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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 13E-4
ISSUER TENDER OFFER STATEMENT
(PURSUANT TO SECTION 13(e)(1) OF THE SECURITIES
EXCHANGE ACT OF 1934)
THE CHERRY CORPORATION
(Name of Issuer)
THE CHERRY CORPORATION
(Name of Person(s) Filing Statement)
CLASS A COMMON STOCK
CLASS B COMMON STOCK
(Title of Class of Securities)
CLASS A COMMON STOCK--164541 20 3
CLASS B COMMON STOCK--164541 30 2
(CUSIP Number of Class of Securities)
DAN A. KING
VICE PRESIDENT OF FINANCE AND ADMINISTRATION
3600 SUNSET AVENUE
WAUKEGAN, IL 60087
(847) 662-9200
(Name, Address and Telephone Number of Person Authorized to Receive Notices
and Communications on Behalf of the Person(s) Filing Statement)
WITH A COPY TO:
WILLIAM J. QUINLAN, JR.
HELEN R. FRIEDLI, P.C.
MCDERMOTT, WILL & EMERY
227 WEST MONROE
CHICAGO, IL 60606
November 17, 1998
(Date Tender Offer First Published, Sent or Given to Security Holders)
CALCULATION OF FILING FEE
Transaction valuation* Amount of filing fee
$34,875,000 $6,975
* Calculated solely for the purpose of determining the filing fee, based upon
the purchase of an aggregate of 2,250,000 shares of Common Stock
of The Cherry Corporation (1,687,500 shares of Class A Common Stock and
562,500 shares of Class B Common Stock) at a maximum tender offer price
of $15.50 per share.
/ / Check box if any part of the fee is offset as provided by Rule 0-11(a)(2)
and identify the filing with which the offsetting fee was previously paid.
Identify the previous filing by registration statement number, or the form
or schedule and the date of its filings.
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This Issuer Tender Offer Statement on Schedule 13E-4 (the "Statement")
relates to the tender offer by The Cherry Corporation, a Delaware corporation
(the "Company"), to purchase up to 1,687,500 shares of Class A Common Stock,
$1.00 par value per share (the "Class A Shares"), and/or 562,500 shares of
Class B Common Stock, $1.00 par value per share (the "Class B Shares," and
the Class A Shares and the Class B Shares are collectively referred to herein
as the "Shares"), at prices, net to the seller in cash, without interest
thereon, not greater than $15.50 nor less than $13.25 per Share for each
class of Shares, as specified by the shareholders tendering their Shares,
upon the terms and subject to the conditions set forth in the Offer to
Purchase dated November 17, 1998 (the "Offer to Purchase") and the related
Letter of Transmittal (which are herein collectively referred to as the
"Offer"). Copies of such documents are filed as Exhibits (a)(1) and (a)(2),
respectively, to this Statement.
ITEM 1. SECURITY AND ISSUER.
(a) The name of the issuer is The Cherry Corporation, a Delaware
corporation. The address of its principal executive offices is 3600 Sunset
Avenue, Waukegan, Illinois 60087.
(b) The information set forth in "Introduction", "The Offer--Section 1,
Number of Shares; Proration" and "The Offer--Section 11, Interest of
Directors and Executive Officers; Transactions and Arrangements Concerning
Shares" of the Offer to Purchase is incorporated herein by
reference.
(c) The information set forth in "Introduction" and the "The
Offer--Section 1, Number of Shares; Proration" and "The Offer--Section 8,
Price Range of Shares; Dividends" of the Offer to Purchase is incorporated
herein by reference.
(d) This Statement is being filed by the Issuer.
ITEM 2. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION.
(a)-(b) The information set forth in "Introduction," "The Offer--Section
9, Source and Amount of Funds" of the Offer to Purchase and information
provided in Exhibit (b) of Item 9 to the Statement is incorporated herein by
reference.
ITEM 3. PURPOSE OF THE TENDER OFFER AND PLANS OR PROPOSALS OF THE ISSUER OR
AFFILIATE.
(a)-(j) The information set forth in "Introduction" and "The Offer--Section
9, Source and Amount of Funds," "The Offer--Section 2, Purpose of the Offer;
Certain Effects of the Offer," "The Offer-- Section 11, Interest of Directors
and Officers; Transactions and Arrangements Concerning Shares" and "The
Offer--Section 12, Effects of the Offer on the Market for Shares; Registration
Under the Exchange Act" of the Offer to Purchase is incorporated herein by
reference.
ITEM 4. INTEREST IN SECURITIES OF THE ISSUER.
The information set forth in "The Offer--Section 11, Interest of Directors
and Officers; Transactions and Arrangements Concerning Shares" of the Offer to
Purchase is incorporated herein by reference.
ITEM 5. CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS OR RELATIONSHIPS WITH RESPECT
TO THE ISSUER'S SECURITIES.
The information set forth in "Introduction" and "The Offer--Section 9,
Source and Amount of Funds," "The Offer--Section 2, Purpose of the Offer;
Certain Effects of the Offer" and "The Offer-- Section 11, Interest of Directors
and Officers; Transactions and Arrangements Concerning Shares" of the Offer to
Purchase is incorporated herein by reference.
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ITEM 6. PERSONS RETAINED, EMPLOYED, OR TO BE COMPENSATED.
The information set forth in "Introduction" and "The Offer--Section 16, Fees
and Expenses" of the Offer to Purchase is incorporated herein by reference.
ITEM 7. FINANCIAL INFORMATION.
(a)-(b) The information set forth in "The Offer--Section 10, Certain
Information Concerning the Company" of the Offer to Purchase is incorporated
herein by reference. The information set forth in Item 8 of the Company's Annual
Report on Form 10-K for the year ended February 28, 1998, filed as Exhibit
(g)(1) hereto, is incorporated herein by reference. The information set forth on
pages two to six of the Company's Quarterly Report on Form 10-Q for the quarter
ended August 31, 1998, filed as Exhibit (g)(2) hereto is incorporated herein by
reference.
ITEM 8. ADDITIONAL INFORMATION.
(a) Not applicable.
(b) The information set forth in "The Offer--Section 13, Certain Legal
Matters; Regulatory Approvals" of the Offer to Purchase is incorporated herein
by reference.
(c) The information set forth in "The Offer--Section 12, Effects of the
Offer on the Market for Shares; Registration Under the Exchange Act" of the
Offer to Purchase is incorporated herein by reference.
(d) There are no material legal proceedings related to the Offer.
(e) The information set forth in the Offer to Purchase and Letter of
Transmittal is incorporated herein by reference.
ITEM 9. MATERIAL TO BE FILED AS EXHIBITS.
(a) (1) Form of Offer to Purchase, dated November 17, 1998.
(2) Form of Letter of Transmittal (including Certification of Taxpayer
Identification Number on Form W-9).
(3) Form of Notice of Guaranteed Delivery.
(4) Form of Letter by Nesbitt Burns Securities Inc. to Brokers, Dealers,
Commercial Banks, Trust Companies and Other Nominees dated November
17, 1998.
(5) Form of Letter to Clients for use by Brokers, Dealers, Commercial
Banks, Trust Companies and Other Nominees dated November 17, 1998.
(6) Text of Press Release issued by the Company, dated November 17, 1998.
(7) Form of Letter to Shareholders of the Company, dated November 17,
1998, from Peter B. Cherry, Chairman and President of the Company.
(8) Guidelines for Certification of Taxpayer Identification Number on
Substitute W-9.
(b) (1) Multicurrency Credit Agreement dated as of May 12, 1995 among The
Cherry Corporation, the banks party thereto and Harris Trust and Savings
Bank, as Agent, as amended. (Exhibit 4 to The Cherry Corporation's Form
8-K dated October 10, 1995 (Commission File No. 0-8955), is incorporated
herein by reference.)
(2) Second Amendment dated November 13, 1998 to the Multicurrency Credit
Agreement dated May 12, 1995 among The Cherry Corporation, the banks
party thereto and Harris Trust and Savings Bank, as Agent.
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(c) Not applicable.
(d) Not applicable.
(e) Not applicable.
(f) Not applicable.
(g) (1) Item 8 of the Company's Annual Report on Form 10-K for the year
ended February 28, 1998 (incorporated herein by reference to such Form
10-K).
(2) Pages 2 to 6 of the Company's Quarterly Report on Form 10-Q for the
quarter ended August 31, 1998 (incorporated herein by reference to the
Form 10-Q filed for the quarter ended August 31, 1998).
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SIGNATURE
After due inquiry and to the best of my knowledge and belief, I certify that
the information set forth in this Schedule 13E-4 is true, complete and correct.
Dated: November 17, 1998
THE CHERRY CORPORATION
By: /s/ PETER B. CHERRY
------------------------------
Name: Peter B. Cherry
TITLE: CHAIRMAN AND PRESIDENT
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[LOGO]
OFFER TO PURCHASE FOR CASH UP TO
1,687,500 SHARES OF ITS CLASS A COMMON STOCK AND/OR
562,500 SHARES OF ITS CLASS B COMMON STOCK
AT A PURCHASE PRICE FOR EACH CLASS NOT GREATER THAN $15.50
NOR LESS THAN $13.25 PER SHARE
THE OFFER, PRORATION PERIOD AND WITHDRAWAL RIGHTS EXPIRE AT 5:00 P.M., NEW
YORK CITY TIME, ON MONDAY, DECEMBER 21, 1998, UNLESS THE OFFER IS EXTENDED.
The Cherry Corporation, a Delaware corporation (the "Company"), hereby
invites its shareholders to tender shares of its Class A Common Stock, $1.00 par
value per share (the "Class A Shares"), and/or its Class B Common Stock, $1.00
par value per share (the "Class B Shares" and with the Class A Shares,
collectively the "Shares"), to the Company at a price for each class of Shares
not greater than $15.50 nor less than $13.25 per share in cash, without interest
thereon, as specified by tendering shareholders, upon the terms and subject to
the conditions set forth in this Offer to Purchase and the related Letter of
Transmittal (which, as amended or supplemented from time to time, together
constitute the "Offer").
The Company will, upon the terms and subject to the conditions of the Offer,
determine the single per share price for the Class A Shares and the single per
share price for the Class B Shares (each price to be not greater than $15.50 nor
less than $13.25 per share), net to the seller in cash, without interest thereon
(each a "Purchase Price"), that it will pay for Class A Shares and/or Class B
Shares, properly tendered and not withdrawn pursuant to the Offer, taking into
account the number of Shares of each class so tendered and the prices for each
class of Shares specified by tendering shareholders. The Company will select the
lowest Purchase Price for Class A Shares that will allow it to buy 1,687,500
Class A Shares properly tendered and not withdrawn pursuant to the Offer (or
such lesser number of Class A Shares as are properly tendered) at prices not
greater than $15.50 nor less than $13.25 per share. The Company will select the
lowest Purchase Price for Class B Shares that will allow it to buy 562,500 Class
B Shares properly tendered (or such lesser number of Class B Shares as are
properly tendered) at prices not greater than $15.50 nor less than $13.25 per
share. The Company may select a different Purchase Price for each class of
Shares. All Class A Shares purchased in the Offer will be purchased at the
Purchase Price for the Class A Shares, and all Class B Shares purchased in the
Offer will be purchased at the Purchase Price for the Class B Shares. The
Company will pay the applicable Purchase Price for all Shares properly tendered
at prices at or below such Purchase Price and not withdrawn upon the terms and
subject to the conditions of the Offer, including the proration and conditional
tender provisions. See Sections 1 and 15. Shares tendered at prices in excess of
the respective Purchase Price for each class of Shares and Shares not purchased
because of proration will be returned. The Company reserves the right, in its
sole discretion, to purchase more than 1,687,500 Class A Shares and/or 562,500
Class B Shares pursuant to the Offer.
THE OFFER IS NOT CONDITIONED ON ANY MINIMUM NUMBER OF SHARES BEING TENDERED.
THE OFFER IS, HOWEVER, SUBJECT TO CERTAIN OTHER CONDITIONS. SEE SECTION 7.
The Class A Shares and the Class B Shares are quoted on the Nasdaq National
Market under the symbols "CHERA" and "CHERB," respectively. As of November 16,
1998, the last full trading day prior to the commencement of the Offer, the last
reported sale prices for the Class A Shares and Class B Shares, as quoted by the
Nasdaq National Market, were $13.50 and $13.00 per share, respectively.
SHAREHOLDERS ARE URGED TO OBTAIN CURRENT MARKET QUOTATIONS FOR EACH CLASS OF
SHARES. SEE SECTION 8.
THE COMPANY'S BOARD OF DIRECTORS HAS UNANIMOUSLY APPROVED THE MAKING OF THE
OFFER. HOWEVER, SHAREHOLDERS MUST MAKE THEIR OWN DECISIONS WHETHER TO TENDER
SHARES AND, IF SO, HOW MANY SHARES TO TENDER AND THE PRICE OR PRICES AT WHICH
SHARES SHOULD BE TENDERED. NONE OF THE COMPANY, ITS BOARD OF DIRECTORS OR THE
DEALER MANAGER MAKES ANY RECOMMENDATION TO ANY SHAREHOLDER AS TO WHETHER TO
TENDER OR REFRAIN FROM TENDERING ANY SHARES OF EITHER CLASS. THE COMPANY HAS
BEEN ADVISED THAT NO DIRECTOR, EXECUTIVE OFFICER OR
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AFFILIATE OF THE COMPANY INTENDS TO TENDER ANY SHARES PURSUANT TO THE OFFER. IF
THE COMPANY PURCHASES 1,687,500 CLASS A SHARES AND 562,500 CLASS B SHARES
PURSUANT TO THE OFFER, THEN IMMEDIATELY FOLLOWING THE COMPLETION OF THE OFFER,
THE COMPANY'S EXECUTIVE OFFICERS AND DIRECTORS AS A GROUP WILL BENEFICIALLY OWN
APPROXIMATELY 54.9% OF THE OUTSTANDING SHARES (46.1% AND 67.8% OF THE
OUTSTANDING CLASS A SHARES AND CLASS B SHARES, RESPECTIVELY), AND PETER B.
CHERRY WILL BENEFICIALLY OWN APPROXIMATELY 52.8% OF THE OUTSTANDING SHARES
(43.8% AND 65.9% OF THE OUTSTANDING CLASS A SHARES AND CLASS B SHARES,
RESPECTIVELY).
IMPORTANT
Any shareholder wishing to tender all or any part of his or her Shares
should either (i) complete and sign the Letter of Transmittal (or a facsimile
thereof) in accordance with the instructions in the Letter of Transmittal, and
mail or deliver it with any required signature guarantee and any other required
documents to Harris Trust and Savings Bank (the "Depositary"), and either mail
or deliver the stock certificates for such Shares to the Depositary (with all
such other documents) or tender such Shares pursuant to the procedure for
book-entry tender set forth in Section 3, or (ii) request a broker, dealer,
commercial bank, trust company or other nominee to effect the transaction for
such shareholder. Holders of Shares registered in the name of a broker, dealer,
commercial bank, trust company or other nominee should contact such person if
they desire to tender their Shares. Any shareholder who desires to tender Shares
and whose certificates for such Shares are not immediately available or who
cannot comply with the procedure for book-entry transfer on a timely basis or
whose other required documentation cannot be delivered to the Depositary by the
expiration of the Offer, should tender such Shares pursuant to the guaranteed
delivery procedures set forth in Section 3.
TO PROPERLY TENDER SHARES, SHAREHOLDERS MUST PROPERLY COMPLETE THE LETTER OF
TRANSMITTAL, INCLUDING THE SECTIONS RELATING TO THE PRICE AT WHICH THEY ARE
TENDERING EACH CLASS OF SHARES.
Questions and requests for assistance or for additional copies of this Offer
to Purchase, the Letter of Transmittal or the Notice of Guaranteed Delivery may
be directed to the Information Agent or to the Dealer Manager at their
respective addresses and telephone numbers set forth on the back cover of this
Offer to Purchase.
THE COMPANY HAS NOT AUTHORIZED ANY PERSON TO MAKE ANY RECOMMENDATION ON
BEHALF OF THE COMPANY AS TO WHETHER SHAREHOLDERS SHOULD TENDER OR REFRAIN FROM
TENDERING ANY SHARES OF EITHER CLASS PURSUANT TO THE OFFER. THE COMPANY HAS NOT
AUTHORIZED ANY PERSON TO GIVE ANY INFORMATION OR TO MAKE ANY REPRESENTATION IN
CONNECTION WITH THE OFFER OTHER THAN THOSE CONTAINED HEREIN OR IN THE RELATED
LETTER OF TRANSMITTAL. IF GIVEN OR MADE, ANY SUCH RECOMMENDATION OR ANY SUCH
INFORMATION OR REPRESENTATION MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED
BY THE COMPANY.
------------------------
[LOGO]
THE DEALER MANAGER FOR THE OFFER IS:
NESBITT BURNS SECURITIES INC.
111 West Monroe Street, 20(th) Floor East
Chicago, Illinois 60603
Toll Free: (877) 461-2900
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<TABLE>
<S> <C>
SUMMARY................................................................................ 3
INTRODUCTION........................................................................... 5
THE OFFER.............................................................................. 8
</TABLE>
<TABLE>
<C> <S> <C>
1. Number of Shares; Proration.................................................... 8
2. Purpose of the Offer; Certain Effects of the Offer............................. 8
3. Procedures for Tendering Shares................................................ 13
4. Withdrawal Rights.............................................................. 18
5. Purchase of Shares and Payment of Purchase Price............................... 18
6. Conditional Tender of Shares................................................... 19
7. Certain Conditions of the Offer................................................ 20
8. Price Range of Shares; Dividends............................................... 21
9. Source and Amount of Funds..................................................... 22
10. Certain Information Concerning the Company..................................... 22
Interest of Directors and Officers; Transactions and Arrangements Concerning
11. Shares....................................................................... 26
Effects of the Offer on the Market for Shares; Registration under the Exchange
12. Act.......................................................................... 26
13. Certain Legal Matters; Regulatory Approvals.................................... 27
14. Certain Federal Income Tax Consequences........................................ 27
15. Extension of Offer; Termination; Amendment..................................... 31
16. Fees and Expenses.............................................................. 32
17. Miscellaneous.................................................................. 32
</TABLE>
2
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SUMMARY
This general summary is solely for the convenience of the Company's
shareholders and is qualified in its entirety by reference to the full text and
more specific details in this Offer to Purchase.
<TABLE>
<CAPTION>
<S> <C>
Number Of Shares To Be Purchased.......... 1,687,500 Class A Shares (or such lesser number of shares as are
properly tendered) and 562,500 Class B Shares (or such lesser
number of shares as are properly tendered). See Section 1.
Purchase Price............................ The Company will select a single per share net cash price for the
Class A Shares and a single per share net cash price for the Class
B Shares, each price to be not greater than $15.50 nor less than
$13.25 per Share, that it will pay for each class of Shares
properly tendered at or below the applicable Purchase Price. The
Company may select a different Purchase Price for each class of
Shares. All Class A Shares purchased in the Offer will be
purchased at the Purchase Price for Class A Shares and all Class B
Shares purchased in the Offer will be purchased at the Purchase
Price for Class B Shares, even if tendered below the respective
Purchase Prices. Each shareholder desiring to tender Shares (i)
must specify in the Letter of Transmittal the minimum price (not
more than $15.50 nor less than $13.25 per share) with respect to
each class of Shares at which such shareholder is willing to have
his or her Class A Shares and/or Class B Shares purchased by the
Company, or (ii) elect to have such shareholder's Shares purchased
at a price determined by the Dutch Auction tender process, which
could result in his or her Shares being purchased at the minimum
price of $13.25 per share.
How To Tender Shares...................... See Section 3. Call the Information Agent or the Dealer Manager or
consult your broker for assistance.
Brokerage Commissions and Stock Transfer
Tax..................................... Tendering shareholders who tender their Shares directly to the
Depositary will not be obligated to pay brokerage fees or
commissions to the Dealer Manager, the Depositary or the
Information Agent or, except as set forth in Instruction 7 to the
Letter of Transmittal, transfer taxes on the sale of Shares
pursuant to the Offer. A tendering shareholder who holds Shares
with such shareholder's broker may be required by such broker to
pay a service charge or other fee.
Expiration And Proration Dates............ Monday, December 21, 1998, at 5:00 P.M., New York City Time,
unless extended by the Company.
Payment Date.............................. As soon as practicable after the Expiration Date.
</TABLE>
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<TABLE>
<CAPTION>
Position Of The Company and Its
Directors............................... Neither the Company nor its Board of Directors makes any
recommendation to any shareholder as to whether to tender or
refrain from tendering any Shares of either class. See Section 11
for information regarding the intentions of the Company's
directors, executive officers and affiliates with respect to
tendering Shares pursuant to the Offer.
<S> <C>
Withdrawal Rights......................... Tendered Shares may be withdrawn at any time until 5:00 P.M., New
York City Time, on Monday, December 21, 1998, unless the Offer is
extended by the Company, and, unless previously purchased, after
12:00 Midnight, New York Time, on January 15, 1999. See Section 4.
Odd Lots.................................. There will be no proration of (i) Class A Shares tendered by any
shareholder owning beneficially less than 100 Class A Shares who
tenders all such Shares or (ii) Class B Shares tendered by any
shareholder owning beneficially less than 100 Class B Shares who
tenders all such Shares, at or below the applicable Purchase Price
prior to the Expiration Date and who checks the "Odd Lots" box for
such class of Shares in the Letter of Transmittal. See Section 1.
Further Developments Regarding the
Offer................................... Call the Information Agent or Dealer Manager or consult your
broker.
Market Price.............................. On November 16, 1998, the last full trading day prior to the
announcement of the Offer, the last reported sales prices for the
Class A Shares and Class B Shares, as quoted on the Nasdaq
National Market, were $13.50 and $13.00, respectively.
</TABLE>
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TO THE HOLDERS OF CLASS A SHARES AND CLASS B SHARES OF THE CHERRY CORPORATION:
INTRODUCTION
The Cherry Corporation, a Delaware corporation (the "Company"), invites its
shareholders to tender Class A Shares and/or Class B Shares, at a price for each
class of Shares not greater than $15.50 nor less than $13.25 per Share, as
specified by shareholders tendering their Shares, upon the terms and subject to
the conditions set forth herein and in the related Letter of Transmittal (which,
as amended or supplemented from time to time, together constitute the "Offer").
The Company will determine the single per share price for the Class A Shares and
the single per share price for the Class B Shares (each price to be not greater
than $15.50 nor less than $13.25 per share), net to the seller in cash, without
interest thereon (the "Purchase Price"), that it will pay for each class of
Shares properly tendered and not withdrawn pursuant to the Offer, taking into
account the number of Shares of each class so tendered and the prices for each
class of Shares specified by tendering shareholders. The Company will select the
lowest Purchase Price for Class A Shares that will allow it to buy 1,687,500
Class A Shares (or such lesser number of Class A Shares as are properly
tendered), and the lowest Purchase Price for Class B Shares that will allow it
to buy 562,500 Class B Shares (or such lesser number of Class B Shares as are
properly tendered), pursuant to the Offer. The Company may select a different
Purchase Price for each class of Shares. All Class A Shares purchased in the
Offer will be purchased at the Purchase Price for the Class A Shares and all
Class B Shares purchased in the Offer will be purchased at the Purchase Price
for the Class B Shares. The Company will pay the applicable Purchase Price for
all Shares properly tendered at prices at or below such Purchase Price and not
withdrawn, upon the terms and subject to the conditions of the Offer, including
the proration and conditional tender provisions. Shares tendered at prices in
excess of the respective Purchase Prices for each class of Shares and Shares not
purchased because of proration or conditional tender will be returned. The
Company reserves the right, in its sole discretion, to purchase more than
1,687,500 Class A Shares and/or 562,500 Class B Shares pursuant to the Offer.
See Section 15.
THIS OFFER IS NOT CONDITIONED UPON THE TENDER OF ANY MINIMUM NUMBER OF
SHARES BUT IS SUBJECT TO CERTAIN OTHER CONDITIONS. SEE SECTION 7.
Upon the terms and subject to the conditions of the Offer, if at the
expiration of the Offer more than 1,687,500 Class A Shares and 562,500 Class B
Shares are properly tendered at or below the Purchase Price and are not properly
withdrawn, the Company will buy, with respect to each class of Shares, first
from all Odd Lot Holders (as defined below) of Class A Shares or Class B Shares
who properly tender all such Shares at or below the Purchase Price and then,
subject to procedures for conditional tenders described in Section 6, on a pro
rata basis, with respect to each class of Shares, from all other shareholders
who properly tender at prices at or below the Purchase Price (and do not
withdraw them). See Section 1. The Company will return at its own expense all
Shares not purchased pursuant to the Offer, including Shares tendered at prices
greater than the Purchase Price and not withdrawn and Shares not purchased
because of proration or conditional tenders. The applicable Purchase Price will
be paid net to the tendering shareholder in cash, without interest thereon, for
all Shares of each class purchased. Tendering shareholders will not be obligated
to pay brokerage, commissions, solicitation fees or, except as set forth in
Instruction 7 to the Letter of Transmittal, transfer taxes on the sale of Shares
pursuant to the Offer. A tendering shareholder who holds Shares with such
shareholder's broker may be required by such broker to pay a service charge or
other fee. HOWEVER, ANY TENDERING SHAREHOLDER OR OTHER PAYEE WHO FAILS TO
COMPLETE, SIGN AND RETURN TO THE DEPOSITARY THE FORM W-9 THAT IS INCLUDED AS
PART OF THE LETTER OF TRANSMITTAL OR FORM W-8 OBTAINED FROM THE DEPOSITARY MAY
BE SUBJECT TO REQUIRED BACKUP FEDERAL INCOME TAX WITHHOLDING OF 31% OF THE GROSS
PROCEEDS PAYABLE TO SUCH SHAREHOLDER OR OTHER PAYEE PURSUANT TO THE OFFER. SEE
SECTION 14. The Company will pay all fees and expenses of Nesbitt Burns
Securities Inc. ("Nesbitt Burns" or the "Dealer Manager"), Harris Trust and
Savings Bank (the "Depositary"), Morrow & Co., Inc. (the "Information
5
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Agent"), and Harris Trust and Savings Bank (the "Transfer Agent") incurred in
connection with the Offer. See Section 16.
THE BOARD OF DIRECTORS HAS UNANIMOUSLY APPROVED THE MAKING OF THE OFFER.
HOWEVER, EACH SHAREHOLDER MUST MAKE ITS OWN DECISION WHETHER TO TENDER SHARES
AND, IF SO, HOW MANY SHARES AND AT WHAT PRICE OR PRICES SHARES SHOULD BE
TENDERED. NONE OF THE COMPANY, ITS BOARD OF DIRECTORS OR THE DEALER MANAGER
MAKES ANY RECOMMENDATION TO ANY SHAREHOLDER AS TO WHETHER TO TENDER OR REFRAIN
FROM TENDERING ANY SHARES OF EITHER CLASS. THE COMPANY HAS BEEN ADVISED THAT NO
DIRECTOR, EXECUTIVE OFFICER OR AFFILIATE OF THE COMPANY INTENDS TO TENDER ANY
SHARES PURSUANT TO THE OFFER. If the Company purchases 1,687,500 Class A Shares
and 562,500 Class B Shares pursuant to the Offer, then immediately following the
completion of the Offer, the Company's executive officers and directors as a
group will beneficially own approximately 54.9% of the outstanding Shares (46.1%
and 67.8% of the outstanding Class A Shares and Class B Shares, respectively),
and Peter B. Cherry will own approximately 52.8% of the outstanding Shares
(43.8% and 65.9% of the outstanding Class A Shares and Class B Shares,
respectively).
SEE SECTION 11 FOR INFORMATION REGARDING THE INTENTION OF THE COMPANY'S
DIRECTORS, EXECUTIVE OFFICERS AND AFFILIATES WITH RESPECT TO TENDERING SHARES
PURSUANT TO THE OFFER.
The Company's Board of Directors believes that the Company's financial
condition and outlook and current market conditions, including recent trading
prices of the Shares, make this an attractive time to repurchase a portion of
the outstanding Shares. The Company's Board of Directors believes that the Offer
constitutes a prudent use of the Company's financial resources, given the
Company's business profile, assets and prospects. The Company believes that the
Offer will provide a capital structure that makes greater use of financial
leverage without imposing unreasonable risk on the Company or its shareholders.
The amounts required to fund the Offer and pay related expenses will be provided
by the Company's Credit Facility described in Section 9. As of November 16,
1998, the Company had available for borrowing approximately $53.0 million under
its Credit Facility. The Company believes that its Credit Facility, along with
cash generated from operations, will be sufficient to finance the Offer and the
Company's working capital needs and capital expenditures.
The Offer provides shareholders who are considering a sale of all or a
portion of their Shares the opportunity to determine the price or prices, not
greater than $15.50 nor less than $13.25 per share, at which they are willing to
sell their Class A Shares and/or Class B Shares and, if any such Shares are
purchased pursuant to the Offer, to sell those Shares for cash without the usual
transaction costs associated with open market sales. In addition, the Offer may
give shareholders the opportunity to sell at prices greater than market prices
prevailing prior to announcement of the Offer.
The Company is not offering, as part of the Offer, to purchase any
outstanding options to purchase Class A Shares or Class B Shares, and tenders
for such options will not be accepted. Holders of vested options may tender
Shares issuable upon exercise of such options by exercising such options during
the Offer and tendering the Shares received upon the exercise of such options.
See the instructions set forth in "Procedure for Tendering Shares--Stock Option
Plans" in Section 3.
