<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 14D-1
TENDER OFFER STATEMENT PURSUANT TO SECTION 14(d)(1)
OF THE SECURITIES EXCHANGE ACT OF 1934
COHR INC.
(Name of Subject Company)
TCF ACQUISITION CORPORATION
THREE CITIES FUND II, L.P.
THREE CITIES OFFSHORE II C.V.
(Bidders)
COMMON STOCK, PAR VALUE $.01 PER SHARE
(INCLUDING THE ASSOCIATED PREFERRED STOCK PURCHASE RIGHTS)
(Title of Class of Securities)
192567105
(Cusip Number of Class of Securities)
J. WILLIAM UHRIG
PRESIDENT
TCF ACQUISITION CORPORATION
C/O THREE CITIES RESEARCH, INC.
650 MADISON AVENUE
NEW YORK, NEW YORK 10022
(212) 838-9660
(Name, Address and Telephone Number of Person Authorized
to Receive Notices and Communications on Behalf of Bidders)
COPY TO:
DAVID W. BERNSTEIN, ESQ.
ROGERS & WELLS LLP
200 PARK AVENUE
NEW YORK, NEW YORK 10166
(212) 878-8000
CALCULATION OF FILING FEE
Transaction Valuation*: $17,994,231.50 Amount of Filing Fee: $3,598.85
* For purposes of calculating the fee only. This amount assumes the
purchase of 3,347,764 shares of common stock, par value $.01 per share
(together with the associated preferred stock purchase rights, the
"Shares") of COHR Inc. at a price per share of $5.375 in cash. The
number of Shares outstanding as of September 30, 1998 which are not
owned by the Bidders, is 3,347,764. The amount of the filing fee,
calculated in accordance with Section 14(g)(3) and Rule 0-11(d) under
the Securities Exchange Act of 1934, as amended, equals 1/50th of one
percent of the aggregate of the cash offered by the Bidders.
/ / Check box if any part of the fee is offset as provided by Rule
0-11(a)(2) and identify the filing with which the offsetting fee was
previously paid. Identify the previous filing by registration statement
number, or the form or schedule and the date of its filing.
Amount Previously Paid: Filing Party:
Form or registration no.: Date Filed:
(Continued on following pages)
(Page 1 of 9 pages)
<PAGE> 2
CUSIP No. 192567105 14D-1 Page 2
================================================================================
1. Name of Reporting Persons
S.S. or I.R.S. Identification Nos. of Above Persons
TCF ACQUISITION CORPORATION
- --------------------------------------------------------------------------------
2. Check the Appropriate Box if a Member of a Group
(a)/X/
(b)/ /
- --------------------------------------------------------------------------------
3. SEC Use Only
- --------------------------------------------------------------------------------
4. Sources of Funds
Not Applicable
- --------------------------------------------------------------------------------
5. Check if Disclosure of Legal Proceedings is Required Pursuant to
Items 2(e) or 2(f)
/ /
- --------------------------------------------------------------------------------
6. Citizenship or Place of Organization
DELAWARE
- --------------------------------------------------------------------------------
7. Aggregate Amount Beneficially Owned by Each Reporting Person
0
- --------------------------------------------------------------------------------
8. Check if the Aggregate Amount in Row 7 Excludes Certain Shares
/ /
- --------------------------------------------------------------------------------
9. Percent of Class Represented by Amount in Row 7
0
- --------------------------------------------------------------------------------
10. Type of Reporting Person
CO
================================================================================
<PAGE> 3
CUSIP No. 192567105 14D-1 Page 3
================================================================================
1. Name of Reporting Persons
S.S. or I.R.S. Identification Nos. of Above Persons
THREE CITIES FUND II, L.P.
- --------------------------------------------------------------------------------
2. Check the Appropriate Box if a Member of a Group
(a)/X/
(b)/ /
- --------------------------------------------------------------------------------
3. SEC Use Only
- --------------------------------------------------------------------------------
4. Sources of Funds
OO - Partner Contributions
- --------------------------------------------------------------------------------
5. Check if Disclosure of Legal Proceedings is Required Pursuant to
Items 2(e) or 2(f)
/ /
- --------------------------------------------------------------------------------
6. Citizenship or Place of Organization
DELAWARE
- --------------------------------------------------------------------------------
7. Aggregate Amount Beneficially Owned by Each Reporting Person
3,085,425
- --------------------------------------------------------------------------------
8. Check if the Aggregate Amount in Row 7 Excludes Certain Shares
/ /
- --------------------------------------------------------------------------------
9. Percent of Class Represented by Amount in Row 7
48.3%
- --------------------------------------------------------------------------------
10. Type of Reporting Person
PN
================================================================================
<PAGE> 4
CUSIP No. 192567105 14D-1 Page 4
================================================================================
1. Name of Reporting Persons
S.S. or I.R.S. Identification Nos. of Above Persons
THREE CITIES OFFSHORE II C.V.
- --------------------------------------------------------------------------------
2. Check the Appropriate Box if a Member of a Group
(a)/X/
(b)/ /
- --------------------------------------------------------------------------------
3. SEC Use Only
- --------------------------------------------------------------------------------
4. Sources of Funds
OO - Partnership Contributions
- --------------------------------------------------------------------------------
5. Check if Disclosure of Legal Proceedings is Required Pursuant to
Items 2(e) or 2(f)
/ /
- --------------------------------------------------------------------------------
6. Citizenship or Place of Organization
NETHERLANDS ANTILLES
- --------------------------------------------------------------------------------
7. Aggregate Amount Beneficially Owned by Each Reporting Person
3,085,425
- --------------------------------------------------------------------------------
8. Check if the Aggregate Amount in Row 7 Excludes Certain Shares
/ /
- --------------------------------------------------------------------------------
9. Percent of Class Represented by Amount in Row 7
48.3%
- --------------------------------------------------------------------------------
10. Type of Reporting Person
PN
================================================================================
ITEM 1. SECURITY AND SUBJECT COMPANY.
(a) The name of the subject company is COHR Inc., a Delaware
corporation (the "Company"). The address of the Company's principal executive
offices is 21540 Plummer Street, Chatsworth, California 91311.
(b) This Statement relates to the offer by TCF Acquisition Corporation,
a Delaware corporation (the "Purchaser"), to purchase all the outstanding shares
of common stock, par value $.01 per share (the "Shares") of the Company which
are not owned by the Purchaser and its stockholders at a purchase price of
$5.375 per Share, net to the seller in cash, (which will be increased to $6.375
per Share if pending stockholder suits are settled before the Offer expires on a
basis which will not require the Company to pay more than $3.0 million, net of
any insurance proceeds) upon the terms and subject to the conditions set forth
in the Offer to Purchase, dated January 4, 1999 (the "Offer to Purchase") and
the related Letter of Transmittal (which, together with any supplements or
amendments, collectively constitute the "Offer"), copies of which are filed as
Exhibits (a)(1) and (a)(2) hereto, respectively. The term "Shares" is deemed to
include the associated preferred stock purchase rights issued pursuant to the
Rights Agreement, dated as of November 23, 1998, between the Company and Chase
Mellon Shareholder Services LLC. As of September 30, 1998, there were 6,433,189
Shares outstanding, of which the Purchaser owns 3,085,425.
(c) The information set forth in the Offer to Purchase in Section 12
("Price Range of Shares") is incorporated herein by reference.
<PAGE> 5
ITEM 2. IDENTITY AND BACKGROUND.
(a) - (d), (g) This Statement is being filed by the Purchaser and Three
Cities Fund II, L.P., a Delaware limited partnership and Three Cities Offshore
II C.V., a Netherlands Antilles partnership (the "Three Cities Funds," and
collectively, the "Bidders"). The Purchaser is currently owned by the Three
Cities Funds. The information set forth in the Offer to Purchase under
"Introduction," in Section 14 ("Certain Information Concerning the Purchaser and
the Three Cities Funds") and in Schedule I to the Offer to Purchase is
incorporated herein by reference.
(e) - (f) During the last five years, none of the Bidders nor to the
best of their knowledge, any of the persons listed in Schedule I to the Offer to
Purchase (i) has been convicted in a criminal proceeding (excluding traffic
violations or similar misdemeanors) or (ii) 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
further violations of, or prohibiting activities subject to, federal or state
securities laws or finding any violation of such laws.
ITEM 3. PAST CONTACTS, TRANSACTIONS OR NEGOTIATIONS WITH THE SUBJECT COMPANY.
(a) - (b) The information set forth in the Offer to Purchase in Section
1 ("Background of the Offer; Contacts with the Company") is incorporated herein
by reference.
ITEM 4. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION.
(a) - (b) The information set forth in the Offer to Purchase in Section
15 ("Source and Amount of Funds") is incorporated herein by reference.
(c) Not applicable.
ITEM 5. PURPOSE OF THE TENDER OFFER AND PLANS OR PROPOSALS OF THE BIDDER.
(a) - (e) The information set forth in the Offer to Purchase in Section
2 ("Purpose of the Offer and the Proposed Merger; Plans for the Company"); and
in Section 16 ("The Merger") is incorporated herein by reference.
(f) - (g) The information set forth in the Offer to Purchase in Section
4 ("Certain Effects of the Transaction") is incorporated herein by reference.
ITEM 6. INTEREST IN SECURITIES OF THE SUBJECT COMPANY.
(a) - (b) The information set forth in the Offer to Purchase under
"Introduction," Section 14 ("Certain Information Concerning The Purchaser and
the Three Cities Funds"), Section 2 ("Purpose of the Offer and the Proposed
Merger; Plans for the Company") and in Section 16 ("The Merger") is incorporated
herein by reference. As of the close of business on December 24, 1998, the Three
Cities Funds, by virtue of the language of Rule 13d-3(d)(1)(i), may be deemed to
own beneficially in the aggregate the number and percent of the Company's Shares
set forth below (based on the number of Shares that were reported to be
outstanding in the Company's Form 10-Q as of September 30, 1998).
<TABLE>
<CAPTION>
Name Number of Shares Percentage
---- ---------------- ----------
<S> <C> <C>
Three Cities Fund II,L.P. 1,234,170 19.3%
Three Cities Offshore II, C.V. 1,851,255 29.0
- ----------------------------- ---------------- ----------
Total 3,085,425 48.3%
</TABLE>
ITEM 7. CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS OR RELATIONSHIPS WITH RESPECT TO
THE SUBJECT COMPANY'S SECURITIES.
The information set forth in the Offer to Purchase under
"Introduction," in Section 14 ("Certain Information Concerning the Purchaser and
the Funds"), Section 1 ("Background of the Offer; Contacts with the Company"),
Section 2 ("Purpose of the Offer and the Proposed Merger; Plans for the
Company") and in Section 16 ("The Merger") is incorporated herein by reference.
ITEM 8. PERSONS RETAINED, EMPLOYED OR TO BE COMPENSATED.
The information set forth in the Offer to Purchase under "Introduction"
and in section 19 ("Fees and Expenses") is incorporated herein by reference.
ITEM 9. FINANCIAL STATEMENTS OF CERTAIN BIDDER
Not applicable.
<PAGE> 6
ITEM 10. ADDITIONAL INFORMATION.
(a) The information set forth in the Offer to Purchase in Section 1
("Background of the Offer; Contacts with the Company"); Section 2 ("Purpose of
the Offer and the Proposed Merger; Plans for the Company"); and in Section 16
("The Merger") is incorporated herein by reference.
(b) - (c) The information set forth in the Offer to Purchase in section
18 ("Certain Legal Matters; Regulatory Approvals") is incorporated herein by
reference.
(d) Not applicable.
(e) The information set forth in the Offer to Purchase in section 18
("Certain Legal Maters; Regulatory Approvals") is incorporated herein by
reference.
(f) The information set forth in the Offer to Purchase, the Letter of
Transmittal and the Plan and Agreement of Merger, dated December 24, 1998, by
copies of which are filed as Exhibits (a)(1), (a)(2) and (c)(1) hereto,
respectively, is incorporated herein by reference in its entirety.
ITEM 11. MATERIAL TO BE FILED AS EXHIBITS.
<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION
----------- -----------
<S> <C>
(a)(1) Offer to Purchase, dated January 4, 1999.
(a)(2) Letter of Transmittal.
(a)(3) Notice of Guaranteed Delivery.
(a)(4) Form of letter, dated January 4, 1999, to
brokers, dealers, commercial banks, trust
companies and other nominees.
(a)(5) Form of letter to be used by brokers, dealers,
commercial banks, trust companies and nominees to
their clients.
(a)(6) Guidelines for Certification of Taxpayer
Identification Number on Substitute Form W-9.
(a)(7) Form of Summary Advertisement, dated January 4,
1999.
(c)(1) Plan and Agreement of Merger, dated December 24,
1998, by and among the Company and the Purchaser.
</TABLE>
<PAGE> 7
SIGNATURE
After due inquiry and to the best of my knowledge and belief, I certify
that the information set forth in this statement is true, complete and correct.
Dated: January 3, 1999
TCF ACQUISITION CORPORATION
By: /s/ J. William Uhrig
------------------------------------------
Name: J. William Uhrig
Title: President
THREE CITIES FUND II, L.P.
By: TCR Associates, L.P.,
its general partner
By: Three Cities Research, Inc.,
its general partner
By: /s/ Willem de Vogel
--------------------------------
Name: Willem de Vogel
Title: President
THREE CITIES OFFSHORE II C.V.
By: TCR Offshore Associates, L.P.,
its general partner
By: Three Cities Associates, N.V.,
its general partner
By: /s/ J. William Uhrig
--------------------------------
Name: J. William Uhrig
Title: President
<PAGE> 8
EXHIBIT INDEX
EXHIBIT NO. DESCRIPTION
(a)(1) Offer to Purchase, dated January 4, 1999.
(a)(2) Letter of Transmittal.
(a)(3) Notice of Guaranteed Delivery.
(a)(4) Form of letter, dated January 4, 1999, to
brokers, dealers, commercial banks, trust
companies and other nominees.
(a)(5) Form of letter to be used by brokers, dealers,
commercial banks, trust companies and nominees to
their clients.
(a)(6) Guidelines for Certification of Taxpayer
Identification Number on Substitute Form W-9.
(a)(7) Form of Summary Advertisement, dated January 4,
1999.
(c)(1) Plan and Agreement of Merger, dated December 24,
1998, by and among the Company and the Purchaser.
<PAGE> 9
SIGNATURE
After due inquiry and to the best of my knowledge and belief, I certify
that the information set forth in this statement is true, complete and correct.
Dated: January 3, 1999
TCF ACQUISITION CORPORATION
By: /s/ J. William Uhrig
------------------------------------------
Name: J. William Uhrig
Title: President
THREE CITIES FUND II, L.P.
By: TCR Associates, L.P.,
its general partner
By: Three Cities Research, Inc.,
its general partner
By: /s/ Willem de Vogel
--------------------------------
Name: Willem de Vogel
Title: President
THREE CITIES OFFSHORE II C.V.
By: TCR Offshore Associates, L.P.,
its general partner
By: Three Cities Associates, N.V.,
its general partner
By: /s/ J. William Uhrig
--------------------------------
Name: J. William Uhrig
Title: President
<PAGE> 1
OFFER TO PURCHASE FOR CASH
ALL OUTSTANDING SHARES OF COMMON STOCK
(INCLUDING THE ASSOCIATED PREFERRED STOCK PURCHASE RIGHTS)
OF
COHR INC.
BY
TCF ACQUISITION CORPORATION
WHICH IS OWNED BY
THREE CITIES FUND II, L.P.
AND
THREE CITIES OFFSHORE II C.V.
FOR
$5.375 NET PER SHARE (OR, UNDER SOME CIRCUMSTANCES, $6.375 NET PER SHARE)
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY
TIME,
ON WEDNESDAY, FEBRUARY 3, 1999, UNLESS THE OFFER IS EXTENDED.
THIS OFFER IS BEING MADE IN ACCORDANCE WITH A PLAN AND AGREEMENT OF MERGER
(THE "MERGER AGREEMENT"), DATED AS OF DECEMBER 24, 1998 , BETWEEN COHR INC. (THE
"COMPANY") AND TCF ACQUISITION CORPORATION (THE "PURCHASER"). THE BOARD OF
DIRECTORS OF THE COMPANY (1) HAS UNANIMOUSLY APPROVED THE MERGER AGREEMENT, THE
OFFER AND A MERGER OF THE COMPANY AND THE PURCHASER (THE "MERGER") IN WHICH, IF
THE MERGER TAKES PLACE, THE STOCKHOLDERS OF THE PURCHASER WILL BECOME THE SOLE
STOCKHOLDERS OF THE MERGED COMPANY AND THE STOCKHOLDERS OF THE COMPANY (OTHER
THAN THE PURCHASER AND ITS STOCKHOLDERS) WILL RECEIVE THE SAME AMOUNT OF CASH
PER COMMON SHARE AS IS PAID FOR SHARES PURCHASED THROUGH THE OFFER, (2) HAS
DETERMINED THAT THE TERMS OF THE OFFER AND THE MERGER ARE FAIR TO AND IN THE
BEST INTERESTS OF THE COMPANY'S STOCKHOLDERS AND (3) RECOMMENDS THAT HOLDERS OF
THE COMMON SHARES TENDER THEIR SHARES IN RESPONSE TO THE OFFER. THREE CITIES
FUND II, L.P. AND THREE CITIES OFFSHORE II C.V. (THE "THREE CITIES FUNDS"),
WHICH CURRENTLY OWN ALL THE STOCK OF THE PURCHASER, HAVE GUARANTEED ALL THE
PURCHASER'S OBLIGATIONS TO MAKE PAYMENTS UNDER THE MERGER AGREEMENT.
THIS OFFER IS NOT CONDITIONED ON ANY MINIMUM NUMBER OF SHARES BEING
TENDERED, NOR IS IT CONDITIONED ON THE ABILITY OF THE PURCHASER TO OBTAIN
FINANCING (BUT IT IS SUBJECT TO SOME CONDITIONS -- SEE SECTION 11). THE THREE
CITIES FUNDS ALREADY OWN MORE THAN 48% OF THE OUTSTANDING COMMON SHARES AND THE
COMPANY'S DIRECTORS AND EXECUTIVE OFFICERS, WHO OWN MORE THAN 2% OF THE
OUTSTANDING COMMON SHARES, HAVE AGREED TO TENDER THEIR SHARES IN RESPONSE TO THE
OFFER OR VOTE IN FAVOR OF THE MERGER. THEREFORE, THE MERGER CAN BE APPROVED EVEN
IF NO OTHER STOCKHOLDER VOTES IN FAVOR OF IT. HOWEVER, THE PURCHASER HAS AGREED
NOT TO CARRY OUT THE MERGER UNLESS, AFTER IT PURCHASES THE SHARES WHICH ARE
TENDERED IN RESPONSE TO THE OFFER, IT AND ITS STOCKHOLDERS OWN AT LEAST 85% OF
THE COMMON SHARES.
THE PURCHASER HAS AGREED TO INCREASE THE TENDER OFFER CONSIDERATION BY $1.00
PER SHARE IF, PRIOR TO THE EXPIRATION TIME, THE STOCKHOLDER SUITS CURRENTLY
PENDING AGAINST THE COMPANY ARE SETTLED ON A BASIS WHICH WILL NOT REQUIRE THE
COMPANY TO PAY MORE THAN $3.0 MILLION (NET OF ANY INSURANCE PROCEEDS).
THIS TRANSACTION HAS NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION, NOR HAS THE SECURITIES AND EXCHANGE COMMISSION PASSED UPON
THE FAIRNESS OR MERIT OF THIS TRANSACTION NOR UPON THE ACCURACY OR ADEQUACY OF
THE INFORMATION CONTAINED IN THIS DOCUMENT. ANY REPRESENTATION TO THE CONTRARY
IS UNLAWFUL.
IMPORTANT
Any stockholder who wishes to tender Common Shares should complete and sign
a Letter of Transmittal (or a facsimile of one) in accordance with the
instructions set forth in the Letter of Transmittal and (A) mail or deliver it,
together with the certificate(s) representing the tendered Common Shares (the
"Share Certificates") and any other required documents, to the Depositary named
on the back cover of this Offer to Purchase or (B) tender the Shares using the
procedures for book-entry transfer described in Section 9. A stockholder whose
Common Shares are registered in the name of a broker, dealer, commercial bank,
trust company or other nominee must contact the broker, dealer, commercial bank,
trust company or other nominee if the stockholder wishes to tender Shares.
A stockholder who wishes to tender Common Shares but whose certificates are
not immediately available, or who cannot comply with the procedures for
book-entry transfer described in this Offer to Purchase on a timely basis, may
tender the Common Shares by following the procedures for guaranteed delivery
described in Section 9.
Questions and requests for assistance, or for additional copies of this
Offer to Purchase, the Letter of Transmittal, or other tender offer materials,
may be directed to the Information Agent at its address and telephone number set
forth on the back cover. Holders of Common Shares may also contact brokers,
dealers or banks for additional copies of this Offer to Purchase, the Letter of
Transmittal or other tender offer materials.
------------------------
January 4, 1999
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<S> <C> <C>
INTRODUCTION..................................................... 1
SPECIAL FACTORS.................................................. 4
1. Background of the Offer; Contacts with the Company.......... 4
2. Purpose of the Offer and the Proposed Merger; Plans for the
Company..................................................... 5
3. Certain Federal Income Tax Consequences..................... 7
4. Certain Effects of the Transaction.......................... 8
5. Fairness of the Transaction................................. 9
6. Reports, Opinions, Appraisals and Certain Negotiations...... 10
THE TENDER OFFER................................................. 10
7. Terms of the Offer.......................................... 10
8. Acceptance for Payment and Payment for Shares............... 11
9. Procedures for Tendering Shares............................. 12
10. Withdrawal Rights........................................... 15
11. Conditions of the Offer..................................... 16
12. Price Range of Shares....................................... 17
13. Certain Information Concerning the Company.................. 17
14. Certain Information Concerning the Purchaser and the Three
Cities Funds................................................ 18
15. Source and Amount of Funds.................................. 19
16. The Merger.................................................. 20
17. Dividends and Distributions................................. 23
18. Certain Legal Matters; Regulatory Approvals................. 23
19. Fees and Expenses........................................... 24
20. Miscellaneous............................................... 24
SCHEDULE I....................................................... I-1
SCHEDULE II...................................................... II-1
</TABLE>
i
<PAGE> 3
TO THE HOLDERS OF COMMON STOCK OF COHR INC.:
INTRODUCTION
TCF Acquisition Corporation (the "Purchaser"), a Delaware corporation
which, at the date of this document, is wholly owned by Three Cities Fund II,
L.P. and Three Cities Offshore II C.V. (the "Three Cities Funds"), hereby offers
to purchase all the outstanding shares of common stock, par value $0.01 per
share ("Common Shares" or "Shares"), of COHR Inc. (the "Company"), a Delaware
corporation, for $5.375 per Common Share (which will be increased to $6.375 per
share if pending Stockholder Suits are settled before the Offer expires on a
basis which will not require the Company to pay more than $3.0 million, net of
any insurance proceeds), net to the seller in cash (the "Offer Price"), upon the
terms and subject to the conditions set forth in this Offer to Purchase and in
the related Letter of Transmittal (which terms and conditions constitute the
"Offer Documents"). The Offer will expire at 12:00 Midnight, New York City time,
on February 3, 1999 (the "Expiration Time") unless the offer is extended. At the
Company's request, the Purchaser will extend the Offer by up to 120 days (and,
under some circumstances, up to 210 days) to permit the Stockholder Suits to be
settled and the settlement to receive preliminary Court approval. Unless the
context otherwise requires, all references in this Offer to Purchase to "Common
Shares" or "Shares" shall be deemed to refer also to the preferred stock
purchase rights (the "Rights") issued pursuant to the Rights Agreement, dated as
of November 23, 1998, between the Company and ChaseMellon Shareholder Services
LLC (the "Rights Agreement").
If, after the Purchaser purchases all the Shares which are properly
tendered in response to the Offer and not withdrawn, the Purchaser, the Three
Cities Funds and any other stockholders of the Purchaser own at least 85% of the
outstanding Common Shares, the Purchaser and its stockholders will take all
steps in their power (including voting their Common Shares) to cause the
Purchaser to be merged with the Company (the "Merger") in a transaction in which
the stockholders of the Purchaser will own all the stock of the corporation
which results from the Merger (essentially, the Company), and the other
stockholders of the Company will receive the same amount of cash per Share as is
paid for Shares tendered in response to the Offer (unless particular
stockholders elect to exercise statutory rights to demand appraisal of their
Common Shares). If, after the Purchaser purchases all the Shares which are
properly tendered in response to the Offer and not withdrawn, the Purchaser and
its stockholders do not own at least 85% of the outstanding Shares, the
Purchaser will not cause the Merger to take place and will not for at least
three years engage in any other business combination with the Company unless the
business combination is approved by the Company's Board of Directors and by
holders of at least 66 2/3% of the Shares the Purchaser and its affiliates do
not own.
The Purchaser has agreed that if, prior to the Expiration Time, five
pending Stockholder Suits, and any other stockholder suits relating to the
matters which are the subject of the five Stockholder Suits, are settled on a
basis which will not require the Company to pay (net of any insurance proceeds
to which the Company's insurers have agreed in writing) more than a total of
$3.0 million for damages, indemnification of other defendants, fees and expenses
of plaintiff's counsel and defendants' counsel and other out of pocket expenses
(but not including any sum paid to the Purchaser, the Three Cities Funds or any
other stockholders of the Purchaser which are affiliated with the Three Cities
Funds) the Purchaser will increase the Offer Price by $1.00 per Share to $6.375
per Share. The five Stockholder Suits are Sherleigh Associates Inc. Profit
Sharing Plan v. COHR Inc., et al. in the United States District Court, Central
District of California, 98-3028 JSL (BQRx); Leonard Leeds v. Umesh Malhotra, et
al. in the Superior Court of the State of California, County of Los Angeles,
BC189490; Marcia Zabronsky, et al. v. COHR Inc. et al. in the United States
District Court, Central District of California, Western Division, 98-3493 R
(Ex); Robert Schug v. Paul Chopra, et al. in the Superior Court of the State of
California, County of Los Angeles, BC190933; and Charles Bird v. COHR Inc. et
al. in the United States District Court, Central District of California, 98-4177
WMB(AJWx) (collectively, the "Stockholder Suits"). As noted above, at the
request of the Company's Board of Directors, the Purchaser will extend the
Expiration Time for up to 120 days to permit the Stockholder Suits to be settled
and the Company to obtain preliminary Court approval of the settlement, and, if
a settlement agreement is signed within the 120 day extension period, the
Company will extend the Expiration Time for up to an additional 90 days to
permit the preliminary Court approval to be obtained. If the Offer Price is
increased (i) the
1
<PAGE> 4
increased amount will be paid to all stockholders who tender Common Shares,
including those who tender Shares before the Stockholder Suits are settled, and
(ii) the Purchaser will extend the Expiration Time until at least 10 business
days after it publicly announces the increased Offer Price. The Company has
stated that the Securities and Exchange Commission is investigating matters
regarding the Company which are similar to those which are the subject of the
Stockholder Suits. Resolution of that investigation, and any litigation which
may result from it, is not a prerequisite to the Offer Price's being increased
to $6.375 per share.
In connection with its approval of the Merger Agreement, the Company's
Board of Directors approved the Three Cities Funds' and the Purchaser's
acquiring Shares without limitation as to amount, and amended the Rights
Agreement so that the acquisition of Shares by the Three Cities Funds or the
Purchaser would not cause Rights to be distributed to stockholders. The Three
Cities Funds then acquired from two shareholder groups for $5.125 per Share a
total of 48.3% of the outstanding Common Shares, plus an assignment of those
shareholder groups' claims with regard to the matters which are the subject of
the Stockholder Suits (including their rights in the Stockholder Suits). The
purpose of the Offer and the Merger is to enable the Purchaser to acquire all
the Common Shares which the Three Cities Funds (and anybody else who becomes a
stockholder of the Purchaser) do not already own. However, as noted above, the
Purchaser has agreed that, unless after it purchases the Shares which are
properly tendered in response to the Offer and not withdrawn, the Purchaser and
its affiliates own at least 85% of the outstanding Common Shares, the Purchaser
will not cause the Merger to take place. Therefore, although, because the
directors and executive officers of the Company, who own more than 2% of the
outstanding Common Shares, have agreed to tender their Shares in response to the
Offer (or, under some circumstances to retain their Shares but vote them in
favor of the Merger), the Purchaser and its stockholders will be able to cast
the votes required for the Merger to be approved under the Delaware General
Corporation Law even if no other stockholders vote in favor of it, it is
possible that the Purchaser will purchase the Shares which are properly tendered
in response to the Offer and not withdrawn, but that the Merger will not take
place, and therefore the stockholders of the Purchaser will not own all the
outstanding stock of the Company.
Tendering stockholders will not be required to pay brokerage fees or
commissions or, except as set forth in Instruction 6 of the Letter of
Transmittal, stock transfer taxes as a result of the sale of Shares to the
Purchaser in response to the Offer.
Any tendering stockholder who fails to complete and sign the Substitute
Form W-9 included in the Letter of Transmittal may be subject to a required
backup Federal income tax withholding of 31% of the gross proceeds payable to
the stockholder or another payee pursuant to the Offer. See Section 3. The
Purchaser will pay all charges and expenses of IBJ Schroder Bank & Trust
Company, as Depositary (the "Depositary"), and D.F. King & Co., Inc. as
Information Agent (the "Information Agent"), incurred in connection with the
Offer. See Section 19.
THE BOARD OF DIRECTORS OF THE COMPANY (1) HAS APPROVED THE OFFER AND THE
MERGER WHICH MAY FOLLOW THE OFFER, (2) HAS DETERMINED THAT THE TERMS OF THE
OFFER AND THE MERGER ARE FAIR TO AND IN THE BEST INTERESTS OF THE COMPANY'S
STOCKHOLDERS, AND (3) RECOMMENDS THAT THE COMPANY'S STOCKHOLDERS ACCEPT THE
OFFER AND TENDER THEIR SHARES IN RESPONSE TO THE OFFER.
LEHMAN BROTHERS INC. ("LEHMAN BROTHERS"), FINANCIAL ADVISOR TO THE COMPANY,
HAS DELIVERED TO THE COMPANY'S BOARD OF DIRECTORS ITS WRITTEN OPINION TO THE
EFFECT THAT, AS OF THE DATE OF THE MERGER AGREEMENT, THE $5.375 IN CASH TO BE
RECEIVED BY THE HOLDERS OF COMMON SHARES IN THE OFFER AND THE MERGER IS FAIR TO
THOSE HOLDERS FROM A FINANCIAL POINT OF VIEW. THE FULL TEXT OF THE WRITTEN
OPINION OF LEHMAN BROTHERS CONTAINING THE ASSUMPTIONS MADE, THE MATTERS
CONSIDERED AND THE SCOPE OF THE OPINION WILL BE INCLUDED WITH THE COMPANY'S
SOLICITATION/RECOMMENDATION STATEMENT ON SCHEDULE 14D-9 (THE "SCHEDULE 14D-9")
WHICH WILL BE MAILED TO STOCKHOLDERS SHORTLY AFTER THIS OFFER TO PURCHASE.
STOCKHOLDERS ARE URGED TO READ THE LEHMAN BROTHERS OPINION IN ITS ENTIRETY.
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Conditions to the Offer. The Offer is subject to some conditions. They are
described in Section 11. However, the Offer is not conditioned on a minimum
number of Common Shares being tendered, on the Purchaser's obtaining financing
or on there being no material adverse change in the Company after December 24,
1998 (the date of the Merger Agreement). The Purchaser expressly reserves the
right, in its sole discretion, to waive any of the conditions to the Offer. See
Section 11.
THIS OFFER TO PURCHASE AND THE LETTER OF TRANSMITTAL CONTAIN IMPORTANT
INFORMATION WHICH YOU SHOULD READ CAREFULLY BEFORE YOU MAKE ANY DECISION WITH
RESPECT TO THE OFFER.
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SPECIAL FACTORS
1. BACKGROUND OF THE OFFER; CONTACTS WITH THE COMPANY.
On September 16, 1998 a mutual acquaintance introduced J. William Uhrig, of
Three Cities Research, Inc. (the adviser to the Three Cities Funds), to Steven
Ritterbush, a director of the Company. Mr. Uhrig and Mr. Ritterbush discussed
the Company and the Company's desire to raise capital in order to expand its
business. On September 21, 1998, there was a conference call in which Lynn
Reitnouer, the Chairman of the Company, was told of the September 16 meeting and
arrangements were made for representatives of Three Cities Research to visit the
Company. That visit took place on October 27, 1998, and was attended by Raymond
List, the Chief Executive Officer of the Company, and Donald F. Clark, the Chief
Financial Officer of the Company, as well as Messrs. Ritterbush and Reitnouer.
