UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 14A
Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934
Filed by the Registrant |X|
Filed by a Party other than the Registrant |_|
Check the appropriate box:
|X| Preliminary Proxy Statement
|_| CONFIDENTIAL, FOR USE OF THE COMMISSION ONLY (AS PERMITTED BY
RULE 14A-6(E)(2))
|_| Definitive Proxy Statement
|_| Definitive Additional Materials
|_| Soliciting Material Pursuant to ss.240.14a-12
THOMAS INDUSTRIES INC.
-------------------------------------------
(Name of Registrant as Specified In Its Charter)
N/A
-------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
|_| No fee required.
|X| Fee computed on table below per Exchange Act Rules 14a-6(i)(1)
and 0-11.
(1) Title of each class of securities to which
transaction applies:
Common Stock, $1.00 par value per share, of Thomas
Industries Inc.
(2) Aggregate number of securities to which transaction
applies:
19,001,090 shares of Thomas Common Stock, consisting
of 17,853,675 outstanding shares of Thomas Common
Stock, 1,092,719 shares of Thomas Common Stock
underlying stock options and stock appreciation
rights that have an exercise price per share less
than $40.00 that may be cashed out in connection with
the Merger and 54,696 shares of Thomas Common Stock
with respect to performance shares awarded (in each
case as of April 28, 2005).
(3) Per unit price or other underlying value of
transaction computed pursuant to Exchange Act Rule
0-11 (set forth the amount on which the filing fee is
calculated and state how it was determined):
The filing fee of $86,419 was calculated pursuant to Exchange Act
Rule 0-11(c) and is equal to $117.70 per million of the aggregate
merger consideration of $734,224,390. The aggregate merger
consideration is calculated as the sum of (a) the product of
17,853,675 outstanding shares of Thomas Common Stock and the
merger consideration of $40.00 per share in cash, (b) the
difference between $40.00 and the exercise or target price per
share for each of the 1,092,719 options and stock appreciation
rights outstanding to purchase shares of Thomas Common Stock that
have an exercise or target price of less than $40.00 per share
and (c) the product of 54,696 shares of Thomas Common Stock with
respect to performance shares awarded and the merger
consideration of $40.00 per share in cash.
(4) Proposed maximum aggregate value of transaction:
$734,224,390
(5) Total fee paid:
$86,419
|_| Fee paid previously with preliminary materials.
|_| Check box if any part of the fee is offset as provided by
Exchange Act Rule 0-11(a)(2) and identify the filing for which
the offsetting fee was paid previously. Identify the previous
filing by registration statement number, or the Form or
Schedule and the date of its filing.
(1) Amount Previously Paid:
(2) Form, Schedule or Registration Statement No.:
(3) Filing Party:
(4) Date Filed:
PRELIMINARY PROXY MATERIALS
---------------------
THOMAS INDUSTRIES INC.
4360 BROWNSBORO ROAD
SUITE 300
LOUISVILLE, KENTUCKY 40207
(502) 893-4600
---------------------
[__________], 2005
To the Shareholders:
You are cordially invited to attend the Special Meeting of Shareholders of
Thomas Industries Inc., a Delaware corporation ("Thomas" or the "Corporation"),
to be held at the Hyatt Regency Hotel, 320 West Jefferson Street, Louisville,
Kentucky, on [Day], [Date], 2005, at [Time].
At the Special Meeting you will be asked to vote upon a proposal to approve
and adopt an Agreement and Plan of Merger, dated March 8, 2005 (the "Merger
Agreement"), pursuant to which Gardner Denver, Inc., a Delaware corporation, has
agreed to acquire Thomas. If Thomas shareholders approve and adopt the Merger
Agreement and the merger is completed, and subject to your right to seek
appraisal rights, each of your shares of Thomas common stock will be
automatically canceled and converted into the right to receive $40.00 in cash
without interest.
THOMAS' BOARD OF DIRECTORS HAS UNANIMOUSLY DETERMINED THAT THE MERGER
AGREEMENT IS ADVISABLE AND APPROVED THE MERGER AGREEMENT AND RECOMMENDS THAT
THOMAS SHAREHOLDERS VOTE "FOR" APPROVAL AND ADOPTION OF THE MERGER AGREEMENT.
The accompanying proxy statement provides you with detailed information
about the proposed merger and the Special Meeting. Please give this material
your careful attention. You may also obtain more information about Thomas from
documents it has filed with the Securities and Exchange Commission.
Expenses incurred in the solicitation of proxies will be borne by the
Corporation. Officers of the Corporation may make additional solicitations in
person or by telephone. In addition, the Corporation has retained Georgeson
Shareholder Communications Inc., to assist in the solicitation of proxies for a
fee of $8,500, plus reimbursement of reasonable out-of-pocket expenses incurred
in connection with the solicitation.
As of [_______], 2005, the Corporation had outstanding [_________] shares
of common stock. These shares are the only shares entitled to vote at the
Special Meeting. Each share is entitled to one vote on each matter to be voted
upon at the Special Meeting.
Thomas common stock is listed on the New York Stock Exchange under the
trading symbol "TII". On the close of trading on [________], 2005, the price of
Thomas common stock was $[____] per share.
YOUR VOTE IS IMPORTANT REGARDLESS OF THE NUMBER OF SHARES OF THOMAS COMMON
STOCK YOU OWN. BECAUSE APPROVAL AND ADOPTION OF THE MERGER AGREEMENT REQUIRES
THE AFFIRMATIVE VOTE BY THE HOLDERS OF A MAJORITY OF THOMAS' ISSUED AND
OUTSTANDING SHARES OF COMMON STOCK AS OF THE RECORD DATE, A FAILURE TO VOTE WILL
COUNT AS A VOTE AGAINST THE MERGER. ACCORDINGLY, YOU ARE REQUESTED TO PROMPTLY
VOTE YOUR SHARES BY COMPLETING, SIGNING AND DATING THE ENCLOSED PROXY CARD AND
RETURNING IT IN THE ENVELOPE PROVIDED, WHETHER OR NOT YOU PLAN TO ATTEND THE
SPECIAL MEETING. Voting in this manner will not prevent you from voting your
shares in person if you subsequently choose to attend the Special Meeting. If
you submit a proxy, you may revoke it at any time before the vote is taken at
the Special Meeting. To revoke your proxy, you must either provide a written
notice of revocation to the Secretary of Thomas, deliver a proxy dated after the
date of the proxy you wish to revoke, or attend the meeting and vote your shares
in person. Merely attending the Special Meeting will not constitute revocation
of your proxy.
Thank you for your cooperation.
Sincerely,
Timothy C. Brown
Chairman, President and Chief Executive Officer
PRELIMINARY PROXY MATERIALS
THIS PROXY STATEMENT IS DATED [______], 2005 AND IS
FIRST BEING MAILED TO SHAREHOLDERS ON OR ABOUT [_______], 2005
------------------------------------------
------------------------------------------
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
TO BE HELD ON [DAY], [DATE], 2005
To the Shareholders of THOMAS INDUSTRIES INC.:
NOTICE IS HEREBY GIVEN that a Special Meeting of Shareholders of Thomas
Industries Inc., a Delaware corporation ("Thomas" or the "Corporation"), will be
held at the Hyatt Regency Hotel, 320 West Jefferson Street, Louisville,
Kentucky, on [Day], [Date], 2005, at [Time], for the following purposes:
1. To vote upon a proposal to approve and adopt the Agreement and Plan of
Merger, dated March 8, 2005 (the "Merger Agreement"), among Thomas, Gardner
Denver, Inc., a Delaware corporation ("Gardner Denver"), and PT Acquisition
Corporation, a Delaware corporation and a wholly-owned subsidiary of
Gardner Denver ("PT Acquisition"). A copy of the Merger Agreement is
attached as Appendix A to the accompanying proxy statement. Pursuant to the
terms of the Merger Agreement, PT Acquisition will merge with and into
Thomas (the "Merger"). In the Merger, Thomas will be the surviving
corporation (sometimes referred to herein as the "Surviving Corporation")
and become a wholly-owned subsidiary of Gardner Denver, and each share of
common stock of Thomas, other than those shares held by any shareholders
who properly exercise their appraisal rights under Delaware law, will be
converted into the right to receive $40.00 in cash without interest.
2. To consider and transact such other business as may properly come before
the Special Meeting or any adjournment thereof.
Only shareholders of record at the close of business on [RECORD DATE], 2005
are entitled to vote at the Special Meeting and at any adjournment or
postponement of the Special Meeting. All shareholders of record at such time are
cordially invited to attend the Special Meeting in person. However, to assure
your representation at the meeting in case you cannot attend, you are urged to
vote your shares by completing, signing, dating and returning the enclosed proxy
card as promptly as possible in the postage prepaid envelope enclosed for that
purpose. If you attend the Special Meeting, you may vote in person even if you
have previously completed and returned a proxy card.
Thomas shareholders have the right to dissent from the Merger and obtain
payment in cash of the fair value of their shares of common stock under
applicable provisions of Delaware law. In order to perfect and exercise
appraisal rights, shareholders must give a written demand for appraisal of their
shares before the vote on the Merger is taken at the Special Meeting and must
not vote in favor of the Merger. A copy of the applicable Delaware statutory
provisions is included as Appendix B to the accompanying proxy statement, and a
summary of these provisions can be found under "The Merger--Appraisal Rights" in
the accompanying proxy statement.
A majority of the outstanding shares entitled to vote at the Special
Meeting and represented in person or by proxy will constitute a quorum. The
approval and adoption of the Merger Agreement requires the affirmative vote by
the holders of a majority of the issued and outstanding shares of Thomas common
stock as of the record date. In the event that there are not sufficient votes to
approve the proposed Merger at the time of the Special Meeting, the Special
Meeting may be adjourned or postponed in order to permit further solicitation by
Thomas. YOUR VOTE IS IMPORTANT. WHETHER OR NOT YOU PLAN TO ATTEND THE SPECIAL
MEETING IN PERSON AND REGARDLESS OF THE NUMBER OF SHARES YOU OWN, PLEASE
COMPLETE, SIGN, DATE AND RETURN THE ENCLOSED PROXY CARD PROMPTLY IN THE ENCLOSED
PRE-ADDRESSED ENVELOPE. NO POSTAGE IS REQUIRED IF MAILED IN THE UNITED STATES.
YOU MAY, OF COURSE, ATTEND THE SPECIAL MEETING, REVOKE YOUR PROXY AND VOTE IN
PERSON EVEN IF YOU HAVE ALREADY RETURNED YOUR PROXY CARD.
Please do not send your stock certificates at this time. If the Merger
Agreement is approved and adopted, you will be sent instructions regarding the
surrender of your stock certificates.
BY ORDER OF THE BOARD OF DIRECTORS,
Sincerely,
Timothy C. Brown
Chairman, President and Chief Executive Officer
Louisville, Kentucky
[_________], 2005
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED THE TRANSACTION CONTEMPLATED IN THIS
PROXY STATEMENT, PASSED UPON THE MERITS OR FAIRNESS OF THIS TRANSACTION, OR
PASSED UPON THE ADEQUACY OR ACCURACY OF THE DISCLOSURE IN THIS PROXY STATEMENT.
ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR MAKE ANY REPRESENTATION
OTHER THAN THOSE CONTAINED IN THIS PROXY STATEMENT, AND, IF GIVEN OR MADE, SUCH
INFORMATION OR REPRESENTATION MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED.
THIS PROXY STATEMENT DOES NOT CONSTITUTE A SOLICITATION OF A PROXY IN ANY
JURISDICTION FROM ANY PERSON TO WHOM IT IS UNLAWFUL TO MAKE A PROXY SOLICITATION
IN SUCH JURISDICTION.
WE URGE YOU TO READ AND CONSIDER CAREFULLY THIS PROXY STATEMENT IN ITS ENTIRETY.
TABLE OF CONTENTS
SUMMARY TERM SHEET.............................................................1
QUESTIONS AND ANSWERS ABOUT THE MERGER.........................................4
SUMMARY........................................................................7
The Parties...........................................................7
The Proposed Acquisition..............................................7
Thomas Stock Price....................................................8
Thomas Stock Options, Stock Appreciation Rights ("SARs"),
Performance Shares and Directors Deferred Shares.....................8
Other Thomas Employee Benefit Plans...................................9
Board Recommendation..................................................9
Thomas' Considerations Relating to the Merger.........................9
The Special Meeting..................................................10
Opinion of Thomas' Financial Advisor.................................11
Interests of Directors and Executive Officers in the Merger
that Differ from Your Interests.....................................11
Material United States Federal Income Tax Consequences...............11
Regulatory Filings and Approvals.....................................11
Appraisal Rights.....................................................12
Financing of the Merger..............................................12
When the Merger will be Completed....................................12
Conditions to Completing the Merger..................................12
Failure to Approve and Complete the Merger...........................13
Termination of the Merger Agreement..................................14
Termination Fees and Expenses........................................14
Accounting Treatment.................................................14
Procedure for Receiving Merger Consideration.........................14
Shares Held by Directors and Executive Officers......................14
Exchange Procedures..................................................15
Questions............................................................15
CAUTIONARY STATEMENT CONCERNING FORWARD-LOOKING INFORMATION...................16
THE PARTIES TO THE MERGER.....................................................16
Thomas ............................................................16
Gardner Denver.......................................................17
PT Acquisition.......................................................17
THE SPECIAL MEETING OF THOMAS SHAREHOLDERS....................................17
Time, Place and Purpose of the Special Meeting.......................17
Who Can Vote at the Special Meeting..................................18
Vote Required for Approval of Merger.................................18
Voting By Proxy......................................................18
How to Vote..........................................................19
Proxy Solicitation...................................................19
THE MERGER....................................................................20
-i-
General Description of the Merger....................................20
Background of the Merger.............................................20
Thomas' Considerations Relating to the Merger........................24
Recommendation of Thomas' Board of Directors.........................27
Failure to Approve and Complete the Merger...........................27
Opinion of Thomas' Financial Advisor.................................28
Interests of Thomas' Directors and Officers in the Merger............37
Thomas Employees and Employee Benefit Plans..........................41
Financing of the Merger..............................................41
Completion and Effectiveness of the Merger...........................41
Material United States Federal Income Tax Consequences...............41
Accounting Treatment of the Merger...................................42
Regulatory Filings and Approvals.....................................43
Appraisal Rights.....................................................44
Delisting and Deregistration of Thomas Stock after the Merger........47
THE MERGER AGREEMENT..........................................................48
Structure of Merger..................................................48
Effective Time of the Merger.........................................48
Consideration to Be Received in Merger...............................48
Conditions to Consummation of the Merger.............................48
Representations and Warranties of Thomas.............................50
Representations and Warranties of Gardner Denver and
PT Acquisition......................................................51
Material Adverse Effect..............................................52
Conduct of Business Pending the Merger...............................52
No Solicitation......................................................55
Best Efforts.........................................................56
Termination of Merger Agreement......................................56
Termination Fees and Expenses........................................57
Amendment, Extension and Waiver......................................58
Thomas Certificate of Incorporation..................................59
Thomas Bylaws........................................................59
Thomas Board of Directors and Officers...............................59
RECENT MARKET PRICES OF, AND DIVIDENDS ON, THOMAS COMMON STOCK................59
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT................60
OTHER MATTERS.................................................................62
WHERE YOU CAN FIND MORE INFORMATION...........................................63
HOUSEHOLDING..................................................................63
APPENDIX A: AGREEMENT AND PLAN OF MERGER....................................A-1
APPENDIX B: DELAWARE GENERAL CORPORATION LAW SECTION 262....................B-1
APPENDIX C: OPINION OF ROBERT W. BAIRD & CO. INCORPORATED...................C-1
-ii-
SUMMARY TERM SHEET
This summary highlights selected information from this proxy statement and
may not contain all of the information that is important to you. To understand
the Merger and the related transactions, you should read carefully this entire
proxy statement and the documents we refer to herein. See "Where You Can Find
More Information." The Merger Agreement is attached as Appendix A to this proxy
statement. Thomas encourages you to read the Merger Agreement as it is the legal
document that governs the Merger. Thomas has included section and page
references to direct you to a more complete description of the topics described
in this summary. All references to "we", "us" and "our" in this proxy statement
refer to Thomas Industries Inc.
o The Merger. Thomas Industries Inc., a Delaware corporation ("Thomas" or the
"Corporation"), has entered into an Agreement and Plan of Merger dated
March 8, 2005 (the "Merger Agreement"), among Thomas, Gardner Denver, Inc.,
a Delaware corporation ("Gardner Denver"), and PT Acquisition Corporation,
a Delaware corporation and a wholly-owned subsidiary of Gardner Denver ("PT
Acquisition"). Pursuant to the terms of the Merger Agreement, PT
Acquisition will merge with and into Thomas (the "Merger"). In the Merger,
Thomas will be the surviving corporation (sometimes referred to herein as
the "Surviving Corporation") and become a wholly-owned subsidiary of
Gardner Denver. Please read the discussion under the heading "The Merger
Agreement" beginning on page 48.
o The Companies. Thomas is primarily engaged in the design, manufacture,
marketing and sale of pumps and compressors for the original equipment
manufacturer ("OEM") market in such applications as medical equipment,
gasoline vapor and refrigerant recovery, automotive and transportation
applications, foundry applications, printing, packaging, business equipment
and laboratory equipment. Thomas conducts its business from its corporate
office located in Louisville, Kentucky and through its worldwide
operations. Thomas' pump and compressor group headquarters are as follows:
North American Group - Sheboygan, Wisconsin; European Group - Puchheim,
Germany; and Asia Pacific Group - Hong Kong, China. Gardner Denver, a
Delaware corporation, is a leading designer, manufacturer and marketer of
highly engineered air compressors, reciprocating pumps, blowers and certain
fluid transfer products. Please read the discussions under the headings
"Summary--The Parties" and "The Parties to the Merger" beginning on pages 7
and 16, respectively.
o Merger Consideration. If the Merger is completed, each share of Thomas
common stock, other than those shares held by any shareholders who properly
exercise their appraisal rights under Delaware law, will be converted into
the right to receive $40.00 in cash without interest. Please read the
discussion under the heading "The Merger Agreement--Consideration to Be
Received in Merger" beginning on page 48.
o Special Meeting and Record Date. The Special Meeting of Thomas shareholders
will be held at the Hyatt Regency Hotel, 320 West Jefferson Street,
Louisville, Kentucky, on [Day], [Date], 2005, at [Time], to vote on the
proposal to adopt and approve the Merger Agreement. Only Thomas
shareholders of record on [Record Date] are entitled to receive notice of
and vote at the Special Meeting. On the record date, there were [_______]
shares of Thomas common stock outstanding which were held by approximately
[_____] record holders. Please read the discussions under the headings "The
Special Meeting of Thomas Shareholders--Time, Place and Purpose of the
Special Meeting" and "The Special Meeting of Thomas Shareholders--Who Can
Vote at the Special Meeting" beginning on page 17 and 18, respectively.
-1-
o Vote Required. Each share of Thomas common stock held by shareholders of
record on the record date will be entitled to vote. Each share of Thomas
common stock is entitled to one vote. The approval and adoption of the
Merger Agreement requires the affirmative vote by the holders of a majority
of the shares of Thomas common stock issued and outstanding on the record
date. Thomas shareholders should vote by completing, signing and dating
their proxy card and sending it to Thomas (which vote may be revoked at any
time before the Special Meeting of shareholders). Please see the
discussions under the headings "The Special Meeting of Thomas
Shareholders--Vote Required for Approval of Merger" and "The Special
Meeting of Thomas Shareholders--Voting by Proxy" each beginning on page 18.
o Recommendation of Thomas Board of Directors. Thomas' board of directors,
after considering many factors, unanimously recommends that Thomas
shareholders vote "FOR" approval and adoption of the Merger Agreement.
Please see the discussion under the heading "The Merger--Recommendation of
Thomas' Board of Directors" beginning on page 27.
o Financing of the Merger. The consummation of the Merger is not contingent
upon Gardner Denver obtaining financing. Gardner Denver plans to finance
the Merger from (i) the proceeds of a $200.6 million offering of five
million shares of its common stock, (ii) a $125 million offering of its
senior subordinated notes due 2013, (iii) an additional $230 million under
its existing amended and restated credit facility with J.P. Morgan
Securities Inc. and certain other lenders, and (iv) approximately $239.2
million in available cash. In connection with the execution of the Merger
Agreement, Gardner Denver also received a financing commitment letter,
jointly issued by Bear, Stearns & Co. Inc., Bear Stearns Corporation
Lending Inc., J.P. Morgan Securities Inc. and JPMorgan Chase Bank, N.A., to
ensure availability, subject to customary conditions, of funding necessary
to consummate the Merger if Gardner Denver's common stock and note offering
are not completed. Gardner Denver may alter its plans on how to finance the
Merger depending on market conditions or other factors. Please see the
discussion under the heading "The Merger--Financing of the Merger"
beginning on page 41.
o Conditions to Consummate Merger. The Merger will be consummated only if
certain conditions and obligations have been satisfied or waived, such as
approval by Thomas shareholders, receipt of regulatory approvals required
under the Merger Agreement and satisfaction of other conditions and
obligations contained in the Merger Agreement. If permitted by law, either
Thomas or Gardner Denver could choose to waive a condition to its
obligation to complete the Merger even though that condition has not been
satisfied. Please see the discussion under the heading "The Merger
Agreement--Conditions to Consummation of the Merger" beginning on page 48.
o Failure to Complete the Merger. It is possible the Merger will not be
completed. This would happen if the Thomas shareholders do not approve and
adopt the Merger Agreement, if certain regulatory approvals required under
the Merger Agreement are not obtained or if certain other conditions are
not satisfied or waived. Thomas could be required to pay a termination fee
of $12 million to Gardner Denver or reimburse Gardner Denver for its
expenses up to $3 million under certain conditions, or Gardner Denver could
be required to pay a termination fee of $5 million to Thomas if the Merger
Agreement is terminated under certain conditions. Please see the
discussions under the headings "The Merger--Failure to Approve and Complete
the Merger," "The Merger Agreement--Conditions to Consummation of the
Merger" and "The Merger Agreement--Material Adverse Effect" beginning on
pages 27, 48 and 52, respectively.
o Appraisal Rights. If a Thomas shareholder fulfills several procedural
requirements, including not voting in favor of the approval and adoption of
the Merger Agreement, Delaware law entitles such shareholder to a judicial
appraisal of the fair value of the shares of Thomas common stock held by
that shareholder. Please read the discussion under the heading "The
Merger--Appraisal Rights" beginning on page 44.
-2-
o Interest of Certain Persons in the Merger. Some of our directors and
officers have interests that are different from or in addition to the
interests of other Thomas shareholders. These interests include, among
others, change of control payments, acceleration of and/or vesting of stock
options, stock appreciation rights, performance shares and director fees.
Please read the discussion under the heading "The Merger--Interests of
Thomas' Directors and Officers in the Merger" beginning on page 37.
o Employee Benefits. Gardner Denver has agreed to maintain certain of Thomas'
employee benefit plans, in accordance with and subject to their respective
terms, or to provide comparable benefit plans, for one year following the
closing date of the Merger. Please read the discussions under the headings
"Summary--Other Thomas Employee Benefit Plans" and "The Merger--Thomas
Employees and Employee Benefit Plans" beginning on pages 9 and 41,
respectively.
o Tax Consequences. The Merger will be a taxable transaction to Thomas
shareholders. Please read the discussion under the heading "The
Merger--Material United States Federal Income Tax Consequences" beginning
on page 41.
-3-
QUESTIONS AND ANSWERS ABOUT THE MERGER
Q: WHY ARE THOMAS AND GARDNER DENVER PROPOSING THE MERGER?
A: Thomas believes that the Merger will provide immediate and fair value to
its shareholders for their interest in Thomas. Gardner Denver believes that
the Merger will expand its product portfolio, distribution channels and end
markets served. To review the reasons for the Merger in greater detail, see
"The Merger--Background of Merger," "The Merger--Thomas' Considerations
Relating to the Merger" and "The Merger--Recommendation of Thomas' Board of
Directors."
Q: WHEN DO YOU EXPECT TO COMPLETE THE MERGER?
A: The Merger cannot be completed until certain conditions have been satisfied
or waived, including among other things, the approval of Thomas'
shareholders of the Merger Agreement and the receipt of certain regulatory
approvals required under the Merger Agreement. See "The Merger
Agreement--Conditions to Consummation of the Merger." However, we
anticipate that all such conditions will be satisfied or waived within
[______] [days] [months] following the Special Meeting.
Q: WHAT WILL I RECEIVE IN THE MERGER?
A: You will receive $40.00 in cash (without interest) for each share of Thomas
common stock that you own. See "The Merger Agreement--Consideration to Be
Received in Merger."
Q: WHAT SHOULD I DO NOW IN ORDER TO VOTE ON THE MERGER?
A: After carefully reading this document, please indicate on your proxy card
how you want to vote and sign and mail it in the enclosed return envelope
as soon as possible, so that your shares may be represented at the Special
Meeting.
Q: WHAT HAPPENS IF I DO NOT VOTE?
A: Because the affirmative vote by the holders of a majority of the
outstanding shares of Thomas common stock is required to approve and adopt
the Merger Agreement, if you fail to vote, it will have the same effect as
if you voted "AGAINST" the Merger.
Q: IF MY BROKER HOLDS MY SHARES IN "STREET NAME," WILL MY BROKER VOTE MY
SHARES FOR ME?
A: If a broker holds your common stock for your benefit but not in your own
name, your shares are in "street name." In that case, your broker will send
you a voting instruction form to use in voting your shares. Please follow
the instructions on the voting instruction form they send you. If your
shares are held in your broker's name and you wish to vote in person at the
Special Meeting, you must contact your broker and request a document called
a "legal proxy." You must bring this legal proxy to the Special Meeting.
Brokers who hold shares in street name for customers have the authority to
vote on "routine" proposals when they have not received instructions from
beneficial owners. However, brokers are precluded from exercising their
voting discretion with respect to the approval of non-routine matters such
as the approval and adoption of the Merger Agreement. As a result, without
specific instructions from you, if your shares are held in street name,
your broker will not be able to vote your shares (referred to as a "broker
non-vote"). A broker non-vote will have the same effect as if you voted
"AGAINST" the Merger.
-4-
Q: WHAT VOTE OF OUR SHAREHOLDERS IS REQUIRED TO APPROVE AND ADOPT THE MERGER
AGREEMENT?
A: The approval and adoption of the Merger Agreement requires the affirmative
vote by the holders of a majority of the outstanding shares of Thomas
common stock as of [RECORD DATE]. Failure to return a properly executed
proxy card, submit a proxy or vote in person will have the same effect as a
vote "AGAINST" approval and adoption of the Merger Agreement. See "The
Special Meeting of Thomas Shareholders--Vote Required for Approval of
Merger."
Q: WHAT DO I DO IF I WANT TO CHANGE MY VOTE AFTER I HAVE MAILED MY SIGNED
PROXY CARD?
A: You may revoke or change your proxy at any time prior to its use at the
Special Meeting by giving a written direction to the Secretary of Thomas to
revoke your proxy, delivering a proxy dated after the date of the proxy you
wish to revoke, or attending the Special Meeting and voting in person. See
"The Special Meeting of Thomas Shareholders--Voting by Proxy."
Q: HOW DO I GET THE CASH IN EXCHANGE FOR MY SHARES OF THOMAS COMMON STOCK?
A: After the Merger is completed, Gardner Denver will send Thomas shareholders
written instructions for surrendering their shares. If you hold Thomas
shares in physical form, please do not send in your stock certificates now.
Q: HOW WILL THE MERGER AFFECT HOLDERS OF THOMAS STOCK OPTIONS AND STOCK
APPRECIATION RIGHTS ("SARS")?
A: Gardner Denver will distribute cash to holders of outstanding stock options
and SARs with exercise prices less than $40.00. The amount of cash will be
determined by reference to the difference between $40.00 and the exercise
or target price of the option or SAR, as provided in the Merger Agreement.
See "Summary--Thomas Stock Options, Stock Appreciation Rights ("SARs"),
Performance Shares and Directors Deferred Shares."
Q: WILL I HAVE THE OPPORTUNITY TO EXERCISE APPRAISAL RIGHTS IN THE MERGER?
A: Yes. Under the Delaware General Corporation Law (the "DGCL"), Thomas
shareholders are entitled to appraisal rights in connection with the
Merger. Any Thomas shareholder who wants to exercise appraisal rights must
strictly comply with the rules governing the exercise of appraisal rights
or else lose those appraisal rights. If a Thomas shareholder returns a
signed proxy card not marked "AGAINST" or "ABSTAIN" with respect to the
approval and adoption of the Merger Agreement, such proxy will be voted
"FOR" the approval and adoption of the Merger Agreement and will result in
that shareholder waiving his, her or its appraisal rights. We have
described the procedures for exercising appraisal rights in this proxy
statement and have attached the provisions of the DGCL that govern
appraisal rights as Appendix B. See "The Merger--Appraisal Rights."
Q: WHAT ARE THE MATERIAL U.S. FEDERAL INCOME TAX CONSEQUENCES OF THE MERGER?
A: The receipt of cash for Thomas common stock pursuant to the Merger,
including as a result of the exercise of appraisal rights, will be a
taxable transaction for United States federal income tax purposes.
-5-
Generally, a beneficial holder of Thomas common stock who receives cash in
exchange for shares pursuant to the Merger will recognize a gain or loss
for federal income tax purposes equal to the difference, if any, between
the amount of cash received and the beneficial holder's adjusted tax basis
in the shares surrendered for cash pursuant to the Merger. You should
consult your tax advisor on how specific tax consequences of the Merger
apply to you. See "The Merger--Material United States Federal Income Tax
Consequences."
Q: HOW DOES THOMAS' BOARD OF DIRECTORS RECOMMEND I VOTE?
A: At a meeting held on March 8, 2005, Thomas' board of directors unanimously
approved the Merger Agreement and declared the Merger Agreement and the
Merger advisable and in the best interests of Thomas shareholders. Thomas'
board of directors recommends that you vote "FOR" approval and adoption of
the Merger Agreement. See "The Merger--Recommendation of Thomas' Board of
Directors."
Q: WHO CAN ANSWER MY QUESTIONS?
A: You can find more information about Thomas from various sources described
under "Where You Can Find More Information." If you have questions about
the Special Meeting, where to send your proxy or other matters with respect
to voting after reading this proxy statement, you should contact:
Georgeson Shareholder Communications Inc.
17 State Street - 10th Floor
New York, NY 10004
Telephone: Banks and Brokers (212) 440-9800
Telephone: All Others call Toll-Free (800) 561-4162
If you have additional questions about the Merger, you should contact:
Thomas Industries Inc.
4360 Brownsboro Road, Suite 300
Louisville, Kentucky 40207
Attn: Secretary
Telephone: (502) 893-4600
-6-
SUMMARY
The following summarizes the material information set forth in this proxy
statement. It does not contain all of the information in this proxy statement.
In order to fully understand the Merger, you should carefully read the entire
proxy statement, the Merger Agreement attached as Appendix A to this proxy
statement and the other appendices attached to this proxy statement. We
encourage you to read the Merger Agreement because it is the legal document that
governs the Merger.
THE PARTIES
Thomas. Thomas is a corporation organized under the laws of the State of
Delaware. Its principal executive offices are located at 4360 Brownsboro Road,
Suite 300, Louisville, Kentucky 40207. Thomas' common stock is listed on the New
York Stock Exchange (the "NYSE"). Thomas is a leading supplier of pumps and
compressors to the original equipment manufacturer ("OEM") market in such
applications as medical equipment, gasoline vapor and refrigerant recovery,
automotive and transportation applications, foundry applications, printing,
packaging, business equipment and laboratory equipment. Thomas conducts its
business from its corporate office located in Louisville, Kentucky and through
its worldwide operations. Thomas' pump and compressor group headquarters are as
follows: North American Group - Sheboygan, Wisconsin; European Group - Puchheim,
Germany; and Asia Pacific Group - Hong Kong, China.
Gardner Denver. Gardner Denver, Inc., referred to as "Gardner Denver" in
this proxy statement, is a leading designer, manufacturer and marketer of highly
engineered air compressors, reciprocating pumps, blowers and certain fluid
transfer products. Its products primarily are used to move fluids, gases or
solids through the application of pressure, vacuum or other mechanical
influences, often in highly demanding applications or environments. Its
compressors, reciprocating pumps and blowers are used in a broad range of
industrial applications and its fluid transfer products are used primarily for
oil and natural gas well drilling, servicing, production and transfer as well as
for industrial cleaning and maintenance. Gardner Denver's common stock is listed
on the NYSE. Gardner Denver is a Delaware corporation with its principal office
at 1800 Gardner Expressway, Quincy, Illinois 62305. Its telephone number is
(217) 222-5400.
PT Acquisition. PT Acquisition Corporation, referred to as "PT Acquisition"
in this proxy statement, is a Delaware corporation that was recently formed by
Gardner Denver for the sole purpose of completing the Merger with Thomas. PT
Acquisition is wholly-owned by Gardner Denver and has not engaged in any
business except in anticipation of the Merger. The principal office address of
PT Acquisition is c/o Gardner Denver, Inc., 1800 Gardner Expressway, Quincy,
Illinois 62305 and its telephone number is (217) 222-5400.
See "The Parties to the Merger."
THE PROPOSED ACQUISITION
Structure of the Merger. In the Merger, PT Acquisition will merge with and
into Thomas. Thomas will be the Surviving Corporation of the Merger and will
become a wholly-owned subsidiary of Gardner Denver.
Shareholder Vote. You are being asked to vote to approve and adopt the
Merger Agreement.
Effectiveness of the Merger. The Merger will be effective upon the filing
of a Certificate of Merger with the Secretary of State of the State of Delaware
(the "Effective Time") in accordance with the DGCL. The Merger Agreement
-7-
provides that the filing will be made on the second business day following the
date on which the conditions set forth in the Merger Agreement are satisfied or
waived, unless another time is agreed to by Thomas and Gardner Denver. See "The
Merger Agreement--Conditions to Consummation of the Merger."
Price for Your Stock. Unless you exercise appraisal rights, as a result of
the Merger you will receive $40.00 in cash (without interest) for each share of
your Thomas common stock.
THOMAS STOCK PRICE
Shares of Thomas are listed on the NYSE under the symbol "TII." On November
19, 2004, the last trading day before Thomas' board of directors publicly
announced that it had authorized management to explore strategic alternatives,
including exploration of acquisitions, stock buybacks, declaration of a special
cash dividend and the possible sale of Thomas, Thomas common stock closed at
$37.13 per share. The average closing price of Thomas common stock for the 30
days prior to such date was $34.59. On March 7, 2005, the last full trading day
immediately preceding the public announcement of the proposed Merger, Thomas
common stock closed at $39.92 per share. On [_______], 2005, which is the latest
practicable date prior to the date of this proxy statement, Thomas common stock
closed at $[___] per share. See "Recent Market Prices Of, and Dividends On,
Thomas Common Stock."
THOMAS STOCK OPTIONS, STOCK APPRECIATION RIGHTS ("SARS"), PERFORMANCE SHARES AND
DIRECTORS DEFERRED SHARES
All unvested stock options and SARs issued under the Thomas incentive stock
plan will become fully vested upon shareholder approval of the Merger in
accordance with the DGCL. Any stock options or SARs outstanding at the Effective
Time will be liquidated (in one of two methods depending upon if the option
involved qualifies as an "incentive stock option" under the Internal Revenue
Code of 1986, as amended (the "Code")). Under either method, if you are a holder
of an outstanding Thomas stock option or SAR with an exercise or target price of
less than $40.00, then within three business days after the Effective Time,
Gardner Denver will cause the paying agent to mail you a letter of transmittal
with instructions on how to exchange your options or SARs for the cash
consideration.
After you mail the letter of transmittal, duly executed and completed in
accordance with the instructions, and your options or SARs to the paying agent,
the paying agent will mail a check to you in the amount of cash equal to the
product of (A) the difference between $40.00 and the per share exercise or
target price of your option or SAR, and (B) the number of shares of Thomas
common stock covered by your option or SAR, less any applicable withholding
taxes. Simultaneously with the completion of the Merger, the Thomas incentive
stock plan and each outstanding Thomas stock option and SAR under the Thomas
incentive stock plan will be terminated.
For all performance share awards outstanding immediately prior to the
Effective Time, upon shareholder approval of the Merger in accordance with the
DGCL, 100 percent of the target shares then credited to each participant will be
deemed payable to each participant. If you are a holder of a performance share
award, in lieu of receipt of Thomas common stock pursuant to the preceding
sentence, promptly within three business days after the Effective Time, Gardner
Denver will cause the paying agent to mail you a letter of transmittal with
instructions on how to exchange your performance shares for the cash
consideration.
After you mail the letter of transmittal, duly executed and completed in
accordance with the instructions, and your performance shares to the paying
agent, the paying agent will mail you a check in the amount of a cash payment
equal to the number of performance shares (adjusted for any dividends paid since
-8-
such performance shares were awarded) multiplied by $40.00, less any applicable
withholding taxes. If you previously earned performance shares but elected to
defer receipt of those shares of Thomas common stock, you will receive a cash
payment equal to the number of shares (adjusted for any dividends paid since
such performance shares were deferred) multiplied by $40.00, less any applicable
withholding taxes.
Finally, if you are a member of Thomas' board of directors and you
previously elected to receive some or all of your retainer or meeting fees in
the form of shares of Thomas common stock payable at a future date, then,
following completion of the Merger, you will receive a cash payment equal to the
number of deferred shares of Thomas common stock to which you are entitled
(adjusted for any dividends paid since such shares were deferred) multiplied by
$40.00, less any applicable withholding taxes.
OTHER THOMAS EMPLOYEE BENEFIT PLANS
Gardner Denver has agreed to maintain Thomas' employee benefit plans (other
than any plan or agreement providing for the grant, issuance, award, sale or
transfer of equities securities in Thomas or any of its subsidiaries) in
accordance with and subject to their respective terms, or to provide comparable
benefit plans, for one year following the closing date of the Merger. Without
limiting the generality of the foregoing statement, Gardner Denver has
specifically agreed to honor two Thomas severance plans, the Thomas Industries
Severance Pay Policies for Exempt and Non-Exempt Employees and the Thomas
Industries Severance Pay Policy for Officers, in accordance with and subject to
their respective terms, for one year following the closing date of the Merger.
See "The Merger--Thomas Employees and Employee Benefit Plans."
BOARD RECOMMENDATION
Thomas' board of directors has unanimously determined that the Merger
Agreement is advisable and in the best interests of Thomas shareholders, has
approved the Merger Agreement and recommends that Thomas shareholders vote "FOR"
approval and adoption of the Merger Agreement. See "The Merger--Recommendation
of Thomas' Board of Directors."
THOMAS' CONSIDERATIONS RELATING TO THE MERGER
During the course of reaching its decision to approve the Merger Agreement
and the Merger our board of directors considered a number of factors and
consulted our senior management and outside financial and legal advisors.
Our board of directors considered a number of factors supporting its
decision to approve the Merger Agreement and the Merger, including, but not
limited to:
o discussions with our management regarding our business, financial
condition, competitive position, business strategy, strategic options and
prospects, as well as the risks involved in achieving these prospects, the
nature of our business and the industry in which we compete, and current
industry, economic and worldwide market conditions, both on a historical
and on a prospective basis, all of which led our board of directors to
conclude that the Merger presented an opportunity for Thomas' shareholders
to realize greater value than the value likely to be realized by
shareholders in the event we remained independent;
o our review of the possible alternatives to a sale of Thomas, including
pursuit of an acquisition growth strategy, a stock buyback or payment of a
special one-time cash dividend, the value to shareholders of such
alternatives and the timing and likelihood of actually achieving additional
value from these alternatives, and our board's assessment that none of
-9-
these options were reasonably likely to result in value for shareholders
greater than the consideration to be received in the Merger;
o that the Merger alternative was agreed to by our board of directors only
after the issuance on November 22, 2004 by us of a press release regarding
a review of our strategic and financial alternatives, publicity concerning
our review of strategic and financial alternatives and the possibility that
we may be sold, and the passage of a significant period of time between
issuance of the press release and approval of the Merger Agreement;
o that the Merger was agreed to by our board of directors after a lengthy
sale process pursuant to which (i) a public press release was issued
concerning the Corporation's evaluation of strategic and financial
alternatives, including, a potential sale of the Corporation; (ii) Robert
W. Baird & Co. Incorporated ("Baird"), Thomas' financial advisor, had
discussions with a total of 68 parties; and (iii) 35 parties received a
confidential information memorandum with respect to the Corporation;
o the financial analyses of Baird presented to our board of directors on
March 8, 2005, and the written opinion of Baird delivered on March 8, 2005
to our board of directors that, as of March 8, 2005, based upon and subject
to the matters set forth in its opinion, including the various assumptions
and limitations set forth therein, the consideration to be received by
holders of our common stock (other than Gardner Denver and its affiliates)
pursuant to the Merger Agreement was fair, from a financial point of view,
to such holders (other than Gardner Denver and its affiliates); and
o the fact that our board of directors determined that the Merger was in the
best interests of all of the Corporation's shareholders and recommended
that the Merger Agreement be approved and adopted by Thomas' shareholders.
Thomas' board of directors viewed all of these factors and the others
discussed in "The Merger-- Thomas' Considerations Relating to the Merger" as
important in reaching its conclusion. For a more detailed discussion of the
board's considerations see "The Merger--Background of the Merger" and "The
Merger--Thomas' Considerations Relating to the Merger." Also see the opinion of
Baird presented and delivered to Thomas' board of directors on March 8, 2005,
attached to this proxy statement as Appendix C.
THE SPECIAL MEETING
Place, Date and Time. The Special Meeting will be held at the Hyatt Regency
Hotel, 320 West Jefferson Street, Louisville, Kentucky, on [Day], [Date], 2005,
at [Time].
What Vote is Required. The approval and adoption of the Merger Agreement
requires the affirmative vote by the holders of a majority of the shares of
Thomas common stock issued and outstanding as of the record date referred to
below. Failing to vote will have the same effect as a vote "AGAINST" approval
and adoption of the Merger Agreement.
Who Can Vote at the Meeting. At the Special Meeting you can vote all of the
shares of Thomas common stock you own of record as of [RECORD DATE], which is
the record date for the Special Meeting. If you own shares that are registered
in someone else's name such as a broker or nominee, you need to direct that
person to vote those shares or obtain an authorization from them to vote the
shares yourself at the Special Meeting. As of the close of business on [RECORD
DATE], there were [_______] shares of Thomas common stock outstanding, which
were held by approximately [_____] holders of record.
-10-
Procedure for Voting. You can vote your shares by attending the Special
Meeting and voting in person or by mailing the enclosed proxy card. If you
submit a proxy, you may revoke it at any time before the vote is taken at the
Special Meeting. To revoke your proxy, you must either provide a written notice
of revocation to the Secretary of Thomas, deliver a proxy dated after the date
of the proxy you wish to revoke, or attend the meeting and vote your shares in
person. Merely attending the Special Meeting will not constitute revocation of
your proxy. See "The Special Meeting of Thomas Shareholders--Voting by Proxy."
