Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2))
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Definitive Proxy Statement
o
Definitive Additional Materials
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Soliciting Material Pursuant to §240.14a-12
INTERNATIONAL ALUMINUM CORPORATION
(Name of Registrant as Specified In Its Charter)
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
o
No fee required.
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Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
(1)
Title of each class of securities to which transaction applies: common stock
of the Registrant, par value $1.00 per share
(2)
Aggregate number of securities to which transaction applies:
4,308,119 shares of the Registrant’s common stock and stock options to purchase
5,000 shares of the Registrant’s common stock
(3)
Per unit price or other underlying value of transaction computed pursuant to
Exchange Act Rule 0-11 (set forth the amount on which the filing fee is calculated and
state how it was determined): The filing fee was determined based upon the sum of (i)
4,308,119 shares of common stock, multiplied by the merger consideration of $53.00 per
share, equaling $228,330,307, and (ii) stock options to purchase 5,000 shares of common
stock, multiplied by $21.4375 per share, which is the difference between the merger
consideration of $53.00 per share and the option exercise price of $31.5625 per share,
equaling $107,187.50. The filing fee was then determined by multiplying 0.000107 by
the aggregate merger consideration of $228,437,494.50.
(4)
Proposed maximum aggregate value of transaction: $228,437,494.50
(5)
Total fee paid: $24,442.81
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Fee paid previously with preliminary materials.
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Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and
identify the filing for which the offsetting fee was paid previously. Identify the previous filing
by registration statement number, or the Form or Schedule and the date of its filing.
We cordially invite you to attend a special meeting of
shareholders of International Aluminum Corporation, a California
corporation, at our executive offices located at 767 Monterey
Pass Road, Monterey Park, California91754, on March 29,2007, at 10:00 a.m., local time.
At the special meeting, we will ask you to consider and vote
upon a proposal to approve an Agreement and Plan of Merger,
dated as of January 9, 2007, pursuant to which IAC Holding
Co., a newly formed Delaware corporation, has agreed to acquire
International Aluminum in a cash merger. IAC Holding Co. was
formed by Genstar Capital, LLC, a private equity firm, for the
purpose of entering into the merger agreement and completing the
transactions contemplated by the merger agreement.
If International Aluminum’s shareholders approve the merger
agreement and the merger is completed, you will receive $53.00
in cash, without interest, for each share of International
Aluminum common stock you own (unless you have properly
exercised your dissenters’ rights with respect to the
merger and the holders of at least five percent of our common
stock properly exercise their dissenters’ rights).
After careful consideration, International Aluminum’s board
of directors, by a unanimous vote of the directors, has
determined that the merger agreement is advisable, fair to, and
in the best interests of the shareholders of International
Aluminum, has approved and authorized in all respects the merger
agreement, and recommends that you vote “FOR” the
approval of the merger agreement.
The accompanying proxy statement provides you with detailed
information about the proposed merger and the special meeting.
Please give this material your careful attention. You may obtain
more information about International Aluminum from documents we
have filed with the Securities and Exchange Commission. We will
also be available at the special meeting to answer your
questions.
We would like you to attend the special
meeting. HOWEVER, WHETHER OR NOT YOU PLAN TO ATTEND
THE SPECIAL MEETING, IT IS IMPORTANT THAT YOUR SHARES BE
REPRESENTED. Accordingly, please sign, date, and return the
enclosed proxy card in the postage-paid envelope or submit your
proxy by the Internet prior to the special meeting. If you
attend the special meeting and vote in person, your vote by
ballot will revoke any proxy previously submitted. If your
shares are held in “street name,” you must instruct
your broker in order to vote. Remember, failing to vote has the
same effect as a vote against the approval of the merger
agreement.
Notice is hereby given that a special meeting of shareholders of
International Aluminum Corporation, a California corporation
(“International Aluminum”), will be held on
March 29, 2007, at 10:00 a.m. local time, at 767
Monterey Pass Road, Monterey Park, California91754, in order to:
(1) Consider and vote upon a proposal to approve the
Agreement and Plan of Merger, dated as of January 9, 2007
(the “merger agreement”), among International
Aluminum, IAC Holding Co., a Delaware corporation (the
“Buyer”), and IAL Acquisition Co., a California
corporation and a wholly owned subsidiary of the Buyer
(“Merger Subsidiary”). A copy of the merger
agreement is attached as Appendix A to the accompanying
proxy statement. Pursuant to the terms of the merger agreement,
Merger Subsidiary will merge with and into International
Aluminum, with International Aluminum continuing as the
surviving corporation and becoming a wholly owned subsidiary of
the Buyer. Upon completion of the merger, each share of
International Aluminum common stock, other than those shares
held (i) by International Aluminum as treasury stock, by
International Aluminum’s subsidiaries, or by the Buyer or
Merger Subsidiary, immediately prior to the effective time of
the merger, or (ii) by shareholders, if any, who properly
exercise their rights as dissenting shareholders under
California law (provided that dissenters’ rights are
available only if persons holding a total of at least five
percent of our common stock properly exercise dissenters’
rights), will be converted into the right to receive $53.00 in
cash, without interest;
(2) Approve the adjournment of the special meeting, if
necessary or appropriate, to solicit additional proxies if there
are insufficient votes at the time of the special meeting to
approve the merger agreement; and
(3) Transact such other business that may properly come
before the special meeting or any adjournment or postponement of
the special meeting.
Only shareholders of record of our common stock at the close of
business on March 8, 2007 are entitled to notice of and to
vote at the special meeting and at any adjournment or
postponement of the special meeting. All shareholders of record
are cordially invited to attend the special meeting in person.
The approval of the merger agreement requires the approval of
the holders of a majority of the outstanding shares of
International Aluminum common stock entitled to vote, with each
share having a single vote for this purpose. Cornelius C.
Vanderstar, our Chairman of the Board and the beneficial owner
of approximately 40% of our outstanding common stock, has agreed
to vote all shares that he controls in favor of the merger
agreement.
Whether or not you plan to attend the special meeting, we urge
you to vote your shares by completing, signing, dating, and
returning the proxy card as promptly as possible in the
postage-paid envelope and thus ensure that your shares will be
represented at the special meeting if you are unable to attend.
If you sign, date, and mail your proxy card without indicating
how you wish to vote, your proxy will be voted in favor of the
approval of the merger agreement. If you fail to return your
proxy card or fail to submit your proxy by the Internet and do
not vote in person at the special meeting, it will have the same
effect as a vote against the approval of the merger agreement.
Any shareholder attending the special meeting may vote in person
even if he or she has returned a proxy card; such vote by ballot
will revoke any proxy previously submitted. If, however, you
hold your shares through a bank or broker or other custodian,
you must obtain a legal proxy issued from such custodian in
order to vote your shares in person at the special meeting.
Each International Aluminum shareholder who does not vote in
favor of the approval of the merger agreement will have the
right to require International Aluminum to purchase his or her
shares, in cash, for the fair value of the shares, but only if
(1) the merger is completed, (2) the shareholder
complies with the requirements of California law for the
exercise of dissenters’ rights that are summarized in the
accompanying proxy statement, and (3) shareholders
Please do not send your stock certificates at this time. If the
merger is completed, the disbursing agent will provide you with
instructions regarding the surrender of your stock certificates.
This Summary Term Sheet summarizes certain material
information regarding the proposed merger. You should carefully
read this entire proxy statement for a more complete
understanding of the merger, the merger agreement, and the
matters to be considered at the special meeting of
shareholders.
•
The Merger (page 10)
Upon the closing of the
transactions described in the merger agreement, International
Aluminum Corporation (‘‘International Aluminum,”
‘‘we,” or ‘‘our”) will become a
wholly owned subsidiary of IAC Holding Co. (the
‘‘Buyer”).
•
The Buyer (page 4)
The Buyer is an affiliate of
Genstar Capital, LLC (‘‘Genstar”). Neither
International Aluminum nor any of our officers or directors has
an ownership interest in Genstar or is otherwise affiliated with
Genstar.
•
Shareholders’ Meeting
(page 30)
At the special meeting of our
shareholders to be held on March 29, 2007, you will be
asked to approve the merger agreement.
•
Merger Consideration to be Paid to
Our Shareholders (page 32)
Upon the completion of the merger,
each outstanding share of International Aluminum common
stock — other than shares that are owned by
International Aluminum or its subsidiaries or by the Buyer or
Merger Subsidiary, and other than shares that are owned by
shareholders who properly exercise dissenters’ rights under
California law if shareholders holding in total at least five
percent of International Aluminum’s common stock properly
exercise their rights as dissenting shareholders —
will be cancelled and converted into the right to receive $53.00
in cash, without interest.
•
Financing of the Merger
(page 20)
Payment of the merger
consideration will be financed through a combination of an
equity investment by Genstar and debt financing that has been
committed by CIBC WorldMarkets Corp. The Buyer’s obligation
to complete the merger is conditioned upon its receipt of the
funds described in the financing commitment letter that it has
provided to us.
•
Other Closing Conditions
(page 39)
Completion of the merger is also
subject to the affirmative vote of a majority of International
Aluminum’s outstanding shares and other customary closing
conditions. We currently expect that the merger will be
completed on March 30, 2007 or in early April 2007, with
the exact timing dependent upon a number of factors. After the
completion of the merger, you will have no ownership interest in
International Aluminum and shares of International
Aluminum’s common stock will no longer be publicly traded.
•
Our Board’s Recommendation
(page 18)
Our board of directors has
unanimously determined that the merger is advisable, fair to,
and in the best interests of our shareholders.
•
Opinion of Citigroup Global
Markets Inc. (page 21)
Citigroup Global Markets Inc. has
provided a written opinion, dated January 9, 2007, to our
board of directors to the effect that, as of the date of the
written opinion and based on and subject to the matters
described in the written opinion, the merger consideration of
$53.00 per share is fair, from a financial point of view,
to our shareholders (other than Genstar and its affiliates).
•
Mr. Vanderstar’s Support
Agreement (page 42)
Cornelius C. Vanderstar, our
Chairman of the Board and the beneficial owner of approximately
40% of International Aluminum’s outstanding common stock,
has agreed to vote all shares that he controls in favor of the
merger agreement.
The following questions and answers address briefly some
questions you may have regarding the special meeting and the
proposed merger. These questions and answers may not address all
questions that may be important to you as a shareholder of
International Aluminum. Please refer to the more detailed
information contained elsewhere in this proxy statement, the
appendices to this proxy statement, and the documents referred
to or incorporated by reference in this proxy statement.
Q:
What is the proposed transaction?
A:
The proposed transaction is the acquisition of International
Aluminum pursuant to the merger agreement by the Buyer, an
entity formed by an affiliate of Genstar for the purpose of
entering into the merger agreement and consummating the
transactions contemplated by the merger agreement. If the merger
agreement is approved by International Aluminum’s
shareholders and the other closing conditions under the merger
agreement have been satisfied or waived, Merger Subsidiary (a
wholly owned subsidiary of the Buyer) will merge with and into
International Aluminum. Pursuant to the merger agreement,
International Aluminum will be the surviving corporation in the
merger and will become a wholly owned subsidiary of the Buyer
and shares of International Aluminum’s common stock will no
longer be publicly traded after the merger.
Q:
What will I receive for my shares of International Aluminum
common stock in the merger?
A:
Upon completion of the merger, you will receive $53.00 in cash,
without interest, for each share of International Aluminum
common stock that you own. For example, if you own
100 shares of common stock, you will receive $5,300 in cash
in exchange for your shares of common stock. You will not own
shares in International Aluminum after the merger.
Q:
Where and when is the special meeting?
A:
The special meeting will be held at 10:00 a.m., local time,
on Thursday, March 29, 2007, at International
Aluminum’s executive offices located at 767 Monterey Pass
Road, Monterey Park, California91754.
Q:
Are all International Aluminum shareholders as of the record
date entitled to vote at the special meeting?
A:
Yes. All shareholders who own International Aluminum common
stock at the close of business on March 8, 2007, the record
date for the special meeting, will be entitled to receive notice
of the special meeting and to vote the shares of International
Aluminum common stock that they hold on that date at the special
meeting, or at any adjournments or postponements of the special
meeting.
Q:
Are all International Aluminum shareholders as of the record
date entitled to attend the special meeting?
A:
All International Aluminum shareholders as of the record date,
or their legally authorized proxies named in the proxy card, may
attend the special meeting. Seating, however, is limited.
Cameras, recording devices, and other electronic devices will
not be permitted at the meeting. If your shares are held in the
name of a broker, trust, bank, or other nominee, you should
bring a proxy or letter from the broker, trustee, bank, or
nominee confirming your beneficial ownership of the shares.
Q:
What vote of International Aluminum’s shareholders is
required to approve the merger agreement?
A:
For us to complete the merger, shareholders holding a majority
of the outstanding shares of International Aluminum common stock
at the close of business on the record date must vote
“FOR” the approval of the merger agreement, with each
share having a single vote for these purposes. Accordingly, the
failure to vote or voting to abstain will have the same effect
as a vote against the merger agreement.
Q
How do the International Aluminum insiders intend to vote
their shares?
Cornelius C. Vanderstar, our Chairman of the Board and the
beneficial owner of approximately 40% of International
Aluminum’s outstanding common stock, has agreed pursuant to
a support agreement that he has entered into with the Buyer to
vote all shares that he controls in favor of the merger
agreement. Mr. Vanderstar has also granted the Buyer a
proxy to vote such shares in favor of the approval of the merger
agreement.
Does our board of directors recommend that our shareholders
vote “FOR” the approval of the merger agreement?
A:
Yes. After careful consideration, the board of directors, by a
unanimous vote of the directors, recommends that you vote
“FOR” the approval of the merger agreement. You should
read “The Merger — Reasons for the
Merger” beginning on page 15 of this proxy statement
for a discussion of the factors that our board of directors
considered in deciding to recommend the approval of the merger
agreement.
In considering the recommendation of the board of directors with
respect to the merger agreement, you should be aware that some
of International Aluminum’s directors and executive
officers who participated in meetings of the board of directors
have interests in the merger that are different from, or in
addition to, the interests of our shareholders generally. See
“The Merger — Interests of International
Aluminum’s Directors and Executive Officers in the
Merger” beginning on page 19.
Q:
What do I need to do now?
A:
We urge you to read this proxy statement carefully, including
its appendices and the information incorporated by reference,
and to consider how the merger affects you. If you are a
shareholder as of the record date, then you can ensure that your
shares are voted at the special meeting by completing, signing,
dating, and returning each proxy card in the postage-paid
envelope provided or submitting your proxy by the Internet prior
to the special meeting.
Q:
If my shares are held in “street name” by my
broker, will my broker vote my shares for me?
A:
Your broker will not vote your shares on your behalf unless you
provide instructions to your broker on how to vote. You should
follow the directions provided by your broker regarding how to
instruct your broker to vote your shares. Without those
instructions, your shares will not be voted, which will have the
same effect as voting against the merger.
Q:
How do I revoke or change my vote?
A:
You can change your vote at any time before your proxy is voted
at the special meeting. You may revoke your proxy prior to the
special meeting by notifying us in writing or by submitting a
later-dated new proxy by the Internet or by mail to
International Aluminum Corporation, 767 Monterey Pass Road,
Monterey Park, California, 91754, Attention: Corporate
Secretary. You also may revoke your proxy by attending the
special meeting and voting in person. Simply attending the
special meeting, however, will not be sufficient to revoke your
proxy. If you have instructed a broker to vote your shares,
these options for changing your vote do not apply, and instead
you must follow the instructions received from your broker to
change your vote.
Q:
What does it mean if I get more than one proxy card or vote
instruction card?
A:
If your shares are registered differently and are in more than
one account, you will receive more than one proxy card. Please
sign, date, and return all of the proxy cards you receive (or
submit your proxy by the Internet) to ensure that all of your
shares are voted.
Q:
When do you expect the merger to be completed?
A:
We are working toward completing the merger as quickly as
possible, and we anticipate that it will be completed on
March 30, 2007 or in early April 2007, assuming
satisfaction or waiver of all of the conditions to the merger.
However, because the merger is subject to certain conditions,
the exact timing of the completion of the merger and the
likelihood of the consummation of the merger cannot be predicted
with certainty. If any of the conditions in the merger agreement
are not satisfied, the merger agreement may terminate as a
result, including as a result of the failure to satisfy any of
the conditions described below under “The Merger
Agreement — Conditions to the Merger” beginning
on page 39 of this proxy statement.
Q:
Who will bear the cost of this solicitation?
A:
The expenses of preparing, printing, and mailing this proxy
statement and the proxies solicited hereby will be borne by
International Aluminum. Additional solicitation may be made by
telephone, facsimile, or other contact by certain directors,
officers, employees, or agents of International Aluminum, none
of whom will receive additional compensation for those
activities. International Aluminum will, upon request, reimburse
brokerage houses and other custodians, nominees, and fiduciaries
for their reasonable expenses for forwarding material to the
beneficial owners of shares held of record by others.
Q:
Will a proxy solicitor be used?
A:
No. However, the directors, officers, employees, and other
agents of International Aluminum may solicit proxies on our
behalf from shareholders by telephone, by other electronic
means, or in person.
Q:
Should I send in my stock certificates now?
A:
No. Shortly after the merger is completed, you will receive
a letter of transmittal with instructions informing you how to
send in your stock certificates to the disbursing agent in order
to receive your portion of the aggregate merger consideration.
Please do not send in your stock certificates with your proxy
card.
Q:
Who can help answer my other questions?
A:
If you have more questions about the merger, need assistance in
submitting your proxy or voting your shares, or need additional
copies of the proxy statement or the enclosed proxy card, you
can call our Corporate Secretary, Mitchell K. Fogelman, at
(323) 264-1670,
extension 2118. If your broker holds your shares, you should
also call your broker for additional information.
This summary highlights selected information from the proxy
statement and may not contain all of the information that is
important to you. You should carefully read the entire proxy
statement to fully understand the proposed transaction. We
encourage you to read the merger agreement that is attached as
Appendix A, because it is the legal document that governs
the parties’ agreement pursuant to which the Buyer will
acquire International Aluminum in a cash merger (the
“merger”) if all of the conditions to the merger are
satisfied or waived. Certain items in this summary include page
references directing you to a more complete description of the
items in this proxy statement. In addition, this proxy statement
incorporates by reference important business and financial
information about International Aluminum. You may obtain the
information incorporated by reference into this proxy statement
without charge by following the instructions in “Where You
Can Find Additional Information” on page 46.
Founded in 1957, International Aluminum is based in Monterey
Park, California, and has three primary business lines: its
commercial division manufactures decorative entrance doors,
store fronts, window and curtain walls, windows and impact and
blast-resistant systems; the residential division manufactures a
broad line of vinyl and aluminum windows and doors, most of
which are used in replacement or remodeling applications; and
its extrusion operations manufacture mill finish, anodized, and
painted extruded aluminum products for internal and external
uses. For the fiscal year ended June 30, 2006,
International Aluminum generated revenues of more than
$280 million. We have approximately 1,600 employees with
operations conducted from 24 North American operating facilities.
The Buyer is a newly formed Delaware corporation. The Buyer was
formed by Genstar Capital Partners IV, L.P, which is an
affiliate of Genstar, for the purpose of entering into the
merger agreement and consummating the transactions contemplated
by the merger agreement, including related financing
transactions. It has not conducted any activities to date other
than activities incidental to its formation and in connection
with the transactions contemplated by the merger agreement.
Based in San Francisco, California, Genstar
(www.gencap.com) is a private equity firm that makes
leveraged investments in quality middle-market companies.
Genstar works in partnership with management to transform its
portfolio companies into industry-leading businesses. With more
than $900 million of committed capital under management and
significant investing experience, Genstar focuses on selected
segments of the life sciences, business services, and industrial
technology sectors.
Merger Subsidiary is a newly organized California corporation
wholly owned by the Buyer. Merger Subsidiary was organized
solely for the purpose of entering into the merger agreement and
consummating the transactions contemplated by the merger
agreement, including related financing transactions. It has not
conducted any activities
You are being asked to vote your shares of International
Aluminum to approve the merger agreement. The merger agreement
provides that Merger Subsidiary will be merged with and into
International Aluminum, and that each outstanding share of
International Aluminum common stock (other than shares that are
owned by International Aluminum and its subsidiaries, or by the
Buyer or Merger Subsidiary, and other than shares that are owned
by shareholders who properly exercise dissenters’ rights
under California law if shareholders holding in total at least
five percent of International Aluminum’s common stock
properly exercise their rights as dissenting shareholders) will
be cancelled and converted into the right to receive $53.00 in
cash, without interest. The total amount paid per share of
International Aluminum common stock is sometimes referred to in
this proxy statement as the “merger
consideration.”
After the completion of the merger, you will have no ownership
interest in International Aluminum and shares of International
Aluminum’s common stock will no longer be publicly traded.
The special meeting of shareholders will be held at
10:00 a.m., local time, on Thursday, March 29, 2007,
at International Aluminum’s executive offices located at
767 Monterey Pass Road, Monterey Park, California91754.
Vote
Required for Approval of the Merger Agreement
Approval of the merger agreement requires shareholders holding a
majority of the outstanding shares of International Aluminum
common stock at the close of business on the record date to vote
“FOR” the approval of the merger agreement, with each
share having a single vote for this purpose. The failure to vote
or voting to abstain has the same effect as a vote against the
approval of the merger agreement.
Who
Can Vote at the Special Meeting
You may vote at the special meeting all of the shares of
International Aluminum common stock you own of record as of the
close of business on March 8, 2007. If you own shares that
are registered in someone else’s name (for example, a
broker), you need to direct that person to vote those shares on
your behalf or obtain an authorization from them to vote the
shares yourself at the special meeting. As of the close of
business on March 8, 2007, there were 4,308,119 shares
of International Aluminum common stock outstanding held by
approximately 282 holders of record.
Procedure
for Voting
You may vote your shares by attending the special meeting and
voting in person, or you may submit a proxy by the Internet or
by mailing the enclosed proxy card. You can change your vote at
any time before your proxy is voted at the special meeting. You
may revoke your proxy prior to the special meeting by notifying
us in writing or by submitting a later-dated proxy by the
Internet or by mail to International Aluminum Corporation, 767
Monterey Pass Road, Monterey Park, California, 91754, Attention:
Corporate Secretary. In addition, you may revoke your proxy by
attending the special meeting and voting in person. However,
simply attending the special meeting will not revoke your proxy.
If you have instructed a broker to vote your shares, these
options for changing your vote do not apply, and instead you
must follow the instructions received from your broker to change
your vote.
If your shares are held in “street name” by your
broker, please follow the directions provided by your broker in
order to instruct your broker as to how to vote your shares. If
you do not instruct your broker to vote your shares, it has the
same effect as a vote against the approval of the merger
agreement.
After careful consideration, our board of directors, by
unanimous vote:
•
has determined that the merger agreement is advisable, fair to,
and in the best interests of International Aluminum and its
shareholders;
•
has approved and authorized in all respects the merger
agreement, the merger, and the other transactions contemplated
by the merger agreement; and
•
recommends that International Aluminum’s shareholders vote
“FOR” the approval of the merger agreement.
In considering the recommendation of the board of directors with
respect to the merger agreement, you should be aware that some
of International Aluminum’s directors and executive
officers who participated in meetings of the board of directors
have interests in the merger that are different from, or in
addition to, the interests of our shareholders generally. See
“The Merger — Interests of International
Aluminum’s Directors and Executive Officers in the
Merger” beginning on page 19.
In connection with the merger, our board of directors received a
written opinion, dated January 9, 2007, from Citigroup
Global Markets Inc. (“Citigroup”),
International Aluminum’s financial advisor, as to the
fairness, from a financial point of view and as of the date of
the opinion, of the merger consideration to be received by
holders of our common stock (other than Genstar and its
affiliates). The full text of Citigroup’s written opinion
is attached to this proxy statement as Appendix C. We
encourage you to read the opinion carefully in its entirety for
a description of the assumptions made, procedures followed,
matters considered, and limitations on the review undertaken.
Citigroup’s opinion was provided to our board of
directors in connection with our board of directors’
evaluation of the merger consideration from a financial point of
view and does not address any terms or other aspects or
implications of the merger, other than the merger consideration
to the extent expressly specified in the opinion, or any aspects
or implications of any other agreement, arrangement, or
understanding entered into in connection with the merger or
otherwise. Citigroup’s opinion is not intended to be, and
does not constitute, a recommendation to any shareholder as to
how such shareholder should vote or act on any matters relating
to the proposed merger.
International Aluminum’s common stock is listed on the New
York Stock Exchange under the trading symbol “IAL.” On
January 9, 2007, which was the last trading day prior to
the date on which we disclosed the merger agreement, our common
stock closed at $50.00 per share. During the sixty trading
days ended January 9, 2007, the average closing price of
our common stock was $44.38 per share.
As of March 8, 2007, the directors and executive officers
of International Aluminum beneficially owned approximately 44.2%
of the shares of International Aluminum common stock entitled to
vote at the special meeting. Cornelius C. Vanderstar, our
Chairman of the Board and the beneficial owner of approximately
40% of International Aluminum’s outstanding common stock,
has agreed pursuant to a support agreement that he has entered
into with the Buyer to vote all shares that he controls in favor
of the merger agreement. Mr. Vanderstar has also granted
the Buyer a proxy to vote such shares in favor of the approval
of the merger agreement. The full text of the support agreement
is attached to this proxy statement as Appendix B. We
encourage you to read the support agreement in its entirety.
The merger will be a taxable transaction to you. For United
States federal income tax purposes, your receipt of cash in
exchange for your shares of International Aluminum common stock
generally will result in your recognizing gain or loss measured
by the difference, if any, between the cash you receive in the
merger and your tax basis in your
shares of International Aluminum common stock. You should
consult your personal tax advisor for a full understanding of
the tax consequences related to the merger that are particular
to you.
If International Aluminum shareholders owning five percent or
more of our outstanding common stock submit proper demands to
International Aluminum for the purchase of their dissenting
shares in accordance with Chapter 13 of the California
General Corporation Law following shareholder approval of the
merger agreement, and if you voted your shares against approval
of the merger agreement, you will be entitled to receive an
amount equal to the fair market value of your shares as of
January 9, 2007, provided that you comply with the
procedures set forth in Chapter 13. The ultimate amount you
receive as a dissenting shareholder may be more or less than, or
the same as, the $53.00 per share you would have received
in the merger. Your failure to follow exactly the procedures
specified under California law will result in the loss of your
dissenters’ rights.
International Aluminum and the Buyer estimate that the total
amount of funds necessary to complete the merger and related
transactions will be approximately $240.7 million. This
amount will be funded by a combination of debt and equity
financing. In connection with the execution and delivery of the
merger agreement, Merger Subsidiary obtained a letter commitment
from CIBC World Markets Corp. (“CIBC”) and its
affiliates to provide up to $150 million in debt financing,
consisting of senior secured and mezzanine loans. Alternatively,
and at the option of the Buyer, CIBC and its affiliates have
committed to provide up to $142 million of debt financing,
consisting of first and second lien loans, if the Buyer elects
to enter into a sale-leaseback financing transaction with
respect to some of International Aluminum’s properties. The
facilities contemplated by the debt commitment letter are
conditioned on the financing being consummated prior to
May 31, 2007, as well as other customary conditions. The
Buyer has obtained a letter commitment from Genstar Capital
Partners IV, L.P., an affiliate of Genstar, to provide equity in
an amount equal to the difference between the total merger
consideration and the foregoing debt financing, but in no event
less than $35 million. The equity commitment is subject to
the satisfaction of the conditions to the Buyer’s and
Merger Subsidiary’s obligations to effect the closing under
the merger agreement and receipt by the Buyer of the funds
contemplated by the debt financing.
In considering the recommendation of our board of directors with
respect to the merger agreement, you should be aware that some
of International Aluminum’s directors and executive
officers have interests in the merger that may be different
from, or in addition to, the interests of our shareholders
generally. These interests include indemnification and insurance
arrangements with officers and directors and change of control
severance benefits that may become payable to certain officers.
These interests, to the extent material, are described below
under “The Merger — Interests of International
Aluminum’s Directors and Executive Officers in the
Merger.” The board of directors was aware of these
interests and considered them, among other matters, in approving
the merger agreement.
The Buyer will appoint a disbursing agent reasonably acceptable
to us to coordinate the payment of the merger consideration
following the merger. Promptly after the completion of the
merger, the disbursing agent will mail a letter of transmittal
and instructions to you and the other shareholders. The letter
of transmittal and instructions will tell you how to surrender
your International Aluminum common stock certificates in
exchange for your portion of the aggregate merger consideration.
Please do not send in your share certificates now.
Each outstanding International Aluminum stock option that
remains outstanding and unexercised as of the effective time of
the merger, whether or not then vested or exercisable, will
automatically be converted into the right to receive a cash
payment equal to the product of (a) the excess, if any, of
the merger consideration of $53.00 per
share over the exercise price per share of the stock option and
(b) the number of shares of common stock issuable upon
exercise of the stock option. After the merger, such stock
options will no longer be outstanding and the holders of the
options will no longer have any rights to purchase International
Aluminum stock.
The merger agreement contains restrictions on International
Aluminum’s ability to solicit or engage in discussions or
negotiations with any third party relating to an
“acquisition transaction,” which generally
means (1) a merger involving International Aluminum,
(2) a sale of a significant amount of our assets,
(3) a sale of at least fifteen percent of our common stock,
or (4) a tender offer regarding our common stock. We have
agreed that, prior to the completion of the merger or the
earlier termination of the merger agreement, we will not
(i) initiate, solicit, or provide non-public or
confidential information to facilitate any inquiry that
constitutes, or may reasonably be expected to lead to, a
proposal or offer relating to an acquisition transaction, or
(ii) enter into, continue, or otherwise participate in any
discussions or negotiations with any third party regarding, or
furnish to any person any non-public information, or provide
access to our properties, books, or records with respect to, any
inquiries that constitute, or may reasonably be expected to lead
to, an acquisition transaction.
However, prior to receipt of our shareholders’ approval of
the merger agreement, if we receive any bona fide written offer
or proposal with respect to a potential or proposed acquisition
transaction that was not solicited, initiated, or knowingly
encouraged by us in violation of the merger agreement and which
our board of directors determines is or could reasonably be
expected to result in a proposal that is superior to the terms
of the merger agreement, we are allowed to (1) furnish
(subject to the execution of a confidentiality agreement)
confidential or non-public information to, and negotiate with,
the potential third party acquirer and (2) upon compliance
by us with the termination provisions of the merger agreement
with the Buyer, including the payment to the Buyer of a
$6,850,000 termination fee, enter into an agreement relating to
the superior acquisition proposal.
Under the
Hart-Scott-Rodino
Antitrust Improvements Act of 1976 (the “HSR
Act”) and the rules promulgated under that act,
International Aluminum was required to notify and furnish
information to the Federal Trade Commission and the Antitrust
Division of the U.S. Department of Justice, and to satisfy
specified waiting period requirements, prior to being permitted
to complete the merger. International Aluminum and the Buyer
submitted the required information to these agencies on February
12 and 13, 2007, respectively. On March 6, 2007, the
Federal Trade Commission granted early termination of the
waiting period under the HSR Act.
Before we can complete the merger, a number of conditions must
be satisfied, including, among others:
•
approval of the merger agreement by our shareholders;
•
none of the parties to the merger agreement being subject to any
law, order, injunction, judgment, or ruling by any governmental
authority that prohibits the consummation of the merger or makes
the consummation of the merger illegal;
•
the absence of any lawsuit (1) seeking to restrain or
prohibit the consummation of the merger or seeking to obtain
from the Buyer or Merger Subsidiary in connection with the
merger any damages that are material in relation to the Buyer
and its subsidiaries, taken as a whole, or seeking to obtain
from International Aluminum any damages that are material in
relation to International Aluminum and its subsidiaries, taken
as a whole, (2) seeking the disposition of any material
assets or businesses of International Aluminum, or (3) otherwise
seeking to limit the actions of the Buyer with respect to the
material assets or businesses of International Aluminum after
the merger;
•
receipt of the financing described in the Buyer’s debt
commitment letter;
•
the continued accuracy of our representations and warranties
that are contained in the merger agreement; and
•
our performance of all of the obligations that we are required
to perform under the merger agreement prior to the time of the
merger.
International Aluminum and the Buyer may agree at any time to
terminate the merger agreement without completing the merger.
The merger agreement may also be terminated in certain other
circumstances specified in the merger agreement, including,
without limitation and subject to the detailed terms and
conditions specified in the merger agreement:
•
by either the Buyer or International Aluminum, if the merger has
not been completed by May 31, 2007 other than due to the
fault of the party seeking to terminate the merger agreement;
•
by either the Buyer or International Aluminum, if the other
party is in material breach of its representations, warranties,
or covenants contained in the merger agreement;
•
by either the Buyer or International Aluminum following the
entry of any final and non-appealable judgment, injunction,
order, or decree by a court or governmental agency restraining
or prohibiting the completion of the merger;
•
by International Aluminum, if our board of directors decides to
accept an unsolicited superior proposal for an acquisition
transaction and pays the termination fee described below to the
Buyer;
•
by the Buyer, if our board of directors changes or withdraws, or
fails to reaffirm, its recommendation to International
Aluminum’s shareholders that they approve the merger
agreement;
•
by the Buyer, if International Aluminum receives a proposal
regarding an acquisition transaction from any person and our
board of directors takes a neutral position or makes no
recommendation with respect to the proposal and does not
publicly reaffirm its recommendation in favor of the merger
agreement; and
•
by the Buyer or International Aluminum, if our shareholders fail
to approve the merger agreement at the special meeting.
The merger agreement provides that, upon termination of the
merger agreement under specified circumstances, International
Aluminum will be obligated to pay the Buyer a termination fee of
$6,850,000. We will owe the termination fee if the merger
agreement is terminated because (1) our board of directors
decides to accept an unsolicited superior proposal for an
acquisition transaction, (2) our board of directors changes
or withdraws, or fails to reaffirm, its recommendation to
International Aluminum’s shareholders that they approve the
merger agreement, (3) we breach specified provisions in the
merger agreement, or (4) our shareholders fail to approve
the merger agreement and we enter into another acquisition
transaction within one year after the termination of the merger
agreement with a party that made a proposal for such acquisition
transaction prior to the special meeting of shareholders.
The Buyer will be obligated to pay a termination fee of
$6,850,000 to International Aluminum if the merger agreement is
terminated by us because the merger has not occurred by
May 31, 2007, but only if (1) all closing conditions
set forth in the merger agreement other than the condition
relating to the Buyer’s receipt of financing have been
satisfied, (2) all other conditions to the receipt of such
financing have been satisfied, except those conditions solely in
the control of the Buyer, and (3) the failure of the
financing condition is not caused by any breach of the merger
agreement by International Aluminum. Genstar Capital Partners
IV, L.P. has guaranteed the Buyer’s payment of this
termination fee.
This proxy statement, and the documents to which we refer you to
in this proxy statement, contain “forward-looking”
statements that reflect our current views as to future events
and financial performance with respect to our operations, the
expected completion and timing of the merger, and other
information relating to the merger. There are forward-looking
statements throughout this proxy statement, including, among
others, under the headings “Summary Term Sheet,”“Questions and Answers About the Special Meeting and the
Merger,”“Summary of the Proxy Statement,”“The Merger,” and “Opinion of International
Aluminum’s Financial Advisor,” and in statements
containing the words “believes,”“expects,”“anticipates,”“intends,” or other similar
expressions.
You should be aware that forward-looking statements involve
known and unknown risks and uncertainties. Although we believe
that the expectations reflected in these forward-looking
statements are reasonable, we cannot assure you that the actual
results or developments we anticipate will be realized, or even
if realized, that they will have the expected effects on the
business or operations of International Aluminum. These
forward-looking statements speak only as of the date on which
the statements were made, and we undertake no obligation to
update or revise any forward-looking statements as a result of
new information, future events, or otherwise.
In addition to other factors and matters contained or
incorporated in this document, we believe the following factors
could cause actual results to differ materially from those
discussed in the forward-looking statements:
•
financial performance of International Aluminum through the
completion of the merger;
•
satisfaction of the closing conditions set forth in the merger
agreement;
•
the occurrence of any event, change, or other circumstance that
could give rise to the termination of the merger agreement,
including as a result of the failure to obtain shareholder
approval;
•
the outcome of any legal proceedings instituted against
International Aluminum and others in connection with the
proposed merger;
•
the failure to obtain the necessary debt financing arrangements
set forth in the loan commitment letter received in connection
with the merger agreement;
•
business uncertainty and contractual restrictions during the
pendency of the merger;
•
a significant delay in the expected completion of the merger;
•
regulatory review, approvals, and restrictions;
•
diversion of management’s attention from ongoing business
concerns;
•
the amount of the costs related to the merger; and
•
other risks detailed in our current filings with the Securities
and Exchange Commission (the “SEC”), including our
most recent filings on
Form 10-Q
and
Form 10-K.
The following discussion of the merger is qualified in its
entirety by reference to the merger agreement and the support
agreement, which are attached to this proxy statement as
Appendices A and B, respectively. You should read each agreement
carefully.
Our board of directors and senior management have periodically
reviewed and assessed strategic alternatives for International
Aluminum, including the possible sale of our company. In
mid-2005, our board determined that it would be in the best
interests of International Aluminum and its shareholders to
investigate a possible sale or other strategic transaction aimed
at increasing shareholder value. The board authorized our senior
management to initiate discussions with a small number of
investment banking firms, including Citigroup Capital Markets
Inc.
(“Citigroup”), about assisting our board and
senior management in exploring possible transactional
alternatives as a means of increasing shareholder value.
During September and October 2005, our senior management and one
of our independent directors met with three investment banking
firms to discuss their possible engagement to assist
International Aluminum in this process. At a meeting of our
board of directors held on October 27, 2005, our senior
management reported to our board on the results of these
meetings and the respective qualifications of the three
investment banking firms. At that meeting, our board authorized
our senior management to request a formal proposal from
Citigroup to serve as our financial advisor.
On November 22, 2005, our board of directors met for the
purpose of considering the engagement of Citigroup. At the
meeting, our board authorized our senior management to enter
into an engagement letter with Citigroup and to begin
investigating the possible sale of International Aluminum and
other strategic alternatives. On November 22, 2005, we
formally engaged Citigroup as our financial advisor. As part of
its engagement letter, Citigroup agreed to provide to our board
of directors an opinion as to the fairness, from a financial
point of view, of the consideration to be received by our
shareholders in any negotiated transaction.
On February 6, 2006, our senior management met with
representatives of Citigroup to discuss possible strategic
alternatives. At the meeting, Citigroup explained the processes
available for pursuing a possible sale of International
Aluminum. Strategic alternatives discussed by our senior
management and Citigroup included:
•
maintaining the status quo;
•
a sale of International Aluminum to another company engaged in
the building products industry (a “strategic
buyer”);
•
a sale of International Aluminum to a private equity, leveraged
buyout, or similar firm (a “financial buyer”);
•
a merger or other business combination of International Aluminum
with a strategic buyer; and
•
repurchasing shares of International Aluminum’s common
stock in the open market.
