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OFFER TO PURCHASE FOR CASH
ALL OUTSTANDING SHARES OF COMMON STOCK
(INCLUDING THE STOCK PURCHASE RIGHTS ASSOCIATED THEREWITH)
OF
XXXXXXXX PBE, INC.
AT
$8.00 NET PER SHARE
BY
FMST ACQUISITION CORPORATION
A WHOLLY OWNED SUBSIDIARY OF
FINISHMASTER, INC.
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THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY
TIME, ON TUESDAY, NOVEMBER 18, 1997, UNLESS EXTENDED.
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THE OFFER IS CONDITIONED UPON, AMONG OTHER THINGS, (A) THERE BEING VALIDLY
TENDERED AND NOT WITHDRAWN PRIOR TO THE EXPIRATION OF THE OFFER THAT NUMBER OF
SHARES OF COMMON STOCK, INCLUDING THE STOCK PURCHASE RIGHTS ASSOCIATED THEREWITH
(COLLECTIVELY, THE "SHARES"), THAT WOULD REPRESENT AT LEAST A MAJORITY OF ALL
OUTSTANDING SHARES ON A FULLY DILUTED BASIS, (B) THE EXPIRATION OR TERMINATION
OF ANY APPLICABLE WAITING PERIODS UNDER THE XXXX-XXXXX-XXXXXX ANTITRUST
IMPROVEMENTS ACT OF 1976, AS AMENDED, AND (C) THE SATISFACTION OF CERTAIN OTHER
TERMS AND CONDITIONS.
THE BOARD OF DIRECTORS OF XXXXXXXX PBE, INC. (THE "COMPANY") UNANIMOUSLY
(A) APPROVED THE OFFER, THE MERGER AND THE MERGER AGREEMENT, (B) DETERMINED THAT
THE OFFER AND THE MERGER ARE FAIR TO AND IN THE BEST INTERESTS OF THE COMPANY
AND ITS STOCKHOLDERS, AND (C) RECOMMENDS THAT STOCKHOLDERS ACCEPT THE OFFER AND
TENDER THEIR SHARES.
IMPORTANT
Any stockholder desiring to tender all or any portion of such stockholder's
Shares should either (a) complete and sign the Letter of Transmittal or a
facsimile copy thereof in accordance with the instructions in the Letter of
Transmittal, have such stockholder's signature thereon guaranteed if required by
Instruction 1 to the Letter of Transmittal and mail or deliver the Letter of
Transmittal or such facsimile together with the certificate(s) representing
tendered Shares and all other required documents to the Depositary, or tender
such Shares pursuant to the procedure for book-entry transfer set forth in
Section 2 of this Offer to Purchase or (b) request such stockholder's broker,
dealer, commercial bank, trust company or other nominee to effect the
transaction for such stockholder. Stockholders having Shares registered in the
name of a broker, dealer, commercial bank, trust company or other nominee must
contact such broker, dealer, commercial bank, trust company or other nominee if
they desire to tender their Shares.
Stockholders who desire to tender Shares and whose certificates for such
Shares are not immediately available, or who cannot comply in a timely manner
with the procedure for book-entry transfer, or who cannot deliver all required
documents to the Depositary prior to the expiration of the Offer, may tender
such Shares by following the procedure for guaranteed delivery set forth in
Section 2 of this Offer to Purchase.
Questions and requests for assistance may be directed to the Information
Agent or the Dealer Manager at their respective addresses and telephone numbers
listed on the back cover of this Offer to Purchase. Requests for copies of the
Offer to Purchase, the Letter of Transmittal, the Notice of Guaranteed Delivery
and other tender offer materials may be directed to the Information Agent, and
copies will be furnished promptly at the Purchaser's expense.
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The Dealer Manager for the Offer is:
XXXXX XXXXXX INC.
October 21, 1997
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TABLE OF CONTENTS
PAGE
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INTRODUCTION................................................ 1
THE TENDER OFFER
1. Terms of the Offer...................................... 2
2. Procedure for Tendering Shares.......................... 4
3. Withdrawal Rights....................................... 6
4. Acceptance for Payment and Payment...................... 7
5. Certain United States Federal Income Tax Consequences... 8
6. Price Range of the Shares; Dividends on the Shares...... 9
7. Effect of the Offer on the Market for the Shares; Stock
Exchange Listing; Registration Under the Exchange Act... 9
8. Certain Information Concerning the Company.............. 10
9. Certain Information Concerning Purchaser and Parent..... 13
10. Source and Amount of Funds.............................. 15
11. Contacts with the Company; Background of the Offer...... 17
12. Purpose of the Offer and the Merger Agreement; Plans for
the Company............................................... 20
13. Dividends and Distributions............................. 29
14. Certain Conditions of the Offer......................... 29
15. Certain Legal Matters; Regulatory Approvals............. 30
16. Fees and Expenses....................................... 32
17. Miscellaneous........................................... 33
Xxxxx X -- Certain Information Concerning the Directors and
Executive Officers of Parent, Purchaser and
Controlling Persons
Annex II -- Section 262 of the General Corporation Law of
the State of Delaware
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TO THE HOLDERS OF COMMON STOCK OF XXXXXXXX PBE, INC.:
INTRODUCTION
FMST Acquisition Corporation, a Delaware corporation ("Purchaser") and a
wholly owned subsidiary of FinishMaster, Inc., an Indiana corporation
("Parent"), hereby offers to purchase all outstanding shares of Common Stock,
par value $.001 per share, of Xxxxxxxx PBE, Inc., a Delaware corporation (the
"Company"), including the stock purchase rights associated therewith issued
pursuant to the Rights Agreement, dated as of May 6, 1997, between the Company
and ChaseMellon Shareholder Services, L.L.C. (collectively, the "Shares"), at
$8.00 per Share, net to the seller in cash (the "Offer Price"), without
interest, upon the terms and subject to the conditions set forth in this Offer
to Purchase and in the related Letter of Transmittal (which, together with any
amendments or supplements hereto or thereto, collectively constitute the
"Offer").
Tendering stockholders will not be obligated to pay brokerage fees or
commissions or, except as set forth in Instruction 6 of the Letter of
Transmittal, stock transfer taxes on the purchase of Shares by Purchaser
pursuant to the Offer. Purchaser will pay all fees and expenses of Xxxxx Xxxxxx
Inc. ("Xxxxx Xxxxxx"), which is acting as the Dealer Manager (the "Dealer
Manager"), First Chicago Trust Company of New York, which is acting as the
Depositary (the "Depositary"), and Xxxxxx & Co., Inc., which is acting as
Information Agent (the "Information Agent"), incurred in connection with the
Offer. See Section 16.
THE BOARD OF DIRECTORS OF THE COMPANY UNANIMOUSLY (A) APPROVED THE OFFER,
THE MERGER AND THE MERGER AGREEMENT, (B) DETERMINED THAT THE OFFER AND THE
MERGER ARE FAIR TO AND IN THE BEST INTERESTS OF THE COMPANY AND ITS
STOCKHOLDERS, AND (C) RECOMMENDS THAT STOCKHOLDERS ACCEPT THE OFFER AND TENDER
THEIR SHARES.
THE OFFER IS CONDITIONED UPON, AMONG OTHER THINGS, THERE BEING VALIDLY
TENDERED AND NOT WITHDRAWN PRIOR TO THE EXPIRATION DATE (AS DEFINED IN SECTION
1) THAT NUMBER OF SHARES WHICH REPRESENTS AT LEAST A MAJORITY OF THE NUMBER OF
SHARES OUTSTANDING ON A FULLY DILUTED BASIS (THE "MINIMUM CONDITION"). SEE
SECTIONS 1, 14 AND 15.
Xxxxxxxxx, Xxxxxx & Xxxxxxxx Securities Corporation ("DLJ"), the Company's
financial advisor, has delivered to the Board of Directors of the Company its
written opinion, dated October 14, 1997, to the effect that, as of the date of
such opinion and based on certain matters considered relevant by DLJ, the
consideration to be received by the holders of the Shares pursuant to each of
the Offer and the Merger was fair to such holders from a financial point of
view. The full text of such opinion which sets forth the procedures followed,
assumptions and qualifications made, matters considered and the limitations
thereof, is attached to the Company's Solicitation/Recommendation Statement on
Schedule 14D-9 (the "Schedule 14D-9"), which is being mailed to stockholders of
the Company herewith. Stockholders are urged to read such opinion in its
entirety.
The Offer is being made pursuant to the Agreement and Plan of Merger, dated
as of October 14, 1997 (the "Merger Agreement"), by and among Parent, Purchaser
and the Company, pursuant to which, following the consummation of the Offer and
the satisfaction or waiver of certain conditions, Purchaser will be merged with
and into the Company, with the Company surviving the merger (as such, the
"Surviving Corporation") as a wholly owned subsidiary of Parent (the "Merger").
In the Merger, each Share issued and outstanding immediately prior to the
Effective Time as defined below (other than Shares held by Parent, Purchaser or
any other wholly owned subsidiary of Parent, or in the treasury of the Company
or by any wholly owned subsidiary of the Company, all of which shall be
cancelled, and the Shares pursuant to which statutory appraisal rights have been
validly exercised (as described in Section 12 hereof)) shall, by virtue of the
Merger and without any action on the part of the holder thereof, be converted
into the right to receive an amount in cash equal to the highest price per share
which may be paid pursuant to the Offer (the "Merger Consideration"), subject to
applicable withholding or back-up withholding taxes, if any, payable by the
holder thereof, without interest thereon, upon surrender of the certificate(s)
formerly representing such Shares. See Section 12. "Effective Time" means the
time of acceptance for filing by the Delaware Secretary of State of a
certificate of merger in
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the form required, and executed in accordance with, the relevant provisions of
the Delaware General Corporation Law (the "DGCL") and such other documents as
may be required by the DGCL.
The Merger is subject to a number of conditions, including approval by
stockholders of the Company, if such approval is required by applicable law. In
the event Purchaser acquires 90% or more of the outstanding Shares pursuant to
the Offer or otherwise, Purchaser would be able to, and intends to, effect the
Merger pursuant to the short-form merger provisions of Section 253 of the DGCL,
without prior notice to, or any action by, any other stockholder of the Company.
See Section 12.
The Company has informed Parent and Purchaser that, as of October 14, 1997,
there were (a) 8,645,084 Shares issued and outstanding (excluding shares held in
treasury), (b) no shares of preferred stock issued and outstanding, (c) 712,343
Shares subject to options (the "Stock Options") pursuant to the Company's 1994
Stock Option Plan and the Company's Stock Option Plan for Outside Directors
(collectively, the "Stock Option Plans"), (d) 47,806 Shares subject to the
Common Stock Purchase Warrant issued April 7, 1994 to Chase Venture Capital
Associates, L.P. (the "CVCA Warrants"), (e) 170,000 Shares subject to the
Warrant Certificate, issued January 1, 1997, to SEV Corporation pursuant to the
Warrant Agreement dated as of May 31, 1995 (the "SEV Warrants"), and (f) Shares
issuable pursuant to the conversion rights contained in the Non-Negotiable
Adjusted Convertible Promissory Note Subject to Right of Set-Off in the original
principal amount of $2,125,000 issued April 18, 1996 to Xxxxx X. Xxxxx (the "APS
Note"). Accordingly, Xxxxxxxxx believes that the Minimum Condition (as defined
in Section 14) will be satisfied, based on the foregoing assumptions, if
approximately 4,837,987 shares are validly tendered and not withdrawn prior to
the Expiration Date (as defined herein). If the Minimum Condition is satisfied
and Purchaser accepts for payment Shares tendered pursuant to the Offer,
Purchaser will be able to, and intends to, elect a majority of the members of
the Company's Board of Directors and to effect the Merger without the
affirmative vote of any other stockholder of the Company.
The Merger Agreement is more fully described in Section 12. Certain United
States federal income tax consequences of the sale of Shares pursuant to the
Offer and the exchange of Shares for the Merger Consideration pursuant to the
Merger are described in Section 5.
THIS OFFER TO PURCHASE AND THE RELATED LETTER OF TRANSMITTAL CONTAIN
IMPORTANT INFORMATION AND SHOULD BE READ IN THEIR ENTIRETY BEFORE ANY DECISION
IS MADE WITH RESPECT TO THE OFFER.
THE TENDER OFFER
1. TERMS OF THE OFFER
Upon the terms and subject to the conditions of the Offer (including, if
the Offer is extended or amended, the terms and conditions of any extension or
amendment), Purchaser will accept for payment and pay for all Shares validly
tendered prior to the Expiration Date and not withdrawn in accordance with
Section 3. The term "Expiration Date" means 12:00 Midnight, New York City time,
on Tuesday, November 18, 1997, unless and until Purchaser shall have 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 Purchaser, shall expire. UNDER NO CIRCUMSTANCES WILL ANY INTEREST BE
PAID ON THE OFFER PRICE FOR TENDERED SHARES, REGARDLESS OF ANY EXTENSION OF THE
OFFER OR ANY DELAY IN MAKING SUCH PAYMENT.
The Offer is subject to certain conditions set forth in Section 14,
including satisfaction of the Minimum Condition and the expiration or
termination of the waiting period applicable to Purchaser's acquisition of
Shares pursuant to the Offer under the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements
Act of 1976, as amended (the "HSR Act"). If any such condition is not satisfied
Purchaser may, subject to the terms of the Merger Agreement, (a) terminate the
Offer and return all tendered Shares to tendering stockholders, (b) extend the
Offer and, subject to withdrawal rights as set forth in Section 3, retain all
such Shares until the expiration of the Offer as so extended, (c) waive such
condition and, subject to any requirements to extend the period of time during
which the Offer is open, purchase all Shares validly tendered by the Expiration
Date and not properly withdrawn or (d) delay acceptance for payment of, or
payment for, Shares, subject to applicable law,
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until satisfaction or waiver of the conditions to the Offer and subject to the
right of Purchaser to extend the Offer as set forth below and in Section 12.
Purchaser has agreed that, without the prior express written consent of the
Company, Purchaser will not (i) decrease the price per Share or the number of
Shares for which the Offer is made, (ii) extend the expiration date of the Offer
except as set forth in Sections 12 and 14, (iii) change the form of
consideration payable in the Offer, (iv) impose conditions to the Offer in
addition to or in modification of those set forth in Section 14, (v) waive or
increase the Minimum Condition as set forth in Section 14, or (vi) otherwise
amend any other term of the Offer in any manner which adversely affects the
rights of the holders of Shares. Pursuant to the Merger Agreement, Purchaser has
agreed, subject to the conditions in Section 14 and its rights under the Offer,
to accept for payment Shares validly tendered and not properly withdrawn as
promptly as practicable following the satisfaction or waiver of the conditions
specified in Section 14. For a description of Purchaser's right or obligation to
extend the period of time during which the Offer is open, and to amend, delay or
terminate the Offer, see Sections 12 and 14.
Any extension, waiver, amendment or termination of the Offer will be
followed as promptly as practicable by public announcement thereof. In the case
of an extension, Rule 14e-1(d) under the Securities Exchange Act of 1934, as
amended (the "Exchange Act"), requires that the announcement be issued no later
than 9:00 a.m., New York City time, on the next business day after the
previously scheduled Expiration Date in accordance with the public announcement
requirements of Rule 14d-4(c) under the Exchange Act. Subject to applicable law
(including Rules 14d-4(c) and 14d-6(d) under the Exchange Act, which require
that any material change in the information published, sent or given to
stockholders in connection with the Offer be promptly disseminated to
stockholders in a manner reasonably designed to inform stockholders of such
change), and without limiting the manner in which Purchaser may choose to make
any public announcement, Purchaser will not have any obligation to publish,
advertise or otherwise communicate any such public announcement other than by
issuing a press release to the Dow Xxxxx News Service and making any appropriate
filing with the Securities and Exchange Commission (the "Commission").
If Purchaser extends the Offer or if Purchaser (whether before or after its
acceptance for payment of Shares) is delayed in its acceptance for payment of or
payment for Shares, or it is unable to pay for Shares pursuant to the Offer for
any reason, then, without prejudice to Purchaser's rights under the Offer, the
Depositary may retain tendered Shares on behalf of Purchaser, and such Shares
may not be withdrawn except to the extent tendering stockholders are entitled to
withdrawal rights as described in Section 3. The ability of Purchaser to delay
the payment for Shares that Purchaser has accepted for payment is limited,
however, by Rule 14e-1 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 Purchaser makes a material change in the terms of the Offer or the
information concerning the Offer or waives a material condition of the Offer
(including a waiver of the Minimum Condition), Purchaser will disseminate
additional tender offer materials and extend the Offer to the extent required by
Rules 14d-4(c), 14d-6(d) and 14e-1 under the Exchange Act or otherwise. The
minimum period during which an 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 the percentage of securities sought, will depend
upon the facts and circumstances then existing, including the relative
materiality of the changed terms or information. With respect to a change in
price or a change in the percentage of securities sought, a minimum period of
ten business days is generally required to allow for adequate dissemination to
stockholders. If prior to the Expiration Date, Purchaser should decide to
increase the price per share being offered in the Offer, such increase will be
applicable to all stockholders whose shares are accepted for payment pursuant to
the Offer. As used in this Offer to Purchase, "business day" means any day other
than a Saturday, Sunday or a federal holiday and consists of the time period
from 12:01 a.m. through 12 midnight, New York City time as computed in
accordance with Rule 14d-1 under the Exchange Act.
The Company has provided Purchaser with the Company's stockholder lists and
security position listings for the purpose of disseminating the Offer to holders
of the Shares. This Offer to Purchase, the related Letter of Transmittal and
other relevant materials will be mailed by Purchaser to record holders of Shares
and will be furnished by Purchaser to brokers, dealers, commercial banks, trust
companies and similar persons whose names, or the names of whose nominees,
appear on the stockholder lists or, if applicable, who are listed as
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participants in a clearing agency's security position listing, for subsequent
transmittal to beneficial owners of Shares.
2. PROCEDURE FOR TENDERING SHARES
Valid Tender. For a stockholder validly to tender Shares pursuant to the
Offer, a properly completed and duly executed Letter of Transmittal (or a
manually signed facsimile thereof), together with any required signature
guarantees, or an Agent's Message (as defined herein) in connection with a
book-entry delivery of Shares, and any other documents required by the Letter of
Transmittal, must be received by the Depositary at one of its addresses set
forth on the back cover of this Offer to Purchase prior to the Expiration Date,
or the tendering stockholder must comply with the guaranteed delivery procedure
set forth below. Additionally, either (a) certificates for such tendered Shares
must be received by the Depositary along with the Letter of Transmittal or such
Shares must be delivered pursuant to the procedure for book-entry transfer set
forth below (and a Book-Entry Confirmation (as defined below) received by the
Depositary), in each case prior to the Expiration Date, or (b) the guaranteed
delivery procedures set forth below must be complied with.
