SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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SCHEDULE 14D-9
Amendment No. 1
SOLICITATION/RECOMMENDATION STATEMENT PURSUANT TO
14(d)(4) OF THE SECURITIES EXCHANGE ACT OF 1934
Concord Fabrics Inc.
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(Name of Subject Company)
Concord Fabrics Inc.
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(Name of Person(s) Filing Statement)
Class A Common Stock, $.50 par value
Class B Common Stock, $.50 par value
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(Title of Class of Securities)
Class A Common Stock: 206219206
Class B Common Stock: 206219305
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(CUSIP Number of Class of Securities)
Peter A. Eisenberg, Esq.
Bryan Cave LLP
245 Park Avenue, New York, NY 10167
(212) 692-1800
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(Name, Address and Telephone Number of Person
Authorized to Receive Notices and
Communication on Behalf of the Person(s) Filing Statement)
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This Amendment No. 1 amends and supplements the
Solicitation/Recommendation Statement on Schedule 14D-9 relating to the offer by
Concord Merger Corp., a Delaware corporation ("Merger Corp."), to purchase all
of the outstanding shares of Class A Common Stock, par value $.50 per share, and
Class B Common Stock, par value $.50 per share, of Concord Fabrics Inc., a
Delaware corporation (the "Company") not owned by Merger Corp., on July 29,
1999, at a price of $7.875 per share, net to the seller in cash, upon the terms
and subject to the conditions set forth in Merger Corp.'s Offer to Purchase
dated August 4, 1999 (the "Offer to Purchase") and in the related Letter of
Transmittal (which together constitute the "Offer"), and Merger Corp.'s
Supplement to Offer to Purchase, dated August 31, 1999 (the "Supplement to Offer
to Purchase") a copy of which is attached hereto as Exhibits (a)(3). Merger
Corp. is an affiliate of the Company.
Item 3. Identity and Background.
(a) The person filing this statement is Concord Fabrics Inc., a Delaware
corporation the Company's business address is 1359 Broadway, New York, NY 10018.
(b) The information set forth in the "Introduction", "The Tender Offer -
7. Certain Information Concerning Purchaser", "Special Factors - 1. Background
of the Offer; Contacts with the Company", "Special Factors - 2. The Offer and
Merger; Merger Agreement", and "Special Factors - 3. Purpose of the Offer and
the Merger; Plans for the Company" of the Offer to Purchase and the Supplement
to Offer to Purchase is incorporated herein by reference.
Item 9. Material to Be Filed as Exhibits.
(a)(1) Form of Offer to Purchase for Cash All Outstanding Shares of Class
A and Class B Common Stock of Concord Fabrics Inc., at $7.875 Net Per Share by
Concord Merger Corp., dated August 4, 1999.**
(a)(2) Form of Letter of Transmittal, dated August 4, 1999.**
(a)(3) Form of Supplement to Offer to Purchase for Cash All Outstanding
Shares of Class A and Class B Common Stock of Concord Fabrics Inc., at $7.875
Net Per Share by Concord Merger Corp., dated August 31, 1999.
(a)(4) Form of Letter of Transmittal, dated August 31, 1999.
(b) Not applicable.
(c) Form of Agreement and Plan of Merger, dated as of July 29, 1999
between Purchaser and the Company.**
**Previously filed as exhibits to the Solicitation/Recommendation Statement on
Schedule 14D-9 filed by Merger Corp. on August 5, 1999.
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SIGNATURE
After reasonable inquiry and to the best of my knowledge and belief,
I certify that the information set forth in this statement is true, complete and
correct.
August 31, 1999
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(Date)
CONCORD FABRICS INC.
By: /s/ Earl Kramer
----------------------------------
(Signature)
President
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(Name and Title)
Supplement
to
Offer to Purchase for Cash All Outstanding Shares of
Class A and Class B Common Stock
of
CONCORD FABRICS INC.
at
$7.875 NET PER SHARE
by
CONCORD MERGER CORP.
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THE EXPIRATION OF THE OFFER HAS BEEN EXTENDED SUCH THAT THE OFFER AND WITHDRAWAL
RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY TIME, ON SEPTEMBER 10, 1999,
UNLESS THE OFFER IS FURTHER EXTENDED.
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THIS SUPPLEMENT, DATED AUGUST 31, 1999, SUPPLEMENTS AND AMENDS THE OFFER
TO PURCHASE, DATED AUGUST 4, 1999, RELATING TO THE PROPOSED OFFER TO PURCHASE
FOR CASH ALL OUTSTANDING SHARES OF CLASS A AND CLASS B COMMON STOCK OF CONCORD
FABRICS INC. (THE "OFFER TO PURCHASE"). THIS SUPPLEMENT, WHICH SHOULD BE READ IN
CONJUNCTION WITH THE OFFER TO PURCHASE, IS BEING PROVIDED TO GIVE YOU CERTAIN
ADDITIONAL INFORMATION. THE MATERIAL TERMS OF THE OFFER HAVE NOT BEEN CHANGED,
OTHER THAN TO EXTEND THE DATE FOR TENDERING YOUR SHARES FROM AUGUST 31, 1999 TO
SEPTEMBER 10, 1999. YOU MAY CONTINUE TO USE THE LETTER OF TRANSMITTAL AND
PROCEDURES FOR TENDERING PREVIOUSLY DELIVERED TO YOU OR YOU MAY USE THE REVISED
LETTER OF TRANSMITTAL INCLUDED HEREWITH. CAPITALIZED TERMS USED HEREIN AND NOT
OTHERWISE DEFINED HAVE THE MEANINGS ASCRIBED TO THEM IN THE OFFER TO PURCHASE.
THIS OFFER IS BEING MADE PURSUANT TO THE MERGER AGREEMENT, AS AMENDED ON
AUGUST 4, 1999 (THE "MERGER AGREEMENT").
IMPORTANT
Questions or requests for assistance may be directed to the Information
Agent or to the Dealer Manager at their respective addresses and telephone
numbers set forth on the back cover of this Supplement. Additional copies of
this Supplement, the Offer to Purchase, the original and the revised Letter of
Transmittal and the Notice of Guaranteed Delivery may also be obtained from the
Information Agent or brokers, dealers, commercial banks or trust companies.
---------------------
The Dealer Manager for the Offer is:
FIRST UNION CAPITAL MARKETS CORP.
August 31, 1999
<PAGE>
To the Holders of Common Stock of Concord Fabrics Inc.:
The Offer to Purchase is amended and supplemented as follows:
1. The fifth and sixth paragraphs under "Special Factors - 1. Background
of the Offer; Contacts with the Company - Background" are hereby replaced in
their entirety by inserting the following in lieu thereof:
"After Mr. Weinstein interviewed BHC and another investment banking
firm, on May 19, 1999, BHC was engaged by the Company to assist management
in determining an appropriate price to offer to the Public Stockholders in
a going private transaction and to advise with respect to dealings with
the holders of the Company's long term debt. On May 19, 1999,
representatives of BHC met with Alvin Weinstein, Joan Weinstein, David
Weinstein, Earl Kramer and Martin Wolfson and representatives of Bryan
Cave, and reviewed with them in depth the Company's history, financial and
otherwise, structure and future prospects, all with a view to determining
an appropriate price to be offered the Company's Public Stockholders in a
going private transaction. During that meeting, BHC made a preliminary
presentation summarizing its work to date. The presentation discussed
various approaches to valuation and included, among other things, an
analysis of public companies, a discounted cash flow analysis of the
Company, a leveraged going private analysis and a premiums paid analysis.
BHC noted that it had not identified from publicly available data
information for any transactions sufficiently comparable to aid in the
valuation process. In connection with its preliminary analysis, BHC (i)
reviewed certain publicly available financial statements and other
information of the Company; (ii) reviewed certain internal financial
statements and other financial and operating data concerning the Company
prepared by the management of the Company; (iii) reviewed certain
financial projections of the Company prepared by the management of the
Company; (iv) discussed the past and current operations, financial
condition and prospects of the Company with management of the Company; (v)
reviewed the reported prices and the limited trading activity of the
Shares; (vi) compared the financial performance and condition of the
Company with that of certain other publicly-traded companies; (vii)
analyzed premiums paid for relevant tender offers; and (viii) performed
such other analyses as it deemed appropriate.
"BHC noted that the valuation methods employed in its preliminary
analysis were standard valuation methodologies, which may or may not be
appropriate for the purposes of valuing the Company. Moreover, the
applicability of these methodologies depends upon the validity of the
assumption that a willing acquiror for the Company exists. Due to the
unrelated nature of the Company's two operating divisions, as well as the
various operational issues faced by each division, it is questionable
whether or not a willing acquiror for the Company exists. In addition, the
Continuing Shareholders have stated that they have no current intention to
sell the Company. Finally, the projections upon which the
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valuations were predicated assumed consistent increases in revenues and
profitability although since 1997 the Company actually experienced
declining revenues and earnings.
