<PAGE>
Offer to Purchase for Cash
All of the Outstanding Shares of Common Stock
of
Specialty Equipment Companies, Inc.
at
$30.50 Net Per Share
by
Solar Acquisition Corp.
a wholly owned subsidiary of
United Technologies Corporation
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK
CITY TIME, ON MONDAY, NOVEMBER 20, 2000, UNLESS THE OFFER IS EXTENDED.
THIS OFFER IS BEING MADE IN CONNECTION WITH THE MERGER AGREEMENT, DATED AS
OF OCTOBER 13, 2000 (THE "MERGER AGREEMENT"), AMONG UNITED TECHNOLOGIES
CORPORATION ("PARENT"), SOLAR ACQUISITION CORP. ("PURCHASER") AND SPECIALTY
EQUIPMENT COMPANIES, INC. (THE "COMPANY"). THE BOARD OF DIRECTORS OF THE
COMPANY HAS UNANIMOUSLY APPROVED THE MERGER AGREEMENT, THE OFFER AND THE
MERGER (EACH AS DEFINED HEREIN), DETERMINED THAT THE OFFER AND THE MERGER ARE
ADVISABLE AND FAIR TO AND IN THE BEST INTEREST OF THE HOLDERS OF SHARES (AS
DEFINED HEREIN) AND UNANIMOUSLY RECOMMENDS THAT STOCKHOLDERS ACCEPT THE OFFER,
TENDER THEIR SHARES PURSUANT TO THE OFFER AND APPROVE THE MERGER.
PARENT AND PURCHASER HAVE ENTERED INTO A STOCKHOLDER AGREEMENT WITH
STOCKHOLDERS OF THE COMPANY WHO OWN AN AGGREGATE OF APPROXIMATELY 38% OF THE
OUTSTANDING SHARES ON A FULLY DILUTED BASIS, ASSUMING THE EXERCISE OF ALL
ISSUED AND OUTSTANDING COMPANY STOCK OPTIONS, PURSUANT TO WHICH, AMONG OTHER
THINGS, SUCH STOCKHOLDERS HAVE AGREED TO VALIDLY TENDER (AND NOT WITHDRAW) ALL
SUCH SHARES PURSUANT TO THE OFFER AND HAVE GRANTED PURCHASER AN OPTION TO
PURCHASE ALL SUCH SHARES AT A PRICE OF $30.50 PER SHARE UPON THE OCCURRENCE OF
CERTAIN EVENTS.
THE OFFER IS CONDITIONED UPON, AMONG OTHER THINGS, (A) THERE HAVING BEEN
VALIDLY TENDERED AND NOT PROPERLY WITHDRAWN PRIOR TO THE EXPIRATION OF THE
OFFER THAT NUMBER OF SHARES WHICH, WHEN AGGREGATED WITH ANY SHARES THEN
BENEFICIALLY OWNED BY PARENT (EXCLUDING SHARES HELD BY AN EMPLOYEE BENEFIT
PLAN), REPRESENTS AT LEAST A MAJORITY OF ALL OF THE ISSUED AND OUTSTANDING
SHARES ON A FULLY DILUTED BASIS, ASSUMING THE EXERCISE OF ALL OUTSTANDING
COMPANY STOCK OPTIONS, AND (B) THE EXPIRATION OR TERMINATION OF ANY WAITING
PERIOD UNDER THE HART-SCOTT-RODINO ANTITRUST IMPROVEMENTS ACT OF 1976, AS
AMENDED, AND THE EXPIRATION OR TERMINATION OF ANY WAITING PERIOD AND THE
RECEIPT OF ANY REQUIRED APPROVAL UNDER ANY FOREIGN ANTITRUST AND COMPETITION
LAWS APPLICABLE TO THE PURCHASE OF SHARES PURSUANT TO THE OFFER OR THE MERGER.
IMPORTANT
Stockholders desiring to tender all or any portion of their shares of common
stock, par value $.01 per share, of the Company, (the "Shares") should either:
(a) complete and sign the Letter of Transmittal or a facsimile thereof in
accordance with the instructions in the Letter of Transmittal, including any
required signature guarantees, and mail or deliver the Letter of Transmittal
or such facsimile with certificate(s) for the tendered Shares and any other
required documents to the Depositary (as defined herein), or (b) follow the
procedures for book-entry tender of Shares set forth in Section 3 or (c)
request such stockholder's broker, dealer, commercial bank, trust company or
other nominee to effect the transaction for such stockholder. Stockholders
whose Shares are registered in the name of a broker, dealer, commercial bank,
trust company or other nominee must contact such broker, dealer, commercial
bank, trust company or other nominee if they desire to tender such Shares.
A stockholder who desires to tender Shares and whose certificates for such
Shares are not immediately available, or who cannot comply with the procedure
for book-entry transfer on a timely basis, may tender such Shares by following
the procedures for guaranteed delivery set forth in Section 3.
Questions and requests for assistance may be directed to the Information
Agent (as defined herein) at its address and telephone number set forth on the
back cover of this Offer to Purchase. Requests for additional copies of this
Offer to Purchase and the Letter of Transmittal may be directed to the
Information Agent or to brokers, dealers, commercial banks or trust companies.
The Information Agent for the Offer is:
[LOGO OF GEORGESON SHAREHOLDER COMMUNICATIONS INC.]
October 23, 2000
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<TABLE>
<CAPTION>
Page
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<C> <S> <C>
SUMMARY TERM SHEET........................................................ 1
INTRODUCTION.............................................................. 5
THE TENDER OFFER.......................................................... 7
1. Terms of the Offer................................................... 7
2. Acceptance for Payment and Payment for Shares........................ 8
3. Procedure for Tendering Shares....................................... 9
4. Withdrawal Rights.................................................... 12
5. Certain United States Federal Income Tax Consequences of the Offer... 13
6. Price Range of Shares; Dividends..................................... 14
7. Possible Effects of the Offer on the Market for the Shares; NYSE
Listing;
Margin Regulations and Exchange Act Registration.................... 14
8. Certain Information Concerning the Company........................... 15
9. Certain Information Concerning Purchaser and Parent.................. 18
10. Background of the Offer; Contacts with the Company................... 19
11. Purpose of the Offer; Plans for the Company; the Merger Agreement;
the Stockholder Agreement; Employee Agreements...................... 20
12. Source and Amount of Funds........................................... 32
13. Certain Conditions of the Offer...................................... 32
14. Certain Legal Matters................................................ 33
15. Fees and Expenses.................................................... 35
16. Miscellaneous........................................................ 36
SCHEDULE A--Information Concerning Directors and the Executive Officers of
Parent and Purchaser..................................................... A-1
</TABLE>
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SUMMARY TERM SHEET
Solar Acquisition Corp., which is referred to in this offer to purchase as
"Purchaser," is offering to purchase all of the outstanding shares of common
stock of Specialty Equipment Companies, Inc., which is referred to in this
offer to purchase as the "Company," for $30.50 per share in cash. The
following are some of the questions you, as a stockholder of Specialty
Equipment Companies, Inc., may have and answers to those questions. We urge
you to read the remainder of this offer to purchase and the letter of
transmittal carefully because the information in this summary is not complete
and additional important information is contained in the remainder of this
offer to purchase and the letter of transmittal.
Who is offering to buy my shares?
Solar Acquisition Corp. is a Delaware corporation formed for the purpose of
making this tender offer. Solar Acquisition Corp. is a wholly owned subsidiary
of United Technologies Corporation, a Delaware corporation, which is referred
to in this offer to purchase as "Parent." See Section 9 of this offer to
purchase--"Certain Information Concerning Purchaser and Parent."
What shares are being sought in the offer?
Solar Acquisition Corp. is offering to purchase all of the outstanding
shares of common stock of Specialty Equipment Companies, Inc. See
"INTRODUCTION" and Section 1 of this offer to purchase--"Terms of the Offer."
How much are you offering to pay and what is the form of payment?
Solar Acquisition Corp. is offering to pay $30.50 per share, net to you, in
cash. See "INTRODUCTION" and Section 1 of the offer to purchase--"Terms of the
Offer."
Do you have the financial resources to make payment?
United Technologies Corporation, the parent of Solar Acquisition Corp., will
provide Solar Acquisition Corp. with sufficient funds from available cash on
hand to acquire all shares tendered in the offer and all shares to be acquired
in the merger which is expected to follow the successful completion of the
offer. The offer is not conditioned upon any financing arrangements. See
Section 12 of this offer to purchase--"Source and Amount of Funds."
Is your financial condition relevant to my decision to tender in the offer?
We do not think our financial condition is relevant to your decision whether
to tender shares and accept the offer because:
. the offer is being made for all outstanding shares solely for cash,
. the offer is not subject to any financing condition, and
. if we consummate the offer, we will acquire all remaining shares for the
same cash price in the merger.
How long do I have to decide whether to tender in the offer?
You will have at least until 12:00 midnight, New York City time, on Monday,
November 20, 2000, to decide whether to tender your shares in the offer. See
Sections 1 and 3 of this offer to purchase--"Terms of the Offer" and--
"Procedure for Tendering Shares--Notice of Guaranteed Delivery."
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Can the offer be extended and under what circumstances?
Yes. We have agreed with Specialty Equipment that we may extend the offer if
less than 90% of the outstanding shares have been tendered or if we are
required to extend the offer by the rules of the Securities and Exchange
Commission. We have also agreed with Specialty Equipment that we will extend
the offer, until as late as December 18, 2000 (and 60 business days thereafter
in certain cases), if at the time the offer is scheduled to expire (including
at the end of an earlier extension) any of the offer conditions is not
satisfied (or waived by us). See Section 1 of this offer to purchase--"Terms
of the Offer."
How will I be notified if the offer is extended?
If we extend the offer, we will inform LaSalle Bank National Association
(which is the depositary for the offer) of that fact and will make a public
announcement of the extension, by not later than 9:00 a.m., New York City
time, on the business day after the scheduled expiration date.
What are the most significant conditions to the offer?
We are not obligated to purchase any tendered shares unless the number of
shares tendered (and not withdrawn), together with any Shares beneficially
owned by United Technologies, equals at least a majority of the shares of
Specialty Equipment outstanding on a fully diluted basis, assuming the
exercise of all Company stock options. We are also not obligated to purchase
tendered shares if there is a material adverse change in Specialty Equipment
or its business. The offer is also subject to a number of other conditions.
See Section 13 of this offer to purchase--"Certain Conditions of the Offer."
How do I tender my shares?
To tender shares, you must deliver the certificates representing your
shares, together with a completed letter of transmittal and any other
documents required, to LaSalle Bank National Association, the depositary for
the offer, not later than the time the tender offer expires. If your shares
are held in street name, the shares can only be tendered by your nominee
through The Depository Trust Company. If you cannot deliver to the depositary
something that is required by the expiration of the tender offer, you may get
a little extra time to do so by having a broker, a bank or another fiduciary,
which is a member of the Securities Transfer Agents Medallion Program or
another eligible institution, guarantee that the missing items will be
received by the depositary within three New York Stock Exchange trading days.
However, the depositary must receive the missing items within that three
trading day period. See Section 3 of this offer to purchase--"Procedure for
Tendering Shares."
Until what time can I withdraw previously tendered shares?
You can withdraw shares at any time until the offer has expired and, if we
have not by December 22, 2000 agreed to accept your shares for payment, you
can withdraw them at any time after such time until we accept shares for
payment. See Sections 1 and 4 of this offer to purchase--"Terms of the Offer"
and "Withdrawal Rights."
How do I withdraw previously tendered shares?
To withdraw shares, you must deliver a written notice of withdrawal, or a
facsimile of one, with the required information to LaSalle Bank National
Association while you still have the right to withdraw the shares. See
Sections 1 and 4 of this offer to purchase--"Terms of the Offer" and
"Withdrawal Rights."
What does the Specialty Equipment Board of Directors think of the offer?
Solar Acquisition Corp. is making the offer pursuant to a merger agreement
with Specialty Equipment. The Specialty Equipment Board of Directors
unanimously approved the merger agreement, Solar Acquisition Corp.'s tender
offer and its proposed merger with Specialty Equipment. The Specialty
Equipment Board of Directors has determined that the offer and the merger are
advisable and fair to and in the best interest of Specialty Equipment's
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stockholders and it unanimously recommends that stockholders accept the offer,
tender their shares and approve the merger. See Section 10 of this offer to
purchase--"Background of the Offer; Contacts with the Company." Specialty
Equipment has prepared a Solicitation and Recommendation Statement containing
additional information regarding the Board's determination and recommendation,
which is being sent to stockholders together with this offer to purchase.
Have other stockholders of Specialty Equipment committed to tender their
shares?
Certain stockholders of Specialty Equipment, who own in the aggregate
approximately 38% of the outstanding shares of Specialty Equipment on a fully
diluted basis, assuming the exercise of all issued and outstanding stock
options, have each agreed to tender (and not withdraw) all of their shares in
the offer. In addition, the same stockholders have granted Solar Acquisition
Corp. an option to purchase all of the shares owned by each of them at a price
of $30.50 per share (or any other price payable in the offer) upon the
occurrence of certain events. See Section 11 of this offer to purchase--
"Purpose of the Offer; Plans for the Company; the Merger Agreement; the
Stockholder Agreement; Employee Agreements--The Stockholder Agreement."
Will the tender offer be followed by a merger if all the shares are not
tendered in the offer?
After Solar Acquisition Corp. closes the offer and purchases tendered shares
in accordance with the offer, subject to certain conditions, Solar Acquisition
Corp. will be merged with Specialty Equipment. If that merger takes place,
United Technologies and its affiliates will own all of the shares of Specialty
Equipment and all other stockholders of Specialty Equipment will receive the
same price paid in the offer, that is, $30.50 per share in cash (or any other
price per share which is paid in the offer). See "INTRODUCTION" and Section 11
of this offer to purchase--"Purpose of the Offer; Plans for the Company; the
Merger Agreement; the Stockholder Agreement; Employee Agreements--The Merger
Agreement." There are no appraisal rights available in connection with the
offer. However, if the merger takes place, stockholders who have not sold
their shares in the offer will have appraisal rights under Delaware law. See
Section 14 of this offer to purchase--"Certain Legal Matters--Appraisal
Rights."
If I decide not to tender, how will the offer affect my shares?
If the merger takes place, stockholders who do not tender in the offer will
receive in the merger the same amount of cash per share which they would have
received had they tendered their shares in the offer, subject to their right
to seek appraisal rights under Delaware law. Therefore, if the merger takes
place, the only difference to you between tendering shares and not tendering
shares is that you will be paid earlier if you tender your shares and that you
will forego the right to assert appraisal rights under Delaware law. However,
until the merger is consummated or if the merger were not to take place for
some reason, the number of stockholders of Specialty Equipment and the shares
of Specialty Equipment which are still in the hands of the public may be so
small that there no longer will be an active public trading market (or,
possibly, any public trading market) for the shares. Also, the shares may no
longer be eligible to be traded on The New York Stock Exchange or any other
securities exchange, and Specialty Equipment may cease making filings with the
Commission or otherwise cease being required to comply with the Commission's
rules relating to publicly held companies. See Sections 7 and 11 of the offer
to purchase--"Possible Effects of the Offer on Market for the Shares; NYSE
Listing; Margin Regulations and Exchange Act Registration" and "Purpose of the
Offer; Plans for the Company; the Merger Agreement; the Stockholder Agreement;
Employee Agreements--The Merger Agreement" of this offer to purchase.
What is the market value of my shares as of a recent date?
On October 13, 2000, the last trading day before United Technologies and
Specialty Equipment announced that they had signed the Merger Agreement, the
last sale price of the shares reported on The New York Stock Exchange was $24
3/16 per share. On October 20, 2000, the last trading day before Solar
Acquisition Corp.
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commenced its tender offer, the last sale price of the shares was $30 3/16 per
share. We advise you to obtain a recent quotation for shares of Specialty
Equipment in deciding whether to tender your shares. See Section 6 of this
offer to purchase--"Price Range of Shares; Dividends."
Who can I talk to if I have questions about the tender offer?
You can call Georgeson Shareholder Communications, Inc. ((888) 223-2064).
Georgeson Shareholder Communications is acting as the information agent for
our tender offer. See the back cover of this offer to purchase.
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To the Holders of Shares of Common Stock
of Specialty Equipment Companies, Inc.:
INTRODUCTION
Solar Acquisition Corp., a Delaware corporation ("Purchaser"), and a wholly
owned subsidiary of United Technologies Corporation, a Delaware corporation
("Parent"), hereby offers to purchase all of the outstanding shares (the
"Shares") of common stock, par value $.01 per share, of Specialty Equipment
Companies, Inc., a Delaware corporation (the "Company"), at $30.50 per Share,
net to the seller in cash (the "Offer Price"), without interest thereon upon
the terms and subject to the conditions set forth in this Offer to Purchase
and in the related Letter of Transmittal (which, together with any amendments
or supplements thereto, collectively constitute the "Offer").
Tendering stockholders will not be obligated to pay brokerage fees or
commissions or, subject to Instruction 6 of the Letter of Transmittal,
transfer taxes on the purchase of Shares by Purchaser. Purchaser will pay all
charges and expenses of LaSalle Bank National Association (the "Depositary")
and Georgeson Shareholder Communications, Inc. (the "Information Agent").
The Offer is conditioned upon, among other things, (a) there having been
validly tendered and not properly withdrawn prior to the expiration of the
Offer that number of Shares which, when aggregated with any Shares then
beneficially owned by Parent (excluding Shares held by an employee benefit
plan), represents at least a majority of all of the issued and outstanding
Shares on a fully diluted basis, assuming the exercise of all outstanding
Company stock options (the "Minimum Tender Condition"), and (b) the expiration
or termination of any waiting period under the Hart-Scott-Rodino Antitrust
Improvements Act of 1976, as amended (the "HSR Act"), and the expiration or
termination of any waiting period and the receipt of any required approval
under any foreign antitrust and competition laws or regulations ("Foreign
Antitrust Laws") applicable to the purchase of Shares pursuant to the Offer or
the Merger. The Offer is also subject to certain other terms and conditions.
