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SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
Filed by the Registrant [ ]
Filed by a Party other than the Registrant [X]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only (as permitted by
Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Section 240.14a-11(c) or
Section 240.14a-12
WALLACE COMPUTER SERVICES, INC.
.................................................................
(Name of Registrant as Specified In Its Charter)
GUY P. WYSER-PRATTE
.................................................................
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[ ] $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1),
14a-6(i)(2) or Item 22(a)(2) of Schedule 14A.
[ ] $500 per each party to the controversy pursuant to Exchange
Act Rule 14a-6(i)(3).
[ ] Fee computed on table below per Exchange Act Rules
14a-6(i)(4) and 0-11.
1) Title of each class of securities to which transaction
applies:
.................................................................
2) Aggregate number of securities to which transaction
applies:
.................................................................
3) Per unit price or other underlying value of transaction
computed pursuant to Exchange Act Rule 0-11 (Set forth the
amount on which the filing fee is calculated and state how it was
determined):
.................................................................
4) Proposed maximum aggregate value of transaction:
.................................................................
5) Total fee paid:
.................................................................
[X] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by
Exchange Act Rule 0-11(a)(2) and identify the filing for
which the offsetting fee was paid previously. Identify the
previous filing by registration statement number, or the
Form or Schedule and the date of its filing.
1) Amount Previously Paid:
.................................................................
2) Form, Schedule or Registration Statement No.:
.................................................................
3) Filing Party:
.................................................................
4) Date Filed:
.................................................................
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SOLICITATION OF PROXIES
IN CONNECTION WITH THE
1996 ANNUAL MEETING OF SHAREHOLDERS
OF
WALLACE COMPUTER SERVICES, INC.
------------------------
PROXY STATEMENT
OF
MR. GUY P. WYSER-PRATTE
WYSER-PRATTE & CO., INC.
63 WALL STREET
NEW YORK, NEW YORK 10005
(212) 495-5350
------------------------
This Proxy Statement and the accompanying GOLD Annual Meeting proxy card
are furnished in connection with the solicitation of proxies by Guy P.
Wyser-Pratte ('Wyser-Pratte') of Wyser-Pratte & Co., Inc. ('WPC') to be used at
the annual meeting of shareholders of Wallace Computer Systems, Inc., a Delaware
corporation ('Wallace' or the 'Company'), to be held Wednesday, November 6,
1996, at the time and place indicated in the Wallace Proxy Statement, and any
adjournments or postponements thereof (the 'Annual Meeting'). This Proxy
Statement and the enclosed proxy card are first being sent to shareholders of
Wallace ('Shareholders') on or about October 4, 1996. The solicitation is being
made by Wyser-Pratte on behalf of Wyser-Pratte and WPC.
REASONS FOR THE PROXY CONTEST
As a result of opposition from the Company's management and Board of
Directors (the 'Board'), Moore Corporation Limited ('Moore') terminated its
tender offer for the Company's stock on December 20, 1995 and abandoned its
efforts to acquire the Company on August 6, 1996. The Board resisted the Moore
offer despite the support of the offer by a majority of the Company's
Shareholders. This support was evidenced by the tender of a majority of the
shares of the Company's stock to Moore and the election to the Board of three
Moore nominees (the 'Moore Directors') who supported the Moore offer.
Wyser-Pratte believes that the Board's resistance to the Moore offer
despite the support of the offer by a majority of the Company's Shareholders
constituted a failure of the Company's corporate governance system. To assure
that such a failure does not happen again, Wyser-Pratte now solicits your
proxies (1) to elect to the Board three nominees (the 'Wyser-Pratte Nominees')
who will seek to maximize shareholder value through the sale of the Company, or
alternatively, through an expanded share repurchase program, and (2) to adopt
two, separate proposals to amend the Company's By-laws (the 'Proposed By-laws')
that would:
require the Board of Directors to terminate defensive measures against a
qualified cash tender offer after ninety days, unless the Shareholders
voted to support the Board's policy of opposition to such offer (the
'Tender Offer By-law'); and
elect not to be governed by Section 203 of the Delaware General
Corporation Law (the 'Business Combination Statute') which, subject to
certain exceptions, requires a business combination with a holder of 15%
or more of the corporation's shares to be approved by an affirmative vote
of the holders of 66 2/3% of the stock not owned by such shareholder (the
'Business Combination By-law').
While the Tender Offer By-law could require the Board to terminate
defensive measures against a qualified tender offer, whether or not such offer
was advantageous for the Company's Shareholders, Wyser-Pratte believes that the
adoption of such By-law is in the best interests of Shareholders because the
Board would have an opportunity to convince Shareholders that the offer was not
advantageous and that Shareholders should vote to give the Board the right to
continue defensive measures. See
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'Proposal to Amend the By-laws to Set a Time Limit on Certain Defensive Actions
Unless Approved by Shareholders.' Similarly, while the Business Combination
By-law could facilitate a business combination with a 15% or greater
shareholder, whether or not the transaction was advantageous for Shareholders,
Wyser-Pratte believes that the adoption of this By-law is in the best interests
of Shareholders because the Business Combination Statute discourages offers to
acquire the Company's shares; and he believes that the Delaware 'entire
fairness' doctrine provides adequate protection of the interests of the other
shareholders in a business combination with a controlling shareholder. See
'Proposal to Amend the By-laws to Elect not to be Governed By the Business
Combination Statute.'
Moore's proxy statement for the 1995 annual meeting stated that 'the Moore
Nominees support the sale of Wallace.' If the Moore Directors still support the
sale of the Company, the election of the Wyser Pratte Nominees will create a
Board majority in favor of maximizing shareholder value through the sale of the
Company. However, the Moore Directors have joined the other members of the
Wallace Board in opposing both the election of the Wyser-Pratte Nominees and the
adoption of the Proposed By-laws. See 'Background and Recent Events.' As a
result, Wyser-Pratte does not know whether the Moore Directors still support the
sale of the Company. Subject to these uncertainties, the Wyser-Pratte Nominees,
if elected, will seek to cooperate with the Moore Directors to maximize
Shareholder value through the sale of the Company. See 'Proposals to Be
Considered at the Annual Meeting, 1. Election of Directors.'
As directors, the Wyser-Pratte Nominees would attempt to persuade the other
directors to seek to maximize Shareholder value through the sale of the Company.
The Wyser-Pratte Nominees would propose that the Board retain investment bankers
to prepare offering materials and solicit proposals to acquire the Company for
cash and/or securities. Except for these steps, Wyser-Pratte has no specific
plans for selling the Company. Wyser-Pratte has not held any discussions or
reached any arrangements or understandings with the Moore directors regarding
cooperation to sell the Company.
PLEASE SUPPORT OUR EFFORTS TO REFORM THE COMPANY'S CORPORATE GOVERNANCE
SYSTEM AND TO MAXIMIZE SHAREHOLDER VALUE. YOU ARE URGED TO VOTE IN FAVOR OF EACH
OF THE PROPOSALS BY PROMPTLY SIGNING, DATING AND MAILING THE GOLD PROXY CARD IN
THE POSTAGE-PAID ENVELOPE PROVIDED.
ONLY YOUR LATEST-DATED PROXY WILL COUNT AT THE ANNUAL MEETING, THEREFORE,
DO NOT SIGN ANY PROXY THAT MANAGEMENT MAY DELIVER TO YOU.
If you have any questions concerning this Proxy Statement or need
assistance in voting your Wallace Common Stock (the 'Common Stock'), feel free
to call our proxy solicitor, Mackenzie Partners, Inc. toll-free at (800)
322-2885 or Eric Longmire, Senior Managing Director of WPC, at (212) 495-5357.
BACKGROUND AND RECENT EVENTS
A little over one year ago, on July 30, 1995, Moore made a tender offer to
purchase all of the outstanding shares of Wallace common stock, together with
the associated preferred stock purchase rights, (the 'Shares'), at a price of
$56 per share.
Two weeks later, on August 15, 1995 the Board concluded that the Moore
offer was inadequate, not in the best interests of the Company and the
Shareholders and that, in the light of the Company's future prospects, the
interests of Shareholders would be best served by the Company remaining
independent.
Then, on October 12, 1995 the Moore tender offer was amended to increase
the price to $60 per share in cash (the initial and amended Moore tender offers
are collectively referred to as the 'Offer').
On October 17, 1995 the Board reached the same conclusions regarding the
Offer and the policy of independence at $60 per share that they had reached in
considering the Offer at $56 per share.
Notwithstanding the Board's conclusions, approximately 73.5% of the Shares
were tendered to Moore and not withdrawn as of November 3, 1995; and
approximately 62.9% of the Shares were still tendered to Moore and not withdrawn
as of December 12, 1995. Furthermore, five days later at the Annual Meeting of
Shareholders held on December 8, 1995 the Shareholders elected to the Board
three individuals who had been nominated by Moore and, according to Moore's
proxy statement, were
2
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<PAGE>
committed to taking such steps as were necessary to permit the Offer and a
subsequent merger with Moore to proceed.
On December 4, 1995, the United States District Court for the District of
Delaware issued its opinion in the litigation between Moore and Wallace. The
Court found that 'the Moore tender offer pose[d] a threat to Wallace that
shareholders, because they are uninformed, will cash out before realizing the
fruits of the substantial technological innovations achieved by Wallace,' and
that the Board response to this threat of Shareholder action was reasonable
because 'Shareholders, at the time of the Moore offer, were unable to appreciate
the upward trend in Wallace's earnings . . .' The Court found further that the
Board's refusal to redeem the poison pill was not coercive or preclusive,
because the Board's decision did not discriminate among Shareholders and would
'have no effect on the success of the proxy contest.'
Shortly thereafter, Moore determined that as a result of continued
opposition from the Company's management and Board, the conditions to the Offer
could not be satisfied and on December 20, Moore terminated the Offer, but
stated that it remained interested in acquiring the Company. See 'The Moore
Offer and the 1995 Proxy Contest' for a more detailed discussion of these
events.
On August 6, 1996 Moore announced that it would not pursue an acquisition
of the Company. On August 7, 1996, Wyser-Pratte notified the Company of his
intention to nominate Guy P. Wyser-Pratte, William M. Frazier and W. Michael
Frazier (the 'Wyser-Pratte Nominees') for election as directors at the Company's
Annual Meeting.
On August 19, 1996 Wyser-Pratte filed preliminary proxy materials with the
Securities and Exchange Commission to solicit proxies from the Company's
Shareholders for the Annual Meeting.
On September 5, 1996 Wyser-Pratte received a letter, signed by all the
Wallace directors, stating that the Board would unanimously recommend that the
Shareholders vote against the Wyser-Pratte Nominees and Wyser-Pratte's proposals
for Shareholder action.
Finally, on September 18, 1996, Wallace filed its preliminary proxy
materials with the Securities and Exchange Commission. These materials included
the statements that the Tender Offer By-law is 'invalid' and that if it is
adopted by the Shareholders at the Annual Meeting, the Tender Offer By-law will
'not be given any effect by the Company.' Wyser-Pratte believes that these
statements are false and misleading because the courts have not resolved the
extent to which such shareholder-adopted by-laws may limit the authority of a
board of directors to oppose, or to adopt or employ defensive measures against,
takeover bids. See 'Proposal to Amend The By-laws to Set a Time Limit on Certain
Defensive Actions Unless Approved by Shareholders.' On September 20, 1996,
Wyser-Pratte commenced an action in the United States District Court for the
Northern District of Illinois by filing a complaint against the Company, seeking
a declaratory judgment that the Tender Offer By-law is valid as a matter of
Delaware law, claiming that the Company's preliminary proxy materials falsely
state that the Tender Offer By-law is invalid and seeking an injunction against
further violations of the Securities and Exchange Act of 1934 by the Company.
The closing price of the Shares on the New York Stock Exchange on October
2, 1996, after giving effect to the Company's July 29, 1996 two-for-one stock
split (the 'Stock Split') was $28.50.
YOU HAVE A SAY IN THE FUTURE OF YOUR INVESTMENT
EXERCISE THAT RIGHT AND VOTE FOR THE WYSER-PRATTE NOMINEES
AND FOR THE WYSER-PRATTE PROPOSALS
3
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PROPOSALS TO BE CONSIDERED AT THE ANNUAL MEETING
1. ELECTION OF DIRECTORS
(ITEM 1 ON PROXY CARD)
Wyser-Pratte believes that the response of management and the Board to the
Moore acquisition proposal and the Offer represented a failure of the Company's
corporate governance system.
In tendering a majority of the Shares to Moore and electing the Moore
Directors, the Shareholders showed that a majority of the Shareholders were
opposed to the Board's policy of independence and did not consider the Offer
coercive or hostile to the interests of Shareholders.
Despite this demonstration of Shareholder sentiment, the Board continued to
oppose the Offer and ultimately succeeded in defeating it, thereby acting toward
the Shareholders in a manner that Wyser-Pratte considers hostile and coercive.
The Board refused Moore's invitation to enter into acquisition negotiations,
resisted the Offer, conducted litigation in opposition to the Offer and refused
to satisfy the conditions to the Offer.
