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EXHIBIT (a)(1)(i)
OFFER TO PURCHASE FOR CASH
ALL OUTSTANDING SHARES OF COMMON STOCK
OF
POLICY MANAGEMENT SYSTEMS CORPORATION
AT
$16.00 NET PER SHARE
BY
PATRIOT ACQUISITION CORP.,
A WHOLLY OWNED SUBSIDIARY OF
COMPUTER SCIENCES CORPORATION
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY
TIME, ON WEDNESDAY, JULY 26, 2000, UNLESS THE OFFER IS EXTENDED.
THIS OFFER IS BEING MADE PURSUANT TO THE AGREEMENT AND PLAN OF MERGER,
DATED AS OF JUNE 20, 2000 (THE "MERGER AGREEMENT"), AMONG COMPUTER SCIENCES
CORPORATION ("PARENT"), PATRIOT ACQUISITION CORP. ("PURCHASER") AND POLICY
MANAGEMENT SYSTEMS CORPORATION (THE "COMPANY"). THE BOARD OF DIRECTORS OF THE
COMPANY (THE "COMPANY BOARD") HAS UNANIMOUSLY APPROVED THE MERGER AGREEMENT, THE
OFFER AND THE MERGER (EACH AS DEFINED HEREIN), HAS UNANIMOUSLY DETERMINED THAT
THE OFFER AND THE MERGER ARE FAIR TO, AND IN THE BEST INTERESTS OF, THE HOLDERS
OF SHARES (AS DEFINED HEREIN) AND UNANIMOUSLY RECOMMENDS THAT STOCKHOLDERS
ACCEPT THE OFFER AND TENDER THEIR SHARES PURSUANT TO THE OFFER.
THE OFFER IS CONDITIONED UPON, AMONG OTHER THINGS, (I) THERE BEING VALIDLY
TENDERED AND NOT PROPERLY WITHDRAWN PRIOR TO THE EXPIRATION OF THE OFFER THAT
NUMBER OF SHARES WHICH, TOGETHER WITH ANY SHARES THEN BENEFICIALLY OWNED BY
PARENT OR PURCHASER AND EXCLUDING SHARES HELD BY THE COMPANY OR ANY OF ITS
SUBSIDIARIES, REPRESENTS AT LEAST TWO-THIRDS OF THE OUTSTANDING SHARES ON A
FULLY DILUTED BASIS (THE "MINIMUM TENDER CONDITION") AND (II) THE EXPIRATION OR
TERMINATION OF ANY APPLICABLE WAITING PERIOD UNDER THE HART-SCOTT-RODINO
ANTITRUST IMPROVEMENTS ACT OF 1976, AS AMENDED (THE "HSR ACT"), AND SIMILAR
STATUTES OR REGULATIONS OF FOREIGN JURISDICTIONS. THE OFFER ALSO IS SUBJECT TO
OTHER TERMS AND CONDITIONS.
------------------
IMPORTANT
Stockholders wishing to tender all or any portion of their shares of common
stock, par value $0.01 per share (the "Shares"), of the Company in the Offer
should either: (i) complete and sign the Letter of Transmittal (or a facsimile
thereof) in accordance with the instructions in the Letter of Transmittal and
mail or deliver the Letter of Transmittal and all other required documents to
the Depositary (as herein defined), together with certificates representing the
Shares tendered, (ii) follow the procedure for book-entry transfer set forth in
Section 3 of this Offer to Purchase -- "Procedures for Accepting the Offer and
Tendering Shares" or (iii) request such stockholder's broker, dealer, commercial
bank, trust company or other nominee to effect the transaction for the
stockholder. Stockholders having Shares registered in the name of a broker,
dealer, commercial bank, trust company or other nominee must contact such person
if they desire to tender such Shares.
Any stockholder who wishes to tender Shares and cannot deliver certificates
representing such Shares and all other required documents to the Depositary on
or prior to the date on which the Offer expires or who cannot comply with the
procedures for book-entry transfer on a timely basis may tender such Shares
pursuant to the guaranteed delivery procedure set forth in Section 3 of this
Offer to Purchase -- "Procedures for Accepting the Offer and Tendering Shares."
Questions and requests for assistance may be directed to the Information
Agent or the Dealer Manager at their respective addresses and telephone numbers
set forth on the back cover of this Offer to Purchase. Additional copies of this
Offer to Purchase, the Letter of Transmittal, the Notice of Guaranteed Delivery
and other related materials may be obtained from the Information Agent or the
Dealer Manager. Stockholders also may contact their broker, dealer, commercial
bank and trust companies or other nominee.
------------------
THE INFORMATION AGENT FOR THE OFFER IS:
MORROW & CO., INC.
THE DEALER MANAGER FOR THE OFFER IS:
GOLDMAN, SACHS & CO.
June 28, 2000
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TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
SUMMARY TERM SHEET.......................................... 1
INTRODUCTION................................................ 5
THE TENDER OFFER............................................ 6
1. Terms of the Offer.................................... 6
2. Acceptance of Payment and Payment for Shares.......... 8
3. Procedures for Accepting the Offer and Tendering
Shares................................................. 9
4. Withdrawal Rights..................................... 12
5. Material U.S. Federal Income Tax Considerations....... 12
6. Price Range of Shares................................. 13
7. Certain Information Concerning the Company............ 14
8. Selected Financial Information........................ 15
9. Certain Information Concerning Parent and Purchaser... 15
10. Source and Amount of Funds............................ 16
11. Background of the Offer; Past Contacts or Negotiations
with the Company....................................... 17
12. The Merger Agreement; Other Arrangements.............. 19
13. Purpose of the Offer; Plans for the Company........... 27
14. Certain Effects of the Offer.......................... 27
15. Dividends and Distributions........................... 28
16. Certain Conditions of the Offer....................... 28
17. Certain Legal Matters; Regulatory Approvals........... 30
18. Appraisal Rights...................................... 32
19. Fees and Expenses..................................... 32
20. Miscellaneous......................................... 33
SCHEDULE I: DIRECTORS AND EXECUTIVE OFFICERS OF PARENT AND
PURCHASER................................................. 34
1. Directors and Executive Officers of Parent............. 34
2. Directors and Executive Officers of Purchaser.......... 36
SCHEDULE II: DIRECTORS AND EXECUTIVE OFFICERS OF PARENT AND
PURCHASER WHO OWN SHARES OF THE COMPANY................... 37
</TABLE>
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SUMMARY TERM SHEET
Patriot Acquisition Corp., which is referred to in this offer to purchase
as "Purchaser," is offering to purchase all of the outstanding shares of common
stock of Policy Management Systems Corporation, which is referred to in this
offer to purchase as the "Company," for $16.00 per share in cash. The following
are some of the questions you may have, as a stockholder of Policy Management
Systems Corporation, followed by answers to those questions. We urge you to
carefully read the remainder of this offer to purchase and the accompanying
letter of transmittal because the information in this Summary Term Sheet is not
complete. Additional important information is contained in the remainder of this
offer to purchase and the letter of transmittal.
- WHO IS OFFERING TO BUY MY SECURITIES?
Our name is Patriot Acquisition Corp. and when this offer to purchase
mentions "Purchaser" it refers to us. We are a South Carolina corporation formed
for the purpose of making a tender offer for all of the outstanding shares of
Policy Management Systems Corporation. We are a wholly owned subsidiary of
Computer Sciences Corporation, a Nevada corporation. See Section 9 of this offer
to purchase -- "Certain Information Concerning Parent and Purchaser."
- WHAT SHARES ARE BEING SOUGHT IN THE OFFER?
We are seeking to purchase all of the outstanding shares of common stock of
Policy Management Systems Corporation. See "Introduction" and Section 1 of the
offer to purchase -- "Terms of the Offer."
- HOW MUCH ARE YOU OFFERING TO PAY, WHAT IS THE FORM OF PAYMENT AND WILL I HAVE
TO PAY ANY FEES OR COMMISSIONS?
We are offering to pay $16.00 per share, net to you, in cash, less any
required withholding of taxes and without the payment of interest. If you are
the record owner of your shares and you tender your shares to us in the offer,
you will not have to pay brokerage fees or similar expenses. If you own your
shares through a broker or other nominee, and your broker tenders your shares on
your behalf, your broker or nominee may charge you a fee for doing so. You
should consult your broker or nominee to determine whether any charges will
apply. We will not be obligated to pay for or reimburse you for such broker or
nominee charges. See the "Introduction" Section to this offer to purchase. In
addition, if you do not complete and sign the Substitute Form W-9 included in
the letter of transmittal, you may be subject to required backup federal income
tax withholding. See Instruction 9 to the letter of transmittal.
- DO YOU HAVE THE FINANCIAL RESOURCES TO MAKE PAYMENT?
We estimate that the total amount of funds required (1) to purchase all of
the outstanding shares of Policy Management Systems Corporation pursuant to the
offer and the merger, (2) to repay all of the debt of Policy Management Systems
Corporation that is anticipated to be outstanding upon the closing of the merger
and (3) to pay the expected transaction costs associated with the offer and the
merger, will be approximately $890 million. These funds will be provided to us
by our parent company, Computer Sciences Corporation. The offer is not
conditioned upon any financing arrangements. See Section 10 of the offer to
purchase -- "Source and Amount of Funds." Computer Sciences Corporation is one
of the world leaders in the information technology services industry. As of
March 31, 2000, its fiscal year-end, Computer Sciences Corporation had total
assets of $5,874 million and, for the year then ended, it had net income of $403
million. See Section 9 of the offer to purchase -- "Certain Information
Concerning Parent and Purchaser."
- IS YOUR FINANCIAL CONDITION RELEVANT TO MY DECISION TO TENDER IN THE OFFER?
We do not think our financial condition is relevant to your decision
whether to tender shares and accept the offer because:
- the offer is being made for all outstanding shares solely for cash,
- the offer is not subject to any financing conditions, and
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- if we consummate the offer, we will acquire all remaining shares for the
same cash price through the merger of Patriot Acquisition Corp. with and
into Policy Management Systems Corporation.
See Section 1 of the offer to purchase -- "Terms of the Offer."
- HOW LONG DO I HAVE TO DECIDE WHETHER TO TENDER IN THE OFFER?
The offer will expire at 12:00 midnight, New York City time, on July 26,
2000, unless we extend the offer. If you cannot deliver everything that is
required in order to make a valid tender by that time, you may be able to use a
guaranteed delivery procedure, which is described later in this offer to
purchase. See Sections 1 and 3 of the offer to purchase -- "Terms of the Offer"
and "Procedures for Accepting the Offer and Tendering Shares."
- CAN THE OFFER BE EXTENDED AND UNDER WHAT CIRCUMSTANCES?
Yes. We have agreed with Policy Management Systems Corporation that we may
extend the offer for one or more periods of not more than ten business days each
(but in no event later than December 31, 2000) if at the time the offer is
scheduled to expire (including at the end of any extension) any of the
conditions to the offer are not satisfied or waived by us or if we are required
to extend the offer by the rules of the Securities and Exchange Commission. We
also may extend the offer if more than 80% but less than 90% of the outstanding
shares have been tendered as of the scheduled or extended expiration date. In
addition, we are obligated, at the request of Policy Management Systems
Corporation, to extend the expiration date of the offer for one or more periods
of not more than ten business days each (but in no event later than December 31,
2000), if (i) any conditions set forth in the merger agreement have not been
satisfied or waived at the scheduled or extended expiration date of the offer,
(ii) the condition is reasonably capable of being satisfied and (iii) Policy
Management Systems Corporation is in material compliance with all of its
covenants in the merger agreement. See Section 1 of the offer to
purchase -- "Terms of the Offer."
- HOW WILL I BE NOTIFIED IF THE OFFER IS EXTENDED?
If we extend the offer, we will make a public announcement no later than
9:00 a.m., New York City time, on the next business day after the day on which
the offer was scheduled to expire. We also will inform ChaseMellon Shareholder
Services, L.L.C., the depositary for the offer, of the extension. See Section 1
of the offer to purchase -- "Terms of the Offer."
- WHAT ARE THE MOST SIGNIFICANT CONDITIONS TO THE OFFER?
We are not obligated to purchase any tendered shares unless the number of
tendered shares, when added to the shares then owned by Computer Sciences
Corporation and its affiliates but excluding any shares held by Policy
Management Systems Corporation or its affiliates, equals at least two-thirds of
the shares of Policy Management Systems Corporation outstanding on a fully
diluted basis. The offer is also subject to a number of other conditions
including the expiration or termination of any applicable waiting period under
the Hart-Scott-Rodino Antitrust Improvements Act of 1976 and similar statutes or
regulations of foreign jurisdictions. See Section 16 of the offer to
purchase -- "Certain Conditions of the Offer." The offer is not conditioned on
our receiving financing.
- HOW DO I TENDER MY SHARES?
If you are a record holder of shares of common stock of Policy Management
Systems Corporation and have your stock certificate(s), you must tender your
shares by delivering the certificates representing your shares, together with a
completed letter of transmittal, to ChaseMellon Shareholder Services, L.L.C.,
the depositary for the offer, not later than the time the tender offer expires,
or follow the procedures described in the offer to purchase for book-entry
transfer. If your shares are held in street name, the shares can be tendered by
your nominee through the depositary. If you are a record holder but your stock
certificate(s) is not available or you cannot deliver your stock certificate(s)
to the depositary by the expiration of the offer, you
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may be able to tender your shares using the attached Notice of Guaranteed
Delivery. See Section 3 of the offer to purchase -- "Procedures for Accepting
the Offer and Tendering Shares."
- WHEN WILL I GET PAID IF I TENDER MY SHARES?
If all of the conditions of the offer are satisfied or waived and your
shares of Policy Management Systems Corporation are accepted for payment, we
will pay you promptly after the expiration of the offer. See Section 2 of the
offer to purchase -- "Acceptance for Payment and Payment for Shares."
- UNTIL WHAT TIME CAN I WITHDRAW PREVIOUSLY TENDERED SHARES?
You can withdraw previously tendered shares at any time until the offer has
expired and, in addition, if we have not agreed to accept your shares for
payment by August 26, 2000, you can withdraw them at any time after that time
until we accept the shares for payment. If you tendered by giving instructions
to a broker or bank, you must instruct the broker or bank to arrange for the
withdrawal of your shares. See Section 4 of the offer to purchase -- "Withdrawal
Rights."
- HOW DO I WITHDRAW PREVIOUSLY TENDERED SHARES?
To withdraw shares, you must deliver a written notice of withdrawal, or a
facsimile of one, with the required information to the depositary while you
still have the right to withdraw the shares. If you tendered your shares by
giving instructions to a broker or nominee, you must instruct your broker or
nominee to arrange for the withdrawal of the shares. See Sections 1 and 4 of the
offer to purchase -- "Terms of the Offer" and "Withdrawal Rights."
- WHAT DOES THE BOARD OF DIRECTORS OF POLICY MANAGEMENT SYSTEMS CORPORATION
THINK OF THE OFFER?
We are making the offer pursuant to the Agreement and Plan of Merger, dated
June 20, 2000, among Policy Management Systems Corporation, Computer Sciences
Corporation and us. The Board of Directors of Policy Management Systems
Corporation has unanimously approved the merger agreement, the offer and the
proposed merger with Policy Management Systems Corporation. The Board of
Directors of Policy Management Systems Corporation has also unanimously
determined that the offer and the merger are fair to, and in the best interests
of, the stockholders of Policy Management Systems Corporation and unanimously
recommends that stockholders accept the offer and tender their shares. See
Section 11 of the offer to purchase -- "Background of the Offer; Past Contacts
or Negotiations with the Company."
- WHAT WILL HAPPEN TO POLICY MANAGEMENT SYSTEMS CORPORATION IF TWO-THIRDS OF THE
SHARES ARE TENDERED AND ACCEPTED FOR PAYMENT IN THE OFFER?
If we purchase in the offer at least that number of shares which, when
added to the shares then owned by Computer Sciences Corporation and its
affiliates, equals at least two-thirds of the shares of Policy Management
Systems Corporation outstanding on a fully diluted basis, and all other
applicable conditions are met, Patriot Acquisition Corp. will be merged with and
into Policy Management Systems Corporation. If that merger takes place, Computer
Sciences Corporation and its affiliates will own all of the shares of Policy
Management Systems Corporation and all remaining stockholders of Policy
Management Systems Corporation will receive the same amount of cash per share
paid in the offer. See "Introduction" and Section 13 of the offer to
purchase -- "Purpose of the Offer; Plans for the Company."
- WILL I HAVE APPRAISAL RIGHTS?
No appraisal rights are available in connection with the offer. Following
the offer, no appraisal rights will be available in accordance with state law so
long as the shares of Policy Management Systems Corporation are listed on a
national securities exchange or quoted on the Nasdaq National Market System. We
do not intend to cause Policy Management Systems Corporation to terminate the
listing of its shares on the New York Stock Exchange until after the merger. If
we own at least 90% of the outstanding shares of Policy Management Systems
Corporation after completion of the offer, we will be able to merge with Policy
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Management Systems Corporation without a vote of the stockholders of Policy
Management Systems Corporation as provided in the merger agreement and as
permitted under state law. No appraisal rights will be available to stockholders
if we merge with Policy Management Systems Corporation by operation of state law
and without a vote of stockholders. See Section 18 of the offer to
purchase -- "Appraisal Rights."
- IF I DECIDE NOT TO TENDER, HOW WILL THE OFFER AFFECT MY SHARES?