After reviewing and discussing the various alternatives with
Citigroup, our board determined that a sale of International
Aluminum to a strategic or financial buyer, or a merger or other
business combination with a strategic buyer, was the best way to
seek to maximize the value of our shareholders’ investment.
During December 2005 and January 2006, we prepared, with the
assistance of Citigroup, a confidential offering memorandum for
use in soliciting bids from prospective buyers to acquire
International Aluminum or to engage in a merger or other
business combination. At a meeting of our board of directors
held on February 6, 2006, our board reviewed with our
senior management, representatives of Citigroup, and a
representative of Troy & Gould P.C.
(“Troy & Gould”), our outside legal
counsel, statistical data compiled by Citigroup regarding
strategic transactions, as well as forms of a confidentiality
agreement, a process letter, and the confidential offering
memorandum that Citigroup proposed to furnish to interested
parties identified by Citigroup.
Beginning in February 2006, Citigroup contacted numerous
potential buyers identified by it, including both strategic
buyers and financial buyers. In the following weeks, we, in
conjunction with Citigroup and Troy & Gould, negotiated
and signed confidentiality agreements with a number of potential
buyers, each of which received a confidential offering
memorandum from us, together with a letter describing the
process to follow to submit a bid for International Aluminum.
Those potential buyers who did not sign a confidentiality
agreement with us were not furnished a confidential offering
memorandum.
The potential buyers that had indicated a preliminary interest
in pursuing a transaction were asked by Citigroup to provide a
written, non-binding indication of interest (including a
transaction structure and economic terms). By March 6,2006, four potential buyers had submitted preliminary
indications of interest in acquiring International Aluminum and
undertaking due diligence with respect to our company. In
addition, one strategic buyer expressed strong interest in
acquiring International Aluminum but was not comfortable in
submitting a price range until further due diligence could be
performed. Subsequent to the initial March 6 deadline, Citigroup
was contacted by an additional financial buyer who was sent
materials and then submitted a competitive indication of
interest. All six buyers were invited to continue the process.
In March and April 2006, our senior management, with the
assistance of Citigroup, made presentations to all six potential
buyers regarding International Aluminum and its business. These
six potential buyers also were granted access to an on-line data
room maintained by International Aluminum with the assistance of
Citigroup and an outside vendor and were invited to conduct due
diligence by visiting the on-line data room. Four of these
interested buyers withdrew from the process after completing
their preliminary due diligence.
In preparation of the final bids, our legal counsel,
Troy & Gould, prepared a draft merger agreement for
International Aluminum and, at the direction of our senior
management, Citigroup distributed the draft merger agreement to
two of the potential buyers. In addition, Citigroup provided
instructions for submitting final bids and, at the direction of
our board of directors, established May 22, 2006 as the
deadline for submitting final bids.
On May 22, 2006, we received a proposal from Genstar for
the acquisition of all of the outstanding shares of
International Aluminum in a merger for cash consideration of
$45.00 per share, or a total of approximately
$193.9 million. Genstar’s proposal was accompanied by
financing commitments from two financial institutions to provide
debt financing to Genstar and was subject to Genstar’s
obtaining the financing described in the financing commitments,
as well as customary closing conditions. Genstar’s proposal
also was conditioned upon Mr. Vanderstar’s entering
into a support agreement by which he would agree to vote all
shares of International Aluminum that he controls in favor of
the proposed merger. The Genstar proposal included detailed
comments of Genstar’s legal counsel, Weil,
Gotshal & Manges LLP (“Weil Gotshal”), on the
draft merger agreement. No other potential buyer submitted a bid
for all of the capital stock or business and assets of
International Aluminum. One other potential buyer submitted a
bid only for International Aluminum’s extrusion division.
At a meeting of our board of directors held on June 2,2006, Citigroup reviewed the financial terms of the Genstar
proposal. A representative of Troy & Gould attended the
meeting, and reviewed with our board the draft merger agreement,
the open issues under the draft merger agreement, and the
financing commitment letters submitted as part of the Genstar
proposal. Our board reviewed the proposal based upon price, deal
structure and deal terms, and the likelihood of proceeding to a
successful closing. Our board observed, based on discussions
with Citigroup, management, and Troy & Gould, that
Genstar had conducted an extensive due diligence review of
International Aluminum, including a review of the
class-action
lawsuit pending against International Aluminum. Our board
instructed Citigroup to continue discussions with Genstar to
seek to enhance the terms of the Genstar bid, including a
possible increase in the price offered and elimination of the
closing condition relating to financing. Our board also directed
our management, along with Citigroup and Troy & Gould,
to negotiate a definitive merger agreement.
Following the June 2, 2006 board meeting, Citigroup and
Genstar continued to negotiate the financial terms of the
Genstar proposal, and Troy & Gould and Weil Gotshal
continued to negotiate the terms of the merger agreement and the
related support agreement.
At a meeting of our board of directors held on June 9,2006, Citigroup reviewed the status of its ongoing discussions
with Genstar and the key financial terms of the proposal made by
Genstar. At the meeting, our senior management and Citigroup
reported that Genstar had declined to increase its offer price
of $45.00 per share. Our directors discussed this and other
aspects of the Genstar proposal, including that the Genstar
offer contemplated that International Aluminum have a specified
minimum amount of cash on hand at the closing of the merger. Our
board also discussed with our senior management and Citigroup
what actions might be taken to achieve a higher share price than
that offered by Genstar. At the meeting, our board authorized
senior management to enter into an agreement with Genstar in
which we agreed to negotiate exclusively with Genstar for a
period of not more than 45 days.
On June 13, 2006, International Aluminum and Genstar signed
an agreement in which we agreed to negotiate exclusively with
Genstar during the period ending July 19, 2006, while
Genstar undertook confirmatory due diligence with respect to
environmental and litigation matters. On July 18, 2006,
International Aluminum and Genstar signed an agreement providing
for an extension of this exclusive negotiation period until
July 31, 2006. At about this time, we scheduled a meeting
of our board of directors for July 26, 2006, with the
intention of acting on the Genstar offer and final merger
agreement.
In the days prior to this scheduled meeting of our board of
directors, Weil Gotshal informed Troy & Gould that
Genstar and its financing sources needed additional information
regarding the pending
class-action
lawsuit against International Aluminum.
At the meeting of our board of directors held on July 26,2006, Citigroup and Troy & Gould relayed to our board
the requests and concerns expressed by Genstar and Weil Gotshal,
and our board was presented with Genstar’s request to
extend the term of the exclusivity agreement. Also at the
meeting, the compensation committee of our board reviewed with
the full board the preliminary terms and provisions of so-called
change of control agreements that the compensation committee, in
consultation with Citigroup and Troy & Gould, was
considering recommending to our board for Ronald L. Rudy, our
President and Chief Executive Officer, and two or three of our
other officers. In light of Mr. Rudy’s possible
participation in the change of control agreements, he recused
himself from this portion of our board meeting. After
discussion, the compensation committee agreed to consider the
directors’ comments regarding the change of control
agreements and indicated that the compensation committee would
meet in advance of the next scheduled board meeting on
August 1, 2006 to determine whether to recommend the
adoption of the change of control agreements. Mr. Rudy then
rejoined the meeting, and our board of directors discussed the
timeline for the possible Genstar merger. It was agreed that,
pending further developments regarding Genstar’s evaluation
of the pending
class-action
matter, our board would meet on August 1, 2006 for the
purpose of considering the final merger agreement and the
fairness presentation and fairness advice of Citigroup. It was
noted that our exclusive agreement with Genstar would expire on
July 31, 2006 and, following a discussion, our board
authorized our senior management to extend the exclusive
agreement with Genstar by one week.
Our board of directors met on August 1, 2006 to discuss the
status of Genstar’s further review of the pending
class-action
lawsuit. Our board determined, based upon input from senior
management and Troy & Gould, that it was unlikely that
the
class-action
lawsuit would be resolved or clarified further in the immediate
future. Our senior management noted that Genstar had sent to
Citigroup a timetable of upcoming proceedings in the pending
class-action
matter that suggested a timeline for resuming discussions
regarding a possible merger. The representative of
Troy & Gould confirmed that the exclusive negotiation
period granted to Genstar expired on the previous day,
July 31, 2006. Our board directed our senior management, in
consultation with Troy & Gould, to confirm to Genstar
that the exclusivity period for dealings between our company and
Genstar had expired. Our board also authorized our senior
management to continue to share with Genstar information that
Genstar might request regarding developments in the pending
class-action
matter, subject to the confidentiality agreement previously
entered into with Genstar. At the August 1 board meeting,
the compensation committee reported to our board that the
compensation committee would meet at a later date to give
further consideration to the adoption of possible change of
control agreements with our senior management.
On August 1, 2006, our senior management confirmed to Weil
Gotshal that Genstar’s exclusive right to negotiate with
International Aluminum had expired on July 31, 2006, and
that Genstar’s confidentiality agreement with International
Aluminum remained in effect. At this time, negotiations ceased
between International Aluminum and Genstar.
Our board of directors met on August 23, 2006 to review
with our senior management the results of operations of
International Aluminum for the fiscal year ended June 30,2006 and management’s business plan for fiscal 2007. At the
August 23 meeting, our senior management also reported to our
board that there had been a potential favorable development with
regard to the
class-action
lawsuit pending against International Aluminum, because the
judge in a substantially identical lawsuit pending in the same
court against another window manufacturer had refused to grant
the plaintiffs in that case
class-action
status. At the meeting, senior management also reported on
recent contacts by Genstar and a renewed contact by a potential
strategic buyer that had indicated an interest in a possible
transaction in the course of the initial auction process.
At the meeting of our board of directors on August 23,2006, the compensation committee presented its recommendation
that we adopt change of control agreements with Mr. Rudy
and three other senior officers. The compensation committee,
along with a representative of Troy & Gould, addressed
questions and comments from our board. After discussion, our
board of directors, by a majority vote, with Mr. Rudy
abstaining due to his interest in the proposal, directed that
International Aluminum enter into the change of control
agreements with Mr. Rudy
and each of our three other senior executive officers. Also on
August 23, 2006, International Aluminum reported that it
had achieved record revenues and earnings for the fiscal year
ended June 30, 2006.
On October 26, 2006, we held the annual meeting of our
shareholders for the purpose of electing directors for the
ensuing year. At the annual meeting, our shareholders elected
six incumbent directors and one new director, Robert H.
Longnecker. Mr. Longnecker is a principal of Barington
Companies Equity Partners, L.P., a significant shareholder of
International Aluminum.
At a meeting of our board of directors held on October 26,2006 following our annual shareholders meeting, our senior
management reported on recent contacts by representatives of
Genstar, as well as by two other interested parties. Our senior
management reported that Genstar expressed renewed interest in
possibly acquiring International Aluminum. Our board discussed
how our company’s recent results of operations and other
current circumstances might affect a possible transaction with
Genstar or other parties.
On November 15, 2006, we extended our engagement letter
with Citigroup for an additional
24-month
period.
In November 2006, Citigroup contacted the potential strategic
buyer who had recently expressed renewed interest in
International Aluminum, as well as two potential financial
buyers who were not previously involved in the process but who
had expressed interest to Citigroup. The two potential financial
buyers who were not previously involved in the process entered
into confidentiality agreements with us. Updated financial
information was sent to Genstar, as well as these three other
potential buyers. The strategic buyer and one of the financial
buyers declined to submit an indication of interest. On
December 8, 2006, we received an indication of interest
from the other potential financial buyer.
On December 11, 2006, Genstar contacted Citigroup and
submitted a new offer to acquire International Aluminum in a
cash merger at a price of $50.25 per share, or approximately
11.7% higher than its previous offer. This new offer implied an
equity value of International Aluminum of approximately
$216.5 million, an increase of approximately
$22.6 million over Genstar’s original offer. The new
offer also exceeded the price indicated on December 8 by the
other potential financial buyer.
Our board of directors met on December 15, 2006 to consider
the new Genstar offer, the status of the negotiation of the
final merger agreement, and strategic alternatives to the
Genstar merger, including maintaining the status quo and
executing a leveraged recapitalization, including a self-tender
offer to repurchase International Aluminum’s shares. At the
meeting, senior management reported on Genstar’s new
proposal and Citigroup updated its previous valuation analysis
of the Genstar offer in light of the results of operations of
International Aluminum for the year ended June 30, 2006 and
the quarter ended September 30, 2006. Citigroup reported
that Genstar had advised Citigroup that, subject to confirmatory
due diligence, Genstar’s proposed financing sources were
willing to proceed to finance the merger consideration
notwithstanding the pendency of the
class-action
lawsuit against International Aluminum, and that Genstar
continued to require that its completion of the debt financing
be a closing condition to the proposed merger. The new Genstar
proposal contained no condition regarding any minimum cash
balances of International Aluminum as of the closing of the
merger.
At the December 15, 2006 meeting, Citigroup made a
presentation to our board regarding the financial terms of the
new Genstar offer and the mechanics of a possible alternative
leveraged recapitalization and self-tender offer. Our board
discussed the advantages, disadvantages, and risks associated
with a leveraged recapitalization and self-tender offer compared
to the Genstar offer. At the conclusion of the meeting, our
board of directors directed Citigroup to inform Genstar that our
board was unwilling to accept Genstar’s new offer at the
$50.25 per share price and had directed Citigroup to
explore the possibility of a leveraged recapitalization and
self-tender offer. Later that day, Citigroup communicated to
Genstar the board’s response.
On December 18, 2006, Genstar contacted Citigroup to
indicate its willingness to increase its offer to acquire
International Aluminum to a price of $53.00 per share, or
approximately 5.5% above its most recent offer. Genstar
indicated that this was its best and final offer.
Our board of directors met later in the day on December 18,2006 to consider whether to accept in principle Genstar’s
new, higher offer and to proceed to finalize and enter into a
merger agreement. At the meeting, our board considered the
increase in the price offered by Genstar, the fact that the
offer price exceeded the highest-ever price
of International Aluminum’s common stock, and the fact that
the parties had made substantial progress in negotiating the
other provisions of the merger agreement. Our board considered
other factors associated with Genstar’s offer, including
the financing condition, as well as risks and uncertainties
associated with pursuing other possible alternatives. Our board
considered the fact that Genstar had indicated that this was its
final offer, and that pursuing a possible leveraged
recapitalization and self-tender offer was likely to cause
Genstar to withdraw its offer and not make another offer. After
discussion, our board authorized our senior management to accept
in principle Genstar’s offer and to enter into an agreement
with Genstar granting Genstar the exclusive right to negotiate
with International Aluminum.
On December 20, 2006, International Aluminum and Genstar
signed an agreement in which we agreed to negotiate exclusively
with Genstar during the period ending January 8, 2007.
On January 7, 2007, a meeting of our board of directors was
held to consider the Genstar offer and the terms of the merger
agreement negotiated between Genstar and Weil Gotshal and our
senior management and Troy & Gould. At that meeting,
Citigroup reviewed the entire bid auction process and the
financial terms of the Genstar proposal. A representative of
Troy & Gould reviewed the final terms of the merger
agreement, including the closing conditions, the provisions
limiting our board’s ability to respond to unsolicited
acquisition proposals, the circumstances under which
International Aluminum would be required to pay Genstar a
termination fee, and the more limited circumstances in which
Genstar would be required to pay a termination fee to
International Aluminum. Also at the meeting, Citigroup reviewed
with our board of directors its financial analysis of the merger
consideration and rendered to our board its oral opinion that,
based on its analysis as of that date and subject to customary
assumptions, qualifications, and limitations, the merger
consideration was fair, from a financial point of view, to our
shareholders (other than Gemstar and its affiliates), as more
fully described below under the caption “Opinion of
International Aluminum’s Financial Advisor.” Following
discussion and questions by our board, our directors unanimously
approved the merger agreement and merger and resolved to
recommend that our shareholders approve and adopt the merger and
the merger agreement.
Over the next few days, Troy & Gould worked with Weil
Gotshal and Genstar’s tax advisors, Ernst & Young
LLP, to address outstanding diligence matters and to finalize
International Aluminum’s disclosure schedules that were to
accompany the final merger agreement. On January 8, 2007,
Troy & Gould informed our senior management that
Genstar had requested that the final merger agreement be revised
to provide that the termination fee be payable by International
Aluminum to Genstar if International Aluminum could not deliver
a certificate at closing certifying that the interests being
sold were not U.S. real property interests under the
Internal Revenue Code. In light of this development, our senior
management determined to schedule a meeting of our board of
directors to consider this proposed change to the merger
agreement.
Our board of directors met on January 9, 2007.
Representatives of Troy & Gould and Citigroup also
participated in the meeting. At the meeting, the representative
of Troy & Gould reviewed with our board the review
conducted by Troy & Gould and presented to Weil Gotshal
and Ernst & Young LLP regarding International
Aluminum’s real estate assets. Following a discussion by
our board, the directors unanimously reconfirmed the
board’s approval of the merger agreement, including the new
termination fee provision. Citigroup also reconfirmed as of that
date its prior oral advice regarding the fairness of the merger
agreement from a financial point of view.
After the meeting, Citigroup delivered to International Aluminum
its written opinion, dated January 9, 2007, to the effect
that, as of that date and based on and subject to the matters
described in its written opinion, the merger consideration was
fair, from a financial point of view, to our shareholders (other
than Gemstar and its affiliates), as more fully described below
under the caption “Opinion of International Aluminum’s
Financial Advisor.” Later in the day on January 9,2007, International Aluminum, the Buyer, and Merger Subsidiary
executed the merger agreement. Prior to the opening of
U.S. financial markets on Thursday, January 10, 2007,
we issued a press release announcing the signing of the merger
agreement.
After careful consideration, International Aluminum’s board
of directors, by a unanimous vote of the directors, has
determined that the merger agreement is advisable, fair to, and
in the best interests of International Aluminum
and its shareholders, has approved and authorized in all
respects the merger agreement, and recommends that you vote
“FOR” the approval of the merger agreement.
In considering the recommendation of the board of directors with
respect to the merger agreement, you should be aware that some
of International Aluminum’s directors and executive
officers who participated in meetings of the board of directors
have interests in the merger that are different from, or in
addition to, the interests of our shareholders generally. See
“The Merger — Interests of International
Aluminum’s Directors and Executive Officers in the
Merger” beginning on page 19.
In reaching the decision to approve and authorize the merger,
the merger agreement, and the other transactions contemplated
under the merger agreement, our board of directors consulted
with senior management and International Aluminum’s
financial and legal advisors, and considered a number of
factors, including, but not limited to, those set forth below:
•
the board of directors’ familiarity with the business,
financial condition, results of operations, prospects, and
competitive position of International Aluminum, including the
industry and business challenges faced by International Aluminum;
•
the fact that International Aluminum, with the assistance of its
advisors, had conducted a broad process to solicit indications
of interest in a purchase, merger or business combination of our
company, including (1) contacting numerous potential
financial and strategic buyers, (2) the execution of
confidentiality agreements with many of these potential buyers,
and (3) the conduct of discussions and negotiations with
six potential buyers, and the fact that the Genstar proposal was
the only definitive proposal to acquire International Aluminum
that resulted from this broad process as described under
“The Merger — Background of the Merger” and
that a similar process conducted in 2001 by International
Aluminum with the assistance of its former advisors resulted in
no definitive proposal to acquire International Aluminum;
•
the fact that the $53.00 price per share reflected the highest
of all the values of International Aluminum indicated by any
party who indicated an interest in a transaction with
International Aluminum in the process discussed above, or
otherwise;
•
the premium over the recent historical market prices of our
common stock reflected in the $53.00 price per share, with the
board of directors noting in its deliberations that the
$53.00 per share reflected a premium of approximately 7.9%
over the all-time high trading price of International Aluminum
common shares, approximately 50% over the
52-week low
trading price of our common shares, and more than 19% above the
average closing price of our common shares during the sixty
trading days ended January 9, 2007, the day prior to the
announcement of the merger agreement;
•
the financial presentation of Citigroup, including its written
opinion, dated January 9, 2007, to our board of directors
as to the fairness, from a financial point of view and as of the
date of the opinion and based on and subject to the matters
described in its written opinion, of the merger consideration to
be received by our shareholders (other than Genstar and its
affiliates), as more fully described below under the caption
“Opinion of International Aluminum’s Financial
Advisor”;
•
the fact that the consideration to be received in the merger is
all cash;
•
the judgment of the board of directors that extending the
process by continuing discussions with any other parties who
indicated an interest in a transaction with International
Aluminum would not be likely to result in a higher price for
International Aluminum and would jeopardize the firm offer
received from the Buyer;
•
the debt and equity commitment letters provided by the Buyer
indicated a strong likelihood that the Buyer would be able to
pay the merger consideration, and the debt commitment would
permit the lenders to terminate their commitment only in
circumstances where the Buyer would be entitled under the
provisions of the merger agreement to terminate the merger
agreement, and not in circumstances extraneous to International
Aluminum;
•
the terms of the merger agreement that provide for the
Buyer’s payment to International Aluminum of a fee of
$6,850,000 if the merger fails to occur because the financing
condition in the merger agreement is not
satisfied, unless the failure to satisfy the financing condition
was attributable to International Aluminum as described under
“The Merger Agreement — Termination Fees”;
•
the terms of the merger agreement, which among other things
permit International Aluminum to respond to unsolicited
acquisition proposals and, upon payment of a $6,850,000
termination fee, to accept an unsolicited proposal that our
board of directors determines to be superior to the merger,
under certain circumstances as more fully described under
“The Merger Agreement — No Solicitation by
Us of Alternative Acquisition Proposals”;
•
the understanding of the directors, after consulting with their
financial and legal advisers, that the termination fee of
$6,850,000 to be paid by International Aluminum if the merger
agreement is terminated under certain circumstances, is
reasonable and customary;
•
the provisions of the merger agreement that allow the board of
directors, under certain circumstances, to change its
recommendation that International Aluminum’s shareholders
vote in favor of the approval of the merger agreement;
•
except for the inclusion of a financing condition, the limited
conditions applicable to the consummation of the merger under
the merger agreement, including the requirement that any breach
by International Aluminum of its representations, warranties,
covenants, or agreements have a material adverse effect in order
for the related conditions not to be satisfied;
•
the terms of the merger agreement that permit International
Aluminum to pay its regular quarterly dividend of $0.30 per
share pending the completion of the merger and other terms of
the merger agreement, including the respective representations,
warranties, and covenants of the parties;
•
the availability of dissenters’ rights to our shareholders,
if the holders of at least five percent of our outstanding
common stock properly exercise their dissenters’ rights;
•
the experience of Genstar in completing acquisitions such as the
merger; and
•
the support agreement of Cornelius C. Vanderstar, our Chairman
of the Board and the beneficial owner of approximately 40% of
our common stock, to vote all shares that he controls in favor
of the merger agreement, as well as his willingness to grant the
Buyer a proxy to vote such shares in favor of the approval of
the merger agreement, and the fact that the support agreement
can be terminated by Mr. Vanderstar if the merger agreement
is terminated.
Our board of directors also considered the following potentially
negative factors in reaching its decision to approve and
authorize in all respects the merger agreement, the merger, and
the other transactions contemplated under the merger agreement:
•
the fact that by consummating a transaction, the shareholders of
International Aluminum will be foregoing the opportunity to
participate in the possible future growth and success of
International Aluminum and any increase in our value;
•
the risk that the financing contemplated by the Buyer’s
debt commitment letter for the consummation of the merger might
not be obtained despite the few conditions to the financing;
•
the fact that the consideration received in the merger will be
taxable to the shareholders of International Aluminum;
•
that the terms of the merger agreement prohibit the solicitation
of other acquisition proposals;
•
that the interests of the directors and officers of
International Aluminum may be different in certain respects from
the interests of shareholders generally, as described under
“The Merger — Interests of International
Aluminum’s Directors and Executive Officers in the
Merger”;
•
the restrictions on the conduct of our business prior to the
consummation of the merger, which, subject to specific
limitations, may delay or prevent International Aluminum from
taking certain actions during the time that the merger agreement
remains in effect;
the requirement under the terms of the merger agreement that
International Aluminum pay the Buyer a termination fee if
International Aluminum terminates the merger agreement to accept
a superior proposal for the acquisition of International
Aluminum, if the board of directors changes its recommendation
concerning the merger agreement, or in certain other
circumstances (including, in some instances, if shareholders do
not vote to approve the merger agreement), and that our
obligation to pay the termination fee might discourage other
parties from proposing a business combination with, or an
acquisition of, International Aluminum;
•
the fact that International Aluminum is entering into a merger
agreement with a newly formed corporation with minimal assets
and, accordingly, that International Aluminum may encounter
difficulty enforcing its right to damages in the event of fraud
or intentional breach of the merger agreement by the Buyer or
Merger Subsidiary; and
•
the risk that, while the merger is expected to be completed,
there is no assurance that all conditions to the parties’
obligations to complete the merger will be satisfied and, as a
result, it is possible that the merger may not be completed even
if approved by our shareholders.
Our board of directors considered all of these factors as a
whole and considered the factors in their totality to favor and
support the decision to approve and authorize in all respects
the merger agreement, the merger, and the other transactions
contemplated under the merger agreement and to recommend that
International Aluminum’s shareholders approve the merger
agreement.
In view of the variety of factors considered in connection with
its evaluation of the merger, our board of directors did not
find it practicable to, and therefore did not, quantify, rank,
or otherwise assign relative or specific weight or values to any
of these factors. In addition, each individual director may have
given different weights to different factors.
The foregoing discussion of our board of directors’
considerations concerning the merger is forward looking in
nature. This information should be read in light of the
discussions under the heading “Cautionary Statement
Concerning Forward-Looking Information.”
If the merger agreement is approved by International
Aluminum’s shareholders and if the merger is completed,
Merger Subsidiary will be merged with and into International
Aluminum, with International Aluminum continuing as the
surviving corporation. Each outstanding share of International
Aluminum common stock (other than shares that are owned by
International Aluminum and its subsidiaries, or by the Buyer or
Merger Subsidiary, and other than shares that are owned by
shareholders who properly exercise dissenters’ rights under
California law if shareholders holding in total at least five
percent of International Aluminum’s common stock properly
elect to exercise their rights as dissenting shareholders) will
be cancelled and converted into the right to receive $53.00 in
cash, without interest.
After the completion of the merger, International Aluminum will
be a wholly owned subsidiary of the Buyer, our current
shareholders will have no ownership interest in International
Aluminum, and shares of International Aluminum’s common
stock will no longer be publicly traded. The Buyer and its
shareholder will be the sole beneficiaries of our future
earnings and growth and will control all corporate matters
affecting us after the merger.
Neither International Aluminum nor any of our officers or
directors has an ownership interest in the Buyer or Genstar or
is otherwise affiliated with the Buyer or Genstar. However, in
considering the recommendation of the board of directors with
respect to the merger agreement, you should be aware that some
of International Aluminum’s directors and executive
officers who participated in meetings of the board of directors
have interests in the merger that are different from, or in
addition to, the interests of our shareholders generally. These
interests, to the extent material, are described below. The
board of directors was aware of these interests and considered
them, among other matters, in approving the merger agreement and
the merger.
Employment
After the Merger
As of the date of this proxy statement, none of our executive
officers has entered into an agreement with the Buyer or any of
its affiliates regarding employment with International Aluminum
after the completion of the merger. Although no such employment
agreement or other post-merger employment arrangement with the
Buyer or any of its affiliates currently exists, we anticipate
that a number of our executive officers will remain with us
after the merger is completed, which means that those executive
officers may, prior to the closing of the merger, enter into new
agreements with the Buyer or its affiliates regarding employment
with, or the right to purchase or participate in the equity of,
International Aluminum after the completion of the merger.
The merger agreement provides that the directors of Merger
Subsidiary will become the directors of International Aluminum
upon the closing of the merger. Therefore, we do not anticipate
that any of our directors will continue to serve as directors of
International Aluminum after the completion of the merger.
Stock
and Stock Options
As of the record date for the special meeting of shareholders,
our directors and executive officers, other than Cornelius C.
Vanderstar, our Chairman of the Board, held in total
185,181 shares of our common stock. Mr. Vanderstar,
age 92, owns beneficially approximately 40% of the shares
of common stock of International Aluminum outstanding on the
record date for the special meeting of shareholders.
As of the record date for the special meeting of shareholders,
none of our directors or executive officers held options or
other rights to purchase any shares of our common stock.
Change
of Control Agreements
International Aluminum has not entered into an employment
agreement with any of its executive officers. However, we have
entered into a change of control agreement with each of the
following four executive officers: Ronald L. Rudy, our President
and Chief Executive Officer; Mitchell K. Fogelman, our Senior
Vice President-Finance and Corporate Secretary; William G.
Gainer, our Senior Vice President-Operations; and Michael J.
Norring, our Chief Accounting Officer.
The following is a summary of the material terms of the four
change of control agreements. Each agreement is identical,
except as described below:
•
if the executive officer is employed by us on the closing date
of the merger, he will be entitled to receive a retention bonus
equal to six times his monthly base salary;
•
if the employment of Mr. Rudy is terminated by us without
cause (as defined in the agreement) within two years after the
closing date of the merger, or if Mr. Rudy terminates his
employment with us for good reason (as defined in the agreement)
within two years after the closing date of the merger, he will
be entitled to receive a severance payment equal to twenty-four
times his monthly base salary. If the employment of
Mr. Fogelman, Gainer, or Norring is terminated by us
without cause (as defined in the agreement) within one year
after the closing date of the merger, or if the executive
officer terminates his employment with us for good reason (as
defined in the agreement) within one year after the closing date
of the merger, he will be entitled to receive a severance
payment equal to twelve times his monthly base salary; and
if the executive officer becomes entitled to receive a severance
payment and if he elects under the Consolidated Omnibus Budget
Reconciliation Act of 1985 (“COBRA”) to continue to
receive group health care coverage under COBRA, we will be
obligated to reimburse him for the amount of his COBRA premiums
for either twenty-four months or twelve months depending upon
whether he is entitled to receive twenty-four months or twelve
months of base salary as a severance payment.
Set forth below is (1) an estimate of the pre-tax amount of
the retention bonus that will be payable to each of the
executive officers listed below under his change of control
agreement upon the completion of the merger (assuming that each
officer is employed by us on that date), and (2) an
estimate of the pre-tax amount of the severance payment that
would be owed to each such officer under his change of control
agreement assuming that the officer is terminated on the day
following the completion of the merger. The following estimates
assume that we will not increase any of our officer’s base
salary prior to the completion of the merger, and the severance
payment estimates do not include any value attributable to the
COBRA-related payments that we have agreed to pay under the
change of control agreements if an officer elects under COBRA to
continue to receive group health care coverage following the
termination of his employment with us.
Estimated
Estimated
Retention
Severance
Name
Bonus
Payment
Ronald L. Rudy
$
175,000
$
700,000
Mitchell K. Fogelman
$
120,000
$
240,000
William G. Gainer
$
110,000
$
220,000
Michael J. Norring
$
78,750
$
157,500
Indemnification
and Insurance
Under the terms of the merger agreement, the Buyer and Merger
Subsidiary have generally agreed to indemnify the current and
former officers and directors of International Aluminum for acts
or omissions in their capacity as officers or directors
occurring on or before the effective time of the merger and to
provide for liability insurance for a period of six years from
and after the effective time of the merger, subject to certain
conditions. The terms of the policies must be no less favorable
than the existing policy of International Aluminum, unless the
cost of the policies would exceed 200% of the current
policy’s annual premium, in which case the coverage will be
the greatest amount available for an amount not exceeding 200%
of the current premium.
International Aluminum and the Buyer estimate that the total
amount of funds necessary to complete the merger and the related
transactions is anticipated to be approximately
240.7 million, which includes approximately
$228.5 million to be paid to International Aluminum’s
shareholders and holders of International Aluminum stock
options, $9.1 million related to the financing
arrangements, and $3.1 million estimated to be applied to
pay fees and expenses in connection with the merger. This amount
will be funded by a combination of debt and equity financing.
Debt
Financing
In connection with the execution and delivery of the merger
agreement, Merger Subsidiary obtained a letter commitment from
CIBC and its affiliates to provide up to $150 million in
debt financing, consisting of senior secured and mezzanine
loans. Alternatively, and at the option of the Buyer, CIBC and
its affiliates have committed to provide up to $142 million
of debt financing, consisting of first and second lien loans, if
the Buyer elects to enter into a sale-leaseback financing
transaction with respect to some of International
Aluminum’s properties. The facilities contemplated by the
debt commitment letter are conditioned on the financing being
consummated prior to May 31, 2007, as well as other
customary conditions, including, among others:
•
the execution and delivery of documentation reasonably
satisfactory to CIBC embodying the structure, terms, and
conditions described in CIBC’s commitment letter;
there not having occurred a material adverse effect on the
business, financial condition, or ongoing operations of
International Aluminum or its subsidiaries since
September 30, 2006;
•
the merger and the other transactions contemplated by the merger
agreement having been consummated concurrently with the initial
funding of the facilities contemplated by CIBC’s commitment
letter;
•
receipt by CIBC of, and satisfaction with, (a) audited
consolidated financial statements of International Aluminum and
its subsidiaries for each of the last three fiscal years,
(b) unaudited consolidated financial statements of
International Aluminum and its subsidiaries for each fiscal
quarter ending after the last fiscal year and prior to
45 days prior to the closing date of the merger and for the
comparable periods of the preceding fiscal year, (c) pro
forma financial statements for the Buyer and its subsidiaries
for the last fiscal year and for the latest four-quarter period
ending more than 45 days prior to the closing date of the
merger, in each case after giving effect to the financing, and
(d) forecasts of the financial performance of the Buyer and
its subsidiaries through and including the maturity of the
mezzanine loans;
•
the Buyer and its subsidiaries shall not have any indebtedness
for borrowed money on the closing date of the merger, other than
in respect of the financing and certain other permitted debt;
•
the existing loan facilities of International Aluminum shall
have been repaid in full and all commitments thereunder and
security interests granted in connection therewith shall have
been terminated;
•
receipt of evidence satisfactory to CIBC that the Buyer shall
have made a cash equity contribution to the Merger Subsidiary of
at least $35 million which is not mandatorily redeemable,
does not have preferential dividends, and does not contain
covenants; and
•
all filings and other actions required to create and perfect a
first priority security interest in all collateral of
International Aluminum and the guarantors in favor of the bank
lenders shall have been duly made or taken (subject to certain
agreed upon exceptions).
Equity
Financing
The Buyer has obtained a letter commitment from Genstar Capital
Partners IV, L.P., an affiliate of Genstar, to provide equity
financing in an amount equal to the difference between the total
merger consideration and the foregoing debt financing, but in no
event less than $35 million. The equity commitment is
subject to the satisfaction of the conditions to the
Buyer’s and Merger Subsidiary’s obligations to effect
the closing under the merger agreement and receipt by the Buyer
of the funds contemplated by the debt financing.
International Aluminum retained Citigroup Global Markets Inc.
(“Citigroup”) as its financial advisor in
connection with the merger. In connection with this engagement,
our board of directors requested that Citigroup evaluate the
fairness, from a financial point of view, of the merger
consideration to be received by holders of our common stock
(other than Genstar and its affiliates). On January 7,2007, at a meeting of our board of directors held to evaluate
the merger, Citigroup rendered to our board of directors an oral
opinion, which was updated on January 9, 2007 and confirmed
by delivery of a written opinion, dated January 9, 2007, to
the effect that, as of the date of its written opinion and based
on and subject to the matters described in its written opinion,
the merger consideration was fair, from a financial point of
view, to the holders of our common stock (other than Genstar and
its affiliates).
The full text of Citigroup’s written opinion, dated
January 9, 2007, which describes the assumptions made,
procedures followed, matters considered, and limitations on the
review undertaken, is attached to this proxy statement as
Appendix C and is incorporated into this proxy statement by
reference. Citigroup’s opinion was provided to our board of
directors in connection with its evaluation of the merger
consideration and relates only to the fairness, from a financial
point of view, of the merger consideration to be received by
holders of our common stock (other than Genstar and its
affiliates). Citigroup’s opinion does not address any terms
or other aspects or implications of the merger, other than the
merger consideration to the extent expressly specified in the
opinion, or any aspects or implications of any other agreement,
arrangement or understanding entered into in connection with the
merger or otherwise. Citigroup’s opinion is not intended to
be, and does not constitute, a recommendation to any
shareholder as to how such shareholder should vote or act on any
matters relating to the proposed merger.
In arriving at its opinion, Citigroup:
•
reviewed a draft of the merger agreement, dated January 6,2007;
•
held discussions with certain of our senior officers, directors,
and other representatives and advisors concerning our business,
operations, and prospects;
•
held discussions with certain senior officers and other
representatives and advisors of Genstar concerning our business,
operations, and prospects;
•
examined certain publicly available business and financial
information relating to us;
•
examined certain financial forecasts and other information and
data relating to us which were provided to or discussed with
Citigroup by our management;
•
reviewed the financial terms of the merger as set forth in the
draft of the merger agreement, dated January 6, 2007, in
relation to, among other things, current and historical market
prices and trading volumes of our common stock, our historical
and projected earnings and other operating data, and our
capitalization and financial condition;
•
considered, to the extent publicly available, the financial
terms of certain other transactions Citigroup considered
relevant in evaluating the merger;
•
analyzed certain financial, stock market, and other publicly
available information relating to the businesses of other
companies whose operations Citigroup considered relevant in
evaluating us; and
•
conducted such other analyses and examinations and considered
other information and financial, economic, and market criteria
as Citigroup deemed appropriate in arriving at its opinion.
In addition, at the direction of our board of directors,
Citigroup was requested to approach, and held discussions with,
third parties to solicit indications of interest in the possible
acquisition of us. Also at the request of our board of
directors, Citigroup participated in the negotiation and
structuring of the merger and Citigroup discussed with our
senior management and outside advisors the process leading to
the proposed merger.
In rendering its opinion, Citigroup assumed and relied, without
assuming any responsibility for independent verification, upon
the accuracy and completeness of all financial and other
information and data publicly available or provided to or
otherwise reviewed by or discussed with Citigroup and upon the
assurances of our management that they were not aware of any
relevant information that had been omitted or that remained
undisclosed to Citigroup. With respect to financial forecasts
and other information and data relating to us provided to or
otherwise reviewed by or discussed with Citigroup, Citigroup was
advised by our management that the forecasts and other
information and data were reasonably prepared on bases
reflecting the best currently available estimates and judgments
of our management as to our future financial performance.
Citigroup assumed, with our board of directors’ consent,
that the merger would be consummated in accordance with its
terms, without waiver, modification, or amendment of any
material term, condition, or agreement and that, in the course
of obtaining the necessary regulatory or third party approvals,
consents, releases, and waivers for the merger, no delay,
limitation, restriction, or condition would be imposed that
would have an adverse effect on us or the merger. In addition,
our representatives advised Citigroup, and Citigroup assumed
with our board of directors’ consent, that the final terms
of the merger agreement would not vary materially from those set
forth in the draft of the merger agreement, dated
January 6, 2007, reviewed by Citigroup.
