Tender-Offer Statement — Third-Party Tender Offer — Schedule 14D-1
Filing Table of Contents
Document/Exhibit Description Pages Size
1: SC 14D1 Tender-Offer Statement -- Third-Party Tender Offer 8 34K
2: EX-1 Exhibit (A)(1) 37 197K
9: EX-1 Exhibit (C)(1) 86 190K
3: EX-2 Exhibit (A)(2) 12 53K
10: EX-2 Exhibit (C)(2) 11 39K
4: EX-3 Exhibit (A)(3) 2 14K
11: EX-3 Exhibit (C)(3) 6 20K
5: EX-4 Exhibit (A)(4) 2 13K
6: EX-5 Exhibit (A)(5) 3 14K
7: EX-6 Exhibit (A)(6) 4± 16K
8: EX-7 Exhibit (A)(7) 1 7K
OFFER TO PURCHASE FOR CASH
ALL OUTSTANDING SHARES OF COMMON STOCK
OF
ELDEC CORPORATION
AT
$13 NET PER SHARE
BY
CRANE ACQUISITION CORP.
A WHOLLY OWNED SUBSIDIARY OF
CRANE CO.
----------
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY
TIME, ON MARCH 17, 1994, UNLESS THE OFFER IS EXTENDED.
------------------------
THE OFFER IS SUBJECT TO CERTAIN TERMS AND CONDITIONS CONTAINED IN THIS OFFER
TO PURCHASE. SEE THE INTRODUCTION AND SECTIONS 1, 14 AND 15.
------------------------
THE BOARD OF DIRECTORS OF ELDEC CORPORATION (THE "COMPANY") HAS UNANIMOUSLY
APPROVED THE OFFER AND THE MERGER REFERRED TO HEREIN, HAS DETERMINED THAT THE
OFFER AND THE MERGER ARE FAIR TO, AND IN THE BEST INTERESTS OF, THE STOCKHOLDERS
OF THE COMPANY AND RECOMMENDS THAT SUCH STOCKHOLDERS ACCEPT THE OFFER AND TENDER
THEIR SHARES PURSUANT TO THE OFFER.
------------------------
IMPORTANT
Any stockholder desiring to tender all or any portion of his or her Shares
should either (a) complete and sign the Letter of Transmittal (or a facsimile
thereof) in accordance with the instructions in the Letter of Transmittal and
mail or deliver it together with the certificate(s) representing tendered Shares
and any other required documents, to the Depositary or tender such Shares
pursuant to the procedure for book-entry transfer set forth in Section 3 or (b)
request his or her broker, dealer, commercial bank, trust company or other
nominee to effect the transaction for him or her. A stockholder whose Shares are
registered in the name of a broker, dealer, commercial bank, trust company or
other nominee must contact such broker, dealer, commercial bank, trust company
or other nominee if he or she desires to tender such Shares.
A stockholder who desires to tender his or her shares and whose certificates
representing such Shares are not immediately available or who cannot comply with
the procedures for book-entry transfer on a timely basis may tender such Shares
by following the procedures for guaranteed delivery set forth in Section 3.
Questions and requests for assistance may be directed to the Information
Agent at its address and telephone number set forth on the back cover of this
Offer to Purchase. Additional copies of this Offer to Purchase, the Letter of
Transmittal, the Notice of Guaranteed Delivery and other related materials may
be obtained from the Information Agent or from brokers, dealers, commercial
banks and trust companies.
------------------------
The Information Agent for the Offer is:
Beacon Hill Partners, Inc.
------------------------
February 17, 1994
TABLE OF CONTENTS
[Enlarge/Download Table]
Page
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INTRODUCTION.................................................................................................... 3
THE TENDER OFFER................................................................................................ 4
1. Terms of the Offer................................................................................... 4
2. Acceptance for Payment and Payment................................................................... 6
3. Procedures for Accepting the Offer and Tendering Shares.............................................. 7
4. Withdrawal Rights.................................................................................... 9
5. Certain Tax Consequences............................................................................. 10
6. Price Range of the Shares; Dividends................................................................. 11
7. Effect of the Offer on the Market for the Shares; NASDAQ Quotation; Exchange Act Registration; Margin
Regulations......................................................................................... 12
8. Certain Information Concerning the Company........................................................... 13
9. Certain Information Concerning the Purchaser and Crane............................................... 16
10. Background of the Offer; Contacts with the Company; The Merger Agreement; The Stock Purchase
Agreement; The Confidentiality Agreement; Statutory Requirements.................................... 19
11. Purpose of the Offer; Plans for the Company.......................................................... 27
12. Source and Amount of Funds........................................................................... 28
13. Dividends and Distributions.......................................................................... 28
14. Certain Conditions of the Offer...................................................................... 29
15. Certain Legal Matters; Required Regulatory Approvals................................................. 30
16. Certain Fees and Expenses............................................................................ 32
17. Miscellaneous........................................................................................ 33
Schedule I -- Directors and Executive Officers of Crane and the Purchaser
2
TO: ALL HOLDERS OF SHARES OF COMMON STOCK OF
ELDEC CORPORATION:
INTRODUCTION
Crane Acquisition Corp., a Washington corporation (the "Purchaser") and a
wholly owned subsidiary of Crane Co., a Delaware corporation ("Crane"), hereby
offers to purchase all outstanding shares of Common Stock, par value $0.05 per
share (the "Shares"), of ELDEC Corporation, a Washington corporation (the
"Company"), at a price of $13 per Share, net to the seller in cash, without
interest thereon (the "Offer Price"), upon the terms and subject to the
conditions set forth in this Offer to Purchase and in the related Letter of
Transmittal (which together constitute the "Offer").
THE OFFER TO PURCHASE AND THE RELATED LETTER OF TRANSMITTAL CONTAIN
IMPORTANT INFORMATION WHICH SHOULD BE READ BEFORE ANY DECISION IS MADE WITH
RESPECT TO THE OFFER.
Tendering stockholders will not be obligated to pay brokerage fees or
commissions or, except as set forth in Instruction 6 of the Letter of
Transmittal, stock transfer taxes on the purchase of Shares pursuant to the
Offer. The Purchaser will pay all charges and expenses of First Interstate Bank,
as Depositary (the "Depositary"), and Beacon Hill Partners, Inc., as Information
Agent (the "Information Agent"), incurred in connection with the Offer. See
Section 16.
THE BOARD OF DIRECTORS OF THE COMPANY HAS APPROVED UNANIMOUSLY THE OFFER AND
THE MERGER (AS DEFINED BELOW), HAS DETERMINED THAT THE OFFER AND THE MERGER ARE
FAIR TO, AND IN THE BEST INTERESTS OF, THE STOCKHOLDERS OF THE COMPANY AND
RECOMMENDS THAT SUCH STOCKHOLDERS ACCEPT THE OFFER AND TENDER THEIR SHARES
PURSUANT TO THE OFFER.
THE OFFER IS SUBJECT TO CERTAIN TERMS AND CONDITIONS CONTAINED IN THIS OFFER
TO PURCHASE. SEE SECTIONS 1, 14 and 15.
The Offer is being made pursuant to an Agreement for Merger and
Reorganization (the "Merger Agreement"), dated as of February 11, 1994, among
Crane, the Purchaser and the Company. The Merger Agreement provides, among other
things, that following the consummation of the Offer, subject to the terms and
conditions contained in the Merger Agreement and in accordance with the relevant
provisions of the Washington Business Corporation Act (the "WBCA"), the
Purchaser will be merged into the Company ("Merger") and the Company will be the
surviving corporation (the "Surviving Corporation"), and, on the effective date
of the Merger (the "Effective Date"), each outstanding Share (other than Shares
owned by Crane, any direct or indirect subsidiary of Crane or the Company and
Shares held by stockholders who perfect their appraisal rights under the WBCA)
will be converted into the right to receive an amount in cash equal to the price
per Share paid pursuant to the Offer (the "Merger Consideration").
Morgan Stanley & Co. Incorporated ("Morgan Stanley" or the "Financial
Advisor") has advised the Company's Board of Directors that the $13 per Share in
cash to be received by the holders of Shares in the Offer and the Merger is fair
from a financial point of view to such holders (the "Fairness Opinion"). A copy
of the Fairness Opinion is contained in the Company's
Solicitation/Recommendation Statement on Schedule 14D-9 (the "Schedule 14D-9")
to be filed by the Company with the Securities and Exchange Commission (the
"Commission" or the "SEC") in connection with the Offer and which is being
mailed to stockholders herewith. Stockholders are urged to read the Fairness
Opinion in its entirety for a description of the assumptions made, factors
considered and procedures followed by the Financial Advisor and also the
Schedule 14D-9 in its entirety, including Item 5 thereof, for a description of
the fees payable to the Financial Advisor for its services relating to the Offer
and the Merger, including the rendering of the Fairness Opinion.
The Company's Board of Directors has unanimously approved and adopted the
Merger Agreement and the Plan of Merger, rendering Section 23B.17.020 (the
"Washington Fair Price Statute")
3
and Section 23B.19.040 (the "Washington Moratorium Statute") inapplicable to the
Merger and to the Stock Purchase Agreement hereinafter described. After giving
effect to the Board's unanimous approval of the Merger Agreement, the
affirmative vote of the holders of at least 66 2/3% of the outstanding Shares is
the only approval required under the WBCA in order to give effect to the Merger.
See Section 10.
Furthermore, under the WBCA, if the Purchaser acquires at least 90% of the
outstanding Shares, the Purchaser would have the power to consummate the Merger
without a meeting or vote of the other stockholders of the Company pursuant to
the "short form" merger provisions of the WBCA. Under the WBCA as currently in
effect, the Purchaser believes that a "short form" merger would have to be
effected in the form of a merger of the Company into the Purchaser. Any such
merger would require an amendment to the Merger Agreement and may require the
consent of third parties under certain of the agreements to which the Company is
subject. See Section 10.
The Company has advised the Purchaser that, as of February 4, 1994 there
were 5,695,647 Shares outstanding. As of that date, 341,475 Shares were reserved
for issuance pursuant to the Company's Incentive Stock Option Plans (the "Option
Plans") and 250,910 shares were reserved for issuance pursuant to the Company's
Employee Stock Purchase Plan (the "Stock Purchase Plan"). The Purchaser has been
advised that the Company will terminate the Stock Purchase Plan prior to
consummation of the Offer. Based on the information supplied by the Company, the
Purchaser will need to purchase (pursuant to the Offer, the Stock Purchase
Agreement hereinafter described, or otherwise) at least 3,797,288 Shares
(assuming that no Shares are issued in addition to those outstanding on February
4, 1994 and assuming termination of the Stock Purchase Plan prior to
consummation of the Offer) or 3,967,570 Shares (on a fully-diluted basis) in
order to have sufficient voting power to approve the Merger without the
affirmative vote of any other stockholder of the Company and 5,126,082 Shares
(assuming no Shares are issued in addition to those outstanding on February 4,
1994 and assuming termination of the Stock Purchase Plan prior to consummation
of the Offer) or 5,351,901 Shares (on a fully diluted basis) in order to effect
the Merger as a "short form" merger without a meeting or vote of any other
stockholder of the Company. The Merger Agreement provides that immediately prior
to the consummation of the Offer, holders of then outstanding stock options
under the Option Plans will receive cash payments from the Company in settlement
of each such option. See Section 10. This may have the effect of reducing the
number of Shares issued upon exercise of options under the Option Plans.
Under a Stock Purchase Agreement (the "Stock Purchase Agreement") dated as
of February 11, 1994, among the individual shareholders and trusts described in
Schedule A thereto (the "Selling Stockholders"), Crane and the Purchaser,
Purchaser has agreed to purchase and the Selling Stockholders have agreed to
sell to Purchaser a total of 2,899,872 Shares (the "Subject Shares")
constituting approximately 51% of the Shares outstanding on February 4, 1994,
immediately following the acceptance for purchase and purchase of Shares
pursuant to the Offer, at the Merger Consideration. Also pursuant to the Stock
Purchase Agreement, if the Company's Board of Directors shall publicly withdraw
or modify in a manner adverse to Crane and Purchaser its recommendation of the
Offer, the Merger Agreement or the Merger, or recommend another acquisition
transaction, or shall have resolved to do any of the foregoing, then Purchaser
shall have the right to purchase the Subject Shares at $13 per share.
THE TENDER OFFER
1. TERMS OF THE OFFER. Upon the terms and subject to the conditions of the
Offer (including, if the Offer is extended or amended, the terms and conditions
of any such extension or amendment), the Purchaser will accept for payment and
thereby purchase all Shares validly tendered and not withdrawn in accordance
with the procedures set forth in Section 4 on or prior to the Expiration Date
(as hereinafter defined). The term "Expiration Date" means 12:00 Midnight, New
York City time, on March 17, 1994, unless and until the Purchaser, in its sole
discretion (but subject to the terms and
4
conditions in the Merger Agreement), shall have extended the period of time for
which the Offer is open, in which event the term "Expiration Date" shall mean
the latest time and date at which the Offer, as so extended by the Purchaser,
shall expire.
The Purchaser expressly reserves the right, at any time or from time to
time, and regardless of whether or not any of the events set forth in Section 14
herein shall have occurred or shall have been determined by the Purchaser to
have occurred, to extend the period of time during which the Offer is open for
not more than 12 business days beyond the initially scheduled Expiration Date,
and thereby delay acceptance for payment of, and the payment for, any Shares, by
giving oral or written notice of such extension to the Depositary. There can be
no assurance that the Purchaser will exercise its right to extend the Offer.
During any such extension, all Shares previously tendered and not withdrawn will
remain subject to the Offer. See Section 4. The Purchaser acknowledges (a) that
Rule 14e-1(c) under the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), requires the Purchaser to pay the consideration offered or
return the Shares tendered promptly after the termination or withdrawal of the
Offer and (b) that the Purchaser may not delay acceptance for payment of, or
payment for, any Shares upon the occurrence of any of the conditions specified
in Section 14 without extending the period of time during which the Offer is
open. If any condition to the Offer is not satisfied by the Expiration Date,
then the Purchaser reserves the right to (1) decline to purchase any of the
Shares tendered, terminate the Offer and return all tendered Shares to tendering
shareholders, (2) extend the Offer for up to 60 business days after the
initially scheduled Expiration Date if there is a reasonable basis to believe
that such condition could be satisfied within such 60 business day period and,
subject to withdrawal rights set forth in Section 4 herein, retain all tendered
Shares until the expiration of the Offer as extended, or (3) waive all of the
unsatisfied conditions (other than the condition relating to the expiration of
the HSR Act (as defined below)) and, subject to complying with applicable rules
and regulations of the SEC, purchase all Shares validly tendered and not
withdrawn. The Purchaser also reserves the right, at any time or from time to
time, and regardless of whether or not any of the events set forth in Section 14
herein shall have occurred or shall have been determined by the Purchaser to
have occurred, to amend the terms and conditions of the Offer, provided that no
change may be made which (i) decreases the Offer Price, (ii) changes the form of
the consideration to be paid in the Offer, (iii) reduces the number of Shares
tendered for in the Offer or (iv) imposes conditions to the Offer in addition to
those specified in Section 14 herein.
