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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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SCHEDULE 14D-9
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SOLICITATION/RECOMMENDATION STATEMENT
PURSUANT TO SECTION 14(D)(4) OF THE
SECURITIES EXCHANGE ACT OF 1934
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DEP CORPORATION
(Name of Subject Company)
DEP CORPORATION
(Name of Person(s) Filing Statement)
COMMON STOCK, PAR VALUE $.01 PER SHARE
(Title of Class of Securities)
233202-40-7
(CUSIP Number of Class of Securities)
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ROBERT H. BERGLASS
CHAIRMAN AND PRESIDENT
DEP CORPORATION
2101 EAST VIA ARADO
RANCHO DOMINGUEZ, CA 90220
(310) 604-0777
(Name, Address and Telephone Number of Person
Authorized to Receive Notice and Communications
on Behalf of the Person(s) Filing Statement)
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WITH A COPY TO:
PAUL D. TOSETTI, ESQ.
LATHAM & WATKINS
633 WEST FIFTH STREET, SUITE 4000
LOS ANGELES, CA 90071
(213)485-1234
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ITEM 1. SECURITY AND SUBJECT COMPANY.
The name of the subject company is DEP Corporation, a Delaware corporation
(the "Company"). The address of the principal executive offices of the Company
is 2101 East Via Arado, Rancho Dominguez, California 90220. The title of the
class of equity securities to which this statement relates is the common stock,
par value $.01 per share, of the Company (the "Shares").
ITEM 2. TENDER OFFER OF PURCHASER.
This statement relates to the tender offer by Henkel Acquisition Corp. II, a
Delaware corporation ("Purchaser"), and a wholly-owned subsidiary of Henkel
KGaA, a Kommandigesellschaft auf Aktien (a partnership limited by shares)
organized under the laws of the Federal Republic of Germany ("Parent"),
disclosed in a Tender Offer Statement on Schedule 14D-1, dated July 20, 1998
(the "Schedule 14D-1"), to purchase all of the issued and outstanding Shares, at
a price of $5.25 per Share, net to the seller in cash (the "Offer Price"), upon
the terms and subject to the conditions set forth in the Offer to Purchase,
dated July 20, 1998 (the "Offer to Purchase"), and the related Letter of
Transmittal (which, together with the Offer to Purchase and all amendments and
supplements thereto, constitute the "Offer").
The Offer is being made pursuant to an Agreement and Plan of Merger, dated
as of July 13, 1998 (the "Merger Agreement"), by and among Parent, Purchaser and
the Company. Subject to certain terms and conditions of the Merger Agreement,
Purchaser will be merged with and into the Company (the "Merger") as soon as
practicable after the expiration of the Offer, with the Company as the
corporation surviving the Merger (the "Surviving Corporation"). A copy of the
Merger Agreement is filed herewith as EXHIBIT 1 and is incorporated herein by
reference.
The Schedule 14D-1 states that the principal executive offices of Parent are
located at HenkelstraSSe 67, D-40191 Dusseldorf, Germany and the principal
executive offices of Purchaser are located at 220 Renaissance Boulevard, Suite
200, Gulph Mills, PA 19406. A copy of the press release issued by the Company
and Parent is filed hereto as EXHIBIT 2 and is incorporated herein by reference.
ITEM 3. IDENTITY AND BACKGROUND.
(a) The name and address of the Company, which is the person filing this
statement, are set forth in Item 1 above.
(b) Except as described or referred to below or incorporated herein by
reference, to the knowledge of the Company, as of the date hereof, there are no
material contracts, agreements, arrangements or understandings, or any actual or
potential conflicts of interest between the Company or its affiliates and (i)
its executive officers, directors or affiliates or (ii) Parent, Purchaser or
their respective officers, directors or affiliates.
ARRANGEMENTS WITH DIRECTORS, EXECUTIVE OFFICERS OR AFFILIATES OF THE COMPANY
Information with respect to certain contracts, agreements, arrangements or
understandings between the Company and certain of its directors, executive
officers and affiliates is set forth in the Company's Proxy Statement for its
Annual Meeting of Stockholders held on December 5, 1997 (the "Proxy Statement")
filed with the Securities and Exchange Commission on October 29, 1997. A copy of
the Proxy Statement is attached hereto as EXHIBIT 3, and the relevant portions
thereof are incorporated herein by reference.
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Employment Agreements (March 1998)
The following is a summary of the material terms of the March 1998
Agreements (as defined below). This summary is not a complete description of
such agreements and is qualified in its entirety by reference to the complete
texts of the agreements, copies of which are filed herewith as EXHIBITS 4 AND 5
and are incorporated herein by reference. Capitalized terms not otherwise
defined herein shall have the meanings set forth in the applicable agreement.
The Company has entered into employment agreements with Mr. Robert Berglass
and Mr. Grant Johnson dated as of March 23, 1998 (the "March 1998 Agreements").
The March 1998 Agreements provide for full time employment for a five (5) year
period until March 23, 2003 at an annual Base Salary of not less than $565,000
(in the case of Mr. Berglass) and $227,000 (in the case of Mr. Johnson). In
addition, the March 1998 Agreements provide for the continuation of incentive
compensation under the Company's Performance Bonus Plan (in the case of Mr.
Berglass) and the DEP Company Executive Bonus Plan (in the case of Mr. Johnson)
during the terms of their respective agreements as well as continuation of
benefits under the Company's insurance and health care benefit plans (in the
case of Mr. Berglass, until such time as he is entitled to participate in
medical and hospital benefits under Medicare). In the event the Company
terminates Mr. Berglass' or Mr. Johnson's employment for any reason other than
Just Cause or in the event Mr. Berglass or Mr. Johnson terminates his employment
with the Company for Good Reason, the Company will pay such executive a lump sum
severance benefit equal to the benefits he would have been entitled to receive
over the remaining term of the applicable March 1998 Agreement and full vesting
of his then outstanding stock options. The March 1998 Agreements also provide
certain rights in the event of a Change of Control of the Company. If there is a
Change of Control and within two years following such Change of Control either
Mr. Berglass or Mr. Johnson is terminated for any reason other than Just Cause
or voluntarily terminates employment with the Company for Good Reason, then such
person is entitled to receive a lump sum payment equal to his then accrued and
unpaid Base Salary plus 299% of the sum of his Base Salary and Assumed Incentive
Compensation and full vesting of his then outstanding stock options. Any
termination payments by the Company would be grossed up on an after-tax basis
with respect to certain federal excise taxes, if applicable.
In July 1998, the Company transferred to Mr. Berglass its ownership interest
in a $1 million key-man whole life insurance policy under which Mr. Berglass was
the insured and the Company was the beneficiary. Accordingly, Mr. Berglass will
be responsible for payment of the policy's future premiums.
Merger Agreement and Ancillary Documents
In connection with the transactions contemplated by the Merger, the
following agreements were entered into: the Merger Agreement; Stockholder Option
Agreements, dated July 13, 1998, by and among Parent, Purchaser and each of
Robert H. Berglass, The Berglass Charitable Remainder Trust UDT 7/8/98 and The
Berglass 1995 Irrevocable Trust UDT 6/27/95 (collectively, the "Stockholder
Option Agreements"); the Stock Option Agreement, dated July 13, 1998, by and
among Parent, Purchaser and the Company (the "Company Option Agreement"); the
Employment Agreement dated as of July 8, 1998, by and between Robert H. Berglass
and the Company (the "Berglass Employment Agreement") and the Employment
Agreement, dated as of July 8, 1998, by and between Grant Johnson and the
Company (the "Johnson Employment Agreement" and, together with the Berglass
Employment Agreement, the "July 1998 Agreements") (collectively, the
"Agreements").
The following is a summary of the material terms of the Agreements. Such
summary is not a complete description of the Agreements and is qualified in its
entirety by reference to the complete texts of the Agreements, copies of which
are filed herewith as exhibits and are incorporated herein by reference.
Capitalized terms not otherwise defined herein shall have the meanings set forth
in the applicable Agreement.
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The Merger Agreement
The offer is being made pursuant to the Merger Agreement, a copy of which
has been filed with the Commission as EXHIBIT 1 hereto.
THE OFFER. The Merger Agreement provides for the commencement of the Offer,
in connection with which Parent or Purchaser has expressly reserved the right to
waive conditions of the Offer (except as set forth below with respect to the
Minimum Condition), in whole or in part, at any time and from time to time in
their sole discretion. Purchaser has agreed that it will not, without the prior
written consent of the Company, (i) decrease or change the form of consideration
payable in the Offer, (ii) decrease the number of Shares sought pursuant to the
Offer (except any amendment so that the Offer is the 49.9% Offer), (iii) impose
additional conditions of the Offer, (iv) change the conditions of the Offer
(provided that Parent or Purchaser in its sole discretion may waive any
conditions to the Offer other than the Minimum Condition) or (v) make any other
change in the terms or conditions of the Offer which is materially adverse to
the holders of the Shares. The obligation of Purchaser to consummate the Offer
and to accept for payment and to pay for any Shares tendered pursuant to the
Offer will be subject only to the conditions set forth under "Certain Conditions
of the Offer."
If the conditions set forth under "Certain Conditions of the Offer" are
satisfied as of any scheduled expiration date of the Offer, Purchaser may extend
the Offer for up to ten business days in the aggregate, and may extend the Offer
for a longer period with the prior written consent of the Company or as required
by law.
If the conditions set forth under "Certain Conditions of the Offer" are not
satisfied or, to the extent permitted by the Merger Agreement, waived by Parent
or Purchaser as of any scheduled expiration date, Purchaser may extend the Offer
from time to time (but not beyond the date that is fifty business days from the
date of the Merger Agreement) and, in any event, upon the written request of the
Company, Purchaser will extend the Offer from time to time until the earlier of
the consummation of the Offer or forty business days from the date of the Merger
Agreement (provided, that Purchaser shall not be obligated to make any such
extension if (i) it reasonably determines that all such conditions are not
likely to be satisfied by such date or (ii) it shall then have the right to
terminate the Merger Agreement, pursuant to its terms).
