OFFER TO PURCHASE FOR CASH
ALL OUTSTANDING SHARES OF COMMON STOCK
OF
OFFICIAL PAYMENTS CORPORATION
AT
$3.00 NET PER SHARE
BY
KINGFISH ACQUISITION CORPORATION
A WHOLLY-OWNED SUBSIDIARY OF
TIER TECHNOLOGIES, INC.
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 5:00 P.M., NEW YORK CITY TIME,
ON TUESDAY, JULY 9, 2002, UNLESS THE OFFER IS EXTENDED.
THE BOARD OF DIRECTORS OF OFFICIAL PAYMENTS CORPORATION (THE "COMPANY")
HAS UNANIMOUSLY DETERMINED THAT THE MERGER AGREEMENT (AS DEFINED HEREIN) AND
THE TRANSACTIONS CONTEMPATED THEREBY, INCLUDING THE OFFER AND THE MERGER (EACH
AS DEFINIED HEREIN), ARE ADVISABLE, FAIR TO, AND IN THE BEST INTERESTS OF, THE
COMPANY'S STOCKHOLDERS AND HAS APPROVED THE MERGER AGREEMENT AND THE
TRANSACTIONS CONTEMPLATED THEREBY, INCLUDING THE OFFER AND THE MERGER AND
UNANIMOUSLY RECOMMENDS THAT THE COMPANY'S STOCKHOLDERS ACCEPT THE OFFER AND
TENDER THEIR SHARES PURSUANT THERETO.
THE OFFER IS CONDITIONED UPON, AMONG OTHER THINGS, THERE BEING VALIDLY
TENDERED AND NOT PROPERLY WITHDRAWN PRIOR TO THE EXPIRATION DATE (AS DEFINED
HEREIN) THAT NUMBER OF SHARES WHICH WOULD REPRESENT AT LEAST A MAJORITY OF THE
SHARES OF THE COMPANY OUTSTANDING ON A FULLY-DILUTED BASIS (PROVIDED THAT FOR
THE PURPOSES OF THE FOREGOING CALCULATION, "FULLY-DILUTED" MEANS GIVING EFFECT
TO THE CONVERSION OR EXERCISE OF ALL OPTIONS EXERCISABLE OR CONVERTIBLE INTO
SHARES AT AN EXERCISE PRICE OF $3.00 OR LESS PER SHARE, WHETHER OR NOT
EXERCISED OR CONVERTED AT THE TIME OF DETERMINATION). THE OFFER IS ALSO SUBJECT
TO CERTAIN OTHER CONDITIONS CONTAINED IN THIS OFFER TO PURCHASE. SEE
INTRODUCTION AND SECTIONS 1 AND 14 HEREOF.
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TABLE OF CONTENTS
PAGE
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SUMMARY TERM SHEET ....................................................................... 1
INTRODUCTION ............................................................................. 4
THE OFFER ................................................................................ 6
1. Terms Of The Offer; Expiration Date ................................................. 6
2. Acceptance For Payment And Payment .................................................. 7
3. Procedures For Accepting The Offer And Tendering Shares ............................. 8
4. Withdrawal Rights ................................................................... 11
5. Certain Federal Income Tax Consequences ............................................. 11
6. Price Range Of The Shares ........................................................... 12
7. Effect Of The Offer On The Market For The Shares; Stock Exchange Listing; Exchange Act
Registration; Margin Regulations .................................................... 12
8. Certain Information Concerning The Company .......................................... 13
9. Certain Information Concerning Purchaser And Parent ................................. 14
10. Background Of The Offer; Contacts With The Company .................................. 15
11. Purpose Of The Offer; Plans For The Company ......................................... 16
12. Source And Amount Of Funds .......................................................... 27
13. Dividends And Distributions ......................................................... 27
14. Certain Conditions Of The Offer ..................................................... 27
15. Certain Legal Matters; Required Regulatory Approvals ................................ 29
16. Certain Fees And Expenses ........................................................... 30
17. Miscellaneous ....................................................................... 30
SCHEDULE I: Directors and Executive Officers of Parent and Purchaser
ANNEX A: Section 262 of the Delaware General Corporation Law
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IMPORTANT
Any stockholder desiring to tender all or any portion of his or her Shares
(as defined herein) should either (a) complete and sign the Letter of
Transmittal (or a facsimile thereof) in accordance with the instructions in the
Letter of Transmittal and mail or deliver it together with the certificate(s)
representing the tendered Shares, and any other required documents as required
by the Letter of Transmittal, to the Depositary or tender such Shares pursuant
to the procedures for book-entry transfer set forth in Section 3 or (b) request
his or her broker, dealer, commercial bank, trust company or other nominee to
effect the transaction for him or her. A stockholder whose Shares are
registered in the name of a broker, dealer, commercial bank, trust company or
other nominee must contact such broker, dealer, commercial bank, trust company
or other nominee if he or she desires to tender such Shares.
A stockholder who desires to tender his or her Shares and whose
certificates representing such Shares are not immediately available or who
cannot comply with the procedures for book-entry transfer on a timely basis may
tender such Shares by following the procedures for guaranteed delivery set
forth in Section 3.
Questions and requests for assistance may be directed to the Information
Agent at its address and telephone number set forth on the back cover of this
Offer to Purchase. Additional copies of this Offer to Purchase, the Letter of
Transmittal, the Notice of Guaranteed Delivery and other related materials may
be obtained from the Information Agent or from brokers, dealers, commercial
banks and trust companies.
THE INFORMATION AGENT FOR THE OFFER IS:
MELLON INVESTOR SERVICES
June 11, 2002
SUMMARY TERM SHEET
This summary term sheet is a brief summary of the material provisions of
Kingfish Acquisition's offer, and is meant to help you understand the offer.
This summary term sheet is not meant to be a substitute for the information
contained in the remainder of this Offer to Purchase, and the information
contained in this summary is qualified in its entirety by the xxxxxx
descriptions and explanations contained in the later pages of this Offer to
Purchase. You are urged to carefully read the entire Offer to Purchase and
related Letter of Transmittal prior to making any decision regarding your
shares.
1. Q. WHO IS OFFERING TO PURCHASE MY SHARES OF COMMON STOCK OF OFFICIAL
PAYMENTS?
A. Kingfish Acquisition Corporation, a Delaware corporation formed solely
to make the offer, is offering to purchase your Official Payments shares.
We are a wholly-owned subsidiary of Tier Technologies, Inc. Tier
Technologies, a California corporation whose securities are traded on the
Nasdaq National Market (symbol: TIER), is a consulting firm that provides
business and information technology consulting, systems design and
integration, transaction processing, business process outsourcing and
business process reengineering for its clients primarily in the state and
local government, healthcare, insurance and utilities markets. See
"Introduction" and Section 9.
2. Q. WHAT IS KINGFISH ACQUISITION SEEKING TO PURCHASE, AT WHAT PRICE, AND DO
I HAVE TO PAY ANY BROKERAGE OR SIMILAR FEES TO TENDER?
A. Kingfish Acquisition is offering to purchase all of the outstanding
shares of common stock of Official Payments, at a price of $3.00 per
share, net to the seller in cash, without interest. If, before expiration
of the offer, Kingfish Acquisition increases the offer price, that
increased price will be paid to all holders of shares that are purchased
in the offer, whether or not such shares were tendered before the
increase in the offer price. If you are the record owner of your shares,
you will not have to pay any brokerage or similar fees. However, if you
own your shares through a broker or other nominee, your broker or nominee
may charge you a fee to tender. You should consult your broker or nominee
to determine whether any charges will apply. See "Introduction" and
Section 9.
3. Q. WHY IS KINGFISH ACQUISITION MAKING THIS OFFER?
A. Kingfish Acquisition is making this offer to enable Kingfish Acquisition
to acquire control of Official Payments. See "Introduction" and Section
11.
4. Q. HOW LONG DO I HAVE TO DECIDE WHETHER TO TENDER IN THE OFFER?
A. You have until 5:00 p.m., New York City time, on July 9, 2002. Under
certain circumstances, we may extend the offer. If the offer is extended,
we will issue a press release announcing the extension on the first
business morning following the date the offer was scheduled to expire.
See Section 1.
5. Q. WHAT ARE THE MOST IMPORTANT CONDITIONS TO THE OFFER?
A. The most important conditions to the offer are the following:
o that stockholders validly tender and do not withdraw before the
expiration of the offer at least a majority of the shares of Official
Payments outstanding on a fully-diluted basis. For the purposes of
determining the number of outstanding shares, options to purchase shares
that are outstanding immediately before the consummation of the offer
and either (i) are not exercisable at such time or (ii) have an exercise
price greater than $3.00 per share will not be taken into account.
o that there is no material adverse change with respect to Official
Payments prior to the expiration of the offer.
o the expiration or termination of the applicable waiting period under
the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of 1976.
A more complete discussion of the conditions to consummation of the
offer may be found in Section 14.
6. Q. DOES KINGFISH ACQUISITION HAVE THE FINANCIAL RESOURCES TO MAKE THE
PAYMENT?
A. Kingfish Acquisition's parent corporation, Tier Technologies, will
provide Kingfish Acquisition with sufficient funds to purchase all shares
tendered in the offer. The offer is not conditioned on any financing
arrangements. See Section 12.
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7. Q. IS YOUR FINANCIAL CONDITION RELEVANT TO MY DECISION TO TENDER IN THE
OFFER?
A. Kingfish Acquisition does not think its financial condition is relevant
to your decision whether to tender shares and accept the offer because
the offer is being made for all outstanding shares solely for cash, the
offer is not subject to any financing condition and, after consummation
of the offer and upon the merger, Kingfish Acquisition will acquire at
the offer price all shares not tendered. See "Introduction" and Sections
1, 11 and 12.
8. Q. HOW DO I ACCEPT THE OFFER AND TENDER MY SHARES?
A. To tender your shares, you must completely fill out the enclosed Letter
of Transmittal and deliver it, along with your share certificates, to the
depositary agent, Mellon Investor Services, prior to the expiration of
the offer. If your shares are held in street name (i.e., through a
broker, dealer or other nominee), they can be tendered by your nominee
through The Depository Trust Company. If you cannot deliver all necessary
documents to The Depository Trust Company in time, you might be able to
complete and deliver to the depositary, in lieu of the missing documents,
the enclosed Notice of Guaranteed Delivery, provided you are able to
fully comply with its terms. See Section 3.
9. Q. IF I ACCEPT THE OFFER, WHEN WILL I GET PAID?
A. Provided the conditions to the offer are satisfied and Kingfish
Acquisition consummates the offer and accepts your shares for payment,
you will receive a check equal to the number of shares you tendered
multiplied by $3.00 as promptly as practicable following the expiration
of the offer. Kingfish Acquisition expects that checks will be mailed out
promptly following expiration of the offer. See Section 2.
10. Q. CAN I WITHDRAW MY PREVIOUSLY TENDERED SHARES?
A. You may withdraw a portion or all of your tendered shares by delivering
written, telegraphic or facsimile notice to the depositary prior to the
expiration of the offer. Further, if Kingfish Acquisition has not agreed
to accept your shares for payment within 60 days of the commencement of
the offer, you can withdraw them at any time after that 60-day period
until Kingfish Acquisition does accept your shares for payment. Once
shares are accepted for payment, they cannot be withdrawn. See Section 4.
11. Q. WHAT DOES THE BOARD OF DIRECTORS OF OFFICIAL PAYMENTS THINK OF THIS
OFFER?
A. The Board of Directors of Official Payments has unanimously determined
that the merger agreement, and the transactions contemplated thereby,
including the offer and the merger, are advisable, fair to, and in the
best interests of, the company's stockholders and has approved the merger
agreement and the transactions contemplated thereby, including the offer
and the merger.
The Board further recommends that stockholders of Official Payments
accept the offer and tender their shares. See "Introduction."
12. Q. HAVE ANY STOCKHOLDERS ALREADY DECIDED TO TENDER THEIR SHARES?
A. Yes. Comerica Incorporated, Beranson Holdings, Inc. and Xxxxxxxxx Xxxxx,
the controlling stockholder of Beranson Holdings and widow of Xxxxxxx
Xxxxx, Official Payments' founder and former president and director, have
each agreed to tender all of their outstanding shares of Official
Payments stock in the offer. Their shares represent approximately 14.6
million shares of common stock of Official Payments (representing
approximately 55.8% of the outstanding shares on a fully-diluted basis).
See "Introduction" and Section 11.
13. Q. WHAT ARE THE FEDERAL INCOME TAX CONSEQUENCES OF THE TRANSACTION?
A. The receipt of cash by you in exchange for your shares pursuant to the
offer, the merger or upon exercise of appraisal rights is taxable for
federal income tax purposes and may be taxable under applicable state,
local or foreign tax laws. In general, you will recognize capital gain or
loss equal to the difference between your adjusted tax basis in the
shares you tender and the amount of cash you receive for those shares.
You should consult your tax advisor about the particular effect tendering
will have on your shares. See Section 5.
14. Q. WHAT WILL HAPPEN TO OFFICIAL PAYMENTS?
A. If the offer is consummated, under a merger agreement among Kingfish
Acquisition, Official Payments and Tier Technologies, Kingfish
Acquisition will be merged with and into Official Payments, with Official
Payments surviving as a wholly-owned subsidiary of Tier Technologies.
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Further, following the consummation of the offer, under the merger
agreement, Official Payments is required to take certain actions so that
representatives of Tier Technologies will constitute at least a majority
of the members of the Board of Directors of Official Payments. See
Section 11.
15. Q. IF I DO NOT TENDER BUT THE TENDER OFFER IS SUCCESSFUL, WHAT WILL HAPPEN
TO MY SHARES?
A. Even if you do not tender your shares, if the offer is consummated, Tier
Technologies acquires control of Official Payments and Kingfish
Acquisition merges with Official Payments, all remaining stockholders of
Official Payments at the time of the merger, other than those who
properly assert appraisal rights, will receive $3.00 per share in cash
for each share of Official Payments common stock, without interest.
Even if Kingfish Acquisition does not merge with Official Payments, the
number of stockholders of Official Payments may be so small that they
will no longer be traded on the Nasdaq National Market or any other
national exchange. Also, Official Payments may no longer be required to
comply with SEC rules governing publicly-held companies. See Section 11.
16. Q. ARE DISSENTERS RIGHTS AVAILABLE IN EITHER THE OFFER OR THE MERGER?
A. Dissenters rights are not available in the offer. However, if you choose
not to tender, and the offer is consummated, dissenters rights will be
available in the merger of Kingfish Acquisition and Official Payments. If
you choose to exercise your dissenters rights, and you comply with all of
the applicable legal requirements, you will be entitled to payment for
your shares based on a fair and independent appraisal of the market value
of your shares. This market value may be more or less than $3.00 per
share.
17. Q. WHAT IS THE MARKET VALUE OF MY SHARES AS OF A RECENT DATE?
A. On May 30, 2002, the last trading day before the public announcement of
the execution of the merger agreement, the closing share price of
Official Payments on the Nasdaq National Market was $2.00 per share. On
June 10, 2002, the last trading day before the commencement of the offer,
the closing share price of Official Payments on the Nasdaq National
Market was $2.96. Please obtain a recent quotation for your shares prior
to deciding whether or not to tender. See Section 6.
18. Q. WHO CAN I CALL WITH QUESTIONS?
A. You can call Mellon Investor Services at (000) 000-0000 with any
questions you may have.
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To: All Holders of Shares of Common Stock of
Official Payments Corporation:
INTRODUCTION
Kingfish Acquisition Corporation, a Delaware corporation ("Purchaser") and
a wholly-owned subsidiary of Tier Technologies, Inc., a California corporation
("Tier Technologies" or "Parent"), hereby offers to purchase all outstanding
shares of common stock, par value $0.01 per share (the "Common Stock"), of
Official Payments Corporation, a Delaware corporation ("Official Payments" or
the "Company") (the "Shares") at a price of $3.00 per Share, net to the seller
in cash, without interest thereon (the "Offer Price"), upon the terms and
subject to the conditions set forth in this Offer to Purchase and in the
related Letter of Transmittal (which, together with any amendments or
supplements thereto, constitute the "Offer").
The Offer is being made pursuant to an Agreement and Plan of Merger, dated
as of May 30, 2002 (the "Merger Agreement"), by and among Parent, Purchaser and
the Company. Pursuant to the Merger Agreement and in accordance with the
Delaware General Corporation Law, (the "DGCL"), as soon as practicable after
the completion of the Offer and satisfaction or waiver, if permissible, of all
conditions, including the purchase of Shares pursuant to the Offer and the
approval and adoption of the Merger Agreement by the stockholders of the
Company (if required by applicable law), Purchaser will be merged with and into
the Company (the "Merger"), and the Company will be the surviving corporation
in the Merger. At the effective time of the Merger (the "Effective Time"), each
Share then outstanding, other than Shares held by (i) the Company or any of its
subsidiaries, (ii) Parent, Purchaser or any of Parent's other subsidiaries and
(iii) stockholders who have properly exercised their dissenters' rights under
the DGCL, will be cancelled and converted automatically into the right to
receive the Offer Price, or any higher price per Share paid in the Offer,
without interest. The Merger Agreement is more fully described in Section 11.
THE BOARD OF DIRECTORS OF THE COMPANY (THE "COMPANY BOARD") HAS
UNANIMOUSLY DETERMINED THAT THE MERGER AGREEMENT AND THE TRANSACTIONS
CONTEMPATED THEREBY, INCLUDING THE OFFER AND THE MERGER, ARE ADVISABLE, FAIR
TO, AND IN THE BEST INTERESTS OF, THE COMPANY'S STOCKHOLDERS AND HAS APPROVED
THE MERGER AGREEMENT AND THE TRANSACTIONS CONTEMPLATED THEREBY, INCLUDING THE
OFFER AND THE MERGER AND UNANIMOUSLY RECOMMENDS THAT THE STOCKHOLDERS ACCEPT
THE OFFER AND TENDER THEIR SHARES PURSUANT THERETO.
CIBC WORLD MARKETS CORP., THE COMPANY'S FINANCIAL ADVISOR ("CIBC"), HAS
DELIVERED TO THE COMPANY ITS WRITTEN OPINION, DATED MAY 30, 2002, THAT SUBJECT
TO THE ASSUMPTIONS, FACTORS AND LIMITATIONS SET FORTH THEREIN, THE
CONSIDERATION TO BE RECEIVED BY THE HOLDERS OF SHARES PURSUANT TO THE OFFER AND
THE MERGER IS FAIR FROM A FINANCIAL POINT OF VIEW TO SUCH HOLDERS. A COPY OF
THE OPINION OF CIBC IS CONTAINED IN THE COMPANY'S SOLICITATION/RECOMMENDATION
STATEMENT ON SCHEDULE 14D-9 (THE "SCHEDULE 14D-9") FILED WITH THE SECURITIES
AND EXCHANGE COMMISSION (THE "SEC") IN CONNECTION WITH THE OFFER, A COPY OF
WHICH IS BEING FURNISHED TO STOCKHOLDERS CONCURRENTLY HEREWITH.
THE OFFER IS CONDITIONED UPON, AMONG OTHER THINGS, THERE BEING VALIDLY
TENDERED AND NOT PROPERLY WITHDRAWN PRIOR TO THE EXPIRATION DATE (AS DEFINED IN
SECTION 1 BELOW) THAT NUMBER OF SHARES WHICH WOULD REPRESENT AT LEAST A
MAJORITY OF THE SHARES OUTSTANDING ON A FULLY-DILUTED BASIS (PROVIDED THAT FOR
THE PURPOSES OF THE FOREGOING CALCULATION, "FULLY-DILUTED" MEANS GIVING EFFECT
TO THE CONVERSION OR EXERCISE OF ALL OPTIONS EXERCISABLE OR CONVERTIBLE INTO
SHARES AT AN EXERCISE PRICE OF $3.00 OR LESS PER SHARE, WHETHER OR NOT
EXERCISED OR CONVERTED AT THE TIME OF DETERMINATION) (THE "MINIMUM CONDITION").
THE OFFER IS ALSO SUBJECT TO CERTAIN OTHER CONDITIONS. SEE SECTIONS 1 AND 14.