The Court in the litigation between Moore and Wallace found that the
Board's refusal to redeem the poison pill was not coercive or preclusive because
the Board's decision did not discriminate among Shareholders and would 'have no
effect on the success of the proxy contest. See 'Background and Recent Events.'
With all due respect to the Wallace court, Wyser-Pratte believes that where, as
here, a company has a staggered board, the ability to solicit proxies for the
election of directors is not an effective remedy for a board's obstruction of a
tender offer because a prospective acquiror must maintain its interest and
continue its efforts through two annual meetings in order to gain control
through proxy solicitations.
The Board opposed the Offer -- at a cost of approximately $10,117,000 to
the Company -- despite the fact that the original offering price of $56 a share
(subsequently increased to $60) represented an 84% premium over the Company's
share price on February 24, 1995 when Moore first contacted Wallace about an
acquisition, and 42% over the 30-day average closing price, immediately prior to
the tender offer, according to a letter from Moore to the Company. The Company
conducted a classic 'just say no' defense, a policy that the Shareholders
sharply repudiated by tendering a majority of the Shares to Moore and electing
the Moore Directors. Wyser-Pratte believes it was wrong for the Board not to
seek other more advantageous alternatives to the Offer. He also believes that
the actions of management and the Board with respect to the Offer represent an
egregious example of management entrenchment and demonstrate an unwillingness to
take actions to enhance Shareholder value for all Shareholders when such actions
conflict with management's interest in remaining in power.
The Board currently consists of nine directors, three of whose terms will
expire at the Annual Meeting. Wyser-Pratte believes that seven of these
directors -- Messrs. Richard F. Doyle, William N. Lane, III, John C. Pope and
Neele E. Stearns, Jr., as well as the Moore Directors, Messrs. Curtis A.
Hessler, Albert W. Isenman, III and Robert P. Rittereiser -- are 'independent
directors' based on the definition of an independent director as one who has not
within five years either (i) been an officer or an employee of the Company or
any of its affiliates or (ii) personally or as an officer, employee or member of
an entity, provided goods or services to the Company as a supplier, attorney,
investment or commercial banker, or otherwise (except for services rendered as a
director) for which the Company paid consideration in excess of $10,000 in any
year. Messrs. Robert J. Cronin and Theodore Dimitriou are not independent
directors according to this definition because Mr. Cronin is an officer of the
Company and Mr. Dimitriou was an officer of the Company until 1992. If elected
to the Board, the Wyser-Pratte Nominees will seek to cooperate with the Moore
Directors to maximize Shareholder value through the sale of the Company, subject
to the questions that exist about whether the Moore Directors are still in favor
of the sale of the Company. See 'Reasons for the Proxy Contest.'
If the Company can not be sold on terms that the Wyser-Pratte Nominees, the
other directors and the Shareholders consider advantageous, Wyser-Pratte would
attempt to persuade the other directors to expand the Company's stock repurchase
program to provide stockholders with an opportunity to sell a substantial amount
of stock at a premium over current market prices. The Company stated in a press
release dated June 6, 1996 that the Board had 'authorized the repurchase of up
to $100 million of the Company's stock. Shares would be repurchased from time to
time at the discretion of the Company at
4
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<PAGE>
prices prevailing at the time of repurchase.' Wyser-Pratte believes that if the
Company is not sold, it should repurchase at least $200 million of its stock
(less amounts previously repurchased by the Company) in a structured repurchase
program, such as a tender offer or 'Dutch Auction,' that would be designed to
enable the Company to purchase this amount of stock at a substantial premium
over current market prices in a relatively short period of time. The program
would be implemented at the beginning of the 1998 fiscal year, which commences
August 1, 1997.
In a Dutch Auction, a company sets a target number or dollar amount of
shares it intends to repurchase and a price range within which shareholders are
invited to tender their shares to the company. Tendering shareholders specify
the lowest price at which they are willing to sell the shares they have
tendered. After the shareholders tender their shares, the company selects, based
on the number of shares tendered at various prices within the range, the lowest
single per share price (the 'Purchase Price') that will allow it to buy its
target number or amount of shares. The company then purchases at the Purchase
Price all shares tendered at or below the Purchase Price, with the number of
purchased shares being prorated to the extent required.
While the Company would have to borrow a substantial portion of the funds
for the $200 million repurchase program, Wyser-Pratte believes that the Company
could prudently incur $200 million or more in additional debt. With a $200
million stock repurchase program, the Company could, for example, repurchase
6,250,000 shares (13.7% of the outstanding shares) at a price of $32 per share
(after giving effect to the Stock-Split). Wyser-Pratte selected a price of $32
per share, because that price would give stockholders a significant premium over
current market prices without causing earnings dilution. Tables 1 and 2 show the
financial effects of such a stock repurchase program on projected earnings per
share and cash flow for the 1998 fiscal year, assuming that the program had been
implemented at the beginning of the 1998 fiscal year and based on other
assumptions stated in those Tables. The Tables use the Company's own earnings
projections contained in the valuation report prepared by Goldman Sachs for the
Board in connection with the Offer (the 'October 1995 Report'). This report was
filed with the Federal District Court in Delaware in connection with the
Moore-Wallace litigation. While Wyser-Pratte has no reason to believe that the
Company's earnings projections used in the October 1995 Report are incorrect,
there is no assurance that the Company will achieve these financial results.
Wyser-Pratte obtained the October 1995 Report from public sources and did not
request the permission of the Company or Goldman Sachs to use these earnings
projections in his calculation of the financial effect of a $200 million share
repurchase program.
Based on the assumptions described in the footnotes to Tables 1 and 2, the
$200 million repurchase program would increase earnings per share by $.08, and
would result in a cash surplus, after debt service and dividends, of
$36,100,000, in fiscal 1998.
The analysis in Tables 1 and 2 is based on the projections in the October
1995 Report which did not contemplate that the Company would have any stock
repurchase program. Because Wyser-Pratte does not know the amount of stock that
will be repurchased in the Company's existing stock repurchase program or the
prices at which these purchases will be made, he can not estimate the impact of
that program on the figures shown in Tables 1 and 2. However, to the extent that
the Company repurchases shares at or about current market prices (the closing
price of the Common Stock on the New York Stock Exchange on October 1, 1996 was
$28.25 per Share), such repurchases will tend to increase the Company's earnings
per share and thereby reduce or possibly eliminate the positive impact on
earnings per share of the repurchase program proposed by Wyser-Pratte. In
addition, the Company's repurchase program would cause a smaller reduction in
cash flow than would be caused by the repurchase program proposed by
Wyser-Pratte. Table 3 shows the effect of the Company's stock repurchase program
on earnings per share for the 1997 and 1998 fiscal years, assuming that the
Company repurchases 3,540,000 shares at $28.25 per share at the beginning of the
1997 and 1998 fiscal years, respectively. The $28.25 price was selected because
that was the closing price of the Company's stock on the New York Stock Exchange
on October 1, 1996, and the Company has said that it would repurchase shares
from time to time at prevailing market prices.
5
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TABLE 1
IMPACT OF $200 MILLION SHARE REPURCHASE PROGRAM ON EARNINGS PER SHARE
(ASSUMING PROGRAM IMPLEMENTED AUGUST 1, 1997)
<TABLE>
<CAPTION>
1998 FISCAL 1998 FISCAL
YEAR WITHOUT YEAR WITH
REPURCHASE REPURCHASE
PROGRAM PROGRAM
------------ -----------
($MILLIONS EXCEPT EARNINGS
PER SHARE)
<S> <C> <C>
Earnings Before Taxes(1).............................................................. 169.30 169.30
Interest on Borrowings(2)............................................................. (18.00)
Earnings Before Taxes After New Interest Expense...................................... 169.30 151.30
Taxes on Earnings at 37.5%(3)......................................................... (63.49) (56.74)
Earnings After Taxes.................................................................. 105.81 94.56
Earnings per Share(4)................................................................. 2.32 2.40
</TABLE>
- ------------
(1) Based on management's projected pretax income for fiscal years ended July
31, 1998, as shown in the valuation report prepared by Goldman Sachs for the
Board in connection with the Offer (the 'October 1995 Report')
(2) Assumes $200 million in borrowings at an interest rate of 9% per annum,
which is the assumed interest rate on borrowings used in a summary of
Management's Recapitalization Analysis in the October 1995 Report.
Wyser-Pratte selected a price of $32 per share because that price would give
stockholders a significant premium over current market prices without
causing earnings dilution.
(3) Based on tax rate used in earnings projections in the October 1995 Report.
(4) Based on 45,582,000 shares outstanding before repurchase program in which
6,250,000 shares are repurchased, reducing outstanding shares to 39,332,000.
TABLE 2
CASH FLOW ANALYSIS OF REPURCHASE PROGRAM
(ASSUMING PROGRAM IMPLEMENTED AUGUST 1, 1997)
<TABLE>
<CAPTION>
1998 FISCAL
YEAR
-----------
($MILLIONS)
<S> <C>
Cash Flow Before Repurchase Program(1)................................................................ 82.5
Debt Service Payments(2).............................................................................. (31.2)
Tax Savings(3)........................................................................................ 6.8
Dividends(4).......................................................................................... (22.0)
-----
Cash Flow after Debt Service and Dividends............................................................ 36.1
</TABLE>
- ------------
(1) Based on projections of Free Cash Flows (before debt service and dividends)
for fiscal year ending July 31, 1998 in Discounted Cashflow Analysis in the
October 1995 Report. Free Cash Flow is defined in the October 1995 Report as
Tax-Effected EBIT (earnings before interest), plus depreciation, plus or
minus changes in working capital and long-term assets, less capital
expenditures and acquisition.
(2) Based on level interest and amortization payments over a ten-year period on
$200 million in borrowings at 9% per annum.
(3) Represents tax savings from interest payments of $18,000,000 based on 37.5%
tax rate.
(4) Based on dividends of $.56 per share on 39,332,000 shares outstanding after
repurchase program.
6
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TABLE 3
IMPACT OF WALLACE'S EXISTING $100 MILLION
SHARE REPURCHASE PROGRAM ON EARNINGS PER SHARE
<TABLE>
<CAPTION>
1997 1998
1997 FISCAL FISCAL 1998 FISCAL FISCAL
YEAR WITHOUT YEAR WITH YEAR WITHOUT YEAR WITH
REPURCHASE REPURCHASE REPURCHASE REPURCHASE
PROGRAM PROGRAM PROGRAM PROGRAM
------------ ---------- ------------ ----------
($MILLIONS EXCEPT EARNINGS PER SHARE)
<S> <C> <C> <C> <C>
Earnings Before Taxes(1)................................. 139.50 139.50 169.30 169.30
Interest on Borrowings(2)................................ (9.00) (9.00)
Earnings Before Taxes After New Interest Expense......... 139.50 130.50 169.30 160.30
Taxes on Earnings at 37.5%(3)............................ (52.31) (48.39) (63.49) (60.11)
Earnings After Taxes..................................... 87.19 81.56 105.81 100.91
Earnings per Share(4).................................... 1.91 1.94 2.32 2.38
</TABLE>
- ------------
(1) Based on management's projected pretax income for fiscal years ended July
31, 1997 and 1998, as shown in the valuation report prepared by Goldman
Sachs for the Board in connection with the Offer (the 'October 1995 Report')
(2) Assumes $100 million in borrowings at an interest rate of 9% per annum,
which is the assumed interest rate on borrowings used in a summary of
Management's Recapitalization Analysis in the October 1995 Report.
(3) Based on tax rate used in earnings projections in the October 1995 Report.
(4) Based on 45,582,000 shares outstanding before repurchase program in which
3,540,000 shares are repurchased at $28.25 per Share, reducing outstanding
shares to 42,042,000. The $28.25 price was selected because that was the
closing price of the Company's stock on the New York Stock Exchange on
October 1, 1996, and the Company has said that it would repurchase shares
from time to time at prevailing market prices.
Wyser-Pratte believes that his proposed repurchase program would be in the
best interests of Shareholders because it would give Shareholders an opportunity
to sell substantial amounts of their stock at prices above the current market
price without adversely impacting the financial condition of the Company. The
repurchase program announced by the Company, on the other hand, would at most be
half the size of the program advocated by Wyser-Pratte and would only acquire
shares at prices prevailing in the market from time-to-time. Wyser-Pratte will
personally benefit from the repurchase program to the extent that he sells
Shares under the program.
In addition, the Wyser-Pratte Nominees, if elected, will also seek to have
the Board review and report to Shareholders on the costs that the Company has
incurred or will incur as a result of 'golden parachutes' and other contracts
with management, as well as the fees that the Company has paid to its advisors
in connection with its resistance to the Offer.