The Company believes that, upon the completion of the Offer, the Class A
Shares and the Class B Shares will continue to be quoted on the Nasdaq National
Market. However, after the completion of the Offer, the Company may consider a
possible conversion or exchange of all of the outstanding Class A Shares into
Class B Shares. If such conversion or exchange did occur, the Class B Shares
would be the only Shares quoted on the Nasdaq National Market or registered
under the Securities Exchange Act of 1934, as amended (the "Exchange Act"). The
Company has not made the determination whether or not to proceed
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with such a conversion or exchange. There can be no assurance that such a
conversion or exchange will occur or, if it does occur, the timing thereof.
As of November 16, 1998, the Company had issued and outstanding 7,738,680
Class A Shares and 4,762,564 Class B Shares. Each Class B Share has one vote per
share and the Class A Shares are nonvoting. The Shares that the Company is
offering to purchase pursuant to the Offer represent approximately 18.0% of the
outstanding Shares (or 21.8% and 11.8% of the outstanding Class A Shares and
Class B Shares, respectively). The Class A Shares and Class B Shares are quoted
on the Nasdaq National Market under the symbols "CHERA" and "CHERB,"
respectively. On November 16, 1998, the last full trading day prior to the
announcement of the Offer, the closing sale prices for Class A Shares and the
Class B Shares, as quoted on the Nasdaq National Market, were $13.50 and $13.00
per share, respectively. SHAREHOLDERS ARE URGED TO OBTAIN CURRENT MARKET
QUOTATIONS FOR THE CLASS A SHARES AND CLASS B SHARES. See Section 8.
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THE OFFER
1. NUMBER OF SHARES; PRORATION
Upon the terms and subject to the conditions of the Offer, the Company will
accept for payment (and thereby purchase) 1,687,500 Class A Shares and/or
562,500 Class B Shares or such lesser number of Class A Shares and/or Class B
Shares as are properly tendered prior to the Expiration Date (and not properly
withdrawn in accordance with Section 4), at a net cash price for each class of
Shares (determined in the manner set forth below) not greater than $15.50 nor
less than $13.25 per share. The term "Expiration Date" means 5:00 P.M., New York
City Time, on Monday, December 21, 1998, unless and until the Company, in its
sole discretion, shall have extended the period of time during which the Offer
will remain open, in which event the term "Expiration Date" shall refer to the
latest time and date at which the Offer, as so extended by the Company, shall
expire. See Section 15 for a description of the Company's right to extend the
time during which the Offer is open and to delay, terminate or amend the Offer.
Subject to Section 2, if the Offer is oversubscribed for either the Class A
Shares or the Class B Shares, Shares tendered at or below the Purchase Price
prior to the Expiration Date will be subject to proration within each class of
Shares, subject to the conditional tender provisions, except for Odd Lots of
either class of Shares as explained below. The proration period also expires on
the Expiration Date. The Offer is not conditioned on any minimum number of
Shares being tendered. In accordance with applicable regulations of the
Securities and Exchange Commission (the "Commission"), the Company may purchase
pursuant to the Offer an additional amount of Shares not to exceed 2% of the
outstanding Shares of either class without amending or extending the Offer. See
Section 15. If (i) the Company increases or decreases the price to be paid for
Shares, the Company increases the Dealer Manager's fee, the Company increases
the number of Shares being sought, and such increase in the number of Shares
being sought exceeds 2% of the outstanding Shares of either class, or the
Company decreases the number of Shares being sought, and (ii) the Offer is
scheduled to expire at any time earlier than the tenth business day from and
including the date that notice of such increase or decrease is first published,
sent or given in the manner specified in Section 15, then the Offer will be
extended until the expiration of ten business days from and including the date
of such notice. For purposes of the Offer, a "business day" means any day other
than a Saturday, Sunday or federal holiday and consists of the time period from
12:01 a.m. through 12:00 Midnight, New York City Time.
The Company will, upon the terms and subject to the conditions of the Offer,
determine a single per share Purchase Price for Class A Shares and a single per
share Purchase Price for Class B Shares that it will pay for each class of
Shares properly tendered and not withdrawn pursuant to the Offer, taking into
account the number of Shares of each class so tendered and the prices for each
class specified by tendering shareholders. The Company will select the lowest
Purchase Price for Class A Shares that will allow it to buy 1,687,500 Class A
Shares properly tendered and not withdrawn pursuant to the Offer (or such lesser
number of Class A Shares as are properly tendered) at prices not greater than
$15.50 nor less than $13.25 per share. The Company will select the lowest
Purchase Price for Class B Shares that will allow it to buy 562,500 Class B
Shares properly tendered and not withdrawn pursuant to the Offer (or such lesser
number of Class B Shares as are properly tendered) at prices not greater than
$15.50 nor less than $13.25 per share. The Company may select a different
Purchase Price for each class of Shares. All Class A Shares purchased in the
Offer will be purchased at the Purchase Price for the Class A Shares and all
Class B Shares purchased in the Offer will be purchased at the Purchase Price
for the Class B Shares. The Company will pay the applicable Purchase Price for
all Shares properly tendered at prices at or below such Purchase Price and not
withdrawn, upon the terms and subject to the conditions of the Offer, including
the proration and conditional tender provisions. Shares tendered at prices in
excess of the respective Purchase Price for each class of Shares and Shares not
purchased because of proration will be returned. The Company reserves the right,
in its sole discretion, to purchase more than 1,687,500 Class A Shares and/or
562,500 Class B Shares pursuant to the Offer.
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THE OFFER IS NOT CONDITIONED ON ANY MINIMUM NUMBER OF SHARES BEING TENDERED,
BUT IS SUBJECT TO CERTAIN OTHER CONDITIONS. SEE SECTION 7.
In accordance with Instruction 5 of the Letter of Transmittal, shareholders
desiring to tender Shares must (i) specify the price (not greater than $15.50
nor less than $13.25 per Share) with respect to each class of Shares, at which
they are willing to sell their Class A Shares and/or Class B Shares to the
Company, or (ii) elect to have such shareholders' Shares purchased at a price
determined by the Dutch Auction tender process, which could result in such
Shares being purchased at the minimum price of $13.25 per Share. By following
the directions of the Letter of Transmittal, shareholders can specify one
minimum price for a specified portion of their Shares of a class and a different
minimum price for other specified Shares. Shareholders can also specify the
order in which their Shares within each class will be purchased in the event
that, as a result of the proration provisions or otherwise, some but not all of
their tendered Shares are purchased pursuant to the Offer. As promptly as
practicable following the Expiration Date, the Company will, in its sole
discretion, determine the Purchase Price that it will pay for each class of
Shares properly tendered and not withdrawn pursuant to the Offer, taking into
account the number of Shares of each class tendered and the prices specified by
tendering shareholders. The Company intends to select the lowest Purchase Price
for Class A Shares, not greater than $15.50 nor less than $13.25 per share, that
will enable it to purchase 1,687,500 Class A Shares (or such lesser number of
Class A Shares as are properly tendered) pursuant to the Offer. The Company
intends to select the lowest Purchase Price for Class B Shares, not greater than
$15.50 nor less than $13.25 per share, that will enable it to purchase 562,500
Class B Shares (or such lesser number of Class B Shares as are properly
tendered) pursuant to the Offer. The Company may select a different Purchase
Price for each class of Shares. The Company will pay the Purchase Price for each
class of Shares for all Shares of that class properly tendered prior to the
Expiration Date pursuant to the Offer at prices at or below such Purchase Price
and not withdrawn, upon the terms and subject to the conditions of the Offer,
including the proration and conditional tender provisions. All Shares tendered
and not purchased pursuant to the Offer, including Shares tendered at prices
greater than the Purchase Price and Shares not purchased because of proration or
conditional tenders, will be returned to the tendering shareholders (or to
another person specified by a tendering shareholder) at the Company's expense as
promptly as practicable following the Expiration Date.
If the number of Shares validly tendered at or below the Purchase Price and
not withdrawn prior to the Expiration Date is less than or equal to 1,687,500
Class A Shares and 562,500 Class B Shares (or such greater number of Shares as
the Company may elect to purchase pursuant to the Offer), then the Company will,
with respect to each class of Shares, upon the terms and subject to the
conditions of the Offer, purchase all Shares so tendered at the Purchase Price
selected for each class.
PRIORITY. Upon the terms and subject to the conditions of the Offer, if
more than 1,687,500 Class A Shares and/or 562,500 Class B Shares (or such
greater number of Class A Shares and/or Class B Shares as the Company may elect
to purchase pursuant to the Offer) have been properly tendered at or below the
Purchase Price prior to the Expiration Date and not withdrawn, then the Company
will, with respect to each class of Shares, purchase properly tendered Shares in
the following order of priority:
(i) all Odd Lot Shares of that class properly tendered prior to the
Expiration Date and not withdrawn by any Odd Lot Holder who:
(a) tenders all Odd Lot Shares of that class beneficially owned by such
Odd Lot Holder of either class of the Shares at a price at or below the
Purchase Price (tenders of less than all Shares of a particular class
owned by such shareholder will not qualify for this preference); and
(b) completes the box captioned "Odd Lots" on the Letter of Transmittal
and, if applicable, on the Notice of Guaranteed Delivery; and
(ii) after purchase of all of the foregoing Shares in item (i) above, all
Shares of that class conditionally tendered in accordance with Section 6, for
which the condition was satisfied, and all other Shares tendered properly and
unconditionally, in each case at prices at or below the Purchase Price prior to
the
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Expiration Date and not withdrawn prior to the Expiration Date, on a pro rata
basis (with appropriate adjustments to avoid purchases of fractional Shares) as
described below; and
(iii) if necessary to permit the Company to purchase 1,687,500 Class A
Shares and/or 562,500 Class B Shares, Shares of that class conditionally
tendered for which the condition was not satisfied, at or below the Purchase
Price prior to the Expiration Date and not withdrawn, selected by lot in
accordance with Section 6.
PRORATION. If proration of tendered Shares is required, then the Company
will determine the proration factor for each class of Shares as soon as
practicable following the Expiration Date. Proration for each shareholder
tendering Shares, other than Odd Lot Holders, shall be based on the ratio of the
number of Shares of that class tendered by such shareholder, at or below the
Purchase Price, to the total number of Shares of that class tendered by all
shareholders, other than Odd Lot Holders, at or below the Purchase Price,
subject to the conditional tender provisions described in Section 6. This ratio
will be applied to shareholders tendering Shares for that class (other than Odd
Lot Holders) to determine the number of Shares that will be purchased from each
such Shareholder pursuant to the Offer. Because of the difficulty in determining
the number of Shares properly tendered (including Shares tendered by guaranteed
delivery procedures, as described in Section 3) and not withdrawn, and because
of the odd lot procedure, the Company does not expect that it will be able to
announce the final proration factor or commence payment for any Shares purchased
pursuant to the Offer until approximately seven (7) to ten (10) business days
after the Expiration Date. The preliminary results of any proration will be
announced by press release as soon as practicable after the Expiration Date.
Shareholders may obtain such preliminary information from the Information Agent
or the Dealer Manager and may be able to obtain such information from their
brokers or financial advisors.
As described in Section 14, the number of Shares that the Company will
purchase from a shareholder may affect the federal income tax consequences to
the shareholder of such purchase and therefore may be relevant to the
shareholder's decision whether to tender Shares. The Letter of Transmittal
affords each tendering shareholder the opportunity to designate the order of
priority in which Shares tendered are to be purchased in the event of proration
and the opportunity to make a tender of all of the shareholder's Shares
conditioned upon the purchase of all or a specified minimum number of the
Shares.
This Offer to Purchase and the related Letter of Transmittal will be mailed
to record holders of Shares as of November 12, 1998 and will be furnished to
brokers, banks and similar persons whose names, or the names of whose nominees,
appear on the Company's shareholder list or, if applicable, who are listed as
participants in a clearing agency's security position listing for subsequent
transmittal to beneficial owners of Shares.
ODD LOTS. For purposes of the Offer, the term "Odd Lots" shall mean all
Shares of a class properly tendered prior to the Expiration Date at prices at or
below the Purchase Price and not withdrawn by any person who owns, beneficially
or of record, as of November 12, 1998 and as of the Expiration Date, an
aggregate of less than 100 Shares of a class (that is, fewer than 100 Class A
Shares and/or fewer than 100 Class B Shares) (an "Odd Lot Holder"). In order to
qualify for this preference, an Odd Lot Holder must tender, at or below the
Purchase Price for such class of Shares, all of his or her Shares in accordance
with the procedures described in Section 3. As set forth above, Odd Lots will be
accepted for payment before proration, if any, of the purchase of other tendered
Shares of that class. This preference is not available to partial tenders. Any
shareholder wishing to tender all of such shareholder's Class A Shares and/or
Class B Shares pursuant to this Section must complete the box captioned "Odd
Lots" on the Letter of Transmittal and, if applicable, on the Notice of
Guaranteed Delivery and must properly indicate the price at which such Shares
are being tendered. See Instruction 8 to the Letter of Transmittal.
As of November 16, 1998, there were approximately 700 holders of record of
Class A Shares and 525 holders of record of Class B Shares. Approximately 60% of
these holders of record of Class A Shares held less than 100 Class A Shares and
held in the aggregate 14,700 Class A Shares. Approximately 60% of the holders of
record of Class B Shares held less than 100 Class B Shares and held in the
aggregate
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approximately 10,300 Class B Shares. Because of the large number of Shares held
in the names of brokers and nominees, the Company is unable to estimate the
number of beneficial owners of less than 100 Class A Shares or 100 Class B
Shares or the aggregate number of Shares owned by these beneficial owners.
The Company also reserves the right, but will not be obligated, to purchase
all Shares of a class duly tendered by any shareholder who tendered all Shares
of such class owned, beneficially or of record, at or below the Purchase Price
and who, as a result of proration, would then own, beneficially or of record, an
aggregate of fewer than 100 Class A Shares and/or fewer than 100 Class B Shares.
If the Company exercises this right, it will increase the number of Shares that
it is offering to purchase by the number of Shares purchased through the
exercise of the right.
2. PURPOSE OF THE OFFER; CERTAIN EFFECTS OF THE OFFER
The discussion in the Introduction, this Section 2, Section 10 and elsewhere
in the Offer to Purchase contains forward-looking statements that involve risks
and uncertainties that could cause actual results to differ materially from
those in the forward-looking statements. When used in this Offer to Purchase,
the words "anticipate," "believe," "plans," "estimate," "intend," "has or may
consider" and "expect" and similar expressions are intended to identify such
forward-looking statements. Such factors include, but are not limited to,
changes in the following: general economic and business conditions, demand for
the Company's products, competition, currency fluctuations, interest rate
fluctuations, relationships with strategic or major customers, suppliers, joint
venture partners and product distributors, cost and availability of raw
materials, technology, domestic and international business legislation and
regulations, the Company's ability to obtain adequate financing in the future,
operational capabilities due to natural disasters and other unforeseen events.
Some or all of the factors are beyond the Company's control. There can be no
assurance that actual results, performance or achievements of the Company will
not differ materially from any future results, performance or achievement
expressed or implied by such forward-looking statements. The Company undertakes
no obligation to release publicly the results of any revisions to these
forward-looking statements to reflect events or circumstances after the date
hereof or to reflect the occurrence of unanticipated events.
The Offer provides shareholders who are considering a sale of all or a
portion of their Shares with the opportunity to determine the price or prices
(not greater than $15.50 nor less than $13.25 per share) at which they are
willing to sell their Shares and, subject to the terms and conditions of the
Offer, to possibly sell those Shares for cash without the usual transaction
costs associated with market sales. The Offer also allows shareholders to sell a
portion of their Shares while retaining a continuing equity interest in the
Company. In addition, the Offer may give shareholders the opportunity to sell
Shares at prices greater than market prices prevailing immediately prior to
announcement of the Offer. The Offer would allow Odd Lot Holders, who hold
Shares in their names, who tender their Shares directly to the Depositary and
whose Shares are purchased pursuant to the Offer, to avoid both the payment of
brokerage commissions and any applicable odd lot discounts payable on sales of
odd lots on a securities exchange. Shareholders who decide not to accept the
Offer will realize a proportionate increase in their relative equity interest in
the Company and thus in the Company's future earnings and assets, subject to the
Company's right to issue additional Shares and other equity securities in the
future. To the extent the purchase of Shares in the Offer results in a reduction
of the number of shareholders, the costs of the Company for services to
shareholders may be reduced. Shareholders who do not accept the Offer may or may
not be able to sell their Shares in the future at a higher price.
The Company's Board of Directors believes that the Company's financial
condition and outlook and current market conditions, including recent trading
prices of the Shares, make this an attractive time to repurchase a portion of
the outstanding Shares. The Company's Board of Directors believes that the Offer
constitutes a prudent use of the Company's financial resources, given the
Company's business profile, assets and prospects. The Company believes that the
Offer will provide a capital structure that makes greater use of financial
leverage without imposing unreasonable risk on the Company or its shareholders.
The amounts required to fund the Offer and pay related expenses will be provided
by the Company's
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Credit Facility described in Section 9. As of November 16, 1998, the Company had
available for borrowing approximately $53.0 million under its Credit Facility.
The Company believes that its Credit Facility, along with cash generated from
operations, will be sufficient to finance the Offer and the Company's working
capital needs and capital expenditures. Accordingly, the Offer is consistent
with the Company's goal of increasing shareholder value.
The Company believes that, upon the completion of the Offer, the Class A
Shares and the Class B Shares will continue to be quoted on the Nasdaq National
Market. However, after the completion of the Offering, the Company may consider
a possible conversion or exchange of all of the outstanding Class A Shares into
Class B Shares. If such conversion or exchange did occur, the Class B Shares
would be the only Shares quoted on the Nasdaq National Market or registered
under the Exchange Act. The Company has not made the determination whether or
not to proceed with such a conversion or exchange. There can be no assurance
that such a transaction will occur or, if it does not occur, the timing thereof.
THE BOARD OF DIRECTORS OF THE COMPANY HAS UNANIMOUSLY APPROVED THE MAKING OF
THE OFFER. HOWEVER, SHAREHOLDERS MUST MAKE THEIR OWN DECISIONS WHETHER TO TENDER
SHARES OF EITHER CLASS AND, IF SO, HOW MANY SHARES TO TENDER AND THE PRICE OR
PRICES AT WHICH SHARES SHOULD BE TENDERED. NONE OF THE COMPANY, ITS BOARD OF
DIRECTORS OR THE DEALER MANAGER MAKES ANY RECOMMENDATION TO ANY SHAREHOLDER AS
TO WHETHER TO TENDER OR REFRAIN FROM TENDERING SHARES AND NEITHER THE COMPANY
NOR ITS BOARD OF DIRECTORS HAS AUTHORIZED ANY PERSON TO MAKE ANY SUCH
RECOMMENDATION.
Shares that the Company acquires pursuant to the Offer will be cancelled and
returned to the status of authorized but unissued stock and will be available
for the Company to issue without further shareholder action (except as required
by applicable law or the rules of the Nasdaq National Market or any other
securities exchange on which the Shares are listed) for purposes including,
without limitation, the acquisition of other businesses, the raising of
additional capital for use in the Company's business and the satisfaction of
obligations under existing or future employee benefit or compensation programs
or stock plan or compensation programs for directors. The Company has no current
plans for issuance of the Shares repurchased pursuant to the Offer.
The Company has from time to time explored and will continue to explore
strategic arrangements, transactions and opportunities consistent with the
Company's goal of increasing shareholder value. Such strategic transactions
could include acquisitions, joint ventures, corporate restructurings, and a
separation of its principal lines of business through a spin-off, public
offering, sale or otherwise. The Company's management plans to recommend to the
Board of Directors that the Company adopt a stock option plan under which
employees of its semiconductor subsidiary would receive options to purchase
stock of that subsidiary. Management believes such a plan is critical in
attracting and retaining key employees at this subsidiary. The holders of any
stock issued under this stock option plan would, as long as no change of control
of the semiconductor subsidiary has occurred, have the right to sell the stock
to the Company upon such holder's death, disability or retirement at a purchase
price to be based upon the value of the semiconductor subsidiary. The Company
has not made the determination whether or not to proceed with this stock option
plan, and there can be no assurance that such stock option plan will be
implemented by the Company. The Company does not currently have any plans to
enter into any strategic transactions. The Company's decision to enter into any
strategic transaction in the future will depend upon a number of factors,
including, without limitation, the Company's business and financial position,
its corporate strategies, general economic and market conditions, and the market
value of its businesses and the Shares. In the event that the Company enters
into a strategic transaction in the future and such transaction increases the
market value of the Shares, however, the shareholders whose Shares are purchased
in the Offer will not realize any of the potential value of such transaction.
The Company may in the future purchase additional Shares on the open market, in
private transactions, through tender offers or otherwise although it has no
current plans to do so. Any additional purchase may be on the same terms or on
terms which are more or
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less favorable to shareholders than the terms of the Offer. However, under the
Exchange Act rules, the Company and its affiliates are prohibited from
purchasing any Shares, other than pursuant to the Offer, until at least ten
business days after the Expiration Date. Any possible future purchases by the
Company will depend on many factors, including the results of the Offer, the
market price of the Shares, the Company's business and financial position and
general economic and market conditions.
Except as disclosed in this Offer to Purchase, the Company currently has no
plans or proposals that relate to or would result in (a) the acquisition by any
person of additional securities of the Company or the disposition of securities
of the Company; (b) an extraordinary corporate transaction, such as a merger,
reorganization or liquidation, involving the Company or any or all of its
subsidiaries; (c) a sale or transfer of a material amount of assets of the
Company or any of its subsidiaries; (d) any change in the present Board of
Directors or management of the Company; (e) any material change in the present
dividend rate or policy, or indebtedness or capitalization of the Company; (f)
any other material change in the Company's corporate structure or business; (g)
any change in the Company's Certificate of Incorporation or Bylaws or any
actions which may impede the acquisition of control of the Company by any
person; (h) a class of equity security of the Company being delisted from a
national securities exchange; (i) a class of equity security of the Company
becoming eligible for termination of registration pursuant to Section 12(g)(4)
of the Exchange Act; or (j) the suspension of the Company's obligation to file
reports pursuant to Section 15(d) of the Exchange Act.
3. PROCEDURES FOR TENDERING SHARES
PROPER TENDER OF SHARES. For Shares to be properly tendered pursuant to the
Offer:
(i) the certificates for such Shares (or confirmation of receipt of such
Shares pursuant to the procedures for book-entry transfer set forth below),
together with a properly completed and duly executed Letter of Transmittal (or
manually signed facsimile thereof), including any required signature guarantees
and any other documents required by the Letter of Transmittal, must be received
prior to 5:00 P.M., New York City Time, on the Expiration Date by the Depositary
at its address set forth on the back cover of this Offer to Purchase; or
(ii) the tendering shareholder must comply with the guaranteed delivery
procedure set forth below.
IN ACCORDANCE WITH INSTRUCTION 5 OF THE LETTER OF TRANSMITTAL, SHAREHOLDERS
DESIRING TO TENDER SHARES PURSUANT TO THE OFFER MUST FOR EACH CLASS OF SHARES
TENDERED EITHER (i) PROPERLY INDICATE IN THE SECTION CAPTIONED "PRICE (IN
DOLLARS) PER SHARE AT WHICH SHARES ARE BEING TENDERED" ON THE LETTER OF
TRANSMITTAL THE PRICE (IN MULTIPLES OF $.25) AT WHICH THEIR SHARES ARE BEING
TENDERED, OR (ii) CHECK THE BOX IN THE SECTION BY THE LETTER OF TRANSMITTAL
CAPTIONED "SHARES TENDERED AT PRICE DETERMINED BY DUTCH AUCTION." A shareholder
who wishes to maximize the chance that such shareholder's Class A Shares and
Class B Shares will be purchased at the relevant Purchase Price should for each
class of Shares tendered check the box for the Class A Shares and the box for
the Class B Shares on the Letter of Transmittal marked "Shares Tendered at Price
Determined by Dutch Auction." Note that this election could result in such
shareholder's Shares (of either class) being purchased at the minimum price of
$13.25 per share. A shareholder who wishes to indicate specific prices (in
multiples of $0.25) at which such shareholder's Class A Shares and Class B
Shares are being tendered must check a box for the Class A Shares and a box for
the Class B Shares under the sections captioned "Shares Tendered at Price
Determined by Shareholder" of the Letter of Transmittal in the table labeled
"Price Per Share at Which Shares Are Being Tendered." Shareholders who desire to
tender Shares of one class at more than one price must complete a separate
Letter of Transmittal for each price at which such Shares are tendered. The same
Shares cannot be tendered (unless properly withdrawn previously in accordance
with the terms of the Offer) at more than one price. IN ORDER TO PROPERLY TENDER
SHARES OF EACH CLASS ONE AND ONLY ONE PRICE BOX MUST BE CHECKED IN THE
APPROPRIATE SECTION FOR CLASS A SHARES AND ONE AND ONLY ONE PRICE BOX MUST BE
CHECKED IN THE APPROPRIATE SECTION FOR CLASS B SHARES ON EACH LETTER OF
TRANSMITTAL.
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A SHAREHOLDER TENDERING BOTH CLASS A SHARES AND CLASS B SHARES MUST COMPLETE
THE PRICE SELECTION BOXES FOR BOTH THE CLASS A SHARES AND THE CLASS B SHARES. A
TENDER OF SHARES WILL BE PROPER IF, AND ONLY IF, ON THE LETTER OF TRANSMITTAL A
SHAREHOLDER CHECKS EITHER (i) THE BOX FOR THE CLASS A SHARES AND THE BOX FOR THE
CLASS B SHARES IN THE SECTIONS CAPTIONED "SHARES TENDERED AT PRICE DETERMINED BY
DUTCH AUCTION" OR (ii) ONE OF THE BOXES FOR CLASS A SHARES AND ONE OF THE BOXES
FOR CLASS B SHARES IN THE SECTIONS CAPTIONED "SHARES TENDERED AT PRICE
DETERMINED BY SHAREHOLDER." SHAREHOLDERS TENDERING BOTH CLASSES OF SHARES MUST
CHECK ONE OF THE BOXES DESCRIBED IN CLAUSES (i) AND (ii) ABOVE FOR BOTH THE
CLASS A SHARES AND THE CLASS B SHARES.
ODD LOT HOLDERS WHO TENDER ALL SUCH SHARES MUST COMPLETE THE BOX CAPTIONED
"ODD LOTS" ON THE LETTER OF TRANSMITTAL AND, IF APPLICABLE, ON THE NOTICE OF
GUARANTEED DELIVERY, IN ORDER TO QUALIFY FOR THE PREFERENTIAL TREATMENT
AVAILABLE TO ODD LOT HOLDERS AS SET FORTH IN SECTION 1, EXCEPT IN THE CASE OF
CERTAIN TENDERS MADE PURSUANT TO THE BOOK-ENTRY PROCEDURES DESCRIBED IN SECTION
3. SEE INSTRUCTION 8 OF THE LETTER OF TRANSMITTAL.
To prevent backup federal income tax withholding of 31% of the gross
proceeds, and in the case of certain foreign shareholders, to prevent a 30%
withholding tax, certain completed forms should accompany the Letter of
Transmittal. See Section 14.
SIGNATURE GUARANTEES AND METHOD OF DELIVERY. No signature guarantee is
required if (i) the Letter of Transmittal is signed by the registered holder of
the Shares (which term for purpose of this Section includes any participant in
The Depository Trust Company (the "Book-Entry Transfer Facility") whose name
appears on a security position listing as the owner of the Shares) tendered
therewith and payment and delivery are to be made directly to such registered
holder; or (ii) Shares are tendered for the account of a financial institution
(including most commercial banks, savings and loan associations and brokerage
houses) that is a member in good standing of a recognized signature guarantee
medallion program within the meaning of Rule 17Ad-15 under the Exchange Act (an
"Eligible Institution"). In all other cases, all signatures on the Letter of
Transmittal must be guaranteed by an Eligible Institution. See Instruction 1 of
the Letter of Transmittal. If a certificate for Shares is registered in the name
of a person other than the person executing a Letter of Transmittal, or if
payment is to be made, or Shares not purchased or tendered are to be returned,
to a person other than the registered holder, then the certificate must be
endorsed or accompanied by an appropriate stock power, in either case, signed
exactly as the name of the registered holder appears on the certificate, with
the signature on the certificate or stock power guaranteed by an Eligible
Institution. 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 certificates for such Shares (or a timely confirmation of a book-entry
transfer of such Shares into the Depositary's account at the Book-Entry Transfer
Facility as described below), a properly completed and duly executed Letter of
Transmittal (or a facsimile thereof), or an Agent's Message in connection with a
book-entry transfer, or a proper tender through the Book-Entry Transfer
Facility's Automated Tender Offer Program ("ATOP"), together with any other
documents required by the Letter of Transmittal.
THE METHOD OF DELIVERY OF ALL DOCUMENTS, INCLUDING CERTIFICATES FOR SHARES,
THE LETTER OF TRANSMITTAL AND ANY OTHER REQUIRED DOCUMENTS, IS AT THE ELECTION
AND RISK OF THE TENDERING SHAREHOLDER. IF DELIVERY IS BY MAIL, THEN REGISTERED
MAIL WITH RETURN RECEIPT REQUESTED, PROPERLY INSURED, IS RECOMMENDED.
BOOK-ENTRY DELIVERY. The Depositary will establish an account with respect
to the Shares for purposes of the Offer at the Book-Entry Transfer Facility
within two business days after the date of this Offer to
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Purchase. Any financial institution that is a participant in the Book-Entry
Transfer Facility's system may make book-entry delivery of the Shares by causing
such facility to transfer Shares into the Depositary's account in accordance
with the respective Book-Entry Transfer Facilities' procedures for transfer.
