common Stock. See "THE
MERGER -- INTERESTS OF CERTAIN PERSONS IN THE MERGER."
As of the date of this Proxy Statement, Merger Sub beneficially owns
7,686,683 shares of Common Stock, representing approximately 37.6% of the
outstanding shares as to which it has shared voting power by way of the Voting
Agreement. Each of Parent, Saw Mill, Saw Mill Investments II, LLC and ▇▇. ▇▇▇▇▇,
exclusively through their direct or indirect control of Merger Sub also
beneficially own the same 7,686,683 shares of Common Stock, representing
approximately 37.6% of the outstanding shares of Common Stock and has shared
voting and dispositive powers over such shares by virtue of the Voting
Agreement. See "THE MERGER -- INTERESTS OF CERTAIN PERSONS IN THE MERGER."
THE MANAGEMENT SHAREHOLDERS
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ is the Chairman of the Company. ▇▇. ▇▇▇▇▇▇ is a citizen
of the United States. The address of ▇▇. ▇▇▇▇▇▇'▇ principal business office is
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ and his
telephone number is (▇▇▇) ▇▇▇-▇▇▇▇. During the last five years, ▇▇. ▇▇▇▇▇▇ has
been employed by the Company. See "PROPOSAL 2: ELECTION OF DIRECTORS -- NOMINEES
FOR ELECTION AS DIRECTORS."
▇▇▇▇ Train is the President and Chief Executive Officer of the Company. Mr.
Train is a citizen of the United States. The address of Mr. Train's principal
business office is ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇ and his telephone number is (▇▇▇) ▇▇▇-▇▇▇▇. During the last five years,
Mr. Train has been employed by the Company. See "PROPOSAL 2: ELECTION OF
DIRECTORS -- NOMINEES FOR ELECTION AS DIRECTORS."
During the last five years, neither ▇▇. ▇▇▇▇▇▇ nor Mr. Train has been
convicted in a criminal proceeding, excluding traffic violations or similar
misdemeanors, or was a party to any civil proceeding of a judicial or
administrative body as a result of which such person was or is subject to a
judgment, decree or final order enjoining future violations of, or prohibiting
or mandating activities subject to, federal or state securities laws or finding
any violation with respect to such laws.
▇▇. ▇▇▇▇▇▇ beneficially owns 4,430,129 shares of Common Stock, representing
approximately 21.7% of the outstanding shares. ▇▇. ▇▇▇▇▇▇ has shared voting
power as to 4,430,004 of those shares under the Voting Agreement. Mr. Train
beneficially owns 3,257,683 shares of Common Stock, representing approximately
15.9% of the outstanding shares. Mr. Train has shared voting power as to
3,256,679 of those shares under the Voting Agreement. See "THE
MERGER -- INTERESTS OF CERTAIN PERSONS IN THE MERGER."
PAST TRANSACTIONS BETWEEN THE COMPANY AND SAW MILL
On June 5, 1998, the Company completed the sale of its power generation
businesses to a management-led group backed by SMC, an affiliate of Saw Mill,
Parent and Merger Sub. Net cash proceeds to the Company from the sale
approximated $30.1 million.
SPECIAL FACTORS
PURPOSE AND EFFECTS OF THE MERGER
The purpose of the Merger is for Saw Mill and the Management Shareholders
to acquire the Company as a result of the Merger in which the Public
Shareholders will receive $11.25 per share of Common Stock, without interest. If
the Merger Agreement and Merger are approved at the Annual Meeting, the parties
to the Merger Agreement will file articles of merger (the "Articles of Merger")
with the Department of Financial Institutions of the State of Wisconsin (the
"Department of Financial Institutions") in accordance with the WBCL. The Merger
will become effective (the "Effective Time") upon filing of the Articles of
Merger with the Department of Financial Institutions. At the Effective Time,
Merger Sub will be merged with and into the Company in accordance with Wisconsin
law, whereupon the separate existence of Merger Sub will cease, and the Company
will be the Surviving Corporation. At the Effective Time, each share of Common
Stock other
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than Common Stock owned by the Company or its affiliates, Common Stock owned by
Merger Sub (including 2,437,262 shares of Common Stock currently owned by the
Management Shareholders to be contributed to Parent prior to the Merger) and
Dissenting Shares, will be converted into the right to receive $11.25 per share
in cash without interest.
The Common Stock is currently registered under the Exchange Act. If the
Merger Agreement and the Merger are approved at the Annual Meeting and the
Merger is completed, the Common Stock will become eligible for termination of
registration under Section 12(g)(4) of the Exchange Act, and the registration of
Common Stock under the Exchange Act will be terminated as soon as practicable
after the Merger is completed. Termination of registration of the shares of
Common Stock under the Exchange Act will substantially reduce the information
required to be furnished by the Company to its shareholders and to the
Commission and will make certain provisions of the Exchange Act inapplicable to
the Company, such as the obligation to file reports under Section 15(d) of the
Exchange Act, the short-swing profit recovery provisions of Section 16(b), the
requirement of furnishing a proxy statement in connection with shareholders'
meetings and the requirements of Rule 13e-3 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, may be impaired or limited. The shares of Common Stock
will also be delisted from NASDAQ as a result of the Merger.
REASONS FOR THE MERGER; FAIRNESS OF THE MERGER
THE SPECIAL COMMITTEE
In concluding that the Merger Agreement should be recommended to the Board
of Directors, and that the Merger is fair to and in the best interests of the
Public Shareholders, the Special Committee considered a number of factors. The
following discussion of the factors considered by the Special Committee is not
intended to be exhaustive but summarizes the material factors considered. The
Special Committee considered the following factors which supported its
conclusion that the Merger is fair to, and in the best interests of, the Public
Shareholders:
- MARKET PRICE AND PREMIUM. The Merger Consideration will enable the
Public Shareholders to realize a significant premium over the prices at
which the Common Stock has traded over the past two years. The
historical market prices of Common Stock were deemed relevant because
they indicate the arm's-length trading prices of Common Stock as
determined in the open market. The Merger Consideration represents a
premium of 57.9%, 45.2%, 80.0%, 21.6% and 91.5%, respectively, over the
closing market price of Common Stock one day, one week, four weeks, at
the 52-week high and at the 52-week low, respectively, prior to the
public announcement of the Merger Agreement.
- FORMATION OF SPECIAL COMMITTEE AND ARM'S-LENGTH NEGOTIATIONS. The
negotiations between the Special Committee on behalf of the Company and
the Public Shareholders, the Management Shareholders and Saw Mill and
their respective advisors were conducted at arm's-length. None of the
members of the Special Committee are employed by or affiliated with the
Company, except in their capacities as directors and shareholders, nor
will they have any equity interest in the Surviving Corporation
following the Merger.
- MERGER CONSIDERATION. The Special Committee concluded, based on its
negotiations with Saw Mill, Parent and Merger Sub, that the Merger
Consideration represented the highest price that Saw Mill, Parent and
Merger Sub were willing to pay to acquire the shares of Common Stock.
This determination was the result of the Special Committee's
arm's-length negotiations with Saw Mill, Parent and Merger Sub in an
attempt to obtain the highest possible price, the fact that the Merger
Consideration was increased by Saw Mill, Parent and Merger Sub by 18.4%
to a price equal to $1.75 per share more than the initial proposal of
$9.50 per share made by Saw Mill, Parent and Merger Sub, and the fact
that the Merger Consideration to Public Shareholders was increased by
Saw Mill, Parent and Merger Sub by a final $0.25 per share only after
the Management Shareholders agreed to accept
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a lower aggregate consideration equal to approximately $10.90 per share
of Common Stock owned by them.
- ▇▇▇▇▇▇ BROTHERS FAIRNESS OPINION. ▇▇▇▇▇▇ Brothers Inc. ("▇▇▇▇▇▇
Brothers") provided an oral opinion to the Special Committee on January
29, 2000, which was subsequently confirmed in writing on January 31,
2000 (the "▇▇▇▇▇▇ Opinion"), to the effect that, as of January 29, 2000
and based upon and subject to certain assumptions, factors and
limitations, the Merger Consideration of $11.25 per share of Common
Stock to the Public Shareholders is fair, from a financial point of
view, to the Public Shareholders. The Special Committee also considered
the analysis underlying the ▇▇▇▇▇▇ Opinion as presented to the Special
Committee in an extensive presentation by ▇▇▇▇▇▇ Brothers on January 29,
2000. A copy of the ▇▇▇▇▇▇ Opinion, setting forth the assumptions made,
matters considered and limitations on the review undertaken in
connection with its opinion, is attached as Annex B. Shareholders should
read the ▇▇▇▇▇▇ Opinion carefully in its entirety.
- FIDUCIARY DUTIES. The Merger Agreement does not unduly deter a third
party from making, or inhibit the Special Committee and its advisors
from evaluating, negotiating or approving a transaction other than the
Merger with a third party. Specifically, the Merger Agreement includes
provisions which permit the Special Committee and its advisors to
receive unsolicited inquiries and proposals from third parties, and
permit the Special Committee to provide information to, engage in
discussions and negotiate with, directly or through its advisors, any
third party making an unsolicited inquiry or proposal, permit the Board
of Directors to terminate the Merger Agreement in order to permit the
Company to enter into an alternative transaction with a third party,
limit the Company's obligation to pay a "break up" fee upon termination
of the Merger Agreement (as a result, among other things, of the Board
of Directors withdrawing its recommendation of the Merger or
recommending an acquisition proposal or potential third party
transaction other than the Merger) to $6.7 million in the aggregate
(which amount includes reimbursable expenses to Saw Mill, Parent and
Merger Sub and represents approximately 2.0% of the total funds required
for Saw Mill, Parent and Merger Sub to complete the Merger), limit the
Company's obligation to reimburse Saw Mill, Parent and Merger Sub for
their expenses upon termination of the Merger Agreement in certain
circumstances where the break up fee is inapplicable to an aggregate of
$1.5 million, and provide that the Company will be reimbursed for its
expenses in certain circumstances up to an aggregate amount of $1.5
million. SEE "THE MERGER AGREEMENT -- FEES, EXPENSES AND OTHER
PAYMENTS."
- RECEIPT OF COMMITMENT LETTERS. Saw Mill had received executed
commitment letters from nationally recognized financial institutions to
provide the necessary debt and private equity financing for the Merger.
The Special Committee reviewed the terms and conditions of the
commitment letters in detail with the assistance of ▇▇▇▇▇▇ Brothers.
- HISTORICAL AND PROJECTED FINANCIAL PERFORMANCE AND RELATED RISK AND
UNCERTAINTIES. The Special Committee considered information with
respect to the financial condition, results of operations, business and
prospects of the Company, including the financial projections supplied
by the Company to ▇▇▇▇▇▇ Brothers and the inherent uncertainties and
contingencies associated with those financial projections, the size of
the Company as compared to the remaining public companies in the
Company's business segments and the economic and market conditions
affecting the Company. The Special Committee did not consider net book
value or liquidation value to be material factors in determining the
fairness of the Merger to the Public Shareholders. The Special Committee
does not believe that these factors have any significant impact on the
inherent value of the Company or the market trading prices of Common
Stock.
- LACK OF LIQUIDITY OF THE COMMON STOCK. In light of the relatively thin
trading market and the lack of liquidity of the Common Stock, the Merger
will afford Public Shareholders an opportunity to dispose of their
Common Stock without the possible diminution of value resulting from the
lack of an active trading market.
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- AVAILABILITY OF DISSENTERS' RIGHTS. Although the Merger is not
structured so that approval of at least a majority of unaffiliated
shareholders is required, dissenters' rights will be available to the
holders of Common Stock under the WBCL in connection with the Merger.
Under the WBCL, shareholders who dissent will be entitled to receive the
"fair value" of their shares, which means the highest closing sales
price per share of Common Stock during the 30-day period immediately
prior to the completion of the Merger. See "RIGHTS OF DISSENTING
SHAREHOLDERS."
- LACK OF VIABLE ALTERNATIVES TO THE MERGER. Prior to the receipt of any
proposal from SMC, the Board of Directors of the Company had discussed
options available to maximize value to the Public Shareholders, including
the sale of the Company to a third party. In that regard, the Board of
Directors did not identify any logical synergistic purchasers. Following
receipt of the proposal from SMC and the formation of the Special
Committee, in its consideration of strategic alternatives, the Special
Committee considered the merits of conducting an auction of the Company
to third parties or authorizing ▇▇▇▇▇▇ Brothers to solicit interest from
third parties, and discussed this possibility with the Management
Shareholders. The Management Shareholders informed the Special Committee
that SMC was not willing to participate in an auction of the Company and
would withdraw its proposal if the Company were put up for auction or if
▇▇▇▇▇▇ Brothers actively solicited third party offers. The financial
advisor and counsel to the Special Committee confirmed this fact directly
with SMC. The Management Shareholders also advised the Special Committee
that they were opposed to these alternatives. After considering these
factors, the Special Committee concluded that it would not be in the best
interests of the Public Shareholders to assume the risk that SMC would
withdraw its proposal, because the opportunity to obtain a premium price
for the Common Stock for the Public Shareholders would be lost.
Accordingly, the Special Committee did not direct ▇▇▇▇▇▇ Brothers to
solicit offers or indications of interest from third parties. The Special
Committee also believed that the ultimate public disclosure of a merger
agreement would have an effect similar to an auction of the Company so
long as any definitive merger agreement preserved the right of the
Special Committee and its advisors to enter into negotiations and
discussions with third parties that might express an interest in
acquiring or entering into a transaction with the Company. The Special
Committee was also cognizant that, unlike a public auction, the Special
Committee would be assured in this process of a committed buyer. The
Special Committee and its legal and financial advisors were unanimous in
this view. As a result, the Special Committee insisted that the Special
Committee and its advisors retain the right to provide information to,
and enter into negotiations and discussions with, third parties that
might express an interest in acquiring, or entering into a transaction
with, the Company. See "THE MERGER AGREEMENT -- THIRD PARTY TRANSACTIONS;
FIDUCIARY RESPONSIBILITIES." Also, the Special Committee preferred the
Merger to the Company remaining a publicly traded entity because the
Merger afforded the Public Shareholders liquidity for their Common Stock
at fair value without the possible diminution of value resulting from the
lack of an active trading market, poorer than expected Company
performance and/or adverse general market conditions.
In determining that the proposed Merger is fair to, and in the best
interests of, the Public Shareholders, the Special Committee also considered the
following potential negative factors:
- LOSS OF EQUITY INTEREST. If the Merger is approved, the Public
Shareholders will not participate in the future growth of the Company.
Because of the risks and uncertainties associated with the Company's
future prospects, the Special Committee concluded that this detriment
was not quantifiable. The Special Committee also weighed the relative
merits of receiving a cash premium for the Common Stock versus a more
speculative potential future return. In addition, the Special Committee
considered the fact that Saw Mill, Parent, Merger Sub and the Management
Shareholders will continue to have the opportunity to benefit from any
increases in the value of the Company following the Merger and in this
consideration, reviewed management's projections of future sales and
earnings of the Company and determined that the future prospects of the
Company are adequately reflected in the Merger Consideration.
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- POTENTIAL CONFLICTS OF INTEREST OF MEMBERS OF THE SPECIAL COMMITTEE. If
the Merger is completed, the members of the Special Committee will
receive (solely in their capacity as shareholders and optionholders of
the Company), in the aggregate, $2,303,831 in Merger Consideration and
$484,073 in Option Consideration. The Special Committee, however,
believes that its interests are consistent with the interests of all
other Public Shareholders in this regard. The members of the Special
Committee will also receive compensation for their services as members
of the Special Committee. See "THE MERGER -- INTERESTS OF CERTAIN
PERSONS IN THE MERGER -- DIRECTORS AND EXECUTIVE OFFICERS OTHER THAN
MANAGEMENT SHAREHOLDERS." The Special Committee believes that this does
not present a conflict of interest because this compensation is payable
whether or not the Merger is completed.
- FEDERAL INCOME TAX CONSEQUENCES TO PUBLIC SHAREHOLDERS. The Special
Committee considered the fact that the Public Shareholders may,
depending on their tax basis in their Common Stock, recognize a taxable
gain upon the completion of the proposed Merger. The Special Committee
believes that the opportunity to receive the cash Merger Consideration,
together with the other positive factors described above, outweighs
these potential tax consequences. See "SPECIAL FACTORS -- CERTAIN TAX
CONSEQUENCES OF THE MERGER."
In view of all of the factors considered by the Special Committee in
connection with the evaluation of the Merger and the complexity of these
matters, the Special Committee did not consider it practicable to, nor did it
attempt to, quantify, rank or otherwise assign relative weights to the specific
factors it considered in reaching its decision. However, based upon these
factors, the evaluation of all the relevant information provided to them by the
Special Committee's independent financial and legal advisors and taking into
account the existing trading ranges for the Common Stock, the Special Committee
determined that the Merger Agreement and the Merger, including the Merger
Consideration, is fair, from a financial point of view, to the Public
Shareholders. In considering the factors described above, individual members of
the Special Committee may have given different weights to different factors.
THE BOARD OF DIRECTORS
The Board of Directors considered the following factors in deciding to
recommend that shareholders vote "FOR" the adoption and approval of the Merger
Agreement at the Annual Meeting:
- the recommendation of the Special Committee;
- the factors referred to above as having been taken into account by the
Special Committee; and
- the fact that the Merger Consideration and the terms and conditions of
the Merger Agreement were the result of arm's-length negotiations
between the Special Committee and its independent legal and financial
advisors, on the one hand, and representatives of Saw Mill, Parent,
Merger Sub and the Management Shareholders, on the other hand.
In view of the factors considered by the Board of Directors in connection
with the evaluation of the Merger and the complexity of these matters, the Board
of Directors did not consider it practicable to, nor did it attempt to,
quantify, rank or otherwise assign relative weights to the specific factors it
considered in reaching its decision, nor did it evaluate whether these factors
were of equal importance. The Board of Directors also received an extensive
presentation from, and relied on the experience and expertise of, ▇▇▇▇▇▇
Brothers with respect to the quantitative analysis of the financial terms of the
Merger. The Board of Directors conducted a discussion of, among other things,
the factors described above, including asking questions of the Company's
management and regularly retained legal advisors, and reached the conclusion
that the Merger was advisable and in the best interests of the Company, the
Public Shareholders and the Company's other constituencies. In considering the
factors described above, individual members of the Board of Directors may have
given different weight to different factors.
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The Board of Directors believes that the Merger is procedurally fair
because, among other things:
- the Special Committee consisted entirely of non-management,
non-affiliated independent directors appointed by the Board of Directors
to represent solely the interests of the Public Shareholders;
- the Special Committee retained and was advised by its own independent
financial advisor, ▇▇▇▇▇▇ Brothers, to assist it in evaluating the
Merger and provide it with financial advice;
- the Special Committee retained and was advised by its own independent
legal counsel, ▇▇▇▇▇▇▇ ▇▇▇▇ & ▇▇▇▇▇▇▇▇▇ LLP, who negotiated on behalf of
the Special Committee;
- the Special Committee engaged in extensive negotiations and
deliberations in evaluating the Merger and Merger Consideration;
- the Merger Consideration and the other terms and conditions of the
Merger Agreement resulted from active arm's-length bargaining between
the Special Committee and Saw Mill, Parent and Merger Sub and their
respective advisors; and
- even though the Special Committee consisted of directors of the Company
and was therefore not completely unaffiliated with the Company,
committees of independent directors are a commonly utilized mechanism
which are recognized under applicable law to ensure fairness in
transactions of this type.
In view of the foregoing, the Board of Directors believes that sufficient
procedural safeguards exist to ensure fairness of the Merger and to permit the
Special Committee to effectively represent the interests of the Public
Shareholders, and therefore, additional unaffiliated representatives to act on
behalf of the Public Shareholders are not necessary.
SAW MILL, PARENT AND MERGER SUB
Saw Mill believes the Merger is fair to the Public Shareholders. However,
neither Saw Mill nor any of its affiliates has undertaken any formal evaluation
of the fairness of the Merger to the Company's shareholders. Moreover, Saw Mill
did not participate in the deliberations of the Special Committee or receive
advice from the Special Committee's financial advisor. Consequently, Saw Mill is
not in a position to specifically adopt the conclusions of the Special Committee
with respect to the fairness of the Merger to the Public Shareholders. Because
of the variety of factors considered, Saw Mill did not find it practicable to
make specific assessments of, quantify or otherwise assign relative weights to
the specific factors considered in reaching its determination. Saw Mill's
determination that the Merger is fair was made after consideration of all
factors it determined to be relevant. These factors include:
- the current and past trading prices of Common Stock compared to the
common stock of other similar manufacturers;
- the Merger will provide the Public Shareholders a significant premium
for their shares compared to the market price at the time the Company
publicly announced a possible sale;
- the Merger Agreement was the result of arm's-length negotiations in
which the Special Committee was assisted by its independent financial
and legal advisers;
- the Company has advised Saw Mill that its proposal was believed to be
the best alternative for the Company and the Public Shareholders;
- the establishment of the Special Committee to evaluate Saw Mill's
proposal as well as other alternatives;
- the unanimous recommendation of the Special Committee;
- the fact that the Special Committee received a written opinion from its
independent financial advisor as to the fairness, from a financial point
of view, of the Merger Consideration to the Public Shareholders;
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- the fact that the Management Shareholders will receive a lower average
price for all of their shares of Common Stock than the Public
Shareholders; and
- the fact that the Special Committee aggressively negotiated the terms of
the Merger Agreement and the Merger.
Saw Mill believes these analyses and factors provide a reasonable basis
upon which to form its belief that the Merger is fair to the Public
Shareholders. This belief should not, however, be construed as a recommendation
to the Company's shareholders by Saw Mill to vote to approve the Merger.
Saw Mill did not consider net book value, going concern value or
liquidation value to be material factors in determining the fairness of the
Merger to the Public Shareholders. Saw Mill does not believe that these factors
have any significant impact on the market trading prices of Common Stock. Saw
Mill did not rely on any report, opinion or appraisal in determining the
fairness of the Merger to the Public Shareholders, but does not disagree with
the conclusion expressed by ▇▇▇▇▇▇ Brothers in its opinion to the Special
Committee regarding the fairness, from a financial point of view, of the Merger
Consideration to the Public Shareholders. Saw Mill is not aware of any firm
offers made in the last 18 months by an unaffiliated person to merge or
consolidate with the Company, to acquire all or any substantial part of the
Company's assets or to acquire control of the Company. For the reasons cited
above and based upon their involvement in the process leading up to the Merger,
Saw Mill believes that the procedures used by the Special Committee were fair to
the Public Shareholders. These procedures include the formation of the Special
Committee and the fact that the Merger must be approved by the Company's
shareholders, including the Management Shareholders.
BENEFITS AND DETRIMENTS OF THE MERGER TO THE COMPANY, THE MANAGEMENT
SHAREHOLDERS AND THE PUBLIC SHAREHOLDERS
The Merger will have different benefits and detriments for each of the
Company, the Management Shareholders and the Public Shareholders. These benefits
and detriments are described, and quantified to the extent practicable, below.
BENEFITS AND DETRIMENTS TO THE COMPANY
The Company believes that the Merger will result in the following benefit
to the Company:
- If the Merger is completed, the Surviving Corporation will be eligible
to delist the Common Stock from NASDAQ and the Surviving Corporation
will no longer be required to bear the legal and administrative expense
of complying with the legal requirements applicable to companies which
have securities listed on NASDAQ. See "SPECIAL FACTORS -- PURPOSE AND
EFFECTS OF THE MERGER." In particular, the Surviving Corporation will
not be required to dedicate any time or expense to public shareholder
and analyst inquiries and investor relations. The Company expects that
its cost savings from the elimination of these items will be
approximately $ per year.
The Company believes that the Merger will result in the following
detriments to the Company:
- If the Merger is completed, the Surviving Corporation will incur a
significant amount of senior and subordinated debt and will issue a
significant amount of preferred equity securities. See "THE
MERGER -- FINANCING FOR THE MERGER."
- The definitive agreements for the senior and subordinated debt and
preferred equity financing will contain certain financial and other
covenants which are expected to be more restrictive than the covenants
required by the Company's existing senior secured lenders.
- If the Merger is completed, the Surviving Corporation will be unable to
use publicly traded equity securities for acquisitions or to grant
options to its employees exercisable for publicly traded equity
securities.
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BENEFITS AND DETRIMENTS TO THE MANAGEMENT SHAREHOLDERS
The Company believes that the Merger will result in the following benefits
to the Management Shareholders:
- After the Merger is completed, the Management Shareholders will benefit
from any stock price appreciation that may result from any increases in
the future earnings, growth and value of the Surviving Corporation. See
"SPECIAL FACTORS -- REASONS FOR THE MERGER; FAIRNESS OF THE MERGER."
- As a result of the Merger, the Management Shareholders will contribute
an aggregate of 2,437,262 shares of Common Stock valued at approximately
$10.13 per share, or $24,700,000 in the aggregate, to Parent in exchange
for shares of common stock of Parent. The Management Shareholders and
their affiliates also will receive $11.25 per share, or $59,068,688 in
the aggregate, for the 5,250,550 shares of Common Stock that they are
not contributing to Parent. The contribution and the Merger will result
in the Management Shareholders and their affiliates receiving aggregate
consideration equal to approximately $10.90 per share of Common Stock.
See "THE MERGER -- INTERESTS OF CERTAIN PERSONS IN THE MERGER."
- Each of the Management Shareholders has agreed to enter into employment
agreements with the Surviving Corporation. Under the employment
agreements, ▇▇. ▇▇▇▇▇▇ will be paid a base salary of $300,000 per year
and Mr. Train will be paid a base salary of $450,000 per year. See "THE
MERGER -- INTERESTS OF CERTAIN PERSONS IN THE MERGER -- EMPLOYMENT
AGREEMENTS."
- The Management Shareholders will enter into a stockholders agreement
with the other stockholders of Parent which will entitle the Management
Shareholders to designate three directors of Parent in their sole
discretion and a fourth independent director subject to the approval of
Saw Mill. See "THE MERGER -- INTERESTS OF CERTAIN PERSONS IN THE
MERGER -- STOCKHOLDERS AGREEMENT."
The Company believes that the Merger will result in the following
detriments to the Management Shareholders:
- After the Merger is completed, the Management Shareholders will continue
to bear the risk of any stock price depreciation that may result from
the future earnings, growth and value of the Surviving Corporation.
- The Company believes that the Management Shareholders will recognize a
taxable gain upon receipt of the cash Merger Consideration. See "SPECIAL
FACTORS -- CERTAIN TAX CONSEQUENCES OF THE MERGER."
- The shares of common stock of Parent which the Management Shareholders
will receive in the Merger will be relatively illiquid and will be
subject to transfer restrictions under the stockholders agreement.
- The Management Shareholders' employment agreements will contain
non-compete provisions which will restrict the Management Shareholders
from being involved in, during the period of their employment and for
two years thereafter, any business which is in competition with the
Surviving Corporation. See "THE MERGER -- INTERESTS OF CERTAIN PERSONS
IN THE MERGER -- EMPLOYMENT AGREEMENTS."
- If the Merger is completed, Saw Mill and its affiliates will
beneficially own a majority of the common stock of Parent and, as a
result, will be able to influence the management of the Surviving
Corporation.
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BENEFITS AND DETRIMENTS TO THE PUBLIC SHAREHOLDERS
The Company believes that the Merger will result in the following benefits
to the Public Shareholders:
- The Public Shareholders will receive a cash premium for their shares of
Common Stock over the market price when the proposed Merger was
announced. The Merger Consideration of $11.25 per share represents a
premium of 57.9% over the closing market price of the Common Stock on
January 28, 2000, the last trading day before the Merger was announced.
- The Public Shareholders in the aggregate will receive $142,084,811 in
Merger Consideration and $5,036,707.62 in Option Consideration as a
result of the Merger.
- After the Merger is completed, the Public Shareholders will not bear the
risk of any stock price depreciation that may result from any decreases
in the future earnings, growth and value of the Surviving Corporation.
- Dissenters' rights are available to Public Shareholders who perfect
their rights under applicable Wisconsin law and such shareholders are
entitled to receive the fair value of their shares of Common Stock, as
determined under such laws. See "RIGHTS OF DISSENTING SHAREHOLDERS."
- The Public Shareholders will not pay commissions or brokerage fees in
connection with the receipt of the Merger Consideration.
The Company believes that the Merger will result in the following
detriments to the Public Shareholders:
- After the Merger is completed, the Public Shareholders will not benefit
from any stock price appreciation which may result from any increases in
future earnings, growth and value of the Surviving Corporation. See "THE
MERGER -- REASONS FOR THE MERGER -- FAIRNESS OF THE MERGER."
- Public Shareholders may realize a taxable gain as a result of the
Merger. See "SPECIAL FACTORS -- CERTAIN TAX CONSEQUENCES OF THE MERGER."
- After the Merger is completed, the Public Shareholders will no longer
have any right to vote as shareholders of the Surviving Corporation.
REPORTS, OPINIONS AND APPRAISALS
The Company has received an opinion from an independent outside party,
▇▇▇▇▇▇ Brothers, regarding the fairness, from a financial point of view, of the
Merger Consideration to the Public Shareholders. ▇▇▇▇▇▇ Brothers also provided
materials and made presentations to the Special Committee and the Board of
Directors at their respective meetings to consider the Merger and the Merger
Agreement. See "THE MERGER -- BACKGROUND OF THE MERGER." The Special Committee
selected ▇▇▇▇▇▇ Brothers based upon its reputation as an investment banking firm
of international standing and based upon the recommendation of outside counsel
to the Special Committee. The Special Committee did not undertake a formal
interview process to select its financial advisor; rather the Special Committee
considered the qualifications of a variety of nationally recognized investment
banking firms. After interviewing ▇▇▇▇▇▇ Brothers and negotiating the terms of
▇▇▇▇▇▇ Brothers' engagement, the Special Committee selected ▇▇▇▇▇▇ Brothers as
its exclusive independent financial advisor in connection with the Merger. At
the commencement of its engagement, ▇▇▇▇▇▇ Brothers was paid a retainer fee of
$100,000. Upon delivery of the ▇▇▇▇▇▇ Opinion, ▇▇▇▇▇▇ Brothers was paid an
additional fee of $900,000. If the Merger is completed, ▇▇▇▇▇▇ Brothers will
receive an additional fee of $2,000,000. ▇▇▇▇▇▇ Brothers will also be reimbursed
for its out-of-pocket expenses in connection with the Merger. See "THE
MERGER -- FEES AND EXPENSES." Except for the foregoing, no material relationship
existed during the past two years between ▇▇▇▇▇▇ Brothers and the Company and
its affiliates.
OPINION OF THE INDEPENDENT FINANCIAL ADVISOR TO THE SPECIAL COMMITTEE
▇▇▇▇▇▇ Brothers has acted as independent financial advisor to the Special
Committee in connection with the Merger and delivered the ▇▇▇▇▇▇ Opinion to the
effect that, as of the date thereof, and based on and
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32
subject to the assumptions, limitations and qualifications set forth in the
▇▇▇▇▇▇ Opinion, the Merger Consideration is fair, from a financial point of
view, to the Public Shareholders.
THE FULL TEXT OF THE ▇▇▇▇▇▇ OPINION WHICH SETS FORTH A DESCRIPTION OF THE
PROCEDURES FOLLOWED, ASSUMPTIONS MADE, MATTERS CONSIDERED AND LIMITATIONS ON THE
REVIEW UNDERTAKEN BY ▇▇▇▇▇▇ BROTHERS IN CONNECTION WITH SUCH OPINION, IS
ATTACHED TO THIS PROXY STATEMENT AS ANNEX B AND IS INCORPORATED HEREIN BY
REFERENCE. SHAREHOLDERS MAY READ THE ▇▇▇▇▇▇ OPINION FOR A DISCUSSION OF
ASSUMPTIONS MADE, MATTERS CONSIDERED AND LIMITATIONS ON THE REVIEW UNDERTAKEN BY
▇▇▇▇▇▇ BROTHERS IN RENDERING ITS OPINION. THE SUMMARY OF THE ▇▇▇▇▇▇ OPINION SET
FORTH IN THIS PROXY STATEMENT IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO THE
FULL TEXT OF THE ▇▇▇▇▇▇ OPINION ATTACHED AS ANNEX B TO THIS PROXY STATEMENT.
No limitations were imposed by the Company or the Special Committee on the
scope of ▇▇▇▇▇▇ Brothers' investigation or the procedures followed by ▇▇▇▇▇▇
Brothers in connection with preparing its opinion, except that ▇▇▇▇▇▇ Brothers
was not authorized to solicit, and did not solicit, any indications of interest
from any third party with respect to a purchase of all or a part of the
Company's business. SEE "SPECIAL FACTORS -- REASONS FOR THE MERGER; FAIRNESS OF
THE MERGER -- THE SPECIAL COMMITTEE -- LACK OF VIABLE ALTERNATIVES TO THE
MERGER." ▇▇▇▇▇▇ Brothers was not requested to and did not make any
recommendation to the Special Committee as to the form or amount of
consideration to be received by the Public Shareholders in the Merger, which was
determined through negotiations between the Special Committee and Saw Mill,
although ▇▇▇▇▇▇ Brothers did participate in such negotiations. In arriving at
its opinion, ▇▇▇▇▇▇ Brothers did not ascribe a specific range of value to the
Company, but rather made its determination as to the fairness, from a financial
point of view, of the consideration to be received by the Public Shareholders in
the Merger on the basis of the financial and comparative analyses described
below. The ▇▇▇▇▇▇ Opinion is for the use and benefit of the Special Committee
and was rendered to it in connection with its consideration of the Merger and is
not intended to be and does not constitute a recommendation to any Public
Shareholder as to how such Public Shareholder should vote with respect to the
Merger. ▇▇▇▇▇▇ Brothers was not requested to opine as to, and its opinion does
not in any manner address, the Company's underlying business decision to proceed
with or effect the Merger.
In connection with the preparation and delivery of the ▇▇▇▇▇▇ Opinion to
the Special Committee, ▇▇▇▇▇▇ Brothers performed a variety of financial and
comparative analyses, as described below. The preparation of a fairness opinion
involves various determinations as to the most appropriate and relevant methods
of financial and comparative analysis and the application of those methods to
the particular circumstances and, therefore, such an opinion is not readily
susceptible to summary description. Furthermore, in arriving at its opinion,
▇▇▇▇▇▇ Brothers did not attribute any particular weight to any analysis or
factor considered by it, but rather made qualitative judgments as to the
significance and relevancy of each analysis and factor. Accordingly, ▇▇▇▇▇▇
Brothers believes that its analyses must be considered as a whole and that
considering any portions of its analyses and of the factors considered by it,
without considering all analyses and factors, could create a misleading or
incomplete view of the process underlying its opinion. In its analyses, ▇▇▇▇▇▇
Brothers made numerous assumptions with respect to industry performance, general
business and economic conditions and other matters, many of which are beyond the
Company's control. Any estimates or projections contained in these analyses are
not necessarily indicative of actual values or predictive of future results or
values, which may be significantly more or less favorable than as set forth
therein. Additionally, analyses relating to the value of businesses do not
purport to be appraisals or to reflect the prices at which businesses actually
may be sold.
In arriving at its opinion, ▇▇▇▇▇▇ Brothers reviewed and analyzed:
- the Merger Agreement and the specific terms of the Merger;
- the annual report of the Company for the fiscal year ended December 25,
1998 filed on Form 10-K, the quarterly financial reports of the Company
for the fiscal quarters ended March 26, 1999, June 25, 1999 and
September 24, 1999 filed on Form 10-Q, and such other publicly available
information concerning the Company that ▇▇▇▇▇▇ Brothers believed to be
relevant to its analysis;
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- financial and operating information with respect to the business,
operations and prospects of the Company furnished to ▇▇▇▇▇▇ Brothers by
the Company;
- a trading history of Common Stock from June 16, 1987 to January 28, 2000
and a comparison of that trading history with other companies that
▇▇▇▇▇▇ Brothers deemed relevant;
- a comparison of the historical financial results and present financial
condition of the Company with other companies ▇▇▇▇▇▇ Brothers deemed
relevant; and
- a comparison of the financial terms of the Merger with the financial
terms of certain other merger transactions that ▇▇▇▇▇▇ Brothers deemed
relevant.
In addition, ▇▇▇▇▇▇ Brothers had discussions with the management of the
Company concerning the industries in which it operates, as well as its
businesses, operations, assets, liabilities, financial condition and prospects
and undertook such other studies, analyses and investigations as ▇▇▇▇▇▇ Brothers
deemed appropriate.
In arriving at its opinion, ▇▇▇▇▇▇ Brothers assumed and relied upon the
accuracy and completeness of the financial and other information used by ▇▇▇▇▇▇
Brothers without assuming any responsibility for independent verification of
such information and has further relied upon the assurances of management of the
Company that they were not aware of any facts or circumstances that would make
such information inaccurate or misleading. With respect to the financial
projections of the Company, upon advice of the Company, ▇▇▇▇▇▇ Brothers assumed
that such projections were reasonably prepared on a basis reflecting the best
currently available estimates and judgments of the management of the Company as
to the future financial performance of the Company and that the Company will
perform substantially in accordance with such projections. In arriving at its
opinion, ▇▇▇▇▇▇ Brothers did not conduct a physical inspection of the properties
and facilities of the Company and did not make or obtain any evaluations or
appraisals of the assets or liabilities of the Company. In addition, the Company
did not request ▇▇▇▇▇▇ Brothers to solicit, and ▇▇▇▇▇▇ Brothers did not solicit,
any indications of interest from any third party with respect to the purchase of
all or any part of the Company's business. The ▇▇▇▇▇▇ Opinion is necessarily
based upon market, economic and other conditions as they existed on, and could
be evaluated as of, the date of the ▇▇▇▇▇▇ Opinion.
COMPARABLE PUBLIC COMPANY ANALYSIS. ▇▇▇▇▇▇ Brothers compared the
historical financial, operating and stock market performances of certain
publicly traded companies that it considered relevant with the historical
financial, operating and stock market performance of the Company, based upon
information that was publicly available at that time and based upon information
provided to ▇▇▇▇▇▇ Brothers by management of the Company. ▇▇▇▇▇▇ Brothers
considered companies in three principal industry segments: automotive suppliers,
industrial consumables producers and small-capitalization diversified
manufacturers. The automotive suppliers that ▇▇▇▇▇▇ Brothers considered were
Avon Rubber PLC, CLARCOR Inc., ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇ Corporation, ▇▇▇▇▇▇▇▇
Corporation, Dura Automotive Systems, Inc., ▇▇▇▇▇ Group PLC, Noble
International, Ltd., Phoenix AG, ▇▇▇▇▇▇▇ Industries, Inc., STRATTEC SECURITY
CORPORATION and ▇▇▇▇'▇ International, Inc. (the "Comparable Automotive
Suppliers"); the industrial consumables producers considered were BHA Group
Holdings, Inc., ▇▇▇▇▇▇▇▇▇ Company, Inc., ▇▇▇▇ Company, Flanders Corporation,
Industrial Holdings, Inc., Kennametal Inc., The ▇.▇. ▇▇▇▇▇▇▇▇ Company, Penn
Engineering and Manufacturing Corp. and SPS Technologies, Inc. (the "Comparable
Industrial Consumables Producers"); and the small-capitalization diversified
manufacturers considered were Amcast Industrial Corporation, ▇▇▇▇▇▇ Group Inc.,
▇▇▇▇▇▇▇▇▇ Technologies Corporation, Griffon Corporation, ▇▇▇▇▇ Industries, Inc.,
▇▇▇▇▇▇ Industries Inc. and Valmont Industries, Inc. (the "Comparable Small-Cap
Diversified Manufacturers" and, together with the Comparable Automotive
Suppliers and Comparable Industrial Consumables Producers, the "Comparable
Public Companies").
▇▇▇▇▇▇ Brothers calculated a range of market multiples for the Comparable
Public Companies by dividing the aggregate equity market value (total common
shares outstanding multiplied by the closing market price per share on January
28, 2000), plus the latest reported debt, preferred stock and minority interest
minus latest reported cash and cash equivalents (in aggregate, the "Enterprise
Value") of each of the Comparable Public Companies by such company's latest
twelve months ("LTM") net sales; earnings before interest, taxes,
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depreciation and amortization ("EBITDA"); and earnings before interest and taxes
("EBIT"), as reported in publicly available information. In addition, ▇▇▇▇▇▇
Brothers divided the equity market value per share on January 28, 2000 of each
of the Comparable Public Companies by the latest reported equity book value per
share as reported in publicly available information and by projected earnings
per share ("EPS") for 2000 calendar year, as represented by the mean estimate of
research analysts as reported by First Call Corporation as of January 27, 2000.
Estimates of 2000 EPS for the Company are based upon management projections.
This analysis indicated the following results:
LOW HIGH MEDIAN
------ ------ ------
Enterprise Value as a multiple of LTM net sales............ 0.31x 1.39x 0.62x
Enterprise Value as a multiple of LTM EBITDA............... 3.3x 9.9x 5.3x
Enterprise Value as a multiple of LTM EBIT................. 4.3x 22.9x 7.7x
Price per share as a multiple of book equity value per
share.................................................... 0.61x 11.36x 1.17x
Price per share as a multiple of 2000 EPS.................. 4.1x 17.5x 9.0x
Implied multiples for the Company based on the Merger price for LTM net
sales, EBITDA and EBIT were 0.74x, 6.0x and 9.2x, respectively, for equity book
value was 1.78x and for estimated calendar 2000 EPS was 11.8x.