BOARD REPRESENTATION. Promptly upon the purchase of Shares by Purchaser
pursuant to the Offer, and from time to time thereafter, Purchaser shall be
entitled to designate such number of directors, rounded up to the next whole
number, on the Board of Directors of the Company as will give Purchaser
representation on the Board of Directors of the Company equal to the product of
the number of directors on the Board of Directors of the Company (determined
after giving effect to the directors elected pursuant to this provision) and the
percentage that such number of Shares so purchased bears to the number of Shares
outstanding, and the Company shall, upon request by Purchaser, promptly increase
the size of the Board of Directors of the Company or use its best efforts to
secure the resignations of such number of directors as is necessary to provide
Parent with such level of representation and shall cause Parent's designees to
be so elected; provided, however, that Purchaser shall be entitled to designate
a number of directors equal to or greater than 50% of the total number of
directors only if Purchaser then owns 90% or more of the Shares then
outstanding. The Company will also use its best efforts to cause persons
designated by Purchaser to constitute the same percentage as is on the entire
Board of Directors of the Company to be on (i) each committee of the Board of
Directors of the Company and (ii) each Board of Directors and each committee
thereof of each subsidiary of the Company. The Company's obligations to appoint
designees to its Board of Directors shall be subject to Section 14(f) of the
Exchange Act. At the request of Purchaser, the Company shall take all actions
necessary to effect any such election or appointment of Purchaser's designees,
including mailing to its stockholders the information required by Section 14(f)
of the Exchange Act and Rule 14f-l promulgated thereunder which, unless
Purchaser otherwise elects, shall be so mailed together with the Schedule 14D-9.
In light of the provisions of the Merger Agreement described above requiring, as
a condition to Purchaser's designees comprising a
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majority of the Board of Directors, that Purchaser then own 90% or more of the
Shares, Purchaser has determined to elect not to require such information in the
mailing of the Schedule 14D-9. If it becomes necessary to disseminate such
information, Purchaser and Parent will supply to the Company all information
with respect to themselves and their respective officers, directors and
affiliates required by such Section and Rule.
Notwithstanding the foregoing, neither Parent nor Purchaser will take any
action to prevent at least two persons who are directors of the Company on the
date hereof from remaining as directors of the Company ("Continuing Directors")
until the Effective Time. Following the election or appointment of Purchaser's
designees pursuant to the preceding paragraph and prior to the Effective Time,
and so long as there shall be at least one Continuing Director, such designees
shall abstain from acting upon, and the approval of a majority of the Continuing
Directors shall be required, and sufficient, to authorize any resolution with
respect to any termination of the Merger Agreement by the Company, any amendment
of the Merger Agreement requiring action by the Board of Directors of the
Company, any extension of time for the performance of any of the obligations or
other acts of Parent or Purchaser under the Merger Agreement, any waiver of
compliance with any of the agreements or conditions under the Merger Agreement
for the benefit of the Company and any action to seek to enforce any obligation
of Parent or Purchaser under the Merger Agreement. If at any time the Continuing
Directors reasonably deem it necessary to consult independent legal counsel in
connection with their duties as Continuing Directors or actions to be taken by
the Company, the Continuing Directors may retain such counsel for such purpose
and the Company has agreed that it will pay the reasonable expenses incurred in
connection therewith.
THE MERGER. The Merger Agreement provides that upon the terms and subject
to the conditions of the Merger Agreement, and in accordance with the relevant
provisions of the DGCL, Purchaser shall be merged with and into the Company as
soon as practicable following the satisfaction or waiver, if permissible, of the
conditions to the Merger. The Company shall be the Surviving Corporation and
shall continue its existence under the laws of Delaware, and the Certificate of
Incorporation and the Bylaws of Purchaser as in effect immediately prior to the
Effective Time shall be the Certificate of Incorporation and Bylaws of the
Surviving Corporation (except the name of the Surviving Corporation shall be
Schwarzkopf & DEP, Inc.). The directors of Purchaser immediately prior to the
Effective Time and the officers of the Company immediately prior to the
Effective Time shall be the directors and officers, respectively, of the
Surviving Corporation until their death, permanent disability, resignation or
removal or until their respective successors are duly elected and qualified.
Each Share issued and outstanding immediately prior to the Effective Time (other
than Shares owned by Parent, Purchaser or any subsidiary of Parent, Purchaser or
the Company or held in the treasury of the Company, all of which shall be
canceled, and other than Dissenting Shares, as defined herein) shall, by virtue
of the Merger and without any action on the part of the holder thereof, be
converted into the right to receive in cash the Merger Consideration, upon the
surrender of the certificate representing such Shares. The parties to the Merger
Agreement shall cause the Merger to be consummated by filing with the Secretary
of State of the State of Delaware a duly executed and verified certificate of
merger, as required by the DGCL. The Merger will become effective upon such
filing or at such time thereafter as is provided under applicable law.
TERMINATION OF STOCK OPTIONS AND STOCK OPTION PLANS. At the Effective Time
(or at such earlier time as Purchaser shall designate, which time may be
immediately prior to the acceptance of Shares pursuant to the Offer), each
holder of a then outstanding option to purchase Shares, whether or not then
exercisable shall, in settlement thereof, be entitled to receive from the
Surviving Corporation for each Share subject to such option, in lieu of such
Share, an amount (subject to any applicable withholding tax as specified in the
Merger Agreement or as may apply to payments made in connection with the
performance of services) in cash equal to the difference between the Merger
Consideration and the per share exercise or purchase price of such option to the
extent such difference is a positive number (the "Option Consideration"). Upon
receipt of the Option Consideration, the option shall be canceled. In the Merger
Agreement, the Company has agreed to take, or cause to be taken, all action
necessary, to ensure that the Company's stock option
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plans shall terminate as of the Effective Time. The Company's stock option plans
shall terminate as of the Effective Time and any and all rights under any
provisions in any other plan, program or arrangement providing for the issuance
or grant of any other interest in respect of the capital stock of the Company or
any Subsidiary thereof shall be canceled as of the Effective Time.
STOCKHOLDER MEETING; RECOMMENDATION TO STOCKHOLDERS. Unless the Merger is
consummated in accordance with the "short-form" merger provisions under the
DGCL, and subject to applicable law, the Company, acting through its Board of
Directors, shall, in accordance with applicable law, duly call, give notice of,
convene and hold a special meeting of its stockholders (the "Special Meeting")
as soon as practicable following the consummation of the Offer for the purpose
of adopting the agreement and plan of merger set forth in the Merger Agreement,
and subject to the fiduciary duties of its Board of Directors under applicable
law as determined in good faith by the Board of Directors, following the receipt
of advice of outside legal counsel, include in the Proxy Statement the
recommendation of its Board of Directors that stockholders of the Company vote
in favor of the adoption of the plan of Merger set forth in the Merger
Agreement. Parent and Purchaser have agreed that, at the Special Meeting, all of
the Shares acquired pursuant to the Offer or otherwise by Parent or Purchaser or
any of their affiliates will be voted in favor of the Merger.
If Purchaser or any other direct or indirect subsidiary of Parent shall
acquire at least 90 percent of the outstanding shares of each class of capital
stock of the Company, each of Parent, Purchaser and the Company shall take all
necessary and appropriate action to cause the Merger to become effective, as
soon as practicable after the consummation of the Offer, without a meeting of
stockholders of the Company, in accordance with Section 253 of the DGCL.
REPRESENTATIONS AND WARRANTIES. The Merger Agreement contains various
representations and warranties of the parties thereto. These include
representations and warranties by the Company with respect to corporate
existence and good standing, capital structure, subsidiaries, corporate
authorization, absence of changes, Commission filings, consents and approvals,
no defaults under of other agreements, investment banking fees, employee
benefits, labor relations, litigation, taxes, compliance with applicable laws,
environmental matters, intellectual property, real property, insurance, material
contracts, related party transactions, liens and other matters.
Purchaser and Parent have also made certain representations and warranties
with respect to corporate existence and good standing, corporate authorization,
Commission filings, consents and approvals, no violations of other agreements
and other matters.
CONDUCT OF BUSINESS AND OTHER COVENANTS PENDING THE MERGER. The Company has
agreed that, except as expressly contemplated by the Merger Agreement, during
the period from the date of the Merger Agreement to the date on which a majority
of the Company's directors are designees of Parent or Purchaser, the Company
will conduct, and will cause each of its subsidiaries to conduct, its operations
according to its ordinary and usual course of business and consistent with past
practice and the Company will use, and will cause each of its subsidiaries to
use, its best efforts to preserve intact its business organization, to keep
available the services of its current officers and employees and to preserve the
goodwill of, and maintain satisfactory relationships with, those having business
relationships with the Company and its subsidiaries. The Company has agreed to
promptly advise Parent and Purchaser in writing of any change in the Company's
or any of its subsidiaries' condition (financial or otherwise), properties,
customer or supplier relationships, assets, liabilities, business prospects or
results of operations which may reasonably be likely to have a Material Adverse
Effect (as defined in the Merger Agreement).