Although delivery of Shares may be effected through a book-entry transfer into
the Depositary's account at the Book-Entry Transfer Facility, either (i) a
properly completed and duly executed Letter of Transmittal (or a facsimile
thereof) with any required signature guarantees, or an Agent's Message, in each
case, together with any other required documents must, in any case, be
transmitted to and received by the Depositary at its address set forth on the
back cover of this Offer to Purchase prior to the Expiration Date or (ii) the
guaranteed delivery procedure described below must be followed. The confirmation
of a book-entry transfer of Shares in the Depositary's account at the Book Entry
Transfer Facility as described above is referred to herein as a "Book-Entry
Confirmation." DELIVERY OF DOCUMENTS TO THE BOOK ENTRY TRANSFER FACILITY DOES
NOT CONSTITUTE DELIVERY TO THE DEPOSITARY.
The term "AGENT'S MESSAGE" means a message transmitted through electronic
means by the Book-Entry Transfer Facility to, and received by, the Depositary
and forming a part of a 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 such
participant has received and agrees to be bound by the terms of the Letter of
Transmittal and that the Company may enforce such agreement against the
participant.
GUARANTEED DELIVERY. If a shareholder desires to tender Shares pursuant to
the Offer and such shareholder's Share certificates cannot be delivered to the
Depositary prior to the Expiration Date (or the procedures for book-entry
transfer cannot be completed on a timely basis) or if time will not permit all
required documents to reach the Depositary before the Expiration Date, such
Shares may nevertheless be tendered, provided that all of the following
conditions are satisfied:
(i) such tender is made by or through an Eligible Institution;
(ii) the Depositary receives (by hand, mail, overnight courier, telegram or
facsimile transmission) on or prior to the Expiration Date, a properly completed
and duly executed Notice of Guaranteed Delivery in the form the Company has
provided with this Offer to Purchase (specifying the price at which the Shares
are being tendered), including (where required) a signature guarantee by an
Eligible Institution; and
(iii) the certificates for all tendered Shares, in proper form for transfer
(or confirmation of book-entry transfer of such Shares into the Depositary's
account at the Book-Entry Transfer Facility), together with a properly completed
and duly executed Letter of Transmittal (or a facsimile thereof) and any
required signature guarantees (or, in the case of book-entry transfers, an
Agent's Message or, in the case of a tender through ATOP, the specified
acknowledgment) and all other documents required by the Letter of Transmittal,
are received by the Depositary within three Nasdaq trading days after the date
of receipt by the Depositary of such Notice of Guaranteed Delivery.
RETURN OF UNPURCHASED SHARES. If any tendered Shares are not purchased or
if less than all Shares evidenced by a shareholder's certificates are tendered,
certificates for unpurchased Shares will be returned as promptly as practicable
after the expiration or termination of the Offer or, in the case of Shares
tendered by book-entry transfer at the Book-Entry Transfer Facility, such Shares
will be credited to the appropriate account maintained by the tendering
shareholder at the Book-Entry Transfer Facility, in each case without expense to
such shareholder.
STOCK OPTION PLANS. The Company is not offering, as part of the Offer, to
purchase any of the options (the "Options") outstanding under any of the
Company's Stock Option Plans (the "Stock Option Plans") and tenders of such
Options will not be accepted. Holders of vested Options who wish to participate
in the Offer may either (i) comply with the procedures for Guaranteed Delivery
set forth under "Guaranteed Delivery" above without having to exercise their
Options until after the results of the Offer are known (provided, however, that
an Option holder will not be required to make the requisite tender through an
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Eligible Institution and may personally execute and deliver a Notice of
Guaranteed Delivery), or (ii) exercise their Options and purchase Shares and
then tender such Shares pursuant to the Offer, provided that, in the case of
either (i) or (ii), any such exercise of an Option and tender of Shares is in
accordance with the terms of the applicable Stock Option Plan and the Options.
In no event are any Options to be delivered to the Depositary in connection with
the tender of Shares hereunder. AN EXERCISE OF AN OPTION CANNOT BE REVOKED EVEN
IF THE SHARES RECEIVED UPON THE EXERCISE THEREOF AND TENDERED IN THE OFFER ARE
NOT PURCHASED IN THE OFFER FOR ANY REASON.
BACKUP UNITED STATES FEDERAL INCOME TAX WITHHOLDING. Under the United
States federal income tax backup withholding rules, unless an exemption applies
under the applicable law and regulations, 31% of the gross proceeds payable to a
shareholder or other payee pursuant to the Offer must be withheld and remitted
to the United States Treasury, unless the shareholder or other payee provides
such person's taxpayer identification number (employer identification number or
social security number) to the Depositary and certifies under penalties of
perjury that such number is correct. Therefore, each tendering shareholder
should complete and sign the Substitute Form W-9 included as part of the Letter
of Transmittal so as to provide the information and certification necessary to
avoid backup withholding, unless such shareholder otherwise establishes to the
satisfaction of the Depositary that the shareholder is not subject to backup
withholding. Certain shareholders (including, among others, all corporations and
certain foreign shareholders) are not subject to these backup withholding and
reporting requirements. In order for a foreign shareholder to qualify as an
exempt recipient, that shareholder must submit a Form W-8 or a Substitute Form
W-9, signed under penalties of perjury, attesting to that shareholder's exempt
status. Such statements can be obtained from the Depositary. See Instructions 10
and 11 of the Letter of Transmittal. Backup withholding is not an additional
tax; any amounts so withheld may be credited against the United States federal
income tax liability of the beneficial holder subject to the withholding.
TO PREVENT BACKUP UNITED STATES FEDERAL INCOME TAX WITHHOLDING EQUAL TO 31%
OF THE GROSS PAYMENTS MADE TO SHAREHOLDERS FOR SHARES PURCHASED PURSUANT TO THE
OFFER, EACH SHAREHOLDER WHO DOES NOT OTHERWISE ESTABLISH AN EXEMPTION FROM SUCH
WITHHOLDING MUST PROVIDE THE DEPOSITARY WITH THE SHAREHOLDER'S CORRECT TAXPAYER
IDENTIFICATION NUMBER AND PROVIDE CERTAIN OTHER INFORMATION BY COMPLETING THE
SUBSTITUTE FORM W-9 INCLUDED AS PART OF THE LETTER OF TRANSMITTAL.
For a discussion of certain United States federal income tax consequences to
tendering shareholders, see Section 14.
WITHHOLDING FOR NON-U.S. SHAREHOLDERS. Even if a non-U.S. shareholder has
provided the required certification to avoid backup withholding, the Depositary
will withhold United States federal income taxes equal to 30% of the gross
payments payable to a non-U.S. shareholder or his or her agent unless the
Depositary determines that a reduced rate of withholding is available pursuant
to a tax treaty or that an exemption from withholding is applicable because such
gross proceeds are effectively connected with the conduct of a trade or business
within the United States. For this purpose, a non-U.S. shareholder is any
shareholder that is not (i) a citizen or resident of the United States, (ii) a
corporation, partnership or other entity created or organized under the laws of
the United States or of any State or any political subdivision thereof, (iii) an
estate the income of which is includible in gross income for United States
federal income tax purposes regardless of its source, or (iv) a trust if a court
within the United States is able to exercise primary supervision over the
administration of the trust and one or more United States trustees have the
authority to control all substantial decisions of the trust. In order to obtain
a reduced rate of withholding pursuant to a tax treaty, a non-U.S. shareholder
must deliver to the Depositary before the payment a properly completed and
executed IRS Form 1001. In order to obtain an exemption from withholding on the
grounds that the gross proceeds paid pursuant to the Offer are effectively
connected with the conduct
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of a trade or business within the United States, a non-U.S. shareholder must
deliver to the Depositary a properly completed and executed IRS Form 4224. The
Depositary will determine a shareholder's status as a non-U.S. shareholder and
eligibility for a reduced rate of, or exemption from, withholding by reference
to any outstanding certificates or statements concerning eligibility for a
reduced rate of, or exemption from, withholding (e.g., IRS Form 1001 or IRS Form
4224) unless facts and circumstances indicate that such reliance is not
warranted. A non-U.S. shareholder may be eligible to obtain a refund of all or a
portion of any tax withheld if such shareholder meets the "complete redemption,"
"substantially disproportionate" or "not essentially equivalent to a dividend"
"substantially disproportionate' or "not essentially equivalent to a dividend"
test described in Section 14 or is otherwise able to establish that no tax or
reduced amount of tax is due. Backup withholding generally will not apply to
amounts subject to the 30% or a treaty-reduced rate of withholding.
NON-U.S. SHAREHOLDERS ARE URGED TO CONSULT THEIR OWN TAX ADVISORS REGARDING
THE APPLICATION OF UNITED STATES FEDERAL INCOME TAX WITHHOLDING, INCLUDING
ELIGIBILITY FOR A WITHHOLDING TAX REDUCTION OR EXEMPTION, AND THE REFUND
PROCEDURE. SEE INSTRUCTIONS 10 AND 11 OF THE LETTER OF TRANSMITTAL.
DETERMINATION OF VALIDITY; REJECTION OF SHARES; WAIVER OF DEFECTS; NO
OBLIGATION TO GIVE NOTICE OF DEFECTS. All questions as to the number of Shares
to be accepted, the price to be paid therefor and the validity, form,
eligibility (including time of receipt) and acceptance of any tender of Shares
will be determined by the Company, in its sole discretion, which determination
shall be final and binding on all parties. The Company reserves the absolute
right to reject any or all tenders it determines are not to be in proper form or
the acceptance of or payments for which may be unlawful. The Company also
reserves the absolute right to waive any of the conditions of the Offer or any
defect or irregularity in any tender of any particular Shares or any particular
shareholder. No tender of Shares will be deemed to have been properly made until
all defects or irregularities have been cured by the tendering shareholder or
waived by the Company. None of the Company, the Dealer Manager, the Depositary,
the Information Agent or any other person shall be obligated to give notice of
any defects or irregularities in tenders, nor shall any of them incur any
liability for failure to give any such notice.
TENDERING SHAREHOLDER'S REPRESENTATION AND WARRANTY; COMPANY'S ACCEPTANCE
CONSTITUTES AN AGREEMENT. It is a violation of Rule 14e-4 promulgated under the
Securities Exchange Act, for a person, directly or indirectly, to tender Shares
for such person's own account unless, at the time of tender and at the
Expiration Date, such person has a "net long position" equal to or greater than
the amount tendered in (i) the Shares and will deliver or cause to be delivered
such Shares for the purpose of tender to the Company within the time period
specified in the Offer, or (ii) other securities immediately convertible into,
exercisable for or exchangeable into Shares ("Equivalent Securities") and, upon
the acceptance of such tender, will acquire such Shares by conversion, exchange
or exercise of such Equivalent Securities to the extent required by the terms of
the Offer and will deliver or cause to be delivered such Shares so acquired for
the purpose of tender to the Company within the period specified in the Offer.
Rule 14e-4 also provides a similar restriction applicable to the tender or
guarantee of a tender on behalf of another person. The Company's acceptance for
payment of Shares tendered pursuant to the Offer will constitute a binding
agreement between the tendering shareholder and the Company upon the terms and
conditions of the Offer. A tender of Shares pursuant to any of the procedures
set forth herein will constitute the tendering shareholder's acceptance of the
terms and conditions of the Offer, as well as the tendering shareholder's
representation and warranty to the Company that (i) such shareholder has a "net
long position" in the Shares or Equivalent Securities being tendered within the
meaning of Rule 14e-4, and (ii) the tender of such Shares complies with Rule
14e-4.
CERTIFICATES FOR SHARES, TOGETHER WITH A PROPERLY COMPLETED LETTER OF
TRANSMITTAL AND ANY OTHER DOCUMENTS REQUIRED BY THE LETTER OF TRANSMITTAL MUST
BE DELIVERED TO THE DEPOSITARY AND NOT TO THE COMPANY, ANY
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SUCH DOCUMENTS DELIVERED TO THE COMPANY WILL NOT BE FORWARDED TO THE DEPOSITARY
AND THEREFORE WILL NOT BE DEEMED TO BE PROPERLY TENDERED.
4. WITHDRAWAL RIGHTS
Except as otherwise provided in this Section 4, tenders of Shares pursuant
to the Offer are irrevocable. Shares tendered pursuant to the Offer may be
withdrawn at any time prior to the Expiration Date, unless the Offer is extended
by the Company, and, unless accepted for payment by the Company as provided in
this Offer to Purchase, may also be withdrawn at any time after 12:00 Midnight,
New York City Time, on Monday, January 15, 1999.
For a withdrawal to be effective, a notice of withdrawal must be in written,
telegraphic or facsimile transmission form and must be received in a timely
manner, at the Depositary's address set forth on the back cover 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 name of the registered holder, the
number and class(es) of Shares tendered and the number and class(es) of Shares
to be withdrawn. If the certificates for Shares to be withdrawn have been
delivered or otherwise identified to the Depositary, then, prior to the release
of such certificates, the tendering shareholder must also submit the serial
numbers shown on the particular certificates evidencing the Shares to be
withdrawn and the signature on the notice of withdrawal must be guaranteed by an
Eligible Institution (except in the case of Shares tendered by an Eligible
Institution). If Shares have been tendered pursuant to the procedure for
book-entry tender set forth in Section 3, the notice of withdrawal also must
specify the name and the number of the account at the Book-Entry Transfer
Facility to be credited with the withdrawn Shares and otherwise comply with the
procedures of such facility. None of the Company, the Dealer Manager, the
Depositary, the Information Agent or any other person is or will be obligated to
give notice of any defects or irregularities in any notice of withdrawal nor
shall any of them incur liability for failure to give any such notice. All
questions as to the form and validity (including time of receipt) of notices of
withdrawal will be determined by the Company, in its sole discretion, which
determination shall be final and binding.
Withdrawals may not be rescinded and any Shares withdrawn will thereafter be
deemed not properly tendered for purposes of the Offer. However, withdrawn
Shares may be retendered before the Expiration Date by again following one of
the procedures described in Section 3.
If the Company extends the Offer, is delayed in its purchase of Shares or is
unable to purchase Shares pursuant to the Offer for any reason, then, without
prejudice to the Company's rights under the Offer, the Depositary may, subject
to applicable law, retain all tendered Shares on behalf of the Company, and such
Shares may not be withdrawn except to the extent tendering shareholders are
entitled to withdrawal rights as described in this Section 4.
5. PURCHASE OF SHARES AND PAYMENT OF PURCHASE PRICE
Upon the terms and subject to the conditions of the Offer, as promptly as
practicable following the Expiration Date, the Company will (i) determine the
single per share Purchase Price for the Class A Shares and the single per share
Purchase Price for the Class B Shares that it will pay for each class of Shares
properly tendered prior to the Expiration Date and not withdrawn, taking into
account the number of Shares of each class so tendered and the prices for each
class specified by tendering shareholders, and (ii) accept for payment and pay
for (and thereby purchase) Shares of each class properly tendered at or below
the Purchase Price for that class of Shares and not withdrawn prior to the
Expiration Date. For purposes of the Offer, the Company will be deemed to have
accepted for payment (and therefore purchased) Shares of each class that are
properly tendered at or below the Purchase Price selected by the Company for
such class of Shares and not withdrawn (subject to the proration and conditional
tender provisions of the Offer) only when, as and if it gives oral or written
notice to the Depositary of its acceptance of such Shares for payment pursuant
to the Offer.
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Upon the terms and subject to the conditions of the Offer, the Company will
purchase and pay a single Purchase Price for all of the Class A Shares and a
single Purchase Price for all of the Class B Shares accepted for payment
pursuant to the Offer, as soon as practicable after the Expiration Date. The
Company may select a different Purchase Price for each class of Shares. In all
cases, payment for Shares tendered and accepted for payment pursuant to the
Offer will be made promptly (subject to possible delay in the event of
proration) but only after timely receipt by the Depositary of certificates for
Shares (or of a timely Book-Entry Confirmation of such Shares into the
Depositary's account at the Book-Entry Transfer Facility), a properly completed
and duly executed Letter of Transmittal (or a facsimile thereof), or, in the
case of a book-entry transfer, an Agent's Message, or, in the case of a tender
through ATOP, the specified acknowledgment, in each case, together with any
other required documents.
Payments for Shares purchased pursuant to the Offer will be made by
depositing the aggregate Purchase Price therefor with the Depositary, which will
act as agent for tendering shareholders for the purpose of receiving payment
from the Company and transmitting payment to the tendering shareholders. In the
event of proration, the Company will determine the proration factor and pay for
those tendered Shares accepted for payment as soon as practicable after the
Expiration Date. However, the Company does not expect to be able to announce the
final results of any such proration until approximately seven to ten business
days after the Expiration Date. Under no circumstances will the Company pay
interest on the Purchase Price, including, without limitation, by reason of any
delay in making payment. Certificates for all Shares not purchased, including
all Shares tendered at prices greater than the applicable Purchase Price for
each class of Shares and Shares not purchased due to proration, will be returned
(or, in the case of Shares tendered by book-entry transfer, such Shares will be
credited to the account maintained with the Book-Entry Transfer Facility by the
participant who so delivered such Shares) as promptly as practicable following
the Expiration Date or termination of the Offer with expense to the tendering
shareholder. In addition, if certain events occur, the Company may not be
obligated to purchase Shares pursuant to the Offer. See Section 6.
The Company will pay all stock transfer taxes, if any, payable on the
transfer to it of Shares purchased pursuant to the Offer. If, however, payment
of the Purchase Price is to be made to, or (in the circumstances permitted by
the Offer) if unpurchased Shares are to be registered in the name of, any person
other than the registered holder, or if tendered certificates are registered in
the name of any person other than the person signing the Letter of Transmittal,
the amount of all stock transfer taxes, if any (whether imposed on the
registered holder or such other person), payable on account of the transfer to
such person will be deducted from the Purchase Price unless satisfactory
evidence of the payment of the stock transfer taxes, or exemption therefrom, is
submitted. See Instruction 7 of the Letter of Transmittal.
ANY TENDERING SHAREHOLDER OR OTHER PAYEE WHO FAILS TO COMPLETE FULLY, SIGN
AND RETURN TO THE DEPOSITARY THE FORM W-9 INCLUDED AS PART OF THE LETTER OF
TRANSMITTAL MAY BE SUBJECT TO REQUIRED BACKUP UNITED STATES FEDERAL INCOME TAX
WITHHOLDING OF 31% OF THE GROSS PROCEEDS PAID TO SUCH SHAREHOLDER OR OTHER PAYEE
PURSUANT TO THE OFFER. SEE SECTION 14. ALSO SEE SECTION 14 REGARDING FEDERAL
INCOME TAX CONSEQUENCES FOR NON-U.S. SHAREHOLDERS.
6. CONDITIONAL TENDER OF SHARES
Under certain circumstances set forth in Section 1 above, the Company may
prorate the number of Shares purchased pursuant to the Offer. As discussed in
Section 14, the number of Shares to be purchased from a particular shareholder
might affect the tax treatment of such purchase to such shareholder and such
shareholder's decision whether to tender. EACH SHAREHOLDER IS URGED TO CONSULT
WITH HIS OR HER OWN TAX ADVISOR. Accordingly, if a shareholder tenders all
Shares he or she beneficially owns, then the shareholder may tender Shares
subject to the condition that a specified minimum number, if any, must be
purchased. Any shareholder wishing to make such a conditional tender should so
indicate in the box captioned "Conditional Tender" on the Letter of Transmittal
or, if applicable,
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on the Notice of Guaranteed Delivery. The conditional tender alternative is made
available so that a shareholder may seek to structure the purchase of Shares
from the shareholder pursuant to the Offer in such a manner that it will be
treated as a sale of Shares by the shareholder, rather than the payment of a
dividend to the shareholder, for federal income tax purposes. Odd Lot Shares,
which will not be subject to proration, cannot be conditionally tendered. It is
the tendering shareholder's responsibility to calculate such minimum number of
Shares. If the effect of accepting tenders on a pro rata basis would be to
reduce the number of Shares to be purchased from any shareholder below the
minimum number so specified, such tender will automatically be deemed withdrawn,
except as provided in the next paragraph, and Shares tendered by such
shareholder will be returned as soon as practicable after the Expiration Date.
However, if so many conditional tenders would be deemed withdrawn that the
total number of Shares to be purchased falls below 1,687,500 Class A Shares
and/or 562,500 Class B Shares, then, to the extent feasible, the Company will
select enough of such conditional tenders, which would otherwise have been
deemed withdrawn, to purchase such desired number of Shares. In selecting among
such conditional tenders, the Company will select by lot and will limit its
purchase in each case to the designated minimum number of Shares to be
purchased. Conditional tenders will be selected by lot only from shareholders
who tender all of their Shares.
IN THE EVENT OF PRORATION, ANY SHARES TENDERED PURSUANT TO A CONDITIONAL
TENDER FOR WHICH THE MINIMUM REQUIREMENTS ARE NOT SATISFIED MAY NOT BE ACCEPTED
AND WILL THEREBY BE DEEMED WITHDRAWN.
7. CERTAIN CONDITIONS OF THE OFFER
Notwithstanding any other provision of the Offer, the Company shall not be
required to accept for payment, purchase or pay for any Shares tendered and may
terminate or amend the Offer or may postpone the acceptance for payment of, or
the purchase of and the payment for, Shares tendered, subject to Rule 13e-4(f)
under the Exchange Act, if at any time on or after November 17, 1998, and prior
to the time of payment for any such Shares (whether any Shares have previously
been accepted for payment, purchased or paid for pursuant to the Offer) any of
the following events shall have occurred (or shall have been determined by the
Company to have occurred) that, in the Company's judgment in any such case and
regardless of the circumstances giving rise thereto (including any action or
omission to act by the Company), the occurrence of such event or events makes it
inadvisable to proceed with the Offer or with such acceptance for payment or
payment:
(a) there shall have been threatened or instituted or be pending before any
court, agency, authority or other tribunal any action, suit or proceeding by
any government or governmental, regulatory or administrative agency or
authority or by any other person, domestic, foreign or supranational, or any
judgment, order or injunction entered, enforced or deemed applicable by any
such court, authority, agency or tribunal, which (i) challenges or seeks to
make illegal, or to delay or otherwise directly or indirectly to restrain,
prohibit or otherwise affect the making of the Offer or the acquisition of
Shares pursuant to the Offer or is otherwise related in any manner to, or
otherwise affects, the Offer or (ii) could, in the sole judgment of the
Company, materially affect the business, condition (financial or otherwise),
income, operations or prospects of the Company and its subsidiaries, taken
as a whole, or otherwise materially impair in any way the contemplated
future conduct of the business of the Company and its subsidiaries, taken as
a whole, or materially impair the Offer's contemplated benefits to the
Company; or
(b) there shall have been any action threatened or taken, or any approval
withheld, or any statute, rule or regulation invoked, proposed, sought,
promulgated, enacted, entered, amended, enforced or deemed to be applicable
to the Offer or the Company or any of its subsidiaries, by any government or
governmental regulatory or administrative authority or agency or tribunal,
domestic, foreign or supranational, which, in the sole judgment of the
Company, would or might directly or indirectly result in any of the
consequences referred to in clause (i) or (ii) of paragraph (a) above; or
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(c) there shall have occurred (i) the declaration of any banking moratorium
or any suspension of payments in respect of banks in the United States
(whether or not mandatory); (ii) any general suspension of trading in, or
limitation on prices for, securities on any United States national
securities exchange or in the over-the-counter market; (iii) the
commencement of a war, armed hostilities or any other national or
international crisis directly or indirectly involving the United States;
(iv) any limitation (whether or not mandatory) by any governmental,
regulatory or administrative agency or authority on, or any event which, in
the sole judgment of the Company might materially affect, the extension of
credit by banks or other lending institutions in the United States; (v) any
significant decrease in the market price of the Shares or in the market
prices of equity securities generally in the United States or any change in
the general political, market, economic or financial conditions in the
United States or abroad that could have in the sole judgment of the Company
a material adverse effect on the business, condition (financial or
otherwise), income, operations or prospects of the company and its
subsidiaries, taken as a whole or on the trading in the Shares; (vi) in the
case of any of the foregoing existing at the time of the announcement of the
Offer, a material acceleration or worsening thereof; or (vii) any decline in
either the Dow Jones Industrial Average or the S&P 500 Composite Index by an
amount in excess of 10% measured from the close of business on November 16,
1998; or
(d) any change shall occur or be threatened in the business, condition
(financial or otherwise), income, operations or prospects of the Company and
its subsidiaries, taken as a whole, which in the sole judgment of the
Company is or may be material to the Company and its subsidiaries taken as a
whole; or
(e) a tender or exchange offer with respect to some or all of the Shares
(other than the Offer), or a merger or acquisition proposal for the Company,
shall have been proposed, announced or made by another person or shall have
been publicly disclosed, or the Company shall have learned that (i) any
person or "group" (within the meaning of Section 13(d)(3) of the Exchange
Act) has acquired or proposes to acquire beneficial ownership of more than
5% of the outstanding Shares of either class, whether through the
acquisition of stock, the formation of a group, the grant of any option or
right, or otherwise (other than as disclosed in a Schedule 13D or 13G (or an
amendment thereto) on file with the Commission on November 16, 1998) or (ii)
any such person or group that on or prior to November 16, 1998, had filed
such a Schedule with the Commission thereafter shall have acquired or shall
propose, to acquire whether through the acquisition of stock, the formation
of a group, the grant of any option or right, or otherwise, beneficial
ownership of additional Shares representing 2% or more of the outstanding
Shares; or
(f) any person or group shall have filed a Notification and Report Form
under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended,
reflecting an intent to acquire the Company or any of its Shares.
The foregoing conditions are for the Company's sole benefit and may be
asserted by the Company regardless of the circumstances giving rise to any such
condition (including any action or inaction by the Company) or may be waived by
the Company in whole or in part. The Company's failure at any time to exercise
any of the foregoing rights shall not be deemed a waiver of any such right, and
each such right shall be deemed an ongoing right that may be asserted at any
time and from time to time. In certain circumstances, if the Company waives any
of the foregoing conditions, it may be required to extend the Expiration Date of
the Offer. Any determination by the Company concerning the events described
above and any related judgment or decision by the Company regarding the
inadvisability of proceeding with the purchase of or payment for any Shares
tendered will be final and binding on all parties.
8. PRICE RANGE OF SHARES; DIVIDENDS
Both the Class A Shares and Class B Shares are quoted on the Nasdaq National
Market under the symbols "CHERA" and "CHERB," respectively. The following table
sets forth, for the quarters indicated, the high and low prices for the Class A
Shares and Class B Shares as quoted on the Nasdaq National
21
<PAGE>
Market. On November 16, 1998, the last full trading day prior to the
announcement of the Offer, the last reported sale prices for the Class A Shares
and Class B Shares were $13.50 and $13.00, respectively. SHAREHOLDERS ARE URGED
TO OBTAIN CURRENT MARKET PRICES FOR CLASS A SHARES AND CLASS B SHARES.
<TABLE>
<CAPTION>
CLASS A COMMON CLASS B COMMON
-------------------- --------------------
HIGH LOW HIGH LOW
--------- --------- --------- ---------
<S> <C> <C> <C> <C>
FISCAL 1999
Quarter ended November 30, 1998 (through November 16, 1998).............. $ 13.75 $ 9.31 $ 13.00 $ 9.50
Quarter ended August 31, 1998............................................ 17.50 12.13 17.31 11.38
Quarter ended May 31, 1998............................................... 19.38 16.50 18.88 16.25
FISCAL 1998
Quarter ended February 28, 1998.......................................... $ 17.50 $ 13.50 $ 17.88 $ 13.25
Quarter ended November 30, 1997.......................................... 19.00 14.88 19.50 14.25
Quarter ended August 31, 1997............................................ 16.50 11.50 17.00 12.38
Quarter ended May 31, 1997............................................... 15.25 10.13 14.50 10.50
FISCAL 1997
Quarter ended February 28, 1997.......................................... $ 16.75 $ 10.50 $ 16.00 $ 10.25
Quarter ended November 30, 1996.......................................... 11.50 10.75 11.00 10.00
Quarter ended August 31, 1996............................................ 12.00 10.56 13.00 9.81
Quarter ended May 31, 1996............................................... 12.00 9.25 12.89 9.00
</TABLE>
The Company did not declare or pay any dividend in either of its last two
fiscal years ended February 28, 1997 and February 28, 1998. As of November 16,
1998, there were approximately 700 and 525 holders of record of the Class A
Shares and Class B Shares, respectively.
9. SOURCE AND AMOUNT OF FUNDS
Assuming the Company purchases 1,687,500 Class A Shares and 562,500 Class B
Shares pursuant to the Offer at a purchase price of $15.50 per Share, the
Company expects the maximum aggregate cost to purchase Shares (including
$400,000 of related fees and expenses) will be approximately $35.3 million. The
Company expects to fund the purchase of Shares pursuant to the Offer and the
payment of related fees and expenses from its Credit Facility described below.
At November 16, 1998 the Company had approximately $53.0 million available for
borrowing under its Credit Facility.
Pursuant to the Multicurrency Credit Agreement dated as of May 12, 1995
among the Company, the banks party thereto, and Harris Trust and Savings Bank,
as agent, the Company has an unsecured, multicurrency revolving credit facility
that permits borrowings of up to $65 million (the "Credit Facility"). Borrowings
under the Credit Facility are subject to an interest rate equal to the prime
rate, or depending upon the Company's financial performance, LIBOR, plus 0.375%
to 0.625%. The Credit Facility has a competitive bid option that can decrease
the interest rate. The Credit Facility expires in May 2002. The Company expects
to repay indebtedness incurred under the Credit Facility as a result of the
Offer through cash flow from operations and/or future borrowings. The Company
believes that its Credit Facility, along with cash generated from operations is
sufficient to finance the Offer and the Company's working capital needs and
capital expenditures.
The preceding summary of the Credit Facility is qualified in its entirety by
reference to the text of the Credit Facility, which is filed as an exhibit to
the Issuer Tender Offer Statement on Schedule 13E-4 (the "Schedule 13E-4") of
which this Offer to Purchase forms a part. A copy of the Schedule 13E-4 may be
obtained from the Commission in the manner provided in Section 10 under the
heading "--Additional Information."