OPINION OF THOMAS' FINANCIAL ADVISOR
Baird, Thomas' financial advisor, delivered its oral opinion (which was
subsequently confirmed in writing) to Thomas' board of directors on March 8,
2005, to the effect that, as of that date and based upon and subject to the
matters and assumptions stated in the written opinion, the merger consideration
of $40.00 in cash per share was fair, from a financial point of view, to Thomas
shareholders (other than Gardner Denver and its affiliates). See "The
Merger--Opinion of Thomas' Financial Advisor" and Appendix C.
INTERESTS OF DIRECTORS AND EXECUTIVE OFFICERS IN THE MERGER THAT DIFFER FROM
YOUR INTERESTS
Some of Thomas' directors and officers have interests in the Merger that
are different from, or are in addition to, their interests as shareholders in
Thomas. Thomas' board of directors knew about these additional interests and
considered them when it approved the Merger Agreement. See "The
Merger--Interests of Thomas' Directors and Officers in the Merger" and "Security
Ownership of Certain Beneficial Owners and Management."
MATERIAL UNITED STATES FEDERAL INCOME TAX CONSEQUENCES
The Merger will be a taxable transaction to you. In general, for United
States federal income tax purposes, your receipt of cash in exchange for your
shares of Thomas common stock will cause you to recognize a gain or loss
measured by the difference, if any, between the cash you receive in the Merger
and your adjusted tax basis in your shares of Thomas common stock. Tax matters
are very complicated, and the tax consequences of the Merger to you will depend
on the facts of your particular situation. We urge you to consult your own tax
advisor as to the specific tax consequences to you of the Merger, including the
applicable federal, state, local and foreign tax consequences. See "The
Merger--Material United States Federal Income Tax Consequences."
REGULATORY FILINGS AND APPROVALS
The Merger is subject to review by the Antitrust Division of the Department
of Justice and the Federal Trade Commission (the "Federal Antitrust Agencies").
On March 16, 2005, Thomas and Gardner Denver each filed the required information
and materials with the Federal Antitrust Agencies. Early termination of the
applicable waiting period under the Hart-Scott-Rodino Antitrust Improvements Act
of 1976, as amended (the "HSR Act"), was granted on April 14, 2005. Even though
the HSR Act waiting period has terminated, these agencies, state antitrust
authorities or a private person or entity could challenge the Merger at any time
before or after its completion. See "The Merger--Regulatory Filings and
Approvals."
The Merger is also subject to review by the German Federal Cartel Office
("FCO"). Gardner Denver submitted the required merger notification to the FCO on
April 22, 2005. The applicable waiting period under Chapter VII of the German
Act against Restraints on Competition of 1958, as amended ("ARC") will expire on
or about May 23, 2005, one month after submission of a complete notification,
-11-
unless early approval is granted or unless the FCO initiates its second phase
investigation. The FCO, or affected third parties, could challenge the Merger at
any time before completion. See "The Merger--Regulatory Filings and Approvals."
The Merger is also subject to review by the Norwegian Competition Authority
(the "NCA"). Gardner Denver submitted a so-called "simplified" notification on
April 13, 2005. The Merger will be deemed cleared by the NCA if the parties have
not received, within 15 working days, a notice that the NCA will require
submission of a complete notification. The NCA may seek to intervene and
prohibit the Merger at any point prior to its completion or after its completion
if Gardner Denver has not already obtained clearance from the NCA. See "The
Merger--Regulatory Filings and Approvals."
APPRAISAL RIGHTS
The DGCL provides you with appraisal rights in the Merger. This means that
if you are not satisfied with the amount you would receive in the Merger, you
are entitled to have the value of your shares determined by the Delaware Court
of Chancery (the "Chancery Court") and to receive payment based on that
valuation. The ultimate amount you receive as a dissenting shareholder in an
appraisal proceeding may be more or less than, or the same as, the amount you
would have received in the Merger. To exercise your appraisal rights, you must
deliver a written objection to the Merger to the Secretary of Thomas at or
before the vote is taken at the Special Meeting and you must not vote in favor
of approval and adoption of the Merger Agreement. Your failure to follow exactly
the procedures specified under the DGCL will result in the loss of your
appraisal rights. If you are interested in exercising your appraisal rights, you
should read carefully "The Merger--Appraisal Rights" and Appendix B.
FINANCING OF THE MERGER
The consummation of the Merger is not contingent upon Gardner Denver
obtaining financing. Gardner Denver plans to finance the Merger from (i) the
proceeds of a $200.6 million offering of five million shares of its common
stock, (ii) a $125 million offering of its senior subordinated notes due 2013,
(iii) an additional $230 million under its existing amended and restated credit
facility with J.P. Morgan Securities Inc. and certain other lenders, and (iv)
approximately $239.2 million in available cash. In connection with the execution
of the Merger Agreement, Gardner Denver also received a financing commitment
letter, jointly issued by Bear, Stearns & Co. Inc., Bear Stearns Corporate
Lending Inc., J.P. Morgan Securities Inc. and JPMorgan Chase Bank, N.A., to
ensure availability, subject to customary conditions, of funding necessary to
consummate the Merger if Gardner Denver's common stock and note offering are not
completed. Gardner Denver may alter its plans on how to finance the Merger
depending on market conditions or other factors. See "The Merger--Financing of
the Merger."
WHEN THE MERGER WILL BE COMPLETED
Thomas and Gardner Denver are working to complete the Merger as soon as
possible. Subject to receipt of Thomas shareholder approval, we anticipate
completing the Merger within two business days following the satisfaction or
waiver of the conditions described immediately below. The parties expect that
all such conditions will be satisfied or waived within [_____] [days] [months]
following the Special Meeting. See "The Merger Agreement--Effective Time of the
Merger."
CONDITIONS TO COMPLETING THE MERGER
The completion of the Merger depends on a number of conditions being
satisfied, including the following:
-12-
o approval and adoption of the Merger Agreement by the shareholders of Thomas
in accordance with the DGCL;
o obtaining all regulatory approvals required under the Merger Agreement;
o the absence of (1) any temporary restraining order, preliminary or
permanent injunction or other order issued by any court of competent
jurisdiction or other legal restraint or prohibition preventing the
consummation of the Merger and (2) any action taken or law or order
enacted, entered, enforced or deemed applicable to the Merger by any
governmental entity that makes the consummation of the Merger illegal;
o Thomas and Gardner Denver having performed in all material respects all of
their requisite obligations under the Merger Agreement (and each party
having received the certificate of the Chief Executive Officer and Chief
Financial Officer of the other party to that effect);
o the representations and warranties of Thomas which are qualified by
materiality in the Merger Agreement being true and correct and those not so
qualified being true and correct in all material respects as of the closing
date of the Merger, other than for such failures of the representations and
warranties to be so true and correct that, individually and in the
aggregate, have not had and could not reasonably be expected to have a
Company Material Adverse Effect (and Gardner Denver having received the
certificate of the Chief Executive Officer and Chief Financial Officer of
Thomas to that effect), see "The Merger Agreement--Material Adverse
Effect";
o there must not be pending any suit, action or proceeding by any
governmental entity seeking to prohibit or impose and no regulatory
approval required under the Merger Agreement shall be conditioned upon or
seek to impose, any material limitations on Gardner Denver's or PT
Acquisition's ownership or operation of all or a material portion of
Gardner Denver's (or their subsidiaries' or affiliates') or Thomas' (or its
subsidiaries') business or assets or to compel Gardner Denver to dispose
of, sell, license or hold separate any material portion of the business or
assets of Gardner Denver, Thomas or their respective subsidiaries; and
o the representations and warranties of Gardner Denver and PT Acquisition
which are qualified by materiality in the Merger Agreement being true and
correct and those not so qualified being true and correct in all material
respects as of the closing date, other than for such failures of the
representations and warranties to be so true and correct that, individually
and in the aggregate, have not had and could not reasonably be expected to
prevent or materially delay the ability of Gardner Denver and PT
Acquisition to perform their obligations under the Merger Agreement or to
consummate the Merger (and Thomas having received the certificate of the
Chief Executive Officer and Chief Financial Officer of Gardner Denver to
that effect).
If permitted by law, either Thomas or Gardner Denver could choose to waive
a condition to its obligation to complete the Merger even though that condition
has not been satisfied. See "The Merger Agreement--Conditions to Consummation of
the Merger" and "The Merger Agreement--Material Adverse Effect."
FAILURE TO APPROVE AND COMPLETE THE MERGER
It is possible the Merger will not be completed. This would happen if the
Thomas shareholders do not approve and adopt the Merger Agreement or if certain
other conditions are not satisfied or waived. See "The Merger
Agreement--Conditions to Consummation of the Merger" and "The Merger
Agreement--Material Adverse Effect." If the Merger is not completed, none of
-13-
Gardner Denver, Thomas or any other person will be under any obligation to make
or consider any alternate proposal regarding the acquisition of Thomas.
TERMINATION OF THE MERGER AGREEMENT
Thomas and Gardner Denver can mutually agree in writing to terminate the
Merger Agreement whether before or after approval and adoption by the Thomas
shareholders. Each of Thomas and Gardner Denver may terminate the Merger
Agreement unilaterally if certain events occur, including, among other things,
breaches by the other party, the Merger not being consummated by December 15,
2005, the Thomas shareholders not approving and adopting the Merger Agreement, a
governmental entity that must grant a regulatory approval required under the
Merger Agreement denying approval of the Merger or taking any action prohibiting
the Merger, and Thomas' board of directors determining that there is a Superior
Company Proposal (as defined in "The Merger Agreement--No Solicitation"). In
addition, Gardner Denver may unilaterally terminate the agreement if Thomas'
board of directors withdraws or adversely amends its recommendation and approval
of the Merger or approves or recommends any Superior Company Proposal. See "The
Merger Agreement--Termination of Merger Agreement."
TERMINATION FEES AND EXPENSES
Thomas will be required to pay a termination fee of $12 million to Gardner
Denver or reimburse Gardner Denver for expenses of up to $3 million if the
Merger Agreement is terminated under certain circumstances. Gardner Denver will
be required to pay a termination fee of $5 million to Thomas if, as of December
15, 2005, Thomas has satisfied certain conditions and the Merger Agreement is
terminated by either Thomas or Gardner Denver as a result of the failure to
obtain the regulatory approvals required under the Merger Agreement or by
Gardner Denver if any governmental entity imposes any material limitation on its
ownership or operation of Thomas and its subsidiaries or requires Gardner Denver
to sell any material portion of its or Thomas' business. See "The Merger
Agreement--Termination of Merger Agreement" and "The Merger
Agreement--Termination Fees and Expenses."
ACCOUNTING TREATMENT
The Merger will be accounted for as a "purchase" as such term is used under
U.S. generally accepted accounting principles ("GAAP"), for accounting and
financial reporting purposes. See "The Merger--Accounting Treatment of the
Merger."
PROCEDURE FOR RECEIVING MERGER CONSIDERATION
Gardner Denver will appoint a paying agent to coordinate the payment of the
cash merger consideration following the Merger. The paying agent will send you
written instructions for surrendering your certificates and obtaining the cash
merger consideration after Thomas and Gardner Denver have completed the Merger.
Do not send in your Thomas stock certificates now. See "Summary--Exchange
Procedures."
SHARES HELD BY DIRECTORS AND EXECUTIVE OFFICERS
As of [_____], 2005, approximately [___]% of the outstanding shares of
Thomas common stock was held by directors and executive officers of Thomas, and
no shares of Thomas common stock were held by Gardner Denver. Each of the
directors has advised Thomas that he will vote the shares held by him in favor
of the proposal to approve and adopt the Merger Agreement. See "Security
Ownership of Certain Beneficial Owners and Management."
-14-
EXCHANGE PROCEDURES
Gardner Denver will appoint a paying agent for the purpose of exchanging
certificates representing shares of Thomas common stock for the cash merger
consideration. Gardner Denver will deposit with the paying agent the funds
sufficient to pay the aggregate merger consideration to the Thomas shareholders
and to satisfy certain of its other obligations under the Merger Agreement.
As soon as practicable after the consummation of the Merger, but in no
event later than 3 business days following the Effective Time, the paying agent
will mail to each former holder of record of Thomas common stock a letter with
instructions on how to exchange stock certificates for the cash consideration.
Please do not send in your stock certificates until you receive the letter
of transmittal and instructions from the paying agent. Do not return your Thomas
stock certificates with the enclosed proxy card. If your shares of Thomas common
stock are held through a broker, your broker will surrender your shares for
cancellation.
After you mail the letter of transmittal, duly executed and completed in
accordance with its instructions, and your stock certificates to the paying
agent, the paying agent will mail a check to you. The stock certificates you
surrender will be canceled. After the completion of the Merger, there will be no
further transfers of Thomas common stock, and stock certificates presented for
transfer after the completion of the Merger will be canceled and exchanged for
the cash merger consideration. If payment is to be made to a person other than
the registered holder of the shares of Thomas common stock, the certificate
surrendered must be properly endorsed or otherwise in proper form for transfer
and any transfer or other taxes must be paid by the person requesting the
payment or that person must establish to the paying agent's satisfaction that
such tax has been paid or is not payable.
If your Thomas stock certificates have been lost, stolen or destroyed, upon
making an affidavit of that fact, and if required by Gardner Denver, posting a
bond as indemnity against any claim with respect to the certificates, the paying
agent will issue the cash merger consideration in exchange for your lost,
stolen, or destroyed stock certificates.
QUESTIONS
If you have questions about the Special Meeting, where to send your proxy
or other matters with respect to voting after reading this proxy statement, you
should contact:
Georgeson Shareholder Communications Inc.
17 State Street - 10th Floor
New York, NY 10004
Telephone: Banks and Brokers (212) 440-9800
Telephone: All Others call Toll-Free (800) 561-4162
If you have additional questions about the Merger, you should contact:
Thomas Industries Inc.
4360 Brownsboro Road, Suite 300
Louisville, Kentucky 40207
Attn: Secretary
Telephone: (502) 893-4600
-15-
CAUTIONARY STATEMENT CONCERNING FORWARD-LOOKING INFORMATION
This proxy statement, and the documents to which we refer you, contain
certain "forward-looking statements" within the meaning Section 27A of the
Securities Act of 1933, as amended, and Section 21E of the Securities Exchange
Act of 1934, as amended. The words "anticipates," "believes," "estimates,"
"expects," "plans," "intends" and other similar expressions are intended to
identify these forward-looking statements, but are not the exclusive means of
identifying them. You are cautioned not to place undue reliance on these
forward-looking statements as these forward-looking statements reflect our and
our management's current view and are subject to certain risks, uncertainties
and contingencies that could cause our actual results, performance or
achievements to differ materially from those expressed in or implied by these
statements. These risks, uncertainties and contingencies include, among other
things, the risk the Merger may not be consummated in a timely manner, if at
all, risk regarding employee and customer retention and other risks detailed in
our current filings with the Securities and Exchange Commission, including the
factors discussed under the heading "Management's Discussion and Analysis of
Financial Condition and Results of Operations--Forward-Looking Statements" in
our Annual Report on Form 10-K for the year ended December 31, 2004, which
information is incorporated herein by reference. We undertake no obligation and
do not intend to update or revise these forward-looking statements to reflect
future events or circumstances except as required pursuant to the federal
securities laws.
THE PARTIES TO THE MERGER
The parties to the Merger Agreement are Thomas, Gardner Denver and PT
Acquisition, a wholly-owned subsidiary of Gardner Denver.
THOMAS
Thomas is a corporation organized under the laws of the State of Delaware.
Its principal executive offices are located at 4360 Brownsboro Road, Suite 300,
Louisville, Kentucky 40207. Thomas' common stock is listed on the New York Stock
Exchange (the "NYSE"). Thomas is a leading supplier of pumps and compressors to
the original equipment manufacturer ("OEM") market in such applications as
medical equipment, gasoline vapor and refrigerant recovery, automotive and
transportation applications, foundry applications, printing, packaging, business
equipment and laboratory equipment. Thomas conducts its business from its
corporate office located in Louisville, Kentucky and through its worldwide
operations. Thomas' pump and compressor group headquarters are as follows: North
American Group - Sheboygan, Wisconsin; European Group - Puchheim, Germany; and
Asia Pacific Group - Hong Kong, China.
The company that was eventually to become known as Thomas Industries Inc.
was founded in 1928 as the Electric Sprayit Company. Electric Sprayit
manufactured paint spraying machines, blowers, and air compressors in Chicago,
Illinois. In 1948, Mr. Lee B. Thomas and a group of investors acquired Moe
Brothers Manufacturing of Fort Atkinson, Wisconsin, a manufacturer of
residential lighting products. In 1953, Moe Lighting and The Electric Sprayit
Company merged to become Thomas Industries Inc. Thomas was incorporated in
Delaware in 1928.
Although its roots were in lighting products and air compressors, Thomas
began to diversify in the 1960's and 1970's, acquiring companies that
manufactured consumer products along with tools, hardware, and specialty
products. A new strategic focus on lighting and pumps/compressors began in the
1980's and was finalized in 1994 when Thomas divested its last non-core
business.
On August 30, 1998, Thomas and The Genlyte Group ("Genlyte") formed a
lighting joint venture that combined substantially all of the assets and
liabilities of Genlyte and substantially all of the lighting assets and related
-16-
liabilities of Thomas to create Genlyte Thomas Group LLC ("GTG"), estimated to
be the third largest manufacturer of lighting fixtures and controls in North
America. Thomas owned a 32% interest in the joint venture, and Genlyte owned a
68% interest. Effective with the close of business on July 31, 2004, Thomas sold
its 32% joint venture interest in GTG to The Genlyte Group Incorporated, thereby
exiting the lighting business.
On August 29, 2002, Thomas purchased substantially all the assets and
liabilities of Werner Rietschle Holding GmbH ("Rietschle"), a privately held
company based in Schopfheim, Germany. Rietschle is a world leader in vacuum and
pressure technology, which includes dry-running and oil-lubricated pumps,
blowers, compressors, and pressure/vacuum pumps utilizing rotary vane, screw,
roots and claw technologies. With the newly-launched Rietschle Thomas brand,
Thomas is currently pursuing further opportunities in markets such as printing,
packaging, woodworking and other applications that utilize these technologies.
GARDNER DENVER
Gardner Denver, Inc., referred to as "Gardner Denver" in this proxy
statement, is a leading designer, manufacturer and marketer of highly engineered
air compressors, reciprocating pumps, blowers and certain fluid transfer
products. Its products primarily are used to move fluids, gases or solids
through the application of pressure, vacuum or other mechanical influences,
often in highly demanding applications or environments. Its compressors,
reciprocating pumps and blowers are used in a broad range of industrial
applications and its fluid transfer products are used primarily for oil and
natural gas well drilling, servicing, production and transfer as well as for
industrial cleaning and maintenance. Gardner Denver's common stock is listed on
the NYSE. Gardner Denver is a Delaware corporation with its principal office at
1800 Gardner Expressway, Quincy, Illinois 62305. Its telephone number is (217)
222-5400.
PT ACQUISITION
PT Acquisition Corporation, referred to as "PT Acquisition" in this proxy
statement, is a Delaware corporation that was recently formed by Gardner Denver
for the sole purpose of completing the Merger with Thomas. PT Acquisition is
wholly-owned by Gardner Denver and has not engaged in any business except in
anticipation of the Merger. The principal office address of PT Acquisition is
c/o Gardner Denver, Inc., 1800 Gardner Expressway, Quincy, Illinois 62305 and
its telephone number is (217) 222-5400.
THE SPECIAL MEETING OF THOMAS SHAREHOLDERS
TIME, PLACE AND PURPOSE OF THE SPECIAL MEETING
The Special Meeting will be held at the Hyatt Regency Hotel, 320 West
Jefferson Street, Louisville, Kentucky, on [Day], [Date], 2005, at [Time]. The
purpose of the Special Meeting is (1) to vote on the proposal to approve and
adopt the Merger Agreement, pursuant to which, upon the terms and subject to the
conditions of the Merger Agreement, (a) PT Acquisition will be merged with and
into Thomas, with Thomas being the Surviving Corporation and becoming a
wholly-owned subsidiary of Gardner Denver; and (b) each share of Thomas common
stock outstanding at the Effective Time (other than shares held by Thomas or its
subsidiaries, any shares held by Gardner Denver or its subsidiaries, or shares
held by shareholders who perfect their statutory appraisal rights with respect
to such shares under the DGCL) will be converted into the right to receive
$40.00 in cash, without interest; and (2) to transact such other business as may
properly come before the Special Meeting.
-17-
Thomas' board of directors has unanimously determined that the Merger
Agreement is advisable and in the best interests of Thomas shareholders, has
approved the Merger Agreement and recommends that Thomas shareholders vote "FOR"
approval and adoption of the Merger Agreement.
WHO CAN VOTE AT THE SPECIAL MEETING
The holders of record of Thomas common stock as of the close of business on
[RECORD DATE], which is the record date for the Special Meeting, are entitled to
receive notice of, and to vote at, the Special Meeting. If you own shares that
are registered in someone else's name, such as a broker or nominee, you need to
direct that person to vote those shares or obtain an authorization from them to
vote the shares yourself at the Special Meeting. On [RECORD DATE], there were
[______] shares of Thomas common stock outstanding, which were held by
approximately [_____] holders of record.
VOTE REQUIRED FOR APPROVAL OF MERGER
The approval and adoption of the Merger Agreement requires the affirmative
vote by the holders of a majority of the shares of Thomas common stock issued
and outstanding on the record date. Each share of common stock is entitled to
one vote. Failure to return a properly executed proxy card, submit a proxy or
vote in person will have the same effect as a vote "AGAINST" approval and
adoption of the Merger Agreement.
Under the rules of the NYSE, brokers who hold shares in "street name" for
customers have the authority to vote on "routine" proposals when they have not
received instructions from beneficial owners. However, brokers are precluded
from exercising their voting discretion with respect to the approval of
non-routine matters such as the approval and adoption of the Merger Agreement.
As a result, without specific instructions from the beneficial owner of shares
they hold in street name, brokers are not empowered to vote those shares
(referred to generally as "broker non-votes"). Abstentions and broker non-votes
will be treated as shares that are present and entitled to vote at the Special
Meeting for purposes of determining whether a quorum exists and will have the
same effect as votes "AGAINST" approval and adoption of the Merger Agreement.
The holders of a majority of the shares of Thomas common stock issued and
outstanding on the record date, represented in person or by proxy, will
constitute a quorum for purposes of the Special Meeting. A quorum is necessary
to hold the Special Meeting. Once a share is represented at the Special Meeting,
it will be counted for the purpose of determining a quorum and any adjournment
of the Special Meeting, unless the holder is present solely to object to the
Special Meeting. However, if a new record date is set for an adjourned meeting,
then a new quorum will have to be established.
VOTING BY PROXY
This proxy statement is being sent to you on behalf of Thomas' board of
directors for the purpose of requesting that you allow your shares of Thomas
common stock to be represented at the Special Meeting by the persons named in
the enclosed proxy card. All shares of Thomas common stock represented at the
meeting by properly executed proxy cards will be voted in accordance with the
instructions indicated on that proxy. If you sign and return a proxy card
without giving voting instructions, your shares will be voted "FOR" approval and
adoption of the Merger Agreement.
We recommend you vote by proxy even if you plan to attend the Special
Meeting. If you vote by proxy, you may change your vote if you attend the
Special Meeting. If you own Thomas common stock in your own name, you are an
"owner of record". This means that you may use the enclosed proxy card to tell
the persons named as proxies how to vote your shares.
-18-
The named proxies will use their own judgment to determine how to vote your
shares regarding any matters not described in this proxy statement that are
properly presented at the Special Meeting. Thomas does not know of any matter to
be presented at the meeting other than the proposal to approve and adopt the
Merger Agreement.
You may revoke your proxy at any time before the vote is taken at the
meeting. To revoke your proxy, you must provide a written notice of revocation
to the Secretary of Thomas, deliver a proxy dated after the date of the proxy
you wish to revoke or attend the meeting and vote your shares in person. Merely
attending the Special Meeting will not constitute revocation of your proxy.
If your shares are held in "street name" by your broker, you should
instruct your broker on how to vote your shares using the instructions provided
by your broker. If you do not instruct your broker to vote your shares, they
will not be voted and this will have the same effect as if they were voted
"AGAINST" approval and adoption of the Merger Agreement.
HOW TO VOTE
You may vote in person at the Special Meeting or by proxy as described
above. You can vote by mail by simply completing, signing, dating and mailing
your proxy card in the postage-paid envelope included with this proxy statement.
A number of banks and brokerage firms participate in a program that also
permits shareholders whose shares are held in "street name" to direct their vote
over the Internet or by telephone. This option, if available, will be reflected
in the voting instructions from the bank or brokerage firm that accompany this
proxy statement. If your shares are held in an account at a bank or brokerage
firm that participates in such a program, you may direct the vote of these
shares by Internet or telephone by following the voting instructions enclosed
with the proxy form from the bank or brokerage firm. The Internet and telephone
proxy procedures are designed to authenticate shareholders' identities, to allow
shareholders to give their proxy voting instructions and to confirm that those
instructions have been properly recorded. Votes directed by the Internet or
telephone through such a program must be received by 11:59 p.m., New York City
time, on [ ], 2005. Requesting a legal proxy prior to the deadline described
above will automatically cancel any voting directions you have previously given
by the Internet or by telephone with respect to your shares. Directing the
voting of your shares will not affect your right to vote in person if you decide
to attend the Special Meeting; however, you must first obtain a signed and
properly executed legal proxy from your bank, broker or other nominee to vote
your shares held in street name at the Special Meeting.
PROXY SOLICITATION
Thomas will pay the cost of this proxy solicitation. Thomas has engaged
Georgeson Shareholder Communications Inc. ("Georgeson") to assist in the
solicitation of proxies for the Special Meeting and will pay Georgeson a fee of
$8,500 plus reimbursement of reasonable out of pocket expenses for these
services. In addition to soliciting proxies by mail, directors, officers and
employees of Thomas may solicit proxies personally and by telephone. None of
these persons will receive additional or special compensation for soliciting
proxies. Thomas will, upon request, reimburse brokers, banks and other nominees
for their expenses in sending proxy materials to their customers who are
beneficial owners and obtaining their voting instructions.
-19-
THE MERGER
GENERAL DESCRIPTION OF THE MERGER
In the Merger, PT Acquisition, a wholly-owned subsidiary of Gardner Denver,
will merge with and into Thomas and Thomas will be the Surviving Corporation and
become a wholly-owned subsidiary of Gardner Denver. The Merger will be effective
upon the filing of a Certificate of Merger with the Secretary of State of the
State of Delaware in accordance with the DGCL. The Merger Agreement provides
that the filing will be made on the second business day following the date on
which the conditions set forth in the Merger Agreement are satisfied or waived,
unless another time is agreed to by Thomas and Gardner Denver. See "The Merger
Agreement--Conditions to Consummation of the Merger." As a result of the Merger,
you will receive $40.00 in cash (without interest) for each share of Thomas
common stock that you own, unless you elect to exercise your appraisal rights in
accordance with the DGCL.
BACKGROUND OF THE MERGER
On May 20, 2004, the Corporation announced that it had entered into an
agreement to sell its 32% joint venture interest in GTG to Genlyte for
approximately $400 million in cash. In 1998, Thomas had combined its lighting
business with Genlyte's to form GTG.
At a meeting of the board of directors of Thomas on July 22, 2004, the
board discussed strategic and financial alternatives available to Thomas in
light of the pending consummation of the sale of its joint venture interest in
GTG and the amount of cash proceeds to be received by the Corporation. The
strategic and financial alternatives discussed by the board included possible
acquisitions, stock buybacks, declaration of a special cash dividend and the
possible sale of Thomas. The board of directors authorized management to
interview investment banks to assist the board in evaluating these possible
alternatives.
The sale of Thomas' joint venture interest in GTG was completed on July 31,
2004. The cash proceeds from the sale were approximately $400 million or
approximately $215 million after payment of taxes and transaction expenses and
the repayment of outstanding indebtedness.
During the week of August 16, 2004, Timothy C. Brown, the Corporation's
Chairman, President and Chief Executive Officer, Phillip J. Stuecker, the
Corporation's Chief Financial Officer, and a representative of McDermott Will &
Emery LLP, Thomas' outside legal counsel, interviewed three investment banking
firms, including Baird, with respect to advising the board of directors
regarding the Corporation's strategic and financial alternatives.
At a meeting of Thomas' board of directors held on August 24, 2004,
representatives of Baird made a presentation covering various strategic and
financial alternatives with respect to the Corporation, including the pursuit of
an acquisition growth strategy, stock buybacks, payment of a special cash
dividend, and the sale of the Corporation. Representatives of McDermott Will &
Emery LLP discussed the board's fiduciary duties in connection with such
alternatives. The board then authorized Mr. Brown to negotiate an engagement
letter with Baird with respect to a review of the Corporation's strategic and
financial alternatives.
On August 30, 2004, Messrs. Brown and Stuecker and representatives from
McDermott Will & Emery LLP met with representatives of Baird for a due diligence
session which was supplemented by several conference calls with the management
team and the receipt of additional business and financial information to assist
Baird in connection with the strategic and financial alternatives review
process.
-20-
At a meeting of Thomas' board of directors on September 17, 2004,
representatives of Baird made a presentation to the board regarding possible
strategic and financial alternatives, including the pursuit of acquisitions,
stock buybacks, payment of a special cash dividend and a possible sale of
Thomas. As part of its presentation, Baird reviewed the potential outcomes of
and the potential buyer participants in, a sale process. The list of potential
buyer participants was based on, among other factors, discussions with the
management team and certain directors, Baird's analysis and industry knowledge
and criteria which included perceived strategic and financial interest,
financial wherewithal and the ability to consummate a transaction in a timely
fashion. The board authorized Thomas management to initiate a process to
evaluate the sale of the Corporation, with the assistance of Baird and McDermott
Will & Emery LLP. Thomas executed an engagement letter with Baird in connection
with its financial advisory role.
Baird continued its due diligence review of the Corporation, which included
discussions with Thomas management and the request and review of various
business, financial and other information. Baird, with the assistance of Thomas'
senior management, finalized a confidential information memorandum to be made
available to potential purchasers of the Corporation. Additionally, the
management team, with assistance from McDermott Will & Emery LLP and Baird,
began to gather information for an electronic data room that would contain
detailed legal, financial, tax, environmental, benefits and other information
regarding Thomas.
Beginning the week of September 27, 2004, Baird began discussions with a
significant number of potential strategic and financial parties concerning a
possible acquisition of the Corporation. During the course of the sale process,
Baird had discussions with a total of 68 parties (29 strategic parties and 39
financial parties) regarding their interest in a possible transaction. Upon
execution of a confidentiality agreement, parties that were interested in
pursuing a preliminary evaluation of the Corporation were provided copies of a
confidential information memorandum which included information about Thomas'
operations and financial performance and projections. In total, 35 parties
executed confidentiality agreements and received the confidential information
memorandum.
On October 13, 2004, Gardner Denver executed its confidentiality agreement
in connection with its evaluation of Thomas, and Baird sent Gardner Denver
copies of the confidential information memorandum.
Baird sent a letter to each party that was formally evaluating a
transaction with the Corporation, requesting that each party provide Baird, not
later than November 11, 2004, with a written non-binding preliminary proposal
for the acquisition of the Corporation, specifying the proposed price range per
share of common stock, the proposed form of consideration, the proposed
transaction financing sources and any material conditions required by the
potential acquiror to complete the acquisition.
At a meeting of Thomas' board of directors on October 28, 2004,
representatives of Baird provided the board with an update of the sale process
and actions taken as of that date. Representatives of Baird discussed, among
other things, the degree of interest expressed by the potential acquirors. In
addition, representatives of Baird also discussed with the board the
implications of a payment of a special cash dividend to the shareholders.
Through November 10, 2004, Baird responded to questions presented by
certain of the potential acquirors regarding the confidential information
memorandum, the request for non-binding preliminary proposals and the
transaction process in general.
By November 11, 2004, four strategic parties (including Gardner Denver)
submitted non-binding written preliminary proposals for the acquisition of the
Corporation.
-21-
At a Thomas board of directors meeting held on November 19, 2004,
representatives of Baird updated the board on the sale process and reviewed the
four non-binding preliminary proposals which reflected valuations ranging from
$35.72 to $40.00 per share of common stock. After considering Baird's
presentation of the preliminary proposals received, Thomas' board of directors
authorized continuation of the sale process and instructed Baird and the
management team to invite the four parties that had submitted preliminary
proposals to proceed in the sale process, attend a management presentation
concerning the business and financial results of the Corporation and to be given
access to an electronic data room containing due diligence documentation. In
addition, representatives of Baird and McDermott Will & Emery LLP discussed with
the board the number of unsolicited inquiries Baird had received from third
parties with respect to their interest in acquiring Thomas. Representatives of
McDermott Will & Emery LLP then discussed with the board the proposed press
release disclosing that the Corporation was undertaking a review of its
strategic and financial alternatives.
On November 22, 2004, Thomas issued a press release reporting that it was
undertaking a review of strategic and financial alternatives, including the
exploration of acquisitions, stock buybacks, declaration of a special cash
dividend and the possible sale of Thomas. The closing price for Thomas' common
stock on November 19, 2004 (the last trading day prior to issuance of the press
release) was $37.13 per share and Thomas' common stock closed at $39.38 per
share on November 22, 2004. After the press release, representatives of Baird
had discussions with several additional potential acquirors of Thomas. Many of
these parties entered into confidentiality agreements and received the
confidential information memorandum and instructions for submitting written
preliminary proposals for the acquisition of Thomas. Ultimately, one additional
financial party submitted a written preliminary proposal on December 23, 2004
with an indicative share price range within the range of the other preliminary
proposals received.
Between December 13, 2004, and January 12, 2005, the parties continuing
their evaluations of a transaction with the Corporation proceeded with their due
diligence reviews consisting of a management presentation and access to the
electronic data room. Gardner Denver's management presentation took place in
Chicago, Illinois on December 20, 2004.
On December 16, 2004, Baird sent a letter to the parties continuing their
evaluations of a transaction with the Corporation requesting that such parties
provide Baird, not later than January 12, 2005, with an updated proposal,
specifying the proposed price per share of common stock, the proposed form of
consideration, the proposed transaction financing sources, the additional
information needed to complete their due diligence review and any material
conditions required by the potential acquiror to complete the acquisition.
By January 12, 2005, two parties (which included Gardner Denver) submitted
non-binding updated proposals for the acquisition of the Corporation.
At a Thomas board of directors meeting held on January 17, 2005,
representatives of Baird updated the board on the sale process and reviewed the
two non-binding updated proposals, one of which was submitted by Gardner Denver,
and the additional non-binding preliminary proposal that was submitted in
December 2004. After considering Baird's presentation of the proposals received,
Thomas' board of directors authorized the continuation of the sale process with
the two parties that had submitted updated proposals.
During the remainder of January 2005, and the first two weeks of February
2005, these parties (which included Gardner Denver) continued their due
diligence reviews of the Corporation, which included discussions with
representatives of the management team, Baird and McDermott Will & Emery LLP, a
-22-
review of documents contained in the electronic data room, visits to Thomas'
manufacturing facilities in the U.S. and Germany and the provision of
supplementary business, financial, legal and other information.
On January 26, 2005, Baird sent a letter to the two potential acquirors
(which included Gardner Denver), requesting that they provide Baird, not later
than February 14, 2005, with a final proposal, specifying the proposed price per
share of common stock, the form of consideration, the proposed transaction
financing sources, comments with respect to a proposed form of Merger Agreement,
any additional information needed to complete their due diligence review and any
material conditions required by the potential acquiror to complete the
acquisition.
On February 1, 2005, Baird provided the proposed form of Merger Agreement
prepared by McDermott Will & Emery LLP to the parties.
On February 14, 2005, Gardner Denver submitted a formal final proposal to
acquire Thomas' common stock along with their proposed revisions to the form of
the Merger Agreement previously provided.
At an informal meeting of Thomas' board of directors on February 16, 2005,
the directors discussed the sale process, the proposal received from Gardner
Denver and the various strategic and financial alternatives available to the
Corporation.
At a meeting of the board of directors of Thomas on February 17, 2005,
representatives of Baird updated the board on the sale process and reviewed the
terms and conditions of Gardner Denver's final proposal. In particular, the
purchase price, financing plan and related financing commitments, status of due
diligence and required regulatory approvals were discussed and considered.
Representatives of McDermott Will & Emery LLP discussed with the board the
proposed changes to the Merger Agreement submitted by Gardner Denver, the
board's fiduciary duties and the regulatory approval process. The board
instructed Baird to further negotiate with Gardner Denver regarding the purchase
price. Following negotiations between representatives of Baird and Gardner
Denver, Gardner Denver increased its cash purchase price to $40.00 per share.
Thomas' board of directors, with the advice of Baird and McDermott Will & Emery
LLP, authorized the management team, McDermott Will & Emery LLP and Baird to
proceed with negotiations with Gardner Denver with respect to the terms of a
definitive Merger Agreement.
On February 22, 2005, Gardner Denver and Thomas entered into a letter
agreement whereby Thomas agreed to exclusively negotiate with Gardner Denver
with respect to a potential acquisition through March 4, 2005 (which was
subsequently extended to March 11, 2005).
From February 18, 2005 through March 8, 2005, Gardner Denver finalized its
due diligence review which involved additional discussions with representatives
of Thomas and McDermott Will & Emery LLP and the receipt of additional due
diligence documents and information. In addition, Gardner Denver, Baker &
McKenzie LLP, its outside counsel, McDermott Will & Emery LLP, and the
management team of Thomas negotiated the definitive Merger Agreement.
At a meeting of the board of directors of Thomas on March 6, 2005, Mr.
Brown, McDermott Will & Emery LLP and Baird reviewed with the board the status
of the transaction and the negotiations of a definitive merger agreement with
Gardner Denver. In particular, there was extensive discussion regarding the
required regulatory approvals. Representatives of McDermott Will & Emery LLP
informed the board that a $5.0 million fee payable to Thomas under certain
circumstances upon termination of the Merger Agreement had been negotiated with
-23-
Gardner Denver in case there was a failure of the parties to obtain any
regulatory approvals required under the Merger Agreement.
On March 8, 2005, a meeting of Thomas' board of directors was convened to
discuss and evaluate the proposed sale of Thomas. During this meeting, McDermott
Will & Emery LLP discussed the terms the Merger Agreement and the directors'
fiduciary duties under Delaware law. Baird made a presentation to the board
regarding its financial analysis of the proposed Merger. As part of such
presentation, Baird provided its oral opinion to Thomas' board of directors to
the effect that, based upon and subject to the contents of such opinion, as of
such date, the consideration to be received by the Thomas shareholders under the
terms of the proposed Merger Agreement was fair, from a financial point of view,
to the Thomas shareholders (other than Gardner Denver and its affiliates). This
opinion was subsequently confirmed in writing on March 8, 2005. Following
conclusion of the deliberations of the board and based on the reasons and
considerations listed below in "The Merger--Thomas' Considerations Relating to
the Merger," Thomas' board of directors unanimously voted to approve the Merger
Agreement and the transactions contemplated by the Merger Agreement and resolved
to recommend that Thomas shareholders vote to approve the Merger Agreement.
On March 8, 2005, the parties executed the Merger Agreement, and the
execution of the Merger Agreement was announced by each of Thomas and Gardner
Denver on March 9, 2005.
THOMAS' CONSIDERATIONS RELATING TO THE MERGER
During the course of reaching its decision to approve the Merger and the
transactions contemplated by the Merger Agreement, our board of directors
considered a number of factors and consulted our senior management and outside
financial and legal advisors.
Our board of directors considered a number of factors supporting its
decision to approve the Merger, including, but not limited to:
o discussions with our management regarding our business, financial
condition, competitive position, business strategy, strategic options and
prospects, as well as the risks involved in achieving these prospects, the
nature of our business and the industry in which we compete, and current
industry, economic and worldwide market conditions, both on a historical
and on a prospective basis, all of which led our board of directors to
conclude that the Merger presented an opportunity for Thomas' shareholders
to realize greater value than the value likely to be realized by
shareholders in the event we remained independent;
o our review of the possible alternatives to a sale of Thomas, including
pursuit of an acquisition growth strategy, a stock buyback or payment of a
special one-time cash dividend, the value to shareholders of such
alternatives and the timing and likelihood of actually achieving additional
value from these alternatives, and our board's assessment that none of
these options were reasonably likely to result in value for shareholders
greater than the consideration to be received in the Merger;
o that the Merger alternative was agreed to by our board of directors only
after the issuance on November 22, 2004 by us of a press release regarding
a review of our strategic and financial alternatives, publicity concerning
our review of strategic and financial alternatives and the possibility that
we may be sold, and the passage of a significant period of time between
issuance of the press release and approval of the Merger Agreement;
-24-
o that the Merger was agreed to only after a lengthy sale process pursuant to
which (i) a public press release was issued concerning the Corporation's
evaluation of strategic and financial alternatives, including, a potential
sale of the Corporation; (ii) Baird had discussions with a total of 68
parties; and (iii) 35 parties received a confidential information
memorandum with respect to the Corporation;
o the financial analyses of Baird presented to our board of directors on
March 8, 2005, and the written opinion of Baird delivered on March 8, 2005
to our board of directors that, as of March 8, 2005, based upon and subject
to the matters set forth in its opinion, including the various assumptions
and limitations set forth therein, the consideration to be received by
holders of our common stock (other than Gardner Denver and its affiliates)
pursuant to the Merger Agreement was fair, from a financial point of view,
to such holders (other than Gardner Denver and its affiliates);
o the fact that our board of directors determined that the Merger was in the
best interests of all of the Corporation's shareholders and recommended
that the Merger Agreement be approved and adopted by Thomas' shareholders;
o the increases in our stock price since the board's process of evaluating
strategic and financial alternatives began on September 17, 2004 ($30.75
per share) and the public announcement of our review of strategic and
financial alternatives on November 22, 2004 ($37.13 per share on November
19, 2004) and our assessment regarding whether our common stock price was
likely to remain at current levels or above $40.00 per share if the Merger
was not consummated;
o the limited trading activity and liquidity and ownership concentration in
our common stock and the lack of research coverage for our Corporation;
o the costs and risks associated with being a public company;
o the fact that our common stock has historically traded at a discount to
other publicly-traded peer pump and compressor companies;
o the ability to apply the Corporation's cash balance in an acquisition
growth strategy given the limited number of available acquisition targets
of material size in our core product areas, the risks associated with an
acquisition growth strategy, the integration risks associated with larger
or non-core acquisitions, and the expected prices to be paid for such
acquisitions;
o the fact that additional senior management resources needed to be
identified and/or hired with respect to our management succession planning;
o our lack of significant revenue growth in the absence of acquisitions and
favorable foreign currency movements;
o continuing pressure on profit margins from competitive forces and higher
commodity costs;
o the belief of our board of directors, after consulting with Baird and
representatives of our management team regarding the discussions and
negotiations conducted with Gardner Denver, that we have obtained the
highest price per share that Gardner Denver was willing to pay;
o Gardner Denver's financial capability and experience in completing
acquisitions;
-25-
o our assessment as to the low likelihood that another party would offer a
higher price than Gardner Denver; and
o the terms of the Merger Agreement, as reviewed by our board of directors
with our legal advisors, including:
o sufficient operating flexibility for us to conduct our business in the
ordinary course between signing the Merger Agreement and consummating
the Merger, see "The Merger Agreement--Conduct of Business Pending the
Merger";
o the absence of a financing condition;
o our ability to furnish information to and conduct negotiations with
third parties under certain circumstances, as more fully described in
"The Merger Agreement--No Solicitation";
o our ability to recommend a more favorable unsolicited acquisition
proposal to our shareholders and terminate the Merger Agreement upon
the payment of a $12.0 million termination fee to Gardner Denver, see
"The Merger Agreement--No Solicitation," "The Merger
Agreement--Termination of Merger Agreement" and "The Merger
Agreement--Termination Fees and Expenses";
o the view of our board of directors, based upon the advice of senior
management after consultation with our legal counsel, that the
regulatory approvals necessary to complete the Merger could be
obtained, see "The Merger--Regulatory Filings and Approvals"; and
o our right to receive a $5.0 million fee if, as of December 15, 2005,
Thomas has satisfied certain conditions and the Merger Agreement is
terminated by either Thomas or Gardner Denver as a result of the
failure to obtain any regulatory approvals required under the Merger
Agreement or by Gardner Denver if any governmental entity imposes any
material limitation on its ownership or operation of Thomas and its
subsidiaries or requires Gardner Denver to sell any material portion
of its or Thomas' business, see "The Merger Agreement--Termination of
Merger Agreement" and "The Merger Agreement--Termination Fees and
Expenses."