If we purchase at least two-thirds of the shares of Policy Management
Systems Corporation outstanding on a fully diluted basis in the offer, we will
own a sufficient number of shares to approve the merger under applicable state
law. If the merger takes place, stockholders who do not tender in the offer will
receive the same amount of cash per share in the merger that they would have
received had they tendered their shares in the offer. Therefore, if the merger
takes place, the only difference to you between tendering your shares and not
tendering your shares is that you will be paid earlier if you tender your shares
in the offer. However, until the merger is consummated or if the merger does not
take place for some reason, the number of stockholders of Policy Management
Systems Corporation may be substantially reduced. See Sections 13 and 14 of the
offer to purchase -- "Purpose of the Offer; Plans for the Company" and "Certain
Effects of the Offer."
- WHAT HAPPENS IF I TENDER MY SHARES AND YOU DO NOT ACCEPT THE TENDERED SHARES?
If any shares of Policy Management Systems Corporation that you tender are
not accepted for any reason, certificates representing such shares will be
returned to you or to the person whom you specify in your tendering documents.
See Section 2 of the offer to purchase -- "Acceptance of Payment and Payment for
Shares."
- WHAT WAS THE MARKET VALUE OF MY SHARES OF POLICY MANAGEMENT SYSTEMS
CORPORATION COMMON STOCK AS OF A RECENT DATE?
On June 19, 2000, the last trading day before Computer Sciences Corporation
and Policy Management Systems Corporation announced that they had signed the
merger agreement, the last sale price of the shares of Policy Management Systems
Corporation common stock reported on the New York Stock Exchange was $10.9375
per share. On June 27, 2000, the last trading day before Patriot Acquisition
Corp. commenced the offer, the last sale price of the shares was $14.8125 per
share. We advise you to obtain a recent quotation for shares of Policy
Management Systems Corporation common stock in deciding whether to tender your
shares in the offer. See Section 6 of the offer to purchase -- "Price Range of
Shares."
- WHO CAN I TALK TO IF I HAVE QUESTIONS ABOUT THE TENDER OFFER?
You can call Morrow & Co., Inc. at (800) 566-9061 (toll free) or Goldman,
Sachs & Co. at (212) 902-1000 (call collect). Morrow & Co., Inc. is acting as
the information agent and Goldman, Sachs & Co. is acting as the dealer manager
for our tender offer. See the cover page of this offer to purchase.
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To the Holders of Shares of Common Stock
of Policy Management Systems Corporation:
INTRODUCTION
Patriot Acquisition Corp., a South Carolina corporation ("Purchaser") and a
wholly owned subsidiary of Computer Sciences Corporation, a Nevada corporation
("Parent"), hereby offers to purchase all of the outstanding shares of common
stock, par value $0.01 per share (the "Shares"), of Policy Management Systems
Corporation, a South Carolina corporation (the "Company"), at $16.00 per Share
(the "Offer Price") net to the seller in cash, without interest, upon the terms
and subject to the conditions set forth in this Offer to Purchase (the "Offer to
Purchase") and Letter of Transmittal (the "Letter of Transmittal," which,
together with the Offer to Purchase, as each may be amended or supplemented from
time to time, collectively constitute the "Offer").
Tendering stockholders who are record owners of their Shares and tender
directly to the Depositary (as defined below) will not be obligated to pay
brokerage fees or commissions or, except as otherwise provided in Instruction 6
of the Letter of Transmittal, stock transfer taxes with respect to the purchase
of Shares by Purchaser pursuant to the Offer. Stockholders who hold their Shares
through a broker or bank should consult such institution as to whether it
charges any service fees. Parent or Purchaser will pay all charges and expenses
of ChaseMellon Shareholder Services, L.L.C., as depositary (the "Depositary"),
Morrow & Co., Inc., as information agent (the "Information Agent") and Goldman,
Sachs & Co., as dealer manager (the "Dealer Manager"), incurred in connection
with the Offer. See Section 19 of the Offer to Purchase -- "Fees and Expenses."
THE OFFER IS CONDITIONED UPON, AMONG OTHER THINGS, (I) THERE BEING VALIDLY
TENDERED AND NOT PROPERLY WITHDRAWN PRIOR TO THE EXPIRATION OF THE OFFER THAT
NUMBER OF SHARES WHICH, TOGETHER WITH ANY SHARES THEN BENEFICIALLY OWNED BY
PARENT OR PURCHASER, REPRESENTS AT LEAST TWO-THIRDS OF THE TOTAL NUMBER OF
OUTSTANDING SHARES ON A FULLY DILUTED BASIS (INCLUDING ALL SHARES ISSUABLE UPON
EXERCISE OF ALL VESTED AND UNVESTED COMPANY STOCK OPTIONS THAT VEST PRIOR TO THE
EFFECTIVE TIME (AS DEFINED BELOW), BUT EXCLUDING ANY SHARES HELD BY THE COMPANY
OR ANY OF ITS SUBSIDIARIES) (THE "MINIMUM TENDER CONDITION") AND (II) THE
EXPIRATION OR TERMINATION OF ANY APPLICABLE WAITING PERIOD UNDER THE
HART-SCOTT-RODINO ANTITRUST IMPROVEMENTS ACT OF 1976, AS AMENDED (THE "HSR
ACT"), AND SIMILAR STATUTES OR REGULATIONS OF FOREIGN JURISDICTIONS. THE OFFER
ALSO IS SUBJECT TO OTHER TERMS AND CONDITIONS.
THE OFFER WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY TIME, ON WEDNESDAY,
JULY 26, 2000, UNLESS THE OFFER IS EXTENDED. SEE SECTIONS 1, 16 AND 17 OF THIS
OFFER TO PURCHASE.
The Offer is being made pursuant to an Agreement and Plan of Merger, dated
as of June 20, 2000, among the Company, Parent and Purchaser (the "Merger
Agreement") pursuant to which, after completion of the Offer and satisfaction or
waiver of certain conditions, Purchaser will be merged with and into the Company
and the Company will be the surviving corporation (the "Merger"). On the
effective date of the Merger (the "Effective Time"), each outstanding Share
(other than Shares held by any subsidiary of the Company, by Purchaser or any
subsidiary or affiliate of Purchaser or held in the treasury of the Company)
will by virtue of the Merger, and without any action by the holder thereof, be
cancelled and converted into the right to receive $16.00 per Share in cash, or
any higher price per share paid pursuant to the Offer, without interest (the
"Cash Merger Consideration"). The Merger Agreement is more fully described in
Section 12 of this Offer to Purchase -- "The Merger Agreement; Other
Arrangements." Certain U.S. federal income tax consequences of the sale of
Shares pursuant to the Offer and the Merger, as the case may be, are discussed
in Section 5 of this Offer to Purchase -- "Material U.S. Federal Income Tax
Considerations."
THE BOARD OF DIRECTORS OF THE COMPANY (THE "COMPANY BOARD") (I) HAS
UNANIMOUSLY APPROVED THE MERGER AGREEMENT, THE OFFER AND THE MERGER, (II) HAS
UNANIMOUSLY DETERMINED THAT THE OFFER AND THE MERGER ARE FAIR TO, AND IN THE
BEST INTERESTS OF, THE HOLDERS OF SHARES, AND (III) UNANIMOUSLY RECOMMENDS THAT
STOCKHOLDERS ACCEPT THE OFFER AND TENDER THEIR SHARES PURSUANT TO THE OFFER.
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Credit Suisse First Boston Corporation ("CSFB"), the Company's financial
advisor, has delivered to the Company Board a written opinion, dated June 20,
2000, to the effect that, as of that date and based on and subject to the
matters described in the opinion, the $16.00 per Share cash consideration to be
received by the holders of Shares in the Offer and the Merger is fair to such
holders from a financial point of view. A copy of CSFB's written opinion, which
describes the assumptions made, procedures followed, matters considered and
limitations on the review undertaken, is contained in the Company's
Solicitation/Recommendation Statement on Schedule 14D-9 (the "Schedule 14D-9")
filed with the Securities and Exchange Commission (the "SEC") on June 28, 2000
in connection with the Offer. A copy of the Schedule 14D-9 (without certain
exhibits) is being furnished to stockholders concurrently herewith. Stockholders
are urged to read the full text of such opinion carefully in its entirety.
If the Minimum Tender Condition and the other conditions to the Offer are
satisfied and the Offer is consummated, Purchaser will own a sufficient number
of Shares to ensure that the Merger will be approved. Under the South Carolina
Business Corporation Act ("SCBCA") if, after consummation of the Offer,
Purchaser owns at least 90% of the Shares then-outstanding, Purchaser will be
able to cause the Merger to occur without a vote of the Company's stockholders.
If, however, after consummation of the Offer Purchaser owns less than 90% of the
then-outstanding Shares, a vote of the Company's stockholders will be required
under the SCBCA to approve the Merger. See Section 12 of this Offer to
Purchase -- "The Merger Agreement; Other Arrangements."
The Company has informed Purchaser that, as of June 26, 2000, there were
35,585,905 Shares issued and outstanding and there were 8,341,825 Shares
reserved for issuance pursuant to the Company's stock option plans, of which
7,602,180 Shares were subject to outstanding stock options. As of the date of
this Offer to Purchase, neither Parent nor Purchaser beneficially owns Shares or
rights to acquire Shares of the Company. See Section 13 of this Offer to
Purchase -- "Purpose of the Offer, Plans for the Company."
Based on the foregoing, the Minimum Tender Condition would be satisfied if
at least 28,792,057 Shares are validly tendered and not withdrawn prior to the
Expiration Date (as defined below). The number of Shares required to be validly
tendered and not withdrawn in order to satisfy the Minimum Tender Condition will
increase to the extent additional Shares are deemed to be outstanding on a fully
diluted basis under the Merger Agreement.
The Merger is subject to the satisfaction or waiver of certain conditions,
including, if required, the approval and adoption of the Merger Agreement by the
requisite vote of the stockholders of the Company. The Company has agreed, if
required, to duly call, give notice of, convene and hold a meeting of its
stockholders, to be held as promptly as practicable after the expiration of the
Offer for the purpose of obtaining stockholder approval of the Merger Agreement.
If the Minimum Tender Condition is satisfied, Purchaser would have sufficient
voting power to approve the Merger without the affirmative vote of any other
stockholder of the Company. See Section 12 of this Offer to Purchase -- "The
Merger Agreement; Other Arrangements."
No appraisal rights are available in connection with the Offer.
Stockholders may have appraisal rights in connection with the Merger if for some
reason the Shares are not listed on a national securities exchange or quoted on
the Nasdaq National Market System. We do not currently intend to delist the
Shares from the New York Stock Exchange until after the consummation of the
Merger. See Section 18 of this Offer to Purchase -- "Appraisal Rights."
THIS OFFER TO PURCHASE AND THE RELATED LETTER OF TRANSMITTAL CONTAIN
IMPORTANT INFORMATION THAT SHOULD BE READ CAREFULLY AND IN THEIR ENTIRETY BEFORE
ANY DECISION IS MADE WITH RESPECT TO THE OFFER.
THE TENDER OFFER
1. TERMS OF THE OFFER.
Upon the terms and subject to the conditions of the Offer (including, if
the Offer is extended or amended, the terms and conditions of such extension or
amendment), Purchaser will accept for payment and pay the Offer Price for all
Shares validly tendered and not properly withdrawn prior to 12:00 midnight, New
York City
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<PAGE> 9
time, on July 26, 2000 as permitted under Section 4 of this Offer to
Purchase -- "Withdrawal Rights" (the "Expiration Date"). If Purchaser extends
the deadline for tendering Shares (in accordance with the Merger Agreement), the
term "Expiration Date" will mean the latest time and date on which the Offer, as
so extended, expires.
The Offer is conditioned upon the Minimum Tender Condition: there having
been validly tendered and not properly withdrawn that number of Shares which,
together with any Shares then beneficially owned by Purchaser and Parent,
represents at least two-thirds of the total number of Shares outstanding on a
fully diluted basis (including Shares issuable upon exercise of all vested and
unvested Company stock options that vest prior to the Effective Time, but
excluding Shares held by the Company or any of its subsidiaries). The Offer also
is conditioned upon expiration or termination of any applicable waiting period
under the HSR Act, or similar statutes and regulations of foreign jurisdictions,
and the other conditions described in Section 16 of this Offer to
Purchase -- "Certain Conditions of the Offer."
Subject to the limitations set forth in this Offer, the Merger Agreement
and the applicable rules and regulations of the SEC described below, Purchaser
reserves the right, at any time and from time to time in its sole discretion, to
extend the period during which the Offer is open by giving oral or written
notice of such extension to the Depositary. During any such extension, all
Shares previously tendered and not withdrawn will remain subject to the Offer,
subject to the right of a tendering stockholder to withdraw such stockholder's
Shares. See Section 4 of this Offer to Purchase -- "Withdrawal Rights." There
can be no assurance that Purchaser will exercise its right to extend the Offer.
Purchaser also expressly reserves the right, at any time, from time to
time, to modify or amend the terms and conditions of the Offer in any respect.
However, pursuant to the Merger Agreement, Purchaser has agreed that it will not
(i) amend or waive the Minimum Tender Condition without the prior written
consent of the Company, (ii) decrease the Offer Price, change the form of
consideration to be paid or decrease the number of Shares sought in the Offer,
(iii) impose additional conditions on the Offer, (iv) extend the Expiration Date
other than as described below, or (v) make any other change which is adverse to
the holders of the Shares.
Pursuant to the Merger Agreement, Parent may, without the consent of the
Company, cause Purchaser to (i) extend the Offer from time to time until
December 31, 2000, if at the then-scheduled expiration date of the Offer, any of
the conditions to the Offer have not been satisfied (other than conditions not
capable of being satisfied), for such amount of time as is reasonably necessary
to cause such Offer conditions to be satisfied, but not exceeding ten business
days in the case of each extension, (ii) extend the Offer for any period
required by any rule or regulation of the SEC applicable to the Offer or (iii)
if more than 80% but less than 90% of the outstanding Shares have been validly
tendered pursuant to the Offer as of the scheduled or extended expiration date,
extend the Offer for an aggregate period of not more than five business days
beyond the latest expiration date that would otherwise be permitted under clause
(ii) of this sentence.
In addition, under the terms of the Merger Agreement, Parent and Purchaser
must, at the request of the Company, extend the expiration date of the Offer in
one or more periods of not more than ten business days each (but in no event
later than December 31, 2000), if (i) any of the conditions set forth in Annex I
to the Merger Agreement have not been satisfied or waived at the scheduled or
extended expiration date of the Offer, (ii) such condition is reasonably capable
of being satisfied and (iii) the Company is in material compliance with all of
its covenants in the Merger Agreement.
The rights reserved in the foregoing paragraphs are in addition to the
rights set forth in Section 16 of this Offer to Purchase -- "Certain Conditions
of the Offer."
Any extension, delay, termination, waiver or amendment will be followed as
promptly as practicable by public announcement. An announcement, in the case of
an extension, will be made no later than 9:00 a.m., New York City time, on the
next business day after the previously scheduled expiration of the Offer, in
accordance with the public announcement requirements of Rule 14e-1(d) under the
Securities Exchange Act of 1934, as amended (the "Exchange Act"). Subject to
applicable law (including Rules 14d-4(d), and 14d-6(c) under the Exchange Act,
which require that material changes be promptly disseminated to stockholders in
a manner reasonably designed to inform them of such changes) and without
limiting the
7
<PAGE> 10
manner in which Purchaser may choose to make any public announcement, Purchaser
has no obligation to publish, advertise or otherwise communicate any such public
announcement other than by issuing a press release to the Dow Jones News
Service.
If, subject to the Merger Agreement, Purchaser makes a material change in
the terms of the Offer or the information concerning the Offer or waives a
material condition of the Offer, Purchaser will disseminate additional tender
offer materials (including by public announcement as set forth below) and extend
the Offer to the extent required by Rules 14d-4(d) and 14e-1 under the Exchange
Act. These rules generally provide that the minimum period during which a tender
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
the percentage of securities sought, will depend upon the facts and
circumstances then existing, including the relative materiality of the changed
terms or information. In the SEC's view, an offer should remain open for a
minimum of five business days from the date the material change is first
published, sent or given to stockholders, and, if material changes are made with
respect to information that approaches the significance of price and the
percentage of securities sought, a minimum of ten business days may be required
to allow for adequate dissemination and investor response. With respect to a
change in price, a minimum ten business day period from the date of the change
generally is required to allow for adequate dissemination to stockholders.
Accordingly, if, prior to the Expiration Date, Purchaser increases or decreases
the consideration offered pursuant to the Offer, and if the Offer is scheduled
to expire at any time earlier than the tenth business day from the date that
notice of the increase or decrease is first published, sent or given to holders
of Shares, Purchaser will extend the Offer at least until the expiration of such
tenth business day. For purposes of the Offer, a "business day" means any day
other than a Saturday, Sunday or a federal holiday and consists of the time
period from 12:01 a.m. through 12:00 midnight, New York City time.
Pursuant to, but subject to certain conditions in, the Merger Agreement,
Purchaser has agreed to accept for payment all Shares validly tendered and not
withdrawn pursuant to the Offer as soon as permitted under applicable law and
pay for such Shares promptly thereafter.
The Company has provided Purchaser with the Company's stockholder list and
security position listings for the purpose of disseminating the Offer to holders
of Shares. This Offer to Purchase and the related Letter of Transmittal will be
mailed to record holders of Shares whose names appear on the Company's
stockholder list and will be furnished, for subsequent transmittal to beneficial
owners of Shares, to brokers, dealers, commercial banks, trust companies and
similar persons whose names, or the names of whose nominees, appear on the
stockholder list or, if applicable, who are listed as participants in a clearing
agency's security position listing.