The Offer will expire at 12:00 midnight, New York City time, on Monday,
November 20, 2000, unless extended. See Sections 1, 13 and 14.
The Offer is being made pursuant to an Agreement and Plan of Merger (the
"Merger Agreement"), dated as of October 13, 2000, among the Company, Parent
and Purchaser, pursuant to which, after the completion of the Offer and the
satisfaction or waiver of certain conditions, Purchaser will be merged with
and into the Company and the Company will be the surviving corporation (the
"Merger"). The Merger Agreement is exhibit (d)(1) to the Schedule TO of
Purchaser and Parent filed with the Securities and Exchange Commission (the
"Commission") on the date hereof. On the effective date of the Merger, each
outstanding Share (other than Shares owned by Parent, Purchaser or any
subsidiary of Parent, Purchaser or the Company or held in the treasury of the
Company or held by stockholders who properly exercise appraisal rights, if
any, under the Delaware General Corporation Law ("DGCL")), will by virtue of
the Merger, and without action by Company, Purchaser or the holder thereof, be
canceled and converted into the right to receive an amount in cash, without
interest, equal to the per Share price paid pursuant to the Offer (the "Merger
Consideration") upon the surrender of the certificate formerly representing
such Share. The Merger Agreement is more fully described in Section 11 below.
Certain United States federal income tax consequences of the sale of Shares
pursuant to the Offer and the Merger, as the case may be, are described in
Section 5 below.
The Board of Directors of the Company has unanimously approved the Merger
Agreement, the Offer and the Merger, determined that the Offer and the Merger
are advisable and fair to and in the best interest of the holders of Shares
and unanimously recommends that stockholders accept the Offer, tender their
Shares pursuant to the Offer and approve the Merger.
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Concurrently with the execution of the Merger Agreement, Purchaser also
entered into a stockholder agreement with certain stockholders of the Company
(the "Stockholder Agreement"). Pursuant to the Stockholder Agreement, each
such stockholder of the Company agreed, among other things, to (a) tender, in
accordance with the terms of the Offer, all of the Shares owned by such
stockholder, (b) vote all of the Shares owned by such stockholder in favor of
the Merger and against certain other extraordinary transactions and (c) grant
an option to Purchaser to purchase the Shares held by such stockholder at the
per Share price payable pursuant to the Offer. According to the information
provided by such stockholders, in the aggregate, 7,768,175 Shares are subject
to the Stockholder Agreement, representing approximately 38 percent of the
outstanding Shares on a fully diluted basis, assuming the exercise of all
outstanding Company stock options. The Stockholder Agreement is more fully
described in Section 11 below.
Credit Suisse First Boston Corporation ("CSFB"), the Company's financial
advisor, has delivered to the Board of Directors of the Company a written
opinion, dated October 13, 2000, to the effect that, as of that date and based
on and subject to the matters described in the opinion, the $30.50 per Share
consideration to be received by holders of Shares in the Offer and the Merger
was fair to such holders (other than Parent and its affiliates) from a
financial point of view. A copy of CSFB's written opinion, which sets forth
the assumptions made, procedures followed, matters considered and limitations
of the review undertaken, is attached as Annex A to the Company's
Solicitation/Recommendation Statement on Schedule 14D-9 (the "Schedule 14D-9")
filed with the Commission in connection with the Offer, a copy of which is
being furnished to stockholders concurrently herewith.
If the Minimum Tender Condition and the other conditions to the Offer are
satisfied and the Offer is consummated, Purchaser will own a sufficient number
of Shares to ensure that the Merger will be approved. Under the DGCL if, after
consummation of the Offer, Purchaser owns at least 90 percent of the Shares
then outstanding, Purchaser will be able to cause the Merger to occur without
a vote of the Company's stockholders. If, however, after consummation of the
Offer Purchaser owns less than 90 percent of the then outstanding Shares, a
vote of the Company's stockholders will be required under the DGCL to approve
the Merger. See Section 11.
The Offer is conditioned upon, among other things, the Minimum Tender
Condition being satisfied. The Company has informed Purchaser that, as of
October 12, 2000, there were 19,515,887 Shares issued and outstanding and
there were 924,100 Shares subject to issuance pursuant to outstanding awards
under the Company's stock option and incentive plans. As of the date of this
Offer to Purchase, Parent, Purchaser and their affiliates do not currently
beneficially own any Shares or rights to acquire Shares, other than
Purchaser's rights under the Stockholder Agreement.
Based on the foregoing, Purchaser believes there are 20,439,987 Shares
outstanding on a fully diluted basis. Accordingly, if all of the Shares
subject to the Stockholder Agreement are tendered into the Offer and not
withdrawn, Purchaser believes that the Minimum Tender Condition would be
satisfied if at least 2,451,819 Shares, other than the Shares subject to the
Stockholder Agreement, are validly tendered prior to the Expiration Date (as
defined in Section 1) and not properly withdrawn.
No appraisal rights are available in connection with the Offer. However,
stockholders may have appraisal rights in connection with the Merger. See
Section 11.
This Offer to Purchase and the related Letter of Transmittal contain
important information that should be read carefully and in their entirety
before any decision is made with respect to the Offer.
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THE TENDER OFFER
1. Terms of the Offer
Upon the terms and subject to the conditions of the Offer (including, if the
Offer is extended or amended, the terms and conditions of any extension or
amendment), Purchaser will accept for payment and pay for all Shares validly
tendered prior to the Expiration Date and not theretofore properly withdrawn
in accordance with Section 4. The term "Expiration Date" means 12:00 midnight,
New York City time, on Monday, November 20, 2000, unless Purchaser shall have
extended the initial period of time during which the Offer is open, in which
event the term "Expiration Date" shall mean the latest time and date at which
the Offer, as so extended by Purchaser, shall expire. If Purchaser shall
decide, in its sole discretion, to increase the per Share price offered in the
Offer to holders of Shares and if, at the time that notice of such change is
first published, sent or given to holders of Shares in the manner specified
below, the Offer is scheduled to expire at any time earlier than the
expiration of a period ending on the tenth business day from, and including,
the date that such notice is first so published, sent or given, then the Offer
will be extended until the expiration of such period of ten business days. For
purposes of the Offer, a "business day" means any day other than a Saturday,
Sunday or a federal holiday and consists of the time period from 12:01 a.m.
through 12:00 midnight, New York City time.
The Offer is conditioned upon, among other things, (a) satisfaction of the
Minimum Tender Condition and (b) the expiration or termination of any waiting
period under the HSR Act and the expiration or termination of any waiting
period and the receipt of any required approval under any Foreign Antitrust
Laws applicable to the purchase of Shares pursuant to the Offer or the Merger.
See Section 13. The Merger Agreement and the Offer may be terminated by
Purchaser and Parent if certain events occur. See Section 11.
Purchaser reserves the right (but is not obligated), in accordance with
applicable rules and regulations of the Commission and subject to the
limitations set forth in the Merger Agreement described below, to waive any
condition to the Offer. Pursuant to the Merger Agreement, however, Purchaser
has agreed not to waive the Minimum Tender Condition or the condition relating
to the expiration of the waiting period under the HSR Act without the consent
of the Company. If the Minimum Tender Condition or any other condition set
forth in Section 13 has not been satisfied by 12:00 midnight, New York City
time, on Monday, November 20, 2000 (or any later time then set as the
Expiration Date), Purchaser will delay the Expiration Date for one or more
periods but in no event will the Expiration Date be extended beyond December
18, 2000; provided, however, that either Purchaser or Company may, in their
respective sole discretion, extend such December 18, 2000 date for an
additional period not to exceed 60 business days if the sole reason that
Purchaser has not accepted for payment and paid for Shares pursuant to the
Offer is the failure of the applicable waiting period under the HSR Act and
any Foreign Antitrust Laws to expire or failure to obtain any required
governmental or regulatory approval (December 18, 2000, or such later date,
the "Outside Date").
Pursuant to the Merger Agreement, Purchaser will not extend the Expiration
Date of the Offer beyond November 20, 2000 without the prior consent of the
Company, except (a) as required by applicable law including applicable rules
and regulations of the Commission or any interpretation or position of the
Commission staff, (b) that if, immediately prior to the expiration date of the
Offer (as it may be extended), the Shares tendered and not withdrawn pursuant
to the Offer constitute less than 90% of the outstanding Shares, Purchaser
may, in its sole discretion, extend the Offer for one or more periods not to
exceed an aggregate of ten business days, notwithstanding that all conditions
to the Offer are satisfied as of such expiration date of the Offer, provided
that after November 20, 2000, the Offer will not be subject to any conditions
that are at the time of such extension satisfied other than the Minimum Tender
Condition and the conditions described in paragraph (a) under "Conditions of
the Offer," and (c) that if any condition to the Offer has not been satisfied
or waived, Purchaser shall extend the expiration date of the Offer for one or
more periods, but in no event later than the Outside Date. In addition, the
Offer Price may be increased and the Offer may be extended to the extent
required by law in connection with such increase without the consent of the
Company.
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Purchaser expressly reserves the right at any time and from time to time to
modify or amend the terms and conditions of the Offer in any respect. However,
pursuant to the Merger Agreement, Purchaser has agreed that it will not,
without the prior written consent of the Company, (a) reduce the maximum
number of Shares to be purchased pursuant to the Offer, (b) decrease the price
per Share payable pursuant to the Offer, (c) change the form of consideration
to be paid for the Shares pursuant to the Offer, (d) impose additional
conditions to the Offer, (e) make any other change in the terms or conditions
of the Offer which is in any manner adverse to the holders of Shares or (f)
waive the Minimum Tender Condition or the condition relating to the expiration
of the waiting period under the HSR Act.
Subject to the applicable rules and regulations of the Commission and
subject to the limitations set forth in the Merger Agreement, Purchaser
expressly reserves the right, at any time and from time to time, in its sole
discretion to delay payment for any Shares regardless of whether such Shares
were theretofore accepted for payment, or to terminate the Offer and not to
accept for payment or pay for any Shares not theretofore accepted for payment
or paid for, upon the failure of any of the conditions set forth in Section
13, by giving oral or written notice of such delay or termination to the
Depositary. Purchaser's right to delay payment for any Shares or not to pay
for any Shares theretofore accepted for payment is subject to the applicable
rules and regulations of the Commission, including Rule 14e-1(c) under the
Exchange Act, relating to Purchaser's obligation to pay for or return tendered
Shares promptly after the termination or withdrawal of the Offer.
Any extension of the period during which the Offer is open, payment, delay
in acceptance for payment, termination or amendment of the Offer will be
followed, as promptly as practicable, by public announcement thereof, such
announcement in the case of an extension to be issued not later than the
earlier of 9:00 a.m., New York City time, on the next business day after the
previously scheduled Expiration Date and the first opening of the New York
Stock Exchange after the previously scheduled Expiration Date in accordance
with the public announcement requirements of Rules 14d-4(c) and 14e-1(d) under
the Exchange Act. Without limiting the obligation of Purchaser under such rule
or the manner in which Purchaser may choose to make any public announcement,
Purchaser currently intends to make announcements by issuing a press release
to the Dow Jones News Service (or such other national media outlet or outlets
it deems prudent) and making any appropriate filing with the Commission.
If, subject to the terms of the Merger Agreement, Purchaser makes a material
change in the terms of the Offer or the information concerning the Offer, or
if it waives a material condition of the Offer (including, with the consent of
the Company, a waiver of the Minimum Tender Condition or the condition
relating to the expiration of the waiting period under the HSR Act), Purchaser
will disseminate additional tender offer materials and extend the Offer if and
to the extent required by Rules 14d-4(c), 14d-4(d), 14d-6(d) and 14e-1 under
the Exchange Act or otherwise. The minimum period during which a tender offer
must remain open following material changes in the terms of the Offer or the
information concerning the Offer, other than a change in the consideration
offered or a change in the percentage of securities sought, will depend upon
the facts and circumstances, including the relative materiality of the
changes. With respect to a change in the consideration offered or a change in
the percentage of securities sought, the Offer generally must remain open for
a minimum of ten business days following such change to allow for adequate
disclosure to stockholders.
The Company has provided Purchaser with the Company's list of stockholders
and security position listings for the purpose of disseminating the Offer to
holders of Shares. This Offer to Purchase and the related Letter of
Transmittal will be mailed to record holders of Shares whose names appear on
the Company's stockholder list and will be furnished to brokers, dealers,
commercial banks, trust companies and similar persons whose names, or the
names of whose nominees, appear on the stockholder list or, if applicable, who
are listed as participants in a clearing agency's security position listing,
for subsequent transmittal to beneficial owners of Shares.
2. Acceptance for Payment and Payment for Shares
Upon the terms and subject to the conditions of the Offer (including, if the
Offer is extended or amended, the terms and conditions of any such extension
or amendment), Purchaser will be deemed to have accepted for
8
<PAGE>
payment, and will pay for, all Shares validly tendered and not properly
withdrawn as soon as practicable after the Expiration Date, if and when
Purchaser gives oral or written notice to the Depositary of Purchaser's
acceptance of the tender of such Shares for payment pursuant to the Offer.
Purchaser expressly reserves the right to delay acceptance for payment of, or
payment for, Shares in order to comply, in whole or in part, with any
applicable law. Payment for Shares accepted for payment pursuant to the Offer
will be made by deposit of the purchase price therefor with the Depositary,
which will act as agent for the tendering stockholders for the purpose of
receiving payments from Purchaser and transmitting such payments to the
tendering stockholders. Under no circumstances will interest be paid on the
purchase price for Shares, regardless of any extension of the Offer or any
delay in making such payment. See Sections 1 and 14.
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 (a)
certificates for such Shares or confirmation of the book-entry transfer of
such Shares into the Depositary's account at The Depository Trust Company (the
"Book-Entry Transfer Facility") pursuant to the procedures set forth in
Section 3, (b) a properly completed and duly executed Letter of Transmittal
(or facsimile thereof), with any required signature guarantees (or, in the
case of a book-entry transfer, an Agent's Message (as defined in Section 3
below) in lieu of the Letter of Transmittal) and (c) any other documents
required by the Letter of Transmittal. See Section 3.
The reservation by Purchaser of the right to delay the acceptance or
purchase of or payment for Shares is subject to the provisions of Rule 14e-
1(c) under the Exchange Act, which requires Purchaser to pay the consideration
offered or to return Shares deposited by or on behalf of tendering
stockholders promptly after the termination or withdrawal of the Offer.
If any tendered Shares are not accepted for payment pursuant to the terms
and conditions of the Offer for any reason, or if certificates are submitted
for more Shares than are tendered, certificates for such unpurchased Shares
will be returned, 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 pursuant to the procedures set forth in
Section 3, such Shares will be credited to an account maintained with the
Book-Entry Transfer Facility), as soon as practicable following expiration or
termination of the Offer.
If, prior to the Expiration Date, Purchaser increases the consideration
offered to holders of Shares pursuant to the Offer, such increased
consideration will be paid to all holders of Shares that are purchased
pursuant to the Offer, whether or not such Shares were tendered prior to such
increase in consideration.
Purchaser reserves the right to transfer or assign in whole or in part, from
time to time, to one or more direct or indirect subsidiaries of Parent the
right to purchase all or any portion of the Shares tendered pursuant to the
Offer, but any such transfer or assignment will not relieve Purchaser of its
obligations under the Offer and will in no way prejudice the rights of
tendering stockholders to receive payment for Shares validly tendered and
accepted for payment pursuant to the Offer. Under the Merger Agreement, Parent
may assign any of its rights and Purchaser may assign any of its rights,
interest and obligations to any of the direct or indirect subsidiaries of
Parent provided that such assignment will not relieve Parent of any liability
under the Merger Agreement for any breach by such assignee.
3. Procedure for Tendering Shares
Valid Tender. To tender Shares pursuant to the Offer, either (a) a properly
completed and duly executed Letter of Transmittal (or a facsimile thereof) in
accordance with the instructions of the Letter of Transmittal, with any
required signature guarantees, certificates for the Shares to be tendered and
any other documents required by the Letter of Transmittal must be received by
the Depositary at its address set forth on the back cover of this Offer to
Purchase prior to the Expiration Date, (b) such Shares must be properly
delivered pursuant to the procedures for book-entry transfer described below
and a confirmation of such delivery received by the Depositary (which
confirmation must include an Agent's Message (as defined below) if the
tendering stockholder has not delivered a Letter of Transmittal), prior to the
Expiration Date, or (c) the tendering stockholder must
9
<PAGE>
comply with the guaranteed delivery procedures set forth below. The term
"Agent's Message" means a message, transmitted by the Book-Entry Transfer
Facility to, and received by, the Depositary and forming a part of a Book-
Entry Confirmation (as defined below), which states that the Book-Entry
Transfer Facility has received an express acknowledgment from the participant
in the Book-Entry Transfer Facility tendering the Shares which are the subject
of such Book-Entry Confirmation that such participant has received and agrees
to be bound by the terms of the Letter of Transmittal and that Purchaser may
enforce such agreement against the participant.