In addition, without limiting the generality of the foregoing and except as
otherwise expressly provided in or contemplated by the Merger Agreement, during
the period specified in the first sentence of the preceding paragraph, the
Company has agreed that, without the prior written consent of Parent, it will
not (and will not permit any of its subsidiaries to): (i) issue, sell, grant
options or rights to purchase, pledge,
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or authorize or propose the issuance, sale, grant of options or rights to
purchase or pledge of (A) any securities of the Company or any of its
subsidiaries, or grant or accelerate any right to convert or exchange any
securities of the Company or any of its subsidiaries, other than Shares issuable
upon exercise of the options or warrants outstanding on the date hereof or (B)
any other securities in respect of, in lieu of, or in substitution for, Shares
outstanding on the date of the Merger Agreement; (ii) otherwise acquire or
redeem, directly or indirectly, or amend any of the securities of the Company or
any of its subsidiaries; (iii) split, combine or reclassify its capital stock or
declare, set aside, make or pay any dividend or distribution (whether in cash,
stock or property) on any shares of capital stock of the Company or any of its
subsidiaries (other than cash dividends paid to the Company by its wholly-owned
subsidiaries with regard to their capital stock); (iv) (1) make or offer to make
any acquisition, by means of a merger or otherwise, of assets or securities, or
any sale, lease, encumbrance or other disposition of assets or securities, in
each case involving the payment or receipt of consideration of $100,000 or more,
except for purchases of inventory made in the ordinary course of business and
consistent with past practice, or (2) enter into or amend any or amend a
Material Contract (as defined in the Merger Agreement) or grant any release or
relinquishment of any rights under any material contract; (v) incur or assume
any long-term debt or short-term debt except for short-term debt incurred under
the Company's existing Revolving Credit Facility in the ordinary course of
business consistent with past practice; (vi) assume, guarantee, endorse or
otherwise become liable or responsible (whether directly, contingently or
otherwise) for the obligations of any other person except wholly-owned
subsidiaries of the Company; (vii) make any loans, advances or capital
contributions to, or investments in, any other person (other than wholly-owned
subsidiaries of the Company); (viii) change any of the accounting principles or
practices used by it; (ix) make any tax election or settle or compromise any
material U.S. federal, state or local income tax liability; (x) propose or adopt
any amendments to its Certificate of Incorporation or Bylaws (or similar
documents); (xi) grant any stock-related, performance or similar awards or
bonuses; (xii) forgive any loans to employees, officers or directors or any of
their respective affiliates or associates; (xiii) enter into any new, or amend
any existing, employment, severance, consulting or salary continuation
agreements with any officers, directors or employees, or grant any increases in
the compensation or benefits to officers, directors and employees other than
normal increases to persons who are not officers or directors in the ordinary
course of business consistent with past practices and that, in the aggregate, do
not result in a material increase in benefits or compensation expense to the
Company; (xiv) make any deposits or contributions of cash or other property to
fund or in any other way secure the payment of compensation or benefits under
the Company's employee benefit plans or agreements subject to such plans other
than in the ordinary course of business consistent with past practice; (xv)
enter into, amend, or extend any collective bargaining or other labor agreement;
(xvi) adopt, amend or terminate any employee benefit plan or any other bonus,
severance, insurance pension or other arrangement; (xvii) settle or agree to
settle any suit, action, claim, proceeding or investigation (including any suit,
action, claim, proceeding or investigation relating to the Merger Agreement or
the transactions contemplated thereby) or pay, discharge or satisfy or agree to
pay, discharge or satisfy any claim, liability or obligation (absolute or
accrued, asserted or unasserted, contingent or otherwise) other than the
payment, discharge or satisfaction of liabilities reflected or reserved against
in full in the financial statements as at April 30, 1998 or incurred in the
ordinary course of business subsequent to April 30, 1998; or (xviii) agree in
writing or otherwise to take any of the foregoing actions or any action which
would make any representation or warranty in the Merger Agreement untrue or
incorrect as of the date when made or as of a future date or would result in any
of the conditions of the Offer (as set forth under "Certain Conditions of the
Offer.") not being satisfied.
NO SOLICITATION. The Company has agreed that it will not and will not
permit any of its subsidiaries or their respective officers, directors,
employees, representatives (including its investment bankers or attorneys),
agents or affiliates to, directly or indirectly, solicit, encourage, initiate or
participate in any way in any discussions or negotiations with, or provide any
non-public information to, or afford any access to the properties, books or
records of the Company or any of its Subsidiaries to, or otherwise assist or
facilitate, any corporation, partnership, person or other entity or group (other
than Parent or Purchaser or any
6
affiliate or associate of Parent or Purchaser) concerning any Acquisition
Transaction (as defined in the Merger Agreement) or potential Acquisition
Transaction; provided, however, that nothing contained in the Merger Agreement
will prohibit the Board of Directors of the Company from furnishing information
to or entering into discussions or negotiations with any person or entity that
makes an unsolicited bona fide proposal to engage in an Acquisition Transaction
that the Board of Directors of the Company determines in good faith represents a
financially superior transaction for the stockholders of the Company when
compared to the Offer and the Merger if, and only to the extent that, the Board
of Directors determines in good faith, following the receipt of advice of
outside legal counsel, that failure to take any such action is reasonably likely
to be a breach by the Board of Directors of its fiduciary duties to the
stockholders of the Company under applicable law; and provided further, however,
that nothing contained in the Merger Agreement will prohibit the Company or its
Board of Directors from taking and disclosing to the Company's stockholders a
position with respect to a tender offer by a third party pursuant to Rules 14d-9
and 14e-2(a) promulgated under the Exchange Act. The Company has agreed that it
will promptly notify Parent and Purchaser if any such information is requested
from it or any such negotiations or discussions are sought to be initiated with
the Company and will promptly communicate to Parent and Purchaser the terms of
any proposal or inquiry and the identity of the party making such proposal or
inquiry which it may receive in respect of any such transaction including in the
case of written proposals or inquiries, furnishing Parent and Purchaser with a
copy of any such written proposal or inquiry (and all amendments and supplements
thereto). Except as is required in the exercise of the fiduciary duties of the
Board of Directors of the Company as determined in good faith, following the
receipt of advice of outside legal counsel, the Company has agreed that it will,
and will cause its Subsidiaries, affiliates and their respective officers,
directors, employees, representatives and agents to, immediately cease and cause
to be terminated any existing activities, discussions, or negotiations with any
parties other than Parent, Purchaser or any of their respective affiliates or
associates conducted heretofore with respect to any Acquisition Transaction.
Except as is required in the exercise of the fiduciary duties of the Board of
Directors of the Company as determined in good faith, following the receipt of
advice of outside legal counsel, the Company has agreed not to release any third
party from any confidentiality or standstill agreement to which the Company is a
party without Parent's prior written consent and to take all steps deemed
necessary or appropriate by Parent to enforce to the fullest extent possible all
such agreements.
FEES AND EXPENSES. The Merger Agreement provides that all costs and
expenses incurred in connection with the Merger Agreement and the transactions
contemplated by the Merger Agreement shall be paid by the party incurring such
expenses, except that under certain circumstances described in "Termination"
below, the Company may be required to pay a termination fee.
CONDITIONS TO THE MERGER. Pursuant to the Merger Agreement, the respective
obligations of each party to effect the Merger are subject to the satisfaction
or waiver, where permissible, prior to the proposed Effective Time, of the
following conditions: (a) unless the Merger is consummated pursuant to the
"short-form" merger provisions of the DGCL, the Merger Agreement shall have been
adopted by the affirmative vote of the stockholders of the Company required by
and in accordance with applicable law; (b) all necessary waiting periods under
the HSR Act applicable to the Merger shall have expired or been terminated; (c)
no statute, rule, regulation, executive order, judgment, decree or injunction
shall have been enacted, entered, issued, promulgated or enforced by any court
or governmental authority against Parent, Purchaser or the Company and be in
effect that prohibits or restricts the consummation of the Merger or makes such
consummation illegal or otherwise materially restricts Parent's or Purchaser's
exercise of full rights to own and operate the Company (each party agreeing to
use all reasonable efforts to have such prohibition lifted); and (d) Purchaser
shall have accepted for purchase and paid for the Shares tendered pursuant to
the Offer; provided, however, that this condition will be deemed satisfied if
Purchaser shall have failed to purchase Shares pursuant to the Offer in
violation of the terms of the Merger Agreement.
The obligations of Purchaser and Parent to effect the Merger are further
subject to the satisfaction or waiver, where permissible, on or prior to the
proposed Effective Time of the following conditions: (a) the
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Company shall have performed and complied in all material respects with all
agreements and obligations and conditions required by the Merger Agreement to be
performed or complied with by it on or prior to the Effective Time; (b) the
representations and warranties of the Company contained in the Merger Agreement
that are qualified as to materiality shall be true and correct and those not so
qualified shall be true and correct in all material respects in each case on the
date of the Merger Agreement and at and on the proposed Effective Time; and (c)
the Company shall have furnished such certificates of its officers to evidence
compliance with the conditions described in the preceding paragraph as may be
reasonably requested by Purchaser.
The obligations of the Company to effect the Merger are further subject to
the satisfaction or waiver, where permissible, on or prior to the proposed
Effective Time of the following conditions: (a) Parent and Purchaser shall have
performed and complied in all material respects with all agreements and
obligations required by the Merger Agreement to be performed or complied with by
them on or prior to the proposed Effective Time; (b) the representations and
warranties of Purchaser and Parent qualified as to materiality shall be true and
correct and those not so qualified shall be true and correct in all material
respects; and (c) Parent or Purchaser shall have delivered to the Company an
officer's certification that each of the preceding conditions have been
satisfied.
For a description of the conditions of the Offer, see "Certain Conditions of
the Offer."