2. ACCEPTANCE OF PAYMENT AND PAYMENT FOR SHARES.
Upon the terms and subject to the conditions of the Offer (including, if
the Offer is extended or amended, the terms and conditions of any such extension
or amendment), Purchaser will accept for payment, purchase and pay for all
Shares which have been validly tendered and not withdrawn pursuant to the Offer
at the earliest time following expiration of the Offer when all conditions to
the Offer described in Section 16 of this Offer to Purchase -- "Certain
Conditions of the Offer" have been satisfied or waived by Purchaser. Subject to
the Merger Agreement and any applicable rules and regulations of the SEC,
including Rule 14e-1(c) under the Exchange Act (relating to Purchaser's
obligation to pay for or return tendered Shares promptly after termination or
withdrawal of the Offer), Purchaser expressly reserves the right to delay the
acceptance for payment of or the payment for any tendered Shares in order to
comply in whole or in part with any applicable laws, including, without
limitation, the HSR Act and similar foreign statutes and regulations. See
Section 17 of this Offer to Purchase -- "Certain Legal Matters; Regulatory
Approvals."
For purposes of the Offer, Purchaser will be deemed to have accepted for
payment (and thereby purchased) Shares validly tendered and not properly
withdrawn as, if and when Purchaser gives oral or written notice to the
Depositary of Purchaser's acceptance for payment of such Shares pursuant to the
Offer. Upon the terms and subject to the conditions of the Offer, payment for
Shares accepted for payment pursuant to the Offer will be made by deposit of the
purchase price for the Shares with the Depositary, which will act as agent
8
<PAGE> 11
for tendering stockholders for the purposes of receiving payments from Purchaser
and transmitting payments to tendering stockholders. Under no circumstances will
Purchaser pay interest on the purchase price for the Shares, regardless of any
extension of the Offer or any delay in making payment.
The reservation by Purchaser of the right to delay the acceptance or
purchase of or payment for Shares is subject to the provisions of Rule 14e-1(c)
under the Exchange Act, which requires Purchaser to pay the consideration
offered or return the Shares deposited by or on behalf of tendering stockholders
promptly after the termination or withdrawal of the Offer.
In all cases, Purchaser will pay for Shares purchased in the Offer only
after timely receipt by the Depositary of (i) the certificates representing the
Shares (the "Share Certificates") or confirmation (a "Book-Entry Confirmation")
of a book-entry transfer of such Shares into the Depositary's account at The
Depository Trust Company (the "Book-Entry Transfer Facility") pursuant to the
procedures set forth in Section 3 -- "Procedures for Accepting the Offer and
Tendering Shares," (ii) the Letter of Transmittal (or a facsimile thereof),
properly completed and duly executed, with any required signature guarantees or,
in the case of a book-entry transfer, an Agent's Message (as defined below) in
lieu of the Letter of Transmittal and (iii) any other documents required under
the Letter of Transmittal.
"Agent's Message" means a message transmitted by a Book-Entry Transfer
Facility to, and received by, the Depositary and forming a part of a Book-Entry
Confirmation, which message states that the Book-Entry Transfer Facility has
received an express acknowledgment from the participant in the Book-Entry
Transfer Facility tendering the Shares which are the subject of the Book-Entry
Confirmation that the participant has received and agrees to be bound by the
terms of the Letter of Transmittal and that Purchaser may enforce the Letter of
Transmittal against the participant.
If Purchaser does not purchase any tendered Shares pursuant to the Offer
for any reason, or if a holder of Shares submits Share Certificates representing
more Shares than are tendered, Share Certificates representing unpurchased or
untendered Shares will be returned, without expense to the tendering stockholder
(or, in the case of Shares tendered by book-entry transfer into the Depositary's
account at the Book-Entry Transfer Facility pursuant to the procedure set forth
in Section 3 of this Offer to Purchase -- "Procedures for Accepting the Offer
and Tendering Shares," such Shares will be credited to an account maintained at
the Book-Entry Transfer Facility), as promptly as practicable following the
expiration or termination of the Offer.
If, prior to the Expiration Date, Purchaser increases the Offer Price,
Purchaser will pay the Offer Price, as increased to all holders of Shares that
are purchased in the Offer, whether or not the Shares were tendered before the
increase in the Offer Price.
Purchaser reserves the right to transfer or assign, in whole or in part,
from time to time, to one or more direct or indirect subsidiaries of Parent, the
right to purchase all or any portion of the Shares tendered pursuant to the
Offer, but any such transfer or assignment will not relieve Purchaser of its
obligations under the Offer and in no way will prejudice the rights of tendering
stockholders to receive payment for Shares validly tendered and accepted for
payment pursuant to the Offer.
3. PROCEDURES FOR ACCEPTING THE OFFER AND TENDERING SHARES.
Valid Tenders. To tender Shares pursuant to the Offer, a stockholder must
comply with one of the following: (a) a properly completed and duly executed
Letter of Transmittal (or a facsimile thereof) in accordance with the
instructions of the Letter of Transmittal (with any required signature
guarantees), certificates for the Shares to be tendered and any other documents
required by the Letter of Transmittal must be received by the Depositary at one
of its addresses set forth on the back cover of this Offer to Purchase prior to
the Expiration Date, (b) Shares must be properly delivered pursuant to the
procedures for book-entry transfer described below and a confirmation of such
delivery must be received by the Depositary, which confirmation must include an
Agent's Message if the tendering stockholder has not delivered a Letter of
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<PAGE> 12
Transmittal, prior to the Expiration Date or (c) the tendering stockholder must
comply with the guaranteed delivery procedures set forth below.
Book-Entry Transfer. The Depositary will establish accounts with respect to
the Shares at the Book-Entry Transfer Facility for purposes of the Offer within
two business days after the date of this Offer to Purchase. Any financial
institution that is a participant in the system of the Book-Entry Transfer
Facility may make a book-entry delivery of Shares by causing the Book-Entry
Transfer Facility to transfer such Shares into the Depositary's account at the
Book-Entry Transfer Facility in accordance with the Book-Entry Transfer
Facility's procedures for such transfer. However, although delivery of Shares
may be effected through book-entry transfer at the Book-Entry Transfer Facility,
either the Letter of Transmittal (or a facsimile thereof), properly completed
and duly executed, together with any required signature guarantees, or an
Agent's Message in lieu of the Letter of Transmittal, and any other required
documents, must, in any case, be received by the Depositary at one of its
addresses set forth on the back cover of this Offer to Purchase on or prior to
the Expiration Date, or the tendering stockholder must comply with the
guaranteed delivery procedure described below.
DELIVERY OF DOCUMENTS TO THE BOOK-ENTRY TRANSFER FACILITY IN ACCORDANCE
WITH THE BOOK-ENTRY TRANSFER FACILITY'S PROCEDURES DOES NOT CONSTITUTE DELIVERY
TO THE DEPOSITARY. THE METHOD OF DELIVERY OF SHARE CERTIFICATES, THE LETTER OF
TRANSMITTAL AND ALL OTHER REQUIRED DOCUMENTS, INCLUDING DELIVERY THROUGH THE
BOOK-ENTRY TRANSFER FACILITY, IS AT THE OPTION AND RISK OF THE TENDERING
STOCKHOLDER, AND THE DELIVERY WILL BE DEEMED MADE ONLY WHEN ACTUALLY RECEIVED BY
THE DEPOSITARY (INCLUDING, IN THE CASE OF A BOOK-ENTRY TRANSFER, A BOOK-ENTRY
CONFIRMATION). IF DELIVERY IS BY MAIL, REGISTERED MAIL WITH RETURN RECEIPT
REQUESTED, PROPERLY INSURED, IS RECOMMENDED. IN ALL CASES, SUFFICIENT TIME
SHOULD BE ALLOWED TO ENSURE TIMELY DELIVERY.
Signature Guarantees. No signature guarantee is required on the Letter of
Transmittal where Shares are tendered (i) by a registered holder of Shares who
has not completed either the box labeled "Special Delivery Instructions" or the
box labeled "Special Payment Instructions" on the Letter of Transmittal or (ii)
for the account of a bank, broker, dealer, credit union, savings association or
other entity which is a member in good standing of a recognized Medallion
Program approved by the Securities Transfer Association Inc., including the
Securities Transfer Agents Medallion Program (STAMP), the Stock Exchange
Medallion Program (SEMP) and the New York Stock Exchange Medallion Signature
Program (MSP), or any other "eligible guarantor institution" as defined in Rule
17Ad-15 under the Exchange Act (each of the foregoing, an "Eligible
Institution"). In all other cases, all signatures on a Letter of Transmittal
must be guaranteed by an Eligible Institution. See Instruction 1 of the Letter
of Transmittal.
If a Share Certificate is registered in the name of a person or persons
other than the signer of the Letter of Transmittal, or if payment is to be made
or delivered to, or a Share Certificate for unpurchased Shares is to be issued
or returned to, a person other than the registered holder, then the Share
Certificate must be endorsed or accompanied by an appropriate, duly executed
stock power, in either case signed exactly as the name of the registered holder
appears on the Share Certificate, with the signature on such Share Certificate
or stock power guaranteed by an Eligible Institution as provided in the Letter
of Transmittal. See Instructions 1 and 5 of the Letter of Transmittal.
Guaranteed Delivery. If a stockholder desires to tender Shares pursuant to
the Offer and the Share Certificates evidencing such stockholder's Shares are
not immediately available or such stockholder cannot deliver the Share
Certificates and all other required documents to the Depositary prior to the
Expiration Date, or such stockholder cannot complete the procedure for delivery
by book-entry transfer on a timely basis, the stockholder's Shares may
nevertheless be tendered; provided that all of the following conditions are
satisfied:
(i) the tender is made by or through an Eligible Institution;
(ii) the Depositary receives, as described below, a properly completed and
duly executed Notice of Guaranteed Delivery, substantially in the
form made available by Purchaser, on or prior to the Expiration Date;
and
(iii) the Depositary receives the Share Certificates (or a Book-Entry
Confirmation) evidencing all tendered Shares, in proper form for
transfer, in each case together with the Letter of Transmittal
10
<PAGE> 13
(or a facsimile thereof), properly completed and duly executed, with
any required signature guarantees (or, in the case of a book-entry
transfer, an Agent's Message), and any other documents required by
the Letter of Transmittal, within three New York Stock Exchange
trading days after the date of execution of such Notice of Guaranteed
Delivery.
The Notice of Guaranteed Delivery may be delivered by hand or mail or
transmitted by telegram or facsimile transmission to the Depositary and must
include a guarantee by an Eligible Institution in the form set forth in the form
of Notice of Guaranteed Delivery made available by Purchaser.
Notwithstanding any other provision of the Offer, Purchaser will pay for
Shares only after timely receipt by the Depositary of (i) Share Certificates
representing, or Book-Entry Confirmation with respect to, the Shares, (ii) a
properly completed and duly executed Letter of Transmittal (or a facsimile
thereof), together with any required signature guarantees (or, in the case of a
book-entry transfer, an Agent's Message) and (iii) any other documents required
by the Letter of Transmittal.
Determination of Validity. All questions as to the validity, form,
eligibility (including time of receipt) and acceptance for payment of any tender
of Shares will be determined by Purchaser or its designee in its sole
discretion, which determination will be final and binding on all parties.
Purchaser reserves the absolute right to reject any and all tenders determined
by it not to be in proper form or the acceptance for payment of which may, in
the opinion of its counsel, be unlawful. Subject to the terms of the Merger
Agreement, Purchaser also reserves the absolute right to waive any condition of
the Offer or any defect or irregularity in the tender of any Shares of any
particular stockholder of the Company, whether or not similar defects or
irregularities are waived in the case of other stockholders of the Company.
Subject to the Merger Agreement, Purchaser's interpretation of the terms
and conditions of the Offer (including the Letter of Transmittal and the
instructions thereto) will be final and binding. No tender of Shares will be
deemed to have been validly made until all defects and irregularities have been
cured or waived. None of Parent, Purchaser, or any of their respective
affiliates or assigns, the Depositary, the Information Agent, the Dealer Manager
or any other person will be under any duty to give notification of any defects
or irregularities in tenders or incur any liability for failure to give any such
notification.
Appointment as Proxy. By executing the Letter of Transmittal, a tendering
stockholder irrevocably appoints designees of Purchaser as such stockholder's
agents, attorneys-in-fact and proxies, with full power of substitution, in the
manner set forth in the Letter of Transmittal, to the full extent of such
stockholder's rights with respect to the Shares tendered by such stockholder and
accepted for payment by Purchaser and with respect to any and all other Shares
or other securities or rights issued or issuable in respect of those Shares on
or after the date of this Offer to Purchase. All such powers of attorney and
proxies will be considered irrevocable and coupled with an interest in the
tendered Shares. This appointment will be effective when, and only to the extent
that, Purchaser accepts such Shares for payment. Upon such acceptance for
payment, all other powers of attorney and proxies given by such stockholder with
respect to such Shares and such other securities or rights prior to such payment
will be revoked without further action, and no subsequent powers of attorney or
proxies may be given, nor may any subsequent written consent be executed by such
stockholder, (and, if given or executed, will not be deemed to be effective)
with respect thereto. The designees of Purchaser will, with respect to the
Shares for which the appointment is effective, be empowered to exercise all
voting and other rights of such stockholder as they, in their sole discretion,
may deem proper at any annual or special meeting of the Company's stockholders
or any adjournment or postponement thereof, or by written consent in lieu of any
such meeting or otherwise. In order for Shares to be deemed validly tendered,
immediately upon the acceptance for payment of such Shares, Purchaser or its
designee must be able to exercise full voting rights to the extent permitted
under applicable law with respect to such Shares.
Tender Constitutes Binding Agreement. Purchaser's acceptance for payment of
Shares tendered pursuant to any of the procedures described above will
constitute a binding agreement between Purchaser and the tendering stockholder
upon the terms and subject to the conditions of the Offer.
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<PAGE> 14
4. WITHDRAWAL RIGHTS.
Tenders of Shares made pursuant to the Offer are irrevocable, except that
such Shares may be withdrawn (i) at any time prior to the Expiration Date and
(ii) unless theretofore accepted for payment by Purchaser pursuant to the Offer,
at any time after August 26, 2000 (or such later date as may apply if the Offer
is extended). See Section 1 of this Offer to Purchase -- "Terms of the Offer."
If Purchaser extends the Offer, is delayed in its acceptance for payment of
Shares, or is unable to accept Shares for payment pursuant to the Offer for any
reason, then, without prejudice to Purchaser's rights under the Offer, the
Depositary may, nevertheless, on behalf of Purchaser, retain tendered Shares,
and such Shares may not be withdrawn except to the extent that tendering
stockholders are entitled to and duly exercise withdrawal rights as described in
this Section 4. Any such delay will be by an extension of the Offer to the
extent required by law.
For a withdrawal to be effective, a written or facsimile transmission
notice of withdrawal must be timely received by the Depositary at one of its
addresses set forth on the back cover page of this Offer to Purchase. Any such
notice of withdrawal must specify the name of the person who tendered the Shares
to be withdrawn, the number of Shares to be withdrawn and (if Share Certificates
have been tendered) the name of the registered holder of such Shares, if
different from that of the person who tendered such Shares. If Share
Certificates representing Shares to be withdrawn have been delivered or
otherwise identified to the Depositary, then, prior to the physical release of
such Share Certificates, the serial numbers shown on such Share Certificates
must be submitted to the Depositary and the signature on the notice of
withdrawal must be guaranteed by an Eligible Institution, except in the case of
Shares tendered for the account of an Eligible Institution. If Shares have been
tendered pursuant to the procedure for book-entry transfer as set forth in
Section 3 of this Offer to Purchase -- "Procedures for Accepting the Offer and
Tendering Shares," the notice of withdrawal must specify the name and number of
the account at the Book-Entry Transfer Facility to be credited with the
withdrawn Shares, in which case a notice of withdrawal will be effective if
delivered to the Depositary by any method of delivery described in the first
sentence of this paragraph.
Any Shares properly withdrawn will be considered not validly tendered for
purposes of the Offer. However, withdrawn Shares may be tendered again at any
time prior to the Expiration Date by following one of the procedures described
in Section 3 of this Offer to Purchase -- "Procedures for Accepting the Offer
and Tendering Shares."
All questions as to the form and validity (including time of receipt) of
any notice of withdrawal will be determined by Purchaser, in its sole
discretion, which determination will be final and binding. None of Parent,
Purchaser, or their respective affiliates or assigns, the Depositary, the
Information Agent, the Dealer Manager or any other person will be under any duty
to give notification of any defects or irregularities in any notice of
withdrawal or incur any liability for failure to give any such notification.
5. MATERIAL U.S. FEDERAL INCOME TAX CONSIDERATIONS.
The following is a summary of the material United States federal income tax
consequences to the Company's stockholders with respect to the sale of Shares
pursuant to the Offer and the exchange of Shares for cash pursuant to the
Merger. This summary does not purport to be a description of all tax
consequences that may be relevant to the Company's stockholders, and assumes an
understanding of tax rules of general application. It does not address special
rules which may apply to the Company's stockholders based on their tax status,
individual circumstances or other factors unrelated to the Offer or the Merger.
All stockholders are encouraged to consult their own tax advisors to determine
the particular tax consequences to them (including the application and effect of
any state, local or foreign income and other tax laws) of the Offer and the
Merger.
The receipt of cash pursuant to the Offer or the Merger will constitute a
taxable transaction for U.S. federal income tax purposes under the Internal
Revenue Code of 1986, as amended (the "Code"), and may also constitute a taxable
transaction under applicable state, local or foreign income and other tax laws.