Any such extension, delay, termination, waiver or amendment will be followed
as promptly as practicable by public announcement thereof, and such announcement
in the case of an extension will be made no later than 9:00 A.M., New York City
time, on the next business day after the previously scheduled Expiration Date.
Without limiting the manner in which the Purchaser may choose to make any public
announcement, subject to applicable law (including Rules 14d-4(c) and 14d-6(d)
under the Exchange Act, which require that material changes be promptly
disseminated to holders of Shares), the Purchaser shall have no obligation to
publish, advertise or otherwise communicate any such public announcement other
than by issuing a release to the Dow Jones News Service.
If the Purchaser makes a material change in the terms of the Offer, or if it
waives a material condition of the Offer, the Purchaser will extend the Offer to
the extent required by Rules 14d-4(c) and 14d-6(d) under the Exchange Act. The
minimum period during which an offer must remain open following material changes
in the terms of the offer, other than a change in price or a change in any
dealer's soliciting fee, will depend upon the facts and circumstances, including
the materiality of the changes. With respect to a change in price or a change in
any dealer's soliciting fee, a minimum ten business day period from the date of
such change is generally required to allow for adequate dissemination to
stockholders. Accordingly, if prior to the Expiration Date, the Purchaser should
increase the consideration offered pursuant to the Offer, and if the Offer is
scheduled to expire at any time earlier than the period ending on the tenth
business day from and including the date that notice of such increase is first
published, sent or given to holders of Shares, the Offer will be extended at
least until
5
the expiration of such ten business day period. For purposes of the Offer, a
"business day" means any day other than a Saturday, Sunday or a federal holiday
and consists of the time period from 12:01 A.M. through 12:00 Midnight, New York
City time.
The Company has provided Purchaser, the Depositary and the Information Agent
with the Company's stockholder list and security position listings for the
purpose of disseminating the Offer to holders of Shares. This Offer to Purchase
and the related Letter of Transmittal will be mailed to record holders of shares
whose names appear on the Company's stockholder list and will be furnished, for
subsequent transmittal to beneficial owners of Shares, to brokers, dealers,
commercial banks, trust companies and similar persons whose names, or the names
of whose nominees, appear on the stockholder list or, if applicable, who are
listed as participants in a clearing agency's security position listing for
subsequent transmittal to beneficial Owners of Shares.
2. ACCEPTANCE FOR PAYMENT AND PAYMENT. Upon the terms and subject to the
conditions of the Offer (including, if the Offer is extended or amended, the
terms and conditions of the Offer as so extended or amended), the Purchaser will
purchase, by accepting for payment, and will pay for all Shares validly tendered
and not withdrawn (as permitted by Section 4) prior to the Expiration Date
promptly after the later to occur of (i) the Expiration Date and (ii) the
satisfaction or waiver of the conditions to the Offer set forth in Section 14.
In addition, subject to applicable rules of the Commission, the Purchaser
expressly reserves the right to delay acceptance for payment of, or payment for,
Shares pending receipt of any regulatory or governmental approvals specified in
Section 15.
The Purchaser and the Company will file with the Federal Trade Commission
(the "FTC") and the Antitrust Division of the Department of Justice (the
"Antitrust Division") Premerger Notification and Report Forms under the
Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (the "HSR
Act"), with respect to the acquisition of the Company. The waiting period under
the HSR Act applicable to the Purchaser's acquisition of the Company and the
Shares, including through the Offer and the Merger, will expire 15 days from the
date of such filing. See Section 15 for additional information regarding the HSR
Act and other antitrust considerations.
In all cases, payment for Shares purchased pursuant to the Offer will be
made only after timely receipt by the Depositary of (i) Share Certificates for
such Shares or timely confirmation (a "Book-Entry Confirmation") of the
book-entry transfer of such Shares into the Depositary's account at the
Depository Trust Company, the Midwest Securities Trust Company or the
Philadelphia Depository Trust Company (collectively, the "Book-Entry Transfer
Facilities"), pursuant to the procedures set forth in Section 3, (ii) the Letter
of Transmittal (or a facsimile thereof) properly completed and duly executed,
with any required signature guarantees, or an Agent's Message (as defined below)
in connection with a book-entry transfer, and (iii) any other documents required
by the Letter of Transmittal.
The term "Agent's Message" means a message, transmitted by a Book-Entry
Transfer Facility to, and received by, the Depositary and forming a part of a
Book-Entry Confirmation, which states that such Book-Entry Transfer Facility has
received an express acknowledgment from the participant in such Book-Entry
Transfer Facility tendering the Shares which are the subject of such Book-Entry
Confirmation, that such participant has received and agrees to be bound by the
terms of the Letter of Transmittal and that the Purchaser may enforce such
agreement against such participant.
For purposes of the Offer, the Purchaser will be deemed to have accepted for
payment, and thereby purchased, Shares validly tendered and not withdrawn as, if
and when the Purchaser gives oral or written notice to the Depositary of the
Purchaser's acceptance of such Shares for payment pursuant to the Offer. In all
cases, upon the terms and subject to the conditions of the Offer, payment for
Shares purchased pursuant to the Offer will be made by deposit of the purchase
price therefor with the Depositary, which will act as agent for tendering
stockholders for the purpose of receiving payment from the Purchaser and
transmitting payment to validly tendering stockholders. Under no circumstances
will interest on the purchase price for Shares be paid by the Purchaser by
reason of any delay in making such payment.
6
If any tendered Shares are not purchased pursuant to the Offer for any
reason, or if Share Certificates are submitted representing more Shares than are
tendered, Share Certificates representing unpurchased or untendered Shares will
be returned, without expense to the tendering stockholder (or, in the case of
Shares delivered by book-entry transfer into the Depositary's account at a Book-
Entry Transfer Facility pursuant to the procedures set forth in Section 3, such
Shares will be credited to an account maintained within such Book-Entry Transfer
Facility), as promptly as practicable following the expiration, termination or
withdrawal of the Offer.
If, prior to the Expiration Date, the Purchaser shall increase the
consideration offered to holders of Shares pursuant to the Offer, such increased
consideration shall be paid to all holders of Shares that are purchased pursuant
to the Offer, whether or not such Shares were tendered prior to such increase in
consideration.
The Purchaser reserves the right to transfer or assign, in whole or from
time to time in part, to one or more of Crane's subsidiaries or affiliates the
right to purchase Shares tendered pursuant to the Offer, but any such transfer
or assignment will not relieve the Purchaser of its obligations under the Offer
or prejudice the rights of tendering stockholders to receive payment for Shares
validly tendered and accepted for payment pursuant to the Offer.
3. PROCEDURES FOR ACCEPTING THE OFFER AND TENDERING SHARES.
VALID TENDER OF SHARES
Except as set forth below, in order for Shares to be validly tendered
pursuant to the Offer, the Letter of Transmittal (or a facsimile thereof),
properly completed and duly executed, together with any required signature
guarantees, or an Agent's Message in connection with a book-entry delivery of
Shares and any other documents required by the Letter of Transmittal, must be
received by the Depositary at one of its addresses set forth on the back cover
of this Offer to Purchase on or prior to the Expiration Date and either (i)
Share Certificates representing tendered Shares must be received by the
Depositary or such Shares must be tendered pursuant to the procedure for
book-entry transfer set forth below and a Book-Entry Confirmation must be
received by the Depositary, in each case on or prior to the Expiration Date, or
(ii) the guaranteed delivery procedures set forth below must be complied with.
THE METHOD OF DELIVERY OF SHARES, THE LETTER OF TRANSMITTAL AND ALL OTHER
REQUIRED DOCUMENTS IS AT THE OPTION AND SOLE RISK OF THE TENDERING STOCKHOLDER,
AND THE DELIVERY WILL BE DEEMED MADE ONLY WHEN ACTUALLY RECEIVED BY THE
DEPOSITARY. IF DELIVERY IS BY MAIL, REGISTERED MAIL WITH RETURN RECEIPT
REQUESTED, PROPERLY INSURED, IS RECOMMENDED. IN ALL CASES, SUFFICIENT TIME
SHOULD BE ALLOWED TO ENSURE TIMELY DELIVERY.
BOOK-ENTRY TRANSFER
The Depositary will make a request to establish accounts with respect to the
Shares at each of the Book-Entry Transfer Facilities for purposes of the Offer
within two business days after the date of this Offer to Purchase. Any financial
institution that is a participant in the system of any Book-Entry Transfer
Facility may make book-entry delivery of Shares by causing such Book-Entry
Transfer Facility to transfer such Shares into the Depositary's account at such
Book-Entry Transfer Facility in accordance with such Book-Entry Transfer
Facility's procedures for such transfer. However, although delivery of Shares
may be effected through book-entry transfer into the Depositary's account at a
Book-Entry Transfer Facility, the Letter of Transmittal (or a facsimile
thereof), properly completed and duly executed, with any required signature
guarantees, or an Agent's Message in connection with a book-entry transfer and
any other required documents must, in any case, be transmitted to and received
by, the Depositary at one of its addresses set forth on the back cover of this
Offer to Purchase on or prior to the Expiration Date, or the guaranteed delivery
procedure set forth below must be complied with.
DELIVERY OF DOCUMENTS TO A BOOK-ENTRY TRANSFER FACILITY IN ACCORDANCE WITH
SUCH BOOK-ENTRY TRANSFER FACILITY'S PROCEDURES DOES NOT CONSTITUTE DELIVERY TO
THE DEPOSITARY.
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SIGNATURE GUARANTEES
Signatures on all Letters of Transmittal must be guaranteed by a firm that
is a bank, broker, dealer, credit union, savings association or other entity
which is a member in good standing of a Medallion Signature Guarantee Program
(an "Eligible Institution"), unless the Shares tendered thereby are tendered (i)
by a registered holder of Shares who has not completed either the box labeled
"Special Payment Instructions" or the box labeled "Special Delivery
Instructions" on the Letter of Transmittal or (ii) for the account of an
Eligible Institution. See Instruction 1 of the Letter of Transmittal.
If the Share Certificates are registered in the name of a person other than
the signer of the Letter of Transmittal, or if payment is to be made to, or
Share Certificates for unpurchased Shares are to be issued or returned to a
person other than the registered holder, then the tendered certificates must be
endorsed or accompanied by appropriate stock powers, signed exactly as the name
or names of the registered holder or holders appear on the certificates, with
the signatures on the certificates or stock powers guaranteed by an Eligible
Institution as provided in the Letter of Transmittal. See Instructions 1 and 5
of the Letter of Transmittal.
If the Share Certificates are forwarded separately to the Depository, a
properly completed and duly executed Letter of Transmittal (or a facsimile
thereof) must accompany each such delivery.
GUARANTEED DELIVERY
If a stockholder desires to tender Shares pursuant to the Offer and such
stockholder's Share Certificates are not immediately available or time will not
permit all required documents to reach the Depositary on or prior to the
Expiration Date, or the procedure for book-entry transfer cannot be completed on
a timely basis, such Shares may nevertheless be tendered if all of the following
guaranteed delivery procedures are duly complied with:
(i) such tender is made by or through an Eligible Institution;
(ii) a properly completed and duly executed Notice of Guaranteed
Delivery, substantially in the form provided by the Purchaser, is received
by the Depositary, as provided below, on or prior to the Expiration Date;
and
(iii) the Share Certificates (or a Book-Entry Confirmation) representing
all tendered Shares, in proper form for transfer together with a properly
completed and duly executed Letter of Transmittal (or a facsimile thereof),
with any required signature guarantees (or, in the case of a book-entry
transfer, an Agent's Message) and any other documents required by the Letter
of Transmittal are received by the Depositary within five National
Association of Securities Dealers ("NASD") Automatic Quotation System
("NASDAQ") trading days after the date of execution of such Notice of
Guaranteed Delivery.
The Notice of Guaranteed Delivery may be delivered by hand or transmitted by
facsimile transmission or mail to the Depositary and must include a signature
guarantee by an Eligible Institution in the form set forth in such Notice of
Guaranteed Delivery.
Notwithstanding any other provision hereof, payment for Shares accepted for
payment pursuant to the Offer will in all cases be made only after timely
receipt by the Depositary of Share Certificates for, or of Book-Entry
Confirmation with respect to, such Shares, a properly completed and duly
executed Letter of Transmittal (or a facsimile thereof), together with any
required signature guarantees (or, in the case of a book-entry transfer, an
Agent's Message) and any other documents required by the Letter of Transmittal.
Accordingly, payment might not be made to all tendering stockholders at the same
time, and will depend upon when Share Certificates or Book-Entry Confirmations
of such Shares are received into the Depositary's account at a Book-Entry
Transfer Facility.
BACK-UP FEDERAL TAX WITHHOLDING
Under the federal income tax laws, the Depositary will be required to
withhold 31 percent of the amount of any payments made to certain stockholders
pursuant to the Offer. To prevent back-up
8
federal income tax withholding on payments made to certain stockholders with
respect to the purchase price of Shares purchased pursuant to the Offer, each
such stockholder must provide the Depositary with such stockholder's correct
taxpayer identification number and certify that such stockholder is not subject
to back-up federal income tax withholding by completing the Substitute Form W-9
included in the Letter of Transmittal. See Section 5 hereof and Instruction 10
of the Letter of Transmittal.
APPOINTMENT AS PROXY
By executing the Letter of Transmittal, a tendering stockholder irrevocably
appoints designees of the Purchaser, and each of them, as such stockholder's
attorneys-in-fact and proxies, with full power of substitution, in the manner
set forth in the Letter of Transmittal, to the full extent of such stockholder's
rights with respect to the Shares tendered by such stockholder and accepted for
payment and paid for by the Purchaser and with respect to any and all other
Shares and other securities or rights issued or issuable in respect of such
Shares on or after the date of this Offer to Purchase. All such proxies shall be
considered coupled with an interest in the tendered Shares. Such appointment
will be effective when, and only to the extent that, the Purchaser pays for such
Shares by depositing the purchase price therefor with the Depositary. Upon such
payment, all prior powers of attorney and proxies given by such stockholder with
respect to such Shares and such other securities or rights will be revoked,
without further action, and no subsequent powers of attorney and proxies may be
given by such stockholder (and, if given, will not be deemed effective). The
designees of the Purchaser will, with respect to the Shares for which such
appointment is effective, be empowered to exercise all voting and other rights
of such stockholder as they in their sole discretion may deem proper at any
annual or special meeting of the Company's stockholders, or any adjournment or
postponement thereof. The Purchaser reserves the right to require that, in order
for Shares to be deemed validly tendered, immediately upon the payment for such
Shares, the Purchaser or its designee must be able to exercise full voting
rights with respect to such Shares and other securities, including voting at any
meeting of stockholders.
DETERMINATION OF VALIDITY
All questions as to the form of documents and validity, eligibility
(including time of receipt) and acceptance for payment of any tender of Shares
will be determined by the Purchaser, in its sole discretion, whose determination
shall be final and binding on all parties. The Purchaser reserves the absolute
right to reject any or all tenders determined by it not to be in proper form or
the acceptance of or payment for which may, in the opinion of the Purchaser's
counsel, be unlawful. The Purchaser also reserves the absolute right to waive
any of the conditions of the Offer or any defect or irregularity in any tender
of Shares of any particular stockholder whether or not similar defects or
irregularities are waived in the case of other stockholders.