TERMINATION. The Merger Agreement may be terminated and the Merger may be
abandoned at any time notwithstanding approval thereof by the stockholders of
the Company, but prior to the Effective Time: (a) by mutual written consent of
the Boards of Directors of Company and Parent; (b) by Parent or the Company, if
the Effective Time shall not have occurred on or before December 31, 1998
(provided that this right to terminate the Merger Agreement 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 Effective
Time to occur on or before such date); (c) by Parent or the Company, if any
court of competent jurisdiction in the United States or Canada or other United
States or Canadian governmental body shall have issued an order, decree or
ruling, or taken any other action restraining, enjoining or otherwise
prohibiting any of the transactions contemplated by the Merger Agreement or the
Stock Option Agreements and such order, decree, ruling or other action shall
have become final and non-appealable; (d) (i) by the Company, if Purchaser fails
to commence the Offer as provided in Section 1 and (ii) by Parent, if the Offer
expires or is terminated on account of the failure of a condition specified in
Section 14 without any Shares being purchased thereunder; (e) by Parent, if (i)
the Board of Directors or any committee thereof of the Company withdraws or
modifies or amends in a manner adverse to Parent or Purchaser its authorization,
approval or recommendation of the Offer or the Merger or this Merger Agreement
or shall have resolved to do any of the foregoing or shall have failed to have
reiterated its recommendation within five business days of any written request
by Parent or Purchaser therefor or (ii) the Company or any of its Subsidiaries
(or the Board of Directors or any committee thereof of the Company) shall have
approved, recommended, authorized, publicly announced its intention to enter
into or filed a Schedule 14D-9 not opposing any Acquisition Transaction with a
party other than Parent, Purchaser or any of their affiliates, or shall have
resolved to do any of the foregoing; (f) by Parent or the Company, if the other
party (or, in the case of termination by the Company, if Purchaser) shall have
breached or failed to comply in any material respect with any of its
obligations, covenants or agreements under the Merger Agreement, or any of the
representations and warranties of the Company set forth in the Merger Agreement
which is qualified as to materiality, shall not be true and correct, or any such
representation or warranty that is not so qualified, shall not be true and
correct in any material respect when made or at any time prior to the Effective
Time as if made at and as such time; (g) by Parent, if at any time prior to the
purchase by Purchaser of all of the Shares subject to the Stockholder Options,
the Stockholder Option Agreements shall not be in full force and effect, or the
Option Grantors shall have breached in any material respect any representation,
warranty or covenant contained in the Stockholder Option Agreements; or (h) by
the Company, to allow the Company to enter into an agreement in respect of an
Acquisition Transaction that the Board of
8
Directors of the Company shall have determined represents a financially superior
transaction for the stockholders of the Company when compared to the Offer and
the Merger if, and only to the extent that, the Board of Directors shall have
determined in good faith, following the receipt of advice of outside legal
counsel, that failure to take any such action would be a breach by the Board of
Directors of its fiduciary duties to the stockholders of the Company under
applicable law; provided, that, prior to any such termination, the Company
notifies Parent promptly of its intention to terminate the Merger Agreement and
enter into an agreement with respect to an Acquisition Transaction and gives
Parent an opportunity to match the terms of such agreement, which notice shall
include the terms of such Acquisition Transaction and shall be given at least
five business days prior to the termination of the Merger Agreement; provided,
further, that such termination shall not be effective unless the Company
contemporaneously pays Parent the fee described herein. In the event of
termination, the Merger shall be abandoned and only liabilities arising prior to
termination shall survive termination, except that (i) obligations under the
Merger Agreement to keep information confidential, (ii) the termination fee
provision and (iii) any provisions of the Merger Agreement relating to the
Company Option Agreement or the Stockholder Option Agreements, shall survive
termination.
In the event that the Merger Agreement is terminated (i) pursuant to clauses
(e) or (h) of the prior paragraph or (ii) pursuant to any other provision of the
prior paragraph (regardless of whether such termination is by Parent or the
Company unless such termination results solely from a material breach by Parent
or Purchaser of their respective obligations under the Merger Agreement) and (in
the case of clause (ii) only) either (y) prior to such termination a Trigger
Event (as defined below) has occurred or (z) prior to such termination a written
proposal shall have been made relating to an Acquisition Event and within twelve
months from the date of such expiration an Acquisition Event has occurred, then
the Company shall pay to Parent a fee of $2,500,000 (the "Termination Fee").
As used herein, "Acquisition Event" means the consummation of any (i)
Acquisition Transaction or (ii) series of transactions that results in any
person, entity or "group" (other than the Option Grantors and their affiliates
and other than Parent, Purchaser or any of their affiliates) acquiring more than
50% of the outstanding Shares or assets of the Company in each case including
through any open market purchases, merger, consolidation, recapitalization,
reorganization or other business combination.
As used herein, "Trigger Event" means the occurrence of any of the following
events: (i) the Company or any of its Subsidiaries (or the Board of Directors or
any committee thereof of the Company) shall have recommended, approved,
authorized, proposed, filed a Schedule 14D-9 not opposing, or publicly announced
its intention to enter into, any Acquisition Transaction (other than with
Parent, Purchaser or any of its affiliates), or shall have resolved to do any of
the foregoing; (ii) the Board of Directors or any committee thereof of the
Company shall have withdrawn or modified or amended in any manner adverse to
Parent or Purchaser its authorization, approval or recommendation to the
stockholders of the Company with respect to the Offer, the Merger or the Merger
Agreement, or shall have resolved to do any of the foregoing or shall have
failed to have reiterated its recommendation within five business days of any
written request by Parent or Purchaser therefor; or (iii) any person, entity or
"group" (as that term is used in Section 13(d)(e) of the Exchange Act) (other
than the Option Grantors and their affiliates and other than Parent, Purchaser
or any of their affiliates and other than persons, entities or groups that are
permitted to report their ownership of Shares with the SEC on Schedule 13G)
shall have become the beneficial owner (as defined in Rule 13d-3 promulgated
under the Exchange Act) of 20% of the then outstanding Shares.
INDEMNIFICATION AND INSURANCE. Purchaser and Parent have agreed that all
rights to indemnification existing in favor of the present or former directors,
officers and employees of the Company or any of its subsidiaries (the
"Indemnified Parties") as provided in indemnification agreements with the
Company, the Company's Certificate of Incorporation or Bylaws, or the articles
of organization, bylaws or similar documents of any of the Company's
subsidiaries as in effect as of the date of the Merger Agreement with respect to
matters occurring prior to the Effective Time including, without limitation,
matters based in
9
whole or in part on, or arising in whole or in part out of, or pertaining to
this Merger Agreement or the transactions contemplated thereby, shall survive
the Merger and shall continue in full force and effect for a period of not less
than the statutes of limitations applicable to such matters. In addition, the
Parent agrees to cause the Surviving Corporation to comply fully with its
indemnification obligations.
To the extent that the preceding paragraph does not indemnify and hold
harmless an Indemnified Party, for a period of four years from and after the
Effective Time, the Surviving Corporation and Parent have agreed to indemnify,
defend and hold harmless the Indemnified Parties against all losses, claims,
damages, costs, expenses (including reasonable attorneys' fees and expenses),
liabilities or judgments of or in connection with any threatened or actual
claim, action, suit, proceeding or investigation (an "Action") arising out of or
pertaining to such individuals' services, prior to the Effective Time, as
directors, officers or employees of the Company or any of its Subsidiaries or as
trustees or fiduciaries of any plan for the benefit of employees of the Company
or as (at the request of the Company) directors, officers or employees of
another corporation or other enterprise (including, without limitation, matters
based in whole or in part on, or arising in whole or in part out of, or
pertaining to the Merger Agreement or the transactions contemplated thereby), in
each case to the full extent permitted by applicable law.
The Surviving Corporation will cause to be maintained in effect for a period
of four years after the Effective Time (or, if the statute of limitations with
respect to such claims is extended, for an additional period, not to exceed two
years, equal to the length of such extension), in respect of acts or omissions
occurring prior to the Effective Time (but only in respect thereof), policies of
directors' and officers' liability insurance covering the persons currently
covered by the Company's existing directors' and officers' liability insurance
policies and providing substantially similar coverage to such existing policies;
provided, however, that the Surviving Corporation will not be required to
maintain directors' and officers' liability insurance policies to the extent
that the aggregate annual cost of maintaining such policies exceeds $265,000
(the "Cap"); and provided further that, if equivalent coverage cannot be
obtained, or can be obtained only by paying an annual premium in excess of the
Cap, the Surviving Corporation shall only be required to obtain as much coverage
as can be obtained by paying an annual premium equal to the Cap.
In the event an Action is brought against any Indemnified Parties for which
indemnification may be sought in accordance with the provisions of the Merger
Agreement, (i) such Indemnified Parties shall notify the Company (or, after the
Effective Time, the Surviving Corporation and Parent) in writing promptly after
such Indemnified Party receives notice of such Action and shall deliver to the
Company (or, after the Effective Time, the Surviving Corporation and Parent) the
undertaking contemplated by Section 145(e) of the DGCL, (ii) the Company (or,
after the Effective Time, the Surviving Corporation or Parent) shall be entitled
to assume the defense thereof and, after notice from the Company (or the
Surviving Corporation or Parent, as applicable) to the Indemnified Parties that
it so chooses, the Company (or the Surviving Corporation or Parent, as
applicable) shall not be liable to the Indemnified Parties for any legal fees or
expenses subsequently incurred by any Indemnified Party in connection with the
defense thereof (provided, however, that if (x) the Company (or the Surviving
Corporation and Parent, as applicable) does not elect to assume the defense
thereof, (y) the Company (or the Surviving Corporation and Parent, as
applicable) otherwise authorizes the Indemnified Party to retain counsel for the
defense thereof or (z) the assumption of the defense thereof by the Company (or
the Surviving Corporation or Parent, as applicable) would present counsel
selected by the Company (or the Surviving Corporation or Parent, as applicable)
with a conflict of interest or if such counsel's representation of the
Indemnified Parties would otherwise be inappropriate under the applicable
standards of professional conduct, then the Company (or the Surviving
Corporation and Parent, as applicable) will pay the reasonable fees and expenses
of counsel selected by the Indemnified Parties, and reasonably acceptable to
Parent), and (iii) the Company (or the Surviving Corporation and Parent, as
applicable) will cooperate in the defense of any such matter; provided, however,
that none of the Company, the Surviving Corporation or Parent shall be liable
for any settlement effected without its prior written consent (which consent
shall not be unreasonably withheld), and provided further that the Company (or
the Surviving Corporation and Parent, as applicable) shall not be obligated
10
pursuant hereby to pay the fees and expenses of more than one counsel for all
Indemnified Parties in any single Action, except to the extent that, in the
reasonable opinion of counsel for the Indemnified Parties, two or more of such
Indemnified Parties have conflicting interests in the outcome of such Action.