For U.S. federal income tax purposes, a stockholder who sells Shares pursuant to
the Offer or receives cash in exchange for Shares pursuant to the Merger would
generally recognize gain or loss in an amount equal to the
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<PAGE> 15
difference between the amount of cash received by the stockholder pursuant to
the Offer or the Merger and the stockholder's adjusted tax basis for the Shares
tendered and purchased pursuant to the Offer or exchanged for cash pursuant to
the Merger. If Shares sold or exchanged are held by a stockholder as capital
assets, that gain or loss will be capital gain or loss. Any such capital gain or
loss will be long term if, as of the date of the disposition of its Shares, the
stockholder held such Shares for more than one year or will be short term if, as
of such date, the stockholder held such Shares for one year or less. Gain or
loss will be determined separately for each block of Shares (i.e., Shares
acquired at the same cost in a single transaction) tendered pursuant to the
Offer or exchanged for cash pursuant to the Merger.
Under U.S. federal income tax law, the amount of any payments made by the
Depositary to stockholders of the Company (other than certain exempt
stockholders, including, among others, all corporations and certain foreign
individuals), pursuant to the Offer or the Merger may be subject to backup
withholding tax at a rate of 31%. To avoid backup withholding tax with respect
to payments made pursuant to the Offer or the Merger, each stockholder must
provide the Depositary with such stockholder's correct taxpayer identification
number or social security number and certify under penalties of perjury that
such stockholder is not subject to backup federal income tax withholding by
completing the Substitute Form W-9 in the Letter of Transmittal. If backup
withholding applies with respect to a stockholder or if a stockholder fails to
deliver a completed Substitute Form W-9 to the Depositary or otherwise establish
an exemption, the Depositary is required to withhold 31% of any payments made to
such stockholder. See Instruction 9 of the Letter of Transmittal.
The foregoing discussion may not be applicable to certain types of
stockholders of the Company, including stockholders who acquired Shares through
the exercise of employee stock options or otherwise as compensation, individuals
who are not citizens or residents of the United States, foreign corporations, or
entities that are otherwise subject to special tax treatment under the Code
(such as insurance companies, tax-exempt entities and regulated investment
companies).
6. PRICE RANGE OF SHARES.
The Shares trade on the New York Stock Exchange under the symbol "PMS." The
following table sets forth, for the periods indicated, the high and low closing
sale prices for the Shares on the New York Stock Exchange based on published
financial sources.
POLICY MANAGEMENT SYSTEMS CORPORATION
<TABLE>
<CAPTION>
HIGH LOW
-------- --------
<S> <C> <C>
Fiscal 1998
First Quarter................................ $40.1562 $32.1875
Second Quarter............................... $43.2500 $37.0000
Third Quarter................................ $48.0000 $36.9375
Fourth Quarter............................... $57.0625 $29.8750
Fiscal 1999
First Quarter................................ $54.0000 $30.6250
Second Quarter............................... $40.9375 $26.6875
Third Quarter................................ $35.2500 $27.2500
Fourth Quarter............................... $30.5625 $16.8125
Fiscal 2000
First Quarter................................ $25.5000 $ 8.0625
Second Quarter (through June 27)............. $18.6250 $ 9.6250
</TABLE>
In the Merger Agreement, the Company has represented to each of Parent and
Purchaser that 35,585,905 Shares were issued and outstanding as of June 19,
2000. On June 19, 2000, the last full day of trading before the public
announcement of the execution of the Merger Agreement, the closing price of the
Shares on the New York Stock Exchange was $10.9375 per Share. On June 27, 2000,
the last full day of trading before the
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<PAGE> 16
commencement of the Offer, the closing sale price of the Shares on the New York
Stock Exchange was $14.8125 per Share.
Stockholders are urged to obtain a current market quotation for the Shares.
7. CERTAIN INFORMATION CONCERNING THE COMPANY.
The Company is a South Carolina corporation with its principal offices
located at One Mynd Center, Blythewood, South Carolina 29016. The telephone
number of the Company is (803) 333-4000.
According to the Company's Annual Report on Form 10-K/A for the fiscal year
ended December 31, 1999 (the "Company's 10-K"), the Company is a leading
provider of enterprise software and electronic commerce systems, related
professional services, and business process outsourcing designed to meet the
needs of the global insurance and related financial services industries. On
January 21, 2000, the Company announced its intent to change the name of the
Company to Mynd Corporation.
The Company is subject to the informational filing requirements of the
Exchange Act and, in accordance therewith, is required to file periodic reports,
proxy statements and other information with the SEC relating to its business,
financial condition and other matters. 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 1024, Washington, D.C.
20549, and at the SEC's regional offices located at Seven World Trade Center,
Suite 1300, New York, New York 10048 and Citicorp Center, 500 West Madison
Street, Suite 1400, Chicago, Illinois 60661. Information regarding the public
reference facilities may be obtained from the SEC by telephoning 1-800-SEC-0330.
The Company's filings are also available to the public on the SEC's Internet
site (http://www.sec.gov). Copies of such materials may also be obtained by mail
from the Public Reference Section of the SEC at 450 Fifth Street, N.W.,
Washington, D.C. 20549 at prescribed rates. You may also read and copy reports
and other information at the office of the New York Stock Exchange, Inc., 20
Broad Street, New York, New York 10005.
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<PAGE> 17
8. SELECTED FINANCIAL INFORMATION.
Set forth below is certain selected historical consolidated financial
information with respect to the Company, excerpted from the Company's 10-K and
from the Company's unaudited interim consolidated financial statements in the
Company's quarterly report on Form 10-Q for the fiscal quarter ended March 31,
2000 (the "Company's 10-Q"), each as filed with the SEC pursuant to the Exchange
Act. More comprehensive financial information is included in such reports
(including management's discussion and analysis of financial condition and
results of operation) and other documents filed by the Company with the SEC, and
the following summary is qualified in its entirety by reference to such reports
and other documents along with all of the financial information and notes
contained therein. Copies of such reports and other documents may be examined at
or obtained from the SEC in the manner set forth above.
POLICY MANAGEMENT SYSTEMS CORPORATION AND SUBSIDIARIES
SELECTED CONSOLIDATED FINANCIAL INFORMATION
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
THREE MONTHS YEARS ENDED
ENDED --------------------------------------------
MARCH 31, DECEMBER 31, DECEMBER 31, DECEMBER 31,
2000 1999 1998 1997
------------ ------------ ------------ ------------
(UNAUDITED)
<S> <C> <C> <C> <C>
Income Statement Data:
Revenues.............................. 148,342 644,019 607,458 518,171
(Loss) income before income taxes..... (19,843) (113,119) 86,355 76,799
Net (loss) income..................... (12,142) (71,971) 53,271 50,257
Net (loss) income per common share:
Basic.............................. (0.34) (2.02) 1.46 1.38
Diluted............................ (0.34) (2.02) 1.36 1.33
Balance Sheet Data (at period end):
Current assets........................ 203,468 211,999 217,123 185,809
Total assets.......................... 693,071 706,288 718,698 618,406
Current liabilities................... 152,826 75,995 98,935 86,213
Stockholders' equity.................. 305,366 321,561 432,484 410,496
</TABLE>
Although each of Parent and Purchaser has no knowledge that would indicate
that any statements contained herein taken from or based on such documents and
records are untrue, neither Parent nor Purchaser can take responsibility for the
accuracy or completeness of the information contained in such documents and
records, or for any failure by the Company to disclose events which may have
occurred or may affect the significance or accuracy of any such information but
which are unknown to Parent or Purchaser.
9. CERTAIN INFORMATION CONCERNING PARENT AND PURCHASER.
Purchaser is a South Carolina corporation and, to date, has engaged in no
activities other than those incident to its formation and the Offer and the
Merger. Purchaser is currently a wholly owned subsidiary of Parent. The
principal executive offices of Purchaser are located at 2100 East Grand Avenue,
El Segundo, California 90245 and Purchaser's telephone number is (310) 615-0311.
Parent is a Nevada corporation with its principal executive offices located
at 2100 East Grand Avenue, El Segundo, California 90245. The telephone number of
Parent is (310) 615-0311. Parent is one of the world leaders in the information
technology services industry.
The name, citizenship, business address, principal occupation or employment
and five-year employment history for each of the directors and executive
officers of Parent and Purchaser and certain other information are set forth in
Schedule I to this Offer to Purchase.
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<PAGE> 18
Except as described elsewhere in this Offer to Purchase or in Schedule II
hereto, (i) none of Parent, Purchaser nor, to the knowledge of Parent and
Purchaser, any of the persons listed in Schedule I to this Offer to Purchase or
any associate or majority-owned subsidiary of Parent or Purchaser so listed
beneficially owns or has any right to acquire, directly or indirectly, any
Shares; and (ii) none of Parent, Purchaser nor, to the best knowledge of Parent
and Purchaser, any of the persons or entities referred to above nor any
director, executive officer or subsidiary of any of the foregoing has effected
any transaction in the Shares during the past sixty (60) days.
Except as provided in the Merger Agreement or as otherwise described in
this Offer to Purchase, none of Parent, Purchaser nor, to the best knowledge of
Parent and Purchaser, any of the persons listed in Schedule I to this Offer to
Purchase, has any contract, arrangement, understanding or relationship with any
other person with respect to any securities of the Company, including, but not
limited to, any contract, arrangement, understanding or relationship concerning
the transfer or voting of such securities, finder's fees, joint ventures, loan
or option arrangements, puts or calls, guarantees of loans, guarantees against
loss, guarantees of profits, division of profits or loss or the giving or
withholding of proxies.
Except as set forth in this Offer to Purchase, (i) none of Parent,
Purchaser nor, to the best knowledge of Parent and Purchaser, any of the persons
listed on Schedule I to this Offer to Purchase, has had any business
relationship or transaction with the Company or any of its executive officers,
directors or affiliates that is required to be reported under the rules and
regulations of the SEC applicable to the Offer, and (ii) there have been no
contracts, negotiations or transactions between Parent or any of its
subsidiaries or, to the best knowledge of Parent, any of the persons listed in
Schedule I to this Offer to Purchase, on the one hand, and the Company or its
affiliates, on the other hand, concerning a merger, consolidation or
acquisition, a tender offer or other acquisition of securities, an election of
directors or a sale or other transfer of a material amount of assets.
None of the persons listed in Schedule I to this Offer to Purchase has,
during the past five years, been convicted in a criminal proceeding (excluding
traffic violations or similar misdemeanors). None of the persons listed in
Schedule I has, during the past five years, been a party to any judicial or
administrative proceeding (except for matters that were dismissed without
sanction or settlement) that resulted in a judgment, decree or final order
enjoining the person from future violations of, or prohibiting activities
subject to, federal or state securities laws, or a finding of any violation of
federal or state securities laws.
According to the Schedule 14D-9, to the knowledge of the Company after
reasonable inquiry, all directors, executive officers and affiliates of the
Company will tender, pursuant to the Offer, all Shares held of record or
beneficially owned by them (other than options to acquire Shares). The foregoing
does not include Shares over which, or with respect to which, any such director,
executive officer or affiliate acts in a fiduciary or representative capacity or
is subject to the instructions of a third party with respect to such tender.
10. SOURCE AND AMOUNT OF FUNDS.
The Offer is not conditioned upon any financing arrangements.
Parent and Purchaser estimate that the total amount of funds required to
purchase all of the outstanding Shares pursuant to the Offer and the Merger, to
repay all of the Company's debt that is anticipated to be outstanding at the
Effective Time and to pay the expected transaction costs associated with the
Offer and the Merger, will be approximately $890 million. These funds will be
provided to Purchaser by Parent. Parent intends to obtain such funds through the
sale of commercial paper and short-term notes bearing a market interest rate
(the "Notes"). The Notes will be senior unsecured obligations of Parent ranking
pari passu with all of Parent's other unsecured senior debt. Parent intends to
repay such commercial paper and Notes from general corporate funds and the
proceeds of one or more capital markets transactions. Parent has no current
plans for alternate financing.
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<PAGE> 19
11. BACKGROUND OF THE OFFER; PAST CONTACTS OR NEGOTIATIONS WITH THE COMPANY.
From time to time over the past few years, the Company has received
indications of interest in a business combination or acquisition. In 1997,
Parent contacted the Company, executed a confidentiality/standstill agreement,
dated August 19, 1997 (together with any amendments thereto, the
"Confidentiality Agreement"), and conducted preliminary due diligence, but did
not propose a price. In August 1999, Parent delivered a letter to the Company,
in which Parent proposed the acquisition of the Company in a stock-for-stock
merger at a price which represented a substantial premium to the then-current
market price of the Company's Shares based on the then-current market price of
Parent's shares. The Company Board determined that it was not in the best
interests of the Company and its stockholders to proceed with the proposal.
In late 1999, the Company suffered unexpected substantial declines in
revenues and earnings. These losses caused the Company to be out of compliance
with the terms of its credit agreements, but the Company obtained amendments to
return it to compliance.
On February 9, 2000, a director of the Company contacted a representative
of Welsh Carson Anderson & Stowe ("WCAS") regarding a possible equity investment
by WCAS in the Company. Thereafter, WCAS raised the possibility of making a
proposal to acquire the Company, as well as making an equity investment.
On March 24, 2000, WCAS proposed a recapitalization transaction, in which
the Company's stockholders would receive $13.50 per Share in cash for 75% to 93%
of their Shares, the Company's debt would be repaid and the Company would
receive a significant cash infusion. WCAS and the Company then negotiated the
terms of the proposed transaction.
On March 30, 2000, the Company again amended the terms of its credit
agreements. Future credit availability under the amended loan agreements is
dependent upon the Company achieving improvements in its operating performance.
The Company is required to repay $70 million of term debt on or before January
31, 2001.
On March 30, 2000, the Company Board met to consider the proposed merger
agreement with WCAS. Following a discussion of the WCAS merger agreement and
presentations by its financial and legal advisors, the Company Board voted
unanimously, with one member, Mr. Wilson, recusing himself, to approve the
merger agreement with WCAS.
The WCAS merger agreement contemplated that stockholders would have the
right to elect either to retain their Shares or to receive $14.00 per Share in
cash, subject to between 75% to 93% of the Shares being converted to cash. If
stockholders elected to retain more than 25% or fewer than 7% of their Shares,
they would be subject to proration to bring the amount of cash and stock within
these limits. Consummation of the WCAS merger was subject to, among other
things, WCAS' receipt of financing.
The Company Board approved the WCAS merger agreement in light of, among
other things:
- The Company Board's belief that the Company's financial condition would
likely deteriorate further as a result of customer, employee and stock
market reaction if the Company announced its 1999 results (which were
required to be disclosed by March 30, 2000) without the contemporaneous
announcement of a merger agreement or significant financing transaction;
- Presentations by CSFB to the Company Board and the opinion of CSFB to the
effect that, as of the date of the opinion and based on and subject to
the matters set forth therein, the aggregate consideration to be received
in the WCAS merger by the holders of Company Shares was fair, from a
financial point of view, to these holders; and
- The terms of the WCAS merger agreement, including the Company's ability,
subject to the Company Board's fiduciary duties, to provide information
to and negotiate with third parties and to terminate the WCAS merger
agreement and accept a superior proposal upon the payment of a $19
million termination fee and up to $5 million of expense reimbursement,
and the Company Board's business
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<PAGE> 20
judgment that these provisions would not significantly deter a more
attractive offer from a bona fide bidder for the Company.
In the evening of March 30, 2000, the Company and WCAS signed the WCAS
merger agreement, and the Company issued a press release announcing its terms.
At the same time, the Company issued a press release announcing its fourth
quarter and full year 1999 results.
On March 31, 2000, the Company sent a letter to Parent releasing it from
the Confidentiality Agreement, solely to the extent of any provision that would
restrict the ability of Parent to make a proposal to the Company.
On April 28, 2000, Electronic Data Systems Corporation ("EDS") delivered a
letter to the Company, in which EDS proposed the acquisition of the Company for
$18 to $20 per Share in cash and indicated it might improve its proposal if EDS
discovered additional synergy value in due diligence. The proposal was
preliminary and non-binding. Later that day, the Company Board authorized the
Company and its advisors to explore this proposal with EDS. The Company issued a
press release which included the text of the EDS letter and disclosed the
Company Board's determination.
On May 2, 2000, the Company and EDS signed a confidentiality agreement and
EDS began a due diligence investigation of the Company.
On May 15, 2000, EDS announced that it had withdrawn its proposal to
acquire the Company.
On May 23, 2000, Parent delivered a letter to the Company in which it
stated that it would like to propose the acquisition of the Company in a
stock-for-stock pooling-of-interests transaction at a price per Share within the
range of $15 to $17, which was based on a fixed exchange ratio to be determined
prior to the public disclosure of Parent's interest in the Company and prior to
the execution of a definitive agreement between Parent and the Company. The
letter stated that the proposal was conditioned on due diligence. The letter
also contained a request that the letter be kept confidential and stated that
Parent would withdraw its proposal if it were publicly disclosed. The Company
Board authorized the Company and its advisors to negotiate this proposal with
Parent.
On May 25, 2000, the Company and Parent amended the Confidentiality
Agreement. Shortly thereafter, Parent conducted a due diligence investigation of
the Company.
On June 13, 2000, Parent delivered a letter to the Company, in which Parent
proposed the acquisition of the Company for $16 per Share in cash. The letter
also contained a request that the proposal be kept confidential. Separately,
Parent indicated that it would withdraw its proposal if it were publicly
disclosed. The Company Board authorized the Company and its advisors to
negotiate this proposal with Parent.
On June 13, 2000, an information technology company ("Company B") delivered
a letter to the Company, in which Company B proposed the acquisition of the
Company for a cash price greater than $16 per Share. The proposal was subject to
customary conditions, including due diligence. In the letter, Company B stated
that it would withdraw its proposal if it were publicly disclosed. The Company
Board authorized the Company and its advisors to negotiate the proposal with
Company B.
On June 14, 2000, counsel for the Company distributed draft merger
agreements to Parent and Company B. On June 15, 2000, the Company and Company B
signed a confidentiality agreement and Company B began a due diligence
investigation of the Company.