Our board of directors also considered a number of potentially negative
factors in its deliberations concerning the Merger, including, but not limited
to:
o that we will no longer exist as a publicly-traded company and our
shareholders will no longer participate in our growth;
o that, under the terms of the Merger Agreement, we are limited in our
ability to solicit other acquisition proposals and we must pay Gardner
Denver a termination fee if the Merger Agreement is terminated under
certain circumstances, all of which may discourage other parties from
proposing an alternative transaction that may be more advantageous to our
shareholders;
o the possibility that the Merger may not be approved by the applicable
regulatory authorities required under the Merger Agreement and the
potential negative consequences arising from the failure to complete the
Merger;
-26-
o the risks and contingencies related to the announcement and pendency of the
Merger, including the likely impact on our customers and suppliers and the
possibility of losing key employees;
o the fact that gains from an all-cash transaction would generally be taxable
to our shareholders for United States federal income tax purposes, see "The
Merger--Material United States Federal Income Tax Consequences";
o that if the Merger does not close, our employees will have expended
extensive efforts to attempt to complete the transaction and will have
experienced significant distractions from their work during the pendency of
the transaction; and
o the conditions to Gardner Denver's obligation to complete the Merger and
the right of Gardner Denver to terminate the Merger Agreement under certain
circumstances, see "The Merger Agreement--Termination of Merger Agreement."
During its consideration of the Merger with Gardner Denver, our board of
directors was also aware that some of our executive officers have interests in
the Merger that are in addition to or differ from those of our shareholders
generally, as described in "The Merger--Interests of Thomas' Directors and
Officers in the Merger."
This summary is not meant to be an exhaustive description of the
information and factors considered by our board of directors but is believed to
address the material information and factors considered. In view of the wide
variety of factors considered by our board of directors, it is not possible to
quantify or to give relative weights to the various factors. After taking into
consideration all the factors set forth above, as well as other factors not
specifically described above, our board of directors unanimously approved the
Merger Agreement and the transactions contemplated by the Merger Agreement
because of its assessment that the Merger is advisable to, and in the best
interest of, our shareholders.
The forgoing discussion of Thomas' board of directors' considerations
relating to the Merger is forward-looking in nature. This information should be
read in light of the discussion under the heading "Cautionary Statement
Concerning Forward-Looking Information."
RECOMMENDATION OF THOMAS' BOARD OF DIRECTORS
After careful consideration, Thomas' board of directors has unanimously
determined that the Merger Agreement is advisable and in the best interests of
Thomas shareholders, has approved the Merger Agreement and recommends that
Thomas shareholders vote "FOR" approval and adoption of the Merger Agreement.
FAILURE TO APPROVE AND COMPLETE THE MERGER
It is possible the Merger will not be completed. This would happen if
Thomas shareholders do not approve and adopt the Merger Agreement or if certain
other conditions are not satisfied or waived. See "The Merger Agreement--
Conditions to Consummation of the Merger." If the Merger is not completed, none
of Gardner Denver, Thomas or any other person will be under any obligation to
make or consider any alternate proposal regarding the acquisition of Thomas.
-27-
OPINION OF THOMAS' FINANCIAL ADVISOR
Thomas' board of directors retained Baird in connection with the Merger and
to render an opinion as to the fairness, from a financial point of view, to the
holders of the Corporation's common stock (other than Gardner Denver and its
affiliates) of the consideration to be received by the holders of the
Corporation's common stock (other than Gardner Denver and its affiliates) in the
Merger.
On March 8, 2005, Baird rendered its oral opinion (which was subsequently
confirmed in writing) to the board of directors of the Corporation to the effect
that, based upon and subject to the contents of such opinion, including the
various assumptions and limitations set forth therein, Baird was of the opinion
that, as of such date, the consideration to be received by the holders of the
Corporation's common stock (other than Gardner Denver and its affiliates) was
fair, from a financial point of view, to the holders of the Corporation's common
stock (other than Gardner Denver and its affiliates).
The full text of Baird's written opinion, dated March 8, 2005, which sets
forth the assumptions made, general procedures followed, matters considered and
limitations on the scope of review undertaken by Baird in rendering its opinion,
is attached as Appendix C to this proxy statement and is incorporated herein by
reference. Baird's opinion is directed only to the fairness, as of the date of
the opinion and from a financial point of view, to the holders of the
Corporation's common stock (other than Gardner Denver and its affiliates) of the
consideration to be received by such holders and does not constitute a
recommendation to any shareholder as to how such shareholder should act with
respect to the Merger. The summary of Baird's opinion set forth below is
qualified in its entirety by reference to the full text of such opinion attached
as Appendix C to this proxy statement. Thomas shareholders are urged to read the
opinion carefully in its entirety.
In conducting its investigation and analyses and in arriving at its
opinion, Baird reviewed such information and took into account such financial
and economic factors, investment banking procedures and considerations as it
deemed relevant under the circumstances. In that connection, Baird has, among
other things: (i) reviewed certain internal information, primarily financial in
nature, including financial forecasts concerning the business and operations of
the Corporation furnished to Baird for purposes of its analysis; (ii) reviewed
publicly available information including, but not limited, to the Corporation's
recent filings with the Securities and Exchange Commission and equity analyst
research reports covering the Corporation prepared by Baird; (iii) reviewed the
draft Merger Agreement in the form presented to the Corporation's board of
directors; (iv) compared the financial position and operating results of the
Corporation with those of other publicly-traded companies Baird deemed relevant;
(v) compared the historical market prices and trading activity of the
Corporation's common stock with those of other publicly-traded companies Baird
deemed relevant and considered the market trading multiples of such companies;
(vi) compared the proposed financial terms of the Merger with the financial
terms of other business combinations Baird deemed relevant; and (vii) considered
the present values of the forecasted cash flows of the Corporation. Baird held
discussions with members of the Corporation's senior management concerning the
Corporation's historical and current financial condition and operating results,
as well as the future prospects of the Corporation. As a part of its engagement,
Baird was requested to and did solicit third party indications of interest in
acquiring the Corporation. Baird also considered such other information,
financial studies, analyses and investigations and financial, economic and
market criteria which it deemed relevant for the preparation of its opinion.
In arriving at its opinion, Baird assumed and relied upon the accuracy and
completeness of all of the financial and other information that was publicly
available or provided to Baird by or on behalf of the Corporation. Baird was not
engaged to independently verify, and it did not assume any responsibility to
verify, any such information, and Baird assumed that the Corporation was not
aware of any information prepared by it or its advisors that might be material
to Baird's opinion that had not been provided to Baird. Baird assumed and relied
upon in preparation of its opinion that: (i) all material assets and liabilities
(contingent or otherwise, known or unknown) of the Corporation were as set forth
in its financial statements; (ii) the financial statements of the Corporation
-28-
provided to Baird presented fairly the results of operations, cash flows and
financial condition of the Corporation for the periods indicated and were
prepared in conformity with U.S. generally accepted accounting principles
consistently applied; (iii) the forecasts for the Corporation furnished to Baird
were reasonably prepared on bases reflecting the best available estimates and
good faith judgments of the Corporation's senior management as to the future
performance of the Corporation; (iv) the Merger will be consummated in
accordance with the terms and conditions of the draft Merger Agreement without
any amendment thereto and without waiver by any party of any of the conditions
to their respective obligations thereunder; (v) in all respects material to
Baird's analysis, the representations and warranties contained in the draft
Merger Agreement are true and correct and that each party will perform all of
the covenants and agreements required to be performed by it under such Merger
Agreement; and (vi) all material corporate, governmental, regulatory or other
consents and approvals required to consummate the Merger have been or will be
obtained. Baird has relied as to all legal matters regarding the Merger on the
advice of counsel of the Corporation. In conducting its review, Baird did not
undertake nor obtain an independent evaluation or appraisal of any of the assets
or liabilities (contingent or otherwise) of the Corporation nor did it make a
physical inspection of the properties or facilities of the Corporation. In each
case, Baird made the assumptions above with the Corporation's consent.
Baird's opinion necessarily is based upon economic, monetary and market
conditions as they existed and could be evaluated on the date of such opinion,
and its opinion does not predict or take into account any changes which have
occurred or may occur, or information which has become available or may become
available, after the date of such opinion.
Baird's opinion was prepared at the request and for the information of the
board of directors of the Corporation, and may not be quoted or referred to, in
whole or in part, in any registration statement, prospectus or proxy statement,
in any other document used in connection with the offering or sale of securities
or in any other publicly available document or otherwise relied upon, used for
any other purpose or disclosed to any other party without Baird's prior written
consent; provided, however, that Baird has consented to the reproduction of its
opinion in full in this proxy statement. Baird's opinion does not address the
relative merits of: (i) the Merger, the Merger Agreement or any other agreements
or other matters provided for or contemplated by the Merger Agreement; (ii) any
other transactions that may be or might have been available as an alternative to
the Merger; or (iii) the Merger compared to any other potential alternative
transactions or business strategies considered by the Corporation's board of
directors and, accordingly, Baird relied upon its discussions with the senior
management of the Corporation with respect to the availability and consequences
of any alternatives to the Merger. BAIRD'S OPINION DOES NOT CONSTITUTE A
RECOMMENDATION TO ANY SHAREHOLDER OF THE CORPORATION AS TO HOW ANY SUCH
SHAREHOLDER SHOULD ACT WITH RESPECT TO THE MERGER.
THE FOLLOWING IS A SUMMARY OF THE MATERIAL FINANCIAL ANALYSES PERFORMED BY
BAIRD IN CONNECTION WITH RENDERING ITS OPINION, WHICH IS QUALIFIED IN ITS
ENTIRETY BY REFERENCE TO THE FULL TEXT OF SUCH OPINION ATTACHED AS APPENDIX C TO
THIS PROXY STATEMENT AND TO THE OTHER DISCLOSURES CONTAINED IN THIS SECTION. THE
FOLLOWING SUMMARY, HOWEVER, DOES NOT PURPORT TO BE A COMPLETE DESCRIPTION OF THE
FINANCIAL ANALYSES PERFORMED BY BAIRD. THE ORDER OF ANALYSES DESCRIBED DOES NOT
REPRESENT RELATIVE IMPORTANCE OR WEIGHT GIVEN TO THE ANALYSES PERFORMED BY
BAIRD. SOME OF THE SUMMARIES OF THE FINANCIAL ANALYSES INCLUDE INFORMATION
PRESENTED IN A TABULAR FORMAT. THESE TABLES MUST BE READ TOGETHER WITH THE FULL
TEXT OF EACH SUMMARY AND ALONE ARE NOT A COMPLETE DESCRIPTION OF BAIRD'S
FINANCIAL ANALYSES. EXCEPT AS OTHERWISE NOTED, THE FOLLOWING QUANTITATIVE
INFORMATION IS BASED ON MARKET AND FINANCIAL DATA AS IT EXISTED ON OR BEFORE
FRIDAY, MARCH 4, 2005 (THE DATE THAT BAIRD'S PRESENTATION TO THE BOARD OF
DIRECTORS WAS FINALIZED), AND IS NOT NECESSARILY INDICATIVE OF CURRENT MARKET
CONDITIONS.
-29-
Implied Transaction Multiples and Transaction Premiums. Based on the
consideration of $40.00 in cash for each outstanding share of the Corporation's
common stock (the "per share equity purchase price"), Baird calculated the
implied "equity purchase price" (defined as the per share equity purchase price
multiplied by the total number of diluted shares of the Corporation's common
stock outstanding (including performance shares and gross shares issuable upon
the exercise of stock options) less implied gross option proceeds, plus implied
payments in respect of stock appreciation rights) to be $734.0 million. In
addition, Baird calculated the implied "total purchase price" (defined as the
equity purchase price plus the book value of the Corporation's total debt and
financial obligations associated with completed acquisitions, less cash, cash
equivalents and marketable securities) to be $491.0 million. Baird then
calculated the multiples of the total purchase price to the latest twelve months
("LTM") ended December 31, 2004 and projected 2005 revenues; earnings before
interest, taxes, depreciation and amortization ("EBITDA"); earnings before
interest and taxes ("EBIT"); net income (excluding after-tax net interest); and
book value (adjusted for the Corporation's net cash position) of the
Corporation. Baird also calculated the multiples of the per share equity
purchase price to the Corporation's LTM and projected 2005 diluted earnings per
share. In calculating the transaction multiples implied in the Merger, Baird
utilized historical and projected financial information provided by the
Corporation, which reflected adjustments for certain non-recurring expenses
provided by the Corporation. These transaction multiples are summarized in the
table below.
IMPLIED MERGER TRANSACTION MULTIPLES
----------------------------------------------------------------------------
FISCAL YEAR ENDED DECEMBER 31,
--------------------------------------------
2004/LTM 2005P
--------------------- --------------------
Revenues 1.2x 1.1x
EBITDA 9.2x 8.3x
EBIT 13.3x 12.2x
Net Income(1) 21.4x 18.6x
EPS 31.2x 24.3x
Book Value(2) 1.8x --
------------------------------------
(1) Based on net income excluding after-tax net interest.
(2) Based on book value adjusted for net cash balance.
Baird reviewed the historical price and trading activity of the
Corporation's common stock and noted that through Friday, March 4, 2005 (the
date that Baird's presentation to the board of directors was finalized), the
Corporation's common stock price rose 24.8% over the last twelve months and rose
50.1% over the last three years. Baird also noted that the Corporation's common
stock rose 30.8% since September 17, 2004, which was the date of the board's
decision to pursue the strategic and financial alternatives evaluation process,
and rose 8.3% since November 19, 2004, which was the trading date prior to the
public announcement of the Corporation's strategic and financial alternatives
evaluation process.
Baird also calculated the premiums that the per share equity purchase price
represented over the closing market prices of the Corporation's common stock for
various time periods ranging from 1-day to 1-year prior to and including March
4, 2005. As part of this analysis, Baird calculated the premiums that the per
share equity price represented over the closing prices on September 17, 2004 and
November 19, 2004. Given the Corporation's cash balance of approximately $14.35
per share, premiums were also computed assuming exclusion of this cash balance.
These premiums are summarized in the table below.
-30-
IMPLIED MERGER TRANSACTION PREMIUMS
-------------------------------------------------------
PREMIUM
(EXCLUDING
PREMIUM CASH)(2)
------------- --------------
1 Day(1) (0.5%) (0.9%)
7 Days(1) (0.0%) (0.0%)
30 Days(1) 0.3% 0.5%
60 Days(1) 2.9% 4.6%
90 Days(1) 2.2% 3.4%
11/19/2004(3) 7.7% 12.6%
09/17/2004(4) 30.1% 56.4%
1 Year(1) 24.1% N/A
LTM High(1) (0.5%) (0.9%)
LTM Low(1) 34.5% 66.8%
------------------------------------
(1) Based on days prior to and including March 4, 2005.
(2) Assumes cash balance of approximately $14.35 per share.
(3) Trading date prior to public announcement of strategic
and financial alternatives evaluation process.
(4) Date of the board of directors' decision to pursue the
strategic and financial alternatives evaluation process.
Discounted Cash Flow Analysis. Baird performed a discounted cash flow
analysis utilizing projected unlevered free cash flows for the Corporation
(defined as net income excluding after-tax net interest, plus depreciation and
amortization, less capital expenditures and increases in net working capital,
plus/minus changes in other operating and investing cash flows) from 2005 to
2009, based on forecasts for 2005, 2006 and 2007 provided by the Corporation's
senior management and extrapolations therefrom based on such forecasts and
consultation with the Corporation's senior management. In such analysis, Baird
calculated the present values of the projected unlevered free cash flows from
2005 to 2009 by discounting such amounts at rates ranging from 10.5% to 12.5%.
Baird calculated the present values of the projected unlevered free cash flows
beyond 2009 by assuming terminal values ranging from 6.5x to 8.5x year 2009
projected EBITDA and alternatively by assuming unlevered free cash flow
long-term perpetual growth rates ranging from 3.0% to 5.0% and discounting the
resulting terminal values at rates ranging from 10.5% to 12.5%. The summation of
the present values of the projected unlevered free cash flows and the present
values of the terminal values implied per share equity values ranging from
$34.47 to $47.27 per share with an average of $39.81 per share and a median of
$39.78 per share. As a part of the analysis that Baird undertook in order to
render its opinion described herein, Baird compared these implied per share
equity values with the per share equity purchase price of $40.00.
Selected Company Analysis. Baird reviewed certain publicly available
financial information and stock market information for publicly-traded companies
that Baird deemed relevant. The group of selected publicly-traded companies
reviewed is listed below.
o AMETEK o Gorman-Rupp
o Baldor Electric o IDEX
o CIRCOR International o Parker Hannifin
o Flowserve o REGAL-BELOIT
o Franklin Electric o Robbins & Myers
o Gardner Denver o Tecumseh Products
-31-
Baird chose these companies based on a review of publicly-traded companies
that possessed general business, operating and/or financial characteristics
representative of companies in the industry in which the Corporation operates.
Baird noted that none of the companies reviewed is identical to the Corporation
and that, accordingly, the analysis of such companies necessarily involves
complex considerations and judgments concerning differences in the business,
operating, financial and trading characteristics of each company and other
factors that affect the public market values of such companies.
For each company, Baird calculated the "equity market value" (defined as
the market price per share of each company's common stock multiplied by the
total number of diluted common shares outstanding of such company, including net
shares issuable upon the exercise of stock options and warrants). In addition,
Baird calculated the "total market value" (defined as the equity market value
plus the book value of each company's total debt, preferred stock and minority
interests, less cash, cash equivalents and marketable securities). Baird
calculated the multiples of each company's total market value to its LTM and
projected 2005 revenues, EBITDA and EBIT. Baird also calculated multiples of
each company's price per share to its LTM and projected 2005 diluted earnings
per share (net income multiples) and to its LTM book value per share. Baird then
compared the transaction multiples implied in the Merger with the corresponding
trading multiples for the selected companies. Stock market and historical
financial information for the selected companies was based on publicly available
information through March 4, 2005, and projected financial information was based
on publicly available research reports as of such date. A summary of the implied
multiples is presented in the table below.
SELECTED COMPANY ANALYSIS
-------------------------------------------------------------------------------------------------------------------
IMPLIED
MERGER SELECTED COMPANY MULTIPLES
TRANSACTION -------------------------------------------------------------------
MULTIPLE LOW AVERAGE MEDIAN HIGH
----------- ------------- ---------------- --------------- -------------
Revenues
2005P 1.1x 0.5x 1.3x 1.1x 2.4x
LTM 1.2x 0.5x 1.4x 1.2x 2.6x
EBITDA
2005P 8.3x 5.6x 9.1x 8.6x 12.4x
LTM 9.2x 6.4x 10.5x 10.6x 14.1x
EBIT
2005P 12.2x 10.1x 12.4x 12.4x 14.6x
LTM 13.3x 10.8x 14.0x 13.9x 16.8x
Net Income(1)
2005P 18.6x 13.8x 18.8x 18.9x 22.9x
LTM 21.4x 16.0x 23.1x 24.8x 26.6x
Book Value (LTM)(2) 1.8x 0.7x 1.6x 1.7x 2.2x
------------------------------------
(1) Based on net income excluding after-tax net interest for Thomas.
(2) Based on book value adjusted for net cash balance for Thomas.
-32-
As a part of the analysis that Baird undertook in order to render its
opinion described herein, Baird calculated the implied per share equity values
of the Corporation's common stock based on the trading multiples that Baird
deemed relevant of the selected public companies and compared such values to the
per share equity purchase price of $40.00 per share. Such implied per share
equity values are set forth in the table below.
SELECTED COMPANY ANALYSIS
-------------------------------------------------------------------------------------------------------------------
IMPLIED EQUITY VALUE / SHARE
------------------------------------------------------------------------------
LOW AVERAGE MEDIAN HIGH
----------- ------------- ---------------- ---------------
Revenues
2005P $25.06 $44.63 $39.33 $70.91
LTM $24.53 $44.69 $39.35 $71.33
EBITDA
2005P $31.42 $42.38 $40.93 $52.74
LTM $32.17 $43.76 $43.87 $53.66
EBIT
2005P $35.48 $40.23 $40.41 $44.91
LTM $35.21 $41.36 $41.26 $46.92
Net Income(1)
2005P $33.38 $40.34 $40.38 $45.94
LTM $33.43 $42.02 $44.08 $46.23
AVERAGE $31.34 $42.43 $41.20 $54.08
------------------------------------
(1) Based on net income excluding after-tax net interest for Thomas.
-33-
Selected Acquisition Analysis. Baird reviewed certain publicly available
financial information concerning completed acquisition transactions that Baird
deemed relevant. The group of selected acquisition transactions is listed below.
TARGET ACQUIROR
------ --------
o HVAC/Refrigeration Motor and o REGAL-BELOIT
Capacitor Operations of General Electric
o Haskel International o United Technologies
o GE Commercial AC Motors o REGAL-BELOIT
o nash_elmo Holdings o Gardner Denver
o WICOR o Pentair
o Denison International o Parker Hannifin
o Syltone o Gardner Denver
o Neptune Technology Group o Roper Industries
o FASCO Motors Group o Tecumseh Products
o Werner Rietschle Holding o Thomas Industries
o Invensys plc's Flow Control Division o Flowserve
o American Machine & Tool Co. o Gorman-Rupp
o KCI o Universal Compression Holdings
o United Dominion Industries o SPX
o Leeson Electric o REGAL-BELOIT
o Ingersoll-Dresser Pump Company o Flowserve
o Gast Manufacturing o IDEX
Baird chose these acquisition transactions based on a review of completed
acquisition transactions involving target companies that possessed general
business, operating and/or financial characteristics representative of companies
in the industry in which the Corporation operates. Baird noted that none of the
acquisition transactions or subject target companies reviewed is identical to
the Merger or the Corporation, respectively, and that, accordingly, the analysis
of such acquisition transactions necessarily involves complex considerations and
judgments concerning differences in the business, operating and financial
characteristics of each subject target company and each acquisition transaction
and other factors that affect the values implied in such acquisition
transactions.
For each transaction, Baird calculated the "equity purchase price" (defined
as the purchase price per share of each target company's common stock multiplied
by the total number of diluted common shares outstanding of such company,
including gross shares issuable upon the exercise of stock options and warrants,
less assumed option and warrant proceeds, or alternatively defined as the value
attributable to the equity of a target company). In addition, Baird calculated
the "total purchase price" (defined as the equity purchase price plus the book
value of each target company's total debt, preferred stock and minority
interests, less cash, cash equivalents and marketable securities). Baird
calculated the multiples of each target company's total purchase price to its
LTM revenues, EBITDA and EBIT. Baird also calculated multiples of each target
company's implied equity purchase price to its LTM net income and book value.
Baird then compared the transaction multiples implied in the Merger with the
corresponding transaction multiples for the selected acquisition transactions.
-34-
A summary of the implied multiples is presented in the table below.
SELECTED ACQUISITION ANALYSIS
---------------------------------------------------------------------------------------------------------------------------
IMPLIED MERGER SELECTED ACQUISITION MULTIPLES
TRANSACTION -----------------------------------------------------------------------
MULTIPLE LOW AVERAGE MEDIAN HIGH
-------------- ------------- ---------------- --------------- -------------
Revenues (LTM) 1.2x 0.5x 1.0x 1.0x 1.6x
EBITDA (LTM) 9.2x 5.2x 7.5x 7.7x 9.9x
EBIT (LTM) 13.3x 6.2x 9.9x 9.5x 13.1x
Net Income (LTM)(1) 21.4x 10.2x 18.7x 18.1x 28.7x
Book Value (LTM)(2) 1.8x 1.0x 1.6x 1.7x 2.2x
------------------------------------
(1) Based on net income excluding after-tax net interest for Thomas.
(2) Based on book value adjusted for net cash balance for Thomas.
As part of the analysis that Baird undertook in order to render its opinion
described herein, Baird calculated the implied per share equity values of the
Corporation's common stock based on the acquisition transaction multiples that
Baird deemed relevant of the selected acquisition transactions and compared such
values to the per share equity purchase price of $40.00. Such implied per share
equity values are set forth in the table below.
SELECTED ACQUISITION ANALYSIS
-------------------------------------------------------------------------------------------------------------------
IMPLIED EQUITY VALUE / SHARE
------------------------------------------------------------------------------
LOW AVERAGE MEDIAN HIGH
----------- ------------- ---------------- ---------------
Revenues (LTM) $24.72 $35.74 $35.32 $48.69
EBITDA (LTM) $28.82 $35.16 $35.69 $41.89
EBIT (LTM) $26.26 $33.50 $32.74 $39.61
Net Income (LTM)(1) $26.43 $36.74 $36.01 $48.84
AVERAGE $26.56 $35.29 $34.94 $44.76
------------------------------------
(1) Based on net income excluding after-tax net interest for Thomas.
-35-
In addition, Baird calculated the acquisition premiums paid in a broad
range of public industrial sector cash transactions and compared them to the
transaction premiums implied in the proposed Merger. This data set included 70
cash transactions with total purchase prices between $250 million and $750
million that were announced since January 2002 and involved U.S. targets while
excluding financial, government agency and real estate industry transactions. As
part of this analysis, Baird calculated the premiums that the per share equity
price in the Merger represented over Thomas' closing stock prices on: (i)
September 17, 2004, which was the date of the board's decision to pursue the
strategic and financial alternatives evaluation process and (ii) November 19,
2004, which was the trading date prior to the public announcement of the
Corporation's strategic and financial alternatives evaluation process. Given the
Corporation's cash balance of approximately $14.35 per share, premiums were also
computed assuming exclusion of this cash balance. A summary of the implied
premiums is provided in the table below.
SELECTED ACQUISITION ANALYSIS - TRANSACTION PREMIUMS
------------------------------------------------------------------------------------------------------------------------
IMPLIED MERGER
IMPLIED TRANSACTION
MERGER PREMIUM SELECTED ACQUISITION PREMIUMS(1)
TRANSACTION (EXCLUDING -----------------------------------------------------
STOCK PRICE PREMIUM CASH)(3) LOW AVERAGE MEDIAN HIGH
----------- ----------- -------------- ----------- ----------- ----------- -----------
1-Day Prior to $40.22 (0.5%) (0.9%) (17.7%) 22.1% 22.0% 65.7%
Announcement(2)
1-Week Prior to $40.01 (0.0%) (0.0%) (20.3%) 25.6% 23.4% 70.0%
Announcement(2)
4-Weeks Prior to $39.68 0.8% 1.3% (14.6%) 33.0% 28.6% 96.7%
Announcement(2)
11/19/2004(4) $37.13 7.7% 12.6% -- -- -- --
9/17/2004(5) $30.75 30.1% 56.4% -- -- -- --
------------------------------------
(1) Based on 70 transactions between $250 million and $750 million since January 2002 involving U.S. targets.
Excludes financial, government agency and real estate industry transactions.
(2) Based on days prior to and including March 4, 2005 for Thomas.
(3) Assumes cash balance of approximately $14.35 per share.
(4) Trading date prior to public announcement of strategic and financial alternatives evaluation process.
(5) Date of the board of directors' decision to pursue the strategic and financial alternatives evaluation
process.
Valuation Summary. A summary of the valuation statistics from the analyses
presented above is provided in the table below.
SUMMARY EQUITY VALUATION PER SHARE
-------------------------------------------------------------------------------------------------------------------
LOW AVERAGE MEDIAN HIGH
--------------- --------------- --------------- ---------------
Discounted Cash Flow Analysis $34.47 $39.81 $39.78 $47.27
Selected Company Analysis $31.34 $42.43 $41.20 $54.08
Selected Acquisition Analysis $26.56 $35.29 $34.94 $44.76
AVERAGE(1) $30.79 $39.17 $38.64 $48.70
------------------------------------
(1) Represents the average of each respective column.
The foregoing summary does not purport to be a complete description of the
analyses performed by Baird or its presentation to the Corporation's board of
directors. The preparation of financial analyses and a fairness opinion is a
complex process and is not necessarily susceptible to partial analyses or
summary description. Baird believes that its analyses (and the summary set forth
above) must be considered as a whole and that selecting portions of such
analyses and factors considered by Baird, without considering all of such
analyses and factors, could create an incomplete view of the processes and
judgments underlying the analyses performed and conclusions reached by Baird and
its opinion. Baird did not attempt to assign specific weights to particular
-36-
analyses. Any estimates contained in Baird's analyses are not necessarily
indicative of actual values, which may be significantly more or less favorable
than as set forth therein. Estimates of values of companies do not purport to be
appraisals or necessarily reflect the prices at which companies may actually be
sold. Because such estimates are inherently subject to uncertainty, Baird does
not assume responsibility for their accuracy.
As part of its investment banking business, Baird is engaged in the
evaluation of businesses and their securities in connection with mergers and
acquisitions, negotiated underwritings, competitive biddings, secondary
distributions of listed and unlisted securities, private placements and
valuations for estate, corporate and other purposes. Pursuant to an engagement
letter dated September 17, 2004, Baird will receive a transaction fee of
approximately $3.7 million for its services, a significant portion of which is
contingent upon the consummation of the Merger. Included in such amount is a
non-refundable fee of $500,000 payable upon delivery of its fairness opinion,
regardless of the conclusions reached in such opinion. In addition, the
Corporation has agreed to reimburse Baird for certain out-of-pocket expenses and
to indemnify Baird against certain liabilities that may arise out of its
engagement, including liabilities under the federal securities laws. In the
past, Baird has provided investment banking services to the Corporation and
Gardner Denver for which Baird received customary compensation. Baird is a full
service securities firm. As such, in the ordinary course of its business, Baird
may from time to time trade the securities of the Corporation or Gardner Denver
for its own account or the accounts of its customers and, accordingly, may at
any time hold long or short positions or effect transactions in such securities.
Baird may also prepare equity analyst research reports from time to time
regarding the Corporation or Gardner Denver.
INTERESTS OF THOMAS' DIRECTORS AND OFFICERS IN THE MERGER
Some of Thomas' directors and executive officers have interests in the
Merger that are different from, or are in addition to, their interests as
shareholders in Thomas. Thomas' board of directors knew about these additional
interests and considered them when it approved the Merger Agreement. See
"Security Ownership of Certain Beneficial Owners and Management." These
interests include the following:
Employment ("Change of Control") Agreements
In 1988, Thomas executed change of control agreements with Timothy C. Brown
and Phillip J. Stuecker. The change of control agreements provide the following:
o Upon a "change of control" (as defined in the change of control
agreements), the executive will be entitled to receive until the earlier of
termination or resignation and the second anniversary of the change of
control a base salary at least equal to the highest monthly base salary
paid during the prior twelve months, plus a bonus equal to the executive's
average bonus over the prior three fiscal years, and participation in
incentive, employee benefit and welfare plans;
o Upon a termination of the executive other than for "cause" (as defined in
the change of control agreements) or upon the executive's resignation for
"good reason" (as defined in the change of control agreements) during the
two-year period following the change of control, the executive will be
entitled to receive, within 30 days of employment termination, a lump sum
cash payment consisting of:
o the executive's unpaid highest base salary (as defined in the change
of control agreements) through the date of termination;
-37-
o a prorated portion of the "Annual Bonus" (as defined in the change of
control agreements) paid to the executive during the last full fiscal
year ending during the "Employment Period" (as defined in the change
of control agreements) (or, if higher, the Annual Bonus paid to the
executive for the fiscal year ended immediately prior to the change of
control), with the prorated portion determined by multiplying the
Annual Bonus amount by a fraction, the numerator of which is the
number of days completed in the current fiscal year through the date
of employment termination and the denominator of which is 365;
o a payment for accrued but unused vacation;
o all prior deferred amounts; and
o the present value of 36 monthly payments each equaling 1/12 of the sum
of (i) the executive's salary at the Highest Base Rate plus (ii) the
executive's Annual Bonus paid to the executive during the last full
fiscal year ending during the Employment Period (or, if higher, the
Annual Bonus paid to the executive for the fiscal year ended
immediately prior to the change of control), with present value
determined as of the date of employment termination using an annual
discount rate set forth in Section 280G of the Code (the "Severance
Payments").
o In addition to the payments described above, upon a termination of the
executive other than for "cause" or upon the executive's resignation for
"good reason" during the two-year period following the change of control,
the executive is entitled to the following:
o the payment six months after employment termination of an amount equal
to the present value (determined using an annual discount rate set
forth in Section 280G of the Code) of three annual contributions or
credits to all Thomas qualified and nonqualified retirement plans,
respectively, based upon the average contribution or credit to those
plans for the two immediately prior fiscal years (the "Retirement
Payments"); and
o for three years from the date of employment termination, continued
coverage for the executive and/or his family under all employee
welfare benefit plans, practices, policies, and programs provided by
the Corporation including, without limitation, medical, prescription,
dental, disability, employee life, group life, accidental death, and
travel accident insurance, each at the levels in effect prior to the
Effective Time as described in the change of control agreements.
o If any payment to the executive, whether pursuant to the change of control
agreements or otherwise, would be subject to the excise tax imposed by
Section 4999 of the Code, then the executive is entitled to receive an
additional payment that will provide the executive, on an after tax basis,
the amount of any taxes imposed upon him by Section 4999 of the Code (the
"Tax Gross Up").
o The executives are also entitled to reimbursement of any legal fees
incurred by the executive to enforce the change of control agreements.
In connection with the Merger, Gardner Denver agreed not to contest either
executive's claim that his termination after the Effective Time was for "good
reason" if the executive provides reasonable advance written notice to the Chief
Executive Officer of Gardner Denver within six months of the Effective Time.
Under the change of control agreements, upon the executive's termination
after the Effective Time, each executive will receive his base salary through
the termination date, a prorated bonus as described above, and continued
participation for three years in the Corporation's welfare benefits program.
Each executive will also receive payments in the following estimated amounts:
-38-
ESTIMATED PAYMENT MR. BROWN MR. STUECKER
Severance Payments $2,708,997 $1,230,685
Retirement Payments $259,327 $76,939
Tax Gross Up $2,173,000 $844,000
---------- --------
TOTAL PAYMENTS PURSUANT TO CHANGE OF CONTROL AGREEMENTS $5,141,324 $2,151,624
========== ==========
Stock Options and Stock Appreciation Rights ("SARs")
All of the officers and directors of Thomas hold stock options or SARs with
respect to common stock of Thomas. Upon shareholder approval of the Merger in
accordance with the DGCL, any unvested options and SARs will immediately become
vested. Any stock options or SARs outstanding at the Effective Time will be
liquidated (in one of two methods depending upon if the option involved
qualifies as an "incentive stock option" under the Code). Under either method,
within three business days after the Effective Time, Gardner Denver will pay or
will cause the Surviving Corporation to pay to each option holder for each
option or SAR an amount in cash equal to the product of (A) the difference
between $40.00 and the per share exercise price of such option or SAR, and (B)
the number of shares of Thomas common stock covered by such option or SAR, less
any applicable withholding taxes. The aggregate amount of cash to be paid to
directors and officers with respect to their options and SARs in connection with
the Merger is expected to be approximately $13,233,704, including $7,442,055 to
Mr. Brown, $2,089,459 to Mr. Stuecker, $274,359 to Ms. Laurie Lyons, $276,533 to
Mr. Roger Whitton, $413,118 to Mr. Ronald Wiseman, $525,980 to Mr. James Kregel
and $921,797 to Mr. Peter Bissinger. The amounts in the preceding sentence are
in addition to any amounts payable with respect to the change of control
agreements or performance shares. The aggregate amount to be paid to all outside
directors with respect to outstanding stock options and SARs is expected to be
$1,290,405.
Performance Shares
For all performance share awards outstanding immediately prior to the
Effective Time, 100 percent of the target shares then credited to each
participant will be deemed payable to each participant; provided, however, that
in lieu of receiving Thomas common stock, participants will receive a cash
payment equal to the number of performance shares (adjusted for any dividends
paid since such performance shares were awarded) multiplied by $40.00, less any
applicable withholding taxes. The amounts to be received by Thomas' officers are
expected to be as follows: Mr. Brown, $1,108,306, Mr. Stuecker, $283,750, Ms.
Lyons, $50,664, Mr. Whitton, $46,632, Mr. Wiseman, $50,664, Mr. Kregel,
$194,142, and Mr. Bissinger, $48,686. These amounts are in addition to amounts
described above with respect to change of control agreements and stock options
and SARs.
Director Payments
Upon termination of each outside director's service with Thomas' board of
directors at the Effective Time, in accordance with Thomas' past practice for
retiring directors, Gardner Denver has agreed to pay all terminated outside
directors (who sign a consulting and non-competition agreement) the amount set
forth below in a single lump sum payment coincident with or as soon as
practicable after the Effective Time. All new directors elected to the board
after 1994 are entitled to receive a benefit equal to one year's retainer fee
for each three years served on the board of directors, up to a maximum of a
three-year benefit. This fee is equal to the fee the director received as an
active member of the board prior to termination. For Messrs. Massaro and Walls,
the benefit will be prorated (on a quarterly basis) based on their expected
service through the Effective Time. The estimated quarterly retirement payments
-39-
scheduled to be made to all directors will be paid in a lump sum (as described
below) computed using an annual discount rate set forth in Section 280G of the
Code.
NAME LUMP SUM PAYMENT
W. Dunbar $67,884
H. Ferguson 67,884
W. Jordan 67,884
F. Lunding 67,884
A. Massaro 57,081
G. Walls 11,837
L. Gloyd* 67,884*
-------
TOTAL $408,338
========
*Mr. Gloyd resigned from the Thomas board of directors effective February 23,
2005 for health reasons; the amount shown above for Mr. Gloyd will be reduced to
reflect the actual amount of any retirement payments to Mr. Gloyd from the date
of his resignation to the Effective Time.
Indemnification and Insurance
The Merger Agreement provides for continuing indemnification of, and the
advancement of expenses to, all present and former directors and officers of
Thomas and any of its subsidiaries at the Effective Time against all losses,
claims, damages, liabilities, fees and expenses (including attorneys' fees and
disbursements), judgments, fines and amounts paid in settlement of or in
connection with any claim, action, suit, proceeding or investigation based in
whole or in part on or arising in whole or in part out of the fact that such
person is or was a director or officer of Thomas or any of its subsidiaries, and
pertaining to any matter existing or occurring, or any acts or omissions
occurring, at or prior to the Effective Time, whether asserted or claimed prior
to, or at or after the Effective Time (including matters, acts or omissions
occurring in connection with (1) the approval of the Merger Agreement and the
consummation of the Merger and (2) serving as a fiduciary under any of Thomas'
employee benefit plans), in each case to the same extent that such persons would
have been entitled to indemnification or the advancement of expenses under
Thomas' current certificate of incorporation, bylaws and indemnification
agreements in effect on the date of the Merger Agreement with any current or
former directors or officers of Thomas or its subsidiaries.
As of the Effective Time, Gardner Denver will obtain, and pay the full lump
sum premium with respect to, policies of directors' and officers' liability
insurance providing an aggregate coverage amount of $25 million issued by
Thomas' current directors' and officers' liability insurance carriers or other
comparably rated insurance carriers. These policies will have terms and
conditions that are not less advantageous to the insured parties than the
directors' and officers' liability insurance in effect for Thomas as of the date
of the Merger Agreement. For a period of six years following the Effective Time,
-40-
Gardner Denver will maintain these policies as well as a letter of credit in an
amount of $2.5 million for the purpose of funding the trust established pursuant
to indemnification agreements in existence on the date of the Merger Agreement
with Thomas' directors and officers.
THOMAS EMPLOYEES AND EMPLOYEE BENEFIT PLANS
Gardner Denver has agreed to maintain Thomas' employee benefit plans (other
than any plan or agreement providing for the grant, issuance, award, sale or
transfer of equities securities in Thomas or any of its subsidiaries) in
accordance with and subject to their respective terms, or to provide comparable
benefit plans, for one year following the closing date of the Merger. Although
the Merger Agreement does not impose on Gardner Denver any new obligation to
continue to employ any Thomas employee for any defined period following the
closing date of the Merger (other than the obligation to honor any employment
contracts in effect at the date of the Merger Agreement), Gardner Denver has
specifically agreed to honor, among other things, two Thomas severance plans,
the Thomas Industries Severance Pay Policies for Exempt and Non-Exempt Employees
and the Thomas Industries Severance Pay Policy for Officers, in accordance with
and subject to their respective terms, for one year following the closing date
of the Merger.
FINANCING OF THE MERGER
The consummation of the Merger is not contingent upon Gardner Denver
obtaining financing. Gardner Denver plans to finance the Merger from (i) the
proceeds of a $200.6 million offering of five million shares of its common
stock, (ii) a $125 million offering of its senior subordinated notes due 2013,
(iii) an additional $230 million under its existing amended and restated credit
facility with J.P. Morgan Securities Inc. and certain other lenders, and (iv)
approximately $239.2 million in available cash. In connection with the execution
of the Merger Agreement, Gardner Denver also received a financing commitment
letter, jointly issued by Bear, Stearns & Co. Inc., Bear Stearns Corporate
Lending Inc., J.P. Morgan Securities Inc. and JPMorgan Chase Bank, N.A., to
ensure availability, subject to customary conditions, of funding necessary to
consummate the Merger if Gardner Denver's common stock and note offering are not
completed. Gardner Denver may alter its plans on how to finance the Merger
depending on market conditions or other factors.
COMPLETION AND EFFECTIVENESS OF THE MERGER
Thomas and Gardner Denver are working to complete the Merger as soon as
possible. Subject to receipt of Thomas shareholder approval and adoption of the
Merger Agreement, Thomas anticipates completing the Merger within two business
days following the satisfaction or waiver of the conditions set forth in the
Merger Agreement. Thomas expects that all such conditions will be satisfied or
waived within [_____] [days] [months] following the Special Meeting. The
Effective Time will occur upon the filing of a Certificate of Merger with the
Secretary of State of the State of Delaware in accordance with the DGCL. The
Merger Agreement provides that such filing will be made on the second business
day following the satisfaction or waiver of the conditions set forth in the
Merger Agreement unless another time is agreed to by the parties. See "The
Merger Agreement--Conditions to Consummation of the Merger" and "The Merger
Agreement--Material Adverse Effect."