During the meeting, the representatives of Three Cities Research expressed
interest in the potential for an investment in the Company by investors advised
by three Cities Research and said they did not want to receive material
non-public information about the Company which would impede them from purchasing
Shares of the Company. Mr. List then discussed the Company's business, subject
to that limitation, and the representatives of Three Cities Research described
Three Cities Research, the investments in which it had been involved, and the
Three Cities Funds.
During the ensuing weeks, there were a number of conversations, primarily
between Mr. Uhrig and Mr. List. Among the topics of those conversations was the
fact that, according to filings with the SEC, two groups of investment funds
(together, the "Funds") owned more than 50% of the outstanding Common Shares,
and that the Three Cities Funds might be interested in purchasing those Shares,
possibly as a first step toward an acquisition of the Company. Mr. Uhrig
expressed concern that, if the Three Cities Funds were to acquire those Shares
without prior approval from the Company's Board of Directors, under Section 203
of the Delaware General Corporation Law (the "DGCL") the Company would be
precluded for three years from entering into a business combination transaction
with the Three Cities Funds or their affiliates unless the transaction were
approved by holders of at least 66 2/3% of the Shares which were not owned by
the Three Cities Funds or their affiliates. On November 23, 1998, Mr. Uhrig sent
a letter, in connection with a meeting of the Company's Board, asking that the
Board approve entities advised by Three Cities Research purchasing more than 15%
of the Company's Common Shares.
On November 23, 1998, the Company's Board of Directors discussed the
request of Three Cities Research that the Board approve the acquisition by
entities advised by it of more than 15% of the outstanding Common Shares.
However, it did not give that approval. Instead, the Board adopted the Rights
Agreement under which, if anyone acquired or agreed or arranged to acquire more
than 15% of the outstanding Common Shares, the stockholders other than the one
who purchased 15% or more of the outstanding Common Shares would be able to
purchase for $20 Series A Junior Participating Cumulative Preferred Stock which
would be equivalent to the number of Common Shares which at the time had a
market value of $40, subject to the right of the Board to redeem the Rights for
$.001 per Right, or to amend the Rights Agreement. Because, if the Three Cities
Funds acquired more than 15% of the outstanding Common Shares, the Rights
related to their shares would not be exercisable, exercise of Rights by the
Company's other stockholders would have diluted the Three Cities Funds'
ownership percentage to an extent which would not have been acceptable to them
Therefore, the Rights Agreement, like Section 203 of the DGCL, was a serious
obstacle to the Three Cities Funds' acquiring the Shares held by the Funds, or
any other large holdings of the Common Shares.
On November 24, 1998, Mr. List told Mr. Uhrig by telephone that the Board's
action in adopting the Rights Agreement did not mean the Board was unwilling to
consider a purchase of the Company by the Three Cities Funds, informing him that
the Rights Agreement was the culmination of an ongoing deliberation by the
Board. He suggested that representatives of Three Cities Research meet the
members of the Board.
On December 10, 1998, Mr. Uhrig and W. Robert Wright II, also of Three
Cities Research, met with the Company's directors in a series of meetings in
Southern California. They described Three Cities Research and the Three Cities
Funds to the directors and discussed their desire to purchase a significant
portion, and perhaps all, of the stock of the Company.
On December 14, 1998, Mr. Reitnouer called Mr. Uhrig to schedule further
discussions. The Board met by telephone on December 15, 1998 with their
financial and legal advisors to discuss a possible transaction
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with the Three Cities Funds. Before that meeting, the Three Cities Funds had
sent a letter to the Board committing that, if the Three Cities Funds purchased
substantially all the Common Shares owned by the Funds, the Three Cities Funds
would offer to purchase any and all the other outstanding Common Shares for a
price at least as high as the highest price the Three Cities Funds paid to the
Funds. On December 16, 1998, Messrs. Uhrig and Wright returned to Los Angeles,
where they met with Mr. Reitnouer and an attorney for the Company, with a
representative of Lehman Brothers and an attorney for the Three Cities Funds
participating by telephone. During the meeting, Mr. Reitnouer emphasized the
Board's strong desire to protect minority stockholder interests if the Three
Cities Funds purchased the Shares owned by the Funds.
Later in the day, the Board met by telephone, and again discussed the Three
Cities Funds' desire to acquire the Company's stock. The Purchaser and the Three
Cities Funds understand that the Board met again by telephone on December 17,
1998. Following that meeting, Mr. Reitnouer told the representatives of the
Three Cities Funds that the Board authorized management to proceed with
negotiating the price and other terms on which the Three Cities Funds would
solicit tenders of Common Shares from stockholders other than the Funds and
enter into a cash merger with the Company.
Drafts of a Merger Agreement were then prepared by attorneys for the Three
Cities Funds, and there were extensive discussions over the next several days of
the terms of the Merger Agreement, and particularly of the amount of the Offer
Price and how it might be increased if the Stockholder Suits were settled on a
specified basis.
The Board met on December 23, 1998. On December 23, 1998, the Board (a)
approved the acquisition by each of the Three Cities Funds and by a company they
formed (i.e., the Purchaser) of more than 15% of the outstanding Common Shares,
(b) approved an amendment of the Rights Agreement which would exclude the Three
Cities Funds and the Purchaser from the persons whose acquisitions of more than
15% of the Common Shares might cause the Rights to become exercisable, (c)
approved the Merger Agreement and the transactions contemplated by it, and (d)
resolved to recommend that the Company's stockholders tender their Common Shares
in response to the Offer. On the following day, (i) the Three Cities Funds
purchased a total of 3,085,425 Common Shares from the Funds for $5.125 per Share
plus assignment of the Funds' claims regarding the matters which are the subject
of the Stockholder Suits (including their rights as members of any class of
plaintiffs in the Stockholder Suits) and (ii) the Company and the Purchaser
signed the Merger Agreement, under which the Purchaser agreed to seek tenders of
any and all the outstanding Common Shares for $5.375 per share, which would be
increased to $6.375 per share if the Stockholder Suits were settled before the
Expiration Time on a basis which did not require the Company to pay, net of any
insurance proceeds, more than $3,000,000, and to pay the same amount per share
in the Merger to stockholders other than the Purchaser. The price the Three
Cities Funds paid to the Funds was substantially higher than the market price of
the Common Shares at the time of the transaction. On December 23, 1998 (the day
before the Three Cities Funds purchased the Common Shares from the Funds and
executed the Merger Agreement), the closing price of the Common Shares was
$3.90625 per Share. On December 24, 1998, the trading prices of the Common
Shares before the Three Cities Funds' purchase of the Common Shares from the
Funds were between $3.875 and $4.25 per share.
2. PURPOSE OF THE OFFER AND THE PROPOSED MERGER; PLANS FOR THE COMPANY.
Purpose. The purpose of the Offer and the Merger is to enable the Three
Cities Funds (and possibly a small number of additional persons) to acquire all
the outstanding stock of the Company. Because of the purchases from the Funds,
the Three Cities Funds own approximately 48.3% of the outstanding Common Shares,
which they will be contributing to the Purchaser in exchange for additional
shares of the Purchaser and which, when the Merger takes place, will become
Shares of the Company. The directors and executive officers of the Company, who
together own slightly more than 2% of the outstanding Common Shares, have agreed
to tender their Shares in response to the Offer (unless a tender by a particular
director or officer might lead to liability under Section 16(b) of the
Securities Exchange Act of 1934, as amended, in which case the director or
officer will vote in favor of the Merger). Therefore, there will be sufficient
affirmative votes to meet
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the DGCL requirement (and the requirement of the Company's Certificate of
Incorporation) for approval of the Merger even if no stockholders other than the
Purchaser and directors or officers who have not tendered their Common Shares in
response to the Tender Offer vote in favor of the Merger. However, unless the
Shares purchased by the Purchaser through the Offer, together with the other
Common Shares it and its stockholders own, total at least 85% of the outstanding
Common Shares, (a) the Merger will not take place, and (b) the Merger Agreement
will prohibit the Purchaser from carrying out a business combination with the
Company during the next three years unless the business combination has been
approved by the Company's Board of Directors and authorized at an annual or
special meeting of stockholders of the Company, and not by written consent, by
the affirmative vote of not less than 66 2/3% of the outstanding Common Shares,
other than Shares owned by the Purchaser and its affiliates.
If the Shares purchased through the Offer, together with the other Shares
the Purchaser and its stockholders (including the Three Cities Funds) own, total
at least 85% of the outstanding Common Shares, and the other conditions set
forth in the Merger Agreement are satisfied or waived, the Purchaser is required
by the Merger Agreement to take all steps in its power to effect the Merger.
The Company may not, and may not authorize or permit its or any of its
subsidiaries' officers, directors, employees, agents or representatives
(including any investment banker, attorney or accountant retained by it or by
any of its subsidiaries) directly or indirectly to initiate, solicit, encourage
or otherwise facilitate any inquiry or the making of any proposal or offer with
respect to a merger, reorganization, share exchange, consolidation or similar
transaction involving the Company, or any purchase of or tender for, all or any
significant portion of the Company's equity securities or any significant
portion of the assets of the Company and its subsidiaries on a consolidated
basis. However, this will not prevent the Company from, in response to an
acquisition proposal which the Company receives despite complying with the
previous sentence and which the Company's Board determines, in good faith after
consultation with its independent financial advisor, would result (if
consummated in accordance with its terms) in a transaction which (i) would
result in the Company's stockholders receiving cash consideration which is
substantially greater than the Offer Price and (ii) would be more favorable to
the Company's stockholders than the Merger, furnishing non-public information to
the person, entity or group which makes the acquisition proposal and entering
into discussions and negotiations with the potential acquiror.
If the Company receives an acquisition proposal, or the Company learns that
someone other than the Purchaser is contemplating soliciting tenders of Common
Shares or otherwise proposes to acquire the Company or its Common Shares if the
Company's stockholders do not tender their Common Shares to the Purchaser in
response to the Offer or do not approve the Merger, the Company has agreed
promptly to notify the Purchaser of that fact and to provide the Purchaser with
all information in the Company's possession which the Purchaser reasonably
requests regarding the acquisition proposal, solicitation of tenders or other
proposed transaction, and the Company will promptly, from time to time, provide
the Purchaser with any additional information the Company obtains regarding the
acquisition proposal, the solicitation of tenders or the other proposed
transaction.
The Company may terminate the Merger Agreement if by February 1, 1999, the
Company receives a proposal for a cash acquisition of the Company, or somebody
commences an all cash tender offer for any and all of the outstanding Common
Shares, which (x) would result in the Company's stockholders' receiving cash
consideration which is substantially greater than the Offer Price, (y) is not
subject to a financing contingency and is from a proposed acquiror which the
Board determines in good faith after consultation with its independent financial
advisor has the financial resources necessary to carry out the transaction, and
(z) the Board determines in good faith after consultation with its independent
financial advisor to be more favorable to the Company's stockholders than the
Offer and the Merger. However, the Company may only cancel the Merger Agreement
if, after the Company has received the proposal and given the Purchaser at least
10 business days' prior notice that the Merger Agreement will terminate if the
Purchaser does not increase the Offer Price to an amount at least as great as
the cash consideration the Company's stockholders would receive under the
proposal or tender offer by the other person, (A) the Purchaser does not
increase the Offer Price to an amount at least as great as the cash per share
the Company's stockholders would receive as a result of the proposal or tender
offer by the other person, and (B) the Company has (1) paid the Purchaser
$1,720,000 and
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(2) reimbursed the Purchaser (or agreed in writing to reimburse the Purchaser)
for all the expenses related to the transactions which are the subject of the
Merger Agreement which the Purchaser or its affiliates (including the Three
Cities Funds) incurred after December 17, 1998, up to a maximum of $200,000 of
expenses. If the Company notifies the Purchaser that the Merger Agreement will
terminate unless the Purchaser increases the Offer Price, the Company will not
be able to revoke that notice without the Purchaser's consent.
The Purchaser has agreed that, if the Company terminates the Merger
Agreement because of a proposal or tender offer by another person as described
in the preceding paragraph, at the request of the Board the Purchaser will vote
for the proposal or tender its Shares, and cause the Three Cities Funds to
tender their Shares, in response to the tender offer.
Effective concurrently with the execution of the Merger Agreement, the
Board approved increasing the number of members constituting the entire Board
from 8 to 10 and elected J. William Uhrig and W. Robert Wright II (each of whom
is an employee of Three Cities Research, Inc.) to fill the two vacancies. The
Merger Agreement provides that until the Purchaser purchases all the Common
Shares which are properly tendered in response to the Offer and not withdrawn,
or the Merger Agreement terminates, neither of the Three Cities Funds nor the
Purchaser will vote any Shares or take any other action to cause (i) anyone
other than J. William Uhrig and W. Robert Wright II (or replacements designated
by the Purchaser) to be elected to the Company's Board, except by voting at an
annual meeting of stockholders in favor of the Board's nominees for election to
the Board, (ii) the number of directors constituting the entire Board to be
increased or decreased, or (iii) any director to be removed from the Board other
than for cause.
3. CERTAIN FEDERAL INCOME TAX CONSEQUENCES.
The following summary is a general discussion of certain of the expected
Federal income tax consequences of the Offer. The summary is based on the
Internal Revenue Code of 1986, as amended (the "Code"), and published
regulations, rulings and judicial decisions in effect at the date of this Offer
to Purchase, all of which are subject to change. The summary does not discuss
all aspects of Federal income taxation that may be relevant to a particular
holder in light of his or her personal circumstances or to certain types of
holders subject to special treatment under the Federal income tax laws, such as
life insurance companies, financial institutions, tax-exempt organizations and
non-U.S. persons. The following summary may not be applicable with respect to
Shares acquired through exercise of employee stock options or otherwise as
compensation. It also does not discuss any aspects of state or local tax laws or
of tax laws of jurisdictions outside the United States of America.
THE DESCRIPTION OF FEDERAL INCOME TAX CONSEQUENCES SET FORTH BELOW IS FOR
GENERAL INFORMATION ONLY. HOLDERS ARE URGED TO CONSULT THEIR TAX ADVISORS AS TO
THE PARTICULAR TAX CONSEQUENCES TO THEM OF THE SALE OF THEIR SHARES, INCLUDING
THE APPLICATION OF FEDERAL, STATE, LOCAL AND FOREIGN TAX LAWS AND POSSIBLE
CHANGES IN TAX LAWS.
Sales of Shares in response to the Offer will be taxable transactions for
Federal income tax purposes, and may also be taxable transactions under
applicable state, local, foreign and other tax laws. For Federal income tax
purposes, a tendering stockholder will generally recognize gain or loss equal to
the difference between the amount of cash received by the stockholder upon sale
of the Shares and the stockholder's tax basis in the Shares which are sold.
Under present law, gain or loss will be calculated separately for each block of
Shares tendered and purchased pursuant to the Offer.
If tendered Shares are held by a tendering stockholder as capital assets,
gain or loss recognized by the tendering stockholder will be capital gain or
loss, which will be long-term or short term depending on whether the tendering
stockholder's holding period for the Shares exceeds one year. Long-term capital
gains recognized by a stockholder who is an individual will generally be taxed
at a maximum Federal marginal tax rate of 20%. Short term capital gains
recognized by an individual will generally be taxed at the individual's ordinary
income tax rate. Capital gains recognized by a tendering corporate stockholder
will be taxed at a maximum Federal marginal tax rate of 35%.
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A stockholder (other than certain exempt stockholders, including all
corporations and certain foreign individuals) who tenders Shares may be subject
to 31% backup withholding unless the stockholder provides its taxpayer
identification number ("TIN") and certifies that the TIN is correct or properly
certifies that it is awaiting a TIN. This should be done by completing and
signing the substitute Form W-9 included as part of the Letter of Transmittal. A
stockholder that does not furnish its TIN also may be subject to a penalty
imposed by the IRS.
If backup withholding applies to a stockholder, the Depositary is required
to withhold 31% from each payment to that 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.
4. CERTAIN EFFECTS OF THE TRANSACTION.
Nasdaq National Market. The purchase of the Shares tendered in response to
the Offer will reduce the number of Shares that might otherwise trade publicly
and probably will significantly reduce the number of holders of Shares, which
could adversely affect the liquidity and market value of the remaining Shares
held by the public. Depending upon the number of Common Shares purchased
pursuant to the Offer, the Shares may no longer meet the standards of the
National Association of Securities Dealers, Inc. (the "NASD") for continued
inclusion in the Nasdaq National Market (the top tier market of the Nasdaq Stock
Market), which require that an issuer have at least 200,000 publicly held shares
with a market value of $1 million held by at least 400 stockholders (or 300
stockholders holding round lots) and have net tangible assets of at least $1
million, $2 million or $4 million depending on profitability levels during the
issuer's four most recent fiscal years. If these standards are not met, the
Common Shares might nevertheless continue to be included in the NASD's Nasdaq
National Market with quotations published in the Nasdaq "additional list" or in
one of the "local lists." However, if the number of holders of Common Shares
falls below 300 or the number of publicly held Common Shares falls below
100,000, or if there are not at least two market makers for Common Shares, the
Common Shares would no longer qualify for Nasdaq Stock Market reporting, and the
Nasdaq Stock Market would cease to provide any quotations. Common Shares held
directly or indirectly by an officer or director of the Company, or by a
beneficial owner of more than 10% of the Common Shares, ordinarily will not be
considered as being publicly held for this purpose. According to the Company, as
of December 28, 1998, there were approximately 80 holders of record of Common
Shares and approximately 1,700 beneficial owners and 6,433,189 Common Shares
were outstanding, of which the Three Cities Funds owned 3,085,425 Shares. If, as
a result of the purchase of Common Shares pursuant to the Offer or otherwise,
the Common Shares no longer meet the NASD requirements for continued inclusion
on the Nasdaq National Market or in any other tier of the Nasdaq Stock Market,
the market for the Common Shares could be adversely affected.
If the Common Shares no longer meet the requirements for inclusion in any
tier of the Nasdaq Stock Market, quotations might or might not still be
available from other sources. The extent of the public market, and availability
of quotations, for the Common Shares would depend upon the number of holders of
Common Stock after the purchase of the Shares tendered in response to the Offer,
whether securities firms are interested in maintaining a market in the Common
Shares, the possible termination of registration under the Securities and
Exchange Act of 1934, as amended (the "Exchange Act"), as described below, and
other factors.
Exchange Act Registration. The Common Shares are currently registered
under the Exchange Act. That registration may be terminated upon application of
the Company to the Securities and Exchange Commission if the Shares are not
listed on a national securities exchange or quoted on Nasdaq and there are fewer
than 300 record holders of the Common Shares. The termination of registration of
the Common Shares under the Exchange Act would substantially reduce the
information the Company would be required to furnish to holders of Common Shares
and to the SEC and would make certain provisions of the Exchange Act, such as
the short-swing profit recovery provisions of Section 16(b) of the Exchange Act,
the requirement that the Company furnish a proxy statement or information
statement in connection with stockholder actions pursuant to Section 14 of the
Exchange Act, and the requirements of Rule 13e-3 under the Exchange Act with
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respect to "going-private" transactions, no longer applicable to the Company.
See Section 18. In addition, "affiliates" of the Company and persons holding
"restricted securities" of the Company may be deprived of the ability to dispose
of those securities pursuant to Rule 144 under the Securities Act of 1933, as
amended. If, after the Purchaser purchases Shares through the Offer, the
Purchaser and its stockholders own at least 85% of the outstanding Common
Shares, the Purchaser intends to seek to cause the Company to terminate
quotation of the Common Shares on the Nasdaq Stock Market and to apply to
terminate the registration of the Common Shares under the Exchange Act as soon
as practicable. As a result, the Purchaser may be able to give the required
stockholder approval of the Merger (if stockholder approval is required) without
the Company's sending a proxy statement or an information statement to its
stockholders. Even if, after the Purchaser purchases Shares through the Offer,
the Purchaser and its stockholders do not own at least 85% of the outstanding
Common Shares, the Common Shares may no longer be eligible for inclusion on the
Nasdaq Stock Market and the Company may be able to terminate the registration of
the Common Shares under the Exchange Act. If that is the case, the Purchaser
will seek to cause the Company to terminate the registration of the Common
Shares under the Exchange Act as soon as practicable after they are no longer
quoted on the Nasdaq Stock Market.
5. FAIRNESS OF THE TRANSACTION. The Purchaser and the Three Cities Funds
believe that the Offer and the Merger are fair to holders of Common Shares who
are not affiliated with the Purchaser, the Three Cities Funds or the Company. An
important reason for this belief is the fact that the $5.375 per share which the
Purchaser is offering for the Common Shares in the Offer, and which holders of
Common Shares will receive as a result of the Merger if it occurs, is more than
37.5% higher than the last sale price of the Common Shares reported on the
Nasdaq National Market on December 23, 1998, the last full day of trading prior
to the day on which the Three Cities Funds purchased 3,085,425 Common Shares
from the Funds, and the Purchaser and the Company executed the Merger Agreement.
It is also more than the amount the Three Cities Funds paid the Funds for their
Common Shares plus assignment of their claims regarding the subject matter of
the Stockholder Suits. Also, if the Stockholder Suits are settled before the
Expiration Time on a basis which does not require the Company to pay more than
$3,000,000 net of insurance proceeds, the Offer Price will increase to $6.375
per share, which is more than 63% higher than the last reported sale price of
the Common Shares on December 23, 1998. Other factors which contribute to the
Purchaser's belief that the Offer and the Merger are fair to holders of Common
Shares who are not affiliated with the Purchaser, the Three Cities Funds or the
Company are (a) the Purchaser and the Three Cities Funds have purchased, or
agreed to acquire, all the Common Shares even if the Stockholder Suits are not
settled, but the Purchaser will be increasing the Offer Price by almost 19% if
the Stockholder Suits can be settled before the Offer expires on a basis which
will not cost the Company more than $3,000,000, net of insurance proceeds; (b)
in addition to exceeding the last reported sale price of the Common Shares on
December 23, 1998 by more than 37.5% (and more than 63% if the Offer Price is
increased because of settlement of the Stockholder Suits), the Offer Price
exceeds by more than 91% (more than 126% if the Offer Price is increased because
of settlement of the Stockholder Suits) the last reported sale price of the
Common Shares as recently as December 7, 1998 (which was $2.8125 per Share); (c)
the Company had a net loss of more than $27,000,000 (and an operating loss of
more than $30,000,000) in the fiscal year ended March 31, 1998, and a net loss
of more than $6,000,000 (and an operating loss of almost $6,500,000) during the
six months ended September 30, 1998 (including a net loss of more than
$5,000,000 and an operating loss of almost $5,250,000 during the three months
ended September 30, 1998) and the Purchaser understands that the Company expects
to have a net loss and an operating loss for the remainder of the fiscal year
ending March 31, 1999; (d) if the Purchaser and its stockholders (including the
Three Cities Funds) acquire all the stock of the Company through the purchase of
Shares from the Funds which took place on December 24, 1998, the Offer and the
Merger, the amount the Purchaser and its stockholders will have paid for the
stock of the Company will exceed the Company's shareholders' equity at September
30, 1998; and (e) although the Board has exempted acquisitions of Common Shares
by the Three Cities Funds and by the Purchaser from the three year prohibition
against business combinations contained in Section 203 of the DGCL, the
Purchaser has, in the Merger Agreement, given the Company's stockholders
essentially the same protections they would have had under Section 203 of the
DGCL (i.e., the Purchaser has agreed that, unless after it purchases Shares
through the Offer, it and its stockholders own at least 85% if the outstanding
Common Shares, neither the Purchaser nor the Three Cities Funds will for three
years enter into
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a business combination with the Company unless the business combination is
approved by the Company's Board of Directors and by the vote of at least 66 2/3%
of the Common Shares not owned by the Purchaser or its affiliates).
No representative of the Purchaser or the Three Cities Funds was a director
of the Company when the Merger Agreement was negotiated. However, it is the
understanding of the Purchaser and the Three Cities Funds that Lehman Brothers
gave an opinion to the Company's Board of Directors regarding the fairness of
the consideration being offered in the Offer and the Merger. See Item 6. Because
neither the Purchaser nor the Funds had any affiliation with the Company until
after the Merger Agreement was executed, the opinion of Lehman Brothers as to
the fairness of the consideration being offered in the Offer and the Merger from
a financial point of view was, in effect, an opinion of an unaffiliated
representative acting solely on behalf of unaffiliated securityholders.
The Purchaser and the Three Cities Funds understand that the Board of
Directors of the Company unanimously approved the Offer and the Merger
Agreement. Therefore, the Merger Agreement was approved by all the directors of
the Company who are not employees of the Company, as well as by all the
directors who are employees of the Company.
6. REPORTS, OPINIONS, APPRAISALS AND CERTAIN NEGOTIATIONS. Neither the
Purchaser nor either of the Three Cities Funds has received a report, opinion or
appraisal from an outside party related to the Offer or the Merger, including,
but not limited to, any such report, opinion or appraisal relating to the
consideration or the fairness of the consideration being offered to holders of
Common Shares or the fairness of the transaction to the Company, to the
Purchaser or its stockholders (including the Three Cities Funds) or to holders
of Common Shares or other securities of the Company who are not affiliates of
the Company. The Schedule 14D-9, which will be filed by the Company with the
SEC, copies of which will be sent to the Company's stockholders, describes an
opinion of Lehman Brothers regarding the fairness of the consideration being
offered in the Offer and the Merger to the Company's shareholders (other than
the Funds) from a financial point of view.
THE TENDER OFFER
7. TERMS OF THE OFFER. On the terms and subject to the conditions of the
Offer (including, if the Offer is extended or amended, the terms and conditions
of the extension or amendment), the Purchaser will accept for payment and pay
for all Common Shares which are validly tendered prior to the Expiration Time
and not withdrawn in accordance with Section 10. The term "Expiration Time"
means 12:00 midnight, New York City time, on February 3, 1999, unless the
Purchaser extends the period during which the Offer is open, in which event the
term "Expiration Time" will mean the time and date at which the Offer, as
extended, will expire.
In the Merger Agreement, the Purchaser has agreed that it will not (a)
decrease the number of Common Shares it is offering to purchase, (b) reduce the
Purchase Price, (c) modify or add to the conditions described in Section 11, (d)
change the form of consideration it is offering, or (e) extend the Offer, except
as required or permitted by the Merger Agreement (which is described below).
The Purchaser reserves the right, at any time and from time to time (except
as limited by the Merger Agreement), to extend the period during which the Offer
is open, by giving oral or written notice of the extension to the Depositary and
by making a public announcement of it as described below. The Merger Agreement
permits the Purchaser to extend the Expiration Time until up to 60 days after
the date of this Offer to Purchase. It also requires the Purchaser to extend the
Expiration Time until 120 days after the date of this Offer to Purchase if the
Company asks the Purchaser to do so in order to permit the Company to attempt to
settle the Stockholder Suits and obtain preliminary Federal court approval of
the settlement, or to extend the Expiration Time to up to 210 days after the
date of this Offer to Purchase if a settlement agreement is signed within the
120 days in order to obtain preliminary Federal court approval of the
settlement. During any extension, all Shares previously tendered and not
withdrawn will remain tendered in response to the Offer, subject to the rights
of a tendering stockholder to withdraw tendered Shares. See Section 10.
Subject to the Merger Agreement and the applicable regulations of the
Securities and Exchange Commission (the "SEC"), the Purchaser reserves the
right, at any time and from time to time, to (i) delay
10
<PAGE> 13
acceptance for payment of, or, regardless of whether Shares were already
accepted for payment, payment for, Shares pending receipt of any regulatory or
third-party approval described in Section 18 or in order to comply in whole or
in part with any other applicable law, (ii) terminate the Offer and not accept
for payment any Shares and if any of the conditions described to in Section 11
have not been satisfied or upon the occurrence of any of the events described in
Section 11 or (iii) waive any condition or otherwise amend the Offer in any
respect, in each case, by giving oral or written notice of the delay,
termination, waiver or amendment to the Depositary and by making a public
announcement of it, as described below.
The Purchaser acknowledges that (i) Rule 14e-1(c) under the Exchange Act
requires the Purchaser to pay the consideration offered or return the tendered
Shares promptly after the termination or withdrawal of the Offer and (ii) the
Purchaser may not delay acceptance for payment of, or payment for (except as
provided in clause (i) of the first sentence of the preceding paragraph), any
Shares upon the occurrence of any of the events described in Section 11 without
extending the period of time during which the Offer is open.
The Purchaser will make a public announcement of any extension, delay,
termination, waiver or amendment as promptly as practicable after it takes
place. In the case of an extension, the Purchaser will make a public
announcement no later than 9:00 a.m., New York City time, on the business day
after the day of the previously scheduled Expiration Time. Subject to applicable
law (including Rules 14d-4(c), 14d-6(d) and 14e-1 under the Exchange Act, which
require that material changes be promptly disseminated to stockholders in a
manner reasonably designed to inform them of the changes), the Purchaser will
have no obligation to publish, advertise or otherwise communicate any public
announcement other than by issuing a press release.
If the Purchaser makes a material change in the terms of the Offer or the
information concerning the Offer or if it waives a material condition to the
Offer, the Purchaser will extend the Offer to the extent required by Rules
14d-4(c), 14d-6(d) and 14e-1 under the Exchange Act. Consummation of the Offer
is conditioned upon satisfaction of the conditions set forth in Section 11. The
Purchaser reserves the right (but will not be obligated) to waive any or all of
those conditions.
If, prior to the Expiration Time, the Purchaser is required by the Merger
Agreement, or otherwise decides, to increase the Offer Price, that increase will
be applicable to all stockholders whose Shares are accepted for payment,
including stockholders who tender their Shares before the Purchaser increases
the Offer Price. If, at the time notice of an increase in the Offer Price is
first published or otherwise given to holders of Shares, the Offer is scheduled
to expire earlier than the tenth business day after (but including) the day the
notice is first published or otherwise given, the Offer will be extended at
least until the expiration of that ten-business-day period. The Purchaser does
not expect to increase the Offer Price unless the Stockholder Suits are settled
on a basis which will not require the Company to pay more than $3.0 million, net
of insurance proceeds.
The Company has given the Purchaser a stockholder list and security
position listings for the purpose of enabling the Purchaser to disseminate the
Offer to holders of Shares. This Offer to Purchase and the related Letter of
Transmittal and other relevant materials will be mailed to record holders of
Shares and to brokers, dealers, commercial banks, trust companies and similar
persons whose names, or the names of whose nominees, appear on the Company's
stockholder list, or who are listed as participants in a clearing agency's
security position listing for subsequent transmittal to beneficial owners of
Shares.
8. ACCEPTANCE FOR PAYMENT AND PAYMENT FOR SHARES. On the terms and
subject to the conditions of the Offer (including, if the Offer is extended or
amended, the terms and conditions of the extension or amendment), the Purchaser
will purchase, by accepting for payment, and will pay for, all Shares which are
validly tendered (and not properly withdrawn in accordance with Section 10)
prior to the Expiration Time. Shares will be accepted as soon as practicable
after the later to occur of (i) the Expiration Time and (ii) the satisfaction or
waiver of the conditions set forth in Section 11. Any determination concerning
the satisfaction of the terms and conditions of the Offer will be in the sole
discretion of the Purchaser. See Section 11. The Purchaser expressly reserves
the right, in its sole discretion, to delay acceptance for payment of, or,
subject to the applicable SEC rules, payment for, Shares in order to comply in
whole or in part with any applicable law. See Section 18.
11
<PAGE> 14
In all cases, payment for Shares which are tendered in response to the
Offer and accepted for payment will be made only after timely receipt by the
Depositary of (a) the certificate(s) representing the tendered Shares (the
"Share Certificates"), or timely confirmation of a book-entry transfer (a
"Book-Entry Confirmation") of the Shares (if that procedure is available) into
the Depositary's account at The Depository Trust Company (the "Book-Entry
Transfer Facility"), as described in Section 9, (b) a properly completed and
duly executed Letter of Transmittal (or facsimile of one), or an Agent's Message
in connection with a book-entry transfer, and (c) any other documents required
by the Letter of Transmittal.
An "Agent's Message" is a message, transmitted by the Book-Entry Transfer
Facility to, and received by, the Depositary and forming a part of the
Book-Entry Confirmation, which states that the Book-Entry Transfer Facility has
received an express acknowledgment from a participant in the Book-Entry Transfer
Facility which is tendering Shares that the participant has received, and agrees
to be bound by the terms of, the Letter of Transmittal and that the Purchaser
may enforce that agreement against the participant.