Because of the inherent differences between the business, operations and
prospects of the Comparable Public Companies, on the one hand, and the Company,
on the other, ▇▇▇▇▇▇ Brothers believed that it was inappropriate to, and
therefore did not, rely solely on the quantitative results of the analysis but
rather also made qualitative judgments concerning differences between the
financial and operating characteristics and prospects of the Comparable Public
Companies, on the one hand, and the Company, on the other, that would affect the
public trading values of each.
PRECEDENT TRANSACTIONS ANALYSIS. ▇▇▇▇▇▇ Brothers compared the financial and
operating performance of certain companies that had entered into merger
transactions since 1997 (with the exception of the transaction by ▇▇▇▇
Corporation with Masland Corporation announced on May 24, 1996) and the
financial terms of such transactions, which ▇▇▇▇▇▇ Brothers considered relevant,
with the historical financial and operating performance of the Company and the
financial terms of the Merger. Using publicly available information, ▇▇▇▇▇▇
Brothers analyzed the purchase prices and multiples paid in selected merger and
acquisition transactions in three different categories: automotive supplier
industry, industrial products industry and leveraged buyout transactions
involving industrial manufacturing companies.
The transactions among automotive suppliers that ▇▇▇▇▇▇ Brothers considered
comparable to the Merger (the "Automotive Supplier Transactions") consisted of
(identified by acquiror/acquiree):
- Intermet Corporation/Ganton Technologies, Inc.
- ▇▇▇▇'▇ International, Inc./Goshen Rubber Companies, Inc.
- Wagon PLC/Aries Structures
- Total Fina SA's ▇▇▇▇▇▇▇▇▇▇ ▇▇ unit/Harvard Industries Inc.'s
▇▇▇▇▇▇▇▇-▇▇▇▇▇▇ unit
- ▇▇▇▇-▇▇▇▇▇▇ Automotive, Inc./▇▇▇▇▇ Corporation's Fluid Power unit
- ▇▇▇▇▇▇ Tire & Rubber Company/Standard Products Company
- American Axle & Manufacturing, Inc./Colfor Manufacturing, Inc.
- Dura Automotive Systems, Inc./Adwest Automotive PLC
- Dura Automotive Systems, Inc./Excel Industries, Inc.
- The General Chemical Group Inc./Defiance, Inc.
- ▇▇▇▇-▇▇▇▇▇▇ Automotive, Inc./▇▇▇▇▇▇▇ Corporation
- Key Plastics LLC/the Foggini Group
- BTR PLC/Saiag SpA's Automotive Sealing unit
- Magna International, Inc./Triam Automotive Inc.
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- Breed Technologies, Inc./Allied Signal Inc.'s Auto Air Bag unit
- Key Plastics Inc./TRINOVA Corporation's Interior Automotive Plastics
facilities
- Magna International, Inc./▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇ Company
- ▇▇▇▇ Corporation/Masland Corporation
The transactions among industrial products companies that ▇▇▇▇▇▇ Brothers
considered comparable to the Merger (the "Industrial Products Transactions")
consisted of (identified by acquiror/acquiree):
- ▇▇▇▇▇ Incorporated/Sinjet System AB
- ▇▇▇▇▇▇ Group Inc./Allegheny Teledyne Incorporated's nitrogen gas springs
unit
- Amsted Industries Incorporated/Varlen Corporation
- Pentair, Inc./Essef Corporation
- Applied Power Inc./ZERO Corporation
- MascoTech, Inc./TriMas Corporation
- Kennametal Inc./Greenfield Industries, Inc.
- Thyssen AG/▇▇▇▇▇▇▇▇ & ▇▇▇▇▇, Inc.
- Durco International Inc./BW/IP, Inc.
- ITT Industries, Inc./Goulds Pumps, Incorporated
The leveraged buyout transactions involving industrial manufacturing
companies that ▇▇▇▇▇▇ Brothers considered comparable to the Merger (the
"Industrial LBOs" and, together with the Automotive Supplier Transactions and
Industrial Products Transactions, the "Precedent Transactions") consisted of
(identified by acquiror/acquiree):
- ▇▇▇▇▇ & Company/Citation Corporation
- Carreras, ▇▇▇▇▇▇▇ & Co., L.L.C./Hilite Industries, Inc.
- ▇▇▇▇▇▇ Brothers Inc./▇▇▇▇▇▇ International, Inc.
- Tinicum Capital Partners, L.P./▇▇▇▇▇▇ International, Inc.
- ▇.▇. Childs Associates, Inc./American Safety Razor Company
- The Blackstone Group L.P. and Veritas Capital Partners L.P./Republic
Engineered Steels, Inc.
- BancBoston Ventures, Inc./CMI Industries, Inc.
- ▇▇▇▇▇▇▇▇▇, Lufkin & ▇▇▇▇▇▇▇▇, Inc./Insilco Corporation
- ▇▇▇▇▇▇▇▇▇, Lufkin & ▇▇▇▇▇▇▇▇, Inc./Thermadyne Holdings Corporation
- The Blackstone Group L.P./▇▇▇▇▇▇ Packaging Company
- ▇▇▇▇ Capital, Inc./Sealy Corporation
- Investcorp S.A./Falcon Building Products, Inc.
- Kohlberg Kravis ▇▇▇▇▇▇▇ & Co., L.P./Amphenol Corporation
▇▇▇▇▇▇ Brothers calculated the purchase price (including net debt) as a
multiple of LTM net sales, EBITDA and EBIT for each acquired company for the
four fiscal quarters immediately preceding the announcement of the transaction.
This analysis indicated the following results:
LOW HIGH MEDIAN
------ ------ ------
Purchase price as a multiple of LTM net sales............... 0.37x 2.08x 1.00x
Purchase price as a multiple of LTM EBITDA.................. 3.8x 11.6x 7.3x
Purchase price as a multiple of LTM EBIT.................... 5.6x 24.4x 11.4x
Based on the Merger price, the multiple of LTM net sales, EBITDA and EBIT
paid for the Company are 0.74x, 6.0x and 9.2x, respectively.
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Because the market conditions, rationale and circumstances surrounding each
of the Precedent Transactions analyzed were specific to each transaction and
because of the inherent differences between the businesses, operations and
prospects of the Precedent Transactions, on the one hand, and the Company, on
the other, ▇▇▇▇▇▇ Brothers believed that it was inappropriate to, and therefore
did not, rely solely on the quantitative results of the analysis and,
accordingly, also made qualitative judgements concerning differences between the
characteristics of the Precedent Transactions, on the one hand, and the Company,
on the other, that would affect the acquisition value of the Company and such
acquired companies.
PREMIUMS PAID ANALYSIS. ▇▇▇▇▇▇ Brothers also analyzed the premiums paid
relative to prices prior to announcement in connection with the Precedent
Transactions. ▇▇▇▇▇▇ Brothers calculated the premium per share paid by the
acquiror in each of the Precedent Transactions as a percentage of the stock
price of the acquired company one day, one week, four weeks, at the 52-week high
and the 52-week low prior to the original announcement of the Precedent
Transactions. This analysis indicated the following results:
LOW HIGH MEDIAN
----- ----- ------
One day prior............................................... -8.6% 104.1% 23.8%
One week prior.............................................. 8.1% 109.8% 32.6%
Four weeks prior............................................ 0.4% 108.3% 35.8%
Vs. 52-week high............................................ -44.4% 44.4% 4.1%
Vs. 52-week low............................................. 7.7% 427.3% 76.0%
▇▇▇▇▇▇ Brothers compared the above-mentioned ranges and median premiums of
the Precedent Transactions to the premiums implied by the Merger price over the
closing market price of Common Stock one day, one week, four weeks, at the
52-week high and at the 52-week low prior to the initial announcement of the
Merger.
The Merger price implied premiums of 57.9%, 45.2%, 80.0%, 21.6% and 91.5%,
respectively, over the closing market price of Common Stock one day, one week,
four weeks, at the 52-week high and at the 52-week low prior to the initial
announcement of the Merger.
DISCOUNTED CASH FLOW ANALYSIS. ▇▇▇▇▇▇ Brothers performed a discounted cash
flow analysis on the projected financial information of the Company for the
fiscal years 2000 through 2004, based upon operating and financial assumptions,
forecasts and other information provided to ▇▇▇▇▇▇ Brothers by the management of
the Company. Using this information, ▇▇▇▇▇▇ Brothers discounted to present value
the projected stream of unleveraged net income (earnings before interest and
after taxes) for the fiscal years 2000 through 2004 as adjusted for: certain
projected non-cash items (such as depreciation and amortization); forecasted
capital expenditures (including discretionary capital expenditures); and
forecasted changes in non-cash working capital (in aggregate, "Free Cash Flow").
To estimate the residual value of the Company at the end of the forecast (the
"Terminal Value"), ▇▇▇▇▇▇ Brothers utilized two approaches, applying a range of
5.5x-6.5x multiples to projected fiscal 2004 EBITDA and applying terminal period
growth rates of 4.0%-5.0% to projected fiscal 2004 Free Cash Flow, and
discounted these Terminal Values to present value.
▇▇▇▇▇▇ Brothers applied a range of discount rates that varied from 11.5% to
12.5%, based on a weighted average cost of capital analysis of the Comparable
Public Companies derived from the Capital Asset Pricing Model. To calculate the
aggregate net present value of the equity of the Company, ▇▇▇▇▇▇ Brothers
subtracted total debt less cash and cash equivalents of the Company as of
December 31, 1999, from the sum of the present value of the projected Free Cash
Flow and the present value of the Terminal Value. This analysis resulted in a
range of equity values of approximately $10.14 to $14.19 per share.
LEVERAGED BUYOUT ANALYSIS. ▇▇▇▇▇▇ Brothers performed a leveraged buyout
analysis to determine the potential implied equity value per share of Common
Stock that might be achieved in an acquisition of the Company in a leveraged
buyout transaction based on current market conditions. In conducting this
analysis, ▇▇▇▇▇▇ Brothers utilized projected financial information of the
Company, based upon operating and financial assumptions, forecasts and other
information provided to ▇▇▇▇▇▇ Brothers by the management of the Company for the
fiscal years 2000 through 2004, and based upon ▇▇▇▇▇▇ Brothers'
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estimates for the fiscal years 2005 through 2009, and assumed that merger
financing could be obtained in the high yield market and bank finance markets in
an amount not in excess of 4.8x 1999 estimated EBITDA. ▇▇▇▇▇▇ Brothers assumed
that a minimum internal rate of return ranging from 20% to 30% on equity
invested during a five-year period would be required by an acquiror. This
analysis resulted in a range of equity values of the Company of $10.00 to $11.50
per share.
PRESENT VALUE OF FUTURE STOCK PRICE ANALYSIS. ▇▇▇▇▇▇ Brothers examined the
present value to shareholders of holding the Common Stock for two years and four
years. Specifically, ▇▇▇▇▇▇ Brothers assumed that the hypothetical future stock
price in two and four years was estimated based on multiplying projected EPS
(based on management projections) by a range of P/E multiples from 10.0x to
13.0x (assuming the Company continues not to pay a dividend to common
shareholders). ▇▇▇▇▇▇ Brothers then discounted these hypothetical future stock
prices per share, applying a range of discount rates from 13% to 15%. The
discount rates were based on the estimated cost of equity capital for the
Company. This analysis resulted in a range of equity values of the Company of
$9.11 to $13.20 per share.
BREAK-UP ANALYSIS. The Special Committee did not request ▇▇▇▇▇▇ Brothers
to solicit indications of interest to purchase the entire Company or any of the
divisions or assets of the Company in connection with advising the Special
Committee on the Merger. However, ▇▇▇▇▇▇ Brothers analyzed the hypothetical
value of the Company assuming that it could be separated and sold as two
distinct, stand-alone businesses, automotive products and industrial consumable
products. The enterprise values of the separate businesses were determined based
on an analysis of the 1999 management projections for each business. A range of
multiples of enterprise value to EBITDA, derived from the Precedent Transactions
Analysis, was then applied to 1999 estimated EBITDA to determine a pretax
enterprise value for each business. The aggregate value of the two businesses
was then adjusted to reflect total debt minus cash and non-operating assets and
liabilities to arrive at equity value per share of the Company. Based upon
advice of the Company, ▇▇▇▇▇▇ Brothers then took into account the fact that the
Company would likely incur a significant tax liability upon the sale of its
assets, resulting in an after-tax break-up value of the Company of $9.52 to
$11.16 per share.
COMMON STOCK PRICE ANALYSIS. ▇▇▇▇▇▇ Brothers compared the Common Stock
price performance from January 31, 1995 until January 28, 2000, one day before
the initial announcement of the Merger. Using January 31, 1995 as the base of
100%, on January 28, 2000, the Common Stock price was 79.2% of the base value,
as compared to the S&P 400 Index value of 262.1%.
▇▇▇▇▇▇ Brothers also compared the Common Stock price performance from
January 31, 1995 until January 28, 2000 with an index of the Comparable
Automotive Suppliers, an index of the Comparable Industrial Consumables
Producers and an index of the Comparable Small-Cap Diversified Manufacturers.
Using January 31, 1995 as the base of 100%, on January 28, 2000, the Common
Stock price was 79.2% of the base value, as compared to an index of the
Comparable Automotive Suppliers, the Comparable Industrial Consumables Producers
and the Comparable Small-Cap Diversified Manufacturers values of 140.3%, 129.2%
and 135.5% of their base value, respectively.
▇▇▇▇▇▇ Brothers noted that the Merger price of $11.25 per share was 57.9%
above the $7.13 per share closing price of the Common Stock one day prior to the
Merger, 45.2% above the $7.75 per share closing price one week prior to the
Merger, 80.0% above the $6.25 per share closing price one month prior to the
Merger and 21.6% above the Common Stock's 52-week high through January 28, 2000
of $9.25 per share. Within the Comparable Public Companies, as of January 28,
2000, the Comparable Automotive Suppliers were down on average 28.7% from their
52-week highs, the Comparable Industrial Consumables Producers were down on
average 26.2% from their 52-week highs and the Comparable Small-Cap Diversified
Manufacturers were down on average 29.9% from their 52-week highs. Overall, the
Comparable Public Companies were down on average 28.2% from their 52-week highs.
▇▇▇▇▇▇ Brothers is an internationally recognized investment banking firm
and, as part of its investment banking activities, is regularly engaged in the
evaluation of businesses and their securities in connection with mergers and
acquisitions, negotiated underwritings, competitive bids, secondary
distributions of listed and unlisted securities, private placements and
valuations for corporate and other purposes. The Special
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Committee selected ▇▇▇▇▇▇ Brothers because of its expertise, reputation and
familiarity with the Company and because its investment banking professionals
have substantial experience in transactions similar to the Merger.
As compensation for its services in connection with the Merger, the Company
has agreed to pay ▇▇▇▇▇▇ Brothers a fee for acting as financial advisor to the
Special Committee in connection with the Merger, including rendering its
opinion. Under the terms of an engagement letter between ▇▇▇▇▇▇ Brothers and the
Special Committee, the Company agreed to pay ▇▇▇▇▇▇ Brothers customary financial
advisory fees, a portion of which was payable upon the rendering of the ▇▇▇▇▇▇
Opinion. See "THE MERGER -- FEES AND EXPENSES."
In addition, the Company has agreed to reimburse ▇▇▇▇▇▇ Brothers for
reasonable out-of-pocket expenses incurred in connection with the Merger and to
indemnify ▇▇▇▇▇▇ Brothers for certain liabilities that may arise out of its
engagement by the Company and the rendering of its opinion. In the ordinary
course of its business, ▇▇▇▇▇▇ Brothers may trade in the equity securities of
the Company for its own account and for the accounts of its customers and,
accordingly, may at any time hold a long or short position in such securities.
ACCOUNTING TREATMENT OF THE MERGER
The Merger will be accounted for as a "purchase" in accordance with
generally accepted accounting principles. Consequently, the aggregate
consideration paid by Merger Sub in connection with the Merger will be allocated
to the assets and liabilities of the Surviving Corporation based upon their fair
values, with any excess being treated as goodwill.
CERTAIN TAX CONSEQUENCES OF THE MERGER
The following is a general summary of certain U.S. federal income tax
consequences of the Merger relevant to a beneficial holder of shares of Common
Stock whose shares are converted into cash in the Merger. This discussion is for
general information only and does not purport to consider all aspects of U.S.
federal income taxation that may be relevant to a holder of shares of Common
Stock. The discussion is based on the provisions of the Internal Revenue Code of
1986 (the "Code"), existing regulations promulgated thereunder, judicial
decisions and administrative rulings, all as in effect as of the date hereof and
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 of Common Stock that may be subject to special rules
(e.g., holders who acquired their shares of Common Stock under the exercise of
employee stock options or other compensation arrangements with the Company,
holders who perfect their dissenters' rights under the WBCL, holders who retain
a continuing ownership interest in the Surviving Corporation, foreign holders,
insurance companies, tax-exempt organizations, dealers in securities and persons
who have acquired the shares of Common Stock as part of a straddle, hedge,
conversion transaction or other integrated investment), nor does it address the
U.S. federal income tax consequences to persons who do not hold the shares of
Common Stock as "capital assets" within the meaning of Section 1221 of the Code
(generally, property held for investment). In addition, the following does not
address the U.S. federal income tax consequences to the Management Shareholders
or any other shareholder who receives cash in the Merger and who has contributed
or will contribute a portion of their shares of Common Stock for the right to
receive shares of common stock of the Parent.
Each holder of Common Stock should consult his or her tax advisor as to the
particular tax consequences of the Merger, including the application and effect
of U.S. federal, state, local and foreign tax laws and possible changes in tax
laws.
The receipt of cash for shares of Common Stock in 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. For U.S. federal income tax purposes, a holder of Common Stock who
receives cash in exchange for shares of Common Stock in the Merger will
generally recognize capital gain or loss equal to the difference, if any,
between the amount of cash received and the holder's adjusted tax basis in the
shares of Common Stock surrendered for cash in the Merger. Gain or loss will be
determined separately
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for each block of shares of Common Stock (i.e., shares of Common Stock acquired
at the same cost in a single transaction) surrendered for cash in the Merger.
Such capital gain or loss will be long-term capital gain or loss if the holder
has held the shares of Common Stock for more than one year at the time the
Merger is completed. Net capital gain recognized by an individual investor (or
an estate or certain trusts) upon a disposition of a share of Common Stock 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 of Common Stock 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.
THE MERGER
MERGER CONSIDERATION; CANCELLATION OF COMMON STOCK
The Merger Agreement provides that, at the Effective Time, each issued and
outstanding share of Common Stock, other than (i) Common Stock owned by the
Company or its subsidiaries, (ii) Common Stock owned by Merger Sub (including
2,437,262 shares of Common Stock currently owned by the Management Shareholders
to be contributed to Parent prior to the Merger) and (iii) Dissenting Shares,
will be converted into the right to receive the Merger Consideration. All shares
of Common Stock so converted will no longer be outstanding and will
automatically be canceled and retired and will cease to exist.
At the Effective Time, Common Stock owned by the Company or its
subsidiaries and Common Stock owned by Merger Sub and its affiliates (including
2,437,262 shares of Common Stock currently owned by the Management Shareholders
to be contributed to Parent prior to the Merger) will be canceled and retired
without any consideration.
In addition, the Merger Agreement provides that at the Effective Time, each
issued and outstanding option to acquire Common Stock will be converted into the
right to receive the Option Consideration, and each such option will
automatically be canceled and retired and will cease to exist, in exchange for
the right to receive the Option Consideration.
Each share of Merger Sub's common stock issued and outstanding immediately
prior to the Effective Time will be converted into and become fully paid and
nonassessable shares of common stock, par value $0.01, of the Surviving
Corporation upon the surrender of the certificates previously representing such
shares of Merger Sub's common stock.
BACKGROUND OF THE MERGER
During 1998 and early 1999 the Board of Directors discussed concerns that
the Company's stock price was undervalued in view of the Company's financial
performance. Subsequently, the Board of Directors reviewed this matter, and in
January and February, 1999, invited ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ Gull ("▇▇▇▇▇▇") to
make a presentation to the Board of Directors concerning alternatives that might
be available to the Company to increase shareholder value. In February, 1999,
▇▇▇▇▇▇ made its presentation to the Board of Directors. The Board of Directors
considered this presentation and other factors deemed relevant by individual
members of the Board of Directors and concluded at the time to take no specific
action. The Board of Directors then communicated to management its concern and
encouraged management to work towards enhancing shareholder value.
In late June, 1999 and again on or about August 31, 1999, ▇▇▇▇▇▇ ▇. ▇▇▇▇▇,
on behalf of SMC, met with ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Chairman of the Company, regarding
whether the Management Shareholders would be interested in discussing the
possibility of participating in a buyout transaction financed by SMC. In
September, 1999, the Management Shareholders informed the Board of Directors of
SMC's interest in possibly participating in a buyout transaction with the
Management Shareholders.
On September 23, 1999, the Company received a letter from SMC (the "SMC
Letter") expressing an interest in discussing a buyout transaction with the
Company and the Management Shareholders. The SMC Letter suggested that a price
to the Company's shareholders of $9.50 per share was possible. The Company
forwarded the SMC Letter to the Board of Directors, but did not immediately
respond to the SMC Letter.
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On September 23, 1999, the Company also entered into a confidentiality and
standstill agreement with SMC, pursuant to which the Company agreed to provide
SMC with certain limited financial information regarding the Company. SMC agreed
to treat all information provided by the Company to SMC as confidential and
agreed not to purchase any additional equity securities of the Company, solicit
proxies to vote Common Stock or attempt to influence the management, Board of
Directors or policies of the Company for a period of two years. Following
execution of that agreement, the Company provided certain limited financial
information to SMC.
On October 1, 1999, the Board of Directors established the Special
Committee comprised of the non-management members of the Board of Directors,
▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇ and ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇. The Special
Committee was authorized by the Board of Directors to consider strategic
alternatives available to the Company, including but not limited to the proposal
in the SMC Letter or other buyout or similar transactions. On October 1, 1999,
▇▇▇▇▇▇▇ ▇▇▇▇ & Friedrich LLP was retained by the Special Committee to serve as
independent counsel to the Special Committee and thereafter made a presentation
to the Special Committee regarding the Special Committee's fiduciary duties,
responsibilities and prerogatives as members of the Board of Directors and of a
special committee of non-management members of the Board of Directors. ▇▇▇▇▇▇▇
▇▇▇▇ & ▇▇▇▇▇▇▇▇▇ LLP had not previously represented the Company or any
individual members of the Board of Directors.
On October 1, 1999, the Special Committee selected ▇▇▇▇▇▇ Brothers as its
independent financial advisor, subject to negotiating a satisfactory engagement
agreement, which was subsequently executed by the Company as of November 15,
1999. The Special Committee directed ▇▇▇▇▇▇ Brothers to undertake an analysis of
the strategic alternatives available to the Company, including the proposal in
the SMC Letter, remaining as an independent public company and otherwise being
acquired by a management-sponsored group or an independent third party. ▇▇▇▇▇▇
Brothers had not previously represented the Company.
On October 1, 1999, at the request of SMC, the Special Committee, along
with its legal and financial advisors, met with the Management Shareholders and
representatives of SMC to learn about the background, experience and
capabilities of SMC. SMC also reviewed the SMC Letter with the Special Committee
at this meeting. The Special Committee declined to engage in any further
discussions with SMC at this time.
At its meeting on October 14, 1999, the Special Committee engaged in a
further discussion of its legal duties and prerogatives and its duty to remain
independent. ▇▇▇▇▇▇ Brothers reported on its activities and analysis to date and
also stated that, although ▇▇▇▇▇▇ Brothers had not yet concluded its analysis of
the Company, it had determined on a preliminary basis that the price per share
referenced in the SMC Letter was inadequate. ▇▇▇▇▇▇ Brothers also reported on
other methods to enhance shareholder value. At this meeting, counsel for the
Special Committee was directed to inform the Company that all future requests
for confidential information concerning the Company should be directed to the
Special Committee and not the Company.
At its meeting on October 26, 1999, the Special Committee determined, after
considering the ▇▇▇▇▇▇ Brothers report of October 26, 1999 and other factors,
that it was not prepared to pursue the proposal outlined in the SMC Letter and
desired to consider other strategic alternatives available to the Company. In
addition, the Special Committee directed its legal and financial advisors to
respond to SMC that the price per share contained in the SMC Letter was
unacceptable. The Special Committee also directed its advisors to communicate to
SMC that the contingent nature of the financing discussed in the SMC Letter was
also unacceptable.
In October and November, 1999, the Special Committee considered the merits
of conducting an auction of the Company to third parties or authorizing ▇▇▇▇▇▇
Brothers to solicit interest from third parties, and discussed this possibility
with the Management Shareholders. During this process, the Management
Shareholders informed the Special Committee that SMC was not willing to
participate in an auction of the Company and would withdraw its proposal if the
Company were put up for auction or if ▇▇▇▇▇▇ Brothers actively solicited third
party offers. The financial advisor and counsel to the Special Committee later
confirmed this fact directly with SMC. The Management Shareholders also advised
the Special Committee that they were opposed to these alternatives. After
considering these factors, the Special Committee
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concluded that it would not be in the best interests of the Public Shareholders
to assume the risk that SMC would withdraw its proposal, because the opportunity
to obtain a premium price for the Common Stock for the Public Shareholders would
be lost. Accordingly, the Special Committee did not direct ▇▇▇▇▇▇ Brothers to
solicit offers or indications of interest from third parties. The Special
Committee also believed that the ultimate public disclosure of a merger
agreement would have an effect similar to an auction of the Company so long as
any definitive merger agreement preserved the right of the Special Committee and
its advisors to enter into negotiations and discussions with third parties that
might express an interest in acquiring, or entering into a transaction with, the
Company. The Special Committee was also cognizant that, unlike a public auction,
the Special Committee would be assured in this process of a committed buyer. The
Special Committee and its legal and financial advisors were unanimous in this
view.
On November 6, 1999, the Special Committee and its legal and financial
advisors met with the Management Shareholders to engage in a discussion of
strategic alternatives available to the Company, including a management buyout.
At this meeting, the Management Shareholders also informed the Special Committee
that SMC was desirous of presenting a revised proposal for a buyout transaction
involving the Company and provided a letter from SMC dated November 6, 1999 (the
"November SMC Letter"). The Special Committee then requested the Management
Shareholders to continue to consider other alternatives available to the
Company. In addition the Special Committee informed the Management Shareholders
that it would not immediately respond to the November SMC Letter, and would
respond in due course. ▇▇▇▇▇ ▇▇▇▇▇ was elected Chairman of the Special Committee
at this meeting.
On November 12, 1999, the Special Committee met with its legal and
financial advisors. At this meeting, the November SMC Letter was discussed in
detail by the Special Committee and ▇▇▇▇▇▇ Brothers. The Special Committee also
discussed its unanimous desire to retain maximum flexibility to respond to other
opportunities which may be presented to the Company and engaged with counsel in
a discussion of the members' fiduciary responsibilities and prerogatives as
members of the Special Committee and Board of Directors. The Special Committee
concluded based upon these factors and the presentations from its advisors that
the proposal outlined in the November SMC Letter was unacceptable. The Special
Committee directed its advisors to communicate its position to SMC.
The Special Committee met on November 18, 1999 to further review matters
within its jurisdiction. On or about November 22, 1999, at the direction of the
Special Committee, counsel for the Special Committee informed SMC that it would
not consider any proposal involving the Management Shareholders and SMC unless
and until (i) counsel for SMC prepared and presented to the Special Committee a
form of merger agreement (excluding the economic terms of any proposed
transaction) which was satisfactory to the Special Committee in its sole
discretion, and (ii) SMC obtained signed commitment letters satisfactory to the
Special Committee and ▇▇▇▇▇▇ Brothers which evidenced SMC's financial capacity
to consummate a transaction with the Company.
During the period from November 22, 1999 through the date of the Merger
Agreement, representatives of SMC and the Management Shareholders met several
times and had numerous telephone conferences to generally discuss issues
regarding, among other things, possible transaction structure, financing for a
potential transaction, the terms of the Management Shareholders' participation
in a possible transaction, possible shareholder arrangements following the
transaction, accounting issues and due diligence matters. In addition, with the
approval of the Special Committee, during such period SMC met with the Company's
senior management and reviewed certain non-public financial information of the
Company, including certain projections and alternative forecasts prepared by
senior management at the request of SMC (the "Projections"), and the Special
Committee allowed SMC and its potential financing sources to conduct due
diligence with respect to the Company and its assets and operations. Prior to
delivery to SMC, the Projections were provided to and reviewed by the Special
Committee and its legal and financial advisors as described in "THE
MERGER -- CERTAIN PROJECTIONS OF FUTURE OPERATING RESULTS."
On or about December 14, 1999, counsel for SMC advised counsel for the
Special Committee that SMC was in the process of performing its due diligence
review of the Company and that a draft of a merger agreement might be submitted
to the Special Committee as early as the end of December, 1999. In addition,
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counsel for SMC advised counsel for the Special Committee that negotiations with
potential financing sources were ongoing and that SMC was working to obtain
signed commitment letters to present to the Special Committee in advance of
making any further proposals to the Special Committee regarding a potential
transaction with the Company.
On December 30, 1999, counsel for SMC presented counsel for the Special
Committee with an initial draft form of merger agreement. The draft presented
did not contain any economic terms of the proposed transaction. During the first
two weeks of January 2000, counsel for SMC and counsel for the Special Committee
negotiated the form of merger agreement.
On January 21, 2000, the Special Committee met with its legal and financial
advisors to discuss the progress of SMC in obtaining draft commitment letters
and the progress of counsel in negotiating the form of merger agreement with
counsel for SMC. ▇▇▇▇▇▇ Brothers reported to the Special Committee that it had
received and reviewed unsigned drafts of commitment letters and that, based upon
and only to the extent of the information set forth in such commitment letters,
such commitment letters were from national financial institutions and contained
terms and conditions which were customary for financing the type of transaction
proposed by SMC and the Management Shareholders. ▇▇▇▇▇▇▇ ▇▇▇▇ & ▇▇▇▇▇▇▇▇▇ LLP
reported that its negotiations with SMC's counsel were ongoing and described in
detail several non-economic terms of the proposed merger agreement which, in the
opinion of counsel, were unacceptable. From approximately 2:00 p.m. until 11:00
p.m. on January 21, 2000, the Special Committee and its legal and financial
advisors met with SMC and its counsel to negotiate the non-economic terms in the
form of merger agreement. At 11:00 p.m., the Special Committee informed SMC that
an impasse existed as to the non-economic terms of the form of merger agreement
and that further discussions were at an end.
On January 22, 2000, the Special Committee reconvened. After deliberation,
the Special Committee determined that under certain conditions it would be in
the best interests of shareholders to resume further negotiations with SMC and
authorized ▇▇▇▇▇▇▇ ▇▇▇▇ & Friedrich LLP to communicate such conditions to SMC.
Counsel for SMC agreed to proceed on the basis outlined by the Special
Committee. In addition, the Special Committee advised SMC that it would not
enter into any economic discussions regarding the Merger until an acceptable
form of merger agreement was prepared. From January 22, 2000 through January 27,
2000, counsel for the Special Committee and counsel for SMC continued to
negotiate the non-economic terms of the form of merger agreement. On January 26
and 27, 2000, ▇▇▇▇▇▇▇ ▇▇▇▇ & ▇▇▇▇▇▇▇▇▇ LLP reported to members of the Special
Committee on the negotiation of the non-economic terms of the form of merger
agreement. On January 28, 2000, the Special Committee met with ▇▇▇▇▇▇▇ ▇▇▇▇ &
Friedrich LLP to discuss the proposed form of merger agreement in detail. The
Special Committee concluded that negotiations had progressed to a point that a
meeting between the Special Committee and SMC to discuss the economic terms of
the proposed merger was appropriate.
At approximately 1:00 p.m. on January 28, 2000, the Special Committee met
with the Management Shareholders and representatives of SMC. SMC then made an
extensive proposal regarding the economic terms of the proposed merger to the
Special Committee pursuant to which SMC proposed that Saw Mill, Parent and
Merger Sub would purchase Common Stock owned by all shareholders for $10.50 per
share in cash. In addition, SMC made proposals regarding various other economic
and non-economic elements of the proposed transaction, including the
circumstances under which the Special Committee would be permitted to engage in
negotiations and discussions with respect to alternative transactions with third
parties, the proposed termination fee and a cap on expense reimbursement in
certain circumstances. The Special Committee then met privately with its legal
and financial advisors regarding each element of the SMC proposal. The Special
Committee then met with SMC and delivered a detailed response to each element of
the SMC proposal and informed SMC that a price of $10.50 per share was
unacceptable and advised SMC that its price per share must be substantially
increased. At 6:30 p.m., SMC informed the Special Committee that it was
unwilling to increase its offer. The Special Committee advised SMC that, at a
price of $10.50 per share, it would not recommend that the Board of Directors
enter into a merger agreement. The Special Committee then adjourned.
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43
Later that evening, the Management Shareholders contacted counsel for the
Special Committee and asked whether the Special Committee would agree to a
further meeting the next day. Following discussions with members of the Special
Committee, counsel for the Special Committee advised the Management Shareholders
that the Special Committee would make itself available to meet again on January
29, 2000. On January 29, 2000, the Special Committee reconvened. SMC then
presented a revised proposal to the Special Committee, pursuant to which SMC
proposed a price to all shareholders of $11.00 per share. After a presentation
by ▇▇▇▇▇▇ Brothers, and based upon the views of its members, the Special
Committee concluded that $11.00 per share was inadequate and communicated its
position to SMC. Discussions continued throughout the day. SMC then advised the
Special Committee that it had restructured its proposed offer such that the
Public Shareholders would receive $11.25 per share in cash and the Management
Shareholders would receive a blended value of approximately $10.90 per share in
cash and common stock of Parent. SMC was then excused from the meeting, and
▇▇▇▇▇▇ Brothers presented to the Special Committee an extensive written and oral
analysis of the revised transaction structure and valuation methodologies. At
the end of such presentation, ▇▇▇▇▇▇ Brothers advised the Special Committee
that, in its opinion, the price of $11.25 per share to the Public Shareholders
was fair to such shareholders from a financial point of view. This opinion was
confirmed in writing on January 31, 2000 in the form of the ▇▇▇▇▇▇ Opinion
attached as ANNEX B. The Special Committee also received a point-by-point
analysis of the form of proposed merger agreement from ▇▇▇▇▇▇▇ ▇▇▇▇ & ▇▇▇▇▇▇▇▇▇
LLP.
The Special Committee then informed SMC that, subject to final review and
analysis of the form of merger agreement incorporating the most recent economic
terms proposed by SMC and subject to final review of signed commitment letters
for financing of the proposed transaction, the Special Committee would recommend
that the Board of Directors approve the proposed merger at a price of $11.25 per
share to the Public Shareholders. The full Board of Directors then convened a
meeting to discuss the proposed merger, at which the Company's regular outside
counsel, Reinhart, Boerner, Van Deuren, ▇▇▇▇▇▇ & Rieselbach, s.c., was present.
At this Board of Directors meeting, ▇▇▇▇▇▇ Brothers made an extensive
presentation to the full Board of Directors and the Company's regular counsel
regarding the SMC proposal and explained to the full Board of Directors that it
had rendered an oral opinion to the Special Committee that a price of $11.25 per
share was fair, from a financial point of view, to the Public Shareholders.
Based upon the presentation from ▇▇▇▇▇▇ Brothers and the work and approval of
the Special Committee, the full Board of Directors voted to approve and adopt
the Merger Agreement, subject to confirmation of agreed upon changes to the form
of merger agreement and receipt of executed commitment letters from the sources
of debt and equity financing for the transaction. The Management Shareholders
were present for the full Board of Directors meeting, but abstained from voting
on the motion to recommend the Merger Agreement to the Public Shareholders.
As required by the Special Committee and the Board of Directors, on January
30, 2000, a completed form of the Merger Agreement and executed commitment
letters for the debt and equity financing were presented by SMC. The Company,
the Management Shareholders, Saw Mill, Parent and Merger Sub then executed the
Merger Agreement. The Management Shareholders, certain of their affiliates, and
Merger Sub then executed the Voting Agreement.
Prior to the opening of NASDAQ for trading on January 31, 2000, the Company
issued a press release announcing the execution of the Merger Agreement.
RECOMMENDATION OF THE SPECIAL COMMITTEE AND THE BOARD OF DIRECTORS
The Special Committee considered a variety of factors in determining
whether to recommend that the Board of Directors approve and adopt the Merger
Agreement and submit the Merger Agreement to a vote of shareholders (SEE
"SPECIAL FACTORS -- REASONS FOR THE MERGER; FAIRNESS OF THE MERGER"). Based upon
such factors, the Special Committee unanimously recommended that the Board of
Directors approve and adopt the Merger Agreement, subject only to shareholder
approval, the right of the Board of Directors to continue to consider proposals
from third parties under the Merger Agreement, and the continuing exercise of
the fiduciary duties of the Board of Directors.
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The Board of Directors considered and relied upon the conclusions and
unanimous recommendation of the Special Committee that the full Board of
Directors approve the Merger Agreement and the transactions contemplated
thereby, including the Merger. In light of the number and variety of factors
that the Special Committee and the Board of Directors considered in connection
with their evaluation of the Merger, neither the Special Committee nor the Board
of Directors found it practicable to quantify or otherwise assign relative
weights to the foregoing factors, and accordingly, neither the Special Committee
nor the Board of Directors did so. In addition, individual members of the
Special Committee and the Board of Directors may have given different weights to
different factors. The Special Committee and the Board of Directors viewed their
positions and recommendations as being based on the totality of the information
presented and considered by them, respectively.
The Board of Directors, after receiving the unanimous recommendation of the
Special Committee, has approved the Merger Agreement and the Merger, and has
determined that the Merger Agreement and the Merger are advisable, fair to and
in the best interests of the Public Shareholders. ACCORDINGLY, THE BOARD OF
DIRECTORS RECOMMENDS THAT SHAREHOLDERS VOTE "FOR" APPROVAL AND ADOPTION OF THE
MERGER AGREEMENT AT THE ANNUAL MEETING.
To avoid any potential conflict of interest with respect to the approval of
the Merger Agreement, the Management Shareholders, who are also members of the
Board of Directors, abstained from voting in their capacity as directors on the
approval and adoption of the Merger Agreement because of their relationship with
Saw Mill, Parent and Merger Sub and because the Management Shareholders will
have a substantial and continuing interest in the Surviving Corporation after
the Merger has been completed.
Under the Voting Agreement, the Management Shareholders provided Merger Sub
with their irrevocable proxy to vote 7,686,683 shares of Common Stock
beneficially owned by them in favor of the Merger. To the knowledge of the
Company after making reasonable inquiry, as of the date of this Proxy Statement,
all of the other executive officers and members of the Board of Directors of the
Company currently intend to vote all shares of Common Stock they own "FOR"
approval and adoption of the Merger Agreement at the Annual Meeting for one or
more of the reasons described under the caption "SPECIAL FACTORS -- Reasons for
the Merger; Fairness of the Merger." In the aggregate, the executive officers
and members of the Board of Directors of the Company beneficially own 8,465,996
shares of Common Stock, or 40.6% of the issued and outstanding shares of Common
Stock.
REQUIRED REGULATORY APPROVALS
Under the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Antitrust Improvements Act of 1976, as amended,
and the rules promulgated thereunder (collectively, the "HSR Act"), certain
merger transactions may not be completed unless certain information has been
furnished to the Antitrust Division of the Department of Justice and the Federal
Trade Commission and certain waiting periods have expired or been terminated.
Based upon information provided to the Company by Saw Mill, Parent and Merger
Sub, the Company has determined that the Company is not required to make any
filing under the HSR Act. The Company has not made any inquiry or determination
with respect to whether or not parties other than the Company may be required to
make filings under the HSR Act. The Company has been advised that ▇▇▇▇▇▇▇ ▇.
▇▇▇▇▇▇ will be required to make a filing under the HSR Act. The Company has
agreed to pay ▇▇. ▇▇▇▇▇▇'▇ $45,000 filing fee in connection with such filing. To
the knowledge of the Company after reasonable investigation, no other regulatory
approvals must be obtained in order to complete the Merger.
INTERESTS OF CERTAIN PERSONS IN THE MERGER
THE MANAGEMENT SHAREHOLDERS
Under the Merger Agreement, the Management Shareholders will contribute
2,437,262 shares of Common Stock, valued at an aggregate average of $10.13 per
share, to Parent immediately prior to the Effective Time in exchange for common
stock of Parent. In exchange, the Management Shareholders will receive
approximately 35% of the common stock of Parent issued and outstanding
immediately after the Effective Time, on a fully diluted basis (which percentage
may be reduced as a result of the issuance of
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45
warrants to providers of financing for the Merger). The Management Shareholders
and certain of their affiliates will receive the Merger Consideration of $11.25
per share for their remaining 5,250,550 shares of Common Stock resulting in an
average value in cash and stock of approximately $10.90 per share of Common
Stock being received by the Management Shareholders for their shares of Common
Stock in connection with the Merger. The ownership of common stock of Parent
presents the Management Shareholders with inherent conflicts of interest in
connection with the Merger. In considering the recommendation of the Board of
Directors with respect to the Merger, shareholders should be aware of such
interests. The Special Committee and the Board of Directors were aware of such
interests and considered them along with other factors described under "SPECIAL
FACTORS -- Reasons for the Merger; Fairness of the Merger."