On June 15, 2000, as required by the WCAS merger agreement, the Company
sent a notice to WCAS to the effect that the Company had received a merger
proposal from Parent and that the Company was giving WCAS two business days'
notice prior to the possible acceptance of Parent's proposal.
On June 19, 2000, Parent indicated to the Company that it would withdraw
its proposal if the proposal was not approved by the end of the day. On June 19,
2000, Company B reiterated its interest in acquiring the Company at a price
above $16 per Share. Company B stated that it intended to make a proposal on
June 26, 2000.
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<PAGE> 21
On June 19, 2000, the Company met to consider the proposed merger agreement
with Parent, as well as the indication of interest from Company B. WCAS had
indicated that it would not submit a revised proposal. Following a discussion of
the issues and presentations by its financial and legal advisors, the Company
Board voted unanimously to approve the Merger Agreement. On June 20, 2000, the
Company and Parent signed the Merger Agreement and issued a press release
announcing its terms.
On June 26, 2000, Company B informed the Company that it would not submit a
proposal that day but expected to submit a proposal in the near future. By a
letter agreement, dated as of June 26, 2000, Parent and the Company mutually
agreed to extend the commencement of the Offer until June 28, 2000.
On June 28, 2000, Parent and Purchaser commenced the Offer.
12. THE MERGER AGREEMENT; OTHER ARRANGEMENTS.
THE MERGER AGREEMENT
The following is a summary of the material provisions of the Merger
Agreement, a copy of which is filed as an exhibit to the Form 8-K filed by
Parent on June 20, 2000 with the SEC. The summary is qualified in its entirety
by reference to the Merger Agreement, which is deemed to be incorporated by
reference herein. The following summary may not contain all of the information
important to you, and accordingly, we encourage you to read the entire Merger
Agreement. The Merger Agreement may be examined and copies may be obtained from
the SEC in the same manner as set forth in Section 7 of this Offer to Purchase.
Capitalized terms used in the following summary and not otherwise defined in
this Offer to Purchase shall have the meanings set forth in the Merger
Agreement.
The Offer. The Merger Agreement provides that Purchaser will commence the
Offer and that, upon the terms and subject to prior satisfaction or waiver of
the Minimum Tender Condition and the other conditions of the Offer, as set forth
in Section 16 of this Offer to Purchase -- "Certain Conditions of the Offer,"
Purchaser will purchase all Shares validly tendered and not properly withdrawn
pursuant to the Offer. The Merger Agreement further provides that (i) the
Minimum Tender Condition may not be amended or waived without the prior written
consent of the Company, and (ii) no change may be made to terms and conditions
of the Offer that changes the form of consideration to be paid, decreases the
price per Share or the number of Shares sought in the Offer, imposes additional
conditions to the Offer, extends the expiration date of the Offer, except as set
forth in the Merger Agreement, or makes any other change which is adverse to the
holders of the Shares.
Without the consent of the Company, Parent may cause Purchaser to (i)
extend the Offer from time to time until December 31, 2000, if at the
then-scheduled expiration date of the Offer, any of the conditions to the Offer
have not been satisfied (other than conditions not capable of being satisfied),
for such amount of time as is reasonably necessary to cause such Offer
conditions to be satisfied, no such extension to exceed ten business days, (ii)
extend the Offer for any period required by any rule or regulation of the SEC
applicable to the Offer, or (iii) if more than 80% but less than 90% of the
outstanding Shares have been validly tendered pursuant to the Offer as of the
scheduled or extended expiration date, extend the Offer for an aggregate period
of not more than five business days beyond the latest expiration date that would
otherwise be permitted under clause (ii) of this sentence.
In addition, Parent and Purchaser have agreed that Purchaser, at the
request of Company, shall extend the expiration date of the Offer in one or more
periods of not more than ten business days each (but in no event later than
December 31, 2000), if (i) any of the conditions set forth in Annex I to the
Merger Agreement have not been satisfied or waived at the scheduled or extended
expiration date of the Offer, (ii) such condition is reasonably capable of being
satisfied, and (iii) Company is in material compliance with all of its covenants
in the Merger Agreement.
Directors. The Merger Agreement provides that promptly upon the acceptance
for payment of any Shares pursuant to the Offer, Parent shall be entitled to
designate that number of directors (rounded up to the next whole number) on the
Company Board that equals the product of (i) the total number of directors on
the Company Board (giving effect to the election of any additional directors
pursuant to the Merger Agreement),
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<PAGE> 22
and (ii) the percentage that the number of Shares beneficially owned by Parent
and/or Purchaser (including Shares accepted for payment) bears to the total
number of Shares outstanding. The Company has agreed to take all action
necessary to cause Parent's designees to be elected or appointed to the Company
Board, including increasing the number of directors and seeking and accepting
resignations of incumbent directors. At such time, to the extent requested by
Parent, the Company will use its best efforts to cause Parent's designees to
constitute the number of members, rounded up to the next whole number, on each
committee of the Company Board and on each board of directors of each subsidiary
of the Company (and each committee thereof) that represents the same percentage
as such individuals represent on the Company Board. Notwithstanding the
foregoing, the parties will use their best efforts to ensure that, prior to the
Effective Time, the Company will retain at least two directors who were
directors of the Company on the date of the Merger Agreement (the "Continuing
Directors"); provided, however, that if there are fewer than two Continuing
Directors for any reason, the Continuing Director or other Directors of the
Company, as the case may be, shall designate a person or persons to fill such
vacancy or vacancies. The Company's obligation to appoint Parent's designees to
the Board is subject to certain provisions of the Exchange Act. From and after
the time that Parent's designees are elected or appointed to the Company Board
until the Effective Time, the approval of a majority of the Continuing Directors
shall be required to authorize: (i) any termination of the Merger Agreement by
the Company, (ii) any amendment of the Merger Agreement requiring action by the
Company Board, (iii) any extension of time of performance of any of the
obligations or actions of Parent or Purchaser under the Merger Agreement, (iv)
any waiver of compliance with any term or condition of the Merger Agreement for
the benefit of the Company, (v) any consent or action by the Company Board under
the Merger Agreement, and (vi) any other action by the Company in connection
with the Merger Agreement which adversely affects the holders of the Shares
(other than Parent or Purchaser).
At or before the Effective Time, Parent will choose Parent's designees from
among its current directors and executive officers as set forth on Schedule I to
this Offer to Purchase.
The Merger. The Merger Agreement provides that, subject to the terms and
conditions of the Merger Agreement, at the Effective Time, Purchaser will be
merged with and into the Company. Following the Merger, the separate existence
of Purchaser will cease and the Company will continue as the surviving
corporation (the "Surviving Corporation"). The Company, as the Surviving
Corporation, will succeed to and assume all of the rights and obligations of
both the Company and Purchaser. Also following the Merger, the Articles of
Incorporation and Bylaws of Purchaser will be the Articles of Incorporation and
Bylaws of the Surviving Corporation, and the directors and officers of Purchaser
will become the directors and officers of the Surviving Corporation. The Merger
Agreement provides that the closing of the Merger will take place as promptly as
practicable but in no event later than the second business day after the
satisfaction or waiver of the conditions to the Merger. At the closing, the
Company, Parent and Purchaser will file the necessary documents with South
Carolina public officials to make the Merger effective.
Conversion of Shares. At the Effective Time, each Share issued and
outstanding immediately prior to the Effective Time (excluding (i) Shares held
by any of the Company's subsidiaries, (ii) Shares held by Purchaser or any other
subsidiary or affiliate of Purchaser, (iii) Shares held in the treasury of the
Company, and (iv) Shares held in any Company benefit plan or the Company Stock
Employee Compensation Trust) will, by virtue of the Merger and without any
action on the part of Purchaser, the Company or the holder, be converted into
and become the right to receive an amount of cash, without interest, equal to
the highest price paid per Share pursuant to the Offer (the "Cash Merger
Consideration"). At the Effective Time, each Share held by any subsidiary of the
Company, by Purchaser or any subsidiary or affiliate of Purchaser or held in the
treasury of the Company (excluding Shares held in any Company benefit plan or
the Company Stock Employee Compensation Trust) immediately prior to the
Effective Time will be canceled and retired and will cease to exist, and no
payment shall be made with respect thereto. Moreover, at the Effective Time,
each share of common stock of Purchaser issued and outstanding immediately prior
to the Effective Time will be converted into and become one validly issued,
fully paid and nonassessable share of common stock of the Surviving Corporation.
Company Stock Options. At the Effective Time, each outstanding option to
purchase Shares (a "Company Stock Option" or collectively "Company Stock
Options") issued pursuant to any Company stock
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<PAGE> 23
option plan (the "Company Plans"), whether vested or unvested, will be canceled
and will become the right to receive an amount, without interest, in cash (less
any applicable income or employment tax withholding) equal to the number of
Shares subject to such Company Stock Option immediately prior to the Effective
Time, multiplied by the excess, if any, of the Cash Merger Consideration over
the exercise price per Share of such Company Stock Option. Pursuant to the
Merger Agreement, the parties have agreed to cooperate to take all reasonable
steps necessary to effectuate the foregoing. Furthermore, except as previously
disclosed to Parent and Purchaser, the Company has agreed not to grant any
rights to acquire Shares or any other interest in the Company and not to take
any action to accelerate the vesting of or permit cash payments with respect to
Company Stock Options.
Restricted Stock. At the Effective Time, each share of Company restricted
stock issued and outstanding immediately prior to the Effective Time shall, by
virtue of the Merger and without any action on the part of Purchaser, the
Company or the holder, be converted into and shall become an amount in cash
equal to the Cash Merger Consideration. The agreements evidencing the grants of
Company restricted stock shall be canceled.
Representations and Warranties. The Merger Agreement contains customary
representations and warranties of the parties. These include representations and
warranties of the Company with respect to, among other things, organization and
qualification, subsidiaries, authority, capitalization, SEC filings, financial
statements, governmental approvals, compliance with laws, litigation,
intellectual property and trade secrets, employment matters, tax matters and
property. The Merger Agreement also contains customary representations and
warranties of Parent and Purchaser, including among other things, organization
and qualification, authority and financing. The representations and warranties
contained in the Merger Agreement expire at the Effective Time of the Merger.
Conduct of Business. From the date of the Merger Agreement until the
Effective Time, unless Parent consents in writing, which consent may not to be
unreasonably withheld, and except as contemplated by the Merger Agreement or in
a schedule attached thereto, the Company has agreed not to, and to cause each of
its subsidiaries not to: (i) take any action except in the ordinary course of
business and consistent with past practices; (ii) sell, pledge, dispose of or
encumber any assets, except inventory, immaterial assets or in the ordinary
course of business; (iii) amend its Articles of Incorporation or Bylaws or
similar organizational documents, except as provided in the Merger Agreement;
(iv) split, combine or reclassify any outstanding shares of its capital stock;
(v) declare, set aside or pay any dividend, except for dividends paid in the
ordinary course of business to the Company or any wholly owned subsidiary; (vi)
redeem, purchase, acquire or offer to acquire any shares of capital stock; (vii)
enter into any contract or arrangement with respect to matters (ii)-(vi) above;
(viii) issue, sell, pledge or dispose of any Company equity securities, assets
or other property, except the issuance of Shares upon the exercise of currently
outstanding Company stock options; (ix) acquire (by merger, consolidation or
acquisition of stock or assets) any corporation, partnership or other business
organization or division thereof (except an existing wholly owned subsidiary of
the Company); (x) incur indebtedness for borrowed money or issue debt securities
in an amount exceeding $100,000 in the aggregate, except as permitted under the
Merger Agreement; (xi) enter into or modify any material contract, lease,
agreement or commitment, except in the ordinary course of business; (xii)
terminate, modify, assign, waive, release or relinquish any contract rights or
amend any material rights or claims not in the ordinary course of business;
(xiii) settle or compromise any claim, action, suit or proceeding pending or
threatened against the Company or the Company's directors, except in the
ordinary course of business; (xiv) grant any increase in salary or compensation
to employees of the Company, except in the ordinary course of business or
pursuant to an employment agreement or grant any bonus to any employee other
than bonuses that are immaterial amount to employees who are not executive
officers; (xv) enter into any employment agreement or make any loan to any
employee of the Company; (xvi) adopt or amend any collective bargaining, bonus,
profit sharing, deferred compensation or other employee benefit plan, agreement
or arrangement, except as permitted by the Merger Agreement; (xvii) take any
action that would make any of its representations or warranties under the Merger
Agreement inaccurate in any respect at, or as of any time before, the Effective
Time, or omit to take any action necessary to prevent any of its representations
and warranties from being inaccurate at any time; (xviii) fail to use its best
efforts to maintain relationships with suppliers and customers; (xix) adopt a
plan of,
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<PAGE> 24
or alter its corporate structure or ownership through, complete or partial
liquidation, dissolution, merger, consolidation, restructuring, recapitalization
or other reorganization, other than the Merger; and (xx) make a tax election or
compromise any material tax liability.
Stockholder Approval. If Company stockholder approval of the Merger is
required by law, the Company has agreed to, as promptly as practicable following
the expiration of the Offer, duly call, give notice of, convene and hold a
meeting of its stockholders (the "Stockholders Meeting") for the purpose of
obtaining such approval. If a Stockholders Meeting is required, the Company will
prepare and file a preliminary Proxy Statement with the SEC and shall use
reasonable efforts to respond to any comments of the SEC or its staff and to
cause the Proxy Statement to be mailed to the Company's stockholders as promptly
as practicable. Subject to its fiduciary duties under applicable law, as
determined by the Company Board in good faith and after consultation with
counsel, the Company shall, through the Company Board, recommend to its
stockholders that approval of the Merger be given. Notwithstanding the
foregoing, if Parent or Purchaser shall acquire beneficial ownership of at least
90% of the outstanding Shares, the parties shall take all necessary and
appropriate action to cause the Merger to become effective as soon as
practicable after the expiration of the Offer without a Stockholders Meeting in
accordance with the short form merger provisions of the SCBCA. Parent has agreed
to cause all Shares owned by Parent or any subsidiary of Parent to be voted in
favor of approval of the Merger.
Access to Information. The Merger Agreement provides that from the date of
the Merger Agreement until the Effective Time, the Company will, and will cause
each of its subsidiaries to, give Purchaser and its representatives reasonable
access, during normal business hours, to its officers, employees, agents,
properties, books and records, and will furnish promptly to Purchaser and its
representatives financial and operating data and other information concerning
the business of the Company and its subsidiaries as Purchaser may reasonably
request. All information obtained by Purchaser and its representatives will be
kept confidential in accordance with the confidentiality provisions of the
Confidentiality Agreement (as defined hereafter) between Parent and the Company.
Between the date of the Merger Agreement and the Effective Time, the Company
additionally has agreed to furnish to Parent certain monthly and quarterly
financial information.
Further Actions. Pursuant to the Merger Agreement, each of Parent,
Purchaser and the Company has agreed to use reasonable efforts to take all
actions and to do all things reasonably necessary, proper or advisable under
applicable laws and regulations to consummate and make effective the
transactions contemplated by the Merger Agreement, including (i) cooperating in
the preparation of filings of the Offer Documents and any filings that may be
required under governmental legal requirements; (ii) obtaining consents
necessary, proper or advisable for the consummation of the transactions
contemplated by the Merger Agreement; (iii) contesting any legal proceeding
relating to the Merger; (iv) executing any additional instruments necessary to
consummate the transactions contemplated by the Merger; (v) taking any
additional action after the Effective Time necessary to carry out the purposes
of the Merger Agreement; and (vi) causing the Effective Time to occur as soon as
practicable after obtaining stockholder approval of the Merger, if required.
Without limiting the foregoing, if requested by any governmental authority,
Parent and the Company shall agree to divest, sell, dispose of, hold separate or
otherwise take or commit to take any action that limits its freedom of action
with respect to its or its subsidiaries' ability to retain or operate, any of
the businesses, product lines or assets of Parent, the Company or their
respective subsidiaries, provided that any such action is conditioned on the
consummation of the Offer or the Merger and such action would not be material in
the context of the Company and its subsidiaries taken as a whole.
Inquiries and Negotiations. The Merger Agreement provides that the Company
and its subsidiaries, and their respective officers, directors, employees,
representatives or agents, will not, directly or indirectly, encourage, solicit,
continue, participate in, continue discussions or negotiations with, or provide
any information or data to and will immediately cease any discussions or
negotiations with anyone (other than Parent, Purchaser or any designees of
either entity) concerning any Alternative Transaction. The term "Alternative
Transaction" means any (i) merger, consolidation, recapitalization, tender or
exchange offer, debt restructuring or similar transaction involving the Company
or its Shares, (ii) the sale of more than 25% of the common stock or other
capital stock of the Company, or (iii) the sale of assets (including stock of
subsidiaries) representing more than 25% of the assets of the Company and its
subsidiaries, taken as a whole.
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The Merger Agreement also requires the Company to notify Parent promptly in
the event that the Company receives any proposal or inquiry concerning an
Alternative Transaction, including the material terms and conditions thereof and
the identity of the party submitting such proposal, and shall keep Parent
updated on material developments affecting such Alternative Transaction. Prior
to furnishing any non-public information, or entering into negotiations or
discussions, with respect to an Alternative Transaction, the Company shall
obtain an executed confidentiality agreement from the third party involved in
the Alternative Transaction on terms substantially the same as, or no less
favorable to the Company in any material respect than, those contained in the
Confidentiality Agreement; provided such agreement need not contain a
"standstill" provision or otherwise restrict the ability of the third party to
make a proposal to the Company Board. Without limiting the foregoing, the
Company shall provide Parent with not less than two business days' notice prior
to the execution by the Company of any definitive agreement with respect to any
Alternative Transaction or any public announcement relating to the approval of
any Alternative Transaction.
