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OMB APPROVAL
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OMB Number 3235-0515
Expires: April 30, 2005
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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SCHEDULE TO-C
(Rule 14d-100)
TENDER OFFER STATEMENT UNDER SECTION 14(d)(1) OR 13(e)(1)
OF THE SECURITIES EXCHANGE ACT OF 1934
(Amendment No. )
HOME PRODUCTS INTERNATIONAL, INC.
(Name of Subject Company (Issuer))
Storage Acquisition Company, L.L.C.
Chai Trust Company, L.L.C.
EGI-Fund (02-04) Investors, L.L.C.
Mr. Joseph Gantz
Walnut Investment Partners, L.P.
Triyar Capital, LLC
(Name of Filing Persons - Offerors)
EGI-Managing Member (02-04), L.L.C.
SZ Investments, L.L.C.
Samstock/SIT, L.L.C.
Zell General Partnership, Inc.
(Name of Filing Persons - Other Persons; 13D Filers)
Common Stock, par value $0.01 per share
(Title of Class of Securities)
437305105
(CUSIP Number of Class of Securities
Marc D. Hauser, Esq.
Equity Group Investments, L.L.C.
2 North Riverside Plaza, Suite 600
Chicago, Illinois 60606
(312) 466-3281
(Name, Address and Telephone Number of Person
Authorized to Receive Notices
and Communications on Behalf of the Filing Person)
------------------------------
Copies to:
Henry Lesser, Esq.
Gray Cary Ware & Freidenrich LLP
2000 University Avenue
East Palo Alto, California 94303
(650) 833-2000
CALCULATION OF FILING FEE
------------------------------ ------------------------------
Transaction Valuation Amount of Filing Fee
N/A* N/A*
------------------------------ ------------------------------
*Pursuant to Instruction D to Schedule TO, a filing fee is not required in
connection with this filing as it is related to preliminary communications made
before the commencement of a tender offer.
[ ] Check the box if any part of the fee is offset as provided by 0-11(a)(2) and
identify the filing with which the offsetting fee was previously paid. Identify
the previous filing by registration statement number, or the Form of Schedule
and the date of its filing.
Amount Previously Paid: N/A Filing Party: N/A
Form or Registration No.: N/A Date Filed: N/A
[X] Check the box if the filing relates solely to preliminary communications
made before the commencement of a tender offer.
Check the appropriate boxes below to designate any transactions to which the
statement relates:
[X] third-party tender offer subject to Rule 14d-1.
[ ] issuer tender offer subject to Rule 13e-4.
[ ] going-private transaction subject to Rule 13e-3.
[X] amendment to Schedule 13D under Rule 13d-2
Check the following if the filing is a final amendment reporting the results of
the tender offer: [ ]
INTRODUCTORY NOTE
THIS SCHEDULE TO IS AN EXACT DUPLICATE (OTHER THAN THIS INTRODUCTORY NOTE) OF A
SCHEDULE TO FILING MADE BY THE SAME FILING PERSONS ON OCTOBER 29, 2004 IN
CONNECTION WITH THE PROPOSED TENDER OFFER REFERRED TO HEREIN AND THEREIN, AND IS
BEING FILED SOLELY TO CORRECT AN INADVERTENT ERROR IN THE EDGAR FILING TAG TO
REFLECT THAT THE FILING WAS INTENDED TO BE MADE ON SCHEDULE TO-C AND NOT ON
SCHEDULE TO-T. THIS OFFER HAS NOT COMMENCED, AND IF AND WHEN SUCH PROPOSED
TENDER OFFER IS COMMENCED, THE FILING PERSONS WILL FILE A NEW SCHEDULE TO ON THE
DATE OF, AND REFLECTING, SUCH COMMENCEMENT. SEE THE "EXPLANATORY STATEMENT" THAT
FOLLOWS THIS INTRODUCTORY NOTE.
EXPLANATORY STATEMENT
Pursuant to an Acquisition Agreement dated as of October 28, 2004 (the
"Acquisition Agreement") between Home Products International, Inc., a Delaware
corporation (the "Subject Company"), and Storage Acquisition Company, L.L.C., a
Delaware limited liability company (the "Bidder"), the Bidder has agreed,
subject to the terms and conditions set forth in the Acquisition Agreement, to
make a tender offer (the "Proposed Tender Offer") for all outstanding shares of
the common stock, par value $0.01 per share (the "Shares"), of the Subject
Company at a price of $2.25 per Share net to the seller in cash. A copy of the
Acquisition Agreement is being filed as an exhibit to the Schedule 13D/A forming
part of this Schedule TO and the foregoing summary is subject in its entirety to
the full text of the Acquisition Agreement.
Neither this Schedule TO nor any of the exhibits hereto constitutes an offer to
buy or solicitation to sell any Shares. The Proposed Tender Offer has not yet
been commenced and its commencement is subject to the conditions set forth in
the Acquisition Agreement. If and when the Proposed Tender Offer is commenced,
the persons filing this Schedule TO will file a Tender Offer Statement on
Schedule TO (the "Tender Offer Statement") containing the terms and conditions
of the Proposed Tender Offer and related information with the Securities and
Exchange Commission (the "SEC"). Stockholders of the Subject Company should read
the Tender Offer Statement when it becomes available because it will contain
important information. The Tender Offer Statement and other filed documents will
be available at no charge on the SEC's website at http://www.sec.gov and will
also be made available without charge to all stockholders by contacting Marc D.
Hauser, Esq. at 312-466-3281. Stockholders are urged to read these materials
carefully before making any decision with respect to the Proposed Tender Offer.
--------------------------------------------------------------------------------
1. Name of Reporting Persons.
I.R.S. Identification Nos. of above persons (entities only).
Storage Acquisition Company, L.L.C. FEIN 20-1793137
--------------------------------------------------------------------------------
2. Check the Appropriate Box If a Member of a Group (See Instructions)
(a) [_]
(b) [x]
--------------------------------------------------------------------------------
3. SEC Use Only
--------------------------------------------------------------------------------
4. Source of Funds (See Instructions)
WC
--------------------------------------------------------------------------------
5. Check If Disclosure of Legal Proceedings Is Required Pursuant to Items 2(d)
or 2(e) [_]
--------------------------------------------------------------------------------
6. Citizenship or Place of Organization
Delaware
--------------------------------------------------------------------------------
7. Sole Voting Power
NUMBER OF 0
SHARES _________________________________________________________________
BENEFICIALLY 8. Shared Voting Power
OWNED BY 5
EACH _________________________________________________________________
REPORTING 9. Sole Dispositive Power
PERSON 0
WITH _________________________________________________________________
10. Shared Dispositive Power
5
--------------------------------------------------------------------------------
11. Aggregate Amount Beneficially Owned by Each Reporting Person
5
--------------------------------------------------------------------------------
12. Check Box If the Aggregate Amount in Row (11) Excludes Certain Shares (See
Instructions) [_]
--------------------------------------------------------------------------------
13. Percent of Class Represented by Amount in Row (11)
Less than 0.1% (1)
--------------------------------------------------------------------------------
14. Type of Reporting Person (See Instructions)
OO
--------------------------------------------------------------------------------
(1) Calculated based upon 7,878,900 shares of Issuer's Common Stock outstanding
as of the date of execution of the Acquisition Agreement, as set forth therein.
-------------------------------------------------------------------------------
1. Name of Reporting Persons.
I.R.S. Identification Nos. of above persons (entities only).
Chai Trust Company, L.L.C. FEIN: 36-6934216
--------------------------------------------------------------------------------
2. Check the Appropriate Box If a Member of a Group (See Instructions)
(a) [_]
(b) [x]
--------------------------------------------------------------------------------
3. SEC Use Only
--------------------------------------------------------------------------------
4. Source of Funds (See Instructions)
WC
--------------------------------------------------------------------------------
5. Check If Disclosure of Legal Proceedings Is Required Pursuant to Items 2(d)
or 2(e) [_]
--------------------------------------------------------------------------------
6. Citizenship or Place of Organization
Delaware
--------------------------------------------------------------------------------
7. Sole Voting Power
NUMBER OF 0
SHARES _________________________________________________________________
BENEFICIALLY 8. Shared Voting Power
OWNED BY 664,000
EACH _________________________________________________________________
REPORTING 9. Sole Dispositive Power
PERSON 0
WITH _________________________________________________________________
10. Shared Dispositive Power
664,000
--------------------------------------------------------------------------------
11. Aggregate Amount Beneficially Owned by Each Reporting Person
5
--------------------------------------------------------------------------------
12. Check Box If the Aggregate Amount in Row (11) Excludes Certain Shares (See
Instructions) [_]
--------------------------------------------------------------------------------
13. Percent of Class Represented by Amount in Row (11)
8.4% (1)
--------------------------------------------------------------------------------
14. Type of Reporting Person (See Instructions)
OO
--------------------------------------------------------------------------------
(1) Calculated based upon 7,878,900 shares of Issuer's Common Stock outstanding
as of the date of execution of the Acquisition Agreement, as set forth therein.
--------------------------------------------------------------------------------
1. Name of Reporting Persons.
I.R.S. Identification Nos. of above persons (entities only).
EGI-Fund (02-04) Investors, L.L.C. FEIN 40-0002819
--------------------------------------------------------------------------------
2. Check the Appropriate Box If a Member of a Group (See Instructions)
(a) [_]
(b) [x]
--------------------------------------------------------------------------------
3. SEC Use Only
--------------------------------------------------------------------------------
4. Source of Funds (See Instructions)
WC
--------------------------------------------------------------------------------
5. Check If Disclosure of Legal Proceedings Is Required Pursuant to Items 2(d)
or 2(e) [_]
--------------------------------------------------------------------------------
6. Citizenship or Place of Organization
Delaware
--------------------------------------------------------------------------------
7. Sole Voting Power
NUMBER OF 0
SHARES _________________________________________________________________
BENEFICIALLY 8. Shared Voting Power
OWNED BY 5
EACH _________________________________________________________________
REPORTING 9. Sole Dispositive Power
PERSON 0
WITH _________________________________________________________________
10. Shared Dispositive Power
5
--------------------------------------------------------------------------------
11. Aggregate Amount Beneficially Owned by Each Reporting Person
5
--------------------------------------------------------------------------------
12. Check Box If the Aggregate Amount in Row (11) Excludes Certain Shares (See
Instructions) [_]
--------------------------------------------------------------------------------
13. Percent of Class Represented by Amount in Row (11)
Less than 0.1% (1)
--------------------------------------------------------------------------------
14. Type of Reporting Person (See Instructions)
OO
--------------------------------------------------------------------------------
(1) Calculated based upon 7,878,900 shares of Issuer's Common Stock outstanding
as of the date of execution of the Acquisition Agreement, as set forth therein.
--------------------------------------------------------------------------------
1. Name of Reporting Persons.
I.R.S. Identification Nos. of above persons (entities only).
Joseph Gantz
--------------------------------------------------------------------------------
2. Check the Appropriate Box If a Member of a Group (See Instructions)
(a) [_]
(b) [x]
--------------------------------------------------------------------------------
3. SEC Use Only
--------------------------------------------------------------------------------
4. Source of Funds (See Instructions)
PF
--------------------------------------------------------------------------------
5. Check If Disclosure of Legal Proceedings Is Required Pursuant to Items 2(d)
or 2(e) [_]
--------------------------------------------------------------------------------
6. Citizenship or Place of Organization
United States
--------------------------------------------------------------------------------
7. Sole Voting Power
NUMBER OF 1,530
SHARES _________________________________________________________________
BENEFICIALLY 8. Shared Voting Power
OWNED BY 5
EACH _________________________________________________________________
REPORTING 9. Sole Dispositive Power
PERSON 1,530
WITH _________________________________________________________________
10. Shared Dispositive Power
0
--------------------------------------------------------------------------------
11. Aggregate Amount Beneficially Owned by Each Reporting Person
1,535
--------------------------------------------------------------------------------
12. Check Box If the Aggregate Amount in Row (11) Excludes Certain Shares (See
Instructions) [_]
--------------------------------------------------------------------------------
13. Percent of Class Represented by Amount in Row (11)
Less than 0.1% (1)
--------------------------------------------------------------------------------
14. Type of Reporting Person (See Instructions)
IN
--------------------------------------------------------------------------------
(1) Calculated based upon 7,878,900 shares of Issuer's Common Stock outstanding
as of the date of execution of the Acquisition Agreement, as set forth therein.
-------------------------------------------------------------------------------
1. Name of Reporting Persons.
I.R.S. Identification Nos. of above persons (entities only).
EGI-Managing Member (02-04), L.L.C. FEIN: 40-0002816
--------------------------------------------------------------------------------
2. Check the Appropriate Box If a Member of a Group (See Instructions)
(a) [_]
(b) [x]
--------------------------------------------------------------------------------
3. SEC Use Only
--------------------------------------------------------------------------------
4. Source of Funds (See Instructions)
WC
--------------------------------------------------------------------------------
5. Check If Disclosure of Legal Proceedings Is Required Pursuant to Items 2(d)
or 2(e) [_]
--------------------------------------------------------------------------------
6. Citizenship or Place of Organization
Delaware
--------------------------------------------------------------------------------
7. Sole Voting Power
NUMBER OF 0
SHARES _________________________________________________________________
BENEFICIALLY 8. Shared Voting Power
OWNED BY 5
EACH _________________________________________________________________
REPORTING 9. Sole Dispositive Power
PERSON 0
WITH _________________________________________________________________
10. Shared Dispositive Power
5
--------------------------------------------------------------------------------
11. Aggregate Amount Beneficially Owned by Each Reporting Person
5
--------------------------------------------------------------------------------
12. Check Box If the Aggregate Amount in Row (11) Excludes Certain Shares (See
Instructions) [_]
--------------------------------------------------------------------------------
13. Percent of Class Represented by Amount in Row (11)
Less than 0.1% (1)
--------------------------------------------------------------------------------
14. Type of Reporting Person (See Instructions)
OO
--------------------------------------------------------------------------------
(1) Calculated based upon 7,878,900 shares of Issuer's Common Stock outstanding
as of the date of execution of the Acquisition Agreement, as set forth therein.
--------------------------------------------------------------------------------
1. Name of Reporting Persons.
I.R.S. Identification Nos. of above persons (entities only).
SZ Investments, L.L.C. FEIN: 36-4150443
--------------------------------------------------------------------------------
2. Check the Appropriate Box If a Member of a Group (See Instructions)
(a) [_]
(b) [x]
--------------------------------------------------------------------------------
3. SEC Use Only
--------------------------------------------------------------------------------
4. Source of Funds (See Instructions)
WC
--------------------------------------------------------------------------------
5. Check If Disclosure of Legal Proceedings Is Required Pursuant to Items 2(d)
or 2(e) [_]
--------------------------------------------------------------------------------
6. Citizenship or Place of Organization
Delaware
--------------------------------------------------------------------------------
7. Sole Voting Power
NUMBER OF 0
SHARES _________________________________________________________________
BENEFICIALLY 8. Shared Voting Power
OWNED BY 5
EACH _________________________________________________________________
REPORTING 9. Sole Dispositive Power
PERSON 0
WITH _________________________________________________________________
10. Shared Dispositive Power
5
--------------------------------------------------------------------------------
11. Aggregate Amount Beneficially Owned by Each Reporting Person
5
--------------------------------------------------------------------------------
12. Check Box If the Aggregate Amount in Row (11) Excludes Certain Shares (See
Instructions) [_]
--------------------------------------------------------------------------------
13. Percent of Class Represented by Amount in Row (11)
Less than 0.1% (1)
--------------------------------------------------------------------------------
14. Type of Reporting Person (See Instructions)
OO
--------------------------------------------------------------------------------
(1) Calculated based upon 7,878,900 shares of Issuer's Common Stock outstanding
as of the date of execution of the Acquisition Agreement, as set forth therein.
--------------------------------------------------------------------------------
1. Name of Reporting Persons.
I.R.S. Identification Nos. of above persons (entities only).
Samstock/SIT, L.L.C. FEIN 36-6934126
--------------------------------------------------------------------------------
2. Check the Appropriate Box If a Member of a Group (See Instructions)
(a) [_]
(b) [x]
--------------------------------------------------------------------------------
3. SEC Use Only
--------------------------------------------------------------------------------
4. Source of Funds (See Instructions)
WC
--------------------------------------------------------------------------------
5. Check If Disclosure of Legal Proceedings Is Required Pursuant to Items 2(d)
or 2(e) [_]
--------------------------------------------------------------------------------
6. Citizenship or Place of Organization
Delaware
--------------------------------------------------------------------------------
7. Sole Voting Power
NUMBER OF 650,720
SHARES _________________________________________________________________
BENEFICIALLY 8. Shared Voting Power
OWNED BY 0
EACH _________________________________________________________________
REPORTING 9. Sole Dispositive Power
PERSON 650,720
WITH _________________________________________________________________
10. Shared Dispositive Power
0
--------------------------------------------------------------------------------
11. Aggregate Amount Beneficially Owned by Each Reporting Person
650,720
--------------------------------------------------------------------------------
12. Check Box If the Aggregate Amount in Row (11) Excludes Certain Shares (See
Instructions) [_]
--------------------------------------------------------------------------------
13. Percent of Class Represented by Amount in Row (11)
8.3% (1)
--------------------------------------------------------------------------------
14. Type of Reporting Person (See Instructions)
OO
--------------------------------------------------------------------------------
(1) Calculated based upon 7,878,900 shares of Issuer's Common Stock outstanding
as of the date of execution of the Acquisition Agreement, as set forth therein.
--------------------------------------------------------------------------------
1. Name of Reporting Persons.
I.R.S. Identification Nos. of above persons (entities only).
Zell General Partnership, Inc. FEIN 36-3716786
--------------------------------------------------------------------------------
2. Check the Appropriate Box If a Member of a Group (See Instructions)
(a) [_]
(b) [x]
--------------------------------------------------------------------------------
3. SEC Use Only
--------------------------------------------------------------------------------
4. Source of Funds (See Instructions)
WC
--------------------------------------------------------------------------------
5. Check If Disclosure of Legal Proceedings Is Required Pursuant to Items 2(d)
or 2(e) [_]
--------------------------------------------------------------------------------
6. Citizenship or Place of Organization
Delaware
--------------------------------------------------------------------------------
7. Sole Voting Power
NUMBER OF 13,275
SHARES _________________________________________________________________
BENEFICIALLY 8. Shared Voting Power
OWNED BY 0
EACH _________________________________________________________________
REPORTING 9. Sole Dispositive Power
PERSON 13,275
WITH _________________________________________________________________
10. Shared Dispositive Power
0
--------------------------------------------------------------------------------
11. Aggregate Amount Beneficially Owned by Each Reporting Person
13,275
--------------------------------------------------------------------------------
12. Check Box If the Aggregate Amount in Row (11) Excludes Certain Shares (See
Instructions) [_]
--------------------------------------------------------------------------------
13. Percent of Class Represented by Amount in Row (11)
0.2% (1)
--------------------------------------------------------------------------------
14. Type of Reporting Person (See Instructions)
OO
--------------------------------------------------------------------------------
(1) Calculated based upon 7,878,900 shares of Issuer's Common Stock outstanding
as of the date of execution of the Acquisition Agreement, as set forth therein.
This amendment amends the Schedule 13D dated December 27, 2001 (as previously
amended from time to time, the "Schedule 13D"), and is filed by Samstock/SIT,
L.L.C., a Delaware limited liability company ("Samstock/SIT"), Zell General
Partnership, Inc., an Illinois corporation ("ZGP"), Storage Acquisition Company,
L.L.C., a Delaware limited liability company ("SAC"), EGI-Fund (02-04)
Investors, L.L.C., a Delaware limited liability company ("Fund 02-04"), and
Joseph Gantz, an individual ("Gantz"), with respect to the common stock, $0.01
par value (the "Common Stock"), of Home Products International, Inc., a Delaware
corporation ("Issuer"), which has its principal executive offices at 4501 West
47th Street, Chicago, Illinois 60632.
Schedule 13D is hereby amended to add EGI-Managing Member (02-04), L.L.C., a
Delaware limited liability company ("Managing Member"), SZ Investments, L.L.C.,
a Delaware limited liability company ("SZ Investments"), and Chai Trust Company,
L.L.C., an Illinois limited liability company ("Chai"; together with
Samstock/SIT, ZGP, SAC, Fund 02-04, Gantz, Managing Member and SZ Investments,
the "Reporting Persons") as Reporting Persons, and to amend Items 3, 4, 6 and 7
of the Schedule 13D as follows:
ITEM 3. Source and Amount of Funds or Other Consideration
Item 3 is hereby amended by adding the following thereto:
The Tender Offer described in Item 4 below will be funded with the working
capital of SAC. Assuming all outstanding shares of Common Stock are accepted for
payment in the Tender Offer, approximately $17,700,000 will be paid by SAC to
the sellers tendering shares of Common Stock in the Tender Offer.
Fund 02-04, Walnut Investment Partners, L.P. a Delaware limited partnership
("Walnut"), and Triyar Capital, LLC, a Delaware limited liability company
("Triyar"), which is the managing member of Triyar Storage Investment Company,
LLC, a Delaware limited liability company ("TSIC"), have each entered into
separate Agreements Regarding Funding, described below, with Issuer providing
for contributions to the capital of SAC sufficient to fund the purchase of
shares of Common Stock tendered in the Tender Offer.
Separately, Fund 02-04, Walnut, TSIC, and Gantz have entered into the Investors
Agreement, described below, with respect to their relative obligations to make
contributions to the capital of SAC prior to consummation of the Tender Offer
and to provide for the funding of expenses and other amounts that SAC may incur
or become liable for in connection with the Tender Offer. The Investors
Agreement contemplates that other investors may be added as members to SAC prior
to the consummation of the Tender Offer. Contributions to SAC by Fund 02-04,
Walnut and TSIC will be made from the working capital of such entities.
Contributions to SAC by the other contributing members of SAC will be made from
the personal funds of such persons.
ITEM 4. PURPOSE OF THE TRANSACTION
Item 4 is hereby amended by adding the following thereto:
On October 28, 2004, SAC and the Issuer entered into an Acquisition Agreement
(the "Acquisition Agreement"), pursuant to the terms of which SAC has agreed to
commence a tender offer to purchase for cash all of the issued and outstanding
shares of Common Stock of the Issuer at a price of $2.25 per share of Common
Stock (the "Tender Offer"). A copy of the Acquisition Agreement is attached
hereto as Exhibit 7. The Tender Offer is subject to a minimum tender of eighty
percent (80%) of the shares of Common Stock that are outstanding immediately
prior to the "Share Acceptance" (as such term is defined therein) and are not
held by any member of a "Filing Group" (as such term is defined therein)
(determined on a primary basis, without giving effect to the exercise or
conversion of any then-outstanding options, warrants, or other rights to
acquire, or securities convertible into or exercisable for, shares of Common
Stock). The Tender Offer does not provide for any transaction (such as a merger
or stock split) to follow its completion. The conditions precedent to, and the
other material terms of, the Tender Offer are more fully set forth in the
Acquisition Agreement.
The Issuer has advised the Reporting Persons that, prior to the execution of the
Acquisition Agreement, the Issuer terminated the Existing Agreement in
accordance with its terms.
On October 28, 2004, SAC, Fund 02-04, Gantz, Walnut, TSIC and certain other
parties entered into an Investors Agreement (the "Investors Agreement"),
pursuant to the terms of which the members of SAC agreed to make certain
contributions to SAC of cash and/or shares of Common Stock prior to the Share
Acceptance. In addition, on October 28, 2004, each of Fund 02-04, Walnut and
Triyar delivered to the Issuer Agreements Regarding Funding (each, an "Agreement
Regarding Funding"), pursuant to the terms of which Fund 02-04, Walnut and
Triyar agreed, prior to the Share Acceptance, to provide funding to SAC in
amounts set forth therein, or such lesser amount as is necessary to capitalize
SAC with aggregate cash and/or equity investments from all investors in SAC.
Copies of the Investors Agreement and the Agreements Regarding Funding are
attached hereto as Exhibits 8 and 9.
On October 28, 2004, Gantz and SAC entered into a Voting Agreement and an
Irrevocable Proxy (together, the "Voting Agreement") pursuant to the terms of
which SAC granted to Gantz an irrevocable proxy to vote all shares of Common
Stock then owned or thereafter acquired by SAC with respect to the election of
members of the Board of Directors of the Issuer (the "Board"). Under the Voting
Agreement, Gantz has the right to designate a majority of the individuals listed
as "Board Designees" (as such term is defined therein) in the written notice
provided by SAC to the Issuer pursuant to Section 1.03 of the Acquisition
Agreement, and those individuals shall be identified as designees of Gantz in
such notice; provided, that, if the total number of Board Designees is nine (9),
Gantz shall have the right to designate six (6) such members, and SAC shall
retain the right to designate three (3) such members. At each election of
directors thereafter, Gantz shall have a right to designate and direct the vote
for the minimum number of directors necessary to constitute a majority of the
directors then standing for election, and SAC shall have the right to vote for
the balance of such directors. In the case of any vacancy on the Board to be
filled by stockholder action with respect to a director designated by Gantz,
Gantz shall have the right to designate and direct the vote for such director's
successor. In the event of any vacancy on the Board to be filled by stockholder
action with respect to a director designated by SAC, SAC shall have the right to
designate and direct the vote for such director's successor. The term of the
Voting Agreement shall continue until the parties unanimously agree to terminate
the Voting Agreement or until the earliest of (i) the date on which none of the
"Notes" (as such term is defined therein) are outstanding; (ii) the date on
which such Notes and the "Indenture" (as such term is defined therein) are
satisfied and discharged or the Indenture ceases to be in effect; (iii) the date
of defeasance in whole of the Issuer's obligations under the Notes and the
Indenture; and (iv) the death of Gantz. A copy of the Voting Agreement is
attached hereto as Exhibit 10.
On October 28, 2004, SAC, Fund 02-04, Gantz, Walnut and certain other parties
thereto entered into a Board Composition Agreement (the "Board Agreement").
Pursuant to the terms of the Board Agreement, the parties thereto agreed to take
such action as is necessary or appropriate to ensure that, after the Share
Acceptance, the Board consist of a total of nine directors with staggered
membership, such that the term of office of the first class of three directors
expires at the first annual meeting after the Share Acceptance; the term of
office of the second class of three directors expires at the second annual
meeting after the Share Acceptance; the term of office of the third class of
three directors expires at the third annual meeting after the Share Acceptance;
and the subsequent terms of each class expire at the third anniversary of each
such date, respectively. The parties to the Board Agreement also agreed to take
such action to ensure that the Certificate of Incorporation and bylaws of the
Issuer permit the removal of a director by the Issuer's stockholders only for
cause. Furthermore, under the Board Agreement, each party thereto, other than
Gantz, agrees to tender for purchase in the Tender Offer all shares of Common
Stock held by it, or any affiliate thereof, immediately prior to the Share
Acceptance (other than shares of Common Stock which are contributed to SAC prior
to the Share Acceptance). A copy of the Board Agreement is attached hereto as
Exhibit 11.
