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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE TO
Tender Offer Statement
(under Section 14(d)(1) or 13(e)(1) of the Securities Exchange Act of 1934)
(Amendment No. 1)*
K-Tron International, Inc.
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(Name of Subject Company (issuer))
K-Tron International, Inc. (issuer)
- --------------------------------------------------------------------------------
(Names of Filing Persons (identifying status as offeror,
issuer or other person))
Common Stock, par value $.01 per share
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(Title of Class of Securities)
482730 10 8
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(CUSIP Number of Class of Securities)
Edward B. Cloues, II
Chairman of the Board and Chief Executive Officer
K-Tron International, Inc.
Routes 55 and 553
P.O. Box 888
Pitman, New Jersey 08071-0888
(856) 589-0500
(Name, address, and telephone numbers of person authorized to receive
notices and communications on behalf of filing persons)
Copies to:
Alan Singer, Esq.
Morgan, Lewis & Bockius LLP
1701 Market Street
Philadelphia, PA 19103-2921
(215) 963-5000
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CALCULATION OF FILING FEE
Transaction Valuation* Amount of Filing Fee
8,100,000 $1,620
* Filing fee is one-50th of one percent of the aggregate dollar amount of cash
being offered by the Company to purchase 450,000 shares of its common stock,
based on a price of $18.00 per share.
[ ] Check the box if any part of the fee is offset as provided by Rule
0-11(a)(2) and identify the filing with which the offsetting fee was
previously paid. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
Amount Previously Paid: _____________ Filing Party: __________________
Form or Registration No.: ___________ Date Filed: ___________________
[ ] Check the box if the filing relates solely to preliminary communications
made before the commencement of a tender offer.
Check the appropriate boxes below to designate any transactions to which the
statement relates:
[ ] Third party tender offer subject to Rule 14d-1.
[X] Issuer tender offer subject to Rule 13e-4.
[ ] Going-private transaction subject to Rule 13e-3.
[ ] Amendment to Schedule 13D under Rule 13d-2.
Check the following box if the filing is a final amendment reporting the results
of the tender offer: [ ]
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INTRODUCTORY STATEMENT
This Tender Offer Statement on Schedule TO relates to an offer by K-Tron
International, Inc., a New Jersey corporation (the "Issuer"), to purchase up to
450,000 shares of its common stock (the "Shares") at a price of $18.00 per
Share, net to the seller, in cash on the terms and subject to the conditions set
forth in the Offer to Purchase dated February 16, 2000 (the "Offer to Purchase")
and the related Letter of Transmittal (the "Letter of Transmittal"). Copies of
the Offer to Purchase, the related Letter of Transmittal and certain other
relevant documents (together, the "Offer") are filed as exhibits hereto.
The information in the Offer to Purchase and the related Letter of
Transmittal, copies of which are filed with this Schedule TO as exhibits
(a)(1)(i) and (a)(1)(ii) hereto, is incorporated herein by reference in answer
to items in this Schedule TO except those items as to which information is
specifically provided herein.
Item 5. Past Contacts, Transactions, Negotiations and Agreements.
The Issuer is not aware of any arrangements in which its securities, or those
of a controlling person or one of its directors or executive officers, are
pledged or are otherwise subject to a contingency, the occurrence of which would
give another person the power to direct the voting or disposition of such
securities.
Item 6. Purposes of the Transaction and Plans or Proposals.
(c) Except as set forth in the Offer to Purchase, the Issuer does not intend
to:
(1) engage in any extraordinary transaction, such as a merger,
reorganization or liquidation, involving the Issuer or any of its subsidiaries;
(2) engage in any purchase, sale or transfer of a material amount of assets
of the Issuer or any of its subsidiaries;
(3) make any material change in the Issuer's present dividend rate or
policy, or indebtedness or capitalization;
(4) change in any way the present Board of Directors or management of the
Issuer;
(5) make any other material changes in the Issuer's corporate structure or
business;
(6) cause any class of equity securities of the Issuer to cease to be
authorized to be quoted on the Nasdaq National Market;
(7) cause a class of equity securities of the Issuer to become eligible for
termination of registration pursuant to Section 12(g)(4) of the Securities
Exchange Act of 1934, as amended (the "Exchange Act");
(8) suspend the Issuer's obligations to file reports pursuant to Section
15(d) of the Exchange Act;
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(9) acquire any additional securities of the Issuer or dispose of any
securities of the Issuer to any person (other than the issuance of Shares and
options for Shares to certain employees under the Issuer's employee benefit
plans and the issuance of Shares and options for Shares in connection with the
acquisition of businesses); or
(10) change the Issuer's charter, bylaws or other governing instruments or
take other actions that could impede the acquisition of control of the Issuer.
Item 7. Source and Amount of Funds and Other Consideration.
(b) There are no conditions to the Issuer's bank financing for the Offer and
the financing documents have been executed. The Issuer has not put into place
any alternative financing plans in the event its primary financing arrangements
fall through.
Item 10. Financial Statements.
Not applicable.
Item 11. Additional Information.
(a)(1) There are no material agreements, arrangements, understandings or
relationships between the Issuer and any of its executive officers, directors,
controlling persons or subsidiaries.
(a)(5) The Company is not aware of any legal proceedings, pending or
threatened, relating to the Offer.
Item 12. Exhibits.
(a)(1)(i) Form of Offer to Purchase dated February 16, 2000.
(a)(1)(ii) Form of Letter of Transmittal to Accompany Shares of Common Stock.
(a)(1)(iii) Guidelines for Certification of Taxpayer Identification Number on
Substitute Form W-9.
(a)(1)(iv) Form of Notice of Guaranteed Delivery.
(a)(1)(v) Form of Letter to Brokers, Dealers, Commercial Banks, Trust
Companies and Other Nominees.
(a)(1)(vi) Form of Letter to Clients for use by Brokers, Dealers, Commercial
Banks, Trust Companies and Other Nominees.
(a)(1)(vii) Form of Letter to Shareholders of the Issuer dated February 16,
2000 from Edward B. Cloues, II, Chairman of the Board and Chief Executive
Officer.
(b)(1) Note dated February 4, 2000 from K-Tron America, Inc. in favor of The
Bank of Gloucester County.
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(d) Not applicable.
(g) Not applicable.
(h) Not applicable.
SIGNATURE
After due inquiry and to the best of my knowledge and belief, I certify that
the information set forth in this statement is true, complete and correct.
K-TRON INTERNATIONAL, INC.
/s/ EDWARD B. CLOUES, II
------------------------------------------
Name: Edward B. Cloues, II
Title: Chairman of the Board and
Chief Executive Officer
Dated: February 16, 2000
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EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit Description
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<S> <C>
(a)(1)(i) Form of Offer to Purchase dated February 16, 2000.
(a)(1)(ii) Form of Letter of Transmittal to Accompany Shares of Common Stock.
(a)(1)(iii) Guidelines for Certification of Taxpayer Identification Number on Substitute
Form W-9.
(a)(1)(iv) Form of Notice of Guaranteed Delivery.
(a)(1)(v) Form of Letter to Brokers, Dealers, Commercial Banks, Trust Companies
and Other Nominees.
(a)(1)(vi) Form of Letter to Clients for use by Brokers, Dealers, Commercial Banks,
Trust Companies and Other Nominees.
(a)(1)(vii) Form of Letter to Shareholders of Issuer dated February 16, 2000 from
Edward B. Cloues, II, Chairman of the Board and Chief Executive Officer.
(b)(1) Note dated February 4, 2000 from K-Tron America, Inc. in favor of The
Bank of Gloucester County.
(d) Not applicable.
(g) Not applicable.
(h) Not applicable.
</TABLE>
<PAGE> 1
K-TRON INTERNATIONAL, INC.
OFFER TO PURCHASE FOR CASH
450,000 SHARES
OF COMMON STOCK
AT A PURCHASE
PRICE OF $18.00 PER SHARE
THE OFFER, PRORATION PERIOD AND WITHDRAWAL RIGHTS EXPIRE AT 5:00 P.M., NEW YORK
CITY TIME, ON MARCH 17, 2000, UNLESS THE OFFER IS EXTENDED.
K-Tron International, Inc., a New Jersey corporation (the "Company"),
invites its shareholders to tender shares of its common stock, par value $.01
per share ("Shares"), to the Company at a price of $18.00 per Share in cash,
upon the terms and subject to the conditions set forth in this Offer to
Purchase, the related Letter of Transmittal and certain other relevant documents
(which together constitute the "Offer"). The Company will pay $18.00 per Share,
net to the seller in cash, for 450,000 Shares validly tendered and not
withdrawn, upon the terms and subject to the conditions of the Offer, including
the proration terms hereof. The Company reserves the right, in its sole
discretion and subject to certain restrictions, to purchase more or less than
450,000 Shares pursuant to the Offer.
THE OFFER IS NOT CONDITIONED ON ANY MINIMUM NUMBER OF SHARES BEING TENDERED.
THE OFFER IS SUBJECT, HOWEVER, TO CERTAIN CONDITIONS.
As of February 11, 2000, the Company had outstanding 2,927,155 Shares. The
450,000 Shares that the Company is offering to purchase represent 15.37% of the
outstanding Shares.
The Shares are quoted on the Nasdaq National Market ("Nasdaq") under the
symbol "KTII." On February 11, 2000, the last full trading day on Nasdaq prior
to the announcement by the Company of its intention to make the Offer, the
closing price per Share was $14.125. SHAREHOLDERS ARE URGED TO OBTAIN CURRENT
MARKET QUOTATIONS FOR THE SHARES. SEE SECTION 6.
THE BOARD OF DIRECTORS OF THE COMPANY HAS APPROVED THE OFFER. HOWEVER,
SHAREHOLDERS MUST MAKE THEIR OWN DECISIONS WHETHER TO TENDER SHARES AND, IF SO,
HOW MANY SHARES TO TENDER. NEITHER THE COMPANY NOR ITS BOARD OF DIRECTORS MAKES
ANY RECOMMENDATION TO ANY SHAREHOLDER AS TO WHETHER TO TENDER OR REFRAIN FROM
TENDERING SHARES.
The Date of this Offer to Purchase is February 16, 2000.
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TERM SHEET
This term sheet is provided for your convenience. Please refer to the full
text of this Offer to Purchase for more specific details.
WHO IS OFFERING TO BUY MY SECURITIES?
- K-Tron International, Inc. See Section 10 for more detailed information
about K-Tron.
WHAT IS THE CLASS AND AMOUNT OF SECURITIES SOUGHT IN THE OFFER?
- We are offering to purchase 450,000 shares of our common stock. See
Section 1 for a more detailed discussion of the offer.
HOW MUCH IS K-TRON OFFERING TO PAY FOR MY SECURITIES AND WHAT IS THE FORM OF
PAYMENT?
- We are offering to pay $18.00 per share in cash. See Section 1 for a more
detailed discussion of the purchase price.
MAY I PLACE CONDITIONS ON THE ACCEPTANCE OF MY SHARES?
- Yes. You may specify a minimum number of your shares that we must
purchase if we are to purchase any of your shares. This format is
intended to assist in your tax planning. See Section 2 for a more
detailed discussion of conditional tender of shares.
DOES K-TRON HAVE THE FINANCIAL RESOURCES TO MAKE PAYMENT?
- Yes. See Section 9 for a detailed discussion of the source and amount of
funds for the transaction.
IS K-TRON'S FINANCIAL CONDITION RELEVANT TO MY DECISION WHETHER TO TENDER IN THE
OFFER?
- We expect to borrow funds to pay for most of the shares we purchase.
- We expect that cash flow from current operations will be used to repay
the indebtedness incurred and that the increased debt will not be unduly
burdensome. See Section 9 for a more detailed discussion of our loan
arrangements.
HOW LONG DO I HAVE TO DECIDE WHETHER TO TENDER IN THE OFFER?
- You have until 5:00 P.M. on March 17, 2000. See Section 1 for a more
detailed discussion of the expiration of the offer.
CAN THE OFFER BE EXTENDED, AND UNDER WHAT CIRCUMSTANCES?
- We can extend the offer at any time in our sole discretion.
- If we extend the offer, we may delay the acceptance of any shares that
have been tendered. See Section 14 for a more detailed discussion of
extension of the offer.
HOW WILL I BE NOTIFIED IF THE OFFER IS EXTENDED?
- We will issue a press release to the Dow Jones News Service.
- We may also communicate the extension of the offer through other means.
See Section 14 for a more detailed discussion of the notification
procedure.
ARE THERE ANY CONDITIONS TO THE OFFER?
- The offer is not subject to a condition that a minimum number of shares
are tendered.
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- We may terminate the offer if, following the date of the offer, another
person:
- makes a tender offer for our shares;
- makes a proposal for a merger or acquisition involving K-Tron;
- to our knowledge acquires or proposes to acquire more than 5% of our
shares; or
- files a notification form under the Hart-Scott-Rodino Antitrust
Improvements Act of 1976 reflecting an intent to acquire K-Tron or any
of our shares.
- We may reduce the number of shares offered to be purchased by us if we
believe that the number of shares tendered would result in an existing
shareholder increasing the percentage of outstanding shares owned by the
shareholder by 2% or more (for example, from 6% of the outstanding shares
immediately before the offer to 8% or more of the outstanding shares
after the offer).
- The offer is subject to other conditions. See Section 5 for a more
detailed discussion of conditions of the offer.
HOW DO I TENDER MY SHARES?
- If the share certificates are registered in your name, you should send
the share certificates, together with a properly completed Letter of
Transmittal, to American Stock Transfer & Trust Company (the
"Depositary").
- If your shares are registered in the name of a broker or other nominee,
you should instruct your broker or other nominee to tender the shares on
your behalf. Your broker or other nominee will execute a Letter of
Transmittal on your behalf.
- Under some conditions, you may need to obtain a signature guarantee or
provide other documentation. See Section 2 for a more detailed discussion
of the procedure for tendering your shares, including instructions
regarding book-entry transfer.
UNTIL WHAT TIME CAN I WITHDRAW PREVIOUSLY TENDERED SHARES?
- You can withdraw shares you previously tendered until 5:00 P.M. on March
17, 2000.
- In addition, if we have not yet accepted your shares for payment, you may
withdraw shares you previously tendered after 12:00 Midnight on April 13,
2000. See Section 3 for a more detailed discussion of withdrawal rights.
HOW DO I WITHDRAW PREVIOUSLY TENDERED SHARES?
- You must send a notice containing your name, the number of shares you
tendered, the number of shares you wish to withdraw and the name of the
registered holder to the Depositary, and the Depositary must receive that
notice before the time to withdraw your shares has expired.
- If you delivered or otherwise identified the certificates to the
Depositary, you will need to provide the serial numbers on those
certificates and your signature on your withdrawal notice must be
guaranteed by an eligible institution, which means a bank, broker,
dealer or other firm or entity that is a member in good standing of
the Security Transfer Agents Medallion Program.
- If your shares were to be tendered by book-entry transfer, the notice
must identify the relevant account number. See Section 3 for a more
detailed discussion of withdrawal procedures.
IS THIS THE FIRST STEP IN A GOING-PRIVATE TRANSACTION?
- No.
ii
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IF I DECIDE NOT TO TENDER, HOW WILL THE OFFER AFFECT MY SHARES?
- You will increase your percentage ownership interest in K-Tron.
- You will increase your percentage interest in our future earnings. See
Section 7 for a more detailed discussion of the effects of the offer.
WHAT IS THE MARKET VALUE OF MY SHARES AS OF A RECENT DATE?
- As of February 11, 2000, the closing price per share of K-Tron common
stock, as reported by Nasdaq, was $14.125. See Section 6 for a more
detailed discussion of the share price.
DO K-TRON INSIDERS OR AFFILIATES HAVE ANY MATERIAL INTEREST IN THE TRANSACTION?
- Our executive officers and directors have informed us that they do not
intend to tender their shares in connection with the offer.
- As a result, the percentage of shares owned by our executive officers and
directors will increase after the offer has been completed.
- Assuming 450,000 shares are tendered, our executive officers' and
directors' aggregate percentage ownership of our outstanding common stock
will increase from 11.4% to 13.4%. See Section 8 for a more detailed
discussion of the interests of our executive officers and directors.
DOES K-TRON RECOMMEND THAT I TENDER IN THE OFFER?
- The Board of Directors has approved the offer, but is not making any
recommendation whether shareholders should tender.
WHO CAN I TALK TO IF I HAVE QUESTIONS ABOUT THE TENDER OFFER?
- If you have questions about the tender offer, you should contact D. F.
King & Co., Inc., our information agent for the offer, toll free at (800)
755-7250 (bankers and brokers call collect (212) 269-5550) or consult
your broker.
iii
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TABLE OF CONTENTS
<TABLE>
<CAPTION>
SECTION PAGE
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<S> <C>
Important Information....................................... 1
Introduction................................................ 2
The Offer................................................... 3
1. Number of Shares; Proration........................... 3
2. Procedure for Tendering Shares........................ 4
3. Withdrawal Rights..................................... 8
4. Purchase of Shares and Payment of Purchase Price...... 9
5. Certain Conditions of the Offer....................... 9
6. Price Range of Shares................................. 11
7. Background and Purpose of the Offer; Certain Effects
of the Offer........................................... 11
8. Information Regarding the Company and its Directors
and Executive Officers; Interests of Directors and
Executive Officers; Transactions and Arrangements
Concerning the Shares................................. 12
9. Source and Amount of Funds............................ 13
10. Certain Information about the Company................. 14
11. Effect of the Offer on the Market for Shares;
Registration under the Exchange Act.................... 15
12. Certain Legal Matters................................. 15
13. Certain United States Federal Income Tax
Consequences........................................... 16
14. Extension of the Offer; Termination; Amendment........ 19
15. Fees and Expenses..................................... 20
16. Miscellaneous......................................... 20
</TABLE>
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 SHARES PURSUANT TO THE OFFER. THE COMPANY HAS NOT AUTHORIZED ANY
PERSON TO GIVE ANY INFORMATION OR TO MAKE ANY REPRESENTATION ON BEHALF OF THE
COMPANY IN CONNECTION WITH THE OFFER OTHER THAN THOSE CONTAINED IN THIS OFFER TO
PURCHASE, THE LETTER OF TRANSMITTAL OR THE OTHER DOCUMENTS SENT TO YOU IN
CONNECTION WITH THE OFFER. DO NOT RELY ON ANY SUCH RECOMMENDATION OR ANY SUCH
INFORMATION OR REPRESENTATION, IF GIVEN OR MADE, AS HAVING BEEN AUTHORIZED BY
THE COMPANY.
iv
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IMPORTANT INFORMATION
GENERAL
The information agent for the Offer is D. F. King & Co, Inc. (the
"Information Agent"), 77 Water Street, New York, New York, 10005 (bankers and
brokers call collect (212) 269-5550, all others call toll free (800) 755-7250).
