OFFER TO PURCHASE FOR CASH
ALL OUTSTANDING SHARES OF COMMON STOCK
OF
CANISCO RESOURCES, INC.
AT
$1.00 NET PER SHARE IN CASH
BY
CANISCO ACQUISITION, INC.,
AN INDIRECT WHOLLY OWNED SUBSIDIARY OF
XXXXX INDUSTRIAL SERVICES, L.L.C.
--------------------------------------------------------------------------------
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY
TIME, ON FRIDAY, AUGUST 11, 2000, UNLESS THE OFFER IS EXTENDED.
--------------------------------------------------------------------------------
THE OFFER IS BEING MADE IN CONNECTION WITH AN AGREEMENT AND PLAN OF MERGER,
DATED AS OF JUNE 28, 2000, AS AMENDED AS OF JULY 10, 2000, BY AND AMONG XXXXX
INDUSTRIAL SERVICES, L.L.C. ("PARENT"), CANISCO ACQUISITION, INC. ("MERGER
SUBSIDIARY"), AND CANISCO RESOURCES, INC. (THE "COMPANY"). THE BOARD OF
DIRECTORS OF THE COMPANY HAS UNANIMOUSLY DETERMINED THAT THE TERMS OF THE MERGER
AGREEMENT AND THE TRANSACTIONS CONTEMPLATED THEREBY, INCLUDING THE OFFER AND THE
MERGER, ARE ADVISABLE AND IN THE BEST INTERESTS OF THE COMPANY AND ITS
STOCKHOLDERS AND FAIR AND EQUITABLE TO THE COMPANY'S STOCKHOLDERS, AND HAS
UNANIMOUSLY APPROVED THE MERGER AGREEMENT AND THE TRANSACTIONS CONTEMPLATED
THEREBY, INCLUDING THE OFFER AND THE MERGER, AND UNANIMOUSLY RECOMMENDS THAT
STOCKHOLDERS ACCEPT THE OFFER AND TENDER THEIR SHARES PURSUANT TO THE OFFER.
THE OFFER IS CONDITIONED UPON, AMONG OTHER THINGS, THERE BEING VALIDLY
TENDERED AND NOT WITHDRAWN PRIOR TO THE EXPIRATION DATE (AS DEFINED HEREIN) THAT
NUMBER OF SHARES (AS DEFINED HEREIN) WHICH, WHEN ADDED TO THE SHARES
BENEFICIALLY OWNED BY PARENT AND MERGER SUBSIDIARY (IF ANY), REPRESENTS AT LEAST
A MAJORITY OF THE SHARES OUTSTANDING ON A FULLY DILUTED BASIS ON THE DATE SHARES
ARE ACCEPTED FOR PAYMENT. THE OFFER IS ALSO SUBJECT TO THE OTHER CONDITIONS SET
FORTH IN THIS OFFER TO PURCHASE. SEE SECTION 14, "CONDITIONS TO THE OFFER."
THIS TRANSACTION HAS NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION NOR HAS THE COMMISSION PASSED UPON THE FAIRNESS OR MERITS OF
SUCH TRANSACTION OR UPON THE ACCURACY OR ADEQUACY OF THE INFORMATION CONTAINED
IN THIS DOCUMENT. ANY REPRESENTATION TO THE CONTRARY IS UNLAWFUL.
IMPORTANT
Any stockholder wishing to tender Shares must (1) complete and sign the
enclosed Letter of Transmittal (or a facsimile thereof) in accordance with the
instructions in the Letter of Transmittal and mail or deliver the Letter of
Transmittal and all other required documents to the Depositary (as defined
herein) together with the certificates representing the Shares or follow the
procedure for book-entry transfer set forth in Section 3, "Procedures for
Tendering Shares," of this Offer to Purchase or (2) request such stockholder's
broker, dealer, commercial bank, trust company or other nominee to effect the
transaction for the stockholder. Any stockholder whose Shares are registered in
the name of a broker, dealer, commercial bank, trust company or other nominee
must contact such person to tender such Shares.
Any stockholder who wishes to tender Shares and cannot deliver certificates
representing such Shares and all other required documents to the Depositary
prior to the expiration of the Offer, 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, "Procedures for
Tendering Shares," of this Offer to Purchase.
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. Requests for additional copies of this Offer to Purchase, the
Letter of Transmittal, the Notice of Guaranteed Delivery and other tender offer
materials may be directed to the Information Agent, or brokers. Stockholders may
also contact dealers, commercial banks, trust companies or nominees for
assistance concerning the Offer.
THE DATE OF THIS OFFER TO PURCHASE IS JULY 17, 2000
TABLE OF CONTENTS
SUMMARY TERM SHEET................................................ 1
INTRODUCTION...................................................... 5
THE OFFER......................................................... 8
1. Terms of the Offer.......................................... 8
2. Acceptance for Payment and Payment for Shares............... 9
3. Procedures for Tendering Shares............................. 10
4. Withdrawal Rights........................................... 12
5. Certain United States Federal Income Tax Consequences....... 13
6. Price Range of the Shares; Dividends........................ 14
7. Certain Effects of the Offer................................ 14
8. Certain Information Concerning the Company.................. 15
9. Certain Information Concerning Parent and Merger
Subsidiary................................................ 15
10. Source and Amount of Funds.................................. 17
11. Background of the Offer; Purpose of the Offer and the
Merger; the Merger Agreement and Certain Other
Agreements................................................ 17
Merger Agreement............................................ 19
Agreement for Exchange of Confidential Information.......... 24
12. Plans for the Company; Other Matters........................ 24
13. Dividends and Distributions................................. 26
14. Conditions to the Offer..................................... 26
15. Certain Legal Matters....................................... 27
16. Fees and Expenses........................................... 29
17. Miscellaneous............................................... 29
SCHEDULE 1.................................................. I-1
i
SUMMARY TERM SHEET
Canisco Acquisition, Inc. ("Merger Subsidiary") is offering to purchase all
of the outstanding common stock of Canisco Resources, Inc. (the "Company") for
$1.00 per share in cash. The following are some of the questions that you, as a
stockholder of the Company, may have and our answers to those questions.
Additional important information is contained in the remainder of this Offer to
Purchase and the Letter of Transmittal. We urge you to read carefully the entire
Offer to Purchase and the Letter of Transmittal.
WHO IS OFFERING TO BUY MY SECURITIES?
Our name is Canisco Acquisition, Inc. We are a Delaware corporation formed
for the purpose of making a tender offer for all of the common stock of the
Company. We have carried on no activities other than in connection with the
merger agreement among Xxxxx Industrial Services, L.L.C. ("Parent"), Merger
Subsidiary and the Company. We are a subsidiary of Parent, a Delaware limited
liability company. Parent is a provider of industrial services, particularly
industrial cleaning and coating services to over 700 customers, and has 25
offices located in the South, Midwest and West. See the "Introduction" and
Section 9, "Certain Information Concerning Parent and Merger Subsidiary," of
this Offer to Purchase.
WHAT ARE THE SECURITIES AND AMOUNTS OF SECURITIES SOUGHT IN THE OFFER?
We are seeking to purchase all of the outstanding common stock of the
Company. See the "Introduction" and Section 1, "Terms of the Offer," of this
Offer to Purchase.
HOW MUCH ARE YOU OFFERING TO PAY, WHAT IS THE FORM OF PAYMENT AND WILL I HAVE TO
PAY ANY FEES OR COMMISSIONS?
We are offering to pay $1.00 per share, net to you, in cash without
interest. This price implies a multiple of 6.5 times the Company's earnings
before interest, taxes, depreciation and amortization of approximately
$3.2 million for the 12 months ended March 31, 2000. The transaction value,
including equity and debt of the Company and anticipated transaction fees and
expenses, is approximately $21 million. If you are the record owner of your
shares and you tender your shares to us in the offer, you will not have to pay
brokerage fees or similar expenses. If you own your shares through a broker or
other nominee, and your broker or nominee tenders your shares on your behalf,
your broker or nominee may charge you a fee for doing so. You should consult
your broker or nominee to determine whether any charges will apply. See the
"Introduction" and Section 11 "Background of the Offer; Purpose of the Offer and
the Merger; the Merger Agreement and Certain Other Agreements," of this Offer to
Purchase.
HAVE ANY STOCKHOLDERS OF THE COMPANY OR SENIOR MANAGEMENT AGREED TO TENDER THEIR
SHARES?
No, however all officers and directors of the Company who own Shares have
entered into a voting agreement, whereby they agree to not vote in favor of any
other acquisition proposal or transfer their Shares other than pursuant to this
Offer. See the "Introduction" of this Offer to Purchase.
DO YOU HAVE THE FINANCIAL RESOURCES TO MAKE PAYMENT FOR MY SHARES?
Xxxxx Industrial Services, L.L.C., our parent company, will provide us with
sufficient funds to purchase all shares validly tendered and not withdrawn in
the offer and to provide funding for the merger which is expected to follow the
successful completion of the offer. We anticipate that all of these funds will
be obtained from the existing resources and internally generated funds of Parent
and from Parent's existing credit facility. The offer is not conditioned upon
any financing arrangements. See Section 10, "Source and Amount of Funds," of
this Offer to Purchase.
IS YOUR FINANCIAL CONDITION RELEVANT TO MY DECISION TO TENDER IN THE OFFER?
We do not think our financial condition is relevant to your decision whether
to tender your shares in the offer because the form of payment consists solely
of cash. Parent has arranged for all of our funding to come from its existing
resources and internally generated funds and from Parent's existing credit
facility. See Section 10, "Source and Amount of Funds," of this Offer to
Purchase.
1
HOW LONG DO I HAVE TO DECIDE WHETHER TO TENDER IN THE OFFER?
You will have at least until 12:00 midnight, New York City time, on Friday,
August 11, 2000 to tender your shares in the offer. If you cannot deliver
everything that is required in order to make a valid tender by that time, you
may be able to use a guaranteed delivery procedure, which is described later in
this Offer to Purchase. See Sections 1, "Terms of the Offer," and 3, "Procedures
for Tendering Shares," of this Offer to Purchase.
CAN THE OFFER BE EXTENDED AND UNDER WHAT CIRCUMSTANCES?
Subject to the terms of the merger agreement, we can extend the Offer. Under
the merger agreement, we may extend the offer without the Company's consent in
the following circumstances:
- If necessary to satisfy the condition that any applicable waiting period
under the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of 1976, has
expired or been terminated, we are obligated by the terms of the merger
agreement to extend the offer from time to time until the earlier of the
consummation of the offer or August 28, 2000.
- If the Securities and Exchange Commission requires the offer to be
extended by any rule, regulation, interpretation, or position of the SEC,
we must extend the offer for any required period.
- If any of the other conditions to the offer have not been satisfied or
waived, we may extend the offer until such time as they are satisfied or
waived in increments of not more than five business days.
- If all conditions to the offer have been satisfied or waived (following,
if applicable, the extension described above), we will accept for payment
and pay for all shares validly tendered and not withdrawn at such time
(which shares may not thereafter be withdrawn), and may extend the offer
for a subsequent offering period of at least three (3) business days and
no more than twenty (20) business days (for all such extensions), during
which time stockholders may tender, but not withdraw, their shares and
receive the offer consideration.
See Section 1, "Terms of the Offer," of this Offer to Purchase for more
details on our ability to extend the offer.
HOW WILL I BE NOTIFIED IF THE OFFER IS EXTENDED?
If we extend the offer, we will inform XxxxxXxxxxx Shareholder Services,
L.L.C. (which is the depositary for the offer) of that fact and will make a
public announcement of the extension no later than 9:00 a.m., New York City
time, on the next business day after the day on which the offer was scheduled to
expire. See Section 1, "Terms of the Offer," of this Offer to Purchase.
WHAT ARE THE MOST SIGNIFICANT CONDITIONS TO THE OFFER?
- We are not obligated to purchase any shares that are validly tendered
unless the number of shares validly tendered and not withdrawn before the
expiration date of the offer represents at least a majority of the then
outstanding shares on a fully diluted basis. We call this condition the
"Minimum Condition."
- We are not obligated to purchase shares that are validly tendered if there
is a material adverse change in the Company or its business.
- We are not obligated to purchase shares that are validly tendered if any
applicable waiting period under the Xxxx-Xxxxx-Xxxxxx Antitrust
Improvements Act of 1976 has not expired or terminated.
The offer is also subject to a number of other conditions. We can waive any
of the conditions to the offer without the Company's consent, other than the
Minimum Condition. See Sections 1, "Terms of the Offer," and 14, "Conditions to
the Offer," of this Offer to Purchase.
HOW DO I TENDER MY SHARES?
To tender shares, you must deliver the certificates representing your
shares, together with a completed Letter of Transmittal and any other documents
required by the Letter of Transmittal, to ChaseMellon, the depositary for the
offer, no later than the time the tender offer expires. If your shares are held
in street name, the shares can be tendered by your nominee through ChaseMellon.
See Section 3, "Procedures for Tendering Shares".
2
UNTIL WHAT TIME MAY I WITHDRAW PREVIOUSLY TENDERED SHARES?
You may withdraw shares at any time until the offer has expired and, if we
have not accepted your shares for payment by September 14, 2000, you may
withdraw them at any time after that date until we accept shares for payment.
This right to withdraw will not apply to the subsequent offering period
discussed in Section 1, "Terms of the Offer." See Section 4, "Withdrawal
Rights," of this Offer to Purchase.
HOW DO I WITHDRAW PREVIOUSLY TENDERED SHARES?
To withdraw shares, you must deliver a written notice of withdrawal, or a
facsimile of one, with the required information to the depositary while you
still have the right to withdraw the shares. See Section 4, "Withdrawal Rights,"
of this Offer to Purchase.
WHAT DOES THE COMPANY'S BOARD OF DIRECTORS THINK OF THE OFFER?
We are making the offer under the merger agreement, which has been
unanimously approved (with one director absent) by the Company's board of
directors. The board of directors unanimously:
- determined that the terms of the voting agreement, the merger agreement
and the transactions contemplated thereby, including the offer and the
merger, are advisable and in the best interests of the Company and its
stockholders and is fair and equitable to the Company's stockholders,
- approved the voting agreement, the merger agreement and the transactions
contemplated thereby, including the offer and the merger, and
- recommends that the Company's stockholders accept the offer and tender
their shares in the offer.
See the "Introduction" to this Offer to Purchase.
WILL THE TENDER OFFER BE FOLLOWED BY A MERGER IF ALL OF THE COMPANY'S SHARES ARE
NOT TENDERED IN THE OFFER?
Yes. If we accept for payment and pay for at least a majority of the shares
of the Company on a fully diluted basis, Merger Subsidiary will be merged with
and into the Company. If that merger takes place, Parent will own all of the
shares of the Company and all remaining stockholders of the Company (other than
Canisco Acquisition, Inc. and stockholders properly exercising dissenters'
rights) will receive $1.00 per share in cash (or any higher price per share that
is paid in the offer). See the "Introduction" and Section 11, "Background of the
Offer; Purpose of the Offer and the Merger; the Merger Agreement and Certain
Other Agreements," of this Offer to Purchase.
IF A MAJORITY OF THE SHARES ARE TENDERED AND ACCEPTED FOR PAYMENT, WILL THE
COMPANY CONTINUE AS A PUBLIC COMPANY?
No. Following the purchase of shares in the offer, we expect to consummate
the merger. If the merger takes place, the Company no longer will be publicly
owned. Even if for some reason the merger does not take place, if we purchase
all of the tendered shares, there may be so few remaining stockholders and
publicly held shares that the Company common stock will not be eligible to be
traded through any securities exchange, there may not be a public trading market
for the Company common stock, and the Company may cease making filings with the
SEC or otherwise cease being required to comply with the SEC rules relating to
publicly held companies. See Section 7, "Certain Effects of the Offer," of this
Offer to Purchase.
IF I DECIDE NOT TO TENDER, HOW WILL THE OFFER AFFECT MY SHARES?