ITEM 6. CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS OR RELATIONSHIPS WITH RESPECT TO
SECURITIES OF THE ISSUER
Item 6 is hereby amended and restated in its entirety as follows:
Except for the Joint Filing Agreement attached hereto as Exhibit 1, the
Investors' proposal attached hereto as Exhibit 2, the Confidentiality Agreement
attached hereto as Exhibit 3, the Revised Proposal attached hereto as Exhibit 4,
the Amended and Restated Joint Filing Agreement dated October 21, 2004 attached
hereto as Exhibit 5, the Power of Attorney dated October 21, 2004 attached
hereto as Exhibit 6, the Acquisition Agreement attached hereto as Exhibit 7, the
Investors Agreement attached hereto as Exhibit 8, the Agreements Regarding
Funding attached hereto as Exhibit 9, the Voting Agreement attached hereto as
Exhibit 10, the Board Agreement attached hereto as Exhibit 11, the Amended and
Restated Joint Filing Agreement dated October 26, 2004 attached hereto as
Exhibit 12, and the Powers of Attorney dated October 26, 2004 attached hereto as
Exhibit 13, no Reporting Person, nor, to the best knowledge of the Reporting
Persons, SIT, EGI, or any of the persons set forth in Item 2 above, has any
contract, arrangement, understanding or relationship with any person with
respect to any securities of the Issuer.
ITEM 7. MATERIAL TO BE FILED AS EXHIBITS
Item 7 is hereby amended by adding the following:
Exhibit 7- Acquisition Agreement dated October 28, 2004
and made by and between SAC and Issuer
Exhibit 8- Investors Agreement dated October 28, 2004 and
made by and among SAC, Fund 02-04, Gantz, Walnut and
certain other parties thereto
Exhibit 9- Agreements Regarding Funding dated October 28,
2004 and made by Fund 02-04, Walnut and Triyar in
favor of Issuer
Exhibit 10- Voting Agreement and Irrevocable Proxy dated
October 28, 2004 and made by and between Gantz and
SAC
Exhibit 11- Board Composition Agreement dated October 28,
2004 made by and among SAC, Fund 02-04, Gantz, Walnut
and certain other parties thereto
Exhibit 12- Amended and Restated Joint Filing Agreement dated
October 26, 2004 among the Reporting Persons and
Walnut
Exhibit 13- Power of Attorney dated October 26, 2004 by Gantz,
each in favor of F. Mark Reuter, SAC and Fund 02-04
INDEX TO EXHIBITS - SCHEDULE 13D/A
Exhibit 7- Acquisition Agreement dated October 28, 2004
and made by and between SAC and Issuer
Exhibit 8- Investors Agreement dated October 28, 2004 and
made by and among SAC, Fund 02-04, Gantz, Walnut and
certain other parties thereto
Exhibit 9- Agreements Regarding Funding dated October 28,
2004 and made by Fund 02-04, Walnut and Triyar in
favor of Issuer
Exhibit 10- Voting Agreement and Irrevocable Proxy dated
October 28, 2004 and made by and between Gantz and
SAC
Exhibit 11- Board Composition Agreement dated October 28,
2004 made by and among SAC, Fund 02-04, Gantz, Walnut
and certain other parties thereto
Exhibit 12- Amended and Restated Joint Filing Agreement dated
October 26, 2004 among the Reporting Persons and
Walnut
Exhibit 13- Power of Attorney dated October 26, 2004 by Gantz,
each in favor of F. Mark Reuter, SAC and Fund 02-04
EXHIBIT 7
ACQUISITION AGREEMENT
This ACQUISITION AGREEMENT is dated as of October 28, 2004 (this "Agreement"),
by and between Storage Acquisition Company, L.L.C., a Delaware limited liability
company ("Acquirer"), and Home Products International, Inc., a Delaware
corporation (the "Company"). Certain defined terms are defined below in Section
8.03.
WHEREAS, Acquirer has proposed acquiring all of the outstanding shares (the
"Shares") of common stock, par value $0.01 per share, of the Company (the
"Company Common Stock") pursuant to the Offer (as defined herein) and at the
price provided for herein as the Offer Price;
WHEREAS, a special committee (the "Special Committee") of the Board of Directors
of the Company (including the Special Committee, the "Company Board") and the
Board of Directors of Acquirer each have approved, and determined that it is in
the best interests of their respective companies and stockholders to consummate,
the Offer and the other transactions provided for herein;
WHEREAS, the Company and Acquirer desire to make certain representations,
warranties, covenants and agreements in connection with the Offer and also to
prescribe various conditions to the consummation of the Offer; and
WHEREAS, immediately prior to the execution of this Agreement, the Company
terminated the Agreement and Plan of Merger, dated as of June 2, 2004, with JRT
Acquisition Company in accordance with its terms.
NOW, THEREFORE, in consideration of the foregoing and the representations,
warranties, covenants and agreements set forth herein, and for other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, intending to be legally bound hereby, the parties hereto agree as
follows:
ARTICLE I
TENDER OFFER
Section 1.01 The Offer.
(a) Provided this Agreement shall not have been terminated in accordance with
Section 7.01 and subject to the conditions of this Agreement set forth in
Section 6.01 as promptly as practicable, but in no event less than ten (10)
business days after the public announcement of the execution of this Agreement,
Acquirer shall commence (within the meaning of Rule 14d-2 under the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), an offer (the "Offer") to
purchase for cash all of the issued and outstanding Shares at a price of $2.25
per Share, net to the seller in cash (such price, or such other price per Share
as may be paid in the Offer, being referred to herein as the "Offer Price"),
subject to reduction only for any applicable federal back-up withholding or
stock transfer taxes payable by such seller. The Company shall not tender Shares
held by it or any of its Subsidiaries pursuant to the Offer. Acquirer shall, on
the terms and subject to the prior satisfaction or waiver of the conditions to
the Offer set forth in Section 6.01, and to its rights to extend the Offer under
Section 1.01(b), accept for payment and pay for Shares tendered as soon as it is
legally permitted to do so under applicable law.
(b) The Offer shall be made by means of an offer to purchase (the "Offer to
Purchase") containing the terms set forth in this Agreement and the conditions
set forth in Section 6.01 hereto and providing for an initial expiration date
(the "Expiration Date", which term shall also indicate any later date to which
the Offer is extended in accordance with this Agreement) of twenty (20) business
days (as defined in Rule 14d-1 under the Exchange Act) from the date of
commencement of the Offer. Acquirer shall not decrease the Offer Price or
decrease the number of Shares sought in the Offer, amend the conditions to the
Offer set forth in Section 6.01 or impose conditions to the Offer in addition to
those set forth in Section 6.01, without the prior written consent of the
Company, authorized by the Special Committee. Acquirer shall (which will not
require the consent of the Company), (A) extend the Offer for the shortest time
periods which it reasonably believes are necessary, in one or more such periods,
if any, to satisfy any such condition that has not by then been satisfied (or
waived by Acquirer in its discretion to the extent permitted by Section 6.03)
and (B) if, on the Expiration Date, the number of Shares validly tendered and
not withdrawn pursuant to the Offer is less than eighty-five percent (85%) of
the Shares that are outstanding and not held by any member of a Filing Group
(determined on a fully diluted basis, after giving effect to the exercise or
conversion of all options, rights and securities exercisable or convertible into
voting securities of the Company), extend the Offer for up to ten (10) business
days, notwithstanding that all the conditions to the Offer were satisfied as of
the date such extension. In addition, (A) the Offer Price may be increased, in
which event the Offer shall be extended to the extent required by law in
connection with such increase, in each case without the consent of the Company,
and (B) Acquirer may, under the terms of the Offer, provide for a subsequent
offering period of up to ten (10) business days in accordance with Rule 14d-11
of the Exchange Act following the Share Acceptance.
(c) On the date the Offer is commenced, Acquirer shall file with the United
States Securities and Exchange Commission (the "SEC") a Tender Offer Statement
on Schedule TO with respect to the Offer (together with all amendments and
supplements thereto and including the exhibits thereto, the "Schedule TO"). The
Schedule TO shall contain or shall incorporate by reference the Offer to
Purchase and a form of letter of transmittal and summary advertisement (the
"Schedule TO, the Offer to Purchase and related letter of transmittal and
related summary advertisement, together with any amendments and supplements
thereto, collectively the "Offer Documents"). The Offer Documents shall comply
in all material respects with the provisions of applicable federal securities
laws and, on the date filed with the SEC and on the date first published, sent
or given to the Company's stockholders, shall not 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 were made, not misleading, except that no
representation shall be made by Acquirer with respect to information supplied by
the Company for inclusion in the Offer Documents. Acquirer shall further take
all steps necessary to cause the Offer Documents to be filed with the SEC and to
be disseminated to holders of Shares, in each case as and to the extent required
by applicable federal securities laws. Each of Acquirer and the Company shall
promptly correct any information provided by it for use in the Offer Documents
if and to the extent that it shall have become false and misleading in any
material respect prior to the Expiration Date and Acquirer further shall take
all steps necessary to cause the Offer Documents as so corrected to be filed
with the SEC and to be disseminated to holders of Shares, in each case as and to
the extent required by applicable federal securities laws. The Company and its
counsel shall be given an opportunity to review and comment upon the Offer
Documents (and shall provide any comments thereon as soon as practicable) prior
to the filing thereof with the SEC. In addition, Acquirer shall provide to the
Company and its counsel in writing any comments that Acquirer or its counsel may
receive from the SEC or its staff with respect to the Offer Documents promptly
after receipt of such comments and copies of any written responses and
telephonic notification of any verbal responses by Acquirer or its counsel.
(d) Prior to the Share Acceptance, there shall have been contributed to
Acquirer, or shall have been properly tendered and not withdrawn in the Offer,
all Shares beneficially owned by any member of Acquirer or any member of a group
that has filed a Schedule 13D under the Exchange Act (a "Filing Group") as to
which Acquirer or any of its members is a signatory (except for 1530 Shares
owned by one member of the Acquirer Group).
Section 1.02 Company Actions.
(a) The Company hereby approves of and consents to the Offer. The Company has
been authorized by Mesirow Financial, Inc. to permit the inclusion of the
fairness opinion referenced in Section 2.09 (including a description thereof) in
the Offer Documents. The Company hereby consents to the inclusion in the Offer
Documents of the recommendation of the Special Committee and the Company Board
described in Sections 2.04(b) and (c).
(b) Concurrently with the commencement of the Offer or as promptly thereafter as
practicable, the Company shall file with the SEC a Solicitation/ Recommendation
Statement on Schedule 14D-9 (together with all amendments and supplements
thereto and including the exhibits thereto, the "Schedule 14D-9") which shall
contain the recommendations referred to in Sections 2.04(b) and (c). The
Schedule 14D-9 shall comply in all material respects with the provisions of
applicable federal securities laws and, on the date filed with the SEC and on
the date first published, sent or given to the Company's stockholders, shall not
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 were made, not
misleading, except that no representation is or shall be made by the Company
with respect to information supplied by Acquirer or any other member of the
Acquirer Group or their Representatives, for inclusion in the Schedule 14D-9.
The Company further shall take all steps necessary to cause the Schedule 14D-9
to be filed with the SEC and to be disseminated to holders of Shares, in each
case as and to the extent required by applicable federal securities laws, and
shall mail such Schedule 14D-9 to the stockholders of the Company promptly after
commencement of the Offer. Each of the Company and Acquirer shall promptly
correct any information provided by it for use in the Schedule 14D-9 if and to
the extent that it shall have become false and misleading in any material
respect and the Company further shall take all steps necessary to cause the
Schedule 14D-9 as so corrected to be filed with the SEC and to be disseminated
to holders of Shares, in each case as and to the extent required by applicable
federal securities laws. Acquirer and its counsel shall be given an opportunity
to review and comment upon the Schedule 14D-9 (and shall provide any comments
thereon as soon as practicable) prior to the filing thereof with the SEC. In
addition, the Company shall provide to Acquirer and its counsel in writing any
comments that the Company or its counsel may receive from the SEC or its staff
with respect to the Schedule 14D-9 promptly after receipt of such comments and
copies of any written responses and telephonic notification of any verbal
responses by the Company or its counsel.
(c) In connection with the Offer, the Company shall promptly furnish or cause to
be furnished to Acquirer mailing labels, security position listings and any
available listing or computer file containing the names and addresses of the
record holders of the Shares as of a recent date, and shall promptly furnish, or
cause to be furnished, to Acquirer such additional information, including
updated lists of stockholders, mailing labels and security position listings,
and such other information and assistance as Acquirer or its agents may
reasonably request in communicating the Offer to the stockholders of the
Company.
Section 1.03 Directors. Prior to the filing by the Company of the Schedule
14D-9, Acquirer shall give the Company written notice of the names of those
individuals (the "Board Designees") whom Acquirer has designated (including
those designated by another member of the Acquirer Group pursuant to the Board
Authorizing Agreements) to be the members of the Company Board as and from the
first acceptance for payment by Acquirer of Shares tendered pursuant to the
Offer (the "Share Acceptance"). Acquirer shall be solely responsible for any
information with respect to itself and the Board Designees required by Section
14(f) of the Exchange Act and Rule 14f-1 promulgated thereunder and the Company
shall include such information, as well as the information required with respect
to itself and its officers and directors by Section 14(f) and Rule 14f-1, in the
Schedule 14D-9. The Company shall, upon request by Acquirer, take such action as
is necessary so that, effective as and from the Share Acceptance, the size of
the Company Board shall be increased as necessary to equal the number of Board
Designees and the Company Board shall consist solely of the Board Designees (who
thereafter shall serve until the earlier of their resignation or removal or
until their respective successors are duly elected and qualified, as the case
may be), and the Board Designees shall be approved as successors to the
directors in office as of immediately prior to the Share Acceptance.
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
In order to induce Acquirer to enter into this Agreement and make the Offer, the
Company represents and warrants to Acquirer that, except to the extent set forth
in any of the Company SEC Documents (as defined below) and except as set forth
in the letter dated as of the date of this Agreement from the Company to
Acquirer (the "Company Disclosure Letter"):
Section 2.01 Organization, Standing and Power. The Company and each of its
subsidiaries (the "Company Subsidiaries") (a) is duly organized, validly
existing and in good standing under the laws of the jurisdiction in which it is
organized, (b) has full corporate or other power, as the case may be, and
authority to transact its business as presently conducted, (c) possesses all
governmental franchises, licenses, permits, authorizations and approvals
necessary to enable it to own, lease or otherwise hold its properties and assets
and to conduct its business as presently conducted, and (d) is duly qualified to
do business in each jurisdiction where the nature of its business or the
ownership or leasing of its properties make such qualification necessary, except
in the case of clauses (c) and (d) above for failures which, individually or in
the aggregate, would not have or result in a Company Material Adverse Effect.
The Company has made available to Acquirer and its Representatives (as defined
in Section 8.03) true and complete copies of the certificate of incorporation of
the Company, as amended through the date of this Agreement (as so amended, the
"Company Charter"), and the by-laws of the Company, as amended through the date
of this Agreement (as so amended, the "Company By-laws"), and the comparable
charter and organizational documents of each Company Subsidiary, in each case as
amended through the date of this Agreement.
Section 2.02 Company Subsidiaries; Equity Interests. Section 2.02 of the Company
Disclosure Letter sets forth, as of the date of this Agreement, a list of each
Company Subsidiary and its jurisdiction of organization. All the outstanding
shares of capital stock of each Company Subsidiary (a) are duly authorized and
have been validly issued and are fully paid and nonassessable, as applicable,
and free of preemptive rights and (b) are owned by the Company, by another
Company Subsidiary or by the Company and another Company Subsidiary, free and
clear of all pledges, liens, charges, mortgages, encumbrances and security
interests of any kind or nature whatsoever (collectively, "Liens"), except in
the case of subsections (a) and (b) for failures which, individually or in the
aggregate, would not have or result in a Company Material Adverse Effect. There
are no Contracts (as defined in Section 2.05(a)) or arrangements with respect to
the ownership, voting or disposition of any shares of stock of any Company
Subsidiary.
Section 2.03 Capital Structure.
(a) The authorized capital stock of the Company consists of 15,000,000 shares of
Company Common Stock and 500,000 shares of preferred stock, par value $0.01 per
share (the "Company Preferred Stock"), and together with the Company Common
Stock, the "Company Capital Stock"). On the date hereof, (i) 7,878,900 shares of
Company Common Stock were issued and outstanding, (ii) 822,394 shares of Company
Common Stock were held by the Company in its treasury, (iii) 864,216 shares of
Company Common Stock were subject to outstanding and unexercised options to
purchase shares of Company Common Stock issued under any Company Stock Plan
(collectively, the "Company Stock Options"), (iv) 151,610 shares of Company
Common Stock were reserved for issuance pursuant to future awards under the
Company's 1999 Directors' Restricted Stock Plan and the Company's Executive
Incentive Plan, (v) 1,132,554 additional shares of Company Common Stock were
available for issuance under the Company Stock Plans, (vi) 79,204 shares of
Company Common Stock were subject to outstanding warrants held by GE Capital
Corporation and Deutsche Bank Securities, Inc., (vii) 389,374 shares of Company
Common Stock were reserved for issuance under the Company's Employee Stock
Purchase Plan, (viii) no shares of Company Common Stock were reserved for and
subject to issuance in connection with the rights (the "Company Rights") issued
pursuant to the Rights Agreement dated as of May 21, 1997, between the Company
and ChaseMellon Shareholder Services L.L.C., as Rights Agent (the "Company
Rights Agreement") and (ix) no shares of Company Preferred Stock were issued and
outstanding. Except as set forth above, as of the date of this Agreement and as
of the Closing Date, no other shares of Company Capital Stock were issued,
reserved for issuance or outstanding.
(b) Section 2.03(b) of the Company Disclosure Letter sets forth a true and
complete list, as of the close of business on October 19, 2004, of all
outstanding Company Stock Options and all other rights, if any, issued or
granted by the Company to purchase or receive Company Capital Stock or stock in
any Company Subsidiary, the number of shares subject thereto, the grant dates
and exercise prices thereof and the names of the holders thereof. The Company
has made available to Acquirer and its Representatives true and complete copies
of all forms of option agreements governing Company Stock Options. During the
period from January 1, 2004 to the date of this Agreement, there have been no
issuances by the Company of shares of Company Capital Stock other than issuances
of shares of Company Common Stock pursuant to the exercise of Company Stock
Options outstanding on such date pursuant to the terms thereof.
(c) All outstanding shares of Company Capital Stock are, and all such shares
that may be issued prior to the Share Acceptance will be when issued, duly
authorized, validly issued, fully paid and nonassessable and not subject to or
issued in violation of any purchase option, call option, right of first refusal,
preemptive right, subscription right or any similar right under any provision of
the Delaware General Corporation Law (the "DGCL"), the Company Charter, the
Company By-laws or any Contract to which the Company is a party or otherwise
bound.
(d) 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 holders of Company Common
Stock may vote ("Voting Company Debt"). Except for the Company Stock Options and
the Company Rights, there are no options, warrants, calls, rights, convertible
or exchangeable securities, "phantom" stock rights, stock appreciation rights,
stock-based performance units, profit participation rights, rights of
repurchase, other rights (other than rights that may have arisen under a Company
Stock Plan) linked to the price of Company Capital Stock, or commitments,
Contracts, arrangements or undertakings of any kind to which the Company or any
Company Subsidiary is a party or by which any of them is bound (i) obligating
the Company or any Company Subsidiary to issue, deliver, sell or grant, or cause
to be issued, delivered, sold or granted additional shares of capital stock or
other voting securities or equity interests in, or any security convertible or
exchangeable into or exercisable for any capital stock of or other voting
security or equity interest in, the Company or any Company Subsidiary or any
Voting Company Debt, or (ii) obligating the Company or any Company Subsidiary to
issue, grant, extend or enter into any such option, warrant, call, right,
security, unit, commitment, Contract, arrangement or undertaking. There are not
any outstanding contractual obligations of the Company or any Company Subsidiary
to repurchase, redeem or otherwise acquire any shares of capital stock of the
Company or any Company Subsidiary. The Company has made available to Acquirer
and its Representatives a true and complete copy of the Company Rights
Agreement, as amended to the date of this Agreement.
(e) Neither the Company nor any Company Subsidiary is a party to any voting
agreement, irrevocable proxy or other agreement with respect to the voting of
the Company Capital Stock.
(f) On the date hereof, the number of holders of record of outstanding Shares
was less than 300.
Section 2.04 Authority; Execution and Delivery; Enforceability.
(a) The Company has all requisite corporate power and authority to execute and
deliver this Agreement and to consummate the Offer and the other transactions
contemplated by this Agreement (the "Transactions") that are to be consummated
by the Company, all in accordance with the terms of this Agreement. The
execution and delivery by the Company of this Agreement and the consummation by
the Company of the Transactions in accordance with the terms of this Agreement
have been duly authorized by all necessary corporate action on the part of the
Company and no other corporate proceedings on the part of the Company are
necessary to approve this Agreement or to consummate the Transactions. The
Company has duly executed and delivered this Agreement, and, assuming due
execution and delivery hereof by Acquirer, this Agreement constitutes the legal,
valid and binding obligation of the Company, enforceable against it in
accordance with its terms, subject to bankruptcy, insolvency, fraudulent
transfer, moratorium and other similar Laws of general applicability relating to
or affecting creditors' rights and to general equity principles.
(b) The Special Committee, which consists of all the non-employee members of the
Company Board, at a meeting duly called and held, duly and unanimously adopted
resolutions (i) determining that the terms and conditions of the Offer and the
other Transactions are fair to, and in the best interest of, the Company's
stockholders, (ii) approving this Agreement, (iii) recommending that the Board
of Directors of the Company approve this Agreement, and (iv) recommending that
the Board of Directors of the Company resolve to recommend that the Company's
stockholders accept the Offer and tender their Shares thereunder to Acquirer.
(c) The Board of Directors of the Company, at a meeting duly called and held,
duly adopted resolutions (i) determining that the terms of the Offer and the
other Transactions are fair to, and in the best interests of, the Company's
stockholders, (ii) approving this Agreement, and (iii) recommending that the
Company's stockholders accept the Offer and tender their Shares thereunder to
Acquirer. Such resolutions and the previous actions taken by the Company Board
are sufficient to render inapplicable the provisions of Section 203 of the DGCL
to (A) this Agreement, (B) the consummation of the Offer and (C) the other
Transactions. No other state takeover statute or similar statute or regulation
applies or purports to apply to the Company with respect to this Agreement, the
Offer or any other Transaction.
Section 2.05 No Conflicts; Consents.
(a) The execution and delivery of this Agreement by the Company does not, and
the consummation of the Transactions will not, (i) violate any statute, law,
ordinance, rule or regulation ("Law") or any judgment, order or decree
("Judgment"), in each case applicable to the Company or by which its property is
bound, (ii) violate the certificate of incorporation or by-laws (or comparable
organizational document) of the Company or any Company Subsidiary, or (iii)
result in any breach of or constitute a default (or an event which with notice
or lapse of time or both would become a default) under, or give others any
rights of termination or cancellation of, or result in the creation of a Lien
(other than a Permitted Lien) on any of the properties or assets of the Company
or any Company Subsidiary under any provision of any contract (whether written
or oral), lease, license, indenture, note, bond, agreement, permit, concession,
franchise or other instrument (other than a Company Benefit Plan) or permit to
which the Company or any Company Subsidiary is a party or by which any of their
respective properties or assets is bound (collectively, "Contracts"), except in
the case of clauses (i) and (iii) for violations, breaches or defaults which,
individually or in the aggregate, would not have or result in a Company Material
Adverse Effect.
(b) No consent, approval, license, permit, order or authorization ("Consent")
of, or registration, declaration or filing with, or permit from, any domestic or
foreign (whether national, federal, state, provincial, local or otherwise)
government or any court of competent jurisdiction, administrative agency or
commission or other governmental authority or instrumentality, domestic or
foreign (each, a "Governmental Entity") is required to be obtained or made by
the Company or any Company Subsidiary in connection with the execution, delivery
and performance of this Agreement by the Company or the consummation of the
Transactions, the failure of which to submit or obtain would, individually or in
the aggregate, have or result in a Company Material Adverse Effect, other than
(i) the filing with the SEC of the Schedule TO and the Schedule 14D-9 and such
reports under Sections 13 and 16 of the Exchange Act as may be required in
connection with this Agreement and the Transactions, (ii) such filings as may be
required in connection with the Taxes described in Section 5.08, (iii) such
filings as may be required under the rules and regulations of The NASDAQ Stock
Market, Inc., (iv) requirements, if any, under Competition Laws, (v) applicable
state securities or "blue sky" laws and the securities laws of any foreign
country and (vi) such other items required solely by reason of the participation
of Acquirer or its stockholders or affiliates in the Transactions.
(c) The Company and the Company Board have taken such action as is necessary to
(i) render the Company Rights inapplicable to (A) this Agreement, (B) the Offer
and (C) the other Transactions, and (ii) ensure that (A) neither of Acquirer nor
any of its members, affiliates or associates is or will become an "Acquiring
Person" (as defined in the Company Rights Agreement) by reason of this
Agreement, the consummation of the Offer or any other Transaction and (B) a
"Distribution Date" (as defined in the Company Rights Agreement) shall not occur
by reason of this Agreement, the Offer or any other Transaction.
Section 2.06 SEC Documents; Undisclosed Liabilities.
(a) The Company has filed all reports, schedules, forms, statements and other
documents required to be filed by the Company with the SEC since January 1, 2003
(the "Company SEC Documents").
(b) As of its respective date, each Company SEC Document complied as to form in
all material respects with the requirements of the Exchange Act or the
Securities Act of 1933, as amended (the "Securities Act"), as the case may be,
and the rules and regulations of the SEC promulgated thereunder applicable to
such Company SEC Document, and did not contain any untrue statement of a
material fact or omit to state a material fact required to be stated therein or
necessary in order to make the statements therein, in light of the circumstances
under which they were made, not misleading, except to the extent modified or
corrected prior to the date hereof by a subsequently filed Company SEC Document.
The consolidated financial statements, including the notes thereto (the "Company
Financial Statements"), of the Company included in the Company SEC Documents
comply in all material respects with applicable accounting requirements and the
published rules and regulations of the SEC with respect thereto, were prepared
in accordance with generally accepted accounting principles ("GAAP") (except, in
the case of unaudited statements, as permitted by Form 10-Q of the SEC) applied
on a consistent basis during the periods involved (except as may be indicated in
the notes thereto) and fairly presented the consolidated financial position of
the Company and its consolidated subsidiaries as of the dates thereof and the
consolidated results of their operations and cash flows for the periods then
ended (subject, in the case of unaudited statements, to normal year-end audit
adjustments).
(c) Other than as disclosed in the Company Financial Statements (including the
notes thereto), as of the date of this Agreement, neither the Company nor any
Company Subsidiary has any liabilities or obligations of any nature (whether
accrued, absolute, contingent or otherwise), other than (i) liabilities or
obligations incurred since June 26, 2004 in the ordinary course of business,
(ii) liabilities and obligations relating to, or incurred in connection with,
the Transactions, and (iii) liabilities and obligations which, individually or
in the aggregate, would not have or result in a Company Material Adverse Effect.
(d) Neither the Company nor any Company Subsidiary is a party to, or has any
commitment to become a party to, any joint venture, partnership agreement or any
similar Contract (including without limitation any Contract relating to any
transaction, arrangement or relationship between or among the Company or any
Company Subsidiaries on the one hand, and any unconsolidated Affiliate,
including without limitation any structured finance, special purpose or limited
purpose entity or person, on the other hand) where the purpose or intended
effect of such arrangement is to avoid disclosure of any material transaction
involving the Company or any Company Subsidiaries in the Company's consolidated
financial statements.