Except as discussed below, any shareholders desiring to tender all or any
portion of their 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, mail or
deliver it with any required signature guarantee, or an agent's message (in
the case of book-entry transfer), and any other required documents to
American Stock Transfer & Trust Company (the "Depositary"), and either mail
or deliver the certificates for such Shares to the Depositary (with all
such other documents) or follow the procedure for book-entry delivery set
forth in Section 2; or
(ii) request a broker, dealer, commercial bank, trust company or other
nominee to effect the transaction for such shareholder.
A shareholder having Shares registered in the name of a broker, dealer,
commercial bank, trust company or other nominee must contact that broker,
dealer, commercial bank, trust company or other nominee if such shareholder
desires to tender such Shares.
Shareholders who desire 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, in any case, by the expiration of the
Offer should tender such Shares by following the procedures for guaranteed
delivery set forth in Section 2. TO EFFECT A VALID TENDER OF SHARES,
SHAREHOLDERS MUST VALIDLY COMPLETE THE LETTER OF TRANSMITTAL.
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.
* * *
The Offer is not being made to (nor will any tender of Shares be accepted
from or on behalf of) shareholders in any jurisdiction in which the making of
the Offer or the acceptance of any tender of Shares therein would not be in
compliance with the laws of such jurisdiction. However, the Company may, at its
discretion, take such action as it may deem necessary for the Company to make
the Offer in any such jurisdiction and extend the Offer to shareholders in such
jurisdiction.
1
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TO THE HOLDERS OF SHARES OF COMMON STOCK OF K-TRON INTERNATIONAL, INC.:
INTRODUCTION
The Company invites its shareholders to tender 450,000 Shares to the
Company at a price of $18.00 per Share, net to the seller in cash, upon the
terms and subject to the conditions set forth in the Offer. The Company will pay
for all Shares validly tendered prior to the Expiration Date (as defined in
Section 1) and not withdrawn, upon the terms and subject to the conditions of
the Offer, including the proration terms described below. The Company reserves
the right, in its sole discretion, to purchase more or less than 450,000 Shares.
THE OFFER IS NOT CONDITIONED ON ANY MINIMUM NUMBER OF SHARES BEING
TENDERED. THE OFFER IS, HOWEVER, SUBJECT TO CERTAIN CONDITIONS. SEE SECTION 5.
If, before the Expiration Date, more than 450,000 Shares (or such greater
number of Shares as the Company may elect to purchase) are validly tendered and
not withdrawn, the Company will, upon the terms and subject to the conditions of
the Offer, purchase Shares subject to the proration terms described in this
Offer to Purchase.
The $18.00 per Share purchase price will be paid net to the tendering
shareholders in cash for all Shares purchased by the Company. Tendering
shareholders will not be obligated to pay brokerage commissions, solicitation
fees or, subject to Instruction 6 of the Letter of Transmittal, stock transfer
taxes on the Company's purchase of Shares pursuant to the Offer. HOWEVER, ANY
TENDERING SHAREHOLDER WHO FAILS TO COMPLETE, SIGN AND RETURN TO THE DEPOSITARY
THE SUBSTITUTE FORM W-9 THAT IS INCLUDED WITH THE LETTER OF TRANSMITTAL MAY BE
SUBJECT TO REQUIRED BACKUP FEDERAL INCOME TAX WITHHOLDING OF 31% OF THE GROSS
PROCEEDS PAYABLE TO SUCH SHAREHOLDER PURSUANT TO THE OFFER. SEE SECTION 2.
THE BOARD OF DIRECTORS OF THE COMPANY HAS APPROVED THE OFFER. HOWEVER,
SHAREHOLDERS MUST MAKE THEIR OWN DECISIONS WHETHER TO TENDER SHARES AND, IF SO,
HOW MANY SHARES TO TENDER. NEITHER THE COMPANY NOR ITS BOARD OF DIRECTORS MAKES
ANY RECOMMENDATION TO ANY SHAREHOLDER AS TO WHETHER TO TENDER OR REFRAIN FROM
TENDERING SHARES.
On February 14, 2000, the Company announced its intention to make the
Offer. The Company is making the Offer because it believes: (i) the Shares are
significantly undervalued in the public market; (ii) investing in its Shares
represents an attractive use of its capital and an efficient way to provide
value to its shareholders; and (iii) the Offer will afford those shareholders
who desire liquidity an opportunity to sell all or a portion of their Shares at
a premium to recent market prices without the usual transaction costs associated
with open market sales. After the Offer is completed, the Company expects to
have sufficient cash flow and access to sources of capital to continue to fund
its operations.
As of February 11, 2000, the Company had outstanding 2,927,155 Shares. The
450,000 Shares that the Company is offering to purchase represent 15.37% of the
Shares that were outstanding on that date.
The Shares are quoted on Nasdaq under the symbol "KTII." On February 11,
2000, the last full trading day on Nasdaq prior to the announcement by the
Company of its intention to make the Offer, the closing price per Share was
$14.125. THE COMPANY URGES SHAREHOLDERS TO OBTAIN CURRENT QUOTATIONS OF THE
MARKET PRICE OF THE SHARES. SEE SECTION 6.
2
<PAGE> 8
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) 450,000 Shares, or such lesser number
of Shares as are validly tendered before the Expiration Date (and not withdrawn
in accordance with Section 3), at a net cash price of $18.00 per Share. The term
"Expiration Date" means 5:00 P.M., New York City time, on March 17, 2000, unless
and until the Company in its sole discretion shall have extended the period of
time during which the Offer is 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 14 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.
The Company reserves the right, in its sole discretion, to purchase more
than 450,000 Shares pursuant to the Offer. See Section 14. In accordance with
applicable regulations of the Securities and Exchange Commission (the "SEC"),
the Company may purchase pursuant to the Offer an additional amount of Shares
not to exceed 2% of the outstanding Shares without amending or extending the
Offer. If (i) the Company increases or decreases the price to be paid for the
Shares, 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, or the Company 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 notice of
such increase or decrease is first published, sent or given in the manner
specified in Section 14, the Offer will be extended until the expiration of such
period of ten business days. For purposes of the Offer, a "business day" means
any day other than a Saturday, Sunday or federal holiday until 12:00 Midnight,
New York City time on such day.
THE OFFER IS NOT CONDITIONED ON ANY MINIMUM NUMBER OF SHARES BEING
TENDERED. THE OFFER IS SUBJECT, HOWEVER, TO CERTAIN CONDITIONS. SEE SECTION 5.
The Company will pay the $18.00 purchase price per Share for all Shares
validly tendered prior to the Expiration Date and not withdrawn upon the terms
and subject to the conditions of the Offer. The Company will return, at its own
expense, as promptly as practicable after the Expiration Date all of the Shares
that it does not purchase, including Shares not purchased because of proration
or conditional tenders.
If the number of Shares validly tendered and not withdrawn prior to the
Expiration Date is less than or equal to 450,000 Shares (or such greater number
of Shares as the Company may elect to purchase), the Company will, upon the
terms and subject to the conditions of the Offer, purchase at the $18.00
purchase price per Share all of the Shares so tendered, subject to its right to
reduce the number of Shares to be purchased under certain circumstances, as
described below in this Section 1.
Priority. Upon the terms and subject to the conditions of the Offer, in
the event that prior to the Expiration Date more than 450,000 Shares (or such
greater number of Shares as the Company may elect to purchase pursuant to the
Offer) are validly tendered and not withdrawn, the Company will purchase such
validly tendered Shares in the following order of priority:
(i) on a pro rata basis, all of the Shares properly and
unconditionally tendered, and all of the Shares properly and conditionally
tendered for which the condition can be satisfied; and
(ii) if the number of Shares acquired under (i) is less than 450,000,
such additional Shares to total 450,000, by lot from shareholders who
conditionally tendered their Shares for which the condition could not be
met and in the respective amounts that each such shareholder indicated as
the minimum number of Shares to be purchased by the Company.
Proration. In the event that proration of tendered Shares is required, the
Company will determine the proration factor as promptly as practicable after the
Expiration Date. Proration for each shareholder tendering Shares shall be based
on the ratio of the number of Shares tendered by such shareholder to the
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<PAGE> 9
total number of Shares tendered by all of the shareholders. This ratio will be
applied to shareholders tendering Shares to determine the number of Shares that
will be purchased from each such shareholder pursuant to the Offer.
The Company does not anticipate that, as a result of its purchase of
450,000 Shares in the Offer, any shareholder's ownership of its outstanding
common stock will increase by 2% or more of such outstanding common stock.
However, if the Company's purchase of 450,000 Shares would cause such an
increase, the Company reserves the right to reduce the number of Shares it will
purchase to the extent necessary to prevent such an increase. Proration would
then apply to such lesser number of Shares.
Although the Company does not expect to be able to announce the final
results of any proration until approximately seven business days after the
Expiration Date, it will announce preliminary results of proration by press
release as promptly as practicable after the Expiration Date. Shareholders will
be able to obtain such preliminary information from the Information Agent and
may be able to obtain such information from their brokers.
As described in Section 13, the number of Shares that the Company will
purchase from a shareholder may affect the United States federal income tax
consequences to that shareholder and, therefore, may be relevant to a
shareholder's decision whether to tender Shares. The Letter of Transmittal
affords each tendering shareholder the opportunity to designate a minimum number
of Shares that the shareholder wants to tender, if any are purchased.
This Offer to Purchase and the related Letter of Transmittal will be
furnished to record holders of Shares as of February 11, 2000 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.
2. PROCEDURE FOR TENDERING SHARES
Proper Tender of Shares. For Shares to be validly 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) with any required
signature guarantees, or an agent's message (in the case of any book-entry
transfer), 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.
It is a violation of Section 14(e) of the Securities Exchange Act of 1934,
as amended (the "Exchange Act"), and Rule 14e-4 promulgated thereunder, for a
person to tender Shares for such person's own account unless the person so
tendering:
(i) owns such Shares; or
(ii) owns other securities convertible into or exchangeable for Shares
or owns an option, warrant or right to purchase Shares and intends to
acquire such Shares for tender by conversion, exchange or exercise of such
option, warrant or right.
Section 14(e) and Rule 14e-4 contain a similar restriction applicable to a
tender or guarantee of a tender on behalf of another person.
The acceptance of Shares by the Company for payment will constitute a
binding agreement between the tendering shareholder and the Company upon the
terms and subject to the conditions of the Offer,
4
<PAGE> 10
including the tendering shareholder's representation that such shareholder owns
the Shares being tendered within the meaning of Rule 14e-4 and that the tender
of such Shares complies with Rule 14e-4.
Conditional Tender of Shares. Under certain circumstances, the Company may
reduce on a pro rata basis the number of Shares purchased pursuant to the Offer.
As discussed in Section 13, 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. Accordingly, a
shareholder may tender Shares subject to the condition that a specified minimum
number of such holder's Shares must be purchased if any such Shares so tendered
are purchased, and any shareholder desiring to make such a conditional tender
must so indicate in the box captioned "Conditional Tender" in the Letter of
Transmittal or, if applicable, the Notice of Guaranteed Delivery.
Any tendering shareholders wishing to make a conditional tender must
calculate and appropriately indicate such minimum number of Shares and each
shareholder is urged to consult with his own tax advisor. 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 regarded as withdrawn (except as provided in the
next paragraph) and all Shares tendered by such shareholder pursuant to such
Letter of Transmittal or Notice of Guaranteed Delivery will be returned as soon
as practicable thereafter.
If conditional tenders would otherwise be so regarded as withdrawn and
would cause the total number of Shares to be purchased to fall below the number
of Shares sought by the Company, then, to the extent feasible, the Company may
select enough of such conditional tenders that would otherwise have been so
withdrawn to permit the Company to purchase the number of Shares sought by the
Company. 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.
Signature Guarantees and Method of Delivery. No signature guarantee is
required on the Letter of Transmittal if (i) the Letter of Transmittal is signed
by the registered holder of the Shares (which term, for purposes 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 holder 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 bank, broker, dealer or other firm or entity that is a
member in good standing of the Security Transfer Agents Medallion Program (each
such entity being hereinafter referred to as 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 representing Shares is registered in the name of a person other than
the signer of a Letter of Transmittal, or if payment is to be made, or Shares
not purchased or tendered are to be issued, to a person other than the
registered holder, 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 this
regard, see Section 4 for information with respect to applicable stock transfer
taxes. 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 above), a properly completed and duly executed Letter of
Transmittal (or manually signed facsimile thereof) or an agent's message (in the
case of any book-entry transfer) and any other documents required by the Letter
of Transmittal.
THE METHOD OF DELIVERY OF ALL DOCUMENTS, INCLUDING SHARE CERTIFICATES, THE
LETTER OF TRANSMITTAL AND ANY OTHER REQUIRED DOCUMENTS, IS AT THE ELECTION AND
RISK OF THE TENDERING SHAREHOLDER. IF DELIVERY IS BY MAIL, REGISTERED MAIL WITH
RETURN RECEIPT REQUESTED, PROPERLY INSURED, IS RECOMMENDED.
Book-Entry Delivery. The Depositary will establish an account with respect
to the Shares at the Book-Entry Transfer Facility for purposes of the Offer
within two business days after the date of this Offer to Purchase. Any financial
institution that is a participant in the Book-Entry Transfer Facility's system
5
<PAGE> 11
may make book-entry delivery of the Shares by causing such facility to transfer
such Shares into the Depositary's account in accordance with such facility's
procedure for such transfer. Even though delivery of Shares may be effected
through book-entry transfer into the Depositary's account at the Book-Entry
Transfer Facility, a properly completed and duly executed Letter of Transmittal
(or manually signed facsimile thereof), with any required signature guarantees
or an agent's message (in the case of any book-entry transfer) and other
required documents must, in any case, be transmitted to and received by the
Depositary at one of its addresses set forth on the back cover of this Offer to
Purchase prior to the Expiration Date, or the guaranteed delivery procedure set
forth below must be followed. DELIVERY OF THE LETTER OF TRANSMITTAL AND ANY
OTHER REQUIRED DOCUMENTS TO THE BOOK-ENTRY TRANSFER FACILITY DOES NOT CONSTITUTE
DELIVERY TO THE DEPOSITARY.
Guaranteed Delivery. If a shareholder desires to tender Shares pursuant to
the Offer and such shareholder's certificates for such Shares 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 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
substantially in the form the Company has provided with this Offer to
Purchase, including (where required) a signature guarantee by an Eligible
Institution in the form set forth in such Notice of Guaranteed Delivery;
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 manually
signed facsimile thereof) and any required signature guarantees, or an
agent's message (in the case of any book-entry transfer), or other
documents required by the Letter of Transmittal, are received by the
Depositary within three Nasdaq trading days after the date the Depositary
receives such Notice of Guaranteed Delivery.
Return of Shares. If any tendered Shares are not purchased, or if less
than all of the Shares evidenced by a shareholder's certificates are tendered,
certificates for Shares that are not purchased 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. Restricted Shares that are returned will bear appropriate
legends restricting transfer, as applicable.
Backup 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 (in addition to foreign corporations), are not
subject to these backup withholding and reporting requirements. In order for a
foreign shareholder (other than a foreign corporation) to qualify as an exempt
recipient, that shareholder must submit an IRS Form W-8 or a Substitute Form
W-8, signed under penalties of perjury, attesting to that shareholder's exempt
status. Such statements can be obtained from the Depositary. See Instruction 11
of the Letter of Transmittal.
6
<PAGE> 12
TO PREVENT BACKUP 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 WITH THE LETTER OF TRANSMITTAL.
For a discussion of certain United States federal income tax consequences
to tendering shareholders, see Section 13.
Withholding for Foreign Shareholders. Even if a foreign 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 foreign shareholder or his 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 foreign 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 in or under the
laws of the United States, any State or any political subdivision thereof; (iii)
an estate, the income of which is subject to United States federal income
taxation regardless of the source of such income; or (iv) a trust, if a court
within the United States is able to exercise primary supervision of the
administration of the trust and one or more United States persons have the
authority to control all of the substantial decisions of the trust. In order to
obtain a reduced rate of withholding pursuant to a tax treaty, a foreign
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 of a trade or business within the
United States, a foreign shareholder must deliver to the Depositary a properly
completed and executed IRS Form 4224. The Depositary will determine a
shareholder's status as a foreign 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 foreign
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 13 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 a treaty-reduced rate of withholding. Foreign 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 Instruction 11 of the
Letter of Transmittal.
Tendering Shareholder's Representation and Warranty; Company's Acceptance
Constitutes an Agreement. It is a violation of Rule 14e-4, promulgated under
the Exchange Act, for a person acting alone or in concert with others, 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 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. A
tender of Shares made pursuant to any method of delivery set forth herein will
constitute the tendering shareholder's representation and warranty to the
Company that (i) such shareholder has a "net long position" in Shares or
Equivalent Securities being tendered within the meaning of Rule 14e-4, and (ii)
such tender of Shares complies with Rule 14e-4. The Company's acceptance for
payment of Shares tendered pursuant to the Offer will constitute a binding
agreement
7
<PAGE> 13
between the tendering shareholder and the Company upon the terms and subject to
the conditions of the Offer.
Determinations 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 the receipt) and acceptance for payment 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 of the tenders it determines not to be
in proper form or which the acceptance of or payment for 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 or any particular shareholder. No tender of
Shares will be deemed to be properly made until all defects or irregularities
have been cured or waived. None of the Company, the Depositary, the Information
Agent 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.
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 SUCH DOCUMENTS
DELIVERED TO THE COMPANY WILL NOT BE FORWARDED TO THE DEPOSITARY AND THEREFORE
WILL NOT BE DEEMED TO BE VALIDLY TENDERED.
3. WITHDRAWAL RIGHTS
Except as otherwise provided in this Section 3, tenders of Shares pursuant
to the Offer are irrevocable. Shares tendered pursuant to the Offer may be
withdrawn at any time before the Expiration Date and, unless the Company has
accepted the Shares for payment as provided in this Offer to Purchase, may also
be withdrawn after 12:00 Midnight, New York City time, on April 13, 2000.
For a withdrawal to be effective, the Depositary must receive (at its
address set forth on the back cover of this Offer to Purchase) a notice of
withdrawal in written, telegraphic or facsimile transmission form on a timely
basis. Such notice of withdrawal must specify the name of the person who
tendered the Shares to be withdrawn, the number of Shares tendered, the number
of Shares to be withdrawn and the name of the registered holder, if different
from that of the person who tendered such Shares. If the certificates 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 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 transfer
set forth in Section 2, the notice of withdrawal 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.