"Using public information, BHC compared selected historical and
operating performance data of the Company to the corresponding data of the
following companies: Cone Mills Corp., Culp, Inc., Dyersburg Corp., FAB
Industries, Inc., Galey & Lord, Inc., Guilford Mills, Inc. Johnston
Industries, Inc., and Quaker Fabric Corp. (the "Public Companies"). BHC
noted that while these companies were all active in various segments of
the textile industry, none was directly comparable to the Company. With
respect to the Public Companies, BHC calculated multiples of adjusted
market value ('AMV') (market value of equity, based on stock market prices
as of May 14, 1999, plus total debt less cash and cash equivalents as of
their most recent Form10-Q) to latest twelve months ('LTM') net income
before interest, taxes, depreciation and amortization ('EBITDA') and LTM
net income before interest and taxes ('EBIT'). BHC also calculated for the
Public Companies multiples of current equity market value to LTM net
income, projected calendar year 1999 net income and book value. When
applied to the operating performance of the Company, the multiples of the
Public Companies yielded an implied per share value for the Company
between $6.73 and $9.78.
"BHC also analyzed the projected unlevered free cash flows of the
Company through August 31, 2004, based on the estimates provided by
management to BHC, utilizing a range of discount rates and perpetuity
value assumptions. Based on this analysis, BHC derived an implied per
share value for the Company between $9.14 and $12.60. BHC did not do a
similar analysis based on an extrapolation of the Company's actual
declining revenue and earnings since 1997, nor did it revise its
calculations to take into account the Company's revised projections
delivered to Peter J. Solomon on July 9, 1999. See "Certain Financial
Projections."
"Based on the Company's projected results for fiscal year 2000
(delivered by management prior to the May 19, 1999 meeting), BHC analyzed
the potential pro-forma earnings impact of an acquisition of the Company
by a potential acquiror assuming an all cash purchase. BHC calculated the
maximum cash purchase price that a hypothetical acquiror could pay which
would result in no earnings dilution for the projected fiscal year 2000,
assuming costs of financing ranged from 7.0% to 8.0%. This analysis
indicated an implied per share value for the Company of up to $10.61.
"BHC analyzed a series of scenarios involving hypothetical
recapitalizations of the Company. This analysis calculated the maximum
cash price per share that could be paid to existing shareholders assuming
reasonable leverage levels for the Company and internal rates of return
for the new investor.
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The analysis was based on the first set of projections provided by
management (though BHC again noted that a new investor might not base his
analysis on those projections, which project a turnaround from the
declining operating performance of the Company since 1997). Based on the
assumptions employed, the calculations implied a per share value for the
Company of $8.65, which could produce an internal rate of return in the
range of 21.1% and 37.0% over a five year period. The analysis was not
updated to reflect the revised projections delivered on July 9, 1999.
"Finally, BHC reviewed the consideration paid in tender offers
completed from January 1, 1997 to May 1, 1999 for transaction sizes
between $25 and $50 million and between $50 and $100 million. BHC
calculated the premiums paid in those transactions over the acquired
entities' equity values one month prior to the announcement of the
acquisition offers. The implied per share value for the Company was based
on the Company's then-current share price of $4.75 on May 14, 1999. The
median premium paid for relevant transactions in the $25 to $50 million
range was 44.3%, which implied a per share value for the Company of $6.85.
The median premium paid for relevant transactions in the $50 to $100
million range was 35.5%, which implied a per share value for the Company
of $6.44.
"While the foregoing summary describes all analyses and examinations
that BHC deemed material to the preparation of its report to the Company,
it does not purport to be a comprehensive description of all analyses and
examinations actually conducted by BHC. In addition, BHC may have given
some analyses more or less weight than other analyses and may have deemed
various assumptions more or less probable than other assumptions. In
performing its analyses, BHC made numerous assumptions with respect to
industry performance, general business and economic conditions and other
matters, many of which are beyond the control of the Company. BHC also
used in its analysis various projections of future performance prepared by
the management of the Company. These projections were based on numerous
variables and assumptions that are inherently unpredictable. In fact,
market conditions changed to such a degree after BHC's presentation that
projections used by BHC in its analysis were later revised downward to
reflect significant raw material price increases.
"At a meeting of the Board on May 25, 1999, Alvin Weinstein informed
the Board that based upon the preliminary report of BHC, he proposed an
offer of $7.50 per Share for all shares of Common Stock held by Public
Stockholders, provided that the Special Committee agreed that the offered
price was fair (the "Initial Proposal"). Mr. Weinstein said that he had
met with representatives of Chase Manhattan Bank who had informally
advised him that they, alone or together with another bank, would provide
the necessary financing to a corporation to be formed by the Continuing
Shareholders for the purpose of making the offer. Thereafter, the Board
established the Special Committee
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consisting of Fred Heller and Richard Solar, both of whom are neither
employees of, nor consultants to, the Company, Purchaser, or the
Continuing Shareholders and had no interest in the proposed transaction
other than as holders of non-employee director Company Stock Options and,
in one case, as a Public Stockholder. The Special Committee was authorized
to consider and take such action, if any, (including, without limitation,
negotiation and/or rejection) as the Special Committee may consider
appropriate with respect to a proposal by the Continuing Shareholders to
acquire all shares of common stock of the Corporation held by the Public
Stockholders at a purchase price of $7.50 per share. The Board also
authorized the Special Committee to retain, at the expense of the Company,
legal counsel and an independent investment banking firm to assist and
advise it in its work concerning the Initial Proposal. Before the meeting
adjourned, representatives of Bryan Cave reviewed with the members of the
Board the duties and responsibilities of the members of the Board and of
the Special Committee in connection with the Initial Proposal. They also
reviewed the various legal forms by which a going private transaction
might be accomplished."
2. The discussion under the caption "Special Factors - 1. Background of
the Offer; Contacts with the Company - Reasons for the Recommendation of the
Special Committee and the Board" is hereby replaced in its entirety by inserting
the following in lieu thereof:
"Reasons for the Recommendation of the Special Committee and the
Board. In determining that the Merger Agreement and the transactions
contemplated thereby are advisable and fair to the Public Stockholders as
a whole as well as to the Public Stockholders who hold Class A Shares, as
a class, and to the Public Stockholders who hold Class B Shares, as a
class, the Special Committee considered the following material factors,
which taken as a whole, supported its determinations:
(i) the financial condition, assets, results of
operations, business and prospects of the Company,
and the risks inherent in achieving those prospects.
The Special Committee particularly focused on the
financial and operating difficulties experienced by
the Concord House Division over the past five years
and management's belief that the Concord House
Division could not be expected to return to its prior
levels of profitability in the near future. To
return to such levels of profitability the division
would need to expand into new markets and there could
be no assurance that it could successfully do so.
The Special Committee also focused on trends in the
industry in which the Company operates, including the
shrinking home sewing market, the increasing
competition presented to the Company by companies
which manufacture fabric in countries with lower
labor costs, and the relocation of the manufacturing
facilities of the Company's customer base to such
countries. The Special Committee considered the
difficulties which the Company would face in
attempting to relocate its manufacturing facility to
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such lower labor cost countries. The Special
Committee considered the unlikelihood of growth in
the Knit Division given the secular decline in
domestic demand for the division's traditional
products.
(ii) the terms and conditions of the Merger Agreement, including
the amount and form of consideration payable to the Public
Stockholders, and the structure of the transaction which is
designed, among other things, to result in the receipt by the
Public Stockholders of cash consideration at the earliest
practicable time without any brokerage fees;
(iii) the historical market prices and recent trading activity of
the Shares, including the fact that the $7.875 per Share cash
consideration to be paid to the Public Stockholders in the
offer represents a premium of approximately 40% over the last
reported sales price of the Class A Shares on July 28, 1999,
the last full trading day for the Class A Shares preceding the
public announcement of the Offer, and of the Class B Shares on
July 27, 1999, the last full trading day for the Class B
Shares preceding the public announcement of the Offer, and a
premium of approximately 38%, 56% and 49% over the average
closing price for the one-month, three-month and six-month
periods, respectively, preceding such date, as well as the
fact that such price would be payable in cash, thus
eliminating any uncertainties in valuing the consideration to
be received by the Public Stockholders. The Special Committee
also considered the opportunity provided by the Offer for a
substantial number of stockholders to realize a premium price
for their Shares in the near future as compared to market
prices that, absent the Offer and the Merger, may continue to
be significantly below the Offer price.
