<PAGE> 1
OFFER TO PURCHASE FOR CASH
ALL OUTSTANDING SHARES OF COMMON STOCK
OF
PIERCING PAGODA, INC.
AT
$21.50 NET PER SHARE
BY
JEWELRY EXPANSION CORP.
AN INDIRECT WHOLLY OWNED SUBSIDIARY OF
ZALE CORPORATION
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY
TIME, SEPTEMBER 19, 2000, UNLESS THE OFFER IS EXTENDED.
THE OFFER IS CONDITIONED UPON, AMONG OTHER THINGS, (1) THERE BEING VALIDLY
TENDERED AND NOT WITHDRAWN PRIOR TO THE EXPIRATION OF THE OFFER AT LEAST THAT
NUMBER OF SHARES OF COMMON STOCK, PAR VALUE $0.01 PER SHARE (THE "COMPANY COMMON
STOCK"), OF PIERCING PAGODA, INC., A DELAWARE CORPORATION (THE "COMPANY"), THAT
WOULD CONSTITUTE A MAJORITY OF THE THEN OUTSTANDING SHARES ON A FULLY DILUTED
BASIS ON THE DATE OF PURCHASE BY JEWELRY EXPANSION CORP., A DELAWARE CORPORATION
("PURCHASER"), AND AN INDIRECT WHOLLY OWNED SUBSIDIARY OF ZALE CORPORATION
("PARENT"), AND (2) THE EXPIRATION OR TERMINATION OF ANY APPLICABLE WAITING
PERIOD UNDER THE HART-SCOTT-RODINO ANTITRUST IMPROVEMENTS ACT OF 1976, AS
AMENDED (THE "HSR ACT"). THE OFFER IS ALSO SUBJECT TO OTHER CONDITIONS CONTAINED
IN THIS OFFER TO PURCHASE. PLEASE READ "SECTION 14. CERTAIN CONDITIONS OF THE
OFFER."
THE BOARD OF DIRECTORS OF THE COMPANY HAS UNANIMOUSLY (1) DECLARED THAT THE
OFFER AND THE MERGER ARE IN THE BEST INTERESTS OF THE COMPANY AND ITS
STOCKHOLDERS AND ARE ADVISABLE AND FAIR TO THE STOCKHOLDERS OF THE COMPANY, (2)
APPROVED THE OFFER, THE MERGER AND THE MERGER AGREEMENT, AND (3) RECOMMENDED
ACCEPTANCE OF THE OFFER AND APPROVAL AND ADOPTION OF THE MERGER AGREEMENT BY THE
STOCKHOLDERS OF THE COMPANY.
------------------------
IMPORTANT
Any stockholder of the Company desiring to tender all or any portion of his
or her Shares (as defined herein) should either (1) complete and sign the
accompanying Letter of Transmittal, or a facsimile thereof, in accordance with
the instructions in the Letter of Transmittal and mail or deliver it, together
with the certificate(s) evidencing any tendered shares and any other required
documents, to the Depositary (as defined herein) or tender such shares pursuant
to the procedure for book-entry transfer set forth in "Section 3. Procedures for
Accepting the Offer and Tendering Shares" or (2) request such stockholder's
broker, dealer, commercial bank, trust company or other nominee to effect the
transaction for such stockholder. Any stockholder whose shares are registered in
the name of a broker, dealer, commercial bank, trust company or other nominee
must contact such broker, dealer, commercial bank, trust company or other
nominee if such stockholder desires to tender such Shares.
A stockholder of the Company who desires to tender Shares and whose
certificates evidencing such shares are not immediately available, or who cannot
comply with the procedure for book-entry transfer on a timely basis, may tender
such shares by following the procedure for guaranteed delivery set forth in
"Section 3. Procedures for Accepting the Offer and Tendering Shares."
Questions or requests for assistance may be directed to the Dealer Manager
or the Information Agent at the addresses and telephone numbers set forth on the
back cover of this Offer to Purchase. Requests for additional copies of this
Offer to Purchase, the Letter of Transmittal or other tender offer materials may
be directed to the Information Agent at its address and telephone number set
forth on the back cover of this Offer to Purchase. Holders of Shares may also
contact brokers, dealers, commercial banks or trust companies for assistance
concerning the Offer.
------------------------
The Dealer Manager for the Offer is:
MERRILL LYNCH & CO.
August 22, 2000
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TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
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<S> <C> <C>
SUMMARY OF THE OFFER......................................................... (i)
INTRODUCTION................................................................. 1
THE TENDER OFFER............................................................. 4
Section 1. Terms of the Offer; Expiration Date........................... 4
Section 2. Acceptance for Payment and Payment for Shares................. 5
Section 3. Procedures for Accepting the Offer and Tendering Shares....... 6
Section 4. Withdrawal Rights............................................. 9
Section 5. Certain United States Federal Income Tax Consequences......... 10
Section 6. Price Range of Shares; Dividends.............................. 11
Section 7. Certain Information Concerning the Company.................... 11
Section 8. Certain Information Concerning Purchaser and Parent........... 13
Section 9. Financing of the Offer and the Merger......................... 14
Section 10. Background of the Offer and the Merger........................ 14
Section 11. Purpose of the Offer and the Merger........................... 27
Section 12. Dividends and Distributions................................... 29
Section 13. Possible Effects of the Offer on the Market for the Shares,
Exchange Listing and Exchange Act Registration, Margin
Regulations................................................... 29
Section 14. Certain Conditions of the Offer............................... 30
Section 15. Certain Regulatory and Legal Matters.......................... 31
Section 16. Fees and Expenses............................................. 33
Section 17. Miscellaneous................................................. 34
Schedule I. Information Concerning Directors and Executive Officers of
Parent and Purchaser
</TABLE>
<PAGE> 3
SUMMARY OF THE OFFER
This summary of the offer highlights selected information from this Offer
to Purchase and may not contain all of the information that is important to you.
To better understand our offer to you and for a complete description of the
terms of the offer, you should read this entire Offer to Purchase and the
accompanying Letter of Transmittal carefully. Questions or requests for
assistance may be directed to the Information Agent or the Dealer Manager at the
addresses and telephone numbers set forth on the back cover of this Offer to
Purchase.
- WHO IS OFFERING TO BUY MY SECURITIES?
Our name is Jewelry Expansion Corp. We are a Delaware corporation formed
for the purpose of making this offer. We are an indirect wholly owned subsidiary
of Zale Corporation, a Delaware corporation. Please see the "Introduction" and
"Section 8. Certain Information Concerning Purchaser and Parent" of this Offer
to Purchase.
- WHAT ARE THE CLASSES AND AMOUNTS OF SECURITIES SOUGHT IN THIS OFFER?
We are offering to purchase all of the outstanding shares of common stock,
$0.01 par value per share, of Piercing Pagoda, Inc. Please see the
"Introduction" to this Offer to Purchase.
- HOW MUCH ARE YOU OFFERING TO PAY AND WHAT IS THE FORM OF PAYMENT?
We are offering to pay $21.50 per share, net to you, in cash and without
interest.
If you are the record owner of your shares and you tender your shares in
the offer, you will not have to pay brokerage fees or similar expenses. If you
own your shares through a broker or other nominee and your broker or nominee
tenders your shares on your behalf, your broker or nominee may charge you a fee
for doing so. You should consult your broker or nominee to determine whether any
such charges will apply. Please see the "Introduction."
- WHAT ARE THE MOST SIGNIFICANT CONDITIONS OF THE OFFER?
We are not obligated to purchase any shares unless at least a majority of
the outstanding shares, including any shares which may be acquired upon the
exercise of outstanding employee stock options, are validly tendered and not
withdrawn prior to the expiration of the offer. In addition, we are not
obligated to purchase any shares unless and until we receive U.S. federal
antitrust clearance for the transaction.
Please see "Section 1. Terms of the Offer; Expiration Date" and "Section
14. Certain Conditions of the Offer" of this Offer to Purchase, which set forth
in full the conditions to the offer.
- DO YOU HAVE THE FINANCIAL RESOURCES TO MAKE PAYMENT?
We will obtain all necessary funds to purchase all of the outstanding
shares of the Company's common stock from Parent or one of Parent's other
subsidiaries. Parent and its subsidiaries will provide such funds from existing
resources. Please see "Section 9. Financing of the Offer and the Merger."
- IS YOUR FINANCIAL CONDITION RELEVANT TO MY DECISION TO TENDER IN THE OFFER?
We do not think our financial condition is relevant to your decision
whether to tender shares and accept the offer because: (1) the offer is being
made for all outstanding shares, (2) the offer is solely for cash, (3) the offer
is not subject to any financing condition, and (4) if we are successful with our
offer, we will acquire all of the remaining shares of the Company.
- HOW LONG DO I HAVE TO DECIDE WHETHER TO TENDER IN THE OFFER?
The offer will expire at 12:00 Midnight, New York City time, on September
19, 2000, unless we extend the offer. If you cannot deliver everything that is
required in order to make a valid tender by that
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<PAGE> 4
time, you may be able to use the guaranteed delivery procedure that is described
in "Section 3. Procedures for Accepting the Offer and Tendering Shares" of this
Offer to Purchase.
- CAN THE OFFER BE EXTENDED, AND UNDER WHAT CIRCUMSTANCES?
We expressly reserve the right, in our sole discretion, but subject to the
terms of the Merger Agreement and applicable law, to extend the period of time
during which the offer remains open. We have agreed in the Merger Agreement that
we may extend the offer if certain conditions to the offer have not been
satisfied. In addition, we have agreed to extend the offer, at the request of
the Company, from time to time until the earlier of completion of the offer or
December 31, 2000, provided that the Merger Agreement has not been terminated
and the conditions to the offer, as set forth in "Section 14. Certain Conditions
of the Offer" have not been satisfied, and are not incapable of being satisfied.
Please see "Section 1. Terms of the Offer; Expiration Date" of this Offer to
Purchase.
- HOW WILL I BE NOTIFIED IF THE OFFER IS EXTENDED?
If we extend the offer, we will inform American Stock Transfer & Trust
Company, the Depositary, of that fact, and will issue a press release giving the
new expiration date no later than 9:00 a.m., New York City time, on the next
business day after the day on which the offer was previously scheduled to
expire. Please see "Section 1. Terms of the Offer; Expiration Date" of this
Offer to Purchase.
- HOW DO I TENDER MY SHARES?
To tender your shares in the offer, you must:
- complete and sign the accompanying Letter of Transmittal (or a facsimile
of the Letter of Transmittal) in accordance with the instructions in the
Letter of Transmittal and mail or deliver it together with your share
certificates and any other required documents, to American Stock Transfer,
the Depositary;
- tender your shares pursuant to the procedure for book-entry transfer set
forth in "Section 3. Procedures for Accepting the Offer and Tendering
Shares" of this Offer to Purchase; or
- if your share certificates are not immediately available or if you cannot
deliver your share certificates and any other required documents to
American Stock Transfer, the Depositary, prior to the expiration of the
offer, or you cannot complete the procedure for delivery by book-entry
transfer on a timely basis, you may still tender your shares if you comply
with the guaranteed delivery procedures described in "Section 3.
Procedures for Accepting the Offer and Tendering Shares" of this Offer to
Purchase.
- UNTIL WHAT TIME CAN I WITHDRAW PREVIOUSLY TENDERED SHARES?
You may withdraw any previously tendered shares at any time prior to the
expiration of the offer, and, unless we have previously accepted them pursuant
to the offer, you may also withdraw them at any time after October 20, 2000.
Please see "Section 4. Withdrawal Rights" of this Offer to Purchase.
- HOW DO I WITHDRAW PREVIOUSLY TENDERED SHARES?
To withdraw previously tendered shares, you must deliver a written or
facsimile notice of withdrawal with the required information to American Stock
Transfer, the Depositary, while you still have the right to withdraw such
shares. If you tendered shares by giving instructions to a broker or nominee,
you must instruct the broker or nominee to arrange for the withdrawal of your
shares. Please see "Section 4. Withdrawal Rights" of this Offer to Purchase.
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- WHAT DOES THE COMPANY'S BOARD OF DIRECTORS THINK OF THE OFFER?
The Board of Directors of the Company has unanimously declared that the
offer and merger are in the best interests of the Company and its stockholders,
approved the offer, the merger and the Merger Agreement, and has recommended
acceptance of the offer and approval and adoption of the Merger Agreement by the
stockholders of the Company.
- WILL THE TENDER OFFER BE FOLLOWED BY A MERGER IF ALL OF THE COMPANY'S SHARES
ARE NOT TENDERED?
If we accept for payment and pay for at least a majority of the outstanding
shares of the Company, we will be merged with and into the Company. If that
merger occurs, the Company will become an indirect wholly owned subsidiary of
Parent, and each share that remains outstanding (other than any shares held by
Parent or the Company, or any of their subsidiaries, or held by stockholders
seeking appraisal for their shares) will be converted automatically into the
right to receive $21.50 net per share in cash.
- IF AT LEAST A MAJORITY OF THE OUTSTANDING SHARES ARE TENDERED AND ACCEPTED FOR
PAYMENT, WILL THE COMPANY CONTINUE AS A PUBLIC COMPANY?
No. If the merger occurs, the Company will no longer be publicly owned.
Even if the merger does not occur, if we purchase all of the tendered shares,
there may be so few remaining stockholders and publicly held shares that the
shares may no longer be eligible to be listed on the Nasdaq National Market
System, there may not be a public trading market for the shares, and the Company
may cease making filings with the Securities and Exchange Commission or
otherwise cease being required to comply with Securities and Exchange Commission
rules relating to publicly held companies. Please see "Section 13. Possible
Effects of the Offer on the Market for the Shares, Exchange Listing and Exchange
Act Registration, Margin Regulations" of this Offer to Purchase.
- IF I DECIDE NOT TO TENDER, HOW WILL THE OFFER AFFECT MY SHARES?
If you decide not to tender your shares in the offer and the merger occurs,
you will receive in the merger the same amount of cash per share as if you would
have tendered your shares in the offer, just at a later date.
If you decide not to tender your shares in the offer and the merger does
not occur, and if we purchase all of the tendered shares, there may be so few
remaining stockholders and publicly held shares that the shares may no longer be
eligible to be listed on the Nasdaq National Market System, there may not be a
public trading market for the shares, and the Company may cease making filings
with the Securities and Exchange Commission or otherwise cease being required to
comply with Securities and Exchange Commission rules relating to publicly held
companies. Please see "Section 13. Possible Effects of the Offer on the Market
for the Shares, Exchange Listing and Exchange Act Registration, Margin
Regulations" of this Offer to Purchase.
- WHAT IS THE MARKET VALUE OF MY SHARES AS OF A RECENT DATE?
On August 10, 2000, the last full trading day before we announced our
offer, the last reported closing price per share reported on the Nasdaq National
Market System was $16.00 per share. On August 21, 2000, the last full trading
day before we commenced our offer, the last reported closing price per share
reported on the Nasdaq National Market System was $21.25 per share. We encourage
you to obtain a recent quotation for shares of the Company's common stock in
deciding whether to tender your shares. See "Section 7. Certain Information
Concerning the Company" of this Offer to Purchase.
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- WITH WHOM MAY I TALK IF I HAVE QUESTIONS ABOUT THE OFFER?
If you have any questions about the offer, you should call:
Our Information Agent:
MORROW & CO., INC.
445 Park Avenue
5th Floor
New York, New York 10022
Call Collect: (212) 754-8000
Bank and Brokerage Firms, Please Call: (800) 662-5200
Shareholders, Please Call: (800) 566-9061
Our Dealer Manager:
MERRILL LYNCH & CO.
Four World Financial Center
New York, New York 10080
(212) 236-3790 (Call Collect)
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To the Holders of Common Stock of the Company:
INTRODUCTION
Purchaser hereby offers to purchase all of the shares of Common Stock of
the Company that are issued and outstanding (the "Shares"), for $21.50 per
Share, net to the seller in cash, without interest, upon the terms and subject
to the conditions set forth in this Offer to Purchase and in the related Letter
of Transmittal (which, together with this Offer to Purchase and any amendments
or supplements hereto or thereto, collectively constitute the "Offer"). Please
read "Section 8. Certain Information Concerning Purchaser and Parent" for
additional information concerning Purchaser and Parent.
Tendering stockholders who are record owners of their shares and tender
directly to the Depositary will not be obligated to pay brokerage fees or
commissions or, except as otherwise provided in Instruction 6 of the Letter of
Transmittal, stock transfer taxes with respect to the purchase of Shares by
Purchaser pursuant to the Offer. Nonetheless, any tendering stockholder or other
payee that fails to complete and sign the Substitute Form W-9, which is included
in the Letter of Transmittal, may be subject to a required back-up U.S. federal
income tax withholding of 31% of the gross proceeds payable to such stockholder
or other payee pursuant to the Offer. See "Section 5. Certain United States
Federal Income Tax Consequences." Purchaser or Parent shall pay all charges and
expenses of American Stock Transfer & Trust Company (the "Depositary"), Morrow &
Co., Inc. (the "Information Agent") and Merrill Lynch, Pierce, Fenner & Smith
Incorporated (the "Dealer Manager") incurred in connection with the Offer. See
"Section 16. Fees and Expenses."
THE BOARD OF DIRECTORS OF THE COMPANY HAS UNANIMOUSLY (1) DECLARED THAT THE
OFFER AND THE MERGER ARE IN THE BEST INTERESTS OF THE COMPANY AND ITS
STOCKHOLDERS AND ARE ADVISABLE AND FAIR TO THE STOCKHOLDERS OF THE COMPANY, (2)
APPROVED THE OFFER, THE MERGER AND THE MERGER AGREEMENT, AND (3) RECOMMENDED
ACCEPTANCE OF THE OFFER AND APPROVAL AND ADOPTION OF THE MERGER AGREEMENT BY THE
STOCKHOLDERS OF THE COMPANY.
ING Barings LLC ("Investment Bank") has delivered to the Board of Directors
of the Company its opinion to the effect that, as of the date thereof, the
consideration to be received by the holders of Shares in connection with the
Offer and the Merger is fair to them from a financial point of view. A copy of
the written opinion of Investment Bank is contained in the Company's
Solicitation/Recommendation Statement on Schedule l4D-9 (the "Schedule 14D-9"),
which has been filed with the Securities and Exchange Commission (the
"Commission") and is being mailed to you concurrently herewith. YOU ARE URGED TO
READ THE OPINION CAREFULLY AND IN ITS ENTIRETY FOR A DESCRIPTION OF THE
ASSUMPTIONS MADE, MATTERS CONSIDERED AND LIMITS ON THE REVIEW UNDERTAKEN BY THE
INVESTMENT BANK.
THE OFFER IS CONDITIONED UPON, AMONG OTHER THINGS, (1) THERE BEING VALIDLY
TENDERED AND NOT WITHDRAWN PRIOR TO THE EXPIRATION OF THE OFFER AT LEAST THAT
NUMBER OF SHARES WHICH WOULD CONSTITUTE A MAJORITY OF THE THEN OUTSTANDING
SHARES ON A FULLY DILUTED BASIS (INCLUDING, WITHOUT LIMITATION, ALL SHARES
ISSUABLE UPON THE CONVERSION OF ANY CONVERTIBLE SECURITIES OR UPON THE EXERCISE
OF ANY OPTIONS, WARRANTS, OR RIGHTS) (THE "MINIMUM CONDITION"), AND (2) THE
EXPIRATION OR TERMINATION OF ANY APPLICABLE WAITING PERIOD UNDER THE HSR ACT
(THE "ANTITRUST CONDITION"). THE OFFER IS ALSO SUBJECT TO OTHER CONDITIONS
CONTAINED IN THIS OFFER TO PURCHASE. PLEASE READ "SECTION 1. TERMS OF THE OFFER;
EXPIRATION DATE" AND "SECTION 14. CERTAIN CONDITIONS OF THE OFFER," WHICH SET
FORTH IN FULL THE CONDITIONS TO THE OFFER.