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 on all parties. None of the
Company, the Depositary, the Information Agent or any other person is or will be
obligated to give any notice of any defects or irregularities in any notice of
withdrawal, and none will incur any liability for failure to give any such
notice. Withdrawals may not be rescinded, and any Shares properly withdrawn will
thereafter be deemed not tendered for purposes of the Offer. However, withdrawn
Shares may be tendered before the Expiration Date by again following any of the
procedures described in Section 2.
If the Company extends the Offer or is delayed in its purchase of Shares
for any reason, then, without prejudice to the Company's rights under the Offer,
the Depositary may, subject to applicable law, retain on behalf of the Company
all tendered Shares, and such Shares may not be withdrawn except to the extent
tendering shareholders are entitled to withdrawal rights as described in this
Section 3.
8
<PAGE> 14
4. PURCHASE OF SHARES AND PAYMENT OF PURCHASE PRICE
Upon the terms and subject to the conditions of the Offer, the Company will
purchase and pay the $18.00 per Share purchase price for all of the Shares
accepted for payment pursuant to the Offer as soon as practicable after the
Expiration Date. 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 confirmation of a book-entry transfer of
such Shares into the Depositary's account at the Book-Entry Transfer Facility),
a properly completed and duly executed Letter of Transmittal (or manually signed
facsimile thereof) and any other required documents.
Payment 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 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 of the Shares not purchased, including all
of the 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 without 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 5.
The Company will pay any stock transfer taxes payable on the transfer to it
of Shares purchased pursuant to the Offer; provided, however, that if 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 of the 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 evidence
satisfactory to the Company of the payment of such taxes or exemption therefrom
is submitted. See Instruction 6 of the Letter of Transmittal.
5. CERTAIN CONDITIONS OF THE OFFER
Notwithstanding any other provision of the Offer, the Company shall not be
required to accept for payment, or 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) promulgated under the Exchange Act, if at any time on or after February
16, 2000 and prior to the time of payment for any such Shares (whether any
Shares have theretofore been accepted for payment, purchased or paid for
pursuant to the Offer) any of the following events 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), 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, authority, agency or other tribunal any action, suit or
proceeding by any government or governmental, regulatory or administrative
authority or agency or by any other person, domestic or foreign, 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
9
<PAGE> 15
the sole judgment of the Company, materially affect the business, condition
(financial or other), 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;
(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 or foreign, 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;
(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 or escalation 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 or in the commercial paper markets 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
February 15, 2000;
(d) any change shall occur or be threatened in the business, condition
(financial or other), 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;
(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) shall have acquired or proposed to acquire beneficial
ownership of more than 5% of the outstanding Shares, or (ii) any new group
shall have been formed that beneficially owns more than 5% 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
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. 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.
10
<PAGE> 16
The Company does not anticipate that, as a result of its purchase of
450,000 Shares in the Offer, an increase in a shareholder's ownership of the
Company's outstanding common stock of 2% or more of such outstanding common
stock will occur. However, if the Company's purchase of 450,000 Shares would
cause such an increase, the Company reserves the right to reduce the number of
Shares it will purchase to the extent necessary to prevent such an increase.
6. PRICE RANGE OF SHARES
The Shares are quoted on Nasdaq. The high and low sales prices per Share on
Nasdaq as compiled from published financial sources for the periods indicated
are listed below.
<TABLE>
<CAPTION>
HIGH LOW
------- --------
<S> <C> <C>
FISCAL YEAR 1998
First Quarter......................................... $17.938 $15.50
Second Quarter........................................ $21.25 $17.00
Third Quarter......................................... $19.813 $17.50
Fourth Quarter........................................ $19.75 $16.875
FISCAL YEAR 1999
First Quarter......................................... $18.625 $17.4375
Second Quarter........................................ $18.625 $16.75
Third Quarter......................................... $18.125 $14.00
Fourth Quarter........................................ $16.50 $12.625
</TABLE>
On February 11, 2000, the last full trading day on Nasdaq prior to the
announcement by the Company of its intention to make this Offer to Purchase, the
closing price per Share on Nasdaq was $14.125. THE COMPANY URGES SHAREHOLDERS TO
OBTAIN CURRENT QUOTATIONS OF THE MARKET PRICE OF THE SHARES.
7. BACKGROUND AND PURPOSE OF THE OFFER; CERTAIN EFFECTS OF THE OFFER
On February 14, 2000, the Company announced its intention to make an offer
to purchase up to 450,000 Shares at $18.00 per Share, with the Offer to commence
on February 16, 2000. The Company is making the Offer because it believes:
(a) the Shares are significantly undervalued in the public market;
(b) investing in the Company's Shares represents an attractive use of
its capital and an efficient way to provide value to its shareholders; and
(c) the Offer will afford those shareholders who desire liquidity an
opportunity to sell all or a portion of their Shares at a premium to recent
market prices without the usual transaction costs associated with open
market sales.
After the Offer is completed, the Company expects to have sufficient cash
flow and access to other sources of capital to fund its operations.
The Offer provides shareholders who are considering a sale of all or a
portion of their Shares the opportunity to sell their Shares to the Company at
$18.00 per Share. Shareholders who determine not to accept the Offer will
increase their proportionate interest in the Company's equity, and thus in its
future earnings and assets, subject to the Company's right to issue additional
Shares and other equity securities in the future.
THE BOARD OF DIRECTORS OF THE COMPANY HAS APPROVED THE OFFER. HOWEVER,
SHAREHOLDERS MUST MAKE THEIR OWN DECISIONS WHETHER TO TENDER SHARES AND, IF SO,
HOW MANY SHARES TO TENDER. NEITHER THE COMPANY NOR ITS BOARD OF DIRECTORS MAKES
ANY RECOMMENDATION TO ANY SHAREHOLDER AS TO WHETHER TO TENDER OR REFRAIN FROM
TENDERING SHARES. NEITHER THE COMPANY NOR ITS BOARD OF DIRECTORS HAS AUTHORIZED
ANY PERSON TO MAKE ANY SUCH RECOMMENDATION.
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<PAGE> 17
Prior to the Offer, the Company purchased 250,000 Shares in July 1998 for
$4,531,250 ($18.125 per Share), 100,000 Shares in January 1999 for $1,812,500
($18.125 per Share), 16,400 Shares in May 1999 for $298,275 ($18.1875 per Share)
and 50,000 Shares in November 1999 for $725,000 ($14.50 per Share). The Company
may, in the future, repurchase additional Shares in the open market, in private
transactions, through tender offers or otherwise, although no such purchases are
presently contemplated. Any such purchases may be on the same terms as, or on
terms that are more or less favorable to shareholders than, the terms of the
Offer. However, Rule 13e-4 of the Exchange Act generally prohibits the Company
or its affiliates from purchasing any Shares, other than through the Offer,
until at least ten business days after the expiration or termination of the
Offer. Any possible future purchases by the Company will depend on many factors,
including the market price of the Shares, the results of the Offer, the
Company's business and financial position and general economic and market
conditions.
Shares the Company acquires pursuant to the Offer will be retained as
treasury stock by the Company (unless and until the Company determines to retire
such Shares) and will be available for the Company to issue without further
shareholder action (except as required by applicable law or the rules of Nasdaq
or any securities exchange on which Shares are listed) for purposes including,
but not limited to, 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 plans.
8. INFORMATION REGARDING THE COMPANY AND ITS DIRECTORS AND EXECUTIVE OFFICERS;
INTERESTS OF DIRECTORS AND EXECUTIVE OFFICERS; TRANSACTIONS AND ARRANGEMENTS
CONCERNING THE SHARES
The Company, which is located at Routes 55 & 553, P.O. Box 888, Pitman, New
Jersey, 08071-0888 (Phone Number: (856) 589-0500), is delivering the Offer and
is filing the documents required to execute an issuer tender offer with the SEC.
The Company's Board of Directors currently consists of seven directors,
whose names, along with those of the chief executive officer and other executive
officers of the Company, are set forth in the table below. Information regarding
those persons' ownership of Shares is also set forth in that table. Each of the
Company's directors and executive officers can be reached in care of the
Company, at the Company's address and telephone number.
<TABLE>
<CAPTION>
NUMBER OF SHARES PERCENTAGE OF SHARES
NAME AND POSITION BENEFICIALLY OWNED BENEFICIALLY OWNED
- ----------------- ------------------ --------------------
<S> <C> <C>
Edward B. Cloues, II, Director, Chairman and Chief
Executive Officer....................................... 171,360 5.7%
Kevin C. Bowen, President and Chief Executive Officer of
K-Tron America, Inc..................................... 23,240 0.8%
Lukas Guenthardt, Senior Vice President -- Strategic
Planning, Product Development and Marketing............. 22,297 0.8%
Ronald R. Remick, Senior Vice President, Chief Financial
Officer and Treasurer................................... 5,900 0.2%
Beat Steger, Managing Director of K-Tron (Schweiz) AG..... 10,500 0.4%
Leo C. Beebe, Director.................................... 60,385 2.1%
Norman Cohen, Director.................................... 7,219 0.2%
Robert A. Engel, Director................................. 2,500 0.1%
Richard J. Pinola, Director............................... 16,969 0.6%
Dr. Hans-Jurg Schurmann, Director......................... 21,000 0.7%
Jean Head Sisco, Director................................. 12,801 0.4%
</TABLE>
As of February 11, 2000, there were 2,927,155 Shares outstanding, net of
treasury stock, and 357,667 Shares issuable upon exercise of outstanding
options. As of February 11, 2000, the Company's directors and executive officers
as a group (11 persons) beneficially owned 354,171 Shares (including 173,900
Shares issuable to such persons upon exercise of options with exercise prices
below $18.00 ("Exercisable
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<PAGE> 18
Securities")), which constituted approximately 11.4% of the outstanding Shares
(including Shares issuable if all of the Exercisable Securities held by
directors and executive officers were exercised) at such time.
If the Company purchases 450,000 Shares in the Offer and no director or
executive officer tenders Shares, then after the purchase of such 450,000
Shares, the Company's directors and executive officers as a group will
beneficially own approximately 13.4% of the outstanding Shares, including
173,900 Shares issuable on exercise of Exercisable Securities held by directors
and executive officers.
Based upon the Company's records and upon information provided to the
Company by its directors and executive officers, neither the Company nor any of
its associates or persons controlling the Company nor, to the best of the
Company's knowledge, any of the directors or executive officers of the Company
or any of its subsidiaries, nor any associates or subsidiaries of any of the
foregoing, has effected any transactions in the Shares during the 60 days prior
to February 16, 2000, except for purchases of common stock under the Company's
employee stock purchase plan. On December 31, 1999, Messrs. Bowen and Guenthardt
purchased 691 and 659 shares of common stock, respectively, under the Company's
employee stock purchase plan, at a purchase price of $11.48 per share.
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).
9. SOURCE AND AMOUNT OF FUNDS
Assuming that the Company purchases 450,000 Shares pursuant to the Offer at
a purchase price of $18.00 per Share, net to the sellers in cash, the Company
expects the maximum aggregate cost, including all fees and expenses applicable
to the Offer, to be approximately $100,000. The Company estimates that the funds
necessary to pay such amounts will come primarily from a loan in an amount not
to exceed $7,000,000 (the "Loan") from The Bank of Gloucester County (the
"Bank") to K-Tron America, Inc., a wholly-owned subsidiary of the Company
("K-Tron America"). The Loan will be payable in equal monthly installments of
principal plus accrued interest over a period of four years commencing May 1,
2000 and ending April 1, 2004. At the election of the Company, the Loan may bear
interest at a fixed rate offered by the Bank with respect to up to one half of
the principal amount, with all principal not subject to a fixed rate being
subject to a variable rate of interest at one month LIBOR plus 1.85 percent.
Repayment of the Loan will be secured by a mortgage on certain real estate owned
by K-Tron America and located in Gloucester County, New Jersey and by inventory,
accounts and equipment (other than equipment subject to purchase money security
interests or similar encumbrances) owned by K-Tron America and located in
Gloucester County and Camden County, New Jersey.
The Company will guarantee payment of the Loan as well as any amounts
borrowed under two other unrelated loan facilities (a mortgage note and a line
of credit note) in the aggregate principal amount of $7,700,000 that the Bank
previously extended to K-Tron America. As a result of this guarantee, the Bank
has removed its requirement for financial covenants in K-Tron America's line of
credit note that would otherwise have prevented K-Tron America from borrowing
funds thereunder after the Loan had been borrowed and the proceeds advanced by
K-Tron America to the Company for use in connection with the Offer.
The Company intends to repay the Loan through cash flow from operations.
It is estimated that the Company will incur approximately $100,000 in
financing, legal and other one-time charges associated with the tender offer.
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<PAGE> 19
10. CERTAIN INFORMATION ABOUT THE COMPANY
The Company is a leading worldwide producer of feeders and related
equipment for the handling of bulk solids in manufacturing processes. K-Tron
feeders control by mass or weight (gravimetric feeding) or by volume (volumetric
feeding) the rate at which ingredients are fed into the manufacturing processes
of numerous products. The major industries served by the Company's feeding
equipment are plastics, food, chemical, pharmaceutical and cement, but the
Company's feeders are also used in many other industries. In addition to feeding
equipment, the Company designs, produces and sells pneumatic conveying systems
and related equipment for the food, plastics and pharmaceutical industries,
which may be used either in conjunction with certain K-Tron feeders or on a
stand-alone basis, as well as electronic assemblies.
Forward-Looking Statements. The Private Securities Litigation Reform Act
of 1995 (the "Act") provides a safe harbor for forward-looking statements made
by or on behalf of the Company. The Company and its representatives may from
time to time make written or oral statements that are "forward-looking,"
including statements contained in this Offer to Purchase and other filings with
the SEC, reports to the Company's shareholders and news releases. All statements
that express expectations, estimates, forecasts and projections are
forward-looking statements within the meaning of the Act. In addition, other
written or oral statements which constitute forward-looking statements may be
made by or on behalf of the Company. Words such as "expects," "anticipates,"
"intends," "plans," "believes," "seeks," "estimates," "projects," "forecasts,"
"may," "should," variations of such words and similar expressions are intended
to identify such forward-looking statements. These statements are not guarantees
of future performance and involve certain risks, uncertainties and assumptions
which are difficult to predict. Therefore, actual outcomes and results may
differ materially from what is expressed or forecasted in or suggested by such
forward-looking statements. The Company undertakes no obligation to update
publicly any forward-looking statements, whether as a result of new information,
future events or otherwise.
A wide range of factors could materially affect future developments and
performance of the Company, including the following: (i) increasing price and
product/service competition by domestic and foreign competitors, including new
entrants; (ii) the mix of products/services sold by the Company; (iii) rapid
technological changes and developments and the Company's ability to continue to
introduce competitive new products on a cost-effective basis; (iv) changes in
U.S. and global financial and currency markets, including significant interest
rate and foreign currency exchange rate fluctuations; (v) protection and
validity of patent and other intellectual property rights, both of the Company
and its competitors; (vi) the cyclical nature of the Company's business as a
capital goods supplier; (vii) possible future litigation and governmental
proceedings; (viii) the availability of financing and financial resources in the
amounts, at the times and on the terms required to support the Company's future
business, including capacity expansions and possible acquisitions; (ix) the loss
of key customers, employees or suppliers; (x) the failure to carry out marketing
and sales plans; (xi) the failure successfully to integrate acquired businesses,
if any, into the Company without substantial costs, delays or other operational
or financial problems; (xii) economic, business and regulatory conditions and
changes which may affect the level of new investments and purchases made by
customers, including general economic and business conditions that are less
favorable than expected; and (xiii) domestic and international political and
economic conditions.
This list of factors that may affect future performance and the accuracy of
forward-looking statements is illustrative, but by no means exhaustive.
Accordingly, all forward-looking statements should be evaluated with the
understanding of their inherent uncertainty.
Increased Debt. The Company will borrow up to $7 million to finance the
Offer. This may have important consequences. These consequences include the
following:
- the Company will have used a substantial portion of its cash;
- a portion of the Company's cash flow will be used to make principal and
interest payments on the debt incurred to finance the Offer, which will
reduce the funds that would otherwise be available to the Company for
operations, capital expenditures and future business opportunities;
14
<PAGE> 20
- a substantial decrease in the Company's cash flow or a substantial
increase in its expenses could make it difficult for the Company to meet
its debt service requirements and force the Company to modify its
operations;
- the Company may have more debt than its competitors, which may place it
at a competitive disadvantage; and
- the Company's level of debt may make it more vulnerable to a downturn in
its business or the economy in general.
Debt Covenants. The Company has borrowed money through K-Tron America to
finance the Offer. The bank financing that K-Tron America and the Company have
entered into contains several significant covenants that impose restrictions on
the Company and its subsidiaries. These covenants include, without limitation,
restrictions on (i) indebtedness; (ii) liens; (iii) mergers and acquisitions;
and (iv) certain upstreaming of funds from K-Tron America to the Company or
K-Tron Technologies, Inc., a wholly-owned subsidiary of the Company.
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 SEC relating to its business,
financial condition and other matters. Information as of particular dates
concerning the Company's directors and officers, their compensation, options
granted to them, the principal holders of the Company's Shares 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 SEC. Such reports, proxy statements and other information can be
inspected and copied at the public reference facilities maintained by the SEC at
450 Fifth Street, N.W., Room 2120, Washington DC 20549; and 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 SEC's customary
charges, from the Public Reference Section of the SEC at Judiciary Plaza, 450
Fifth Street, N.W., Washington D.C. 20549. The SEC also maintains a Website on
the internet at http://www.sec.gov that contains reports, proxy and information
statements and other information regarding registrants, such as the Company,
that file electronically with the SEC.
11. EFFECT 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 trade publicly and may reduce the number
of shareholders. Nonetheless, the Company believes that a sufficient number of
Shares will be outstanding and publicly traded following the Offer to ensure a
continued trading market in the Shares. Based on the published guidelines of the
National Association of Securities Dealers, Inc., the Company does not believe
that its purchase of Shares pursuant to the Offer will cause its remaining
Shares to no longer be quoted on Nasdaq.
The Shares currently are "margin securities" under the rules of the Federal
Reserve. This has the effect, among other things, of allowing brokers to extend
credit on the collateral of the Shares. 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's margin regulations.
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 SEC and comply with the SEC'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 the Shares becoming subject to
deregistration under the Exchange Act.