The Purchaser's interpretation of the terms and conditions of the Offer
(including the Letter of Transmittal and the instructions thereto) will be final
and binding. No tender of Shares will be deemed to have been validly made until
all defects and irregularities have been cured or waived. None of the Purchaser,
Crane, any of their affiliates or assigns, if any, the Depositary, the
Information Agent or any other person will be under any duty to give any
notification of any defects or irregularities in tenders, nor shall they incur
any liability for failure to give such notification.
The Purchaser's acceptance for payment of Shares tendered pursuant to any of
the procedures described above will constitute a binding agreement between the
tendering stockholder and the Purchaser upon the terms and subject to the
conditions of the Offer.
4. WITHDRAWAL RIGHTS. Except as otherwise provided in this Section 4,
tenders of Shares made pursuant to the Offer are irrevocable. Shares tendered
pursuant to the Offer may be withdrawn at any time on or prior to the Expiration
Date and, unless theretofore accepted for payment as provided herein, may also
be withdrawn at any time after April 18, 1994 (or such later date as may apply
in case the Offer is extended).
9
If, for any reason whatsoever, acceptance for payment of any Shares tendered
pursuant to the Offer is delayed, or the Purchaser is unable to accept for
payment or pay for Shares tendered pursuant to the Offer, then, without
prejudice to the Purchaser's rights set forth herein, the Depositary may,
nevertheless, on behalf of the Purchaser retain tendered Shares and such Shares
may not be withdrawn except to the extent that the tendering stockholder is
entitled to and duly exercises withdrawal rights as described in this Section 4.
Any such delay will be by an extension of the Offer to the extent required by
law.
In order for a withdrawal to be effective, a written or facsimile
transmission notice of withdrawal must be timely received by the Depositary at
one of its addresses set forth on the back cover of this Offer to Purchase. Any
such notice of withdrawal must specify the name of the person who tendered the
Shares to be withdrawn, the number of Shares to be withdrawn, and (if Share
Certificates have been tendered) the name of the registered holder of the Shares
as set forth in the Share Certificate, if different from that of the person who
tendered such Shares. If Share Certificates have been delivered or otherwise
identified to the Depositary, then prior to the physical release of such
certificates, the tendering stockholder must submit the serial numbers shown on
the particular certificates evidencing the Shares to be withdrawn and the
signature on the notice of withdrawal must be guaranteed by an Eligible
Institution, except in the case of Shares tendered for the account of the
Eligible Institution. If Shares have been tendered pursuant to the procedures
for book-entry transfer set forth in Section 3, the notice of withdrawal must
specifiy the name and number of the account at the appropriate Book-Entry
Transfer Facility to be credited with the withdrawn shares, in which case a
notice of withdrawal will be effective if delivered to the Depositary by any
method of delivery described in the first sentence of this paragraph.
Withdrawals of Shares may not be rescinded. Any shares properly withdrawn will
be deemed not validly tendered for purposes of the Offer, but may be retendered
at any subsequent time prior to the Expiration Date by following any of the
procedures described in Section 3.
All questions as to the form and validity (including time of receipt) of
notices of withdrawal will be determined by the Purchaser, in its sole
discretion, whose determination shall be final and binding. None of the
Purchaser, Crane, any of their affiliates or assigns, if any, the Depositary,
the Information Agent or any other person will be under any duty to give any
notification of any defects or irregularities in any notice of withdrawal or
incur any liability for failure to give any such notification.
5. CERTAIN TAX CONSEQUENCES. The summary of tax consequences set forth
below is for general information only and is based on the law as currently in
effect. The tax treatment of each stockholder will depend in part upon such
stockholder's particular situation.
FEDERAL INCOME TAX
The following discussion may not be applicable to certain types of
stockholders, including stockholders who acquired Shares pursuant to the
exercise of employee stock options or otherwise as compensation, individuals who
are not citizens or residents of the United States and foreign corporations, or
entities that are otherwise subject to special tax treatment under the Internal
Revenue Code of 1986, as amended (the "Code"), such as insurance companies,
tax-exempt entities and regulated investment companies. ALL STOCKHOLDERS SHOULD
CONSULT WITH THEIR OWN TAX ADVISORS AS TO THE PARTICULAR TAX CONSEQUENCES OF THE
OFFER AND THE MERGER TO THEM, INCLUDING THE APPLICABILITY AND EFFECT OF THE
ALTERNATIVE MINIMUM TAX, AND ANY STATE, LOCAL OR FOREIGN INCOME AND OTHER TAX
LAWS.
The receipt of cash pursuant to the Offer or the Merger will be a taxable
transaction for federal income tax purposes under the Code, and may also be a
taxable transaction under applicable state, local or foreign income or other tax
laws. Generally, for federal income tax purposes a tendering stockholder will
recognize gain or loss in an amount equal to the difference between the cash
received and the stockholder's adjusted tax basis in the Shares tendered by the
stockholder and purchased pursuant to the Offer or the Merger, as the case may
be. Gain or loss will be calculated for each block of Shares tendered and
purchased pursuant to the Offer. For federal income tax purposes, such gain or
loss will be a capital gain or loss if the Shares are a capital asset in the
hands of the stockholder, and
10
any such capital gain or loss will be long term if the stockholder's holding
period is more than one year, or short term if the stockholder's holding period
is one year or less, as of the date of the sale of the Shares or the effective
date of the Merger, as the case may be. Long-term capital gain is currently
subject to a maximum marginal federal income tax rate of 28%. Short-term capital
gain is subject to a maximum marginal federal income tax rate of 39.6%. There
are limitations on the deductibility of capital losses.
REAL ESTATE TRANSFER TAXES
Under certain circumstances, the State of Washington may impose taxes (the
"Transfer Taxes") on the gain or proceeds from the sale of the Shares pursuant
to the Offer or the Merger attributable to real property of the Company or its
subsidiaries in such jurisdiction. If any Transfer Taxes are owing in connection
with the purchase of Shares by the Purchaser pursuant to the Offer, the
Purchaser will file all necessary tax returns and pay such taxes. If any
Transfer Taxes are owing as a result of the Merger, the Purchaser will cause the
Company to file all necessary tax returns and pay any such taxes. By tendering
Shares, a stockholder is authorizing the Surviving Corporation in the Merger, to
complete and file any ncessary tax forms or otherwise take action with respect
to the Transfer Taxes in connection with the Offer. The payment of any Transfer
Taxes by the Company should have no effect on the amount of gain or loss
realized by any stockholder for federal income tax purposes.
6. PRICE RANGE OF THE SHARES; DIVIDENDS. The Company has confirmed to the
Purchasers that the Shares are traded principally in the over-the-counter market
and are quoted through the NASDAQ National Market System. The Shares are quoted
on the NASDAQ National Market System under the symbol "ELDC". The following
table sets forth, for the periods indicated, the reported high and low sale
prices for the Shares as reported on the NASDAQ National Market System, all as
reported in published financial sources.
[Download Table]
High Low
--------- ---------
1991
First Quarter ending June 30, 1991 $ 10 $ 7
Second Quarter ending September 29, 1991 9 7
Third Quarter ending December 29, 1991 7- 3/4 4- 1/2
Fourth Quarter ending March 29, 1992 7 5- 1/4
1992
First Quarter ending June 28, 1992 $ 6- 1/2 $ 4- 1/4
Second Quarter ending September 27, 1992 5- 3/4 4- 1/4
Third Quarter ending December 27, 1992 6- 1/4 4- 3/8
Fourth Quarter ending March 28, 1993 6- 1/2 4- 3/4
1993
First Quarter ending June 27, 1993 $ 6- 1/4 $ 5- 1/4
Second Quarter ending September 26, 1993 6- 3/4 4- 3/4
Third Quarter ending December 26, 1993 6- 3/4 6
Fourth Quarter (through February 16, 1994) 13- 1/8 6
11
The Company does not pay regular dividends and there are currently no plans
to commence payments of regular dividends.
On February 10, 1994, the last full day of trading before the issuance of a
joint press release by Crane and the Company announcing the proposed acquisition
of the Company and the per Share purchase price of $13 in cash (see Section 10),
the reported closing price on the NASDAQ National Market System for the Shares
was $10- 1/8 per Share, according to published sources.
On February 16, 1994, the last full day of trading prior to the commencement
of the Offer, the reported closing price on the NASDAQ National Market System
for the Shares was $12- 7/8 per Share, according to published sources.
STOCKHOLDERS ARE URGED TO OBTAIN A CURRENT MARKET QUOTATION FOR THE SHARES.
7. EFFECT OF THE OFFER ON THE MARKET FOR THE SHARES; NASDAQ QUOTATION;
EXCHANGE ACT REGISTRATION; MARGIN REGULATIONS.
EFFECT OF THE OFFER ON THE MARKET FOR THE SHARES
The purchase of Shares pursuant to the Offer will reduce the number of
Shares that might otherwise trade publicly and, depending upon the number of
Shares so purchased, could adversely affect the liquidity and market value of
the remaining Shares held by the public. The purchase of Shares pursuant to the
Offer can also be expected to reduce the number of holders of Shares.
NASDAQ QUOTATION
Depending upon the aggregate market value and the number of Shares not
purchased pursuant to the Offer, the Shares may no longer meet the quantitative
requirements of the NASD for continued inclusion in the NASDAQ National Market
System, which require that an issuer have at least 200,000 publicly held shares,
held by at least 400 stockholders or 300 stockholders of round lots, with a
market value of $1 million and must have net tangible assets of at least $1
million, $2 million or $4 million (depending on profitability levels during the
issuer's four most recent fiscal years) and a minimum bid price per Share of
$1.00 (unless the issuer has a public float of $3 million and $4 million of net
tangible assets). If these standards were not met, quotations might continue to
be published in the Regular NASDAQ System, but (subject to certain exceptions
and other maintenance criteria) if the number of holders of Shares were to fall
below 300, or if the number of publicly held Shares were to fall below 100,000,
or the market value of the publicly held Shares were to fall below $200,000, the
rules of the NASD provide that the Shares would no longer be "qualified" for
NASDAQ reporting and NASDAQ could cease to provide any quotations. Shares held
directly or indirectly by an officer or director of the Company or by any
beneficial owner of more than 10% of the Shares will ordinarily not be
considered as being publicly held for this purpose. In the event the Shares were
no longer eligible for NASDAQ quotation, quotations might still be available
from other sources. The extent of the public market for the Shares and the
availability of such quotations would, however, depend upon the number of
stockholders and/or the aggregate market value of the Shares remaining at such
time, the interest in maintaining a market in the Shares on the part of
securities firms, the possible termination of registration of the Shares under
the Exchange Act as described below, and other factors.
The Purchaser cannot predict whether the reduction in the number of Shares
that might otherwise trade publicly would have an adverse or beneficial effect
on the market price for or marketability of the Shares or whether it would cause
future market prices to be greater or less than the price in the Offer.
EXCHANGE ACT REGISTRATION
The Shares are currently registered under the Exchange Act. The purchase of
the Shares pursuant to the Offer may result in the Shares becoming eligible for
deregistration under the Exchange Act. Registration of the Shares may be
terminated upon application of the Company to the Commission if the Shares are
not listed on a "national securities exchange" and there are fewer than 300
record
12
holders of Shares. Termination of registration of the Shares under the Exchange
Act would substantially reduce the information required to be furnished by the
Company to its stockholders and the Commission and would make certain provisions
of the Exchange Act, such as the short-swing profit recovery provisions of
Section 16(b) and the requirements of furnishing a proxy statement in connection
with stockholders' meetings pursuant to Section 14(a), no longer applicable to
the Company. If the Shares are no longer registered under the Exchange Act, the
requirements of Rule 13e-3 under the Exchange Act with respect to "going
private" transactions would no longer be applicable to the Company. Furthermore,
the ability of "affiliates" of the Company and persons holding "restricted
securities" of the Company to dispose of such securities pursuant to Rule 144
promulgated under the Securities Act of 1933, as amended, may be impaired or
eliminated. If, as a result of the purchase of Shares pursuant to the Offer, the
Company is no longer required to maintain registration of the Shares under the
Exchange Act, the Purchaser intends to cause the Company to apply for
termination of such registration. See Section 11.
If registration of the Shares is not terminated prior to the Merger, then
the Shares will be removed from eligibility for NASDAQ quotation and the
registration of the Shares under the Exchange Act will be terminated following
the consummation of the Merger.
MARGIN REGULATIONS
The Shares are presently "margin securities" under the regulations of the
Board of Governors of the Federal Reserve System (the "Federal Reserve Board"),
which have the effect, among other things, of allowing brokers to extend credit
on the collateral of such Shares for the purpose of buying, carrying or trading
in securities ("Purpose Loans"). Depending on factors such as the number of
record holders of the Shares and the number and market value of publicly held
Shares, following the purchase of Shares pursuant to the Offer, the Shares might
no longer constitute "margin securities" for purposes of the Federal Reserve
Board's margin regulations and, therefore, could no longer be used as collateral
for Purpose Loans made by brokers. In addition, if registration of the Shares
under the Exchange Act was terminated, the Shares would no longer constitute
"margin securities".
8. CERTAIN INFORMATION CONCERNING THE COMPANY. Except as otherwise set
forth herein, the information concerning the Company contained in this Offer to
Purchase, including financial information, has been furnished by the Company or
has been taken from or based upon publicly available documents and records on
file with the Commission and other public sources. Neither the Purchaser nor the
Information Agent assumes any responsibility for the accuracy or completeness of
the information concerning the Company furnished by the Company or contained in
such documents and records or for any failure by the Company to disclose events
which may have occurred or may affect the significance or accuracy of any such
information but which are unknown to Crane, the Purchaser or the Information
Agent.
The Company is a Washington corporation with its principal executive offices
located at 16700 - 13th Avenue West, P.O. Box 100, Lynnwood, WA 98046-0100. The
following general description of the Company's business has been taken from the
Company's Annual Report on Form 10-K for the fiscal year ended March 28, 1993
(the "1992 10-K").
The Company designs, manufactures and markets custom electronic and
electromechanical products and systems for applications that are technically and
environmentally demanding. The Company's primary market is aerospace, both
commercial and military, and its major customers are airframe manufacturers,
aircraft engine manufacturers and electronic systems manufacturers. Its
operating units provide: sensing systems and power conversion products to
airframe manufacturers; power supplies to electronic systems houses and fuel
flowmeters and diagnostic systems to aircraft engine manufacturers. The Company
has four major product lines: sensing systems that monitor the status of
aircraft landing gear, doors and flight surfaces; low voltage and high voltage
power supplies for avionic and defense electronic systems; monitor and control
devices for aircraft engines, including fuel flowmeters and engine diagnostic
systems; battery chargers, transformer-rectifiers and other devices that
regulated the DC power on aircraft.
13
The selected financial information of the Company and its consolidated
subsidiaries set forth below has been excerpted and derived from the 1992 10-K,
the Company's Quarterly Report on Form 10-Q for the quarter ended December 26,
1993 (the "Third Quarter 1993 10-Q") and the Company's Quarterly Report on Form
10-Q for the quarter ended December 27, 1992 (the "Third Quarter 1992 10-Q").