If the merger described above takes place, stockholders not tendering in the
offer will receive the same amount of cash per share that they would have
received had they tendered their shares in the offer, subject to any dissenters'
rights properly exercised under Delaware law. Therefore, if the merger takes
place, the only difference to you between tendering your shares and not
tendering your shares is that you will be paid earlier and not have dissenters'
rights if you tender your shares. If, however, for some reason the merger does
not take place, the number of stockholders and the number of shares of the
Company that are still publicly held may be so small that there no longer will
be an active public trading market or, possibly, there may not be any public
trading market for the Company common stock. Also, as described above, the
Company may cease making filings with the SEC or otherwise may not be required
to comply with the SEC rules relating to publicly held companies. See the
"Introduction" and Section 7, "Certain Effects of the Offer," of this Offer to
Purchase.
3
WHAT IS THE MARKET VALUE OF MY SHARES AS OF A RECENT DATE?
On June 27, 2000, the last trading day before we announced the acquisition,
the closing price of the Company common stock reported over the counter was
$0.65 per share. On July 13, 2000, the closing price of the Company common stock
reported in the over the counter market was $0.80 per share. We encourage you to
obtain a recent quotation for shares of common stock in deciding whether to
tender your shares. See Section 6, "Price Range of the Shares; Dividends" of
this Offer to Purchase.
WHAT ARE CERTAIN UNITED STATES FEDERAL INCOME TAX CONSEQUENCES OF TENDERING
SHARES?
The receipt of cash for shares in to the tender offer or the merger will be
a taxable transaction for United States federal income tax purposes and possibly
for state, local and foreign income tax purposes as well. In general, a
stockholder who sells shares in the tender offer or receives cash in exchange
for shares in to the merger will recognize gain or loss for United States
federal income tax purposes equal to the difference, if any, between the amount
of cash received and the stockholder's adjusted tax basis in the shares sold in
the tender offer or exchanged for cash in the merger. If the shares exchanged
constitute capital assets in the hands of the stockholder, such gain or loss
will be capital gain or loss. In general, capital gains recognized by an
individual will be subject to a maximum United States federal income tax rate of
20% if the shares were held for more than one year, and if held for one year or
less they will be subject to tax at ordinary income tax rates. See Section 5,
"Certain United States Federal Income Tax Consequences," of this Offer to
Purchase.
TO WHOM MAY I SPEAK IF I HAVE QUESTIONS ABOUT THE TENDER OFFER?
You may call Xxxxxx & Co., Inc. ("Xxxxxx") at (000) 000-0000 (toll free).
Xxxxxx is acting as the information agent for our tender offer. See the back
cover of this Offer to Purchase.
4
To the Holders of Common Stock of
Canisco Resources, Inc.:
INTRODUCTION
Canisco Acquisition, Inc., a Delaware corporation ("Merger Subsidiary") and
an indirect wholly owned subsidiary of Xxxxx Industrial Services, L.L.C., a
Delaware limited liability company ("Parent"), hereby offers to purchase all
outstanding shares of common stock, par value $0.0025 per share (the "Common
Stock"), of Canisco Resources, Inc., a Delaware corporation (the "Company"),
(the shares of Common Stock are herein referred to as the "Shares" or "Company
Common Stock"), at a price of $1.00 per Share, net to the seller in cash,
without interest (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, as amended or supplemented from time to time, collectively
constitute the "Offer").
Tendering stockholders who are record owners of their Shares and tender
directly to the Depositary (as defined below) will not be obligated to pay
brokerage fees or commissions or, except as set forth in Instruction 6 of the
Letter of Transmittal, stock transfer taxes with respect to the purchase of
Shares by Merger Subsidiary pursuant to the Offer. Stockholders who hold their
Shares through a bank or broker should check with such institution as to whether
it charges any service fees. However, any tendering stockholder or other payee
who fails to complete and sign the Substitute Form W-9 that is included in the
Letter of Transmittal may be subject to a required federal backup withholding
tax of 31% of the gross proceeds payable to such stockholder or other payee
pursuant to the Offer. See Sections 3, "Procedures for Tendering Shares," and 5,
"Certain United States Federal Income Tax Consequences." Merger Subsidiary will
pay all fees and expenses of ChaseMellon Shareholder Services, L.L.C.
("ChaseMellon"), as Depositary (the "Depositary"), and Xxxxxx & Co., Inc.
("Xxxxxx"), as Information Agent (the "Information Agent"), incurred in
connection with the Offer and in accordance with the terms of the agreements
entered into between Merger Subsidiary and/or Parent and each such person. See
Section 16, "Fees and Expenses."
THE BOARD OF DIRECTORS OF THE COMPANY (THE "COMPANY BOARD OF DIRECTORS") HAS
UNANIMOUSLY DETERMINED THAT THE TERMS OF THE VOTING AGREEMENT, MERGER AGREEMENT
(AS DEFINED BELOW) AND THE TRANSACTIONS CONTEMPLATED THEREBY, INCLUDING THE
OFFER AND THE MERGER (AS DEFINED BELOW), ARE ADVISABLE AND IN THE BEST INTERESTS
OF THE COMPANY AND ITS STOCKHOLDERS AND FAIR AND EQUITABLE TO THE COMPANY'S
STOCKHOLDERS, HAS UNANIMOUSLY APPROVED THE VOTING AGREEMENT, MERGER AGREEMENT
AND THE TRANSACTIONS CONTEMPLATED THEREBY, INCLUDING THE OFFER AND THE MERGER,
AND UNANIMOUSLY RECOMMENDS THAT STOCKHOLDERS ACCEPT THE OFFER AND TENDER THEIR
SHARES PURSUANT TO THE OFFER.
Hempstead & Co. ("Hempstead"), the Company's financial advisor, has
delivered to the Company Board of Directors its written opinion, dated June 30,
2000, to the effect that, as of such date and based upon and subject to certain
assumptions, limitations and qualifications stated therein, the consideration to
be received by the holders of Shares in the Offer and the Merger is fair from a
financial point of view to such holders. Xxxxxxxxx was engaged by the Company
pursuant to the terms of an engagement letter to advise the Company with respect
to a proposed acquisition of the Company by Parent and to undertake an analysis
to enable Hempstead to provide an opinion to the Company's Board of Directors as
to the fairness to the Company or its stockholders, from a financial point of
view, of the consideration to be received by the Company or its stockholders.
The Company agreed to pay Hempstead the following fees: (i) a fee of $25,000
plus out-of-pocket expenses; and (ii) an initial retainer fee of $12,500 with
the balance of the entire fee to be due upon completion. The Company also agreed
to indemnify Hempstead for certain liabilities in connection with the
engagement. A copy of Hempstead's written opinion setting forth the procedures
followed, the matters considered, the assumptions and qualifications made, and
the limitations on the review undertaken by Hempstead, is attached as Annex I to
the Company's Solicitation/Recommendation Statement on Schedule 14D-9 (the
"Schedule 14D-9"), which has been filed by the Company with the Securities and
Exchange Commission (the "SEC") in connection with the Offer and which is being
mailed to holders of Shares concurrently herewith. Holders of Shares are urged
to, and should, read the full text of such opinion carefully in its entirety.
THE OFFER IS CONDITIONED UPON, AMONG OTHER THINGS, THERE BEING VALIDLY
TENDERED AND NOT WITHDRAWN PRIOR TO THE EXPIRATION DATE (AS DEFINED BELOW) THAT
NUMBER OF SHARES WHICH, WHEN ADDED TO THE SHARES BENEFICIALLY OWNED BY PARENT OR
MERGER SUBSIDIARY (IF ANY), REPRESENTS AT LEAST A MAJORITY OF THE SHARES
OUTSTANDING ON A FULLY DILUTED BASIS ON THE DATE SHARES ARE ACCEPTED FOR PAYMENT
(THE "MINIMUM CONDITION"). THE OFFER IS ALSO SUBJECT TO THE OTHER CONDITIONS SET
5
FORTH IN THIS OFFER TO PURCHASE. SEE SECTION 14, "CONDITIONS TO THE OFFER." As
used in this Offer to Purchase, "on a fully diluted basis" means, as of any
time, on a basis that includes the number of Shares that are actually issued and
outstanding plus the maximum number of Shares that the Company may be required
to issue pursuant to obligations under stock options, warrants and other rights
and securities exercisable or exchangeable for, or convertible into, Shares,
whether or not currently exercisable. The Company has represented and warranted
to Parent and Merger Subsidiary that, as of June 26, 2000, there were 2,536,565
Shares issued and outstanding. In addition, the Company has represented and
warranted to Parent and Merger Subsidiary that there are options outstanding
exercisable for an aggregate of 103,875 Shares, as well as warrants which are
currently not exercisable to purchase in aggregate of 110,000 Shares. Neither
Parent, Merger Subsidiary, Canisco Holding (as hereafter defined) nor any person
listed on Schedule I hereto beneficially owns any Shares. The Merger Agreement
provides, among other things, that the Company will not, without the prior
written consent of Parent, issue any additional Shares (except upon the exercise
of outstanding options or warrants) or other securities convertible into, or
exercisable or exchangeable for, Shares. See Section 11, "Background of the
Offer; Purpose of the Offer and the Merger; the Merger Agreement and Certain
Other Agreements." Based on the foregoing, Merger Subsidiary believes that the
Minimum Condition will be satisfied if 1,375,221 Shares are validly tendered and
not withdrawn prior to the Expiration Date.
The Offer is being made pursuant to an Agreement and Plan of Merger, dated
as of June 28, 2000, as amended as of July 10, 2000 (the "Merger Agreement"), by
and among Parent, Merger Subsidiary and the Company. Pursuant to the Merger
Agreement, as soon as practicable after the completion of the Offer and
satisfaction or waiver, if permissible, of all conditions, including the
approval and adoption of the Merger Agreement by the stockholders of the Company
(if required by applicable law), Merger Subsidiary will be merged with and into
the Company (the "Merger") and the Company will be the surviving corporation in
the Merger (the "Surviving Corporation"). At the effective time of the Merger
(the "Effective Time"), each Share then outstanding, other than Shares held by
(1) the Company or any of its subsidiaries, (2) Parent or any of its
subsidiaries, including Merger Subsidiary, and (3) stockholders who properly
perfect their dissenters' rights under the Delaware General Corporation Law, as
amended (the "DGCL"), will be converted into the right to receive $1.00 in cash
or any higher price per Share paid in the Offer, without interest. The Merger
Agreement is more fully described in Section 11, "Background of the Offer;
Purpose of the Offer and the Merger; the Merger Agreement and Certain Other
Agreements."
The Merger Agreement provides that, upon the purchase by Xxxxxx Xxxxxxxxxx
of at least a majority of the outstanding Shares on a fully diluted basis
pursuant to the Offer and from time to time thereafter, Parent will be entitled
to designate such number of directors, rounded up to the next whole number, on
the Company Board of Directors so that the percentage of Parent's nominees on
the Company Board of Directors equals the percentage of outstanding Shares
beneficially owned by Merger Subsidiary, Parent and their affiliates. The
Company will, at such time, upon the request of Parent, promptly use its
reasonable best efforts to take all action necessary to cause such persons
designated by Parent to be appointed or elected to the Company Board of
Directors, if necessary, by increasing the size of the Company Board of
Directors or securing resignations of incumbent directors or both.
Consummation of the Merger is subject to the satisfaction or waiver of
certain conditions, including, if required, the approval and adoption of the
Merger Agreement by the affirmative vote of the holders of a majority of the
outstanding Shares. If the Minimum Condition is satisfied, Merger Subsidiary
would have sufficient voting power to approve the Merger without the affirmative
vote of any other stockholder. The Merger Agreement provides that if, following
a Subsequent Offering Period (as hereinafter defined), if any, Merger Subsidiary
has acquired less than 90% of the Shares outstanding on a fully diluted basis,
then the Company, Merger Subsidiary and Parent will enter into a stock option
agreement, on customary terms, whereby the Company will grant to Merger
Subsidiary an option to purchase that number of Shares that, when added to the
Shares owned by Merger Subsidiary and its affiliates, results in Merger
Subsidiary owning 90% of the outstanding Shares on a fully diluted basis. The
Company has agreed, if required, to cause a meeting of its stockholders to be
held as promptly as practicable following consummation of the Offer for the
purpose of considering and taking action upon the approval and adoption of the
Merger Agreement. Parent has agreed to vote the Shares owned by Xxxxxx, Merger
Subsidiary and any other subsidiaries of Parent in favor of the approval and
adoption of the Merger Agreement.
On June 28, 2000, Parent and each of Xxxxxxx X. Xxxxx, Xxxxx Xxxxxxxxx,
Xxxxx X. Xxxxxx, Xxxx X. Xxxxxxxx, Xxxxxx X. XxXxxxx and X. Xxxxxxxx Xxxxxxxx
(individually a "Shareholder" and collectively, the "Shareholders") entered into
a voting agreement (the "Voting Agreement"). Pursuant to the terms of the Voting
Agreement, each Shareholder shall at every annual, special or adjourned meeting
(including any consents in lieu of a meeting), vote their Shares (i) in favor of
the approval of the Merger Agreement and the transactions contemplated by the
Merger Agreement, (ii) against any Acquisition Proposal (as defined below)
involving the Company, or any action or
6
agreement that would result in a breach of any covenant, representation,
warranty or any other obligation or agreement of the Company under the Merger
Agreement or which could result in any of the conditions to the Company's
obligations under the Merger Agreement not being fulfilled, and (iii) in favor
of any other matter relating to the consummation of the transactions
contemplated by the Merger Agreement. The Voting Agreement further provides that
during the term of the Voting Agreement each Shareholder shall not (other than
tendering Shares to Parent and Merger Subsidiary pursuant to the transactions
described in the Merger Agreement) (a) sell, transfer, pledge, grant a security
interest in or lien on or otherwise dispose of or encumber any of his or her
Shares or relinquish control of the voting power with respect to any of his of
her Shares, (b) deposit any of his or her Shares into a voting trust, enter into
a voting agreement or arrangement or grant any proxy (except a proxy under the
proxy statement, if any, voted in accordance with this Agreement) with respect
to any of his or her Shares, or (c) enter into any contract, option or other
arrangement or undertaking with respect to the direct or indirect acquisition of
sale, assignment, transfer, pledge, grant of a security interest in or lien on
or other disposition of or encumbrance on his or her Shares.
If an insufficient number of Shares are tendered pursuant to this Offer
prior to the Expiration Date and the Merger Agreement is terminated as a
consequence of the failure to satisfy the Minimum Condition, the Company has
agreed to pay Parent a termination fee of $1,000,000 or, under certain
circumstances, $500,000 plus reimbursement of up to $1,000,000 of Parent's
expenses. See Section 11, "Background of the Offer; Purpose of the Offer and the
Merger; The Merger Agreement and Certain Other Agreements."
Under Section 253 of the DGCL, if a corporation owns at least 90% of the
outstanding shares of each class of another corporation, the corporation holding
such stock may merge that corporation into itself, or itself into such
corporation, without any action or vote on the part of the board of directors or
the stockholders of such other corporation (a "short-form merger"). In the event
that Parent, Merger Subsidiary, or any other subsidiaries of Parent acquire 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 could be
effected without any further approval of the Company Board of Directors or the
Company's stockholders, subject to compliance with the provisions of
Section 253 of the DGCL. Even if Merger Subsidiary does not own 90% of the
outstanding Shares following consummation of the Offer, Parent or Merger
Subsidiary could obtain an option from the Company (as described above) or seek
to purchase additional Shares in the open market or otherwise in order to reach
the 90% threshold and employ 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 the conditions to
the Merger are satisfied and if permitted to do so under the DGCL, pursuant to
which Merger Subsidiary will be merged with and into the Company. See
Section 12, "Plans for the Company; Other Matters."
THIS OFFER TO PURCHASE AND THE RELATED LETTER OF TRANSMITTAL CONTAIN
IMPORTANT INFORMATION AND SHOULD BE READ CAREFULLY BEFORE ANY DECISION IS MADE
WITH RESPECT TO THE OFFER.