12. CERTAIN LEGAL MATTERS
The Company is not aware of any license or regulatory permit that appears
to be material to its business that might be adversely affected by its
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
15
<PAGE> 21
agency, domestic or foreign, that would be required for the Company's
acquisition or ownership of Shares as contemplated by the Offer. The Company
also is not aware of any applicability of antitrust laws to this transaction.
Should any such approval or other action be required, the Company currently
contemplates that it will seek such approval or take such other action. The
Company cannot predict whether it may be 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
are subject to certain conditions. See Section 5.
13. CERTAIN UNITED STATES FEDERAL INCOME TAX CONSEQUENCES
In General. The following summary describes certain United States federal
income tax consequences relevant to the Offer. The discussion contained in this
summary is based upon the Internal Revenue Code of 1986, as amended to the date
hereof (the "Code"), existing and proposed United States Treasury regulations
promulgated thereunder, rulings, administrative pronouncements and judicial
decisions, changes to which could materially affect the tax consequences
described herein and could be made on a retroactive basis. As discussed below,
depending upon a shareholder's particular circumstances, the Company's purchase
of such shareholder's Shares pursuant to the Offer may be treated either as a
sale or a dividend for United States federal income tax purposes. Accordingly,
such a purchase generally will be referred to in this section of the Offer to
Purchase as an "exchange" of Shares for cash.
Scope. This summary does not apply to Shares acquired as compensation. The
summary discusses only Shares held as capital assets, within the meaning of
Section 1221 of the Code, and does not address all of the tax consequences that
may be relevant to particular shareholders in light of their personal
circumstances, or to certain types of shareholders (such as certain financial
institutions, dealers in securities or commodities, insurance companies,
tax-exempt organizations or persons who hold Shares as a position in a
"straddle" or as a part of a "hedging" or "conversion" transaction for United
States federal income tax purposes). In particular, the discussion of the
consequences of an exchange of Shares for cash pursuant to the Offer applies
only to a United States Holder. For purposes of this summary, a United States
Holder is a holder of Shares that is (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, any State or any political subdivision
thereof; (iii) an estate, the income of which is subject to United States
federal income taxation regardless of its source; or (iv) a trust, if a court
within the United States is able to exercise primary supervision of the
administration of the trust and one or more United States persons have the
authority to control all substantial decisions of the trust. This discussion
does not address the tax consequences to foreign shareholders who will be
subject to United States federal income tax on a net basis on the proceeds of
their exchange of Shares pursuant to the Offer because such income is
effectively connected with the conduct of a trade or business within the United
States. Such shareholders are generally taxed in a manner similar to a United
States Holder (for purposes of this section, "Shareholder"); however, certain
special rules apply. Foreign shareholders who are not subject to United States
federal income tax on a net basis should see Section 2 for a discussion of the
applicable United States withholding rules and the potential for obtaining a
refund of all or a portion of the tax withheld.
THE SUMMARY DISCUSSION SET FORTH HEREIN IS INCLUDED FOR GENERAL INFORMATION
ONLY. THE TAX CONSEQUENCES OF A SALE OF SHARES PURSUANT TO THE OFFER MAY VARY
DEPENDING UPON, AMONG OTHER THINGS, THE PARTICULAR SITUATION AND CIRCUMSTANCES
OF THE TENDERING SHAREHOLDER. NO INFORMATION IS PROVIDED HEREIN AS TO THE STATE,
LOCAL OR FOREIGN TAX CONSEQUENCES OF THE TRANSACTION CONTEMPLATED BY THE OFFER.
SHAREHOLDERS ARE URGED TO CONSULT THEIR OWN TAX ADVISORS TO DETERMINE THE
SPECIFIC FEDERAL, STATE, LOCAL, FOREIGN AND OTHER TAX CONSEQUENCES OF SALES MADE
BY THEM PURSUANT TO THE OFFER, INCLUDING THE EFFECT OF THE STOCK OWNERSHIP
ATTRIBUTION RULES MENTIONED HEREIN.
Characterization of the Sale. An exchange of Shares by a Shareholder
pursuant to the Offer will be a taxable transaction for United States federal
income tax purposes. The United States federal income tax
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<PAGE> 22
consequences of such exchange to a Shareholder may vary depending upon the
Shareholder's particular facts and circumstances. Under Section 302 of the Code,
an exchange of Shares by a Shareholder with the Company pursuant to the Offer
will be treated as a "sale or exchange" of such Shares for United States federal
income tax purposes (rather than as a deemed distribution by the Company with
respect to Shares continued to be held (or deemed to be held) by the tendering
Shareholder) if the receipt of cash upon such exchange (i) is "substantially
disproportionate" with respect to the Shareholder; (ii) results in a "complete
redemption" of the Shareholder's interest in the Company; or (iii) is "not
essentially equivalent to a dividend" with respect to the Shareholder. These
tests (the "Section 302 tests") are explained more fully below.
If any of the Section 302 tests is satisfied, and the sale of the tendered
Shares is therefore treated as a "sale or exchange" of such Shares for United
States federal income tax purposes, the tendering Shareholder will recognize
capital gain or loss equal to the difference between the amount of cash received
by the Shareholder pursuant to the Offer and the Shareholder's adjusted tax
basis in the Shares sold pursuant to the Offer. Such capital gain or loss will
generally be long-term capital gain or loss if the tendering Shareholder held
the tendered Shares for more than 12 months. Under current law, any such gain or
loss recognized by individuals, trusts or estates will be subject to a maximum
20% tax rate.
If none of the Section 302 tests is satisfied, then, to the extent of the
Company's current and accumulated earnings and profits, the tendering
Shareholder will be treated as having received a dividend taxable as ordinary
income in an amount equal to the entire amount of cash received by the
Shareholder pursuant to the Offer (without reduction for the adjusted tax basis
of the Shares sold pursuant to the Offer), no loss will be recognized, and
(subject to reduction as described below for corporate Shareholders eligible for
the dividends-received deduction) the tendering Shareholder's adjusted tax basis
in the Shares exchanged pursuant to the Offer will be added to such
Shareholder's adjusted tax basis in his remaining Shares, if any. No assurance
can be given that any of the Section 302 tests will be satisfied as to any
particular Shareholder, and thus no assurance can be given that any particular
Shareholder will not be treated as having received a dividend taxable as
ordinary income. If the exchange of Shares by a Shareholder is not treated as a
sale or exchange for federal income tax purposes, any cash received for Shares
pursuant to the Offer in excess of the current and accumulated earnings and
profits of the Company will be treated, first, as a nontaxable return of capital
to the extent of the Shareholder's adjusted tax basis in his Shares, and
thereafter, as taxable capital gain, to the extent the cash received exceeds
such basis.
Constructive Ownership of Stock. In determining whether any of the Section
302 tests is satisfied, a Shareholder must take into account not only the Shares
which are actually owned by the Shareholder, but also Shares which are
constructively owned by the Shareholder by reason of the attribution rules
contained in Section 318 of the Code. Under Section 318 of the Code, a
Shareholder may be treated as owning (i) Shares that are actually owned, and in
some cases constructively owned, by certain related individuals or entities in
which the Shareholder owns an interest, or, in the case of Shareholders that are
entities, by certain individuals or entities that own an interest in the
Shareholder; and (ii) Shares which the Shareholder has the right to acquire by
exercise of an option or a conversion right contained in another instrument held
by the Shareholder. EACH SHAREHOLDER SHOULD BE AWARE THAT, BECAUSE PRORATION MAY
OCCUR IN THE OFFER, EVEN IF ALL OF THE SHARES ACTUALLY AND CONSTRUCTIVELY OWNED
BY A SHAREHOLDER ARE TENDERED PURSUANT TO THE OFFER, FEWER THAN ALL OF SUCH
SHARES MAY BE PURCHASED BY THE COMPANY. THUS, PRORATION MAY AFFECT WHETHER A
SALE BY A SHAREHOLDER PURSUANT TO THE OFFER WILL MEET ANY OF THE SECTION 302
TESTS.
Section 302 Tests. One of the following tests must be satisfied in order
for the exchange of Shares pursuant to the Offer to be treated as a sale or
exchange for federal income tax purposes.
a. Substantially Disproportionate Test. The receipt of cash by a
Shareholder will be "substantially disproportionate" if the percentage of the
outstanding Shares actually and constructively owned by the Shareholder
immediately following the exchange of Shares pursuant to the Offer (treating as
not being outstanding all of the Shares purchased pursuant to the Offer) is less
than 80% of the percentage of the outstanding Shares actually and constructively
owned by such Shareholder immediately before the
17
<PAGE> 23
exchange of Shares pursuant to the Offer (treating as outstanding all of the
Shares purchased pursuant to the Offer). Shareholders should consult their own
tax advisors with respect to the application of the "substantially
disproportionate" test to their particular situation and circumstances.
b. Complete Redemption Test. The receipt of cash by a Shareholder will be
a "complete redemption" if either (i) all of the Shares actually and
constructively owned by the Shareholder are exchanged pursuant to the Offer; or
(ii) all of the Shares actually owned by the Shareholder are exchanged pursuant
to the Offer and, with respect to the Shares constructively owned by the
Shareholder which are not exchanged pursuant to the Offer, the Shareholder is
eligible to waive (and effectively waives) constructive ownership of all of such
Shares under procedures described in Section 302(c) of the Code. Shareholders
considering making such a waiver should do so in consultation with their own tax
advisors.
c. Not Essentially Equivalent to a Dividend Test. Even if the receipt of
cash by a Shareholder fails to satisfy the "substantially disproportionate" test
and the "complete redemption" test, a Shareholder may nevertheless satisfy the
"not essentially equivalent to a dividend" test if the Shareholder's exchange of
Shares pursuant to the Offer results in a "meaningful reduction" in the
Shareholder's proportionate interest in the Company. Whether the receipt of cash
by a Shareholder who exchanges Shares pursuant to the Offer will be "not
essentially equivalent to a dividend" will depend upon the Shareholder's
particular facts and circumstances. The IRS has indicated in published Revenue
Rulings that even a small reduction in the proportionate interest of a small
minority Shareholder in a publicly-held corporation who exercises no control
over corporate affairs may constitute such a "meaningful reduction." The IRS
held, for example, in Rev. Rul. 76-385, 1976-2 C.B. 92, that a reduction in the
percentage ownership interest of a Shareholder in a publicly-held corporation
who held a minimal interest and who exercised no control over the affairs of the
corporation from .0001118% to .0001081% (a reduction of only 3.3% in the
Shareholder's prior percentage ownership interest) would constitute a
"meaningful reduction." Shareholders expecting to rely on the "not essentially
equivalent to a dividend" test should consult their own tax advisors as to its
application to their particular situation and circumstances.
The Company cannot predict whether or to what extent the Offer will be
over-subscribed. If the Offer is over-subscribed, proration of the tenders
pursuant to the Offer will cause the Company to accept fewer Shares than are
tendered. Therefore, a Shareholder can be given no assurance that a sufficient
number of such Shareholder's Shares will be exchanged pursuant to the Offer to
ensure that such exchange will be treated as a sale, rather than as a dividend,
for United States federal income tax purposes pursuant to the rules discussed
above unless the Shareholder makes a conditional tender as described in Section
2.
If a Shareholder sells Shares to persons other than the Company at or about
the time such holder also exchanges Shares pursuant to the Offer, and the
various sales effected by the Shareholder are part of an overall plan to reduce
or terminate such Shareholder's proportionate interest in the Company, then the
sales to persons other than the Company may, for United States federal income
tax purposes, be integrated with the Shareholder's exchange of Shares pursuant
to the Offer and, if integrated, should be taken into account in determining
whether the Shareholder satisfies any of the Section 302 tests described above.
Corporate Shareholder Dividend Treatment. If an exchange of Shares
pursuant to the Offer by a corporate Shareholder is treated as a dividend, the
corporate Shareholder may be entitled to claim a deduction in an amount equal to
70% of the gross dividend under Section 243 of the Code, subject to applicable
limitations. Corporate Shareholders should consider the effect of Section 246(c)
of the Code, which disallows the 70% dividends-received deduction with respect
to any dividend on any share of stock that is held for 45 days or less during
the 90-day period beginning on the date which is 45 days before the date on
which such share becomes ex-dividend with respect to such dividend. For this
purpose, the length of time a taxpayer is deemed to have held stock may be
reduced by periods during which the taxpayer's risk of loss with respect to the
stock is diminished by reason of the existence of certain options or other
hedging transactions. Moreover, under Section 246A of the Code, if a corporate
Shareholder has incurred indebtedness directly attributable to an investment in
Shares, the 70% dividends received deduction may
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<PAGE> 24
be reduced by a percentage generally computed based on the amount of such
indebtedness and the Shareholder's total adjusted tax basis in the Shares.
In addition, any amount received by a corporate Shareholder pursuant to the
Offer that is treated as a dividend may constitute an "extraordinary dividend"
under Section 1059 of the Code. In such case, a corporate Shareholder would be
required under Section 1059(a) of the Code to reduce its adjusted tax basis (but
not below zero) in its Shares by the non-taxed portion of the extraordinary
dividend (i.e., the portion of the dividend for which a deduction is allowed),
and, if such portion exceeds the Shareholder's adjusted tax basis in its Shares,
to treat the excess as gain from the sale of such Shares in the year in which
the dividend is received. These basis reduction and gain recognition rules would
be applied by taking account only of the Shareholder's adjusted tax basis in the
Shares that were sold, without regard to other Shares that the Shareholder may
continue to own. Corporate Shareholders should consult their own tax advisors as
to the application of Section 1059 of the Code to the Offer and to any dividends
which may be treated as paid with respect to Shares sold pursuant to the Offer.
Foreign Shareholders. See Section 2 with respect to the withholding of
taxes for foreign shareholders.
Backup Withholding. See Section 2 with respect to the application of
United States federal income tax backup withholding.
14. EXTENSION OF THE 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 5 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
theretofore 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 5 hereof by giving oral or written notice of such
termination or postponement to the Depositary and making a public announcement
thereof. 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 5 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 by
public announcement thereof, such announcement, in the case of an extension, to
be issued no later than 12:00 noon, 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 any
public announcement, except as provided by applicable law (including Rule
13e-4(e)(3) promulgated under the Exchange Act), 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 News 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, the Company will extend the Offer to the extent required by Rule 13e-4
promulgated under the Exchange Act, which requires that the minimum period
19
<PAGE> 25
during which the 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 upon the facts and
circumstances, including the relative materiality of such terms or information.
Pursuant to Rule 13e-4(f)(1)(ii), if (i) the Company increases or decreases the
price to be paid for Shares, 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, or the Company 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 notice of such increase or decrease is first published, sent or given,
the Offer will be extended until the expiration of such period of ten business
days.
15. FEES AND EXPENSES
D. F. King & Co., Inc. and American Stock Transfer & Trust Company are
providing services as Information Agent and Depositary, respectively, in
connection with the Offer, and the Company will pay reasonable and customary
compensation for their services in such capacities. The Company will also
reimburse the Information Agent and the Depositary for out-of-pocket expenses
and has agreed to indemnify the Information Agent and the Depositary against
certain liabilities in connection with the Offer, including certain liabilities
under the federal securities laws. The Information Agent may contact
shareholders by mail, telephone, fax, email, telex, telegraph and personal
interviews, and may request brokers, dealers and other shareholders to forward
materials relating to the Offer to beneficial owners. Neither the Information
Agent nor the Depositary has been retained to make solicitations or
recommendations in connection with the Offer.
The Company will not pay fees or commissions to any broker, dealer,
commercial bank, trust company or other person for soliciting any Shares
pursuant to the Offer. The Company will, however, on request, reimburse such
persons for customary handling and mailing expenses incurred in forwarding
materials in respect of the Offer to the beneficial owners for which they act as
nominees. No such broker, dealer, commercial bank, trust company or other person
has been authorized to act as the Company's agent for purposes of the Offer. The
Company will pay (or cause to be paid) any stock transfer taxes on its purchase
of Shares, except as otherwise provided in Instruction 6 of the Letter of
Transmittal.
16. 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
applicable law, the Company will make a good faith effort to comply with such
law.
Pursuant to Rule 13e-4 promulgated under the Exchange Act, the Company has
filed with the SEC a Tender Offer Statement on Schedule TO (the "Schedule TO")
which contains additional information with respect to the Offer. The Schedule
TO, 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 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.
February 16, 2000 K-TRON INTERNATIONAL, INC.
20
<PAGE> 26
Manually signed facsimile copies of the Letter of Transmittal will be
accepted. The Letter of Transmittal and certificates for the Shares and any
other required documents should be sent or delivered by each shareholder or such
shareholder's broker, dealer, commercial bank, trust company or other nominee to
the Depositary at the applicable address set forth below:
The Depositary for the Offer is:
AMERICAN STOCK TRANSFER & TRUST COMPANY
40 Wall Street
46th Floor
New York, New York 10005
If by facsimile transmission:
(For Eligible Institutions only)
(718) 234-5001
Any questions or 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 at its telephone number and
address set forth below. Shareholders may also contact their broker, dealer,
commercial bank, trust company or other nominee for assistance concerning the
Offer.
The Information Agent for the Offer is:
D. F. KING & CO., INC.
77 Water Street
New York, New York 10005
BANKERS AND BROKERS CALL COLLECT (212) 269-5550
ALL OTHERS CALL TOLL FREE (800) 755-7250
<PAGE> 1
LETTER OF TRANSMITTAL
TO ACCOMPANY SHARES OF COMMON STOCK
OF
K-TRON INTERNATIONAL, INC.
TENDERED PURSUANT TO THE OFFER TO PURCHASE
DATED FEBRUARY 16, 2000
THE OFFER AND WITHDRAWAL RIGHTS EXPIRE AT 5:00 P.M., NEW YORK CITY TIME,
ON MARCH 17, 2000, UNLESS THE OFFER IS EXTENDED
Depositary:
AMERICAN STOCK TRANSFER & TRUST COMPANY
40 Wall Street
46th Floor
New York, New York, 10005
<TABLE>
<S> <C>
By Facsimile Transmission: For Information:
(for Eligible Institutions (800) 937-5449
Only)
(718) 234-5001
</TABLE>
DELIVERY OF THIS LETTER OF TRANSMITTAL TO AN ADDRESS OTHER THAN AS SET FORTH
ABOVE DOES NOT CONSTITUTE A VALID DELIVERY.
The instructions accompanying this Letter of Transmittal should be read
carefully before this Letter of Transmittal is completed.