MATERIAL UNITED STATES FEDERAL INCOME TAX CONSEQUENCES
The following is a summary of United States federal income tax consequences
of the Merger relevant to beneficial holders of Thomas common stock, including
beneficial holders that exercise their appraisal rights. The discussion does not
purport to consider all aspects of federal income taxation that might be
relevant to beneficial holders of Thomas common stock. The discussion is based
on current provisions of the Code, existing, proposed and temporary regulations
-41-
promulgated thereunder, rulings, administrative pronouncements and judicial
decisions, changes to which could materially affect the tax consequences
described herein and could be made on a retroactive basis. The discussion
applies only to beneficial holders of Thomas common stock in whose hands shares
are capital assets and may not apply to beneficial holders who acquired their
shares pursuant to the exercise of employee stock options or other compensation
arrangements with Thomas or hold their shares as part of a hedge, straddle or
conversion transaction or who are subject to special tax treatment under the
Code (such as dealers in securities, insurance companies, other financial
institutions, regulated investment companies, tax-exempt entities, S
corporations and taxpayers subject to the alternative minimum tax). In addition,
this discussion does not discuss the federal income tax consequences to a
beneficial holder of Thomas common stock who, for United States federal income
tax purposes, is a non-resident alien individual, a foreign corporation, a
foreign partnership or a foreign estate or trust, nor does it consider the
effect of any state, local or foreign tax laws.
The receipt of cash for Thomas common stock pursuant to the Merger,
including as a result of the exercise of appraisal rights, will be a taxable
transaction for United States federal income tax purposes. In general, a
beneficial holder who receives cash in exchange for shares pursuant to the
Merger will recognize gain or loss for federal income tax purposes equal to the
difference, if any, between the amount of cash received and the beneficial
holder's adjusted tax basis in the shares surrendered for cash pursuant to the
Merger. Gain or loss will be determined separately for each block of shares
(i.e., shares acquired at the same cost in a single transaction) surrendered for
cash pursuant to the Merger. Such gain or loss will be capital gain or loss, and
will be long-term capital gain or loss if the beneficial holder's holding period
for such shares is more than one year at the time of consummation of the Merger.
Backup withholding at a 28% rate may apply to cash payments a beneficial
holder of shares receives pursuant to the Merger. Backup withholding generally
will apply only if the beneficial holder fails to furnish a correct taxpayer
identification number, or otherwise fails to comply with applicable backup
withholding rules and certification requirements. Each beneficial holder should
complete and sign the substitute Form W-9 that will be part of the letter of
transmittal to be returned to the paying agent in order to provide the
information and certification necessary to avoid backup withholding, unless an
applicable exemption exists and is otherwise proved in a manner acceptable to
the paying agent. Backup withholding is not an additional tax. Any amounts
withheld under the backup withholding rules will be allowable as a refund or
credit against a beneficial holder's United States federal income tax liability
provided the required information is furnished to the Internal Revenue Service.
Because individual circumstances may differ, each beneficial holder of
shares is urged to consult such beneficial holder's own tax advisor as to the
particular tax consequences to such beneficial holder of the Merger, including
the application and effect of state, local, foreign and other tax laws.
ACCOUNTING TREATMENT OF THE MERGER
The Merger will be accounted for as a "purchase," as such term is used
under GAAP, for accounting and financial reporting purposes. Accordingly, a
determination of the fair value of Thomas' assets and liabilities will be made
in order to allocate the purchase price to the assets acquired and the
liabilities assumed.
-42-
REGULATORY FILINGS AND APPROVALS
U.S. Antitrust Filing
Under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended
(the "HSR Act"), and the rules promulgated thereunder by the Federal Trade
Commission, certain acquisition transactions, including the Merger, may not be
consummated until specified notification requirements have been satisfied and
waiting periods have been terminated or expired. On March 16, 2005, the
Notification and Report Forms required pursuant to the HSR Act were filed by
Thomas and Gardner Denver with the Antitrust Division of the Department of
Justice and the Federal Trade Commission (the "Federal Antitrust Agencies") for
review in connection with the Merger. Early termination of the applicable
waiting period under the HSR Act was granted on April 14, 2005. Even though the
HSR Act waiting period has terminated, the Federal Antitrust Agencies could take
such actions under the antitrust laws as they deem necessary or desirable in the
public interest, including seeking divestiture of substantial assets of Thomas
or Gardner Denver. In certain cases, state antitrust regulators or other persons
may also have the right to challenge the Merger under applicable antitrust laws.
Germany Competition Filing
Under Chapter VII of the German Act against Restraints on Competition of
1958, as amended ("ARC"), certain transactions which result in a change in the
nature of control over an undertaking, including corporations, must not be
consummated until specified notification requirements have been satisfied and
either the German Federal Cartel Office ("FCO") has approved the transaction or
the waiting period has expired. The types of transactions covered by the ARC
include, inter alia, acquisitions of other undertakings where the sales of the
acquiring group and/or the target group (excluding the seller) exceed certain
thresholds in Germany and on a worldwide basis. The initial waiting period is
one month beginning with the submission of the complete notification. This
waiting period may be shortened by the issuance of an early clearance letter by
the FCO or may be extended to a total period of four months if the FCO initiates
a second phase investigation. Gardner Denver submitted the required complete
notification on April 22, 2005, and the waiting period expires on or about May
23, 2005 unless the FCO either grants early clearance or initiates a second
phase investigation. Should the FCO determine that the transaction is likely to
lead to a creation or enhancement of a dominant position in the relevant market,
the FCO is empowered to take such action as it deems necessary to resolve these
concerns, including issuance of a prohibition order or requiring divestitures or
other behavioral remedies as a condition of approval, which decisions are
subject to judicial review. Third parties that can show they are affected by the
transaction may be granted the right to intervene and can challenge a decision
by the FCO to clear the transaction or to clear it subject to conditions.
Norway Competition Filing
Under Chapter 4 of the Norwegian Competition Act of 5 March 2004 No.12 (the
"Act") and the Regulation on Notification of Concentrations of 28 April 2004, a
concentration that involves companies which exceed certain turnover thresholds
in Norway must be notified to the Norwegian Competition Authority (the "NCA").
The Merger constitutes a concentration under the Act. For a concentration that
requires notification, the parties may file a so-called "simplified"
notification with the NCA. The NCA has 15 working days to review the submission
and determine whether it will require submission of a "complete" notification.
If the NCA requires submission of a complete notification, consummation of the
transaction must be suspended until 25 working days after the parties submit the
complete notification. Within 25 working days of receiving a complete
notification, the NCA must inform the parties as to whether the NCA will
investigate the transaction further. If no such notice is given by the NCA
within the 25 working day period, the transaction is considered cleared. If the
NCA informs the parties that it will investigate the transaction further, no
-43-
later than 70 working days after receipt of a complete notification the NCA must
provide a reasoned draft decision of intervention. The parties will then have 15
working days to submit their comments. At the completion of the more detailed
investigation, the NCA either can approve the transaction, issue a determination
prohibiting the transaction or issue a decision requiring remedies. Gardner
Denver submitted a "simplified" notification on April 13, 2005. The transaction
will be deemed cleared by the NCA if the parties have not received, within 15
working days of the submission, a notice that the NCA will require submission of
a complete notification. The NCA may seek to intervene and prohibit the Merger
at any point prior to its completion or after its completion if Gardner Denver
has not already obtained clearance from the NCA.
The Merger Agreement provides that, subject to certain limitations, each of
Thomas, Gardner Denver and PT Acquisition will use its best efforts to take all
actions and to assist and cooperate with each other in doing all things
necessary or advisable to consummate the Merger including, among other things,
(1) the obtaining of all necessary consents and approvals from governmental
entities and third parties and the making of all filings and the taking of all
reasonable steps necessary to obtain an approval or waiver from, to secure the
expiration of any mandatory waiting periods of or to avoid an action or
proceeding by, any governmental entity and (2) the defending of any lawsuits or
other legal proceedings challenging the Merger Agreement or the consummation of
the Merger. Under the Merger Agreement, neither Gardner Denver nor PT
Acquisition are required to sell, divest or otherwise dispose of any assets or
businesses or enter into any compulsory licensing or similar arrangement in
order to obtain approval or clearance under any antitrust or competition law.
See "The Merger Agreement--Best Efforts."
The parties do not believe that consummation of the Merger will result in a
violation of any applicable antitrust or competition laws. However, there can be
no assurances that a challenge to the Merger on antitrust or competition grounds
will not be made or, if such a challenge is made, of the result of any
challenge. Gardner Denver will be required to pay a termination fee of $5
million to Thomas if, as of December 15, 2005, Thomas has satisfied certain
conditions and the Merger Agreement is terminated by either Thomas or Gardner
Denver as a result of the failure to obtain the regulatory approvals required
under the Merger Agreement or by Gardner Denver if any governmental entity
imposes any material limitation on its ownership or operation of Thomas and its
subsidiaries or requires Gardner Denver to sell any material portion of its or
Thomas' business. See "The Merger Agreement--Termination of Merger Agreement"
and "The Merger Agreement--Termination Fees and Expenses." See also "The Merger
Agreement--Conditions to Consummation of the Merger."
APPRAISAL RIGHTS
Under the DGCL, if you do not wish to accept the cash payment provided for
in the Merger Agreement, you have the right to dissent from the Merger and to
receive payment in cash for the fair value of your Thomas common stock. Thomas
shareholders electing to exercise appraisal rights must comply with the
provisions of Section 262 of the DGCL in order to perfect their rights. Thomas
will require strict compliance with the statutory procedures. A copy of Section
262 is attached to this proxy statement as Appendix B.
The following is intended as a brief summary of the material provisions of
the Delaware statutory procedures required to be followed by a shareholder in
order to dissent from the Merger and perfect appraisal rights. This summary,
however, is not a complete statement of all applicable requirements and is
qualified in its entirety by reference to Section 262 of the DGCL.
Section 262 requires that shareholders be notified that appraisal rights
will be available not less than 20 days before the Special Meeting to vote on
the Merger. A copy of Section 262 must be included with such notice. This proxy
statement constitutes Thomas' notice to its shareholders of the availability of
-44-
appraisal rights in connection with the Merger in compliance with the
requirements of Section 262. If you wish to consider exercising your appraisal
rights, you should carefully review the text of Section 262 contained in
Appendix B since failure to timely and properly comply with the requirements of
Section 262 will result in the loss of your appraisal rights under Delaware law.
If you elect to demand appraisal of your shares, you must satisfy each of
the following conditions:
o You must deliver to Thomas a written demand for appraisal of your shares
before the vote with respect to the Merger is taken. This written demand
for appraisal must be in addition to and separate from any proxy or vote
abstaining from or voting against approval and adoption of the Merger
Agreement. Voting against or failing to vote for approval and adoption of
the Merger Agreement by itself does not constitute a demand for appraisal
within the meaning of Section 262.
o You must not vote in favor of approval and adoption of the Merger
Agreement. A vote in favor of the approval and adoption of the Merger
Agreement, by proxy or in person, will constitute a waiver of your
appraisal rights in respect of the shares so voted and will nullify any
previously filed written demands for appraisal.
If you fail to comply with either of these conditions and the Merger is
completed, you will be entitled to receive the cash payment for your shares of
Thomas common stock in the amount of $40.00 per share (without interest), as
provided for in the Merger Agreement, but you will have no appraisal rights with
respect to your shares of Thomas common stock.
All demands for appraisal should be addressed to the Secretary at Thomas
Industries Inc., 4360 Brownsboro Road, Suite 300, Louisville, Kentucky, 40207,
before the vote on the Merger is taken at the Special Meeting, and should be
executed by, or on behalf of, the record holder of the shares of Thomas common
stock. The demand must reasonably inform Thomas of the identity of the
shareholder and the intention of the shareholder to demand appraisal of his, her
or its shares.
To be effective, a demand for appraisal by a holder of Thomas common stock
must be made by, or in the name of, such registered shareholder, fully and
correctly, as the shareholder's name appears on his or her stock certificate(s)
and cannot be made by the beneficial owner if he or she does not also hold the
shares of record. The beneficial holder must, in such cases, have the registered
owner submit the required demand in respect of those shares.
If shares are owned of record in a fiduciary capacity, such as by a
trustee, guardian or custodian, execution of a demand for appraisal should be
made in that capacity; and if the shares are owned of record by more than one
person, as in a joint tenancy or tenancy in common, the demand should be
executed by or for all joint owners. An authorized agent, including an
authorized agent for two or more joint owners, may execute the demand for
appraisal for a shareholder of record; however, the agent must identify the
record owner or owners and expressly disclose the fact that, in executing the
demand, he or she is acting as agent for the record owner. A record owner, such
as a broker, who holds shares as a nominee for others, may exercise his or her
right of appraisal with respect to the shares held for one or more beneficial
owners, while not exercising this right for other beneficial owners. In that
case, the written demand should state the number of shares as to which appraisal
is sought. Where no number of shares is expressly mentioned, the demand will be
presumed to cover all shares held in the name of the record owner.
-45-
If you hold your shares of Thomas common stock in a brokerage account or in
other nominee form and you wish to exercise appraisal rights, you should consult
with your broker or the other nominee to determine the appropriate procedures
for the making of a demand for appraisal by the nominee.
Within 10 days after the Effective Time, the Surviving Corporation must
give written notice that the Merger has become effective to each Thomas
shareholder who has properly filed a written demand for appraisal and who did
not vote in favor of the Merger. At any time within 60 days after the Effective
Time, any shareholder who has demanded an appraisal has the right to withdraw
the demand and to accept the cash payment specified by the Merger Agreement for
his or her shares of Thomas common stock. Within 120 days after the Effective
Time, either the Surviving Corporation or any shareholder who has complied with
the requirements of Section 262 may file a petition in the Chancery Court
demanding a determination of the fair value of the shares held by all
shareholders entitled to appraisal. The Surviving Corporation has no obligation
to file such a petition in the event there are dissenting shareholders.
Accordingly, the failure of a shareholder to file such a petition within the
period specified could nullify the shareholder's previously written demand for
appraisal.
If a petition for appraisal is duly filed by a shareholder and a copy of
the petition is delivered to the Surviving Corporation, the Surviving
Corporation will then be obligated, within 20 days after receiving service of a
copy of the petition, to provide the Chancery Court with a duly verified list
containing the names and addresses of all shareholders who have demanded an
appraisal of their shares. After notice to dissenting shareholders, the Chancery
Court is empowered to conduct a hearing upon the petition, and to determine
those shareholders who have complied with Section 262 and who have become
entitled to the appraisal rights provided thereby. The Chancery Court may
require the shareholders who have demanded payment for their shares to submit
their stock certificates to the Register in Chancery for notation thereon of the
pendency of the appraisal proceedings; and if any shareholder fails to comply
with that direction, the Chancery Court may dismiss the proceedings as to that
shareholder.
After determination of the shareholders entitled to appraisal of their
shares of Thomas common stock, the Chancery Court will appraise the shares,
determining their fair value exclusive of any element of value arising from the
accomplishment or expectation of the Merger, together with a fair rate of
interest. When the value is determined, the Chancery Court will direct the
payment of such value, with interest thereon accrued during the pendency of the
proceeding, if the Chancery Court so determines, to the shareholders entitled to
receive the same, upon surrender by such holders of the certificates
representing those shares.
In determining fair value, the Chancery Court is required to take into
account all relevant factors. You should be aware that the fair value of your
shares as determined under Section 262 could be more, the same, or less than the
value that you are entitled to receive under the terms of the Merger Agreement.
Costs of the appraisal proceeding may be imposed upon the Surviving
Corporation and the shareholders participating in the appraisal proceeding by
the Chancery Court as the Chancery Court deems equitable in the circumstances.
Upon the application of a shareholder, the Chancery Court may order all or a
portion of the expenses incurred by any shareholder in connection with the
appraisal proceeding, including, without limitation, reasonable attorneys' fees
and the fees and expenses of experts, to be charged pro rata against the value
of all shares entitled to appraisal. Any shareholder who had demanded appraisal
rights will not, after the Effective Time, be entitled to vote shares subject to
that demand for any purpose or to receive payments of dividends or any other
distribution with respect to those shares, other than with respect to payment as
of a record date prior to the Effective Time; however, if no petition for
appraisal is filed within 120 days after the Effective Time, or if the
shareholder delivers a written withdrawal of his or her demand for appraisal and
an acceptance of the terms of the Merger within 60 days after the Effective
Time, then the right of that shareholder to appraisal will cease and that
-46-
shareholder will be entitled to receive the cash payment for shares of his, her
or its Thomas common stock pursuant to the Merger Agreement. Any withdrawal of a
demand for appraisal made more than 60 days after the Effective Time may only be
made with the written approval of the Surviving Corporation and must, to be
effective, be made within 120 days after the Effective Time.
In view of the complexity of Section 262, Thomas shareholders who may wish
to dissent from the Merger and pursue appraisal rights should consult their
legal advisors.
DELISTING AND DEREGISTRATION OF THOMAS STOCK AFTER THE MERGER
If the Merger is completed, Thomas common stock will be delisted from the
NYSE and will be deregistered under the Securities Exchange Act of 1934.
-47-
THE MERGER AGREEMENT
The following is a brief summary of the material provisions of the Merger
Agreement. This summary is not a complete statement of all applicable provisions
and is qualified in its entirety by reference to the Merger Agreement attached
as Appendix A to this proxy statement. The Merger Agreement has been included to
provide you with information regarding its terms and the legal relationship and
risk allocation between Thomas and Gardner Denver as contracting parties. It is
not intended to provide any other factual information about the parties. Such
information can be found elsewhere in this proxy statement and in other public
filings each of Thomas and Gardner Denver makes with the Securities and Exchange
Commission, which are available without charge at www.sec.gov. Thomas encourages
you to read the Merger Agreement as it is the legal document that governs the
Merger.
STRUCTURE OF MERGER
In the Merger, PT Acquisition, a wholly-owned subsidiary of Gardner Denver,
will merge with and into Thomas, and, as a result, Thomas will become a
wholly-owned subsidiary of Gardner Denver.
EFFECTIVE TIME OF THE MERGER
The Merger will become effective upon the filing of a Certificate of Merger
with the Secretary of State of the State of Delaware. The filing will take place
on the second business day following the date on which the conditions contained
in the Merger Agreement have been satisfied or waived (subject to certain
restrictions), or at a time and date as Thomas and Gardner Denver agree.
CONSIDERATION TO BE RECEIVED IN MERGER
As of the Effective Time, each share of Thomas common stock outstanding
(other than shares held by Thomas, Gardner Denver or any of their respective
subsidiaries or by shareholders who perfect their statutory appraisal rights
under the DGCL), will be converted into the right to receive $40.00 in cash
without interest. Each share of Thomas common stock held by Thomas, Gardner
Denver or any of their respective subsidiaries will be canceled at the Effective
Time.
CONDITIONS TO CONSUMMATION OF THE MERGER
Thomas and Gardner Denver. Thomas' and Gardner Denver's obligations to
effect the Merger are subject to the satisfaction or waiver of the following
conditions:
o the holders of a majority of the outstanding shares of Thomas common stock
have voted in favor of approving and adopting the Merger Agreement;
o all authorizations, consents or approvals of, or filings with, and all
expirations of waiting periods required from, any governmental entity under
the HSR Act or any other applicable law of Germany or Norway have been
filed, have occurred or have been obtained; and
o no temporary restraining order, preliminary or permanent injunction or
other order issued by any court of competent jurisdiction or other legal
restraint or prohibition preventing the consummation of the Merger shall be
in effect and there shall not be any action taken, or any law or order
enacted, entered, enforced or deemed applicable to the Merger, by any
governmental entity that makes the completion of the Merger illegal.
-48-
Gardner Denver. The obligations of Gardner Denver and PT Acquisition to
consummate the Merger are further subject to the fulfillment of the following
conditions, any of which may be waived in whole or part by Gardner Denver:
o Thomas must have performed in all material respects all obligations
required to be performed by it under the Merger Agreement at or prior to
the closing of the Merger (and Gardner Denver must have received the
certificate of the Chief Executive Officer and Chief Financial Officer of
Thomas to that effect);
o the representations and warranties of Thomas which are qualified by
materiality in the Merger Agreement must be true and correct and those not
so qualified must be true and correct in all material respects, as of the
closing date of the Merger, except to the extent such representations and
warranties expressly relate to an earlier date (in which case such
representations and warranties qualified as to materiality shall be true
and correct, and those not so qualified shall be true and correct in all
material respects, on and as of such earlier date), other than for such
failures of the representations and warranties to be so true and correct
that, individually and in the aggregate, have not had and could not
reasonably be expected to have a Company Material Adverse Effect (and
Gardner Denver must have received the certificate of the Chief Executive
Officer and Chief Financial Officer of Thomas to that effect), see
"The Merger Agreement--Material Adverse Effect"; and
o there must not be pending any suit, action or proceeding by any
governmental entity seeking to prohibit or impose and no regulatory
approval required under the Merger Agreement shall be conditioned upon or
seek to impose, any material limitations on Gardner Denver's or PT
Acquisition's ownership or operation of all or a material portion of
Gardner Denver's (or its subsidiaries' or affiliates') or Thomas' (or its
subsidiaries') business or assets or to compel Gardner Denver or its
subsidiaries and affiliates to dispose of, sell, license or hold separate
any material portion of the business or assets of Gardner Denver, Thomas or
their respective subsidiaries.
Thomas. The obligations of Thomas to consummate the Merger are further
subject to the fulfillment of the following conditions, any of which may be
waived in whole or part by Thomas:
o Gardner Denver and PT Acquisition must have performed in all material
respects all obligations required to be performed by them under the Merger
Agreement at or prior to the closing of the Merger (and Thomas must have
received the certificate of the Chief Executive Officer and Chief Financial
Officer of Gardner Denver to that effect); and
o the representations and warranties of Gardner Denver and PT Acquisition
which are qualified by materiality in the Merger Agreement must be true and
correct and those not so qualified must be true and correct in all material
respects, as of the closing date of the Merger, except to the extent such
representations and warranties expressly relate to an earlier date (in
which case such representations and warranties qualified as to materiality
shall be true and correct, and those not so qualified shall be true and
correct in all material respects, on and as of such earlier date), other
than for such failures of the representations and warranties to be so true
and correct that, individually and in the aggregate, have not had and could
not reasonably be expected to prevent or materially delay the ability of
Gardner Denver and PT Acquisition to perform their obligations under the
Merger Agreement or to consummate the Merger (and Thomas must have received
the certificate of the Chief Executive Officer and Chief Financial Officer
of Gardner Denver to that effect).
-49-
REPRESENTATIONS AND WARRANTIES OF THOMAS
The Merger Agreement contains customary representations and warranties by
Thomas relating to, among other things:
o corporate organization and power with respect to Thomas and its
subsidiaries;
o ownership of Thomas' subsidiaries;
o Thomas' equity ownership in third parties;
o Thomas' capital structure;
o authorization, execution, delivery, and enforceability of the Merger
Agreement and the transactions contemplated by the Merger Agreement;
o no conflict with or a violation of any statute, law, ordinance, rule or
regulation or violation or breach of Thomas' or any of its subsidiaries'
organizational documents or other contracts, in each case with respect to
entering into the Merger Agreement or consummating the Merger;
o the required consents, approvals, licenses, permits, orders or
authorizations of, or registrations, declarations or filings with, or
permits from, any governmental entity;
o inapplicability of Thomas' Rights Agreement to the transactions
contemplated by the Merger Agreement;
o inapplicability of Section 203 of the DGCL to the transactions contemplated
by the Merger Agreement;
o Thomas' SEC filings, the accuracy of the financial statements and other
information contained in such filings, compliance with the SEC rules and
regulations, and the absence of undisclosed liabilities;
o as of the date of the Merger Agreement, Thomas had at least $230 million in
consolidated cash and cash equivalents;
o compliance with the internal controls requirement under the Sarbanes-Oxley
Act;
o compliance with the listing standards of the NYSE;
o compliance with applicable laws and regulations regarding future filings
with the SEC, including this proxy statement;
o compliance with applicable laws, licenses and permits;
o the absence of investigations, reviews, audits, prosecutions or other
enforcement actions by any governmental entities;
o outstanding litigation;
o insurance policies;
-50-
o tax matters;
o validity and compliance with contracts;
o absence of changes in Thomas' employee benefit plans since September 30,
2004;
o employee benefit and compensation arrangements;
o Thomas's conduct of its operations in the ordinary course of business since
September 30, 2004;
o title to properties and assets and rights to leasehold interests;
o intellectual property;
o environmental matters;
o labor and employment matters and compliance with labor laws;
o fees to brokers, investment bankers and financial advisors in connection
with the Merger Agreement; and
o the receipt of a fairness opinion from Baird.
REPRESENTATIONS AND WARRANTIES OF GARDNER DENVER AND PT ACQUISITION
The Merger Agreement contains customary representations and warranties by
Gardner Denver and PT Acquisition relating to, among other things:
o corporate organization and power with respect to Gardner Denver and PT
Acquisition;
o that PT Acquisition has not carried on any business or conducted any
operations outside of the execution of the Merger Agreement and the
performance of its obligations thereunder;
o authorization, execution, delivery, and enforceability of the Merger
Agreement and the transactions contemplated by the Merger Agreement;
o no conflict with or a violation of any statute, law, ordinance, rule or
regulation or violation or breach of Gardner Denver's of PT Acquisition's
respective organizational documents or other contracts with respect to
entering into the Merger Agreement or consummating the Merger;
o consents, approvals, licenses, permits, orders or authorizations of, or
registrations, declarations or filings with, or permits from, any
governmental entity;
o absence of any untrue statements or omissions of any material facts in the
information supplied by Gardner Denver and PT Acquisition for inclusion in
this proxy statement;
o no engagement of or payment of fees to, brokers, investment bankers or
financial advisors by Gardner Denver or PT Acquisition in connection with
the Merger Agreement and the Merger;
-51-
o the availability to Gardner Denver and PT Acquisition of all funds
necessary for the acquisition of all shares of Thomas common stock pursuant
to the Merger Agreement and to perform their respective obligations under
the Merger Agreement;
o the delivery to Thomas by Gardner Denver of copies of any the financing
commitment letters pursuant to which Gardner Denver will obtain the funds
necessary to acquire all of the shares of Thomas common stock, together
with all of Gardner Denver's fee and expenses incurred in connection with
the Merger;
o solvency of the Surviving Corporation immediately following the Effective
Time;
o acknowledgement that Thomas has made no representations or warranties other
than those set forth in the Merger Agreement or the other documents
specifically referred to therein, and that Gardner Denver and PT
Acquisition have conducted their own investigation of Thomas and its
subsidiaries prior to entering into the Merger Agreement; and
o acknowledgement that if the Merger is completed (except with respect to
fraud), that none of Thomas, its subsidiaries or any of their respective
directors, officers, employees, affiliates, agents, or representatives will
have any liability or responsibility to Gardner Denver or its subsidiaries
with respect to any information provided or made available or statements
made to Gardner Denver or its subsidiaries or with respect to the
certificate to be delivered by the officers of Thomas in connection with
the closing of the Merger.
MATERIAL ADVERSE EFFECT
Several of Thomas' representations and warranties contained in the Merger
Agreement are qualified by reference to whether the item in question would
reasonably be expected to have a "Company Material Adverse Effect." Furthermore,
a condition to Gardner Denver being obligated to consummate the Merger is that
the representations and warranties of Thomas which are qualified by materiality
must be true and correct and any of the representations and warranties not so
qualified must be true and correct in all material respects as of the closing
date of the Merger, other than such failures to be true and correct that,
individually and in the aggregate, have not had and could not reasonably be
expected to have a Company Material Adverse Effect. The Merger Agreement
provides that a "Company Material Adverse Effect" means (a) any change, effect,
event or occurrence or state of facts having a material adverse effect on the
business, assets, financial condition or results of operations of Thomas and its
subsidiaries, taken as a whole, other than effects relating to (1) changes,
effects, events, occurrences or circumstances that generally affect the United
States or the global economy or the industries in which Thomas operates, (2)
general economic, financial or securities market conditions in the United States
or elsewhere, (3) the execution, delivery or announcement of the Merger
Agreement or the announcement of the Merger, (4) changes in GAAP or requirements
applicable to Thomas and its subsidiaries, (5) changes in laws or
interpretations thereof by a governmental entity, (6) changes, effects, events
or occurrences caused by or resulting from the taking of any action required or
permitted by the Merger Agreement or approved by Gardner Denver or (7) any
outbreak of major hostilities in any country in which Thomas operates or in
which the United States is involved or any act of terrorism within the United
States or any country in which Thomas operates or directed against United States
facilities or citizens wherever located or (b) a material adverse effect on the
ability of Thomas to perform its obligations under the Merger Agreement.
CONDUCT OF BUSINESS PENDING THE MERGER
Pursuant to the Merger Agreement, Thomas has agreed that, except as
permitted or contemplated by the Merger Agreement or as consented to by Gardner
Denver in writing, during the period from the date of the Merger Agreement to
the completion of the Merger:
-52-
o Thomas and its subsidiaries will conduct their business in all material
respects in the ordinary course of business consistent with past practice
and use commercially reasonable efforts to (1) preserve intact their
present business organization, (2) maintain in effect all material permits,
licenses, approvals and authorizations and (3) preserve existing
relationships with material customers, lenders, suppliers and others having
material business relationships with them;
o Thomas and its subsidiaries will not amend their respective certificates of
incorporation or by-laws (or similar organizational documents);
o Thomas and its subsidiaries will not split, combine or reclassify any
shares of their capital stock or declare, set aside or pay any dividend or
other distribution in respect of their capital stock, or redeem, repurchase
or otherwise acquire or offer to redeem, repurchase or otherwise acquire
any of their securities, subject to certain exceptions and provided that
Thomas will have the ability to continue to declare and pay quarterly
dividends, not in excess of $0.095 per share, through the Effective Time,
consistent with past practices;
o Thomas and its subsidiaries will not issue, deliver or sell, or authorize
the issuance, delivery or sale of, any shares of capital stock, stock
appreciation rights or any securities convertible into or exercisable for,
or any rights, warrants or options to acquire, any capital stock, other
than the issuance of shares of Thomas common stock pursuant to the exercise
of Thomas stock options outstanding as of the date of the Merger Agreement;
o Thomas and its subsidiaries will not acquire (1) except for purchases in
the ordinary course of business, any assets having a fair market value in
excess of $1,000,000, or (2) all or substantially all of the equity
interests of any third party or business or division of any third party
having a fair market value in excess of $100,000;
o Thomas and its subsidiaries will not sell, lease or otherwise dispose of
any assets, other than (1) sales in the ordinary course of business, (2)
equipment and property no longer used in the operation of the business of
Thomas or its subsidiaries and (3) assets related to discontinued
operations;
o Thomas and its subsidiaries will not (1) incur any indebtedness for
borrowed money, (2) guarantee any indebtedness or (3) issue or sell any
debt securities or warrants or rights to acquire any debt securities of
Thomas or any of its subsidiaries or guarantee any debt securities of
others, except in the ordinary course of business;
o Thomas and its subsidiaries will not affirmatively waive without
appropriate consideration any material rights under certain contracts or
forgive any material indebtedness for borrowed money owed to Thomas or its
subsidiaries;
o Thomas and its subsidiaries will not, except in the ordinary course of
business, amend, modify or terminate certain contracts or otherwise waive,
release or assign without appropriate consideration any material rights,
claims or benefits of Thomas or any of its subsidiaries thereunder;
o Thomas and its subsidiaries will not (1) except for ordinary course salary
increases within a certain range or as required by law or agreement,
increase the amount of compensation of any director, executive officer or
employee at or above the manager level or make any increase in or
commitment to increase any employee benefits, (2) except as required by law
or agreement or pursuant to Thomas' severance policies, grant any severance
or termination pay to any director or officer of Thomas or any subsidiary,
(3) adopt any additional employee benefit plan or, except in the ordinary
course of business or as required by law, make any contribution to any
existing employee benefit plan, (4) except as required by law, amend in any
-53-
material respect any employee benefit plan, (5) except for ordinary course
salary increases within a certain range or as required by the terms of any
existing collective bargaining agreement, implement or announce any
intention to implement any general increase in the compensation or benefits
payable to non-executive employees of Thomas or any of its subsidiaries or
(6) except for ordinary course salary increases within a certain range or
as required by law or under the terms of any existing collective bargaining
agreement, make any announcement or enter into any commitment with respect
to general employment levels or the general terms and conditions of
employment applicable after closing of the Merger to the employees of
Thomas and its subsidiaries;
o Thomas and its subsidiaries will not settle, or propose to settle, any
litigation, investigation, arbitration, proceeding or other claim that is
material to the business of Thomas and its subsidiaries, other than the
payment or satisfaction, in the ordinary course of business consistent with
past practice, of liabilities disclosed in Thomas' most recent financial
statements or incurred since the date of such financial statements in the
ordinary course of business consistent with past practice;
o Thomas and its subsidiaries will not, other than in the ordinary course of
business consistent with past practice, (1) make any tax election or take
any position on any tax return filed on or after the date of the Merger
Agreement or adopt any method thereof that is inconsistent with elections
made, positions taken or methods used in preparing or filing similar
returns in prior periods or (2) enter into any settlement or compromise of
any tax liability that in either case is material to the business of Thomas
and its subsidiaries;
o Thomas will not materially change its methods of accounting in effect at
September 30, 2004, except as required by changes in law, GAAP or the SEC,
as concurred by Thomas' independent public accountants;
o Thomas and its subsidiaries will not amend, waive any provision of or
terminate any confidentiality or standstill agreements, except as otherwise
permitted under the Merger Agreement;
o Thomas will not amend or terminate its Rights Agreement or redeem any of
the rights thereunder, except as contemplated by the Merger Agreement;
o Thomas and its subsidiaries will not enter into any material contract
outside the ordinary course of business consistent with past practice;
o Thomas and its subsidiaries will not materially amend or terminate any
insurance policy or allow any material insurance policy to lapse;
o Thomas and its subsidiaries will not (1) make or contractually commit to
make capital expenditures in excess of a certain amount (excluding
expenditures relating to the expansion of Thomas' Schopfheim, Germany
facility) or (2) make or contractually commit to make capital expenditures
with respect to the Schopfheim, Germany facility expansion for 2005 and
2006 in excess of a certain amount; provided that the limitation in clause
(1) above will not apply if the Merger is not consummated within sixty days
after the date of the Merger Agreement;
o Thomas and its subsidiaries will make all capital expenditures only in the
ordinary course of business, consistent with past practice, and will notify
Gardner Denver prior to making or committing to make any individual capital
expenditure in excess of certain agreed upon amounts; and
o except as contemplated by the Merger Agreement, Thomas and its subsidiaries
will not adopt a plan of complete or partial liquidation, dissolution,
merger, consolidation, restructuring, recapitalization or other
reorganization of Thomas or any subsidiary (other than the Merger).
-54-
NO SOLICITATION
Thomas agreed to immediately cease any discussions that were being
conducted with third parties at the time the Merger Agreement was signed with
respect to a possible transaction with Thomas and discontinue all access to
third parties to the electronic data room established for due diligence.
Thomas has agreed that neither it nor any of its directors, officers,
employees, investment bankers, attorneys or other advisors or representatives
will:
o directly or indirectly solicit or initiate any Company Takeover Proposal
(defined below);
o enter into any agreement with respect to any Company Takeover Proposal; or
o enter into, participate in or continue any discussions or negotiations
regarding, or furnish to any third party any information with respect to,
any Company Takeover Proposal.
If Thomas receives an unsolicited Company Takeover Proposal at any time
before Thomas' shareholders approve and adopt the Merger Agreement and Thomas'
board of directors determines in good faith, after consultation with its outside
legal and financial advisors, that (i) the Company Takeover Proposal is
reasonably likely to result in a transaction constituting a Superior Company
Proposal (defined below) and (ii) failing to take such action would be
inconsistent with the board of directors' fiduciary duties to Thomas and its
shareholders, under applicable law, then, subject to providing at least two
business days prior written notice to Gardner Denver, the Merger Agreement
provides that:
o Thomas may furnish information with respect to Thomas to the third party
making such Company Takeover Proposal and its representatives pursuant to a
confidentiality agreement not less restrictive of the third party than the
confidentiality agreement between Thomas and Gardner Denver; and
o Thomas may participate in discussions or negotiations (including the
solicitation of a revised Company Takeover Proposal) with such third party
and its representatives regarding such Company Takeover Proposal.
If Thomas receives an unsolicited Superior Company Proposal and as a result
thereof Thomas' board of directors determines in good faith, after consultation
with its outside legal and financial advisors, that it is necessary to do so in
order to comply with its fiduciary duties, the Merger Agreement permits Thomas'
board of directors to withdraw or modify its approval or recommendation of the
Merger and the Merger Agreement and to approve or recommend such Superior
Company Proposal.
The Merger Agreement provides that Thomas must submit the Merger and the
Merger Agreement for adoption and approval by its shareholders at the Special
Meeting even if Thomas' board of directors withdraws or adversely modifies its
approval or recommendation of the Merger and the Merger Agreement or approves or
recommends any Superior Company Proposal.
The Merger Agreement provides that Thomas will, within 48 hours after its
receipt of any Company Takeover Proposal, notify Gardner Denver of such Company
Takeover Proposal and its material terms and conditions, other than the identity
of the potential acquiring party. The Merger Agreement also provides that, in
connection with any determination by Thomas' board of directors that a Company
Takeover Proposal is a Superior Company Proposal, Thomas will within 24 hours
after making such determination provide Gardner Denver with a written summary in
reasonable detail of the reasons for such determination.
-55-
The Merger Agreement provides that the term "Company Takeover Proposal"
means any proposal or offer (1) for a merger, share exchange, business
combination, consolidation, dual listed structure, liquidation, dissolution,
recapitalization, reorganization or similar transaction involving Thomas, (2) to
acquire in any manner, directly or indirectly, 15% or more of the equity
securities of Thomas or (3) to acquire in any manner, directly or indirectly,
over 15% of the consolidated total assets of Thomas, in a single transaction or
a series of related transactions, in each case other than the transactions
contemplated by the Merger Agreement.
The Merger Agreement provides that the term "Superior Company Proposal"
means a written proposal made by a third party to acquire all of the outstanding
common stock of Thomas or all or substantially all of the assets of Thomas and
its subsidiaries, pursuant to a tender or exchange offer, a merger, a
consolidation, a liquidation or dissolution, a recapitalization or a sale of
assets, in each case that the board of directors of Thomas determines in good
faith after consulting with Thomas' outside financial and legal advisors (i) is
reasonably capable of being completed, taking into account all legal, financial,
regulatory and other aspects of such proposal, and (ii) presents to Thomas and
its shareholders more favorable financial and other terms, taken as a whole,
than the Merger (taking into account any changes in the terms of the Merger made
by Gardner Denver as a result of such proposal). For a description of fees
payable by Thomas if the board of directors adversely changes its recommendation
of the Merger as a consequence of a Superior Company Proposal, see "The Merger
Agreement--Termination Fees and Expenses" below.
BEST EFFORTS
Except as otherwise limited by the terms of the Merger Agreement, each of
Thomas and Gardner Denver has agreed to use its best efforts to take all
actions, and to do or cause to be done, and to assist and cooperate with each
other in doing, all things necessary, proper or advisable to complete the
Merger, including:
o obtaining all necessary actions or nonactions, waivers, consents and
approvals from governmental entities and the making of all necessary
registrations and filings and the taking of all reasonable steps as may be
necessary to obtain an approval or waiver from, to secure the expiration of
any mandatory waiting periods of or to avoid an action or proceeding by,
any governmental entity;
o obtaining all necessary consents, approvals or waivers from third parties;
o defending any lawsuits or other legal proceedings, whether judicial or
administrative, challenging the Merger Agreement or the consummation of the
Merger; and
o the execution and delivery of any additional instruments necessary to
consummate the Merger.
Notwithstanding the obligations described above, Gardner Denver is not required
to sell, divest, hold separate or otherwise dispose of, any assets or
businesses, including any assets or businesses of Thomas or its subsidiaries, or
to enter into any compulsory licensing of similar arrangement to obtain any
required approval under the HSR Act or any other antitrust or competition law.
TERMINATION OF MERGER AGREEMENT
Thomas and Gardner Denver may terminate the Merger Agreement under certain
circumstances including:
o by mutual written consent of Thomas, Gardner Denver and PT Acquisition;
-56-
o by Thomas or Gardner Denver if:
o approval of the Merger Agreement by the Thomas shareholders is not
obtained;
o a governmental entity of competent jurisdiction that must grant a
required regulatory approval under the Merger Agreement has denied
approval of the Merger or has issued an order, decree or ruling or
taken any other action permanently enjoining, restraining or otherwise
prohibiting the Merger and such denial, order, decree, ruling or other
action has become final and non-appealable; provided that this right
of termination is not available to any party whose failure to comply
with any provision of the Merger Agreement is the cause of or resulted
in such action;
o the other party breaches or fails to perform in any material respect
any of its representations, warranties or covenants contained in the
Merger Agreement, which breach or failure to perform would give rise
to the failure of any of the conditions to consummation of the Merger
and such breach or failure of condition cannot be or has not been
cured within 30 days after written notice of such breach or failure is
given to such breaching party by the other party, provided that the
party seeking termination is not then in material breach of its
obligations under the Merger Agreement; or
o the Merger has not been consummated on or before December 15, 2005
(unless the failure of the Merger to occur on or before such date
results from the other party breaching in any material respect any
representation, warranty, covenant or agreement contained in the
Merger Agreement).
o by Gardner Denver if:
o Thomas' board of directors has withdrawn or amended in any manner
adverse to Gardner Denver or PT Acquisition its recommendation and
approval of the Merger or approves or recommends any Superior Company
Proposal.
o by Thomas if:
o Thomas' board of directors determines in accordance with the
provisions of the Merger Agreement that there is a Superior Company
Proposal.
TERMINATION FEES AND EXPENSES
In the event that (1) Gardner Denver terminates the Merger Agreement
because Thomas' board of directors has withdrawn or adversely amended its
recommendation and approval of the Merger or has approved or recommended any
Superior Company Proposal, (2) Thomas' board of directors withdraws or adversely
amends its recommendation and approval of the Merger or approves or recommends
any Superior Company Proposal and in either case shareholder approval of the
Merger Agreement at the Special Meeting is not obtained, or (3) Thomas
terminates the Merger Agreement based on its determination that there is a
Superior Company Proposal, then Thomas will pay to Gardner Denver, within three
business days following the delivery of notice of such termination (in the case
of clauses (1) and (3) above) or the occurrence of such event (in the case of
clause (2) above), a termination fee equal to $12 million.
If Gardner Denver terminates the Merger Agreement as a result of any breach
by Thomas of its representations and warranties in the Merger Agreement, solely
as such representations and warranties were made as of the date of the Merger
Agreement, or as a result of Thomas' failure to perform any covenant set forth
-57-
in the Merger Agreement, then Thomas will pay to Gardner Denver, within three
business days following the delivery of notice of such termination, an amount
equal to the reasonable fees and expenses incurred by Gardner Denver in
connection with the Merger Agreement and the Merger, up to a maximum amount of
$3 million.