For purposes of the Offer, the Purchaser will be deemed to have accepted
for payment, and thereby purchased, tendered Shares when the Purchaser gives
oral or written notice to the Depositary of the Purchaser's acceptance of the
Shares for payment. Payment for Shares which are accepted will be made by
deposit of the aggregate purchase price for all the Shares which are accepted
for payment with the Depositary, which will act as agent for tendering
stockholders for the purpose of receiving payment from the Purchaser and
transmitting payment to the tendering stockholders. UNDER NO CIRCUMSTANCES WILL
THE PURCHASER PAY INTEREST ON THE OFFER PRICE BY REASON OF ANY DELAY IN PAYING
FOR SHARES. Upon the deposit of funds with the Depositary for the purpose of
making payments to tendering stockholders, the Purchaser's obligation to pay for
Shares will be satisfied and tendering stockholders must look solely to the
Depositary for payment of amounts owed to them by reason of the acceptance of
their Shares pursuant to the Offer. If, for any reason, acceptance for payment
of or payment for any Shares tendered in response to the Offer is delayed, or
the Purchaser is prevented from accepting for payment or paying for Shares which
are tendered in response to the Offer, the Depositary may, nevertheless, retain
tendered Shares on behalf of the Purchaser and those Shares may not be
withdrawn, except to the extent the tendering stockholder exercises withdrawal
rights as described in Section 10. The Purchaser will pay any stock transfer
taxes incident to the transfer to it of validly tendered Shares, except as
otherwise provided in Instruction 6 of the Letter of Transmittal, as well as the
charges and expenses of the Depositary and the Information Agent.
If any tendered Shares are not accepted for payment for any reason, or if
certificates which are submitted evidence more Shares than are tendered,
certificates representing unpurchased or untendered Shares will be returned or
sent, without expense to the tendering stockholder (or, in the case of Shares
tendered by book-entry transfer into the Depositary's account at the Book-Entry
Transfer Facility, Shares which are not purchased will be credited to an account
at that Book-Entry Transfer Facility), as promptly as practicable following the
expiration or termination of the Offer.
IF, PRIOR TO THE EXPIRATION TIME, THE PURCHASER INCREASES THE OFFER PRICE,
THE INCREASED CONSIDERATION WILL BE PAID TO ALL HOLDERS WHOSE SHARES ARE
PURCHASED THROUGH THE OFFER, INCLUDING HOLDERS WHOSE SHARES ARE TENDERED BEFORE
THE OFFER PRICE IS INCREASED.
The Purchaser reserves the right to transfer or assign, in whole, or in
part from time to time, to one or more of its affiliates the right to purchase
all or any portion of the Shares which are tendered in response to the Offer,
but such a transfer or assignment will not relieve the Purchaser of its
obligations under the Offer and will in no way prejudice the rights of tendering
stockholders to receive payment for Shares which are validly tendered in
response to the Offer and accepted for payment.
9. PROCEDURES FOR TENDERING SHARES.
Valid Tender of Shares. Except as set forth below, in order for Shares to
be validly tendered in response to the Offer, (a) a Letter of Transmittal or a
facsimile of one, properly completed and duly executed, with any required
signature guarantees, or an Agent's Message in connection with a book-entry
delivery of Shares, and
12
<PAGE> 15
any other required documents, must be received by the Depositary at one of its
addresses set forth on the back cover of this Offer to Purchase prior to the
Expiration Time and (b) either (i) the certificates representing the tendered
Shares must be received by the Depositary along with the Letter of Transmittal,
(ii) the Shares must be tendered using the procedure for book-entry transfer
described below, and the Book-Entry Confirmation must be received by the
Depositary prior to the Expiration Time, or (iii) the tendering stockholder must
comply with the guaranteed delivery procedures described below.
THE METHOD OF DELIVERY OF SHARE CERTIFICATES, THE LETTER OF TRANSMITTAL,
AND OTHER REQUIRED DOCUMENTS, INCLUDING DELIVERY THROUGH THE BOOK-ENTRY TRANSFER
FACILITY, IS AT THE OPTION AND RISK OF THE TENDERING STOCKHOLDER. ITEMS WILL BE
DEEMED DELIVERED ONLY WHEN THEY ARE ACTUALLY RECEIVED BY THE DEPOSITARY. IF
DELIVERY IS BY MAIL, REGISTERED MAIL WITH RETURN RECEIPT REQUESTED, PROPERLY
INSURED, IS RECOMMENDED. IN ALL CASES, SUFFICIENT TIME SHOULD BE ALLOWED TO
ENSURE TIMELY DELIVERY.
Book-Entry Transfer. The Depositary will establish an account with respect
to the Shares at The Depository Trust Company (the "Book-Entry Transfer
Facility") for purposes of the Offer within two business days after the date of
this Offer to Purchase, and any financial institution that is a participant in
the Book-Entry Transfer Facility's system may make book-entry delivery of Shares
by causing the Book-Entry Transfer Facility to transfer the Shares into the
Depositary's account at the Book-Entry Transfer Facility. Although delivery of
Shares may be effected through book-entry transfer at the Book-Entry Transfer
Facility, a Letter of Transmittal or a facsimile of one, with any required
signature guarantees, or an Agent's Message in connection with a book-entry
delivery of Shares, and any other required documents, as well as the Book Entry
Confirmation relating to the Shares, must 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 Time or the guaranteed delivery procedures
described below must be followed.
REQUIRED DOCUMENTS MUST BE TRANSMITTED TO AND RECEIVED BY THE DEPOSITARY AT
ONE OF ITS ADDRESSES SET FORTH ON THE BACK COVER PAGE OF THIS OFFER TO PURCHASE.
DELIVERY OF DOCUMENTS TO THE BOOK-ENTRY TRANSFER FACILITY OR TO THE PURCHASER
DOES NOT CONSTITUTE DELIVERY TO THE DEPOSITARY.
Signature Guarantees. Signatures on Letters of Transmittal need not be
guaranteed, unless, in the case of the Letter of Transmittal, the Shares to
which they relate are being tendered by a registered holder of Shares who has
completed either the box entitled "Special Delivery Instructions" or the box
entitled "Special Payment Instructions" on the Letter of Transmittal. Signatures
on Letters of Transmittal on which either of those boxes has been completed must
be guaranteed by a firm which is a bank, broker, dealer, credit union, savings
association or other entity that is a member in good standing of the Securities
Transfer Agents Medallion Program (each an "Eligible Institution"). See
Instruction 1 of the Letter of Transmittal.
If a Share Certificate is 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 representing Shares which are not tendered or are not accepted for
payment are to be returned, to a person other than the registered holder(s),
then the Share Certificate must be endorsed or accompanied by appropriate stock
powers, in either case, signed exactly as the name(s) of the registered
holder(s) appear on the Share Certificate, with the signature(s) on the Share
Certificate or stock powers guaranteed. See Instructions 1 and 5 of the Letter
of Transmittal.
If Share certificates are delivered to the Depositary at different times, a
properly completed and duly executed Letter of Transmittal (or facsimile of one)
must accompany each delivery.
Guaranteed Delivery. If a stockholder wishes to tender Shares in response
to the Offer but the Share Certificates are not immediately available or time
will not permit all required documents to reach the
13
<PAGE> 16
Depositary prior to the Expiration Time, or the procedure for book-entry
transfer cannot be completed on a timely basis, the Shares may nevertheless be
tendered as follows:
(i) the tender must be made by or through an Eligible Institution;
(ii) a properly completed and duly executed Notice of Guaranteed
Delivery, substantially in the form provided with this Offer to Purchase,
must be received by the Depositary before the Expiration Time; and
(iii) the Share Certificates representing all tendered Shares, in
proper form for transfer, or the Book-Entry Confirmation, together with a
properly completed and duly executed Letter of Transmittal (or facsimile of
one), 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 must be received by the Depositary within
three Nasdaq National Market trading days after the date of execution of
the Notice of Guaranteed Delivery.
A Notice of Guaranteed Delivery may be delivered by hand or transmitted by
telegram, facsimile transmission or mail to the Depositary, but must include a
guarantee by an Eligible Institution in the form set forth in the Notice of
Guaranteed Delivery distributed with this Offer to Purchase
Payment for Shares which are accepted for payment will be made only after
(i) timely receipt by the Depositary of Share Certificates for, or of Book-Entry
Confirmation with respect to, the Shares, (ii) a properly completed and duly
executed Letter of Transmittal (or facsimile of one), together with any required
signature guarantees (or, in the case of a book-entry transfer, an Agent's
Message) and (iii) any other documents required by the Letter of Transmittal.
Accordingly, it is possible that payment will not be made to all tendering
stockholders at the same time.
Backup United States Federal Withholding Tax. Under the United States
Federal income tax laws, the Depositary may be required to withhold 31% of the
amount of any payments made to certain stockholders. To prevent backup Federal
income tax withholding, each tendering stockholder must provide the Depositary
with the stockholder's correct taxpayer identification number, or certify that
the stockholder is exempt from backup Federal income tax withholding, by
completing the Substitute Form W-9 included in the Letter of Transmittal. See
Instruction 10 of the Letter of Transmittal.
Appointment as Proxy. By executing a Letter of Transmittal, a tendering
stockholder irrevocably appoints designees of the Purchaser as the tendering
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 the stockholder's rights with respect to the Shares tendered by the
stockholder and accepted for payment by the Purchaser (and with respect to any
other securities issued in respect of those Shares on or after the date of this
Offer to Purchase). That proxy is considered coupled with an interest in the
tendered Shares. This appointment will be effective if, when and to the extent
that the Purchaser accepts the tendered Shares for payment pursuant to the
Offer. When tendered Shares are accepted for payment, all prior proxies given by
the stockholder with respect to the tendered Shares and any other securities
issued in respect of them will, without further action, be revoked, and no
subsequent proxies may be given. The designees of the Purchaser will, with
respect to the tendered Shares and any other securities for which the
appointment is effective, be empowered to exercise all voting and other rights
of the tendering stockholder as they, in their sole discretion, deem proper at
any annual, special, adjourned or postponed meeting of the Company's
stockholders, and the Purchaser reserves the right to require that in order for
Shares or other securities to be deemed validly tendered, immediately upon the
Purchaser's acceptance for payment of the Shares, the Purchaser will be able to
exercise full voting rights with respect to the Shares.
Proxies are effective only as to Shares accepted for payment pursuant to
the Offer. The Offer does not constitute a solicitation of proxies, absent a
purchase of Shares, for any meeting of the Company's stockholders. Any
solicitation of proxies will be made only pursuant to separate proxy soliciting
materials complying with the Exchange Act.
14
<PAGE> 17
Determinations Regarding Tenders. All questions as to the validity, form,
eligibility (including time of receipt) and acceptance for payment of any Shares
using any of the procedures described above will be determined by the Purchaser,
in its sole discretion, and the Purchaser's determination will be final and
binding on all parties. The Purchaser reserves the absolute right to reject any
or all tenders of Shares which it determines were not in proper form or if the
acceptance for payment of, or payment for, the Shares may, in the opinion of the
Purchaser's counsel, be unlawful. The Purchaser also reserves the absolute
right, in its sole discretion, to waive any of the conditions of the Offer or
any defect or irregularity in any tender with respect to Shares of any
particular stockholder, whether or not similar defects or irregularities are
waived in the case of other stockholders. No tender of Shares will be deemed to
have been validly made until all defects and irregularities have been cured or
waived.
The Purchaser's interpretation of the terms and conditions of the Offer
(including the Letter of Transmittal and the instructions to it) will be final
and binding. None of the Purchaser, the Depositary, the Information Agent or any
other person will be under any duty to give notification of any defects or
irregularities in tenders or will incur any liability for failure to give any
such notification.
Binding Agreement. The Purchaser's acceptance for payment of Shares
tendered in response to the Offer will constitute a binding agreement by the
tendering stockholder to sell, and by the Purchaser to purchase, the tendered
Shares on the terms and subject to the conditions of the Offer.
10. WITHDRAWAL RIGHTS. Except as otherwise provided in this Section 10,
tenders of Shares made in response to the Offer are irrevocable. Shares tendered
in response to the Offer may be withdrawn at any time prior to the Expiration
Time and, unless they have been accepted for payment by the Purchaser, may also
be withdrawn at any time after March 5, 1999.
If the Purchaser extends the Offer, is delayed in its acceptance of Shares
for payment or is unable to accept Shares for payment for any reason, then,
without prejudice to the Purchaser's rights under the Offer, the Depositary may,
nevertheless, retain tendered Shares on behalf of the Purchaser, and those
Shares may not be withdrawn except to the extent that tendering stockholders are
entitled to withdraw them as described in this Section 10. Any such delay will
be accompanied by an extension of the Offer to the extent required by law.
For a withdrawal to be effective, a written or facsimile transmission of a
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. A notice of
withdrawal must specify the name of the person who tendered the Shares to be
withdrawn, the number of Shares to be withdrawn and (if Share Certificates have
been tendered) the name of the registered holder, if different from that of the
person who tendered the Shares. If Share Certificates evidencing Shares to be
withdrawn have been delivered or otherwise identified to the Depositary, then
prior to the release of those Share Certificates, the serial numbers shown on
the particular Share Certificates to be withdrawn must be submitted to the
Depositary, and the signature(s) on the notice of withdrawal must be guaranteed
by an Eligible Institution, unless the Shares have been tendered for the account
of an Eligible Institution. If Shares have been tendered pursuant to the
procedure for book-entry transfer, any notice of withdrawal must also specify
the name and number of the account at the Book-Entry Transfer Facility to be
credited with the withdrawn Shares. Withdrawals of Shares may not be rescinded.
After Shares are properly withdrawn, they will be deemed not to have been
validly tendered for purposes of the Offer. However, withdrawn Shares may be
retendered at any time prior to the Expiration Time using one of the procedures
described in Section 9.
All questions as to the form and validity (including, without limitation,
time of receipt) of notices of withdrawal will be determined by the Purchaser,
in its sole discretion, and its determination will be final and binding. None of
the Purchaser, the Depositary, the Information Agent or any other person will be
under any duty to give notification of any defects or irregularities in any
notice of withdrawal or will incur any liability for failure to give any such
notification.
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<PAGE> 18
11. CONDITIONS OF THE OFFER. The Purchaser will not be required to accept
for payment or, subject to any applicable SEC rules, including Rule 14e-1(c)
under the Exchange Act (relating to the Purchaser's obligation to pay for or
return tendered Shares promptly after termination or withdrawal of the Offer),
pay for, the Shares which are tendered in response to the Offer if:
(a) Any statute, rule, regulation, order or injunction has been
enacted, promulgated, entered or enforced by any national or state
government or governmental authority or by any United States court of
competent jurisdiction, that would make the acquisition of the Shares by
the Purchaser illegal or otherwise prohibit consummation of the Offer or
the Merger; or
(b) There has been (i) a general suspension of trading in, or
limitation on prices for, securities on the New York Stock Exchange or
Nasdaq National Market which continued for at least three business days,
(ii) the declaration of a banking moratorium or any suspension of payments
in respect of banks in the United States (whether or not mandatory) which
continued for at least three business days, (iii) the commencement of a war
or armed hostilities or any other international or national calamity
directly or indirectly involving the United States, which has a significant
adverse effect on the functioning of financial markets in the United
States, (iv) any limitation (whether or not mandatory) by any United States
governmental authority or agency on the extension of credit by banks or
other financial institutions which would have a material adverse effect on
the Fund's or the Purchaser's ability to pay for all the Shares which are
tendered in response to the Offer and to carry out the Merger on the terms
contemplated by the Merger Agreement or (v) there is a material
acceleration or worsening of any of the conditions described in clauses (i)
through (iv) which exists at the date of the commencement of the Offer.
(c) Any of the representations and warranties of the Company set forth
in the Merger Agreement is not true and correct as of the date of the
Merger Agreement except failures to be true and correct which would not, in
the aggregate, have a material adverse effect upon the Company or adversely
affect the Purchaser's ownership of the Shares, the Purchaser's ability to
consummate the Merger, or the ownership of the surviving corporation after
the Merger;
(d) The Purchaser or the Three Cities Funds learn that the Company's
Annual Report on Form 10-K for the year ended March 31, 1998, or Quarterly
Report on Form 10-Q for the six months ended September 30, 1998 was
misleading in a material respect (other than with regard to matters which
are the subject of the Stockholder Suits);
(e) The Company has not performed all the obligations it is required
to have performed under the Merger Agreement, except failures which (i)
would, in the aggregate, not materially impair or delay the ability of the
Purchaser to consummate the purchase of the Shares which are tendered in
response to the Offer or the ability of the Purchaser and the Company to
effect the Merger, (ii) have been caused by or result from a breach of the
Merger Agreement by the Purchaser; or (iii) do not, and are not reasonably
expected to, have a material adverse effect on the Company;
(f) The Merger Agreement has been terminated in accordance with its
terms; or
(g) The Board of Directors of the Company withdraws or modifies in a
manner adverse to the Purchaser the Board's approval or recommendation of
the Offer or the Merger.
The conditions set forth above are for the sole benefit of the Purchaser,
and may be waived by the Purchaser, in whole or in part. Any delay by the
Purchaser in exercising the right to terminate the Offer because any of the
conditions are not fulfilled will not be deemed a waiver of its right to do so.
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<PAGE> 19
12. PRICE RANGE OF SHARES. The Shares trade on the Nasdaq National Market
under the symbol "CHRI." The following table sets forth, for the periods
indicated, the high and low sales prices per Share on the Nasdaq National Market
as reported by the Nasdaq National Market and the Dow Jones News Retrieval
Service:
<TABLE>
<CAPTION>
SALES PRICE
-----------
HIGH LOW
---- ---
<S> <C> <C>
FISCAL YEAR ENDED MARCH 31, 1997
First Quarter............................................. $30 1/2 $15 1/2
Second Quarter............................................ 28 16 1/2
Third Quarter............................................. 29 19 1/4
Fourth Quarter............................................ 28 1/2 22 3/8
FISCAL YEAR ENDED MARCH 31, 1998
First Quarter............................................. $23 $16 3/4
Second Quarter............................................ 22 1/4 13 7/8
Third Quarter............................................. 17 10 1/2
Fourth Quarter............................................ 13 9 1/2
FISCAL YEAR ENDED MARCH 31, 1999
First Quarter............................................. $11 7/8 $ 4 5/8
Second Quarter............................................ 5 7/8 3
Third Quarter through December 29, 1998................... 5 3/8 2 5/16
</TABLE>
On December 23, 1998, the last full day of trading before the day on which
the Three Cities Funds purchased 3,085,425 Common Shares of the Purchaser and
the Company signed the Merger Agreement, the last sale price of the Shares
reported on the Nasdaq National Market was $3.0925 per Share. On December 31,
1998, the last full day of trading prior to the commencement of the Offer, the
last sale price reported on the Nasdaq National Market was $5.125 per Share.
STOCKHOLDERS ARE URGED TO OBTAIN CURRENT MARKET QUOTATIONS FOR THE SHARES.
13. CERTAIN INFORMATION CONCERNING THE COMPANY. The information
concerning the Company contained in this Offer to Purchase, including financial
information, has been taken from or is based upon publicly available documents
and records on file with the Commission and other public sources. Neither the
Purchaser nor either of the Three Cities Funds assumes any responsibility for
the accuracy or completeness of the information concerning the Company contained
in those documents and records or for any failure by the Company to disclose
events which may have occurred or may affect the significance or accuracy of
that information of which neither the Purchaser nor either of the Three Cities
Funds is aware.
The Company is a Delaware corporation with its principal executive offices
located at 21540 Plummer Street, Chatsworth, California 91311. According to the
Company's Annual Report on Form 10-K for the year ended March 31, 1998 (the
"Company 10-K"), the Company is a national outsourcing service company which
provides equipment sales and servicing, group purchasing and other services to
the health care industry. The Company has two lines of business: COHR MasterPlan
and Purchase Connection. COHR MasterPlan is the Company's equipment sales and
services division and Purchase Connection is the Company's group purchasing
division.
The following selected consolidated financial data relating to the Company
and its subsidiaries has been taken or derived from the audited financial
statements contained in the Company 10-K and the unaudited financial statements
contained in the Company's Quarterly Report on Form 10-Q/A for the fiscal
quarter ended September 30, 1997 and its Quarterly Report on Form 10-Q for the
fiscal quarter ended September 30, 1998 (the "Company 10-Q's"). More
comprehensive financial information is included in the Company 10-K and the
Company 10-Q and the other documents filed by the Company with the SEC, and the
financial data set forth below is qualified in its entirety by reference to
those reports and other documents. They may be examined and copies may be
obtained from the SEC's offices in the manner set forth below.
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<PAGE> 20
COHR INC. AND SUBSIDIARIES
SELECTED CONSOLIDATED FINANCIAL DATA
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
FISCAL YEARS ENDED SIX MONTHS ENDED
MARCH 31, SEPTEMBER 30,
------------------- ------------------
1998 1997 1998 1997
-------- ------- ------- -------
<S> <C> <C> <C> <C>
INCOME STATEMENT DATA:
Total Revenues................................... $102,144 $86,221 $51,311 $50,775
Special charges.................................. 11,440 3,627
Operating income (loss).......................... (30,731) 3,126 (6,496) (1,687)
Net income (loss)................................ $(27,338) $ 2,326 $(6,121) $ (754)
Net income (loss) per common share:
Basic............................................ $ (4.25) $ 0.45 $ (0.95) $ (0.12)
Diluted.......................................... $ (4.25) $ 0.42 $ (0.95) $ (0.12)
BALANCE SHEET DATA:
Working capital.................................. $ 28,190 $49,889 $22,771 $46,899
Total assets..................................... 56,584 85,079 46,419 85,432
Total long-term debt (excluding current
portion)...................................... 498 1,146 357 509
Total shareholders' equity....................... $ 37,170 $64,508 $31,049 $63,754
Shareholders' equity per share (1)............... $ 5.78 $ 4.83
</TABLE>
- ---------------
(1) Based on 6,433,189 Common Shares issued and outstanding as of March 31, 1998
and September 30, 1998, as reported in the Company 10-K and the Company 10-Q
for the six months ended September 30, 1998.
The Company is subject to the informational and reporting requirements of
the Exchange Act and 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, stock options granted to them, the principal
holders of the Company's securities, any material interests of those persons in
transactions with the Company and other matters is required to be disclosed in
proxy statements distributed to the Company's stockholders and filed with the
Commission. These reports, proxy statements and other information can be
inspected and copied at the public reference facilities of the Commission
located at Room 1024, Judiciary Plaza, 450 Fifth Street, N.W., Washington, D.C.
20549, and at the following regional offices of the Commission: Seven World
Trade Center, New York, New York 10048; and Citicorp Center, 500 West Madison
Street, Chicago, Illinois 60661. Copies of this material may be obtained by
mail, upon payment of the Commission's customary fees, from the Commission's
principal office at 450 Fifth Street, N.W., Washington, D.C. 20549. The
Commission also maintains an Internet site on the world wide web at
http://www.sec.gov that contains reports, proxy statements and other
information. Reports, proxy statements and other information concerning the
Company should also be available for inspection at the offices of NASDAQ, 1735 K
Street, N.W., Washington, D.C. 20006. All of the information with respect to the
Company and its affiliates set forth in this Offer to Purchase has been derived
from publicly available information.
14. CERTAIN INFORMATION CONCERNING THE PURCHASER AND THE THREE CITIES
FUNDS.
The Purchaser. The Purchaser is a Delaware corporation organized in order
to enter into the transactions which are the subject of the Merger Agreement
(including the Offer). The principal executive offices of the Purchaser are
located at c/o Three Cities Research, Inc., 650 Madison Avenue, New York, New
York 10022. The Purchaser is wholly owned by the Three Cities Funds (although at
least one other substantial stockholder of the Company may become a stockholder
of the Purchaser). The Purchaser does not have any significant assets or
liabilities and has not engaged in activities other than those incidental to its
formation and capitalization, its execution of the Merger Agreement and
preparation for the Offer and the
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<PAGE> 21
Merger. Because the Purchaser is newly formed and has minimal assets and
capitalization, no meaningful financial information regarding the Purchaser is
available.
The Three Cities Funds. Three Cities Fund II, L.P., a Delaware limited
partnership, is principally engaged in investing in securities selected by its
investment committee. The principal executive offices of Three Cities Fund II,
L.P. are located at c/o Three Cities Research, Inc., 650 Madison Avenue, New
York, New York 10022. Three Cities Offshore II C.V., a Netherlands Antilles
partnership, is principally engaged in investing in securities selected by its
investment committee. The principal executive offices of Three Cities Offshore
II C.V. are located at c/o Three Cities Research, Inc., 650 Madison Avenue, New
York, New York 10022.
During the last 5 years none of the Purchaser's or either Three Cities
Fund's officers, directors or general partners was (1) convicted in a criminal
proceeding or (2) party to a civil proceeding of a judicial or administrative
body and as a result of the proceeding was or is subject to a judgment enjoining
future violations of or prohibiting activities subject to, Federal or state
securities laws or finding any violation of such laws.
Neither Three Cities Fund is subject to the informational and reporting
requirements of the Exchange Act and neither Three Cities Fund is required to
file reports and other information with the Commission relating to its
businesses, financial condition or other matters.
The name, citizenship, business address, principal occupation or employment
and five-year employment history for each of the directors and executive
officers of the Purchaser and each Three Cities Fund are set forth in Schedule
I.
Except for 3,085,425 Shares acquired by the Three Cities Funds on December
24, 1998, none of the Purchaser, the Three Cities Funds or, to the best of their
knowledge, any of the persons listed on Schedule I or any associate or majority
owned subsidiary of any of those persons beneficially owns any equity security
of the Company, and none of the Purchaser, the Three Cities Funds or, to the
best of their knowledge, any of the other persons referred to above, or any of
their respective directors, executive officers or subsidiaries, has effected any
transaction in any equity security of the Company during the past 60 days.
Except as described in this Offer to Purchase, none of the Purchaser, the
Three Cities Funds or, to the best of their knowledge, any of the persons listed
on Schedule I has any contract, arrangement, understanding or relationship with
any other person with respect to any securities of the Company, including,
without limitation, any contract, arrangement, understanding or relationship
concerning the transfer or the voting of any securities of the Company, joint
ventures, loan or option arrangements, puts or calls, guarantees of loans,
guarantees against loss or the giving or withholding of proxies. Except as
described in this Offer to Purchase, none of the Purchaser, the Three Cities
Funds or, to the best of their knowledge, any of the persons listed on Schedule
I has had any transactions with the Company or any of its executive officers,
directors or affiliates that would require reporting under the rules of the
Commission.
Except as described in this Offer to Purchase, since January 1, 1994, there
have been no contacts, negotiations or transactions between the Three Cities
Funds or the Purchaser, or their respective subsidiaries, or, to the best of
their knowledge, any of the persons listed in Schedule I, on the one hand, and
the Company or its executive officers, directors or affiliates, on the other
hand, concerning a merger, consolidation or acquisition, tender offer or other
acquisition of securities, election of directors or a sale or other transfer of
a material amount of assets.
15. SOURCE AND AMOUNT OF FUNDS. If all the outstanding Shares not owned
by the Three Cities Funds or the Purchaser were tendered in response to the
Offer, the Purchaser would be required to pay a total of approximately
$18,250,000 ($21,600,000 if the Offer Price is increased to $6.375 per share) to
purchase the tendered Shares and pay the fees and other expenses related to the
Offer. See Section 19. The Purchaser expects to obtain the funds required to
consummate the Offer through capital contributions or advances made by the Three
Cities Funds. The Funds have guaranteed the Purchaser's obligations under the
Merger Agreement, including obligations with respect to the Offer. The Three
Cities Funds intend to use capital
19
<PAGE> 22
contributed by the partners of the Three Cities Funds to provide the Purchaser
with the funds required to consummate the Offer.
16. THE MERGER.
The Merger Agreement. The Merger Agreement requires that if, after the
Purchaser purchases Shares through the Offer, the Shares owned by the Purchaser,
the Three Cities Funds and any other stockholders of the Purchaser total at
least 85% of the outstanding Common Shares, following the satisfaction or waiver
of the conditions described below under "Conditions to the Merger", the
Purchaser will be merged into the Company, which will be the surviving
corporation of the Merger (the "Surviving Corporation"). As a result of the
Merger (i) the stockholders of the Purchaser will become the sole stockholders
of the Company, and (ii) all the pre-Merger stockholders of the Company, other
than the Purchaser, will receive cash equal to the Offer Price (i.e., $5.375 or
$6.375 per share, or whatever other amount the Purchaser pays for Shares which
are tendered in response to the Offer).
Recommendation. The Merger Agreement states that the Company's Board of
Directors has (i) determined that the Merger Agreement and the transactions
contemplated by it are fair to and in the best interests of the Company and its
stockholders and (ii) resolved to recommend that the Company's stockholders
accept the Offer, tender their Shares in response to the Offer and adopt and
approve the Merger Agreement and the Merger. The Board may withdraw, modify or
amend its recommendation if its legal counsel advises the Board in writing that
its failure to do so could reasonably be expected to be a breach of the
directors' fiduciary duties under applicable law. Each of the directors and
executive officers of the Company has agreed to tender and sell his or her
shares in response to the Offer, except that directors and executive officers
whose sales might result in liability under Section 16(b) of the Exchange Act
have agreed that if they do not tender and sell their Shares in response to the
Offer, they will votes their Shares in favor of the Merger,
Stock of the Company. AT THE EFFECTIVE TIME, (a) EACH COMMON SHARE WHICH
IS NOT OWNED BY THE PURCHASER WILL BECOME THE RIGHT TO RECEIVE $5.375 OR $6.375
IN CASH, OR ANY OTHER PRICE PER SHARE PAID WITH REGARD TO THE COMMON SHARES
TENDERED IN RESPONSE TO THE OFFER (WHICH MAY NOT BE LESS THAN $5.375 PER SHARE)
AND (b) EACH SHARE OWNED BY THE PURCHASER (OR BY THE COMPANY OR ITS
SUBSIDIARIES) WILL BE CANCELLED AND NO PAYMENT WILL BE MADE WITH RESPECT TO
THOSE SHARES.
Stock of the Purchaser. At the Effective Time, each share of common stock
of the Purchaser which is outstanding immediately before the Effective Time will
be converted into and become one share of common stock of the Surviving
Corporation ("Surviving Corporation Common Stock"). Therefore, the stockholders
of the Purchaser will become the sole stockholders of the Company.
Company Option and Warrants. At the Effective Time, each outstanding
option or warrant issued by the Company will become the right to receive (i) the
amount, if any, by which the Offer Price exceeds the exercise price of the
option or warrant, times (ii) the number of Common Shares issuable upon exercise
of the option or warrant in full.
Stockholder Vote Required to Approve Merger. Under the DGCL, the
affirmative vote of holders of a majority of the outstanding Shares (including
any Shares owned by the Purchaser) is required to approve the Merger. The Shares
owned by the Three Cities Funds, together with the Shares owned by directors or
officers of the Company (who have agreed to tender their Shares in response to
the Offer or to vote their Shares in favor of the Merger) would be sufficient to
meet this requirement. However, the Purchaser has agreed that, unless, after it
purchases the Shares tendered in response to the Offer, it, the Three Cities
Funds, and any other stockholders of the Purchaser own in total more than 85% of
the outstanding Common Shares, the Purchaser will not enter into a business
combination with the Company for at least three years unless the business
combination is approved by the Board and by holders of 66 2/3% of the Shares
which are not owned by the Purchaser or its affiliates. Therefore the Merger
will not take place unless, after the Purchaser purchases the Shares tendered in
response to the Offer, the Purchaser, the Three Cities Funds and any other
stockholders of the Purchaser own at least 85% of the outstanding Shares. If the
Purchaser acquires at least 90% of the outstanding shares, stockholder approval
will not be required under Section 253 of the DGCL.
20
<PAGE> 23
Stockholders Meeting. If approval by the Company's stockholders is
required in order to consummate the Merger and, if the Shares acquired by the
Purchaser through the Offer together with the Shares which its stockholders
already own total at least 85% of the outstanding Common Shares, the Company
will hold a special meeting of its stockholders as soon as practicable after the
Expiration Time for the purpose of adopting the Merger Agreement and approving
the Merger.
Amendment of Rights Agreement. The Company amended its Rights Agreement,
dated November 23, 1998, between the Company and ChaseMellon Shareholder
Services LLC (The "Rights Agreement"), to exclude the Three Cities Funds and the
Purchaser from the persons whose acquisitions of Common Shares could cause
Rights to be distributed and become exercisable under the Rights Agreement.
Therefore, neither the Offer nor the Merger will cause there to be a
Distribution Date under the Rights Agreement.
Conditions to the Merger. Neither the Company nor the Purchaser is
contractually obligated to complete the Merger unless, after the Purchaser
purchases the Shares tendered in response to the Offer, the Purchaser, the Three
Cities Funds and any other stockholders of the Purchaser own at least 85% of the
outstanding Common Shares. If that occurs, the Purchaser and the Funds will be
contractually obligated to vote in favor of the Merger. The obligations of the
Company to carry out the Merger will be conditioned on the Merger's being
approved by the holders of a majority of the outstanding Shares. In addition,
the obligations of the Company and of the Purchaser complete the Merger are
subject to the conditions that: (a) the representations and warranties of the
Company contained in the Merger Agreement will, except as contemplated by the
Merger Agreement, be true and correct in all material respects at the Effective
Time and the Company will have delivered to the Purchaser a certificate dated
the date of the Effective Time; (b) the Company will have fulfilled in all
material respects all its obligations under the Merger Agreement required to
have been fulfilled on or before the Effective Time; (c) no order will have been
entered by any court or governmental authority and be in force which invalidates
the Merger Agreement or restrains the Company or the Purchaser from completing
the transactions contemplated by the Merger Agreement and no action will be
pending against the Company or the Purchaser relating to the transactions
contemplated in the Merger Agreement which presents a reasonable likelihood of
resulting in an award of damages against the Company or the Purchaser which
would be material after the Merger to the Company and its subsidiaries; (d) J.