The Management Shareholders and their affiliates in the aggregate currently
own 37.6% of the Common Stock. For the year ended December 31, 1999, the net
book value of the Company and net earnings of the Company were approximately,
$140,369,000 and $17,762,000, respectively. As a result the Management
Shareholders' aggregate proportionate interest in the net book value and net
earnings of the Company for the fiscal year ended December 31, 1999 was
approximately $52,778,744 and $6,678,512, respectively. If the Merger is
completed, the Management Shareholders, in the aggregate, will own approximately
35% of Parent (which percentage may be reduced as a result of the issuance of
warrants to providers of financing for the Merger) and will have, indirectly, a
proportionate interest in the net book value and net earnings of the Surviving
Corporation for the fiscal year ended December 31, 2000.
DIRECTORS AND EXECUTIVE OFFICERS OTHER THAN MANAGEMENT SHAREHOLDERS
Each member of the Board of Directors and each executive officer, other
than the Management Shareholders, and certain other employees of the Company own
shares of Common Stock and options to acquire Common Stock which will be
converted at the Effective Time into the right to receive the Merger
Consideration and Option Consideration, respectively. At or immediately after
the Effective Time, certain named executive officers (other than the Management
Shareholders) will receive vested options to acquire common stock of Parent
(which options have an aggregate value $1,119,391) which represent approximately
2.1% of the common stock of Parent issued and outstanding immediately after the
Effective Time on a fully diluted basis (which percentage may be reduced as a
result of the issuance of warrants to providers of financing for the Merger). In
addition, the same such named executive officers will receive vested deferred
compensation at or immediately after the Effective Time in the aggregate amount
of $373,130. Certain of such named-executive officers will also be entitled to
invest cash in the aggregate amount of $138,262 and to obtain loans from the
Parent, at or after the Effective Time, in the maximum aggregate amount of
$823,103, the proceeds of each of which will be used to purchase up to 1.3% of
the common stock of Parent on a fully diluted basis (which percentage may be
reduced as a result of the issuance of warrants to providers of financing for
the Merger). Such named executive officers may also receive additional
time-based and performance-based options and other compensation at or after the
Effective Time as the board of directors of Parent may determine in its sole
discretion. Except for the foregoing, the treatment of members of the Board of
Directors and each executive officer, other than the Management Shareholders,
and such other employees is identical to treatment of shareholders of the
Company who are not members of the Board of Directors, named executive officers
or employees. In the aggregate, the executive officers, other than the
Management Shareholders, will be entitled to receive $1,589,974 in Merger
Consideration and $510,841 in Option Consideration, including $137,363 with
respect to options that are not exercisable as of the date of this Proxy
Statement but which provide for accelerated vesting upon a change of control,
including as a result of the Merger, after the Effective Time. The members of
the Special Committee will be entitled to receive, in the aggregate, $2,303,831
in Merger Consideration and $484,073 in Option Consideration after the Effective
Time. All options held by members of the Special Committee are exercisable as of
the date of this Proxy Statement.
▇▇▇▇▇ ▇▇▇▇▇, the Chairman of the Special Committee, will be paid a fee of
$35,000, and each other member of the Special Committee will be paid a fee of
$25,000, for their service to the Company as members of the Special Committee.
In addition, the Chairman of the Special Committee is entitled to receive a fee
of $2,000 per meeting attended and each other member of the Special Committee is
entitled to receive a fee of
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46
$1,000 per meeting attended, plus reimbursement of any reasonable travel
expenses incurred in connection with attending such meetings.
SAW MILL, PARENT AND MERGER SUB
The Merger is being completed to permit Saw Mill, together with the
Management Shareholders, to acquire the Company from the Public Shareholders and
take the Company from being a public corporation to being a private corporation.
After the Merger, Saw Mill will indirectly control the Surviving Corporation
through its control of Parent.
VOTING AGREEMENT
Each of Parent, Merger Sub, Saw Mill, Saw Mill Investments II, LLC and ▇▇.
▇▇▇▇▇ acquired beneficial ownership of 7,686,683 shares of Common Stock
(representing approximately 37.6% of the outstanding Common Stock as of the date
hereof) on the execution of a voting agreement, dated as of January 30, 2000
(the "Voting Agreement"), by and between Merger Sub, the Management
Shareholders, ▇▇▇▇▇ ▇. ▇▇▇▇▇▇ and the ▇▇▇▇▇▇ Family Foundation. The Management
Shareholders, ▇▇▇. ▇▇▇▇▇▇ and the ▇▇▇▇▇▇ Family Foundation entered into the
Voting Agreement in order to induce Merger Sub to enter into the Merger
Agreement.
Under the Voting Agreement, the Management Shareholders, ▇▇▇. ▇▇▇▇▇▇ and
the ▇▇▇▇▇▇ Family Foundation have agreed that at any meeting of the Company's
shareholders called for the approval of the Merger Agreement and the
transactions contemplated by the Merger Agreement or a transaction involving the
acquisition of a material portion of the Company's assets or capital stock other
than the Merger, or in connection with any written consent of the holders of
shares of Common Stock, or in any other circumstances in which the Management
Shareholders, ▇▇▇. ▇▇▇▇▇▇ or the Foundation are entitled to vote, consent or
give any other approval, with respect to the Merger Agreement, the transactions
contemplated by the Merger Agreement or a third party transaction, to vote, or
cause to be voted, the shares of Common Stock held by the Management
Shareholders, ▇▇▇. ▇▇▇▇▇▇ and the ▇▇▇▇▇▇ Family Foundation at the direction of
Merger Sub with respect to such transactions. The Management Shareholders, ▇▇▇.
▇▇▇▇▇▇ and the ▇▇▇▇▇▇ Family Foundation also agreed under the Voting Agreement
to vote against actions or agreements that would interfere with the completion
of the Merger.
The Management Shareholders, ▇▇▇. ▇▇▇▇▇▇ and the ▇▇▇▇▇▇ Family Foundation
granted Merger Sub an irrevocable proxy to vote the shares of Common Stock held
by such shareholders as indicated above. Furthermore, the Management
Shareholders, ▇▇▇. ▇▇▇▇▇▇ and the Foundation agreed not to:
- transfer any of the shares of Common Stock held by the Management
Shareholders, ▇▇▇. ▇▇▇▇▇▇ or the ▇▇▇▇▇▇ Family Foundation except as
contemplated by the Voting Agreement or the Merger Agreement; or
- enter into any voting arrangement or understanding with respect to the
shares of Common Stock held by the Management Shareholders, ▇▇▇. ▇▇▇▇▇▇
or the ▇▇▇▇▇▇ Family Foundation.
Under the Voting Agreement, the Management Shareholders also agreed to
enter into a registration rights agreement and stockholders agreement with the
Parent and to enter into employment agreements with the Company.
STOCKHOLDERS AGREEMENT
In connection with the Merger, Parent and certain of its shareholders will
enter into a stockholders agreement under which such shareholders of Parent will
agree to vote in favor of members of the Board of Directors of Parent designated
by groups of Parent's shareholders who are parties to the stockholders
agreement. Also, under the stockholders agreement:
- Parent will have nine directors;
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- Saw Mill will designate three directors in its sole discretion and will
designate a fourth, independent director who is not an affiliate of SMC
or the Management Shareholders subject to the approval of the Management
Shareholders. Pursuant to Saw Mill's limited partnership agreement, one
of the three directors designated by Saw Mill will be designated by
Chase Capital Partners and two will be designated by Saw Mill's general
partner, Saw Mill Investments II, LLC;
- Management Shareholders will designate three directors in their sole
discretion and will designate a fourth independent director subject to
the approval of Saw Mill; and
- the ninth director will be an independent director approved by Saw Mill
and the Management Shareholders.
The stockholders agreement also gives the holders of the senior preferred
stock of Parent issued in connection with the financing of the Merger the
ability to cause the size of the Board of Directors of Parent to increase to
eleven and to fill the two new vacancies created in the event the Surviving
Corporation's leverage ratio increases beyond a specified amount.
EMPLOYMENT AGREEMENTS
Under the Voting Agreement, each of the Management Shareholders has agreed
to enter into employment agreements with the Surviving Corporation. Under the
employment agreements, ▇▇. ▇▇▇▇▇▇ will be paid a base salary of $300,000 per
year and Mr. Train will be paid a base salary of $450,000 per year. In addition,
their respective employment agreements entitle ▇▇. ▇▇▇▇▇▇ and Mr. Train, at or
after the Effective Time, to each participate in an option plan under which each
will be granted options to acquire 1% of the common stock of Parent at the time
of such grant. Each employment agreement has a term of five years, subject to
earlier termination by resolution of the board of directors, upon the death or
permanent disability of the executive or upon the Management Shareholder's
voluntary resignation. If a Management Shareholder is terminated without cause,
the Surviving Corporation is obligated to make severance payments consisting of
such Management Shareholder's then current salary until the end of the term of
the employment agreement together with any earned but unpaid bonuses. The
employment agreements also contain non-compete provisions which restrict the
Management Shareholders from being involved in, during the period of their
employment and for two years thereafter, any business which is in competition
with the Surviving Corporation. In addition, each employment agreement contains
an obligation of confidentiality in respect of the Surviving Corporation's
proprietary information and an agreement to assign intellectual property rights
to the Surviving Corporation.
REGISTRATION RIGHTS AGREEMENT
In connection with the Merger, each of the Parent, Saw Mill, the Management
Shareholders and certain other equity holders of Parent will enter into a
registration rights agreement. Under the registration rights agreement, the
Management Shareholders, such other equity holders and Saw Mill will have the
ability to cause Parent to register common equity securities of Parent held by
the parties to the registration rights agreement and to participate in
registrations by the Parent of its equity securities.
PLEDGE AGREEMENT
Saw Mill, Merger Sub and Parent have agreed that in the event the Merger
Agreement is terminated by the Company as a result of a material breach of any
representation, warranty or agreement contained in the Merger Agreement by
Parent, Merger Sub or Saw Mill that is not cured within twenty days, Saw Mill,
Parent and Merger Sub will pay up to $1,500,000 of the Company's expenses
incurred in connection with the Merger. To secure this obligation, ▇▇▇▇▇▇ ▇▇▇▇▇
and the Company entered into a pledge agreement under which ▇▇. ▇▇▇▇▇ has
pledged his shares of Common Stock to the Company. If neither Saw Mill, Parent
nor Merger Sub fulfill their obligations to pay the Company's expenses as
described above, the Company is entitled to ▇▇. ▇▇▇▇▇'▇ shares of Common Stock
in partial satisfaction of this obligation.
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FINANCING FOR THE MERGER
Saw Mill, Parent and Merger Sub estimate that the total amount of funds
required to pay the Merger Consideration, the Option Consideration and the
repayment of indebtedness for borrowed money of the Company or any of its
subsidiaries that is required to be repaid as a result of the Merger, if any,
and to pay all fees and expenses related to the Merger will be approximately
$331.8 million. Saw Mill, Parent and Merger Sub expect these funds to be
provided through the following sources:
- senior secured term loan facility of $95.0 million;
- the issuance of at least $125.0 million of senior subordinated notes;
- an investment in the preferred stock and warrants to acquire common
stock of Parent in the amount of $35.0 million provided by Chase Capital
Partners, The Northwestern Mutual Life Insurance Company and
Massachusetts Mutual Life Insurance Company;
- an investment in the common stock of Parent in the amount of
approximately $35.0 million provided by Saw Mill through the purchase of
Parent common stock;
- common equity financing in the amount of approximately $30.0 million
provided by the Management Shareholders and certain other members of the
Company's management team by way of a contribution of a portion of their
existing equity in the Company to Parent in exchange for equity
securities of Parent; and
- the assumption by the Surviving Corporation of approximately $11.8
million of the Company's existing indebtedness.
The Surviving Corporation expects to repay the debt it incurs in connection
with the financing of the Merger from its cash flow from operations and/or from
the proceeds of new debt or equity financings. The following is a summary of
certain provisions of the senior, subordinated and preferred equity financing
presently intended to be obtained by Saw Mill and its affiliates in connection
with the Merger. Saw Mill has obtained commitment letters for the financing
described herein; however, the definitive agreements evidencing such financing
may contain additional or different terms and conditions. As provided in Section
7.15 of the Merger Agreement, Saw Mill, Parent and Merger Sub have agreed that
if any such commitment letter is terminated or the funds to be provided pursuant
to any such commitment letter shall not be available, then Saw Mill, Parent and
Merger Sub shall use commercially reasonable efforts to obtain an alternative
source of financing, in each case, on financial and other terms no less
favorable than those set forth therein, or, to the extent not set forth therein,
on terms reasonably acceptable to Saw Mill, Parent and Merger Sub. Accordingly,
if funds are not available under any such commitment letter (whether by
termination or otherwise) or any such commitment letter is not otherwise used
then, in order to consummate the Merger, Parent and/or Surviving Corporation may
enter into such senior debt facilities, issue such subordinated debt securities
and/or issue such preferred equity securities and/or warrants, in each case, in
such amounts and on such terms as are reasonably acceptable to Saw Mill, Parent
and Merger Sub.
SENIOR CREDIT FACILITIES
Credit Agricole Indosuez ("Indosuez") has committed to provide the
Surviving Corporation with a senior credit facility in an aggregate amount of
$130.0 million. The senior credit facility will be comprised of the following:
- a $20.0 million term A loan facility repayable in quarterly installments
beginning three months following the completion of the Merger and ending
on the maturity date in accordance with the chart set forth below;
- a $75.0 million term B loan facility repayable in quarterly installments
beginning three months following the completion of the Merger and ending
on the maturity date in accordance with the chart set forth below; and
- a $35.0 million revolving credit facility maturing five and one-half
years after the Merger is completed with a letter of credit sub-facility
in an amount to be determined.
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REPAYMENT SCHEDULE
-----------------------------------------------------------
TERM A LOAN TERM B LOAN
------------------------------------ --------------------
PERCENT OF PERCENT OF
YEAR PRINCIPAL DUE YEAR PRINCIPAL DUE
---- ------------- ---- -------------
1 5.0% 1 1.0%
2 10.0% 2 1.0%
3 15.0% 3 1.0%
4 20.0% 4 1.0%
5 25.0% 5 1.0%
5.5 25.0% 6 10.0%
7 85.0%
The Surviving Corporation will be the borrower under the senior credit
facilities. All of the Surviving Corporation's present and future domestic
subsidiaries will guarantee the senior credit facilities. In addition, the
senior credit facilities will be secured by the following:
- substantially all of the Surviving Corporation's assets and the assets
of the Surviving Corporation's domestic subsidiaries; and
- a pledge of all of the Surviving Corporation's capital stock and the
capital stock of the Surviving Corporation's present and future domestic
subsidiaries and sixty-six percent of the capital stock of the Surviving
Corporation's present and future foreign subsidiaries.
Loans under the senior credit facilities will bear interest, at the
Surviving Corporation's option, at either:
- the base rate plus an applicable margin; or
- the London Interbank Offered Rate ("LIBOR") plus an applicable margin.
The base rate is defined as the higher of the following:
- Indosuez's prime commercial lending rate as announced from time to time
at its head office; or
- the federal funds effective rate from time to time plus 0.5%.
The initial applicable margins will be as follows:
BASE RATE LOANS LIBOR LOANS
--------------- -----------
Revolving credit facility.................. 1.5% 3.0%
Term Loan A................................ 1.5% 3.0%
Term Loan B................................ 2.0% 3.5%
Six months following the completion of the Merger, the interest rates on
the revolving credit facility and the term A loan will be subject to adjustment
based on total leverage.
Borrowings under the senior credit facilities must be repaid with the net
proceeds received by the Surviving Corporation from:
- sales of the Surviving Corporation's assets other than sales of
inventory in the ordinary course of business;
- the Surviving Corporation's incurrence of indebtedness or the issuance
of the Surviving Corporation's debt or equity securities;
- at Indosuez's discretion, certain insurance recoveries; and
- the reversion of pension plan assets.
The borrowings must also be prepaid each fiscal year with 50% of the
Surviving Corporation's cash flow above a set level. All mandatory prepayments
must be used first to reduce the term A loan and the term B loan pro rata and
then to reduce any balance under the revolving credit facility.
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The documents for the senior credit facilities will contain affirmative,
negative and financial covenants and events of default customary for credit
facilities of a size and type similar to the senior credit facilities.
The funding of the senior credit facilities will be subject to satisfaction
of customary conditions for similar secured financings including:
- the Surviving Corporation will have received gross proceeds of $125
million from the issuance of the senior subordinated notes or senior
subordinated bridge loans, with the final terms and conditions of such
debt satisfactory to Indosuez; and
- Saw Mill and the preferred equity investors will have made their
respective equity investments as described in the proxy statement.
SENIOR SUBORDINATED DEBT FINANCING
Merger Sub expects the Surviving Corporation to issue at least $125 million
in senior subordinated notes. These senior subordinated notes will be the
Surviving Corporation's senior subordinated obligations, ranking behind all of
the Surviving Corporation's existing and future senior indebtedness, including
the Surviving Corporation's indebtedness under the senior credit facility. The
senior subordinated notes will be unconditionally guaranteed by each of the
Surviving Corporation's domestic subsidiaries.
In the event that the senior subordinated notes cannot be placed prior to
the completion of the Merger, SMC has arranged for Credit Suisse First Boston to
provide the Surviving Corporation with interim loans. Under the arrangement, if
issued, the interim loans will have a maturity date that is 364 days from the
closing of the Merger. Each lender of interim loans will have the option at any
time to exchange all or a portion of its interim loans for the Surviving
Corporation's senior subordinated notes (the "Exchange Notes") ranking on an
equivalent basis as the interim loans. Each lender of interim loans who does not
elect to exchange such loans for Exchange Notes will be required to extend the
maturity date of the interim loans for intervals as determined by each lender.
However, no lender will be required to extend the maturity date of the interim
loans beyond the tenth anniversary of the closing of the Merger. The interest
rate on the interim loans increases at the end of each three-month period from
the closing of the Merger until the maturity date, up to a maximum rate.
The Exchange Notes mature on the tenth anniversary of the closing of the
Merger and bear interest at a fixed rate plus an applicable margin, up to a
maximum rate. The definitive documentation for the senior subordinated notes
and/or interim loans and Exchange Notes will contain affirmative and negative
covenants and events of default customary for issuance of similar debt
securities of this size and type.
The funding of the interim loans is subject to the conditions customary for
these types of transactions, including:
- Credit Suisse First Boston having completed an environmental due
diligence review of the Company to its satisfaction;
- no event having occurred that affects the Company's business in a
material adverse manner; and
- after the date of the commitment letter, none of the following events
shall have occurred:
-- a general suspension of trading in, or limitation on prices for,
securities on any national securities exchange or in the
over-the-counter market in any applicable jurisdiction;
-- the declaration of a banking moratorium or any suspension of payments
in respect of banks in any applicable jurisdiction;
-- the commencement of a war, armed hostilities or other international or
national calamity or emergency, directly or indirectly involving any
applicable jurisdiction;
-- any limitations, whether or not mandatory, imposed by any governmental
authority on the nature or extension of credit or further extension of
credit by banks or other lending institutions; and
-- a material adverse change in the financial markets that could have a
material adverse effect on the syndication of leveraged bank credit
facilities or the consummation of high-yield note offerings.
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PREFERRED EQUITY FINANCING
Parent has received a commitment letter from Chase Capital Partners, The
Northwestern Mutual Life Insurance Company and Massachusetts Mutual Life
Insurance Company to provide the preferred equity financing. The preferred
equity financing will consist of the purchase by the preferred equity investors
of Parent's senior preferred stock and warrants to purchase shares of Parent's
common stock for total consideration of $35.0 million.
The senior preferred stock issued by Parent in connection with the Merger
will have a liquidation value of $1,000 per share. Each share will accrue
dividends at a rate of 14% per year, subject to increases if Parent does not
fulfill various obligations. Upon any liquidation, dissolution or winding up of
Parent, each holder of senior preferred stock will be entitled to be paid the
liquidation value of the senior preferred stock plus accrued and unpaid
dividends. The holders of senior preferred stock will not be entitled to any
further payment. Holders of senior preferred stock must be paid before any
holders of Parent's other equity securities receive any payments for their
shares. The terms of the senior preferred stock will provide that holders of a
majority of the outstanding shares of the senior preferred stock at the time in
question will have the right to designate two members of the Parent's board of
directors so long as the ratio of total debt to earnings before interest, taxes,
depreciation and amortization exceeds 5.5:1.
The warrants issued to the preferred equity investors will be exercisable
into a total of 9% of Parent's common stock on a fully diluted basis immediately
following the completion of the Merger.
The obligation of the preferred equity investors to purchase the senior
preferred stock is subject to conditions customary for these types of
transactions, including:
- the completion of the Merger on terms and conditions satisfactory to the
preferred equity investors and their counsel;
- Parent having a credit facility of not less than $130 million of
financing under the senior credit facilities, on terms and conditions
substantially as set forth in the commitment letter for the senior
credit facilities;
- Parent having received proceeds of not less than $125 million from the
issuance of the senior subordinated notes or the senior subordinated
bridge loans on terms and conditions substantially as set forth in the
commitment letter for the senior subordinated debt;
- the investment by Saw Mill of not less than $37 million; and
- an investment in the common stock of Parent by the Management
Shareholders of not less than $26 million.
FEES AND EXPENSES
Except as disclosed in this Proxy Statement and as set forth in the Merger
Agreement, all fees and expenses incurred in connection with the Merger, the
Merger Agreement and any other transactions contemplated thereby will be paid by
the party incurring such fees and expenses, except that the Company will pay all
expenses relating to the printing, filing and mailing of the Proxy Statement and
all other related regulatory filing fees.
To date, the Company has paid to ▇▇▇▇▇▇ Brothers a fee of $1 million. If
the Merger is approved by the Company's shareholders, the Company will be
obligated to pay ▇▇▇▇▇▇ Brothers an additional fee of $2 million. The Company
has agreed to pay the reasonable out-of-pocket expenses incurred by ▇▇▇▇▇▇
Brothers.
Firstar Trust Company has been retained to act as the Paying Agent in
connection with the Merger. The Paying Agent will receive reasonable and
customary compensation for services relating to the Merger and will be
reimbursed for certain reasonable out-of-pocket expenses.
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It is estimated that the fees and expenses incurred by the Company, Saw
Mill, Parent and Merger Sub in connection with the Merger and other transactions
contemplated by the Merger Agreement will be approximately as set forth below
(in millions):
Financing and Commitment Fees............................... $ 9.81
Filing Fees................................................. 0.10
Special Committee's Financial Advisor's Fee and Expenses.... 3.30
Legal Fees and Expenses..................................... 2.72
Accounting Fees and Expenses................................ 0.35
Printing and Mailing Costs.................................. 0.50
Miscellaneous............................................... 1.20
------
Total....................................................... $17.98
======
Under certain circumstances, the Company is obligated to reimburse Saw
Mill, Parent and Merger Sub for certain expenses and to pay Merger Sub the
Termination Fee. See "THE MERGER AGREEMENT -- FEES, EXPENSES AND OTHER
PAYMENTS."
CONDUCT OF THE COMPANY'S BUSINESS IF THE MERGER IS NOT COMPLETED
If the Merger Agreement is not approved at the Annual Meeting or if the
Merger is not completed for any other reason, then the Company will continue to
operate its business in the ordinary course.
PLANS FOR THE COMPANY AFTER THE MERGER
Following the completion of the Merger, Saw Mill has informed the Company
that the business and operations of the Surviving Corporation will be continued
substantially as they are being currently conducted. The board of directors and
management of the Surviving Corporation will, however, continue to evaluate the
Surviving Corporation's business, operations, corporate structure and
organization and will make changes as they deem appropriate.
CERTAIN PROJECTIONS OF FUTURE OPERATING RESULTS
In November, 1999, management prepared projections of the Company's future
operating performance for the fiscal years 2000 through 2004. The Company does
not as a matter of course make public forecasts as to future operations, and the
projections set forth below are included in this Proxy Statement only because
such information was provided to Merger Sub and to its prospective lenders and
to the Special Committee and its financial and legal advisors as described
below. The Company does not intend to update or otherwise revise the financial
projections to reflect circumstances existing after the date on which the
projections were prepared or to reflect the occurrence of unanticipated events.
Projections of this type are based on estimates and assumptions that are
inherently subject to significant economic, industry and competitive
uncertainties and contingencies, all of which are difficult to predict and many
of which are beyond the Company's control. Accordingly, there can be no
assurance that the projected results would be realized or that actual results
would not be significantly higher or lower than those projected. In addition,
the projections were prepared by the Company not with a view to public
disclosure or compliance with the published guidelines of the Commission or the
guidelines established by the American Institute of Certified Public Accountants
regarding projections and forecasts. The inclusion of this information should
not be regarded as an indication that anyone who received this information
considered it a reliable predictor of future operating results and this
information should not be relied upon as such. The projections are based upon a
variety of assumptions relating to the businesses of the Company which, although
considered reasonable by the Company, may not be realized, and are subject to
significant uncertainties and contingencies, many of which are beyond the
control of the Company. See "FORWARD-LOOKING STATEMENTS." None of the Company,
Merger Sub, the Special Committee or any other person or party assumes
responsibility for the accuracy or validity of the following projections.
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Significant financial projections that were provided to Merger Sub and to
its prospective lenders and to the Special Committee and its financial and legal
advisors are as follows:
(AMOUNTS IN THOUSANDS)
FISCAL YEARS ENDING
----------------------------------------------------
2000 2001 2002 2003 2004
-------- -------- -------- -------- --------
STATEMENT OF INCOME DATA:
Net sales................................ $466,144 $491,936 $523,312 $554,937 $583,641
Operating income......................... 38,358 42,785 47,797 51,047 53,757
Net income............................... 19,555 22,691 26,723 29,942 32,977
EBITDA................................... 59,535 65,962 71,602 74,930 77,704
12/31/00 12/31/01 12/31/02 12/31/03 12/31/04
-------- -------- -------- -------- --------
BALANCE SHEET DATA:
Total assets............................. $335,756 $342,696 $345,265 $347,412 $348,839
Long-term debt (including current
portion)............................... 88,119 70,430 43,918 13,746 --
Stockholder's equity..................... 160,466 183,157 209,880 239,822 272,800
LEGAL PROCEEDINGS
Three purported class action lawsuits (collectively, the "Complaints") were
filed in the Circuit Court of the State of Wisconsin for Milwaukee County under
the captions Harbor Finance Partners v. ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, et al, (Case No.
00CV000907, filed on February 1, 2000), ▇▇▇▇▇ ▇▇▇▇▇▇ v. ▇▇▇▇▇ Incorporated, et
al, (Case No. 00CV000953, filed on February 2, 2000) and ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ v. ▇▇▇▇▇
Incorporated, et al (Case No. 00CV001322, filed on February 15, 2000). Each
Complaint was filed by an alleged shareholder of the Company against the Company
and each Management Shareholder and member of the Special Committee. The
Complaints, which are substantially similar to each other, allege, among other
things, that the price to Public Shareholders of $11.25 per share is inadequate.
The Complaints seek, among other things, an order which certifies that the
lawsuits may be maintained as class actions, prevents the Merger from being
completed, rescinds the Merger in the event the Merger is consummated, awards
unspecified compensatory damages to the members of the purported class, and
awards the named plaintiffs their costs, including counsel and expert fees.
The Special Committee, the Company and the Management Shareholders all
believe the Complaints are without merit.
RIGHTS OF DISSENTING SHAREHOLDERS
Sections 180.1301 to 180.1331 of the WBCL provide that any shareholder may
dissent from the Merger and obtain payment of the fair value of his or her
shares as determined in accordance with Section 180.1301(4) of the WBCL,
provided that such shareholder delivers to the Company before the shareholder
vote on the Merger, a written notice of the such shareholder's intent to demand
payment for his or her shares if the Merger is completed, does not vote his or
her shares in favor of the Merger, and complies with all of the remaining
provisions of Sections 180.1301 to 180.1331 of the WBCL. The WBCL provides that
a dissenting shareholder may not challenge the corporate action creating his or
her entitlement to dissent unless the action is unlawful or fraudulent with
respect to such shareholder or the issuer corporation.
The following is a brief summary of Sections 180.1301 to 180.1331 of the
WBCL which set forth the procedures for demanding statutory dissenters' rights.
This summary is qualified in its entirety by reference to the full text of
Sections 180.1301 to 180.1331 which is attached to this Proxy Statement as ANNEX
C. For purposes of this summary, "shareholder" refers to shareholders of record
and beneficial shareholders who comply with the provisions of Section 180.1303
of the WBCL applicable to beneficial shareholders. For purposes of this summary,
the "Company" also refers to the Surviving Corporation in the event the Merger
is completed.
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If the Merger is approved and completed, shareholders who elect to exercise
their dissenters' rights and who properly and timely perfect such rights will be
entitled to receive the "fair value" in cash for their shares of Common Stock.
Under Section 180.1301(4) of the WBCL, "fair value" means the highest closing
sales price per share of Common Stock during the 30 day period immediately prior
to the completion of the Merger.
A shareholder who elects to exercise his or her dissenters' rights must
perfect such rights by delivering to the Company prior to the vote at the Annual
Meeting written notice of his or her intent to demand payment and must either
vote against the Merger or abstain from voting on the Merger. Neither voting in
person or by proxy against, abstaining from voting on or failing to vote on the
proposal to approve and adopt the Merger Agreement will constitute a written
notice of intent to exercise dissenters' rights with the meaning of Section
180.1321. The written notice of intent to exercise dissenters' rights must be in
addition to, and separate from, any such proxy or vote. Any shareholder who
fails to deliver written notice prior to the vote on the Merger at the Annual
Meeting or votes in favor of the Merger will lose the right to receive the fair
value of his or her shares.
If the Merger is approved, then within ten days after such approval, the
Company will deliver to those shareholders who deliver the written notice
described above and who do not vote in favor of the Merger (each, a "Dissenting
Shareholder") a written dissenters' notice (the "Dissenters' Notice"). The
Dissenters' Notice will set forth where the Dissenting Shareholder must send the
payment demand, where and when certificates for shares of Common Stock must be
deposited and the date by which the Company must receive the payment demand,
which date must not be fewer than 30 nor more than 60 days from the date on
which the Dissenters' Notice is delivered. In addition, the Dissenters' Notice
must include a form for demanding payment which includes the date of first
announcement to the shareholders of the terms of the Merger and requires the
Dissenting Shareholder to certify whether he or she acquired beneficial
ownership of the shares of Common Stock before such date, and a copy of the
sections of the WBCL pertaining to dissenters' rights.
A Dissenting Shareholder who is sent a Dissenters' Notice must demand
payment in writing, certifying whether he or she acquired beneficial ownership
of the shares before the date specified in such notice and deposit his or her
certificates in accordance with such notice. A shareholder who does not demand
payment by the date set in the Dissenters' Notice or who does not deposit his or
her certificates where required by the date set forth in the Dissenters' Notice
is not entitled to payment of the fair value of his or her shares.
Upon the later of completion of the Merger or receipt of the payment
demand, the Company will pay each Dissenting Shareholder who has complied with
the above the fair value of the Dissenting Shareholder's shares of Common Stock,
plus accrued interest. The payment must be accompanied by the latest available
financial statements of the Company, an estimate of the fair value of the
shares, an explanation of how the interest was calculated, a statement of the
dissenters' rights if the Dissenting Shareholder is dissatisfied with the
payment and a copy of the Sections of the WBCL pertaining to dissenters' rights.
If the Dissenting Shareholder believes that the amount paid by the Company
is less than the fair value of his or her shares or that the interest due was
incorrectly calculated, the Company fails to make payment within 60 days after
the date set in the Dissenters' Notice for demanding payment, or the Merger is
not completed and the Company does not return the deposited certificates within
60 days after the date set in the Dissenters' Notice for demanding payment, the
dissenter may notify the Company of his or her estimate of the fair value of his
or her shares and the amount of interest due and demand payment of his or her
estimate, less any payment previously received. The Dissenting Shareholder must
notify the Company in writing within 30 days after the Company made or payment
for the Dissenting Shareholder's shares. If within 60 days after receipt by the
Company of a demand described in this paragraph, the demand remains unsettled,
the Company will bring a special proceeding and will petition the court to
determine the fair value of the shares and accrued interest. If the Company does
not bring the special proceeding within such 60 day period, the Company will pay
each Dissenting Shareholder whose claim remains unsettled the amount demanded.
The dissenter will be entitled to judgment for the amount by which the court
finds the fair value of his or her shares exceeds the amount paid by the
Company.
The Merger Agreement provides that it may be terminated if the holders of
more than 10% of the outstanding shares of Common Stock are Dissenting
Shareholders.
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FAILURE TO COMPLY STRICTLY WITH ALL OF THE PROCEDURES SET FORTH IN SECTIONS
180.1301 TO 180.1331 OF THE WBCL WILL RESULT IN THE LOSS OF A SHAREHOLDER'S
DISSENTERS' RIGHTS. CONSEQUENTLY, ANY SHAREHOLDER WISHING TO EXERCISE
DISSENTERS' RIGHTS IS URGED TO CONSULT LEGAL COUNSEL BEFORE ATTEMPTING TO
EXERCISE SUCH RIGHTS.
SHAREHOLDERS CONSIDERING THE EXERCISE OF DISSENTERS' RIGHTS SHOULD BE AWARE
THAT THE FAIR VALUE OF THEIR SHARES AS DETERMINED UNDER SECTIONS 180.1301 TO
180.1331 COULD BE MORE THAN, THE SAME AS OR LESS THAN THE MERGER CONSIDERATION
THEY WOULD RECEIVE UNDER THE MERGER AGREEMENT IF THEY DID NOT DISSENT.
THE MERGER AGREEMENT
THE FOLLOWING IS A SUMMARY OF CERTAIN PROVISIONS OF THE MERGER AGREEMENT.
THE SUMMARY 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
IS ATTACHED TO THIS PROXY STATEMENT AS ANNEX A. CAPITALIZED TERMS NOT OTHERWISE
DEFINED IN THE FOLLOWING SUMMARY HAVE THE MEANINGS SET FORTH IN THE MERGER
AGREEMENT. SHAREHOLDERS SHOULD READ THE MERGER AGREEMENT IN ITS ENTIRETY.
GENERAL
The Merger Agreement provides that at the Effective Time, Merger Sub will
be merged with and into the Company in accordance with the WBCL. As a result of
the Merger, the separate corporate existence of Merger Sub will cease and the
Company will become the Surviving Corporation.
At the Effective Time, each issued and outstanding share of Common Stock,
other than Dissenting Shares, shares of Common Stock held by the Company or its
subsidiaries or by Merger Sub and the Contributed Shares (as defined below),
will be converted into the right to receive $11.25 in cash without interest, and
each share of Common Stock held by Merger Sub will be canceled without
consideration.
The Merger Agreement provides that each share of Merger Sub's common stock
issued and outstanding immediately prior to the Effective Time will be converted
into and become shares of Common Stock, par value $0.01, of the Surviving
Corporation.
Pursuant to a contribution agreement to be executed immediately prior to
the Merger (the "Contribution Agreement"), the Management Shareholders will
contribute an aggregate of 2,437,262 shares of Common Stock (the "Contributed
Shares") to Parent in exchange for shares of common stock of Parent. Parent will
own 100% of the common stock of the Surviving Corporation after the Merger. For
purposes of determining the number of shares of common stock of Parent issued to
the Management Shareholders, the 2,437,262 contributed shares of Common Stock
were valued at the average price of $10.13 per share. The Chairman and Chief
Executive Officer will receive $11.25 per share of Common Stock for the
2,918,623 shares and 2,331,928 shares, respectively, that they beneficially own
and are not contributing to Parent under the Contribution Agreement
("Noncontributed Shares"). The contribution and the Merger will result in the
Management Shareholders receiving aggregate consideration equal to approximately
$10.90 per share of Common Stock for their Contributed Shares and Noncontributed
Shares combined.
PAYMENT FOR SHARES
Prior to the Effective Time, Merger Sub will designate a bank or trust
company, reasonably satisfactory to the Company, to act as paying agent in the
Merger (the "Paying Agent"). As soon as reasonably practicable after the
Effective Time, the Surviving Corporation will mail or cause to be mailed to
each holder of record of any certificate, which immediately prior to the
Effective Time represented shares of Common Stock (all such certificates, the
"Certificates"), a letter of transmittal and instructions for use in effecting
the surrender of Certificates in exchange for the Merger Consideration. These
materials will not be mailed to Merger Sub or holders of Dissenting Shares.
Properly surrendered Certificates will be canceled, and the holder will receive
the Merger Consideration, without interest, for each share of Common Stock
represented by such Certificate.
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Interest will not be paid on the amounts payable upon surrender of
Certificates which formerly represented shares of Common Stock. Therefore, the
Company recommends that shareholders surrender their Certificates promptly after
the Merger is completed. Shareholders whose certificates are lost, stolen or
destroyed will be required to make an affidavit claiming such certificate or
certificates to be lost, stolen or destroyed and, if required by the Company, to
post a bond in such amount as the Company may reasonably require as indemnity
against any claim that may be made against it with respect to such certificate.
If, with respect to any shares of Common Stock, the Merger Consideration is to
be paid to a person who is not the holder of record of such shares of Common
Stock, the amount of any applicable transfer taxes will be required to be paid
by the person requesting such payment of the Merger Consideration, unless
satisfactory evidence of the payment of such taxes, or exemption therefrom, is
submitted to the Surviving Corporation.
At any time following the expiration of six months after the Effective
Time, the Surviving Corporation will be entitled to require the Paying Agent to
deliver to it any funds which have not been disbursed to holders of
Certificates, and thereafter such holders will look to the Surviving
Corporation, subject to any applicable abandoned property, escheat or similar
law, only as general creditors for payment of the Merger Consideration payable
upon due surrender of their Certificates, without interest. Neither Merger Sub,
the Management Shareholders, the Company, the Surviving Corporation nor the
Paying Agent will be liable to any person in respect of any cash delivered to a
public official or entity under any applicable abandoned property, escheat or
similar law.
TREATMENT OF COMPANY STOCK OPTIONS
The Surviving Corporation will promptly after the Effective Time pay to
each holder of an option to purchase shares of Common Stock issued under the
Company Stock Option Plan, whether or not exercisable or vested, the Option
Consideration net of applicable withholding taxes. Upon receipt of the Option
Consideration, each Company Stock Option will be canceled. The surrender of a
Company Stock Option to the Company in exchange for the Option Consideration
will release all rights the holder had or may have had in respect to such
Company Stock Option.
Except as otherwise agreed to by Merger Sub and the Company, all other
plans, programs or arrangements providing for the issuance or grant of any other
interest in the capital stock of the Company or any of its subsidiaries will
terminate at the Effective Time, and no participant in any such plans, programs
or arrangements will have any rights thereunder to acquire any equity securities
of the Company, the Surviving Corporation or any of their subsidiaries.
DIRECTORS AND OFFICERS
The Merger Agreement provides that from and after the Effective Time, the
board of directors of the Surviving Corporation will be comprised of the
directors of Merger Sub existing immediately prior to the Effective Time, and
the officers of the Surviving Corporation will be the officers of the Company
existing immediately prior to the Effective Time, in each case until the earlier
of their resignation or removal or until their respective successors are duly
elected and qualified, as the case may be, in accordance with the Articles of
Incorporation and By-laws of the Surviving Corporation and applicable law.
ARTICLES OF INCORPORATION AND BY-LAWS
From and after the Effective Time, the Articles of Incorporation and
By-laws of Merger Sub as in effect immediately prior to the Effective Time will
be the Articles of Incorporation and By-laws of the Surviving Corporation, until
thereafter amended in accordance with their respective terms.
REPRESENTATIONS AND WARRANTIES
In the Merger Agreement, the Company has made customary representations and
warranties to Merger Sub with respect to, among other things, corporate
organization and qualification, capitalization, authority to enter into the
Merger Agreement and complete the Merger, no conflicts, filings with the
Commission and financial statements, known or asserted liabilities or
obligations, the absence of certain changes or events, the
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absence of litigation, the requirement of a shareholder vote to approve the
Merger Agreement, the receipt of the ▇▇▇▇▇▇ Opinion, no broker's or finder's
fee, the applicability of state takeover statutes, disclosures in the proxy
statement, compliance with laws, tax matters, the absence of change of control
provisions, transactions with affiliates and known violations of the Foreign
Corrupt Practices Act.
In the Merger Agreement, each of Saw Mill, Parent and Merger Sub has made
customary representations and warranties to the Company with respect to, among
other things, corporate organization and qualification, authority to enter into
the Merger Agreement and complete the Merger, no conflicts, interim operations
of Parent and Merger Sub, disclosures in the proxy statement, no broker's or
finder's fee, financing commitments, capitalization of Merger Sub, solvency, and
current estimated sources and uses of funds in connection with the completion of
the Merger. Saw Mill, Parent and Merger Sub have also represented that they have
delivered to the Company true, correct and complete copies of the Senior Debt
Commitment Letter, the Subordinated Debt Commitment Letter, the Preferred Equity
Commitment Letter (collectively, the "Commitment Letters") and Saw Mill's
agreement of limited partnership.