7
THE OFFER
1. TERMS OF THE OFFER.
Upon the terms and subject to the conditions of the Offer (including, if the
Offer is extended or amended, the terms and conditions of any extension or
amendment), Merger Subsidiary will accept for payment and pay for all Shares
validly tendered prior to the Expiration Date and not withdrawn in accordance
with Section 4, "Withdrawal Rights." The term "Expiration Date" shall mean 12:00
midnight, New York City time, on Friday, August 11, 2000, unless and until
Merger Subsidiary, in accordance with the terms of the Merger Agreement, has
extended the period of time during which the Offer is open, in which event the
term "Expiration Date" shall mean the latest time and date at which the Offer,
as so extended by Merger Subsidiary (other than any extension with respect to
the Subsequent Offering Period described below), expires.
The acceptance for payment of Shares pursuant to the Offer, and payment
therefor, is conditioned upon the satisfaction of the Minimum Condition, the
expiration or termination of all waiting periods imposed by the
Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of 1976, as amended (the "HSR
Act"), and the other conditions set forth in Section 14, "Conditions to the
Offer." If such conditions are not satisfied prior to the Expiration Date,
Merger Subsidiary reserves the right, subject to the terms of the Merger
Agreement and subject to complying with applicable rules and regulations of the
SEC, to (1) decline to purchase any Shares tendered in the Offer and terminate
the Offer and return all tendered Shares to the tendering stockholders,
(2) waive any or all conditions to the Offer (other than the Minimum Condition)
and, to the extent permitted by applicable law, purchase all Shares validly
tendered and not properly withdrawn, or (3) extend the Offer and, subject to the
right of stockholders to withdraw Shares until the new Expiration Date, retain
all Shares that have been tendered until the expiration of the Offer, as
extended. The Merger Agreement provides that Merger Subsidiary will not waive
the Minimum Condition, decrease the Offer Price, change the form of
consideration payable in the Offer, decrease the number of Shares to be
purchased in the Offer, add to or change the conditions to the Offer or make any
other change in the terms or conditions of the Offer without the prior written
consent of the Company.
The Merger Agreement requires Merger Subsidiary to accept for payment and
pay for all Shares validly tendered and not withdrawn pursuant to the Offer if
all conditions to the Offer are satisfied or waived on the Expiration Date. If
on the scheduled Expiration Date of the Offer (as it may be extended) all
conditions to the Offer have not been satisfied or waived, Merger Subsidiary
may, in its sole discretion, extend the Offer in increments of not more than
five business days each, for such period of time as Merger Subsidiary deems
appropriate, unless any applicable waiting period under the HSR Act has not
expired or been terminated, in which case Merger Subsidiary has agreed to extend
the Offer, from time to time until the earlier of the consummation of the Offer
or August 28, 2000.
Pursuant to Rule 14d-11 under the Securities Exchange Act of 1934, as
amended (the "Exchange Act"), Merger Subsidiary may, subject to certain
conditions, provide a subsequent offering period following the expiration of the
Offer on the Expiration Date (a "Subsequent Offering Period"). A Subsequent
Offering Period is an additional period of time from three (3) business days to
twenty (20) business days in length, beginning after Merger Subsidiary purchases
Shares tendered in the Offer, during which stockholders may tender, but not
withdraw, their Shares and receive the Offer Price.
The Merger Agreement provides that Merger Subsidiary may, in its sole
discretion, commence a Subsequent Offering Period. Pursuant to Rule 14d-7 under
the Exchange Act, no withdrawal rights apply to Shares tendered during 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. During a Subsequent Offering Period, Merger Subsidiary will promptly
purchase and pay for all Shares tendered at the same price paid in the Offer.
Subject to the applicable rules and regulations of the SEC and the
provisions of the Merger Agreement, Merger Subsidiary also expressly reserves
the right, in its sole discretion, at any time or from time to time, (1) to
terminate the Offer if any of the conditions set forth in Section 14,
"Conditions to the Offer," have not been satisfied and (2) to waive any
condition to the Offer (other than the Minimum Condition) or otherwise amend the
Offer in any respect, in each case by giving oral or written notice of such
extension, termination, waiver or amendment to the Depositary and by making a
public announcement thereof. If Merger Subsidiary accepts for payment any Shares
pursuant to the Offer, it will accept for payment all Shares validly tendered
prior to the Expiration Date and not properly withdrawn, and will promptly pay
for all Shares so accepted for payment.
The rights reserved by Merger Subsidiary by the preceding paragraph are in
addition to Merger Subsidiary's rights pursuant to Section 14, "Conditions to
the Offer." Any extension, amendment or termination of the Offer will be
followed as promptly as practicable by public announcement thereof, the
announcement in the case of an extension to be issued no later than 9:00 a.m.,
New York City time, on the next business day after the previously scheduled
8
Expiration Date in accordance with Rules 14d-4(d), 14d-6(c) and 14e-1(d) under
the Exchange Act. As used in this Offer to Purchase, "business day" has the
meaning set forth in Rule 14d-1 under the Exchange Act. Without limiting the
obligation of Merger Subsidiary under such Rules or the manner in which Merger
Subsidiary may choose to make any public announcement, Merger Subsidiary
currently intends to make announcements by issuing a press release to Dow Xxxxx
News Service.
If Merger Subsidiary extends the Offer, or if Merger Subsidiary (whether
before or after its acceptance for payment of Shares) is delayed in its purchase
of, or payment for, Shares or is unable to pay for Shares pursuant to the Offer
for any reason, then, without prejudice to Merger Subsidiary's rights under the
Offer, the Depositary may retain tendered Shares on behalf of Merger Subsidiary,
and such Shares may not be withdrawn except to the extent tendering stockholders
are entitled to withdrawal rights as described in Section 4, "Withdrawal
Rights." However, the ability of Merger Subsidiary to delay the payment for
Shares which Merger Subsidiary 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,
holders of securities promptly after the termination or withdrawal of such
bidder's Offer.
If Merger Subsidiary makes a material change in the terms of the Offer or
the information concerning the Offer or waives a material condition of the
Offer, Merger Subsidiary will disseminate additional tender offer materials and
extend the Offer to the extent required by Rules 14d-4(d), 14d-6(c) and 14e-1
under the Exchange Act. The minimum period during which the Offer must remain
open following material changes in the terms of the Offer or information
concerning the Offer, other than a change in price or a change in percentage of
securities sought, will depend upon the facts and circumstances then existing,
including the relative materiality of the changed terms or information. In the
SEC's view, an offer should remain open for a minimum of five (5) business days
from the date a material change is first published, sent or given to
stockholders and, if material changes are made with respect to information that
approaches the significance of price and the number of shares being sought, a
minimum of ten (10) business days may be required to allow adequate
dissemination and investor response. The requirement to extend the Offer will
not apply to the extent that the number of business days remaining between the
occurrence of the change and the then-scheduled Expiration Date equals or
exceeds the minimum extension period that would be required because of such
amendment. If, prior to the Expiration Date, Merger Subsidiary increases the
consideration offered to holders of Shares pursuant to the Offer, such increased
consideration will be paid to all holders whose Shares are purchased in the
Offer whether or not such Shares were tendered prior to such increase.
The Company has provided Merger Subsidiary 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.
2. ACCEPTANCE FOR PAYMENT AND PAYMENT FOR SHARES.
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 extension or
amendment), Merger Subsidiary will accept for payment and will pay for, as soon
as practicable after the Expiration Date, all Shares validly tendered prior to
the Expiration Date and not properly withdrawn in accordance with Section 4,
"Withdrawal Rights."
In all cases, payment for Shares accepted for payment pursuant to the Offer
will be made only after timely receipt by the Depositary of (1) certificates for
such Shares (or a timely Book-Entry Confirmation (as defined below) with respect
thereto), (2) a Letter of Transmittal (or facsimile thereof), properly completed
and duly executed, with any required signature guarantees, or, in the case of a
book-entry transfer, an Agent's Message (as defined below) in lieu of the Letter
of Transmittal, and (3) any other documents required by the Letter of
Transmittal. The per Share consideration paid to any holder of Shares pursuant
to the Offer will be the highest per Share consideration paid to any other
holder of such Shares pursuant to the Offer.
For purposes of the Offer, Merger Subsidiary will be deemed to have accepted
for payment, and thereby purchased, Shares properly tendered to Merger
Subsidiary and not withdrawn, if, as and when Merger Subsidiary gives oral or
written notice to the Depositary of Merger Subsidiary's acceptance for payment
of such Shares. Payment for Shares accepted for payment 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 Merger Subsidiary and transmitting payment to tendering
stockholders.
9
UNDER NO CIRCUMSTANCES WILL INTEREST BE PAID ON THE OFFER PRICE TO BE PAID
BY MERGER SUBSIDIARY FOR THE SHARES, REGARDLESS OF ANY EXTENSION OF THE OFFER OR
ANY DELAY IN MAKING SUCH PAYMENT.
Merger Subsidiary expressly reserves the right, in its sole discretion, to
delay acceptance for payment of, or payment for, Shares in order to comply in
whole or in part with any applicable law. If Merger Subsidiary is delayed in its
acceptance for payment of, or payment for, Shares or is unable to accept for
payment or pay for Shares pursuant to the Offer for any reason, then, without
prejudice to Merger Subsidiary's rights under the Offer (including such rights
as are set forth in Sections 1, "Terms of the Offer," and 14, "Conditions to the
Offer") (but subject to compliance with Rule 14e-1(c) under the Exchange Act),
the Depositary may, nevertheless, on behalf of Merger Subsidiary, retain
tendered Shares, and such Shares may not be withdrawn except to the extent
tendering stockholders are entitled to exercise, and duly exercise, withdrawal
rights as described in Section 4, "Withdrawal Rights."
If any tendered Shares are not purchased pursuant to the Offer for any
reason, or if certificates are submitted representing more Shares than are
tendered, certificates evidencing Shares not tendered or not accepted for
purchase will be returned to the tendering stockholder, or such other person as
the tendering stockholder shall specify in the Letter of Transmittal, as
promptly as practicable following the expiration, termination or withdrawal of
the Offer. In the case of Shares delivered by book-entry transfer into the
Depositary's account at the Book-Entry Transfer Facility (as defined below)
pursuant to the procedures set forth in Section 3, "Procedures for Tendering
Shares," such Shares will be credited to such account maintained at the
Book-Entry Transfer Facility as the tendering stockholder shall specify in the
Letter of Transmittal, as promptly as practicable following the expiration,
termination or withdrawal of the Offer. If no such instructions are given with
respect to Shares delivered by book-entry transfer, any such Shares not tendered
or not purchased will be returned by crediting the account at the Book-Entry
Transfer Facility designated in the Letter of Transmittal as the account from
which such Shares were delivered.
Merger Subsidiary reserves the right to transfer or assign, in whole or,
from time to time, in part, to one or more of its affiliates, the right to
purchase Shares tendered pursuant to the Offer, but any such transfer or
assignment will not relieve Merger Subsidiary of its obligations under the Offer
and will in no way prejudice the rights of tendering stockholders to receive
payment for Shares validly tendered and accepted for payment pursuant to the
Offer.
3. PROCEDURES FOR TENDERING SHARES.
VALID TENDERS. For Shares to be validly tendered pursuant to the Offer,
either (1) 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 in lieu of the Letter of
Transmittal, and any other required documents, must be received by the
Depositary at one of its addresses set forth on the back cover of this Offer to
Purchase prior to the Expiration Date and either certificates evidencing
tendered Shares must be received by the Depositary at one of such addresses or
such Shares must be delivered to the Depositary pursuant to the procedures for
book-entry transfer set forth below and a Book-Entry Confirmation (as defined
below) must be received by the Depositary, in each case prior to the Expiration
Date, or (2) the tendering stockholder must comply with the guaranteed delivery
procedures described below.
BOOK-ENTRY TRANSFER. The Depositary will establish an account with respect
to the Shares at The Depository Trust Company (the "Book-Entry Transfer
Facility") for purposes of the Offer within two (2) business days after the date
of this Offer to Purchase. Any financial institution that is a participant in
the Book-Entry Transfer Facility's system may make book-entry delivery of Shares
by causing the Book-Entry Transfer Facility to transfer such Shares into the
Depositary's account in accordance with the Book-Entry Transfer Facility's
procedures for such transfer. Even though delivery of Shares may be effected
through book-entry transfer into the Depositary's account at the Book-Entry
Transfer Facility, a Letter of Transmittal (or facsimile thereof), properly
completed and duly executed, with any required signature guarantees, or an
Agent's Message in lieu of the Letter of Transmittal, and any other required
documents, must, in any case, be received by the Depositary at one of its
addresses set forth on the back cover of this Offer to Purchase prior to the
Expiration Date, or the tendering stockholder must comply with the guaranteed
delivery procedures described below. The confirmation of a book-entry transfer
of Shares into the Depositary's account at the Book-Entry Transfer Facility as
described above is referred to herein as a "Book-Entry Confirmation." DELIVERY
OF THE LETTER OF TRANSMITTAL AND ANY OTHER REQUIRED DOCUMENTS TO THE BOOK-ENTRY
TRANSFER FACILITY DOES NOT CONSTITUTE DELIVERY TO THE DEPOSITARY.
The term "Agent's Message" means a message transmitted by the Book-Entry
Transfer Facility to, and received by, the Depositary and forming a part of a
Book-Entry Confirmation, which states that the Book-Entry Transfer Facility has
received an express acknowledgment from the participant in the Book-Entry
Transfer Facility tendering
10
the Shares that such participant has received and agrees to be bound by the
terms of the Letter of Transmittal and that Merger Subsidiary may enforce such
agreement against such participant.
THE METHOD OF DELIVERY OF SHARES, THE LETTER OF TRANSMITTAL AND ALL OTHER
REQUIRED DOCUMENTS, INCLUDING DELIVERY THROUGH THE BOOK-ENTRY TRANSFER FACILITY,
IS AT THE ELECTION AND RISK OF THE TENDERING STOCKHOLDER. SHARES WILL BE DEEMED
DELIVERED ONLY WHEN ACTUALLY RECEIVED BY THE DEPOSITARY (INCLUDING, IN THE CASE
OF A BOOK-ENTRY TRANSFER, BY BOOK-ENTRY CONFIRMATION). 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.
SIGNATURE GUARANTEES. No signature guarantee is required on the Letter of
Transmittal (1) 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 (2) 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. See Instructions 1 and 5 to the Letter of Transmittal. 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 by an
Eligible Institution as provided in the Letter of Transmittal. See Instructions
1 and 5 to the Letter of Transmittal.
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:
(1) such tender is made by or through an Eligible Institution;
(2) a properly completed and duly executed Notice of Guaranteed
Delivery, substantially in the form provided by Merger Subsidiary, is
received by the Depositary, as provided below, prior to the Expiration Date;
and
(3) 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) New York
Stock Exchange ("NYSE") trading days after the date of execution of such
Notice of Guaranteed Delivery.
The Notice of Guaranteed Delivery may be delivered by hand to the Depositary
or transmitted by telegram or facsimile or mailed to the Depositary and must
include a guarantee by an Eligible Institution in the form set forth in the form
of Notice of Guaranteed Delivery made available by Merger Subsidiary.
Upon the acceptance of Shares for payment pursuant to the Offer, the valid
tender of Shares pursuant to one of the procedures described above will
constitute a binding agreement between the tendering stockholder and Merger
Subsidiary upon the terms and subject to the conditions of the Offer.