22
<PAGE>
10. CERTAIN INFORMATION CONCERNING THE COMPANY
The Company designs, manufactures and sells over 3,000 types of proprietary
and custom electrical, electronic and semiconductor components used by a broad
range of OEMs and distributors in the automotive, computer and consumer and
commercial markets. The Company has the following three major business segments:
the Automotive Market, the Computer Market and the Consumer and Commercial
Market.
The AUTOMOTIVE MARKET segment designs, manufactures and sells
semiconductors, electronic controls, switch assemblies and sensors for the
automobile industry. Automobile special-use switches and switch assemblies are
used in a variety of applications including power windows and mirrors, central
door locks and cruise controls. The Company's semiconductor devices are
integrated circuits used in power train controls, body electronics, vehicle
control and safety, instrumentation and entertainment electronics. Its
electronic control modules are used as controls for sunroofs, convertible tops
and memory power seats. Hall-effect sensors can be used in applications where a
magnetically actuated solid state device is desirable, such as a position sensor
for seat belt engagement. Automotive products are custom made for major U.S. and
European manufacturers, including Japanese transplants in North America. The
Company's automotive customers generally pay for the tooling and other special
manufacturing requirements.
The COMPUTER MARKET segment designs, manufactures and sells keyboards and
related products, semiconductors and switches for computer applications. The
Company sells standard and advanced performance keyboards for use with personal
computers; data entry, point-of-sale and reservation terminals; word processing
systems; and other computer input applications. Advanced performance keyboards
include integrated magnetic-stripe readers, chip-card readers and/or bar code
scanners. Semiconductors are used for power management solutions in the computer
market and applications include uninterruptible power sources, tape backup and
distributed power sources. Selector switches are used in addressing peripherals
in computer networks, among other applications.
The CONSUMER AND COMMERCIAL MARKET segment designs, manufactures and sells
switches, semiconductors, sensors, and electronic controls and displays used in
household appliances, office equipment and cellular telephones. Snap-action
switches are generally manufactured to customer specifications by modifying the
Company's standard products. Switches are used in various appliances, office
equipment and control and measurement device applications. Semiconductor
applications include cellular communications, off-line power supplies and DC/DC
converters. Plasma display products are primarily sold to the entertainment
industry as readouts for electronic games. Electronic controls are used in
office equipment and appliances. Hall-effect sensors are magnetically actuated
solid state devices that be used in a wide range of office and industrial
equipment applications to measure speed or position involving harsh
environments.
The Company's principal executive offices are at 3600 Sunset Avenue,
Waukegan, Illinois 60087.
CERTAIN FINANCIAL INFORMATION
SUMMARY HISTORICAL AND UNAUDITED PRO FORMA CONSOLIDATED FINANCIAL INFORMATION
The following summary historical consolidated financial information (other
than the ratios of earnings to fixed charges) as of and for the years ended
February 28, 1997 and February 28, 1998 was derived from the audited
consolidated financial statements included in the Company's Annual Report on
Form 10-K for the year ended February 28, 1998 (the "Company's 1998 Annual
Report"), and the following summary historical financial information (other than
the ratios of earnings to fixed charges) as of and for the six months ended
August 31, 1997 and 1998 was derived from the unaudited consolidated condensed
financial statements included in the Company's Quarterly Report on Form 10-Q for
the period ended August 31, 1998 (the "Company's 1998 Second Quarter Report"),
each of which is incorporated herein by reference, and other information and
data contained in the Company's 1998 Annual Report and the Company's 1998 Second
Quarter Report. More comprehensive financial information is included in such
reports, and the financial information that follows is qualified in its entirety
by reference to such reports, as such reports
23
<PAGE>
may be amended from time to time, and all the financial statements and related
notes contained therein, copies of which may be obtained as set forth below
under the caption "--Additional Information." The Company intends to report
summary third quarter results on or about December 17, 1998.
The following summary unaudited pro forma consolidated financial information
gives effect to the purchase of Shares pursuant to the Offer, based on certain
assumptions described in the Notes to Summary Historical and Unaudited Pro Forma
Consolidated Financial Information as if the purchase had occurred at the
beginning of each period with respect to income statement information, and at
the end of each period with respect to balance sheet information. The summary
unaudited pro forma consolidated financial information should be read in
conjunction with the summary historical consolidated financial information and
does not purport to be indicative of the results that would actually have been
obtained, or results that may be obtained in the future, or the financial
condition that would have resulted had the purchase of the Shares pursuant to
the Offer been completed at the dates indicated.
24
<PAGE>
SUMMARY HISTORICAL AND UNAUDITED PRO FORMA
CONSOLIDATED FINANCIAL INFORMATION
<TABLE>
<CAPTION>
YEAR ENDED FEBRUARY 28, SIX MONTHS ENDED AUG. 31,
-------------------------------------------------- -------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
1998 1998 1998 1997 1998 1998 1998
----------- ----------- ----------- ----------- ----------- ----------- -----------
<CAPTION>
UNAUDITED UNAUDITED
PRO FORMA(1) ACTUAL PRO FORMA(1) ACTUAL
------------------------ ------------------------ ------------------------ -----------
ASSUMED ASSUMED ASSUMED ASSUMED
$13.25 $15.50 $13.25 $15.50
PER SHARE PER SHARE PER SHARE PER SHARE
PURCHASE PURCHASE PURCHASE PURCHASE
PRICE PRICE PRICE PRICE
----------- ----------- ----------- -----------
----------- ----------- -----------
(IN THOUSANDS, EXCEPT RATIOS AND PER SHARE INFORMATION)
<S> <C> <C> <C> <C> <C> <C> <C>
INCOME STATEMENT INFORMATION:
Net sales........................ $ 452,055 $ 452,055 $ 452,055 $ 439,592 $ 230,329 $ 230,329 $ 230,329
Income before income taxes....... 25,423 25,094 27,387 24,808 11,283 11,119 12,265
Net income....................... 16,146 15,936 17,403 15,914 7,222 7,116 7,850
Average shares outstanding
Basic............................ 10,196 10,196 12,446 12,366 10,241 10,241 12,491
Diluted.......................... 10,297 10,297 12,547 12,425 10,367 10,367 12,617
Earnings per share
Basic............................ $ 1.58 $ 1.56 $ 1.40 $ 1.29 $ 0.71 $ 0.69 $ 0.63
Diluted.......................... $ 1.57 $ 1.55 $ 1.39 $ 1.28 $ 0.70 $ 0.69 $ 0.62
Ratio of earnings to fixed
charges(2)..................... 5.02 4.77 7.32 5.85 4.55 4.32 6.65
BALANCE SHEET INFORMATION
(AT END OF PERIOD):
Working capital.................. $ 63,258 $ 63,258 $ 63,258 $ 55,220 $ 63,571 $ 63,571 $ 63,571
Total assets..................... 310,333 310,333 310,333 295,646 324,815 324,815 324,815
Total debt....................... 86,016 91,078 55,803 62,866 92,018 97,080 61,805
Shareholders' equity............. 153,242 148,179 183,454 168,076 161,380 156,317 191,592
Book value per common share(3)... $ 14.99 $ 14.49 $ 14.71 $ 13.54 $ 15.75 $ 15.25 $ 15.33
<CAPTION>
<S> <C>
1997
-----------
-----------
<S> <C>
INCOME STATEMENT INFORMATION:
Net sales........................ $ 220,311
Income before income taxes....... 10,261
Net income....................... 6,464
Average shares outstanding
Basic............................ 12,437
Diluted.......................... 12,517
Earnings per share
Basic............................ $ 0.52
Diluted.......................... $ 0.52
Ratio of earnings to fixed
charges(2)..................... 5.57
BALANCE SHEET INFORMATION
(AT END OF PERIOD):
Working capital..................
Total assets.....................
Total debt.......................
Shareholders' equity.............
Book value per common share(3)...
</TABLE>
- --------------------------
Notes to Summary Historical and Unaudited Pro Forma Consolidated Financial
Information:
(1) The pro forma consolidated financial information assumes a total of
2,250,000 shares (1,687,500 Class A Shares and 562,500 Class B Shares) are
purchased at $13.25 per Share and $15.50 per Share with the total purchase
amounts of $30,212,500 and $35,275,000 (both amounts inclusive of expenses
of the Offer) being initially financed with borrowings under the existing
Credit Facility. The assumed interest rate used in the pro forma
consolidated financial information was 6.5%. Expenses directly related to
the Offer were assumed to be $400,000 and were charged against additional
paid-in capital. The pro forma consolidated financial information gives
effect to the tax expense or benefit of all applicable adjustments, as
described above, at an incremental rate of 36%.
(2) For purposes of the ratio of earnings to fixed charges computation, earnings
are defined as income before income taxes and fixed charges. Fixed charges
are interest expense and the interest portion of operating lease payments.
(3) Book value per Share is calculated as total shareholders' equity divided by
the number of pro forma Shares outstanding at the end of the period.
ADDITIONAL INFORMATION
The Company is subject to the informational filing requirements of the
Exchange Act and, in accordance therewith, is obligated to file reports and
other information with the Commission relating to its business, financial
condition and other matters. Information, as of particular dates, concerning the
Company's directors and officers, their remuneration, options granted to them,
the principal holders of the
25
<PAGE>
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 shareholders and filed with the Commission. The Company has also
filed an Issuer Tender Offer Statement on Schedule 13E-4 (the "Schedule 13E-4")
with the Commission, which includes additional information with respect to the
Offer. Such reports, proxy statements and other information can be inspected and
copied at the public reference facilities maintained by the Commission at 450
Fifth Street, N.W., Room 2120, Washington, D.C. 20549; at its regional offices
located at 500 West Madison Street, Suite 1400, Chicago, Illinois 60661-2511;
and 7 World Trade Center, New York, New York 10048. Copies of such material may
also be obtained by mail, upon payment of the Commission's customary charges,
from the Public Reference Section of the Commission at Judiciary Plaza, 450
Fifth Street, N.W., Washington, D.C. 20549. The Commission also maintains a Web
site on the World Wide Web at http://www.sec.gov that contains reports, proxy
statements and other information regarding registrants that file electronically
with the Commission. Such reports, proxy statements and other information
concerning the Company also can be inspected at the offices of the Nasdaq
National Market, 1735 K Street NW, Washington, DC 20006-1500, on which the
Shares are listed.
11. INTEREST OF DIRECTORS AND OFFICERS; TRANSACTIONS AND ARRANGEMENTS CONCERNING
SHARES
As of November 16, 1998, the Company had issued and outstanding 7,738,680
Class A Shares and 4,762,564 Class B Shares. The 1,687,500 Class A Shares and
the 562,500 Class B Shares that the Company is offering to purchase pursuant to
the Offer represent approximately 18.0% of the outstanding Shares (21.8% of the
outstanding Class A Shares and 11.8% of the outstanding Class B Shares). As of
November 16, 1998, the Company's directors and executive officers as a group (13
persons) beneficially owned an aggregate of 2,828,896 Class A Shares and
2,846,209 Class B Shares, representing approximately 45.1% of the outstanding
Shares.
The Company has been advised that no director or executive officer or
affiliate of the Company intends to tender Shares in the Offer. If the Company
purchases 1,687,500 Class A Shares and 562,500 Class B Shares pursuant to the
Offer, then immediately following the completion of the Offer, the Company's
executive officers and directors as a group will beneficially own approximately
54.9% of the outstanding Shares (46.1% and 67.8% of the outstanding Class A
Shares and Class B Shares, respectively), and Peter B. Cherry will own
approximately 52.8% of the outstanding Shares (43.8% and 65.9% of the
outstanding Class A Shares and Class B Shares, respectively).
Based upon the Company's records and upon information provided to the
Company by its directors, executive officers, associates and subsidiaries,
neither the Company nor any of its associates or subsidiaries or persons
controlling the Company nor, to the best of the Company's knowledge, any of the
directors or executive officers of the Company, nor any associates of such
directors or executive officers, has effected any transactions in the Shares
during the 40 business days prior to the date hereof.
Except as set forth in this Offer to Purchase, neither the Company nor any
person controlling the Company nor, to the Company's knowledge, any of its
directors or executive officers, is a party to any contract, arrangement,
understanding or relationship with any other person relating, directly or
indirectly, to the Offer with respect to any securities of the Company
(including, but not limited to, any contract, arrangement, understanding or
relationship concerning the transfer or the voting of any such securities, joint
ventures, loan or option arrangements, puts or calls, guarantees of loans,
guarantees against loss or the giving or withholding of proxies, consents or
authorizations).
12. EFFECTS OF THE OFFER ON THE MARKET FOR SHARES; REGISTRATION UNDER THE
EXCHANGE ACT
The Company's purchase of Shares pursuant to the Offer will reduce the
number of Shares that might otherwise be traded publicly and may reduce the
number of shareholders. Nonetheless, the Company anticipates that there will be
a sufficient number of Class A Shares and Class B Shares outstanding and
publicly traded following consummation of the Offer to ensure a continued
trading market for both classes
26
<PAGE>
of Shares. Based upon published guidelines of the Nasdaq National Market, the
Company does not believe that its purchase of Shares pursuant to the Offer will
cause the Company's remaining Class A Shares and Class B Shares to be delisted
from the Nasdaq National Market.
The Shares are registered under the Exchange Act, which requires, among
other things, that the Company furnish certain information to its shareholders
and to the Commission and comply with the Commission's proxy rules in connection
with meetings of the Company's shareholders. The Company believes that its
purchase of Shares pursuant to the Offer will not result in either class of the
Shares becoming eligible for deregistration under the Exchange Act.
After the completion of the Offer, the Company may consider a possible
conversion or exchange of all of the outstanding Class A Shares into Class B
Shares. If such conversion or exchange did occur, the Class B Shares would be
the only Shares quoted on the Nasdaq National Market or registered under the
Exchange Act. The Company has not made the determination whether or not to
proceed with such a conversion or exchange. There can be no assurance that such
conversion or exchange will occur, or, if it does occur, the timing thereof.
The Class A Shares and Class B Shares are currently "margin securities"
under the rules of the Federal Reserve Board. This has the effect, among other
things, of allowing brokers to extend credit to their customers using such
Shares as collateral. The Company believes that, following the purchase of
Shares pursuant to the Offer, the Shares will continue to be "margin securities"
for purposes of the Federal Reserve Board's margin regulations.
13. CERTAIN LEGAL MATTERS; REGULATORY APPROVALS
The Company is not aware of any license or regulatory permit material to the
Company's business that might be adversely affected by the Company's acquisition
of Shares as contemplated in the Offer, or of any approval or other action by
any government or governmental, administrative or regulatory authority or
agency, domestic or foreign or supranational, that would be required for the
acquisition or ownership of Shares by the Company as contemplated herein. Should
any such approval or other action be required, the Company presently
contemplates that such approval or other action will be sought. The Company is
unable to predict whether it may determine that it is required to delay the
acceptance for payment of, or payment for, Shares tendered pursuant to the Offer
pending the outcome of any such matter. There can be no assurance that any such
approval or other action, if needed, would be obtained or would be obtained
without substantial conditions, or that the failure to obtain any such approval
or other action might not result in adverse consequences to the Company's
business. The Company's obligations under the Offer to accept for payment and
pay for Shares is subject to certain conditions. See Section 7.
14. CERTAIN FEDERAL INCOME TAX CONSEQUENCES
The following is a general summary of the material U.S. federal income tax
consequences of the exchange of Shares for cash pursuant to the Offer. This
discussion is based on the Internal Revenue Code of 1986, as amended (the
"Code"), its legislative history, Treasury Regulations thereunder and
administrative and judicial interpretations thereof, as of the date hereof, all
of which are subject to change (possibly on a retroactive basis). This summary
does not discuss all the tax consequences that may be relevant to a particular
shareholder in light of the shareholder's particular circumstances and it is not
intended to be applicable in all respects to all categories of shareholders,
some of whom--such as insurance companies, tax-exempt persons, financial
institutions, regulated investment companies, dealers in securities or
currencies, persons that hold Shares as a position in a "straddle" or as part of
a "hedge," "conversion transaction" or other integrated investment, persons who
received Shares as compensation or persons whose functional currency is other
than United States dollars--may be subject to different rules not discussed
below. In addition, this summary does not address any state, local or foreign
tax considerations that may be relevant to a shareholder's decision to tender
Shares pursuant to the Offer. This summary
27
<PAGE>
discusses only Shares held as capital assets within the meaning of Section 1221
of the Code. EACH SHAREHOLDER IS URGED TO CONSULT HIS OR HER OWN TAX ADVISER
WITH RESPECT TO THE U.S. FEDERAL, STATE AND LOCAL CONSEQUENCES OF PARTICIPATING
IN THE OFFER, AS WELL AS ANY TAX CONSEQUENCES ARISING UNDER THE LAWS OF ANY
OTHER TAXING JURISDICTION.
DIVIDEND V. SALE TREATMENT. If an exchange of Shares for cash pursuant to
the Offer is treated as a sale because a shareholder meets any of the tests
discussed below, the shareholder will recognize gain or loss on the exchange in
an amount equal to the difference between the amount of cash received by the
shareholder and such shareholder's tax basis in the Shares exchanged. Such gain
or loss will be a capital gain or loss and will be long-term capital gain or
loss if the Shares were held more than one year. Calculation of gain or loss
must be made separately for each block of Shares owned by a shareholder. Under
the tax laws, a shareholder may be able to designate which blocks and the order
of such blocks of Shares to be tendered pursuant to the Offer.
If a shareholder's exchange of Shares for cash pursuant to the Offer
satisfies none of the tests discussed below, the receipt of cash by the
shareholder will be treated as a distribution from the Company and will be taxed
to the shareholder as ordinary dividend income provided the Company has
sufficient current and accumulated earnings and profits (as the Company believes
it does). If the exchange is treated as a dividend, the tax basis of a
shareholder's Shares which are exchanged for cash pursuant to the Offer is added
to the tax basis of the remaining Shares of common stock of the Company which
the shareholder actually or constructively owns and cannot be used to offset
such shareholder's dividend income from the transaction.
CONSEQUENCES OF SALE TREATMENT FOR THE PURCHASE OF SHARES FOR CASH PURSUANT
TO THE OFFER. An exchange of Shares for cash will be treated as a sale of
Shares by the exchanging shareholder provided that at least one of the following
tests is met:
(i) as a result of the exchange the shareholder's equity interest in the
Company is completely terminated (a "complete termination");
(ii) the receipt of cash in exchange for the shareholder's Shares is "not
essentially equivalent to a dividend"; or
(iii) as a result of the exchange there is a "substantially
disproportionate" reduction in the shareholder's equity interest in the
Company.
In applying the foregoing tests, the constructive ownership rules of Section
318 of the Code apply. Thus a shareholder generally takes into account Shares
actually owned by the shareholder as well as Shares actually (and in some cases
constructively) owned by others, but which the shareholder is treated as owning
by reason of the application of the constructive ownership rules. Pursuant to
the constructive ownership rules, a shareholder will be considered to own those
Shares owned, directly or indirectly, by certain members of the shareholder's
family and certain related entities (such as corporations, partnerships, trusts
and estates) in which the shareholder has an interest, as well as Shares which
the shareholder has an option to purchase. Under certain circumstances, however,
a shareholder may avoid the constructive ownership of Shares owned by family
members solely for the purpose of determining whether the "complete termination"
of interest test referred to above has been satisfied if (i) the shareholder
does not actually own any Shares after the purchase by the Company, and (ii) in
accordance with Section 302(c)(2) of the Code, the shareholder files an
effective waiver with the Internal Revenue Service ("IRS"). If a shareholder
desires to file such a waiver, the shareholder should consult his or her own tax
advisor.
COMPLETE TERMINATION. A sale of shares pursuant to the Offer will be deemed
to result in a "complete termination" of the shareholder's interest in the
Company if, immediately after the sale, either:
(i) the shareholder owns, actually and constructively, no Shares of the
Company's common stock; or
28
<PAGE>
(ii) the shareholder actually owns no Shares of the Company's common stock
and constructively owns only Shares of the Company's common stock as to
which the shareholder is eligible to waive, and does effectively waive, such
constructive ownership under the procedures described in Section 302(c)(2)
of the Code, as discussed above.
NOT ESSENTIALLY EQUIVALENT TO A DIVIDEND. Even if a shareholder's receipt
of cash in exchange for Shares pursuant to the Offer fails to meet the "complete
termination" test, the shareholder may nevertheless meet the "not essentially
equivalent to a dividend" test. Whether a shareholder meets this test will
depend on his or her facts and circumstances. In any case, in order to satisfy
this test, the shareholder's sale of Shares pursuant to the Offer must result in
a "meaningful reduction" in his or her interest in the Company taking into
account the constructive ownership rules of Section 318 of the Code referred to
above. The IRS has held in a public ruling that, under the particular facts of
that ruling, a 3.3% reduction in the percentage stock ownership of a stockholder
constituted a "meaningful reduction" when the stockholder owned .0001118% of the
publicly-held corporation's stock before a redemption, owned .0001081% of the
corporation's stock after the redemption, and did not exercise any control over
corporate affairs. In that ruling, the IRS applied the meaningful reduction
standard to three important rights attributable to stock ownership: (1) the
right to vote and thereby exercise control; (2) the right to participate in
current earnings and accumulated surplus; and (3) the right to share in net
assets on liquidation. In measuring the change, if any, in a shareholder's
proportionate interest in the Company, the meaningful reduction test is applied
by taking into account all Shares that the Company purchases pursuant to the
Offer, including Shares purchased from other shareholders.
If, taking into account the constructive ownership rules of Section 318 of
the Code referred to above, a shareholder owns Shares that constitute only a
minimal interest in the Company and does not exercise any control over the
affairs of the Company, any reduction in the shareholder's percentage interest
in all of the three rights described in the preceding sentence should be a
"meaningful reduction." Such selling shareholder would, under these
circumstances, be entitled to treat his or her sale of Shares to the Company
pursuant to the Offer as a "sale or exchange" for U.S. federal income tax
purposes.
If a shareholder intends to rely on the "not essentially equivalent to a
dividend" test to obtain "sale or exchange" treatment for Shares that he or she
sells pursuant to the Offer, particularly if he or she owns, actually or
constructively, a combination of Class A Shares and Class B Shares, the
shareholder is urged to consult his or her own tax advisor, inasmuch as the
redeeming corporation in the public ruling described above had only one class of
stock outstanding, and the Company has two classes of outstanding shares, one of
which is non-voting.
SUBSTANTIALLY DISPROPORTIONATE. Under Section 302(b)(2) of the Code, a sale
of Shares pursuant to the Offer, in general, will be "substantially
disproportionate" as to a shareholder if immediately after the sale:
(a) The ratio of the outstanding voting stock of the Company that the
shareholder then actually and constructively owns (treating as not outstanding
all voting stock purchased by the Company pursuant to the Offer) is less than
80% of the ratio of the outstanding voting stock of the Company that the
shareholder actually and constructively owned immediately before the sale of
Shares (treating as outstanding all voting stock purchased by the Company
pursuant to the Offer); and
(b) the ratio of the fair market value of the outstanding common stock that
the shareholder then actually and constructively owns (treating as not
outstanding all common stock purchased by the Company pursuant to the Offer) is
less than 80% of the ratio of the fair market value of the outstanding common
stock that the shareholder actually and constructively owned immediately before
the sale of Shares (treating as outstanding all common stock purchased by the
Company pursuant to the Offer).
The Class A Shares are non-voting and the Class B Shares have one vote per
share. As such, certain issues exist as to precisely how the "substantially
disproportionate" percentage determinations, described above, are to be
calculated in these circumstances. For this reason, if a shareholder intends to
rely on the "substantially disproportionate" test to obtain "sale or exchange"
treatment for Shares that a shareholder sells pursuant to the Offer, the
shareholder should consult his or her tax advisor regarding the particulars of
how this test will be applied to the shareholder in this instance.
29
<PAGE>
CORPORATE DIVIDENDS-RECEIVED DEDUCTION. If the case of a corporate
shareholder, if the cash paid is treated as a dividend, such dividend income may
be eligible for the 70% dividends-received deduction. The dividends-received
deduction is subject to certain limitations, and may not be available if the
corporate shareholder does not satisfy certain holding period requirements set
forth in Section 246 of the Code or if the Shares are treated as "debt financed
portfolio Stock" within the meaning of Section 246A(c) of the Code.
Additionally, if a dividends-received deduction is available, the dividend may
be treated as an "extraordinary dividend" under Section 1059(a) of the Code, in
which case a corporate shareholder's adjusted tax basis in the Shares retained
by such shareholder would be reduced, but not below zero, by the amount of the
nontaxed portion of such dividend. Any amount of the nontaxed portion of the
dividend in excess of the corporate shareholder's adjusted tax basis generally
will be taxable. Corporate shareholders are urged to consult their own tax
advisors as to the effect of Section 1059 of the Code on the adjusted tax basis
of their Shares.
OVER-SUBSCRIPTION OF THE OFFER. The Company cannot predict whether or the
extent to which the Offer will be oversubscribed. If the Offer is
oversubscribed, proration of tenders pursuant to the Offer will cause the
Company to accept fewer Shares than are tendered. Consequently, the Company can
give no assurance that a sufficient number of any shareholder's Shares will be
purchased pursuant to the Offer to ensure that such purchase will be treated as
a sale or exchange, rather than as a dividend, for federal income tax purposes
pursuant to the rules discussed above. However, see Section 6 regarding a
shareholder's right to tender Shares subject to the condition that a specified
minimum number of such Shares must be purchased (if any are purchased).
CONSEQUENCES TO SHAREHOLDERS WHO DO NOT TENDER PURSUANT TO THE
OFFER. Shareholders who do not accept the Company's Offer to tender their
Shares will not incur any tax liability as a result of the consummation of the
Offer.
BACKUP UNITED STATES FEDERAL INCOME TAX WITHHOLDING. Payments in connection
with the Offer may be subject to "backup withholding" at a 31% rate. Backup
withholding generally applies if the shareholder (a) fails to furnish such
shareholder's social security number or other taxpayer identification number
("TIN"), (b) furnishes an incorrect TIN, (c) fails to properly report to the IRS
interest or dividends or (d) under certain circumstances, fails to provide a
certified statement, signed under penalties of perjury, that the TIN provided is
such shareholder's current number and that such shareholder is not subject to
backup withholding. To prevent backup withholding each shareholder should
complete the substitute IRS Form W-9 included in the Letter of Transmittal.
Certain persons generally are exempt from backup withholding, including
corporations, financial institutions and certain non-U.S. shareholders. In order
to qualify for an exemption from backup withholding, a non-U.S. shareholder must
submit a properly executed IRS Form W-8 to the Depositary.
WITHHOLDING FOR NON-U.S. SHAREHOLDERS. Although a non-U.S. shareholder may
be exempt from U.S. federal backup withholding, certain payments to the non-U.S.
shareholders are subject to U.S. withholding tax at a rate of 30%. The
Depositary will withhold the 30% tax from gross payments made to non-U.S.
shareholders pursuant to the Offer unless the Depositary determines that a
non-U.S. shareholder is either exempt from the withholding or entitled to a
reduced withholding rate under an income tax treaty. For purposes of this
discussion, a "non-U.S. shareholder" means a shareholder who is not (i) a
citizen or resident of the United States, (ii) a corporation, partnership or
other entity created or organized under the laws of the United States or of any
State or political subdivision thereof, (iii) an estate the income of which is
includible in gross income for U.S. federal income tax purposes regardless of
its source, or (iv) a trust if a court within the United States is able to
exercise primary supervision over the administration of the trust and one or
more U.S. trustees have the authority to control all substantial decisions of
the trust. A non-U.S. shareholder will not be subject to the withholding tax if
the payment from the Company is effectively connected with the conduct of a
trade or business in the United States by such non-U.S. shareholder (and, if
certain tax treaties apply, is attributable to a United States permanent
establishment
30
<PAGE>
maintained by such non-U.S. shareholder) and the non-U.S. shareholder has
furnished the Depositary with a properly executed IRS Form 4224 prior to the
time of payment.
A non-U.S. shareholder who is eligible for a reduced rate of withholding
pursuant to a U.S. income tax treaty must certify such to the Depositary by
providing to the Depositary a properly executed IRS Form 1001 prior to the time
payment is made. A non-U.S. shareholder may be eligible to obtain from the IRS a
refund of tax withheld if such non-U.S. shareholder is able to establish that no
tax (or a reduced amount of tax) is due.
THE TAX DISCUSSION SET FORTH ABOVE IS INCLUDED FOR GENERAL INFORMATION ONLY.
EACH SHAREHOLDER OF SHARES OF THE COMPANY IS ADVISED TO CONSULT HIS OR HER OWN
TAX ADVISORS REGARDING THE UNITED STATES FEDERAL, STATE, LOCAL AND FOREIGN TAX
CONSEQUENCES OF EXCHANGING SHARES FOR CASH PURSUANT TO THE OFFER IN LIGHT OF
THEIR OWN PARTICULAR CIRCUMSTANCES.
15. EXTENSION OF OFFER; TERMINATION; AMENDMENT
The Company expressly reserves the right, in its sole discretion, at any
time and from time to time, and regardless of whether or not any of the events
set forth in Section 7 shall have occurred or shall be deemed by the Company to
have occurred, to extend the period of time during which the Offer is open and
thereby delay acceptance for payment of and payment for any Shares by giving
oral or written notice of such extension to the Depositary and making a public
announcement thereof. The Company also expressly reserves the right, in its sole
discretion, to terminate the Offer and not accept for payment or pay for any
Shares not previously accepted for payment or paid for or, subject to applicable
law, to postpone payment for Shares upon the occurrence of any of the conditions
specified in Section 7 by giving oral or written notice of such termination or
postponement to the Depositary and making a public announcement thereof.