(e) Except as disclosed in the Company Financial Statements, there is no
outstanding indebtedness for borrowed money of the Company or any Company
Subsidiary and there are no guarantees by the Company or any Company Subsidiary
of indebtedness of third parties for borrowed money.
Section 2.07 Information Supplied.
(a) At the time the Schedule 14D-9 is filed with the SEC, at any time it is
amended or supplemented or at the time it is first mailed to stockholders of the
Company, the Schedule 14D-9, as amended or supplemented, will comply as to form
in all material respects with the applicable requirements of the Exchange Act
and will not 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 were
made, not misleading, except that no representation or warranty is made by the
Company in this Section 2.07(a) with respect to statements made or incorporated
by reference therein based on information supplied by Acquirer, any other member
of the Acquirer Group or their Representatives for inclusion or incorporation by
reference in such documents.
(b) Each document required to be filed by the Company with the SEC or required
to be distributed or otherwise disseminated by the Company to the Company's
stockholders in connection with the Offer and the other Transactions and any
amendments or supplements thereto, when filed, distributed or disseminated, as
applicable, will comply as to form in all material respects with the applicable
requirements of the Exchange Act and the rules and regulations promulgated
thereunder, except that no representation or warranty is made by the Company
with respect to statements made or incorporated by reference therein based on
information supplied by Acquirer, any other member of the Acquirer Group or
their Representatives for inclusion or incorporation by reference therein.
Section 2.08 Brokers. No broker, investment banker, financial advisor or other
person, other than Mesirow Financial, Inc., the fees and expenses of which will
be paid by the Company, is entitled to any broker's, finder's, financial
advisor's or other similar fee or commission in connection with the Transactions
based upon arrangements made by or on behalf of the Company.
Section 2.09 Opinion of Financial Advisor. Mesirow Financial, Inc. has delivered
an executed opinion to the Special Committee, dated the date of this Agreement,
to the effect that, as of such date and subject to the qualifications and
limitations stated therein, the Offer Price is fair from a financial point of
view to the holders of Shares. The Company has delivered a true and complete
copy of such executed opinion to Acquirer concurrently with the execution of
this Agreement.
Section 2.10 Absence of Certain Changes or Events. Since June 26, 2004 through
the date of this Agreement, and except as contemplated by this Agreement (i) the
Company and the Company Subsidiaries have conducted their respective businesses
only in the ordinary course of business and (ii) there has not been: (A) a
Company Material Adverse Effect; (B) any declaration, setting aside or payment
of any dividend or other distribution (whether in cash, stock or property) with
respect to any of the Company's or any Company Subsidiary's capital stock; (C)
any purchase, redemption or other acquisition of any shares of capital stock or
other securities of the Company or the Company Subsidiaries or the issuance of
any options, warrants, calls, or rights to acquire such shares or securities;
(D) any granting by the Company or any Company Subsidiary to any current or
former director, officer, employee or consultant (1) of any increase in
compensation, bonus or other benefits, or (2) of the right to receive any
severance or termination pay, or increases therein; or (E) any material change
in financial or tax accounting methods.
Section 2.11 Absence of Litigation; Investigations. There are no claims,
actions, suits, proceedings, governmental investigations, inquiries or subpoenas
pending or, to the knowledge of the Company, threatened against the Company or
any Company Subsidiary, or to the knowledge of the Company, any current or
former supervisory employee of the Company or any of its Subsidiaries with
respect to any acts or omissions in connection with their employment with the
Company or any of its Subsidiaries, or any properties or assets of the Company
or of any Company Subsidiaries. Neither the Company nor any Company Subsidiary
is subject to any outstanding order, judgment, writ, injunction or decree that
could reasonably be expected to result in a Company Material Adverse Effect or
is reasonably expected to prevent or delay the consummation of the Transactions.
There have not been since January 1, 2002, nor are there currently, any internal
investigations being conducted by management of the Company, the Company Board
or any third party or Governmental Entity at the request of the Company Board
concerning any financial, accounting, Tax, conflict of interest, self-dealing,
fraudulent or deceptive conduct or other misfeasance or malfeasance issues.
Section 2.12 Permits; Compliance with Applicable Laws. The Company and the
Company Subsidiaries hold all permits, licenses, variances, exemptions,
certificates, authorizations, orders and approvals of all Governmental Entities
which are necessary to the lawful operation of the respective business of the
Company and its Subsidiaries (the "Permits"), except where the failure to hold
such Permits could not reasonably be expected to result in a Company Material
Adverse Effect. All such Permits are in full force and effect and the Company
and the Company Subsidiaries are in compliance with the terms of the Permits and
all applicable statutes, laws, ordinances, rules and regulations, judgments and
decrees, except where the failure so to maintain such Permits or so to comply
could not reasonably be expected to result in a Company Material Adverse Effect.
The Company has not received any written notice (that is existing and in effect
as of the date of this Agreement) to the effect that the Company or any of its
Subsidiaries is not in compliance with the terms of the Permits or any such
statutes, laws, ordinances, rules, or regulations.
Section 2.13 Labor Matters.
(a) Section 2.13 of the Company Disclosure Letter sets forth the names, hire
dates and titles, employer name, locality of residence (city or town, state or
province, and country), annual salary rate and 2003 total compensation of all of
the Company's and the Company Subsidiaries' employees who are paid an annual
base salary of at least $100,000, as of September 15, 2004, and summary
information with respect to the other employees of the Company and the Company
Subsidiaries (including numbers of employees by category). No present or former
employee of the Company or any Company Subsidiary is the beneficiary of any
currently effective written employment agreement or severance agreement or
similar agreement or arrangement other than as set forth in Section 2.14(a) of
the Company Disclosure Letter.
(b) Section 2.13(b) of the Company Disclosure Letter sets forth a list of all
agreements with labor unions or associations representing employees of the
Company or any Company Subsidiaries. Neither the Company nor any Company
Subsidiary is involved in, or to the Company's knowledge, threatened with any
work stoppage, labor dispute, arbitration, lawsuit or administrative proceeding
relating to labor matters involving the employees of the Company or any Company
Subsidiary that would, individually or in the aggregate, have or reasonably be
expected to have a Company Material Adverse Effect.
Section 2.14 Employee Benefit Matters.
(a) Section 2.14(a) of the Company Disclosure Letter lists (i) each currently
outstanding loan from the Company to any employee, officer or director of the
Company or any Subsidiary, as well as (ii) each pension, profit and retirement
savings, cafeteria, severance, disability, death, medical, welfare or other
benefit plan, program or arrangement (whether oral or written) that is an
"employee benefit plan," as defined in Section 3(3) of Employee Retirement
Income Security Act of 1974, as amended, ("ERISA") that is subject to the
provisions of ERISA (collectively, the "ERISA Benefit Plans") which the Company
or any entity, trade or business that is, together with the Company, required to
be treated as a single employer pursuant to Section 414 of the Code or Section
4001 of ERISA (a "Controlled Group Member") sponsors or maintains or to which
the Company or such entity, trade or business is required to contribute, (iii)
each deferred compensation, cash bonus, stock bonus, performance or other
incentive compensation, severance, vacation, paid time off or paid sick time
benefit plan, program or arrangement (whether oral or written), that is not
governed by ERISA (collectively, the "Non-ERISA Benefit Plans"), providing any
such benefits to any current or former employee, officer or director of the
Company or any Controlled Group Member other than, in the case of former
employees, officers or directors, such benefits for which the Company or any
Controlled Group Member has no current liability or obligation (such plans,
agreements, arrangements described in clauses (ii) and (iii) and related trusts
and related agreements and arrangements being hereinafter referred to as the
"Benefit Plans"). To the extent applicable, the Company has delivered or made
available to Acquirer true and complete copies of all written Benefit Plans,
summary plan descriptions and all financial statements, actuarial reports and
annual reports and returns filed with the Internal Revenue Service or Department
of Labor with respect to the three (3) most recent filings made for such Benefit
Plans prior to the date hereof.
(b) Neither the Company nor any Controlled Group Member has any obligation to
provide health or other welfare benefits to former, retired or terminated
employees, except as specifically required under Section 4980B of the Code or
Part 6 of Subtitle B of Title I of ERISA.
(c) Neither the Company nor any Controlled Group Member maintains, sponsors,
contributes to, or has an obligation to contribute to, or has maintained,
sponsored, contributed to, or had an obligation to contribute to, any "defined
benefit plan" (within the meaning of Section 3(35) of ERISA), any multiemployer
plan (within the meaning of Section 3(37) of ERISA), or any multiple employer
plan (within the meaning of Section 413 of the Code).
(d) No payment made or deemed made by the Company or any Company Subsidiary as a
result of the Transactions will be disallowed as a deduction by the Company or
such Company Subsidiary as a result of the limitations contained in Section 280G
of the Code, and no such payment will be subject to the excise tax pursuant to
Code Section 4999.
(e) Each Benefit Plan has been operated and administered in all material
respects in compliance with its terms and complies, as applicable, in all
material respects with the requirements of ERISA and the Code, and all other
applicable laws. No "prohibited transaction" (within the meaning of Section 406
of ERISA or Section 4975(c) of the Code) has occurred with respect to any ERISA
Benefit Plan. Each Benefit Plan can be amended, discontinued or terminated at
any time (including after the Effective Time) in accordance with its terms,
without liability (other than (A) liability for ordinary administrative expenses
typically incurred in a termination event, or (B) liabilities for which
sufficient assets are set aside in a trust or insurance contract to satisfy such
liabilities or which are accrued on the Company Financial Statements). All
contributions required to be made in connection with any Benefit Plan through
the date hereof have been timely made or, if not yet due, have been accrued on
the Company Financial Statements to the extent required to be accrued thereon.
Section 2.15 Environmental Matters.
(a) Each of the Company and Company Subsidiary possesses in full force and
effect all Environmental Permits necessary to conduct its businesses and
operations as now being conducted, except where the failure to possess and
maintain such Environmental Permits could not reasonably be expected to result
in a Company Material Adverse Effect. None of the Company or any Company
Subsidiary has been notified in writing by any Governmental Entity that any
Environmental Permits will be modified, suspended or revoked, except when such
modification, suspension or revocation could not reasonably be expected to
result in a Company Material Adverse Effect.
(b) Each of the Company and the Company Subsidiaries is in compliance with all
applicable Environmental Laws and the terms and conditions of all Environmental
Permits, except where the failure to so comply could not reasonably be expected
to result in a Company Material Adverse Effect. None of the Company or the
Company Subsidiaries has received any written communication from any
Governmental Entity or other Person that alleges that the Company or any of the
Company Subsidiaries has violated or is, or may be, liable under any
Environmental Law, and which constitutes a potential continuing liability or
obligation of the Company.
(c) There are no past or pending or, to the knowledge of the Company, threatened
Environmental Claims (i) against the Company or any Company Subsidiary or (ii)
against any Person whose liability for any Environmental Claim the Company or
any Company Subsidiary has retained or assumed, either by Contract or by
operation of law, and none of the Company or any Company Subsidiary has
contractually retained or assumed any liabilities or obligations that could
reasonably be expected to result in an Environmental Claim against the Company
or any Company Subsidiary.
(d) There have been no Releases of any Hazardous Materials at, from, in, to, on
or under any real properties currently or, to the knowledge of the Company,
previously owned, leased, or utilized by the Company or any Company Subsidiary,
predecessors, or Affiliates that could reasonably be expected to form the basis
of any Environmental Claim against the Company or any Company Subsidiary.
(e) Neither the Company nor any Company Subsidiary, predecessors or Affiliates
transported or arranged for the transportation, treatment, storage, handling or
disposal of any Hazardous Materials to any off-site location that could
reasonably be expected to result in an Environmental Claim against the Company
or any Company Subsidiary.
(f) There are no (i) underground storage tanks, active or abandoned, (ii)
polychlorinated biphenyl containing equipment or (iii) asbestos containing
material within the leasehold of any site or building utilized by the Company or
any Company Subsidiary that could reasonably be expected to result in an
Environmental Claim against the Company or any Company Subsidiary.
(g) There have been no environmental investigations, studies, material tests,
audits, reviews or other analyses conducted by, on behalf of, the Company or any
of its Subsidiaries, and which are in the possession or control of the Company
or any of its Subsidiaries, which have not been delivered or made available to
Acquirer.
(h) For purposes of this Agreement, the following defined terms shall apply:
(i) "Environmental Claims" means any and all actions, orders, decrees,
suits, demands, directives, claims, Liens, investigations, proceedings or
notices of violation by any Governmental Entity or other Person alleging
potential responsibility or liability arising out of, based on or related
to (1) the presence, Release or threatened Release of, or exposure to, any
Hazardous Materials at any location or (2) circumstances forming the basis
of any violation or alleged violation of any Environmental Law, except in
any case as could not reasonably be expected to have a Company Material
Adverse Effect;
(ii) "Environmental Laws" means all laws, rules, regulations, orders,
decrees, common law, judgments or binding agreements issued, promulgated or
entered into by or with any Governmental Entity with applicable authority
over such matters relating to pollution or protection of the environment or
human health;
(iii) "Environmental Permits" means all permits, licenses, registrations
and other authorizations required under applicable Environmental Laws;
(iv) "Hazardous Materials" means all hazardous, toxic, explosive or
radioactive substances, wastes or other pollutants, including petroleum or
petroleum distillates, asbestos, polychlorinated biphenyls, radon gas and
all other substances or wastes of any nature designated as a danger to
human health or the environment pursuant to any Environmental Law; and
(v) "Release" means any release, spill, emission, leaking, dumping,
injection, pouring, deposit, disposal, discharge, dispersal, leaching or
migration into the environment or within any building, structure, facility
or fixture.
Section 2.16 Contracts; No Defaults.
(a) Each material contract (as defined in Item 601 of Regulation S-K of the SEC)
(collectively, the "Material Contracts") of the Company is enforceable against
the Company or a Company Subsidiary and to the Company's knowledge is
enforceable against the other parties to such Material Contract, in accordance
with its terms, except to the extent it has previously expired in accordance
with its terms or to the extent the enforcement thereof may be limited by
applicable bankruptcy, insolvency, reorganization, moratorium or similar laws
generally affecting the rights of creditors and the application of general
principles of equity or public policy (regardless of whether such enforceability
is considered in a proceeding in equity or at law).
(b) (i) Neither the Company nor any Company Subsidiary has violated or breached,
or committed any default under, any Material Contract, except for violations,
breaches and defaults that have not had and would not reasonably be expected to
result in a Company Material Adverse Effect; and, to the knowledge of the
Company, no other person has violated or breached, or committed any default
under, any Material Contract, except for violations, breaches and defaults that
have not had and would not reasonably be expected to result in a Company
Material Adverse Effect; (ii) to the knowledge of the Company, no event has
occurred, and no circumstance or condition exists, that (with or without notice
or lapse of time) will or would reasonably be expected to, (A) result in a
violation or breach of any of the provisions of any Material Contract, (B) give
any person the right to declare a default or exercise any remedy under any
Material Contract, (C) give any person the right to receive or require a rebate,
chargeback, penalty or change in delivery schedule under any Material Contract,
(D) give any person the right to accelerate the maturity or performance of any
Material Contract, or (E) give any person the right to cancel, terminate or
modify any Material Contract, except in each such case for defaults,
acceleration rights, termination rights and other rights that have not had and
would not reasonably be expected to result in a Company Material Adverse Effect;
and (iii) since June 2, 2004, neither the Company nor any Company Subsidiary has
received any written notice or other communication regarding any actual or
possible violation or breach of, or default under, any Material Contract, except
in each such case for defaults, acceleration rights, termination rights and
other rights that have not had and would not reasonably be expected to result in
a Company Material Adverse Effect.
Section 2.17 Insurance. All physical assets of the Company and the Company
Subsidiaries carried for value on the Company Financial Statements are covered
by fire and other insurance with responsible insurers against such risks and in
such amounts as are reasonable for prudent owners of comparable assets. Neither
the Company nor any Company Subsidiary is in default with respect to any of the
provisions contained in any such policies of insurance or has failed to give any
notice or pay any premium or present any claim under any such insurance policy,
except for such defaults or failures that could not reasonably be expected to
have a Company Material Adverse Effect. The Company has no reason to believe
that any of its insurance policies will not be renewed by the insurer upon the
scheduled expiration of the policy or will be renewed by the insurer only on the
basis that there will be a material increase in the premiums payable in respect
of the policy. The Company has delivered or made available to Acquirer true and
complete copies of all of such insurance policies.
Section 2.18 No Restrictions on Business. Except for this Agreement, there is no
Contract, judgment, injunction, order or decree binding upon the Company or any
Company Subsidiary which has or could reasonably be expected to have the effect
of prohibiting or impairing any significant business practice of the Company or
any Company Subsidiary, acquisition of property by the Company or any Company
Subsidiary or the conduct of business by the Company or any Company Subsidiary
as currently conducted or as currently proposed to be conducted by the Company.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF ACQUIRER
Acquirer represents and warrants to the Company that:
Section 3.01 Organization, Standing and Power. Acquirer was duly formed and is
validly existing and in good standing under the laws of Delaware and has the
requisite power and authority to conduct its business as presently conducted.
Acquirer has made available to the Company a true and complete copy of its
certificate of formation, as amended to date.
Section 3.02 Acquirer.
(a) Since the date of its formation, Acquirer has not carried on any business or
conducted any operations other than the execution of this Agreement, the
performance of its obligations hereunder and matters ancillary thereto. Acquirer
has no subsidiaries.
(b) As of the date of this Agreement, the membership interests that have been
issued by Acquirer have been validly issued, are fully paid and are owned free
and clear of any Lien.
Section 3.03 Authority; Execution and Delivery; Enforceability. Acquirer has all
requisite power and authority to execute and deliver this Agreement and to
consummate the Transactions in accordance with the terms of this Agreement. The
execution and delivery by Acquirer of this Agreement and the consummation of the
Transactions has been duly authorized by all necessary action on the part of
Acquirer or its members and no other proceedings on the part of Acquirer are
necessary to approve this Agreement or to consummate the Transactions. Acquirer
has duly approved this Agreement, the Offer and the other Transactions. Acquirer
has duly executed and delivered this Agreement, and, assuming due execution and
delivery hereof by the Company, this Agreement constitutes the legal, valid and
binding obligation of Acquirer, enforceable against it in accordance with its
terms, subject to bankruptcy, insolvency, fraudulent transfer, moratorium and
other similar Laws of general applicability relating to or affecting creditors'
rights and to general equity principles.
Section 3.04 No Conflicts; Consents. The execution and delivery by Acquirer of
this Agreement does not, and the consummation of the Transactions will not (i)
violate any Law or Judgment in each case applicable to Acquirer or by which any
of its property is bound, (ii) violate the certificate of formation or operating
agreement of Acquirer, or (iii) result in any breach of or constitute a default
(or an event which with notice or lapse of time or both would become a default)
under, or give to others any rights of termination or cancellation of, or result
in the creation of a Lien (other than a Permitted Lien) on any of the properties
or assets of Acquirer pursuant to, any provision of any contract (whether
written or oral), lease, license, indenture, note, bond, agreement, permit,
concession, franchise or other instrument or permit to which Acquirer is a party
or by which any of its properties or assets is bound, except in the case of
clauses (i) and (ii), for failures which would not have or result in an Acquirer
Material Adverse Effect. No Consent of, or registration, declaration or filing
with, or permit from any Governmental Entity is required to be obtained or made
by or with respect to Acquirer in connection with the execution, delivery and
performance of this Agreement thereby or the consummation of the Transactions,
other than (i) the filing with the SEC of the Offer Documents and such reports
under Sections 13 and 16 of the Exchange Act, as may be required in connection
with this Agreement, the Offer and the other Transactions, (ii) requirements, if
any, under Competition Laws, and (iii) such filings as may be required in
connection with the Taxes described in Section 5.08.
Section 3.05 Information Supplied. At the time the Offer Documents are filed
with the SEC, at any time they are amended or supplemented or at the time they
are first mailed to stockholders of the Company, the Offer Documents, as amended
or supplemented, will not 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 were made, not misleading, except that this representation and warranty is
and shall be made by Acquirer in this Section 3.05 solely with respect to
statements made or incorporated by reference therein based on information
supplied by Acquirer, any other member of the Acquirer Group or their
Representatives for inclusion or incorporation by reference in such documents.
None of the information supplied or to be supplied by Acquirer, any other member
of the Acquirer Group or their Representatives for inclusion or incorporation by
reference in the Offer Documents will, at the time any such documents are filed
with the SEC, at any time they are amended or supplemented or at the time they
are first mailed to the Company's stockholders, contain any untrue statement of
a material fact or omit to state a material fact required to be stated therein
or necessary in order to make the statements therein not misleading.
Section 3.06 Brokers. No broker, investment banker, financial advisor or other
person is entitled to any broker's, finder's, financial advisor's or other
similar fee or commission in connection with the Offer and the other
Transactions from any Person other than Acquirer or any other member of the
Acquirer Group based upon arrangements made by or on behalf of Acquirer or any
other member of the Acquirer Group.
Section 3.07 Financing. Acquirer has received, and has provided to the Company,
a true and complete copy of a written financing commitment (which has not
expired or been cancelled, terminated, amended or otherwise modified) from Fleet
Capital Corporation in an amount sufficient to enable the maintenance or
replacement of the Company's current credit facility. At the time of the Share
Acceptance, Acquirer will have monies sufficient for the payment of (i) the
Offer Price in respect of all Shares tendered pursuant to the Offer, (ii) the
Cancellation Consideration in respect of the cancellation of all Company Stock
Options pursuant to Section 5.03, and (iii) all expenses associated with any of
the foregoing (including, but not limited to, applicable Acquirer broker fees
and expenses).
Section 3.08 Board Authorizing Agreements.
(a) Concurrently with the execution and delivery of this Agreement: (i) Acquirer
and the stockholder of the Company named in that certain Voting Agreement by and
between them (the "Voting Agreement") are executing and delivering the Voting
Agreement and Acquirer is executing in favor of such stockholder the irrevocable
proxy provided for therein (the "Proxy"); and (ii) Acquirer and certain other
members of the Acquirer Group named as the initial signatories in that certain
Board Composition Agreement by and among them (the "Board Composition Agreement"
and, together with the Voting Agreement and the Proxy, the "Board Authorizing
Agreements") are executing and delivering the Board Composition Agreement.
(b) True and complete copies of the Board Authorizing Agreements, in the forms
being executed and delivered concurrently herewith, have been furnished to the
Company.
(c) Neither Acquirer nor the stockholder named in the Voting Agreement will
amend or revoke the Voting Agreement or the Proxy prior to the Share Acceptance
or has any plans to do so thereafter.
(d) Each initial party to any Board Authorizing Agreement (a "Subject Party")
has all requisite power and authority to execute and deliver such Board
Authorizing Agreement and to perform its respective obligations thereunder. The
execution, delivery and performance by such Subject Party of such Board
Authorizing Agreement and the performance of such Subject Party's obligations
thereunder have been duly authorized by all necessary action on the part of such
Subject Party and no other proceedings on the part of such Subject Party are
necessary to approve such Board Authorizing Agreement or to consummate the
transactions provided for therein. Such Subject Party has duly approved such
Board Authorizing Agreement. Assuming due execution and delivery thereof by all
other Subject Parties, such Board Authorizing Agreement constitutes the legal,
valid and binding obligation of such Subject Party enforceable against such
Subject Party in accordance with its terms, subject to bankruptcy, insolvency,
fraudulent transfer, moratorium and other similar Laws of general applicably
relating to or affecting creditors' rights and general equitable principles.
ARTICLE IV
COVENANTS RELATING TO CONDUCT OF BUSINESS
Section 4.01 Conduct of Business by the Company.
(a) Except for matters contemplated by this Agreement, from the date of this
Agreement until the Share Acceptance (or the earlier termination of this
Agreement pursuant to Article VII), the Company shall, and shall cause each
Company Subsidiary to, (i) conduct its business in light of the existing
circumstances in the ordinary course, including operating in compliance with Law
and making all required filings with the SEC, (ii) use commercially reasonable
efforts to preserve intact its current business organizations, keep available
the service of its current officers and employees and preserve its current
relationships with customers, suppliers, distributors, lessors, creditors,
employees, contractors and others having material business dealings with it, and
(iii) permit reasonable, on-site access during normal business hours to a
designated representative of Acquirer, which representative shall be Rich
Hassert. Without limiting the generality of the foregoing, except as expressly
provided in this Agreement or as consented to in writing by Acquirer (which
consent will not be unreasonably withheld or delayed), prior to the earlier of
(A) the Share Acceptance and (B) the termination of this Agreement pursuant to
Article VII, neither the Company nor any Company Subsidiary will:
(i) amend its charter and organizational documents;
(ii) authorize for issuance, issue, sell, deliver or agree to commit to
issue, sell or deliver any stock of any class or any other debt or equity
securities or equity equivalents (including any stock options or stock
appreciation rights), except for the issuance and sale of shares of Company
Common Stock pursuant to the exercise of stock options or warrants
outstanding on the date hereof;
(iii) split, combine or reclassify any shares of its capital stock,
declare, set aside or pay any dividends (whether in cash, stock or property
or any combination thereof) in respect of its capital stock, make any other
actual, constructive or deemed distribution in respect of its capital stock
or otherwise make any payments to stockholders in their capacity as such,
or redeem or otherwise acquire any of its securities or any securities of
any of the Company Subsidiaries;
(iv) subject to Section 4.02, adopt a plan of complete or partial
liquidation, dissolution, merger, consolidation, restructuring,
recapitalization or other reorganization of the Company;
(v) (A) incur or assume any long-term or short-term indebtedness for
borrowed money or issue any debt securities in each case, except for
borrowings under existing lines of credit in the Company's ordinary course
of business, or materially modify or agree to any material amendment of the
terms of any of the foregoing; (B) assume, guarantee, endorse or otherwise
become liable or responsible (whether directly, contingently or otherwise)
for the obligations of any other Person except for obligations of the
Company Subsidiaries incurred in the ordinary course of business; (C) make
any loans, advances or capital contributions to or investments in any other
Person (other than to a Company Subsidiary in the ordinary course of
business); (D) pledge or otherwise create or suffer to exist any Lien
(except for a Permitted Lien) with respect to shares of capital stock of
the Company or the Company Subsidiaries or (E) mortgage or pledge any of
its assets, tangible or intangible, or create or suffer to exist any other
Lien thereon except for a Permitted Lien;
(vi) except as otherwise contemplated by this Agreement and except for
increases in salary, wages and benefits granted to employees of the Company
or Company Subsidiaries in conjunction with promotions or other changes in
job status consistent with past practice (other than promotions or other
changes in job status for officers and directors of the Company), or as
required under existing agreements or otherwise made in the ordinary course
of business, and except as may be required by applicable Law, enter into,
adopt or amend or terminate (other than by expiration) any bonus, special
remuneration, compensation, severance, stock option, stock purchase
agreement, retirement, health, life, or disability insurance, severance or
other employee benefit plan agreement, trust, fund or other arrangement for
the benefit or welfare of any director, officer, employee or consultant in
any manner or increase in any manner the compensation or fringe benefits of
any director, officer or employee or pay any benefit not required by any
plan and arrangement as in effect as of the date hereof (including the
granting of stock appreciation rights or performance units); provided,
however, that any incentive or bonus plans or programs for 2005 shall be
permitted only to the extent set forth in Section 4.01(a)(vi) of the
Company Disclosure Letter;
(vii) grant any severance or termination pay to any director, officer,
employee or consultant, except payments made pursuant to written agreements
outstanding on the date hereof, copies of which have been provided to
Acquirer, or as required by applicable federal, state or local law or
regulations;
(viii) (A) acquire, sell, lease, license, transfer or otherwise dispose of
any material assets in any single transaction or series of related
transactions having a fair market value in excess of $250,000 in the
aggregate, other than sales of its products in the ordinary course of
business; or (B) enter into any exclusive license, distribution, marketing,
sales or other agreement;
(ix) except as may be required as a result of a change in applicable Law or
in GAAP, change any of the accounting principles, practices or methods used
by it;
(x) (A) acquire (by merger, consolidation or acquisition of stock or
assets) any corporation, partnership or other entity or division thereof or
any material equity interest therein; (B) amend, modify or waive any
material right under any Material Contract; or (C) authorize any capital
expenditure or expenditures, (aa) in respect of the fourth quarter of 2004,
in excess of already committed and budgeted expenditures plus an additional
$200,000, and (bb) in respect of the first quarter of 2005 in excess of
$1.8 million in the aggregate;
(xi) make or revoke any material tax election or settle or compromise any
income tax liability in excess of $100,000;
(xii) fail to file any Tax returns when due (or, alternatively, fail to
file for available extensions) or fail to cause such Tax returns when filed
to be complete and accurate in all material respects;
(xiii) fail to pay any material Taxes or other material debts when due
unless being contested in good faith and promptly disclosed to Acquirer;
(xiv) settle or compromise any pending or threatened suit, action or claim
that (A) relates to the transactions contemplated hereby; (B) the
settlement or compromise of which would involve more than $250,000 out of
pocket expenses for the Company or any Company Subsidiary; or (C) that
would reasonably be expected to result in a Company Material Adverse
Effect;
(xv) make any material change in its practices, procedures or methods with
respect to billing, collections or payment of accounts, including delaying
payment of any accounts payable or accelerating the collection of any
accounts receivable, except, with respect to delaying payment of any
accounts payable or accelerating the collection of any accounts receivable,
to the extent consistent with past practice; or
(xvi) agree in writing to take any of the actions described in Sections
4.01(a)(i) through (a)(xv).