APPOINTMENT. By executing the Letter of Transmittal as set forth above
(including delivery through an Agent's Message), the tendering stockholder will
irrevocably appoint designees of Parent as such stockholder's attorneys-in-fact
and proxies in the manner set forth in the Letter of Transmittal, each with full
power of substitution, to the full extent of such stockholder's rights with
respect to the Shares tendered by such stockholder and accepted for payment by
Merger Subsidiary and with respect to any and all non-cash dividends,
distributions, rights, other Shares or other securities issued or issuable in
respect of such Shares on or after July 17, 2000 (collectively,
"Distributions"). All such powers of attorney and proxies will be considered
coupled with an interest in the tendered Shares. Such appointment will be
effective if, as and when, and only to the extent that, Merger Subsidiary
accepts for payment
11
Shares tendered by such stockholder as provided herein. All such powers of
attorney and proxies will be irrevocable and will be deemed granted in
consideration of the acceptance for payment by Merger Subsidiary of Shares
tendered in accordance with the terms of the Offer. Upon such appointment, all
prior powers of attorney, proxies and consents given by such stockholder with
respect to such Shares (and any and all Distributions) will, without further
action, be revoked and no subsequent powers of attorney, proxies, consents or
revocations may be given by such stockholder (and, if given, will not be deemed
effective). The designees of Parent will thereby be empowered to exercise all
voting and other rights with respect to such Shares (and any and all
Distributions), including, without limitation, in respect of any annual or
special meeting of the Company's stockholders (and any adjournment or
postponement thereof), actions by written consent in lieu of any such meeting or
otherwise, as each such attorney-in-fact and proxy or his substitute shall in
his sole discretion deem proper. Merger Subsidiary reserves the right to require
that, in order for Shares to be deemed validly tendered, immediately upon Merger
Subsidiary's acceptance for payment of such Shares, Merger Subsidiary must be
able to exercise full voting, consent and other rights with respect to such
Shares (and any and all Distributions), including voting at any meeting of
stockholders.
DETERMINATION OF VALIDITY. All questions as to the validity, form,
eligibility (including time of receipt) and acceptance for payment of any tender
of Shares will be determined by Merger Subsidiary, in its sole discretion, which
determination will be final and binding. Merger Subsidiary reserves the absolute
right to reject any or all tenders of any Shares determined by it not to be in
proper form or the acceptance for payment of which, or payment for which, may,
in the opinion of Merger Subsidiary's counsel, be unlawful. Merger Subsidiary
also reserves the absolute right, in its sole discretion, to waive 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. No tender of Shares will be deemed to have been validly made until
all defects or irregularities relating thereto have been cured or waived. None
of Merger Subsidiary, Parent, the Depositary, the Information Agent or any other
person will be under any duty to give notification of any defects or
irregularities in tenders or incur any liability for failure to give any such
notification. Xxxxxx Xxxxxxxxxx's interpretation of the terms and conditions of
the Offer in this regard (including the Letter of Transmittal and the
instructions thereto) will be final and binding.
BACKUP WITHHOLDING. Under the "backup withholding" provisions of United
States federal income tax law, the Depositary may be required to withhold 31% of
the amount of any payments pursuant to the Offer. In order to avoid backup
withholding of United States federal income tax on payments of the Offer Price
pursuant to the Offer, a stockholder surrendering Shares in the Offer must,
unless an exemption applies and is proven in a manner satisfactory to the
Depositary, provide the Depositary with such stockholder's correct taxpayer
identifying number ("TIN") on a Substitute Form W-9 and certify under penalty of
perjury that such TIN is correct and that such stockholder is not subject to
backup withholding. Certain stockholders (including, among others, all
corporations and certain foreign individuals and entities) are not subject to
backup withholding. If a stockholder does not provide its correct TIN or fails
to provide the certifications described above, the Internal Revenue Service may
impose a penalty on such stockholder and payment of the Offer Price to such
stockholder pursuant to the Offer may be subject to backup withholding. All
stockholders surrendering Shares pursuant to the Offer should complete and sign
the main signature form and the Substitute Form W-9 included as part of the
Letter of Transmittal to provide the information and certification necessary to
avoid backup withholding (unless an applicable exemption exists and is proven in
a manner satisfactory to the Depositary). Noncorporate foreign stockholders
should complete and sign the main signature form and a Form W-8, Certificate of
Foreign Status, a copy of which may be obtained from the Depositary, in order to
avoid backup withholding. See Instruction 10 to the Letter of Transmittal.
4. WITHDRAWAL RIGHTS.
Except as otherwise provided in this Section 4, or as provided by applicable
law, tenders of Shares are irrevocable. Shares tendered pursuant to the Offer
may be withdrawn pursuant to the procedures set forth below at any time prior to
the Expiration Date and, unless theretofore accepted for payment and paid for by
Merger Subsidiary pursuant to the Offer, may also be withdrawn at any time after
September 14, 2000.
For a withdrawal 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, "Procedures for Tendering
12
Shares," 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 tendered Shares may not be rescinded, and any Shares
withdrawn will thereafter be deemed not validly tendered for purposes of the
Offer. However, withdrawn Shares may be re-tendered at any time prior to the
Expiration Date, or during the Subsequent Offering Period, by again following
one of the procedures described in Section 3, "Procedures for Tendering Shares."
All questions as to the validity, form and eligibility (including time of
receipt) of notices of withdrawal will be determined by Merger Subsidiary, in
its sole discretion, which determination will be final and binding. None of
Merger Subsidiary, Parent, the Depositary, the Information Agent or any other
person will be under any duty to give notification of any defects or
irregularities in any notice of withdrawal or incur any liability for failure to
give any such notification.
No withdrawal rights will apply to Shares tendered during 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.
See Section 1, "Terms of the Offer."
5. CERTAIN UNITED STATES FEDERAL INCOME TAX CONSEQUENCES.
The following discussion is a summary of certain material United States
federal income tax consequences of the Offer and the Merger to holders of Shares
whose Shares are tendered and accepted for payment pursuant to the Offer or
whose Shares are converted into the right to receive cash in the Merger. The
discussion is for general information only and does not purport to consider all
aspects of United States federal income taxation that might be relevant to
holders of Shares. The discussion is limited to holders of Shares who hold the
Shares "as capital assets" within the meaning of Section 1221 of the Internal
Revenue Code of 1986, as amended (the "Code"), which generally includes property
held for investment. The discussion set forth below does not apply to certain
categories of holders of Shares subject to special treatment under the Code,
such as foreign holders and holders who acquired such Shares pursuant to the
exercise of employee stock options or otherwise as compensation. This summary is
based upon laws, regulations, rulings and interpretations currently in effect,
all of which are subject to change, retroactively or prospectively.
The receipt of cash for Shares pursuant to the Offer or the Merger will be a
taxable transaction for United States federal income tax purposes and may also
be a taxable transaction under applicable state, local and foreign income and
other tax laws. In general, a holder who sells Shares pursuant to the Offer, or
who receives cash in exchange for Shares pursuant to the Merger, will recognize
gain or loss for United States federal income tax purposes equal to the
difference, if any, between the amount of cash received and the holder's
adjusted tax basis in the Shares sold pursuant to the Offer or surrendered for
cash pursuant to the Merger.
The gain or loss recognized by a holder of Shares pursuant to the Offer or
the Merger will be capital gain or loss and if, as of the date of the tender
pursuant to the Offer or surrender for cash pursuant to the Merger, as the case
may be, the holder has held the Shares tendered or surrendered for more than one
year, such capital gain or loss will be long-term. The amount of any gain or
loss recognized and its character as short-term or long-term will be calculated
and determined separately for each identifiable block of Shares tendered
pursuant to the Offer or surrendered for cash pursuant to the Merger. In
general, capital gains recognized by an individual upon a disposition of a Share
that has been held for more than one year will be subject to a maximum United
States federal income tax rate of 20% or, in the case of a Share that has been
held for one year or less, will be subject to tax at ordinary income rates.
Certain limitations apply to the tax treatment of a stockholder's capital
losses.
Unless a stockholder complies with certain reporting and/or certification
procedures or is an exempt recipient under applicable provisions of the Code and
Treasury regulations promulgated thereunder, such stockholder may be subject to
a withholding tax of 31% with respect to any cash payments received pursuant to
the Offer and the Merger. See the discussion regarding backup withholding in
Section 3, "Procedures for Tendering Shares." Foreign stockholders should
consult with their own tax advisors regarding withholding taxes in general.
13
BECAUSE INDIVIDUAL CIRCUMSTANCES MAY DIFFER, EACH STOCKHOLDER IS URGED TO
CONSULT HIS, HER OR ITS OWN TAX ADVISOR TO DETERMINE THE SPECIFIC TAX
CONSEQUENCES OF THE OFFER AND THE MERGER, INCLUDING ANY FEDERAL, STATE, LOCAL,
FOREIGN OR OTHER TAX CONSEQUENCES (INCLUDING ANY TAX RETURN FILING OR OTHER TAX
REPORTING REQUIREMENTS) OF THE OFFER AND THE MERGER.
6. PRICE RANGE OF THE SHARES; DIVIDENDS.
The Shares are traded over the counter under the symbol "CANR." The
following table sets forth, for each of the fiscal quarters indicated, the high
and low sales price per Share. Share prices are as reported over the counter
based on published financial sources.
HIGH LOW
----------- -----------
Fiscal Year Ended March 31, 1998
First Quarter............................................. $2 3/4 $1 3/8
Second Quarter............................................ 2 3/4 1 3/8
Third Quarter............................................. 3 7/8 1 3/4
Fourth Quarter............................................ 2 3/4 1 7/8
Fiscal Year Ended March 31, 1999
First Quarter............................................. $3 3/4 $2 1/2
Second Quarter............................................ 3 1/4 1 3/4
Third Quarter............................................. 3 1/2 1 1/2
Fourth Quarter............................................ 2 1/4 1 1/2
Fiscal Year Ended March 31, 2000
First Quarter............................................. $3 1/2 $3 1/2
Second Quarter............................................ 3 1/2 1
Third Quarter............................................. 1 7/16 11/16
Fourth Quarter............................................ 1 65/128
Fiscal Year Ended March 31, 2001
First Quarter............................................. $ 122/128 $ 50/128
On June 27, 2000, the last full trading day prior to the public announcement
of the execution of the Merger Agreement by the Company, Parent and Merger
Subsidiary, the last reported closing sales price of the Shares in the over the
counter market was $0.65 per Share. On July 13, 2000, the last reported closing
sales price of the Shares in the over the counter market was $0.80 per Share.
STOCKHOLDERS ARE URGED TO OBTAIN A CURRENT MARKET QUOTATION FOR THE SHARES.
The Company has not paid any cash dividends on its Shares during either of
its two most recent fiscal years. Under the terms of the Merger Agreement, the
Company is not permitted to declare or pay dividends with respect to the Shares
without the prior written consent of Parent and Parent does not intend to
consent to any such declaration or payment.
7. CERTAIN EFFECTS OF THE OFFER.
MARKET FOR THE SHARES. The purchase of Shares by Merger Subsidiary pursuant
to the Offer will reduce the number of Shares that might otherwise trade
publicly, could reduce the number of holders of Shares 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.
EXCHANGE ACT REGISTRATION. The Shares are currently registered under the
Exchange Act. Registration of the Shares under the Exchange Act may be
terminated upon application of the Company to the SEC if the Shares are neither
listed on a national securities exchange nor held by 300 or more holders of
record. 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 to the SEC and would make certain provisions of the
Exchange Act no longer applicable to the Company, such as the short-swing profit
recovery provisions of Section 16(b), the requirement of furnishing a proxy
statement pursuant to Section 14(a) in connection with stockholders' meetings
and the related requirement of furnishing an annual report to stockholders and
the requirements of Rule 13e-3 under the Exchange Act with respect to "going
private" transactions. Furthermore, the ability of "affiliates" of the Company
and persons
14
holding "restricted securities" of the Company to dispose of such securities
pursuant to Rule 144 or Rule 144A promulgated under the Securities Act of 1933,
as amended, may be impaired or eliminated.
Merger Subsidiary currently intends to seek termination of the registration
of the Shares under the Exchange Act as soon after the completion of the Offer
as the requirements for such termination are met. If the Exchange Act
registration of the Shares are not terminated prior to the Merger, then the
registration of the Shares under the Exchange Act will be terminated following
the consummation of the Merger.
8. CERTAIN INFORMATION CONCERNING THE COMPANY.
The information concerning the Company contained in this Offer to Purchase,
including financial information, has been furnished by the Company or has been
taken from or based upon publicly available documents and records on file with
the SEC and other public sources. Although neither Merger Subsidiary nor Parent
has any knowledge that would indicate that any statements contained herein based
upon such reports and documents are untrue, none of Parent, Merger Subsidiary,
the Depositary or the Information Agent assumes any responsibility for the
accuracy or completeness of the information concerning the Company contained in
such documents and records or for any failure by the Company to disclose events
which may have occurred or may affect the significance or accuracy of any such
information but which are unknown to Parent, Merger Subsidiary, the Depositary
or the Information Agent.
The Company was founded in 1996 as the successor by merger of Nuclear
Support Services, Inc. ("NSSI"), which was founded in 1973, and NSS of
Delaware, Inc. Shareholder approval for the merger of NSSI and NSS of Delaware
into Canisco Resources, Inc. was granted at a special meeting of shareholders
held March 29, 1996. This merger was also effected pursuant to the Company's
Amended Joint Plan of Reorganization which was confirmed by the United States
Bankruptcy Court for the Middle District of Pennsylvania, Harrisburg on
April 24, 1996.
The Company provides versatile services supporting operations and facility
maintenance for the power generation, pulp and paper and petrochemical markets
as well as general industry. The principal offices of the Company are located at
000 Xxxxxxxx Xxxxxx 00000. The telephone number of the Company is
(000) 000-0000. As of June 26, 2000, there were 2,536,565 Shares issued and
outstanding.
On January 31, 1996, the Company filed a Joint Plan of Reorganization. An
Amended Joint Plan of Reorganization (the "Amended Plan") was filed and
confirmed by the Court on April 24, 1996. On June 28, 1996, the Company met all
the requirements of the Amended Plan by executing the necessary banking
documents for securing exit financing. The Company's exited from bankruptcy on
July 1, 1996.
On March 24, 1998, the court administratively closed the bankruptcy
proceedings pending the resolution of two contested matters. These matters have
subsequently been resolved.
In January 2000, substantially all the assets of IceSolv, Inc., a wholly
owned subsidiary, were sold to Radiological Services, Inc.
AVAILABLE INFORMATION. The Company is subject to the information and
reporting requirements of the Exchange Act and, in accordance therewith, is
required to file reports and other information with the SEC relating to its
business, financial condition and other matters. Information, as of particular
dates, concerning the Company's directors and officers, their remuneration,
stock options granted to them, the principal holders of the Company's securities
and any material interests of such persons in transactions with the Company is
required to be disclosed in proxy statements distributed to the Company's
stockholders and filed with the SEC. These reports, proxy statements and other
information should be available for inspection at the public reference
facilities of the SEC at 000 Xxxxx Xxxxxx, X.X., Xxxxxxxxxx, X.X. 00000, and at
the regional offices of the SEC located at Seven World Trade Center, Suite 1300,
New York, New York 10048 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. Copies of
these materials should be obtainable by mail, upon payment of the SEC's
customary fees, by writing to the SEC's principal office at 000 Xxxxx Xxxxxx,
X.X., Xxxxxxxxxx, X.X. 00000. The SEC also maintains a website on the Internet
at xxxx://xxx.xxx.xxx that contains reports, proxy statements and other
information relating to the Company.
9. CERTAIN INFORMATION CONCERNING PARENT AND MERGER SUBSIDIARY.
Parent, a Delaware corporation, is a provider of industrial services,
particularly industrial cleaning and coating services, to over 700 customers in
a broad range of industries, including steel, utility, general contracting, pulp
and paper, petrochemical and other heavy manufacturing. Parent's services, which
require the use of company-owned
15
equipment and specially trained personnel, are typically provided at the
customer's facilities during plant operations, regularly scheduled plant outages
and emergency situations. Parent currently has 25 offices located in the South,
Midwest and West.
Merger Subsidiary is a newly incorporated Delaware corporation organized in
connection with the Offer and the Merger and has not carried on any significant
activities other than in connection with the Offer and the Merger. All of the
outstanding capital stock of Merger Subsidiary is owned directly by Canisco
Holding, Inc., a Delaware corporation ("Canisco Holding"). Until immediately
prior to the time Merger Subsidiary purchases Shares pursuant to the Offer, it
is not anticipated that Merger Subsidiary will have any significant assets or
liabilities or engage in any significant activities other than those incident to
its formation and capitalization and the transactions contemplated by the Offer
and the Merger.
Canisco Holding is a newly incorporated Delaware corporation organized in
connection with the Offer and the Merger and has not carried on any significant
activities other than in connection with the Offer and the Merger. All of the
outstanding capital stock of Merger Subsidiary is owned directly by Parent.