William Uhrig and W. Robert Wright II (or replacements designated by the
Purchaser) will have been members of the Board at all times since the Merger
Agreement was signed by the Company and the Purchaser; (e) if stockholder
approval of the Merger is required by applicable law or by the rules of the
Nasdaq National Market (if they are applicable), the Merger will have been
approved by the holders of at least a majority of the outstanding Shares; and
(f) if stockholder approval of the Merger is required by applicable law or by
the rules of the Nasdaq National Market (if they are applicable), the Effective
Time will occur not later than 120 days after the Expiration Time unless the
Effective Time is delayed until after then because of the actions of the
Purchaser or its Affiliates or because of the Purchaser's failure to fulfill
obligations under the Merger Agreement.
Termination of the Merger Agreement. The Merger Agreement may be
terminated at any time prior to the Effective Time of the Merger, whether before
or after approval of the terms of the Merger Agreement by the stockholders of
the Company:
(1) by mutual consent of the Company and the Purchaser;
(2) by the Purchaser if, without fault of the Purchaser, the Effective
Time of the Merger is later than 120 days after the Expiration Time;
(3) by the Company if (i) any of the representations and warranties of
the Purchaser contained in the Merger Agreement was not complete and
accurate in all material respects on the date of the Merger Agreement or
(ii) any of the conditions to the Company's obligations to complete the
Merger are not satisfied or waived by the Company prior to or on the date
of the Merger;
(4) by the Purchaser if (i) any of the representations or warranties
of the Company contained in the Merger Agreement was not complete and
accurate in all material respects on the date of the Merger
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<PAGE> 24
Agreement, or (ii) any of the conditions to the Purchaser's obligations to
complete the Merger are not satisfied or waived by the Purchaser prior to
or on the date of the Merger;
(5) by the Company if (A) it receives a Superior Proposal (as defined
below) on or before February 1, 1999, (B) within 10 business days after the
Company receives a Superior Proposal, the Company's Board of Directors
resolves to accept the Superior Proposal unless the Purchaser will increase
the Tender Offer Price to an amount at least as great as that offered in
the Superior Proposal, and (C) the Company has given the Purchaser at least
10 business days' prior notice (i) of the terms of the Superior Proposal
(including the amount of cash per Share the Company's stockholders will
receive as a result of the Superior Proposal), and (ii) that unless the
Purchaser increases the Tender Offer Price to an amount at least as great
as the cash per share the Company's stockholders will receive as a result
of the Superior Proposal, the Merger Agreement will terminate on the day
specified in the notice, which will be after the expiration of the 10
business day period, (D) the Purchaser does not, by the termination date
specified in the notice, increase the Offer Price to an amount at least as
great as the cash per Share the Company's stockholders will receive as a
result of the Superior Proposal, as set forth in the notice and (E) the
Company has paid the Purchaser $1.72 million, and reimbursed or agreed to
reimburse the Purchaser for its out of pocket expenses incurred after
December 17, 1998 up to a maximum amount of $200,000. A "Superior Proposal"
is an Acquisition Proposal which (A) would result in stockholders receiving
cash consideration which is substantially greater than the Offer Price, (B)
is not subject to a financing contingency and is from a proposed acquiror
which the Board determines in good faith, after consultation with its
independent financial advisor, has the financial resources necessary to
carry out the transaction and (C) the Board determines in good faith after
consultation with its independent financial advisor, to be more favorable
to the Company's stockholders than the Merger.
(6) by the Company if (A) on or before February 1, 1999, a tender
offer is commenced by a potential acquiror for any and all the outstanding
Shares for cash consideration which is substantially greater than the Offer
Price, (B) the Company's Board of Directors determines in good faith and
after consultation with its independent financial advisor that the offer
constitutes a Superior Proposal and resolves to recommend to the Company's
stockholders that they tender their Shares in response to the tender offer,
(C) the Company has given the Purchaser at least 10 business days' prior
notice, (i) of the terms of the Superior Proposal, and (ii) that unless the
Purchaser increases the Offer Price to an amount at least as great as the
cash consideration offered in the tender offer which is a Superior
Proposal, the Merger Agreement will terminate on a date specified in the
notice, which will be after the expiration of the 10 business day period
and (D) the Company has paid the Purchaser $1.72 million, and reimbursed or
agreed to reimburse the Purchaser for its out of pocket expenses incurred
after December 17, 1998 up to a maximum of $200,000.
The Company will not be able to withdraw a notice that it will terminate
the Merger Agreement which it gives as described in conditions (5) and (6)
unless the Purchaser consents to the withdrawal.
Effect of Termination of the Merger Agreement. If the Merger Agreement is
terminated, neither the Company nor the Purchaser will be required to complete
the Merger. Termination of the Merger Agreement will not relieve either party of
liability for any breach of the Merger Agreement which occurs before the Merger
Agreement is terminated. If the Merger Agreement is terminated after the
Purchaser has accepted Shares tendered in response to the Offer, the termination
will not affect the Purchaser's purchase of the Shares it has accepted or its
obligation to pay for those Shares.
Acquisition Proposals. The Merger Agreement contains prohibitions against
the Company's soliciting, or authorizing its officers, directors, employees or
agents to solicit, acquisition proposals, and regarding what the Company may do
if it receives unsolicited acquisition proposals.
Board of Directors. Effective concurrently with the execution of the
Merger Agreement, the Board approved increasing the number of members
constituting the entire Board to 10 and elected J. William Uhrig and W. Robert
Wright II to fill the two vacancies. The Merger Agreement provides that until
the Purchaser purchases all the Common Shares which are properly tendered in
response to the Offer and not withdrawn, or the Merger Agreement terminates,
none of the Funds and the Purchaser will vote any Shares or take any other
22
<PAGE> 25
action to cause (i) anyone other than J. William Uhrig and Robert Wright to be
elected to the Company's Board (except by voting at an annual meeting of
stockholders in favor of the Board's nominees for election to the Board), (ii)
the number of directors constituting the entire Board to be increased or
decreased, or (iii) any director to be removed from the Board other than for
cause. The Merger Agreement provides that if the Merger is consummated, the
directors of the Purchaser will be the directors of the Surviving Corporation.
Agreement to Vote or Sell Shares. If the Company terminates the Merger
Agreement because of a Superior Proposal, and the Company has complied with all
the requirements of the Merger Agreement with regard to a termination following
a Superior Proposal (including the requirements regarding payments to the
Purchaser), at the request of the Board, (a) if the Superior Proposal requires a
vote of the holders of the Common Shares, the Purchaser will, and will cause the
Funds to, vote all the Common Shares they own or have the power to vote in favor
of the Superior Proposal or (b) if the Superior Proposal is a tender offer, the
Purchaser will, and will cause the Funds to, tender in response to the tender
offer all the Common Shares they own.
Representations and Warranties. The Merger Agreement contains various
customary representations and warranties.
Other provisions. The Merger Agreement also contains provisions (i)
requiring the Company to operate its business in the ordinary course, including
maintaining the goodwill of its business and maintaining its assets in good
condition, limiting the Company's borrowings and commitments for capital
expenditures, precluding the Company from amending or entering into employment
or severance agreements, and precluding the Company from paying dividends (other
than payments by subsidiaries of the Company to the Company or to other wholly
owned subsidiaries of the Company) or taking other steps regarding its stock,
until the Effective Time and (ii) requiring the Purchaser (and the corporation
which survives the Merger) to indemnify directors, officers, employees,
fiduciaries and agents of the Company and its subsidiaries against liability
rising out of their service as directors, officers, employees or agents of the
Company or its subsidiaries, or of companies with regard to which they served as
directors, officers, employees or agents at the request of the Company or its
subsidiaries.
Appraisal Rights. If the Merger is consummated, holders of Shares at the
Effective Time of the Merger will have rights pursuant to the provisions of
Section 262 of the DGCL to dissent and demand appraisal of their Shares. Under
Section 262, dissenting stockholders who comply with the applicable statutory
procedures will be entitled to receive a judicial determination of the fair
value of their Shares (exclusive of any element of value arising from the
Merger) and to receive payment of that fair value in cash, together with a fair
rate of interest, if any. The statutory procedures include notifying the Company
prior to the meeting at which the Company's stockholders vote on the Merger that
the particular stockholder intends to exercise dissenter's rights and giving
that stockholder's name and address. Any judicial determination of the fair
value of Shares could be more or less than the price per Share to be paid in the
Merger.
The foregoing summary of Section 262 is not complete. A copy of Section 262
is reprinted as Exhibit II to this Offer to Purchase. You should read Section
262 in its entirety if you are considering the possibility of seeking appraisal
of your Shares.
17. DIVIDENDS AND DISTRIBUTIONS. The Merger Agreement prohibits the
Company from paying any dividends or making other distributions with regard to
its stock or from issuing any Common Shares, until the Effective Time of the
Merger.
18. CERTAIN LEGAL MATTERS; REGULATORY APPROVALS.
General. Except as otherwise disclosed in this Offer to Purchase, based on
the Company's representations and warranties in the Merger Agreement and a
review of publicly available filings by the Company with the Commission, the
Purchaser is not aware of (i) any license or regulatory permit that appears to
be material to the business of the Company and its subsidiaries, taken as a
whole, that might be adversely affected by the acquisition of Shares by the
Purchaser pursuant to the Offer or by the Merger or (ii) any approval or other
action by any governmental, administrative or regulatory agency or authority,
domestic or foreign, that would be required for the Purchaser to acquire and own
Shares.
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<PAGE> 26
Going Private Transactions. The Commission has adopted Rule 13e-3 under
the Exchange Act, which is applicable to certain "going private" transactions.
This Offer to Purchase contains information required by Rule 13e-3. Also, the
Purchaser and the Three Cities Funds have filed with the Commission a
Transaction Statement on Schedule 13E-3. The Schedule 13E-3 and any exhibits or
amendments to it may be inspected at, and copies obtained from, the places
described in Section 13 (except that they will not be available at the regional
offices of the Commission).
Antitrust Compliance. The Company and the Three Cities Funds are required
to make a filing with the United States Federal Trade Commission (the "FTC")
under the Hart-Scott-Rodino Antitrust Improvements Act of 1976 (the "HSR Act").
The HSR Act requires that, before an acquisition involving companies which
exceed specified sizes can take place, information must be provided to the FTC
and to the Antitrust Division of the United States Department of Justice, and
specified waiting periods must expire or be terminated by the FTC or the
Antitrust Division.
State Takeover Statutes. The Company is incorporated under the laws of
Delaware. Section 203 of the DGCL limits ability of a Delaware corporation to
engage in business combinations with "interested stockholders" (defined
generally 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." Prior to the execution of the Merger Agreement, the Company's
Board of Directors approved the Three Cities Funds' and the Purchaser's
acquiring Shares without limitation as to amount and, therefore, Section 203 of
the DGCL is inapplicable to the purchase of Shares from the Funds, the Offer and
the Merger.
A number of other states have adopted laws and regulations applicable to
attempts to acquire securities of corporations which are incorporated, or have
substantial assets, stockholders, principal executive offices or principal
places of business, or whose business operations otherwise have substantial
economic effects, in such states. In 1982, in Edgar v. MITE Corp., the Supreme
Court of the United States invalidated on constitutional grounds the Illinois
Business Takeover Statute, which, as a matter of state securities law, made
takeovers of corporations meeting certain requirements more difficult. However,
in 1987, in CTS Corp. v. Dynamics Corp. of America, the Supreme Court held that
the State of Indiana may, as a matter of corporate law, and, in particular, with
respect to those aspects of corporate law concerning corporate governance,
constitutionally disqualify a potential acquiror from voting on the affairs of a
target corporation without the prior approval of the remaining stockholders. The
state law before the Supreme Court was by its terms applicable only to
corporations that had a substantial number of stockholders in the state and were
incorporated there.
19. FEES AND EXPENSES. Except as set forth below, neither the Purchaser
nor either of the Three Cities Funds will pay any fees or commissions to any
broker, dealer or other person for soliciting tenders of Shares pursuant to the
Offer.
The Purchaser has retained D.F. King & Co., Inc. to act as the Information
Agent in connection with the Offer. The Information Agent may contact holders of
Shares by mail, telephone, facsimile, telegraph and personal interviews and may
request brokers, dealers and other nominee stockholders to forward materials
relating to the Offer to beneficial owners of Shares. The Information Agent will
receive reasonable and customary compensation together with reimbursement for
its reasonable out-of-pocket expenses and will be indemnified against certain
liabilities and expenses, including certain liabilities under the federal
securities laws.
In addition, the Purchaser has retained IBJ Schroder Bank & Trust Company
as the Depositary. The Depositary has not been retained to make solicitations or
recommendations in its role as Depositary. The Depositary will receive
reasonable and customary compensation for its services, will be reimbursed for
certain reasonable out-of-pocket expenses and will be indemnified against
certain liabilities and expenses. Brokers, dealers, commercial banks and trust
companies will be reimbursed by the Purchaser for customary mailing and handling
expenses incurred by them in forwarding offering material to their customers.
20. MISCELLANEOUS. The Purchaser is not aware of any jurisdiction where
the making of the Offer is prohibited by any administrative or judicial action
or pursuant to any state statute. If the Purchaser becomes
24
<PAGE> 27
aware of any state statute prohibiting the making of the Offer or the acceptance
of the Shares which are tendered in response to the Offer, the Purchaser will
make a good faith effort to comply with that state statute. If, after a good
faith effort the Purchaser cannot comply with any such state statute, the Offer
will not be made to (nor will tenders be accepted from or on behalf of) the
holders of Shares in such state.
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR MAKE ANY
REPRESENTATION ON BEHALF OF THE PURCHASER WHICH IS NOT CONTAINED IN THIS OFFER
TO PURCHASE OR IN THE LETTER OF TRANSMITTAL, AND IF GIVEN OR MADE, THAT
INFORMATION OR REPRESENTATION MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED.
The Three Cities Funds and the Purchaser have filed with the Commission a
Tender Offer Statement on Schedule 14D-1 (the "Schedule 14D-1"), together with
exhibits, pursuant to Rule 14d-3 of the General Rules and Regulations under the
Exchange Act, containing additional information with respect to the Offer, and
the Funds or the Purchaser may file amendments to the Schedule 14D-1. The
Schedule 14D-1 and any amendments to it, including exhibits, may be inspected
at, and copies may be obtained from, the places described in Section 13 (except
that they will not be available at the regional offices of the Commission).
TCF ACQUISITION CORPORATION
January 4, 1999
25
<PAGE> 28
SCHEDULE I
CERTAIN INFORMATION CONCERNING THE THREE CITIES FUNDS
AND THE PURCHASER
1. General. Three Cities Fund II, L.P. is a Delaware limited partnership.
The general partner of Three Cities Fund II, L.P. is TCR Associates, L.P., which
is also a Delaware limited partnership. The general partner of TCR Associates,
L.P. is Three Cities Research, Inc., a Delaware corporation. Information with
regard to the directors and executive officers of Three Cities Research, Inc. is
set forth in item 2 below.
Three Cities Offshore II C.V. is a Netherlands Antilles limited
partnership. The general partner of Three Cities Offshore II C.V. is TCR
Offshore Associates, L.P., which is also a Netherlands Antilles limited
partnership. The general partner of TCR Offshore Associates, L.P. is Three
Cities Associates, N.V., a Netherlands Antilles corporation whose sole officer,
director and stockholder is J. William Uhrig. Information with regard to Mr.
Uhrig is set forth in item 2 below.
The principal address and current business address for each of the entities
described in this item 1 is c/o Three Cities Research, Inc., 650 Madison Avenue,
New York, New York 10022.
2. Directors and Executive Officers of Three Cities Research, Inc. Set
forth below is the name, current business address, citizenship and the present
principal occupation or employment and material occupations, positions, offices
or employments for the past five years of each director and executive officer of
Three Cities Research, Inc. The principal address of Three Cities Research, Inc.
is 650 Madison Avenue, New York, New York 10022. Unless otherwise indicated,
each such person is a citizen of the United States.
<TABLE>
<CAPTION>
PRINCIPAL OCCUPATION OR EMPLOYMENT DURING PAST
NAME FIVE YEARS, POSITIONS WITH THREE CITIES RESEARCH, INC. AND CERTAIN DIRECTORSHIPS
- ---- --------------------------------------------------------------------------------
<S> <C>
J. William Uhrig..................... Mr. Uhrig is a Director and is the Secretary of Three Cities Research, Inc. Mr.
Uhrig has been Director of Three Cities Research, Inc. since 1991. Mr. Uhrig
joined Three Cities Research, Inc. in 1984. From January 1993 to January 1998,
Mr. Uhrig served on the Board of Directors of MLX Corp., a holding company which
was a predecessor of Morton Industrial Group. From January 1997 to October 1998,
Mr. Uhrig served on the Board of Directors of Family Bargain Corporation.
Williem F.P. de Vogel................ Mr. de Vogel is a Director and is the President of Three Cities Research, Inc.
Mr. de Vogel has been the President of Three Cities Research, Inc. since 1982.
Mr. de Vogel is a Director of Computer Associates International and Morton
Industrial Group. Mr. de Vogel is a citizen of the Kingdom of The Netherlands.
Thomas G. Weld....................... Mr. Weld is a Director and is the Treasurer of Three Cities Research, Inc. which
he joined in 1993. From 1988 until 1993, Mr. Weld was an associate with McKinsey
and Company, a management consulting firm. Mr. Weld was a director of Family
Bargain Corporation from January 1997 to December 1998.
</TABLE>
3. Directors and Executive Officers of Purchaser. Set forth below is the
name, current business address, citizenship and the present principal occupation
or employment and material occupations, positions, offices or employments for
the past five years of each director and executive officer of Purchaser. The
principal address of Purchaser and, unless otherwise indicated below, the
current business address for each individual listed below is c/o Three Cities
Research, Inc., 650 Madison Avenue, New York, New York 10022. Unless otherwise
indicated, each such person is a citizen of the United States.
I-1
<PAGE> 29
<TABLE>
<CAPTION>
PRINCIPAL OCCUPATION OR EMPLOYMENT DURING PAST
NAME FIVE YEARS, POSITIONS WITH THE PURCHASER AND CERTAIN DIRECTORSHIPS
- ---- ------------------------------------------------------------------
<S> <C>
J. William Uhrig..................... Mr. Uhrig is a Director and is the President and Treasurer of the
Purchaser. Mr. Uhrig's biographical information is set forth
above.
W. Robert Wright II.................. Mr. Wright is a Director and is the Secretary of the Purchaser.
Mr. Wright has been employed by Three Cities Research, Inc. since
1992, except for a period from July 1993 to August 1995 when he
was in a graduate program at Harvard University. He has been a
Principal of Three Cities Research, Inc. since 1998. Before
joining Three Cities Research, Inc., Mr. Wright worked for Mariott
International in its strategic planning department. He is a
Director of Family Bargain Corporation.
</TABLE>
I-2
<PAGE> 30
SCHEDULE II
Section 262 of the Delaware General Corporation Law
262 APPRAISAL RIGHTS. -- (a) Any stockholder of a corporation of this
State who holds shares of stock on the date of the making of a demand pursuant
to subsection (d) of this section with respect to such shares, who continuously
holds such shares through the effective date of the merger or consolidation, who
has otherwise complied with subsection (d) of this section and who has neither
voted in favor of the merger or consolidation nor consented thereto in writing
pursuant to sec.228 of this title shall be entitled to an appraisal by the Court
of Chancery of the fair value of the stockholders' 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 interests of a member of a nonstock
corporation; and the words "depository receipt" mean a receipt or other
instrument issued by a depository representing an interest in one or more
shares, or fractions thereof, solely of stock of a corporation, which stock is
deposited with the depository.
(b) Appraisal rights shall be available for the shares of any class or
series of stock of a constituent corporation in a merger or consolidation to be
effected pursuant to sec.251 (other than a merger effected pursuant to
sec.251(g) of this title), sec.252, sec.254, sec.257, sec.258, sec.263 or
sec.264 of this title:
(1) Provided, however, that no appraisal rights under this section
shall be available for the shares of any class or series of stock, which
stock, or depository receipts in respect thereof, at the record date fixed
to determine the stockholders entitled to receive notice of and to vote at
the meeting of stockholders to act upon the agreement of merger or
consolidation, were either (i) listed on a national securities exchange or
designated as a national market system security on an interdealer quotation
system by the National Association of Securities Dealers, Inc. or (ii) held
of record by more than 2,000 holders; and further provided that no
appraisal rights shall be available for any shares of stock of the
constituent corporation surviving a merger if the merger did not require
for its approval the vote of the stockholders of the surviving corporation
as provided in subsection (f) of sec.251 of this title.
(2) Notwithstanding paragraph (1) of this subsection, appraisal rights
under this section shall be available for the shares of any class or series
of stock of a constituent corporation if the holders thereof are required
by the terms of an agreement of merger or consolidation pursuant to
sec.sec.251, 252, 254, 257, 258, 263 and 264 of this title to accept for
such stock anything except:
a. Shares of stock of the corporation surviving or resulting from
such merger or consolidation, or depository receipts in respect thereof;
b. Shares of stock of any other corporation, or depository receipts
in respect thereof, which shares of stock (or depository receipts in
respect thereof) or depository receipts at the effective date of the
merger or consolidation will be either listed on a national securities
exchange or designated as a national market system security on an
interdealer quotation system by the National Association of Securities
Dealers, Inc. or held of record by more than 2,000 holders;
c. Cash in lieu of fractional shares or fractional depository
receipts described in the foregoing subparagraphs a. and b. of this
paragraph; or
d. Any combination of the shares of stock, depository receipts and
cash in lieu of fractional shares or fractional depository receipts
described in the foregoing subparagraphs a., b. and c. of this
paragraph.
(3) In the event all of the stock of a subsidiary Delaware corporation
party to a merger effected under sec.253 of this title is not owned by the
parent corporation immediately prior to the merger, appraisal rights shall
be available for the shares of the subsidiary Delaware corporation.
II-1
<PAGE> 31
(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 such
stockholder's shares shall deliver to the corporation, before the taking of
the vote on the merger or consolidation, a written demand for appraisal of
such stockholder's shares. Such demand will be sufficient if it reasonably
informs the corporation of the identity of the stockholder and that the
stockholder intends thereby to demand the appraisal of such stockholder's
shares. A proxy or vote against the merger or consolidation shall not
constitute such a demand. A stockholder electing to take such action must
do so by a separate written demand as herein provided. Within 10 days after
the effective date of such merger or consolidation, the surviving or
resulting corporation shall notify each stockholder of each constituent
corporation who has complied with this subsection and has not voted in
favor of or consented to the merger or consolidation of the date that the
merger or consolidation has become effective; or
(2) 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 20 days after the date of mailing
of such notice, demand in writing from the surviving or resulting
corporation the appraisal of such holder's shares. Such demand will be
sufficient if it reasonably informs the corporation of the identity of the
stockholder and that the stockholder intends thereby to demand the
appraisal of such holder's shares. If such notice did not notify
stockholders of the effective date of the merger or consolidation, either
(i) each such constituent corporation shall send a second notice before the
effective date of the merger or consolidation notifying each of the holders
of any class or series of stock of such constituent corporation that are
entitled to appraisal rights of the effective date of the merger or
consolidation or (ii) the surviving or resulting corporation shall send
such a second notice to all such holders on or within 10 days after such
effective date; provided, however, that if such second notice is sent more
than 20 days following the sending of the first notice, such second notice
need only be sent to each stockholder who is entitled to appraisal rights
and who has demanded appraisal of such holder's shares in accordance with
this subsection. An affidavit of the secretary or assistant secretary or of
the transfer agent of the corporation that is required to give either
notice that such notice has been given shall, in the absence of fraud, be
prima facie evidence of the facts stated therein. For purposes of
determining the stockholders entitled to receive either notice, each
constituent corporation may fix, in advance, a record date that shall be
not more than 10 days prior to the date the notice is given, provided, that
if the notice is given on or after the effective date of the merger or
consolidation, the record date shall be such effective date. If no record
date is fixed and the notice is given prior to the effective date, the
record date shall be the close of business on the day next preceding the
day on which the notice is given.
II-2
<PAGE> 32
(e) Within 120 days after the effective date of the merger or
consolidation, the surviving or resulting corporation or any stockholder who has
complied with subsections (a) and (d) hereof and who is otherwise entitled to
appraisal rights, may file a petition in the Court of Chancery demanding a
determination of the value of the stock of all such stockholders.
Notwithstanding the foregoing, at any time within 60 days after the effective
date of the merger or consolidation, any stockholder shall have the right to
withdraw such stockholder's demand for appraisal and to accept the terms offered
upon the merger or consolidation. Within 120 days after the effective date of
the merger or consolidation, any stockholder who has complied with the
requirements of subsections (a) and (d) hereof, upon written request, shall be
entitled to receive from the corporation surviving the merger or resulting from
the consolidation a statement setting forth the aggregate number of shares not
voted in favor of the merger or consolidation and with respect to which demands
for appraisal have been received and the aggregate number of holders of such
shares. Such written statement shall be mailed to the stockholder within 10 days
after such stockholder's written request for such a statement is received by the
surviving or resulting corporation or within 10 days after expiration of the
period for delivery of demands for appraisal under subsection (d) hereof,
whichever is later.
(f) Upon the filing of any such petition by a stockholder, service of a
copy thereof shall be made upon the surviving or resulting corporation, which
shall within 20 days after such service file in the office of the Register in
Chancery in which the petition was filed a duly verified list containing the
names and addresses of all stockholders who have demanded payment for their
shares and with whom agreements as to the value of their shares have not been
reached by the surviving or resulting corporation. If the petition shall be
filed by the surviving or resulting corporation, the petition shall be
accompanied by such a duly verified list. The Register in Chancery, if so
ordered by the Court, shall give notice of the time and place fixed for the
hearing of such petition by registered or certified mail to the surviving or
resulting corporation and to the stockholders shown on the list at the addresses
therein stated. Such notice shall also be given by 1 or more publications at
least 1 week before the day of the hearing, in a newspaper of general
circulation published in the City of Wilmington, Delaware or such publication as
the Court deems advisable. The forms of the notices by mail and by publication
shall be approved by the Court, and the costs thereof shall be borne by the
surviving or resulting corporation.
(g) At the hearing on such petition, the Court shall determine the
stockholders who have complied with this section and who have become entitle to
appraisal rights. The Court may require the stockholders who have demanded an
appraisal for their shares and who hold stock represented by certificates to
submit their certificates of stock to the Register in Chancery for notation
thereon of the pendency of the appraisal proceedings; and if any stockholder
fails to comply with such direction, the Court may dismiss the proceedings as to
such stockholder.
(h) After determining the stockholders entitled to an appraisal, the Court
shall appraise the shares, determining their fair value exclusive of any element
of value arising from the accomplishment or expectation of the merger or
consolidation, together with a fair rate of interest, if any, to be paid upon
the amount determined to be the fair value. In determining such fair value, the
Court shall take into account all relevant factors. In determining the fair rate
of interest, the Court may consider all relevant factors, including the rate of
interest which the surviving or resulting corporation would have had to pay to
borrow money during the pendency of the proceeding. Upon application by the
surviving or resulting corporation or by any stockholder entitled to participate
in the appraisal proceeding, the Court may, in its discretion, permit discovery
or other pretrial proceedings and may proceed to trial upon the appraisal prior
to the final determination of the stockholder entitled to an appraisal. Any
stockholder whose name appears on the list filed by the surviving or resulting
corporation pursuant to subsection (f) of this section and who has submitted
such stockholder's certificates of stock to the Register in Chancery, if such is
required, may participate fully in all proceedings until it is finally
determined that such stockholder is not entitled to appraisal rights under this
section.
(i) The Court shall direct the payment of the fair value of the shares,
together with interest, if any, by the surviving or resulting corporation to the
stockholders entitled thereto. Interest may be simple or compound, as the Court
may direct. Payment shall be so made to each such stockholder, in the case of
holders of uncertificated stock forthwith, and the case of holders of shares
represented by certificates upon the surrender to the corporation of the
certificates representing such stock. The Court's decree may be enforced as
II-3
<PAGE> 33
other decrees in the Court of Chancery may be enforced, whether such surviving
or resulting corporation be a corporation of this State or of any state.
(j) The costs of the proceeding may be determined by the Court and taxed
upon the parties as the Court deems equitable in the circumstances. Upon
application of a stockholder, the Court may order all or a portion of the
expenses incurred by any stockholder in connection with the appraisal
proceeding, including, without limitation, reasonable attorney's fees and the
fees and expenses of experts, to be charged pro rata against the value of all
the shares entitled to an appraisal.
(k) From and after the effective date of the merger or consolidation, no
stockholder who has demanded appraisal rights as provided in subsection (d) of
this section shall be entitled to vote such stock for any purpose or to receive
payment of dividends or other distributions on the stock (except dividends or
other distributions payable to stockholders of record at a date which is prior
to the effective date of the merger or consolidation); provided, however, that
if no petition for an appraisal shall be filed within the time provided in
subsection (e) of this section, or if such stockholder shall deliver to the
surviving or resulting corporation a written withdrawal of such stockholder's
demand for an appraisal and an acceptance of the merger or consolidation, either
within 60 days after the effective date of the merger or consolidation as
provided in subsection (e) of this section or thereafter with the written
approval of the corporation, then the right of 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.
II-4
<PAGE> 34
Facsimile copies of the Letter of Transmittal, properly completed and duly
signed, will be accepted. The Letter of Transmittal, certificates for Shares and
any other required documents should be sent by each stockholder of the Company
or the stockholder's broker, dealer, commercial bank, trust company or other
nominee to the Depositary as follows:
The Depositary for the Offer is:
IBJ SCHRODER BANK & TRUST COMPANY
<TABLE>
<S> <C> <C>
By Registered or Certified Facsimile Transmission: By Hand or Overnight
Mail: Delivery:
(for Eligible Institutions
IBJ Schroder Bank & Trust Only) IBJ Schroder Bank & Trust
Company Company
P.O. Box 84 (212) 858-2611 One State Street
Bowling Green Station New York, NY 10004
New York, NY 10274-0084 Attn: Securities Processing
Attn: Reorganization Window, SC-1
Operations
Department
For Confirmation Telephone:
(212) 858-2103
</TABLE>
Any questions or requests for assistance or additional copies of the Offer
to Purchase, the Letter of Transmittal or the Notice of Guaranteed Delivery may
be directed to the Information Agent at the telephone numbers and location
listed below. You may also contact your broker, dealer, commercial bank or trust
company or other nominee for assistance concerning the Offer.
The Information Agent for the Offer is:
D.F. KING & CO., INC.
77 Water Street
New York, New York 10005-4495
Banks and Brokerage Firms Call Collect: (212) 269-5550
All Others Call Toll Free: (800) 758-5378
<PAGE> 1
LETTER OF TRANSMITTAL
TO TENDER SHARES OF COMMON STOCK
OF
COHR INC.
AT
$5.375 NET PER SHARE (OR UNDER SOME CIRCUMSTANCES, $6.375 NET PER SHARE)
IN RESPONSE TO THE OFFER TO PURCHASE DATED JANUARY 4, 1999
OF
TCF ACQUISITION CORPORATION
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT,
NEW YORK CITY TIME, ON FEBRUARY 3, 1999, UNLESS THE OFFER IS EXTENDED.
The Depositary:
IBJ SCHRODER BANK & TRUST COMPANY
<TABLE>
<S> <C> <C>
By Registered or Certified Mail: By Facsimile Transaction: By Hand or
Overnight Courier:
P.O. Box 84 (For Eligible Institutions Only)
Bowling Green Station (212) 858-2611 IBJ Schroder Bank & Trust Company
New York, NY 10274-0084 For Confirmation Telephone One State Street
Attn: Reorganization Operations New York, NY 10004
Department (212) 858-2103 Attn: Securities Processing
Window, SC-1
</TABLE>
DELIVERY OF THIS INSTRUMENT TO AN ADDRESS OTHER THAN AS SET FORTH ABOVE OR
TRANSMISSION OF INSTRUCTIONS VIA A TELEX OR FACSIMILE NUMBER OTHER THAN THE ONES
LISTED ABOVE WILL NOT CONSTITUTE A VALID DELIVERY.
This Letter of Transmittal is to be used to tender shares of common stock
("Shares") of COHR Inc. (the "Company") in response to a solicitation of tenders
by TCF Acquisition Corporation (the "Purchaser"). It must be used whether
certificates evidencing Shares are to be forwarded with this Letter of
Transmittal or whether delivery of Shares is to be made by book-entry transfer
to the account maintained by the Depositary at The Depository Trust Company (the
"Book-Entry Facility") as described in Section 9 of the Offer to Purchase.