This Letter of Transmittal is to be used (a) if you desire to effect the
tender transaction yourself; (b) if you intend to request your broker, dealer,
commercial bank, trust company or other nominee to effect the transaction for
you and the Shares (as hereinafter defined) are not registered in the name of
such broker, dealer, commercial bank, trust company or other nominee; and (c) by
a broker, dealer, commercial bank, trust company or other nominee effecting the
transaction as a registered owner or on behalf of a registered owner. To accept
the Offer in accordance with its terms, a properly completed and duly executed
Letter of Transmittal (or photocopy thereof bearing original signature(s) and
any required signature guarantees), any certificates representing Shares
tendered, and any other documents required by this Letter of Transmittal should
be mailed or delivered to the Depositary at the appropriate address set forth
herein and must be received by the Depositary prior to 5:00 P.M., New York City
time, on March 17, 2000, or such later time and date to which the Offer is
extended, unless the tendering party has satisfied the conditions for guaranteed
delivery described in Section 2 of the Offer to Purchase. Shareholders are not
required to pay a service charge to K-Tron International, Inc. or the Depositary
in connection with their tender of Shares, but may be charged a fee by a broker,
dealer or other institution for processing the tender requested. DELIVERY OF
DOCUMENTS TO THE BOOK-ENTRY TRANSFER FACILITY DOES NOT CONSTITUTE DELIVERY TO
THE DEPOSITARY.
DESCRIPTION OF SHARES TENDERED
NAME(S) AND ADDRESS(ES) OF REGISTERED HOLDER(S)
(PLEASE FILL IN, EXACTLY AS NAME(S) APPEAR(S) ON TENDERED CERTIFICATE(S))
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------------
DESCRIPTION OF SHARES TENDERED
(SEE INSTRUCTIONS 3 AND 4)
- ---------------------------------------------------------------------------------------------------------------------------
NAME(S) AND ADDRESS(ES) OF REGISTERED HOLDER(S) CERTIFICATE(S) ENCLOSED
(PLEASE FILL IN EXACTLY AS NAME(S) APPEAR(S) ON CERTIFICATE(S)) (ATTACH SIGNED LIST IF NECESSARY)
-----------------------------------------------------------
CERTIFICATE NO. OF NO. OF SHARES
NO.* SHARES TENDERED**
<S> <C> <C> <C>
- ---------------------------------------------------------------------------------------------------------------------------
------------------------------------------------------
------------------------------------------------------
------------------------------------------------------
------------------------------------------------------
Total No. of Shares Tendered
- ---------------------------------------------------------------------------------------------------------------------------
</TABLE>
* Need not be completed by shareholders who tender Shares by book-entry
transfer.
** Unless otherwise indicated, it will be assumed that all Shares represented
by any certificates delivered to the Depositary are being tendered. See
Instruction 4.
- --------------------------------------------------------------------------------
<PAGE> 2
THE BOXES BELOW ARE TO BE CHECKED BY ELIGIBLE INSTITUTIONS ONLY
[ ] CHECK HERE IF SHARES ARE BEING DELIVERED BY BOOK-ENTRY TRANSFER MADE TO AN
ACCOUNT MAINTAINED BY THE DEPOSITARY WITH THE DEPOSITARY TRUST COMPANY
("DTC") AND COMPLETE THE FOLLOWING:
[ ] Name of Tendering Institution
[ ] DTC Participant Number
[ ] Transaction Code Number
[ ] CHECK HERE IF SHARES ARE BEING DELIVERED PURSUANT TO A NOTICE OF GUARANTEED
DELIVERY PREVIOUSLY SENT TO THE DEPOSITARY AND COMPLETE THE FOLLOWING:
Name(s) of Registered Holder(s)
Window Ticket Number (if any)
Date of Execution of Notice of Guaranteed Delivery
DTC Participant Number (if delivered by book-entry transfer)
NOTE: SIGNATURE(S) MUST BE PROVIDED BELOW
2
<PAGE> 3
Ladies and Gentlemen:
The person(s) signing this Letter of Transmittal (the "Signer") hereby
tender(s) to K-Tron International, Inc. (the "Company"), a New Jersey
corporation, the above-described shares of common stock, par value $.01 per
share (the "Shares"), of the Company, at a price (the "Purchase Price") equal to
$18.00 per Share net in cash, upon the terms and subject to the conditions set
forth in the Offer to Purchase, dated February 16, 2000, receipt of which is
hereby acknowledged, and in this Letter of Transmittal (which Offer to Purchase
and Letter of Transmittal together constitute the "Offer").
Subject to, and effective upon, acceptance for payment of, or payment for,
Shares tendered herewith 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 any such extension or amendment), the Signer 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
that are purchased pursuant to the Offer and hereby irrevocably constitutes and
appoints American Stock Transfer & Trust Company (the "Depositary") as
attorney-in-fact of the Signer 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 (a) present certificate(s) for such Shares, if
any, for cancellation and transfer on the Company's books; and (b) receive all
benefits and otherwise exercise all rights of beneficial ownership of such
Shares, all in accordance with the terms and subject to the conditions set forth
in the Offer.
The Signer hereby represents and warrants that (a) the Signer, if a broker,
dealer, commercial bank, trust company or other nominee, has obtained the
tendering shareholder's instructions to tender pursuant to the terms and
conditions of this Offer in accordance with the letter from the Company to
brokers, dealers, commercial banks, trust companies and other nominees; (b) when
and to the extent the Company accepts the Shares for purchase, the Company will
acquire good, marketable and unencumbered title thereto, free and clear of all
security interests, liens, restrictions, 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 Signer will execute and
deliver any additional documents that the Depositary or the Company deems
necessary or desirable to complete the assignment, transfer and purchase of the
Shares tendered hereby; and (d) the Signer has read and agrees to all of the
terms and conditions of the Offer.
The name(s) and address(es) of the registered owner(s) should be printed as
on the registration of the Shares. If the Shares tendered hereby are in
certificated form, the certificate(s) representing such Shares must be delivered
together with this Letter of Transmittal.
The Signer recognizes that, under certain circumstances set forth in the
Offer to Purchase, the Company may terminate or amend the Offer or may not be
required to purchase any of the Shares tendered hereby. In any such event, the
Signer understands that certificate(s) for the Shares not purchased, if any,
will be returned to the Signer at its registered address unless otherwise
indicated under the Special Delivery Instructions below. The Signer understands
that acceptance of Shares by the Company for payment will constitute a binding
agreement between the Signer and the Company upon the terms and subject to the
conditions of the Offer.
The check for the Purchase Price of the tendered Shares purchased will be
issued to the order of the Signer and mailed to the address indicated, unless
otherwise indicated in the box titled Special Payment Instructions or the box
titled Special Delivery Instructions. The Company will not pay interest on the
Purchase Price under any circumstances.
All authority herein conferred or agreed to be conferred shall survive the
death or incapacity of the Signer and all obligations of the Signer hereunder
shall be binding upon the heirs, personal representatives, successors and
assigns of the Signer. Except as stated in the Offer, this tender is
irrevocable.
Unless otherwise indicated herein under "Special Payment Instructions," the
Signer acknowledges that the Company will issue the check for the Purchase Price
and/or return any certificate for Shares not accepted for payment in the name(s)
of the registered holder(s) appearing under "Description of Shares Tendered."
Similarly, unless otherwise indicated under "Special Delivery Instructions," the
Signer acknowledges that the Company will mail the check for the Purchase Price
for any Shares purchased and/or return any certificates for Shares not accepted
for payment (and accompanying documents, as appropriate) to the address(es) of
the registered holder(s) appearing under "Description of Shares Tendered." In
the event that both the Special Payment Instructions and/or the Special
3
<PAGE> 4
Delivery Instructions are completed, the Signer expects that the Company will
issue the check for the Purchase Price and/or return any certificates for Shares
not accepted for payment in the name of, and/or deliver such check and/or return
any such certificates for Shares to, the person(s) so indicated. The Signer
recognizes that the Company has no obligation pursuant to the Special Payment
Instructions to transfer any Shares from the name of the registered holder
thereof if the Company does not accept for payment any of the Shares tendered
hereby.
4
<PAGE> 5
SPECIAL PAYMENT INSTRUCTIONS
(SEE INSTRUCTIONS 1, 4, 5, 6, 7, AND 10)
To be completed ONLY if certificates for Shares that are not purchased and/or
any check are to be issued in the name of and sent to someone other than the
Signer.
Mail [ ] check [ ] certificates to:
Name(s)
- -------------------------------------------
(PLEASE PRINT)
Address
- --------------------------------------------
(INCLUDE ZIP CODE)
- ------------------------------------------------------
(TAX IDENTIFICATION OR SOCIAL SECURITY NO.)
SPECIAL DELIVERY INSTRUCTIONS
(SEE INSTRUCTIONS 1, 4 AND 7)
To be completed ONLY if certificates for Shares that are not purchased and/or
any check, issued in the name of the Signer, are to be sent to someone other
than the Signer or to the Signer at an address other than that shown above.
Mail [ ] check [ ] certificates to:
Name(s)
- -------------------------------------------
(PLEASE PRINT)
Address
- --------------------------------------------
- ------------------------------------------------------
(INCLUDE ZIP CODE)
SIGNATURE
(IF SPECIAL PAYMENT INSTRUCTIONS ARE GIVEN)
(SEE INSTRUCTION 7)
- ------------------------------------------------------
SIGNATURE(S) OF PAYEE(S)
Dated
- --------------------- , 2000
By signing and completing the form above, under the penalties of perjury, I/we
certify that the above tax identification or social security number(s) is/are
correct.
Note: Failure to complete and sign may result in backup withholding of 31% of
the payments due to you. See Instruction 11.
CONDITIONAL TENDER
Unless this box has been completed and a minimum specified, the tender will be
deemed unconditional (see Section 2 of the Offer to Purchase).
Minimum number of Shares that must be purchased, if they are purchased:
--------------- Shares (fill in)
5
<PAGE> 6
IMPORTANT:
SIGN HERE AND COMPLETE SUBSTITUTE FORM W-9 (BELOW) OR FORM W-8
AS APPLICABLE (SEE INSTRUCTIONS 1, 5, 6 AND 11)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
(SIGNATURE(S) OF SHAREHOLDER(S))
Dated:
- ------------------------, 2000
(Must be signed by registered holder(s) exactly as name(s) appear(s) on the
Share certificates or on a security position listing or by person(s) authorized
to become registered holder(s) by certificates and documents transmitted
herewith. If signature is by trustees, executors, administrators, guardians,
attorneys-in-fact, agents, officers of corporations or others acting in a
fiduciary or representative capacity, please provide the following information.
See Instruction 5.)
Name(s):
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
(PLEASE TYPE OR PRINT)
Capacity (Full Title):
- --------------------------------------------------------------------------------
(SEE INSTRUCTION 5)
Address:
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Area Code and Telephone Number:
- --------------------------------------------------------------------------------
Home:
- ---------------------------------------------------- Business:
-----------------
Taxpayer Identification or Social Security No. (if applicable):
-----------------
(COMPLETE SUBSTITUTE FORM W-9 BELOW
OR FORM W-8, AS APPLICABLE)
(SEE INSTRUCTION 11)
GUARANTEE OF SIGNATURE(S)
(SEE INSTRUCTIONS 1 AND 5)
Authorized Signature:
- --------------------------------------------------------------------------------
Name:
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
(PLEASE TYPE OR PRINT)
Title:
- --------------------------------------------------------------------------------
Name of Firm:
- --------------------------------------------------------------------------------
Address:
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
(INCLUDING ZIP CODE)
Area Code and Tel. No.:
- --------------------------------------------------------------------------------
6
<PAGE> 7
INSTRUCTIONS
FORMING PART OF THE TERMS AND CONDITIONS OF THE OFFER
1. Guarantee of Signatures. No signature guarantee is required on this
Letter of Transmittal (a) if this Letter of Transmittal is signed by the
registered holder(s) of Shares tendered herewith (including, for purposes of
this document, any participant in the book-entry transfer facility of The
Depository Trust Company ("DTC") whose name appears on DTC's security position
listing as the owner of Shares), unless such holder(s) has completed either the
box entitled "Special Payment Instructions" or the box entitled "Special
Delivery Instructions" above; or (b) if such Shares are tendered for the account
of a firm or other entity that is a member in good standing of the Security
Transfer Agent's Medallion Program (an "Eligible Institution"). In all other
cases, all signatures on this Letter of Transmittal must be guaranteed by an
Eligible Institution. See Instruction 5.
2. Delivery of Letter of Transmittal and Certificates. This Letter of
Transmittal is to be used (a) if Shares are to be forwarded herewith; or (b) if
tenders are to be made by book-entry transfer to the account maintained by the
Depositary pursuant to the procedure set forth in Section 2 of the Offer to
Purchase.
THE METHOD OF DELIVERY OF SHARE CERTIFICATES, THIS LETTER OF TRANSMITTAL
AND ALL OTHER REQUIRED DOCUMENTS, INCLUDING DELIVERY THROUGH ANY BOOK-ENTRY
TRANSFER FACILITY, IS AT THE OPTION AND SOLE RISK OF THE TENDERING SHAREHOLDER.
IN ALL CASES, SUFFICIENT TIME SHOULD BE ALLOWED TO ENSURE TIMELY DELIVERY.
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. Shareholders have the responsibility to cause their
Shares (in proper certificated or uncertificated form), this Letter of
Transmittal (or a photocopy hereof) bearing original signature(s) and any
required signature guarantee(s), and any other documents required by this Letter
of Transmittal to be timely delivered in accordance with the Offer.
All tendering shareholders, brokers, dealers, commercial banks, trust
companies and other nominees, by execution of this Letter of Transmittal (or
photocopy hereof), waive any right to receive any notice of the acceptance of
their tender.
3. Inadequate Space. If the space provided in any of the above boxes is
inadequate, the necessary information should be listed on a separate schedule
signed by all of the required signatories and attached hereto.
4. Partial Tenders (not applicable to shareholders who tender by book-entry
transfer). If fewer than all of the Shares represented by any certificate
delivered to the Depositary are to be tendered, fill in the number of Shares
that are to be tendered in the box entitled "Description of Shares Tendered." In
such case, a new certificate for the remainder of the Shares represented by the
old certificate will be sent to the person(s) signing this Letter of Transmittal
(unless otherwise provided in the box titled "Special Payment Instructions" or
"Special Delivery Instructions") as promptly as practicable following the
expiration or termination of the Offer. All Shares represented by certificates
delivered to the Depositary will be deemed to have been tendered unless
otherwise indicated.
5. Signatures on Letter of Transmittal, Authorizations and Endorsements.
a. If this Letter of Transmittal is signed by the registered holder(s)
of the Shares tendered hereby, the signature(s) must correspond with the
name(s) as written on the face of the certificate(s) without alteration,
enlargement or any change whatsoever.
b. If any of the Shares tendered hereby are owned of record by two or
more joint owners, all of such owners must sign this Letter of Transmittal.
c. If any of the 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 as there are different registrations
of certificates.
d. If this Letter of Transmittal or stock powers 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 proper evidence
satisfactory to the Company of their authority so to act must be submitted.
7
<PAGE> 8
e. If this Letter of Transmittal is signed by the registered holder(s)
of the Shares transmitted hereby, no endorsements of certificates or
separate stock powers are required unless payment is to be made to, or
certificates for Shares not purchased are to be issued in the name of, a
person other than the registered holder(s). Signatures on such certificates
or stock powers must be guaranteed by an Eligible Institution.
f. If this Letter of Transmittal is signed by a person other than the
registered holder(s) of the certificate(s) listed, the certificate(s) must
be endorsed or accompanied by appropriate stock powers, in either case
signed exactly as the name(s) of the registered holder(s) appears on the
certificate(s) for such Shares. Signatures on such certificates or stock
powers must be guaranteed by an Eligible Institution.
6. Transfer Taxes. The Company will pay any transfer taxes payable upon
the transfer to it of Shares purchased pursuant to the Offer. If, however, (a)
payment of the Purchase Price is to be made to, or (in the circumstances
permitted by the Offer) unpurchased Shares are to be registered in the name(s)
of, any person(s) other than the registered owner(s); or (b) if any tendered
certificate(s) are registered, or the Shares tendered are otherwise held, in the
name(s) of any person(s) other than the person signing this Letter of
Transmittal, the amount of any transfer taxes (whether imposed on the registered
owner(s) or such other person(s)) payable on account of the transfer to such
person(s) will be deducted from the Purchase Price unless satisfactory evidence
of the payment of such taxes, or exemption therefrom, is submitted.
7. Special Payment and Delivery Instructions. If certificate(s) for
unpurchased Shares and/or check(s) are to be issued in the name of a person
other than the registered owner(s) or if such certificate(s) and/or check(s) are
to be sent to someone other than the registered owner(s), or to the registered
owner(s) at a different address, the captioned boxes "Special Payment
Instructions" and/or "Special Delivery Instructions" on this Letter of
Transmittal must be completed.
8. Irregularities. All questions as to the validity, form, eligibility
(including time of receipt) and acceptance of tenders will be determined by the
Company, in its sole discretion, which determination shall be final and binding.
The Company reserves the absolute right to reject any or all tenders determined
not to be in appropriate form or to refuse to accept for payment, purchase or
pay for any Shares if, in the opinion of the Company's counsel, accepting,
purchasing or paying for such Shares would be unlawful. The Company also
reserves the absolute right to waive any of the conditions of the Offer or any
defect in any tender, whether generally or with respect to any particular
Share(s) or shareholder(s). The Company's interpretations of the terms and
conditions of the Offer (including these instructions) shall be final and
binding.
NONE OF THE COMPANY, THE DEPOSITARY, THE INFORMATION AGENT OR ANY OTHER
PERSON IS OR WILL BE OBLIGATED TO GIVE ANY NOTICE OF DEFECTS IN TENDERS, AND
NONE OF THEM SHALL INCUR ANY LIABILITY FOR FAILURE TO GIVE ANY SUCH NOTICE.
9. Questions and Requests for Assistance and Additional Copies. Questions
and requests for assistance may be directed to D. F. King & Co., Inc., the
Information Agent (bankers and brokers call collect (212) 269-5550, all others
call toll free (800) 755-7250). Requests for additional copies of the Offer to
Purchase and this Letter of Transmittal may also be directed to the Information
Agent. Shareholders who do not own Shares directly may also obtain such
information and copies from their broker, dealer, commercial bank, trust company
or other nominee. Shareholders who do not own Shares directly are required to
tender their Shares through their broker, dealer, commercial bank, trust company
or other nominee and should NOT submit this Letter of Transmittal to the
Depositary.