(iv) the prices paid by the Company in the stock repurchases made
by the Company beginning in September 1998, including the fact
that the $7.875 per Share cash consideration to be paid to the
Public Stockholders is approximately 31%, 27% and 28% greater
than the average price paid by the Company during each of the
three fiscal quarters following the commencement of such
repurchases. See "The Tender Offer - Certain Information
Concerning the Company."
(v) the fact that the Merger Agreement and the price of $7.875 per
Share are the product of arms' length negotiations between the
Continuing Shareholders and Purchaser, on the one hand, and
the Special Committee, on the other. These
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negotiations led to an increase in the proposed price from
$7.50 to $7.875 per Share, which the Continuing Shareholders
agreed to on the condition that this price was final and there
would be no further negotiations.
(vi) the opinion of Peter J. Solomon as to the fairness, from a
financial point of view, of the price of $7.875 per Share to
be paid in the Offer and the Merger. The full text of Peter J.
Solomon's opinion, describing various considerations,
assumptions and limitations stated therein, is set forth in
Schedule I to the Offer to Purchase. The Special Committee
also considered the presentation by Peter J. Solomon to the
Special Committee regarding:
- the Company's current financial condition and results
of operations; and
- the financial, operating and stock market performance
data of the Company compared to certain publicly traded
textile companies, the analysis of the valuation of
selected going private transactions announced or
consummated since January 1, 1997, and a discounted cash
flow analysis.
These factors and the results of Peter J. Solomon's analysis
of such factors which are summarized in the discussion below
under the caption "Opinion of Peter J. Solomon" were
considered and specifically adopted by the Special Committee.
It is Peter J. Solomon's position that its duties in
connection with its fairness opinion are solely to the Special
Committee, and that it has no legal responsibility to any
other persons, including shareholders of the Company, under
the terms of its engagement letter. Peter J. Solomon's
engagement letter is governed by the laws of the State of New
York. Peter J. Solomon would likely assert the substance of
this disclaimer as a defense to claims, if any, that might be
brought against it by shareholders of the Company with respect
to its fairness opinion. However, since no New York court has
ruled specifically on the availability of such a disclaimer as
a defense in the context of a Special Committee financial
advisory engagement, it necessarily would have to be resolved
by a court of competent jurisdiction. In any event, the
availability or non-availability of the defense will have no
effect on Peter J. Solomon's rights and responsibilities under
the federal securities laws, or on the rights and
responsibilities of the directors of the Company under either
the governing state fiduciary law or the federal securities
laws.
(vii) that the Continuing Shareholders have stated that they have
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no current intention to sell the Company, which made the
pursuit of other potential alternatives (such as a sale of the
Company as a going concern) impracticable. The Special
Committee also considered the intention of the Continuing
Shareholders to continue the business as a going concern,
which makes any consideration of liquidation of the Company or
values that ultimately might be obtained from such liquidation
impracticable and speculative; and
(viii) the availability of appraisal rights under the DGCL to
holders of Shares who dissent in the Merger.
"The Board considered and specifically adopted the conclusions and
recommendation of the Special Committee and the factors described above
which the Special Committee took into account in making its recommendation
to the Board. The members of the Board, including the members of the
Special Committee, evaluated the various factors considered in light of
their knowledge of the business, financial condition and prospects of the
Company, and sought and considered the advice of financial and legal
advisors. In light of the number and variety of factors that the Board and
the Special Committee considered in connection with their evaluation of
the Offer and the Merger, neither the Board nor the Special Committee
found it practicable to quantify or otherwise assign relative weights to
any of the foregoing factors, and, accordingly, neither the Board nor the
Special Committee did so. The Board and the Special Committee, however,
gave significant weight to the factors specified in clauses (i) through
(vi), inclusive, above.
"In addition to the factors listed above, the Special Committee
considered the fact that consummation of the Offer and the Merger would
eliminate the opportunity of the Public Stockholders to participate in any
potential future growth in the value of the Company, but believed that
this loss of opportunity was appropriately reflected by the price of
$7.875 per Share to be paid in the Offer and the Merger. See "Purpose of
the Offer and the Merger; Plans for the Company."
"The Board, including the Special Committee, the Continuing
Shareholders and the Purchaser believe that the Offer and the Merger are
procedurally fair because, among other things: (i) the Special Committee
consisted of independent directors (unaffiliated with Purchaser or its
affiliates or the Company's management) appointed to represent the
interests of the Public Stockholders; (ii) the Special Committee retained
and was advised by independent legal counsel; (iii) the Special Committee
retained and was advised by independent financial advisors, who negotiated
the terms of the Offer solely on behalf of the Special Committee as
representative of the Public Stockholders, assisted the Special Committee
in evaluating the Offer and the Merger and rendered a fairness opinion, as
described herein; (iv) the detailed review by the Special Committee and
its advisors of the business and financial condition of the Company; (v)
the deliberations pursuant to which the Special Committee evaluated the
Offer and the Merger; (vi) the $7.875 per Share
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price and the other terms and conditions of the Merger Agreement resulted
from active arms' length bargaining between members of the Special
Committee, on the one hand, and Purchaser and the Continuing Shareholders,
on the other; and (vii) the Minimum Condition, which cannot be waived by
Purchaser without the consent of the Special Committee and which the
Board, the Special Committee, the Continuing Shareholders and the
Purchaser believe is tantamount to a requirement that approval of the
Merger Agreement be subject to the affirmative vote of a majority of the
Public Stockholders since, if it is not satisfied or waived, it will
prevent consummation of the Offer and the Merger. The Board, including the
Special Committee, the Continuing Shareholders and Purchaser reached the
conclusion that the Offer and Merger are procedurally fair for the
foregoing reasons, notwithstanding the fact that approval of the Merger
Agreement is not subject to the affirmative vote of at least a majority of
the Public Stockholders, as well as the fact that, pursuant to the
Company's engagement letter with Peter J. Solomon, the opinion of Peter J.
Solomon states that it may be relied upon solely by the Special Committee.
"THE BOARD OF DIRECTORS OF THE COMPANY BELIEVES THAT THE MERGER IS
ADVISABLE AND FAIR TO, AND IN THE BEST INTERESTS OF, THE COMPANY AND THE
PUBLIC STOCKHOLDERS AS A WHOLE AS WELL AS THE PUBLIC STOCKHOLDERS WHO HOLD
CLASS A SHARES, AS A CLASS, AND THE PUBLIC STOCKHOLDERS WHO HOLD CLASS B
SHARES, AS A CLASS, AND, UPON THE RECOMMENDATION OF THE SPECIAL COMMITTEE,
RECOMMENDS THAT THE PUBLIC STOCKHOLDERS WHO HOLD CLASS A SHARES AND THE
PUBLIC STOCKHOLDERS WHO HOLD CLASS B SHARES ACCEPT THE OFFER AND TENDER
THEIR SHARES TO PURCHASER.
"Except to the extent a recommendation is made in a person's
capacity as a director, no executive officer of the Company, nor any of
the Continuing Shareholders nor the Purchaser, has made any recommendation
with respect to the Offer, the adoption of the Merger Agreement or the
Merger."
3. The discussion under "Special Factors - 1. Background of the Offer;
Contacts with the Company - Certain Financial Projections" is hereby replaced in
its entirety by inserting the following in lieu thereof:
"Certain Financial Projections. The Company does not as a matter of
course make public forecasts or projections as to future performance
(including as to revenues, earnings, other income statement items and cash
flows) or financial position. However, in May 1999, the Company engaged
BHC to assist management in determining an appropriate price to offer to
the Public Stockholders in a going private transaction. During the course
of its consultation with BHC, the Company prepared income statement
projections and certain other financial data through August 31, 2004 (the
"Original Projections"). The assumptions used by the Company in preparing
the Original Projections were:
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o revenues are expected to grow slightly as a result of increased
sales at Concord House Division;
o EBITDA margin is expected to be 7.2% in 1999, and to increase
slightly each year thereafter due to improved margin contribution
from the Concord House Division;
o capital expenditures and depreciation are expected to be
approximately $1.8 million;
o working capital needs are expected to remain relatively constant;
o base year is estimated to be the fiscal year ending August 29, 1999;
o 179,000 Shares authorized to be repurchased are assumed to be
repurchased equally in fiscal years 2000 and 2001 at a Price to
Forward Earnings multiple of 7.3; and
o the Chino California facility is assumed to be sold in year 2000 at
a net sales price of $3.0 million. (The Company has subsequently
received an offer to purchase the Chino California facility at a net
sales price of $3.44 million. Although, the difference between the
assumed net sales price and the offered net sales price may have a
material effect on the projected net income of the Company for the
year in which the facility is sold (if the offer is accepted), such
difference would not affect the projected income from continuing
operations of the Company. Accordingly, BHC has orally advised the
Company that in its opinion the sale of the Chino California
facility at a net sales price of $3.44 million would not have a
material effect on the valuation of the Company.)
