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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14D-1
(Amendment No. 1)
Tender Offer Statement Pursuant to Section
14(d)(1) of the Securities Exchange Act of 1934
and
SCHEDULE 13D
under the Securities Exchange Act of 1934
FORUM GROUP, INC.
(Name of Subject Company)
FG ACQUISITION CORP.
MARRIOTT INTERNATIONAL, INC.
(Bidders)
Common Stock, Without Par Value
(Title of Class of Securities)
349841304
---------------
(CUSIP Number of Class of Securities)
Edward L. Bednarz, Esq. Copy to:
FG Acquisition Corp. Jeffrey J. Rosen, Esq.
Marriott International, Inc. O'Melveny & Myers
10400 Fernwood Road 555 13th St., N.W., Suite 500W
Bethesda, Maryland 20817 Washington, D.C. 20004-1109
(301) 380-9555 (202) 383-5300
(Name, Address and Telephone Number of Person
Authorized to Receive Notices and
Communications on Behalf of Bidders)
February 20 and 21, 1996
------------------------
Date of Event(s) which require filing Statement on Schedule 13D
CALCULATION OF FILING FEE
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<S> <C>
Transaction Valuation/1/: $305,194,175 Amount of Filing Fee/2/: $61,039
- --------------------------------------------------------------------------
</TABLE>
/1/ For purposes of calculating the filing fee only. This calculation assumes
the purchase of (i) all outstanding shares of Common Stock of Forum Group,
Inc., (ii) all shares of Common Stock of Forum Group, Inc. issuable
pursuant to Stock Options vested as of February 15, 1996, and (iii) all
shares of Common Stock of Forum Group, Inc. issuable upon exercise of
outstanding
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warrants (other than warrants which are to be cancelled pursuant to
agreements with the holders thereof), in each case at $13.00 net per share
in cash.
/2/ The amount of the filing fee, calculated in accordance with Rule 0-11(d) of
the Securities Exchange Act of 1934, as amended, equals 1/50th of one
percent of the aggregate value of cash offered by FG Acquisition Corp. for
such shares.
[X] CHECK BOX IF ANY PART OF THE FEE IS OFFSET AS PROVIDED BY RULE 0-11(A)(2)
AND IDENTIFY THE FILING WITH WHICH THE OFFSETTING FEE WAS PREVIOUSLY PAID.
IDENTIFY THE PREVIOUS FILING BY REGISTRATION STATEMENT NUMBER, OR THE FORM
OR SCHEDULE AND THE DATE OF ITS FILING.
Amount previously paid: $61,039 Filing Party: FG Acquisition Corp.
Marriott International, Inc.
Form or
registration no.: Schedule 14D-1 Date Filed: February 23, 1996
(CONTINUED ON FOLLOWING PAGE(S))
(Page 1 of 6 pages)
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This Amendment No. 1 amends and supplements the Tender Offer Statement on
Schedule 14D-1 (as it may be amended from time to time, the "Tender Offer
Statement") of FG Acquisition Corp., an Indiana corporation (the "Purchaser")
and a wholly owned indirect subsidiary of Marriott International, Inc., a
Delaware corporation ("Parent"), filed on February 23, 1996 with the Securities
and Exchange Commission (the "Commission") in respect of the tender offer (the
"Offer") by the Purchaser for all of the outstanding shares of Common Stock,
without par value (the "Shares"), of Forum Group, Inc. (the "Company"). The
Offer is being made pursuant to an Agreement and Plan of Merger dated as of
February 15, 1996 by and among the Company, the Purchaser and Parent.
The Tender Offer Statement on Schedule 14D-1, as amended hereby, also
constitutes a Statement on Schedule 13D with respect to the acquisition by the
Purchaser and Parent of beneficial ownership of Shares subject to the
Irrevocable Proxy dated as of February 20, 1996 by Forum Holdings, L.P.,
attached as Exhibit (c)(6) to the Tender Offer Statement (the "Forum Holdings
Proxy"), and the Irrevocable Proxy dated as of February 20, 1996 by Apollo FG
Partners, L.P., attached as Exhibit (c)(5) to the Tender Offer Statement (the
"Apollo FG Proxy" and, collectively with the Forum Holdings Proxy, the
"Irrevocable Proxies"). The cover page and item numbers and responses to the
Tender Offer Statement are in accordance with the requirements of Schedule 14D-
1.