The Depositary will establish an account with respect to the Shares at The
Depository Trust Company and Philadelphia Depository Trust Company (the
"Book-Entry Transfer Facilities") for purposes of the Offer within two business
days after the date of this Offer. Any financial institution that is a
participant in any of the Book-Entry Transfer Facilities' systems may make
book-entry delivery of Shares by causing a Book-Entry Transfer Facility to
transfer such Shares into the Depositary's account in accordance with such
Book-Entry Transfer Facility's procedures for such transfer. However, although
delivery of Shares may be effected through book-entry transfer into the
Depositary's account at a Book-Entry Transfer Facility, the Letter of
Transmittal (or a manually signed facsimile thereof), properly completed and
duly executed, with any required signature guarantees, or an Agent's Message in
connection with a book-entry transfer, and any other required documents, must,
in any case, be transmitted to, and received by, the Depositary at one of its
addresses set forth on the back cover of this Offer to Purchase prior to the
Expiration Date, or the tendering stockholder must comply with the guaranteed
delivery procedure described below. The confirmation of a book-entry transfer of
Shares into the Depositary's account at a Book-Entry Transfer Facility as
described above is referred to herein as a "Book-Entry Confirmation." No
alternative, conditional or contingent tenders will be accepted. DELIVERY OF
DOCUMENTS TO A BOOK-ENTRY TRANSFER FACILITY IN ACCORDANCE WITH SUCH BOOK-ENTRY
TRANSFER FACILITY'S PROCEDURES DOES NOT CONSTITUTE DELIVERY TO THE DEPOSITARY.
THE METHOD OF DELIVERY OF SHARES, THE LETTER OF TRANSMITTAL AND ALL OTHER
REQUIRED DOCUMENTS, INCLUDING DELIVERY THROUGH ANY 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. 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.
The term "Agent's Message" means a message, transmitted by a Book-Entry
Transfer Facility to, and received by, the Depositary and forming a part of a
Book-Entry Confirmation, which states that such Book Entry Transfer Facility has
received an express acknowledgment from the participant in such Book-Entry
Transfer Facility tendering the Shares that are the subject of such Book-Entry
Confirmation that such participant has received and agrees to be bound by the
terms of the Letter of Transmittal and that Purchaser may enforce such agreement
against such participant.
Signature Guarantees. No signature guarantee is required on the Letter of
Transmittal if (a) the Letter of Transmittal is signed by the registered holder
of Shares (which term, for purposes of this Section, includes any participant in
any of the Book-Entry Transfer Facilities' systems whose name appears on a
security position listing as the owner of the 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 (b) such Shares are tendered for the account of a firm
that is a member of a
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registered national securities exchange or of the National Association of
Securities Dealers, Inc. (the "NASD"), or a commercial bank, trust company or
savings institution having an office or correspondent in the United States
(each, an "Eligible Institution"). In all other cases, all signatures on the
Letters of Transmittal must be guaranteed by a recognized member of a Medallion
Signature Guarantee Program or 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 issued to a person other than the
registered holder of the certificates surrendered, the tendered certificates
must be endorsed or accompanied by appropriate stock powers, in either case
signed exactly as the name or names of the registered holders or owners appear
on the certificates, with the signatures on the certificates or stock powers
guaranteed as specified above. See Instruction 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, the procedure 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:
(a) such tender is made by or through an Eligible Institution;
(b) a properly completed and duly executed Notice of Guaranteed
Delivery, substantially in the form provided by Purchaser herewith, is
received by the Depositary, as provided below, prior to the Expiration
Date; and
(c) the certificates for all tendered Shares, in proper form for
transfer (or a Book-Entry Confirmation with respect to such Shares),
together with a properly completed and duly executed Letter of Transmittal
(or a manually signed facsimile thereof), with any required signature
guarantees (or, in the case of a book-entry transfer, an Agent's Message)
and any other documents required by the Letter of Transmittal, are received
by the Depositary within three trading days after the date of execution of
such Notice of Guaranteed Delivery. A "trading day" is any day on which the
New York Stock Exchange, Inc. (the "NYSE") is open for business.
The Notice of Guaranteed Delivery may be delivered by hand, or transmitted
by telegram, facsimile transmission or mail, to the Depositary and must include
a guarantee by an Eligible Institution in the form set forth in such Notice of
Guaranteed Delivery.
Notwithstanding any other provision hereof, payment for Shares accepted for
payment pursuant to the Offer will in all cases be made only after timely
receipt by the Depositary of (a) certificates for (or a timely Book-Entry
Confirmation with respect to) such Shares, (b) a properly completed and duly
executed Letter of Transmittal (or a manually signed facsimile thereof), with
any required signature guarantees, or, in the case of a book-entry transfer, an
Agent's Message and (c) any other documents required by the Letter of
Transmittal. Accordingly, tendering stockholders may be paid at different times
depending upon when certificates for Shares or Book-Entry Confirmations are
actually received by the Depositary. UNDER NO CIRCUMSTANCES WILL INTEREST BE
PAID ON THE PURCHASE PRICE FOR THE SHARES TO BE PAID BY PURCHASER, REGARDLESS OF
ANY EXTENSION OF THE OFFER OR ANY DELAY IN MAKING SUCH PAYMENT.
The valid tender of Shares pursuant to one of the procedures described
above will constitute a binding agreement between the tendering stockholder and
Purchaser upon the terms and subject to the conditions of the Offer.
Appointment. By executing a Letter of Transmittal as set forth above, the
tendering stockholder irrevocably appoints designees of Purchaser 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 Purchaser and with respect to any and
all other Shares or other securities or rights issued or issuable in respect of
such Shares on or after October 14, 1997. All such proxies shall be considered
coupled with an interest in the tendered Shares. Such appointment will be
effective when, and only to the extent that, Purchaser accepts
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for payment Shares tendered by such stockholder as provided herein. Upon such
acceptance for payment, all prior powers of attorney and proxies given by such
stockholder with respect to such Shares or other securities or rights will,
without further action, be revoked and no subsequent powers of attorney and
proxies may be given (and, if given, will not be deemed effective). The
designees of Purchaser will thereby be empowered to exercise voting and other
rights with respect to such Shares or other securities or rights in respect of
any annual, special or adjourned meeting of the Company's stockholders, or
otherwise, as they in their sole discretion deem proper. Purchaser reserves the
right to require that, in order for Shares to be deemed validly tendered,
immediately upon Purchaser's acceptance for payment of such Shares, Purchaser
must be able to exercise voting and other rights with respect to such Shares and
other securities or rights, including voting at any meeting of stockholders then
scheduled.
Determination of Validity. All questions as to the validity, form,
eligibility (including time of receipt) and acceptance of any tender of Shares
will be determined by Purchaser in its sole discretion, which determination will
be final and binding. Purchaser reserves the absolute right to reject any or all
tenders determined by it not to be in proper form or the acceptance for payment
of or payment for which may, in the opinion of Purchaser's counsel, be unlawful.
Purchaser also reserves the absolute right to waive any defect or irregularity
in any tender with respect to any particular Shares, whether or not similar
defects or irregularities are waived with respect to other Shares. 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 Purchaser,
Parent, the Depositary, the Dealer Manager, the Information Agent or any other
person will be under any duty to give notification of any defects or
irregularities in tenders or will incur any liability for failure to give any
such notification. Purchaser's interpretation of the terms and conditions of the
Offer (including the Letter of Transmittal and the instructions thereto) will be
final and binding.
Backup Federal Income Tax Withholding. To prevent backup federal income tax
withholding on payments of cash pursuant to the Offer, each stockholder
surrendering Shares in the Offer must provide the Depositary with such
stockholder's correct taxpayer identification number ("TIN") on a Substitute
Form W-9 and certify that such TIN is correct and that such stockholder is not
subject to backup federal income tax withholding. Certain stockholders
(including, among others, all corporations and certain foreign individuals and
entities) are not subject to backup federal income tax withholding. If a
stockholder does not provide its correct TIN or fails to provide the
certifications described above, the Internal Revenue Service ("IRS") may impose
a penalty on such stockholder and payment of cash to such stockholder pursuant
to the Offer may be subject to backup withholding of 31%. All stockholders
surrendering Shares pursuant to the Offer should complete and sign the main
signature box and the Substitute Form W-9 included as part of the Letter of
Transmittal to provide the information and certification necessary to avoid
backup federal income tax withholding (unless an applicable exemption exists and
is proved in a manner satisfactory to Purchaser and the Depositary).
Non-corporate foreign stockholders should complete and sign the main signature
box and a Form W-8, Certificate of Foreign Status, a copy of which may be
obtained from the Depositary, in order to avoid backup federal income tax
withholding. See Section 5 of this Offer to Purchase and Instruction 11 to the
Letter of Transmittal.
3. WITHDRAWAL RIGHTS
Except as otherwise provided in this Section 3, tenders of Shares made
pursuant to the Offer 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
Purchaser pursuant to the Offer, may also be withdrawn at any time after
December 19, 1997.
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 and
must specify the name of the person having 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 for Shares 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
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Eligible Institution, the signatures on the notice of withdrawal must be
guaranteed in a manner required by Section 2 hereof. Withdrawals of tenders of
Shares may not be rescinded, and any Shares properly withdrawn will thereafter
be deemed not validly tendered for any purposes of the Offer. However, withdrawn
Shares may be retendered by again following one of the procedures described in
Section 2 at any time prior to the Expiration Date.
All questions as to the form and validity (including time of receipt) of
notices of withdrawal will be determined by Purchaser in its sole discretion,
which determination will be final and binding. None of Purchaser, Parent, the
Depositary, the Dealer Manager, 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 will incur any liability for failure to give any such
notification.
4. ACCEPTANCE FOR PAYMENT AND PAYMENT
Upon the terms and subject to the conditions of the Offer (including, if
the Offer is extended or amended, the terms and conditions of any such extension
or amendment), Purchaser will accept for payment and will pay for all Shares
validly tendered prior to the Expiration Date and not properly withdrawn in
accordance with Section 3 as soon as practicable after the Expiration Date and
the satisfaction or waiver of the conditions described in Section 14 hereof. For
a description of Purchaser's right to terminate the Offer and not accept for
payment or pay for Shares or to delay acceptance for payment or payment for
Shares, see Sections 12 and 14.
In all cases, payment for Shares accepted for payment pursuant to the Offer
will be made only after timely receipt by the Depositary of (a) certificates
evidencing such Shares (or timely Book-Entry Confirmation of a transfer of such
Shares as described in Section 2), (b) the Letter of Transmittal (or a manually
signed 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) and (c) any other documents required by the Letter of
Transmittal. The per Share consideration paid to any stockholder pursuant to the
Offer will be the highest per Share consideration paid to any other stockholder
pursuant to the Offer.
For purposes of the Offer, Purchaser will be deemed to have accepted for
payment, and thereby purchased, Shares properly tendered to Purchaser and not
withdrawn as, if and when Purchaser gives oral or written notice to the
Depositary of Purchaser'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 Purchaser and
transmitting payment to tendering stockholders. UNDER NO CIRCUMSTANCES WILL
INTEREST BE PAID ON THE PURCHASE PRICE FOR THE SHARES TO BE PAID BY PURCHASER,
REGARDLESS OF ANY EXTENSION OF THE OFFER OR ANY DELAY IN MAKING SUCH PAYMENT.
If Purchaser is delayed in its acceptance for payment of, or payment for,
tendered Shares or is unable to accept for payment or pay for such Shares
pursuant to the Offer for any reason, then, without prejudice to Purchaser's
rights under the Offer (but subject to compliance with Rule 14e-1(c) under the
Exchange Act, which requires that a tender offeror pay the consideration offered
or return the tendered securities promptly after the termination or withdrawal
of a tender offer), the Depositary may, nevertheless, on behalf of Purchaser,
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 3.
If any tendered Shares are not purchased pursuant to the Offer because of
an invalid tender or otherwise, certificates for any such Shares will be
returned, without expense to the tendering stockholder (or, in the case of
Shares delivered by book-entry transfer of such Shares into the Depositary's
account at a Book-Entry Transfer Facility pursuant to the procedure set forth in
Section 2, such Shares will be credited to an account maintained at the
appropriate Book-Entry Transfer Facility), as promptly as practicable after the
expiration or termination of the Offer.
Purchaser reserves the right to transfer or assign, in whole or from time
to time in part, to Parent, or to one or more direct or indirect wholly owned
subsidiaries of Parent, the right to purchase Shares tendered
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pursuant to the Offer, but any such transfer or assignment will not relieve
Purchaser 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.
5. CERTAIN UNITED STATES FEDERAL INCOME TAX CONSEQUENCES
Sales of Shares pursuant to the Offer (and the receipt of the right to
receive cash by stockholders of the Company pursuant to the Merger) will be
taxable transactions for federal income tax purposes under the Internal Revenue
Code of 1986, as amended (the "Code"), and may also be taxable transactions
under applicable state, local, foreign and other tax laws. A tendering
stockholder will generally recognize gain or loss for federal income tax
purposes equal to the difference between the amount of cash received by the
stockholder pursuant to the Offer (or to be received pursuant to the Merger) and
the aggregate tax basis in the Shares tendered by the stockholder and purchased
pursuant to the Offer (or canceled pursuant to the Merger). Gain or loss will be
calculated separately for each block of Shares tendered and purchased pursuant
to the Offer (or canceled pursuant to the Merger).
Under current law, gain or loss from the sale or exchange of property will
be treated as long-term capital gain or loss if the property is deemed to have
been held for more than 18 months. The maximum federal long-term capital gains
rate applicable to an individual is 20%. Gain or loss from the sale or exchange
of stock will be treated as mid-term capital gain if the stock is deemed to have
been held for more than one year but not more than 18 months. The maximum
federal mid-term capital gains rate for an individual is 28%. Any gain or loss
other than long-term or mid-term capital gain or loss will be treated as
short-term capital gain or loss. The maximum federal tax rate applicable to
ordinary income (including dividends and short-term capital gains) recognized by
individuals is 39.6%. The maximum federal tax rate applicable to all capital
gains and ordinary income recognized by a corporation is 35%.
A stockholder (other than certain exempt stockholders including, among
others, all corporations and certain foreign individuals) that tenders Shares
may be subject to 31% backup withholding unless the stockholder provides its TIN
and certifies that such number is correct or properly certifies that it is
awaiting a TIN. A stockholder that does not furnish its TIN may be subject to a
penalty imposed by the IRS. Each stockholder should complete and sign the
Substitute Form W-9 included as part of the Letter of Transmittal so as to
provide the information and certification necessary to avoid backup withholding.
See Section 2.
If backup withholding applies to a stockholder, the Depositary is required
to withhold 31% from payments to such stockholder. Backup withholding is not an
additional tax. Rather, the amount of the backup withholding can be credited
against the federal income tax liability of the person subject to the backup
withholding, provided that the required information is given to the IRS. If
backup withholding results in an overpayment of tax, a refund can be obtained by
the stockholder upon filing an income tax return.
THE FOREGOING DISCUSSION MAY NOT BE APPLICABLE WITH RESPECT TO SHARES
RECEIVED PURSUANT TO THE EXERCISE OF EMPLOYEE STOCK OPTIONS OR OTHERWISE AS
COMPENSATION OR WITH RESPECT TO HOLDERS OF SHARES WHO ARE SUBJECT TO SPECIAL TAX
TREATMENT UNDER THE CODE, SUCH AS NON-U.S. PERSONS, LIFE INSURANCE COMPANIES,
TAX-EXEMPT ORGANIZATIONS AND FINANCIAL INSTITUTIONS, AND MAY NOT APPLY TO A
HOLDER OF SHARES IN LIGHT OF ITS INDIVIDUAL CIRCUMSTANCES. STOCKHOLDERS ARE
URGED TO CONSULT THEIR OWN TAX ADVISORS TO DETERMINE THE PARTICULAR TAX
CONSEQUENCES TO THEM (INCLUDING THE APPLICATION AND EFFECT OF ANY STATE, LOCAL
OR FOREIGN INCOME AND OTHER TAX LAWS) OF THE OFFER AND THE MERGER.
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6. PRICE RANGE OF THE SHARES; DIVIDENDS ON THE SHARES
The Shares are admitted for quotation and traded on the Nasdaq National
Market under the symbol "THOM." The following table sets forth, for each of the
periods indicated, the high and low last reported sales prices per Share as
published in financial sources. The periods set forth below are calendar
quarters.
LOW HIGH
--- ----
1995
Fourth Quarter...................................... $13 1/2 $20 1/2
1996
First Quarter....................................... $11 5/8 $15 1/4
Second Quarter...................................... $ 9 7/8 $14 1/4
Third Quarter....................................... $ 9 $13
Fourth Quarter...................................... $ 5 3/4 $10 1/2
1997
First Quarter....................................... $ 5 1/8 $ 6 3/4
Second Quarter...................................... $ 2 1/4 $ 6 3/4
Third Quarter....................................... $ 4 5/8 $ 5 7/8
Fourth Quarter (through October 17, 1997)........... $ 5 3/8 $ 7 13/16
The Company has not paid any cash dividends on the Shares since its
formation. Pursuant to the Merger Agreement, the Company has agreed not to
declare or pay any dividend or distribution on the Shares until the consummation
of the Merger.
On October 14, 1997, the last full day of trading before the public
announcement of the execution of the Merger Agreement, the last reported sales
price of the Shares on the Nasdaq National Market was $6 3/8 per Share. On
October 17, 1997, the last reported sales price of the Shares on the Nasdaq
National Market was $7 3/4 per Share. STOCKHOLDERS ARE URGED TO OBTAIN CURRENT
MARKET QUOTATIONS FOR THE SHARES.
7. EFFECT OF THE OFFER ON THE MARKET FOR THE SHARES; STOCK EXCHANGE LISTING;
REGISTRATION UNDER THE EXCHANGE ACT
The purchase of Shares pursuant to the Offer will reduce the number of
Shares that might otherwise trade publicly and may reduce the number of holders
of Shares, which could adversely affect the liquidity and market value of the
remaining publicly held Shares. Purchaser cannot predict whether the reduction
in the number of Shares that might otherwise trade publicly would have an
adverse or beneficial effect on the market price for or marketability of the
Shares or whether it would cause future market prices to be greater or less than
the Offer Price.
Nasdaq National Market Listing. Depending upon the aggregate market value
and the per Share price of any Shares not purchased pursuant to the Offer,
following the Offer the Shares may no longer meet the standards for continued
inclusion on the Nasdaq National Market, which require an issuer to have at
least 750,000 publicly held shares and net tangible assets of at least
$4,000,000 or at least 1.1 million publicly held shares with a market
capitalization, total assets or total revenue of at least $75 million. Xxxxxx
held directly or indirectly by an officer or director of the Company or by any
beneficial owner of more than 10% of the shares are ordinarily not considered as
being publicly held for this purpose. If the Shares were no longer quoted on the
Nasdaq National Market, it is possible that the Shares could continue to trade
in the over-the-counter market and that quotations would continue to be reported
through from other sources. The extent of the public market for the Shares and
the availability of such quotations would, however, depend upon the number of
stockholders and/or the aggregate market value of the Shares remaining at such
time, the interest in maintaining a market in the Shares on the part of
securities firms, the possible termination of registration of the Shares under
the Exchange Act, as described below, and other factors.
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Purchaser cannot predict whether the reduction in the number of Shares that
might otherwise trade publicly would have an adverse or beneficial effect on the
market price for or marketability of the Shares or whether it would cause future
market prices to be greater or less than the price in the Offer.