If required by the fiduciary duties of the Company Board as determined in
good faith by the Company Board after consultation with counsel, and if solely
in connection with a Superior Proposal (as defined herein) or a proposal that is
reasonably likely to lead to a Superior Proposal, then but only then may the
Company participate in negotiations or provide information in connection with an
Alternative Transaction. The term "Superior Proposal" shall mean any bona fide
proposal to acquire, directly or indirectly, for consideration consisting of
cash and/or securities, more than two-thirds of the Shares then outstanding or
all or substantially all of the consolidated assets of the Company and otherwise
on terms which the Company Board by a majority vote determines in its good faith
judgment (after consultation with a financial advisor of nationally recognized
reputation and with the advice of such financial advisor as to the financial
ability of the potential acquirer) to be more favorable to the Company's
stockholders than the Merger.
If the Merger is not consummated for any one of the following reasons: (i)
the Merger Agreement is terminated by Parent, prior to the purchase of Shares in
the Offer, because the Company Board withdrew, modified or amended in a manner
adverse to Purchaser its approval or recommendation of the Merger or approved,
recommended or endorsed any proposal for, or authorized the Company to enter
into, an Alternative Transaction; (ii) the Merger Agreement is terminated by the
Company due to the Company's entering into a written agreement with respect to
an Alternative Transaction, or a third party has commenced a tender offer which,
in either case, the Company Board believes in good faith is a Superior Proposal;
(iii) within twelve months of the date of termination of the Merger Agreement
(other than by reason of Parent's failure to comply with or perform, or its
breach of, in any material respect any of its agreements or covenants contained
therein), there is an agreement of the Company to enter into, or the
consummation of, a transaction that is the subject of an inquiry, proposal or
offer that is an Alternative Transaction that was publicly announced or
submitted to the Company prior to the termination of the Merger Agreement; or
(iv) the Merger Agreement is terminated by the Company because the waiting
period with respect to the purchase of Shares in the Offer under the HSR Act or
similar statutes or regulations of foreign jurisdictions shall not have expired
or been terminated on or following August 20, 2000, and the Company Board shall
have determined that such waiting period will not be satisfied by December 31,
2000, and within twelve months of the date of termination of this Agreement
(other than by reason of Parent's failure to comply with or perform, or its
breach of, in any material respect, any of its agreements or covenants contained
therein), the Company agrees to enter into, or consummates, a transaction that
is an Alternative Transaction; then, the Company shall pay to Parent or its
designated beneficiary within two business days following the occurrence of any
one of the foregoing, a fee of $19 million in cash, plus all documented
out-of-pocket costs and expenses of Parent, including, without limitation,
financing fees, fees and expenses of counsel, accountants, investment bankers
and other advisors, filing fees and printing expenses, up to a maximum of $5
million. In the event that the Merger Agreement is terminated for any other
reason and the Company shall have failed to comply with or perform, or shall
have breached, in any material respect, any of its covenants or agreements
contained in the Merger Agreement, the Company shall pay to Parent or its
designated beneficiary, within two business days following such termination, the
out-of-pocket costs and expenses of Parent referred to above, provided that
Parent shall not have failed to comply with or perform, or shall not have
breached, in any material respect, any of its covenants or agreements contained
in the Merger Agreement.
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<PAGE> 26
Notification of Certain Matters. Each of the Company and Parent has agreed
to give prompt notice to the other of (i) the occurrence or nonoccurrence of any
event that would be likely to cause any of its representations and warranties to
be untrue or inaccurate in any material respect, and (ii) any material failure
of the Company or Parent, as the case may be, to comply with or satisfy any
covenant, condition or agreement to be complied with or satisfied by it under
the Merger Agreement. Parent has agreed that it will not take any action that
would make any representation or warranty of Parent under the Merger Agreement
inaccurate in any respect at, or as of any time prior to, the Effective Time, or
omit to take any action necessary to prevent any such representation or warranty
from being inaccurate in any respect at any such time.
Indemnification. The Merger Agreement requires Parent to provide, until the
sixth anniversary of the closing date of the Merger, to the directors and
officers who currently are covered by the Company's existing insurance and
indemnification policy an insurance and indemnification policy that provides
coverage for events occurring prior to the Effective Time that is no less
favorable than the Company's existing policy or, if substantially equivalent
coverage is unavailable, the best available coverage; provided, however, that
Parent shall not be required to pay an annual premium for the coverage in excess
of 200% of the last annual premium paid by the Company prior to the date of the
Merger Agreement. After the Effective Time, the Surviving Corporation shall
indemnify and hold harmless each person who has been prior to the date of the
Merger Agreement, or who becomes prior to the Effective Time, an officer or
director of the Company or any of its subsidiaries against all losses, claims,
damages, costs, expenses (including without limitation counsel fees and
expenses), settlements, payments or liabilities arising out of or in connection
with the fact that such person is or was an officer or director of the Company
or any of its subsidiaries, or pertaining to the Merger Agreement or the
transactions contemplated by the Merger Agreement, in each case to the fullest
extent required or permitted under applicable law or under the Surviving
Corporation's Articles of Incorporation or Bylaws.
Employee Benefit Matters. The Merger Agreement provides that from and after
the Effective Time, the Surviving Corporation and its subsidiaries will honor in
accordance with their terms all existing employment, severance, consulting and
salary continuation agreements between the Company or any of its subsidiaries
and any current or former executive officer or director of the Company or any of
its subsidiaries of a type required to be filed with the SEC pursuant to the
Exchange Act, subject to any modifications agreed to by any such officers or
directors. From and after the Effective Time, employees of the Company shall
participate in all benefit plans of Parent to the same extent as similarly
situated employees of Parent. To the extent permitted under applicable law, each
employee of the Company or its subsidiaries shall be given credit for all
service with the Company or its subsidiaries (or service credited by the Company
or its subsidiaries) under all employee benefit plans, programs, policies and
arrangements maintained by the Surviving Corporation in which they participate
or in which they become participants for purposes of eligibility, vesting and
benefit accrual including, without limitation, for purposes of determining (i)
short-term and long-term disability benefits, (ii) severance benefits, (iii)
vacation benefits and (iv) benefits under any retirement plan. If there is a
material reduction, in the aggregate, in the employee benefits provided to
employees of the Company six months after the Effective Time, as compared to the
benefits provided on the date of the Merger Agreement, there will be a one-time
equitable cash adjustment for those affected employees. Effective as of
immediately prior to the purchase of Shares in the Offer, the Company shall
cause every plan which has a cash or deferred arrangement under Section 401(k)
of the Internal Revenue Code to be terminated and the account of each
participant in such plan to become 100% vested and nonforfeitable and Parent
will cause there to be no gap in 401(k) plan availability.
Section 16 Matters. Prior to the Effective Time, the Company shall take all
such steps as may be required to cause any dispositions of Shares (including
derivative securities with respect to the Shares) resulting from the
transactions contemplated by the Merger Agreement by each individual who is
subject to the reporting requirements of Section 16(a) of the Exchange Act with
respect to the Company to be exempt under Rule 16b-3 promulgated under the
Exchange Act.
Works Councils. Prior to the Effective Time, the Company and Parent shall
notify all works councils, as appropriate, as to the transactions contemplated
by the Merger Agreement, shall reasonably consult with such works councils to
the extent required, and shall make such changes to this Agreement as are
mutually agreed by Parent and the Company as required as a result of such
consultations.
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Promissory Notes. On June 21, 2000, Parent paid, on behalf of the Company,
$19 million required to be paid by the Company to WCAS pursuant to the WCAS
merger agreement. The $19 million is repayable by the Company to Parent pursuant
to a promissory note executed and delivered by the Company on June 20, 2000 in
favor of Parent. Parent also will pay, on behalf of the Company, up to an
additional $5 million required to be paid by the Company to WCAS. This amount of
up to $5 million also will be repayable by the Company to Parent pursuant to a
promissory note. Parent additionally has agreed to loan to the Company, upon
request from the Company, from time to time, funds for use as working capital up
to the aggregate amount of $30 million (the "Loan"). From time to time as
draw-downs are requested, the Company will execute and deliver to Parent
revolving promissory notes in the amounts of the funds borrowed from Parent.
Such promissory notes will include the following terms, among others: (i)
interest, repayment and default provisions; (ii) a $1 million minimum draw-down;
(iii) a minimum three business day's notice of a draw-down; and (iv) all
draw-downs to be subject to actual need as reasonably demonstrated by the
Company to Parent pursuant to a form of takedown letter to be mutually agreed
between the parties in good faith. The Company has represented to Parent that it
does not anticipate requiring a draw-down on the Loan prior to July 31, 2000.
All of the promissory notes will be in substantially the same form and will be
due and payable upon the earlier of (i) July 3, 2001 or (ii) immediately prior
to the occurrence of an "Event of Default" as described and defined in Section
6.1(k) of the Credit Agreements (as the term "Credit Agreements" is defined in
the subordination agreement (the "Subordination Agreement") by and among the
Company, Parent and Bank of America, N.A., as agent for the Senior Lenders,
which was executed in conjunction with the Merger Agreement).
Conditions to the Merger. The respective obligations of Company and
Purchaser to complete the Merger are subject to the fulfillment of the following
conditions: (i) the Merger Agreement having been duly approved by the holders of
two-thirds of the outstanding Shares; (ii) no statute, rule, regulation,
executive order, decree, ruling or injunction shall have been enacted, entered,
promulgated or enforced by any United States court or United States governmental
authority which prohibits, restrains or enjoins the consummation of the Merger;
and (iii) Purchaser shall have accepted for payment and paid for Shares pursuant
to the Offer, provided that Parent and Purchaser may not assert this condition
if the failure to accept Shares for payment was in breach of the Merger
Agreement.
Termination and Abandonment. The Merger Agreement may be terminated and the
merger abandoned at any time prior to the Effective Time as follows: (i) by
mutual actions of the boards of directors of the Company and Parent; (ii) by
either the Company or Parent, if the Offer has expired without the acceptance of
Shares, or the purchase of Shares pursuant to the Offer shall not have occurred
on or prior to the close of business on December 31, 2000, unless such event has
been caused by the breach of the Merger Agreement by the party seeking such
termination; (iii) by the Company if, prior to the purchase of the Shares in the
Offer, (A) the Company enters into a definitive written agreement with respect
to an Alternative Transaction, or a third party has commenced a tender offer
which, in either case, the Company Board believes in good faith is a Superior
Proposal, or (B) the representations and warranties of Parent contained in the
Merger Agreement are not true and correct (except to the extent that the
aggregate of all breaches thereof would not have a Material Adverse Effect on
Parent), or (C) Parent shall have failed to perform in all material respects its
covenants and obligations contained in the Merger Agreement, which failure to
perform has not been cured within ten business days after the giving of written
notice to Parent; (iv) by Parent if, prior to the purchase of the Shares in the
Offer, the Company Board shall have withdrawn, modified or amended in a manner
adverse to Purchaser its approval or recommendation of the Merger or approved,
recommended or endorsed any proposal for, or authorized the Company to enter
into, an Alternative Transaction; or (v) by the Company on or after August 20,
2000 and prior to the purchase of Shares in the Offer if (A) the waiting period
with respect to the purchase of Shares in the Offer under the HSR Act or similar
statutes or regulations of foreign jurisdictions shall not have expired or been
terminated, (B) the Board of Directors of the Company shall determine in good
faith, after consultation with counsel, that it believes that there is a
substantial likelihood that the conditions set forth in clause (A) will not be
satisfied by December 31, 2000, and (C) the Company has provided Parent with at
least two weeks' notice prior to termination. In the event of the termination of
the Merger Agreement, except for the amounts described under the headings
entitled "Inquiries and Negotiations" and "Promissory Notes" and any liability
arising out of a willful breach, no party shall have any liability
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to any other party or its stockholders or directors or officers, and the Merger
Agreement shall become void and have no effect.
Publicity. The Company and Purchaser agree that they will not issue any
press release or make any other public announcement concerning the Merger
Agreement or the transactions contemplated thereby without the prior consent of
the other party, except such public disclosure that the Company believes in good
faith to be required by law.
Amendment. The Merger Agreement may be amended by action taken by the
boards of directors of the Company and Purchaser at any time before or after
approval, if necessary, of the Merger by the stockholders of the Company but,
after any such approval, no amendment shall, without the consent of the
stockholders, be made which reduces the amount or alters the form of the
consideration that the stockholders of the Company shall be entitled to receive
upon the Effective Time.
Waiver. Each of the Company and Parent may (i) extend the time for the
performance of any of the obligations or other acts of the other party, (ii)
waive any inaccuracies in the representations and warranties of the other made
in the Merger Agreement or in any other document delivered pursuant to the
Merger Agreement, (iii) waive compliance by the other party with the conditions
contained in the Merger Agreement; or (iv) waive performance by the other party
with the obligations contained in the Merger Agreement. By letter, dated as of
June 26, 2000, Parent and the Company mutually agreed to extend the commencement
of the Offer until June 28, 2000.
GOING PRIVATE TRANSACTIONS.
The Merger would have to comply with any applicable Federal law operative
at the time of its consummation including Rule 13e-3 under the Exchange Act
which applies to certain "going private" transactions. If applicable, Rule 13e-3
requires, among other things, that certain financial information concerning the
fairness of the Merger and the consideration offered to minority stockholders in
the Merger be filed with the SEC and disclosed to stockholders prior to the
consummation of the Merger. Purchaser does not believe that Rule 13e-3 will be
applicable to the Merger unless the Merger is consummated more than one year
after the termination of the Offer.
CONFIDENTIALITY AGREEMENT.
The following is a summary of certain provisions of the Confidentiality
Agreement. This summary does not purport to be complete and is qualified in its
entirety by reference to the complete text of the Confidentiality Agreement, a
copy of which is filed with the SEC as Exhibit (d)(3) to the Schedule TO and
incorporated herein by reference. Capitalized terms not otherwise defined below
shall have the meanings set forth in the Confidentiality Agreement. The
Confidentiality Agreement may be examined and copies may be obtained at the
places and in the manner set forth in Section 7 of the Offer to
Purchase -- "Certain Information Concerning the Company."
The Confidentiality Agreement contains customary provisions pursuant to
which, among other matters, Parent and the Company have mutually agreed, subject
to certain exceptions, to keep confidential all non-public, confidential or
proprietary information exchanged between each other, including notes,
summaries, reports, analyses or other materials derived from the information
exchanged (the "Confidential Information"), and to use the Confidential
Information solely for the purpose of evaluating a possible transaction
("Transaction") involving Parent and the Company, together with any of their
subsidiaries or affiliates.
On March 31, 2000, the Company sent a letter to Parent releasing it from
the Confidentiality Agreement, solely to the extent of any provision that would
restrict the ability of Parent to make a proposal to the Company Board. Pursuant
to a May 25, 2000 amendment to the Confidentiality Agreement, Parent agreed not
to acquire, or cause any of its representatives to acquire, any securities of
the Company prior to November 30, 2001, without the Company's prior written
consent. Notwithstanding this restriction on acquiring securities of the
Company, Parent is permitted to (a) make an offer to acquire all Shares or other
capital stock of the Company, whether through merger, tender or exchange offer
or otherwise or (b) purchase shares of the
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Company's capital stock pursuant to a tender or exchange offer for all
outstanding Shares. The May 25, 2000 amendment also extended until May 23, 2001
the period during which Parent and the Company each agree not to solicit certain
members of management for employment from the other, in the event that a
Transaction is not consummated.
13. PURPOSE OF THE OFFER; PLANS FOR THE COMPANY.
Purpose of the Offer. The purpose of the Offer is to acquire control of,
and the entire equity interest in, the Company. The purpose of the Merger is to
acquire all outstanding Shares not tendered and purchased pursuant to the Offer.
If the Offer is successful, Purchaser intends to consummate the Merger as soon
as practicable following the satisfaction or waiver of each of the conditions to
the Merger set forth in the Merger Agreement.
Plans for the Company. Except as otherwise set forth in this Offer to
Purchase, it is expected that, initially following the Merger, the business
operations of the Company will be continued by the Surviving Corporation
substantially as they are currently being conducted. The directors of Purchaser
will be the initial directors of the Surviving Corporation, and the officers of
Purchaser will be the initial officers of the Surviving Corporation. Upon
completion of the Offer and the Merger, Parent intends to conduct a detailed
review of the Company and its assets, corporate structure, capitalization,
operations, policies, management and personnel. After such review, Parent will
determine what actions or changes, if any, would be desirable in light of the
circumstances which then exist.
Except as described in this Offer to Purchase, neither Parent nor Purchaser
has any present plans or proposals that would relate to or result in (i) any
extraordinary corporate transaction, such as a merger, reorganization or
liquidation involving the Company or any of its subsidiaries, (ii) a purchase,
sale or transfer of a material amount of assets of the Company or any of its
subsidiaries, (iii) any change in the Company Board or management, including,
but not limited to, any plans or proposals to change the number or term of
directors or to fill any existing vacancies on the Company Board or to change
any material term of the employment contract of any executive officer; (iv) any
material change in the Company's capitalization, indebtedness or dividend
policy, (v) any other material change in the Company's corporate structure or
business, (vi) a class of securities being delisted from a national securities
exchange or ceasing to be authorized to be quoted in an inter-dealer quotation
system of a registered national securities association, or (vii) a class of
equity securities of the Company becoming eligible for termination of
registration pursuant to Section 12(g)(4) of the Exchange Act. Certain members
of the Company's current management are not expected to continue with the
Surviving Corporation following the Merger. See Sections 12 and 14 of the Offer
to Purchase -- "The Merger Agreement; Other Arrangements" and "Certain Effects
of the Offer," respectively.