Citigroup did not make, and it was not provided with, an
independent evaluation or appraisal of our assets or
liabilities, contingent or otherwise, and Citigroup did not make
any physical inspection of our properties or assets. Citigroup
expressed no view as to, and its opinion does not address, our
underlying business decision to effect the merger, the relative
merits of the merger as compared to any alternative business
strategies that might exist for us or the effect of any other
transaction in which we might engage. Citigroup’s opinion
is necessarily based upon information available to Citigroup,
and financial, stock market and other conditions and
circumstances existing as
of the date of its opinion. Except as described above, our board
of directors imposed no other instructions or limitations on
Citigroup with respect to the investigations made or procedures
followed by Citigroup in rendering its opinion.
In preparing its opinion, Citigroup performed a variety of
financial and comparative analyses, including those described
below. The summary of these analyses is not a complete
description of the analyses underlying Citigroup’s opinion.
The preparation of a financial opinion is a complex analytical
process involving various determinations as to the most
appropriate and relevant methods of financial analysis and the
application of those methods to the particular circumstances
and, therefore, a financial opinion is not readily susceptible
to summary description. Citigroup arrived at its ultimate
opinion based on the results of all analyses undertaken by it
and assessed as a whole, and did not draw, in isolation,
conclusions from or with regard to any one factor or method of
analysis for purposes of its opinion. Accordingly, Citigroup
believes that its analyses must be considered as a whole and
that selecting portions of its analyses and factors or focusing
on information presented in tabular format, without considering
all analyses and factors or the narrative description of the
analyses, could create a misleading or incomplete view of the
processes underlying its analyses and opinion.
In its analyses, Citigroup considered industry performance,
general business, economic, market, and financial conditions and
other matters existing as of the date of its opinion, many of
which are beyond our control. No company, business, or
transaction used in those analyses as a comparison is identical
or directly comparable to us or the merger, and an evaluation of
those analyses is not entirely mathematical. Rather, the
analyses involve complex considerations and judgments concerning
financial and operating characteristics and other factors that
could affect the acquisition, public trading, or other values of
the companies, business segments, or transactions analyzed.
The estimates contained in Citigroup’s analyses and the
valuation ranges resulting from any particular analysis are not
necessarily indicative of actual values or predictive of future
results or values, which may be significantly more or less
favorable than those suggested by its analyses. In addition,
analyses relating to the value of businesses or securities do
not necessarily purport to be appraisals or to reflect the
prices at which businesses or securities actually may be sold.
Accordingly, the estimates used in, and the results derived
from, Citigroup’s analyses are inherently subject to
substantial uncertainty.
The type and amount of consideration payable in the merger was
determined through negotiations between our board of directors
and Genstar, and the decision to enter into the merger was
solely that of our board of directors. Citigroup’s opinion
was only one of many factors considered by our board of
directors in its evaluation of the merger and should not be
viewed as determinative of the views of our board of directors
or management with respect to the merger or the merger
consideration.
The following is a summary of the material financial analyses
presented to our board of directors in connection with
Citigroup’s opinion. The financial analyses summarized
below include information presented in tabular format. In order
to fully understand Citigroup’s financial analyses, the
tables must be read together with the text of each summary. The
tables alone do not constitute a complete description of the
financial analyses. Considering the data below without
considering the full narrative description of the financial
analyses, including the methodologies and assumptions underlying
the analyses, could create a misleading or incomplete view of
Citigroup’s financial analyses.
Stock
Trading History and Implied Premiums
Citigroup reviewed the merger consideration of $53.00 per
share offered to holders of our common stock in the merger and
calculated the implied premiums represented relative to the
closing price of our common stock on January 8, 2007, the
all-time high closing stock price for our common stock, the
lowest closing stock price for the 52-week period ended
January 8, 2007, and the average closing stock prices of
our common stock for the one-week
period, one-month period, three-month period and twelve-month
period ended January 8, 2007. The results of this analysis
are set forth below:
Implied
Premium at
$53.00 Offer
Date
(%)
Price on
1/8/2007
8.5
All-Time High
7.9
52 Week Low as of
1/8/2007
50.3
7 Day Average as of
1/8/2007
9.3
30 Day Average as of
1/8/2007
12.4
60 Day Average as of
1/8/2007
19.0
90 Day Average as of
1/8/2007
26.8
Twelve Month Average as of
1/8/2007
30.7
Selected
Companies Analysis
Citigroup reviewed financial and stock market information and
public market trading multiples for us and the following seven
selected publicly held companies that Citigroup believed to be
generally relevant:
•
Building Materials Holding Corp.
•
Builders FirstSource
•
American Woodmark Corp.
•
PGT Inc.
•
Shiloh Industries
•
Insteel Industries
•
Monarch Cement Co.
No companies, including the seven selected companies, are
directly comparable to us as they do not operate in the
residential, commercial and extrusion business. Citigroup
selected these seven companies because they are all publicly
traded and include small to mid cap building products companies
with similar products for the residential construction market
and small cap industrial companies that manufacture products for
the residential and nonresidential construction markets and
other industrial applications.
Citigroup reviewed, among other things, enterprise values of the
selected companies (calculated as fully diluted equity value
based on closing stock prices on January 8, 2007, plus
straight and convertible debt, straight and convertible
preferred stock and minority interest, less cash, options and
warrants proceeds and investments in unconsolidated
subsidiaries) as a multiple of each selected company’s
estimated earnings before interest, taxes, depreciation and
amortization, commonly referred to as EBITDA, for the
12-month
period ending September 30, 2006, and estimated EBITDA for
calendar years 2006 and 2007. Citigroup also reviewed closing
stock prices of the selected companies on January 8, 2007
as a multiple of estimated earnings per share, commonly referred
to as EPS, for calendar years 2006 and 2007. Citigroup then
reviewed our enterprise value, based on our stock price as of
January 8, 2007 and at the merger consideration of
$53.00 per share as a multiple of our EBITDA for the
12-month
period ending September 30, 2006, and our estimated EBITDA
for calendar years 2006 and 2007, and our stock price as of
January 8, 2007 and at the merger consideration of
$53.00 per share as a multiple of our estimated EPS for
calendar years 2006 and 2007. Financial data of the selected
companies were based on research analysts’ estimates,
public filings, FirstCall, and other publicly available
information. Our financial data were based on public filings and
internal estimates of our management.
This analysis indicated (i) approximate implied mean and
median enterprise values, based on closing stock prices as of
January 8, 2007, as a multiple of EBITDA for the selected
companies for the
12-month
period ending September 30, 2006 and as a multiple of
estimated EBITDA for calendar years 2006 and 2007,
(ii) approximate
implied mean and median stock prices, based on closing stock
prices as of January 8, 2007, as a multiple of estimated
EPS for the selected companies for calendar years 2006 and 2007,
(iii) approximate implied enterprise value, based on our
closing stock price as of January 8, 2007 and the merger
consideration of $53.00 per share, as a multiple of our
EBITDA for the
12-month
period ending September 30, 2006 and as a multiple of our
estimated EBITDA for calendar years 2006 and 2007, and
(iv) approximate implied stock price, based on our closing
stock price as of January 8, 2007 and the merger
consideration of $53.00 per share, as a multiple of our
estimated EPS for calendar years 2006 and 2007 as set forth
below:
Implied
Multiples for
International
Aluminum
Implied
Based on:
Multiples for
Closing Stock
Merger
all Selected Public Companies
Price
Consideration
Mean
Median
on
1/8/2007
($53.00)
Enterprise Value as a Multiple
of
EBITDA for
12-Month
Period ending
9/30/06
5.0
5.1
5.4
5.9
Estimated EBITDA Calendar Year 2006
5.4
5.1
5.0
5.5
Estimated EBITDA Calendar Year 2007
5.3
5.2
5.1
5.5
Stock Price as a Multiple of
Estimated EPS
Calendar Year 2006
12.8
10.3
10.3
11.1
Calendar Year 2007
12.5
10.2
10.1
10.9
Precedent
Transactions Analysis
Using publicly available information, Citigroup reviewed the
transaction valuation multiples in the following 37 selected
transactions in the building products industry. The reviewed
transactions included premium branded companies that, at the
time of the transaction, generally were greater in size than the
proposed merger. No precedent transactions for businesses with a
similar exposure to both the commercial and residential markets
were available for review. In addition, the reviewed
transactions do not include private companies for which
transaction values were not publicly available.
Citigroup reviewed, among other things, transaction values
(calculated as the purchase prices paid for the equity, plus
straight and convertible debt, straight and convertible
preferred stock and minority interest, less cash, options and
warrants proceeds and investments in unconsolidated
subsidiaries) in the selected transactions as a multiple of
EBITDA of the target company for the
12-month
period ending the fiscal quarter closest to the date of the
announcement of the selected transaction and our enterprise
value, based on our closing stock price as of
January 8, 2007 and the merger consideration of
$53.00 per share, as an approximate implied multiple
against our EBITDA for the
12-month
period ending September 30, 2006. Transaction values,
EBITDA and multiples for the selected transactions were based on
public filings and publicly available financial information at
the time of announcement of the relevant transaction and, in
certain instances, Citigroup’s estimates. Financial data
for us were based on public filings.
This analysis indicated approximate implied mean and median
enterprise values as a multiple of EBITDA for the selected
precedent transactions and approximate implied enterprise values
for us, using our closing stock price as of January 8, 2007
and the merger consideration of $53.00 per share, as a
multiple of our EBITDA for the
12-month
period ending September 30, 2006:
Implied
Implied Multiples for International
Multiples for
Aluminum Based on:
all Selected
Closing Stock
Merger
Transactions
Price
Consideration
Mean
Median
on
1/8/2007
($53.00)
Enterprise Value as a Multiple
of EBITDA
7.6
7.7
5.4
5.9
Discounted
Cash Flow Analysis
Citigroup performed a discounted cash flow analysis of us to
calculate the estimated present value of the standalone
unlevered, after-tax free cash flows that we could generate
during fiscal years 2007 through 2011 based on internal
estimates of our management. Estimated terminal values for us
were calculated by applying to our fiscal year 2011 estimated
EBITDA, referred to as the terminal EBITDA, a range of EBITDA
terminal value multiples of 5.0x to 6.0x. The cash flows and
terminal values were then discounted to present value using
discount rates ranging from 9.5% to 11.0%. This analysis
indicated the following approximate implied per share equity
reference range for us, based on our fully diluted shares
outstanding as of December 31, 2006, as compared to the
merger consideration of $53.00 per share:
Implied per Share Equity Reference
Range for International Aluminum Based
Per Share
on Terminal EBITDA
Merger Consideration
$42.31 — $48.22
$
53.00
Leveraged
Buyout Analysis
Citigroup performed a leveraged buyout analysis to estimate the
theoretical purchase price that could be paid by a hypothetical
financial buyer in an acquisition of us based on internal
estimates of our management. The pro forma capital structure
used in the analysis was based on Genstar’s proposed
financing for the merger. Citigroup performed analyses to
project the likely internal rates of return on investment that
could be realized by a financial buyer exiting the transaction
in calendar years 2009, 2010, and 2011. Estimated exit values
for us were calculated by applying to our estimated terminal
EBITDA for calendar years 2009, 2010, and 2011 a range of exit
value multiples of 5.0x to 7.0x. Citigroup then derived a range
of theoretical internal rates of return based on an assumed
transaction cost of $10.5 million for a transaction closing
on December 31, 2006. Financial data for us were based on
internal estimates of our management. This analysis indicated
the following approximate internal rates of return for exit
years 2009, 2010, and 2011:
Exit Year
Exit EBITDA Multiple
2009
2010
2011
5.0
11
%
1
%
(4
)%
5.5
18
6
0
6.0
24
10
3
6.5
30
14
6
7.0
35
17
9
Citigroup also performed an analysis to estimate the theoretical
price that could be paid by a hypothetical financial buyer to
obtain a return of 25% based upon estimated exit values for us
calculated by applying to our
estimated terminal EBITDA for calendar years 2009, 2010, and
2011 a range of exit value multiples of 5.0x to 6.0x. This
analysis indicated the following approximate implied per share
equity reference range for us, as compared to the merger
consideration of $53.00 per share:
Implied per Share Equity Reference
Per Share
Range for International Aluminum Based
Merger
on Exit Multiple and Exit Year
Consideration
6.0x in 2009
5.0x in 2011
$39.98
$52.71
$53.00
Miscellaneous
Citigroup has acted as financial advisor to our board of
directors in connection with the merger. Under the terms of
Citigroup’s engagement, Citigroup will receive a fee of
$2.4 million for its financial advisory services, which is
contingent upon the consummation of the merger. Citigroup also
has received a fee of $1.0 million in connection with
delivery of its opinion. We also have agreed to reimburse
Citigroup for reasonable travel and other expenses incurred by
Citigroup in performing its services, including reasonable fees
and expenses of its legal counsel, and to indemnify Citigroup
and related persons against liabilities, including liabilities
under the federal securities laws, arising out of its engagement.
In the ordinary course of Citigroup’s business, Citigroup
and its affiliates may actively trade or hold our securities or
securities of publicly traded affiliates of Genstar, in each
case, for their own account or for the account of their
customers and, accordingly, may at any time hold a long or short
position in those securities. In addition, Citigroup and its
affiliates, including Citigroup Inc. and its affiliates, may
maintain relationships with us and our affiliates.
We selected Citigroup as our financial advisor in connection
with the merger because Citigroup is an internationally
recognized investment banking firm with substantial experience
in similar transactions. Citigroup, as part of its investment
banking services, is regularly engaged in the valuation of
businesses and their securities in connection with mergers and
acquisitions, strategic transactions, corporate restructurings,
negotiated underwritings, secondary distributions of listed and
unlisted securities, private placements, and valuations for
corporate and other purposes.
The following is a summary of certain material U.S. federal
income tax consequences of the merger that are relevant to
beneficial holders of International Aluminum common stock whose
shares will be converted to cash in the merger and who will not
own (actually or constructively) any shares of International
Aluminum common stock after the merger.
The following discussion is for general information only and
does not purport to consider all aspects of federal income
taxation that might be relevant to beneficial holders of
International Aluminum common stock. The discussion is based on
current provisions of the Internal Revenue Code of 1986, as
amended (the “Code”), existing, proposed, and
temporary regulations promulgated under the Code, and rulings,
administrative pronouncements, and judicial decisions as in
effect on the date of this proxy statement, changes to which
could materially affect the tax consequences described below and
could be made on a retroactive basis. The discussion applies
only to beneficial holders of International Aluminum common
stock in whose hands the shares are capital assets within the
meaning of Section 1221 of the Code and may not apply to
beneficial holders who acquired their shares pursuant to the
exercise of employee stock options or other compensation
arrangements with International Aluminum or who hold their
shares as part of a hedge, straddle, conversion, or other risk
reduction transaction or who are subject to special tax
treatment under the Code (such as dealers in securities or
foreign currency, insurance companies, other financial
institutions, regulated investment companies, tax-exempt
entities, former citizens or long-term residents of the U.S.,
S corporations, partnerships and investors in S
corporations and partnerships, and taxpayers subject to the
alternative minimum tax). In addition, this discussion does not
consider the effect of any state, local, or foreign tax laws.
The following discussion is not binding on the Internal Revenue
Service or the courts and, therefore, could be successfully
challenged. We do not intend to seek any ruling from the
Internal Revenue Service with respect to the merger.
For purposes of this discussion, the term
“U.S. holder” means a beneficial owner of
International Aluminum common stock that is, for
U.S. federal income tax purposes: a citizen or individual
resident of the United States; a corporation, or other entity
treated as a corporation for U.S. federal income tax
purposes, created in or under the laws of the United States or
of any state (including the District of Columbia); an estate,
the income of which is subject to U.S. federal income
taxation regardless of its source; or a trust, if a court within
the United States is able to exercise primary supervision over
the administration of the trust and one or more
U.S. persons have the authority to control all substantial
decisions of the trust, or a trust that has a valid election in
effect under applicable U.S. Treasury regulations to be
treated as a U.S. person. For purposes of this discussion,
the term
“non-U.S. holder”
means a beneficial owner of International Aluminum common stock
that is not a U.S. holder.
The receipt of cash in exchange for International Aluminum
common stock pursuant to the merger will be a taxable
transaction for U.S. federal income tax purposes. In
general, a U.S. holder who receives cash in exchange for
shares pursuant to the merger will recognize gain or loss for
federal income tax purposes equal to the difference, if any,
between the amount of cash received and the
U.S. holder’s adjusted tax basis in the shares
surrendered for cash pursuant to the merger. Gain or loss will
be determined separately for each block of shares (i.e., shares
acquired at the same price per share in a single transaction)
surrendered for cash pursuant to the merger. Such gain or loss
will be capital gain or loss and will be long-term capital gain
or loss if the U.S. holder’s holding period for such
shares is more than one year at the time of consummation of the
merger. The maximum federal income tax rate on net long-term
capital gain recognized by individuals is 15% under current law.
Deduction of capital losses may be subject to certain
limitations.
A
non-U.S. holder
generally will not be subject to U.S. federal income tax
with respect to gain recognized pursuant to the merger unless
one of the following applies:
•
The gain is effectively connected with a
non-U.S. holder’s
conduct of a trade or business within the United States
and, if a tax treaty applies, the gain is attributable to a
non-U.S. holder’s
U.S. permanent establishment. In such case, the
non-U.S. holder
will, unless an applicable tax treaty provides otherwise,
generally be taxed on its net gain derived from the merger at
regular graduated U.S. federal income tax rates, and in the
case of a foreign corporation, may also be subject to the branch
profits tax; or
•
A
non-U.S. holder
who is an individual holds International Aluminum common stock
as a capital asset, is present in the United States for 183 or
more days in the taxable year of the merger, and certain other
conditions are met. In such a case, the
non-U.S. holder
will be subject to a flat 30% tax on the gain derived from the
merger, which may be offset by certain U.S. capital losses.
Cash payments made pursuant to the merger will be reported to
the recipients and the Internal Revenue Service to the extent
required by the Code and applicable Treasury regulations. In
addition, certain non-corporate beneficial owners may be subject
to backup withholding at a 28% rate on cash payments received in
connection with the merger. Backup withholding will not apply,
however, to a beneficial owner who (1) furnishes a correct
taxpayer identification number and certifies that he, she, or it
is not subject to backup withholding on the substitute
Form W-9
or successor form, (2) provides a certification of foreign
status on
Form W-8
or successor form, or (3) is otherwise exempt from backup
withholding. Backup withholding is not an additional tax. Any
amounts withheld under the backup withholding rules will be
allowed as a refund or a credit against your federal income tax
liability provided the required information is timely furnished
to the Internal Revenue Service.
The discussion set forth above is included for general
information only. Each beneficial owner of shares of
International Aluminum common stock should consult his, her, or
its own tax advisor with respect to the specific tax
consequences of the merger to him, her, or it, including the
application and effect of state, local, and foreign tax laws.
This proxy statement is being furnished to our shareholders as
part of the solicitation of proxies by our board of directors
for use at a special meeting to be held at 10:00 a.m.,
local time, on Thursday, March 29, 2007, at International
Aluminum’s executive offices located at 767 Monterey Pass
Road, Monterey Park, California91754, or at any postponement or
adjournment of the meeting. The purpose of the special meeting
is to consider and vote on the proposal to approve the merger
agreement (and to approve the adjournment of the special
meeting, if necessary or appropriate to solicit additional
proxies). If the shareholders fail to approve the merger
agreement, the merger will not occur. A copy of the merger
agreement is attached to this proxy statement as Appendix A.
You may vote at the special meeting all of the shares of
International Aluminum common stock you owned of record as of
the close of business on March 8, 2007. If you own shares
that are registered in someone else’s name (for example, a
broker), you need to direct that person to vote those shares on
your behalf or obtain an authorization from them to vote the
shares yourself at the special meeting. As of the close of
business on March 8, 2007, there were 4,308,119 shares
of International Aluminum common stock outstanding held by
approximately 282 holders of record.
Approval of the merger agreement requires shareholders holding a
majority of the outstanding shares of International Aluminum
common stock at the close of business on the record date to vote
for the approval of the merger agreement, with each share having
a single vote for this purpose. The failure to vote has the same
effect as a vote against the approval of the merger agreement.
Cornelius C. Vanderstar, our Chairman of the Board and the
beneficial owner of approximately 40% of International
Aluminum’s outstanding common stock, has agreed pursuant to
a support agreement that he has entered into with the Buyer to
vote all shares that he controls in favor of the merger
agreement. Mr. Vanderstar has also granted the Buyer a
proxy to vote such shares in favor of the approval of the merger
agreement. The full text of the support agreement is attached to
this proxy statement as Appendix B.
Under the rules of the New York Stock Exchange, brokers who hold
shares in street name for customers have the authority to vote
on “routine” proposals when they have not received
instructions from beneficial owners. However, brokers are
precluded from exercising their voting discretion with respect
to the approval of non-routine matters such as the approval of
the merger agreement and, as a result, absent specific
instructions from the beneficial owner of such shares, brokers
are not empowered to vote those shares, referred to generally as
“broker non-votes.” Abstentions and broker non-votes
will be treated as shares that are present and entitled to vote
at the special meeting for purposes of determining whether a
quorum exists and will have the same effect as votes against
approval of the merger agreement.
The holders of a majority of the outstanding shares of
International Aluminum common stock entitled to be cast as of
the record date, represented in person or by proxy, will
constitute a quorum for purposes of the special meeting. A
quorum is necessary to hold the special meeting. Once a share of
International Aluminum common stock is represented at the
special meeting, it will be counted for the purpose of
determining a quorum and any adjournment of the special meeting,
unless the holder is present solely to object to the special
meeting. However, if a new record date is set for an adjourned
meeting, then a new quorum will have to be established.
This proxy statement is being sent to you on behalf of the board
of directors for the purpose of requesting that you allow your
shares of International Aluminum common stock to be represented
at the special meeting by the persons named in the enclosed
proxy card. All shares of International Aluminum common stock
represented at the special meeting by proxies voted by the
Internet or by properly executed proxy cards will be voted in
accordance with the instructions indicated on that proxy. If you
sign and return a proxy card without giving voting instructions,
your shares will be voted as recommended by the board of
directors. After careful consideration, the board of
directors, by a unanimous vote of all of the directors,
recommends a vote “FOR” the approval of the merger
agreement.
The persons named in the proxy card will use their own judgment
to determine how to vote your shares regarding any matters not
described in this proxy statement that are properly presented at
the special meeting. International Aluminum does not know of any
matter to be presented at the special meeting other than the
proposal to approve the merger agreement (and to approve the
adjournment of the meeting, if necessary or appropriate to
solicit additional proxies).
You may revoke your proxy at any time before the vote is taken
at the special meeting. To revoke your proxy, you must
(1) send a signed written notice of revocation to us at
International Aluminum Corporation, 767 Monterey Pass Road,
Monterey Park, California, 91754, Attention: Corporate
Secretary, (2) submit a proxy by mail or by the Internet
dated after the date of the earlier proxy you wish to change, or
(3) attend the special meeting and vote your shares in
person. Merely attending the special meeting without voting will
not be sufficient to revoke your earlier proxy.
If your shares of International Aluminum common stock are held
in street name, you will receive instructions from your broker,
bank, or other nominee that you must follow in order to have
your shares voted. If you do not instruct your broker to vote
your shares, it has the same effect as a vote against the
approval of the merger agreement.
International Aluminum will pay the cost of this proxy
solicitation. In addition to soliciting proxies by mail,
directors, officers, and employees of International Aluminum may
solicit proxies by telephone, by other electronic means, or in
person. None of these persons will receive additional or special
compensation for soliciting proxies. International Aluminum will
also, upon request, reimburse brokers, banks, and other nominees
for their expenses in sending proxy materials to their customers
who are beneficial owners and obtaining their voting
instructions.
Although it is not currently expected, the special meeting may
be adjourned or postponed for the purpose of soliciting
additional proxies. Any adjournment may be made without notice
(if the adjournment is not for more than thirty days), by an
announcement made at the special meeting of the time, date, and
place of the adjourned meeting. If no quorum exists, the
Chairman of the meeting will have the power to adjourn the
meeting from time to time, without notice other than
announcement at the meeting, until a quorum is present or
represented. If a quorum exists, holders of a majority of the
shares of International Aluminum common stock present in person
or represented by proxy at the special meeting and entitled to
vote at the meeting may adjourn the special meeting. Any signed
proxies received by International Aluminum in which no voting
instructions are provided on such matter will be voted in favor
of an adjournment in these circumstances. Any adjournment or
postponement of the special meeting for the purpose of
soliciting additional proxies will allow International
Aluminum’s shareholders who have already sent in their
proxies to revoke them at any time prior to their use at the
special meeting as adjourned or postponed.
This section describes the material terms of the merger
agreement. The description in this section and elsewhere in this
proxy statement is qualified in its entirety by reference to the
merger agreement, a copy of which is attached to this proxy
statement as Appendix A and which we incorporate by
reference into this document. This summary does not purport to
be complete and may not contain all of the information about the
merger agreement that is important to you. We encourage you to
read carefully the merger agreement in its entirety.
The merger agreement has been included to provide you with
information regarding its terms and is not intended to provide
any other factual information about International Aluminum, the
Buyer, Merger Subsidiary, or their affiliates. Furthermore, the
merger agreement contains representations and warranties made by
and to International Aluminum, the Buyer, and Merger Subsidiary
for the purposes of that contract and which are subject to
qualifications and limitations agreed to by the parties in
connection with negotiating the terms of that contract.
The effective time of the merger will occur at the time that
International Aluminum, the Buyer, and Merger Subsidiary file a
short-form agreement of merger (with attached officers’
certificates) with the Secretary of State of the State of
California on the closing date of the merger or on a later date
agreed to by the Buyer and International Aluminum. The closing
of the transactions contemplated by the merger agreement will
occur on the second business day after all of the conditions to
the merger set forth in the merger agreement have been satisfied
or waived, or on such other date as the Buyer and International
Aluminum may agree.
At the effective time of the merger, Merger Subsidiary will
merge with and into International Aluminum in accordance with
the California General Corporation Law. The separate existence
of Merger Subsidiary will cease, and International Aluminum will
survive the merger and continue to exist after the merger as a
wholly owned subsidiary of the Buyer. All of International
Aluminum’s and Merger Subsidiary’s rights and
properties and all of their debts and liabilities will become
those of the surviving corporation.
Following completion of the merger, International
Aluminum’s common stock will be delisted from the
New York Stock Exchange, deregistered under the Securities
Exchange Act of 1934, and will no longer be publicly traded.
Therefore, the current shareholders of International Aluminum
will not participate in any future earnings or growth of
International Aluminum and will not benefit from any
appreciation in value of International Aluminum following the
effective time of the merger.
At the effective time of the merger, each outstanding share of
International Aluminum common stock (other than shares that are
owned by International Aluminum as treasury stock, by any of our
subsidiaries, by the Buyer or by Merger Subsidiary, and other
than shares that are owned by shareholders who properly exercise
dissenters’ rights under California law if shareholders
holding at least five percent of International Aluminum’s
common stock properly exercise their rights as dissenting
shareholders) will be cancelled and converted into the right to
receive $53.00 in cash, without interest. Any of our shares that
are owned by International Aluminum, our subsidiaries, the Buyer
or Merger Subsidiary will be cancelled without the payment of
any consideration. After the effective time of the merger, each
outstanding stock certificate or book-entry share representing
shares of International Aluminum common stock converted in the
merger will represent only the right to receive the merger
consideration of $53.00, without interest, with respect to each
share of International Aluminum common stock.
At the effective time of the merger, each outstanding share of
the capital stock of Merger Subsidiary will be converted into
one share of the common stock of International Aluminum, and
such converted shares will constitute the only outstanding
shares of capital stock of International Aluminum as of the
effective time of the merger.
International
Aluminum Stock Options
Each outstanding International Aluminum stock option that
remains outstanding and unexercised as of the effective time of
the merger, whether or not then vested or exercisable, will
automatically be converted into the right to receive a cash
payment equal to the product of (1) the excess, if any, of
the merger consideration of $53.00 per share over the
exercise price per share of the stock option and (2) the
number of shares of common stock issuable upon exercise of the
stock option. After the merger, such stock options will no
longer be outstanding and the holders of the options will no
longer have any rights to purchase International Aluminum common
stock. As of the record date for the special meeting, two
employees each held an option granted in 1998 to purchase
2,500 shares of our common stock at an exercise price of
$31.5625 per share.
Prior to the effective time of the merger, the Buyer will
deposit with a disbursing agent selected by the Buyer and
reasonably acceptable to us a cash amount sufficient to pay the
aggregate merger consideration to be paid to our shareholders in
the merger in exchange for shares of our common stock.
Promptly after the effective time of the merger, the disbursing
agent will mail to each shareholder who is entitled to receive
the merger consideration a letter of transmittal and
instructions for use in effecting the surrender of the
shareholder’s stock certificate(s) in exchange for payment
of the merger consideration of $53.00 per share. Upon
surrender to the disbursing agent of the shareholder’s
stock certificate(s), together with the letter of transmittal
duly executed and such other documents as may be reasonably
required by the disbursing agent, the shareholder will be paid
promptly in exchange therefor a portion of the merger
consideration equaling $53.00 per share multiplied by the
number of shares of common stock owned by the shareholder. No
interest will be paid or accrued on the merger consideration.
A shareholder should not return a stock certificate with the
enclosed proxy card, and a shareholder should not send a stock
certificate to the disbursing agent without a signed letter of
transmittal.
The merger consideration may be paid to a person other than the
person in whose name the corresponding certificate is registered
if the certificate is properly endorsed or is otherwise in the
proper form for transfer. In addition, the person who surrenders
the certificate must either pay any transfer or other applicable
taxes or establish to the satisfaction of the surviving
corporation that such taxes have been paid or are not applicable.
The disbursing agent is entitled to deduct, withhold, and pay to
the appropriate taxing authorities any applicable taxes from the
merger consideration. Any sum that is withheld and paid to a
taxing authority by the paying agent will be deemed to have been
paid to the person with regard to whom it is withheld.
After the effective time of the merger, there will be no
transfers on our stock transfer books of shares of our common
stock that were outstanding prior to the effective time of the
merger. If, after the effective time of the merger, certificates
are presented to us for transfer, they will be canceled and
exchanged for the merger consideration.
Any portion of the merger consideration deposited with the
disbursing agent that remains undistributed to former holders of
our common stock more than six months after the effective time
of the merger will be delivered, upon demand, to the surviving
corporation. Former holders of our common stock who have not
complied with the above-described exchange and payment
procedures will thereafter be entitled to look only to the Buyer
for payment of the merger consideration. The disbursing agent,
the Buyer, and International Aluminum will not be liable to any
former holders of our common stock for any cash that is
delivered to a public official pursuant to any applicable
abandoned property, escheat, or similar laws.
If a shareholder has lost a stock certificate, or if it has been
stolen or destroyed, then before the shareholder will be
entitled to receive any portion of the merger consideration, he
or she will need to make an affidavit of the fact of such loss,
theft, or destruction and, if required by the surviving
corporation, post a bond in a reasonable amount sufficient to
protect the surviving corporation and the Buyer against any
claim that may be made against either of them with respect to
such certificate.
The merger agreement contains customary representations and
warranties of the parties to the merger agreement, which are
made to and solely for the benefit of each other. The assertions
embodied in the representations and warranties are qualified and
modified by information contained in a confidential disclosure
schedule that the parties exchanged in connection with the
signing of the merger agreement. Accordingly, you should not
rely on the representations and warranties as characterizations
of the actual state of facts about International Aluminum or the
Buyer because (1) they were made only as of the date of the
merger agreement or a prior specified date, (2) in some
cases they are subject to qualifications with respect to
materiality and knowledge, and (3) they are modified in
important part by the underlying disclosure schedule. The
disclosure schedule contains information that has been included
in International Aluminum’s prior public disclosures, as
well as non-public information. Moreover, information concerning
the subject matter of the representations and warranties may
have changed since the date of the merger agreement, and such
subsequent information may or may not be fully reflected in
International Aluminum’s public disclosures.
International Aluminum’s representations and warranties in
the merger agreement relate to, among other things:
•
our and our subsidiaries’ due incorporation, valid
existence, good standing, and qualification to do business;
our capitalization, including the number of shares of
International Aluminum common stock and stock options
outstanding;
•
our corporate power and authority to enter into the merger
agreement and to consummate the transactions contemplated by the
merger agreement;
•
the approval and recommendation by our board of directors of the
merger agreement and the merger and the other transactions
contemplated by the merger agreement;
•
the absence of certain specified violations of, or conflicts
with, our and our subsidiaries’ governing documents,
applicable law, and certain agreements as a result of entering
into the merger agreement and consummating the merger;
•
the required consents and approvals of governmental entities in
connection with the execution, delivery, and performance of the
merger agreement, the merger, and the other transactions
contemplated by the merger agreement;
•
compliance with applicable laws and permits;
•
our SEC forms, documents, registration statements, and reports
filed since January 1, 2003, including the financial
statements contained therein;
•
our disclosure controls and procedures and internal control over
financial reporting;
•
the absence of a material adverse effect and certain other
changes or events related to us or our subsidiaries since
June 30, 2006;
•
the absence of certain undisclosed liabilities;
•
the absence of undisclosed legal proceedings and governmental
orders against us;
•
employment and labor matters affecting us or our subsidiaries,
including matters relating to our or our subsidiaries’
employee benefit plans;
the receipt by the board of directors of a fairness opinion from
Citigroup;
•
the required vote of our shareholders in connection with the
approval of the merger agreement; and
•
the absence of undisclosed brokers’ fees.
Many of our representations and warranties are qualified by a
“material adverse effect” standard. For purposes of
the merger agreement, a “material adverse effect”
relating to International Aluminum means any change, event,
circumstance, development, or occurrence (other than an effect
arising out of or resulting from the entering into, or the
public announcement or disclosure of, the merger agreement and
the transactions contemplated by the merger agreement) that,
individually or in the aggregate, (1) has a material
adverse effect on the business, financial condition, or ongoing
operations of International Aluminum and its subsidiaries, taken
as a whole, or (2) has a material adverse effect on
International Aluminum’s ability to complete the merger.
The merger agreement also contains various representations and
warranties made jointly and severally by the Buyer and Merger
Subsidiary that are subject, in some cases, to exceptions and
qualifications. The representations and warranties by the Buyer
and Merger Subsidiary relate to, among other things:
•
their due incorporation, valid existence, and good standing;
•
their organizational documents;
•
the absence of specified violations of, or conflicts with, their
governing documents, applicable law, and certain agreements as a
result of entering into the merger agreement and consummating
the merger;
•
the required consents and approvals of governmental entities in
connection with the execution, delivery, and performance of the
merger agreement and the merger and the other transactions
contemplated by the merger agreement;
•
their power and authority to enter into the merger agreement and
to consummate the transactions contemplated by the merger
agreement; and
•
their possession of sufficient funds to pay the aggregate merger
consideration, including their procurement of a commitment
letter from a financially responsible institution for the debt
financing to be used to fund a portion of the aggregate merger
consideration.
Some of the representations and warranties by the Buyer and
Merger Subsidiary are qualified by a “material adverse
effect” standard. For purposes of the merger agreement, a
“material adverse effect” relating to the Buyer or
Merger Subsidiary means any change, event, circumstance,
development, or occurrence that is materially adverse to
(1) the business, financial condition, or ongoing
operations of the Buyer and its subsidiaries, taken as a whole,
or (ii) the ability of the Buyer or any of its subsidiaries
to complete the merger.
The representations and warranties in the merger agreement of
International Aluminum, the Buyer, and Merger Subsidiary will
terminate upon the effective time of the merger.
Under the merger agreement, International Aluminum has agreed
that, subject to certain exceptions, between January 9,2007 and the completion of the merger, unless the Buyer gives
its prior written consent (which consent will not be
unreasonably withheld or delayed):
•
International Aluminum and its subsidiaries will conduct their
businesses in the ordinary course, consistent with past
practice; and
International Aluminum and its subsidiaries will use reasonable
efforts to preserve intact their respective business
organizations and goodwill, keep available the services of their
respective officers and key employees, and preserve the goodwill
and business relationships with customers and others having
business relationships with them.
International Aluminum has also agreed that, during the same
time period and subject to certain exceptions, neither
International Aluminum nor any of its subsidiaries will take any
of the following actions, unless the Buyer gives its prior
written consent (which consent will not be unreasonably withheld
or delayed):
•
amend their respective articles of incorporation, bylaws or
other charter documents; split, combine, subdivide or reclassify
any shares of their outstanding capital stock; declare or pay
any dividend or distribution payable in cash, stock, property,
or otherwise; or make any other distribution in respect of any
shares of its or its subsidiaries’ capital stock, except
for the payment of our regular quarterly dividend of
$0.30 per share; or repurchase or otherwise acquire, or
modify or amend, any shares of capital stock or any rights,
warrants, or options to acquire any such shares;
•
issue, sell, pledge, or dispose of any additional shares of, or
any options, warrants or rights of any kind to acquire any
shares of, their capital stock of any class or any debt or
equity securities convertible into or exchangeable for such
capital stock, except that International Aluminum may issue
shares upon the exercise of currently outstanding options;
•
incur indebtedness for borrowed money; make any acquisition of
any capital stock, assets, or businesses of any other person
other than expenditures for current assets in the ordinary
course of business and expenditures for fixed or capital assets
in the ordinary course of business; or sell, pledge, or encumber
any assets or businesses that are material to International
Aluminum and its subsidiaries taken as a whole, subject to
specified exceptions;
•
enter into, amend, or renew any employment, consulting,
severance or similar agreement with, or pay any bonus or grant
any increase in salary, wage, or other compensation or any
increase in any employee benefit to, any directors, officers or
employees of International Aluminum or its subsidiaries, except
in each such case (1) as may be required by applicable law,
(2) to satisfy existing obligations, or (3) in the
ordinary course of business;
•
enter into, establish, or amend any pension, retirement, stock
purchase, savings, profit sharing, deferred compensation,
consulting, bonus, group insurance, or other employee benefit,
incentive, or welfare plan, agreement, program or arrangement,
in respect of any directors, officers, or employees of
International Aluminum or its subsidiaries, except, in each such
case (1) as may be required by applicable law or pursuant
to the terms of the merger agreement, (2) to satisfy
existing obligations, or (3) in the ordinary course of
business;
•
except to the extent required under existing employee and
director benefit plans, agreements, or arrangements, accelerate
the payment, right to payment, or vesting of any bonus,
severance, profit sharing, retirement, deferred compensation,
stock option, insurance or other compensation or benefits;
•
make capital expenditures or enter into any contract to make
capital expenditures, subject to specified exceptions;
•
make, change, or revoke any material tax election unless
required by law, or make any agreement or settlement with any
taxing authority regarding any material amount of taxes;
•
make any changes in financial or tax accounting methods,
principles, or practices (or change an annual accounting
period), except insofar as may be required by a change in
generally accepted accounting principles or applicable law;
•
adopt a plan or agreement of complete or partial liquidation or
dissolution;
•
pay, discharge, or satisfy any material claims, material
liabilities, or material obligations, (1) other than in the
ordinary course of business and (2) other than obligations
reflected or reserved against in, or
contemplated by, the consolidated financial statements (or the
notes thereto) contained in International Aluminum’s
reports filed with the SEC;
•
agree to the settlement of any material claim, litigation,
investigation, or other action;
•
enter into any agreement that restrains, limits, or impedes the
ability of International Aluminum or any of its subsidiaries to
compete with or conduct any business or line of business;
•
materially amend or terminate any material contract, or waive or
terminate any material right or material claim, or enter into
any material contract; or
The merger agreement contains restrictions on International
Aluminum’s ability to solicit or engage in discussions or
negotiations with any third party relating to an
“acquisition transaction,” which means:
•
any acquisition of assets of International Aluminum and our
subsidiaries (including securities of subsidiaries, but
excluding sales of assets in the ordinary course of business)
equal to 15% or more of our consolidated assets or to which 15%
or more of our revenues or earnings on a consolidated basis are
attributable;
•
any acquisition of 15% or more of our outstanding common stock;
•
any tender offer or exchange offer that if completed would
result in any third party beneficially owning 15% or more of our
outstanding common stock; or
•
any merger, consolidation, share exchange, business combination,
recapitalization, liquidation, dissolution, or similar
transaction involving International Aluminum and a third party.