Stockholders whose certificates are not immediately available or who cannot
deliver their confirmation of the book-entry transfer of their Shares into the
Depositary's account at the Book-Entry Facility ("Book-Entry Confirmation") on
or before the Expiration Time may use the guaranteed delivery procedure
described in Section 9 of the Offer to Purchase to tender their shares. See
Instruction 2. DELIVERY OF DOCUMENTS TO THE BOOK-ENTRY FACILITY DOES NOT
CONSTITUTE DELIVERY TO THE DEPOSITARY.
[ ] CHECK HERE IF TENDERED SHARES ARE BEING DELIVERED BY BOOK-ENTRY TRANSFER TO
THE ACCOUNT MAINTAINED BY THE DEPOSITARY AT THE BOOK-ENTRY FACILITY AND
COMPLETE THE FOLLOWING:
Name of Tendering Institution:
Account Number
Transaction Code Number
<PAGE> 2
[ ] CHECK HERE IF TENDERED SHARES ARE BEING DELIVERED PURSUANT TO A NOTICE OF
GUARANTEED DELIVERY PREVIOUSLY SENT TO THE DEPOSITARY AND COMPLETE THE
FOLLOWING:
Name(s) of Registered Owner(s):
Date of Execution of Notice of Guaranteed Delivery:
Name of Institution which Guaranteed Delivery:
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------
DESCRIPTION OF SHARES TENDERED
- ------------------------------------------------------------------------------------------------------------------------
NAME(S) AND ADDRESS(ES) OF REGISTERED HOLDER(S) CERTIFICATE(S) TENDERED
(PLEASE FILL IN, IF BLANK) (ATTACH ADDITIONAL LIST IF NECESSARY)
- ------------------------------------------------------------------------------------------------------------------------
TOTAL NUMBER
OF SHARES NUMBER
CERTIFICATE REPRESENTED BY OF SHARES
NUMBER(S)* CERTIFICATE(S)* TENDERED**
<S> <C> <C> <C>
------------------------------------------------------
------------------------------------------------------
------------------------------------------------------
------------------------------------------------------
------------------------------------------------------
Total Shares
- ------------------------------------------------------------------------------------------------------------------------
* Need not be completed by stockholders tendering by book-entry transfer.
** Unless otherwise indicated it will be assumed that all Shares described above are being tendered. See Instruction
4.
- ------------------------------------------------------------------------------------------------------------------------
</TABLE>
NOTE: SIGNATURE MUST BE PROVIDED BELOW.
PLEASE READ THE ACCOMPANYING INSTRUCTIONS CAREFULLY.
<PAGE> 3
Ladies and Gentlemen:
The undersigned hereby tenders to TCF Acquisition Corporation (the
"Purchaser"), a Delaware corporation, the shares of common stock (the "Shares")
of COHR Inc. (the "Company"), a Delaware corporation, listed above, in response
to the Purchaser's offer to purchase all outstanding Shares at a price of $5.375
net per Share (or, under some circumstances, $6.375 net per Share), upon the
terms and subject to the conditions set forth in the Offer to Purchase dated
January 4, 1999 (the "Offer to Purchase"), receipt of which is hereby
acknowledged, and in this Letter of Transmittal (which terms and conditions
constitute the "Offer").
Subject to, and effective upon, acceptance of the Shares tendered with this
Letter of Transmittal for payment in accordance with the Offer, the undersigned
hereby sells, assigns, and transfers to, or upon the order of, the Purchaser all
right, title and interest in and to all the Shares that are being tendered with
this Letter of Transmittal (and any other Shares or other securities issued or
issuable in respect of those Shares after January 4, 1999) and irrevocably
constitutes and appoints the Depositary the true and lawful agent and
attorney-in-fact of the undersigned with respect to those Shares (and any such
other Shares or securities) with full power of substitution, (that power of
attorney being an irrevocable power coupled with an interest) to (a) deliver
certificates for the Shares (and any such other Shares or securities) or
transfer ownership of the Shares (and any such other Shares or securities) on
the account books maintained by the Book-Entry Facility, together in either case
with all accompanying evidences of transfer and authenticity, to or upon the
order of the Purchaser upon receipt by the Depositary, as the undersigned's
agent, of the purchase price (adjusted, if appropriate, as provided in the Offer
to Purchase), (b) present those Shares (and any such other Shares or securities)
for transfer on the books of the Company and (c) otherwise exercise all rights
of beneficial ownership of the Shares (and any such other Shares or securities),
all in accordance with the terms of the Offer. The sale, assignment and transfer
of Shares include a transfer of the Rights relating to those Shares under a
Rights Agreement dated November 23, 1998 between the Company and ChaseMellon
Shareholder Services LLC.
The undersigned irrevocably appoints the Purchaser, its officers and its
designees, and each of them, the attorneys-in-fact and proxies of the
undersigned, each with full power of substitution, to vote in such manner as
each such attorney-in-fact and proxy or his or its substitute, in his or its
sole discretion deems proper, and otherwise act (including acting by written
consent without a meeting) with respect to, all the Shares tendered by this
Letter of Transmittal which have been accepted for payment by the Purchaser
prior to the time of the vote or action (and any other Shares or securities
issued in respect of those Shares after January 4, 1999). This proxy is
irrevocable and is granted in consideration of, and is effective upon, the
deposit by the Purchaser with the Depositary of the purchase price for the
Shares to which it relates, and acceptance of those Shares for payment, in
accordance with the Offer. That acceptance for payment will revoke all prior
proxies granted by the undersigned with regard to those Shares (and any such
other Shares or other securities) and the undersigned will not give any
subsequent proxies with respect to those Shares.
The undersigned represents and warrants that the undersigned has full power
and authority to tender, sell, assign and transfer the Shares tendered by this
Letter of Transmittal (and any other Shares or other securities issued in
respect of those Shares after January 4, 1999) and that, when those Shares are
accepted for payment by the Purchaser, the Purchaser will acquire good and
unencumbered titled to the Shares (and any such other Shares or securities),
free and clear of all liens, restrictions, charges, encumbrances or adverse
claims. The undersigned, upon request, will execute and deliver any additional
documents deemed by the Depositary or the Purchaser to be necessary or desirable
to complete the sale, assignment and transfer of the Shares tendered by this
Letter of Transmittal (and any such other Shares or other securities) to the
Purchaser.
The authority conferred in this Letter of Transmittal will not be affected
by, and will survive, the death or incapacity of the undersigned, and any
obligation of the undersigned under this Letter of Transmittal or otherwise
resulting from the tender of the Shares to which this Letter of Transmittal
relates will be binding upon the successors, assigns, heirs, executors,
administrators and legal representatives of the undersigned. Except as stated in
the Offer to Purchase, the tender made by this Letter of Transmittal is
irrevocable.
The undersigned understands that tenders of Shares pursuant to any one of
the procedures described in Section 9 of the Offer to Purchase and in the
instructions to this Letter of Transmittal will constitute a binding agreement
between the undersigned and the Purchaser upon the terms and subject to the
conditions of the Offer.
<PAGE> 4
Unless otherwise indicated in the box below captioned "Special Payment
Instructions," please issue the check for the purchase price of the Shares
tendered by this Letter of Transmittal, and cause any Shares represented by
certificates accompanying this Letter of Transmittal which are not being
tendered, or are not accepted for payment, in the name(s) of the undersigned.
Similarly, unless otherwise indicated in the box below captioned "Special
Delivery Instructions," please mail the check for the purchase price and deliver
certificates representing any Shares which are not being tendered or are not
accepted for payment (and accompanying documents, as appropriate) to the
undersigned at the address shown below the undersigned's signature. If both the
Special Delivery Instructions and the Special Payment Instructions are
completed, please issue the check for the purchase price and certificates for
any Shares which are not being tendered, or are not accepted for payment, in the
name of, and deliver the check and certificates, or confirmation of transfer of
the Shares at the Book-Entry Facility, to the person or persons indicated.
Stockholders delivering Shares by book-entry transfer may request that any
Shares not accepted for payment be returned by crediting an account at the
Book-Entry Facility, by making an appropriate entry under "Special Payment
Instructions." The undersigned recognizes that the Purchaser has no obligation
pursuant to the Special Payment Instructions or otherwise to transfer any
tendered Shares which are not accepted for payment from the name of the
registered holder of the Shares to the name of another person.
<PAGE> 5
------------------------------------------------------------
SPECIAL PAYMENT INSTRUCTIONS
(SEE INSTRUCTIONS 5, 6 AND 7)
To be completed ONLY if certificates for Shares which are not
tendered or not purchased and the check for the purchase price of Shares
which are purchased are to be issued in the name of someone other than the
undersigned, or if Shares delivered by book-entry which are not purchased
are to be returned by credit to an account maintained at a Book-Entry
Facility other than that designated above.
Issue: [ ] Check [ ] Certificate(s) to:
Name
----------------------------------------------------
(PLEASE PRINT)
Address
--------------------------------------------------
------------------------------------------------------------
(INCLUDE ZIP CODE)
------------------------------------------------------------
(TAX IDENTIFICATION OR
SOCIAL SECURITY NUMBER)
[ ] Credit unpurchased Shares delivered by book-entry transfer to the
Book-Entry Facility account set forth below:
------------------------------------------------------------
(ACCOUNT NUMBER)
------------------------------------------------------------
------------------------------------------------------------
SPECIAL DELIVERY INSTRUCTIONS
(SEE INSTRUCTIONS 5, 6 AND 7)
To be completed ONLY if certificates for Shares which are not
tendered or are not purchased and the check for the purchase price of
Shares which are purchased are to be sent to someone other than the
undersigned, or to the undersigned at an address other than that shown
after the undersigned's signature below.
Mail: [ ] Check [ ] Certificate(s) to:
Name
----------------------------------------------------
(PLEASE PRINT)
Address
--------------------------------------------------
------------------------------------------------------------
(INCLUDE ZIP CODE)
------------------------------------------------------------
<PAGE> 6
SIGN HERE
(COMPLETE SUBSTITUTE FORM W-9 ON REVERSE)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SIGNATURE(S) OF OWNER(S)
Dated:
- --------------------------- , 1999
(Must be signed by registered holder(s) exactly as name(s) appear(s) on stock
certificate(s) or on a security position listing or by person(s) authorized to
become registered holder(s) by certificates and documents transmitted with this
Letter of Transmittal. If signature is by trustees, executors, administrators,
guardians, attorneys-at-fact, agents, officers of corporations or others acting
in a fiduciary or representative capacity, please provide the information
described in Instruction 5.)
Name(s) ------------------------------------------------------------------------
- --------------------------------------------------------------------------------
(PLEASE PRINT)
Capacity (Full Title)
----------------------------------------------------------------
Address-------------------------------------------------------------------------
- --------------------------------------------------------------------------------
(INCLUDE ZIP CODE)
Area Code and Telephone Number( )
-------------------------------------------------
Tax Identification or Social Security No.
-------------------------------------------------
(COMPLETE SUBSTITUTE FORM W-9 ON REVERSE)
GUARANTEE OF SIGNATURE(S)
(SEE INSTRUCTIONS 1 AND 5)
Authorized Signature
----------------------------------------------------------------
Name --------------------------------------------------------------------------
Title---------------------------------------------------------------------------
Name of Firm
---------------------------------------------------------------------
Address-------------------------------------------------------------------------
Area Code and Telephone Number ( )
------------------------------------------------
Dated:
- --------------------------- , 1999
<PAGE> 7
INSTRUCTIONS
FORMING PART OF THE TERMS AND CONDITIONS OF THE OFFER
1. GUARANTEE OF SIGNATURES. No signature guarantee is required on this
Letter of Transmittal (i) if this Letter of Transmittal is signed by the
registered holder of the Shares tendered by it (which, for purposes of this
document, includes any participant in the Book-Entry Facility whose name appears
on a security position listing as the owner of Shares) unless the holder has
completed either the box entitled "Special Delivery Instructions" or the box
entitled "Special Payment Instructions" on the reverse of this Letter of
Transmittal or (ii) if those Shares are tendered for the account of a member
firm of a registered national securities exchange or a member of the National
Association of Securities Dealers, Inc. or by a commercial bank or trust company
which has an office or correspondent in the United States (collectively,
"Eligible Institutions"). In all other cases, all signatures on this Letter of
Transmittal must be guaranteed by an Eligible Institution. See Instruction 5.
2. DELIVERY OF LETTER OF TRANSMITTAL AND CERTIFICATES. This Letter of
Transmittal is to be completed by stockholders either if certificates are being
forwarded with it or, unless an Agent's Message is utilized, tenders of Shares
are being made in accordance with the procedures for delivery by book-entry
transfer set forth in Section 9 of the Offer to Purchase. Certificates for all
physically tendered Shares, or a Book-Entry Confirmation confirming book-entry
transfer of Shares to an account of the Depositary, as the case may be, together
with a properly completed and duly executed Letter of Transmittal (or facsimile
of one) and any other documents required by this Letter of Transmittal, must be
received by the Depositary at one of its addresses set forth above on or prior
to the Expiration Date (as defined in the Offer to Purchase). Stockholders whose
certificates for Shares are not immediately available, or who cannot deliver
Book-Entry Confirmation of book entry transfer of the Shares to the Depositary
on or prior to the Expiration Date, may tender their Shares by properly
completing and executing a Notice of Guaranteed Delivery in accordance with the
guaranteed delivery procedure described in Section 9 of the Offer to Purchase.
Pursuant to that procedure, (i) the tender must be made by or through an
Eligible Institution, (ii) a properly completed and duly executed Notice of
Guaranteed Delivery, substantially in the form provided by the Purchaser, must
be received by the Depositary prior to the Expiration Date and (iii) the
certificates for all physically tendered Shares, or Book-Entry Confirmation of
Shares tendered by book-entry transfer, as the case may be, together with a
properly completed and duly executed Letter of Transmittal (or facsimile of one)
and any other documents required by this Letter of Transmittal, must be received
by the Depositary within three New York Stock Exchange trading days after the
date of execution of the Notice of Guaranteed Delivery, all as provided in
Section 9 of the Offer to Purchase.
The method of delivery of this Letter of Transmittal, the certificates for
Shares and all other required documents, including delivery through the
Book-Entry Facility, is at the option and risk of the tendering stockholder and,
except as otherwise provided in this Instruction 2, the delivery will be deemed
made only when actually received by the Depositary. If delivery is by mail,
registered mail with return receipt requested, properly insured, is recommended.
No alternative, conditional or contingent tenders will be accepted and no
fractional Shares will be purchased. All tendering stockholders, by execution of
this Letter of Transmittal (or a facsimile of it), waive any right to receive
any notice of the acceptance of their Shares for payment.
3. INADEQUATE SPACE. If the space provided in this Letter of Transmittal
is inadequate, the certificate numbers and numbers of Shares being tendered
should be listed on a separate signed schedule which should be attached to this
Letter of Transmittal.
4. PARTIAL TENDERS. (Not applicable to stockholders who tender by
book-entry transfer). If fewer than all the Shares evidenced by a certificate
are to be tendered, fill in the number of Shares which are to be tendered in the
box entitled "Number of Shares Tendered." In such case, new certificate(s) for
the remainder of the Shares that were evidenced by your old certificate(s) will
be sent to you, unless otherwise provided in the appropriate box on this Letter
of Transmittal, as soon as practicable after the Expiration Date. All Shares
represented by certificates delivered to the Depositary will be deemed to have
been tendered unless otherwise indicated.
5. SIGNATURES ON LETTER OF TRANSMITTAL, STOCK POWERS AND ENDORSEMENTS. If
this Letter of Transmittal is signed by the registered holder(s) of the Shares
being tendered, the signature(s) must correspond exactly with the name(s) as
written on the face of the certificate(s), without any alteration, enlargement
or change whatsoever.
<PAGE> 8
If any of the tendered Shares are owned of record by two or more joint
owners, all the owners must sign this Letter of Transmittal.
IF TENDERED SHARES ARE REGISTERED IN DIFFERENT NAMES ON DIFFERENT
CERTIFICATES, IT WILL BE NECESSARY TO COMPLETE, SIGN AND SUBMIT AS MANY SEPARATE
LETTERS OF TRANSMITTAL AS THERE ARE DIFFERENT REGISTRATIONS ON CERTIFICATES.
If this Letter of Transmittal or any certificates or stock powers are
signed by a trustee, executor, administrator, guardian, attorney-in-fact,
officer of a corporation or other person acting in a fiduciary or representative
capacity, that person should so indicate when signing, and may be required to
submit evidence satisfactory to the Purchaser of the person's authority so to
act.
When this Letter of Transmittal is signed by the registered owner(s) of the
Shares being tendered, no endorsements of certificates or separate stock powers
are required, unless payment or certificates for Shares which are not tendered
or purchased are to be issued to a person other than the registered owner(s), in
which case, endorsements of certificates or separate stock powers are required
and signatures on those certificates or stock powers must be guaranteed by an
Eligible Institution.
If this Letter of Transmittal is signed by a person other than the
registered owner(s) of the Shares being tendered, the certificates must be
endorsed or accompanied by appropriate stock powers, in either case signed
exactly as the name(s) of the registered owner(s) appear on the certificates.
Signatures on the certificates or stock powers must be guaranteed by an Eligible
Institution.
6. STOCK TRANSFER TAXES. Except as set forth in this Instruction 6, the
Purchaser will pay or cause to be paid any stock transfer taxes with respect to
the transfer and sale to it of Shares it purchases pursuant to the Offer. If
payment of the purchase price is to be made to, or if certificates for Shares
which are not tendered or are not purchased are to be registered in the name of,
any person other than the registered holder, or if tendered certificates are
registered in the name of anyone other than the person(s) signing this Letter of
Transmittal, the amount of any stock transfer taxes payable on account of the
transfer to another person (whether imposed on the registered holder or on the
other person) will be deducted from the purchase price unless satisfactory
evidence of the payment of, or an exemption from the need to pay, stock transfer
taxes is submitted.
Except as provided in this Instruction 6, it will not be necessary for
transfer tax stamps to be affixed to the certificates submitted with this Letter
of Transmittal.
7. SPECIAL PAYMENT AND DELIVERY INSTRUCTIONS. If a check or certificates
for unpurchased Shares are to be issued in the name of a person other than the
signer of this Letter of Transmittal, or if a check is to be sent or
certificates are to be returned to someone other than the signer of this Letter
of Transmittal or to an address other than the signer's address shown above, the
appropriate boxes on this Letter of Transmittal must be completed. Stockholders
tendering Shares by book-entry transfer may request that any Shares which are
not purchased be credited to an account maintained at the Book-Entry Facility
which the stockholder designates. If no instructions are given, Shares tendered
by book-entry transfer which are not purchased will be returned by crediting the
account at the Book-Entry Facility designated above.
8. REQUESTS FOR ASSISTANCE OR ADDITIONAL COPIES. Requests for assistance
may be directed to, or additional copies of the Offer to Purchase and this
Letter of Transmittal may be obtained from, the Information Agent its address
set forth below or from your broker, dealer, commercial bank or trust company.
9. WAIVER OF CONDITIONS. The conditions to the Offer may be waived by the
Purchaser, in whole or in part, at any time and from time to time in the
Purchaser's sole discretion, as to any Shares which are tendered.
10. SUBSTITUTE FORM W-9. The tendering stockholder is required to provide
the Depositary with a correct Taxpayer Identification Number ("TIN") on the
Substitute Form W-9 which is provided under "Important Tax Information" below,
and to indicate that the stockholder is not subject to backup withholding by
checking the box in Part 2 of the Substitute Form W-9. Failure to provide the
information on the Substitute Form W-9 may subject the tendering stockholder to
31% Federal income tax withholding from the payment of the purchase price. The
box in Part 3 of the Substitute Form W-9 may be checked if the tendering
<PAGE> 9
stockholder has not been issued a TIN and has applied for a number or intends to
apply for a number in the near future. If the box in Part 3 is checked and the
Depositary is not provided with a TIN within 60 days, the Depositary will
withhold 31% from all payments of the purchase price to be made after expiration
of that 60 day period until a TIN is provided to the Depositary.
Important: This Letter of Transmittal (or a facsimile of it), together with
certificates or confirmation of book-entry transfer and all other required
documents, or a Notice of Guaranteed Delivery, must be received by the
Depositary on or prior to the Expiration Time.
<TABLE>
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------------------
(DO NOT WRITE IN THE SPACES BELOW)
Date Received --------------- Accepted by --------------- Checked by ----------
--------------------------------------------------------------------------------------------------------
CERTIFICATES SHARES SHARES CHECK AMOUNT SHARES CERTIFICATE BLOCK
SURRENDERED TENDERED ACCEPTED NO. OF CHECK RETURNED NO. NO.
--------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------------------------
Delivery Prepared by --------------- Checked by --------------- Date ---------------
- ------------------------------------------------------------------------------------------------------------------
</TABLE>
IMPORTANT TAX INFORMATION
Under Federal income tax law, a stockholder whose tendered Shares are
accepted for payment is required to provide the Depositary with the
stockholder's correct TIN on Substitute Form W-9 below. If the stockholder is an
individual, the TIN is his or her social security number. If the Depositary is
not provided with the correct TIN, the stockholder may be subject, among other
things, to penalties imposed by the Internal Revenue Service. In addition,
payments that are made to the stockholder with respect to Shares purchased
pursuant to the Offer may be subject to backup withholding.
Certain stockholders (including, among others, all corporations and certain
foreign individuals) are not subject to these backup withholding and reporting
requirements. In order for a foreign individual to qualify as an exempt
recipient, that individual must submit a statement, signed under penalties of
perjury, attesting to the individual's exempt status. A form of statement may be
obtained from the Depositary. See the enclosed Guidelines for Certification of
Taxpayer Identification Number on Substitute Form W-9 for additional
instructions.
If backup withholding applies, the Depositary is required to withhold 31%
of any payments made to the stockholder. Backup withholding is not an additional
tax. Rather, the tax liability of persons subject to backup withholding will be
reduced by the amount of tax withheld. If withholding results in an overpayment
of taxes, a refund may be obtained.
PURPOSE OF SUBSTITUTE FORM W-9
To prevent backup withholding on payments that are made to a stockholder
with respect to Shares purchased pursuant to the Offer, the stockholder is
required to notify the Depositary of the stockholder's correct TIN by completing
the form below certifying that the TIN provided on the Substitute Form W-9 is
correct (or that the stockholder is awaiting a TIN).
<PAGE> 10
WHAT NUMBER TO GIVE THE DEPOSITARY
The stockholder is required to give the Depositary the social security
number or employer identification number of the record owner of the Shares. If
the Shares being tendered are in more than one name or are not in the name of
the actual owner, consult the enclosed Guidelines for Certification of Taxpayer
Identification Number on Substitute Form W-9 for additional guidelines on which
number to report.
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
PAYER'S NAME: IBJ SCHRODER BANK & TRUST COMPANY
- -------------------------------------------------------------------------------------------------------------
SUBSTITUTE Part 1 -- PLEASE PROVIDE YOUR TIN IN THE BOX AT Social Security
FORM W-9 RIGHT AND CERTIFY BY SIGNING AND DATING BELOW Number
OR
--------------------
Employer
Identification Number
-----------------------------------------------------------------------
Part 2 -- Check the box if you are NOT subject to backup withholding
Department of the Treasury under the provisions of Section 3406(a)(1)(C) of the Internal Revenue
Internal Revenue Service Code because (1) you are exempt from backup withholding, or (2) you
have not been notified that you are subject to backup withholding as a
result of failure to report all interest or dividends or (3) the
Internal Revenue Service has notified you that you are no longer
subject to backup withholding. [ ]
-----------------------------------------------------------------------
PAYER'S REQUEST FOR TAXPAYER CERTIFICATION -- UNDER THE PENALTIES OF PERJURY, I CERTIFY Part 3 --
IDENTIFICATION NUMBER (TIN) THAT THE INFORMATION PROVIDED ON THIS FORM IS TRUE, CORRECT
AND COMPLETE.
SIGNATURE -------------------------- DATE-------------- Awaiting TIN [ ]
- -------------------------------------------------------------------------------------------------------------
</TABLE>
NOTE: FAILURE TO COMPLETE AND RETURN THIS FORM MAY RESULT IN BACKUP WITHHOLDING
OF 31% OF ANY PAYMENTS MADE TO YOU PURSUANT TO THE OFFER. PLEASE REVIEW
THE ENCLOSED GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION
NUMBER ON SUBSTITUTE FORM W-9 FOR ADDITIONAL DETAILS.
THE INFORMATION AGENT FOR THE OFFER IS:
D.F. KING & CO., INC.
77 Water Street
New York, New York 10005-4495
Banks and Brokerage Firms call collect: (212) 269-5550
All others call toll-free: (800) 758-5378
<PAGE> 1
NOTICE OF GUARANTEED DELIVERY
FOR
TENDER OF SHARES OF COMMON STOCK
(INCLUDING THE ASSOCIATED PREFERRED STOCK PURCHASE RIGHTS)
OF
COHR INC.
(NOT TO BE USED FOR SIGNATURE GUARANTEES)
This Notice of Guaranteed Delivery, or one substantially in the form
hereof, must be used to accept the Offer (as defined below) (i) if certificates
("Share Certificates") evidencing shares of common stock, par value $0.01 per
share (together with the associated preferred stock purchase rights, the
"Shares"), of COHR Inc., a Delaware corporation (the "Company"), are not
immediately available, (ii) if Share Certificates and all other required
documents cannot be delivered to IBJ Schroder Bank & Trust Company, as
Depositary (the "Depositary"), prior to the Expiration Time (as defined in the
Offer to Purchase (as defined below)) or (iii) if the procedure for delivery by
book-entry transfer cannot be completed on a timely basis. This Notice of
Guaranteed Delivery may be delivered by hand or mail or transmitted by telegram
or facsimile transmission to the Depositary. See Section 9 of the Offer to
Purchase.
The Depositary for the Offer is:
IBJ SCHRODER BANK & TRUST COMPANY
By Facsimile Transmission (for Eligible Institutions only):
(212) 858-2611
Confirm by Telephone: (212) 858-2103
<TABLE>
<S> <C>
By Registered or Certified Mail: By Hand or Overnight Courier:
IBJ Schroder Bank & Trust Company IBJ Schroder Bank & Trust Company
P.O. Box 84 One State Street
Bowling Green Station New York, NY 10004
New York, NY 10274-0084 Attn: Securities Processing Window, SC-1
Attn: Reorganization Operations Department
</TABLE>
DELIVERY OF THIS NOTICE OF GUARANTEED DELIVERY TO AN ADDRESS OTHER THAN AS
SET FORTH ABOVE, OR TRANSMISSION OF INSTRUCTIONS VIA FACSIMILE TRANSMISSION
OTHER THAN AS SET FORTH ABOVE, WILL NOT CONSTITUTE A VALID DELIVERY.
THIS FORM IS NOT TO BE USED TO GUARANTEE SIGNATURES. IF A SIGNATURE ON A
LETTER OF TRANSMITTAL IS REQUIRED TO BE GUARANTEED BY AN "ELIGIBLE INSTITUTION"
UNDER THE INSTRUCTIONS THERETO, SUCH SIGNATURE GUARANTEE MUST APPEAR IN THE
APPLICABLE SPACE PROVIDED IN THE SIGNATURE BOX ON THE LETTER OF TRANSMITTAL.
<PAGE> 2
LADIES AND GENTLEMEN:
The undersigned hereby tenders to TCF Acquisition Corporation, a Delaware
corporation which is currently owned by Three Cities Fund II, L.P., a Delaware
limited partnership, and Three Cities Offshore II C.V., a Netherlands Antilles
partnership, upon the terms and subject to the conditions set forth in the Offer
to Purchase, dated January 4, 1999 (the "Offer to Purchase"), and the related
Letter of Transmittal (the terms and conditions of which, as amended or
supplemented from time to time, together constitute the "Offer"), receipt of
each of which is hereby acknowledged, the number of Shares specified below
pursuant to the guarantee delivery procedures described in Section 9 of the
Offer to Purchase.
Number of Shares:
- --------------------------------------------------------------------------------
Name(s) of Record Holder(s):
- --------------------------------------------------------------------------------
(PLEASE PRINT)
Address(es):
- --------------------------------------------------------------------------------
(ZIP CODE)
Area Code and Tel. No:
- --------------------------------------------------------------------------------
Certificate Nos. (if available):
- --------------------------------------------------------------------------------
Check box if Shares will be tendered by book-entry transfer:
[ ] The Depository Trust Company
Signature(s):
- --------------------------------------------------------------------------------
Account Number:
- --------------------------------------------------------------------------------
Dated:
- ------------------------------------, 1999
<PAGE> 3
GUARANTEE
(NOT TO BE USED FOR SIGNATURE GUARANTEE)
The undersigned, a participant in the Security Transfer Agents Medallion
Program, hereby guarantees to deliver to the Depositary either the certificates
representing the Shares tendered hereby, in proper form for transfer, or a
Book-Entry Confirmation (as defined in Section 8 of the Offer to Purchase) of a
transfer of such Shares, in any such case together with a properly completed and
duly executed Letter of Transmittal, or a manually signed facsimile thereof,
with any required signature guarantees, or an Agent's Message (as defined in
Section 8 of the Offer to Purchase), and any other documents required by the
Letter of Transmittal within three NASDAQ National Market trading days after the
date of execution of this Notice of Guaranteed Delivery.
The Eligible Institution that completes this form must communicate the
guarantee to the Depositary and must deliver the Letter of Transmittal and
certificates for Shares to the Depositary within the time period shown herein.
Failure to do so could result in financial loss to such Eligible Institution.
Name of Firm:
- --------------------------------------------------------------------------------
(AUTHORIZED SIGNATURE)
Address:
- --------------------------------------------------------------------------------
(ZIP CODE)
Area Code and Tel. No.:
- --------------------------------------------------------------------------------
Name:
- --------------------------------------------------------------------------------
Title:
- --------------------------------------------------------------------------------
Date:
- ------------------, 1999
NOTE: DO NOT SEND CERTIFICATES FOR SHARES WITH THIS NOTICE.
SHARE CERTIFICATES SHOULD BE SENT WITH YOUR LETTER OF TRANSMITTAL.
<PAGE> 1
OFFER TO PURCHASE FOR CASH
ALL OUTSTANDING SHARES OF COMMON STOCK
(INCLUDING THE ASSOCIATED PREFERRED STOCK PURCHASE RIGHTS)
OF
COHR INC.
AT
$5.375 NET PER SHARE (OR UNDER SOME
CIRCUMSTANCES, $6.375 NET PER SHARE)
BY
TCF ACQUISITION CORPORATION
WHICH IS OWNED BY
THREE CITIES FUND II, L.P. AND
THREE CITIES OFFSHORE II C.V.
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY
TIME, ON WEDNESDAY, FEBRUARY 3, 1999, UNLESS THE OFFER IS EXTENDED.
To Brokers, Dealers, Commercial Banks,
Trust Companies and Other Nominees:
We have been appointed by TCF Acquisition Corporation, a Delaware
corporation (the "Purchaser"), which is currently owned by Three Cities Fund II,
L.P., a Delaware limited partnership, and Three Cities Offshore II C.V., a
Netherlands Antilles partnership (the "Three Cities Funds"), to act as
Information Agent in connection with the Purchaser's offer to purchase all
outstanding shares of common stock, par value $0.01 per share (together with the
associated preferred stock purchase rights, the "Shares"), of COHR Inc., a
Delaware corporation (the "Company"), at a price of $5.375 per Share (or under
some circumstances, $6.375 net per Share), net to the seller in cash, upon the
terms and subject to the conditions set forth in the Offer to Purchase dated
January 4, 1999 (the "Offer to Purchase"), and the related Letter of Transmittal
(the terms and conditions of which, as amended or supplemented from time to
time, together constitute the "Offer") enclosed herewith. Please furnish copies
of the enclosed materials to those of your clients for whose accounts you hold
Shares registered in your name or in the name of your nominee.
The Offer is not conditioned on any minimum number of Shares being
tendered, nor is it conditioned on the ability of the Purchaser to obtain
financing or on absence of material adverse change regarding the Company while
the Offer is pending, but the Offer is subject to other terms and conditions
contained in the Offer to Purchase.
Enclosed for your information and use are copies of the following
documents:
1. Offer to Purchase;
2. Letter of Transmittal to be used by holders of Shares in accepting
the Offer and tendering Shares;
3. A letter which may be sent to your clients for whose accounts you
hold Shares registered in your name or in the name of your nominee, with
space provided for obtaining such clients' instructions with regard to the
Offer;
4. Guidelines for Certification of Taxpayer Identification Number on
Substitute Form W-9; and
5. Return envelope addressed to the Depositary.
<PAGE> 2
WE URGE YOU TO CONTACT YOUR CLIENTS AS PROMPTLY AS POSSIBLE. PLEASE NOTE
THAT THE OFFER AND WITHDRAWAL RIGHTS EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY
TIME, ON WEDNESDAY, FEBRUARY 3, 1999, UNLESS THE OFFER IS EXTENDED.