"Based upon the assumptions in the Original Projections, the Company
estimated that net sales would increase from an estimated $87.8 million for
fiscal 1999 to $89.0 million in fiscal 2000, $90.6 million in fiscal 2001, $92.7
million in fiscal 2002, $94.8 million in fiscal 2003 and $97.1 million in fiscal
2004. In total, therefore, the Company estimated a five year compound annual
growth rate of 2.0% in sales for the Company. Gross profit was also expected to
rise at a compound annual growth rate of 2.5% from $28.4 million in fiscal 1999
to a projected $32.2 million by fiscal 2004. Net Income was expected to rise at
a compound annual growth rate of 12.1% from $2.2 million in fiscal 1999 to $4.0
million in fiscal 2004.
"In June 1999, the Company's management updated the Company's operating
plan to reflect an industry-wide price increase for polyester by the fiber's
largest global suppliers. The operational and financial projections prepared by
the Company in connection with the updated operating plan are referred to as the
"Updated Projections." The Updated Projections yielded the same sales growth
figures, but the gross profit increased only at a compound annual growth rate of
0.7% through fiscal 2003, to $29.3 million, and net income was expected to
increase only at a
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compound annual growth rate of 0.9% from $2.2 million in fiscal 1999 to $2.3
million in fiscal 2003."
4. The discussion under "Special Factors - 1. Background of the Offer;
Contacts with the Company - Special Cautionary Notice Regarding Forward-Looking
Statements" is hereby replaced in its entirety by inserting the following in
lieu thereof:
"Special Cautionary Notice Regarding Forward-Looking Statements. The
Projections were based upon numerous estimates and assumptions that are
inherently subject to significant uncertainties, are difficult to predict
and, in many cases, are influenced by factors beyond the Company's
control. The material assumptions used in preparing the Projections are
described in the respective Projections and footnotes to the Projections.
There can be no assurance that the projected results will be realized or
that actual results will not be significantly higher or lower than those
predicted. While the Projections were prepared in good faith by the
Company's management, no assurance can be made regarding future events.
Therefore, neither the Original Projections nor the Updated Projections
can be considered a reliable prediction of future operating results and
should not be relied on as such. Additionally, the Projections were
prepared at the times indicated above and do not reflect any subsequent
results or any changes that have occurred or may occur in the future
regarding the business, assets, operations, properties, management,
capitalization, corporate structure or policies of the Company, general
economic or business conditions, or any other transaction or event that
has occurred since the respective dates of preparation, or that may occur,
and were not anticipated at the time such information was prepared. The
Company does not intend to update the Projections. The Projections were
prepared by the Company solely for use by the Company's and the Special
Committee's financial advisors and not for publication or with a view to
complying with the published guidelines of either the Commission regarding
projections or forecasts or the American Institute of Certified Public
Accountants' Guide for Prospective Financial Statements, nor in accordance
with generally accepted accounting principles. The Company's independent
auditors have not examined, compiled or performed any procedures regarding
the Projections, nor have they expressed any opinion or given any
assurance on such information or its achievability and, accordingly, they
assume no responsibility for the Projections. The Purchaser assumes no
responsibility for the validity, reasonableness, accuracy or completeness
of the Projections and makes no representation regarding the Projections.
None of the Company, Purchaser or the Continuing Shareholders intends to
update or supplement the Projections prior to consummation of the Offer or
the Merger, except to the extent required by law. Shareholders are
cautioned not to place undue reliance on the Projections."
5. The discussion under "Special Factors - 3. Purpose of the Offer and the
Merger; Plans for the Company - Purpose of the Offer and the Merger" is hereby
amended by inserting the following after the fourth paragraph thereof:
"The Continuing Shareholders and Purchaser have concluded that the
Offer and the Merger, including the $7.875 per Share cash consideration to
be
11
<PAGE>
paid pursuant thereto and the terms and conditions of the Merger
Agreement, are fair to the Company and the Public Stockholders as a whole
as well as to the Public Stockholders who hold Class A Shares, as a class,
and to the Public Stockholders who hold Class B Shares, as a class, based
upon the same factors identified by the Special Committee and the Board as
discussed under the caption "- 1. Background of the Offer; Contacts with
the Company - Reasons for the Recommendation of the Special Committee and
the Board" and have specifically adopted the analysis and conclusions of
the Special Committee and the Board as to the fairness of the Offer and
the Merger, including the $7.875 per Share cash consideration to be paid
pursuant thereto, and the terms and conditions of the Merger Agreement.
The Continuing Shareholders recognize that, following the Merger, the
Public Stockholders will no longer have an equity interest in the Company
and, therefore, will not participate in any potential future earnings and
growth of the Company. While this could be detrimental to the Public
Stockholders if the Company's operational performance improves and it
grows, the Continuing Shareholders believe that any significant business
improvement and growth is uncertain and not likely in the near term and
that it is also uncertain that any improvement and growth would favorably
affect the market price of the Shares. Accordingly, the Continuing
Shareholders believe that offering Public Stockholders the opportunity to
select, by a majority of the Public Shareholders of each class tendering
their Shares pursuant to the Offer, the present receipt of $7.875 per
Share in cash instead of a speculative future return is appropriate."
6. The first paragraph under "The Tender Offer - 2. Acceptance for Payment
and Payment for Shares" is hereby replaced in its entirety by inserting the
following in lieu thereof:
"Upon the terms and subject to the conditions of the Merger
Agreement and 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, and will pay for promptly
after the Expiration Date, including any extension thereof all Shares
validly tendered and not properly withdrawn in accordance with "The Tender
Offer - 9. Conditions to the Offer." Subject to applicable rules of the
Commission, Purchaser expressly reserves the right to delay acceptance for
payment of, or payment for, Shares in order to comply in whole or in part
with any applicable law."
7. The introductory clause to the first paragraph under "The Tender Offer
- - 9. Conditions to the Offer" is hereby replaced in its entirety by inserting
the following in lieu thereof:
"Notwithstanding any other provision of the Offer, Purchaser shall
not be required to accept for payment or pay for any Shares tendered
pursuant to the Offer, and may terminate or amend the Offer and may extend
the Expiration Date, if (i) the condition (the "Minimum Condition") that a
number of Shares which constitutes at least a majority of each class of
the Shares outstanding on a fully
12
<PAGE>
diluted basis not then owned, beneficially or of record, by Purchaser
shall have been tendered shall not have been satisfied, (ii) Purchaser
shall not have obtained sufficient financing to enable it to purchase the
Shares to be purchased by it and to pay fees and expenses of the Offer and
the Merger, including, without limitation, fees and expenses incurred or
to be incurred in connection with the financing (the "Financing
Condition") or (iii) at any time on or after the date of the Merger
Agreement, and on or prior to the Expiration Date, any of the following
conditions shall exist:"
8. The consummation of the Offer by Purchaser is subject to certain
conditions which are discussed under the caption "The Tender Offer - 9.
Conditions to the Offer." One of the conditions is that there shall not be
pending any action or proceeding challenging the Offer or the Merger before any
court. The Company has announced that an action has been filed in Delaware
Chancery Court challenging the Offer and the Merger. The Company has stated that
it intends to proceed with the Merger and Purchaser has no current intention to
terminate the Offer. However, the failure of Purchaser to exercise its right to
terminate the Offer is not a waiver of such right to terminate.
9. The item (c) in the first paragraph under "The Tender Offer - 9.
Conditions to the Offer" is hereby replaced in its entirety by inserting the
following in lieu thereof:
"(c) there shall have occurred any change, condition, event or
development that has a Material Adverse Effect, which is
defined in the Merger Agreement to mean a change or effect
that is materially adverse to the business, operations,
properties, condition (financial or otherwise), assets or
liabilities (including, without limitation, contingent
liabilities) or prospects of the Company. The foregoing
description of the definition of the term "Material Adverse
Effect" is a summary thereof and is qualified in its
entirely by reference to the full text of the Merger
Agreement, a copy of which is filed as an Exhibit to the
Schedule 14D-1."
13
<PAGE>
The Letter of Transmittal, certificates for Shares and any other required
documents should be sent or delivered by each stockholder of the Company or his
broker, dealer, commercial bank or other nominee to the Depository at one of its
addresses set forth below.