The Forum Holdings Proxy was delivered to representatives of the Purchaser
on February 20, 1996 and the Apollo FG Proxy was delivered to representatives of
the Purchaser on February 21, 1996.
The Irrevocable Proxies cover all Shares now or hereafter owned by Forum
Holdings, L.P. and Apollo FG Partners, L.P. As of February 15, 1996, Forum
Holdings, L.P. and Apollo FG Partners, L.P. each held 9,079,568 Shares and
warrants exercisable to purchase 350,072 Shares. Accordingly, the Irrevocable
Proxies cover in the aggregate 18,159,136 Shares and warrants exercisable to
purchase 700,144 Shares, or approximately 80 percent of all Shares on a fully
diluted basis.
As described in the the Offer to Purchase (see Introduction and Section 10.
"Background of the Offer; the Merger Agreement; the Shareholder Agreements"),
the Forum Holdings Proxy was delivered pursuant to Section 3 of the Agreement
and Irrevocable Proxy dated as of February 15, 1996 by and among Parent, the
Purchaser and Forum Holdings, L.P., attached as Exhibit (c)(2) to the Tender
Offer Statement. The Apollo FG Proxy was delivered pursuant to Section 3 of the
Agreement and Irrevocable Proxy dated as of February 15, 1996 by and among
Parent, the Purchaser and Apollo FG Partners, L.P., attached as Exhibit (c)(3)
to the Tender Offer Statement).
Also as described in the Offer to Purchase (see Introduction and Section
10. "Background of the Offer; the Merger Agreement; the Shareholder
Agreements"), Forum/Classic, L.P. entered into an agreement with Parent and
the Purchaser
2
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dated as of February 15, 1996, attached as Exhibit (c)(4) to the Tender Offer
Statement (the "Forum/Classic Agreement"). The Forum/Classic Agreement does
not, however, provide for delivery of an irrevocable proxy. As of February 15,
1996, Forum Holdings, L.P., Apollo FG Partners and Forum/Classic, L.P. held in
the aggregate 20,709,680 Shares and warrants exercisable to purchase 700,144
Shares, or approximately 91 percent of all Shares on a fully diluted basis.
The Purchaser and Parent each expressly disclaims that it is the beneficial
owner of any Shares for purposes of Section 13(d) and Section 13(g) of the
Securities Exchange Act of 1934.
The Purchaser and Parent made certain minor corrections to Section 16 of
the Offer to Purchase, dated February 23, 1996 (which was filed with the
Commission on February 23, 1996 as Exhibit (a)(1) to the Schedule 14D-1), prior
to the initial distribution to the shareholders of the Company of the printed
Offer to Purchase. Accordingly, the Purchaser and Parent are hereby amending
and supplementing the Schedule 14D-1 to add as an exhibit thereto a copy of the
final printed version of such Offer to Purchase, as set forth below:
ITEM 11. Material to be Filed as Exhibits.
Item 11 is hereby amended and supplemented by the addition of the following
exhibit thereto:
Exhibit (a)(9) Offer to Purchase, dated February 23, 1996 (final
printed version)
3
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SIGNATURE
After due inquiry and to the best of my knowledge and belief, I certify
that the information set forth in this statement is true, complete and correct.
Dated: February 28, 1996 FG ACQUISITION CORP.
By: /s/ G. Cope Stewart III
----------------------
Name: G. Cope Stewart III
Title: Vice President
4
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SIGNATURE
After due inquiry and to the best of my knowledge and belief, I certify
that the information set forth in this statement is true, complete and correct.