Book-Entry Transfer. The Depositary will establish an account with respect
to the Shares at the Book-Entry Transfer Facility for purposes of the Offer
within two business days after the date of this Offer to Purchase. Any
financial institution that is a participant in the Book-Entry Transfer
Facility's systems may make a book-entry transfer of Shares by causing the
Book-Entry Transfer Facility to transfer such Shares into the Depositary's
account in accordance with the Book-Entry Transfer Facility's procedures for
such transfer. However, although delivery of Shares may be effected through
book-entry transfer, either the Letter of Transmittal (or facsimile thereof),
properly completed and duly executed, together with any required signature
guarantees, or an Agent's Message in lieu of the Letter of Transmittal, and
any other required documents, must, in any case, be transmitted to and
received by the Depositary at its address set forth on the back cover of this
Offer to Purchase by the Expiration Date, or the tendering stockholder must
comply with the guaranteed delivery procedures described below. The
confirmation of a book-entry transfer of Shares into the Depositary's account
at the Book-Entry Transfer Facility as described above is referred to herein
as a "Book-Entry Confirmation." Delivery of documents to the Book-Entry
Transfer Facility in accordance with the Book-Entry Transfer Facility's
procedures does not constitute delivery to the Depositary.
Signature Guarantees and Stock Powers. Except as otherwise provided below,
all signatures on a Letter of Transmittal must be guaranteed by a financial
institution that is a participant in the Security Transfer Agents Medallion
Program, the New York Stock Exchange Medallion Signature Guarantee Program or
the Stock Exchange Medallion Program (an "Eligible Institution"). Most
commercial banks, savings and loans associations and brokerage houses are
Eligible Institutions. Signatures on a Letter of Transmittal need not be
guaranteed (a) if the Letter of Transmittal is signed by the registered owner
(which term, for purposes of this section, includes any participant in any of
the Book-Entry Transfer Facility's systems whose name appears on a security
position listing as the owner of the Shares) of Shares tendered therewith and
such registered holder has not completed the box entitled "Special Payment
Instructions" or the box entitled "Special Delivery Instructions" on the
Letter of Transmittal or (b) if such Shares are tendered for the account of an
Eligible Institution. See Instructions 1 and 5 of the Letter of Transmittal.
If the certificates for Shares are registered in the name of a person other
than the signer of the Letter of Transmittal, or if payment is to be made or
certificates for Shares not tendered or not accepted for payment are to be
returned to a person other than the registered holder of the certificates
surrendered, then the tendered certificates must be endorsed or accompanied by
appropriate stock powers, in either case signed exactly as the name or names
of the registered holders or owners appear on the certificates, with the
signatures on the certificates or stock powers guaranteed as described above.
See Instructions 1 and 5 of the Letter of Transmittal.
Guaranteed Delivery. A stockholder who desires to tender Shares pursuant to
the Offer and whose certificates for Shares are not immediately available, or
who cannot comply with the procedures for book-entry transfer on a timely
basis, or who cannot deliver all required documents to the Depositary prior to
the Expiration Date, may tender such Shares by following all of the procedures
set forth below:
(a) such tender is made by or through an Eligible Institution;
(b) a properly completed and duly executed Notice of Guaranteed Delivery,
substantially in the form provided by Purchaser, is received by the
Depositary (as provided below) prior to the Expiration Date; and
(c) the certificates for all tendered Shares, in proper form for transfer
(or a Book-Entry Confirmation with respect to all such Shares), together
with a properly completed and duly executed Letter of Transmittal (or
facsimile thereof), with any required signature guarantees (or, in the case
of a book-entry transfer, an
10
<PAGE>
Agent's Message in lieu of the Letter of Transmittal), and any other
required documents, are received by the Depositary within three trading
days after the date of execution of such Notice of Guaranteed Delivery. A
"trading day" is any day on which The New York Stock Exchange, Inc. (the
"NYSE") is open for business.
The Notice of Guaranteed Delivery may be delivered by hand to the Depositary
or transmitted by telegram, facsimile transmission or mail to the Depositary
and must include a guarantee by an Eligible Institution in the form set forth
in such Notice of Guaranteed Delivery.
The method of delivery of Shares, the Letter of Transmittal and all other
required documents, including delivery through the Book-Entry Transfer
Facility, is at the election and risk of the tendering stockholder. Delivery
of all such documents will be deemed made only when actually received by the
Depositary (including, in the case of a book-entry transfer, by Book-Entry
Confirmation). If such delivery is by mail, it is recommended that all such
documents be sent by properly insured registered mail with return receipt
requested. In all cases, sufficient time should be allowed to ensure timely
delivery.
Other Requirements. Notwithstanding any provision hereof, payment for Shares
accepted for payment pursuant to the Offer will in all cases be made only
after timely receipt by the Depositary of (a) certificates for (or a timely
Book-Entry Confirmation with respect to) such Shares, (b) a properly completed
and duly executed Letter of Transmittal (or facsimile thereof), with any
required signature guarantees (or, in the case of a book-entry transfer, an
Agent's Message in lieu of the Letter of Transmittal) and (c) any other
documents required by the Letter of Transmittal. Accordingly, tendering
stockholders may be paid at different times depending upon when certificates
for Shares or Book-Entry Confirmations with respect to Shares are actually
received by the Depositary. Under no circumstances will interest be paid by
Purchaser on the purchase price of the Shares, regardless of any extension of
the Offer or any delay in making such payment.
Tender Constitutes a Binding Agreement. The valid tender of Shares pursuant
to one of the procedures described above will constitute a binding agreement
between the tendering stockholder and Purchaser upon the terms and subject to
the conditions of the Offer and subject to the withdrawal rights described in
Section 4.
Appointment as Proxy; Consent to Election of Directors. By executing and
delivering a Letter of Transmittal as set forth above (or, in the case of a
book-entry transfer, by delivery of an Agent's Message, in lieu of a Letter of
Transmittal), the tendering stockholder irrevocably appoints designees of
Purchaser as such stockholder's attorneys in fact and proxies, each with full
power of substitution, to the full extent of such stockholder's rights with
respect to the Shares tendered by such stockholder and accepted for payment by
Purchaser. All such proxies and powers of attorney will be considered coupled
with an interest in the tendered Shares. Such appointment is effective when,
and only to the extent that, Purchaser deposits the payment for such Shares
with the Depositary. Upon the effectiveness of such appointment, all prior
powers of attorney, proxies and consents given by such stockholder will be
revoked, and no subsequent powers of attorney, proxies and consents may be
given (and, if given, will not be deemed effective). Purchaser reserves the
right to require that, in order for Shares to be deemed validly tendered,
immediately upon Purchaser's acceptance for payment of such Shares, Purchaser
must be able to exercise full voting rights to the extent permitted under
applicable law with respect to such Shares.
Without limiting the foregoing, by executing and delivering a Letter of
Transmittal as set forth above (or, in the case of a book-entry transfer, by
delivery of an Agent's Message, in lieu of a Letter of Transmittal), the
tendering stockholder will be deemed to consent thereby to the election of
directors of the Company, to be designated by Purchaser, to fill the vacancies
on the Board of Directors of the Company that are expected to result, after
completion of the Offer, from the resignation of certain directors of the
Company pursuant to the Merger Agreement. The number of directors that are
expected to resign, and that will be designated for election by Purchaser,
will equal the number, rounded up to the nearest whole number, which is the
product of the total number of directors on the Board of Directors of the
Company and the percentage that the aggregate number of Shares beneficially
owned by Purchaser after completion of the Offer bears to the total number of
Shares then
11
<PAGE>
outstanding, provided that there will remain after the Offer but prior to the
time the Merger becomes effective, two directors who were directors of the
Company on the date of the Merger Agreement and who are not representatives of
Parent. Such consent is effective when, and only to the extent that, Purchaser
deposits the payment for the Shares tendered hereby with the Depositary. See
the Company's enclosed Proxy Statement on Schedule 14A for additional
information regarding the consent described in this paragraph.
Determination of Validity. All questions as to the validity, form,
eligibility (including time of receipt) and acceptance of any tender of Shares
will be determined by Purchaser in its sole and absolute discretion, which
determination will be final and binding. Purchaser reserves the absolute right
to reject any and all tenders determined by it not to be in proper form or the
acceptance for payment of or payment for which may, in the opinion of
Purchaser, be unlawful. Purchaser also reserves the absolute right to waive
any defect or irregularity in the tender of any Shares of any particular
stockholder whether or not similar defects or irregularities are waived in the
case of any other stockholder. No tender of Shares will be deemed to have been
validly made until all defects and irregularities relating thereto have been
cured or waived. None of Parent, 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 incur any liability for failure to
give any such notification. Purchaser's interpretation of the terms and
conditions of the Offer (including the Letter of Transmittal and Instructions
and any other related documents thereto) will be final and binding.
4. Withdrawal Rights
Except as otherwise provided in this Section 4, tenders of Shares made
pursuant to the Offer are irrevocable. Shares tendered pursuant to the Offer
may be withdrawn at any time prior to the Expiration Date and, unless
theretofore accepted for payment by Purchaser pursuant to the Offer, may also
be withdrawn at any time after December 22, 2000.
For a withdrawal of Shares to be effective, a written facsimile transmission
notice of withdrawal must be timely received by the Depositary at its address
set forth on the back cover of this Offer to Purchase. Any notice of
withdrawal must specify the name of the person having tendered the Shares to
be withdrawn, the number of Shares to be withdrawn and the name of the
recordholder of the Shares to be withdrawn, if different from that of the
person who tendered such Shares. The signature(s) on the notice of withdrawal
must be guaranteed by an Eligible Institution, unless such Shares have been
tendered for the account of any Eligible Institution. If Shares have been
tendered pursuant to the procedures for book-entry transfer as set forth in
Section 3, any notice of withdrawal must specify the name and number of the
account at the Book-Entry Transfer Facility to be credited with the withdrawn
Shares. If certificates have been delivered or otherwise identified to the
Depositary, the name of the registered holder and the serial numbers shown on
such certificates must also be furnished to the Depositary as aforesaid prior
to the physical release of such certificates.
Subject to applicable law, all questions as to the form and validity
(including time of receipt) of any notice of withdrawal will be determined by
Purchaser, in its sole and absolute discretion, which determination shall be
final and binding. No withdrawal of Shares shall be deemed to have been
properly made until all defects and irregularities relating thereto have been
cured or waived. None of Purchaser, Parent, the Depositary, the Information
Agent or any other person will be under any duty to give notification of any
defects or irregularities in any notice of withdrawal or incur any liability
for failure to give such notification. Withdrawals of tenders of Shares may
not be rescinded, and any Shares properly withdrawn will be deemed not to have
been validly tendered for purposes of the Offer. However, withdrawn Shares may
be retendered by following one of the procedures described in Section 3 at any
time prior to the Expiration Date.
If Purchaser extends the Offer, is delayed in its acceptance for payment of
Shares or is unable to accept for payment Shares pursuant to the Offer for any
reason, then, without prejudice to Purchaser's rights under this Offer, the
Depositary may, nevertheless, on behalf of Purchaser, retain tendered Shares,
and such Shares may not be withdrawn except to the extent that tendering
stockholders are entitled to withdrawal rights as set forth in this Section 4.
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<PAGE>
5. Certain United States Federal Income Tax Consequences of the Offer
The following is a summary of the material United States federal income tax
consequences to the Company's stockholders of the sale of Shares pursuant to
the Offer and the exchange of Shares for cash pursuant to the Merger. This
summary does not purport to be a description of all tax consequences that may
be relevant to the Company's stockholders, and assumes an understanding of tax
rules of general application. It does not address special rules which may
apply to the Company's stockholders based on their tax status, individual
circumstances or other factors unrelated to the Offer or the Merger.
Stockholders are encouraged to consult their own tax advisors regarding the
Offer and the Merger.
The receipt of cash in exchange for Shares pursuant to the Offer or the
Merger will be a taxable transaction for federal income tax purposes, and may
also be taxable under applicable state, local, foreign and other tax laws. For
federal income tax purposes, a stockholder whose Shares are purchased pursuant
to the Offer or who receives cash as a result of the Merger will realize gain
or loss equal to the difference between the adjusted basis of the Shares sold
or exchanged and the amount of cash received therefor. Such gain or loss will
be capital gain or loss if the Shares are held as capital assets by the
stockholder and will be long-term capital gain or loss if the stockholder's
holding period in such Shares for federal income tax purposes is more than one
year at the time of the sale or exchange. Long-term capital gain of a non-
corporate stockholder is generally subject to a maximum tax rate of 20
percent. In addition, a stockholder's ability to use capital losses to offset
ordinary income is limited.
Backup Withholding. Under the federal income tax backup withholding rules,
unless an exemption applies, Purchaser is required to, and will, withhold 31
percent of all payments to which a stockholder is entitled pursuant to the
Offer, unless such stockholder provides a tax identification number and
certifies under penalties of perjury that the number is correct. If a
stockholder is an individual, the tax identification number is a social
security number. If a stockholder is not an individual, the tax identification
number is an employer identification number. Each stockholder should complete
and sign the substitute Form W-9, which will be included with the Letter of
Transmittal to be returned to the Depositary, in order to provide the
information and certification necessary to avoid backup withholding, unless an
applicable exception exists and is proved in a manner satisfactory to the
Depositary. Certain stockholders, including corporations and some foreign
individuals, are not subject to these backup withholding and reporting
requirements. In order for a foreign individual to qualify as an exempt
recipient, however, he or she must submit a Certificate of Foreign Status on
Form W-8BEN attesting to his or her exempt status. Any amounts withheld will
be allowed as a credit against the holder's federal income tax liability for
that year.
The foregoing discussion is included for general information purposes and
may not apply to stockholders who acquired their Shares pursuant to the
exercise of employee stock options or other compensation arrangements with the
Company, or who are not citizens or residents of the United States or who are
otherwise subject to special tax treatment. The tax discussion above is based
upon laws, regulations, rulings and decisions now in effect, all of which are
subject to change, possibly retroactively. Each stockholder is urged to
consult his, her or its own tax advisor with respect to the tax consequences
of the Offer and the Merger, including the application and effect of state,
local, foreign or other tax laws.
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<PAGE>
6. Price Range of Shares; Dividends
The Shares are listed on the NYSE under the symbol "SEC." The following
table sets forth, for the calendar quarters indicated, the high and low sales
prices for the Common Stock on the NYSE:
<TABLE>
<CAPTION>
Calendar Year High Low
------------- --------- ---------
<S> <C> <C>
1998:
First Quarter.......................................... $23 3/4 $16 3/8
Second Quarter......................................... 24 20
Third Quarter.......................................... 24 3/8 18 7/8
Fourth Quarter......................................... 27 1/8 18
1999:
First Quarter.......................................... 28 15/16 25
Second Quarter......................................... 31 3/4 27 5/8
Third Quarter.......................................... 34 1/8 21 1/2
Fourth Quarter......................................... 25 1/2 20 7/16
2000:
First Quarter.......................................... 24 3/8 15
Second Quarter......................................... 27 1/8 18 15/16
Third Quarter.......................................... 30 3/8 24
Fourth Quarter (through October 20, 2000).............. 30 3/8 23 5/8
</TABLE>
On October 13, 2000, the last full trading day prior to the public
announcement of the terms of the Offer and the Merger, the reported closing
price per Share on the NYSE was $24 3/16 per Share. On October 20, 2000, the
last full trading day prior to the commencement of the Offer, the reported
closing price per Share on the NYSE was $30 3/16 per Share. The Company has
not paid any dividends since January 1, 1998. Stockholders are urged to obtain
a current market quotation for the Shares.
7. Possible Effects of the Offer on the Market for the Shares; NYSE Listing;
Margin Regulations and Exchange Act Registration
Possible Effects of the Offer on the Market for the Shares. The purchase of
Shares pursuant to the Offer will reduce the number of Shares that might
otherwise trade publicly and could adversely affect the liquidity and market
value of the remaining Shares held by the public.
NYSE Listing. Depending upon the number of Shares purchased pursuant to the
Offer and the Stockholder Agreement, the Shares may no longer meet the
standards for continued listing on the NYSE. According to its published
guidelines, the NYSE would give consideration to delisting the Shares if,
among other things, the number of publicly held Shares falls below 600,000,
the number of holders of round lots of Shares falls below 400 (or below 1,200
if the average monthly trading volume is below 100,000 for the last twelve
months) or the aggregate market value of such publicly held Shares falls below
$8,000,000. Shares held by officers or directors of the Company or their
immediate families, or by any beneficial owner of more than 10 percent or more
of the Shares, ordinarily will not be considered as being publicly held for
this purpose.
In the event the Shares are no longer eligible for listing on the NYSE,
quotations might still be available from other sources. The extent of the
public market for the Shares and the availability of such quotations would,
however, depend upon the number of holders of such Shares at such time, the
interest in maintaining a market in such Shares on the part of securities
firms, the possible termination of registration of such Shares under the
Exchange Act as described below and other factors.
Margin Regulation. The Shares are presently "margin securities" under the
regulations of the Board of Governors of the Federal Reserve System (the
"Federal Reserve Board"), which has the effect, among other
14
<PAGE>
things, of allowing brokers to extend credit using such Shares as collateral.
Depending upon factors similar to those described above regarding listing and
market quotations, the Shares might no longer constitute "margin securities"
for the purposes of the Federal Reserve Board's margin regulations in which
event the Shares would be ineligible as collateral for margin loans made by
brokers.
Exchange Act Registration. The Shares are currently registered under the
Exchange Act. Such registration may be terminated by the Company upon
application to the Commission if the outstanding Shares are not listed on a
national securities exchange and if there are fewer than 300 holders of record
of Shares. Termination of registration of the Shares under the Exchange Act
would reduce the information required to be furnished by the Company to its
stockholders and to the Commission and would make certain provisions of the
Exchange Act, such as the short-swing profit recovery provisions of Section
16(b) and the requirement of furnishing a proxy statement in connection with
stockholders' meetings pursuant to Section 14(a) and the related requirement
of furnishing an annual report to stockholders, no longer applicable with
respect to the Shares. Furthermore, the ability of "affiliates" of the Company
and persons holding "restricted securities" of the Company to dispose of such
securities pursuant to Rule 144 under the Securities Act of 1933, as amended,
may be impaired or eliminated. If registration of the Shares under the
Exchange Act were terminated, the Shares would no longer be eligible for NYSE
reporting or for continued inclusion on the Federal Reserve Board's list of
"margin securities." Purchaser intends to seek to cause the Company to apply
for termination of registration of the Shares as soon as possible after
consummation of the Offer if the requirements for termination of registration
are met.