In the Merger Agreement, each Management Shareholder has made customary
representations and warranties to the Company, Saw Mill, Parent and Merger Sub
with respect to, among other things, no conflicts, ownership of his shares of
Common Stock, authority to enter into the Merger Agreement and perform his
obligations thereunder, no broker's or finder's fee and transactions with the
Company or any of its subsidiaries.
Certain representations and warranties in the Merger Agreement are
qualified as to "Company Material Adverse Effect." For purposes of the Merger
Agreement, the term "Company Material Adverse Effect" means, when used in
connection with the Company and its subsidiaries, any change, effect, event,
occurrence, condition or development that is or is reasonably likely to be
materially adverse to the business, assets, liabilities, properties, results of
operations or conditions, financial or otherwise, of the Company and its
subsidiaries, taken as a whole (excluding any change or effect resulting from
general economic conditions or relating to those industries specific to the
business of the Company), or the ability of the Company to perform its
obligations under the Merger Agreement, except for such changes, effects,
events, occurrences, conditions or developments directly resulting from the
Company's performance of its obligations under the Merger Agreement.
VOTE OF SAW MILL, PARENT AND MERGER SUB
Under the Merger Agreement, Saw Mill, Parent and Merger Sub have agreed to
vote all shares of Common Stock beneficially owned by them, or with respect to
which they have the power, by agreement, proxy or otherwise, to cause to be
voted, in favor of the approval and adoption of the Merger Agreement and the
Merger.
THIRD PARTY TRANSACTIONS; FIDUCIARY RESPONSIBILITIES
Prior to the Effective Time, the Board of Directors, the Company, the
Management Shareholders and the Special Committee will not, and the Company will
cause its subsidiaries not to, and the Company will not authorize nor permit any
of the Company's agents to, directly or indirectly, solicit, knowingly
encourage, participate in or initiate discussions or negotiations with, or
provide any non-public information to any person, other than Merger Sub, Parent,
Saw Mill or any of their affiliates or representatives, concerning any potential
Third Party Transaction (as defined below).
Notwithstanding the above, if, after the date of the Merger Agreement, the
Special Committee or the Company receives a bona-fide inquiry or proposal (any
such inquiry, an "Acquisition Inquiry" or any such proposal, an "Acquisition
Proposal") from a person who the Special Committee, in good faith, reasonably
determines has the financial capacity to complete a merger or similar
transaction involving the Company or the acquisition of a material portion of
the assets or capital stock of the Company or its subsidiaries (any such
transaction, other than the Merger, a "Third Party Transaction") and the Special
Committee reasonably concludes, after consultation with its legal counsel, that
the failure to provide information to, or engage in discussions or negotiations
with, such person is inconsistent with the fiduciary duties of the Board of
Directors
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(the "Board's Fiduciary Duties"), then the Special Committee may provide certain
information about the Company to such person and engage in discussions and
negotiations with such person regarding the Acquisition Inquiry or Acquisition
Proposal. In the event that, after the date of the Merger Agreement and prior to
the Annual Meeting, the Special Committee or the Company receives an Acquisition
Proposal from a person whom the Special Committee, in good faith, reasonably
determines has the financial capabilities to complete such Acquisition Proposal
and the Special Committee determines, in good faith and after consultation with
its legal counsel, that the failure to do any or all of the following is
inconsistent with the Board's Fiduciary Duties, the Board of Directors acting on
the recommendation of the Special Committee may do any or all of the following:
- withdraw, modify or change the Board of Directors' approval or
recommendation of the Merger Agreement and the Merger;
- approve or recommend to the Company's shareholders such Acquisition
Proposal; or
- terminate the Merger Agreement three business days after the Board of
Directors gives Merger Sub written notice stating that the Board of
Directors intends to terminate the Agreement and disclosing certain
information with respect to any Acquisition Proposal which the Board of
Directors intends to accept or recommend.
Nothing in the Merger Agreement prohibits the Board of Directors or the
Special Committee from taking and disclosing to the Company's shareholders a
position with respect to a tender or exchange offer by a third party, or from
making such disclosure to the Company's shareholders which, in the judgment of
the Board of Directors or the Special Committee, after consultation with its
legal counsel, is necessary under applicable law or the rules of any stock
exchange to meet the Board's Fiduciary Duties.
The Merger Agreement further provides that the Company will promptly give
Merger Sub written notice of any Acquisition Inquiry or Acquisition Proposal,
including the material terms and conditions of such proposal or inquiry. In
addition, the Company is required to keep Merger Sub reasonably informed of the
status of any such Acquisition Inquiry or Acquisition Proposal, including any
change in the terms or conditions thereof.
INDEMNIFICATION AND INSURANCE
The Merger Agreement provides that the Surviving Corporation, for six and
one-half years from and after the Effective Time, will indemnify, defend and
hold harmless the present and former officers and directors of the Company
("Covered Parties") against all losses, claims, damages, liabilities, costs and
expenses, including attorneys' fees and expenses, judgments, fines, losses and
amounts paid in settlement in connection with any actual or threatened action,
suit, claim, proceeding or investigation whether arising before or after the
Effective Time (each a "Claim") to the extent that any such Claim is based on,
or arises out of, the fact that such person is or was an officer or director of
the Company or, at the request of the Company, serving as an officer or director
of another corporation, partnership, joint venture, trust or other enterprise,
based on the Merger Agreement or the transactions contemplated thereby, in each
case to the extent that such Claim pertains to any matter of fact arising,
existing or accruing prior to or at the Effective Time, to the full extent
permitted under applicable law or the Company's Articles of Incorporation,
By-laws or indemnification agreements in effect on the date of the Merger
Agreement. In addition, the Surviving Corporation will, for six and one-half
years from and after the Effective Time, maintain in effect directors' and
officers' liability insurance policies for the Covered Parties with respect to
matters occurring prior to the Effective Time that is at least equal to the
Company's current directors' and officers' liability insurance policies.
STATE TAKEOVER LAWS
Under the Merger Agreement, the Company will take all reasonably necessary
steps to exempt the transactions contemplated by the Merger Agreement, including
the Merger, from the requirements of any applicable state takeover law and to
assist Merger Sub in any challenge to the validity or applicability to such
transactions of any state takeover law.
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COOPERATION WITH FINANCING
During the period prior to the Effective Time, the Company will cooperate
with Merger Sub and will use commercially reasonable efforts to cooperate with
and provide information to Merger Sub to assist with Merger Sub's financing of
the Merger.
EQUITY SECURITIES OF THE COMPANY
Under the Merger Agreement, during the period beginning on the date of the
Merger Agreement and ending on the first to occur of the completion of the
Merger or the date nine months after the date of termination of the Merger
Agreement, neither Saw Mill, Parent nor Merger Sub will, directly or indirectly,
acquire or propose to acquire ownership, beneficially or of record, of any
equity securities of the Company or any of its subsidiaries, except pursuant to
the Merger Agreement and, immediately prior to the completion of the Merger,
pursuant to the limited partnership agreement of Saw Mill and the Contribution
Agreement.
CONDUCT OF BUSINESS PENDING THE MERGER
The Company has agreed that, prior to the Effective Time, it will, and it
will cause its subsidiaries to, conduct business in the ordinary course and in a
manner consistent with past custom and practice, use commercially reasonable
efforts to, among other things, preserve the current relationships of the
Company and its subsidiaries with customers, distributors, suppliers, licensors,
licensees, contractors and other persons with which the Company or its
subsidiaries has significant business relations. Further, the Company will not,
and will cause its subsidiaries to not, prior to the Effective Time, directly or
indirectly do any of the following without the prior written consent of Merger
Sub:
- amend or otherwise change its Articles of Incorporation or By-laws;
- issue, sell, pledge, dispose of, grant or encumber, or authorize the
issuance, sale, pledge, disposition, grant or encumbrance of, any shares
of capital stock or other equity securities of any type or class of the
Company or its subsidiaries, or any options, warrants, convertible
securities or other rights of any kind to acquire any shares of such
capital stock or other equity securities, or any other ownership
interest (including, without limitation, any phantom interests), of the
Company or its subsidiaries, or any assets of the Company or its
subsidiaries, except for sales in the ordinary course of business
consistent with past custom and practice and other asset sales for
consideration or having a fair market value aggregating not more than
$500,000;
- declare, set aside, make or pay any dividend or other distribution,
payable in cash, stock, property or otherwise, with respect to any of
its capital stock or other equity securities;
- reclassify, combine, split, subdivide or redeem, purchase or otherwise
acquire, or propose to redeem, purchase or otherwise acquire, directly
or indirectly, any of its capital stock or other equity securities;
- acquire (including, without limitation, by merger, consolidation or
acquisition of stock or assets) or agree to acquire any corporation,
partnership, limited liability company, or other business organization
or division, other than certain acquisitions of assets previously agreed
to;
- other than under the Company's existing credit facilities as in effect
as of the date of the Merger Agreement, incur or agree to incur any
indebtedness for borrowed money or issue any debt securities or assume,
guarantee or endorse, or otherwise as an accommodation become
responsible for, the obligations of any person, or make any loans,
advances, or capital contributions to or investments in, any other
person; or authorize or make capital expenditures which are not in
accordance with the Company's calendar year 2000 budget which has been
presented to the Board of Directors prior to the date of the Merger
Agreement;
- enter into, establish, adopt, amend or renew any employment, consulting,
severance or similar agreement or arrangements with any director,
officer, or employee, or grant any salary or wage increase (other than
in the ordinary course of business consistent with past custom and
practice);
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- establish, adopt, amend or increase benefits under any pension,
retirement, stock option, stock purchase, savings, profit sharing,
deferred compensation, consulting, welfare benefit contract, plan or
arrangement (other than in the ordinary course of business consistent
with past custom and practice or as may be required by applicable law);
- commence any voluntary petition, proceeding or action under any
bankruptcy, insolvency or other similar law;
- make or institute any material change in accounting methods, procedures
or practices in its accounting methods, procedures and practices unless
mandated by GAAP;
- enter into any agreement or other arrangement with any director, officer
or shareholder of the Company, its subsidiaries or any affiliate of any
of the foregoing, except in the ordinary course of business consistent
with past custom and practice and with respect to the payment of
reasonable compensation to the members of the Special Committee in
connection with their performance of services as members of the Special
Committee;
- take any action or omit to take any action which would result in a
violation of any applicable law or would cause a breach of any
agreement, contract or commitment, which violation or breach would have
or could reasonably be expected to have a Company Material Adverse
Effect; or
- license, assign or otherwise transfer to any person or entity any rights
to any material intellectual property rights owned or used by the
Company or its subsidiaries, except in the ordinary course of business
consistent with past custom or practice, or fail to maintain or enforce
any material intellectual property rights owned or used by the Company
or its subsidiaries, except in the ordinary course of business
consistent with past custom or practice.
CONDITIONS TO THE MERGER
CONDITIONS TO THE OBLIGATIONS OF EACH PARTY.
The respective obligations of the Company and Merger Sub and the Management
Shareholders to complete the Merger are subject to the satisfaction or waiver of
the following conditions:
- the Merger Agreement and the Merger will have been approved and adopted
by the affirmative vote of the requisite holders of the outstanding
shares of Common Stock in accordance with Wisconsin law and the
Company's Articles of Incorporation;
- no order, statute, rule, regulation, executive order, stay, decree,
judgment or injunction will have been enacted, entered, issued,
promulgated or enforced by any governmental authority or a court of
competent jurisdiction will be in effect which makes the Merger illegal
or otherwise prohibits completion of the Merger, or limits or restricts
the Surviving Corporation's conduct or operation of the business of the
Company after the Merger;
- all necessary and material governmental and regulatory clearances,
consents or approvals will have been received; and
- any applicable waiting period under the HSR Act relating to the Merger
and related transactions will have expired or terminated.
CONDITIONS TO THE OBLIGATIONS OF MERGER SUB.
The obligations of Merger Sub to consummate the Merger are subject to the
satisfaction or waiver by Merger Sub of the following further conditions:
- the Company will have performed, in all material respects, all of its
obligations required under the Merger Agreement to be performed by it at
or prior to the Effective Time each of the representations and
warranties of the Company contained in the Merger Agreement that are
qualified by materiality or by Company Material Adverse Effect will be
true and correct, and that are not so qualified will be
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true and correct in all material respects as of the date of the Merger
Agreement and as of the Closing Date;
- Saw Mill, Parent and Merger Sub will have received an opinion of counsel
from the Special Committee's legal counsel;
- the Surviving Corporation will have obtained the Debt and Preferred
Equity Financing on the terms and conditions set forth in the Commitment
Letters or otherwise obtained debt and/or equity financing sufficient to
complete the Merger and to pay all fees and expenses in connection with
the Merger and to provide working capital for the Surviving Corporation;
- since December 31, 1998, no event has occurred or will occur which has
or which would reasonably be expected to have a Company Material Adverse
Effect;
- all Company Stock Options will be extinguished and, as of immediately
prior to Closing, the Company will have no liability or obligation with
respect to any such Company Stock Options;
- except as set forth in the Merger Agreement, all outstanding
indebtedness for borrowed money of the Company or any of its
subsidiaries will be paid in full, any letters of credit of the Company
or any of its subsidiaries will be terminated and the Company will have
obtained the release of all liens or encumbrances on the capital stock
of the Company or any of its subsidiaries and all assets of the Company
or any of its subsidiaries securing indebtedness, and the release of all
guarantees by the Company or any of its subsidiaries of indebtedness for
borrowed money;
- the Company will have obtained all consents, authorizations, approvals
and waivers from third parties which are necessary in order to enable
the completion of the transactions contemplated by the Merger Agreement
and the Surviving Corporation to conduct its business in all material
respects after the Closing Date on the same basis as it is currently
conducted; and
- the Dissenting Shares, if any, will not include more than 10% of the
issued and outstanding shares of Common Stock.
CONDITIONS TO THE OBLIGATIONS OF THE COMPANY AND THE MANAGEMENT
SHAREHOLDERS.
The respective obligations of the Company and the Management Shareholders
are subject to the satisfaction or waiver by the Company and the Management
Shareholders of the following further conditions:
- each of Merger Sub, Parent and Saw Mill will have performed, in all
material respects, all of its obligations required under the Merger
Agreement to be performed by it at or prior to the Effective Time; and
- each of the representations and warranties of Merger Sub, Parent and Saw
Mill contained in the Merger Agreement that are qualified by materiality
will be true and correct, and that are not so qualified, will be true
and correct in all material respects as of the date of the Merger
Agreement and as of the Closing Date.
CONDITIONS TO THE OBLIGATIONS OF SAW MILL AND PARENT.
The respective obligations of Saw Mill to execute and deliver the
Contribution Agreement and to make the Saw Mill Contribution, and Parent to
execute and deliver the Contribution Agreement and to consummate the Pre-Merger
Contributions as defined in the Merger Agreement, are subject to the
satisfaction or waiver by Saw Mill of the "Conditions to the Obligations of Each
Party" set forth above, and the "Conditions to the Obligations of Merger Sub"
set forth above.
TERMINATION
The Merger Agreement may be terminated and the Merger may be abandoned at
any time prior to the Effective Time, notwithstanding the approval and adoption
of the Merger Agreement and the Merger by the shareholders of the Company:
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A. by mutual written consent of the Company and Merger Sub;
B. by either the Company or Merger Sub if the waiting period under the
HSR Act has not terminated or expired, or if any court of competent
jurisdiction in the United States or other United States governmental
authority has issued an order, decree or ruling, or taken any other
action, in each case, which is final and non-appealable and which
restrains, enjoins or otherwise prohibits the Merger, or if the
Effective Time has not occurred on or before August 31, 2000, provided
that the right to terminate the Merger Agreement under this clause
will 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 the Closing to occur;
C. by either the Company or Merger Sub if the holders of the outstanding
shares of Common Stock fail to approve and adopt the Merger Agreement
and the Merger upon a vote taken at a meeting of shareholders,
provided that the right to terminate the Merger Agreement under this
clause will not be available to the Company if its breach of the
Merger Agreement has been the cause of or resulted in the failure to
obtain such shareholder approval;
D. by Merger Sub, if the Board of Directors or any committee thereof
(including the Special Committee) withdraws, modifies in a manner
adverse to Merger Sub, or refrains from giving its approval or
recommendation of the Merger Agreement, or recommends an Acquisition
Proposal or a potential Third Party Transaction to the Company's
shareholders pursuant to the Board's Fiduciary Duties (See "THE MERGER
AGREEMENT -- THIRD PARTY TRANSACTIONS; FIDUCIARY RESPONSIBILITIES");
E. by the Company, upon a material breach of any representation, warranty
or agreement of any of Parent, Saw Mill or Merger Sub set forth in the
Merger Agreement, provided that, if such breach is of a type curable
and is curable by Parent, Saw Mill or Merger Sub through the exercise
of its reasonable best efforts and Parent, Saw Mill or Merger Sub
continues to exercise such reasonable best efforts, the Company may
not terminate the Merger Agreement under this clause for a period of
20 business days from the date on which the Company delivers to
Parent, Saw Mill or Merger Sub written notice setting forth in
reasonable detail the circumstances giving rise to such breach;
F. by Merger Sub, upon any material breach of any representation,
warranty or agreement of the Company set forth in the Merger
Agreement, provided that, if such breach is of a type curable and is
curable by the Company through the exercise of its reasonable best
efforts and the Company continues to exercise such reasonable best
efforts, Merger Sub may not terminate the Merger Agreement under this
clause for a period of 20 business days from the date on which Merger
Sub delivers to the Company written notice setting forth in
reasonable detail the circumstances giving rise to such breach; or
G. by the Company in accordance with the Boards' Fiduciary Duties,
provided, that in order for the termination of the Merger Agreement
under this clause to be deemed effective, the Company will have
complied with all of the provisions contained in the Merger Agreement
(See "THE MERGER AGREEMENT -- THIRD PARTY TRANSACTIONS; FIDUCIARY
RESPONSIBILITIES.")
FEES, EXPENSES AND OTHER PAYMENTS
Except as otherwise provided herein and in the Merger Agreement, all fees
and expenses incurred in connection with the Merger, the Merger Agreement and
any other transactions contemplated thereby will be paid by the party incurring
such fees and expenses, except that the Company will pay all expenses relating
to the printing, filing and mailing of the Proxy Statement and all other related
regulatory filing fees.
Under the Merger Agreement, in the event the Merger Agreement is terminated
under clauses A or B under "Termination" above and certain conditions described
in "Conditions to the Obligations of Merger Sub" have not been satisfied, or
under clauses D, F or G in "THE MERGER AGREEMENT -- TERMINATION" above, on the
date of such termination, the Company will pay Saw Mill by wire transfer of
immediately available funds an amount (such amount, the "Saw Mill Reimbursable
Expenses") in cash equal to the lesser of:
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- the total amount of the costs, fees and expenses of counsel,
accountants, financial advisors and other experts and advisors as well
as fees and expenses incident to the negotiation, preparation and
execution of the Merger Agreement and the attempted financing and
completion of the transactions contemplated by the Merger Agreement,
including investment banking and commitment fees, the related
documentation and the shareholders' meeting and consents ("Costs"),
including without limitation, the legal fees of the providers of the
Commitment Letters, and out-of-pocket expenses; and
- $1,500,000.
Under the Merger Agreement, in the event the Merger Agreement is terminated
under clause E in the "TERMINATION" above, Saw Mill, Parent or Merger Sub will
pay the Company by wire transfer of immediately available funds an amount (such
amount, the "Company Reimbursable Expenses") in cash equal to the lesser of:
- the aggregate amount of Costs incurred in connection with pursuing the
transactions contemplated by the Merger Agreement, and out-of-pocket
expenses; and
- $1,500,000.
Under the Merger Agreement, in the event the Merger Agreement is terminated
by Merger Sub or the Company under clauses D or G of "TERMINATION" above, on the
date of such termination, the Company will pay Saw Mill by wire transfer of
immediately available funds a payment in the amount (such amount, the
"Termination Fee") equal to $6.7 million minus the amount of Saw Mill
Reimbursable Expenses, if any, paid by the Company on or prior to the date of
such termination. If the Merger Agreement is terminated under clauses B, C or F
and a potential Third Party Transaction has been publicly disclosed prior to
such termination, then if within nine months after such termination a Third
Party Transaction is consummated, on the date of consummation of such Third
Party Transaction, the Company will pay the Termination Fee to Saw Mill by wire
transfer of immediately available funds.
PROPOSAL 2: ELECTION OF DIRECTORS
Pursuant to the authority contained in the By-laws of the Company, the
Board of Directors has established the number of directors to be six. The Board
of Directors has nominated ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ Train, ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇
▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇ and ▇▇▇▇▇ ▇▇▇▇▇ for election as directors, all to serve
until the 2001 Annual Meeting of Shareholders. Although Messrs. Oldenburg,
Jones, ▇▇▇▇▇▇ and ▇▇▇▇▇ have been nominated for election to the Board of
Directors, it is not anticipated that any of these individuals will remain on
the Board of Directors if the Merger Agreement is approved by shareholders at
the Annual Meeting and the Merger is completed.
As indicated below, all six persons nominated by the Board of Directors are
incumbent directors. The Company anticipates that all of the nominees listed in
this Proxy Statement will be candidates when the election is held. However, if
for any reason any nominee is not a candidate at that time, Proxies will be
voted for any substitute nominee designated by the Company, except where a Proxy
withholds authority with respect to the election of directors.
COMMITTEES
The Company has both Audit and Compensation Committees of directors. The
Audit Committee of the Board of Directors is comprised of ▇▇▇▇▇ ▇▇▇▇▇
(Chairman), ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ and ▇▇▇▇▇ ▇▇▇▇▇. The responsibilities
of the Audit Committee, in addition to such other duties as may be specified by
the Board of Directors, include the following: (1) recommendation to the Board
of Directors of independent accountants for the Company; (2) review of the
timing, scope and results of the independent accountants' audit examination; and
(3) review of periodic comments and recommendations by the independent
accountants and of the Company's response thereto regarding the adequacy of
internal accounting controls. The Audit Committee met twice in the fiscal year
ended December 31, 1999.
The Compensation Committee of the Board of Directors is comprised of ▇▇▇▇▇
▇▇▇▇▇▇ (Chairman), ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇ and ▇▇▇▇▇ ▇▇▇▇▇. The
responsibility of the Compensation Committee, in addition to such other duties
as may be specified by the Board of Directors, is to make recommendations to
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the Board of Directors with respect to compensation for the executive officers,
the stock option program and the management incentive compensation program. The
Compensation Committee met once in the fiscal year ended December 31, 1999.
The Board of Directors held six meetings during the Company's fiscal year
ended December 31, 1999. No incumbent director attended fewer than 75% of the
aggregate of (1) the total number of meetings of the Board of Directors and (2)
the total number of meetings held by all committees of the Board on which he
served, if any.
The Board of Directors does not have a nominating committee or other
committee to consider nominees to serve on the Board of Directors.
NOMINEES FOR ELECTION AS DIRECTORS
The nominees for election to the Board of Directors of the Company are as
follows:
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Age: 60; Elected Director: 1985; Present Term Ends: 2000 Annual Meeting;
Shares Beneficially Owned: 4,430,129
▇▇. ▇▇▇▇▇▇ has been Chairman since June, 1999. ▇▇. ▇▇▇▇▇▇ was Chief
Executive Officer of the Company from November, 1985 to June, 1999 and has been
a director since it was formed in November, 1985. ▇▇. ▇▇▇▇▇▇ is a director of
Modine Manufacturing Company.
▇▇▇▇ TRAIN
Age: 58; Elected Director: 1985; Present Term Ends: 2000 Annual Meeting;
Shares Beneficially Owned: 3,257,683
Mr. Train has been Chief Executive Officer and President since June, 1999.
Mr. Train was Executive Vice President, Secretary and Treasurer of the Company
and has been a director since it was formed in November, 1985. Mr. Train is a
member of the American Institute of Certified Public Accountants.
▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
Age: 53; Elected Director: 1987; Present Term Ends: 2000 Annual Meeting;
Shares Beneficially Owned: 147,078
Since 1981 ▇▇. ▇▇▇▇▇▇▇▇▇ has served as Chief Executive Officer of ▇▇▇▇▇▇▇▇▇
Group, Inc., a privately-held industrial manufacturing company.
▇▇▇▇▇ ▇▇▇▇▇
Age: 60; Elected Director: 1987; Present Term Ends: 2000 Annual Meeting;
Shares Beneficially Owned: 65,086
For the past twelve years ▇▇. ▇▇▇▇▇ has been an independent consultant in
Tucson, Arizona. ▇▇. ▇▇▇▇▇ is a director of Modine Manufacturing Company,
Ingersoll International Incorporated, Star Cutter Co., ▇▇▇▇▇▇▇ Publications Inc.
and General Tool Co. Inc.
▇▇▇▇▇ ▇▇▇▇▇
Age: 51; Elected Director: 1989; Present Term Ends: 2000 Annual Meeting;
Shares Beneficially Owned: 67,863
Since July, 1999 ▇▇. ▇▇▇▇▇ has been President of ▇▇▇▇▇▇▇▇ & Sons, LLC, a
privately-held manufacturer of commercial signs and displays. From November,
1997 through June, 1999 and from January 1, 1994 through September, 1994, ▇▇.
▇▇▇▇▇ was an independent consultant in Milwaukee, Wisconsin. ▇▇. ▇▇▇▇▇ served as
President of ▇▇▇▇▇▇▇-Fabralloy Co. LLC, a fabricator of gas turbine engine
components, from
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October, 1994 through October, 1997. ▇▇. ▇▇▇▇▇ is a director of Plexus Corp. and
St. ▇▇▇▇▇▇▇ Capital Corporation.
▇▇▇▇▇ ▇▇▇▇▇▇
Age: 55; Elected Director: 1987; Present Term Ends: 2000 Annual Meeting;
Shares Beneficially Owned: 36,010
▇▇. ▇▇▇▇▇▇ has served as Chief Executive Officer of Fiskars Consumer
Products Group whose parent is Fiskars OY AB of Helsinki, Finland, since 1978.
Fiskars is a manufacturer of consumer cutlery and power electronics.
EXECUTIVE OFFICERS
The executive officers of the Company are as follows:
NAME TITLE AGE
---- ----- ---
▇▇▇▇▇▇▇ ▇▇▇▇▇▇.................................... Chairman of the Board 60
▇▇▇▇ Train........................................ Chief Executive Officer and President 58
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇................................... Vice President 59
▇▇▇▇ ▇▇▇▇▇▇....................................... Vice President-Finance and Secretary 41
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇.................................. Vice President 55
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇................................... Vice President 50
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇................................... Vice President 56
▇▇▇▇▇▇ ▇▇▇▇▇▇..................................... Controller and Assistant Secretary 68
The terms of office and past business experiences of Messrs. ▇▇▇▇▇▇ and
Train are described above.
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, Vice President
▇▇. ▇▇▇▇▇▇▇ was appointed a Vice President of the Company in May, 1993 and
is in charge of the Company's Janesville Products unit. ▇▇. ▇▇▇▇▇▇▇ has been
with Janesville Products since 1983 and was Vice President of Operations when
Janesville Products was acquired by the Company in January, 1986.
▇▇▇▇ ▇▇▇▇▇▇, Vice President-Finance and Secretary
▇▇. ▇▇▇▇▇▇ was appointed Vice President-Finance and Secretary in June, 1999
and serves as the Company's Chief Financial Officer. Prior to joining the
Company in June, 1999, ▇▇. ▇▇▇▇▇▇ held various positions at
PricewaterhouseCoopers LLP, most recently as a Director of Audit and Business
Advisory Services. ▇▇. ▇▇▇▇▇▇ is a Certified Public Accountant.
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, Vice President
▇▇. ▇▇▇▇▇▇▇▇ was appointed a Vice President of the Company in April, 1998
and is in charge of ▇▇▇▇▇▇ International. ▇▇. ▇▇▇▇▇▇▇▇ has been with ▇▇▇▇▇▇
International since 1991 and was Vice-President of Operations until appointment
as President of ▇▇▇▇▇▇ International in April, 1997.
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, Vice President
▇▇. ▇▇▇▇▇▇▇▇ was appointed a Vice President of the Company in December,
1994. He has been in charge of the Company's Sackner Products unit since June,
1993, and of its ▇▇▇▇▇ Components unit since September, 1998. ▇▇. ▇▇▇▇▇▇▇▇ has
been with Sackner Products since 1977 and was Vice President of Operations when
it was acquired by the Company in June, 1991.
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▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, Vice President
▇▇. ▇▇▇▇▇▇▇ has been with the Company since 1987 and was appointed a Vice
President of the Company in February, 1988. He is in charge of the Company's
JacksonLea unit.
▇▇▇▇▇▇ ▇▇▇▇▇▇, Controller and Assistant Secretary
▇▇. ▇▇▇▇▇▇ has been the Controller and Assistant Secretary of the Company
since April, 1989. ▇▇. ▇▇▇▇▇▇ has been with the Company since its formation.
EXECUTIVE COMPENSATION
The following table sets forth summary information with respect to all
compensation, including stock options granted and all cash bonuses and accrued
deferred compensation, incurred by the Company during the last three fiscal
years ended December 31, 1999, to or on behalf of the Chief Executive Officer
("CEO") and the four most highly paid executive officers, other than the CEO
(the "named executive officers"):
SUMMARY COMPENSATION TABLE
LONG-TERM
COMPENSATION
AWARDS
---------------
ANNUAL COMPENSATION SECURITIES
----------------------- UNDERLYING OTHER ANNUAL
NAME AND PRINCIPAL POSITION YEAR SALARY($) BONUS($)(1) OPTIONS/SARS(#) COMPENSATION($)(2)
--------------------------- ---- --------- ----------- --------------- ------------------
▇▇▇▇▇▇▇ ▇▇▇▇▇▇................ 1999 412,500 160,421 0 6,400
Chairman 1998 405,000 175,500 0 6,400
1997 390,000 248,182 0 6,350
▇▇▇▇ Train.................... 1999 412,500 160,421 0 6,400
President and Chief 1998 380,000 164,667 0 6,400
Executive Officer 1997 365,000 232,273 0 6,350
▇▇▇▇▇ ▇▇▇▇▇▇▇▇................ 1999 203,769 127,360 0 10,400
Vice President(3) 1998 195,423 71,711 0 10,400
1997 184,812 85,324 0 10,350
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇............... 1999 164,000 164,000 0 6,400
Vice President 1998 156,000 156,000 5,000 6,240
1997 148,000 93,283 5,000 5,920
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇............... 1999 159,000 159,000 0 6,400
Vice President 1998 126,000 126,000 0 5,040
1997 124,385 124,385 5,000 4,975
---------------
(1) Bonus earned upon achievement of performance objectives. See "Compensation
Committee Report."
(2) Company contributions under qualified employees savings and profit sharing
plan.
(3) ▇▇. ▇▇▇▇▇▇▇▇ retired effective February 8, 2000.
The Company, by policy, provides that each of its officers, including the
named executive officers, is entitled to receive their base salaries for one
year after termination if the Company terminates their employment without cause.
If termination is for cause, which includes gross negligence in the course of
employment and other forms of misconduct, the salary continuation is forfeited.
Directors of the Company, other than salaried employees of the Company,
receive directors' fees of $15,000 per year and $1,000 per meeting. All
directors are reimbursed for reasonable out-of-pocket expenses incurred in
attending meetings of the Board of Directors.
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STOCK OPTIONS
On April 16, 1987, the Company adopted a nonqualified stock option plan,
which was amended on April 25, 1991 (the "Plan"). The Plan provides for the
grant to key employees and outside directors of the Company of options covering
shares of Common Stock. The Plan is administered by the Board of Directors which
has discretion to increase the number of shares covered by the Plan, select
optionees, designate the number of shares to be covered by each option,
establish vesting schedules, specify the amount and type of consideration to be
paid to the Company on exercise, and to specify certain other terms of the
options. The exercise price of options granted under the Plan must be at least
85% of the fair market value of Common Stock on the date of grant. The Company
has reserved 2,687,500 shares of Common Stock for issuance under the Plan
subject to adjustment for certain dilutive events. At December 31, 1999, options
to purchase 1,323,184 shares were outstanding. During fiscal 1999, options were
granted to purchase 27,000 shares of Common Stock at per share exercise prices
of $7.38 to $8.19 and options for 80,720 shares were exercised at exercise
prices of $1.30 to $7.69 per share. A total of 743,048 shares of Common Stock
remain available for future grants under the Plan.
No stock options were granted to the named executive officers during the
fiscal year ended December 31, 1999.
The following table shows certain information regarding stock options held
by the named executive officers as of December 31, 1999:
AGGREGATED OPTION/SAR EXERCISES IN LAST
FISCAL YEAR AND FY-END OPTION/SAR VALUES
NUMBER OF SECURITIES VALUE OF UNEXERCISED
UNDERLYING EXERCISE IN-THE-MONEY
OPTIONS/SARS AT FY-END OPTIONS/SARS AT FY-END
SHARES ACQUIRED (#) ($)*
ON EXERCISE VALUE --------------------------- ---------------------------
NAME (#) REALIZED($) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
---- --------------- ----------- ----------- ------------- ----------- -------------
▇▇▇▇▇▇▇ ▇▇▇▇▇▇............ 0 -- -- -- -- --
▇▇▇▇ Train................ 0 -- -- -- -- --
▇▇▇▇▇ ▇▇▇▇▇▇▇▇............ 0 -- 60,000 -- 19,375 --
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇........... 0 -- 41,915 10,000 43,112 --
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇........... 0 -- 43,439 5,000 22,111 --
---------------
* Calculated based on the closing sale price of $7.25 per share on December 31,
1999.
COMPENSATION COMMITTEE REPORT
As is the case each year, the Compensation Committee reviewed the proposed
2000 salary and bonuses and considered 1999 stock option grants for the
executive officers at the Compensation Committee meeting on December 16, 1999.
Base salaries for all executive officers are established at levels considered
appropriate considering the scope of each officer's responsibilities. The
proposed salary levels were compared to nationally recognized published
compensation surveys and were in line with or below the average salary levels in
the report for comparable positions of responsibility.
A significant amount of the total compensation of ▇▇. ▇▇▇▇▇▇, Mr. Train and
each other executive officer is dependent on the performance of the Company.
Presidents of the Company's operating divisions (including Messrs. ▇▇▇▇▇▇▇▇,
▇▇▇▇▇▇▇ and ▇▇▇▇▇▇▇▇) earn bonuses equal to a stated percentage of their base
salary based on the return on average capital employed for their respective
divisions. The other corporate officers earn bonuses based on the Company's net
income. For competitive reasons, the Compensation Committee has determined not
to specify the target return rates. Executive officers other than Messrs. ▇▇▇▇▇▇
and Train can elect, at the beginning of each fiscal year, to defer 25% of their
bonus into a growth bonus program for three years. They receive interest on
their deferred amounts plus a growth bonus equal to the four year compound
62
68
annual growth in earnings per share (up to a maximum of 20%) calculated from a
base equal to the earnings per share for the fiscal year ended just prior to
election. This growth rate is multiplied by the maximum incentive bonus that
could have been paid for the fiscal year of election. Because of the scope of
their responsibilities as Chairman and Chief Executive Officer, respectively,
and given the substantial equity stake they each have in the Company, the
Compensation Committee separately considers the compensation of Messrs. ▇▇▇▇▇▇
and Train. Their salaries, like those of the other officers, are determined by
reference to published compensation surveys, and their salary levels are in line
with or below such published salary levels for comparable positions of
responsibility. The Compensation Committee believes a significant portion of the
total annual compensation of Messrs. ▇▇▇▇▇▇ and Train should be directly tied to
the Company's performance. Accordingly, Messrs. ▇▇▇▇▇▇ and Train also earn cash
bonuses based on an increase in earnings per share in the current fiscal year
compared to the prior year. The bonuses for 2000 are earned if earnings per
share exceed $0.86 and increase to a maximum of 100% of base salary if the
Company's earnings per share are 50% above this amount, i.e., $1.29. The
Compensation Committee considers earnings per share a meaningful objective
standard by which to measure the Company's performance and the effectiveness of
the efforts of Messrs. ▇▇▇▇▇▇ and Train.
The Compensation Committee customarily grants stock options to the
Company's officers in December of each year. In fixing such stock option grants,
the Compensation Committee considers the current stock holdings of each officer,
their responsibilities and historical and anticipated future contributions to
the Company's performance. The Compensation Committee believes that selective
grants of stock options, along with the performance-based cash compensation
described above, promote an identity of interest between the Company's officers
and its shareholders. The Compensation Committee did not grant any options in
December, 1999 in view of the proposed transaction with Merger Sub and the
Management Shareholders.
The Compensation Committee is of the opinion that the compensation levels
for the named executive officers are reasonable when compared to similar
positions of responsibility and scope in similar industries and that an
appropriate amount of total compensation is based on the performance of the
Company, and therefore provides sufficient incentive for these individuals to
attain improved results in the future.
COMPENSATION COMMITTEE
▇▇▇▇▇ ▇▇▇▇▇▇, Chairman ▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
63
69
STOCK PERFORMANCE
The following chart tracks the value of $100 invested on January 1, 1995,
in ▇▇▇▇▇ Incorporated common stock compared to the change in the ▇▇▇▇▇▇▇ 2000
Index and the Barclays Global Investors (BGI) Micro Cap Index. The chart shows
that $100 invested five years ago in ▇▇▇▇▇ Incorporated common stock was worth
$80.56 at December 31, 1999, compared to $204.48 for the ▇▇▇▇▇▇▇ 2000 and
$233.68 for the BGI Micro Cap Index.
[PERFORMANCE CHART]
▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇ MICRO CAP INDEX
----- ------------ -------------------
Jan-95 100.00 100.00 100.00
97.22 103.94 103.43
95.83 105.64 105.29
102.78 107.83 108.29
106.94 109.48 110.54
113.89 114.90 117.78
Jul-95 108.33 121.42 124.86
108.33 123.68 129.46
94.44 125.74 132.60
72.22 120.01 126.16
79.17 125.01 128.97
72.22 128.00 131.57
Jan-96 73.61 127.76 133.39
80.56 131.63 136.96
77.78 134.00 140.52
83.33 141.09 150.33
88.89 146.59 159.91
93.06 140.41 151.81
Jul-96 91.67 128.01 137.10
83.33 135.26 144.18
83.33 140.32 149.48
77.78 137.97 146.71
79.17 143.45 150.51
72.22 146.89 154.52
Jan-97 73.61 149.67 161.25
77.78 145.86 157.16
72.92 138.77 148.93
69.44 138.95 143.50
66.67 154.25 159.09
63.89 160.57 168.25
Jul-97 69.44 167.91 176.66
83.33 171.53 183.89
91.67 183.84 200.70
88.89 175.52 194.01
87.50 174.16 190.70
88.89 177.04 189.75
Jan-98 91.67 174.22 187.73
93.06 187.09 198.81
119.44 194.73 208.43
119.44 195.62 212.36
113.89 184.98 201.50
106.94 185.29 197.98
Jul-98 97.22 170.04 185.25
88.89 136.91 147.92
87.50 147.29 156.58
88.89 153.19 160.89
95.83 161.13 173.05
94.44 170.94 179.32
Jan-99 91.67 173.07 185.76
93.75 158.91 166.24
94.44 161.08 162.68
77.78 175.33 178.34
94.44 177.71 183.01
88.89 185.41 194.25
Jul-99 91.67 180.18 194.06
77.78 173.32 190.36
87.50 173.10 189.83
84.03 173.64 188.23
86.11 183.95 208.22
80.56 204.48 233.68
SECURITY OWNERSHIP
The following table sets forth certain information regarding the beneficial
ownership of shares of Common Stock as of February 15, 2000 by each person known
to the Company to own beneficially more than 5% of the Common Stock, each
director of the Company, the named executive officers, and all directors and
officers as a group.
The Company has determined beneficial ownership in accordance with the
rules of the Commission. Unless otherwise indicated, the persons and entities
included in the table have sole voting and investment power with respect to all
shares beneficially owned, subject to applicable community property laws. Shares
of common stock subject to options that are either currently exercisable or
exercisable within 60 days of February 15, 2000 are treated as outstanding and
beneficially owned by the option holder for the purpose of computing the
percentage ownership of the option holder. However, these shares are not treated
as outstanding for the purpose of computing the percentage ownership of any
other person.
NUMBER OF
SHARES
NAME AND ADDRESS OF BENEFICIAL OWNER OWNED PERCENT
------------------------------------ --------- -------
▇▇▇▇▇▇▇ ▇▇▇▇▇▇.............................................. 4,430,129(1) 21.7%
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
▇▇▇▇ TRAIN.................................................. 3,257,683(2) 15.9%
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
64
70
NUMBER OF
SHARES
NAME AND ADDRESS OF BENEFICIAL OWNER OWNED PERCENT
------------------------------------ --------- -------
STATE OF WISCONSIN INVESTMENT BOARD......................... 2,080,675(3) 10.2%
▇.▇. ▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
DIMENSIONAL FUND ADVISORS INC............................... 1,326,699(4) 6.5%
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
UBS AG...................................................... 1,316,689(5) 6.4%
▇▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇
▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇▇▇, INC......................................... 1,102,502(6) 5.4%
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇▇▇.............................................. 88,263(7) (15)
▇▇▇▇ ▇. ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇............................................. 96,275(8) (15)
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇............................................. 147,078(9) (15)
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇................................................. 65,086(10) (15)
▇▇▇▇ ▇▇▇▇▇ ▇▇. ▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇............................................. 67,712(11) (15)
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇................................................. 67,863(12) (15)
▇▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇................................................ 36,010(13) (15)
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
All directors and officers as a group (thirteen persons).... 8,465,996(14) 40.6%
---------------
(1) Includes 4,430,004 shares that are subject to the Voting Agreement (see
"THE MERGER -- INTERESTS OF CERTAIN PERSONS IN THE MERGER") and 125 shares
that are not subject to the Voting Agreement and that are held by a trust
of which ▇▇. ▇▇▇▇▇▇ is trustee.