Additionally, in certain circumstances, if the Company waives any of the
conditions of the Offer set forth in Section 7, it may be required to extend the
Expiration Date of the Offer. The Company's reservation of the right to delay
payment for Shares which it has accepted for payment is limited by Rule
13e-4(f)(5) promulgated under the Exchange Act, which requires that the Company
must pay the consideration offered or return the Shares tendered promptly after
termination or withdrawal of a tender offer. Subject to compliance with
applicable law, the Company further reserves the right, in its sole discretion,
and regardless of whether any of the events set forth in Section 7 shall have
occurred or shall be deemed by the Company to have occurred, to amend the Offer
in any respect (including, without limitation, by decreasing or increasing the
consideration offered in the Offer to holders of Shares or by decreasing or
increasing the number of Shares being sought in the Offer). Amendments to the
Offer may be made at any time and from time to time effected by public
announcement thereof, such announcement, in the case of an extension, to be
issued no later than 9:00 a.m., New York City Time, on the next business day
after the last previously scheduled or announced Expiration Date. Any public
announcement made pursuant to the Offer will be disseminated promptly to
shareholders in a manner reasonably designated to inform shareholders of such
change. Without limiting the manner in which the Company may choose to make a
public announcement, except as required by applicable law, the Company shall
have no obligation to publish, advertise or otherwise communicate any such
public announcement other than by making a release to the Dow Jones New Service.
If the Company 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, then the Company will extend the Offer to the extent required by Rules
13e-4(d)(2) and 13e-4(e)(2) promulgated under the Exchange Act. These rules
require that the minimum period during which an offer must remain open following
material changes in the terms of the offer or information concerning the offer
(other than a change in price or a change in percentage of securities sought)
will depend on the facts and circumstances, including the relative materiality
of such terms or information. If (i) the Company increases or decreases the
price to be paid for Shares, increases the Dealer Manager's fee, increases the
number of Shares being sought in the Offer and,
31
<PAGE>
such increase in Shares exceeds 2% of the outstanding Shares of either class, or
decreases the number of Shares being sought, and (ii) the Offer is scheduled to
expire at any time earlier than the expiration of a period ending on the tenth
business day from, and including, the date that such notice of an increase or
decrease is first published, sent or given, the Offer will be extended until the
expiration of such period of ten business days.
16. FEES AND EXPENSES
The Company has retained Nesbitt Burns Securities Inc. to act as the Dealer
Manager in connection with the Offer. The Dealer Manager will receive a fee for
its service of $150,000 plus $.10 per share for each Share purchased in this
Offer in excess of 2,000,000 Shares. The Company also has agreed to reimburse
the Dealer Manager for certain out-of-pocket expenses incurred in connection
with the Offer and to indemnify the Dealer Manager against certain liabilities
in connection with the Offer, including liabilities under the federal securities
laws. Other than related to the Offer, Nesbitt Burns Securities Inc. has not
rendered investment banking or other advisory services to the Company in the
past, but it may render such services to the Company in the future.
The Company has retained Morrow & Co., Inc. to act as Information Agent and
Harris Trust and Savings Bank to act as Depositary in connection with the Offer.
The Information Agent may contact holders of Shares by mail, telephone,
telegraph and personal interviews and may request brokers, dealers and other
nominee shareholders to forward materials relating to the Offer to beneficial
owners. The Information Agent and the Depositary will each receive reasonable
and customary compensation for their respective services, will be reimbursed by
the Company for certain reasonable out-of-pocket expenses, including reasonable
attorneys' fees, and will be indemnified against certain liabilities in
connection with the Offer, including certain liabilities under the federal
securities laws. The Dealer Manager and Information Agent may contact
shareholders by mail, telephone, telex, telegraph and personal interviews, and
may request brokers, dealers and other nominee shareholders to forward materials
relating to the Offer to beneficial owners. None of the Dealer Manager,
Information Agent or the Depositary has been retained to make solicitations or
recommendations in connection with the Offer.
No fees or commissions will be payable to brokers, dealers or other persons
(other than fees to the Dealer Manager, the Information Agent and the Depositary
as described above) for soliciting tenders of Shares pursuant to the Offer. The
Company, however, upon request, will reimburse such persons for customary
mailing and handling expenses incurred in forwarding the materials regarding the
Offer to the beneficial owners of Shares for which they act as nominees. No
broker, dealer, commercial bank or trust company has been authorized to act as
the agent of the Company, the Dealer Manager, the Information Agent or the
Depositary for purposes of the Offer. The Company will pay (or cause to be paid)
all stock transfer taxes, if any, on its purchase of Shares except as otherwise
provided in Instruction 7 in the Letter of Transmittal.
17. MISCELLANEOUS
The Company is not aware of any jurisdiction where the making of the Offer
is not in compliance with applicable law. If the Company becomes aware of any
jurisdiction where the making of the Offer is not in compliance with any valid
applicable law, the Company will make a good faith effort to comply with such
law. If, after such good faith effort, the Company cannot comply with such law,
the Offer will not be made to (nor will tenders be accepted from or on behalf
of) the holders of Shares residing in such jurisdiction. In any jurisdiction the
securities or blue sky laws of which require the Offer to be made by a licensed
broker or dealer, the Offer is being made on the Company's behalf by the Dealer
Manager or one or more registered brokers or dealers licensed under the laws of
such jurisdiction.
Pursuant to Rule 13e-4 of the General Rules and Regulations under the
Exchange Act, the Company has filed with the Commission an Issuer Tender Offer
Statement on Schedule 13E-4 which contains
32
<PAGE>
additional information with respect to the Offer. Such Schedule 13E-4, including
the exhibits and any amendments thereto, may be examined, and copies may be
obtained, at the same places and in the same manner as is set forth in Section
10 with respect to information concerning the Company.
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR MAKE ANY
REPRESENTATION ON BEHALF OF THE COMPANY OR THE DEALER MANAGER IN CONNECTION WITH
THE OFFER OTHER THAN THOSE CONTAINED IN THIS OFFER TO PURCHASE OR IN THE RELATED
LETTER OF TRANSMITTAL. IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATION MUST
NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE COMPANY OR THE DEALER
MANAGER.
THE CHERRY CORPORATION
November 17, 1998
33
<PAGE>
Facsimile copies of the Letter of Transmittal will be accepted from Eligible
Institutions. The Letter of Transmittal and certificates for Shares and any
other required documents should be sent or delivered by each shareholder or his
or her broker, dealer, commercial bank, trust company or nominee to the
Depositary at one of its addresses set forth below.
THE DEPOSITARY FOR THE OFFER IS:
HARRIS TRUST AND SAVINGS BANK
<TABLE>
<S> <C> <C>
BY MAIL: FACSIMILE BY HAND OR OVERNIGHT DELIVERY:
Harris Trust and Savings Bank TRANSMISSION: Harris Trust and Savings Bank
c/o Harris Trust Company of New (212) 701-7636 c/o Harris Trust Company of New
York York
Wall Street Station CONFIRM RECEIPT OF Receive Window
P.O. Box 1010 FACSIMILE BY Wall Street Plaza
New York, New York 10268-1010 TELEPHONE: 88 Pine Street, 19(th) Floor
(212) 701-7624 New York, New York 10005
</TABLE>
Any questions or requests for assistance or additional copies of the Offer
to Purchase, the Letter of Transmittal or the Notice of Guaranteed Delivery may
be directed to the Information Agent or the Dealer Manager at the telephone
numbers and locations listed below. Shareholders may also contact their local
broker, dealer, commercial bank, trust company or nominee for assistance
concerning the Offer.
THE INFORMATION AGENT FOR THE OFFER IS:
[LOGO]
445 Park Avenue, 5(th) Floor
New York, New York 10022
Toll Free: (800) 566-9061
Call Collect: (212) 754-8000
Banks and Brokerage Firms, please call:
(800) 662-5200 (Toll Free)
THE DEALER MANAGER FOR THE OFFER IS:
NESBITT BURNS SECURITIES INC.
111 West Monroe Street, 20(th) Floor
Chicago, Illinois 60603
Toll Free: (877) 461-2900
November 17, 1998
<PAGE>
LETTER OF TRANSMITTAL
TO TENDER SHARES OF CLASS A COMMON STOCK AND/OR CLASS B COMMON STOCK
OF
THE CHERRY CORPORATION
PURSUANT TO THE OFFER TO PURCHASE DATED NOVEMBER 17, 1998
THE OFFER, PRORATION PERIOD AND WITHDRAWAL RIGHTS EXPIRE AT 5:00 P.M., NEW
YORK CITY TIME, ON MONDAY, DECEMBER 21, 1998 UNLESS THE OFFER IS EXTENDED.
THE DEPOSITARY FOR THE OFFER IS:
HARRIS TRUST AND SAVINGS BANK:
<TABLE>
<S> <C> <C>
BY HAND OR OVERNIGHT BY FACSIMILE BY REGISTERED OR CERTIFIED
DELIVERY: TRANSMISSION MAIL:
Harris Trust and Savings (ELIGIBLE INSTITUTION Harris Trust and Savings Bank
Bank ONLY):
c/o Harris Trust Company (212) 701-7636 c/o Harris Trust Company
of New York of New York
Wall Street Plaza CONFIRM RECEIPT OF P.O. Box 1010
88 Pine Street, 19th Floor FACSIMILE BY TELEPHONE: Wall Street Station
New York, New York 10005 (212) 701-7624 New York, New York 10268-1010
FOR INFORMATION CALL:
(800) 245-7630
</TABLE>
DELIVERY OF THIS INSTRUMENT AND ALL OTHER DOCUMENTS TO ANY ADDRESS OR
TRANSMISSION OF INSTRUCTIONS TO A FACSIMILE NUMBER OTHER THAN AS SET FORTH ABOVE
DOES NOT CONSTITUTE A VALID DELIVERY.
THIS LETTER OF TRANSMITTAL, INCLUDING THE ACCOMPANYING INSTRUCTIONS, SHOULD
BE READ CAREFULLY BEFORE THIS LETTER OF TRANSMITTAL IS COMPLETED.
This Letter of Transmittal is to be completed only if (a) certificates for
Shares (as defined below) are being forwarded herewith or (b) a tender of Shares
is being made concurrently by book-entry transfer to the account maintained by
Harris Trust and Savings Bank (the "Depositary") at The Depository Trust Company
(the "Book-Entry Transfer Facility") pursuant to Section 3 of the Offer to
Purchase. Shareholders who cannot deliver the certificates for their Shares to
the Depositary prior to the Expiration Date (as defined in the Offer to
Purchase) or who cannot complete the procedure for book-entry transfer on a
timely basis or who cannot deliver a Letter of Transmittal and all other
required documents to the Depositary prior to the Expiration Date (as defined
below) must, in each case, tender their Shares pursuant to the guaranteed
delivery procedure set forth in Section 3 of the Offer to Purchase (as defined
below). See Instruction 2.
Shareholders who cannot deliver their Share certificates and any other
required documents to the Depositary by the Expiration Date (as defined in the
Offer to Purchase) must tender their Shares using the guaranteed delivery
procedure set forth in Section 3 of the Offer to Purchase. See Instruction 2.
DELIVERY OF DOCUMENTS TO THE BOOK-ENTRY TRANSFER FACILITY DOES NOT CONSTITUTE
DELIVERY TO THE DEPOSITARY.
THIS LETTER OF TRANSMITTAL MAY NOT BE USED FOR DIRECTING THE EXERCISE OF
OPTIONS GRANTED UNDER THE CHERRY CORPORATION'S STOCK OPTION PLANS. SEE SECTION
3, "PROCEDURES FOR TENDERING SHARES--STOCK OPTION PLANS" IN THE OFFER TO
PURCHASE.
<PAGE>
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------
NAME(S) AND ADDRESSES OF REGISTERED HOLDER(S)
(Please fill in, if blank, exactly as name(s) appear(s) on Share certificate(s))
- ----------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------
DESCRIPTION OF CLASS A SHARES TENDERED
(See Instructions 3 and 4)
- ----------------------------------------------------------------------------------------------------
CLASS A SHARES TENDERED
(ATTACH ADDITIONAL SIGNED LIST IF NECESSARY)
- ----------------------------------------------------------------------------------------------------
CLASS A SHARE CERTIFICATE TOTAL NUMBER OF CLASS A SHARES NUMBER
NUMBER(S)* REPRESENTED BY CERTIFICATE(S)* OF CLASS A SHARES TENDERED**
<S> <C> <C>
- ----------------------------------------------------------------------------------------------------
------------------------------------------------------------------
------------------------------------------------------------------
------------------------------------------------------------------
------------------------------------------------------------------
Total Class A Shares Tendered...................................
- ----------------------------------------------------------------------------------------------------
<CAPTION>
DESCRIPTION OF CLASS B SHARES TENDERED
(See Instructions 3 and 4)
- ----------------------------------------------------------------------------------------------------
CLASS B SHARES TENDERED
(ATTACH ADDITIONAL SIGNED LIST IF NECESSARY)
- ----------------------------------------------------------------------------------------------------
CLASS B SHARE CERTIFICATE TOTAL NUMBER OF CLASS B SHARES NUMBER
NUMBER(S)* REPRESENTED BY CERTIFICATE(S)* OF CLASS B SHARES TENDERED**
<S> <C> <C>
- ----------------------------------------------------------------------------------------------------
------------------------------------------------------------------
------------------------------------------------------------------
------------------------------------------------------------------
------------------------------------------------------------------
Total Class B Shares Tendered...................................
- ----------------------------------------------------------------------------------------------------
</TABLE>
/ / Indicate in this box the order (by class of Shares and certificate number)
in which Shares are to be purchased in event of proration. (Attach
additional list if necessary.)*** See Instruction 10.
Class A Shares: 1st: ________ 2nd: ________ 3rd: ________ 4th: ________
5th: ________
Class B Shares: 1st: ________ 2nd: ________ 3rd: ________ 4th: ________
5th: ________
- --------------------------------------------------------------------------------
* DOES NOT need to be completed if Shares are tendered by book-entry transfer.
** If you desire to tender less than all Shares evidenced by any certificates
listed above, please indicate in this column the number of Shares you wish to
tender. Otherwise, all Shares evidenced by such certificates will be deemed
to have been tendered. See Instruction 4.
***If you do not designate an order, in the event less than all Shares tendered
are purchased due to proration, Shares will be selected for purchase by the
Depositary. See Instruction 10.
- --------------------------------------------------------------------------------
2
<PAGE>
/ / CHECK HERE IF ANY OF THE CERTIFICATES REPRESENTING SHARES THAT YOU OWN HAVE
BEEN LOST OR DESTROYED. UPON RECEIPT OF THIS LETTER OF TRANSMITTAL, THE
DEPOSITARY WILL CONTACT YOU DIRECTLY WITH REPLACEMENT INSTRUCTIONS, OR TO
EXPEDITE THE PROCESS, PLEASE CALL THE HARRIS TRUST AND SAVINGS BANK AT
(312) 461-6001. NUMBER OF SHARES REPRESENTED BY LOST OR DESTROYED
CERTIFICATES: __________________.
DELIVERY OF THIS INSTRUMENT TO AN ADDRESS OTHER THAN AS SET FORTH ABOVE OR
TRANSMISSION OF INSTRUCTIONS VIA FACSIMILE TRANSMISSION OTHER THAN AS SET FORTH
ABOVE WILL NOT CONSTITUTE A VALID DELIVERY. DELIVERIES TO THE COMPANY WILL NOT
BE FORWARDED TO THE DEPOSITARY AND THEREFORE WILL NOT CONSTITUTE VALID DELIVERY.
DELIVERIES TO THE BOOK-ENTRY TRANSFER FACILITY WILL NOT CONSTITUTE VALID
DELIVERY TO THE DEPOSITARY.
THIS BOX IS FOR USE BY ELIGIBLE INSTITUTIONS ONLY:
- --------------------------------------------------------------------------------
/ / CHECK HERE IF TENDERED SHARES ARE BEING DELIVERED BY BOOK-ENTRY TRANSFER
TO AN ACCOUNT MAINTAINED BY THE DEPOSITARY WITH THE BOOK-ENTRY TRANSFER
FACILITY AND COMPLETE THE FOLLOWING:
Name of Tendering Institution: _________________________________________
DTC Account Number: ____________________________________________________
Transaction Code Number: _______________________________________________
/ / CHECK HERE IF CERTIFICATES FOR TENDERED SHARES ARE BEING DELIVERED
PURSUANT TO A NOTICE OF GUARANTEED DELIVERY PREVIOUSLY SENT TO THE
DEPOSITARY AND COMPLETE THE FOLLOWING:
Name(s) of Registered Owner(s): ________________________________________
Date of Execution of Notice of Guaranteed Delivery:_____________________
Name of Institution that Guaranteed Delivery: __________________________
DTC Account Number: ____________________________________________________
Transaction Code Number: _______________________________________________
- --------------------------------------------------------------------------------
3
<PAGE>
NOTE: SIGNATURES MUST BE PROVIDED BELOW
PLEASE READ ACCOMPANYING INSTRUCTIONS CAREFULLY
TO HARRIS TRUST AND SAVINGS BANK:
The undersigned hereby tenders to The Cherry Corporation, a Delaware
corporation (the "Company"), the above described shares of the Company's Class A
Common Stock, $1.00 par value per share (the "Class A Shares"), and/or its Class
B Common Stock, $1.00 par value per share (the "Class B Shares" and with the
Class A Shares, collectively, the "Shares"), represented by the above described
certificates for Shares at a price per Class A Share and at a price per Class B
Share indicated in this Letter of Transmittal, net to the seller in cash,
without interest thereon, upon the terms and subject to the conditions set forth
in the Company's Offer to Purchase, dated November 17, 1998 (the "Offer to
Purchase"), receipt of which is hereby acknowledged, and in this Letter of
Transmittal (which, as amended or supplemented from time to time, together
constitute the "Offer").
Subject to and effective upon acceptance for payment of the Shares tendered
hereby in accordance with the terms and subject to the conditions of the Offer
(including, if the Offer is extended or amended, the terms and conditions of
such extension or amendment), the undersigned hereby sells, assigns and
transfers to, or upon the order of, the Company all right, title and interest in
and to all of the Shares that are being tendered hereby and orders the
registration of all such Shares if tendered by book-entry transfer and hereby
irrevocably constitutes and appoints the Depositary as the true and lawful agent
and attorney-in-fact of the undersigned (with full knowledge that said
Depositary also acts as the agent of the Company), with respect to such Shares
with full power of substitution (such power of attorney being deemed to be an
irrevocable power coupled with an interest), to: (i) deliver certificate(s) for
such Shares or transfer ownership of such Shares on the account books maintained
by the Book-Entry Transfer Facility, together in either such case with all
accompanying evidences of transfer and authenticity, to, or upon the order of,
the Company upon receipt by the Depositary, as the undersigned's agent, of the
aggregate Purchase Price (as defined below) with respect to such Shares; (ii)
present certificates for such Shares for cancellation and transfer on the
Company's books; and (iii) receive all benefits and otherwise exercise all
rights of beneficial ownership of such Shares, subject to the next paragraph,
all in accordance with the terms of the Offer.
The undersigned has full power and authority to tender, sell, assign and
transfer the Shares tendered hereby and further represents and warrants to the
Company that:
(a) the undersigned understands that tenders of Shares pursuant to any
one of the procedures described in Section 3 of the Offer to Purchase and in
the instructions hereto will constitute the undersigned's acceptance of the
terms and conditions of the Offer, including the undersigned's
representation and warranty that: (i) the undersigned has a "net long
position" in Shares or equivalent securities at least equal to the Shares
tendered within the meaning of Rule 14e-4 under the Securities Exchange Act
of 1934, as amended (the "1934 Act"), and (ii) such tender of Shares
complies with Rule 14e-4 under the 1934 Act;
(b) when and to the extent the Company accepts such Shares for purchase,
the Company will acquire good, marketable and unencumbered title to them,
free and clear of all security interests, liens, charges, encumbrances,
conditional sales agreements or other obligations relating to their sale or
transfer, and not subject to any adverse claim;
(c) on request, the undersigned will execute and deliver any additional
documents the Depositary or the Company deems necessary or desirable to
complete the assignment, transfer and purchase of the Shares tendered
hereby;
(d) the undersigned has read and agrees to all of the terms of the
Offer; and
(e) the Company's acceptance for payment of Shares tendered pursuant to
the Offer will constitute a binding agreement between the undersigned and
the Company upon terms and subject to the conditions of the Offer.
4
<PAGE>
All authorities conferred or agreed to be conferred in this Letter of
Transmittal shall survive the death or incapacity of the undersigned, and any
obligation of the undersigned hereunder shall be binding upon the heirs,
personal representatives, executors, administrators, successors, assigns,
trustees in bankruptcy, and legal representatives of the undersigned. Except as
stated in the Offer to Purchase, this tender is irrevocable.
The name(s) and address(es) of the registered holder(s) should be printed
above, if they are not already printed above, exactly as they appear on the
certificates representing Shares tendered hereby. The class and certificate
numbers, the number of Shares represented by such certificates and the number of
Shares that the undersigned wishes to tender, should be set forth in the
appropriate boxes above. Any order (by certificate number) in which the tendered
Shares of a class must be purchased should also be indicated above. The price at
which each class of Shares is being tendered should be indicated in the boxes
below.
The undersigned understands that the Company will, upon the terms and
subject to the conditions of the Offer, determine a single per share price for
the Class A Shares, and a single per share price for the Class B Shares, each
price to be not greater than $15.50 nor less than $13.25 per share, net to the
seller in cash, without interest thereon (each, a "Purchase Price"), that it
will pay for Shares properly tendered and not withdrawn prior to the Expiration
Date pursuant to the Offer, taking into account the number of Shares of each
class so tendered and the prices (in multiples of $.25) for each class specified
by tendering shareholders. The undersigned understands that the Company will
select the lowest Purchase Price for the Class A Shares that will allow it to
buy 1,687,500 Class A Shares and the lowest Purchase Price for the Class B
Shares that will allow it to buy 562,500 Class B Shares, or such lesser number
of Shares of each class as are properly tendered, at prices for each class not
greater than $15.50 nor less than $13.25 per share, pursuant to the Offer. The
undersigned understands that the Company may select a different Purchase Price
for each class of Shares. The undersigned understands that (i) all Shares of
each class properly tendered prior to the Expiration Date at prices at or below
the Purchase Price for that class and not properly withdrawn will be purchased
at such Purchase Price, net to the Seller in cash, upon the terms and subject to
the conditions of the Offer, including its proration and conditional tender
provisions, and (ii) the Company will return all other Shares not purchased
pursuant to the Offer, including Shares tendered at prices greater than the
applicable Purchase Price for that class of Shares and not withdrawn prior to
the Expiration Date and Shares not purchased because of proration or conditional
tender.
The undersigned recognizes that, under certain circumstances set forth in
the Offer to Purchase, the Company may terminate or amend the Offer or may
postpone the acceptance for payment of, or the payment for, Shares tendered or
may accept for payment less than all of the Shares tendered hereby. In any such
event, the undersigned understands that certificate(s) for any Shares delivered
herewith but not tendered or not purchased will be returned to the undersigned
at the address indicated above, unless otherwise indicated under the "Special
Payment Instructions" or "Special Delivery Instructions" boxes below. The
undersigned recognizes that the Company has no obligation, pursuant to the
Special Payment Instructions, to transfer any certificate for Shares from the
name of its registered holder, or to order the registration or transfer of
Shares tendered by book-entry transfer, if the Company purchases none of the
Shares represented by such certificate or tendered by such book-entry transfer.
Unless otherwise indicated under "Special Payment Instructions," please
issue the check for the Purchase Price of any Shares purchased, and/or return
any Shares not tendered or not purchased, in the name(s) of the undersigned.
Similarly, unless otherwise indicated under "Special Delivery Instructions,"
please mail the check for the Purchase Price of any Shares purchased and/or any
certificates for Shares not tendered or not purchased (and accompanying
documents, as appropriate) to the undersigned at the address shown below the
undersigned's signature(s). In the event that both "Special Payment
Instructions" and "Special Delivery Instructions" are completed, please issue
the check for the Purchase Price of any Shares purchased and/or return any
Shares not tendered or not purchased in the name(s) of, and mail such check
and/or any certificates to, the person(s) so indicated. The undersigned
recognizes that the Company has no obligation, pursuant to the "Special Payment
Instructions," to transfer any Shares from the name of the registered holder(s)
thereof if the Company does not accept for payment any of the Shares so
tendered.
5
<PAGE>
IMPORTANT: SHAREHOLDERS MUST COMPLETE THE PRICE SELECTION INFORMATION FOR EACH
CLASS OF SHARES TENDERED. SHAREHOLDERS TENDERING BOTH CLASSES OF SHARES MUST
COMPLETE EACH OF THE FOLLOWING TWO BOXES.
- --------------------------------------------------------------------------------
PRICE (IN DOLLARS) PER CLASS A SHARE
AT WHICH CLASS A SHARES ARE BEING TENDERED
(SEE INSTRUCTION 5)
- --------------------------------------------------------------------------------
CHECK ONLY ONE BOX. IF MORE THAN ONE BOX IS CHECKED OR IF NO BOX IS CHECKED,
THERE IS NO PROPER TENDER OF CLASS A SHARES
(Shareholders who desire to tender Class A Shares at more than one price
must complete a separate Letter of Transmittal for each price at which Class
A Shares are tendered.)
CLASS A SHARES TENDERED AT PRICE DETERMINED BY DUTCH AUCTION:
/ / The undersigned wants to maximize the chance of having The Cherry
Corporation purchase all Class A Shares the undersigned is tendering
(subject to the possibility of proration). Accordingly, by checking this
BOX INSTEAD OF ONE OF THE PRICES BELOW, the undersigned hereby tenders
Class A Shares and is willing to accept the Purchase Price resulting
from the Dutch Auction tender process. This action will result in
receiving a price per Class A Share as low as $13.25 or as high as
$15.50.
OR
CLASS A SHARES TENDERED AT PRICE DETERMINED BY SHAREHOLDER:
By checking ONE of the boxes below INSTEAD OF THE BOX ABOVE, the undersigned
hereby tenders Class A Shares at the price checked. THIS ACTION COULD RESULT
IN NONE OF THE SHARES BEING PURCHASED IF THE PURCHASE PRICE FOR THE CLASS A
SHARES IS LESS THAN THE PRICE CHECKED. A shareholder who desires to tender
Class A Shares at more than one price must complete a separate Letter of
Transmittal for each price at which Class A Shares are tendered. The same
Class A Shares cannot be tendered at more than one price.
PRICE (IN DOLLARS) PER CLASS A SHARE AT WHICH CLASS A SHARES ARE BEING
TENDERED:
<TABLE>
<S> <C> <C> <C> <C>
/ / $13.25 / / $13.75 / / $14.25 / / $14.75 / / $15.25
/ / $13.50 / / $14.00 / / $14.50 / / $15.00 / / $15.50
</TABLE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
PRICE (IN DOLLARS) PER CLASS B SHARE
AT WHICH CLASS B SHARES ARE BEING TENDERED
(SEE INSTRUCTION 5)
- --------------------------------------------------------------------------------
CHECK ONLY ONE BOX. IF MORE THAN ONE BOX IS CHECKED OR IF NO BOX IS CHECKED,
THERE IS NO PROPER TENDER OF CLASS B SHARES
(Shareholders who desire to tender Class B Shares at more than one price
must complete a separate Letter of Transmittal for each price at which Class
B Shares are tendered.)
CLASS B SHARES TENDERED AT PRICE DETERMINED BY DUTCH AUCTION:
/ / The undersigned wants to maximize the chance of having The Cherry
Corporation purchase all Class B Shares the undersigned is tendering
(subject to the possibility of proration). Accordingly, by checking this
BOX INSTEAD OF ONE OF THE PRICES BELOW, the undersigned hereby tenders
Class B Shares and is willing to accept the Purchase Price resulting
from the Dutch Auction tender process. This action will result in
receiving a price per Class B Share as low as $13.25 or as high as
$15.50.
OR
CLASS B SHARES TENDERED AT PRICE DETERMINED BY SHAREHOLDER:
By checking ONE of the boxes below INSTEAD OF THE BOX ABOVE, the undersigned
hereby tenders Class B Shares at the price checked. THIS ACTION COULD RESULT
IN NONE OF THE SHARES BEING PURCHASED IF THE PURCHASE PRICE FOR THE CLASS B
SHARES IS LESS THAN THE PRICE CHECKED. A shareholder who desires to tender
Class A Shares at more than one price must complete a separate Letter of
Transmittal for each price at which Class B Shares are tendered. The same
Class B Shares cannot be tendered at more than one price.
PRICE (IN DOLLARS) PER CLASS B SHARE AT WHICH CLASS B SHARES ARE BEING
TENDERED:
<TABLE>
<S> <C> <C> <C> <C>
/ / $13.25 / / $13.75 / / $14.25 / / $14.75 / / $15.25
/ / $13.50 / / $14.00 / / $14.50 / / $15.00 / / $15.50
</TABLE>
- --------------------------------------------------------------------------------
6
<PAGE>
- --------------------------------------------------------------------------------
CONDITIONAL TENDER
(SEE INSTRUCTION 9)
A tendering shareholder may condition the tender of Shares upon the
purchase by the Company of a specified minimum number of Shares tendered
hereby, all as described in the Offer to Purchase, particularly Section 6
thereof. Except as set forth in Section 6 of the Offer to Purchase, unless
at least such minimum number of Shares is purchased by the Company pursuant
to the terms of the Offer, none of the Shares tendered hereby will be
purchased. It is the tendering Shareholder's responsibility to calculate and
appropriately indicate a minimum number of Shares, and each Shareholder is
urged to consult a tax advisor. Unless this box is completed and a minimum
number specified, the tender will be deemed unconditional.