The Offer is being made pursuant to an Agreement and Plan of Merger, dated
as of August 11, 2000 (the "Merger Agreement"), by and among Parent, Purchaser
and the Company. The Merger Agreement
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provides, among other things, that as promptly as practicable after the purchase
of Shares pursuant to the Offer and the satisfaction or, if permissible, waiver
of the other conditions set forth in the Merger Agreement and in accordance with
the relevant provisions of the Delaware General Corporation Law ("Delaware
Law"), Purchaser will be merged with and into the Company (the "Merger"). As a
result, the Company will continue as the surviving corporation and will become
an indirect wholly owned subsidiary of Parent. At the effective time of the
Merger (the "Effective Time"), each Share issued and outstanding immediately
prior to the Effective Time (other than Shares held by Parent, the Company or
any subsidiary of Parent or the Company and other than Shares held by
stockholders who shall have demanded and perfected appraisal rights under
Delaware Law, if any) shall be converted automatically into the right to receive
$21.50 in cash, or any higher price that may be paid per Share in the Offer,
without interest. Stockholders who demand and fully perfect appraisal rights
under Delaware Law will be entitled to receive, in connection with the Merger,
cash for the fair value of their Shares as determined pursuant to the procedures
prescribed by Delaware Law. See "Section 11. Purpose of the Offer and the
Merger." The Merger Agreement is more fully described in "Section 10. Background
of the Offer and the Merger." Certain federal income tax consequences of the
sale of Shares pursuant to the Offer and the conversion of Shares into the right
to receive cash in the Merger, as the case may be, are described in "Section 5.
Certain United States Federal Income Tax Consequences."
Simultaneously with the execution of the Merger Agreement, Parent and
Purchaser have entered into a Tender and Voting Agreement with Mr. Richard H.
Penske, and certain other directors, executive officers and stockholders of the
Company (the "Tender and Voting Agreement"), pursuant to which they have agreed,
among other things, to (i) tender all of the Shares owned by them in the Offer,
(ii) vote all of the Shares owned by them in favor of the Merger, against any
action that would result in a material breach of any covenant, obligation,
agreement, representation or warranty of the Company under the Merger Agreement,
against any extraordinary corporate transaction, against a change in a majority
of the Company's board of directors, against any action, agreement or
transaction that would materially delay or impair the ability of the Company to
consummate the transactions provided for in the Merger Agreement or any
Alternative Acquisition Proposal (as defined in the Merger Agreement) and (iii)
grant an irrevocable proxy to Parent and Purchaser, or a nominee thereof to vote
and act (by written consent or otherwise) with respect to all of the Shares
owned by them at any meeting of the stockholders of the Company or by written
consent in lieu of any such meetings with regard to any matter covered in (ii).
See "Section 10. Background of the Offer and the Merger."
The Merger Agreement provides that promptly upon the purchase by Purchaser
of Shares pursuant to the Offer, and from time to time thereafter, Purchaser
will be entitled to designate up to such number of directors, rounded up to the
next whole number, on the Board as shall give Purchaser representation on the
Board equal to the product of the total number of directors on the Board (giving
effect to the directors elected pursuant to the Merger Agreement) multiplied by
the percentage that the aggregate number of Shares then beneficially owned by
Purchaser or any affiliate of Purchaser following such purchase bears to the
total number of Shares then outstanding. In the Merger Agreement, the Company
has agreed, at such time, to use its reasonable best efforts to cause
Purchaser's designees to be elected as directors of the Company, including
increasing the size of the Board or securing the resignations of incumbent
directors, or both.
The consummation of the Merger is subject to the satisfaction or waiver of
certain conditions, including the consummation of the Offer, and, if necessary,
the approval and adoption of the Merger Agreement by the requisite vote of the
stockholders of the Company. For a more detailed description of the conditions
to the Merger, please see "Section 10. Background of the Offer and the Merger."
Under Delaware Law, the affirmative vote of the holders of at least a majority
of the outstanding Shares is required to approve and adopt the Merger Agreement.
Consequently, if Purchaser acquires (pursuant to the Offer or otherwise) at
least a majority of the outstanding Shares, then Purchaser will have sufficient
voting power to approve and adopt the Merger Agreement without the affirmative
vote of any other stockholder. See "Section 10. Background of the Offer and the
Merger" and "Section 11. Purpose of the Offer and the Merger; Plans for the
Company."
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<PAGE> 9
Under Delaware Law, if Purchaser acquires, pursuant to the Offer or
otherwise, at least 90% of the then outstanding Shares, Purchaser will be able
to approve and adopt the Merger Agreement without the necessity of a vote of the
Company's stockholders. In such event, Parent, Purchaser and the Company have
agreed to take, at the request of Purchaser, all necessary and appropriate
action to cause the Merger to become effective in accordance with Delaware Law
as promptly as reasonably practicable after such acquisition, without a meeting
of the Company's stockholders. If, however, Purchaser does not acquire at least
90% of the then outstanding Shares and a vote of the Company's stockholders is
required under Delaware Law, a significantly longer period of time will be
required to effect the Merger. See "Section 11. Purpose of the Offer and the
Merger."
The Company has advised Purchaser that as of August 11, 2000, 8,941,239
Shares were issued and outstanding, 934,423 Shares were subject to outstanding
stock options and 254,150 Shares were held in the treasury of the Company. As a
result, as of such date, the Minimum Condition would be satisfied if Purchaser
acquired 4,937,832 Shares. Also, as of such date, Purchaser could cause the
Merger to become effective in accordance with Delaware Law, without the
necessity of calling a meeting of the Company's stockholders or requiring a vote
of the Company's stockholders, if Purchaser acquired 8,047,116 Shares.
No appraisal rights are available in connection with the Offer; however,
stockholders may have appraisal rights in connection with the Merger regardless
of whether the Merger is consummated with or without a vote of the Company's
stockholders. See "Section 11. Purpose of the Offer and the Merger."
THIS OFFER TO PURCHASE AND THE RELATED LETTER OF TRANSMITTAL CONTAIN
IMPORTANT INFORMATION THAT SHOULD BE READ CAREFULLY BEFORE YOU MAKE ANY DECISION
WITH RESPECT TO THE OFFER.
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<PAGE> 10
THE TENDER OFFER
SECTION 1. TERMS OF THE OFFER; EXPIRATION DATE.
Upon the terms and subject to the conditions of the Offer (including any
terms and conditions of any extension or amendment), Purchaser will accept for
payment and pay for all Shares validly tendered prior to the Expiration Date and
not withdrawn in accordance with the procedures set forth in "Section 4.
Withdrawal Rights." "Expiration Date" means 12:00 Midnight, New York City time,
on September 19, 2000, unless and until Purchaser (subject to the terms and
conditions of the Merger Agreement) shall have extended the period during which
the Offer is open, in which case Expiration Date shall mean the latest time and
date at which the Offer, as it may be extended by Purchaser, shall expire.
The Offer is subject to the conditions set forth under "Section 14. Certain
Conditions of the Offer," including the satisfaction of the Minimum Condition
and the Antitrust Condition. Subject to the applicable rules and regulations of
the Commission and subject to the terms and conditions of the Merger Agreement
(which provides that the Minimum Condition may not be waived), Purchaser
expressly reserves the right to waive any such conditions in whole or in part,
in its sole discretion, and also expressly reserves the right to increase the
price per Share payable in the Offer and to make any other changes in the terms
and conditions of the Offer; provided, however, that Purchaser may not decrease
the price per Share payable in the Offer, reduce the maximum number of Shares to
be purchased in the Offer, change the form of consideration payable in the
Offer, add to or change the conditions to the Offer as set forth in "Section 14.
Certain Conditions to the Offer," waive the Minimum Condition, or modify or
amend any other condition to the Offer in any manner that is materially adverse
to the holders of Shares.
The Merger Agreement provides that Purchaser may, without the consent of
the Company, (i) extend the Offer beyond the scheduled expiration date, which
shall be 20 business days following the commencement of the Offer in increments
of not more than 10 business days each, if at the then scheduled expiration date
any of the conditions to Purchaser's obligation to purchase Shares are not
satisfied, or (ii) extend the Offer for any period required by any rule,
regulation, interpretation or position of the Commission, or the staff thereof,
applicable to the Offer. During any such extension, all Shares previously
tendered and not withdrawn will remain subject to the Offer and subject to the
right of a tendering stockholder to withdraw such stockholder's Shares. See
"Section 4. Withdrawal Rights." Under no circumstances will interest be paid on
the purchase price for tendered Shares, whether or not the Offer is extended.
Any extension of the Offer may be effected by Purchaser giving oral or written
notice of such extension to the Depositary.
In addition, Purchaser may make available a "subsequent offering period"
within the meaning of Rule 14d-11 under the Securities Exchange Act of 1934, as
amended (the "Exchange Act"). A subsequent offering period is an additional
period of time from three business days to 20 business days in length, beginning
after Purchaser purchases Shares tendered in the Offer, during which
stockholders may tender, but not withdraw, their Shares. During a subsequent
offering period, Purchaser will promptly pay for all Shares tendered at the same
price paid in the Offer.
Purchaser shall pay for all Shares validly tendered and not withdrawn
promptly following the acceptance of Shares for payment pursuant to the Offer.
Notwithstanding the immediately preceding sentence and subject to the applicable
rules of the Commission and the terms and conditions of the Offer, Purchaser
also expressly reserves the right to delay payment for Shares in order to comply
in whole or in part with applicable laws (any such delay shall be effected in
compliance with Rule 14e-l(c) under the Exchange Act, which requires Purchaser
to pay the consideration offered or to return Shares deposited by or on behalf
of stockholders promptly after the termination or withdrawal of the Offer).
Any such extension, delay, termination, waiver or amendment will be
followed as promptly as practicable by public announcement thereof, such
announcement in the case of an extension to be made no later than 9:00 a.m., New
York City time, on the next business day after the previously scheduled
Expiration Date. Subject to applicable law (including Rules l4d-4(c), l4d-6(d)
and l4e-l under the Exchange Act, which require that material changes be
promptly disseminated to stockholders in a manner
4
<PAGE> 11
reasonably designed to inform them of such changes) and without limiting the
manner in which Purchaser may choose to make any public announcement, Purchaser
will have no obligation to publish, advertise or otherwise communicate any such
public announcement other than by issuing a press release to the Dow Jones News
Service or the Public Relations Newswire.
If Purchaser makes a material change in the terms of the Offer or the
information concerning the Offer, or if it waives a material condition of the
Offer, Purchaser will extend the Offer to the extent required by Rules 14d-4(c),
l4d-6(d) and l4e-1 under the Exchange Act. Subject to the terms of the Merger
Agreement, if, prior to the Expiration Date, Purchaser should decide to increase
the consideration being offered in the Offer, such increase in the consideration
being offered will be applicable to all stockholders whose Shares are accepted
for payment pursuant to the Offer and, if at the time notice of any such
increase in the consideration being offered is first published, sent or given to
holders of such Shares, the Offer is scheduled to expire at any time earlier
than the period ending on the tenth business day from and including the date
that such notice is first so published, sent or given, the Offer will be
extended at least until the expiration of such 10 business day period.
For purposes of the Offer, a "business day" means any day on which the
principal offices of the Commission in Washington, D.C. are open to accept
filings, or, in the case of determining a date when any payment is due, any day
on which banks are not required or authorized to close in New York City, and
consists of the time period from 12:01 a.m. through 12:00 Midnight, New York
City time.
The Company has provided Purchaser with the Company's stockholder list and
security position listings, including the most recent list of names, addresses
and security positions of non-objecting beneficial owners in the possession of
the Company, for the purpose of disseminating the Offer to holders of Shares.
This Offer to Purchase and the related Letter of Transmittal will be mailed by
Purchaser to record holders of Shares whose names appear on the Company's
stockholder list and will be furnished, for subsequent transmittal to beneficial
owners of Shares, to brokers, dealers, commercial banks, trust companies and
similar persons whose names, or the names of whose nominees, appear on the
stockholder list or, if applicable, who are listed as participants in a clearing
agency's security position listing.
SECTION 2. ACCEPTANCE FOR PAYMENT AND PAYMENT FOR SHARES.
Upon the terms and subject to the conditions of the Offer (including, if
the Offer is extended or amended, the terms and conditions of any such extension
or amendment), Purchaser will accept for payment all Shares validly tendered
(and not properly withdrawn in accordance with "Section 4. Withdrawal Rights")
prior to the Expiration Date promptly after the occurrence of the Expiration
Date. Purchaser shall pay for all Shares validly tendered and not withdrawn
promptly after expiration of the Offer in compliance with Rule 14e-1(c)
promulgated under the Exchange Act. Notwithstanding the immediately preceding
sentence and subject to applicable rules and regulations of the Commission and
the terms of the Merger Agreement, Purchaser expressly reserves the right to
delay payment for Shares in order to comply in whole or in part with applicable
laws. See "Section 1. Terms of the Offer; Expiration Date" and "Section 15.
Certain Regulatory and Legal Matters."
In all cases, payment for Shares tendered and accepted for payment pursuant
to the Offer will be made only after timely receipt by the Depositary of (i) the
certificates evidencing such Shares (the "Share Certificates") or timely
confirmation (a "Book-Entry Confirmation") of a book-entry transfer of such
Shares into the Depositary's account at The Depository Trust Company (the
"Book-Entry Transfer Facility") pursuant to the procedures set forth in "Section
3. Procedures for Accepting the Offer and Tendering Shares," (ii) the Letter of
Transmittal (or a manually signed facsimile thereof), properly completed and
duly executed, with any required signature guarantees or an Agent's Message (as
defined below), in connection with the book-entry transfer and (iii) any other
documents required under the Letter of Transmittal. The term "Agent's Message"
means a message, transmitted by the Book-Entry Transfer Facility to, and
received by, the Depositary and forming a part of the Book-Entry Confirmation
which states that the Book-Entry Transfer Facility has received an express
acknowledgment from the participant in the Book-Entry Transfer Facility
tendering the Shares that are the subject of such Book-
5
<PAGE> 12
Entry Confirmation, that such participant has received and agrees to be bound by
the Letter of Transmittal and that Purchaser may enforce such agreement against
such participant.
On August 18, 2000, Parent filed with the Federal Trade Commission (the
"FTC") and the Antitrust Division of the Department of Justice (the "Antitrust
Division") a Premerger Notification and Report Form under the HSR Act with
respect to the Offer. Accordingly, the statutory waiting period under the HSR
Act applicable to the Offer will expire at 11:59 p.m., New York City time, on
September 2, 2000, unless extended by the FTC and the Antitrust Division. The
FTC or the Antitrust Division may extend such waiting period by requesting
additional information from Parent with respect to the Offer. If such a request
is made, the waiting period will expire at 11:59 p.m., New York City time, on
the tenth calendar day after substantial compliance with such a request.
Thereafter, the waiting period may only be extended by court order or with the
consent of Parent. The waiting period under the HSR Act may be terminated prior
to expiration by the FTC and the Antitrust Division. Parent has requested early
termination of the waiting period, although there can be no assurance that this
request will be granted. See "Section 15. Certain Regulatory and Legal Matters."
For purposes of the Offer, Purchaser will be deemed to have accepted for
payment (and thereby purchased) Shares validly tendered and not properly
withdrawn as, if and when Purchaser gives oral or written notice to the
Depositary of Purchaser's acceptance for payment of such Shares pursuant to the
Offer. Upon the terms and subject to the conditions of the Offer, payment for
Shares accepted for payment pursuant to the Offer will be made by deposit of the
purchase price therefor with the Depositary, which will act as agent for
tendering stockholders for the purpose of receiving payments from Purchaser and
transmitting such payments to tendering stockholders whose Shares have been
accepted for payment. UNDER NO CIRCUMSTANCES WILL INTEREST ON THE PURCHASE PRICE
FOR SHARES BE PAID, REGARDLESS OF ANY DELAY IN MAKING SUCH PAYMENT. Upon the
deposit of funds with the Depositary for the purpose of making payments to the
tendering holders of Shares, Purchaser's obligation to make such payment shall
be satisfied, and tendering holders of Shares must thereafter look solely to the
Depositary for payment of amounts owed to them by reason of the acceptance for
payment of Shares pursuant to the Offer.
If any tendered Shares are not accepted for payment for any reason pursuant
to the terms and conditions of the Offer, or if Share Certificates are submitted
evidencing more Shares than are tendered, Share Certificates evidencing
unpurchased Shares will be returned, without expense to the tendering
stockholder (or, in the case of Shares tendered by book-entry transfer into the
Depositary's account at the Book-Entry Transfer Facility pursuant to the
procedure set forth in "Section 3. Procedures for Accepting the Offer and
Tendering Shares," such Shares will be credited to an account maintained at the
Book-Entry Transfer Facility), as promptly as practicable following the
expiration or termination of the Offer.
PURCHASER RESERVES THE RIGHT TO TRANSFER OR ASSIGN, IN WHOLE OR FROM TIME
TO TIME IN PART, TO ONE OR MORE OF ITS AFFILIATES, THE RIGHT TO PURCHASE ALL OR
ANY PORTION OF THE SHARES TENDERED PURSUANT TO THE OFFER, BUT ANY SUCH TRANSFER
OR ASSIGNMENT WILL NOT RELIEVE PURCHASER OF ITS OBLIGATIONS UNDER THE OFFER AND
WILL IN NO WAY PREJUDICE THE RIGHTS OF TENDERING STOCKHOLDERS TO RECEIVE PAYMENT
FOR SHARES VALIDLY TENDERED AND ACCEPTED FOR PAYMENT PURSUANT TO THE OFFER.
SECTION 3. PROCEDURES FOR ACCEPTING THE OFFER AND TENDERING SHARES.
In order for Shares to be validly tendered pursuant to the Offer, the
Letter of Transmittal (or a manually signed facsimile thereof), properly
completed and duly executed, together with any required signature guarantees or,
in the case of a book-entry transfer, an Agent's Message, and any other
documents required by the Letter of Transmittal, must be received by the
Depositary at one of its addresses set forth on the back cover of this Offer to
Purchase and either (1) the Share Certificates evidencing tendered Shares must
be received by the Depositary at such address or such Shares must be tendered
pursuant to the procedure for book-entry transfer described below and a
Book-Entry Confirmation
6
<PAGE> 13
must be received by the Depositary (including an Agent's Message if the
tendering stockholder has not delivered a Letter of Transmittal), in each case
prior to the Expiration Date, or (2) the tendering stockholder must comply with
the guaranteed delivery procedures described below.