An offer or proposal made to us by a third party with respect to
a potential or proposed acquisition transaction is referred to
in the merger agreement as an “acquisition
proposal.”
We have agreed that, prior to the effective time of the merger
or the earlier termination of the merger agreement, we will
cease any existing discussions or negotiations with any third
party regarding an acquisition transaction and will request the
prompt return or destruction of all confidential information
relating to us or any of our subsidiaries previously furnished
to any such person. We have also agreed to cause our and our
subsidiaries’ respective directors, officers and investment
bankers, attorneys, accountants, financial advisors and other
advisors, agents, and representatives to comply with the
covenants that are described in the preceding sentence.
We have agreed that, prior to the effective time of the merger
or the earlier termination of the merger agreement, we will not,
and will not permit any of our subsidiaries or representatives
to, directly or indirectly:
•
initiate, solicit, induce, negotiate, encourage, or provide
non-public or confidential information to facilitate any inquiry
that constitutes, or may reasonably be expected to lead to, an
acquisition proposal; or
•
enter into, continue, or otherwise participate in any
discussions or negotiations with any third party regarding, or
furnish to any third party any non-public information, or afford
access to our properties, books, or records with respect to, any
inquiries that constitute, or may reasonably be expected to lead
to, an acquisition transaction, or otherwise knowingly
facilitate any effort to attempt to make or implement any
acquisition transaction, except as described below.
We are required by the merger agreement to notify the Buyer
promptly after our receipt of any acquisition proposal,
indication of interest, or request for non-public information
relating to us or our subsidiaries in connection with an
acquisition proposal or for access to our or our
subsidiaries’ properties, books, or records by any third
party that informs us that it is considering making, or has
made, an acquisition proposal. We are also required to continue
to keep the Buyer informed of the status of the acquisition
proposal. The merger agreement’s restrictions on our
activities regarding an acquisition proposal do not prevent us
from making disclosures about an acquisition proposal that are
required by applicable federal securities laws.
Prior to approval of the merger agreement by our shareholders,
if we receive a written acquisition proposal from a third party
that did not result from a breach of our non-solicitation
covenants described above,
we may take the following actions notwithstanding the
above-described restrictions imposed by the merger agreement:
•
furnish confidential or non-public information to the third
party who made the acquisition proposal and negotiate with the
third party with respect to the acquisition proposal (but only
after the third party has signed a confidentiality agreement
that is no less favorable to us than the confidentiality
agreement that Genstar signed);
•
resolve to accept, or recommend, the third party’s
acquisition proposal if our board of directors determines that
the acquisition proposal constitutes a “superior
acquisition proposal,” which means a proposal to
acquire more than 50% of our common stock or 50% or more of our
consolidated assets and which is otherwise on terms that our
board of directors determines in good faith (after consultation
with our financial advisor and outside legal counsel) to be more
favorable to our shareholders from a financial point of view
than the merger and the other transactions contemplated by the
merger agreement; and
•
terminate the merger agreement and enter into an agreement with
the third party with respect to its superior acquisition
proposal.
We may take the actions listed in the preceding paragraph only
if (1) our board of directors determines, in good faith and
after consultation with our financial advisor and outside legal
counsel, that the acquisition proposal is or could reasonably be
expected to result in a superior acquisition proposal and
(2) our board determines, in good faith and after
consultation with our financial advisor and outside legal
counsel, that such action or actions are necessary to comply
with the board’s fiduciary duties to our shareholders under
applicable law. Furthermore, we may not terminate the merger
agreement in order to accept the third party’s acquisition
proposal unless we give the Buyer at least four days’ prior
written notice of our intention to terminate and we pay a
termination fee of $6,850,000 to the Buyer. In addition, the
merger agreement prohibits our board of directors from
withdrawing or modifying its recommendation in this proxy
statement that our shareholders approve the merger agreement
unless the board determines in good faith, based on those
matters as it deems appropriate after consulting with our
financial advisor and outside legal counsel, that taking such
action is necessary to comply with its fiduciary duties under
applicable law.
Merger
Subsidiary’s Activities
The Buyer has agreed to cause Merger Subsidiary to perform its
obligations under the merger agreement, and Merger Subsidiary is
prohibited from carrying on any business operations prior to the
completion of the merger.
Under the merger agreement, the Buyer has agreed that it will,
and will cause the surviving corporation to:
•
for a period of not less than one year following the effective
time of the merger, maintain our employees’ existing
employment agreements, bonus plans, severance plans, and other
benefit plans and benefits, provided that this covenant will not
prevent the surviving corporation from terminating the
employment of any employee; and
•
continue to accrue bonuses to participants in the International
Aluminum Corporation Annual Bonus Plan in respect of the fiscal
year ending June 30, 2007.
As promptly as practicable, International Aluminum is required
to establish a record date for, give notice of, and hold a
special meeting of shareholders to consider the proposal to
approve the merger agreement and to use our reasonable best
efforts to obtain the approval of our shareholders, including by
recommending in the proxy statement that our shareholders
approve the merger agreement. However, we will be relieved of
our obligations with respect to the special meeting if, in
accordance with the provisions described below under
“Termination of the
Merger Agreement,” our board of directors terminates the
merger agreement after receiving a superior acquisition proposal
and after paying the Buyer a termination fee of $6,850,000.
Each of the parties to the merger agreement has agreed to use
all reasonable best efforts to do anything necessary or
advisable to consummate and make effective the transactions
contemplated by the merger agreement, including using its
reasonable best efforts to obtain all necessary or appropriate
waivers, consents, or approvals of third parties and to effect
all necessary registrations, filings, and submissions. The
parties to the merger agreement have agreed to cooperate with
each other in connection with the satisfaction of the conditions
to the completion of the merger, including our agreement to
assist the Buyer in obtaining the financing to be used to pay a
portion of the merger consideration.
Under the terms of the merger agreement, the Buyer and Merger
Subsidiary have agreed that, to the fullest extent permitted
under applicable law, after the completion of the merger
International Aluminum will indemnify each of our current and
former officers, employees, and directors for acts or omissions
in his or her capacity as an officer, employee, or director
occurring on or before the effective time of the merger.
For a period of six years after the effective time of the
merger, the Buyer must cause to be maintained (or must cause
International Aluminum to maintain) in effect the current
policies of directors’ and officers’ liability
insurance maintained by us, provided that the Buyer may
substitute policies, including a tail policy, of at least the
same coverage and amounts containing terms and conditions that
are no less advantageous to the indemnified parties and which
coverage and amounts must be no less than the current coverage
and amounts; provided, however, that, if the aggregate annual
premiums for such insurance shall exceed 200% of the current
aggregate annual premium, then the Buyer may provide or cause to
be provided a policy for the applicable individuals with the
best coverage as is then available at an annual premium of not
more than 200% of the current aggregate annual premium.
actions necessary to exempt dispositions of our common stock by
our directors and officers pursuant to the merger under
Rule 16b-3
of the Securities Exchange Act of 1934.
The obligations of the parties to complete the merger are
subject to the satisfaction or waiver of the following mutual
conditions:
•
Shareholder Approval — The approval of the
merger agreement by International Aluminum’s shareholders
must have been obtained in accordance with the California
General Corporation Law;
•
No Law or Orders — None of the parties to the
merger agreement shall be subject to any law, order, injunction,
judgment, or ruling by any governmental authority that prohibits
the consummation of the merger or makes the consummation of the
merger illegal;
•
HSR Act — The waiting period applicable to
consummation of the merger under the
Hart-Scott-Rodino
Antitrust Improvements Act of 1976 must have expired or
been terminated, this condition having been satisfied on
March 6, 2007 as a result of the Federal Trade
Commission’s early termination of the waiting
period, and
No Lawsuits — There must not be pending any
action, suit, or other proceeding (1) seeking to restrain
or prohibit the consummation of the merger or seeking to obtain
from the Buyer or Merger Subsidiary in connection with the
merger any damages that are material in relation to the Buyer
and its subsidiaries, taken as a whole, or seeking to obtain
from International Aluminum any damages that are material in
relation to International Aluminum and its subsidiaries, taken
as a whole, (2) seeking the disposition of any material
assets or businesses of International Aluminum, or
(3) otherwise seeking to limit the actions of the Buyer
with respect to International Aluminum after the completion of
the merger.
The obligations of the Buyer and Merger Subsidiary to complete
the merger are subject to the satisfaction or waiver of the
following additional conditions:
•
Representations and Warranties — The
representations and warranties of International Aluminum
contained in the merger agreement must be true and correct,
except for specified immaterial failures;
•
Performance of Covenants — International
Aluminum must have performed in all material respects all
obligations required to be performed by it by the effective time
of the merger under the merger agreement, except for specified
immaterial failures;
•
Officers’ Certificate — International
Aluminum must have delivered to the Buyer and Merger Subsidiary
an officers’ certificate with respect to the satisfaction
of the conditions relating to its representations, warranties,
and covenants;
•
Approvals — All material approvals required to
be obtained in order to permit consummation of the merger under
applicable law must have been obtained;
•
Financing — The Buyer and Merger Subsidiary
must have received the proceeds of the financing described in
their debt commitment letter;
•
FIRPTA Affidavit — International Aluminum must
have delivered to the Buyer a statement described in
Section 1.1445-2(c)(3)(i)
of the United States Treasury Regulations certifying that the
interests in International Aluminum are not U.S. real
property interests; and
•
Termination of Line of Credit — International
Aluminum must have terminated its existing revolving line of
credit with City National Bank and delivered to the Buyer a
payoff letter and drafts of all necessary UCC termination
statements or other releases or satisfactions in connection with
such termination, together with any other forms of payoff
letters and drafts of all necessary UCC termination statements
in connection with the repayment of our other indebtedness.
The obligation of International Aluminum to complete the merger
is subject to the satisfaction or waiver of the following
additional conditions:
•
Representations and Warranties — The
representations and warranties of the Buyer and Merger
Subsidiary contained in the merger agreement must be true and
correct, except for specified immaterial failures;
•
Performance of Covenants — The Buyer and Merger
Subsidiary must have performed in all material respects all
obligations required to be performed by them by the effective
time of the merger under the merger agreement, except for
specified immaterial failures;
•
Officers’ Certificate — The Buyer and
Merger Subsidiary must have delivered to International Aluminum
an officers’ certificate with respect to the satisfaction
of the conditions relating to their representations, warranties,
and covenants; and
•
Approvals — All material approvals required to
be obtained in order to permit consummation of the merger under
applicable law must have been obtained.
The merger agreement may be terminated and the merger may be
abandoned at any time prior to the effective time of the merger
(notwithstanding any approval of the merger agreement by our
shareholders) as follows:
•
by the mutual written consent of International Aluminum and the
Buyer;
•
by either International Aluminum or the Buyer, if the merger has
not been completed by May 31, 2007; provided, however, that
the right to terminate the merger agreement for this reason is
not available to a party whose failure to perform its covenants
has caused the failure of the merger to occur by this date;
•
by either International Aluminum or the Buyer, if (1) there
has been a breach by the other party of any representation or
warranty contained in the merger agreement which would
reasonably be expected to have a material adverse effect and
which breach is not curable or, if curable, the breaching party
is not using on a continuous basis its reasonable best efforts
to cure in all material respects such breach, or (2) there
has been a breach of any of the covenants set forth in the
merger agreement on the part of the other party which would
reasonably be expected to have a material adverse effect and
which breach is not curable or, if curable, the breaching party
is not using on a continuous basis its reasonable best efforts
to cure such breach;
•
by either International Aluminum or the Buyer following the
entry of any final and non-appealable judgment, injunction,
order, or decree by a court or governmental agency restraining
or prohibiting the consummation of the merger;
•
by International Aluminum, if, prior to receipt of shareholder
approval of the merger agreement, it receives a superior
acquisition proposal described above under “No Solicitation
by Us of Alternative Acquisition Proposals,” it resolves to
accept the superior acquisition proposal, it pays the Buyer a
termination fee of $6,850,000 as described below under
“Termination Fees,” and it gives the Buyer at least
four days’ prior written notice of its intention to
terminate the merger agreement;
•
by the Buyer, if International Aluminum’s board of
directors fails to recommend that our shareholders approve the
merger agreement, or if our board withdraws, modifies, or amends
in a manner adverse to the Buyer in any material respect the
board’s recommendation to our shareholders to approve the
merger agreement, or if our board recommends another acquisition
proposal, or if our board resolves to accept a superior
acquisition proposal or recommends to our shareholders that they
tender their shares in a tender or an exchange offer commenced
by a third party; or
•
by the Buyer, if International Aluminum receives an acquisition
proposal from any person and our board of directors takes a
neutral position or makes no recommendation with respect to such
acquisition proposal and does not publicly reaffirm its
recommendation to approve the merger agreement after a
reasonable amount of time (and in no event more than ten
business days following such receipt) elapses for our board of
directors to review and make a recommendation with respect to
such acquisition proposal; or
•
by the Buyer or International Aluminum, if our shareholders fail
to approve the merger agreement at the special meeting of
shareholders (including any adjournment or postponement of the
meeting).
International Aluminum will owe the Buyer a termination fee of
$6,850,000 if:
•
International Aluminum terminates the merger agreement because,
prior to receipt of shareholder approval of the merger
agreement, it receives a superior acquisition proposal described
above under “No Solicitation by Us of Alternative
Acquisition Proposals” and resolves to accept the superior
acquisition proposal;
•
the Buyer terminates the merger agreement because
(1) International Aluminum’s board of directors fails
to recommend that our shareholders approve the merger agreement,
or if our board withdraws, modifies, or amends in a manner
adverse to the Buyer in any material respect the board’s
recommendation to our shareholders to approve the merger
agreement, or if our board recommends another acquisition
proposal, or if our board resolves to accept a superior
acquisition proposal or recommends to our shareholders that they
tender their shares in a tender or an exchange offer commenced
by a third party, or (2) International
Aluminum receives an acquisition proposal from another person
and our board of directors takes a neutral position or makes no
recommendation with respect to such acquisition proposal and
does not publicly reaffirm its recommendation to approve the
merger agreement after a reasonable amount of time elapses for
our board of directors to review and make a recommendation with
respect to such acquisition proposal;
•
the Buyer terminates the merger agreement because International
Aluminum has breached its covenants in the merger agreement
regarding (1) the solicitation of competing acquisition
proposals described above under “No Solicitation by Us of
Alternative Acquisition Proposals,” (2) the special
meeting of shareholders described above under
“Shareholders’ Meeting,” or (3) the
preparation, filing with the SEC, and delivery to our
shareholders of the proxy statement related to the special
meeting;
•
the Buyer or International Aluminum terminates the merger
agreement because our shareholders fail to approve the merger
agreement at the special meeting; provided, however, that the
termination fee described in this paragraph will be owed by us
only if (1) we enter into another acquisition transaction
within one year after the termination of the merger agreement
and (2) the proposal for such acquisition transaction was
made prior to the date of the special meeting of
shareholders; or
•
we fail to deliver to the Buyer the FIRPTA affidavit described
above under “Conditions to the Merger.”
The Buyer will owe International Aluminum a termination fee of
$6,850,000 if:
•
International Aluminum terminates the merger agreement because
the merger has not been completed by May 31, 2007;
•
all conditions to closing the merger have been satisfied as of
the date of such termination other than the Buyer’s and
Merger Subsidiary’s financing condition described above
under “Conditions to the Merger”;
•
all other conditions to the receipt of such financing have been
satisfied except for conditions solely within the Buyer’s
control; and
•
the failure to satisfy the financing condition is not caused by
International Aluminum’s breach of the merger agreement.
Genstar Capital Partners IV, L.P. has guaranteed the
Buyer’s obligation to pay the termination fee in this
limited circumstance.
Any provision of the merger agreement may be amended or waived
prior to the effective time of the merger if, and only if, such
amendment or waiver is in writing and signed, in the case of an
amendment, by International Aluminum, the Buyer, and Merger
Subsidiary or, in the case of a waiver, by the party against
whom the waiver is to be effective.
This section describes the material terms of the support
agreement. The description in this section and elsewhere in this
proxy statement is qualified in its entirety by reference to the
support agreement, a copy of which is attached to this proxy
statement as Appendix B and which we incorporate by
reference into this document. We encourage you to read carefully
the support agreement in its entirety.
In connection with the merger agreement, and concurrently with
the execution of the merger agreement, Cornelius C. Vanderstar,
our Chairman of the Board and the beneficial owner of
approximately 40% of International Aluminum’s outstanding
common stock, entered into the support agreement with the Buyer
and Merger Subsidiary. Pursuant to the support agreement,
Mr. Vanderstar has agreed to vote all shares of
International Aluminum common stock that he controls in favor of
the merger agreement. Mr. Vanderstar also agreed to vote
such shares (1) against any action or agreement that would
result in a breach of any representation, warranty, or covenant
of International Aluminum under the merger agreement,
(2) against any competing acquisition proposal, and
(3) against any agreement or other action that is intended,
or could reasonably be expected to, prevent or delay the
completion of
the merger. Mr. Vanderstar also agreed not to solicit
proxies or participate in a solicitation with respect to a
competing acquisition proposal.
Concurrently with the signing of the support agreement,
Mr. Vanderstar delivered to the Buyer an irrevocable proxy
to vote all of the International Aluminum shares that he
controls in favor of the approval of the merger agreement.
Under the support agreement, Mr. Vanderstar agreed that,
for the duration of the support agreement, he will not sell,
pledge, or otherwise transfer any shares of International
Aluminum common stock that he beneficially owns, other than
transfers for estate planning or charitable purposes if the
transferee agrees to comply with the support agreement.
The support agreement will terminate upon the earlier of the
completion of the merger and the date of termination of the
merger agreement in accordance with its terms.
The following table sets forth the high and low sales prices of
our common stock on the New York Stock Exchange during the
fiscal quarters indicated below:
On January 9, 2007, which was the trading day prior to the
date on which we announced the execution of the merger
agreement, International Aluminum’s common stock closed at
$50.00 per share. On March 7, 2007, which was the last
trading day before this proxy statement was printed,
International Aluminum’s common stock closed at $52.50 per
share. You are encouraged to obtain current market quotations
for our common stock in connection with voting your shares. As
of March 8, 2007, there were 4,308,119 shares of
International Aluminum common stock outstanding held by
approximately 282 holders of record.
The following table sets forth certain information regarding the
beneficial ownership of International Aluminum’s common
stock as of March 7, 2007 by (1) each person who is
known to us to beneficially own more than five percent of the
outstanding shares of our common stock, (2) each of our
directors, (3) each of our executive officers, and
(4) all directors and executive officers as a group. Except
as indicated in the footnotes to the table, we believe that each
person named in the table has sole voting and investment power
with respect to all shares shown as beneficially owned by such
person, subject to community property laws where applicable.
Beneficial ownership is determined in accordance with SEC rules
and generally means the possession of voting or investment
power with respect to securities. The percentages of ownership
set forth below are based upon 4,308,119 shares of our
common stock that were outstanding on March 7, 2007.
Number of Shares
Percentage of Class
Name and Address of Beneficial Owner
Beneficially Owned
Beneficially Owned
Cornelius C. Vanderstar(1)
1,720,700
39.9
%
John P. Cunningham(2)
146,606
3.4
%
Alexander L. Dean
300
*
Mitchell K. Fogelman
18,500
*
William G. Gainer
2,200
*
Robert H. Longnecker
0
*
Joel F. McIntyre
0
*
Norma A. Provencio
0
*
Ronald L. Rudy(3)
17,575
*
All current directors and
executive officers as a group (nine persons)
1,905,881
44.2
%
*
Represents less than one percent of our outstanding common stock.
(1)
Mr. Vanderstar’s shares are held of record by the
Vanderstar Family Trust, Cornelius C. and Marguerite
D. Vanderstar, Trustees. Mr. Vanderstar’s address
is c/o International Aluminum, 767 Monterey Pass Road,
Monterey Park, California91754.
(2)
Mr. Cunningham’s shares are held of record by the
Cunningham Family Trust, Patricia M. Cunningham, Trustee.
Mrs. Cunningham is Mr. Cunningham’s spouse.
(3)
Mr. Rudy’s shares are held of record by the Ronald and
LaJuana Rudy 2004 Trust, Ronald L. and LaJuana Rudy, Trustees.
Since International Aluminum’s common stock is listed on
the New York Stock Exchange, dissenting shareholders’
rights will not be available in connection with the merger
unless International Aluminum’s shareholders owning five
percent or more of the total outstanding common stock file
proper demands for payment pursuant to Chapter 13 of the
California General Corporation Law following shareholder
approval of the merger agreement.
If (1) International Aluminum’s shareholders owning
five percent or more of the outstanding common stock submit
proper demands for the purchase of dissenting shares in
accordance with Chapter 13 of the California General
Corporation Law following shareholder approval of the proposed
merger, (2) you voted your International Aluminum shares
against the proposal to approve the merger agreement and the
transactions contemplated thereby, and (3) you remain a
holder of International Aluminum common stock at the effective
time of the merger, then you will, by making a written demand
and complying with the procedures set forth in Chapter 13,
be entitled to receive an amount equal to the fair market value
of your shares as of January 9, 2007, which was the last
trading day before the public announcement of the merger.
The closing price for International Aluminum common stock on
January 9, 2007 was $50.00 per share. Chapter 13
of the California General Corporation Law provides that fair
market value shall be determined without taking into account any
appreciation from the proposed merger.
A copy of Chapter 13 of the California General Corporation
Law is attached to this proxy statement as Appendix D. You
should read it for more complete information concerning
dissenting shareholders’ rights. The discussion in this
section is qualified in its entirety by reference to
Appendix D.
The required procedures set forth in Chapter 13 of the
California General Corporation Law must be followed exactly or
any dissenting shareholders’ rights may be lost.
Furthermore, the fair market value determined under
Chapter 13 may be less than or more than the
$53.00 per share being paid in the merger.
In order to be entitled to exercise dissenting
shareholders’ rights, you must vote “AGAINST” the
merger agreement and the transactions contemplated thereby.
Thus, if you wish to dissent and you execute and return a proxy
in the accompanying form, you must specify that your shares are
to be voted “AGAINST” the merger agreement. If you
return a proxy without voting instructions or with instructions
to vote “ABSTAIN” or “FOR” approval of the
merger agreement, you will lose your potential dissenting
shareholders’ rights.
To be effective, an exercise of dissenting shareholder’s
rights must be made by, or on behalf of, the registered
shareholder. Beneficial owners who do not also hold their shares
of record may not directly make dissenters’ rights demands.
The beneficial holder must, in such cases, have the registered
owner submit the required demand in respect of those shares. If
you hold your shares of common stock in a brokerage account or
in other nominee form and you wish to exercise dissenters’
rights, you should consult with your broker or the other nominee
to determine the appropriate procedures for the making of a
demand by the nominee.
Upon shareholder approval of the merger agreement, International
Aluminum will have ten days following the approval to send to
those shareholders who have timely submitted a written demand
and voted “AGAINST” approval of the principal terms of
the merger agreement and the transactions contemplated thereby a
written notice of such approval accompanied by:
•
a copy of Chapter 13 of the California General Corporation
Law;
•
a statement of the price determined by International Aluminum to
represent the fair market value of the dissenting shares as of
January 9, 2007; and
•
a brief description of the procedures to be followed if a
shareholder desires to exercise dissenting shareholders’
rights.
Within thirty days after the date on which the notice of the
approval of the merger agreement is mailed, a shareholder who
plans to exercise dissenting shareholders’ rights must make
written demand upon International Aluminum for the purchase of
dissenting shares and payment to the shareholder of their fair
market value. The written demand must specify the number of
shares held of record by the shareholder and a statement of what
the shareholder claims to be the fair market value of those
shares as of January 9, 2007. At the same time, the
shareholder must surrender, at the office designated in the
notice of approval, the certificates representing the dissenting
shares to be stamped or endorsed with a statement that they are
dissenting shares or to be exchanged for certificates of
appropriate denomination so stamped or endorsed. Any shares of
International Aluminum common stock that are transferred prior
to their submission for endorsement will lose their status as
dissenting shares, and a dissenting shareholder may not withdraw
his or her dissent or demand for payment unless International
Aluminum consents to such withdrawal. If, at the close of the
thirty-day
period, the five percent threshold required to trigger
dissenting shareholders’ rights has not been achieved,
share certificates will be returned to shareholders who
submitted written demands for payment, along with instructions
for submitting those shares to the disbursing agent in order to
receive the merger consideration of $53.00 per share,
without interest.
If International Aluminum and the dissenting shareholder agree
that the surrendered shares are dissenting shares and agree upon
the price of the shares, the dissenting shareholder will be
entitled to the agreed price with interest from the date of such
agreement. The applicable interest rate will be the rate then
set by law for the accrual of interest on judgments for money.
That rate is currently ten percent per annum simple interest
(not compounded). International Aluminum must pay the fair value
of the dissenting shares within thirty days after the amount
thereof has been agreed upon, or thirty days after any statutory
or contractual conditions to the merger have been satisfied,
whichever is later. The obligation to pay for the dissenting
shares is subject to receipt of the certificates representing
them.
If International Aluminum denies that the shares surrendered are
dissenting shares, or if International Aluminum and the
dissenting shareholder fail to agree upon a fair market value of
such shares, then the dissenting shareholder must, within six
months after the notice of approval is mailed, file a complaint
in the Superior Court of the proper County in California
requesting the court to make such determination(s) or intervene
in any pending action brought by any other dissenting
shareholder. If the complaint is not filed or intervention in a
pending action is not made within the specified six-month
period, the dissenter’s rights will be lost. If the fair
market value of the
The 2007 annual meeting of shareholders of International
Aluminum will be held only if the merger is not completed. If
the 2007 annual meeting is held, shareholders interested in
submitting a proposal for inclusion in our proxy statement for
the 2007 annual meeting of shareholders may do so by following
the procedures prescribed in SEC
Rule 14a-8.
In accordance with the SEC’s rules, we must receive
proposals of shareholders intended to be presented at the 2007
meeting of shareholders at our principal executive offices not
later than May 29, 2007 for inclusion in our proxy
statement and form of proxy relating to the annual meeting, and
the proposals must otherwise comply with the requirements of
Rule 14a-8.
Notice of shareholder proposals submitted outside of SEC
Rule 14a-8
will be considered untimely if received by us after
August 10, 2007.
All notices of proposals by shareholders, whether or not to be
included in International Aluminum’s proxy materials,
should be sent to International Aluminum Corporation, 767
Monterey Pass Road, Monterey Park, California91754, Attention:
Corporate Secretary.
Management of International Aluminum is not aware of any matters
to be presented for action at the special meeting other than
those set forth in this proxy statement. However, should any
other business properly come before the special meeting, or any
adjournment or postponement of the meeting, the enclosed proxy
confers upon the persons entitled to vote the shares represented
by such proxy discretionary authority to vote the same in
respect of any such other business in accordance with their best
judgment in the interest of International Aluminum.
In accordance with SEC
Rule 14a-3(e)(1),
one proxy statement will be delivered to two or more
shareholders who share an address, unless International Aluminum
has received contrary instructions from one or more of the
shareholders. International Aluminum will deliver promptly upon
written or oral request a separate copy of the proxy statement
to a shareholder at a shared address to which a single copy of
the proxy statement was delivered. Requests for additional
copies of the proxy statement, and requests that in the future
separate proxy statements be sent to shareholders who share an
address, should be directed by writing to International Aluminum
Corporation, 767 Monterey Pass Road, Monterey Park, California,
91754, Attention: Corporate Secretary, or by calling Mitchell K.
Fogelman, our Corporate Secretary, at
(323) 264-1670,
extension 2118. In addition, shareholders who share a single
address but receive multiple copies of the proxy statement may
request that in the future they receive a single copy by
contacting International Aluminum at the address and phone
number set forth in the prior sentence.
International Aluminum files annual, quarterly, and current
reports, proxy statements, and other information with the SEC.
You may read and copy any reports, proxy statements, or other
information that we file with the SEC at the following location
of the SEC:
Public Reference Room
100 F Street, N.E.
Washington, D.C. 20549
Please call the SEC at
1-800-SEC-0330
for further information on the public reference room. You may
also obtain copies of this information by mail from the Public
Reference Section of the SEC, 100 F Street, N.E.,
Washington, D.C. 20549, at prescribed rates. International
Aluminum’s public filings are also available to the public
from document retrieval services and the Internet website
maintained by the SEC at www.sec.gov.
Any person, including any beneficial owner, to whom this proxy
statement is delivered may request copies of reports, proxy
statements, or other information concerning us, without charge,
by writing to International Aluminum Corporation, 767 Monterey
Pass Road, Monterey Park, California, 91754, Attention:
Corporate Secretary, or by calling Mitchell K. Fogelman, our
Corporate Secretary, at
(323) 264-1670,
extension 2118. If you would like to request documents, please
do so by March 20, 2007, in order to receive them before
the special meeting.
The SEC allows us to “incorporate by reference” into
this proxy statement documents that we file with the SEC. This
means that we can disclose important information to you by
referring you to those documents. The information incorporated
by reference is considered to be a part of this proxy statement,
and later information that we file with the SEC will update and
supersede that information. We incorporate by reference the
documents listed below and any documents filed by us pursuant to
Section 13(a), 13(c), 14, or 15(d) of the Securities
Exchange Act of 1934 after the date of this proxy statement and
prior to the date of the special meeting:
•
International Aluminum’s Annual Report on
Form 10-K
for the year ended June 30, 2006;
International Aluminum’s Definitive Proxy Statement for its
2006 annual meeting, filed on September 22, 2006.
You may request a copy of these filings, at no cost, by writing
to International Aluminum Corporation, 767 Monterey Pass Road,
Monterey Park, California91754, Attention: Corporate Secretary,
or by calling Mitchell K. Fogelman, our Corporate Secretary, at
(323) 264-1670,
extension 2118. Exhibits to the filings will not be sent,
however, unless those exhibits have specifically been
incorporated by reference in this document.
No persons have been authorized to give any information or to
make any representations other than those contained in this
proxy statement and, if given or made, such information or
representations must not be relied upon as having been
authorized by us or any other person. This proxy statement is
dated March 8, 2007. You should not assume that the
information contained in this proxy statement is accurate as of
any date other than that date, and the mailing of this proxy
statement to shareholders shall not create any implication to
the contrary.
AGREEMENT AND PLAN OF MERGER (this “Agreement”)
entered into as of January 9, 2007, by and among
INTERNATIONAL ALUMINUM CORPORATION, a California corporation
(the “Company”), IAC HOLDING CO., a Delaware
corporation (“Parent”), and IAL ACQUISITION
CO., a California corporation (“Merger
Subsidiary”).
WHEREAS, the respective Boards of Directors of the Company,
Parent, and Merger Subsidiary have each determined that this
Agreement and the transactions contemplated hereby, including
the Merger (as defined below), are advisable and fair to, and in
the best interests of, their respective shareholders, and have
each approved the merger of Merger Subsidiary with and into the
Company on the terms and subject to the conditions set forth in
this Agreement (the “Merger”); and
WHEREAS, as a condition and an inducement to the willingness of
Parent to enter into this Agreement, certain shareholders of the
Company have concurrently herewith entered into Support
Agreement in substantially the form attached hereto as
Exhibit A (“Support Agreement”),
pursuant to which, among other things, such shareholders have
agreed to vote the shares of Company Common Stock (as defined
below) owned by them in favor of the approval and adoption of
this Agreement and the approval of the Merger.
NOW, THEREFORE, in consideration of the foregoing and the
respective representations, warranties, covenants and agreements
set forth herein, the parties hereto agree as follows:
ARTICLE I
THE MERGER;
CLOSING
Section 1.01 The
Merger. Upon the terms and subject to the
conditions of this Agreement, at the effective time of the
merger (as defined in Section 1.02) Merger Subsidiary shall
be merged with and into the Company in accordance with the
California General Corporation Law (the
“CGCL”). Upon the Merger, the separate
existence of Merger Subsidiary shall cease and the Company shall
continue as the surviving corporation (the “Surviving
Corporation”) and shall continue its existence under
the CGCL.
Section 1.02 effective
time of the merger. Unless this Agreement is
earlier terminated pursuant to the terms hereof, the Merger
shall become effective at or following the Closing (as defined
in Section 1.08) upon the filing with the Secretary of
State of the State of California (the ‘‘Secretary
of State”) of an agreement of merger and certificates
of officers of the Company and Merger Subsidiary in accordance
with the requirements of the CGCL (the “Certificate of
Merger”). When used in this Agreement, the term
“effective time of the merger” means the date
and time at which the Certificate of Merger is accepted by the
Secretary of State for filing, or such later time as shall be
set forth in the Certificate of Merger.
Section 1.03 Effects
of the Merger. The Merger shall have the
effects provided for in this Agreement and in Section 1107
of the CGCL.
Section 1.04 Conversion
of Shares. At the effective time of the
merger, by virtue of the Merger and without any action on the
part of the parties or the holders of any of the following
securities:
(a) each issued and outstanding share of the Company’s
common stock, par value $1.00 per share (“Company
Common Stock”), owned by the Company as treasury stock
or owned by any wholly owned subsidiary of the Company or by
Parent, Merger Subsidiary or any other subsidiary of Parent,
shall automatically be cancelled and retired and shall cease to
exist, and no payment or consideration shall be made with
respect thereto;
(b) each issued and outstanding share of Company Common
Stock other than shares of Company Common Stock referred to in
paragraph (a) above and other than any Dissenting
Shares (as defined in Section 1.05) shall be converted into
the right to receive an amount in cash, without interest, equal
to $53.00 (the ‘‘Merger Consideration”).
At the effective time of the merger, all such shares of Company
Common Stock shall no longer be outstanding and shall
automatically be cancelled and retired and shall cease to exist,
and
each holder of a certificate representing any such shares of
Company Common Stock shall cease to have any rights with respect
thereto, except the right to receive the Merger Consideration,
without interest; and
(c) each issued and outstanding share of capital stock of
Merger Subsidiary shall be converted into one validly issued,
fully paid and nonassessable share of common stock of the
Surviving Corporation.
Section 1.05 Dissenting
Shares.
(a) For purposes of this Agreement, “Dissenting
Shares” means shares of the Company Common Stock held
immediately prior to the effective time of the merger by a
shareholder who did not vote in favor of the Merger (or consent
thereto in writing) and with respect to which demand to the
Company for purchase of such shares is duly made and perfected
in accordance with Section 1301 of the CGCL and not
subsequently and effectively withdrawn or forfeited.
Notwithstanding the provisions of Section 1.04(b) or any
other provision of this Agreement to the contrary, Dissenting
Shares shall not be converted into or be exchangeable for the
right to receive the Merger Consideration at or after the
effective time of the merger, but shall entitle the holder
thereof to receive such consideration as may be determined to be
due to holders pursuant to the CGCL, unless and until the holder
of such Dissenting Shares withdraws his or her demand for such
appraisal in accordance with the CGCL or becomes ineligible for
such appraisal. If a holder of Dissenting Shares shall withdraw
his or her demand for such appraisal or shall become ineligible
for such appraisal (through failure to perfect or otherwise),
then, as of the effective time of the merger or the occurrence
of such event, whichever last occurs, such holder’s
Dissenting Shares shall automatically be converted into and
represent the right to receive the Merger Consideration, without
interest, as provided in Section 1.04(b) and in accordance
with the CGCL.
(b) The Company shall give Parent (i) prompt notice of
any demands received by the Company for appraisal of shares of
Company Common Stock and (ii) the opportunity to
participate in and direct all negotiations and proceedings with
respect to any such demands. The Company shall not, without the
prior written consent of Parent, make any payment with respect
to, or settle, offer to settle or otherwise negotiate, any such
demands.
Section 1.06 Payment
of Merger Consideration.
(a) Prior to the effective time of the merger, Parent shall
appoint a bank or trust company reasonably satisfactory to the
Company to act as disbursing agent (the “Disbursing
Agent”) for the payment of the Merger Consideration
upon surrender of certificates representing shares of Company
Common Stock. At or prior to the effective time of the merger,
Parent shall deposit or cause to be deposited with the
Disbursing Agent in trust for the benefit of the Company’s
shareholders cash in an aggregate amount necessary to make the
payments pursuant to Section 1.04(b) to holders of shares
of Company Common Stock (such amounts being hereinafter referred
to as the “Exchange Fund”). The Disbursing
Agent shall invest the Exchange Fund, as the Surviving
Corporation directs, in direct obligations of the United States
of America, obligations for which the full faith and credit of
the United States of America is pledged to provide for the
payment of all principal and interest or commercial paper
obligations receiving the highest rating from either
Moody’s Investors Service, Inc. or Standard &
Poor’s, a division of The McGraw Hill Companies, or money
market funds investing solely in a combination of the foregoing,
provided that, in any such case, no such instrument shall have a
maturity exceeding three months. Any net profit resulting from,
or interest or income produced by, such investments shall be
payable to the Surviving Corporation. The Exchange Fund shall
not be used for any purpose other than as provided in this
Agreement.
(b) Promptly after the effective time of the merger, the
Surviving Corporation shall cause the Disbursing Agent to mail
to each individual, corporation, limited liability company,
partnership, association, joint venture, unincorporated
organization, trust or any other entity, including a
governmental authority (each a “Person”), who
was a record holder as of the effective time of the merger of an
outstanding certificate or certificates which immediately prior
to the effective time of the merger represented shares of
Company Common Stock (the “Certificates”), and
whose shares were converted into the right to receive the Merger
Consideration pursuant to Section 1.04, a form of letter of
transmittal (which shall specify that delivery shall be
effected, and risk of loss and title to the Certificates shall
pass, only upon proper delivery of the Certificates to the
Disbursing Agent, and which shall be in such form and shall have
such other customary provisions as Parent may reasonably
specify) and instructions for use in effecting the surrender of
the Certificates in exchange for payment of the Merger
Consideration. Upon surrender to the Disbursing Agent of a
Certificate, together with such letter of transmittal
duly executed and such other documents as may be reasonably
required by the Disbursing Agent, the holder of such Certificate
shall be paid promptly in exchange therefor cash in an amount
equal to the product of the number of shares of Company Common
Stock represented by such Certificate multiplied by the Merger
Consideration, and such Certificate shall forthwith be canceled.