10. Restriction on Short Sales. Section 14(e) of the Securities Exchange
Act of 1934, as amended (the "Exchange Act"), and Rule 14e-4 promulgated
thereunder make it unlawful for any person, acting alone or in concert with
others, to tender Shares in a partial tender offer for such person's own account
unless at the time of tender, and at the time the Shares are accepted for
payment, the person tendering has a net long position equal to or greater than
the amount tendered in (i) Shares, and will deliver or cause to be delivered
such Shares for the purpose of tender to the person making the Offer within the
period specified in the Offer; or (ii) an equivalent security and, upon
acceptance of his or her tender, will acquire Shares by conversion, exchange or
exercise of such equivalent security to the extent required by the terms of the
Offer, and will deliver or cause to be delivered the Shares so acquired for the
purpose of tender to the Company within the period specified in the Offer.
Section 14(e) and Rule 14e-4 provide a similar restriction applicable to the
tender or guarantee of a tender on behalf of another person.
8
<PAGE> 9
The acceptance of Shares by the Company for payment will constitute a
binding agreement between the tendering shareholder and the Company, upon the
terms and subject to the conditions of the Offer, including such shareholder's
representation that (i) such shareholder has a net long position in the Shares
being tendered within the meaning of Rule 14e-4 promulgated under the Exchange
Act; and (ii) the tender of such Shares complies with Rule 14e-4.
11. Backup Withholding Tax. Subject to the availability of an exemption,
each tendering shareholder is required to provide the Depositary with a correct
Taxpayer Identification Number ("TIN") on the Substitute Form W-9, which is
provided under "Important Tax Information" below, and to certify under penalties
of perjury that such number is correct and that such shareholder is not subject
to backup withholding. If a tendering shareholder has been notified by the
Internal Revenue Service that such shareholder is subject to backup withholding,
such shareholder must not check the box in Part 2 of the Substitute Form W-9,
set forth below, unless such shareholder has since been notified by the Internal
Revenue Service that such shareholder is no longer subject to backup
withholding. Failure to provide the information on the Substitute Form W-9 may
subject the tendering shareholder to 31% federal income tax withholding with
respect to any payments received pursuant to the Offer. If the tendering
shareholder has not been issued a TIN and has applied for one or intends to
apply for one in the near future, such shareholder should write "Applied For" in
the space provided for the TIN in Part I of the Substitute Form W-9, check the
box in Part 3 of the Substitute Form W-9 and sign and date the Substitute Form
W-9. Such a shareholder must also complete the Certificate of Awaiting Taxpayer
Identification Number, which is provided below. Notwithstanding that "Applied
For" is written in Part I and the Certificate of Awaiting Taxpayer
Identification Number is completed, the Depositary will withhold 31% on all
payments of the purchase price to such shareholder until a TIN is provided to
the Depositary. However, such withheld amount will be refunded to such
shareholder if a certified TIN is provided to the Depositary within 60 days.
Each tendering non-U.S. shareholder should complete a Form W-8 and provide
it to the Depositary. Contact the Information Agent for a copy of the Form W-8.
IMPORTANT TAX INFORMATION
THE FEDERAL INCOME TAX DISCUSSION SET FORTH HEREIN IS INCLUDED FOR GENERAL
INFORMATION ONLY. IT MAY NOT BE APPLICABLE TO NON-U.S. SHAREHOLDERS. ALL
SHAREHOLDERS ARE URGED TO CONSULT THEIR OWN TAX ADVISORS AS TO THE SPECIFIC TAX
CONSEQUENCES TO THEM OF THE OFFER.
SUBSTITUTE FORM W-9 OR FORM W-8
Under the United States federal income tax laws, the Depositary may be
required to withhold 31% of the amount of any payment made to certain holders
pursuant to the Offer. In order to avoid such backup withholding, each tendering
United States shareholder must provide the Depositary with such shareholder's
correct TIN by completing the Substitute Form W-9 set forth on the following
page. In general, if a shareholder is an individual, the TIN is the Social
Security number of such individual. If the Depositary is not provided with the
correct TIN, the shareholder may be subject to a penalty imposed by the Internal
Revenue Service. Certain shareholders (including, among others, all
corporations) are not subject to these backup withholding and reporting
requirements, but should nonetheless complete a Substitute Form W-9 to avoid
possible erroneous backup withholding. For further information regarding backup
withholding and instructions for completing the Substitute Form W-9 (including
how to obtain a TIN if you do not have one and how to complete the Substitute
Form W-9 if Shares are held in more than one name), consult the enclosed
Guidelines for Certification of Taxpayer Identification Number.
In order for a non-United States shareholder to avoid 31% backup
withholding, such shareholder must submit a statement to the Depositary signed
under penalties of perjury attesting as to its non-United States status. Form
W-8 and instructions for such statement may be obtained by contacting the
Information Agent.
IMPORTANT: THIS LETTER OF TRANSMITTAL, OR FACSIMILE HEREOF BEARING ORIGINAL
SIGNATURE(S), PROPERLY COMPLETED AND DULY EXECUTED, TOGETHER WITH ANY REQUIRED
SIGNATURE GUARANTEES, SHARES (IN PROPER CERTIFICATED OR UNCERTIFICATED FORM),
AND ALL OTHER REQUIRED DOCUMENTS MUST BE RECEIVED BY THE DEPOSITARY, OR A
PROPERLY COMPLETED AND DULY EXECUTED NOTICE OF GUARANTEED DELIVERY MUST BE
RECEIVED BY THE DEPOSITARY, ON OR PRIOR TO THE EXPIRATION DATE.
9
<PAGE> 10
CONSEQUENCES OF FAILURE TO FILE SUBSTITUTE FORM W-9 OR FORM W-8
Failure to complete Substitute Form W-9 or Form W-8 will not, by itself,
cause the Shares to be deemed invalidly tendered but may require the Depositary
to withhold 31% of the amount of any payments made pursuant to the Offer. Backup
withholding is not an additional federal income tax. Rather, the federal income
tax liability of a person subject to backup withholding will be reduced by the
amount of tax withheld. If withholding results in an overpayment of taxes, the
shareholder may claim a refund from the Internal Revenue Service.
<TABLE>
<S> <C> <C>
- ---------------------------------------------------------------------------------------------------------------------------
SUBSTITUTE Part 1: PLEASE PROVIDE YOUR TIN IN THE BOX AT RIGHT Social Security Number
FORM W-9 AND CERTIFY BY SIGNING AND DATING BELOW OR
DEPARTMENT OF THE TREASURY Employer Identification Number
INTERNAL REVENUE SERVICE -------------------------------
------------------------------------------------------------------------------------------
PAYER'S REQUEST FOR TAXPAYER Part 2: Check the box if you are NOT subject to backup withholding under the provisions of
IDENTIFICATION NUMBER (TIN) section 3406(a)(1)(C) of the Internal Revenue Code because (1) you have not been notified
that you are subject to backup withholding as a result of failure to report all interest or
dividends or (2) the Internal Revenue Service has notified you that you are no longer
subject to backup withholding. []
------------------------------------------------------------------------------------------
CERTIFICATION: UNDER THE PENALTIES OF PERJURY, I CERTIFY THAT THE INFORMATION PROVIDED ON
THIS FORM IS TRUE, CORRECT, AND COMPLETE.
SIGNATURE ---------------------------------------------------- DATE--------------
------------------------------------------------------------------------------------------
Part 3: Awaiting TIN [ ]
- ---------------------------------------------------------------------------------------------------------------------------
</TABLE>
NOTE: FAILURE TO COMPLETE AND RETURN THIS FORM MAY RESULT IN BACKUP WITHHOLDING
OF 31% OF ANY PAYMENTS MADE TO YOU PURSUANT TO THE OFFER. PLEASE REVIEW
THE "GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION NUMBER" FOR
ADDITIONAL DETAILS.
YOU MUST COMPLETE THE FOLLOWING CERTIFICATE IF YOU ARE AWAITING (OR WILL
SOON APPLY FOR) A TAXPAYER IDENTIFICATION NUMBER.
CERTIFICATE OF AWAITING TAXPAYER 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 to the payer, 31% of all
reportable payments due to me pursuant to the Offer will be withheld until I
provide a Taxpayer Identification Number to the payer and that, if I do not
provide my Taxpayer Identification Number within 60 days, such retained amounts
shall be remitted to the Internal Revenue Service as backup withholding.
Signature:
- ------------------------------------------------------------------ Date:
--------
10
<PAGE> 1
GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION
NUMBER ON SUBSTITUTE FORM W-9
GUIDELINES FOR DETERMINING THE PROPER IDENTIFICATION NUMBER TO GIVE THE
PAYER.--Social Security numbers have nine digits separated by two hyphens: i.e.
000-00-0000. Employer identification numbers have nine digits separated by only
one hyphen: i.e. 00-0000000. The table below will help determine the number to
give the payer.
<TABLE>
<C> <S> <C>
- ------------------------------------------------------------
GIVE THE
FOR THIS TYPE OF ACCOUNT: SOCIAL SECURITY
NUMBER OF--
- ------------------------------------------------------------
1. An individual's account The individual
2. Two or more individuals (joint The actual owner of
account) the account or, if
combined funds, the
first individual on
the account(1)
3. Husband and wife (joint account) The actual owner of
the account or, if
joint funds, either
person(1)
4. Custodian account of a minor The minor(2)
(Uniform Gift to Minors Act)
5. Adult and minor (joint account) The adult or, if
the minor is the
only contributor,
the minor(1)
6. Account in the name of guardian or The ward, minor, or
committee for a designated ward, incompetent
minor, or incompetent person person(3)
7. a. A revocable savings trust The grantor-
account (in which grantor is trustee(1)
also trustee)
b. Any "trust" account that is not The actual owner(1)
a legal or valid trust under
State law
8. Sole proprietorship account The owner(4)
- ------------------------------------------------------------
- ------------------------------------------------------------
GIVE THE EMPLOYER
FOR THIS TYPE OF ACCOUNT: IDENTIFICATION
NUMBER OF--
- ------------------------------------------------------------
9. A valid trust, estate, or pension The legal entity
(do not furnish the
identifying number
of the personal
representative or
trustee unless the
legal entity itself
is not designated
in the account
title.)(5)
10. Corporate account The corporation
11. Religious, charitable, or The organization
educational organization account
12. Partnership account held in the The partnership
name of the business
13. Association, club, or other tax- The organization
exempt organization
14. A broker or registered nominee The broker or
nominee
15. Account with the Department of The public entity
Agriculture in the name of a
public entity (such as a State or
local government, school district,
or prison) that receives
agricultural program payments
- ------------------------------------------------------------
</TABLE>
(1) List first and circle the name of the person whose number you furnish.
(2) Circle the minor's name and furnish the minor's social security number.
(3) Circle the ward's, minor's or incompetent person's name and furnish such
person's social security number.
(4) Show the name of the owner. If the owner does not have an employer
identification number, furnish the owner's social security number.
(5) List first and circle the name of the legal trust, estate, or pension trust.
NOTE: If no name is circled when there is more than one name, the number will be
considered to be that of the first name listed.
<PAGE> 2
GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION
NUMBER ON SUBSTITUTE FORM W-9
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 (for
resident individuals), Form SS-4, Application for Employer Identification Number
(for businesses and all other entities), or Form W-7 for International Taxpayer
Identification Number (for alien individuals required to file U.S. tax returns),
at an office of the Social Security Administration or the Internal Revenue
Service.
To complete Substitute Form W-9, if you do not have a taxpayer identification
number, write "Applied For" in the space for the taxpayer identification number
in Part 1, sign and date the Form, and give it to the requester. Generally, you
will then have 60 days to obtain a taxpayer identification number and furnish it
to the requester. If the requester does not receive your taxpayer identification
number within 60 days, backup withholding, if applicable, will begin and will
continue until you furnish your taxpayer identification number to the requester.
PAYEES EXEMPT FROM BACKUP WITHHOLDING
Unless otherwise noted herein, all references below to section numbers or to
regulations are references to the Internal Revenue Code and the regulations
promulgated thereunder. Payees specifically exempted from backup withholding on
ALL payments include the following:
- A corporation.
- A financial institution.
- An organization exempt from tax under section 501(a), or an individual
retirement plan, or a custodial account under section 403(b)(7).
- 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 a political subdivision, agency or instrumentality
thereof.
- An international organization or any agency or instrumentality thereof.
- A registered dealer in securities or commodities registered in the United
States or a possession of the United States.
- A real estate investment trust.
- A common trust fund operated by a bank under section 584(a).
- An exempt charitable remainder trust, or a non-exempt trust described in
section 4947(a)(1).
- An entity registered at all times during the tax year under the Investment
Company Act of 1940.
- A foreign central bank of issue.
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 United
States and which have at least one nonresident partner.
- Payments of patronage dividends where the amount received is not paid in
money.
- Payments made by certain foreign organizations.
- Payments made to a nominee.
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 with-holding if (i) this interest is $600 or more, and
(ii) the interest is paid in the course of the payer's trade or business and
(iii) you have not provided your correct taxpayer identification number to
the payer.
- Payments of tax-exempt interest (including exempt-interest dividends under
section 852).
- Payments described in section 6049(b)(5) to non-resident aliens.
- Payments on tax-free covenant bonds under section 1451.
- Payments made by certain foreign organizations.
- Payments made to a nominee.
EXEMPT PAYEES DESCRIBED ABOVE SHOULD FILE A SUBSTITUTE FORM W-9 TO AVOID
POSSIBLE ERRONEOUS BACKUP WITHHOLDING. FILE THIS FORM WITH THE PAYER, FURNISH
YOUR TAXPAYER IDENTIFICATION NUMBER, WRITE "EXEMPT" ON THE FACE OF THE FORM, AND
RETURN IT TO THE PAYER.
Certain payments other than interest, dividends, and patronage dividends that
are not subject to information reporting are also not subject to backup
withholding. For details, see the regulations under section 6041, 6041A(a), 6045
and 6050A.
PRIVACY ACT NOTICES.--Section 6109 requires most recipients of dividends,
interest, or other payments to give taxpayer identification numbers to payers
who must report the payments to the IRS. The IRS uses the numbers for
identification purposes and to help verify the accuracy of your tax return.
Payers must be given the numbers whether or not recipients are required to file
tax returns. Payers must generally withhold 31% of taxable interest, dividends,
and certain other payments to a payee who does not furnish a taxpayer
identification number to a payer. Certain penalties may also apply.
PENALTIES
(1) PENALTY FOR FAILURE TO FURNISH TAXPAYER IDENTIFICATION NUMBER.--If you fail
to furnish your taxpayer identification number to a payer, you are subject to a
penalty of $50 for each such failure unless your failure is due to reasonable
cause and not to willful neglect.
(2) FAILURE TO REPORT CERTAIN DIVIDEND AND INTEREST PAYMENTS.--If you fail to
include any portion of an includible payment for interest, dividends, or
patronage dividends in gross income and such failure is due to negligence, a
penalty of 20% is imposed on any portion of an underpayment attributable to the
failure.
(3) CIVIL PENALTY FOR FALSE STATEMENTS 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.
(4) CRIMINAL PENALTY FOR FALSIFYING INFORMATION.--If you falsify certification
or affirmations, you are subject to criminal penalties including fines and/or
imprisonment.
FOR ADDITIONAL INFORMATION CONTACT YOUR TAX CONSULTANT OR THE INTERNAL REVENUE
SERVICE.
<PAGE> 1
NOTICE OF GUARANTEED DELIVERY
REGARDING THE OFFER BY
K-TRON INTERNATIONAL, INC.
TO PURCHASE FOR CASH 450,000 SHARES
AT $18.00 PER SHARE
This Notice of Guaranteed Delivery, or one substantially in the form
hereof, must be used to tender shares pursuant to the Offer if (i) certificates
for shares of common stock ("Shares") of K-Tron International, Inc., a New
Jersey corporation (the "Company"), are not immediately available; (ii) time
will not permit all required documents to reach American Stock Transfer & Trust
Company, as Depositary (the "Depositary"), prior to the Expiration Date (as
defined in the Offer to Purchase, dated February 16, 2000 (the "Offer to
Purchase")); or (iii) the procedure for delivery by book-entry transfer cannot
be completed on a timely basis. This Notice of Guaranteed Delivery may be
delivered by hand or transmitted by telegram, facsimile transmission or mail to
the Depositary. See Section 2 of the Offer to Purchase. Tenders using this form
may be made only by or through a firm or other entity that is a member in good
standing of the Security Transfer Agent's Medallion Program.
Depositary:
AMERICAN STOCK TRANSFER & TRUST COMPANY
40 Wall Street
46th Floor
New York, New York, 10005
By Facsimile Transmission:
(for Eligible Institutions only)
(718) 234-5001
For Information:
(800) 937-5449
DELIVERY OF THIS INSTRUMENT TO AN ADDRESS OTHER THAN AS SET FORTH ABOVE DOES NOT
CONSTITUTE VALID DELIVERY.
<PAGE> 2
Ladies and Gentlemen:
The undersigned hereby tenders to K-Tron International, Inc. (the
"Company"), upon the terms and subject to the conditions set forth in its Offer
to Purchase, dated February 16, 2000, and the related Letter of Transmittal,
receipt of which are hereby acknowledged, the number of Shares specified below
pursuant to the guaranteed delivery procedures set forth in Section 2 of the
Offer to Purchase.
- --------------------------------------------------------------------------------
Number of Shares Tendered:
----------------------
Certificate Nos. (if available):
------------------------------------------------------
------------------------------------------------------
If Shares will be tendered by book-entry transfer to The Depository Trust
Company, please check box:
DTC Participant Number:
-------------------------
- --------------------------------------------------------------------------------
Name(s) of Record Holder(s):
------------------------------------------------------
------------------------------------------------------
Address(es):
---------------------------------------
------------------------------------------------------
------------------------------------------------------
[ ]
Area Code and
Telephone Number:
--------------------------------
CONDITIONAL TENDER
Unless this box has been completed and a minimum specified, the tender will
be deemed unconditional (see Section 2 of the Offer to Purchase).
Minimum number of Shares that must be purchased, if they are purchased:
--------------- Shares (fill in)
Dated: , 2000
- --------------------------------- ---------------------------------------
Signature
2
<PAGE> 3
GUARANTEE
The undersigned, a firm or other entity that is a member in good standing
of the Security Transfer Agent's Medallion Program, hereby: (a) represents that
the above named person(s) "own(s)" the Shares tendered hereby within the meaning
of Rule 14e-4 under the Securities Exchange Act of 1934, as amended; (b)
represents that the tender of such Shares complies with Rule 14e-4; and (c)
guarantees to deliver to American Stock Transfer & Trust Company, the
Depositary, certificates representing the Shares tendered hereby, in proper form
for transfer (or to tender Shares pursuant to the procedure for book-entry
transfer into the Depositary's account at the Depository Trust Company if so
specified on the foregoing page), together with a properly completed and duly
executed Letter of Transmittal with any required signature guarantees, and any
other required documents, within three Nasdaq trading days after the date of
receipt hereof by the Depositary.