AMENDMENT. To the extent permitted by applicable law, the Merger Agreement
may be amended by action taken by or on behalf of the Boards of Directors of the
Company, Parent and Purchaser (subject in the case of the Company to the last
paragraph of "Board Representation" herein) at any time before or after adoption
of the Merger Agreement by the stockholders of the Company but, after any such
stockholder approval, no amendment shall be made which decreases the Merger
Consideration or which adversely affects the rights of the Company's
stockholders hereunder without the approval of such stockholders. The Merger
Agreement may not be amended except by an instrument in writing signed on behalf
of all of the parties.
OTHER AGREEMENTS. Each party has agreed to use its reasonable best efforts
to take, or cause to be taken, all appropriate action, and to do, or cause to be
done, all things necessary, proper or advisable under applicable laws and
regulations to consummate and make effective the transactions contemplated by
the Merger Agreement. However, nothing in the Merger Agreement (other than as
expressly provided therein) shall obligate Parent or Purchaser to keep the Offer
open beyond the expiration date set forth in the Offer, and none of Parent,
Purchaser or any of their subsidiaries or affiliates is obligated (i) to limit
or not to exercise any rights of ownership of any securities (including the
Shares), or to divest, dispose of or hold separate any securities or all or a
portion of their respective businesses, assets or properties or of the business,
assets or properties of the Company or any of its subsidiaries or (ii) to limit
the ability of such entities (A) to conduct their respective businesses or own
such assets or properties or to conduct the businesses or own the properties or
assets of the Company and its subsidiaries or (B) to control their respective
businesses or operations or the businesses or operations of the Company and its
subsidiaries. In addition, among other things, (x) each of the Company, Parent
and Purchaser has agreed to use its reasonable best efforts to make promptly any
required submissions under the HSR Act which the Company and Parent and
Purchaser determine should be made, in each case, with respect to the Offer, the
Merger Agreement, the Company Option Agreement or the Stockholder Option
Agreements and (y) Parent, Purchaser and the Company have each agreed to
cooperate with one another (i) in promptly determining whether any filings are
required to be or should be made or consents, approvals, permits or
authorizations are required to be or should be obtained under any other federal,
state or foreign law or regulation or whether any consents, approvals or waivers
are required to be or should be obtained from other parties to loan agreements
or other contracts or instruments material to the Company's business in
connection with the consummation of the transactions contemplated by the Merger
Agreement, and (ii) in promptly making any such filings, furnishing information
required in connection therewith and seeking to obtain timely any such consents,
permits, authorizations, approvals or waivers and (z) the Company has agreed
that it will use its reasonable best efforts promptly to grant such approvals
and to take or cause to be taken such actions as are necessary to eliminate or
minimize the effects on the transactions contemplated hereby of any antitakeover
statute, regulation or charter provision that is or shall become applicable to
the transactions contemplated hereby (except, in the case of any such approval
or action by the Board of Directors of the Company, to the extent that the Board
of Directors determines in good faith, following the receipt of advice of
outside legal counsel, that granting such approval or taking such action is
reasonably likely to be a breach by the Board of Directors of its fiduciary
duties to the stockholders of the Company under applicable law).
TIMING. The exact timing and details of the Merger will depend upon legal
requirements and a variety of other factors, including the number of Shares
acquired by Purchaser pursuant to the Offer. Although Parent has agreed to cause
the Merger to be consummated on the terms and subject to the conditions set
forth above, there can be no assurance as to the timing of the Merger.
11
Certain Conditions of the Offer
Notwithstanding any other provision of the Offer, Purchaser shall not be
required to accept for payment, purchase or pay for any Shares tendered until
the expiration of any applicable waiting period for the Offer and the
Stockholder Options granted pursuant to the Stockholder Option Agreements under
the HSR Act, and Parent may terminate or, subject to the terms and conditions of
the Merger Agreement, amend the Offer as to any Shares not then accepted for
payment, shall not be required to accept for payment or pay for any Shares, or
may delay the acceptance for payment of Shares tendered, if (i) at the
expiration of the Offer, the number of Shares validly tendered and not
withdrawn, together with the Shares beneficially owned by Parent and its
affiliates or which Parent and its affiliates have the right to acquire pursuant
to the Company Option Agreement, shall not constitute at least 90% of the
outstanding Shares on a fully diluted basis, provided, however, that the Minimum
Condition may be required to be amended in accordance with the Merger Agreement
as set forth in Section 1 herein, or (ii) at any time on or after the date of
the Merger Agreement, and prior to the acceptance for payment of Shares, any of
the following events shall occur or exist:
(a) there shall have been any action taken, or any statute, rule,
regulation, judgment, order or injunction, proposed, sought, promulgated,
enacted, entered, enforced or deemed applicable to the Offer, the
Stockholder Options, the Top-Up Option or the Merger, that would or is
reasonably likely to (i) make the acceptance for payment of, or payment for
or purchase of some or all of the Shares pursuant to the Offer, the
Stockholder Options or the Top-Up Option illegal, or otherwise restrict or
prohibit the consummation of the Offer, the Stockholder Options, the Top-Up
Option or the Merger, (ii) result in a significant delay in or restrict the
ability of Purchaser to accept for payment, pay for or purchase some or all
of the Shares pursuant to the Offer, the Stockholder Options or the Top-Up
Option or to effect the Merger, (iii) render Purchaser unable to accept for
payment or pay for or purchase some or all of the Shares pursuant to the
Offer, the Stockholder Options or the Top-Up Option, (iv) impose material
limitations on the ability of Parent, Purchaser or any of their respective
subsidiaries or affiliates to acquire or hold, transfer or dispose of, or
effectively to exercise all rights of ownership of, some or all of the
Shares including the right to vote the Shares purchased by it pursuant to
the Offer, the Stockholder Options or the Top-Up Option on all matters
properly presented to the stockholders of the Company, (v) require the
divestiture by Parent, Purchaser or any of their respective subsidiaries or
affiliates of any Shares, or require Parent, Purchaser, the Company, or any
of their respective subsidiaries or affiliates to dispose of or hold
separate all or any material portion of their respective businesses, assets
or properties or impose any material limitations on the ability of any of
such entities to conduct their respective businesses or own such assets,
properties or Shares or on the ability of Parent or Purchaser to conduct the
business of the Company and its subsidiaries and own the assets and
properties of the Company and its subsidiaries, or (vi) impose any material
limitations on the ability of Parent, Purchaser or any of their respective
subsidiaries or affiliates effectively to control the business or operations
of the Company, Parent, Purchaser, or any of their respective subsidiaries
or affiliates.
(b) there shall have been instituted or pending any action, proceeding
or counterclaim by or before any governmental, administrative or regulatory
agency or instrumentality or before any court, arbitration tribunal or any
other tribunal, domestic or foreign, challenging the making of the Offer or
the acquisition by Purchaser of the Shares pursuant to the Offer or the
Stockholder Options or the Top-Up Option or the consummation of the Merger,
or seeking to obtain any material damages, or seeking to, directly or
indirectly, result in any of the consequences referred to in clauses (i)
through (viii) of paragraph (a) above;
(c) any of the Stockholder Option Agreements shall not be in full force
and effect or any of the Option Grantors shall have breached in any material
respect any representation, warranty or covenant contained therein;
12
(d) there shall have occurred (i) any general suspension of, or
limitation on prices for, trading in securities on any national securities
exchange in the United States, including the NASDAQ stock market, or the
Frankfurt Stock Exchange, for a period of more than one full trading day,
(ii) the declaration of any banking moratorium or any suspension of payments
in respect of banks in the United States or Germany, (iii) the commencement
of a war, armed hostilities or any other international or national calamity
involving the United States or Germany, or (iv) in the case of any of the
foregoing existing at the time of the execution of the Merger Agreement, a
material acceleration or worsening thereof;
(e) any Person, entity or "group" (as such term is used in Section
13(d)(3) of the Exchange Act) other than the Parent or the Option Grantors
or any of their respective affiliates (and other than persons, entities or
groups that are permitted to report their ownership of Shares with the SEC
on Schedule 13G) shall have become the beneficial owner (as that term is
used in Rule 13d-3 under the Exchange Act) of more than 20% of the
outstanding Shares;
(f) the Company or any of its subsidiaries (or the Board of Directors or
any committee thereof of the Company) shall have approved, recommended,
authorized, proposed, filed a Schedule 14D-9 not opposing, or publicly
announced its intention to enter into, any Acquisition Transaction (other
than with the Parent, Purchaser or any of their affiliates) or shall have
resolved to do any of the foregoing;
(g) there shall have occurred any change, condition, event or
development in the business, condition (financial or otherwise), assets,
liabilities, results of operations or prospects of the Company or any of its
subsidiaries that is, or is reasonably likely to be, materially adverse to
the Company and its subsidiaries taken as a whole or that materially impairs
the ability of the parties to consummate the Offer or the Merger;
(h) the Company shall have breached or failed to comply in any material
respect with any of its obligations, covenants, or agreements under the
Merger Agreement or the Company Option Agreement or any representation or
warranty of the Company contained in the Merger Agreement, that is qualified
as to materiality, shall not be true and correct, or any such representation
or warranty that is not so qualified, shall not be true and correct in any
material respect, in each case either as of when made or at any time
thereafter;
(i) the Merger Agreement shall have been terminated pursuant to its
terms or shall have been amended pursuant to its terms to provide for such
termination or amendment of the Offer; or
(j) the Board of Directors or any committee thereof of the Company shall
have modified or amended in any manner adverse to Parent or Purchaser or
shall have withdrawn its authorization, approval or recommendation of the
Offer, the Merger or the Merger Agreement, or shall have resolved to do any
of the foregoing or shall have failed to have reiterated its recommendation
within five business days of any written request by Parent or Purchaser
therefor;
which, in the good faith judgment of Parent or Purchaser, in any case, and
regardless of the circumstances (including any action or inaction by Parent or
Purchaser or any of their affiliates permitted by the Merger Agreement) giving
rise to any such condition, makes it inadvisable to proceed with the Offer or
with acceptance for payment or payment for Shares.