The Depositary for the Offer is:
CHASEMELLON
SHAREHOLDER SERVICES, LLC
--------------------------
Facsimile Transmission: (201) 296-4293
(For Eligible Institutions Only)
Confirmation Facsimile Only: (201) 296-4860
------------------------
By Mail: By Overnight Delivery: By Hand:
-------- ---------------------- --------
ChaseMellon Shareholder ChaseMellon Shareholder ChaseMellon Shareholder
Services, L.L.C. Services, L.L.C. Services, L.L.C.
Post Office Box 3301 85 Challenger Road-Mail 120 Broadway, 13th Floor
South Hackensack, NJ 07606 Drop-Reorg New York, NY 10271
Attn: Reorganization Ridgefield Park, NJ 07660 Attn: Reorganization
Department Attn: Reorganization Department
Department
Any questions or requests for assistance or additional copies of this
Supplement, the Offer to Purchase, the original or the revised Letter of
Transmittal and the Notice of Guaranteed Delivery may be directed to the
Information Agent at its telephone numbers and location listed below. You may
also contact your broker, dealer, commercial bank or trust company or nominee
for assistance concerning the Offer.
The Information Agent for the Offer is:
AMERICAN STOCK TRANSFER & TRUST COMPANY
40 Wall Street
46th Floor
New York, NY 10005
or
CALL TOLL FREE: (800) 937-5449 or (212) 936-5100
The Dealer Manager for the Offer is:
FIRST UNION CAPITAL MARKETS CORP.
901 East Byrd Street
3rd Floor
Richmond, VA 23219
(800) 532-2916
14
LETTER OF TRANSMITTAL
To Tender Shares of Common Stock
of
CONCORD FABRICS INC.
at $7.875 Net Per Share
Pursuant to the Offer to Purchase Dated August 31, 1999 by
Concord Merger Corp., a Delaware corporation
- --------------------------------------------------------------------------------
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY
TIME, ON SEPTEMBER 10, 1999, UNLESS THE OFFER IS EXTENDED.
- --------------------------------------------------------------------------------
The Letter of Transmittal, certificates for Shares and any other
required documents should be sent or delivered by each stockholder of the
Company or his broker, dealer, commercial bank or other nominee to the
Depository at one of its addresses set forth below.
The Depository for the Offer is:
CHASEMELLON SHAREHOLDER SERVICES, L.L.C.
By Mail: By Overnight Courier Delivery:
Post Office Box 3301 85 Challenger Road-Mail
South Hackensack, NJ 07606 Drop-Reorg
Attn.: Reorganization Department Ridgefield Park, NJ 07660
Attn.: Reorganization Department
By Facsimile Transmission: By Hand:
(201) 329-8936 120 Broadway, 13th Floor
Confirm by Telephone: New York, NY 10271
(201) 296-4860 Attn.: Reorganization Department
DELIVERY OF THIS LETTER OF TRANSMITTAL TO AN ADDRESS OTHER THAN AS SET FORTH
ABOVE, OR TRANSMISSION OF INSTRUCTIONS VIA A FACSIMILE NUMBER OTHER THAN AS SET
FORTH ABOVE, WILL NOT CONSTITUTE A VALID DELIVERY.
YOU MUST SIGN THIS LETTER OF TRANSMITTAL WHERE INDICATED BELOW AND COMPLETE THE
SUBSTITUTE FORM W-9 PROVIDED BELOW. THE INSTRUCTIONS ACCOMPANYING THIS LETTER OF
TRANSMITTAL SHOULD BE READ CAREFULLY BEFORE THIS LETTER OF TRANSMITTAL IS
COMPLETED.
<PAGE>
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
DESCRIPTION OF SHARES TENDERED
- ------------------------------------------------------------------------------------------------------------------------------------
Name(s) and Address(es) of Registered Holder(s) Share Certificate(s) and Share(s) Tendered
(Please fill in, if blank, exactly as name(s) appear(s) (Attach additional list if necessary)
on Share Certificate(s) and Share(s) Tendered)
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Total Number
Share of Shares Number
Certificate Represented of Shares
Number(s)* by Certificates** Tendered
---------------------------- ---------------------------- ----------------------------
---------------------------- ---------------------------- ----------------------------
---------------------------- ---------------------------- ----------------------------
---------------------------- ---------------------------- ----------------------------
---------------------------- ---------------------------- ----------------------------
---------------------------- ---------------------------- ----------------------------
Total Number of Common
Shares
- ------------------------------------------------------------------------------------------------------------------------------------
* Need not be completed by stockholders tendering by book-entry transfer.
** Unless otherwise indicated, it will be assumed that all Shares evidenced by each Share Certificate delivered to the Depository
are being tendered hereby. See Instruction 4.
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
This Letter of Transmittal is to be completed by stockholders either if
certificates are to be forwarded herewith or if delivery is to be made by
book-entry transfer to the Depository's account at The Depository Trust Company
or Philadelphia Depository Trust Company (each, a "Book-Entry Transfer Facility"
and collectively, the "Book-Entry Transfer Facilities") pursuant to the
procedures set forth in "The Tender Offer - 3. Procedures for Accepting the
Offer and Tendering Shares" of the Offer to Purchase (as defined below).
DELIVERY OF DOCUMENTS TO A BOOK-ENTRY TRANSFER FACILITY DOES NOT CONSTITUTE
DELIVERY TO THE DEPOSITORY. BOXES BELOW FOR USE BY ELIGIBLE INSTITUTIONS ONLY.
Stockholders whose certificates evidencing Shares ("Share Certificates")
are not immediately available or who cannot deliver their Share Certificates and
all other documents required hereby to the Depository prior to the Expiration
Date (as defined in "The Tender Offer - 1. Terms of the Offer" of the Offer to
Purchase) or who cannot comply with the book-entry transfer procedures on a
timely basis must tender their Shares according to the guaranteed delivery
procedure set forth in "The Tender Offer - 3. Procedures for Accepting the Offer
and Tendering Shares" of the Offer to Purchase. See Instruction 2.
|_| CHECK HERE IF TENDERED SHARES ARE BEING DELIVERED BOOK-ENTRY TRANSFER MADE
TO THE ACCOUNT MAINTAINED BY THE DEPOSITORY WITH ONE OF THE BOOK-ENTRY
TRANSFER FACILITIES AND COMPLETE THE FOLLOWING:
Name of Tendering Institution: _________________________________________________
Check Box of Book-Entry Transfer Facility (check one):
|_| The Depository Trust Company |_| Philadelphia Depository Trust Company
Account Number: ________________________________________________________________
<PAGE>
Transaction Code Number: _______________________________________________________
|_| CHECK HERE IF TENDERED SHARES ARE BEING DELIVERED PURSUANT TO A NOTICE OF
GUARANTEED DELIVERY SENT TO THE DEPOSITORY PRIOR TO THE DATE HEREOF AND
COMPLETE THE FOLLOWING:
Name(s) of Registered Owner(s): ________________________________________________
Window Ticket Number (if any): _________________________________________________
Date of Execution of Notice of Guaranteed Delivery: ____________________________
Name of Institution that Guaranteed Delivery: __________________________________
The names and addresses of the registered holders should be printed, if
not already printed above, exactly as they appear on the certificates
representing Shares tendered hereby. The certificates and number of Shares that
the undersigned wishes to tender should be indicated in the appropriate boxes.
|_| CHECK HERE IF TENDER IS BEING MADE PURSUANT TO LOST, STOLEN, DESTROYED OR
MUTILATED SECURITIES. SEE INSTRUCTION 11.
NOTE: SIGNATURES MUST BE PROVIDED BELOW
PLEASE READ THE ACCOMPANYING INSTRUCTIONS CAREFULLY
Ladies and Gentlemen:
The undersigned hereby tenders to Concord Merger Corp., a Delaware
corporation ("Purchaser"), the above-described shares of Common Stock, par value
$0.50 per share (collectively, the "Shares"), of Concord Fabrics Inc., a
Delaware corporation (the "Company"), at $7.875 per Share, net to the seller in
cash, without interest, upon the terms and subject to the conditions set forth
in the Offer to Purchase dated August 4, 1999 (the "Offer to Purchase"),the
Supplement to Offer to Purchase, dated August 31, 1999 (the "Supplement to Offer
to Purchase"), receipt of which is hereby acknowledged, and in this Letter of
Transmittal (which, as amended or supplemented from time to time, together
constitute the "Offer"). The undersigned understands that Purchaser reserves the
right to transfer or assign, in whole or in part from time to time, to one or
more of its affiliates, the right to purchase Shares tendered pursuant to the
Offer.