(b) Except as otherwise permitted by Section 4.02, the Company, on the one hand,
and Acquirer on the other hand, shall not, and shall not permit any of their
subsidiaries or affiliates to, take any action that would, or that is reasonably
likely to, result in any of the representations and warranties of such party set
forth in this Agreement becoming untrue, other than, in the case of the
representations and warranties of the Company, for such failures to be true and
correct that, individually or in the aggregate, have not resulted and are not
reasonably likely to result in the condition in Section 6.01(c) not being
satisfied.
Section 4.02 Company Takeover Proposals.
(a) The Company shall not, nor shall it authorize or permit any Company
Subsidiary to, nor shall it authorize or permit any of its or any Company
Subsidiary's Representatives to, directly or indirectly (i) solicit, initiate,
knowingly encourage or knowingly facilitate any Company Takeover Proposal or any
inquiries or the making of any proposal that constitutes or could reasonably be
expected to lead to a Company Takeover Proposal; or (ii) enter into, continue or
otherwise participate in any discussions or negotiations regarding, or furnish
to any person any information with respect to, or otherwise cooperate in any way
with any Company Takeover Proposal; provided, however, that at any time prior to
the Share Acceptance, the Company may, in response to a bona fide unsolicited
Company Takeover Proposal, and subject to compliance with this Section 4.02: (x)
furnish information with respect to the Company to the person making such
Company Takeover Proposal (and its representatives) pursuant to a
confidentiality agreement that is no less favorable to the Company than the
Confidentiality Agreement between Equity Group Investments, L.L.C. and the
Company dated July 19, 2004, provided that all of such information not
previously supplied to Acquirer is provided to Acquirer on a substantially
concurrent basis; and (y) participate in discussions and negotiations with the
person making such Company Takeover Proposal (and its representatives) regarding
such Company Takeover Proposal, if (1) the Special Committee determines in good
faith, after consultation with outside counsel, that it is required to do so in
order to comply with its fiduciary duties to the Company's stockholders under
applicable law, (2) the Special Committee determines that such Company Takeover
Proposal constitutes a Superior Company Proposal, or a Company Takeover Proposal
that could reasonably be expected to result in a Superior Company Proposal, and
(3) the Company provides Acquirer with notice that it intends to engage in any
of the actions contemplated in clauses (x) and (y) above, identifying the
Company Takeover Proposal and the parties thereto and delivering an accurate
description of all material terms of the Company Takeover Proposal. Without
limiting the foregoing, it is understood that any violation of the restrictions
set forth in this Section 4.02(a) by any director, officer or employee of the
Company or any of its Subsidiaries or any financial advisor, attorney,
accountant or other advisor or representative of the Company or any of its
Subsidiaries shall be deemed to be a breach of this Section 4.02(a) by the
Company.
(b) The Company Board shall not (i) withdraw or modify in a manner adverse to
Acquirer, or propose publicly to withdraw or modify, in a manner adverse to
Acquirer, the recommendation by the Company Board of this Agreement or the
Offer, in each case unless the Company Board determines in good faith, after
consultation with outside counsel, that it is necessary to do so to comply with
its fiduciary duties (any such withdrawal, modification or proposal being
referred to herein as an "Adverse Recommendation Change"), (ii) approve any
letter of intent, agreement in principle, acquisition agreement or similar
agreement relating to any Company Takeover Proposal or (iii) approve or
recommend, or propose publicly to approve or recommend, any Company Takeover
Proposal. Notwithstanding the foregoing, if, prior to the Share Acceptance, the
Company Board receives a Superior Company Proposal, then the Company Board may,
in accordance with Section 7.05(b) below, approve and recommend such Superior
Company Proposal and cause the Company to terminate this Agreement and
concurrently (or substantially contemporaneously) enter into a definitive
agreement providing for the implementation of such Superior Company Proposal.
(c) The Company promptly (but in no event later than 24 hours) shall advise
Acquirer orally and in writing of any Company Takeover Proposal made to the
Company or its Representatives, the Special Committee or a member thereof, or to
a Representative of the Special Committee, the identity of the person making any
such Company Takeover Proposal (including the parties in interest thereto, to
the extent known to the Company or the Special Committee) and the material terms
of any such Company Takeover Proposal. The Company shall keep Acquirer informed
of the status (including any change to the material terms) of any such Company
Takeover Proposal or inquiry.
(d) Nothing contained in this Section 4.02 shall prohibit the Company from
taking any action necessary to comply with Rule 14d-9 or Rule 14e-2(a) of the
SEC or from making any disclosure to the Company's stockholders if, in the good
faith judgment of the Special Committee, after consultation with outside
counsel, failure to so disclose would be inconsistent with its obligations under
applicable Law, it being understood that if any such disclosure constitutes an
Adverse Recommendation Change, Acquirer shall have the rights provided in the
event of an Adverse Recommendation Change.
(e) The Company shall (i) immediately cease discussions or negotiations with any
person conducted heretofore with respect to a Company Takeover Proposal and
existing as of the date of this Agreement and (ii) take all steps necessary to
ensure that any information that may be exchanged after the date hereof shall be
subject to the terms and conditions of this Agreement.
ARTICLE V
ADDITIONAL AGREEMENTS
Section 5.01 Preparation of SEC Documents. As promptly as reasonably practicable
following the date of this Agreement, (i) Acquirer shall provide the Company
with all information with respect to the Acquirer Group as is reasonably
necessary or advisable for inclusion in the Schedule 14D-9, (ii) the Company
shall provide Acquirer with all information with respect to the Company as is
reasonably necessary or advisable for inclusion in the Offer Documents and (iii)
each of the Company and Acquirer shall prepare and, after obtaining the approval
of the other party, which approval shall not be unreasonably withheld, delayed
or conditioned, file with the SEC the Schedule 14D-9 (in the case of the
Company) or the Offer Documents (in the case of Acquirer). Without limiting the
foregoing, each of the Company and Acquirer will take all reasonable steps
necessary or advisable to enable the Offer Documents and Schedule 14D-9 to be
filed with the SEC, as soon as practicable in accordance with Section 1.01
hereof.
Section 5.02 Commercially Reasonable Efforts; Notification. (a) Upon the terms
and subject to the conditions set forth in this Agreement, unless, to the extent
permitted by Section 4.02(b), the Company Board approves or recommends a
Superior Company Proposal, each of the parties hereto shall use its commercially
reasonable efforts to take, or cause to be taken, all actions, and to do, or
cause to be done, and to assist and cooperate with the other party in doing, all
things necessary, proper or advisable to consummate and make effective, in the
most expeditious manner practicable, the Transactions, including (i) the
obtaining of all necessary actions or nonactions, Consents and waivers from
Governmental Entities and the making of all necessary registrations and filings
(including filings with Governmental Entities, if any) and the taking of all
reasonable steps as may be necessary to obtain a Consent or waiver from, or to
avoid an action or proceeding by, any Governmental Entity, (ii) the obtaining of
all necessary consents or waivers from third parties under Contracts, (iii) the
defending of any lawsuits or other legal proceedings, whether judicial or
administrative, challenging this Agreement or the consummation of any of the
Transactions, including seeking to have any stay, order or injunction entered by
any court or other Governmental Entity vacated or reversed and (iv) the
execution and delivery of any additional instruments necessary to consummate the
Transactions and to fully carry out the purposes of this Agreement. In
connection with and without limiting the foregoing, the Company and the Company
Board shall (x) take all action necessary to ensure that no state takeover
statute or similar statute or regulation is or becomes applicable to any
Transaction or this Agreement and (y) if any state takeover statute or similar
statute or regulation becomes applicable to any Transaction or this Agreement,
take all action necessary to ensure that the Transactions may be consummated as
promptly as practicable on the terms contemplated by this Agreement and
otherwise to minimize the effect of such statute or regulation on the
Transactions. Notwithstanding the foregoing, the Company and its Representatives
shall not be prohibited under this Section 5.02 from taking any action permitted
by Section 4.02(b) or (d). Acquirer will use its reasonable efforts to cooperate
with the Company, at the Company's reasonable request, in the performance of the
Company's obligations in clauses (i), (ii) and (iii) above.
Section 5.03 Stock Options; Employee Stock Purchase Plan.
(a) Each outstanding and unexercised option to purchase shares of Company Common
Stock issued under any Company Stock Plan (collectively, the "Company Stock
Options"), whether vested or unvested, as to which an option cancellation
agreement (in form and substance reasonably acceptable to Company and Acquirer)
providing for the cancellation of such option hereunder has been delivered prior
to the Share Acceptance, shall terminate and be canceled as of the Share
Acceptance. In consideration for the cancellation thereof, each person who holds
an exercisable Company Stock Option (including options which, by their terms,
become exercisable as a result of the Transactions hereby) shall be entitled to
receive, in consideration therefor, a cash payment promptly after the Share
Acceptance (the "Cancellation Consideration") equal to the product of (i) the
excess, if any, of the Offer Price over the per share exercise price of such
Company Stock Option, multiplied by (ii) the aggregate number of shares of
Company Common Stock then subject to such Company Stock Option. Prior to the
Share Acceptance, the Company and Acquirer shall cooperate in an effort to
obtain an option cancellation agreement executed by each holder of a Company
Stock Option in form and substance reasonably acceptable to Acquirer and to the
Company. Acquirer shall provide to the Company the funds necessary to pay the
Cancellation Consideration. Substantially concurrent with the payment of the
Cancellation Consideration, the Company shall issue and sell to Acquirer, and
Acquirer shall purchase, for a purchase price equal to the aggregate amount of
all the Cancellation Consideration paid to all such holders, the number of
Shares equal to (x) the aggregate amount of such Cancellation Consideration
divided by (y) the Offer Price.
(b) As promptly as practicable following the Share Acceptance, but in no event
later than five Business Days thereafter, Acquirer shall cause the Cancellation
Consideration to be paid to each holder of Company Stock Options who has not
previously exercised his or her Company Stock Options and who has executed and
delivered an option cancellation agreement. Payment of the Cancellation
Consideration shall be net of any required withholding taxes and no interest
shall be paid or accrue thereon.
(c) Prior to the Share Acceptance, the Company Board shall adopt resolutions, in
form and substance reasonably acceptable to Acquirer, terminating, as of the
Share Acceptance or an earlier date determined by the Company, the Company
Employee Stock Purchase Plan in accordance with its terms.
Section 5.04 Competition Laws. Each of Acquirer and the Company will (i) make
any filings required of such party under Competition Laws with respect to the
Transactions as soon as reasonably practicable or as otherwise required after
the date of this Agreement; (ii) comply at the earliest reasonably practicable
date with any request under Competition Laws for information, documents or other
materials received by such party from any Governmental Entity in respect of the
Transactions; (iii) promptly notify the other of (A) the receipt of any comments
on, or any request of amendments or supplements to, any such filings or
information, documents, or other materials by any Governmental Entity or
official, and (B) any other communications from or with any Governmental Entity
with respect to the Transactions; and (iv) cooperate with the other party in
connection with making any filing under Competition Laws and in connection with
any filings, conferences or other submissions related to resolving any
investigation or other inquiry by any such Governmental Entity under Competition
Laws with respect to the Transactions, including (A) supplying the other with
information which may be required to effectuate any such filings or
applications, (B) keeping the other party apprised of the status of matters
relating to the completion of the Transactions contemplated by this Agreement
and working cooperatively in connection with obtaining any consents from any
Governmental Entity, (C) not participating in any meeting with any Governmental
Entity unless it consults with the other party in advance, to the extent
permitted by such Governmental Entity, and (D) providing copies of all such
documents and correspondence to the non-filing party and its advisors prior to
filing and, if requested, to accept all reasonable additions, deletions or
changes suggested in connection therewith.
Section 5.05 Indemnification.
(a) From and after the Share Acceptance, Acquirer shall cause the Company to
fulfill and honor in all respects the indemnification obligations of the Company
pursuant to the Company Charter, the Company By-laws and any indemnification or
similar agreement to which the Company is a party, each as in effect on the date
hereof, with respect to each present and former Person who serves or served as a
director, officer, employee or agent of the Company or any Company Subsidiary at
any time at or before the Share Acceptance (each, together with such Person's
heirs, executors or administrators, an "Indemnified Person").
(b) Without limiting the generality of Section 5.05(a), from and after the Share
Acceptance, the certificate of incorporation and by-laws of the Company shall
continue to contain provisions with respect to exculpation from liability,
indemnification and advancement of expenses that are at least as favorable to
the Indemnified Persons as those contained in the Company Charter and the
Company By-laws as in effect on the date hereof, which provisions shall not be
amended, repealed or otherwise modified for a period of six years from the Share
Acceptance in any manner that would adversely affect the rights of the
Indemnified Persons who, immediately prior to the Share Acceptance, were
directors and officers of the Company, unless such modification is required by
law.
(c) Prior to the Share Acceptance, the Company shall purchase a fully prepaid
"tail" policy under the Company's existing directors' and officers' liability
insurance policy with American International Group, Inc. ("AIG"), or, if
unavailable from AIG and the current excess carriers, another insurance provider
or providers mutually acceptable to the Special Committee and Acquirer, such
policy or policies to (i) provide for aggregate coverage of at least $15,000,000
at a cost not to exceed $1,000,000, (or, to the extent the cost for such
aggregate coverage would exceed $1,000,000, aggregate coverage for the maximum
amount available on substantially equivalent terms for $1,000,000), (ii) be
effective for a period of six years commencing on the Share Acceptance, and
(iii) otherwise be on terms and conditions reasonably acceptable to the Special
Committee ("Tail Coverage"). Until the sixth anniversary of the Share
Acceptance, Acquirer shall cause the Company (i) to maintain the Tail Coverage
in full force and effect, (ii) not to amend or otherwise modify the Tail
Coverage or take any action that would result in the cancellation, termination,
amendment or modification of the Tail Coverage, and (iii) to continue to honor
its obligations under the Tail Coverage.
(d) If, following the Share Acceptance, the Company or any of its successors or
assigns (i) consolidates with or merges into any other Person and shall not be
the continuing or surviving corporation or entity of such consolidation or
merger, or (ii) transfers all or substantially all of its assets to any Person,
then and in each such case, proper provision shall be made so that the
successors and assigns of the Company or its assets assume (x) the
indemnification obligations set forth in the Company Charter, the Company
By-laws and any indemnification or similar agreement to which the Company is a
party, each as in effect on the date hereof, with respect to each Indemnified
Person; and (y) the obligations set forth in this Section 5.05.
(e) Notwithstanding anything herein to the contrary, if any claim, action, suit,
proceeding or investigation (whether arising before, at or after the Share
Acceptance) is made against any Indemnified Person, the provisions of this
Section 5.05 shall continue in effect until the final disposition of such claim,
action, suit proceeding or investigation.
(f) This Section 5.05 shall continue in effect following the Share Acceptance.
The Company shall reimburse all expenses, including reasonable attorneys' fees
and expenses, incurred by any Person to enforce the Company's obligations under
this Section 5.05. This Section 5.05 is intended to be for the benefit of and to
grant third party rights to Indemnified Persons, whether or not parties to this
Agreement, and each of the Indemnified Persons shall be entitled to enforce the
covenants contained herein. The parties hereto agree that irreparable damage
would occur to the Indemnified Persons in the event that any of the provisions
of this Section 5.05 were not performed in accordance with their specific terms
or were otherwise breached. It is accordingly agreed that each of the
Indemnified Persons shall be entitled to an injunction or injunctions (without
the necessity of posting any bond or other security) to prevent breaches of this
Section 5.05 and to enforce specifically the terms and provisions of this
Section 5.05 in any Illinois state court or any Federal court located in
Chicago, Illinois, this being in addition to any other remedy to which they are
entitled at law or in equity.
(g) The covenants contained in this Section 5.05 shall not be deemed exclusive
of other rights to which an Indemnified Person is entitled, whether pursuant to
Law, contract or otherwise.
Section 5.06 Fees and Expenses.
(a) Except as otherwise provided below, all fees, costs and expenses incurred in
connection with the Transactions shall be paid by the party incurring such fees
or expenses, whether or not the Offer is consummated.
(b) In the event (A) this Agreement is terminated pursuant to Sections
7.01(a)(i) or 7.01(b) and at or prior to such termination (1) Acquirer shall not
have breached this Agreement in any material respect, (2) a Company Takeover
Proposal shall have been publicly announced, commenced or otherwise become
publicly known or any person shall have publicly announced an intention (whether
or not conditional) to make a Company Takeover Proposal, (3) such Company
Takeover Proposal or intention has not been withdrawn and (4) within six (6)
months following the termination of this Agreement, with respect to a
termination of this Agreement pursuant to Section 7.01(b), a definitive
agreement relating to a Company Takeover Proposal is executed by the Company, or
with respect to a termination of this Agreement pursuant to Section 7.01(a)(i),
a Company Takeover Proposal is consummated, (B) Acquirer terminates this
Agreement pursuant to Section 7.01(c) or (C) the Company terminates this
Agreement pursuant to Section 7.05(b), then the Company shall pay Acquirer, by
wire transfer of same day funds to an account designated by Acquirer, an amount
(the "Expense Reimbursement Fee") equal to all out of pocket fees, costs and
expenses, including the reasonable fees and expenses of Acquirer's counsel and
accountants and the fees and expenses of Fleet Capital Corporation and its
counsel, incurred by Acquirer (including such out of pocket fees, costs and
expenses Acquirer has incurred for the benefit of, or has agreed to reimburse
to, or advance for the account of, its members) in connection with (i) the
amendment of the Company's Loan and Security Agreement with Bank of America
Business Capital (f/k/a Fleet Capital Corporation), (ii) the execution of this
Agreement, and (iii) the Transactions (collectively, the "Acquirer Expenses"),
provided that Acquirer has delivered to the Special Committee invoices and other
supporting documentation with respect to such Acquirer Expenses, and provided,
further, that the aggregate amount of such Acquirer Expenses reimbursable by the
Company under this Section 5.06(b) shall be limited to $750,000. For the
avoidance of doubt, in the event of a termination of this Agreement by Acquirer
pursuant to Section 7.01(b), the Expense Reimbursement Fee shall not constitute
liquidated damages, and the payment of the Expense Reimbursement Fee by the
Company to Acquirer shall not relieve the Company of any liabilities or
obligations to Acquirer resulting from or arising in connection with any willful
and material breach by the Company of any representation, warranty or covenant
of the Company set forth in this Agreement.
(c) In case of termination of this Agreement by (i) the Company pursuant to
Section 7.05(b) or (ii) Acquirer pursuant to Section 7.01(c), the Expense
Reimbursement Fee shall be paid by the Company prior to or simultaneous with the
termination of the Agreement. In case of termination of this Agreement by the
Company or Acquirer pursuant to Sections 7.01(a)(i), the Expense Reimbursement
Fee, if applicable, shall be paid by the Company upon the consummation of the
transaction contemplated by the applicable Company Takeover Proposal. In case of
termination of this Agreement pursuant to Section 7.01(b), the Expense
Reimbursement Fee, if applicable shall be paid by the Company upon the execution
of a definitive agreement relating to a Company Takeover Proposal.
(d) Immediately preceding the Share Acceptance, and upon written certification
to the Company from Acquirer that the Share Acceptance will occur immediately
thereafter and confirmation from the Acquirer to the Company that all funds
necessary to pay the Offer Price in respect of Shares tendered pursuant to the
Offer have been deposited with the depositary for the Offer, the Company shall
pay Acquirer, by wire transfer of same day funds to an account designated by
Acquirer, an amount equal to the Acquirer Expenses, provided that Acquirer has
delivered to the Special Committee invoices and other supporting documentation
with respect to such Acquirer Expenses, and provided, further, that the
aggregate amount of such Acquirer Expenses reimbursable by the Company under
this Section 5.06(d) shall be limited to $1,500,000. In the event that this
Agreement is terminated prior to the occurrence of the Share Acceptance,
Acquirer shall repay to the Company, by wire transfer of same day funds to an
account designated by the Company, the amount of the Acquirer Expenses
theretofore paid under this Section 5.06(d) as promptly as practicable and in
any event within one business day.
The Company acknowledges that the agreements contained in this Section 5.06 are
an integral part of the Transactions, and that, without these agreements,
Acquirer would not enter into this Agreement.
Section 5.07 Public Announcements. Acquirer and all other members of the
Acquirer Group, on the one hand, and the Company, on the other hand, shall
consult with each other before issuing, and provide each other the opportunity
to review and comment upon, any press release or other public statements with
respect to the Offer and the other Transactions and shall not issue any such
press release or make any such public statement prior to such consultation,
except as may be required by applicable Law, court process or obligations
pursuant to any listing agreement with The NASDAQ Stock Market, Inc. Further,
Acquirer and all other members of the Acquirer Group, on the one hand, and the
Company, on the other hand, shall consult with each other before holding any
press conferences, analyst calls or other meetings or discussions with respect
to the Transactions.
Section 5.08 Transfer Taxes. All stock transfer, real estate transfer,
documentary, stamp, recording and other similar Taxes (including interest,
penalties and additions to any such Taxes) ("Transfer Taxes") incurred in
connection with the Transactions shall be paid by the Company, and the Company
shall cooperate with Acquirer in preparing, executing and filing any returns
with respect to such Transfer Taxes.
Section 5.09 Rights Agreement. Except as approved in writing by Acquirer or
contemplated by this Agreement, prior to the Share Acceptance the Company Board
shall not (i) amend the Company Rights Agreement, (ii) redeem the Company Rights
or (iii) take any action with respect to, or make any determination under, the
Company Rights Agreement, in each case, unless the Company Board determines in
good faith, after compliance with applicable provisions of this Agreement and
after consultation with outside counsel, that such action is necessary to do so
to comply with its fiduciary duties.
Section 5.10 Delisting. If, following the Share Acceptance, the Company Common
Stock is eligible, or required, to be delisted from the NASDAQ SmallCap Market
under the applicable rules thereof, the Company and Acquirer acknowledge that
such delisting shall be effected by the Company.
Section 5.11 Conveyance Taxes. Acquirer and the Company shall cooperate in the
preparation, execution and filing of all returns, questionnaires, applications
or other documents regarding any real property transfer or gains, sales, use,
transfer, value added, stock transfer or stamp taxes, any transfer, recording,
registration or other fees or any similar taxes which become payable in
connection with the Transactions that are required or permitted to be filed on
or before the Effective Time. All such taxes will be paid by the party bearing
the legal responsibility for such payment.
Section 5.12 Acquirer. Prior to the Share Acceptance, Acquirer shall not conduct
any business or make any investments other than as specifically contemplated by
or in furtherance of this Agreement, or incur or guarantee any indebtedness
other than as necessary for the consummation of the Transactions.
Section 5.13 Employee and Termination Benefits.
(a) Acquirer shall cause the Company, through 90 days after the Share
Acceptance, to provide compensation and benefits to the employees of the Company
and the Company Subsidiaries (other than those employees terminated for cause)
as of the Share Acceptance ("Company Employees") that are, in the aggregate, no
less favorable than those provided to Company Employees as of the Share
Acceptance, to the extent, if any, to which such compensation and benefits are
not provided during such 90-day period under any agreement referred to in
Section 5.13(b) or under any Company Benefit Plan. Any former Company Employees
who receive any compensation or benefits as of the Share Acceptance shall
continue to receive such compensation and benefits for the lesser of such 90-day
period and the period of time provided for under the Company's relevant benefit
plans as of the Share Acceptance. With respect to any compensation, severance,
termination, benefit, welfare and similar plans or arrangements in which Company
Employees first become eligible to participate on or after the Share Acceptance
(the "New Company Plans"), Acquirer shall cause the Company, to the extent
allowable by its third party providers, to: (i) waive all pre-existing
conditions, exclusions and waiting periods with respect to participation and
coverage requirements applicable to Company Employees under any health and
welfare New Company Plans in which such Company Employee may be eligible to
participate after the Share Acceptance, and deductibles, coinsurance or maximum
out-of-pocket payments made by such Company Employee during the applicable plan
year in which such Company Employee first participates in the applicable New
Company Plan occurs shall reduce the amount of deductibles, coinsurance and
maximum out-of-pocket payments under the New Company Plans, provided, that, for
purposes of deductibles, coinsurance and out-of-pocket payments, such Company
Employee was enrolled under the Company Benefit Plans immediately prior to the
effective time of coverage in the New Company Plans, and (ii) recognize service
of Company Employees accrued prior to the Share Acceptance for purposes of
eligibility to participate and vesting credit (and levels of benefits) in any
New Company Plan in which such Company Employee may be eligible to participate
after the Share Acceptance, to the extent such service would have been taken
into account under the applicable Company Benefit Plans.