Name of Firm:
--------------------------------------
(PLEASE PRINT)
Authorized Signature:
--------------------------------------
Name:
--------------------------------------
Title:
--------------------------------------
Address:
--------------------------------------
(INCLUDE ZIP CODE)
--------------------------------------
(AREA CODE AND TELEPHONE NUMBER)
Dated:
- ---------------------------------, 2000
3
<PAGE> 1
OFFER BY
K-TRON INTERNATIONAL, INC.
TO PURCHASE FOR CASH 450,000 SHARES
AT $18.00 PER SHARE
TO: BROKERS, DEALERS, COMMERCIAL BANKS, TRUST COMPANIES AND
OTHER NOMINEES:
Pursuant to your request, we are enclosing herewith the material listed
below relating to the offer by K-Tron International, Inc. (the "Company") to
purchase 450,000 shares of its issued and outstanding common stock ("Shares") at
a price equal to $18.00 per Share, subject to the terms and conditions set forth
in the Offer to Purchase, dated February 16, 2000, and the related Letter of
Transmittal (which together constitute the "Offer").
THE OFFER EXPIRES AT 5:00 P.M., NEW YORK CITY TIME, ON MARCH 17, 2000,
UNLESS EXTENDED (THE "EXPIRATION DATE").
The following documents are enclosed:
(1) OFFER TO PURCHASE DATED FEBRUARY 16, 2000;
(2) LETTER OF TRANSMITTAL TO ACCOMPANY SHARES OF COMMON STOCK;
(3) GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION NUMBER;
(4) NOTICE OF GUARANTEED DELIVERY;
(5) LETTER TO CLIENTS, WHICH SHOULD BE SENT TO CLIENTS FOR WHOSE
ACCOUNT 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;
(6) RETURN ENVELOPE ADDRESSED TO THE DEPOSITARY; AND
(7) LETTER TO SHAREHOLDERS FROM EDWARD B. CLOUES, II, CHAIRMAN OF THE
BOARD AND CHIEF EXECUTIVE OFFICER OF K-TRON INTERNATIONAL, INC.
PLEASE NOTE THAT THE EXPIRATION DATE AND THE WITHDRAWAL DEADLINE IS 5:00 P.M.,
NEW YORK CITY TIME, ON MARCH 17, 2000, UNLESS EXTENDED.
WE URGE YOU TO CONTACT YOUR CLIENTS PROMPTLY.
No fees or commissions will be payable to brokers, dealers or other persons
for soliciting tenders of Shares pursuant to the Offer. The Company will,
however, upon request, reimburse brokers, dealers, commercial banks and trust
companies for reasonable and necessary costs and expenses incurred by them in
forwarding materials to their customers. The Company will pay all transfer taxes
on its purchase of Shares, subject to Instruction 6 of the Letter of
Transmittal. Backup tax withholding at a 31% rate may be required unless an
exemption is proved or unless the required taxpayer identification information
is or has previously been provided. Certain withholdings may also apply with
respect to payments to non-U.S. shareholders. See Instruction 11 of the Letter
of Transmittal.
<PAGE> 2
The Offer is not being made to (nor will tenders be accepted from or on
behalf of) shareholders residing in any jurisdiction in which the making of the
Offer or acceptance thereof would not be in compliance with the laws of such
jurisdiction.
Additional copies of the enclosed material may be obtained from D. F. King
& Co., Inc., the Information Agent (bankers and brokers call collect (212)
269-5550, all others call toll free (800) 755-7250). Any question you have with
respect to the Offer should be directed to the Information Agent at one of the
telephone numbers listed in the previous sentence.
Very truly yours,
K-TRON INTERNATIONAL, INC.
NOTHING CONTAINED HEREIN OR IN THE ENCLOSED DOCUMENTS SHALL CONSTITUTE YOU OR
ANY OTHER PERSON AS THE AGENT OF THE COMPANY, THE DEPOSITARY OR THE INFORMATION
AGENT OR AUTHORIZE YOU OR ANY OTHER PERSON (A) TO MAKE ANY STATEMENTS WITH
RESPECT TO THE OFFER, OTHER THAN THE STATEMENTS SPECIFICALLY SET FORTH IN THE
OFFER TO PURCHASE AND THE LETTER OF TRANSMITTAL, OR (B) TO DISTRIBUTE ANY
MATERIAL WITH RESPECT TO THE OFFER OTHER THAN AS AUTHORIZED HEREIN.
2
<PAGE> 1
OFFER BY
K-TRON INTERNATIONAL, INC.
TO PURCHASE FOR CASH
To Our Clients:
Enclosed for your consideration are the Offer to Purchase, dated February
16, 2000 (the "Offer to Purchase"), of K-Tron International, Inc. (the
"Company") and the related Letter of Transmittal, pursuant to which the Company
is offering to purchase 450,000 shares of its issued and outstanding common
stock ("Shares"), for cash of $18.00 per Share, subject to the terms and
conditions set forth in the Offer to Purchase and the related Letter of
Transmittal (which together constitute the "Offer").
THE OFFER EXPIRES AT 5:00 P.M., NEW YORK CITY TIME, ON MARCH 17, 2000
UNLESS EXTENDED (THE "EXPIRATION DATE").
The Offer to Purchase and the Letter of Transmittal are being forwarded to
you as the beneficial owner of Shares held by us for your account but not
registered in your name. We are sending you the Letter of Transmittal for your
information only; you cannot use it to tender Shares we hold for your account. A
tender of such Shares can be made only by us as the holder of record and only
pursuant to your instructions.
Your attention is called to the following:
(1) The purchase price is $18.00 per Share, subject to the terms and
conditions set forth in the Offer to Purchase and the related Letter of
Transmittal.
(2) The Offer is for 450,000 of the issued and outstanding Shares of
the Company and is subject to certain conditions set forth in the Offer to
Purchase. Under the conditions described in the Offer to Purchase, the
Company may reduce the number of Shares to be purchased, terminate or amend
the Offer, or postpone acceptance for payment of, payment for, or purchase
of any Shares.
(3) The Offer is not conditioned on any minimum number of Shares being
tendered.
(4) Assuming more than 450,000 Shares are duly tendered prior to the
expiration of the Offer (as may be extended), the Company will purchase
Shares from tendering shareholders in accordance with the terms and
conditions specified in the Offer to Purchase pro rata in accordance with
the number of Shares tendered by each shareholder during the period the
Offer remains open, unless the Company determines not to purchase any
Shares.
(5) Tendering shareholders will not be obligated to pay brokerage
commissions or, subject to Instruction 6 of the Letter of Transmittal,
transfer taxes on the purchase of Shares by the Company pursuant to the
Offer; however, a broker, dealer or other person may charge a fee for
processing the transactions on behalf of shareholders. Shareholders are not
required to pay a service charge to the Company or the Depositary in
connection with their tender of Shares.
If you wish to have us tender your Shares, please so instruct us by
completing, executing and returning to us the instruction form included herein.
YOUR INSTRUCTIONS SHOULD BE FORWARDED TO US IN AMPLE TIME TO PERMIT US TO
SUBMIT A TENDER ON YOUR BEHALF ON OR BEFORE THE EXPIRATION OF THE OFFER. THE
EXPIRATION DATE AND WITHDRAWAL DEADLINE IS 5:00 P.M., NEW YORK CITY TIME, ON
MARCH 17, 2000, UNLESS EXTENDED.
This Offer it not being made to (nor will tenders be accepted from or on
behalf of) owners of Shares in any jurisdiction in which the Offer or its
acceptance would violate the laws of such jurisdiction.
<PAGE> 2
INSTRUCTIONS REGARDING THE OFFER BY
K-TRON INTERNATIONAL, INC.
TO PURCHASE FOR CASH 450,000 SHARES
AT $18.00 PER SHARE
THIS FORM IS NOT TO BE USED TO TENDER SHARES DIRECTLY TO THE DEPOSITARY. IT
SHOULD BE SENT TO YOUR BROKER, DEALER, COMMERCIAL BANK, TRUST COMPANY OR OTHER
NOMINEE ONLY IF SUCH FIRM IS THE HOLDER OF RECORD OF YOUR SHARES AND WILL BE
EFFECTING THE TENDER ON YOUR BEHALF. THE DEPOSITARY MUST RECEIVE YOUR SHARES ON
OR PRIOR TO MARCH 17, 2000.
DO NOT COMPLETE THIS FORM IF YOU HAVE DECIDED NOT TO TENDER YOUR SHARES.
The undersigned acknowledge(s) receipt of your letter and the enclosed
Offer to Purchase, dated February 16, 2000, and the related Letter of
Transmittal (which together constitute the "Offer") in connection with the Offer
by K-Tron International, Inc. (the "Company") to purchase 450,000 shares of its
issued and outstanding common stock, par value $.01 per share ("Shares"), at
$18.00 per Share, expiring on March 17, 2000 (or, if the Offer is extended, on
the new Expiration Date), on the terms and subject to the conditions of the
Offer.
The undersigned hereby instructs you to tender to the Company the number of
Shares indicated below or, if no number is indicated, all Shares held by you for
the account of the undersigned, upon the terms and subject to the conditions of
the Offer.
The undersigned hereby represents and warrants that: (i) the undersigned
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; and
(ii) the tender of such shares complies with Rule 14e-4.
NUMBER OF SHARES TO BE TENDERED
____________ Shares*
* Unless otherwise indicated, it will be assumed by us that all of the Shares
held by us for your account are to be tendered.
CONDITIONAL TENDER
By completing this box, the undersigned conditions the tender authorized hereby
on the following minimum number of Shares being purchased if any are purchased:
____________ Shares
Unless this box is completed, the tender authorized hereby will be made
unconditionally.
2
<PAGE> 3
<TABLE>
<S> <C>
Account Number: -----------------------------------------------------
Tax Identification or Social Security Number: -----------------------------------------------------
-----------------------------------------------------
Name(s) of Beneficial Owner(s): (PLEASE PRINT)
-----------------------------------------------------
(PLEASE PRINT)
-----------------------------------------------------
(PLEASE PRINT)
Address: -----------------------------------------------------
-----------------------------------------------------
-----------------------------------------------------
-----------------------------------------------------
Area Code and Telephone Number: (SIGNATURE OF BENEFICIAL OWNER)
-----------------------------------------------------
(SIGNATURE OF ADDITIONAL BENEFICIAL OWNER, IF ANY)
Date: ------------------------, 2000
</TABLE>
3
<PAGE> 1
K-Tron International, Inc. [K-TRON LOGO]
Routes 55 & 553
P.O. Box 888
Pitman, NJ 08071-0888
Phone (856) 589-0500
Direct Dial (856) 256-3310
FAX (856) 582-7968
E-mail: [email protected]
www.ktron.com
EDWARD B. CLOUES, II
Chairman and Chief Executive Officer
February 16, 2000
Dear Shareholder:
Enclosed is a copy of K-Tron International, Inc.'s offer to purchase dated
February 16, 2000 (the "Offer to Purchase") 450,000 shares of its issued and
outstanding common stock ("Shares"), at a price of $18.00 per Share, subject to
the terms and conditions set forth in the Offer to Purchase and the related
Letter of Transmittal (which together constitute the "Offer").
THE OFFER EXPIRES AT 5:00 P.M., NEW YORK CITY TIME, ON MARCH 17, 2000,
UNLESS EXTENDED.
If, after reviewing the information set forth in the Offer to Purchase and
Letter of Transmittal, you wish to tender Shares for purchase by K-Tron
International, Inc. (the "Company"), please contact your broker, dealer,
commercial bank, trust company or other nominee to effect the tender for you or,
if you have the certificates for your Shares and they are in your name, you may
follow the instructions contained in the Offer to Purchase and Letter of
Transmittal. Tendering shareholders will not be obligated to pay brokerage
commissions or, subject to Instruction 6 of the Letter of Transmittal, transfer
taxes, on the purchase of Shares by the Company pursuant to the Offer; however,
a broker, dealer or other person may charge a fee for processing the
transactions on behalf of shareholders. Shareholders are not required to pay a
service charge to the Company or to American Stock Transfer & Trust Company, the
Depositary, in connection with their tender of Shares.
Neither the Company nor its Board of Directors is making any recommendation
to any holder of Shares as to whether to tender Shares. Each shareholder is
urged to consult his or her broker, investment advisor or tax advisor before
deciding to tender any Shares.
Should you have any other questions on the enclosed material, please do not
hesitate to contact your broker, dealer or other nominee or call D. F. King &
Co., Inc., the Information Agent, toll free at (800) 755-7250.
Yours truly,
/s/ Edward B. Cloues, II
Edward B. Cloues, II
Chairman and Chief Executive Officer
<PAGE> 1
(b)(1)
Prepared by:
JEFFREY G. ALBERTSON, ESQ.
Albertson Ward
36 Euclid Street, P.O. Box 685
Woodbury, NJ 08096
(856) 853-7770
NOTE
$7,000,000.00 WOODBURY, NEW JERSEY
February 4, 2000
BETWEEN the Borrower(s) K-TRON AMERICA, INC., A DELAWARE CORPORATION,
whose address is Routes 55 and 553, P.O. Box 888, Pitman, New Jersey 08071-0888,
referred to as "Borrower".
AND the Lender, THE BANK of Gloucester County, whose address is 100
Park Avenue, Woodbury, New Jersey 08096, referred to as "THE BANK".
The word "THE BANK" means the original Lender and anyone else who takes
this Note by transfer.
BORROWER'S PROMISE TO PAY PRINCIPAL AND INTEREST. In return for the
loan that Borrower may receive hereunder, Borrower promises to pay the maximum
principal sum of $7,000,000.00 or such lesser amount as may be advanced by THE
BANK as hereinafter set forth (called "principal"), plus interest to the order
of THE BANK. The Borrower may borrow up to one-half of the amount of the loan,
not to exceed $3,500,000.00, on a fixed interest rate basis, and all or any part
of the loan on a floating rate basis as Borrower elects at time of funding under
this Note. Interest will be charged on that part of the principal which has not
been paid from the date of funding of this Note until all principal has been
paid. Interest shall be calculated hereunder for the actual number of days that
principal is outstanding based on a year of 360 days. Interest rate charged
shall be as follows:
<PAGE> 2
1. For the fixed rate portion of the Note, a fixed interest rate equal
to the two (2) year Treasury rate plus 175 basis points, such rate to be
determined as of the date of funding under the terms of this Note. Said rate
established at time of funding shall be fixed for two (2) years from the date of
funding of the Note. At the two (2) year anniversary of the funding under the
terms of this Note, the rate on this fixed interest rate portion of the Note
shall change to the variable rate of interest described in paragraph 2 below,
unless the Borrower then elects to accept a fixed rate option to be determined
and offered by THE BANK at that time.
2. For the floating rate portion of the Note, a variable interest rate
equal to the one (1) month LIBOR rate plus 185 basis points. The rate of
interest shall be established on the twenty-fifth (25th) day of each calendar
month, or the next business day thereafter, and said interest rate to commence
on the first business day of each calendar month thereafter. For purpose of this
Note, LIBOR interest rate shall be defined as the rate of interest equal to the
sum of (a) the London Interbank Offered Rate (LIBOR) for maturities of one (1)
month, expressed as an annual yield, as reported in the Wall Street Journal or a
comparable source on the date the quote by THE BANK is given (the "LIBOR Index
Rate"); and (b) 185 basis points. The rate of interest so established shall
remain in effect until the first business day of the succeeding calendar month,
at which time the rate of interest shall be reestablished as provided herein.
The interest rate established at time of funding under the terms of this Note
shall be the same as if established on the first of said month.
TERM AND PAYMENTS. Borrower will pay principal together with interest
accrued based on a FOUR (4) YEAR schedule with equal principal monthly payments,
PLUS INTEREST AS SET FORTH ABOVE commencing on MAY 1, 2000 and continuing on the
first business day of each month thereafter during the term hereof with a final
payment to be due and payable on the FIRST DAY OF
-2-
<PAGE> 3
APRIL 2004. An amount of each principal payment equal to 1/48th of the amount
borrowed under the fixed rate portion shall be allocated to the fixed rate
portion of the loan, and the balance to the variable rate portion. All payments
will be made to THE BANK at the address shown above or to a different place if
required by THE BANK.
SECURITY. The Borrower hereunder has delivered as security for this
instrument a second mortgage bearing even date herewith covering premises
designated on the official tax map as Lot 3.01, Block 249, Township of Mantua,
Gloucester County, New Jersey, which Mortgage is about to be recorded in the
office of the Clerk of Gloucester County. The provisions of any mortgage given
as security for this Note are incorporated herein by reference. Further, the
Borrower shall deliver a second lien perfected security interest in the accounts
receivable, inventory, machinery and equipment now owned or hereafter acquired
by Borrower located at Routes 55 and 553, Pitman, New Jersey 08071 and Suite
601, VPR Commerce Center, 1001 Lower Landing Road, Blackwood, New Jersey 08012.
Borrower shall also deliver the Guaranty of K-Tron International, Inc.
("Guarantor").
PREPAYMENT PENALTY: This Note may be prepaid at any time, subject to
the following provision. There shall be a Prepayment Penalty on the fixed
interest rate portion of this Note as set forth above in the amount of 2% OF THE
AMOUNT OF PREPAYMENT AS DEFINED HEREIN for the first two (2) years following
funding under the terms of this Note, provided however that the Borrower may
prepay up to 30% of the principal balance per year without penalty. The said 30%
shall be calculated on the original principal balance or the outstanding
principal balance at the beginning of each anniversary of funding under the
terms of this Note, as applicable. After two (2) years from funding under the
terms of this Note, the balance on the fixed interest rate portion of this
-3-
<PAGE> 4
Note may be prepaid without penalty. At no time will there be a prepayment
penalty on the variable interest rate portion of this Note.
BORROWER COVENANTS. Borrower agrees that until all obligations under
the terms of this Note and the loan commitment dated January 21, 2000 are fully
paid and discharged, without prior written consent of THE BANK:
A. The consolidated debt to net worth ratio of Guarantor shall not be
more than 1.55 at fiscal year-end 2000 or more than 1.50 at fiscal year-end 2001
and each fiscal year-end thereafter.
B. The consolidated annual debt coverage ratio of Guarantor at each
fiscal year-end shall not be less than 1.20.