The Company has informed Purchaser that, at the close of business on May
15, 2002, (i) 22,932,876 Shares were issued and outstanding and (ii) 8,900,000
shares of Common Stock were reserved for issuance in connection with the
exercise of options to purchase Shares (each, a "Company Stock Option")
pursuant to the Company's 1999 Stock Incentive Plan and 2000 Stock Incentive
Plan (collectively, the "Company Stock Option Plans"), of which 3,208,850
Shares were subject to outstanding Company Stock Options with an exercise price
of $3.00 or less per Share. Accordingly, based on this information, there are
26,141,726 Shares outstanding on a fully-diluted basis (provided that for the
purposes of the
4
foregoing calculation, "fully-diluted" means giving effect to the conversion or
exercise of all Company Stock Options exercisable or convertible into Shares at
an exercise price of $3.00 or less per Share, whether or not exercised or
converted at the time of determination). Based on the foregoing, Xxxxxxxxx
believes the Minimum Condition will be satisfied if 13,070,864 Shares are
validly tendered pursuant to the Offer and not withdrawn.
Certain other conditions to the consummation of the Offer are described in
Section 14. Purchaser expressly reserves the right to waive any one or more of
the conditions to the Offer, other than the Minimum Condition. See Sections 14
and 15.
Tendering stockholders will not be obligated to pay brokerage fees or
commissions or, except as set forth in the Letter of Transmittal, stock
transfer taxes on the purchase of Shares by Purchaser pursuant to the Offer.
Stockholders who hold their Shares through a bank or broker should check with
such institution as to whether they charge any service fees. Purchaser will pay
all charges and expenses of Xxxxx, Xxxxxxxx & Xxxx, Inc. as Dealer Manager (the
"Dealer Manager") and Mellon Investor Services, as Depository (the
"Depository") and as Information Agent (the "Information Agent"), incurred in
connection with the Offer. See Section 16.
Comerica Incorporated, Beranson Holdings, Inc. ("Beranson") and Xxxxxxxxx
Xxxxx, the controlling stockholder of Xxxxxxxx and widow of Xxxxxxx Xxxxx,
founder and former president and director of the Company, have all executed a
Stockholders Agreement, pursuant to which each has agreed to tender all Shares
she or it owns, and in any event to vote in favor of the Merger Agreement and
the Merger and against certain competing proposals to purchase the Company with
respect to any Shares they may own as of the record date of a stockholder's
meeting at which such matters will be considered. As of the date hereof, these
persons own approximately 14.6 million outstanding Shares. See Section 11.
Consummation of the Merger is conditioned upon, among other things, the
approval and adoption by the requisite vote of stockholders of the Company of
the Merger Agreement and the Merger, if required by applicable law and the
Company's Certificate of Incorporation. See Section 11. Under the DGCL and
pursuant to the Company's Certificate of Incorporation, the affirmative vote of
the holders of a majority of outstanding Shares, voting together as a single
class, is the only vote of any class or series of the Company's capital stock
that would be necessary to approve the Merger Agreement and the Merger at a
meeting of the Company's stockholders. If the Minimum Condition is satisfied
and Purchaser purchases at least a majority of the Shares on a fully-diluted
basis entitled to vote on the approval of the Merger and the Merger Agreement,
Purchaser will be able to effect the Merger without the affirmative vote of any
other stockholder. Pursuant to the Merger Agreement, Parent has agreed to vote,
or cause to be voted, all of the Shares then owned by it, Purchaser or any of
its other subsidiaries or affiliates controlled by Parent in favor of the
approval of the Merger and the approval and adoption of the Merger Agreement.
The Merger Agreement is more fully described in Section 11.
Under Section 253 of the DGCL, if a corporation owns at least 90% of the
outstanding shares of each class of a subsidiary corporation, the corporation
holding such stock may merge such subsidiary into itself, or itself into such
subsidiary, without any action or vote on the part of the board of directors or
the stockholders of such other corporation (a "Short-Form Merger"). If
Purchaser acquires an aggregate of at least 90% of the outstanding Shares
pursuant to the Offer or otherwise, then, at the election of Parent, a
Short-Form Merger of Purchaser with and into the Company could be effected
without any further approval of the Company Board or the stockholders of the
Company. Even if Purchaser does not own 90% of the outstanding Shares following
consummation of the Offer, Parent could seek to purchase additional Shares in
the open market or otherwise in order to reach the applicable 90% threshold and
employ such a Short-Form Merger. The per share consideration paid for any
Shares so acquired in open market purchases may be greater or less than the
Offer Price. Parent presently intends to effect a Short-Form Merger, if
permitted to do so under the DGCL, pursuant to which Purchaser will be merged
with and into the Company. See Section 11.
THIS OFFER TO PURCHASE AND THE RELATED LETTER OF TRANSMITTAL CONTAIN
IMPORTANT INFORMATION WHICH SHOULD BE READ CAREFULLY BEFORE ANY DECISION IS
MADE WITH RESPECT TO THE OFFER.
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THE OFFER
1. TERMS OF THE OFFER; EXPIRATION DATE
Upon the terms and subject to the conditions of the Offer (including, if
the Offer is extended or amended, the terms and conditions of any such
extension or amendment), Purchaser will accept for payment and thereby purchase
all Shares validly tendered and not withdrawn in accordance with the procedures
set forth in Section 4 on or prior to the Expiration Date (as hereinafter
defined). The term "Expiration Date" means 5:00 p.m., New York City time, on
July 9, 2002, unless and until Purchaser, in accordance with the terms of the
Offer, but subject to the limitations set forth in the Merger Agreement,
extends the period of time for which the Offer is open, in which event the term
"Expiration Date" means the time and date at which the Offer, as so extended by
Purchaser, will expire.
Without the consent of the Company, Purchaser may not (i) reduce the
number of Shares subject to the Offer, (ii) reduce the Offer Price, (iii)
modify or add to the Offer conditions set forth in the Merger Agreement and
described in Section 14 below or otherwise amend the Offer in any manner
adverse to the holders of the Shares, (iv) except as provided in the next three
sentences, extend the Offer, or (v) change the form of consideration payable in
the Offer. Notwithstanding the foregoing, Purchaser may, without the consent of
the Company, (i) extend the Offer from time to time if at the Expiration Date
or any extension thereof any of the conditions to Purchaser's obligations to
purchase the Shares (set forth in the Merger Agreement and described in Section
14 below) shall not be satisfied or waived, until such time as such conditions
are satisfied or waived and (ii) extend the Offer for any period required by
any rule, regulation, interpretation or position of the SEC applicable to the
Offer. Further, if, immediately prior to the Expiration Date, the Shares
tendered and not withdrawn pursuant to the Offer equal less than 100% of the
outstanding Shares on a fully-diluted basis, Purchaser may (x) extend the Offer
for a period not to exceed fifteen business days, notwithstanding that all
conditions to the Offer are satisfied as of such Expiration Date, provided that
upon such extension Parent and Purchaser shall be deemed to have waived all of
the Offer conditions set forth in the Merger Agreement and described in Section
14 below (other than the Minimum Condition) and provided further that Purchaser
shall not extend the Offer beyond the last business day of the month in which
the Minimum Condition has been satisfied and all conditions to the Offer have
been satisfied or waived or (y) amend the Offer to include a Subsequent
Offering Period (as defined below) not to exceed twenty business days to the
extent permitted under Rule 14d-11 under the Securities Exchange Act of 1934,
as amended (the "Exchange Act"), if available.
Subject to the applicable regulations of the SEC, Purchaser shall not be
required to accept for payment or, subject to any applicable rules and
regulations of the SEC, including Rule 14e-1(c) under the Exchange Act
described below, pay for, and may delay the acceptance for payment of or,
subject to the restriction referred to above, the payment for, any tendered
Shares, and may terminate or amend the Offer as to any Shares not then paid
for, if any of the conditions referred to in Section 14 have not been satisfied
or upon the occurrence of any of the events specified in Section 14 and which
events continue in effect immediately prior to the expiration of the Offer
(except in the case of certain conditions in which case the event must continue
in effect for a period of ten days following notice by Parent to Company), in
each case, by giving oral or written notice of such delay, termination, waiver
or amendment to the Depositary and by making a public announcement thereof.
Purchaser acknowledges (i) that Rule 14e-1(c) under the Exchange Act requires
Purchaser to pay the consideration offered or return the Shares tendered
promptly after the termination or withdrawal of the Offer and (ii) that
Purchaser may not delay acceptance for payment of, or payment for any Shares
upon the occurrence of any of the conditions specified in Section 14 without
extending the period of time during which the Offer is open.
If Purchaser extends the Offer or if Purchaser is delayed in its
acceptance for payment of or payment (whether before or after its acceptance
for payment of Shares) for Shares or it is unable to pay for Shares pursuant to
the Offer for any reason, then, without prejudice to Purchaser's rights under
the Offer, the Depositary may retain tendered Shares on behalf of Purchaser,
and such Shares may not be withdrawn except to the extent tendering
stockholders are entitled to withdrawal rights as described herein under
Section 4. However, the ability of Purchaser to delay the payment for Shares
that Purchaser has accepted for payment is limited by Rule 14e-1(c) under the
Exchange Act, which requires that a bidder pay the consideration offered or
return the securities deposited by or on behalf of stockholders promptly after
the termination or withdrawal of such bidder's offer, unless such bidder elects
to offer a subsequent offering period (a "Subsequent Offering Period") under
Rule 14d-11 under the Exchange Act and pays for Shares tendered during the
Offer and the Subsequent Offering Period in accordance with Rule 14d-11 and the
terms of the Merger Agreement.
Any such extension, delay, termination, waiver or amendment will be
followed as promptly as practicable by public announcement thereof, and such
announcement in the case of an extension will be made no later than 9:00 a.m.,
New York City time, on the next business day after the previously scheduled
Expiration Date. Without limiting the manner
6
in which Purchaser may choose to make any public announcement, subject to
applicable law (including Rules 14d-4(d) and 14e-1(e) under the Exchange Act,
which require that material changes be promptly disseminated to holders of
Shares in a manner reasonably designed to inform such holders of such change),
Purchaser currently intends to make announcements by issuing a press release to
the Business Wire news service.
If Purchaser makes a material change in the terms of the Offer, or if it
waives a material condition to the Offer, Purchaser will extend the Offer and
disseminate additional tender offer materials to the extent required by Rules
14d-4(d) and 14e-1 under the Exchange Act. The minimum period during which an
Offer must remain open following material changes in the terms of the Offer,
other than a change in price or a change in percentage of securities sought or
a change in any dealer's soliciting fee, will depend upon the facts and
circumstances, including the materiality, of the changes. With respect to a
change in price or, subject to certain limitations, a change in the percentage
of securities sought or a change in any dealer's soliciting fee, a minimum ten
business day period from the date of such change is generally required to allow
for adequate dissemination to stockholders. For purposes of the Offer, a
"business day" means any day other than a Saturday, Sunday or a Federal holiday
and consists of the time period from 12:01 a.m. through 5:00 p.m., New York
City time.
Pursuant to Rule 14d-11 under the Exchange Act, Purchaser may, subject to
certain conditions, include a Subsequent Offering Period following the
expiration of the Offer on the Expiration Date. Rule 14d-11 provides that
Purchaser may include a Subsequent Offering Period so long as, among other
things, (1) the Offer remained open for a minimum of 20 business days and has
expired, (2) the Offer was for all outstanding Shares, (3) Purchaser accepts
and promptly pays for all Shares tendered during the Offer, (4) Purchaser
announces the results of the Offer, including the approximate number and
percentage of Shares deposited, no later than 9:00 a.m., New York City time, on
the next business day after the Expiration Date and immediately begins the
Subsequent Offering Period, (5) Purchaser immediately accepts and promptly pays
for Shares as they are tendered during the Subsequent Offering Period and (6)
Purchaser pays the Offer Price for all Shares tendered in the Subsequent
Offering Period. Purchaser will be able to include a Subsequent Offering Period
if it satisfies the conditions above. In a public release, the SEC expressed
the view that the inclusion of a Subsequent Offering Period would constitute a
material change to the terms of the Offer requiring Purchaser to disseminate
new information to stockholders in a manner reasonably calculated to inform
them of such change sufficiently in advance of the Expiration Date (generally
five business days). In the event Purchaser elects to include a Subsequent
Offering Period, it will notify stockholders of the Company consistent with the
requirements of the SEC.
A Subsequent Offering Period, if one is included, is not an extension of
the Offer. A Subsequent Offering Period would be an additional period of time,
following the expiration of the Offer, in which stockholders may tender Shares
not tendered during the Offer. Purchaser does not currently intend to include a
Subsequent Offering Period in the Offer, although it reserves the right to do
so in its sole discretion.
Pursuant to Rule 14d-7 under the Exchange Act, no withdrawal rights will
apply to Shares tendered in a Subsequent Offering Period and no withdrawal
rights apply during the Subsequent Offering Period with respect to Shares
tendered in the Offer and accepted for payment. The same consideration, the
Offer Price, will be paid to stockholders tendering Shares in the Offer or in a
Subsequent Offering Period, if one is included.
The Company has provided Purchaser with the Company's stockholder lists
and security position listings for the purpose of disseminating the Offer to
holders of Shares. This Offer to Purchase and the related Letter of Transmittal
will be mailed to record holders of Shares and will be furnished to brokers,
dealers, banks and similar persons whose names, or the names of whose nominees,
appear on the stockholder lists or, if applicable, who are listed as
participants in a clearing agency's security position listing, for subsequent
transmittal to beneficial owners of Shares, or who are listed as participants
in a clearing agency's security position listing for subsequent transmittal to
beneficial owners of Shares.
2. ACCEPTANCE FOR PAYMENT AND PAYMENT
Upon the terms and subject to the conditions of the Offer (including, if
the Offer is extended or amended, the terms and conditions of the Offer as so
extended or amended), Purchaser will purchase, by accepting for payment, and
will pay for all Shares validly tendered and not withdrawn (as permitted by
Section 4) prior to the Expiration Date promptly after the Expiration Date.
Parent filed on June 5, 2002 with the Federal Trade Commission (the "FTC")
and the Antitrust Division of the Department of Justice (the "Antitrust
Division") a Premerger Notification and Report Form under the HSR Act with
respect to the Offer. Unless the FTC and the Antitrust Division grant Parent's
request for expedited review, the waiting period under the HSR Act applicable
to the Offer will expire at 11:59 p.m., New York City time, on June 20, 2002,
unless
7
prior to the expiration or termination of the waiting period the FTC or the
Antitrust Division extends the waiting period by requesting additional
information from Parent or the Company. If such a request is made, the waiting
period applicable to the Offer will expire on the tenth calendar day after the
date of substantial compliance by Parent or the Company, as applicable, with
such request. Thereafter, the waiting period may only be extended by court
order. The waiting period under the HSR Act may be terminated by the FTC and
the Antitrust Division prior to its expiration. For information with respect to
approvals required to be obtained prior to the consummation of the Offer,
including under the HSR Act and other approvals, see Section 15.
In all cases, payment for Shares purchased pursuant to the Offer will be
made only after timely receipt by the Depositary of:
(i) certificates representing such Shares or timely confirmation (a
"Book-Entry Confirmation") of the book-entry transfer of such
Shares into the Depositary's account at The Depository Trust
Company (the "Book-Entry Transfer Facility"), pursuant to the
procedures set forth in Section 3,
(ii) the Letter of Transmittal (or a facsimile thereof), properly
completed and duly executed, with any required signature
guarantees, or an Agent's Message (as defined below) in
connection with a book- entry transfer and
(iii) any other documents required by the Letter of Transmittal.
The term "Agent's Message" means a message, transmitted by a Book-Entry
Transfer Facility to, and received by, the Depositary and forming a part of a
Book-Entry Confirmation, which states that such Book-Entry Transfer Facility
has received an express acknowledgment from the participant in such Book-Entry
Transfer Facility tendering the Shares which are the subject of such Book-Entry
Confirmation, that such participant has received and agrees to be bound by the
terms of the Letter of Transmittal and that Purchaser may enforce such
agreement against such participant.
For purposes of the Offer, Purchaser will be deemed to have accepted for
payment, and thereby purchased, Shares validly tendered and not withdrawn as,
if and when Purchaser gives oral or written notice to the Depositary of
Purchaser's acceptance of such Shares for payment pursuant to the Offer. In all
cases, upon the terms and subject to the conditions of the Offer, payment for
Shares purchased pursuant to the Offer will be made by deposit of the purchase
price therefor with the Depositary, which will act as agent for tendering
stockholders for the purpose of receiving payment from Purchaser and
transmitting payment to validly tendering stockholders. UNDER NO CIRCUMSTANCES
WILL INTEREST ON THE PURCHASE PRICE FOR SHARES BE PAID BY PURCHASER BY REASON
OF ANY DELAY IN MAKING SUCH PAYMENT.
If any tendered Shares are not purchased pursuant to the Offer for any
reason, or if certificates representing Shares are submitted representing more
Shares than are tendered, certificates representing unpurchased or untendered
Shares will be returned, without expense to the tendering stockholder (or, in
the case of Shares delivered by book-entry transfer into the Depositary's
account at the Book-Entry Transfer Facility pursuant to the procedures set
forth in Section 3, such Shares will be credited to an account maintained
within such Book-Entry Transfer Facility), as promptly as practicable following
the expiration, termination or withdrawal of the Offer.
IF, PRIOR TO THE EXPIRATION DATE, PURCHASER INCREASES THE CONSIDERATION
OFFERED TO HOLDERS OF SHARES PURSUANT TO THE OFFER, SUCH INCREASED
CONSIDERATION WILL BE PAID TO ALL HOLDERS OF SHARES THAT ARE PURCHASED PURSUANT
TO THE OFFER, WHETHER OR NOT SUCH SHARES WERE TENDERED PRIOR TO SUCH INCREASE
IN CONSIDERATION.
Purchaser reserves the right to transfer or assign to one or more of
Purchaser's subsidiaries or affiliates, in whole or from time to time in part,
the right to purchase all or any portion of the Shares tendered pursuant to the
Offer, but any such transfer or assignment will not relieve Purchaser of its
obligations under the Offer or prejudice the rights of tendering stockholders
to receive payment for Shares validly tendered and accepted for payment
pursuant to the Offer.
3. PROCEDURES FOR ACCEPTING THE OFFER AND TENDERING SHARES.
Valid Tender of Shares
Except as set forth below, in order for Shares to be validly tendered
pursuant to the Offer, the Letter of Transmittal (or a facsimile thereof),
properly completed and duly executed, together with any required signature
guarantees, or an Agent's Message in connection with a book-entry delivery of
Shares, and any other documents required by the Letter of Transmittal, must be
received by the Depositary at one of its addresses set forth on the back cover
of this Offer to
8
Purchase on or prior to the Expiration Date and either (i) certificates
representing tendered Shares must be received by the Depositary, or such Shares
must be tendered pursuant to the procedure for book-entry transfer set forth
below and a Book-Entry Confirmation must be received by the Depositary, in each
case on or prior to the Expiration Date, or (ii) the guaranteed delivery
procedures set forth below must be complied with.
THE METHOD OF DELIVERY OF CERTIFICATES REPRESENTING TENDERED SHARES, THE
LETTER OF TRANSMITTAL AND ALL OTHER REQUIRED DOCUMENTS IS AT THE OPTION AND
SOLE RISK OF THE TENDERING STOCKHOLDER, AND THE DELIVERY WILL BE DEEMED MADE
ONLY WHEN ACTUALLY RECEIVED BY THE DEPOSITARY. IF DELIVERY IS BY MAIL,
REGISTERED MAIL WITH RETURN RECEIPT REQUESTED, PROPERLY INSURED, IS
RECOMMENDED. IN ALL CASES, SUFFICIENT TIME SHOULD BE ALLOWED TO ENSURE TIMELY
DELIVERY.