No interest will be paid or accrued on the cash payable upon the
surrender of the Certificates. If payment is to be made to a
Person other than the Person in whose name the Certificate
surrendered is registered, it shall be a condition of payment
that the Certificate so surrendered be properly endorsed or
otherwise be in proper form for transfer and that the Person
requesting such payment pay any transfer or other taxes required
by reason of the payment of the Merger Consideration to a Person
other than the registered holder of the Certificate surrendered
or establish to the satisfaction of the Surviving Corporation
that such tax has been paid or is not applicable. Until
surrendered in accordance with the provisions of this
Section 1.06, each Certificate (other than Certificates
representing shares of Company Common Stock owned by any
subsidiary of the Company, Parent, Merger Subsidiary or any
other subsidiary of Parent and shares of Company Common Stock
held in the treasury of the Company, which shall have been
canceled as provided in Section 1.04(a), and other than
Certificates representing Dissenting Shares) shall represent for
all purposes only the right to receive the Merger Consideration
in cash multiplied by the number of shares of Company Common
Stock evidenced by such Certificate, without any interest
thereon.
(c) From and after the effective time of the merger, there
shall be no registration of transfers of shares of Company
Common Stock which were outstanding immediately prior to the
effective time of the merger on the stock transfer books of the
Surviving Corporation. From and after the effective time of the
merger, the holders of shares of Company Common Stock
outstanding immediately prior to the effective time of the
merger shall cease to have any rights with respect to such
shares of Company Common Stock except as otherwise provided in
this Agreement or by applicable law. All cash paid upon the
surrender of Certificates in accordance with the terms of this
Article I shall be deemed to have been paid in full
satisfaction of all rights pertaining to the shares of Company
Common Stock previously represented by such Certificates. If,
after the effective time of the merger, Certificates are
presented to the Surviving Corporation for any reason, such
Certificates shall be cancelled and exchanged for cash as
provided in this Article I. At the close of business on the
day of the effective time of the merger the stock ledger of the
Company shall be closed.
(d) If any Certificate shall have been lost, stolen or
destroyed, upon the making of an affidavit of that fact by the
Person claiming such Certificate to be lost, stolen or destroyed
and, if reasonably required by the Surviving Corporation, the
posting by such Person of a bond, in such reasonable amount as
Parent may direct, as indemnity against any claim that may be
made against it with respect to such Certificate, the Disbursing
Agent will pay, in exchange for such lost, stolen or destroyed
Certificate, the applicable Merger Consideration to be paid in
respect of the shares of Company Common Stock formerly
represented by such Certificate, as contemplated by this
Article I.
(e) At any time more than six months after the effective
time of the merger, the Surviving Corporation shall be entitled
to require the Disbursing Agent to deliver to it any funds which
had been made available to the Disbursing Agent and not
disbursed in exchange for Certificates (including all interest
and other income received by the Disbursing Agent in respect of
all such funds). Thereafter, holders of shares of Company Common
Stock shall look only to Parent (subject to the terms of this
Agreement and abandoned property, escheat and other similar
laws) as general creditors thereof with respect to any Merger
Consideration that may be payable, without interest, upon
surrender of the Certificates held by them. If any Certificates
shall not have been surrendered prior to two years after the
effective time of the merger (or immediately prior to such time
on which any payment in respect thereof would otherwise escheat
or become the property of any governmental unit or agency), the
payment in respect of such Certificates shall, to the extent
permitted by applicable law, become the property of the
Surviving Corporation, free and clear of all claims or interest
of any Person previously entitled thereto. Notwithstanding the
foregoing, none of Parent, the Company, the Surviving
Corporation nor the Disbursing Agent shall be liable to any
holder of a share of Company Common Stock for any Merger
Consideration delivered in respect of such share of Company
Common Stock to a public official pursuant to any abandoned
property, escheat or other similar law.
(f) Parent, the Surviving Corporation and the Disbursing
Agent shall be entitled to deduct and withhold from the Merger
Consideration otherwise payable to a holder of shares of Company
Common Stock pursuant to this Agreement such amounts as may be
required to be deducted and withheld with respect to the making
of such payment under the Internal Revenue Code of 1986, as
amended, and the rules and regulations promulgated
thereunder (the “Code”), or under any provision
of state, local or foreign tax law. To the extent amounts are so
withheld and paid over to the appropriate taxing authority, the
withheld amounts shall be treated for all purposes of this
Agreement as having been paid to the Person in respect of which
such deduction and withholding was made.
Section 1.07 Treatment
of Stock Options.
(a) Effective immediately prior to the effective time of
the merger, each then-outstanding Option (as defined in
Section 4.02) to purchase shares of Company Common Stock,
whether or not then vested or exercisable, shall constitute only
the right to receive a cash amount equal to the Option
Consideration (as defined below) for each share of Company
Common Stock then subject to the Option. As of the effective
time of the merger, any Option with an exercise price greater
than the Merger Consideration shall be canceled without
consideration and be of no further force or effect. After the
effective time of the merger, the holders (the “Option
Holders”) of Options shall receive in exchange for
their Options consideration at a price (the “Option
Consideration”) equal to the product of (i) the
number of shares of Company Common Stock purchasable under such
Option multiplied by (ii) the difference between the Merger
Consideration and the exercise price per share of Company Common
Stock purchasable under such Option. Notwithstanding the
foregoing, Parent or Merger Subsidiary shall be entitled to
deduct and withhold from the Option Consideration otherwise
payable such amounts as may be required to be deducted and
withheld with respect to the making of such payment under the
Code, or any provision of state, local or foreign tax law.
(b) In the event any stock option agreement or other
instrument evidencing the Options to be purchased pursuant to
Section 1.07(a) shall have been lost, stolen or destroyed,
upon the making and delivery to Parent of an affidavit, in form
and substance reasonably satisfactory to Parent, to such effect
by the Person claiming to be the owner of the Options evidenced
by such lost, stolen or destroyed agreement or instrument, and
provided that the Company’s records indicate that such
Person is the owner of the Options evidenced by such lost,
stolen or destroyed agreement or instrument, Parent or Merger
Subsidiary, as the case may be, shall pay and deliver to such
Person the Option Consideration deliverable in respect thereof
in accordance with Section 1.07(a).
Section 1.08 The
Closing. The consummation of the transactions
contemplated by this Agreement (the “Closing”)
shall take place at the offices of Troy & Gould
Professional Corporation, 1801 Century Park East,
16th Floor, Los Angeles, California90067, commencing at
9:00 A.M., local time, on the second business day following
the satisfaction or waiver of all conditions set forth in
Article VI or such other place and date as the parties may
mutually determine (the “Closing Date”). As
soon as practicable following the Closing, the Company and
Merger Subsidiary shall file with the Secretary of State the
duly executed Certificate of Merger and such other documents as
may be required by the CGCL, and the parties shall take all such
other and further actions as may be required by law to make the
Merger effective.
ARTICLE II
THE
SURVIVING CORPORATION; DIRECTORS AND OFFICERS
Section 2.01 Articles
of Incorporation. The Articles of
Incorporation of Merger Subsidiary in effect at the effective
time of the merger shall be the articles of incorporation of the
Surviving Corporation, unless and until amended in accordance
with applicable law and the terms of this Agreement.
Section 2.02 Bylaws. The
Bylaws of Merger Subsidiary in effect at the effective time of
the merger shall be the bylaws of the Surviving Corporation,
unless and until amended in accordance with applicable law.
Section 2.03 Directors
and Officers. The directors of Merger
Subsidiary immediately prior to the effective time of the merger
shall be the directors of the Surviving Corporation as of the
effective time of the merger. The officers of the Company
immediately prior to the effective time of the merger shall be
the officers of the Surviving Corporation as of the effective
time of the merger, subject to the right of the Board of
Directors of the Surviving Corporation to appoint or replace
officers.
Parent and Merger Subsidiary jointly and severally represent and
warrant to the Company that:
Section 3.01 Organization. Each
of Parent and Merger Subsidiary is a corporation duly organized,
validly existing and in good standing under the laws of the
state of its incorporation. Each of Parent and Merger Subsidiary
has the requisite corporate power and authority to own, lease
and operate its assets and properties and to carry on its
business as it is now being conducted.
(a) Each of Parent and Merger Subsidiary has the requisite
corporate power and authority to enter into this Agreement and
to consummate the transactions contemplated hereby. The
execution and delivery of this Agreement and the consummation of
the transactions contemplated hereby have been duly authorized
and approved by all requisite actions of the respective Boards
of Directors and the shareholders of Parent and Merger
Subsidiary. This Agreement has been duly executed and delivered
by each of Parent and Merger Subsidiary and, assuming the due
authorization, execution and delivery hereof by the Company,
constitutes a valid and legally binding agreement of each of
Parent and Merger Subsidiary, enforceable against each of Parent
and Merger Subsidiary in accordance with its terms, subject to
applicable bankruptcy, insolvency, reorganization, moratorium
and similar laws affecting creditors’ rights and remedies
generally, and subject, as to enforceability, to general
principles of equity, including principles of commercial
reasonableness, good faith and fair dealing (regardless of
whether enforcement is sought in a proceeding at law or in
equity).
(b) The execution, delivery and performance of this
Agreement by each of Parent and Merger Subsidiary and the
consummation of the transactions contemplated hereby do not and
will not violate, conflict with or result in a breach of any
provision of, or constitute a default (or an event which, with
notice or lapse of time or both, would constitute a default)
under, or result in the termination of, or accelerate the
performance required by, or result in a right of termination or
acceleration under, or result in the creation of any lien,
security interest or encumbrance upon any of the properties or
assets of Parent or any of its subsidiaries under any of the
terms, conditions or provisions of (i) the respective
certificate or articles of incorporation, bylaws or other
charter documents of Parent or any of its subsidiaries,
(ii) any statute, law, ordinance, rule, regulation,
judgment, decree, order, injunction, writ, permit or license of
any court or governmental authority applicable to Parent or any
of its subsidiaries or any of their respective properties or
assets, subject, in the case of consummation, to obtaining
(prior to the effective time of the merger) the Parent Required
Statutory Approvals (as defined in Section 3.02(c)), or
(iii) any note, bond, mortgage, indenture, deed of trust,
license, franchise, permit, concession, contract, lease or other
instrument, obligation or agreement of any kind (each a
“Contract” and collectively
“Contracts”) to which Parent or any of its
subsidiaries is now a party or by which Parent or any of its
subsidiaries or any of their respective properties or assets may
be bound or affected, other than, in the case of clause (i)
of this paragraph (b) (solely to the extent such clause
relates to organizational documents of Parent’s
subsidiaries) and clauses (ii) and (iii) of this
paragraph (b), such violations, conflicts, breaches,
defaults, terminations, accelerations or creations of liens,
security interests or encumbrances that would not reasonably be
expected to have a Parent Material Adverse Effect (as
hereinafter defined) and would not prevent or materially delay
the consummation of the Merger. In this Agreement, the term
“Parent Material Adverse Effect” means any
change, event, circumstance, development or occurrence that is
materially adverse to (i) the business, financial condition
or ongoing operations of Parent and its subsidiaries, taken as a
whole, or (ii) the ability of Parent or any of its
subsidiaries to consummate the Merger.
(c) Except for (i) the filings by Parent required by
the
Hart-Scott-Rodino
Antitrust Improvements Act of 1976, as amended (the
“HSR Act”), (ii) applicable filings, if
any, with the Securities and Exchange Commission (the
“SEC”) pursuant to the Securities Exchange Act
of 1934, as amended (the ‘‘Exchange Act”),
and (iii) the filing of the Certificate of Merger with the
Secretary of State in connection with the Merger (the filings
and approvals referred to in clauses (i) through
(iii) are collectively referred to as the
‘‘Parent Required Statutory Approvals”),
no declaration, filing or registration with, or notice to, or
authorization, consent or approval of, any governmental or
regulatory body or authority is necessary for the valid
execution and delivery of this Agreement by Parent or Merger
Subsidiary or the consummation by Parent or Merger Subsidiary of
the transactions contemplated hereby, other than such
declarations, filings, registrations, notices, authorizations,
consents or approvals which, if not made or obtained, as the
case may be, would not reasonably be expected to have a Parent
Material Adverse Effect and would not materially delay the
consummation of the Merger.
Section 3.03 Proxy
Statement. None of the information to be
supplied by Parent with respect to Parent, Merger Subsidiary or
Parent’s other subsidiaries or its shareholders for
inclusion in any proxy statement to be distributed in connection
with the Company’s meeting of shareholders to vote upon
this Agreement and the transactions contemplated hereby (the
“Proxy Statement”) will, at the time of the
mailing of the Proxy Statement and at the time of the meeting of
shareholders of the Company to be held in connection with the
transactions contemplated by this Agreement, contain any untrue
statement of a material fact or omit to state any material fact
required to be stated therein or necessary in order to make the
statements therein, in the light of the circumstances under
which they are made, not misleading.
Section 3.04 Ownership
of Company Common Stock. Neither Parent,
Merger Subsidiary nor any of Parent’s other subsidiaries
beneficially owns any shares of Company Common Stock.
Section 3.05 Funding
of Merger Consideration. Merger Subsidiary
has obtained binding written commitment letters and related term
sheets from financially responsible institutions, addressed to
Merger Subsidiary, dated as of the date hereof, true and correct
copies of which have been furnished to the Company for the debt
financing to be used in connection with the transactions
contemplated hereby (the “Financing”). The
commitment letters are in full force and effect and Parent has
performed all of its obligations thereunder required to be
performed on or prior to the date hereof. From and after the
satisfaction or waiver of the conditions to closing in
Sections 6.01 and 6.03, Parent shall have available cash in
an amount sufficient for Parent to pay the Merger Consideration
and the Option Consideration and otherwise to consummate the
transactions contemplated by this Agreement.
The Company represents and warrants to Parent and Merger
Subsidiary that, except as set forth in (i) the Company SEC
Reports (as defined in Section 4.05) filed with the SEC
prior to the date hereof and (ii) the disclosure schedule
delivered to Parent by the Company concurrently herewith (the
“Company Disclosure Schedule”), which shall be
arranged in sections corresponding to the numbered sections of
this Article IV, it being agreed that disclosure of any
item on the Company Disclosure Schedule shall be deemed
disclosure with respect to all Sections of this Agreement if the
relevance of such item is reasonably apparent from the face of
the Company Disclosure Schedule:
Section 4.01 Organization
and Qualification.The Company is a
corporation duly organized, validly existing and in good
standing under the laws of the State of California and has the
requisite corporate power and authority to own, lease and
operate its assets and properties and to carry on its business
as it is now being conducted. The Company is duly qualified and
licensed to transact business and is in good standing (with
respect to jurisdictions that recognize such concept) in each
jurisdiction in which the properties owned, leased or operated
by it or the nature of the business conducted by it makes such
qualification necessary, except where the failure to be so
organized, existing, qualified, licensed and in good standing
would not reasonably be expected to have a Company Material
Adverse Effect (as hereinafter defined). In this Agreement, the
term “Company Material Adverse Effect” means
any change, event, circumstance, development or occurrence
(other than an effect arising out of or resulting from the
entering into or the public announcement or disclosure of this
Agreement and the transactions contemplated hereby) that,
individually or in the aggregate, (i) has a material
adverse effect on the business, financial condition or ongoing
operations of the Company and its subsidiaries, taken as a
whole, or (ii) has a material adverse effect on the
Company’s ability to consummate the Merger. True, accurate
and complete copies of the Company’s Restated Articles of
Incorporation and Bylaws, in each case, as in effect on the date
hereof, including all amendments thereto, have heretofore been
made available to Parent.
(a) The authorized capital stock of the Company consists of
10,000,000 shares of Company Common Stock and
500,000 shares of preferred stock, par value $10 per
share (“Company Preferred Stock”). As of
January 2, 2007, (i) 4,308,119 shares of Company
Common Stock were issued and outstanding, all of which shares
were duly authorized, validly issued, fully paid, nonassessable
and free of preemptive rights, (ii) no shares of Company
Preferred Stock were issued and outstanding, and
(iii) 5,000 shares of Company Common Stock were
reserved for issuance upon exercise of outstanding stock options
(the ‘‘Options”). The outstanding shares
of Company Common Stock were issued in compliance with all
applicable securities laws. Since January 2, 2007, except
as permitted by this Agreement, (i) no shares of capital
stock of the Company have been issued and (ii) no options,
warrants or securities convertible into, or commitments with
respect to the issuance of, shares of capital stock of the
Company have been issued, granted or made.
(b) Section 4.02(b) of the Company Disclosure Schedule
sets forth a complete and accurate list of all holders of
Options, indicating with respect to each Option, the number of
shares of Company Common Stock subject to such Option, the
exercise price, the date of grant, and the expiration date
thereof. The Company has delivered or made available to Parent
accurate and complete copies of all Company stock plans, the
standard forms of stock option agreement evidencing Options, and
any stock option agreements evidencing an Option that deviates
in any material manner from the Company’s standard forms of
stock option agreement.
(c) Except for the Options, there are no outstanding
subscriptions, options, calls, contracts, commitments,
understandings, restrictions, arrangements, rights or warrants,
including any right of conversion or exchange under any
outstanding security, instrument or other agreement and also
including any rights plan or other anti-takeover agreement,
obligating the Company or any subsidiary of the Company to
issue, deliver or sell, or cause to be issued, delivered or
sold, additional shares of the capital stock of the Company or
obligating the Company or any subsidiary of the Company to
grant, extend or enter into any such agreement or commitment.
There are no outstanding stock appreciation rights or similar
derivative securities or rights of the Company or any of its
subsidiaries. There are no voting trusts, irrevocable proxies or
other agreements or understandings to which the Company or any
subsidiary of the Company is a party or is bound with respect to
the voting of any shares of capital stock of the Company.
Section 4.03 Subsidiaries. Each
direct and indirect subsidiary of the Company is duly organized,
validly existing and in good standing (with respect to
jurisdictions that recognize such concept) under the laws of its
jurisdiction of incorporation and has the requisite corporate
power and authority to own, lease and operate its assets and
properties and to carry on its business as it is now being
conducted, and each subsidiary of the Company is duly qualified
and licensed to transact business, and is in good standing (with
respect to jurisdictions that recognize such concept), in each
jurisdiction in which the properties owned, leased or operated
by it or the nature of the business conducted by it makes such
qualification necessary, except, in all cases, where the failure
to be so organized, existing, qualified, licensed and in good
standing or to have such power and authority would not
reasonably be expected to have a Company Material Adverse
Effect. All of the outstanding shares of capital stock of each
subsidiary of the Company are validly issued, fully paid,
nonassessable and free of preemptive rights and are owned
directly, or indirectly through other subsidiaries, by the
Company. There are no outstanding subscriptions, options,
warrants, rights, calls, contracts, commitments, understandings,
restrictions or arrangements relating to the issuance or sale
with respect to any shares of capital stock of any subsidiary of
the Company, including any right of conversion or exchange under
any outstanding security, instrument or agreement. For purposes
of this Agreement, the term “subsidiary” means,
with respect to any specified Person (the
“Owner”), any other Person of which more than
50% of the total voting power of shares of capital stock or
other equity interests entitled (without regard to the
occurrence of any contingency) to vote in the election of
directors, managers, trustees or other governing body thereof is
at the time owned or controlled, directly or indirectly, by such
Owner or one or more of the other subsidiaries of such Owner.
(a) The Company has the requisite corporate power and
authority to enter into this Agreement and, subject to the
Company Shareholders’ Approval (as defined in
Section 4.18), to perform its obligations hereunder and to
consummate the transactions contemplated hereby. The execution
and delivery of this Agreement and the consummation of the
transactions contemplated hereby have been duly authorized and
approved by the Board
of Directors of the Company. No other corporate proceedings on
the part of the Company are necessary to authorize the
execution, delivery and performance of this Agreement or, except
for the Company Shareholders’ Approval, the consummation by
the Company of the transactions contemplated hereby. This
Agreement has been duly executed and delivered by the Company,
and, assuming the due authorization, execution and delivery
hereof by Parent and Merger Subsidiary, constitutes a valid and
legally binding agreement of the Company, enforceable against
the Company in accordance with its terms, subject to applicable
bankruptcy, insolvency, reorganization, moratorium and similar
laws affecting creditors’ rights and remedies generally,
and subject, as to enforceability, to general principles of
equity, including principles of commercial reasonableness, good
faith and fair dealing (regardless of whether enforcement is
sought in a proceeding at law or in equity).
(b) The Company Board of Directors, at a meeting duly
called and held, has unanimously (i) approved and declared
advisable this Agreement and the transactions contemplated
hereby, including the Merger, and (ii) resolved to
recommend that shareholders of the Company adopt this Agreement
and approve the transactions contemplated hereby.
(c) The execution, delivery and performance of this
Agreement by the Company and the consummation of the Merger and
the transactions contemplated hereby do not and will not
violate, conflict with or result in a breach of any provision
of, or constitute a default (or an event which, with notice or
lapse of time or both, would constitute a default) under, or
result in the termination of, or accelerate the performance
required by, or result in a right of termination or acceleration
under, contractually require any offer to purchase or any
prepayment of any debt, or result in the creation of any lien,
security interest or encumbrance upon any of the properties or
assets of the Company or any of its subsidiaries under any of
the terms, conditions or provisions of (i) the respective
articles of incorporation, bylaws or other charter documents of
the Company or any of its subsidiaries, (ii) any statute,
law, ordinance, rule, regulation, judgment, decree, order,
injunction, writ, permit or license of any court or governmental
authority applicable to the Company or any of its subsidiaries
or any of their respective properties or assets, subject, in the
case of consummation, to obtaining (prior to the effective time
of the merger) the Company Required Statutory Approvals (as
defined in Section 4.04(d)) and the Company
Shareholders’ Approval, or (iii) any Contract to which
the Company or any of its subsidiaries is now a party or by
which the Company or any of its subsidiaries or any of their
respective properties or assets may be bound or affected, other
than, in the case of clause (i) of this paragraph (b)
(solely to the extent such clause relates to organizational
documents of the Company’s subsidiaries) and
clauses (ii) and (iii) of this paragraph (b),
such violations, conflicts, breaches, defaults, terminations,
accelerations, contractual requirements or creations of liens,
security interests or encumbrances that would not reasonably be
expected, individually or in the aggregate, to have a Company
Material Adverse Effect and would not prevent or materially
delay the consummation of the Merger.
(d) Except for (i) the filings by the Company required
by the HSR Act, (ii) the filing of the Proxy Statement and
other applicable filings, if any, with the SEC pursuant to the
Exchange Act, (iii) the filing of the Certificate of Merger
with the Secretary of State in connection with the Merger, and
(iv) any filings with or approvals from authorities
required solely by virtue of the jurisdictions in which Parent
or its subsidiaries conduct any business or own any assets (the
filings and approvals referred to in clauses (i) through
(iv) and those disclosed in Section 4.04(c) of the
Company Disclosure Schedule are collectively referred to as the
“Company Required Statutory Approvals”), no
declaration, filing or registration with, or notice to, or
authorization, consent or approval of, any governmental or
regulatory body or authority is necessary for the execution and
delivery of this Agreement by the Company or the consummation by
the Company of the transactions contemplated hereby, other than
such declarations, filings, registrations, notices,
authorizations, consents or approvals which, if not made or
obtained, as the case may be, would not reasonably be expected,
individually or in the aggregate, to have a Company Material
Adverse Effect and would not prevent or materially delay the
consummation of the Merger.
Section 4.05 Reports
and Financial Statements.
(a) Since January 1, 2003, the Company has filed with
the SEC all material forms, statements, reports and documents
(including all exhibits, post-effective amendments and
supplements thereto) (the “Company SEC
Reports”) required to be filed by it under each of the
Securities Act of 1933, as amended, the Exchange Act and the
respective rules and regulations thereunder, all of which, as
amended if applicable, complied when filed, or amended, in all
material respects with all applicable requirements of the
appropriate act and the rules and
regulations thereunder. As of their respective dates, the
Company SEC Reports filed with the SEC prior to the date hereof
did not contain any untrue statement of a material fact or omit
to state a material fact required to be stated therein or
necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading, except
to the extent corrected by a subsequently filed Company SEC
Report filed with the SEC prior to the date hereof.
(b) The audited consolidated financial statements and
unaudited financial statements of the Company included in the
Company’s Annual Report on
Form 10-K
for the fiscal years ended June 30, 2005 and June 30,2006, respectively, and the Company’s Quarterly Report on
Form 10-Q
for the quarterly period ended September 30, 2006
(collectively, the “Company Financial
Statements”), have been prepared in accordance with
generally accepted accounting principles (except, with respect
to any unaudited financial statements, as permitted by
applicable SEC rules or requirements) applied on a consistent
basis (except as may be indicated therein or in the notes
thereto) and fairly present in all material respects the
consolidated financial position of the Company and its
subsidiaries as of the dates thereof and the results of their
consolidated operations and changes in financial position for
the periods then ended (subject in the case of any unaudited
interim financial statements, to normal year-end adjustments).
Section 4.06 Sarbanes-Oxley
Act; Internal Accounting Controls. The
Company is in material compliance with all applicable provisions
of the Sarbanes-Oxley Act of 2002. The Company and its
subsidiaries maintain a system of internal accounting controls
sufficient to provide reasonable assurance that
(i) transactions are executed in accordance with
management’s general or specific authorizations,
(ii) access to assets is permitted only in accordance with
management’s general or specific authorization, and
(iii) the recorded accountability for assets is compared
with the existing assets at reasonable intervals and appropriate
action is taken with respect to any differences. The
Company’s certifying officers have evaluated the
effectiveness of its controls and procedures as of the date
prior to the filing date of the most recently filed periodic
report under the Exchange Act (such date, the
“Evaluation Date”). The Company presented in
its most recently filed periodic report under the Exchange Act
the conclusions of the certifying officers about the
effectiveness of the disclosure controls and procedures based on
their evaluations as of the Evaluation Date. Since the
Evaluation Date, there have been no significant changes in the
Company’s internal controls or, to the Company’s
knowledge, in other factors that could adversely affect the
Company’s internal controls.
Section 4.07 Absence
of Undisclosed Liabilities. Neither the
Company nor any of its subsidiaries had at June 30, 2006,
or has incurred since that date and as of the date hereof, any
liabilities or obligations (whether absolute, accrued,
contingent or otherwise) of any nature, except
(a) liabilities, obligations or contingencies
(i) which are accrued or reserved against in the Company
Financial Statements or reflected in the notes thereto or
(ii) which were incurred after June 30, 2006 in the
ordinary course of business and consistent with past practices,
(b) liabilities, obligations or contingencies which
(i) would not reasonably be expected, individually or in
the aggregate, to have a Company Material Adverse Effect, or
(ii) have been discharged or paid in full prior to the date
hereof in the ordinary course of business, and
(c) liabilities, obligations and contingencies which are of
a nature not required to be reflected in the consolidated
financial statements of the Company and its subsidiaries
prepared in accordance with generally accepted accounting
principles consistently applied.
Section 4.08 Absence
of Certain Changes or Events. Since
June 30, 2006, (a) except with respect to the
transactions contemplated by this Agreement, the Company has
carried on and operated its businesses in all material respects
in the ordinary course of business and (b) there have not
been any changes, events, circumstances, developments or
occurrences that would reasonably be expected to have a Company
Material Adverse Effect.
Section 4.09 Litigation;
Government Investigations. There are no
material claims, suits, actions, proceedings, arbitrations or
other actions pending or, to the knowledge of the Company,
threatened against, relating to or affecting the Company or any
of its subsidiaries, before any court, governmental department,
commission, agency, instrumentality or authority, or any
arbitrator. To the knowledge of the Company, no material
investigation or review by any governmental or regulatory body
or authority is pending or threatened, nor has any governmental
or regulatory body or authority indicated an intention to
conduct the same. Except as may be entered into with
Parent’s prior written consent in connection with
Section 5.11, neither the Company nor any of its
subsidiaries is subject to any judgment, decree, injunction,
rule or order of any court, governmental department, commission,
agency, instrumentality or authority, or any arbitrator, or any
settlement agreement or stipulation, which as of the date hereof
prohibits the consummation of the transactions contemplated
hereby or would reasonably be expected, individually or in the
aggregate, to have a Company Material Adverse Effect.
Section 4.10 Proxy
Statement. None of the information to be
supplied by the Company or its subsidiaries or shareholders for
inclusion in the Proxy Statement will, at the time of the
mailing thereof or any amendments or supplements thereto, or at
the time of the meeting of shareholders of the Company to be
held in connection with the transactions contemplated by this
Agreement, contain any untrue statement of a material fact or
omit to state any material fact required to be stated therein or
necessary in order to make the statements therein, in light of
the circumstances under which they are made, not misleading. The
Proxy Statement will comply, as of its mailing date, as to form
in all material respects with all applicable laws, including the
provisions of the Exchange Act and the rules and regulations
promulgated thereunder, except that no representation is made by
the Company with respect to information supplied by Parent,
Merger Subsidiary or any shareholder of Parent for inclusion
therein.
Section 4.11 No
Violation of Law. Neither the Company nor any
of its subsidiaries is in violation of or has been given written
(or, to the knowledge of the Company, oral) notice of any
violation of any law, statute, order, rule, regulation,
ordinance or judgment (other than any Environmental Law, which
is the subject of Section 4.16) of any governmental or
regulatory body or authority, except for violations which would
not reasonably be expected, individually or in the aggregate, to
have a Company Material Adverse Effect. The Company and its
subsidiaries are not in violation of the terms of any permits,
licenses, franchises, variances, exemptions, orders and other
governmental authorizations, consents and approvals necessary to
conduct their businesses as presently conducted (collectively,
the “Company Permits”), except for delays in
filing reports or violations which would not reasonably be
expected, individually or in the aggregate, to have a Company
Material Adverse Effect.
(a) Section 4.12(a) of the Company Disclosure Schedule
includes a list of each contract, agreement, license,
arrangement or understanding to which the Company is a party or
by which the Company or its assets are bound or affected as of
the date hereof (each, a “Material Contract”),
(i) which is required to be disclosed in the Company SEC
Reports,
(ii) pursuant to which payments in excess of $250,000 are
required or acceleration of benefits is required upon a change
of control of the Company,
(iii) which requires the consent or waiver of a third party
prior to the Company consummating the transactions contemplated
hereby and otherwise would constitute a Material Contract,
(iv) which constitutes a lease of real property,
(v) which involves consideration received or paid by the
Company in excess of $250,000 for the twelve-month period ending
June 30, 2006, or is reasonably likely to result in the
receipt or payment by the Company in the ordinary course of its
business of consideration, to the knowledge of the Company, in
excess of $250,000 in the twelve-month period following the date
of this Agreement, or
(vi) which relates to (A) any acquisition by or from
the Company or any subsidiary, or any grant by or to the Company
or any subsidiary, of any right, title or interest in, under or
to any Intellectual Property (as defined in Section 4.19),
including Intellectual Property Licenses (as defined in
Section 4.19), contracts, agreements, arrangements or
understandings or (B) any covenant not to sue granted by
the Company or any subsidiary to any Person or granted by any
Person to the Company or any subsidiary for the benefit of the
Company or such subsidiary, as the case may be, with respect to
any Intellectual Property, all of which Intellectual Property in
clauses (A) and (B) is material to the Company
and its subsidiaries, taken as a whole, other than standardized
nonexclusive licenses obtained by the Company in the ordinary
course of business.
Notwithstanding anything set forth in (v) above, the
Company shall not be required to include on Section 4.12(a)
of the Company Disclosure Schedule nonexclusive distribution,
reseller, license out and similar agreements whereby the Company
or any subsidiary sells its products to a third party and grants
a license or otherwise authorizes or permits such third party to
use the Company’s or such subsidiary’s trademarks for
such
products in connection with such third party’s marketing,
distribution, sales and other commercialization efforts related
to such products, provided that although such agreements are not
required to be listed on Section 4.12(a) of the Company
Disclosure Schedule, such agreements shall nevertheless
constitute Material Contracts to the extent the Intellectual
Property that is the subject of such agreements is material to
the Company and its subsidiaries, taken as a whole, and provided
further that the Company has delivered or made available to
Parent a complete and accurate copy of each such agreement.
(b) With respect to each Material Contract (i) the
Material Contract is legal, valid, binding and enforceable and
in full force and effect with respect to the Company, subject to
applicable bankruptcy, insolvency, reorganization, moratorium
and similar laws affecting creditors’ rights and remedies
generally, and subject, as to enforceability, to general
principles of equity, including principles of commercial
reasonableness, good faith and fair dealing (regardless of
whether enforcement is sought in a proceeding at law or in
equity) and (ii) neither the Company nor any of its
subsidiaries is in material breach or violation of or in
material default in the performance or observance of any term or
provision of, and, to the knowledge of the Company, no event has
occurred which, with lapse of time or action by a third party,
would result in a default under, any Contract to which the
Company or any of its subsidiaries is a party or by which any of
them is bound or to which any of their property is subject.
Section 4.13 Taxes.
(a) The Company and its subsidiaries have timely
(i) filed with the appropriate governmental authorities all
material Tax Returns (as defined below) required to be filed by
them, and such Tax Returns are true, correct and complete in all
material respects, and (ii) paid in full or reserved in
accordance with generally accepted accounting principles on the
Company Financial Statements all Taxes (as defined below)
required to be paid. Neither the Company nor any of its
subsidiaries has requested an extension of time within which to
file a material Tax Return which has not been since filed. There
are no liens for Taxes upon any property or asset of the Company
or any subsidiary thereof, other than liens for Taxes not yet
due or Taxes contested in good faith by appropriate proceedings
or that are otherwise not material and reserved against in
accordance with generally accepted accounting principles. No
deficiency with respect to Taxes has been proposed, asserted or
assessed against the Company or any of its subsidiaries, which
has not been fully paid or adequately reserved in the Company
SEC Reports, and there are no material unresolved issues of law
or fact arising out of a notice of deficiency, proposed
deficiency or assessment from the Internal Revenue Service (the
‘‘IRS”) or any other governmental taxing
authority with respect to Taxes of the Company or any of its
subsidiaries. Neither the Company nor its subsidiaries has
agreed to an extension of time with respect to a Tax deficiency,
other than extensions which are no longer in effect. Neither the
Company nor any of its subsidiaries is a party to any agreement
providing for the allocation or sharing of Taxes with any entity
that is not, directly or indirectly, a wholly owned subsidiary
of the Company, other than agreements the consequences of which
are fully and adequately reserved for in the Company Financial
Statements. The Company has not been a United States real
property holding corporation within the meaning of Code
Section 897(c)(2) during the five-year period ending on the
date hereof.
(b) The Company and each of its subsidiaries have withheld
or collected and have paid over to the appropriate governmental
entities (or are properly holding for such payment) all Taxes
required to be collected or withheld, including with respect to
amounts paid or owed to any employee, independent contractor,
shareholder, or other third party.
(c) For purposes of this Agreement, “Tax”
(including, with correlative meaning, the terms
“Taxes”) means all federal, state, local and
foreign taxes, charges, fees, imposts, levies or other
assessments, including all net income, profits, franchise, gross
receipts, environmental, customs duty, capital stock,
communications services, severance, stamp, payroll, sales,
employment, unemployment, disability, social security,
occupation, use, property, withholding, excise, production,
value added, occupancy, capital, ad valorem, transfer,
inventory, license, customs duties, fees, assessments and
charges of any kind whatsoever and other taxes, duties or
assessments of any nature whatsoever, together with all
interest, penalties, fines and additions imposed with respect to
such amounts and any interest in respect of such penalties and
additions, and includes any liability for Taxes of another
Person by Contract, as a transferee or successor, under Treas.
Reg. 1.1502-6 or analogous state, local or foreign law provision
or otherwise, and ‘‘Tax Return” means any
return, report, claim for refund, estimate, information return
or statement or
other similar document (including attached schedules) relating
to or required to be filed with respect to any Tax, including,
any information return, claim for refund, amended return or
declaration of estimated Tax.
(a) The Company SEC Reports set forth or refer to each
employee or director benefit plan, arrangement or agreement
(other than immaterial plans, arrangements or agreements),
including any (i) employment agreement or indemnification
agreement, as well as (ii) any employee welfare benefit
plan within the meaning of Section 3(1) of the Employee
Retirement Income Security Act of 1974, as amended
(“ERISA”), any employee pension benefit plan
within the meaning of Section 3(2) of ERISA (whether or not
such plan is subject to ERISA), or bonus, incentive, deferred
compensation, vacation, stock purchase, stock option, severance,
employment, change of control or fringe benefit plan, program or
agreement (excluding any multi-employer plans as defined in
Section 3(37) of ERISA (a “Multi-employer
Plan”)) and any multiple employer plan within the
meaning of Section 413(c) of the Code) that is sponsored,
maintained or contributed to by the Company or any of its
subsidiaries or by any trade or business, whether or not
incorporated, all of which together with the Company would be
deemed a “single employer” within the meaning
of Section 4001 of ERISA, or with respect to which the
Company or any such subsidiary or trade or business has any
liability (the ‘‘Company Plans”).
(b) (i) There have been no prohibited transactions
within the meaning of Section 406 or 407 of ERISA or
Section 4975 of the Code with respect to any of the Company
Plans that could result in penalties, taxes or liabilities which
would reasonably be expected to have a Company Material Adverse
Effect, (ii) no Company Plan is subject to Title IV of
ERISA, (iii) each of the Company Plans has been operated
and administered in accordance with applicable laws during the
period of time covered by the applicable statute of limitations,
except for failures to comply which would not reasonably be
expected, individually or in the aggregate, to have a Company
Material Adverse Effect, (iv) each of the Company Plans
which is intended to be “qualified” within the
meaning of Section 401(a) of the Code has been the subject
of a favorable determination letter from the IRS and such
determination letter has not been revoked by failure to satisfy
any condition thereof or by a subsequent amendment thereto or a
failure to amend, except that it may be necessary to make
additional amendments retroactively to maintain the
“qualified” status of such Company Plans, and
the period for making any such necessary retroactive amendments
has not expired, (v) to the knowledge of the Company, there
are no pending or threatened claims involving any of the Company
Plans other than claims for benefits in the ordinary course or
claims which would not reasonably be expected, individually or
in the aggregate, to have a Company Material Adverse Effect,
(vi) no Company Plan provides post-retirement medical
benefits to employees or directors of the Company or its
subsidiaries beyond their retirement or other termination of
service, other than coverage mandated by applicable law,
(vii) all material contributions or other amounts payable
by the Company or its subsidiaries as of the date hereof with
respect to each Company Plan in respect of current or prior plan
years have been paid or accrued in accordance with generally
accepted accounting principles, (viii) with respect to each
Multi-employer Plan contributed to by the Company, to the
knowledge of the Company, as of the date hereof, none of the
Company or any of its subsidiaries has received any notification
that any such Multi-employer Plan is in reorganization, has been
terminated or is insolvent, (ix) the Company and its
subsidiaries have complied in all respects with the Worker
Adjustment and Retraining Notification Act, except for failures
which would not reasonably be expected, individually or in the
aggregate, to have a Company Material Adverse Effect, and
(x) no act, omission or transaction has occurred with
respect to any Company Plan that has resulted or could result in
any liability of the Company or any subsidiary under
Sections 409, 502(c) or 502(l) of ERISA or Chapter 43
of Subtitle (A) of the Code, except for liabilities which
would not reasonably be expected, individually or in the
aggregate, to have a Company Material Adverse Effect.