More comprehensive financial information is included in such reports (including
management's analysis of results of operations and financial position) and other
documents filed with the Commission. The following financial information is
qualified in its entirety by reference to the 1992 10-K, the Third Quarter 1993
10-Q and the Third Quarter 1992 10-Q and all other such reports and documents
filed with the Commission and all of the financial statements and related notes
contained therein. The 1992 10-K, the Third Quarter 1993 10-Q and the Third
Quarter 1992 10-Q and certain other reports may be examined and copies may be
obtained at the offices of the Commission in the manner set forth below.
ELDEC CORPORATION
SELECTED CONSOLIDATED FINANCIAL INFORMATION
(IN THOUSANDS)
[Enlarge/Download Table]
NINE MONTHS ENDED YEARS ENDED
-------------------- -------------------------------------
DEC. 26, DEC. 27, MARCH 28, MARCH 29, MARCH 31,
1993 1992 1993 1992 1991
--------- --------- ----------- ----------- -----------
INCOME
Net Sales................................................. 73,302 81,485 108,415 109,945 122,983
Cost of Sales............................................. 43,300 48,579 63,658 71,781 76,888
Gross Profit.............................................. 30,002 32,906 44,757 38,164 46,095
Selling, General and Administrative Expenses.............. 21,057 19,748 27,780 26,838 28,249
Research and Development.................................. 7,617 10,355 13,056 12,798 12,465
Operating Income (Loss)................................... 1,328 2,803 3,921 (1,472) 5,381
Other (Income) Expense.................................... 1,307 918 1,361 1,941 961
Income (Loss) Before Income Taxes......................... 21 1,885 2,560 (3,413) 4,420
Income Tax Provision (benefit)............................ (536) 558 803 (1,654) 1,356
Income (Loss)............................................. 557 1,327 1,757 (1,759) 3,064
Discontinued Operations Income (Loss)..................... -- -- -- -- (402)
Extraordinary Expense..................................... -- -- -- (105) (211)
Cumulative Effect of Accounting Change.................... -- 673 673 -- --
--------- --------- ----------- -----------
Net income (Loss)................................... 557 2,000 2,430 (1,864) 2,451
[Enlarge/Download Table]
AT AT
-------------------- ------------------------
DEC. 26, DEC. 27, MARCH 28, MARCH 29,
1993 1992 1993 1992
--------- --------- ----------- -----------
ASSETS
Total Current Assets.................................................. 69,154 66,070 66,217 50,952
Other Non-Current Assets, Net......................................... 2,726 3,001 2,760 2,882
Property, Plant and Equipment......................................... 41,315 43,535 43,258 40,273
Total Current Liabilities............................................. 16,472 18,320 16,312 18,033
Long-Term Debt........................................................ 25,000 25,000 25,000 9,100
Deferred Income Taxes................................................. 4,065 3,127 4,065 3,127
Other Non-Current Liabilities......................................... 1,630 1,340 1,630 1,340
Shareholders' Equity.................................................. 66,028 64,819 65,228 62,507
CERTAIN PROJECTIONS. The Company does not as a matter of course make public
forecasts as to future sales or earnings. However, in connection with the
Company's discussions with Crane concerning the Offer and the Merger,
projections of financial performance of the Company from 1994 through 1999
14
were provided to Crane as part of an information memorandum dated December 1993,
delivered on behalf of the Company by Morgan Stanley, financial advisor to the
Company. A summary of these projections is set forth below. The projections do
not give effect to the Offer or the Merger.
The projections reflect a five-year plan for the years ending in March and
were prepared in connection with the Company's anticipated sale.
[Enlarge/Download Table]
1994 1995 1996 1997 1998 1999
--------- --------- ----------- ----------- ----------- -----------
(IN THOUSANDS)
Net Sales............................. $ 99,987 $ 98,442 $ 113,766 $ 126,647 $ 143,506 $ 152,590
Operating Income...................... 4,348 9,911 8,167 19,819 23,350 25,204
Net Income............................ 2,209 5,355 4,203 12,041 14,520 15,892
The Company has informed Crane that in preparing the foregoing projections,
the following general assumptions, among others, were used: (i) a general
decline in military and commercial sales levels over the next four years with a
projected recovery in 1998 or 1999, (ii) the Company's Aircraft Systems Division
is expected to out-perform the market for new aircraft due to increased platform
content on recently won new programs, (iii) a general decline in the power
supply market and a corresponding decline in the Company's Power Conversion
Division through 1995, improving in 1996 and beyond due to product and market
development efforts and targeted new market segments, (iv) noise reduction
requirements will present opportunities for engine modifications or new engine
retrofits on existing aircraft which is expected to increase the demand for the
Company's mass flowmeters and the Company's Monitor and Control Division plans
to expand its engine sensor and instrumentation business with new product
introductions, (v) a reduction in marketing expenses through 1995 due to reduced
proposal activity and continued reductions in headcount and an increase
thereafter growing at the same rate as the growth in sales, (vi) a slight
reduction in general and administrative expenses through 1995 and growth
thereafter at a rate slightly below the rate of sales growth due to continuing
efforts to constrain such expenses and improved productivity and (vii) beginning
in 1995, capital expenditures at a constant percentage of revenue representing a
reduction from recent years due to required test equipment purchases associated
with certain new programs.
BECAUSE THE ESTIMATES AND ASSUMPTIONS UNDERLYING THE ABOVE PROJECTIONS ARE
INHERENTLY SUBJECT TO SIGNIFICANT ECONOMIC AND COMPETITIVE UNCERTAINTIES BEYOND
THE COMPANY'S CONTROL, THERE CAN BE NO ASSURANCE THAT THE PROJECTED RESULTS CAN
BE REALIZED, OR THAT ACTUAL RESULTS WOULD NOT BE MATERIALLY HIGHER OR LOWER THAN
THOSE PROJECTED. NEITHER THE COMPANY NOR CRANE OR THE PURCHASER ASSUME ANY
RESPONSIBILITY FOR THE ACCURACY OF SUCH INFORMATION. MOREOVER, THE PROJECTIONS
WERE NOT PREPARED WITH A VIEW TO PUBLIC DISCLOSURE OR COMPLYING WITH PUBLISHED
GUIDELINES OF THE COMMISSION OR THE GUIDELINES ESTABLISHED BY THE AMERICAN
INSTITUTE OF CERTIFIED PUBLIC ACCOUNTANTS. THE PROJECTIONS ARE INCLUDED IN THIS
OFFER TO PURCHASE ONLY BECAUSE SUCH INFORMATION WAS PROVIDED TO CRANE. CRANE AND
PURCHASER DID NOT RELY ON THE FOREGOING PROJECTIONS AND RELATED ASSUMPTIONS IN
CONNECTION WITH THIS OFFER TO PURCHASE.
The Company is subject to the information and reporting requirements of the
Exchange Act and in accordance therewith is required to file periodic reports,
proxy statements and other information with the Commission relating to its
business, financial condition and other matters. Certain information, as of
particular dates, concerning the Company's directors and officers (including
their remuneration and the stock options granted to them), the principal holders
of the Company's securities, any material interests of such persons in
transactions with the Company and other matters is required to be disclosed in
proxy statements and annual reports distributed to the Company's stockholders
and filed with the Commission. Such reports, proxy statements and other
information may be inspected and copied at the Commission's public reference
facilities at Room 1024, Judiciary Plaza, 450 Fifth Street, N.W., Washington,
D.C. 20549, and should also be available for inspection at the following
regional offices of the Commission: 7 World Trade Center, New York, New York
10048; and 500 West Madison Street, Chicago, Illinois 60621; and copies may be
obtained by mail at prescribed rates, from the principal office of the
Commission at 450 Fifth Street, N.W., Washington, D.C. 20549.
15
9. CERTAIN INFORMATION CONCERNING THE PURCHASER AND CRANE.
THE PURCHASER
The Purchaser, a Washington corporation, was incorporated on February 10,
1994 for the purpose of acquiring the Company, and has engaged in no activities
to date, other than those incidental to its organization and making the Offer.
The Purchaser is a wholly owned subsidiary of Crane. The principal office of the
Purchaser is 100 First Stamford Place, Stamford, CT 06902. Since the Purchaser
is newly formed and has minimal assets and capitalization, no meaningful
financial information with respect to the Purchaser is available.
CRANE
Crane is a Delaware corporation with its principal executive offices located
at 100 First Stamford Place, Stamford, CT 06902.
Crane is a diversified manufacturer of engineered industrial products,
serving niche markets in aerospace, fluid handling, automatic merchandising and
the construction industry. Crane's wholesale distribution business serves the
building products markets and industrial customers. Founded in 1855, Crane
employs over 8,500 people in North America, Europe and Australia. Crane's
strategy is to maintain a balanced business mix, to focus on niche businesses
with high market share and to avoid capital-intensive and cyclical businesses.
The name, business address, citizenship, present principal occupation and
employment history of each of the directors and executive officers of the
Purchaser and Crane are set forth in Schedule I to this Offer to Purchase.
Crane is subject to the information and reporting requirements of the
Exchange Act and in accordance therewith is required to file periodic reports,
proxy statements and other information with the Commission relating to its
business, financial condition and other matters. Certain information, as of
particular dates, concerning Crane's business, principal physical properties,
capital structure, material pending legal proceedings, operating results,
financial condition, directors and officers (including their remuneration and
stock options granted to them), the principal holders of Crane's securities, any
material interests of such persons in transactions with Crane and other matters
is required to be disclosed in proxy statements and annual reports distributed
to Crane's stockholders and filed with the Commission. Such reports, proxy
statements and other information may be inspected and copied at the Commission's
public reference facilities in the same manner as set forth with respect to the
Company in Section 8. In addition, such information is also available for
inspection at the NYSE, 20 Broad Street, New York, New York 10005.
Set forth below is a summary of certain consolidated financial information
with respect to Crane and its subsidiaries for its fiscal years ended and as of
December 31, 1992, 1991 and 1990, excerpted from financial statements presented
in Crane's Annual Report on Form 10-K for the fiscal year ended December 31,
1992 filed with the Commission and for the nine months ended and as of September
30, 1993 and 1992, excerpted from financial statements presented in Crane's
Quarterly Reports on Form 10-Q for the fiscal quarters ended September 30, 1993
and September 30, 1992 filed with the Commission. More comprehensive financial
information is included in such reports (including management's analysis of
results of operations and financial position) and other documents filed by Crane
with the Commission, and the financial information summary set forth below is
qualified in its entirety by reference to such reports, which are incorporated
herein by reference, and all the financial information and related notes
contained therein.
16
CRANE CO.
SELECTED CONSOLIDATED FINANCIAL INFORMATION
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
[Enlarge/Download Table]
NINE MONTHS
ENDED
SEPTEMBER 30, YEARS ENDED DECEMBER 31,
---------------------- ---------------------------------------
1993 1992 1992 1991 1990
-------- ------------ -------------- ---------- ----------
(UNAUDITED)
INCOME STATEMENT INFORMATION:
Net Sales.......................... $987,930 $990,953 $1,306,977 $1,302,532 $1,438,248
Operating Costs and Expenses....... 921,466 970,254 1,261,733 1,223,630 1,324,937
-------- ------------ -------------- ---------- ----------
Operating Profit................... 66,464 20,699(a) 45,244(a) 78,902 113,311
Other Income (Deductions).......... (3,852) (4,290) (6,555) (6,497) (10,823)
-------- ------------ -------------- ---------- ----------
Income Before Taxes................ 62,612 16,409 38,689 72,405 102,488
Provision for Income Taxes......... 23,358 6,368 14,403 27,412 39,753
-------- ------------ -------------- ---------- ----------
Cumulative Effect of a Change in
accounting for postretirement
benefits.......................... -- -- -- (22,341) --
-------- ------------ -------------- ---------- ----------
Net Income......................... $ 39,254 $ 10,041(a) $ 24,286(a) $ 22,652 $ 62,735
-------- ------------ -------------- ---------- ----------
-------- ------------ -------------- ---------- ----------
Net Income Per Share............... $ 1.30 $ .32(a) $ .79(a) $ .72 $ 1.96
Dividends Per Share................ $ .5625 $ .5625 $ .75 $ .75 $ .75
<FN>
------------------------
(a) Includes a special charge of $39,444 ($24,400 after tax) or $.78 per
share.
[Enlarge/Download Table]
AT SEPTEMBER 30, AT DECEMBER 31,
------------------------ ------------------------
1993 1992 1992 1991
----------- ----------- ----------- -----------
(UNAUDITED)
BALANCE SHEET INFORMATION:
Total Current Assets.......................................... $ 404,062 $ 430,228 $ 378,653 $ 377,360
Property, Plant and Equipment................................. 168,235 166,559 163,185 176,904
Other Assets.................................................. 28,280 14,742 26,205 12,902
Cost in excess of net assets acquired......................... 60,899 61,662 62,168 63,071
Total Current Liabilities..................................... 191,880 199,204 174,023 169,900
Long Term Debt................................................ 105,492 111,564 111,048 83,847
Deferred Income Taxes......................................... 6,097 11,518 3,673 19,186
Reserves and Other Liabilities................................ 19,701 20,553 23,008 9,554
Accrued Postretirement Benefits............................... 40,214 39,891 39,398 38,371
Accrued Pension Liability..................................... 7,701 8,889 7,709 8,901
Total Common Shareholders' Equity............................. 290,391 281,572 271,352 300,478
On January 24, 1994, Crane issued a press release which provides in
pertinent part:
"Crane Co. today reported net income for the fourth quarter ended December
31, 1993 of $9.6 million, or 32 cents per share. This compares to last year's
fourth quarter results of $14.2 million or 47 cents per share. Fourth quarter
earnings were lower than last year due to an unfavorable jury award at National
Vendors, a higher LIFO charge at Huttig Sash & Door and a higher tax rate.
17
For the year ended December 31,1993, earnings were up 3 percent to $1.62 per
share. Earnings per share in 1992 were $1.57 before a special charge of 78
cents.
Two acquisitions were completed during the quarter: Filon in mid-October and
Burks Pumps, Inc. just before year-end. Filon has been integrated with Kemlite's
fiberglass panel business with the benefits already evident in fourth quarter
results. The Burk Pumps acquisition will substantially increase Crane's
participation in niche engineered pump markets.
CRANE CO. AND SUBSIDIARIES NET SALES AND NET INCOME
[Enlarge/Download Table]
FOR THE PERIODS ENDED DEC. 31,
------------------------------------------------------
THREE MONTHS TWELVE MONTHS
------------------------ ----------------------------
1993 1992 1993 1992
----------- ----------- ------------- -------------
(000'S OMITTED)
Net Sales................................................ $ 322,275 $ 316,024 $ 1,310,205 $ 1,306,977
Depreciation and Amortization............................ 7,669 6,869 29,420 28,530
Special Charge........................................... (39,444)
----------- ----------- ------------- -------------
Operating Profit......................................... 19,392 24,545 85,856 45,244
Income Before Taxes...................................... 17,206 22,280 79,818 38,689
Provision for Income Taxes............................... 7,567 8,035 30,925 14,403
----------- ----------- ------------- -------------
Net Income......................................... $ 9,639 $ 14,245 $ 48,893 $ 24,286
----------- ----------- ------------- -------------
----------- ----------- ------------- -------------
Primary Net Income Per Share............................. $ .32 $ .47 $ 1.62 $ .79(a)
Average Shares Outstanding............................... 30,184 30,553 30,217 30,845
<FN>
------------------------
(a) Includes after-tax effect of special charge of $(.78) per share.