Margin Regulations. The Shares are currently "margin securities" under the
regulations of the Board of Governors of the Federal Reserve System (the
"Federal Reserve Board"), which has the effect, among other things, of allowing
brokers to extend credit on the collateral of such Shares. Depending upon
factors similar to those described above regarding listing and market
quotations, following the Offer the Shares might no longer constitute "margin
securities" for the purposes of the Federal Reserve Board's margin regulations
and, therefore, could no longer be used as collateral for loans made by brokers.
Exchange Act Registration. The Shares are currently registered under the
Exchange Act. Such registration may be terminated upon application of the
Company to the Commission if the Shares are not listed on a national securities
exchange and there are less than 300 holders of record. Termination of the
registration of the Shares under the Exchange Act would substantially reduce the
information required to be furnished by the Company to holders of Shares and to
the Commission and would make certain of the provisions of the Exchange Act,
such as the short-swing profit recovery provisions of Section 16(b), the
requirement of furnishing a proxy or information statement in connection with
stockholder action and the related requirement of an annual report to
stockholders and the requirements of Rule 13e-3 under the Exchange Act with
respect to "going private" transactions, no longer applicable to the Shares.
Furthermore, "affiliates" of the Company and persons holding "restricted
securities" of the Company may be deprived of the ability to dispose of such
securities pursuant to Rule 144 promulgated under the Securities Act of 1933, as
amended. If registration of the Shares under the Exchange Act were terminated,
the Shares would no longer be "margin securities" or eligible for listing on a
securities exchange or Nasdaq reporting. It is the current intention of Parent
to deregister the Shares after consummation of the Offer if the requirements for
termination of registration are met.
8. CERTAIN INFORMATION CONCERNING THE COMPANY
Except as otherwise set forth herein, the information concerning the
Company contained in this Offer to Purchase, including financial information,
has been furnished by the Company or has been taken from or based upon publicly
available documents and records on file with the Commission and other public
sources. Although none of Purchaser, Parent or the Dealer Manager has any
knowledge that would indicate that the statements contained herein based upon
such documents are untrue, none of Purchaser, Parent or the Dealer Manager
assumes any responsibility for the accuracy or completeness of the information
concerning the Company furnished by the Company, or contained in such documents
and records, or for any failure by the Company to disclose events which may have
occurred or which may affect the significance or accuracy of any such
information but which are unknown to Purchaser, Parent or the Dealer Manager.
The Company is a Delaware corporation with its principal executive offices
at 0000 Xxxxxxx Xxxxxx, Xxxxx 000, Xxxxxx xxx Xxx, Xxxxxxxxxx 00000. According
to the Company's Annual Report on Form 10-K (a "Form 10-K") for the fiscal year
ended September 30, 1996, the Company is an independent aftermarket distributor
of automotive paint and related supplies to the automotive collision repair
industry. As of September 30, 1996, the Company operated 101 distribution sites,
with 39 in the Southeast Division, 20 in the Southern California Division, 11 in
the Northern California Division, 11 in the Rocky Mountain Division, 13 in the
Mid-Atlantic Division and 7 in the Northeast Division.
Set forth below is certain selected consolidated financial information with
respect to the Company and its subsidiaries excerpted or derived from the
information contained in the Company's Form 10-K for the fiscal year ended
September 30, 1996 and the Company's Quarterly Report on Form 10-Q for the
quarterly period ended June 28, 1997 (the "Company's 10-Q"). More comprehensive
financial information is included in such reports and other documents filed by
the Company with the Commission, and the following summary is qualified in its
entirety by reference to such reports and such other documents and all the
financial information (including any related notes) contained therein. Such
reports and other documents should be available for
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inspection and copies thereof should be obtainable in the manner set forth below
under "Available Information."
XXXXXXXX PBE, INC.
SELECTED HISTORICAL FINANCIAL INFORMATION
(IN THOUSANDS, EXCEPT PER SHARE DATA)
FISCAL YEAR ENDED NINE MONTHS ENDED
SEPTEMBER JUNE 30,
------------------- -------------------
1995 1996 1996 1997
---- ---- ---- ----
CONSOLIDATED STATEMENT OF OPERATIONS DATA:
Net sales............................................. $131,827 $178,139 $128,084 $151,505
Cost of revenues...................................... 82,562 113,210 80,305 97,959
-------- -------- -------- --------
Gross profit.......................................... 49,265 64,929 47,779 53,546
Selling, general and administrative................... 36,996 55,831 37,133 44,067
Depreciation expense.................................. 1,387 1,848 1,345 1,646
Amortization of goodwill and other intangible
assets(1)........................................... 1,679 2,267 1,598 2,206
Interest expense...................................... 2,918 2,600 1,642 3,146
Charge in connection with sale, closure or
consolidation of certain sites...................... 3,616
-------- -------- -------- --------
Income (loss) before income taxes and extraordinary
items............................................... 6,285 2,383 6,061 (1,135)
Provision for income taxes............................ 805 1,310 2,515 606
-------- -------- -------- --------
Income (loss) before extraordinary item............... 5,480 1,073 3,546 (1,741)
Extraordinary item -- early extinguishment of debt.... (445)
-------- -------- -------- --------
Net income (loss)..................................... $ 5,035 $ 1,073 $ 3,546 $ (1,741)
======== ======== ======== ========
HISTORICAL PER SHARE DATA(2):
Income before extraordinary item...................... $ 0.70 $ 0.12 $ 0.40 $ (0.20)
Extraordinary item -- early extinguishment of debt.... $ (0.07)
Net income per share.................................. $ 0.63 $ 0.12 $ 0.40 $ (0.20)
Weighted average common and common equivalent
shares.............................................. 6,317 8,850 8,849 8,656
CONSOLIDATED BALANCE SHEET DATA:
Working capital....................................... $ 21,617 $ 30,249 $ 36,261 $ 17,841
Total assets.......................................... 81,908 124,380 119,774 129,064
Long-term debt........................................ 46,084 44,307 42,687 39,118
Stockholders' equity.................................. 16,956 51,234 53,657 49,135
-------------------------
(1) Includes amortization of goodwill and covenants not to compete resulting
primarily from the Company's business acquisitions and amortization of debt
issuance costs.
(2) Historical income per share before extraordinary item and historical net
income per share for the fiscal year ended September 30, 1995 have each been
computed assuming a charge of $1,078,000 related to the redemption of the
Company's redeemable stock and dividends accrued thereon. All outstanding
shares of the Company's redeemable stock were redeemed with a portion of the
net proceeds from the Company's November 1994 initial public offering.
PROJECTED FINANCIAL INFORMATION. IN THE COURSE OF DISCUSSIONS BETWEEN
REPRESENTATIVES OF PARENT AND THE COMPANY (SEE SECTION 11), THE COMPANY PROVIDED
PARENT WITH CERTAIN PROJECTED FINANCIAL INFORMATION. SUCH INFORMATION WAS NOT
PREPARED WITH A VIEW TO PUBLIC DISCLOSURE OR COMPLIANCE WITH PUBLISHED
GUIDELINES OF THE COMMISSION OR THE GUIDELINES ESTABLISHED BY THE AMERICAN
INSTITUTE OF CERTIFIED PUBLIC ACCOUNTANTS REGARDING PROJECTIONS. THE INFORMATION
WAS NOT PREPARED WITH THE ASSISTANCE OF, OR REVIEWED BY, INDEPENDENT
ACCOUNTANTS, AND IS INCLUDED IN THIS OFFER TO PURCHASE ONLY BECAUSE IT WAS
PROVIDED TO PARENT IN JULY 1997. NEITHER PARENT, PURCHASER, THE COMPANY, THE
DEALER MANAGER, NOR ANY OFFICER, DIRECTOR, OR REPRESENTATIVE OF OR ADVISOR TO
ANY SUCH PERSON ASSUMES ANY RESPONSIBILITY FOR THE VALIDITY, REASONABLENESS,
ACCURACY OR COMPLETENESS OF THESE PROJECTIONS. WHILE PRESENTED WITH NUMERICAL
SPECIFICITY, THESE PROJECTIONS ARE BASED UPON A VARIETY OF ASSUMPTIONS RELATING
TO THE BUSINESSES OF THE COMPANY THAT MAY NOT BE REALIZED AND ARE SUBJECT TO
SIGNIFICANT UNCERTAINTIES AND CONTINGENCIES, MANY OF WHICH ARE BEYOND THE
CONTROL OF THE COMPANY AND, THEREFORE, THESE PROJECTIONS ARE INHERENTLY
IMPRECISE, AND THERE CAN BE NO ASSURANCE THAT PROJECTED FINANCIAL RESULTS OR ANY
VALUATION ASSUMED THEREIN WILL BE REALIZED. SET FORTH BELOW IS CERTAIN
CONSOLIDATED
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FINANCIAL INFORMATION WITH RESPECT TO THE COMPANY AND ITS SUBSIDIARIES INCLUDED
IN THE PROJECTED FINANCIAL INFORMATION SHOWN TO PARENT BY THE COMPANY. THE
INCLUSION OF SUCH PROJECTIONS HEREIN SHOULD NOT BE REGARDED AS AN INDICATION
THAT PARENT, PURCHASER, THE COMPANY, THE DEALER MANAGER OR ANY OFFICER,
DIRECTOR, OR REPRESENTATIVES OF OR ADVISOR TO ANY SUCH PERSON OR ANY OTHER PARTY
WHO RECEIVES SUCH INFORMATION CONSIDERS IT AS AN ACCURATE PREDICTION OF FUTURE
EVENTS. THE PROJECTIONS DO NOT TAKE INTO ACCOUNT ANY OF THE POTENTIAL EFFECTS OF
THE TRANSACTIONS CONTEMPLATED BY THE OFFER AND THE MERGER.
XXXXXXXX PBE, INC.
PROJECTED INCOME STATEMENT INFORMATION
(PREPARED IN JUNE 1997)
FISCAL YEARS ENDED SEPTEMBER 30,
-------------------------------------------
1997(1) 1998 1999 2000 2001
------- ---- ---- ---- ----
(IN MILLIONS)
Revenues............................................ $197.9 $206.9 $230.9 $265.2 $300.2
Cost of Goods Sold.................................. 127.8 132.4 147.8 169.8 192.2
------ ------ ------ ------ ------
Gross Profit........................................ 70.1 74.5 83.1 95.4 108.0
Selling, General and Administrative................. 54.9 56.9 62.3 71.6 81.1
------ ------ ------ ------ ------
EBITDA......................................... 15.2 17.6 20.8 23.8 26.9
Depreciation and Amortization....................... 5.3 5.4 6.0 6.9 7.8
------ ------ ------ ------ ------
EBIT........................................... $ 9.9 $ 12.2 $ 14.8 $ 16.9 $ 19.1
====== ====== ====== ====== ======
-------------------------
(1) Pro forma for $3.0 million in net operating income benefit, of which $1.2
million is assumed to be realized in fiscal 1997, and $0.65 million of
non-recurring expenses.
Discussion of Financial Projections
Sales. Sales are projected to increase from $202.9 million in fiscal 1996
(pro forma) to $300.2 million in fiscal 2001 through acquisitions and increases
in same store sales for 1998 and beyond. Comparable store sales are projected to
decrease in fiscal 1997 as a result of unseasonably mild weather in several of
the Company's major markets and acquisition integration. Revenue from new
acquisitions with annual sales of $9.9 million will offset this decline. Fiscal
year 1998 comparable store sales are projected to be $201.9 million, up 2.0%
from 1997. Sales are estimated assuming that base sales per store increase by
2.0% per year after 1997. Acquisitions with sales of $10 million per year in
1998 are assumed with a sales contribution of $5 million (one half of a year).
Acquisitions of businesses representing $30 million in sales are assumed in 1999
through 2001 spread evenly through each year, resulting in $15 million of sales
contribution per year for the new acquisitions. The Company assumes that
acquisition will be paid for with cash at a price which is consistent with the
average price paid for acquisitions in the past. However, the Company has
historically used debt (usually taken by the seller as part of the proposed
purchase price) to finance a portion of its acquisitions and will continue to
use debt in the future when terms are attractive.
Gross Profit. Gross profit margin for the years 1998 through 2001 is
assumed to be approximately 36.0%. This is an increase from the 35.4% expected
in 1997. 1997's gross profit margin will be below historical and projected
levels due to the Company's focus on reducing inventory and the resultant
reduction of bulk order discounts from paint manufacturers. The Company expects
to complete its inventory rationalization by the end of fiscal 1997 and believes
that its gross margin will rise as the Company returns to historic purchasing
patterns.
Selling, General & Administrative. Base selling, general and administrative
expenses are assumed to decline over time as a percentage of revenue as the
Company leverages its fixed costs over a larger revenue base.
Depreciation and Amortization. The Company expects depreciation to increase
by $400,000 (17%) to $2.7 million in 1998 as the Company's new computer system
and related costs are depreciated over seven years. Amortization will increase
over the period of the projections as the Company records intangible assets
related to acquisitions.
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Operating Income. Operating income is projected to increase from $9.9
million in fiscal 1997 to $19.1 million in fiscal 2001. The Company has
implemented plans to realize $3.0 million of annualized net operating income
benefit and $0.65 million of non-recurring expenses in fiscal year 1997 and will
reduce recurring operating expenses on a pro forma basis.
Corporate Expenses. In fiscal 1997 it is estimated that corporate expenses,
which are included in selling, general and administrative expenses, will be $6.6
million. Corporate expenses are assumed to rise by inflation over the forecast
period. Below is a table outlining the major components of 1997 annualized
corporate expenses. ($ in millions)
Accounting............................................... $3.5
Corporate................................................ 1.8
MIS...................................................... 0.8
Public Company Costs..................................... 0.5
----
Total............................................... $6.6
====
Capital Expenditures. Capital expenditures, primarily for vehicles and
leasehold improvements, are expected to be $1.7 million in 1997 and are expected
to increase by approximately $0.2 million per year thereafter. These amounts
exclude costs for the Company's new computer system.
Working Capital. Working capital requirements and ratios remain constant
over the period of the projections. However, when the Company acquires a target,
the net working capital of that business is included in the acquisition price.
In addition, the Company is often able to decrease working capital requirements
of new businesses because, as the largest distributor of aftermarket automotive
paint in the U.S., the Company can take advantage of published discounts and
terms which smaller companies may not receive.
Available Information
The Company is subject to the reporting requirements of the Exchange Act
and, in accordance therewith, is required to file reports and other information
with the Commission relating to its business, financial condition and other
matters. Information as of particular dates concerning the Company's directors
and officers, their remuneration, the principal holders of the Company's
securities and any material interest 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 Commission. Such reports, proxy
statements and other information may be inspected at the public reference
facilities of the Commission located at 000 Xxxxx Xxxxxx, X.X., Xxxxxxxxxx, X.X.
00000, and at the regional offices of the Commission located in the Citicorp
Center, 000 Xxxx Xxxxxxx Xxxxxx (Xxxxx 0000), Xxxxxxx, Xxxxxxxx 00000-2511 and
Seven World Trade Center, Xxxxx 0000, Xxx Xxxx, Xxx Xxxx 00000. Copies of this
material may also be obtained by mail, upon payment of the Commission's
customary charges, by writing to the Commission's principal office at 000 Xxxxx
Xxxxxx, X.X., Xxxxxxxxxx, X.X. 00000. The Commission also maintains a Web site
on the Internet that contains reports, proxy materials, information statements
and other information regarding issuers that file electronically with the SEC,
including the Company. The address of such site is: xxxx://xxx.xxx.xxx.
9. CERTAIN INFORMATION CONCERNING PURCHASER AND PARENT
Purchaser, a Delaware corporation and wholly owned subsidiary of Parent,
was organized to acquire the Company and has not conducted any unrelated
activities since its organization. The principal offices of Purchaser are
located at 00 Xxxxxxxx Xxxxxx, Xxxxxxxxxxxx, Xxxxxxx 00000. All outstanding
shares of capital stock of Purchaser are owned by Parent. Until immediately
prior to the time Purchaser purchases shares pursuant to the Offer, it is not
anticipated that Purchaser will have any significant assets or liabilities or
engage in activities other than those incident to its formation and
capitalization and the transactions contemplated by the Offer. Because Purchaser
is a newly formed corporation and has minimal assets and capitalization, no
meaningful financial information regarding Purchaser is available.
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Parent is an Indiana corporation with its principal office located at 0000
00xx Xxxxxx, XX, Xxxxxxxx, Xxxxxxxx 00000. The Parent's business is the sale and
distribution of automotive paints, coatings and paint-related accessories
principally to the automotive collision repair industry. Parent is controlled by
LDI AutoPaints, Inc., an Indiana corporation ("AutoPaints"), a wholly owned
subsidiary of Xxxx Distribution, Inc., an Indiana corporation ("Xxxx"), and an
indirect wholly owned subsidiary of LDI, Ltd., an Indiana limited partnership
("LDI"). LDI has two general partners: LDI Management, Inc. ("LDIM"), its
managing partner, and Xxxxx X. Xxxx, the Chairman and Chief Executive Officer of
Parent. The name, business address, present principal occupation or employment,
five-year employment history and citizenship of each of the directors and
executive officers of Purchaser, Parent and each entity controlling Parent are
set forth in Annex I.
Set forth below is certain selected consolidated financial information with
respect to Parent and its subsidiaries excerpted or derived from the information
contained in Parent's Form 10-K for the period ended December 31, 1996 and the
Parent's Quarterly Report on Form 10-Q for the quarterly period ended June 30,
1997. More comprehensive financial information is included in such reports and
other documents filed by Parent with the Commission, and the following summary
is qualified in its entirety by reference to such reports and such other
documents and all the financial information (including any related notes)
contained therein. Such reports and other documents should be available for
inspection and copies thereof should be obtainable in the manner set forth below
under "Available Information."
FINISHMASTER, INC.
SELECTED CONSOLIDATED FINANCIAL INFORMATION
SIX MONTHS SIX MONTHS NINE MONTHS NINE MONTHS FISCAL YEAR ENDED
ENDED ENDED ENDED ENDED MARCH 31,
JUNE 30, JUNE 30, DECEMBER 31, DECEMBER 31, ------------------
1997 1996 1996(1) 1995(1) 1996 1995
---------- ---------- ------------ ------------ ---- ----
(UNAUDITED) (UNAUDITED) (UNAUDITED)
(IN THOUSANDS EXCEPT PER SHARE DATA)
STATEMENTS OF OPERATIONS
DATA
Net sales................... $60,273 $63,122 $95,822 $77,538 $107,511 $79,382
Gross margin................ 22,201 22,240 33,891 27,699 38,012 28,048
Income from operations(2)... 3,155 2,190 2,566 4,619 5,073 5,394
Net income.................. 1,411 701 660 2,647 2,649 3,462
------- ------- ------- ------- -------- -------
Net income per share........ $ .24 $ .12 $ 0.11 $ 0.44 $ 0.44 $ 0.58
------- ------- ------- ------- -------- -------
Shares used in the
computation of net income
per share................. 5,994 6,000 6,000 6,000 6,000 6,000
-------------------------
(1) Parent elected to change its fiscal year-end from March 31 to December 31,
effective for the period ended December 31, 1996. As a result of this change
Parent has shown unaudited comparative information for the nine months ended
December 31, 1995.
(2) State income taxes have been reclassified from operating expense to income
tax expense in the prior year amounts to conform with the presentation of
corresponding amounts in the current period.