Until immediately prior to the time Merger Subsidiary purchases Shares pursuant
to the Offer, it is not anticipated that Canisco Holding will have any
significant assets or liabilities or engage in any significant activities other
than those incident to its formation and capitalization and the transactions
contemplated by the Offer and the Merger.
The principal offices of Parent and Merger Subsidiary are located at 000
Xxxxx Xxxxxxx, Xxxxx 000, Xxxxxxx, Xxxxxxxx 00000. The telephone number of
Parent and Merger Subsidiary is (000) 000-0000. For any information concerning
this Offer, please call the Information Agent, Xxxxxx, toll-free
(000) 000-0000.
The name, citizenship, business address, principal occupation or employment
and five-year employment history for each of the directors and the executive
officers of Xxxxxx, Merger Subsidiary, and Canisco Holding are set forth on
Schedule I hereto.
Except as set forth in this Offer to Purchase, none of Parent, Canisco
Holding, Merger Subsidiary nor, to the best knowledge of Parent, Canisco Holding
and Merger Subsidiary, any of the persons listed on Schedule I hereto or any
associate or majority owned subsidiary of such persons beneficially owns or has
any right to acquire, directly or indirectly, any Shares, and none of Parent,
Canisco Holding, Merger Subsidiary nor, to the best knowledge of Parent and
Merger Subsidiary, any of the other persons or entities referred to above, nor
any of the respective directors, executive officers or subsidiaries of any of
the foregoing, has effected any transaction in the Shares during the past sixty
(60) days.
Except as set forth in this Offer to Purchase, neither Parent nor Merger
Subsidiary nor, to the best knowledge of Parent, Canisco Holding and Merger
Subsidiary, any of the persons listed on Schedule I hereto has any contract,
arrangement, understanding or relationship with any other person with respect to
any securities of the Company, including, but not limited to, any contract,
arrangement, understanding or relationship concerning the transfer or the voting
of any securities of the Company, finder's fees, joint ventures, loan or option
arrangements, puts or calls, guarantees of loans, guarantees against loss,
guarantees of profits, divisions of profits or loss or the giving or withholding
of proxies.
Except as set forth in this Offer to Purchase, neither Parent, Canisco
Holding nor Merger Subsidiary nor, to the best knowledge of Parent, Canisco
Holding and Merger Subsidiary, any of the persons listed on Schedule I hereto
has had any business relationships or transactions 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, since June 1, 1998, there have been no
contacts, negotiations or transactions between Parent, Canisco Holding or Merger
Subsidiary, their respective subsidiaries, or, to the best knowledge of Parent,
Canisco Holding and Merger Subsidiary, any of the persons listed on Schedule I
hereto, on the one hand, and the Company or its executive officers, directors or
affiliates, on the other hand, concerning a merger, consolidation or
acquisition, tender offer or other acquisition of securities, election of
directors or a sale or other transfer of a material amount of assets. See
Section 11, "Background of the Offer; Purpose of the Offer and the Merger; the
Merger Agreement and Certain Other Agreements."
Except as set forth above, during the past five years, neither Parent,
Canisco Holding nor Merger Subsidiary nor, to the best knowledge of Parent,
Canisco Holding and Merger Subsidiary, any of the persons listed on Schedule I
hereto has been convicted in a criminal proceeding (excluding traffic violations
or similar misdemeanors), nor has any of them, during the past five years, been
a party to any judicial or administrative proceeding (except for matters that
were dismissed without sanction or settlement) that resulted in a judgment,
decree or final order enjoining the person
16
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.
AVAILABLE INFORMATION. Neither Merger Subsidiary, Canisco Holding nor
Parent is subject to the informational reporting requirements of the Exchange
Act, nor are any of them required to file reports and other information with the
Commission relating to its business, financial condition or other matters.
Except as otherwise disclosed in this Offer to Purchase, neither of Merger
Subsidiary, Canisco Holding nor Parent has made, or is making, any provision in
connection with the Offer or the Merger to grant stockholders access to the
files of Merger Subsidiary, Canisco Holding or Parent.
10. SOURCE AND AMOUNT OF FUNDS.
The Offer is not conditioned upon any financing arrangements. The total
amount of funds required by Merger Subsidiary to purchase Shares pursuant to the
Offer and the Merger is estimated to be approximately $4 million. The total
transaction value, including equity and debt of the Company and anticipated
transaction fees and expenses, is approximately $21 million. Merger Subsidiary
will obtain all such funds from Parent. Parent will obtain funds to purchase
Shares pursuant to the Offer and the Merger from existing resources and
internally generated funds, including the issuance of commercial paper in the
ordinary course of business.
11. BACKGROUND OF THE OFFER; PURPOSE OF THE OFFER AND THE MERGER; THE MERGER
AGREEMENT AND CERTAIN OTHER AGREEMENTS.
CONTACTS WITH THE COMPANY; BACKGROUND OF THE OFFER.
Parent continually evaluates and considers other businesses of varying sizes
as potential strategic partners and candidates for acquisition. In the fall of
1999, the Company was approached by Parent to determine whether the Company had
any interest in a strategic transaction involving the Company. This offer was
rejected by the Company.
On May 24, 2000, Xxxxxxx Xxxxxxx, the Chief Executive Officer and a director
of Parent, was approached by Xxxxx Xxxxxxxxx, the Chief Executive Officer and a
director of the Company, to discuss a potential sale of the Company to Parent.
On May 25, 2000, certain members of the senior management of Parent, including
the Chief Executive Officer, met with senior management of the Company.
On May 26, 2000, Xxxx Xxxxx, the Chief Financial Officer of the Company, met
with Xxxxxxx Xxxxxx, the Chief Financial Officer and a director of Parent, and
Xxxxxxx Xxxxxxx. At that meeting, Xx. Xxxxx presented the Company's current
financial statements.
On June 6, 2000, Xxxxx Xxxxxxxxx met with Xxxxxxx Xxxxxx, Xxxxx Xxxxxxx (a
director of Parent) and Xxxxxxx Xxxxxxx. He informed Parent that there were
other parties interested in a transaction with the Company and that they were
financial investors interested in an equity participation rather than strategic
investors.
On June 7, 2000, the senior management of the Company met with the senior
management of Parent to discuss the advantages of a strategic combination as
opposed to an equity investment and the terms and conditions of Parent's offer.
The Company's senior management agreed to make a presentation to the Company's
Board of Directors regarding the proposed merger at Parent's suggested price and
terms.
On June 9, 2000, a telephonic Company Board of Directors meeting was held at
which time a possible strategic acquisition by Parent was discussed. Following
that Board meeting, the Company and Parent executed the agreement for exchange
of confidential information.
On June 12, 2000, the senior management of both parties met with GMAC
Commercial Credit (formerly BNY Financial Corporation), the Company's
primary-financing institution, to advise them of the proposed transaction.
From June 13, 2000 through June 28, 2000, the parties, together with their
respective outside legal counsel, conducted negotiations with respect to the
terms of a proposed merger agreement.
On June 19 and 20, 2000, Xxxxxx's senior management, and their outside legal
counsel and auditors met in Wilmington, Delaware, to begin legal due diligence
and pursue further discussions regarding the terms of a possible transaction.
Also on June 20, 2000, the Company engaged Xxxxxxxxx to advise the Company
as to the fairness, from financial point of view, of the consideration to be
received by the stockholders of the Company with respect to the proposed
acquisition by Parent. Promptly thereafter, Xxxxxxxxx commenced a due diligence
review.
17
On June 21, 2000, Xxxxxx's senior management, and their outside legal
counsel had an all day meeting with the Company's senior management and their
outside legal counsel in Wilmington, Delaware, where the parties negotiated the
terms of a proposed merger agreement.
On June 26 and June 27, 2000, the Company's Board of Directors met in order
to consider the proposed acquisition by Parent. The Chief Executive Officer of
Parent made a presentation to the Board at that meeting. At the Company Board of
Directors meeting, Xxxxxxxxx delivered to the Company's Board of Directors its
oral opinion (later confirmed by delivery of a written opinion) to the effect
that, as of such date and based upon and subject to certain matters and
assumptions stated 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. At that meeting, the Company Board of Directors
unanimously (with one director absent) determined that the terms of the Voting
Agreement and Merger Agreement, including the Offer and the Merger, are
advisable and in the best interests of the Company and its stockholders, and
fair and equitable to the Company's stockholders, unanimously (with one director
absent) approved and adopted the Merger Agreement, the Voting Agreement, and the
transactions contemplated thereby, including the Offer and the Merger, and
unanimously (with one director absent) recommended that stockholders of the
Company accept the Offer and tender their Shares pursuant to the Offer.
By unanimous written consent on June 28, 2000, Parent Operating Board
unanimously approved and adopted the Merger Agreement and the transactions
contemplated thereby, including the Offer, the Merger and the Voting Agreement.
In addition, by unanimous written consent by Xxxxxx Xxxxxxxxxx's Board of
Directors on June 28, 2000, Xxxxxx Xxxxxxxxxx's Board of Directors unanimously
approved and adopted the Merger Agreement and transactions contemplated thereby,
including the Offer, the Merger and the Voting Agreement.
Following the approval of Parent Operating Board, Merger Subsidiary's Board
of Directors, and the Company Board of Directors, on June 28, 2000, Parent,
Merger Subsidiary and the Company executed and delivered the Merger Agreement
and, on June 28, 2000, issued a press release announcing the execution of the
Merger Agreement and the transactions contemplated thereby.
On July 10, the parties to the Merger Agreement amended the terms thereof to
provide that the Offer be commenced no later than July 17, 2000.
On July 17, 2000, pursuant to the terms of the Merger Agreement, Merger
Subsidiary and Parent commenced the Offer.
PURPOSE OF THE OFFER AND THE MERGER.
The purpose of the Offer and the Merger is to enable Parent to acquire
control of, and the entire equity interest in, the Company. Upon consummation of
the Merger, the Company will become an indirect wholly owned subsidiary of
Parent. The Offer is being made pursuant to the Merger Agreement and is intended
to increase the likelihood that the Merger will be effected.
Stockholders of the Company who 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. See Section 12, "Plans for the Company; Other Matters." 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.
The primary benefits of the Offer and the Merger to the stockholders of the
Company are that such stockholders are being afforded an opportunity to sell all
of their Shares for cash at a price which represents a premium of approximately
54% over the closing sales price of the Shares on June 27, 2000, the last full
trading day prior to the initial public announcement that the Company, Merger
Subsidiary and Parent had executed the Merger Agreement.
This price implies a multiple of 6.5 times the Company's earnings before
interest, taxes, depreciation and amortization of approximately $3.2 million for
the 12 months ended March 31, 2000. The transaction value, including equity and
debt of the Company and anticipated transaction fees and expenses, is
approximately $21 million.
18
MERGER AGREEMENT
The following is a summary of the material provisions of the Merger
Agreement, a copy of which is filed as an exhibit to the Tender Offer Statement
on Schedule TO filed by Parent and Merger Subsidiary with the SEC in connection
with the Offer (the "Schedule TO"). This summary is qualified in its entirety by
reference to the Merger Agreement, which is deemed to be incorporated herein.
The following summary may not contain all of the information that is important
to you. The Merger Agreement may be examined and copies may be obtained from the
SEC in the manner set forth in Section 9, "Certain Information Concerning Parent
and Merger Subsidiary." Capitalized terms used herein and not otherwise defined
shall have the meanings set forth in the Merger Agreement.
THE OFFER. The Merger Agreement provides that Merger Subsidiary will
commence the Offer and that, upon the terms and subject to the satisfaction or
waiver of the conditions of the Offer, Merger Subsidiary will purchase all
Shares validly tendered pursuant to the Offer. The obligation of Merger
Subsidiary to accept for payment and pay for any Shares validly tendered prior
to the expiration of the Offer is conditioned upon satisfaction of the Minimum
Condition and the satisfaction or waiver of the conditions described in Annex A
to the Merger Agreement. The Merger Agreement provides that Merger Subsidiary
may not amend or waive the Minimum Condition, or decrease the Offer Price,
change the form of consideration payable in the Offer, decrease the number of
Shares sought in the Offer, add to or change conditions to the Offer or make any
other change in the terms or conditions of the Offer without the prior written
consent of the Company. Notwithstanding the foregoing provisions, if on the
scheduled expiration of the Offer (as it may be extended), all conditions to the
Offer have not been satisfied or waived, the Offer may be extended from time to
time, unless any applicable waiting period under the HSR Act has not expired or
been terminated, in which case the Offer will be extended from time to time
until the earlier of the consummation of the Offer or August 28, 2000. If an
insufficient number of Shares are tendered pursuant to this Offer prior to the
Expiration Date and the Merger Agreement is terminated as a consequence of the
failure to satisfy the Minimum Condition, the Company has agreed to pay Parent a
termination fee of $1,000,000.
STOCK OPTION AGREEMENT. The Merger Agreement provides that, if following a
Subsequent Offering Period, if any, Merger Subsidiary has acquired Shares
purchased in the Offer and such Shares represent less than 90% of the Shares
outstanding on a fully diluted basis, Parent, Merger Subsidiary and the Company
will enter into a stock option agreement, on customary terms, pursuant to which
the Company will grant to Merger Subsidiary an option to purchase that number of
Shares equal to the number of Shares that, when added to the number of Shares
owned by Xxxxxx Xxxxxxxxxx and its affiliates immediately following expiration
of the Subsequent Offering Period, results in Merger Subsidiary's beneficially
owning 90% of the Shares then outstanding on a fully diluted basis.
DESIGNATION OF DIRECTORS. The Merger Agreement provides that, promptly upon
the purchase of and payment for Shares by Parent or any of its subsidiaries
which represents at least a majority of the outstanding Shares (on a fully
diluted basis), Parent will be entitled to designate such number of directors,
rounded up to the next whole number, on the Company Board of Directors as is
equal to the product of the total number of directors on such board (giving
effect to the directors designated by Parent pursuant to this sentence)
multiplied by the percentage that the aggregate number of Shares beneficially
owned by Xxxxxx and Merger Subsidiary bears to the total number of Shares then
outstanding. The Company will, upon request of Parent, use its reasonable best
efforts promptly either to increase the size of the Company Board of Directors
or to secure the resignations of incumbent directors, or both, and use its
reasonable best efforts to cause Xxxxxx's designees to be so elected or
appointed to the Company Board of Directors. The Company's obligation to elect
or appoint Xxxxxx's designees to the Company Board of Directors is subject to
compliance with Section 14(f) of the Exchange Act and Rule 14f-1 promulgated
thereunder. The Merger Agreement further provides that in the event that
Xxxxxx's designees are elected to the Company Board of Directors, until the
Effective Time, the Company will cause the Company Board of Directors to have at
least three directors who were directors on June 28, 2000 (the "Independent
Directors"), provided that if any Independent Directors cannot serve due to
death or disability, the remaining Independent Directors (or Independent
Director, if there is only one remaining) are entitled to designate another
person or persons who served as a director on June 28, 2000, to fill such
vacancies or, if no Independent Director then remains, the other directors will
designate three persons who were directors on June 28, 2000, to fill such
vacancies. Once Parent's designees constitute a majority of the Company Board of
Directors, the affirmative vote of a majority of the Independent Directors is
required to (1) amend or terminate the Merger Agreement by the Company,
(2) exercise or waive any of the Company's rights, benefits or remedies under
the Merger Agreement, (3) amend the Certificate of Incorporation or By-laws of
the Company, or (4) take any other action of the Company Board of Directors
under or in connection with the Merger Agreement; provided, that if there are no
Independent Directors as a result of such persons' deaths, disabilities or
refusal to serve, such actions may be effected by majority vote of the entire
Company Board of Directors.
19
THE MERGER. The Merger Agreement provides that, subject to the terms and
conditions thereof, Merger Subsidiary will be merged with and into the Company,
with the Company continuing as the Surviving Corporation and an indirect wholly
owned subsidiary of Parent. At the Effective Time, each issued and outstanding
Share (other than Shares owned by Parent, Merger Subsidiary or any other wholly
owned subsidiary of Parent, Shares owned by the Company as treasury stock and
Shares held by holders who perfect any available dissenters rights under the
DGCL) will be converted into the right to receive the Offer Price, without
interest thereon, and each issued and outstanding share of common stock of
Merger Subsidiary will be converted into and become one fully paid and
nonassessable share of common stock of the Surviving Corporation.