Sales for the fourth quarter were $322 million, 2 percent above the $316
million for the same period in 1992. Fourth quarter operating profit totalled
$19.4 million, 21 percent below the 1992 level of $24.5 million. Sales for the
full year were $1.3 billion, slightly above last year's results. Operating
profit for the year ended December 31, 1993 of $85.9 million, increased 1
percent compared to 1992 earnings of $84.7 million, excluding the $39.4 million
special charge."
- - -
Except as set forth elsewhere in this Offer to Purchase: (i) neither the
Purchaser nor Crane nor, to the knowledge of the Purchaser and Crane, any of the
persons listed in Schedule I hereto or any associate or majority-owned
subsidiary or any pension, profit-sharing or similar plan of the Purchaser,
Crane or any of the persons so listed, beneficially owns or has a right to
acquire any Shares or any other equity securities of the Company; (ii) neither
the Purchaser nor Crane nor, to the knowledge of the Purchaser and Crane, any of
the persons or entities referred to in clause (i) above or any of their
executive officers, directors or subsidiaries has effected any transaction in
the Shares or any other equity securities of the Company during the past 60
days; (iii) neither the Purchaser nor Crane nor, to the knowledge of the
Purchaser or Crane, any of the persons listed in Schedule I hereto has any
contract, arrangement, understanding or relationship with any other person with
respect to any securities of the Company, including, but not limited to, the
transfer or voting thereof, joint ventures, loan or option arrangements, puts or
calls, guarantees of loans, guarantees against loss or the giving or withholding
of proxies, consents or authorizations; (iv) since January 1, 1991, there have
been no transactions which would require reporting under the rules and
regulations of the Commission between the Purchaser, Crane or any of their
respective subsidiaries or, to the knowledge of the Purchaser and Crane, any of
the persons listed in Schedule I hereto, on the one hand, and the Company, any
of its affiliates which are corporations or any of its executive officers,
directors or affiliates, on the other had; and (v) since January 1, 1991, there
have been no contacts, negotiations or transactions between the Purchaser, Crane
or any of their respective subsidiaries or, to the knowledge of the Purchaser
and Crane, any of the persons listed in Schedule I hereto, on the one hand, and
the
18
Company or its subsidiaries or affiliates, on the other hand, concerning a
merger, consolidation or acquisition, tender offer or other acquisition of
securities, an election of directors or a sale or other transfer of a material
amount of assets of the Company.
10. BACKGROUND OF THE OFFER; CONTACTS WITH THE COMPANY; THE MERGER
AGREEMENT; THE STOCK PURCHASE AGREEMENT; THE CONFIDENTIALITY AGREEMENT;
STATUTORY REQUIREMENTS.
BACKGROUND OF THE OFFER; CONTACTS WITH THE COMPANY
In May, 1993, Crane, as part of an effort to expand its activities in the
aerospace industry, retained Roger D. Williams & Co., a financial advisor, to
help identify potential acquisition candidates. Crane determined that the
Company would fit well with Crane's existing business strategies, and a letter
dated June 7, 1993, from Roger D. Williams to Thomas K. Brown, President and
Chief Executive Officer of the Company, expressed the possibility of a potential
business combination with respect to the Company. As a result of several
subsequent contacts by Mr. Williams, on July 6, 1993, Mr. Williams and a Crane
executive toured the Company's facilities and met with Mr. Brown and other
representatives of the Company in Lynnwood and Bothell, Washington to obtain
specific information concerning the Company's financial affairs and other
matters.
Further discussions between Mr. Williams and Mr. Brown were held in
late-July and early-August and, at the request of the Company, on August 18,
1993 Crane made a preliminary, non-binding proposal which contemplated the
purchase of all of the outstanding common stock of the Company for a cash
purchase price of $12.50 per share. No further significant contacts between
Crane and the Company occurred until mid-December when Crane was provided with
an information memorandum concerning the Company by Morgan Stanley.
On January 5, 1994, following review of the information memorandum, Crane
again proposed to purchase, through a cash tender offer at $12.50 per share, the
common stock of the Company. Meetings and other conversations between
representatives of the Company and Crane were held from mid to late-January,
including a management presentation by the Company.
In response to these discussions, on January 31, 1994, Crane submitted a
proposal to the Company, pursuant to which Crane would acquire all shares of
common stock of the Company at $13.00 per share. On February 6, 1994, the
parties' senior managements and financial and legal advisers commenced meeting
to negotiate a definitive agreement for the merger of the Company and a
subsidiary of Crane, to be preceded by a cash tender offer for the Shares. These
meetings continued through February 11, 1994. On that date, the Merger Agreement
was approved by the Company's and Crane's respective boards of directors and was
executed on behalf of each of the parties and the transaction was publicly
announced.
THE MERGER AGREEMENT
The following is a summary of the Merger Agreement, a copy of which is filed
as an Exhibit to the Tender Offer Statement on Schedule 14D-1 (the "Schedule
14D-1") filed by the Purchaser and Crane with the Commission in connection with
the Offer. Such summary is qualified in its entirety by reference to the Merger
Agreement.
THE OFFER
The Merger Agreement provides for the commencement of the Offer as promptly
as reasonably practicable, but in no event later than five business days after
the initial public announcement of Purchaser's intention to commence the Offer.
The obligation of Purchaser to accept for payment and pay for Shares tendered
pursuant to the Offer is subject only to satisfaction of the conditions
described in Section 14 hereof. No change in the Offer may be made which
decreases the Offer Price or the number of Shares tendered for in the Offer, or
which changes in the form of consideration or imposes conditions to the Offer in
addition to those described in Section 14 hereto.
19
COMPANY ACTION
The Company has approved and consented to the Offer and the Board of
Directors of the Company has (i) determined that the Offer and the Merger, taken
together, are fair to and in the best interest of the Company's stockholders;
(ii) recommended that the stockholders of the Company accept the Offer and vote
in favor of the Merger; (iii) taken all necessary steps to render inapplicable
to the Merger the Washington Moratorium Statute, which prohibits certain
"significant business transactions" with a greater-than-ten percent stockholder;
and (iv) taken all necessary steps so that the Offer, the Merger or the
transactions contemplated by the Merger Agreement, to the extent permitted by
law, not be subject to any state takeover law.
THE MERGER
At the Effective Time (as defined in the Merger Agreement), the Purchaser
will be merged into the Company in accordance with the applicable provisions of
the WBCA. At the Effective Time, (i) each Share then owned by Crane or Purchaser
and each Share then held in the treasury of the Company will be canceled; (ii)
each then remaining outstanding Share (other than Dissenting Shares, as
hereinafter defined) will be converted into the right to receive the Merger
Consideration in cash, without interest; (iii) all then outstanding shares of
common stock of Purchaser will be converted into one fully paid and
non-assessable share of common stock of the Company or the Surviving
Corporation; and (iv) all outstanding Shares held by stockholders who shall have
properly exercised appraisal rights, if any, with respect thereto under the
applicable provisions of the WBCA ("Dissenting Shares") will not be converted
into the right to receive the Merger Consideration pursuant to the Merger, but
will be entitled to receive payment of the appraised value of such Shares in
accordance with the provisions of the WBCA. In addition, (i) the Articles of
Incorporation of Purchaser, as in effect immediately prior to the Effective
Time, will be the Articles of Incorporation of the Surviving Corporation; (ii)
the by-laws of Purchaser, as in effect immediately prior to the Effective Time,
will be the by-laws of the Surviving Corporation; and (iii) the directors and
officers of Purchaser immediately prior to the Effective Time will be the
directors and officers of the Surviving Corporation.
VOTE REQUIRED TO APPROVE MERGER
The WBCA requires, among other things, that the adoption of any plan of
merger or consolidation of the Company must be approved by the Company's Board
of Directors and by the vote of the holders of two-thirds of the outstanding
Shares entitled to vote thereon. The Company's Board of Directors has
unanimously approved the Offer and the Merger and the only further action of the
Company required to approve the Merger will be the approval by such vote of
shareholders. The unanimous approval of the Merger Agreement by the Company's
Board of Directors has rendered inapplicable Section 23B.17.020 of the WBCA,
which would otherwise have prevented the Shares held by the Purchaser (as an
interested stockholder) from being counted towards the two-thirds majority. The
Purchaser has agreed to vote all outstanding Shares beneficially owned by it in
favor of adoption of the Merger.
CONDITIONS OF THE MERGER
The Merger Agreement provides that the obligations of the Company, Crane and
the Purchaser to consummate the Merger are subject to the satisfaction of the
following conditions: (1) the Plan of Merger shall have been approved by the
stockholders of the Company (to the extent the approval of such stockholders is
required) in accordance with the WBCA; (2) no provision of any applicable law or
regulation and no judgment, injunction, order or decree shall restrict, prevent
or prohibit the consummation of the Merger; (3) each of the Company, Crane and
the Purchaser shall have performed and complied with, in all material respects,
each agreement, covenant and obligation of such party required by the Merger
Agreement; and (4) the Purchaser shall have purchased shares validly tendered
pursuant to the Offer.
TERMINATION OF THE MERGER AGREEMENT
The Merger Agreement may be terminated and the Merger may be abandoned at
any time before the Effective Time (notwithstanding any approval of the Merger
by the stockholders):
20
(1) by mutual written agreement of the Company, Crane and the Purchaser,
provided that the Company cannot so agree at a time when Crane, its subsidiaries
or affiliates are in control of the Board of Directors of the Company,
(2) by either the Company or Crane upon notification to the non-terminating
party by the terminating party:
(a) if the Company shall submit the Plan of Merger to the Company's
stockholders and the requisite vote of the Company's stockholders shall not
have been obtained; or
(b) if any court of competent jurisdiction or other competent
governmental authority shall have issued a judgment, decree, order or writ
making illegal or otherwise restricting, preventing or prohibiting the
Merger and such judgment, decree, order or writ shall have become final and
nonappealable.
(3) By the Company:
(a) Upon two days' prior written notice to Crane if the Purchaser (or
any of its subsidiaries or affiliates) shall not have paid for the Shares
pursuant to the Offer within 45 days after the commencement of the Offer;
PROVIDED, HOWEVER, that the Company shall not be permitted to terminate this
Agreement pursuant to this clause (a) if such failure to pay for the Shares
shall have been caused by or resulted from an event described in clause (2)
(b) above and such event shall not have become final and nonappealable, in
which event the Company may terminate the Merger Agreement only if the
Purchaser shall have failed to purchase Shares pursuant to the Offer within
ten (10) business days after the elimination of such judgment, decree, order
or writ, but in any event within sixty (60) days following issuance of such
judgment, decree, order or writ; or
(b) if the Offer shall have expired or been terminated in accordance
with its terms without any of the Shares having been purchased thereunder
and the Purchaser shall have failed to purchase within ten (10) days thereof
the Shares purchasable by the Purchaser under the Stock Purchase Agreement;
or
(c) upon two days' prior written notice to Crane if the Effective Time
shall not have occurred on or before November 30, 1994 due to a failure of
any of the conditions set forth in the Merger Agreement; or
(d) if, prior to the purchase of Shares pursuant to the Offer,
(i) the Board of Directors of the Company shall have withdrawn or
modified in a manner adverse to Crane or the Purchaser its approval or
recommendation of the Offer, the Merger Agreement or the Merger in order
to permit the Company to execute a definitive agreement providing for the
acquisition of the Company or in order to approve another tender offer
for the Shares, in either case, as determined by the Board of Directors
of the Company in good faith, after consultation with its legal and
financial advisers, to be financially more favorable to the Company's
stockholders than the Offer, or
(ii) the Board of Directors of the Company shall have recommended
such other acquisition or offer,
provided that, in the case of either (i) or (ii), the Purchaser shall have
failed to purchase within ten days thereafter the Shares purchasable by the
Purchaser under the Stock Purchase Agreement,
(4) by Crane and the Purchaser upon two days' prior written notice to the
Company:
(a) if, due to an occurrence which would result in a failure to satisfy
any of the conditions set forth in Section 14 hereof, the Purchaser (or any
of its subsidiaries or affiliates) shall have terminated the Offer (or
permitted it to expire) without the purchase of the Shares thereunder) or
21
(b) if the Effective Time shall not have occurred on or before November
30, 1994 due to a failure of any of the conditions to the obligations of the
Crane and the Purchaser set forth in the Merger Agreement; or
(c) if the Company shall have withdrawn or modified in any manner
adverse to the Purchaser its approval or recommendation of the Offer, the
Merger Agreement or the Merger, provided that if the Purchaser shall
purchase within ten days thereafter the Shares purchasable by the Purcahser
under the Stock Purchase Agreement, and thereby owns at least a majority of
the Shares, the Purchaser shall use its best efforts to consummate a Merger
as contemplated by the Merger Agreement; or
(d) if the Company deliberately fails to perform any covenant or
agreement under the Merger Agreement and such failure has resulted in, or is
reasonably expected to result in, a Material Adverse Effect (as defined
below); or
(e) if the Purchaser shall have failed to pay for Shares pursuant to the
Offer because of the occurrence of an event described in clause (2)(b) above
and such event shall not have become final and nonappealable, in which event
Crane and the Purchaser may terminate the Merger Agreement only if the
Purchaser shall not be permitted to purchase Shares pursuant to the Offer
within sixty (60) days following such event.
As used herein, "Material Adverse Effect" shall mean a material adverse
effect on (i) the business, assets, liabilities, results of operations,
condition (financial or otherwise) or prospects of the Company and its
subsidiaries taken as a whole, (ii) the ability of the Company to perform its
obligations under, and to consummate the transactions contemplated by, the
Merger Agreement, the Plan of Merger or any other agreement or instrument
contemplated thereby or to be entered into in connection herewith or therewith.
Notwithstanding the foregoing, a "Material Adverse Effect" shall not include any
material adverse effect caused by (i) any change in general economic conditions
or financial markets, (ii) any change in economic conditions in the industries
in which the Company operates or (iii) any change resulting from the
announcement of the Offer or the Merger.
NO SOLICITATIONS
The Company has agreed that it and its subsidiaries will not, directly and
indirectly, through any officer, director, agent or otherwise, (i) initiate,
solicit or encourage the submission of proposals or offers from any Person (a
"Potential Acquiror") relating to any Acquisition Transaction (as defined
below), or (ii) participate in any negotiations regarding, or furnish to any
Potential Acquiror any information with respect to any of the foregoing, or
(iii) otherwise cooperate in any way with, or assist or participate in,
facilitate or encourage any effort or attempt by any Potential Acquiror to seek
to do any of the foregoing. The company shall promptly notify Crane of any
proposal, expression of interest or offer relating to an Acquisition
Transaction, including the terms and conditions thereof and of any amendments or
revisions thereto and the identity of the Potential Acquiror. The Company shall
not terminate, make any changes in, or waive any rights under any contract to
which it is a party, to the extent such contract governs (i) the conduct of
another party with respect to purchases of Shares or the making of proposals for
a business combination with the Company, or (ii) the right of another party to
make use of information relating to the Company which is not publicly available.