7
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ACCORDINGLY, WYSER-PRATTE PROPOSES THE ELECTION OF THE FOLLOWING NOMINEES
TO THE BOARD:
THE WYSER-PRATTE NOMINEES
<TABLE>
<CAPTION>
PRESENT PRINCIPAL OCCUPATION AND
NAME, BUSINESS PRINCIPAL OCCUPATIONS DURING
ADDRESS AND AGE LAST FIVE YEARS; DIRECTORSHIPS(i)
- ------------------------------------------------------ ---------------------------------------------------------
<S> <C>
Guy P. Wyser-Pratte (56) ............................. Mr. Wyser-Pratte is the President and Chief Executive
Wyser-Pratte & Co., Inc. Officer of Wyser-Pratte Management Company and WPC,
63 Wall Street companies which are principally engaged in money
New York, New York 10005 management and event arbitrage, which he defines as
investment in securities whose value depends on uncertain
events, such as proposed mergers and acquisitions.
William M. Frazier (67) .............................. Mr. William M. Frazier is a senior member of Frazier &
Frazier & Oxley, L.C. Oxley, Legal Corporation and President and Chief
The St. James Mezzanine Executive Officer of the Old National Bank of Huntington,
401 Tenth Street Huntington, West Virginia. In 1992, served as a director
Huntington, West Virginia 25727 of the Van Dorn Company, a publicly owned corporation
which was sold to Crown Cork & Seal Co., Inc. in December
1992.
W. Michael Frazier (36)(ii) .......................... Mr. Michael Frazier is a partner of Frazier & Oxley,
Frazier & Oxley, L.C. Legal Corporation.
The St. James Mezzanine
401 Tenth Street
Huntington, West Virginia 25727
</TABLE>
- ------------
(i) Unless otherwise indicated, nominees' principal occupations have been
their principal occupations for the preceding five years. No corporation
or organization named in this table is a parent, subsidiary or other
affiliate of the Company
(ii) William M. Frazier is the father of W. Michael Frazier.
------------------------
Based on currently available public information, the election of the
Wyser-Pratte Nominees as directors of Wallace requires a plurality of the votes
cast by the holders of the Shares represented in person or by proxy at the
Annual Meeting and entitled to vote in the election of directors, assuming a
quorum is present at the Annual Meeting. Thus, assuming a quorum is present, the
three persons receiving the greatest number of votes will be elected to serve as
directors until the 1999 Annual Meeting. Non-voted shares with the respect to
the election of directors will not affect the outcome of the election of
directors. Shareholders will not be able to cumulate votes for the election of
directors on Wyser-Pratte's form of proxy.
Based on a review of documents filed with the Securities and Exchange
Commission and other publicly available information, Wyser-Pratte believes that
the election of the Wyser-Pratte Nominees may result in a 'Material Change'
within the meaning of various of the Company's employee benefit plans and
employment contracts, thereby entitling the participants in such plans and the
individual parties to such contracts to receive various payments and benefits.
See 'Change in Control' for a more detailed discussion of these employee benefit
plans and contracts. Wyser-Pratte is not able, on the basis of publicly
available information, to determine the aggregate dollar amount of such payments
that would be triggered by such a change.
There are no arrangements or understandings between the Wyser-Pratte
Nominees and any other person pursuant to which the Wyser-Pratte Nominees were
selected as nominees. The Wyser-Pratte Nominees will receive directors' fees
upon their election as directors of the Company in accordance with the Company's
current practice. Although Wyser-Pratte has no reason to believe that any of the
Wyser-Pratte Nominees will be unable to serve as directors, if any one or more
of the Wyser-Pratte Nominees is not available for election, the persons named on
the GOLD Annual Meeting proxy card
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will vote for such other nominees as may be proposed by Wyser-Pratte. There may
be a question as to whether Wyser-Pratte would be able to substitute nominees
because Section 3.3 of the Company's by-laws provides that a shareholder may
nominate a person for election as a director at a Shareholders meeting only by
giving notice to the Company at least 90 days in advance of the meeting. In
interpreting other shareholder notification by-laws, the Delaware courts have
ruled that when there is a material change in circumstances after the period for
shareholder nominations ends, corporations may be required to make an exception
to such an advance notification requirement to give shareholders a fair
opportunity to nominate directors. Hubbard v. Hollywood Park, 1991 Del. Ch.
LEXIS (Jan. 14, 1991). Wyser-Pratte believes that if one of the Wyser-Pratte
Nominees withdrew and Wyser-Pratte needed to make a new nomination to complete
his slate, the withdrawal of such Nominee would constitute a material change in
circumstances requiring the Company to allow Wyser-Pratte to make a new
nomination so as to satisfy the Company's obligation to give Wyser-Pratte a fair
opportunity to nominate directors.
In order to give Shareholders a greater voice in the governance of the
Company and to achieve a board of directors committed to the goal of maximizing
Shareholder value, Wyser-Pratte recommends that you vote FOR the proposal to
elect the Wyser-Pratte Nominees.
SHAREHOLDER PROPOSALS RELATING TO THE SALE OF THE COMPANY
Wyser-Pratte believes that to maximize Shareholder value, the Shareholders
need to eliminate the Board's ability to block tender offers for the Company's
shares for an unlimited period of time. The history of the Company during the
past year illustrates, in Wyser-Pratte's view, the difficulty of changing
corporate policy by soliciting proxies for the election of directors in a
company with a staggered board and underscores the need for Shareholders to take
direct action through by-law amendments.
The Proposed By-laws would:
require the Board of Directors to terminate defensive measures
against a qualified cash tender offer after ninety days, unless the
Shareholders voted to support the Board's policy of opposition to
such offer (the 'Tender Offer By-law'); and
elect not to be governed by Section 203 of the Delaware General
Corporation Law (the 'Business Combination Statute') which, subject
to certain exceptions, requires a business combination with a holder
of 15% or more of the corporation's shares to be approved by 66 2/3%
of the stock not owned by such shareholder (the 'Business Combination
By-law').
Based on publicly available information, adoption of the Resolution
proposing the Tender Offer By-law requires a majority vote of the shares of
stock represented and entitled to vote at the Annual Meeting, assuming a quorum
is present at the Annual Meeting and (ii) adoption of the Resolution proposing
the Business Combination By-law requires approval by a majority of the
outstanding Shares, as provided in the Business Combination Statute. With
respect to abstentions and broker non-votes, the shares will be considered
present at the Annual Meeting, but since they are not affirmative votes for the
Resolutions, they will have the same effect as votes against the Resolutions.
While the Tender Offer By-law could require the Board to terminate
defensive measures against a qualified tender offer, whether or not such offer
was advantageous for the Company's Shareholders, Wyser-Pratte believes that the
adoption of such By-law is in the best interests of Shareholders because the
Board would have an opportunity to convince Shareholders that the offer was not
advantageous and that Shareholders should vote to give the Board the right to
continue defensive measures. See 'Proposal to Amend the By-laws to Set a Time
Limit Unless Approved by Shareholders on Certain Defensive Actions.' Similarly,
while the Business Combination By-law could facilitate a business combination
with a 15% or greater shareholder, whether or not the transaction was
advantageous for Shareholders, Wyser-Pratte believes that the adoption of this
By-law is in the best interests of Shareholders because the Business Combination
Statute discourages offers to acquire the Company's shares; and he believes that
the Delaware 'entire fairness' doctrine provides adequate protection of the
interests of the other shareholders in a business combination with a controlling
shareholder. See 'Proposal to Amend the By-laws to Require a Shareholder Vote on
Certain Defensive Actions.'
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2. PROPOSAL TO AMEND THE BY-LAWS TO SET A TIME LIMIT ON CERTAIN
DEFENSIVE ACTIONS UNLESS APPROVED BY SHAREHOLDERS
(ITEM 2 ON PROXY CARD)
Shareholders are asked to consider and vote upon a proposal to adopt the
following amendment to the Company's By-laws, which would set a time limit on
certain defensive actions unless approved by Shareholders:
'RESOLVED, that the Shareholders hereby amend the Company's By-laws by
adding a new Section 7.8, which shall read as follows:
`If a fully financed tender offer is made to purchase all the
Company's outstanding shares of Common Stock for cash at a price that is at
least 25% greater than the average closing price of such shares on the New
York Stock Exchange during the 30 days prior to the date on which such
offer is first published or sent to security holders and the Board of
Directors opposes such offer, the Board of Directors shall terminate all
defensive measures against such offer at the end of the ninetieth day after
such offer is first published or sent to security holders unless the Board
of Directors' policy of opposition to such offer is approved by a vote of a
majority of the shares of Common Stock present and entitled to vote on the
subject matter at a meeting of shareholders which is held on or before such
ninetieth day and at which a quorum is present; provided, however, that the
Board of Directors shall not be required to terminate defensive measures
against such offer at the end of such ninetieth day unless at such time the
offer has an expiration date which is at least ten business days
thereafter. Notwithstanding anything to the contrary contained in Section
2.5 of the by-laws, unless the record date for such shareholders meeting
was set prior to the date on which such offer was first published or sent
to security holders, the record date for such meeting shall be at least
five business days after the date on which the Company files its statement
of position with respect to such offer in accordance with Rule 14e-2 of the
Securities Exchange Act of 1934, as amended. At such time as it is
required, pursuant to the first sentence of this by-law, to terminate
defensive measures against such offer the Board of Directors shall redeem
the outstanding Rights under the Rights Agreement dated as of March 14,
1990 between the Company and Harris Trust and Savings Bank, as Rights
Agent, or any successor agreement. Prior to the end of such ninetieth day,
unless the Board's policy of opposition to such offer has been approved by
a shareholder vote as provided in this by-law, the Board of Directors shall
take such reasonable actions as are necessary to preserve the possibility
of satisfying the conditions to such offer after such ninetieth day. This
Section 7.8 may only be amended or repealed by a shareholder vote pursuant
to Section 7.1 of the By-laws.' '
Wyser-Pratte believes that the Board's opposition to the Offer was a
failure of the Company's corporate governance system because the Board resisted
and ultimately defeated an offer that a majority of the Shareholders supported.
If a substantial offer is made to acquire a company's Shares, the Shareholders,
not the Board, should have the ultimate decision on whether to accept the offer.
The Tender Offer By-law would assure that such Shareholder abuse does not happen
again. If the Board decided to oppose a fully financed cash tender offer at a
premium of at least 25% above the market price of the Shares during the
preceding month, the Board would be required to terminate all defensive measures
against such offer unless the Board's policy of opposition was approved by
Shareholders within ninety days after the offer was made. The By-law follows an
approach to tender offer regulation that is followed in Canada, the United
Kingdom and other European Countries.
The By-law only applies to offers of at least a 25% premium because
Wyser-Pratte believes that a premium of this size is large enough to be worthy
of consideration by Shareholders although the average acquisition premium in
Wallace's industry is higher than 25%. While there can be no assurance that the
Company will ultimately get a price higher than the initial offer, most
acquisition bids attract competition that often leads to subsequent offers at a
price higher than the initial offer or the initial bidder often raises its
price.
The By-law is limited to fully-financed offers because Wyser-Pratte
believes that the availability of financing is the best evidence that an offer
is serious and has a reasonable chance of being completed. Offers covered by the
Tender Offer By-law are likely to be subject to conditions, other than
financing, and in some instances offers may not be completed because of a
failure to satisfy such other conditions;
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but Wyser-Pratte believes that the termination of defensive measures against
such offers would not be harmful to Shareholders because the Shareholders could
evaluate for themselves the likelihood that such conditions will be satisfied
and, on the basis of such evaluation, could decide to sell, hold or tender their
shares.
Wyser-Pratte believes that the provision for a Shareholder vote assures
that the By-law will not be used to facilitate coercive offers. The Court in the
Moore-Wallace litigation defined a coercive offer as 'an offer which has the
effect of compelling Shareholders to tender their shares out of fear of being
treated less favorably in the second stage.' If a majority of the Company's
Shareholders consider an offer coercive, the Board will be able to win
Shareholder approval to continue defensive measures against the offer for more
than ninety days.
Based on his experience as an investor in target company securities,
Wyser-Pratte believes that ninety days is normally sufficient time for a target
company, seeking a higher offer, to complete the bidding process. However,
circumstances could arise in which a board of directors seeking a higher offer
was unable to complete the entire process of finding and closing an alternative
transaction within the ninety-day period prescribed by the Tender Offer By-law.
Similarly, if a board were trying to negotiate the terms of an acquisition with
a prospective purchaser, the inability to resist a hostile tender offer by that
purchaser beyond an initial ninety-day period could reduce the board's leverage
to negotiate favorable terms for stockholders. Wyser-Pratte believes the
ninety-day limit on defensive measures in the Tender Offer By-law need not
prevent the Board from obtaining the best possible terms for stockholders in
either of these situations, because the Board would be free to seek Shareholder
approval to continue defensive measures for an additional period of time.
However, given the time periods required to solicit proxies and possibly to call
and hold a stockholders meeting, the Board would have to plan ahead to get such
approval before the end of the ninety-day period; and if the Board failed to do
so it is possible that under the Tender Offer By-law the Board would lose the
power to take defensive measures against an offer that was not in the best
interests of Shareholders.