(b) From and after the Share Acceptance, Acquirer shall cause the Company to
honor and assume, in accordance with their terms, all existing employment,
change-of-control, retention, non-competition, non-solicitation and severance
agreements between the Company or any of its Subsidiaries and any Company
Employee, to the extent the same have been identified in the Company Disclosure
Letter, and all benefits or other amounts earned or accrued to the extent vested
or which becomes vested in the ordinary course, through the Share Acceptance
(including paying amounts payable at the Share Acceptance, as set forth in the
Disclosure Letter, pursuant to the Company's 1998 Executive Incentive Plan,
Management Incentive Plan and Compensation Plan for Retirement, Profit
Sharing/401(k) Plan dated December 5, 2001, as amended, as determined in
accordance with the terms of each such plan), under the Company Benefit Plans
identified in the Company Disclosure Letter.
(c) In the event of any termination of any Company Benefit Plan following the
Share Acceptance, terminated Company or Surviving Corporation employees and
their qualified beneficiaries will have the right to continued coverage under
group health plans of the Company as required by Code Section 4980B(f) and ERISA
Sections 601 through 609.
Section 5.14 Company Board Resolutions. Prior to the Share Acceptance, the
Company Board shall adopt resolutions, each of which shall be contingent upon
the Share Acceptance, as reasonably requested by Acquirer, in connection with
(i) the approval of the appointment of the Board Designees as the new directors
of the Company pursuant to Section 1.03 hereof, and (ii) the approval of the
proposed amendment to the Company's credit agreement with Fleet Capital
Corporation implementing the commitment letter that Acquirer has furnished to
the Company in connection with the execution and delivery of this Agreement.
Section 5.15 Insurance. Effective upon the expiration of the Company's existing
directors and officers liability insurance policies, the Company shall purchase
an extension of such policies (the "Policy Extension") on substantially
equivalent coverage terms for up to one additional year, for a premium not to
exceed the amount set forth in Section 5.16 of the Company Disclosure Letter;
provided, however, that any of such premium applicable to coverage for the
period subsequent to the Share Acceptance shall be credited, on a pro rata
basis, by the insurers against the cost of the Tail Coverage (as set forth in
Section 5.05(c)). The Policy Extension shall reflect this agreement for a pro
rata credit. The aggregate of the premiums payable for the Policy Extension and
the Tail Coverage, after application of the credit as above, shall not exceed
$1,200,000. Notwithstanding the foregoing, the $1,200,000 cap shall not apply if
the Share Acceptance occurs after March 31, 2005.
Section 5.16 Certain Transactions. During the period commencing on the Share
Acceptance and ending on the first anniversary thereof, Acquirer shall not,
directly or through any member of the Acquirer Group, and shall not cause,
suffer or permit the Company to, engage in any transaction (whether by stock
purchase, stock split, merger or otherwise) that results in any Shares held by
any stockholder of the Company other than any member of the Acquirer Group or
any Filing Group (or any successor security to such Shares resulting from any
reclassification, recapitalization or other change in the capital stock of the
Company) being converted into, or eliminated in exchange for, cash unless the
amount of cash paid per Share (or successor security) in such transaction is at
least $2.25 per Share (or equivalent as adjusted per successor security).
ARTICLE VI
CONDITIONS PRECEDENT
Section 6.01 Conditions to the Offer. Notwithstanding any other term of the
Offer or this Agreement, Acquirer shall not be required to accept for payment,
or subject to any applicable rules and regulations of the SEC, including Rule
14e-1(c) under the Exchange Act (relating to Acquirer's obligation to pay for or
return tendered Shares promptly after termination of withdrawal of the Offer),
to pay for any Shares tendered pursuant to the Offer unless (i) there shall have
been validly tendered and not withdrawn prior to the expiration of the Offer
such number of Shares that would constitute at least 80% of the Shares that are
outstanding immediately prior to the Share Acceptance and are not held by any
member of a Filing Group (determined on a primary basis, without giving effect
to the exercise or conversion of any then-outstanding options, warrants, or
other rights to acquire, or securities convertible into or exercisable for,
Shares) (the "Minimum Tender Condition") and (ii) the waiting period (and any
extension thereof) under any Competition Law applicable to the purchase of
Shares pursuant to the Offer shall have expired or been terminated. Furthermore,
notwithstanding any other term of the Offer or this Agreement, Acquirer shall
not be required to accept for payment or to pay for any Shares not theretofore
accepted for payment or paid for if, at any time on or after the date of this
Agreement and before the acceptance of such Shares for payment or the payment
therefore, any of the following conditions exist:
(a) Injunctions or Restraints. Any temporary restraining order, preliminary or
permanent injunction or other order issued by any court of competent
jurisdiction or Law preventing the consummation of the Offer, or preventing
Acquirer from owning the shares of the Surviving Corporation or from operating
any material part of the business of the Surviving Corporation and its
subsidiaries, taken as a whole, shall be in effect; provided, however, that
prior to asserting this condition, the applicable party shall have used its
reasonable efforts to prevent the entry of any such injunction or other order
and to appeal as promptly as possible any such injunction or other order that
may be entered.
(b) Governmental Restriction. There shall be any pending or threatened suit,
action or proceeding asserted by any Governmental Entity challenging or seeking
to restrain or prohibit the consummation any of the Transaction.
(c) Representations and Warranties. The representations and warranties of the
Company in this Agreement shall not be true and correct in all material respects
(except to the extent such representations and warranties contain "Material
Adverse Effect" or other materiality qualifications, to which extent such
representations and warranties shall not be true and correct in all respects),
as of the date of this Agreement and as of the Share Acceptance, except to the
extent that such representations and warranties expressly relate to an earlier
date (in which case on and as of such earlier date; provided, however, that the
foregoing shall not apply to the representation and warranty in Section 2.11 to
the extent that such representation and warranty has become untrue or incorrect
by reason of a claim referred to in the proviso to Section 6.01(f)).
(d) Performance of Obligations of the Company. The Company shall not have
performed in all material respects any obligation and complied in all material
respects with any agreement or covenant of the Company to be performed or
complied with by it under this Agreement prior to or at the time of the Share
Acceptance.
(e) Company Certificate. The Company shall not have furnished a certificate,
signed by an authorized officer, certifying compliance with the conditions set
forth in Sections 6.01(c) and (d) if such certificate was requested in writing
by Acquirer prior to the Share Acceptance.
(f) Litigation. There shall be any pending suit, action or proceeding that
advances non-frivolous claims against Acquirer, the Company or any Company
Subsidiary that seeks any equitable relief which, if successful, would prevent
(i) the consummation of the Offer, (ii) Acquirer from owning shares of the
Company Common Stock or (iii) Acquirer from operating any material part of the
business of the Company and its subsidiaries, taken as a whole; provided,
however, that the foregoing shall not apply to any claim to the extent such
claim (x) is made by, and in the capacity of, and relating to the alleged rights
of, a holder of the securities issued under the Indenture dated as of May 14,
1998 among the Company and the other parties thereto, and (y) is based upon the
execution, delivery or performance of this Agreement and/or the consummation or
proposed consummation of any Transaction.
(g) Company Material Adverse Effect. Since the date of this Agreement, there
shall have occurred and be continuing a Company Material Adverse Effect.
(h) Consents and Approvals. Any consent or approval required to be obtained,
made or given in connection with the Offer and the other Transactions, and as
listed on Schedule 6.01(h) of the Company Disclosure Letter, shall not have been
obtained, made or given in a form reasonably satisfactory to Acquirer or shall
not be in full force and effect.
(i) Directors of the Company. Acquirer shall not have received written
resignations from all of the incumbent members of the Company Board of the
Company or the Board Designees shall not have been duly appointed to the Company
Board, subject only to the occurrence of the Share Acceptance.
(j) Company Board Resolutions. The Company Board shall not have approved the
resolutions required by Section 5.03(c) and 5.14.
(k) Payment of Acquirer Expenses. The Company shall not have made the payment
provided for in Section 5.06(d).
Section 6.02 Frustration of Offer Conditions. Acquirer may not rely on the
failure of any condition set forth in Section 6.01 to be satisfied if such
failure was caused primarily by the failure of Acquirer or any other member of
the Acquirer Group to use commercially reasonable efforts to consummate the
Offer.
Section 6.03 Waiver of Offer Conditions. The conditions set forth in Section
6.01 are for the sole benefit of Acquirer and may be asserted by Acquirer, in
whole or in part, at any time and from time to time in the discretion of
Acquirer. The failure of Acquirer at any time to exercise its rights under any
of the foregoing conditions shall not be deemed a waiver of any such rights and
each such right shall be deemed an ongoing right which may be amended at any
time or from time to time. Notwithstanding the foregoing, however, Acquirer
shall not waive the Minimum Tender Condition without the prior written consent
of the Company, authorized by the Special Committee where the effect of such
waiver would be to entitle Acquirer to accept for payment pursuant to the Offer
a number of Shares that would result in Acquirer beneficially owning (including
Shares held by any member of a Filing Group) less than 70% of the outstanding
Shares (determined on a fully diluted basis, giving effect to the exercise or
conversion of any then-outstanding options, warrants or other rights to acquire,
or securities convertible into or exercisable for, Shares).
ARTICLE VII
TERMINATION, AMENDMENT AND WAIVER
Section 7.01 Termination. This Agreement may be terminated at any time prior to
the Share Acceptance:
(a) by either Acquirer or the Company if any of the following events occur:
(i) if the Share Acceptance does not occur on or before March 31, 2005 (the
"Outside Date"), unless its failure to so occur is the result of a material
breach of this Agreement by the party seeking to terminate this Agreement;
or
(ii) if any Governmental Entity issues an order or injunction or takes any
other action permanently enjoining, restraining or otherwise prohibiting
the consummation of the Offer and such order, injunction or other action
shall have become final and nonappealable, unless such order, injunction or
other action is the result of a material breach of this Agreement by the
party seeking to terminate this Agreement; provided, however, that prior to
seeking to terminate, such party shall have used its commercially
reasonable efforts to prevent such order, injunction or other action and to
appeal as promptly as practicable any such order, injunction or other
action.
(b) by Acquirer if the Company breaches or fails to perform in any material
respect any of its representations, warranties or covenants contained in this
Agreement, which breach or failure to perform (i) would give rise to the failure
of a condition set forth in Section 6.01, and (ii) cannot be or has not been
cured within 30 days after the giving of written notice to the Company of such
breach;
(c) by Acquirer if (i) the Company or any Company Subsidiary or any of their
Representatives fail to comply in any material respect with Section 4.02, or
(ii) there shall have occurred a Company Triggering Event;
(d) by the Company (i) if Acquirer breaches or fails to perform in any material
respect any of its representations, warranties or covenants contained in this
Agreement, which breach or failure to perform cannot be or has not been cured
within 30 days after the giving of written notice to Acquirer of such breach; or
(ii) in accordance with Section 7.05(b); provided, however, that the Company
shall have complied with all provisions thereof.
Section 7.02 Effect of Termination. In the event of termination of this
Agreement by either the Company or Acquirer as provided in Section 7.01, this
Agreement shall forthwith become void and have no effect, without any liability
or obligation on the part of Acquirer or the Company, other than the provisions
of Section 2.08, Section 3.06, Section 5.05, Section 5.06, this Section 7.02,
Section 7.05 and Article VIII, which provisions shall survive such termination,
and except to the extent that such termination results from the willful and
material breach by a party of any representation, warranty or covenant set forth
in this Agreement.
Section 7.03 Amendment. This Agreement may not be amended except by an
instrument in writing signed on behalf of each of the parties hereto.
Section 7.04 Extension; Waiver. At any time prior to the Share Acceptance, the
parties hereto may (a) extend the time for the performance of any of the
obligations or other acts of the other parties, (b) waive any inaccuracies in
the representations and warranties contained in this Agreement or in any
document delivered pursuant to this Agreement or (c) except as set forth in
Section 6.03 with respect to the Minimum Tender Condition, waive compliance with
any of the agreements or conditions contained in this Agreement. Any agreement
on the part of a party to any such extension or waiver shall be valid only if
set forth in an instrument in writing signed on behalf of such party. Any
failure or delay by any party hereto to assert any of its rights under this
Agreement or otherwise shall not constitute a waiver of such rights.
Section 7.05 Procedure for Termination, Amendment, Extension or Waiver.
(a) A termination of this Agreement pursuant to Section 7.01, an amendment of
this Agreement pursuant to Section 7.03 or an extension or waiver pursuant to
Section 7.04 shall, in order to be effective, require in the case of the
Company, action by its Board of Directors or the duly authorized designee of its
Board of Directors (including the Special Committee).
(b) Prior to the Share Acceptance and so long as the Company is in compliance
with Section 4.02, the Company may terminate this Agreement pursuant to Section
7.01(d)(ii) if (i) the Company Board has received a Company Takeover Proposal,
(ii) the Special Committee shall have determined in good faith that such Company
Takeover Proposal constitutes a Superior Company Proposal, (iii) at least three
(3) business days prior to such termination, the Company notifies Acquirer in
writing of the determination described in clause (ii) above, which notice shall
describe all material terms of such Company Takeover Proposal in accordance with
Section 4.02(c) hereof; (iv) Acquirer shall not have made, within three (3)
business days of receipt of such notice referred to in clause (iii) above, a
binding written offer to acquire the Company that causes the Special Committee
to no longer be able to determine in good faith that such Superior Company
Proposal remains a Superior Company Proposal, and (v) the Company concurrently
(or substantially contemporaneously), enters into a definitive agreement
providing for the implementation of such Superior Company Proposal.
ARTICLE VIII
GENERAL PROVISIONS
Section 8.01 Nonsurvival of Representations and Warranties. None of the
representations and warranties in this Agreement or in any instrument delivered
pursuant to this Agreement shall survive the Share Acceptance. This Section 8.01
shall not limit any covenant or agreement of the parties hereto which by its
terms contemplates performance after the Share Acceptance.
Section 8.02 Notices. All notices, requests, claims, demands and other
communications given or made under this Agreement shall be in writing and shall
be deemed to have been duly given or made (i) as of the date delivered if
delivered personally or by a nationally recognized overnight courier service or
(ii) on the date confirmation of receipt (or, the first business day following
such receipt if the date is not a business day) of transmission by facsimile
(with a confirming copy of such communication to be sent as provided in clause
(i)), and, in each case to the parties at the following addresses or facsimile
number (or at such other address for a party as shall be specified by like
notice, except that notices of changes of address shall be effective upon
receipt):
(a) If to Acquirer, to
Storage Acquisition Company, L.L.C.
c/o Equity Group Investments, L.L.C.
Two N. Riverside Plaza
Suite 600
Chicago, Illinois 60606
Attention: Ellen Havdala
Fax: 312-454-9678
With a copy to:
Gray Cary Ware & Freidenrich LLP
2000 University Ave.
East Palo Alto, CA 94303
Attention: Henry Lesser
Fax: 650-833-2001
(b) If to the Company, to
Home Products International, Inc.
4501 West 47th Street
Chicago, IL 60632
Attention: Special Committee of the Board of Directors
Fax: 773-890-0523
with a copy to
Katten Muchin Zavis Rosenman
525 West Monroe Street
Chicago, IL 60661
Attention: Maryann A. Waryjas, Esq.
Mark D. Wood, Esq.
Fax: 312-902-1061
Section 8.03 Definitions. For purposes of this Agreement:
(a) "Acquirer Group" shall mean Acquirer, any direct or indirect equity holder
of Acquirer, including EGI-Fund (02-04) Investors, L.L.C., a Delaware limited
liability company, any direct or indirect subsidiary of Acquirer, Equity Group
Investments, L.L.C., a Delaware limited liability company, Joseph Gantz, and
Walnut Investment Partners, L.P., a Delaware limited partnership, and Triyar
Capital, LLC and Triyar Storage Investment Company, LLC, Delaware limited
liability companies.
(b) "Acquirer Material Adverse Effect" means any state of facts, change,
development, effect, condition or occurrence that materially impairs the ability
of Acquirer to perform its obligations under this Agreement or consummate the
Transactions.
(c) An "affiliate" of any person means another person who directly or
indirectly, through one or more intermediaries, controls, is controlled by, or
is under common control with, such first person. For the purposes of this
Agreement, (i) no member of the Acquirer Group is an affiliate of the Company
and (ii) the Company is not an affiliate of any member of the Acquirer Group.
(d) "Company Benefit Plan" means any collective bargaining agreement or any
bonus, "employee pension benefit plans" (as defined in Section 3(2) of the
Employee Retirement Income Security Act of 1974, as amended ("ERISA")),
"employee welfare benefit plans" (as defined in Section 3(1) of ERISA), deferred
compensation, incentive compensation, stock ownership, stock purchase, stock
option, phantom stock, retirement, vacation, severance, disability, death
benefit, hospitalization, medical or other plan, arrangement or understanding
providing benefits to any current or former employee, officer or director of the
Company or any Company Subsidiary.
(e) "Company Material Adverse Effect" means any state of facts, change,
development, effect, condition or occurrence that is material and adverse to the
business, prospects, financial condition or results of operations of the Company
and the Company Subsidiaries, taken as a whole, or that materially impairs the
ability of the Company to perform its obligations under this Agreement or
consummate the Transactions; provided, however, that none of the following shall
be deemed in themselves, either alone or in combination, to constitute, and none
of the following shall be taken into account in determining whether there has
been or will be, a Company Material Adverse Effect: any change or effect that
results from (A) conditions affecting the consumer housewares manufacturing
industry generally, (B) any change in the trading price or volume of Company
Common Stock, in and of itself, or (C) the announcement or pendency of this
Agreement or the Offer, including any stockholder class action litigation
arising from allegations of breach of fiduciary duty relating to the Agreement
or any litigation covered by the proviso to Section 6.01(f). The parties hereby
agree that an increase in the price of resin (as set forth in The Plastics News
trade publication) used by the Company in its business by less than 12.5% from
the date of this Agreement shall not, in and of itself, constitute a Company
Material Adverse Effect.
(f) "Company Stock Plan" means the Company's (i) 1994 Stock Option Plan, (ii)
1991 Stock Option Plan, (iii) 1987 Stock Option Plan, (iv) 1999 Performance
Incentive Plan and (vi) 1999 Director's Restricted Stock Plan, and any other
stock option plan of the Company or any Company Subsidiary which issued options
to purchase shares of the Company to officers, employees or directors of the
Company, in each case as amended through the date of this Agreement.
(g) "Company Takeover Proposal" means any inquiry, proposal or offer from a
third party relating to, or that is reasonably likely to lead to, any direct or
indirect acquisition, in one transaction or a series of transactions, including
any merger, consolidation, tender offer, stock acquisition, asset acquisition,
binding share exchange, business combination, recapitalization, liquidation,
dissolution, joint venture or similar transaction, of (i) 25% or more of the
assets, properties or business of the Company or its Subsidiaries, or (ii) 20%
or more of the outstanding shares of Company Common Stock or capital stock of,
or other equity or voting interests in, the Company or any of its Subsidiaries.
(h) "Company Triggering Event" shall mean the occurrence of any of the
following: (i) an Adverse Recommendation Change by the Company Board; (ii) the
Company shall have failed to include in the Schedule 14D-9 a statement
recommending that holders of Company Common Stock accept the Offer and tender
their Shares thereunder; (iii) the Board of Directors of the Company shall have
approved, endorsed or recommended any Company Takeover Proposal; (iv) any member
of the Company Board directly or indirectly publicly recommends, endorses or
supports any Company Takeover Proposal or publicly advises against or publicly
recommends or encourages other Company shareholders to not accept the Offer; (v)
a tender or exchange offer (other than the Offer) relating to securities of the
Company shall have been commenced and the Company shall not have sent to its
securityholders, within 10 business days after the commencement of such tender
or exchange offer, a statement disclosing that the Company Board recommends
rejection of such tender or exchange offer; (vi) a Company Takeover Proposal is
publicly announced, and the Company fails to issue a press release announcing
its opposition to such Company Takeover Proposal within 10 business days after
such Company Takeover Proposal is announced; (vii) the Company enters into any
letter of intent, memorandum of understanding, agreement in principle,
acquisition agreement, merger agreement, option agreement, joint venture
agreement, partnership agreement or other agreement (excluding any nondisclosure
agreement) constituting or directly related to, or which is intended to or is
reasonably likely to lead to, any Company Takeover Proposal; (viii) the Company
fails to publicly confirm its approval or recommendation of this Agreement and
the acceptance of the Offer by the holders of Company Common Stock within ten
(10) business days after receipt of request from Acquirer after a Company
Takeover Proposal is publicly announced by the Company; (ix) if, pursuant to
Section 5.09 and without the written approval of Acquirer, the Company Board
amends the Company Rights Agreement, redeems the Company Rights or takes any
action with respect to, or makes any determination under, the Company Rights
Agreement to comply with its fiduciary duties and, as a result of such
amendment, redemption, action or determination, any person other than any member
of the Acquirer Group or any of its affiliates is permitted to become an
Acquiring Person (as currently defined in the Company Rights Agreement).
(i) "Competition Laws" means statutes, rules, regulations, orders, decrees,
administrative and judicial doctrines, and other Laws that are designed or
intended to prohibit, restrict or regulate actions having the purpose or effect
of monopolization, lessening of competition or restraint of trade, and includes
the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, and, to
the extent applicable, equivalent Laws of the European Union or the Member
States thereof, Canada and any other country in which the Company or any Company
Subsidiary has operations or derives revenue.
(j) "Permitted Lien" means (i) Liens as reflected on the Company's June 26, 2004
balance sheet, including the notes thereto, included in the Company Financial
Statements, (ii) Liens for Taxes not yet due and payable, or, if due (A) not
delinquent, or (B) being contested in good faith by appropriate proceedings
during which collection or enforcement is stayed (iii) statutory Liens securing
payments not yet due, including carriers', warehouseman's, mechanics',
materialmen's, repairmen's or other similar Liens, (iv) pledges or deposits in
connection with workers' compensation, unemployment insurance and other social
security legislation, (v) easements, rights-of-way, restrictions and other
similar Liens incurred in the ordinary course of business, (vi) title retention
or security interests under conditional sales contracts and equipment leases
with third parties entered into in the ordinary course of business, (vii) Liens
relating to purchase money obligations, and (viii) Liens, if any, as,
individually or in the aggregate, would not have or result in a Company Material
Adverse Effect or Acquirer Material Adverse Effect, as applicable.
(k) A "person" means any individual, firm, corporation, partnership, company,
limited liability company, trust, joint venture, association, Governmental
Entity or other entity.
(l) A "Representative" of any person means any officer, director or employee of,
or any investment banker, attorney or other advisor or representative of, such
person.
(m) A "subsidiary" of any person means another person, an amount of the voting
securities or other voting ownership or voting partnership interests of which is
sufficient to elect at least a majority of its Board of Directors or other
governing body (or, if there are no such voting interests, 50% or more of the
equity interests of which) is owned directly or indirectly by such first person.
(n) "Superior Company Proposal" means any inquiry, proposal or offer from a
third party relating to, or that is reasonably likely to lead to, any direct or
indirect acquisition, in one transaction or a series of transactions, including
any merger, consolidation, tender offer, exchange offer, stock acquisition,
asset acquisition, binding share exchange, business combination,
recapitalization, liquidation, dissolution, joint venture or similar
transaction, of (i) all or substantially all of the assets, properties and
business of the Company or its Subsidiaries or (ii) 50% or more of the
outstanding shares of the Company Common Stock or capital stock of, or other
equity or voting interests in, the Company or any of its Subsidiaries, that the
Special Committee determines in good faith, after receipt of advice from the
Company's independent financial advisors, is more favorable to the Company's
stockholders from a financial point of view than the Offer (or if applicable,
any proposal by Acquirer to amend the terms of this Agreement), taking into
account all of the terms and conditions of such proposal, the likelihood of
completion of such transaction, and all financial, regulatory, legal and other
aspects of such proposal.
(o) "Taxes" includes all forms of taxation imposed by any domestic or foreign
(whether national, federal, state, provincial, local, or otherwise) Governmental
Entity, including income, franchise, property, sales, use, excise, employment,
unemployment, payroll, social security, estimated, value added, ad valorem,
transfer, recapture, withholding and other taxes of any kind, including all
interest, penalties and additions thereto.
Section 8.04 Interpretation; Disclosure Letter.
(a) When a reference is made in this Agreement to a Section, Exhibit or
Schedule, such reference shall be to a Section of, or an Exhibit or Schedule to,
this Agreement unless otherwise indicated. The table of contents and headings
contained in this Agreement are for reference purposes only and shall not affect
in any way the meaning or interpretation of this Agreement. Whenever the words
"include," "includes" or "including" are used in this Agreement, they shall be
deemed to be followed by the words "without limitation." The words "hereof,"
"herein," "hereby" and "hereunder" and words of similar import when used in this
Agreement shall refer to this Agreement as a whole and not to any particular
provision of this Agreement. The words "date hereof" shall refer to the date of
this Agreement. The term "or" is not exclusive. The word "extent" in the phrase
"to the extent" shall mean the degree to which a subject or other thing extends,
and such phrase shall not mean simply "if." The definitions contained in this
Agreement are applicable to the singular as well as the plural forms of such
terms. Any agreement or instrument defined or referred to herein or in any
agreement or instrument that is referred to herein means such agreement or
instrument as from time to time amended, modified or supplemented. References to
a person are also to its permitted successors and assigns.
(b) The Company may update or amend the Company Disclosure Letter prior to the
Share Acceptance; provided however, if any such update or amendment discloses a
breach or default under this Agreement which results in Section 6.01 not being
satisfied, Acquirer may terminate this Agreement as permitted by Section
7.01(b).
Section 8.05 Severability. If any term or other provision of this Agreement is
invalid, illegal or incapable of being enforced as a result of any applicable
Law, or public policy, all other conditions and provisions of this Agreement
shall nevertheless remain in full force and effect so long as the economic or
legal substance of the Transactions contemplated hereby is not affected in any
manner materially adverse to any party. Upon such determination that any term or
other provision is invalid, illegal or incapable of being enforced, the parties
hereto shall negotiate in good faith to modify this Agreement so as to effect
the original intent of the parties as closely as possible in an acceptable
manner to the end that the Transactions are fulfilled to the extent possible.
Section 8.06 Counterparts. This Agreement may be executed in one or more
counterparts, all of which shall be considered one and the same agreement and
shall become effective when one or more counterparts have been signed by each of
the parties hereto and delivered to the other parties. Each party hereto need
not sign the same counterpart. This Agreement, and each other agreement or
instrument entered into in connection herewith or contemplated hereby, and any
amendments hereto or thereto, to the extent signed and delivered by means of a
facsimile machine, shall be treated in all manner and respects and for all
purposes as an original agreement or instrument and shall be considered to have
the same binding legal effect as if it were the original signed version thereof
delivered in person. At the request of any party hereto or to any such agreement
or instrument, each other party hereto or thereto shall re-execute original
forms thereof and deliver them to all other parties. No party hereto or to any
such agreement or instrument shall raise the use of a facsimile machine to
deliver a signature or the fact that any signature or agreement or instrument
was transmitted or communicated through the use of a facsimile machine as a
defense to the formation or enforceability of this Agreement or any such
agreement or instrument, and each such party forever waives any such defense.