The Company shall use its best efforts to enforce the terms of any such
contract. The Company has agreed to immediately cease and cause to be terminated
any existing activities, discussions or negotiations with any parties conducted
heretofore with any respect to any Acquisition Transaction. Notwithstanding the
foregoing, the Company is not prohibited from (i) taking any actions or
permitting any events described above, if, and to the extent that, the Board of
Directors shall conclude in good faith on advice of independent counsel that
such action should be taken in order for the Board of Directors of the Company
to act in a manner which is consistent with its fiduciary obligations under
applicable law or (ii) taking any position necessary in order to comply with the
filing and disclosure requirements of Rules 14d-9 and 14e-2(a) promulgated under
the Exchange Act. The Board of Directors of the Company has agreed to provide to
Crane reasonable notice of any action contemplated by the next
22
preceding sentence and shall continue to consult with Crane after taking such
action. For the purposes hereof, "Acquisition Transaction" means any merger,
consolidation or other business combination involving the Company or any of its
subsidiaries, or any acquisition in any manner of all or a substantial portion
of the equity of, or all or a substantial portion of the assets of, the Company
and its subsidiaries taken as a whole, whether for cash, securities or any other
consideration or combination thereof other than pursuant to the transactions
contemplated by the Merger Agreement.
OPERATION OF THE COMPANY'S BUSINESS UNTIL THE EFFECTIVE TIME
The Merger Agreement provides that from the date thereof until the Effective
Time the Company will use its best efforts to preserve substantially intact the
business organization and reputation of the Company and its subsidiaries, to
maintain the assets and properties of the Company and its subsidiaries in good
working order and condition, ordinary wear and tear excepted, to maintain
insurance with respect to assets and businesses of the Company and its
subsidiaries in such amounts and against such risks and losses as are currently
in effect, and to preserve the present relationships of the Company and its
subsidiaries with persons having significant business relations therewith, and
use reasonable efforts to keep available the services of the present officers
and employees of the Company and its subsidiaries.
The Merger Agreement further provides that the Company and its subsidiaries
shall conduct their respective businesses only in the ordinary course consistent
with past practice. Without limiting the generality of the foregoing, the
Company has agreed that neither it nor any of its subsidiaries will, without the
prior written consent of Crane: (i) issue or sell or commit to issue or sell any
capital stock of or other ownership interest in the Company or any of its
subsidiaries other than pursuant to exercise of outstanding stock options in
accordance with their terms; (ii) grant or commit to grant any options,
warrants, convertible securities or other rights to subscribe for, purchase or
otherwise acquire any shares of capital stock of or other ownership interest in
the Company or any of its subsidiaries; (iii) declare, set aside or pay any
dividend or distribution with respect to the capital stock of the Company or any
of its subsidiaries not wholly owned; (iv) directly or indirectly redeem,
purchase or otherwise acquire or commit to acquire any capital stock of the
Company or any Option with respect thereto; (v) split, combine, reclassify or
take similar action with respect to any of its capital stock or issue or
authorize or propose the issuance of any other securities in respect of, in in
leiu of or in substitution for shares of its capital stock; (vi) adopt a plan of
complete or partial liquidation or resolutions providing for or authorizing such
liquidation or a dissolution, merger, consolidation, restructuring,
recapitalization or other reorganization; (vii) amend or propose to amend the
Articles of Incorporation, By-laws or other governing instruments of the Company
or any of its subsidiaries; (viii) except in the ordinary course of its business
consistent with past practice, enter into, amend or terminate any employment,
management or consulting agreement, or any collective bargaining agreement, with
any Person; (ix) (A) incur any indebtedness other than in the ordinary course of
its business consistent with past practice, or (B) voluntarily purchase, cancel,
prepay or otherwise provide for a complete or partial discharge in advance of a
scheduled repayment date with respect to, or waive any right under, any
indebtedness other than in the ordinary course of its business consistent with
past practice; (x) acquire (by merging or consolidating with, or by purchasing a
substantial equity interest in or a substantial portion of the assets of, or by
any other manner) any business or any corporation, partnership, association or
other business organization or division thereof or otherwise acquire or enter
into any agreement relating to such an acquisition; (xi) except to the extent
required by applicable law, (A) make or permit to be made any material change in
(i) any pricing, marketing, purchasing, investment, accounting, financial
reporting, inventory, credit, allowance or tax practice or policy or (ii) any
method of calculating any bad debt, contingency or other reserve for accounting,
financial reporting or tax purposes or (B) make any material tax election or
settle or compromise any material income tax liability with any Governmental or
Regulatory Authority; (xii) other than sales of products and inventory in the
ordinary course of its business consistent with past practice, sell, lease,
license, grant any security interest in or otherwise dispose of or encumber any
of its assets or properties, including without limitation, any of its
23
intellectual property; (xiii) make any representation or promise, oral or
written, to any officer, employee or consultant of the Company or any of its
subsidiaries concerning any benefit plan, or concerning benefits to be provided
to such person following the Effective Time, except, in each case, for
statements consistent with the terms of any Company benefit plan (as constituted
on February 11, 1994) and for statements as to the rights or accrued benefits of
any such person under the terms of any Company benefit plan; (xiv) make any
increase in salary, wages or other compensation of (a) any present or former
director, officer or consultant of the Company or any of its subsidiaries or (b)
any employee of the Company or any of its subsidiaries other than in the
ordinary course of its business consistent with past practice; (xv) establish or
modify (A) targets, goals, pools or similar provisions in respect of any fiscal
year under any Company benefit plan, employment-related agreement or other
employee compensation arrangement or (B) salary ranges, increase guidelines or
similar provisions in respect of any Company benefit plan, employment-related
agreement or other employee compensation arrangement; (xvi) adopt, enter into,
amend, modify or terminate (partially or completely) any Company benefit plan
except to the extent required by applicable law or in the ordinary course of its
business consistent with past practice; (xvii) enter into, amend or modify any
contract with any person containing any provision or covenant prohibiting or
limiting the ability of the Company or any subsidiary to engage in any business
or limiting the ability of any person to compete with the Company or any
subsidiary; (xviii) enter into, amend or modify any contract, or engage in any
new transaction outside the ordinary course of business consistent with past
practice or not on an arm's length basis, with any shareholder or affiliate of
the Company or any of its subsidiaries; (xix) enter into, amend in any material
respect, or terminate any contract, except in the ordinary course of its
business consistent with past practice; (xx) make any capital expenditures or
commitments for additions to plant, property or equipment constituting capital
assets which individually exceed $50,000, or in the aggregate exceed $250,000;
(xxi) make any change in the lines of business in which it participates or is
engaged; or (xxii) enter into any contract, agreement, commitment or arrangement
to do or engage in any of the foregoing.
In addition, the Company has agreed to confer on a regular and frequent
basis with Crane, through a liaison designated by Crane and satisfactory to the
chief executive officer of the Company, with respect to its business and
operations and other matters relevant to the Merger, and to promptly advise
Crane, of any change or event having, or, which, insofar as can be reasonably
foreseen, could have, a Material Adverse Effect.
COMPANY BOARD REPRESENTATION
Upon the purchase by Purchaser, pursuant to the Offer or pursuant to
Purchaser's rights under the Stock Purchase Agreement, or otherwise, of at least
a majority of the outstanding Shares, Purchaser is forthwith entitled to
designate at least a majority of the Company's Board of Directors.
EMPLOYEE STOCK OPTIONS
The Merger Agreement provides that immediately prior to the consummation of
the Offer, each holder of then outstanding employee or non-employee director
stock options (whether or not then exercisable) shall receive from the Company
in settlement of each option a cash payment from the Company in an amount equal
to the product of (i) the difference between (1) the Merger Consideration and
(2) the exercise price per share for the purchase of Shares under such option,
and (ii) the number of Shares covered by such option.
INDEMNIFICATION AND INSURANCE
Crane has agreed that it will cause the Surviving Corporation, from and
after the Effective Time, to (except to the extent prohibited by applicable law)
indemnify, defend and hold harmless the present and former directors, officers
and employees of the Company and its subsidiaries in office prior to the
Effective Time with respect to all acts and omissions by such persons on or
prior to the Effective Time to, the fullest extent provided in the Company's
Articles of Incorporation and By-Laws in effect on February 11, 1994 ( and
advance expenses incurred in defense of any action or suit in respect of any
such act or omission as provided therein). Crane has also agreed to, or to cause
the Surviving
24
Corporation to, maintain directors and officers liability insurance coverage
applicable to the Company's and its subsidiaries' directors and officers
providing substantially the same coverages and limits as the Company directors
and officers liability insurance coverage existing on the date hereof, and keep
such coverage in force until the expiration or six (6) years after the Effective
Time with respect to any error or omission which may be alleged to have occurred
prior to the Effective Time to the extent the same would have been covered by
the present Company directors and officers liability insurance coverage;
PROVIDED, HOWEVER, that such insurance shall be required to be maintained only
to the extent that the annual premium (or the premium on any annualized basis)
does not exceed one hundred and fifty percent (150%) of the annual premium
currently paid by the Company for such insurance. The Company has represented to
Crane that there are no claims currently asserted or, to its knowledge,
threatened which would give rise to such indemnification or potential payment
under such insurance.
REPRESENTATIONS AND WARRANTIES
The Merger Agreement contains various representations and warranties of the
Company all of which terminate on February 18, 1994.
THE STOCK PURCHASE AGREEMENT
Under a Stock Purchase Agreement (the "Stock Purchase Agreement") dated as
of February 11, 1994, among the individual shareholders and trusts described in
Schedule A thereto (the "Selling Stockholders"), Crane and the Purchaser,
Purchaser has agreed to purchase and the Selling Stockholders have agreed to
sell to Purchaser a total of 2,899,872 Shares (the "Subject Shares")
constituting approximately 51% of the Shares outstanding on February 4, 1994,
immediately following the acceptance for purchase and purchase of Shares
pursuant to the Offer, at the Merger Consideration. Also pursuant to the Stock
Purchase Agreement, if the Company's Board of Directors shall publicly withdraw
or modify in a manner adverse to Crane and Purchaser its recommendation of the
Offer, the Merger Agreement or the Merger, or recommend another acquisition
transaction, or shall have resolved to do any of the foregoing, then Purchaser
shall have the right to purchase the Subject Shares at $13 per share.
THE CONFIDENTIALITY AGREEMENT
The Company and Crane entered into a Confidentiality Agreement dated
December 17, 1993 ( the "Confidentiality Agreement") which provides that each
party will maintain the confidentiality of information received from the other
party. In addition, Crane agreed that, for a period of eighteen months from the
date of the Confidentiality Agreement, neither it nor any of its affiliates
would, without the prior written consent of the Company or its Board of
Directors, acquire or offer to acquire any Shares, solicit any proxies to vote
such Shares, or make any public announcement with respect to any extraordinary
transaction involving the Company. The Company has informed Crane that, by
approving the making of the Offer and the Merger Agreement, the Board of
Directors waived the restrictions of the Confidentiality Agreement as and to the
extent necessary to permit the making and the consummation of the Offer and the
execution and performance of the Stock Purchase Agreement.
The foregoing includes a summary of certain provisions of the Merger
Agreement, the Stock Purchase Agreement and the Confidentiality Agreement,
copies of which have been filed as Exhibits to the Schedule 14D-1. The Merger
Agreement should be available for examination and copies should be obtainable in
the manner set forth in Section 8 hereof (except that Schedule 14D-1 will not be
available in the regional offices of the Commission). The description of the
Merger Agreement, the Stock Purchase Agreement and the Confidentiality Agreement
set forth herein do not purport to be complete and are qualified in their
entirety by reference to the Merger Agreement, the Stock Purchase Agreement and
the Confidentiality Agreement.
STATUTORY REQUIREMENTS
STOCKHOLDER VOTE
The Company has advised the Purchaser that, as of February 4, 1994, there
were 5,695,647 Shares outstanding. As of that date, 341,475 Shares were reserved
for issuance pursuant to the
25
Company's Incentive Stock Option Plans (the "Option Plans") and 250,910 Shares
were reserved for issuance pursuant to the Company's Employee Stock Purchase
Plan (the "Stock Purchase Plan"). The Purchaser has been advised that the
Company will terminate the Stock Purchase Plan prior to consummation of the
Offer. Based on the information supplied by the Company, the Purchaser will need
to purchase (pursuant to the Offer, the Stock Purchase Agreement hereinafter
described, or otherwise) at least 3,797,288 Shares (assuming that no Shares are
issued in addition to those outstanding on February 4, 1994 and assuming
termination of the Stock Purchase Plan prior to consummation of the Offer) or
3,967,570 Shares (on a fully-diluted basis) in order to have sufficient voting
power to approve the Merger without the affirmative vote of any other
stockholder of the Company and 5,126,082 Shares (assuming no Shares are issued
in addition to those outstanding on February 4, 1994 and assuming termination of
the Stock Purchase Plan prior to consummation of the Offer) or 5,351,901 Shares
(on a fully diluted basis) in order to effect the Merger as a "short form"
merger without a meeting or vote of any other stockholder of the Company. The
Merger Agreement provides that immediately prior to the consummation of the
Offer, holders of then outstanding stock options under the Option Plans will
receive cash payments from the Company in settlement of each such option. See
Section 10. This may have the effect of reducing the number of Shares issued
upon exercise of options under the Option Plans.
If the Purchaser acquires at least 90% of the outstanding Shares, the
Purchaser would have the power to consummate the Merger without a meeting or
vote of the other shareholders of the Company pursuant to the "short form"
merger provisions of the WBCA. Under the WBCA as currently in effect, the
Purchaser believes that a "short form" merger would have to be effected in the
form of a merger of the Company into the Purchaser. Any such merger would
require amendment of the Merger Agreement and may require the consent of third
parties under certain of the agreements to which the Company is subject.
Although the Purchaser, Crane and the Company have agreed to consummate the
Merger, there can be no assurance that the Merger will be consummated or as to
the timing of the Merger because the Merger is subject to certain conditions,
some of which are beyond the control of the Purchaser, Crane and the Company.
See "The Merger Agreement -- Conditions to the Merger" in this Section 10. Since
the Purchaser's ultimate objective is to acquire ownership of all of the Shares,
if the Merger does not take place due to the failure to satisfy certain
conditions to the Merger, by agreement of the Purchaser, Crane and the Company,
or otherwise, the Purchaser would consider, and reserves the right to effect,
the acquisition, whether directly or through an affiliate, of Shares through
privately negotiated or open market purchases, or subsequent tender offers or by
any other permissible means deemed advisable by it, including, without
limitation, a reverse stock split, or a different merger or other combination of
the Company with the Purchaser or an affiliate or subsidiary thereof. Any of
these possible transactions might be on terms the same as, or more or less
favorable than, those of the Offer or the Merger.
DISSENTERS' RIGHTS
Holders of Shares do not have appraisal rights as a result of the Offer.
However, if the Merger is ultimately consummated, shareholders who have filed
timely notices of intent to dissent will have certain rights under the WBCA to
dissent to the Merger and receive payment of the fair value of their Shares.
Such rights to dissent, if the statutory procedures are complied with, could
result in a judicial determination of the fair value of the Shares required to
be paid to dissenting shareholders. The fair value of the Shares awarded to
dissenting shareholders would be the fair value as of the time immediately
preceding the consummation of the Merger, and would exclude any appreciation or
depreciation that occurred in anticipation of the Merger. The court would also
allow interest, at a rate that it determines to be fair and equitable, from the
date on which the Merger is consummated.