Dated: February 28, 1996 MARRIOTT INTERNATIONAL, INC.
By: /s/ Joseph Ryan
-------------------------------
Name: Joseph Ryan
Title: Executive Vice President
5
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EXHIBIT INDEX
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<CAPTION>
EXHIBIT NO. DESCRIPTION
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Exhibit (a)(9) Offer to Purchase, dated February 23, 1996 (final
printed version)
</TABLE>
6
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OFFER TO PURCHASE FOR CASH
ALL OUTSTANDING SHARES OF COMMON STOCK
OF
FORUM GROUP, INC.
AT
$13.00 NET PER SHARE
BY
FG ACQUISITION CORP.
A WHOLLY OWNED INDIRECT SUBSIDIARY OF
MARRIOTT INTERNATIONAL, INC.
THE BOARD OF DIRECTORS OF FORUM GROUP, INC. (THE "COMPANY") HAS UNANIMOUSLY
APPROVED THE OFFER AND THE MERGER, DETERMINED THAT THE OFFER AND THE MERGER
ARE FAIR TO THE SHAREHOLDERS OF THE COMPANY AND ARE IN THE BEST INTERESTS OF
THE SHAREHOLDERS OF THE COMPANY, AND RECOMMENDS ACCEPTANCE OF THE OFFER AND
APPROVAL AND ADOPTION OF THE MERGER AGREEMENT AND THE MERGER BY THE
SHAREHOLDERS OF THE COMPANY.
--------------
THE OFFER IS CONDITIONED UPON, AMONG OTHER THINGS, THERE BEING VALIDLY
TENDERED AND NOT WITHDRAWN PRIOR TO THE EXPIRATION DATE A NUMBER OF SHARES OF
COMMON STOCK WITHOUT PAR VALUE WHICH, WHEN ADDED TO THE SHARES THEN
BENEFICIALLY OWNED BY MARRIOTT INTERNATIONAL, INC. ("PARENT"), CONSTITUTES AT
LEAST TWO-THIRDS OF THE TOTAL NUMBER OF SHARES OUTSTANDING AND TWO-THIRDS OF
THE VOTING POWER OF THE SHARES THEN OUTSTANDING ON A FULLY-DILUTED BASIS. ANY
OR ALL CONDITIONS TO THE OFFER MAY BE WAIVED BY FG ACQUISITION CORP. (THE
"PURCHASER"). SEE SECTION 15.
--------------
THE PURCHASER AND PARENT HAVE ENTERED INTO AGREEMENTS (EACH, A "SHAREHOLDER
AGREEMENT") WITH EACH OF FORUM HOLDINGS, L.P., A TEXAS LIMITED PARTNERSHIP,
APOLLO FG PARTNERS, L.P., A DELAWARE LIMITED PARTNERSHIP, AND FORUM/CLASSIC,
L.P., A DELAWARE LIMITED PARTNERSHIP (THE FOREGOING COLLECTIVELY, THE
"PRINCIPAL SHAREHOLDERS"). PURSUANT TO THE SHAREHOLDER AGREEMENTS, EACH
PRINCIPAL SHAREHOLDER HAS AGREED, AMONG OTHER THINGS, SO LONG AS THE PRICE TO
BE PAID IN THE OFFER IS AT LEAST $13.00 IN CASH (NET TO THE SELLER), TO TENDER
AND NOT WITHDRAW ITS SHARES IN THE OFFER. SEE INTRODUCTION AND SECTION 10.