JUNE 30, DECEMBER 31, MARCH 31, MARCH 31,
1997 1996 1996 1995
-------- ------------ --------- ---------
(IN THOUSANDS)
BALANCE SHEET DATA
Working capital..................................... $23,439 $22,819 $25,036 $17,763
Total assets........................................ 61,361 66,477 66,772 46,442
Long-term debt...................................... 19,782 21,970 23,248 7,208
Stockholders' equity................................ 33,686 32,326 31,665 28,956
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Acquisitions made by Parent have been accounted for as purchases and,
accordingly, the acquired assets and liabilities have been recorded at their
estimated fair values at the dates of acquisition. Operating results of these
acquired organizations are included in Parent's financial statements from the
respective dates of purchase.
Except as described in this Offer to Purchase, neither Purchaser nor Parent
(together, the "Corporate Entities") or, to the best knowledge of the Corporate
Entities, any of the persons listed in Annex I or any associate or
majority-owned subsidiary of the Corporate Entities or any of the persons so
listed, beneficially owns any equity security of the Company (except that LDI
and Parent each own 100 Shares), and none of the Corporate Entities, any of the
other persons referred to above, or any of the respective directors, executive
officers or subsidiaries of any of the foregoing, has effected any transaction
in any equity security of the Company during the past 60 days.
Except as described in this Offer to Purchase, (a) there have not been any
contracts, transactions or negotiations between the Corporate Entities, any of
their respective subsidiaries or, to the best knowledge of the Corporate
Entities, any of the persons listed in Annex I, on the one hand, and the Company
or any of its directors, officers or affiliates, on the other hand, that are
required to be disclosed pursuant to the rules and regulations of the Commission
and (b) none of the Corporate Entities or, to the best knowledge of the
Corporate Entities, any of the persons listed in Annex I has any contract,
arrangement, understanding or relationship with any person with respect to any
securities of the Company.
During the last five years none of the Corporate Entities or, to the best
knowledge of Corporate Entities, any of the persons listed in Annex I (a) has
been convicted in a criminal proceeding (excluding traffic violations and
similar misdemeanors) or (b) was a party to a civil proceeding of a judicial or
administrative body of competent jurisdiction and as a result of such proceeding
was or is subject to a judgment, decree or final order enjoining future
violations of, or prohibiting activities subject to, Federal or state securities
laws or finding any violation of such laws.
Available Information. Parent is subject to the reporting requirements of
the Exchange Act and, in accordance therewith, is required to file reports and
other information with the Commission relating to its business, financial
condition and other matters. Information as of particular dates concerning
Xxxxxx's directors and officers, their remuneration, the principal holders of
Parent's securities and any material interest of such persons in transactions
with Parent is required to be disclosed in proxy statements distributed to
Parent's stockholders and filed with the Commission. Such reports, proxy
statements and other information should be available for inspection at the
Commission, and copies thereof should be obtainable from the Commission, in the
same manner as set forth with respect to information concerning the Company in
Section 8.
10. SOURCE AND AMOUNT OF FUNDS
The total amount of funds required by Purchaser to purchase all outstanding
Shares pursuant to the Offer, to refinance certain indebtedness of the Company
and to pay fees and expenses related to the Offer and the Merger is estimated to
be approximately $110 million. Purchaser plans to obtain all funds needed for
the Offer and the Merger through a capital contribution that will be made by
Parent to Purchaser.
Bank Facilities. NBD Bank, N.A. ("NBD") has entered into a written
commitment with Parent (the "Bank Commitment Letter") dated October 8, 1997, to
provide up to $100 million (the "Aggregate Commitment") through two credit
facilities (the "Facilities") to be used by Parent to: (a) provide funds for the
purchase of the Company, (b) pay expenses in connection with the acquisition,
(c) refinance certain indebtedness, (d) satisfy the working capital needs of
Parent and its subsidiaries, and (e) fund the general corporate purposes of the
Parent and its subsidiaries. NBD has retained the right to syndicate all or a
portion of the Facilities to additional lenders. First Chicago Capital Markets,
Inc., an affiliate of NBD (the "Arranger"), will provide the syndication
services.
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The term loan facility provided for in the Bank Commitment Letter (the
"Term Loan Facility") in the principal amount of $40 million matures six years
from the date of closing of the Facilities (the "Loan Closing Date") with
quarterly installments of principal in the following aggregate annual amounts:
ANNUAL AMOUNT
YEAR EACH PERIOD
---- -------------
1998.............................................. $ 0
1999.............................................. $ 4,000,000
2000.............................................. $ 6,000,000
2001.............................................. $ 9,000,000
2002.............................................. $10,000,000
2003.............................................. $11,000,000
Interest on indebtedness outstanding under the Term Loan Facility will be
payable at a rate per annum equal to, at Parent's election, either (a) the
greater of NBD's corporate base rate or the federal funds rate plus 0.50% per
annum (the "ABR Rate"), or (b) the Eurodollar Rate, plus in the case of each of
(a) and (b), an additional amount (the "Applicable Margin") based on the ratio
of Parent's total indebtedness to EBITDA (the "Leverage Ratio"). In the case of
ABR loans, the Applicable Margin ranges from 1.00% to 0% and, in the case of
Eurodollar loans, ranges from 2.25% to 0.75%.
The revolving credit facility provided for in the Bank Commitment Letter
(the "Revolving Credit Facility") in the amount of $60 million matures six years
from the Loan Closing Date. Interest is payable on the indebtedness outstanding
under the Revolving Credit Facility at a rate per annum determined in the same
manner as with respect to the Term Loan. The aggregate outstanding amount of
loans under the Revolving Credit Facility may not exceed the borrowing base
which will consist of inventory and accounts receivable, with eligibility and
advance rates to be determined.
The Facilities will be secured by a first perfected security interest in
all of Parent's assets and, through secured guarantees, in all of its
subsidiaries' assets, including the assets of the Surviving Corporation.
The funding of the Facilities is conditioned upon Parent having received at
least $30 million in proceeds from the issuance of a subordinated note to LDI,
an affiliate of Parent. The anticipated terms of such subordinated note are
described below. Other conditions to funding of the Facilities include, among
other matters: (a) absence of default; (b) lack of material adverse change from
Parent's or the Company's financial condition and operations performance,
properties or prospects since September 30, 1997; (c) determination that all
required approvals to the Merger and Offer have been obtained; (d) satisfactory
results of confirmatory due diligence investigation of Parent and the Company
and their subsidiaries have been received; (e) the terms of the Offer and the
Merger Agreement are acceptable to NBD; (f) receipt of a copy of the fairness
opinion from the Company's investment banker addressed to the Company; (g)
receipt of opinions of value and solvency from Parent's Chief Financial Officer
supporting conclusion that Parent and the Company are each solvent and will be
solvent subsequent to incurring the indebtedness and each can pay their debts as
they come due; and (h) other customary conditions.
The Bank Commitment Letter provides that the definitive loan documents will
include customary representations, warranties and covenants, including financial
covenants which have not yet been negotiated.
Pursuant to the Bank Commitment Letter, Purchaser has agreed, regardless of
whether the Bank Commitment Letter is revoked or terminated or whether or not
the financing transactions contemplated by the Bank Commitment Letter close, to
reimburse NBD and the Arranger for all out of pocket expenses incurred by NBD
and the Arranger in connection with the Bank Commitment Letter, the transactions
contemplated thereby and the on-going due diligence investigation of NBD and the
Arranger in connection therewith and to indemnify NBD, the Arranger, the lenders
and their respective officers, employees, agents and directors against any
losses, claims, damages or liabilities (including, but not limited to, costs of
defense and investigation) to which they may become subject in connection with
the transaction contemplated by the Bank Commitment Letter.
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19
The obligations of the Agent and the Arranger in the Bank Commitment Letter
are subject to the execution and delivery of mutually agreeable loan documents
incorporating the terms and conditions contained in the Bank Commitment Letter,
the absence of a material adverse change with respect to Purchaser and its
subsidiaries and the Company and its subsidiaries and the absence of a material
adverse change in the loan syndication markets or capital markets generally.
The Bank Commitment Letter provides that the commitments in respect of the
facilities will terminate on January 31, 1998 unless definitive loan documents
are executed on or before that date.
The foregoing description of the Bank Commitment Letter is qualified in its
entirety by reference to the text of the Bank Commitment Letter, a copy of which
has been filed as an exhibit to the Schedule 14D-1 of Purchaser and the Parent
relating to the Offer (the "Schedule 14D-1").
LDI Commitment. LDI, the indirect owner of approximately 67.4% of the
outstanding common stock of Parent, has provided a written commitment to Parent,
dated October 14, 1997, to advance to Parent the funds needed to complete the
Offer and the Merger and to refinance certain indebtedness of the Company (the
"LDI Commitment Letter"). Although not specifically referenced, the commitment
of LDI in the LDI Commitment Letter includes providing $30 million to the Parent
in exchange for a subordinated note as required by the Bank Commitment Letter
(the "Subordinated Note").
Although the definitive terms of such Subordinated Note have not been fully
negotiated, it is anticipated that such Subordinated Note will (a) bear an
interest rate equal to the rate borne by obligations of the U.S. Treasury having
approximately the same maturity as the Subordinated Note plus 300 basis points,
(b) mature at least 18 months after the Facilities, (c) provide for the payment
of interest quarterly and the payment of principal at maturity, (d) be
unsecured, and (e) contain subordination and other provisions acceptable to the
Arranger, NBD and the lenders under the Facilities.
The obligation of LDI under the LDI Commitment Letter is not limited to the
purchase of the Subordinated Note. If the Facilities contemplated by the Bank
Commitment Letter are not funded, LDI has committed to make available to Parent
the funds required to complete the Offer and the Merger. The terms on which such
funds would be made available to Parent have not yet been negotiated.
The foregoing description of the LDI Commitment Letter is qualified in its
entirety by reference to the text of the LDI Commitment Letter, a copy of which
has been filed as an exhibit to the Schedule 14D-1.
Repayment. Parent expects that it will repay any amounts borrowed under the
Facilities and the Subordinated Note with cash flow from operations and/or with
proceeds from public or private sales of debt or equity securities.
11. CONTACTS WITH THE COMPANY; BACKGROUND OF THE OFFER
In September 1995, the Company's senior executives (including Xx. Xxxxxxxx
X. Xxxxx, III, then the President and Chief Operating Officer of the Company)
were introduced to Xxxxx X. Xxxx, Chairman of the Board, Chief Executive Officer
and President of LDIM, the managing general partner of LDI, Xxxxxxx Xxxxxxxx,
Vice President and Chief Financial Officer of LDIM, and Xxxxxx X. Xxxxxxxx,
outside counsel to LDI and Corporate Secretary of LDIM, in a meeting held in
Chicago. In that meeting, which had been requested by Xx. Xxxx, Xx. Xxxx
expressed an interest in LDI's investing in the auto paint distribution industry
generally and in acquiring a significant ownership position in the Company in
particular. The Company elected not to pursue Xx. Xxxx'x unsolicited expression
of interest.
In the Spring of 1996, the then-controlling shareholder of Parent advised
the Company that it was actively seeking a buyer for its stake in Parent or,
possibly, the entire company. The Company considered this opportunity with the
assistance of DLJ, but determined not to pursue a transaction. In June 1996,
LDI, through its subsidiary AutoPaints, acquired this controlling stake in
Parent consistent with its strategic plan to invest in the auto paint
distribution industry. Upon completion of that transaction, Xx. Xxxx became
Chairman of the Board and Chief Executive Officer of Parent. During this time
period, AutoPaints also acquired an additional independent auto paint
distributor.
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20
On October 18, 1996, at the invitation of Xx. Xxxx, X. Xxxx Xxxxxxxxxx,
Xx., then Chief Executive Officer of the Company, met with Xx. Xxxx in Chicago.
The purpose of the meeting was to establish a personal relationship and discuss
in general terms the prospects of the auto paint distribution business.
In December 1996, the Company announced that Xx. Xxxxxxxxxx would be
resigning from his positions as an executive officer with the Company and that
Xx. Xxxxx would assume the additional positions of Chairman and Chief Executive
Officer. At the invitation of Xx. Xxxx, Xx. Xxxxx and Xx. Xxxx met in Chicago on
January 30, 1997 for the purpose of renewing their relationship and discussing
the prospects of the auto paint distribution business.
During late 1996 and into 1997, the Company's Board of Directors began to
consider the long-term business plan and strategic future of the Company.
Throughout this period, the Company generally reported operating results that
were inferior to the prior year reflecting several business challenges. The
Company continued to experience difficulties in fully integrating acquired
companies that had been purchased at a very rapid pace in 1995 and 1996. More
broadly, the Company was faced with unfavorable industry conditions, including
flat revenue on decreasing volume and a consolidating customer base. In
response, the Company's stock price had been declining, thereby limiting the
Company's options to obtain growth capital to fund its acquisition strategy,
while at the same time the Company also faced the need to make significant
capital expenditures to upgrade its computer systems. In light of the foregoing
factors, the Board of Directors of the Company determined that it was in the
interests of the Company and its stockholders to consider a possible strategic
transaction with a third party. In particular, the Board of Directors was of the
view that the Company's stock was significantly undervalued in the marketplace
in light of the considerable value the Company might have to another distributor
of auto paint and related supplies, another supplier of products to the
Company's customers, or a financial buyer who could use the Company as a
platform for such a transaction.
On or about April 9, 1997, Xx. Xxxxxx X. Xxxxx, President of Parent,
telephoned Xx. Xxxxx and asked for a meeting between Xx. Xxxxx and Messrs. Xxxx
and Xxxxx. After consulting with the Company's outside directors, Xx. Xxxxx
accepted the invitation and the meeting was scheduled for May 5, 1997.
At a Board meeting held on April 29, 1997, the Company's Board of Directors
determined that it should retain an investment banker to assist it in the
consideration of strategic alternatives to maximize shareholder value. A member
of the Company's Board of Directors was delegated to interview candidates and
recommend the retention of an appropriate financial advisor to assist the
Company. This process led to the retention of DLJ shortly thereafter and the
execution of an engagement letter dated June 2, 1997.
On May 5, 1997, Xx. Xxxxx met with Messrs. Xxxx and Xxxxx in Palm Springs,
California. At this meeting, Messrs. Xxxx and Xxxxx indicated preliminary
interest in considering the possible combination of Parent and the Company. Xx.
Xxxxx advised them that the present sentiment of the Company's Board was that
the Company should consider its strategic alternatives in a formal process.
However, Xx. Xxxxx also indicated that the board might be inclined to give
Parent a first opportunity to propose a transaction if it was interested in
moving quickly. Xx. Xxxxx suggested that Xx. Xxxx meet with Xx. Xxxxx X.
Xxxxxxxx, a member of the Company's Board of Directors.
On May 7, 1997, Xx. Xxxx met with Messrs. Xxxxx and Ferguson at Xx.
Xxxxxxxx'x offices in El Segundo, California. Again, Xx. Xxxx, on behalf of
Xxxxxx, expressed interest in a business combination. Xx. Xxxxxxxx indicated
that the Company's Board of Directors would give appropriate consideration to
any proposal made by Xxxxxx. Xx. Xxxxxxxx also advised Xx. Xxxx that the board
presently intended to hire an investment banker to assist it in conducting a
process to explore the strategic alternatives that might be available to the
Company.
Messrs. Xxxx, Xxxxx and Xxxxxxxx met again in Los Angeles on May 28, 1997
at the request of Xx. Xxxx. In that meeting, Xx. Xxxx proposed a business
combination which contemplated a stock for stock transaction and suggested
approximately equal values for Parent and Company shares. Xx. Xxxxxxxx indicated
that the Company generally preferred a cash transaction. He suggested that
Xxxxxx's advisor, Xxxxx Xxxxxx, make contact with DLJ so that the financial
advisors could exchange views regarding a possible transaction. On June 27,
1997, the Company entered into a confidentiality and standstill agreement with
Parent, Xx. Xxxx,
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21
LDI and certain of their affiliated companies (the "Letter Agreement") in order
to facilitate the release of certain non-public financial information to Parent
and Xxxxx Xxxxxx.
In the conversations that followed among the financial advisors, Xxxxxx
continued to propose transaction structures which contemplated all Parent stock
or mostly stock with a limited cash component. At the direction of the Board,
DLJ conveyed to Xxxxx Xxxxxx the Company's view that such a structure was not
likely to be acceptable and that the Company was inclined to conduct a formal
auction process to determine whether or not a cash transaction was possible with
another party. Xx. Xxxxxxxx also conveyed this view in separate calls with Xx.
Xxxx and a representative of Xxxxx Xxxxxx.
On July 1, 1997, Messrs. Xxxxx and Ferguson and representatives of DLJ
conferred with Xx. Xxxx and representatives of Xxxxx Xxxxxx in a telephone
conference to discuss the confidential information provided by the Company to
Parent and Xxxxx Xxxxxx. Subsequently, on approximately July 8, 1997, Xxxxxx,
acting through Xxxxx Xxxxxx, informed DLJ that Parent would not make a further
proposal at that time, but would instead participate in the process to maximize
shareholder value which was to be conducted by DLJ on behalf of the Company.
After the market closed on July 8, 1997, the Company issued a press release
stating that the Company had elected to explore the strategic alternatives that
may be available to the Company with the objective of maximizing the Company's
value to its stockholders and other constituents, and that DLJ had been retained
to assist the Company in this process. The last reported sales price of the
Common Stock on July 8, 1997 was $4.625 per share.
Promptly after this press release was issued, DLJ began to contact parties
that it believed might be interested in a transaction and to respond to
inquiries from parties that had seen the Company's press release. During July
and August 1997, DLJ had contact with approximately 87 parties, of which 45
parties entered into confidentiality agreements and received information
packages regarding the Company and seven parties responded with written
indications of interest in conducting a formal due diligence review of the
Company. Subsequently, DLJ invited six of these interested parties (including
Parent) to attend presentations to be held in early September at the Company's
executive offices and to have access to the Company's files for due diligence
purposes. The Board of Directors of the Company held meetings on each of August
7, August 20 and September 17, 1997 to monitor this process.
At a special meeting of the Board of Directors of Parent held on October 3,
1997, that board approved and authorized Parent to make a proposal to the
Company for an $8.00 per Share acquisition and the execution and delivery of a
related Agreement and Plan of Merger. In accordance with instructions received
from DLJ, Parent submitted to DLJ on October 6, 1997 a written proposal to
acquire the Company at a purchase price of $8.00 in cash per Share. In its
proposal, Parent advised the Company that its bid was fully financed either
through a bank financing to be arranged by Parent or additional funds to be
provided by LDI.
On October 8, 1997, the Company's Board of Directors met with DLJ and
counsel to review the results of the auction process. At this meeting, the board
determined to pursue a transaction with Parent consistent with the proposal
described above. Accordingly, the board authorized its counsel and DLJ to meet
with representatives of Parent and to attempt to negotiate the definitive terms
of an all cash, fully-financed transaction consistent with Parent's October 6
proposal. Those meetings commenced in Los Angeles at the offices of counsel to
the Company on the afternoon of October 9, 1997 and continued through the
afternoon of October 11, 1997. Final details on a draft form of Merger Agreement
and the related LDI Commitment Letter were completed among counsel on October
13, 1997.