Book-Entry Transfer
The Depositary will make a request to establish accounts with respect to
the Shares at the Book-Entry Transfer Facility for purposes of the Offer within
two business days after the date of this Offer to Purchase. Any financial
institution that is a participant in the system of the Book-Entry Transfer
Facility may make book-entry delivery of Shares by causing such Book-Entry
Transfer Facility to transfer such Shares into the Depositary's account at such
Book-Entry Transfer Facility in accordance with such Book-Entry Transfer
Facility's procedures for such transfer. However, although delivery of Shares
may be effected through book-entry transfer into the Depositary's account at a
Book-Entry Transfer Facility, the Letter of Transmittal (or facsimile thereof),
properly completed and duly executed, with any required signature guarantees,
or an Agent's Message in connection with a book-entry transfer, and any other
required documents must, in any case, be transmitted to and received by the
Depositary at one of its addresses set forth on the back cover of this Offer to
Purchase on or prior to the Expiration Date, or the guaranteed delivery
procedure set forth below must be complied with.
DELIVERY OF DOCUMENTS TO A BOOK-ENTRY TRANSFER FACILITY IN ACCORDANCE WITH
SUCH BOOK-ENTRY TRANSFER FACILITY'S PROCEDURES DOES NOT CONSTITUTE DELIVERY TO
THE DEPOSITARY.
Signature Guarantees
No signature guarantee is required on the Letter of Transmittal (i) if the
Letter of Transmittal is signed by the registered holder(s) (which term, for
purposes of this Section, includes any participant in the Book-Entry Transfer
Facility's systems whose name appears on a security position listing as the
owner of the Shares) of Shares tendered therewith and such registered holder
has not completed either the box entitled "Special Delivery Instructions" or
the box entitled "Special Payment Instructions" on the Letter of Transmittal or
(ii) if such Shares are tendered for the account of a financial institution
(including most commercial banks, savings and loan associations and brokerage
houses) that is a participant in the Security Transfer Agents Medallion
Program, the New York Stock Exchange Medallion Signature Guarantee Program or
the Stock Exchange Medallion Program (each, an "Eligible Institution" and,
collectively, "Eligible Institutions"). In all other cases, all signatures on
Letters of Transmittal must be guaranteed by an Eligible Institution. If the
certificates for Shares are registered in the name of a person other than the
signer of the Letter of Transmittal, or if payment is to be made, or
certificates for Shares not tendered or not accepted for payment are to be
returned, to a person other than the registered holder of the certificates
surrendered, then the tendered certificates for such Shares must be endorsed or
accompanied by appropriate stock powers, in either case, signed exactly as the
name or names of the registered holders or owners appear on the certificates,
with the signatures on the certificates or stock powers guaranteed as
aforesaid.
Guaranteed Delivery
If a stockholder desires to tender Shares pursuant to the Offer and such
stockholder's certificates for Shares are not immediately available or the
procedures for book-entry transfer cannot be completed on a timely basis or
time will not permit all required documents to reach the Depositary prior to
the Expiration Date, such stockholder's tender may be effected if all the
following conditions are met:
(i) such tender is made by or through an Eligible Institution;
9
(ii) a properly completed and duly executed Notice of Guaranteed
Delivery, substantially in the form provided by Purchaser, is
received by the Depositary, as provided below, prior to the
Expiration Date; and
(iii) the certificates for (or a Book-Entry Confirmation with respect
to) such Shares, together with a properly completed and duly
executed Letter of Transmittal (or facsimile thereof), with any
required signature guarantees, or, in the case of a book-entry
transfer, an Agent's Message, and any other required documents,
are received by the Depositary within three (3) trading days
after the date of execution of such Notice of Guaranteed
Delivery. A "trading day" is any day on which the Nasdaq
National Market ("Nasdaq") is open for business.
The Notice of Guaranteed Delivery may be delivered by hand to the
Depositary or transmitted by telegram, facsimile transmission or mailed to the
Depositary and must include a guarantee by an Eligible Institution in the form
set forth in such Notice of Guaranteed Delivery.
Notwithstanding any other provision hereof, payment for Shares accepted
for payment pursuant to the Offer will in all cases be made only after timely
receipt by the Depositary of certificates for, or of Book-Entry Confirmation
with respect to, such Shares, a properly completed and duly executed Letter of
Transmittal (or facsimile thereof), together with any required signature
guarantees (or, in the case of a book-entry transfer, an Agent's Message), and
any other documents required by the Letter of Transmittal. Accordingly, payment
might not be made to all tendering stockholders at the same time, and will
depend upon when certificates representing, or Book-Entry Confirmations of,
such Shares are received into the Depositary's account at a Book-Entry Transfer
Facility.
Backup Federal Tax Withholding
Under the federal income tax laws, payments in connection with the Offer
and the Merger may be subject to "backup withholding" at a rate of 31% unless a
stockholder that holds Shares (i) provides a correct taxpayer identification
number (which, for an individual stockholder, is the stockholder's social
security number) and any other required information, or (ii) is a corporation
or comes within certain other exempt categories and, when required,
demonstrates this fact, and otherwise complies with applicable requirements of
the backup withholding rules. A stockholder that does not provide a correct
taxpayer identification number may be subject to penalties imposed by the
Internal Revenue Service. To prevent backup federal income tax withholding on
payments with respect to the purchase price of Shares purchased pursuant to the
Offer, each stockholder should provide the Depositary with his or her correct
taxpayer identification number and certify that he or she is not subject to
backup federal income tax withholding by completing the Substitute Form W-9
included in the Letter of Transmittal.
Determination of Validity
All questions as to the form of documents and validity, eligibility
(including time of receipt) and acceptance for payment of any tender of Shares
will be determined by Purchaser, in its sole discretion, whose determination
will be final and binding on all parties. Purchaser reserves the absolute right
to reject any or all tenders determined by it not to be in proper form or the
acceptance of or payment for which may, in the opinion of Purchaser's counsel,
be unlawful. Purchaser also reserves the absolute right to waive any of the
conditions of the Offer or any defect or irregularity in any tender of Shares
of any particular stockholder whether or not similar defects or irregularities
are waived in the case of other stockholders.
Purchaser's interpretation of the terms and conditions of the Offer
(including the Letter of Transmittal and the instructions thereto) will be
final and binding. No tender of Shares will be deemed to have been validly made
until all defects and irregularities with respect to such tender have been
cured or waived. None of Purchaser, Parent or any of their affiliates or
assigns, if any, the Depositary, the Dealer Manager, the Information Agent or
any other person will be under any duty to give any notification of any defects
or irregularities in tenders or incur any liability for failure to give any
such notification.
Purchaser's acceptance for payment of Shares tendered pursuant to any of
the procedures described above will constitute a binding agreement between the
tendering stockholder and Purchaser upon the terms and subject to the
conditions of the Offer.
10
4. WITHDRAWAL RIGHTS
Except as otherwise provided in this Section 4, tenders of Shares made
pursuant to the Offer are irrevocable. Shares tendered pursuant to the Offer
may be withdrawn at any time on or prior to the Expiration Date and, unless
theretofore accepted for payment as provided herein, may also be withdrawn at
any time after August 10, 2002 (or such later date as may apply in case the
Offer is extended).
If, for any reason whatsoever, acceptance for payment of any Shares
tendered pursuant to the Offer is delayed, or Purchaser is unable to accept for
payment or pay for Shares tendered pursuant to the Offer, then, without
prejudice to Purchaser's rights set forth herein, the Depositary may,
nevertheless, on behalf of Purchaser, retain tendered Shares and such Shares
may not be withdrawn except to the extent that the tendering stockholder is
entitled to and duly exercises withdrawal rights as described in this Section
4. Any such delay will be by an extension of the Offer to the extent required
by law.
To be effective, a written, telegraphic or facsimile transmission notice
of withdrawal must be timely received by the Depositary at one of its addresses
set forth on the back cover of this Offer to Purchase. Any such notice of
withdrawal must specify the name of the person who tendered the Shares to be
withdrawn, the number of Shares to be withdrawn and the name of the registered
holder of the Shares to be withdrawn, if different from the name of the person
who tendered the Shares. If certificates evidencing Shares to be withdrawn have
been delivered or otherwise identified to the Depositary, then, prior to the
physical release of such certificates, the serial numbers shown on such
certificates must be submitted to the Depositary and, unless such Shares have
been tendered by an Eligible Institution, the signatures on the notice of
withdrawal must be guaranteed by an Eligible Institution. If Shares have been
delivered pursuant to the procedures for book-entry transfer as set forth in
Section 3, any notice of withdrawal must also specify the name and number of
the account at the Book-Entry Transfer Facility to be credited with the
withdrawn Shares and otherwise comply with such Book-Entry Transfer Facility's
procedures.
Withdrawals of Shares may not be rescinded. Any Shares properly withdrawn
will be deemed not validly tendered for purposes of the Offer, but may be
retendered at any subsequent time prior to the Expiration Date by following any
of the procedures described in Section 3.
No withdrawal rights will apply to Shares tendered during any Subsequent
Offering Period and no withdrawal rights apply during any such Subsequent
Offering Period with respect to shares tendered in the Offer and accepted for
payment.
All questions as to the form and validity (including time of receipt) of
notices of withdrawal will be determined by Purchaser, in its sole discretion,
whose determination will be final and binding. None of Purchaser, Parent or any
of their affiliates or assigns, if any, the Dealer Manager, the Depositary, the
Information Agent or any other person will be under any duty to give any
notification of any defects or irregularities in any notice of withdrawal or
incur any liability for failure to give any such notification.
5. CERTAIN FEDERAL INCOME TAX CONSEQUENCES.
The receipt of cash in exchange for Shares pursuant to the Offer, the
Merger or upon the exercise of appraisal rights will be taxable for federal
income tax purposes and may also be taxable under applicable state, local or
foreign tax laws. A stockholder who receives cash will generally recognize gain
or loss for federal income tax purposes in an amount equal to the difference,
if any, between the amount of cash received by the stockholder and the
stockholder's adjusted tax basis in the Shares exchanged therefor. Gain or loss
must be determined separately for each block of Shares exchanged (for example,
Shares acquired at the same cost in a single transaction). Such gain or loss
will be capital gain or loss (provided that the Shares are held as capital
assets) and any such capital gain or loss will be long term if, as of the date
of the exchange, the Shares were held for more than one year.
The foregoing discussion may not be applicable to certain types of
stockholders, including stockholders who acquired Shares pursuant to the
exercise of options or otherwise as compensation, individuals who are not
citizens or residents of the United States and foreign corporations, Shares
held as part of a straddle, hedge, conversion transaction, synthetic security
or other integrated investment, or entities that are otherwise subject to
special tax treatment under the Internal Revenue Code of 1986, as amended (such
as dealers in securities or foreign currency, insurance companies, regulated
investment companies, tax-exempt entities, financial institutions, and
investors in pass-through entities).
THE FEDERAL INCOME TAX DISCUSSION SET FORTH ABOVE IS INCLUDED FOR GENERAL
INFORMATION ONLY. EACH STOCKHOLDER IS URGED TO CONSULT HIS OR HER TAX ADVISOR
WITH
11
RESPECT TO THE PARTICULAR TAX CONSEQUENCES TO HIM OR HER OF THE OFFER AND THE
MERGER, INCLUDING FEDERAL, STATE, LOCAL, FOREIGN AND OTHER TAX CONSEQUENCES.
6. PRICE RANGE OF THE SHARES
According to the Company's Annual Report on Form 10-K for the fiscal year
ended December 31, 2001 (the "2001 Annual Report"), the Shares are listed and
traded principally on Nasdaq under the symbol "OPAY." The following table sets
forth, for the periods indicated, the reported high and low sales prices for
the Shares on Nasdaq, all as reported in published financial sources.
Fiscal Quarters: High Low
---------------- ---- ---
2002
Second (through June 10, 2002) ......... $ 3.25 $ 1.93
First .................................. 3.35 2.20
2001
Fourth ................................. 3.95 1.50
Third .................................. 5.30 1.73
Second ................................. 7.13 4.35
First .................................. 9.88 4.38
2000
Fourth ................................. 10.00 4.00
Third .................................. 10.72 3.81
Second ................................. 42.50 4.00
First .................................. 55.00 32.00
On May 30, 2002, the last full day of trading prior to the public
announcement of the execution of the Merger Agreement, the reported closing
price on Nasdaq for the Shares was $2.00 per Share. On June 10, 2002, the last
full day of trading prior to the commencement of the Offer, according to
published sources, the reported closing price on Nasdaq for the Shares was $2.96
per Share. STOCKHOLDERS ARE URGED TO OBTAIN A CURRENT MARKET QUOTATION FOR THE
SHARES.
The Company represented in the Merger Agreement that at the close of
business on May 15, 2002, there were 22,932,876 shares outstanding.
7. EFFECT OF THE OFFER ON THE MARKET FOR THE SHARES; STOCK EXCHANGE LISTING;
EXCHANGE ACT REGISTRATION; MARGIN REGULATIONS.
Effect of the Offer on the Market for the Shares
The purchase of Shares pursuant to the Offer will reduce the number of
Shares that trade publicly and, depending upon the number of Shares so
purchased, could adversely affect the liquidity and market value of the
remaining Shares held by the public.
Stock Exchange Listing
According to Nasdaq's published guidelines, Nasdaq would consider
delisting the Shares if, among other things, the number of record holders of at
least 100 shares should fall below 400, the number of publicly held Shares
(exclusive of holdings of officers, directors, their immediate families and
other concentrated holdings of 10% or more ("Nasdaq Excluded Holdings")) should
fall below 750,000 or the aggregate market value of publicly held Shares
(exclusive of Nasdaq Excluded Holdings) should fall below $5,000,000.
Depending upon the number of Shares acquired pursuant to the Offer, the
Shares may no longer meet the requirements for continued listing on Nasdaq or
any other exchanges upon which the Shares are listed. If as a result of the
purchase of Shares pursuant to the Offer or otherwise, the Shares no longer
meet Nasdaq's requirements for continued listing and/or trading and such
trading of the Shares was discontinued, the market for the Shares could be
adversely affected.
If the Shares were no longer listed or traded on Nasdaq, it is possible
that the Shares would trade on another securities exchange or in the
over-the-counter market and that price quotations would be reported by such
exchange, or other sources. Such trading and the availability of such
quotations would, however, depend upon the number of stockholders and/or
12
the aggregate market value of the Shares remaining at such time, the interest
in maintaining a market in the Shares on the part of securities firms, the
possible termination of registration of the Shares under the Exchange Act as
described below and other factors.
Exchange Act Registration
The Shares are currently registered under the Exchange Act. The purchase
of the Shares pursuant to the Offer may result in the Shares becoming eligible
for deregistration under the Exchange Act. Registration of the Shares may be
terminated upon application by the Company to the SEC if the Shares are not
listed on a "national securities exchange" and there are fewer than 300 record
holders of Shares. Termination of registration of the Shares under the Exchange
Act would substantially reduce the information required to be furnished by the
Company to its stockholders and the SEC and would make certain provisions of
the Exchange Act, such as the short-swing profit recovery provisions of Section
16(b) and the requirements of furnishing a proxy statement in connection with
stockholders' meetings pursuant to Section 14(a), no longer applicable to the
Company. If the Shares are no longer registered under the Exchange Act, the
requirements of Rule 13e-3 under the Exchange Act with respect to "going
private" transactions would no longer be applicable to the Company.
Furthermore, the ability of "affiliates" of the Company and persons holding
"restricted securities" of the Company to dispose of such securities pursuant
to Rule 144 promulgated under the Securities Act of 1933, as amended, may be
impaired or eliminated.
Purchaser currently intends to seek delisting of the Shares from Nasdaq
and the termination of the registration of the Shares under the Exchange Act as
soon after the completion of the Offer as the requirements for such delisting
and termination are met. If the Nasdaq listing and the Exchange Act
registration of Shares are not terminated prior to the Merger, then it is
anticipated that the Shares will be delisted from Nasdaq and the registration
of the Shares under the Exchange Act will be terminated following the
consummation of the Merger. See Section 11.
Margin Regulations
The Shares are currently "margin securities" under the regulations of the
Board of Governors of the Federal Reserve System (the "Federal Reserve Board"),
which have the effect, among other things, of allowing brokers to extend credit
on the collateral of such Shares for the purpose of buying, carrying or trading
in securities ("Purpose Loans"). Depending upon factors such as the number of
record holders of the Shares and the number and market value of publicly held
Shares, following the purchase of Shares pursuant to the Offer the Shares might
no longer constitute "margin securities" for purposes of the Federal Reserve
Board's margin regulations and, therefore, could no longer be used as
collateral for Purpose Loans made by brokers. In addition, if registration of
the Shares under the Exchange Act were terminated, the Shares would no longer
constitute "margin securities."
8. CERTAIN INFORMATION CONCERNING THE COMPANY
According to the 2001 Annual Report, the Company's predecessor business
(U.S. Audiotex, LLC) commenced operations in June 1996 and was merged into the
Company in September 1999, following the Company's incorporation in Delaware in
August 1999. In October 1999, the Company changed its name from U.S. Audiotex
Corporation to Official Payments Corporation.
The Company is a leading provider of electronic payment options to
government entities. The Company's systems enable consumers to use their credit
cards and "pin-less" debit cards to pay through the Internet or by telephone,
federal and state income taxes, sales and use taxes, real estate and personal
property taxes, tuition payments, utility payments, motor vehicle fees, fines
for traffic violations and parking citations and other government-imposed taxes
and fees. The principal executive offices of the Company are located at Three
Landmark Square, Stamford, Connecticut 00000-0000 and its telephone number is
(000) 000-0000.
The Company is subject to the informational filing requirements of the
Exchange Act and, in accordance therewith, is required to file periodic
reports, proxy statements and other information with the SEC relating to its
business, financial condition and other matters. Such reports, proxy statements
and other information can be inspected and copied at the public reference
facilities maintained by the SEC at 000 Xxxxx Xxxxxx, X.X., Xxxx 0000,
Xxxxxxxxxx, X.X. 00000, and at the SEC's regional offices located at 000
Xxxxxxxx, Xxx Xxxx, Xxx Xxxx 10279 and Citicorp Center, 000 Xxxx Xxxxxxx
Xxxxxx, Xxxxx 0000, Xxxxxxx, Xxxxxxxx 00000. Information regarding the public
reference facilities may be obtained from the SEC by telephoning
1-800-SEC-0330. The Company's filings are also available to the public on the
SEC's Internet
13
site (xxxx://xxx.xxx.xxx). Copies of such materials may also be obtained by
mail from the Public Reference Section of the SEC at 000 Xxxxx Xxxxxx, X.X.,
Xxxxxxxxxx, X.X. 00000 at prescribed rates.
9. CERTAIN INFORMATION CONCERNING PURCHASER AND PARENT
Parent is a vertically focused provider of end-to-end business solutions
to national, multinational and public sector clients. Parent formulates,
evaluates and implements solutions that allow clients to rapidly channel
emerging technologies into their business operations. Parent combines its
understanding of enterprise-wide systems with domain knowledge in four primary
vertical markets--state and local government, healthcare, insurance and
utilities. Parent focuses on markets that are driven by forces that make demand
for its services non-discretionary and are likely to provide Parent with
recurring long-term revenue streams.
Parent's ability to understand the specific industry environment in which
its clients operate allows it to reuse and transfer its knowledge throughout
Parent and to achieve significant improvements in cost, quality and deployment
on client projects. Parent provides business solutions through four primary
delivery offerings--systems design and integration, transaction processing,
business process outsourcing and business process reengineering. Several of
Parent's engagements involve providing a combination of these delivery
offerings as part of the overall project.
Parent was incorporated under the laws of the State of California in
October 1991 and has its principal executive offices at 0000 Xxxxx Xxxxxxxxx,
Xxxxx 000, Xxxxxx Xxxxx, XX 00000 and its telephone number is (000) 000-0000.
Parent is subject to the informational filing requirements of the Exchange
Act and, in accordance therewith, is required to file periodic reports, proxy
statements and other information with the SEC relating to its business,
financial condition and other matters. Such reports, proxy statements and other
information may be obtained in the same manner as described in Section 8 above.
Purchaser was incorporated in May 2002 under the laws of the State of
Delaware for the purpose of acquiring the Company. Purchaser is a wholly-owned
subsidiary of Parent. Purchaser has not, and is not expected to, engage in any
business other than in connection with its organization, the Offer and the
Merger. Its principal executive offices and telephone number are that of
Parent.