THE METHOD OF DELIVERY OF SHARE CERTIFICATES AND ALL OTHER REQUIRED
DOCUMENTS, INCLUDING DELIVERY THROUGH THE BOOK-ENTRY TRANSFER FACILITY, IS AT
THE OPTION AND RISK OF THE TENDERING STOCKHOLDER, AND THE DELIVERY WILL BE
DEEMED MADE ONLY WHEN ACTUALLY RECEIVED BY THE DEPOSITARY. IF DELIVERY IS BY
MAIL, REGISTERED MAIL WITH RETURN RECEIPT REQUESTED, PROPERLY INSURED, IS
RECOMMENDED. IN ALL CASES, SUFFICIENT TIME SHOULD BE ALLOWED TO ENSURE TIMELY
DELIVERY.
BOOK-ENTRY TRANSFER. The Depositary will establish an account with respect
to the Shares at the Book-Entry Transfer Facility for purposes of the Offer
within two business days after the date of this Offer to Purchase. Any financial
institution that is a participant in the system of the Book-Entry Transfer
Facility may make a book-entry delivery of Shares by causing the Book-Entry
Transfer Facility to transfer such Shares into the Depositary's account at the
Book-Entry Transfer Facility in accordance with the Book-Entry Transfer
Facility's procedures for such transfer. However, although delivery of Shares
may be effected through book-entry transfer at the Book-Entry Transfer Facility,
the Letter of Transmittal (or a manually signed facsimile thereof), properly
completed and duly executed, together with any required signature guarantees, or
an Agent's Message, and any other required documents, must, in any case, be
received by the Depositary at its address set forth on the back cover of this
Offer to Purchase prior to the Expiration Date, or the tendering stockholder
must comply with the guaranteed delivery procedure described below. DELIVERY OF
DOCUMENTS TO THE BOOK-ENTRY TRANSFER FACILITY DOES NOT CONSTITUTE DELIVERY TO
THE DEPOSITARY.
SIGNATURE GUARANTEES. Signatures on all Letters of Transmittal must be
guaranteed by a firm that is a member of the Security Transfer Agent Medallion
Signature Program, or by any other "eligible guarantor institution," as such
term is defined in Rule l7Ad-l5 under the Exchange Act (each of the foregoing
being referred to as an "Eligible Institution"), except in cases where Shares
are tendered (i) by a registered holder of Shares who has not completed either
the box entitled "Special Payment Instructions" or the box entitled "Special
Delivery Instructions" on the Letter of Transmittal or (ii) for the account of
an Eligible Institution. If a Share Certificate is registered in the name of a
person other than the signer of the Letter of Transmittal, or if payment is to
be made, or a Share Certificate not accepted for payment or not tendered is to
be returned, to a person other than the registered holder(s), then the Share
Certificate must be endorsed or accompanied by appropriate stock powers, in
either case signed exactly as the name(s) of the registered holder(s) appear on
the Share Certificate, with the signature(s) on such Share Certificate or stock
powers guaranteed by an Eligible Institution. See Instructions 1 and 5 of the
Letter of Transmittal.
GUARANTEED DELIVERY. If a stockholder desires to tender Shares pursuant to
the Offer and such stockholder's Share Certificates evidencing such Shares are
not immediately available or such stockholder cannot deliver the Share
Certificates and all other required documents to the Depositary prior to the
Expiration Date, or such stockholder cannot complete the procedure for delivery
by book-entry transfer on a timely basis, such Shares may nevertheless be
tendered, provided that all the following conditions are satisfied:
(a) such tender is made by or through an Eligible Institution;
(b) a properly completed and duly executed Notice of Guaranteed
Delivery, substantially in the form made available by Purchaser, is
received prior to the Expiration Date by the Depositary as provided below;
and
(c) the Share Certificates (or a Book-Entry Confirmation) evidencing
all tendered Shares, in proper form for transfer, in each case together
with the Letter of Transmittal (or a manually signed facsimile thereof),
properly completed and duly executed, with any required signature
guarantees or,
7
<PAGE> 14
in the case of a book-entry transfer, an Agent's Message, and any other
documents required by the Letter of Transmittal are received by the
Depositary within three trading days after the date of execution of such
Notice of Guaranteed Delivery.
The Notice of Guaranteed Delivery may be delivered by hand or mail or by
facsimile transmission to the Depositary and must include a guarantee by an
Eligible Institution in the form set forth in the form of Notice of Guaranteed
Delivery made available by Purchaser.
In all cases, payment for Shares tendered and accepted for payment pursuant
to the Offer will be made only after timely receipt by the Depositary of the
Share Certificates evidencing such Shares, or a Book-Entry Confirmation of the
delivery of such Shares, and the Letter of Transmittal (or a manually signed
facsimile thereof), properly completed and duly executed, with any required
signature guarantees or, in the case of a book-entry transfer, an Agent's
Message, and any other documents required by the Letter of Transmittal.
DETERMINATION OF VALIDITY. ALL QUESTIONS AS TO THE VALIDITY, FORM,
ELIGIBILITY (INCLUDING, WITHOUT LIMITATION, TIME OF RECEIPT) AND ACCEPTANCE FOR
PAYMENT OF ANY TENDER OF SHARES WILL BE DETERMINED BY PURCHASER, IN ITS SOLE
DISCRETION, WHICH DETERMINATION SHALL BE FINAL AND BINDING ON ALL PARTIES.
Purchaser reserves the absolute right to reject any and all tenders determined
by it not to be in proper form or the acceptance for payment of which may, in
the opinion of its counsel, be unlawful. Purchaser also reserves the absolute
right to waive any condition of the Offer to the extent permitted by applicable
law and the Merger Agreement or any defect or irregularity in the tender of any
Shares of any particular stockholder, whether or not similar defects or
irregularities are waived in the case of other stockholders. NO TENDER OF SHARES
WILL BE DEEMED TO HAVE BEEN VALIDLY MADE UNTIL ALL DEFECTS AND IRREGULARITIES
HAVE BEEN CURED OR WAIVED. NONE OF PURCHASER, PARENT OR ANY OF THEIR RESPECTIVE
AFFILIATES OR ASSIGNS, THE DEPOSITARY, THE INFORMATION AGENT, THE DEALER MANAGER
OR ANY OTHER PERSON WILL BE UNDER ANY DUTY TO GIVE NOTIFICATION OF ANY DEFECTS
OR IRREGULARITIES IN TENDERS OR INCUR ANY LIABILITY FOR FAILURE TO GIVE ANY SUCH
NOTIFICATION. Purchaser's interpretation of the terms and conditions of the
Offer (including the Letter of Transmittal and the instructions thereto) will be
final and binding.
A tender of Shares pursuant to any of the procedures described above will
constitute the tendering stockholder's acceptance of the terms and conditions of
the Offer, as well as the tendering stockholder's representation and warranty to
Purchaser that (i) such stockholder has the full power and authority to tender,
sell, assign and transfer the tendered Shares (and any and all other Shares or
other securities issued or issuable in respect of such Shares), and (ii) when
the same are accepted for payment by Purchaser, Purchaser will acquire good and
unencumbered title thereto, free and clear of all liens, restrictions, charges
and encumbrances and not subject to any adverse claims.
The acceptance for payment by Purchaser of Shares pursuant to any of the
procedures described above will constitute a binding agreement between the
tendering stockholder and Purchaser upon the terms and subject to the conditions
of the Offer.
APPOINTMENT AS PROXY. By executing the Letter of Transmittal as set forth
above, a tendering stockholder irrevocably appoints designees of Purchaser as
such stockholder's agents, attorneys-in-fact and proxies, each with full power
of substitution, in the manner set forth in the Letter of Transmittal, to the
full extent of such stockholder's rights with respect to the Shares tendered by
such stockholder and accepted for payment by Purchaser (and with respect to any
and all other Shares or other securities issued or issuable in respect of such
Shares on or after the date of this Offer to Purchase). All such powers of
attorney and proxies will be considered irrevocable and coupled with an interest
in the tendered Shares. Such appointment will be effective when, and only to the
extent that, Purchaser accepts such Shares for payment. Upon such acceptance for
payment, all prior powers of attorney and proxies given by such stockholder with
respect to such Shares (and such other Shares and securities) will be revoked,
without further action, and no subsequent powers of attorney or proxies may be
given nor any subsequent written
8
<PAGE> 15
consent executed by such stockholder (and, if given or executed, will not be
deemed to be effective) with respect thereto. The designees of Purchaser will,
with respect to the Shares for which the appointment is effective, be empowered
to exercise all voting and other rights of such stockholder as they in their
sole discretion may deem proper at any annual or special meeting of the
Company's stockholders or any adjournment or postponement thereof, by written
consent in lieu of any such meeting or otherwise. Purchaser reserves the right
to require that, in order for Shares to be deemed validly tendered, immediately
upon Purchaser's payment for such Shares, Purchaser must be able to exercise
full voting rights with respect to such Shares (and such other Shares and
securities).
UNDER THE "BACKUP WITHHOLDING" PROVISIONS OF U.S. FEDERAL INCOME TAX LAW,
THE DEPOSITARY MAY BE REQUIRED TO WITHHOLD 31% OF ANY PAYMENTS OF CASH PURSUANT
TO THE OFFER. TO PREVENT BACKUP FEDERAL INCOME TAX WITHHOLDING WITH RESPECT TO
PAYMENT TO CERTAIN STOCKHOLDERS OF THE PURCHASE PRICE OF SHARES PURCHASED
PURSUANT TO THE OFFER, EACH SUCH STOCKHOLDER MUST PROVIDE THE DEPOSITARY WITH
SUCH STOCKHOLDER'S CORRECT TAXPAYER IDENTIFICATION NUMBER AND CERTIFY THAT SUCH
STOCKHOLDER IS NOT SUBJECT TO BACKUP FEDERAL INCOME TAX WITHHOLDING BY
COMPLETING THE SUBSTITUTE FORM W-9 IN THE LETTER OF TRANSMITTAL. SEE INSTRUCTION
8 OF THE LETTER OF TRANSMITTAL.
SECTION 4. WITHDRAWAL RIGHTS.
Tenders of Shares made pursuant to the Offer are irrevocable except that
such Shares may be withdrawn at any time prior to the Expiration Date and,
unless theretofore accepted for payment by Purchaser pursuant to the Offer, may
also be withdrawn at any time after October 20, 2000. If Purchaser extends the
Offer, is delayed in its acceptance for payment of Shares or is unable to accept
Shares for payment pursuant to the Offer for any reason, then, without prejudice
to Purchaser's rights under the Offer, the Depositary may, nevertheless, on
behalf of Purchaser, retain tendered Shares, and such Shares may not be
withdrawn except to the extent that tendering stockholders are entitled to
withdrawal rights as described in this "Section 4. Withdrawal Rights," subject
to Rule l4e-1(c) under the Exchange Act. Any such delay will be by an extension
of the Offer to the extent required by law.
For a withdrawal to be effective, a written or facsimile transmission
notice of withdrawal must be timely received by the Depositary at one of its
addresses set forth on the back cover page of this Offer to Purchase. Any such
notice of withdrawal must specify the name of the person who tendered the Shares
to be withdrawn, the number of Shares to be withdrawn and the name of the
registered holder of such Shares, if different from that of the person who
tendered such Shares. If Share Certificates evidencing Shares to be withdrawn
have been delivered or otherwise identified to the Depositary, then, prior to
the physical release of such Share Certificates, the serial numbers shown on
such Share Certificates must be submitted to the Depositary and the signature(s)
on the notice of withdrawal must be guaranteed by an Eligible Institution,
unless such Shares have been tendered for the account of an Eligible
Institution. If Shares have been tendered pursuant to the procedure for
book-entry transfer as set forth in "Section 3. Procedures for Accepting the
Offer and Tendering Shares," any notice of withdrawal must specify the name and
number of the account at the Book-Entry Transfer Facility to be credited with
the withdrawn Shares.
ALL QUESTIONS AS TO THE FORM AND VALIDITY (INCLUDING TIME OF RECEIPT) OF
ANY NOTICE OF WITHDRAWAL WILL BE DETERMINED BY PURCHASER, IN ITS SOLE
DISCRETION, WHOSE DETERMINATION WILL BE FINAL AND BINDING. NONE OF PURCHASER,
PARENT OR ANY OF THEIR RESPECTIVE AFFILIATES OR ASSIGNS, THE DEPOSITARY, THE
INFORMATION AGENT, THE DEALER MANAGER OR ANY OTHER PERSON WILL BE UNDER ANY DUTY
TO GIVE ANY NOTIFICATION OF ANY DEFECTS OR IRREGULARITIES IN ANY NOTICE OF
WITHDRAWAL OR INCUR ANY LIABILITY FOR FAILURE TO GIVE ANY SUCH NOTIFICATION.
9
<PAGE> 16
Withdrawals of Shares may not be rescinded. Any Shares properly withdrawn
will thereafter be deemed not to have been validly tendered for purposes of the
Offer. Notwithstanding the foregoing, withdrawn Shares may be re-tendered at any
time prior to the Expiration Date by following one of the procedures described
in "Section 3. Procedures for Accepting the Offer and Tendering Shares."
SECTION 5. CERTAIN UNITED STATES FEDERAL INCOME TAX CONSEQUENCES.
The following is a summary of the principal federal income tax consequences
of the Offer and the Merger to holders whose Shares are purchased pursuant to
the Offer or whose Shares are converted into the right to receive cash in the
Merger (whether upon receipt of the Transaction Consideration (as defined in the
Merger Agreement) or pursuant to the proper exercise of dissenter's rights). The
discussion applies only to holders of Shares in whose hands Shares are capital
assets, and may not apply to Shares received pursuant to the exercise of
employee stock options or otherwise as compensation, or to holders of Shares who
are not citizens or residents of the United States of America.
THE TAX DISCUSSION SET FORTH BELOW IS INCLUDED FOR GENERAL INFORMATION
PURPOSES ONLY AND IS BASED UPON PRESENT LAW. BECAUSE INDIVIDUAL CIRCUMSTANCES
MAY DIFFER, EACH HOLDER OF SHARES SHOULD CONSULT SUCH HOLDER'S OWN TAX ADVISOR
TO DETERMINE THE APPLICABILITY OF THE RULES DISCUSSED HEREIN TO SUCH STOCKHOLDER
AND THE PARTICULAR TAX EFFECTS OF THE OFFER AND THE MERGER, INCLUDING THE
APPLICATION AND EFFECT OF OTHER FEDERAL, STATE, LOCAL AND OTHER TAX LAWS.
The receipt of the offer price and the receipt of cash pursuant to the
Merger (whether as Transaction Consideration or pursuant to the proper exercise
of dissenter's rights) will be a taxable transaction for federal income tax
purposes (and also may be a taxable transaction under applicable state, local
and other income tax laws). In general, for federal income tax purposes, a
holder of Shares will recognize gain or loss equal to the difference between
such holder's adjusted tax basis in the Shares sold pursuant to the Offer or
converted to cash in the Merger and the amount of cash received therefor. Gain
or loss must be determined separately for each block of Shares (i.e., Shares
acquired at the same cost in a single transaction) sold pursuant to the Offer or
converted to cash in the Merger. Such gain or loss will be capital gain or loss.
Individual stockholders generally will be subject to tax on the net amount of
such gain at a maximum rate of 20% provided such stockholder's holding period
for the Shares exceeds 12 months. Special rules (and generally lower maximum
rates) apply to individuals in lower tax brackets. The deduction of capital
losses is subject to certain limitations. Stockholders should consult their own
tax advisors in this regard.
Payments in connection with the Offer or the Merger may be subject to
backup withholding at a 31% rate. Backup withholding generally applies if a
stockholder (i) fails to furnish such stockholder's social security number or
taxpayer identification number ("TIN"), (ii) furnishes an incorrect TIN, (iii)
fails properly to report interest or dividends, or (iv) under certain
circumstances, fails to provide a certified statement, signed under penalties of
perjury, that the TIN provided is such stockholder's correct number and that
such stockholder is not subject to backup withholding. Backup withholding is not
an additional tax but merely an advance payment, which may be refunded to the
extent it results in an overpayment of tax. Certain persons, including
corporations and financial institutions generally, are exempt from backup
withholding. Certain penalties apply for failure to furnish correct information
and for failure to include the reportable payments in income. Each stockholder
should consult with such stockholder's own tax advisor as to such stockholder's
qualifications for exemption from withholding and the procedure for obtaining
such exemption.
10
<PAGE> 17
SECTION 6. PRICE RANGE OF SHARES; DIVIDENDS.
The Shares are listed and principally traded on the Nasdaq National Market
System ("Nasdaq") under the symbol "PGDA." The following table sets forth, for
the quarters indicated, the high and low sales prices of the Shares on Nasdaq:
<TABLE>
<CAPTION>
HIGH LOW
------ ------
<S> <C> <C>
Fiscal 1999 (Ended March 31):
First Quarter............................................. $25.67 $20.83
Second Quarter............................................ 24.30 11.06
Third Quarter............................................. 16.13 8.50
Fourth Quarter............................................ 11.06 8.88
Fiscal 2000 (Ended March 31):
First Quarter............................................. $13.75 $ 8.81
Second Quarter............................................ 16.75 12.75
Third Quarter............................................. 15.13 8.13
Fourth Quarter............................................ 13.88 11.50
Fiscal 2001 (Ending March 31):
First Quarter............................................. $15.00 $12.50
Second Quarter (through August 21)........................ 21.31 14.13
</TABLE>
---------------
Source: The Company's Annual Report on Form 10-K for the fiscal year ended March
31, 2000, filed with the Commission on June 23, 2000, other than fiscal
year 2001 data; fiscal year 2001 data from Nasdaq.
On August 10, 2000, the last full trading day prior to the announcement of
the execution of the Merger Agreement and of Purchaser's intention to commence
the Offer, the closing price per Share, as reported on Nasdaq, was $16.00. On
August 21, 2000, the last full trading day prior to the commencement of the
Offer, the closing price per Share, as reported on the Nasdaq, was $21.25.
The Company has not paid any dividends since the beginning of its fiscal
year ended March 31, 1996. Pursuant to the Merger Agreement, the Company is not
permitted to declare, set aside or pay any dividend or distribution on any
shares, or redeem or otherwise acquire any shares of capital stock of the
Company without the consent of Parent.
STOCKHOLDERS ARE URGED TO OBTAIN A CURRENT MARKET QUOTATION FOR THE SHARES.
SECTION 7. CERTAIN INFORMATION CONCERNING THE COMPANY.
Except as otherwise set forth in this Offer to Purchase, all of the
information concerning the Company contained in this Offer to Purchase,
including financial information, has been furnished by the Company or has been
taken from or based upon publicly available documents and records on file with
the Commission and other public sources. Neither Purchaser nor Parent assumes
any responsibility for the accuracy or completeness of the information
concerning the Company furnished by the Company or contained in such documents
and records or for any failure by the Company to disclose events which may have
occurred or may affect the significance or accuracy of any such information but
which are unknown to Purchaser or Parent.
GENERAL. The Company is the largest retailer of gold jewelry through kiosk
stores in the United States. At March 31, 2000, the Company operated 940 stores
in 44 states and Puerto Rico, including 907 kiosk stores and 33 in-line stores.
The Company offers an extensive selection of popular-priced 14 karat and 10
karat gold chains, bracelets, earrings, charms and rings, as well as a selection
of silver jewelry, all in basic styles at everyday low prices. The Company's
stores are generally located in high traffic concourses of regional shopping
malls and are primarily operated under the names Piercing Pagoda, Plumb Gold and
Silver & Gold Connection.