If, as of December 15, 2005, Thomas is in compliance with all of its
representations, warranties and covenants under the Merger Agreement, and on or
after such date either Thomas terminates the Merger Agreement as a result of the
failure to obtain any required regulatory approvals under the Merger Agreement
or Gardner Denver terminates the Merger Agreement as a result of (1) the failure
to obtain any required regulatory approvals under the Merger Agreement or (2)
any pending proceeding by any governmental entity against Gardner Denver, PT
Acquisition, Thomas or any of its subsidiaries seeking to prohibit or impose, or
any regulatory approval required under the Merger Agreement being conditioned
upon or seeking to impose, any material limitations on Gardner Denver's
ownership or operation of all or a material portion of the business or assets of
Gardner Denver and its subsidiaries or Thomas and its subsidiaries or which
compels Gardner Denver or its subsidiaries to dispose of, sell or license or
hold separate any material portion of the business or assets described above,
then Gardner Denver will pay to Thomas, within three business days following the
delivery of notice of such termination, a termination fee equal to $5 million
(the "Parent Termination Fee"). At any time prior to Thomas' termination of the
Merger Agreement, however, Gardner Denver may elect to waive satisfaction of the
conditions described in clauses (1) and (2) above and proceed with the
consummation of the Merger, in which case Thomas would still be entitled to
terminate the Merger Agreement as a result of the failure to complete the Merger
on or before December 15, 2005 but Thomas would not be entitled to receive the
Parent Termination Fee.
AMENDMENT, EXTENSION AND WAIVER
The Merger Agreement may be amended by written agreement of all parties
before or after approval and adoption of the Merger Agreement by Thomas'
shareholders and prior to the Effective Time; provided that after approval and
adoption of the Merger Agreement by Thomas' shareholders, no amendment may be
made that by law requires further approval by Thomas' shareholders without the
further approval of Thomas' shareholders.
At any time before the Effective Time, any party to the Merger Agreement
may, in writing:
o extend the time for the performance of any of the obligations or other acts
of the other parties pursuant to the Merger Agreement;
o waive any inaccuracies in the representations and warranties contained in
the Merger Agreement or in any document delivered pursuant to the Merger
Agreement; and
o waive compliance with any of the agreements or conditions contained in the
Merger Agreement.
While it has the legal ability to do so, Thomas' board of directors
anticipates that it would use its ability to waive any inaccuracies of
representations and warranties, breaches of covenants or failures of conditions
included for Thomas' benefit in the Merger Agreement if, and only if, such
waivers would not materially adversely affect the amount, type or certainty of
receipt of the consideration to be received by Thomas shareholders in connection
with the Merger. Thomas' board of directors does not believe it would or would
be required to re-solicit shareholder proxies as a result of any such waiver,
although any final decision on that issue would have to be made at the time of
any such waiver based on the facts and circumstances then prevailing.
-58-
THOMAS CERTIFICATE OF INCORPORATION
As of the Effective Time, the certificate of incorporation in the form
attached to the Merger Agreement will be the certificate of incorporation of the
Surviving Corporation until thereafter changed or amended as provided therein or
by applicable law and Thomas' certificate of incorporation will no longer be in
effect.
THOMAS BYLAWS
As of the Effective Time, the bylaws of PT Acquisition will become the
bylaws of the Surviving Corporation until thereafter changed or amended as
provided therein or by applicable law and Thomas' bylaws will no longer be in
effect.
THOMAS BOARD OF DIRECTORS AND OFFICERS
As of the Effective Time, the board of directors of PT Acquisition
immediately before the Effective Time will be the initial board of directors of
the Surviving Corporation, and the officers of Thomas immediately before the
Effective Time will be the initial officers of the Surviving Corporation, in
each case until their successors are elected or appointed and qualified or their
earlier resignation or removal. See also, "The Merger--Thomas Employees and
Employee Benefit Plans" and "The Merger--Interests of Thomas' Directors and
Officers in the Merger."
RECENT MARKET PRICES OF, AND DIVIDENDS ON, THOMAS COMMON STOCK
Thomas' shares are traded on the NYSE under the trading symbol "TII." The
following table sets forth the closing high and low prices for the Thomas common
stock as reported on the NYSE for the indicated periods and the dividends paid
per share during such periods.
2005 2004 2003
MARKET PRICE MARKET PRICE MARKET PRICE
------------ ------------ ------------
CASH CASH CASH
QUARTER DIVIDENDS DIVIDENDS DIVIDENDS
ENDED HIGH LOW DECLARED HIGH LOW DECLARED HIGH LOW DECLARED
------ ---- --- -------- ---- --- -------- ---- --- --------
March 31 $41.66 $36.60 $0.095 $35.30 $30.07 $0.095 $28.32 $24.26 $0.085
June 30 - - - 34.95 31.18 0.095 29.81 24.32 0.095
September 30 - - - 33.57 29.73 0.095 28.65 26.40 0.095
December 31 - - - 39.92 33.00 0.095 34.66 27.88 0.095
On the record date, [RECORD DATE], the number of holders of record of
Thomas common stock was approximately [_____].
On November 19, 2004, the last trading day before Thomas' board of
directors publicly announced that it had authorized management to explore
strategic and financial alternatives, including exploration of acquisitions,
stock buybacks, declaration of a special cash dividend and the possible sale of
Thomas, Thomas common stock closed at $37.13 per share. The average closing
price of Thomas common stock for the 30 days prior to such date was $34.59. On
March 8, 2005, the last full trading day immediately preceding the public
announcement of the proposed Merger, Thomas common stock closed at $39.92 per
share. On [_______], 2005, which is the latest practicable date prior to the
date of this proxy statement, Thomas common stock closed at $[___] per share.
-59-
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
Set forth in the following table are the beneficial holdings (and the
percentages of outstanding shares represented by such beneficial holdings) as of
March 31, 2005, except as otherwise noted, of (i) each person (including any
"group" as defined in Section 13(d)(3) of the Securities Exchange Act of 1934
(the "Exchange Act")) known by the Corporation to own beneficially more than 5
percent of its outstanding common stock, (ii) directors and nominees, (iii) the
named executive officers who are not directors, and (iv) all executive officers,
directors, and nominees as a group.
Under Rule 13d-3 of the Exchange Act, persons who have the power to vote or
dispose of common stock of the Corporation, either alone or jointly with others,
are deemed to be beneficial owners of such common stock. Because the voting or
dispositive power of certain stock listed in the following table is shared, the
same securities in such cases are listed opposite more than one name in the
table. The total number of shares of common stock of the Corporation listed in
the table, after elimination of such duplication, is 7,944,331 (44.50 percent of
the outstanding common stock).
NUMBER OF SHARES
AND NATURE OF PERCENT
NAME BENEFICIAL OWNERSHIP OF CLASS
---- -------------------- --------
(i) Gabelli Group................................................ 3,471,454(1) 19.44%
One Corporate Center
Rye, NY 10580
T. Rowe Price Associates, Inc. .............................. 1,640,500(2) 9.18
100 E. Pratt Street
Baltimore, MD 21202
Werner Rietschle Holding GmbH................................ 1,800,000(3) 10.08
Grienmatt 79650, Schopfheim, Germany
(ii) Timothy C. Brown............................................. 453,322(4)(6) 2.54
Wallace H. Dunbar............................................ 257,605(7) 1.44
H. Joseph Ferguson........................................... 34,880(5)(8) *
William M. Jordan............................................ 42,092(5)(8) *
Franklin J. Lunding, Jr...................................... 25,014(5)(8) *
Anthony A. Massaro........................................... 38,076(5)(8) *
George H. Walls, Jr.......................................... -- --
(iii) Dieter W. Rietschle.......................................... 1,800,000(3)(9) 10.08
Peter H. Bissinger........................................... 56,842(6) *
Phillip J. Stuecker.......................................... 142,807(6) *
James J. Kregel.............................................. 25,029(6) *
(iv) All Executive Officers, Directors, and Nominees as a Group
(11 people).................................................. 2,832,377(5)(6)(10) 15.87
-----------------
* Less than 1.0%
-60-
(1) Based on an amendment to Schedule 13D filed by certain reporting persons
(the "Gabelli Group") with the Securities and Exchange Commission dated November
12, 2004. One of the members of the Gabelli Group, GAMCO Investors, Inc.,
beneficially owns 2,876,454 shares, representing 16.11% of the outstanding
common stock. GAMCO Investors, Inc. has sole voting power with respect to
2,782,654 of such shares. The other reporting persons included in this group are
Gabelli Funds, LLC, MJG Associates, Inc., Gabelli Securities, Inc., Gabelli
Group Capital Partners, Inc., Gabelli Asset Management Inc., and Mario J.
Gabelli.
(2) Based on an amendment to Schedule 13G filed by T. Rowe Price Associates,
Inc. ("Price Associates"), and T. Rowe Price Small-Cap Value Fund, Inc., with
the Securities and Exchange Commission dated February 14, 2005. T. Rowe Price
Small-Cap Value Fund, Inc., beneficially owns and has sole voting power with
respect to 1,000,000 shares, representing 5.60% of the outstanding common stock.
Price Associates has sole voting power with respect to 597,600 shares and sole
dispositive power with respect to 640,500 shares. The Schedule 13G indicates
that with respect to the shares held by Price Associates, such shares are owned
by various individual and institutional investors which Price Associates serves
as investment advisor with power to direct investments.
(3) Based on a Form 3 filed by Werner Rietschle Holding GmbH with the Securities
and Exchange Commission dated August 29, 2002. Werner Rietschle Holding GmbH is
the legal entity from which the Corporation purchased substantially all of the
assets of the Rietschle business in August 2002.
(4) Excludes 372 shares owned separately by Mr. Brown's spouse. Mr. Brown
disclaims that he is the beneficial owner of any shares of which except for Rule
13d-3 he would not be deemed the beneficial owner.
(5) Includes shares that may be acquired pursuant to stock options exercisable
within sixty days as follows: Mr. Massaro, 18,000 shares; Mr. Jordan, 12,000
shares; Mr. Ferguson, 9,000 shares; and Mr. Lunding, 6,000 shares.
(6) Includes shares that may be acquired pursuant to stock options exercisable
within sixty days as follows: Mr. Brown, 305,375 shares; Mr. Bissinger, 37,350
shares; Mr. Stuecker, 83,957 shares; Mr. Kregel, 20,306 shares; and all
executive officers as a group, 446,988 shares.
(7) Includes 3,048 shares owned by the Dunbar Foundation, for which Mr. Dunbar
serves as President. Mr. Dunbar disclaims beneficial ownership of such shares.
(8) Includes 14,430 shares held by the Thomas Industries Master Trust, as
amended. The Compensation Committee, which is composed of Messrs. Ferguson,
Jordan, Lunding, and Massaro, has the power to vote and direct disposition of
such shares, except for certain restrictions placed upon the Compensation
Committee by the Trustee in the event of a tender offer for the shares of the
Corporation. Messrs. Ferguson, Jordan, Lunding, and Massaro disclaim beneficial
ownership of such shares.
(9) Mr. Rietschle has 49% ownership and 51% voting control of Werner Rietschle
Holding GmbH.
(10) The total number of shares of common stock of the Corporation reported for
executive officers, directors, and nominees as a group is shown after
eliminating duplication within the table.
-61-
OTHER MATTERS
You should rely only on the information contained in this proxy statement
to vote your shares at the Special Meeting. We have not authorized anyone to
provide you with information that is different from what is contained in this
proxy statement. This proxy statement is dated [______], 2005. The information
contained in this proxy statement is accurate as of the date of the proxy
statement. If any statements set forth in this proxy statement become materially
inaccurate before the date of the Special Meeting, Thomas will update these
proxy materials through filings of additional definitive materials with the SEC,
which will be sent to shareholders or otherwise made available to them as set
forth below in the section entitled "Where You Can Find More Information."
If the Merger is completed, we will not hold a 2005 Annual Meeting of
shareholders. If the Merger is not completed, you will continue to be entitled
to attend and participate in our shareholder meetings and we will hold a 2005
Annual Meeting of Shareholders, in which case shareholder proposals will be
eligible for consideration for inclusion in the proxy statement and form of
proxy for our 2005 Annual Meeting of shareholders in accordance with Rule 14a-8
under the Exchange Act. We will notify our shareholders of the date of the
Annual Meeting of shareholders, if any, in the Company's next available Form
10-Q. To be eligible for inclusion in the proxy statement and form of proxy for
the 2005 Annual Meeting pursuant to Rule 14a-8, proposals of shareholders would
have been required to be received by us no later than November 12, 2004 and
would have to comply with Rule 14a-8. Because the date of the 2005 Annual
Meeting, if any, will be changed by more than 30 days from the anniversary date
of last year's annual meeting, in order to be considered for inclusion in
Thomas' proxy materials, proposals of shareholders intended to be presented at
the 2005 Annual Meeting must be received by us a reasonable time before we begin
to print and mail our proxy materials for the 2005 Annual Meeting. In order to
curtail controversy as to the date on which a proposal was received by us, we
suggest that proponents submit their proposals by Certified Mail, Return Receipt
Requested, to Thomas Industries Inc., 4360 Brownsboro Road, Suite 300,
Louisville, Kentucky 40207, directed to the attention of the Secretary.
Under our bylaws, proposals of shareholders intended to be submitted for a
formal vote at our rescheduled 2005 Annual Meeting of shareholders (other than
proposals intended to be included in our proxy statement and form of proxy in
accordance with Rule 14a-8 promulgated under the Securities Exchange Act of
1934, as amended) may be made only by a shareholder who has given written notice
of the proposal to our Secretary at our principal executive offices not less
than 90 days prior to the date of such rescheduled 2005 Annual Meeting, if any,
and must provide the information and be in the form required by our bylaws.
The board of directors of the Corporation knows of no other business which
may come before the Special Meeting. If any other matters are properly presented
at the Special Meeting, the persons named in the proxy will vote upon them in
accordance with their best judgment.
WHETHER OR NOT YOU EXPECT TO ATTEND THE MEETING, PLEASE SIGN THE PROXY AND
RETURN IT IN THE ENCLOSED STAMPED ENVELOPE.
-62-
WHERE YOU CAN FIND MORE INFORMATION
Thomas files annual, quarterly and current reports, proxy statements and
other information with the SEC. You may read and copy this information at the
following location of the SEC:
Public Reference Room
450 Fifth Street, N.W.
Room 1024
Washington, D.C. 20549
Please call the SEC at 1-800-SEC-0330 for further information on the public
reference rooms. You may also obtain copies of this information by mail from the
Public Reference Section of the SEC, 450 Fifth Street, N.W., Room 1024,
Washington, D.C. 20549, at prescribed rates. Thomas' public filings are also
available to the public from document retrieval services, and Thomas' public
filings are available to the public at the Internet website maintained by the
SEC at http://www.sec.gov.
HOUSEHOLDING
Only one copy of this proxy statement has been sent to multiple
shareholders of Thomas who share the same address and last name, unless Thomas
has received contrary instructions from one or more of those shareholders. This
procedure is referred to as "householding." In addition, Thomas has been
notified that certain intermediaries, such as brokers or banks, will household
proxy materials. Thomas will deliver promptly, upon oral or written request, a
separate copy of this proxy statement to any shareholder at the same address. If
you wish to receive a separate copy of this proxy statement, you may write to
Attn: Secretary, Thomas Industries Inc., 4360 Brownsboro Road, Suite 300,
Louisville, Kentucky 40207 or call (502) 893-4600 or you may obtain a copy on
Thomas' website at "www.thomasind.com". You can contact your broker or bank to
make a similar request. Shareholders sharing an address who now receive multiple
copies of proxy statements may request delivery of a single copy by writing or
calling Thomas at the above address or phone number or by contacting their
broker or bank, provided they have determined to household proxy materials.
BY ORDER OF THE BOARD OF DIRECTORS
Timothy C. Brown
Chairman, President and Chief Executive Officer
[__________], 2005
-63-
APPENDIX A
EXECUTION COPY
AGREEMENT AND PLAN OF MERGER
Dated March 8, 2005
among
GARDNER DENVER, INC.,
PT ACQUISITION CORPORATION
and
THOMAS INDUSTRIES INC.
A-1
TABLE OF CONTENTS
Page
ARTICLE I Definitions..............................................................................A-1
Section 1.01 Definitions..............................................................................A-1
Section 1.02 Cross References to Certain Terms Defined Elsewhere in this Agreement....................A-4
ARTICLE II The Merger...............................................................................A-6
Section 2.01 The Merger...............................................................................A-6
Section 2.02 Closing..................................................................................A-6
Section 2.03 Effective Time...........................................................................A-6
Section 2.04 Effects..................................................................................A-6
Section 2.05 Certificate of Incorporation and Bylaws..................................................A-7
Section 2.06 Directors................................................................................A-7
Section 2.07 Officers.................................................................................A-7
ARTICLE III Effect of Merger; Exchange of Certificates...............................................A-7
Section 3.01 Effect on Capital Stock..................................................................A-7
Section 3.02 Exchange of Certificates.................................................................A-8
Section 3.03 Stock Options, SARs and Performance Shares..............................................A-10
ARTICLE IV Representations and Warranties of the Company...........................................A-12
Section 4.01 Organization, Standing and Power........................................................A-12
Section 4.02 Company Subsidiaries; Equity Interests..................................................A-12
Section 4.03 Capital Structure.......................................................................A-12
Section 4.04 Authority; Execution and Delivery, Enforceability.......................................A-13
Section 4.05 No Conflicts; Consents..................................................................A-14
Section 4.06 SEC Documents and Related Matters.......................................................A-15
Section 4.07 Proxy Statement and Company Future SEC Filings..........................................A-17
Section 4.08 Compliance with Applicable Laws.........................................................A-19
Section 4.09 Litigation and Insurance................................................................A-20
Section 4.10 Taxes...................................................................................A-20
Section 4.11 Certain Agreements......................................................................A-21
Section 4.12 Absence of Changes in Benefit Plans.....................................................A-21
Section 4.13 ERISA Compliance; Excess Parachute Payments.............................................A-22
Section 4.14 Absence of Certain Changes or Events....................................................A-24
-i-
TABLE OF CONTENTS
Page
Section 4.15 Properties..............................................................................A-24
Section 4.16 Intellectual Property...................................................................A-24
Section 4.17 Environmental Matters...................................................................A-25
Section 4.18 Labor and Employment Matters............................................................A-26
Section 4.19 Brokers; Schedule of Fees and Expenses..................................................A-26
Section 4.20 Opinion of Financial Advisor............................................................A-27
ARTICLE V Representations and Warranties of Parent and Sub........................................A-27
Section 5.01 Organization, Standing and Power........................................................A-27
Section 5.02 Sub.....................................................................................A-27
Section 5.03 Authority; Execution and Delivery, Enforceability.......................................A-27
Section 5.04 No Conflicts; Consents..................................................................A-27
Section 5.05 Information Supplied....................................................................A-28
Section 5.06 Brokers.................................................................................A-28
Section 5.07 Financing...............................................................................A-28
Section 5.08 No Additional Representations; Investigation by Parent and Sub..........................A-29
ARTICLE VI Covenants Relating to Conduct of Business...............................................A-30
Section 6.01 Conduct of Business.....................................................................A-30
Section 6.02 No Solicitation.........................................................................A-33
ARTICLE VII Additional Agreements...................................................................A-34
Section 7.01 Preparation of Proxy Statement; Stockholders Meeting....................................A-34
Section 7.02 Access to Information; Confidentiality..................................................A-35
Section 7.03 Best Efforts; Notification..............................................................A-35
Section 7.04 Employment, Compensation and Benefit Plans..............................................A-36
Section 7.05 Indemnification; Directors' and Officers' Insurance.....................................A-37
Section 7.06 Fees and Expenses.......................................................................A-39
Section 7.07 Public Announcements....................................................................A-39
Section 7.08 Transfer Taxes..........................................................................A-39
ARTICLE VIII Conditions Precedent....................................................................A-39
Section 8.01 Conditions to Each Party's Obligation To Effect The Merger..............................A-39
Section 8.02 Further Conditions to Obligation of the Company.........................................A-40
-ii-
TABLE OF CONTENTS
Page
Section 8.03 Further Conditions to Obligation of Parent and Sub......................................A-40
ARTICLE IX Termination, Amendment and Waiver.......................................................A-41
Section 9.01 Termination.............................................................................A-41
Section 9.02 Effect of Termination...................................................................A-42
Section 9.03 Amendment...............................................................................A-44
Section 9.04 Extension; Waiver.......................................................................A-44
ARTICLE X General Provisions......................................................................A-45
Section 10.01 Non-Survival of Representations, Warranties and Agreements..............................A-45
Section 10.02 Notices.................................................................................A-45
Section 10.03 Interpretation; Disclosure Letters......................................................A-46
Section 10.04 Severability............................................................................A-46
Section 10.05 Counterparts............................................................................A-46
Section 10.06 Entire Agreement; No Third-Party Beneficiaries..........................................A-47
Section 10.07 Governing Law...........................................................................A-47
Section 10.08 Assignment..............................................................................A-47
Section 10.09 Enforcement; Jurisdiction; WAIVER OF JURY TRIAL.........................................A-47
-iii-
This AGREEMENT AND PLAN OF MERGER (this "AGREEMENT") is dated
this 8th day of March, 2005 by and among Gardner Denver, Inc., a Delaware
corporation ("PARENT"), PT Acquisition Corporation, a Delaware corporation and a
wholly owned Subsidiary of Parent ("SUB"), and Thomas Industries Inc., a
Delaware corporation (the "COMPANY").
WHEREAS, the Boards of Directors of Sub and the Company have
approved and deemed it advisable and in the best interests of their respective
stockholders to consummate, and the Board of Directors of Parent has approved,
the acquisition of the Company by Parent on the terms and subject to the
conditions set forth in this Agreement;
WHEREAS, the Boards of Directors of Sub and the Company have
approved and deemed it advisable and in the best interests of their respective
stockholders to consummate, and the Board of Directors of Parent has approved,
the merger (the "MERGER") of Sub with and into the Company, on the terms and
subject to the conditions set forth in this Agreement;
WHEREAS, upon the consummation of the Merger, each issued and
outstanding share of common stock of the Company, par value $1.00 per share (the
"COMPANY COMMON STOCK"), shall be converted into the right to receive in cash
$40.00 (such amount, or any higher amount per share of Company Common Stock paid
pursuant to this Agreement, the "MERGER PRICE"), upon the terms and subject to
the limitations and conditions of this Agreement;
WHEREAS, the Boards of Directors of Parent, Sub and the
Company have each determined that the Merger and the other Transactions are
consistent with, and in furtherance of, their respective business strategies and
goals; and
WHEREAS, Parent, Sub and the Company desire to make certain
representations, warranties, covenants and agreements in connection with the
Merger and also to prescribe various conditions to the Merger.
NOW, THEREFORE, in consideration of the foregoing and the
respective representations, warranties, covenants and agreements set forth
herein, the parties hereto agree as follows:
ARTICLE I
Definitions
-----------
Section 1.01 Definitions. As used in this Agreement, the
following terms shall have the meanings set forth below:
"AFFILIATE" of any Person means another Person that, directly
or indirectly, through one or more intermediaries, controls, is controlled by,
or is under common control with, such first Person.
"BUSINESS DAY" means any day that is not a Saturday, a Sunday
or a day on which banks are required or permitted to be closed in the State of
New York.
"CODE" means the Internal Revenue Code of 1986, as amended.
"COMPANY MATERIAL ADVERSE EFFECT" means (a) any change,
effect, event, occurrence or state of facts having a material adverse effect on
the business, assets, financial condition or results of operations of the
Company and the Company Subsidiaries, taken as a whole, other than effects
relating to (1) changes, effects, events, occurrences or circumstances that
generally affect the United States or the global economy or the industries in
which the Company operates, (2) general economic, financial or securities market
conditions in the United States or elsewhere, (3) the execution, delivery or
announcement of this Agreement or the announcement of the Merger, (4) changes in
GAAP or requirements applicable to the Company and the Company Subsidiaries, (5)
changes in Laws or interpretations thereof by a Governmental Entity, (6)
changes, effects, events or occurrences caused by or resulting from the taking
of any action required or permitted by this Agreement or approved by Parent or
(7) any outbreak of major hostilities in any country in which the Company
operates or in which the United States is involved or any act of terrorism
within the United States or any country in which the Company operates or
directed against United States facilities or citizens wherever located or (b) a
material adverse effect on the ability of the Company to perform its obligations
under this Agreement.
"COMPANY PERFORMANCE SHARES" mean the performance shares
issued under the Company Stock Plan.
"COMPANY SAR" means any stock appreciation right linked to the
price of Company Common Stock and granted under the Company Stock Plan.
"COMPANY STOCK OPTION" means any option to purchase Company
Common Stock granted under the Company Stock Plan.
"COMPANY STOCK PLAN" means the Thomas Industries Inc. 1995
Incentive Stock Plan, as Amended and Restated (and predecessors thereto
including the Thomas Industries Inc. 1995 Incentive Stock Plan and the Thomas
Industries Inc. Non-Employee Director Stock Option Plan).
"COMPANY TAKEOVER PROPOSAL" means any proposal or offer (1)
for a merger, share exchange, business combination, consolidation, dual listed
structure, liquidation, dissolution, recapitalization, reorganization or other
similar transaction involving the Company, or (2) to acquire in any manner,
directly or indirectly, 15% or more of the equity securities of the Company or
(3) to acquire, lease, exchange, mortgage, pledge, dispose of or otherwise
transfer, in any manner (including through any arrangement having substantially
the same economic effect as a sale of assets), directly or indirectly, over 15%
of the consolidated total assets of the Company, in a single transaction or a
series of related transactions, in each case other than the Transactions.
"ISO" means a Company Stock Option that meets the incentive
stock option requirements of Section 422 of the Code.
"PARENT MATERIAL ADVERSE EFFECT" means any effect, event or
change that prevents or materially delays the ability of Parent and Sub to
perform their obligations under this Agreement or to consummate the Merger or
the other Transactions in accordance with the terms hereof.
A-2
"PERSON" means any individual, firm, corporation, partnership,
company, limited liability company, trust, joint venture, association,
Governmental Entity or other entity.
"SARBANES-OXLEY ACT" means the Sarbanes-Oxley Act of 2002.
"SEC" means the United States Securities and Exchange
Commission.
"SIGNIFICANT COMPANY SUBSIDIARY" means any Subsidiary of the
Company that constitutes a significant subsidiary within the meaning of Rule
1-02 of Regulation S-X of the SEC.
"SUBSIDIARY" of any Person means another Person, an amount of
the voting securities, other voting ownership or voting partnership interests of
which is sufficient to elect at least a majority of its Board of Directors or
other governing body (or, if there are no such voting interests, 50% or more of
the equity interests of which) is owned directly or indirectly by such first
Person.
"SUPERIOR COMPANY PROPOSAL" means a written proposal made by a
third Person to acquire all of the outstanding Company Common Stock or all or
substantially all of the assets of the Company and the Company Subsidiaries,
pursuant to a tender or exchange offer, a merger, a consolidation, a liquidation
or dissolution, a recapitalization or a sale of assets, in each case that the
Board of Directors of the Company determines in good faith after consulting with
the Company's outside financial and legal advisors (i) is reasonably capable of
being completed, taking into account all legal, financial, regulatory and other
aspects of such proposal, and (ii) presents to the Company and its stockholders
more favorable financial and other terms, taken as a whole, than the Merger
(taking into account any changes in the terms of the Merger made by Parent and
Sub as a result of such proposal).
"TAXES" includes all forms of taxation, whenever created or
imposed, and whether of the United States or elsewhere, and whether imposed by a
local, municipal, governmental, state, foreign, Federal or other Governmental
Entity, or in connection with any agreement with respect to taxes, including all
interest, penalties and additions imposed with respect to such amounts.
"TAX RETURN" means all Federal, state, local, provincial and
foreign Tax returns, declarations, statements, reports, schedules, forms and
information returns and any amended Tax return relating to Taxes.
"TRANSACTIONS" means the Merger and the other transactions
contemplated by this Agreement.
A-3
Section 1.02 Cross References to Certain Terms Defined
Elsewhere in this Agreement.
Term Section
---- -------
Affected Employee 7.04(c)
Affiliate 1.01
Agreement Preamble
All Benefit Plans and Agreements 4.12
Appraisal Shares 3.01(d)
Auditing Standard No. 2 4.07(c)
Baird 4.19
Business Day 1.01
Certificate of Merger 2.03
Certificates 3.02(b)
Certifications 4.06(b)
Closing 2.02
Closing Date 2.02
Code 1.01
Company Preamble
Company Benefit Agreements 4.12
Company Benefit Plans 4.12
Company Board 4.04(b)
Company Bylaws 4.01
Company Capital Stock 4.03
Company Charter 4.01
Company Common Stock Preamble
Company Contracts 4.11
Company Disclosure Letter Article IV
Company Future SEC Filings 4.07(c)
Company Intellectual Property 4.16
Company Material Adverse Effect 1.01
Company Multiemployer Pension Plan 4.13(b)
Company Pension Plans 4.13(a)
Company Performance Shares 1.01
Company Permits 4.08(a)
Company Rights 4.03
Company Rights Agreement 4.03
Company SAR 1.01
Company SEC Documents 4.06(b)
Company Stock Option 1.01
Company Stock Plan 1.01
Company Stockholder Approval 4.04(c)
Company Stockholders Meeting 7.01(b)
Company Subsidiary 4.02
A-4
Term Section
---- -------
Company Takeover Proposal 1.01
Company Termination Fee 9.02(b)
Company 2004 Form 10-K 4.07(b)
Confidentiality Agreement 7.02
Consent 4.05(b)
Contract 4.05(a)
DGCL 2.01
Effective Time 2.03
Environmental Laws 4.17(a)
ERISA 4.13(a)
Exchange Act 3.03(f)
Exchange Fund 3.02
Expense Reimbursement 9.02(c)
GAAP 4.06(e)
Governmental Entity 4.05(b)
Hazardous Materials 4.17(c)
HSR Act 4.05(b)
Indemnified Parties 7.05(b)
Infringe 4.16
Injunction 8.01(c)
Insolvent 5.07(c)
Judgment 4.05(a)
Law 4.05(a)
Liens 4.02(a)
Management Report 4.07(c)
Merger Preamble
Merger Consideration 3.01(c)(2)
Merger Price Preamble
Outside Date 9.01(d)
Parent Preamble
Parent Disclosure Letter Article V
Parent Material Adverse Effect 1.01
Parent Termination Fee 9.02(d)
Paying Agent 3.02
Permitted Liens 4.15
Person 1.01
Proxy Statement 7.01
Representatives 6.02(b)
Requisite Regulatory Approvals 8.01(b)
Sarbanes-Oxley Act 1.01
SEC 1.01
Section 262 3.01(d)
Securities Act 4.06(c)
Significant Company Subsidiary 1.01
Sub Preamble
A-5
Term Section
---- -------
Subsidiary 1.01
Superior Company Proposal 1.01
Surviving Corporation 2.01
Tail Insurance 7.05(c)
Tax Return 1.01
Taxes 1.01
Transactions 1.01
Transfer Taxes 7.08
U.S. Benefit Plans and Agreements 4.12
ARTICLE II
The Merger
----------
Section 2.01 The Merger. On the terms and subject to the
conditions set forth in this Agreement, and in accordance with the Delaware
General Corporation Law (the "DGCL"), Sub shall be merged with and into the
Company at the Effective Time. At the Effective Time, the separate corporate
existence of Sub shall cease and the Company shall continue as the surviving
corporation (the "SURVIVING CORPORATION"). As a result of the Merger, the
Company shall become a wholly-owned Subsidiary of Parent.
Section 2.02 Closing. The closing of the Merger (the
"CLOSING") will take place at the offices of McDermott Will & Emery LLP, 227
West Monroe St., Chicago, Illinois 60606 at 10:00 a.m. on the date (the "CLOSING
DATE") that is the second Business Day following the satisfaction (or, to the
extent permitted by Law, waiver by all parties) of the conditions set forth in
Article VIII, or, if on such day any condition set forth in Article VIII has not
been satisfied (or, to the extent permitted by Law, has not been waived by the
party or parties entitled to the benefits thereof), as soon as practicable after
all the conditions set forth in Article VIII have been satisfied (or, to the
extent permitted by Law, waived by the parties entitled to the benefits
thereof), or at such other place, time and date as shall be agreed in writing
between Parent and the Company.
Section 2.03 Effective Time. Subject to the provisions of this
Agreement, on the Closing Date the Company and Sub shall execute and deliver for
filing a certificate of merger (the "CERTIFICATE OF MERGER") to the Secretary of
State of the State of Delaware in such form and manner provided in the DGCL and
shall make all other filings or recordings required under the DGCL in connection
with the Merger. The Merger shall become effective at such time as the
Certificate of Merger is duly filed with the Secretary of State of the State of
Delaware, or at such later time as may be specified in the Certificate of Merger
(the time the Merger becomes effective being the "EFFECTIVE TIME").
Section 2.04 Effects. The Merger shall have the effects set
forth in Section 259 of the DGCL.
A-6
Section 2.05 Certificate of Incorporation and Bylaws. (a) At
the Effective Time, the Certificate of Incorporation of the Surviving
Corporation shall be amended to read in the form of Exhibit A and, as so
amended, such Certificate of Incorporation shall be the Certificate of
Incorporation of the Surviving Corporation until thereafter changed or amended
as provided therein or by applicable Law.
(b) The bylaws of Sub as in effect immediately prior to the
Effective Time shall be the bylaws of the Surviving Corporation until thereafter
changed or amended as provided therein or by applicable Law.
Section 2.06 Directors. The directors of Sub immediately prior
to the Effective Time shall be the directors of the Surviving Corporation, until
the earlier of their resignation or removal or until their respective successors
are duly elected and qualified, as the case may be.
Section 2.07 Officers. The officers of the Company immediately
prior to the Effective Time shall be the officers of the Surviving Corporation,
until the earlier of their resignation or removal or until their respective
successors are duly elected or appointed and qualified, as the case may be.
ARTICLE III
Effect of Merger; Exchange of Certificates
------------------------------------------
Section 3.01 Effect on Capital Stock. At the Effective Time,
by virtue of the Merger and without any action on the part of Parent, Sub, the
Company or the holder of any shares of Company Common Stock or any shares of
capital stock of Sub:
(a) Capital Stock of Sub. Each issued and outstanding share of
capital stock of Sub issued and outstanding immediately prior to the Effective
Time shall be converted into and become one fully paid and nonassessable share
of common stock, par value $0.01 per share, of the Surviving Corporation.
(b) Cancellation of Treasury Stock and Parent-Owned Company
Common Stock. Each share of Company Common Stock that is owned by the Company
(or any Subsidiary of the Company), Parent (or any Subsidiary of Parent) or Sub
shall no longer be outstanding and shall automatically be canceled and retired
and shall cease to exist, and no consideration shall be delivered or deliverable
in exchange therefor.
(c) Conversion of Company Common Stock. (1) Except as
otherwise provided by Sections 3.01(b) and 3.01(d), each issued share of Company
Common Stock shall be converted into the right to receive the Merger Price.
(2) The aggregate amount of cash payable upon the conversion
of all of the issued shares of Company Common Stock pursuant to this Section
3.01(c) is referred to as the "MERGER CONSIDERATION." As of the Effective Time,
all such shares of Company Common Stock shall no longer be outstanding and shall
automatically be canceled and retired and shall cease to exist, and each holder
of a certificate representing any such shares of Company Common Stock shall
A-7
cease to have any rights with respect thereto, except the right to receive
Merger Consideration upon surrender of such certificate in accordance with
Section 3.02, without interest.
(d) Appraisal Rights. Notwithstanding anything in this
Agreement to the contrary, each of the shares ("APPRAISAL SHARES") of Company
Common Stock that are outstanding immediately prior to the Effective Time and
that are held by any Person who is entitled to demand and properly demands
appraisal of such Appraisal Shares pursuant to, and who complies in all respects
with, Section 262 of the DGCL ("SECTION 262") shall not be converted into the
Merger Price as provided in Section 3.01(c), but rather the holders of Appraisal
Shares shall be entitled to payment of the fair market value of such Appraisal
Shares in accordance with Section 262; provided that if any such holder shall
fail to perfect or otherwise shall waive, withdraw or lose the right to
appraisal under Section 262, then the right of such holder to be paid the fair
value of any of such holder's Appraisal Shares shall cease and each of such
holder's Appraisal Shares shall be deemed to have been converted as of the
Effective Time into, and to have become exchangeable solely for the right to
receive, the Merger Price as provided in Section 3.01(c), without any interest
thereon.
Section 3.02 Exchange of Certificates. (a) Paying Agent.
Parent shall appoint JPMorgan Trust Company, N.A. or another paying agent
acceptable to the Company to act as paying agent (the "PAYING AGENT") for the
payment of the Merger Consideration upon surrender of certificates representing
Company Common Stock. Parent shall take all steps necessary to enable and cause
the Surviving Corporation to provide to the Paying Agent immediately following
the Effective Time all the cash necessary to pay for the shares of Company
Common Stock converted into the right to receive cash pursuant to Section 3.01
and the amounts payable to holders of Company Stock Options, Company SARs and
Company Performance Shares as set forth in Section 3.03 (such cash being
hereinafter referred to as the "EXCHANGE FUND"). The Exchange Fund shall not be
used for any other purpose. The Paying Agent shall invest any cash deposited
with the Paying Agent by Parent as directed by Parent; provided that no such
investment or losses thereon shall affect the Merger Consideration payable to
holders of shares of Company Common Stock entitled to receive such
consideration, or the consideration to be paid to the holders of the Company
Stock Options, Company SARs and Company Performance Shares as set forth in
Section 3.03, and Parent shall promptly provide additional funds to Paying Agent
for the benefit of holders of shares of Company Common Stock, Company Stock
Options, Company SARs and Company Performance Shares entitled to receive such
consideration in the amount of any such losses. Any interest or income produced
by such investment shall not be deemed part of the Exchange Fund and shall be
payable to Parent.
(b) Exchange Procedure. As soon as reasonably practicable
after the Effective Time, but in no event later than three Business Days after
the Effective Time, Parent shall cause the Paying Agent to mail to each holder
of record of a certificate or certificates that immediately prior to the
Effective Time represented outstanding shares of Company Common Stock (the
"CERTIFICATES") whose shares were converted into the right to receive Merger
Consideration pursuant to Section 3.01, (1) a letter of transmittal (which shall
specify that delivery shall be effected, and risk of loss and title to the
Certificates shall pass, only upon delivery of the Certificates to the Paying
Agent and shall be in such form and have such other provisions as are reasonably
A-8
acceptable to each of Parent and the Company) and (2) instructions for use in
effecting the surrender of the Certificates in exchange for payment of the
Merger Consideration therefor. Upon surrender of a Certificate for cancellation
to the Paying Agent together with such letter of transmittal, duly completed and
validly executed in accordance with the instructions thereto, and such other
documents as may reasonably be required pursuant to such instructions, the
holder of such Certificate shall be entitled to receive in exchange therefor the
amount of cash into which the shares of Company Common Stock theretofore
represented by such Certificate shall have been converted pursuant to Section
3.01, and the Certificate so surrendered shall forthwith be canceled. In the
event of a transfer of ownership of Company Common Stock that is not registered
in the transfer records of the Company, payment may be made to a Person other
than the Person in whose name the Certificate so surrendered is registered, if
such Certificate shall be properly endorsed or otherwise be in proper form for
transfer and the Person requesting such payment shall pay any transfer or other
Taxes required by reason of the payment to a Person other than the registered
holder of such Certificate or establish to the satisfaction of Parent that such
Tax has been paid or is not applicable. Until surrendered as contemplated by
this Section 3.02, each Certificate shall be deemed at any time after the
Effective Time to represent only the right to receive upon such surrender the
amount of cash, without interest, into which the shares of Company Common Stock
theretofore represented by such Certificate have been converted pursuant to
Section 3.01. No interest shall be paid or accrue on the cash payable upon
surrender of any Certificate.
(c) No Further Ownership Rights in Company Common Stock. The
Merger Consideration paid in accordance with the terms of this Article III upon
conversion of any shares of Company Common Stock shall be deemed to have been
paid in full satisfaction of all rights pertaining to such shares of Company
Common Stock, subject, however, to the Surviving Corporation's obligation to pay
any dividends or make any other distributions with a record date prior to the
Effective Time that may have been declared or made by the Company on such shares
of Company Common Stock in accordance with the terms of this Agreement or prior
to the date of this Agreement and which remain unpaid at the Effective Time.
After the Effective Time there shall be no further registration of transfers on
the stock transfer books of the Surviving Corporation of shares of Company
Common Stock that were outstanding immediately prior to the Effective Time. If,
after the Effective Time, any certificates formerly representing shares of
Company Common Stock are presented to the Surviving Corporation or the Paying
Agent for any reason, they shall be canceled and exchanged as provided in this
Article III.
(d) Termination of Exchange Fund. Upon demand by Parent, any
portion of the Exchange Fund that remains undistributed to the holders of
Company Common Stock for one year after the Effective Time shall be delivered to
Parent, upon demand, and any holder of Company Common Stock, Company Stock
Options, Company SARs or Company Performance Shares who has not theretofore
complied with this Article III shall thereafter look only to Parent for payment
of its claim for Merger Consideration or the consideration to be paid pursuant
to Section 3.03, as the case may be.
(e) No Liability. None of Parent, Sub, the Company or the
Paying Agent shall be liable to any Person in respect of any cash from the
Exchange Fund delivered to a public official pursuant to any applicable
abandoned property, escheat or similar Law.
A-9
(f) Withholding Rights. Each of Parent, the Surviving
Corporation and the Paying Agent shall be entitled to deduct and withhold from
the consideration otherwise payable to any holder of Company Common Stock
pursuant to this Agreement such amounts as may be required to be deducted and
withheld with respect to the making of such payment under the Code, or under any
provision of state, local or foreign Tax Law. To the extent such amounts are so
withheld by Parent, the Surviving Corporation or the Paying Agent, such withheld
amounts shall be treated for all purposes of this Agreement as having been paid
to the holder of the Company Common Stock in respect of which such deduction and
withholding was made by Parent, the Surviving Corporation or the Paying Agent.
(g) Lost Certificates. If any Certificate has been or is
claimed to have been lost, stolen or destroyed, upon the making of an affidavit
of that fact by the Person claiming that Certificate has been lost, stolen or
destroyed, the Paying Agent will deliver in exchange for such lost, stolen or
destroyed Certificate, the proper amount of the Merger Consideration. The
Surviving Corporation shall have the right to require the posting of a bond or
other indemnity in connection with any such affidavit.
Section 3.03 Stock Options, SARs and Performance Shares. (a)
As soon as practicable following the date of this Agreement, the Board of
Directors or the committee administering the Company Stock Plan shall adopt such
resolutions or take such other actions, as are required to adjust the terms of
all outstanding Company Stock Options that are not ISOs and all outstanding
Company SARs heretofore granted under the Company Stock Plan to provide that
each Company Stock Option that is not an ISO and each Company SAR outstanding at
the Effective Time shall be cancelled and that in exchange therefor the holder
thereof shall not have the right to receive any capital stock of the Company or
the Surviving Corporation after the Effective Time or to receive from the
Company or the Surviving Corporation any consideration other than an amount of
cash equal to (1) the excess, if any, of (x) the Merger Price over (y) the
exercise price per share of Company Common Stock subject to such Company Stock
Option that is not an ISO or Company SAR, as the case may be, multiplied by (2)
the number of shares of Company Common Stock for which such Company Stock Option
that is not an ISO or Company SAR shall not theretofore have been exercised. All
amounts payable pursuant to this paragraph shall be subject to any required
withholding of Taxes and shall be paid without interest.