C. The consolidated net worth of Guarantor shall not be less than
$22,000,000.00 at fiscal year-end 2000 or less than $24,000,000.00 at fiscal
year-end 2001 and each fiscal year-end thereafter, excluding any declines due to
changes in foreign exchange rates subsequent to January 1, 2000.
D. There shall be no additional borrowing of funded debt by Guarantor
or its subsidiaries from any party other than THE BANK in an amount greater than
the sum of (i) $2,000,000.00 above the borrowings on Guarantor's consolidated
January 1, 2000 financial statements, exclusive of changes in borrowings due to
foreign exchange rate changes, and (ii) the difference between $12,000,000.00
and the amount of Borrower's borrowings from THE BANK outstanding at the time of
any such additional borrowing, excluding the existing $2,700,000.00 mortgage for
all purposes of this calculation.
E. There shall be no upstreaming of funds from Borrower to Guarantor or
K-Tron Technologies, Inc. except for management fees consistent with past
practice and royalties paid in the
-4-
<PAGE> 5
ordinary course of business at the new royalty rate established as of January 2,
2000, and except for dividends paid with the proceeds of this loan.
F. For two (2) years from the date of funding under the terms of this
Note, there shall be no mergers or acquisitions by Guarantor or its subsidiaries
involving consideration of more than $2,000,000.00.
LATE CHARGE: The effective date of the receipt by the holder of any
installment of this Note shall be the day on which the holder receives cash or
collected funds at the place of payment as specified herein in payment of any
such installment. Borrower shall be entitled to a FIFTEEN (15) DAY grace period
after which period a "late charge" of $0.05 FOR EACH $1.00 SO OVERDUE OR $25.00
WHICHEVER IS GREATER, NOT TO EXCEED $1,000.00 may be charged by the holder for
the purpose of defraying the expense incident to handling such delinquent
payment.
DEFAULT: If any installment of this Note or interest payment is not
paid within 15 days of the date and at the place herein specified and after THE
BANK has given the Borrower fifteen (15) days written notice to cure said
default, THE BANK may at its option, and without further notice declare this
Note to be in default and the entire principal balance then remaining unpaid
together with all interest which shall have accrued on the unpaid principal
balance from and after the date of such default shall be due and payable in full
without notice.
It shall be a default of this Note if Borrower shall default in any
payment of principal or interest on any indebtedness or contingent obligation
for money borrowed (other than Borrower's obligations under this Note) or any
other event shall occur, the effect of which is to permit such indebtedness or
contingent obligation to be declared or such indebtedness or contingent
obligation shall otherwise become due prior to its stated maturity, provided,
however, that this provision shall
-5-
<PAGE> 6
not apply concerning obligations other than Borrower's obligations under this
Note unless the amount involved exceeds $50,000.00.
If a default shall occur in this loan and not be cured as provided in
the loan documents or otherwise agreed to by THE BANK, THE BANK shall, after
declaring the loan to be in default, have the right to increase the interest
rate TWO (2%) PERCENT PER YEAR in excess of the note rate. This provision is in
addition to any late charges that may be due.
ATTORNEY'S FEE: If this Note is placed in the hands of an attorney for
collection because of a default in the terms hereof or in the terms of the
mortgage given as security for the within obligation, the undersigned agrees to
pay the reasonable fees and costs of such attorney, whether or not legal action
is instituted and further consents that if a judgment is entered in any action
the amount of such fees shall form a part of such judgment in addition to any
fees allowed by Statute or Rule of the Court.
COMMITMENT LETTER COMPLIANCE: Funding under this Note is contingent
only upon Borrower's compliance with all of the terms and conditions contained
in the commitment letter issued by THE BANK to Borrower on January 21, 2000.
Also upon breach of any term or condition contained therein THE BANK shall have
the right to declare this loan in default and demand payment in full of the
principal balance remaining unpaid, together with all interest which shall have
accrued thereon. Further, providing the said commitment letter so provides, THE
BANK reserves the right to increase the interest rate in accordance with the
provisions of the loan commitment for failure of the Borrower or any guarantor
to submit required financial information within thirty days of the date of
request by THE BANK.
-6-
<PAGE> 7
PAYMENT AT MATURITY: THIS LOAN IS PAYABLE IN FULL AT MATURITY OR UPON
DEMAND IN THE EVENT OF A DEFAULT HEREUNDER OR DEFAULT UNDER THE MORTGAGE
SECURING THIS NOTE OR DEFAULT UNDER THE TERMS OF ANY OTHER APPLICABLE LOAN
INSTRUMENT. YOU MUST REPAY THE ENTIRE PRINCIPAL BALANCE OF THE LOAN AND UNPAID
INTEREST THEN DUE. THE BANK IS UNDER NO OBLIGATION TO REFINANCE THE LOAN AT THAT
TIME.
WAIVER OF PRESENTMENT: EACH AND ALL PARTIES hereto whether maker,
endorsers, sureties, guarantor or otherwise do hereby jointly and severally
waive presentment and demand for payment, notice of dishonor, protest and notice
of protest.
INCONSISTENCY: In the event of any inconsistency between this Note and
any other loan document, this Note shall govern.
IN WITNESS WHEREOF, the Borrower hereunder has hereunto set its hands
and seals the day and year first above written.
ATTEST: K-TRON AMERICA, INC.
BY:
/s/ MARY VACCARA /s/ PATRICIA M. MOORE
- ------------------------------------- ---------------------------------
MARY VACCARA, SECRETARY PATRICIA M. MOORE,
VICE PRESIDENT-FINANCE
-7-
<PAGE> 8
100 Park Avenue
Woodbury, New Jersey 08096
(856) 845-0700
January 21, 2000
Edward B. Cloues, II
K-Tron America, Inc.
Routes 55 & 553 P.O. Box 888
Pitman, New Jersey 08071-0888
Dear Mr. Cloues:
This commitment letter replaces the one dated January 19, 2000, which is now
null and void.
We are pleased to advise you that The Bank of Gloucester County ("The Bank") has
approved your request for a Term Loan under the following terms and conditions:
BORROWER: K-Tron America, Inc.
GUARANTOR: K-Tron International, Inc.
AMOUNT: up to $7,000,000.00
USE OF PROCEEDS: The loan proceeds shall be used to finance
the purchase by K-Tron International, Inc.
of up to 450,000 shares of K-Tron
International, Inc. stock.
INTEREST RATE: Variable Interest Rate Option:
A variable interest rate equal to the one
(1) month LIBOR rate plus 185 basis points,
such rate to change as of the first business
day of each calendar month.
<PAGE> 9
K-Tron America, Inc.
January 19, 2000
Page 2 of 9
Fixed Interest Rate Option:
For up to $3,500,000.00 or one-half the loan
amount, whichever is less, a fixed interest
rate equal to the two (2) year Treasury rate
plus 175 basis points, such rate to be
determined as of the date of the note. Said
rate shall be fixed for two (2) years from
the date of the note. At the two (2) year
anniversary of the note, the rate on the
Fixed Interest Rate portion of the loan
shall change to a variable rate as described
under Variable Interest Rate Option above,
unless the Borrower then elects to accept a
fixed rate option to be determined and
offered by The Bank at that time.
Of the balance of this loan for which
Borrower now elects not to take the Fixed
Interest Rate Option, said balance shall
accrue interest at the Variable Interest
Rate Option described above.
COMMITMENT FEE: None
TERM OF LOAN
AND
REPAYMENT TERMS: The loan is to be repayable in forty-seven
(47) monthly principal installments of
$145,833.33, plus interest, and one final
payment of the remaining principal balance
and interest owing in the forty-eighth
(48th) month. Payments shall commence one
month from the date of settlement of the
loan.
In the event that less than $7 million is
borrowed hereunder, the amount of the
monthly principal installment shall be
correspondingly reduced so that the amount
borrowed is scheduled to amortize over 48
months.
COLLATERAL: This loan is to be secured by:
1. Second lien perfected security interest,
subject only to The Bank's first lien
security interest, in the
<PAGE> 10
K-Tron America, Inc.
January 19, 2000
Page 3 of 9
accounts receivable, inventory, machinery
and equipment now owned or hereafter
acquired by Borrower located at Routes 55
and 553, Pitman, NJ 08071 and Suite 601, VPR
Commerce Center, 1001 Lower Landing Road,
Blackwood, NJ 08012.
2. Second mortgage, behind The Bank's $2.7
million first mortgage, on the commercial
real estate located at Routes 55 & 553
(Block 249 Lot 3.01) in Mantua Township, New
Jersey ("Mortgaged Property").
3. The corporate unconditional, unlimited
guarantee of K-Tron International, Inc.
ATTORNEY: The Bank will be represented in this
transaction by Jeffrey G. Albertson,
Esquire, of Albertson Ward, 36 Euclid
Street, Woodbury, New Jersey 08096,
856-853-7770. All documents pertaining to
this transaction must be prepared by or
reviewed by the Bank's attorney. All fees
charged by The Bank's counsel in connection
with this transaction shall be borne by the
Borrower.
The Borrower shall have the right to be
represented in this transaction by an
attorney of the Borrower's selection, whose
fee shall be borne by the Borrower.
Upon acceptance of this commitment, the
Borrower shall contact Mr. Albertson's
office concerning the loan closing
procedure.
OTHER CONDITIONS The funding of this commitment and the
satisfactory continuance of this Term Loan
are contingent upon:
1. The loan documents shall include a
fifteen (15) day default clause. The
Borrower shall have fifteen (15) days to
cure said default after receiving written
notice of same. The loan documents shall
include a due on transfer clause. The Bank
shall require the
<PAGE> 11
K-Tron America, Inc.
January 19, 2000
Page 4 of 9
maintenance of adequate insurance coverage
on the Mortgaged Property and require
payment of real estate taxes, when due. A
hazard insurance policy must be obtained for
a term of not less than one year. The
original insurance policy and proof that the
first year's premium is paid must be
provided at settlement. The policy must be
dated on or before the date of settlement,
must provide coverage in an amount not less
than the lesser of (i) this loan balance or
(ii) $2,700,000.00, and the "Mortgagee
Clause" must indicate: The Bank of
Gloucester County, its successors and/or
assigns, 100 Park Avenue, Woodbury, NJ
08096.
2. The loan documents shall contain such
other provisions as The Bank or its counsel
may deem appropriate in order to maintain
the adequacy of its security and primarily
obligate the Borrower and Guarantor for
repayment of the loan. This commitment and
the obligations and undertakings therein
shall be incorporated in the loan documents
and become an integral part thereof.
3. In regard to the second mortgage on the
Mortgaged Property located at Routes 55 &
553 (Block 249 Lot 3.01) in Mantua Township,
New Jersey:
A. The Bank is in receipt
of a satisfactory
appraisal on the Mortgaged
Property.
B. Receipt by the Bank of
a satisfactory title
report and superior court
searches which must
indicate that our lien
position on Mortgaged
Property is a second lien
position, the cost of
which is to be borne by
the Borrower.
C. If flood insurance is
required at settlement or
subsequently the Mortgaged
Property becomes
designated by HUD as
<PAGE> 12
K-Tron America, Inc.
January 19, 2000
Page 5 of 9
containing special flood
or mud-slide hazards, then
in accordance with Federal
regulations evidence of
coverage and proof that
the first year's premium
is paid will be required.
The Flood Insurance
Policy, if required, must
be in an amount not less
than the lesser of (i)
this loan balance or (ii)
the fair market value of
the Mortgaged Property,
and the "Mortgagee Clause"
must indicate: The Bank of
Gloucester County, its
successors and/or assigns,
100 Park Avenue, Woodbury,
NJ 08096.
4. Receipt by The Bank of a Corporate Status
Search for the Borrower and Guarantor, the
cost of which shall be borne by the
Borrower.
5. Receipt by the Bank of satisfactory state
and county UCC searches, which must indicate
that our lien position on the assets of the
Borrower, referenced above, is in second
position, subject only to The Bank's first
position, the cost of which is to be borne
by the Borrower.
6. Receipt by the Bank of acceptable current
financial statements and annual updates on
the Borrower and Guarantor. The updates for
financial statements and tax returns are to
be submitted within thirty (30) days of the
date requested by the Bank. Should the
Borrower or Guarantor fail to submit
required financial information within 30
days of the date of request, the Bank may,
at its sole option, increase the interest
rate on the note by one half (1/2) of one
(1) percent per annum.
7. The Borrower must develop and maintain
with The Bank a meaningful deposit
relationship satisfactory to The Bank.
8. If a default shall occur in this loan and
not be cured as provided in the loan
documents or otherwise agreed to by THE
BANK, THE BANK
<PAGE> 13
K-Tron America, Inc.
January 19, 2000
Page 5 of 9
shall, after declaring the loan to be in
default, have the right to increase the
applicable interest rate to two (2%) percent
in excess of the contract rate. This
provision is in addition to any late charges
that may be due.
9. Borrower and Guarantor agree that until
all obligations hereunder are fully paid and
discharged, Borrower and Guarantor will not
without the prior written consent of The
Bank:
A. Permit the consolidated
debt to worth ratio of
Guarantor to be more than
1.55 at fiscal year-end
2000 or more than 1.50 at
fiscal year-end 2001 and
each fiscal year-end
thereafter.
B. Permit the consolidated
annual debt coverage ratio
of Guarantor to be less
than 1.20.
C. Permit the consolidated
net worth of Guarantor to
be less than $22 million
at fiscal year-end 2000 or
less than $24 million at
fiscal year-end 2001 and
each fiscal year-end
thereafter.
D. Permit additional
borrowing elsewhere by
Guarantor or its
subsidiaries in an amount
greater than the sum of
(i) $2 million above the
borrowings on Guarantor's
consolidated 1/1/00
financial statements,
exclusive of changes in
borrowings due to foreign
exchange rate changes, and
(ii) the difference
between $12 million and
the amount of Borrower's
borrowings from The Bank
outstanding at the time of
any such additional
borrowing, excluding the
existing $2.7 million
mortgage for all purposes
of this calculation.
<PAGE> 14
K-Tron America, Inc.
January 19, 2000
Page 7 of 9
E. Permit upstreaming of
funds from Borrower to
Guarantor or K-Tron
Technologies, Inc. except
for management fees
consistent with past
practice and royalties
paid in the ordinary
course of business at the
new royalty rate
established as of January
2, 2000, and except for
dividends paid in
connection with the
proceeds of this loan.
F. For two years from the
date of the loan, permit
mergers or acquisitions by
Guarantor or its
subsidiaries involving
consideration of more than
$2 million without the
written approval of The
Bank.
10. As to the amount borrowed under the
Fixed Interest Rate Option, Borrower shall
have the right at any time during the term
hereof to prepay all or a part of the
principal balance then outstanding under the
note upon payment of the premiums and
charges hereinafter set forth. A principal
prepayment shall be deemed to have occurred
upon Borrower's payment to The Bank in any
Loan Year during the first two (2) Loan
Years of the note of any sum in reduction of
principal which exceeds 30% of the
outstanding principal balance at the
beginning of that Loan Year, excluding
principal payments (including scheduled
amortization) the Borrower is obligated to
make under any other term or provision of
the note, the mortgage securing the note or
any other document constituting a part of
the loan transaction evidenced by the note.
Upon the occurrence of a principal
prepayment including prepayment of the
entire debt, The Bank shall be entitled to
charge and Borrower shall be obligated to
pay, in addition to interest and all other
charges then properly due, a prepayment
premium equal to 2% of the amount prepaid.
No premium shall be charged on any principal
reduction made after the second (2nd)
anniversary of the note. The term "Loan
Year" as used herein is defined as any
period
<PAGE> 15
K-Tron America, Inc.
January 19, 2000
Page 8 of 9
of one year commencing on the date of the
note or on any anniversary of such date.
At no time will there be a prepayment
penalty on the Variable Interest Rate
portion of the loan.
This commitment will expire at the end of fifteen (15) days from the date hereof
unless written acceptance is received from the Borrower, and in any case, at the
end of sixty (60) days from the date hereof if settlement has not been held
hereunder. Your signature and return of the enclosed copy of this letter shall
constitute written acceptance. Upon acceptance of this commitment, borrower
agrees to reimburse The Bank of Gloucester County for all expenses incurred for
ordering appraisals, surveys, title insurance, environmental evaluations, and
the like as may be necessary to meet the requirements on this loan commitment.
IMPORTANT: THE BANK (AND ITS COUNSEL) CANNOT BEGIN PROCESSING YOUR LOAN UNTIL
YOU HAVE RETURNED THIS EXECUTED COMMITMENT LETTER TO THE BANK. FURTHERMORE, YOUR
ELECTIONS AS TO THE AMOUNT BORROWED AND THE INTEREST RATE OPTIONS MUST BE MADE
NO LESS THAN TEN (10) DAYS PRIOR TO THE CLOSING OF THIS LOAN.
Sincerely,
The Bank of Gloucester County
/s/ DAVID J. HANRAHAN, SR.
David J. Hanrahan, Sr.
Vice President
<PAGE> 16
K-Tron America, Inc.
January 19, 2000
Page 9 of 9
NOTICE
PURSUANT TO THE PROVISIONS OF N.J.S.A. 46:10A-6, AS AMENDED, YOU ARE PUT ON
NOTICE THAT THE INTERESTS OF THE BORROWER AND LENDER ARE OR MAY BE DIFFERENT AND
MAY CONFLICT, AND THAT THE LENDER'S ATTORNEY REPRESENTS ONLY THE LENDER AND NOT
THE BORROWER AND THE BORROWER IS THEREFORE ADVISED TO EMPLOY AN ATTORNEY OF THE
BORROWER'S CHOICE LICENSED TO PRACTICE LAW IN THE STATE OF NEW JERSEY TO
REPRESENT THE INTERESTS OF THE BORROWER.
The fee of The Bank's counsel is based upon a fixed fee basis and is
estimated to be $3,000.00.
<TABLE>
ACCEPTED BY:
K-TRON AMERICA, INC.
<S> <C>
/s/ KEVIN C. BOWEN FEBRUARY 4, 2000
____________________________________ __________________
Kevin C. Bowen, President Date
/s/ MARY E. VACCARA FEBRUARY 4, 2000
____________________________________ __________________
Mary E. Vaccara, Corp. Secretary Date
GUARANTOR:
K-TRON INTERNATIONAL, INC.
/s/ EDWARD B. CLOUES, II FEBRUARY 4, 2000
____________________________________ __________________
Edward B. Cloues, II, Chairman/CEO Date
/s/ MARY E. VACCARA FEBRUARY 4, 2000
____________________________________ __________________
Mary E. Vaccara, Corp. Secretary Date
</TABLE>