8. Certain Information Concerning the Company
The Company is a manufacturer of a diversified line of highly engineered
commercial and institutional hot and cold food service equipment. The
Company's products are used by customers in the food service and beverage
equipment market segment and include a variety of national restaurant chains,
other commercial restaurants, convenience store chains, soft drink bottlers,
hotels, brewers, roasters, office coffee contractors and institutional food
service operators. The Company services its customers through a broad-based
global distribution and service network. The Company's principal executive
offices are located at 1245 Corporate Boulevard, Suite 401, Aurora, Illinois,
60504 and the Company's telephone is (630) 585-5111.
Set forth below is certain summary consolidated financial information for
the Company's last three fiscal years and for the six months ended July 31,
1999 and July 31, 2000. The summary consolidated financial information is
derived from more comprehensive financial information included in the
Company's Annual Report on Form 10-K for the fiscal year ended January 31,
2000 and Quarterly Report on Form 10-Q for the fiscal quarter ended July 31,
2000 (including management's discussion and analysis of financial condition
and results of operation) and other documents filed by the Company with the
Commission, and is qualified in its entirety by reference to such reports and
other documents and all of the financial information and notes contained
therein. Copies of such reports and other documents may be examined at or
obtained from the Commission in the manner set forth below.
15
<PAGE>
SPECIALTY EQUIPMENT COMPANIES, INC.
SELECTED CONSOLIDATED FINANCIAL INFORMATION
(In thousands, except ratio and per share amounts)
<TABLE>
<CAPTION>
Fiscal Year Ended Six Months Ended
----------------------------------- ------------------
January 31, January 31, January 31, July 31, July 31,
2000 1999 1998 2000 1999
----------- ----------- ----------- -------- --------
<S> <C> <C> <C> <C> <C>
OPERATING DATA:
Net revenue............. $502,119 $495,647 $433,121 $266,063 $268,698
Gross margin............ 157,969 156,758 133,899 85,379 84,554
Earnings from operations
before interest expense
and income taxes....... 71,966 74,124 63,043 38,933 40,489
Earnings before
extraordinary item..... 44,369 44,025 37,542
Net earnings............ 44,369 37,601 37,542 21,244 22,534
Net earnings per diluted
common share........... 2.22 1.86 1.86 1.08 1.12
Interest expense........ 7,964 14,068 15,944 4,643 3,867
Ratio of earnings to
fixed charges(1)....... 8.77x 5.10x 3.85x 8.21x 10.16x
FINANCIAL RATIOS AND
OTHER DATA:
EBITDA(2)............... $ 78,968 80,625 $ 68,882 43,035 $ 43,766
Depreciation............ 5,971 5,352 4,871 3,320 2,852
Amortization(3)......... 1,031 1,149 968 782 425
Capital expenditures.... 11,603 7,527 4,715 3,020 5,480
Ratio of EBITDA to
interest expense....... 9.92x 5.73x 4.32x 9.27x 11.32x
Ratio of EBITDA less
capital expenditures to
interest expense....... 8.46x 5.20x 4.02x 8.62x 9.90x
BALANCE SHEET DATA (AT
PERIOD END):
Total assets............ $265,316 $236,745 $241,450 $284,505 $247,173
Cash and each
equivalents, including
restricted cash
equivalents............ 1,561 6,814 42,609 12,626 14,007
Long-term debt,
including current
installments........... 127,335 128,515 177,986 118,941 123,688
Total other
liabilities............ 110,604 108,154 102,275 1,694 1,772
Total stockholders'
equity (deficit)....... 27,377 76 (38,811) 41,364 504
</TABLE>
--------
1. For purposes of determining this ratio, earnings consist of earnings (loss)
from operations before income tax expense (benefit) plus interest expense
and amortization of deferred financing costs. Fixed charges consist of
interest expense, plus amortization of deferred financing costs.
2. EBITDA is defined as earnings from operations before interest expense,
income taxes, depreciation and amortization. EBITDA does not represent
earnings from operating activities as defined by generally accepted
accounting principles and should not be considered as an alternative to net
earnings as an indicator of the Company's operating performance or to cash
flows as a measure of liquidity, but rather provides additional information
related to debt service capability.
3. Amortization expense includes the amortization of deferred financing costs,
reorganization value in excess of amounts allocable to identifiable assets,
goodwill, other intangible assets and unearned compensation.
Except as otherwise set forth herein, the information concerning the Company
contained in this offer to purchase has been taken from or based upon publicly
available documents and records on file with the Commission and other public
sources and is qualified in its entirety by reference thereto. Although Parent
has no knowledge that would indicate that any statements contained herein
taken from or based on such documents and records are untrue, Parent cannot
take responsibility for the accuracy or completeness of the information
contained in such documents and records, or for any failure by the Company to
disclose events which may have occurred or may affect the significance or
accuracy of any such information but which are unknown to Parent.
The Company is subject to the information and reporting requirements of the
Exchange Act and in accordance therewith is obligated 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 such 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. Such reports, proxy
statements and other information should be available for inspection at the
public reference
16
<PAGE>
room at the Commission's office 450 Fifth Street, N.W., Room 1024, Judiciary
Plaza, Washington, D.C. 20549, and also should be available for inspection and
copying at the following regional offices of the Commission: 7 World Trade
Center, Suite 1300, New York, New York 10048 and Citicorp Center, 500 West
Madison Street, Suite 1400, Chicago, Illinois 60661-2511. Copies may be
obtained by mail, upon payment of the Commission's customary charges, by
writing to its principal office at 450 Fifth Street, N.W., Room 1024,
Judiciary Plaza, Washington, D.C. 20549. Further information on the operation
of the Commission's Public Reference Room in Washington, D.C. can be obtained
by calling the Commission at 1-800-Commission-0330. The Commission also
maintains an Internet web site that contains reports, proxy statements and
other information about issuers, such as the Company, who file electronically
with the Commission. The address of that site is http://www.sec.gov.
During the discussions between the Company and Parent that led to execution
of the Merger Agreement, the Company provided Parent with certain information
relating to the Company that Parent and Purchaser believe is not publicly
available. This information included projections of the operating performance
of the Company for the years ended on or about January 31, 2001, January 31,
2002 and January 31, 2003, based on financial projections developed by the
Company. The projections do not take into account any of the transactions
contemplated by the Merger Agreement, including the Offer or the Merger. These
events may cause actual results to differ materially from the projections.
The projections include the following information regarding the Company's
anticipated results of operations for the years ended January 31, 2001,
January 31, 2002 and January 31, 2003:
<TABLE>
<CAPTION>
Fiscal Year Ended
-----------------------------------
January 31, January 31, January 31,
2001 2002 2003
----------- ----------- -----------
(in millions, except percentages)
<S> <C> <C> <C>
Consolidated Revenue.................. $508.6 $573.4 $630.5
Consolidated projected earnings from
operations before interest expense,
income taxes and amortization
("EBITA")............................ $ 72.6 $ 86.6 $ 97.3
Consolidated EBITA Margins............ 14.3% 15.1% 15.4%
</TABLE>
The projections are forward looking statements that are subject to certain
risks and uncertainties that could cause actual results to differ from those
statements and should be read with caution. The projections are subjective in
many respects and are thus susceptible to interpretations and periodic
revisions based on actual experience and recent developments. The projections
are based on a variety of estimates and hypothetical assumptions made by
management of the Company with respect to, among other things, industry
performance, general economic and competitive conditions, inflation rates and
technology trends.
The Company has advised Parent and Purchaser that it does not as a matter of
course disclose projections as to future revenues, earnings or other income
statement data and the projections were not prepared with a view to public
disclosure. In addition, the projections were not prepared in accordance with
generally accepted accounting principles, or with a view to compliance with
the published guidelines of the Commission or the American Institute of
Certified Public Accountants regarding projections or generally accepted
accounting principles, which would require a more complete presentation of the
data than as shown above. The projections have not been examined, reviewed or
compiled by the Company's independent auditors. Accordingly such auditors have
not expressed an opinion or provided any other assurance on the data and
assume no responsibility for the data. The forecasted information is included
herein solely because such information was furnished to Parent and Purchaser
prior to the Offer. Accordingly, the inclusion of the projections in this
Offer should not be regarded as an indication that Parent, Purchaser or the
Company or their respective financial advisors or their respective officers
and directors consider such information to be accurate or reliable. In
addition, because the estimates and assumptions underlying the projections are
inherently subject to significant economic and competitive uncertainties and
contingencies, which are difficult or impossible to predict accurately and are
beyond the
17
<PAGE>
control of the Company, Parent or Purchaser, there can be no assurance that
results set forth in the above projections will be realized and it is expected
that there will be differences between actual and projected results, and
actual results may be materially higher or lower than those set forth above.
More specifically, based upon the Company's year to date performance, the
Company may not achieve its projected revenue and EBITA for fiscal year 2001.
9. Certain Information Concerning Purchaser and Parent
Purchaser is a Delaware corporation and, to date, has engaged in no
activities other than those incident to its formation and the Offer and the
Merger. Purchaser is currently a direct wholly owned subsidiary of Parent. The
principal executive offices of Purchaser are located at One Financial Plaza,
Hartford, Connecticut 06101 and Purchaser's telephone number is (860) 728-
7000.
Parent is a Delaware corporation. Parent and its consolidated subsidiaries
conduct their business within four principal operating segments. The operating
units of Parent and its consolidated subsidiaries are grouped based upon the
operating segment in which they participate. The units participating in each
operating segment and their respective principal products are as follows:
. Otis offers a wide range of elevators, escalators, moving walks and
shuttle systems and related installation, maintenance and repair
services; and modernization products and services for elevators and
escalators.
. Carrier provides heating, ventilating and air conditioning (HVAC)
equipment for commercial, industrial and residential buildings; HVAC
replacement parts and services; building controls; commercial,
industrial and transport refrigeration equipment; and aftermarket
service and components.
. Pratt & Whitney provides large and small commercial and military
turbofan (jet) and turboprop engines, spare parts and product support;
specialized engine maintenance and overhaul and repair services for
airlines, government and private fleets; and rocket engines and space
propulsion systems and industrial gas turbines.
. Flight Systems is made up of Sikorsky and Hamilton Sundstrand. Sikorsky
offers military and commercial helicopters and maintenance services.
Hamilton Sundstrand offers engine and flight controls; propellers;
environmental controls systems; space life support systems; electrical,
mechanical and power systems products for aircraft; rotary screw
compressors, power transmission equipment; pumps and other industrial
products.
In addition, Parent's International Fuel Cell operation is engaged in
research, development and production of fuel cell power systems for
commercial, transportation, residential and space applications.
Parent's principal executive offices are located at One Financial Plaza,
Hartford, Connecticut 06101 and Parent's telephone number is (860) 728-7000.
The name, citizenship, business address, present principal occupation, and
material positions held during the past five years of each of the directors
and executive officers of Parent and Purchaser are set forth in Schedule A to
this Offer to Purchase.
Neither Parent nor Purchaser (except in connection with the Stockholder
Agreement) nor, to the best of Parent's and Purchaser's knowledge, any of the
persons listed in Schedule A hereto or any associate or majority owned
subsidiary of Parent, beneficially owns (directly or indirectly) or has a
right to acquire (pursuant to options or otherwise) any securities of the
Company or has any contract, arrangement, understanding or relationship with
any other person with respect to any securities of the Company, including, but
not limited to, any agreements relating to transfers or the voting of any
securities of the Company, finder's fees, joint ventures, loan or option
arrangements, puts or calls, guarantees of loans, guarantees of profits or
guarantees against loss, division of
18
<PAGE>
profits or loss or the giving or withholding of proxies consents or
authorizations, or has effected any transaction in the securities of the
Company during the past 60 days.
Except as set forth in this Offer to Purchase, since October 23, 1998,
neither Parent, Purchaser, any person acting jointly or in concert with
Purchaser nor, to the best of Parent's and Purchaser's knowledge, any of the
persons listed on Schedule A hereto nor any associate of a person listed on
Schedule A hereto, has had any transaction with the Company or any of its
executive officers, directors or affiliates that is required to be reported
under the rules and regulations of the Commission applicable to the Offer.
Except as set forth in this Offer to Purchase, since October 23, 1998, there
have been no contacts, negotiations or transactions between Parent, any of its
subsidiaries or, to the best of Parent's and Purchaser's knowledge, any of the
persons listed in Schedule A to this Offer to Purchase, on the one hand, and
the Company or its affiliates, on the other hand, concerning any matter,
including (but not limited to) a merger, consolidation, acquisition, tender
offer or other acquisition of securities of any class of the Company, election
of directors of the Company, or a sale or other transfer of a material amount
of assets of the Company or any of its subsidiaries.
10. Background of the Offer; Contacts with the Company
On August 3, 2000, representatives of CSFB contacted Parent to ascertain on
a preliminary basis Parent's level of interest in a business combination with
the Company. On August 8, 2000, Parent provided an oral indication to CSFB of
its interest in an acquisition of all of the Shares of the Company for cash,
and requested a meeting with the management of the Company.
On August 14, 2000, the Company and Parent entered into a confidentiality
and standstill agreement (the "Confidentiality and Standstill Agreement").
On August 15, 2000, management of the Company, including Mr. Rhodenbaugh,
Chief Executive Officer of the Company and Mr. Donald McKay, Executive Vice
President of the Company, met with representatives of Parent and its wholly
owned subsidiary Carrier Corporation, including Mr. Jack Keller, Manager,
Corporate Strategy and Development of Parent and Mr. Nicholas Pinchuk,
President of Carrier Refrigeration Operations, a division of Carrier
Corporation, in Chicago to discuss the Company's business.
On August 22, 2000, the Company received a non-binding, written indication
of interest from Mr. Ari Bousbib, Vice President, Corporate Strategy and
Development of Parent, with a range of $30-$34 per Share in an all cash offer
to acquire the Company subject to satisfaction of certain conditions.
From August 24 through 29, 2000, representatives of Parent and its advisors
met with the Company's management, toured the Company's plants and conducted a
due diligence investigation of the Company.
On August 26, 2000, the Company distributed a proposed form of Merger
Agreement to Parent.
On September 4, 2000, Parent indicated to CSFB a proposed price of $30 per
Share for the acquisition.
On September 6, 2000, counsel to Parent distributed to the Company and its
counsel its comments to the draft Merger Agreement, as well as a draft of the
Stockholder Agreement proposed to be entered into by the Company's principal
stockholders.
On September 14, 2000, Mr. Bousbib confirmed that Parent continued to
believe that a $30 per Share offer price was appropriate.
On September 27 and 28, 2000, Mr. Malcolm Glazer met with Mr. George David,
Chairman and Chief Executive Officer of Parent, and Mr. Bousbib to discuss the
proposed acquisition, and in particular the terms under which the Glazer
family would be willing to agree to the terms of the Stockholder Agreement.
Parent indicated to Mr. Glazer that it would be willing to increase its
proposed offer price to $30.50 per Share if the
19
<PAGE>
Glazer family would enter into a Stockholder Agreement that provided Parent an
option to purchase the Shares beneficially owned by the Glazer family at a
price of $30.50 per Share.
On September 29, 2000, the Company delivered a revised Merger Agreement to
Parent.
On October 2, 2000, Parent's Board of Directors approved the acquisition of
the Company at a purchase price of $30.50 per Share.
On October 3, 2000, counsel for the Company and counsel for Parent discussed
the principal issues under the Merger Agreement. Negotiations between the
parties continued during the period from October 3 through October 13.
On October 10, 2000, Mr. Rhodenbaugh and Mr. McKay, together with the
Company's legal and financial advisors, met with Mr. Bousbib and Mr. Keller
and Parent's legal advisors to discuss unresolved issues related to the Merger
Agreement.
On October 11 through 13, 2000, Mr. Rhodenbaugh met with certain executives
of Parent's Carrier Corporation to discuss issues relating to Parent's
proposals for the Company to amend the employment agreements of certain key
executives. During these discussions, the parties continued to negotiate and
discuss the open issues on the Merger Agreement and the Stockholder Agreement.
On Friday night, October 13, 2000, the Company entered into amendments to
the employment agreements of certain of its employees. At a meeting held that
night, and after discussion and consideration of certain factors, the
Company's Board unanimously determined that the terms of the Offer and the
Merger were advisable, fair to and in the best interest of, the stockholders
of the Company, unanimously approved the Offer, the Merger, the Merger
Agreement, the Stockholder Agreement and the other transactions contemplated
thereby, and unanimously determined to recommend that the Company's
stockholders accept the Offer and tender their Shares pursuant to the Offer
and approve and adopt the Merger Agreement. Following the meeting of the
Company's Board of Directors, Parent, Purchaser and the Company executed the
Merger Agreement.
On October 16, 2000, prior to the opening of the financial markets, a press
release was issued announcing the execution of the Merger Agreement.
On October 23, 2000, in accordance with the Merger Agreement, Purchaser
commenced the Offer.
11. Purpose of the Offer; Plans for the Company; the Merger Agreement; the
Stockholder Agreement; Employee Agreements
Purpose. The purpose of the Offer and the Merger is to acquire control of,
and the entire equity interest in, the Company. The Offer, as the first step
in the acquisition of the Company, is intended to facilitate the acquisition
of all outstanding Shares. The purpose of the Merger is to acquire all of the
capital stock of the Company not purchased pursuant to the Offer or otherwise.