(b) As soon as practicable following the date of this
Agreement, the Board of Directors or the committee administering the Company
Stock Plan shall adopt such resolutions or take such other actions, as are
required to adjust the terms of all outstanding ISOs heretofore granted under
the Company Stock Plan to provide that each ISO outstanding at the Effective
Time shall be fully vested and exercised automatically on a net exercise basis
with the ISO holder immediately selling the shares received on exercise to the
Company for an amount of cash equal to the number of shares received multiplied
by the Merger Price. All amounts payable pursuant to this paragraph shall not be
subject to any required withholding of Taxes and shall be paid without interest.
(c) As soon as practicable following the date of this
Agreement, the Board of Directors or the committee administering the Company
Stock Plan shall adopt such resolutions or take such other actions, as are
required to adjust the terms of any Company Performance Share awards heretofore
granted under the Company Stock Plan to provide that as of the Effective Time
A-10
the performance goals established thereunder shall be deemed satisfied and 100%
of the target shares then credited to each participant shall be awarded and
deemed payable to each participant; provided that the holder thereof shall not
have the right to receive any capital stock of the Company or the Surviving
Corporation after the Effective Time or to receive from the Company or the
Surviving Corporation any consideration other than an amount of cash equal to
(x) the Merger Price multiplied by (y) the number of target shares awarded to
the participant pursuant to this sentence. All amounts payable pursuant to this
paragraph shall be subject to any required withholding of Taxes and shall be
paid without interest.
(d) As soon as practicable following the date of this
Agreement, the Board of Directors or the committee administering the Company
Stock Plan shall adopt such resolutions or take such other actions, as are
required to adjust the terms of any deferrals under such plan to non-employee
directors to provide that participants shall not have the right to receive any
capital stock of the Company or the Surviving Corporation after the Effective
Time or to receive from the Company or the Surviving Corporation any
consideration other than an amount of cash equal to the Merger Price multiplied
by the number of full and fractional shares held by the participant under such
plan.
(e) The Company Stock Plan shall terminate as of the Effective
Time, and the provisions in any other Company Benefit Plan providing for the
issuance, transfer or grant of any capital stock of the Company or any interest
in respect of any capital stock of the Company shall be deleted as of the
Effective Time, and the Company shall ensure that following the Effective Time
no holder of a Company Stock Option, Company SAR or Company Performance Share or
any participant in the Company Stock Plan or other Company Benefit Plan shall
have any right thereunder to acquire any capital stock of the Company or the
Surviving Corporation.
(f) As soon as reasonably practicable after the Effective
Time, but in no event later than three Business Days after the Effective Time,
Parent shall cause the Paying Agent to mail to each holder of Company Stock
Options, Company SARs and Company Performance Shares entitled to receive cash in
exchange therefor pursuant to this Section 3.03 (i) a letter of transmittal
(which shall be in such form and have such other provisions as are reasonably
acceptable to each of Parent and the Company) and (ii) instructions reasonably
acceptable to Parent and the Company for use in effecting the surrender,
cancellation and termination of such Company Stock Options, Company SARs and
Company Performance Shares in exchange for cash in accordance with this Section
3.03.
(g) Prior to the Effective Time, the Board of Directors or
Compensation Committee of the Company shall take all reasonable actions required
pursuant to Rule 16b-3(e) under the Securities Exchange Act of 1934, as amended
(the "EXCHANGE ACT"), to cause the disposition in the Merger of Company Common
Stock, Company Stock Options, Company SARs and Company Performance Shares by
each executive officer and director of the Company who is subject to the
reporting requirements of Section 16(a) of the Exchange Act with respect to the
Company to be exempt from the provisions of Section 16(b) of the Exchange Act.
A-11
ARTICLE IV
Representations and Warranties of the Company
---------------------------------------------
The Company represents and warrants to Parent and Sub that,
except as set forth in the Company SEC Documents or in the letter, dated as of
the date of this Agreement, from the Company to Parent and Sub (the "COMPANY
DISCLOSURE LETTER"):
Section 4.01 Organization, Standing and Power. Each of the
Company and each Company Subsidiary is duly organized, validly existing and in
good standing under the Laws of the jurisdiction in which it is organized and
has full corporate power and authority to conduct its businesses as presently
conducted. The Company and each Company Subsidiary is duly qualified to do
business in each jurisdiction where the nature of its business or the ownership
or leasing of its properties makes such qualification necessary or the failure
to so qualify has had or could reasonably be expected to have a Company Material
Adverse Effect. The Company has made available to Parent true and complete
copies of the certificate of incorporation of the Company, as amended to the
date of this Agreement (as so amended, the "COMPANY CHARTER"), and the bylaws of
the Company, as amended to the date of this Agreement (as so amended, the
"COMPANY BYLAWS"), and the comparable charter and organizational documents of
each Significant Company Subsidiary, in each case as amended through the date of
this Agreement.
Section 4.02 Company Subsidiaries; Equity Interests. (a) The
Company Disclosure Letter lists each Subsidiary of the Company (each, a "COMPANY
SUBSIDIARY") and its jurisdiction of organization. All the outstanding shares of
capital stock of each Company Subsidiary have been validly issued and are fully
paid and nonassessable and, except as set forth in the Company Disclosure
Letter, are owned by the Company, by another Company Subsidiary or by the
Company and another Company Subsidiary (other than director's qualifying shares
or similar requirements of a foreign jurisdiction), free and clear of all
pledges, liens, charges, mortgages, encumbrances, security interests or other
adverse claims of any kind or nature whatsoever (collectively, "Liens"). Except
with respect to agreements relating to director's qualifying shares or similar
requirements of a foreign jurisdiction, neither the Company nor any Company
Subsidiary is a party to any voting trust, proxy or other agreement or
understanding with respect to the voting of any capital stock of the Company or
any Company Subsidiary.
(b) Except for its interests in the Company Subsidiaries and
except for the ownership interests set forth in the Company Disclosure Letter,
the Company does not own, directly or indirectly, any capital stock, membership
interest, partnership interest, joint venture interest or other equity interest
with a fair market value as of the date of this Agreement in excess of
$1,000,000 in any Person.
Section 4.03 Capital Structure. The authorized capital stock
of the Company consists of 60,000,000 shares of Company Common Stock and
3,000,000 shares of preferred stock, par value $1.00 per share (the "COMPANY
PREFERRED STOCK" and, together with the Company Common Stock, the "COMPANY
CAPITAL STOCK"). At the close of business on March 3, 2005, (a) 17,849,925
shares of Company Common Stock and no shares of Company Preferred Stock were
issued and outstanding, (b) 822,339 shares of Company Common Stock were held by
A-12
the Company in its treasury, (c) 1,032,826 shares of Company Common Stock were
subject to outstanding Company Stock Options, Company SARs or Company
Performance Shares and 810,851 additional shares of Company Common Stock were
reserved for issuance pursuant to the Company Stock Plan, (d) 22,539.41 shares
of Company Common Stock were subject to outstanding deferrals by non-employee
directors under the Company Stock Plan and (e) 60,000,000 shares of Company
Common Stock and 3,000,000 shares of Company Preferred Stock were reserved for
issuance in connection with the rights (the "COMPANY RIGHTS") issued pursuant to
the Amended and Restated Rights Agreement dated as of April 20, 2000 (as amended
from time to time, the "COMPANY RIGHTS AGREEMENT"), between the Company and
National City Bank, as Rights Agent. Except as set forth above, at the close of
business on March 3, 2005, no shares of capital stock or other equity securities
of the Company, including any securities or instruments containing profit
participation or similar features, were issued, reserved for issuance or
outstanding. All outstanding shares of Company Capital Stock are, and all such
shares that may be issued prior to the Effective Time will be when issued, duly
authorized, validly issued, fully paid and nonassessable. No outstanding shares
of Company Capital Stock were issued in violation of any contract to which the
Company or any Company Subsidiary is or was a party or any statutory preemptive
right, right of first refusal or similar right. Except for this Agreement or as
set forth above or disclosed in the Company Disclosure Letter, there are not any
options, warrants, rights, convertible or exchangeable securities, subscriptions
or agreements to which the Company or any Company Subsidiary is a party (1)
obligating the Company or any Company Subsidiary to issue, deliver or sell, or
cause to be issued, delivered or sold, additional shares of capital stock or
other equity interests in, or any security convertible or exercisable for or
exchangeable into any capital stock of or other equity interest in, the Company
or of any Company Subsidiary or (2) obligating the Company or any Company
Subsidiary to issue, grant, extend or enter into any such option, warrant, call,
right, security, commitment, Contract, arrangement or undertaking. There are not
any outstanding contractual obligations of the Company or any Company Subsidiary
to repurchase, redeem or otherwise acquire any shares of capital stock of the
Company or any Company Subsidiary. The Company has made available to Parent a
true and complete copy of the Company Rights Agreement, as amended to the date
of this Agreement. As of the Effective Time, all of the Company Rights shall
have expired and no Company Right shall be outstanding. As of the Effective
Time, the former holders of Company Rights shall not be entitled to receive any
payment or consideration in connection therewith. Except as set forth in the
Company Disclosure Letter, the Board of Directors of the Company has not
declared any dividend or distribution with respect to the Company Common Stock
the record or payment date for which is on or after the date of this Agreement.
Section 4.04 Authority; Execution and Delivery,
Enforceability. (a) Except for the receipt of the Company Stockholder Approval,
the execution and delivery by the Company of this Agreement and the consummation
by the Company of the Merger and the other Transactions have been duly
authorized by all necessary corporate action on the part of the Company. The
Company has duly executed and delivered this Agreement and, assuming this
Agreement constitutes the valid and binding agreement of Parent and Sub, this
Agreement constitutes its legal, valid and binding obligation, enforceable
against it in accordance with its terms.
A-13
(b) The Board of Directors of the Company (the "COMPANY
BOARD"), at a meeting duly called and held duly and unanimously adopted
resolutions (i) approving this Agreement, the Merger and the other Transactions,
(ii) determining that the terms of the Merger and the other Transactions are
fair to and in the best interests of the stockholders of the Company, (iii)
recommending that the Company's stockholders adopt this Agreement and (iv)
declaring that this Agreement is advisable.
(c) The only vote of holders of any class or series of Company
Capital Stock necessary to approve and adopt this Agreement and the Merger is
the adoption of this Agreement by the holders of a majority of the outstanding
Company Common Stock (the "COMPANY STOCKHOLDER APPROVAL").
Section 4.05 No Conflicts; Consents. (a) Except as set forth
in the Company Disclosure Letter, the execution and delivery by the Company of
this Agreement does not, and the consummation of the Merger and the other
Transactions will not, conflict with, or result in any violation of or default
(with or without notice or lapse of time, or both) under, or give rise to a
right of termination, cancellation or acceleration of any obligation or loss of
a material benefit under, or result in the creation of any Lien upon any of the
properties or assets of the Company or any Company Subsidiary under, any
provision of (1) the Company Charter, the Company Bylaws or the comparable
charter or organizational documents of any Company Subsidiary, (2) to the
knowledge of the Company, any contract, lease, license, indenture, note, bond,
agreement, permit, concession, franchise or other instrument (a "CONTRACT") to
which the Company or any Company Subsidiary is a party or by which any of their
respective properties or assets is bound or (3) to the knowledge of the Company,
subject to the filings and other matters referred to in Section 4.05(b), any
judgment, order or decree ("JUDGMENT") or statute, law, ordinance, rule or
regulation (including common law and interpretations thereof by a Governmental
Entity) ("LAW") applicable to the Company or any Company Subsidiary or their
respective properties or assets, other than, in the case of clauses (2) and (3)
above, any such items that, individually or in the aggregate, would not
reasonably be expected to have a Company Material Adverse Effect.
(b) Except as set forth in the Company Disclosure Letter, no
consent, approval, license, permit, order or authorization ("CONSENT") of, or
registration, declaration or filing with, or permit from, any Federal, state,
local or foreign government or any court of competent jurisdiction,
administrative agency or commission or other governmental authority or
instrumentality, domestic or foreign (a "GOVERNMENTAL ENTITY") is required to be
obtained or made by or with respect to the Company or any Company Subsidiary in
connection with the execution, delivery and performance of this Agreement or the
consummation of the Transactions, which failure to make or obtain, individually
or in the aggregate, would reasonably be expected to have a Company Material
Adverse Effect, other than (1) compliance with and filings under (i) the
Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (the "HSR
ACT"), and (ii) applicable foreign merger control or competition Laws and
regulations, (2) the filing with the SEC of (i) the Proxy Statement and (ii)
such other reports under the Exchange Act or the rules and regulations of the
New York Stock Exchange, as may be required in connection with this Agreement,
the Merger or the other Transactions and the obtaining from the SEC of such
orders as may be required in connection therewith, (3) the filing and
recordation of appropriate documents for the Merger and the other Transactions
as required by the DGCL and appropriate documents with the relevant authorities
A-14
of the other jurisdictions in which the Company is qualified to do business, (4)
such filings as may be required in connection with the Taxes described in
Section 7.08, and (5) such other items (i) that may be required under the
applicable Law of any foreign country or Governmental Entity or (ii) required
solely by reason of the participation of Parent or Sub (as opposed to any third
party) in the Merger or the Transactions.
(c) The Company and the Company Board have taken all action
necessary to (1) render the Company Rights inapplicable to this Agreement, the
Merger and the other Transactions and (2) ensure that Parent and Sub will not
become an "Acquiring Person" (as defined in the Company Rights Agreement) by
reason of this Agreement, the Merger or any other Transaction).
(d) The Company Board has taken all actions necessary to cause
the provisions of Section 203 of the DGCL to be inapplicable to Parent or Sub
with respect to this Agreement, the Merger and the other Transactions. To the
Company's knowledge, no other fair price, moratorium, control share acquisition
or other form of antitakeover statute, rule or regulation of any state or
jurisdiction applies or purports to apply to this Agreement, the Merger or the
other Transactions.
Section 4.06 SEC Documents and Related Matters.
(a) The Company has filed on a timely basis all reports,
schedules, forms, statements and other documents required to be filed by it with
the SEC since January 1, 2003. No Company Subsidiary is required to file any
report, schedule, form, statement and other document with the SEC.
(b) Except to the extent available in full without redaction
on the SEC's website at least two Business Days prior to the date of this
Agreement, Section 4.06 of the Company Disclosure Letter lists, and the Company
has made available to Parent complete copies of, all of the following:
(i) the Company's Annual Reports on Form 10-K for the
fiscal years of the Company ended December 31, 2002 and December 31, 2003;
(ii) the Company's Quarterly Reports on Form 10-Q for each
of the first three fiscal quarters in the fiscal years of the Company ended
December 31, 2003 and December 31, 2004;
(iii) the Company's Current Reports on Form 8-K filed with
the SEC from January 1, 2003 through the date of this Agreement;
(iv) all proxy statements relating to the Company's
meetings of stockholders (whether annual or special) held, and all information
statements relating to stockholder consents, from January 1, 2003 through the
date of this Agreement;
A-15
(v) all certifications and statements required pursuant to
Rule 13a-14(a) or 15d-14(a) under the Exchange Act or 18 U.S.C. ss.1350 (Section
906 of the Sarbanes-Oxley Act) with respect to any report referred to in clause
(i) and (ii) above (the "Certifications"); and
(vi) all other forms, reports, registration statements and
other documents (other than preliminary materials if the corresponding
definitive materials have been provided to Parent pursuant to this Section 4.06)
filed by the Company with the SEC from January 1, 2003 through the date of this
Agreement.
The foregoing reports, schedules, forms, statements and other
documents are collectively referred to in this Agreement as the "Company SEC
Documents."
(c) The Company SEC Documents as of their respective dates of
filing with the SEC (or, if amended or superseded by a filing prior to the date
of this Agreement, as of the date of such filing) (i) were prepared in all
material respects in accordance with the requirements of the Securities Act of
1933, as amended (the "Securities Act"), and the Exchange Act, as applicable,
and the rules and regulations of the SEC thereunder and (ii) did not at the time
they were filed with the SEC contain any untrue statement of a material fact or
omit to state a material fact required to be stated therein or necessary in
order to make the statements made therein, in the light of the circumstances
under which they were made, not misleading.
(d) Section 4.06 of the Company Disclosure Letter lists and
the Company has delivered to Parent complete copies of all comment letters
received by the Company from the Staff of the SEC since January 1, 2003 and all
responses to such comment letters by or on behalf of the Company. The term
"comment letter" as used herein shall exclude routine correspondence or
communications sent to or received from the SEC that do not contain substantive
comments regarding the Company's filings under the Securities Act or the
Exchange Act.
(e) The consolidated financial statements of the Company,
including the notes thereto, included or incorporated by reference in the
Company SEC Documents were prepared in accordance with generally accepted
accounting principles ("GAAP") and Regulation S-X of the SEC as in effect on the
date of filing such reports (except, in the case of unaudited statements, as
permitted by Form 10-Q or Form 8-K of the SEC) applied on a consistent basis
during the periods involved (except as may be indicated in the notes thereto)
and fairly present the consolidated financial position of the Company and its
consolidated Subsidiaries as of the dates thereof and the consolidated results
of their operations, changes in stockholders' equity and cash flows for the
periods shown (subject, in the case of unaudited statements, to the absence of
footnotes and to normal year-end audit adjustments). Except as provided in the
Company SEC Documents and with respect to Genlyte Thomas Group LLC, no financial
statements of any Person other than the Company and the Company Subsidiaries are
required by GAAP or Regulation S-X of the SEC to be included in the consolidated
financial statements of the Company. As of the date of the Agreement, the
Company has consolidated cash and cash equivalents of not less than $230
million.
A-16
(f) Except as set forth in the Company SEC Documents or
liabilities incurred since September 30, 2004 in the ordinary course of business
consistent with past practice, neither the Company nor any Company Subsidiary
has any material liabilities or obligations of any nature (whether accrued,
absolute, contingent or otherwise) that, individually or in the aggregate, would
reasonably be expected to have a Company Material Adverse Effect.
(g) The Company maintains disclosure controls and procedures
as defined in Rule 13a-15(e) or 15d-15(e) under the Exchange Act.
(h) The Company has prepared and is implementing a plan to
comply with requirements of Section 404 of the Sarbanes-Oxley Act on the date by
which it must comply with such requirements. As of the date of this Agreement,
the Company is not aware of any reason it will not comply with the requirements
of Section 404 of the Sarbanes-Oxley Act on the applicable compliance date.
During the period from January 1, 2003 through the date of this Agreement, the
management of the Company has not disclosed to the Company's independent
registered public accounting firm or the audit committee of the Board of
Directors of the Company any occurrence of material fraud that involves
management or other employees of the Company or the Company Subsidiaries who
have a significant role in the Company's internal controls over financial
reporting.
(i) The Company is in compliance in all material respects with
the applicable listing standards of the New York Stock Exchange and has not
since January 1, 2003 received any written notice from the New York Stock
Exchange asserting any material non-compliance with such standards.
Section 4.07 Proxy Statement and Company Future SEC Filings.
(a) The Proxy Statement will not, on the date it is first
published or sent or delivered to the Company stockholders or at the time of the
Company Stockholders Meeting, contain any untrue statement of a material fact or
omit to state any material fact required to be stated therein or necessary in
order to make the statements made therein, in light of the circumstances under
which they were made, not misleading. The Proxy Statement will comply as to form
in all material respects with the requirements of the Exchange Act and the
applicable rules and regulations of the SEC thereunder. Notwithstanding the
foregoing, no representation or warranty is made by the Company with respect to
statements made or incorporated by reference therein based on information
supplied by Parent or Sub specifically for inclusion or incorporation by
reference in any of the foregoing documents.
(b) The Company has provided Parent with the most recent draft
of the Company's Annual Report on Form 10-K for the fiscal year of the Company
ended December 31, 2004 (the "Company 2004 Form 10-K").
(c) Except as would not, individually or in the aggregate,
have a Company Material Adverse Effect:
(i) the Company 2004 Form 10-K and the other reports
filed by the Company with the SEC pursuant to Section 13(a) of the Exchange Act
on or after the date of this Agreement but on or prior to the Closing Date (the
"Company Future SEC Filings") will not, on the date they are filed with the SEC,
A-17
contain any untrue statement of a material fact or omit to state any material
fact required to be stated therein or necessary in order to make the statements
made therein, in light of the circumstances under which they were made, not
misleading;
(ii) the consolidated financial statements of the
Company, including the notes thereto, included or incorporated by reference in
the Company Future SEC Filings will be prepared in accordance with GAAP and
Regulation S-X of the SEC as in effect on the date of filing such reports
(except in the case of unaudited statements, as permitted by Form 10-Q or Form
8-K of the SEC) applied on a consistent basis during the periods involved
(except as may be indicated in the notes thereto) and will fairly present the
consolidated financial position of the Company and its consolidated Subsidiaries
as of the dates thereof and the consolidated results of their operations,
changes in stockholders' equity and cash flows for the periods shown (subject,
in the case of unaudited statements, to the absence of footnotes and normal
year-end audit adjustments);
(iii) the consolidated financial statements of the
Company included in the Company 2004 Form 10-K will be accompanied by an
opinion, which will not be subject to any qualification or limitation, issued by
the Company's independent registered public accounting firm;
(iv) the Company Future SEC Filings will comply as to
form in all material respects with the requirements of the Exchange Act and the
applicable rules and regulations of the SEC thereunder;
(v) to the Company's knowledge, there is no reason why
the Certifications required to be filed with the Company 2004 Form 10-K cannot
be filed without material qualification or exception;
(vi) to the Company's knowledge, (A) the Company's
management will conclude that the Company's internal control over financial
reporting was effective as of December 31, 2004 based on the criteria set forth
by the Committee of Sponsoring Organizations of the Treadway Commission (COSO)
A-18
in Internal Control-Integrated Framework and (B) the management report on
internal control over financial reporting included in the Company 2004 Form 10-K
("Management Report") will not describe any "material weaknesses" as defined in
the Public Company Accounting Oversight Board's Auditing Standard No. 2, as in
effect as of the date hereof ("Auditing Standard No. 2"), in the design or
operation of the Company's internal control over financial reporting; and
(vii) to the Company's knowledge, the attestation report
by the Company's independent registered public accounting firm with respect to
the Management Report included in the Company 2004 Form 10-K will concur in all
material respects with management's assessment included in the Management Report
and will conclude that the Company maintained, in all material respects,
effective internal control over financial reporting as of December 31, 2004
based on the criteria set forth by the Committee on Sponsoring Organizations of
the Treadway Commission (COSO) in Internal Control-Integrated Framework.
For the avoidance of doubt, the Company acknowledges that a statement
of the existence of one or more "material weaknesses" as defined in Auditing
Standard No. 2 with respect to the Company's internal control over financial
reporting contained in the Management Report, or in the attestation by the
Company's independent registered public accounting firm with respect to the
Management Report, will be deemed to have a Company Material Adverse Effect,
irrespective of whether the Company had knowledge thereof as of the date of this
Agreement.
Section 4.08 Compliance with Applicable Laws.
(a) To the knowledge of the Company, except as disclosed in
the Company SEC Documents or in the Company Disclosure Letter, and except for
instances of noncompliance or violation that, individually and in the aggregate,
would not reasonably be expected to have a Company Material Adverse Effect, (i)
the Company and the Company Subsidiaries hold all permits, licenses, variances,
exemptions, orders and approvals of all Governmental Entities that are material
to the operation of the businesses of the Company and the Company Subsidiaries,
taken as a whole (the "COMPANY PERMITS"), (ii) the Company and the Company
Subsidiaries and their respective operations are in compliance with the terms of
the Company Permits and all applicable Laws, and (iii) since January 1, 2004,
neither the Company nor any of the Company Subsidiaries has been given written
notice of any violation or purported violation of any Company Permits or Laws.
This Section 4.08(a) and Section 4.08(c) do not relate to (1) matters with
respect to Taxes, which are the subject of Section 4.10, (2) employee benefits
matters, which are the subject of Section 4.13, (3) environmental matters, which
are the subject of Section 4.17 and (4) labor and employment matters, which are
the subject of Section 4.18.
(b) To the knowledge of the Company, except as disclosed in
the Company SEC Documents or in the Company Disclosure Letter and except for
matters that, individually or in the aggregate, would not reasonably be expected
to have a Company Material Adverse Effect, none of the Company, any of the
Company Subsidiaries or any of their respective directors, officers, employees
or agents has in connection with the operation of the businesses of the Company
and the Company Subsidiaries (i) used any corporate or other funds for unlawful
contributions, payments, gifts or entertainment, or made any unlawful
expenditures relating to political activity to government officials, candidates
or members of political parties, political parties, public international
organizations, or organizations, or established or maintained any unlawful or
unrecorded accounts in violation of Sections 13(b)(2)(a) and 13(b)(2)(b) of the
Exchange Act, or any other similar applicable foreign, Federal or state Law,
(ii) paid, accepted or received any unlawful contributions, payments,
expenditures or gifts, or (iii) violated or operated in noncompliance with any
export restrictions, anti-boycott regulations, embargo regulations or other
applicable domestic or foreign Laws.
(c) To the knowledge of the Company, except as disclosed in
the Company SEC Documents or in the Company Disclosure Letter and except for
matters that, individually or in the aggregate, would not reasonably be expected
to have a Company Material Adverse Effect, since January 1, 2004, no
investigation, review, audit, prosecution or other enforcement action by any
Governmental Entity is or was pending, or threatened in writing, against or with
respect to the Company or any of the Company Subsidiaries, nor has any
A-19
Governmental Entity indicated in a writing made available to the Company or any
Company Subsidiary an intention to conduct the same.
Section 4.09 Litigation and Insurance.
(a) Except as disclosed in the Company SEC Documents or in the
Company Disclosure Letter and except for matters that, individually or in the
aggregate, would not reasonably be expected to have a Company Material Adverse
Effect, there is no suit, action or proceeding pending or, to the knowledge of
the Company, threatened against the Company or any Company Subsidiary, nor is
there any Judgment outstanding against the Company or any Company Subsidiary.
(b) Section 4.09(b) of the Company Disclosure Letter sets
forth all the insurance policies maintained by, or covering, the Company and the
Company Subsidiaries as of the date of this Agreement. All the policies listed
on Section 4.09(b) of the Company Disclosure Letter are in full force and effect
and, to the Company's knowledge, no written notice of cancellation of any such
policies have been received by the Company or the Company Subsidiaries. Section
4.09(a) of the Company Disclosure Letter includes a copy of the most recent
version of the Company's regularly-maintained pending litigation and claims
schedule. With respect to each matter listed on such schedule, Section 4.09(a)
of the Company Disclosure Letter sets forth the Company's insurance coverage and
policy limits applicable to such matter and the amount, if any, of the reserve
relating to such matter to be set forth or reflected in the Company's
consolidated balance sheet as of December 31, 2004.
Section 4.10 Taxes. (a) The Company and each Company
Subsidiary has filed, or has caused to be filed on its behalf, all Tax Returns
required to be filed by it, except to the extent any failure to file,
individually or in the aggregate, has not had and would not reasonably be
expected to have a Company Material Adverse Effect. All such Tax Returns are
true and complete in all material respects. All Taxes shown to be due on such
Tax Returns have been timely paid, except to the extent that any failure to pay,
individually or in the aggregate, would not reasonably be expected to have a
Company Material Adverse Effect.
(b) The most recent financial statements contained in the
Company SEC Documents reflect an adequate reserve, in accordance with GAAP, for
all Taxes payable by the Company and the Company Subsidiaries for all Taxable
periods and portions thereof through the date of such financial statements. No
material deficiency with respect to any Taxes has been proposed, asserted or
assessed against the Company or any Company Subsidiary, and no requests for
waivers of the time to assess any such Taxes are pending, except to the extent
any such deficiency or request for waiver has been resolved prior to the date of
this Agreement or would not, individually or in the aggregate, reasonably be
expected to have a Company Material Adverse Effect.
(c) Except as set forth in the Company Disclosure Letter,
since January 1, 2004, neither the Company nor any Company Subsidiary has: (i)
made or changed any material election concerning Taxes, (ii) changed an annual
accounting period or adopted or changed any material accounting method, (iii)
settled any material Tax claim or assessment, or (iv) surrendered any right to
claim a material refund of any Taxes.
A-20
Section 4.11 Certain Agreements. Except for this Agreement or
as disclosed in the Company SEC Documents or in the Company Disclosure Letter,
neither the Company nor any Company Subsidiary is a party to or bound by any
Contract (a) with respect to the employment of any directors, executive officers
or employees, or with any consultants that are natural Persons, involving the
payment of salary and cash bonus having a value of $200,000 or more (or its
equivalent in foreign currency) per annum; (b) that is a "material contract" (as
such term is defined in Item 601(b)(10) of Regulation S-K of the SEC), whether
or not filed as an exhibit to the Company SEC Documents; (c) that contains an
annual minimum purchase obligation of $750,000 or more or that requires annual
payments by or to the Company or any Company Subsidiary of $750,000 or more (in
each case excluding purchase orders in the ordinary course of business); (d)
that limits the ability of the Company or any of the Company Subsidiaries to
compete in any line of business, in any geographic area or with any Person, or
that requires referrals of business or exclusive dealing and, in each case,
which limitation or requirement would reasonably be expected to be material to
the Company and the Company Subsidiaries taken as a whole; (e) that would
prevent, materially delay or materially impede the consummation of any of the
Transactions; or (f) with respect to supplier or customer contracts required to
be disclosed under (b) and (c) of this Section 4.11, that provide a third party
a right to terminate or exercise any other material right (such as the right to
terminate exclusivity or the right to require the purchase or sale of assets) in
the event any of the Transactions are consummated. All contracts, arrangements,
commitments or understandings of the type described in this Section 4.11
(collectively referred to herein as the "COMPANY CONTRACTS") are valid and in
full force and effect as to the Company, and to the knowledge of the Company,
each other party thereto, except to the extent they have previously expired in
accordance with their terms or if the failure to be in full force and effect,
individually or in the aggregate, would not reasonably be expected to have a
Company Material Adverse Effect. Neither the Company nor any of the Company
Subsidiaries has, and to the knowledge of the Company, none of the other parties
thereto have, violated any provision of, or committed or failed to perform any
act, and no event or condition exists, which with or without notice, lapse of
time or both would constitute a default under the provisions of, any Company
Contract, except in each case for those violations and defaults that,
individually or in the aggregate, would not reasonably be expected to result in
a Company Material Adverse Effect. Except as disclosed in the Company SEC
Documents or the Company Disclosure Letter and except for matters that,
individually or in the aggregate, would not reasonably be expected to have a
Company Material Adverse Effect, to the Company's knowledge, during the period
from September 30, 2004 through the date of this Agreement no material customer
or supplier of the Company or any Company Subsidiary has provided notice, orally
or in writing, of an intention to terminate or materially reduce its business
relationship with the Company and the Company Subsidiaries.
Section 4.12 Absence of Changes in Benefit Plans. Except as
disclosed in the Company SEC Documents or the Company Disclosure Letter or as
required by applicable Law, during the period since September 30, 2004, there
has not been any adoption or amendment in any material respect by the Company or
any Company Subsidiary of any collective bargaining agreement or any bonus,
pension, profit sharing, deferred compensation, incentive compensation, stock
ownership, stock purchase, stock option, phantom stock, stock appreciation
right, performance share, retirement, vacation, severance, disability, death
benefit, hospitalization, medical or other plan, arrangement or understanding
(whether or not legally binding) providing benefits to any current or former
employee, officer or director of the Company or any Company Subsidiary
A-21
(collectively, "COMPANY BENEFIT PLANS"). Except as disclosed in the Company SEC
Documents or the Company Disclosure Letter, there are not any severance,
termination or change in control agreements or arrangements between the Company
or any Company Subsidiary and any current or former executive officer or
director of the Company or any Company Subsidiary (collectively, the "COMPANY
BENEFIT AGREEMENTS"). For purposes of Section 4.13, Company Benefit Plans and
Company Benefit Agreements may be grouped into either (i) only those Company
Benefit Plans and Company Benefit Agreements covering only employees in the
United States ("U.S. BENEFIT PLANS AND AGREEMENTS") or (ii) all such Company
Benefit Plans and Company Benefit Agreements ("ALL BENEFIT PLANS AND
AGREEMENTS").
Section 4.13 ERISA Compliance; Excess Parachute Payments. (a)
With respect to All Benefit Plans and Agreements, the Company Disclosure Letter
contains a list of all "employee pension benefit plans" (as defined in Section
3(2) of the Employee Retirement Income Security Act of 1974, as amended
("ERISA")) ("COMPANY PENSION Plans"), "employee welfare benefit plans" (as
defined in Section 3(1) of ERISA) and all other Company Benefit Plans
maintained, or contributed to, by the Company or any Company Subsidiary for the
benefit of any current or former employees, officers or directors of the Company
or any Company Subsidiary (determined, for this purpose only, without regard to
the exception in ERISA Section 4(b)(4) for plans maintained outside of the
United States primarily for the benefit of nonresident aliens). Each Company
Benefit Plan has been administered in compliance in all material respects with
its terms, applicable Law and any applicable collective bargaining agreement,
other than instances of noncompliance that, individually and in the aggregate,
have not had and would not reasonably be expected to have a Company Material
Adverse Effect. The Company has made available to Parent true and complete
copies of (1) each Company Benefit Plan (or, in the case of any unwritten
Company Benefit Plan, a description thereof), (2) the most recent annual report
on Form 5500 filed with the Internal Revenue Service with respect to each
Company Benefit Plan (if any such report was required), (3) the most recent
determination letter (or in the case of a prototype plan, the most recent IRS
opinion letter) for each U.S. Benefit Plan and Agreement intended to be
qualified under Section 401(a) of the Code, (4) the most recent summary plan
description for each Company Benefit Plan for which such summary plan
description is required, and (5) each trust agreement and group annuity contract
relating to any Company Benefit Plan.
(b) With respect to any U.S. Benefit Plans and Agreements,
except as disclosed in the Company Disclosure Letter or in the Company SEC
Documents, no Company Pension Plan, other than any Company Pension Plan that is
a "multiemployer plan" within the meaning of Section 4001(a)(3) of ERISA (a
"COMPANY MULTIEMPLOYER PENSION PLAN"), had, as of the respective last annual
valuation date for each such Company Pension Plan, an "unfunded benefit
liability" (as such term is defined in Section 4001(a)(18) of ERISA), based on
actuarial assumptions that have been furnished to Parent. None of the Company
Pension Plans has an "accumulated funding deficiency" (as such term is defined
in Section 302 of ERISA or Section 412 of the Code), whether or not waived. Each
U.S. Benefit Plan and Agreement that is intended to be qualified under Section
401(a) of the Code has received a favorable determination letter from the
Internal Revenue Service (or in the case of a prototype plan, the most recent
IRS opinion letter) to that effect and each such plan complies in all material
respects in form and in operation with the requirements of the Code and meets
the requirements of a "qualified plan" under Section 401(a) of the Code. To the
A-22
Company's knowledge, no event has occurred or circumstances exist that will or
could give rise to disqualification or loss of tax-exempt status of any such
plan or agreement. To the Company's knowledge, none of the Company, any Company
Subsidiary, any officer of the Company or any of its Company Subsidiary or, any
of the Company Benefit Plans which are subject to ERISA, including the Company
Pension Plans, any trusts created thereunder or any trustee or administrator
thereof, or any fiduciary, has engaged in a "prohibited transaction" (as such
term is defined in Section 406 of ERISA or Section 4975 of the Code). None of
such Company Benefit Plans and trusts has been terminated, nor to the Company's
knowledge has there been any "reportable event" (as that term is defined in
Section 4043 of ERISA) with respect to any Company Benefit Plan during the last
five years. Neither the Company nor any Company Subsidiary has incurred a
"complete withdrawal" or a "partial withdrawal" (as such terms are defined in
Sections 4203 and 4205, respectively, of ERISA) with respect to any Company
Multiemployer Pension Plan during the last five years.
(c) With respect to any U.S. Benefit Plans and Agreements that
are employee welfare benefit plans, except as disclosed in the Company
Disclosure Letter, no such Company Benefit Plan is funded through a "welfare
benefits fund" (as such term is defined in Section 419(e) of the Code) and each
such Company Benefit Plan that is a "group health plan" (as such term is defined
in Section 5000(b)(1) of the Code) materially complies with the applicable
requirements of Section 4980B(f) of the Code, except in such instances in which
noncompliance, individually and in the aggregate, would not reasonably be
expected to have a Company Material Adverse Effect.
(d) With respect to U.S. Benefit Plans and Agreements, other
than payments that may be made to the Persons listed in the Company Disclosure
Letter or disclosed in the Company SEC Documents, any amount that could be
received (whether in cash or property or the vesting of property) as a result of
the Merger or any other Transaction by any employee, officer or director of the
Company or any of its affiliates who is a "disqualified individual" (as such
term is defined in Treasury Regulation Section 1.280G-1) under any employment,
severance or termination agreement, other compensation arrangement or Company
Benefit Plan currently in effect would not be characterized as an "excess
parachute payment" (as defined in Section 280G(b)(1) of the Code).
(e) With respect to All Benefit Plans and Agreements, except
as disclosed in the Company Disclosure Letter or in the Company SEC Documents,
the execution and delivery by the Company of this Agreement do not, and the
consummation of the Merger and the other Transactions and compliance with the
terms hereof will not, (1) entitle any employee, officer or director of the
Company or any Company Subsidiary to severance pay, (2) accelerate the time of
payment or vesting or trigger any payment or funding (through a grantor trust or
otherwise) of compensation or benefits under, increase the amount payable or
trigger any other material obligation pursuant to, any Company Benefit Plan or
Company Benefit Agreement or (3) result in any breach or violation of, or a
default under, any Company Benefit Plan or Company Benefit Agreement.
(f) With respect to All Benefit Plans and Agreements, except
as disclosed in the Company Disclosure Letter, (1) other than routine claims for
benefits submitted by or on behalf of participants or beneficiaries (including
alternate payees in connection with qualified domestic relations orders as
A-23
defined in Section 414(p) of the Code), no claim, legal proceeding or
investigation by a Governmental Entity is pending, or to the Company's
knowledge, is threatened, (2) the Company and each Company Subsidiary have made
all contributions due under each Company Benefit Plan and each Company Benefit
Agreement as of the date of this Agreement in accordance with local Law and past
practice, (3) the liabilities of the Company and each Company Subsidiary as of
the date of this Agreement have been appropriately reflected in all material
respects on the relevant financial statements in accordance with local Law, past
practice, and generally accepted accounting principles in each jurisdiction, and
(4) to the extent a separate trust or other funding vehicle has been established
to fund the liabilities under a Company Benefit Plan or Company Benefit
Agreement, the actuarially determined fair market value of all accrued benefits
does not exceed, as of the date of this Agreement, the fair market value of the
assets in such trust or funding vehicle, determined using assumptions and
actuarial principles consistent with local Law and past practice in each
jurisdiction.
Section 4.14 Absence of Certain Changes or Events. Except as
disclosed in the Company SEC Documents or the Company Disclosure Letter, during
the period since September 30, 2004, the Company and the Company Subsidiaries
have conducted their respective businesses only in the ordinary course
consistent with their past practices and there has not been any change,
circumstance or event that has had, or would reasonably be expected to have,
individually or in the aggregate, a Company Material Adverse Effect.
Section 4.15 Properties. Except as would not reasonably be
expected to have, individually or in the aggregate, a Company Material Adverse
Effect, the Company or one of the Company Subsidiaries (a) has good and
marketable title to all the properties and assets reflected in the latest
audited balance sheet included in the Company SEC Documents as being owned by
the Company or one of the Company Subsidiaries or acquired after the date
thereof that are material to the Company's business on a consolidated basis
(except properties sold or otherwise disposed of since the date thereof in the
ordinary course of business), free and clear of all Liens, except statutory
liens securing payments not yet due, such imperfections or irregularities of
title, claims, Liens, easements, covenants and other restrictions or
encumbrances as do not materially affect the use of the properties or assets
subject thereto or affected thereby or otherwise materially impair business
operations at such properties and mortgages, or deeds of trust, security
interests or other encumbrances on title related to indebtedness reflected on
the consolidated financial statements of the Company (such liens, imperfections
and irregularities in clauses (1), (2) and (3), "PERMITTED LIENS"), and (b) is
the lessee of all leasehold estates reflected in the latest audited financial
statements included in the Company SEC Documents or acquired after the date
thereof that are material to its business on a consolidated basis (except for
leases that have expired by their terms since the date thereof or been assigned,
terminated or otherwise disposed of in the ordinary course of business
consistent with past practice) and is in possession of the properties purported
to be leased thereunder, and each such lease is valid without default thereunder
by the lessee or, to the Company's knowledge, the lessor.
Section 4.16 Intellectual Property. Except as disclosed in the
Company Disclosure Letter or in the Company SEC Documents or as would not,
individually or in the aggregate, reasonably be expected to have a Company
Material Adverse Effect, (a) the Company or the Company Subsidiaries own free
and clear of all Liens other than Permitted Liens or have a valid license to use
all material patents, inventions, copyrights, software, trademarks, service
A-24
marks, domain names, trade names and other intellectual property (including any
registrations or applications for registration of any of the foregoing)
(collectively, the "COMPANY INTELLECTUAL PROPERTY") necessary to carry on their
business as currently conducted, (b) to the knowledge of the Company, the
Company Intellectual Property does not infringe, imitate, misappropriate,
dilute, violate or otherwise derogate or make unauthorized use of ("INFRINGE")
the intellectual property rights of third parties and, to the knowledge of the
Company, is not being Infringed by any third parties, (c) to the knowledge of
the Company, no facts or circumstances exist that would affect the validity,
substance or existence of, or the Company's rights in, the Company Intellectual
Property, (d) the Company and the Company Subsidiaries have taken reasonable
actions to protect and maintain the Company Intellectual Property, including
Company Intellectual Property that is confidential in nature, and (e) there are
no claims, suits or other actions, and to the knowledge of the Company, no
claim, suit or other action is threatened, that seek to limit or challenge the
validity, enforceability, ownership, or right to use, sell or license the
Company Intellectual Property, nor does the Company know of any valid basis
therefor.