While Wyser-Pratte believes that the Tender Offer By-law is valid, he
recognizes that the courts have not considered the validity of a by-law similar
to the one proposed by this Resolution and, therefore, have not resolved the
extent to which such shareholder-adopted by-laws may limit the authority of a
board of directors to oppose, or to adopt or employ defensive measures against,
takeover bids. Accordingly, it is uncertain whether the Tender Offer By-law
would survive a Delaware court challenge.
Wyser-Pratte believes that Section 109 of the Delaware General Corporation
Law authorizes the enactment of the Tender Offer By-law. Section 109(a) gives
stockholders the power to 'adopt, amend or repeal bylaws.' Section (109)(b)
states: 'The by-laws may contain any provision, not inconsistent with law or
with the certificate of incorporation, relating to the business of the
corporation, the conduct of its affairs, and its rights or powers or the rights
or powers of its stockholders, directors, officers or employees,' (emphasis
added). In a review of the Delaware General Corporation Law, the Company's
certificate of incorporation and by-laws Wyser-Pratte has not discovered any
provisions that bar stockholders from adopting the Tender Offer By-law. He
believes that Section 141(a) of the Delaware General Corporation Law does not
bar the adoption of the Tender Offer By-law. That section states: 'The business
and affairs of every corporation organized under this chapter shall be managed
by or under the direction of a board of directors, except as may be otherwise
provided in this chapter or in its certificate of incorporation.' (emphasis
added). Wyser-Pratte believes that the adoption of the Tender Offer By-law is
not inconsistent with Section 141(a) for two reasons. First, if Section 141(a)
is read as granting the board of directors exclusive authority over the business
and affairs of the corporation, that grant is qualified by the phrase 'except as
may be otherwise provided in this chapter or in its certificate of
incorporation.' This savings clause leaves room for the grant of authority in
Section 109 for stockholders to adopt by-laws, such as the Tender Offer By-law,
which relate to the rights and powers of stockholders and directors. Second,
Wyser-Pratte believes that any reading of Section 141(a) that invalidated the
Tender Offer By-law would make meaningless Section 109's broad grant of
authority for stockholders to adopt by-laws relating to the rights or powers of
stockholders and directors.
Wyser-Pratte also believes that the Tender Offer by-law does not conflict
with Delaware case law dealing with the fiduciary duties of boards of directors.
In certain cases, including the decision last year
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in the litigation between Moore and Wallace (see, 'Background And Recent
Events'), courts interpreting Delaware law have, on the basis of particular
facts presented, upheld reasonable defensive measures adopted by directors who,
in good faith and upon reasonable investigation, believed that a hostile offer
posed a danger to corporate policy and effectiveness, even though a majority of
the stockholders may have tendered their shares. Wyser-Pratte believes that
these cases do not support invalidating the Tender Offer By-law because in none
of those cases was the board's discretion limited by a by-law previously adopted
by stockholders pursuant to their powers under Section 109, nor did the court
consider the stockholders' authority to adopt such a by-law. Wyser-Pratte
believes it is inherent in the Delaware scheme of corporate law that while the
board is entitled to exercise its judgment in responding to a tender offer or
other takeover bid, its judgment must be exercised within the framework of
statutes, charter provisions and by-laws which in certain instances limit the
actions that directors may take even when the directors believe that their
chosen course of action is in the best interests of stockholders.
While the Board has the exclusive right to call special meetings of
stockholders, pursuant to Article Eighth of the Certificate of Incorporation,
Wyser-Pratte does not believe that the Tender Offer By-law conflicts with that
provision. The fact that the Board's ability to continue defensive measures may
be conditional on calling a special stockholders meeting does not mean that the
Board is required to call such a meeting. If Shareholders receive a tender offer
that is subject to the By-law, the Board may elect to discontinue defensive
measures at the end of ninety days without calling a stockholders meeting; and,
depending on the timing of the offer, the Board may be able to seek Shareholder
approval at an annual meeting. Since it would be the Board's decision whether or
not to call a special stockholders meeting, Wyser-Pratte believes the Tender
Offer By-law is consistent with Article Eighth.
On September 20, 1996, Wyser-Pratte commenced an action in the United
States District Court for the Northern District of Illinois by filing a
complaint against the Company, seeking a declaratory judgment that the Tender
Offer By-law is valid as a matter of Delaware law, claiming that the Company's
preliminary proxy materials falsely state that the Tender Offer By-law is
invalid and seeking an injunction against further violations of the Securities
and Exchange Act of 1934 by the Company.
Wyser-Pratte urges you to vote FOR the Resolution proposing the
Tender-Offer By-law to set a time limit on certain defensive actions unless
approved by Shareholders.
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3. PROPOSAL TO AMEND THE BY-LAWS TO ELECT NOT TO BE
GOVERNED BY THE BUSINESS COMBINATION STATUTE
(ITEM 3 ON PROXY CARD)
Shareholders are asked to consider and vote upon the following Resolution,
amending the Company's By-laws to elect not to be governed by the Business
Combination Statute:
'RESOLVED, that pursuant to Section 203(b)(3) of the Delaware General
Corporation Law, the Shareholders hereby amend the Company's By-laws by
adding a new section 7.7 which shall read as follows:
`The corporation shall not be governed by Section 203 of the
Delaware General Corporation Law.' '
The Business Combination Statute provides, in effect, that if any person
acquires beneficial ownership of 15% or more of the Company's outstanding shares
(thereby becoming an 'Interested Stockholder'), the Interested Stockholder may
not engage in a business combination with the Company for three years
thereafter, subject to certain exceptions. Among the exceptions are the Board's
prior approval of such acquisition; the acquisition of at least 85% of the
Company's shares (subject to certain exclusions) in the transaction in which
such person becomes an Interested Stockholder; and the approval of such business
combination by 66 2/3% of the outstanding stock not owned by the Interested
Stockholder. The Company's Stockholders may, by a vote of a majority of the
outstanding shares, adopt an amendment to the By-laws or Certificate of
Incorporation electing not to be governed by the Business Combination Statute.
Such amendment would become effective twelve months after adoption and would not
be subject to amendment by the Board and would not apply to a business
combination with a person who became an Interested Stockholder prior to the
adoption of such amendment.
THE FOREGOING IS A SUMMARY OF THE BUSINESS COMBINATION STATUTE AND IS
QUALIFIED IN ITS ENTIRETY BY REFERENCE THERETO. THE TEXT OF THE BUSINESS
COMBINATION STATUTE IS ATTACHED HERETO AS EXHIBIT A.
Wyser-Pratte believes the Business Combination Statute is inconsistent with
the goal of maximizing shareholder value because the provision discourages
offers to acquire the Company's shares by creating obstacles to second-stage
mergers in which successful offerors acquire the remainder of the Company's
shares. The Business Combination Statute has this effect because it requires the
offeror to win the votes of a two-thirds super-majority of the minority
shareholders to approve a second-stage merger unless the offeror acquired at
least 85% of the Company's shares (subject to certain exclusions) in the
transaction in which the offeror became an Interested Shareholder or unless such
transaction was approved by the Board of Directors. If the Company were to opt
out of the Business Combination Statute, there would be no specific vote of the
minority shareholders required by statute to effect a second-stage merger. In
such event, if Moore or one of its affiliates became an Interested Stockholder
and proposed to acquire the remainder of the Company's shares in a second-stage
merger which was not subject to the Business Combination Statute, it might be
able to accomplish this transaction without the favorable vote of a majority of
the minority shareholders. As a result an acquiror (including Moore or one of
its affiliates, if Moore were to resume its efforts to acquire the Company)
might be able to accomplish a second-stage merger which was opposed by a
majority of the minority shareholders and which, such shareholders did not
believe was in their best interests.
However, Wyser-Pratte believes that the Company's remaining shareholders
would not require the protection of the Business Combination Statute, because
under Delaware law a second-stage merger with a controlling shareholder would
have to satisfy the entire fairness test. This test requires the courts to
conduct a comprehensive review of the fairness of such a transaction. Its scope
has been described by the Delaware Supreme Court in Weinberger v. UOP, Inc. 457
A.2d 701 (Del. 1983): 'The concept of fairness has two basic aspects: fair
dealing and fair price. The former embraces questions of when the transaction
was timed, how it was initiated, structured, negotiated, disclosed to the
directors, and how the approvals of the directors and shareholders were
obtained. The latter aspect of fairness relates to the economic and financial
considerations of the proposed merger, including all relevant factors: assets,
market value, earnings, future prospects, and any other elements that affect the
intrinsic or inherent value of a company's stock.' It is common practice for
acquirors to satisfy this requirement by
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conditioning a second-stage merger on approval by a majority of the minority
shareholders. In addition, if Article Ninth of the Certificate of Incorporation
applied to the second-stage merger, it would be necessary for the acquiror to
obtain the approval of a majority of the Disinterested Directors (as defined in
Article Ninth), to obtain the vote of 80% of the Shares (including Shares owned
by the acquiror) in favor of the transaction, or to pay a price that was equal
to or greater than various benchmarks including the highest price paid for any
Shares purchased by the acquiror during the two years prior to the public
announcement of the second-stage merger.
Wyser-Pratte urges you to vote FOR the Resolution proposing the Business
Combination By-law to eliminate an obstacle to the acquisition of the Company by
electing not to be governed by the Business Combination Statute.
THE MOORE OFFER AND THE 1995 PROXY CONTEST
By letter on February 24, 1995, Moore sought to initiate discussions of a
business combination between Moore and the Company and was advised that the
Company was not interested in pursuing such discussions at that time. On July
30, 1995, Moore announced its intention to commence a tender offer for the
Shares at a price of $56 per share. In a letter to Wallace, Moore stated that
the offer represented a 42% premium over Wallace's most recent 30-day average
closing price and an 84% premium over the Wallace share price on February 24
when Moore first approached Wallace. The Offer was conditioned upon, among other
things, the Board's redemption of the Company's poison pill.
On August 15, 1995, the Board concluded that the Offer was inadequate and
not in the best interests of the Company and the shareholders and that, in the
light of the Company's future prospects, the interests of shareholders would be
best served by the Company remaining independent. Also on August 15, 1995,
Wallace commenced litigation opposing the Offer.
On July 31, 1995, Moore Corporation Limited ('Moore') and FRDK, Inc.
('FRDK') commenced an action in the United States District Court for the
District of Delaware by filing a complaint (the 'Moore Action') against the
Company and each of the directors of the Company, entitled Moore Corporation
Limited and FRDK, Inc. v. Wallace Computer Services, Inc., et al. The Moore
Action, as amended by the Amended and Supplemental Complaint filed on October
17, 1995, asserted, among other things, that the use of certain anti-takeover
devices and other defensive measures by the Company was not proportionate nor
within the range of reasonable responses to the tender offer made by FRDK, a
wholly owned subsidiary of Moore, to purchase all outstanding shares of common
stock of the Company, together with associated preferred stock purchase rights
(the 'Rights') issued pursuant to the Rights Agreement, dated as of March 14,
1990 (the 'Rights Agreement'), at a price of $60 net to the seller in cash (the
'Offer'), and was in breach of the directors' fiduciary duties to the Company's
shareholders. The Moore Action also asserted that the Offer and merger with FRDK
or another wholly-owned subsidiary of Moore (the 'Proposed Merger') and proxy
solicitation complied or would comply with all applicable laws and other
obligations and sought a declaratory judgment that the Offer and the Proposed
Merger and proxy solicitation complied with all applicable laws and other
obligations.
The Moore Action sought: (i) preliminary and permanent injunctive relief
that would have prohibited the Company, its directors, officers and certain
other related parties from taking steps to impede the ability of the Company's
shareholders to consider and make their own determination as to whether to
accept the terms of the Offer or give or withhold consent to the terms of the
proxy solicitation, or taking any other action to thwart or interfere with the
Offer, the Proposed Merger or the proxy solicitation; (ii) (a) to compel the
Company's directors to redeem the Rights or amend the Rights Agreement to make
the Rights inapplicable to the Offer and the Proposed Merger, and (b)
preliminary and permanent injunctive relief that would have enjoined the
Company, its directors, officers and certain other related parties from taking
any action to implement and distribute the Rights and from taking actions
pursuant to the Rights Agreement; (iii) (a) to compel the Company's directors to
approve the Offer and the Proposed Merger for the purposes of Section 203 of the
Delaware General Corporation Law ('Section 203'), and (b) preliminary and
injunctive relief that would have enjoined the Company, its directors, officers
and certain other related parties from taking any actions to enforce or apply
Section 203 that would have interfered with the Offer; and (iv) (a) to compel
the Company's directors to approve the Offer and the Proposed Merger for
purposes of Article Ninth of the Restated
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Certificate of Incorporation of the Company ('Article Ninth'), and (b)
preliminary and permanent injunctive relief that would have enjoined the
Company, its directors, officers and certain other related parties from taking
any actions to enforce or apply Article Ninth that would have interfered with
the Offer.
On August 15, 1995, the Company and each of the directors of the Company
filed a Motion to Dismiss the Moore Action. On September 19, 1995, the United
States District Court for the District of Delaware denied the Motion to Dismiss.