The foregoing conditions are for the sole benefit of Parent and Purchaser
and may be asserted regardless of the circumstances (including any action or
inaction by Parent or Purchaser or any of their affiliates permitted by the
Merger Agreement giving rise to any such condition) or waived by Parent or
Purchaser in whole or in part at any time or from time to time in its discretion
subject to the terms and conditions of the Merger Agreement; provided, however,
that the Minimum Condition may not be waived without the Company's consent. The
failure of Parent or Purchaser at any time to exercise any of the foregoing
rights shall not be deemed a waiver of any such right, and each such right shall
be deemed an
13
ongoing right which may be asserted at any time and from time to time. Any
determination by Parent or Purchaser concerning the events described above will
be final and binding on all parties.
Stockholder Option Agreements
TENDER OF SHARES. Pursuant to the terms of the Stockholder Option
Agreements, copies of which have been filed with the Commission as EXHIBITS 6,
7, AND 8 hereto, Robert H. Berglass, The Berglass Charitable Remainder Trust UDT
7/8/98 and The Berglass 1995 Irrevocable Trust UDT 6/27/95 (collectively, the
"Option Grantors") have agreed to validly tender and not to withdraw pursuant to
and in accordance with the terms of the Offer, not later than the fifth business
day after commencement of the Offer, the Option Grantors' Shares. The Option
Grantors together beneficially own 2,161,460 Shares, constituting approximately
31.4% of the outstanding Shares.
VOTING OF SHARES. At any meeting of the stockholders of the Company,
however called, or in connection with any written consent of stockholders of the
Company, the Option Grantors have agreed to vote (or cause to be voted) all the
Shares held of record or beneficially owned by the Option Grantors (and in the
case of Shares not held of record by the Option Grantors, subject to the Option
Grantors' voting direction) (i) in favor of the Merger, the execution and
delivery by the Company of the Merger Agreement, the Company Option Agreement
and approval of the terms of each and each of the other actions contemplated
under such agreements and any actions required in furtherance thereof and (ii)
against any proposal relating to an Acquisition Transaction and against any
action or agreement that would impede, frustrate, prevent or nullify the
Stockholder Option Agreements or result in a breach in respect of any covenant,
representation or warranty or any other obligation or agreement of the Company
under the Merger Agreement or the Company Option Agreement or which would result
in any of the conditions to the Offer set forth under "Certain Conditions to the
Offer" not being fulfilled.
OPTION. To induce Parent and Purchaser to enter into the Merger Agreement,
the Option Grantors have granted Purchaser options (the "Stockholder Options")
to purchase the Option Grantors' Shares at the Offer Price, subject to increase
as set forth below (the "Purchase Price"). The Stockholder Options may be
exercised, in whole but not in part, by written notice to the Option Grantor,
for a period of ten (10) business days (the "10 Day Period") following
termination of the Merger Agreement or termination of the Offer, whichever shall
first occur; provided that, prior to such termination, either (i) a Trigger
Event shall have occurred or (ii) (A) the Company shall have received a written
proposal from any person other than Parent, Purchaser or any affiliate of Parent
or Purchaser for an Acquisition Transaction, which proposal shall not have
expired or been withdrawn, (B) the Merger Agreement shall have been terminated
by Parent pursuant to the rights described under paragraphs (b), (d)(ii), (f) or
(g) of "The Merger Agreement--Termination" herein and (C) at the time of such
termination the Minimum Condition shall not have been satisfied. Notwithstanding
the foregoing, the Stockholder Options may not be exercised until: (i) all
waiting periods under the HSR Act, required for the purchase of the Option
Grantors' Shares upon such exercise shall have expired or been waived and any
other conditions under the other Antitrust Laws shall have been satisfied and
(ii) there shall not be in effect any preliminary injunction or other order
issued by any Governmental Entity prohibiting the exercise of the Stockholder
Options; provided that if (i) all HSR Act waiting periods shall not have expired
or been terminated or (ii) there shall be in effect any such injunction or
order, in each case on the expiration of the 10 Day Period, the 10 Day Period
shall be extended until five (5) business days after the later of (A) the date
of expiration or termination of all HSR Act waiting periods, and (B) the date of
removal or lifting of such injunction or order.
In the event the Option Grantors' Shares are acquired by Purchaser pursuant
to the exercise of the Stockholder Options (the "Acquired Securities") and,
either before or at any time within the one-year period following such
acquisition, Parent, Purchaser or any affiliate of Parent or Purchaser shall
acquire Common Stock (other than from the Company) at a price in excess of the
Purchase Price, then the Purchase Price shall be increased to such higher price.
If the purchase of the Acquired Securities has been completed at the time of
such increase, the Option Grantor will be entitled to receive, and Purchaser
will
14
promptly (and in no event more than 48 hours following such increase) pay to the
Option Grantor, by wire transfer of same day funds to such account as the Option
Grantor shall designate, the amount of the increase.
In the event the Option Grantors' Shares are acquired by Purchaser pursuant
to the exercise of the Stockholder Options, the Option Grantors will be entitled
to receive, and Purchaser will promptly (and in no event more than 48 hours
following such Sale) pay to the Option Grantor, upon any subsequent disposition,
transfer or sale to an unaffiliated third party ("Sale") of all or any portion
of the Acquired Securities within the one-year period following such
acquisition, an amount per share in cash equal to the excess, if any, of the net
proceeds received per share in the Sale over the Purchase Price. Any such
payment shall be made by wire transfer of same day funds to such account as the
Option Grantor shall designate.
RESTRICTIONS ON TRANSFER. Except as contemplated by the Stockholder Option
Agreements and the Merger Agreement, the Option Grantors shall not (i) offer to
transfer (which term includes, without limitation, any sale, tender, gift,
pledge (other than a pledge which does not impair such Option Grantor's ability
to perform under the Stockholder Option Agreements), assignment or other
disposition), transfer or consent to any transfer of, any or all of their Shares
or any interest therein, (ii) enter into any contract, option or other agreement
or understanding with respect to any transfer of any or all of their Shares or
any interest therein, (iii) grant any proxy, power-of-attorney or other
authorization or consent in or with respect to their Shares, (iv) deposit their
Shares into a voting trust or enter into a voting agreement or arrangement with
respect to their Shares or (v) take any other action that would in any way
restrict, limit or interfere with the performance of its obligations under the
Stockholder Option Agreements or the transactions contemplated thereby or by the
Merger Agreement or the Company Option Agreement (including, without limitation,
any action that would cause the Merger to be subject to Section 1101 of the
CGCL).
NO SOLICITATION. Each of the Option Grantors has agreed, in its capacity as
a stockholder of the Company, that neither the Option Grantor nor any
affiliates, representatives or agents shall (and, if the Option Grantor is a
corporation, partnership, trust or other entity, the Option Grantor shall cause
its officers, directors, partners, and employees, representatives and agents,
including, but not limited to, investment bankers, attorneys and accountants,
not to), directly or indirectly, encourage, solicit, participate in or initiate
discussions or negotiations with, or provide any information to, any
corporation, partnership, person or other entity or group (other than Parent,
Purchaser or any of their respective affiliates or representatives) concerning
any proposal relating to an Acquisition Transaction. The Option Grantors have
agreed to immediately cease any existing activities, discussions or negotiations
with any parties conducted heretofore with respect to any proposal relating to
an Acquisition Transaction. The Option Grantors have agreed to communicate to
Parent, to the same extent as required by the Company as described above, the
terms, and other information concerning, any proposal, discussion, negotiation
or inquiry and the identity of the party making such proposal or inquiry which
an Option Grantor may receive in respect of any such Acquisition Transaction.
Company Option Agreement
TOP-UP OPTION. Pursuant to the terms of the Company Option Agreement, a
copy of which has been filed with the Comission as EXHIBIT 9 hereto the Company
has granted to Purchaser an irrevocable option (the "Top-Up Option"),
exercisable if Purchaser acquires at least 85% of the then outstanding Shares
pursuant to the Offer, to purchase that number of Shares (the "Top-Up Option
Shares") equal to the lowest number of Shares that, when added to the number of
Shares owned by Purchaser at the time of such exercise, shall constitute one
share more than 90% of the Shares then outstanding (assuming issuance of the
Top-Up Option Shares) at a price equal to $5.25 per share (the "Option Price");
provided, however, that the Top-Up Option shall not be exercisable unless
immediately after such exercise Purchaser would own more than 90% of the Shares
then outstanding.
15
Purchaser may exercise the Top-Up Option, in whole but not in part, at any
one time after the occurrence of a Top-Up Exercise Event (as defined below) and
prior to the occurrence of a Top-Up Termination Event (as defined below).
A "Top-Up Exercise Event" will occur upon Purchaser's acceptance for payment
pursuant to the Offer of Shares constituting more than 85% but less than 90% of
the Shares then outstanding. A "Top-Up Termination Event" means (i) the
Effective Time, (ii) the date which is 10 business days after the occurrence of
the Top-Up Exercise Event (or such later date on which the closing of a purchase
of Shares pursuant to the Company Option Agreement may be consummated), or (iii)
the termination of the Merger Agreement.