Section 4.17 Environmental Matters. Except as disclosed in the
Company Disclosure Letter or in the Company SEC Documents or as would not,
individually or in the aggregate, reasonably be expected to have a Company
Material Adverse Effect:
(a) to the Company's knowledge, the Company and the Company
Subsidiaries are in compliance with all applicable permits, licenses and
registrations required under all foreign, Federal, state and local Laws relating
to contamination, pollution, natural resources or the environment
("ENVIRONMENTAL LAWS") for the Company and the Company Subsidiaries to conduct
their operations and are in compliance with all applicable Environmental Laws;
(b) there are no claims pending and, to the Company's
knowledge, the Company and the Company Subsidiaries have not received any
written notice, claim or demand, by any Person alleging any violation of any
Environmental Laws or permits, licenses or registrations;
(c) to the Company's knowledge, no waste, hazardous,
radioactive, dangerous or toxic substance or pollutant or contaminant or any
substance that is listed, defined, designated or classified as such under or
pursuant to any Environmental Law, including asbestos, asbestos-containing
materials, silica, mixed dust, PCBs, methylene chloride, tricholoroethylene,
1,2-trans-dichoro-ethylene, dioxins, dibenzoflurans (or any combination thereof)
or petroleum (including crude oil or any fraction or derivatives thereof)
(collectively, "HAZARDOUS MATERIALS"), have been disposed of or released by the
Company, any of the Company Subsidiaries, any of their respective predecessors
in interest or any other entity for or from which the Company or any Company
Subsidiary has assumed environmental liability and are present at, on, from or
under any of the properties or facilities currently or previously owned or
leased by the Company, the Company Subsidiaries, any of their respective
predecessors-in-interest or any other entity for or from which the Company or
any Company Subsidiary has assumed environmental liability, in violation of, or
in a manner or to a location that would reasonably be expected to give rise to
liability to the Company or the Company Subsidiaries under or relating to, any
Environmental Laws. The Company has made available to Parent complete copies of
all material reports and studies in the possession of the Company or the Company
A-25
Subsidiaries relating to environmental conditions and compliance with respect to
the facilities owned or leased by the Company and the Company Subsidiaries;
(d) to the Company's knowledge, as of the date of this
Agreement:
(i) no facts, circumstances or conditions exist that
could reasonably be expected to result in a material liability or cost to the
Company or any Company Subsidiary (A) under any Environmental Law or (B) in
connection with the manufacture, marketing, use, sale or distribution of
asbestos, asbestos-containing materials, silica or mixed dust (or any
combination thereof); and
(ii) neither the Company, any Company Subsidiary nor any
of their respective predecessors-in-interest utilizes or has ever previously
utilized asbestos or asbestos-containing materials, silica or mixed dust as a
raw material, component or otherwise in connection with any of their respective
products. Section 4.18 Labor and Employment Matters. Except as disclosed in the
Company Disclosure Letter or in the Company SEC Documents or as would not,
individually or in the aggregate, reasonably be expected to have a Company
Material Adverse Effect, (a) there is no labor strike, dispute, slowdown,
stoppage or lockout actually pending or, to the knowledge of the Company,
threatened against the Company or any of the Company Subsidiaries, (b) no union
organizing campaign with respect to the employees of the Company or the Company
Subsidiaries is underway or, to the Company's knowledge, threatened, (c) there
is no unfair labor practice charge or complaint against the Company or the
Company Subsidiaries pending or, to the knowledge of the Company, threatened
before the National Labor Relations Board or any similar state or foreign
agency, (d) there is no grievance pending relating to any collective bargaining
agreement or other grievance procedure, (e) no charges with respect to or
relating to the Company or the Company Subsidiaries are pending before the Equal
Employment Opportunity Commission or any other Governmental Entity responsible
for the prevention of unlawful employment practices, (f) there is no works
council, union, employee representative, or other labor organization which
pursuant to applicable Law has to be notified or consulted or with which
negotiations need to be conducted by operation of Law in connection with the
Transactions and (g) the Company and each Company Subsidiary are in compliance
with all domestic and applicable foreign Laws, regulations, ordinances, codes or
other legally binding rules and their own policies respecting employment,
employment practices, terms and conditions of employment, wage and hours, equal
opportunity, equal pay, civil rights, labor relations, immigration, occupational
health and safety, and payroll and wage taxes, except to the extent any
noncompliance would not reasonably be expected to have a Company Material
Adverse Effect.
Section 4.19 Brokers; Schedule of Fees and Expenses. No
broker, investment banker, financial advisor or other Person except Robert W.
Baird & Co. Incorporated ("BAIRD") is entitled to any broker's, finder's,
financial advisor's or other similar fee or commission in connection with the
Merger and the other Transactions based upon arrangements made by or on behalf
of the Company. The Company provided to Parent a correct and complete copy of
its engagement letter with Baird and has disclosed to Parent all material terms
of the engagement of Baird.
A-26
Section 4.20 Opinion of Financial Advisor. The Company has
received the opinion of Baird, dated the date of this Agreement, to the effect
that, as of such date, the consideration to be received in the Merger by the
holders of Company Common Stock (other than Parent and its Affiliates) is fair
to such holders from a financial point of view.
ARTICLE V
Representations and Warranties of Parent and Sub
------------------------------------------------
Parent and Sub, jointly and severally, represent and warrant
to the Company that, except as set forth in the letter, dated as of the date of
this Agreement, from the Parent to the Company (the "PARENT DISCLOSURE LETTER"):
Section 5.01 Organization, Standing and Power. Each of Parent
and Sub, is duly organized, validly existing and in good standing under the Laws
of the jurisdiction in which it is organized and has full corporate power and
authority to conduct its businesses as presently conducted. Each of Parent and
Sub is duly qualified to do business in each jurisdiction where the nature of
its business or the ownership or leasing of its properties makes such
qualification necessary or the failure to so qualify has had or could reasonably
be expected to have a Parent Material Adverse Effect. Parent has made available
to the Company true and complete copies of the organizational documents of
Parent, as amended through the date of this Agreement. Parent has made available
to the Company true and complete copies of the certificate of incorporation of
Sub and the bylaws of Sub, in each case as amended through the date of this
Agreement.
Section 5.02 Sub. (a) Since the date of its incorporation, Sub
has not carried on any business or conducted any operations other than the
execution of this Agreement, the performance of its obligations hereunder and
matters ancillary thereto.
(b) The authorized capital stock of Sub consists of 10,000
shares of common stock, par value $0.01 per share, 100 of which have been
validly issued, are fully paid and nonassessable and are owned by Parent free
and clear of any Lien.
Section 5.03 Authority; Execution and Delivery,
Enforceability. Each of Parent and Sub has all requisite corporate power and
authority to execute and deliver this Agreement and to consummate the
Transactions. The execution and delivery by each of Parent and Sub of this
Agreement and the consummation by it of the Transactions have been duly
authorized by all necessary corporate action on the part of Parent and Sub.
Parent, as sole stockholder of Sub, has approved this Agreement. Each of Parent
and Sub has duly executed this Agreement, and, assuming this Agreement
constitutes the valid and binding agreement of the Company, this Agreement
constitutes its legal, valid and binding obligation, enforceable against it in
accordance with its terms.
Section 5.04 No Conflicts; Consents. (a) The execution and
delivery by each of Parent and Sub of this Agreement, do not, and the
consummation of the Merger and the other Transactions will not, conflict with,
A-27
or result in any violation of or default (with or without notice or lapse of
time, or both) under, or give rise to a right of termination, cancellation or
acceleration of any obligation or to loss of a material benefit under, or result
in the creation of any Lien upon any of the properties or assets of Parent or
any of its Subsidiaries under, any provision of (1) the charter or
organizational documents of Parent or any of its Subsidiaries, (2) any Contract
to which Parent or any of its Subsidiaries is a party or by which any of their
respective properties or assets is bound or (3) subject to the filings and other
matters referred to in Section 5.04(b), any Judgment or Law applicable to Parent
or any of its Subsidiaries or their respective properties or assets, other than,
in the case of clauses (2) and (3) above, any such items that, individually or
in the aggregate, have not had and could not reasonably be expected to have a
Parent Material Adverse Effect.
(b) No Consent of, or registration, declaration or filing
with, any Governmental Entity is required to be obtained or made by or with
respect to Parent or any of its Subsidiaries in connection with the execution,
delivery and performance of this Agreement or the consummation of the Merger or
the other Transactions, other than (1) compliance with and filings under the HSR
Act and compliance with and filings under the applicable foreign merger control
or competition Laws or regulations, (2) the filing with the SEC of such reports
under Section 13 of the Exchange Act, as may be required in connection with this
Agreement, the Merger and the other Transactions, (3) the filing of the
Certificate of Merger with the Secretary of State of the State of Delaware, (4)
such filings as may be required in connection with the Taxes described in
Section 7.08 and (5) such other items (i) that may be required under the
applicable Law of any foreign country, (ii) required solely by reason of the
participation of the Company (as opposed to any third party) in the
Transactions, (iii) that, individually or in the aggregate, have not had and
could not reasonably be expected to have a Parent Material Adverse Effect or
(iv) as are set forth in the Parent Disclosure Letter.
Section 5.05 Information Supplied. None of the information
supplied or to be supplied by or on behalf of Parent or Sub specifically for
inclusion or incorporation by reference in the Proxy Statement will, at the date
such documents are first published, sent or delivered to the Company's
stockholders or at the time of the Company Stockholders Meeting, contain any
untrue statement of a material fact or omit to state any material fact required
to be stated therein or necessary in order to make the statements made therein,
in light of the circumstances under which they were made, not misleading.
Section 5.06 Brokers. No broker, investment banker, financial
advisor or other Person is entitled to any broker's, finder's, financial
advisor's or other similar fee or commission in connection with the Merger and
the other Transactions based upon arrangements made by or on behalf of Parent or
Sub.
Section 5.07 Financing. (a) At Closing, Parent and Sub will
have available all of the funds necessary for the acquisition of all shares of
Company Common Stock pursuant to the Merger and to perform their respective
obligations under this Agreement.
(b) Parent has previously delivered to the Company copies of
any commitment letters pursuant to which Parent shall obtain the funds necessary
to acquire all shares of Company Common Stock pursuant to the Merger, together
with all of Parent's fees and expenses incurred in connection with the Merger
and the other Transactions. For the avoidance of doubt, it shall not be a
condition to Closing for Parent to obtain such funds, and the Company shall be
A-28
entitled to pursue any and all remedies available at Law or in equity if Parent
breaches this Agreement on account of Parent's failure to obtain such funds on
or before the Closing Date.
(c) Assuming the Company is not Insolvent (as defined below)
prior to the Effective Time, immediately after the Effective Time and after
giving effect to any change in the Surviving Corporation's assets and
liabilities as a result of the Merger, the Surviving Corporation will not (1) be
insolvent (either because its financial condition is such that the sum of its
debts is greater than the fair value of its assets or because the fair saleable
value of its assets is less than the amount required to pay its probable
liability on existing debts as they mature), (2) have unreasonably small capital
with which to engage in its business or (3) have incurred liabilities beyond its
ability to pay as they become due. For purposes hereof, the Company will be
deemed to be "INSOLVENT" if any of the conditions described in clause (1), (2)
or (3) above are applicable to the Company on or prior to the Effective Time.
Section 5.08 No Additional Representations; Investigation by
Parent and Sub. In entering into this Agreement, Parent and Sub have not been
induced by, or relied upon, any representations, warranties or statements by the
Company not specifically set forth herein, the Company Disclosure Letter or the
other documents specifically referred to herein or required to be delivered
thereby, whether or not such representations, warranties or statements have
actually been made, in writing or orally, and Parent and Sub acknowledge that
they have made their own investigation of the Company and the Company
Subsidiaries prior to the execution of this Agreement and have not been induced
by or relied upon any representations, warranties or statements as to the
advisability of entering into this Agreement other than the representations,
warranties and statements in Article IV above, and Parent and Sub:
(a) acknowledge that, other than as set forth in this
Agreement, the Company Disclosure Letter or the other documents required to be
delivered by the Company or specifically referred to herein, none of the
Company, its Subsidiaries or any of their respective directors, officers,
employees, affiliates, agents or representatives makes any representation or
warranty, either express or implied, as to the accuracy or completeness of any
of the information provided or made available to Parent or Sub or their agents
or representatives; and
(b) agree that if the Merger and the other Transactions are
consummated, to the fullest extent permitted by Law (except with respect to
fraud), that none of the Company, its Subsidiaries or any of their respective
directors, officers, employees, affiliates, agents or representatives shall have
any liability or responsibility whatsoever to Parent or Sub on any basis
(including in contract, tort or otherwise) based upon any information provided
or made available, or statements made, to Parent or Sub or with respect to the
certificate to be delivered pursuant to Section 8.03(d).
A-29
ARTICLE VI
Covenants Relating to Conduct of Business
-----------------------------------------
Section 6.01 Conduct of Business. Except as set forth in the
Company Disclosure Letter or as otherwise expressly contemplated hereby, without
the prior consent of Parent (which consent shall not be unreasonably withheld or
delayed), from the date hereof until the Effective Time, the Company shall, and
shall cause each of the Company Subsidiaries to, conduct their business in all
material respects in the ordinary course consistent with past practice and shall
use commercially reasonable efforts to (a) preserve intact its present business
organization, (b) maintain in effect all material foreign, Federal, state and
local licenses, approvals and authorizations, including, all Company Permits
that are required for the Company and the Company Subsidiaries to carry on their
business and (c) preserve existing relationships with its material customers,
lenders, suppliers and others having material business relationships with it;
provided that in each case, the Company shall not be held responsible for any
change or development relating to (t) changes, effects, events, occurrences or
circumstances that generally affect the United States or the global economy or
the industries in which the Company operates, (u) general economic, financial or
securities market conditions in the United States or elsewhere, (v) the
execution, delivery or announcement of this Agreement or the announcement of the
Merger, (w) changes in GAAP or requirements applicable to the Company and the
Company Subsidiaries, (x) changes in Laws or interpretations thereof by a
Governmental Entity, (y) changes, effects, events or occurrences caused by or
resulting from the taking of any action required or permitted by this Agreement
or approved by Parent and/or (z) any outbreak of major hostilities in any
country in which the Company operates or in which the United States is involved
or any act of terrorism within the United States or any country in which the
Company operates or directed against United States facilities or citizens
wherever located. Without limiting the generality of the foregoing, except as
set forth in the Company Disclosure Letter or as otherwise expressly
contemplated by this Agreement, from the date hereof until the Effective Time,
without the prior consent of Parent (which consent shall not be unreasonably
withheld or delayed), the Company shall not, nor shall it permit any of the
Company Subsidiaries to:
(1) amend the Company's or any Company Subsidiary's
certificate of incorporation or bylaws or similar organizational documents;
(2) split, combine or reclassify any shares of capital stock
of the Company or declare, set aside or pay any dividend or other distribution
(whether in cash, stock or property or any combination thereof) in respect of
its capital stock, or redeem, repurchase or otherwise acquire or offer to
redeem, repurchase, or otherwise acquire any of its securities, except (i) for
ordinary course dividends by Company Subsidiaries or (ii) pursuant to the
existing terms of the Company Stock Plan or redemptions under the Rights Plan;
(3) issue, deliver or sell, or authorize the issuance,
delivery or sale of, any shares of its capital stock, stock appreciation rights
or any securities convertible into or exercisable for, or any rights, warrants
or options to acquire, any capital stock, other than the issuance of shares of
Company Common Stock pursuant to the exercise of Company Stock Options
outstanding as of the date of this Agreement;
A-30
(4) acquire (whether pursuant to merger, stock or asset
purchase or otherwise) in one transaction or series of related transactions (i)
except for purchases in the ordinary course of business, any assets having a
fair market value in excess of $1,000,000, or (ii) all or substantially all of
the equity interests of any Person or any business or division of any Person
having a fair market value in excess of $100,000;
(5) sell, lease, encumber or otherwise dispose of any assets,
other than (i) sales in the ordinary course of business, (ii) equipment and
property no longer used in the operation of the Company's business and (iii)
assets related to discontinued operations;
(6) incur (which shall not include entering into credit
agreements, lines of credit or similar arrangements until the Company or any of
the Company Subsidiaries becomes liable with respect to any indebtedness for
borrowed money or guarantees thereof) any indebtedness for borrowed money or
guarantee any indebtedness or issue or sell any debt securities or warrants or
rights to acquire any debt securities of the Company or any of the Company
Subsidiaries or guarantee any debt securities of others, except in the ordinary
course of business (which shall include borrowings under the Company's existing
credit agreements and overnight borrowings);
(7) affirmatively waive without appropriate consideration
therefor any material rights under any Company Contract or forgive any material
indebtedness for borrowed money owed to the Company or any Company Subsidiary;
(8) except in the ordinary course of business, amend, modify
or terminate any Company Contract or otherwise waive, release or assign without
appropriate consideration any material rights, claims or benefits of the Company
or any of its Subsidiaries thereunder, in each case material to the Company and
the Company Subsidiaries, taken as a whole;
(9) (i) except as disclosed in the Company Disclosure Letter
or as required by Law or an agreement existing on the date hereof, increase the
amount of compensation of any director, executive officer or employee at or
above the manager level or make any increase in or commitment to increase any
employee benefits, (ii) except as required by Law, an agreement existing on the
date hereof or the Company's or any Company Subsidiaries' severance policy as of
the date hereof, grant any severance or termination pay to any director or
officer of the Company or any Company Subsidiary, (iii) adopt any additional
employee benefit plan or, except in the ordinary course of business or as
required by Law, make any contribution to any existing Company Benefit Plan,
(iv) except as may be required by Law, amend in any material respect any Company
Benefit Plan, (v) except as disclosed in the Company Disclosure Letter or as
required under the terms of any collective bargaining agreement existing on the
date hereof, implement or announce any intention to implement any general
increase in the compensation or benefits payable to non-executive employees of
the Company or the Company Subsidiaries, or (vi) except as disclosed in the
Company Disclosure Letter or as may be required by Law or under the terms of any
collective bargaining agreement existing on the date hereof, make any
announcement or enter into commitment with respect to general employment levels
or the general terms and conditions of employment applicable after the Effective
Time to the employees of the Company and the Company Subsidiaries;
A-31
(10) settle, or propose to settle, any litigation,
investigation, arbitration, proceeding or other claim that is material to the
business of the Company and the Company Subsidiaries, taken as a whole, other
than the payment, discharge or satisfaction, in the ordinary course of business
consistent with past practice, of liabilities (i) recognized or disclosed in the
most recent consolidated financial statements (or notes thereto) of the Company
included in the Company SEC Documents or (ii) incurred since the date of such
financial statements in the ordinary course of business consistent with past
practice;
(11) other than in the ordinary course of business consistent
with past practice, (i) make any Tax election or take any position on any Tax
Return filed on or after the date of this Agreement or adopt any method thereof
that is inconsistent with elections made, positions taken or methods used in
preparing or filing similar returns in prior periods or (ii) enter into any
settlement or compromise of any Tax liability that in either case is material to
the business of the Company and the Company Subsidiaries, taken as a whole;
(12) materially change the Company's methods of accounting in
effect at September 30, 2004, except as required by changes in Law, GAAP or by
Regulation S-X of the Exchange Act, as concurred by the Company's independent
public accountants;
(13) except as expressly permitted in accordance with Section
6.02, amend, waive any provision of or terminate any agreement identified as a
"Confidentiality and Standstill Agreement" in Section 6.01 of the Company
Disclosure Letter;
(14) except as contemplated by Section 4.05(c) or as expressly
permitted in accordance with Section 6.02, amend or terminate the Rights
Agreement or redeem any of the Company Rights;
(15) enter into any Contract that would constitute a Company
Contract outside the ordinary course of business consistent with past practice;
(16) materially amend or terminate any insurance policy
required to be disclosed on the Company Disclosure Letter or allow any material
insurance policy to lapse;
(17) (i) make or contractually commit to make capital
expenditures (as determined in accordance with GAAP, consistently applied) in
excess of $15 million in the aggregate, excluding the Shopfheim facility
expansion, or (ii) make or contractually commit to make capital expenditures (as
determined in accordance with GAAP, consistently applied) with respect to the
Shopfheim facility expansion for 2005 and 2006 in excess of $14 million in the
aggregate; provided that in the event the Closing has not occurred within 60
days after the date of this Agreement, the limitations set forth in clause (i)
shall not apply; provided further that, in any event, the Company shall make all
capital expenditures only in the ordinary course of business, consistent with
past practice, and shall notify Parent prior to making or committing to make any
individual capital expenditure of $500,000 or more;
(18) except as permitted in accordance with Section 6.02,
adopt a plan of complete or partial liquidation, dissolution, merger,
consolidation, restructuring, recapitalization or other reorganization of the
Company or any Company Subsidiary (other than the Merger); or
(19) agree, resolve or commit to do any of the foregoing;
provided that the limitations set forth herein shall not apply to any action,
transaction or event occurring exclusively between the Company and any Company
Subsidiary or between any Company Subsidiaries.
A-32
Section 6.02 No Solicitation. (a) The Company, each of the
Company Subsidiaries and each of their respective directors, officers,
employees, agents and representatives shall immediately cease any discussions or
negotiations presently being conducted with respect to any Company Takeover
Proposal. The Company shall immediately discontinue access to the electronic
data room maintained by the Company by all third Persons other than Parent and
Sub and their lenders, employees, agents and representatives and the Company's
representatives and, except as expressly permitted in accordance with Section
6.02(c), shall not provide any such other Person with further access, electronic
or otherwise, to any information, documents, facilities or employees of the
Company or any Company Subsidiary that are not in the public domain. Nothing in
this Section 6.02(a) shall prevent the Company from supplying information to any
Person (other than a Person that has made or is reasonably expected to make a
Company Takeover Proposal) to the extent required by Law.
(b) Subject to Section 6.02(c), after the date of this
Agreement, the Company shall not, nor shall it authorize or permit any Company
Subsidiary to, nor shall it authorize or knowingly permit any officer, director
or employee of, or any investment banker, attorney or other advisor or
representative (collectively, "REPRESENTATIVES") of, the Company or any Company
Subsidiary to (i) directly or indirectly solicit or initiate any Company
Takeover Proposal, (ii) enter into any agreement, including any letter of intent
or similar agreement, with respect to any Company Takeover Proposal or (iii)
enter into, participate in or continue any discussions or negotiations
regarding, or furnish to any Person any information with respect to, any Company
Takeover Proposal.
(c) Notwithstanding the provisions of this Section 6.02 or any
other provisions contained in this Agreement, if prior to the date the Company
Stockholder Approval is obtained the Company receives an unsolicited Company
Takeover Proposal and the Company Board determines in good faith, after
consultation with its outside legal and financial advisors, that (i) the Company
Takeover Proposal is reasonably likely to result in a transaction meeting the
requirements of the definition of "Superior Company Proposal" and (ii) failing
to take such action would be inconsistent with the Company Board's fiduciary
duties to the Company and its stockholders under applicable Law, then, subject
to providing at least two Business Days prior written notice to Parent, the
Company may (i) furnish information with respect to the Company to the Person
making such Company Takeover Proposal and its Representatives pursuant to a
confidentiality agreement not less restrictive of the other party than the
Confidentiality Agreement (as defined in Section 7.02) and (ii) participate in
discussions or negotiations (including solicitation of a revised Company
Takeover Proposal) with such Person and its Representatives regarding such
Company Takeover Proposal.
(d) Neither the Company Board nor any committee thereof shall
(i) withdraw or propose publicly to withdraw the approval or recommendation by
the Company Board or any such committee of this Agreement or the Merger or (ii)
approve or recommend, or propose publicly to approve or recommend, any Company
A-33
Takeover Proposal. Notwithstanding the foregoing, if the Company Board receives
an unsolicited Superior Company Proposal and as a result thereof the Company
Board determines in good faith, after consultation with its outside legal and
financial advisors, that it is necessary to do so in order to comply with their
fiduciary duties under applicable Law, the Company Board may withdraw or modify
its approval or recommendation of the Merger and this Agreement and, in
connection therewith, approve or recommend such Superior Company Proposal.
(e) The Company shall within 48 hours after its receipt of any
Company Takeover Proposal notify Parent of such Company Takeover Proposal and
the material terms and conditions of such Company Takeover Proposal, excluding
the identity of the acquiring party. In connection with any determination by the
Company Board that a Company Takeover Proposal is a Superior Company Proposal,
the Company shall within 24 hours after the making of such determination provide
Parent with a written summary in reasonable detail of the reasons for such
determination.
(f) Nothing contained in this Section 6.02 shall prohibit the
Company from taking and disclosing to its stockholders a position contemplated
by Rule 14e-2 promulgated under the Exchange Act or from making any disclosure
to the Company's stockholders if, in the good faith judgment of the Company
Board, failure so to disclose would be inconsistent with its obligations under
applicable Law. Any action taken by the Company or the Company Board in
accordance with this Section 6.02(f) shall be deemed not to be a modification of
the Company Board's approval or recommendation of the Merger and this Agreement.
ARTICLE VII
Additional Agreements
---------------------
Section 7.01 Preparation of Proxy Statement; Stockholders
Meeting. (a) The Company shall, as soon as practicable, prepare and file with
the SEC the proxy materials that shall constitute the proxy statement relating
to the Merger and the Transactions to be submitted to the Company's stockholders
at the Company Stockholders Meeting to approve the Merger and the Transactions
(such proxy materials, and any amendments or supplements, the "PROXY STATEMENT")
in preliminary form, and the Company shall use its reasonable best efforts to
respond as promptly as practicable to any comments of the SEC with respect
thereto. The Parent shall promptly provide to the Company all information
regarding the Parent required to be included in the Proxy Statement in
accordance with the Exchange Act and the rules of the SEC thereunder. Except as
otherwise expressly permitted in accordance with Section 6.02(d), the Proxy
Statement shall include the recommendation of the Company Board as provided in
Section 4.04(b). Parent and its counsel shall be given a reasonable opportunity
to review and comment on the Proxy Statement and all related proxy materials
prior to such documents being filed with the SEC. At the earliest practical date
following clearance of the Proxy Statement by the SEC, the Company shall use its
reasonable best efforts to prepare and file with the SEC the definitive Proxy
Statement and to cause the definitive Proxy Statement to be mailed to the
Company's stockholders, in each case at the earliest practicable date following
the filing of the preliminary Proxy Statement with the SEC. If at any time prior
to receipt of the Company Stockholder Approval there shall occur any event that
should be set forth in an amendment or supplement to the Proxy Statement, the
A-34
Company shall promptly prepare and mail to its stockholders such an amendment or
supplement.
(b) The Company shall establish a record date for, duly call,
give notice of, convene and hold a meeting of its stockholders (the "COMPANY
STOCKHOLDERS MEETING") for the purpose of seeking the Company Stockholder
Approval. The record and meeting dates for the Company Stockholders Meeting
shall be established so as to permit completion of the Merger and the other
Transactions at the earliest practicable date and shall be reasonably acceptable
to each of the Company and Parent.
(c) The Company shall be required to comply with Section
7.01(b) notwithstanding any action taken by the Company Board pursuant to
Section 6.02(d) to withdraw or modify its approval or recommendation of the
Merger and this Agreement or to approve or recommend any Superior Company
Proposal.
(d) Parent shall: (i) cause Sub promptly to submit this
Agreement and the Transactions for approval and adoption by Parent by written
consent of sole stockholder; (ii) cause the shares of capital stock of Sub to be
voted for adoption and approval of this Agreement, the Merger and the other
Transactions; and (iii) cause to be taken all additional actions necessary for
Sub to adopt and approve this Agreement and the Transactions and to consummate
the Merger.
Section 7.02 Access to Information; Confidentiality. Upon
reasonable notice, the Company shall, and shall cause each of the Company
Subsidiaries to, afford to Parent, and to Parent's and its lenders' officers,
employees, accountants, counsel, financial advisors and other representatives,
reasonable access during normal business hours during the period prior to the
Effective Time to all its properties, books and contracts and, during such
period, the Company shall, and shall cause each of the Company Subsidiaries to,
make available to Parent all other information concerning its business,
properties and personnel as Parent may reasonably request. Any such
investigation shall be conducted in such a manner as not to interfere
unreasonably with the business or operations of the Company. Neither the Company
nor any of the Company Subsidiaries shall be required to provide access to or to
disclose information where such access or disclosure would violate or contravene
any Law, order, judgment, decree or binding agreement entered into prior to the
date hereof. To the extent practicable, the parties will make appropriate
substitute disclosure arrangements under circumstances in which the restrictions
of the preceding sentence apply. All information exchanged pursuant to this
Section 7.02 shall be subject to the confidentiality agreement effective as of
October 13, 2004 between the Company and Parent (the "CONFIDENTIALITY
AGREEMENT").
Section 7.03 Best Efforts; Notification. (a) Upon the terms
and subject to the conditions set forth in this Agreement, unless, to the extent
permitted by Section 6.02(d), the Company Board approves or recommends a
Superior Company Proposal, each of the parties shall use its best efforts to
take, or cause to be taken, all actions, and to do, or cause to be done, and to
assist and cooperate with the other parties in doing, all things necessary,
proper or advisable to consummate and make effective, in the most expeditious
manner practicable, the Merger and the other Transactions, including (i) the
obtaining of all necessary actions or nonactions, waivers, consents and
approvals from Governmental Entities and the making of all necessary
A-35
registrations and filings (including filings with Governmental Entities, if any)
and the taking of all reasonable steps as may be necessary to obtain an approval
or waiver from, to secure the expiration of any mandatory waiting periods of or
to avoid an action or proceeding by, any Governmental Entity, (ii) the obtaining
of all necessary consents, approvals or waivers from third parties, (iii) the
defending of any lawsuits or other legal proceedings, whether judicial or
administrative, challenging this Agreement or the consummation of the Merger or
the other Transactions and (iv) the execution and delivery of any additional
instruments necessary to consummate the Merger and the other Transactions and to
fully carry out the purposes of this Agreement. Notwithstanding the foregoing,
(x) the requirement under this Section 7.03(a) that Parent and Sub use their
best efforts to obtain all necessary consents and approvals from Governmental
Entities with respect to the Merger or the other Transactions shall not be
construed to require Parent or Sub to sell, divest, hold separate or otherwise
dispose of, or agree to sell, divest, hold separate or otherwise dispose of, any
assets or businesses, including any assets or businesses of the Company or the
Company Subsidiaries, or to enter into or agree to enter into any compulsory
licensing or similar arrangement, in order to obtain approval, clearance or
expiration of any waiting periods under the HSR Act or any other antitrust or
competition Law and (y) the Company and its Representatives shall not be
prohibited under this Section 7.03(a) from taking any action permitted by
Section 6.02.
(b) The Company shall give prompt notice to Parent, and Parent
or Sub shall give prompt notice to the Company, of (1) any representation or
warranty made by it contained in this Agreement that is qualified as to
materiality becoming untrue or inaccurate in any respect or any such
representation or warranty that is not so qualified becoming untrue or
inaccurate in any material respect or (2) any failure by it to comply with or
satisfy in any material respect any covenant, condition or agreement to be
complied with or satisfied by it under this Agreement; provided that no such
notification shall affect the representations, warranties, covenants or
agreements of the parties or the conditions to the obligations of the parties
under this Agreement.
(c) Parent shall not, and shall not permit any of its
Subsidiaries to, without the prior written consent of the Company, take any
action or enter into any transaction, including any merger, acquisition, joint
venture, disposition, lease, contract or debt or equity financing that would
reasonably be expected to impair, delay or prevent Parent's or Sub's ability to
perform its obligations under this Agreement or to consummate the Merger or the
other Transactions.
Section 7.04 Employment, Compensation and Benefit Plans. (a)
From and after the Effective Time, Parent shall, and shall cause the Surviving
Corporation to, honor in accordance with their respective terms (as in effect on
the date of this Agreement), the Company's written employment, severance and
termination agreements with individual employees set forth in the Company
Disclosure Letter.
(b) With respect to any "employee benefit plan," as defined in
Section 3(3) of ERISA but without regard to Section 4(b)(4) of ERISA, maintained
by Parent or any of its Subsidiaries (including but not limited to any severance
plan), for all purposes, including determining eligibility to participate or to
receive benefits and vesting, service with the Company or any Company Subsidiary
or predecessor entity (and any other service credited by the Company under
similar severance plans), shall be treated as service with Parent or any of its
A-36
Subsidiaries or Affiliates; provided that such service need not be recognized to
the extent that such recognition would result in any duplication of benefits.
(c) With respect to each U.S. Benefit Plan and Agreement that
is an employee welfare benefit plan, Parent shall waive, or cause to be waived,
any pre-existing condition, evidence of insurability, waiting period,
continuing-course-of-treatment, or actively-at-work requirement limitation under
any employee welfare benefit plan, as defined in Section 3(1) of ERISA,
maintained by Parent or any of its Subsidiaries or Affiliates (other than the
Surviving Corporation) in which each employee who was an employee of the Company
or a Company Subsidiary immediately prior to the Effective Time (an "AFFECTED
EMPLOYEE") (and their eligible dependents) will be eligible to participate from
and after the Effective Time, with respect to those Affected Employees (and
their eligible dependents) except, with respect to any Person, to the extent
that such requirements would have been applicable to such Person under the
comparable employee welfare benefit plan of the Company or Company Subsidiary
immediately prior to the Effective Time. Parent shall recognize, or cause to be
recognized, the dollar amount of all expenses incurred by each Affected Employee
(and his or her eligible dependents) during the calendar year in which the
Effective Time occurs for purposes of satisfying such year's deductible,
co-payment and "out-of-pocket" maximum limitations under the relevant employee
welfare benefit plans, as defined in Section 3(1) of ERISA, in which they will
be eligible to participate from and after the Effective Time.
(d) The obligations of the Surviving Corporation and Parent
under clauses (a) through (c) of this Section 7.04, shall not be terminated,
amended, repealed, revoked or modified in any manner which will adversely affect
any director, officer or other person to whom such Sections apply without the
consent of the affected director, officer or other person (it being expressly
agreed that each director, officer or other person to whom such Sections apply
shall be third-party beneficiaries of such Sections).
(e) Notwithstanding the provisions of this Section 7.04, from
and after the Effective Time and subject to the terms of any applicable
collective bargaining agreement or any employment agreement existing as of the
date hereof, the Affected Employees shall be deemed employees at will and
nothing expressed or implied herein will obligate Parent or its Subsidiaries to
provide continued employment to any Affected Employee for a specified period of
time following the Effective Time.
Section 7.05 Indemnification; Directors' and Officers'
Insurance.
(a) The certificate of incorporation and the bylaws of the
Surviving Corporation shall contain provisions with respect to indemnification,
advancement of expenses and director exculpation as are set forth in the Company
Charter and the Company Bylaws as in effect at the date hereof (to the extent
consistent with applicable Law), which provisions shall not be amended, repealed
or otherwise modified in any manner that would adversely affect the rights
thereunder of the persons who at any time prior to the Effective Time were
entitled to indemnification, advancement of expenses or exculpation under the
Company Charter or Company Bylaws in respect of actions or omissions occurring
at or prior to the Effective Time (including, without limitation, the
Transactions), unless otherwise required by applicable Law.
A-37
(b) From and after the Effective Time, to the fullest extent
permitted by applicable Law, Parent shall and shall cause the Surviving
Corporation to, indemnify, defend and hold harmless, and provide advancement of
expenses to, each person who is now, or has been at any time prior to the date
hereof or who becomes prior to the Effective Time, a director or officer of the
Company or any of the Company Subsidiaries (the "INDEMNIFIED Parties") against
all losses, claims, damages, liabilities, fees and expenses (including
attorneys' fees and disbursements), judgments, fines and amounts paid in
settlement of or in connection with any claim, action, suit, proceeding or
investigation based in whole or in part on or arising in whole or in part out of
the fact that such person is or was a director or officer of the Company or any
Company Subsidiary, and pertaining to any matter existing or occurring, or any
acts or omissions occurring, at or prior to the Effective Time, whether asserted
or claimed prior to, or at or after, the Effective Time (including matters, acts
or omissions occurring in connection with (1) the approval of this Agreement and
the consummation of the Merger and the other Transactions or (2) serving as
fiduciary under any Company Benefit Plan) to the same extent such persons are
indemnified or have the right to advancement of expenses as of the date hereof
by the Company pursuant to the Company Charter, Company Bylaws and
indemnification agreements in existence on the date hereof with any current or
former directors or officers of the Company and the Company Subsidiaries.
(c) As of the Effective Time, Parent shall cause to be
obtained, and shall pay the full lump sum premium with respect to, policies of
directors' and officers' liability insurance providing an aggregate coverage
amount of $25 million issued by the Company's current directors' and officers'
liability insurance carriers or other insurance carriers with ratings by A.M.
Best & Co. equal to or higher than the ratings of such current insurance
carriers (the "TAIL INSURANCE"). At least 10 Business Days prior to the
Effective Time, Parent shall deliver to the Company evidence reasonably
satisfactory to the Company that the Tail Insurance will be in full force and
effect as of the Effective Time. The Tail Insurance shall have terms and
conditions that are not less advantageous to the insured parties than the
directors' and officers' liability insurance currently in effect for the
Company. For a period of six (6) years after the Effective Time, Parent shall
cause to be maintained (1) the Tail Insurance and (2) a letter of credit in an
amount of $2,500,000 for the purpose of funding the trust established pursuant
to indemnification agreements in existence on the date hereof with the Company's
directors and officers. Neither Parent nor the Surviving Corporation shall take
any action to cause the Tail Insurance to be modified, terminated or cancelled
prior to the end of such six-year period after the Effective Time.
(d) Parent shall pay (as incurred) all expenses, including
reasonable fees and expenses of counsel, that an Indemnified Party may incur in
enforcing the indemnity and other obligations provided for in this Section 7.05.
(e) If Parent or any of its successors or assigns (i)
consolidates with or merges into any other Person and shall not be the
continuing or surviving corporation or entity of such consolidation or merger,
or (ii) transfers or conveys all or substantially all of its properties and
assets to any Person, then, and in each such case, to the extent necessary,
proper provision shall be made so that the successors and assigns of Parent, as
the case may be, shall assume and agree to perform the obligations set forth in
this Section 7.05.
A-38
(f) The provisions of this Section 7.05 (i) are intended to be
for the benefit of, and shall be enforceable by, each Indemnified Party, his or
her heirs and representatives, (ii) are in addition to, and not in substitution
for, any other rights to indemnification or contribution that any such person
may have by Law, contract or otherwise and (iii) shall survive the consummation
of the Merger.
Section 7.06 Fees and Expenses. Except as provided below, all
fees and expenses incurred in connection with the Merger and the other
Transactions shall be paid by the party incurring such fees or expenses;
provided that (a) the costs and expenses of printing and mailing the Proxy
Statement (excluding attorneys' and accountants' fees and expenses), the fees
and expenses of a proxy solicitor mutually acceptable to Parent and the Company
and all filing and other fees paid to the SEC in connection with the Merger,
shall be shared equally by Company and Parent and (b) if the Merger is
consummated the Surviving Corporation shall pay all expenses.
Section 7.07 Public Announcements. Parent and Sub, on the one
hand, and the Company, on the other hand, shall consult with each other before
issuing, and provide each other the opportunity to review and comment upon, any
press release or other public statements with respect to the Merger and the
other Transactions and shall not issue any such press release or make any such
public statement prior to such consultation, except as may be required by
applicable Law, court process or by obligations pursuant to any listing
agreement with any national securities exchange.
Section 7.08 Transfer Taxes. All stock transfer, real estate
transfer, documentary, stamp, recording and other similar Taxes (including
interest, penalties and additions to any such Taxes) ("TRANSFER TAXES") incurred
in connection with the Transactions shall be paid by either Sub or the Surviving
Corporation, and the Company shall cooperate with Sub and Parent in preparing,
executing and filing any Tax Returns with respect to such Transfer Taxes.
ARTICLE VIII
Conditions Precedent
--------------------
Section 8.01 Conditions to Each Party's Obligation To Effect
The Merger. The respective obligation of each party to effect the Merger is
subject to the satisfaction or waiver on or prior to the Closing Date of the
following conditions:
(a) the Company shall have obtained the Company Stockholder
Approval;
(b) all authorizations, consents, orders or approvals of, or
declarations or filings with, and all expirations of waiting periods (and
extensions thereof) required from, any Governmental Entity under the HSR Act or
any other applicable Law of those jurisdictions set forth in Section 5.04(b) of
the Parent Disclosure Letter shall have been filed, have occurred or have been
obtained (all such permits, approvals, filings and consents and lapse of all
such waiting periods being referred to as the "REQUISITE REGULATORY APPROVALS"),
and all such Requisite Regulatory Approvals shall be in full force and effect;
and
A-39
(c) no temporary restraining order, preliminary or permanent
injunction or other order issued by any court of competent jurisdiction or other
legal restraint or prohibition (an "INJUNCTION") preventing the consummation of
the Merger shall be in effect. There shall not be any action taken, or any law
or order enacted, entered, enforced or deemed applicable to the Merger, by any
Governmental Entity of competent jurisdiction that makes the consummation of the
Merger illegal.
Section 8.02 Further Conditions to Obligation of the Company.
The obligation of the Company to effect the Merger is further subject to the
satisfaction or waiver on or prior to the Closing Date of the following
conditions:
(a) Parent and Sub shall have each performed in all material
respects all obligations required to be performed by it under this Agreement at
or prior to the Closing Date;
(b) the representations and warranties of Parent and Sub in
this Agreement that are qualified as to materiality shall be true and correct
and any of those not so qualified shall be true and correct in all material
respects, as of the Closing Date, except to the extent such representations and
warranties expressly relate to an earlier date (in which case such
representations and warranties qualified as to materiality shall be true and
correct, and those not so qualified shall be true and correct in all material
respects, on and as of such earlier date), other than for such failures to be
true and correct that, individually and in the aggregate, have not had and could
not reasonably be expected to have a Parent Material Adverse Effect; and
(c) the Company shall have received a certificate, dated as of
the Closing Date, executed on behalf of Parent by the Chief Executive Officer
and Chief Financial Officer of Parent stating that the conditions set forth in
paragraphs (a) and (b) above have been satisfied.
Section 8.03 Further Conditions to Obligation of Parent and
Sub. The obligation of Parent and Sub to effect the Merger is further subject to
the satisfaction or waiver on or prior to the Closing Date of the following
conditions:
(a) the Company shall have performed in all material respects
all obligations required to be performed by it under this Agreement at or prior
to the Closing Date;
(b) the representations and warranties of the Company in this
Agreement that are qualified as to materiality shall be true and correct and any
of those not so qualified shall be true and correct in all material respects, as
of the Closing Date, except to the extent such representations and warranties
expressly relate to an earlier date (in which case such representations and
warranties qualified as to materiality shall be true and correct, and those not
so qualified shall be true and correct in all material respects, on and as of
such earlier date), other than for such failures to be true and correct that,
individually and in the aggregate, have not had and could not reasonably be
expected to have a Company Material Adverse Effect;
(c) there shall not be pending any suit, action or proceeding
by any Governmental Entity against Parent, Sub, the Company or any Company
Subsidiary relating to the Merger or the other Transactions seeking to prohibit
or impose, and no Requisite Regulatory Approval shall be conditioned upon or
seek to impose, any material limitations on Parent's or Sub's ownership or
operation (or that of any of their respective Subsidiaries or affiliates) of all
A-40
or a material portion of their or the Company's and the Company's Subsidiaries'
business or assets, taken as a whole, or to compel Parent or Sub or their
respective Subsidiaries and affiliates to dispose of, sell, license or hold
separate any material portion of the business or assets of Parent or the Company
and their respective Subsidiaries; and
(d) Parent shall have received a certificate, dated as of the
Closing Date, executed on behalf of the Company by the Chief Executive Officer
and the Chief Financial Officer of the Company stating that the conditions set
forth in paragraphs (a) and (b) above have been satisfied.