If Purchaser owns a majority of the issued and outstanding Shares following
the consummation of the Offer, it will have the ability under the DGCL to
approve the Merger without the approval of the holders of any other Shares,
although a stockholder vote may be necessary. If, however, after consummation
of the Offer, Purchaser owns at least 90 percent of the Shares then
outstanding, Purchaser will be able to cause the Merger to occur without a
vote of the Company's stockholders.
Plans for the Company. In connection with the Offer, Parent and Purchaser
have reviewed, and will continue to review, various possible business
strategies that they might consider in the event that Purchaser acquires
control of the Company, whether pursuant to the Offer, the Merger or
otherwise. Such strategies could include, among other things, changes in the
Company's business, corporate structure, capitalization or management.
20
<PAGE>
The Merger Agreement. The following is a summary of certain provisions of
the Merger Agreement. This summary is qualified in its entirety by reference
to the Merger Agreement, which is incorporated herein by reference and a copy
of which has been filed with the Commission as an exhibit to the Tender Offer
Statement on Schedule TO to which this Offer to Purchase is an exhibit (the
"Schedule TO"). The Merger Agreement may be examined and copies may be
obtained in the manner set forth in Section 8. Defined terms used herein and
not defined herein have the meanings assigned to those terms in the Merger
Agreement.
The Offer. The Merger Agreement provides that Parent will cause Purchaser
to commence the Offer and that, upon the terms and subject to prior
satisfaction or waiver of the conditions set forth in the Offer as
described in Section 13 (including, if the Offer is extended or amended,
the terms and conditions of any extension or amendment), Purchaser will
accept for payment, and pay for, all Shares validly tendered pursuant to
the Offer and not withdrawn on or prior to the Expiration Date.
Directors. Pursuant to the Merger Agreement, promptly after Purchaser has
purchased Shares pursuant to the Offer, Purchaser will have the right to
have persons designated by it become directors of the Company so that the
total number of such persons equals the number, rounded up to the nearest
whole number, which is the product of the total number of directors on the
Board of Directors of the Company and the percentage that the aggregate
number of Shares purchased bears to the total number of Shares then
outstanding. The Merger Agreement provides that the Company will promptly
take all actions necessary to cause such Purchaser designees to be so
elected, including, upon request by Purchaser, using its best efforts to
seek the resignations of one or more existing directors. At such time, the
Company will also cause, if requested by Purchaser, (a) each committee of
the Board of Directors, (b) the board of directors of each of the
subsidiaries of the Company and (c) each committee of such board to include
persons designated by Purchaser constituting up to the same percentage
(rounded up to the nearest whole number) of each such committee or board as
Purchaser's designees constitute on the Board of Directors. In addition,
pursuant to the Merger Agreement, the Company (x) has established October
18, 2000 as a record date for the written consent by the Company's
stockholders to such election and (y) has filed with the Commission a
Schedule 14A (together with any supplements or amendments thereto the
"Schedule 14A") regarding the solicitation of written consents to the
election of the Purchaser designees which contains the information required
by Schedule 14A under the Exchange Act necessary to enable the Purchaser
designees to be elected to the Board of Directors. Until the time the
Merger becomes effective (the "Effective Time"), the Company, Purchaser and
Parent will use all reasonable best efforts to retain as members of the
Board of Directors at least two directors who were directors of the Company
on the date of the Merger Agreement and who are not representatives of
Parent (the "Independent Directors"). Following the time Purchaser
designees constitute a majority of the Board of Directors and prior to the
Effective Time, any amendment or termination of the Merger Agreement which
requires action by the Company, any extension of time for the performance
of any of the obligations of Parent under the Merger Agreement, any
exercise or waiver of any of the provisions of the Merger Agreement
providing rights or remedies to the Company and any other action by the
Company that could adversely affect the interest of the stockholders (other
than Parent, Purchaser and their affiliates) with respect to the Merger
Agreement, the Merger or the Offer will require the affirmative vote of a
majority of the Independent Directors.
The Merger. The Merger Agreement provides that, after the completion of
the Offer and the satisfaction or waiver of certain conditions, Purchaser
will be merged with and into the Company and the Company will be the
surviving corporation. On the effective date of the Merger, each
outstanding Share (other than Shares owned by Parent, Purchaser or any
subsidiary of Parent, Purchaser or the Company, or held in the treasury of
the Company, or held by stockholders who properly exercise appraisal rights
under the DGCL, if any) will by virtue of the Merger and without action by
the holder thereof be cancelled and converted into the right to receive the
Merger Consideration.
The Company has agreed pursuant to the Merger Agreement that it will take
all action necessary in accordance with the DGCL and the Certificate of
Incorporation and By-Laws of the Company to convene
21
<PAGE>
and hold a special meeting of its stockholders following the consummation
of the Offer for the purpose of approving and adopting the agreement of
merger (within the meaning of Section 251 of the DGCL) contained in the
Merger Agreement or, at the option of Parent, to seek such approval and
adoption of the merger by written consent in lieu of such special meeting.
Further, the Company will use its reasonable efforts to solicit from
stockholders of the Company proxies in the event a stockholder meeting is
to be held in favor of the Merger (or written consent is to be obtained in
lieu thereof) and will take all other action necessary or, in the
reasonable opinion of Parent, advisable to secure any vote (or written
consent) of stockholders required by the DGCL to effect the Merger. Parent
has agreed that it will vote, or cause to be voted, at the special meeting
of stockholders all Shares then owned by it or Purchaser or any of Parent's
other subsidiaries and affiliates in favor of the Merger and the adoption
of this Agreement (or deliver written consents conforming to the
requirements of the DGCL in lieu thereof).
The Merger Agreement further provides that, notwithstanding the
foregoing, if Purchaser or any other subsidiary of Parent acquires at least
90 percent of the outstanding Shares (and provided that all conditions to
the Merger as set forth below have been satisfied or waived), the Company
will use its best efforts to take all necessary and appropriate action to
cause the Merger to become effective as soon as practicable after such
acquisition without the approval of the stockholders of the Company, in
accordance with Section 253 of the DGCL.
As promptly as practicable after the consummation of the Offer if
required by the Exchange Act, the Company will prepare and file with the
Commission a proxy statement to be sent to the Stockholders of the Company
in connection with a meeting of the Company's Stockholders to consider the
Merger or the information statement to be sent to such Stockholders in
connection with any action by consent in writing in lieu of a meeting as
appropriate (such proxy statement or information statement, as amended or
supplemented, the "Proxy Statement"), subject to the prior review and
approval of Parent and Purchaser (which approval will not be unreasonably
withheld) and will use all reasonable efforts to have it cleared by the
Commission. The Company will obtain and furnish the information required to
be included in the Proxy Statement, will provide Parent and Purchaser with,
and consult with Parent and Purchaser regarding, any comments that may be
received from the Commission or its staff with respect thereto, will,
subject to the prior review and approval of Parent and Purchaser, which
approval will not be unreasonably withheld, respond promptly to any such
comments made by the Commission or its Staff with respect to the Proxy
Statement and will cause the Proxy Statement to be mailed to its
stockholders at the earliest practicable date. The Proxy Statement will
contain the recommendation of the Company's Board of Directors that
stockholders of the Company approve and adopt the Merger Agreement and the
Merger.
Charter, Bylaws, Directors and Officers. Parent and Purchaser have agreed
that the Certificate of Incorporation and By-Laws of Company in effect
immediately prior to the Effective Time will be the Certificate of
Incorporation and By-Laws of the surviving corporation until amended as
provided by law, such Certificate of Incorporation and, with respect to the
By-Laws, such By-Laws. The foregoing is subject to the provisions of the
Merger Agreement that provide certain rights to indemnification as
described below under "Indemnification; Directors' and Officers'
Insurance."
The directors of Purchaser immediately prior to the Effective Time will
be the initial directors of the surviving corporation, and the officers of
the Company immediately prior to the Effective Time will be the initial
officers of the surviving corporation, in each case until their successors
are duly elected or appointed and qualified or until their earlier death,
permanent disability, resignation or removal.
Conversion of Shares. Each Share issued and outstanding immediately prior
to the Effective Time (other than (a) Shares owned by Parent, Purchaser or
any subsidiary of Parent, Purchaser or the Company or held in the treasury
of the Company, all of which will be cancelled without any consideration
being exchanged therefor and (b) Shares held by stockholders who properly
exercise appraisal rights) will, by virtue of the Merger and without any
action on the part of Purchaser, the Company or the holder thereof, be
canceled and converted at the Effective Time into the right to receive in
cash an amount per Share equal to
22
<PAGE>
the Merger Consideration, without interest, upon surrender of the
certificate representing such Share less any applicable withholding taxes.
At the Effective Time, each share of common stock of Purchaser, $.0001 par
value, issued and outstanding immediately prior to the Effective Time will,
by virtue of the Merger and without any action on the part of the
Purchaser, the Company or the holder thereof, be converted into and become
one share of common stock of the surviving corporation.
The Merger Agreement provides that, as of the Effective Time, each
outstanding option to purchase Shares (each, a "Company Stock Option")
issued pursuant to the Company's Executive Long-Term Incentive Plan and
Non-Employee Directors Long-Term Incentive Plan will be cancelled and each
holder of Company Stock Options, whether such Company Stock Option is
vested or not, will receive, in consideration of such holder's Company
Stock Options a cash payment from Parent immediately upon the Effective
Time equal to the product of (a) the amount by which the Merger
Consideration amount exceeds the exercise price of such Company Stock
Option and (b) the number of Shares issuable upon exercise of such Company
Stock Option.
Representations and Warranties. In the Merger Agreement, the Company has
made customary representations and warranties to Parent and Purchaser with
respect to, among other matters, its organization, qualification and
subsidiaries, capitalization, authority relative to the Merger Agreement,
lack of conflicts, required filings and consents, Commission filings,
financial statements, the absence of certain changes or events, litigation,
employee benefit plans, labor and employment matters, environmental
matters, licenses, permits and compliance with laws, taxes, information to
be included in the Offer documents and Proxy Statement, brokerage fees, the
opinion of CSFB regarding the price per Share payable in the Offer,
material contracts, real property, intellectual property, related party
transactions, the inapplicability of state takeover statutes and the vote
required of the Company stockholders to approve the Merger. Each of Parent
and Purchaser has made customary representations and warranties to the
Company with respect to, among other matters, its corporate organization,
authority relative to the Merger Agreement, information to be included in
the Offer documents and the Proxy Statement, lack of conflicts, required
filings and consents, brokerage fees and financing arrangements.
Covenants. The Merger Agreement provides that, from the date of the
Merger Agreement until the Effective Time, the Company will, and will cause
each of its subsidiaries (except as expressly required by the Merger
Agreement or otherwise with the prior consent of Purchaser or as
specifically disclosed to Purchaser), to (a) carry on its businesses in the
ordinary course consistent with past practice, (b) use reasonable efforts
to preserve intact its then current business organizations, and keep
available the services of the then current officers and employees, (c) use
all reasonable efforts to preserve the then present relationships with
customers, suppliers and other persons with which it has business dealings,
and (d) comply in all material respects with all laws and regulations
applicable to it or any of its properties, assets or business. The Merger
Agreement also provides, without limiting the generality of the foregoing
provisions, that from the date of the Merger Agreement to the Effective
Time, the Company will not, and will cause its subsidiaries not to, do or
commit to do, certain actions without the prior written consent of Parent,
including, among other things and subject to certain exceptions: (a) change
its Certificate of Incorporation or By-Laws; (b) sell, pledge or encumber
any stock owned by the Company in any of its subsidiaries; (c) issue or
sell its securities or make any other changes in its capital structure; (d)
declare or pay any dividends or other distributions; (e) reclassify or
redeem any shares of capital stock of the Company or any subsidiary; (f)
make acquisitions in excess of $100,000, except in limited circumstances;
(g) incur any indebtedness, other than borrowings in the ordinary course of
business under the Company's existing credit facility, or issue any debt
securities; (h) enter into, or modify, amend or terminate, any material
contract or agreement; (i) authorize or make capital expenditures not in
the ordinary course of business or in excess of $2,000,000; (j) (i)
increase the compensation or benefits of any of its directors, officers or
employees, (ii) grant any increase in severance or termination pay not then
required to be paid, (iii) enter into or amend any employment, consulting
or severance agreement, (iv) make any material determination not in the
ordinary course of business under any collective bargaining agreement or
employee benefit plan
23
<PAGE>
or (v) forgive any loans to employees, officers or directors; (k) change
any of the accounting methods used by it; (l) make any material tax
election, make or change any method of accounting with respect to taxes,
file any amended tax returns that may have a material adverse effect on the
tax position of the Company or any subsidiary or settle or compromise any
material federal, state, local or foreign tax liability or refund; (m)
settle certain litigation or claims; (n) adopt a plan to liquidate,
dissolve, merge or reorganize the Company; (o) pay, discharge or satisfy
any claims, liabilities or obligations, cancel any material indebtedness or
agree to modify any confidentiality, standstill or similar agreement; (p)
sell, or subject to any encumbrance, its assets; (q) make any loans to, or
investments in, any other person; (r) take any action that is reasonably
likely to result in the conditions to the Offer not being satisfied, or
that would materially impair the ability to consummate the Offer or the
Merger; (s) agree to take any of the foregoing actions; or (t) except as
may be required by applicable law or the Company's Certificate of
Incorporation or By-Laws, call or hold any stockholders' meeting other than
as required by Section 251 of the DGCL to approve the Merger.
No Solicitation. In the Merger Agreement, the Company has agreed not to
(for so long as the Merger Agreement has not been terminated in accordance
with its terms), and to cause its subsidiaries and its and their respective
officers, directors, employees, consultants, representatives, agents or
affiliates (collectively, the "Company Representatives"), not to, directly
or indirectly, (a) encourage, solicit, initiate or facilitate the making
of, or take any other action to facilitate any inquiries or the making of
any proposal that constitutes or may reasonably be expected to lead to, any
proposal or offer, or any indication of interest in making an offer or
proposal, by any person or group relating to (i) any acquisition or
purchase which is structured to permit such person or group to acquire
beneficial ownership of at least 10% of the assets of the Company or any of
its subsidiaries or of over 10% of any class of equity securities of the
Company or any of its subsidiaries, (ii) any tender offer or exchange offer
that would result in any person, other than Parent, Purchaser, their
affiliates or any group of which any of them is a member, beneficially
owning 10% or more of any class of equity securities of the Company or any
of its subsidiaries, or (iii) any merger, consolidation, business
combination, sale of substantially all the assets, recapitalization,
liquidation, dissolution or similar transaction involving the Company or
any of its subsidiaries (an "Acquisition Proposal") (including, without
limitation, by taking any action that would make Section 203 of the DGCL
inapplicable to an Acquisition Proposal), (b) participate in any way in
discussions or negotiations with, or furnish or disclose any information or
afford any access to the properties, books or records of the Company or any
of its subsidiaries to, any person (other than Parent or Purchaser or any
affiliate or associate of Parent or Purchaser) in connection with any
Acquisition Proposal, (c) withdraw or modify, or propose to withdraw or
modify, in a manner adverse to Parent or Purchaser the approval and
recommendation of the Offer, the Merger or the Merger Agreement, (d)
approve or recommend, or propose publicly to approve or recommend, any
Acquisition Proposal (unless contemporaneously with such approval or
recommendation the Company terminates the Merger Agreement in the manner
described in paragraph (e) under "Termination" below), (e) release any
third party from any confidentiality or standstill agreement to which the
Company is a party or fail to enforce to the fullest extent possible, or
grant any waiver, request or consent to any Acquisition Proposal under, any
such agreement, or (f) enter into any agreement, letter of intent or
similar document contemplating or otherwise relating to any Acquisition
Proposal.
The Merger Agreement provides, that notwithstanding the foregoing
provisions, neither the Company nor the Company Representatives will be
prohibited from:
(a) (i) issuing a press release or otherwise publicly disclosing the
terms of the Merger Agreement, the Offer, the Merger or any Acquisition
Proposal, (ii) proceeding with the transactions contemplated by the
Merger Agreement, (iii) communicating to the stockholders a position
with respect to an Acquisition Proposal by a third party contemplated
by Rule 14d-9 and Rule 14e-2 under the Exchange Act, or (iv) making any
disclosure to the stockholders which, in the judgment of the Company's
Board of Directors (after receiving the advice of legal counsel) is
advisable to be made under applicable law; or
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(b) participating in discussions or negotiations with, or furnishing
or disclosing nonpublic information to or entering into any
confidentiality or standstill or similar agreements with, any person in
response to an unsolicited, bona fide and written Acquisition Proposal
that is submitted to the Company by such person after the date of the
Merger Agreement and prior to the date an amount of Shares sufficient
to satisfy the Minimum Tender Condition have been accepted for payment
pursuant to the Offer if (i) such Acquisition Proposal does not result
from a violation of any of the provisions described in this "No
Solicitations" section, (ii) a majority of the members of the Company's
Board of Directors determines in good faith, after having received the
advice of its financial advisor and outside legal counsel, that (A)
such person is reasonably capable of consummating such Acquisition
Proposal, (B) such Acquisition Proposal is reasonably likely to lead to
an unsolicited bona fide written proposal by such person to acquire all
of the issued and outstanding Shares pursuant to a tender offer or a
merger or to acquire all of the properties and assets of the Company on
terms and conditions that the Company's Board of Directors has
determined in good faith, after receiving the written advice of its
financial advisor and taking into account all the terms and conditions
of such proposal, is more favorable to the Company's stockholders from
a financial point of view than the transactions contemplated hereby and
is reasonably likely to be consummated (a "Superior Proposal") and (C)
failure to do so would result in a breach of the fiduciary duty of the
Board of Directors of the Company to the stockholders under applicable
law and (iii) prior to participating in discussions or negotiations
with, or furnishing or disclosing any nonpublic information to, such
person, the Company gives Parent written notice of the identity of such
person and of the Company's intention to participate in discussions or
negotiations with, or furnish or disclose nonpublic information to,
such person, and the Company receives from such person an executed
confidentiality agreement containing terms no less restrictive than the
terms of the Confidentiality Agreement.