Employment Agreements (July 1998)
In connection with entering into the Merger Agreement, the Company entered
into the July 1998 Agreements with Mr. Berglass and Mr. Johnson which become
effective upon the acquisition by Parent (or an affiliate of Parent) of a
majority of the Shares. Copies of the July 1998 Agreements have been filed with
the Commission as EXHIBITS 10 AND 11 hereto. Upon their effectiveness, the July
1998 Agreements will reduce the respective employment terms of Mr. Berglass and
Mr. Johnson to three (3) years and replace the March 23, 1998 Agreements in
their entirety. Under the July 1998 Agreements, Mr. Berglass will receive a Base
Salary of not less than $565,000 and Mr. Johnson will receive a Base Salary of
not less than $227,000, and both will receive incentive compensation pursuant to
the Henkel Corporation Management Incentive Plan ("MIP") and the Henkel
Corporation Long-Term Incentive Plan ("LTI"), provided, that such annual
incentive compensation shall not be less than $250,000 (or $100,000 in the case
of Mr. Johnson). In addition, Mr. Berglass and Mr. Johnson are entitled to other
benefits on a basis not less favorable than those which are currently provided
to them by the Company. In the event Mr. Berglass' or Mr. Johnson's employment
is terminated during the term of the applicable July 1998 Agreement for any
reason other than Good Cause, death, or permanent and total disability, or in
the event Mr. Berglass or Mr. Johnson terminates his employment for Good Reason,
such person will be entitled to receive the greater of: (i) a one time lump sum
equal to the Base Salary and guaranteed minimum incentive compensation for the
remainder of the three year initial term of the July 1998 Agreement and the
right to participate in all medical and dental, insurance and other benefits of
the Company until such time as he is eligible for Medicare benefits, or (ii)
severance and continuation benefits under the Henkel Corporation Severance Pay
Plan. Under his July 1998 Agreement Mr. Berglass may not engage in competitive
activities for a period of six months, subject to the Company's option to extend
for an additional six month period, after his employment terminates. Until the
effectiveness of the July 1998 Agreements, Mr. Berglass and Mr. Johnson will
continue to be employed pursuant to the terms of their respective March 1998
Agreements.
Confidentiality Agreement
Pursuant to an agreement dated as of November 3, 1997 (the "Confidentiality
Agreement") between the Company and Parent, the Company has supplied Parent with
certain non-public, confidential and proprietary information about the Company.
Parent has agreed in the Confidentiality Agreement that it, together with its
directors, officers, employees, agents and representatives, will keep
confidential all such information supplied by the Company and that it will not,
without the prior written consent of the Board of Directors of the Company,
until November 3, 1999, acquire or offer to acquire any securities or assets of
the Company or enter into or propose to enter into any business combination
involving the Company. In the Merger Agreement, the Company has represented and
warranted that the making of any offer and proposal and the taking of any other
action by Parent or Purchaser in connection with the Merger Agreement, the
Company Option Agreement and the Stockholder Option Agreements and the
transactions contemplated hereby and thereby have been consented to by the Board
of Directors of the Company in accordance with the terms and provisions of the
Confidentiality Agreement.
16
ITEM 4. THE SOLICITATION OR RECOMMENDATION
(a) Recommendation. At a meeting of the Company's Board of Directors held on
July 13, 1998, the Board, by unanimous vote, (i) determined that the Offer and
the Merger were fair to, and in the best interests of, the Company and its
stockholders, (ii) approved the Merger Agreement, the Offer and the Merger and
(iii) recommended that the holders of Shares accept the Offer and approve the
Merger Agreement. A letter to the Company's stockholders from the Company's
Chairman of the Board and President, dated July 20, 1998, which includes the
Board's recommendation to the Company's stockholders, is attached AS EXHIBIT 12
hereto and is incorporated herein by reference.
(b) Background; Reasons for the Board's Recommendation.
BACKGROUND. Since the middle of 1995, as a result of the Company's highly
leveraged capital structure and its relatively small size in a consolidating
industry with a number of larger and better capitalized competitors, the Company
has been exploring a variety of potential strategic alternatives in order to
address such factors, including raising capital by issuing additional equity
securities of the Company, selling one or more of the Company's product lines
and selling the Company. Accordingly, pursuant to an engagement letter entered
into in June 1995 the Company retained Donaldson, Lufkin & Jenrette Securities
Corporation ("DLJ"), an investment banking firm, to evaluate and advise the
Company regarding these alternatives. In connection with such engagement, DLJ
prepared an offering memorandum regarding the Company and made preliminary
contacts with potential strategic and financial investors.
Between June 1995 and April 1996, the Company pursued contacts with a number
of such potential partners. During this period, the Company signed
confidentiality agreements with approximately 60 entities and permitted
approximately 25 entities to conduct a preliminary due diligence review of the
Company. Although the Company engaged in substantive discussions with several of
these potential transaction partners, no transaction was agreed upon.
In April 1996, the Company filed for protection under the federal bankruptcy
laws, and subsequent thereto continued to discuss and meet with potential
strategic and financial partners. Upon the effectiveness of its Second Amended
Plan of Reorganization, the Company emerged from bankrupty in November 1996 and
thereafter continued from time to time to engage in preliminary discussions
regarding possible transactions with prospective strategic and financial
partners. In November 1997, the Company commenced discussions with Parent
regarding the possible acquisition of the Company by Parent. The Company
executed a confidentiality agreement with Parent and provided Parent with
certain financial, corporate and other information concerning the Company.
Executives of the Company met several times with representatives of Parent, but
no firm proposal was made. In December 1997, Parent informed the Company that
for internal reasons it had decided not to pursue a transaction with the Company
at that time.
In early January 1998, the Company approached one of its debt holders about
a possible equity investment in the Company by such debt holder and the
concurrent retirement of portions of the Company's debt. Company executives
initiated discussions with such holder and in early March 1998, received an
offer to purchase 40% of the Company's equity at $3.00 per share (the "March
1998 Offer"). After a review of the terms of such proposal at a regular meeting
of the Board on March 23, 1998, the Board determined that it would be in the
best interests of the Company to retain the services of Houlihan Lokey Howard &
Zukin ("Houlihan Lokey") to evaluate such offer and to consider other strategic
alternatives of the Company.
The Company was unable to reach a definitive agreement regarding the March
1998 Offer, but with the advice and assistance of Houlihan Lokey, executives of
the Company continued to pursue discussions with other entities regarding
potential equity investments or debt restructurings. These discussions continued
through May 1998, but no transaction resulted from such discussions.
17
In early May 1998, Robert Berglass, the Company's Chairman and President,
contacted Parent regarding a possible transaction between the Company and
Parent. A representative of Parent visited the Company's offices on May 7, 1998
and met with Company executives. At such meeting, Mr. Berglass proposed an
equity investment in the Company by Parent of approximately 20% of the
outstanding equity. Parent's representative indicated that Parent was interested
in pursuing a transaction with the Company, but that Parent generally preferred
a purchase of all of the Company's outstanding stock.
From June 4 through June 6, 1998, discussions between the Company and Parent
continued in Los Angeles, with representatives from their respective advisors,
Houlihan Lokey and Rhone Group LLC, in attendance. At these meetings, the
framework of a potential transaction involving the acquisition of the Company by
Parent was outlined. Parent indicated that any transaction would need to include
the grant of an option to Parent to purchase stock owned by Mr. Berglass and
certain family trusts of Mr. Berglass in the event the transaction was not
consummated in certain circumstances. Both parties expressed a willingness to
continue negotiations in the hope of reaching agreement. During the week of June
9, 1998, the Company's management held informal telephonic discussions with its
outside directors regarding the recent developments in the discussions with
Parent.
On June 15, a meeting of the Board of Directors of the Company was held, at
which time Mr. Berglass advised the Board of the possibility of a transaction
with Parent. After a discussion, including advice from Houlihan Lokey, the Board
unanimously determined that negotiations with respect to such a transaction
should continue. From June 17 through June 19, 1998, Parent undertook a due
diligence investigation of the Company and also commenced preparation of
documentation with respect to the transaction. Parent thereafter delivered
initial drafts of the definitive documents to the Company.
On June 30 and July 1, 1998, Mr. Berglass met with executives of Parent in
Germany to continue negotiations regarding the terms of the transaction. At
these meetings, Parent reiterated its insistence that the transaction include an
option to purchase the stock owned by Berglass and certain Burglass family
trusts if the proposed Merger Agreement were terminated.
On July 2, 1998, the Board of Directors of the Company held another
telephonic Board meeting. At the meeting, the Board, together with the Company's
outside legal counsel and a representative from Houlihan Lokey, reviewed the
terms and conditions of the Offer and the Merger as set forth in drafts of the
Merger Agreement, the Stockholder Option Agreements and related documents. The
Board heard presentations by its outside legal counsel with respect to the terms
of the proposed transaction and the Board's fiduciary obligations under Delaware
law. The Board also heard a presentation by the representative of Houlihan Lokey
with respect to the financial terms of the proposed Offer and Merger. The Board,
by unanimous vote, authorized Mr. Berglass to continue negotiations on the
transaction documents.
From July 3 through July 12, 1998, negotiations and document preparation
continued. On July 10, 1998, the Board held a meeting to discuss the status of
the negotiations. At this meeting, the Company's outside counsel and special
Delaware counsel advised the Board regarding its fiduciary duties under
applicable law and a representative of Houlihan Lokey delivered its oral opinion
to the Board that the consideration to be received by the public stockholders of
the Company in connection with the Offer and the Merger was fair to such holders
from a financial point of view. Based upon such presentations, the Board
unanimously voted to authorize Mr. Berglass to finalize the documentation for
the transaction. The transaction documents were finalized on July 12 following a
conference call among the Company, Parent and their respective counsel and
financial advisors.