11
<PAGE> 18
CERTAIN PROJECTED FINANCIAL DATA OF THE COMPANY. Prior to entering into
the Merger Agreement, Parent conducted a due diligence review of the Company and
in connection with such review received certain projections of the Company's
future operating performance (the "Projections"). The Company does not, in the
ordinary course, publicly disclose projections and the Projections were not
prepared with a view to public disclosure. The Company has advised Parent and
Purchaser that the Projections were prepared by the Company's management based
on numerous assumptions including, among others, projections of revenues,
operating income, benefits and other expenses, depreciation and amortization,
capital expenditure and working capital requirements. No assurances can be given
with respect to any such assumptions. The Projections do not give effect to the
Offer or the potential combined operations of Parent and the Company or any
alterations Parent may make to the Company's operations or strategy after the
consummation of the Offer. The information set forth below is presented for the
limited purpose of giving the stockholders access to the material financial
projections prepared by the Company's management that were made available to
Parent and Purchaser in connection with the Merger Agreement and the Offer.
The Projections reflect estimated total sales for the year ending March 31,
2001 which range from $294,466,000 to $300,000,000; reflect estimated total cost
of sales for the year ending March 31, 2001 which range from $150,950,000 to
$152,895,000; reflect estimated operating income for the year ending March 31,
2001 which range from $30,116,000 to $31,173,000; and reflect estimated net
income, after taxes, for the year ending March 31, 2001 which range from
$15,942,000 to $16,447,000. The Projections also include quarterly estimates for
the year ending March 31, 2001 which generally aggregate to the estimates
reflected for the year ending March 31, 2001 presented above. In addition, the
Projections reflect estimated total sales of $330,000,000 for the year ending
March 31, 2002; reflect estimated total cost of sales of $164,340,000 for the
year ending March 31, 2002; reflect estimated operating income of $40,920,000
for the year ending March 31, 2002; and reflect estimated net income, after
taxes, of $22,518,000 for the year ending March 31, 2002. None of Parent,
Purchaser or any of their affiliates or representatives had any role in the
preparation of the Projections, and Purchaser therefore has no basis for
determining their reliability.
CERTAIN MATTERS DISCUSSED HEREIN, INCLUDING, BUT NOT LIMITED TO THE
PROJECTIONS, CONTAIN FORWARD-LOOKING STATEMENTS THAT INVOLVE RISKS AND
UNCERTAINTIES. FORWARD-LOOKING STATEMENTS INCLUDE THE INFORMATION SET FORTH
ABOVE UNDER "CERTAIN PROJECTED FINANCIAL DATA OF THE COMPANY". WHILE PRESENTED
WITH NUMERICAL SPECIFICITY, THE PROJECTIONS WERE NOT PREPARED BY THE COMPANY IN
THE ORDINARY COURSE AND ARE BASED UPON A VARIETY OF ESTIMATES AND HYPOTHETICAL
ASSUMPTIONS THAT MAY NOT BE ACCURATE, MAY NOT BE REALIZED, AND ARE ALSO
INHERENTLY SUBJECT TO SIGNIFICANT BUSINESS, ECONOMIC AND COMPETITIVE
UNCERTAINTIES AND CONTINGENCIES, EACH OF WHICH IS DIFFICULT TO PREDICT, AND ARE,
IN MOST INSTANCES, BEYOND THE CONTROL OF THE COMPANY. ACCORDINGLY, THERE CAN BE
NO ASSURANCE THAT ANY OF THE PROJECTIONS WILL BE REALIZED AND THE ACTUAL RESULTS
FOR THE YEARS ENDING MARCH 31, 2001 AND MARCH 31, 2002 MAY VARY MATERIALLY FROM
THOSE SHOWN ABOVE.
The Projections were not prepared in accordance with generally accepted
accounting principles, and neither the Company's nor Parent's independent
accountants have examined or compiled any of the Projections or expressed any
conclusion or provided any other form of assurance with respect to these
Projections and accordingly assume no responsibility for these Projections.
These Projections were not prepared with a view to public disclosure or
compliance with the published guidelines of the Commission or the guidelines
established by the American Institute of Certified Public Accountants regarding
projections, which would require a more complete presentation of data than as
shown above. THE INCLUSION OF THE PROJECTIONS HEREIN SHOULD NOT BE REGARDED AS A
REPRESENTATION EITHER BY PARENT, PURCHASER OR THE COMPANY OR ANY OTHER PERSON
THAT THE PROJECTED RESULTS WILL BE ACHIEVED. THE PROJECTIONS SHOULD BE READ IN
CONJUNCTION WITH THE HISTORICAL FINANCIAL INFORMATION
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OF THE COMPANY. NONE OF PARENT, PURCHASER, THE COMPANY, OR ANY OTHER PERSON
ASSUMES ANY RESPONSIBILITY FOR THE ACCURACY OR VALIDITY OF THE FOREGOING
PROJECTIONS.
AVAILABLE INFORMATION. The Company is subject to the informational filing
requirements of the Exchange Act and, in accordance therewith, is required to
file periodic reports, proxy statements and other information with the
Commission relating to its business, financial condition and other matters.
Information as of particular dates concerning the Company's directors and
officers, their remuneration, stock options granted to them, the principal
holders of the Company's securities and any material interest of such persons in
transactions with the Company is required to be disclosed in proxy statements
distributed to the Company's stockholders and filed with the Commission. Such
reports, proxy statements and other information should be available for
inspection at the public reference facilities maintained by the Commission at
Judiciary Plaza, 450 Fifth Street, N.W., Washington, D.C. 20549, and also should
be available for inspection at the Commission's regional offices located at
Seven World Trade Center, 13th Floor, New York, New York 10048 and the
Northwestern Atrium Center, 500 West Madison Street, Suite 1400, Chicago,
Illinois 60661-2511. Copies of such materials may also be obtained by mail, upon
payment of the Commission's customary fees, by writing to its principal office
at Judiciary Plaza, 450 Fifth Street, N.W., Washington, D.C. 20549. The
Commission also maintains a World Wide Website on the Internet at
http://www.sec.gov that contains reports and other information regarding issuers
that file electronically with the Commission. The phone number of the Commission
is (202) 942-8088.
SECTION 8. CERTAIN INFORMATION CONCERNING PURCHASER AND PARENT.
GENERAL. Purchaser is a newly incorporated Delaware corporation organized
in connection with the Offer and the Merger and has not carried on any
activities other than in connection with the Offer and the Merger. The principal
offices of Purchaser are located at 901 W. Walnut Hill Lane, Irving, Texas
75038-1003 and its telephone number is (972) 580-4000. Purchaser is an indirect
wholly owned subsidiary of Parent.
Until immediately prior to the time that Purchaser will purchase Shares
pursuant to the Offer, it is not anticipated that Purchaser will have any
significant assets or liabilities or engage in activities other than those
incident to its formation and capitalization and the transactions contemplated
by the Offer and the Merger. Because Purchaser is newly formed and has minimal
assets and capitalization, no meaningful financial information regarding
Purchaser is available.
Parent is the largest specialty retailer of fine jewelry in North America.
At July 31, 2000, Parent operated approximately 1,390 retail jewelry stores
located primarily in shopping malls throughout the United States, Canada and
Puerto Rico. Parent operates under four brand names: Zales Jewelers(R), Gordon's
Jewelers(R), Bailey Banks & Biddle Fine Jewelers(R), and Peoples Jewellers(R).
Zales Jewelers provides traditional, moderately priced jewelry to a broad range
of customers. Gordon's Jewelers offers contemporary merchandise targeted to
regional preferences at somewhat higher price points than Zales Jewelers. Bailey
Banks & Biddle Fine Jewelers operates upscale jewelry stores which are
considered among the finest jewelry stores in their markets. Under the Zales
Jewelers brand name, at July 31, 2000, the Company also operated 68 Zales Outlet
stores in 28 states and offered online shopping at http://www.zales.com. Parent
acquired substantially all of the assets of Peoples Jewellers Corporation, a
Canadian company, effective May 23, 1999. Peoples Jewellers offers traditional
moderately priced jewelry to customers across Canada. Parent is incorporated in
Delaware. Its principal executive offices are located at 901 W. Walnut Hill
Lane, Irving, Texas 75038-1003, its telephone number at that address is (972)
580-4000, and its internet address is http://www.zalecorp.com.
AVAILABLE INFORMATION. Parent is subject to the informational filing
requirements of the Exchange Act and, in accordance therewith, is required to
file periodic reports, proxy statements and other information with the
Commission relating to its business, financial condition and other matters.
Information as of particular dates concerning Parent's directors and officers,
their remuneration, stock options granted to them, the principal holders of
Parent's securities and any material interest of such
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persons in transactions with Parent is required to be disclosed in proxy
statements distributed to Parent's stockholders and filed with the Commission.
You may inspect or copy these reports, proxy statements and other information at
the Commission's public reference facility and they should also be available for
inspection in the same manner as set forth with respect to the Company in
"Section 7. Certain Information Concerning the Company."
OTHER INFORMATION. The name, citizenship, business address, business
telephone number, principal occupation or employment, and five-year employment
history for each of the directors and executive officers of Purchaser and Parent
and certain other information are set forth in Schedule I hereto. Except as
described in this Offer to Purchase and in Schedule I hereto, none of Parent,
Purchaser or, to the best knowledge of such corporations, any of the persons
listed on Schedule I to the Offer of Purchase has during the last five years (i)
been convicted in a criminal proceeding (excluding traffic violations or similar
misdemeanors) or (ii) been a party to any judicial or administrative proceeding
(except for matters that were dismissed without sanction or settlement) that
resulted in a judgment, decree or final order enjoining the person from future
violations of, or prohibiting activities subject to, federal or state securities
laws or finding any violation of such laws.
Except as described in this Offer to Purchase, (i) none of Purchaser,
Parent nor, to the best knowledge of Purchaser and Parent, any of the persons
listed in Schedule I to this Offer to Purchase or any subsidiary of Purchaser,
Parent or any of the persons so listed, beneficially owns or has any right to
acquire any Shares and (ii) none of Purchaser, Parent nor, to the best knowledge
of Purchaser and Parent, any of the persons or entities referred to above nor
any director, executive officer or subsidiary of any of the foregoing has
effected any transaction in the Shares during the past 60 days. Please see
"Section 10. Background of the Offer and the Merger."
Except as provided in the Merger Agreement and the Tender and Voting
Agreement and as otherwise described in this Offer to Purchase, none of
Purchaser, Parent nor, to the best knowledge of Purchaser and Parent, any of the
persons listed in Schedule I to this Offer to Purchase, has any agreement,
arrangement, understanding, whether or not legally enforceable, with any other
person with respect to any securities of the Company, including, but not limited
to, the transfer or voting of such securities, joint ventures, loan or option
arrangements, puts or calls, guaranties of loans, guaranties against loss or the
giving or withholding of proxies, consents or authorizations. Except as set
forth in this Offer to Purchase, during the past two years, neither Purchaser
nor Parent nor, to the best knowledge of Purchaser and Parent, any of the
persons listed on Schedule I hereto, has had any transaction with the Company or
any of its executive officers, directors or affiliates that is required to be
reported under the rules and regulations of the Commission applicable to the
Offer. Except as set forth in this Offer to Purchase, during the past two years,
there have been no negotiations, transactions or material contacts between any
of Purchaser, Parent, or any of their respective subsidiaries or, to the best
knowledge of Purchaser and Parent, any of the persons listed in Schedule I to
this Offer to Purchase, on the one hand, and the Company or its affiliates, on
the other hand, concerning a merger, consolidation or acquisition, tender offer
for or other acquisition of any class of the Company's securities, an election
of the Company's directors or a sale or other transfer of a material amount of
assets of the Company.
SECTION 9. FINANCING OF THE OFFER AND THE MERGER.
The total amount of funds required by Purchaser to consummate the Offer and
the Merger and to pay related fees and expenses is estimated to be approximately
$202 million. Purchaser will obtain all of such funds from Parent or its
affiliates. Parent and its affiliates will provide such funds from existing
resources.
SECTION 10. BACKGROUND OF THE OFFER AND THE MERGER.
BACKGROUND OF THE OFFER
Prior to April 1, 2000, Mr. Robert J. DiNicola, Parent's Chairman, and
Richard H. Penske, the Company's Chairman, periodically discussed general
business conditions and opportunities, including the
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potential acquisition of the Company by Parent. These discussions were informal
and did not reach any material level of detail.
On March 28, 2000, Parent and the Company entered into the Mutual
Nondisclosure Agreement (as defined herein), pursuant to which the parties
agreed to provide, among other things, for the confidential treatment of their
discussions and the exchange of certain confidential information.
On April 1, 2000, Mr. DiNicola, Beryl Raff, Parent's Chief Executive
Officer, and Alan Shor, Parent's Chief Operating Officer, met with Mr. Penske,
John Eureyecko, the Company's President, and Alan Hoefer, a board member of the
Company, to discuss a possible acquisition of the Company by Parent. These
discussions were at a general level, and the Company's representatives provided
a presentation on the Company's business to the Parent's representatives.
Further discussions regarding business conditions and the benefits of a
strategic combination ensued. The Company also provided to Parent general
information concerning the Company's operations.
On various occasions between April 1, 2000 and April 28, 2000, Mr.
Eureyecko spoke with Mr. Shor and Sue Gove, Parent's Chief Financial Officer,
concerning the Company's operations and financial results. During this time, Mr.
Eureyecko sent to Parent additional background materials describing the
Company's business.
On May 1, 2000, a conference call was held among Mr. DiNicola and Mr. Shor
of Parent and Mr. Penske and Mr. Eureyecko of the Company. The discussion
continued earlier talks of a possible acquisition, and also included a
discussion on the price per share that Parent was prepared to propose. At that
time, the Company responded with an acquisition range of between $26 and $28 per
share.
On May 3, 2000, Mr. DiNicola spoke with Mr. Penske and Mr. Eureyecko and
indicated that Parent was prepared to offer a per share price of between $18 and
$20. Mr. Penske responded by stating that Parent's range was unacceptable, but
that the Company would consider a per share offer of greater than $25.
On May 16, 2000, Mr. DiNicola, Mr. Shor, Mrs. Raff, and Mrs. Gove met with
Mr. Penske and Mr. Eureyecko concerning the ongoing discussions to acquire the
Company. At that meeting, additional information was provided to the Company,
and discussions took place concerning current business conditions and the
synergies of a combined business. The Company proposed an acquisition price of
between $23 and $24.50 per share. Parent responded with a purchase price range
of between $21 and $23 per share. No agreement was reached.
On May 20, 2000, further discussions were held between Mr. Shor and Mr.
Eureyecko concerning the price Parent was prepared to offer for the purchase of
the Company. Mr. Shor indicated that Parent was prepared to offer $21 per share
for the Company, subject to satisfactory completion of due diligence and
negotiation of a definitive merger agreement. At that time, Mr. Eureyecko
advised Mr. Shor that the Company would retain ING Barings as its financial
advisor.
On May 25, 2000, Mr. Shor and Mr. Eureyecko continued to discuss purchase
price. At that time, Mr. Shor again indicated that Parent was prepared to offer
$21 per share, to which Mr. Eureyecko responded that he did not believe the
price adequately reflected the Company's value. In response, Mr. Eureyecko
proposed a $23 per share acquisition price.
On May 30, 2000, Mr. Eureyecko and David Harris, a Managing Director of ING
Barings, contacted Mr. Shor regarding the continued negotiations on price and
commencement of due diligence. Mr. Shor maintained Parent's proposed offer price
of $21 per share for the purchase of the Company and expressed the need to reach
tentative agreement on price prior to beginning due diligence.
On various occasions between June 1 and June 15, 2000, Mr. Shor, Mr.
Eureyecko and Mr. Harris continued to negotiate the acquisition price for the
Company. No agreement was reached on the issue of price.
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On June 26, 2000, Mr. Shor had a telephone conference with Mr. Harris
regarding the purchase price for the Company. Mr. Shor maintained a proposed
offer price of $21 per share, and Mr. Harris responded that the Company's Board
did not believe that to be an adequate offer.
On July 2, 2000, Mr. DiNicola spoke with Mr. Penske, and proposed a
purchase price of $21.875 per share, subject to satisfactory completion of due
diligence and negotiation of a definitive agreement. Mr. Penske indicated that
$21.875 per Share might be acceptable to the Company's Board of Directors,
subject to other terms being worked out.
On July 7, 2000, Parent and the Company entered into the Letter Agreement
(as defined herein), pursuant to which the parties agreed to make no public
announcements regarding their negotiations, and pursuant to which the Company
agreed that until August 15, 2000, it would not solicit, cooperate, facilitate,
encourage, or enter into an agreement with another party regarding the sale of a
substantial portion of the stock or assets of the Company. Also on July 7, 2000,
outside legal counsel for the Company delivered a draft of the Merger Agreement
to Parent's outside legal counsel. From July 7, 2000 through August 10, 2000,
the parties, together with their respective outside legal counsel, conducted
negotiations with respect to the Merger Agreement and the Tender and Voting
Agreement.
In addition, on July 11, 2000, representatives of Parent commenced due
diligence at the Company's offices in Bethlehem, Pennsylvania. Subsequently,
representatives of Parent's outside legal counsel and independent auditors
joined the due diligence review process.
Throughout Parent's due diligence review of the Company, Parent and the
Company continued to negotiate the purchase price for the Company, as well as
other terms of the Merger Agreement and the Tender and Voting Agreement. On
August 10, 2000 Parent and the Purchaser reached agreement on a price of $21.50
per share and continued to negotiate the terms of the Merger Agreement and the
Tender and Voting Agreement.
On August 10, 2000, both the Company's and Parent's Boards of Directors met
and unanimously approved the Merger Agreement and the transactions contemplated
thereby, including the Offer and the Merger.
On August 11, 2000, Parent, Purchaser and the Company executed and
delivered the Merger Agreement and issued a press release announcing the
execution of the Merger Agreement and the transactions contemplated thereby. On
August 22, 2000, the Purchaser commenced the Offer.
THE MERGER AGREEMENT
The following is a summary of certain provisions of the Merger Agreement.
This summary is qualified in its entirety by reference to the Merger Agreement,
which has been filed as an exhibit to the tender offer statement on Schedule TO
(the "Schedule TO") filed with the Commission by Purchaser and Parent in
connection with the Offer and is incorporated by reference. The Merger Agreement
may be examined and copies may be obtained at the places set forth in "Section
7. Certain Information Concerning the Company" or downloaded for free at the
Commission's website at http://www.sec.gov. Defined terms used herein and not
defined herein shall have the respective meanings assigned to those terms in the
Merger Agreement.
THE OFFER. The Merger Agreement provides for the commencement of the Offer
as promptly as reasonably practicable, after the initial public announcement of
Purchaser's intention to commence the Offer. The obligation of Purchaser to
accept for payment Shares tendered pursuant to the Offer is subject to the
satisfaction of the Minimum Condition, the Antitrust Condition and certain other
conditions that are described in "Section 14. Certain Conditions of the Offer"
hereof. Purchaser and Parent have agreed that no change in the Offer may be made
that decreases the price per Share payable in the Offer, reduces the maximum
number of Shares to be purchased in the Offer, changes the form of the
consideration payable in the Offer, alters or changes the conditions to the
Offer as set forth in "Section 14. Certain Conditions of the Offer," waives the
Minimum Condition or modifies or amends any other condition to the Offer in any
manner that is materially adverse to the holders of Shares.