Purchaser is not subject to the informational filing requirements of the
Exchange Act, and, accordingly, does not file reports or other information with
the SEC relating to its business, financial condition and other matters.
Purchaser believes the financial condition of Parent, Purchaser and their
affiliates is not material to a decision by a holder of Shares whether to sell,
tender or hold Shares pursuant to the Offer. The consideration offered consists
solely of cash, the Offer is not subject to any financing condition, Parent is
a public reporting company under Section 13(a) or 15(d) of the Exchange Act and
files reports electronically with the SEC's Electronic Data Gathering, Analysis
and Retrieval (XXXXX) system and the offer is for all of the outstanding
Shares. However, consolidated financial statements (including notes thereto) of
Parent are contained in Parent's Annual Report on Form 10-K for the year ended
September 30, 2001 and in Parent's Quarterly Reports on Form 10-Q for the
periods ended December 31, 2001 and March 31, 2002. Such reports and other
documents may be examined and copies may be obtained from the offices of the
SEC in the manner described in Section 8 above.
The name, business address and telephone number, citizenship, present
principal occupation and employment history of each of the directors and
executive officers of Parent and Purchaser are set forth in Schedule I of this
Offer to Purchase.
Except as set forth elsewhere in this Offer to Purchase, (i) neither
Parent, Purchaser nor, to the best knowledge of Parent and Purchaser, any of
the persons listed in Schedule I hereto or any associate or majority-owned
subsidiary of Parent or any of the persons so listed, beneficially owns or has
a right to acquire any Shares or any other equity securities of the Company and
(ii) neither Parent, Purchaser nor, to the knowledge of either Parent or
Purchaser, any of the persons or entities referred to in clause (i) above or
any of their executive officers, directors or subsidiaries has effected any
transaction in the Shares or any other equity securities of the Company during
the past 60 days.
Except as set forth in this Offer to Purchase, none of Parent, Purchaser
nor, to the best knowledge of Parent and Purchaser, any of the persons listed
on Schedule I hereto, has had any business relationship or transaction with the
Company or any of its executive officers, directors or affiliates that is
required to be reported under the rules and regulations of the SEC applicable
to the Offer. Except as set forth in this Offer to Purchase, there have been no
contracts, negotiations or transactions between Parent or any of its
subsidiaries or, to the best knowledge of Parent, any of the persons listed in
Schedule I to this Offer to Purchase, on the one hand, and the Company or its
affiliates, on the other hand,
14
concerning a merger, consolidation or acquisition, tender offer or other
acquisition of securities, an election of directors or a sale or other transfer
of a material amount of assets. None of the persons listed in Schedule I have,
during the past five years, been convicted in a criminal proceeding (excluding
traffic violations or similar misdemeanors). None of the persons listed in
Schedule I have, during the past five years, been a party to any judicial or
administrative proceeding (except for matters that were dismissed without
sanction of settlement) that resulted in a judgment, decree or final order
enjoining the person from future violations of, or prohibiting activities
subject to, federal or state securities laws, or a finding of any violation of
federal or state securities laws.
10. BACKGROUND OF THE OFFER; CONTACTS WITH THE COMPANY
On April 17, 2002, a representative of Xxxxx, Xxxxxxxx & Xxxx, Inc.
("AH&H"), the financial advisor to Parent, and, separately, Xxxxx X. Xxxxxxx,
Chairman & Chief Executive Officer of Parent, contacted Xxxxxx X. Xxxxx,
Chairman & Chief Executive Officer of the Company, regarding a potential
business combination involving the Company. Parent entered into a
Confidentiality Agreement with the Company on the same day and received
confidential financial and operating information from the Company. The
Confidentiality Agreement is more fully described in Section 11. Following the
discussion that ensued, AH&H and Xx. Xxxxx agreed to set April 25, 2002 as a
date in which senior management of Parent would visit the Company at its
corporate headquarters.
Over the ensuing two weeks, Messrs. Xxxxx and Xxxxxxx had follow-up phone
conversations regarding a possible transaction and information about the
Company and began negotiating the preliminary terms of a possible business
transaction. On April 25, 2002, Xx. Xxxxxxx and Xxxxx X. Xxxxxx, President of
Parent, visited the Company's corporate headquarters in Stamford, Connecticut.
By letter, dated May 2, 2002, Xx. Xxxxxxx submitted a proposed,
non-binding expression of interest (the "Letter") to the Company, setting out
the basic terms of a tender offer by Parent. Shortly thereafter, the parties'
legal and financial advisors began negotiations by telephone regarding the
terms of the Letter between Parent and the Company. On May 6, 2002, Xx. Xxxxxxx
signed the Letter on behalf of Parent and, on May 7, 2002, Xx. Xxxxx
countersigned the Letter on behalf of the Company. At that time, the Company
agreed in writing not to solicit, negotiate or discuss a business combination
proposal relating to the Company with any person other than Parent until May
24, 2002.
On May 7-9 and 14-15, 2002, representatives of Parent, including attorneys
from Xxxxxxx Xxxxx + Xxxxxx LLP ("FBM"), Parent's outside counsel, and
representatives of AH&H commenced preliminary due diligence at the Company's
corporate offices in Stamford, Connecticut and San Ramon, California. During
this due diligence period, Xxxxxx's representatives reviewed certain of the
Company's financial, operational and legal documents and met with
representatives of the Company.
Following Parent's due diligence, on May 21, 2002, Parent proposed an
acquisition of the Company in a transaction in which the Company's stockholders
would receive $3.00 of cash consideration per outstanding share, and in which
the holders of the Company options to purchase the Company Common Stock would
receive $3.00 per share less the exercise price for such outstanding options
(representing aggregate consideration of approximately $74.1 million). Over the
ten days following Xxxxxx's proposal, the senior officers of Parent and the
Company and their legal and financial advisors negotiated the terms of the
Merger Agreement and the related transaction documents. As a condition to
entering into the Merger Agreement, Parent requested that certain stockholders
of the Company enter into a stockholder's agreement, whereby each such person
would agree to tender their shares of the Company Common Stock in the tender
offer, and also agreed to vote such shares in favor of the merger and against
any competing transaction. In addition, during this ten-day period, Xxxxxx
discussed the future terms of employment for certain key employees of the
Company and an extension of the non-solicitation restrictions through midday on
May 30, 2002. At a meeting on May 22, 2002, the Company Board authorized
Company management to continue discussions with Parent and approved an
extension of the non-solicitation restrictions through midday on May 30, 2002.
On May 29, 2002, the board of directors of Parent held a special meeting
to consider the Merger Agreement and the transactions contemplated thereby,
including the Offer and the Merger. At such meeting, Xxxxxx's board approved
the Merger Agreement and the transactions contemplated thereby, including the
Offer and the Merger.
On May 30, 2002, the Company's board of directors held a special meeting
to consider the Merger Agreement and the transactions contemplated thereby. At
such meeting, the board unanimously (i) determined that the Merger Agreement
and the transactions contemplated thereby, including, the Offer and the Merger,
are advisable, fair to, and in the best interests of, the Company's
stockholders, (ii) approved and adopted the Merger Agreement and the
transactions contemplated thereby, including the Offer and the Merger, and
approved the Stockholders Agreement, and (iii) determined
15
to recommend that the Company's stockholders accept the Offer and tender their
Shares to Purchaser pursuant thereto and, if required under applicable law,
vote in favor of the Merger and approval and adoption of the Merger Agreement.
The Merger Agreement and Stockholder's Agreement were finalized and
executed on May 30, 2002.
On the morning of May 31, 2002, before the opening of trading on the
Nasdaq, Parent and the Company issued a joint press release announcing that
they had executed the Merger Agreement.
11. PURPOSE OF THE OFFER; PLANS FOR THE COMPANY.
The purpose of the Offer is to enable Parent and Purchaser to acquire
control of, and the entire equity interest in, the Company. The Offer is being
made pursuant to the Merger Agreement and is intended to increase the
likelihood that the Merger will be effected. The purpose of the Merger is to
acquire all of the outstanding Shares not purchased pursuant to the Offer.
Purchaser intends to consummate the Merger as soon as possible following the
consummation of the Offer.
As provided in the Merger Agreement, upon consummation of the Merger, the
directors of Purchaser and the officers of the Company will be the directors
and officers, respectively, of the Surviving Corporation. Parent anticipates
that, with the exception of Xxxxxxx Xxxxxx, Chief Operating Officer of the
Company, the current executive officers of the Company will not continue
employment with the Company following consummation of the Merger. Xxxxxx X.
Xxxxx, Chairman and Chief Executive Officer of the Company, who will be leaving
his position at the Company following the Effective Time, has agreed to serve
on Parent's board of directors if elected or appointed.
Stockholders of the Company who tender and sell their Shares in the Offer
will cease to have any equity interest in the Company and any right to
participate in its earnings and future growth. If the Merger is consummated,
non-tendering stockholders will no longer have an equity interest in the
Company and instead will have only the right to receive cash consideration
pursuant to the Merger Agreement or to exercise statutory appraisal rights
under Section 262 of the DGCL. Similarly, after selling their Shares in the
Offer or the subsequent Merger, stockholders of the Company will not bear the
risk of any decrease in the value of the Company.
Under Section 253 of the DGCL, if a corporation owns at least 90% of the
outstanding shares of each class of a subsidiary corporation, the corporation
holding such stock may merge such subsidiary into itself, or itself into such
subsidiary pursuant to a Short-Form Merger, without any action or vote on the
part of the board of directors or the stockholders of such other corporation.
In the event that Purchaser acquires in the aggregate at least 90% of the
outstanding Shares pursuant to the Offer or otherwise, then, at the election of
Parent, a Short-Form Merger of Purchaser with and into the Company could be
effected without any further approval of the Company Board or the stockholders
of the Company. Even if Purchaser does not own 90% of the outstanding Shares
following consummation of the Offer, Parent could seek to purchase additional
Shares in the open market or otherwise in order to reach the applicable 90%
threshold and employ such a Short-Form Merger. The per share consideration paid
for any Shares so acquired in open market purchases may be greater or less than
the Offer Price. Parent presently intends to effect a Short-Form Merger, if
permitted to do so under the DGCL, pursuant to which Purchaser will be merged
with and into the Company.
Except as described above or elsewhere in this Offer to Purchase,
Purchaser and Parent have no present plans that would relate to or result in an
extraordinary corporate transaction involving the Company or any of their
respective subsidiaries (such as a merger, reorganization, liquidation,
relocation of any operations or sale or other transfer of a material amount of
assets), any sale or transfer of a material amount of assets of the Company or
any of its subsidiaries, any material change in the Company's capitalization or
dividend policy or any other material change in the Company's corporate
structure or business.
Merger Agreement
The following is a summary of material provisions of the Merger Agreement.
This summary is not a complete description of the terms and conditions of the
Merger Agreement and is qualified in its entirety by reference to the full text
of the Merger Agreement filed with the SEC as an exhibit to the Schedule TO and
is incorporated herein by reference. Capitalized terms not otherwise defined
below will have the meanings set forth in the Merger Agreement. The Merger
Agreement may be examined, and copies obtained, as set forth in Section 8 of
this Offer to Purchase.
The Merger. Upon the terms and subject to the conditions set forth in the
Merger Agreement, and, in accordance with the DGCL, at the Effective Time,
Purchaser will be merged with and into the Company and the separate corporate
existence of Purchaser will thereupon cease and the Company will continue as
the surviving corporation.
16
Further pursuant to the Merger Agreement, following the Merger, (x) the
Certificate of Incorporation of the Company as in effect immediately prior to
the Effective Time will be the Certificate of Incorporation of the Surviving
Corporation until thereafter amended as provided by law and such Certificate of
Incorporation, and (y) the by-laws of Purchaser, as in effect immediately prior
to the Effective Time, will be the by-laws of the Surviving Corporation until
thereafter amended as provided by law, by such Certificate of Incorporation or
by such by-laws.
Representations and Warranties. In the Merger Agreement, the Company has
made customary representations and warranties to Parent and Purchaser with
respect to, among other things, organization, standing and corporate power;
subsidiaries; capital structure; authority to enter into the Merger Agreement;
the absence of conflicts between the Merger Agreement and the Company's
Certificate of Incorporation, by-laws, applicable laws and certain agreements
to which the Company or its assets may be subject; required consents; filings
with the SEC; financial statements; disclosures in certain proxy statement
documents; the absence of certain changes or events; compliance of the Company
with applicable laws; litigation; benefit plans; employment matters; taxes;
stockholder votes; applicability of state takeover statutes; brokers;
intellectual property; material contracts; transactions with affiliates; labor
relations; title to and sufficiency of assets; environmental matters; insurance
and the opinion of CIBC.
In the Merger Agreement, Parent and Purchaser have made customary
representations and warranties to the Company with respect to, among other
things, organization, standing and corporate power; authority to enter into the
Merger Agreement; the absence of conflicts between the Merger Agreement and the
Certificate of Incorporation and by-laws of each of Parent and Purchaser,
applicable laws and certain agreements to which the Company or its assets may
be subject; required consents; disclosures in certain proxy statement
documents; ownership of Shares; sufficiency of funds; brokers; and the absence
of prior activities by Purchaser.
Conditions to the Merger. The Merger Agreement provides that the
respective obligation of each party to effect the Merger is subject to the
satisfaction or waiver on or prior to the Effective Time of the following
conditions: (i) if required by applicable law, the Company Stockholder Approval
will have been obtained; (ii) no judgment, order, decree, statute, law,
ordinance, rule, regulation or permanent injunction entered, enacted,
promulgated, enforced or issued by any court or other Governmental Entity of
competent jurisdiction or other legal restraint or prohibition (collectively,
"Restraints") shall be in effect preventing, enjoining or prohibiting the
consummation of the Merger; provided, however, that each of the parties shall
have used its reasonable best efforts to prevent the entry of any such
Restraints and to appeal as promptly as possible any such Restraints that may
be entered; and (iii) Parent, Purchaser or their affiliates shall have accepted
for payment and paid for all of the Shares tendered pursuant to the Offer,
except that this condition will not apply if Parent, Purchaser or their
affiliates shall have failed to purchase Shares pursuant to the Offer in breach
of their obligations under the Merger Agreement; provided, however, that none
of Parent, Purchaser or the Company may rely on the failure of any condition
set forth in this paragraph to be satisfied if such failure was caused by such
party's failure to use reasonable best efforts to consummate the Offer, the
Merger and the other Transactions, subject to the provisions of the Merger
Agreement.
The Company Board. The Merger Agreement provides that promptly upon the
purchase of and payment for any Shares by Parent or Purchaser pursuant to the
Offer, Parent will be entitled to designate such number of directors, rounded
up to the nearest whole number, on the Company Board as is equal to the product
of the total number of directors on the Company Board (giving effect to the
directors designated by Parent pursuant to this sentence) multiplied by the
percentage that the number of Shares so accepted for payment bears to the total
number of Shares then outstanding. In furtherance thereof, the Company will,
upon request of Parent, use its reasonable best efforts promptly either to
increase the size of the Company Board or secure the resignations of such
number of its incumbent directors, or both, as is necessary to enable Parent's
designees to be so elected to the Company Board, and will take all actions to
cause Parent's designees to be so elected. At such time, the Company will also
cause persons designated by Parent to have appropriate representation on each
committee of the Company Board.
The Merger Agreement further provides that in the event that Xxxxxx's
designees are elected to the Company Board, until the Effective Time, the
Company Board will have at least three directors who were directors on May 30,
2002 (the "Original Directors"); provided that, in such event, if the number of
Original Directors will be reduced below three for any reason whatsoever, any
remaining Original Directors (or Original Director, if there be only one
remaining) will be entitled to designate persons to fill such vacancies who
will be deemed to be Original Directors for purposes of the Merger Agreement
or, if no Original Director then remains, the other directors will designate
three persons to fill such vacancies who will not be stockholders, affiliates
or associates of Parent or Purchaser, and such persons shall be deemed to be
Original Directors for purposes of the Merger Agreement. Notwithstanding
anything in the Merger Agreement to the contrary, in the event that Xxxxxx's
designees are elected to the Company Board prior to the Effective Time, the
affirmative
17
vote of a majority of the Original Directors will be required for the Company
to (i) amend or terminate the Merger Agreement or agree or consent to any
amendment or termination of the Merger Agreement, (ii) exercise or waive any of
the Company's rights, benefits or remedies under the Merger Agreement, (iii)
extend the time for performance of Parent's and Purchaser's respective
obligations under the Merger Agreement (iv) take any other action by the
Company Board under or in connection with the Merger Agreement other than the
actions necessary to effect the Company Stockholder Meeting (as defined below)
or (v) approve any other action by the Company which adversely affects the
interests of the stockholders of the Company (other than Parent, Purchaser and
their affiliates) with respect to the Transactions.
Company Stockholder Meeting. Pursuant to the Merger Agreement, if required
by applicable law in order to consummate the Merger, the Company, acting
through its Board of Directors, will, in accordance with applicable law: (i)
duly call, give notice of, convene and hold a special meeting of its
stockholders (the "Company Stockholders Meeting") as promptly as practicable
following the acceptance for payment and purchase of Shares by Purchaser
pursuant to the Offer for the purpose of considering and taking action upon the
approval of the Merger and the approval and adoption of the Merger Agreement;
(ii) prepare and file with the SEC a proxy statement and related proxy
materials (the "Proxy Statement"), respond (after consultation with Parent) to
any comments made by the SEC with respect to such Proxy Statement and cause
such Proxy Statement to be mailed to stockholders of the Company, provided that
no amendment or supplement to the Proxy Statement will be made by the Company
without consultation with Parent and its outside counsel; (iii) include in the
Proxy Statement the recommendation of the Company Board that stockholders of
the Company vote in favor of the approval of the Merger and the adoption of the
Merger Agreement and (iv) use its commercially reasonable efforts to solicit
from holders of Shares proxies in favor of the Merger and take such other
actions that are reasonably necessary or advisable to secure any vote or
consent of stockholders required by Delaware law, the Company's Certificate of
Incorporation or by-laws to effect the Merger. The Merger Agreement provides
that Parent will provide the Company with the information concerning Parent and
Purchaser required to be included in the Proxy Statement. Parent will vote, or
cause to be voted, all of the Shares then owned by it, Purchaser or any of its
other subsidiaries or affiliates controlled by Parent in favor of the approval
of the Merger and the approval and adoption of the Merger Agreement.
Company Stock Option Plans. The Merger Agreement provides that Parent and
the Company will take all actions necessary or appropriate to provide that each
outstanding Company Stock Option granted under any stock option or stock
purchase plan, program or agreement to which the Company is a party which is
outstanding immediately prior to the consummation of the Offer, whether or not
then exercisable, will be cancelled as of the consummation of the Offer and the
holder thereof will be entitled to receive an amount in cash payable at the
time of cancellation equal to the product of (A) the excess, if any, of (x) the
Offer Price over (y) the per share exercise price of such Company Stock Option
multiplied by (B) the number of shares of Company Common Stock subject to such
Company Stock Option. Such cash payment will be reduced by all applicable
federal, state and local Taxes to be withheld in respect of such payment. The
surrender of a Company Stock Option will be deemed a release of any and all
rights the holder had or may have had in respect thereof.