(c) Neither the execution and delivery of this Agreement
nor the consummation of the transactions contemplated hereby
will, or could reasonably be expected to, (i) result in any
material payment (including severance or “excess
parachute payment” (within the meaning of
Section 280G of the Code)) becoming due to any director or
employee of the Company or any of its subsidiaries under any
Company Plan or any Contract, (ii) materially increase any
benefits otherwise payable under any Company Plan or
(iii) result in any acceleration of the time of payment or
vesting of any such benefits.
(d) The Company and its subsidiaries are not a party to or
bound by any employment, consulting, termination, severance or
similar agreement with any individual officer, director or
employee of the Company or any of its
subsidiaries or any agreement pursuant to which any such Person
is entitled to receive any benefits from the Company or its
subsidiaries upon the occurrence of a change in control of the
Company.
Section 4.15 Labor
Controversies. There are no significant
controversies pending or, to the knowledge of the Company,
threatened between the Company or its subsidiaries and any
representatives (including unions) of any of their employees,
and to the knowledge of the Company, there are no material
organizational efforts presently being made involving any of the
presently unorganized employees of the Company or its
subsidiaries. The Company and its subsidiaries are not subject
to any union agreements that, upon effectiveness of the Merger,
would be binding upon Parent or any of its subsidiaries other
than the Company and its subsidiaries.
Section 4.16 Environmental
Matters.
(a) Except as disclosed in Section 4.16(a) of the
Company Disclosure Schedule, (i) the Company and its
subsidiaries have conducted and are conducting their respective
businesses in compliance with all applicable Environmental Laws
(as defined below), which compliance includes obtaining,
maintaining in good standing and complying with all permits,
licenses and other governmental approvals and authorizations
required under Environmental Laws for the operation of their
respective businesses, (ii) none of the properties owned
or, to the knowledge of the Company, leased by the Company or
any of its subsidiaries contain any Hazardous Substances (as
defined below) in amounts exceeding the levels permitted by
applicable Environmental Laws, (iii) neither the Company
nor any of its subsidiaries has received any written notices,
demand letters or requests for information, or to the
Company’s knowledge, any other notice from any Federal,
state, local or foreign governmental entity or Person indicating
that the Company or any of its subsidiaries is or may be in
violation of, or liable under, any Environmental Law in
connection with the ownership or operation of their businesses,
including any real property owned or leased by or for the
Company or any subsidiary, (iv) there are no civil,
criminal or administrative actions, suits, demands, claims,
hearings, investigations or proceedings pending or threatened
against the Company or any of its subsidiaries relating to any
violation, or alleged violation, of or liability or alleged
liability under any Environmental Law, (v) no Hazardous
Substance has been disposed of, released or transported in
violation of or in a manner reasonably expected to give rise to
liability under any applicable Environmental Law from any
properties owned or operated by the Company or any of its
subsidiaries, (vi) neither the Company, its subsidiaries
nor any of their respective properties are subject to any
liabilities or expenditures (fixed or contingent) relating to
any suit, settlement, court order, administrative order,
regulatory requirement, judgment or claim asserted or arising
under any Environmental Law or the presence or release of any
Hazardous Substances, and (vii) to the knowledge of the
Company, no facts, circumstances or conditions currently exist
with respect to the Company or any subsidiary, any real property
currently or formerly owned, operated or leased by or for the
Company or any subsidiary or at any real property which the
Company or any subsidiary arranged for the disposal or treatment
of Hazardous Substances that would reasonably be expected to
result in the Company and its subsidiaries incurring any
liabilities under Environmental Laws, except for such matters in
the foregoing clauses (i) through (vii) that would not
reasonably be expected, individually or in the aggregate, to
result in the Company and its subsidiaries incurring liabilities
which would be material to the Company and its subsidiaries,
taken as a whole.
(b) Except as disclosed in Section 4.16(b) of the
Company Disclosure Schedule, the transactions contemplated
hereunder do not require any approval from any governmental
authority under Environmental Laws necessary to close the
transactions, including approval under environmental property
transfer laws.
(c) The Company has made available to Parent true, correct
and complete copies of all material environmental assessments,
investigations, analyses or reports relating to any real
property currently or formerly owned, operated or leased by or
for the Company or any of its subsidiaries, as well as all
material communications and documentation relating to any
outstanding or threatened material liabilities under
Environmental Laws, to the extent in the possession, custody or
control of the Company.
(d) As used herein, the following terms have the following
definitions (i) ‘‘Environmental Law”
means any federal, state, local or foreign law, statute,
ordinance, rule, regulation, code, license, permit,
authorization, approval, consent, order, judgment, decree,
injunction, requirement or binding agreement of or with any
governmental entity or other legal requirement (including common
law) relating to (x) the protection, preservation or
restoration of the environment (including air, water vapor,
surface water, groundwater, drinking water supply, surface land,
subsurface land, plant and animal life or any other natural
resource) or to human health or safety, or (y) the
exposure to, or the use, storage, recycling, treatment,
generation, transportation, processing, handling, labeling,
production, release or disposal of hazardous substances or
wastes, in each case as amended and as in effect at the
effective time of the merger. The term “Environmental
Law” includes the Federal Comprehensive Environmental
Response Compensation, and Liability Act of 1980, the Superfund
Amendments and Reauthorization Act, the Federal Water Pollution
Control Act of 1972, the Federal Clean Air Act, the Federal
Clean Water Act, the Federal Resource Conservation and Recovery
Act of 1976 (including the Hazardous and Solid Waste Amendments
thereto), the Federal Solid Waste Disposal Act and the Federal
Toxic Substances Control Act, and the Federal Insecticide,
Fungicide and Rodenticide Act, each as amended and as in effect
before or at the effective time of the merger; and
(ii) “Hazardous Substance” means any
substance, material or waste presently regulated as hazardous,
toxic or radioactive or pollutant or contaminant under any
Environmental Law including any toxic waste, pollutant,
contaminant, hazardous substance, toxic substance, hazardous
waste, or petroleum or any derivative or by-product thereof,
radon, radioactive material, asbestos, or asbestos-containing
material, urea formaldehyde foam insulation, lead-based paint or
polychlorinated biphenyls.
Section 4.17 Title
to Assets.The Company and each of its
subsidiaries has good title to all its real property and to all
its leasehold interests and other properties, as reflected in
the most recent balance sheet included in the Company Financial
Statements, except for properties and assets that have been
disposed of in the ordinary course of business since the date of
such balance sheet, free and clear of all mortgages, liens,
pledges, charges or encumbrances of any nature whatsoever,
except (i) liens for current Taxes, payments of which are
not yet delinquent or are being disputed in good faith by
appropriate proceedings, (ii) such imperfections in title
and easements and encumbrances, if any, as are not substantial
in character, amount or extent and do not materially detract
from the value, or interfere with the present use of the
property subject thereto or affected thereby, or otherwise
materially impair the Company’s business operations (in the
manner presently carried on by the Company), or (iii) for
such matters which would not reasonably be expected,
individually or in the aggregate, to have a Company Material
Adverse Effect. With respect to real property leased by the
Company, the Company is entitled to and has exclusive possession
of such leased properties, and the leased properties are not
subject to any other legally binding lease, tenancy, license or
easement of any kind that materially interferes with the
Company’s use of the leased properties as currently used.
To the knowledge of the Company, all leases under which the
Company or any of its subsidiaries leases any real or personal
property are in good standing, valid and effective in accordance
with their respective terms, and, to the knowledge of the
Company, there is not, under any of such leases, any existing
default or event which with notice or lapse of time or both
would become a default other than failures to be in good
standing, valid and effective and defaults under such leases
which would not reasonably be expected, individually or in the
aggregate, to have a Company Material Adverse Effect.
Section 4.18 Company
Shareholders’ Approval. The only vote of
the holders of any class or series of capital stock of the
Company or any of its subsidiaries required for approval of this
Agreement is the affirmative vote of the holders of a majority
of the outstanding shares of Company Common Stock entitled to
vote thereon (the “Company Shareholders’
Approval”). There are no bonds, debentures, notes or
other indebtedness of the Company having the right to vote (or
convertible into, or exchangeable for, securities having the
right to vote) on any matters on which shareholders of the
Company may vote.
Section 4.19 Intellectual
Property.
(a) As used in this Agreement, the following capitalized
terms have the meanings indicated below.
(i) ‘‘Company Intellectual
Property” means all Intellectual Property used in
or necessary for the conduct of the business of the Company or
any of its subsidiaries, or owned or held for use by the Company
or any of its subsidiaries;
(ii) ‘‘Company Technology”
means all Technology used in or necessary for the conduct of the
business of the Company or any of its subsidiaries, or owned or
held for use by the Company or any of its subsidiaries;
(iii) ‘‘Intellectual Property”
means all intellectual property rights and related priority
rights, arising from or in respect of the following, whether
protected, created or arising under the laws of the United
States or any other jurisdiction or under any international
convention, including: (A) all patents and patent
applications, including all continuations, divisionals,
continuations-in-part
and provisionals and patents issuing thereon, and all reissues,
reexaminations, substitutions, renewals and extensions thereof
(collectively, “Patents”); (B) all
trademarks, service marks, trade names, trade dress, logos,
corporate names and other source or business identifiers,
together with the goodwill associated with any of the foregoing,
and all applications, registrations, renewals and extensions
thereof (collectively, “Marks”); (C) all
Internet domain names; (D) all copyrights, works of
authorship and moral rights, and all registrations,
applications, renewals, extensions and reversions thereof
(collectively, “Copyrights”); and (E) all
confidential and proprietary information or non-public
discoveries, concepts, ideas, research and development,
technology, know-how, formulae, inventions, trade secrets,
compositions, processes, techniques, technical data and
information, procedures, designs, drawings, specifications,
databases, customer lists, supplier lists, pricing and cost
information, and business and marketing plans and proposals, in
each case excluding any rights in respect of any of the
foregoing that comprise or are protected by Patents
(collectively, “Trade Secrets”);
(iv) “Intellectual Property
License” means (A) any grant by the Company to
another Person of any license, sublicense, right, permission,
consent or non-assertion relating to or under any Company
Intellectual Property
and/or
Company Technology; and (B) any grant by another Person to
the Company of any license, sublicense, right, permission,
consent or non-assertion relating to or under any Intellectual
Property
and/or
Technology owned by a third Person;
(v) ‘‘Software” means any and
all: (A) computer programs, including any and all software
implementations of algorithms, models and methodologies, whether
in source code or object code; (B) databases and
compilations, including any and all data and collections of
data, whether machine readable or otherwise;
(C) descriptions, flow-charts and other work product used
to design, plan, organize and develop any of the foregoing, and
screens, user interfaces, report formats, firmware, development
tools, templates, menus, buttons and icons; and (D) all
documentation, including user manuals and other training
documentation, related to any of the foregoing; and
(vi) ‘‘Technology” means all
Software, information, designs, formulae, algorithms,
procedures, methods, techniques, ideas, know-how, research and
development, technical data, programs, subroutines, tools,
materials, specifications, processes, inventions (whether
patentable or unpatentable and whether or not reduced to
practice), apparatus, creations, improvements and other similar
materials, and all recordings, graphs, drawings, reports,
analyses, and other writings, and other embodiments of any of
the foregoing, in any form or media whether or not specifically
listed herein, and all related technology used in, incorporated
in, embodied in, displayed by or related to, or used in
connection with, any of the foregoing.
(b) Section 4.19(b) of the Company Disclosure
Schedules sets forth an accurate and complete list of all issued
Patents and pending Patent applications, registered Marks,
pending applications for registration of Marks, unregistered
Marks, registered Copyrights, and Internet domain names owned or
filed by the Company or any of its subsidiaries.
Section 4.19(b) of the Company Disclosure Schedules lists
(i) the record owner of each such item of Intellectual
Property and (ii) the jurisdictions in which each such item
of Intellectual Property has been issued or registered or in
which any such application for issuance or registration has been
filed.
(c) The Company or one of its subsidiaries is the sole and
exclusive owner of, or has valid and continuing rights to use,
sell, license and otherwise commercially exploit, as the case
may be, all Company Intellectual Property, Company Technology
and Intellectual Property licensed to the Company or any of its
subsidiaries under the Intellectual Property Licenses as the
same is used, sold, licensed and otherwise commercially
exploited by the Company or its subsidiaries in the business as
presently conducted, free and clear of all liens, encumbrances
and security interests. The Company Intellectual Property, the
Company Technology and the Intellectual Property licensed to the
Company under the Intellectual Property Licenses include all of
the Intellectual Property and Technology necessary and
sufficient to enable the Company to conduct the business in the
manner in which such business is currently being conducted.
Neither the Company nor any of its subsidiaries own any
proprietary software.
(d) The Company Intellectual Property, the Company
Technology, the development, manufacturing, licensing,
marketing, importation, offer for sale, sale or use of any
products and services in connection with the business as
presently conducted, and the present business practices, methods
and operations of the Company do not infringe, dilute,
constitute an unauthorized use or misappropriation of, or
violate any Intellectual Property, Technology or other right of
any Person. To the knowledge of the Company, no Person is
infringing, diluting, violating, misusing or misappropriating
any Company Intellectual Property or Company Technology, and no
claims of infringement,
dilution, violation, misuse or misappropriation of any Company
Intellectual Property or Company Technology have been made
against any Person by the Company.
(e) The Company and its subsidiaries have taken adequate
security measures to protect the confidentiality and value of
all Trade Secrets and any other material non-public, proprietary
information of the Company and its subsidiaries (and any
confidential information owned by a third Person to whom the
Company or any of its subsidiaries has a confidentiality
obligation) which measures are reasonable in the industry in
which the business operates. Each Company Employee, consultant
and independent contractor involved in the creation or
development of any products, services, Intellectual Property or
Technology related to the business of the Company or any of its
subsidiaries has entered into a written non-disclosure and
invention assignment agreement with the Company or one of its
subsidiaries in a form provided to Parent prior to the date
hereof.
(f) As of the date hereof, the Company and its subsidiaries
are not the subject of any pending or, to the knowledge of the
Company, threatened legal proceedings that involve a claim of
infringement, unauthorized use, misappropriation, dilution or
violation by any Person against the Company or any of its
subsidiaries or challenging the ownership, use, validity or
enforceability of any Company Intellectual Property, Company
Technology or Intellectual Property licensed to the Company or
any of its subsidiaries under any of the Intellectual Property
Licenses. The Company and its subsidiaries have not received
written (including by electronic mail) notice of any such
threatened claim. The Company Intellectual Property and the
Company Technology, and all of the Company’s and its
subsidiaries’ rights in and to the Company Intellectual
Property, the Company Technology and the Intellectual Property
licensed to the Company and its subsidiaries under the
Intellectual Property Licenses, are valid and enforceable.
(g) The consummation of the transactions contemplated
hereby will not result in the loss or impairment of the
Surviving Corporation’s right to own or use any of the
Company Intellectual Property or Company Technology. Neither
this Agreement nor any transaction contemplated by this
Agreement will result in the grant of any license or other
rights with respect to any Company Intellectual Property or
Company Technology to any third Person pursuant to any Contract
to which the Company or any of its subsidiaries is a party or by
which any assets or properties of the Company or any of its
subsidiaries is bound.
Section 4.20 Insurance. Section 4.20
of the Company Disclosure Schedule sets forth each insurance
policy maintained by the Company and its subsidiaries as of the
date hereof and each general liability, umbrella and excess
liability policy maintained by the Company and its subsidiaries
since 1993 (each, an “Insurance Policy”). Each
Insurance Policy is in full force and effect with respect to the
period covered and is valid, outstanding and enforceable, and
all premiums or installment payments of premiums, as applicable,
due thereon have been paid in full. No insurer under any
Insurance Policy has canceled or generally disclaimed liability
under any such policy or, to the knowledge of the Company,
indicated any intent to do so or not to renew any such policy.
To the knowledge of the Company, all material claims under the
Insurance Policies have been filed in a timely fashion.
Section 4.21 Certain
Payments.The Company has not, nor to the
knowledge of the Company, has any director, officer, agent or
employee of the Company, or any other Person, directly or
indirectly, made any contribution, gift, bribe, rebate, payoff,
influence payment, kickback or other payment to any entity or
Person, private or public, regardless of form, whether in money,
property or services, in material violation of any applicable
law.
Section 4.22 Brokers
and Finders.The Company has not entered into
any Contract with any Person or firm which may result in the
obligation of the Company to pay any investment banking fees,
finder’s fees or brokerage fees in connection with the
transactions contemplated hereby, other than fees payable to
Citigroup Global Markets, Inc. (the “Company Financial
Advisor”). A true, correct and complete copy of the fee
agreement with the Company Financial Advisor has been made
available to Parent, and the Company has provided to Parent a
true, correct and complete copy of any and all other engagement
or retention agreements with outside legal counsel, financial
advisors or other advisors, to which the Company is a party and
which are related to the transactions contemplated hereby.
Section 4.23 Opinion
of Financial Advisor.The Company Board of
Directors has received the signed opinion of Company Financial
Advisor, dated the date of this Agreement (the
“Financial Advisor Opinion”), to the effect
that, as of such date, and subject to the various assumptions
and qualifications set forth therein, the consideration to be
received by the Company’s shareholders (other than certain
affiliates of the Company) in the
Merger is fair to such holders from a financial point of view. A
true and complete copy of such Financial Advisor Opinion has
been furnished for informational purposes only to Parent, and
such Financial Advisor Opinion has not been withdrawn, revoked
or modified.
ARTICLE V
COVENANTS
Section 5.01 Conduct
of Business by the Company Pending the
Merger. Except as otherwise contemplated by
this Agreement or disclosed in the Company Disclosure Schedule,
after the date hereof and until the effective time of the merger
or earlier termination of this Agreement, unless Parent shall
otherwise agree in writing (which agreement shall not be
unreasonably withheld or delayed), the Company and its
subsidiaries shall:
(a) conduct their respective businesses in the ordinary
course of business consistent with past practice;
(b) not (i) amend or propose to amend their respective
articles of incorporation, bylaws or other charter documents,
(ii) split, combine, subdivide or reclassify any shares of
their outstanding capital stock, (iii) declare, set aside
or pay any dividend or distribution payable in cash, stock,
property or otherwise, or make any other distribution in respect
of any shares of its or its subsidiaries’ capital stock,
except for (x) the payment of the Company’s regular
quarterly dividend of $0.30 per share, and (y) the
payment of dividends or distributions to the Company or a wholly
owned subsidiary of the Company by a direct or indirect wholly
owned subsidiary of the Company, or (iv) repurchase, redeem
or otherwise acquire, or modify or amend, any shares of the
capital stock of the Company or any of its subsidiaries or any
other securities thereof or any rights, warrants or options to
acquire any such shares or other securities;
(c) not issue, sell, pledge, grant or dispose of, or agree
to issue, sell, pledge, grant or dispose of, any additional
shares of, or any options, warrants or rights of any kind to
acquire any shares of, their capital stock of any class or any
debt or equity securities convertible into or exchangeable for
such capital stock, except that the Company may issue shares
upon the exercise of Options outstanding on the date hereof;
(d) not (i) incur or become contingently liable with
respect to any indebtedness for borrowed money,
(ii) redeem, purchase, acquire or offer to purchase or
acquire any shares of its capital stock or any options, warrants
or rights to acquire any of its capital stock or any security
convertible into or exchangeable for its capital stock other
than in connection with the exercise of outstanding Options
pursuant to the terms thereof, (iii) make any acquisition
of any capital stock, assets or businesses of any other Person
other than expenditures for current assets in the ordinary
course of business consistent with past practice and
expenditures for fixed or capital assets in the ordinary course
of business consistent with past practice, (iv) sell,
pledge, dispose of or encumber any assets or businesses that are
material to the Company and its subsidiaries taken as a whole,
except (A) sales, leases, rentals and licenses in the
ordinary course of business consistent with past practice,
(B) pursuant to Contracts that are in force at the date of
this Agreement and are disclosed in the Company Disclosure
Schedules hereto, (C) dispositions of obsolete or worthless
assets or (D) transfers among the Company and its
subsidiaries, or (v) enter into any binding Contract with
respect to any of the foregoing;
(e) use all reasonable efforts to preserve intact their
respective business organizations and goodwill, keep available
the services of their respective present officers and key
employees, and preserve the goodwill and business relationships
with customers and others having business relationships with
them, other than as expressly permitted by the terms of this
Agreement;
(f) not enter into, amend, modify or renew any employment,
consulting, severance or similar agreements with, pay any bonus
or grant any increase in salary, wage or other compensation or
any increase in any employee benefit to, any directors, officers
or employees of the Company or its subsidiaries, except in each
such case (i) as may be required by applicable law,
(ii) to satisfy obligations existing as of the date hereof
pursuant to the terms of Contracts that are in effect on the
date hereof or (iii) in the ordinary course of business
consistent with past practice;
(g) not enter into, establish, adopt, amend or modify any
pension, retirement, stock purchase, savings, profit sharing,
deferred compensation, consulting, bonus, group insurance or
other employee benefit, incentive
or welfare plan, agreement, program or arrangement, in respect
of any directors, officers or employees of the Company or its
subsidiaries, except, in each such case (i) as may be
required by applicable law or pursuant to the terms of this
Agreement, (ii) to satisfy obligations existing as of the
date hereof pursuant to the terms of Contracts that are in
effect on the date hereof, including pursuant to any collective
bargaining agreement, or (iii) in the ordinary course of
business consistent with past practice;
(h) except to the extent required under existing employee
and director benefit plans, agreements or arrangements as in
effect on the date hereof or as expressly provided by this
Agreement, not accelerate the payment, right to payment or
vesting of any bonus, severance, profit sharing, retirement,
deferred compensation, stock option, insurance or other
compensation or benefits;
(i) not make capital expenditures or enter into any binding
commitment or Contract to make capital expenditures, except
(i) capital expenditures which the Company or its
subsidiaries are currently committed to make, (ii) capital
expenditures consistent with the estimated amounts disclosed in
the Company SEC Reports, (iii) capital expenditures for
emergency repairs and other capital expenditures necessary in
light of circumstances not anticipated as of the date of this
Agreement which are necessary to avoid significant disruption to
the Company’s business or operations consistent with past
practice (and, if reasonably practicable, after consultation
with Parent), and (iv) repairs and maintenance in the
ordinary course of business;
(j) not make, change or revoke any material Tax election
unless required by law or make any agreement or settlement with
any taxing authority regarding any material amount of Taxes or
which would reasonably be expected to materially increase the
obligations of the Company or the Surviving Corporation to pay
Taxes in the future;
(k) not make any changes in financial or Tax accounting
methods, principles or practices (or change an annual accounting
period), except insofar as may be required by a change in
generally accepted accounting principles or applicable law;
(l) not adopt a plan or agreement of complete or partial
liquidation or dissolution;
(m) not pay, discharge or satisfy any material claims,
material liabilities or material obligations (absolute, accrued,
asserted or unasserted, contingent or otherwise), other than the
payment, discharge or satisfaction (A) of any such material
claims, material liabilities or material obligations in the
ordinary course of business consistent with past practice or
(B) of material claims, material liabilities or material
obligations reflected or reserved against in, or contemplated
by, the consolidated financial statements (or the notes thereto)
contained in the Company SEC Reports;
(n) not agree to the settlement of any claim, litigation,
investigation or other action that is material to the Company
and its subsidiaries, taken as a whole;
(o) not enter into any agreement, understanding or
commitment that restrains, limits or impedes the ability of the
Company or any of its subsidiaries to compete with or conduct
any business or line of business, including geographic
limitations on the activities of the Company or any of its
subsidiaries;
(p) not materially modify or amend, or terminate any
Material Contract, or waive, relinquish, release or terminate
any material right or material claim, or enter into any contract
or agreement that would have been a Material Contract if it had
been in existence at the time of the execution of this
Agreement; and
(q) not agree to take any of the foregoing actions.
Section 5.02 Acquisition
Proposals.
(a) After the date hereof and until the effective time of
the merger or earlier termination of this Agreement, the Company
shall, and shall cause its and its subsidiaries’ respective
directors, officers and investment bankers, attorneys,
accountants, financial advisors and other advisors, agents or
representatives (collectively,
“Representatives”) to, (i) cease any
discussions or negotiations that may be ongoing as of the date
of this Agreement with any Person with respect to an Acquisition
Transaction (as defined below) and (ii) request the prompt
return or destruction of all confidential information relating
to the Company or any of its subsidiaries previously furnished
to such Person.
(b) After the date hereof and until the effective time of
the merger or earlier termination of this Agreement, the Company
shall not, and shall not permit any of its subsidiaries or
Representatives to, directly or indirectly, (i) initiate,
solicit, induce, negotiate, encourage or provide non-public or
confidential information to facilitate any inquiry that
constitutes, or may reasonably be expected to lead to, a
proposal or offer to acquire, in one or any series of
transactions with such Person (other than Parent and its
subsidiaries), any (A) acquisition of assets of the Company
and its subsidiaries (including securities of subsidiaries, but
excluding sales of assets in the ordinary course of business)
equal to 15% or more of the Company’s consolidated assets
or to which 15% or more of the Company’s revenues or
earnings on a consolidated basis are attributable,
(B) acquisition of 15% or more of the outstanding Company
Common Stock, (C) tender offer or exchange offer that if
consummated would result in any Person beneficially owning 15%
or more of the outstanding Company Common Stock or
(D) merger, consolidation, share exchange, business
combination, recapitalization, liquidation, dissolution or
similar transaction involving the Company; in each case, other
than the transactions contemplated by this Agreement (any such
transactions being referred to herein as an
‘‘Acquisition Transaction”); or
(ii) enter into, continue or otherwise participate in any
discussions or negotiations with any third party regarding, or
furnish to any Person any non-public information or data, or
afford access to the properties, books or records of the Company
or any of its subsidiaries, with respect to, any inquiries that
constitute, or may reasonably be expected to lead to, an
Acquisition Transaction, or otherwise knowingly facilitate any
effort to attempt to make or implement any Acquisition
Transaction.
(c) Notwithstanding anything in this Agreement to the
contrary, (i) prior to receipt of the Company
Shareholders’ Approval, the Company may, in response to a
bona fide written offer or proposal with respect to a potential
or proposed Acquisition Transaction (“Acquisition
Proposal”) from a Person or group (a “Potential
Acquirer”) that was not solicited, initiated, induced
or knowingly encouraged in violation of this Section 5.02
and which the Company Board of Directors determines, in good
faith and after consultation with the Company Financial Advisor
or other financial advisor and its outside legal counsel, is or
could reasonably be expected to result in a Superior Proposal
(as defined below), and only after the Company Board of
Directors determines, in good faith and after consultation with
the Company Financial Advisor or other financial advisor and its
outside legal counsel, that such action is necessary to comply
with its fiduciary duties to the Company’s shareholders
under applicable law, (A) furnish (subject to the execution
of a confidentiality agreement not materially less favorable to
the Company than the Confidentiality Agreement, dated
April 4, 2006, between the Company Financial Advisor and
Genstar Capital LLC (the “Confidentiality
Agreement”)) confidential or non-public information to,
and negotiate with, such Potential Acquirer and (B) subject
to Section 5.02(e) hereof, resolve to accept, or recommend,
and, upon termination of this Agreement in accordance with
Section 7.01(e), enter into agreements relating to, an
Acquisition Proposal as to which the Company Board of Directors
has determined in good faith constitutes a Superior Proposal and
(ii) the Company Board of Directors may take and disclose
to the Company’s shareholders a position contemplated by
Rule 14d-9
or
Rule 14e-2
under the Exchange Act and otherwise make disclosures required
by applicable law. In addition, it is understood and agreed
that, for purposes of this Agreement (including
Article VII), a factually accurate public statement by the
Company that describes the Company’s receipt of an
Acquisition Proposal and the operation of this Agreement with
respect thereto shall not be deemed a withdrawal or modification
of, or proposal by the Company Board of Directors to withdraw or
modify, the Directors’ Recommendation (as defined in
Section 5.07), or an approval or recommendation or neutral
position with respect to such Acquisition Proposal. It is
understood and agreed that negotiations and other activities
conducted in accordance with this paragraph (c) and
Sections 5.02(d) and (e) hereof shall not constitute a
violation of paragraph (a) of this Section 5.02.
The Company agrees to provide to Parent, to the extent the
Company shall not have done so previously, any information that
it is providing to any Potential Acquirer pursuant to this
Section 5.02 at substantially the same time as it provides
it to such other Potential Acquirer. “Superior
Proposal” means a proposal to acquire, directly or
indirectly, for consideration consisting of cash
and/or
securities, more than 50% of the equity securities of the
Company or 50% or more of the assets of the Company and its
subsidiaries on a consolidated basis, made by a third party, and
which is otherwise on terms and conditions which the Company
Board of Directors determines in good faith (after consultation
with its financial advisor and outside legal counsel) to be more
favorable to the Company’s shareholders from a financial
point of view than the Merger and the other transactions
contemplated hereby.
(d) The Company shall promptly notify Parent after receipt
of any Acquisition Proposal, indication of interest or request
for non-public information relating to the Company or its
subsidiaries in connection with an Acquisition Proposal or for
access to the properties, books or records of the Company or any
subsidiary by any Person or entity
that informs the Board of Directors of the Company or such
subsidiary that it is considering making, or has made, an
Acquisition Proposal. Such notice to Parent shall be made orally
and in writing and shall indicate in reasonable detail the
identity of the offeror and the material terms and conditions of
such proposal, inquiry or contact. Thereafter, the Company shall
keep Parent informed on a current basis of any material changes
in the status of any such Acquisition Proposal, including
whether any such Acquisition Proposal has been withdrawn or
rejected.
(e) Except as expressly permitted by Section 5.02(c)
or this Section 5.02(e), neither the Company Board of
Directors, nor any committee thereof, shall (i)(A) withdraw or
modify, or propose publicly to withdraw or modify, in a manner
adverse to Parent, the Directors’ Recommendation or the
approval or declaration of advisability by such Board of this
Agreement and the Merger or (B) approve or recommend, or
propose publicly to approve or recommend, the adoption of any
Acquisition Proposal (any action described in this
clause (i) being referred to as a “Company Adverse
Recommendation Change”), or (ii) cause, authorize
or permit the Company or any of its subsidiaries to enter into
any letter of intent, memorandum of understanding, agreement in
principal, acquisition agreement, merger agreement, option
agreement, joint venture agreement, partnership agreement, or
any similar agreement, with respect to any Acquisition Proposal
(other than a confidentiality agreement permitted by
Section 5.02(c) above) (each, a “Company
Acquisition Agreement”). Notwithstanding the foregoing,
(x) the Company Board of Directors may withdraw or modify
the Directors’ Recommendation, or recommend an Acquisition
Proposal, if the Company Board of Directors determines in good
faith, based on those matters as it deems appropriate after
consulting with the Company Financial Advisor or other financial
advisor and its outside legal counsel, that taking such action
is necessary to comply with its fiduciary duties under
applicable law, and (y) if the Company Board of Directors
receives an Acquisition Proposal that such Board determines in
good faith constitutes a Superior Proposal, then the Company or
its subsidiaries may terminate this Agreement pursuant to
Section 7.01(e) and concurrently enter into a Company
Acquisition Agreement with respect to such Superior Proposal;
provided, that, with respect to any termination
pursuant to clause (y), the Company shall have complied
with its obligations under this Section 5.02 since the date
of this Agreement and the Company pays Parent the Termination
Fee pursuant to Section 7.02 hereof concurrent with (and as
a condition of) such termination.
(f) After the date hereof and until the effective time of
the merger or earlier termination of this Agreement, Parent
shall promptly notify the Company after receipt of any proposal
or offer to acquire all or any substantial part of the business,
properties or capital stock of Parent, whether by merger,
purchase of assets, tender offer or otherwise, whether for cash,
securities or any other consideration or combination thereof and
shall indicate in reasonable detail the identity of the offeror
or Person and the material terms and conditions of such proposal
or offer and the financing arrangements, if any, relating
thereto.
Section 5.03 Access
to Information; Confidentiality.
(a) Subject to applicable law relating to the exchange of
information, the Company and its subsidiaries shall afford to
Parent and Merger Subsidiary and their respective accountants,
counsel, financial advisors, sources of financing and other
representatives (the “Parent Representatives”)
reasonable access during normal business hours with reasonable
notice throughout the period from the date hereof until the
effective time of the merger to all of their respective
properties, books, Contracts, commitments and records
(including, but not limited to, Tax Returns) and, during such
period, shall furnish promptly (i) a copy of each report,
schedule and other document filed or received by any of them
pursuant to the requirements of federal or state securities laws
or filed by any of them with the SEC in connection with the
transactions contemplated by this Agreement, and (ii) such
other information concerning its businesses, properties and
personnel as Parent or Merger Subsidiary shall reasonably
request, and will use reasonable efforts to obtain the
reasonable cooperation of the Company’s officers,
employees, counsel, accountants, consultants and financial
advisors in connection with the review of such other information
by Parent and the Parent Representatives. During the period from
the date hereof through the earlier of the effective time of the
merger and the termination of this Agreement, the Company and
its accountants, counsel and financial advisors may obtain
non-public information concerning Parent and Merger Subsidiary.
(b) All nonpublic information provided to, or obtained by,
a party regarding another party in connection with the
transactions contemplated hereby shall be “Proprietary
Information.” Notwithstanding the foregoing, the term
Proprietary Information shall not include information that
(i) is or becomes within the public domain through no act
of the receiving party in breach of this Section 5.03,
(ii) was in the possession of the receiving party prior to
its
disclosure or transfer hereunder, (iii) is independently
developed by the receiving party, or (iv) is received from
another source without any restriction on use or disclosure
through no act of the receiving party in breach of this
Section 5.03.
(c) Except as specifically provided herein, each party
agrees that it shall not disclose any Proprietary Information to
any third party nor use any Proprietary Information of another
party for any purpose other than as may be necessary in
connection with the transactions contemplated hereby, including
seeking the Parent Required Statutory Approvals and the Company
Required Statutory Approvals. The parties shall each protect all
Proprietary Information with the same degree of care as it
applies to protect its own proprietary information. As used
herein, the term “third party” shall be broadly
interpreted to include any corporation, company, partnership or
individual.
(d) Notwithstanding the foregoing, a party may disclose
such Proprietary Information to their respective directors,
officers, employees, consultants, agents and representatives who
need to know such Proprietary Information in connection with the
transactions contemplated hereby (it being understood that such
directors, officers, consultants, agents and representatives
shall be informed by the receiving party of the confidential
nature of such Proprietary Information and will agree to be
bound by the terms of this Section 5.03), provided, that,
the receiving party agrees to be responsible for any breach of
this Section 5.03 by such persons.
(e) The parties agree that all communications with the
Company and all requests for information related thereto will be
submitted only to persons specifically designated in writing by
the Company.
(f) In the event a party is legally requested or required
to disclose Proprietary Information of the other party, the
receiving party shall promptly notify the disclosing party of
such request or requirement so that the disclosing party may
seek an appropriate protective order or waive the provisions of
this Section 5.03. In the event that such protection or
other remedy is not obtained or that the disclosing party waives
compliance, the receiving party agrees to furnish only that
portion of the Proprietary Information which it is advised by
counsel is legally required. Notwithstanding anything to the
contrary in this Agreement, a disclosing party shall not be
required to provide any information to any other party which it
reasonably believes it may not provide to another party by
reason of applicable law, rules or regulations, which
constitutes information protected by attorney/client privilege,
or which the disclosing party or any subsidiary is required to
keep confidential by reason of Contract, agreement or
understanding with third parties.
Section 5.04 Notices
of Certain Events.
(a) The Company shall as promptly as reasonably practicable
after executive officers of the Company acquire knowledge
thereof, notify Parent of: (i) any notice or other
communication from any Person alleging that the consent of such
Person (or another Person) is or may be required in connection
with the transactions contemplated by this Agreement which
consent relates to a Material Contract or the failure of which
to obtain could materially delay consummation of the Merger;
(ii) any notice or other communication from any
governmental or regulatory agency or authority in connection
with the transactions contemplated by this Agreement; and
(iii) any actions, suits, claims, investigations or
proceedings commenced or, to its knowledge, threatened, relating
to or involving or otherwise affecting the Company or any of its
subsidiaries that, if pending on the date of this Agreement,
would have been required to have been disclosed pursuant to
Sections 4.08, 4.09 or 4.11 or which relate to the
consummation of the transactions contemplated by this Agreement.
(b) Subject to the provisions of Section 5.02, each of
the Company, Parent and Merger Subsidiary agrees to give prompt
notice to each other of, and to use its reasonable best efforts
to remedy, (i) the occurrence or failure to occur of any
event which occurrence or failure to occur would reasonably be
expected to cause any of its representations or warranties in
this Agreement to be untrue or inaccurate at the effective time
of the merger unless such occurrence or failure to occur would
not reasonably be expected to have a Company Material Adverse
Effect or a Parent Material Adverse Effect, as the case may be,
and (ii) any failure on its part to comply with or satisfy
any covenant, condition or agreement to be complied with or
satisfied by it hereunder unless such failure would not
reasonably be expected to have a Company Material Adverse Effect
or a Parent Material Adverse Effect, as the case may be;
provided, however, that the delivery of any notice pursuant to
this Section 5.04(b) shall not limit or otherwise affect
the representations, warranties, covenants or agreements of the
parties, the remedies available hereunder to the party receiving
such notice or the conditions to such party’s obligation to
consummate the Merger.
Section 5.05 Merger
Subsidiary. Parent will take all action
necessary to cause Merger Subsidiary to perform its obligations
under this Agreement and to consummate the Merger on the terms
and conditions set forth in this Agreement. Until the effective
time of the merger, Merger Subsidiary will not carry on any
business or conduct any operations other than the execution of
this Agreement, the performance of its obligations hereunder and
matters ancillary hereto.
Section 5.06 Employee
Benefits.
(a) For a period of no less than one year following the
effective time of the merger, Parent shall cause Surviving
Corporation to maintain the Company Plans and the benefits to be
provided to employees of the Company and its subsidiaries as of
the effective time of the merger (“Company
Employees”). Notwithstanding the foregoing, Company
Employees who are covered under a collective bargaining
agreement shall be provided the benefits that are required by
such collective bargaining agreement from time to time. No
provision in this Agreement shall be construed as a guarantee of
continued employment of any Company Employee and this Agreement
shall not be construed so as to prohibit the Surviving
Corporation or its subsidiaries from having the right to
terminate the employment of any employee of the Surviving
Corporation or its subsidiaries.