The Offer is being made pursuant to a Plan and Agreement of Merger, dated
as of December 24, 1998 (the "Merger Agreement"), by and among the Company and
the Purchaser. The Merger Agreement provides, among other things, that if, after
the Purchaser purchases all the Shares which are properly tendered in response
to the Offer and not withdrawn, the Purchaser, the Three Cities Funds and any
other stockholders of the Purchaser own at least 85% of the outstanding Common
Shares, the Purchaser and its stockholders will take all steps in their power
(including voting their Common Shares) to cause the Purchaser to be merged with
the Company (the "Merger") in a transaction in which the stockholders of the
Purchaser will own all the stock of the corporation which results from the
Merger (essentially, the Company), and the other stockholders of the Company
will receive the same amount of cash per Share as is paid for Shares tendered in
response to the Offer (unless particular stockholders elect to exercise
statutory rights to demand appraisal of their Common Shares). If, after the
Purchaser purchases all the Shares which are properly tendered in response to
the Offer and not withdrawn, the Purchaser and its stockholders do not own at
least 85% of the outstanding Shares, the Purchaser will not cause the Merger to
take place and will not for at least three years engage in any other business
combination with the Company unless the business combination is approved by the
Company's Board of Directors and by holders of 66 2/3% of the Shares the
Purchaser and its affiliates do not own. At the effective time of the Merger,
each outstanding Share (other than Shares held in the treasury of the Company or
by any wholly owned subsidiary of the Company and Shares owned by the Purchaser
and its affiliates or held by shareholders, if any, who are entitled to and who
properly exercise dissenters' rights under Delaware law) will be converted into
the right to receive an amount in cash equal to the Offer Price. The Three
Cities Funds have guaranteed all the Purchaser's obligations to make payments
under the Merger Agreement.
In all cases, payment for Shares tendered and accepted for payment pursuant
to the Offer will be made only after timely receipt by the Depositary of the
certificates evidencing such Shares or timely confirmation of a book-entry
transfer of such Shares into the Depositary's account at the Book-Entry Transfer
Facility (as defined in the Offer to Purchase) pursuant to the procedures set
forth in the Offer to Purchase, a Letter of Transmittal (or a facsimile
thereof), properly completed and duly executed, with any required signature
guarantees or an Agent's Message (as defined in the Offer to Purchase) in
connection with a book-entry transfer, and any other documents required by the
Letter of Transmittal.
If a holder of Shares wishes to tender Shares, but cannot deliver such
holder's certificates or other required documents, or cannot comply with the
procedure for book-entry transfer, prior to the expiration of the Offer, a
tender of Shares may be effected by following the guaranteed delivery procedure
described in Section 9 of the Offer to Purchase.
The Purchaser will not pay any fees or commissions to any broker, dealer or
other person (other than the Information Agent as described in the Offer to
Purchase) in connection with the solicitation of tenders of Shares pursuant to
the Offer. However, the Purchaser will reimburse you for customary mailing and
handling expenses incurred by you in forwarding any of the enclosed materials to
your clients. The Purchaser will pay or cause to be paid any stock transfer
taxes payable with respect to the transfer of Shares to it, except as otherwise
provided in Instruction 6 of the Letter of Transmittal.
Any questions or requests for assistance may be directed to the Information
Agent at its telephone numbers and address set forth on the back cover of the
Offer to Purchase. Additional copies of the enclosed material may be obtained
from the Information Agent at its address and telephone numbers set forth on the
back cover of the Offer to Purchase.
Very truly yours,
D. F. King & Co., Inc.
NOTHING CONTAINED HEREIN OR IN THE ENCLOSED DOCUMENTS SHALL CONSTITUTE YOU OR
ANY OTHER PERSON THE AGENT OF THE THREE CITIES FUNDS, THE PURCHASER, THE
COMPANY, THE INFORMATION AGENT OR THE DEPOSITARY, OR OF ANY AFFILIATE OF ANY OF
THEM, OR AUTHORIZE YOU OR ANY OTHER PERSON TO USE ANY DOCUMENT OR TO MAKE ANY
STATEMENT ON BEHALF OF ANY OF THEM IN CONNECTION WITH THE OFFER OTHER THAN THE
ENCLOSED DOCUMENTS AND THE STATEMENTS CONTAINED THEREIN.
<PAGE> 1
OFFER TO PURCHASE FOR CASH
ALL OUTSTANDING SHARES OF COMMON STOCK
(INCLUDING THE ASSOCIATED PREFERRED STOCK PURCHASE RIGHTS)
OF
COHR INC.
AT
$5.375 NET PER SHARE (OR UNDER SOME CIRCUMSTANCES,
$6.375 NET PER SHARE)
BY
TCF ACQUISITION CORPORATION
WHICH IS OWNED
BY
THREE CITIES FUND II, L.P. AND
THREE CITIES OFFSHORE II C.V.
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY
TIME, ON WEDNESDAY, FEBRUARY 3, 1999, UNLESS THE OFFER IS EXTENDED.
To Our Clients:
Enclosed for your consideration is an Offer to Purchase, dated January 4,
1999 (the "Offer to Purchase"), and a related Letter of Transmittal (the terms
and conditions of which, together with any supplements or amendments thereto,
collectively constitute the "Offer") relating to the offer by TCF Acquisition
Corporation, a Delaware corporation (the "Purchaser") which is currently owned
by Three Cities Fund II, L.P., a Delaware limited partnership, and Three Cities
Offshore II C.V., a Netherlands Antilles partnership, to purchase all
outstanding shares of common stock, par value $.01 per share (together with the
associated preferred stock purchase rights the "Shares"), of COHR Inc., a
Delaware corporation (the "Company"), at a price of $5.375 per Share (or under
some circumstances, $6.375), net to the seller in cash, upon the terms and
subject to the conditions set forth in the Offer to Purchase and in the related
Letter of Transmittal.
WE ARE THE HOLDER OF RECORD OF SHARES HELD BY US FOR YOUR ACCOUNT. A TENDER
OF SUCH SHARES CAN BE MADE ONLY BY US AS THE HOLDER OF RECORD AND PURSUANT TO
YOUR INSTRUCTIONS. THE LETTER OF TRANSMITTAL IS FURNISHED TO YOU FOR YOUR
INFORMATION ONLY AND CANNOT BE USED BY YOU TO TENDER SHARES HELD BY US FOR YOUR
ACCOUNT.
Accordingly, we request instructions as to whether you wish to have us
tender, on your behalf, any or all Shares held by us for your account pursuant
to the terms and conditions set forth in the Offer.
Please note the following:
1. The Offer Price is $5.375 per Share, net to you in cash, upon the
terms and subject to the conditions set forth in the Offer. The Offer Price
will be increased by $1.00 per Share if pending Stockholder Suits (as
defined in the Offer to Purchase) against the Company are settled on a
basis which will not require the Company to pay more
<PAGE> 2
than $3.0 million, net of insurance proceeds. If the Offer Price is
increased (i) the increased amount will be paid to all stockholders who
tender Common Shares, including those who tender Shares before the
Stockholder Suits are settled, and (ii) the Purchaser will extend the
Expiration Time until at least 10 business days after it publicly announces
the increased Offer Price.
2. The Board of Directors of the Company has unanimously approved the
Offer and the Merger (as defined below) and determined that the terms of
the Offer and the Merger are fair to, and in the best interests of, the
stockholders of the Company and unanimously recommends that the
stockholders of the Company accept the Offer and tender their Shares.
3. The Offer is being made for all outstanding Shares.
4. If, after the Purchaser purchases all the Shares which are
properly tendered in response to the Offer and not withdrawn, the
Purchaser, the Three Cities Funds and any other stockholders of the
Purchaser own at least 85% of the outstanding Common Shares, the Purchaser
and its stockholders will take all steps in their power (including voting
their Common Shares) to cause the Purchaser to be merged with the Company
(the "Merger") in a transaction in which the stockholders of the Purchaser
will own all the stock of the corporation which results from the Merger
(essentially, the Company), and the other stockholders of the Company will
receive the same amount of cash per Share as is paid for Shares tendered in
response to the Offer (unless particular stockholders elect to exercise
statutory rights to demand appraisal of their Common Shares). If, after the
Purchaser purchases all the Shares which are properly tendered in response
to the Offer and not withdrawn, the Purchaser and its stockholders do not
own at least 85% of the outstanding Shares, the Purchaser will not cause
the Merger to take place and will not for at least three years engage in
any other business combination with the Company unless the business
combination is approved by the Company's Board of Directors and by holders
of at least 66 2/3% of the Shares the Purchaser and its affiliates do not
own.
5. The Offer is conditioned upon, among other things, (1) the
expiration or termination of all waiting periods imposed by the
Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, and the
regulations thereunder, and (2) the satisfaction or waiver of certain
conditions to the obligations of the Purchaser and the Company to
consummate the Offer and the transactions contemplated by the Merger
Agreement. The Offer is not conditioned on a minimum number of Shares being
tendered in the Offer, nor is it conditioned on the Purchaser's obtaining
financing or on there being no material adverse change regarding the
Company while the Offer is pending.
6. Tendering stockholders will not be obligated to pay brokerage fees
or commissions or, except as otherwise provided in Instruction 6 of the
Letter of Transmittal, stock transfer taxes on the purchase of Shares by
the Purchaser pursuant to the Offer.
7. The Offer and withdrawal rights will expire at 12:00 midnight, New
York City time, on February 3, 1999, unless the Offer is extended in
accordance with the terms of the Merger Agreement. At the Company's
request, the Purchaser will extend the Offer by up to 120 days (and, under
some circumstances, up to 210 days) to permit the Stockholder Suits to be
settled and the settlement to receive preliminary Court approval.
If you wish to have us tender any or all of the Shares held by us for your
account, please so instruct us by completing, executing, detaching and returning
to us the instruction form set forth below. If you authorize the tender of your
Shares, all such Shares will be tendered unless otherwise specified below. An
envelope to return your instructions to us is enclosed. Your instructions should
be forwarded to us in ample time to permit us to submit a tender on your behalf
prior to the expiration of the Offer.
For purposes of the Offer, the Purchaser shall be deemed to have accepted
for payment, and thereby purchased, tendered Shares, if, as and when the
Purchaser gives oral or written notice to the Depositary of the Purchaser's
acceptance of such Shares for payment. Upon the terms and subject to the
conditions of the Offer, payment for Shares purchased pursuant to the Offer will
in all cases be made only after timely receipt by IBJ Schroder Bank & Trust
Company (the
2
<PAGE> 3
"Depositary") of (a) Share Certificates (or a timely Book-Entry Confirmation (as
defined in the Offer to Purchase) with respect to such Shares) into the account
maintained by the Depositary at the Depository Trust Company (the "Book-Entry
Transfer Facility"), pursuant to the procedures set forth in Section 9 of the
Offer to Purchase, (b) the Letter of Transmittal (or a facsimile thereof),
properly completed and duly executed, with any required signature guarantees or
an Agent's Message (as defined in the Offer to Purchase), in connection with a
book-entry delivery, and (c) any other documents required by the Letter of
Transmittal. Accordingly, payment may not be made to all tendering stockholders
at the same time depending upon when certificates for or Book Entry
Confirmations into the Depositary's account at the Book-Entry Transfer Facility
are actually received by the Depositary. UNDER NO CIRCUMSTANCES WILL INTEREST BE
PAID ON THE PURCHASE PRICE OF THE SHARES TO BE PAID BY THE PURCHASER, REGARDLESS
OF ANY EXTENSION OF THE OFFER OR ANY DELAY IN MAKING SUCH PAYMENT.
The Offer is not being made to (nor will tenders be accepted from or on
behalf of) holders of Shares residing in any jurisdiction in which the making of
the Offer or the acceptance thereof would not be in compliance with the laws of
such jurisdiction. In any jurisdiction where securities, blue-sky or other laws
require the Offer to be made by a licensed broker or dealer, the Offer shall be
deemed to be made on behalf of the Purchaser by one or more registered brokers
or dealers that are licensed under the laws of such jurisdiction.
3
<PAGE> 4
INSTRUCTIONS WITH RESPECT TO THE OFFER TO PURCHASE
FOR CASH ALL OUTSTANDING SHARES OF COMMON STOCK
OF
COHR INC.
The undersigned acknowledge(s) receipt of your letter and the enclosed
Offer to Purchase, dated January 4, 1999, and the related Letter of Transmittal
in connection with the offer by TCF Acquisition Corporation, a Delaware
corporation (the "Purchaser") which is currently owned by Three Cities Fund II,
L.P., a Delaware corporation, and Three Cities Offshore II C.V., a Netherlands
Antilles partnership, to purchase all outstanding shares of common stock, par
value $.01 per share (the "Shares"), of COHR Inc., a Delaware corporation.
This will instruct you to tender to the Purchaser the number of Shares
indicated below (or if no number is indicated below, all Shares) which are held
by you for the account of the undersigned, upon the terms and subject to the
conditions set forth in the Offer.
Number of Shares to Be Tendered: Date:
------------------ ---------------------
SIGN HERE
Signature(s)
- --------------------------------------------------------------------------------
Print Name(s)
- --------------------------------------------------------------------------------
Print Address(es)
- --------------------------------------------------------------------------------
Area Code and Telephone Number(s)
- ------------------------------------------------------------------------------
Taxpayer Identification
or Social Security Numbers(s)
- --------------------------------------------------------------------------------
4
<PAGE> 1
GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION
NUMBER ON SUBSTITUTE FORM W-9
GUIDELINES FOR DETERMINING THE PROPER IDENTIFICATION NUMBER TO GIVE THE PAYER.
SOCIAL SECURITY NUMBERS HAVE NINE DIGITS SEPARATED BY TWO HYPHENS: I.E.
000-00-0000. EMPLOYER IDENTIFICATION NUMBERS HAVE NINE DIGITS SEPARATED BY ONLY
ONE HYPHEN: 00-0000000. THE TABLE BELOW WILL HELP DETERMINE THE NUMBER TO GIVE
THE PAYER.
<TABLE>
<C> <S> <C>
- ------------------------------------------------------------
GIVE THE
FOR THIS TYPE OF ACCOUNT: SOCIAL SECURITY
NUMBER OF--
- ------------------------------------------------------------
1. An individual's account The individual
2. Two or more individuals (joint The actual owner of
account) the account or, if
combined funds, the
first individual on
the account(1)
3. Custodian account of a minor The minor(2)
(Uniform Gift to Minors Act)
4. a. The usual revocable savings The grantor-
trust account (grantor is also trustee(1)
trustee)
b. So-called trust account that is The actual owner(1)
not a legal or valid trust
under state law
5. Sole proprietorship account The owner(3)
6. Sole proprietorship The owner(3)
7. A valid, estate, or pension trust The legal entity
(Do not furnish the
identifying number
of the personal
representative or
trustee unless the
legal entity itself
is not designated
in the account
title.)(4)
- ------------------------------------------------------------
- ------------------------------------------------------------
GIVE THE EMPLOYER
FOR THIS TYPE OF ACCOUNT: IDENTIFICATION
NUMBER OF--
- ------------------------------------------------------------
8. Corporate account The corporation
9. Religious, charitable or The organization
educational organization account
10. Partnership account held in the The partnership
name of the partnership
11. Association, club, or other tax- The organization
exempt organization
12. A broker or registered nominee The broker or
nominee
13. Account with the Department of The public entity
Agriculture in the name of a
public entity (such as a state or
local government, school district
or prison) that receives
agricultural program payments
- ------------------------------------------------------------
</TABLE>
(1) List first and circle the name of the person whose number you furnish.
(2) Circle the minor's name and furnish the minor's social security number.
(3) You must show your individual name, but you may also enter your business or
"doing business as" name. You may use either your social security number or
employer identification number.
(4) List first and circle the name of the legal trust, estate, or pension trust.
NOTE: If no name is circled when there is more than one name, the number will be
considered to be that of the first name listed.
<PAGE> 2
GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION
NUMBER ON SUBSTITUTE FORM W-9
OBTAINING A NUMBER
If you do not have a taxpayer identification number or you don't know your
number, obtain Form SS-5, Application for a Social Security Number Card (for
individuals), or Form SS-4, Application for Employer Identification Number (for
business and all other entities), at the local office of the Social Security
Administration or the Internal Revenue Service.
To complete Substitute Form W-9 if you do not have a taxpayer identification
number, write "Applied For" in the space for the taxpayer identification number
in Part I, sign and date the Form, and give it to the requester. Generally, you
will then have 60 days to obtain a taxpayer identification number and furnish it
to the requester. If the requester does not receive your taxpayer identification
number within 60 days, backup withholding, if applicable, will begin and
continue until you furnish your taxpayer identification number to the requester.
PAYEES EXEMPT FROM BACKUP WITHHOLDING
The following is a list of payees exempt from backup withholding. For interest
and dividends, all listed payees are exempt except item (9). For broker
transactions, payees listed in items (1) through (13) and a person registered
under the Investment Advisers Act of 1940 who regularly acts as a broker are
exempt. Payments subject to reporting under sections 6041 and 6041A are
generally exempt from backup withholding only if made to payees described in
items (1) through (7), except a corporation that provides medical and health
care services or bills and collects payments for such services is not exempt
from backup withholding. Only payees described in items (2) through (6) are
exempt from backup withholding for barter exchange transactions, patronage
dividends, and payments by certain fishing boat operators.
(1) A corporation
(2) An organization exempt from tax under section 501(a), or an IRA, or a
custodial account under section 403(b)(7).
(3) The United States or any of its agencies or instrumentalities.
(4) A state, the District of Columbia, a possession of the United States, or
any of their political subdivisions or instrumentalities.
(5) A foreign government or any of its political subdivisions, agencies, or
instrumentalities.
(6) An international organization or any of its agencies or
instrumentalities.
(7) A foreign central bank of issue.
(8) A dealer in securities or commodities required to register in the United
States or a possession of the United States.
(9) A futures commission merchant registered with the Commodity Futures
Trading Commission.
(10) A real estate investment trust.
(11) An entity registered at all times during the tax year under the
Investment Company Act of 1940.
(12) A common trust fund operated by a bank under section 584(a).
(13) A financial institution.
(14) A middleman known in the investment community as a nominee or listed in
the most recent publication of the American Society of Corporate
Securities, Inc., Nominee List.
(15) A trust exempt from tax under section 664 or described in section 4947.
Payments of dividends and patronage dividends not generally subject to backup
withholding include the following:
- Payments to nonresident aliens subject to withholding under Section 1441.
- Payments to partnership not engaged in a trade or business in the United
States and which have at least one nonresident partner.
- Payments of patronage dividends where the amount received is not paid in
money.
- Payments made by certain foreign organizations.
Payments of interest not generally subject to backup withholding include the
following:
- Payments of interest on obligations issued by individuals. Note: You may be
subject to backup withholding if this interest is $600 or more and is paid
in the course of the payer's trade or business and you have not provided
your correct taxpayer identification number to the payer.
- Payments of tax-exempt interest (including exempt-interest dividends under
section 852).
- Payments described in section 6049(b)(5) to non-resident aliens.
- Payments on tax-free covenant bonds under section 1451 of the Code.
- Payments made by certain foreign organizations.
- Mortgage interest paid to you.
EXEMPT PAYEES DESCRIBED ABOVE SHOULD FILE SUBSTITUTE FORM W-9 TO AVOID POSSIBLE
ERRONEOUS BACKUP WITHHOLDING. FILE THIS FORM WITH THE PAYER. FURNISH YOUR
TAXPAYER IDENTIFICATION NUMBER, WRITE "EXEMPT" ON THE FACE OF THE FORM, SIGN AND
DATE THE FORM AND RETURN IT TO THE PAYER.
Certain payments other than interest, dividends, and patronage dividends, that
are not subject to information reporting are also not subject to backup
withholding. For details, see Sections 6041, 6041(a), 6042, 6044, 6045, 6049 and
6050A and 6050N of the Code and the regulations promulgated therein.
PRIVACY ACT NOTICE.--Section 6109 requires recipients of dividends, interest, or
other payments to give taxpayer identification numbers to payers who must report
the payments to IRS. The IRS uses the numbers for identification purposes and to
help verify the accuracy of your tax return. Payers must be given the numbers
whether or not recipients are required to file tax returns. Payers must
generally withhold 31% of taxable interest, dividends, and certain other
payments to a payee who does not furnish a taxpayer identification number to a
payer. Certain penalties may also apply.
PENALTIES
(1) PENALTY FOR FAILURE TO FURNISH TAXPAYER IDENTIFICATION NUMBER.--If you fail
to furnish your taxpayer identification number to a payer, you are subject to a
penalty of $50 for each such failure unless your failure is due to reasonable
cause and not to willful neglect.
(2) CIVIL PENALTY FOR FALSE INFORMATION WITH RESPECT TO WITHHOLDING.--If you
make a false statement with no reasonable basis which results in no imposition
of backup withholding, you are subject to penalty of $500.
(3) CRIMINAL PENALTY FOR FALSIFYING INFORMATION.--Willfully falsifying
certifications or affirmations may subject you to criminal penalties including
fines and/or imprisonment.
FOR ADDITIONAL INFORMATION CONTACT YOUR TAX
CONSULTANT OR THE INTERNAL REVENUE SERVICE
<PAGE> 1
This announcement is neither an offer to purchase nor a solicitation of an
offer to sell Shares. The Offer is made solely by the Offer to Purchase
dated January 4, 1999, and the related Letter of Transmittal and 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
or acceptance of the Offer would not be in compliance
with the laws of such jurisdiction.
Notice of Offer to Purchase for Cash
All Outstanding Shares of Common Stock
(including the associated Preferred Stock Purchase Rights)
of
COHR Inc.
at
$5.375 Net Per Share
(Or, Under Some Circumstances,
$6.375 Net Per Share)
by
TCF Acquisition Corporation
which is owned by
Three Cities Fund II, L.P.
and
Three Cities Offshore II C.V.
TCF Acquisition Corporation, a Delaware corporation (the "Purchaser"), which is
currently owned by Three Cities Fund II, L.P., a Delaware limited partnership,
and Three Cities Offshore II C.V., a Netherlands Antilles partnership (the
"Three Cities Funds"), is offering to purchase for cash all outstanding shares
of common stock, par value $0.01 per share (the "Shares"), of COHR Inc., a
Delaware corporation (the "Company"), at a price (the "Offer Price") of $5.375
per Share, net to the seller (which will be increased to $6.375 per share if
pending Stockholder Suits (as defined in the Offer to Purchase) are settled
before the Offer expires on a basis which will not require the Company to pay
more than $3.0 million, net of insurance proceeds), without interest, on the
terms and subject to the conditions set forth in an Offer to Purchase, dated
January 4, 1999 (the "Offer to Purchase") and in the related Letter of
Transmittal (the terms and conditions of which, together with any supplements or
amendments thereto, collectively constitute the "Offer").
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT
12:00 MIDNIGHT, NEW YORK CITY TIME, ON WEDNESDAY,
FEBRUARY 3, 1999, UNLESS THE OFFER IS EXTENDED.
<PAGE> 2
The Offer is not conditioned on any minimum number of Shares being tendered. Nor
is it conditioned on the ability of the Purchaser to obtain financing or on
absence of material adverse change regarding the Company while the Offer is
pending. However, it is subject to the satisfaction or waiver of some
conditions.
The Offer is being made pursuant to an Agreement and Plan of Merger, dated as of
December 24, 1998 (the "Merger Agreement"), pursuant to which, if after the
Purchaser purchases the Shares which are tendered in response to the Offer, the
Purchaser and its stockholders (including the Three Cities Funds) own at least
85% of the Company's outstanding Common Shares, the Purchaser will be merged
into the Company in a transaction in which the Company will become wholly owned
by the Purchaser's stockholders, and the Shares not owned by the Purchaser will
be converted into the right to receive cash equal to the per share amount which
is paid for Shares tendered in response to the Offer (which will be at least
$5.375 per share).
THE BOARD OF DIRECTORS OF THE COMPANY (THE "BOARD") HAS UNANIMOUSLY APPROVED THE
OFFER AND THE MERGER AND DETERMINED THAT THE TERMS OF THE OFFER AND THE MERGER
ARE FAIR TO, AND IN THE BEST INTERESTS OF, THE STOCKHOLDERS OF THE COMPANY. THE
BOARD UNANIMOUSLY RECOMMENDS THAT STOCKHOLDERS OF THE COMPANY ACCEPT THE OFFER
AND TENDER THEIR SHARES.
The Offer will expire at 12:00 midnight on February 3, 1999, unless it is
extended. The Purchaser has the right to extend the Offer to not later than
March 5, 1999. Also, at the request of the Company's Board, the Purchaser will
extend the Offer to not later than May 4, 1999 in order to permit settlement of
pending Stockholder Suits and preliminary Federal court approval of that
settlement, and if a settlement agreement is signed by May 4, 1999, the
Purchaser will, at the request of the Company's Board, extend the Offer to not
later than August 2, 1999 to provide time for the preliminary Federal court
approval to be obtained. If those Stockholder Suits are settled before the Offer
expires on a basis which will not require the Company to pay more than $3.0
million, net of insurance proceeds, the Offer Price will be increased to $6.375
per Share. The Purchaser will make a public announcement of any extension not
later than 9:00 a.m. New York City time on the business day after the previously
scheduled Expiration Time. During any extension, all Shares which had previously
been tendered and not withdrawn will remain tendered, subject to the right of a
tendering stockholder to withdraw tendered Shares.
For purposes of the Offer, the Purchaser will be deemed to accept for payment,
and thereby purchase, all the Shares which are properly tendered and not
properly withdrawn when and if the Purchaser gives oral or written notice to IBJ
Schroder Bank & Trust Company (the "Depositary") that the Purchaser is accepting
those Shares for payment. Payment for Shares purchased pursuant to the Offer
will be made by deposit of the purchase price with the Depositary, which will
act as agent for tendering stockholders for the purpose of receiving the payment
from the Purchaser and transmitting payment to tendering stockholders whose
Shares have been accepted for payment. In all cases, payment for Shares
purchased pursuant to the Offer will be made only after timely receipt by the
Depositary of (a) certificates representing shares (or a timely Book-Entry
Confirmation of transfer of Shares into an account maintained by the Depositary
at The Depository Trust Company, pursuant to the procedures set forth in Section
9 of the Offer to Purchase, (b) a Letter of Transmittal (or a facsimile of one),
properly completed and duly executed, with any required signature guarantees or
an Agent's Message (as defined in the Offer to Purchase), in connection with a
book-entry delivery, and (c) any other documents required by the Letter of
Transmittal. Accordingly, payment may not be made to all tendering stockholders
at the same time, depending upon when certificates or Book-Entry Confirmations
are actually received by the Depositary. UNDER NO CIRCUMSTANCES WILL INTEREST BE
PAID ON THE PURCHASE PRICE OF THE SHARES, REGARDLESS OF ANY EXTENSION OF THE
OFFER OR ANY DELAY IN PAYING FOR SHARES.
Questions and requests for assistance may be directed to the
Information Agent as set forth below. Requests for copies of the Offer to
Purchase and the related Letter of Transmittal and all other tender offer
materials may be directed to the Information Agent,
<PAGE> 3
and copies will be furnished promptly at the Purchaser's expense. The Purchaser
will not pay any fees or commissions to any broker or dealer or any other person
(other than the Information Agent) for soliciting tenders of Shares pursuant to
the Offer.
The Information Agent for the Offer is:
D.F. KING & CO., INC.
77 Water Street
New York, New York 10005
Banks and Brokers Call Collect: (212) 269-5550
ALL OTHERS CALL TOLL FREE: (800) 758-5378
January 4, 1999
<PAGE> 1
PLAN AND AGREEMENT OF MERGER
DATED
DECEMBER 24, 1998
BETWEEN
COHR INC.
AND
TCF ACQUISITION CORPORATION
<PAGE> 2
<TABLE>
<S> <C>
Article 1 THE TENDER OFFER................................................... 1
1.1 The Tender Offer....................................................... 1
1.2 Company Action......................................................... 4
Article 2 THE MERGER......................................................... 6
2.1 Agreement to Effect Merger............................................. 6
2.2 The Merger............................................................. 6
2.3 Certificate of Incorporation........................................... 7
2.4 By-Laws................................................................ 7
2.5 Directors.............................................................. 7
2.6 Officers............................................................... 7
2.7 Stock of the Company................................................... 7
2.8 Stock of Acquisition................................................... 8
2.9 Stockholders Meeting................................................... 8
2.10 Voting by Acquisition.................................................. 9
2.11 Dissenting Shares...................................................... 9
2.12 Payment for Shares..................................................... 10
2.13 Options and Warrants................................................... 12
Article 3 EFFECTIVE TIME OF MERGER........................................... 12
3.1 Date of the Merger..................................................... 12
3.2 Execution of Certificate of Merger..................................... 12
3.3 Effective Time of the Merger........................................... 13
Article 4 REPRESENTATIONS AND WARRANTIES..................................... 13
4.1 Representations and Warranties of Acquisition.......................... 13
4.2 Representations and Warranties of the Company.......................... 16
4.3 Termination of Representations and Warranties.......................... 23
Article 5 ACTIONS PRIOR TO THE MERGER........................................ 23
5.1 Activities Until Effective Time........................................ 23
5.2 HSR Act Filings........................................................ 25
5.3 Proxy Statements and Stockholders' Meetings............................ 25
5.4 No Solicitation of Offers; Notice of Proposals from Others............. 26
5.5 Acquisition's Efforts to Fulfill Conditions............................ 27
5.6 Company's Efforts to Fulfill Conditions................................ 27
Article 6 CONDITIONS PRECEDENT TO MERGER..................................... 27
6.1 Conditions to the Company's Obligations................................ 27
6.2 Conditions to Acquisition's Obligations................................ 28
</TABLE>
<PAGE> 3
<TABLE>
<S> <C>
Article 7 TERMINATION........................................................ 29
7.1 Right to Terminate..................................................... 29
7.2 Manner of Terminating Agreement........................................ 33
7.3 Effect of Termination.................................................. 33
Article 8 ABSENCE OF BROKERS................................................. 33
8.1 Representations and Warranties Regarding Brokers and Others............ 33
Article 9 OTHER AGREEMENTS................................................... 34
9.1 Indemnification for Prior Acts......................................... 34
9.2 Agreement Not To Merge Under Certain Conditions........................ 35
9.3 Agreement Regarding Directors.......................................... 36
9.4 Agreement to Vote or Sell Shares....................................... 36
9.5 Control of Stockholder Suits........................................... 37
Article 10 GENERAL............................................................ 37
10.1 Expenses............................................................... 37
10.2 Access to Properties, Books and Records................................ 37
10.3 Press Releases......................................................... 38
10.4 Entire Agreement....................................................... 38
10.5 Effect of Disclosures.................................................. 38
10.6 Captions............................................................... 38
10.7 Prohibition Against Assignment......................................... 39
10.8 Notices and Other Communications....................................... 39
10.9 Governing Law.......................................................... 41
10.10 Amendments............................................................. 41
10.11 Counterparts........................................................... 41
</TABLE>
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PLAN AND AGREEMENT OF MERGER
This is a Plan and Agreement of Merger (the "Agreement") dated as of
December 24, 1998 between COHR Inc. (the "Company"), a Delaware corporation, and
TCF Acquisition Corporation ("Acquisition"), a Delaware corporation.
ARTICLE 1
THE TENDER OFFER
1.1 The Tender Offer. (a) On the date of this Agreement, Three Cities
Fund II L.P. and Three Cities Offshore II C.V. (the "Three Cities Funds") are
purchasing from funds managed by Franklin Research, Inc. (the "Franklin Funds")
and by Strong Capital Management, Inc. (the "Strong Funds" and, together with
the Franklin Funds, the "Funds") substantially all the stock of the Company
which the Funds own. Not later than the first business day after the date of
this Agreement, Acquisition will make a public announcement of an offer (the
"Tender Offer") to purchase any and all the outstanding common stock of the
Company ("Common Stock") at a price per share in cash (the "Tender Offer Price")
of $5.375. Notwithstanding the foregoing, the Tender Offer Price will be subject
to possible increase as provided in subparagraph (d).
(b) Within five business days after the public announcement of the
Tender Offer, Acquisition will file with the Securities and Exchange Commission
("SEC") a Tender Offer Statement on Schedule 14D-1 with respect to the Tender
Offer (together with any amendments or supplements, the "Schedule 14D-1"),
including forms of an offer to purchase, a letter of transmittal and a summary
advertisement (the Schedule 14D-1 and the documents included in it by which the
Tender Offer will be made, as they may be supplemented or amended, being the
"Offer Documents"). Promptly after that, Acquisition will communicate the Tender
Offer to the record holders and beneficial owners of the Common Stock. Each of
Acquisition and the Company will promptly correct any information provided by it
for use in the Offer Documents if
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and to the extent that information becomes incomplete or inaccurate in any
material respect, and Acquisition will supplement or amend the Offer Documents
to the extent required by the Securities Exchange Act of 1934, as amended (the
"Exchange Act") and the rules under it, file the amended or supplemented Offer
Documents with the SEC and, if required, disseminate the amended Offer Documents
to the Company's stockholders. The Company and its counsel will be given a
reasonable opportunity to review the Offer Documents and any amendments or
supplements to them before they are filed with the SEC or disseminated to the
Company's stockholders.