The Board of Directors of the Company met on October 14, 1997 to consider
presentations by counsel and to review the draft Merger Agreement. A
presentation was also provided by DLJ, which included the delivery of its
written opinion to the effect that the proposed cash consideration of $8.00 per
share is fair to the Company's stockholders from a financial point of view.
After considering these presentations, the Board of Directors of the Company
approved the Merger Agreement and approved its execution, subject to receiving
the LDI Commitment Letter. These events were completed late in the day of
October 14, 1997 and a related public announcement was disseminated before the
stock market opened on October 15, 1997.
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12. PURPOSE OF THE OFFER AND THE MERGER AGREEMENT; PLANS FOR THE COMPANY
The purpose of the Offer is to enable Parent and Purchaser to acquire
control of the entire equity interest in the Company. The purpose of the Merger
is for Purchaser and Parent to acquire any remaining equity interest in the
Company not acquired in the Offer.
Subject to the foregoing, Parent intends to conduct a detailed review of
the Company and its assets, corporate structure, capitalization, operations,
properties, policies, management and personnel and to consider what, if any,
changes would be desirable in light of the circumstances then existing and
reserves the right to take such actions or effect such changes as it deems
desirable. Such changes could include changes in the Company's business,
corporate structure, capitalization, Board of Directors or management.
Except as otherwise described in this Offer to Purchase, Purchaser and
Parent have no current plans or proposals that would relate to, or result in,
any extraordinary corporate transaction involving the Company, such as a merger,
reorganization or liquidation involving the Company or any of its subsidiaries,
a sale or transfer of a material amount of assets of the Company or any of its
subsidiaries, any change in the Company's capitalization or dividend policy or
any other material change in the Company's business, corporate structure or
personnel.
The Merger Agreement
The following is a summary of certain provisions of the Merger Agreement, a
copy of which is filed as an Exhibit to the Schedule 14D-1 and is incorporated
herein by reference. The Merger Agreement may be examined, and copies may be
obtained as set forth in Section 9 above. Such summary is qualified in its
entirety by reference to the Merger Agreement.
The Offer. The Merger Agreement provides that Parent will take all
necessary actions to cause Purchaser to commence the Offer as soon as
practicable, but in no event later than five business days from the date of the
announcement of the Merger Agreement. The obligation of Purchaser to accept for
payment (and thereby purchase) any Shares tendered pursuant to the Offer is
subject to the conditions set forth in Annex A to the Merger Agreement (the
"Offer Conditions"). See the Section entitled "Conditions to the Offer" below
and Section 14. Purchaser may waive, in its sole discretion, any Offer Condition
other than the Minimum Condition (as defined in Section 14). Subject only to the
Offer Conditions, Purchaser has agreed to accept for payment and purchase, as
soon as permitted by the terms of the Offer, all Shares validly tendered and not
withdrawn prior to the expiration of the Offer. Without the prior express
written consent of the Company (which it may grant or withhold in its sole
discretion), Parent and Purchaser have agreed that they will not decrease the
per Share price to be paid pursuant to the Offer or the number of Shares for
which the Offer is made, extend the expiration date of the Offer except as
permitted by the Merger Agreement, change the form of consideration or impose
conditions to the Offer in addition to or in modification of the conditions set
forth in Section 14 (other than to waive any conditions to the extent permitted
by the Merger Agreement), waive or increase the Minimum Condition (as defined in
Section 14), or otherwise amend the Offer in any manner that would adversely
affect the Company's stockholders; provided, however, that Purchaser may,
without the consent of the Company, (a) extend the offer beyond any scheduled
Expiration Date for a period not to exceed 20 business days, if at any scheduled
Expiration Date the conditions listed in (a) through (f) of Section 14 and the
Minimum Condition have not been satisfied or waived, (b) extend the Offer for
any period required by any rule, regulation, interpretation or position of the
Commission or its staff, or (c) extend the Offer for a period of seven business
days beyond the latest Expiration Date if more than 90% of the Shares have not
been tendered. In addition, Purchaser has agreed to extend the offer from time
to time in order to satisfy its obligations to take, or cause to be taken, all
actions and to do, or cause to be done, all things necessary, proper or
advisable under applicable laws and regulations to consummate and make effective
the transactions contemplated by the Merger Agreement (subject to the earlier
termination of the Merger Agreement).
Upon payment by Purchaser for Shares purchased pursuant to the Offer
constituting at least a majority of the outstanding Shares on a Fully Diluted
Basis (as defined below), the Company, at Parent's request, will take all
necessary actions to cause its Board of Directors to include a number of
Parent's designees such that
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the designees constitute a percentage of the Board as nearly equal as
practicable to the percentage of outstanding Shares beneficially owned by Parent
on a Fully Diluted Basis (which will be at least a majority of the Board). The
necessary actions of the Company may include accepting resignations of certain
incumbent directors or increasing the size of the Board. The Company and the
Parent have agreed that the Company's Board of Directors shall have at least two
members ("Independent Directors") who are neither officers of the Company nor
designees, stockholders or affiliates of the Parent ("Parent Insiders");
provided, however, that if the number of Independent Directors shall be reduced
below two because of death, disability or resignation, the remaining Independent
Director shall be entitled to designate persons to fill such vacancies who shall
be deemed to be Independent Directors. From and after the date of any
designation of directors by Parent pursuant to the above provision, there will
be formed a Committee of the Board of Directors (the "Special Committee") which
will make all determinations to be made by the Company's Board of Directors
under the Merger Agreement. For purposes of the Merger Agreement, "Fully Diluted
Basis" means, as of any date of determination, a basis that includes all
outstanding Shares, together with all Shares issuable upon the conversion of any
convertible securities or upon the exercise of any options, warrants or rights.
Any amendment or termination of the Merger Agreement by the Company, any
waiver of any of the Company's rights thereunder, any extension of the time for
performance of the Parent's obligations thereunder, or any other action taken by
the Company's Board of Directors in connection with the Merger Agreement or
which adversely affects the interest of the stockholders of the Company (other
than Parent, Purchaser and their affiliates) in addition to action pursuant to
certain specified provisions of the Merger Agreement will require the
concurrence of a majority of the members of the Special Committee, none of the
members of which may be Parent Insiders.
The Merger. The Merger Agreement provides that at the Effective Time,
subject to the terms and conditions thereof, Purchaser will be merged with and
into the Company, and the Company will be the Surviving Corporation. The name of
the Surviving Corporation will be "Xxxxxxxx PBE, Inc." Pursuant to the Merger,
the Certificate of Incorporation and By-Laws of the Company will be the
Certificate of Incorporation and By-Laws of the Surviving Corporation until
thereafter amended as provided by law. The directors of Purchaser at the
Effective Time will become the directors of the Surviving Corporation until
their respective successors are duly elected or appointed and qualified. The
officers of the Company at the Effective Time will continue as the officers of
the Surviving Corporation until their respective successors are duly elected or
appointed and qualified.
Conversion of Shares. The Merger Agreement provides that at the Effective
Time, each outstanding Share will be converted into the right to receive the
Merger Consideration, other than (a) Shares held by the Parent, Purchaser or any
wholly owned subsidiary of Parent or Purchaser, or in the treasury of the
Company, or by any wholly owned subsidiary of the Company, which Shares, by
virtue of the Merger and without any action on the part of the holder thereof,
will be canceled and retired and will cease to exist with no payment being made
with respect thereto, and (b) Shares held by stockholders who exercise their
statutory appraisal rights as described below. At the Effective Time, each
issued and outstanding share of capital stock of Purchaser will be converted
into one validly issued, fully paid and nonassessable share of Common Stock, par
value $.001 per share, of the Surviving Corporation.
The Merger Agreement further provides that any Shares outstanding
immediately before the Effective Time and held by a stockholder who has not
voted in favor of or consented to the Merger in writing and who complies with
all the provisions of the DGCL concerning the right of holders of shares of
capital stock to dissent from the Merger and require appraisal of their shares
(a "Dissenting Stockholder") will not be converted into the right to receive the
Merger Consideration as described above but instead will be converted, at the
Effective Time, by virtue of the Merger and without any further action, into the
right to receive any consideration that may be determined to be due to the
Dissenting Stockholder pursuant to the DGCL; provided, that Shares outstanding
immediately before the Effective Time and held by a Dissenting Stockholder who,
after the Effective Time, fails to perfect or withdraws or loses the Dissenting
Stockholder's right to appraisal, in either case pursuant to the DGCL, will be
deemed to be converted as of the Effective Time into the right to receive the
Merger Consideration, without interest or dividends thereon. The Company
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may not, without the prior written consent of the Parent, voluntarily make any
payment with respect to, or settle or offer to settle, any demands for appraisal
of Shares.
Stockholders' Meeting. The Company has agreed to convene a meeting of its
stockholders as soon as practicable after the purchase of shares pursuant to the
Offer to consider and vote on the adoption of the Merger Agreement, if such a
meeting is required by applicable law or the rules of the Nasdaq National
Market. The Company has agreed that in the proxy statement with respect to the
meeting, the Company will, through its Board, and subject to the fiduciary
obligations of the Board under applicable law and as advised by counsel,
recommend that stockholders of the Company vote in favor of approval and
adoption of the Merger Agreement. Parent has agreed that at any stockholders'
meeting, it will vote or cause all of the Shares then owned by it, Purchaser or
any of its other affiliates to be voted in favor of approval and adoption of the
Merger Agreement.
Conditions to the Merger. The respective obligations of each party to
effect the Merger are subject to the satisfaction or waiver, if permissible,
prior to the Effective Time of the following conditions: (a) the Merger
Agreement shall have been adopted by the stockholders of the Company in
accordance with applicable law and the rules of the Nasdaq National Market if
such a vote is required; (b) no statute, rule, regulation, order, decree or
injunction shall have been enacted, entered, promulgated or enforced by any
court or governmental authority of competent jurisdiction which restrains,
enjoins or otherwise prohibits the consummation of the Merger; provided,
however, that the Company, Parent and Purchaser shall, among other things, use
their reasonable best efforts to have any such order, decree or injunction
vacated; (c) the applicable waiting period under the HSR Act shall have expired
or been terminated; and (d) Purchaser shall have accepted for payment and paid
for all Shares validly tendered pursuant to the Offer, provided that this
condition will be deemed satisfied with respect to the obligations of Parent and
Purchaser if Purchaser fails to accept for payment and pay for any Shares
pursuant to the Offer in violation of the terms of the Merger Agreement or the
Offer.
Conditions to the Offer. Notwithstanding any other provision of the Offer,
Purchaser shall not be required to accept for payment, purchase or pay for any
Shares tendered until the expiration or termination of any applicable waiting
period under the HSR Act, and Purchaser may terminate or, subject to the terms
of the Merger Agreement, amend the Offer and may postpone the purchase of, and
payment for, Shares if the Minimum Condition (as defined in Section 14) has not
been satisfied or waived or if, at any time on or after the date of the Merger
Agreement, and prior to the time of acceptance of any such Shares for payment,
any of the following events shall occur and remain in effect:
(a) an order shall have been entered in any action or proceeding
before any United States federal or state court or governmental agency or
other United States regulatory or administrative agency or commission (an
"Order"), or a preliminary or permanent injunction by a United States court
of competent jurisdiction shall have been issued and remain in effect (an
"Injunction"), which in either case (i) prohibits the making or
consummation of the Offer or the consummation of the Merger, (ii)
significantly restricts the ability of Purchaser, or renders Purchaser
unable, to accept for payment, pay for or purchase Shares sufficient to
satisfy the Minimum Condition in the Offer or the remaining Shares
outstanding in the Merger (other than as a result of the exercise of
dissenters' rights and other than for delays or restrictions that are not
material to Parent and Purchaser), (iii) prohibits or restricts the
ownership or operation by Parent or Purchaser (or any of their respective
affiliates or subsidiaries) of any portion of its or the Company's business
or assets which is material to the business of the Company and its
subsidiaries taken as a whole or of Parent and its subsidiaries taken as a
whole or compels Parent or Purchaser (or any of their respective affiliates
or subsidiaries) to dispose of or hold separate any portion of its or the
Company's business or assets which is material to the business of the
Company and its subsidiaries taken as a whole or of Parent and its
subsidiaries, taken as a whole, (iv) imposes material limitations on the
ability of Purchaser effectively to acquire or to hold or to exercise full
rights of ownership of the Shares, including, without limitation, the right
to vote the Shares purchased by Purchaser on all matters properly presented
to the stockholders of the Company, (v) imposes any material limitations on
the ability of Parent or Purchaser or any of their respective affiliates or
subsidiaries effectively to control in any material respect the business
and operations of the Company and its subsidiaries, or (vi) which otherwise
would result in a Company Material Adverse Effect (as defined
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below); provided, however, that Parent and Purchaser shall have complied
with Section 5.5 of the Merger Agreement and that in order to invoke this
condition Parent and Purchaser shall have used their respective reasonable
best efforts to prevent such Order or Injunction or ameliorate the effects
thereof; and provided, further, that if the Order or Injunction is a
temporary restraining order or preliminary injunction of a court of
competent jurisdiction Purchaser may not by virtue of this condition alone
amend or terminate the Offer, but may only extend the Offer and thereby
postpone acceptance for payment or purchase of Shares; or
(b) there shall have been any United States federal or state statute,
rule or regulation enacted or promulgated after the date of the Offer that
would result in any of the material adverse consequences referred to in
paragraph (a) above; or
(c) there shall have occurred and be continuing (in any event, for not
less than two consecutive days) (i) any general suspension of, or
limitation on prices for, trading in securities on any national securities
exchange or on the Nasdaq National Market, (ii) a declaration of a banking
moratorium or any suspension of payments in respect of banks in the United
States (whether or not mandatory), (iii) the commencement of a war, armed
hostilities or other international or national calamity directly involving
the United States, (iv) from the date of commencement of the Offer, a
decline of at least 25 percent in the Standard & Poor's 500 Index, (v) any
limitation by any U.S. governmental authority or agency that materially
affects generally the extension of credit by banks or other financial
institutions or (vi) in the case of any of the foregoing existing at the
time of the commencement of the Offer, a material acceleration or worsening
thereof; or
(d) the Company shall have breached or failed to perform in any
material respect any of its obligations, covenants or agreements contained
in the Merger Agreement or any of the representations and warranties of the
Company set forth in the Merger Agreement (other than such breaches,
failures to perform or inaccuracies which, in the aggregate, could not
reasonably be expected to have a Company Material Adverse Effect); or
(e) the Merger Agreement shall have been terminated in accordance with
its terms; or
(f) the Board of Directors of the Company shall have publicly
withdrawn or modified in any manner adverse to Purchaser its recommendation
that stockholders accept the Offer; provided, however, that Purchaser shall
not be entitled to terminate the Offer pursuant to this paragraph if, as a
result of an offer which the Board of Directors of the Company, after
consultation with the Company's outside legal counsel and financial
advisor, determines, in its good faith judgment by a majority vote, to be
more favorable to the Company's stockholders than the Offer and the Merger
(a "Superior Offer"), the Company withdraws or modifies its approval or
recommendation of the transactions contemplated hereby by reason of taking,
and disclosing to the Company's stockholders, a position with respect to a
tender offer contemplated by Rules 14d-9 and 14e-2 promulgated under the
Exchange Act and if, within five business days of taking and disclosing
such position, the Company publicly reaffirms its recommendation of the
transactions contemplated by the Merger Agreement which in the reasonable
judgment of Parent with respect to each and every matter referred to above
regardless of the circumstances (including any action or inaction by Parent
or Purchaser) giving rise to any such condition, makes it advisable to
proceed with the Offer or with such acceptance for payment or payment.
The foregoing conditions set forth in paragraphs (a) through (f) are for
the sole benefit of Purchaser and may be asserted by Purchaser regardless of the
circumstances giving rise to any such conditions (including any action or
inaction by Purchaser) or, subject to the terms of the Merger Agreement, may be
waived by Purchaser in whole or in part. The failure by Purchaser at any time to
exercise any of the foregoing rights shall not be deemed a waiver of any such
right and such right shall be deemed a continuing right which may be asserted at
any time and from time to time.
For purposes of the Merger Agreement, "Company Material Adverse Effect"
means a material adverse effect on the financial condition, results of operation
or business of the Company and its subsidiaries taken as a
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whole or on the ability of the Company to consummate the transactions
contemplated by the Merger Agreement.
Interim Operations of the Company. In the Merger Agreement, the Company has
agreed that, except as contemplated by the Merger Agreement or previously
disclosed to Parent, prior to the Effective Time, (i) the business of the
Company and its subsidiaries will be conducted only in the ordinary and usual
course of business consistent with past practice, and (ii) the Company will not,
nor will it permit any of its subsidiaries to, without the prior written consent
of Parent (such consent not to be unreasonably withheld):
(a) issue, sell or repurchase, or authorize or propose the issuance,
sale or repurchase of any shares of capital stock of the Company and its
subsidiaries, or securities convertible into such shares, or any rights,
warrants or options to acquire such shares or other convertible securities,
other than the issuance of Shares pursuant to the redemption of preferred
share purchase rights ("Rights") issued pursuant to the Rights Agreement,
dated as of May 6, 1997, between the Company and ChaseMellon Shareholder
Services, L.L.C., as Rights Agent, if otherwise permitted or required by
the Merger Agreement, or the exercise of Stock Options, CVCA Warrants, SEV
Warrants or the APS Note as outstanding on the date of the Merger
Agreement,
(b) declare or pay any dividend or distribution on any shares of its
capital stock (other than dividends paid by wholly owned subsidiaries of
the Company to the Company or a redemption of the Rights if otherwise
permitted or required by the Merger Agreement);
(c) except for such transactions in the ordinary course of business or
fees and expenses related to the transactions contemplated by the Merger
Agreement, authorize or enter into any agreement with respect to any
commitment or transaction which requires the Company to pay in excess of
$300,000 in the aggregate;
(d) except as specified in the Merger Agreement and except in the
ordinary course of business consistent with past practice and except as
previously disclosed to Parent or as may be required by law, adopt or amend
in any material respect or terminate any profit sharing, compensation,
stock option, pension, retirement, deferred compensation, employment or
other employee benefit plan, agreement, trust, plan, fund or other
arrangement (collectively, "Compensation Plans"), or grant, or become
obligated to grant, any general increase in the compensation of executive
officers or any increase in the compensation payable or to become payable
to any executive officer or institute any material new welfare program or
Compensation Plan, or make any material change in any Compensation Plan;
(e) except as required by the consummation of the Merger, pay,
discharge or satisfy any material claims, liabilities or obligations
(absolute, accrued, contingent or otherwise), other than the payment,
discharge or satisfaction in the ordinary course of business;
(f) except for transactions in the ordinary course of business (i)
incur, assume or prepay any long-term or short-term debt or issue any debt
securities except for borrowing under existing lines of credit or
prepayments or other borrowings not to exceed $300,000 in the aggregate;
(ii) assume, guarantee, endorse or otherwise become liable or responsible
(whether directly, contingently or otherwise) for any material obligations
of any other person except for obligations of wholly owned subsidiaries of
the Company; (iii) make any loans, advances or capital contributions to, or
investments in, any other person (other than to wholly owned subsidiaries
of the Company, advances to customers in amounts not to exceed $25,000 in
the aggregate, or customary loans to employees in amounts not material to
the maker of such loan); (iv) except as required under the 1995 Credit
Agreement (as defined in the Merger Agreement), pledge or otherwise
encumber shares of capital stock of the Company or any of its subsidiaries;
or (v) except as required under the 1995 Credit Agreement, mortgage or
pledge any of its material assets, tangible or intangible, or create or
suffer to exist any lien thereupon, excluding Permitted Liens (as defined
in the Merger Agreement);
(g) subject to the rights of the Company's stockholders under
applicable law, propose or adopt any amendments to its Certificate of
Incorporation or By-Laws (except for any amendment to the Company's By-Laws
necessary to increase the number of directors);
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(h) except for transactions in the ordinary course of business,
contemplated by the Merger Agreement or otherwise disclosed therein,
acquire, sell, lease or dispose of any assets which in the aggregate are
material to the Company and its subsidiaries taken as a whole, or enter
into or modify, amend, terminate or waive any rights under any commitments,
contracts, agreements or transactions which would, individually or in the
aggregate, be material to the Company and its subsidiaries taken as a
whole;
(i) except for transactions with subsidiaries, acquire (by merger,
consolidation or acquisition of stock or assets) any corporation,
partnership or other business organization or division thereof or any
equity interest therein;
(j) subject to certain exceptions, make any material tax election or
settle or compromise any material federal, state or local tax liability or
assent to the assessment of any federal, state or local tax;
(k) authorize any new capital expenditure or expenditures not
reflected in the capital expenditure budget provided to Parent and which in
the aggregate are in excess of $50,000; or
(l) agree, in writing or otherwise, to take any of the foregoing
actions.