(2) Includes 3,256,679 shares that are subject to the Voting Agreement (see
"THE MERGER -- INTERESTS OF CERTAIN PERSONS IN THE MERGER -- VOTING
AGREEMENT") and 1,004 shares that are not subject to the Voting Agreement
and that are held by trusts of which Mr. Train is trustee.
(3) The State of Wisconsin Investment Board has reported to the Company that a
Schedule 13G was filed with the Securities and Exchange Commission
indicating that as of December 31, 1999, it had sole power to vote
2,080,675 shares.
65
71
(4) Dimensional Fund Advisors has reported to the Company that a Schedule 13G
was filed with the Securities and Exchange Commission indicating that as of
December 31, 1999, it had sole power to vote 1,326,699 shares.
(5) UBS AG has reported to the Company that a Schedule 13G was filed with the
Securities and Exchange Commission indicating that as of December 31, 1999,
it had sole power to vote 1,315,689 shares and shared power to dispose of
1,316,689 shares.
(6) ▇▇▇▇▇▇ ▇▇▇▇▇▇▇, Inc. has reported to the Company that a Schedule 13G was
filed with the Securities and Exchange Commission indicating that as of
December 31, 1999, it had sole power to vote 1,102,502 shares.
(7) Includes options to purchase 60,000 shares.
(8) Includes options to purchase 41,915 shares.
(9) Includes options to purchase 27,813 shares.
(10) Includes options to purchase 27,813 shares.
(11) Includes options to purchase 43,439 shares.
(12) Includes options to purchase 27,813 shares.
(13) Includes options to purchase 27,813 shares.
(14) Includes options to purchase 432,068 shares
(15) Less than 1%.
PROPOSAL 3: RATIFICATION OF INDEPENDENT AUDITORS
The Board of Directors has appointed PricewaterhouseCoopers LLP as
independent certified public accountants to examine the financial statements of
the Company for the 2000 fiscal year. Unless otherwise directed, the Proxy will
be voted in favor of the ratification of such appointment.
Although this appointment is not required to be submitted to a vote of
shareholders, the Board of Directors believes it appropriate as a matter of
policy to request that the shareholders ratify the appointment. If shareholder
ratification is not received, the Board of Directors will reconsider the
appointment.
PricewaterhouseCoopers LLP has served as auditors for the Company since its
formation in 1985. A representative of PricewaterhouseCoopers LLP is expected to
be present at the Annual Meeting and will be provided an opportunity to make a
statement if he or she desires and will be available to respond to appropriate
questions.
SHAREHOLDER PROPOSALS FOR 2001 ANNUAL MEETING
If the Merger is completed, the Company will not have any public
shareholders and, therefore, no public participation in any future shareholder
meetings. However, if the Merger is not completed, the Company's public
shareholders will continue to be entitled to attend and participate in meetings
of the Company's shareholders. If the Merger is not completed, any shareholder
who desires to submit a proposal pursuant to Rule 14a-8 of the Exchange Act for
the 2001 Proxy Statement and Annual Meeting should submit the proposal in
writing to ▇▇▇▇ Train, Chief Executive Officer, ▇▇▇▇▇ Incorporated, ▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇. The proposal, together
with any supporting statement, may not exceed 500 words in length. The Company
must receive a proposal by , 2001, in order to consider it for
inclusion in the 2001 Proxy Statement. Proposals submitted other than pursuant
to Rule 14a-8 will be considered untimely if received after , 2001,
and the Company will not be required to present any such proposal at the 2001
Annual Meeting of Shareholders. If the Board of Directors decides to present a
proposal despite its untimeliness, the people named in the proxies will have the
right to exercise discretionary voting power with respect to such proposal.
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72
INDEPENDENT PUBLIC ACCOUNTANTS
The consolidated balance sheets of the Company and its subsidiaries as of
December 31, 1999, and the related consolidated statements of income,
shareholders' equity, and cash flows for the year ended December 31, 1999
included in the Company's Annual Report on Form 10-K for the year ended December
31, 1999 and incorporated by reference in this Proxy Statement, have been
audited by PricewaterhouseCoopers LLP, independent auditors, in accordance with
auditing standards generally accepted in the United States.
OTHER MATTERS
The Board of Directors of the Company knows of no other matters to be
presented at the Annual Meeting. However, if any other matters properly come
before the Annual Meeting, the persons named in the enclosed proxy will vote on
such matters in accordance with their best judgment.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Exchange Act requires the Company's officers and
directors, and persons who own more than 10% of a registered class of the
Company's equity securities, to file reports of ownership and changes in
ownership with the Commission. Officers, directors and greater than 10%
shareholders are required by the Exchange Act to furnish the Company with copies
of all Section 16(a) forms they file.
Based solely on review of the copies of such forms furnished to the
Company, or written representations that no Forms 5 were required, the Company
believes that during fiscal 1999 all Section 16(a) filing requirements
applicable to its officers, directors and greater than 10% beneficial owners
were complied with.
PERSONS MAKING THE SOLICITATION; EXPENSES OF SOLICITATION
Your Proxies are being solicited by the Company. The cost of this
solicitation of Proxies will be paid by the Company. It is anticipated that the
Proxies will be solicited only by mail, except that solicitation personally or
by telephone may also be made by the Company's regular employees who will
receive no additional compensation for their services in connection with the
solicitation. Arrangements will be made with brokerage houses and other
custodians, nominees and fiduciaries for the forwarding of solicitation material
and annual reports to beneficial owners of stock held by such persons. The
Company will reimburse such parties for their expenses in so doing.
ANNUAL REPORT
Copies of the Company's 1999 Annual Report and the Annual Report on Form
10-K for the year ended December 31, 1999 accompany this Proxy Statement.
Additional copies of the Annual Report on Form 10-K for the year ended December
31, 1999 will be provided without charge on written request of any shareholder
whose Proxy is being solicited by the Board of Directors. The written request
should be directed to: Corporate Secretary, ▇▇▇▇▇ Incorporated, ▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇.
PROVISIONS FOR UNAFFILIATED SECURITY HOLDERS
Neither the Company, Saw Mill, Parent, Merger Sub nor the Management
Shareholders have made any provision to grant unaffiliated security holders
access to the corporate files of such persons or to obtain counsel or appraisal
services at the expense of such persons; however, shareholders of the Company
are entitled to inspect the books and records of the Company as provided by the
Company's by-laws and the WBCL.
67
73
ANNEX A
--------------------------------------------------------------------------------
AGREEMENT AND PLAN OF MERGER
AMONG
SAW MILL CAPITAL FUND II, L.P.,
CALENDAR HOLDINGS, INC.,
CALENDAR ACQUISITION CORP.,
▇▇▇▇▇ INCORPORATED
AND
THE SHAREHOLDERS OF THE COMPANY NAMED HEREIN
--------------------------------------------------------------------------------
January 30, 2000
74
TABLE OF CONTENTS
PAGE
----
ARTICLE I
THE MERGER AND THE OTHER TRANSACTIONS.....................................2
SECTION 1.01 Contribution Agreement......................................2
SECTION 1.02 Debt and Preferred Equity Financing.........................2
SECTION 1.03 The Merger..................................................3
SECTION 1.04 Effective Time; Closing.....................................3
SECTION 1.05 Effect of the Merger........................................3
SECTION 1.06 Articles of Incorporation; By-laws..........................3
SECTION 1.07 Directors and Officers......................................4
SECTION 1.08 Additional Actions..........................................4
ARTICLE II
CONVERSION OF SECURITIES; EXCHANGE OF CERTIFICATES; DEPOSIT...............4
SECTION 2.01 Effect on Capital Stock and Company Stock Options...........4
SECTION 2.02 Exchange of Certificates....................................5
SECTION 2.03 Company Stock Options; Plans................................7
SECTION 2.05 Adjustment of Merger Consideration
and Option Consideration....................................9
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY.............................9
SECTION 3.01 Organization and Qualification; Subsidiaries................9
SECTION 3.02 Articles of Incorporation and By-laws......................10
SECTION 3.03 Capitalization.............................................10
SECTION 3.04 Authority Relative to this Agreement.......................11
SECTION 3.05 No Conflict; Required Filings and Consents.................11
SECTION 3.06 SEC Filings; Financial Statements;
Undisclosed Liabilities....................................12
SECTION 3.07 Absence of Certain Changes or Events.......................13
SECTION 3.08 Absence of Litigation......................................14
SECTION 3.09 Shareholder Vote Required..................................14
SECTION 3.10 Opinion of Financial Advisor...............................14
SECTION 3.11 Brokers....................................................15
SECTION 3.12 Company Action; State Takeover Statutes....................15
SECTION 3.13 Information Supplied.......................................15
SECTION 3.14 Compliance with Laws.......................................15
SECTION 3.15 Tax Matters................................................15
SECTION 3.16 Change of Control Provisions...............................16
SECTION 3.17 Transactions with Affiliates...............................16
SECTION 3.18 Foreign Corrupt Practices Act..............................16
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF
SAW MILL, PARENT AND MERGER SUB..........................................17
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TABLE OF CONTENTS
(CONT'D) PAGE
----
SECTION 4.01 Organization and Qualification; Subsidiaries................17
SECTION 4.02 Authority Relative to this Agreement........................17
SECTION 4.03 No Conflict; Required Filings and Consents..................17
SECTION 4.04 Interim Operations of Parent and Merger Sub.................18
SECTION 4.05 Information Supplied........................................18
SECTION 4.06 Brokers.....................................................18
SECTION 4.07 Financing...................................................18
SECTION 4.08 Capitalization of Merger Sub................................19
SECTION 4.09 Solvency....................................................19
SECTION 4.10 Pro Formas..................................................19
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF THE SHAREHOLDERS........................20
SECTION 5.01 No Conflict; Required Filings and Consents..................20
SECTION 5.02 Ownership of Owned Shares...................................20
SECTION 5.03 Authority Relative to this Agreement........................20
SECTION 5.04 No Finder's Fees............................................21
SECTION 5.05 Transactions with Shareholders..............................21
ARTICLE VI
CONDUCT OF BUSINESS PENDING THE MERGER....................................21
SECTION 6.01 Conduct of Business by the Company Pending the Merger.......21
ARTICLE VII
ADDITIONAL AGREEMENTS.....................................................23
SECTION 7.01 Shareholders' Meeting.......................................23
SECTION 7.02 Preparation of Proxy Statement..............................24
SECTION 7.03 Appropriate Action; Consents; Filings; Further Assurances...25
SECTION 7.04 Confidentiality; Access to Information......................26
SECTION 7.05 Fiduciary Responsibilities..................................28
SECTION 7.06 Indemnification and Insurance...............................30
SECTION 7.07 Notification of Certain Matters.............................31
SECTION 7.08 Public Announcements........................................32
SECTION 7.09 Cooperation with Financing..................................32
SECTION 7.10 Shareholder Approval........................................33
SECTION 7.11 Exchange Act and NASDAQ Filings.............................33
SECTION 7.13 State Takeover Laws.........................................33
SECTION 7.14 Capital Stock of Merger Sub and Parent......................33
SECTION 7.15 Debt and Preferred Equity Financing.........................33
SECTION 7.16 Equity Securities of the Company............................34
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TABLE OF CONTENTS
(CONT'D) PAGE
PAGE
ARTICLE VIII ----
CONDITIONS TO THE MERGER...................................................34
SECTION 8.01 Conditions to the Obligations of Each Party..................34
SECTION 8.02 Conditions to the Obligations of Merger Sub..................35
SECTION 8.03 Conditions to the Obligations of the Company and the
Shareholders.................................................36
SECTION 8.04 Conditions to the Obligations of Saw Mill and Parent.........36
ARTICLE IX
TERMINATION, AMENDMENT AND WAIVER..........................................37
SECTION 9.01 Termination..................................................37
SECTION 9.02 Method of Termination; Effect of Termination.................38
SECTION 9.03 Fees and Expenses............................................38
SECTION 9.04 Amendment....................................................40
SECTION 9.05 Waiver.......................................................41
ARTICLE X
GENERAL PROVISIONS.........................................................41
SECTION 10.01 Non-Survival of Representations and Warranties...............41
SECTION 10.02 Notices......................................................41
SECTION 10.03 Certain Definitions..........................................43
SECTION 10.04 Accounting Terms.............................................45
SECTION 10.05 Severability.................................................45
SECTION 10.06 Entire Agreement; Assignment.................................45
SECTION 10.07 Parties in Interest..........................................45
SECTION 10.08 Specific Performance.........................................45
SECTION 10.09 Governing Law................................................46
SECTION 10.10 Headings.....................................................46
SECTION 10.11 Counterparts.................................................46
SECTION 10.12 Construction.................................................46
SECTION 10.13 Recitals.....................................................46
SECTION 10.14 Knowledge of Saw Mill, Parent and Merger Sub.................46
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TABLE OF CONTENTS
(CONT'D)
EXHIBITS:
Exhibit A - Form of Contribution Agreement
Exhibit B - Pro Formas
Exhibit C - Owned Shares
Exhibit D - Permitted Indebtedness for Borrowed Money
Exhibit E - Required Consents
Exhibit F - Agreements with Shareholder Related Parties
Exhibit G-1 - Senior Debt Commitment Letter
Exhibit G-2 - Subordinated Debt Commitment Letter
Exhibit G-3 - Preferred Equity Commitment Letter
Exhibit H - Form of Legal Opinion
DISCLOSURE SCHEDULES:
Company Disclosure Schedule
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AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER dated as of January 30, 2000
(this "Agreement") among Saw Mill Capital Fund II, L.P., a Delaware limited
partnership ("Saw Mill"), Calendar Holdings, Inc., a Delaware corporation and a
wholly-owned subsidiary of Saw Mill ("Parent"), Calendar Acquisition Corp., a
Wisconsin corporation and a wholly-owned subsidiary of Parent, ("Merger Sub"),
▇▇▇▇▇ Incorporated, a Wisconsin corporation (the "Company"), ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
("Chairman"), and ▇▇▇▇ Train ("Chief Executive Officer", and together with the
Chairman, the "Shareholders"). Capitalized terms used herein but not otherwise
defined shall have the meanings set forth in Section 10.03.
WHEREAS, the Board of Directors of the Company formed a
special committee of the Board of Directors consisting entirely of outside,
independent members of the Company's Board of Directors (the "Special
Committee");
WHEREAS, the Special Committee has engaged independent legal
and financial advisors (the "Independent Advisors"), and together with the
Independent Advisors, has explored various strategic alternatives for the
Company;
WHEREAS, after exploring the various available strategic
alternatives for the Company and after consultation with the Independent
Advisors, the Special Committee has determined that the Acquisition is fair to,
and is in the best interest of the Company and the holders of shares of Company
Common Stock (as such term is defined in Section 3.03), and the Board of
Directors of the Company has adopted the recommendation of the Special
Committee;
WHEREAS, immediately prior to the Closing (as defined below),
Parent, Merger Sub, Saw Mill and the Shareholders shall (i) execute and deliver
a contribution agreement substantially in the form attached hereto as Exhibit A
(the "Contribution Agreement") and (ii) consummate the transactions contemplated
thereby (the "Pre-Merger Contributions");
WHEREAS, pursuant to the terms of the Contribution Agreement,
immediately prior to the Closing, the Shareholders are contributing 2,552,817
shares of Company Common Stock at an agreed upon value per share of Company
Common Stock as set forth in the Contribution Agreement and, pursuant to the
terms of this Agreement, at the Closing, the Shareholders and certain of the
Shareholders' related parties will be entitled to receive $11.25 per share of
Company Common Stock (other than any Contributed Company Common Shares (as such
term is defined in the Contribution Agreement)); accordingly, in connection with
the consummation of the transactions contemplated by this Agreement, the
Shareholders and such related parties of the Shareholders shall be entitled to
receive aggregate consideration equal to approximately $10.896 per share of
Company Common Stock owned by them;
WHEREAS, the respective Boards of Directors of the Company and
Merger Sub have approved and declared advisable a merger (the "Merger") of
Merger Sub with and into the Company upon the terms and subject to the
conditions set forth in this Agreement, with the Company surviving the Merger,
and the Board of Directors of the Company (acting upon the
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recommendation of the Special Committee) has resolved to recommend, subject to
its obligations under applicable law, that the holders of shares of Company
Common Stock approve the Acquisition upon the terms of this Agreement;
WHEREAS, the Boards of Directors of Merger Sub and Company
have determined that the Merger is fair to and in the best interests of their
respective shareholders;
WHEREAS, the Merger is subject to the approval by the
requisite holders of the outstanding shares of Company Common Stock and
satisfaction of certain other conditions described in this Agreement;
WHEREAS, the Surviving Corporation and/or Parent, as the case
may be, shall, contemporaneously with the Merger, obtain the debt and preferred
equity financing (the "Debt and Preferred Equity Financing") described in the
Commitment Letters (as defined below) to fund a portion of the Merger
Consideration (as defined below); and
WHEREAS, it is intended that the transactions contemplated by
this Agreement be recorded as a purchase of the Company for financial reporting
purposes.
NOW, THEREFORE, in consideration of the foregoing and the
mutual covenants and agreements herein contained and intending to be legally
bound hereby, the parties hereto hereby agree as follows:
ARTICLE I
THE MERGER AND THE OTHER TRANSACTIONS
SECTION 1.01 Contribution Agreement. Subject to the conditions
set forth in this Agreement, (i) Parent, Merger Sub, Saw Mill and the
Shareholders hereby agree to execute and deliver the Contribution Agreement as
of immediately prior to the Closing, (ii) Saw Mill and Parent hereby agree to
consummate the Saw Mill Contribution (as such term is defined in the
Contribution Agreement) as of immediately prior to the Closing, (iii) Chairman
and Parent hereby agree to consummate the Chairman Contribution (as such term is
defined in the Contribution Agreement) as of immediately prior to the Closing,
(iv) Chief Executive Officer and Parent hereby agree to consummate the CEO
Contribution (as such term is defined in the Contribution Agreement) as of
immediately prior to the Closing and (v) immediately after the consummation of
the Saw Mill Contribution, the Chairman Contribution and the CEO Contribution,
Parent and Merger Sub hereby agree to consummate the Parent Contribution (as
such term is defined in the Contribution Agreement).
SECTION 1.02 Debt and Preferred Equity Financing.
Contemporaneously with the Merger, the Surviving Corporation and/or Parent, as
the case may be, will consummate the Debt and Preferred Equity Financing. Upon
receipt, Parent hereby agrees to immediately contribute the net proceeds of any
Debt and Preferred Equity Financing received by Parent to Merger Sub (if
received by Parent prior to the Merger) or to the Surviving Corporation (if
received by Parent contemporaneously with the Merger).
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SECTION 1.03 The Merger. Upon the terms and subject to the
conditions set forth in Article VIII, and in accordance with Section 180.1101 of
the Wisconsin Business Corporation Law ("Wisconsin Law"), at the Effective Time
(as defined below), Merger Sub shall be merged with and into the Company. As a
result of the Merger, the separate corporate existence of Merger Sub shall
cease, and the Company shall be the surviving corporation of the Merger (the
"Surviving Corporation").
SECTION 1.04 Effective Time; Closing. As promptly as
practicable, and in no event later than five business days after the
satisfaction or, if permissible, waiver of the conditions set forth in Article
VIII (other than those conditions that can only be satisfied on the Closing Date
(as defined below)), including, without limitation, the approval of the Merger
by an affirmative vote of the requisite holders of the outstanding shares of the
Company Common Stock, the parties hereto shall cause the Merger to be
consummated by filing articles of merger (the "Articles of Merger") with the
Department of Financial Institutions of the State of Wisconsin, in such form as
is required by, and executed in accordance with, Section 180.1105 of Wisconsin
Law. The term "Effective Time" means the date and time of the filing of the
Articles of Merger with the Department of Financial Institutions of the State of
Wisconsin (or such later time as may be agreed by the parties hereto and
specified in the Articles of Merger). Immediately prior to the filing of the
Articles of Merger, a closing (the "Closing") will be held at the offices of
▇▇▇▇▇▇▇▇ & ▇▇▇▇▇, Citicorp Center, ▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇
▇▇▇▇▇ (or such other place as the parties may agree) (the date on which such
closing takes place being the "Closing Date").
SECTION 1.05 Effect of the Merger. At the Effective Time, the
effect of the Merger shall be as provided in the applicable provisions of
Wisconsin Law. Without limiting the generality of the foregoing, and subject
thereto, at the Effective Time, all the property, rights, immunities,
privileges, powers and franchises of the Company and Merger Sub shall vest in
the Surviving Corporation, without further act or deed, and all debts,
liabilities, obligations, restrictions, disabilities and duties of each of the
Company and Merger Sub shall become the debts, liabilities, obligations,
restrictions, disabilities and duties of the Surviving Corporation and be
enforceable against the Surviving Corporation to the same extent as if the same
had been contracted by the Surviving Corporation.
SECTION 1.06 Articles of Incorporation; By-laws.
(a) From and after the Effective Time, subject to the terms of
Section 7.06, the Articles of Incorporation of the Surviving
Corporation shall be the Articles of Incorporation of Merger Sub as in
effect immediately prior to the Effective Time until thereafter amended
in accordance with its terms and as provided by applicable Law (as
herein defined) and this Agreement, except that, as of the Effective
Time, Article I of such Articles of Incorporation shall be amended to
read as follows: "The name of the Corporation is "▇▇▇▇▇ Incorporated".
(b) From and after the Effective Time, subject to the terms of
Section 7.06, the By-laws of Merger Sub, as in effect immediately prior
to the Effective Time, shall be the By-
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laws of the Surviving Corporation until thereafter amended as provided
by applicable Law, the Articles of Incorporation of the Surviving
Corporation and such By-laws.
SECTION 1.07 Directors and Officers.
(a) Directors. From and after the Effective Time, the
directors of Merger Sub immediately prior to the Effective Time shall
be the directors of the Surviving Corporation until the earlier of
their resignation or removal or until their respective successors are
duly elected and qualified, as the case may be, in accordance with the
Articles of Incorporation and By-laws of the Surviving Corporation and
applicable Law.
(b) Officers. From and after the Effective Time, the officers
of the Company immediately prior to the Effective Time shall be the
officers of the Surviving Corporation and shall hold office until the
earlier of their resignation or removal or until their respective
successors are duly elected and qualified, as the case may be, in
accordance with the Articles of Incorporation and By-laws of the
Surviving Corporation and applicable Law.
SECTION 1.08 Additional Actions. If, at any time at or after
the Effective Time, the Surviving Corporation shall consider or be advised that
any further deeds, assignments or assurances in law or any other acts are
necessary or desirable to (a) vest, perfect or confirm, of record or otherwise,
in the Surviving Corporation its rights, title or interest in, to or under any
of the rights, properties or assets of the Company or its subsidiaries, or (b)
otherwise carry out the provisions of this Agreement, the Company and its
officers and directors shall be deemed to have granted to the Surviving
Corporation an irrevocable power of attorney to execute and deliver all such
deeds, assignments or assurances in law and to take all acts necessary, proper
or desirable to vest, perfect or confirm title to and possession of such rights,
properties or assets in the Surviving Corporation and otherwise to carry out the
provisions of this Agreement, and the officers and directors of the Surviving
Corporation are authorized in the name of the Company or otherwise to take any
and all such action.
ARTICLE II
CONVERSION OF SECURITIES; EXCHANGE OF CERTIFICATES; DEPOSIT
SECTION 2.01 Effect on Capital Stock and Company Stock
Options. As of the Effective Time, by virtue of the Merger and without any
action on the part of the holder of any Company Common Stock or any other holder
of capital stock of the Company or any shares of capital stock of Merger Sub:
(a) Cancellation of Company Owned Stock. All shares of Company
Common Stock that are held (i) in the treasury of the Company, (ii) by
any wholly owned subsidiary of the Company or (iii) by Merger Sub
(including the Contributed Company Common Shares (as such term is
defined in the Contribution Agreement)) shall be canceled and retired
and shall cease to exist without any consideration payable therefor.
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(b) Conversion of Company Common Stock. Each share of Company
Common Stock issued and outstanding immediately prior to Effective Time
(other than Dissenting Shares (as herein defined) and shares of the
Company Common Stock referred to in Section 2.01(a) (including the
Contributed Company Common Shares (as such term is defined in the
Contribution Agreement)) shall be converted into the right to receive
from the Surviving Corporation in cash $11.25 per share of Company
Common Stock (the "Merger Consideration") without interest thereon upon
surrender of the certificate previously representing such share of
Company Common Stock. As of the Effective Time, all such shares of
Company Common Stock shall no longer be outstanding and shall
automatically be canceled and retired and shall cease to exist, and
each holder of a certificate representing any such share of Company
Common Stock shall cease to have any rights with respect thereto,
except the right to receive the cash into which their shares of Company
Common Stock have been converted by the Merger as provided in this
Section 2.01(b).
(c) Conversion of Common Stock of Merger Sub. Each share of
Merger Sub's common stock issued and outstanding immediately prior to
the Effective Time shall be converted into and become that certain
number of fully paid and nonassessable (except as set forth in Section
180.0622 of Wisconsin Law as judicially interpreted) shares of Common
Stock, par value $0.01, of the Surviving Corporation (the "Surviving
Corporation Common Stock") equal to the Conversion Number (as herein
defined) upon the surrender of the certificates previously representing
such share(s) of Merger Sub's common stock. For purposes of this
Agreement, the "Conversion Number" shall equal the sum of (i) the
number of Contributed Company Common Shares (as such term is defined in
the Contribution Agreement) plus (ii) (x) the amount of Saw Mill
Contributed Cash (as such term is defined in the Contribution
Agreement) plus 100 divided by (y) the per share Merger Consideration.
(d) Conversion of Company Stock Options. Each Company Stock
Option (as defined in Section 2.03(a) hereof), issued and outstanding
immediately prior to the Effective Time shall be converted into the
right to receive from the Surviving Corporation the Option
Consideration (as defined in Section 2.03(a) hereof) without interest
thereon. As of the Effective Time, all such Company Stock Options shall
no longer be outstanding and shall automatically be canceled and
retired and shall cease to exist, and each holder of any such Company
Stock Option shall cease to have any rights with respect thereto,
except the right to receive the cash into which their Company Stock
Options have been converted by the Merger as provided in this Section
2.01(d) and Section 2.03(a).
SECTION 2.02 Exchange of Certificates.
(a) Paying Agent. Prior to the Effective Time, Merger Sub
shall designate a bank or trust company, reasonably satisfactory to the
Company, to act as paying agent in the Merger (the "Paying Agent").
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(b) At the Closing, Merger Sub or Surviving Corporation
shall deliver:
(i) to the Persons who shall have surrendered to the
Merger Sub at the Closing the certificates which, immediately
prior to the Effective Time, represented shares of outstanding
common stock of Merger Sub, the securities of the Surviving
Corporation into which the shares of common stock of Merger
Sub represented by such certificates have been converted
pursuant to the provisions of this Article II; and
(ii) to the Paying Agent, for the benefit of the
holders of Company Common Stock entitled to receive Merger
Consideration, the amount of Merger Consideration which such
holders of Company Common Stock are entitled to receive
pursuant to the provisions of this Article II.
(c) Exchange Procedure. As soon as reasonably practicable
after the Effective Time, the Surviving Corporation shall mail or
caused to be mailed to each holder of record of any certificate, which
as of immediately prior to the Effective Time represented shares of
Company Common Stock and as of the Effective Time represents the right
to receive Merger Consideration (all such certificates, the
"Certificates"), (i) a letter of transmittal (which shall specify that
delivery shall be effected, and risk of loss and title to the
Certificates shall pass, only upon delivery of the Certificates to the
address specified therein) and (ii) instructions for use in effecting
the surrender of the Certificates in exchange for the applicable Merger
Consideration. Upon surrender of a Certificate for cancellation to the
Paying Agent, together with such letter of transmittal, duly executed,
and such other documents as may reasonably be required by the Paying
Agent, the holder of such Certificate shall be entitled to receive in
exchange therefor from the Paying Agent the amount of cash into which
the shares of Company Common Stock theretofore represented by such
Certificate shall have been converted pursuant to Section 2.01, and the
Certificate so surrendered shall forthwith be canceled. In the event of
a transfer of ownership of the shares of Company Common Stock that is
not registered in the transfer records of the Company, payment may be
made to a person other than the person in whose name the Certificate so
surrendered is registered, if such Certificate shall be properly
endorsed or otherwise be in proper form for transfer and the person
requesting such payment shall pay any transfer or other taxes required
by reason of the payment to a person other than the registered holder
of such Certificate or establish to the satisfaction of the Surviving
Corporation that such tax has been paid or is not applicable. Until
surrendered as contemplated by this Section 2.02, each Certificate
shall be deemed at any time after the Effective Time to represent only
the right to receive upon such surrender the amount of cash, without
interest, into which the shares of Company Common Stock theretofore
represented by such Certificate shall have been converted pursuant to
Section 2.01. No interest will be paid or will accrue on the cash
payable upon the surrender of any Certificate. In the event any
Certificate shall have been lost, stolen or destroyed, upon making of
an affidavit of that fact by the Person claiming such Certificate to be
lost, stolen or destroyed, the Surviving Corporation will pay in
exchange for such lost, stolen or destroyed Certificate, the amount of
cash into which the shares of Company Common Stock theretofore
represented by such Certificate have been converted pursuant to Section
2.01, except that when authorizing such payment, the Board of Directors
of the Surviving
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Corporation, may, in its discretion and as a condition precedent to
such payment, require the owner of such lost, stolen or destroyed
Certificate to deliver a bond in such sum as it may reasonably direct
as indemnity against any claim that may be made against the Surviving
Corporation or the Paying Agent with respect to such Certificate.
(d) Withholding. Merger Sub, Surviving Corporation and Paying
Agent shall be entitled to deduct and withhold from the Merger
Consideration otherwise payable or issuable pursuant to this Agreement
to any holder of Company Common Stock such amount as Merger Sub,
Surviving Corporation or Paying Agent is required to deduct and
withhold with respect to such payment or issuance under the Code, or
any provision of state, local or foreign tax law. To the extent that
amounts are so withheld, such withheld amounts shall be treated for all
purposes of this Agreement as having been paid to the holder of Company
Common Stock in respect of which such deduction and withholding was
made.
(e) No Further Ownership Rights in Company Common Stock. All
cash paid upon the surrender of Certificates in accordance with the
terms of this Article II shall be deemed to have been paid in full
satisfaction of all rights pertaining to the shares of Company Common
Stock theretofore represented by such Certificates. At the Effective
Time, the stock transfer books of the Company shall be closed, and
there shall be no further registration of transfers on the stock
transfer books of the Surviving Corporation of the shares of Company
Common Stock that were outstanding immediately prior to the Effective
Time. If, after the Effective Time, Certificates are presented to the
Surviving Corporation or the Paying Agent for any reason, they shall be
canceled and exchanged as provided in this Article II.
(f) No Liability. At any time following the expiration of six
months after the Effective Time, the Surviving Corporation shall, in
its sole discretion, be entitled to require the Paying Agent to deliver
to it any funds (including any interest received with respect thereto)
which had been made available to the Paying Agent and which have not
been disbursed to holders of Certificates, and thereafter such holders
shall be entitled to look to the Surviving Corporation (subject to any
applicable abandoned property, escheat or similar law) only as general
creditors thereof with respect to the Merger Consideration payable upon
due surrender of their Certificates, without any interest thereon.
Notwithstanding the foregoing, none of Merger Sub, the Shareholders,
the Company, the Surviving Corporation or the Paying Agent shall be
liable to any person in respect of any cash delivered to a public
official or entity pursuant to any applicable abandoned property,
escheat or similar law.
SECTION 2.03 Company Stock Options; Plans.
(a) Except as set forth in this Section 2.03 and except to the
extent that Merger Sub and the holder of any option otherwise agree,
the Surviving Corporation shall promptly after the Effective Time pay
to each holder of an outstanding option to purchase Company Common
Stock (a "Company Stock Option") issued pursuant to the Company's 1987
Nonqualified Stock Option Plan dated April 16, 1987, as amended and
restated January 30, 1989 (the "Company Stock Option Plan"), in
settlement of each such Company Stock
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Option, whether or not exercisable or vested, an amount of cash in
respect thereof equal to the product of (x) the excess, if any, of the
Merger Consideration over the exercise price of each such Company Stock
Option, and (y) the number of shares of Company Common Stock subject to
the Company Stock Option immediately prior to its settlement (the
"Option Consideration") (such payment to be net of applicable
withholding taxes). Upon receipt of the Option Consideration, the
Company Stock Option shall be canceled. The surrender of a Company
Stock Option to the Company in exchange for the Option Consideration
shall be deemed a release of all rights the holder had or may have had
in respect of that Company Stock Option.
(b) Prior to the Effective Time, the Company shall use its
commercially reasonable best efforts to obtain any consents from
holders of the Company Stock Options and make any amendments to the
terms of the Company Stock Option Plans or arrangements that are
necessary to give effect to the transactions contemplated by Section
2.01(d) and this Section 2.03.
(c) Except as may otherwise be agreed by Merger Sub and the
Company, the Company Stock Option Plan shall terminate as of the
Effective Time, and no holder of Company Stock Options or any
participant in the Company Stock Option Plan shall have any rights
thereunder, including any rights to acquire any equity securities of
the Company, the Surviving Corporation or any subsidiary thereof, other
than to receive Option Consideration payable pursuant to Section
2.03(a).
(d) Except as may otherwise be agreed by Merger Sub and the
Company, all other plans, programs or arrangements providing for the
issuance or grant of any other interest in respect of the capital stock
of the Company or any of its subsidiaries shall terminate as of the
Effective Time, and no participant in any such plans, programs or
arrangements shall have any rights thereunder to acquire any equity
securities of the Company, the Surviving Corporation or any subsidiary
thereof.
SECTION 2.04 Shares of Dissenting Shareholders.
(a) Notwithstanding anything in this Agreement to the
contrary, any shares of Company Common Stock that are issued and
outstanding as of the Effective Time and that are held by a holder who
has not voted in favor of the Merger or consented thereto in writing
and who has properly exercised his or her appraisal rights (the
"Dissenting Shares") under Wisconsin Law, shall not be converted into
the right to receive the Merger Consideration, unless and until such
holder shall have failed to perfect, or shall have effectively
withdrawn or lost, his or her right to dissent from the Merger under
Wisconsin Law and to receive such consideration as may be determined to
be due with respect to such Dissenting Shares pursuant to and subject
to the requirements of Wisconsin Law. If, after the Effective Time, any
such holder shall have failed to perfect or shall have effectively
withdrawn or lost such right, each share of such holder's Company
Common Stock shall thereupon be deemed to have been converted into and
to have become, as of the Effective Time, the right to receive, without
interest or dividends thereon, the consideration provided for in this
Article II.
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(b) The Company shall give Merger Sub and Saw Mill (i) prompt
notice of any notices or demands for appraisal or payment for shares of
Company Common Stock received by the Company and (ii) the opportunity
to participate in all negotiations and proceedings with respect to any
such demands or notices. Any decision to settle, offer to settle, make
any payments or otherwise negotiate, with respect to any such demands,
shall be mutually agreeable to Saw Mill and the Company.
(c) Dissenting Shares, if any, after payments of fair value in
respect thereto have been made to the holders thereof pursuant to
Wisconsin Law, shall be canceled.
SECTION 2.05 Adjustment of Merger Consideration and Option
Consideration. In the event that, subsequent to the date of this Agreement but
prior to the Effective Time, the outstanding shares of Company Common Stock
shall have been changed into a different number of shares of a different class
as a result of a stock split, reverse stock split, stock dividend, subdivision,
reclassification, split, combination, exchange, recapitalization or other
similar transaction, the Merger Consideration and the Option Consideration shall
be appropriately adjusted. The Merger Consideration and the Option Consideration
have been calculated based upon the representations and warranties made by the
Company in Section 3.03. The provisions of this Section 2.05 shall not, in any
event, derogate from the representation and warranty set forth in Section 3.03.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
For the avoidance of doubt and notwithstanding anything to the
contrary set forth herein, all representations and warranties made by the
Company herein are made solely by the Company and not by any member of the
Special Committee in his individual capacity. No member of the Special Committee
shall have any liability for any breach of any representation or warranty of the
Company set forth herein.
Except as disclosed in a separate disclosure schedule
referring to the Sections contained in this Agreement, which is attached hereto
(the "Company Disclosure Schedule") (any matter disclosed with respect to a
particular Section on the Company Disclosure Schedule shall be deemed to be
disclosed with respect to each other Section of this Article III to which it
relates), the Company hereby represents and warrants to Merger Sub that:
SECTION 3.01 Organization and Qualification; Subsidiaries.
(a) Each of the Company and its subsidiaries is duly formed
and organized, validly existing and in good standing (or the equivalent
thereof) under the laws of the jurisdiction of its incorporation or
formation, as applicable, and has the requisite power and authority and
all necessary and material governmental approvals to own, lease and
operate the properties and assets it currently owns, operates or holds
under lease and to carry on its business as it is now being conducted.
Each of the Company and its subsidiaries is duly qualified or licensed
as a foreign corporation or other entity to do business, and is in good
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standing (or the equivalent thereof), in each jurisdiction where the
character of the properties owned, leased or operated by it or the
nature of its business makes such qualification or licensing necessary,
except for such failures to be so qualified or licensed and in good
standing that would not, individually or in the aggregate, have a
Company Material Adverse Effect. The term "Company Material Adverse
Effect" means, when used in connection with the Company and its
subsidiaries, any change, effect, event, occurrence, condition or
development that is or is reasonably likely to be materially adverse to
(i) the business, assets, liabilities, properties, results of
operations or condition (financial or otherwise) of the Company and its
subsidiaries, taken as a whole (excluding any change or effect
resulting from general economic conditions or relating to those
industries specific to the business of the Company) or (ii) the ability
of the Company to perform its obligations under this Agreement, except
for such changes, effects, events, occurrences, conditions or
developments directly resulting from the Company's performance of its
obligations under this Agreement.
(b) Except as set forth in Section 3.01 of the Company
Disclosure Schedule, the Company does not directly or indirectly own
any equity or similar interest in, or any interest convertible into or
exchangeable or exercisable for any equity or similar interest in, any
corporation, partnership, limited liability company, joint venture or
other business association or entity. Section 3.01 of the Company
Disclosure Schedule sets forth the name, owner, jurisdiction of
organization and type and percentages of outstanding equity securities
owned, directly or indirectly, by the Company, with respect to each
corporation, partnership, limited liability company, joint venture or
other business association or entity of which the Company owns directly
or indirectly, any equity or equity related securities. Except as set
forth in Section 3.01 of the Company Disclosure Schedule, all
outstanding shares of stock or other equity securities of each
subsidiary of the Company have been duly authorized and validly issued
and are fully paid and non-assessable, and are owned, directly or
indirectly, by the Company free and clear of any Liens, and there are
no outstanding options, warrants, convertible securities, calls,
rights, commitments, preemptive rights or agreements or instruments or
understandings of any character, obligating any subsidiary of the
Company to issue, deliver or sell, or cause to be issued, delivered or
sold, contingently or otherwise, additional shares of such subsidiary
or any securities or obligations convertible or exchangeable for such
shares or to grant, extend or enter into any such option, warrant,
convertible security, call, right, commitment, preemptive right or
agreement.
SECTION 3.02 Articles of Incorporation and By-laws. The
Company has heretofore made available to Merger Sub complete and correct copies
of its Articles of Incorporation and Bylaws, each as amended to the date hereof.
Such Articles of Incorporation and By-laws are in full force and effect and have
not been modified or amended in any way. The Company is not in any material
violation of any provision of its Articles of Incorporation or By-laws.
SECTION 3.03 Capitalization. The authorized capital stock of
the Company consists of 30,000,000 shares of Common Stock par value $0.10 per
share ("Company Common Stock"). As of the date hereof, there are 20,435,353
shares of Company Common Stock issued and outstanding. Section 3.03 of the
Company Disclosure Schedule identifies and describes the number
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of shares of Company Common Stock to be received upon exercise or conversion and
the exercise or conversion price of each outstanding Company Stock Option (the
"Company Common Stock Equivalents") as well as the aggregate number of shares of
Company Common Stock and the aggregate exercise price for all of the outstanding
Company Common Stock Equivalents. All of the Company Common Stock Equivalents
will be fully vested upon a change of control of the Company. Except for the
Company Common Stock Equivalents or as contemplated by this Agreement, there are
no existing options, warrants, convertible securities, calls, subscriptions, or
other rights or other agreements or commitments obligating the Company to issue,
transfer or sell, or caused to be issued, transferred or sold, contingently or
otherwise, any shares of capital stock of the Company or any other securities
convertible into or evidencing the right to subscribe for any such shares.