(b) Notwithstanding anything contained herein to the
contrary, participants in the International Aluminum Corporation
Annual Bonus Plan shall continue to accrue bonuses under such
plan in respect of the Company’s fiscal year ending
June 30, 2007 in accordance with such plan as in effect on
the date hereof, and Parent shall pay or cause such bonuses to
be paid to such participants in accordance with such plan.
(c) Nothing in this Section 5.06 shall be interpreted
as preventing Parent or the Surviving Corporation from amending,
modifying or terminating any Company Plan in accordance with its
terms and applicable law following the expiration of the
one-year period referenced in subsection (a) above or
otherwise as required pursuant to subsection (d) below.
(d) Parent and the Company, in consultation with each
other, shall each take whatever commercially reasonable actions
are required with respect to any Company Plans that are or may
become subject to Section 409A of the Code including,
without limitation, the adoption of amendments (including
amendments with retroactive effect) that are necessary to
preserve the intended tax treatment of the benefits provided
under any Company Plans.
Section 5.07 Meeting
of the Company’s Shareholders. The
Company shall as promptly as practicable after the date of this
Agreement take all action necessary in accordance with the CGCL
and its Restated Articles of Incorporation and Bylaws to
establish a record date for, duly call, give notice of, and
convene a meeting of the Company’s shareholders (the
“Company Shareholders’ Meeting”) for the
purpose of obtaining the Company Shareholders’ Approval and
will use its reasonable best efforts (including postponing or
adjourning the Company Shareholders’ Meeting to obtain a
quorum or to solicit additional proxies) to obtain the Company
Shareholders’ Approval; provided, however,
that the Company shall be relieved of its obligations with
respect to the Company Shareholders’ Meeting if the Company
Board of Directors terminates this Agreement pursuant to
Section 7.01(e) and pays Parent the Termination Fee
pursuant to Section 7.02 concurrent with (and as a
condition of) such termination. Subject to Sections 5.02(c)
and (e), the Company Board of Directors shall recommend that the
Company’s shareholders vote to approve this Agreement, and
the Proxy Statement shall contain the unqualified recommendation
of the Company Board of Directors that its shareholders vote in
favor of the adoption of this Agreement and the approval of the
transactions contemplated hereby (the “Directors’
Recommendation”).
Section 5.08 Proxy
Statement. As promptly as practicable after
execution of this Agreement, the Company shall prepare the Proxy
Statement, which shall, subject to Section 5.07, include
the Directors’ Recommendation, and file the Proxy Statement
with the SEC under the Exchange Act and thereafter use all
reasonable efforts to have the Proxy Statement cleared by the
SEC. Parent, Merger Subsidiary and the Company shall cooperate
with each other in the preparation of the Proxy Statement, and
the Company shall promptly notify Parent of the receipt of any
comments of the SEC with respect to the Proxy Statement and of
any requests by the SEC for any amendment or supplement thereto
or for additional information and shall provide to Parent
promptly copies of all correspondence between the Company or any
representative of the Company and the SEC. The Company shall
give Parent and its counsel the opportunity to review the Proxy
Statement prior to its being filed with the SEC and shall give
Parent and its counsel the opportunity to review all amendments
and supplements to the Proxy Statement and all responses to
requests for additional information and replies to comments
prior to their being filed with, or sent to, the SEC. Each of
the Company, Parent and Merger Subsidiary agrees to use its
reasonable best efforts, after consultation with the other
parties hereto, to respond promptly to all such comments of and
requests by the SEC. As promptly as practicable after the Proxy
Statement has been cleared by the SEC, the Company shall mail
the Proxy Statement to the shareholders of the Company. Prior to
the date of approval of the Merger by the Company’s
shareholders, each of the Company, Parent and Merger Subsidiary
shall correct promptly any information provided by it to be used
specifically in the Proxy Statement that shall have become false
or misleading in any material respect and the Company shall take
all steps necessary to file with the SEC and have cleared by the
SEC any amendment or supplement to the Proxy Statement so as to
correct the same and to cause the Proxy Statement as so
corrected to be disseminated to the shareholders of the Company,
in each case to the extent required by applicable law.
Section 5.09 Public
Announcements. Neither the Company nor Parent
shall issue or cause the publication of any press release or
other public announcement (to the extent not previously issued
or made in accordance with this Agreement) with respect to this
Agreement, the Merger or the other transactions contemplated
hereby without the prior consent of the other party (which
consent shall not be unreasonably withheld or delayed), except
as may be required by law, applicable fiduciary duties or by any
applicable listing agreement with the New York Stock Exchange
(in which case such party shall not issue or cause the
publication of such press release or other public statement
without prior consultation with the other party).
Section 5.10 Expenses
and Fees. Each of the parties shall bear and
pay all costs and expenses incurred by it in connection with
this Agreement and the transactions contemplated hereby.
Section 5.11 Agreement
to Cooperate.
(a) Subject to the terms and conditions of this Agreement,
including Section 5.02 and this Section 5.11, each of
the parties hereto shall use all reasonable best efforts to
take, or cause to be taken, all actions and to do, or cause to
be done, all things necessary, proper or advisable under
applicable law and regulations (including the HSR Act) to
consummate and make effective the transactions contemplated by
this Agreement, including using its reasonable best efforts to
obtain all necessary or appropriate waivers, consents or
approvals of third parties required in order to preserve
material contractual relationships of Parent and the Company and
their respective subsidiaries and to effect all necessary
registrations, filings and submissions. In addition, subject to
the terms and conditions herein provided and subject to the
fiduciary duties of the respective Boards of Directors of the
Company and Parent, none of the parties hereto shall knowingly
take or cause to be taken any action which would reasonably be
expected to materially delay or prevent consummation of the
Merger. Each of Parent and the Company undertakes and agrees to
file as soon as practicable a Notification and Report Form under
the HSR Act with the United States Federal Trade Commission (the
“FTC”) and the Antitrust Division of the United
States Department of Justice (the “Antitrust
Division”).
(b) Each of Parent and the Company shall (i) respond
as promptly as practicable under the circumstances to any
inquiries received from the FTC or the Antitrust Division for
additional information or documentation and to all inquiries and
requests received from any State Attorney General or other
governmental authority in connection with antitrust matters, and
(ii) not extend any waiting period under the HSR Act or
enter into any agreement with the FTC or the Antitrust Division
not to consummate the transactions contemplated by this
Agreement, except with the prior written consent of the other
parties hereto, which consent shall not be unreasonably withheld
or delayed. The Company and Parent shall each use its reasonable
best efforts to (x) take all action necessary to ensure
that no state takeover statute or similar law is or becomes
applicable to any of the transactions contemplated hereby and
(y) if any state takeover statute or similar law becomes
applicable to any of the transactions contemplated hereby, take
all action necessary to ensure that the transactions
contemplated hereby may be consummated as promptly as
practicable on the terms contemplated by this Agreement and
otherwise minimize the effect of such law on the transactions
contemplated hereby.
(c) Parent and the Company shall, from the date hereof
until the Outside Date, use their respective reasonable best
efforts to avoid the entry of, or to have vacated or terminated,
any decree, order, or judgment that would restrain, prevent or
delay the Closing. Notwithstanding the foregoing, Parent shall
have the sole and exclusive right to determine, at its option,
whether to contest through litigation on the merits, negotiation
or other action any position or claim, including any demands for
sale, divestiture or disposition of assets or business of Parent
or,
effective as of the effective time of the merger, the Surviving
Corporation or their respective subsidiaries, asserted by the
FTC, the Antitrust Division or other governmental authority in
connection with antitrust matters which would operate to hinder
or delay the effective time of the merger. Parent shall have the
sole and exclusive right to direct and control any such
litigation, negotiation or other action, with counsel of its own
choosing, and the Company agrees to reasonably cooperate with
Parent with respect thereto. Notwithstanding any of the
foregoing, nothing in this Section 5.11 shall require
Parent or any of its subsidiaries to (i) propose, negotiate
for, commit to or effect, by consent decree, hold separate
order, or otherwise, the sale, divestiture or disposition of any
material assets or businesses of Parent and its subsidiaries,
taken as a whole, or any assets or businesses of the Company and
its subsidiaries the sale, divestiture or disposition of which
would reasonably be expected to result in a Company Material
Adverse Effect, or (ii) otherwise take or commit to take
any actions that limit the freedom of action of Parent and its
subsidiaries with respect to, or their ability to retain, their
material assets or one or more of their businesses, or the
material assets or businesses of the Company and its
subsidiaries, taken as a whole, or the Surviving Corporation.
(d) The Company shall agree if, but solely if, requested by
Parent to divest, hold separate or otherwise take or commit to
take any action that limits Parent’s freedom of action with
respect to, or its ability to retain, any of the businesses,
services, or assets of the Company or any of its subsidiaries,
provided that any such action may be conditioned upon the
consummation of the Merger and the transactions contemplated
hereby.
(e) In addition, each party shall, subject to applicable
law and the limitations set forth in Section 5.03 and
except as prohibited by any applicable representative of any
applicable governmental entity, (i) promptly notify the
other party of any written communication to that party from the
FTC, the Antitrust Division, any State Attorney General or any
other governmental entity and permit the other party to review
in advance any proposed written communication to any of the
foregoing; (ii) not agree to participate in any substantive
meeting or discussion with any governmental authority in respect
of any filings, investigation or inquiry concerning this
Agreement or the Merger unless it consults with the other party
in advance and, to the extent permitted by such governmental
authority, gives the other party the opportunity to attend and
participate thereat; and (iii) furnish the other party with
copies of all correspondence, filings, and written
communications (and memoranda setting forth the substance
thereof) between them and its affiliates and their respective
representatives on the one hand, and any government or
regulatory authority or members or their respective staffs on
the other hand, with respect to this Agreement and the Merger.
Section 5.12 Directors’
and Officers’ Indemnification.
(a) After the effective time of the merger, Parent shall
cause the Surviving Corporation to, to the fullest extent
permitted under applicable law, indemnify, defend and hold
harmless, each individual who at the effective time of the
merger is, or at any time prior to the effective time of the
merger was, a director, officer, employee or agent of the
Company or any of its subsidiaries (each, together with such
Person’s heirs, executors or administrators, an
“Indemnified Party” and collectively, the
‘‘Indemnified Parties”) against any costs
or expenses (including attorneys’ fees), judgments, fines,
losses, claims, damages, liabilities and amounts paid in
settlement in connection with any actual or threatened claim,
action, suit, proceeding or investigation, whether civil,
criminal, administrative or investigative (collectively,
“Costs and Expenses”), arising out of, relating
to or in connection with (i) any action or omission
occurring or alleged to occur prior to the effective time of the
merger (including acts or omissions in connection with such
persons serving as an officer, director or other fiduciary in
any entity if such service was at the request or for the benefit
of the Company or any of its affiliates) and (ii) this
Agreement, the Merger or the other transactions contemplated by
this Agreement or arising out of or pertaining to the
transactions contemplated by this Agreement or the events and
developments between Parent and the Company leading up to this
Agreement. In the event of any actual or threatened claim,
action, suit, proceeding or investigation (whether arising
before or after the effective time of the merger) subject to
this Section 5.12, (i) Parent and the Surviving
Corporation shall pay the reasonable fees and expenses of
counsel selected by the Indemnified Parties, which counsel shall
be reasonably satisfactory to Parent and the Surviving
Corporation, promptly after statements therefor are received and
shall pay all other reasonable expenses in advance of the final
disposition of such action, (ii) Parent and the Surviving
Corporation will cooperate and use all reasonable efforts to
assist in the defense of any such matter, and (iii) to the
extent any determination is required to be made with respect to
whether an Indemnified Party’s conduct complies with the
standards set forth under the CGCL and Parent’s or the
Surviving Corporation’s respective certificate or
articles of incorporation or bylaws, such determination shall be
made by independent legal counsel acceptable to Parent or the
Surviving Corporation, as the case may be, and the Indemnified
Party; provided, however, that neither Parent nor the Surviving
Corporation shall be liable for any settlement effected without
its written consent (which consent shall not be unreasonably
withheld or delayed); and, provided, further, that if Parent or
the Surviving Corporation advances or pays any amount to any
person under this paragraph (b) and if it shall
thereafter be finally determined by a court of competent
jurisdiction that such person was not entitled to be indemnified
hereunder for all or any portion of such amount, to the extent
required by law, such person shall repay such amount or such
portion thereof, as the case may be, to Parent or the Surviving
Corporation, as the case may be. The Indemnified Parties as a
group may not retain more than one law firm to represent them
with respect to each matter, except to the extent that under
applicable standards of professional conduct such counsel would
have a conflict representing such Indemnified Party or
Indemnified Parties.
(b) In the event the Surviving Corporation or Parent or any
of their successors or assigns (i) consolidates with or
merges into any other Person and shall not be the continuing or
surviving corporation or entity of such consolidation or merger,
or (ii) transfers all or substantially all of its
properties and assets to any Person, then and in each such case,
proper provisions shall be made so that the successors and
assigns of the Surviving Corporation or Parent shall assume the
obligations of the Surviving Corporation or Parent, as the case
may be, set forth in this Section 5.12.
(c) For a period of six years commencing immediately after
the effective time of the merger, Parent shall cause to be
maintained, or shall cause the Surviving Corporation to
maintain, in effect the current policies of directors’ and
officers’ liability insurance maintained by the Company and
its subsidiaries (provided that Parent may substitute therefor
policies, including a tail policy, of at least the same coverage
and amounts containing terms and conditions that are no less
advantageous to the Indemnified Parties, and which coverages and
amounts shall be no less than the coverages and amounts provided
at that time for Parent’s directors and officers) with
respect to matters arising on or before the effective time of
the merger; provided, however, that, if the aggregate annual
premiums for such insurance shall exceed 200% of the current
aggregate annual premium, then Parent shall provide or cause to
be provided a policy for the applicable individuals with the
best coverage as shall then be available at an annual premium of
not more than 200% of the current aggregate annual premium.
(d) To the maximum extent permitted by applicable law, the
Surviving Corporation shall pay all reasonable expenses,
including reasonable attorneys’ fees, that may be incurred
by any Indemnified Party in enforcing the indemnity and other
obligations provided in this Section 5.12. The rights of
each Indemnified Party hereunder shall be in addition to, and
not in limitation of, any other rights such Indemnified Party
may have under the charter or bylaws of the Company, any
indemnification agreement, under the CGCL or otherwise. The
provisions of this Section 5.12 shall survive the
consummation of the Merger and expressly are intended to benefit
each of the Indemnified Parties.
Section 5.13 Company
Securities. Between the date hereof and the
effective time of the merger, neither Parent nor any of its
subsidiaries shall acquire, or agree to acquire, whether in the
open market or otherwise, any rights in any Company Common Stock
other than pursuant to the Merger.
Section 5.14 Cooperation
with Financing. In order to assist Parent in
obtaining the Financing (or any replacement financing), at
Parent’s request the Company shall (a) cooperate in
Parent’s preparation of any prospectus or offering
memorandum or similar document, (b) make senior management
of the Company reasonably available for customary
“roadshow” presentations, lender meetings and rating
agencies presentations, (c) cooperate with prospective
lenders, underwriters, placement agents or initial purchasers in
performing their due diligence with respect to the Company and
its subsidiaries and (d) cooperate in procuring reasonably
requested certificates or documents, including a customary
certificate of the chief financial officer of the Company with
respect to solvency matters, legal opinions and real estate
title documentation, required under any definitive financing
agreements. At the Company’s request, Parent shall pay or
reimburse the Company for reasonable direct,
out-of-pocket
fees and expenses incurred by the Company in the performance of
its obligations under this Section 5.14.
Section 5.15 Rule 16b-3. Prior
to the effective time of the merger, the Company shall take such
steps as may be reasonably requested by any party hereto to
cause dispositions of Company equity securities (including
derivative securities) pursuant to the transactions contemplated
by this Agreement by each individual who is a
director or officer of the Company to be exempt under
Rule 16b-3
promulgated under the Exchange Act in accordance with that
certain No-Action Letter dated January 12, 1999 issued by
the SEC regarding such matters.
ARTICLE VI
CONDITIONS
TO THE MERGER
Section 6.01 Conditions
to the Obligations of Each Party. The
obligations of the parties to consummate the Merger are subject
to the fulfillment at or prior to the effective time of the
merger of the following conditions:
(a) this Agreement and the Merger shall have been adopted
by the requisite vote of the shareholders of the Company in
accordance with the CGCL;
(b) none of the parties hereto shall be subject to any law,
order, injunction, judgment or ruling enacted, promulgated,
issued, entered, amended or enforced by any governmental
authority of competent jurisdiction that prohibits the
consummation of the Merger or makes the consummation of the
Merger illegal;
(c) the waiting period applicable to consummation of the
Merger under the HSR Act shall have expired or been
terminated; and
(d) there shall not be pending any action, suit or other
proceeding (i) seeking to restrain or prohibit the
consummation of the Merger or seeking to obtain from Parent or
Merger Subsidiary in connection with the Merger any damages that
are material in relation to Parent and its subsidiaries, taken
as a whole, or seeking to obtain from the Company any damages
that are material in relation to the Company and its
subsidiaries, taken as a whole, (ii) seeking the sale,
divestiture or disposition of any material assets or businesses
of the Company and its subsidiaries, taken as a whole, or
(iii) otherwise seeking to limit the freedom of action of
Parent and its subsidiaries with respect to the material assets
or businesses of the Company and its subsidiaries, taken as a
whole, or of the Surviving Corporation.
Section 6.02 Conditions
to Obligation of the Company to Effect the
Merger. Unless waived by the Company, the
obligation of the Company to consummate the Merger shall be
subject to the fulfillment at or prior to the effective time of
the merger of the following additional conditions:
(a) each of Parent and Merger Subsidiary shall have
performed in all material respects all obligations required to
be performed by it under this Agreement on or prior to the
effective time of the merger and the representations and
warranties of Parent and Merger Subsidiary contained in this
Agreement shall be true and correct on and as of the effective
time of the merger as if made at and as of such date (except to
the extent that such representations and warranties speak as of
an earlier date), except for such failures to perform or to be
true and correct that would not reasonably be expected to impair
in any material respect the ability of Parent or Merger
Subsidiary to perform its obligations under this Agreement or
prevent or materially delay consummation of the transactions
contemplated hereby, and the Company shall have received a
certificate of the chief executive officer or the chief
financial officer of Parent to that effect; and
(b) all Parent Required Statutory Approvals and Company
Required Statutory Approvals required to be obtained in order to
permit consummation of the Merger under applicable law shall
have been obtained, except for any such Parent Required
Statutory Approvals or Company Required Statutory Approvals the
failure of which to obtain would not, individually or in the
aggregate, reasonably be expected to materially adversely affect
the Surviving Corporation after the effective time of the merger.
Section 6.03 Conditions
to Obligations of Parent and Subsidiary to Effect the
Merger. Unless waived by Parent and Merger
Subsidiary, the obligations of Parent and Merger Subsidiary to
consummate the Merger shall be subject to the fulfillment at or
prior to the effective time of the merger of the following
additional conditions:
(a) (i) the representations and warranties of the
Company set forth in Sections 4.02 (Capitalization),
4.04(a) – (c) (Authority; Non-Contravention)
and 4.23 (Opinion of Financial Advisor) shall be true and
correct in all respects as of the date hereof and as of the
effective time of the merger as if made on and as of the
effective time of the merger (or, if given as of a specific
date, at and as of such date) and (ii) the other
representations and warranties of the Company contained in this
Agreement, disregarding all qualifications and exceptions
contained therein relating to materiality or Company Material
Adverse Effect, shall be true and correct in all respects as of
the date hereof and as of the effective time of the merger as if
made on and as of the effective time of the merger (or, if given
as of a specific date, at and as of such date), except in the
case of this clause (ii) (x) for changes expressly
permitted by this Agreement or (y) where the failure to be
true and correct would not reasonably be expected to have a
Company Material Adverse Effect. Parent shall have received a
certificate of the chief executive officer or the chief
financial officer of the Company to that effect;
(b) the Company shall have performed in all material
respects all obligations required to be performed by it under
this Agreement on or prior to the effective time of the merger,
and Parent shall have received a certificate of the chief
executive officer or the chief financial officer of the Company
to that effect;
(c) all Parent Required Statutory Approvals and Company
Required Statutory Approvals required to be obtained in order to
permit consummation of the Merger under applicable law shall
have been obtained, except for any such Parent Required
Statutory Approvals or Company Required Statutory Approvals the
failure of which to obtain would not reasonably be expected to
materially adversely affect the Parent or the Surviving
Corporation after the effective time of the merger;
(d) the Company, Parent or Merger Subsidiary shall have
received the proceeds of the Financing described in the
commitment letters referred to in Section 3.05;
(e) the Company shall have delivered to Parent a statement
described in
Section 1.1445-2(c)(3)(i)
of the United States Treasury Regulations certifying the
interests in the Company are not U.S. real property
interests (the “FIRPTA Affidavit”); and
(f) (i) the Company shall have terminated the existing
revolving line of credit with City National Bank and delivered
to Parent a payoff letter and drafts of all necessary UCC
termination statements or other releases or satisfactions in
connection with such termination and (ii) the Company or
its subsidiaries, as applicable, shall have delivered to Parent
any other forms of payoff letters and drafts of all necessary
UCC termination statements or other releases or satisfactions in
connection with the repayment of the Company’s indebtedness
for borrowed money as may be requested by Parent.
ARTICLE VII
TERMINATION
Section 7.01 Termination. This
Agreement may be terminated and the Merger may be abandoned at
any time prior to the effective time of the merger
(notwithstanding any approval of this Agreement by the
shareholders of the Company):
(a) by mutual written consent of the Company and Parent
duly authorized by each of their respective Boards of Directors;
(b) by either the Company or Parent, if the Merger has not
been consummated by May 31, 2007 (the “Outside
Date”); provided, however, that the right to terminate
this Agreement under this Section 7.01(b) shall not be
available to (i) Parent, if the failure of Parent or Merger
Subsidiary to fulfill any of its material obligations under this
Agreement caused the failure of the Closing to occur on or
before such date, or (ii) the Company, if the failure of
the Company to fulfill any of its material obligations under
this Agreement caused the failure of the Closing to occur on or
before such date;
(c) by either the Company or Parent, if (x) there has
been a breach by the other of any representation or warranty
contained in this Agreement which would reasonably be expected
to have a Company Material Adverse Effect or a Parent Material
Adverse Effect, as the case may be, and which breach is not
curable or, if curable, the breaching party shall not be using
on a continuous basis its reasonable best efforts to cure in all
material respects such breach after written notice of such
breach by the terminating party or such breach has not been
cured within twenty business days after written notice of such
breach by the terminating party, or (y) there has been a
breach of any of the covenants or agreements set forth in this
Agreement on the part of the other party, which would reasonably
be expected to have a Parent Material Adverse Effect or a
Company
Material Adverse Effect, as the case may be, and which breach is
not curable or, if curable, the breaching party shall not be
using on a continuous basis its reasonable best efforts to cure
such breach after written notice of such breach by the
terminating party or such breach has not been cured within
twenty business days after written notice of such breach by the
terminating party;
(d) by either the Company or Parent after ten days
following the entry of any final and non-appealable judgment,
injunction, order or decree by a court or governmental agency or
authority of competent jurisdiction restraining or prohibiting
the consummation of the Merger;
(e) by the Company if, prior to receipt of the Company
Shareholders’ Approval, the Company receives a Superior
Proposal, resolves to accept such Superior Proposal, complies
with its Termination Fee payment obligations under
Section 7.02 hereof and gives Parent at least four
days’ prior written notice of its intention to terminate
pursuant to this provision; provided, however, that such
termination shall not be effective until such time as the
payment required by Section 7.02 shall have been received
by Parent;
(f) by Parent, if the Board of Directors of the Company
shall have failed to recommend, or shall have withdrawn,
modified or amended in a manner adverse to Parent in any
material respect the Directors’ Recommendation, or shall
have resolved to do any of the foregoing, or shall have
recommended another Acquisition Proposal or if the Board of
Directors of the Company shall have resolved to accept a
Superior Proposal or shall have recommended to the shareholders
of the Company that they tender their shares in a tender or an
exchange offer commenced by a third party (excluding any
affiliate of Parent or any group of which any affiliate of
Parent is a member) or any other circumstance in which a Company
Adverse Recommendation Change shall have occurred; or
(g) by Parent, if the Company shall have received an
Acquisition Proposal from any Person and the Company Board of
Directors took a neutral position or made no recommendation with
respect to such Acquisition Proposal and did not publicly
reaffirm the Directors’ Recommendation in favor of the
Merger and the transactions contemplated hereby after a
reasonable amount of time (and in no event more than ten
business days following such receipt) has elapsed for the
Company Board of Directors to review and make a recommendation
with respect to such Acquisition Proposal; or
(h) by Parent or the Company if the shareholders of the
Company fail to approve the Merger at a duly held meeting of
shareholders called for such purpose (including any adjournment
or postponement thereof).
Section 7.02 Termination
Fees.
(a) The Company shall pay to Parent a termination fee in an
amount in cash equal to $6,850,000 (the “Termination
Fee”) in the event that (i) the Company terminates
this Agreement pursuant to Section 7.01(e);
(ii) Parent terminates this Agreement pursuant to
Sections 7.01(f) or (g); (iii) Parent terminates this
Agreement pursuant to Section 7.01(c), provided that such
termination is as a result of the Company’s breach of
Section 5.02, 5.07 or 5.08; (iv) Parent or the Company
terminates this Agreement pursuant to Section 7.01(h);
provided, in the case of this clause (iv), that
(A) after the date hereof and prior to the Company’s
Shareholder Meeting, an Acquisition Proposal has been publicly
announced and not withdrawn or abandoned at the time of
termination, and (B) within one year after such
termination, the Company enters into a definitive agreement with
respect to or consummates such Acquisition Proposal or
(v) the Company fails to deliver the FIRPTA Affidavit
pursuant to Section 6.03(e). Payment of the Termination Fee
under this Section 7.02(a) shall be paid by wire transfer
of same-day
funds to an account designated by Parent, in the event of
payment pursuant to clause (i) above on the date of
termination of this Agreement, in the event of payment pursuant
to clauses (ii) or (iii) above within three business
days following the date of termination of this Agreement, in the
event of payment pursuant to clause (iv) above, on the date
of the execution and delivery by the Company of the definitive
agreement regarding such Acquisition Proposal, and in the event
of payment pursuant to clause (v) above on the date on
which the Company notifies Parent of its inability to deliver
the FIRPTA Affidavit. Parent acknowledges and agrees that,
notwithstanding anything to the contrary in this Agreement or
any document or instrument delivered in connection herewith, the
rights set forth in clause (iii) of this Section 7.02
shall be the sole and exclusive remedy of Parent, Merger
Subsidiary and their respective affiliates against the Company
or its Subsidiaries or any of their respective affiliates with
respect to the
Company’s breach of Section 5.02, 5.07 or 5.08 of this
Agreement (excluding any willful breach of such provisions).
(b) Parent shall pay to the Company the Termination Fee in
the event that (i) this Agreement is terminated by the
Company pursuant to Section 7.01(b), (ii) all
conditions to Closing set forth in Article VI, other than
the conditions set forth in Section 6.03(d), have been
satisfied, (iii) all other conditions to the Financing have
been satisfied (except those conditions solely in the control of
Parent), and (iv) the failure to satisfy the conditions set
forth in Section 6.03(d) is not caused by any breach of
this Agreement by the Company. Payment of the Termination Fee
under this Section 7.02(b) shall be paid promptly by wire
transfer of
same-day
funds to an account designated by the Company. The Company
acknowledges and agrees that, notwithstanding anything to the
contrary in this Agreement or any document or instrument
delivered in connection herewith, the rights set forth in this
Section 7.02 shall be the sole and exclusive remedy of the
Company and all of its subsidiaries and their respective
affiliates against Parent, Merger Subsidiary or any of their
respective affiliates with respect to the matters set forth in
this Section 7.02 and with respect to the failure of Parent
or Merger Subsidiary to satisfy an obligation due to a failure
to obtain the Financing.
Section 7.03 Effect
of Termination. In the event of termination
of this Agreement by either Parent or the Company pursuant to
the provisions of Section 7.01, written notice thereof
shall be given to the other party or parties, specifying the
provision hereof pursuant to which such termination is made, and
this Agreement shall forthwith become void and there shall be no
liability or further obligation on the part of the Company,
Parent, Merger Subsidiary or their respective officers or
directors (except as set forth in the first sentence of
Section 4.22,
Section 5.03(b) – (d) and (f),
Section 5.10, Section 7.02 and this Section 7.03,
and Article VIII, all of which shall survive the
termination). Nothing in this Section 7.03 shall relieve
any party from liability for fraud or any willful breach of this
Agreement.
ARTICLE VIII
MISCELLANEOUS
Section 8.01 Non-Survival
of Representations and Warranties. Except as
otherwise provided in this Agreement, no representations,
warranties or agreements in this Agreement or in any instrument
delivered pursuant to this Agreement shall survive the effective
time of the merger, and after the effective time of the merger
neither the Company, Parent, Merger Subsidiary nor their
respective officers or directors shall have any further
obligation with respect thereto; provided, however, that this
Section 8.01 shall not limit any covenant or agreement of
the parties hereto which by its express terms contemplates
performance, in whole or in part, after the effective time of
the merger.
Section 8.02 Notices. All
notices and other communications hereunder shall be in writing
and shall be deemed given if delivered personally, mailed by
registered or certified mail (return receipt requested), sent
via facsimile or sent by a nationally recognized overnight
courier (providing proof of delivery) to the parties at the
following addresses (or at such other address for a party as
shall be specified by like notice):
International Aluminum Corporation
767 Monterey Pass Road Monterey Park, California91754
Attention: Ronald L. Rudy
Facsimile:
(323) 266-3838
with a copy to:
Troy & Gould Professional Corporation
1801 Century Park East, 16th Floor Los Angeles, California90067
Attention: Dale E. Short, Esq.
Facsimile:
(310) 201-4746
IAC Holding Co.
c/o Genstar Capital Partners IV, L.P.
Four Embarcadero Center, Suite 1900 San Francisco, CA94111
Attention: Darren J. Gold
Facsimile:
(415) 834-2383
(a) The headings contained in this Agreement are for
reference purposes only and shall not affect in any way the
meaning or interpretation of this Agreement. In this Agreement,
unless a contrary intention appears, (i) the words
“herein,” “hereof” and
“hereunder” and other words of similar import
refer to this Agreement as a whole and not to any particular
Article, Section or other subdivision,
(ii) “knowledge” shall mean actual
knowledge as of the date hereof of the executive officers of the
Company or Parent, as the case may be, after reasonable inquiry
of any person directly reporting to any such executive officer,
(iii) “including” shall mean
‘‘including, without limitation,” and
“includes” shall mean ‘‘includes,
without limitation,” and (iv) reference to any
Article or Section means such Article or Section hereof. No
provision of this Agreement shall be interpreted or construed
against any party hereto solely because such party or its legal
representative drafted such provision. For purposes of
determining whether any fact or circumstance involves a material
adverse effect on the ongoing operations of a party, any special
transaction charges incurred by such party as a result of the
consummation of transactions contemplated by this Agreement
shall not be considered.
(b) The parties hereto have participated jointly in the
negotiation and drafting of this Agreement and, in the event an
ambiguity or question of intent or interpretation arises, this
Agreement shall be construed as jointly drafted by the parties
hereto and no presumption or burden of proof shall arise
favoring or disfavoring any party by virtue of the authorship of
any provision of this Agreement.
Section 8.04 Assignment;
Governing Law; Forum. This Agreement
(including the documents and instruments referred to herein)
shall not be assigned by operation of law or otherwise except
that Merger Subsidiary may assign its obligations under this
Agreement to any other wholly-owned subsidiary of Parent subject
to the terms of this Agreement, in which case such assignee
shall become the “Merger Subsidiary” for all
purposes of this Agreement. THIS AGREEMENT, AND ANY DISPUTES
ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE
PARTIES’ RELATIONSHIP TO EACH OTHER, SHALL BE GOVERNED BY,
AND CONSTRUED IN ACCORDANCE WITH, THE INTERNAL LAWS OF THE STATE
OF CALIFORNIA, REGARDLESS OF THE LAWS THAT MIGHT OTHERWISE
GOVERN UNDER APPLICABLE PRINCIPLES OF CONFLICTS OF LAW THEREOF.
The parties hereby (a) submit to the jurisdiction of any
federal or state court sitting in the State of California,
(b) agree not to object to venue in such courts or to claim
that such forum is inconvenient and (c) agree that notice
or the service of process in any proceeding shall be properly
served or delivered if delivered in the manner contemplated by
Section 8.02 of this Agreement.
Section 8.05 Counterparts. This
Agreement may be executed in two or more counterparts, each of
which shall be deemed to be an original, but all of which shall
constitute one and the same agreement.
Section 8.06 Amendments;
No Waivers.
(a) Any provision of this Agreement may be amended or
waived prior to the effective time of the merger if, and only
if, such amendment or waiver is in writing and signed, in the
case of an amendment, by the Company, Parent and Merger
Subsidiary or, in the case of a waiver, by the party against
whom the waiver is to be effective;
provided that any waiver or amendment shall be effective against
a party only if the board of directors of such party approves
such waiver or amendment.
(b) No failure or delay by any party in exercising any
right, power or privilege hereunder shall operate as a waiver
thereof nor shall any single or partial exercise thereof
preclude any other or further exercise thereof or the exercise
of any other right, power or privilege. The rights and remedies
herein provided shall be cumulative and not exclusive of any
rights or remedies provided by law.
Section 8.07 Entire
Agreement. This Agreement and the
Confidentiality Agreement constitute the entire agreement
between the parties with respect to the subject matter hereof
and supersede all prior agreements, understandings and
negotiations, both written and oral, between the parties with
respect to the subject matter of this Agreement. No
representation, inducement, promise, understanding, condition or
warranty not set forth herein has been made or relied upon by
any party hereto. Neither this Agreement nor any provision
hereof is intended to confer upon any Person other than the
parties hereto any rights or remedies hereunder except for the
provisions of Section 5.12, which are intended for the
benefit of the Company’s officers, directors, employees and
agents, the provisions of Articles I and II, which are
intended for the benefit of the Company’s shareholders,
including holders of the Options, the provisions of
Section 5.06, which are intended for the benefit of the
parties to the agreements or participants in the plans referred
to therein, and Section 8.10, which is intended for the
benefit of the persons named therein.
Section 8.08 Severability. If
any term or other provision of this Agreement is invalid,
illegal or unenforceable, all other provisions of this Agreement
shall remain in full force and effect so long as the economic or
legal substance of the transactions contemplated hereby is not
affected in any manner materially adverse to any party.
Section 8.09 Specific
Performance. The parties hereto agree that
irreparable damage would occur in the event any of the
provisions of this Agreement were not to be performed in
accordance with the terms hereof and that the parties shall be
entitled to specific performance of the terms hereof in addition
to any other remedies at law or in equity.
Section 8.10 Principal
Shareholder. The parties acknowledge that
neither Cornelius C. Vanderstar, individually, nor
Mr. Vanderstar and Marguerite D. Vanderstar, as Trustees
(the “Trustees”) of the Vanderstar Family
Trust, are parties to this Agreement or any exhibit or agreement
provided for herein other than the Support Agreement.
Accordingly, the parties hereby agree that no party, nor any
party claiming through it (to the extent permitted by applicable
law), shall commence any proceedings or otherwise seek to impose
any liability whatsoever against Mr. Vanderstar or the
Trustees by reason of (i) any alleged breach or default by
any party under this Agreement or any exhibit or agreement
provided for herein other than the Support Agreement or
(ii) any claim arising from or relating to any such
agreement other than the Support Agreement.
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed by their respective authorized
officers as of the day and year first above written.
THIS SUPPORT AGREEMENT (this “Agreement”) is
made and entered into as of January 9, 2007, by and among
IAC Holding Co., a Delaware corporation
(“Parent”), IAL Acquisition Co., a Delaware
corporation and wholly owned subsidiary of Parent
(“Merger Subsidiary”), and Cornelius C.
Vanderstar, individually and as Co-trustee of the Vanderstar
Family Trust (“Shareholder”).
WHEREAS, concurrently with the execution of this Agreement,
Parent, Merger Subsidiary and International Aluminum
Corporation, a California corporation (the
“Company”), are entering into an Agreement and
Plan of Merger, dated as of the date hereof (the “Merger
Agreement”), providing for the merger of Merger
Subsidiary with and into the Company (the
“Merger”), pursuant to which the Company will
become a wholly owned subsidiary of Parent;
WHEREAS, as of the date hereof, Shareholder is the record or
beneficial owner of 1,720,700 shares of common stock, par
value $1.00 per share, of the Company (such shares,
together with any other shares of Company common stock acquired
by Shareholder after the date hereof, being collectively
referred to herein as the “Shares”); and
WHEREAS, as a condition to their willingness to enter into the
Merger Agreement, Parent and Merger Subsidiary have required
that Shareholder enter into this Agreement and, in order to
induce Parent and Merger Subsidiary to enter into the Merger
Agreement, Shareholder is willing to enter into this Agreement.
NOW, THEREFORE, in consideration of the foregoing and the mutual
covenants and agreements contained herein, the parties hereto,
intending to be legally bound hereby, agree as follows:
1. Agreements of Shareholder.
(a) Voting; Refrain From Certain Proxy
Solicitations. From the date hereof until any
termination of this Agreement in accordance with its terms, at
any meeting of the shareholders of the Company however called
(or any action by written consent in lieu of a meeting) and any
adjournment thereof, Shareholder shall vote the Shares (or cause
them to be voted) or (as appropriate) execute written consents
in respect thereof, (i) in favor of the approval of the
Merger Agreement and the approval of the transactions
contemplated thereby, (ii) against any action or agreement
(including, without limitation, any amendment of any agreement)
that would result in a breach of any representation, warranty,
covenant, agreement or other obligation of the Company under the
Merger Agreement, (iii) against any Acquisition Proposal
and (iv) against any agreement (including, without
limitation, any amendment of any agreement), amendment of the
Company’s charter documents or other action that is
intended or could reasonably be expected to prevent, impede,
interfere with, delay, postpone or discourage the consummation
of the Merger. Any such vote shall be cast (or consent shall be
given) by Shareholder in accordance with such procedures
relating thereto so as to ensure that it is duly counted,
including for purposes of determining that a quorum is present
and for purposes of recording the results of such vote (or
consent). Shareholder further covenants and agrees that he shall
not, in his capacity as owner of the Shares, solicit proxies or
participate in a solicitation with respect to an Acquisition
Proposal. Notwithstanding any other provision of this Agreement,
Shareholder’s obligations under this Section 1(a)
shall not extend to any modification or amendment to the Merger
Agreement unless Shareholder otherwise agrees in a subsequent
writing.