Crane and the Purchaser cannot make any representations as to the outcome of
any determination of fair value by a court, and holders of Shares should
recognize that such a determination of fair value could result in a price higher
than, lower than, or equal to the price available to shareholders
26
pursuant to the Merger. Moreover, Crane may argue in such a court proceeding
that, for purposes of such proceeding, the fair value of the Shares is less than
the price available pursuant to the Merger. Under Washington law, the court may
consider a variety of factors in determining fair value. These include the
market price at which the Shares are trading, the net value of the Company's
assets, the anticipated future business prospects of the Company, estimates of
the capitalized value of future earnings and other factors. Washington law
requires that the court consider all relevant facts and curcumstances in
determining the fair value and that it did not give undue emphasis to any one
factor.
The Merger may be found to be subject to additional requirements for the
existence of "fairness." Several recent cases in jurisdictions other than
Washington, which may or may not apply to a merger or other business combination
involving the Company, have held that a controlling shareholder of a company
involved in a merger or other business combination has a fiduciary duty to the
other shareholders. In determining whether the controlling shareholder has
fulfilled such duty to the shareholders, certain courts have considered, among
other things, the type and amount of the consideration to be received by such
other shareholders and whether the other shareholders are accorded appraisal
rights.
THE FOREGOING SUMMARY OF THE RIGHTS OF OBJECTING STOCKHOLDERS DOES NOT
PURPORT TO BE A COMPLETE STATEMENT OF THE PROCEDURES TO BE FOLLOWED BY
STOCKHOLDERS DESIRING TO EXERCISE THEIR DISSENTERS' RIGHTS. THE PRESERVATION AND
EXERCISE OF DISSENTERS' RIGHTS ARE CONDITIONED ON STRICT ADHERENCE TO THE
APPLICABLE PROVISIONS OF THE WBCA.
"GOING PRIVATE" TRANSACTIONS
The Commission has adopted Rule 13e-3 under the Exchange Act which is
applicable to certain "going private" transactions and which may under certain
curcumstances be applicable to the Merger. However, Rule 13e-3 would be
inapplicable if (i) the Shares are deregistered under the Exchange Act prior to
the Merger or other business combination or (ii) the Merger or other business
combination is consummated within one year after the purchase of the Shares
pursuant to the Offer and the amount paid per Share in the Merger or other
business combination is at least equal to the amount paid per Share in the
Offer. If applicable, Rule 13e-3 requires, among other things, that certain
financial information concerning the fairness of the proposed transaction and
the consideration offered to minority stockholders in such transaction be filed
with the Commission and disclosed to stockolders prior to the consummation of
the transaction.
11. PURPOSE OF THE OFFER; PLANS FOR THE COMPANY.
PURPOSE OF THE OFFER
The purpose of the Offer is to acquire as many Shares as possible as a first
step in the acquisition by the Purchaser of the entire equity interest in the
Company. The purpose of the Merger is to acquire all Shares not tendered and
purchased pursuant to the Offer, the Stock Purchase Agreement or otherwise. The
Purchaser currently intends, as soon as practicable following completion of the
Offer, to seek to consummate the Merger.
27
PLANS FOR THE COMPANY
Except as described in this Offer to Purchase, based on their current
knowledge of the Company, Crane and the Purchaser have no present plans or
proposals that would result in (i) an extraordinary corporate transaction, such
as a merger, consolidation, reorganization or liquidation involving the Company
or any of its subsidiaries, (ii) sale or transfer of a material amount of assets
involving the Company or any of its subsidiaries, (iii) any material changes in
the Company's present capitalization or dividend policy of the Company, or (iv)
any other material change in the Company's corporate structure or business.
However, Crane and its affiliates are continuing their review of the Company and
its assets, corporate structure, capitalization, operations, properties,
policies, management and personnel. After the completion of such review, Crane
may propose or develop alternative plans or proposals, including mergers,
transfers of a material amount of assets or other transactions or changes of the
nature described above. Crane and the Purchaser also reserve the right to effect
any change in the Company's operations, properties, policies, management and
personnel as may be deemed necessary as a result of such continuing review
thereof. Crane expects that upon effectiveness of the Merger or shortly
thereafter, the Board of Directors of the Company will be composed exclusively
of representatives of Crane and representatives of Crane will be added to or
replace existing directors of the Company's subsidiaries.
12. SOURCE AND AMOUNT OF FUNDS. The total amount of funds required to
purchase all of the Shares pursuant to the Offer, the Stock Purchase Agreement
and the Merger, to pay the Company's net indebtedness if certain long-term
lenders accept the offer to repay which the Company is required to make upon a
change in control and to pay all fees and expenses in connection with the Offer
and the Merger is expected to approximate $94 million. All sums required for the
foregoing purposes will be provided by Crane to the Purchaser and will be
borrowed by Crane under existing unsecured, short-term lines of credit.
13. DIVIDENDS AND DISTRIBUTIONS. Except as contemplated by the Merger
Agreement (including, without limitation, the making of the Offer) the Company
has agreed that neither it nor any of its subsidiaries will, between the date of
the Merger Agreement and the Effective Time, directly or indirectly do, or
propose or agree to do, any of the following without the prior written consent
of Purchaser:
(i) issue or sell or commit to issue or sell any capital stock of or
other ownership interest in the Company or any of its Subsidiaries other
than pursuant to exercise of outstanding Company Employee Options in
accordance with their terms;
(ii) grant or commit to grant any Options, warrants, convertible
securities or other rights to subscribe for, purchase or otherwise acquire
any shares of capital stock of or other ownership interest in the Company or
any of its Subsidiaries;
(iii) declare, set aside or pay any dividend of distribution with respect
to the capital stock of the Company or any of its Subsidiaries not wholly
owned;
(iv) directly or indirectly redeem, purchase or otherwise acquire or
commit to acquire any capital stock of the Company or any Option with
respect thereto; or
(v) split, combine, reclassify or take similar action with respect to
any of the its capital stock or issue or authorize or propose the issuance
of any other securities in respect of, in lieu of or in substitution for
shares of its capital stock;
If shares are purchased pursuant to the Offer, and, on or after March 17,
1994, the Company should declare or pay any dividend on the Shares or any
distribution (including, without limitation, the issuance of additional Shares
pursuant to a stock dividend or stock split, the issuance of other securities or
the issuance of rights for the purchase of any securities) with respect to the
Shares that is payable or distributable to stockholders of record on a date
prior to the transfer into the name of the Purchaser or its nominees or
transferees on the Company's stock transfer records of the Shares
28
purchased pursuant to the Offer, then, without prejudice to the Purchaser's
rights under Section 14, (i) the purchase price per Share payable by the
Purchaser pursuant to the Offer shall be reduced by the amount of any such cash
dividend or cash distribution and (ii) any such noncash dividend, distribution,
issuance, proceeds or right to be received by the tendering stockholders shall
(a) be received and held by the tendering stockholders for the account of the
Purchaser and will be required to be promptly remitted and transferred by each
tendering stockholder to the Depositary for the account of the Purchaser,
accompanied by appropriate documentation of transfer, or (b) at the direction of
the Purchaser, be exercised for the benefit of the Purchaser, in which case the
proceeds of such exercise will promptly be remitted to the Purchaser. Pending
such remittance and subject to applicable law, the Purchaser will be entitled to
all rights and privileges as owner of any such noncash dividend, distribution,
issuance, proceeds or right and may withhold the entire purchase price or deduct
from the purchase price the amount of value thereof, as determined by the
Purchaser in its sole discretion.
14. CERTAIN CONDITIONS OF THE OFFER. Notwithstanding any other provisions
of the Offer, and in addition to (and not in limitation of) the Purchaser's
rights to extend and amend the Offer at any time in its sole discretion (subject
to the provisions of the Merger Agreement), the Purchaser shall not be required
to accept for payment or, subject to any applicable rules and regulations of the
SEC, including Rule 14e-1(c) under the Securities Exchange Act (relating the
Purchaser's obligation to pay for or return tendered Shares promptly after
termination or withdrawal of the Offer), pay for, and may delay the acceptance
for payment of or, subject to the restriction referred to above, the payment
for, any tendered Shares, and may terminate the Offer as to any Shares not then
paid for, if (i) Shares representing (together with shares available for
purchase by the Purchaser under the Stock Purchase Agreement) less than 66- 2/3%
of the Shares outstanding on a fully diluted basis shall have been validly
tendered and not properly withdrawn pursuant to the Offer, (ii) any applicable
waiting period under the HSR Act shall not have expired or terminated, or (iii)
at any time on or after February 11, 1994 and before the time of payment for any
such Shares (whether or not any Shares have theretofore been accepted for
payment or paid for pursuant to the Offer), any of the following events shall
have occurred and remain in effect:
(a) there shall have been any action taken, or any Law or Order
promulgated, entered, enforced, enacted, issued or deemed applicable to the
Offer or the Merger by any court of competent jurisdiction or other
competent governmental or regulatory authority which directly or indirectly
(1) prohibits, or imposes any material limitations on, Crane or the
Purchaser's ownership or operation (or that of any of their respective
subsidiaries or affiliates) of all or a material portion of their or the
Company's businesses or assets, or compels Crane or the Purchaser (or their
respective Subsidiaries and affiliates) to dispose of or hold separate any
material portion of the business or assets of the Company or Crane and their
respective subsidiaries, in each case taken as a whole, (2) prohibits or
makes illegal the acceptance for payment, payment for or purchase of Shares
pursuant to the Offer or the consummation of the Offer or the Merger, (3)
results in the delay in or restricts the ability of the Purchaser, or
renders the Purchaser unable, to accept for payment, pay for or purchase
some or all of the Shares tendered pursuant to the Offer, (4) imposes or
confirms material limitations on the ability of the Purchaser or Crane (or
any of their respective Subsidiaries or affiliates) effectively to exercise
full rights of ownership of the Shares purchased pursuant to the Offer,
including, without limitation, the right to vote such Shares on all matters
properly presented to the Company's stockholders, or (5) has or is
reasonably expected to have a Material Adverse Effect;
(b) there shall be instituted or pending any action, proceeding or
counterclaim brought by a governmental or regulatory authority (1)
challenging the acquisition by Crane or the Purchaser of Shares or otherwise
seeking to restrain or prohibit the consummation of the Offer or the Merger
or seeking to obtain any material damages as a result thereof, or (2) that
could reasonably be expected to result, directly or indirectly, in any of
the consequences referred to in clauses (1) through (5) of paragraph (a)
above;
(c) there shall have occurred a change or event subsequent to February
11, 1994 which has had, or is reasonably expected to have a Material Adverse
Effect;
29
(d) the Company shall not have performed and complied with each
agreement, covenant and obligation required by the Merger Agreement to be
performed or complied with by it except where the failure to perform or
comply has not had or is not reasonably expected to have a Material Adverse
Effect;
(e) the Merger Agreement shall have been terminated in accordance with
its terms;
(f) the Company's Board of Directors shall have publicly (including by
amendment of the Schedule 14D-9) withdrawn or modified in a manner adverse
to Crane and the Purchaser its recommendation of the Offer, the Merger
Agreement or the Merger, or recommended another Acquisition Transaction, or
shall have resolved to do any of the foregoing; or
(g) Crane, the Purchaser and the Company shall have agreed that the
Purchaser shall terminate the Offer or postpone the payment for Shares
thereunder;
which in the good faith judgment of Crane and the Purchaser, in any such case,
and regardless of the circumstances (including any action or inaction by Crane
or the Purchaser giving rise to such condition) makes it inadvisable to proceed
with the Offer or with such acceptance for payment or payment or with the
Merger.
The foregoing conditions are for the sole benefit of Crane and the
Purchaser, may be asserted by Crane and Crane Acquisition Corp. regardless of
the circumstances (including any action or inaction by Crane or the Purchaser)
giving rise to any such condition and, subject to the terms and conditions of
the Merger Agreement, may be waived by Crane and the Purchaser, in whole or in
part at any time and from time to time in the sole discretion of Crane and the
Purchaser. The failure by Crane and the Purchaser at any time to exercise any of
the foregoing rights shall not be deemed a waiver of any such right and each
such right shall be deemed an ongoing right which may be asserted at any time
and from time to time.
15. CERTAIN LEGAL MATTERS; REQUIRED REGULATORY APPROVALS. Except as set
forth in this Offer to Purchase, based on a review of publicly available
information regarding the Company and the review of certain information
furnished by the Company to the Purchaser and Crane and discussions of
representatives of Purchaser and Crane with representatives of the Company
during Purchaser's and Crane's investigation of the Company (see Section 10),
the Purchaser and Crane are not aware of any licenses or regulatory permits that
would be material to the business of the Company, and its subsidiaries, taken as
a whole, and that might be adversely affected by the Purchaser's acquisition of
Shares (and the indirect acquisition of the stock of the Company's subsidiaries)
as contemplated herein, or any filings, approvals or other actions by or with
any domestic, foreign or supranational governmental authority or administrative
or regulatory agency that would be required prior to the acquisition of Shares
(or the indirect acquisition of the stock of the Company's subsidiaries) by the
Purchaser pursuant to the Offer as contemplated herein. Should any such approval
or other action be required, there can be no assurance that any such additional
approval or action, if needed, would be obtained without substantial conditions
or that adverse consequences might not result to the Company's business, or that
certain parts of the Company's or Crane's business might not have to be disposed
of or held separate or other substantial conditions complied with in order to
obtain such approval or action or in the event that such approvals were not
obtained or such actions were not taken. The Purchaser's obligation to purchase
and pay for Shares is subject to certain conditions, including conditions with
respect to legal matters discussed in this Section 15. See Section 14.
STATE TAKEOVER LAWS. The Company is incorporated under the laws of the
State of Washington. As a Washington corporation, the Company is subject to the
provisions of the WBCA, including those described below.
THE WASHINGTON MORATORIUM STATUTE. The Washington Moratorium Statute
purports to prohibit certain "significant business transactions" of a target
corporation with a greater-than-ten percent shareholder (an "acquiring person")
for a period of five years unless the board of directors of the target
corporation, prior to the acquiring person's stock acquisition, approves the
acquisition by
30
the acquiring person of more than 10% of the target corporation's voting stock
or approves the significant business transaction itself. The Washington
Moratorium Statute defines a significant business transaction to include a
merger between a target corporation and an acquiring corporation and any
agreement providing therefor.
The Company's Board of Directors has unanimously approved the Merger
Agreement and the transactions contemplated thereby, including the Offer and the
Merger, which approvals constitute approval of all "significant business
transactions" and "purchases of shares" contemplated by the Merger Agreement for
purposes of the Washington Moratorium Statute.
THE WASHINGTON FAIR PRICE STATUTE. The Washington Fair Price Statute
generally requires that certain business combination transactions between a
corporation and a 20% shareholder must be approved by a two-thirds vote of
disinterested shareholders, unless (1) such transaction is approved by a
majority of the corporation's disinterested directors or (2) a majority of the
disinterested directors determines that the fair market value of the
consideration to be received by the disinterested shareholders, for shares of
any class of which shares are owned by any interested shareholder, is not less
than the highest fair market value paid by any interested shareholder in
acquiring shares of the same class within 24 months of the proposed transaction.
The Company's Board of Directors has unanimously approved the Merger
Agreement and the transactions contemplated thereby, including the Offer and the
Merger, rendering the Washington Fair Price Statute inapplicable to the Offer
and the Merger.