Conduct of Business. Pursuant to the Merger Agreement, the Company has
covenanted and agreed that, except as otherwise expressly permitted or
contemplated by the Merger Agreement or except as consented to in writing by
Parent (in certain cases, such consent not to be unreasonably withheld or
delayed), during the period from the date of the Merger Agreement to the
earlier of the Effective Time and the appointment or election of Parent's
designees to the Company Board (such earlier time, the "Control Time"), the
Company will carry on its business in the ordinary course consistent with past
practice and in compliance in all material respects with all applicable laws
and regulations and, to the extent consistent therewith, use reasonable best
efforts to preserve intact its current business organizations, to keep
available the services of its current officers and other key employees and to
maintain satisfactory relationships with those Governmental Entities, vendors,
merchants and other persons having significant business dealings with the
Company. Without limiting the generality of the foregoing (but subject to the
above exceptions), during the period from the date of the Merger Agreement to
the Control Time, the Company will not, and will not permit its subsidiary to:
(i) (A) declare, set aside or pay any dividends on, or make any other
distributions in respect of, any of its capital stock, (B) split, combine
or reclassify any of its capital stock or issue or authorize the issuance
of any other securities in respect of, in lieu of or in substitution for
shares of its capital stock, except for issuances of Company Common Stock
upon the exercise of Company Stock Options under the Company Stock Option
Plans or in connection with other awards under the Company Stock Option
Plans outstanding as of May 30, 2002 in accordance with their present
terms or issued in accordance with the terms of the Merger Agreement, (C)
except pursuant to agreements entered into with respect to the Company
Stock Option Plans, purchase,
18
redeem or otherwise acquire any shares of capital stock of the Company or
any of its subsidiaries or any other securities thereof or any rights,
warrants or options to acquire any such shares or other securities;
(ii) issue, deliver, sell, pledge or otherwise encumber or subject to
any Lien any shares of its capital stock, any other voting securities or
any securities convertible into, or any rights, warrants or options to
acquire, any such shares, voting securities or convertible securities
(other than Company Stock Options granted under clause (ii)(B) below or
the issuance of Company Common Stock upon the exercise of Company Stock
Options or in connection with other awards under the Company Stock Option
Plans (A) outstanding as of May 30, 2002 in accordance with their present
terms or (B) granted after May 30, 2002 with the written consent of
Parent;
(iii) amend its Certificate of Incorporation or by-laws;
(iv) acquire by merging or consolidating with, or by purchasing a
substantial portion of the assets of, or by any other manner, any
business or any person;
(v) sell, lease, license, mortgage or otherwise encumber or subject
to any Lien or otherwise dispose of any of its properties or assets
(including securitizations), other than in the ordinary course of
business consistent with past practice;
(vi) incur any indebtedness for borrowed money or issue any debt
securities or assume, guarantee or endorse, or otherwise become
responsible for the obligations of any person, or make any loans,
advances or capital contributions to, or investments in, any person other
than a wholly-owned subsidiary, except in the ordinary course of business
consistent with past practice;
(vii) take, or agree to commit to take, any action that would or is
reasonably likely to result in any representation or warranty becoming
untrue or any of the Offer conditions or any of the conditions precedent
to the Merger set forth in the Merger Agreement not being satisfied, or
that would materially impair the ability of the Company, Parent,
Purchaser or the holders of Shares to consummate the Offer or the Merger
in accordance with the terms of the Merger Agreement or materially delay
such consummation;
(viii) alter the corporate structure or ownership of the Company or
its subsidiary;
(ix) (A) increase the compensation payable or to become payable to
the Company's or its subsidiary's directors, officers or employees or
grant any severance or termination pay to, or enter into any employment
or severance agreement with any director, officer or employee of the
Company or its subsidiary (except with respect to payment of severance to
non-continuing employees as permitted by the Merger Agreement), (B)
establish, adopt, enter into, or (except as required to comply with
applicable law or as permitted by the Merger Agreement) amend in any
material respect or take action to enhance in any material respect or
accelerate any rights or benefits under, any labor, collective
bargaining, bonus, profit sharing, thrift, compensation, stock option,
restricted stock, retirement, deferred compensation, employment,
termination, severance or other plan, agreement, trust, fund, policy or
arrangement for the benefit of any director, officer or employee, except
as related to employees in the ordinary course of business and to the
extent such action does not (and is not expected to) result in increased
expenses, costs or liabilities in excess of $50,000 in the aggregate;
(x) knowingly violate or knowingly fail to perform, in any material
respect, any obligation or duty imposed upon the Company or its
subsidiary by any applicable federal, state or local law, rule,
regulation, guideline or ordinance;
(xi) make any change to accounting policies, practices or procedures
(other than actions required to be taken as a result of a change in law
or GAAP);
(xii) prepare or file any material Tax Return inconsistent with past
practice or, on any such Tax Return, take any material position, make any
material election, or adopt any material method that is inconsistent with
positions taken, elections made, or methods used in preparing or filing
similar Tax Returns in prior periods;
(xiii) settle or compromise any claims or litigation, including any
federal, state, local or foreign income tax dispute, where (A) the
consideration paid by the Company, in the aggregate, has a fair market
value in excess of $100,000 or (B) there are potential criminal
liabilities;
(xiv) other than in the ordinary course of business consistent with
past practice, enter into, terminate or materially amend any agreement or
contract to which the Company is a party (provided that this shall not
prevent the Company from renewing any existing contract with any
Governmental Entities), (A) having a remaining
19
term in excess of six months and (B) which involves or is expected to
involve future receipt or payment of $100,000 or more during the term
thereof, or waive, release or sign any material rights or claims under
which any such agreement or contract, or purchase any real property, or
make or agree to make any new capital expenditure or expenditures which
in the aggregate exceed $100,000;
(xv) pay, discharge or satisfy any claims, liabilities or obligations
in excess of $100,000, other than the payment, discharge or satisfaction,
in the ordinary course of business consistent with past practice and in
accordance with their terms, of any such claims, liabilities or
obligations (in each case not related to pending litigation) reflected or
disclosed in the most recent consolidated financial statements of the
Company included in the Company SEC Documents or incurred since the date
of such financial statements in the ordinary course of business
consistent with past practice; or
(xvi) authorize, recommend, propose, commit or agree to take, or
announce any intention to take any of the foregoing actions.
Indemnification. The Merger Agreement provides that Parent will, or will
cause the Surviving Corporation to, indemnify and hold harmless from
liabilities for acts or omissions occurring at or prior to the Effective Time
those classes of persons currently entitled to indemnification from the Company
and its subsidiary as provided in their respective certificates of
incorporation or by-laws (or comparable organizational documents) and to cause
the Surviving Corporation to assume as of the Effective Time any
indemnification agreements in effect as of May 30, 2002; provided that (x)
those persons entitled to recovery pursuant to the terms of certain insurance
policies (including any endorsements and/or replacements to such policies)
issued to Imperial Bancorp and Comerica Incorporated (the "Insurance Policies")
shall not be entitled to duplication of recovery under the Insurance Policies
and from Parent or Surviving Corporation and (y) Parent and Surviving
Corporation shall be subrogated to the rights of those persons entitled to
recover pursuant to the Insurance Policies. Pursuant to the Merger Agreement,
the timing and amount of any recovery under the Insurance Policies will not
affect Parent's or the Surviving Corporation's indemnification obligations as
described in the preceding sentence. Subject to clauses (x) and (y) above,
Xxxxxx has also agreed to advance expenses to any such person promptly upon
receipt of an undertaking from such person that such expenses will be repaid
should it be ultimately determined that such person is not entitled to
indemnification. In addition, from and after the Effective Time, directors and
officers of the Company who become directors or officers of Parent or any of
its subsidiaries will be entitled to indemnification under Parent's or any of
its subsidiaries' certificates of incorporation and by-laws, as the same may be
amended from time to time in accordance with their terms and applicable law,
and to all other indemnity rights and protections as are afforded to other
directors and officers of Parent or any of its subsidiaries. The Company and
Comerica Incorporated have also entered into an Executive Liability and
Indemnification Policies Maintenance Agreement, dated as of May 30, 2002, under
which Comerica Incorporated has agreed, among other things, to maintain in full
force and effect the Insurance Policies for the benefit of the Company and its
current and former employees and directors, as applicable.
The Merger Agreement further provides that, in the event the Surviving
Corporation or any of its successors or assigns (x) consolidates with or merges
into any other person and is not the continuing or surviving corporation or
entity of such consolidation or merger or (y) except for any disposition of
assets by the Surviving Corporation required by applicable law in connection
with the Merger, transfers or conveys all or substantially all of its
properties and assets to any person, then, and in each case, proper provision
will be made so that successors and assigns of the Surviving Corporation assume
the indemnification obligations set forth in the Merger Agreement.
Pursuant to the Executive Liability and Indemnification Policies
Maintenance Agreement between the Company and Comerica Incorporated, dated as
of May 30, 2002, the Company, Parent and Purchaser have acknowledged that the
Company's directors and officers shall be insured for any acts or omissions
occurring prior to the Effective Time pursuant to the Insurance Policies.
Parent will, or will cause the Surviving Corporation, to make all deductible
payments relating to claims under the Insurance Policies.
No Solicitation. Pursuant to the Merger Agreement, the Company has agreed
that it and its subsidiary and each of their respective affiliates, directors,
officers, employees, agents and representatives (including without limitation
any investment banker, financial advisor, attorney, accountant or other
representative retained by it or any of its subsidiaries) will immediately
cease any discussions or negotiations with any other parties that may be
ongoing with respect to any Company Takeover Proposal (as defined below). From
May 30, 2002 through the Effective Time, the Company will not, nor will it
permit any of its subsidiaries to, nor will it authorize or permit any of its
or its subsidiaries' directors, officers or employees or any investment banker,
financial advisor, attorney, accountant or other representative retained by it
or any of its subsidiaries to, directly or indirectly through another person,
(i) solicit, initiate or encourage (including by way
20
of furnishing information or assistance), or take any other action designed to
facilitate or that is likely to result in, any inquiries or the making of any
proposal which constitutes, or is reasonably likely to lead to, any Company
Takeover Proposal, (ii) enter into any agreement with respect to any proposal
for the Company Takeover Proposal or (iii) participate in any discussions or
negotiations regarding any Company Takeover Proposal; provided, however, that
if, at any time, the Company Board determines in good faith, after consultation
with outside counsel, that it would be inconsistent with the Company Board's
fiduciary duties to the Company or its stockholders or otherwise breach or
violate applicable law (based on the advice of outside counsel), the Company
may, in response to a bona fide, written Company Takeover Proposal not
solicited in violation of this paragraph that the Company Board believes in
good faith would result in a Company Superior Proposal (as defined below),
subject to providing 48-hour prior written notice of its decision to take such
action to Parent and identifying the person making the proposal and all
material terms and conditions of such proposal (the "Company Notice") and
compliance with this paragraph, following delivery of the Company Notice (x)
furnish information with respect to the Company to any person making such a
Company Takeover Proposal pursuant to a customary confidentiality agreement (as
determined by the Company after consultation with its outside counsel) on terms
no more favorable to such person than the terms contained in the
Confidentiality Agreement between Company and Parent (provided that such
confidentiality agreement may omit a standstill provision if the Company Notice
contains a release of Parent from any standstill obligations, if such
standstill obligation has not previously been released), and (y) participate in
discussions or negotiations regarding such a Company Takeover Proposal. Any
violation of the foregoing restrictions by any of the Company's
representatives, whether or not such representative is so authorized and
whether or not such representative is purporting to act on behalf of the
Company or otherwise, shall be deemed to be a breach of the Merger Agreement by
the Company. For purposes of the Merger Agreement, "Company Takeover Proposal"
means any inquiry, proposal or offer from any person relating to any (r) direct
or indirect acquisition or purchase of a business that constitutes a
substantial portion of the net revenues, net income or assets of the Company,
(s) direct or indirect acquisition or purchase of a substantial interest in any
class of equity securities of the Company, (t) tender offer or exchange offer
that if consummated would result in any person beneficially owning a
substantial interest in any class of equity securities of the Company, (u)
merger, consolidation, business combination, recapitalization, liquidation,
dissolution or similar transaction involving the Company, other than the
transactions contemplated by the Merger Agreement or (v) any other transaction
the consummation of which could reasonably be expected to impede, interfere
with, prevent or materially delay the Merger or Offer or which could reasonably
be expected to dilute or adversely affect materially the benefits to Parent of
the transactions contemplated by the Merger Agreement or the Stockholders
Agreement.
The Merger Agreement provides that except as expressly permitted by the
terms discussed below, neither the Company Board nor any committee thereof will
(i) after receipt of a Company Takeover Proposal, withdraw or modify, or
propose publicly to withdraw or modify, in a manner adverse to Parent, the
approval or recommendation by the Company Board or such committee of the Merger
or the Merger Agreement, (ii) approve or recommend, or propose publicly to
approve or recommend, any Company Takeover Proposal or (iii) cause the Company
to enter into any letter of intent, agreement in principle, acquisition
agreement or other similar agreement (each, a "Company Acquisition Agreement")
related to any Company Takeover Proposal. Notwithstanding the foregoing, in the
event that the Company Board determines in good faith, based on advice from
outside legal counsel and after consultation with a nationally recognized
investment banking firm serving as financial advisor to the Company, that the
value of consideration provided in such proposal, at the time of such
determination by the Board of Directors, exceeds the Merger Consideration and
that the Company Takeover Proposal is a Company Superior Proposal, the Company
Board may (subject to this and the following sentences) (x) withdraw or
adversely modify its approval or recommendation of the Transactions or the
matters to be considered at the Company Stockholders Meeting, (y) approve or
recommend such Company Superior Proposal and/or (z) terminate the Merger
Agreement and, if it so chooses, enter into a Company Acquisition Agreement
with respect to such Company Superior Proposal, but only after the third full
business day following Parent's receipt of written notice advising Parent that
the Company Board is prepared to terminate the Merger Agreement and only if,
during such three-day period, the Company and its advisors shall have
negotiated in good faith with Parent to make such adjustments in the terms and
conditions of the Merger Agreement as would enable Parent to proceed with the
Transactions on terms and conditions substantially equivalent to the Company
Superior Proposal; provided that should Parent not seek to proceed with the
Transactions on such adjusted terms, the Company may solicit additional Company
Takeover Proposals. For purposes of the Merger Agreement, a "Company Superior
Proposal" means any bona fide written proposal made by a third party to
acquire, directly or indirectly, including pursuant to a tender offer, exchange
offer, merger, consolidation, business combination, recapitalization,
liquidation, dissolution or similar transaction, more than 50% of the combined
voting power of the shares of Company Common Stock then outstanding or all or
substantially all the assets of the Company and otherwise on terms which the
Company Board determines in its good faith judgment to be more favorable to the
Company's stockholders than the Offer and the Merger and for which financing,
to the extent required, is then committed or which, in the good faith judgment
of the Company Board, is highly likely to be obtained by such third party.
21
Pursuant to the Merger Agreement, the Company will promptly and in any
event within 24 hours advise Parent orally and in writing of any Company
Takeover Proposal (or any inquiry which could lead to a Company Takeover
Proposal) and keep Parent informed, on a current basis, of the continuing
status thereof and shall contemporaneously provide to Parent all materials
provided to or made available to any third party which were not previously
provided to Parent.
Termination. The Merger Agreement may be terminated at any time prior to
the Effective Time, whether before or after the Company Stockholder Approval:
(a) by mutual written consent of Parent and the Company;
(b) by either Parent or the Company:
(i) if the Offer shall have expired in accordance with the
terms of the Merger Agreement without any Shares being purchased
therein; provided, however, that the right to terminate the Merger
Agreement under this subparagraph (b)(i) will not be available to
any party whose failure to fulfill any obligation under the Merger
Agreement has been the cause of, or resulted in, the failure of
Parent or Purchaser, as the case may be, to purchase the Shares
pursuant to the Offer on or prior to such date or if the failure
of a condition to the Merger Agreement results from facts or
circumstances that constitute a breach of any representation or
warranty under the Merger Agreement by such party;
(ii) if the Offer shall not have been consummated by September
1, 2002 or such date as the Offer shall have been properly
extended; provided, that the right to terminate under this
subparagraph (b)(ii) shall not be available to any party whose
failure to perform any of its obligations under the Merger
Agreement results in the failure of the Offer to be consummated by
such time or if the failure of a condition to this Agreement
results from facts or circumstances that constitute a breach of
any representation or warranty under the Merger Agreement by such
party; or
(iii) if any Restraint which in effect prevents the
consummation of the Merger shall be in effect and shall have
become final and nonappealable; provided, that the party seeking
to terminate the Merger Agreement pursuant to this subparagraph
(b)(iii) shall have used reasonable best efforts to prevent the
entry of and to remove such Restraint;
(c) by the Company:
(i) if at any time prior to consummation of the Offer, Parent
or Purchaser shall have breached or failed to perform in any
material respect any of their respective material representations,
warranties, covenants or other agreements contained in the Merger
Agreement which breach or failure to perform (A) would give rise
to the failure of a condition precedent to the Merger as provided
in the Merger Agreement and (B) cannot be or has not been cured
within 10 days after the giving of written notice to Parent or
Purchaser, as applicable, except, in any case, for such breaches
or failures to perform which are not, in the Company's opinion,
reasonably likely to adversely affect Parent's or Purchaser's
ability to complete the Offer or the Merger;
(ii) if the Company Board shall have exercised its termination
rights pursuant to the terms of the Merger Agreement and in
connection with the receipt of a Company Superior Proposal;
provided that, in order for the termination of the Merger
Agreement pursuant to this subparagraph (c)(ii) to be deemed
effective, the Company shall have complied with (A) the
non-solicitation provisions in the Merger Agreement, including the
notice provisions therein and (B) the obligation to simultaneously
pay to Parent the Termination Fee in connection with such
termination of the Merger Agreement; or
(iii) if Parent, Purchaser or any of their affiliates shall
have failed to commence the Offer in accordance with the terms of
the Merger Agreement; provided, that the Company may not terminate
the Merger Agreement pursuant to this subparagraph (c)(iii) if the
cause of such failure was due to any action or failure to act on
the part of the Company;
(d) by Parent or Purchaser:
(i) if prior to the purchase of Shares pursuant to the Offer,
the Company shall have breached or failed to perform any of its
representations, warranties, covenants or other agreements
contained in the Merger Agreement (except where the breach of such
representations or warranties results from
22
changes specifically permitted by the Merger Agreement or from any
transaction expressly consented to in writing by Parent) which (A)
would give rise to the failure of the Offer conditions set forth
in the Merger Agreement and described in Section 14 herein and (B)
cannot be or has not been cured within 10 days after the giving of
written notice to the Company;
(ii) if, due to an occurrence not involving a breach by Parent
or Purchaser of their respective obligations under the Merger
Agreement, which makes it impossible to satisfy any of the Offer
conditions set forth in the Merger Agreement and described in
Section 14 hereof, Parent, Purchaser, or any of their affiliates
shall have failed to commence the Offer in accordance with the
terms of the Merger Agreement;
(iii) if either Parent or Purchaser is entitled to terminate
the Offer as a result of the Company's entering into any Company
Acquisition Agreement with respect to any Company Superior
Proposal in accordance with the terms of the Merger Agreement, the
Company Board's withdrawing or modifying its approval or
recommendation of the Merger in accordance with the terms of the
Merger Agreement or the Company's or its directors or
representatives having taken any other action, whether or not in
accordance with the Merger Agreement, that permits Parent to
terminate the Merger Agreement in accordance with its terms; or
(iv) if (A) the Company Board or any committee thereof shall
have withdrawn or modified in a manner adverse to Parent its
approval or recommendation of the Offer, the Merger or the Merger
Agreement, or approved or recommended any Company Takeover
Proposal (whether or not in compliance with the obligation to
simultaneously pay to Parent the Termination Fee in connection
with such termination of the Merger Agreement) or (B) the Company
Board shall have resolved to take any of the foregoing actions.
Termination Fee. The Merger Agreement provides that in the event that (i)
the Merger Agreement is terminated by the Company pursuant to subparagraph
(c)(ii) of the immediately preceding section, or (ii) the Merger Agreement is
terminated by Parent pursuant to subparagraph (d)(iv) of the immediately
preceding section then simultaneously with such termination, the Company will
pay Parent a fee of $1.75 million by wire transfer of same day funds (the
"Termination Fee"). In addition, in the event that (A) a Pre-Termination
Takeover Proposal Event (as defined below) occurs and thereafter the Merger
Agreement is terminated by either Parent or the Company pursuant to
subparagraph (b)(i) of the immediately preceding section solely as a result of
the failure of the Minimum Condition having been satisfied and (B) within 12
months following the date of such termination the Company enters into a Company
Acquisition Agreement with the party (or an affiliate thereof) who initiated
the Pre-Termination Takeover Proposal Event, then the Company will, upon the
date the transactions set forth in such Company Acquisition Agreement are
consummated, pay Parent the Termination Fee. A "Pre-Termination Takeover
Proposal Event" will be deemed to occur if a Company Takeover Proposal will
have been publicly made directly to the Company's stockholders generally or any
person will have publicly announced an intention (whether or not conditional)
to make a Company Takeover Proposal.