14. CERTAIN EFFECTS OF THE OFFER.
Market for the Shares. The purchase of Shares pursuant to the Offer will
reduce the number of holders of Shares and the number of Shares that might
otherwise trade publicly and could adversely affect the liquidity and market
value of the remaining Shares held by stockholders other than Purchaser.
Purchaser cannot predict whether the reduction in the number of Shares that
might otherwise trade publicly would have an adverse or beneficial effect on the
market price for, or marketability of, the Shares or whether such reduction
would cause future market prices to be greater or less than the Offer Price.
Stock Quotation. Inclusion of the Shares on the New York Stock Exchange is
voluntary, so the Company may terminate that inclusion at any time. Parent has
no intention to cause the Company to terminate the inclusion of the Shares on
the New York Stock Exchange prior to the Merger. However, depending upon the
number of Shares purchased pursuant to the Offer, the Shares may no longer meet
the standards for continued inclusion on the New York Stock Exchange. According
to its published guidelines, the New York Stock Exchange would give
consideration to delisting the Shares if, among other things, the number of
publicly held Shares falls below 600,000 or the number of holders of round lots
of Shares falls below 400 (or below 1,200 if the average monthly trading volume
is below 100,000 for the last twelve
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months). Shares held by officers or directors of the Company or their immediate
families, or by any beneficial owner of 10% or more of the Shares, ordinarily
will not be considered as being publicly held for this purpose.
If the New York Stock Exchange were to delist the Shares, it is possible
that the Shares would continue to trade on another securities exchange or in the
over-the-counter market and that price or other quotations would be reported by
such exchange or through the National Association of Securities Dealers
Automated Quotation System or other sources. The extent of the public market for
the Shares and the availability of such quotations would depend upon such
factors as the number of stockholders and/or the aggregate market value of the
publicly traded Shares remaining at such time, the interest in maintaining a
market in the Shares on the part of securities firms and the possible
termination of registration under the Exchange Act (as described below). We
cannot predict whether the reduction in the number of Shares that otherwise
might trade publicly would have an adverse or beneficial effect on the market
price for or marketability of the Shares or whether it would cause future market
prices to be greater or less than the Offer Price.
Exchange Act Registration. The Shares currently are registered under the
Exchange Act. The purchase of the Shares pursuant to the Offer may result in the
Shares becoming eligible for deregistration under the Exchange Act. Such
registration of the Shares may be terminated upon application of the Company to
the SEC if the Shares are not listed on a national securities exchange and there
are fewer than 300 holders of record of the Shares. Termination of registration
of the Shares under the Exchange Act would substantially reduce the information
required to be furnished by the Company to its stockholders and to the SEC and
would make certain provisions of the Exchange Act no longer applicable to the
Company, such as the short-swing profit recovery provisions of Section 16(b) of
the Exchange Act, the requirement of furnishing a proxy statement pursuant to
Section 14(a) of the Exchange Act in connection with stockholders' meetings and
the related requirement of furnishing an annual report to stockholders, and the
requirements of Rule 13e-3 under the Exchange Act with respect to "going
private" transactions. Furthermore, the ability of "affiliates" of the Company
and persons holding "restricted securities" of the Company to dispose of such
securities pursuant to Rule 144 promulgated under the Securities Act of 1933 may
be impaired or eliminated. If registration of the Shares under the Exchange Act
were terminated, the Shares would no longer be "margin securities" or be
eligible for inclusion on the New York Stock Exchange.
Purchaser believes that the purchase of the Shares pursuant to the Offer
may result in the Shares becoming eligible for deregistration under the Exchange
Act and it would be the intention of Purchaser to cause the Company to make an
application for termination of registration of the Shares as soon as possible
after consummation of the Merger, if the Shares are then eligible for such
termination. Purchaser does not currently intend to cause the Shares to be
deregistered under the Exchange Act prior to the consummation of the Merger.
Margin Regulations. The Shares are currently "margin securities" under the
Regulations of the Board of Governors of the Federal Reserve System (the
"Federal Reserve Board"), which has the effect, among other things, of allowing
brokers to extend credit on the collateral of the Shares. Depending upon factors
similar to those described above regarding the market for the Shares and stock
quotations, it is possible that, following the Offer, the Shares would no longer
constitute "margin securities" for the purposes of the margin regulations of the
Federal Reserve Board and therefore could no longer be used as collateral for
loans made by brokers.
15. DIVIDENDS AND DISTRIBUTIONS.
The Merger Agreement provides that from the date of the Merger Agreement
until the Effective Time, unless the Parent has consented in writing, the
Company may not declare, set aside or pay any dividend, except for dividends
paid in the ordinary course of business to the Company or any wholly owned
subsidiary of the Company, or redeem, purchase, acquire or offer to acquire any
shares of capital stock of the Company or any of its subsidiaries.
16. CERTAIN CONDITIONS OF THE OFFER.
Notwithstanding any other provision of the Offer or the Merger Agreement,
and in addition to and not in limitation of Purchaser's rights to extend and
amend the Offer (subject to the terms of the Merger
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<PAGE> 31
Agreement), and subject to any applicable rules and regulations of the SEC
including Rule 14e-l(c) under the Exchange Act relating to Purchaser's
obligation to pay for or return any tendered Shares after termination of the
Offer, Purchaser shall not be required to accept for payment or pay for Shares
tendered pursuant to the Offer, may delay the acceptance for payment of any
Shares and subject to the terms of the Merger Agreement may extend the Offer one
or more times, and may terminate the Offer at any time after the Expiration Date
(subject to the Company's right under the Merger Agreement to request that
Purchaser extend the Offer) if (i) less than two-thirds of the outstanding
Shares on a fully diluted basis (including for purposes of such calculation all
Shares issuable upon exercise of all vested Company stock options and unvested
Company stock options that vest prior to the Effective Time, but excluding any
Shares held by the Company or any of its subsidiaries) have been tendered
pursuant to the Offer by the expiration of the Offer and not withdrawn; (ii) any
applicable waiting period under the HSR Act or similar statutes or regulations
of a foreign jurisdiction has not expired or terminated; (iii) all necessary
consents and approvals from all governmental entities shall not have been
obtained on terms and conditions reasonably satisfactory to Parent; or (iv) at
any time after the date of the Merger Agreement and before the Expiration Date,
any of the following events shall occur and be continuing:
(a) any action taken, or any statute, rule, regulation, judgment,
order or injunction promulgated, entered, enforced, enacted, issued or
deemed applicable to the Offer or the Merger by any domestic or foreign
court or other governmental entity which directly or indirectly (i)
prohibits, or makes illegal, the acceptance for payment, payment for or
purchase of Shares or the consummation of the Offer, the Merger or the
other transactions contemplated by the Merger Agreement, (ii) renders
Purchaser unable to accept for payment, pay for or purchase some or all of
the Shares or (iii) imposes material limitations on the ability of Parent
effectively to exercise full rights of ownership of the Shares, including
the right to vote the Shares purchased by it on all matters properly
presented to the Company's stockholders, unless in each case such action is
conditioned upon the consummation of the Offer or the Merger or would not
be material to the Company and its subsidiaries as a whole;
(b) (i) the representations and warranties of the Company set forth in
the Merger Agreement shall not be true and correct (unless the aggregate of
all breaches would not have a Material Adverse Effect on the Company) at
the date of the Merger Agreement and as of the consummation of the Offer
with the same effect as if made at and as of the consummation of the Offer,
(ii) the Company shall have failed to perform in all material respects its
covenants and obligations contained in the Merger Agreement, which failure
to perform has not been cured within ten business days after the giving of
written notice to the Company, or (iii) except as disclosed in the
Company's SEC filings or the Merger Agreement, there shall have occurred
since March 31, 2000 any events or changes which constitute a Material
Adverse Effect on the Company, other than as a result of the announcement
or expectation of the Merger;
(c) (1) a tender offer or exchange offer for 15% or more of the
outstanding Shares is commenced, and the Company Board, within ten business
days after such tender offer or exchange offer is commenced, either fails
to recommend against acceptance of the tender offer or exchange offer by
its stockholders or takes no position with respect to the acceptance of the
tender offer or exchange offer by its stockholders; or (2) any person or
group shall have entered into a definitive agreement or agreement in
principle with Company with respect to a third party acquisition;
(d) the Company Board shall have withdrawn, or modified or changed in
a manner adverse to Parent and Purchaser (including by amendment of the
Schedule 14D-9), its recommendation of the Offer, the Merger Agreement or
the Merger, or recommended another proposal or offer, or the Company Board
shall have resolved to do any of the foregoing; or
(e) the Merger Agreement shall have terminated in accordance with its
terms,
which in the good faith judgment of Parent, in any such case, and regardless of
the circumstances (including any action or inaction by Parent) giving rise to
such condition makes it inadvisable to proceed with the Offer or the acceptance
for payment of or payment for the Shares.
29
<PAGE> 32
The conditions set forth above are for the sole benefit of Parent and
Purchaser and may be waived by Parent and Purchaser, in whole or in part at any
time and from time to time, in the sole discretion of Parent and Purchaser. The
failure by Parent and Purchaser 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 which may be asserted at any time and from time to
time.
17. CERTAIN LEGAL MATTERS; REGULATORY APPROVALS.
General. Purchaser is not aware of any material pending legal proceeding
relating to the Offer. Based on its examination of publicly available
information filed by the Company with the SEC and other publicly available
information concerning the Company, Purchaser is not aware of any governmental
license or regulatory permit that appears to be material to the Company's
business that might be adversely affected by Purchaser's purchase of the Shares
as contemplated herein or, except as set forth below, of any approval or other
action by any government or governmental administrative or regulatory authority
or agency, domestic or foreign, that would be required for the purchase or
ownership of Shares by Purchaser or Parent as contemplated herein. Should any
such approval or other action be required, Purchaser currently contemplates
that, except as described below under "State Takeover Statutes," such approval
or other action will be sought. 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 if such approval were not obtained or such other
action were not taken, adverse consequences might not result to the Company's
business, or certain parts of the Company's business might not have to be
disposed of, any of which could cause Purchaser to elect to terminate the Offer
without the purchase of Shares thereunder under certain conditions. See Section
16 of this Offer to Purchase -- "Certain Conditions of the Offer."
State Takeover Statutes. A number of states (including South Carolina,
where the Company is incorporated), have adopted laws which purport, to varying
degrees, to apply to attempts to acquire corporations that are incorporated in,
or which have substantial assets, stockholders, principal executive offices or
principal places of business or whose business operations otherwise have
substantial economic effects in, such states. Except as described herein,
Purchaser does not know whether any of these laws will, by their terms, apply to
the Offer or the Merger or any other business combination between Purchaser or
any of its affiliates and the Company. To the extent that certain provisions of
these laws purport to apply to the Offer or the Merger or other business
combination, Purchaser believes that there are reasonable bases for contesting
such laws. In 1982, in Edgar v. MITE Corp., the Supreme Court of the United
States invalidated on constitutional grounds the Illinois Business Takeover
Statute which, as a matter of state securities law, made takeovers of
corporations meeting certain requirements more difficult. However, in 1987 in
CTS Corp. v. Dynamics Corp. of America, the Supreme Court held that the State of
Indiana could, as a matter of corporate law, constitutionally disqualify a
potential acquiror from voting Shares of a target corporation without the prior
approval of the remaining stockholders where, among other things, the
corporation is incorporated in, and has a substantial number of stockholders in,
the state. Subsequently, in TLX Acquisition Corp. v. Telex Corp., a Federal
District Court in Oklahoma ruled that certain Oklahoma statutes were
unconstitutional insofar as they apply to corporations incorporated outside
Oklahoma in that they would subject such corporations to inconsistent
Regulations. Similarly, in Tyson Foods, Inc. v. McReynolds, a Federal District
Court in Tennessee ruled that four Tennessee takeover statutes were
unconstitutional as applied to corporations incorporated outside Tennessee. This
decision was affirmed by the United States Court of Appeals for the Sixth
Circuit.
Section 35-2-218 of the SCBCA ("Section 35-2-218"), in general, prevents an
"interested shareholder" (including a person who owns or has the right to
acquire 10% or more of the corporation's outstanding voting stock) from engaging
in a "business combination" (defined to include mergers and certain other
actions) with a South Carolina corporation for a period of two years following
the date such person became an interested shareholder. The Company Board has
taken all appropriate action so that neither Parent nor Purchaser is or will be
considered an "interested shareholder" pursuant to Section 35-2-218.
Neither Parent nor Purchaser has determined whether any other state
takeover laws or regulations will by their terms apply to the Offer or the
Merger, and except as set forth above, neither Purchaser nor Parent has
30
<PAGE> 33
attempted to comply with any state takeover statutes in connection with the
Offer or the Merger. Purchaser and Parent reserve the right to challenge the
validity or applicability of any state law allegedly applicable to the Offer or
the Merger, and nothing in this Offer to Purchase nor any action taken by Parent
or Purchaser in connection with the Offer is intended as a waiver of that right.
In the event it is asserted that one or more state takeover statutes is
applicable to the Offer or the Merger and an appropriate court does not
determine that such takeover statute is inapplicable or invalid as applied to
the Offer or the Merger, Purchaser might be required to file certain information
with, or to receive approvals from, the relevant state authorities or holders of
Shares, and Purchaser might be unable to accept for payment or pay for Shares
tendered pursuant to the Offer or may be delayed in continuing or consummating
the Offer or the Merger. In such case, Purchaser may not be obligated to accept
for payment or pay for any tendered Shares. See Section 16 of this Offer to
Purchase -- "Certain Conditions of the Offer."
Antitrust Regulatory Matters. Under the HSR Act and the rules that have
been promulgated thereunder by the Federal Trade Commission (the "FTC"), certain
acquisition transactions may not be consummated unless certain information has
been furnished to the Antitrust Division of the Department of Justice (the
"Antitrust Division") and the FTC and certain waiting period requirements have
been satisfied. The purchase of Shares pursuant to the Offer is subject to such
requirements.
Pursuant to the requirements of the HSR Act, Purchaser expects to file a
Notification and Report Form with respect to the Offer and Merger with the
Antitrust Division and the FTC on or about June 28, 2000. The waiting period
applicable to the purchase of Shares pursuant to the Offer is scheduled to
expire at 11:59 p.m., New York City time, 15 days after such filing. However,
prior to such time, the Antitrust Division or the FTC may extend the waiting
period by requesting additional information or documentary material relevant to
the Offer from Purchaser and the Company. If such a request is made, the waiting
period will be extended until 11:59 p.m., New York City time, on the tenth day
after substantial compliance by Purchaser with such request, even if the Company
has not complied by that date. Thereafter, such waiting period can be extended
only by court order or by consent.
Any extension of the waiting period will not give rise to any withdrawal
rights not otherwise provided for by applicable law. See Section 4 of this Offer
to Purchase -- "Withdrawal Rights." If Purchaser is delayed in its purchase of
the Shares due to a request by the Antitrust Division or the FTC for additional
information or documentary material pursuant to the HSR Act, the Offer will be
extended in certain circumstances. See Section 16 of this Offer to
Purchase -- "Certain Conditions of the Offer."
Completion of the transactions also may require certain other regulatory
approvals, including approvals of foreign regulatory authorities. Under the laws
of certain foreign nations, the Merger may not be completed unless certain
filings are made with these nations' antitrust regulatory authorities and these
authorities approve or clear the Merger. The parties conduct operations in a
number of foreign countries, some of which have voluntary and/or post-merger
notification systems. The parties intend to file shortly all non-U.S. antitrust
pre-merger notifications that they believe are required. Should any other
approval or action be required, the parties currently contemplate that such
approval or action would be sought.
Although the parties believe that they will obtain all material required
regulatory approvals in a timely manner, it is not certain that all such
approvals will be received in a timely manner or at all or that governmental
authorities will not impose unfavorable conditions for granting the required
approvals.
The Antitrust Division, the FTC and foreign antitrust authorities
scrutinize the legality under the antitrust laws of transactions such as the
purchase of Shares by Purchaser pursuant to the Offer. At any time before or
after the consummation of any such transactions, the Antitrust Division, the FTC
or foreign antitrust authorities could take such action under antitrust laws as
deemed necessary or desirable to challenge the Merger, including seeking to
enjoin the purchase of Shares pursuant to the Offer or seeking divestiture of
the Shares so acquired or divestiture of substantial assets of Parent or the
Company. Private parties (including individual states) may also bring legal
actions under antitrust laws if circumstances permit. Purchaser does not believe
that the consummation of the Offer will result in a violation of any applicable
antitrust laws. However, there can be no assurance that a challenge to the Offer
on antitrust grounds will not be made, or if such a challenge is made, what the
result will be. See Section 16 of this Offer to Purchase -- "Certain Conditions
of
31
<PAGE> 34
the Offer," including conditions with respect to litigation and certain
governmental actions and Section 12 of this Offer to Purchase -- "The Merger
Agreement; Other Arrangements" for certain termination rights.
18. APPRAISAL RIGHTS.
The Company Board has unanimously approved the Merger and adopted the
Merger Agreement. Depending upon the number of Shares purchased by Purchaser
pursuant to the Offer, the Company Board may be required to submit the Merger
Agreement to the Company's stockholders for approval at a stockholders' meeting
convened for that purpose in accordance with South Carolina law. If stockholder
approval is required, the Merger Agreement must be approved by two-thirds of all
votes entitled to be cast at such meeting. If the Minimum Tender Condition is
satisfied, Purchaser will have sufficient voting power to approve the Merger
Agreement at the stockholders' meeting without the affirmative vote of any other
stockholder. If Purchaser acquires at least 90% of the Shares pursuant to the
Offer, the Merger may be consummated without a stockholders' meeting and without
the approval of the Company's stockholders.