TREATMENT OF OPTIONS. The Merger Agreement provides that Parent and the
Company shall take all actions necessary to provide that, as of the Effective
Time, (i) each outstanding stock option, stock equivalent right or right to
acquire Shares (an "Option") granted by the Company pursuant to any written or
oral plan or agreement whether or not then exercisable or vested, shall be
cancelled and (ii) in consideration of such cancellation, Parent shall, or shall
cause the Surviving Corporation to, pay to such holders of Options, whether or
not then exercisable or vested, an amount in respect thereof equal to the
product of (A) the excess, if any, of the Offer Price over the exercise price of
each such Option and (B) the number of Shares subject thereto (such payment, if
any, to be net of applicable withholding and excise taxes). As of the Effective
Time, the Options and the related plans and agreements shall terminate and all
rights under any provision of any other plan, program or arrangement providing
for the issuance or grant of any other interest in respect of the capital stock
of the Company or any of its subsidiaries shall be cancelled. The Company shall
take all action necessary to ensure that, after the Effective Time, no person
shall have any right under such plan or agreements or any other plan, program or
arrangement with respect to equity securities of the Surviving Corporation or
any subsidiary thereof.
CONDITIONS. The respective obligations of each party to effect the Merger
are subject to the satisfaction on or prior to the closing of the Merger, of
each of the following conditions: (1) the Merger Agreement and the Merger have
been approved and adopted by the stockholders of the Company if required by and
in accordance with the DGCL; (2) no statute, rule, order, decree, regulation,
executive order, ruling or temporary or permanent injunction has been enacted,
entered promulgated or enforced by any federal, state, local or foreign
governmental entity ("Governmental Entity") of competent jurisdiction which
prohibits the consummation of the Merger or otherwise limits or restricts
ownership or operation of the business of the Surviving Corporation and all
foreign or domestic governmental consents, orders and approvals, including but
not limited to approval under the HSR Act, required for the consummation of the
Merger have been obtained and are in effect at the Effective Time and shall not
limit or restrict ownership or the operating of the business of the Surviving
Corporation; and (3) Merger Subsidiary or its affiliates have purchased Shares
pursuant to the Offer.
STOCKHOLDERS' MEETING. Pursuant to the Merger Agreement, the Company will,
if required by applicable law in order to consummate the Merger, (1) duly call,
give notice of, convene and hold a special meeting of its stockholders as soon
as reasonably practicable following the acceptance for payment and purchase of
Shares by Merger Subsidiary pursuant to the Offer for the purpose of considering
and taking action upon the Merger Agreement; (2) prepare and file with the SEC a
preliminary proxy or information statement relating to the Merger and the Merger
Agreement and will use its reasonable best efforts to cause a definitive proxy
statement to be mailed to its stockholders; (3) subject to the applicable
provisions of the Merger Agreement, include in the proxy statement the
recommendation of the Company Board of Directors that stockholders of the
Company vote in favor of the approval of the Merger and the adoption of the
Merger Agreement; and (4) use its reasonable best efforts to solicit from
holders of Shares proxies in favor of the Merger and take all other action
reasonably necessary or advisable to secure the stockholder approval required by
the DGCL to effect the Merger. In the event that Parent, Merger Subsidiary or
any other subsidiary of Parent acquires at least 90% of the outstanding Shares,
pursuant to the Offer or otherwise, the parties will take all necessary and
appropriate action to cause the Merger to become effective as soon as
practicable after such acquisition, without a meeting of the Company's
stockholders, in accordance with the DGCL.
REPRESENTATIONS AND WARRANTIES. The Merger Agreement contains various
representations and warranties of the parties thereto, including representations
by the Company as to, among other things (1) organization, good standing and
subsidiaries, (2) capitalization, (3) governmental authorization,
non-contravention, validity of the Merger Agreement and all required Company
action taken with respect to the Offer and the Merger, (4) vote required to
approve the Merger, (5) consents or approvals, (6) no material misstatements in
filings made with the SEC or financial statements, (7) absence of material
adverse changes, (8) undisclosed liabilities, (9) no misstatements or omissions
of a material fact in the Schedule 14D-9, proxy statement or other filings with
the SEC with respect to the Offer and the Merger, (10) employee benefit plans
and ERISA, (11) litigation, (12) compliance with environmental
20
laws and regulations, (13) tax returns and tax liabilities, (14) labor
relations, (15) compliance with all laws, (16) insurance, (17) material
contracts, (18) title to properties, (19) all necessary permits and licenses,
(20) intellectual property, (21) receipt of fairness opinion from financial
advisor, (22) full disclosure, (23) health and safety matters, (24) no finder's
or advisor's fees, and (25) takeover statutes and charter provisions. In
addition, the Merger Agreement contains representations by Xxxxxx and Xxxxxx
Xxxxxxxxxx as to, among other things, (1) organization and good standing,
(2) authorization, non-contravention, validity of the Merger Agreement and all
required Parent and Merger Subsidiary action taken with respect to the Offer and
the Merger, (3) consents or approvals, and (4) no finder's or advisor's fees.
INTERIM OPERATIONS. Pursuant to the Merger Agreement, the Company has
agreed that after the date of the Merger Agreement and prior to the Effective
Time, unless Parent otherwise agrees in writing or except as otherwise
contemplated by the Merger Agreement:
(a) the Company will not, and will not permit any of its subsidiaries
to, adopt or propose any change in its certificate of incorporation or
by-laws;
(b) the Company will not, and will not permit any subsidiary of the
Company to, adopt a plan or agreement of complete or partial liquidation,
dissolution, merger, consolidation, restructuring, recapitalization or other
reorganization of the Company or any of its subsidiaries (other than
transactions between direct and/or indirect wholly owned subsidiaries of the
Company);
(c) the Company will not, and will not permit any subsidiary of the
Company to, issue, sell, transfer, pledge, dispose of or encumber any shares
of, or securities convertible into or exchangeable for, or options,
warrants, calls, commitments or rights of any kind to acquire, any shares of
capital stock of any class or series of the Company or any of its
subsidiaries other than issuances of Company Common Stock pursuant to the
exercise of options that are outstanding on the date of the Merger
Agreement;
(d) the Company will not (i) split, combine, subdivide or reclassify its
outstanding shares of capital stock, or (ii) declare, set aside or pay any
dividend or other distribution payable in cash, stock or property with
respect to its capital stock;
(e) the Company will not, and will not permit any subsidiary of the
Company to, redeem, purchase or otherwise acquire directly or indirectly any
of the Company's or its subsidiaries' capital stock;
(f) the Company will not amend the terms (including the terms relating
to accelerating the vesting or lapse of repurchase rights or obligations) of
any options or other stock based awards;
(g) the Company will not, and will not permit any subsidiary of the
Company to, (i) grant any severance or termination pay to (or amend any such
existing arrangement with) any director, officer or employee of the Company
or any of its subsidiaries, (ii) enter into any employment, deferred
compensation or other similar agreement (or any amendment to any such
existing agreement) with any director, officer or employee of the Company or
any of its subsidiaries, (iii) increase any benefits payable under any
existing severance or termination pay policies or employment agreements,
(iv) increase, other than customary periodic increases in the ordinary
course of business, (or amend the terms of) any compensation, bonus or other
benefits payable to directors, officers or employees of the Company or any
of its subsidiaries or (v) permit any director, officer or employee who is
not already a party to an agreement or a participant in a plan providing
benefits upon or following a "change in control" to become a party to any
such agreement or a participant in any such plan;
(h) the Company will not, and will not permit any of its subsidiaries
to, acquire a material amount of assets or property of any other person;
(i) the Company will not, and will not permit any of its subsidiaries
to, sell, lease, license or otherwise dispose of any material amount of
assets or property except pursuant to existing contracts or commitments or
otherwise in the ordinary course of business;
(j) except for any such change which is required by reason of a
concurrent change in GAAP, the Company will not, and will not permit any
subsidiary of the Company to, change any method of accounting or accounting
practice used by it;
(k) the Company will not, and will not permit any subsidiary of the
Company to, enter into any joint venture, partnership or other similar
arrangement;
21
(l) the Company will not, and will not permit any of its subsidiaries
to, take any action that would make any representation or warranty of the
Company under the Merger Agreement inaccurate in any material respect;
(m) the Company will not make or change any tax election, settle any
audit or file any amended tax returns, except in the ordinary course of
business consistent with past practice; and
(n) the Company will not, and will not permit any of its subsidiaries
to, agree or commit to do any of the foregoing.
NO SOLICITATION. From the date of the Merger Agreement until the
termination of the Merger Agreement in accordance with its terms, neither the
Company nor any of its subsidiaries or affiliates shall (and the Company shall
use its reasonable best efforts to cause its and each of its subsidiaries'
officers, directors, employees, representatives and agents, including, but not
limited to, investment bankers, attorneys and accountants, not to), directly or
indirectly, solicit, participate in, initiate or knowingly encourage discussions
or negotiations with, provide any information to, or enter into any agreement
with, any corporation, partnership, person or other entity or group (other than
Parent or any of its affiliates or representatives) concerning any merger,
business combination, tender offer, exchange offer, sale of all or substantially
all of its business, assets, capital stock or debt securities or any significant
equity or debt investment in the Company or any similar transactions involving
the Company (an "Acquisition Proposal"). The Company further agrees that it will
immediately cease any existing activities, discussions or negotiations with any
parties conducted heretofore with respect to any of the foregoing.
Notwithstanding the foregoing, prior to the time of acceptance of Shares for
payment pursuant to the Offer, the Company may, directly or indirectly, provide
access and furnish information concerning its business, properties or assets to
any corporation, partnership, person or other entity or group pursuant to
customary confidentiality agreements, and may negotiate and participate in
discussions and negotiations with such entity or group if (x) such entity or
group has submitted an unsolicited bona fide written proposal to the Board of
Directors of the Company relating to any such transaction, (y) such proposal
provides for the acquisition for cash or readily marketable securities of all of
the outstanding Shares or all or substantially all of the assets of the Company,
and (z) the Board of Directors of the Company determines in good faith, after
consultation with its independent financial advisor, that such proposal is
financially superior to the Offer and the Merger and fully financed or
reasonably capable of being financed. A proposal meeting all of the criteria in
the preceding sentence is referred to herein as a "Superior Proposal." The
Company will immediately notify Parent of any Superior Proposal, or if an
inquiry is made, will keep Parent fully apprised of all developments with
respect to any Superior Proposal, will immediately provide to Parent copies of
any written materials received by the Company in connection with any Superior
Proposal, discussion, negotiation or inquiry and the identity of the party
making any Superior Proposal or inquiry or engaging in such discussion or
negotiation. The Company will promptly provide to Parent any non-public
information concerning the Company provided to any other party which was not
previously provided to Parent. Notwithstanding anything to the contrary
contained in the Merger Agreement, only in connection with the valid termination
of the Merger Agreement pursuant to paragraph (c)(i) under "Termination" below,
the Board of Directors of the Company may (i) withdraw, modify or change in a
manner adverse to Parent or Merger Subsidiary, or propose to withdraw, or
propose to modify or change in a manner adverse to Parent or the Merger
Subsidiary, the approval or recommendation by such Board of Directors of the
Offer, the Merger Agreement or the Merger, (ii) approve or recommend, or propose
to approve or recommend, any Acquisition Proposal or (iii) enter into any
agreement with respect to any Acquisition Proposal.
TERMINATION. The Merger Agreement provides that it may be terminated or
abandoned at any time prior to the Effective Time, whether before or after
stockholder approval thereof:
(a) By the mutual consent of the Operating Board of Parent and the Board
of Directors of the Company.
(b) By either of the Board of Directors of the Company or the Operating
Board of Parent:
(i) if shares of Company Common Stock shall not have been purchased
pursuant to the Offer on or prior to September 30, 2000; provided,
however, that the right to terminate the Merger Agreement under this
paragraph shall 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 Merger Subsidiary to purchase shares of
Company Common Stock pursuant to the Offer on or prior to such date; or
(ii) if any Governmental Entity shall have issued an order, decree or
ruling or taken any other action (which order, decree, ruling or other
action the parties shall use their reasonable efforts to lift), in each
case, permanently restraining, enjoining or otherwise prohibiting the
transactions contemplated by the Merger Agreement and such order, decree,
ruling or other action shall have become final and non-appealable.
22
(c) By the Board of Directors of the Company:
(i) if, prior to the purchase of shares of Company Common Stock
pursuant to the Offer, the Board of Directors of the Company shall have
withdrawn, or modified or changed in a manner adverse to Parent or Merger
Subsidiary, its approval or recommendation of the Offer, the Merger
Agreement, or the Merger in order to approve and permit the Company to
execute a definitive agreement providing for a Superior Proposal;
provided that (A) at least three business days prior to terminating the
Merger Agreement pursuant to this paragraph, the Company has provided
Parent with written notice advising Parent that the Board of Directors of
the Company has received a Superior Proposal that it intends to accept,
specifying the material terms and conditions of such Superior Proposal,
and identifying the person making such Superior Proposal and (B) the
Company shall have caused its financial and legal advisors to negotiate
in good faith with Parent to make such adjustments in the financial terms
of a revised Agreement that are equal or superior to the financial terms
of such Superior Proposal; and further provided that simultaneously with
any termination of the Merger Agreement pursuant to this paragraph, the
Company shall pay to Parent the Termination Fee (as defined below); and
further provided that the Company may not terminate the Merger Agreement
pursuant to this paragraph, if the Company is in material breach of the
Merger Agreement; or
(ii) if, prior to the purchase of shares of Company Common Stock
pursuant to the Offer, Parent or Merger Subsidiary breaches or fails in
any material respect to perform or comply with any of its material
covenants and agreements contained in the Merger Agreement or breaches
its representations and warranties in any material respect; or
(iii) if Parent or Merger Subsidiary, as the case may be, shall have
terminated the Offer, or the Offer shall have expired, without Parent or
Merger Subsidiary, as the case may be, purchasing any shares of Company
Common Stock pursuant thereto; provided that the Company may not
terminate the Merger Agreement pursuant to this paragraph, if the Company
is in material breach of the Merger Agreement.
(d) By the Operating Board of Parent:
(i) if, until July 19, 2000, during which period Parent shall conduct
its financial, operating, environmental, tax, accounting, business, and
legal due diligence review of the Company, Parent shall have discovered
any information which would result in a breach of any of the Company's
representations or warranties contained in the Merger Agreement; or
(ii) if, prior to the purchase of shares of Company Common Stock
pursuant to the Offer, the Board of Directors of the Company shall have
withdrawn, or modified or changed in a manner adverse to Parent or Merger
Subsidiary, its approval or recommendation of the Offer, the Merger
Agreement, or the Merger or shall have recommended an Acquisition
Proposal or offer, or shall have executed an agreement in principle (or
similar agreement) or definitive agreement providing for a tender offer
or exchange offer for any shares of capital stock of the Company, or a
merger, consolidation or other business combination with a person or
entity other than Parent, Merger Subsidiary or their affiliates (or the
Board of Directors of the Company resolves to do any of the foregoing);
provided that Parent may not terminate the Merger Agreement pursuant to
this paragraph, if Parent or Merger Subsidiary is in material breach of
the Merger Agreement; or
(iii) if Parent or Merger Subsidiary, as the case may be, shall have
terminated the Offer, or the Offer shall have expired, without Parent or
Merger Subsidiary, as the case may be, purchasing any shares of Company
Common Stock thereunder; provided that Parent may not terminate the
Merger Agreement pursuant to this paragraph, if it or Merger Subsidiary
is in material breach of the Merger Agreement.