ARTICLE IX
Termination, Amendment and Waiver
---------------------------------
Section 9.01 Termination. This Agreement may be terminated at
any time prior to the Effective Time, by action taken or authorized by the Board
of Directors of the terminating party or parties, whether before or after
receipt of Company Stockholder Approval:
(a) by mutual consent of Parent, Sub and the Company in a
written instrument;
(b) by either Parent or the Company if the Company Stockholder
Approval shall not have been obtained upon a vote taken thereon at a duly
convened Company Stockholder Meeting;
(c) by either Parent or the Company if a Governmental Entity
of competent jurisdiction that must grant a Requisite Regulatory Approval has
denied approval of the Merger and such denial has become final and
nonappealable; or any Governmental Entity of competent jurisdiction shall have
issued an order, decree or ruling or taken any other action permanently
enjoining, restraining or otherwise prohibiting the Merger and such order,
decree, ruling or other action shall have become final and nonappealable;
provided that the right to terminate this Agreement under this Section 9.01(c)
shall not be available to any party whose failure to comply with Section 7.03 or
any other provision of this Agreement has been the cause of, or resulted in,
such action;
(d) by Parent if:
(i) the Company breaches or fails to perform in any
material respect any of its representations, warranties or covenants set forth
in this Agreement, which
breach or failure to perform (A) would give rise, if occurring or continuing on
the Closing Date, to the failure of one or more of the conditions set forth in
Sections 8.03(a) or 8.03(b) and (B) cannot be or has not been cured within 30
days after the date written notice of such breach or failure to perform is given
by Parent to the Company; provided that Parent and Sub are not then in material
breach of their obligations under this Agreement and provided further that any
right of Parent under this Agreement to terminate this Agreement due to a
reference to one or more "material weaknesses" in the Management Report or in
the attestation report by the Company's independent registered public accounting
firm with respect to the Management Report must be exercised within 10 Business
Days after Parent receives written notice from the Company of such material
A-41
weaknesses and thereafter Parent shall not be entitled to terminate this
Agreement as a result of such matter;
(ii) the Board of Directors of the Company has withdrawn
or amended in any manner adverse to Parent or Sub its recommendation and
approval of the Merger in accordance with Section 4.04(b) or approves or
recommends any Superior Company Proposal; or
(iii) the Merger has not been consummated on or before
December 15, 2005 (the "OUTSIDE DATE") (unless the failure of the Merger to have
been consummated results from Parent or Sub breaching in any material respect
any representation, warranty, covenant or agreement contained in this
Agreement);
(e) by the Company if:
(i) Parent or Sub breaches or fails to perform in any
material respect any of its representations, warranties or covenants set forth
in this Agreement, which breach or failure to perform (A) would give rise, if
occurring or continuing on the Closing Date, to the failure of one or more of
the conditions set forth Sections 8.02(a) or 8.02(b) and (B) cannot be or has
not been cured within 30 days after the date written notice of such breach or
failure to perform is given by the Company to Parent (or one Business Day after
the date such notice is given in the case of any breach of the representations
and warranties of Parent and Sub set forth in Section 5.07(a) or any failure by
Parent or Sub to perform their obligations under Section 3.02(a) to provide the
Paying Agent with the Exchange Fund); provided that the Company is not then in
material breach of its obligations under this Agreement; or
(ii) the Merger has not been consummated on or before the
Outside Date (unless the failure of the Merger to have been consummated results
from the Company breaching in any material respect any representation, warranty,
covenant or agreement contained in this Agreement); or
(f) by the Company in the event its Board determines in
accordance with Section 6.02 that there is a Superior Company Proposal.
Section 9.02 Effect of Termination. (a) In the event of
termination of this Agreement by either the Company or Parent as provided in
Section 9.01, this Agreement shall forthwith become void and have no effect,
without any liability or obligation on the part of Parent, Sub or the Company or
their officers, directors, stockholders, affiliates and agents; provided that
the last sentence of Section 7.02, Section 7.06, this Section 9.02 and Article X
shall survive such termination and provided further that each party shall be
entitled to all remedies available under this Agreement and applicable Law to
the extent that such termination results from the willful and material breach by
the other party or parties of any representation, warranty or covenant set forth
in this Agreement.
A-42
(b) If:
(i) Parent terminates this Agreement pursuant to Section
9.01(d)(ii);
(ii) the Board of Directors of the Company withdraws or
amends in any manner adverse to Parent or Sub its recommendation and approval of
the Merger in accordance with Section 4.04(b), or the Board of Directors of the
Company approves or recommends any Superior Company Proposal, and in either case
the Company Stockholder Approval is not obtained upon a vote taken thereon at a
duly convened Company Stockholder Meeting; or
(iii) the Company terminates this Agreement pursuant to
Section 9.01(f);
then the Company will pay to Parent, within three
Business Days following the delivery of notice of such termination (in the case
of clauses (i) and (iii) above) or the occurrence of such event (in the case of
clause (ii) above), a termination fee equal to $12,000,000 (the "COMPANY
TERMINATION FEE"), payable by wire transfer of immediately available funds to an
account designated by Parent.
(c) If Parent terminates this Agreement pursuant to Section
9.01(d)(i) with respect to any breach of the Company's representations and
warranties, solely as such representations and warranties are made as of the
date of this Agreement, or with respect to the failure by the Company to perform
any covenant set forth in this Agreement, then the Company will pay to Parent,
within three Business Days following the delivery of notice of such termination,
an amount equal to the reasonable fees and expenses (including reasonable
attorneys' fees and expenses) incurred by Parent and Sub in connection with this
Agreement, the Merger or the other Transactions, the amount of which shall be
set forth and reasonably documented in the notice of such termination (the
"EXPENSE REIMBURSEMENT"), payable by wire transfer of immediately available
funds to an account designated by Parent; provided that the aggregate amount of
the Expense Reimbursement shall not exceed $3,000,000.
(d) Subject to Section 9.02(e), if as of the Outside Date the
conditions set forth in Sections 8.03(a) and 8.03(b) have been satisfied (and
the Company has delivered to Parent the certificate described in Section 8.03(d)
confirming the satisfaction of such conditions as of the Outside Date) and
either:
(i) the Company, on or after the Outside Date, terminates
this Agreement pursuant to Section 9.01(e)(ii) as a result of the failure of the
conditions set forth in Section 8.01(b) to have been satisfied; or
(ii) Parent, on or after the Outside Date, terminates
this Agreement pursuant to Section 9.01(d)(iii) as a result of the failure of
the conditions set forth in Section 8.01(b) or Section 8.03(c) to have been
satisfied;
then Parent will pay to the Company, within three
Business Days following the delivery of notice of such termination, a
A-43
termination fee equal to $5,000,000 (the "PARENT TERMINATION FEE"), payable by
wire transfer of immediately available funds to an account designated by the
Company.
(e) Notwithstanding Section 9.02(d)(i), if Parent, at any time
prior to the termination of this Agreement by the Company, delivers written
notice to the Company of Parent's election, in its sole and absolute discretion,
to waive satisfaction of the conditions set forth in Section 8.01(b) and Section
8.03(c) and proceed with the Closing, then the Company shall continue to be
entitled to terminate this Agreement on or after the Outside Date pursuant to
Section 9.01(e)(ii) as a result of the failure of the conditions set forth in
Section 8.01(b) to have been satisfied, but the Company shall not be entitled to
receive the Parent Termination Fee if it exercises such termination right.
(f) The parties acknowledge that the agreements contained in
this Section 9.02 are an integral part of the Transactions and that, without
these agreements, the parties would not enter into this Agreement. Each party
accordingly agrees that in the event it fails to pay any amount when due under
this Section 9.02, it shall in addition to the payment of such amount also pay
to the other party all of the costs and expenses (including reasonable
attorneys' fees and expenses) incurred in the enforcement of the other party's
rights under this Section 9.02, together with interest on such amount at a rate
per annum equal to the prime rate as quoted from time to time by JPMorgan Chase
Bank, N.A., plus three percentage points, payable from the date upon which such
payment was due, to and including the date of payment. Provided that a party is
not in breach of its obligations under this Section 9.02, each of the parties
hereto acknowledges that (i) all amounts payable under this Section 9.02, if
any, shall constitute liquidated damages in lieu of any actual damages for
termination of this Agreement and (ii) that upon the payment of the amounts
payable under this Section 9.02, if any, the paying party and its Affiliates and
Representatives shall be relieved from any and all liabilities for any breach or
termination of this Agreement.
Section 9.03 Amendment. This Agreement may be amended by the
parties at any time whether before or after receipt of the Company Stockholder
Approval and prior to the Effective Time; provided that after receipt of the
Company Stockholder Approval, there shall be made no amendment that by Law
requires further approval by the stockholders of the Company without the further
approval of such stockholders. This Agreement may not be amended except by an
instrument in writing signed on behalf of each of the parties.
Section 9.04 Extension; Waiver. At any time prior to the
Effective Time, the parties may (a) extend the time for the performance of any
of the obligations or other acts of the other parties, (b) waive any
inaccuracies in the representations and warranties contained in this Agreement
or in any document delivered pursuant to this Agreement or (c) subject to the
proviso of Section 9.03, waive compliance with any of the agreements or
conditions contained in this Agreement. Any agreement on the part of a party to
any such extension or waiver shall be valid only if set forth in an instrument
in writing signed on behalf of such party. The failure of any party to this
Agreement to assert any of its rights under this Agreement or otherwise shall
not constitute a waiver of such rights.
A-44
ARTICLE X
General Provisions
------------------
Section 10.01 Non-Survival of Representations, Warranties and
Agreements. None of the representations, warranties, covenants and agreements in
this Agreement (other than the covenants contained in Section 5.08, the last
sentence of Section 7.02 and in Sections 7.04, 7.05, 7.06, 9.02 and this Article
X) or in any instrument delivered pursuant to this Agreement, including any
rights arising out of the breach of such representations, warranties, covenants
and agreements, shall survive the Effective Time. This Section 10.01 shall not
limit any covenant or agreement of the parties which by its terms contemplates
performance after the Effective Time.
Section 10.02 Notices. All notices and other communications
hereunder shall be in writing and shall be deemed duly given (a) on the date of
delivery if delivered personally, or by facsimile, upon confirmation of receipt,
(b) on the first Business Day following the date of dispatch if delivered by a
recognized next-day courier service, or (c) on the fifth Business Day following
the date of mailing if delivered by registered or certified mail, return receipt
requested, postage prepaid. All notices hereunder shall be delivered as set
forth below, or pursuant to such other instructions as may be designated in
writing by the party to receive such notice.
(a) if to Parent or Sub, to
Gardner Denver, Inc.
1800 Gardner Expressway
Quincy, Illinois 62305
Attention: Corporate Secretary
with a copy to:
Baker & McKenzie LLP
One Prudential Plaza, Suite 3500
130 East Randolph Drive
Chicago, Illinois 60601
Attention: Dieter A. Schmitz
Craig A. Roeder
(b) if to the Company, to
Thomas Industries Inc.
Suite 300
4360 Brownsboro Road
Louisville, Kentucky 40207
Attention: President
A-45
with a copy to:
McDermott Will & Emery LLP
227 West Monroe, Suite 4700
Chicago, Illinois 60606
Attention: Michael R. Fayhee, P.C.
John P. Tamisiea
Section 10.03 Interpretation; Disclosure Letters. When a
reference is made in this Agreement to a Section, such reference shall be to a
Section of this Agreement unless otherwise indicated. The table of contents and
headings contained in this Agreement are for reference purposes only and shall
not affect in any way the meaning or interpretation of this Agreement. Each
party hereto has participated in the drafting of this Agreement, which each
party acknowledges and agrees is the result of extensive negotiations among the
parties. Whenever the words "include", "includes" or "including" are used in
this Agreement, they shall be deemed to be followed by the words "without
limitation". The phrase "made available" in this Agreement shall mean that the
information referred to has been made available by the party to whom such
information is to be made available. The phrases "herein," "hereof," "hereunder"
and words of similar import shall be deemed to refer to this Agreement as a
whole, including the Exhibits and Schedules hereto, and not to any particular
provision of this Agreement. The word "or" shall be inclusive and not exclusive.
Any pronoun shall include the corresponding masculine, feminine and neuter
forms. The phrases "known" or "knowledge" mean, with respect to the Company and
the Company Subsidiaries, the actual knowledge of the officers of the Company
and the Company Subsidiaries identified on Section 10.03 of the Company
Disclosure Letter. The Company Disclosure Letter shall be organized in numbered
sections corresponding to the sections of this Agreement. Any matter disclosed
in any section of the Company Disclosure Letter shall be deemed disclosed for
all purposes and all sections of the Company Disclosure Letter provided that the
relevance of such matter to such other sections would be reasonably apparent to
a reasonable Person.
Section 10.04 Severability. If any term or other provision of
this Agreement is invalid, illegal or incapable of being enforced by any Law, or
public policy, all other terms, conditions and provisions of this Agreement
shall nevertheless remain in full force and effect so long as the economic or
legal substance of the Transactions is not affected in any manner materially
adverse to any party. Upon such determination that any term or other provision
is invalid, illegal or incapable of being enforced, the parties hereto shall
negotiate in good faith to modify this Agreement so as to effect the original
intent of the parties as closely as possible in an acceptable manner to the end
that the Transactions are fulfilled to the fullest extent possible.
Section 10.05 Counterparts. This Agreement may be executed in
one or more counterparts, all of which shall be considered one and the same
agreement and shall become effective when one or more counterparts have been
signed by each of the parties and delivered to the other parties.
A-46
Section 10.06 Entire Agreement; No Third-Party Beneficiaries.
This Agreement, taken together with the Company Disclosure Letter, the
Confidentiality Agreement, any other written agreements executed by the parties
on or after the date of this Agreement and the certificates and documents
contemplated by this Agreement, (a) constitute the entire agreement, and
supersede all prior agreements and understandings, both written and oral, among
the parties with respect to the Merger and the other Transactions and (b) except
for the provisions of Sections 7.04 and 7.05, are not intended to confer upon
any Person other than the parties any rights or remedies.
Section 10.07 Governing Law. This Agreement shall be governed
by, and construed in accordance with, the Laws of the State of Delaware,
regardless of the Laws that might otherwise govern under applicable principles
of conflicts of laws thereof.
Section 10.08 Assignment. Neither this Agreement nor any of
the rights, interests or obligations under this Agreement shall be assigned, in
whole or in part, by operation of law or otherwise by any of the parties without
the prior written consent of the other parties. Any purported assignment without
such consent shall be void. Subject to the preceding sentences, this Agreement
will be binding upon, inure to the benefit of, and be enforceable by, the
parties and their respective successors and assigns.
Section 10.09 Enforcement; Jurisdiction; WAIVER OF JURY TRIAL.
The parties agree that irreparable damage would occur in the event that any of
the provisions of this Agreement were not performed in accordance with their
specific terms or were otherwise breached. It is accordingly agreed that the
parties shall be entitled to an injunction or injunctions to prevent breaches of
this Agreement and to enforce specifically the terms and provisions of this
Agreement in any Federal court located in the State of Delaware or in any
Delaware state court, this being in addition to any other remedy to which they
are entitled at law or in equity. In addition, each of the parties hereto (a)
consents to submit itself to the personal jurisdiction of any Federal court
located in the State of Delaware or any Delaware state court in the event any
dispute arises out of this Agreement or any Transaction, (b) agrees that it will
not attempt to deny or defeat such personal jurisdiction by motion or other
request for leave from any such court, (c) agrees that it will not bring any
action relating to this Agreement or any Transaction in any court other than any
Federal court sitting in the State of Delaware or any Delaware state court and
(d) waives any right to trial by jury with respect to any action related to or
arising out of this Agreement or any Transaction.
[SIGNATURE PAGE FOLLOWS]
A-47
IN WITNESS WHEREOF, Parent, Sub and the Company have duly
executed this Agreement, all as of the date first written above.
GARDNER DENVER, INC.
By: /s/ Ross J. Centanni
--------------------------------------
Name: Ross J. Centanni
Title: Chief Executive Officer
PT ACQUISITION CORPORATION
By: /s/ Tracy Pagliara
--------------------------------------
Name: Tracy Pagliara
Title: Vice President and Secretary
THOMAS INDUSTRIES INC.
By: /s/ Timothy C. Brown
--------------------------------------
Name: Timothy C. Brown
Title: Chief Executive Officer
A-48
EXHIBIT A
---------
RESTATED CERTIFICATE OF INCORPORATION
OF
THOMAS INDUSTRIES INC.
================================================================================
The original Certificate of Incorporation of Thomas Industries Inc. was
filed with the Secretary of State of Delaware on December 28, 1928, under the
name The Electric Sprayit Company. The following Restated Certificate of
Incorporation restates, integrates and further amends the provisions of the
corporation's Certificate of Incorporation, and all amendments thereto.
ARTICLE 1
The name of the corporation is:
Thomas Industries Inc.
ARTICLE 2
---------
The address of the corporation's registered office in the State of
Delaware is 2711 Centerville Road, Suite 400, in the City of Wilmington, County
of New Castle. The name of the corporation's registered agent at such address is
Corporation Service Company.
ARTICLE 3
---------
The nature of the business or the objects or purposes to be conducted
or promoted by the corporation are to engage in any capacity in any lawful act
or activity for which corporations may be organized under the General
Corporation Law of the State of Delaware as now in force or as hereafter amended
and to possess, exercise and enjoy all the powers, rights and privileges granted
by the General Corporation Law of the State of Delaware, together with any
lawful powers, rights and privileges incidental thereto.
ARTICLE 4
---------
The total number of shares of capital stock which the Corporation shall
have authority to issue is 10,000 shares, all of which shall be common stock
having $0.01 par value per share.
ARTICLE 5
---------
The corporation shall have perpetual existence.
-2-
ARTICLE 6
---------
In furtherance and not in limitation of the powers conferred by
statute, the board of directors is expressly authorized to adopt, amend or
repeal the bylaws of the corporation; provided, however, that such authorization
shall not divest the stockholders of the power or limit the power of the
stockholders to adopt, amend or repeal the bylaws of the corporation.
ARTICLE 7
---------
Meetings of stockholders may be held within or without the State of
Delaware, as the bylaws of the corporation may provide. The books of the
corporation may be kept outside the State of Delaware at such place or places as
may be designated from time to time by the board of directors or in the bylaws
of the corporation. Election of directors need not be by written ballot unless
the bylaws of the corporation so provide.
ARTICLE 8
---------
The corporation shall have the power to indemnify its directors,
officers, employees or agents to the full extent permitted by the General
Corporation Law of the State of Delaware as now in force or hereafter amended.
ARTICLE 9
---------
A Director of this corporation shall not be personally liable to the
corporation or its shareholders for monetary damages for breach of fiduciary
duty as a director, except that this Article 9 shall not eliminate or limit a
Director's liability (i) for any breach of the Director's duty of loyalty to the
corporation or its shareholders, (ii) for acts or omissions not in good faith or
which involve intentional misconduct or a knowing violation of law, (iii) under
Section 174 or the Delaware General Corporation Law, or (iv) for any transaction
from which the Director derived an improper personal benefit. If the Delaware
General Corporation Law is amended after approval by the shareholders of this
Article 9 to authorize corporate action further eliminating or limiting the
personal liability of directors, then the liability of a Director of the
corporation shall be eliminated or limited to the fullest extent permitted by
the Delaware General Corporation Law, as so amended from time to time.
Any repeal or modification of this Article 9 shall not increase the
personal liability of any Director of this corporation for any act or occurrence
taking place prior to such repeal or modification, or otherwise adversely affect
any right or protection of a Director of the corporation existing at the tine of
such repeal or modification.
The provisions of this Article 9 shall not be deemed to limit or
preclude indemnification of a Director by the corporation for any liability of a
Director which has not been eliminated by the provisions of this Article 9.
-3-
ARTICLE 10
----------
Whenever a compromise or arrangement is proposed between this
corporation and its creditors or any class of them and/or between this
corporation and its stockholders or any class of them, any court of equitable
jurisdiction within the State of Delaware may, on the application in a summary
way of this corporation or of any creditor or stockholder thereof or on the
application of any receiver or receivers appointed for this corporation under
the provisions of section 291 of Title 8 of the Delaware Code or on the
application of trustees in dissolution or of any receiver or receivers appointed
for this corporation under the provisions of section 279 of Title 8 of the
Delaware Code, order a meeting of the creditors or class of creditors and/or of
the stockholders or class of stockholders of this corporation, as the case may
be, to be summoned in such manner as the said court directs. If a majority in
number representing three-fourths in value of the creditors or class of
creditors and/or of the stockholders or class of stockholders of this
corporation, as the case may be, agree to any compromise or arrangement and to
any reorganization of this corporation as consequence of such compromise or
arrangement, the said compromise or arrangement and the said reorganization
shall, if sanctioned by the court to which the said application has been made,
be binding on all the creditors or class of creditors, and/or on all the
stockholders or class of stockholders, of this corporation, as the case may be,
and also on this corporation.
ARTICLE 11
----------
The corporation reserves the right to amend, alter, change or repeal
any provision contained in this certificate of incorporation in the manner now
or hereafter prescribed by the laws of the State of Delaware, and all rights and
powers conferred upon stockholders herein are granted subject to this
reservation.
APPENDIX B
DELAWARE GENERAL CORPORATION LAW
SECTION 262-APPRAISAL RIGHTS
Section 262 of the General Corporation Law of the State of Delaware
262 APPRAISAL RIGHTS.
(a) Any stockholder of a corporation of this State who holds shares of
stock on the date of the making of a demand pursuant to subsection (d) of this
section with respect to such shares, who continuously holds such shares through
the effective date of the merger or consolidation, who has otherwise complied
with subsection (d) of this section and who has neither voted in favor of the
merger or consolidation nor consented thereto in writing pursuant to ss.228 of
this title shall be entitled to an appraisal by the Court of Chancery of the
fair value of the stockholder's shares of stock under the circumstances
described in subsections (b) and (c) of this section. As used in this section,
the word "stockholder" means a holder of record of stock in a stock corporation
and also a member of record of a nonstock corporation; the words "stock" and
"share" mean and include what is ordinarily meant by those words and also
membership or membership interest of a member of a nonstock corporation; and the
words "depository receipt" mean a receipt or other instrument issued by a
depository representing an interest in one or more shares, or fractions thereof,
solely of stock of a corporation, which stock is deposited with the depository.
(b) Appraisal rights shall be available for the shares of any class or
series of stock of a constituent corporation in a merger or consolidation to be
effected pursuant to ss.251 (other than a merger effected pursuant to ss.251(g)
of this title), ss.252, ss.254, ss.257, ss.258, ss.263 or ss.264 of this title:
(1) Provided, however, that no appraisal rights under this section
shall be available for the shares of any class or series of stock, which
stock, or depository receipts in respect thereof, at the record date fixed
to determine the stockholders entitled to receive notice of and to vote at
the meeting of stockholders to act upon the agreement of merger or
consolidation, were either (i) listed on a national securities exchange or
designated as a national market system security on an interdealer quotation
system by the National Association of Securities Dealers, Inc. or (ii) held
of record by more than 2,000 holders; and further provided that no
appraisal rights shall be available for any shares of stock of the
constituent corporation surviving a merger if the merger did not require
for its approval the vote of the stockholders of the surviving corporation
as provided in subsection (f) of ss.251 of this title.
(2) Notwithstanding paragraph (1) of this subsection, appraisal rights
under this section shall be available for the shares of any class or series
of stock of a constituent corporation if the holders thereof are required
by the terms of an agreement of merger or consolidation pursuant to
ss.ss.251, 252, 254, 257, 258, 263 and 264 of this title to accept for such
stock anything except:
a. Shares of stock of the corporation surviving or resulting from
such merger or consolidation, or depository receipts in respect
thereof;
b. Shares of stock of any other corporation, or depository
receipts in respect thereof, which shares of stock (or depository
receipts in respect thereof) or depository receipts at the effective
B-1
date of the merger or consolidation will be either listed on a
national securities exchange or designated as a national market system
security on an interdealer quotation system by the National
Association of Securities Dealers, Inc. or held of record by more than
2,000 holders;
c. Cash in lieu of fractional shares or fractional depository
receipts described in the foregoing subparagraphs a. and b. of this
paragraph; or
d. Any combination of the shares of stock, depository receipts
and cash in lieu of fractional shares or fractional depository
receipts described in the foregoing subparagraphs a., b. and c. of
this paragraph.
(3) In the event all of the stock of a subsidiary Delaware corporation
party to a merger effected under ss.253 of this title is not owned by the
parent corporation immediately prior to the merger, appraisal rights shall
be available for the shares of the subsidiary Delaware corporation.
(c) Any corporation may provide in its certificate of incorporation that
appraisal rights under this section shall be available for the shares of any
class or series of its stock as a result of an amendment to its certificate of
incorporation, any merger or consolidation in which the corporation is a
constituent corporation or the sale of all or substantially all of the assets of
the corporation. If the certificate of incorporation contains such a provision,
the procedures of this section, including those set forth in subsections (d) and
(e) of this section, shall apply as nearly as is practicable.
(d) Appraisal rights shall be perfected as follows:
(1) If a proposed merger or consolidation for which appraisal rights
are provided under this section is to be submitted for approval at a
meeting of stockholders, the corporation, not less than 20 days prior to
the meeting, shall notify each of its stockholders who was such on the
record date for such meeting with respect to shares for which appraisal
rights are available pursuant to subsection (b) or (c) hereof that
appraisal rights are available for any or all of the shares of the
constituent corporations, and shall include in such notice a copy of this
section. Each stockholder electing to demand the appraisal of such
stockholder's shares shall deliver to the corporation, before the taking of
the vote on the merger or consolidation, a written demand for appraisal of
such stockholder's shares. Such demand will be sufficient if it reasonably
informs the corporation of the identity of the stockholder and that the
stockholder intends thereby to demand the appraisal of such stockholder's
shares. A proxy or vote against the merger or consolidation shall not
constitute such a demand. A stockholder electing to take such action must
do so by a separate written demand as herein provided. Within 10 days after
the effective date of such merger or consolidation, the surviving or
resulting corporation shall notify each stockholder of each constituent
corporation who has complied with this subsection and has not voted in
favor of or consented to the merger or consolidation of the date that the
merger or consolidation has become effective; or
(2) 1 If the merger or consolidation was approved pursuant to ss.228
or ss.253 of this title, then, either a constituent corporation before the
effective date of the merger or consolidation, or the surviving or
resulting corporation within ten days thereafter, shall notify each of the
holders of any class or series of stock of such constituent corporation who
are entitled to appraisal rights of the approval of the merger or
consolidation and that appraisal rights are available for any or all shares
of such class or series of stock of such constituent corporation, and shall
include in such notice a copy of this section. Such notice may, and, if
given on or after the effective date of the merger or consolidation, shall,
B-2
also notify such stockholders of the effective date of the merger or
consolidation. Any stockholder entitled to appraisal rights may, within 20
days after the date of mailing of such notice, demand in writing from the
surviving or resulting corporation the appraisal of such holder's shares.
Such demand will be sufficient if it reasonably informs the corporation of
the identity of the stockholder and that the stockholder intends thereby to
demand the appraisal of such holder's shares. If such notice did not notify
stockholders of the effective date of the merger or consolidation, either
(i) each such constituent corporation shall send a second notice before the
effective date of the merger or consolidation notifying each of the holders
of any class or series of stock of such constituent corporation that are
entitled to appraisal rights of the effective date of the merger or
consolidation or (ii) the surviving or resulting corporation shall send
such a second notice to all such holders on or within 10 days after such
effective date; provided, however, that if such second notice is sent more
than 20 days following the sending of the first notice, such second notice
need only be sent to each stockholder who is entitled to appraisal rights
and who has demanded appraisal of such holder's shares in accordance with
this subsection. An affidavit of the secretary or assistant secretary or of
the transfer agent of the corporation that is required to give either
notice that such notice has been given shall, in the absence of fraud, be
prima facie evidence of the facts stated therein. For purposes of
determining the stockholders entitled to receive either notice, each
constituent corporation may fix, in advance, a record date that shall be
not more than 10 days prior to the date the notice is given, provided, that
if the notice is given on or after the effective date of the merger or
consolidation, the record date shall be such effective date. If no record
date is fixed and the notice is given prior to the effective date, the
record date shall be the close of business on the day next preceding the
day on which the notice is given.
(e) Within 120 days after the effective date of the merger or
consolidation, the surviving or resulting corporation or any stockholder who has
complied with subsections (a) and (d) hereof and who is otherwise entitled to
appraisal rights, may file a petition in the Court of Chancery demanding a
determination of the value of the stock of all such stockholders.
Notwithstanding the foregoing, at any time within 60 days after the effective
date of the merger or consolidation, any stockholder shall have the right to
withdraw such stockholder's demand for appraisal and to accept the terms offered
upon the merger or consolidation. Within 120 days after the effective date of
the merger or consolidation, any stockholder who has complied with the
requirements of subsections (a) and (d) hereof, upon written request, shall be
entitled to receive from the corporation surviving the merger or resulting from
the consolidation a statement setting forth the aggregate number of shares not
voted in favor of the merger or consolidation and with respect to which demands
for appraisal have been received and the aggregate number of holders of such
shares. Such written statement shall be mailed to the stockholder within 10 days
after such stockholder's written request for such a statement is received by the
surviving or resulting corporation or within 10 days after expiration of the
period for delivery of demands for appraisal under subsection (d) hereof,
whichever is later.
(f) Upon the filing of any such petition by a stockholder, service of a
copy thereof shall be made upon the surviving or resulting corporation, which
shall within 20 days after such service file in the office of the Register in
Chancery in which the petition was filed a duly verified list containing the
names and addresses of all stockholders who have demanded payment for their
shares and with whom agreements as to the value of their shares have not been
reached by the surviving or resulting corporation. If the petition shall be
filed by the surviving or resulting corporation, the petition shall be
accompanied by such a duly verified list. The Register in Chancery, if so
ordered by the Court, shall give notice of the time and place fixed for the
hearing of such petition by registered or certified mail to the surviving or
resulting corporation and to the stockholders shown on the list at the addresses
therein stated. Such notice shall also be given by 1 or more publications at
least 1 week before the day of the hearing, in a newspaper of general
circulation published in the City of Wilmington, Delaware or such publication as
the Court deems advisable. The forms of the notices by mail and by publication
B-3
shall be approved by the Court, and the costs thereof shall be borne by the
surviving or resulting corporation.
(g) At the hearing on such petition, the Court shall determine the
stockholders who have complied with this section and who have become entitled to
appraisal rights. The Court may require the stockholders who have demanded an
appraisal for their shares and who hold stock represented by certificates to
submit their certificates of stock to the Register in Chancery for notation
thereon of the pendency of the appraisal proceedings; and if any stockholder
fails to comply with such direction, the Court may dismiss the proceedings as to
such stockholder.
(h) After determining the stockholders entitled to an appraisal, the Court
shall appraise the shares, determining their fair value exclusive of any element
of value arising from the accomplishment or expectation of the merger or
consolidation, together with a fair rate of interest, if any, to be paid upon
the amount determined to be the fair value. In determining such fair value, the
Court shall take into account all relevant factors. In determining the fair rate
of interest, the Court may consider all relevant factors, including the rate of
interest which the surviving or resulting corporation would have had to pay to
borrow money during the pendency of the proceeding. Upon application by the
surviving or resulting corporation or by any stockholder entitled to participate
in the appraisal proceeding, the Court may, in its discretion, permit discovery
or other pretrial proceedings and may proceed to trial upon the appraisal prior
to the final determination of the stockholder entitled to an appraisal. Any
stockholder whose name appears on the list filed by the surviving or resulting
corporation pursuant to subsection (f) of this section and who has submitted
such stockholder's certificates of stock to the Register in Chancery, if such is
required, may participate fully in all proceedings until it is finally
determined that such stockholder is not entitled to appraisal rights under this
section.
(i) The Court shall direct the payment of the fair value of the shares,
together with interest, if any, by the surviving or resulting corporation to the
stockholders entitled thereto. Interest may be simple or compound, as the Court
may direct. Payment shall be so made to each such stockholder, in the case of
holders of uncertificated stock forthwith, and the case of holders of shares
represented by certificates upon the surrender to the corporation of the
certificates representing such stock. The Court's decree may be enforced as
other decrees in the Court of Chancery may be enforced, whether such surviving
or resulting corporation be a corporation of this State or of any state.
(j) The costs of the proceeding may be determined by the Court and taxed
upon the parties as the Court deems equitable in the circumstances. Upon
application of a stockholder, the Court may order all or a portion of the
expenses incurred by any stockholder in connection with the appraisal
proceeding, including, without limitation, reasonable attorney's fees and the
fees and expenses of experts, to be charged pro rata against the value of all
the shares entitled to an appraisal.
(k) From and after the effective date of the merger or consolidation, no
stockholder who has demanded appraisal rights as provided in subsection (d) of
this section shall be entitled to vote such stock for any purpose or to receive
payment of dividends or other distributions on the stock (except dividends or
other distributions payable to stockholders of record at a date which is prior
to the effective date of the merger or consolidation); provided, however, that
if no petition for an appraisal shall be filed within the time provided in
subsection (e) of this section, or if such stockholder shall deliver to the
surviving or resulting corporation a written withdrawal of such stockholder's
demand for an appraisal and an acceptance of the merger or consolidation, either
within 60 days after the effective date of the merger or consolidation as
provided in subsection (e) of this section or thereafter with the written
approval of the corporation, then the right of such stockholder to an appraisal
shall cease. Notwithstanding the foregoing, no appraisal proceeding in the Court
of Chancery shall be dismissed as to any stockholder without the approval of the
Court, and such approval may be conditioned upon such terms as the Court deems
just.
B-4
(l) The shares of the surviving or resulting corporation to which the
shares of such objecting stockholders would have been converted had they
assented to the merger or consolidation shall have the status of authorized and
unissued shares of the surviving or resulting corporation. (Last amended by Ch.
82, L. '01, eff. 7-1-01.)
B-5
APPENDIX C
OPINION OF ROBERT W. BAIRD & CO. INCORPORATED
March 8, 2005
Board of Directors
Thomas Industries Inc.
4360 Brownsboro Road
Suite 300
Louisville, KY 40207
Members of the Board of Directors:
Thomas Industries Inc. (the "Company") proposes to enter into an Agreement and
Plan of Merger (the "Agreement") with Gardner Denver, Inc. (the "Buyer") and a
wholly-owned subsidiary of the Buyer ("PT Acquisition Corporation"), pursuant to
which PT Acquisition Corporation shall be merged with and into the Company (the
"Merger") and each issued and outstanding share of common stock, par value $1.00
per share, of the Company (the "Common Stock") shall be converted into the right
to receive $40.00 per share in cash (the "Consideration") subject to the terms
and conditions of the Agreement.
In connection with your consideration of the Merger, you have requested our
opinion as to the fairness, from a financial point of view, to the holders of
the Common Stock (other than the Buyer and its affiliates) of the Consideration
to be received by the holders of the Common Stock (other than the Buyer and its
affiliates) in the Merger.
As part of our investment banking business, we are engaged in the evaluation of
businesses and their securities in connection with mergers and acquisitions,
negotiated underwritings, competitive biddings, secondary distributions of
listed and unlisted securities, private placements and valuations for estate,
corporate and other purposes.
In conducting our investigation and analyses and in arriving at our opinion
herein, we have reviewed such information and have taken into account such
financial and economic factors, investment banking procedures and considerations
as we have deemed relevant under the circumstances. In that connection, we have,
among other things: (i) reviewed certain internal information, primarily
financial in nature, including financial forecasts (the "Forecasts"), concerning
the business and operations of the Company furnished to us for purposes of our
analysis; (ii) reviewed publicly available information including, but not
limited, to the Company's recent filings with the Securities and Exchange
Commission and equity analyst research reports covering the Company prepared by
our firm; (iii) reviewed the draft Agreement in the form presented to the
Company's Board of Directors; (iv) compared the financial position and operating
results of the Company with those of other publicly traded companies we deemed
relevant; (v) compared the historical market prices and trading activity of the
Common Stock with those of other publicly traded companies we deemed relevant
and considered the market trading multiples of such companies; (vi) compared the
proposed financial terms of the Merger with the financial terms of other
business combinations we deemed relevant; and (vii) considered the present
values of the forecasted cash flows of the Company. We have held discussions
with members of the Company's senior management concerning the Company's
historical and current financial condition and operating results, as well as the
C-1
future prospects of the Company. As a part of our engagement, we were requested
to and did solicit third party indications of interest in acquiring the Company.
We have also considered such other information, financial studies, analyses and
investigations and financial, economic and market criteria which we deemed
relevant for the preparation of this opinion.
In arriving at our opinion, we have assumed and relied upon the accuracy and
completeness of all of the financial and other information that was publicly
available or provided to us by or on behalf of the Company. We have not been
engaged to independently verify, and we have not assumed any responsibility to
verify, any such information, and we have assumed that the Company is not aware
of any information prepared by it or its advisors that might be material to our
opinion that has not been provided to us. We have assumed and relied upon in
preparation of this opinion that: (i) all material assets and liabilities
(contingent or otherwise, known or unknown) of the Company are as set forth in
its financial statements; (ii) the financial statements of the Company provided
to us present fairly the results of operations, cash flows and financial
condition of the Company for the periods indicated and were prepared in
conformity with U.S. generally accepted accounting principles consistently
applied; (iii) the Forecasts for the Company were reasonably prepared on bases
reflecting the best available estimates and good faith judgments of the
Company's senior management as to the future performance of the Company; (iv)
the Merger will be consummated in accordance with the terms and conditions of
the draft Agreement without any amendment thereto and without waiver by any
party of any of the conditions to their respective obligations thereunder; (v)
in all respects material to our analysis, the representations and warranties
contained in the draft Agreement are true and correct and that each party will
perform all of the covenants and agreements required to be performed by it under
such Agreement; and (vi) all material corporate, governmental, regulatory or
other consents and approvals required to consummate the Merger have been or will
be obtained. We have relied as to all legal matters regarding the Merger on the
advice of counsel of the Company. In conducting our review, we have not
undertaken nor obtained an independent evaluation or appraisal of any of the
assets or liabilities (contingent or otherwise) of the Company nor have we made
a physical inspection of the properties or facilities of the Company. In each
case, we have made the assumptions above with your consent.
Our opinion necessarily is based upon economic, monetary and market conditions
as they exist and can be evaluated on the date hereof, and our opinion does not
predict or take into account any changes which may occur, or information which
may become available, after the date hereof.
Our opinion has been prepared at the request and for the information of the
Board of Directors of the Company, and may not be quoted or referred to, in
whole or in part, in any registration statement, prospectus or proxy statement,
in any other document used in connection with the offering or sale of securities
or in any other publicly available document or otherwise relied upon, used for
any other purpose or disclosed to any other party without our prior written
consent; provided, however, that this letter may be reproduced in full in the
proxy statement to be provided to the Company's shareholders in connection with
the Merger. Any reference to us or our opinion in the proxy statement or any
other publicly available document, however, shall be subject to our prior review
and approval. This opinion does not address the relative merits of: (i) the
Merger, the draft Agreement or any other agreements or other matters provided
for or contemplated by the draft Agreement; (ii) any other transactions that may
be or might have been available as an alternative to the Merger; or (iii) the
Merger compared to any other potential alternative transactions or business
strategies considered by the Company's Board of Directors and, accordingly, we
have relied upon our discussions with the senior management of the Company with
respect to the availability and consequences of any alternatives to the Merger.
This opinion does not constitute a recommendation to any shareholder of the
Company as to how any such shareholder should act with respect to the Merger.
We have acted as financial advisor to the Company in connection with the Merger
and will receive a fee for our services, a significant portion of which is
contingent upon the consummation of the Merger. We will also receive a fee for
rendering this opinion which is not contingent upon the consummation of the
Merger. In addition, the Company has agreed to indemnify us against certain
liabilities that may arise out of our engagement. In the past, we have provided
investment banking services to the Company and the Buyer for which we received
C-2
our customary compensation. We are a full service securities firm. As such, in
the ordinary course of our business, we may from time to time trade the
securities of the Company or the Buyer for our own account or the accounts of
our customers and, accordingly, may at any time hold long or short positions or
effect transactions in such securities. Our firm may also prepare equity analyst
research reports from time to time regarding the Company or the Buyer.
Based upon and subject to the foregoing, including the various assumptions and
limitations set forth herein, we are of the opinion that, as of the date hereof,
the Consideration to be received by the holders of the Common Stock (other than
the Buyer and its affiliates) in the Merger is fair, from a financial point of
view, to the holders of the Common Stock (other than the Buyer and its
affiliates).
Very truly yours,
ROBERT W. BAIRD & CO. INCORPORATED
C-3
--------------------------------------------------------------------------------
DETACH CARD HERE
--------------------------------------------------------------------------------
PROXY
THOMAS INDUSTRIES INC.
4360 BROWNSBORO ROAD, SUITE 300, LOUISVILLE, KENTUCKY 40207
SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
SPECIAL MEETING OF SHAREHOLDERS - [______], 2005
The undersigned hereby appoints Timothy C. Brown and Phillip J. Stuecker,
or either of them, as proxies, with full powers of substitution, to represent
and to vote the stock of the undersigned at the Special Meeting of Shareholders
of Thomas Industries Inc., to be held at the Hyatt Regency Hotel, 320 West
Jefferson Street, Louisville, Kentucky, on [Day], [Date], 2005, at [Time], and
at any postponements or adjournments thereof. THE BOARD OF DIRECTORS RECOMMENDS
A VOTE FOR APPROVAL AND ADOPTION OF THE MERGER AGREEMENT.
1. To approve and adopt the Agreement and Plan of FOR AGAINST ABSTAIN
Merger, dated as of March 8, 2005 (the "Merger / / / / / /
Agreement"), among Thomas Industries Inc.
("Thomas"), Gardner Denver, Inc. and PT
Acquisition Corporation ("PT Acquisition")
providing for the merger (the "Merger") of PT
Acquisition with and into Thomas, and to
authorize the Merger and the other transactions
contemplated by the Merger Agreement. If Thomas
shareholders approve and adopt the Merger
Agreement and the Merger is completed, each
share of Thomas common stock, other than those
held by persons exercising their appraisal
rights, will be automatically canceled and
converted into the right to receive $40.00 in
cash without interest.
IN THEIR DISCRETION, THE PROXIES ARE AUTHORIZED TO VOTE UPON SUCH OTHER
BUSINESS AS MAY PROPERLY COME BEFORE THE SPECIAL MEETING, INCLUDING TO VOTE TO
POSTPONE OR TO ADJOURN THE SPECIAL MEETING TO SOLICIT ADDITIONAL PROXIES IN THE
EVENT THAT THE NUMBER OF PROXIES SUFFICIENT TO APPROVE AND ADOPT THE MERGER
AGREEMENT HAS NOT BEEN RECEIVED BY THE DATE OF THE SPECIAL MEETING.
PLEASE MARK, SIGN ON THE REVERSE SIDE, DATE, AND
RETURN IN THE ENCLOSED ENVELOPE.
(Continued and to be signed on reverse side)
--------------------------------------------------------------------------------
DETACH CARD HERE
--------------------------------------------------------------------------------
(Continued from other side)
THIS PROXY IS REVOCABLE AND IT WILL NOT BE VOTED IF THE UNDERSIGNED IS PRESENT
AND VOTING IN PERSON. IF NO DIRECTION IS GIVEN WHEN THE DULY EXECUTED PROXY IS
RETURNED, THE SHARES WILL BE VOTED FOR THE PROPOSAL SET FORTH IN ITEM 1, AND
WITH REGARD TO OTHER MATTERS THAT MAY COME BEFORE THE MEETING OR ANY
POSTPONEMENT OR ADJOURNMENT THEREOF, IN THE DISCRETION OF THE PROXY HOLDERS AS
DESCRIBED IN THE PROXY STATEMENT.
Date , 2005
---------------------------------------
-------------------------------------------------
Signature(s)
-------------------------------------------------
Signature(s)
-------------------------------------------------
When signing as attorney, administrator, personal
representative, executor, custodian, trustee,
guardian, or corporate official, please give your
full title as such. When stock is held in the
name of more than one person, each such person
should sign the proxy.
--------------------------------------------------------------------------------