(c) The day on which the Tender Offer expires (the "Expiration
Date") will not be earlier than 20 business days, and (except as provided in
subparagraphs (d) and (e)) will not be later than 60 days, after the day on
which the Schedule 14D-1 is filed with the SEC.
(d) If the Company, with the approval of its Board of Directors
(the "Board"), requests that Acquisition extend the Expiration Date in order to
permit the Company to attempt to settle Sherleigh Associates Inc. Profit Sharing
Plan v. Cohr, Inc., et. al. in the United States District Court, Central
District of California, 988-3028 JSL (BQRx); Leonard Leeds v. Umesh Malhotra,
et. al. in the Superior Court of the State of California, County of Los Angeles,
BC 189490; Marcia Zabronsky, et. al. v. Cohr, Inc. et. al. in the United States
District Court, Central District of California, Western Division, 98-3493 R
(Ex); Robert Schug v. Paul Chopra, et. al. in the Superior Court of the State of
California, County of Los Angeles, BC 190933; Charles Birdu v. Cohr, Inc. et. al
in the United States District Court, Central District of California, 98-4177
WMB(AJWx) and any other suits brought by or on behalf of stockholders of the
Company relating to the occurrences which are the subject of those five suits
(together, the "Stockholder Suits"), Acquisition will extend the Expiration Date
to a date designated by the Company which is not more than 120 days after the
day on which the Schedule 14D-1 is filed with the SEC, and if, within that 120
day period, all the counsel for the plaintiffs and all the counsel for the
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<PAGE> 6
defendants in the Stockholder Suits enter into a settlement agreement relating
to settlement of all the Stockholder Suits on a basis which will not require the
Company to pay (net of any insurance proceeds to which the Company's insurers
have agreed in writing) more than a total of $3,000,000 for damages,
indemnification of other defendants, fees and expenses of the plaintiffs'
counsel, fees and expenses of the defendants' counsel and the Company's other
out of pocket expenses, but not including any sum paid by the Company as
settlement proceeds or otherwise to Acquisition, to either of the Three Cities
Funds or to any other stockholders of Acquisition which are affiliated with the
Three Cities Funds, Acquisition will, at the request of the Company made within
the 120 day period, further extend the Expiration Date to a date designated by
the Company which is not more than 210 days after the day on which the Schedule
14D-1 is filed with the SEC. If, before the day on which the Tender Offer, as
extended, expires, the United States District Court, Central District of
California, enters an order giving preliminary approval of the settlement agreed
to in the relevant settlement agreement, Acquisition will (i) increase the
Tender Offer Price by $1.00 per share and (ii) extend the Expiration Date until
at least 10 business days after Acquisition publicly announces the increased
Tender Offer Price.
(e) Subject to the conditions to the Tender Offer set forth on
Exhibit 1.1-E and the other conditions set forth in this Agreement, Acquisition
will, not later than five days after the Expiration Date, accept for payment and
pay for all the shares of Common Stock which are properly tendered in response
to the Tender Offer and not withdrawn. The obligation of Acquisition to accept
for payment and pay for shares which are properly tendered and not withdrawn
will not be subject to any conditions other than those set forth on Exhibit
1.1-E. Acquisition will not (i) decrease the Tender Offer Price below that
described in subparagraphs (a) and (d), (ii) decrease the number of shares being
solicited in the Tender Offer, (iii) change the form of consideration payable in
the Tender Offer, (iv) modify or add to the conditions set
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<PAGE> 7
forth on Exhibit 1.1-E or (v) extend the Expiration Date to a day which is more
than 60 days after the day on which the Schedule 14D-1 is filed with the SEC,
except that (A) the Expiration Date may be extended as provided in subparagraph
(d), (B) if the waiting periods under the Hart-Scott-Rodino Antitrust
Improvements Act of 1976, as amended (the "HSR Act") have not expired or been
terminated at least three days before the Expiration Date, the Expiration Date
may be extended until 10 business days after the day on which the waiting
periods under the HSR Act expire or are terminated, (C) if the Tender Offer is
modified to increase the Tender Offer Price or in any other manner permitted by
this Agreement, the Expiration Date may be extended until 10 business days after
the day on which Acquisition makes a public announcement of the modification,
(D) if anyone other than Acquisition makes a tender offer for Common Stock
before the Tender Offer expires, Acquisition may extend the Expiration Date
until not more than 10 business days after the other tender offer expires, and
(E) if Acquisition is prevented by an order of a court or other governmental
agency from accepting shares which are tendered in response to the Tender Offer,
Acquisition may extend the Expiration Date until 10 business days after
Acquisition is able to accept shares without violating any order of any court or
other governmental agency.
1.2 Company Action. (a) The Company approves of and consents to the
Tender Offer and represents and warrants that the Board has (i) determined that
this Agreement and the transactions contemplated by it are fair to and in the
best interests of the Company and its stockholders, (ii) approved this Agreement
and the transactions contemplated by it, including the Three Cities Funds'
purchase of the stock of the Company which the Funds own, the Tender Offer and
the Merger (described in Article 2), and (iii) resolved to recommend that the
Company's stockholders accept the Tender Offer, tender their shares in response
to the Tender Offer, and adopt and approve this Agreement and the Merger.
Simultaneously with the execution of this Agreement, each of the directors and
executive officers of the Company has
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<PAGE> 8
agreed to tender and sell his or her shares of Common Stock in response to the
Tender Offer, except that directors and executive officers whose sales of their
shares in response to the Tender Offer might result in liability under Section
16(b) of the Exchange Act have agreed that if they do not tender and sell their
shares in response to the Tender Offer, they will vote their shares in favor of
the Merger. Notwithstanding anything contained in this subparagraph (a) or
elsewhere in this Agreement, if the Board, based upon written advice from its
counsel, determines, in good faith to withdraw, modify or amend the
recommendation, because the failure to do so could reasonably be expected to be
a breach of the directors' fiduciary duties under applicable law, that
withdrawal, modification or amendment will not constitute a breach of this
Agreement.
(b) The Company will file with the SEC, promptly after Acquisition
files the Schedule 14D-1, a Solicitation/Recommendation Statement on Schedule
14D-9 (together with any amendments or supplements, the "Schedule 14D-9")
containing the recommendations described in subparagraph (a) and will
disseminate the Schedule 14D-9 as required by Rule 14d-9 under the Exchange Act.
The Company and Acquisition each agrees to correct promptly any information
provided by it for use in the Schedule 14D-9 if and to the extent that
information is or becomes incomplete or inaccurate in any material respect and
the Company will file any corrected Schedule 14D-9 with the SEC and disseminate
the corrected Schedule 14D-9 to the Company's stockholders to the extent
required by the Exchange Act or the rules under it.
(c) In connection with the Tender Offer, the Company will promptly
furnish Acquisition with mailing labels, security position listings and any
other available listing or computer files containing the names and addresses of
the record holders or beneficial owners of shares of Common Stock as of a recent
date and the Company will furnish Acquisition with such additional information
and assistance (including, without limitation, updated lists of stockholders,
mailing labels and lists of securities positions) as Acquisition or its
representatives
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<PAGE> 9
may reasonably request in order to communicate the Tender Offer to the record
holders and beneficial owners of the Common Stock. Subject to the requirements
of applicable law, Acquisition will hold in confidence the information contained
in any such labels, listings or files, and will use that information only in
connection with the Tender Offer and the Merger. If this Agreement is
terminated, Acquisition will return to the Company the originals and all copies
of that information which are in Acquisition's possession.
ARTICLE 2
THE MERGER
2.1 Agreement to Effect Merger. If (a) the number of shares which are
owned by Acquisition, the Three Cities Funds and any other stockholders of
Acquisition after Acquisition purchases all the shares which are properly
tendered in response to the Tender Offer and not withdrawn, totals at least 85%
of all the Common Stock which is outstanding on the Expiration Date, and (b) the
conditions to the Merger set forth in Paragraph 6.2 are satisfied or waived,
Acquisition will take all steps in its power, including voting, and causing its
affiliates to vote, all the Common Stock beneficially owned by any of them in
favor of adoption of this Agreement and approval of the Merger, to cause
Acquisition to be merged into the Company (the "Merger") on the terms and with
the effects set forth in Paragraphs 2.2 through 2.8.
2.2 The Merger. In the Merger, Acquisition will be merged into the
Company, which will be the surviving corporation of the Merger (the "Surviving
Corporation"). Except as specifically provided in this Agreement, when the
Merger becomes effective, (i) the real and personal property, other assets,
rights, privileges, immunities, powers, purposes and franchises of the Company
will continue unaffected and unimpaired by the Merger, (ii) the separate
existence of Acquisition will terminate, and Acquisition's real and personal
property, other assets, rights, privileges, immunities, powers, purposes and
franchises will be merged into the
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Surviving Corporation, and (iii) the Merger will have the other effects
specified in Section 259 of the Delaware General Corporation Law (the "DGCL").
2.3 Certificate of Incorporation. From the Effective Time (described in
Paragraph 3.3) until subsequently amended (subject to Paragraph 9.1), the
Certificate of Incorporation of Acquisition immediately before the Effective
Time will be the Certificate of Incorporation of the Surviving Corporation, and
that Certificate of Incorporation, separate and apart from this Agreement, may
be certified as the Certificate of Incorporation of the Surviving Corporation.
2.4 By-Laws. At the Effective Time, the By-Laws of Acquisition
immediately before the Effective Time will be the By-Laws of the Surviving
Corporation, until they are altered, amended or repealed (subject to Paragraph
9.1).
2.5 Directors. The directors of Acquisition immediately before the
Effective Time will be the directors of the Surviving Corporation after the
Effective Time and will hold office in accordance with the By-Laws of the
Surviving Corporation for the respective terms shown on Exhibit 2.5.
2.6 Officers. The officers of the Company immediately before the
Effective Time will be the officers of the Surviving Corporation after the
Effective Time and will hold office at the pleasure of the Board of Directors of
the Surviving Corporation.
2.7 Stock of the Company. (a) Except as provided in subparagraph (b),
at the Effective Time each share of Common Stock which is outstanding
immediately before the Effective Time will be converted into and become the
right to receive a sum in cash equal to the Tender Offer Price (the "Merger
Price").
(b) Each share of Common Stock held in the treasury of the
Company, and each share of Common Stock held by Acquisition or by any direct or
indirect subsidiary of the
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Company, immediately before the Effective Time will, at the Effective Time, be
cancelled and cease to exist and no payment will be made with respect to any of
those shares.
2.8 Stock of Acquisition. At the Effective Time, each share of common
stock, par value $1.00 per share, of Acquisition ("Acquisition common stock")
which is outstanding immediately before the Effective Time will be converted
into and become one share of common stock of the Surviving Corporation
("Surviving Corporation Common Stock"). At the Effective Time, a certificate
which represented Acquisition common stock will automatically become and be a
certificate representing the number of shares of Surviving Corporation Common
Stock into which the Acquisition common stock represented by the certificate was
converted.
2.9 Stockholders Meeting. If the conditions described in clauses (a)
and (b) of Paragraph 2.1 are satisfied, and if approval by the Company's
stockholders is required by applicable law in order to consummate the Merger,
the Company will:
(a) hold a special meeting of its stockholders as soon as
practicable following the Expiration Date for the purpose of adopting this
Agreement and approving the Merger (the "Stockholders Meeting");
(b) as promptly as practicable after the Expiration Date, (i) file
with the SEC a proxy statement (the "Proxy Statement") and other proxy
soliciting materials relating to the Stockholders Meeting, (ii) respond promptly
to any comments made by the staff of the SEC with respect to the Proxy Statement
or other proxy soliciting materials, (iii) cause the Proxy Statement to be
mailed to its stockholders at the earliest practicable time following the
Expiration Date, and (iv) in all other respects, use its best efforts to cause
its stockholders to adopt this Agreement and approve the Merger; and
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(c) include in the Proxy Statement the recommendation of the Board
that the stockholders of the Company vote in favor of the adoption of this
Agreement and approve the Merger, unless the Board, based upon written advice
from its counsel, determines in good faith that the failure to amend or withdraw
that recommendation could reasonably be expected to be a breach of the
directors' fiduciary duties under applicable law.
2.10 Voting by Acquisition. Until (a) the earlier of the Expiration
Time or such time as this Agreement is terminated and (b) if the conditions
described in clauses (a) and (b) of Paragraph 2.1 are satisfied, the earlier of
the Effective Time or such time as this Agreement is terminated, (i) Acquisition
will not, and Acquisition will cause the Three Cities Funds not to, dispose of
any of stock of the Company (except to a parent or subsidiary of Acquisition
which agrees to be bound by Paragraph 2.1 and this Paragraph) and (ii)
Acquisition will, and Acquisition will cause the Three Cities Funds to, vote all
shares of Common Stock which Acquisition or the Three Cities Funds own or
otherwise have the power to vote as required by Paragraph 2.1.
2.11 Dissenting Shares. (a) Notwithstanding any provision of this
Agreement to the contrary, Common Stock that is outstanding immediately prior to
the Effective Time which is held by stockholders who have complied with Section
262 of the DGCL (including making a timely demand for appraisal and not voting
in favor of or consenting to the Merger) will not be converted into the right to
receive the Merger Price. Instead, if the Merger takes place, the Surviving
Corporation will pay the holders of those shares the fair value of the shares
determined as provided in Section 262 of the DGCL. Shares held by stockholders
who fail to perfect, or who otherwise properly withdraw or lose, their rights to
receive the fair value of their shares determined under Section 262 of the DGCL
will be deemed to have been converted, at the later of the Effective Time or the
time they withdraw or lose their rights to receive the fair value of their
shares, into the right to receive the Merger Price, without any interest.
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(b) The Company will promptly give Acquisition (i) notice of any
demands for appraisal received by the Company, any withdrawals of any such
demands, and any other instruments served pursuant to Section 262 of the DGCL
which the Company receives and (ii) the opportunity to direct all negotiations
and proceedings with respect to demands for appraisal under the DGCL. The
Company will not, except with the prior written consent of Acquisition, make any
payment with respect to any demands for payment of the fair value of shares or
offer to settle or settle any such demands.
2.12 Payment for Shares. (a) Prior to the Effective Time, Acquisition
will designate a bank or trust company to act as Paying Agent in connection with
the Merger (the "Paying Agent"). At, or immediately before, the Effective Time,
Acquisition will provide the Paying Agent with the funds necessary to make the
payments contemplated by Paragraph 2.7. Until used for that purpose, the funds
will be invested by the Paying Agent, as directed by Acquisition, in obligations
of or guaranteed by the United States of America or obligations of an agency of
the United States of America which are backed by the full faith and credit of
the United States of America, in commercial paper obligations rated A-1 or P-1
or better by Moody's Investors Services Inc. or Standard & Poors' Corporation,
or in deposit accounts, certificates of deposit or banker's acceptances of,
repurchase or reverse repurchase agreements with, or Eurodollar time deposits
purchased from, commercial banks with capital, surplus and undivided profits
aggregating more than $200 million (based on the most recent financial
statements of the banks which are then publicly available at the SEC or
otherwise).
(b) Promptly after the Effective Time, the Surviving Corporation will
cause the Paying Agent to mail to each person who was a record holder of Common
Stock at the Effective Time, a form of letter of transmittal for use in
effecting the surrender of stock certificates representing Common Stock
("Certificates") in order to receive payment of the Merger Price. When the
Paying Agent receives a Certificate, together with a properly completed and
executed
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letter of transmittal and any other required documents, the Paying Agent will
pay to the holder of the Certificate, or as otherwise directed in the letter of
transmittal, the Merger Price with regard to the shares represented by the
Certificate, and the Certificate will be cancelled. No interest will be paid or
accrued on the cash payable upon the surrender of Certificates. If payment is to
be made to a person other than the person in whose name a surrendered
Certificate is registered, the surrendered Certificate must be properly endorsed
or otherwise be in proper form for transfer, and the person who surrenders the
Certificate must provide funds for payment of any transfer or other taxes
required by reason of the payment to a person other than the registered holder
of the surrendered Certificate or establish to the satisfaction of the Surviving
Corporation that the tax has been paid. After the Effective Time, a Certificate
which has not been surrendered will represent only the right to receive the
Merger Price, without any interest.
(c) If a Certificate has been lost, stolen or destroyed, the
Surviving Corporation will accept an affidavit and indemnification reasonably
satisfactory to it instead of the Certificate.
(d) At any time which is more than six months after the Effective
Time, the Surviving Corporation may require the Paying Agent to deliver to it
any funds which had been made available to the Paying Agent and have not been
disbursed to holders of shares of Common Stock (including, without limitation,
interest and other income received by the Paying Agent in respect of the funds
made available to it), and after the funds have been delivered to the Surviving
Corporation, former stockholders of the Company must look to the Surviving
Corporation for payment of the Merger Price upon surrender of the Certificates
held by them. Neither the Surviving Corporation nor the Paying Agent will be
liable to any former stockholder of the Company for any Merger consideration
which is delivered to a public official pursuant to any abandoned property,
escheat or similar law.
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(e) After the Effective Time, the Surviving Corporation will not
record any transfers of shares of Common Stock on the stock transfer books of
the Company or the Surviving Corporation, and the stock ledger of the Company
will be closed. If, after the Effective Time, Certificates are presented for
transfer, they will be cancelled and treated as having been surrendered for the
Merger Price.
2.13 Options and Warrants. At the Effective Time, each option or
warrant issued by the Company which is outstanding at that time will become the
right to receive a sum in cash equal to (a) the amount, if any, by which the
Merger Price exceeds the per share exercise price of the option or warrant,
times (b) the number of shares of Common Stock issuable upon exercise of the
option or warrant in full. In order to receive the amount to which a holder of
an option or warrant is entitled under this Paragraph, the holder must deliver
to the Company (i) any certificate or option agreement relating to the option or
warrant and (ii) a document in which the holder acknowledges that the payment
the holder is receiving is in full satisfaction of any rights the holder may
have under or with regard to the option or warrant.
ARTICLE 3
EFFECTIVE TIME OF MERGER
3.1 Date of the Merger. The day on which the Merger is to take place
(the "Merger Date") will be (a) the day on which the Merger is approved by the
holders of a majority of the outstanding shares of Common Stock or (b) if
stockholder approval of the Merger is not required by applicable law or by the
rules of the Nasdaq National Market (if they are applicable), a day designated
by Acquisition which will be not later than 10 days after the Expiration Date.
The Merger Date may be changed with the consent of the Company and Acquisition.
3.2 Execution of Certificate of Merger. Not later than 3:00 P.M. on the
day before the Merger Date, (a) Acquisition and the Company will each execute a
certificate of merger (the
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"Certificate of Merger") substantially in the form of Exhibit 3.2 and deliver it
to Rogers & Wells for filing with the Secretary of State of Delaware. Rogers &
Wells will be instructed that, if it is notified on the Merger Date that all the
conditions in Article VI have been fulfilled or waived, it is to cause the
Certificate of Merger to be filed with the Secretary of State of Delaware on the
Merger Date or as soon after that date as is practicable.
3.3 Effective Time of the Merger. The Merger will become effective at
11:59 P.M. on the day when the Certificate of Merger is filed with the Secretary
of State of Delaware (that being the "Effective Time").
ARTICLE 4
REPRESENTATIONS AND WARRANTIES
4.1 Representations and Warranties of Acquisition. Acquisition
represents and warrants to the Company as follows:
(a) Acquisition is a corporation duly organized, validly existing
and in good standing under the laws of the State of Delaware.
(b) Acquisition has all corporate power and authority necessary to
enable it to enter into this Agreement and carry out the transactions
contemplated by this Agreement. All corporate actions necessary to authorize
Acquisition to enter into this Agreement and carry out the transactions
contemplated by it have been taken. This Agreement has been duly executed by
Acquisition and is a valid and binding agreement of Acquisition, enforceable
against Acquisition in accordance with its terms.
(c) Neither the execution or delivery of this Agreement or of any
document to be delivered in accordance with this Agreement nor the consummation
of the transactions contemplated by this Agreement or by any document to be
delivered in accordance with this
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Agreement will violate, result in a breach of, or constitute a default (or an
event which, with notice or lapse of time or both would constitute a default)
under, the Certificate of Incorporation or by-laws of Acquisition, any agreement
or instrument to which Acquisition or any subsidiary of Acquisition is a party
or by which any of them is bound, any law, or any order, rule or regulation of
any court or governmental agency or other regulatory organization having
jurisdiction over Acquisition or any of its subsidiaries, except violations or
breaches of, or defaults under, agreements or instruments which would not have a
Material Adverse Effect on any of the Company, Acquisition or either of the
Three Cities Funds.
(d) No governmental filings, authorizations, approvals or
consents, or other governmental action, other than the termination or expiration
of waiting periods under the HSR Act, if any, are required to permit Acquisition
to fulfill all its obligations under this Agreement.
(e) Acquisition was formed solely for the purpose of engaging in
the transaction contemplated by this Agreement. Acquisition has not, and on the
Effective Date will not have, engaged in any activities or incurred, directly or
indirectly, any obligations or liabilities, except the activities relating to or
contemplated by this Agreement and obligations or liabilities incurred in
connection with those activities and with the transactions contemplated by this
Agreement.
(f) Neither the Offer Documents nor any information supplied by
Acquisition for inclusion in the Schedule 14D-9 will, at the respective times
the Schedule 14D-1 and the Schedule 14D-9 are filed with the SEC and first
published, sent or given to the Company's stockholders, contain a false or
misleading statement with respect to any material fact or omit to state any
material fact required to be stated therein or necessary in order to make the
statements therein, in light of the circumstances under which they are made, not
misleading. On the date the Proxy Statement is mailed to the Company's
stockholders and on the date of the Stockholders Meeting, none of the
information supplied by Acquisition for inclusion in the
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Proxy Statement will be false or misleading with respect to any material fact or
will omit to state any material fact required to be stated therein or necessary
in order to make the statements therein, in light of the circumstances under
which they are made, not misleading or necessary to correct any statement in any
earlier communication with respect to the Stockholders Meeting or the
solicitation of proxies to be used at the Stockholders Meeting. However,
Acquisition does not make any representations or warranties with respect to
information supplied by the Company or any of its affiliates or representatives
for inclusion in the Offering Documents, or with respect to the Schedule 14D-9
or the Proxy Statement (except to the extent of information supplied by
Acquisition for inclusion in the Schedule 14D-9 or the Proxy Statement). The
Offering Documents will comply as to form in all material respects with the
requirements of the Exchange Act and the rules under it.
(g) At the date of this Agreement, Acquisition is wholly owned by
the Three Cities Funds. The Three Cities Funds have, or have arranged equity
investments or loans which will provide, sufficient funds to enable Acquisition
to purchase and pay for in a timely manner all the Common Stock which is
tendered in response to the Tender Offer and enable Acquisition to fulfill in a
timely manner all of its other obligations under this Agreement.
(h) At the date of this Agreement, neither Acquisition nor either
of the Three Cities Funds is the subject of any suit or governmental proceeding
which seeks to prevent Acquisition from completing the transactions which are
the subject of this Agreement, nor, to the best of Acquisition's knowledge, has
any such suit or proceeding been threatened.
(i) Prior to purchasing Common Stock from either of the Funds, the
Three Cities Funds disclosed to the Funds the principal terms of this Agreement,
including the terms relating to the amount of the Tender Offer Price and the
amount of the Merger Price.
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(j) In connection with the purchase of Common Stock from the
Funds, the Three Cities Funds will obtain from the Funds assignments of (i) all
claims the Funds have or may have as purchasers or holders of Common Stock
against the Company, any directors, officers, agents or employees of, or
underwriters, accountants or attorneys for, the Company or any other persons
arising out of or relating to disclosure, or omissions to disclosure, by the
Company relating to its or its subsidiaries' business, operating results,
financial condition or prospects or to any other subjects, (ii) all rights
arising out of or resulting from those claims or the subject matter of those
claims, and (iii) all rights to payments, and all other rights which they have
or to which they in the future become entitled as the holders of those claims
(including all the claims and rights the Funds may have as members of any class
or alleged class of plaintiffs, or otherwise as stockholders of the Company
during the relevant time period, in the Stockholder Suits).
(k) In acquiring claims and rights relating to the Stockholder
Suits, the Three Cities Funds were at all times advised by competent counsel of
their own choosing, and they have not been represented by anyone who is a
counsel for any of the plaintiffs in any of the Stockholder Suits.
4.2 Representations and Warranties of the Company. The Company
represents and warrants to Acquisition as follows:
(a) The Company is a corporation duly organized, validly existing
and in good standing under the laws of the State of Delaware.
(b) The Company has all corporate power and authority necessary to
enable it to enter into this Agreement and carry out the transactions
contemplated by this Agreement. All corporate actions necessary to authorize the
Company to enter into this Agreement and carry out the transactions contemplated
by it, other than adoption of this Agreement by the
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stockholders of the Company, have been taken. This Agreement has been duly
executed by the Company and is a valid and binding agreement of the Company,
enforceable against the Company in accordance with its terms.
(c) Neither the execution and delivery of this Agreement or of any
document to be delivered in accordance with this Agreement nor the consummation
of the transactions contemplated by this Agreement or by any document to be
delivered in accordance with this Agreement will violate, result in a breach of,
or constitute a default (or an event which, with notice or lapse of time or
both, would constitute a default) under, the Certificate of Incorporation or
By-Laws of the Company, any agreement or instrument to which the Company or any
subsidiary of the Company is a party or by which any of them is bound, any law,
or any order, rule or regulation of any court or governmental agency or other
regulatory organization having jurisdiction over the Company or any of its
subsidiaries except violations or breaches of, or defaults under, agreements or
instruments which would not have a Material Adverse Effect on any of the
Company, Acquisition or either of the Three Cities Funds.
(d) Except as shown on Exhibit 4.2-D, no governmental filings,
authorizations, approvals, or consents, or other governmental action, other than
the expiration or termination of waiting periods under the HSR Act, if any, are
required to permit the Company to fulfill all its obligations under this
Agreement.
(e) Effective concurrently with the execution of this Agreement,
the Board has approved increasing in the number of members constituting the
entire Board to ten and has elected J. William Uhrig and Wm. Robert Wright III
to fill the resulting two vacancies on the Board.
(f) The Company and each of its subsidiaries is qualified to do
business as a foreign corporation in each state in which it is required to be
qualified, except states in which the
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failure to qualify, in the aggregate, would not have a Material Adverse Effect
upon the Company. As used in this Agreement, the term "Material Adverse Effect"
upon a company means a material adverse effect upon (i) the consolidated
financial position of that company and its subsidiaries taken as a whole, or
(ii) the consolidated results of operations of that company and its subsidiaries
taken as a whole compared with the consolidated results of their operations
during the same period of the prior year. For the purposes of the definition of
Material Adverse Effect, (x) an adverse change in financial condition will be
material if it is a material reduction of working capital, tangible net worth or
net asset value, and (y) an adverse change in results of operations will be
material if it is a material reduction in total revenues, net income before
income taxes or net income.
(g) The only authorized stock of the Company is 20,000,000 shares
of Common Stock and 2,000,000 shares of preferred stock, par value $.01 per
share. At the date of this Agreement, the only outstanding stock of the Company
is 6,433,189 shares of Common Stock. All those shares have been duly authorized
and issued and are fully paid and non-assessable. Except as shown on Exhibit
4.2-G, the Company has not issued any options, warrants or convertible or
exchangeable securities, and is not a party to any other agreements, which
require, or upon the passage of time, the payment of money or the occurrence of
any other event may require, the Company to issue or sell any of its stock. The
Company, with the approval of the Board, has amended the Rights Agreement (the
"Rights Agreement") dated November 23, 1998 between the Company and ChaseMellon
Shareholder Services LLC, to exclude the Three Cities Funds and Acquisition from
the definition of "Acquiring Person" in the Rights Agreement. As a result of
that amendment, neither the purchase of Common Stock by the Three Cities Funds
from the Funds nor any of the transactions contemplated by this Agreement will
result in there being a Distribution Date under the Rights Agreement or
otherwise entitle anyone to exercise Rights under the Rights Agreement.
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(h) Except as shown on Exhibit 4.2-G or 4.2-H, (i) each of the
corporations and other entities of which the Company owns directly or indirectly
50% or more of the equity (each corporation or other entity of which a company
owns directly or indirectly 50% or more of the equity being a "subsidiary" of
that company) has been duly organized, and is validly existing and in good
standing under the laws of its state of incorporation, (ii) all outstanding
shares of stock of the Company's subsidiaries owned by the Company or any of its
subsidiaries are duly authorized, validly issued, fully paid and non-assessable
and are not subject to any preemptive rights, and (iii) neither the Company nor
any of its subsidiaries has issued any options, warrants or convertible or
exchangeable securities, or is a party to any other agreements, which require,
or upon the passage of time, the payment of money or the occurrence of any other
event may require, the Company or any subsidiary to issue or sell any of its
stock or other equity interests, and, there are no registration covenants or
transfer or voting restrictions with respect to outstanding securities of any of
the Company's subsidiaries.
(i) Since February 16, 1996, the Company has filed with the SEC
all forms, statements, reports and documents it has been required to file under
the Securities Act of 1993, as amended, the Exchange Act or the rules under
them.
(j) The Company's Annual Report on Form 10-K for the year ended
March 31, 1998 (the "1998 10-K") and its Report on Form 10-Q for the period
ended September 30, 1998 (the "September 10-Q") which were filed with the
Securities and Exchange Commission, including the documents incorporated by
reference in each of them, each contained all the information required to be
included in it and, when it was filed, did not contain an untrue statement of a
material fact or omit to state a material fact necessary in order to make the
statements made in it, in light of the circumstances under which they were made,
not misleading. Without limiting what is said in the preceding sentence, the
financial statements included in the 1998 10-K all were prepared, and the
financial information included in the
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<PAGE> 23
September 10-Q was derived from financial statements which were prepared, in
accordance with United States generally accepted accounting principles ("GAAP")
applied on a consistent basis (except that financial information included in the
September 10-Q does not contain notes and is subject to normal year end
adjustments) and presented fairly the consolidated financial condition and the
consolidated results of operations of the Company and its subsidiaries at the
dates, and for the periods, to which they relate. The Company has not filed any
reports with the Securities and Exchange Commission with regard to any period
which ended, or any event which occurred, after September 30, 1998, except a
Form 8-A which the Company filed on November 25, 1998 and a Form 8-K which the
Company filed on December 21, 1998.
(k) Between September 30, 1998 and the date of this Agreement, (i)
the Company and its subsidiaries have conducted their businesses in the ordinary
course and in the same manner in which they were conducted prior to September
30, 1998, and (ii) nothing has occurred which, individually or in aggregate, has
had a Material Adverse Effect on the Company and its subsidiaries taken as a
whole.
(l) The assets of the Company and its subsidiaries at the date of
this Agreement constitute, in the aggregate, all the assets (including, but not
limited to, intellectual property rights) used in or necessary to the conduct of
their businesses as they are being conducted at the date of this Agreement.
(m) The Company and it subsidiaries have at all times prior to the
date of this Agreement complied, and at the date of this Agreement are
complying, with all applicable Federal, state, local and foreign laws and
regulations, except failures to comply which would not reasonably be expected,
in the aggregate, to have a Material Averse Effect on the Company.
(n) At the date of this Agreement, the Company and each of its
subsidiaries has all licenses and permits which are required at the date of this
Agreement to enable them to
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conduct their businesses as they currently are being conducted, except licenses
or permits the lack of which would not reasonably be expected, in the aggregate,
to have a Material Adverse Effect on the Company.
(o) The Company and each of its subsidiaries has filed when due
all Tax Returns which it has been required to file and has paid all Taxes shown
on those returns to be due. Those Tax Returns accurately reflect all Taxes
required to have been paid, except to the extent of items which may be disputed
by applicable taxing authorities but for which there is substantial authority to
support the position taken by the Company or the subsidiary and which have been
adequately reserved against in accordance with GAAP on the balance sheet at
September 30, 1998 included in the September 10-Q. Except as shown on Exhibit
4.2-O, (i) no extension of time given by the Company or any of its subsidiaries
for completion of the audit of any of its Tax Returns is in effect, (ii) no tax
lien has been filed by any taxing authority against the Company or any of its
subsidiaries or any of their assets, (iii) no Federal, state or local audits or
other administrative proceedings or court proceedings with regard to Taxes are
presently pending with regard to the Company or any of its subsidiaries, (iv)
neither the Company nor any subsidiary is a party to any agreement providing for
the allocation or sharing of Taxes, (v) neither the Company nor any subsidiary
has participated in or cooperated with an international boycott as that term is
used in Section 999 of the Internal Revenue Code of 1986, as amended (the
"Code") and (vi) neither the Company nor any subsidiary has filed a consent
pursuant to Section 341(f) of the Code or agreed to have Section 341(f)(2) of
the Code apply to any disposition of a Subsection (f) asset (as that term is
defined in Section 341(f)(4) of the Code) owned by the Company or any
subsidiary. For the purposes of this Agreement, the term "Taxes" means all taxes
(including, but not limited to, withholding taxes), assessments, fees, levies
and other governmental charges, and any related interest or penalties. For the
purposes
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of this Agreement, the term "Tax Return" means any report, return or other
information required to be supplied to a taxing authority in connection with
Taxes.