Stock Option Plans. The Merger Agreement provides that, immediately prior
to the Effective Time, each holder of a Stock Option, whether or not then
presently exercisable, will be entitled to receive a cash payment from the
Company equal to the product of (a) the total number of Shares then subject to
each such Stock Option with an exercise price less than the per Share Merger
Consideration and (b) the excess of the per Share Merger Consideration over the
exercise price per Share subject to such Stock Option, subject to any required
withholding of taxes, and the Stock Options will be canceled and will cease to
exist.
CVCA Warrants. The Merger Agreement provides that, immediately prior to the
Effective Time, the holder of the CVCA Warrants will, to the extent such
warrants have not previously been exercised, be entitled to receive a cash
payment from Purchaser equal to the product of (a) 47,806 (the total number of
Shares then subject to such CVCA Warrants) and (b) the excess of the per Share
Merger Consideration over $0.004545 (the exercise price per Share subject to the
CVCA Warrants). As a condition to such payment, the holder of the CVCA Warrants
must provide to Purchaser a written acknowledgment that such payment satisfies
in full all of the Company's obligations to such person pursuant to such
warrants.
Rights Agreement. The Company has issued Rights pursuant to the Rights
Agreement. The Merger Agreement provides that the Company's Board of Directors
has taken all necessary action to provide that neither Parent nor Purchaser will
become an "Acquiring Person" such that no "Shares Acquisition Date" or
"Distribution Date" (as such terms are defined in the Rights Agreement) will
occur and that Section 11.1.2 of the Rights Agreement will not be triggered as a
result of the announcement, commencement or consummation of the Offer, the
execution or delivery of the Merger Agreement or any amendments thereto, the
consummation of the Merger, or the consummation of the transactions contemplated
by the Merger Agreement. Under the Merger Agreement, the Company has agreed,
should Parent or Purchaser so request, to redeem the Rights effective
immediately prior to Purchaser's acceptance of Shares for purchase pursuant to
the Offer. No such request has been made as of the date of this Offer to
Purchase.
No Solicitation. The Company has agreed, has agreed to cause its officers
and directors and, has agreed to use its reasonable best efforts to cause its
employees, representatives and agents to cease any existing discussions or
negotiations with any parties with respect to any Third Party Transaction. A
"Third Party Transaction" means the acquisition of beneficial ownership of all
or a majority of the assets of, or a majority equity interest in, the Company
pursuant to a merger, consolidation or other business combination, sale of
shares of capital stock, sale of assets, tender offer or exchange offer or other
business combination, sale of shares of capital stock, sale of assets, tender
offer or exchange offer or other business acquisition or combination transaction
involving the Company and its subsidiaries, including any single transaction or
series of related transactions which is structured to permit such a party other
than Parent, Purchaser or an affiliate thereof (a "Third Party") to acquire
beneficial ownership of a majority of the assets of, or majority equity interest
in, the Company (other than transactions contemplated by the Merger Agreement).
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The Company has also agreed that the Company and its subsidiaries will not,
and will cause its officers and directors, and has agreed to use its reasonable
best efforts to cause its employees and representatives of the Company and its
subsidiaries not, to solicit any inquiries with respect to any unsolicited, bona
fide written proposal made by a Third Party to enter into a Third Party
Transaction (an "Acquisition Proposal") (other than the transactions
contemplated by the Merger Agreement) or, except as discussed below, to engage
in negotiations or discussions with, or furnish any confidential information
relating to the Company or any of its subsidiaries to, any Third Party relating
to an Acquisition Proposal. Notwithstanding anything to the contrary in the
Merger Agreement, the Company and its representatives may furnish information
to, and participate in discussions or negotiations with, any Third Party which
submits an Acquisition Proposal if the Company's Board of Directors, in its good
faith judgment by a majority vote, after consultation with the Company's outside
legal counsel and financial advisor, determines that the proposal constitutes a
Superior Offer and that, based as to legal matters on the advice of outside
legal counsel, the failure to furnish such information or participate in such
discussions or negotiations could reasonably be expected to result in a breach
of their fiduciary duties under applicable law.
The Company has also agreed that it will not enter into a definitive
written agreement providing for a Third Party Transaction except concurrently
with or after the termination of the Merger Agreement in accordance with its
terms. The Company will promptly provide Parent with a reasonable description of
any Acquisition Proposal received (including a summary of all material terms
and, unless it is prohibited from disclosing the same, the identity of the Third
Party making such Acquisition Proposal). The Company will also promptly inform
Parent of the status and content of any discussions regarding any Acquisition
Proposal.
The Company has further agreed not to disclose non-public information to
any Third Party making an Acquisition Proposal unless such party enters into a
confidentiality agreement with the Company. The Company will notify Parent of
such event and identify the person with whom the agreement was executed, unless
such disclosure is prohibited.
Indemnification; Directors' and Officers' Insurance. The Merger Agreement
provides that after the Effective Time, Parent and the Surviving Corporation
will perform the obligations of the Company under the indemnification agreements
between the Company and the directors and certain officers of the Company
previously identified to Parent. After the consummation of the Merger, the
Surviving Corporation will remain responsible for officers' and directors' right
to indemnification and exculpation provided for in the Amended and Restated
Certificate of Incorporation and By-Laws of the Company as in effect on the date
of the Merger Agreement, with respect to the acts and omissions occurring prior
to the Effective Time, including, without limitation, the transactions
contemplated by the Merger Agreement. Further, Parent has agreed that for six
years after the Effective Time, Parent or the Surviving Corporation will
maintain officers' and directors' liability insurance covering the persons who
are presently covered by the Company's officers' and directors' liability
insurance policies with respect to acts and omissions occurring prior to the
Effective Time, on terms which are not less favorable than that in effect on the
date of the Merger Agreement; provided, however, that Parent will not be
obligated to make annual premium payments for such insurance exceeding 175% of
the annual premiums paid as of the date of the Merger Agreement (the "Maximum
Amount"). If the cost of such insurance exceeds the Maximum Amount, Parent and
the Surviving Corporation will maintain the most advantageous policies of
directors and officers insurance obtainable for an annual premium equal to the
Maximum Amount.
The Merger Agreement also provides that, to the fullest extent permitted by
applicable law, from and after the purchase of the Shares pursuant to the Offer,
Parent, Purchaser and the Company will indemnify and hold harmless, and from and
after the Effective Time, Parent and the Surviving Corporation will indemnify
and hold harmless, each present and former director and officer of the Company
for acts and omissions pertaining to the transactions occurring prior to the
Effective Time including, without limitation, events contemplated by the Merger
Agreement. The Company or the Surviving Corporation have also agreed to advance
such expenses to each former director and officer of the Company and to
cooperate fully in the defense of any such matter.
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Representations and Warranties. In the Merger Agreement, the Company has
made customary representations and warranties to Parent and Purchaser with
respect to, among other things, the Company's organization, capitalization,
authority to enter into the Merger Agreement and to consummate the transactions
contemplated thereby, potential conflicts, consents and approvals, public
filings, absence of certain events, undisclosed liabilities, litigation,
compliance with laws, tax matters, termination, severance and employment
agreements, employee benefit plans, environmental matters, assets (including
real property and intellectual property), broker's fees, labor matters and
information set forth in the Schedule 14D-9. None of the representations or
warranties in the Merger Agreement will survive the Effective Time of the
Merger.
Access; Confidentiality. The Company has agreed, until the Effective Time,
to give Parent and its authorized representatives access during normal business
hours to all facilities, books and records of the Company and its subsidiaries
and to permit Parent to make such inspections as it may reasonably require. In
addition, the Company has agreed to use reasonable efforts to cause its
accountants to furnish such financial and operating data as Parent may
reasonably request. Pursuant to the Letter Agreement, Xxxxxx has agreed to hold
in confidence all information concerning the Company and its subsidiaries and
not to use that information in any way detrimental to the Company. A copy of the
Letter Agreement is filed as an Exhibit to the Schedule 14D-1 and is
incorporated herein by reference.
Amendment. Subject to applicable law, the Company, Parent and Purchaser may
amend or supplement the Merger Agreement at any time before or after stockholder
approval of the Merger Agreement, but after the purchase of Shares pursuant to
the Offer, no amendment may be made which decreases the price per Share, changes
the form of consideration to be received by the holders of Shares in the Merger
or which adversely affects the rights of stockholders of the Company under the
Merger Agreement without the approval of such stockholders and, if required, the
Special Committee.
Termination. The Merger Agreement may be terminated and the Merger may be
abandoned, notwithstanding approval thereof by the stockholders of the Company,
at any time prior to the Effective Time,
(a) by mutual written consent of Parent and the Company (including, if
required, the Special Committee);
(b) by Parent, Purchaser or the Company if the Effective Time has not
occurred on or before April 30, 1998; provided, however, that the right to
terminate the Merger Agreement will not be available to (i) Parent if it or
its affiliates have purchased Shares pursuant to the Offer or (ii) any
party whose failure to fulfill any obligation under the Merger Agreement
has been the cause of the failure of the Effective Time to occur on or
before such date;
(c) by Parent, Purchaser or the Company if any court of competent
jurisdiction or other governmental body has taken action restraining or
otherwise prohibiting the Offer or the Merger and such action has become
final and nonappealable;
(d) by the Company (i) if the Company has not materially breached any
representation, warranty, covenant or agreement and Purchaser has failed to
commence the Offer within the time required by Regulation 14D under the
Exchange Act or terminated the Offer or allowed it to expire, or (ii) prior
to the acceptance of any Shares pursuant to the Offer, if a Third Party has
made an Acquisition Proposal that the Board of Directors of the Company,
after consultation with the Company's outside legal counsel and financial
advisor, determines constitutes a Superior Offer, and the Board, after
consultation with the Company's outside legal counsel, determines, in its
good faith judgment, that a withdrawal, modification or change of
recommendation or approval is required for the Board to comply with its
fiduciary duties under applicable law;
(e) by Parent if (i) Purchaser has failed to commence the Offer due to
an occurrence which would result in a failure to satisfy any of the
conditions set forth in paragraphs (a) through (f) of Section 14 or (ii)
the Offer has expired or been terminated without any Shares being purchased
thereunder by Purchaser as a result of a failure of any of the conditions
set forth in Section 14;
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(f) by Parent or Purchaser prior to the acceptance of any Shares for
purchase pursuant to the Offer, if (i) the Company has breached any
representation or warranty in the Merger Agreement having a Company
Material Adverse Effect, which breach has not been cured prior to 10 days
following notice of such breach, (ii) the Company has breached any covenant
or agreement in the Merger Agreement which materially adversely affects the
consummation of the Offer, which breach has not been cured prior to 10 days
following notice of such breach, or (iii) the Company's Board of Directors
has withdrawn its approval or recommendation of the Offer, the Merger, or
the Merger Agreement, or has recommended another offer to the Company's
stockholders;
(g) by the Company if (i) Parent has breached any representation or
warranty in the Merger Agreement which materially adversely affects the
consummation of the Offer, which breach has not been cured prior to 10 days
following notice of such breach, or (ii) Parent or Purchaser has materially
breached any covenant or agreement in the Merger Agreement which materially
adversely affects the consummation of the Offer which has not been cured
prior to 10 days following notice of such breach; or
(h) by the Company if (i) after 90 days from the date of the Merger
Agreement any government agency shall have commenced and be continuing any
formal or informal investigations of the transactions contemplated by the
Merger Agreement and (ii) the Company delivers written notice to Parent or
Purchaser of its intent to terminate the Merger Agreement and Parent and
Purchaser fail to resolve the government agency investigation within 10
business days of such notice.
The Merger Agreement provides that in the event of termination, all legal
and other costs and expenses incurred in connection with the Merger Agreement
and the transactions contemplated thereby will be paid by the party incurring
such costs and expenses; provided, however, that if the Company terminates the
Merger Agreement in accordance with subsection (d)(ii) above, then the Company
will pay to Parent $2.2 million within three business days thereafter, and if
the Company terminates the Merger Agreement in accordance with Subsection
(d)(ii) above and consummates a Third Party Transaction within nine months from
the date of termination of the Merger Agreement, the Company will pay Parent an
additional fee in the amount of $2.2 million within three business days of the
consummation of the Third Party Transaction.
Timing. The exact timing and details for the Merger will depend upon legal
requirements and a variety of other factors, including the number of Shares
acquired by Purchaser pursuant to the Offer. Although Parent and Purchaser have
agreed to cause the Merger to be consummated on the terms described above, there
can be no assurance as to the timing of the Merger.
Appraisal Rights. Holders of Shares do not have dissenters' rights as a
result of the Offer. However, if the Merger is consummated, holders of Shares
will have certain rights pursuant to the provisions of Section 262 of the DGCL
to dissent and demand appraisal of, and to receive payment in cash of the fair
value of, their Shares. If the statutory procedures are complied with, such
rights could lead to a judicial determination of the fair value required to be
paid in cash to such dissenting holders for their shares. Any such judicial
determination of the fair value of Shares could be based upon considerations
other than or in addition to the Offer Price or the market value of the Shares,
including asset values and the investment value of the Shares. The value so
determined could be more or less than the Offer Price or the Merger
Consideration.
If any stockholder who demands appraisal under Section 262 of the DGCL
fails to perfect, or effectively withdraws or loses the right to appraisal, as
provided in the DGCL, the Shares of such stockholder will be converted into the
Merger Consideration in accordance with the Merger Agreement. A stockholder may
withdraw a demand for appraisal by delivery to Parent of a written withdrawal of
the demand for appraisal and acceptance of the Merger. The full text of DGCL
Section 262 is attached to this Offer to Purchase as Xxxxx XX.
FAILURE TO FOLLOW THE STEPS REQUIRED BY SECTION 262 OF THE DGCL FOR PERFECTING
APPRAISAL RIGHTS WILL RESULT IN THE LOSS OF SUCH RIGHTS.
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13. DIVIDENDS AND DISTRIBUTIONS
If prior to the Effective Time, the outstanding Shares are changed into a
different number of shares or a different class by reason of any
reclassification, recapitalization, split-up, combination, exchange of shares or
readjustment, or a stock dividend thereon is declared with a record date prior
to the Effective Time, the amount of the per Share Merger Consideration will be
correspondingly adjusted.
The Merger Agreement prohibits the Company from taking the foregoing
actions and from declaring or paying any dividend or distribution on any shares
of its capital stock (other than dividends paid by wholly owned subsidiaries of
the Company to the Company or a redemption of the Rights if otherwise permitted
or required thereby).
14. CERTAIN CONDITIONS OF THE OFFER
Notwithstanding any other provision of the Offer, Purchaser shall not be
required to accept for payment, purchase or pay for any Shares tendered until
the expiration or termination of any applicable waiting period under the HSR
Act, and Purchaser may terminate or, subject to the terms of the Merger
Agreement, amend the Offer and may postpone the purchase of, and payment for,
Shares if fewer than a majority of the Shares then issued and outstanding on a
fully diluted basis (including without limitation, all Shares issuable upon the
exercise of any options, warrants or rights) are validly tendered and not
withdrawn prior to the Expiration Date (the "Minimum Condition") or if, at any
time on or after the date of the Merger Agreement, and prior to the time of
acceptance of any such Shares for payment, any of the following events shall
occur and remain in effect:
(a) an order shall have been entered in any action or proceeding
before any United States federal or state court or governmental agency or
other United States regulatory or administrative agency or commission (an
"Order"), or a preliminary or permanent injunction by a United States court
of competent jurisdiction shall have been issued and remain in effect (an
"Injunction"), which in either case (i) prohibits the making or
consummation of the Offer or the consummation of the Merger, (ii)
significantly restricts the ability of Purchaser, or renders Purchaser
unable, to accept for payment, pay for or purchase Shares sufficient to
satisfy the Minimum Condition in the Offer or the remaining Shares
outstanding in the Merger (other than as a result of the exercise of
dissenters' rights and other than for delays or restrictions that are not
material to Parent and Purchaser), (iii) prohibits or restricts the
ownership or operation by Parent or Purchaser (or any of their respective
affiliates or subsidiaries) of any portion of its or the Company's business
or assets which is material to the business of the Company and its
subsidiaries taken as a whole or of Parent and its subsidiaries taken as a
whole or compels Parent or Purchaser (or any of their respective affiliates
or subsidiaries) to dispose of or hold separate any portion of its or the
Company's business or assets which is material to the business of the
Company and its subsidiaries taken as a whole or of Parent and its
subsidiaries taken as a whole, (iv) imposes material limitations on the
ability of Purchaser effectively to acquire or to hold or to exercise full
rights of ownership of the Shares, including, without limitation, the right
to vote the Shares purchased by Purchaser on all matters properly presented
to the stockholders of the Company, (v) imposes any material limitations on
the ability of Parent or Purchaser or any of their respective affiliates or
subsidiaries effectively to control in any material respect the business
and operations of the Company and its subsidiaries, or (vi) which otherwise
would result in a Company Material Adverse Effect; provided, however, that
Parent and Purchaser shall have complied with Section 5.5 of the Merger
Agreement and that in order to invoke this condition Parent and Purchaser
shall have used their respective reasonable best efforts to prevent such
Order or Injunction or ameliorate the effects thereof; and provided,
further, that if the Order or Injunction is a temporary restraining order
or preliminary injunction of a court of competent jurisdiction Purchaser
may not by virtue of this condition alone amend or terminate the Offer, but
may only extend the Offer and thereby postpone acceptance for payment or
purchase of Shares; or
(b) there shall have been any United States federal or state statute,
rule or regulation enacted or promulgated after the date of the Offer that
would result in any of the material adverse consequences referred to in
paragraph (a) above; or
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(c) there shall have occurred and be continuing (in any event, for not
less than two consecutive days) (i) any general suspension of, or
limitation on prices for, trading in securities on any national securities
exchange or on the Nasdaq National Market, (ii) a declaration of a banking
moratorium or any suspension of payments in respect of banks in the United
States (whether or not mandatory), (iii) the commencement of a war, armed
hostilities or other international or national calamity directly involving
the United States, (iv) from the date of commencement of the Offer, a
decline of at least 25 percent in the Standard & Poor's 500 Index, (v) any
limitation by any U.S. governmental authority or agency that materially
affects generally the extension of credit by banks or other financial
institutions or (vi) in the case of any of the foregoing existing at the
time of the commencement of the Offer, a material acceleration or worsening
thereof; or
(d) the Company shall have breached or failed to perform in any
material respect any of its obligations, covenants or agreements contained
in the Merger Agreement or any of the representations and warranties of the
Company set forth in the Merger Agreement (other than such breaches,
failures to perform or inaccuracies which, in the aggregate, could not
reasonably be expected to have a Company Material Adverse Effect); or
(e) the Merger Agreement shall have been terminated in accordance with
its terms; or
(f) the Board of Directors of the Company shall have publicly
withdrawn or modified in any manner adverse to Purchaser its recommendation
that stockholders accept the Offer; provided, however, that Purchaser shall
not be entitled to terminate the Offer pursuant to this paragraph if, as a
result of a Superior Offer, the Company withdraws or modifies its approval
or recommendation of the transactions contemplated hereby by reason of
taking, and disclosing to the Company's stockholders, a position with
respect to a tender offer contemplated by Rules 14d-9 and 14e-2 promulgated
under the Exchange Act and if, within five business days of taking and
disclosing such position, the Company publicly reaffirms its recommendation
of the transactions contemplated by the Merger Agreement which in the
reasonable judgment of Parent with respect to each and every matter
referred to above regardless of the circumstances (including any action or
inaction by Parent or Purchaser) giving rise to any such condition, makes
it advisable to proceed with the Offer or with such acceptance for payment
or payment.