(b) Irrevocable
Proxy. Concurrently with the execution of
this Agreement, Shareholder agrees to deliver to Parent a proxy
in the form attached hereto as Annex A (the
“Proxy”), which shall be irrevocable to the
extent provided therein.
(c) Restriction on Transfer; Other
Restrictions. From the date hereof until any
termination of this Agreement in accordance with its terms,
Shareholder shall not directly or indirectly (i) sell,
transfer (including by operation of law), give, pledge,
encumber, assign or otherwise dispose of, or enter into any
contract, option or other arrangement or understanding with
respect to the sale, transfer, gift, pledge, encumbrance,
assignment or other disposition of, any of the Shares (or any
right, title or interest thereto or therein), (ii) deposit
any of the Shares into a voting trust or grant any proxies or
enter into a voting agreement, power of attorney or voting trust
with respect to any of the Shares, (iii) take any action
that would make any representation or warranty of Shareholder
set forth in
this Agreement untrue or incorrect in any material respect or
have the effect of preventing, disabling or delaying Shareholder
from performing any of his obligations under this Agreement or
(iv) agree (whether or not in writing) to take any of the
actions referred to in the foregoing clauses of this
Section 1(c). Notwithstanding the foregoing, Shareholder
may transfer, give or otherwise assign Shares for estate
planning or charitable purposes; provided, however, that, as a
condition precedent thereto, the transferee shall agree in
writing to become party to this Agreement with respect to such
Shares.
2. Representation and Warranties of Parent and Merger
Subsidiary. Parent and Merger Subsidiary
jointly and severally represent and warrant to Shareholder as
follows:
(a) Due Authorization. This
Agreement has been authorized by all necessary corporate action
on the part of each of Parent and Merger Subsidiary and has been
duly executed by a duly authorized officer of each of Parent and
Merger Subsidiary.
(b) Validity; No Conflict. This
Agreement constitutes the legal, valid and binding obligation of
each of Parent and Merger Subsidiary, enforceable against each
of them in accordance with its terms, except as such
enforceability may be limited by bankruptcy, insolvency,
moratorium or other similar laws affecting or relating to
creditors’ rights generally and by general principles of
equity. Neither the execution of this Agreement by Parent and
Merger Subsidiary nor the consummation of the transactions
contemplated hereby will result in a breach or violation of the
terms of any agreement by which Parent or Merger Subsidiary is
bound or of any decree, judgment, order, law or regulation now
in effect of any court or other governmental body applicable to
Parent or Merger Subsidiary.
3. Representations and Warranties of
Shareholder. Shareholder hereby represents
and warrants to Parent and Merger Subsidiary as follows:
(a) Validity; Consents and Approvals; No
Conflict. This Agreement constitutes the
legal, valid and binding obligation of Shareholder, enforceable
against Shareholder in accordance with its terms, except as such
enforceability may be limited by bankruptcy, insolvency,
moratorium or other similar laws affecting or relating to
creditors’ rights generally and by general principles of
equity. No consents or approvals of, or filings, declarations or
registrations with, any governmental agency are necessary for
the performance by Shareholder of its obligations under this
Agreement, other than such other consents, approvals, filings,
declarations or registrations that, if not obtained, made or
given, would not, individually or in the aggregate, reasonably
be expected to prevent or materially delay the performance by
Shareholder of any of his obligations under this Agreement.
Neither the execution and delivery of this Agreement by
Shareholder, nor the performance by Shareholder of his
obligations hereunder, will result in a breach or violation of
the terms of any agreement by which Shareholder is bound or of
any decree, judgment, order, law or regulation now in effect of
any court or other governmental body applicable to Shareholder.
(b) Ownership of Shares. Except as
specifically described on Annex B, Shareholder
(i) is the record and beneficial owner of all of the Shares
and (ii) owns all of the Shares free and clear of any
proxy, voting restriction, adverse claim or other Lien (other
than proxies and restrictions in favor of Parent and Merger
Subsidiary pursuant to this Agreement and except for such
transfer restrictions of general applicability as may be
provided under the Securities Act and the “blue sky”
laws of the various states of the United States). Without
limiting the foregoing, except for certain proxies and
restrictions provided for in clause (ii) above, Shareholder
has sole voting power and sole power of disposition with respect
to all of the Shares, with no restrictions on Shareholder’s
rights of voting or disposition pertaining thereto and no Person
other than Shareholder has any right to direct or approve the
voting or disposition of any of the Shares. As of the date
hereof, Shareholder does not own, beneficially or of record, any
securities of the Company other than 1,720,700 shares of
common stock which constitute the “Shares.”
4. Termination. This Agreement may
be terminated by Shareholder upon notice to Parent at any time
within ten (10) days following any Company Adverse
Recommendation Change in accordance with the Merger Agreement;
provided, that, the Company pays Parent the Termination Fee
prior to or simultaneously with such termination. This Agreement
and the Proxy shall terminate automatically on the first to
occur of (a) the termination of the Merger Agreement in
accordance with its terms and (b) the effective time of the
merger. Notwithstanding the
foregoing, (i) nothing herein shall relieve any party from
liability for breach of this Agreement and (ii) the
provisions of this Section 4 and Section 5 of this
Agreement shall survive any termination of this Agreement.
5. Miscellaneous.
(a) Action in Shareholder Capacity
Only. The parties acknowledge that this
Agreement is entered into by Shareholder in his capacity as
owner of the Shares only, and that nothing in this Agreement
shall in any way restrict or limit Shareholder from taking any
action in his capacity as a director or officer of the Company,
including, without limitation, participating in his capacity as
a director or officer of the Company in any discussions or
negotiations in accordance with Section 5.02 of the Merger
Agreement.
(b) Expenses. Except as otherwise
expressly provided in this Agreement, all costs and expenses
incurred in connection with the transactions contemplated by
this Agreement shall be paid by the party incurring such costs
and expenses.
(c) Additional Shares. Until any
termination of this Agreement in accordance with its terms,
Shareholder shall promptly notify Parent of the number of shares
of Company common stock, if any, as to which Shareholder
acquires record or beneficial ownership after the date hereof.
Any shares of Company common stock as to which Shareholder
acquires record or beneficial ownership after the date hereof
and prior to termination of this Agreement shall be
“Shares” for purposes of this Agreement. Without
limiting the foregoing, in the event of any stock split, stock
dividend or other change in the capital structure of the Company
affecting the Company common stock, the number of shares
constituting “Shares” shall be adjusted appropriately
and this Agreement and the obligations hereunder shall attach to
any additional shares of Company common stock or other voting
securities of the Company issued to Shareholder in connection
therewith.
(d) Definition of “Beneficial
Ownership”. For purposes of this
Agreement, “beneficial ownership” with respect to (or
to “own beneficially”) any securities shall mean
having “beneficial ownership” of such securities (as
determined pursuant to
Rule 13d-3
under the Exchange Act), including pursuant to any agreement,
arrangement or understanding, whether or not in writing.
(e) Further Assurances. From time
to time, at the request of Parent and without further
consideration, Shareholder shall execute and deliver such
additional documents and take all such further action as may be
reasonably required to consummate and make effective, in the
most expeditious manner practicable, the transactions
contemplated by this Agreement.
(f) Entire Agreement; No Third Party
Beneficiaries. This Agreement constitutes the
entire agreement, and supersedes all prior agreements and
understandings, both written and oral, among the parties, or any
of them, with respect to the subject matter hereof. This
Agreement is not intended to and shall not confer upon any
Person other than the parties hereto any rights hereunder.
(g) Assignment; Binding
Effect. Neither this Agreement nor any of the
rights, interests or obligations hereunder shall be assigned by
any of the parties hereto without the prior written consent of
the other parties, except that (i) Merger Subsidiary may
assign its rights and interests hereunder to Parent or to any
wholly owned subsidiary of Parent if such assignment would not
cause a delay in the consummation of any of the transactions
contemplated by the Merger Agreement and (ii) the rights,
interests and obligations of Shareholder hereunder shall be
binding upon Shareholder’s heirs, trustees, executors and
other representatives in the event of Shareholder’s death
or incapacity. Subject to the preceding sentence, this Agreement
shall be binding upon and shall inure to the benefit of the
parties hereto and their respective successors and permitted
assigns. No past, present or future director, officer, employee,
incorporator, member, partner or shareholder of Genstar Capital
Partners IV, L.P. shall have any liability for any obligations
of Parent or Merger Subsidiary under this Agreement or for any
claim based on, in respect of, or by reason of, the transactions
contemplated hereunder and under the Merger Agreement. Any
purported assignment not permitted under this Section shall be
null and void.
(h) Amendments. This Agreement may
not be amended or supplemented, except by a written agreement
executed by the parties hereto.
(i) Severability. If any term or
other provision of this Agreement is determined by a court of
competent jurisdiction to be invalid, illegal or incapable of
being enforced by any rule of law or public policy, all other
terms,
provisions and conditions of this Agreement shall nevertheless
remain in full force and effect. Upon such determination that
any term or other provision is invalid, illegal or incapable of
being enforced, the parties hereto shall negotiate in good faith
to modify this Agreement so as to effect the original intent of
the parties as closely as possible to the fullest extent
permitted by applicable law in an acceptable manner to the end
that the transactions contemplated hereby are fulfilled to the
extent possible.
(j) Counterparts. This Agreement
may be executed in two or more separate counterparts, each of
which shall be deemed to be an original but all of which taken
together shall constitute one and the same agreement. This
Agreement shall become effective when each party hereto shall
have received counterparts hereof signed by the other parties
hereto.
(k) Descriptive Headings. Headings
of Sections and subsections of this Agreement are for
convenience of the parties only, and shall be given no
substantive or interpretive effect whatsoever.
(l) Notices. All notices, requests
and other communications to any party hereunder shall be in
writing (including facsimile transmission) and shall be given,
If to Parent or Merger Subsidiary, to:
c/o Genstar Capital Partners IV, L.P.
Four Embarcadero Center, Suite 1900 San Francisco, CA94111
Attention: Darren J. Gold
Facsimile:
(415) 834-2383
with a copy (which shall not constitute notice) to:
Cornelius C. Vanderstar
c/o International Aluminum Corporation
767 Monterey Pass Road Monterey Park, California91754
Facsimile:
(323) 266-3838
with a copy (which shall not constitute notice) to:
Troy & Gould Professional Corporation
1801 Century Park East, 16th Floor Los Angeles, California90067
Attention: Dale E. Short, Esq.
Facsimile:
(310) 201-4746
or such other address or facsimile number as such party may
hereafter specify for the purpose by notice to the other parties
hereto. All such notices, requests and other communications
shall be deemed received on the date of receipt by the recipient
thereof if received prior to 5 P.M. in the place of receipt
and such day is a business day in the place of receipt.
Otherwise, any such notice, request or communication shall be
deemed not to have been received until the next succeeding
business day in the place of receipt.
(m) Governing Law; Enforcement;
Jurisdiction. This Agreement shall be
governed by, and construed in accordance with, the laws of the
State of California, applicable to contracts executed in and to
be performed entirely within that State. All actions and
proceedings arising out of or relating to this Agreement shall
be heard and determined in any federal or state court sitting in
the State of California, and the parties hereto hereby
irrevocably submit to the exclusive jurisdiction of such courts
in any such action or proceeding and irrevocably waive the
defense of an inconvenient forum to the maintenance of any such
action or proceeding. The parties hereto agree that a final
judgment in any such action or proceeding shall be conclusive
and may be enforced in other jurisdictions by suit on the
judgment or in any other manner provided by applicable law.
(n) Specific Performance; Injunctive
Relief. The parties agree that irreparable
damage would occur in the event that any of the provisions of
this Agreement were not performed in accordance with their
specific terms or were otherwise breached. It is accordingly
agreed that the parties shall be entitled to an injunction or
injunctions to prevent breaches of this Agreement and to enforce
specifically the terms and provisions of this Agreement in any
federal or state court sitting in the State of California, this
being in addition to any other remedy to which they are entitled
at law or in equity.
(o) Definitions. Capitalized terms
not otherwise defined herein shall have the meanings ascribed
thereto in the Merger Agreement.
IN WITNESS WHEREOF, the parties hereto have duly executed and
delivered this Agreement as of the date and year first written
above.
PARENT
By:
/s/ Darren
J. Gold
Darren J. Gold
President
MERGER SUBSIDIARY
By:
/s/ Darren
J. Gold
Darren J. Gold
President
SHAREHOLDER
By:
/s/ Cornelius
C. Vanderstar
Cornelius C. Vanderstar, individually
and as Co-trustee of the Vanderstar
Family Trust
THE UNDERSIGNED, SPOUSE OF THE SHAREHOLDER, BOTH INDIVIDUALLY
AND AS CO-TRUSTEE OF THE VANDERSTAR FAMILY TRUST, HEREBY
EXPRESSLY APPROVES AND AGREES TO BE BOUND BY THE PROVISIONS OF
THIS AGREEMENT, AND HEREBY AGREES NOT TO DEVISE OR BEQUEATH
WHATEVER COMMUNITY PROPERTY INTEREST OR QUASI-COMMUNITY PROPERTY
INTEREST THE UNDERSIGNED MAY HAVE IN THE SHARES IN
CONTRAVENTION OF THE TERMS OF THIS AGREEMENT.
The undersigned Shareholder of International Aluminum
Corporation, a California corporation (the
“Company”), hereby irrevocably appoints and
constitutes the members of the Board of Directors of IAC Holding
Co., a Delaware corporation (“Parent”), and
each of them (the “Proxyholders”), the proxies
of the undersigned, with full power of substitution and
resubstitution, to the full extent of the undersigned’s
rights with respect to the shares of common stock of the Company
beneficially owned by the undersigned, which shares are listed
below (the “Shares”), and any and all other
shares or securities issued or issuable in respect thereof on or
after the date hereof and prior to the date this proxy
terminates, to vote the Shares for the following limited, and
for no other, purposes:
1. In favor of approval of the Agreement and Plan of
Merger, dated as of January 9, 2007, by and among Parent,
IAL Acquisition Co., a Delaware corporation and wholly owned
subsidiary of Parent (“Merger Subsidiary”), and
the Company, and approval of the transactions contemplated by
the Merger Agreement; and
2. Against (A) any action or agreement (including,
without limitation, any amendment of any agreement) that would
result in a breach of any representation, warranty, covenant,
agreement or other obligation of the Company under the Merger
Agreement, (B) any Acquisition Proposal (as such term is
defined in the Merger Agreement) and (C) any agreement
(including, without limitation, any amendment of any agreement),
amendment of the Company’s charter documents or other
action that is intended or could reasonably be expected to
prevent, impede, interfere with, delay, postpone or discourage
the consummation of the Merger.
The Proxyholders may not exercise this proxy on any other
matter. The undersigned Shareholder may vote the Shares on all
such other matters.
The proxies named above are empowered at any time prior to
termination of this proxy to exercise all voting rights
(including the power to execute and deliver written consents
with respect to the Shares) of the undersigned at every annual,
special or adjourned meeting of Company shareholders, and in
every written consent in lieu of such meeting, or otherwise.
The proxy granted by the Shareholder to the Proxyholders is
hereby granted as of the date hereof in connection with the
obligations of the Shareholder set forth in the Support
Agreement, dated as of January 9, 2007, among Parent,
Merger Subsidiary and the Shareholder (the “Support
Agreement”), and is irrevocable and coupled with an
interest in such obligations and in the interests in the Company
to be purchased and sold pursuant to the Merger Agreement. This
proxy will automatically terminate upon the termination of the
Support Agreement in accordance with its terms.
Upon the execution hereof, all prior proxies given by the
undersigned with respect to the Shares, and any and all other
shares or securities issued or issuable in respect thereof on or
after the date hereof, are hereby revoked and no subsequent
proxies will be given until such time as this proxy shall be
terminated in accordance with its terms.
Any obligation of the undersigned hereunder shall be binding
upon the successors and assigns of the undersigned. The
undersigned hereby authorizes the Proxyholders to file this
proxy and any substitution or revocation of substitution with
the Secretary of the Company and with any Inspector of Elections
at any meeting of Shareholders of the Company.
This proxy is irrevocable and shall survive the incapacity or
death of the undersigned.
Dated: ,
2007
Cornelius C. Vanderstar,
individually and as Co-trustee of the
Vanderstar Family Trust
THE UNDERSIGNED, SPOUSE OF THE SHAREHOLDER, BOTH INDIVIDUALLY
AND AS CO-TRUSTEE OF THE VANDERSTAR FAMILY TRUST, HEREBY
EXPRESSLY APPROVES AND AGREES TO BE BOUND BY THE PROVISIONS OF
THIS PROXY, AND HEREBY AGREES NOT TO DEVISE OR BEQUEATH WHATEVER
COMMUNITY PROPERTY INTEREST OR QUASI-COMMUNITY PROPERTY INTEREST
THE UNDERSIGNED MAY HAVE IN THE SHARES IN CONTRAVENTION OF
THE TERMS OF THIS PROXY.
You have requested our opinion as to the fairness, from a
financial point of view, to the holders of the common stock of
International Aluminum Corporation (“IAC”)
(other than Genstar Capital Partners IV, L.P.
(“Genstar”) and its affiliates) of the Merger
Consideration (defined below) to be received by such holders
(other than Genstar and its affiliates) pursuant to the terms
and subject to the conditions set forth in an Agreement and Plan
of Merger (the “Merger Agreement”) to be entered into
among IAC, IAC Holding Co. (“Parent”) and IAL
Acquisition Co. (“Acquisition Sub”), a wholly
owned subsidiary of Parent. As more fully described in the
Merger Agreement, (i) Acquisition Sub will be merged with
and into IAC (the “Merger”) with IAC becoming a
wholly-owned subsidiary of Parent and (ii) each outstanding
share of the common stock, par value $1.00 per share, of
IAC (“IAC Common Stock”) will be converted into
the right to receive $53.00 in cash (the “Merger
Consideration”). Parent is a wholly owned subsidiary of
Genstar.
In arriving at our opinion, we reviewed a draft dated
January 6, 2007 of the Merger Agreement and held
discussions with certain senior officers, directors and other
representatives and advisors of IAC and certain senior officers
and other representatives and advisors of Genstar concerning the
business, operations and prospects of IAC. We examined certain
publicly available business and financial information relating
to IAC as well as certain financial forecasts and other
information and data relating to IAC which were provided to or
discussed with us by the management of IAC. We reviewed the
financial terms of the Merger as set forth in the draft dated
January 6, 2007 of the Merger Agreement in relation to,
among other things: current and historical market prices and
trading volumes of IAC Common Stock; the historical and
projected earnings and other operating data of IAC; and the
capitalization and financial condition of IAC. We considered, to
the extent publicly available, the financial terms of certain
other transactions which we considered relevant in evaluating
the Merger and analyzed certain financial, stock market and
other publicly available information relating to the businesses
of other companies whose operations we considered relevant in
evaluating those of IAC. In connection with our engagement and
at the direction of IAC, we were requested to approach, and we
held discussions with, third parties to solicit indications of
interest in the possible acquisition of IAC. In addition to the
foregoing, we conducted such other analyses and examinations and
considered such other information and financial, economic and
market criteria as we deemed appropriate in arriving at our
opinion.
In rendering our opinion, we have assumed and relied, without
assuming any responsibility for independent verification, upon
the accuracy and completeness of all financial and other
information and data publicly available or provided to or
otherwise reviewed by or discussed with us and upon the
assurances of the management of IAC that they are not aware of
any relevant information that has been omitted or that remains
undisclosed to us. With respect to financial forecasts and other
information and data relating to IAC provided to or otherwise
reviewed by or discussed with us, we have been advised by the
management of IAC that such forecasts and other information and
data were reasonably prepared on bases reflecting the best
currently available estimates and judgments of the management of
IAC as to the future financial performance of IAC. We have
assumed, with your consent, that the Merger will be consummated
in accordance with its terms, without waiver, modification or
amendment of any material term, condition or agreement and that,
in the course of obtaining the necessary regulatory or third
party approvals, consents and releases for the Merger, no delay,
limitation, restriction or condition will be imposed that would
have an adverse effect on IAC or the Merger. Representatives of
IAC have advised us, and we further have assumed, that the final
terms of the Merger Agreement will not vary materially from
those set forth in the draft reviewed by us. We have not made or
been provided with an independent evaluation or appraisal of the
assets or
liabilities (contingent or otherwise) of IAC nor have we made
any physical inspection of the properties or assets of IAC. Our
opinion does not address the relative merits of the Merger as
compared to any alternative business strategies that might exist
for IAC or the effect of any other transaction in which IAC
might engage. Our opinion is necessarily based upon information
available to us, and financial, stock market and other
conditions and circumstances existing, as of the date hereof.
Citigroup Global Markets Inc. has acted as financial advisor to
IAC in connection with the proposed Merger and will receive a
fee for such services, a significant portion of which is
contingent upon the consummation of the Merger. We also will
receive a fee in connection with the delivery of this opinion.
At the request of IAC, an affiliate of Citigroup engaged in
commercial banking has offered financing to the potential
bidders for IAC in connection with their proposed acquisition of
IAC. In the ordinary course of our business, we and our
affiliates may actively trade or hold the securities of IAC or
of publicly traded affiliates of Genstar, in each case, for our
own account or for the account of our customers and,
accordingly, may at any time hold a long or short position in
such securities. In addition, we and our affiliates (including
Citigroup Inc. and its affiliates) may maintain relationships
with IAC and its respective affiliates.
Our advisory services and the opinion expressed herein are
provided for the information of the Board of Directors of IAC in
its evaluation of the proposed Merger, and our opinion is not
intended to be and does not constitute a recommendation to any
stockholder as to how such stockholder should vote or act on any
matters relating to the proposed Merger.
Based upon and subject to the foregoing, our experience as
investment bankers, our work as described above and other
factors we deemed relevant, we are of the opinion that, as of
the date hereof, the Merger Consideration is fair, from a
financial point of view, to the holders of IAC Common Stock
(other than Genstar and its affiliates).
CALIFORNIA
GENERAL CORPORATION LAW
SECTIONS 1300-1313-DISSENTERS’
RIGHTS
§
1300. Right to Require Purchase — “Dissenting
Shares” and “Dissenting Shareholder”
Defined.
(a) If the approval of the outstanding shares
(Section 152) of a corporation is required for a
reorganization under subdivisions (a) and (b) or
subdivision (e) or (f) of Section 1201, each
shareholder of the corporation entitled to vote on the
transaction and each shareholder of a subsidiary corporation in
a short-form merger may, by complying with this chapter, require
the corporation in which the shareholder holds shares to
purchase for cash at their fair market value the shares owned by
the shareholder which are dissenting shares as defined in
subdivision (b). The fair market value shall be determined as of
the day before the first announcement of the terms of the
proposed reorganization or short-form merger, excluding any
appreciation or depreciation in consequence of the proposed
action, but adjusted for any stock split, reverse stock split,
or share dividend which becomes effective thereafter.
(b) As used in this chapter, “dissenting shares”
means shares which come within all of the following descriptions:
(1) Which were not immediately prior to the reorganization
or short-form merger either (A) listed on any national
securities exchange certified by the Commissioner of
Corporations under subdivision (o) of Section 25100 or
(B) listed on the National Market System of the NASDAQ
Stock Market, and the notice of meeting of shareholders to act
upon the reorganization summarizes this section and
Sections 1301, 1302, 1303 and 1304; provided, however, that
this provision does not apply to any shares with respect to
which there exists any restriction on transfer imposed by the
corporation or by any law or regulation; and provided, further,
that this provision does not apply to any class of shares
described in subparagraph (A) or (B) if demands
for payment are filed with respect to 5 percent or more of
the outstanding shares of that class.
(2) Which were outstanding on the date for the
determination of shareholders entitled to vote on the
reorganization and (A) were not voted in favor of the
reorganization or, (B) if described in
subparagraph (A) or (B) of paragraph (1)
(without regard to the provisos in that paragraph), were voted
against the reorganization, or which were held of record on the
effective date of a short-form merger; provided, however, that
subparagraph (A) rather than
subparagraph (B) of this paragraph applies in any case
where the approval required by Section 1201 is sought by
written consent rather than at a meeting.
(3) Which the dissenting shareholder has demanded that the
corporation purchase at their fair market value, in accordance
with Section 1301.
(4) Which the dissenting shareholder has submitted for
endorsement, in accordance with Section 1302.
(c) As used in this chapter, “dissenting
shareholder” means the recordholder of dissenting shares
and includes a transferee of record.
§
1301. Demand for Purchase.
(a) If, in the case of a reorganization, any shareholders
of a corporation have a right under Section 1300, subject
to compliance with paragraphs (3) and (4) of
subdivision (b) thereof, to require the corporation to
purchase their shares for cash, that corporation shall mail to
each such shareholder a notice of the approval of the
reorganization by its outstanding shares
(Section 152) within 10 days after the date of
that approval, accompanied by a copy of Sections 1300,
1302, 1303, and 1304 and this section, a statement of the price
determined by the corporation to represent the fair market value
of the dissenting shares, and a brief description of the
procedure to be followed if the shareholder desires to exercise
the shareholder’s right under those sections. The statement
of price constitutes an offer by the corporation to purchase at
the price stated any dissenting shares as defined in subdivision
(b) of Section 1300, unless they lose their status as
dissenting shares under Section 1309.
(b) Any shareholder who has a right to require the
corporation to purchase the shareholder’s shares for cash
under Section 1300, subject to compliance with
paragraphs (3) and (4) of subdivision
(b) thereof, and who desires
the corporation to purchase shares shall make written demand
upon the corporation for the purchase of those shares and
payment to the shareholder in cash of their fair market value.
The demand is not effective for any purpose unless it is
received by the corporation or any transfer agent thereof
(1) in the case of shares described in
clause (A) or (B) of paragraph (1) of
subdivision (b) of Section 1300 (without regard to the
provisos in that paragraph), not later than the date of the
shareholders’ meeting to vote upon the reorganization, or
(2) in any other case within 30 days after the date on
which the notice of the approval by the outstanding shares
pursuant to subdivision (a) or the notice pursuant to
subdivision (i) of Section 1110 was mailed to the
shareholder.
(c) The demand shall state the number and class of the
shares held of record by the shareholder which the shareholder
demands that the corporation purchase and shall contain a
statement of that such shareholder claims to be the fair market
value of those shares as of the day before the announcement of
the proposed reorganization or short-form merger. The statement
of fair market value constitutes an offer by the shareholder to
sell the shares at that price.
§
1302. Endorsement of Shares.
Within 30 days after the date on which notice of the
approval by the outstanding shares or the notice pursuant to
subdivision (i) of Section 1110 was mailed to the
shareholder, the shareholder shall submit to the corporation at
its principal office or at the office of any transfer agent
thereof, (a) if the shares are certificated securities, the
shareholder’s certificates representing any shares which
the shareholder demands that the corporation purchase, to be
stamped or endorsed with a statement that the shares are
dissenting shares or to be exchanged for certificates of
appropriate denomination so stamped or endorsed or (b) if
the shares are uncertificated securities, written notice of the
number of shares which the shareholder demands that the
corporation purchase. Upon subsequent transfers of the
dissenting shares on the books of the corporation, the new
certificates, initial transaction statement, and other written
statements issued therefor shall bear a like statement, together
with the name of the original dissenting holder of the shares.
§
1303. Agreed Price — Time for Payment.
(a) If the corporation and the shareholder agree that the
shares are dissenting shares and agree upon the price of the
shares, the dissenting shareholder is entitled to the agreed
price with interest thereon at the legal rate on judgments from
the date of the agreement. Any agreements fixing the fair market
value of any dissenting shares as between the corporation and
the holders thereof shall be filed with the secretary of the
corporation.
(b) Subject to the provisions of Section 1306, payment
of the fair market value of dissenting shares shall be made
within 30 days after the amount thereof has been agreed or
within 30 days after any statutory or contractual
conditions to the reorganization are satisfied, whichever is
later, and in the case of certificated securities, subject to
surrender of the certificates therefor, unless provided
otherwise by agreement.
§
1304. Dissenter’s Action to Enforce Payment.
(a) If the corporation denies that the shares are
dissenting shares, or the corporation and the shareholder fail
to agree upon the fair market value of the shares, then the
shareholder demanding purchase of such shares as dissenting
shares or any interested corporation, within six months after
the date on which notice of the approval by the outstanding
shares (Section 152) or notice pursuant to subdivision
(i) of Section 1110 was mailed to the shareholder, but
not thereafter, may file a complaint in the superior court of
the proper county praying the court to determine whether the
shares are dissenting shares or the fair market value of the
dissenting shares or both or may intervene in any action pending
on such a complaint.
(b) Two or more dissenting shareholders may join as
plaintiffs or be joined as defendants in any such action and two
or more such actions may be consolidated.
(c) On the trial of the action, the court shall determine
the issues. If the status of the shares as dissenting shares is
in issue, the court shall first determine that issue. If the
fair market value of the dissenting shares is in issue, the
court shall determine, or shall appoint one or more impartial
appraisers to determine, the fair market value of the shares.
§
1305. Appraisers’ Report — Payment —
Costs.
(a) If the court appoints an appraiser or appraisers, they
shall proceed forthwith to determine the fair market value per
share. Within the time fixed by the court, the appraisers, or a
majority of them, shall make and file a report
in the office of the clerk of the court. Thereupon, on the
motion of any party, the report shall be submitted to the court
and considered on such evidence as the court considers relevant.
If the court finds the report reasonable, the court may confirm
it.
(b) If a majority of the appraisers appointed fail to make
and file a report within 10 days from the date of their
appointment or within such further time as may be allowed by the
court or the report is not confirmed by the court, the court
shall determine the fair market value of the dissenting shares.
(c) Subject to the provisions of Section 1306,
judgment shall be rendered against the corporation for payment
of an amount equal to the fair market value of each dissenting
share multiplied by the number of dissenting shares which any
dissenting shareholder who is a party, or who has intervened, is
entitled to require the corporation to purchase, with interest
thereon at the legal rate from the date on which judgment was
entered.
(d) Any such judgment shall be payable forthwith with
respect to uncertificated securities and, with respect to
certificated securities, only upon the endorsement and delivery
to the corporation of the certificates for the shares described
in the judgment. Any party may appeal from the judgment.
(e) The costs of the action, including reasonable
compensation to the appraisers to be fixed by the court, shall
be assessed or apportioned as the court considers equitable,
but, if the appraisal exceeds the price offered by the
corporation, the corporation shall pay the costs (including in
the discretion of the court attorneys’ fees, fees of expert
witnesses and interest at the legal rate on judgments from the
date of compliance with Sections 1300, 1301 and 1302 if the
value awarded by the court for the shares is more than
125 percent of the price offered by the corporation under
subdivision (a) of Section 1301).
§
1306. Dissenting Shareholder’s Status as
Creditor.
To the extent that the provisions of Chapter 5 prevent the
payment to any holders of dissenting shares of their fair market
value, they shall become creditors of the corporation for the
amount thereof together with interest at the legal rate on
judgments until the date of payment, but subordinate to all
other creditors in any liquidation proceeding, such debt to be
payable when permissible under the provisions of Chapter 5.
§
1307. Dividends Paid as Credit Against Payment.
Cash dividends declared and paid by the corporation upon the
dissenting shares after the date of approval of the
reorganization by the outstanding shares
(Section 152) and prior to payment for the shares by
the corporation shall be credited against the total amount to be
paid by the corporation therefor.
§
1308. Continuing Rights and Privileges of Dissenting
Shareholders.
Except as expressly limited in this chapter, holders of
dissenting shares continue to have all the rights and privileges
incident to their shares, until the fair market value of their
shares is agreed upon or determined. A dissenting shareholder
may not withdraw a demand for payment unless the corporation
consents thereto.
§
1309. Termination of Dissenting Shareholder Status.
Dissenting shares lose their status as dissenting shares and the
holders thereof cease to be dissenting shareholders and cease to
be entitled to require the corporation to purchase their shares
upon the happening of any of the following:
(a) The corporation abandons the reorganization. Upon
abandonment of the reorganization, the corporation shall pay on
demand to any dissenting shareholder who has initiated
proceedings in good faith under this chapter all necessary
expenses incurred in such proceedings and reasonable
attorneys’ fees.
(b) The shares are transferred prior to their submission
for endorsement in accordance with Section 1302 or are
surrendered for conversion into shares of another class in
accordance with the articles.
(c) The dissenting shareholder and the corporation do not
agree upon the status of the shares as dissenting shares or upon
the purchase price of the shares, and neither files a complaint
or intervenes in a pending action as
provided in Section 1304, within six months after the date
on which notice of the approval by the outstanding shares or
notice pursuant to subdivision (i) of Section 1110 was
mailed to the shareholder.
(d) The dissenting shareholder, with the consent of the
corporation, withdraws the shareholder’s demand for
purchase of the dissenting shares.
§
1310. Suspension of Proceedings for Payment Pending
Litigation.
If litigation is instituted to test the sufficiency or
regularity of the votes of the shareholders in authorizing a
reorganization, any proceedings under Sections 1304 and
1305 shall be suspended until final determination of such
litigation.
§
1311. Exempt Shares.
This chapter, except Section 1312, does not apply to
classes of shares whose terms and provisions specifically set
forth the amount to be paid in respect to such shares in the
event of a reorganization or merger.
§
1312. Attacking Validity of Reorganization or Merger.
(a) No shareholder of a corporation who has a right under
this chapter to demand payment of cash for the shares held by
the shareholder shall have any right at law or in equity to
attack the validity of the reorganization or short-form merger,
or to have the reorganization or short-form merger set aside or
rescinded, except in an action to test whether the number of
shares required to authorize or approve the reorganization have
been legally voted in favor thereof; but any holder of shares of
a class whose terms and provisions specifically set forth the
amount to be paid in respect to them in the event of a
reorganization or short-form merger is entitled to payment in
accordance with those terms and provisions or, if the principal
terms of the reorganization are approved pursuant to subdivision
(b) of Section 1202, is entitled to payment in
accordance with the terms and provisions of the approved
reorganization.
(b) If one of the parties to a reorganization or short-form
merger is directly or indirectly controlled by, or under common
control with, another party to the reorganization or short-form
merger, subdivision (a) shall not apply to any shareholder
of such party who has not demanded payment of cash for such
shareholder’s shares pursuant to this chapter; but if the
shareholder institutes any action to attack the validity of the
reorganization or short-form merger or to have the
reorganization or short-form merger set aside or rescinded, the
shareholder shall not thereafter have any right to demand
payment of cash for the shareholder’s shares pursuant to
this chapter. The court in any action attacking the validity of
the reorganization or short-form merger or to have the
reorganization or short-form merger set aside or rescinded shall
not restrain or enjoin the consummation of the transaction
except upon 10 days’ prior notice to the corporation
and upon a determination by the court that clearly no other
remedy will adequately protect the complaining shareholder or
the class of shareholders of which such shareholder is a member.
(c) If one of the parties to a reorganization or short-form
merger is directly or indirectly controlled by, or under common
control with, another party to the reorganization or short-form
merger, in any action to attack the validity of the
reorganization or short-form merger or to have the
reorganization or short-form merger set aside or rescinded,
(1) a party to a reorganization or short-form merger which
controls another party to the reorganization or short-form
merger shall have the burden of proving that the transaction is
just and reasonable as to the shareholders of the controlled
party, and (2) a person who controls two or more parties to
a reorganization shall have the burden of proving that the
transaction is just and reasonable as to the shareholders of any
party so controlled.
§
1313. Conversion Deemed to Constitute Reorganization for
Purposes of Chapter.
A conversion pursuant to Chapter 11.5 (commencing with
Section 1150) shall be deemed to constitute a
reorganization for purposes of applying the provisions of this
chapter, in accordance with and to the extent provided in
Section 1159.
Please take a moment now to vote your shares of International Aluminum Corporation
common stock for the upcoming Special Meeting of Shareholders.
YOU CAN VOTE TODAY IN ONE OF TWO WAYS:
1.
Vote by Internet —Please access
www.continentalstock.com and then follow the simple
instructions provided.
CONTROL NUMBER:
You may vote by Internet 24 hours a day, 7 days a week.
Your Internet vote authorizes the named proxies to vote your shares in the same manner
as if you had executed a proxy card.
OR
2.
Vote by Mail — Please sign, date, and mail the proxy card in the envelope provided to:
International Aluminum Corporation, 767 Monterey Pass Road, Monterey Park, California, 91754,
Attention: Corporate Secretary.
TO VOTE BY MAIL, PLEASE DETACH PROXY CARD HERE AND RETURN IN THE ENVELOPE PROVIDED.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE “FOR” BOTH OF THE PROPOSALS LISTED BELOW.
(1)
Approve the Agreement and Plan of Merger, dated as of January 9, 2007, by and among
International Aluminum Corporation, IAC Holding Co., a Delaware corporation (the
“Buyer”), and IAL Acquisition Co., a California corporation and a wholly owned
subsidiary of the Buyer.
o FOR
o AGAINST
o ABSTAIN
(2)
Approve the adjournment of the special meeting, if necessary or appropriate, to
solicit additional proxies if there are insufficient votes at the time of the special
meeting to approve the merger agreement.
o FOR
o AGAINST
o ABSTAIN
Transact such other business that may properly come before the special meeting or any
adjournment thereof.
Date:
Signature(s) of Shareholder
Signature(s) of Shareholder
Title(s)
Please date and sign exactly as name appears on this proxy. If shares are held
jointly, each shareholder should sign. Executors, administrators, trustees,
etc. should use full title and, if more than one, all should sign. If the
shareholder is a corporation, please sign full corporate name and indicate
title of authorized officer who signs.
PLEASE SIGN, DATE, AND RETURN THE PROXY CARD PROMPTLY, USING THE ENCLOSED POSTAGE-PAID ENVELOPE.
TO VOTE BY MAIL, PLEASE DETACH PROXY CARD HERE AND RETURN IN THE ENVELOPE
PROVIDED.
INTERNATIONAL ALUMINUM CORPORATION
PROXY SOLICITED BY THE BOARD OF DIRECTORS
FOR THE SPECIAL MEETING OF SHAREHOLDERS March 29, 2007
I/We hereby appoint Cornelius C. Vanderstar and Ronald L. Rudy, and each of them, as
Proxies, with full power of substitution, to represent me (us) and to vote all of my (our) shares
of Common Stock of International Aluminum Corporation (“International Aluminum”), on all matters
that may come before the Special Meeting of Shareholders of International Aluminum to be held at
International Aluminum’s executive offices located at 767 Monterey Pass Road, Monterey Park,
California on March 29, 2007 and any adjournments thereof. Said Proxies are directed
to vote as hereafter indicated.
This Proxy, when properly executed, will be voted in the manner directed hereon. If no
direction is made, it will be voted “FOR” Proposal 1 and
“FOR” Proposal 2.
Proxies will vote in accordance with their judgment in connection with the transaction of such
other business as may properly come before the meeting or any adjournment thereof.
(Continued and to be signed on the reverse side.)
Dates Referenced Herein and Documents Incorporated by Reference