On September 24, 1995, the Company and its directors filed an Answer and
Counterclaim in the United States District Court for the District of Delaware in
connection with the Moore Action. The counterclaim was brought against Moore,
Bidder and Reto Braun, Chairman of the Board and Chief Executive Officer of
Moore, and asserted (i) that the effect of the transactions contemplated by the
Offer to Purchase may have been substantially to lessen competition in a
relevant market and therefore violate Section 7 of the Clayton Act, 15 U.S.C.
Section 18; and (ii) that Moore, the Bidder, and Mr. Braun have made false and
misleading statements of fact in connection with the Offer and their proxy
solicitation materials. The counterclaim sought declaratory and injunctive
relief that would have enjoined (i) Moore and the Bidder from acquiring any
voting securities of the Company, and (ii) Moore, the Bidder and Mr. Braun from
acquiring any shares of Common Stock of the Company until 60 days after they
have fully complied with the Securities Exchange Act of 1934, as amended.
On December 4, 1995, the United States District Court for the District of
Delaware issued an Order and an Opinion. The Court found that 'the Moore tender
offer pose[d] a threat to Wallace that shareholders, because they are
uninformed, will cash out before realizing the fruits of the substantial
technological innovations achieved by Wallace,' and upheld the Board's defensive
measures as reasonable because '[s]hareholders, at the time of the Moore offer,
were unable to appreciate the upward trend in Wallace's earnings . . .' Pursuant
to the Order and Opinion, the Court denied Moore and the Bidder's motion for a
preliminary injunction with respect to the breach of fiduciary claim. In
addition, the Court denied Moore and the Bidder's motion to dismiss the
Company's antitrust counterclaim. On January 23, 1996, the Court entered a final
judgment dismissing all claims in the action with prejudice. On January 29,
1996, the Company filed a notice of appeal with the District Court in order to
appeal the Court's dismissal of the Company's antitrust counterclaim described
above. On August 20, 1996, the United States Court of Appeals for the Third
Circuit, in light of Moore's stated decision not to proceed with the acquisition
of the Company, issued an order dismissing the appeal as moot and remanding the
action to the District Court for the dismissal of Wallace's antitrust claim. On
August 22, 1996, the District Court implemented the Third Circuit's order,
dismissing the Company's antitrust claim as moot.
In addition to the Moore Action, the Company and its directors have been
named as defendants in three purported class actions filed between July 31, 1995
and August 3, 1995 on behalf of the public shareholders of the Company in the
Court of Chancery of the State of Delaware in and for New Castle County. These
actions are entitled Koff v. Dimitriou, et al.; Laperriere v. Wallace Computer
Services, Inc., et al.; and Pittman v. Dimitriou, et al. (collectively, the
'Shareholder Actions'). The complaints in the Shareholder Actions contain
substantially similar allegations, and allege breach of fiduciary duty claims
arising out of the proposal by FRDK to acquire the Company. The complaints in
the Shareholder Actions also seek substantially similar relief, including
declaratory and injunctive relief barring defendants from breaching their
fiduciary duties to plaintiffs and the putative class members and from taking
steps to impede any offer to acquire the Company, as well as damages in an
unspecified amount.
On September 22, 1995, the plaintiffs in the Koff and Laperriere actions
filed an Amended Class Action Complaint which, among other things, consolidates
the actions that those plaintiffs filed in the Court of Chancery of the State of
Delaware. The Amended Class Action Complaint, among other things, seeks
injunctive relief with respect to enforcement of certain amendments to the
Company's Profit Sharing Plan and Profit Sharing Trust. On November 21, 1995,
the plaintiffs in the Koff and Dimitriou actions filed a Second Amended Class
Action Complaint in the Court of Chancery of the State of Delaware. The
plaintiffs' counsel in the Shareholder Actions has extended the time in which
the Company must answer or otherwise respond to the complaint until ten days
from the date plaintiffs' counsel requests such a response.
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On October 12, 1995, Moore amended the Offer to increase the cash price for
the Shares to $60 net per share. On October 17, 1995 the Board reached the same
conclusions regarding the Offer and the policy of independence at $60 per share
that they had reached in considering the Offer at $56 per share. As of November
3, 1995, a total of 16,698,706 shares, representing approximately 73.5% of the
Shares before giving effect to the Stock Split, had been validly tendered and
not withdrawn pursuant to the Offer, but the Offer was not consummated because
the Poison Pill Conditions had not been satisfied or waived. On November 6,
1995, Moore extended the Offer until 12:00 Midnight, New York City time, on
Monday December 11, 1995. On November 10, 1995, Moore distributed a proxy
statement to Wallace shareholders soliciting proxies in connection with certain
Moore proposals to be voted on at the 1995 annual meeting of Wallace
shareholders scheduled for December 8, 1995. Moore solicited proxies for the
following proposals:
1. to elect the Moore Directors to the Board;
2. to remove all of the members of the Board other than the Moore
Directors;
3. to amend the Wallace By-laws to fix the number of directors at
five, rather than a number to be agreed upon by the Board from time to
time; and
4. to repeal each provision of the Wallace By-laws or amendments
thereto adopted without shareholder approval after February 15, 1995 and
before the annual meeting, including the By-law amendment creating a 60-day
notice requirement applicable to shareholders desiring to bring business
for consideration at a Wallace annual meeting.
The Moore Directors were elected at the 1995 annual meeting. If, in
addition, the Moore shareholder resolutions had been approved, the Moore
Directors would have constituted a majority of a five member Wallace Board, and
the Moore Directors, subject to the fulfillment of their fiduciary duties as
directors of Wallace, would have been able to take action to satisfy the Poison
Pill Conditions to enable the Offer to be consummated. However, while the Moore
shareholder resolution relating to By-law amendments adopted without shareholder
approval was approved by a vote of a majority of the Shares represented at the
meeting, the other resolutions, which required the affirmative vote of 80% of
the outstanding Shares, were not adopted. As a result, the Poison Pill
Conditions were not satisfied, and on December 20, Moore terminated the Offer,
but stated that it remained interested in acquiring the Company.
On August 6, 1996, Moore announced that it would not pursue the acquisition
of the Company.
CHANGE IN CONTROL
Based on a review of documents filed with the Securities and Exchange
Commission and other publicly available information, Wyser-Pratte believes that
the election of the Wyser-Pratte Nominees may result in a 'Material Change'
within the meaning of various of the Company's employee benefit plans and
employment contracts, thereby entitling the participants in such plans and the
individual parties to such contracts to receive various payments and benefits.
Wyser-Pratte is not able, on the basis of publicly available information, to
determine the aggregate dollar amount of such payments that would be triggered
by such a change.
According to Amendment No. 3 to Schedule 14D-9, the Board approved and
adopted amendments on September 6, 1995 to the Wallace Computer Services, Inc.
Employee Severance Pay Plan (the 'Employee Plan'), the Wallace Computer
Services, Inc. Executive Severance Pay Plan (the 'Executive Pay Plan'), the
Wallace Computer Services, Inc. Executive Incentive Plan (the 'Executive
Incentive Plan') and the Wallace Computer Services, Inc. Deferred
Compensation/Capital Accumulation Plans for 1990, 1991, 1993, 1994 and 1995 (the
'Deferred Compensation Plans') (the Employee Plan, the Executive Pay Plan, the
Executive Incentive Plan and the Deferred Compensation Plans are referred to
collectively as the 'Benefit Plans') to increase the number of incumbent
directors that must cease to be directors before a 'Material Change' shall occur
under the Benefit Plans. The amendments provide that a 'Material Change' shall
be deemed to have occurred when, among other things, individuals who, as of
September 6, 1995, constitute the Board (the 'Incumbent Board') cease for any
reason to constitute at least a majority of such Board; provided, however, that
any individual who becomes a member of the Board subsequent to such date whose
election, or nomination for election by the shareholders of
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Wallace was approved by a vote of at least a majority of the directors then
comprising the Incumbent Board shall be deemed to be a member of the Incumbent
Board; and provided further, that no individual whose election or initial
assumption of office as a director of Wallace occurs as a result of an actual or
threatened election contest (as such terms are used in Rule14a-11 of Regulation
14A promulgated under the Exchange Act) with respect to the election or removal
of directors, or any other actual or threatened solicitation of proxies or
consents by or on behalf of any person other than the Board shall be deemed to
be a member of the Incumbent Board. The Board also approved and adopted an
amendment to the Employee Plan to provide that the amount of the severance
benefit payable upon certain terminations of employment as provided in the
Employee Plan after the occurrence of a Material Change to certain participants,
as designated by the Compensation Committee of the Board from time to time,
shall be not less than one year of Annual Compensation (as defined in the
Employee Plan). On September 6, 1995, the Compensation Committee designed 37
participants for this purpose. The Board also approved the reclassification of
four employees that were not executive officers of Wallace from Level I
Participants to Level II Participants under the Executive Pay Plan.
On September 6, 1995, the Board approved and adopted Amendment No. 36 to
the Wallace Computer Services, Inc. Profit Sharing and Retirement Plan (the
'Profit Sharing Plan') and Amendment No. 6 to the Wallace Computer Services,
Inc. Profit Sharing and Retirement Trust Agreement (the 'Profit Sharing Trust')
(collectively, the 'Amendments') which provide, among other things, that (i)
each plan participant is allowed to give voting instructions, in the manner
proscribed by the trustee, with respect to the number of Shares represented by
such plan participant's proportionate interest in the trust under the Profit
Sharing Plan and (ii) each plan participant is allowed to instruct the trustee
regarding how to respond to a tender offer with respect to the numbers of Shares
represented by such plan participant's interest in the trust under the Profit
Sharing Plan. On September 6, 1995, the Board also authorized certain officers
of Wallace to appoint on behalf of Wallace and independent institutional trustee
to replace the current individual trustees under the Profit Sharing Trust with
respect to the Shares held thereunder.
On September 6, 1995, the Board approved and adopted Amendment No. 1
('Amendment No.1') to the Wallace Computer Services, Inc. Long-Term Performance
Plan (the 'LTP Plan'), which Amendment No. 1 added a provision relating to the
treatment of awards in the event of a 'Material Change.' The definition of
'Material Change' as provided in the Amendment No. 1 is substantially similar to
the definition of Material Change contained in the Employee Plan, the Executive
Pay Plan and the Executive Incentive Pay Plan. Amendment No. 1 provides, among
other things, that (i) a plan participant's accrued bonus balance under the LTP
Plan would not be reduced below the amount of the plan participant's accrued
bonus balance as calculated after inclusion of the plan participant's award, if
any, for the Plan Year (as defined in the LTP Plan) immediately preceding the
Plan Year during which the Material Change occurs and (ii) an individual who is
a plan participant immediately prior to the occurrence of a Material Change (a
'Protected Participant') will be entitled to receive payment of such
participant's accrued bonus balance if, at any time during the two-year period
beginning on the date that the Material Change occurs, the Protected
Participant's employment with Wallace terminates, whether voluntarily or
involuntarily, for any reason other than for Cause (as defined in Amendment No.
1) or on account of the Protected Participant's death or permanent disability
(in which event the Protected Participant or his or her beneficiaries, as the
case may be, are entitled to the benefits otherwise provided by the LTP Plan).
According to Amendment No. 7 to the Schedule 14D-9, the Board approved and
adopted on September 27, 1995, Amendment No. 37 ('Amendment No. 37') to the
Wallace Computer Services, Inc. Profit Sharing and Retirement Fund, which
Amendment No. 37 modified the definition of 'Material Change' to be
substantially similar to the definition of Material Change contained in the
Employee plan, the Executive Pay Plan, the Executive Incentive Plan and the LTP
Plan.
The Cronin Employment Agreement provides that Mr. Cronin be paid various
payments and receive additional benefits upon the occurrence of certain events
following a 'Material Change' (as defined therein).
In 1996, the Company established the Wallace Computer Services, Inc.
Benefit Trust (the 'Trust') to provide for the funding of certain plans and
arrangements in the event of the occurrence of a
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'Material Change' (as defined in the Trust). Under the Trust, a 'Material
Change' includes the acquisition of beneficial ownership of 35% of more of the
outstanding shares of the Common Stock, the election of directors representing
one-half or more of the Company's Board of Directors of persons who were not
nominated or recommended by the incumbent Board of Directors, or the occurrence
of any other event or state of facts that the Board of Directors determines to
constitute a 'Material Change' for purposes of the Trust. The election of two or
more the Wyser-Pratte Nominees to the Board may constitute a Material Change
under the Trust. The following plans and arrangements of the Company are subject
to the Trust: the 1988, 1989, 1990, 1991, 1992, 1993, 1994, 1995, and 1996
Deferred Compensation/Capital Accumulation Plans, the Supplemental Profit
Sharing Plan, the Supplemental Retirement Plan, the Executive Incentive Plan,
the Long-Term Performance Plan, individual pension arrangements for certain
executive officers and directors and benefits payable to retired directors under
the Retirement Plan for Outside Directors.