(p) Except as shown on Exhibit 4.2-P, neither the Company nor any
subsidiary has received any notice of material non-compliance or material
liability under any Federal, state or local environmental laws or regulations
relating to real property owned or leased by the Company or by a subsidiary.
(q) Neither the Schedule 14D-9 nor any information supplied by the
Company for inclusion in the Offering Documents will, at the respective times
the Schedule 14D-9 and the Schedule 14D-1 are filed with the SEC and first
published, sent or given to the Company's stockholders, contain a false or
misleading statement with respect to any material fact or omit to state any
material fact required to be stated therein or necessary in order to make the
statements therein, in light of the circumstances under which they are made, not
misleading. On the day the Proxy Statement is mailed to the Company's
stockholders and on the day of the Stockholders Meeting, the Proxy Statement
will not contain a false or misleading statement with respect to any material
fact or omit to state any material fact required to be stated therein or
necessary in order to make the statements therein, in light of the circumstances
under which they are made, not misleading or necessary to correct any statement
in any earlier communication with respect to the Stockholders Meeting or the
solicitation of proxies to be used at the Stockholders Meeting. However, the
Company does not make any representations or warranties with respect to
information supplied by Acquisition or any of its affiliates or representatives
for inclusion in the Schedule 14D-9 or the Proxy Statement, or with respect to
the Offering Documents (except to the extent of information supplied by the
Company for inclusion in the Offering Documents). The Schedule 14D-9 and Proxy
Statement will comply as to form in all material respects with the requirements
of the Exchange Act and the rules under it.
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4.3 Termination of Representations and Warranties. The representations
and warranties in Paragraphs 4.1, 4.2 and 8.1 will terminate at the Expiration
Date, and neither the Company nor Acquisition, nor any of their respective
stockholders, will have any rights or claims as a result of any of those
representations or warranties after the Expiration Date.
ARTICLE 5
ACTIONS PRIOR TO THE MERGER
5.1 Activities Until Effective Time. From the date of this Agreement to
the Effective Time, except as described on Exhibit 5.1, the Company will, and
will cause each of its subsidiaries to, except with the written consent of
Acquisition and the Company:
(a) Operate its business in the ordinary course and in a manner
consistent with the manner in which it is being operated at the date of this
Agreement.
(b) Take all reasonable steps available to it to maintain the
goodwill of its business and, except as otherwise requested by Acquisition, the
continued employment of its executives and other employees.
(c) At its expense, maintain all its assets in good repair and
condition, except to the extent of reasonable wear and use and damage by fire or
other unavoidable casualty.
(d) Not make any borrowings other than borrowings in the ordinary
course of business under working capital lines which are disclosed in the notes
to the consolidated balance sheet at March 31, 1998 included in the 1998 10-K or
the consolidated balance sheet at September 30, 1998 included in the September
10-Q.
(e) Not enter into any contractual commitments involving capital
expenditures, loans or advances, and not voluntarily incur any contingent
liabilities, except in each case in the ordinary course of business.
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(f) Not redeem or purchase any of its stock and not declare or pay
any dividends, or make any other distributions or repayments of debt to its
stockholders (other than payments by subsidiaries of the Company to the Company
or to other wholly owned subsidiaries of the Company).
(g) Not make any loans or advances (other than advances for travel
and other normal business expenses) to stockholders, directors, officers or
employees.
(h) Maintain its books of account and records in the usual manner,
in accordance with GAAP applied on a consistent basis, subject to normal
year-end adjustments and accruals.
(i) Comply in all material respects with all applicable laws and
regulations of governmental agencies.
(j) Not sell, dispose of or encumber any property or assets, or
engage in any activities or transactions, except in each case in the ordinary
course of business.
(k) Not enter into or amend any employment, severance or similar
agreements or arrangements, or increase the salaries of any employees, other
than through normal annual merit increases averaging not more than 10%.
(l) Not adopt, become an employer with regard to, or amend any
employee compensation, employee benefit or post-employment benefit plan.
(m) Not amend its certificate of incorporation or by-laws.
(n) Not (i) issue or sell any of its stock (except upon exercise of
options which are outstanding on the date of this Agreement) or any options,
warrants or convertible or exchangeable securities or (ii) split, combine, or
reclassify its outstanding stock.
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(o) Not authorize or enter into any agreement to take any of the
actions referred to in subparagraphs (a ) through (n) above.
5.2 HSR Act Filings. The Company and Acquisition will each make as
promptly as practicable the filing it is required to make under the HSR Act with
regard to the transactions which are the subject of this Agreement and each of
them will take all reasonable steps within its control (including providing
information to the Federal Trade Commission and the Department of Justice) to
cause the waiting periods required by the HSR Act to be terminated or to expire
as promptly as practicable. The Company and Acquisition will each provide
information and cooperate in all other respects to assist the other of them in
making its filing under the HSR Act.
5.3 Proxy Statements and Stockholders' Meetings
(a) If the conditions in clauses (a) and (b) of Paragraph 2.1 are
satisfied and stockholder approval of the Merger is required by applicable law
or by rules of the Nasdaq National Market (if they are applicable), the Company
will (i) file the Proxy Statement with the SEC as promptly as practicable after
the Expiration Date, (ii) use its best efforts to cause review of the Proxy
Statement by the SEC staff to be completed as promptly as practicable, (iii)
recommend to its stockholders that they vote in favor of the Merger and permit
that recommendation to be described in the Proxy Statement, (iv) as promptly as
practicable, and in any event within 10 days after the Company is informed that
the SEC staff has no further comments about the Proxy Statement, cause the Proxy
Statement to be mailed to its stockholders and (v) cause the Stockholders
Meeting to be held not later than the 30th day after the day on which the Proxy
Statement is mailed.
(b) Acquisition will (i) supply to the Company all information in
Acquisition's possession, including any required financial statements of
Acquisition, which the Company is
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required to include in the Proxy Statement and in all other respects cooperate
with the Company in its efforts to file the Proxy Statement with the SEC and
cause review of the Proxy Statement to be completed as promptly as practicable
after it is filed with the SEC.
5.4 No Solicitation of Offers; Notice of Proposals from Others. (a) The
Company will not, and will not authorize or permit its or any of its
subsidiaries' officers, directors, employees, agents or representatives
(including any investment banker, attorney or accountant retained by it or by
any of its subsidiaries) directly or indirectly to initiate, solicit, encourage
or otherwise facilitate any inquiry or the making of any proposal or offer with
respect to a merger, reorganization, share exchange, consolidation or similar
transaction involving the Company, or any purchase of or tender offer for, all
or any significant portion of the Company's equity securities or any significant
portion of the assets of the Company and its subsidiaries on a consolidated
basis (each of these being an "Acquisition Proposal").
(b) Subparagraph (a) will not prevent the Company from, in response
to an Acquisition Proposal which the Company receives despite complying with
subparagraph (a) and which the Company's Board determines, in good faith after
consultation with its independent financial advisor, would result (if
consummated in accordance with its terms) in a transaction which (i) would
result in the Company's stockholders' receiving cash consideration which is
substantially greater than the Tender Offer Price and (ii) would be more
favorable to the Company's stockholders than the Tender Offer and the Merger,
furnishing non-public information to the person, entity or group (the "Potential
Acquiror") which makes the Acquisition Proposal and entering into discussions
and negotiations with the Potential Acquiror.
(c) If the Company receives an Acquisition Proposal, or the Company
learns that someone other than Acquisition is contemplating soliciting tenders
of Common Stock or otherwise proposes to acquire the Company or its Common Stock
if the Company's
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stockholders do not tender their Common Stock to Acquisition or do not approve
the Merger, the Company will promptly notify Acquisition of that fact and
provide Acquisition with all information in the Company's possession which
Acquisition reasonably requests regarding the Acquisition Proposal, solicitation
of tenders or other proposed transaction, and the Company will promptly, from
time to time, provide Acquisition with any additional information the Company
obtains regarding the Acquisition Proposal, the solicitation of tenders or the
other proposed transaction.
5.5 Acquisition's Efforts to Fulfill Conditions. Acquisition will use
its best efforts to cause all the conditions set forth in Paragraph 6.1 to be
fulfilled on or before the Merger Date.
5.6 Company's Efforts to Fulfill Conditions. The Company will use its
best efforts to cause all the conditions set forth in Paragraph 6.2 to be
fulfilled on or before the Merger Date.
ARTICLE 6
CONDITIONS PRECEDENT TO MERGER
6.1 Conditions to the Company's Obligations. The obligations of the
Company to complete the Merger are subject to satisfaction of the following
conditions (any or all of which may be waived by the Company):
(a) The representations and warranties of Acquisition contained in
this Agreement will, except as contemplated by this Agreement, be true and
correct in all material respects on the Merger Date with the same effect as
though made on that date (except that representations or warranties which
related expressly to a specified date or a specified period need only to have
been true and correct with regard to the specified date or period), and
Acquisition will have delivered to the Company a certificate dated that date and
signed by the President or a Vice President of Acquisition to that effect.
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(b) Acquisition will have fulfilled in all material respects all
its obligations under this Agreement required to have been fulfilled on or
before the Merger Date.
(c) No order will have been entered by any court or governmental
authority and be in force which invalidates this Agreement or restrains the
Company from completing the transactions which are the subject of this Agreement
(d) If stockholder approval of the Merger is required by applicable
law or by the rules of the Nasdaq National Market (if they are applicable), the
Merger will have been approved by the holders of a majority of the outstanding
shares of Common Stock.
6.2 Conditions to Acquisition's Obligations. The obligations of
Acquisition to complete the Merger are subject to the following conditions (any
or all of which may be waived by Acquisition):
(a) The representations and warranties of the Company contained in
this Agreement will, except as contemplated by this Agreement, be true and
correct in all material respects on the Merger Date with the same effect as
though made on that date (except that representations or warranties which
related expressly as of a specified date or a specified period need only to have
been true and correct with regard to the specified date or period), and the
Company will have delivered to Acquisition a certificate dated that date and
signed by the President or a Vice President of the Company to that effect.
(b) The Company will have fulfilled in all material respects all
its obligations under this Agreement required to have been fulfilled on or
before the Merger Date.
(c) No order will have been entered by any court or governmental
authority and be in force which invalidates this Agreement or restrains
Acquisition from completing the transactions which are the subject of this
Agreement and no action will be pending against the
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Company or Acquisition relating to the transactions which are the subject of
this Agreement which presents a reasonable likelihood of resulting in an award
of damages against the Company or Acquisition which would be material after the
Merger to the Company and its subsidiaries taken as a whole.
(d) J. William Uhrig and Wm. Robert Wright III (or replacements
designated by Acquisition) will have been members of the Board at all times
since this Agreement was signed by the Company and by Acquisition.
(e) If stockholder approval of the Merger is required by applicable
law or by the rules of the Nasdaq National Market (if they are applicable), the
Merger will have been approved by the holders of at least a majority of the
outstanding shares of Common Stock.
(f) If stockholder approval of the Merger is required by applicable
law or by the rules of the Nasdaq National Market (if they are applicable), the
Effective Time will occur not later than 120 days after the Expiration Time,
unless the Effective Time is delayed until after then because of actions of
Acquisition or its affiliates (other than the Company and its subsidiaries) or
because of Acquisition's failure to fulfill obligations under this Agreement.
ARTICLE 7
TERMINATION
7.1 Right to Terminate. This Agreement may be terminated at any time
prior to the Effective Time (whether or not the Company's stockholders have
approved the Merger):
(a) By mutual consent of the Company and Acquisition.
(b) By Acquisition if the condition in Paragraph 6.2(f) is not
fulfilled.
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(c) By the Company if (i) it is determined that any of the
representations or warranties of Acquisition contained in this Agreement was not
complete and accurate in all material respects on the date of this Agreement or
(ii) any of the conditions in Paragraph 6.1 is not satisfied or waived by the
Company on or before the Merger Date.
(d) By Acquisition if (i) it is determined that any of the
representations or warranties of the Company contained in this Agreement was not
complete and accurate in all material respects on the date of this Agreement or
(ii) any of the conditions in Paragraph 6.2 is not satisfied or waived by
Acquisition on or before the Merger Date.
(e) By the Company if (i) it receives a Superior Proposal within 20
business days after the Schedule 14D-1 is filed with the SEC, (ii) within 10
business days after the Company receives the Superior Proposal, the Company's
Board of Directors resolves to accept the Superior Proposal unless Acquisition
will increase the Tender Offer Price to an amount at least as great as the
amount of cash per shares the Company's stockholders would receive as a result
of the Superior Proposal, and (iii) the Company has given Acquisition at least
10 business days' prior notice (A) of the terms of the Superior Proposal
(including the amount of cash per share the Company's stockholders would receive
as a result of the Superior Proposal), and (B) that unless Acquisition increases
the Tender Offer Price to an amount at least as great as the cash per share the
Company's stockholders would receive as a result of the Superior Proposal, this
Agreement will terminate on a day specified in the notice, which will be after
the expiration of the 10 business day period, (iv) Acquisition does not, by the
termination date specified in the notice, increase the Tender Offer Price to an
amount at least as great as the cash per share the Company's stockholders will
receive as a result of the Superior Proposal, as set forth in the notice, and
(v) the Company has (x) paid Acquisition $1,720,000 (y) reimbursed Acquisition
for all the expenses related to the transactions which are the subject of this
Agreement which Acquisition or its affiliates (including the Three Cities Funds)
incurred after December 17, 1998
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(including fees and expenses of lawyers and accountants for work performed after
December 17, 1998) regarding which Acquisition has presented reasonable
documentation to the Company, and (z) agreed in writing to reimburse Acquisition
for all expenses of the type described in clause (y) for which Acquisition has
not been reimbursed for which Acquisition subsequently presents the Company
reasonable documentation (up to a total reimbursement of expenses under clauses
(y) and (z) not exceeding $200,000). A "Superior Proposal" is an all cash
Acquisition Proposal which (x) would result in the Company's stockholders'
receiving cash consideration which is substantially greater than the Tender
Offer Price, (y) is not subject to a financing contingency and is from a
Proposed Acquiror which the Board determines in good faith after consultation
with its independent financial advisor has the financial resources necessary to
carry out the transaction and (z) the Board determines in good faith after
consultation with its independent financial advisor to be more favorable to the
Company's stockholders than the Tender Offer and the Merger. A notice that this
Agreement will terminate given pursuant to clause (iii) of the first sentence of
this subparagraph will be irrevocable (unless Acquisition consents in writing to
its being withdrawn by the Company) and will result in this Agreement's
terminating on the later of the date specified in the notice or the date the
Company makes the payments and provides the agreement described in clause (v) of
the first sentence of this subparagraph. When the Company delivers a notice
pursuant to clause (iii) of the first sentence of this subparagraph,
Acquisition's obligations under Paragraphs 5.2 and 5.3 will terminate.
(f) By the Company if (i) within 20 business days after the
Schedule 14D-1 is filed with the SEC, a Potential Acquiror commences an all cash
tender offer for any and all the outstanding shares of the Company's Common
Stock for cash consideration which is substantially greater than the Tender
Offer Price, (ii) the Board determines in good faith after consultation with its
independent financial advisor that the Potential Acquiror's tender offer
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constitutes a Superior Proposal and resolves to recommend to the Company's
stockholders that they tender their shares in response to that Superior
Proposal, (iii) the Company has given Acquisition at least 10 business days'
prior notice (A) of the terms of the tender offer which is a Superior Proposal,
and (B) that, unless Acquisition increases the Tender Offer Price to an amount
at least as great as the cash consideration offered in the tender offer which is
a Superior Proposal, this Agreement will terminate on a date specified in the
notice, which will be after the expiration of the 10 business day period, (iv)
Acquisition does not, by the termination date specified in the notice, increase
the Tender Offer Price to an amount at least as great as the cash consideration
offered in the tender offer which is a Superior Proposal, and (v) the Company
has (x) paid Acquisition $1,720,000, (y) reimbursed Acquisition for all the
expenses related to the transactions which are the subject of this Agreement
which Acquisition or its affiliates (including the Three Cities Funds) incurred
after December 17, 1998 (including fees and expenses of lawyers and accountants
for work performed after December 17, 1998) regarding which Acquisition has
presented reasonable documentation to the Company and (z) agreed in writing to
reimburse Acquisition for all expenses of the type described in clause (y) for
which Acquisition has not been reimbursed for which Acquisition subsequently
presents the Company reasonable documentation (up to a total reimbursement of
expenses under clauses (y) and (z) not exceeding $200,000). A notice that this
Agreement will terminate given pursuant to clause (iii) of the first sentence of
this subparagraph will be irrevocable (unless Acquisition consents in writing to
its being withdrawn by the Company) and will result in this Agreement's
terminating on the later of the date specified in the notice or the date the
Company makes the payments and provides the agreement described in clause (v) of
the first sentence of this subparagraph. When the Company delivers a notice of
intention to terminate pursuant to this Paragraph, Acquisition's obligations
under Paragraphs 5.2 and 5.3 will terminate.
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7.2 Manner of Terminating Agreement If at any time the Company has the
right under Paragraph 7.1 to terminate this Agreement, it can terminate this
Agreement by a notice to the other of them that it is terminating this
Agreement.
7.3 Effect of Termination. If this Agreement is terminated pursuant to
Paragraph 7.1, after this Agreement is terminated, neither party will have any
further rights or obligations under this Agreement other than the Company's
obligations under the agreement to reimburse expenses described in paragraph 7.2
and Acquisition's obligations under Paragraphs 9.1, 9.2 and 9.4. Nothing
contained in this Paragraph will, however, relieve either party of liability for
any breach of this Agreement which occurs before this Agreement is terminated.
ARTICLE 8
ABSENCE OF BROKERS
8.1 Representations and Warranties Regarding Brokers and Others. The
Company and Acquisition each represents and warrants to the other of them that
nobody acted as a broker, a finder or in any similar capacity in connection with
the transactions which are the subject of this Agreement, except that Lehman
Brothers, Inc. acted as financial advisor to the Company and Sanders Morris
Mundy & Co. has assisted the Three Cities Funds in connection with the purchases
of Common Stock from the Funds. The Company will pay all fees of Lehman
Brothers, Inc. (which will not exceed $900,000) and reimbursement of Lehman
Brothers, Inc. for out-of-pocket expenses (which will not exceed $25,000) and
the Three Cities Funds will pay all fees of Sanders Morris Mundy & Co. The
Company and Acquisition each indemnifies the other of them against, and agrees
to hold the other of them harmless from, all losses, liabilities and expenses
(including, but not limited to, reasonable fees and expenses of counsel and
costs of investigation) incurred because of any claim by anyone for compensation
as a broker, a finder or in any similar capacity by reason of services allegedly
rendered to the indemnifying party in connection with the transactions which are
the subject of this Agreement.
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ARTICLE 9
OTHER AGREEMENTS
9.1 Indemnification for Prior Acts. (a) The Surviving Corporation will
honor, and will not amend or modify for a period of not less than six years
after the date of this Agreement, any and all obligations of the Company and its
subsidiaries to indemnify present and former directors, officers or employees of
the Company or its subsidiaries (each an "Indemnified Party") with respect to
matters which occur on or prior to the Effective Time, whether provided in the
certificate of incorporation or by-laws of the Company or any of its
subsidiaries, in any of the agreements listed on Exhibit 9.1-A(1) or under the
DGCL. The Surviving Corporation will, maintain in effect for not less than six
years after Effective Time with respect to occurrences prior to the Effective
Time the Company's policies of directors and officers' liability insurance which
are in effect on the date of this Agreement and are listed on Exhibit 9.1-A(2)
(notwithstanding any provisions of those policies that they will terminate as a
result of Merger) to the extent that such insurance (or substantially similar
insurance) is available.
(b) Without limiting the foregoing, in the event any indemnified
claim ("Claim") is brought against any Indemnified Party after the Effective
Time, (i) the Indemnified Parties may retain the Company's regularly engaged
independent legal counsel, or other independent legal counsel satisfactory to
them and to the Surviving Corporation, (ii) the Surviving Corporation shall pay
all reasonable fees and expenses of counsel for the Indemnified Parties as
described below promptly as statements therefor are received and (iii) the
Surviving Corporation will use its best efforts to assist in the vigorous
defense of any such matter, provided that the Surviving Corporation shall not be
liable for any settlement of any Claim effected without its written consent,
which consent shall not be unreasonably withheld. Any Indemnified Party wishing
to claim indemnification with regard to a Claim, upon learning of the Claim,
shall notify the Surviving Corporation of the Claim (although the failure so to
notify the Surviving Corporation
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shall not relieve the Surviving Corporation from any liability which the
Surviving Corporation may have, except to the extent such failure materially
prejudices the Surviving Corporation), and shall deliver to the Surviving
Corporation the undertaking contemplated by Section 145(e) of the DGCL. The
Indemnified Parties as a group may retain one law firm (in addition to local
counsel) to represent them with respect to each such matter unless there is,
under applicable standards of professional conduct (as determined by counsel to
the Indemnified Parties), a conflict on any significant issue between the
positions of any two or more Indemnified Parties, in which event, such
additional counsel as may be required may be retained by the Indemnified
Parties. The Company will pay the fees and expenses of the one law firm (plus
local counsel) and, if there is a conflict as described in the preceding
sentence, fees and expenses of one additional law firm (plus local counsel).
Under no circumstances will the Company be required to pay the fees and expenses
of more than two law firms (plus local counsel) with regard to any Claim or
group of related Claims.
(c) The provisions of this Paragraph 9.1 are intended to be for the
benefit of, and will be enforceable by, the respective directors, officers and
employees of the Company or its subsidiaries to which it relates and their heirs
and representatives and will be binding upon the Surviving Corporation.
9.2 Agreement Not To Merge Under Certain Conditions. If Acquisition
purchases all the shares which are property tendered in response to the Tender
Offer and not withdrawn, and after that purchase, the number of shares of Common
Stock which are owned by Acquisition, the Three Cities Funds and any other
stockholders of Acquisition, totals less than 85% of the Common Stock which is
outstanding at the Expiration Time, neither Acquisition nor either of the Three
Cities Funds will engage in a business combination (as that term is defined in
Section 203 of the DGCL) with the Company for a period of three years following
the Expiration Time, unless the business combination has been approved by the
Company's Board of Directors and
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authorized at an annual or special meeting of stockholders, and not by written
consent, by the affirmative vote of at least 662/3% of the outstanding Common
Stock which is not owned by Acquisition or an affiliate of Acquisition (as the
term "affiliate" is defined in Section 203 of the DGCL, but excluding from the
definition of "affiliate" any person which is an affiliate of Acquisition solely
because that person owns shares of the Company).
9.3 Agreement Regarding Directors. Until Acquisition purchases all the
shares of Common Stock which are properly tendered in response to the Tender
Offer and not withdrawn or this Agreement terminates, neither of the Three
Cities Funds nor Acquisition will vote any Common Stock or take any other action
to cause (i) anyone other than J. William Uhrig and Wm. Robert Wright III (or
replacements for them designated by Acquisition) to be elected to the Board
(except by voting at an annual meeting of stockholders in favor of the Board's
nominees for election to the Board), (ii) the number of directors constituting
the entire Board to be increased or decreased, or (iii) any director to be
removed from the Board other than for cause.
9.4 Agreement to Vote or Sell Shares. If the Company terminates this
Agreement under subparagraph (e) or (f) of paragraph 7.1 because of a Superior
Proposal, and the Company has complied with all the requirements of the
applicable one of those subparagraphs (including the requirements regarding
payments to Acquisition), at the request of the Board, (a) if the Superior
Proposal requires a vote of the holders of the Common Stock, Acquisition will,
and will cause the Three Cities Funds to, vote all the Common Stock they own or
have the power to vote (including the Common Stock the Three Cities Funds
purchase from the Funds, to the extent Acquisition or the Three Cities Funds
still own that Common Stock) in favor of the Superior Proposal or (b) if the
Superior Proposal is a tender offer, Acquisition will, and will cause the Three
Cities Funds to, tender in response to the tender offer all the Common Stock
they own when the tender offer expires (including all the Common Stock the Three
Cities Funds purchased from the Funds which they still own when the tender offer
expires).
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9.5 Control of Stockholder Suits. At least until the Expiration Date,
the Company, under the direction of the Board, will control any and all
negotiations and decisions with respect to the Stockholder Suits, and
Acquisition will not, and will cause the Three Cities Funds not to, communicate
about the Stockholder Suits with counsel for the plaintiffs in the Stockholder
Suits, the Company's insurance carriers or their counsel, or any other party
involved in the Stockholder Suits, without the express prior consent of the
Company or its counsel.
ARTICLE 10
GENERAL
10.1 Expenses. The Company and Acquisition will each pay its own
expenses in connection with the transactions which are the subject of this
Agreement, including legal fees.
10.2 Access to Properties, Books and Records. From the date of this
Agreement until the Effective Time, the Company will, and will cause each of its
subsidiaries to, give representatives of Acquisition full access during normal
business hours to all of their respective properties, books and records.
Acquisition will, and will cause its representatives to, hold all information it
receives as a result of its access to the properties, books and records of the
Company or its subsidiaries in confidence, except to the extent that information
(i) is or becomes available to the public (other than through a breach of this
Agreement), (ii) becomes available to Acquisition from a third party which,
insofar as Acquisition is aware, is not under an obligation to the Company, or
to a subsidiary of the Company, to keep the information confidential, (iii) was
known to Acquisition or its affiliates (which includes the Three Cities Funds
and Three Cities Research, Inc.) before it was made available to Acquisition or
its representative by the Company or a subsidiary, or (iv) otherwise is
independently developed by Acquisition or its affiliates. If this Agreement is
terminated prior to the Effective Time, Acquisition will, at the request of the
Company, deliver to the Company all documents and other
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material obtained by Acquisition from the Company or a subsidiary in connection
with the transactions which are the subject of this Agreement or evidence that
that material has been destroyed by Acquisition.
10.3 Press Releases. The Company and Acquisition will consult with each
other before issuing any press releases or otherwise making any public
statements with respect to this Agreement, except that nothing in this Paragraph
will prevent either party from making any statement when and as required by law
or by the rules of any securities exchange or securities quotation or trading
system on which securities of that party or an affiliate are listed, quoted or
traded.
10.4 Entire Agreement. This Agreement and the documents to be delivered
in accordance with this Agreement contain the entire agreement between the
Company and Acquisition relating to the transactions which are the subject of
this Agreement and those other documents, all prior negotiations, understandings
and agreements between the Company and Acquisition are superseded by this
Agreement and those other documents, and there are no representations,
warranties, understandings or agreements concerning the transactions which are
the subject of this Agreement or those other documents other than those
expressly set forth in this Agreement or those other documents.
10.5 Effect of Disclosures. Any information disclosed by a party in any
representation or warranty contained in this Agreement (including exhibits to
this Agreement) will be treated as having been disclosed in connection with each
representation and warranty made by that party in this Agreement.
10.6 Captions. The captions of the articles and paragraphs of this
Agreement are for reference only, and do not affect the meaning or
interpretation of this Agreement.
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10.7 Prohibition Against Assignment. Neither this Agreement nor any
right of any party under it may be assigned, except that Acquisition may assign
its rights under this Agreement to a corporation or other entity a majority of
the equity of which is owned by the Three Cities Funds.
10.8 Notices and Other Communications. Any notice or other
communication under this Agreement must be in writing and will be deemed given
when it is delivered in person or sent by facsimile (with proof of receipt at
the number to which it is required to be sent), on the business day after the
day on which it is sent by a major nationwide overnight delivery service, or on
the third business day after the day on which it is mailed by first class mail
from within the United States of America, to the following addresses (or such
other address as may be specified after the date of this Agreement by the party
to which the notice or communication is sent):
If to Acquisition:
TCF Acquisition Corporation
c/o Three Cities Research, Inc.
650 Madison Avenue
New York, New York
Attention: J. William Uhrig
Facsimile: 212-980-1142
with a copy to:
David W. Bernstein
Rogers & Wells LLP
200 Park Avenue
New York, New York 10166
Facsimile: 212-878-8375
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If to the Company.:
COHR Inc.
21540 Plummer Street
Chatsworth, CA 91311
Attention: President
Facsimile: 818-717-8426
with a copy to:
Robert B. Knauss
Munger Tolles & Olson LLP
355 South Grand Avenue
Los Angeles, CA 90071
Facsimile No.:213-687-3702
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10.9 Governing Law. This Agreement will be governed by, and construed
under, the substantive laws of the State of Delaware.
10.10 Amendments. This Agreement may be amended only by a document in
writing signed by both the Company and Acquisition.
10.11 Counterparts. This Agreement may be executed in two or more
counterparts, some of which may be signed by fewer than all the parties or may
contain facsimile copies of pages signed by some of the parties. Each of those
counterparts will be deemed to be an original copy of this Agreement, but all of
them together will constitute one and the same agreement.
IN WITNESS WHEREOF, the Company and Acquisition have executed this
Agreement, intending to be legally bound by it, on the day shown on the first
page of this Agreement.
COHR INC.
By:
--------------------------------
Title:
TCF ACQUISITION CORPORATION
By:
--------------------------------
Title: President
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Exhibit 1.1-E
Acquisition will not be required to accept for payment or pay for any
Common Stock tendered in response to the Tender Offer if:
(a) Any statute, rule, regulation, order or injunction has been
enacted, promulgated, entered or enforced by any national or state government or
governmental authority or by any United States court of competent jurisdiction,
that would make the acquisition of the tendered Common Stock by Acquisition
illegal or otherwise prohibit consummation of the Tender Offer or the Merger; or
(b) There has been (i) a general suspension of trading in, or
limitation on prices for, securities on the New York Stock Exchange or the
Nasdaq National Market System which continued for at least three business days,
(ii) the declaration of a banking moratorium or any suspension of payments in
respect of banks in the United States (whether or not mandatory) which continued
for at least three business days, (iii) the commencement of a war or armed
hostilities or any other international or national calamity directly or
indirectly involving the United States, which has a significant adverse effect
on the functioning of financial markets in the United States, (iv) any
limitation (whether or not mandatory) by any United States governmental
authority or agency on the extension of credit by banks or other financial
institutions which would have a material adverse effect on Acquisition's ability
to purchase and pay for all the Common Stock which is tendered in response to
the Tender Offers and to carry out the Merger on the terms contemplated by the
Agreement or (v) there is a material acceleration or worsening of any of the
conditions described in clauses (i) through (iv) which exists at the date of the
commencement of the Tender Offer.
(c) Any of the representations or warranties of the Company in the
Agreement is not true and correct as of the date of the Agreement, except
failures to be true and correct which would not, in the aggregate, have a
Material Adverse Effect upon the Company or adversely affect Acquisition's legal
ownership of the tendered Common Stock, Acquisition's legal ability to
consummate the Merger as contemplated by the Agreement, or the ownership of the
Surviving Corporation after the Merger by the persons which own the stock of
Acquisition immediately before the Merger;
(d) Without limiting the condition in subparagraph (c), Acquisition
learns that the 1998 10-K or the September 10-Q contained a false or misleading
statement with respect to a material fact or omitted to state a material fact
required to be stated therein or which may be necessary to make the statements
therein, in the light of the circumstances under which they were made, not
misleading (other than with regard to matters which are the subject of the
Stockholder Suits);
(e) The Company has not performed all the obligations it is required to
have performed under the Agreement by the Expiration Date, except failures which
(i) would, in the aggregate, not materially impair or delay the ability of
Acquisition to consummate the purchase of the Common Stock which is tendered in
response to the Tender Offer or the ability of Acquisition and the Company to
effect the Merger, (ii) have been caused by or result from a breach of the
Agreement by Acquisition; or (iii) do not, and are not reasonably expected to,
have a Material Adverse Effect on the Company.
(f) The Agreement has been terminated in accordance with its terms; or
<PAGE> 46
(g) The Board withdraws or modifies in a manner adverse to Acquisition
the Board's approval or recommendation of the Tender Offer or the Merger.
The conditions set forth above are for the sole benefit of Acquisition,
and may be waived by Acquisition, in whole or in part. Any delay by Acquisition
in exercising the right to terminate the Tender Offer because any of the
conditions are not fulfilled will not be deemed a waiver of its right to do so.