/ / Check here if tender of Shares of either Class A Shares or Class B
Shares is conditional on the Company purchasing all or a minimum number
of the tendered Shares and complete the following:
Minimum number of Shares to be sold: ___________________________________
-------------------------------------------------------------------------
ODD LOTS
(SEE INSTRUCTION 8)
To be completed ONLY if the Shares are being tendered by or on
behalf of a person owning beneficially or of record an aggregate of less
than 100 Class A Shares and/or less than 100 Class B Shares. The
undersigned either (check one box):
/ / is the beneficial or record owner of an aggregate of less than 100 Class
A Shares, all which Shares are being tendered; or
/ / is the beneficial or record owner of an aggregate of less than 100 Class
B Shares, all which Shares are being tendered; or
/ / is a broker, dealer, commercial bank, trust company, or other nominee
that (i) is tendering for the beneficial owner(s) thereof, Shares with
respect to which it is the record holder, and (ii) believes, based upon
representations made to it by such beneficial owner(s), that each such
person is the beneficial owner of an aggregate of less than 100 Class A
Shares and/or less than 100 Class B Shares and is tendering all of such
Shares of that class (or classes).
ODD LOT SHARES CANNOT BE CONDITIONALLY TENDERED
NOTE: SIGNATURES MUST BE PROVIDED BELOW. PLEASE READ THE
ACCOMPANYING INSTRUCTIONS CAREFULLY.
- --------------------------------------------------------------------------------
- -----------------------------------------
SPECIAL PAYMENT INSTRUCTIONS
(SEE INSTRUCTIONS 1, 4, 6, 7 AND 11)
To be completed ONLY if certificates for Shares not tendered or not
purchased and/or any check for the aggregate Purchase Price of Shares
purchased are to be issued in the name of and sent to someone other than the
undersigned.
Issue: / / Check to: / / Certificates to:
Name(s): ___________________________________________________________________
(Please Print)
Address: ___________________________________________________________________
____________________________________________________________________________
____________________________________________________________________________
(Include Zip Code)
__________________________________________________________________________
(Taxpayer Identification or Social Security Number)
----------------------------------------------
----------------------------------------------
SPECIAL DELIVERY INSTRUCTIONS
(SEE INSTRUCTIONS 1, 4, 6, 7 AND 11)
To be completed ONLY if certificates for Shares not tendered or not
purchased and/or any check for the Purchase Price of Shares purchased,
issued in the name of the undersigned, are to be mailed to someone other
than the undersigned or to the undersigned at an address other than that
shown above.
Mail: / / Check to: / / Certificates to:
Name(s): ___________________________________________________________________
(Please Print)
Address: ___________________________________________________________________
____________________________________________________________________________
____________________________________________________________________________
(Include Zip Code)
----------------------------------------------
7
<PAGE>
--------------------------------------------------------------------------
PLEASE SIGN HERE
(TO BE COMPLETED BY ALL SHAREHOLDERS)
(PLEASE ALSO COMPLETE AND RETURN THE ENCLOSED FORM W-9)
(Must be signed by the registered holder(s) exactly as name(s) appear(s) on
certificate(s) or on a security position listing or by person(s) authorized
to become registered holder(s) by certificate(s) and documents transmitted
with this Letter of Transmittal. If signature is by a trustee, executor,
administrator, guardian, attorney-in-fact, officer of a corporation or
another person acting in a fiduciary or representative capacity, please set
forth full title and see Instruction 6.)
-- ______________________________________________________________________ --
-- ______________________________________________________________________ --
SIGNATURES OF OWNER(S)
Dated: __________________________, 1998
Name(s): ___________________________________________________________________
(Please Print)
Capacity (Full Title): _____________________________________________________
Address: ___________________________________________________________________
(Include Zip Code)
Area Code and Telephone No.: _______________________________________________
Taxpayer Identification or Social Security No.: ____________________________
(See substitute Form W-9)
GUARANTEE OF SIGNATURE(S)
(SEE INSTRUCTIONS 1 AND 6)
Name of Firm: ______________________________________________________________
Authorized Signature: ______________________________________________________
Name: ______________________________________________________________________
(Please Print)
Title: _____________________________________________________________________
Address: ___________________________________________________________________
(Include Zip Code)
Area Code and Telephone Number: ____________________________________________
Dated: __________________________, 1998
- --------------------------------------------------------------------------------
8
<PAGE>
INSTRUCTIONS
FORMING PART OF THE TERMS AND CONDITIONS OF THE OFFER
1. GUARANTEE OF SIGNATURES. Except as otherwise provided below, all
signatures on this Letter of Transmittal must be guaranteed by a financial
institution (including commercial banks, savings and loan associations, and
brokerage houses) that is a member in good standing of a recognized signature
guarantee medallion program within the meaning of Rule 17Ad-15 under the
Securities Exchange Act of 1934, as amended (the "Exchange Agreement") (an
"Eligible Institution") unless: (i) this Letter of Transmittal is signed by the
registered holder(s) of the Shares tendered (which term, for purposes of this
document, shall include any participant in the Book-Entry Transfer Facility
whose name appears on a security position listing as the owner of Shares)
exactly as the name of the registered holder appears on the certificate tendered
with this Letter of Transmittal and payment and delivery are to be made directly
to such owner, unless such holder(s) has completed either the box entitled
"Special Delivery Instructions" or the box entitled "Special Payment
Instructions" included herein; or (ii) if such Shares are tendered for the
account of an Eligible Institution. See Instructions 6 and 11.
2. DELIVERY OF LETTER OF TRANSMITTAL AND CERTIFICATES; GUARANTEED DELIVERY
PROCEDURES. This Letter of Transmittal is to be used only if certificates for
Shares are delivered with it to the Depositary (or such certificates will be
delivered pursuant to a Notice of Guaranteed Delivery previously sent to the
Depositary) or if a tender for Shares is being made concurrently pursuant to the
procedure for tender by book-entry transfer set forth in Section 3 of the Offer
to Purchase. The Depositary must receive (a) properly completed and duly
executed Letter of Transmittal or a facsimile thereof in accordance with the
instructions of the Letter of Transmittal, including any required signature
guarantees, certificates, and any other documents required by the Letter of
Transmittal, on or prior to the Expiration Date at one of its addresses set
forth on the back cover of the Offer to Purchase, (b) such Shares delivered
pursuant to the procedures for book-entry transfer described in Section 3 of the
Offer to Purchase (and a confirmation of such delivery is received by the
Depositary, including an Agent's Message, if the tendering shareholder has not
delivered a Letter of Transmittal) or (c) such Shares validly tendered through
the Book-Entry Transfer Facility's Automated Tender Offer Program ("ATOP"),
prior to the Expiration Date. The term "Agent's Message" means a message,
transmitted through electronic means by the Book-Entry Transfer Facility to, and
received by the Depositary and forming a part of the Book-Entry Confirmation (as
defined in Section 3 of the Offer to Purchase), 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 such participant has
received and agrees to be bound by the terms of the Letter of Transmittal and
that the Company may enforce such agreement against the participant. If
certificates are to be forwarded to the Depositary in multiple deliveries, a
properly completed and duly executed Letter of Transmittal must accompany each
such delivery.
Participants in the Book-Entry Transfer Facility may tender their Shares in
accordance with ATOP, to the extent it is available to such participants for the
Shares they wish to tender. A shareholder tendering through ATOP must expressly
acknowledge that the shareholder has reviewed and agreed to be bound by the
Letter of Transmittal and that the Letter of Transmittal may be enforced against
such shareholder.
Shareholders whose certificates are not immediately available or who cannot
deliver certificates for their Shares and all other required documents to the
Depositary before the Expiration Date, or whose Shares cannot be delivered on a
timely basis pursuant to the procedures for book-entry transfer, must, in any
case, tender their Shares by or through any Eligible Institution by properly
completing and duly executing and delivering a Notice of Guaranteed Delivery (or
facsimile of it) and by otherwise complying with the guaranteed delivery
procedure set forth in Section 3 of the Offer to Purchase. Pursuant to such
procedure: (a) such tender must be made by or through an Eligible Institution,
(b) a properly completed and duly executed Notice of Guaranteed Delivery
substantially in the form provided by the Company (with any required signature
guarantees) must be received by the Depositary prior to the Expiration Date, and
(c) certificates for all physically delivered Shares in proper form for transfer
by delivery, or in the case of Shares by confirmation of a book-entry transfer,
into Depositary's account at the Book-Entry Transfer Facility of all Shares
delivered electronically, in each case together with a properly completed and
duly executed Letter of Transmittal (or manually signed facsimile thereof) with
any required signature guarantees (or, in the case of book-entry transfer an
Agent's Message or, in the case of a tender through ATOP, the specified
acknowledgment), and all other documents required by this Letter of
9
<PAGE>
Transmittal, must be received by the Depositary within three trading days of the
Nasdaq National Market after receipt by the Depositary of such Notice of
Guaranteed Delivery, all as provided in Section 3 of the Offer to Purchase.
The Notice of Guaranteed Delivery may be delivered by hand or transmitted by
telegram, facsimile transmission or mail to the Depositary and must include a
signature guarantee by an Eligible Institution in the form set forth in such
Notice. For Shares to be tendered validly pursuant to the guaranteed delivery
procedure, the Depositary must receive the Notice of Guaranteed Delivery on or
before the Expiration Date.
THE METHOD OF DELIVERY OF ALL DOCUMENTS, INCLUDING CERTIFICATES FOR SHARES,
THE LETTER OF TRANSMITTAL AND ANY OTHER REQUIRED DOCUMENTS IS AT THE ELECTION
AND RISK OF THE TENDERING SHAREHOLDER, AND 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 ASSURE DELIVERY.
The Company will not accept any alternative, conditional or contingent
tenders, nor will it purchase any fractional Shares, except as expressly
provided in the Offer to Purchase. All tendering shareholders, by execution of
this Letter of Transmittal (or a facsimile of it), waive any right to receive
any notice of the acceptance of their tender. DELIVERY OF DOCUMENTS TO THE BOOK
ENTRY TRANSFER FACILITY DOES NOT CONSTITUTE DELIVERY TO THE DEPOSITARY.
3. INADEQUATE SPACE. If the space provided in the boxes captioned
"Description of Class A Shares Tendered" and "Description of Class B Shares
Tendered" is inadequate, then the certificate numbers, the class of Shares,
and/or the number of Shares should be listed on a separate signed schedule and
attached to this Letter of Transmittal.
4. PARTIAL TENDERS AND UNPURCHASED SHARES. (Not applicable to shareholders
who tender by book entry transfer.) If less than all of the Shares evidenced by
any certificate are to be tendered, fill in the number of Shares that are to be
tendered in the column entitled "Number of Shares Tendered," in the boxes
captioned "Description of Class A Shares Tendered" and "Description of Class B
Shares Tendered." In such case, if any tendered Shares are purchased, a new
certificate for the remainder of the Shares (including any Shares not purchased)
evidenced by the old certificate(s) will be issued and sent to the registered
holder(s), unless otherwise specified in either the "Special Payment
Instructions" or "Special Delivery Instructions" box on this Letter of
Transmittal, as soon as practicable after the Expiration Date. Unless otherwise
indicated, all Shares represented by the certificates(s) listed and delivered to
the Depositary will be deemed to have been tendered.
5. INDICATION OF PRICE AT WHICH SHARES ARE BEING TENDERED. For Shares to
be properly tendered, the shareholder MUST check FOR BOTH CLASS A SHARES AND
CLASS B SHARES either the box under "Shares Tendered at Price Determined by
Dutch Auction" or one of the boxes under "Shares Tendered at Price Determined by
Shareholder," indicating the price per share at which he or she is tendering
Shares all under "Price (In Dollars) Per Share at Which Shares Are Being
Tendered" on this Letter of Transmittal (the "Price Selection"). SHAREHOLDERS
MUST COMPLETE THE PRICE SELECTION INFORMATION FOR EACH CLASS OF SHARES. TO
PROPERLY TENDER SHARES, A SHAREHOLDER TENDERING CLASS A SHARES MUST COMPLETE THE
PRICE SELECTION FOR CLASS A SHARES, AND A SHAREHOLDER TENDERING CLASS B SHARES
MUST COMPLETE THE PRICE SELECTION FOR CLASS B SHARES. ONLY ONE BOX MAY BE
CHECKED FOR EACH CLASS OF SHARES. IF MORE THAN ONE BOX FOR EACH CLASS OF SHARES
IS CHECKED OR IF NO BOX IS CHECKED FOR A CLASS OF SHARES, THEN THERE IS NO
PROPER TENDER OF SHARES FOR THAT CLASS. A shareholder wishing to tender portions
of his or her Share holdings of a class of Shares at different prices must
complete a separate Letter of Transmittal (and, if applicable, a separate Notice
of Guaranteed Delivery) for each price at which he or she wishes to tender each
such portion of his or her Shares. The same Shares cannot be tendered (unless
previously properly withdrawn as provided in Section 4 of the Offer to Purchase)
at more than one price.
10
<PAGE>
6. SIGNATURES ON LETTER OF TRANSMITTAL, STOCK POWERS AND ENDORSEMENTS.
(a) If this Letter if Transmittal is signed by the registered holder(s) of
the Shares tendered hereby, the signature(s) must correspond exactly with the
name(s) as written on the face of the certificate(s) without any change
whatsoever.
(b) If any tendered Shares are registered in the names of two or more joint
holders, each such holder must sign this Letter of Transmittal.
(c) If any tendered Shares are registered in different names on several
certificates, it will be necessary to complete, sign and submit as many separate
Letters of Transmittal (or facsimiles of it) as there are different
registrations of certificates.
(d) When this Letter of Transmittal is signed by the registered holder(s) of
the Shares listed and transmitted hereby, no endorsement(s) of certificate(s)
representing such Shares or separate stock power(s) are required unless payment
is to the made or the certificate(s) for the Shares not tendered or not
purchased are to be issued to a person other than the registered holder(s). If
this Letter of Transmittal is signed by a person other than the registered
holder(s) of the certificate(s) listed, or if payment is to be made or
certificate(s) not tendered or not purchased are to be issued to a person other
than the registered holder(s), the certificate(s) must be endorsed or
accompanied by appropriate stock power(s), in either case signed exactly as the
name(s) of the registered holder(s) appears on the certificate(s). SIGNATURE(S)
ON SUCH CERTIFICATE(S) OR STOCK POWER(S) MUST BE GUARANTEED BY AN ELIGIBLE
INSTITUTION. See Instruction 1.
(e) If this Letter of Transmittal or any certificate(s) or stock powers(s)
are signed by trustees, executors, administrators, guardians, attorneys-in-fact,
officers of corporations or others acting in a fiduciary or representative
capacity, such persons should so indicate when signing and must submit proper
evidence satisfactory to the Company of their authority to so act.
7. STOCK TRANSFER TAXES. Except as provided in this Instruction 7, no
stock transfer tax stamps or funds to cover such stamps need accompany this
Letter of Transmittal. The Company will pay or cause to be paid any stock
transfer taxes payable on the transfer to it of Shares purchased pursuant to the
Offer. If, however:
(a) payment of the aggregate Purchase Price for Shares tendered hereby and
accepted for purchase is to be made to any person other than the registered
holder(s);
(b) certificates not tendered or not accepted for purchase are to be
registered in the name(s) of any person(s) other than the registered holder(s);
or
(c) tendered certificates are registered in the name(s) of any person(s)
other than the person(s) signing this Letter of Transmittal;
then the Depositary will deduct from such aggregate Purchase Price the amount of
any stock transfer taxes (whether imposed on the registered holder, such other
person or otherwise) payable on account of the transfer to such person, unless
satisfactory evidence of the payment of such taxes or any exemption from them is
submitted. See Section 5 of the Offer to Purchase.
8. ODD LOTS. As described in Section 1 of the Offer to Purchase, if the
Company is to purchase, with respect to each class of Shares, less than all
Shares of that class tendered before the Expiration Date and not properly
withdrawn, then the Shares purchased first within each class will consist of all
Shares tendered by any shareholders who own of record or own beneficially, as of
November 12, 1998 and as of the Expiration Date, an aggregate of less than 100
Shares of that class (that is, 100 Class A Shares and/or less than 100 Class B
Shares), and who tender all of his or her Shares of that class, at or below the
Purchase Price (an "Odd Lot Holder"). This preference will not be available
unless the box captioned "Odd Lots" is completed for that class of Shares.
9. CONDITIONAL TENDERS. As described in Sections 1 and 6 of the Offer to
Purchase, shareholders may condition their tenders on all or a minimum number of
their tendered Shares being purchased ("Conditional Tenders"). If the Company is
to purchase less than all Shares tendered before the Expiration Date and not
properly withdrawn, then the Depositary will perform a preliminary proration,
and any Shares of either class tendered at or below the applicable Purchase
Prices for each class pursuant to a Conditional Tender for which
11
<PAGE>
the condition was not satisfied shall be deemed withdrawn, subject to
reinstatement if such conditionally tendered Shares are subsequently selected by
lot for purchase, and subject to Sections 1 and 6 of the Offer to Purchase. If
conditional tenders would otherwise be so regarded as withdrawn and would cause
the total number of Shares to be purchased to fall below 1,687,500 Class A
Shares and/or 562,500 Class B Shares then, to the extent feasible, the Company
will select enough of such conditional tenders that would otherwise have been so
withdrawn to permit the Company to purchase 1,687,500 Class A Shares and/or
562,500 Class B Shares. CONDITIONAL TENDERS WILL BE SELECTED BY LOT ONLY FROM
SHAREHOLDERS WHO TENDER ALL OF THEIR SHARES OF EACH CLASS. All tendered Shares
shall be deemed unconditionally tendered unless the "Conditional Tender" box is
completed. The Conditional Tender alternative is made available so that a
shareholder may assure that the purchase of Shares from the shareholder pursuant
to the Offer will be treated as a sale of such Shares by the shareholder, rather
than the payment of a dividend to the shareholder, for federal income tax
purposes. Odd Lot Shares, which will not be subject to proration, cannot be
conditionally tendered. It is the tendering shareholder's responsibility to
calculate the minimum number of Shares that must be purchased from the
shareholder in order for the shareholder to qualify for sale (rather than
dividend) treatment, and each shareholder is urged to consult his or her own tax
advisor.
In the event of proration, any Shares tendered pursuant to a conditional
tender for which the minimum requirements are not satisfied may not be accepted
and thereby will be deemed withdrawn.
10. ORDER OF PURCHASE IN EVENT OF PRORATION. As described in Section 1 of
the Offer to Purchase, with respect to each class of Shares, shareholders may
designate the order in which their Shares of a class are to be purchased in the
event of proration. The order of purchase may have an effect on the U.S. Federal
income tax treatment of the Purchase Price for the Shares purchased. If you do
not designate an order, in the event that less than all Shares tendered are
purchased due to proration, Shares will be selected for purchase by the
Depositary. See Sections 1, 3 and 14 of the Offer to Purchase.
11. SPECIAL PAYMENT AND DELIVERY INSTRUCTIONS. If a check for the Purchase
Price of any Shares tendered hereby is to be issued in the name of, and/or any
certificates not tendered or not accepted for purchase are to be returned to, a
person other than the signer of the Letter of Transmittal or if such
certificates and/or checks are to be mailed to someone other than the person
signing the Letter of Transmittal or to the signer at a different address, the
boxes captioned "Special Payment Instructions" and/or "Special Delivery
Instructions" on this Letter of Transmittal should be completed as applicable
and signatures must be guaranteed as described in Instruction 1. Shareholders
tendering Shares by book-entry transfer will have any Shares not accepted for
payment returned by crediting the account maintained by such shareholder at the
Book-Entry Transfer Facility.
12. IRREGULARITIES. All questions as to the number of Shares to be
accepted, the price to be paid therefor and the validity, form, eligibility
(including time of receipt) and acceptance for payment of any tender of Shares
will be determined by the Company in its sole discretion, which determinations
shall be final and binding on all parties. The Company reserves the absolute
right to reject any or all tenders of Shares it determines not to be in proper
form or the acceptance of which or payment for which may, in the opinion of the
Company's counsel, be unlawful. The Company also reserves the absolute right to
waive any of the conditions of the Offer and any defect or irregularity in the
tender of any particular Shares, and the Company's interpretation of the terms
of the Offer (including these instructions) will be final and binding on all
parties. No tender of Shares will be deemed to be properly made until all
defects and irregularities have been cured or waived. Unless waived, any defects
or irregularities in connection with tenders must be cured within such time as
the Company shall determine. None of the Company, the Dealer Manager (as defined
in the Offer to Purchase), the Depositary, the Information Agent (as defined in
the Offer to Purchase) or any other person is or will be obligated to give
notice of any defects or irregularities in tenders and none of them will incur
any liability for failure to give any such notice.
13. QUESTIONS AND REQUESTS FOR ASSISTANCE AND ADDITIONAL COPIES. Questions
and requests for assistance may be directed to, or additional copies of the
Offer to Purchase, the Notice of Guaranteed Delivery and this Letter of
Transmittal may be obtained from, the Information Agent or the Dealer Manager at
their addresses and telephone numbers set forth at the end of this Letter of
Transmittal or from your broker, dealer, commercial bank or trust company.
12
<PAGE>
14. FORM W-9 AND FORM W-8. Under the federal income tax backup withholding
rules, unless an exemption applies under the applicable law and regulations, 31%
of the gross proceeds payable to a shareholder or other payee pursuant to the
Offer must be withheld and remitted to the United States Treasury, unless the
shareholder or other payee provides his or her taxpayer identification number
(employer identification number or social security number) to the Depositary and
certifies that such number is correct. Therefore, each tendering shareholder
should complete and sign the Substitute Form W-9 included as part of the Letter
of Transmittal so as to provide the information and certification necessary to
avoid backup withholding, unless such shareholder otherwise establishes to the
satisfaction of the Depositary that it is not subject to backup withholding.
Certain shareholders (including, among others, all corporations and certain
foreign individuals) are not subject to these backup withholding and reporting
requirements. In order for a foreign individual to qualify as an exempt
recipient, that individual must submit an IRS Form W-8 or a Substitute Form W-8,
signed under penalties of perjury, attesting to that individual's exempt status.
Such statements can be obtained from the Depositary.
15. WITHHOLDING ON NON-U.S. SHAREHOLDERS. Even if a non-U.S. shareholder
has provided the required certification to avoid backup withholding, the
Depositary will withhold federal income taxes equal to 30% of the gross payments
payable to a non-U.S. shareholder or his agent unless the Depositary determines
that an exemption from or a reduced rate of withholding is available pursuant to
a tax treaty or that an exemption from withholding is applicable because such
gross proceeds are effectively connected with the conduct of a trade or business
in the United States. For this purpose, a non-U.S. shareholder is a shareholder
who is not (i) a citizen or resident of the United States, (ii) a corporation,
partnership or other entity created or organized in or under the laws of the
United States or of any State or any political subdivision thereof, (iii) an
estate the income of which is includible in gross income for U.S. federal income
tax purposes regardless of its source, or (iv) a trust if a court within the
United States is able to exercise primary supervision over the administration of
the trust and one or more U.S. trustees have the authority to control all
substantial decisions of the trust. In order to obtain a reduced rate of
withholding pursuant to a tax treaty, a non-U.S. shareholder must deliver to the
Depositary a properly completed Form 1001. In order to obtain an exemption from
withholding on the grounds that the gross proceeds paid pursuant to the Offer
are effectively connected with the conduct of a trade or business within the
United States, a non-U.S. shareholder must deliver to the Depositary a properly
completed Form 4224. The Depositary will determine a shareholder's status as a
non-U.S. shareholder and eligibility for a reduced rate of, or an exemption
from, withholding by reference to outstanding certificates or statements
concerning eligibility for a reduced rate of, or exemption from, withholding
(E.G., Form 1001 or Form 4224) unless facts and circumstances indicate that such
reliance is not warranted. A non-U.S. shareholder may be eligible to obtain a
refund of all or a portion of any tax withheld if such shareholder meets the
"complete redemption," "substantially disproportionate" or "not essentially
equivalent to a dividend" test described in Section 14 of the Offer to Purchase
or is otherwise able to establish that no tax or a reduced amount of tax is due.
Backup withholding generally will not apply to amounts subject to the 30% or
treaty-reduced rate of withholding. Non-U.S. shareholders are urged to consult
their tax advisors regarding the application of federal income tax withholding,
including eligibility for a withholding tax reduction or exemption and refund
procedures.
16. LOST, DESTROYED OR STOLEN CERTIFICATES. If any certificate(s)
representing Shares has been lost or destroyed, the shareholder should promptly
notify the Depositary the number of Shares represented by the certificate so
lost or destroyed. The shareholder will then be instructed by the Depositary as
to the steps that must be taken in order to replace the certificate(s). This
Letter of Transmittal and related documents cannot be processed until the
procedures for replacing lost or destroyed certificates have been followed.
Please allow at least ten to fourteen business days to complete such procedures.
13
<PAGE>
<TABLE>
<C> <S> <C>
- ------------------------------------------------------------------------------------
PAYER'S NAME: HARRIS TRUST AND SAVINGS BANK
- ------------------------------------------------------------------------------------
SUBSTITUTE PART 1--Taxpayer Identification Number--for TIN:
FORM W-9 all accounts, enter taxpayer identification Social Security Number
Department of the number in the box at right and certify by or Employer
Treasury, Internal signing and dating below. Identification Number
Revenue Service (If waiting for TIN, write
"Applied For")
Note: If the account is in more than one
name, see the chart in the enclosed
GUIDELINES to determine which number to
give the payer.
-----------------------------------------------------------------------
PAYER'S REQUEST FOR PART 2--For payees exempt from backup withholding, please write
TAXPAYER IDENTIFICATION "EXEMPT" here (see the enclosed GUIDELINES):
NUMBER ("TIN")
-----------------------------------------------------------------------
PART 3--CERTIFICATION--UNDER PENALTIES OF PERJURY, I CERTIFY THAT: (1) The number shown on this
form is my correct TIN (or I am waiting for a TIN to be issued to me), and (2) I am not subject to
backup withholding because (a) I am exempt from withholding, or (b) I have not been notified by
the Internal Revenue Service ("IRS") that I am subject to backup withholding as a result of a
failure to report all interest or dividends, or (c) the IRS has notified me that I am no longer
subject to backup withholding.
CERTIFICATION INSTRUCTIONS--You must cross out item (2) above if you have been notified by the IRS
that you are currently subject to backup withholding because of underreporting interest or
dividends on your tax return and you have not been notified by the IRS that you are no longer
subject to backup withholding. (Also see instructions in the enclosed GUIDELINES.)
- --------------------------------------------------------------------------------
SIGNATURE: ------------------------------------------------------------- DATE:
-------------------------
- --------------------------------------------------------------------------------
</TABLE>
NOTE: FAILURE TO COMPLETE AND RETURN THIS FORM MAY RESULT IN BACKUP WITHHOLDING
OF 31% OF ANY PAYMENTS MADE TO YOU PURSUANT TO THE OFFER. PLEASE REVIEW
THE ENCLOSED GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION
NUMBER ON SUBSTITUTE FORM W-9 FOR ADDITIONAL DETAILS.
YOU MUST COMPLETE THE FOLLOWING CERTIFICATE IF YOU ARE WAITING (OR SOON
WILL APPLY FOR) A TAXPAYER IDENTIFICATION NUMBER
- --------------------------------------------------------------------------------
CERTIFICATE OF TAXPAYER AWAITING IDENTIFICATION NUMBER
I certify under penalties of perjury that a taxpayer identification number
has not been issued to me, and either (a) I have mailed or delivered an
application to receive a taxpayer identification number to the appropriate
Internal Revenue Service Center or Social Security Administration Office, or
(b) I intend to mail or deliver an application in the near future. I
understand that if I do not provide a taxpayer identification number by the
time of payment, 31% of all reportable payments made to me will be withheld;
but that such amounts will be refunded to me if I then provide a Taxpayer
Identification Number within sixty (60) days.
_________________________________ _________________________________
Signature Date
Name: ______________________________________________________________________
(Please Print)
Address: ___________________________________________________________________
(Include Zip Code)
----------------------------------------------------------------------------
14
<PAGE>
THE INFORMATION AGENT FOR THE OFFER IS:
MORROW & CO., INC.
445 Park Avenue, 5th Floor
New York, New York 10022
Toll Free: (800) 566-9061
Call Collect: (212) 754-8000
Banks and Brokerage Firms, please call:
(800) 662-5200
THE DEALER MANAGER FOR THE OFFER IS:
NESBITT BURNS SECURITIES INC.
111 West Monroe Street, 20th Floor East
Chicago, Illinois 60603
Toll Free: (877) 461-2900
15
<PAGE>
NOTICE OF GUARANTEED DELIVERY
(NOT TO BE USED FOR SIGNATURE GUARANTEES)
OF
SHARES OF CLASS A COMMON STOCK AND CLASS B COMMON STOCK OF
THE CHERRY CORPORATION
PURSUANT TO THE OFFER TO PURCHASE
DATED NOVEMBER 17, 1998
This form or a facsimile hereof must be used to accept the Offer (as defined
below) if:
(a) certificates for shares of Class A Common Stock, $1.00 par value per
share (the "Class A Shares"), and/or Class B Common Stock, $1.00 par value
per share (the "Class B Shares" and with the "Class A Shares," collectively,
the "Shares"), of The Cherry Corporation (the "Company") are not immediately
available; or
(b) the procedure for book-entry transfer (set forth in Section 3 of the
Company's Offer to Purchase dated November 17, 1998 (the "Offer to
Purchase")) cannot be completed on a timely basis; or
(c) the Letter of Transmittal (or a facsimile thereof) and all other
required documents cannot be delivered to the Depositary prior to the
Expiration Date.
This form, properly completed and duly executed, may be delivered by hand,
mail or facsimile transmission to the Depositary. See Section 3 of the Offer to
Purchase.