CERTAIN INFORMATION CONCERNING WYSER-PRATTE AND
OTHER PARTICIPANTS IN THE SOLICITATION
Wyser-Pratte is President and Chief Executive Officer of Wyser-Pratte
Management Company and WPC, which are principally engaged in money management
and event arbitrage. The principal executive offices of WPC are located at 63
Wall Street, New York, New York 10005. Wyser-Pratte owns beneficially 1,057,000
shares of the Common Stock, representing approximately 2.3% of the 45,757,794
shares of Common Stock outstanding as of May 31, 1996, as reported in the
Company's Quarterly Report on Form 10-Q for the quarter ended April 30, 1996,
after giving effect to the Stock Split. This includes (i) 8,000 shares owned
directly by Wyser-Pratte and (ii) 1,049,000 shares owned by investment
partnerships and other managed accounts for which affiliates of WPC are the
general partner or investment manager. In non-discretionary accounts maintained
with WPC, 44,000 shares of the Common Stock, representing less than 1% of the
outstanding shares of Common Stock, are held by clients of WPC. Neither WPC nor
Wyser-Pratte has any voting or investment power or authority with respect to
shares of Common Stock held in such accounts. Both Wyser-Pratte and WPC disclaim
beneficial ownership of such shares. Certain information about the directors and
executive officers of WPC is set forth in Schedule I attached hereto. Other than
Wyser-Pratte, no other officer of WPC owns any shares of Common Stock check. If
the Wyser-Pratte Nominees are elected, Wyser-Pratte will ask the Board to have
the Company reimburse him for costs and expenses incurred in connection with
this proxy solicitation. Wyser-Pratte does not intend to request that his
reimbursement request be submitted to a vote of Shareholders.
Except as set forth in this Proxy Statement or in the Appendices hereto, to
the best knowledge of Wyser-Pratte, none of Wyser-Pratte, any of the persons
participating in this solicitation on behalf of Wyser-Pratte, the Wyser-Pratte
Nominees, and any associate of any of the foregoing persons (i) owns
beneficially, directly or indirectly, or has the right to acquire, any
securities of the Company or any parent or subsidiary of the Company, (ii) owns
any securities of the Company of record but not beneficially, (iii) has
purchased or sold any securities of the Company within the past two years, (iv)
has incurred indebtedness for the purpose of acquiring or holding securities of
the Company, (v) is or has been a party to any contract, arrangement or
understanding with respect to any securities of the Company within the past
year, (vi) has been indebted to the Company or any of its subsidiaries since the
beginning of the Company's last fiscal year or (vii) has any arrangement or
understanding with respect to future employment by the Company or with respect
to any future transactions to which the Company or any of its affiliates will or
may be a party. In addition, except as set forth in this Proxy Statement or in
the Appendices hereto, to the best knowledge of Wyser-Pratte, none of
Wyser-Pratte, any of the persons participating in this solicitation on behalf of
Wyser-Pratte, the Wyser-Pratte Nominees, and any associate or immediate family
member of any of the foregoing persons has had or is to have a direct or
indirect material interest in any transaction with the Company since the
beginning of the Company's last fiscal year, or any proposed transaction, to
which the Company or any of its affiliates was or is a party.
None of the corporations or organizations in which the Wyser-Pratte
Nominees have conducted their principal occupation or employment was a parent,
subsidiary or other affiliate of the Company and
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the Wyser-Pratte Nominees do not hold any position or office with the Company or
have any family relationship with any executive officer or director of the
Company or have been involved in any legal proceedings of the type required to
be disclosed by the rules governing this solicitation.
VOTING RIGHTS
According the Company's Quarterly Report on Form 10Q for the quarter ended
April 30, 1996, at May 31, 1996, 45,757,788 shares of Common Stock were
outstanding and entitled to vote, after giving effect to the Stock Split. Only
holders of record as of the close of business on September 17, 1996 will be
entitled to vote at the Annual Meeting. Wyser-Pratte intends to vote all shares
of Common Stock beneficially owned by him in favor of each proposal set forth
herein.
GENERAL INFORMATION
This Proxy Statement and the accompanying GOLD Proxy Card are first being
made available to shareholders on or about October 4, 1996. Executed Proxies
will be solicited by mail advertisement, telephone, telecopier and in person.
Solicitation will be made by Wyser-Pratte and Eric Longmire, Senior Managing
Director of WPC neither of whom will receive additional compensation for such
solicitation. Proxies will be solicited from individuals, brokers, banks, bank
nominees and other institutional holders. Wyser-Pratte has requested banks,
brokerage houses and other custodians, nominees and fiduciaries to forward all
solicitation materials to the beneficial owners of the shares they hold of
record. Wyser-Pratte will reimburse these record holders for their reasonable
out-of-pocket expenses.
In addition, Wyser-Pratte has retained Mackenzie Partners, Inc.
('Mackenzie') to solicit proxies in connection with the Annual Meeting for which
Mackenzie will be paid a fee of approximately $75,000.00 and will be reimbursed
for its reasonable expenses. Mackenzie will employ approximately 40 people in
its efforts. Costs incidental to this solicitation include expenditures for
printing, postage, legal and related expenses and are expected to be
approximately $150,000.00. The total costs incurred to date in connection with
this solicitation are not in excess of $175,000.00.
OTHER MATTERS TO BE CONSIDERED AT THE ANNUAL MEETING
According to the Company's 1996 Proxy Statement, the Company will ask
shareholders to consider and vote upon the Board's nominees and a proposal to
ratify the appointment of Arthur Andersen LLP as the Company's independent
public accountants for fiscal year 1997. Except as set forth in the Proxy
Statement, Wyser-Pratte is not aware of other matters to be considered at the
Annual Meeting. However, if any other matters properly come before the Annual
Meeting, Wyser-Pratte will vote his Common Stock and all proxies held by him in
accordance with his best judgment with respect to such matters. Your attention
is directed to the Company's 1996 Proxy Statement regarding the procedures for
submitting proposals for consideration at the Company's 1997 Annual Meeting.
CERTAIN OTHER INFORMATION REGARDING THE COMPANY
Shareholders are referred to the Company's 1996 Proxy Statement with
respect to the compensation and remuneration paid and payable and other
information related to the Company's officers and directors, beneficial
ownership of the Company's securities.
VOTING OF PROXY CARDS
Shares of Common Stock represented by properly executed GOLD PROXY CARDS
will be voted at the Annual Meeting as marked, and in the discretion of the
persons named as proxies on all other matters as may properly come before the
Annual Meeting, including all motions for an adjournment or postponement of
Annual Meeting, unless otherwise indicated in the Proxy Statement.
IF YOU WISH TO VOTE FOR THE PROPOSALS AND IN THE DISCRETION OF THE PERSONS
NAMED AS PROXIES ON ALL MATTERS AS MAY PROPERLY COME BEFORE THE ANNUAL MEETING,
PLEASE SIGN, DATE AND RETURN PROMPTLY THE ENCLOSED PROXY CARD IN THE PROVIDED
POSTAGE-PAID ENVELOPE.
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REVOCABILITY OF SIGNED PROXIES
A proxy executed by a holder of the Company's Common Stock may be revoked
at any time before its exercise by sending a written revocation of such proxy,
by submitting another proxy with a later date marked on it or by appearing in
person at the Annual Meeting and voting. A written revocation must clearly state
that the proxy to which it relates is no longer effective and must be executed
and delivered prior to the time that the action authorized by the executed proxy
is taken. The written revocation may be delivered either to Wyser-Pratte or the
Secretary of the Company. Although a written revocation or later dated proxy
delivered only to Wallace will be effective, Wyser-Pratte requests that if a
written revocation or subsequent proxy also be delivered to Wyser-Pratte so that
he will be aware of such written revocation.
THE RETURN OF A SIGNED AND DATED GOLD PROXY CARD WILL FULLY REVOKE ANY
PREVIOUSLY DATED PROXY YOU MAY HAVE RETURNED. THE LATEST DATED PROXY IS THE ONE
THAT COUNTS.
YOUR VOTE IS IMPORTANT. IT WILL HELP DECIDE WHETHER THE SHAREHOLDERS WILL
HAVE AN ADEQUATE VOICE IN THE AFFAIRS OF THE COMPANY. PLEASE MARK, SIGN AND DATE
THE ENCLOSED GOLD PROXY CARD AND RETURN IT PROMPTLY IN THE PROVIDED POSTAGE-PAID
ENVELOPE.
GUY P. WYSER-PRATTE
IF YOUR SHARES OF WALLACE COMMON STOCK ARE HELD IN THE NAME OF A BROKERAGE
FIRM, BANK NOMINEE OR OTHER INSTITUTION, ONLY IT CAN SIGN A PROXY WITH RESPECT
TO YOUR COMMON STOCK. ACCORDINGLY, PLEASE CONTACT THE PERSON RESPONSIBLE FOR
YOUR ACCOUNT AND GIVE INSTRUCTIONS FOR A PROXY CARD TO BE SIGNED REPRESENTING
YOUR SHARES OF COMMON STOCK.
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If you have any questions about giving your proxy or required assistance, please
contact our proxy solicitor, Mackenzie partners, Inc. toll-free at (800)
322-2885, or Eric Longmire, Senior Managing Director of WPC at (212) 495-5357.
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EXHIBIT A
203. Business Combinations With Interested Stockholders. (a)
Notwithstanding any other provisions of this chapter, a corporation shall not
engage in any business combination with any interested stockholder for a period
of 3 years following the time that such stockholder became an interested
stockholder, unless:
(1) prior to such time the board of directors of the corporation
approved either the business combination or the transaction which resulted
in the stockholder becoming an interested stockholder, or
(2) upon consummation of the transaction which resulted in the
stockholder becoming an interested stockholder, the interested stockholder
owned at least 85% of the voting stock of the corporation outstanding at
the time the transaction commenced, excluding for purposes of determining
the number of shares outstanding those shares owned (i) by persons who are
directors and also officers and (ii) employee stock plans in which employee
participants do not have the right to determine confidentially whether
shares held subject to the plan will be tendered in a tender or exchange
offer, or
(3) At or subsequent to such time the business combination is approved
by the board of directors and authorized at an annual or special meeting of
stockholders, and not by written consent, by the affirmative vote of at
least 66 2/3% of the outstanding voting stock which is not owned by the
interested stockholder.
(b) The restrictions contained in this section shall not apply if:
(1) the corporation's original certificate of incorporation contains a
provision expressly electing not to be governed by this section;
(2) the corporation, by action of its board of directors, adopts an
amendment to its bylaws within 90 days of the effective date of this
section, expressly electing not to be governed by this section, which
amendment shall not be further amended by the board of directors.
(3) the corporation, by action of its stockholders, adopts an
amendment to its certificate of incorporation or bylaws expressly electing
not to be governed by this section, provided that, in addition to any other
vote required by law, such amendment to the certificate of incorporation or
bylaws must be approved by the affirmative vote of a majority of the shares
entitled to vote. An amendment adopted pursuant to this paragraph shall be
effective immediately in the case of a corporation that both (i) has never
had a class of voting stock that falls within any of the three categories
set out in subsection (b)(4) hereof, and (ii) has not elected by a
provision in its original certificate of incorporation or any amendment
thereto to be governed by this section. In all other cases, an amendment
adopted pursuant to this paragraph shall not be effective until 12 months
after the adoption of such amendment and shall not apply to any business
combination between such corporation and any person who became an
interested stockholder of such corporation on or prior to such adoption. A
bylaw amendment adopted pursuant to this paragraph shall not be further
amended by the board of directors;
(4) the corporation does not have a class of voting stock that is (i)
listed on a national securities exchange, (ii) authorized for quotation on
The NASDAQ Stock Market or (iii) held of record by more than 2,000
stockholders, unless any of the foregoing results from action taken,
directly or indirectly, by an interested stockholder or from a transaction
in which a person becomes an interested stockholder;
(5) a stockholder becomes an interested stockholder inadvertently and
(i) as soon as practicable divests itself of ownership of sufficient shares
so that the stockholder ceases to be an interested stockholder and (ii)
would not, at any time within the 3 year period immediately prior to a
business combination between the corporation and such stockholder, have
been an interested stockholder but for the inadvertent acquisition of
ownership;
(6) the business combination is proposed prior to the consummation or
abandonment of and subsequent to the earlier of the public announcement or
the notice required hereunder of a proposed transaction which (i)
constitutes one of the transactions described in the second sentence
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of this paragraph; (ii) is with or by a person who either was not an
interested stockholder during the previous 3 years or who became an
interested stockholder with the approval of the corporation's board of
directors or during the period described in paragraph (7) of this
subsection (b); and (iii) is approved or not opposed by a majority of the
members of the board of directors then in office (but not less than 1) who
were directors prior to any person becoming an interested stockholder
during the previous 3 years or were recommended for election or elected to
succeed such directors by a majority of such directors. The proposed
transactions referred to in the preceding sentence are limited to (x) a
merger or consolidation of the corporation (except for a merger in respect
of which, pursuant to section 251(f) of the chapter, no vote of the
stockholders of the corporation is required); (y) a sale, lease, exchange,
mortgage, pledge, transfer or other disposition (in one transaction or a
series of transactions), whether as part of a dissolution or otherwise, of
assets of the corporation or of any direct or indirect majority-owned
subsidiary of the corporation (other than to any direct or indirect
wholly-owned subsidiary or to the corporation) having an aggregate market
value equal to 50% or more of either that aggregate market value of all of
the assets of the corporation determined on a consolidated basis or the
aggregate market value of all the outstanding stock of the corporation; or
(z) a proposed tender or exchange offer for 50% or more of the outstanding
voting stock of the corporation. The corporation shall give not less than
20 days notice to all interested stockholders prior to the consummation of
any of the transactions described in clauses (x) or (y) of the second
sentence of this paragraph; or
(7) The business combination is with an interested stockholder who
became an interested stockholder at a time when the restrictions contained
in this section did not apply by reason of any paragraphs (1) through (4)
of this subsection (b), provided, however, that this paragraph (7) shall
not apply if, at the time such interested stockholder became an interested
stockholder, the corporation's certificate of incorporation contained a
provision authorized by the last sentence of this subsection (b).