EFFECT OF TERMINATION; TERMINATION FEE. In the event of the termination of
the Merger Agreement as provided in the "Termination" paragraph above, written
notice thereof shall forthwith be given to the other party or parties specifying
the provision hereof pursuant to which such termination is made, and the Merger
Agreement shall forthwith become null and void, except for certain provisions of
the Merger Agreement relating to fees and expenses which shall survive such
termination, and there shall be no liability on the part of Parent, Merger
Subsidiary or the Company except (a) for fraud or for breach of the Merger
Agreement, with damages to be limited to out-of-pocket costs and (b) as
otherwise set forth in the applicable provisions.
23
Set forth below are the circumstances under which a termination fee is
payable under the terms of the Merger Agreement. All references to paragraph
numbers refer to the section entitled "Termination" above.
If (w) the Board of Directors of the Company shall terminate the Merger
Agreement pursuant to paragraph (c)(i) above, (x) the Operating Board of Parent
shall terminate the Merger Agreement pursuant to paragraph (d)(ii) above, or
(y) (I) the Board of Directors of the Company shall terminate the Merger
Agreement pursuant to paragraph (b)(i) above or (c)(iii) and prior thereto there
shall have been publicly announced another Acquisition Proposal or (II) the
Operating Board of Parent shall terminate the Merger Agreement pursuant to
paragraph (b)(i) above or (d)(iii) above due to a failure to satisfy the Minimum
Condition or the conditions contained in paragraphs (h) or (i) of Section 14 of
this Offer to Purchase and Parent shall have reasonably determined that such
failure is attributable to there having been publicly announced another
Acquisition Proposal, then in any such case as described in clause (w), (x) or
(y), the Company shall not later than two business days after such termination
of the Merger Agreement or, in the case of any termination by the Company
pursuant to paragraph (c)(i) above, simultaneously with such termination pay to
Parent an amount in cash equal to the sum of (i) Parent's documented
out-of-pocket expenses, incurred in connection with the Merger Agreement and the
transactions contemplated hereby not to exceed $1,000,000; and (ii) $500,000
(together, the "Termination Fee").
In the event that the Merger Agreement is terminated pursuant to
paragraph (b)(i) above due to a failure to satisfy the Minimum Condition or the
Operating Board of Parent shall terminate the Merger Agreement pursuant to
paragraph (d)(iii) above due to a failure to satisfy the Minimum Condition, the
Company shall (not later than 2 business days after such termination of the
Merger Agreement) pay to Parent an amount equal to $1,000,000 in cash; provided,
however, that no payment shall be required pursuant to this paragraph if payment
is made by the Company to Parent pursuant to the paragraph above.
FEES AND EXPENSES. The Merger Agreement provides that, except as set forth
above, all costs and expenses incurred in connection with the Merger Agreement
and the consummation of the transactions contemplated thereby will be paid by
the party incurring such expenses.
AGREEMENT FOR EXCHANGE OF CONFIDENTIAL INFORMATION
The following is a summary of the material provisions of the Agreement for
Exchange of Confidential Information, a copy of which is filed as an exhibit to
the Schedule TO. The following summary may not contain all of the information
that is important to you. The Agreement for Exchange of Confidential Information
may be examined and copies may be obtained from the SEC in the manner set forth
in Section 9, "Certain Information Concerning Parent and Merger Subsidiary."
Pursuant to the terms of the Agreement for Exchange of Confidential
Information entered into on June 9, 2000, the Company agreed to provide Parent
with certain confidential information and Parent agreed to treat such
information as confidential and to use such information solely in connection
with a possible acquisition of the Company. Parent further agreed not to solicit
for employment or hire management or employees of the Company for a period of
one year.
12. PLANS FOR THE COMPANY; OTHER MATTERS.
PLANS FOR THE COMPANY. Parent is conducting a detailed review of the
Company and its assets, corporate structure, dividend policy, capitalization,
operations, properties, policies, management and personnel and will consider,
subject to the terms of the Merger Agreement, what, if any, changes would be
desirable in light of the circumstances existing upon completion of the Offer.
Such changes could include, among other things, changes in the Company's
business, corporate structure, capitalization, management or dividend policy.
Assuming the Minimum Condition is satisfied and Merger Subsidiary purchases
Shares pursuant to the Offer, Parent intends promptly to exercise its rights
under the Merger Agreement to obtain majority representation on, and control of,
the Company Board of Directors. See "Merger Agreement--Designation of Directors"
above. Parent will exercise such rights by causing the Company to elect to the
Company Board of Directors Messrs. Xxxxxxx Xxxxxxx, Xxxxxxx Xxxxxx, and Xxxxx
Xxxxxxx. Information with respect to such directors is contained in the
Information Statement attached as Xxxxx XX to the Schedule 14D-9. The Merger
Agreement provides that, upon the purchase of and payment for any Shares by
Parent or any of its subsidiaries pursuant to the Offer, Parent will be entitled
to designate such number of directors, rounded up to the next whole number, on
the Company Board of Directors such that the percentage of its designees on the
Company Board of Directors equals the percentage of the outstanding Shares
beneficially owned by Merger Subsidiary, Parent and any of their affiliates. See
Section 11, "Background of the
24
Offer; Purpose of the Offer and the Merger; the Merger Agreement and Certain
Other Agreements." The Merger Agreement provides that the directors of Xxxxxx
Xxxxxxxxxx and the officers of the Company, in each case immediately prior to
the Effective Time, will, from and after the Effective Time, be the initial
directors and officers, respectively, of the Surviving Corporation.
Except as disclosed in this Offer to Purchase, and except as may be effected
in connection with the integration of operations referred to above, neither
Parent nor Merger Subsidiary has any present plans or proposals that would
result in an extraordinary corporate transaction, such as a merger,
reorganization, liquidation, relocation of operations, or sale or transfer of a
material amount of assets, involving the Company or its subsidiaries, or any
material changes in the Company's capitalization, corporate structure, business
or composition of its management or the Company Board of Directors.
STOCKHOLDER APPROVAL. Under the DGCL, the approval of the Company Board of
Directors and the affirmative vote of the holders of a majority of the
outstanding Shares are required to adopt and approve the Merger Agreement and
the transactions contemplated thereby. The Company has represented in the Merger
Agreement that the execution and delivery of the Merger Agreement by the Company
and the consummation by the Company of the transactions contemplated by the
Merger Agreement have been duly authorized by all necessary corporate action on
the part of the Company, subject to the approval of the Merger by the Company's
stockholders in accordance with the DGCL. In addition, the Company has
represented that the affirmative vote of the holders of a majority of the
outstanding Shares is the only vote of the holders of any class or series of the
Company's capital stock which is necessary to approve the Merger Agreement and
the transactions contemplated thereby, including the Merger. Therefore, unless
the Merger is consummated pursuant to the short-form merger provisions under the
DGCL described below (in which case no further corporate action by the
stockholders of the Company will be required to complete the Merger), the only
remaining required corporate action of the Company will be the approval of the
Merger Agreement and the transactions contemplated thereby by the affirmative
vote of the holders of a majority of the Shares. The Merger Agreement provides
that Parent will vote, or cause to be voted, all of the Shares then owned by
Xxxxxx, Merger Subsidiary or any of Parent's other subsidiaries and affiliates
in favor of the approval of the Merger and the adoption of the Merger Agreement.
In the event that Parent, Merger Subsidiary and Xxxxxx's other subsidiaries and
affiliates acquire in the aggregate at least a majority of the Shares entitled
to vote on the approval of the Merger and the Merger Agreement (which would be
the case if the Minimum Condition is satisfied and Merger Subsidiary were to
accept for payment Shares tendered in the Offer), they would have the ability to
effect the Merger without the affirmative votes of any other stockholders.
SHORT-FORM MERGER. Section 253 of the DGCL provides that, if a corporation
owns at least 90% of the outstanding shares of each class of another
corporation, the corporation holding such stock may merge that corporation into
itself or itself into such corporation, without any action or vote on the part
of the board of directors or the stockholders of such other corporation (a
"short-form merger"). In the event that Parent, Merger Subsidiary and any other
subsidiaries of Parent acquire 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 could be effected without further approval of the Board of
Directors or stockholders of the Company, subject to compliance with the
provisions of Section 253 of the DGCL. The Merger Agreement provides that if,
following a Subsequent Offering Period (as hereinafter defined), if any, Merger
Subsidiary has acquired less than 90% of the Shares outstanding on a fully
diluted basis, then the Company, Merger Subsidiary and Parent will enter into a
stock option agreement, on customary terms, whereby the Company will grant to
Merger Subsidiary an option to purchase that number of Shares that, when added
to the Shares owned by Merger Subsidiary and its affiliates, results in Merger
Subsidiary owning 90% of the outstanding Shares on a fully diluted basis. In
addition, even if Parent and Merger Subsidiary do not own 90% of the outstanding
Shares following consummation of the Offer, Parent and Merger Subsidiary could
seek to purchase additional Shares in the open market or otherwise in order to
reach the 90% threshold and employ a short-form merger. The per Share
consideration paid for any Shares so acquired may be greater or less than the
Offer Price. Parent and Merger Subsidiary presently intend to effect a
short-form merger if permitted to do so under the DGCL, pursuant to which Merger
Subsidiary will be merged with and into the Company.
APPRAISAL RIGHTS. Holders of the Shares do not have appraisal rights in
connection with the Offer. However, if the Merger is consummated, holders of the
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
25
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.
13. DIVIDENDS AND DISTRIBUTIONS.
As described above, the Merger Agreement provides that from the date of the
Merger Agreement until the Effective Time, without the prior written consent of
Parent, neither the Company nor any of its subsidiaries will (i) declare, set
aside or pay any dividend or other distribution payable in cash, stock or
property with respect to its capital stock; (ii) issue, sell, transfer, pledge,
dispose of or encumber any shares of, or securities convertible into or
exchangeable for, or options, warrants, calls, commitments or rights of any kind
to acquire any shares of, capital stock of any class or series of the Company or
any of its subsidiaries, other than issuances of Shares pursuant to the exercise
of options outstanding as of the date of the Merger Agreement; (iii) split,
combine or reclassify the outstanding Shares or any outstanding capital stock of
the Company or any of the subsidiaries of the Company; or (iv) redeem, purchase
or otherwise acquire directly or indirectly any of the Company's or its
Subsidiaries' capital stock.
14. CONDITIONS TO THE OFFER.
Notwithstanding any other provisions of the Offer, and in addition to (and
not in limitation of) Merger Subsidiary's rights to extend and amend the Offer
at any time in its sole discretion (subject to the provisions of the Merger
Agreement), Merger Subsidiary 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 Merger Subsidiary's obligation
to pay for or return tendered Shares promptly after termination or withdrawal of
the Offer), pay for, and may delay the acceptance for payment of or, subject to
the restriction referred to above, the payment for, any tendered Shares, and may
terminate the Offer as to any Shares not then paid for, if (i) the Minimum
Condition shall not have been satisfied; (ii) any applicable waiting period
under the HSR Act has not expired or terminated; or (iii) at any time on or
after the date of the Merger Agreement and before the time of payment for any
such Shares, any of the following events shall occur:
(a) there shall be threatened or pending any suit, action or proceeding
by any Governmental Entity (i) seeking to prohibit or impose any limitations
on Parent's or Merger Subsidiary's ownership or operation (or that of any of
their respective subsidiaries or affiliates) of all or a material portion of
their or the Company's businesses or assets, or to compel Parent or Merger
Subsidiary or their respective subsidiaries and affiliates to dispose of or
hold separate any portion of the business or assets of the Company or Parent
and their respective subsidiaries, in each case taken as a whole,
(ii) challenging the acquisition by Parent or Merger Subsidiary of any
Shares under the Offer, seeking to restrain or prohibit the making or
consummation of the Offer or the Merger or the performance of any of the
other transactions contemplated by this Merger Agreement, or seeking to
obtain from the Company, Parent or Merger Subsidiary any damages,
(iii) seeking to impose limitations on the ability of Merger Subsidiary, or
rendering Merger Subsidiary unable, to accept for payment, pay for or
purchase some or all of the Shares pursuant to the Offer and the Merger, or
(iv) seeking to impose limitations on the ability of Merger Subsidiary 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;
(b) there shall be any statute, rule, regulation, judgment, order or
injunction enacted, entered, enforced, promulgated or deemed applicable to
the Offer or the Merger, or any other action shall be taken by any
Governmental Entity, that is reasonably likely to result, directly or
indirectly, in any of the consequences referred to in clauses (i) through
(iv) of paragraph (a) above;
(c) there shall have occurred and continue to exist (i) any general
suspension of trading in, or limitation on prices for, securities on the New
York Stock Exchange for a period in excess of three hours (excluding
suspensions or limitations resulting solely from physical damage or
interference with such exchanges not related
26
to market conditions) or (ii) a declaration of a banking moratorium or any
suspension of payments in respect of banks in the United States (whether or
not mandatory);
(d) any of the representations and warranties of the Company set forth
in the Merger Agreement shall not be true and correct, as if such
representations and warranties were made at the time of such determination
(except as to any such representation and warranty which speaks as of a
specific date, which must be untrue or incorrect as of such specific date),
except where the failure to be so true and correct would not, individually
or in the aggregate, reasonably be likely to have a material adverse effect;
(e) the Company shall have breached or failed to perform any material
obligation or to comply with any material agreement or covenant of the
Company to be performed or complied with by it under the Merger Agreement;
(f) there shall have occurred any events or changes which have had or
which are reasonably likely to have or constitute, individually or in the
aggregate, a material adverse effect on the Company;
(g) the Merger Agreement shall have been terminated in accordance with
its terms;
(h) (i) any person, entity or "group" (as defined in Section 13(d)(3) of
the Exchange Act), other than Parent or its affiliates or any group of which
any of them is a member, shall have acquired beneficial ownership
(determined pursuant to Rule 13d-3 promulgated under the Exchange Act) of
10% or more of any class or series of capital stock of the Company
(including the Shares) (or any person beneficially owning 5% or more of any
class or series of capital stock of the Company (including the Shares) on
the date of the Merger Agreement shall increase such person's beneficial
ownership by 1% or more in excess of such beneficial ownership as reported
in an SEC filing publicly filed prior to the date of the Merger Agreement),
through the acquisition of stock, the formation of a group or otherwise, or
shall have been granted an option, right or warrant, conditional or
otherwise, to acquire beneficial ownership of 10% or more of any class or
series of capital stock of the Company (including the Shares); and (ii) any
person or group shall have entered into a definitive agreement or agreement
in principle with the Company with respect to a merger, consolidation or
other business combination with the Company; or
(i) the Company's Board of Directors or any committee thereof (i) shall
have withdrawn, or modified or changed in a manner adverse to Parent or
Merger Subsidiary (including by amendment of the Schedule 14D-9), its
recommendation of the Offer, the Merger Agreement, or the Merger,
(ii) shall have recommended another proposal or offer, (iii) shall have
resolved to do any of the foregoing and (iv) shall have taken a neutral
position or made no recommendation with respect to the Transactions; and
which in the sole judgment of Parent or Merger Subsidiary, in any such case,
makes it inadvisable to proceed with the Offer or with such acceptance for
payment or payments.
The foregoing conditions are for the sole benefit of Merger Subsidiary and
Parent and, subject to Section 1.1(a) of the Merger Agreement, may be waived by
Parent or Merger Subsidiary, in whole or in part at any time and from time to
time in the sole discretion of Parent or Merger Subsidiary. The failure by
Parent or Merger Subsidiary 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.
GENERAL. Except as described in this Offer to Purchase, based on
information provided by the Company, neither Merger Subsidiary nor Parent is
aware of (i) any license or regulatory permit that appears to be material to the
business of the Company and its subsidiaries, taken as a whole, that might be
adversely affected by the acquisition of Shares by Parent or Merger Subsidiary
pursuant to the Offer or the Merger, or (ii) any approval or other action by any
governmental, administrative or regulatory agency or authority, domestic or
foreign, that would be required prior to the acquisition of Shares by Merger
Subsidiary pursuant to the Offer or the Merger. Should any such approval or
other action be required, Merger Subsidiary and Parent presently contemplate
that such approval or other action would be sought. While, except as otherwise
described in this Offer to Purchase, Merger Subsidiary does not presently intend
to delay the acceptance for payment of, or payment for, Shares tendered pursuant
to the Offer pending the outcome of any such matter, there can be no assurance
that any such approval or other action, if needed, would be obtained or would be
obtained without substantial conditions or that failure to obtain any such
approval or other action might not result in consequences adverse to the
business of the Company or Parent or that certain parts of the businesses of the
Company or Parent might not have to be disposed of, or other substantial
conditions complied with,
27
in the event that such approvals were not obtained or such other actions were
not taken or in order to obtain any such approval or other action. If certain
types of adverse actions are taken with respect to the matters discussed below,
Merger Subsidiary could decline to accept for payment, or pay for, any Shares
tendered. Merger Subsidiary's obligation under the Offer to accept for payment
and pay for Shares is subject to certain conditions including conditions with
respect to governmental actions. See Section 14, "Conditions to the Offer."