No appraisal rights are available in connection with the Offer.
Stockholders may have appraisal rights in connection with the Merger if for some
reason the Shares are not listed on a national securities exchange or quoted on
the Nasdaq National Market System. Parent does not currently intend to delist
the Shares from the New York Stock Exchange until after the consummation of the
Merger.
If the Shares are delisted from the New York Stock Exchange prior to the
consummation of the Merger, holders of Shares at the Effective Time will have
certain rights under Sections 33-13-101 to 33-13-300 of the SCBCA to dissent and
demand appraisal of, and payment in cash of the fair value of, their Shares (the
"Dissenting Shares"). Such rights, if the statutory procedures are complied
with, could lead to a judicial determination of the fair value (excluding any
element of value arising from the accomplishment or expectation of the Merger)
required to be paid in cash to such dissenting holders for their Dissenting
Shares. Any such judicial determination of the fair value of Dissenting Shares
could be based upon considerations other than, or in addition to, the price paid
in the Offer and the market value of the Dissenting Shares, including asset
values and the investment value of the Dissenting Shares. The value so
determined could be more or less than the purchase price per Share pursuant to
the Offer or the Cash Merger Consideration.
The foregoing summary of the rights of objecting stockholders does not
purport to be a complete statement of the procedures to be followed by
stockholders of the Company desiring to exercise any available dissenters'
rights. The foregoing summary is qualified in its entirety by reference to
Sections 33-13-101 to 33-13-300 of the SCBCA. The preservation and exercise of
dissenters' rights require strict adherence to the applicable provisions of the
SCBCA.
19. FEES AND EXPENSES.
Parent has retained Goldman, Sachs & Co. to render financial advisory
services to Parent concerning its acquisition of the Company, to act as the
Dealer Manager in connection with the Offer and to arrange financing for the
Offer, pursuant to which Goldman, Sachs & Co. will be paid customary
compensation and will be reimbursed for certain out-of-pocket expenses. Parent
and Purchaser have agreed to indemnify the Dealer Manager and certain related
persons against certain liabilities and expenses in connection with its
engagement, including certain liabilities under the federal securities laws.
Parent and Purchaser have retained Morrow & Co., Inc. to be the Information
Agent and ChaseMellon Shareholder Services, L.L.C. to be the Depositary in
connection with the Offer. The Information Agent may contact holders of Shares
by mail, telephone, telecopy, telegraph and personal interview and may request
banks, brokers, dealers and other nominees to forward materials relating to the
Offer to beneficial owners of Shares. The Information Agent and the Depositary
each will receive reasonable and customary compensation for their respective
services in connection with the Offer, will be reimbursed for reasonable
out-of-pocket expenses, and will be indemnified against certain liabilities and
expenses in connection therewith, including certain liabilities under federal
securities laws. Neither Parent nor Purchaser will pay any fees or commissions
to any broker or dealer or to any other person (other than to the Depositary,
the Information Agent and the Dealer Manager) in connection with the
solicitation of tenders of Shares pursuant to the Offer. Brokers,
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<PAGE> 35
dealers, commercial banks and trust companies will, upon request, be reimbursed
by the Purchaser for customary mailing and handling expenses incurred by them in
forwarding Offering materials to their customers.
20. MISCELLANEOUS.
Neither Purchaser nor Parent is aware of any jurisdiction where the making
of the Offer is prohibited by any administrative or judicial action pursuant to
any valid state statute. If either Purchaser or Parent becomes aware of any
valid state statute prohibiting the making of the Offer or the acceptance of the
Shares, Parent and Purchaser will make a good faith effort to comply with that
state statute. If, after a good faith effort, Purchaser and Parent cannot comply
with the state statute, the Offer will not be made to, nor will tenders be
accepted from or on behalf of, the holders of Shares in that state.
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATION ON BEHALF OF PARENT OR PURCHASER NOT CONTAINED IN THE OFFER
DOCUMENTS AND, IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATION MUST NOT BE
RELIED UPON AS HAVING BEEN AUTHORIZED.
Purchaser has filed with the SEC a Tender Offer Statement on Schedule TO
pursuant to Rule 14d-3 of the General Rules and Regulations under the Exchange
Act, together with exhibits furnishing certain additional information with
respect to the Offer, and may file amendments thereto. In addition, the Company
has filed with the SEC a Solicitation/Recommendation Statement on Schedule
14D-9, together with exhibits, pursuant to Rule 14d-9 under the Exchange Act,
setting forth the recommendations of the Company Board with respect to the Offer
and the reasons for such recommendations and furnishing certain additional
related information. A copy of such documents, and any amendments thereto, may
be examined at, and copies may be obtained from, the SEC (but not the regional
offices of the SEC) in the manner set forth in Section 7 of this Offer to
Purchase -- "Certain Information Concerning the Company."
Patriot Acquisition Corp.
June 28, 2000
33
<PAGE> 36
SCHEDULE I:
DIRECTORS AND EXECUTIVE OFFICERS OF PARENT AND PURCHASER
1. DIRECTORS AND EXECUTIVE OFFICERS OF PARENT.
The following table sets forth the name and present principal occupation or
employment, and material occupations, positions, offices or employments for the
past five years of each director and executive officer of Parent. Unless
otherwise indicated below, each occupation set forth opposite each person refers
to employment with Parent. Unless otherwise indicated, the business address of
each such person is c/o Parent at 2100 East Grand Avenue, El Segundo, California
90245 and each such person is a citizen of the United States.
<TABLE>
<CAPTION>
DIRECTORS AND
EXECUTIVE OFFICERS PRESENT PRINCIPAL AND FIVE-YEAR EMPLOYMENT HISTORY
------------------ --------------------------------------------------
<S> <C>
VAN B. HONEYCUTT* Chairman, President and Chief Executive Officer of Parent.
Van B. Honeycutt was elected Chairman of Parent's Board of
Directors effective March 29, 1997. He was appointed Chief
Executive Officer effective April 1, 1995. He joined Parent
in 1975 and was elected President and Chief Operating
Officer during 1993. Prior to his election he was a Vice
President of Parent and President of the Industry Services
Group. He was formerly President of CSC Credit Services,
Inc. He has held a variety of other positions with Parent.
Director of Beckman Coulter, Inc. and Tenet Healthcare
Corporation.
LEON J. LEVEL* Director, Vice President and Chief Financial Officer of
Parent. Leon J. Level joined Parent in 1989 as Vice
President and Chief Financial Officer and as a member of
Parent's Board of Directors. Former positions include Vice
President and Treasurer of Unisys Corporation and Chairman
of Unisys Finance Corporation; Assistant Corporate
Controller and Executive Director of The Bendix Corporation;
and Principal with the public accounting firm of Deloitte &
Touche LLP. He is a Certified Public Accountant.
IRVING W. BAILEY, Director of Parent. Irving W. Bailey, II joined Parent in
II* 1992 as a member of its Board of Directors. President of
Bailey Capital Corporation. Former Chairman and Chief
Executive Officer of Providian Corporation. Director of High
Speed Access Corp.
STEPHEN L. BAUM* Director of Parent. Stephen L. Baum joined Parent in 1999 as
a member of its Board of Directors. Vice Chairman, President
and Chief Executive Officer of Sempra Energy.
WILLIAM R. HOOVER* Director and Chairman of the Executive Committee of Parent.
William R. Hoover joined Parent in 1968. Former Chairman,
President and Chief Executive Officer of Parent. Director of
Merrill Lynch & Co., Inc., Storage Technology Corporation
and Rofin-Sinar Technologies Inc.
THOMAS A. MCDONNELL* Director of Parent. Thomas A. McDonnell joined Parent in
1997 as a member of Parent's Board of Directors. President,
Chief Executive Officer and Director of DST Systems, Inc.
and Director of Euronet Services Inc., Informix Corporation
and BHA Group Holdings, Inc.
F. WARREN MCFARLAN* Director of Parent. F. Warren McFarlan joined Parent in 1989
as a member of its Board of Directors. Senior Associate
Dean, Director of External Relations and Albert H. Gordon
Professor of Business Administration at the Graduate School
of Business Administration, Harvard University. Director of
Providian Financial Corporation and Li & Fung Limited.
JAMES R. MELLOR* Director of Parent. James R. Mellon joined Parent in 1992 as
a member of its Board of Directors. Former Chairman,
President and Chief Executive Officer of General Dynamics
Corporation. Director of General Dynamics Corporation,
Bergen Brunswig Corporation, USEC Inc., Howmet International
Inc. and Net2Phone, Inc.
</TABLE>
34
<PAGE> 37
<TABLE>
<CAPTION>
DIRECTORS AND
EXECUTIVE OFFICERS PRESENT PRINCIPAL AND FIVE-YEAR EMPLOYMENT HISTORY
------------------ --------------------------------------------------
<S> <C>
WILLIAM P. RUTLEDGE* Director of Parent. William P. Rutledge joined Parent in
1997 as a member of its Board of Directors. Former positions
include President, Chief Executive Officer and Director of
Allegheny Teledyne Incorporated. Chairman of Communica-
tions & Power Industries, Inc.
HARVEY N. BERNSTEIN Vice President of Parent. Harvey N. Bernstein joined Parent
as Assistant General Counsel in 1983. He became Deputy
General Counsel and was elected a Vice President in 1988.
Prior to joining Parent, he specialized in government
procurement law at the firm of Fried, Frank, Harris, Shriver
& Jacobson in Washington, D.C.
EDWARD P. BOYKIN Vice President of Parent. Edward P. Boykin joined Parent in
1966 and has held numerous positions with several Parent
divisions. He was elected a Vice President in 1995. Since
May, 1999, he has been President of the Financial Services
Group. From 1998 to 1999, he was responsible for leveraging
the capabilities that exist within the J.P. Morgan & Co.
Incorporated and E.I. duPont de Nemours and Company
accounts. Previously, he was President of The Pinnacle
Alliance, a Parent-managed organization providing
information technology outsourcing and other services to
J.P. Morgan & Co. Incorporated, from 1996 to 1998, and
President of the Technology Management Group from 1993 to
1996.
MILTON E. COOPER Vice President of Parent. Milton E. Cooper joined Parent in
1984 as Group Vice President of program development. He was
named President of the Federal Sector, formerly known as the
Systems Group, in December 1991 and became a Corporate Vice
President in January 1992. A veteran of 36 years in the
information industry, he has held senior sales and marketing
positions with IBM Corporation and Telex Corporation. He is
a graduate of the United States Military Academy at West
Point.
BRYAN BRADY Vice President and Controller of Parent. Bryan Brady joined
Parent in 1997 and served as Vice President, Finance of
European Business Development and then Vice President,
Finance and Administration of the United Kingdom Division.
He was elected Vice President and Controller of Parent in
February, 2000. Prior to joining Parent, he worked for
International Computers Ltd. from 1985 to 1997 and held
various executive-level finance positions. He also spent
seven years in South Africa and Saudi Arabia as general
manager of a joint ventures division.
HAYWARD D. FISK Vice President, General Counsel and Secretary of Parent.
Hayward D. Fisk joined Parent in 1989 as Vice President,
General Counsel and Secretary. Prior to joining Parent, he
was associated for 21 years with Sprint Corporation
(formerly United Telecommunications, Inc.), in various legal
and executive officer positions, most recently as Vice
President and Associate General Counsel.
RONALD W. MACKINTOSH Vice President of Parent. Ronald W. Mackintosh joined Parent
in 1988 as a result of the Index acquisition, where he was
Managing Director of its London office. Previously he was a
partner in the London office of Nolan, Norton & Company. In
1991, he was named Chief Executive Officer of Parent's U.K.
Operations and, subsequently, President of the European
Group. In 1993 he was elected a Vice President of Parent.
PAUL T. TUCKER Vice President of Parent. Paul T. Tucker joined Parent in
1996 as a Corporate Development executive, and in August,
1997 was elected Vice President of Corporate Development.
Prior to joining Parent, he was President and Chief
Executive Officer of Knight-Ridder Financial, an electronic
real-time financial market information company, from 1990 to
1995. Previously, he founded and served as President and
Chief Technologist of HAL Communications Corp., a
communications hardware and software company and was an
Associate Professor and Senior Research Engineer at the
University of Illinois.
</TABLE>
---------------
* Member of Parent's Board of Directors.
35
<PAGE> 38
2. DIRECTORS AND EXECUTIVE OFFICERS OF PURCHASER.
The following table sets forth the name and present principal occupation or
employment, and material occupations, positions, offices or employments for the
past five years of each director and executive officer of Purchaser. Unless
otherwise indicated below, each occupation set forth opposite each person refers
to employment with Parent. Unless otherwise indicated, the business address of
each such person is c/o Parent at 2100 East Grand Avenue, El Segundo California
90245 and each such person is a citizen of the United States.
<TABLE>
<CAPTION>
DIRECTORS AND
EXECUTIVE OFFICERS PRESENT PRINCIPAL AND FIVE-YEAR EMPLOYMENT HISTORY
------------------ --------------------------------------------------
<S> <C>
VAN B. HONEYCUTT* President and Director of Purchaser. Chairman, President and
Chief Executive Officer of Parent. Van B. Honeycutt was
elected Chairman of Parent's Board of Directors effective
March 29, 1997. He was appointed Chief Executive Officer
effective April 1, 1995. He joined Parent in 1975 and was
elected President and Chief Operating Officer during 1993.
Prior to his election he was a Vice President of Parent and
President of the Industry Services Group. He was formerly
President of CSC Credit Services, Inc. He has held a variety
of other positions with Parent. Director of Beckman Coulter,
Inc. and Tenet Healthcare Corporation.
HAYWARD D. FISK* Vice President, Secretary and Director of Purchaser. Vice
President, General Counsel and Secretary of Parent. Hayward
D. Fisk joined Parent in 1989 as Vice President, General
Counsel and Secretary. Prior to joining Parent, he was
associated for 21 years with Sprint Corporation (formerly
United Telecommunications, Inc.), in various legal and
executive officer positions, most recently as Vice President
and Associate General Counsel.
LEON J. LEVEL* Vice President, Treasurer and Director of Purchaser.
Director, Vice President and Chief Financial Officer of
Parent. Leon J. Level joined Parent in 1989 as Vice
President and Chief Financial Officer and as a member of
Parent's Board of Directors. Former positions include Vice
President and Treasurer of Unisys Corporation and Chairman
of Unisys Finance Corporation; Assistant Corporate
Controller and Executive Director of The Bendix Corporation;
and Principal with the public accounting firm of Deloitte &
Touche LLP. He is a Certified Public Accountant.
PAUL T. TUCKER Vice President of Purchaser. Vice President of Parent. Paul
T. Tucker joined Parent in 1996 as a Corporate Development
executive, and in August, 1997 was elected Vice President of
Corporate Development. Prior to joining Parent, he was
President and Chief Executive Officer of Knight-Ridder
Financial, an electronic real-time financial market
information company, from 1990 to 1995. Previously, he
founded and served as President and Chief Technologist of
HAL Communications Corp., a communications hardware and
software company and was an Associate Professor and Senior
Research Engineer at the University of Illinois.
</TABLE>
---------------
* Member of Purchaser's Board of Directors prior to Effective Time.
36
<PAGE> 39
SCHEDULE II:
DIRECTORS AND EXECUTIVE OFFICERS OF PARENT AND PURCHASER
WHO OWN SHARES OF THE COMPANY
The following table sets forth the name of each director and executive
officer of Parent and Purchaser who beneficially owns Shares of the Company and
the number of Shares beneficially owned by each.
<TABLE>
<CAPTION>
NUMBER
NAME OF SHARES
---- ---------
<S> <C>
Van B. Honeycutt 9,000
Paul T. Tucker 15,000
</TABLE>
37
<PAGE> 40
Facsimile copies of the Letter of Transmittal, properly completed and duly
signed, will be accepted. The Letter of Transmittal, Share Certificates and any
other required documents should be sent by each stockholder or such
stockholder's broker, dealer, commercial bank, trust company or other nominee to
the Depositary at one of the addresses set forth below:
THE DEPOSITARY FOR THE OFFER IS:
CHASEMELLON SHAREHOLDER SERVICES, L.L.C.
<TABLE>
<CAPTION>
By Mail: By Hand: By Overnight Delivery:
<S> <C> <C>
ChaseMellon Shareholder ChaseMellon Shareholder ChaseMellon Shareholder
Services, L.L.C. Services, L.L.C. Services, L.L.C.
Reorganization Department Reorganization Department Reorganization Department
P.O. Box 3301 120 Broadway Avenue 85 Challenger Road
South Hackensack, NJ 07606 13th Floor Mail Stop -- Reorg.
New York, New York 10271 Ridgefield Park, NJ 07660
</TABLE>
<TABLE>
<CAPTION>
By Facsimile Transmission: Confirmation Receipt of Facsimile by Telephone Only:
<S> <C>
(For Eligible Institutions Only) (201) 296-4860
(201) 296-4293
</TABLE>
Questions and requests for assistance may be directed to the Information
Agent or the Dealer Manager at their respective addresses and telephone numbers
as set forth below. Additional copies of this Offer to Purchase, the Letter of
Transmittal, or other related tender offer materials may be obtained from the
Information Agent or from brokers, dealers, commercial banks or trust companies.
THE INFORMATION AGENT FOR THE OFFER IS:
MORROW & CO., INC.
445 Park Avenue, 5th Floor
New York, NY 10022
Call Collect (212) 754-8000
Banks and Brokerage Firms, Please Call:
(800) 662-5200
STOCKHOLDERS PLEASE CALL: (800) 566-9061
THE DEALER MANAGER FOR THE OFFER IS:
GOLDMAN, SACHS & CO.
85 Broad Street
New York, New York 10004
(212) 902-1000 (call collect)