--------------
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY
TIME, ON THURSDAY, MARCH 21, 1996, UNLESS EXTENDED. THE PURCHASER HAS AGREED,
UNDER THE MERGER AGREEMENT, TO EXTEND THE OFFER UNTIL THE FIRST BUSINESS DAY
AFTER THE CONDITIONS (AS DEFINED BELOW) ARE SATISFIED; PROVIDED THAT THE
PURCHASER SHALL BE PERMITTED BUT NOT OBLIGATED TO EXTEND THE OFFER IF EITHER
(X) THE COMPANY IS IN BREACH IN ANY MATERIAL RESPECT OF ITS COVENANTS OR
AGREEMENTS CONTAINED IN THE MERGER AGREEMENT (AS DEFINED BELOW) OR (Y) THERE
IS A REASONABLE LIKELIHOOD THAT ONE OR MORE OF THE CONDITIONS CANNOT BE
SATISFIED; AND PROVIDED, FURTHER, THAT THE PURCHASER SHALL NOT BE PERMITTED OR
OBLIGATED TO EXTEND THE OFFER BEYOND JULY 15, 1996.
--------------
IMPORTANT
Any shareholder desiring to tender all or any portion of such holder's
Shares (as defined herein) should either (a) complete and sign the Letter of
Transmittal (or a facsimile thereof) in accordance with the instructions in
the Letter of Transmittal and mail or deliver it together with the
certificates representing the tendered Shares and all other required documents
to the Depositary, or tender such Shares pursuant to the procedure for book-
entry transfer set forth in Section 3 of this Offer to Purchase or (b) request
his or her broker, dealer, commercial bank, trust company or other nominee to
effect the transaction for him or her. A shareholder whose Shares are
registered in the name of a broker, dealer, commercial bank, trust company or
other nominee must contact such broker, dealer, commercial bank, trust company
or other nominee if such holder desires to tender such Shares.
Any shareholder who desires to tender such holder's Shares and whose
certificates representing such Shares are not immediately available or who
cannot comply with the procedures for book-entry transfer on a timely basis
may tender such Shares by following the procedures for guaranteed delivery set
forth in Section 3 of this Offer to Purchase.
Questions and requests for assistance and for additional copies of this
Offer to Purchase, the Letter of Transmittal, the Notice of Guaranteed
Delivery and other related materials may be directed to the Information Agent
at its address and telephone number set forth on the back cover of this Offer
to Purchase. Additional copies of this Offer to Purchase, the Letter of
Transmittal and the other tender offer materials may also be obtained from
brokers, dealers, commercial banks or trust companies.
February 23, 1996
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TABLE OF CONTENTS
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PAGE
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INTRODUCTION............................................................. 1
1. Terms of the Offer.................................................. 2
2. Acceptance for Payment and Payment.................................. 3
3. Procedures for Tendering Shares..................................... 4
4. Withdrawal Rights................................................... 6
5. Certain Tax Considerations.......................................... 7
6. Price Range of Shares; Dividends.................................... 8
7. Certain Information Concerning the Company.......................... 8
8. Certain Information Concerning the Purchaser and Parent............. 12
9. Sources and Amounts of Funds........................................ 13
10. Background of the Offer; the Merger Agreement; the Shareholder
Agreements......................................................... 14
11. Purpose of the Offer and the Merger; Plans for the Company.......... 26
12. Effect of the Offer on the Market for the Shares; Exchange Act
Registration; Margin Regulations................................... 27
13. Dividends and Distributions......................................... 28
14. Extension of Tender Period; Amendment; Termination.................. 29
15. Conditions to the Offer............................................. 29
16. Certain Legal Matters; Regulatory Approvals......................... 31
17. Fees and Expenses................................................... 33
18. Miscellaneous....................................................... 33
</TABLE>
Schedule I--Directors and Executive Officers of Parent and the Purchaser
<PAGE>
To the Holders of Common Stock of
FORUM GROUP, INC.
INTRODUCTION
FG Acquisition Corp., an Indiana corporation (the "Purchaser") and a wholly
owned indirect subsidiary of Marriott International, Inc., a Delaware
corporation ("Parent"), hereby offers to purchase all outstanding shares of
common stock, without par value (the "Shares"), of Forum Group, Inc., an
Indiana corporation (the "Company"), at $13.00 per Share, net to the seller in
cash (the "Offer Price"), upon the terms and subject to the conditions set
forth in this Offer to Purchase and in the related Letter of Transmittal
(which together constitute the "Offer").