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THE MERGER. The Merger Agreement provides that, upon the terms and subject
to the conditions thereof, and in accordance with Delaware Law, Purchaser shall
be merged with and into the Company. As a result of the Merger, the separate
corporate existence of Purchaser will cease and the Company will continue as the
Surviving Corporation and will become an indirect wholly owned subsidiary of
Parent. Upon consummation of the Merger, each issued and then outstanding Share
(other than any Shares owned by Parent, the Company, or any subsidiary of Parent
or the Company, and any Shares that are held by stockholders who have not voted
in favor of the Merger or consented thereto in writing and who shall have
demanded properly in writing appraisal for such Shares in accordance with
Delaware Law) shall be converted automatically into the right to receive the
Transaction Consideration.
Pursuant to the Merger Agreement, each share of common stock of Purchaser
issued and outstanding immediately prior to the Effective Time shall be
converted into and exchanged for one validly issued, fully paid and
non-assessable share of common stock, par value $0.01 per share, of the
Surviving Corporation.
The Merger Agreement provides that the directors of Purchaser immediately
prior to the Effective Time will be the initial directors of the Surviving
Corporation and that the officers of the Company immediately prior to the
Effective Time will be the initial officers of the Surviving Corporation.
Subject to the Merger Agreement, at the Effective Time the Restated
Certificate of Incorporation of the Company, as in effect immediately prior to
the Effective Time, will be the Certificate of Incorporation of the Surviving
Corporation. Subject to the Merger Agreement, at the Effective Time, the Bylaws
of Company, as in effect immediately prior to the Effective Time, will be the
Bylaws of the Surviving Corporation.
STOCKHOLDERS' MEETING. Pursuant to the Merger Agreement, the Company,
acting through its Board, shall, if required by Delaware Law in order to
consummate the Merger, duly call, give notice of, convene and hold a special
meeting of its stockholders as soon as practicable following expiration or
termination of the Offer at which the Merger Agreement shall be submitted to the
Company's stockholders for the purpose of acting on the Merger Agreement (the
"Stockholders' Meeting"). If the Minimum Condition is satisfied and Purchaser
acquires in the Offer at least a majority of the outstanding Shares, Purchaser
shall have sufficient voting power to approve the Merger, even if no other
stockholder votes in favor of the Merger.
PROXY STATEMENT. The Merger Agreement provides that the Company shall, if
approval of the Company's stockholders is required by Delaware Law to consummate
the Merger, promptly following consummation of the Offer, file with the
Commission under the Exchange Act a proxy statement and related proxy materials
(the "Proxy Statement") with respect to the Stockholders' Meeting and shall
cause the Proxy Statement and all required amendments and supplements thereto to
be mailed to the holders of Shares at the earliest practicable time. The Company
has agreed to include in the Proxy Statement the unanimous recommendation of the
Board that the stockholders of the Company approve and adopt the Merger
Agreement and shall use all reasonable efforts deemed necessary and advisable to
secure the vote from its stockholders required under applicable law, the
Company's Restated Certificate of Incorporation and the Company's By-Laws for
approval of the Merger Agreement. Parent and Purchaser have agreed to cause all
Shares then owned by them and their subsidiaries to be voted in favor of
approval and adoption of the Merger Agreement. The Merger Agreement provides
that, in the event that Purchaser shall acquire at least 90% of the then
outstanding Shares, Parent, Purchaser and the Company will take all necessary
and appropriate action to cause the Merger to become effective, in accordance
with Delaware Law, as promptly as practicable after such acquisition, without a
meeting of the Company's stockholders.
CONDUCT OF BUSINESS BY THE COMPANY PENDING THE MERGER. Pursuant to the
Merger Agreement, the Company has covenanted and agreed that, during the period
from the date of the Merger Agreement to such time at which the directors of the
Company affiliated with or designated by Parent constitute a majority of the
Company's Board of Directors (the "Board Transition Date"), the Company and its
subsidiaries will each conduct its operations according to its ordinary course
of business, in a manner consistent with past practice. The Merger Agreement
provides that except as contemplated therein, neither
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the Company nor any of its subsidiaries will, prior to the Board Transition
Date, without the prior written consent of Parent:
(a) issue, sell or pledge, or authorize or propose the issuance, sale
or pledge of (i) additional shares of capital stock of any class of the
Company (other than shares of the Company Common Stock that may be issued
pursuant to the Company's Employee Stock Purchase Plan in connection with
amounts withheld on or before August 4, 2000) or its subsidiaries, or
securities convertible into or exchangeable for any such shares, or any
options, warrants, calls, subscriptions or other rights to acquire any such
shares or other convertible or exchangeable securities, other than such
issuance of Shares pursuant to the exercise of Options outstanding on the
date of the Merger Agreement, or (ii) any other securities in respect of,
in lieu of or in substitution for, Shares outstanding on the date of the
Merger Agreement;
(b) purchase, repurchase, redeem or otherwise acquire, or propose to
purchase, repurchase, redeem or otherwise acquire, any outstanding shares
of capital stock of the Company;
(c) declare, set aside or pay any dividend or distribution on any
Shares, or redeem or otherwise acquire any shares of capital stock of the
Company;
(d) propose or adopt any amendments to its Restated Certificate of
Incorporation or By-Laws;
(e) issue, sell, pledge, dispose of, grant, encumber, or authorize the
issuance, sale, pledge, disposition, grant or encumbrance of any material
assets of the Company or any subsidiary, except in the ordinary course of
business and in a manner consistent with past practice;
(f) reclassify, combine, split, subdivide any of its capital stock;
(g) acquire (including, without limitation, by merger, consolidation,
or acquisition of stock or assets or any other business combination) any
corporation, partnership, other business organization or any division
thereof or any material amount of assets, other than pending acquisitions
or minority investments, in each case publicly announced prior to the date
of the Merger Agreement, or, with respect to the acquisition of assets, in
the ordinary course of business consistent with past practice;
(h) incur any indebtedness for borrowed money or issue any debt
securities or assume, guarantee or endorse, or otherwise become responsible
for, the obligations of any person, or make any loans or advances, except
in the ordinary course of business and in a manner consistent with past
practice;
(i) authorize, or make any commitment with respect to (i) any capital
expenditures in excess of $250,000 in the aggregate per month, (ii) any
single capital expenditure which is in excess of $50,000 or (iii) any
single capital project that is reasonably likely to cost $75,000 or more in
the aggregate for the Company and the subsidiaries taken as a whole, (iv)
make or direct to be made any capital investments or equity investments in
any entity, other than investments in any wholly owned subsidiary, or (v)
enter into or amend any contract, agreement, commitment or arrangement with
respect to any matter set forth in this paragraph (i);
(j) increase the compensation payable or to become payable or the
benefits provided to its directors, officers or employees, except for
increases in the ordinary course of business and consistent with past
practice in salaries or wages of employees of the Company or any subsidiary
who are not directors or Executive Officers of the Company, or grant any
severance or termination pay to, or enter into any employment or severance
agreement with, any director, officer or other employee of the Company or
of any subsidiary, or establish, adopt, enter into or amend any collective
bargaining, plan or agreement or Company Benefit Plan for the benefit of
any director, officer or employee;
(k) take any action, other than actions in the ordinary course of
business and consistent with past practice or as required by law, with
respect to accounting policies or procedures;
(l) make any tax election or settle or compromise any United States
federal, state, local or other non-United States income tax liability,
except in the ordinary course of business and in a manner consistent with
past practice;
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(m) pay, discharge or satisfy any claim, liability or obligation
(absolute, accrued, asserted or unasserted, contingent or otherwise), other
than the payment, discharge or satisfaction, in the ordinary course of
business and in a manner consistent with past practice, of liabilities
reflected or reserved against in the Company's balance sheet for the year
ended March 31, 2000 or subsequently incurred in the ordinary course of
business and consistent with past practice;
(n) amend, modify or consent to the termination of any Material
Contract of the Company, or amend, waive, modify or consent to the
termination of the Company's or any subsidiary's rights thereunder, other
than in the ordinary course of business and consistent with past practice;
(o) commence or settle any material litigation, suit, claim, action,
proceeding or investigation;
(p) (i) grant, confer or award any option, warrant, securities
convertible into or exercisable for securities having the right to vote or
any call, subscription or other right or agreement to acquire any shares of
its capital stock or take any action to cause to be exercisable any
otherwise unexercisable option under any Company Benefit Plan (except as
otherwise specifically required by the terms of such unexercisable options
or as otherwise set forth in the Merger Agreement), (ii) accelerate or
waive any or all of the goals, restrictions or conditions imposed under, or
(iii) issue, sell, grant or award any shares of capital stock or any right
to acquire shares of capital stock under any Company Benefit Plan other
than pursuant to the exercise of outstanding options; or
(q) agree in writing or otherwise to take any of the foregoing
actions.
COMPANY BOARD REPRESENTATION. The Merger Agreement provides that, promptly
upon the purchase by Purchaser of Shares pursuant to the Offer and from time to
time thereafter, Purchaser shall be entitled to designate up to such number of
directors, rounded up to the next whole number, on the Board as shall give
Purchaser representation on the Board equal to the product of the total number
of directors on the Board (giving effect to the directors elected pursuant to
this sentence), multiplied by the percentage that the aggregate number of Shares
beneficially owned by Purchaser or any affiliate of Purchaser following such
purchase bears to the total number of Shares then outstanding, and the Company
shall, at such time, promptly take all actions within its power reasonably
necessary to cause Purchaser's designees to be elected as directors of the
Company, including increasing the size of the Board or securing the resignations
of incumbent directors, or both. The Merger Agreement also provides that, at
such times, the Company shall use its reasonable best efforts to cause persons
designated by Purchaser to constitute the same percentage as persons designated
by Purchaser shall constitute of the Board of (i) each committee of the Board,
(ii) each board of directors of each Subsidiary, and (iii) each committee of
each such board, in each case only to the extent permitted by applicable law.
Notwithstanding the foregoing, the Company has agreed to use its reasonable best
efforts to ensure that all of the members of the Board and each committee of the
Board and such boards and committees of the Company's subsidiaries, as of the
date of the Merger Agreement, who are not employees of the Company shall remain
members of the Board and of such boards and committees until the Effective Time.
The Merger Agreement provides that, following the election or appointment
of Purchaser's designees in accordance with the immediately preceding paragraph
and prior to the Effective Time, any amendment of the Merger Agreement, any
extension by the Company of the time for the performance of any of the
obligations or other acts of Parent or Purchaser, or waiver of any of the
Company's rights thereunder, will require the concurrence of a majority of those
directors of the Company then in office who were neither designated by
Purchaser, employees of the Company or any of its subsidiaries nor otherwise
affiliated with Purchaser.
ACCESS TO INFORMATION. Pursuant to the Merger Agreement, upon reasonable
prior notice to the Company, the Company will give Parent and its authorized
representatives reasonable access during normal business hours to the plants,
offices, warehouses and other facilities and to the books and records of it and
its subsidiaries, will permit Parent to make such reasonable inspections during
normal business hours as it may reasonably request and will cause its officers
and those of its subsidiaries to furnish Parent with such financial and
operating data and other information with respect to the business and properties
of
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<PAGE> 26
the Company and its subsidiaries as Parent may from time to time reasonably
request; provided, however, that all such access and inspections shall be
coordinated by Parent with a designee of the Company and shall be conducted in
such manner so as not to unduly interfere with the normal business operations of
the Company or any of its subsidiaries. All such information received by Parent
and its representatives is subject to the Mutual Non-Disclosure Agreement dated
as of March 28, 2000 between Parent and the Company (the "Non-Disclosure
Agreement").
NO SOLICITATION OF TRANSACTIONS. The Company has agreed that neither it
nor any of its subsidiaries shall (and shall direct all of their respective
officers, directors, agents or affiliates, including any investment banker,
attorney, or accountant retained by the Company or its subsidiaries not to)
directly or indirectly (i) solicit, engage in discussions or negotiate with any
person (whether such discussions or negotiations are initiated by the Company or
otherwise) or take any other action intended or designed to facilitate the
efforts of any person (other than Parent) including initiating, soliciting or
encouraging any inquiries or the making or implementation of any Alternative
Acquisition (as defined in the Merger Agreement), (ii) provide any information
with respect to the Company or afford access to the properties, books or records
of the Company to any person, other than Parent, relating to a possible
Alternative Acquisition by any person, other than Parent, or otherwise
facilitate or assist the making of any proposal or offer relating to an
Alternative Acquisition (iii) enter into an agreement with any person, other
than Parent, contemplating or providing for a possible Alternative Acquisition,
or (iv) make or authorize any statement, recommendation or solicitation in
support of any possible Alternative Acquisition by any person, other than by
Parent. Notwithstanding the foregoing, prior to the acceptance for payment of
Shares pursuant to the Offer the Company may, to the extent required by the
fiduciary obligations of the Board, as determined in good faith by the Board
after consultation with outside counsel, in response to an unsolicited bona fide
written proposal for an Alternative Acquisition ("Alternative Acquisition
Proposal") that was made by a person whom the Board determines, in good faith
after consultation with outside counsel and an independent financial advisor, to
be reasonably capable of consummating a Superior Company Proposal (as defined
below), (i) furnish information with respect to the Company to the person or
group making such Alternative Acquisition Proposal and its representatives
pursuant to a confidentiality agreement no less restrictive than the terms of
the Mutual Non-Disclosure Agreement, and (ii) participate in discussions and
negotiations with such person or group and its representatives regarding the
Alternative Acquisition Proposal; provided, that, at least one (1) business day
prior to taking such actions, the Company shall provide Parent with written
notice of its right to take such action and the identity of the person making
the Alternative Acquisition Proposal.
A "Superior Company Proposal" means any bona fide, written proposal not
solicited, initiated or encouraged in violation of the foregoing, made by a
third party to acquire all or substantially all the equity securities or assets
of the Company, pursuant to a tender or exchange offer, a merger, a
consolidation, a liquidation or dissolution, a recapitalization or a sale of all
or substantially all its assets, (i) on terms which a majority of the
disinterested directors of the Company determines, after consultation with its
outside counsel and an independent financial advisor, in its good faith judgment
to represent superior value, from a financial point of view for the holders of
Shares than the Offer and the Merger, taking into account at the time of such
determination all the terms and conditions of such proposal and the Merger
Agreement (including any proposal by Parent to amend the terms of the Merger
Agreement, the Offer and the Merger) and (ii) that is reasonably likely to be
consummated without undue delay, taking into account all financial, regulatory,
legal and other aspects of such proposal.
The Company has also agreed that neither the Board nor any committee
thereof will (i) withdraw or modify, or propose to withdraw or modify in a
manner adverse to Parent or Purchaser, the approval or recommendation by the
Board or any such committee of the Merger Agreement, the Offer, the Merger, or
(ii) approve any letter of intent, agreement in principal, acquisition agreement
or similar agreement relating to any Alternative Acquisition Proposal, or (iii)
approve or recommend, or propose to approve or recommend, any Alternative
Acquisition Proposal. Notwithstanding the foregoing, in the event that, prior to
the time of acceptance for payment of Shares pursuant to the Offer, the Board
receives a Superior Company Proposal and a majority of the disinterested
directors of the Company determine in good faith,
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<PAGE> 27
after consultation with outside counsel, that it is required to do so in order
to comply with their fiduciary obligations, the Board may withdraw its approval
or recommendation of the Offer, the Merger and the Merger Agreement, and may
approve or recommend the Superior Company Proposal.
Subject to the fiduciary obligations of the directors of the Company, the
Company shall, and shall cause its directors, officers, employees, agents and
representatives to, cease immediately and cause to be terminated all discussions
and negotiations regarding any proposal that constitutes, or may reasonably be
expected to lead to, an Alternative Acquisition Proposal.
Nothing contained in the section of the Merger Agreement relating to the
non-solicitation of transactions by the Company shall prohibit the Company from
taking and disclosing to its stockholders a position contemplated by Rules l4d-9
and l4e-2(a) promulgated under the Exchange Act or from making any disclosure to
the Company's stockholders, if the Board determines in good faith, after having
received advice from outside legal counsel, that such action is required under
applicable law.
EMPLOYEE STOCK OPTIONS. The Merger Agreement also provides that,
immediately prior to the Effective Time, all outstanding options to purchase
Shares granted by the Company (whether or not presently exercisable) (each, a
"Company Stock Option"), will be entitled to receive at the Effective Time, in
exchange for the cancellation of such Company Stock Option, an amount in cash
equal to the excess, if any, of (x) the Transaction Consideration over (y) the
per share exercise price of such Company Stock Option, multiplied by the number
of shares of Company Common Stock subject to such Company Stock Option as of the
Effective Time. The Company and Parent have each agreed, to the extent required,
to use their reasonable best efforts to obtain the consent of each holder of
Company Stock Options to the foregoing treatment of such Company Stock Options.
DIRECTORS' AND OFFICERS' INDEMNIFICATION INSURANCE. The Merger Agreement
further provides that for a period of six years from the Effective Time (and
until the disposition of any claims made during, and remaining outstanding at
the end of such six year period) all rights to indemnification existing in
favor, and all limitations on the personal liability of the directors, officers,
employees, agents or trustees of the Company or any of its subsidiaries provided
for in the Company's Restated Certificate of Incorporation or Bylaws will
continue in full force and effect. The Surviving Corporation shall not be liable
for any settlement effected without its written consent (which consent shall not
be unreasonably withheld or delayed); and provided further, that, in the event
that any claim or claims for indemnification are asserted or made within such
six-year period, all rights to indemnification in respect of any such claim or
claims shall continue until the disposition of any and all such claims. The
Indemnified Parties as a group may retain only one law firm (plus local counsel,
if applicable) to represent them with respect to any single action at the
expense of the indemnifying person unless there is, under applicable standards
of professional conduct, a material conflict on any significant issue between
the positions of any two or more Indemnified Parties, in which case each
Indemnified Person with respect to whom such a conflict exists (or group of such
Indemnified Persons who among them have no such conflict) may retain one
separate law firm. Any such legal counsel shall be reasonably satisfactory to
the indemnifying person, and the indemnifying person shall pay the reasonable
legal fees and expenses of such legal counsel.
The Merger Agreement also provides that the Surviving Corporation shall
maintain in effect for six years from the Effective Time, the current directors'
and officers' liability insurance policies maintained by the Company, or may
substitute therefor policies that are not materially less favorable, with
respect to matters occurring prior to the Effective Time; provided, however,
that in no event shall the Surviving Corporation be required to expend more than
an amount per year equal to 150% of current annual premiums paid by the Company
for such insurance (which premiums the Company has represented to Parent and
Purchaser to be $103,000 per annum in the aggregate).
Parent, Purchaser and the Company have also agreed that in the event the
Company or the Surviving Corporation or any of their respective successors or
assigns (i) consolidates with or merges into any other person and shall not be
the continuing or surviving corporation or entity of such consolidation or
merger or (ii) transfers all or substantially all of its properties and assets
to any person, then and in each such case, proper provision shall be made so
that the successors and assigns of the Company or the Surviving
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<PAGE> 28
Corporation, as the case may be, or at Parent's option, Parent, shall assume the
foregoing indemnification obligations.