Except as identified and described in Section 3.03 of the Company Disclosure
Schedule, there are no outstanding stock appreciation rights or similar phantom
equity securities with respect to the capital stock of the Company. All issued
and outstanding shares of Company Common Stock are duly authorized and validly
issued, fully paid, non-assessable and free of preemptive rights with respect
thereto, except as set forth in Section 180.0622 of Wisconsin Law as judicially
interpreted. To the Company's Knowledge, other than the Voting Agreement, there
are no voting trusts or shareholder agreements to which the Company is a party
with respect to the voting of the capital stock of the Company and, to the
Company's Knowledge, there are no such agreements among its shareholders other
than those listed in Section 3.03 of the Company Disclosure Schedule. To the
Company's Knowledge, other than the Voting Agreement, there are no irrevocable
proxies with respect to shares of capital stock of the Company or any Subsidiary
that cover more than 2% of the Company's outstanding capital stock. A list of
the holders of record of shares of the Company's capital stock and their
respective state of residency as of a recent date is set forth in Section 3.03
of the Company Disclosure Schedule.
SECTION 3.04 Authority Relative to this Agreement. The Company
has all necessary corporate power and authority to execute and deliver this
Agreement, to perform its obligations hereunder and to consummate the
Acquisition. The execution and delivery of this Agreement by the Company and the
consummation by the Company of the Acquisition have been duly and validly
authorized by all necessary corporate action and no other corporate proceedings
on the part of the Company are necessary to authorize this Agreement or to
consummate the Acquisition (other than, with respect to the Merger, the adoption
of this Agreement by the holders of the shares of Company Common Stock and the
filing and recordation of appropriate merger documents as required by Wisconsin
Law). This Agreement has been duly and validly executed and delivered by the
Company and, assuming the due authorization, execution and delivery by Merger
Sub, Parent, Saw Mill and the Shareholders, constitutes a legal, valid and
binding obligation of the Company, enforceable against the Company in accordance
with its terms, subject to bankruptcy, insolvency, fraudulent transfer,
reorganization, moratorium and similar laws of general applicability relating to
or affecting creditors' rights and to general equity principles.
SECTION 3.05 No Conflict; Required Filings and Consents.
(a) Subject to the approval of the Company's shareholders and
compliance with applicable provisions of Wisconsin Law or any other
applicable Law, the execution and delivery of this Agreement by the
Company does not, and the consummation by the
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Company of the Acquisition will not (i) conflict with or violate the
Articles of Incorporation or By-laws of the Company or any of its
subsidiaries, (ii) to the Company's Knowledge, conflict with or violate
any domestic (federal, state or local) or foreign law, rule,
regulation, order, judgment or decree (collectively, "Laws") applicable
to the Company or its subsidiaries or by which any of their respective
properties or assets is bound or affected or (iii) to the Company's
Knowledge, result in a violation or breach of or constitute a default
(or an event which with notice or lapse of time or both would become a
default) under, or give to others any right of termination, amendment,
acceleration or cancellation of, or result in the creation of a Lien on
any property or asset of the Company or its subsidiaries pursuant to,
any note, bond, mortgage, indenture, contract, agreement, lease,
license, permit, franchise or other instrument or obligation to which
the Company or its subsidiaries is a party or by which the Company, its
subsidiaries or any of its properties or assets is bound or affected,
except as disclosed in Section 3.05(a) of the Company Disclosure
Schedule and except, in the case of clauses (ii) and (iii) above,
conflicts, violations, breaches or defaults which would not,
individually or in the aggregate, have or be reasonably expected to
have a Company Material Adverse Effect.
(b) To the Company's Knowledge, the execution and delivery of
this Agreement by the Company do not, and the consummation by the
Company of the Acquisition will not, require any consent, approval,
authorization or permit of, or filing with or notification to, any
governmental or subdivision thereof, or any administrative,
governmental or regulatory authority, agency, commission, tribunal or
body, domestic, foreign or supranational, except for (i) applicable
requirements, if any, of the Securities Exchange Act of 1934, as
amended (the "Exchange Act"), the Securities Act of 1933, as amended
(the "Securities Act"), state securities or "blue sky" laws ("Blue Sky
Laws"), the rules of the National Association of Securities Dealers
("NASD"), state takeover laws, the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Antitrust
Improvements Act of 1976, as amended, and the rules and regulations
thereunder (the "HSR Act"), and Wisconsin Law or any other applicable
Law and (ii) where the failure to obtain such other consents,
approvals, authorizations, or permits, or to make such filings or
notifications, would not, individually or in the aggregate, have or be
reasonably expected to have a Company Material Adverse Effect.
SECTION 3.06 SEC Filings; Financial Statements; Undisclosed
Liabilities.
(a) To the Company's Knowledge, the Company has filed all
forms, reports and documents required to be filed by it with the
Securities and Exchange Commission (the "SEC") since January 1, 1997
and has made available to the Merger Sub all registration statements
filed by the Company with the SEC, including all exhibits filed in
connection therewith (on all forms applicable to the registration of
securities) since January 1, 1997 and prior to the date of this
Agreement (collectively, the "Company SEC Reports"). To the Company's
Knowledge, as of their respective dates, the Company SEC Reports (i)
complied in all material respects with the requirements of the
Securities Act or the Exchange Act, as the case may be, and the rules
and regulations thereunder and (ii) did not contain any untrue
statement of a material fact or omit to state a material fact required
to be stated therein or necessary in order to make the statements made
therein, in the light of the circumstances
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under which they were made, not misleading. The Company will deliver to
the Merger Sub as soon as they become available true and complete
copies of any Company SEC Reports filed subsequent to the date hereof
and prior to the Effective Time.
(b) Each of the financial statements (including, in each case,
any notes and schedules thereto) contained in the Company SEC Reports
complied as to form in all material respects with the applicable
accounting requirements and rules and regulations of the SEC and was
prepared in accordance with United States generally accepted accounting
principles ("GAAP") applied on a consistent basis throughout the
periods indicated (except as may be indicated in the notes thereto),
and each fairly presented in all material respects the consolidated
financial position, results of operations and cash flows of the Company
and its consolidated subsidiaries as at the respective dates thereof
and for the respective periods indicated therein in accordance with
GAAP (subject, in the case of unaudited statements (the "Interim
Financial Statements"), to normal and recurring year-end adjustments
and the absence of footnotes none of which would, individually or in
the aggregate, have or be reasonably expected to have a Company
Material Adverse Effect).
(c) Except as set forth on Section 3.06 of the Company
Disclosure Schedule, since December 31, 1998, to the Company's
Knowledge, there has not been any Company Material Adverse Effect, or
any event, condition or development which is reasonably likely to
result in a Company Material Adverse Effect.
(d) To the Company's Knowledge, neither the Company nor its
subsidiaries have any known or asserted liabilities or obligations
(whether absolute or contingent, whether accrued or unaccrued, whether
liquidated or unliquidated and whether due or to become due, including
any liability for taxes) including without limitation any liabilities
or obligations with respect to environmental, health or safety matters,
other than such liabilities or obligations (i) disclosed in the Company
Disclosure Statement, (ii) that have been specifically disclosed or
reserved for in the audited consolidated balance sheet of the Company
for calendar year 1998 as filed with the SEC, (iii) that have been
incurred in the ordinary course of business consistent with past
practice since December 31, 1998, or (iv) that would not, individually
or in the aggregate, have or be expected to have a Company Material
Adverse Effect.
(e) Section 3.06 of the Company Disclosure Schedule sets forth
a list of all of the Company's and its subsidiaries' indebtedness for
borrowed money which is outstanding as of December 31, 1999, except for
amounts of indebtedness which are not individually in excess of
$250,000.
SECTION 3.07 Absence of Certain Changes or Events. Except as
disclosed in Section 3.07 of the Company Disclosure Schedule or in the Company
SEC Reports and except for the execution of this Agreement and the consummation
of the transactions contemplated hereby, since December 31, 1998, (i) to the
Company's Knowledge, the Company and its subsidiaries have conducted their
respective businesses only in, and have not engaged in any material transaction
other than in accordance with, the ordinary course of business consistent with
past custom and practice
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(including with respect to quantity and frequency) in all material respects and
(ii) neither the Company nor any of its subsidiaries have, directly or
indirectly:
(a) redeemed, purchased, otherwise acquired, or agreed to
redeem, purchase or otherwise acquire, any shares of capital stock of
the Company, or declared, set aside or paid any dividend or otherwise
made a distribution (whether in cash, stock or property or any
combination thereof) in respect of the Company's capital stock;
(b) instituted any material change in its accounting methods,
principles or practices;
(c) granted any increase in the base compensation of, or made
any other material change in the employment terms for, any of its
directors, officers and/or employees, except (i) for increases or
changes reflecting or based upon changed responsibilities or duties and
increases or changes made in the ordinary course of business consistent
with past practice and (ii) reasonable compensation payable to the
members of the Special Committee in connection with their performance
of services as members of the Special Committee; or
(d) adopted, modified or terminated any bonus, profit-sharing,
incentive, severance or other plan or contract for the benefit of any
of its directors, officers and/or employees other than changes which do
not materially increase the aggregate cost of such plan or contract and
changes made in the ordinary course of business consistent with past
practices.
SECTION 3.08 Absence of Litigation. Except as disclosed in the
Company SEC Reports, as of the date hereof, there is no claim, action,
proceeding or investigation pending or, to the Company's Knowledge, threatened
in writing against the Company, its subsidiaries, or any of its properties or
assets, before any court, arbitrator or Governmental Authority, which,
individually or when aggregated with other claims, actions, proceedings or
investigations or product liability claims, would have or could reasonably be
expected to have a Company Material Adverse Effect. As of the date hereof,
neither the Company nor its subsidiaries nor any of their respective properties
or assets is subject to any order, writ, judgment, injunction, decree,
determination or award having or which could reasonably be expected to have,
individually or in the aggregate, a Company Material Adverse Effect.
SECTION 3.09 Shareholder Vote Required. The affirmative vote
of the holders of the outstanding shares of Company Common Stock in accordance
with Wisconsin Law and other applicable Law is the only vote of the holders of
any class or series of securities of the Company necessary to approve the
Merger, this Agreement and the other transactions contemplated hereby.
SECTION 3.10 Opinion of Financial Advisor. The Special
Committee has received the opinion, dated January 29, 2000 (the "▇▇▇▇▇▇
Opinion"), of ▇▇▇▇▇▇ Brothers Inc. (the "Company Financial Advisor"), to the
effect that the Merger Consideration is fair to the Company's shareholders
(other than the Shareholders) from a financial point of view.
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SECTION 3.11 Brokers. No broker, finder or investment banker
(other than the Company Financial Advisor) is entitled to any brokerage,
finder's or other fee or commission in connection with the Merger based upon
arrangements made by or on behalf of the Company or any of its subsidiaries. The
Company has heretofore furnished to Merger Sub a complete and correct copy of
all agreements between the Company and the Company Financial Advisor pursuant to
which such firm would be entitled to any payment relating to the Merger and the
other transactions contemplated hereby, and there have been no amendments to
such agreements.
SECTION 3.12 Company Action; State Takeover Statutes. The
Company's Board of Directors (at a meeting duly called and held) has by
requisite vote of directors (i) approved and adopted this Agreement, the Merger
and all of the other transactions contemplated hereby and (ii) agreed to
recommend that the shareholders of the Company approve and adopt this Agreement,
the Merger and all of the other transactions contemplated hereby.
SECTION 3.13 Information Supplied. The Proxy Statement (as
defined below) and any other document to be filed with the SEC or any
Governmental Authority in connection with the Acquisition (the "Other Filings")
will not, at the respective times filed with the SEC or other Governmental
Authority, to the Company's Knowledge, contain any untrue statement of a
material fact (other than information furnished by Merger Sub, Parent or Saw
Mill for which no representation or warranty is being made by the Company) or
omit to state any material fact (other than information required to be furnished
by Merger Sub, Parent or Saw Mill for which no representation or warranty is
being made by the Company) required to be stated therein or necessary in order
to make the statements made therein, in light of the circumstances in which they
were made, not misleading. The Proxy Statement will, to the Company's Knowledge,
comply as to form in all material respects with the provisions of the Exchange
Act and the rules and regulations thereunder.
SECTION 3.14 Compliance with Laws. To the Company's Knowledge,
neither the Company nor any of its subsidiaries is in violation of or has
violated or failed to comply with any Law, including without limitation any
relating to environmental, health or safety matters, except for violations and
failures to comply that would not, individually or in the aggregate, be
reasonably likely to result in a Company Material Adverse Effect.
SECTION 3.15 Tax Matters.
(a) The Company, each domestic subsidiary of the Company and,
to the Company's Knowledge, each foreign subsidiary of the Company has
filed all Tax Returns that it was required to file prior to the date
hereof. To the Company's Knowledge, all such Tax Returns were filed in
good faith and were complete in all material respects. All Taxes owed
by any of the Company and each subsidiary of the Company (whether or
not shown on any Tax Return) have been paid or reserved. Except as
provided in Section 3.15 of the Company Disclosure Schedule, neither
the Company nor any domestic subsidiary of the Company currently is the
beneficiary of any extension of time within which to file any Tax
Return. No claim has ever been made by an authority in a jurisdiction
where any of the Company or any subsidiary of the Company does not file
Tax Returns that the Company or any such subsidiary so not filing is or
may be subject to taxation by that jurisdiction except
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for claims which, individually or in the aggregate, would not result or
be expected to result in a Company Material Adverse Effect.
(b) Neither the Company nor any subsidiary of the Company has
made any payments, is obligated to make any payments, or is a party to
any agreement that under certain circumstances could obligate it to
make any payments that will not be deductible under Code ss.280G.
Neither the Company nor any subsidiary of the Company has made any
payments or is obligated to make any payments (other than payments
required as a result of the operation of this Agreement) that may not
be deductible under Code ss.162(m).
(c) Neither the Company nor any subsidiary of the Company has
any liability for the Taxes of any person other than the Company and
the subsidiaries of the Company (i) under Treas. Reg. ss.1.1502-6 (or
any similar provision of state, local, or foreign law), (ii) as a
transferee or successor, (iii) by contract, or (iv) otherwise. Neither
the Company nor any subsidiary of the Company is a party to any Tax
allocation or sharing agreement.
SECTION 3.16 Change of Control Provisions. Except as disclosed
on Section 3.16 of the Company Disclosure Schedule or as expressly provided for
in or permitted by this Agreement, no director, officer or employee of the
Company or any subsidiary of the Company (other than the Shareholders) will be
entitled to receive additional compensation, other payments or other rights
(whether as a result of any employee benefit plan, program or arrangement, any
contract or other agreement, or otherwise) as a result of the execution of this
Agreement, the consummation of the Merger, the consummation of any of the other
transactions contemplated hereby or otherwise in connection with a change of
control of the Company.
SECTION 3.17 Transactions with Affiliates. Except as disclosed
on Section 3.17 of the Company Disclosure Schedule and subject to the final
sentence of this Section 3.17, neither the Company nor any of its subsidiaries
is a party to any executory contract or other arrangement with any of its
affiliates, and no affiliate of the Company or any of its subsidiaries (other
than the Company and its subsidiaries) owns any material asset, property, or
right, tangible or intangible, that is used in the Company's or any of its
subsidiaries' businesses. For purpose of this Section 3.17, the term"affiliate"
shall not include any of the Shareholders. Notwithstanding the foregoing, the
Company makes the representations set forth in the first sentence of this
Section 3.17 to its Knowledge with respect to the Company's Chinese and Romanian
ventures.
SECTION 3.18 Foreign Corrupt Practices Act. To the Company's
Knowledge, neither the Company, any subsidiary of the Company, nor any director,
manager, officer, agent, employee or other person associated with or acting on
behalf of the Company or any of its subsidiaries has used any funds for any
unlawful contribution, gift, entertainment or other expense relating to
political activity or made any direct or indirect unlawful payment to any United
States or foreign government official or employee from company funds or violated
or is in violation of any provision of the Foreign Corrupt Practices Act of 1977
or paid or made any bribe, rebate, payoff, influence payment, kickback, or other
unlawful payment.
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ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF
SAW MILL, PARENT AND MERGER SUB
Saw Mill, Parent and Merger Sub hereby jointly and severally
represent and warrant to the Company that:
SECTION 4.01 Organization and Qualification; Subsidiaries.
Each of Merger Sub, Parent and Saw Mill is duly organized, validly existing and
in good standing (or the equivalent thereof) under the laws of the jurisdiction
of its incorporation or formation, as applicable, and has the requisite power
and authority to carry on its respective business as now being conducted, except
where the failure to have such power of authority would not be reasonably
expected to prevent or materially delay the consummation of the Merger.
SECTION 4.02 Authority Relative to this Agreement. Each of
Merger Sub, Parent and Saw Mill has all necessary power and authority to execute
and deliver this Agreement, to perform its respective obligations hereunder and
to consummate the Acquisition. The execution and delivery of this Agreement by
each of Merger Sub, Parent and Saw Mill and the consummation by each of Merger
Sub, Parent and Saw Mill of the Acquisition have been duly and validly
authorized by all necessary action and no other proceedings on the part of
Merger Sub, Parent or Saw Mill are necessary to authorize this Agreement or to
consummate the Merger (other than the filing and recordation of appropriate
merger documents as required by Wisconsin Law). This Agreement has been duly and
validly executed and delivered by each of Merger Sub, Parent or Saw Mill and,
assuming the due authorization, execution and delivery by the Company and the
Shareholders, constitutes a legal, valid and binding obligation of each of
Merger Sub, Parent and Saw Mill, enforceable against each of Merger Sub, Parent
and Saw Mill in accordance with its terms, subject to bankruptcy, insolvency,
fraudulent transfer, reorganization, moratorium and similar laws of general
applicability relating to or affecting creditors' rights and to general equity
principles.
SECTION 4.03 No Conflict; Required Filings and Consents.
(a) Subject to compliance with applicable provisions of
Wisconsin Law or any other applicable Law, the execution and delivery
of this Agreement by each of Merger Sub, Parent and Saw Mill does not,
and the consummation of the Acquisition by each of Merger Sub, Parent
and Saw Mill will not (i) conflict with or violate the charter
documents, By-laws or other organizational documents of Merger Sub,
Parent or Saw Mill, (ii) to Merger Sub's, Parent's and Saw Mill's
knowledge, conflict with or violate any Laws applicable to Merger Sub,
Parent or Saw Mill or by which any of their respective properties or
assets is bound or affected, or (iii) to Merger Sub's, Parent's and Saw
Mill's knowledge, result in a violation or any breach of or constitute
a default (or an event which with notice or lapse of time or both would
become a default) under any note, bond, mortgage, indenture, contract,
agreement, lease, license, permit, franchise or other instrument or
obligation to which Merger Sub, Parent or Saw Mill is a party or by
which Merger Sub, Parent or Saw Mill or any property or asset of Merger
Sub, Parent or Saw Mill is bound or affected, except, in the case of
clauses (ii) and (iii), for violations, breaches or defaults which
would not, individually or in the
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aggregate, be reasonably expected to prevent or materially delay the
consummation of the Acquisition.
(b) To Merger Sub's, Parent's and Saw Mill's knowledge, the
execution and delivery of this Agreement by each of Merger Sub, Parent
and Saw Mill does not, and the consummation of this Agreement by each
of Merger Sub, Parent and Saw Mill will not, require any consent,
approval, authorization or permit of, or filing with or notification
to, any government or subdivision thereof, or any administration,
governmental or regulatory authority, agency, commission, tribunal or
body, domestic, foreign or supranational, except (i) for applicable
requirements, if any, of the Exchange Act, the Securities Act, Blue Sky
Laws, the rules of any applicable stock exchange, state takeover laws,
the HSR Act, and by Wisconsin Law or any other applicable Law, and (ii)
where the failure to obtain such other consents, approvals,
authorizations, or permits, or to make such filings or notifications,
would not, individually or in the aggregate, be reasonably expected to
prevent or materially delay the consummation of the Acquisition.
SECTION 4.04 Interim Operations of Parent and Merger Sub.
Parent and Merger Sub were each formed solely for the purpose of engaging in the
transactions contemplated hereby, has engaged in no other business activities
(other than those incident to its organization and the execution of this
Agreement and obtaining the Commitment Letters (as herein defined)) and has
conducted its operations only as contemplated hereby.
SECTION 4.05 Information Supplied. None of the information
supplied in writing or to be supplied in writing by Merger Sub specifically for
inclusion or incorporation by reference in the Proxy Statement or the Other
Filings, at the respective time filed with the SEC or such other Governmental
Authority, and, in addition, in the case of the Proxy Statement, at the date it
is first mailed to the Company's shareholders or at the time of the Shareholders
Meeting (as defined below), contains or will contain any untrue statement of a
material fact or omit to state any material fact required to be stated therein
or necessary in order to make the statements therein, in light of the
circumstances under which they are made, not misleading.
SECTION 4.06 Brokers. No broker, finder or investment banker
is entitled to any brokerage, finder's or investment banker's fee or commission
in connection with the Merger based upon arrangements made by or on behalf of
Merger Sub, Parent or Saw Mill.
SECTION 4.07 Financing. Saw Mill has received written
commitments from (a) Credit Agricole Indosuez (the "Senior Lender"), dated as of
January 20, 2000 (the "Senior Debt Commitment Letter"), pursuant to which the
Senior Lender has committed, subject to the terms and conditions contained
therein, to provide up to $130,000,000 in senior debt financing for the
Transactions, (b) Credit Suisse First Boston (the "Subordinated Debt Lender"),
dated as of January 19, 2000 (the "Subordinated Debt Commitment Letter"),
pursuant to which the Subordinated Debt Lender has committed, subject to the
terms and conditions contained therein, to provide up to $125,000,000 in
subordinated debt financing for the Transactions, and (c) Chase Capital
Partners, Massachusetts Mutual Life Insurance Company and The Northwestern
Mutual Life Insurance Company (collectively, the "Preferred Equity Investors"),
dated as of January 27, 2000 (the
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"Preferred Equity Commitment Letter", and collectively with the Senior Debt
Commitment Letter and the Subordinated Debt Commitment Letter, the "Commitment
Letters"), pursuant to which the Preferred Equity Investors have committed,
subject to the terms and conditions contained therein, to provide up to
$35,000,000 in preferred equity financing for the Transactions. The proceeds
from the Debt and Preferred Equity Financing, assuming the Commitment Letters
have been funded pursuant to and in accordance with their respective terms,
together with the Pre-Merger Contributions, shall provide sufficient funds to
pay, pursuant to the Merger, the Merger Consideration, the Option Consideration
and the repayment of indebtedness for borrowed money of the Company or any of
its subsidiaries that is required to be repaid as a result of the Transactions,
if any, and to pay all fees and expenses related to the Transactions. A true,
correct and complete copy of (i) the Senior Debt Commitment Letter is attached
hereto as Exhibit G-1, (ii) the Subordinated Debt Commitment Letter is attached
hereto as Exhibit G-2, (iii) the Preferred Equity Commitment Letter is attached
hereto as Exhibit G-3 and (iv) Saw Mill's agreement of limited partnership (the
"Saw Mill Limited Partnership Agreement") has been provided to the Special
Committee prior to date hereof. The partners named in the Saw Mill Limited
Partnership Agreement, taken together, have committed, subject to the terms and
conditions contained therein, to contribute the Contributed Cash and the
Contributed Company Common Shares to Saw Mill. Merger Sub is not aware of any
facts which in its reasonable judgment would prevent the consummation of the
financing contemplated by the Commitment Letters. As of the date hereof, the
Commitment Letters and the Saw Mill Limited Partnership Agreement have not been
modified or amended and are in full force and effect.
SECTION 4.08 Capitalization of Merger Sub. Immediately prior
to the Effective Time, the authorized capital stock of Merger Sub will consist
of shares of common stock, par value $0.01 per share, of which only one share
will be issued and outstanding and such share shall be owned by Parent.
SECTION 4.09 Solvency. Immediately after giving effect to the
Transactions, the Surviving Corporation shall be able to pay its debts as they
become due, shall own assets having a fair market value greater than the amounts
required to pay its debts (including a reasonable estimate of the amount of
contingent liabilities) and shall not have an unreasonably small amount of
capital to conduct its business. No transfer of property is being made, and no
obligation is being incurred, in connection with the Transactions with the
intent to hinder, delay or defraud present or future creditors of the Company,
Parent, Merger Sub or Surviving Corporation.
SECTION 4.10 Pro Formas. Set forth on Exhibit B is the current
estimated sources and uses of funds in connection with the Contribution
Agreement, the Debt and Preferred Equity Financing and the consummation of the
Transactions, which reflect the current assumptions regarding the sources and
uses of funds for such purposes, and Merger Sub shall notify the Special
Committee of any material changes in such estimated sources and uses of funds.
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ARTICLE V
REPRESENTATIONS AND WARRANTIES OF THE SHAREHOLDERS
Each Shareholder hereby severally but not jointly represents
and warrants to the Company, Saw Mill, Parent and Merger Sub that:
SECTION 5.01 No Conflict; Required Filings and Consents.
(a) The execution and delivery of this Agreement by such
Shareholder does not, and the consummation of the Acquisition will not,
(i) to such Shareholder's knowledge, violate any Law applicable to such
Shareholder, (ii) prevent or materially delay the consummation of the
Merger or (iii) to such Shareholder's knowledge, result in a violation
or any breach of or constitute a default (or an event which with notice
or lapse of time or both would become a default) under any note, bond,
mortgage, indenture, contract, agreement, lease, license, permit,
franchise or other instrument or obligation to which such Shareholder
is a party.
(b) To such Shareholder's knowledge, the execution and
delivery of this Agreement by such Shareholder does not, and the
consummation of the Acquisition will not, require any consent,
approval, authorization or permit of, or filing with or notification
to, any government or subdivision thereof, or any administrative,
governmental or regulatory authority, agency, commission, tribunal or
body, domestic, foreign or supranational, except for applicable
requirements, if any, of the Exchange Act, the Securities Act, Blue Sky
Laws, the rules of any applicable exchange, state takeover laws, the
HSR Act, and filings and recordation of appropriate merger documents as
required by Wisconsin Law or any other applicable Law.
SECTION 5.02 Ownership of Owned Shares. Except as set forth on
Exhibit C hereof, as of the date hereof, such Shareholder is the sole record and
beneficial owner of the number of shares of Company Common Stock listed opposite
such Shareholder's name on Exhibit C hereof, free and clear of any Liens
(including, without limitation, any restriction on the right to vote, sell or
otherwise dispose of the Owned Shares or any interest therein) except pursuant
to this Agreement, the Voting Agreement or applicable securities Laws. The Owned
Shares constitute all of the capital stock of the Company owned of record or
beneficially owned by such Shareholder. Exhibit C hereof sets forth for each
Owned Share the date such Owned Share was acquired by the respective Shareholder
and the purchase price paid for such Owned Share by the respective Shareholder.
SECTION 5.03 Authority Relative to this Agreement. Each
Shareholder has all necessary capacity to execute and deliver this Agreement and
to perform his obligations hereunder. This Agreement has been duly and validly
executed and delivered by such Shareholder and, assuming the due authorization,
execution and delivery by Merger Sub, Parent, Saw Mill, the other Shareholder
and the Company, constitutes a legal, valid and binding obligation of such
Shareholder, enforceable against such Shareholder in accordance with its terms,
subject to bankruptcy, insolvency, fraudulent transfer, reorganization,
moratorium and similar laws of general applicability relating to or affecting
creditors' rights and to general equity principles.
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SECTION 5.04 No Finder's Fees. No broker, investment banker,
financial advisor or other person is entitled to any broker's finder's,
financial advisor's or other similar fee or commission in connection with the
transactions contemplated hereby based upon arrangements made by or on behalf of
such Shareholder.
SECTION 5.05 Transactions with Shareholders. Except as set
forth on Exhibit F hereof, neither the Company nor any of its subsidiaries is a
party to any executory contract or other arrangement with any Shareholder or any
family member or affiliate of any Shareholder (other than the Company or any of
its subsidiaries) (collectively, the "Shareholder Related Parties") and no
Shareholder Related Party owns any material asset, property or right, tangible
or intangible, that is used in the Company's or any of its subsidiaries'
businesses.
ARTICLE VI
CONDUCT OF BUSINESS PENDING THE MERGER
SECTION 6.01 Conduct of Business by the Company Pending the
Merger. The Company covenants and agrees that, between the date of this
Agreement and the Effective Time, except as set forth in Section 6.01 of the
Company Disclosure Schedule or as otherwise expressly provided for in this
Agreement, unless Merger Sub shall otherwise agree in writing, the Company
shall, and shall cause its subsidiaries, to conduct its business in the ordinary
course and in a manner consistent with past custom and practice (including with
respect to quantity and frequency in all material respects). The Company shall,
and shall cause its subsidiaries to, use commercially reasonable efforts to (i)
preserve intact its business organization, (ii) keep available the services of
the current officers, employees and consultants of the Company and its
subsidiaries, (iii) preserve the current relationships of the Company and its
subsidiaries with customers, distributors, suppliers, licensors, licensees,
contractors and other persons with which the Company or its subsidiaries has
significant business relations, (iv) maintain all assets in good repair and
condition (except for ordinary wear and tear) other than those disposed of in
the ordinary course of business consistent with past custom and practice, (v)
maintain all insurance currently used in the conduct of the Company's and its
subsidiaries' business as currently conducted, (vi) maintain the Company's and
its subsidiaries' books of account and records in the usual, regular and
ordinary manner and (vii) maintain and protect all of its material Intellectual
Property Rights, in each case, in a manner consistent in all material respects
with the Company's ordinary course of business, consistent with past practice.
Except as contemplated by this Agreement, or as set forth in Section 6.01 of the
Company Disclosure Schedule, the Company shall not, and shall cause its
subsidiaries not to, between the date of this Agreement and the Effective Time,
directly or indirectly do any of the following without the prior written consent
of Merger Sub (which consent shall not be unreasonably withheld or delayed):
(a) amend or otherwise change its Articles of Incorporation
or By-laws;
(b) issue, sell, pledge, dispose of, grant or encumber, or
authorize the issuance, sale, pledge, disposition, grant or encumbrance
of, (i) any shares of capital stock or other
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equity securities of any type or class of the Company or its
subsidiaries, or any options, warrants, convertible securities or other
rights of any kind to acquire any shares of such capital stock or other
equity securities, or any other ownership interest (including, without
limitation, any phantom interests), of the Company or its subsidiaries
or (ii) any assets of the Company or its subsidiaries, except for sales
in the ordinary course of business consistent with past custom and
practice and other asset sales for consideration or having a fair
market value aggregating not more than $500,000;
(c) declare, set aside, make or pay any dividend or other
distribution, payable in cash, stock, property or otherwise, with
respect to any of its capital stock or other equity securities;
(d) reclassify, combine, split, subdivide or redeem, purchase
or otherwise acquire, or propose to redeem, purchase or otherwise
acquire, directly or indirectly, any of its capital stock or other
equity securities;
(e) acquire (including, without limitation, by merger,
consolidation or acquisition of stock or assets) or agree to acquire
any corporation, partnership, limited liability company, or other
business organization or division thereof, other than the acquisition
of assets pursuant to the Letter of Intent, dated September 27, 1999;
(f) (i) other than under the Company's existing credit
facilities as in effect as of the date hereof, incur or agree to incur
any indebtedness for borrowed money or issue any debt securities or
assume, guarantee or endorse, or otherwise as an accommodation become
responsible for, the obligations of any person, or make any loans,
advances, or capital contributions to or investments in, any other
person; or (ii) authorize or make capital expenditures which are not in
accordance with the Company's calendar year 2000 budget which has been
presented to the Company's board of directors prior to the date hereof;
(g) enter into, establish, adopt, amend or renew any
employment, consulting, severance or similar agreement or arrangements
with any director, officer, or employee, or grant any salary or wage
increase (other than in the ordinary course of business consistent with
past custom and practice);
(h) establish, adopt, amend or increase benefits under any
pension, retirement, stock option, stock purchase, savings, profit
sharing, deferred compensation, consulting, welfare benefit contract,
plan or arrangement (other than in the ordinary course of business
consistent with past custom and practice or as may be required by
applicable Law);
(i) commence any voluntary petition, proceeding or action
under any bankruptcy, insolvency or other similar law;
(j) make or institute any material change in accounting
methods, procedures or practices in its accounting methods, procedures
and practices unless mandated by GAAP;
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(k) enter into any agreement or other arrangement with any
director, officer or shareholder of the Company, its subsidiaries or
any affiliate of any of the foregoing, except (i) in the ordinary
course of business consistent with past custom and practice and (ii)
with respect to the payment of reasonable compensation to the members
of the Special Committee in connection with their performance of
services as members of the Special Committee;
(l) take any action or omit to take any action which would
result in a violation of any applicable Law or would cause a breach of
any agreement, contract or commitment, which violation or breach would
have or could reasonably be expected to have a Company Material Adverse
Effect;
(m) license, assign or otherwise transfer to any person or
entity any rights to any material Intellectual Property Rights owned or
used by the Company or its subsidiaries, except in the ordinary course
of business consistent with past custom or practice, or fail to
maintain or enforce any material Intellectual Property Rights owned or
used by the Company or its subsidiaries, except in the ordinary course
of business consistent with past custom or practice; or
(n) authorize, propose, or agree to take, any of the
foregoing actions prohibited under the other provisions of this Section
6.01.
ARTICLE VII
ADDITIONAL AGREEMENTS
SECTION 7.01 Shareholders' Meeting.
(a) Subject to the provisions of Section 7.05 and Section
9.01, the Company shall, consistent with applicable Law, call and hold
a meeting of the holders of shares of Company Common Stock (the
"Shareholders' Meeting") as promptly as practicable for the purpose of
voting upon the approval and adoption of this Agreement and the Merger.
The Company, through its Board of Directors, shall recommend to its
shareholders approval and adoption of this Agreement and the Merger,
which recommendation shall be contained in the Proxy Statement (as
defined below); provided, however, that the Board of Directors may fail
to make its recommendation to the shareholders of the Company or may
withdraw, modify or change its recommendation to the shareholders of
the Company, in accordance with Section 7.05(a). Subject to the
foregoing, the Company shall solicit from the holders of shares of
Company Common Stock proxies in favor of the approval and adoption of
the Merger, and shall take all other action necessary or advisable to
secure the vote or consent of such holders required by Wisconsin Law.
(b) Saw Mill, Parent and Merger Sub shall vote (or consent
with respect to) any shares of Company Common Stock beneficially owned
by them, or with respect to which they have the power (by agreement,
proxy or otherwise) to cause to be voted (or to provide a consent), in
favor of the approval and adoption of this Agreement and the Merger at
any meeting of the shareholders of the Company at which this Agreement
and the Merger shall
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be submitted for approval and adoption and at all adjournments or
postponements thereof (or, if applicable, by any action of the
shareholders of the Company by consent in lieu of a meeting).
SECTION 7.02 Preparation of Proxy Statement.
(a) The Company, the Shareholders, Merger Sub, Parent and Saw
Mill shall furnish to each other all information concerning such person
or such person's business that is required for the Proxy Statement (as
herein defined). Under the direct control of the Special Committee, the
Company shall, as soon as practicable, prepare and file (after
providing Merger Sub with a reasonable opportunity to review and
comment thereon) preliminary proxy materials (including, without
limitation, a Schedule 13e-3 filing) relating to the meeting of the
holders of shares of Company Common Stock to be held in connection with
the Merger (together with any amendments thereof or supplements
thereto, the "Proxy Statement") with the SEC and shall use its best
efforts to respond to any comments of the SEC (after providing Merger
Sub with a reasonable opportunity to review and comment thereon) and to
cause the Proxy Statement to be mailed to the Company's shareholders as
promptly as practicable after responding to all such comments to the
satisfaction of the staff; provided, that, subject to Saw Mill's,
Parent's and Merger Sub's compliance with the immediately preceding
sentence, in no event shall the Company file the Proxy Statement with
the SEC any later than the date forty-five (45) days after the date
hereof. The Company shall notify Merger Sub promptly of the receipt of
any comments from the SEC and of any request by the SEC for amendments
or supplements to the Proxy Statement or for additional information and
shall supply Merger Sub with copies of all correspondence between the
Company or any of its representatives, on the one hand, and the SEC, on
the other hand, with respect to the Proxy Statement or the
Transactions. The Company will cause the Proxy Statement to comply in
all material respects with the applicable provisions of the Exchange
Act and the rules and regulations thereunder applicable to the Proxy
Statement and the solicitation of proxies for the Shareholders' Meeting
(including any requirement to amend or supplement the Proxy Statement)
and each party shall furnish to the other such information relating to
it and its affiliates and the Transactions and such further and
supplemental information as may be reasonably requested by the other
party. If at any time prior to the Shareholders Meeting there shall
occur any event that should be set forth in an amendment or supplement
to the Proxy Statement, the Company shall promptly prepare and mail to
its shareholders such an amendment or supplement; provided, that no
such amendment or supplement to the Proxy Statement will be made by the
Company without providing the Merger Sub the reasonable opportunity to
review and comment thereon and without the approval of Merger Sub,
which approval shall not be unreasonably withheld. To the extent
practicable, the Special Committee and its counsel shall permit Merger
Sub and its counsel and the Company and its counsel to participate in
all communications with the SEC and its staff, including all meetings
and telephone conferences, relating to the Proxy Statement, this
Agreement or the Transactions; provided that in the event that such
participation by Merger Sub or the Company is not practicable, the
Special Committee shall promptly inform Merger Sub and the Company of
the content of all such communications and the participants involved
therein.
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(b) Subject to the provisions of Section 7.05 and Section
9.01, the Company agrees to include in the Proxy Statement the
recommendation of the Company's Board of Directors, subject to any
modification, amendment or withdrawal thereof as provided in this
Agreement. The Proxy Statement shall contain a copy of the ▇▇▇▇▇▇
Opinion.
SECTION 7.03 Appropriate Action; Consents; Filings; Further
Assurances.
(a) Subject to the provisions of Section 7.05 and Section
9.01, the Company, Merger Sub, Parent and Saw Mill shall use their
commercially reasonable efforts to (i) take, or cause to be taken, all
appropriate action and do, or cause to be done, all things necessary,
proper or advisable under applicable Law or otherwise to consummate the
Transactions and make effective the Merger as promptly as practicable,
(ii) obtain expeditiously from any Governmental Authorities any
consents, licenses, permits, waivers, approvals, authorizations or
orders required to be obtained or made by Merger Sub, Parent or the
Company or any of its subsidiaries in connection with the
authorization, execution and delivery of this Agreement and the
consummation of the Transactions, and (iii) as promptly as practicable,
make all necessary filings, and thereafter make any other required
submissions, with respect to this Agreement and the Transactions
required under (A) the Securities Act and the Exchange Act, and any
other applicable federal or state securities Laws, (B) the HSR Act and
any related governmental request thereunder and (C) any other
applicable Law; provided, that Merger Sub, Parent and the Company shall
cooperate with each other in connection with the making of all such
filings, including providing copies of all such documents to the
non-filing party and its advisors prior to filing. From the date of
this Agreement until the Effective Time, each party shall promptly
notify the other party in writing of any pending or, to the knowledge
of the first party, threatened action, proceeding or investigation by
any Governmental Authority or any other person (i) challenging or
seeking material damages in connection with the Merger or the
conversion of the Company Common Stock into cash pursuant to the Merger
or (ii) seeking to restrain or prohibit the consummation of the
Transactions or otherwise limit the right of Surviving Corporation to
own or operate all or any portion of the businesses or assets of the
Company or its subsidiaries, which in either case would have a Company
Material Adverse Effect prior to or after the Effective Time, or a
Surviving Corporation Material Adverse Effect after the Effective Time.
The term "Surviving Corporation Material Adverse Effect" means, when
used in connection with the Surviving Corporation, any change, effect,
event, occurrence, condition or development that is or is reasonably
likely to be materially adverse to the business, assets, liabilities,
properties, results of operations or condition (financial or otherwise)
of the Surviving Corporation and its subsidiaries, taken as a whole.
(b) The Company, the Shareholders, Merger Sub, Parent and Saw
Mill shall furnish to each other all information required for any
application or other filing to be made pursuant to the rules and
regulations of any applicable Law (including all information required
to be included in the Proxy Statement) in connection with the
transactions contemplated by this Agreement.
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(c) Each of Merger Sub, Parent, Saw Mill and the Company
shall give (or shall cause its respective subsidiaries to give) any
notices to third parties and use, and cause its respective
subsidiaries to use, their respective commercially reasonable efforts,
at, subject to Section 9.03(b), Merger Sub's expense, to obtain any
third party consents, (A) necessary, proper or advisable to consummate
the Transactions, (B) disclosed or required to be disclosed in the
Company Disclosure Schedule or (C) required to prevent a Company
Material Adverse Effect from occurring prior to or after the Effective
Time or a Surviving Corporation Material Adverse Effect from occurring
after the Effective Time. In the event that Merger Sub, Parent or the
Company shall fail to obtain any third party consent described in the
immediately preceding sentence, it shall use its commercially
reasonable efforts, at, subject to Section 9.03(b), Merger Sub's
expense, and shall take any such actions reasonably requested by the
other party, to minimize any adverse effect upon the Company, Merger
Sub and Parent, their respective subsidiaries, and their respective
businesses resulting, or which could reasonably be expected to result
after the Effective Time, from the failure to obtain such consent.