Section 8.07 Entire Agreement; No Third-Party Beneficiaries. This Agreement,
taken together with the Company Disclosure Letter, (a) constitutes the entire
agreement, and supersedes all prior agreements and understandings, both written
and oral, among the parties hereto with respect to the Transactions and (b)
except for the provisions of Section 5.05 (which are intended to be for the
benefit of the persons covered thereby and may be enforced by such persons only
following the consummation of the Offer), are not intended to confer upon any
person other than the parties hereto any rights or remedies.
Section 8.08 Governing Law. This Agreement shall be governed by, and construed
in accordance with, the laws of the State of Delaware, regardless of the laws
that might otherwise govern under applicable principles of conflicts of laws
thereof.
Section 8.09 Assignment. Neither this Agreement nor any of the rights, interests
or obligations under this Agreement shall be assigned, in whole or in part, by
operation of law or otherwise by any of the parties hereto without the prior
written consent of the other parties. Any purported assignment without such
consent shall be void. Subject to the preceding sentences, this Agreement will
be binding upon, inure to the benefit of, and be enforceable by, the parties
hereto and their respective successors and assigns.
Section 8.10 Enforcement; Waiver of Jury Trial.
(a) The parties hereto 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 hereto 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 Illinois state court or any Federal court
located in Chicago, Illinois, this being in addition to any other remedy to
which they are entitled at law or in equity. In addition, each of the parties
hereto irrevocably and unconditionally submits to the exclusive jurisdiction of
any Illinois state court or any Federal court located in Chicago, Illinois for
the purposes of any suit, action or other proceedings arising out of this
Agreement or any Transaction (and each party agrees that no such suit, action or
proceeding arising out of to this Agreement or any Transaction shall be brought
by it or any of its affiliates except in such courts). Each party hereto further
agrees that, to the fullest extent permitted by applicable Law, service of any
process, summons, notice or document by U.S. registered mail to such party's
respective address set forth above shall be effective service of process for any
suit, action or proceeding in Illinois with respect to any matters to which it
has submitted to jurisdiction in this Section 8.10. Each of the parties hereto
irrevocably and unconditionally waives (and agrees not to plead or claim) any
objection to the laying of venue of any suit, action or proceeding arising out
of this Agreement or any Transaction in any Illinois State court or any Federal
court located in Chicago, Illinois, or that any such suit, action or proceeding
brought in any such court has been brought in an inconvenient forum.
(b) Each party hereto hereby waives, to the fullest extent permitted by
applicable Law, any right it may have to a trial by jury in respect of any suit,
action or proceeding directly or indirectly arising out of, under or in
connection with this Agreement or any Transaction. Each party hereto, (i)
certifies that no representative, agent or attorney of any other party has
represented, expressly or otherwise, that such party would not, in the event of
any suit, action or proceeding, seek to enforce the foregoing waiver and (ii)
acknowledges that it and the other parties hereto have been induced to enter
into this Agreement by, among other things the mutual waivers and certifications
in this Section 8.10(b).
[Signature page follows.]
IN WITNESS WHEREOF, Acquirer and the Company have duly executed this Acquisition
Agreement as of the date first written above.
STORAGE ACQUISITION COMPANY, L.L.C.
/s/
-----------------------------
Authorized Signatory
HOME PRODUCTS INTERNATIONAL, INC.
/s/
-----------------------------
Authorized Signatory
EXHIBIT 8
INVESTORS AGREEMENT
THIS INVESTORS AGREEMENT (the "Agreement") is entered into as of October 28,
2004, by and among Storage Acquisition Company, L.L.C., a Delaware limited
liability company (the "Company"), EGI-Fund (02-04) Investors, L.L.C., a
Delaware limited liability company ("EGI"), Joseph Gantz ("Gantz"), Walnut
Investment Partners, L.P., a Delaware limited partnership ("Walnut"), Triyar
Storage Investment Company, LLC, a Delaware limited liability company ("Triyar")
and the other persons and entities set forth on Schedule A hereto (individually
an "Investor" and collectively the "Investors").
RECITALS
WHEREAS, the Company has been formed for the purpose of acquiring the
outstanding common stock (the "HPI Common Stock") of Home Products
International, Inc., a Delaware corporation ("HPI"), by means of a tender offer,
pursuant to an Acquisition Agreement between the Company and HPI (the
"Acquisition Agreement"). Capitalized terms not otherwise defined herein have
the meanings given in the Acquisition Agreement;
WHEREAS, as partial consideration for each Investor's agreement to purchase
membership interests of the Company (the "Membership Interests"), each other
Investor has agreed to execute and deliver, and become bound by the obligations
under, this Agreement; and
WHEREAS, the Investors wish to promote the Company's best interests and their
own interests and facilitate the Offer, as that term is defined in the
Acquisition Agreement, by imposing certain restrictions and obligations on
themselves.
NOW THEREFORE, in consideration of the mutual covenants and agreements contained
herein, the parties hereto, intending to be legally bound hereby, agree:
1. Initial Capital Contributions. Each Investor hereby agrees that, prior to the
Share Acceptance, at such times as is determined by the Company's Managing
Member, such Investor shall pay and contribute to the Company cash and/or, at
the election of such Investor, shares of HPI Common Stock, with an Aggregate
Contribution Value (as defined below) equal to the dollar value set forth next
to such Investor's name on Schedule A, and such Investor shall receive therefor
Membership Interests in the Company pursuant to the Company's Limited Liability
Company Agreement dated as of the date hereof (the "Operating Agreement"). As
used herein, "Aggregate Contribution Value" means, with respect to each
Investor, the sum of (a) the total amount of cash paid and contributed to the
Company by such Investor, plus (b) the product of (x) the number of shares of
HPI Common Stock contributed to the Company by such Investor, multiplied by (y)
$2.25. In no event shall any Investor be liable for the failure of any other
Investor to make its or his required payments and contributions hereunder.
2. Expenses of Offer and Related Expenses; Additional Capital Contributions. The
Company's Managing Member, in its sole discretion, may, from time to time,
request from the Investors additional cash Capital Contributions (up to a
maximum of $15,000,000, or such larger amount as is approved in a writing signed
by (i) the holder of the largest Percentage Interest (as defined in the
Operating Agreement) in the Company and (ii) the Supermajority of Minority
Interests (as defined in the Operating Agreement) in the Company) on a pro rata
basis, based on each Investor's aggregate Capital Contributions prior thereto,
in accordance with Section 7.5 of the Operating Agreement, to pay for, or
reimburse the payment of, costs and expenses incurred by HPI, the Company and/or
Investors on behalf of the Company and approved by the Managing Member in its
sole discretion, in connection with the Offer and the transactions contemplated
thereby and the consequences thereof, including, without limitation: (i)
attorneys', accountants' and other professionals' fees and expenses; (ii)
brokerage, investment banking and similar fees and expenses; (iii) severance,
other compensation and other payments owed to HPI employees, option holders and
other constituents; and (iv) payments in respect of any outstanding obligations
of HPI, in each case to the extent not paid or reimbursed by HPI. To the extent
any Investor declines to fund its pro rata share of requested additional Capital
Contributions, each other Investor shall be entitled, but not required, to fund
the unfunded Capital Contribution on a pro rata basis, based on each Investor's
aggregate Capital Contributions prior thereto, in accordance with Section 7.5 of
the Operating Agreement. All Capital Contributions requested by the Managing
Member for the purposes described herein during the first six months following
the Share Acceptance shall be contributed at the same Company enterprise value
as that at the time of the initial Capital Contributions made by the Investors.
3. Investor Representations and Warranties. Each Investor hereby represents and
warrants to the Company and each other Investor that the representations and
warranties relating to such Investor set forth in Section 3.08 of the
Acquisition Agreement are true and correct.
4. Additional Documentation. Each Investor shall, from time to time, execute and
deliver, or cause to be executed and delivered, such additional or further
consents, documents and other instruments and shall take all such other action
as any other party hereto may reasonably request for the purpose of effectively
carrying out the transactions contemplated by and the purposes and intents of
this Agreement.
5. Term of this Agreement. The term of this Agreement shall commence at the date
this Agreement is executed by all parties and shall continue until the parties
unanimously agree to terminate the Agreement or until the earliest of (A) the
date on which none of the 9 5/8 % Senior Subordinated Notes due 2008 issued by
HPI and outstanding as of the date hereof (as such may be amended pursuant to
their terms, the "Notes") are outstanding, (B) the date on which such Notes and
the Indenture dated as of May 14, 1998, by and among HPI, the Subsidiary
Guarantors (as defined in such Indenture) and LaSalle National Bank, predecessor
to HSBC Bank USA, as trustee (as such may be amended pursuant to its terms, the
"Indenture") are satisfied and discharged or the Indenture ceases to be in
effect, (C) the date of defeasance in whole of the HPI's obligations under the
Notes and the Indenture, and (D) the termination of the Acquisition Agreement in
accordance with its terms.
6. Remedies. The Investors stipulate that an Investor's remedies at law in the
event of any default or threatened default by an Investor in the performance of
or compliance with any of the terms hereof are not and will not be adequate to
the fullest extent permitted by law, and that such terms may be specifically
enforced by a decree for the specific performance of any agreement contained
herein or by an injunction against a violation of any of the terms hereof or
otherwise.
7. Enforcement Costs. If any party to, or beneficiary of, this Agreement seeks
to enforce its rights hereunder by legal proceedings or otherwise, then the
non-prevailing party shall pay all reasonable costs and expenses incurred by the
prevailing party, including, without limitation, all reasonable attorneys' fees
and costs of suit.
8. Nonwaiver; Cumulative Remedies. No course of dealing or any delay or failure
to exercise any right hereunder on the part of an Investor shall operate as a
waiver of such right or otherwise prejudice the rights, powers or remedies of
such Investor. No single or partial waiver by an Investor of any provision
hereof or of any breach or default hereunder or of any right or remedy shall
operate as a waiver of any other provision, breach, default right or remedy or
of the same provision, breach, default, right or remedy on a future occasion.
The rights and remedies provided herein are cumulative and are in addition to
all rights and remedies which each Investor may have in law or in equity or by
statute or otherwise.
9. Notices. All notices, requests, reports and other communications pursuant to
this Agreement shall be in writing, either by letter (delivered by hand or
commercial delivery service or sent by certified mail, return receipt requested)
or telecopier, addressed to each Investor at the address set forth next to such
Investor's name on Schedule A hereto. Any notice, request or communication
hereunder shall be deemed to have been given on the day on which it is delivered
by hand to such party at its address specified above, or, if sent by mail, on
the third business day following the day it was deposited in the mail, postage
prepaid, or in the case of telecopy notice, when transmitted addressed as
aforesaid, answerback received. Any party may change the person or address to
whom or which notices are to be given hereunder, by notice duly given hereunder;
provided, however, that any such notice shall be deemed to have been given
hereunder only when actually received by the party to which it is addressed.
10. Miscellaneous Provisions.
(a) This Agreement shall be governed by and construed in accordance with the
laws of the State of Delaware (without regard to conflicts of laws purposes).
Each party hereby irrevocably and unconditionally consents service of process by
notice given as provided herein and to submit to the jurisdiction of the federal
courts located in the State of Delaware or any Delaware state courts in
connection with any action or proceeding arising out of or relating to this
Agreement and the transactions contemplated hereby (and agrees not to commence
any suit, action or proceeding relating thereto except in those courts), waives
any defense or objection such party may have or hereafter have relating to the
laying of venue of any suit, action or proceeding in any such courts and agrees
not to plead or claim that any suit, action or proceeding brought therein has
been brought in an inconvenient forum.
(b) If, in any action before any court or agency legally empowered to enforce
any term, any term is found to be unenforceable, then such term shall be deemed
modified to the extent necessary to make it enforceable by such court or agency.
If any term is not curable as set forth in the preceding sentence, the
unenforceability of such term shall not affect the other provisions of this
Agreement but this Agreement shall be construed as if such unenforceable term
had never been contained herein.
(c) This Agreement, together with the Operating Agreement, embodies the entire
agreement between the parties hereto with respect to the subject matter hereof
and supersedes any and all prior agreements and understandings between the
parties hereto with respect to the subject matter hereof. This Agreement may
only be amended, modified or restated by means of a written instrument executed
by (i) the holder of the largest Percentage Interest (as defined in the
Operating Agreement) in the Company and (ii) the Supermajority of Minority
Interests in the Company. Notwithstanding the foregoing, all parties hereto
acknowledge and agree that individuals identified by the Company as prospective
officers and key employees of HPI (each a "Member of Management") may be issued
membership interests of the Company and invited or required to become party to
this Agreement as a condition of such issuance, and hereby agree that if and
when a Member of Management receives a Membership Interest in the Company, such
Member of Management may become a party to, and bound by, this Agreement, solely
with the consent of the Company and by delivering to the Company a counterpart
signature page to this Agreement (and Schedule A hereto shall be adjusted to
reflect the Aggregate Contribution Value provide by such Member of Management).
(d) This Agreement shall not be assignable, by operation of law or otherwise,
without the consent of all other parties hereto, but shall be binding upon the
parties hereto.
(e) This Agreement and the documents and instruments and other agreements
specifically referred to herein or delivered pursuant hereto, are not intended
to confer upon any other person any rights or remedies hereunder, and shall not
be assigned by operation of law or otherwise without the written consent of the
other parties.
(f) Various headings used in this Agreement are for convenience only and are not
to be used in interpreting the text of the section in which they appear or to
which they relate.
(g) This Agreement may be executed by the parties in two or more counterparts,
each of which shall be deemed to constitute an original, and all of which shall
constitute one and the same instrument.
IN WITNESS WHEREOF the parties hereto have caused this Investors Agreement to be
duly executed as of the date first above written.
STORAGE ACQUISITION COMPANY, L.L.C.
/s/ Donald J. Liebentritt
-----------------------------
Vice President
EGI-FUND (02-04) INVESTORS, L.L.C.
/s/ Donald J. Liebentritt
-----------------------------
Vice President
WALNUT INVESTMENT PARTNERS, L.P.
By: Walnut Investments Holding Company, LLC
Its: General Partner
/s/ James M. Gould
-----------------------------
By: James M. Gould
Its: Manager
/s/ Joseph Gantz
-----------------------------
JOSEPH GANTZ
TRIYAR STORAGE INVESTMENT COMPANY, LLC
/s/ Mark Weber
-----------------------------
By: Mark Weber
Its: Authorized Signatory
EXHIBIT 9
AGREEMENT REGARDING FUNDING
THIS AGREEMENT REGARDING FUNDING (this "Agreement") is made as of October 28,
2004, by EGI-Fund (02-04) Investors, L.L.C., a Delaware limited liability
company ("Investor"), in favor of Home Products International, Inc., a Delaware
corporation (the "Company").
RECITALS
A. The Company and Storage Acquisition Company, L.L.C., a Delaware limited
liability company ("Storage"), have entered into that certain Acquisition
Agreement, dated as of the date hereof (the "Acquisition Agreement"), providing
for, among other things, the acquisition of common stock of the Company by
Storage as provided in the Acquisition Agreement (the "Acquisition").
B. Investor is a member of Storage.
C. As a material inducement for the Company to enter into the Acquisition
Agreement, Investor desires, pursuant to the terms and conditions described
herein, to provide this Agreement regarding funding of Storage.
NOW, THEREFORE, for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereby agree as
follows:
1. Capitalized terms not otherwise defined herein have the meanings provided in
the Acquisition Agreement. As used in this Agreement, the following terms have
the meanings given below:
(a) "Aggregate Contributions" means the amount equal to sum of (a) the aggregate
amount of all cash contributions by all investors in Storage prior to the Share
Acceptance, plus (b) the product of (i) the aggregate number of shares of common
stock of the Company contributed to Storage by all investors in Storage prior to
the Share Acceptance, multiplied by (ii) Two and 25/100 Dollars ($2.25).
(b) "Cash Contribution" means the aggregate amount of all cash invested in or
contributed to Storage by Investor.
(c) "Share Value" means an amount equal to the product of (a) the number of
shares of common stock of the Company contributed to Storage by Investor,
multiplied, by (b) Two and 25/100 Dollars ($2.25).
2. Investor agrees that it shall, prior to the Share Acceptance, invest in or
contribute to, or cause to be invested in or contributed to, Storage any
combination of shares of common stock of the Company and cash such that the sum
of the Share Value plus the Cash Contribution is not less than Eleven Million
Five Hundred Forty Eight Thousand One Hundred Eighty Five and 00/100 Dollars
($11,548,185.00), or such lesser amount as is sufficient to cause Storage to
hold, at the time of the Share Acceptance, Aggregate Contributions available for
payment of the aggregate Offer Price of not less than Seventeen Million Seven
Hundred Twenty Seven Thousand Five Hundred Thirty and 00/100 Dollars
($17,727,530.00).
3. This Agreement shall remain and continue in full force and effect until the
Expiration Date (as defined below), at which time, the obligations of the
Investor under this Agreement shall cease, become null and void and be of no
further force or effect. As used in this Agreement, "Expiration Date" means the
earliest to occur of: (a) payment in full of the Offer Price for all Shares
purchased pursuant to the Offer under the Acquisition Agreement; and (b) the
termination of the Acquisition Agreement pursuant to Section 7.01 thereof.
4. This Agreement may not be amended, modified, waived, discharged or terminated
orally or by course of conduct, but only by an instrument in writing duly
executed by both the Company and Investor. No waiver by the Company of any
default or any other event shall be effective unless in writing, nor shall it
operate as a waiver of any other default or of the same default on a future
occasion. No delay or omission by the Company in exercising any of its rights,
remedies, powers and privileges hereunder and no course of dealing between the
Company and Investor shall be deemed a waiver by the Company of any of its
rights, remedies, powers or privileges, even if such delay or omission is
continuous or repeated, nor shall any single or partial exercise of any right,
remedy, power or privilege preclude any other or further exercise thereof by the
Company, or the exercise of any other right, remedy, power or privilege by the
Company.
5. This Agreement shall be binding upon and shall inure to the benefit of the
Company and Investor and their respective successors and assigns. This Agreement
is not intended to confer upon any other person any rights or remedies
hereunder, and shall not be assigned by operation of law or otherwise. All
rights and remedies of the Company under this Agreement are cumulative and not
restrictive of any other rights or remedies available at law or in equity.
6. All notices, requests, claims, demands and other communications given or made
under this Agreement shall be in writing and shall be deemed to have been duly
given or made (i) as of the date delivered if delivered personally or by a
nationally recognized overnight courier service or (ii) on the date confirmation
of receipt (or, the first business day following such receipt if the date is not
a business day) of transmission by facsimile (with a confirming copy of such
communication to be sent as provided in clause (i)), and, in each case to the
parties at the following addresses or facsimile number (or at such other address
for a party as shall be specified by like notice, except that notices of changes
of address shall be effective upon receipt):
(a) If to Investor, to
EGI-Fund (02-04) Investors, L.L.C.
Two N. Riverside Plaza, Suite 600
Chicago, Illinois 60606
Attention: Ellen Havdala
Fax: 312-454-9678
With a copy to:
Gray Cary Ware & Freidenrich LLP
2000 University Ave.
East Palo Alto, CA 94303
Attention: Henry Lesser, Esq.
Fax: (650) 833-2001
(b) If to Company, to
Home Products International, Inc.
4501 West 47th Street
Chicago, IL 60632
Attention: Special Committee of the Board of Directors
Fax: 773-890-0523
with a copy to
Katten Muchin Zavis Rosenman
525 West Monroe Street
Chicago, IL 60661
Attention: Maryann A. Waryjas, Esq.
Mark D. Wood, Esq.
Fax: 312-902-1061
7. Whenever possible, each provision of this Agreement shall be interpreted in
such manner as to be effective and valid under applicable law, but if any
provision of this Agreement shall be prohibited by or invalid under such law,
such provision shall be ineffective to the extent of such prohibition or
invalidity, without invalidating the remainder of such provision or the
remaining provisions of this Agreement.
8. This Agreement shall be governed by the laws of the State of Delaware,
without regard to conflicts of law principles.
9. This Agreement may be executed in one or more counterparts, all of which
shall be considered one and the same agreement and shall become effective when
one or more counterparts have been signed by each of the parties hereto and
delivered to the other parties. Each party hereto need not sign the same
counterpart. This Agreement to the extent signed and delivered by means of a
facsimile machine, shall be treated in all manner and respects and for all
purposes as an original and shall be considered to have the same binding legal
effect as if it were the original signed version thereof delivered in person. No
party hereto shall raise the use of a facsimile machine to deliver a signature
or the fact that any signature was transmitted or communicated through the use
of a facsimile machine as a defense to the formation or enforceability of this
Agreement, and each such party forever waives any such defense.
IN WITNESS WHEREOF, the undersigned have executed this Agreement as of the day
and year first above written.
EGI-FUND (02-04) INVESTORS, L.L.C.
/s/ Donald J. Liebentritt
-----------------------------
Vice President
HOME PRODUCTS INTERNATIONAL, INC.
/s/ James E. Winslow
-----------------------------
Executive Vice President and
Chief Financial Officer
AGREEMENT REGARDING FUNDING
THIS AGREEMENT REGARDING FUNDING (this "Agreement") is made as of October 28,
2004, by Walnut Investment Partners, L.P., a Delaware limited partnership
("Investor"), in favor of Home Products International, Inc., a Delaware
corporation (the "Company").
RECITALS
A. The Company and Storage Acquisition Company, L.L.C., a Delaware limited
liability company ("Storage"), have entered into that certain Acquisition
Agreement, dated as of the date hereof (the "Acquisition Agreement"), providing
for, among other things, the acquisition of common stock of the Company by
Storage as provided in the Acquisition Agreement (the "Acquisition").
B. Investor is a member of Storage.
C. As a material inducement for the Company to enter into the Acquisition
Agreement, Investor desires, pursuant to the terms and conditions described
herein, to provide this Agreement regarding funding of Storage.
NOW, THEREFORE, for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereby agree as
follows:
1. Capitalized terms not otherwise defined herein have the meanings provided in
the Acquisition Agreement. As used in this Agreement, the following terms have
the meanings given below:
(a) "Aggregate Contributions" means the amount equal to sum of (a) the aggregate
amount of all cash contributions by all investors in Storage prior to the Share
Acceptance, plus (b) the product of (i) the aggregate number of shares of common
stock of the Company contributed to Storage by all investors in Storage prior to
the Share Acceptance, multiplied by (ii) Two and 25/100 Dollars ($2.25).
(b) "Cash Contribution" means the aggregate amount of all cash invested in or
contributed to Storage by Investor.
(c) "Share Value" means an amount equal to the product of (a) the number of
shares of common stock of the Company contributed to Storage, multiplied, by (b)
Two and 25/100 Dollars ($2.25).
2. Walnut agrees that it shall, prior to the Share Acceptance, invest in or
contribute to, or cause to be invested in or contributed to, Storage any
combination of shares of common stock of the Company and cash such that the sum
of its Share Value plus its Cash Contribution is not less than Three Million One
Hundred Seventy Nine Thousand Three Hundred and Forty-Five and 00/100 Dollars
($3,179,345.00), or such lesser amount as is sufficient to cause Storage to
hold, at the time of the Share Acceptance, Aggregate Contributions available for
payment of the aggregate Offer Price of not less than Seventeen Million Seven
Hundred Twenty Seven Thousand Five Hundred Thirty and 00/100 Dollars
($17,727,530.00).
3. This Agreement shall remain and continue in full force and effect until the
Expiration Date (as defined below), at which time, the obligations of the
Investor under this Agreement shall cease, become null and void and be of no
further force or effect. As used in this Agreement, "Expiration Date" means the
earliest to occur of: (a) payment in full of the Offer Price for all Shares
purchased pursuant to the Offer under the Acquisition Agreement; and (b) the
termination of the Acquisition Agreement pursuant to Section 7.01 thereof.
4. This Agreement may not be amended, modified, waived, discharged or terminated
orally or by course of conduct, but only by an instrument in writing duly
executed by both the Company and Investor. No waiver by the Company of any
default or any other event shall be effective unless in writing, nor shall it
operate as a waiver of any other default or of the same default on a future
occasion. No delay or omission by the Company in exercising any of its rights,
remedies, powers and privileges hereunder and no course of dealing between the
Company and Investor shall be deemed a waiver by the Company of any of its
rights, remedies, powers or privileges, even if such delay or omission is
continuous or repeated, nor shall any single or partial exercise of any right,
remedy, power or privilege preclude any other or further exercise thereof by the
Company, or the exercise of any other right, remedy, power or privilege by the
Company.
5. This Agreement shall be binding upon and shall inure to the benefit of the
Company and Investor and their respective successors and assigns. This Agreement
is not intended to confer upon any other person any rights or remedies
hereunder, and shall not be assigned by operation of law or otherwise. All
rights and remedies of the Company under this Agreement are cumulative and not
restrictive of any other rights or remedies available at law or in equity.
6. All notices, requests, claims, demands and other communications given or made
under this Agreement shall be in writing and shall be deemed to have been duly
given or made (i) as of the date delivered if delivered personally or by a
nationally recognized overnight courier service or (ii) on the date confirmation
of receipt (or, the first business day following such receipt if the date is not
a business day) of transmission by facsimile (with a confirming copy of such
communication to be sent as provided in clause (i)), and, in each case to the
parties at the following addresses or facsimile number (or at such other address
for a party as shall be specified by like notice, except that notices of changes
of address shall be effective upon receipt):
(a) If to Investor, to:
Walnut Investment Partners, L.P.
Attn: Manager
312 Walnut Street, Suite 1151
Cincinnati, Ohio 45202
With a copy to:
Keating, Muething & Klekamp, PLL
1400 Provident Tower
One East Fourth Street
Cincinnati, Ohio 45202
Attn: Edward E. Steiner, Esq.
Fax: 513-579-6578
(b) If to Company, to
Home Products International, Inc.
4501 West 47th Street
Chicago, IL 60632
Attention: Special Committee of the Board of Directors
Fax: 773-890-0523
with a copy to
Katten Muchin Zavis Rosenman
525 West Monroe Street
Chicago, IL 60661
Attention: Maryann A. Waryjas, Esq.
Mark D. Wood, Esq.
Fax: 312-902-1061
7. Whenever possible, each provision of this Agreement shall be interpreted in
such manner as to be effective and valid under applicable law, but if any
provision of this Agreement shall be prohibited by or invalid under such law,
such provision shall be ineffective to the extent of such prohibition or
invalidity, without invalidating the remainder of such provision or the
remaining provisions of this Agreement.
8. This Agreement shall be governed by the laws of the State of Delaware,
without regard to conflicts of law principles.
9. This Agreement may be executed in one or more counterparts, all of which
shall be considered one and the same agreement and shall become effective when
one or more counterparts have been signed by each of the parties hereto and
delivered to the other parties. Each party hereto need not sign the same
counterpart. This Agreement to the extent signed and delivered by means of a
facsimile machine, shall be treated in all manner and respects and for all
purposes as an original and shall be considered to have the same binding legal
effect as if it were the original signed version thereof delivered in person. No
party hereto shall raise the use of a facsimile machine to deliver a signature
or the fact that any signature was transmitted or communicated through the use
of a facsimile machine as a defense to the formation or enforceability of this
Agreement, and each such party forever waives any such defense.
IN WITNESS WHEREOF, the undersigned have executed this Agreement as of the day
and year first above written.
WALNUT INVESTMENT PARTNERS, L.P.
By: Walnut Investments Holding Company, LLC
Its: General Partner
/s/ James M. Gould
-----------------------------
By: James M. Gould
Its: Manager
HOME PRODUCTS INTERNATIONAL, INC.