REASONABLE BEST EFFORTS. The Merger Agreement provides that, subject to
its terms and conditions, each of the parties thereto will (i) promptly effect
all necessary filings under the HSR Act and use its reasonable best efforts to
secure all government clearances (including by taking all reasonable steps to
avoid or set aside any preliminary or permanent injunction or other order of any
federal or state court of competent jurisdiction or other governmental
authority), and (ii) use its reasonable efforts to take, or cause to be taken,
all action, and to do, or cause to be done, all other things necessary, proper
or advisable under applicable laws and regulations to consummate and make
effective the transactions contemplated by the Merger Agreement. In particular,
Parent and the Company will use their respective reasonable efforts to obtain
all other consents, authorizations, orders and approvals required in connection
with, and waivers of any violations, breaches and defaults that may be caused
by, the consummation of the Merger or the other transactions contemplated by the
Merger Agreement, other than consents, authorizations, orders, approvals and
waivers the failure to obtain which would not (A) be material to the
consummation of the Merger or the other transactions contemplated by the Merger
Agreement or (B) have a Material Adverse Effect (as defined below). In case at
any time after the Effective Time any further action is necessary or desirable
to carry out the purposes of the Merger Agreement, the proper officers and
directors of each party to the Merger Agreement shall take all such necessary
action, including, without limitation, providing for the sale or other
disposition or the holding separate (through the establishment of a trust or
otherwise) of particular assets or categories of assets, or businesses, of the
Company or any of its subsidiaries.
REPRESENTATIONS AND WARRANTIES. The Merger Agreement contains various
customary representations and warranties of the parties thereto including
representations by the Company as to the absence of certain changes or events
concerning the Company's business, absence of undisclosed liabilities, absence
of litigation, property and leases, employee benefit plans, labor matters,
compliance with law, intellectual property, taxes, insurance, material
contracts, environmental matters and brokers.
Certain representations and warranties in the Merger Agreement are
qualified as to "materiality" or "Material Adverse Effect." For purposes of the
Merger Agreement and this Offer to Purchase, the term "Material Adverse Effect"
means any adverse change in financial condition, assets, liabilities, business,
or results of operations of the Company and its subsidiaries which is material
to the Company and its subsidiaries taken as a whole or the ability of the
Company to perform its obligations under the Merger Agreement or to consummate
the transactions contemplated thereby, excluding any changes relating to general
economic or conditions affecting at any time the Company or any of its
subsidiaries of the industry or industries in which any of them operate.
CONDITIONS TO THE MERGER. Under the Merger Agreement, the respective
obligations of each party to effect the Merger are subject to the satisfaction,
at or prior to the Effective Time, of the following conditions:
(a) if and to the extent required by Delaware Law, the Merger
Agreement shall have been approved and adopted by the affirmative vote of
the stockholders of the Company;
(b) all regulatory approvals required to consummate the transactions
contemplated by the Merger Agreement shall have been obtained and shall
remain in full force and effect and all statutory waiting periods in
respect thereof shall have expired;
(c) no statute, rule or regulation shall have been enacted or
promulgated by any governmental authority which prohibits the consummation
of the Merger;
(d) there is no order or injunction of a United States federal or
state court of competent jurisdiction in effect precluding consummation of
the Merger;
(e) Purchaser shall have purchased Shares validly tendered and not
withdrawn pursuant to the Offer.
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<PAGE> 29
TERMINATION. The Merger Agreement provides that it may be terminated and
the Merger contemplated thereby may be abandoned at any time prior to the
Effective Time, notwithstanding any requisite approval and adoption of the
Merger Agreement by the stockholders of the Company:
(a) by mutual written consent of Parent and the Company;
(b) by Parent if an occurrence or circumstance (except where Parent's
or Purchaser's failure to fulfill any of their respective obligations under
the Merger Agreement is the cause of or resulted in such occurrence or
circumstance or except where there has been a material breach of any
material representation or warranty on the part of Parent or Purchaser
which has not been cured) has rendered the conditions of the Offer, as set
forth in "Section 14. Certain Conditions of the Offer" incapable of being
satisfied, provided that Purchaser shall have failed to commence the Offer
or the Offer shall have been terminated or shall have expired without
Purchaser having purchased any Shares pursuant to the Offer;
(c) by either Parent or the Company if any court of competent
jurisdiction or other Governmental Authority within the United States shall
have issued an order, decree or ruling or taken any other action
permanently restraining, enjoining or otherwise prohibiting the Merger and
such order, decree, ruling or other action shall have become final and
nonappealable;
(d) by Parent prior to the purchase of Shares pursuant to the Offer,
if:
(i) Purchaser discovers that any representation or warranty made by
the Company in the Merger Agreement is untrue at the time such
representation or warranty was made or will not be true and correct as
of the date of consummation of the Offer, except where the failure to be
so true and correct would not have a Material Adverse Effect, provided
that if any such failure to be so true and correct is capable of being
cured prior to December 31, 2000 (the "Final Date"), then Parent and
Purchaser may not terminate the Merger Agreement under this paragraph
(d) until the Final Date;
(ii) if there has been a breach of any covenant or agreement by the
Company under the Merger Agreement resulting in a Material Adverse
Effect which is not be capable of being cured prior to the Final Date;
(iii) the Board of Directors or any committee thereof fails to
recommend approval and adoption of the Merger Agreement and the Merger
or withdraws or amends or modifies in a manner adverse to Parent and
Purchaser its recommendation or approval, or makes any recommendation
with respect to an Alternative Acquisition other than a recommendation
to reject such Alternative Acquisition or has resolved to do any of the
foregoing; or
(iv) there have not been validly tendered and not withdrawn prior
to the expiration of the Offer at least a majority of the Shares, on a
fully diluted basis, and on or prior to such date a person shall have
made a written Alternative Acquisition Proposal to the Company and not
withdrawn such proposal;
(e) by the Company, if:
(i) the Company discovers that any representation or warranty made
by Parent or Purchaser in the Merger Agreement is untrue at the time
such representation or warranty was made or will not be true as of the
date of consummation of the Offer, except where the failure to be so
true and correct would not materially adversely affect (or materially
delay) the consummation of the Offer or the Merger, provided that if any
such failure to be so true is capable of being cured prior to the Final
Date, then the Company may not terminate the Merger Agreement until the
Final Date and unless at such time the matter has not been cured;
(ii) there has been a material breach of any covenant or agreement
in the Merger Agreement on the part of Parent or Purchaser which
materially adversely affects (or materially
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<PAGE> 30
delays) the consummation of the Offer or the Merger which is not be
capable of being cured prior to the Final Date; or
(iii) such termination is necessary to allow the Company to enter
into an agreement with respect to an Alternative Acquisition Proposal in
compliance with the Merger Agreement (provided that the termination
described in this clause (iii) shall not be effective unless and until
the Company shall have paid to Parent in full the fee and expense
reimbursement described in the Merger Agreement); or
(f) by the Company if there has not been a material breach of any
representation, warranty, covenant or agreement by the Company which has
not been cured and (i) Purchaser failed to commence the Offer within the
time required by the Merger Agreement, (ii) the Offer has been terminated
or has expired without the Purchaser having purchased any Shares pursuant
to the Offer, or (iii) Purchaser has failed to pay for Shares pursuant to
the Offer prior to the Final Date.
EFFECT OF TERMINATION. In the event of the termination of the Merger
Agreement, the Merger Agreement shall become void, and there shall be no
liability on the part of any party thereto, except (i) as set forth below under
the section entitled "Fees" and (ii) nothing in the Merger Agreement shall
relieve any party from liability for any breach thereof prior to the date of
such termination. The Non-Disclosure Agreement shall survive any termination of
the Merger Agreement.
FEES. The Merger Agreement provides that in the event that (i) if Parent
or Purchaser shall have terminated the Merger Agreement pursuant to the
provisions of (d)(i), (d)(ii), or (d)(iii) above, or the Company shall have
terminated the Merger Agreement pursuant to the provisions of (e)(iii) above,
then the Company shall promptly reimburse Parent for all documented
out-of-pocket expenses of Parent and its subsidiaries, up to an amount of
$1,000,000 incurred in connection with the transactions contemplated by the
Merger Agreement. In addition, if Parent or Purchaser shall have terminated the
Merger Agreement pursuant to the provisions of (d)(iii) above or the Company
shall have terminated the Merger Agreement pursuant to the provisions of
(e)(iii) above, then in any such case the Company shall, (i) in the event of any
such termination by Parent or Purchaser within one business day after the date
of such termination, or (ii) in the event of any such termination by the
Company, prior to such termination and as a condition to the effectiveness of
such termination, pay Parent a termination fee of $5,000,000. However, if the
Company shall have terminated the Merger Agreement pursuant to the provisions of
(e)(i), (e)(ii) or (f)(i) above, then Parent shall promptly reimburse the
Company for all out-of-pocket expenses of Company and its subsidiaries, up to an
amount of $1,000,000, incurred in connection with the transactions contemplated
by the Merger Agreement. Notwithstanding any other provision of the Merger
Agreement, no fee or expense reimbursement shall be paid to any party who shall
be in material breach of its obligations hereunder.
THE TENDER AND VOTING AGREEMENT
The following is a summary of certain provisions of the Tender and Voting
Agreement, dated as of August 11, 2000 among Parent, Purchaser, and Mr. Richard
H. Penske and certain directors, executive officers and stockholders of the
Company (the "Tender and Voting Agreement"). This summary is qualified in its
entirety by reference to the Tender and Voting Agreement, which has been filed
as an exhibit to the Schedule TO filed with the Commission by Purchaser and
Parent in connection with the Offer and is incorporated by reference. The Tender
and Voting Agreement may be examined and copies may be obtained at the places
set forth in "Section 7. Certain Information Concerning the Company" or
downloaded for free at the Commission's website at http://www.sec.gov.
TENDER OF SHARES. Mr. Penske, John F. Eureyecko, Barry R. Clauser, Sharon
J. Zondag, Gilbert P. Hollander, Brandon R. Lehman, Alan R. Hoefer, Mark A.
Randol, Patrick Capital, FLP, and various trusts established for the benefit of
Richard H. Penske, Patricia L. Penske, Victoria L. Penske, Crislyn A. Penske and
R. Stephen Penske (the "Stockholders") have agreed to tender all of their Shares
in the Offer, and not to withdraw such Shares from the Offer unless the Offer is
terminated.
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<PAGE> 31
VOTING AGREEMENT. Each Stockholder further agreed that until the
termination of the Tender and Voting Agreement, at any meeting of the
stockholders of the Company, however called, and in any action by consent of the
stockholders of the Company, he will appoint Parent and Purchaser or a nominee
nominee of Parent and Purchaser as his proxy to vote his Shares (i) in favor of
the approval and adoption of the Merger Agreement, the Merger and all the
transactions contemplated by the Merger Agreement and otherwise in such manner
as may be necessary to consummate the Merger; and (ii) against any action,
transaction or agreement that would result in a material breach of any covenant,
obligation, agreement, representation or warranty of the Company under the
Merger Agreement. In addition, except as otherwise agreed to in writing by
Parent, (i) against any extraordinary corporate transaction, such as a merger,
consolidation or other business combination involving the Company or any of its
subsidiaries; (ii) a sale, lease or transfer of a material amount of assets of
the Company or any of its subsidiaries, (iii) a change in a majority of board of
directors of the Company; (iv) a change in capitalization of the Company or an
amendment to the Company's Restated Certificate of Incorporation or By-Laws; (v)
any material change in the Company's corporate structure or business; or (vi)
any action that would materially delay or impair the ability of the Company to
consummate the transitions provided for in the Merger Agreement.
IRREVOCABLE PROXY. Pursuant to the Tender and Voting Agreement, each
Stockholder irrevocably appointed Parent and each of its officers as such
Stockholder's attorney, agent and proxy, with full power of substitution, to
vote and otherwise act (by written consent or otherwise) with respect to his
Shares at any meeting of stockholders of the Company or by written consent in
lieu of any such meeting or otherwise, on the matters and in the manner
specified in the paragraph above.
Pursuant to the Tender and Voting Agreement, each Stockholder agreed to
revoke all other proxies and powers of attorney with respect to his Shares, and
agreed that no subsequent proxy or power of attorney will be given or written
consent executed (and if given or executed, shall not be effective) by him with
respect thereto.
NO DISPOSITION OR ENCUMBRANCE OF SHARES. Each Stockholder further agreed
that, except as contemplated by the Tender and Voting Agreement, he will not (i)
sell, offer for sale, transfer, tender, pledge, assign, hypothecate or otherwise
dispose of, grant a proxy or powers of attorney with respect to, deposit into
any voting trust, enter into any voting agreement, or create or permit to exist
any liens of any nature whatsoever with respect to, any of his Shares, (ii)
other than as contemplated by the Tender and Voting Agreement, take any action
that would make any representation or warranty of him untrue or incorrect in any
material respect or have the effect of preventing or disabling him from
performing his material obligations, or (iii) directly or indirectly, initiate,
solicit or encourage any person to take actions that could reasonably be
expected to lead to the occurrence of any of the foregoing.
NO SOLICITATION OF TRANSACTIONS. Subject to his fiduciary duties and
obligations as an officer or director of the Company, each Stockholder has
agreed that until the date of termination of the Merger Agreement, he will not,
directly or indirectly, solicit, initiate, facilitate, including by furnishing
any information to any person, or encourage the submission of any Alternative
Acquisition Proposal or any proposal that may reasonably be expected to lead to
an Alternative Acquisition Proposal.
TERMINATION. A Stockholder's obligation under the Tender and Voting
Agreement will terminate upon the purchase of all Shares beneficially owned by
such Stockholder pursuant to the Offer, or on the earlier to occur of (i) the
effective time of the Merger or (ii) the termination of the Merger Agreement.
THE RESTRICTIVE COVENANT AGREEMENT
The following is a summary of certain provisions of the Restrictive
Covenant Agreement, dated August 11, 2000, among Parent, the Company and Richard
H. Penske (the "Restrictive Covenant Agreement"). This summary is qualified in
its entirety by reference to the Restrictive Covenant Agreement, which has been
filed as an exhibit to the Schedule TO filed with the Commission by Purchaser
and Parent in connection with the Offer and is incorporated herein by reference.
The Restrictive Covenant Agreement
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<PAGE> 32
may be examined and copies may be obtained at the places set forth in "Section
7. Certain Information Concerning the Company" or downloaded for free at the
Commission's website at http://www.sec.gov.
NONCOMPETITION. Pursuant to the Restrictive Covenant Agreement, Mr. Penske
has agreed that, during the five year period following the purchase of Shares in
the Offer by Purchaser, he will not, without the prior consent of Parent, enter
into or take any action in furtherance of a Competitive Position (as defined in
the Restrictive Covenant Agreement) within North America. However, under the
Restrictive Covenant Agreement, Mr. Penske will be permitted to open one retail
jewelry store after a period of three years from the date of the Restrictive
Covenant Agreement.
NONSOLICITATION. The Restrictive Covenant Agreement also provides that
during the five year period following the purchase of Shares in the Offer by
Purchaser, Mr. Penske will not, without the prior written consent of Parent,
either directly or indirectly, for or on behalf of any Competing Business (as
defined in the Restrictive Covenant Agreement) solicit, entice or induce any
customer, supplier or distributor of the Company (or any actively sought
prospective customer, supplier or distributor of the Company) with whom or with
which Mr. Penske had direct contact prior to August 11, 2000. In addition, Mr.
Penske has agreed that during the five year period following the purchase of
Shares in the Offer by Purchaser, he will not, without the prior written consent
of Parent, either directly or indirectly, alone or in conjunction with any other
person or entity, solicit or attempt to solicit any key or material employee,
consultant, contractor or other personnel of Parent or the Company to terminate,
alter or lessen that party's affiliation with Parent or the Company or to
violate the terms of any agreement or understanding between the employee,
consultant, contractor or other person and Parent or the Company.
CONFIDENTIALITY. The Restrictive Covenant Agreement also provides that Mr.
Penske will not, without the prior written consent of Parent, distribute, sell,
market, publish, disclose, transfer, assign, disseminate or otherwise
communicate to any other person or entity, or use, copy or appropriate for or on
behalf of himself or any other person or entity, (i) any Confidential
Information (as defined in the Restrictive Covenant Agreement) for a period of
five years from the date of the purchase of Shares in the Offer by Purchaser, or
(ii) any Trade Secret (as defined in the Merger Agreement) at any time during
which such information constitutes a trade secret under applicable law.
THE MUTUAL NON-DISCLOSURE AGREEMENT AND THE LETTER AGREEMENT
The following is a summary of certain provisions of The Mutual
Non-Disclosure Agreement, dated March 28, 2000, between the Company and Parent
(the "Non-Disclosure Agreement") and the Letter Agreement, dated July 7, 2000,
among the Company, Parent and Richard H. Penske (the "Letter Agreement"). This
summary is qualified in its entirety by reference to the Non-Disclosure
Agreement and the Letter Agreement, which have been filed as exhibits to the
Schedule TO filed by Purchaser and Parent in connection with the Offer and are
incorporated by reference. The Non-Disclosure Agreement and Letter Agreement may
be examined and copies may be obtained at the places set forth in "Section 7.
Certain Information Concerning the Company" or downloaded for free at the
Commission's website at http://www.sec.gov.
Effective as of March 28, 2000, Parent and the Company entered into the
Non-Disclosure Agreement, pursuant to which the parties agreed to provide, among
other things, for the confidential treatment of their discussions regarding the
Offer and the Merger and the exchange of certain confidential information.
Effective as of July 7, 2000, Parent and the Company entered into the
Letter Agreement, pursuant to which each party agreed to make no public
announcements regarding their discussions in connection with the Offer and the
Merger. In addition, the Company agreed that until August 15, 2000, it would
not, and would not authorize or permit its officers, directors, employees,
representatives, advisors or agents to (i) enter into any discussions with, or
solicit offers from or enter into an agreement for the sale of a substantial
portion of the stock or assets of the Company, (ii) cooperate, facilitate or
encourage any such transaction, or (iii) agree to consummate any such
transaction. The terms of the Letter Agreement terminated upon execution of the
Merger Agreement.
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EMPLOYMENT AND RELATED AGREEMENTS
The Company currently does not have any employment agreements with its
executive officers.
Under the Merger Agreement, Parent has agreed to provide retention and
severance benefits to current employees of the Company consistent with Parent's
severance plan and retention policies. Based upon an employee's length of
service to the Company and depending upon the employee's employment
classification, the minimum severance received will be two weeks of pay and the
maximum will be nine months of pay. Generally executive officers of the Company
at the level of senior vice president or above (excluding Messrs. Penske and
Eureyecko, who are not entitled to retention or severance except as described in
the following paragraph) would be eligible for severance equal to one month of
pay per year of service, with a minimum of three months and a maximum of nine
months. The amounts of severance payments for which Mr. Hollander, Mr. Clauser
and Ms. Zondag, the three executive officers at the highest classification,
would be eligible under the Merger Agreement are $45,000, $127,500, and
$127,500, respectively. The amounts of retention payments for which Mr.
Hollander, Mr. Clauser and Ms. Zondag would be eligible under the Merger
Agreement are $45,000, $42,500 and $42,500, respectively. In addition to the
foregoing, Parent has agreed to provide an aggregate of $500,000 as additional
severance to be allocated to various employees prior to the closing of the
contemplated transactions as mutually agreed by Parent and the Company.