(d) If any state takeover statute or similar statute or
regulation becomes applicable to this Agreement or any of the
Transactions, the Company, Merger Sub and Parent will take all action
reasonably necessary to ensure that the Merger and the other
Transactions may be lawfully consummated as promptly as practicable on
the terms contemplated by this Agreement and otherwise to minimize the
effect of such statute or regulation on the Merger and the other
Transactions.
(e) If at any time after the Effective Time any further
action is necessary or desirable to carry out the purposes of this
Agreement, including the execution of additional documents, the proper
officers and directors of each party to this Agreement (including the
Shareholders) shall take all such necessary action.
SECTION 7.04 Confidentiality; Access to Information.
(a) Merger Sub, Parent and Saw Mill shall each, and shall
each use its reasonable best efforts to cause its Representatives
(as defined below) to, keep confidential and not disclose to any other
person (other than such Representatives) or use for its own benefit or
the benefit of any other person any trade secrets or other confidential
proprietary information in its or their possession or control regarding
the Company or any of its subsidiaries. The obligation of Merger Sub,
Parent and Saw Mill under this Section 7.04(a) shall not apply to
information which (i) is or becomes generally available to the public
without breach of the commitment provided for in this Section 7.04(a);
or (ii) is required to be disclosed by Law or a Governmental Authority;
provided, however, that, in any such case, the person subject to such
requirement shall notify the Company as early as reasonably practicable
prior to disclosure to allow the Company to take appropriate measures
to preserve the confidentiality of such information. The provisions of
this Section 7.04(a) (other than the provisions of this sentence) shall
terminate as of the Effective Time and all confidentiality agreements
entered into between the Company and Saw Mill and/or any affiliate of
Saw Mill (including Saw Mill Capital LLC) prior to the date hereof are
hereby terminated and have no further force
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or effect. Notwithstanding the foregoing, nothing in this Section
7.04(a) shall prevent the Company from complying with its obligations
contained in Section 7.09.
(b) The Shareholders shall each, and shall each use his
reasonable best efforts to cause his accountants, consultants, legal
counsel, agents and other representatives, as applicable, to, keep
confidential and not disclose to any other person or use for his or its
own benefit or the benefit of any other person any trade secrets or
other confidential proprietary information in his, its or their
possession or control regarding Merger Sub, Parent, Saw Mill or any of
their respective affiliates. The obligation of the Shareholders under
this Section 7.04(b) shall not apply to information which (i) is or
becomes generally available to the public without breach of the
commitment provided for in this Section 7.04(b); or (ii) is required to
be disclosed by Law or a Governmental Authority; provided, however,
that, in any such case, the Shareholder subject to such requirement
shall notify Merger Sub and Parent as early as reasonably practicable
prior to disclosure to allow Merger Sub and Parent to take appropriate
measures to preserve the confidentiality of such information.
(c) Except as otherwise dictated by the legal duties or legal
obligations of the Special Committee or the Company and subject to the
requirements of agreements with third parties, from the date hereof to
the Effective Time, the Company shall (and shall cause each of its
subsidiaries to) provide to Merger Sub (and its lenders, other
financing sources, officers, directors, employees, accountants,
consultants, legal counsel, agents and other representatives,
collectively, "Representatives") reasonable access to all information
and documents which Merger Sub may reasonably request regarding the
business, assets, liabilities, employees and other aspects of the
Company or its subsidiaries.
(d) Except as otherwise dictated by the legal duties or legal
obligations of the Special Committee or the Company and subject to the
requirements of agreements with third parties, from the date hereof to
the Effective Time, the Company shall (and shall cause each of its
subsidiaries to): (i) provide to Merger Sub and its Representatives
access at reasonable times upon prior notice to the officers,
employees, agents, properties, offices and other facilities of the
Company and its subsidiaries and to the books and records thereof and
(ii) furnish promptly such information concerning the business,
properties, contracts, assets, liabilities, personnel and other aspects
of the Company and its subsidiaries as Merger Sub or its
Representatives may reasonably request.
(e) No investigation by Merger Sub or the Company, as
applicable, whether prior to the execution of this Agreement or
pursuant to this Section 7.04, shall affect any representation or
warranty in this Agreement of any party hereto or any condition to the
obligations of the parties hereto.
(f) Merger Sub and its Representatives shall have the right
to conduct any environmental and engineering inspections at any of the
Company's properties (whether owned or leased), which inspections shall
be, subject to Section 9.03(b), at Merger Sub's expense; provided, that
in no event shall Merger Sub have the right to conduct so-called "Phase
II" environmental tests without the Company's prior consent, which
consent shall not
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be unreasonably withheld. Notwithstanding anything contained herein to
the contrary, all of Merger Sub's and their Representatives' activities
pursuant to this Section 7.04(f) shall be conducted in a manner that
does not unreasonably interfere with the ongoing operations of the
Company and its subsidiaries.
SECTION 7.05 Fiduciary Responsibilities.
(a) If, after the date of this Agreement, the Special
Committee or the Company receives a bona-fide inquiry or proposal (any
such inquiry, an "Acquisition Inquiry" or any such proposal, an
"Acquisition Proposal") from a person whom the Special Committee, in
good faith, reasonably determines has the financial capacity to
consummate a merger, consolidation, tender offer, exchange offer,
recapitalization or other business combination involving the Company or
the acquisition (of any kind) of a material portion of the assets or
capital stock of the Company or its subsidiaries (any such transaction,
other than the Merger, a "Third Party Transaction") and the Special
Committee reasonably concludes, after consultation with its legal
counsel, that the failure to provide information to, or to engage in
discussions or negotiations with, such person would be inconsistent
with the fiduciary duties of the Company's directors to the Company's
shareholders under applicable Law (the "Board's Fiduciary Duties"),
then (i) the Special Committee may, through any of the Company's
directors, officers, employees, agents, representatives or affiliates
(the "Company's Agents"), directly or indirectly, (x) provide access
to, furnish or cause to be furnished information concerning the
Company's business, properties, assets, financial position, operations
and/or prospects to such person pursuant to an appropriate
confidentiality agreement, and (y) engage in discussions related
thereto; and (ii) the Special Committee may, through any of the
Company's Agents, participate in and engage in discussions and
negotiations with such person regarding the Acquisition Inquiry or
Acquisition Proposal, as the case may be. In the event that, after the
date of this Agreement and prior to the Shareholders' Meeting, the
Special Committee or the Company receives an Acquisition Proposal from
a person whom the Special Committee, in good faith, reasonably
determines has the financial capabilities to consummate such
Acquisition Proposal and the Special Committee determines, in good
faith and after consultation with its legal counsel, that the failure
to do any or all of the following would be inconsistent with the
Board's Fiduciary Duties, the Board of Directors of the Company (acting
on the recommendation of the Special Committee) may do any or all of
the following: (xx) withdraw, modify or change the Company's Board of
Directors' approval or recommendation of this Agreement and the Merger;
(yy) approve or recommend to the Company's shareholders such
Acquisition Proposal; and (zz) terminate this Agreement. The Board of
Directors of the Company shall not take the action described in clause
(zz) above prior to three business days after the Board of Directors of
the Company shall have given Merger Sub written notice stating that the
Board of Directors of the Company intends to terminate this Agreement
and setting forth the information specified in Section 7.05(d) hereof
with respect to any Acquisition Proposal which the Board of Directors
of the Company intends to accept or recommend. If the Company shall
exercise its right to terminate this Agreement pursuant to clause (zz)
of this Section 7.05(a), the Company shall deliver to Saw Mill (or at
Saw Mill's direction, such other person as Saw Mill may designate in
writing), and any such termination shall be conditioned
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upon Saw Mill's or such other person's receipt of, a wire transfer of
same day funds in the amount of the Termination Fee (as defined in
Section 9.03(d)). Notwithstanding anything contained in this Agreement
to the contrary, so long as there has been no breach of Section
7.05(b), the exercise of the rights of the Board of Directors of the
Company and the Special Committee pursuant to this Section 7.05 shall
not constitute a breach of this Agreement by the Company.
(b) Notwithstanding anything contained herein to the
contrary, the Board of Directors of the Company, the Shareholders and
the Special Committee shall not, and the Company shall cause its
subsidiaries not to, and the Company agrees that it shall not
authorize nor permit any of the Company's Agents to, directly or
indirectly, solicit, knowingly encourage, participate in or initiate
discussions or negotiations with, or provide any non-public
information to any person (other than Merger Sub, Parent, Saw Mill or
any of their affiliates or representatives) concerning any potential
Third Party Transaction; provided, that after the Special Committee
(i) has received an Acquisition Inquiry or Acquisition Proposal and
(ii) has reached the applicable conclusions required by the first
sentence of Section 7.05(a) with respect to such Acquisition Inquiry
or Acquisition Proposal, as the case may be, the Special Committee
may, through any of the Company's Agents, directly or indirectly
participate in or initiate discussions or negotiations or provide
information and conduct any other activities it determines, in good
faith, after consultation with its legal counsel, are necessary to
satisfy the Board's Fiduciary Duties regarding such Acquisition
Inquiry or Acquisition Proposal, as the case may be, but only in the
manner and to the extent expressly permitted by Section 7.05(a).
(c) Subject to Section 7.05(a) hereof, nothing contained in
this Section 7.05 shall prohibit the Company's Board of Directors or
the Special Committee from 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(a) promulgated under the
Exchange Act or from making such disclosure to the Company's
shareholders which, in the judgment of the Board of Directors of the
Company or the Special Committee, after consultation with its legal
counsel, is necessary under applicable Law or the rules of any stock
exchange to meet the Board's Fiduciary Duties. The Company shall give
Merger Sub prompt written notice and a copy of any such disclosure.
(d) The Company shall promptly, but in any event within one
business day, give Merger Sub written notice of any Acquisition Inquiry
or Acquisition Proposal, which written notice shall include the
material terms and conditions of such Acquisition Inquiry or
Acquisition Proposal, as the case may be. The Company shall keep Merger
Sub reasonably informed of the status of any such Acquisition Inquiry
or Acquisition Proposal, including any change in the material terms or
conditions thereof.
(e) Notwithstanding anything contained herein to the
contrary, the initial press release issued by the Company announcing
the execution of this Agreement, which press release may not be issued
in any manner other than as is customary for issuing a press release
for a transaction such as the Merger, may include the following
language and the inclusion
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of such language shall not be a breach of any provision of this Section
7.05 and Saw Mill, Parent and Merger Sub hereby consent to the
inclusion of the following language in any such press release:
"Notwithstanding its recommendation and consistent with the
terms of the Merger Agreement, the Special Committee of the
Company's Board of Directors requested that the Special
Committee's financial advisor, ▇▇▇▇▇▇ Brothers Inc., and legal
advisor, ▇▇▇▇▇▇▇ ▇▇▇▇ & ▇▇▇▇▇▇▇▇▇ LLP, be available to receive
unsolicited inquiries from any other parties interested in the
possible acquisition of the Company. If the Special Committee
of the Company's Board of Directors concludes that the failure
to provide information to, or engage in discussions or
negotiations with, such parties would be inconsistent with its
fiduciary duties to the Company's shareholders, ▇▇▇▇▇▇
Brothers Inc. and ▇▇▇▇▇▇▇ ▇▇▇▇ & ▇▇▇▇▇▇▇▇▇ LLP, in conjunction
with the Special Committee of the Company's Board of
Directors, may provide information to and engage in
discussions and negotiations with such parties in connection
with any such indicated interest."
(f) Nothing in this Agreement shall require or be deemed to
require the Special Committee or the Company's Board of Directors to
take or refrain from taking any action which would violate any
obligation (including any fiduciary duty) under applicable Law. In
taking or refraining from taking such action, the Special Committee or
the Company's Board of Directors shall act in good faith and shall
obtain the written advice from its counsel; provided, that, in the
event that the Special Committee or the Company's Board of Directors,
as the case may be, shall exercise any of its rights under this Section
7.05(f) with respect to any action taken or any inaction, the Special
Committee or the Company's Board of Directors, as the case may be,
shall give prompt written notice to Saw Mill, of such action or
inaction (along with a reasonable description thereof) and the basis
for the exercise of such right(s).
SECTION 7.06 Indemnification and Insurance.
(a) The Surviving Corporation, the Shareholders and the
Company agree that, except as may be limited by applicable Laws, for
six and one half years from and after the Effective Time, the Surviving
Corporation shall indemnify, defend and hold harmless any person who is
now, or has been at any time prior to the date hereof, or who becomes
prior to the Effective Time, an officer or director ("Covered Parties")
of the Company against all losses, claims, damages, liabilities, costs
and expenses (including attorneys' fees and expenses), judgments,
fines, losses, and amounts paid in settlement in connection with any
actual or threatened action, suit, claim, proceeding or investigation
(whether arising before or after the Effective Time) (each a "Claim")
to the extent that any such Claim is based on, or arises out of, (i)
the fact that such person is or was a director or officer of the
Company or is or was serving at the request of the Company as a
director or officer of another corporation, partnership, joint venture,
trust or other enterprise, or (ii) this Agreement, or any
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of the transactions contemplated hereby, in each case to the extent
that any such Claim pertains to any matter or fact arising, existing or
occurring prior to or at the Effective Time, regardless of whether such
Claim is asserted or claimed prior to, at or after the Effective Time,
to the full extent permitted under applicable Law or the Company's
Articles of Incorporation, By-laws or indemnification agreements in
effect at the date hereof, including provisions relating to the
advancement of expenses incurred in the defense of any action or suit.
Without limiting the foregoing, in the event any Covered Party becomes
involved in any capacity in any Claim, then from and after the
Effective Time, the Surviving Corporation shall periodically advance to
such Covered Party its legal and other expenses (including the cost of
any investigation and preparation incurred in connection therewith),
subject to the provision by such Covered Party of an undertaking to
reimburse the amounts so advanced in the event of a final
non-appealable determination by a court of competent jurisdiction that
such Covered Party is not entitled thereto.
(b) The Surviving Corporation shall maintain in effect, for
six and one half years from and after the Effective Time, directors'
and officers' liability insurance policies for the Covered Parties on
terms not materially less favorable than the existing insurance
coverage with respect to matters occurring prior to the Effective Time
and otherwise on terms reasonably satisfactory to such directors.
(c) Subject to the fiduciary duties of the Special Committee
and the Company's Board of Directors under Wisconsin Law, in the event
that any action, suit, proceeding or investigation relating thereto or
to the transactions contemplated by this Agreement is commenced,
whether before or after the Effective Time, the parties hereto agree to
cooperate and use their respective reasonable efforts to vigorously
defend against and respond thereto.
(d) The provisions of this Section 7.06 are for the benefit
of, and shall be enforceable by, the Covered Parties. This Section 7.06
shall be binding on the Surviving Corporation and its successors and
assigns.
SECTION 7.07 Notification of Certain Matters. From and after
the date of this Agreement until the Effective Time, each party hereto shall
promptly notify the other parties hereto of:
(a) the occurrence, or non-occurrence, of any event the
occurrence or non-occurrence of which would be reasonably likely to
cause any (i) representation or warranty contained in this Agreement to
be untrue or inaccurate in any material respect or (ii) any covenant or
any condition to the obligations of any party to effect the Merger not
to be complied with or satisfied;
(b) the failure of any party hereto to comply with or satisfy
any covenant, condition or agreement to be complied with or satisfied
by it pursuant to this Agreement;
(c) the receipt of any notice or other communication from any
person alleging that the consent of such person is or may be required
in connection with the Transactions;
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(d) the receipt of any notice or other communication from any
Governmental Authority in connection with the Transactions; and
(e) any actions, suits, claims, investigations or proceedings
commenced or, to the knowledge of the party, threatened against,
relating to or involving or otherwise affecting the Company or Merger
Sub, which relates to the consummation of the Transactions;
in each case, to the extent such event or circumstance is or becomes known to
the party required to give such notice; provided, however, that the delivery of
any notice pursuant to this Section 7.07 shall not be deemed to be an amendment
of this Agreement or any Section in the Company Disclosure Schedule and shall
not cure any breach of any representation or warranty requiring disclosure of
such matter prior to the date of this Agreement.
SECTION 7.08 Public Announcements. Subject to the fiduciary
duties of the Special Committee and the Company's Board of Directors under
Wisconsin Law, during the period beginning on the date hereof and ending on the
Closing, Merger Sub, Parent, Saw Mill and the Company shall consult with each
other before issuing (and give one another a reasonable opportunity to comment
on) any press release or otherwise making any public statements with respect to
this Agreement or any of the Transactions, except as may be required by Law or
any listing agreement with the NASD or any national securities exchange to which
Merger Sub, Parent, Saw Mill or the Company is a party and, in such case, shall
use reasonable efforts to consult with all the parties hereto prior to such
release or statement being issued.
SECTION 7.09 Cooperation with Financing. In order to assist
with the financing of the Transactions, at or prior to Closing, the Company
shall, and shall cause its subsidiaries to, take such commercially reasonable
steps as are necessary to cause the following to occur:
(a) At Merger Sub's request and, subject to Section 9.03(b),
expense, (i) with respect to each real property leased by the Company
or its subsidiaries within the United States, the Company shall use its
commercially reasonable best efforts to deliver to Merger Sub, if
required by the lender of any such financing, a nondisturbance
agreement, a consent and waiver and/or an estoppel letter executed by
the landlord, lessor and/or licensor of such leased property and (ii)
with respect to each parcel of real property owned by the Company or
its subsidiaries that is located within the United States, the Company
shall deliver title insurance and surveys, in each case, in form and
substance reasonably acceptable to Merger Sub;
(b) At Merger Sub's request and, subject to Section 9.03(b),
expense, the Company shall furnish such financial statements as may be
reasonably requested by Merger Sub in connection with the financing of
the Transactions; and
(c) At Merger Sub's request and, subject to Section 9.03(b),
expense, the Company shall cause its and its subsidiaries' officers,
employees, consultants, agents, accountants and attorneys to cooperate
with Merger Sub and its lenders and authorized
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representatives in connection with a review of the Company and the
financing of the Transactions, including the preparation by Merger Sub
and its financing sources of any offering memorandum or other documents
related to the financing of the Transactions and making senior
management available to meet with any prospective providers of
financing (including pursuant to any "road show").
SECTION 7.10 Shareholder Approval. Subject to the provisions
of Section 7.05 and Section 9.01, the Company shall take all reasonable action
necessary in accordance with Wisconsin Law and its Articles of Incorporation and
By-laws to obtain the requisite approval and adoption of this Agreement and the
Merger by the shareholders of the Company.
SECTION 7.11 Exchange Act and NASDAQ Filings. Unless an
exemption shall be expressly applicable to the Company, or unless Merger Sub
agrees otherwise in writing, the Company will file with the SEC and the National
Association of Security Dealers ("NASD") all reports required to be filed by it
pursuant to the rules and regulations of the SEC and NASD (including, without
limitation, all required financial statements). Such reports and other
information shall comply in all material respects with all of the requirements
of the SEC and NASD rules and regulations, and when filed, to the Company's
Knowledge, will not include an untrue statement of a material fact or omit to
state a material fact required to be stated therein or necessary to make the
statements therein, in light of the circumstances under which they were made,
not misleading.
SECTION 7.12 Solvency Opinion. If any of the providers of the
Debt and Preferred Equity Financing require the delivery of a solvency opinion
from an independent valuation firm at the Closing, Merger Sub shall cause such
solvency opinion to also be delivered to the Special Committee.
SECTION 7.13 State Takeover Laws. The Company shall take all
reasonably necessary steps to exempt the Transactions contemplated by this
Agreement, including the Merger, from the requirements of any applicable state
takeover law and to assist Merger Sub in any challenge to the validity or
applicability to the Transactions of any state takeover law.
SECTION 7.14 Capital Stock of Merger Sub and Parent. Except as
contemplated by this Agreement and the Contribution Agreement, during the period
beginning on the date hereof and ending on the Closing, (i) Merger Sub shall not
issue or commit to issue any capital stock to any person, (ii) Parent shall not
sell, transfer or otherwise dispose of any capital stock of Merger Sub and (iii)
Saw Mill shall not sell, transfer or otherwise dispose of any capital stock of
Parent, in each case, without the approval of the Company (which approval shall
not be unreasonably withheld or delayed).
SECTION 7.15 Debt and Preferred Equity Financing. Merger Sub,
Parent and Saw Mill shall be solely responsible for all negotiations with
respect to definitive agreements regarding the financing contemplated by the
Commitment Letters. Merger Sub, Parent and Saw Mill shall conduct such
negotiations reasonably and in good faith and, at the request of the Special
Committee, shall promptly inform the Special Committee as to the status of such
negotiations. So long as the Company is in compliance with Sections 7.04(c),
7.04(d), 7.04(f) and 7.09, Saw Mill, Merger Sub
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and Parent shall use commercially reasonable efforts to satisfy the requirements
of the Commitment Letters and to obtain the funding contemplated by and on the
terms contained in the Commitment Letters, or if any of the Commitment Letters
is terminated or such funds shall not otherwise be available, use commercially
reasonable efforts to obtain an alternative source of financing, in each case,
on financial and other terms no less favorable than those set forth in the
respective Commitment Letters or to the extent not set forth therein, on terms
reasonably acceptable to Saw Mill, Merger Sub and Parent. Following the date
hereof, any amendment, termination, cancellation or modification of any
Commitment Letter or any information known to Merger Sub which makes it unlikely
to obtain the financing on the terms set forth in the Commitment Letters, shall
be promptly disclosed to the Special Committee; provided, that Merger Sub shall
consult with the Company Financial Advisor with respect to any such amendment or
modification.
SECTION 7.16 Equity Securities of the Company. During the
period beginning on the date hereof and ending on the first to occur of (x) the
Closing or (y) the date nine months after the date of the termination of this
Agreement, neither Saw Mill, Parent nor Merger Sub shall, directly or
indirectly, acquire or propose to acquire ownership, beneficially or of record,
of any equity securities of the Company or any subsidiary thereof, except (i)
pursuant to and as contemplated by this Agreement and (ii) immediately prior to
the Closing, pursuant to and as contemplated by the Saw Mill Limited Partnership
Agreement and the Contribution Agreement.
ARTICLE VIII
CONDITIONS TO THE MERGER
SECTION 8.01 Conditions to the Obligations of Each Party. The
obligations of the Company, Merger Sub and the Shareholders to consummate the
Merger are subject to the satisfaction (or, if permitted by applicable Law,
waiver by the party for whose benefit such condition exist) of the following
conditions:
(a) this Agreement and the Merger shall have been approved
and adopted by the affirmative vote of the requisite holders of the
outstanding shares of Company Common Stock in accordance with Wisconsin
Law and the Company's Articles of Incorporation;
(b) any applicable waiting period under the HSR Act relating
to the Merger and/or the Pre-Merger Contributions shall have expired or
been terminated;
(c) no order, statute, rule, regulation, executive order,
stay, decree, judgment or injunction shall have been enacted, entered,
issued, promulgated or enforced by any Governmental Authority or a
court of competent jurisdiction shall be in effect which has the effect
of making the Merger illegal or otherwise prohibiting consummation of
the Merger or of limiting or restricting the Surviving Corporation's
conduct or operation of the business of the Company after the Merger;
and
(d) all other necessary and material governmental and
regulatory clearances, consents, or approvals shall have been received.
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SECTION 8.02 Conditions to the Obligations of Merger Sub. The
obligations of Merger Sub to consummate the Merger are subject to the
satisfaction or, if permitted by applicable Law, waiver by Merger Sub of the
following further conditions:
(a) The Company shall have performed, in all material
respects, all of its obligations hereunder required to be performed by
it at or prior to the Effective Time; each of the representations and
warranties of the Company contained in this Agreement (i) that are
qualified by materiality or by Company Material Adverse Effect shall be
true and correct and (ii) that are not qualified by materiality or by
Company Material Adverse Effect shall be true and correct in all
material respects, in each case, as of the date hereof and as of the
Closing Date as if made at and as of such time; and Merger Sub shall
have received a certificate signed by an executive officer of the
Company as to compliance with the conditions set forth in this Section
8.02(a);
(b) Saw Mill, Parent and Merger Sub shall have received an
opinion of counsel from ▇▇▇▇▇▇▇ ▇▇▇▇ & Friedrich LLP, which opinion of
counsel shall be substantially in the form attached hereto as Exhibit
H;
(c) Surviving Corporation shall have obtained the Debt and
Preferred Equity Financing on the terms and conditions set forth in the
Commitment Letters or otherwise obtained debt and/or other financing
sufficient to consummate the Merger (including the payment of the
Merger Consideration, the Option Consideration and the repayment of
indebtedness for borrowed money of the Company or any of its
subsidiaries that is required to be repaid as a result of the
Transactions, if any) and to pay all fees and expenses in connection
therewith and to provide working capital for the Surviving Corporation;
(d) Since December 31, 1998, no event shall have occurred
which has or which would reasonably be expected to have a Company
Material Adverse Effect;
(e) All Company Stock Options shall be extinguished and, as
of immediately prior to Closing, the Company shall have no liability or
obligation with respect to any such Company Stock Options, except as
provided in Section 2.03;
(f) Except as set forth on Exhibit D hereto, all outstanding
indebtedness for borrowed money of the Company or any of its
subsidiaries shall be paid in full, (ii) any letters of credit of the
Company or any of its subsidiaries shall be terminated and (iii) the
Company shall have obtained (x) the release of all liens or
encumbrances on the capital stock of the Company or any of its
subsidiaries and all assets of the Company or any of its subsidiaries
securing indebtedness and (y) the release of all guarantees by the
Company or any of its subsidiaries of indebtedness for borrowed money.
At the Closing, the Company shall provide or arrange to be provided to
Merger Sub all releases and other documents in form and substance
reasonably satisfactory to Merger Sub demonstrating the release of such
liens, encumbrances and guarantees;
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(g) The Company shall have obtained all consents,
authorizations, approvals and waivers from third parties, in form
reasonably acceptable to Merger Sub (x) which are necessary in order to
enable (i) the consummation of the Transactions and (ii) the Surviving
Corporation to conduct its business in all material respects after the
Closing Date on the same basis as conducted prior to the date hereof,
in each case, except for those failure of which to obtain would not
have, individually or in the aggregate, a Company Material Adverse
Effect and (y) which are listed on Exhibit E hereto; and
(h) The Dissenting Shares, if any, shall not include greater
than 10% of the issued and outstanding shares of Company Common Stock.
SECTION 8.03 Conditions to the Obligations of the Company and
the Shareholders. The obligations of the Company and the Shareholders to
consummate the Merger are subject to the satisfaction or, if permitted by
applicable Law, waiver by the Company or the Shareholders, as the case may be,
of the following further conditions:
(a) Each of Merger Sub, Parent and Saw Mill shall have
performed, in all material respects, all of its obligations hereunder
required to be performed by it at or prior to the Effective Time; each
of the representations and warranties of Merger Sub, Parent and Saw
Mill contained in this Agreement (i) that are qualified by materiality
shall be true and correct and (ii) that are not qualified by
materiality, shall be true and correct in all material respects, in
each case, as of date hereof and as of the Closing Date as if made at
and as of such time; and the Company and Shareholders shall have
received a certificate signed by an executive officer of Merger Sub, an
executive officer of Parent and an authorized person of Saw Mill as to
compliance with the conditions set forth in this Section 8.03(a).
SECTION 8.04 Conditions to the Obligations of Saw Mill and
Parent. The obligations of Saw Mill to execute and deliver the Contribution
Agreement and to make the Saw Mill Contribution (as such term is defined in the
Contribution Agreement) and the obligations of Parent to execute and deliver the
Contribution Agreement and to consummate the Pre-Merger Contributions are
subject to the satisfaction or, if permitted by applicable Law, waiver by Saw
Mill of the following conditions:
(a) the conditions set forth in Section 8.01 of this
Agreement; and
(b) the conditions set forth in Section 8.02.
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ARTICLE IX
TERMINATION, AMENDMENT AND WAIVER
SECTION 9.01 Termination. This Agreement may be terminated and
the Merger may be abandoned at any time prior to the Effective Time,
notwithstanding any requisite approval and adoption of this Agreement and the
transactions contemplated hereby by the shareholders of the Company:
(a) by mutual written consent of the Company and Merger Sub;
(b) by Merger Sub or the Company, if (i) the waiting period
applicable to the consummation of the Merger under the HSR Act shall
not have expired or been terminated prior to ▇▇▇▇▇▇ ▇▇, ▇▇▇▇, (▇▇) any
court of competent jurisdiction in the United States or other United
States Governmental Authority shall have issued an order (other than a
temporary restraining order), decree or ruling, or taken any other
action, in each case, which is final and non-appealable and which
restrains, enjoins or otherwise prohibits the Merger or (iii) the
Effective Time shall not have occurred on or before August 31, 2000;
provided, that the right to terminate this Agreement under this Section
9.01(b) shall not be available to any party whose failure to fulfill
any obligation under this Agreement has been the cause of or resulted
in the failure of the Closing to occur;
(c) by Merger Sub or the Company, if the Shareholders' Meeting
shall have been held and the holders of outstanding shares of Company
Common Stock shall have failed to approve and adopt this Agreement and
the Merger upon a vote taken at such meeting (including any adjournment
or postponement thereof); provided, that the right to terminate this
Agreement under this Section 9.01(c) shall not be available to the
Company if its breach of this Agreement has been the cause of or
resulted in the failure to obtain such shareholder approval;
(d) by Merger Sub, if the Board of Directors of the Company or
any committee thereof (including the Special Committee) (i) shall
withdraw, modify in a manner adverse to Merger Sub, or refrain from
giving its approval or recommendation of this Agreement or any of the
Transactions or (ii) recommends an Acquisition Proposal or a potential
Third Party Transaction to the Company's shareholders pursuant to
Section 7.05;
(e) by the Company, upon a material breach of any
representation, warranty, or agreement of any of Parent, Saw Mill or
Merger Sub set forth in this Agreement; provided, however, that, if
such breach is of a type curable and is curable by Parent, Saw Mill or
Merger Sub, as the case may be, through the exercise of its reasonable
best efforts and Parent, Saw Mill or Merger Sub, as the case may be,
continues to exercise such reasonable best efforts, the Company may not
terminate this Agreement under this Section 9.01(e) for a period of 20
business days from the date on which the Company delivers to Parent,
Saw Mill or Merger Sub, as the case may be, written notice setting
forth in reasonable detail the circumstances giving rise to such
breach;
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(f) by Merger Sub, upon a material breach of any
representation, warranty, or agreement of the Company set forth in this
Agreement; provided, however, that, if such breach (other than a breach
of Section 7.05) is of a type curable and is curable by the Company
through the exercise of its reasonable best efforts and the Company
continues to exercise such reasonable best efforts, Merger Sub may not
terminate this Agreement under this Section 9.01(f) for a period of 20
business days from the date on which Merger Sub delivers to the Company
written notice setting forth in reasonable detail the circumstances
giving rise to such breach; or
(g) by the Company in accordance with Section 7.05(a);
provided, that in order for the termination of this Agreement pursuant
to this Section 9.01(g) to be deemed effective, the Company shall have
complied with all of the provisions of Section 7.05, including the
notice provisions contained therein and the payment of the Termination
Fee.
SECTION 9.02 Method of Termination; Effect of Termination.
(a) Any such right of termination hereunder shall be exercised
by written notice of termination given by the terminating party to the
applicable other parties hereto in the manner hereinafter provided in
Section 10.02.
(b) In the event of the termination of this Agreement pursuant
to Section 9.01, this Agreement shall forthwith become void, there
shall be no liability under this Agreement on the part of any of the
parties hereto or any of their respective officers or directors and all
rights and obligations of any party hereto shall cease, except for (i)
fraud, (ii) as set forth in Section 9.03 and (iii) the provisions of
Sections 7.04; provided, however, that nothing herein shall relieve any
party from liability for, or be deemed to waive any rights of specific
performance of this Agreement available to a party by reason of, any
intentional breach by the other party or parties of this Agreement.
SECTION 9.03 Fees and Expenses.
(a) Except as provided in this Section 9.03, all expenses
incurred by the parties hereto shall be borne solely and entirely by
the party which has incurred the same; provided, however, that (i) the
Company shall bear all expenses related to printing, filing and mailing
the Proxy Statement and all SEC and other regulatory filing fees
incurred in connection with the Proxy Statement, and (ii) Merger Sub
and the Company shall each pay one-half of the filing fee in connection
with any filing by Merger Sub and the Company under the HSR Act which
relates to the Merger.
(b) In the event that this Agreement is terminated pursuant to
Sections 9.01(a) or 9.01(b) and at the time of such termination the
conditions contained in Section 8.02(d) have not been satisfied (other
than from an event which is directly caused by or directly results from
facts known by Merger Sub as of the date hereof) or pursuant to
Sections 9.01(d), 9.01(f) or 9.01(g), on the date of such termination,
the Company shall pay Saw Mill (or at Saw Mill's direction, to such
other person as Saw Mill may designate in writing) by wire
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transfer of immediately available funds to an account specified by Saw
Mill an amount (such amount, the "Saw Mill Reimbursable Expenses") in
cash equal to the lesser of (x) the aggregate amount of (i) the costs,
fees and expenses of counsel, accountants, financial advisors and other
experts and advisors as well as fees and expenses incident to the
negotiation, preparation and execution of this Agreement and the
attempted financing and consummation of the transactions contemplated
by this Agreement (including investment banking and commitment fees),
the related documentation and the shareholders' meetings and consents
("Costs"), including without limitation, the legal fees of the
providers of the Commitment Letters and (ii) out-of-pocket expenses, in
each case, of Parent, Merger Sub, Saw Mill and/or any of their
respective affiliates (as such Costs and out-of-pocket expenses may be
estimated by Saw Mill in good faith prior to the date of such payment,
subject to an adjustment payment between the parties upon Saw Mill's
definitive determination of such Costs and out-of-pocket expenses) and
(y) $1,500,000; provided, however, that Saw Mill shall have no right to
receive Saw Mill Reimbursable Expenses pursuant to this Section 9.03(b)
if (i) Saw Mill's, Parent's or Merger Sub's breach of or failure to
fulfill any obligation under this Agreement caused or resulted in the
termination of this Agreement or (ii) if this Agreement is terminated
pursuant to Section 9.01(d)(i) and the applicable withdrawal or
modification referred to in Section 9.01(d)(i) is a direct result of
(xx) Saw Mill's, Parent's and/or Merger Sub's breach of Section 7.15
which continues for a period of 20 business days from the date on which
the Company delivers to Saw Mill written notice setting forth in
reasonable detail the circumstances giving rise to such breach (other
than if prior to such termination an event has occurred which has or
which would reasonably be expected to have a Company Material Adverse
Effect or the Company has materially breached any of its
representations, warranties or covenants contained in this Agreement)
or (yy) a material adverse change in any of the Commitment Letters,
which results in a material adverse change in the capital structure for
the Surviving Corporation as of immediately after the Closing (the
"Surviving Corporation Capital Structure") as compared to the Surviving
Corporation Capital Structure as contemplated as of the date hereof,
which causes the Company Financial Advisor to either withdraw the
Lehman Opinion or modify the Lehman Opinion in a manner which is
materially adverse to the consummation of the Merger, but only if the
Company Financial Advisor has provided Saw Mill with a period of at
least 20 business days (which period shall commence upon written notice
from the Company Financial Advisor setting forth its concerns regarding
the changed Surviving Corporation Capital Structure and the reasons for
the issuance of such negative opinion), during which time Saw Mill has
had an opportunity to address or cure the Company Financial Advisor's
concerns regarding the changed Surviving Corporation Capital Structure;
provided, further, that if the Company at any time pays the Termination
Fee, the Company shall thereafter have no obligation to pay any Saw
Mill Reimbursable Expenses.
(c) In the event that this Agreement is terminated pursuant to
Section 9.01(e), Saw Mill, Parent or Merger Sub shall pay the Company
by wire transfer of immediately available funds to an account specified
by the Company an amount (such amount, the "Company Reimbursable
Expenses") in cash equal to the lesser of (x) the aggregate amount of
(i) the Costs incurred in connection with pursuing the transactions
contemplated by this Agreement and (ii) out-of-pocket expenses, in each
case, of the Company (as such Costs and
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out-of-pocket expenses may be estimated by the Company in good faith
prior to the date of such payment, subject to an adjustment payment
between the parties upon the Company's definitive determination of such
Costs and out-of-pocket expenses) and (y) $1,500,000; provided,
however, that the Company shall have no right to receive Company
Reimbursable Expenses pursuant to this Section 9.03(c) if the Company's
breach of or failure to fulfill any obligation under this Agreement
caused or resulted in the termination of this Agreement.
(d) In the event that this Agreement is terminated by Merger
Sub or the Company pursuant to Section 9.01(d) or Section 9.01(g), on
the date of such termination, the Company shall pay Saw Mill (or at Saw
Mill's direction, such other person as Saw Mill may designate in
writing) by wire transfer of immediately available funds to an account
specified by Saw Mill a payment in the amount (such amount, the
"Termination Fee") equal to (i) $6,700,000 minus (ii) the amount of Saw
Mill Reimbursable Expenses, if any, paid by the Company on or prior to
the date of such termination; provided, however, that Saw Mill shall
have no right to receive the Termination Fee pursuant to this Section
9.03(d) if this Agreement is terminated pursuant to Section 9.01(d)(i)
and the applicable withdrawal or modification referred to in Section
9.01(d)(i) is a result of (x) Saw Mill's, Parent's and/or Merger Sub's
breach of Section 7.15 which continues for a period of 20 business days
from the date on which the Company delivers to Saw Mill written notice
setting forth in reasonable detail the circumstances giving rise to
such breach (other than if prior to such termination an event has
occurred which has or which would reasonably be expected to have a
Company Material Adverse Effect or the Company has materially breached
any of its representations, warranties or covenants contained in this
Agreement) or (y) a material adverse change in any of the Commitment
Letters, which results in a material adverse change in the Surviving
Corporation Capital Structure as compared to the Surviving Corporation
Capital Structure as contemplated as of the date hereof, which causes
the Company Financial Advisor to either withdraw the Lehman Opinion or
modify the Lehman Opinion in a manner which is materially adverse to
the consummation of the Merger, but only if the Company Financial
Advisor has provided Saw Mill with a period of at least 20 business
days (which period shall commence upon written notice from the Company
Financial Advisor setting forth its concerns regarding the changed
Surviving Corporation Capital Structure and the reasons for the
issuance of such negative opinion), during which time Saw Mill has had
an opportunity to address or cure the Company Financial Advisor's
concerns regarding the changed Surviving Corporation Capital Structure.
If this Agreement is terminated pursuant to Section 9.01(b), Section
9.01(c) or Section 9.01(f) and a potential Third Party Transaction has
been publicly disclosed prior to such termination, then if within nine
months after such termination a Third Party Transaction with the party
or parties or any of their respective affiliates which proposed such
Third Party Transaction is consummated, on the date of the consummation
of such Third Party Transaction, the Company shall pay the Termination
Fee to Saw Mill (or at Saw Mill's direction, such other person as Saw
Mill may designate in writing) by wire transfer of immediately
available funds to an account specified by Saw Mill.
SECTION 9.04 Amendment. This Agreement may be amended by the
parties hereto at any time prior to the Effective Time; provided, that after the
approval and adoption of this Agreement by the shareholders of the Company, no
amendment may be made which would
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(a) change the amount or the type of Merger Consideration to be received by the
shareholders of the Company pursuant to the Merger, (b) change any other term or
condition of the Agreement if such change would materially and adversely affect
the Company or the holders of shares of Company Common Stock or (c) without the
vote of the shareholders entitled to vote on the matter, change any term of the
Articles of Incorporation of the Company. This Agreement may not be amended nor
may any provision of this Agreement be waived except by an instrument in writing
signed by the parties hereto.
SECTION 9.05 Waiver. At any time prior to the Effective Time,
any party hereto may (a) extend the time for the performance of any obligation
or other act of any other party hereto, (b) waive any inaccuracy in the
representations and warranties of the other party contained herein or in any
document, certificate or writing delivered by the other party pursuant hereto
and (c) waive compliance with any agreement or condition to its obligations
(other than the conditions set forth in Sections 8.01(a) and (b)) contained
herein. Any such extension or waiver shall be valid if set forth in an
instrument in writing signed by the party or parties to be bound thereby.
ARTICLE X
GENERAL PROVISIONS
SECTION 10.01 Non-Survival of Representations and Warranties.
The representations and warranties in this Agreement and any certificate
delivered pursuant hereto by any person shall terminate at the Effective Time or
upon the termination of this Agreement pursuant to Section 9.01.
SECTION 10.02 Notices. All notices, requests, claims, demands
and other communications hereunder shall be in writing and shall be given (and
shall be deemed to have been duly given upon receipt) by delivery in person, by
facsimile or by registered or certified mail (postage prepaid, return receipt
requested) or by a nationally recognized overnight courier service to the
respective parties at the following addresses (or at such other address for a
party as shall be specified in a notice given in accordance with this Section
10.02):
if to Merger Sub, Parent or Saw Mill:
c/o Saw Mill Capital LLC
▇▇ ▇▇▇ ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇
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with copies to:
▇▇▇▇▇▇▇▇ & ▇▇▇▇▇
Citicorp Center
▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, Esq.