Pursuant to the Merger Agreement, Parent and Purchaser have agreed that
neither the Company, the Company Representatives, nor any person who makes
an Acquisition Proposal will be deemed, by reason of taking actions
described under paragraphs (a) and (b) above, to have tortiously or
otherwise wrongfully interfered with or caused a breach of the Merger
Agreement or any other agreements, instruments or documents executed in
connection with the Merger Agreement, or tortiously or otherwise wrongfully
interfered with the Offer, the Merger, the other transactions contemplated
thereby or the rights of Parent, Purchaser or any of their affiliates
thereunder.
The Merger Agreement requires the Company to, and to cause its
subsidiaries and the Company Representatives to, immediately cease and
cause to be terminated any discussions or negotiations, if any, with any
other parties that might have been ongoing as of the date of the Merger
Agreement with respect to any Acquisition Proposal.
Nothing described in this "No Solicitation" section will prohibit
Purchaser from purchasing the Shares pursuant to the Offer or consummating
the Merger. Without limiting any other rights of Parent or Purchaser under
the Merger Agreement in respect of any such action, neither any withdrawal
or modification by the Company of the approval or recommendation of the
Offer or the Merger nor the termination of the Merger Agreement will have
any effect on the approvals of, and other actions referred to herein for
the purpose of causing Section 203 of the DGCL, the takeover statutes
referred to in the Merger Agreement and the statutes referred to under
"Confidentiality and Standstill Agreement" below to be inapplicable to the
Merger Agreement and the Stockholder Agreement and the transactions
contemplated thereby, which approvals and actions are irrevocable.
Efforts. The Merger Agreement provides that, subject to the terms and
conditions provided in the Merger Agreement, each of the Company, Parent
and Purchaser will use its reasonable efforts to obtain in a timely manner
all necessary waivers, consents, and approvals and to effect all necessary
registrations and filings and to take, or cause to be taken, all other
actions and to do or cause to be done all other things necessary, proper or
advisable to consummate and make effective as promptly as practicable the
transactions
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contemplated by the Merger Agreement except that Parent and Purchaser are
not obligated to extend the Offer except as provided therein.
Nothing in the Merger Agreement obligates Parent, Purchaser or any of
their respective subsidiaries or affiliates to agree (a) to limit in any
manner or not to exercise any rights of ownership of any securities
(including the Shares), or to divest, dispose of or hold separate any
securities or all or any material portion of their respective businesses,
assets or properties or of the businesses, assets or properties of the
Company or any of its subsidiaries or (b) to limit in any material manner
the ability of such entities (i) to conduct their respective businesses or
own such assets or properties or to conduct the businesses or own the
properties or assets of the Company and its subsidiaries or (ii) to control
their respective businesses or operations or the businesses or operations
of the Company and its subsidiaries.
Indemnification; Directors' and Officers' Insurance. In the Merger
Agreement, Parent and Purchaser have agreed that the Certificate of
Incorporation and the By-Laws of the surviving corporation will contain the
provisions in favor of the directors, officers, employees or agents of the
Company or of any other corporation, partnership, joint venture, trust or
other enterprise with which he or she is or was serving in such capacity at
the request of the Company, with respect to indemnification and exculpation
from liability set forth in the Company's Certificate of Incorporation and
By-Laws as in effect on the date of the Merger Agreement and have agreed
not to amend, repeal or otherwise modify the Certificate of Incorporation
or the By-laws for a period of six years from the Effective Time in any
manner that would adversely affect the rights thereunder of individuals who
on or prior to the Effective Time were directors, officers or employees of
the Company, or any of its subsidiaries unless such modification is
required by law. Parent has agreed to guarantee the obligations of the
surviving corporation with respect to the indemnification provisions
contained in the surviving corporation's Certificate of Incorporation and
By-Laws and in any agreements existing on the date of the Merger Agreement
with respect to indemnification between the Company and any of its current
and former officers, directors or employees of the Company, to the extent
such agreements have been disclosed and provided to the Company.
The Merger Agreement further provides that the surviving corporation will
cause to be maintained in effect for a period of six years after the
Effective Time, in respect of acts or omissions occurring prior to the
Effective Time, policies of directors' and officers' liability insurance
covering the persons covered by such policies (on the date of the Merger
Agreement) on terms with respect to coverage and amount no less favorable
in any material respect than those of such policy in effect on the date of
the Merger Agreement. However, the surviving corporation will not be
obligated to pay annual premiums in excess of 200 percent of the amount
paid per annum by the Company for such coverage on the date of the Merger
Agreement; and provided further that, if the annual premiums of such
insurance coverage exceeds such amount, the surviving corporation will only
be required to obtain policies with as much coverage as is available for a
cost not exceeding such amount.
Take-over Laws. The Merger Agreement provides that if any state takeover
statute or other similar statute or regulation becomes or is deemed to
become applicable to the Offer, the Merger, the Merger Agreement or any of
the transactions contemplated thereby, the Company shall promptly take all
action necessary to render such statute or regulation inapplicable.
Employee Benefit Arrangements. Parent and Purchaser have agreed that each
employee of the Company, or any of its subsidiaries, immediately prior to
the Effective Time will become an employee of the surviving corporation as
of the Effective Time ("Company Employees"). Purchaser will provide to
Company Employees for a period of one year after the Effective Time
compensation, employee welfare benefits, tax-qualified retirement benefits
and other employee and fringe benefits that are, in the aggregate, of at
least equal value to those in effect for such Company Employees at the date
of the Merger Agreement. Purchaser will waive any pre-existing condition
clause or waiting period requirement in welfare benefit plans or programs
(except to the extent such condition or waiting period in comparable plans
of the Company would apply to a participant or beneficiary after the
closing of the Merger if such plans continued
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after the closing of the Merger) and give credit for deductible amounts and
co-payments paid by Company Employees during the deductible year in which
the Merger Agreement was executed. Purchaser will grant each Company
Employee credit under its tax-qualified retirement plans, for purposes of
eligibility and vesting (but not for purposes of benefit accrual), for
Company Employee's service with the Company and its affiliates prior to the
Effective Time. Notwithstanding anything in the Merger Agreement to the
contrary, Parent will cause the surviving corporation to honor and assume
the written employment agreements, severance agreements, indemnification
agreements with then existing directors and officers of the Company,
incentive arrangements and other agreements disclosed to Parent, all as in
effect on the date of the Merger Agreement. The provisions described in
this paragraph are not intended to create any enforceable rights by current
or former employees, officers and directors of the Company and their
respective heirs and legal representatives.
Conditions to the Consummation of the Merger. Pursuant to the Merger
Agreement, the respective obligations of Parent, Purchaser and the Company
to consummate the Merger are subject to the satisfaction or waiver, where
permissible, on or prior to the Effective Time of the following conditions:
(a) Purchaser shall have made, or caused to be made, the Offer and shall
have accepted for payment and paid for Shares in an amount necessary to
satisfy the Minimum Tender Condition and otherwise pursuant to the Offer;
(b) the Merger and the Merger Agreement shall have been approved and
adopted by the requisite vote of the stockholders of the Company, if
required by the DGCL; and (c) no statute, rule, regulation, judgment, writ,
decree, order or injunction shall have been promulgated, enacted, entered
or enforced, and no other action shall have been taken, by any federal,
state or local government or any court, administrative or regulatory agency
or commission or other governmental authority or agency, domestic or
foreign (a "Governmental Entity") that in any of the foregoing cases has
the effect of making illegal or directly or indirectly restraining,
prohibiting or restricting the consummation of the Merger (provided that
each party to the Merger Agreement has agreed to use its reasonable best
efforts to have vacated or reversed, in accordance with the Merger
Agreement, any applicable judgment, writ, decree, order or injunction).
Termination. The Merger Agreement provides that it may be terminated and
the Merger may be abandoned at any time prior to the Effective Time,
notwithstanding approval thereof by the stockholders of the Company (with
any termination by Parent also being an effective termination by
Purchaser):
(a) by the mutual written consent of the Company and Parent;
(b) by Parent or the Company if any statute, law, rule or regulation
shall have been promulgated that prohibits the consummation of the
Offer or the Merger or if any Governmental Entity of competent
jurisdiction shall have issued an order, decree or ruling or taken any
other action (which order, decree or ruling the parties to the Merger
Agreement will use reasonable efforts to have vacated or reversed in
accordance with the provisions described under "Efforts" above), in
each case restraining, enjoining or otherwise prohibiting the
transactions contemplated by the Merger Agreement and such order,
decree, ruling or other action shall have become final and non-
appealable;
(c) by the Company if (i) Purchaser fails to commence the Offer in
accordance with the terms of Merger Agreement, (ii) as a result of the
failure of one or more conditions set forth in Annex I to the Merger
Agreement, Purchaser has not accepted for payment and paid for Shares
pursuant to the Offer in accordance with the terms of the Offer on or
before the Outside Date or (iii) Purchaser fails to purchase validly
tendered Shares in violation of the terms of the Merger Agreement;
(d) by Parent if due to an occurrence or circumstance which would
result in a failure to satisfy any of the conditions to the Offer,
Purchaser has (i) not commenced the Offer within six business days
after the public announcement of the terms of the Merger Agreement,
(ii) terminated the Offer without purchasing any Shares pursuant to the
Offer or (iii) failed to accept for payment Shares pursuant to the
Offer prior to the Outside Date;
(e) by the Company, prior to the purchase of Shares pursuant to the
Offer, if (i) the Company has complied with its obligations as
described under "No Solicitation" above and (ii) the Company has
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<PAGE>
given Parent and Purchaser prior written notice, of not less than the
greater of seventy-two hours and two full business days, of its
intention to terminate the Merger Agreement and accept or recommend a
Superior Proposal and of the material terms and conditions of such
Superior Proposal; provided that such termination shall not be
effective unless and until the Company shall have paid the termination
fee discussed below to Parent;
(f) by Parent, prior to the purchase of Shares pursuant to the Offer,
if the Company breaches any of the covenants referred to above under
"No Solicitation," or if the Board of Directors of the Company shall
have resolved to effect any of the actions referred to in the first
paragraph under "No Solicitation" above;
(g) By Parent, prior to the purchase of Shares pursuant to the Offer,
if the Company shall have breached any of its representations,
warranties or covenants contained in the Merger Agreement, which breach
would give rise to a failure of a condition to the Offer and which
breach has not been or is incapable of being cured by the Company prior
to the Outside Date; or
(h) By the Company, prior to the purchase of Shares pursuant to the
Offer, if Parent or Purchaser shall have breached any of their
representations, warranties or covenants contained in the Merger
Agreement, which breach would cause Parent or Purchaser to be unable to
complete the Offer and the Merger and which breach has not been or is
incapable of being cured prior to the Outside Date.
In the event that the Merger Agreement is terminated, the Merger
Agreement will become void and have no effect, without any liability or
obligation on the part of Parent, Purchaser or the Company, except that
certain provisions relating to, among other things, the payment of certain
fees and expenses, including the Termination Fee, will survive any such
termination.
Fees and Expenses. Except as provided below and as otherwise expressly
set forth in the Merger Agreement, whether or not the Merger is
consummated, all fees, costs and expenses incurred in connection with the
Offer, the Merger Agreement and the transactions contemplated by the Merger
Agreement will be paid by the party incurring such fees, costs and
expenses.
In the event that the Merger Agreement is terminated pursuant to the
provisions described under (i) subparagraph (e) of "Termination" above,
(ii) subparagraph (f) of "Termination above or (iii) subparagraph (c)(ii)
or subparagraph (d) of "Termination" above and, in the case of this clause
(iii) only, at any time after the date of the Merger Agreement and prior to
such termination an Acquisition Proposal shall have been publicly announced
or otherwise publicly communicated to the stockholders of the Company
generally and as of the date of such termination such Acquisition Proposal
shall not have been withdrawn or lapsed in accordance with its terms, then
the Company will pay to Parent an amount equal to $20 million ("Termination
Fee"). If the Termination Fee becomes payable, it will be payable
simultaneously with such termination (in the case of termination by the
Company) or within two business days thereafter (in the case of termination
by Parent).
The Company has acknowledged pursuant to the Merger Agreement that the
agreements described in the preceding paragraph are an integral part of the
transactions contemplated by the Merger Agreement, and that, without such
agreements, Parent and Purchaser would not enter into the Merger Agreement;
accordingly, if the Company fails to pay the Termination Fee and, in order
to obtain such payment, Parent or Purchaser commences a suit which results
in a judgment against the Company with respect to the Termination Fee, the
Company will pay to Parent or Purchaser, as the case may be, its costs and
expenses in connection with such suit, together with interest on the amount
of the Termination Fee.
Amendment. To the extent permitted by applicable law, the Merger
Agreement may be amended by action taken by or on behalf of the respective
Boards of Directors of the Company, Parent and Purchaser, subject in the
case of the Company to the approval of the Independent Directors as
described under "Directors" above, at any time prior to the Effective Time;
provided, however, that after approval of the
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Merger by the stockholders of the Company, no amendment may be made which
by law requires further approval by such stockholders without such further
approval.
Appraisal. No appraisal rights are available in connection with the
Offer. If the Merger is consummated, however, stockholders of the Company
who have not tendered their Shares will have certain rights under the DGCL
to dissent and demand appraisal of, and to receive payment in cash of the
fair value of, their Shares. See Section 14.
The Stockholder Agreement. The following is a summary of certain provisions
of the Stockholder Agreement. This summary is qualified in its entirety by
reference to the Stockholder Agreement, which is incorporated herein by
reference and a copy of which has been filed with the Commission as an exhibit
to the Schedule TO. The Stockholder Agreement may be examined and copies may
be obtained in the manner set forth in Section 8.
In order to induce Parent and Purchaser to enter into the Merger Agreement,
pursuant to the Stockholder Agreement, the Malcolm I. Glazer Family Limited
Partnership, Kevin E. Glazer and Avram A. Glazer (each a "Stockholder" and
collectively the "Stockholders"), who own in the aggregate approximately 38
percent of the outstanding Shares on a fully diluted basis, assuming the
exercise of all issued and outstanding Company stock options, have agreed to
validly tender (or cause the record owner of such Shares to validly tender),
and not to withdraw, pursuant to the Offer, not later than the fifth business
day after its commencement, all Shares beneficially owned by such Stockholder
on the date of the Stockholder Agreement or subsequently acquired by such
Stockholder.
Each Stockholder has granted Purchaser an irrevocable option to purchase all
(but not less than all) of the Shares beneficially owned by such stockholder
(the "Option Shares") at the price per Share payable in the Offer, exercisable
at any time in whole after (a) the occurrence of any event as a result of
which Parent is entitled to receive a Termination Fee under the Merger
Agreement or (b) such Stockholder shall have breached certain specified
agreements contained in the Stockholder Agreement. Each such option that
becomes exercisable will remain exercisable until the later of (x) the date
that is 60 days after the date such option became exercisable, and (y) the
date that is ten days after the later of the date that all waiting periods
under the HSR Act required for the purchase of the Shares upon such exercise
shall have expired or been terminated and the date on which all approvals
required under Foreign Antitrust Laws have been obtained; provided that if at
the expiration of such period there is in effect any injunction or other order
issued by any Governmental Entity prohibiting the exercise of such option, the
exercise period will be extended until ten (10) days after the date that no
such injunction or order is in effect.
Each Stockholder has agreed that, unless the Merger Agreement has been
terminated, at any meeting of the stockholders of the Company, however called,
or in connection with any written consent of the stockholders of the Company,
such Stockholder will vote (or cause to be voted) all Shares held of record or
beneficially owned by such Stockholder (a) in favor of the Merger, the
execution and delivery by the Company of the Merger Agreement and the approval
of the terms thereof and each of the other actions contemplated by the Merger
Agreement and the Stockholder Agreement and any actions required in
furtherance thereof and (b) against any proposal relating to an Acquisition
Proposal and against any action or agreement that would impede, frustrate,
prevent or nullify the Stockholder Agreement, or result in a breach in any
respect of any covenant, representation or warranty or any other obligation or
agreement of the Company under the Merger Agreement or which would result in
any of the conditions described in Section 13 or "Conditions to the
Consummation of the Merger" above, not being fulfilled. Each such Stockholder
irrevocably granted to and appointed Purchaser as such Stockholder's proxy and
attorney-in-fact (with full power of substitution) to vote the Shares
beneficially owned by such Stockholder, or grant a consent or approval in
respect of such Shares, in the manner specified above.
Each Stockholder has agreed that, except as provided by the Merger Agreement
and the Stockholder Agreement, such Stockholder will not (a) offer to
transfer, transfer or consent to any transfer of, any or all of the Shares
beneficially owned by such Stockholder or any interest therein, (b) enter into
any contract, option or other
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<PAGE>
agreement or understanding with respect to any transfer of any or all of such
Shares or any interest therein, (c) grant any proxy, power-of-attorney or
other authorization or consent in or with respect to such Shares, (d) deposit
such Shares into a voting trust or enter into a voting agreement or
arrangement with respect to such Shares or (e) take any other action that
would make any representation or warranty of such Stockholder contained in the
Stockholder Agreement untrue or incorrect or in any way restrict, limit or
interfere with the performance of its obligations thereunder or the
transactions contemplated thereby or by the Merger Agreement.