Subject to and effective upon acceptance for payment of the Shares
tendered herewith in accordance with the terms and subject to the conditions of
the Offer, the undersigned hereby sells, assigns and transfers to, or upon the
order of, Purchaser all right, title and interest in and to all of the Shares
that are being tendered hereby and irrevocably appoints the Depository the true
and lawful agent and attorney-in-fact of the undersigned with respect to such
Shares with full power of substitution (such power of attorney being deemed to
be an irrevocable power coupled with an interest), to (a) deliver Share
Certificates evidencing such Shares, or transfer ownership of such Shares on the
account books maintained by any of the Book-Entry Transfer Facilities, together,
in either case, with all accompanying evidences of transfer and authenticity, to
or upon the order of Purchaser, upon receipt by the Depository, as the
undersigned's agent, of the purchase price (adjusted, if appropriate, as
provided in the Offer to Purchase), (b) present such for transfer on the books
of the Company, and (c) receive all benefits and otherwise exercise all rights
of beneficial ownership of such Shares, all in accordance with the terms of the
Offer.
<PAGE>
The undersigned hereby irrevocably appoints Purchaser or any other
designees of Purchaser, the attorneys and proxies of the undersigned, each with
full power of substitution, to the full extent of the undersigned's rights,
including to exercise such voting and other rights as each such attorney and
proxy or his (or her) substitute shall, in his (or her) sole discretion, deem
proper, and otherwise act (including pursuant to written consent), with respect
to all of the Shares tendered hereby which have been accepted for payment by
Purchaser, which the undersigned is entitled to vote at any meeting of
stockholders of the Company (whether annual or special and whether or not an
adjourned meeting), or written consent in lieu of such meeting, or otherwise.
This proxy and power of attorney is coupled with an interest in the Shares
tendered hereby and is irrevocable and is granted in consideration of, and is
effective upon, the acceptance for payment of such Shares by Purchaser in
accordance with the terms of the Offer. Such acceptance for payment shall,
without further action, revoke all prior proxies and consents granted by the
undersigned with respect to such Shares, and no subsequent proxy or power of
attorney or written consent shall be given (and if given or executed, shall be
deemed not to be effective) with respect thereto by the undersigned. Purchaser
reserves the right to require that, in order for Shares to be deemed validly
tendered, immediately upon Purchaser's acceptance for payment of such Shares,
Purchaser is able to exercise full voting and other rights with respect to such
Shares (including voting at any meeting of stockholders then scheduled or acting
by written consent without a meeting).
The undersigned hereby represents and warrants that the undersigned has
full power and authority to tender, sell, assign and transfer the Shares
tendered hereby, and that when such Shares are accepted for payment by
Purchaser, Purchaser will acquire good, marketable and unencumbered title
thereto, free and clear of all liens, restrictions, charges and encumbrances,
and that none of such Shares will be subject to any adverse claim. The
undersigned, upon request, shall execute and deliver any signature guarantees or
additional documents deemed by the Depository or Purchaser to be necessary or
desirable to complete the sale, assignment and transfer of the Shares tendered
hereby.
All authority herein conferred or agreed to be conferred shall survive the
death or incapacity of the undersigned, and any obligation of the undersigned
hereunder shall be binding upon the successors, assigns, heirs, executors,
administrators and legal representatives of the undersigned. Except as stated in
the Offer to Purchase, this tender is irrevocable.
The undersigned understands that tenders of Shares pursuant to any one of
the procedures described in "The Tender Offer - 3. Procedures for Accepting the
Offer and Tendering Shares" of the Offer to Purchase and in the instructions
hereto will constitute a binding agreement between the undersigned and Purchaser
upon the terms and subject to the conditions of the Offer. The undersigned
recognizes that under certain circumstances set forth in the Offer to Purchase,
Purchaser may not be required to accept for payment any of the Shares tendered
hereby.
Unless otherwise indicated herein under "Special Payment Instructions,"
please issue the check for the purchase price and/or return any Share
Certificates evidencing Shares not tendered or not accepted for payment in the
name(s) of the registered holder(s) appearing under "Description of Shares
Tendered." Similarly, unless otherwise indicated under "Special Delivery
Instructions," please mail the check for the purchase price and/or return any
Share Certificates evidencing Shares not tendered or accepted for payment (and
accompanying documents, as appropriate) to the address(es) of the registered
holder(s) appearing under "Description of Shares Tendered." In the event that
both the Special Delivery Instructions and the Special Payment Instructions are
completed, please issue the check for the purchase price and/or return any Share
Certificates evidencing Shares not purchased (together with accompanying
documents as appropriate) in the name(s) of, and deliver said check and/or
return such Share Certificates to, the person or persons so indicated.
Stockholders tendering Shares by book-entry transfer may request that any
Shares not accepted for payment be returned by crediting the account at the
Book-Entry Transfer Facility designated above or as such stockholder may
designate by making an appropriate entry under "Special Payment Instructions."
The undersigned recognizes that Purchaser has no obligation pursuant to the
Special Payment Instructions to transfer any Shares from the name of the
registered holder(s) thereof if Purchaser does not accept for payment any of the
Shares so tendered.
<PAGE>
================================================================================
SPECIAL PAYMENT INSTRUCTIONS
(See Instructions 1, 5, 6, and 7)
To be completed ONLY if the check for the purchase price of Shares
purchased or Share Certificates evidencing Shares not tendered or not purchased
are to be issued in the name of someone other than the undersigned.
Issue: |_| Check and/or |_| Certificate(s)
To:
Name: __________________________________________________________________________
(Please Print)
Address: _______________________________________________________________________
(Please Print)
________________________________________________________________________________
(Zip Code)
________________________________________________________________________________
(Tax Identification or Social Security Number)
(See Substitute Form W-9)
|_| Check here if any of the Share Certificates that you own and wish to
tender have been lost, destroyed or stolen. (See Instruction 11.)
Number of Shares represented by lost, destroyed or stolen certificates:
================================================================================
================================================================================
SPECIAL DELIVERY INSTRUCTIONS
(See Instructions 5 and 7)
To be completed ONLY if the check for the purchase price of Shares
purchased or Share Certificates evidencing Shares not tendered or not purchased
are to be mailed to someone other than the undersigned, or to the undersigned at
an address other than that shown under "Description of Shares Tendered."
Mail: |_| Check and/or |_| Certificate(s)
To:
Name: __________________________________________________________________________
(Please Print)
Address: _______________________________________________________________________
(Please Print)
________________________________________________________________________________
(Zip Code)
________________________________________________________________________________
(Tax Identification or Social Security Number)
(See Substitute Form W-9)
================================================================================
(Please also complete the enclosed Substitute Form W-9 herein)
<PAGE>
================================================================================
STOCKHOLDERS SIGN HERE
(PLEASE COMPLETE SUBSTITUTE FORM W-9 INCLUDED HEREIN)
X ______________________________________________________________________________
X ______________________________________________________________________________
SIGNATURE(S) OF STOCKHOLDER(S)
Dated: ___________________________________________________________________, 1999
Name(s) ________________________________________________________________________
________________________________________________________________________________
(Please Type or Print)
Capacity (full title): _________________________________________________________
Address: _______________________________________________________________________
________________________________________________________________________________
(Including Zip Code)
Area Code and Telephone No.: ___________________________________________________
Employer Identification or Social Security Number: _____________________________
GUARANTEE OF SIGNATURE(S)
(If Required - See Instructions 1 and 5)
________________________________________________________________________________
AUTHORIZED SIGNATURE
_____________________________________ _____________________________________
FULL TITLE NAME OF FIRM
________________________________________________________________________________
ADDRESS (INCLUDE ZIP CODE)
________________________________________________________________________________
AREA CODE AND TELEPHONE NUMBER
Date: ____________________________________________________________________, 1997
================================================================================
<PAGE>
INSTRUCTIONS
(FORMING PART OF THE TERMS AND CONDITIONS OF THE OFFER)
1. Guarantee of Signatures. All signatures on this Letter of Transmittal
must be guaranteed by a firm which is a member of a registered national
securities exchange or of the National Association of Securities Dealers, Inc.,
or by a commercial bank or trust company having an office or correspondent in
the United States (each of the foregoing, an "Eligible Institution"), except in
cases where (a) the Letter of Transmittal is signed by the registered holder of
the Shares tendered therewith and such holder has not completed the box entitled
"Special Payment Instructions" or the box entitled "Special Delivery
Instructions" on the Letter of Transmittal, or (b) such Shares are tendered for
the account of an Eligible Institution. See Instruction 5.