THE DEPOSITARY OF THE OFFER IS:
HARRIS TRUST AND SAVINGS BANK
<TABLE>
<S> <C> <C>
BY REGISTERED OR CERTIFIED MAIL: BY FACSIMILE TRANSMISSION: BY HAND OR OVERNIGHT
DELIVERY:
Harris Trust and Savings Bank (212) 701-7636 (212) Harris Trust and Savings
c/o Harris Trust Company of 701-7637 Bank
New York CONFIRM RECEIPT OF FACSIMILE c/o Harris Trust Company of
P.O. Box 1010 BY TELEPHONE: New York
Wall Street Station (212) 701-7624 Wall Street Plaza
New York, New York 10268-1010 FOR INFORMATION CALL: 88 Pine Street, 19(th) Floor
(800) 245-7630 New York, New York 10005
</TABLE>
DELIVERY OF THIS INSTRUMENT TO AN ADDRESS OTHER THAN AS SET FORTH ABOVE OR
TRANSMISSION OF INSTRUCTIONS VIA A FACSIMILE NUMBER OTHER THAN AS SET FORTH
ABOVE DOES NOT CONSTITUTE A VALID DELIVERY. DELIVERIES TO THE COMPANY WILL NOT
BE FORWARDED TO THE DEPOSITARY AND THEREFORE WILL NOT CONSTITUTE VALID DELIVERY.
DELIVERIES TO THE BOOK-ENTRY TRANSFER FACILITY WILL NOT CONSTITUTE VALID
DELIVERY TO THE DEPOSITARY.
THIS FORM IS NOT TO BE USED TO GUARANTEE SIGNATURES. IF A SIGNATURE ON A
LETTER OF TRANSMITTAL IS REQUIRED TO BE GUARANTEED BY AN "ELIGIBLE INSTITUTION"
UNDER THE INSTRUCTIONS THERETO, SUCH SIGNATURE GUARANTEE MUST APPEAR IN THE
APPLICABLE SPACE PROVIDED IN THE SIGNATURE BOX ON THE LETTER OF TRANSMITTAL.
<PAGE>
Ladies and Gentlemen:
The undersigned hereby tenders to The Cherry Corporation, a Delaware
corporation, at the price per share indicated in this Notice of Guaranteed
Delivery, upon the terms and subject to the conditions set forth in the Offer to
Purchase and the related Letter of Transmittal (which together constitute the
"Offer"), receipt of both of which is hereby acknowledged, the number of Class A
Shares, $1.00 par value per share (the "Class A Shares"), and Class B Shares,
$1.00 par value per share (the "Class B Shares" and with the Class A Shares,
collectively, the "Shares"), pursuant to the guaranteed delivery procedure set
forth in Section 3 of the Offer to Purchase.
CONDITIONAL TENDER
(SEE INSTRUCTION 9 OF THE LETTER OF TRANSMITTAL)
/ / CHECK HERE AND COMPLETE THE FOLLOWING IF THE SHAREHOLDER IS TENDERING
ALL OF HIS OR HER SHARES AND IF THE TENDER OF SHARES IS CONDITIONAL ON
THE COMPANY PURCHASING ALL OR A MINIMUM NUMBER OF THE TENDERED SHARES:
MINIMUM NUMBER OF SHARES TO BE SOLD: SHARES
ODD LOTS
To be completed ONLY if the Shares are being tendered by or on behalf of a
person owning beneficially or of record an aggregate of less than 100 Class
A Shares and/or less than 100 Class B Shares. The undersigned either (check
one box):
/ / is the beneficial or record owner of an aggregate of less than 100
Class A Shares, all of which Shares are being tendered; or
/ / is the beneficial or record owner of an aggregate of less than 100
Class B Shares, all of which Shares are being tendered; or
/ / is a broker, dealer, commercial bank, trust company, or other nominee
that (a) is tendering for the beneficial owner(s) thereof, Shares with
respect to which it is the record holder, and (b) believes, based upon
representations made to it by such beneficial owner(s), that each such
person is the beneficial owner of an aggregate of less than 100 Class A
Shares and/or less than 100 Class B Shares and is tendering all of such
Shares of that class (or classes).
ODD LOT SHARES CANNOT BE CONDITIONALLY TENDERED
2
<PAGE>
IMPORTANT: SHAREHOLDERS MUST COMPLETE THE PRICE SELECTION INFORMATION FOR EACH
CLASS OF SHARES TENDERED. SHAREHOLDERS TENDERING BOTH CLASSES OF SHARES MUST
COMPLETE EACH OF THE FOLLOWING TWO BOXES.
PRICE SELECTION FOR CLASS A SHARES:
PRICE (IN DOLLARS) PER CLASS A SHARE
AT WHICH CLASS A SHARES ARE BEING TENDERED
(SEE INSTRUCTION 5)
CHECK ONLY ONE BOX. IF MORE THAN ONE BOX IS CHECKED OR IF NO BOX IS CHECKED,
THERE IS NO PROPER TENDER OF CLASS A SHARES
(Shareholders who desire to tender Class A Shares at more than one price
must complete a separate Letter of Transmittal for each price at which Class
A Shares are tendered.)
CLASS A SHARES TENDERED AT PRICE DETERMINED BY DUTCH AUCTION:
/ / The undersigned wants to maximize the chance of having The Cherry
Corporation purchase all Class A Shares the undersigned is tendering
(subject to the possibility of proration). Accordingly, by checking
this BOX INSTEAD OF ONE OF THE PRICES BELOW, the undersigned hereby
tenders Class A Shares and is willing to accept the Purchase Price
resulting from the Dutch Auction tender process. This action will
result in receiving a price per Class A Share as low as $13.25 or as
high as $15.50.
OR
CLASS A SHARES TENDERED AT PRICE DETERMINED BY SHAREHOLDER:
By checking ONE of the boxes below INSTEAD OF THE BOX ABOVE, the undersigned
hereby tenders Class A Shares at the price checked. THIS ACTION COULD RESULT
IN NONE OF THE SHARES BEING PURCHASED IF THE PURCHASE PRICE FOR THE CLASS A
SHARES IS LESS THAN THE PRICE CHECKED. A shareholder who desires to tender
Class A Shares at more than one price must complete a separate Letter of
Transmittal for each price at which Class A Shares are tendered. The same
Class A Shares cannot be tendered at more than one price.
PRICE (IN DOLLARS) PER CLASS A SHARE AT WHICH CLASS A SHARES ARE BEING
TENDERED:
/ / $13.25 / / $13.50 / / $13.75 / / $14.00 / / $14.25
/ / $14.50 / / $14.75 / / $15.00 / / $15.25 / / $15.50
3
<PAGE>
PRICE SELECTION FOR CLASS B SHARES:
PRICE (IN DOLLARS) PER CLASS B SHARE
AT WHICH CLASS B SHARES ARE BEING TENDERED
(SEE INSTRUCTION 5)
CHECK ONLY ONE BOX. IF MORE THAN ONE BOX IS CHECKED OR IF NO BOX IS CHECKED,
THERE IS NO PROPER TENDER OF CLASS B SHARES
(Shareholders who desire to tender Class B Shares at more than one price
must complete a separate Letter of Transmittal for each price at which Class
B Shares are tendered.)
CLASS B SHARES TENDERED AT PRICE DETERMINED BY DUTCH AUCTION:
/ / The undersigned wants to maximize the chance of having The Cherry
Corporation purchase all Class B Shares the undersigned is tendering
(subject to the possibility of proration). Accordingly, by checking
this BOX INSTEAD OF ONE OF THE PRICES BELOW, the undersigned hereby
tenders Class B Shares and is willing to accept the Purchase Price
resulting from the Dutch Auction tender process. This action will
result in receiving a price per Class B Share as low as $13.25 or as
high as $15.50.
OR
CLASS B SHARES TENDERED AT PRICE DETERMINED BY SHAREHOLDER:
By checking ONE of the boxes below INSTEAD OF THE BOX ABOVE, the undersigned
hereby tenders Class B Shares at the price checked. THIS ACTION COULD RESULT
IN NONE OF THE CLASS B SHARES BEING PURCHASED IF THE PURCHASE PRICE FOR THE
CLASS B SHARES IS LESS THAN THE PRICE CHECKED. A shareholder who desires to
tender Class B Shares at more than one price must complete a separate Letter
of Transmittal for each price at which Class B Shares are tendered. The same
Class B Shares cannot be tendered at more than one price.
PRICE (IN DOLLARS) PER CLASS B SHARE AT WHICH CLASS B SHARES ARE BEING
TENDERED:
/ / $13.25 / / $13.50 / / $13.75 / / $14.00 / / $14.25
/ / $14.50 / / $14.75 / / $15.00 / / $15.25 / / $15.50
4
<PAGE>
(Please type or print)
Certificate Nos. (if available):
________________________________________
________________________________________
Name(s)
______________________________________
Address(es)
______________________________________
______________________________________
Area Code(s) and Telephone Number(s)
SIGN HERE
________________________________________
Signature(s)
______________________________________
Dated:
If Shares will be tendered by book-entry
transfer, fill in the applicable account
number, below:
The Depository Trust Company
DTC Account Number:_____________________
Transaction Code Number:________________
5
<PAGE>
GUARANTEE
(NOT TO BE USED FOR SIGNATURE GUARANTEE)
The undersigned, a firm that is a member of a registered national securities
exchange or the National Association of Securities Dealers, Inc., or a financial
institution that is a member in good standing of a recognized signature
guarantee medallion program within the meaning of Rule 17Ad-15 under the
Securities Exchange Act of 1934, as amended (an "Eligible Institution"), hereby
guarantees (i) that the above-named person(s) has a net long position in the
Shares being tendered within the meaning of Rule 14e-4 promulgated under the
Securities Exchange Act of 1934, as amended, (ii) that such tender of Shares
complies with Rule 14e-4, and (iii) the delivery to the Depositary, at one of
its addresses set forth above, of certificate(s) for the Shares tendered hereby,
in proper form for transfer, or a confirmation of the book-entry transfer of the
Shares tendered hereby into the Depositary's account at The Depository Trust
Company, in each case together with a properly completed and duly executed
Letter(s) of Transmittal (or a facsimile(s) thereof), with any required
signature guarantee(s), or an Agent's Message (as defined in the Offer to
Purchase) or through ATOP (as defined in the Offer to Purchase), and any other
required documents, all within three Nasdaq National Market trading days after
the date of receipt by the Depositary.
THE ELIGIBLE INSTITUTION THAT COMPLETES THIS FORM MUST COMMUNICATE THE
GUARANTEE TO THE DEPOSITARY AND MUST DELIVER THE LETTER OF TRANSMITTAL AND
CERTIFICATES FOR SHARES TO THE DEPOSITARY WITHIN THE TIME SHOWN HEREIN. FAILURE
TO DO SO COULD RESULT IN A FINANCIAL LOSS TO SUCH ELIGIBLE INSTITUTION.
Authorized Signature:_____________________________________________
Name:_____________________________________________________________
(Please Print)
Title:____________________________________________________________
Name of Firm:_____________________________________________________
Address:__________________________________________________________
__________________________________________________________________
__________________________________________________________________
(Including Zip Code)
Area Code and Telephone Number:___________________________________
Date:_______________________________________________________, 1997
NOTE: DO NOT SEND CERTIFICATES WITH THIS FORM. YOUR STOCK CERTIFICATES MUST BE
SENT WITH THE LETTER OF TRANSMITTAL.
6
<PAGE>
Nesbitt Burns Securities Inc.
20th Floor East
111 West Monroe Street
Chicago, Illinois 60603
THE CHERRY CORPORATION
OFFER TO PURCHASE FOR CASH UP TO
1,687,500 SHARES OF ITS CLASS A COMMON STOCK
AND/OR 562,500 SHARES OF ITS CLASS B COMMON STOCK
AT A PURCHASE PRICE NOT GREATER THAN $15.50
NOR LESS THAN $13.25 PER SHARE
THE OFFER, PRORATION PERIOD AND WITHDRAWAL RIGHTS EXPIRE AT 5:00 P.M., NEW
YORK CITY TIME, ON MONDAY, DECEMBER 21, 1998, UNLESS THE OFFER IS EXTENDED.
To Brokers, Dealers, Commercial Banks, Trust Companies and Other Nominees:
The Cherry Corporation, a Delaware corporation (the "Company"), has
appointed us to act as Dealer Manager in connection with its offer to purchase
for cash 1,687,500 shares of its Class A Common Stock, par value $1.00 per share
(the "Class A Shares"), and/or 562,500 shares of its Class B Common Stock, $1.00
par value per share (the "Class B Shares" and with the Class A Shares
collectively, the "Shares"), or such lesser number of shares as are properly
tendered, at a price per Class A Share and a price per Class B Share not greater
than $15.50 nor less than $13.25 per share in cash, without interest thereon, as
specified by its shareholders tendering their Shares, upon the terms and subject
to the conditions set forth in its Offer to Purchase, dated November 17, 1998,
and in the related Letter of Transmittal (which together as amended or
supplemented from time to time constitute the "Offer").
The Company will, upon the terms and subject to the conditions of the Offer,
determine a single per share price for the Class A Shares and a single per share
price for the Class B Shares, each not greater than $15.50 nor less than $13.25
per share, net to the seller in cash, without interest thereon (each a "Purchase
Price"), that it will pay for the Class A Shares and the Class B Shares properly
tendered pursuant to the Offer, taking into account the number of Shares of each
class so tendered and the prices for each class specified by tendering
shareholders. The Company will select the lowest Purchase Price for Class A
Shares that will allow it to buy 1,687,500 Class A Shares, or such lesser number
as are properly tendered. The Company will select the lowest Purchase Price for
Class B Shares that will allow it to buy 562,500 Class B Shares, or such lesser
number as are properly tendered. The Company may select a different Purchase
Price for each class of Shares. All Shares of a class properly tendered at
prices at or below the Purchase Price for that class and not withdrawn will be
purchased at such Purchase Price, upon the terms and subject to the conditions
of the Offer, including the proration and conditional tender provisions. Shares
tendered at prices greater than the applicable Purchase Price and Shares not
purchased because of proration or conditional tender will be returned. The
Company reserves the right, in its sole discretion, to purchase more than
1,687,500 Class A Shares and/or 562,500 Class B Shares pursuant to the Offer.
See Sections 1 and 15 of the Offer to Purchase.
The Purchase Price will be paid in cash, net to the seller, without interest
thereon, with respect to all Shares purchased. Shares tendered at prices greater
than the applicable Purchase Price and Shares not purchased because of proration
or conditional tenders will be returned.
THE OFFER IS NOT CONDITIONED ON ANY MINIMUM NUMBER OF SHARES BEING TENDERED.
THE OFFER IS, HOWEVER, SUBJECT TO CERTAIN OTHER CONDITIONS. SEE SECTION 7 OF THE
OFFER TO PURCHASE.
<PAGE>
For your information and for forwarding to your clients for whom you hold
Shares registered in your name or in the name of your nominee, we are enclosing
the following documents:
1. Offer to Purchase, dated November 17, 1998;
2. Letter to Clients which may be sent to your clients for whose accounts you
hold Shares registered in your name or in the name of your nominee, with space
provided for obtaining such clients' instructions with regard to the Offer;
3. Letter, dated November 17, 1998, from Peter B. Cherry, Chairman and
President of the Company, to shareholders of the Company;
4. Letter of Transmittal for your use and for the information of your clients
(together with accompanying Form W-9); and
5. Notice of Guaranteed Delivery to be used to accept the Offer if the Share
certificates and all other required documents cannot be delivered to the
Depositary by the Expiration Date or if the procedure for book-entry transfer
cannot be completed on a timely basis.
WE URGE YOU TO CONTACT YOUR CLIENTS AS PROMPTLY AS POSSIBLE. THE OFFER,
PRORATION PERIOD AND WITHDRAWAL RIGHTS WILL EXPIRE AT 5:00 P.M., NEW YORK CITY
TIME, ON MONDAY, DECEMBER 21, 1998, UNLESS THE OFFER IS EXTENDED.
No fees or commissions will be payable to brokers, dealers or any person for
soliciting tenders of Shares pursuant to the Offer other than fees paid to the
Dealer Manager, the Information Agent or the Depositary as described in the
Offer to Purchase. The Company will, however, upon request, reimburse you for
customary mailing and handling expenses incurred by you in forwarding any of the
enclosed materials to the beneficial owners of Shares held by you as a nominee
or in a fiduciary capacity. The Company will pay or cause to be paid any stock
transfer taxes applicable to its purchase of Shares, except as otherwise
provided in Instruction 7 of the Letter of Transmittal.
In order to take advantage of the Offer, a duly executed and properly
completed Letter of Transmittal and any other required documents should be sent
to the Depositary with either certificate(s) representing the tendered Shares or
confirmation of their book-entry transfer, all in accordance with the
instructions set forth in the Letter of Transmittal and Section 3 of the Offer
to Purchase.
As described in Section 3 of the Offer to Purchase, tenders may be made
without the concurrent deposit of stock certificates or concurrent compliance
with the procedure for book-entry transfer if such tenders are made by or
through a financial institution (including most commercial banks, savings and
loan associations and brokerage houses) that is a member in good standing of a
recognized signature guarantee medallion program within the meaning of Rule
17Ad-15 under the Exchange Act. Certificates for Shares so tendered (or a
confirmation of a book-entry transfer of such Shares into the Depositary's
account at the "Book-Entry Transfer Facility" described in the Offer to
Purchase), together with a properly completed and duly executed Letter of
Transmittal and any other documents required by the Letter of Transmittal, must
be received by the Depositary within three (3) Nasdaq National Market trading
days after timely receipt by the Depositary of a properly completed and duly
executed Notice of Guaranteed Delivery.
Any inquiries you may have with respect to the Offer should be addressed to
Nesbitt Burns Securities Inc. or to the Information Agent at their respective
addresses and telephone numbers set forth on the back cover page of the Offer to
Purchase.
2
<PAGE>
Additional copies of the enclosed material may be obtained from the
undersigned, telephone: (877) 461-2900 (toll free) or from the Information
Agent, Morrow & Co., Inc., telephone: (800) 566-9061 (toll free), call collect
(212) 754-8000; and, banks and brokerage firms, please call: (800) 662-5200
(toll free).
Very truly yours,
Nesbitt Burns Securities Inc.
Enclosures
NOTHING CONTAINED HEREIN OR IN THE ENCLOSED DOCUMENTS SHALL CONSTITUTE YOU
OR ANY OTHER PERSON AS AN AGENT OF THE COMPANY OR ANY OF ITS AFFILIATES, THE
DEALER MANAGER, THE INFORMATION AGENT OR THE DEPOSITARY, OR AUTHORIZE YOU OR ANY
OTHER PERSON TO USE ANY DOCUMENT OR MAKE ANY STATEMENT ON BEHALF OF ANY OF THEM
IN CONNECTION WITH THE OFFER OTHER THAN THE DOCUMENTS ENCLOSED HEREWITH AND THE
STATEMENTS CONTAINED THEREIN.
3
<PAGE>
THE CHERRY CORPORATION
OFFER TO PURCHASE FOR CASH UP TO
1,687,500 SHARES OF ITS CLASS A COMMON STOCK
AND/OR 562,500 SHARES OF ITS CLASS B COMMON STOCK
AT A PURCHASE PRICE NOT GREATER THAN $15.50
NOR LESS THAN $13.25 PER SHARE
THE OFFER, PRORATION PERIOD AND WITHDRAWAL RIGHTS EXPIRE AT 5:00 P.M., NEW
YORK CITY TIME, ON MONDAY, DECEMBER 21, 1998, UNLESS THE OFFER IS EXTENDED.
To Our Clients:
Enclosed for your consideration are the Offer to Purchase, dated November
17, 1998, and the related Letter of Transmittal (which, as amended or
supplemented from time to time, together constitute the "Offer") in connection
with the Offer by The Cherry Corporation, a Delaware corporation (the
"Company"), to purchase 1,687,500 shares of its Class A Common Stock, par value
$1.00 per share ("Class A Shares"), and/or 562,500 shares of its Class B Common
Stock, par value $1.00 per share ("Class B Shares" and with the Class A Shares,
collectively, the "Shares"), or such lesser number of Shares as are properly
tendered, at a price per Class A Share and a price per Class B Share not greater
than $15.50 nor less than $13.25 per share, net to the Seller in cash, without
interest thereon, specified by tendering shareholders, upon the terms and
subject to the conditions set forth in the Offer. Also enclosed herewith is
certain other material related to the Offer, including a letter to shareholders
from Peter B. Cherry, the Chairman and President of the Company.
The Company will, upon the terms and subject to the completion of the Offer,
determine a single per share price for the Class A Shares and a single per share
price for the Class B Shares, each not greater than $15.50 nor less than $13.25
per share, net to the seller in cash, without interest thereon, (each a
"Purchase Price"), that it will pay for the Class A Shares and the Class B
Shares properly tendered pursuant to the Offer, taking into account the number
of Shares of each class so tendered and the prices for each class specified by
tendering shareholders. The Company will select the lowest Purchase Price for
Class A Shares that will allow it to buy 1,687,500 Class A Shares, or such
lesser number as are properly tendered. The Company will select the lowest
Purchase Price for Class B Shares that will allow it to buy 562,500 Class B
Shares, or such lesser number as are properly tendered. The Company may select a
different Purchase Price for each class of Shares. All Shares of a class
properly tendered at prices at or below the Purchase Price for that class and
not withdrawn will be purchased at such Purchase Price, upon the terms and
subject to the conditions of the Offer, including the proration and conditional
tender provisions. Shares tendered at prices greater than the applicable
Purchase Price and Shares not purchased because of proration or conditional
tender will be returned. The Company reserves the right, in its sole discretion,
to purchase more than 1,687,500 Class A Shares and/or 562,500 Class B Shares
pursuant to the Offer. See Sections 1 and 15 of the Offer to Purchase.
THE OFFER IS NOT CONDITIONED ON ANY MINIMUM NUMBER OF SHARES BEING TENDERED.
THE OFFER IS, HOWEVER, SUBJECT TO CERTAIN OTHER CONDITIONS. SEE SECTION 7 OF THE
OFFER TO PURCHASE.
WE ARE THE OWNER OF RECORD OF SHARES HELD FOR YOUR ACCOUNT. AS SUCH, WE ARE
THE ONLY ONES WHO CAN TENDER SUCH SHARES, AND THEN ONLY PURSUANT TO YOUR
INSTRUCTIONS. WE ARE SENDING YOU THE LETTER OF TRANSMITTAL FOR YOUR INFORMATION
ONLY; YOU CANNOT USE IT TO TENDER SHARES WE HOLD FOR YOUR ACCOUNT.
Please instruct us as to whether you wish us to tender any or all of the
Shares we hold for your account on the terms and subject to the conditions of
the Offer to Purchase and the Letter of Transmittal.
<PAGE>
We call your attention to the following:
1. You may tender Shares of either class at prices not greater than
$15.50 nor less than $13.25 per share, or the price determined by the "Dutch
Auction" tender process, as indicated in the attached Instruction Form, net
to you in cash. For each class of Shares, you should mark the box entitled
"Shares Tendered at Price Determined by Dutch Auction" if you are willing to
accept the Purchase Price resulting from the Dutch Auction tender process
for each class of Shares. This could result in your receiving the minimum
price of $13.25 per share. You must complete the price selection for both
the Class A Shares and the Class B Shares.
2. The Offer is for 1,687,500 Class A Shares and/or 562,500 Class B
Shares, constituting approximately 21.8% of the Class A Shares and 11.8% of
the Class B Shares outstanding as of November 16, 1998. Although the Company
has no present intention of doing so, the Company reserves the right, in its
sole discretion but subject to certain applicable legal requirements, to
purchase more than the 1,687,500 Class A Shares and/or 562,500 Class B
Shares pursuant to the Offer. The Offer is not conditioned on any minimum
number of Shares being tendered. The Offer is, however, subject to certain
other conditions set forth in Section 7 of the Offer to Purchase.
3. The Offer, proration period and withdrawal rights will expire at
5:00 P.M., New York City Time, on December 21, 1998, unless the Company
extends the Offer. Your instructions to us should be forwarded to us in
ample time to permit us to submit a tender on your behalf.
4. As described in the Offer to Purchase, if more than 1,687,500 Class
A Shares and/or 562,500 Class B Shares have been properly tendered at or
below the Purchase Price and not withdrawn prior to the Expiration Date, as
defined in Section 1 of the Offer to Purchase, the Company will purchase
Shares in the following order of priority:
(i) all Shares of a class properly tendered at or below the Purchase
Price and not withdrawn prior to the Expiration Date by any
stockholder who owns beneficially or of record an aggregate of less
than 100 Class A Shares and/or 100 Class B Shares, as of November
12, 1998 and as of the Expiration Date, who validly tenders all of
such Shares of that class (partial tenders will not qualify for this
preference) and completes the box captioned "Odd Lots" in the Letter
of Transmittal and, if applicable, the Notice of Guaranteed
Delivery;
(ii) after purchase of all of the foregoing Shares, all Shares
conditionally tendered in accordance with Section 6 of the Offer to
Purchase, for which the condition was satisfied, and all other
Shares tendered properly and unconditionally at prices at or below
the Purchase Price and not withdrawn prior to the Expiration Date,
on a pro rata basis as described in Section 1 of the Offer to
Purchase; and
(iii) if necessary to permit the Company to purchase 1,687,500 Class A
Shares and/or 562,500 Class B Shares, Shares conditionally
tendered, for which the condition was not initially satisfied, at
or below the Purchase Price and not withdrawn prior to the
Expiration Date, selected by lot in accordance with Section 6 of
the Offer to Purchase.
5. You may designate the order in which your Shares shall be purchased
in the event of proration.
6. The Offer is not conditioned upon any minimum number of Shares being
tendered.
7. Tendering shareholders will not be obligated to pay brokerage fees
or commissions to the Dealer Manager, the Depositary or the Information
Agent or, except as set forth in Instruction 7 to the Letter of Transmittal,
transfer taxes on the sale of Shares pursuant to the Offer. A tendering
shareholder who holds Shares with such shareholder's broker may be required
by such broker to pay a service charge or other fee.
8. You may instruct us to tender Shares on your behalf subject to the
condition that a specified minimum number of your tendered Shares must be
purchased if any such tendered Shares are
2
<PAGE>
purchased, as described in Section 6 of the Offer to Purchase. It is your
responsibility to calculate such minimum number and you are urged to consult
a tax advisor. If you wish us to make a conditional tender on your behalf,
you must complete the box captioned "Conditional Tenders" in the Instruction
Form.
9. If you beneficially hold an aggregate of less than 100 Class A
Shares and/or less than 100 Class B Shares, as of November 12, 1998 and as
of the Expiration Date, and you instruct us to tender on your behalf all
such Shares of such class or classes at or below the Purchase Price before
the Expiration Date (as defined in the Offer to Purchase) and check the box
captioned "Odd Lots" in the attached Instruction Form, the Company, upon the
terms and subject to the conditions of the Offer, will accept all such
Shares of such class (or classes) for purchase before proration, if any, of
the purchase of other Shares of that class properly tendered at or below the
Purchase Price.
10. If you wish to tender portions of your Shares of either class at
different prices, you must complete a separate Instruction Form for each
price at which you wish to tender each such portion of your Shares. We must
submit a separate Letter of Transmittal on your behalf for each price you
will accept. The same Shares cannot be tendered at more than one price.
11. The Company believes that the Class A Shares and Class B Shares are
expected to continue to be listed on the Nasdaq National Market. Upon
completion of the Offer, however, the Company may consider a possible
conversion or exchange of all outstanding Class A Shares into Class B
Shares. If such conversion or exchange did occur, the Class B Shares would
be the only Shares quoted on the Nasdaq National Market. The Company has not
made the determination whether or not to proceed with such a conversion or
exchange. There can be no assurance that such a transaction will occur, or
if it does occur, the timing thereof.
If you wish to have us tender any or all of your Shares, please so instruct
us by completing, executing, detaching and returning to us the attached
Instruction Form. An envelope to return your Instruction Form to us is enclosed.
If you authorize us to tender your Shares, we will tender all such Shares unless
you specify otherwise on the attached Instruction Form.
YOUR INSTRUCTION FORM SHOULD BE FORWARDED TO US IN AMPLE TIME TO PERMIT US
TO SUBMIT A TENDER ON YOUR BEHALF ON OR BEFORE THE EXPIRATION DATE OF THE OFFER.
THE OFFER, PRORATION PERIOD AND WITHDRAWAL RIGHTS EXPIRE AT 5:00 P.M., NEW YORK
CITY TIME, ON MONDAY, DECEMBER 21, 1998, UNLESS THE COMPANY EXTENDS THE OFFER.
If you tender all of the Shares you own (whether beneficially or of record),
you may condition your tender on the Company purchasing a minimum number of your
tendered Shares. In such case, if as a result of the preliminary proration
provisions in the Offer to Purchase the Company would purchase less than such
minimum number of your Shares, then the Company will not purchase any of your
Shares, except as provided in the next sentence. In such case, if as a result of
conditionally tendered Shares not being purchased the total number of Shares
that would be purchased falls below 1,687,500 Class A Shares and 562,500 Class B
Shares, the Company will select, by lot, Shares for purchase from shareholders
who conditionally tendered Shares for which the condition, based on a
preliminary proration, has not been satisfied. See Sections 1 and 6 of the Offer
to Purchase.
The Offer is being made to all holders of Shares. The Company is not aware
of any state where the making of the Offer is prohibited by administrative or
judicial action pursuant to a valid state statute. If the Company becomes aware
of any valid state statute prohibiting the making of the Offer, the Company will
make a good faith effort to comply with such statute. If, after such good faith
effort, the Company cannot comply with such statute, the Offer will not be made
to, nor will tenders be accepted from or on behalf of, holders of Shares in such
state. In those jurisdictions whose securities, blue sky or other laws require
the Offer to be made by a licensed broker or dealer, the Offer shall be deemed
to be made on behalf of the Company by the Dealer Manager or one or more
registered brokers or dealers licensed under the laws of such jurisdiction.