On July 13, 1998, the Board held a telephonic meeting to discuss the results
of the July 12 negotiations and to approve the final documents. The Board
received Houlihan Lokey's written opinion that the consideration to be received
by the public stockholders of the Company in connection with the Offer and the
Merger is fair to such holders from a financial point of view. Based on such
opinion and on the presentations delivered to it at the July 2 and July 10
meetings, the Board unanimously approved the Offer
18
and the Merger. The transaction was publicly announced on the morning of July
14, 1998 and on July 20, 1998, Parent commenced the Offer.
REASONS FOR THE BOARD'S RECOMMENDATION.
REASONS FOR THE BOARD'S CONCLUSIONS. In reaching the determination
described in paragraph (a) above, the Board considered a number of factors,
including, without limitation, the following:
(i) The financial condition, results of operations, business and
strategic objectives of the Company, as well as the risks involved in
achieving those objectives;
(ii) The highly-leveraged capital structure of the Company, the
significant competition in and consolidation of the industry in which the
Company operates, the relative size of the other participants in the
industry and the available capital and resources of such other participants
as compared to the available capital and resources of the Company;
(iii) A review of the possible alternatives to the Offer and the Merger
including the possibilities of continuing to operate the Company as an
independent entity, a sale or partial sale of the Company through a merger
or by other means, various financing alternatives involving the possible
sale of the Company's equity; and, in respect of each alternative, the range
of possible benefits to the Company's stockholders of such alternative and
the timing and the likelihood of actually accomplishing such alternative;
(iv) The advice of Houlihan Lokey, regarding the likelihood of other
potential offers for the Company on terms more favorable to the stockholders
of the Company than the Offer and the results of its efforts on behalf of
the Company seeking indications of interest in other possible alternatives;
(v) The financial and valuation analyses presented orally to the Board
by Houlihan Lokey, including market prices and financial data relating to
other companies engaged in businesses considered comparable to the Company
and the prices and premiums paid in recent selected acquisitions of
companies engaged in businesses considered comparable to those of the
Company;
(vi) The relationship of the Offer price to historical market prices of
the Shares and to the Company's book value and liquidation value per Share;
(vii) The written opinion of Houlihan Lokey that, based on certain
assumptions and subject to certain limitations, the consideration to be
received by the Company's public stockholders in the Offer and Merger is
fair to such holders from a financial point of view. A copy of the written
opinion of Houlihan Lokey, which set forth the assumptions made, matters
considered and basis of its review, is filed as EXHIBIT 13 hereto and
incorporated herein by reference;
(viii) The financial and other terms and conditions of the Offer, the
Merger and the Merger Agreement, including, without limitation, that the
terms of the Merger Agreement will not prevent other third parties from
making certain bona fide proposals subsequent to execution of the Merger
Agreement, will not prevent the Company's Board from determining, in the
exercise of its fiduciary duties in accordance with the Merger Agreement, to
provide information to and engage in negotiations with such third parties,
and will permit the Company, subject to the non-solicitation provisions and
the payment of the termination fee discussed above, to enter into a
transaction with a third party that would be more favorable to the Company's
stockholders than the Offer and the Merger;
(ix) The structure of the transaction, which is designed, among other
things, to result in the holders of Shares receiving, at the earliest
practicable time, the consideration to be paid in the Offer and the fact
that the consideration to be paid in the Offer and the Merger is the same;
19
(x) The fact that Parent required that the Option Grantors enter the
Stockholder Option Agreements before it would consummate the transaction and
its belief, notwithstanding such fact, that the Company would continue to be
able to consider bona fide proposals from third parties;
(xi) The likelihood that the proposed acquisition would be consummated,
including the experience, reputation and financial condition of Parent and
the risks to the Company if the acquisition were not consummated;
(xii) The fact that the Offer and the Merger are not subject to a
condition that Parent have available financing; and
(xiii) The availability of dissenters' rights in the Merger under
applicable law.
In view of the wide variety of factors considered in connection with its
evaluation of the Offer and the Merger, the Board did not find it practicable
to, and did not, quantify or otherwise attempt to assign relative weights to the
specific factors considered in reaching its respective determinations.
ITEM 5. PERSONS RETAINED, EMPLOYED OR TO BE COMPENSATED.
Pursuant to an engagement letter dated March 26, 1998, between the Company
and Houlihan Lokey, subsequently amended as of June 8, 1998 (such engagement
letter as so amended, the "Houlihan Engagement Letter"), the Company retained
Houlihan Lokey as a financial advisor. The original engagement as of March 26,
1998 is referred to herein as the "Original Engagement" and the subsequent
amendment to the terms of such engagement as of June 8, 1998 is referred to
herein as the "Amended Engagement." Pursuant to the Original Engagement,
Houlihan Lokey was retained by the Company (i) to assist it, in connection with
a potential issuance of equity and/or debt securities and/or (ii) to act as the
Company's advisor in connection with consideration and, if desired, negotiation
of the terms of the March 1998 Offer and to render an opinion as to the fairness
of such transaction if so requested. Pursuant to the Amended Engagement,
Houlihan Lokey was also retained to advise the Company in connection with a
potential transaction with Parent. In that regard, Houlihan Lokey was employed
to assist the Company in negotiating and structuring the proposed transaction
and to provide an opinion to the Company's Board of Directors with respect to
the fairness of the proposed transaction from a financial point of view.
Pursuant to the Houlihan Engagement Letter, as amended, the Company has agreed
to pay to Houlihan Lokey, if a transaction with Parent is consummated, a
transaction fee of one and one-eighth percent (1 1/8%) of the total transaction
value with respect to such transaction. The transaction fee payable to Houlihan
Lokey, assuming consummation of the Offer and the Merger on the terms described
herein, is estimated to be approximately $1.0 million. In addition, the Company
has agreed (i) to reimburse Houlihan Lokey for out-of-pocket expenses (including
the reasonable fees and expenses of counsel) incurred in performing its services
under the Houlihan Engagement Letter and (ii) to indemnify Houlihan Lokey and
certain related persons against certain liabilities related to, or arising out
of, Houlihan Lokey's engagement under the Houlihan Engagement Letter.
Except as disclosed herein, neither the Company nor any person acting on its
behalf currently intends to employ, retain or compensate any other person to
make solicitations or recommendations to security holders on its behalf
concerning the Offer or the Merger.
ITEM 6. RECENT TRANSACTIONS AND INTENT WITH RESPECT TO SECURITIES.
(a) Except for the transfer of 761,905 shares by Mr. Berglass to The
Berglass Charitable Remainder Trust UDT 7/8/98 in July 1998, no transactions in
the Shares have been effected during the past 60 days by the Company or, to the
best of the Company's knowledge, by any executive officer, director, affiliate
or subsidiary of the Company.
20
(b) To the best knowledge of the Company, all of its executive officers,
directors, affiliates and subsidiaries currently intend to tender, pursuant to
the Offer, all Shares held of record or beneficially owned by them.
ITEM 7. CERTAIN NEGOTIATIONS AND TRANSACTIONS BY THE SUBJECT COMPANY.
(a) Except as set forth in this Schedule 14D-9, the Company is not engaged
in any negotiation in response to the Offer which relates to or would result in
(i) an extraordinary transaction, such as a merger or reorganization, involving
the Company or any subsidiary of the Company; (ii) a purchase, sale or transfer
of a material amount of assets by the Company or any subsidiary of the Company;
(iii) a tender offer for or other acquisition of securities by or of the
Company; or (iv) any material change in the present capitalization or dividend
policy of the Company.
(b) Except as described in Item 3(b) and Item 4 above (the provisions of
which are hereby incorporated by reference), there are no transactions, board
resolutions, agreements in principle or signed contracts in response to the
Offer which relate to or would result in one or more of the matters referred to
in paragraph (a) of this Item 7.
ITEM 8. ADDITIONAL INFORMATION TO BE FURNISHED.
None.
ITEM 9. MATERIAL TO BE FILED AS EXHIBITS.
Exhibit 1 Agreement and Plan of Merger dated as of July 13, by and among the Company,
Parent and Purchaser.
Exhibit 2 Joint Press Release, issued by the Company and Parent on July 14, 1998.
Exhibit 3 The Company's Proxy Statement on Schedule 14A filed on October 29, 1997.
Exhibit 4 Employment Agreement dated as of March 23, 1998 between the Company and Robert
Berglass.
Exhibit 5 Employment Agreement dated as of March 23, 1998 between the Company and Grant
Johnson.
Exhibit 6 Stockholder Option Agreement, dated as of July 13, 1998, between Purchaser,
Parent and Robert Berglass.
Exhibit 7 Stockholder Option Agreement, dated as of July 13, 1998, between Purchaser,
Parent and Robert Berglass, as Trustee of the Berglass Charitable Remainder
Trust.
Exhibit 8 Stockholder Option Agreement, dated as of July 13, 1998, between Purchaser,
Parent and Judith Berglass, Trustee of the Berglass 1995 Irrevocable Trust.
Exhibit 9 Stock Option Agreement between Parent, Purchaser and the Company dated July 13,
1998.
Exhibit Employment Agreement dated as of July 8, 1998 between the Company and Robert
10 Berglass.
Exhibit Employment Agreement dated as of July 8, 1998 between the Company and Grant
11 Johnson.
Exhibit Letter to Stockholders of the Company dated July 20, 1998.*
12
Exhibit Opinion of Houlihan Lokey Howard & Zukin dated July 13, 1998.*
13
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* Included in copies of the Schedule 14D-9 mailed to stockholders.
21
SIGNATURE
After reasonable inquiry and to the best of my knowledge and belief, I
certify that the information set forth in this statement is true, complete and
correct.
DEP CORPORATION
By: /s/ ROBERT BERGLASS
-----------------------------------------
Name: ROBERT BERGLASS
Title: CHAIRMAN AND PRESIDENT
DATED: July 20, 1998