The foregoing summaries of the Washington Moratorium Statute and the
Washington Fair Price Statute do not purport to be complete and are qualified in
their entirety by reference to the provisions of such Statutes.
A number of other states have adopted takeover laws and regulations which
purport, to varying degrees, to be applicable to attempts to acquire securities
of corporations which are incorporated in such states or which have substantial
assets, security holders, principal executive offices or principal places of
business therein. To the extent that certain provisions of certain of these
state takeover statutes purport to apply to the Offer, the Purchaser believes
that such laws conflict with federal law and constitute an unconstitutional
burden on interstate commerce. In 1982, the Supreme Court of the United States,
in EDGAR V. MITE CORP., invalidated on constitutional grounds the Illinois
Business Takeovers Statute, which as a matter of state securities law, made
takeovers of corporations meeting certain requirements more difficult, and the
reasoning in such decision is likely to apply to certain other state takeover
statutes. In 1987, however, in CTS CORP. V. DYNAMICS CORP. OF AMERICA, the
Supreme Court of the United States held that the State of Indiana could, as a
matter of corporate law and, in particular, those aspects of corporate law
concerning corporate governance, constitutionally disqualify a potential
acquiror from voting on the affairs of a target corporation without the prior
approval of the remaining stockholders, provided that such laws were applicable
only under certain conditions.
The Company, directly or through subsidiaries, conducts business in a number
of states throughout the United States, some of which have enacted takeover
laws. Purchaser does not know whether any of these laws will, by their terms,
apply to the Offer or the Merger and has not complied with any such laws. Should
any person seek to apply any state takeover law, Purchaser will take such action
as then appears desirable, which may include challenging the validity or
applicability of any such statute in appropriate court proceedings. In the event
it is asserted that one or more state takeover laws is applicable to the Offer
or the Merger, and an appropriate court does not determine that it is
inapplicable or invalid as applied to the Offer, Purchaser might be required to
file certain information with, or receive approvals from, the relevant state
authorities. In addition, if enjoined, Purchaser might be unable to accept for
payment any Shares tendered pursuant to the Offer, or be delayed in continuing
or consummating the Offer and the Merger. In such case, the Purchaser may not be
obligated to accept for purchase, or pay for, any Shares tendered. See Section
14.
31
ANTITRUST. Under the HSR Act, and the rules and regulations that have been
promulgated thereunder by the Federal Trade Commission (the "FTC"), certain
acquisition transactions may not be consummated until certain information and
documentary material has been furnished for review by the Antitrust Division of
the Department of Justice (the "Antitrust Division") and the FTC and certain
waiting period requirements have been satisfied. The acquisition of Shares
pursuant to the Offer is, and the Merger may be, subject to such requirements.
Crane and the Purchaser will file a Premerger Notification and Report Form with
the Antitrust Division and the FTC in connection with the purchase of Shares
pursuant to the Offer and the Merger.
Under the provisions of the HSR Act applicable to the Offer, the purchase of
Shares pursuant to the Offer may not be consummated until the expiration of a
15-calendar day waiting period following the filing by Crane, unless such
waiting period is earlier terminated by the FTC and the Antitrust Division or
Crane receives a request for additional information or documentary material from
the Antitrust Division or the FTC prior thereto. If either the FTC or the
Antitrust Division were to request additional information or documentary
material from Crane, the waiting period would expire at 11:59 p.m., New York
City time, on the tenth calendar day after the date of substantial compliance
with such request. Thereafter, the waiting period could be extended only by
court order or with the consent of Crane. The additional 10-calendar day waiting
period may be terminated sooner by the FTC and the Antitrust Division. Although
the Company is required to file certain information and documentary material
with the Antitrust Division and the FTC in connection with the Offer, neither
the Company's failure to make such filings nor a request from the Antitrust
Division or the FTC for additional information or documentary material made to
the Company will extend the waiting period with respect to the Offer.
The Antitrust Division and the FTC frequently scrutinize the legality under
the antitrust laws of transactions such as the acquisition of Shares by the
Purchaser pursuant to the Offer and the Merger. At any time before or after the
Purchaser's purchase of Shares, the Antitrust Division or the FTC could take
such action under the antitrust laws as either deems necessary or desirable in
the public interest, including seeking to enjoin the purchase of Shares pursuant
to the Offer, the divestiture of Shares purchased thereunder or the divestiture
of substantial assets of the Company or Crane. Private parties as well as state
attorneys general may also bring legal actions under the antitrust laws under
certain circumstances.
Based upon an examination of publicly available information relating to the
businesses in which the Company is engaged, the Purchaser and Crane believe that
the acquisition of Shares pursuant to the Offer and the Merger would not violate
the antitrust laws. The Purchaser and Crane believe that retention of all of the
operations of the Company and Crane should be permitted under the antitrust
laws. Nevertheless, there can be no assurance that a challenge to the Offer on
antitrust grounds will not be made, or, if such challenge is made, what the
result will be. See Section 14.
FOREIGN APPROVALS. According to the 1992 10-K, the Company also conducts
business in a number of foreign countries and jurisdictions. In connection with
the acquisition of the Shares pursuant to the Offer, the laws of certain of
those foreign countries and jurisdictions may require the filing of information
with, or the obtaining of the approval of, governmental authorities in such
countries and jurisdictions. The governments in such countries and jurisdictions
might attempt to impose additional conditions on the Company's operations
conducted in such countries and jurisdictions as a result of the acquisition of
the Shares pursuant to the Offer or the Merger. There can be no assurance that
the Purchaser will be able to cause the Company or its subsidiaries to satisfy
or comply with such laws or that compliance or non-compliance will not have
adverse consequences for the Company or any subsidiary after purchase of the
Shares pursuant to the Offer or the Merger. Neither the Purchaser nor Crane is
aware of any material pending legal proceedings relating to the Offer.
16. CERTAIN FEES AND EXPENSES. Beacon Hill Partners, Inc. has been retained
by the Purchaser as Information Agent in connection with the Offer. The
Information Agent may contact holders of Shares by mail, telephone, telex,
telegraph and personal interview and may request brokers, dealers and
32
other nominee stockholders to forward material relating to the Offer to
beneficial owners. Customary compensation will be paid for all such services in
addition to reimbursement of reasonable out-of-pocket expenses. The Purchaser
has agreed to indemnify the Information Agent against certain liabilities and
expenses, including liabilities under the federal securities laws.
In addition, First Interstate Bank has been retained as the Depositary. The
Depositary has not been retained to make solicitations or recommendations in its
role as Depositary. The Depositary will receive reasonable and customary
compensation for its services in connection with the Offer, will be reimbursed
for its reasonable out-of-pocket expenses and will be indemnified against
certain liabilities and expenses in connection therewith.
Except as set forth above, the Purchaser will not pay any fees or
commissions to any broker, dealer or other person (other than the Information
Agent) for soliciting tenders of Shares pursuant to the Offer. Brokers, dealers,
commercial banks and trust companies and other nominees will, upon request, be
reimbursed by the Purchaser for customary clerical and mailing expenses incurred
by them in forwarding materials to their customers.
17. MISCELLANEOUS. Crane and the Purchaser have filed with the Commission
the Schedule 14D-1, together with exhibits, pursuant to Rule 14d-3 of the
General Rules and Regulations under the Exchange Act, furnishing certain
additional information with respect to the Offer, and may file amendments
thereto. Such Schedule 14D-1 and any amendments thereto, including exhibits, may
be examined and copies may be obtained from the office of the Commission in the
same manner as described in Section 8 with respect to information concerning the
Company, except that they will not be available at the regional offices of the
Commission.
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATION ON BEHALF OF THE PURCHASER OR CRANE NOT CONTAINED IN THIS OFFER
TO PURCHASE OR IN THE LETTER OF TRANSMITTAL AND, IF GIVEN OR MADE, ANY SUCH
INFORMATION OR REPRESENTATION MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED.
Neither the delivery of the Offer to Purchase nor any purchase pursuant to the
Offer, shall, under any circumstances, create any implication that there has
been no change in the affairs of Crane, the Purchaser or the Company since the
date as of which information is furnished or the date of this Offer to Purchase.
CRANE ACQUISITION CORP.
February 17, 1994
33
SCHEDULE I
DIRECTORS AND EXECUTIVE OFFICERS OF CRANE
The following table sets forth the name, business address and principal
occupation or employment at the present time and during the last five years, and
the name, principal business and address of any corporation or other
organization in which such employment is or was conducted, of each director and
executive officer of Crane. Except as otherwise noted, each such person is a
citizen of the United States and the business address of each such person is 100
First Stamford Place, Stamford, CT 06902. Except as otherwise noted, each
occupation set forth opposite a person's name refers to employment with Crane
and each such person has held such occupation for at least the past five years.
All directors and executive officers of the Purchaser are executive officers of
Crane and are identified in the table below.
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PRESENT PRINCIPAL OCCUPATION OR EMPLOYMENT AND BUSINESS
ADDRESS AND MATERIAL OCCUPATIONS, OFFICES OR EMPLOYMENTS
NAME HELD DURING THE PAST FIVE YEARS
-------------------------------------------------------- --------------------------------------------------------
DIRECTORS
Mone Anathan, III Director since 1992, President, Filene's Basement Corp.,
40 Walnut Street Boston, MA (Retailer), 1988 to present; President,
Wellesley, MA 02181 Filene's Basement, a division of Federated Department
Stores, 1982 to 1988. Other directorships: Medusa
Corporation, Brookstone, Inc., Harvard Community Health
Plan, Advest Advantage Trusts.
E. Thayer Bigelow, Jr. Director since 1984. President and Chief Executive
300 First Stamford Place Officer, Time Warner Cable Programming Inc., Stamford,
Stamford, CT 06902 CT, 1991 to present; President, Home Box Office, Inc.
(cable programming and entertainment), a subsidiary of
Time Warner Inc., 1988 to 1991; President, American
Television and Communications Corporation (cable
television systems), a subsidiary of Time Inc., 1988;
Chief Financial Officer, Time, Inc., 1984 to 1988. Other
directorships: Medusa Corporation, BET Holdings, Inc.
R.S. Evans Chairman and Chief Executive Officer, 1984 to present;
President 1987 to 1991 and since June 30, 1992, Director
since 1979. Chairman and Chief Executive Officer of
Medusa Corporation, 1987 to present. Other
directorships: Medusa Corporation, Fansteel, Inc., HBD
Industries, Inc., Mid-Ocean Reinsurance Company Ltd.
Richard S. Forte Director since 1983. President, Forte Cashmere Company,
8A Pleasant Street Inc., Woonsocket, RI (importer and manufacturer), 1988
South Natick, MA 01760 to present; General Partner, Forte Cashmere Company 1982
to 1988; President, Jewell Brook Mills Inc. (woolen
spinners), 1981 to 1988. Other directorships: Medusa
Corporation.
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Dorsey R. Gardner Director 1982 to 1986 and since 1989.
One Post Office Square President, Kelso Management Co., Inc.,
Boston, MA 02109 Boston, MA (investment management). Other
directorships: American Values, III, IV,
Medusa Corporation, POCA Corp.
Dwight C. Minton Director since 1983. Chairman of the Board
469 N. Harrison Street and Chief Executive Officer, Church & Dwight
Princeton, NJ 08543 Co., Inc., Princeton, NJ (manufacturer of
consumer and specialty products). Other
directorships: Medusa Corporation, Chemical
Bank of New Jersey; First Brands Corporation.
Charles J. Queenan, Jr. Director since 1986. Partner, Kirpatrick &
1500 Oliver Building Lockhart, Pittsburgh, PA (attorneys at law).
Pittsburgh, PA 15222 Other directorships: Fansteel, Inc.,
Allegheny Ludlum Corporation, Medusa
Corporation.
Arthur A. Seeligson, Jr. Director since 1982. Independent Oil
4040 Broadway - Room 510 Operator, Investments, San Antonio, TX. Other
San Antonio, TX 78209 directorships: Medusa Corporation.
Boris Yavitz Director since 1987. Paul Garrett Professor
Old Canoe Place Road of Public Policy and Business Responsibility
Hampton Bays, NY 11946 and Former Dean, Columbia University Graduate
School of Business, New York, NY; Deputy
Chairman and Director, Federal Reserve Bank
of New York, 1976 to 1982; Director, The
Institute for the Future. Other
directorships: J.C. Penney Company Inc.,
Barnes Group, Inc., Medusa Corporation.
EXECUTIVE OFFICERS
R. S. Evans Chairman, Chief Executive Officer and
President. President of the Purchaser.
Jeremiah P. Cronin Vice President--Finance and Chief Financial
Officer, previously Senior Vice President
Finance and Administration of Research-
Cottrel, Inc. Vice President Finance and
Treasurer of the Purchaser.
Paul R. Hundt Vice President, Secretary and General
Counsel. Vice President, Secretary and
Director of the Purchaser.
L. Hill Clark Executive Vice President, previously
241 South Abbe Road President, Lear Romec Division of Crane, 1990
Elyria, Ohio 44035 to 1994; Plant Manager, Allied Signal
Aerospace, 1982-1989.
Robert J. Muller, Jr. Executive Vice President, previously Vice
President.
Anthony D. Pantaleoni Vice President--Environment, Health & Safety,
previously Director of Environmental, Health
and Safety Audit Programs of Hoechst
Celanese. Director of Environmental, Health
and Safety Affairs of Specialty Chemicals
Group.
Richard B. Phillips Vice President--Human Resources, previously
Director of Human Resources.
2
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Michael L. Raithel Controller
David S. Smith Vice President--Corporate Development,
previously Vice President, Corporate Finance,
Bankers Trust Company. Vice President of the
Purchaser.
Gil A. Dickoff Treasurer, previously Assistant Treasurer.
3
Facsimile copies of the Letter of Transmittal, properly completed and duly
executed, will be accepted. The Letter of Transmittal, certificates for Shares
and any other required documents should be sent or delivered by each stockholder
of the Company or his broker, dealer, commercial bank, trust company or other
nominee to the Depositary at one of its addresses set forth below:
THE DEPOSITARY FOR THE OFFER IS:
FIRST INTERSTATE BANK
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BY MAIL: FACSIMILE BY HAND: BY OVERNIGHT DELIVERY:
First Interstate Bank TRANSMISSION: First Interstate Bank First Interstate Bank
Special Services Unit (For Eligible 120 Broadway 26610 West Agoura Road
P.O. Box 4177 Institutions 33rd Floor Calabasas, CA 91302
Woodland Hills, CA 91365-4177 only) New York, NY 10271 (818) 880-3114
(818) 880-7176 or
CONFIRM BY First Interstate Bank
TELEPHONE 999 Third Avenue
(818) 880-3114 14th Floor
Seattle, WA 98104
Questions and requests for assistance may be directed to the Information
Agent at its respective addresses and telephone numbers listed below. Additional
copies of this Offer to Purchase, the Letter of Transmittal and other tender
offer materials may be obtained from the Information Agent as set forth below,
and will be furnished promptly at the Purchaser's expense. You may also contact
your broker, dealer, commercial bank, trust company or other nominee for
assistance concerning the Offer.
THE INFORMATION AGENT FOR THE OFFER IS:
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1
Dates Referenced Herein and Documents Incorporated by Reference
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