Additional Agreements; Employee Benefit Matters. Pursuant to the Merger
Agreement, Parent has agreed that individuals identified as continuing
employees ("Continuing Employees") and who are employed by the Company as of
the Closing shall continue to be employed by the Surviving Corporation
immediately following the Closing. Upon request of Parent, Company will
terminate the employment or services of all individuals not identified as a
Continuing Employee as soon as practicable following the earlier to occur of
(i) the consummation of the Offer or (ii) Parent's waiver of the Offer
conditions set forth in the Merger Agreement and described in Section 14 hereof
upon an extension of the Offer. Each such terminated employee will receive
severance pay as provided under the Merger Agreement. Each Continuing Employee
identified as a transition employee (a "Transition Employee") will receive
severance pay upon the earlier to occur of (i) termination of the Transition
Employee's employment by Parent or the Surviving Corporation (other than a
termination for cause), or (ii) the completion of the respective Transition
Employee's transition period. Prior to the consummation of the Offer, the
Company will assist Parent in causing, and Parent will reasonably endeavor to
cause, each Continuing Employee who is identified by the Company as a key
employee ("Key Employee") to enter an employment agreement substantially in the
form provided by Parent to Company (the "Employment Agreement") which will
provide for base salary equal to or exceeding the respective employee's salary
on May 30, 2002. This foregoing summary is not a complete description of the
terms and conditions of the Employment Agreement and is qualified in its
entirety by reference to the full text of the Employment Agreement incorporated
herein by reference and a copy of which has been filed with the SEC as an
exhibit to the Schedule TO. The Employment Agreement may be examined, and
copies obtained, as set forth in Section 8 herein. Except as modified or
amended with the consent of a Continuing
23
Employee, or actions taken in furtherance thereof, Xxxxxx has agreed, and
agreed to cause the Surviving Corporation, to comply with the terms and make
required payments when due under (and not to attempt to invalidate), certain
contracts and agreements identified by the Company. Nothing in this paragraph
nor any other provision of the Merger Agreement will limit the ability or right
of the Company to terminate the employment of any of its employees after the
Closing (subject to any rights of any such employee pursuant to a written
contract or agreement).
Parent has further agreed that, from and after the Closing, for purposes
of all employee benefit plans, programs and arrangements maintained by or
contributed to by Parent, Parent will use commercially reasonable efforts, or
will cause the Surviving Corporation to use commercially reasonable efforts, to
cause each such plan, program or arrangement, to the extent permitted by
applicable law, to treat the prior service with the Company and its affiliates
of each person who is an employee of the Company or its subsidiaries
immediately prior to the Closing (a "Company Employee") (to the same extent
such service is recognized under analogous plans, programs or arrangements of
the Company or its affiliates prior to the Closing) as service rendered to
Parent or its subsidiaries, as the case may be, for purposes of eligibility to
participate in and vesting thereunder (but not benefit accrual under defined
benefit pension plans); provided, that such crediting of service will not
operate to duplicate any benefit or the funding of such benefit. To the extent
that following the Closing, a Continuing Employee participates in a Parent
Benefit Plan, Parent will use commercially reasonable efforts to cause each
Parent Benefit Plan to waive any preexisting condition which was waived under
the terms of any Company Benefit Plan immediately prior to the Closing or
waiting period limitation which would otherwise be applicable to a Company
Employee on or after the Closing. Parent further agreed to recognize any
accrued but unused vacation time of the Company Employees as of the Closing
Date to the extent accrued in Company's books and records, and Parent will
cause the Company and its subsidiaries to provide such paid vacation.
The Merger Agreement further provides that, for a period of eleven months
following the Effective Time, Parent will provide, or will cause the Surviving
Corporation, the Company or their affiliates to provide to each Continuing
Employee with each such entity with employee benefits that are no less
favorable in the aggregate than those provided to comparable employees of
Parent. In addition, Parent will, or will cause the Surviving Corporation, to
provide certain specified severance pay to any Continuing Employee whose
employment is terminated by Parent or the Surviving Corporation (other than a
termination for cause), or any of their respective subsidiaries, during the
period beginning on the Closing Date and ending eleven months following the
Effective Time.
Stockholders Agreement
The following is a summary of the material terms of a Stockholders
Agreement (the "Stockholders Agreement"), dated as of May 30, 2002, among
Parent, Purchaser, Comerica Incorporated, Beranson Holdings, Inc. and Xxxxxxxxx
Xxxxx (each, a "Stockholder"). This summary is not a complete description of
the terms and conditions of the Stockholders Agreement and is qualified in its
entirety by reference to the full text of the Stockholders Agreement , which is
incorporated herein by reference and a copy of which has been filed with the
SEC as an exhibit to Schedule TO. The Stockholders Agreement may be examined,
and copies obtained, as set forth in Section 8 herein. Capitalized terms used
in the summary below but not otherwise defined below have the meaning set forth
in the Stockholders Agreement.
Voting Agreement. The Stockholders Agreement provides that each
Stockholder, at any meeting of the stockholders of the Company, however called,
or in connection with any written consent of the holders of Company Common
Stock, will vote his or her Shares (a) in favor of the adoption of the Merger
Agreement and in favor of any other matter necessary or appropriate for the
consummation of the transactions contemplated by the Merger Agreement, the
Merger and all the transactions contemplated by the Merger Agreement and the
Stockholders Agreement and any other actions required in furtherance of the
Merger Agreement or the Stockholders Agreement; and (b) against the adoption of
any Adverse Proposal. For purposes of the Stockholders Agreement, the term
"Adverse Proposal" means (a) any Company Takeover Proposal, (b) any proposal or
action that would reasonably be expected to result in a breach of any covenant,
agreement, representation or warranty of the Company set forth in the
Stockholders Agreement or the Merger Agreement, or (c) the following actions
(other than the Offer, the Merger and the other transactions contemplated by
the Merger Agreement): (i) any extraordinary corporate transaction, such as a
merger, consolidation or other business combination involving the Company or
its subsidiary; (ii) a sale, lease, disposition or transfer of a material
amount of assets of the Company or its subsidiary, or a reorganization,
recapitalization, dissolution or liquidation of the Company or its subsidiary;
and (iii) (1) any change in a majority of the persons who constitute the
Company Board as of May 30, 2002; (2) any change in the capitalization of the
Company as of May 30, 2002, or any amendment of the Company's certificate of
incorporation or bylaws, as amended to May 30, 2002; (3) any other material
change in the Company's corporate structure or business; or (4) any other
action that is intended, or could reasonably be expected, to impede, interfere
with, delay, postpone, or
24
adversely affect the Offer or the Merger and the other transactions
contemplated by the Stockholders Agreement and the Merger Agreement or increase
the likelihood that such transactions will not be consummated.
The Stockholders Agreement further provides that each Stockholder
appointed Xxxxxx and any designee of Parent such Stockholder's irrevocable
proxy and attorney-in-fact with full power of substitution to vote or act by
written consent with respect to all of such Shareholder's Subject Shares which
it has the right to vote in accordance with the immediately preceding
paragraph.
Agreement to Tender. The Stockholders Agreement further provides that,
each Stockholder will validly tender, or cause to be validly tendered (and not
withdrawn) all of the Stockholder's Subject Shares not later than the tenth
business day after the commencement of the Offer in accordance with the terms
and conditions of the Offer. Each Stockholder acknowledged that Purchaser's
obligation to accept for payment and pay the Offer Price for Shares (including
such Stockholder's Subject Shares) pursuant to the Offer is subject to the
terms and conditions of the Offer set forth in the Merger Agreement.
Covenants. The Stockholder Agreement provides that no Stockholder will,
directly or indirectly: (a) except pursuant to the terms of the Stockholders
Agreement and for the conversion of Subject Shares into the right to receive
the Offer Price at the Effective Time pursuant to the terms of the Merger
Agreement, offer for sale, sell, transfer, tender, pledge, encumber, gift,
assign or otherwise dispose of, or enter into any contract, option or other
arrangement or understanding with respect to or consent to the offer for sale,
sale, transfer, tender, pledge, encumbrance, gift-over, assignment or other
disposition of, any or all of such Stockholder's Subject Shares; (b) acquire
any Shares or other securities of the Company (other than as permitted by the
Stockholders Agreement) or enter into any contract, option, arrangement or
other undertaking with respect to the direct or indirect acquisition of any
interest in or the voting of any Subject Shares or any other securities of the
Company; (c) except pursuant to the terms of the Stockholders Agreement, grant
any proxies or powers of attorney, deposit any Subject Shares into a voting
trust or enter into a voting agreement with respect to any Subject Shares; or
(d) take any action that would reasonably be expected to make any of its
representations or warranties contained in the Stockholders Agreement untrue or
incorrect or have the effect of impairing the ability of such Stockholder to
perform such Stockholder's obligations under the Stockholders Agreement or
preventing or delaying the consummation of any of the transactions contemplated
by the Stockholders Agreement.
Further, each Stockholder will not and will not authorize or permit its
officers, directors, employees, agents or representatives (including any
investment banker, financial advisor, attorney or accountant for such
Stockholder) ("Representatives") to directly or indirectly to (i) initiate,
solicit or encourage (including by way of furnishing information or
assistance), or take any other action to facilitate the making of, any offer or
proposal which constitutes or is reasonably likely to lead to any Company
Takeover Proposal, (ii) enter into any agreement with respect to any Company
Takeover Proposal, or (iii) in the event of an unsolicited Company Takeover
Proposal for the Company, engage in negotiations or discussions with, or
provide any information or data to, any person (other than Parent or any of its
affiliates or representatives) relating to any Company Takeover Proposal.
Notwithstanding the foregoing sentence, (a) if any Stockholder is a member of
the Company Board, such member of the Company Board may take actions in such
capacity to the extent permitted by the Merger Agreement, and (b) if any
Stockholder is an officer of the Company, such officer may take actions in such
capacity to the extent directed to do so by the Company Board in compliance
with the Merger Agreement.
Share Ownership. The number of Shares (or shares of Common Stock
underlying Company Stock Options) subject to the terms and conditions of the
Stockholders Agreement owned by each of the Stockholders is as follows:
NAME SHARES OPTIONS
---- ------ -------
Comerica Incorporated ............ 12,000,000
Beranson Holdings, Inc. .......... 2,642,000
Xxxxxxxxx Xxxxx .................. 199,252
Confidentiality Agreement
The following is a summary of the material provisions of a Confidentiality
Agreement, dated April 17, 2002, between Parent and the Company (the
"Confidentiality Agreement"). This summary is not a complete description of the
terms and conditions of the Confidentiality Agreement and is qualified in its
entirety by reference to the full text of the Confidentiality Agreement, which
is incorporated herein by reference and a copy of which has been filed with the
SEC as an exhibit to Schedule TO. The Confidentiality Agreement may be
examined, and copies obtained, as set forth in Section
25
8 herein. Capitalized terms used in the summary below but not otherwise defined
below have the meanings set forth in the Confidentiality Agreement.
Pursuant to the terms of the Confidentiality Agreement, Parent agreed to
treat as confidential Evaluation Material provided by the Company to Parent in
connection with Parent's consideration of a possible transaction with the
Company.
In addition, Parent agreed that, without the prior written consent of the
Company, it would not, and would direct its Representatives not to, disclose to
any person (i) the existence of the Confidentiality Agreement and that the
Evaluation Material has been made available to Parent or its Representatives;
(ii) that discussions or negotiations are taking place concerning a possible
transaction between the Company and Parent; or (iii) any terms, conditions or
other facts with respect to any such possible transaction, including the status
thereof.
Further, Parent agreed not to, and to cause its Representative not to,
initiate or maintain contact (except in the ordinary course of business) in
connection with a potential transaction between the Company and Parent with any
officer, director or employee of the Company or any third party with whom the
Company has a business relationship regarding the Company's business,
operations, prospects or finances, except with the express written permission
of the Company. Parent also agreed that for a period of three years from the
date of the Confidentiality Agreement that it would not, directly or
indirectly, solicit for employment any officer, director or senior level
employee of the Company or any of its subsidiaries except that Parent will not
be precluded from hiring any such employee who has been terminated by the
Company or its subsidiaries prior to commencement or employment discussions
between Parent and such employee or who has come to Parent of their own
initiative or in response to a general advertisement of employment
opportunities by Parent.
Parent further agreed that, for a period of three years from the date of
the Confidentiality Agreement, without the prior written consent of the
Company, neither Parent nor any of its affiliates will, directly or indirectly,
alone or in concert with others: (i) purchase, offer or agree to purchase, or
announce an intention to purchase any securities or assets of the Company or
any subsidiary or rights or options to acquire the same; (ii) make, or in any
way participate in any "solicitation" of "proxies" to vote or "consents" (as
such terms are used in the rules and regulations of the SEC), or seek to advise
or influence any person with respect to the voting of any voting securities of
the Company; (iii) initiate or support any stockholder proposal with respect to
the Company; (iv) make any public statements and/or announcement with respect
to, or submit a proposal for, or offer of (with or without conditions) any
extraordinary transaction involving the Company or its securities, assets or
business or any subsidiary or division thereof, or of any successor thereto or
any controlling person thereof; (v) seek or propose to influence or control the
Company's management, board of directors, policies or affairs; (vi) disclose
any intention, plan or arrangement inconsistent with the foregoing; (vii) form,
join or in any participate in a "group" as defined in Section 13(d)(3) of the
Securities Exchange Act of 1934 in connection with any of the foregoing; (viii)
take any action that, in the sole judgment of the Company, may require the
Company to make a public announcement concerning any of the foregoing; or (ix)
encourage any of the foregoing. The Company has released Parent from the
"standstill" restrictions described in this paragraph in order to allow Parent
to commence the Offer.
Appraisal Rights
Holders of Shares do not have appraisal rights in connection with the
Offer. However, if the Merger is consummated, holders of Shares at the
Effective Time will have certain rights pursuant to the provisions of Section
262 of the DGCL, including the right to dissent and demand appraisal of, and to
receive payment in cash of the fair value of, their Shares. Under Section 262
of the DGCL, dissenting stockholders of the Company who comply with the
applicable statutory procedures will be entitled to receive a judicial
determination of the fair value of their Shares (exclusive of any element of
value arising from the accomplishment or expectation of the Merger) and to
receive payment of such fair value in cash, together with a fair rate of
interest thereon, if any. Any such judicial determination of the fair value of
the Shares could be based upon factors other than, or in addition to, the price
per Share to be paid in the Merger or the market value of the Shares. The value
so determined could be more or less than the price per Share to be paid in the
Merger. THE FOREGOING SUMMARY OF THE RIGHTS OF DISSENTING STOCKHOLDERS UNDER
THE DGCL DOES NOT PURPORT TO BE A COMPLETE STATEMENT OF THE PROCEDURES TO BE
FOLLOWED BY STOCKHOLDERS DESIRING TO EXERCISE ANY APPRAISAL RIGHTS AVAILABLE
UNDER THE DGCL. THE PRESERVATION AND EXERCISE OF APPRAISAL RIGHTS REQUIRE
STRICT ADHERENCE TO THE APPLICABLE PROVISIONS OF THE DGCL. The foregoing
summary is qualified in its entirety by reference to the full text of Section
262 attached hereto as Annex A and incorporated herein by reference.
26
Rule 13e-3
The SEC has adopted Rule 13e-3 under the Exchange Act which is applicable
to certain "going private" transactions and which may under certain
circumstances be applicable to the Merger or another business combination
following the purchase of Shares pursuant to the Offer in which Purchaser seeks
to acquire the remaining Shares not held by it. Xxxxxxxxx believes, however,
that Rule 13e-3 will not be applicable to the Merger because it is anticipated
that the Merger would be effected within one (1) year following consummation of
the Offer and in the Merger stockholders would receive the same price per Share
as paid in the Offer. If Rule 13e-3 were applicable to the Merger, it would
require, among other things, that certain financial information concerning the
Company, and certain information relating to the fairness of the proposed
transaction and the consideration offered to minority stockholders in such a
transaction, be filed with the SEC and disclosed to minority stockholders prior
to consummation of the transaction.
12. SOURCE AND AMOUNT OF FUNDS
The total amount of funds required by Purchaser and Parent to consummate
the Offer, exclusive of customary related fees and expenses, is estimated to be
approximately $68.8 million; the total amount of funds required by Purchaser
and Parent pursuant to the Merger to pay for the cash-out of all remaining
Company Stock Options following the consummation of the Offer is estimated to
be approximately $5.4 million. Purchaser will obtain the funds required to
consummate such transactions with funds provided through capital contributions
or advances made by Parent. Parent expects to fund any necessary capital
contributions or advances to Purchaser through the use of cash on hand,
existing lines of credit and other internally generated funds.
The Offer is not subject to any financing arrangements.
13. DIVIDENDS AND DISTRIBUTIONS
The Merger Agreement provides that the Company will not, and will not
permit any of its subsidiaries to, between the date of the Merger Agreement and
the earlier of the Effective Time and the appointment or election of Xxxxxx's
designees to the Company Board, without the prior consent of Parent,
(a) declare, set aside or pay any dividends on, or make any other
distributions in respect of, any of its capital stock, (y) split, combine
or reclassify any of its capital stock or issue or authorize the issuance
of any other securities in respect of, in lieu of or in substitution for
shares of its capital stock, except for issuances of Common Stock upon
the exercise of Company Stock Options under the Company Stock Option
Plans or in connection with other awards under the Company Stock Option
Plans outstanding as of May 30, 2002 in accordance with their present
terms or issued pursuant to paragraph (b) below or (z) except pursuant to
agreements entered into with respect to the Company Stock Option Plans,
purchase, redeem or otherwise acquire any shares of capital stock of the
Company or any of its subsidiaries or any other securities thereof or any
rights, warrants or options to acquire any such shares or other
securities; or
(b) issue, deliver, sell, pledge or otherwise encumber or subject to
any Lien any shares of its capital stock, any other voting securities or
any securities convertible into, or any rights, warrants or options to
acquire, any such shares, voting securities or convertible securities
(other than (i) Company Stock Options granted under clause (y) below or
(ii) the issuance of Common Stock upon the exercise of Company Stock
Options or in connection with other awards under the Company Stock Option
Plans (x) outstanding as of May 30, 2002 in accordance with their present
terms or (y) granted after May 30, 2002 with the written consent of
Parent.
14. CERTAIN CONDITIONS OF THE OFFER
For the purposes of this Section 14, capitalized terms used but not
defined herein will have the meanings set forth in the Merger Agreement.