W. ▇▇▇▇▇ ▇▇▇▇▇▇▇, Esq.
if to the Company:
▇▇▇▇▇ Incorporated
▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Telecopy No.: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇ ▇▇▇▇▇
with copies to:
▇▇▇▇▇▇▇ ▇▇▇▇ & Friedrich LLP
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: K. ▇▇▇▇ ▇▇▇▇▇▇▇▇, Esq.
and
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ Van Deuren ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq.
if to any Shareholder:
c/o ▇▇▇▇▇ Incorporated
▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Telecopy No.: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ and ▇▇▇▇ Train
with a copy to:
▇▇▇▇▇ & Lardner
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▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Telecopy No.: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇ ▇▇▇▇▇
SECTION 10.03 Certain Definitions. For purposes of this
Agreement, the term:
(a) "Acquisition" means the Merger and the other transactions
contemplated by this Agreement (other than the Pre-Merger Contributions
and the Debt and Preferred Equity Financing);
(b) "affiliate" of a specified person means a person who directly
or indirectly through one or more intermediaries controls, is
controlled by, or is under common control with, such specified person;
(c) "beneficial owner" with respect to any shares means a person
who shall be deemed to be the beneficial owner of such shares (i) which
such person or any of its affiliates or associates (as such term is
defined in Rule 12b-2 promulgated under the Exchange Act) beneficially
owns, directly or indirectly, (ii) which such person or any of its
affiliates or associates has, directly or indirectly, (A) the right to
acquire (whether such right is exercisable immediately or subject only
to the passage of time), pursuant to any agreement, arrangement or
understanding or upon the exercise of consideration rights, exchange
rights, warrants or options, or otherwise, or (B) the right to vote
pursuant to any agreement, arrangement or understanding or (iii) which
are beneficially owned, directly or indirectly, by any other persons
with whom such person or any of its affiliates or associates or any
person with whom such person or any of its affiliates or associates has
any agreement, arrangement or understanding for the purpose of
acquiring, holding, voting or disposing of any such shares;
(d) "business day" means any day on which the principal offices
of the SEC in Washington, D.C. are open to accept filings, or, in the
case of determining a date when any payment is due, any day on which
banks are not required or authorized to close in the City of Milwaukee,
Wisconsin;
(e) "Code" means the Internal Revenue Code of 1986, as
amended;
(f) "Control" (including the terms "controlled by" and "under
common control with") means the possession, directly or indirectly or
as trustee or executor, of the power to direct or cause the direction
of the management and policies of a person, whether through the
ownership of voting securities, as trustee or executor, by contract or
credit arrangement or otherwise;
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121
(g) "Governmental Authority" means any United States (federal,
state or local), foreign or supra-national Government, or governmental,
regulatory or administrative authority, agency or commission;
(h) "Intellectual Property Rights" means all patents, patent
applications and patent disclosures; all inventions (whether or not
patentable and whether or not reduced to practice); all trademarks,
service marks, trade dress, trade names and corporate names and all the
goodwill associated therewith; all mask works; all registered and
unregistered statutory and common law copyrights; all registrations,
applications and renewals for any of the foregoing; and all trade
secrets, confidential information, ideas, formulae, compositions,
know-how, manufacturing and production processes and techniques,
research information, drawings, specifications, designs, plans,
improvements, proposals, technical and computer data, documentation and
software, financial business and marketing plans, customer and supplier
lists and related information, marketing materials and all other
proprietary rights;
(i) "Knowledge" means the actual knowledge of any of the
Company's Chairman, Chief Executive Officer or Chief Financial Officer.
(j) "Lien" shall mean, with respect to any property or asset, any
mortgage, pledge, security interest, lien (statutory or other), charge,
encumbrance or other similar restrictions or limitations of any kind or
nature whatsoever on or with respect to such property or asset;
(k) "Owned Shares" means the aggregate shares of Company Common
Stock owned beneficially and of record by the Shareholders as of the
date hereof as set forth on Exhibit C hereof (as such number may be
reduced as a result of the consummation of the transactions
contemplated by the Contribution Agreement);
(l) "person" means an individual, corporation, limited liability
company, partnership, limited partnership, syndicate, person
(including, without limitation, a "person" as defined in Section
13(d)(3) of the Exchange Act), trust, association or entity or
government, political subdivision, agency or instrumentality of a
government;
(m) "subsidiary" or "subsidiaries" of any person means any
corporation, partnership, joint venture or other legal entity of which
such person (either above or through or together with any other
subsidiary), owns, directly or indirectly, 50% or more of the stock or
other equity interests, the holders of which are generally entitled to
vote for the election of the board of directors or other governing body
of such corporation or other legal entity;
(n) "Tax" or "Taxes" means federal, state, county, local, foreign
or other income, gross receipts, ad valorem, franchise, profits, sales
or use, transfer, registration, excise, utility, environmental,
communications, real or personal property, capital stock, license,
payroll, wage or other withholding, employment, social security,
severance, stamp, occupation, alternative or add-on minimum, estimated
and other taxes of any kind whatsoever (including deficiencies,
penalties, additions to tax, and interest attributable thereto) whether
disputed or not;
44
122
(o) "Tax Return" means any return, information report or filing
with respect to Taxes, including any schedules attached thereto and
including any amendment thereof;
(p) "Transactions" means the Acquisition and the Debt and
Preferred Equity Financing; and
(q) "Voting Agreement" means that certain Voting Agreement, dated
as of the date hereof, by and among Merger Sub and the Shareholders and
the other shareholders of the Company named therein.
SECTION 10.04 Accounting Terms. All accounting terms used herein
which are not expressly defined in this Agreement shall have the respective
meanings given to them in accordance with GAAP.
SECTION 10.05 Severability. If any term or other provision of
this Agreement is invalid, illegal or incapable of being enforced by any rule of
Law, or public policy, all other conditions and provisions of this Agreement
shall nevertheless remain in full force and effect so long as the economic or
legal substance of the Merger is not affected in any manner materially adverse
to any party. Upon such determination that any term or other provision is
invalid, illegal or incapable of being enforced, the parties hereto shall
negotiate in good faith to modify this Agreement so as to effect the original
intent of the parties as closely as possible in a mutually acceptable manner in
order that the Merger be consummated as originally contemplated to the fullest
extent possible.
SECTION 10.06 Entire Agreement; Assignment. This Agreement
(including the Exhibits, and the Company Disclosure Schedule, which are hereby
incorporated herein and made a part hereof for all purposes as if fully set
forth herein) constitutes the entire agreement among the parties with respect to
the subject matter hereof and supersede all prior agreements and undertakings,
both written and oral, among the parties, or any of them, with respect to the
subject matter hereof. This Agreement shall not be assigned by operation of law
or otherwise without the prior written consent of the other parties, except that
Parent, Merger Sub and the Company may assign their respective rights and
obligations hereunder as collateral security to any person providing financing
to Parent, Merger Sub and/or the Company; provided, that no such assignment
shall change the amount or nature of the Merger Consideration or relieve the
assigning party of its obligations hereunder if such assignee does not perform
such obligations.
SECTION 10.07 Parties in Interest. This Agreement shall be
binding upon and inure solely to the benefit of each party hereto, and nothing
in this Agreement, express or implied, is intended to or shall confer upon any
other person any right, benefit or remedy of any nature whatsoever under or by
reason of this Agreement, other than Section 7.06 (which is intended to be for
the benefit of the persons covered thereby and may be enforced by such persons).
SECTION 10.08 Specific Performance. The parties hereto agree that
irreparable damage would occur in the event any provision of this Agreement was
not performed in accordance with the terms hereof and that the parties shall be
entitled to an injunction or injunctions to prevent
45
123
breaches of this Agreement and to specific performance of the terms hereof, in
addition to any other remedy at law or in equity.
SECTION 10.09 Governing Law. The provisions of this Agreement
shall be governed by and construed in accordance with the laws of the State of
Wisconsin (excluding any conflict of law rule or principle that would refer to
the laws of another jurisdiction). EACH PARTY HERETO HEREBY IRREVOCABLY AND
UNCONDITIONALLY WAIVES, TO THE FULLEST EXTENT IT MAY LEGALLY AND EFFECTIVELY DO
SO, TRIAL BY JURY IN ANY SUIT, ACTION OR PROCEEDING ARISING HEREUNDER.
SECTION 10.10 Headings. The descriptive headings contained in
this Agreement are included for convenience of reference only and shall not
affect in any way the meaning or interpretation of this Agreement.
SECTION 10.11 Counterparts. This Agreement may be executed and
delivered (including by facsimile transmission) in one or more counterparts, and
by the different parties hereto in separate counterparts, each of which when
executed and delivered shall be deemed to be an original but all of which taken
together shall constitute one and the same agreement.
SECTION 10.12 Construction. This Agreement and any documents or
instruments delivered pursuant hereto or in connection herewith shall be
construed without regard to the identity of the person who drafted the various
provisions of the same. Each and every provision of this Agreement and such
other documents and instruments shall be construed as though all of the parties
participated equally in the drafting of the same. Consequently, the parties
acknowledge and agree that any rule of construction that a document is to be
construed against the drafting party shall not be applicable either to this
Agreement or such other documents and instruments.
SECTION 10.13 Recitals. The Recitals to this Agreement are a part
of this Agreement and are hereby incorporated by reference.
SECTION 10.14 Knowledge of Saw Mill, Parent and Merger Sub. For
all purposes of this Agreement, the phrases "to Saw Mill's Knowledge", "to
Parent's Knowledge", "to Merger Sub's Knowledge" and "known by Merger Sub" shall
mean as of the applicable date, the actual knowledge of ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇
▇▇▇▇▇▇ or ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇.
* * * * *
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124
IN WITNESS WHEREOF, Saw Mill, Parent, Merger Sub, Shareholders
and the Company have caused this Agreement and Plan of Merger to be executed as
of the date first written above by their respective officers thereunto duly
authorized.
SAW MILL CAPITAL FUND II, L.P.
By: Saw Mill Investments II, LLC,
Its General Partner
By: ▇▇▇▇▇▇ ▇▇▇▇▇
-----------------------------
Name: ▇▇▇▇▇▇ ▇▇▇▇▇
Title: President
CALENDAR HOLDINGS, INC.
By: ▇▇▇▇▇▇ ▇▇▇▇▇
---------------------------------
Name: ▇▇▇▇▇▇ ▇▇▇▇▇
Title: President
CALENDAR ACQUISITION CORP.
By: ▇▇▇▇▇▇ ▇▇▇▇▇
---------------------------------
Name: ▇▇▇▇▇▇ ▇▇▇▇▇
Title: President
▇▇▇▇▇ INCORPORATED
By: ▇▇▇▇ Train
---------------------------------
Name: ▇▇▇▇ Train
Title: Chief Executive Officer
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
--------------------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
▇▇▇▇ TRAIN
--------------------------------------
▇▇▇▇ TRAIN
125
AMENDMENT NO. 1 TO
AGREEMENT AND PLAN OF MERGER
This Amendment No. 1 dated as of March 13, 2000, to that Agreement and
Plan of Merger ("Merger Agreement") dated as of January 30, 2000, among Saw Mill
Capital Fund II, L.P., a Delaware limited partnership ("Saw Mill"), Calendar
Holdings, Inc., a Delaware corporation and a wholly-owned subsidiary of Saw Mill
("Parent"), Calendar Acquisition Corp., a Wisconsin corporation and a
wholly-owned subsidiary of Parent ("Merger Sub"), ▇▇▇▇▇ Incorporated, a
Wisconsin corporation (the "Company"), ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ ("Chairman") and ▇▇▇▇
Train ("Chief Executive Officer" and together with the Chairman, the
"Shareholders"). Capitalized terms used herein and not defined shall have the
meaning given them in the Merger Agreement.
WHEREAS, Section 7.02(a) of the Merger Agreement requires the Company
to file the Proxy Statement with the SEC no later than March 15, 2000;
WHEREAS, the parties agree that it is in the best interests of the
parties to delay filing the Proxy Statement with the SEC by up to nine days.
NOW, THEREFORE, in consideration of the foregoing and the mutual
covenants and agreements herein contained and intending to be legally bound
hereby, the parties hereby agree as follows:
1. The parties hereby agree that the proviso relating to filing of the
Proxy Statement with the SEC contained in Section 7.02(a) of the Merger
Agreement is hereby amended to read as follows:
"provided that subject to Saw Mill's, Parent's and Merger Sub's
compliance with the immediately-preceding sentence, in no event
shall the Company file the Proxy Statement with the SEC any later
than the date 54 days after the date hereof."
2. All other terms and provisions of the Merger Agreement shall remain
unchanged and in full force and effect.
[Signatures on Following Page]
126
IN WITNESS WHEREOF, Saw Mill, Parent, Merger Sub, Shareholders and the
Company have caused this Amendment No. 1 to the Agreement and Plan of Merger to
be executed as of the date first written above by their respective officers
thereunto duly authorized.
SAW MILL CAPITAL FUND II, L.P.
By: Saw Mill Investments II, LLC,
Its General Partner
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇
----------------------
Name: ▇▇▇▇▇▇ ▇▇▇▇▇
Title: President
CALENDAR HOLDINGS, INC.
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇
---------------------------
Name: ▇▇▇▇▇▇ ▇▇▇▇▇
Title: President
CALENDAR ACQUISITION CORP.
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇
---------------------------
Name: ▇▇▇▇▇▇ ▇▇▇▇▇
Title: President
▇▇▇▇▇ INCORPORATED
By: /s/ ▇▇▇▇ Train
---------------------------
Name: ▇▇▇▇ Train
Title: Chief Executive Officer
/s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
-------------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
/s/ ▇▇▇▇ Train
-------------------------------
▇▇▇▇ TRAIN
127
AMENDMENT NO. 2 TO
AGREEMENT AND PLAN OF MERGER
This Amendment No. 2 dated as of May 8, 2000, to that Agreement and
Plan of Merger dated as of January 30, 2000 (as amended, the "Merger
Agreement"), among Saw Mill Capital Fund II, L.P., a Delaware limited
partnership ("Saw Mill"), Calendar Holdings, Inc., a Delaware corporation and a
wholly-owned subsidiary of Saw Mill ("Parent"), Calendar Acquisition Corp., a
Wisconsin corporation and a wholly-owned subsidiary of Parent ("Merger Sub"),
▇▇▇▇▇ Incorporated, a Wisconsin corporation (the "Company"), ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
("Chairman") and ▇▇▇▇ Train ("Chief Executive Officer" and together with the
Chairman, the "Shareholders"). Capitalized terms used herein and not defined
shall have the meaning given them in the Merger Agreement.
WHEREAS, the parties wish to amend the Merger Agreement to reduce the
number of shares of Company Common Stock to be contributed by the Shareholders.
NOW, THEREFORE, in consideration of the foregoing and the mutual
covenants and agreements herein contained and intending to be legally bound
hereby, the parties hereby agree as follows:
1. The fifth "Whereas" clause of the Merger Agreement is hereby amended
by deleting the reference to "2,552,817" contained therein and replacing it with
"2,437,262".
2. EXHIBIT A to the Merger Agreement is hereby amended and restated in
its entirety as set forth on EXHIBIT A attached hereto.
3. All other terms and provisions of the Merger Agreement shall remain
unchanged and in full force and effect.
[Signatures on Following Page]
128
IN WITNESS WHEREOF, Saw Mill, Parent, Merger Sub, Shareholders and the
Company have caused this Amendment No. 2 to the Agreement and Plan of Merger to
be executed as of the date first written above by their respective officers
thereunto duly authorized.
SAW MILL CAPITAL FUND II, L.P.
By: Saw Mill Investments II, LLC,
Its General Partner
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇
----------------
Name: ▇▇▇▇▇▇ ▇▇▇▇▇
Title: President
CALENDAR HOLDINGS, INC.
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇
-----------------
Name: ▇▇▇▇▇▇ ▇▇▇▇▇
Title: President
CALENDAR ACQUISITION CORP.
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇
-------------------
Name: ▇▇▇▇▇▇ ▇▇▇▇▇
Title: President
▇▇▇▇▇ INCORPORATED
By: /s/ ▇▇▇▇ Train
-----------------
Name: ▇▇▇▇ Train
Title: Chief Executive Officer
/s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
---------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
/s/ ▇▇▇▇ Train
---------------
▇▇▇▇ TRAIN
129
ANNEX B
[▇▇▇▇▇▇ BROTHERS LOGO]
January 29, 2000
Special Committee of the Board of Directors
▇▇▇▇▇ Incorporated
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Members of the Special Committee of the Board of Directors:
We understand that ▇▇▇▇▇ Incorporated (the "Company"), Saw Mill Capital
Fund II, L.P. (collectively with its affiliates, "SMC" or the "Purchaser") and
the Management Stockholders (as defined below), intend to enter into an
Agreement and Plan of Merger (the "Agreement") pursuant to which a newly-formed
subsidiary of the Purchaser will merge with and into the Company (the "Merger")
and, upon effectiveness of the Merger, each issued and outstanding share of the
Company's common stock (other than shares held by the Chairman, ▇▇▇▇▇▇▇ ▇▇▇▇▇▇,
and the Chief Executive Officer, ▇▇▇▇ Train, (the "Management Stockholders") and
the Purchaser) will be converted into the right to receive $11.25 in cash (the
"Proposed Transaction"). The terms and conditions of the Proposed Transaction
are set forth in more detail in the Agreement dated January 30, 2000 among
Calendar Holdings, Inc., Calendar Acquisition Corp., the Company and the
Management Stockholders.
We have been requested by the Special Committee of the Board of
Directors of the Company (the "Special Committee") to render our opinion with
respect to the fairness, from a financial point of view, to the stockholders of
the Company other than the Management Stockholders and the Purchaser (the
"Public Stockholders"), of the consideration to be received by the Public
Stockholders in the Proposed Transaction. We have not been requested to opine as
to, and our opinion does not in any manner address, the Company's underlying
business decision to proceed with or effect the Proposed Transaction.
In arriving at our opinion, we reviewed and analyzed: (1) the Agreement
and the specific terms of the Proposed Transaction, (2) the annual report of the
Company for the fiscal year ended December 25, 1998 filed on Form 10-K, the
quarterly reports of the Company for the fiscal quarters ended March 26, 1999,
June 25, 1999 and September 24, 1999 filed on Form 10-Q, and such other publicly
available information concerning the Company as we believe to be relevant to our
analysis, (3) financial and operating
130
January 29, 2000
Page 2
information with respect to the business, operations and prospects of the
Company furnished to us by the Company, (4) a trading history of the Company's
common stock from June 16, 1987 to the present and a comparison of that trading
history with those of other companies that we deemed relevant, (5) a comparison
of the historical financial results and present financial condition of the
Company with those of other companies that we deemed relevant and (6) a
comparison of the financial terms of the Proposed Transaction with the financial
terms of certain other transactions that we deemed relevant. In addition, we
have had discussions with the management of the Company concerning the
industries in which it operates, businesses, operations, assets, liabilities,
financial condition and prospects and have undertaken such other studies,
analyses and investigations as we deemed appropriate.
In arriving at our opinion, we have assumed and relied upon the accuracy
and completeness of the financial and other information used by us without
assuming any responsibility for independent verification of such information and
have further relied upon the assurances of management of the Company that they
are not aware of any facts or circumstances that would make such information
inaccurate or misleading. With respect to the financial projections of the
Company, upon advice of the Company, we have assumed that such projections have
been reasonably prepared on a basis reflecting the best currently available
estimates and judgments of the management of the Company as to the future
financial performance of the Company and that the Company will perform
substantially in accordance with such projections. In arriving at our opinion,
we have not conducted a physical inspection of the properties and facilities of
the Company and have not made or obtained any evaluations or appraisals of the
assets or liabilities of the Company. In addition, you have not authorized us to
solicit, and we have not solicited any indications of interest from any third
party with respect to the purchase of all or a part of the Company's business.
Our opinion necessarily is based upon market, economic and other conditions as
they exist on, and can be evaluated as of, the date of this letter.
Based upon and subject to the foregoing, we are of the opinion as of the
date hereof that, from a financial point of view, the consideration to be
received by the Public Stockholders in the Proposed Transaction is fair to the
Public Stockholders.
We have acted as financial advisor to the Special Committee in
connection with the Proposed Transaction and will receive a fee for our services
which is contingent in part upon the consummation of the Proposed Transaction.
In addition, the Company has agreed to indemnify us for certain liabilities that
may arise out of the rendering of this opinion. In the ordinary course of our
business, we may trade in the equity securities of the Company for our own
account and for the accounts of our customers and, accordingly, may at any time
hold a long or short position in such securities.
This opinion is for the use and benefit of the Special Committee and the
Board of Directors and is rendered to the Special Committee in connection with
its consideration of the Proposed Transaction. This opinion is not intended to
be and does not constitute a
131
January 29, 2000
Page 3
recommendation to any stockholder of the Company as to how such stockholder
should vote with respect to the Proposed Transaction.
Very truly yours,
/s/ ▇▇▇▇▇▇ Brothers
▇▇▇▇▇▇ BROTHERS
132
ANNEX C
SECTIONS 180.1301 - 180.1331 OF THE WISCONSIN BUSINESS CORPORATION LAW
DISSENTERS' RIGHTS
180.1301. Definitions
In ss. 180.1301 to 180.1331:
(1) "Beneficial shareholder" means a person who is a beneficial owner of shares
held by a nominee as the shareholder.
(1m) "Business combination" has the meaning given in s. 180.1130(3).
(2) "Corporation" means the issuer corporation or, if the corporate action
giving rise to dissenters' rights under s. 180.1302 is a merger or share
exchange that has been effectuated, the surviving domestic corporation or
foreign corporation of the merger or the acquiring domestic corporation or
foreign corporation of the share exchange.
(3) "Dissenter" means a shareholder or beneficial shareholder who is entitled to
dissent from corporate action under s. 180.1302 and who exercises that right
when and in the manner required by ss. 180.1320 to 180.1328.
(4) "Fair value", with respect to a dissenter's shares other than in a business
combination, means the value of the shares immediately before the effectuation
of the corporate action to which the dissenter objects, excluding any
appreciation or depreciation in anticipation of the corporate action unless
exclusion would be inequitable. "Fair value", with respect to a dissenter's
shares in a business combination, means market value, as defined in s.
180.1130(9)(a) 1 to 4.
(5) "Interest" means interest from the effectuation date of the corporate action
until the date of payment, at the average rate currently paid by the corporation
on its principal bank loans or, if none, at a rate that is fair and equitable
under all of the circumstances.
(6) "Issuer corporation" means a domestic corporation that is the issuer of the
shares held by a dissenter before the corporate action.
180.1302. Right to dissent
(1) Except as provided in sub. (4) and s. 180.1008(3), a shareholder or
beneficial shareholder may dissent from, and obtain payment of the fair value of
his or her shares in the event of, any of the following corporate actions:
(a) Consummation of a plan of merger to which the issuer corporation is a party
if any of the following applies:
1. Shareholder approval is required for the merger by s. 180.1103 or by the
articles of incorporation.
2. The issuer corporation is a subsidiary that is merged with its parent under
s. 180.1104.
(b) Consummation of a plan of share exchange if the issuer corporation's shares
will be acquired, and the shareholder or the shareholder holding shares on
behalf of the beneficial shareholder is entitled to vote on the plan.
(c) Consummation of a sale or exchange of all, or substantially all, of the
property of the issuer corporation other than in the usual and regular course of
business, including a sale in dissolution, but not including any of the
following:
1. A sale pursuant to court order.
2. A sale for cash pursuant to a plan by which all or substantially all of the
net proceeds of the sale will be distributed to the shareholders within one year
after the date of sale.
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(d) Except as provided in sub. (2), any other corporate action taken pursuant to
a shareholder vote to the extent that the articles of incorporation, bylaws or a
resolution of the board of directors provides that the voting or nonvoting
shareholder or beneficial shareholder may dissent and obtain payment for his or
her shares.
(2) Except as provided in sub. (4) and s. 180.1008(3), the articles of
incorporation may allow a shareholder or beneficial shareholder to dissent from
an amendment of the articles of incorporation and obtain payment of the fair
value of his or her shares if the amendment materially and adversely affects
rights in respect of a dissenter's shares because it does any of the following:
(a) Alters or abolishes a preferential right of the shares.
(b) Creates, alters or abolishes a right in respect of redemption, including a
provision respecting a sinking fund for the redemption or repurchase, of the
shares.
(c) Alters or abolishes a preemptive right of the holder of shares to acquire
shares or other securities.
(d) Excludes or limits the right of the shares to vote on any matter or to
cumulate votes, other than a limitation by dilution through issuance of shares
or other securities with similar voting rights.
(e) Reduces the number of shares owned by the shareholder or beneficial
shareholder to a fraction of a share if the fractional share so created is to be
acquired for cash under s. 180.0604.
(3) Notwithstanding sub. (1)(a) to (c), if the issuer corporation is a statutory
close corporation under ss. 180.1801 to 180.1837, a shareholder of the statutory
close corporation may dissent from a corporate action and obtain payment of the
fair value of his or her shares, to the extent permitted under sub. (1)(d) or
(2) or s. 180.1803, 180.1813(1)(d) or (2)(b), 180.1815(3) or 180.1829(1)(c).
(4) Except in a business combination or unless the articles of incorporation
provide otherwise, subs. (1) and (2) do not apply to the holders of shares of
any class or series if the shares of the class or series are registered on a
national securities exchange or quoted on the national association of securities
dealers, inc., automated quotations system on the record date fixed to determine
the shareholders entitled to notice of a shareholders meeting at which
shareholders are to vote on the proposed corporate action.
(5) Except as provided in s. 180.1833, a shareholder or beneficial shareholder
entitled to dissent and obtain payment for his or her shares under ss. 180.1301
to 180.1331 may not challenge the corporate action creating his or her
entitlement unless the action is unlawful or fraudulent with respect to the
shareholder, beneficial shareholder or issuer corporation.
180.1303. Dissent by shareholders and beneficial shareholders
(1) A shareholder may assert dissenters' rights as to fewer than all of the
shares registered in his or her name only if the shareholder dissents with
respect to all shares beneficially owned by any one person and notifies the
corporation in writing of the name and address of each person on whose behalf he
or she asserts dissenters' rights. The rights of a shareholder who under this
subsection asserts dissenters' rights as to fewer than all of the shares
registered in his or her name are determined as if the shares as to which he or
she dissents and his or her other shares were registered in the names of
different shareholders.
(2) A beneficial shareholder may assert dissenters' rights as to shares held on
his or her behalf only if the beneficial shareholder does all of the following:
(a) Submits to the corporation the shareholder's written consent to the dissent
not later than the time that the beneficial shareholder asserts dissenters'
rights.
(b) Submits the consent under par. (a) with respect to all shares of which he or
she is the beneficial shareholder.
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180.1320. Notice of dissenters' rights
(1) If proposed corporate action creating dissenters' rights under s. 180.1302
is submitted to a vote at a shareholders' meeting, the meeting notice shall
state that shareholders and beneficial shareholders are or may be entitled to
assert dissenters' rights under ss. 180.1301 to 180.1331 and shall be
accompanied by a copy of those sections.
(2) If corporate action creating dissenters' rights under s. 180.1302 is
authorized without a vote of shareholders, the corporation shall notify, in
writing and in accordance with s. 180.0141, all shareholders entitled to assert
dissenters' rights that the action was authorized and send them the dissenters'
notice described in s. 180.1322.
180.1321. Notice of intent to demand payment
(1) If proposed corporate action creating dissenters' rights under s. 180.1302
is submitted to a vote at a shareholders' meeting, a shareholder or beneficial
shareholder who wishes to assert dissenters' rights shall do all of the
following:
(a) Deliver to the issuer corporation before the vote is taken written notice
that complies with s. 180.0141 of the shareholder's or beneficial shareholder's
intent to demand payment for his or her shares if the proposed action is
effectuated.
(b) Not vote his or her shares in favor of the proposed action.
(2) A shareholder or beneficial shareholder who fails to satisfy sub. (1) is not
entitled to payment for his or her shares under ss. 180.1301 to 180.1331.
180.1322. Dissenters' notice
(1) If proposed corporate action creating dissenters' rights under s. 180.1302
is authorized at a shareholders' meeting, the corporation shall deliver a
written dissenters' notice to all shareholders and beneficial shareholders who
satisfied s. 180.1321.
(2) The dissenters' notice shall be sent no later than 10 days after the
corporate action is authorized at a shareholders' meeting or without a vote of
shareholders, whichever is applicable. The dissenters' notice shall comply with
s. 180.0141 and shall include or have attached all of the following:
(a) A statement indicating where the shareholder or beneficial shareholder must
send the payment demand and where and when certificates for certificated shares
must be deposited.
(b) For holders of uncertificated shares, an explanation of the extent to which
transfer of the shares will be restricted after the payment demand is received.
(c) A form for demanding payment that includes the date of the first
announcement to news media or to shareholders of the terms of the proposed
corporate action and that requires the shareholder or beneficial shareholder
asserting dissenters' rights to certify whether he or she acquired beneficial
ownership of the shares before that date.
(d) A date by which the corporation must receive the payment demand, which may
not be fewer than 30 days nor more than 60 days after the date on which the
dissenters' notice is delivered.
(e) A copy of ss. 180.1301 to 180.1331.
180.1323. Duty to demand payment
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(1) A shareholder or beneficial shareholder who is sent a dissenters' notice
described in s. 180.1322, or a beneficial shareholder whose shares are held by a
nominee who is sent a dissenters' notice described in s. 180.1322, must demand
payment in writing and certify whether he or she acquired beneficial ownership
of the shares before the date specified in the dissenters' notice under s.
180.1322(2)(c). A shareholder or beneficial shareholder with certificated shares
must also deposit his or her certificates in accordance with the terms of the
notice.
(2) A shareholder or beneficial shareholder with certificated shares who demands
payment and deposits his or her share certificates under sub. (1) retains all
other rights of a shareholder or beneficial shareholder until these rights are
canceled or modified by the effectuation of the corporate action.
(3) A shareholder or beneficial shareholder with certificated or uncertificated
shares who does not demand payment by the date set in the dissenters' notice, or
a shareholder or beneficial shareholder with certificated shares who does not
deposit his or her share certificates where required and by the date set in the
dissenters' notice, is not entitled to payment for his or her shares under ss.
180.1301 to 180.1331.
180.1324. Restrictions on uncertificated shares
(1) The issuer corporation may restrict the transfer of uncertificated shares
from the date that the demand for payment for those shares is received until the
corporate action is effectuated or the restrictions released under s. 180.1326.
(2) The shareholder or beneficial shareholder who asserts dissenters' rights as
to uncertificated shares retains all of the rights of a shareholder or
beneficial shareholder, other than those restricted under sub. (1), until these
rights are canceled or modified by the effectuation of the corporate action.
180.1325. Payment
(1) Except as provided in s. 180.1327, as soon as the corporate action is
effectuated or upon receipt of a payment demand, whichever is later, the
corporation shall pay each shareholder or beneficial shareholder who has
complied with s. 180.1323 the amount that the corporation estimates to be the
fair value of his or her shares, plus accrued interest.
(2) The payment shall be accompanied by all of the following:
(a) The corporation's latest available financial statements, audited and
including footnote disclosure if available, but including not less than a
balance sheet as of the end of a fiscal year ending not more than 16 months
before the date of payment, an income statement for that year, a statement of
changes in shareholders' equity for that year and the latest available interim
financial statements, if any.
(b) A statement of the corporation's estimate of the fair value of the shares.
(c) An explanation of how the interest was calculated.
(d) A statement of the dissenter's right to demand payment under s. 180.1328 if
the dissenter is dissatisfied with the payment.
(e) A copy of ss. 180.1301 to 180.1331.
180.1326. Failure to take action
(1) If an issuer corporation does not effectuate the corporate action within 60
days after the date set under s. 180.1322 for demanding payment, the issuer
corporation shall return the deposited certificates and release the transfer
restrictions imposed on uncertificated shares.
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136
(2) If after returning deposited certificates and releasing transfer
restrictions, the issuer corporation effectuates the corporate action, the
corporation shall deliver a new dissenters' notice under s. 180.1322 and repeat
the payment demand procedure.
180.1327. After-acquired shares
(1) A corporation may elect to withhold payment required by s. 180.1325 from a
dissenter unless the dissenter was the beneficial owner of the shares before the
date specified in the dissenters' notice under s. 180.1322(2)(c) as the date of
the first announcement to news media or to shareholders of the terms of the
proposed corporate action.
(2) To the extent that the corporation elects to withhold payment under sub. (1)
after effectuating the corporate action, it shall estimate the fair value of the
shares, plus accrued interest, and shall pay this amount to each dissenter who
agrees to accept it in full satisfaction of his or her demand. The corporation
shall send with its offer a statement of its estimate of the fair value of the
shares, an explanation of how the interest was calculated, and a statement of
the dissenter's right to demand payment under s. 180.1328 if the dissenter is
dissatisfied with the offer.
180.1328. Procedure if dissenter dissatisfied with payment or offer
(1) A dissenter may, in the manner provided in sub. (2), notify the corporation
of the dissenter's estimate of the fair value of his or her shares and amount of
interest due, and demand payment of his or her estimate, less any payment
received under s. 180.1325, or reject the offer under s. 180.1327 and demand
payment of the fair value of his or her shares and interest due, if any of the
following applies:
(a) The dissenter believes that the amount paid under s. 180.1325 or offered
under s. 180.1327 is less than the fair value of his or her shares or that the
interest due is incorrectly calculated.
(b) The corporation fails to make payment under s. 180.1325 within 60 days after
the date set under s. 180.1322 for demanding payment.
(c) The issuer corporation, having failed to effectuate the corporate action,
does not return the deposited certificates or release the transfer restrictions
imposed on uncertificated shares within 60 days after the date set under s.
180.1322 for demanding payment.
(2) A dissenter waives his or her right to demand payment under this section
unless the dissenter notifies the corporation of his or her demand under sub.
(1) in writing within 30 days after the corporation made or offered payment for
his or her shares. The notice shall comply with s. 180.0141.
180.1330. Court action
(1) If a demand for payment under s. 180.1328 remains unsettled, the corporation
shall bring a special proceeding within 60 days after receiving the payment
demand under s. 180.1328 and petition the court to determine the fair value of
the shares and accrued interest. If the corporation does not bring the special
proceeding within the 60-day period, it shall pay each dissenter whose demand
remains unsettled the amount demanded.
(2) The corporation shall bring the special proceeding in the circuit court for
the county where its principal office or, if none in this state, its registered
office is located. If the corporation is a foreign corporation without a
registered office in this state, it shall bring the special proceeding in the
county in this state in which was located the registered office of the issuer
corporation that merged with or whose shares were acquired by the foreign
corporation.
(3) The corporation shall make all dissenters, whether or not residents of this
state, whose demands remain unsettled parties to the special proceeding. Each
party to the special proceeding shall be served with a copy of the petition as
provided in s. 801.14.
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137
(4) The jurisdiction of the court in which the special proceeding is brought
under sub. (2) is plenary and exclusive. The court may appoint one or more
persons as appraisers to receive evidence and recommend decision on the question
of fair value. An appraiser has the power described in the order appointing him
or her or in any amendment to the order. The dissenters are entitled to the same
discovery rights as parties in other civil proceedings.
(5) Each dissenter made a party to the special proceeding is entitled to
judgment for any of the following:
(a) The amount, if any, by which the court finds the fair value of his or her
shares, plus interest, exceeds the amount paid by the corporation.
(b) The fair value, plus accrued interest, of his or her shares acquired on or
after the date specified in the dissenter's notice under s. 180.1322(2)(c), for
which the corporation elected to withhold payment under s. 180.1327.
180.1331. Court costs and counsel fees
(1)(a) Notwithstanding ss. 814.01 to 814.04, the court in a special proceeding
brought under s. 180.1330 shall determine all costs of the proceeding, including
the reasonable compensation and expenses of appraisers appointed by the court
and shall assess the costs against the corporation, except as provided in par.
(b).
(b) Notwithstanding ss. 814.01 and 814.04, the court may assess costs against
all or some of the dissenters, in amounts that the court finds to be equitable,
to the extent that the court finds the dissenters acted arbitrarily, vexatiously
or not in good faith in demanding payment under s. 180.1328.
(2) The parties shall bear their own expenses of the proceeding, except that,
notwithstanding ss. 814.01 to 814.04, the court may also assess the fees and
expenses of counsel and experts for the respective parties, in amounts that the
court finds to be equitable, as follows:
(a) Against the corporation and in favor of any dissenter if the court finds
that the corporation did not substantially comply with ss. 180.1320 to 180.1328.
(b) Against the corporation or against a dissenter, in favor of any other party,
if the court finds that the party against whom the fees and expenses are
assessed acted arbitrarily, vexatiously or not in good faith with respect to the
rights provided by this chapter.
(3) Notwithstanding ss. 814.01 to 814.04, if the court finds that the services
of counsel and experts for any dissenter were of substantial benefit to other
dissenters similarly situated, the court may award to these counsel and experts
reasonable fees to be paid out of the amounts awarded the dissenters who were
benefited.
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138
▇▇▇▇▇ INCORPORATED
PROXY
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ and ▇▇▇▇ Train, or either of
them, as Proxies, each with full power of substitution for himself, and hereby
authorizes them to represent and to vote, as designated below, all of the shares
of common stock of ▇▇▇▇▇ Incorporated held of record by the undersigned on
May 15, 2000, and which the undersigned is entitled to vote at the Annual
Meeting of Shareholders to be held on _______, 2000, and any or all adjournments
or postponements thereof, with like effect as if the undersigned were personally
present and voting.
1. PROPOSAL TO APPROVE THE AGREEMENT AND PLAN OF MERGER, DATED AS OF
JANUARY 30, 2000, BY AND AMONG THE SAW MILL CAPITAL FUND II, L.P., A
DELAWARE LIMITED PARTNERSHIP ("SAW MILL"), CALENDAR HOLDINGS, INC., A
DELAWARE CORPORATION AND A WHOLLY OWNED SUBSIDIARY OF SAW MILL
("PARENT"), CALENDAR ACQUISITION CORP., A WISCONSIN CORPORATION AND A
WHOLLY OWNED SUBSIDIARY OF PARENT ("MERGER SUB"), ▇▇▇▇▇ INCORPORATED,
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ AND ▇▇▇▇ TRAIN, AND THE TRANSACTIONS CONTEMPLATED
THEREBY, INCLUDING THE RESULTING RIGHT TO RECEIVE $11.25, WITHOUT
INTEREST, FOR EACH SHARE OF THE $0.10 PAR VALUE COMMON STOCK OF THE
COMPANY, OTHER THAN CERTAIN SHARES OWNED BY ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇▇▇
TRAIN, SAW MILL AND THEIR RESPECTIVE AFFILIATES.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE APPROVAL OF THE
MERGER AGREEMENT AND THE MERGER.
2. ELECTION OF DIRECTORS:
1-▇▇▇▇▇▇▇ ▇▇▇▇▇▇
2-▇▇▇▇ TRAIN
3-▇▇▇▇▇ ▇▇▇▇▇
4-▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
5-▇▇▇▇▇ ▇▇▇▇▇▇
6-▇▇▇▇▇ ▇▇▇▇▇
[ ] FOR ALL NOMINEES [ ] WITHHOLD AUTHORITY
(INSTRUCTIONS: TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDICATED NOMINEE, WRITE
THE NUMBER(S) OF THE NOMINEE(S) IN THE BOX PROVIDED) [ ]
3. TO RATIFY THE APPOINTMENT OF PRICEWATERHOUSECOOPERS LLP AS INDEPENDENT
PUBLIC ACCOUNTANTS OF THE COMPANY FOR THE FISCAL YEAR 2000.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
4. IN THEIR DISCRETION, THE PROXIES ARE AUTHORIZED TO VOTE ON SUCH OTHER
BUSINESS AS MAY PROPERLY COME BEFORE THE MEETING.
Should the undersigned be present and elect to vote at the Annual Meeting
or at any adjournment or postponement thereof and after notification to the
Secretary of the Company at the Annual Meeting of the Shareholder's decision to
terminate this proxy, then the power of said attorneys and proxies will be
deemed terminated and of no further force and effect.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" ALL OF THE PROPOSALS ABOVE.
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139
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED
HEREIN BY THE UNDERSIGNED SHAREHOLDER. IF NO DIRECTION IS MADE, THIS PROXY WILL
BE VOTED FOR ALL OF THE PROPOSALS LISTED ABOVE IF NO SPECIFICATION IS MADE. IF
ANY OTHER BUSINESS IS PRESENTED AT THE ANNUAL MEETING, INCLUDING MATTERS
RELATING TO THE CONDUCT OF THE ANNUAL MEETING, THIS PROXY WILL BE VOTED BY THOSE
NAMED IN THIS PROXY IN THEIR BEST JUDGMENT.
The undersigned hereby acknowledges receipt of the Notice of Annual
Meeting of Shareholders and the Proxy Statement furnished therewith dated
_____ _____, 2000.
▇▇▇▇▇ INCORPORATED 2000 ANNUAL MEETING
Check appropriate box Date
Indicate changes below: _______________________ NO. OF SHARES
Address Change? [ ] Name Change? [ ]
___________________________________
| |
| |
|___________________________________|
SIGNATURE(S) IN BOX Please
sign exactly as your name
appears hereon. When shares
are held by joint tenants,
both should sign. When signing
as attorney, executor,
administrator, trustee or
guardian, please give full
title as such. If a
corporation, please sign in
full corporate name by
President or other authorized
officer. If a partnership,
please sign in partnership
name by an authorized person.
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