/s/ James E. Winslow
-----------------------------
Executive Vice President and
Chief Financial Officer
AGREEMENT REGARDING FUNDING
THIS AGREEMENT REGARDING FUNDING (this "Agreement") is made as of October 28,
2004, by Triyar Capital, LLC, a Delaware limited liability company ("Triyar"),
in favor of Home Products International, Inc., a Delaware corporation (the
"Company").
RECITALS
A. The Company and Storage Acquisition Company, L.L.C., a Delaware limited
liability company ("Storage"), have entered into that certain Acquisition
Agreement, dated as of the date hereof (the "Acquisition Agreement"), providing
for, among other things, the acquisition of common stock of the Company by
Storage as provided in the Acquisition Agreement (the "Acquisition").
B. Triyar Storage Investment Company, LLC, a Delaware limited liability company
("Investor"), is an affiliate of Triyar and is a member of Storage.
C. As a material inducement for the Company to enter into the Acquisition
Agreement, Triyar desires, pursuant to the terms and conditions described
herein, to provide this Agreement regarding funding of Storage.
NOW, THEREFORE, for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereby agree as
follows:
1. Capitalized terms not otherwise defined herein have the meanings provided in
the Acquisition Agreement. As used in this Agreement, the following terms have
the meanings given below:
(a) "Aggregate Contributions" means the amount equal to sum of (a) the aggregate
amount of all cash contributions by all investors in Storage prior to the Share
Acceptance, plus (b) the product of (i) the aggregate number of shares of common
stock of the Company contributed to Storage by all investors in Storage prior to
the Share Acceptance, multiplied by (ii) Two and 25/100 Dollars ($2.25).
(b) "Cash Contribution" means the aggregate amount of all cash invested in or
contributed to Storage by Triyar and Investor.
(c) "Share Value" means an amount equal to the product of (a) the number of
shares of common stock of the Company contributed to Storage by Triyar and
Investor, multiplied, by (b) Two and 25/100 Dollars ($2.25).
2. Triyar agrees that it shall, prior to the Share Acceptance, invest in or
contribute to, or cause to be invested in or contributed to, Storage any
combination of shares of common stock of the Company and cash such that the sum
of the Share Value plus the Cash Contribution is not less than Three Million
Dollars ($3,000,000.00), or such lesser amount as is sufficient to cause Storage
to hold, at the time of the Share Acceptance, Aggregate Contributions available
for payment of the aggregate Offer Price of not less than Seventeen Million
Seven Hundred Twenty Seven Thousand Five Hundred Thirty and 00/100 Dollars
($17,727,530.00).
3. This Agreement shall remain and continue in full force and effect until the
Expiration Date (as defined below), at which time, the obligations of Triyar
under this Agreement shall cease, become null and void and be of no further
force or effect. As used in this Agreement, "Expiration Date" means the earliest
to occur of: (a) payment in full of the Offer Price for all Shares purchased
pursuant to the Offer under the Acquisition Agreement; and (b) the termination
of the Acquisition Agreement pursuant to Section 7.01 thereof.
4. This Agreement may not be amended, modified, waived, discharged or terminated
orally or by course of conduct, but only by an instrument in writing duly
executed by both the Company and Triyar. No waiver by the Company of any default
or any other event shall be effective unless in writing, nor shall it operate as
a waiver of any other default or of the same default on a future occasion. No
delay or omission by the Company in exercising any of its rights, remedies,
powers and privileges hereunder and no course of dealing between the Company and
Triyar shall be deemed a waiver by the Company of any of its rights, remedies,
powers or privileges, even if such delay or omission is continuous or repeated,
nor shall any single or partial exercise of any right, remedy, power or
privilege preclude any other or further exercise thereof by the Company, or the
exercise of any other right, remedy, power or privilege by the Company.
5. This Agreement shall be binding upon and shall inure to the benefit of
Company and Triyar and their respective successors and assigns. This Agreement
is not intended to confer upon any other person any rights or remedies
hereunder, and shall not be assigned by operation of law or otherwise. All
rights and remedies of Company under this Agreement are cumulative and not
restrictive of any other rights or remedies available at law or in equity.
6. All notices, requests, claims, demands and other communications given or made
under this Agreement shall be in writing and shall be deemed to have been duly
given or made (i) as of the date delivered if delivered personally or by a
nationally recognized overnight courier service or (ii) on the date confirmation
of receipt (or, the first business day following such receipt if the date is not
a business day) of transmission by facsimile (with a confirming copy of such
communication to be sent as provided in clause (i)), and, in each case to the
parties at the following addresses or facsimile number (or at such other address
for a party as shall be specified by like notice, except that notices of changes
of address shall be effective upon receipt):
(a) If to Triyar, to
Mark Weber
Managing Director
Triyar Capital, LLC
10850 Wilshire Blvd., 10th Floor
Los Angeles, CA 90024
(b) If to Company, to
Home Products International, Inc.
4501 West 47th Street
Chicago, IL 60632
Attention: Special Committee of the Board of Directors
Fax: 773-890-0523
with a copy to
Katten Muchin Zavis Rosenman
525 West Monroe Street
Chicago, IL 60661
Attention: Maryann A. Waryjas, Esq.
Mark D. Wood, Esq.
Fax: 312-902-1061
7. Whenever possible, each provision of this Agreement shall be interpreted in
such manner as to be effective and valid under applicable law, but if any
provision of this Agreement shall be prohibited by or invalid under such law,
such provision shall be ineffective to the extent of such prohibition or
invalidity, without invalidating the remainder of such provision or the
remaining provisions of this Agreement.
8. This Agreement shall be governed by the laws of the State of Delaware,
without regard to conflicts of law principles.
9. This Agreement may be executed in one or more counterparts, all of which
shall be considered one and the same agreement and shall become effective when
one or more counterparts have been signed by each of the parties hereto and
delivered to the other parties. Each party hereto need not sign the same
counterpart. This Agreement to the extent signed and delivered by means of a
facsimile machine, shall be treated in all manner and respects and for all
purposes as an original and shall be considered to have the same binding legal
effect as if it were the original signed version thereof delivered in person. No
party hereto shall raise the use of a facsimile machine to deliver a signature
or the fact that any signature was transmitted or communicated through the use
of a facsimile machine as a defense to the formation or enforceability of this
Agreement, and each such party forever waives any such defense.
IN WITNESS WHEREOF, the undersigned have executed this Agreement as of the day
and year first above written.
TRIYAR CAPITAL, LLC
/s/ Mark Weber
-----------------------------
Authorized Signatory
HOME PRODUCTS INTERNATIONAL, INC.
/s/ James E. Winslow
-----------------------------
Executive Vice President and
Chief Financial Officer
EXHIBIT 10
VOTING AGREEMENT
THIS VOTING AGREEMENT (this "Agreement") is dated as of October 28, 2004, by and
between STORAGE ACQUISITION COMPANY, L.L.C., a Delaware limited liability
company (the "Company"), and JOSEPH GANTZ ("Gantz").
WHEREAS, Home Products International, Inc., a Delaware corporation ("HPI"),
currently has outstanding approximately 7,878,900 shares of common stock, $0.01
par value per share (the "Common Stock");
WHEREAS, HPI and the Company are entering into an Acquisition Agreement of even
date herewith which provides for the acquisition of the Common Stock by the
Company (the "Acquisition Agreement");
WHEREAS, Gantz is currently the holder of one thousand five hundred thirty
(1,530) shares of Common Stock (the "Gantz Shares"), and the Company is
currently the holder of five (5) shares of Common Stock;
WHEREAS, the parties hereto wish to ensure that Gantz will have the right and
ability to elect a majority of the Board of Directors of HPI simultaneously with
the Share Acceptance (the "Board");
WHEREAS, in reliance on, among other things, this Agreement, Gantz and Gantz's
affiliate, Walnut Investment Partners, L.P., a Delaware limited partnership
("Walnut") have become members of the Company and Walnut has agreed to
contribute cash and/or Common Stock to the Company in connection with the
consummation of the tender offer contemplated by the Acquisition Agreement, and
has entered into the Funding Agreement, dated as of the date hereof by and
between Walnut and HPI; and
WHEREAS, the parties hereto intend that this Agreement is a specialty, and shall
have all the attributes of a contract entered into under seal.
NOW THEREFORE, in consideration of the mutual covenants and agreements contained
herein, the parties hereto, intending to be legally bound hereby, agree:
1. Voting. It is the intent of the parties hereto that from the Share Acceptance
until the termination of this Agreement, Gantz shall have the right to elect a
majority of the Board. The parties agree that, from the date hereof and
continuing until the termination of this Agreement, the Company shall vote, in
person or by proxy, or act by written consent with respect to, all shares of
Common Stock now owned or hereafter acquired by the Company (the "Shares") as
set forth in this Section 1 but only with respect to the election of directors
of the Board.
(a) Gantz shall have the right to designate a majority of the individuals listed
as Board Designees in the written notice provided by the Company to HPI pursuant
to Section 1.03 of the Acquisition Agreement, and those individuals shall be
identified as designees of Gantz in such notice; provided, however, if the total
number of Board Designees is nine (9), Gantz shall have the right to designate
six (6) such members, and the Company shall retain the right to designate three
(3) such members.
(b) At each election of directors thereafter, Gantz shall have a right to
designate and direct the vote for the minimum number of directors necessary to
constitute a majority of the directors then standing for election, and the
Company shall have the right to vote for the balance of such directors.
(c) In the case of any vacancy on the Board to be filled by stockholder action
with respect to a director designated by Gantz, Gantz shall have the right to
designate and direct the vote for such director's successor. In the event of any
vacancy on the Board to be filled by stockholder action with respect to a
director designated by the Company, the Company shall retain the right to
designate and direct the vote for such director's successor.
(d) Gantz may vote any Share owned directly and of record by Gantz in his
discretion.
2. Proxy. The Company is granting to Gantz an irrevocable proxy in the form
attached hereto as Exhibit A. The Company and Gantz each intend this proxy to be
irrevocable and coupled with an interest, and will take any further action and
execute such other instruments as may be necessary to effectuate the intent of
this proxy and this Agreement. Neither this Agreement nor the granting of the
proxy shall prevent the Company from granting any additional proxy or proxies
with respect to the Shares, so long as such proxy or proxies do not grant the
power to vote the Shares with respect to the matters set forth in Section 1 of
this Agreement during the term hereof.
3. Term of Agreement. The term of this Agreement shall commence at the date this
Agreement is executed by all parties and shall continue until the parties
unanimously agree to terminate the Agreement or until the earliest of (A) the
date on which none of the 9 5/8% Senior Subordinated Notes due 2008 issued by
the Corporation and outstanding as of the date hereof (as such may be amended
pursuant to their terms, the "Notes") are outstanding, (B) the date on which
such Notes and the Indenture dated as of May 14, 1998, by and among HPI, the
Subsidiary Guarantors (as defined in such Indenture) and LaSalle National Bank,
predecessor to HSBC Bank USA, as trustee (as such may be amended pursuant to its
terms, the "Indenture") are satisfied and discharged or the Indenture ceases to
be in effect, (C) the date of defeasance in whole of HPI's obligations under the
Notes and the Indenture, or (D) the death of Gantz.
4. Additional Documentation. The parties hereto agree that each such party,
without further consideration, shall take such other reasonable steps, or
deliver such further documents, as any other party hereto may reasonably request
in order to consummate the transactions and actions referred to herein.
5. Notices. Any notice required to be given hereunder shall be sufficient if in
writing, and sent by facsimile transmission or by courier service (with proof of
service), hand delivery or certified registered mail (return receipt requested
and first-class postage prepaid), addressed as follows:
(a) If to Gantz, addressed to:
Mr. Joseph Gantz
21st Floor
100 Park Avenue
New York, New York 10017
Fax: 212-661-9178
With a copy to:
Keating, Muething & Klekamp, PLL
1400 Provident Tower
One East Fourth Street
Cincinnati, Ohio 45202
Attention: Edward E. Steiner, Esq.
Fax: 513-579-6578
(b) If to the Company, addressed to:
Storage Acquisition Company, L.L.C.
c/o Equity Group Investments, L.L.C.
Two N. Riverside Plaza
Suite 600
Chicago, Illinois 60606
Attention: Ellen Havdala
Fax: 312-454-9678
With a copy to:
Gray Cary Ware & Freidenrich LLP
2000 University Avenue
East Palo Alto, California 94303
Attention: Henry Lesser
Fax: 650-833-2001
6. Construction.
(a) This Agreement shall be governed by and construed in accordance with the
laws of the State of Delaware. Each party hereby irrevocably and unconditionally
consents service of process by notice given as provided in Section 5 hereof and
to submit to the jurisdiction of the federal courts located in the State of
Delaware or any Delaware state courts in connection with any action or
proceeding arising out of or relating to this Agreement and the transactions
contemplated hereby (and agrees not to commence any suit, action or proceeding
relating thereto except in those courts), waives any defense or objection he may
have or hereafter have relating to the laying of venue of any suit, action or
proceeding in any such courts and agrees not to plead or claim that any suit,
action or proceeding brought therein has been brought in an inconvenient forum.
(b) This Agreement, together with the Board Composition Agreement, dated as of
the date hereof, among Gantz, the Company and certain investors in the Company,
embodies the entire agreement between the parties hereto with respect to the
subject matter hereof and supersedes any and all prior agreements and
understandings between the parties hereto with respect to the subject matter
hereof. This Agreement may only be amended, modified or restated by means of a
written instrument executed by all of the parties hereto.
(c) This Agreement may be executed by the parties in two or more counterparts,
each of which shall be deemed to constitute an original, and all of which shall
constitute one and the same instrument.
(d) Various headings used in this Agreement are for convenience only and are not
to be used in interpreting the text of the section in which they appear or to
which they relate.
(e) This Agreement shall not be assignable, by operation of law or otherwise,
without the consent of all other parties hereto, but shall be binding upon the
parties hereto.
(f) Capitalized terms not otherwise defined herein have the meanings given in
the Acquisition Agreement.
(g) The parties hereto agree that this Agreement is a specialty, and shall have
all the attributes of a contract entered into under seal.
(Signature page follows)
STORAGE ACQUISITION COMPANY, L.L.C.
/s/ Donald J. Liebentritt (seal)
-----------------------------
Vice President
/s/ Joseph Gantz (seal)
-----------------------------
JOSEPH GANTZ
IRREVOCABLE PROXY
By its execution hereof, and in order to secure its obligations under the Voting
Agreement (the "Agreement") of even date herewith between Storage Acquisition
Company, L.L.C., a Delaware limited liability company (the "Stockholder") and
Joseph Gantz, the undersigned hereby constitutes and appoints Joseph Gantz as
such Stockholder's true and lawful attorney and proxy, for and in the
Stockholder's name, place and stead, to vote each of the Shares, at every
annual, special or adjourned meeting of stockholders of Home Products
International, Inc., a Delaware corporation ("HPI"), and to sign on behalf of
the Stockholder any ballot, consent, certificate or other document relating to
the Shares that law permits or requires, but only with respect to the matters
and during the period (which may exceed three years) set forth in Section 1 of
the Agreement. This Proxy is coupled with an interest and the Stockholder
intends this Proxy to be, and this Proxy is, irrevocable to the fullest extent
permitted by law. The Stockholder hereby revokes any proxy previously granted by
the Stockholder with respect to the matters covered by this Proxy. The granting
of this Proxy shall not prevent the undersigned from granting any additional
proxy or proxies with respect to the Shares, so long as such proxy or proxies do
not grant the power to vote the Shares with respect to the matters set forth in
Section 1 of the Agreement during the term thereof. Capitalized terms used but
not defined herein shall have the meaning set forth in the Agreement. The
Stockholder shall perform such further acts and execute such further documents
and instruments as may reasonably be required to vest in Joseph Gantz the power
to carry out and give effect to the provisions of this Proxy. This Proxy shall
terminate upon the termination of the Agreement in accordance with its terms.
Notwithstanding any other provision of this Proxy, the holder of this Proxy
shall have no power of substitution, and this Proxy may not be assigned, by
operation of law or otherwise.
IN WITNESS WHEREOF, the undersigned has executed this Irrevocable Proxy this
28th day of October, 2004.
STORAGE ACQUISITION COMPANY, L.L.C.
/s/ Donald J. Liebentritt (seal)
-----------------------------
Vice President
EXHIBIT 11
BOARD COMPOSITION AGREEMENT
THIS BOARD COMPOSITION AGREEMENT (this "Agreement") is entered into as of
October 28, 2004, by and among Storage Acquisition Company, L.L.C., a Delaware
limited liability company (the "Company"), EGI-Fund (02-04) Investors, L.L.C., a
Delaware limited liability company ("EGI"), Joseph Gantz ("Gantz"), Walnut
Investment Partners, L.P., a Delaware limited partnership ("Walnut"), Triyar
Storage Investment Company, LLC, a Delaware limited liability company
("Triyar"), and the other persons and entities set forth on Schedule A hereto
(individually an "Investor" and collectively the "Investors").
RECITALS
WHEREAS, the Company has been formed for the purpose of acquiring the
outstanding common stock (the "HPI Common Stock") of Home Products
International, Inc., a Delaware corporation ("HPI"), by means of a tender offer
pursuant to an Acquisition Agreement between the Company and HPI (the
"Acquisition Agreement"). Capitalized terms not otherwise defined herein have
the meanings given in the Acquisition Agreement;
WHEREAS, concurrent with the execution of this Agreement, the Company and Gantz
are executing and delivering the Voting Agreement, dated as of the date hereof
(the "Voting Agreement"), and the Company is executing in favor of Gantz the
irrevocable proxy provided for therein (the "Proxy");
WHEREAS, pursuant to the Voting Agreement, among other things, Gantz has the
right to designate a majority of the individuals listed as "Board Designees" (as
such term is defined in the Acquisition Agreement) in the written notice
provided by the Company to HPI pursuant to Section 1.03 of the Acquisition
Agreement; and
WHEREAS, the Investors wish to enter into certain agreements relating to the
governance of HPI following the Share Acceptance and the tender of HPI Common
Stock in connection with the Share Acceptance.
NOW THEREFORE, in consideration of the mutual covenants and agreements contained
herein, the parties hereto, intending to be legally bound hereby, agree:
1. Board of Directors. Each Investor hereby agrees to take all action to cause
the Company, as promptly as practicable following the Share Acceptance and
consistent with all applicable law (including, without limitation, but only if
then applicable, Section 14(c) of the Exchange Act and Regulation 14C
promulgated thereunder), to take such action as is necessary or appropriate to
ensure that:
(a) the Board of Directors of HPI consists of a total of nine directors;
(b) the Board of Directors of HPI consists of three classes of directors, with
the term of office of the first class (Class I) to expire at the first annual
meeting after the Share Acceptance; the term of office of the second class
(Class II) to expire at the second annual meeting after the Share Acceptance;
the term of office of the third class (Class III) to expire at the third annual
meeting after the Share Acceptance; and with the subsequent terms of each class
expiring at the third anniversary of each such date, respectively; and
(c) the HPI Certificate of Incorporation and bylaws permit removal of a director
by HPI stockholders only for cause.
2. Board Designees.
(a) Not later than five calendar days from the date hereof, Gantz shall deliver
to the Company a list identifying the individuals designated by him as Board
Designees (the "Gantz Designees"), and directing the Company to include such
Board Designees in the written notice to be provided to HPI by the Company
pursuant to Section 1.03 of the Acquisition Agreement. While the Board of
Directors is classified into three classes as contemplated in Section 1(b)
hereof, each such class of the initial Board of Directors shall include two
Gantz Designees. In the event that Gantz, prior to the Share Acceptance, elects
to change any designation of such individuals, he shall give prompt written
notice of such change to the Company and each other Investor, and after receipt
of such notice, such change shall be effected only to the extent permitted, and
in compliance with, all applicable laws (including, without limitation, Sections
14(d) and 14(f) of the Exchange Act and the rules promulgated thereunder).
(b) Not later than five calendar days from the date hereof, the Company shall
deliver to Gantz and the other Investors a list identifying the individuals
designated by it as Board Designees (the "Company Designees"). While the Board
of Directors is classified into three classes as contemplated in Section 1(b)
hereof, each such class of the initial Board of Directors shall include one
Company Designee. In the event that the Company, prior to the Share Acceptance,
elects to change any designation of such individuals, it shall give prompt
written notice of such change to the Investors, and after receipt of such
notice, such change shall be effected only to the extent permitted, and in
compliance with, all applicable laws (including, without limitation, Sections
14(d) and 14(f) of the Exchange Act and the rules promulgated thereunder).
3. Tender of HPI Common Stock. Each Investor, other than Gantz, covenants and
agrees that, with respect to any shares of HPI Common Stock such Investor holds
(or any affiliate of such Investor, other than Gantz, holds) immediately prior
to the Share Acceptance (other than the shares which are contributed to the
Company prior to such Share Acceptance), such Investor shall tender all such
shares of HPI Common Stock for purchase in connection with the Offer. In no
event shall any Investor be liable for the failure of any other Investor to
tender its or his shares of HPI Common Stock hereunder.
4. Investor Representations and Warranties. Each Investor hereby represents and
warrants to the Company and each other Investor that the representations and
warranties relating to such Investor set forth in Section 3.08 of the
Acquisition Agreement are true and correct.
5. Additional Documentation. Each Investor shall, from time to time, execute and
deliver, or cause to be executed and delivered, such additional or further
consents, documents and other instruments and shall take all such other action
as any other party hereto may reasonably request for the purpose of effectively
carrying out the transactions contemplated by and the purposes and intents of
this Agreement.
6. Term of this Agreement. The term of this Agreement shall commence at the date
this Agreement is executed by all parties and shall continue until the parties
unanimously agree to terminate the Agreement or until the earliest of (A) the
date on which none of the 9 5/8 % Senior Subordinated Notes due 2008 issued by
HPI and outstanding as of the date hereof (as such may be amended pursuant to
their terms, the "Notes") are outstanding, (B) the date on which such Notes and
the Indenture dated as of May 14, 1998, by and among HPI, the Subsidiary
Guarantors (as defined in such Indenture) and LaSalle National Bank, predecessor
to HSBC Bank USA, as trustee (as such may be amended pursuant to its terms, the
"Indenture") are satisfied and discharged or the Indenture ceases to be in
effect, (C) the date of defeasance in whole of the HPI's obligations under the
Notes and the Indenture, and (D) the termination of the Acquisition Agreement in
accordance with its terms.
7. Remedies. The Investors stipulate that an Investor's remedies at law in the
event of any default or threatened default by an Investor in the performance of
or compliance with any of the terms hereof are not and will not be adequate to
the fullest extent permitted by law, and that such terms may be specifically
enforced by a decree for the specific performance of any agreement contained
herein or by an injunction against a violation of any of the terms hereof or
otherwise.
8. Enforcement Costs. If any party to, or beneficiary of, this Agreement seeks
to enforce its rights hereunder by legal proceedings or otherwise, then the
non-prevailing party shall pay all reasonable costs and expenses incurred by the
prevailing party, including, without limitation, all reasonable attorneys' fees
and costs of suit.
9. Nonwaiver; Cumulative Remedies. No course of dealing or any delay or failure
to exercise any right hereunder on the part of an Investor shall operate as a
waiver of such right or otherwise prejudice the rights, powers or remedies of
such Investor. No single or partial waiver by an Investor of any provision
hereof or of any breach or default hereunder or of any right or remedy shall
operate as a waiver of any other provision, breach, default right or remedy or
of the same provision, breach, default, right or remedy on a future occasion.
The rights and remedies provided herein are cumulative and are in addition to
all rights and remedies which each Investor may have in law or in equity or by
statute or otherwise.
10. Notices. All notices, requests, reports and other communications pursuant to
this Agreement shall be in writing, either by letter (delivered by hand or
commercial delivery service or sent by certified mail, return receipt requested)
or telecopier, addressed to each Investor at the address set forth next to such
Investor's name on Schedule A hereto. Any notice, request or communication
hereunder shall be deemed to have been given on the day on which it is delivered
by hand to such party at its address specified above, or, if sent by mail, on
the third business day following the day it was deposited in the mail, postage
prepaid, or in the case of telecopy notice, when transmitted addressed as
aforesaid, answerback received. Any party may change the person or address to
whom or which notices are to be given hereunder, by notice duly given hereunder;
provided, however, that any such notice shall be deemed to have been given
hereunder only when actually received by the party to which it is addressed.
11. Miscellaneous Provisions.
(a) This Agreement shall be governed by and construed in accordance with the
laws of the State of Delaware (without regard to conflicts of laws purposes).
Each party hereby irrevocably and unconditionally consents service of process by
notice given as provided herein and to submit to the jurisdiction of the federal
courts located in the State of Delaware or any Delaware state courts in
connection with any action or proceeding arising out of or relating to this
Agreement and the transactions contemplated hereby (and agrees not to commence
any suit, action or proceeding relating thereto except in those courts), waives
any defense or objection such party may have or hereafter have relating to the
laying of venue of any suit, action or proceeding in any such courts and agrees
not to plead or claim that any suit, action or proceeding brought therein has
been brought in an inconvenient forum.
(b) If, in any action before any court or agency legally empowered to enforce
any term, any term is found to be unenforceable, then such term shall be deemed
modified to the extent necessary to make it enforceable by such court or agency.
If any term is not curable as set forth in the preceding sentence, the
unenforceability of such term shall not affect the other provisions of this
Agreement but this Agreement shall be construed as if such unenforceable term
had never been contained herein.
(c) This Agreement, together with the Voting Agreement, embodies the entire
agreement between the parties hereto with respect to the subject matter hereof
and supersedes any and all prior agreements and understandings between the
parties hereto with respect to the subject matter hereof. This Agreement may
only be amended, modified or restated by means of a written instrument executed
by (i) the holder of the largest Percentage Interest in the Company and (ii) the
holders of at least seventy five percent of the outstanding Company Membership
Interests not held by the holder of the largest Percentage Interest in the
Company. Notwithstanding the foregoing, all parties hereto acknowledge and agree
that individuals identified by the Company as prospective officers and key
employees of HPI (each a "Member of Management") may be issued membership
interests of the Company and invited or required to become party to this
Agreement as a condition of such issuance, and hereby agree that if and when a
Member of Management receives a membership interest in the Company, such Member
of Management may become a party to, and bound by, this Agreement, solely with
the consent of the Company and by delivering to the Company a counterpart
signature page to this Agreement.
(d) This Agreement shall not be assignable, by operation of law or otherwise,
without the consent of all other parties hereto, but shall be binding upon the
parties hereto.
(e) This Agreement and the documents and instruments and other agreements
specifically referred to herein or delivered pursuant hereto, are not intended
to confer upon any other person any rights or remedies hereunder, and shall not
be assigned by operation of law or otherwise without the written consent of the
other parties.
(f) Various headings used in this Agreement are for convenience only and are not
to be used in interpreting the text of the section in which they appear or to
which they relate.
(g) This Agreement may be executed by the parties in two or more counterparts,
each of which shall be deemed to constitute an original, and all of which shall
constitute one and the same instrument.
IN WITNESS WHEREOF the parties hereto have caused this Board Composition
Agreement to be duly executed as of the date first above written.
STORAGE ACQUISITION COMPANY, L.L.C.