Notwithstanding paragraphs (1), (2), (3) and (4) of this subsection, a
corporation may elect by a provision of its original certificate of
incorporation or any amendment thereto to be governed by this section; provided
that any such amendment to the certificate of incorporation shall not apply to
restrict a business combination between the corporation and an interested
stockholder of the corporation if the interested stockholder became such prior
to the effective date of the amendment.
(c) As used in this section only, the term:
(1) 'affiliate' means a person that directly, or indirectly through
one or more intermediaries, controls, or is controlled by, or is under
common control with, another person.
(2) 'associate,' when used to indicated a relationship with any
person, means (i) any corporation, partnership, unincorporated association
or other entity of which such person is a director, officer or partner or
is, directly or indirectly, the owner of 20% or more of any class of voting
stock, (ii) any trust or other estate in which such person has at least a
20% beneficial interest or as to which such person serves as trustee or in
a similar fiduciary capacity, and (iii) any relative or spouse of such
person, or any relative of such spouse, who has the same residence as such
person.
(3) 'business combination,' when used in reference to any corporation
and any interested stockholder of such corporation, means:
(i) any merger or consolidation of the corporation or any direct or
indirect majority-owned subsidiary of the corporation with (A) the
interested stockholder, or (B) with any other corporation, partnership,
unincorporated association or other entity if the merger or
consolidation is caused by the interested stockholder and as a result of
such merger or consolidation subsection (a) of this section is not
applicable to the surviving entity;
(ii) any sale, lease, exchange, mortgage, pledge, transfer or other
disposition (in one transaction or a series of transactions), except
proportionately as a stockholder of such corporation, to or with the
interested stockholder, whether as part of a dissolution or otherwise,
of assets of the corporation or of any direct or indirect majority-owned
subsidiary of the corporation which assets have an aggregate market
value equal to 10% or more of either
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the aggregate market value of all the assets of the corporation
determined on a consolidated basis or the aggregate market value of all
the outstanding stock of the corporation;
(iii) any transaction which results in the issuance or transfer by
the corporation or by any direct or indirect majority-owned subsidiary
of the corporation of any stock of the corporation or of any stock of
the corporation or of such subsidiary to the interested stockholder,
except (A) pursuant to the exercise, exchange or conversion of
securities exercisable for, exchangeable for or convertible into stock
of such corporation or any such subsidiary which securities were
outstanding prior to the time that the interested stockholder became
such, (B) pursuant to a merger under Section 251(g) of this title; (C)
pursuant to a dividend or distribution paid or made, or the exercise,
exchange or conversion of securities exercisable for, exchangeable for
or convertible into stock of such corporation or any such subsidiary
which security is distributed, pro rata to all holders of a class or
series of stock of such corporation subsequent to the time the
interested stockholder became such, (D) pursuant to an exchange offer by
the corporation to purchase stock made on the same terms to all holders
of said stock, or (E) any issuance or transfer of stock by the
corporation, provided however, that in no case under (C)-(E) above shall
there be an increase in the interested stockholder's proportionate share
of the stock of any class or series of the corporation or of the voting
stock of the corporation;
(iv) any transaction involving the corporation or any direct or
indirect majority-owned subsidiary of the corporation which has the
effect, directly or indirectly, of increasing the proportionate share of
the stock of any class or series, or securities convertible into the
stock of any class or series, of the corporation or of any such
subsidiary which is owned by the interested stockholder, except as a
result of immaterial changes due to fractional share adjustments or as a
result of any purchase or redemption of any shares of stock not caused,
directly or indirectly, by the interested stockholder; or
(v) any receipt by the interested stockholder of the benefit,
directly or indirectly (except proportionately as a stockholder of such
corporation) of any loans, advances, guarantees, pledges, or other
financial benefits (other than those expressly permitted in
subparagraphs (i)-(iv) above) provided by or through the corporation or
any direct or indirect majority owned subsidiary.
(4) 'control,' including the term 'controlling,' 'controlled by' and
'under common control with,' means the possession, directly or indirectly,
of the power to direct or cause the direction of the management and
policies of a person, whether through the ownership of voting stock, by
contract, or otherwise. A person who is the owner of 20% or more of the
outstanding voting stock of any corporation, partnership, unincorporated
association or other entity shall be presumed to have control of such
entity, in the absence of proof by a preponderance of the evidence to the
contrary. Notwithstanding the foregoing, a presumption of control shall not
apply where such person holds voting stock, in good faith and not for the
purpose of circumventing this section, as an agent, bank, broker, nominee,
custodian or trustee for one or more owners who do not individually or as a
group have control of such entity.
(5) 'interested stockholder' means any person (other than the
corporation and any direct or indirect majority-owned subsidiary of the
corporation) that (i) is the owner of 15% or more of the outstanding voting
stock of the corporation, or (ii) is an affiliate or associate of the
corporation and was the owner of 15% or more of the outstanding voting
stock of the corporation at any time within the 3-year period immediately
prior to the date on which it is sought to be determined whether such
person is an interested stockholder; and the affiliates and associates of
such person; provided, however, that the term 'interested stockholder'
shall not include (x) any person who (A) owned shares in excess of the 15%
limitation set forth herein as of, or acquired such shares pursuant to a
tender offer commenced prior to, December 23, 1987, or pursuant to an
exchange offer announced prior to the aforesaid date and commenced within
90 days thereafter and either (I) continued to own shares in excess of such
15% limitation or would have but for action by the corporation or (II) is
an affiliate or associate of the corporation and so continued (or so would
have continued but for action by the corporation) to be the owner of 15% or
more of the outstanding voting stock of the corporation at any time within
the 3-year period immediately prior to the date
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on which it is sought to be determined whether such a person is an
interested stockholder or (B) acquired said shares from a person described
in (A) above by gift, inheritance or in a transaction in which no
consideration was exchanged; or (y) any person whose ownership of shares in
excess of the 15% limitation set forth herein in the result of action taken
solely by the corporation provided that such person shall be an interested
stockholder if thereafter such person acquires additional shares of voting
stock of the corporation, except as a result of further corporate action
not caused, directly or indirectly, by such person. For the purpose of
determining whether a person is an interested stockholder, the voting stock
of the corporation deemed to be outstanding shall include stock deemed to
be owned by the person through application of paragraph (8) of this
subsection but shall not include any other unissued stock of such
corporation which may be issuable pursuant to any agreement, arrangement or
understanding, or upon exercise of conversion rights, warrants or options,
or otherwise.
(6) 'person' means any individual, corporation, partnership,
unincorporated association or other entity.
(7) 'Stock' means, with respect to any corporation, capital stock and,
with respect to any other entity, any equity interest.
(8) 'Voting stock' means, with respect to any corporation, stock of
any class or series entitled to vote generally in the election of directors
and, with respect to any entity that is not a corporation, any equity
interest entitled to vote generally in the election of the governing body
of such entity.
(9) 'owner' including the terms 'own' and 'owned' when used with
respect to any stock means a person that individually or with or through
any of its affiliates or associates:
(i) beneficially owns such stock, directly or indirectly; or
(ii) has (A) the right to acquire such stock (whether such right is
exercisable immediately or only after the passage of time) pursuant to
any agreement, arrangement or understanding, or upon the exercise of
conversion rights, exchange rights, warrants or options, or otherwise;
provided, however, that a person shall not be deemed the owner of stock
tendered pursuant to a tender or exchange offer made by such person or
any of such person's affiliates or associates until such tendered stock
is accepted for purchase or exchange; or (B) the right to vote such
stock pursuant to any agreement, arrangement or understanding; provided,
however, that a person shall not be deemed the owner of any stock
because of such person's right to vote such stock if the agreement,
arrangement or understanding to vote such stock arises solely from a
revocable proxy or consent given in response to a proxy or consent
solicitation made to 10 or more persons; or
(iii) has any agreement, arrangement or understanding for the
purpose of acquiring, holding, voting (except voting pursuant to a
revocable proxy or consent as described in item (B) of clause (ii) of
this paragraph), or disposing of such stock with any other person that
beneficially owns, or whose affiliates or associates beneficially own,
directly or indirectly, such stock.
(d) No provision of a certificate of incorporation or bylaw shall require,
for any vote of stockholders required by this section a greater vote of
stockholders than that specified in this section.
(e) The Court of Chancery is hereby vested with exclusive jurisdiction to
hear and determine all matters with respect to this section.
A-4
<PAGE>
<PAGE>
SCHEDULE I
INFORMATION CONCERNING DIRECTORS AND EXECUTIVE OFFICERS OF WPC
AND THEIR ADVISORS THAT MAY PARTICIPATE
IN THE SOLICITATION OF PROXIES
The name, business address, and present principal occupation or employment
of each of the directors and executive officers of WPC and its advisors and
certain other employees and representatives of WPC that may participate in the
solicitation of proxies are set forth below. Unless otherwise indicated, the
principal business address of each director or executive officer of Wyser-Pratte
& Co. is, 63 Wall Street, New York, NY 10005.
PARTICIPANT DIRECTORS AND EXECUTIVE OFFICERS OF WPC
<TABLE>
<CAPTION>
PRESENT OFFICE OR OTHER
NAME PRINCIPAL OCCUPATION OR EMPLOYMENT
- ---- ----------------------------------
<S> <C>
Guy P. Wyser-Pratte.................................................. President
Eric Longmire........................................................ Senior Managing Director
</TABLE>
S-1
<PAGE>
<PAGE>
SCHEDULE II
The following sets forth the name, business address and the number of shares
of Common Stock of the Company owned beneficially by the participants in this
solicitation of proxies, or their associates. No shares are held of record but
not beneficially by the participants or their associates.
<TABLE>
<CAPTION>
NUMBER OF SHARES OF COMMON
NAME & STOCK BENEFICIALLY OWNED
BUSINESS ADDRESS (SEPTEMBER , 1996) PERCENT OF COMMON STOCK
- -------------------------------------------------------- -------------------------- -----------------------
<S> <C> <C>
William M. Frazier ..................................... 1,000(2) (3)
Frazier & Oxley, L.C.
The St. James Mezzanine
401 Tenth Street
Huntington, West Virginia 25727
W. Michael Frazier ..................................... 600 (2)
Frazier & Oxley, L.C.
The St. James Mezzanine
401 Tenth Street
Huntington, West Virginia 25727
Guy P. Wyser-Pratte .................................... 1,057,000(4) 2.3
Wyser-Pratte & Co., Inc.
63 Wall Street
New York, New York 10005
</TABLE>
- ------------
(2) Mr. Frazier holds an additional 200 shares as nominee and disclaims any
beneficial ownership of these shares.
(3) Less than 1%.
(4) Includes (i) 8,000 shares owned directly by Mr. Wyser-Pratte; and (ii)
1,049,000 shares owned by investment partnerships and other managed accounts
for which affiliates of WPC are the general partner or investment manager.
Another 44,000 shares are held in non-discretionary accounts at WPC.
Wyser-Pratte disclaims beneficial ownership of these shares.
S-2
<PAGE>
<PAGE>
SCHEDULE III
The following tables set forth information with respect to all purchases and
sales of Common Stock of the Company by Wyser-Pratte and his affiliates and the
Wyser-Pratte Nominees during the past two years. (Except as set forth below, no
participant in this solicitation has purchased or sold securities of the Company
within the past two years.
SHARES PURCHASED BY WPC FOR NON-DISCRETIONARY ACCOUNTS
<TABLE>
<CAPTION>
NO. OF SHARES
DATE SOLD PRICE
- --------- ------------- -------
<S> <C> <C>
08-14-95 5,000 59.1175
08-14-95 5,000 59.1175
08-14-95 2,000 59.0575
08-14-95 5,000 59.1175
08-14-95 1,000 59.1175
08-14-95 1,000 59.1175
09-13-95 10,000 58.0000
09-13-95 10,000 58.0000
09-21-95 10,000 57.1600
10-31-95 2,000 56.6875
10-31-95 1,000 56.7375
10-31-95 2,000 56.4635
10-31-95 1,000 56.7375
10-31-95 2,000 56.6875
10-31-95 2,000 56.7375
12-21-95 2,000 54.3548
12-21-95 1,000 54.3548
12-21-95 5,000 54.3548
12-21-95 5,000 54.2648
12-21-95 5,000 54.3548
12-21-95 1,000 54.3548
12-21-95 1,000 54.3548
01-11-96 11,000 53.5500
01-17-96 11,000 53.3000
01-22-96 5,000 54.7025
06-28-96 5,000 60.0132
06-28-96 10,000 60.0132
07-02-96 3,000 59.5250
07-10-96 10,000 58.7537
07-19-96 2,000 58.3500
07-22-96 4,000 57.2700
</TABLE>
- ------------
* Shares purchased or sold before July 29, 1996 do not reflect the Stock Split.