The foregoing conditions set forth in paragraph (a) through (f) are for the
sole benefit of Purchaser and may be asserted by Purchaser regardless of the
circumstances giving rise to any such conditions (including any action or
inaction by Purchaser) or, subject to the terms of the Merger Agreement, may be
waived by Purchaser in whole or in part. The failure by Purchaser at any time to
exercise any of the foregoing rights shall not be deemed a waiver of any such
right and such right shall be deemed a continuing right which may be asserted at
any time and from time to time.
15. CERTAIN LEGAL MATTERS; REGULATORY APPROVALS
Based on a review of publicly available filings made by the Company with
the Commission and other publicly available information concerning the Company,
neither Purchaser nor Parent is aware of 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 Purchaser's acquisition of
Shares as contemplated herein or of any approval or other action, except as
otherwise described in this Section 15, by any governmental entity that would be
required for the acquisition or ownership of Shares by Purchaser as contemplated
herein. Should any such approval or other action be required, Purchaser and
Parent currently contemplate that such approval or other action will be sought.
While Purchaser 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 Company's business or that certain parts of the
Company's business might not have to be disposed of if such approvals were not
obtained or such other actions were not taken. Purchaser's obligations under the
Offer to accept for payment and pay for Shares are subject to certain conditions
including conditions relating to certain of the legal matters discussed in this
Section 15. See Section 14.
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State Takeover Laws. A number of states throughout the United States have
enacted takeover statutes that purport, in varying degrees, to be applicable to
attempts to acquire securities of corporations that are incorporated or have
assets, stockholders, executive offices or places of business in such states. In
Xxxxx x. MITE Corp., the Supreme Court of the United States held that the
Illinois Business Takeover Act, which involved state securities laws that made
the takeover of certain corporations more difficult, imposed a substantial
burden on interstate commerce and therefore was unconstitutional. In CTS Corp.
v. Dynamics Corp. of America, however, the Supreme Court of the United States
held that a state may, as a matter of corporate law and, in particular, those
laws concerning corporate governance, constitutionally disqualify a potential
acquirer from voting on the affairs of a target corporation without prior
approval of the remaining stockholders, provided that such laws were applicable
only under certain conditions.
Section 203 of the DGCL limits the ability of a Delaware corporation to
engage in business combinations with "interested stockholders" (defined as any
beneficial owner of 15% or more of the outstanding voting stock of the
corporation) unless, among other things, the corporation's board of directors
has given its prior approval to either the business combination or the
transaction which resulted in the stockholder becoming an "interested
stockholder." The Company's Board of Directors has approved the Merger Agreement
and Purchaser's acquisition of Shares pursuant to the Offer and, therefore,
Section 203 of DGCL is inapplicable to the Merger.
Based on information supplied by the Company, Purchaser does not believe
that any state takeover statutes purport to apply to the Offer or the Merger.
Neither Purchaser nor Parent has currently complied with any state takeover
statute or regulation. Purchaser reserves the right to challenge the
applicability or validity of any state law purportedly applicable to the Offer
or the Merger and nothing in this Offer to Purchase or any action taken in
connection with the Offer or the Merger is intended as a waiver of such right.
If it is asserted that any state takeover statute is applicable to the Offer or
the Merger and an appropriate court does not determine that it is inapplicable
or invalid as applied to the Offer or the Merger, Purchaser might be required to
file certain information with, or to receive approvals from, the relevant state
authorities, and Purchaser might be unable to accept for payment or pay for
Shares tendered pursuant to the Offer, or be delayed in consummating the Offer
or the Merger. In such case, Purchaser may not be obliged to accept for payment
or pay for any Shares tendered pursuant to the Offer.
Antitrust. Under the provisions of the HSR Act applicable to the Offer, the
purchase of Shares under the Offer may be consummated following the expiration
of a 15-calendar day waiting period following the filing by LDI, as the ultimate
parent entity of Parent, of a Notification and Report Form with respect to the
Offer, unless LDI receives a request for additional information or documentary
material from the Antitrust Division of the Department of Justice (the
"Antitrust Division) or the Federal Trade Commission (the "FTC") or unless early
termination of the waiting period is granted. LDI will make such filing on or
about the date of this Offer to Purchase. If, within the initial 15-day waiting
period, either the Antitrust Division or the FTC requests additional information
or material from LDI concerning the Offer, 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 LDI 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 LDI. In practice, complying with a
request for additional information or material can take a significant amount of
time. In addition, if the Antitrust Division or the FTC raises substantive
issues in connection with a proposed transaction, the parties frequently engage
in negotiations with the relevant governmental agency concerning possible means
of addressing those issues and may agree to delay consummation of the
transaction while such negotiations continue.
The Merger would not require an additional filing under the HSR Act if
Purchaser owns 50% or more of the outstanding Shares at the time of the Merger
or if the Merger occurs within one year after the HSR Act waiting period
applicable to the Offer expires or is terminated.
The FTC and the Antitrust Division frequently scrutinize the legality under
the antitrust laws of transactions such as Purchaser's proposed acquisition of
the Company. At any time before or after Purchaser's purchase of Shares pursuant
to the Offer, the Antitrust Division or FTC could take such action under the
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antitrust laws as it deems necessary or desirable in the public interest,
including seeking to enjoin the purchase of Shares pursuant to the Offer or the
consummation of the Merger or seeking the divestiture of Shares acquired by
Purchaser or the divestiture of substantial assets of Parent or its
subsidiaries, or the Company or its subsidiaries. Private parties may also bring
legal action under the antitrust laws under certain circumstances. There can be
no assurance that a challenge to the Offer on antitrust grounds will not be made
or, if such a challenge is made, of the results thereof.
Federal Reserve Board Regulations. Regulations G, U and X (the "Margin
Regulations") of the Federal Reserve Board restrict the extension or maintenance
of credit for the purpose of buying or carrying margin stock, including the
Shares, if the credit is secured directly or indirectly by margin stock. Such
secured credit may not be extended or maintained in an amount that exceeds the
maximum loan value of all the direct and indirect collateral securing the
credit, including margin stock and other collateral.
The security arrangements for the financing described in Section 10 of this
Offer to Purchase will be negotiated by Xxxxxx and NBD. Such financing may be
directly or indirectly secured by the Shares or other securities which
constitute margin stock. Pursuant to the Margin Regulations, the maximum loan
value of margin stock is presently 50% of its current market value, which in the
case of credit used to purchase securities, means the total cost of purchase of
such securities. The loan value of collateral other than margin stock is the
amount that a lender would in good faith lend against such collateral without
regard to other loan or collateral arrangements such lender might have. It is
Xxxxxx's intention that all financing for the Offer and the Merger be in full
compliance with the Margin Regulations, and Parent believes that direct or
indirect margin stock and other collateral having an aggregate loan value in
excess of the entire amount of the financing will be available to comply fully
with the Margin Regulations.
Going Private Transactions. The Merger would have to comply with any
applicable Federal law operative at the time of its consummation. Rule 13e-3
under the Exchange Act is applicable to certain "going private" transactions.
Purchaser does not believe that Rule 13e-3 will be applicable to the Merger
unless the Merger is consummated more than one year after the termination of the
Offer. If applicable, Rule 13e-3 would require, among other things, that certain
financial information concerning the Company and certain information relating to
the fairness of the Merger and the consideration offered to minority
stockholders be filed with the Commission and disclosed to minority stockholders
prior to consummation of the Merger.
16. FEES AND EXPENSES
Except as described below, neither Purchaser nor Parent will pay any fees
or commissions to any broker or dealer or other person in connection with the
solicitation of tenders of Shares pursuant to the Offer. Brokers, dealers, banks
and trust companies will be reimbursed by Purchaser upon request for customary
mailing and handling expenses incurred by them in forwarding material to their
customers.
Xxxxx Xxxxxx is acting as Dealer Manager for the Offer and as Parent's
exclusive financial advisor in connection with Xxxxxx's proposed acquisition of
the Company, for which services Xxxxx Xxxxxx will receive customary
compensation. Parent also has agreed to reimburse Xxxxx Xxxxxx for reasonable
travel and other out-of-pocket expenses, including reasonable legal fees and
expenses, and to indemnify Xxxxx Xxxxxx and certain related parties against
certain liabilities, including liabilities under the federal securities laws,
arising out of Xxxxx Barney's engagement. In the ordinary course of business,
Xxxxx Xxxxxx and its affiliates may actively trade or hold the securities of
Parent and the Company for their own account or for the account of customers
and, accordingly, may at any time hold a long or short position in such
securities.
Purchaser has retained Xxxxxx & Co., Inc. to act as the Information Agent
and First Chicago Trust Company of New York to act as the Depositary in
connection with the Offer. The Information Agent and the Depositary each will
receive reasonable and customary compensation for their services, be reimbursed
for certain reasonable out-of-pocket expenses and be indemnified against certain
liabilities and expenses in connection therewith, including certain liabilities
under the federal securities laws.
Neither Purchaser nor Parent, nor any officer, director, stockholder, agent
or other representative of Purchaser or Parent, will pay any fees or commissions
to any broker, dealer or other person (other than the
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Information Agent and the Dealer Manager) for soliciting tenders of Shares
pursuant to the Offer. Brokers, dealers, commercial banks and trust companies
and other nominees will, upon request, be reimbursed by Purchaser for customary
mailing and handling expenses incurred by them in forwarding materials to their
customers.
17. MISCELLANEOUS
The Offer is not being made to (nor will tenders be accepted from or on
behalf of) holders of Shares in any jurisdiction in which the making of the
Offer or the acceptance thereof would not be in compliance with the laws of such
jurisdiction. Neither Purchaser nor Parent is aware of any jurisdiction in which
the making of the Offer or the tender of Shares in connection therewith would
not be in compliance with the laws of such jurisdiction. To the extent Purchaser
or Parent becomes aware of any state law that would limit the class of offerees
in the Offer, Purchaser will amend the Offer and, depending on the timing of
such amendment, if any, will extend the Offer to provide adequate dissemination
of such information to holders of Shares prior to the expiration of the Offer.
In any jurisdiction the securities, blue sky or other laws of which require the
Offer to be made by a licensed broker or dealer, the Offer is being made on
behalf of Purchaser by one or more registered brokers or dealers licensed under
the laws of such jurisdiction.
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATION ON BEHALF OF PURCHASER OR PARENT 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.
Purchaser or Parent has filed with the Commission the Schedule 14D-1
pursuant to Rule 14d-3 under the Exchange Act, furnishing certain additional
information with respect to the Offer. In addition, the Company has filed with
the Commission the Schedule 14D-9 pursuant to Rule 14d-9 under the Exchange Act,
setting forth its recommendation with respect to the Offer and the reasons for
such 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 manner set forth in
Sections 8 and 9 (except that they will not be available at the regional offices
of the Commission).
FMST ACQUISITION CORPORATION
October 21, 1997
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ANNEX I
DIRECTORS AND EXECUTIVE OFFICERS OF PARENT
The name, business address, present principal occupation or employment and
five-year employment history of each director and executive officer of Parent
and certain other information are set forth below. Unless otherwise indicated
below, the address of each director and officer is c/o LDI, Ltd., 00 Xxxxxxxx
Xxxxxx, Xxxxxxxxxxxx, Xxxxxxx 00000, and each occupation set forth below an
individual's name refers to employment with Parent. All directors and officers
listed below are citizens of the United States.
XXXXX X. XXXX,
Chairman of the Board and
Chief Executive Officer....... Xx. Xxxx was elected Chairman Board and Chief
Executive of the Board of Directors and Officer
Chief Executive Officer of the Parent in July,
1996. Xx. Xxxx is President, Chief Executive
Officer and Chairman of the Board of Directors
of LDIM, the managing general partner of LDI.
Xx. Xxxx, individually, also serves as a
general partner of LDI. Xx. Xxxx serves as
President, Chief Executive Officer and Chairman
of the Board of Directors of Xxxx and he has
served as Chairman of the Board of Directors
and Chief Executive Officer of AutoPaints,
since its formation in April, 1996. Except for
his position with the Parent and AutoPaints,
Xx. Xxxx has served in these capacities for
more than the previous five years. Xx. Xxxx
also serves as a director of Tredegar
Industries, Inc., Albemarle Corporation, IPALCO
Enterprises, Inc., Xxxxx Xxxxx, Inc., The
National Bank of Indianapolis, and Xxxxxxxxx
Dental Company.
XXXXXX X. XXXXX,
Director, President and Chief
Operating Officer............. Xx. Xxxxx was named Vice President and Chief
Operating Chairman of the Board of Officer
Directors of the Parent in July 1996, and was
subsequently elected President and Chief
Operating Officer of the Parent effective July
24, 1996. Xx. Xxxxx has served as a Vice
President of LDIM and as President and Chief
Operating Officer of AutoPaints since June
1996. From 1989 until May 31, 1996, Xx. Xxxxx
served as the World Wide Director of the
Refinish Business for X.X. Xxxxxx de Nemours &
Co., Wilmington, Delaware. Xx. Xxxxx'x
principal business address is 0000 00xx Xxxxxx,
X.X., Xxxxxxxx, Xxxxxxxx 00000.
XXXXXX X. XXXXXX,
Director...................... Xx. Xxxxxx has served as a director of the
Parent since July 1996. She has served as a
director of LDIM and as its Vice President and
Assistant Secretary for more than the previous
five years. Xx. Xxxxxx also serves as a
director, Vice President and Assistant
Secretary of Xxxx, and she has served as a
director and Assistant Secretary of AutoPaints
since its formation in April 1996.
XXXXXXX X. XXXXXXXX,
Director and Treasurer........ Xx. Xxxxxxxx has served as the Treasurer and as
a director of the Parent since July 1996. He
has served as Vice President, Treasurer and
Chief Financial Officer of LDIM for more than
the previous five years. Xx. Xxxxxxxx also
serves as a director and as the Vice President,
Treasurer and Chief Financial Officer of Xxxx,
and he
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has served as a director and Treasurer of
AutoPaints since its formation in April 1996.
XXXXX X. XXXXXXXXX,
Director...................... Xx. Xxxxxxxxx has served as a director of the
Parent since August 1996. He has also served as
Chairman of the Board, President, and Chief
Executive Officer of Xxxxxxxxx Dental Company,
a distributor of dental supplies and equipment
based in St. Xxxx, Minnesota, for more than the
past five years. His principal business address
is 0000 Xxxxxxx Xxxxxxx Xxxx, Xx. Xxxx,
Xxxxxxxxx 00000.
XXXXXX X. XXXXXXX,
Director...................... Xx. Xxxxxxx has served as a director of the
Parent since July 1996. He has served as a Vice
President of LDIM for more than the last five
years. He served as President of Major Video
Concepts, Inc. ("MVC"), a wholesale distributor
of videocassettes based in Indianapolis,
Indiana, and a wholly owned subsidiary of Xxxx
from June, 1987 until March 31, 1997.
XXXXXX X. XXXXXXXX,
Secretary..................... Xx. Xxxxxxxx is the Secretary of Parent and of
LDIM. Xx. Xxxxxxxx has been a partner of the
law firm of Xxxxxx & Xxxxxxxxx for more than
five years. Xx. Xxxxxxxx'x business address is
00 Xxxxx Xxxxxxxx Xxxxxx, Xxxxxxxxxxxx, Xxxxxxx
00000.
XXXXX X. XXXXXXX,
Vice President -- Finance and
Chief Financial Officer....... Xx. Xxxxxxx has been the Vice President --
Finance and Chief Financial Officer of Parent
for more than the last five years. His business
address is 0000 00xx Xxxxxx, X.X., Xxxxxxxx,
Xxxxxxxx 00000.
DIRECTORS AND EXECUTIVE OFFICERS OF PURCHASER
The name, business address, present principal occupation or employment and
five-year employment history of each director and executive officer of Purchaser
and certain other information are set forth below. Unless otherwise indicated
below, the address of each director and officer is c/o 00 Xxxxxxxx Xxxxxx,
Xxxxxxxxxxxx, Xxxxxxx 00000, and each occupation set forth below an individual's
name refers to employment with Purchaser. All directors and officers listed
below are citizens of the United States.
XXXXX X. XXXX,
Chairman of the Board and
Chief Executive Officer....... Xx. Xxxx has served as the Chairman of the
Board and Chief Executive Officer of Purchaser
since its incorporation in October 1997. Xx.
Xxxx is President, Chief Executive Officer and
Chairman of the Board of Directors of LDIM, the
corporate managing general partner of LDI. Xx.
Xxxx, individually, also serves as a general
partner of LDI. Xx. Xxxx serves as President,
Chief Executive Officer and Chairman of the
Board of Directors of Xxxx, and he has served
as Chairman of the Board of Directors and Chief
Executive Officer of AutoPaints, since its
formation in April 1996. Except for his
position with the Parent, Purchaser and
AutoPaints, Xx. Xxxx has served in these
capacities for more than the previous five
years. Xx. Xxxx also serves as a director of
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Tredegar Industries, Inc., Albemarle
Corporation, IPALCO Enterprises, Inc., Xxxxx
Xxxxx, Inc., The National Bank of Indianapolis,
and Xxxxxxxxx Dental Company.
XXXXXX X. XXXXX,
Director and President........ Xx. Xxxxx has served as President and as a
director of Purchaser since its formation in
October 1997. Xx. Xxxxx was named Vice Chairman
of the Board of Directors of the Parent in July
1996, and was subsequently elected President
and Chief Operating Officer of the Parent
effective July 24, 1996. Xx. Xxxxx has served
as a Vice President of LDIM and as President
and Chief Operating Officer of AutoPaints since
June 1996. From 1989 until May 31, 1996, Xx.