Parent and the Company have an oral understanding with John F. Eureyecko,
the Company's current President and Chief Operating Officer, that the Company
will enter into an employment agreement with Mr. Eureyecko. Under such
agreement, Mr. Eureyecko would be employed at his current annual salary through
September 30, 2001. Mr. Eureyecko may also be entitled to an annual bonus
contingent on meeting certain financial objectives established for the Company.
Under the agreement, Mr. Eureyecko would receive, in a lump sum payment, twice
the amount of his annual salary, in the event he is terminated without cause or
required to relocate or at the end of the natural expiration of the employment
agreement. Parent and Company anticipate that the agreement will include
customary non-competition and non-solicitation provisions that would extend two
years after Mr. Eureyecko's employment terminates.
SECTION 11. PURPOSE OF THE OFFER AND THE MERGER.
PURPOSE OF THE OFFER. The Offer is being made pursuant to the Merger
Agreement. The purpose of the Offer and the Merger is for Parent to acquire
control of, and the entire equity interest in, the Company. The purpose of the
Merger is for Parent to acquire all Shares not purchased pursuant to the Offer.
Upon consummation of the Merger, the Company will become an indirect wholly
owned subsidiary of Parent.
Under Delaware Law, the approval of the Board and the affirmative vote of
the holders of a majority of the outstanding Shares is required to approve and
adopt the Merger Agreement and the transactions contemplated thereby, including
the Merger. The Board of Directors of the Company has unanimously declared that
the Offer and the Merger are in the best interests of the Company and its
stockholders, and are advisable and fair to the stockholders of the Company, has
approved the Offer, the Merger, and the Merger Agreement, and has recommended
acceptance of the Offer and approval and adoption of the Merger Agreement by the
stockholders of the Company. Unless the Merger is consummated pursuant to the
short-form merger provisions under Delaware Law as described below, the only
remaining required corporate action of the Company is the approval and adoption
of the Merger Agreement by the affirmative vote of the holders of at least a
majority of the Shares. Accordingly, if the Minimum Condition is satisfied and
Shares are purchased in the Offer, Purchaser will have sufficient voting power
to cause the approval and adoption of the Merger Agreement without the
affirmative vote of any other stockholder.
In the Merger Agreement, the Company has agreed to duly call, give notice
of, convene and hold a special meeting of its stockholders as soon as
practicable following expiration or termination of the Offer at which the Merger
Agreement shall be submitted to the Company's stockholders for the purpose of
acting on the Merger Agreement, if such action is required by Delaware Law.
Parent and Purchaser have agreed
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that all Shares owned by them and their subsidiaries will be voted in favor of
the approval and adoption of the Merger Agreement and the Merger.
The Merger Agreement provides that, promptly upon the purchase by Purchaser
of Shares pursuant to the Offer, Purchaser will be entitled to designate
representatives to serve on the Board in proportion to Purchaser's ownership of
Shares following such purchase. See "Section 10. Background of the Offer and the
Merger." Purchaser expects that such representation would permit Purchaser to
exert substantial influence over the Company's conduct of its business and
operations.
SHORT FORM MERGER. Under Delaware Law, if Purchaser acquires, pursuant to
the Offer or otherwise, at least 90% of the then outstanding Shares, Purchaser
will be able to approve the Merger without a vote of the Company's stockholders.
In such event, Parent, Purchaser and the Company have agreed in the Merger
Agreement, at the request of Parent or Purchaser, to take all necessary and
appropriate action to cause the Merger to become effective as soon as
practicable after the expiration of the Offer, without a meeting of the
Company's stockholders. If, however, Purchaser does not acquire at least 90% of
the outstanding Shares pursuant to the Offer or otherwise and a vote of the
Company's stockholders is required under Delaware Law, a significantly longer
period of time would be required to effect the Merger.
APPRAISAL RIGHTS. Parent and the Purchaser do not believe that appraisal
rights are available in connection with the Offer. Notwithstanding the
foregoing, if the Merger is consummated, stockholders who have not tendered
their Shares may have certain rights under Delaware Law to dissent from the
Merger and demand appraisal of, and to receive payment in cash of the fair value
of, their Shares. Stockholders who perfect such rights by complying with the
procedures set forth in Section 262 of Delaware Law will have the "fair value"
of their Shares (exclusive of any element of value arising from the
accomplishment or expectation of the Merger) determined by the Delaware Chancery
Court and will be entitled to receive a cash payment equal to such fair value
from the Surviving Corporation. In addition, such dissenting stockholders may be
entitled to receive payment of a fair rate of interest from the date of
consummation of the Merger on the amount determined to be the fair value of
their Shares.
Parent does not intend to object, assuming the proper procedures are
followed, to the exercise of appraisal rights by any stockholder and the demand
for appraisal of, and payment in cash for the fair value of, the Shares. Parent
intends, however, to cause the Surviving Corporation to argue in an appraisal
proceeding that, for purposes of such proceeding, the fair value of each Share
is less than or equal to the Transaction Consideration. In this regard,
stockholders should be aware that opinions of investment banking firms as to the
fairness from a financial point of view (including Investment Bank's) are not
necessarily opinions as to "fair value" under Delaware Law.
The foregoing summary of the rights of dissenting stockholders under
Delaware Law does not purport to be a complete statement of the procedures to be
followed by stockholders desiring to exercise any dissenters' rights under
Delaware Law. The preservation and exercise of dissenters' rights require strict
adherence to the applicable provisions of Delaware Law.
GOING PRIVATE TRANSACTIONS. The Commission has adopted Rule l3e-3 under
the Exchange Act which is applicable to certain "going private" transactions and
which may under certain circumstances be applicable to the Merger or another
business combination following the purchase of Shares pursuant to the Offer in
which Purchaser seeks to acquire the remaining Shares not held by it. Purchaser
believes that Rule l3e-3 will not be applicable to the Merger. Rule l3e-3
requires, among other things, that certain financial information concerning the
Company and certain information relating to the fairness of the proposed
transaction and the consideration offered to minority stockholders in such
transaction be filed with the Commission and disclosed to stockholders prior to
consummation of the transaction.
PLANS FOR THE COMPANY. It is expected that following the Merger, Parent
will continue to evaluate the business and operations of the Company and will
take such actions as it deems appropriate under circumstances then existing.
Parent will continue to seek additional information about the Company and employ
consultants to aid it in its evaluation during the pendency of the Offer and
after consummation of the Offer. Thereafter, Parent intends to review such
information as part of a comprehensive review of the
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Company's business, operations, capitalization and management with a view to
optimizing exploitation of the Company's potential in conjunction with Parent's
businesses, including, but not limited to, aligning the Company's businesses
with the businesses within Parent. It is expected that the business and
operations of the Company would form an important part of Parent's future
business plans.
SECTION 12. DIVIDENDS AND DISTRIBUTIONS.
The Merger Agreement provides that the Company shall not, between the date
of the Merger Agreement and the Effective Time, without the prior written
consent of Parent, (i) issue, sell or pledge, or authorize or propose the
issuance, sale or pledge of (A) additional shares of capital stock of any class
of the Company (other than shares of Common Stock that may be issued pursuant to
the Company's Employee Stock Purchase Plan in connection with amounts withheld
on or before August 4, 2000) or its subsidiaries, or securities convertible into
or exchangeable for any such shares, or any options, warrants, calls,
subscriptions or other rights to acquire any such shares or other convertible or
exchangeable securities, other than such issuance of Shares pursuant to the
exercise of Options outstanding on the date hereof, or (B) any other securities
in respect of, in lieu of or in substitution for, Shares outstanding on the date
hereof, (ii) purchase, repurchase, redeem or otherwise acquire, or propose to
purchase, repurchase, redeem or otherwise acquire, any outstanding shares of
capital stock of the Company, or (iii) declare, set aside or pay any dividend or
distribution on any Shares, or redeem or otherwise acquire any shares of capital
stock of the Company. See "Section 10. Background of the Offer and the Merger."
SECTION 13. POSSIBLE EFFECTS OF THE OFFER ON THE MARKET FOR THE SHARES, EXCHANGE
LISTING AND EXCHANGE ACT REGISTRATION, MARGIN REGULATIONS.
POSSIBLE EFFECTS OF THE OFFER ON THE MARKET FOR THE SHARES.
The purchase of Shares by Purchaser pursuant to the Offer will reduce the
number of Shares that might otherwise trade publicly and will reduce the number
of holders of Shares, which could adversely affect the liquidity and market
value of the remaining Shares held by the public.
Parent intends to cause the delisting of the Shares by Nasdaq following
consummation of the Offer and the Merger.
NASDAQ LISTING. Depending upon the number of Shares purchased pursuant to
the Offer, the Shares may no longer meet the requirements of the National
Association of Securities Dealers, Inc. (the "NASD") for continued inclusion on
the Nasdaq National Market System, which requires that an issuer either (i) have
at least 750,000 publicly held shares, held by at least 400 round-lot
stockholders, with a market value of at least $5,000,000, net tangible assets
(total assets (excluding goodwill) minus liabilities) of at least $4,000,000 and
have a minimum bid price of $1, of (ii) have at least 1,100,000 publicly held
shares, held by at least 400 round-lot stockholders, with a market value of at
least $15,000,000, have a minimum bid price of $5 and have either (A) a market
capitalization of at least $50,000,000 or (B) total assets and revenues each of
at least $50,000,000. Shares held directly or indirectly by an officer or
director of the Company or by a beneficial owner of more than 10% of the Shares
will ordinarily not be considered as being publicly held for purposes of these
standards. Parent currently intends to cause the Company to delist the Shares
from the Nasdaq National Market System as soon as reasonably practicable after
consummation of the Offer and the Merger. If the Nasdaq National Market System
were to cease to publish quotations for the Shares, it is possible that the
Shares would continue to trade in the over-the-counter market and that price or
other quotations would be reported by other sources. The extent of the public
market for such Shares and the availability of such quotations would depend,
however, upon such factors as the number of stockholders and/or the aggregate
market value of such securities remaining at such time, the interest in
maintaining a market in the Shares on the part of securities firms, the possible
termination of registration under the Exchange Act, as described below, and
other factors. Purchaser cannot predict whether the reduction in the number of
Shares that might otherwise trade publicly would have an adverse or beneficial
effect on the market price for, or marketability of, the Shares or whether it
would cause future market prices to be greater or less than the Transaction
Consideration.
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EXCHANGE ACT REGISTRATION. The Shares are currently registered under the
Exchange Act. Such registration may be terminated upon application by the
Company to the Commission if the Shares are not listed on a "national securities
exchange" and there are fewer than 300 record holders. The termination of the
registration of the Shares under the Exchange Act would substantially reduce the
information required to be furnished by the Company to holders of Shares and to
the Commission and would make certain provisions of the Exchange Act, such as
the short-swing profit recovery provisions of Section 16(b) of the Exchange Act,
the requirement of furnishing a proxy statement in connection with stockholders'
meetings pursuant to Section 14(a) or 14(c) of the Exchange Act and the related
requirements of an annual report, and the requirements of Rule l3e-3 under the
Exchange Act with respect to "going private" transactions, no longer applicable
to the Shares. In addition, "affiliates" of the Company and persons holding
"restricted securities" of the Company may be deprived of the ability to dispose
of such securities pursuant to Rule 144 promulgated under the Securities Act of
1933, as amended. If registration of the Shares under the Exchange Act were
terminated, the Shares would no longer be eligible for Nasdaq reporting.
Purchaser currently intends to seek to cause the Company to terminate the
registration of the Shares under the Exchange Act as soon after consummation of
the Offer and the Merger as the requirements for termination of registration are
met.
MARGIN REGULATIONS. The Shares are currently "margin securities," as such
term is defined under the rules of the Board of Governors of the Federal Reserve
System (the "Federal Reserve Board"), which has the effect, among other things,
of allowing brokers to extend credit on the collateral of such securities.
Depending upon factors similar to those described above regarding listing and
market quotations, following the Offer it is possible that the Shares might no
longer constitute "margin securities" for purposes of the margin regulations of
the Federal Reserve Board, in which event such Shares could no longer be used as
collateral for loans made by brokers. In addition, if registration of the Shares
under the Exchange Act were terminated, the Shares would no longer constitute
"margin securities."
SECTION 14. CERTAIN CONDITIONS OF THE OFFER.
Notwithstanding any other provision of the Offer, Purchaser shall not be
required to accept for payment any Shares tendered pursuant to the Offer, and
may extend, terminate or amend the Offer, if (i) immediately prior to the
expiration of the Offer, the Minimum Condition shall not have been satisfied,
(ii) any applicable waiting period under the HSR Act shall not have expired or
been terminated prior to the expiration of the Offer, or (iii) or if any of the
following conditions shall exist:
(a) there shall be instituted or pending any suit, action or
proceeding by any Governmental Authority (as defined in the Merger
Agreement) which seeks to (i) restrain or prohibit the making or
consummation of the Offer or the Merger or (ii) restrain or prohibit the
performance of the Merger Agreement; (iii) restrain or prohibit Parent's
ownership of all or any portion of the business and assets of the Company
and its subsidiaries, or to compel Parent or its affiliates to dispose of
or hold separate all or any portion of the business or assets of the
Company; or (iv) impose or confirm any limitation on the ability of Parent
or Purchaser or any affiliate of Parent or Purchaser to exercise
effectively full rights of ownership of any Shares, including, without
limitation, the right to vote any Shares acquired by Purchaser pursuant to
the Offer or otherwise on all matters properly presented to the Company's
stockholders;
(b) there shall have been any statute, rule, regulation, legislation
or interpretation enacted, promulgated, amended, issued or deemed
applicable to (i) Parent, the Company or any subsidiary or affiliate of
Parent or the Company or (ii) any of the transactions contemplated by the
Merger Agreement, by any United States or non United States legislative
body or Governmental Authority with appropriate jurisdiction, other than
the routine application of the waiting period provisions of the HSR Act and
in the other countries where a merger filing was necessary or advisable, to
the Offer or the Merger, that is reasonably likely to result, directly or
indirectly in any of the consequences referred to in clauses (i) through
(iv) of paragraph (a) above;
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(c) (i) any representation or warranty made by the Company in the
Merger Agreement that is qualified as to Material Adverse Effect is untrue
at the time such representation or warranty was made or shall not be true
and correct as of the date of consummation of the Offer (except for those
representations and warranties made as of a particular date which need only
be true and correct as of such date) or (ii) any representations or
warranties made by the Company in the Merger Agreement that are not so
qualified as to Material Adverse Effect shall not be true or correct in all
respects as of the date of consummation of the Offer (except for those
representations and warranties made as of a particular date which need only
be true and correct as of such date), unless the failure of all such
representations and warranties in this clause (ii) to be true and correct,
individually or in the aggregate, has had or would reasonably be expected
to have a Material Adverse Effect;
(d) there shall have been a breach in any material respect by the
Company (which breach has not been cured in all material respects) of any
of its covenants or agreements contained in the Merger Agreement, except
for any such breaches or failures to perform that would not have a Material
Adverse Effect;
(e) the Merger Agreement shall have been terminated in accordance with
its terms;
(f) the Company's Board of Directors or any committee thereof will
have withdrawn or modified (including by amendment of the Schedule 14D-9)
in a manner adverse to Parent or Purchaser its approval or recommendation
of the Offer, the Merger Agreement or the Merger, or will have recommended
to the Company's stockholders any Alternative Acquisition Proposal or will
have adopted any resolution to effect any of the foregoing which, in the
sole judgment of Purchaser in any such case, and regardless of the
circumstances (including any action or omission by Purchaser) giving rise
to any such condition, makes it inadvisable to proceed with such acceptance
or payment;
(g) any Person (other than Parent or any of its subsidiaries) acquires
beneficial ownership (as defined in Rule 13d-3 promulgated under the
Exchange Act), of at least 25% of the outstanding voting securities of the
Company or is granted by the Company or any stockholder of the Company that
is a party to the Tender and Voting Agreement any option or right to
acquire at least 15% of such voting securities (as used herein, "Person"
shall include any corporation, individual, partnership, limited liability
company, trust, other entity or group (as defined in the Exchange Act),
other than Parent or any of its affiliates (as defined in the Exchange
Act));
(h) Since the date of the Merger Agreement, any change shall have
occurred which has, or could reasonably be expected to have, a Material
Adverse Effect; or
(i) there shall be in effect a declaration of a banking moratorium or
any suspension of payments in respect of banks in the United States.
The foregoing conditions are for the sole benefit of Purchaser and Parent
and may be asserted by Purchaser or Parent regardless of the circumstances
giving rise to any such condition or, subject to applicable law and the terms of
the Merger Agreement, may be waived by Purchaser or Parent in whole or in part
at any time and from time to time in their sole discretion. The failure by
Parent or Purchaser at any time to exercise any of the foregoing rights shall
not be deemed a waiver of any such right; the waiver of any such right with
respect to particular facts and other circumstances shall not be deemed a waiver
with respect to any other facts and circumstances; and each such right shall be
deemed an ongoing right that may be asserted at any time and from time to time.
SECTION 15. CERTAIN REGULATORY AND LEGAL MATTERS.
GENERAL. Based upon its examination of publicly available information with
respect to the Company and the review of certain information furnished by the
Company to Parent and discussions between representatives of Parent with
representatives of the Company during Parent's investigation of the Company,
neither Purchaser nor Parent is aware of (i) any license or other regulatory
permit that appears to be material to the business of the Company or any of its
subsidiaries, taken as a whole, which might be adversely affected by the
acquisition of Shares by Purchaser pursuant to the Offer or (ii) except as set
forth below, of any approval or other action by any domestic (federal or state)
or foreign governmental authority which would be required prior to the
acquisition of Shares by Purchaser pursuant to the Offer.
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Should any such approval or other action be required, it is Purchaser's present
intention to seek such approval or action. Purchaser does not currently intend,
however, to delay the purchase of Shares tendered pursuant to the Offer pending
the outcome of any such action or the receipt of any such approval (subject to
Purchaser's right to decline to purchase Shares if any of the conditions in
"Section 14. Certain Conditions of the Offer" shall have occurred). There can be
no assurance that any such approval or other action, if needed, would be
obtained without substantial conditions or that adverse consequences might not
result to the business of the Company, Purchaser or Parent or that certain parts
of the businesses of the Company, Purchaser or Parent might not have to be
disposed of or held separate or other substantial conditions complied with in
order to obtain such approval or other action or in the event that such approval
was not obtained or such other action was not taken. Purchaser's obligation
under the Offer to accept for payment and pay for Shares is subject to certain
conditions, including conditions relating to the legal matters discussed in this
"Section 15. Certain Regulatory and Legal Matters." See "Section 14. Certain
Conditions and the Offer."
STATE TAKEOVER LAWS. The Company is incorporated under the laws of the
State of Delaware. In general, Section 203 of Delaware Law prevents an
"interested stockholder" (generally a person who owns or has the right to
acquire 10% or more of a corporation's outstanding voting stock, or an affiliate
or associate thereof) from engaging in a "business combination" (defined to
include mergers and certain other transactions) with a Delaware corporation for
a period of five years following the date such person became an interested
stockholder unless, among other things, prior to such date the board of
directors of the corporation approved either the business combination or the
transaction in which the interested stockholder became an interested
stockholder. On August 10, 2000, prior to the execution of the Merger Agreement,
the Board by unanimous vote of all directors present at a meeting held on such
date, approved and adopted the Merger Agreement, determined and declared that
each of the Offer and the Merger are fair and advisable to, and in the best
interest of, the stockholders of the Company. In addition, the Board approved
the Tender and Voting Agreement and determined that Section 203 would not be
applicable to Parent and Purchaser in connection with the Tender and Voting
Agreement. Accordingly, Section 203 is inapplicable to the Merger Agreement and
the transactions contemplated thereby, including the Offer and the Merger.