SHARES SOLD BY WPC FOR NON-DISCRETIONARY ACCOUNTS
<TABLE>
<CAPTION>
NO. OF SHARES
DATE SOLD PRICE
- --------- ------------- -------
<S> <C> <C>
02-21-96 5,000 54.9482
04-23-96 1,000 57.4231
05-07-96 5,000 59.0480
05-08-96 2,000 58.9690
05-08-96 1,000 58.9690
05-08-96 8,000 58.9690
05-08-96 1,000 58.9590
05-08-96 2,000 59.1840
05-08-96 1,000 59.1840
05-08-96 1,000 58.9590
05-09-96 2,000 59.0383
05-09-96 5,000 59.0383
05-09-96 5,000 59.0383
05-09-96 5,000 59.0383
</TABLE>
(table continued on next page)
S-3
<PAGE>
<PAGE>
(table continued from previous page)
<TABLE>
<CAPTION>
NO. OF SHARES
DATE SOLD PRICE
- --------- ------------- -------
<S> <C> <C>
05-09-96 5,000 59.0383
05-09-96 5,000 59.0383
05-09-96 1,000 59.0383
05-09-96 1,500 59.0383
05-09-96 1,000 59.0383
05-09-96 1,500 59.0383
05-17-96 1,000 60.7080
05-20-96 5,000 60.6980
05-20-96 5,000 60.6980
05-20-96 5,000 60.6980
05-20-96 5,000 60.6980
05-21-96 1,000 60.6980
05-21-96 500 60.6980
05-21-96 1,000 60.6980
05-21-96 500 60.6980
05-21-96 1,000 60.6980
</TABLE>
SHARES PURCHASED BY WPC FOR MANAGED ACCOUNTS
<TABLE>
<CAPTION>
NO. OF SHARES
DATE PURCHASED PRICE
- --------- ------------- -------
<S> <C> <C>
08-01-95 5,000 58.5200
08-09-95 7,300 59.0550
08-09-95 2,700 59.0600
08-09-95 3,400 59.0500
08-09-95 1,600 59.0700
08-09-95 2,000 59.0650
08-10-95 28,500 58.7196
08-10-95 6,100 58.7196
08-10-95 7,700 58.7146
08-10-95 3,600 58.7246
08-10-95 4,500 58.7246
08-11-95 25,900 58.8223
08-11-95 5,600 58.8223
08-11-95 7,000 58.8173
08-11-95 3,400 58.8273
08-11-95 4,100 58.8273
08-14-95 16,800 59.0475
08-14-95 3,900 59.0525
08-14-95 4,800 59.0425
08-14-95 2,100 59.0575
08-14-95 2,800 59.0525
08-17-95 2,500 58.8100
08-17-95 2,500 58.8100
09-06-95 4,500 58.0600
09-06-95 2,500 58.0600
09-06-95 3,000 58.0600
09-08-95 3,000 58.0600
09-08-95 10,100 58.0500
09-08-95 3,000 58.0600
09-08-95 3,100 58.0600
09-14-95 1,700 57.0300
09-14-95 4,000 57.0500
09-14-95 1,200 57.0350
09-14-95 2,100 57.0300
09-15-95 15,000 56.9262
09-15-95 6,300 56.9263
09-15-95 8,400 56.9562
09-15-95 4,200 56.9262
09-15-95 4,900 56.9263
</TABLE>
(table continued on next page)
S-4
<PAGE>
<PAGE>
(table continued from previous page)
<TABLE>
<CAPTION>
NO. OF SHARES
DATE PURCHASED PRICE
- --------- ------------- -------
<S> <C> <C>
10-26-95 9,900 57.0550
11-03-95 4,800 57.7086
11-03-95 1,800 57.7186
11-03-95 2,200 57.7386
11-03-95 400 57.7686
11-03-95 1,400 57.7236
12-21-95 42,000 54.1248
12-21-95 11,100 54.1298
12-21-95 14,800 54,1548
12-21-95 3,200 54.1348
12-21-95 7,900 54,1298
12-21-95 8,600 54.1298
01-03-96 14,400 55.5200
01-11-96 9,900 53.6804
01-11-96 5,200 53.7104
01-11-96 1,200 53.6954
01-11-96 1,400 53.6954
01-12-96 2,900 53.4692
01-12-96 2,900 53.4692
01-12-96 1,700 53.4942
01-12-96 1,000 53.4842
01-12-96 1,500 53.4792
01-15-96 3,000 53.4000
01-15-96 2,000 53.4050
01-15-96 2,000 53.4250
01-15-96 1,000 53.4150
01-15-96 1,000 53.4150
01-17-96 5,300 53.2700
01-17-96 2,000 53.2800
01-17-96 2,000 53.2800
01-17-96 2,500 54.0250
01-18-96 2,500 54.0250
01-18-96 8,500 54.0500
01-18-96 1,200 54.0350
01-22-96 10,500 54.6725
01-22-96 8,400 54.6725
01-22-96 4,500 54.7025
01-22-96 1,100 54.6925
01-22-96 3,400 54.6775
01-22-96 1,300 54.6875
01-23-96 3,500 54.5250
01-25-96 800 54.8397
01-25-96 28,200 54.8447
01-26-96 3,100 54.9250
05-07-96 10,443 59.1200
06-28-96 1,600 59.7932
06-28-96 2,400 59.7882
07-11-96 8,157 59.8750
07-22-96 3,100 57.3000
07-23-96 2,000 57.8625
07-26-96 9,100 57.6283
07-26-96 5,900 57.6583
07-31-96 500 29.5650
07-31-96 500 29.5650
08-09-96 20,000 27.0500
</TABLE>
S-5
<PAGE>
<PAGE>
SHARES SOLD BY WPC FOR MANAGED ACCOUNTS
<TABLE>
<CAPTION>
NO. OF SHARES
DATE SOLD PRICE
- --------- ------------- -------
<S> <C> <C>
05-06-96 5,000 59.0930
05-06-96 2,700 59.0930
05-06-96 2,300 59.0930
05-06-96 3,800 58.9430
05-06-96 5,600 58.9430
05-06-96 600 58.9430
06-06-96 100 60.4979
06-26-96 2,000 59.9780
06-26-96 4,500 59.9780
06-26-96 400 59.9780
07-31-96 500 29.4340
</TABLE>
SHARES PURCHASED BY GUY P. WYSER-PRATTE(1)
<TABLE>
<CAPTION>
NO. OF SHARES
DATE PURCHASED PRICE
- --------- ------------- -------
<S> <C> <C>
08-14-95 2,000 59.0575
10-31-95 2,000 56.4635
07-22-96 4,000 57.2700
</TABLE>
- ------------
(1) Wyser-Pratte's securities are contained in a margin account in the regular
course of business of a broker in connection with the purchases listed in
the table. As of October 2, 1996, $875,000 of this indebtedness was
outstanding.
SHARES SOLD BY GUY P. WYSER-PRATTE
<TABLE>
<CAPTION>
NO. OF SHARES
DATE SOLD PRICE
- --------- ------------- -------
<S> <C> <C>
05-08-95 2,000 59.1835
05-08-96 1,000 56.1839
05-17-96 1,000 57.7079
</TABLE>
SHARES PURCHASED BY W. MICHAEL FRAZIER
<TABLE>
<CAPTION>
NO. OF SHARES
DATE PURCHASED PRICE
- --------- ------------- -------
<S> <C> <C>
07-10-96 300 59.2566
</TABLE>
SHARES PURCHASED BY W. M. FRAZIER
<TABLE>
<CAPTION>
NO. OF SHARES
DATE PURCHASED PRICE
- --------- ------------- -------
<S> <C> <C>
07-03-96 500 60.0835
</TABLE>
S-6
<PAGE>
<PAGE>
IMPORTANT
Your proxy is important. No matter how many shares you own, please give
Wyser-Pratte your proxy FOR the election of the Wyser-Pratte Nominees and FOR
approval of the Wyser-Pratte Resolutions by:
MARKING the enclosed GOLD Annual Meeting proxy card,
SIGNING the enclosed GOLD Annual Meeting proxy card,
DATING the enclosed GOLD Annual Meeting proxy card and
MAILING the enclosed GOLD Annual Meeting proxy card TODAY in the
envelope provided (no postage is required if mailed in the United States).
If you have already submitted a proxy to Wallace for the Annual Meeting,
you may change your vote to a vote FOR the election of the Wyser-Pratte Nominees
or FOR the Wyser-Pratte Resolutions by marking, signing, dating and returning
the enclosed GOLD proxy card for the Annual Meeting, which must be dated after
any proxy you may have submitted to Wallace. Only your latest dated proxy for
the Annual Meeting will count at such meeting.
If you have any question or require any addition information concerning
this Proxy Statement or the proposals by Wyser-Pratte, please contact Mackenzie
Partners, Inc. at the address and telephone number set forth below.
IF ANY OF YOUR SHARES ARE HELD IN THE NAME OF A BROKERAGE FIRM, BANK, BANK
NOMINEE OR OTHER INSTITUTION, ONLY IT CAN VOTE SUCH SHARES AND ONLY UPON RECEIPT
OF YOUR SPECIFIC INSTRUCTIONS. ACCORDINGLY, PLEASE CONTACT THE PERSON
RESPONSIBLE FOR YOUR ACCOUNT AND INSTRUCT THAT PERSON TO EXECUTE THE GOLD ANNUAL
MEETING PROXY CARD.
<PAGE>
<PAGE>
If you have any questions or need assistance in voting your shares or
changing your vote, please contact:
MACKENZIE PARTNERS, INC.
156 Fifth Avenue
New York, New York 10010
(212) 929-5500 (Call Collect)
or
CALL TOLL-FREE (800) 322-2885
<PAGE>
<PAGE>
APPENDIX A
GOLD PROXY
WALLACE COMPUTER SERVICES, INC.
ANNUAL MEETING OF SHAREHOLDERS -- NOVEMBER 6, 1996
THIS PROXY IS SOLICITED BY GUY P. WYSER-PRATTE
IN OPPOSITION TO THE WALLACE BOARD OF DIRECTORS
The undersigned shareholder of Wallace Computer Services, Inc. ('Wallace')
hereby appoints Eric Longmire, Daniel H. Burch, and Stanley J. Kay, Jr., each of
them with full power of substitution, to vote all shares of Common Stock of
Wallace that the undersigned is entitled to vote if personally present at the
1996 Annual Meeting of Shareholders of Wallace to be held on November 6, 1996,
and at any adjournments or postponements thereof as indicated below and in the
discretion of the proxies, to vote upon such other business as may properly come
before the meeting, and any adjournment or postponement thereof. The undersigned
hereby revokes any previous proxies with respect to matters covered by this
Proxy.
MR. WYSER-PRATTE RECOMMENDS A VOTE FOR PROPOSALS 1, 2, 3 AND 4.
1. ELECTION OF DIRECTORS: Election of Guy P. Wyser-Pratte, William W. Frazier,
W. Michael Frazier as directors whose terms expire at the Annual Meeting of
Shareholders in 1999
[ ] FOR all nominees [ ] WITHHOLD AUTHORITY for all nominees
INSTRUCTION: To withhold authority to vote for the election of one or more of
the persons nominated by Wyser-Pratte, mark FOR above and write the name(s) of
the person(s) with respect to whom you wish to withhold authority to vote below:
------------------------------------------------------------
2. To set a time limit on certain defensive actions unless approved by
Shareholders.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
3. To elect not to be governed by the Business Combination Statute.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
4. Ratification of Appointment of Arthur Andersen LLP as Independent Public
Accountants of the Company.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
<PAGE>
<PAGE>
This Proxy, when properly executed, will be voted in the manner marked herein by
the undersigned shareholder. If no marking is made, this proxy will be deemed to
be a direction to vote FOR Proposals 1, 2, 3 and 4 in the discretion of the
proxies, to vote upon such other business as may properly come before the
meeting, and any adjournment or postponement thereof.
________________________________
(Date)
________________________________
(Signature)
________________________________
(Title)
________________________________
(Signature, if held jointly)
When shares are held by joint
tenants, both should sign. When
signing an attorney, executor,
administrator, trustee,
guardian, corporate officer or
partner, please give full title
as such. If a corporation,
please sign in corporate name by
President or other authorized
officer. If a partnership,
please sign in partnership name
by authorized person. This Proxy
votes all shares held in all
capacities.
PLEASE MARK, SIGN, DATE AND MAIL PROMPTLY