Each Stockholder has agreed that neither such Stockholder nor any of its
affiliates, representatives or agents will (and, if such Stockholder is a
corporation, partnership, trust or other entity, such Stockholder will cause
its officers, directors, partners, and employees, representatives and agents,
including its investment bankers, attorneys and accountants, not to), directly
or indirectly, encourage, solicit, initiate or participate in any way in any
discussions or negotiations with, or provide any information to, or afford any
access to the properties, books or records of the Company or any of its
subsidiaries to, or otherwise take any other action to assist or facilitate,
any person or group (other than Parent or Purchaser or any affiliate or
associate of Parent or Purchaser) concerning any Acquisition Proposal. Each
Stockholder has agreed to immediately cease any activities, discussions or
negotiations conducted prior to the date of the Stockholder Agreement with
respect to any Acquisition Proposal. Each Stockholder has agreed to
immediately communicate to Purchaser the terms of any Acquisition Proposal (or
any discussion, negotiation or inquiry with respect thereto) and the identity
of the person making such Acquisition Proposal or inquiry which it may
receive.
Subject to the terms and conditions of the Stockholder Agreement, each of
the parties thereto has agreed to use all reasonable efforts to take, or cause
to be taken, all actions, and to do, or cause to be done, all things
necessary, proper or advisable under applicable laws to consummate and make
effective the transactions contemplated by the Stockholder Agreement.
Each Stockholder has waived any rights of appraisal or rights to dissent
from the Merger that it might have had.
The Stockholder Agreement will terminate with respect to each Stockholder
upon the earliest of (a) the Effective Time, (b) the first anniversary of the
date of the Stockholder Agreement, and (c) termination of the Merger Agreement
(unless, in the case of (c), either (i) Parent is entitled to receive a
Termination Fee in connection with such termination or (ii) prior to such
termination such Stockholder has breached certain specified agreements
contained in the Stockholder Agreement).
Confidentiality and Standstill Agreement. Pursuant to the Confidentiality
and Standstill Agreement, Parent agreed to keep confidential certain
information furnished to it by the Company and to use such information solely
for the purpose of evaluating a possible transaction with the Company. The
Confidentiality and Standstill Agreement also provides that:
(a) Parent may disclose such information to its representatives who need
to know such information for purposes of evaluating a possible transaction
with the Company and who shall be informed by Parent of the confidential
nature of such information and instructed to comply with the terms of the
Confidentiality and Standstill Agreement;
(b) subject to certain requirements (including prior notification of the
Company), Parent and Purchaser may only disclose the fact that discussions
or negotiations are taking place concerning a possible transaction between
the Company and Parent or any of the terms, conditions or other facts with
respect to any such possible transaction, including the status thereof, to
the extent required by applicable law, regulation or stock exchange rules;
and
(c) upon the Company's request, Parent and Purchaser must promptly return
all documents furnished by the Company and destroy all portions of
documents, memoranda, notes and other writings based on the confidential
information furnished by the Company.
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The Confidentiality and Standstill Agreement additionally provides that,
unless approved in writing by the Board of Directors of the Company, Parent
will not, and will direct its representatives not to (and will not assist or
encourage others to), directly or indirectly, during the 18 month period
commencing on the date of the Confidentiality and Standstill Agreement (any of
the following being referred to as "Prohibited Actions"):
(a) make any public announcement with respect to, or submit any proposal
for, a business combination or other transaction between the Company and
Parent (or any of its affiliates or any person acting in concert with
Parent) involving the Company, unless the proposal is directed and
disclosed solely to the Company's management or their representatives and
the Company shall have requested in advance the submission of such
proposal;
(b) by purchase or otherwise, acquire, offer to acquire, or agree to
acquire, ownership of any assets or businesses of the Company or its
affiliates or of any securities issued by the Company or its affiliates or
any direct or indirect rights (including convertible securities) or options
to acquire such ownership (or otherwise act in concert with or in any way
assist any person which so acquires, offers to acquire, or agrees to
acquire);
(c) make, or in any way participate in, directly or indirectly, any
"solicitation" of "proxies" (as such terms are defined or used in
Regulation 14A under the Exchange Act) or become a "participant" in an
"election contest" (as such terms are defined or used in Rule 14a-11 under
the Exchange Act) with respect to the Company or seek to advise or
influence any person with respect to the voting of any securities issued by
the Company;
(d) initiate, propose or otherwise solicit stockholders for the approval
of one or more stockholder proposals with respect to the Company as
described in Rule 14a-8 under the Exchange Act or induce or attempt to
induce any other person to initiate any stockholder proposal;
(e) acquire or affect the control of the Company or directly or
indirectly participate in or encourage the formation of any "group" (within
the meaning of Section 13(d)(3) of the Exchange Act) which owns or seeks to
acquire ownership of voting securities of the Company, or to acquire or
affect control of the Company;
(f) call or seek to have called any meeting of the stockholders of the
Company or execute any written consent in lieu of a meeting of holders of
any securities of the Company;
(g) seek election or seek to place a representative on the Board of
Directors of the Company or seek the removal of any member of the Board of
Directors;
(h) otherwise, directly or indirectly, alone or in concert with others,
seek to influence or control the management, Board of Directors or policies
of the Company or any of its affiliates; or
(i) request any waiver, modification, termination or amendment of the
foregoing provisions of the agreement or the relinquishment by the Company
of any rights with respect thereto.
Notwithstanding the provisions of the Confidentiality and Standstill
Agreement, no outside law firm, Big Five accounting firm, investment bank,
environmental consulting firm or similar independent consultant retained by
Parent or on Parent's behalf in connection with Parent's evaluation of the
proposed transaction ("Representatives") which is not affiliated with Parent
shall be prohibited from representing or providing services to other clients
which may engage in Prohibited Actions, so long as such Representatives do not
take any action which if taken by the Company would be a breach of the
Confidentiality and Standstill Agreement (other than a Prohibited Action). The
Confidentiality and Standstill Agreement also does not prohibit Parent from
taking Prohibited Actions with respect to any company which after the date of
the Confidentiality and Standstill Agreement becomes an affiliate of the
Company through acquisition of (1) stock of the Company or (2) all or
substantially all of the Company's assets or businesses.
Parent, pursuant to the Confidentiality and Standstill Agreement, agreed
that, without the prior written consent of the Company, neither Parent nor its
representatives would, subject to certain exceptions, require, induce or
influence any management employee Company identified through the confidential
information received
31
<PAGE>
from the Company to leave his or her employment with the Company or its
affiliates, or employ any such employee until August 14, 2002.
Employee Agreements. In order to induce Parent and Purchaser to enter into
the Merger Agreement, the Company and certain employees, including Robert R.
Friedl and Jeffrey P. Rhodenbaugh (each an "Employee"), entered into an
amendment to each such Employee's Amended Employment Retention Agreement (each
an "Original Agreement"), which such amendment will be effective only upon the
closing of the Merger and only if such closing occurs on or before March 1,
2001 (each an "Amendment"). Under each Amendment, the Company agrees to employ
such Employee and such Employee agrees to be employed by the Company until the
second anniversary of the closing of the Merger, unless terminated sooner in
accordance with the Original Agreement, as modified by the Amendment. Under
the Amendments, each Employee will be entitled to receive a transition
payment, which shall be payable in monthly installments for two years
following the closing of the Merger, provided that the Employee remains
employed by the Company following the Merger. The Amendments also provide that
each Employee will not compete against the Company during his employment with
the Company and for a one-year period following the termination of his
employment. See Item 3 of the Schedule 14D-9 under the caption "Arrangements
with Executive Officers, Directors or Affiliates of the Company--Change-in-
Control Arrangements."
12. Source and Amount of Funds
The Offer is not conditioned upon any financing arrangements.
Parent and Purchaser estimate that the total amount of funds required to
purchase all of the outstanding Shares pursuant to the Offer and the Merger
and to pay related fees and expenses will be approximately $614 million.
Purchaser will obtain such funds from Parent. Parent currently intends to
obtain such funds from available cash on hand at the time of the completion of
the Offer.
13. Certain Conditions of the Offer
Notwithstanding any other provision of the Offer or the Merger Agreement,
Purchaser will not be required (subject to the rules and regulations of the
Commission) to pay for any Shares tendered in connection with the Offer, if
(i) the Minimum Tender Condition has not been satisfied, (ii) any applicable
waiting period under the HSR Act and any Foreign Antitrust Law shall not have
expired or been terminated or any required approval under any Foreign
Antitrust Law shall not have been obtained or (iii) at any time after the date
of the Merger Agreement and prior to the acceptance of such Shares for payment
or payment for any such Shares, any of the following events shall occur or
conditions shall exist:
(a) there shall have been any statute, rule, regulation, legislation,
judgment, order or injunction, promulgated, enacted, entered, enforced,
issued, amended or deemed applicable by a Governmental Entity to Parent,
Purchaser, the Company, any other affiliate of Parent or the Company, the
Offer or the Merger, that would or is reasonably likely to (i) make the
acceptance for payment of, or payment for or purchase of all or a
substantial number of the Shares pursuant to the Offer illegal, or
otherwise materially restrict or prohibit the consummation of the Offer or
the Merger, (ii) result in a material delay in the ability of Purchaser to
accept for payment, pay for or purchase all or a substantial number of the
Shares pursuant to the Offer or to effect the Merger, (iii) render
Purchaser unable to accept for payment or pay for or purchase all or a
substantial number of the Shares pursuant to the Offer, (iv) impose
material limitations on the ability of Parent, Purchaser or any of their
respective subsidiaries or affiliates to acquire or hold, transfer or
dispose of, or effectively to exercise all rights of ownership of, all or a
substantial number of the Shares including the right to vote the Shares
purchased by it pursuant to the Offer on an equal basis with all other
Shares on all matters properly presented to the stockholders of the
Company, (v) require the divestiture by Parent, Purchaser or any of their
respective subsidiaries or affiliates of any Shares, or require Purchaser,
Parent, the Company, or any of their respective subsidiaries or affiliates
to dispose of all or any material portion of their respective businesses,
assets or properties or impose any material limitations on the ability of
any of
32
<PAGE>
such entities to conduct their respective businesses or own such assets,
properties or Shares or on the ability of Parent or Purchaser to conduct
the business of the Company and its subsidiaries and own the assets and
properties of the Company and its subsidiaries, or (vi) impose any material
limitations on the ability of Parent, Purchaser or any of their respective
subsidiaries or affiliates effectively to control the business or
operations of the Company, Parent, Purchaser or any of their respective
subsidiaries or affiliates;
(b) the Merger Agreement shall have been terminated in accordance with
its terms;
(c) the representations and warranties of the Company set forth in the
Merger Agreement shall not have been true and correct when made, or shall
not continue to be true and correct except (i) those representations and
warranties that address matters only as of a particular date (which shall
be true and correct as of such date), and (ii) where the failure of such
representations and warranties has not had, and is not reasonably likely to
have, a material adverse effect on the business, financial condition or
operations of the Company and its subsidiaries taken as a whole, other than
adverse effects from (i) conditions, circumstances or changes in the
general economy or capital markets or (ii) any disclosure of the Merger
Agreement (a "Material Adverse Effect");
(d) the Company shall have failed to perform in any material respect, or
to comply in any material respect with, any obligation, agreement or
covenant of the Company to be performed or complied with by it under the
Merger Agreement;
(e) there shall have occurred (i) any general suspension of, or
limitation on trading in securities on the New York Stock Exchange (other
than any suspension or limitation on trading in any particular security as
a result of a computerized trading limit or any intraday suspension due to
"circuit breakers") or (ii) the declaration of any banking moratorium or
any suspension of payments in respect of banks or any limitation (whether
or not mandatory) on the extension of credit by lending institutions in the
United States; or
(f) there shall have occurred any change, condition, event or development
that, individually or in the aggregate, has had or is reasonably likely to
have a Material Adverse Effect.
The conditions described above are for the sole benefit of Parent and
Purchaser and may be asserted by either of Parent or Purchaser regardless of
the circumstances (including any action or inaction by Parent or Purchaser or
any of their affiliates giving rise to any such condition) or waived by Parent
or Purchaser in whole or in part at any time or from time to time in its
discretion subject to the terms and conditions of the Merger Agreement. The
failure of Parent or Purchaser at any time to exercise any of the rights
described above will not be deemed a waiver of any such right and each such
right will be deemed an ongoing right which may be asserted at any time and
from time to time.
14. Certain Legal Matters
General. Except as otherwise disclosed herein, Parent and Purchaser are not
aware of any licenses or other regulatory permits which appear to be material
to the business of the Company and which might be adversely affected by the
acquisition of Shares by Purchaser pursuant to the Offer or of any approval or
other action by any governmental, administrative or regulatory agency or
authority which would be required for the acquisition or ownership of Shares
by Purchaser pursuant to the Offer. Should any such approval or other action
be required, it is currently contemplated that such approval or action would
be sought or taken. There can be no assurance that any such approval or
action, if needed, would be obtained or, if obtained, that it will be obtained
without substantial conditions or that adverse consequences might not result
to the Company's or Parent's business or that certain parts of the Company's
or Parent's business might not have to be disposed of in the event that such
approvals were not obtained or such other actions were not taken. Purchaser's
obligation under the Offer to accept for payment and pay for Shares is subject
to certain conditions. See Section 13.
Antitrust Compliance. Under the provisions of the HSR Act applicable to the
Offer, the purchase of Shares under the Offer may be consummated following the
expiration or earlier termination of a 15 calendar day waiting period
following the filing by Purchaser of a Notification and Report Form with
respect to the Offer, unless
33
<PAGE>
Purchaser receives a request for additional information or documentary
material from the Antitrust Division of the U.S. Department of Justice (the
"Antitrust Division") or the U.S. Federal Trade Commission (the "FTC").
Purchaser expects to make its filing with the Antitrust Division and the FTC
on or about October 23, 2000, and the waiting period is expected to terminate
within 15 calendar days thereafter. If, within the initial 15-day waiting
period, either the Antitrust Division or the FTC requests additional
information or documentary material from Purchaser, the waiting period will be
extended and would expire at 11:59 p.m., New York City time, on the tenth
calendar day after the date of substantial compliance by Purchaser with such
request. Only one extension of the waiting period pursuant to a request for
additional information is authorized by the HSR Act. Thereafter, such waiting
period may be extended only by court order or with the consent of Purchaser.
If the acquisition of Shares is delayed pursuant to a request by the FTC or
the Antitrust Division for additional information or documentary material
pursuant to the HSR Act, the Offer may be extended and, in any event, the
purchase of and any payment for Shares will be deferred until the Expiration
Date. Unless the Offer is extended, any extension of the waiting period may
not give rise to any additional withdrawal rights. See Section 4.
In practice, complying with a request for additional information or
documentary material can take a significant amount of time. In addition, if
the Antitrust Division or the FTC raises substantive issues in connection with
a proposed transaction, the parties frequently engage in negotiations with the
relevant governmental agency concerning possible means of addressing those
issues and may agree to delay consummation of the transaction while such
negotiations continue.
The FTC and the Antitrust Division frequently scrutinize the legality under
the antitrust laws of transactions such as Purchaser's proposed acquisition of
the Company. At any time before or after Purchaser's purchase of Shares
pursuant to the Offer, the Antitrust Division or the FTC could take such
action under the antitrust laws as it deems necessary or desirable in the
public interest, including seeking to enjoin the purchase of Shares pursuant
to the Offer or the Merger or seeking the divestiture of Shares acquired by
Purchaser or the divestiture of substantial assets of Purchaser or its
subsidiaries, or of the Company or its subsidiaries. Private parties may also
bring legal action under the antitrust laws under certain circumstances. If
any such action by the FTC, the Antitrust Division or any other person should
be threatened or commenced, Purchaser believes that consummation of the Offer
would not violate any antitrust laws; there can be no assurance, however, that
a challenge to the Offer on antitrust grounds will not be made or, if a
challenge is made, what the result will be.
Parent, Purchaser and the Company have been advised that notice filings with
respect to the Offer are required in Argentina, Austria, Brazil, Germany,
Ireland, Italy, the Netherlands, Poland, South Africa, and Taiwan. Other
regulatory filings may also be required or advisable in connection with the
completion of the merger. Parent, Purchaser and the Company are currently in
the process of reviewing whether filings or approvals may be required or
desirable in these jurisdictions. It is possible that one or more of these
filings may not be made or one or more of these approvals may not be obtained
prior to the Expiration Date. Under the Merger Agreement, either Purchaser or
Company has the option in their respective sole discretion to extend the
Expiration Date until as late as the Outside Date if the sole reason that
Purchaser has not accepted for payment and paid for Shares pursuant to the
Offer is the failure of the applicable waiting period under the HSR Act and
Foreign Antitrust Laws to expire or failure to obtain any required
governmental or regulatory approval.
State Take-over Laws. A number of states (including Delaware where the
Company is incorporated) have adopted takeover laws and regulations which
purport, to varying degrees, to be applicable to attempts to acquire
securities of corporations which are incorporated in such states or which have
substantial assets, stockholders, principal executive offices or principal
places of business therein. To the extent that certain provisions of certain
of these state takeover statutes purport to apply to the Offer or the Merger,
Purchaser believes that such laws conflict with federal law and constitute an
unconstitutional burden on interstate commerce.
Section 203 of the DGCL prevents certain "business combinations" with an
"interested stockholder" (generally, any person who owns or has the right to
acquire 15 percent or more of a corporation's outstanding voting stock) for a
period of three years following the time such person became an interested
stockholder, unless, among other things, prior to the time the interested
stockholder became such, the board of directors of the
34
<PAGE>
corporation approved either the business combination or the transaction in
which the interested stockholder became such. The Board of Directors of the
Company has irrevocably taken all necessary steps to render the restrictions
of Section 203 of the DGCL inapplicable to the Merger, the Offer and the
transactions contemplated by the Merger Agreement and Stockholder Agreement.