A number of other states have adopted laws and regulations applicable to
attempts to acquire securities of corporations which are incorporated, or have
substantial assets, stockholders, principal executive offices or principal
places of business, or whose business operations otherwise have substantial
economic effects, in such states. In Edgar v. Mite Corporation, the Supreme
Court of the United States invalidated on constitutional grounds the Illinois
Business Takeover Statute, which, as a matter of state securities law, made
takeovers of corporations meeting certain requirements more difficult. However,
in 1987 in CTS Corporation v. Dynamics Corporation of America, the Supreme Court
held that the State of Indiana may, as a matter of corporate law and, in
particular, with respect to those aspects of corporate law concerning corporate
governance, constitutionally disqualify a potential acquiror from voting on the
affairs of a target corporation without the prior approval of the remaining
stockholders. The state law before the Supreme Court was by its terms applicable
only to corporations that had a substantial number of stockholders in the state
and were incorporated there.
The Company, directly or through its subsidiaries, conducts business in a
number of states throughout the United States, some of which have enacted
takeover laws. Purchaser does not know whether any of these laws will, by their
terms, apply to the Offer or the Merger and has not complied with any such laws.
Should any person seek to apply any state takeover law, Purchaser will take such
action as then appears desirable, which may include challenging the validity or
applicability of any such statute in appropriate court proceedings. In the event
it is asserted that one or more state takeover laws is applicable to the Offer
or the Merger, and an appropriate court does not determine that it is
inapplicable or invalid as applied to the Offer, Purchaser might be required to
file certain information with, or receive approvals from, the relevant state
authorities. In addition, if enjoined, Purchaser might be unable to accept for
payment any Shares tendered pursuant to the Offer, or be delayed in continuing
or consummating the Offer, and the
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Merger. In such case, Purchaser may not be obligated to accept for payment any
Shares tendered. See "Section 14. Certain Conditions of the Offer."
ANTITRUST. Under the HSR Act and the rules that have been promulgated
thereunder by the FTC, certain acquisition transactions may not be consummated
unless certain information has been furnished to the Antitrust Division and the
FTC and certain waiting period requirements have been satisfied. The acquisition
of Shares by Purchaser pursuant to the Offer are subject to such requirements.
See "Section 2. Acceptance for Payment and Payment for Shares."
Pursuant to the HSR Act, on August 18, 2000, Parent filed a Premerger
Notification and Report Form in connection with the purchase of Shares pursuant
to the Offer with the Antitrust Division and the FTC. Under the provisions of
the HSR Act applicable to the Offer, the purchase of Shares pursuant to the
Offer may not be consummated until the expiration of a 15-calendar day waiting
period following the filing by Parent. Accordingly, the waiting period under the
HSR Act applicable to the purchase of Shares pursuant to the Offer will expire
at 11:59 p.m., New York City time, on September 2, 2000, unless such waiting
period is earlier terminated by the FTC and the Antitrust Division or extended
by a request from the FTC or the Antitrust Division for additional information
or documentary material prior to the expiration of the waiting period. Pursuant
to the HSR Act, Parent has requested early termination of the waiting period
applicable to the Offer. There can be no assurance, however, that the 15-day HSR
Act waiting period will be terminated early. If either the FTC or the Antitrust
Division were to request additional information or documentary material from
Parent with respect to the Offer, the waiting period with respect to the Offer
would expire at 11:59 p.m., New York City time, on the tenth calendar day after
the date of substantial compliance with such request. Thereafter, the waiting
period could be extended only by court order or with the consent of Parent. If
the acquisition of Shares is delayed pursuant to a request by the FTC or the
Antitrust Division for additional information or documentary material pursuant
to the HSR Act, the Offer shall be extended and, in any event, the purchase of
and payment for Shares will be deferred until 10 days after the request is
substantially complied with, unless the waiting period is sooner terminated by
the FTC and the Antitrust Division. Only one extension of such waiting period
pursuant to a request for additional information is authorized by the HSR Act
and the rules promulgated thereunder, except by court order. Any such extension
of the waiting period will not give rise to any withdrawal rights not otherwise
provided for by applicable law. See "Section 4. Withdrawal Rights." It is a
condition to the Offer that the waiting period applicable under the HSR Act to
the Offer expire or be terminated. See "Section 2. Acceptance for Payment and
Payment for Shares" and "Section 14. Certain Conditions of the Offer."
The FTC and the Antitrust Division frequently scrutinize the legality under
the antitrust laws of transactions such as the proposed acquisition of Shares by
Purchaser pursuant to the Offer. At any time before or after the purchase of
Shares pursuant to the Offer by Purchaser, the FTC or the Antitrust Division
could take such action under the antitrust laws as it deems necessary or
desirable in the public interest, including seeking to enjoin the purchase of
Shares pursuant to the Offer or seeking the divestiture of Shares purchased by
Purchaser or the divestiture of substantial assets of Parent, the Company or
their respective subsidiaries. Private parties and state attorneys general may
also bring legal action under federal or state antitrust laws under certain
circumstances. Based upon an examination of information available to Parent
relating to the businesses in which Parent, the Company and their respective
subsidiaries are engaged, Parent and Purchaser believe that the Offer will not
violate the antitrust laws. Nevertheless, there can be no assurance that a
challenge to the Offer on antitrust grounds will not be made or, if such a
challenge is made, what the result would be. See "Section 14. Certain Conditions
to the Offer."
SECTION 16. FEES AND EXPENSES.
Except as set forth below, Purchaser will not pay any fees or commissions
to any broker, dealer or other person for soliciting tenders of Shares pursuant
to the Offer. Merrill Lynch is acting as Dealer Manager in connection with the
Offer. Parent has agreed to pay Merrill Lynch reasonable and customary
compensation for such services. Parent has also agreed to indemnify Merrill
Lynch against liabilities under the federal securities laws.
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Purchaser and Parent have retained Morrow & Co, Inc., as the Information
Agent, and American Stock Transfer and Trust Company, as the Depositary, in
connection with the Offer. The Information Agent may contact holders of Shares
by mail, telephone, telex, facsimile, telegraph and personal interview and may
request banks, brokers, dealers and other nominee stockholders to forward
materials relating to the Offer to beneficial owners. As compensation for acting
as Information Agent in connection with the Offer, Morrow & Co. will be paid
reasonable and customary fees for its services and will also be reimbursed for
certain out-of-pocket expenses and may be indemnified against certain
liabilities and expenses in connection with the Offer, including certain
liabilities under the federal securities laws.
Purchaser will pay the Depositary reasonable and customary compensation for
its services in connection with the Offer, plus reimbursement for out-of-pocket
expenses, and will indemnify the Depositary against certain liabilities and
expenses in connection therewith, including under federal securities laws.
Brokers, dealers, commercial banks and trust companies will be reimbursed by
Purchaser for customary handling and mailing expenses incurred by them in
forwarding material to their customers.
SECTION 17. MISCELLANEOUS.
The Offer is being made solely by this Offer to Purchase and the related
Letter of Transmittal and is being made to holders of Shares. Purchaser is not
aware of any jurisdiction where the making of the Offer is prohibited by any
administrative or judicial action pursuant to any valid state statute. If
Purchaser becomes aware of any valid state statute prohibiting the making of the
Offer or the acceptance of Shares pursuant thereto, Purchaser will make a good
faith effort to comply with any such state statute. If, after such good faith
effort, Purchaser cannot comply with any such state statute, the Offer will not
be made to (nor will tenders be accepted from or on behalf of) the holders of
Shares in such state. In any jurisdiction where the securities, blue sky or
other laws require the Offer to be made by a licensed broker or dealer, the
Offer shall be deemed to be made on behalf of Purchaser by the Dealer Manager or
by one or more registered brokers or dealers licensed under the laws of such
jurisdiction.
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR MAKE ANY
REPRESENTATION ON BEHALF OF PURCHASER OR THE COMPANY NOT CONTAINED IN THIS OFFER
TO PURCHASE OR IN THE LETTER OF TRANSMITTAL, AND IF GIVEN OR MADE, SUCH
INFORMATION OR REPRESENTATION MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED.
Pursuant to Rule 14d-3 of the General Rules and Regulations under the
Exchange Act, Parent and Purchaser have filed with the Commission the Schedule
TO, together with exhibits, furnishing certain additional information with
respect to the Offer. The Schedule TO and any amendments thereto, including
exhibits, may be inspected at, and copies may be obtained from, the same places
and in the same manner as set forth in "Section 7. Certain Information
Concerning the Company" (except that they will not be available at the regional
offices of the Commission).
Jewelry Expansion Corp.
Dated: August 22, 2000
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SCHEDULE I
DIRECTORS AND EXECUTIVE OFFICERS OF PARENT. The following table sets forth
the name, present principal occupation or employment, and material occupations,
positions, offices or employment for the past five years of each director and
executive officer of Parent. The individuals listed below as directors of Parent
also serve as directors of Zale Delaware, Inc., a direct wholly owned subsidiary
of Parent and the sole shareholder of Purchaser. Unless otherwise indicated,
each occupation set forth opposite an individual's name refers to employment
with Parent. The principal address of Parent and, unless indicated below, the
current business address for each individual listed below is 901 West Walnut
Hill Lane, Irving, Texas 75038.
DIRECTORS
ROBERT J. DINICOLA Mr. DiNicola has served as Chairman of the Board of
Parent since April 18, 1994. He also served as Chief
Executive Officer of the Parent from April 18, 1994
until September 7, 1999.
BERYL B. RAFF Ms. Raff was appointed Chief Executive Officer and a
member of Parent's Board of Directors on September 7,
1999, while retaining her position as President of
Parent. From July 15, 1998 to September 7, 1999, Ms.
Raff served as President and Chief Operating Officer.
From July 1997 to July 1998, she served as Executive
Vice President and Chief Operating Officer. From
November 1994 to July 1997, she served as President of
Zales Jewelers.
GLEN ADAMS Mr. Adams has served as a director of Parent since July
21, 1993. From August 1990 to August 1996, Mr. Adams
served as Chairman, President and Chief Executive
Officer of Southmark Corporation, Dallas, Texas, a real
estate financing and syndication firm.
A. DAVID BROWN Mr. Brown joined the board as a director of Parent on
March 4, 1997. Mr. Brown became Managing Partner for the
New York office of Pendleton James Associates as of May
15, 1997. Prior to joining Pendleton James Associates,
Mr. Brown served as Vice President of the Worldwide
Retail/ Fashion Specialty Practice at Korn/Ferry
International, 1800 Century Park East, Suite 900, Los
Angeles, California 90067, from June 1, 1994 to May 14,
1997. Mr. Brown is a director of The Sports Authority
and Selective Insurance Group, Inc. Mr. Brown also
serves as a trustee for Drew University. Mr. Brown's
principal business address is 200 Park Avenue, New York,
New York 10001.
PETER P. COPSES Mr. Copses served from September 9, 1993 to September 9,
1996 as a director of Parent and returned to serve on
the Board on February 4, 1997. Since 1990, Mr. Copses
has been a principal of Apollo Advisors, L.P., which,
together with certain affiliates, acts as the managing
general partner of Apollo Investment Fund, L.P., AIF II,
L.P., Apollo Investment Fund III, L.P., and Apollo
Investment Fund IV, L.P., private securities investment
funds, and of Lion Advisors, L.P., which acts as a
financial advisor to and representative for certain
institutional investors with respect to securities
investments. Mr. Copses is a director of Mariner-Post
Acute Network, Inc., Rent-A-Center, Inc., and Prandium,
Inc. Mr. Copses present business address is 1999 Avenue
of the Stars, Los Angeles, California 90067.
RICHARD C. MARCUS Mr. Marcus has served as a director of Parent since July
21, 1993. Mr. Marcus is a private investor and cofounder
of InterSolve Group, a management services firm, which
was established in 1991. Since Janu-
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ary 1997, Mr. Marcus has served as an advisor to Peter
J. Solomon Company, a New York investment banking firm.
From December 1994 through December 1995, Mr. Marcus
served as CEO of the Plaid Clothing Group, and as a
director of that company from December 1994 through
December 1996. In July 1995, Plaid Clothing Group filed
a petition of reorganization under Chapter 11 of the
U.S. Bankruptcy Code and was subsequently sold to
Hartmarx in December 1996. Mr. Marcus is a director of
Michaels Stores Inc. and Fashionmall.com. Mr. Marcus's
present business address is 767 Fifth Avenue, 26th
Floor, New York, New York 10153.
CHARLES H. PISTOR, JR. Mr. Pistor joined the board as a director of Parent on
June 24, 1997. Mr. Pistor is the former Vice Chair of
Southern Methodist University, and has served as Chief
Executive Officer of Republic BankDallas, and president
of the American Bankers Association. Mr. Pistor
currently serves as a director on the boards of Fortune
Brands, AMR and American Airlines and Centex
Corporation.
ANDREW H. TISCH Mr. Tisch has served as a director of Parent since July
21, 1993. Mr. Tisch has been Chairman of the Executive
Committee of Loews Corporation since January 1, 1999.
Mr. Tisch is Chairman of the Board of Directors of
Bulova Corporation. Mr. Tisch currently serves as a
director of Loews Corporation, Bulova Corporation and
Canary Wharf, Ltd. Mr. Tisch's present principal
business address is 667 Madison Avenue, New York, New
York 10021.
EXECUTIVE OFFICERS
ALAN P. SHOR Mr. Shor was named Executive Vice President and Chief
Operating Officer of Parent on September 15, 1999. From
November 17, 1997 to September 15, 1999, Mr. Shor served
as Executive Vice President, Chief Logistics Officer,
Secretary and General Counsel of Parent. From May 1997
to November 1997, Mr. Shor served as Executive Vice
President and Chief Administrative Officer, General
Counsel and Secretary of Parent. From June 1995 to May
1997, Mr. Shor served as Senior Vice President, General
Counsel and Secretary of Parent.
SUE E. GOVE Ms. Gove was appointed Executive Vice President and
Chief Financial Officer of Parent on July 15, 1998. From
December 1997 to July 1998, she served as Group Vice
President and Chief Financial Officer of Parent. From
January 1996 to December 1997, she served as Senior Vice
President, Corporate Planning and Analysis of Parent.
From September 1996 through June 1997, Ms. Gove also
served as Senior Vice President and Treasurer,
overseeing Investor Relations and Treasury, Tax and
Control functions. Ms. Gove joined Parent in 1980 and
served in numerous assignments until her appointment to
Vice President in 1989.
MARY L. FORTE Ms. Forte was appointed Executive Vice President and
Chief Administrative Officer on January 13, 1998. From
July 1994 to January 1998, Ms. Forte served as President
of Gordon Jewelers.
DIRECTORS AND EXECUTIVE OFFICERS OF PURCHASER. The following table sets
forth the name, present principal occupation or employment, and material
occupations, positions, offices or employment for the past five years of each
director and executive officer of Purchaser. Unless otherwise indicated, each
occupation set forth opposite an individual's name refers to employment with
Parent. The principal address of Purchaser and, unless otherwise indicated
below, the current business address for each individual listed
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<PAGE> 43
below is 901 West Walnut Hill Lane, Irving, Texas 75038. Each person listed is
also a director of Purchaser.
ALAN P. SHOR Mr. Shor was named Executive Vice President and Chief
Operating Officer of Parent on September 15, 1999. From
November 17, 1997 to September 15, 1999, Mr. Shor served
as Executive Vice President, Chief Logistics Officer,
Secretary and General Counsel of Parent. From May 1997
to November 1997, Mr. Shor served as Executive Vice
President and Chief Administrative Officer, General
Counsel and Secretary of Parent. From June 1995 to May
1997, Mr. Shor served as Senior Vice President, General
Counsel and Secretary of Parent.
BERYL B. RAFF Ms. Raff was appointed Chief Executive Officer and a
member of Parent's Board of Directors on September 7,
1999, while retaining her position as President of
Parent. From July 15, 1998 to September 7, 1999, Ms.
Raff served as President and Chief Operating Officer.
From July 1997 to July 1998, she served as Executive
Vice President and Chief Operating Officer. From
November 1994 to July 1997, she served as President of
Zales Jewelers.
SUE E. GOVE Ms. Gove was appointed Executive Vice President and
Chief Financial Officer of Parent on July 15, 1998. From
December 1997 to July 1998, she served as Group Vice
President and Chief Financial Officer of Parent. From
January 1996 to December 1997, she served as Senior Vice
President, Corporate Planning and Analysis of Parent.
From September 1996 through June 1997, Ms. Gove also
served as Senior Vice President and Treasurer,
overseeing Investor Relations and Treasury, Tax and
Control functions. Ms. Gove joined Parent in 1980 and
served in numerous assignments until her appointment to
Vice President in 1989.
MARY L. FORTE Ms. Forte was appointed Executive Vice President and
Chief Administrative Officer on January 13, 1998. From
July 1994 to January 1998, Ms. Forte served as President
of Gordon Jewelers.
SUSAN S. LANIGAN Ms. Lanigan presently serves as Senior Vice President,
General Counsel and Secretary of Parent. From November
1999 to August 2000 Ms. Lanigan served as Vice
President, General Counsel and Secretary of Parent. Ms.
Lanigan served as Vice President and General Counsel of
Parent from August 1999 to November 1999. From August
1998 to August 1999, Ms. Lanigan served as Vice
President and Associate General Counsel of Parent. Mrs.
Lanigan served as Director and Associate General Counsel
of Parent from January 1996 to August 1998.
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<PAGE> 44
Manually signed facsimile copies of the Letter of Transmittal will be
accepted. Letters of Transmittal and certificates for Shares should be sent or
delivered by each stockholder of the Company or his broker, dealer, commercial
bank or trust company to the Depositary at the address set forth below:
The Depositary For The Offer Is:
AMERICAN STOCK TRANSFER & TRUST COMPANY
By Mail, Hand or Overnight Delivery:
40 Wall Street, 46th Floor
New York, New York 10005
Facsimile Transmissions:
(For Eligible Institutions Only)
(718) 234-5001
Confirm Receipt Of Facsimile
By Telephone
(718) 921-8200
Any questions and requests for assistance may be directed to the
Information Agent or the Dealer Manager at their respective addresses and
telephone numbers set forth below. Requests for additional copies of this Offer
to Purchase and the Letter of Transmittal may be obtained from the Information
Agent. Stockholders may also contact their brokers, dealers, commercial banks or
trust companies for assistance concerning the Offer.
The Information Agent for the Offer is:
[MORROW & CO., INC. LOGO]
445 Park Avenue, 5th Floor
New York, New York 10022
Call Collect (212) 754-8000
Banks and Brokerage Firms, Please Call:
(800) 662-5200
Shareholders, Please Call: (800) 566-9061
The Dealer Manager for the Offer is:
MERRILL LYNCH & CO.
Four World Financial Center
New York, New York 10080
(212) 236-3790 (Call Collect)