ANTITRUST. The Offer is subject to the HSR Act and the rules promulgated
thereunder, which provide that certain acquisition transactions may not be
consummated unless certain information has been furnished to the Antitrust
Division of the Department of Justice (the "Antitrust Division") and the Federal
Trade Commission (the "FTC") and certain waiting period requirements have been
satisfied.
A Notification and Report Form with respect to the Offer was filed by Parent
under the HSR Act on July 6, 2000. 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 Parent, unless the Antitrust Division and the FTC terminate the
waiting period prior thereto. Accordingly, the waiting period under the HSR Act
applicable to the Offer will expire at 11:59 p.m., New York City time, on
July 21, 2000, unless, prior to the expiration or termination of the waiting
period, the FTC or the Antitrust Division extends the waiting period by
requesting additional information or documentary material. If such a request is
made, the waiting period will be extended and would expire at 11:59 p.m., New
York City time, on the tenth calendar day after the date of substantial
compliance by Parent with such request. Only one extension of the waiting period
pursuant to a request for additional information is authorized by the HSR Act.
Thereafter, such waiting period may be extended only by court order or with the
consent of Parent. Merger Subsidiary will not accept for payment Shares tendered
pursuant to the Offer unless and until the waiting period requirements imposed
by the HSR Act with respect to the Offer have been satisfied. See Section 14,
"Conditions to the Offer."
The FTC and the Antitrust Division frequently scrutinize the legality under
the Antitrust Laws (as defined below) of transactions such as Merger
Subsidiary's acquisition of Shares pursuant to the Offer and the Merger. At any
time before or after Merger Subsidiary's acquisition of Shares, the Antitrust
Division or the FTC could take such action under the Antitrust Laws as it deems
necessary or desirable in the public interest, including seeking to enjoin the
acquisition of Shares pursuant to the Offer or otherwise seeking divestiture of
Shares acquired by Merger Subsidiary or divestiture of substantial assets of
Parent, the Company or their respective affiliates. Private parties and state
attorneys general may also bring legal action under the Antitrust Laws under
certain circumstances.
Based upon an examination of information provided by the Company relating to
the businesses in which Parent and the Company are engaged, Parent and Merger
Subsidiary believe that the acquisition of Shares by Merger Subsidiary pursuant
to the Offer and Xxxxxx will not violate the Antitrust Laws. Nevertheless, there
can be no assurance that a challenge to the Offer or other acquisition of Shares
by Merger Subsidiary on antitrust grounds will not be made or, if such a
challenge is made, what the result would be.
As used in this Offer to Purchase, "Antitrust Laws" shall mean and include
the Xxxxxxx Act, as amended, the Xxxxxxx Act, as amended, the HSR Act, the
Federal Trade Commission Act, as amended, and all other Federal and state
statutes, rules, regulations, orders, decrees, administrative and judicial
doctrines, and other laws that are designed or intended to prohibit, restrict or
regulate actions having the purpose or effect of monopolization or restraint of
trade.
STATE ANTITAKEOVER STATUTES. The Company is incorporated under the laws of
the State of Delaware. In general, Section 203 of the DGCL ("Section 203")
prevents an "interested stockholder" (including a person who has the right to
acquire 15% or more of the corporation's outstanding voting stock) from engaging
in a "business combination" (defined to include mergers and certain other
actions) with a Delaware corporation for a period of three years following the
date such person became an interested stockholder. The Company Board of
Directors approved for purposes of Section 203 the entering into by Merger
Subsidiary, Parent and the Company of the Merger Agreement and the Voting
Agreement and the consummation of the transactions contemplated thereby and has
taken all appropriate action so that Section 203, with respect to the Company,
will not be applicable to Parent and Merger Subsidiary by virtue of such
actions.
Other than as set forth above, Parent and Merger Subsidiary do not believe
that the antitakeover laws and regulations of any state will by their terms
apply to the Offer and the Merger, and neither Parent nor Merger Subsidiary has
attempted to comply with any state antitakeover statute or regulation. Merger
Subsidiary reserves the right to challenge the applicability or validity of any
state law purportedly applicable to the Offer and nothing in this Offer to
Purchase or any action taken in connection with the Offer is intended as a
waiver of such right. If it is
28
asserted that any state antitakeover statute is applicable to the Offer and an
appropriate court does not determine that it is inapplicable or invalid as
applied to the Offer, Merger Subsidiary might be required to file certain
information with, or to receive approvals from, the relevant state authorities,
and Merger Subsidiary might be unable to accept for payment or pay for Shares
tendered pursuant to the Offer or may be delayed in consummating the Offer. In
such case, Merger Subsidiary may not be obligated to accept for payment, or pay
for, any Shares tendered pursuant to the Offer. See Section 14, "Conditions to
the Offer."
16. FEES AND EXPENSES.
Xxxxxx Xxxxxxxxxx and Parent have retained Xxxxxx to serve as the
Information Agent and ChaseMellon to serve as the Depositary in connection with
the Offer. The Information Agent may contact holders of Shares by personal
interview, mail, telephone, telex, facsimile, e-mail, telegraph and other
methods of electronic communication and may request brokers, dealers, commercial
banks, trust companies and other nominees to forward the Offer materials to
beneficial holders. The Information Agent and the Depositary will each receive
reasonable and customary compensation for their services, be reimbursed for
certain reasonable out-of-pocket expenses and be indemnified against certain
liabilities in connection with their services, including certain liabilities and
expenses under the federal securities laws.
Except as set forth above, neither Parent nor Merger Subsidiary will pay any
fees or commissions to any broker or dealer or other person or entity in
connection with the solicitation of tenders of Shares pursuant to the Offer.
Brokers, dealers, banks and trust companies will be reimbursed by Xxxxxx
Xxxxxxxxxx for customary mailing and handling expenses incurred by them in
forwarding the Offer materials to their customers.
17. MISCELLANEOUS.
Merger Subsidiary is not aware of any state where the making of the Offer is
prohibited by administrative or judicial action pursuant to any valid state
statute. If Merger Subsidiary becomes aware of any valid state statute
prohibiting the making of the Offer or the acceptance of the Shares pursuant
thereto, Merger Subsidiary shall make a good faith effort to comply with such
statute or seek to have such statute declared inapplicable to the Offer. If,
after such good faith effort, Merger Subsidiary cannot comply with such state
statute, the Offer will not be made to (nor will tenders be accepted from or on
behalf of) holders of Shares in such state. 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 shall be deemed to be made on behalf of Merger
Subsidiary by one or more registered brokers or dealers which are licensed under
the laws of such jurisdiction.
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATION ON BEHALF OF PARENT OR MERGER SUBSIDIARY NOT CONTAINED HEREIN OR
IN THE LETTER OF TRANSMITTAL AND, IF GIVEN OR MADE, SUCH INFORMATION OR
REPRESENTATION MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED.
Merger Subsidiary and Parent have filed with the SEC a Tender Offer
Statement on Schedule TO pursuant to Rule 14d-3 under the Exchange Act, together
with exhibits, furnishing certain additional information with respect to the
Offer, and may file amendments thereto. In addition, the Company has filed with
the SEC a Solicitation/ Recommendation Statement on Schedule 14D-9, together
with exhibits, pursuant to Rule 14d-9 under the Exchange Act, setting forth its
recommendation with respect to the Offer and the reasons for its recommendation
and furnishing certain additional related information. Such Schedules and any
amendments thereto, including exhibits, should be available for inspection, and
copies should be obtainable in the same manner set forth in Section 9, "Certain
Information Concerning Parent and Merger Subsidiary," of this Offer to Purchase
(except that such material will not be available at the regional offices of the
SEC).
CANISCO ACQUISITION, INC.
July 17, 2000
29
SCHEDULE I
INFORMATION CONCERNING THE DIRECTORS AND
EXECUTIVE OFFICERS OF PARENT, CANISCO HOLDING AND MERGER SUBSIDIARY
Directors and Executive Officers of Parent, Canisco Holding and Merger
Subsidiary. Set forth below is the name and 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, Canisco
Holding and Merger Subsidiary. Each such person is a citizen of the United
States of America. Unless otherwise indicated, the current business address of
each such person is c/o Xxxxx Industrial Services, L.L.C., 000 X. Xxxxxxx,
Xxxxx 000, Xxxxxxx, Xxxxxxxx 00000. Unless otherwise indicated, each occupation
set forth opposite an individual's name refers to employment with Parent. Unless
otherwise indicated, each such person has held his or her present occupation as
set forth below, or has been an executive officer at Parent, or the organization
indicated, since the inception of Parent in February 1998. Directors of Parent,
Canisco Holding or Merger Subsidiary, as the case may be, are identified by an
asterisk.
DIRECTORS AND EXECUTIVE OFFICERS OF PARENT
PRESENT PRINCIPAL OCCUPATION OR EMPLOYMENT;
NAME MATERIAL POSITIONS HELD DURING THE PAST FIVE YEARS
---- ------------------------------------------------------------
Xxxxxxx X. Xxxxxxx* ......................... Xx. Xxxxxxx co-founded Parent. Prior to founding Parent,
Chief Executive Officer, Xx. Xxxxxxx co-founded Industrial Cleaning Specialists
Operating Board Member ("ICS") and he operated it from 1994 until 1998 when it
merged with The CleanUp Company to create Xxxxx Industrial
Services, L.L.C.
Xxxxxxx X. Xxxxxx* .......................... Prior to joining Parent in connection with the X.X. Xxxxx
Chief Financial Officer, acquisition in November 1998, Xx. Xxxxxx served as Chief
Operating Board Member Financial Officer of X.X. Xxxxx.
Xxxxxxx Xxxxx ............................... Xx. Xxxxx co-founded Parent. Xx. Xxxxx is responsible for
President, Xxxxxx's Midwest industrial cleaning business and manages
Industrial Cleaning Division several of the largest customer accounts, including U.S.
Steel. Prior to joining Parent, Xx. Xxxxx co-founded ICS
with Xx. Xxxxxxx in 1994.
Xxxx X. Xxxxx ............................... Prior to joining Parent Mr. Xxxxx served as President of
President, X.X. Xxxxx from 1994 to 1998.
Industrial Coatings Division
Xxxxxx X. Xxxx .............................. Xx. Xxxx has been with Parent since its inception in 1998.
Executive Vice President, Xx. Xxxx'x responsibilities at Parent include corporate
General Counsel counsel and all corporate financing. Prior to joining
Parent, Xx. Xxxx was a consultant for Development
Specialists Incorporated, a financial workout and
turnaround-consulting firm, where he specialized in
restructuring businesses in financial distress.
Xxxx X. Xxxxxxxx* ........................... Xx. Xxxxxxxx is a co-founder of Parent. Xx. Xxxxxxxx is
Operating Board Member President of Jelco Ventures, Inc., a private equity
investment firm founded in 1971. He has also served since
1997 as an investor with and a consultant to Mesirow
Financial's Private Equity Funds. Xx. Xxxxxxxx is member of
the Board of Directors of SMS Technology, Inc.,
GOOItech, Inc., Paragon Solutions, Inc., XxxxxxxXxxx.xxx
and Capital Resource Advisors. In addition, Xx. Xxxxxxxx is
a co-founder of the Entrepreneur Foundation at Miami
University and has served as a co-trustee of the Miami
University fund and its Business School Board. In addition,
Xx. Xxxxxxxx is presently a Partner with Value Investing
Partners, Inc. and is a minority shareholder in that firm.
Xxxxxx X. Xxxxx* ............................ Xx. Xxxxx is a co-founder of Parent. Xx. Xxxxx is currently
Operating Board Member President of Seven K Construction Company and Northgate
Investment Company. Seven K is an affiliate of Xxxxx
Construction Company, a 65 year-old construction firm based
in Chicago.
I-1
PRESENT PRINCIPAL OCCUPATION OR EMPLOYMENT;
NAME MATERIAL POSITIONS HELD DURING THE PAST FIVE YEARS
---- ------------------------------------------------------------
Xxxxxxx X. Xxxxx* ........................... Xx. Xxxxx is currently Co-manager of Bluestem Capital
Operating Board Member Company, a private equity investment fund, and President of
Xxxxx Capital Corporation, a venture capital firm based in
Sioux Falls, South Dakota. He has been with Xxxxx Capital
Corporation since its formation in 1992.
Xxxx X. Xxxxxx* ............................. Xx. Xxxxxx is currently a partner of Xxxxxxxx, Xxxx &
Operating Board Member Xxxxxx, a private merchant bank engaged in the acquisition
and ownership of operating businesses. Xx. Xxxxxx is
responsible for the firm's investments and serves as
director for many of the firm's portfolio companies. The
firm currently manages over $800 million in two private
equity funds. Xx. Xxxxxx has served on Parent's Operating
Board since April 2000. Xx. Xxxxxx joined Xxxxxxxx Xxxx &
Xxxxxx in 1992.
Xxxxx X. Xxxxxxx* ........................... Xx. Xxxxxxx is a partner of Xxxxxxxx, Xxxx & Xxxxxx, a
Operating Board Member private merchant bank engaged in the acquisition and
ownership of operating businesses. Before joining Xxxxxxxx,
Xxxx & Xxxxxx in 1998, Xx. Xxxxxxx was a Managing Director
at BT Capital Partners, Inc., the private equity investment
arm of BT Xxxx Xxxxx. Xx. Xxxxxxx has served on Parent's
Operating Board since April 2000.
DIRECTORS AND EXECUTIVE OFFICERS OF
MERGER SUBSIDIARY AND CANISCO HOLDING
PRESENT PRINCIPAL OCCUPATION OR EMPLOYMENT;
NAME MATERIAL POSITIONS HELD DURING THE PAST FIVE YEARS
---- ------------------------------------------------------------
Xxxxxxx X. Xxxxxxx* ......................... See above in this Schedule I.
President and Chief Executive Officer,
Member of the Board of Directors
Xxxxxxx X. Xxxxxx* .......................... See above in this Schedule I.
Treasurer and Secretary;
Member of the Board of Directors
I-2
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 or her broker, dealer, commercial bank, trust company or
other nominee to the Depositary, at one of the addresses set forth below:
THE DEPOSITARY FOR THE OFFER IS:
ChaseMellon Shareholder Services, L.L.C.
BY MAIL: BY HAND: BY OVERNIGHT:
Reorganization Department Reorganization Department Reorganization Department
P. O. Box 0000 000 Xxxxxxxx 00 Xxxxxxxxxx Xxxx
Xxxxx Xxxxxxxxxx, XX 00000 13th Floor Mail Drop-Reorg
New York, NY 00000 Xxxxxxxxxx Xxxx, XX 00000
By Facsimile Transmission:
(For Eligible Institutions
Only)
(000) 000-0000
Confirm Facsimile Transmission
By Telephone Only:
(000) 000-0000
Any questions or requests for assistance or additional copies of this Offer
to Purchase, the Letter of Transmittal or, the Notice of Guaranteed Delivery may
be directed to the Information Agent at the address and telephone numbers set
forth below. Stockholders may also contact their broker, dealer, commercial
bank, trust company or nominee for assistance concerning the Offer.
THE INFORMATION AGENT FOR THE OFFER IS:
XXXXXX & CO., INC.
000 Xxxx Xxxxxx
0xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Call Collect: (000) 000-0000
Banks and Brokerage Firms Call: (000) 000-0000
SHAREHOLDERS PLEASE CALL: (000) 000-0000