Purchaser has not attempted to comply with any state takeover statutes in
connection with the Offer or the Merger. Purchaser reserves the right to
challenge the validity or applicability of any state law allegedly applicable
to the Offer or the Merger, and nothing in this Offer to Purchase nor any
action taken in connection herewith is intended as a waiver of that right. In
the event that it is asserted that one or more takeover statutes apply to the
Offer or the Merger, and it is not determined by an appropriate court that
such statute or statutes do not apply or are invalid as applied to the Offer
or the Merger, as applicable, Purchaser may be required to file certain
documents with, or receive approvals from, the relevant state authorities, and
Purchaser might be unable to accept for payment or purchase Shares tendered
pursuant to the Offer or be delayed in continuing or consummating the Offer.
In such case, Purchaser may not be obligated to accept for purchase, or pay
for, any Shares tendered. See Section 13.
Appraisal Rights. No appraisal rights are available in connection with the
Offer. If the Merger is consummated, however, stockholders of the Company who
have not tendered their Shares will have certain rights under the DGCL to
dissent and demand appraisal of, and to receive payment in cash of the fair
value of, their Shares. Under Section 262 of the DGCL, dissenting stockholders
of the Company who comply with the applicable statutory procedures will be
entitled to a judicial determination of the fair value of their Shares
(exclusive of any element of value arising from the accomplishment or
expectation of the Merger) and to receive payment of such fair value in cash,
together with a fair rate of interest thereon, if any. Any such judicial
determination of the fair value of the Shares could be based upon factors
other than, or in addition to, the price per Share to be paid in the Merger or
the market value of the Shares. The value so determined could be more or less
than the price per Share to be paid in the Merger.
The foregoing summary of the rights of dissenting stockholders under the
DGCL does not purport to be a complete statement of the procedures to be
followed by stockholders desiring to exercise any appraisal rights under the
DGCL. The preservation and exercise of appraisal rights require strict
adherence to the applicable provisions of the DGCL.
"Going Private" Transactions. Rule 13e-3 under the Exchange Act is
applicable to certain "going private" transactions and may under certain
circumstances be applicable to the Merger. However, Rule 13e-3 will be
inapplicable if (a) the Shares are deregistered under the Exchange Act prior
to the Merger or another business combination or (b) the Merger or other
business combination is consummated within one year after the purchase of the
Shares pursuant to the Offer and the amount paid per Share in the Merger or
other business combination is at least equal to the amount paid per Share in
the Offer. Neither Parent nor Purchaser believes that Rule 13e-3 will be
applicable to the Merger.
15. Fees and Expenses
Purchaser has retained LaSalle Bank National Association as Depositary and
Georgeson Shareholder Communications, Inc. as Information Agent in connection
with the Offer. LaSalle Bank National Association and Georgeson Shareholder
Communications, Inc. will receive customary compensation and reimbursement for
reasonable out-of-pocket expenses, as well as indemnification against certain
liabilities in connection with the Offer, including liabilities under
applicable securities laws.
Except as set forth above, Purchaser will not pay any fees or commissions to
any broker or dealer or other person for soliciting tenders of Shares pursuant
to the Offer. Brokers, dealers, commercial banks and trust companies will upon
request be reimbursed by Purchaser for customary mailing and handling expenses
incurred by them in forwarding the offering material to their customers.
35
<PAGE>
16. Miscellaneous
The Offer is not being made to (nor will tenders be accepted from or on
behalf of) holders of Shares in any jurisdiction in which the making of the
Offer or the acceptance thereof would not be in compliance with the laws of
such jurisdiction. However, Purchaser may, in its sole discretion, take such
action as it may deem necessary to make the Offer in any such jurisdiction and
extend the Offer to holders of Shares in such jurisdiction.
Neither Purchaser nor Parent is aware of any jurisdiction in which the
making of the Offer or the acceptance of Shares in connection therewith would
not be in compliance with the laws of such jurisdiction.
Purchaser and Parent have filed with the Commission the Schedule TO
(including exhibits) pursuant to Rule 14d-3 under the Exchange Act, furnishing
certain additional information with respect to the Offer and may file
amendments thereto. The Schedule TO and any amendments thereto, including
exhibits, may be examined and copies may be obtained from the principal office
of the Commission in Washington, D.C. in the manner set forth in Section 8
with respect to information concerning the Company.
During the last five years, neither Purchaser nor Parent nor, to the best of
their knowledge, any of the persons listed in Schedule A, has been convicted
in a criminal proceeding (excluding traffic violations or similar
misdemeanors) or has been a party to any civil, judicial or administrative
proceeding (except for matters that were dismissed without sanction or
settlement) that resulted in a judgment, decree or final order enjoining the
person from future violations of, or prohibiting or requiring activities
subject to, the securities laws of any jurisdiction, or a finding of any
violation of the securities laws of any jurisdiction.
No person has been authorized to give any information or make any
representation on behalf of Parent or Purchaser not contained in this Offer to
Purchase or in the Letter of Transmittal and, if given or made, such
information or representation must not be relied upon as having been
authorized.
SOLAR ACQUISITION CORP.
36
<PAGE>
SCHEDULE A
DIRECTORS AND EXECUTIVE OFFICERS OF
PARENT AND PURCHASER
Parent. Set forth below are the name, business address and present principal
occupation or employment, and material occupations, positions, offices or
employment for the past five years of each director and executive officer of
Parent. The business address of each such person is One Financial Plaza,
Hartford, CT 06101. Unless otherwise indicated, each such person is a citizen
of the United States and has held his or her present position as set forth
below for the past five years. Directors of Parent are indicated by an
asterisk.
<TABLE>
<CAPTION>
Present Principal Occupation or
Employment;
Name, Citizenship and Material Positions Held During the Past
Current Business Address Age Five Years
------------------------ --- ---------------------------------------
<C> <C> <S>
Jonathan W. Ayers................ 44 President, Carrier Corporation;
previously President Asian Pacific
Operations, Carrier Corporation and
Vice President, Strategic Planning for
Parent
Dean C. Borgman.................. 59 President, Sikorsky Aircraft Corp.;
previously Senior Vice President, The
Boeing Company (helicopter unit);
former President, McDonnell Douglas'
helicopter business
Ari Bousbib ..................... 39 Vice President, Corporate Strategy and
Citizenship: Development of Parent since 1997;
French/Portuguese previously Managing Director, the
Strategic Partners Group; Partner,
Booz, Allen & Hamilton
William L. Bucknall, Jr.......... 58 Senior Vice President, Human Resources
& Organization, of Parent since 1992
John F. Cassidy, Jr.............. 56 Senior Vice President, Science and
Technology, of Parent since 1998;
previously Vice President, United
Technologies Research Center
Antonia Handler Chayes*.......... 71 Senior Advisor and Vice Chair of the
Board of Conflict Management Group, a
non-profit conflict resolution
consulting firm; Adjunct Lecturer at
the J. F. Kennedy School of Government
at Harvard University; Undersecretary
of the United States Air Force, 1979 to
1981; Co-Director of the Project on
International Law and Conflict
Management at the Program on
Negotiation at Harvard Law School;
member of the American Law Institute,
the Council on Foreign Relations and
the Aspen Strategy Core Group; director
of Parent since 1981
Louise Chenevert................. 43 President, Pratt & Whitney since 1999;
Executive Vice President, Pratt &
Whitney for operations, worldwide
purchasing, and aftermarket business
from June 1998-1999; Executive Vice
President for operations of Pratt &
Whitney from January 1997-1998; joined
Pratt & Whitney Canada in 1993
George David*.................... 58 Director of Parent since 1992; Chairman
of Parent since 1997; Chief Executive
Officer of Parent since 1994; President
of Parent from 1992 to 1999; Board
Member of the Institute for
International Economics; Chairman or
President of the Boards of the Graduate
School of Business Administration at
the University of Virginia, the
National Minority Supplier Development
Council, and the Wadsworth Atheneum
Museum of Art in Hartford, Connecticut;
Co-Chair the Transatlantic Business
Dialogue for the year 2000
</TABLE>
A-1
<PAGE>
<TABLE>
<CAPTION>
Present Principal Occupation or
Employment;
Name, Citizenship and Material Positions Held During the Past
Current Business Address Age Five Years
------------------------ --- ---------------------------------------
<C> <C> <S>
John E. Evard, Jr. .............. 54 Vice President, Taxes of Parent since
2000; previously Senior Vice President
Corporate Development and General Tax
Counsel, CNH Global N.V.; Director,
Tax, Case Corporation
David J. Fitzpatrick............. 46 Senior Vice President, Chief Financial
Officer and Treasurer of Parent since
2000; Senior Vice President and Chief
Financial Officer, Parent, 1998-2000;
previously Vice President and
Controller, Eastman Kodak Co.; Finance
Director, Cadillac Luxury Car Division,
Chief Accounting Officer, General
Motors Corp.
Jean-Pierre Garnier, Ph.D.*...... 52 Director of Parent since 1997; Chief
Executive Officer and Executive Member
of the Board of Directors of SmithKline
Beecham plc, Philadelphia, PA
(pharmaceuticals); Chief Executive
Officer of GlaxoSmithKline plc;
previously Chief Operating Officer and
Executive Member of the Board of
Directors of SmithKline Beecham plc;
Chairman, SmithKline Beecham plc,
Pharmaceuticals from 1994-1995;
Director of the Eisenhower Exchange
Fellowships
Jamie S. Gorelick*............... 50 Director of Parent since February,
2000; Vice Chair, Fannie Mae, since
1997; Deputy Attorney General of the
United States, 1994 to 1997; Harvard
Board of Overseers and the Boards of
America's Promise, the Carnegie
Endowment for International Peace, and
the Washington Legal Clinic for the
Homeless and other civic organizations;
member of the Council of the American
Law Institute and the Council on
Foreign Relations; serves on the
Central Intelligence Agency's National
Security Advisory Panel
Ruth R. Harkin................... 56 Senior Vice President, International
Affairs and Government Relations of
Parent since 1997; previously President
and Chief Executive Officer, Overseas
Private Investment Corporation
Karl J. Krapek*.................. 51 Director of Parent since 1997;
President and Chief Operating Officer
of Parent since 1999. Previously
Executive Vice President of Parent,
1997 to 1999; President, Pratt &
Whitney, 1992 to 1999; Chairman of the
Board of Directors of the Connecticut
Capitol Region Growth Council; Chairman
of the MetroHartford Millennium
Management Group; Vice Chairman of the
Board of Trustees of the Connecticut
State University System and Chairman of
Finance Committee; member of the
Director's Advisory Board of the Yale
Cancer Center; Director of Saint
Francis Care, Inc.; 1999 General
Campaign Chairman for the United Way
and Combined Health Appeal Community
Campaign in Hartford area
Robert F. Leduc.................. 44 Executive Vice President and Chief
Operating Officer, Pratt & Whitney;
previously Executive Vice President,
Pratt & Whitney
</TABLE>
A-2
<PAGE>
<TABLE>
<CAPTION>
Present Principal Occupation or
Employment;
Name, Citizenship and Material Positions Held During the Past
Current Business Address Age Five Years
------------------------ --- ---------------------------------------
<C> <C> <S>
Charles R. Lee*.................. 60 Director of Parent since 1994; Chairman
and Co-Chief Executive Officer, Verizon
Communications; Chairman and Chief
Executive Officer of GTE Corporation,
1992 to 2000; Director of The Procter &
Gamble Company; Director of the USX
Corporation; member of The Business
Roundtable and The Business Council;
Trustee of the Board of Trustees of
Cornell University; Director of the New
American Schools Emeritus Corporation;
member of The Conference Board;
Director of the Stamford Hospital
Foundation
Richard D. McCormick*............ 60 Director of Parent since February,
1999; Chairman Emeritus U S WEST, Inc.,
Denver, Colorado (telecommunications).
Previously Chairman, U S WEST, Inc.,
1998 to 1999; Chairman, President and
Chief Executive Officer U S WEST, Inc.,
1992 to 1998; Director of United
Airlines; Director of Wells Fargo and
Company; Director of Concept Five
Technologies; Chairman of the United
States Council for International
Business; Vice President of the
International Chamber of Commerce;
Director of Creighton University; will
serve as President of the International
Chamber of Commerce, beginning 2001
member of the Business Council; Trustee
of the Denver Art Museum; Board Member
of the American Indian College Fund
Ronald F. McKenna................ 60 President, Hamilton Sundstrand since
June 21, 1999; Executive Vice President
and Chief Operating Officer of Hamilton
Sundstrand, Aerospace, May 6, 1996 to
June 21, 1996; Vice President of
Business Development, Sunstrand
Aerospace, January, 1995 to May, 1996;
Vice President and General Manager of
Sunstrand Aerospace Electric Power,
December, 1989 to January, 1995
Angelo J. Messina................ 47 Vice President, Financial Planning and
Analysis of Parent since 1998;
previously Director, Financial Planning
and Analysis, of Parent; Vice
President, Strategic Planning, Pratt &
Whitney; Director, Investor Relations,
of Parent
David G. Nord.................... 43 Vice President, Controller of Parent
since 2000; previously Acting
Controller; Assistant Controller,
Financial Reporting and Accounting of
Parent; Corporate Controller, Pittston
Co.
Stephen F. Page.................. 60 Executive Vice President of Parent and
President and Chief Executive Officer,
Otis Elevator since 1997; previously
Executive Vice President and Chief
Financial Officer of Parent
Frank P. Popoff*................. 64 Director of Parent since 1996;
Chairman, The Dow Chemical Company,
Midland, Michigan, will retire,
effective November 1, 2000; previously,
Chief Executive Officer of The Dow
Chemical Company; Director of American
Express Company; Quest Communications
International, Inc.; Chemical Financial
Corporation; and Michigan Molecular
Institute; previously Chairman of
Chemical Manufacturers Association;
member of the Business Council for
Sustainable Development; The
</TABLE>
A-3
<PAGE>
<TABLE>
<CAPTION>
Present Principal Occupation or
Employment;
Name, Citizenship and Material Positions Held During the Past
Current Business Address Age Five Years
------------------------ --- ---------------------------------------
<C> <C> <S>
Business Council; the Council for
Competitiveness; the American Chemical
Society; and director emeritus of the
Indiana University Foundation
William H. Trachsel.............. 57 Senior Vice President, General Counsel
and Secretary of Parent since 1998;
previously Vice President, Secretary
and Deputy General Counsel of Parent
Andre Villeneuve*................ 55 Director of Parent since 1997; Chairman
of Instinet Corporation, Reuter's
electronic brokerage subsidiary;
previously Executive Director of
Reuters Holdings PLC, London, England
(worldwide news information and
services business), 1998 to February
2000; Director of CGU plc
Harold Wagner*................... 64 Director of Parent since 1994; Chairman
and Chief Executive Officer, Air
Products and Chemicals, Inc.,
Allentown, Pennsylvania (industrial
gases and chemicals); previously
Chairman, President and Chief Executive
Officer, Air Products and Chemicals,
Inc., 1992 to 1998; Director of CIGNA
Corporation; PACCAR Inc.; Daido-Hoxan;
Member of The Business Council; the
Policy Committee of The Business
Roundtable; Member of the Pennsylvania
Business Roundtable; serves on the
Board of Trustees of Lehigh University
Sanford I. Weill*................ 67 Director of Parent since 1999; Chairman
and Chief Executive Officer of
Citigroup, Inc.; previously Chairman
and Co-Chief Executive Officer of
Citigroup, Inc., 1998 to 2000; Chairman
and Chief Executive Officer of
Travelers Group Inc., 1993 to 1998;
Director of AT&T Corporation; E.I.
duPont de Nemours & Company; Chairman
of the Board of Trustees of Carnegie
Hall; Member of the Business
Roundtable; the Business Council; the
Board of Directors of the Baltimore
Symphony; the Board of Governors of New
York Presbyterian Hospital; the Board
of Overseers of the Weill Medical
College; Graduate School of Medical
Sciences of Cornell University and
other civic organizations.
</TABLE>
Purchaser. Set forth below are the name, business address and present
principal occupation or employment, and material occupations, positions,
offices or employment for the past five years of the directors and executive
officers of Purchaser. Except as otherwise noted, the business address of such
person is One Financial Plaza, Hartford, CT 06101. Unless otherwise indicated,
such person is a citizen of the United States.
<TABLE>
<CAPTION>
Present Principal Occupation or
Employment;
Name, Citizenship and Material Positions Held During the Past
Current Business Address Age Five Years
------------------------ --- ---------------------------------------
<C> <C> <S>
Ari Bousbib ................... 39 Director of Purchaser since October, 2000;
Citizenship: French/Portuguese President of Purchaser since October 2000;
Vice President, Corporate Strategy and
Development of Parent since 1997;
previously Managing Director, the
Strategic Partners Group; Partner, Booz,
Allen & Hamilton
Lawrence V. Mowell............. 52 Vice-President, Treasurer and Secretary of
Purchaser since October, 2000; Associate
General Counsel of Parent since 1998; Vice
President and General Counsel, UT Finance
1992-1998
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Facsimile copies of the Letter of Transmittal will be accepted. The Letter of
Transmittal, certificates for the Shares and any other required documents
should be sent by each stockholder of the Company or such stockholder's broker-
dealer, commercial bank, trust company or other nominee to the Depositary as
follows:
The Depositary For The Offer Is:
LaSalle Bank National Association
By Mail/Overnight Courier:
LaSalle Bank National Association
Attention: Corporate Trust Operations
135 South LaSalle Street
Suite 1811
Chicago, Illinois 60603
By Facsimile Transmission:
(For Eligible Institutions Only)
(312) 904-2236
Confirm Facsimile Transmission:
By Telephone Only:
(312) 904-2450
Any questions or requests for assistance or additional copies of the Offer to
Purchase and the Letter of Transmittal may be directed to the Information Agent
at its telephone number 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:
[Logo of Georgeson Shareholder Communications Inc.]
17 State Street, 10th Floor
New York, New York 10004
Banks and brokers call collect: (212) 440-9800
All others call toll free: (888) 223-2064