Notwithstanding any other provisions of the Offer, Purchaser shall not be
required to accept for payment or, subject to any applicable rules and
regulations of the SEC, including Rule 14e-1(c) under the Exchange Act
(relating to Purchaser's obligation to pay for or return tendered Shares
promptly after termination or withdrawal of the Offer), pay for, and may delay
the acceptance for payment of or, subject to the restriction referred to above,
the payment for, any tendered Shares, and may terminate or amend the Offer as
to any Shares not then paid for, if (i) any applicable waiting period under the
HSR Act has not expired or terminated, (ii) the Minimum Condition has not been
satisfied, or (iii) at any time on or after May 30, 2002 and (except in the
case of clause (a), (b) or (g)) continuing in effect for a period of 10 days
following notice by the Parent to the Company, any of the following events
shall occur (other than as a result of any action or inaction of Parent or any
of its subsidiaries which constitutes a breach of this Agreement):
27
(a) there shall be any statute, rule, regulation, judgment, order or
injunction issued, enacted, entered, enforced, promulgated or deemed
applicable to the Offer or the Merger or any other action shall be taken
by any Governmental Entity (other than actions taken by any Governmental
Entity pursuant to any state or federal antitrust law, including without
limitation the HSR Act) (i) prohibiting or imposing any material
limitations on Parent's or Purchaser's ownership or operation (or that of
any of their respective subsidiaries or affiliates) of their or the
Company's businesses or assets, (ii) restraining or prohibiting the
making or consummation of the Offer, the Merger or the performance of any
of the other transactions contemplated by this Agreement, (iii) imposing
material limitations on the ability of Purchaser, or rendering Purchaser
unable, to accept for payment, pay for or purchase some or all of the
Shares pursuant to the Offer, and the Merger, (iv) imposing material
limitations on the ability of Purchaser or Parent effectively to exercise
full rights of ownership of the Shares, including, without limitation,
the right to vote the Shares purchased by it on all matters properly
presented to the Company's stockholders or (v) otherwise is reasonably
likely to materially adversely affect the Purchaser or the Company taken
as a whole;
(b) the Company shall have entered into any Company Acquisition
Agreement with respect to any Company Superior Proposal in accordance
with the Merger Agreement, the Company Board has withdrawn or modified
the approval or recommendation by such Board of the Merger in accordance
with the Merger Agreement or the Company or its directors or
representatives have taken any other action, whether or not in accordance
with the Agreement, that permits Parent to terminate the Merger Agreement
in accordance with its terms;
(c) any of the representations and warranties of the Company set
forth in the Merger Agreement that are qualified as to materiality or
material adverse effect shall not be true and correct and any such
representations and warranties that are not so qualified shall not be
true and correct in any material respect, in each case as of the
scheduled expiration of the Offer, except where the failure of such
representations and warranties to be so true and correct results directly
from changes specifically permitted by the Merger Agreement or from any
transaction expressly consented to in writing by Parent;
(d) the Company shall have breached or failed to perform in any
material respect any material obligation or to comply in any material
respect with any material agreement or covenant of the Company to be
performed or complied with by it under the Merger Agreement at or
immediately prior to consummation of the Offer;
(e) any third party shall not have given its written consent as
required under the applicable contract identified by the Company in the
Company Disclosure Schedule delivered to Parent;
(f) twenty percent or more of the Key Employees shall not have
entered into written employment agreements with the Company as provided
in the Merger Agreement;
(g) there shall have occurred any change, event, condition, fact or
set of facts, or development which has had or would reasonably be
expected to have a material adverse change with respect to the Company;
or
(h) the Merger Agreement shall have been terminated in accordance
with its terms;
which in the reasonable judgment of Parent or Purchaser, in any such
case, and regardless of the circumstances (including any action or
inaction by Parent or Purchaser) giving rise to such condition makes it
inadvisable to proceed with the Merger, the Offer and/or with such
acceptance for payment of or payment for Shares.
Under the Merger Agreement, "material adverse change" or "material adverse
effect" means, when used in connection with the Company or Parent, any change,
effect, event, occurrence or state of facts that is, or would reasonably be
expected to be, materially adverse to the business, properties, assets (whether
tangible or intangible), condition (financial or otherwise), operations or
results of operations of such party and its subsidiaries taken as a whole, or a
material adverse effect on the ability of such party to perform its obligations
under this Agreement or on the ability of the party to consummate the Offer,
the Merger and the other Transactions without material deviation from the time
frame such actions would otherwise be consummated in the absence of such
effect; provided that material adverse effect shall not include any change,
effect, event or occurrence relating to (i) the economy or securities markets
of the United States or any other region in general, (ii) the Merger Agreement
or the transactions expressly contemplated thereby or the announcement thereof,
or (iii) the industry in which the Company or Parent, as the case may be,
operates in general, and not specifically relating to the Company or Parent or
their respective subsidiaries, and the terms "material" and "materially" have
correlative meanings.
28
The foregoing conditions are for the sole benefit of Parent and Purchaser,
may be waived by Parent or Purchaser, in whole or in part, at any time and from
time to time in the sole discretion of Parent or Purchaser. The failure by
Parent or Purchaser at any time to exercise any of the foregoing rights shall
not be deemed a waiver of any such right and each such right shall be deemed an
ongoing right which may be asserted at any time and from time to time.
15. CERTAIN LEGAL MATTERS; REQUIRED REGULATORY APPROVALS
Except as set forth in this Offer to Purchase, based on its review of
publicly available filings by the Company with the SEC and other publicly
available information regarding the Company, Purchaser is not aware of any
licenses or regulatory permits that would be material to the business of the
Company and its subsidiaries, taken as a whole, and that might be adversely
affected by Purchaser's acquisition of Shares (and the indirect acquisition of
the stock of the Company's subsidiaries) as contemplated herein, or, except to
the extent required by any foreign regulatory authorities, any filings,
approvals or other actions by or with any domestic, foreign or supranational
governmental authority or administrative or regulatory agency that would be
required prior to the acquisition of Shares (or the indirect acquisition of the
stock of the Company's subsidiaries) by Purchaser pursuant to the Offer as
contemplated herein. Should any such approval or other action be required,
there can be no assurance that any such additional approval or action, if
needed, would be obtained without substantial conditions or that adverse
consequences might not result to the Company's business, or that certain parts
of the Company's or Purchaser's business might not have to be disposed of or
held separate or other substantial conditions complied with in order to obtain
such approval or action or in the event that such approvals were not obtained
or such actions were not taken. Purchaser's obligation to purchase and pay for
Shares is subject to certain conditions, including conditions with respect to
governmental actions. See the Introduction and Section 14 for a description of
certain conditions to the Offer, including with respect to litigation and
governmental actions.
State Takeover Laws. A number of states (including Delaware, where the
Company is incorporated) have adopted takeover laws and regulations which
purport, to varying degrees, to be applicable to attempts to acquire securities
of corporations which are incorporated in such states or which have substantial
assets, security holders, principal executive offices or principal places of
business therein. In Xxxxx x. MITE Corp., the Supreme Court of the United
States (the "Supreme Court") invalidated on constitutional grounds the Illinois
Business Takeover statute, which, as a matter of state securities law, made
certain corporate acquisitions more difficult. However, in 1987, in CTS Corp.
v. Dynamics Corp. of America, the Supreme Court held that the State of Indiana
may, as a matter of corporate law and, in particular, with respect to those
aspects of corporate law concerning corporate governance, constitutionally
disqualify a potential acquiror from voting on the affairs of a target
corporation without the prior approval of the remaining stockholders. The state
law before the Supreme Court was by its terms applicable only to corporations
that had a substantial number of stockholders in the state and were
incorporated there.
Parent and Purchaser do not believe that the antitakeover laws and
regulations of any state other than the State of Delaware will by their terms
apply to the Offer, and except as described herein, Purchaser has not attempted
to comply with any state takeover statutes in connection with the Offer.
Purchaser reserves the right to challenge the validity or applicability of any
state law allegedly applicable to the Offer and nothing in this Offer to
Purchase nor any action taken in connection herewith is intended as a waiver of
that right. In the event that any state takeover statute is found applicable to
the Offer, Purchaser might be unable to accept for payment or purchase Shares
tendered pursuant to the Offer or might be delayed in continuing or
consummating the Offer. In such case, Purchaser may not be obligated to accept
for purchase, or pay for, any Shares tendered. See Section 14.
Antitrust. Under the HSR Act, and the rules and regulations that have been
promulgated thereunder by the FTC, certain acquisition transactions may not be
consummated until certain information and documentary material has been
furnished for review by the Antitrust Division and the FTC and certain waiting
period requirements have been satisfied. The acquisition of Shares pursuant to
the Offer is subject to such requirements. On June 5, 2002, Xxxxxx filed a
Premerger Notification and Report Form with the Antitrust Division and the FTC
in connection with the purchase of Shares pursuant to the Offer. The Company is
expected to file a Premerger Notification and Report Form with the Antitrust
Division and the FTC on or before June 17, 2002.
Under the provisions of the HSR Act applicable to the Offer, the purchase
of Shares pursuant to the Offer may not be consummated until the expiration of
a 15-calendar-day waiting period following the filing by Purchaser, unless such
waiting period is earlier terminated by the FTC and the Antitrust Division.
Accordingly, the waiting period under the HSR Act which is applicable to the
Offer will expire at 11:59 p.m., New York City time, on June 20, 2002, unless
earlier terminated by the Antitrust Division and the FTC or Parent receives a
request for additional information or documentary material from the Antitrust
Division or the FTC prior thereto. If either the FTC or the Antitrust Division
were to request
29
additional information or documentary material from Parent, the waiting period
with respect to the Offer would expire at 11:59 p.m., New York City time, on
the tenth calendar day after the date of substantial compliance with such
request by Xxxxxx. Thereafter, the waiting period could be extended only by
court order or with the consent of Parent. The additional 10-calendar-day
waiting period may be terminated sooner by the FTC and the Antitrust Division.
Although the Company is required to file certain information and documentary
material with the Antitrust Division and the FTC in connection with the Offer,
neither the Company's failure to make such filings nor a request made to the
Company from the Antitrust Division or the FTC for additional information or
documentary material will extend the waiting period with respect to the Offer.
The Antitrust Division and the FTC frequently scrutinize the legality
under the antitrust laws of transactions such as the acquisition of Shares by
Purchaser pursuant to the Offer. At any time before or after Purchaser's
purchase of Shares, the Antitrust Division or the FTC could take such action
under the antitrust laws as either deems necessary or desirable in the public
interest, including seeking to enjoin the purchase of Shares pursuant to the
Offer, the divestiture of Shares purchased pursuant to the Offer or the
divestiture of substantial assets of the Company or Purchaser. Private parties
as well as state attorneys general may also bring legal actions under the
antitrust laws under certain circumstances. See Section 14. In addition, the
parties may also be subject to certain foreign competition statutes.
Based upon an examination of publicly available information provided by
the Company relating to the businesses in which the Company is engaged, Parent
and Purchaser believe the acquisition of Shares pursuant to the Offer will not
violate the antitrust laws. Nevertheless, there can be no assurance that a
challenge to the Offer on antitrust grounds will not be made, or, if such
challenge is made, what the result will be. See Section 14.
16. CERTAIN FEES AND EXPENSES.
Xxxxx, Xxxxxxxx & Xxxx is acting as Dealer Manager in connection with the
Offer, and served as investment banker to Parent in connection with the
proposed acquisition of the Company under an agreement effective as of May 16,
2002. Parent has agreed to pay Xxxxx, Xxxxxxxx & Xxxx a fee for its services of
$809,000. In addition, Xxxxxx has agreed to reimburse Xxxxx, Xxxxxxxx & Xxxx
for all reasonable expenses incurred in connection with such engagement,
including fees of outside counsel and of other professional advisors and to
indemnify Xxxxx, Xxxxxxxx & Xxxx and certain related persons against certain
liabilities and expenses, including certain liabilities under the federal
securities laws. In the ordinary course or its business, Xxxxx, Xxxxxxxx & Xxxx
and its affiliates may actively trade in the Shares for its own account and for
the account of its customers, and accordingly, may at any time hold a long or
short positions in the Shares.
Mellon Investor Services has been retained by Purchaser as Information
Agent in connection with the Offer. The Information Agent may contact holders
of Shares by mail, telephone, telex, telegraph and personal interview and may
request brokers, dealers and other nominee stockholders to forward material
relating to the Offer to beneficial owners. Customary compensation will be paid
for all such services in addition to reimbursement of reasonable out-of-pocket
expenses. Xxxxxxxxx has agreed to indemnify the Information Agent against
certain liabilities and expenses, including liabilities under the federal
securities laws.
In addition, Mellon Investor Services has been retained as the Depositary.
The Depositary has not been retained to make solicitations or recommendations
in its role as Depositary. The Depositary will receive reasonable and customary
compensation for its services in connection with the Offer, will be reimbursed
for its reasonable out-of-pocket expenses and will be indemnified against
certain liabilities and expenses in connection therewith.
Except as set forth above, Purchaser will not pay any fees or commissions
to any broker, dealer or other person (other than the Information Agent and the
Dealer Manager) for soliciting tenders of Shares pursuant to the Offer.
Brokers, dealers, commercial banks and trust companies and other nominees will,
upon request, be reimbursed by Purchaser for customary clerical and mailing
expenses incurred by them in forwarding materials to their customers.
17. MISCELLANEOUS
The Offer is not being made to (nor will tenders be accepted from or on
behalf of) holders of Shares residing in any jurisdiction in which the making
of the Offer or the acceptance thereof would not be in compliance with the
securities, blue sky or other laws of such jurisdiction. However, Purchaser
may, in its discretion, take such action as it may deem necessary to make the
Offer in any jurisdiction and extend the Offer to holders of Shares in such
jurisdiction.
30
In any jurisdiction where the securities, blue sky or other laws require
the Offer to be made by a licensed broker or dealer, the Offer will be deemed
to be made on behalf of Purchaser by the Dealer Manager or one or more
registered brokers or dealers that are licensed under the laws of such
jurisdiction.
Purchaser has filed with the SEC the Schedule TO, together with exhibits,
pursuant to Rule 14d-3 of the General Rules and Regulations under the Exchange
Act, furnishing certain additional information with respect to the Offer, and
may file amendments thereto. Such Schedule TO and any amendments thereto,
including exhibits, may be examined and copies may be obtained from the offices
of the SEC in the same manner as described in Section 8 with respect to
information concerning the Company, except that they will not be available at
the regional offices of the SEC.
No person has been authorized to give any information or to make any
representation on behalf of Purchaser not contained in this Offer to Purchase
or in the Letter of Transmittal and, if given or made, any such information or
representation must not be relied upon as having been authorized. Neither the
delivery of the Offer to Purchase nor any purchase pursuant to the Offer will,
under any circumstances, create any implication that there has been no change
in the affairs of Purchaser or the Company since the date as of which
information is furnished or the date of this Offer to Purchase.
KINGFISH ACQUISITION CORPORATION
June 11, 2002
31
SCHEDULE I
DIRECTORS AND EXECUTIVE OFFICERS OF PARENT AND PURCHASER
1. DIRECTORS AND EXECUTIVE OFFICERS OF PARENT.
The following table sets forth the name, present principal occupation or
employment, and material occupations, positions, offices or employments for the
past five years, of each director and executive officer of Parent. The business
address and telephone number of each such person is c/o Tier Technologies,
Inc., 0000 Xxxxx Xxxxxxxxx, Xxxxx 000, Xxxxxx Xxxxx, XX 00000, (000) 000-0000.
Except as otherwise disclosed below, each person listed below is a citizen of
the United States.
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PRESENT PRINCIPAL OCCUPATION OR EMPLOYMENT; MATERIAL
NAME AND TITLE POSITIONS HELD DURING THE PAST FIVE YEARS
------------------------------------------------------------------------------------------------------------------
Xxxxx X. Xxxxxxx Xx. Xxxxxxx joined Parent as Chairman of the Board in November 1995,
Chairman of the Board and became Chief Executive Officer in December 1996 and served as President
Chief Executive Officer from July 2000 to January 2002. Xx. Xxxxxxx serves on the Board of Visitors of
the Xxxxxx Foundation of Dartmouth College and the Board of Visitors of Case
Western Reserve School of Law. Xx. Xxxxxxx is also a trustee of Xxxxxx
University, an Overseer of Children's Hospital of Boston, a member of the
corporation of Northeast Medical Systems, Inc., a member of the National
Council of Environmental Defense, a Trustee of the Trustees of the Reservation
and serves on the Board of Directors of Australia's Lizard Island Reef Research
Foundation. Xx. Xxxxxxx holds an A.B. from Dartmouth College and a X.X.
from Case Western Reserve School of Law.
------------------------------------------------------------------------------------------------------------------
Xxxxxxx X. Xxxxxx Xx. Xxxxxx has served as a Director of Parent since January 2002. He has served as
Director President and Chief Executive Officer of Vicinity Corporation, a provider of
enterprise location services, since December 2001. Before that time, Xx. Xxxxxx
was the managing director of Volatilis, LLC, a private investment and aviation
services firm, since its founding in June 2001. Prior to forming Volatilis, Xx.
Xxxxxx served as Chairman and Chief Executive Officer of AdForce, Inc., an online
advertising company, from July 1997 to June 2001. Previously, Xx. Xxxxxx served
as Chairman and Chief Executive Officer of Radius, Inc., a maker of peripheral
products for graphics and video applications, from 1993 to 1997. Xx. Xxxxxx is also
on the Board of Directors of Center Court, Inc., Efficient Market Services and
FreeFlyer, Inc. Xx. Xxxxxx received a B.S. from Bucknell University and an MBA
from the University of Santa Xxxxx.
------------------------------------------------------------------------------------------------------------------
Xxxxxx Xxxxx XXX Xx. Xxxxx has served as a Director of Parent since January 1997. He has served
Director as President of Xxxxxx Xxxxx Inc., a manufacturer and marketer of premium
quality exterior stains and architectural coatings, since 1978, and as Chairman
of its Board of Directors since February 2000. He is also on the Board of
Directors of Plasticolors, Inc., Blue Cross and Blue Shield of Massachusetts,
Inc., Fiduciary Trust Co. and Xxxx & Xxxxxx Inc. Xx. Xxxxx also served two
years in Chile as a Peace Corps volunteer. Xx. Xxxxx received an A.B. from
Dartmouth College and an MBA from Boston University.
------------------------------------------------------------------------------------------------------------------
Xxxxxx X. Xxxxxxxx Xx. Xxxxxxxx has served as a Director of Parent since August 1999. Since
Director October 2001, Xx. Xxxxxxxx has served as President of TiVo, Inc., a technology
firm specializing in the creation of personalized television services. From June
1999 through October 2001, Xx. Xxxxxxxx served as Vice President of Business
Development and Senior Vice President of Business Development and Revenue
Operations at TiVo. From August 1998 to June 1999, Xx. Xxxxxxxx was a
partner at Paul, Hastings, Xxxxxxxx & Xxxxxx LLP, an international law firm.
From 1990 to March 1998, Xx. Xxxxxxxx was a partner at the law firm of
Xxxxxxx Xxxxx & Xxxxxx LLP. Xx. Xxxxxxxx is also on the Board of Directors of
Integral Development Corp., a software developer providing e-commerce
solutions for capital market transactions to banks and other financial
institutions. Xx. Xxxxxxxx holds a B.A. and a X.X. from the University of
Colorado and an MBA from the University of San Francisco.
------------------------------------------------------------------------------------------------------------------
32
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PRESENT PRINCIPAL OCCUPATION OR EMPLOYMENT; MATERIAL
NAME AND TITLE POSITIONS HELD DURING THE PAST FIVE YEARS
--------------------------- -------------------------------------------------------------------------------
Xxxxxx X. Xxxxxxxx Xx. Xxxxxxxx has served as a Director of Parent since November 1995. Since
Director February 1997, he has been President of Riverside Capital Partners, Inc., a
venture capital investment firm. Xx. Xxxxxxxx is on the advisory board of
Xxxxxxxx Associates and serves as a trustee of Northeastern University. He
received a B.S. from Northeastern University.
------------------------------------------------------------------------------------------------------------------
Xxxxxxx X. Xxx Xxxxxx Xx. Xxx Xxxxxx has served as a Director of Parent since June 1999. Since
Director September 1992, Xx. Xxx Xxxxxx has been President and Chief Executive
Officer of Blue Cross and Blue Shield of Massachusetts, Inc., a non-profit
company providing health benefits, products and services. Xx. Xxx Xxxxxx
currently serves on the Board of Directors of IMS Health, Liberty Mutual
Insurance Company and Citizens Bank of Massachusetts. Xx. Xxx Xxxxxx
received a B.A. from Hope College and an MBA from Michigan State
University.
------------------------------------------------------------------------------------------------------------------
Xxxx Xxxxx Xxxxxxxxxxx Xx. Xxxxxxxxxxx has served as a Director of Parent since January 2002.
Director Xx. Xxxxxxxxxxx has been President and Chief Executive Officer of Wink
Communications, Inc., a provider of enhanced broadcasting and e-commerce
services on television, since January 1997. Xx. Xxxxxxxxxxx also serves on the
Board of Directors of Airborne Express, American Tower Corporation, Electric
Lightwave, Inc., Xxxxxxx Entertainment, The McClatchy Company, Holy Cross
College, National Cable & Telecommunication Association, California Cable
Television Association, Women in Cable Foundation, and the Xxxx'x Advisory
Board at U.C. Xxxxx. Xx. Xxxxxxxxxxx received a B.A. degree in Economics and
Business Administration from Holy Cross College.