Xxxxx served as the World Wide Director of the
Refinish Business for X.X. Xxxxxx de Nemours &
Co., Wilmington, Delaware. Xx. Xxxxx'x
principal business address is 40th Street,
S.E., Kentwood, Michigan 49512.
XXXXXX X. XXXXXX,
Director, Vice President and
Assistant Secretary........... Xx. Xxxxxx has served as Vice President,
Assistant Secretary and a director of Purchaser
since its formation in October 1997. Xx. Xxxxxx
has served as a director of the Parent since
July 1996. She has served as a director of LDIM
and as its Vice President and Assistant
Secretary for more than the previous five
years. Xx. Xxxxxx also serves as a director,
Vice President and Assistant Secretary of Xxxx,
and she has served as a director and Assistant
Secretary of AutoPaints since its formation in
April 1996.
XXXXXXX X. XXXXXXXX,
Director and Treasurer........ Xx. Xxxxxxxx has served as Treasurer and a
director of Purchaser since its formation in
October 1997. Xx. Xxxxxxxx has served as the
Treasurer and as a director of the Parent since
July 1996. He has served as Vice President,
Treasurer and Chief Financial Officer of LDIM
for more than the previous five years. Xx.
Xxxxxxxx also serves as a director and as the
Vice President, Treasurer and Chief Financial
Officer of Xxxx, and he has served as a
director and Treasurer of AutoPaints since its
formation in April 1996.
XXXXXX X. XXXXXXXX,
Director and Secretary........ Xx. Xxxxxxxx has served as Secretary and a
director of Purchaser since its formation in
October 1997. Xx. Xxxxxxxx is the Secretary of
Parent and LDIM. Xx. Xxxxxxxx has been a
partner of the law firm of Xxxxxx & Xxxxxxxxx
for more than five years. Xx. Xxxxxxxx'x
business address is 00 Xxxxx Xxxxxxxx Xxxxxx,
Xxxxxxxxxxxx, Xxxxxxx 00000.
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DIRECTORS AND EXECUTIVE OFFICERS OF CONTROLLING PERSONS
The name, business address, present principal occupation or employment and
five-year employment history of each director and executive officer of
Controlling Persons (as defined in the Exchange Act) who are not executive
officers or directors of Parent or Purchaser and certain other information are
set forth below. All directors and officers listed below are citizens of the
United States.
X. XXXX XXXX.................. Mr. Xxxx is a director of LDIM. Mr. Xxxx has
served as the Chairman of Security Group, Inc.,
in Indianapolis, Indiana for more than the last
five years. His principal business address is
0000 Xxxxx Xxxxxxxxxxxx Xxxxxx, Xxxxxxxxxxxx,
Xxxxxxx 00000.
XXXXX X. XXXXX................ Xx. Xxxxx serves as a director of LDIM. He has
been the President and Chief Operating Officer
of IPALCO Enterprises, Inc., an electric
utility in Indianapolis, Indiana, for more than
the last five years. Xx. Xxxxx'x principal
business address is Xxx Xxxxxxxx Xxxxxx,
Xxxxxxxxxxxx, Xxxxxxx 00000.
XXXXXX X. XXXXXXX............. Xx. Xxxxxxx serves as a director and a Vice
President of LDIM. He has been the Chairman and
President of Xxxxxx Xxxxx Distributing for more
than the last five years. His business address
is 0000 Xxxxxx Xxxx, Xxxxx 000, Xxxxxx, Xxxxx
00000.
XXXXXXX X. XXXXX.............. Xx. Xxxxx is a director of LDIM. Xx. Xxxxx has
been a partner of Xxxxxx-Xxxxx Partnership, a
real estate owner and developer in Chicago,
Illinois for more than the last five years. His
business address is 000 XxXxxxx Xxxxxx, Xxxxx
0000, Xxxxxxx, Xxxxxxxx 00000.
XXXXX X. XXXXXXXX............. Xx. Xxxxxxxx has been the Vice President --
Human Resources of LDIM for more than the last
five years. Her business address is 00 Xxxxxxxx
Xxxxxx, Xxxxxxxxxxxx, Xxxxxxx 00000.
XXXXX X. XXXXX................ Xx. Xxxxx has been a Vice President and
Corporate Counsel for LDIM since August 1,
1997. Xx. Xxxxx was a partner of the law firm
of Xxxxx & Xxxxxxx in Indianapolis, Indiana
from January 1, 1982 through December 31, 1995
and served as the President of Community
Leaders Allied for Superior Schools from
January 15, 1996 through July 31, 1997.
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ANNEX II
Set forth below is Section 262 of the General Corporation Law of the State
of Delaware regarding appraisal rights, which rights will only be available in
connection with the Merger.
SECTION 262 OF THE GENERAL CORPORATION LAW OF THE STATE OF DELAWARE
sec. 262 Appraisal Rights -- (a) Any stockholder of a corporation of this
State who holds shares of stock on the date of the making of a demand pursuant
to subsection (d) of this section with respect to such shares, who continuously
holds such shares through the effective date of the merger or consolidation, who
has otherwise complied with subsection (d) of this section and who has neither
voted in favor of the merger or consolidation nor consented thereto in writing
pursuant to sec. 228 of this title shall be entitled to an appraisal by the
Court of Chancery of the fair value of the stockholder's shares of stock under
the circumstances described in subsections (b) and (c) of this section. As used
in this section, the word "stockholder" means a holder of record of stock in a
stock corporation and also a member of record of a nonstock corporation; the
words "stock" and "share" mean and include what is ordinarily meant by those
words and also membership or membership interest of a member of a nonstock
corporation; and the words "depository receipt" mean a receipt or other
instrument issued by a depository representing an interest in one or more
shares, or fractions thereof, solely of stock of a corporation, which stock is
deposited with the depository.
(b) Appraisal rights shall be available for the shares of any class or
series of stock of a constituent corporation in a merger or consolidation to be
effected pursuant to sec.sec. 251 (other than a merger effected pursuant to
subsection (g) of sec. 251), 252, 254, 257, 258, 263 or 264 of this title:
(1) Provided, however, that no appraisal rights under this section
shall be available for the shares of any class or series of stock, which
stock, or depository receipts in respect thereof, at the record date fixed
to determine the stockholders entitled to receive notice of and to vote at
the meeting of stockholders to act upon the agreement of merger or
consolidation, were either (i) listed on a national securities exchange or
designated as a national market system security on an interdealer quotation
system by the National Association of Securities Dealers, Inc. or (ii) held
of record by more than 2,000 holders; and further provided that no
appraisal rights shall be available for any shares of stock of the
constituent corporation surviving a merger if the merger did not require
for its approval the vote of the holders of the surviving corporation as
provided in subsection (f) of sec. 251 of this title.
(2) Notwithstanding paragraph (1) of this subsection, appraisal rights
under this section shall be available for the shares of any class or series
of stock of a constituent corporation if the holders thereof are required
by the terms of an agreement of merger or consolidation pursuant to
sec.sec. 251, 252, 254, 257, 258, 263 and 264 of this title to accept for
such stock anything except:
a. Shares of stock of the corporation surviving or resulting from
such merger or consolidation, or depository receipts in respect thereof;
b. Shares of stock of any other corporation, or depository receipts
in respect thereof, which shares of stock or depository receipts at the
effective date of the merger or consolidation will be either listed on a
national securities exchange or designated as a national market system
security on an interdealer quotation system by the National Association
of Securities Dealers, Inc. or held of record by more than 2,000
holders;
c. Cash in lieu of fractional shares or fractional depository
receipts described in the foregoing subparagraphs a. and b. of this
paragraph; or
d. Any combination of the shares of stock, depository receipts and
cash in lieu of fractional shares or fractional depository receipts
described in the foregoing subparagraphs a., b. and c. of this
paragraph.
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(3) In the event all of the stock of a subsidiary Delaware corporation
party to a merger effected under 253 of this title is not owned by the
parent corporation immediately prior to the merger, appraisal rights shall
be available for the shares of the subsidiary Delaware corporation.
(c) Any corporation may provide in its certificate of incorporation that
appraisal rights under this section shall be available for the shares of any
class or series of its stock as a result of an amendment to its certificate of
incorporation, any merger or consolidation in which the corporation is a
constituent corporation or the sale of all or substantially all of the assets of
the corporation. If the certificate of incorporation contains such a provision,
the procedures of this section, including those set forth in subsections (d) and
(e) of this section, shall apply as nearly as is practicable.
(d) Appraisal rights shall be perfected as follows:
(1) If a proposed merger or consolidation for which appraisal rights
are provided under this section is to be submitted for approval at a
meeting of stockholders, the corporation, not less than 20 days prior to
the meeting, shall notify each of its stockholders who was such on the
record date for such meeting with respect to shares for which appraisal
rights are available pursuant to subsections (b) or (c) hereof that
appraisal rights are available for any or all of the shares of the
constituent corporations, and shall include in such notice a copy of this
section. Each stockholder electing to demand the appraisal of his shares
shall deliver to the corporation, before the taking of the vote on the
merger or consolidation, a written demand for appraisal of his shares. Such
demand will be sufficient if it reasonably informs the corporation of the
identity of the stockholder and that the stockholder intends thereby to
demand the appraisal of his shares. A proxy or vote against the merger or
consolidation shall not constitute such a demand. A stockholder electing to
take such action must do so by a separate written demand as herein
provided. Within 10 days after the effective date of such merger or
consolidation, the surviving or resulting corporation shall notify each
stockholder of each constituent corporation who has complied with this
subsection and has not voted in favor of or consented to the merger or
consolidation of the date that the merger or consolidation has become
effective; or
(2) If the merger or consolidation was approved pursuant to sec. 228
or sec. 253 of this title, each constituent corporation, either before the
effective date of the merger or consolidation or within ten days
thereafter, shall notify each of the holders of any class or series of
stock of such constituent corporation who are entitled to appraisal rights
of the approval of the merger or consolidation and that appraisal rights
are available for any or all shares of such class or series of stock of
such constituent corporation, and shall include in such notice a copy of
this section, provided that, if the notice is given on or after the
effective date of the merger or consolidation, such notice shall be given
by the surviving or resulting corporation to all such holders of any class
or series of stock of a constituent corporation that are entitled to
appraisal rights. Such notice may, and, if given on or after the effective
date of the merger or consolidation, shall, also notify such stockholders
of the effective date of the merger or consolidation. Any stockholder
entitled to appraisal rights may, within twenty days after the date of
mailing of such notice, demand in writing from the surviving or resulting
corporation the appraisal of such holder's shares. Such demand will be
sufficient if it reasonably informs the corporation of the identity of the
stockholder and that the stockholder intends thereby to demand the
appraisal of such holder's shares. If such notice did not notify
stockholders of the effective date of the merger or consolidation, either
(i) each such constituent corporation shall send a second notice before the
effective date of the merger or consolidation notifying each of the holders
of any class or series of stock of such constituent corporation that are
entitled to appraisal rights of the effective date of the merger or
consolidation or (ii) the surviving or resulting corporation shall send
such a second notice to all such holders on or within 10 days after such
effective date; provided, however, that if such second notice is sent more
than 20 days following the sending of the first notice, such second notice
need only be sent to each stockholder who is entitled to appraisal rights
and who has demanded appraisal of such holder's shares in accordance with
this subsection. An affidavit of the secretary or assistant secretary or of
the transfer agent of the corporation that is required to give either
notice that such notice has been given shall, in the absence of fraud, be
prima facie evidence of the facts stated therein. For purposes of
determining the stockholders entitled to receive either notice, each
constituent corporation may fix, in advance, a record date that shall be
not more than 10 days prior to the
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date the notice is given; provided that, if the notice is given on or after
the effective date of the merger or consolidation, the record date shall be
such effective date. If no record date is fixed and the notice is given
prior to the effective date, the record date shall be the close of business
on the day next preceding the day on which the notice is given.
(e) Within 120 days after the effective date of the merger or
consolidation, the surviving or resulting corporation or any stockholder who has
complied with subsections (a) and (d) hereof and who is otherwise entitled to
appraisal rights, may file a petition in the Court of Chancery demanding a
determination of the value of the stock of all such stockholders.
Notwithstanding the foregoing, at any time within 60 days after the effective
date of the merger or consolidation, any stockholder shall have the right to
withdraw his demand for appraisal and to accept the terms offered upon the
merger or consolidation. Within 120 days after the effective date of the merger
or consolidation, any stockholder who has complied with the requirements of
subsections (a) and (d) hereof, upon written request, shall be entitled to
receive from the corporation surviving the merger or resulting from the
consolidation a statement setting forth the aggregate number of shares not voted
in favor of the merger or consolidation and with respect to which demands for
appraisal have been received and the aggregate number of holders of such shares.
Such written statement shall be mailed to the stockholder within 10 days after
his written request for such a statement is received by the surviving or
resulting corporation or within 10 days after expiration of the period for
delivery of demands for appraisal under subsection (d) hereof, whichever is
later.
(f) Upon the filing of any such petition by a stockholder, service of a
copy thereof shall be made upon the surviving or resulting corporation, which
shall within 20 days after such service file in the office of the Register in
Chancery in which the petition was filed a duly verified list containing the
names and addresses of all stockholders who have demanded payment for their
shares and with whom agreements as to the value of their shares have not been
reached by the surviving or resulting corporation. If the petition shall be
filed by the surviving or resulting corporation, the petition shall be
accompanied by such a duly verified list. The Register in Chancery, if so
ordered by the Court, shall give notice of the time and place fixed for the
hearing of such petition by registered or certified mail to the surviving or
resulting corporation and to the stockholders shown on the list at the addresses
therein stated. Such notice shall also be given by 1 or more publications at
least 1 week before the day of the hearing, in a newspaper of general
circulation published in the City of Wilmington, Delaware or such publication as
the Court deems advisable. The forms of the notices by mail and by publication
shall be approved by the Court, and the costs thereof shall be borne by the
surviving or resulting corporation.
(g) At the hearing on such petition, the Court shall determine the
stockholders who have complied with this section and who have become entitled to
appraisal rights. The Court may require the stockholders who have demanded an
appraisal for their shares and who hold stock represented by certificates to
submit their certificates of stock to the Register in Chancery for notation
thereon of the pendency of the appraisal proceedings; and if any stockholder
fails to comply with such direction, the Court may dismiss the proceedings as to
such stockholder.
(h) After determining the stockholders entitled to an appraisal, the Court
shall appraise the shares, determining their fair value exclusive of any element
of value arising from the accomplishment or expectation of the merger or
consolidation, together with a fair rate of interest, if any, to be paid upon
the amount determined to be the fair value. In determining such fair value, the
Court shall take into account all relevant factors. In determining the fair rate
of interest, the Court may consider all relevant factors, including the rate of
interest which the surviving or resulting corporation would have had to pay to
borrow money during the pendency of the proceeding. Upon application by the
surviving or resulting corporation or by any stockholder entitled to participate
in the appraisal proceeding, the Court may, in its discretion, permit discovery
or other pretrial proceedings and may proceed to trial upon the appraisal prior
to the final determination of the stockholder entitled to an appraisal. Any
stockholder whose name appears on the list filed by the surviving or resulting
corporation pursuant to subsection (f) of this section and who has submitted his
certificates of stock to the Register in Chancery, if such is required, may
participate fully in all proceedings until it is finally determined that he is
not entitled to appraisal rights under this section.
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(i) The Court shall direct the payment of the fair value of the shares,
together with interest, if any, by the surviving or resulting corporation to the
stockholders entitled thereto. Interest may be simple or compound, as the Court
may direct. Payment shall be so made to each such stockholder, in the case of
holders of uncertificated stock forthwith, and the case of holders of shares
represented by certificates upon the surrender to the corporation of the
certificates representing such stock. The Court's decree may be enforced as
other decrees in the Court of Chancery may be enforced, whether such surviving
or resulting corporation be a corporation of this State or of any state.
(j) The costs of the proceeding may be determined by the Court and taxed
upon the parties as the Court deems equitable in the circumstances. Upon
application of a stockholder, the Court may order all or a portion of the
expenses incurred by any stockholder in connection with the appraisal
proceeding, including, without limitation, reasonable attorney's fees and the
fees and expenses of experts, to be charged pro rata against the value of all
the shares entitled to an appraisal.
(k) From and after the effective date of the merger or consolidation, no
stockholder who has demanded his appraisal rights as provided in subsection (d)
of this section shall be entitled to vote such stock for any purpose or to
receive payment of dividends or other distributions on the stock (except
dividends or other distributions payable to stockholders of record at a date
which is prior to the effective date of the merger or consolidation); provided,
however, that if no petition for an appraisal shall be filed within the time
provided in subsection (e) of this section, or if such stockholder shall deliver
to the surviving or resulting corporation a written withdrawal of his demand for
an appraisal and an acceptance of the merger or consolidation, either within 60
days after the effective date of the merger or consolidation as provided in
subsection (e) of this section or thereafter with the written approval of the
corporation, then the right of such stockholder to an appraisal shall cease.
Notwithstanding the foregoing, no appraisal proceeding in the Court of Chancery
shall be dismissed as to any stockholder without the approval of the Court, and
such approval may be conditioned upon such terms as the Court deems just.
(l) The shares of the surviving or resulting corporation to which the
shares of such objecting stockholders would have been converted had they
assented to the merger or consolidation shall have the status of authorized and
unissued shares of the surviving or resulting corporation.
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The Letter of Transmittal, certificates for Shares and any other required
documents should be sent or delivered by each shareholder of the Company or his
broker, dealer, commercial bank or other nominee to the Depositary at one of its
addresses set forth below.
The Depositary for the Offer is:
FIRST CHICAGO TRUST COMPANY OF NEW YORK
By Mail:
Tenders & Exchanges
P.O. Box 2569
Suite 4660-Xxxxxxxx
Jersey City, New Jersey
07303-2569
Facsimile Transmission
(For Eligible Institutions Only):
(000) 000-0000
or
(000) 000-0000
Confirm Receipt of Notice of
Guaranteed Delivery
(000) 000-0000
By Overnight Courier:
Tenders & Exchanges
00 Xxxx Xxxxxx
0xx Xxxxx
Xxxxx 0000-Xxxxxxxx
Xxx Xxxx, Xxx Xxxx 00000
By Hand:
Tenders & Exchanges
c/o The Depository Trust Company
00 Xxxxx Xxxxxx
DTC TAD
Vietnam Veterans Memorial Plaza
New York, New York 10041
Any questions or requests for assistance or additional copies of this Offer
to Purchase, the Letter of Transmittal and the Notice of Guaranteed Delivery may
be directed to the Information Agent at its telephone numbers and location
listed below. You may also contact your broker, dealer, commercial bank or trust
company or nominee for assistance concerning the Offer.
The Information Agent for the Offer is:
[XXXXXX & CO., INC. LOGO]
000 Xxxxx Xxxxxx
00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
(000) 000-0000
Toll Free: (000) 000-0000
Banks and Brokerage Firms, please call:
(000) 000-0000
The Dealer Manager for the Offer is:
XXXXX XXXXXX INC.
000 Xxxxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
(000) 000-0000