3
<PAGE>
INSTRUCTION FORM
INSTRUCTIONS FOR TENDER OF SHARES OF
THE CHERRY CORPORATION
The undersigned acknowledge(s) receipt of your letter and the enclosed Offer
to Purchase dated November 17, 1998 (the "Offer to Purchase") and the related
Letter of Transmittal (which, as amended or supplemented from time to time,
together constitute the "Offer") in connection with the offer by The Cherry
Corporation, a Delaware corporation (the "Company"), to purchase up to 1,687,500
shares of its Class A Common Stock, par value $1.00 per share (the "Class A
Shares") and 562,500 shares of its Class B Common Stock, par value $1.00 per
share (the "Class B Shares"), or such lesser number of shares as are properly
tendered, at a price per Class A Share and a price per Class B Share not greater
than $15.50 nor less than $13.25 per share, net to the seller in cash, without
interest thereon, as specified by shareholders tendering their Shares, upon the
terms and subject to the conditions of the Offer.
This will instruct you to tender to the Company, on (our) (my) behalf, the
number of Shares indicated below (or if no number is indicated below, all
Shares) which are beneficially owned by (us)(me) and registered in your name,
upon terms and subject to the conditions of the Offer.
NUMBER OF SHARES TO BE TENDERED: _____________________________ CLASS A SHARES*
_______________________ CLASS B SHARES*
* Unless otherwise indicated, it will be assumed that all Shares held by us for
your account are to be tendered.
4
<PAGE>
CONDITIONAL TENDER
(SEE INSTRUCTION 9 OF THE LETTER OF TRANSMITTAL)
A tendering Shareholder may condition the tender of Shares upon the
purchase by the Company of a specified minimum number of Shares tendered
hereby, all as described in the Offer to Purchase, particularly Section 6
thereof. Except as set forth in Section 6 of the Offer to Purchase, unless at
least a minimum number of Shares is purchased by the Company pursuant to the
terms of the Offer, none of the Shares tendered hereby will be purchased. It
is the tendering Shareholder's responsibility to calculate and appropriately
indicate a minimum number of Shares, and each Shareholder is urged to consult
a tax advisor. Unless this box is completed and a minimum number specified,
the tender will be deemed unconditional.
/ / Check here if tender of Shares is conditional on the Company purchasing
all or a minimum number of the tendered Shares and complete the following:
Minimum number of Shares to be sold: _____________________________________
ODD LOTS
(SEE INSTRUCTION 8 OF THE LETTER OF TRANSMITTAL)
To be completed ONLY if the Shares are being tendered by or on behalf of a
person owning beneficially or of record an aggregate of less than 100 Class A
Shares or less than 100 Class B Shares. The undersigned either (check one
box):
/ / is the beneficial or record owner of an aggregate of less than 100 Class A
Shares all which Shares are being tendered; or
/ / is the beneficial or record owner of an aggregate of less than 100 Class B
Shares, all which Shares are being tendered; or
/ / is a broker, dealer, commercial bank, trust company, or other nominee that
(a) is tendering for the beneficial owner(s) thereof, Shares with respect
to which it is the record holder, and (b) believes, based upon
representations made to it by such beneficial owner(s), that each such
person is the beneficial owner of an aggregate of less than 100 Class A
Shares and/or less than 100 Class B Shares and is tendering all of such
Shares of that class (or classes).
ODD LOT SHARES CANNOT BE CONDITIONALLY TENDERED
NOTE: SIGNATURES MUST BE PROVIDED BELOW. PLEASE READ THE
ACCOMPANYING INSTRUCTIONS CAREFULLY.
5
<PAGE>
INSTRUCTION FORM
INSTRUCTIONS FOR TENDER OF SHARES OF
THE CHERRY CORPORATION
Please tender to The Cherry Corporation (the "Company"), on (our) (my)
behalf, the number of Shares indicated below, which are beneficially owned by
(us) (me) and registered in your name, upon the terms and subject to the
conditions contained in the Offer to Purchase of the Company dated November
17, 1998, and the related Letter of Transmittal, the receipt of both of which
is acknowledged.
NUMBER OF SHARES TO BE TENDERED PURSUANT TO THIS INSTRUCTION FORM:
CLASS A SHARES: ______________________________________________________________
CLASS B SHARES: ______________________________________________________________
6
<PAGE>
IMPORTANT: SHAREHOLDERS MUST COMPLETE THE PRICE SELECTION INFORMATION FOR EACH
CLASS OF SHARES TENDERED. SHAREHOLDERS TENDERING BOTH CLASSES OF SHARES MUST
COMPLETE EACH OF THE FOLLOWING TWO BOXES.
PRICE SELECTION FOR CLASS A SHARES:
PRICE (IN DOLLARS) PER CLASS A SHARE
AT WHICH CLASS A SHARES ARE BEING TENDERED
(SEE INSTRUCTION 5 OF THE LETTER OF TRANSMITTAL)
CHECK ONLY ONE BOX. IF MORE THAN ONE BOX IS CHECKED OR IF NO BOX IS CHECKED,
THERE IS NO PROPER TENDER OF CLASS A SHARES
(Shareholders who desire to tender Class A Shares at more than one price must
complete a separate Letter of Transmittal for each price at which Class A
Shares are tendered.)
CLASS A SHARES TENDERED AT PRICE DETERMINED BY DUTCH AUCTION:
/ / The undersigned wants to maximize the chance of having The Cherry
Corporation purchase all Class A Shares the undersigned is tendering
(subject to the possibility of proration). Accordingly, by checking this
BOX INSTEAD OF ONE OF THE PRICES BELOW, the undersigned hereby tenders
Class A Shares and is willing to accept the Purchase Price resulting from
the Dutch Auction tender process. This action will result in receiving a
price per Class A Share as low as $13.25 or as high as $15.50.
OR
CLASS A SHARES TENDERED AT PRICE DETERMINED BY SHAREHOLDER:
By checking ONE of the boxes below INSTEAD OF THE BOX ABOVE, the undersigned
hereby tenders Class A Shares at the price checked. THIS ACTION COULD RESULT
IN NONE OF THE SHARES BEING PURCHASED IF THE PURCHASE PRICE FOR THE CLASS A
SHARES IS LESS THAN THE PRICE CHECKED. A shareholder who desires to tender
Class A Shares at more than one price must complete a separate Letter of
Transmittal for each price at which Class A Shares are tendered. The same
Class A Shares cannot be tendered at more than one price.
PRICE (IN DOLLARS) PER CLASS A SHARE AT WHICH CLASS A SHARES ARE BEING
TENDERED:
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
/ / $13.25 / / $13.75 / / $14.25 / / $14.75 / / $15.25
/ / $13.50 / / $14.00 / / $14.50 / / $15.00 / / $15.50
</TABLE>
7
<PAGE>
PRICE SELECTION FOR CLASS B SHARES:
PRICE (IN DOLLARS) PER CLASS B SHARE
AT WHICH CLASS B SHARES ARE BEING TENDERED
(SEE INSTRUCTION 5 OF THE LETTER OF TRANSMITTAL)
CHECK ONLY ONE BOX. IF MORE THAN ONE BOX IS CHECKED OR IF NO BOX IS CHECKED,
THERE IS NO PROPER TENDER OF CLASS B SHARES
(Shareholders who desire to tender Class B Shares at more than one price must
complete a separate Letter of Transmittal for each price at which Class B
Shares are tendered.)
CLASS B SHARES TENDERED AT PRICE DETERMINED BY DUTCH AUCTION:
/ / The undersigned wants to maximize the chance of having The Cherry
Corporation purchase all Class B Shares the undersigned is tendering
(subject to the possibility of proration). Accordingly, by checking this
BOX INSTEAD OF ONE OF THE PRICES BELOW, the undersigned hereby tenders
Class B Shares and is willing to accept the Purchase Price resulting from
the Dutch Auction tender process. This action will result in receiving a
price per Class B Share as low as $13.25 or as high as $15.50.
OR
CLASS B SHARES TENDERED AT PRICE DETERMINED BY SHAREHOLDER:
By checking ONE of the boxes below INSTEAD OF THE BOX ABOVE, the undersigned
hereby tenders Class B Shares at the price checked. THIS ACTION COULD RESULT
IN NONE OF THE CLASS B SHARES BEING PURCHASED IF THE PURCHASE PRICE FOR THE
CLASS B SHARES IS LESS THAN THE PRICE CHECKED. A shareholder who desires to
tender Class B Shares at more than one price must complete a separate Letter
of Transmittal for each price at which Class B Shares are tendered. The same
Class B Shares cannot be tendered at more than one price.
PRICE (IN DOLLARS) PER CLASS B SHARE AT WHICH CLASS B SHARES ARE BEING
TENDERED:
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
/ / $13.25 / / $13.75 / / $14.25 / / $14.75 / / $15.25
/ / $13.50 / / $14.00 / / $14.50 / / $15.00 / / $15.50
</TABLE>
Indicate in this box the order (by class and/or certificate number) in which
Shares are to be purchased in event of proration. (Attach additional list if
necessary.) *See Instructions.
Class A Shares: 1st:________ 2nd:________ 3rd:________ 4th:________
5th:________
Class B Shares: 1st:________ 2nd:________ 3rd:________ 4th:________
5th:________
8
<PAGE>
*If you do not designate an order, in the event less than all Shares tendered
are purchased due to proration, Shares will be selected for purchase by the
Depositary.
THE METHOD OF DELIVERY OF THIS DOCUMENT IS AT THE OPTION AND RISK OF THE
TENDERING SHAREHOLDER. IF DELIVERY IS BY MAIL, REGISTERED MAIL WITH RETURN
RECEIPT REQUESTED, PROPERLY INSURED, IS RECOMMENDED. IN ALL CASES, SUFFICIENT
TIME SHOULD BE ALLOWED TO ASSURE DELIVERY.
THE BOARD OF DIRECTORS OF THE COMPANY HAS UNANIMOUSLY APPROVED THE OFFER.
HOWEVER, NONE OF THE COMPANY, ITS BOARD OF DIRECTORS OR THE DEALER MANAGER
MAKES ANY RECOMMENDATION TO SHAREHOLDERS AS TO WHETHER TO TENDER OR REFRAIN
FROM TENDERING ANY OF THEIR SHARES OF EITHER CLASS. EACH SHAREHOLDER MUST MAKE
THE DECISION WHETHER TO TENDER SHARES AND, IF SO, HOW MANY SHARES AND AT WHICH
PRICE OR PRICES SHARES SHOULD BE TENDERED.
<TABLE>
<S> <C>
Signature(s): Address:
Name(s):
(Please Print) (Including Zip Code)
Area Code and Telephone No.
(Taxpayer Identification or Social
Security Number)
Date: , 1998
</TABLE>
THIS FORM MUST BE RETURNED TO THE BROKERAGE FIRM
MAINTAINING YOUR ACCOUNT.
9
<PAGE>
THE CHERRY CORPORATION ANNOUNCES "DUTCH AUCTION" SELF TENDER OFFER
FOR SHARES OF ITS CLASS A AND CLASS B COMMON STOCK
WAUKEGAN, IL. (November 17, 1998)--The Cherry Corporation (Nasdaq-- CHERA &
CHERB) today announced that it will commence a Dutch Auction self tender offer
to purchase for cash up to 1,687,500 shares of its Class A Common Stock and
562,500 shares of its Class B Common Stock representing 21.8% and 11.8%,
respectively, of its issued and outstanding Class A and Class B Common Stock,
subject to the terms and conditions set forth in the Offer to Purchase of the
Company dated November 17, 1998, and the related Letter of Transmittal. The
tender offer begins Tuesday, November 17, 1998, and will expire, unless
extended, at 5:00 p.m. (New York City Time) on Monday, December 21, 1998.
The terms of the Dutch Auction tender offer, which are described more fully
in the Offer to Purchase and the Letter of Transmittal, pursuant to which the
tender offer is made, include a purchase price for each class of shares of not
less than $13.25 nor more than $15.50 per share, net to the seller in cash,
without interest thereon.
In a Dutch Auction, the Company sets a price range, and the holders have an
opportunity to specify prices within that range at which they are willing to
sell shares. After the expiration of the tender offer, the Company will
determine a single per share price for Class A Common Stock and a single per
share price for Class B Common Stock to be paid for each share purchased, taking
into consideration the number of shares tendered for each Class and the prices
specified by tendering shareholders. If more than 1,687,500 shares of Class A
Common Stock or 562,500 shares of Class B Common Stock are properly tendered
pursuant to the Offer to Purchase and Letter of Transmittal, the Company will
accept shares of each class of stock on a pro rata basis. Odd lots tendered will
not be subject to proration. The Company reserves the right to purchase more
than 1,687,500 shares of Class A Common Stock and 562,500 shares of Class B
Common Stock pursuant to the tender offer. The tender offer is not conditioned
on any minimum number of shares being tendered.
Neither the Company nor its Board of Directors makes any recommendation to
any shareholder as to whether to tender or refrain from tendering shares. Each
shareholder must make the decision whether to tender shares and, if so, how many
shares and at what price or prices shares should be tendered. The Company has
been advised that none of its directors or executive officers intend to tender
any shares pursuant to the Offer.
On November 16, 1998, the last trading day prior to the announcement of the
Offer, the price per share for the last trade for the Shares on Nasdaq National
Market was $13.50 for Class A Common Stock and $13.00 for Class B Common Stock.
As of November 16, 1998, the Company had issued and outstanding 7,738,680 shares
of its Class A Common Stock and 4,762,564 shares of its Class B Common Stock.
The Offer to Purchase, Letter of Transmittal and related documents will be
mailed to the stockholders of record of its Class A and Class B Common Stock and
will also be made available for distribution to beneficial owners of the Class A
and Class B Common Stock.
The dealer manager for the tender offer is Nesbitt Burns Securities Inc. and
the information agent is Morrow & Co., Inc. Shareholders may obtain further
information by calling Morrow & Co., Inc. at (800) 662-5200 or Nesbitt Burns
Securities Inc. at (877) 461-2900 (toll free throughout the U.S.).
The Cherry Corporation manufactures proprietary and custom electrical
switches, sensors, electronic keyboards and controls, and semiconductors for the
worldwide automotive, computer, and consumer and commercial markets. The Company
has eight wholly owned subsidiaries in the United States, Germany, England,
France, Australia, Czech Republic, Mexico and Hong Kong. Cherry also has 50-50
joint ventures in Japan, Hirose Cherry Precision Company Limited, and in India,
TVS Cherry Private Limited, and a Japanese automotive sales and engineering
office. Additional information is available on the Company's website at
http://www.cherrycorp.com.
<PAGE>
[LOGO]
THE CHERRY CORPORATION
3600 SUNSET AVENUE
WAUKEGAN, ILLINOIS 60087
847-662-9200
------------------------
To our Shareholders:
The Cherry Corporation (the "Company") is offering (the "Offer") to purchase
up to 1,687,500 shares of Class A Common Stock ("Class A Shares") and/or 562,500
shares of Class B Common Stock ("Class B Shares" and the Class A Shares and the
Class B Shares are collectively referred to as the "Shares"), or approximately
21.8% of the currently outstanding Class A Shares and 11.8% of the currently
outstanding Class B Shares, from existing shareholders, subject to the terms and
conditions set forth in the enclosed Offer to Purchase dated November 17, 1998
and the related Letter of Transmittal. The price for each class of shares will
not be greater than $15.50 nor less than $13.25 per Share. The Company is
conducting the tender offer through a procedure known as a "Dutch Auction." This
allows you to select the price or prices, for each class of Shares, within the
specified range at which you are willing to sell some, or all, of your Shares to
The Cherry Corporation.
On November 16, 1998, the last trading day prior to the announcement of the
Offer, the price per share for the last trade for the Shares on the Nasdaq
National Market was $13.50 for Class A Shares and $13.00 for Class B Shares. Any
shareholder whose Shares are purchased in the Offer will receive the total
purchase price in cash and will not incur the usual transaction costs associated
with open market sales.
The Offer is explained in detail in the enclosed Offer to Purchase and the
related Letter of Transmittal. We encourage you to read these materials
carefully before making any decision with respect to the Offer. If you desire to
tender your Shares, the instructions on how to tender Shares are also explained
in detail in the accompanying materials.
Neither the Company nor its Board of Directors makes any recommendation to
any shareholder as to whether to tender or refrain from tendering any Shares of
either class. Each shareholder must make the decision whether to tender Shares
and, if so, how many Shares and at what price or prices Shares of each class
should be tendered. The Company has been advised that none of its directors,
executive officers or its affiliates intend to tender any Shares pursuant to the
Offer.
Please note that the Offer will expire at 5:00 P.M., New York City Time, on
December 21, 1998, unless it is extended. Questions with respect to the Offer
should be referred to Morrow & Co., Inc., the Information Agent, at (800)
566-9061 (toll free throughout the U.S.).
Sincerely yours,
Peter B. Cherry
<PAGE>
GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION
NUMBER ON SUBSTITUTE FORM W-9
GUIDELINES FOR DETERMINING THE PROPER IDENTIFICATION NUMBER TO GIVE THE
PAYER.--Social Security numbers have nine digits separated by two hyphens: I.E.
000-00-0000. Employer identification numbers have nine digits separated by only
one hyphen: I.E. 00-0000000. The table below will help determine the number to
give the payer.
<TABLE>
<CAPTION>
----------------------------------------------- -----------------------------------------
<S> <C> <C>
FOR THIS TYPE OF ACCOUNT: GIVE THE SOCIAL SECURITY NUMBER OF--
<CAPTION>
- ----------------------------------------------------- ------------------------------------------
<S> <C> <C>
1. Individual The individual
2. Two or more individuals (joint account) The account owner of the account or, if
combined funds, the first individual on
the account(1)
The minor(2)
3. Custodian account of a minor (Uniform Gift The grantor-trustee(1)
to Minors Act)
4a. The usual revocable savings trust account The actual owner(1)
(grantor is also trustee)
b. So-called trust account that is not a
legal or valid trust under State Law
5. Sole proprietorship The owner(3)
6. Sole proprietorship The owner(3)
7. A valid trust, estate, or pension trust The legal entity(4)
8. Corporate The corporation
9. Association, club, religious, charitable, The organization
educational, or other tax-exempt
organization
10. Partnership The partnership
11. A broker or registered nominee The broker or nominee
12. Account with the Department of Agriculture The public entity
in the name of a public entity (such as a
State or local government, school
district, or prison) that receives
agricultural program payments
<CAPTION>
----------------------------------------------- -----------------------------------------
</TABLE>
(1) List first and circle the name of the person whose number you furnish. If
only one person on a joint account has a social security number, that
person's number must be furnished.
(2) Circle the minor's name and furnish the minor's social security number.
(3) You must show your individual name, but you may also enter your business or
"doing business as" name. You may use either your social security number or
your employer identification number (if you have one).
(4) List first and circle the name of the legal trust, estate, or pension trust.
(Do not furnish the taxpayer identification number of the personal
representative or trustee unless the legal entity itself is not designated
in the account title.)
NOTE: If no name is circled when there is more than one name, the number will
be considered to be that of the first name listed.
<PAGE>
GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION
NUMBER ON SUBSTITUTE FORM W-9
PAGE 2
OBTAINING A NUMBER
If you do not have a taxpayer identification number or you do not know your
number, obtain Form SS-5, Application for a Social Security Number Card, or Form
SS-4, Application for Employer Identification Number, at the local office of the
Social Security Administration or the Internal Revenue Service and apply for a
number.
PAYEES EXEMPT FROM BACKUP WITHHOLDING
Payees specifically exempted from backup withholding include the following:
- An organization exempt from tax under section 501(a) of the Internal
Revenue Code of 1986, as amended (the "Code"), an individual retirement
account or a custodial account under section 403(b)(7), if the account
satisfies the requirements of section 401(f)(2).
- The United States or any agency or instrumentality thereof.
- A state, the District of Columbia, a possession of the United States, or
any political subdivision or instrumentality thereof.
- A foreign government or any political subdivision, agency or
instrumentality thereof.
- An international organization or any agency or instrumentality thereof.
Other payees that may be exempt from backup withholding include:
- A corporation.
- A financial institution.
- A dealer in securities or commodities registered in the U.S., the District
of Columbia or a possession of the U.S.
- A futures commission merchant registered with the Commodity Futures
Trading Commission.
- A real estate investment trust.
- A common trust fund operated by a bank under section 584(a).
- An entity registered at all times during the tax year under the Investment
Company Act of 1940.
- A foreign central bank of issue.
- A middleman known in the investment community as a nominee or who is
listed in the most recent publication of the American Society of Corporate
Secretaries, Inc. Nominee List.
- A trust exempt from tax under section 664 as described in section 4947.
Payments of dividends and patronage dividends not generally subject to
backup withholding include the following:
- Payments to nonresident aliens subject to withholding under section 1441.
- Payments to partnerships not engaged in a trade or business in the U.S.
and which have at least one nonresident alien partner.
- Payments of patronage dividends where the amount received is not paid in
money.
- Payments made by certain foreign organizations.
- Section 404(k) payments made by an ESOP.
Payments of interest not generally subject to backup withholding include the
following:
- Payments of interest on obligations issued by individuals.
Note: You may be subject to backup withholding if this interest is $600
or more and is paid in the course of the payer's trade or business
and you have not provided your correct taxpayer identification
number to the payer.
- Payments of tax-exempt interest (including exempt-interest dividends under
section 852).
- Payments described in section 6049(b)(5) to nonresident aliens.
- Payments on tax-free covenant bonds under section 1451.
- Payments made by certain foreign organizations.
- Mortgage interest paid to you.
EXEMPT PAYEES DESCRIBED ABOVE SHOULD FILE FORM W-9 TO AVOID POSSIBLE ERRONEOUS
BACKUP WITHHOLDING. FILE THIS FORM WITH THE PAYER, FURNISH YOUR TAXPAYER
IDENTIFICATION NUMBER, WRITE "EXEMPT" IN PART II OF THE FORM, SIGN AND DATE THE
FORM, AND RETURN IT TO THE PAYER.
Certain payments other than interest, dividends, and patronage dividends,
that are not subject to information reporting are also not subject to backup
withholding.
PRIVACY ACT NOTICE.--Section 6109 of the Code requires most recipients of
dividend, interest, or other payments to give taxpayer identification numbers to
payers who must report the payments to IRS. IRS uses the numbers for
identification purposes and to help verify the accuracy of your tax return. The
IRS may also provide this information to the Department of Justice for civil and
criminal litigation and to cities, states, and the District of Columbia to carry
out their tax laws. You must provide your taxpayer identification number whether
or not you are required to file tax returns. Payers must generally withhold 31%
of taxable interest, dividend, and certain other payments to a payee who does
not furnish a taxpayer identification number to a payer. Certain penalties may
also apply.
PENALTIES
PENALTY FOR FAILURE TO FURNISH TAXPAYER IDENTIFICATION NUMBER.--If you fail to
furnish your taxpayer identification number to a payer, you are subject to a
penalty of $50 for each such failure unless your failure is due to reasonable
cause and not to willful neglect.
CIVIL PENALTY FOR FALSE INFORMATION WITH RESPECT TO WITHHOLDING.--If you make a
false statement with no reasonable basis which results in no imposition of
backup withholding, you are subject to a penalty of $500.
CRIMINAL PENALTY FOR FALSIFYING INFORMATION.-- Willfully falsifying
certifications or affirmations may subject you to criminal penalties including
fines and/or imprisonment.
FOR ADDITIONAL INFORMATION CONTACT YOUR TAX CONSULTANT OR THE INTERNAL REVENUE
SERVICE.
<PAGE>
THE CHERRY CORPORATION
SECOND AMENDMENT TO CREDIT AGREEMENT
To each of the Banks signatory hereto
Ladies and Gentlemen:
Reference is hereby made to that certain Credit Agreement dated as of
May 12, 1995, as heretofore amended (as so amended, the "CREDIT AGREEMENT")
among the undersigned, The Cherry Corporation, a Delaware corporation (the
"COMPANY"), Harris Trust and Savings Bank, as Agent and you (the "BANKS").
All capitalized terms used herein without definition shall have the same
meanings herein as such terms have in the Credit Agreement.
The Company has requested that the Banks make certain amendments to the
Credit Agreement, and the Banks are willing to do so under the terms and
conditions set forth in this Amendment.
1. AMENDMENTS.
Upon acceptance hereof by the Required Banks in the space provided for
that purpose below, the Credit Agreement shall be and hereby is amended as
follows:
(a) Section 8.7 of the Credit Agreement shall be amended in its
entirety and as so amended shall read as follows:
"SECTION 8.7. CONSOLIDATED TANGIBLE NET WORTH FOR THE COMPANY
AND ITS SUBSIDIARIES. The Company shall at all times have
Consolidated Tangible Net Worth of not less than the Minimum Required
Amount. For purposes of this Section 8.7, the "MINIMUM REQUIRED
AMOUNT" shall mean $100,000,000 through February 28, 1999 and shall
increase (but never decrease) as of March 1, 1999 and as of each March
1st thereafter, by an amount equal to 50% of the cumulative positive
Consolidated Net Income earned each fiscal year commencing and
completed after February 28, 1999 (but without subtraction for any
negative Consolidated Net Income for any such fiscal year)."
(b) Section 8.8 of the Credit Agreement shall be amended in its
entirety and as so amended shall read as follows:
"SECTION 8.8. LEVERAGE RATIO FOR THE COMPANY AND ITS
SUBSIDIARIES. At all times the Company shall have a Leverage Ratio of
not greater than 50%."
<PAGE>
(c) The ratio of "3.0 to 1.0" appearing in the last line of
Section 8.10 of the Credit Agreement shall be deleted and the ratio of "2.0
to 1.0" shall be inserted in its stead.
(d) The definition of the term "DOMESTIC CASH AND CASH EQUIVALENTS"
appearing in Section 10 of the Credit Agreement shall be amended in its
entirety and as so amended shall read as follows:
"CASH AND CASH EQUIVALENTS" shall mean as of the date of any
determination thereof, the sum of (i) all cash on hand of the Company
and its Subsidiaries held in deposit accounts and (ii) all investments
of the Company and its Subsidiaries of a type described in
Sections 8.13(a), (b) or (c) hereof maturing within sixty (60) days
from the date of determination thereof, all as determined on a
consolidated basis in accordance with GAAP."
(e) The term "DOMESTIC CASH AND CASH EQUIVALENTS" wherever appearing
the Credit Agreement (including all Schedules and Exhibits) shall be
deleted and the term "CASH AND CASH EQUIVALENTS" substituted therefor.
2. CONDITIONS PRECEDENT.
The effectiveness of this Amendment is subject to the satisfaction of
all of the following conditions precedent:
(a) The Company and the Required Banks shall have executed and
delivered this Amendment.
(b) Legal matters incident to the execution and delivery of this
Amendment shall be satisfactory to the Banks and their counsel.
(c) Cherry Semiconductor Corporation shall have executed and
delivered to the Banks its consent to this Amendment in the form set forth
below.
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<PAGE>
3. REPRESENTATIONS.
In order to induce the Banks to execute and deliver this Amendment, the
Company hereby represents to the Banks that as of the date hereof, the
representations and warranties set forth in Section 6 of the Credit Agreement
are and shall be and remain true and correct (except that the representations
contained in Section 6.3 shall be deemed to refer to the most recent
financial statements of the Company delivered to the Bank) and no Default or
Event of Default has occurred and is continuing under the Credit Agreement or
shall result after giving effect to this Amendment.
4. MISCELLANEOUS.
(a) Except as specifically amended herein, the Credit Agreement shall
continue in full force and effect in accordance with its original terms.
Reference to this specific Amendment need not be made in the Credit
Agreement, the Notes, or any other instrument or document executed in
connection therewith, or in any certificate, letter or communication issued
or made pursuant to or with respect to the Credit Agreement, any reference in
any of such items to the Credit Agreement being sufficient to refer to the
Credit Agreement as amended hereby.
(b) The Company agrees to pay on demand all costs and expenses of or
incurred by the Agent in connection with the negotiation, preparation,
execution and delivery of this Amendment, including the fees and expenses of
counsel for the Agent.
-3-
<PAGE>
(c) This Amendment may be executed in any number of counterparts, and
by the different parties on different counterpart signature pages, all of
which taken together shall constitute one and the same agreement. Any of the
parties hereto may execute this Amendment by signing any such counterpart and
each of such counterparts shall for all purposes be deemed to be an original.
This Amendment shall be governed by the internal laws of the State of
Illinois.
Dated as of November 13, 1998.
THE CHERRY CORPORATION
By
Its _____________________________
Accepted and agreed to in Chicago, Illinois as of the date and year last
above written.
HARRIS TRUST AND SAVINGS BANK,
individually and as Agent
By
Its Vice President
BANK OF AMERICA ILLINOIS
By
Its _____________________________
SOCIETE GENERALE
By
Its _____________________________
BAYERISCHE VEREINSBANK AG
By
Its _____________________________
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<PAGE>
GUARANTOR'S CONSENT
The undersigned, Cherry Semiconductor Corporation, has heretofore
executed and delivered to the Banks a Guaranty dated May 12, 1995 and hereby
consents to the Amendment to the Credit Agreement as set forth above and
confirms that its Guaranty and all of the undersigned's obligations
thereunder remain in full force and effect. The undersigned further agrees
that the consent of the undersigned to any further amendments to the Credit
Agreement shall not be required as a result of this consent having been
obtained, except to the extent, if any, required by the Guaranty referred to
above.
CHERRY SEMICONDUCTOR CORPORATION
By
Its _____________________________