/s/ Donald J. Liebentritt
-----------------------------
Vice President
EGI-FUND (02-04) INVESTORS, L.L.C.
/s/ Donald J. Liebentritt
-----------------------------
Vice President
WALNUT INVESTMENT PARTNERS, L.P.
By: Walnut Investments Holding Company, LLC
Its: General Partner
/s/ James M. Gould
-----------------------------
By: James M. Gould
Its: Manager
/s/ Joseph Gantz
-----------------------------
JOSEPH GANTZ
TRIYAR STORAGE INVESTMENT COMPANY, LLC
/s/ Mark Weber
-----------------------------
By: Mark Weber
Its: Authorized Signatory
EXHIBIT 12
AMENDED AND RESTATED JOINT FILING AGREEMENT
THIS AGREEMENT is dated as of October 26, 2004 and is made by and among Storage
Acquisition Company, L.L.C., a Delaware limited liability company ("SAC"),
Samstock/SIT, L.L.C., a Delaware limited liability company ("Samstock/SIT"),
Zell General Partnership, Inc., an Illinois corporation ("ZGP"), EGI-Fund
(02-04) Investors, L.L.C., a Delaware limited liability company ("Fund 02-04"),
EGI-Managing Member (02-04), L.L.C., a Delaware limited liability company
("Managing Member"), SZ Investments, L.L.C., a Delaware limited liability
company ("SZ Investments "), Chai Trust Company, L.L.C., an Illinois limited
liability company ("Chai"), Joseph Gantz, an individual ("Gantz"), Walnut
Investment Partners, L.P., a Delaware limited partnership ("Walnut"), Triyar
Storage Investment Company, LLC, a Delaware limited liability company ("TSIC"),
and Triyar Capital Partners LLC, a Delaware limited liability company ("Triyar";
together with SAC, Samstock/SIT, ZGP, Fund 02-04, Managing Member, SZ
Investments, Chai, Gantz, Walnut and TSIC, the "Reporting Persons").
WHEREAS, each of SAC, Samstock/SIT, ZGP, Fund 02-04 and Gantz are parties to
that certain Amended and Restated Joint Filing Agreement dated as of October 21,
2004 (the "Original Agreement"), pursuant to the terms of which such parties
agreed to provide for the filing of a joint Schedule 13D, and all amendments
thereto, with respect to shares of common stock, par value $0.01, of Home
Products International, Inc. (the "Common Stock");
WHEREAS, each of Samstock/SIT, ZGP, Fund 02-04, Gantz, Managing Member, SZ
Investments and Chai may be deemed to constitute a "group" for purposes of
Section 13(d)(3) of the Securities Exchange Act of 1934, as amended (the "Act");
WHEREAS, each of SAC, Fund 02-04, Walnut, Gantz and Triyar may be deemed to
constitute an "offeror" for purposes of Rule 14d-100 of the Act;
WHEREAS, each of the Reporting Persons desire by this Agreement to amend and
restate the Original Agreement in its entirety to add SZ Investments, Managing
Member, Chai, Walnut, TSIC and Triyar thereto and to provide for the joint
filing of a Schedule 13D, and all amendments thereto, a Schedule TO, and all
amendments thereto, and all other filings required in connection therewith with
the Securities and Exchange Commission with respect to the Common Stock
(collectively, the "Filings").
NOW, THEREFORE, the parties hereto agree as follows:
1. The parties hereto will join in the preparation and filing of a single
statement containing the information required by any of the Filings and will be
filed on behalf of each party hereto. Each party is eligible to use the any of
the Filings on which such information is filed.
2. Each party hereto will be responsible for the timely filing of each of the
Filings, and all amendments thereto, and for the completeness and accuracy of
the information concerning such party contained therein. No party hereto will be
responsible for the completeness or accuracy of the information concerning any
other party contained in the Schedule 13D or any amendment thereto, except to
the extent such party knows or has reason to believe that such information is
inaccurate.
3. This Agreement may be executed in counterparts, all of which when taken
together will constitute one and the same instrument. This Agreement hereby
amends and restates the Original Agreement in its entirety.
IN WITNESS WHEREOF the undersigned have caused this agreement to be duly
executed as of the date first above written.
EGI-FUND (02-04) INVESTORS, L.L.C.
EGI-MANAGING MEMBER (02-04), L.L.C.
SZ INVESTMENTS, L.L.C.
SAMSTOCK/SIT, L.L.C.
ZELL GENERAL PARTNERSHIP, INC.
/s/ Donald J. Liebentritt
-----------------------------
Each By: Donald J. Liebentritt
Its: Vice President
CHAI TRUST COMPANY, L.L.C.
/s/ Donald J. Liebentritt
-----------------------------
By: Donald J. Liebentritt
Its: President
STORAGE ACQUISITION COMPANY, L.L.C.
/s/ Ellen Havdala
-----------------------------
By: Ellen Havdala
Its: Vice President
/s/ Joseph Gantz
-----------------------------
JOSEPH GANTZ
WALNUT INVESTMENT PARTNERS, L.P.
By: Walnut Investments Holding Company, LLC
Its: General Partner
/s/ James M. Gould
-----------------------------
By: James M. Gould
Its: Manager
TRIYAR CAPITAL, LLC
TRIYAR STORAGE INVESTMENT COMPANY, LLC
/s/ Mark Weber
-----------------------------
Each by: Mark Weber
Its: Authorized Signatory
EXHIBIT 13
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned, Joseph Gantz, has made,
constituted and appointed, and by these presents does make, constitute and
appoint, each and any of F. Mark Reuter ("Reuter"), Storage Acquisition Company,
L.L.C. ("SAC") and EGI-Fund (02-04) Investors, L.L.C. ("Fund 02-04") with full
power of substitution, his true and lawful attorney-in-fact and agent, for him
in his name, place and stead, to execute, acknowledge, deliver and file any and
all filings required by (i) Section 13 of the Securities Exchange Act of 1934,
as amended (the "Act"), and the rules and regulations promulgated thereunder
respecting Rule 13d, Schedule 13D, and any amendments thereto, together with all
filings required by Section 16 of the Act, and the rules and regulations
promulgated thereunder, and any amendments thereto, (ii) Section 14 of the Act,
and the rules and regulations promulgated thereunder respecting any filings
required thereunder or in respect thereof, including, without limitation, under
Rule 14d or Schedule TO, and any amendments thereto, and (iii) any other section
of the Act, and the rules and regulations promulgated thereunder, to be filed by
him in connection with the acquisition and/or disposition by SAC (of which he is
a non-managing member) or Fund 02-04 of shares of common stock, $0.01 per share
par value, of Home Products International, Inc., hereby ratifying and confirming
all that said attorney-in-fact and agent or its substitute or substitutes may do
or cause to be done by virtue hereof.
The validity of this Power of Attorney shall not be affected in any manner by
reason of the execution, at any time, of other powers of attorney by the
undersigned in favor of persons other than those named herein.
WITNESS THE EXECUTION HEREOF this 26th day of October, 2004, by Joseph
Gantz.
/s/ Joseph Gantz
-----------------------------
JOSEPH GANTZ
SCHEDULE TO
ITEM 12. EXHIBITS
(a)(5)(A) Press Release issued by Home Products International,
Inc. on October 29, 2004
(a)(5)(B) Amended and Restated Joint Filing Agreement dated
October 26, 2004 among Storage Acquisition Company,
L.L.C., EGI-Fund (02-04) Investors, L.L.C.,
EGI-Managing Member (02-04), L.L.C., SZ Investments,
L.L.C., Chai Trust Company, L.L.C., Samstock/SIT,
L.L.C., Zell General Partnership, Inc., Walnut
Investment Partners, L.P., Joseph Gantz, Triyar
Capital, LLC and Triyar Storage Investment Company,
LLC
(a)(5)(C) Powers of Attorney dated October 26, 2004 by (i)
Walnut Investment Partners, L.P. and Joseph Gantz,
each in favor of F. Mark Reuter, Storage Acquisition
Company, L.L.C. and EGI-Fund (02-04) Investors,
L.L.C., and (ii) Triyar Capital, LLC and Triyar
Storage Investment Company, LLC, in favor of Storage
Acquisition Company, L.L.C. and EGI-Fund (02-04)
Investors, L.L.C.
SIGNATURES
After reasonable inquiry and to the best of my knowledge and belief, I certify
that the information set forth in this statement is true, complete and correct.
Date: October 29, 2004
STORAGE ACQUISITION COMPANY, L.L.C.
/s/ Ellen Havdala
-----------------------------
By: Ellen Havdala
Its: Vice President
CHAI TRUST COMPANY, L.L.C.
/s/ Donald J. Liebentritt
-----------------------------
By: Donald J. Liebentritt
Its: President
EGI-FUND (02-04) INVESTORS, L.L.C.
/s/ Donald J. Liebentritt
-----------------------------
By: Donald J. Liebentritt
Its: Vice President
/s/ Joseph Gantz
-----------------------------
JOSEPH GANTZ
WALNUT INVESTMENT PARTNERS, L.P.
By: Walnut Investments Holding Company, LLC
Its: General Partner
/s/ James M. Gould
-----------------------------
By: James M. Gould
Its: Manager
TRIYAR CAPITAL, LLC
/s/ Mark Weber
-----------------------------
By: Mark Weber
Its: Authorized Signatory
EGI-MANAGING MEMBER (02-04), L.L.C.
SZ INVESTMENTS, L.L.C.
SAMSTOCK/SIT, L.L.C.
ZELL GENERAL PARTNERSHIP, INC.
/s/ Donald J. Liebentritt
-----------------------------
Each By: Donald J. Liebentritt
Its: Vice President
INDEX TO EXHIBITS - SCHEDULE TO
(a)(5)(A) Press Release issued by Home Products International,
Inc. on October 29, 2004
(a)(5)(B) Amended and Restated Joint Filing Agreement dated
October 26, 2004 among Storage Acquisition Company,
L.L.C., EGI-Fund (02-04) Investors, L.L.C.,
EGI-Managing Member (02-04), L.L.C., SZ Investments,
L.L.C., Chai Trust Company, L.L.C., Samstock/SIT,
L.L.C., Zell General Partnership, Inc., Walnut
Investment Partners, L.P., Joseph Gantz, Triyar
Capital, LLC and Triyar Storage Investment Company,
LLC
(a)(5)(C) Powers of Attorney dated October 26, 2004 by (i)
Walnut Investment Partners, L.P. and Joseph Gantz,
each in favor of F. Mark Reuter, Storage Acquisition
Company, L.L.C. and EGI-Fund (02-04) Investors,
L.L.C., and (ii) Triyar Capital, LLC and Triyar
Storage Investment Company, LLC, in favor of Storage
Acquisition Company, L.L.C. and EGI-Fund (02-04)
Investors, L.L.C.
EXHIBIT (a)(5)(A)
PRESS RELEASE
FOR: Home Products International, Inc.
APPROVED BY:
James R. Tennant, Chairman & CEO
Home Products International, Inc.
(773) 890-1010
FOR IMMEDIATE RELEASE
CONTACT:
Investor Relations:
James Winslow, Executive VP & CFO
Home Products International, Inc.
(773) 890-1010
HOME PRODUCTS INTERNATIONAL, INC.
TO BE ACQUIRED FOR $2.25 PER SHARE IN CASH
Chicago, IL, October 29, 2004 - Home Products International, Inc. (the Company
or Home Products) (Nasdaq SmallCap: HOMZ), a leader in the housewares industry,
announced today that it has entered into a definitive acquisition agreement
under which it will be acquired for $2.25 per share in cash.
The acquirer is Storage Acquisition Company, L.L.C., whose members are EGI-Fund
(02-04) Investors, L.L.C; an affiliate of Triyar Capital, LLC; Joseph Gantz (a
former director of Home Products); and Walnut Investment Partners, L.P. (an
affiliate of Mr. Gantz). Mr. Gantz and affiliates of EGI Fund (02-04) own shares
representing approximately 8% of the Company's outstanding common stock.
Under the acquisition agreement, if specified conditions are met, Storage
Acquisition Company will make a tender offer for all outstanding shares of the
Company's common stock, subject to a minimum tender of 80% of all of the
outstanding shares not held by Storage Acquisition Company or its affiliates
(not giving effect to any options or warrants). The tender offer, which is to be
commenced by November 11, 2004, will also be subject to other customary
conditions. The tender offer is not conditioned on any agreement with any holder
of the 9- 5/8% senior subordinated notes due 2008.
A special committee of independent directors of Home Products represented the
Company in negotiating the acquisition agreement. The special committee
unanimously recommended that the Company's board of directors approve the
acquisition agreement, and the board of directors accepted this recommendation
and is recommending that the stockholders of the Company accept the tender offer
when it is made.
The special committee was advised by Katten Muchin Zavis Rosenman as legal
counsel, and received an opinion from the investment banking firm Mesirow
Financial that the per share consideration of $2.25 in cash is fair, from a
financial point of view, to the holders of Home Products common stock.
Before entering into the acquisition agreement with Storage Acquisition Company,
the Company terminated its merger agreement with JRT Acquisition, Inc., an
entity formed by James R. Tennant, the Company's chairman and chief executive
officer. The special committee determined that the $2.25 per share acquisition
proposal from Storage Acquisition Company represented a superior company
proposal under the JRT Agreement.
Under the acquisition agreement, holders of options under the Home Products'
stock option plans who enter into cancellation agreements prior to the purchase
of shares in the tender offer will be entitled to a cash payment equal to the
excess of the $2.25 offer price over the option exercise price for each share
issuable under these options.
The acquisition agreement does not provide for any transaction (such as a merger
or stock split) to follow the completion of the tender offer. Accordingly, the
Company's stockholders whose shares are not purchased in the tender offer will
retain their shares. Depending on the number of such stockholders, the Company
may or may not be eligible to terminate its status as a mandatory filer of
annual and periodic reports with the SEC. Storage Acquisition Company has
informed the Company that it intends to cause the Company to terminate that
status after the completion of the tender offer, if it is eligible to do so.
Even if that status is terminated, the Company will continue to be required to
file certain reports with the SEC under Home Products' indenture governing its
9-5/8% senior subordinated notes due 2008. However, the Company will not be
subject to other SEC requirements if such status is terminated, including
provisions enacted in the Sarbanes-Oxley Act. Whether or not such status is
terminated, Storage Acquisition Company has advised the Company that, following
the completion of the tender offer, it intends to cause the Company to
voluntarily terminate the listing of its common stock on the NASDAQ SmallCap
market, which will result in significantly reduced liquidity for any shares that
continue to be held by stockholders other than Storage Acquisition Company.
Under the acquisition agreement, upon the first acceptance of tendered shares
for payment in the tender offer, the Home Products board will be reconstituted
to consist solely of designees of Storage Acquisition Company. Storage
Acquisition Company has entered into a voting agreement and irrevocable proxy
under which Mr. Gantz (who was a director of the Company at the issue date of
the senior subordinated notes and, accordingly, is a "permitted holder" under
the Company's note indenture) will be entitled to designate a majority of those
designees as well as a majority of the board at every director election
thereafter. As a result of the voting rights granted to Mr. Gantz, and the other
terms and conditions of the transaction, the Company does not believe that the
rights of noteholders to require a repurchase of their notes upon a change of
control will be triggered.
The Company will file a copy of the acquisition agreement on Form 8-K with the
SEC shortly.
This announcement is neither an offer to purchase nor a solicitation to sell
securities. The tender offer for the shares of Home Products common stock
described in this press release has not commenced. In connection with the
acquisition agreement, Storage Acquisition Company and its investors will be
filing a Tender Offer Statement on Schedule TO, an Offer to Purchase, and
related materials, and the Company will be filing a Solicitation/Recommendation
Statement on Schedule 14D-9, with the SEC. Investors and stockholders of the
Company are advised to read the Schedule TO, the Offer to Purchase and Schedule
14D-9 when they become available, and any other relevant documents filed with
the SEC, because they will contain important information regarding the proposed
tender offer. The Offer to Purchase and Schedule 14D-9 will be mailed to the
Company's stockholders. Investors and stockholders may also obtain a free copy
of the Schedule TO, Offer to Purchase and Schedule 14D-9 (when available) and
other documents filed by the Company with the SEC, at the SEC's web site at
http://www.sec.gov.
Home Products International, Inc. is an international consumer products company
specializing in the manufacture and marketing of quality diversified housewares
products. The Company sells its products through national and regional
discounters including Kmart, Wal-Mart and Target, hardware/home centers,
food/drug stores, juvenile stores and specialty stores.
NOTE: This press release contains forward-looking statements regarding Home
Products International, Inc. that are subject to risks, uncertainties and
assumptions, including those identified below, as well as other risks not yet
known to the Company or not currently considered material by the Company. Should
one or more of these risks or uncertainties materialize, or should underlying
assumptions prove incorrect, actual results may differ materially from those
expected. These risks include, but are not limited to, the risk the tender offer
will not be consummated because the conditions thereto are not satisfied, as
well as risks and uncertainties associated with the Company's operating results
and prospects. For a more detailed description of these and other risk factors,
please refer to the Company's SEC filings. The Company undertakes no obligation
to update any such factors or to announce the results of any revision to any of
the forward-looking statements contained herein to reflect future events or
developments.
EXHIBIT (a)(5)(B)
AMENDED AND RESTATED JOINT FILING AGREEMENT
THIS AGREEMENT is dated as of October 26, 2004 and is made by and among Storage
Acquisition Company, L.L.C., a Delaware limited liability company ("SAC"),
Samstock/SIT, L.L.C., a Delaware limited liability company ("Samstock/SIT"),
Zell General Partnership, Inc., an Illinois corporation ("ZGP"), EGI-Fund
(02-04) Investors, L.L.C., a Delaware limited liability company ("Fund 02-04"),
EGI-Managing Member (02-04), L.L.C., a Delaware limited liability company
("Managing Member"), SZ Investments, L.L.C., a Delaware limited liability
company ("SZ Investments "), Chai Trust Company, L.L.C., an Illinois limited
liability company ("Chai"), Joseph Gantz, an individual ("Gantz"), Walnut
Investment Partners, L.P., a Delaware limited partnership ("Walnut"), Triyar
Storage Investment Company, LLC, a Delaware limited liability company ("TSIC"),
and Triyar Capital Partners LLC, a Delaware limited liability company ("Triyar";
together with SAC, Samstock/SIT, ZGP, Fund 02-04, Managing Member, SZ
Investments, Chai, Gantz, Walnut and TSIC, the "Reporting Persons").
WHEREAS, each of SAC, Samstock/SIT, ZGP, Fund 02-04 and Gantz are parties to
that certain Amended and Restated Joint Filing Agreement dated as of October 21,
2004 (the "Original Agreement"), pursuant to the terms of which such parties
agreed to provide for the filing of a joint Schedule 13D, and all amendments
thereto, with respect to shares of common stock, par value $0.01, of Home
Products International, Inc. (the "Common Stock");
WHEREAS, each of Samstock/SIT, ZGP, Fund 02-04, Gantz, Managing Member, SZ
Investments and Chai may be deemed to constitute a "group" for purposes of
Section 13(d)(3) of the Securities Exchange Act of 1934, as amended (the "Act");
WHEREAS, each of SAC, Fund 02-04, Walnut, Gantz and Triyar may be deemed to
constitute an "offeror" for purposes of Rule 14d-100 of the Act;
WHEREAS, each of the Reporting Persons desire by this Agreement to amend and
restate the Original Agreement in its entirety to add SZ Investments, Managing
Member, Chai, Walnut, TSIC and Triyar thereto and to provide for the joint
filing of a Schedule 13D, and all amendments thereto, a Schedule TO, and all
amendments thereto, and all other filings required in connection therewith with
the Securities and Exchange Commission with respect to the Common Stock
(collectively, the "Filings").
NOW, THEREFORE, the parties hereto agree as follows:
1. The parties hereto will join in the preparation and filing of a single
statement containing the information required by any of the Filings and will be
filed on behalf of each party hereto. Each party is eligible to use the any of
the Filings on which such information is filed.
2. Each party hereto will be responsible for the timely filing of each of the
Filings, and all amendments thereto, and for the completeness and accuracy of
the information concerning such party contained therein. No party hereto will be
responsible for the completeness or accuracy of the information concerning any
other party contained in the Schedule 13D or any amendment thereto, except to
the extent such party knows or has reason to believe that such information is
inaccurate.
3. This Agreement may be executed in counterparts, all of which when taken
together will constitute one and the same instrument. This Agreement hereby
amends and restates the Original Agreement in its entirety.
IN WITNESS WHEREOF the undersigned have caused this agreement to be duly
executed as of the date first above written.
EGI-FUND (02-04) INVESTORS, L.L.C.
EGI-MANAGING MEMBER (02-04), L.L.C.
SZ INVESTMENTS, L.L.C.
SAMSTOCK/SIT, L.L.C.
ZELL GENERAL PARTNERSHIP, INC.
/s/ Donald J. Liebentritt
-----------------------------
Each By: Donald J. Liebentritt
Its: Vice President
CHAI TRUST COMPANY, L.L.C.
/s/ Donald J. Liebentritt
-----------------------------
By: Donald J. Liebentritt
Its: President
STORAGE ACQUISITION COMPANY, L.L.C.
/s/ Ellen Havdala
-----------------------------
By: Ellen Havdala
Its: Vice President
/s/ Joseph Gantz
-----------------------------
JOSEPH GANTZ
WALNUT INVESTMENT PARTNERS, L.P.
By: Walnut Investments Holding Company, LLC
Its: General Partner
/s/ James M. Gould
-----------------------------
By: James M. Gould
Its: Manager
TRIYAR CAPITAL, LLC
TRIYAR STORAGE INVESTMENT COMPANY, LLC
/s/ Mark Weber
-----------------------------
Each by: Mark Weber
Its: Authorized Signatory
EXHIBIT (a)(5)(C)
POWERS OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned, Walnut Investment
Partners, L.P., has made, constituted and appointed, and by these presents does
make, constitute and appoint, each and any of F. Mark Reuter ("Reuter"), Storage
Acquisition Company, L.L.C. ("SAC") and EGI-Fund (02-04) Investors, L.L.C.
("Fund 02-04") with full power of substitution, its true and lawful
attorney-in-fact and agent, for it in its name, place and stead, to execute,
acknowledge, deliver and file any and all filings required by (i) Section 13 of
the Securities Exchange Act of 1934, as amended (the "Act"), and the rules and
regulations promulgated thereunder respecting Rule 13d, Schedule 13D, and any
amendments thereto, together with all filings required by Section 16 of the Act,
and the rules and regulations promulgated thereunder, and any amendments
thereto, (ii) Section 14 of the Act, and the rules and regulations promulgated
thereunder respecting any filings required thereunder or in respect thereof,
including, without limitation, under Rule 14d or Schedule TO, and any amendments
thereto, and (iii) any other section of the Act, and the rules and regulations
promulgated thereunder, to be filed by it in connection with the acquisition
and/or disposition by SAC (of which it is a non-managing member) or Fund 02-04
of shares of common stock, $0.01 per share par value, of Home Products
International, Inc., hereby ratifying and confirming all that said
attorney-in-fact and agent or its substitute or substitutes may do or cause to
be done by virtue hereof.
The validity of this Power of Attorney shall not be affected in any manner by
reason of the execution, at any time, of other powers of attorney by the
undersigned in favor of persons other than those named herein.
WITNESS THE EXECUTION HEREOF this 25th day of October, 2004, by Walnut
Investment Partners, L.P.
WALNUT INVESTMENT PARTNERS, L.P.
By: Walnut Investments Holding Company, LLC
Its: General Partner
/s/ James M. Gould
-----------------------------
James M. Gould, Manager
KNOW ALL MEN BY THESE PRESENTS, that the undersigned, Joseph Gantz, has made,
constituted and appointed, and by these presents does make, constitute and
appoint, each and any of F. Mark Reuter ("Reuter"), Storage Acquisition Company,
L.L.C. ("SAC") and EGI-Fund (02-04) Investors, L.L.C. ("Fund 02-04") with full
power of substitution, his true and lawful attorney-in-fact and agent, for him
in his name, place and stead, to execute, acknowledge, deliver and file any and
all filings required by (i) Section 13 of the Securities Exchange Act of 1934,
as amended (the "Act"), and the rules and regulations promulgated thereunder
respecting Rule 13d, Schedule 13D, and any amendments thereto, together with all
filings required by Section 16 of the Act, and the rules and regulations
promulgated thereunder, and any amendments thereto, (ii) Section 14 of the Act,
and the rules and regulations promulgated thereunder respecting any filings
required thereunder or in respect thereof, including, without limitation, under
Rule 14d or Schedule TO, and any amendments thereto, and (iii) any other section
of the Act, and the rules and regulations promulgated thereunder, to be filed by
him in connection with the acquisition and/or disposition by SAC (of which he is
a non-managing member) or Fund 02-04 of shares of common stock, $0.01 per share
par value, of Home Products International, Inc., hereby ratifying and confirming
all that said attorney-in-fact and agent or its substitute or substitutes may do
or cause to be done by virtue hereof.
The validity of this Power of Attorney shall not be affected in any manner by
reason of the execution, at any time, of other powers of attorney by the
undersigned in favor of persons other than those named herein.
WITNESS THE EXECUTION HEREOF this 26th day of October, 2004, by Joseph Gantz.
/s/ Joseph Gantz
-----------------------------
JOSEPH GANTZ
KNOW ALL MEN BY THESE PRESENTS, that the undersigned, Triyar Capital, LLC and
Triyar Storage Investment Company, LLC (together, "Triyar"), has made,
constituted and appointed, and by these presents does make, constitute and
appoint, each and any of Storage Acquisition Company, L.L.C. ("SAC") and
EGI-Fund (02-04) Investors, L.L.C. ("Fund 02-04") with full power of
substitution, its true and lawful attorney-in-fact and agent, for it in its
name, place and stead, to execute, acknowledge, deliver and file any and all
filings required by (i) Section 13 of the Securities Exchange Act of 1934, as
amended (the "Act"), and the rules and regulations promulgated thereunder
respecting Rule 13d, Schedule 13D, and any amendments thereto, together with all
filings required by Section 16 of the Act, and the rules and regulations
promulgated thereunder, and any amendments thereto, (ii) Section 14 of the Act,
and the rules and regulations promulgated thereunder respecting any filings
required thereunder or in respect thereof, including, without limitation, under
Rule 14d or Schedule TO, and any amendments thereto, and (iii) any other section
of the Act, and the rules and regulations promulgated thereunder, to be filed by
it in connection with the acquisition and/or disposition by SAC (of which it is
a non-managing member) or Fund 02-04 of shares of common stock, $0.01 per share
par value, of Home Products International, Inc., hereby ratifying and confirming
all that said attorney-in-fact and agent or its substitute or substitutes may do
or cause to be done by virtue hereof.
The validity of this Power of Attorney shall not be affected in any manner by
reason of the execution, at any time, of other powers of attorney by the
undersigned in favor of persons other than those named herein.
WITNESS THE EXECUTION HEREOF this 26th day of October, 2004, by Triyar Capital,
LLC and Triyar Storage Investment Company, LLC
TRIYAR CAPITAL, LLC
TRIARY STORAGE INVESTMENT COMPANY, LLC
/s/ Mark Weber
-----------------------------
Each by: Mark Weber
Its: Authorized Signatory