------------------------------------------------------------------------------------------------------------------
Xxxxx X. Xxxxxx Xx. Xxxxxx joined Parent as President, Government Services Division in
President May 1998, became President, U.S. Operations in August 2000 and President
in January 2002. From June 1997 until May 1998, Xx. Xxxxxx served as Vice
President, Government Solutions of BDM International, Inc., an information
technology company, where he was responsible for strategic planning, policy
and procedure development, client base expansion and overall business
planning and development. From March 1995 until June 1997, he served as
National Program Director, Public Sector for Xxxxxx Xxxxxxxxxxx, an
information technology company. Xx. Xxxxxx received a B.A. in Psychology
from California University of Pennsylvania.
------------------------------------------------------------------------------------------------------------------
Xxxxx X. XxXxxx Xx. XxXxxx has served as Parent's Senior Vice President, Chief Financial
Senior Vice President, Officer, Secretary and Treasurer since January 2000 and Chief Accounting
Chief Financial Officer, Officer since August 1997. Xx. XxXxxx previously served as Senior Vice
Secretary and Treasurer President, Finance from April 1999 to January 2000. From October 1998 to
April 1999, Xx. XxXxxx was Vice President, Finance and from August 1997 to
October 1998, Xx. XxXxxx was also the Corporate Controller of Parent. From
July 1988 through July 1997, Xx. XxXxxx held various positions at Ernst &
Young LLP, an international public accounting firm. Xx. XxXxxx received a
B.S. in Accounting from San Francisco State University and is a Certified
Public Accountant.
------------------------------------------------------------------------------------------------------------------
Xxxxxxx XxXxxxx Xx. XxXxxxx joined Parent as Senior Vice President, Human Resources
Senior Vice President, Management in October 1998. From January 1998 to October 1998, he served
Human Resources as a Vice President of Renaissance Worldwide, Inc., a consulting firm. From
Management February 1993 to January 1998, he served as a Vice President of Xxxxxx X.
Xxxxxx, a consulting firm. Xx. XxXxxxx received a B.A. in Psychology from
State University of New York at Plattsburgh and an M.S. in Industrial/
Organizational Psychology from Rensselaer Polytechnic Institute.
------------------------------------------------------------------------------------------------------------------
33
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PRESENT PRINCIPAL OCCUPATION OR EMPLOYMENT; MATERIAL
NAME AND TITLE POSITIONS HELD DURING THE PAST FIVE YEARS
------------------------------------------------------------------------------------------------------------------
Xxxxx X. Xxxxxxx Xx. Xxxxxxx joined Parent as Senior Vice President and General Manager of
Senior Vice President and Government Services in September 2001. From July 1992 to September 2001,
General Manager of Xx. Xxxxxxx served as Vice President in Lockheed Xxxxxx IMS' Children and
Government Services Family Services Business Unit (now ACS State & Local Solutions, Inc., a
division of Affiliated Computer Services, Inc., an information technology
outsourcing company). Xx. Xxxxxxx received a Master's degree in Business
Management from Central Michigan University, a Master's degree in Public
Administration from Rider College and a B.A. in Political Science from
Gettysburg College.
------------------------------------------------------------------------------------------------------------------
Xxxxx Xxxxxxx Xx. Xxxxxxx joined Parent as President, International Operations in March
President, International 1999. From January 1996 to February 1999, Xx. Xxxxxxx served as General
Operations Manager for the IBM Global Services Australia Consulting and Systems
Integration Unit. Xx. Xxxxxxx received a B.S. and M.S. in Engineering from
Melbourne University. Xx. Xxxxxxx is an Australian citizen.
------------------------------------------------------------------------------------------------------------------
Xxxxxxx X. Xxxxxxxxxx Xx. Xxxxxxxxxx joined Parent as President, U.S. Commercial Services in March
President, U.S. 2000. From January 1999 to February 2000, Xx. Xxxxxxxxxx served as President
Commercial Services and Chief Operating Officer of The SCA Group, a management consulting firm.
From September 1993 to December 1998, Xx. Xxxxxxxxxx served as President
and Chief Executive Officer of Xxxxxx Xxxxxxx & Company, a management
consulting firm. Xx. Xxxxxxxxxx received a B.A. in English and Psychology
from Xxxxxx College and an M.B.A. in Organizational Behavior from the
University of Pittsburgh.
------------------------------------------------------------------------------------------------------------------
Xxxxxxx X. Xxxxxxxx Xx. Xxxxxxxx joined Parent as Senior Vice President and Chief Marketing
Senior Vice President and Officer in August 2000. From January 1986 to August 2000, Xx. Xxxxxxxx was
Chief Marketing Officer with Deloitte & Touche LLP, an international public accounting firm, and from
1994 to 2000, served as Director of Marketing. Xx. Xxxxxxxx received a B.A.
in the Honors Program with a double major in English and Art History from
the University of San Francisco.
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2. DIRECTORS AND EXECUTIVE OFFICERS OF PURCHASER.
The following table sets forth the name, present principal occupation or
employment, and material occupations, positions, offices or employments for the
past five years, of each director and executive officer of Purchaser. The
business address of each such person is c/o Tier Technologies, Inc., 0000 Xxxxx
Xxxxxxxxx, Xxxxx 000, Xxxxxx Xxxxx, XX 00000, (000) 000-0000. Each of the
persons listed below are citizens of the United States.
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PRESENT PRINCIPAL OCCUPATION OR EMPLOYMENT; MATERIAL
NAME AND TITLE POSITIONS HELD DURING THE PAST FIVE YEARS
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Xxxxx X. Xxxxxxx See Part 1 of this Schedule I
Director
President and Chief
Executive Officer
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Xxxxx X. XxXxxx See Part 1 of this Schedule I
Secretary and Treasurer
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34
ANNEX A
SECTION 262 OF THE DELAWARE GENERAL CORPORATION LAW
262 APPRAISAL RIGHTS.
(a) Any stockholder of a corporation of this State who holds shares of
stock on the date of the making of a demand pursuant to subsection (d) of this
section with respect to such shares, who continuously holds such shares through
the effective date of the merger or consolidation, who has otherwise complied
with subsection (d) of this section and who has neither voted in favor of the
merger or consolidation nor consented thereto in writing pursuant to [sec]228
of this title shall be entitled to an appraisal by the Court of Chancery of the
fair value of the stockholder's shares of stock under the circumstances
described in subsections (b) and (c) of this section. As used in this section,
the word "stockholder" means a holder of record of stock in a stock corporation
and also a member of record of a nonstock corporation; the words "stock" and
"share" mean and include what is ordinarily meant by those words and also
membership or membership interest of a member of a nonstock corporation; and
the words "depository receipt" mean a receipt or other instrument issued by a
depository representing an interest in one or more shares, or fractions
thereof, solely of stock of a corporation, which stock is deposited with the
depository.
(b)Appraisal rights shall be available for the shares of any class or
series of stock of a constituent corporation in a merger or consolidation to be
effected pursuant to [sec]251 (other than a merger effected pursuant to
[sec]251(g) of this title), [sec]252, [sec]254, [sec]257, [sec]258, [sec]263 or
[sec]264 of this title:
(1) Provided, however, that no appraisal rights under this section
shall be available for the shares of any class or series of stock, which
stock, or depository receipts in respect thereof, at the record date
fixed to determine the stockholders entitled to receive notice of and to
vote at the meeting of stockholders to act upon the agreement of merger
or consolidation, were either (i) listed on a national securities
exchange or designated as a national market system security on an
interdealer quotation system by the National Association of Securities
Dealers, Inc. or (ii) held of record by more than 2,000 holders; and
further provided that no appraisal rights shall be available for any
shares of stock of the constituent corporation surviving a merger if the
merger did not require for its approval the vote of the stockholders of
the surviving corporation as provided in subsection (f) of [sec]251 of
this title.
(2) Notwithstanding paragraph (1) of this subsection, appraisal
rights under this section shall be available for the shares of any class
or series of stock of a constituent corporation if the holders thereof
are required by the terms of an agreement of merger or consolidation
pursuant to [sec][sec]251, 252, 254, 257, 258, 263 and 264 of this title
to accept for such stock anything except:
a. Shares of stock of the corporation surviving or resulting
from such merger or consolidation, or depository receipts in
respect thereof;
b. Shares of stock of any other corporation, or depository
receipts in respect thereof, which shares of stock (or depository
receipts in respect thereof) or depository receipts at the
effective date of the merger or consolidation will be either
listed on a national securities exchange or designated as a
national market system security on an interdealer quotation system
by the National Association of Securities Dealers, Inc. or held of
record by more than 2,000 holders;
c. Cash in lieu of fractional shares or fractional depository
receipts described in the foregoing subparagraphs a. and b. of
this paragraph; or
d. Any combination of the shares of stock, depository receipts
and cash in lieu of fractional shares or fractional depository
receipts described in the foregoing subparagraphs a., b. and c. of
this paragraph.
(3) In the event all of the stock of a subsidiary Delaware
corporation party to a merger effected under [sec]253 of this title is
not owned by the parent corporation immediately prior to the merger,
appraisal rights shall be available for the shares of the subsidiary
Delaware corporation.
(c) Any corporation may provide in its certificate of incorporation that
appraisal rights under this section shall be available for the shares of any
class or series of its stock as a result of an amendment to its certificate of
incorporation, any merger or consolidation in which the corporation is a
constituent corporation or the sale of all or substantially all
A-1
of the assets of the corporation. If the certificate of incorporation contains
such a provision, the procedures of this section, including those set forth in
subsections (d) and (e) of this section, shall apply as nearly as is
practicable.
(d) Appraisal rights shall be perfected as follows:
(1) If a proposed merger or consolidation for which appraisal rights
are provided under this section is to be submitted for approval at a
meeting of stockholders, the corporation, not less than 20 days prior to
the meeting, shall notify each of its stockholders who was such on the
record date for such meeting with respect to shares for which appraisal
rights are available pursuant to subsection (b) or (c) hereof that
appraisal rights are available for any or all of the shares of the
constituent corporations, and shall include in such notice a copy of this
section. Each stockholder electing to demand the appraisal of such
stockholder's shares shall deliver to the corporation, before the taking
of the vote on the merger or consolidation, a written demand for
appraisal of such stockholder's shares. Such demand will be sufficient if
it reasonably informs the corporation of the identity of the stockholder
and that the stockholder intends thereby to demand the appraisal of such
stockholder's shares. A proxy or vote against the merger or consolidation
shall not constitute such a demand. A stockholder electing to take such
action must do so by a separate written demand as herein provided. Within
10 days after the effective date of such merger or consolidation, the
surviving or resulting corporation shall notify each stockholder of each
constituent corporation who has complied with this subsection and has not
voted in favor of or consented to the merger or consolidation of the date
that the merger or consolidation has become effective; or
(2) 1 If the merger or consolidation was approved pursuant to
[sec]228 or [sec]253 of this title, then, either a constituent
corporation before the effective date of the merger or consolidation, or
the surviving or resulting corporation within ten days thereafter, shall
notify each of the holders of any class or series of stock of such
constituent corporation who are entitled to appraisal rights of the
approval of the merger or consolidation and that appraisal rights are
available for any or all shares of such class or series of stock of such
constituent corporation, and shall include in such notice a copy of this
section. Such notice may, and, if given on or after the effective date of
the merger or consolidation, shall, also notify such stockholders of the
effective date of the merger or consolidation. Any stockholder entitled
to appraisal rights may, within 20 days after the date of mailing of such
notice, demand in writing from the surviving or resulting corporation the
appraisal of such holder's shares. Such demand will be sufficient if it
reasonably informs the corporation of the identity of the stockholder and
that the stockholder intends thereby to demand the appraisal of such
holder's shares. If such notice did not notify stockholders of the
effective date of the merger or consolidation, either (i) each such
constituent corporation shall send a second notice before the effective
date of the merger or consolidation notifying each of the holders of any
class or series of stock of such constituent corporation that are
entitled to appraisal rights of the effective date of the merger or
consolidation or (ii) the surviving or resulting corporation shall send
such a second notice to all such holders on or within 10 days after such
effective date; provided, however, that if such second notice is sent
more than 20 days following the sending of the first notice, such second
notice need only be sent to each stockholder who is entitled to appraisal
rights and who has demanded appraisal of such holder's shares in
accordance with this subsection. An affidavit of the secretary or
assistant secretary or of the transfer agent of the corporation that is
required to give either notice that such notice has been given shall, in
the absence of fraud, be prima facie evidence of the facts stated
therein. For purposes of determining the stockholders entitled to receive
either notice, each constituent corporation may fix, in advance, a record
date that shall be not more than 10 days prior to the date the notice is
given, provided, that if the notice is given on or after the effective
date of the merger or consolidation, the record date shall be such
effective date. If no record date is fixed and the notice is given prior
to the effective date, the record date shall be the close of business on
the day next preceding the day on which the notice is given.
(e) Within 120 days after the effective date of the merger or
consolidation, the surviving or resulting corporation or any stockholder who
has complied with subsections (a) and (d) hereof and who is otherwise entitled
to appraisal rights, may file a petition in the Court of Chancery demanding a
determination of the value of the stock of all such stockholders.
Notwithstanding the foregoing, at any time within 60 days after the effective
date of the merger or consolidation, any stockholder shall have the right to
withdraw such stockholder's demand for appraisal and to accept the terms
offered upon the merger or consolidation. Within 120 days after the effective
date of the merger or consolidation, any stockholder who has complied with the
requirements of subsections (a) and (d) hereof, upon written request, shall be
entitled to receive from the corporation surviving the merger or resulting from
the consolidation a statement setting forth the aggregate number of shares not
voted in favor of the merger or consolidation and with respect to which demands
for appraisal have been received and the aggregate number of holders of such
shares. Such written statement shall be mailed to the
A-2
stockholder within 10 days after such stockholder's written request for such a
statement is received by the surviving or resulting corporation or within 10
days after expiration of the period for delivery of demands for appraisal under
subsection (d) hereof, whichever is later.
(f) Upon the filing of any such petition by a stockholder, service of a
copy thereof shall be made upon the surviving or resulting corporation, which
shall within 20 days after such service file in the office of the Register in
Chancery in which the petition was filed a duly verified list containing the
names and addresses of all stockholders who have demanded payment for their
shares and with whom agreements as to the value of their shares have not been
reached by the surviving or resulting corporation. If the petition shall be
filed by the surviving or resulting corporation, the petition shall be
accompanied by such a duly verified list. The Register in Chancery, if so
ordered by the Court, shall give notice of the time and place fixed for the
hearing of such petition by registered or certified mail to the surviving or
resulting corporation and to the stockholders shown on the list at the
addresses therein stated. Such notice shall also be given by 1 or more
publications at least 1 week before the day of the hearing, in a newspaper of
general circulation published in the City of Wilmington, Delaware or such
publication as the Court deems advisable. The forms of the notices by mail and
by publication shall be approved by the Court, and the costs thereof shall be
borne by the surviving or resulting corporation.
(g) At the hearing on such petition, the Court shall determine the
stockholders who have complied with this section and who have become entitled
to appraisal rights. The Court may require the stockholders who have demanded
an appraisal for their shares and who hold stock represented by certificates to
submit their certificates of stock to the Register in Chancery for notation
thereon of the pendency of the appraisal proceedings; and if any stockholder
fails to comply with such direction, the Court may dismiss the proceedings as
to such stockholder.
(h) After determining the stockholders entitled to an appraisal, the Court
shall appraise the shares, determining their fair value exclusive of any
element of value arising from the accomplishment or expectation of the merger
or consolidation, together with a fair rate of interest, if any, to be paid
upon the amount determined to be the fair value. In determining such fair
value, the Court shall take into account all relevant factors. In determining
the fair rate of interest, the Court may consider all relevant factors,
including the rate of interest which the surviving or resulting corporation
would have had to pay to borrow money during the pendency of the proceeding.
Upon application by the surviving or resulting corporation or by any
stockholder entitled to participate in the appraisal proceeding, the Court may,
in its discretion, permit discovery or other pretrial proceedings and may
proceed to trial upon the appraisal prior to the final determination of the
stockholder entitled to an appraisal. Any stockholder whose name appears on the
list filed by the surviving or resulting corporation pursuant to subsection (f)
of this section and who has submitted such stockholder's certificates of stock
to the Register in Chancery, if such is required, may participate fully in all
proceedings until it is finally determined that such stockholder is not
entitled to appraisal rights under this section.
(i) The Court shall direct the payment of the fair value of the shares,
together with interest, if any, by the surviving or resulting corporation to
the stockholders entitled thereto. Interest may be simple or compound, as the
Court may direct. Payment shall be so made to each such stockholder, in the
case of holders of uncertificated stock forthwith, and the case of holders of
shares represented by certificates upon the surrender to the corporation of the
certificates representing such stock. The Court's decree may be enforced as
other decrees in the Court of Chancery may be enforced, whether such surviving
or resulting corporation be a corporation of this State or of any state.
(j) The costs of the proceeding may be determined by the Court and taxed
upon the parties as the Court deems equitable in the circumstances. Upon
application of a stockholder, the Court may order all or a portion of the
expenses incurred by any stockholder in connection with the appraisal
proceeding, including, without limitation, reasonable attorney's fees and the
fees and expenses of experts, to be charged pro rata against the value of all
the shares entitled to an appraisal.
(k) From and after the effective date of the merger or consolidation, no
stockholder who has demanded appraisal rights as provided in subsection (d) of
this section shall be entitled to vote such stock for any purpose or to receive
payment of dividends or other distributions on the stock (except dividends or
other distributions payable to stockholders of record at a date which is prior
to the effective date of the merger or consolidation); provided, however, that
if no petition for an appraisal shall be filed within the time provided in
subsection (e) of this section, or if such stockholder shall deliver to the
surviving or resulting corporation a written withdrawal of such stockholder's
demand for an appraisal and an acceptance of the merger or consolidation,
either within 60 days after the effective date of the merger or consolidation
as provided in subsection (e) of this section or thereafter with the written
approval of the corporation, then the right of
A-3
such stockholder to an appraisal shall cease. Notwithstanding the foregoing, no
appraisal proceeding in the Court of Chancery shall be dismissed as to any
stockholder without the approval of the Court, and such approval may be
conditioned upon such terms as the Court deems just.
(l) The shares of the surviving or resulting corporation to which the
shares of such objecting stockholders would have been converted had they
assented to the merger or consolidation shall have the status of authorized and
unissued shares of the surviving or resulting corporation.
A-4
Facsimile copies of the Letter of Transmittal, properly completed and duly
executed, will be accepted. The Letter of Transmittal, certificates for Shares
and any other required documents should be sent or delivered by each
stockholder of the Company or his broker, dealer, commercial bank, trust
company or other nominee to the Depositary at one of its addresses set forth
below:
The Depositary for the Offer Is:
MELLON INVESTOR SERVICES LLC
By Mail: By Hand:
Mellon Investor Services LLC Mellon Investor Services LLC
P.O. Box 0000 000 Xxxxxxxx, 00xx Xxxxx
Xxxxx Xxxxxxxxxx, XX 00000 Xxx Xxxx, XX 00000
Attn.: Reorganization Department Attn.: Reorganization Department
By Overnight Courier:
Mellon Investor Services LLC
00 Xxxxxxxxxx Xxxx
Mail Stop--Reorg.
Ridgefield Park, NJ 07660
Attn.: Reorganization Department
Questions and requests for assistance may be directed to the Information
Agent or the Dealer Manager at their respective addresses and telephone numbers
listed below. Additional copies of this Offer to Purchase, the Letter of
Transmittal and other tender offer materials may be obtained from the
Information Agent as set forth below, and will be furnished promptly at
Purchaser's expense. You may also contact your broker, dealer, commercial bank,
trust company or other nominee for assistance concerning the Offer.
The Information Agent for the Offer Is:
MELLON INVESTOR SERVICES LLC
00 Xxxx Xxxxxx, 0xx Xxxxx
Xxx Xxxx, XX 00000
Call Toll Free: (000) 000-0000
The Dealer Manager for the Offer Is:
XXXXX, XXXXXXXX & XXXX, INC.
00 Xxxxx Xxxxxx
Xxxxxx, XX 00000
(000) 000-0000 (call collect)