2. Delivery of Letter of Transmittal and Certificates; Guaranteed Delivery
Procedures. This Letter of Transmittal is to be completed by stockholders either
if Share Certificates are to be forwarded herewith or if a tender of Shares is
to be made pursuant to the procedures for delivery by book-entry transfer set
forth in "The Tender Offer - 3. Procedures for Accepting the Offer and Tendering
Shares" of the Offer to Purchase. Share Certificates evidencing all physically
tendered Shares, or confirmation ("Book-Entry Confirmation") of any book-entry
transfer into the Depository's account at a Book-Entry Transfer Facility of
Shares delivered by book-entry transfer as well as a properly completed and duly
executed Letter of Transmittal, must be received by the Depository, at one of
the addresses set forth herein prior to the Expiration Date (as defined in "The
Tender Offer - 1. Terms of the Offer" of the Offer to Purchase). If Share
Certificates are forwarded to the Depository in multiple deliveries, a properly
completed and duly executed Letter of Transmittal must accompany each such
delivery. Stockholders whose Share Certificates are not immediately available,
who cannot deliver their Share Certificates and all other required documents to
the Depository prior to the Expiration Date or who cannot comply with the
book-entry transfer procedures on a timely basis may tender their Shares by
properly completing and duly executing a Notice of Guaranteed Delivery pursuant
to the guaranteed delivery procedure set forth in "The Tender Offer - 3.
Procedures for Accepting the Offer and Tendering Shares" of the Offer to
Purchase. Pursuant to such procedure, (i) such tender must be made by or through
an Eligible Institution, (ii) a properly completed and duly executed Notice of
Guaranteed Delivery, substantially in the form provided by Purchaser, must be
received by the Depository prior to the Expiration Date and (iii) the Share
Certificates evidencing all physically tendered Shares (or Book-Entry
Confirmation with respect to such Shares), as well as a properly completed and
duly executed Letter of Transmittal (or facsimile thereof) with any required
signature guarantees and any other documents required by this Letter of
Transmittal, must be received by the Depository within three American Stock
Exchange trading days after the date of execution of such Notice of Guaranteed
Delivery, all as provided in "The Tender Offer - 3. Procedures for Accepting the
Offer and Tendering Shares" of the Offer to Purchase.
THE METHOD OF DELIVERY OF THIS LETTER OF TRANSMITTAL, SHARES AND ALL OTHER
REQUIRED DOCUMENTS, INCLUDING DELIVERY THROUGH ANY 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 DEPOSITORY. IF DELIVERY IS BY
MAIL, IT IS RECOMMENDED THAT SUCH CERTIFICATES AND DOCUMENTS BE SENT BY
REGISTERED MAIL, PROPERLY INSURED, WITH RETURN RECEIPT REQUESTED. IN ALL CASES,
SUFFICIENT TIME SHOULD BE ALLOWED TO INSURE TIMELY DELIVERY.
No alternative, conditional or contingent tenders will be accepted. All
tendering stockholders, by execution of this Letter of Transmittal (or facsimile
thereof), waive any right to receive any notice of the acceptance of their
Shares for payment.
3. Inadequate Space. If the space provided herein under "Description of
Shares Tendered" is inadequate, the certificate numbers and/or the number of
Shares tendered should be listed on a separate signed schedule and attached
hereto.
<PAGE>
4. Partial Tenders. (Not applicable to stockholders who tender by
book-entry transfer.) If fewer than all the Shares evidenced by any Share
Certificate submitted are to be tendered, fill in the number of Shares which are
to be tendered in the box entitled "Number of Shares Tendered." In such case,
new Share Certificate(s) evidencing the remainder of the Shares that were
evidenced by the old Share Certificate(s) will be sent to the registered holder,
unless otherwise provided in the appropriate box on this Letter of Transmittal,
as soon as practicable after the Expiration Date. All Shares represented by
Share Certificates delivered to the Depository will be deemed to have been
tendered unless otherwise indicated.
5. Signatures on Letter of Transmittal, Stock Powers and Endorsements. If
this Letter of Transmittal is signed by the registered holder(s) of the Shares
tendered hereby, the signature(s) must correspond exactly with the name(s) as
written on the face of the Share Certificate(s) without alteration, enlargement
or any change whatsoever. If any of the Shares tendered hereby are held of
record by two or more persons, all such persons must sign this Letter of
Transmittal.
If any tendered Shares are registered in different names on several Share
Certificates, it will be necessary to complete, sign and submit as many separate
Letters of Transmittal as there are different registrations of such Shares.
If this Letter of Transmittal is signed by the registered holder(s) of the
Shares evidenced by Share Certificates listed and transmitted hereby, no
endorsements of Share Certificates or separate stock powers are required unless
payment is to be made to or Share Certificates evidencing Shares not tendered or
purchased are to be issued in the name of a person other than the registered
holder(s), in which case the Share Certificate(s) evidencing the Shares tendered
hereby must be endorsed or accompanied by appropriate stock powers, in either
case signed exactly as the name(s) of the registered holder(s) appear(s) on such
Share Certificate(s). Signatures on such certificates and stock powers must be
guaranteed by an Eligible Institution.
If this Letter of Transmittal is signed by a person other than the
registered holder(s) of the Shares tendered hereby, the Share Certificate(s)
evidencing the Shares tendered hereby must be endorsed or accompanied by
appropriate stock powers, in either case signed exactly as the name or names of
the registered holder or holders appear on the Share Certificate(s).
Signatures on such Share Certificate(s) or stock powers must be guaranteed
by an Eligible Institution.
If this Letter of Transmittal or any Share Certificates or stock power is
signed by a trustee, executor, administrator, guardian, attorney-in-fact, agent,
officer of a corporation or any person acting in a fiduciary or representative
capacity, such person should so indicate when signing, and proper evidence
satisfactory to Purchaser of such person's authority so to act must be
submitted.
6. Stock Transfer Taxes. Except as set forth in this Instruction 6,
Purchaser will pay or cause to be paid any stock transfer taxes with respect to
the transfer and sale of Shares to it or its order pursuant to the Offer. If,
however, payment of the purchase price is to be made to, or if Share
Certificates evidencing Shares not tendered or purchased are to be registered in
the name of, any person other than the registered holder(s), or if Share
Certificates evidencing tendered Shares are registered in the name of any person
other than the person(s) signing this Letter of Transmittal, the amount of any
stock transfer taxes (whether imposed on the registered holder(s) or such other
person) payable on account of the transfer to such person will be deducted from
the purchase price unless satisfactory evidence of the payment of such taxes or
exemption therefrom is submitted.
EXCEPT AS PROVIDED IN THIS INSTRUCTION 6, IT WILL NOT BE NECESSARY FOR
TRANSFER TAX STAMPS TO BE AFFIXED TO THE CERTIFICATE(S) LISTED IN THIS LETTER OF
TRANSMITTAL.
7. Special Payment and Delivery Instructions. If a check for the purchase
price of any Shares tendered hereby is to be issued, or Share Certificate(s)
evidencing Shares not tendered or not purchased are to be issued, in the name of
a person other than the person(s) signing this Letter of Transmittal or if such
check or any such Share Certificate is to be sent and/or any Share Certificates
are to be returned to someone other than the signer
<PAGE>
above, or to the signer above but at an address other than that shown in the box
entitled "Description of Shares Tendered" on the first page hereof, the
appropriate boxes on this Letter of Transmittal should be completed.
Stockholders tendering Shares by book-entry transfer may request that Shares not
purchased be credited to such account maintained at any of the Book-Entry
Transfer Facilities as such stockholder may designate under "Special Delivery
Instructions." If no such instructions are given, any such Shares not purchased
will be returned by crediting the account at the Book-Entry Transfer Facilities
designated above.
8. Request for Assistance or Additional Copies. Requests for assistance
may be directed to, or additional copies of the Offer to Purchase, this Letter
of Transmittal and the Notice of Guaranteed Delivery may be obtained from, the
Information Agent or the Dealer Managers at the telephone numbers and address
set forth below. Stockholders may also contact their broker, dealer, commercial
bank or trust company.
9. Waiver of Conditions. Except as otherwise provided in the Offer to
Purchase, Purchaser reserves the right in its sole discretion to waive in whole
or in part at any time or from time to time any of the specified conditions of
the Offer or any defect or irregularity in tender with regard to any Shares
tendered.
10. Substitute Form W-9. The tendering stockholder is required to provide
the Depository with a correct Taxpayer Identification Number ("TIN"), generally
the stockholder's social security or employer identification number, on
Substitute Form W-9, which is provided under "Important Tax Information" below,
and to certify, under penalties of perjury, whether he or she is subject to
backup withholding of federal income tax. If a tendering stockholder is subject
to backup withholding, he or she must cross out item (2) of the Certification
Box on Substitute Form W-9. Failure to provide the information on Substitute
Form W-9 may subject the tendering stockholder to 31% federal income tax
withholding on the payment of the purchase price. If the tendering stockholder
has not been issued a TIN and has applied for a number or intends to apply for a
number in the near future, he or she should write "Applied For" in the space
provided for the TIN in Part I, sign and date the Substitute Form W-9 and sign
and date the Certificate of Awaiting Taxpayer Identification Number. If "Applied
For" is written in Part I and the Depository is not provided with a TIN within
60 days, the Depository will withhold 31% of payments for surrendered Shares
thereafter until a TIN is provided to the Depository.
11. Mutilated, Lost, Stolen or Destroyed Certificates. Any holder of a
Share Certificate whose certificate(s) has been mutilated, lost, stolen or
destroyed should (i) complete this Letter of Transmittal and check the
appropriate box on this Letter of Transmittal and (ii) complete and return to
the Depository any additional documentation, including the posting of any
indemnity bond, requested by the Depository. If required by Purchaser, the
holder will be required to post a bond in such reasonable amount as Purchaser
may direct as indemnity against any claim that may be made against Purchaser or
any of its respective affiliates with respect to such certificate(s).
IMPORTANT: THIS LETTER OF TRANSMITTAL (OR FACSIMILE HEREOF), PROPERLY
COMPLETED AND DULY EXECUTED, OR AN AGENT'S MESSAGE IN THE CASE OF A BOOK-ENTRY
DELIVERY, TOGETHER WITH CERTIFICATES (OR BOOK-ENTRY CONFIRMATION) AND ALL OTHER
REQUIRED DOCUMENTS OR A PROPERLY COMPLETED AND DULY EXECUTED NOTICE OF
GUARANTEED DELIVERY MUST BE RECEIVED BY THE DEPOSITORY ON OR PRIOR TO THE
EXPIRATION DATE.
IMPORTANT TAX INFORMATION
Under federal tax law, a stockholder whose tendered Shares are accepted
for payment is required to provide the Depository (as payor) with such
stockholder's correct TIN on Substitute Form W-9 below. If such stockholder is
an individual, the TIN is such stockholder's Social Security Number. If the
Depository is not provided with the correct TIN or an adequate basis for
exemption, the stockholder may be subject to a $50 penalty imposed by the
Internal Revenue Service. In addition, payments that are made to such
stockholder with respect to Shares purchased pursuant to the Offer may be
subject to backup withholding in an amount equal to 31% of the gross proceeds
resulting from the Offer.
<PAGE>
Certain stockholders (including, among others, certain corporations and
foreign individuals) are not subject to these backup withholding and reporting
requirements. In order for a foreign individual to qualify as an exempt
recipient, that stockholder must submit an IRS Form W-8, signed under penalties
of perjury, attesting to that individual's exempt status. Such statements can be
obtained from the Depository. See the enclosed Guidelines for Certification of
Taxpayer Identification Number on Substitute Form W-9 for additional
instructions.
If backup withholding applies, the Depository is required to withhold 31%
of any payments made to the stockholder. Backup withholding is not an additional
tax. Rather, the tax liability of persons subject to backup withholding will be
reduced by the amount of tax withheld. If withholding results in an overpayment
of taxes, a refund may be obtained from the Internal Revenue Service.
Purpose of Substitute Form W-9
To prevent backup withholding on payments that are made to a stockholder
with respect to Shares purchased pursuant to the Offer, the stockholder is
required to notify the Depository of his or her correct TIN by completing the
Substitute Form W-9 contained herein, certifying that the TIN provided on the
Substitute Form W-9 is correct (or that such stockholder is awaiting a TIN) and
that (1) the stockholder is exempt from backup withholding, (2) the stockholder
has not been notified by the Internal Revenue Service that he or she is subject
to backup withholding as a result of failure to report all interest or
dividends, or (3) the Internal Revenue Service has notified the stockholder that
he or she is no longer subject to backup withholding.
What Number to Give the Depository
The stockholder is required to give the Depository the social security
number or employer identification number of the record owner of the Shares. If
the Shares are in more than one name or are not in the name of the actual owner,
consult the enclosed Guidelines for Certification of Taxpayer Identification
Number on Substitute Form W-9 for additional guidance on which number to report.
If the tendering stockholder has not been issued a TIN and has applied for a
number or intends to apply for a number in the near future, he or she should
write "Applied For" in the space provided for the TIN in Part I, sign and date
the Substitute Form W-9 and sign and date the Certificate of Awaiting Taxpayer
Identification Number. If "Applied For" is written in Part I and the Depository
is not provided with a TIN within 60 days, the Depository will withhold 31% of
all payments of the purchase price until a TIN is provided to the Depository.
<PAGE>
<TABLE>
<CAPTION>
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ALL TENDERING STOCKHOLDERS MUST COMPLETE THE FOLLOWING:
PAYER'S NAME: CHASEMELLON SHAREHOLDER SERVICES, LLC, AS DEPOSITORY
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C>
SUBSTITUTE PART I--PLEASE PROVIDE YOUR TIN IN THE BOX AT RIGHT AND CERTIFY BY Social security
Form W-9 SIGNING AND DATING BELOW number or
______/______/_______
Employer
identification number
- ------------------------------------------------------------------------------------------------------------------------------------
DEPARTMENT OF THE TREASURY NAME (PLEASE PRINT): ___________________________ (If awaiting TIN
INTERNAL REVENUE SERVICE write "Applied For")
ADDRESS: _______________________________________
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Payer's Request for Taxpayer PART II--For Payees NOT subject to backup withholding, see the enclosed
Identification Number (TIN) Guidelines for Certification of Taxpayer Identification Number on Substitute
and Certification Form W-9 and complete as instructed therein.
CITY:________________ ______________________________________________________________________________
STATE:_______________
ZIP CODE:____________ CERTIFICATION--UNDER PENALTIES OF PERJURY, I CERTIFY THAT:
(1) The number shown on this form is my correct Taxpayer Identification Number
(or I am waiting for a number to be issued to me), and
(2) I am not subject to backup withholding because (a) I am exempt from backup
withholding, (b) I have not been notified by the Internal Revenue Service
("IRS") that I am subject to backup withholding as a result of failure to
report all interest or dividends, or (c) the IRS has notified me that I am
no longer subject to backup withholding.
- ------------------------------------------------------------------------------------------------------------------------------------
CERTIFICATION INSTRUCTIONS--You must cross out item (2) above if you have been
notified by the IRS that you are subject to backup withholding because of
underreporting interest or dividends on your tax return. However, if after being
notified by the IRS that you are subject to backup withholding you received
under notification from the IRS that you are no longer subject to backup
withholding, do not cross out item (2). (Also see instructions in the enclosed
Guidelines.)
Signature: _________________________________ Dated: ________________________, 1999
====================================================================================================================================
</TABLE>
NOTE: FAILURE TO COMPLETE AND RETURN THIS FORM MAY RESULT IN BACKUP WITHHOLDING
OF 31% OF ANY PAYMENTS MADE TO YOU PURSUANT TO THE OFFER. PLEASE REVIEW
THE ENCLOSED GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION
NUMBER ON SUBSTITUTE FORM W-9 FOR ADDITIONAL DETAILS. YOU MUST COMPLETE
THE FOLLOWING CERTIFICATE IF YOU WROTE "APPLIED FOR" IN PART I OF
SUBSTITUTE FORM W-9.
================================================================================
CERTIFICATE OF AWAITING TAXPAYER IDENTIFICATION NUMBER
I certify under penalties of perjury that a taxpayer identification number
has not been issued to me and either (a) I have mailed or delivered an
application to receive a taxpayer identification number to the appropriate
Internal Revenue Service Center or Social Security Administration Officer or (b)
I intend to mail or deliver an application in the near future. I understand that
if I do not provide a taxpayer identification number within 60 days, 31% of all
reportable payments made to me thereafter will be withheld until I provide a
number.
Signature(s): _________________________________ Dated: _____________________
================================================================================
<PAGE>
The Information Agent for the Offer is:
AMERICAN STOCK TRANSFER & TRUST COMPANY
40 Wall Street
46th Floor
New York, NY 10005
(800) 937-5449 or (212) 936-5100
The Dealer Manager for the Offer are:
FIRST UNION CAPITAL MARKETS CORP.
901 East Byrd Street
3rd Floor
Richmond, VA 23219
(800) 532-2916