Tendering shareholders will not be obligated to pay brokerage fees or
commissions or, except as set forth in Instruction 6 of the Letter of
Transmittal, stock transfer taxes on the purchase of Shares by the Purchaser
pursuant to the Offer. The Purchaser will pay all charges and expenses of
First Chicago Trust Company of New York (the "Depositary") and MacKenzie
Partners, Inc. (the "Information Agent") incurred in connection with the
Offer. See Section 17. For purposes of this Offer to Purchase, references to
"Section" are references to a section of this Offer to Purchase, unless the
context otherwise requires.
THE OFFER IS CONDITIONED UPON, AMONG OTHER THINGS, THERE BEING VALIDLY
TENDERED AND NOT WITHDRAWN PRIOR TO THE EXPIRATION DATE A NUMBER OF SHARES OF
COMMON STOCK WITHOUT PAR VALUE WHICH, WHEN ADDED TO THE SHARES THEN
BENEFICIALLY OWNED BY PARENT, CONSTITUTES AT LEAST TWO-THIRDS OF THE TOTAL
NUMBER OF SHARES OUTSTANDING AND TWO-THIRDS OF THE VOTING POWER OF THE SHARES
THEN OUTSTANDING ON A FULLY-DILUTED BASIS (THE "MINIMUM CONDITION"). ANY OR
ALL OF THE CONDITIONS TO THE OFFER MAY BE WAIVED BY THE PURCHASER. SEE SECTION
15.
THE BOARD OF DIRECTORS OF THE COMPANY (THE "BOARD" OR "BOARD OF DIRECTORS")
HAS UNANIMOUSLY APPROVED THE OFFER AND THE MERGER, DETERMINED THAT THE OFFER
AND THE MERGER ARE FAIR TO THE SHAREHOLDERS OF THE COMPANY AND ARE IN THE BEST
INTERESTS OF THE SHAREHOLDERS OF THE COMPANY, AND, SUBJECT TO THE FIDUCIARY
DUTIES OF THE BOARD, RECOMMENDS ACCEPTANCE OF THE OFFER AND APPROVAL AND
ADOPTION OF THE MERGER AGREEMENT AND THE MERGER (EACH AS DEFINED BELOW) BY THE
SHAREHOLDERS OF THE COMPANY.
The Offer is being made pursuant to an Agreement and Plan of Merger, dated
as of February 15, 1996 (the "Merger Agreement"), by and among the Company,
Parent and the Purchaser. The Merger Agreement provides, among other things,
that as promptly as practicable following the completion of the Offer and the
satisfaction or waiver of certain conditions, including the purchase of Shares
pursuant to the Offer (sometimes referred to herein as the "consummation" of
the Offer) and the approval and adoption of the Merger Agreement by the
shareholders of the Company, if required by applicable law, the Purchaser will
be merged with and into the Company (the "Merger") with the Company as the
surviving corporation. In the Merger, each issued and outstanding Share (other
than Dissenting Shares (as hereinafter defined)) not owned by Parent, the
Purchaser, the Company or any of their wholly owned subsidiaries will be
converted into and represent the right to receive $13.00 in cash, or any
higher price that may be paid per Share in the Offer, without interest (the
"Merger Price"). See Section 10.
Smith Barney Inc. ("Smith Barney"), financial advisor to the Company, has
delivered to the Board a written opinion dated February 15, 1996 to the effect
that, as of such date and based upon and subject to certain matters stated in
such opinion, the $13.00 per Share cash consideration to be received by the
holders of Shares (other than Parent and its affiliates) in the Offer and the
Merger was fair to such holders from a financial point of view. A copy of such
opinion is included with the Company's Solicitation/Recommendation Statement
on Schedule 14D-9 (the "Schedule 14D-9"), which is being mailed to
shareholders concurrently herewith, and
1
<PAGE>
should be read carefully in its entirety for a description of the assumptions
made, matters considered and limitations on the review undertaken by Smith
Barney.
The Purchaser and Parent have entered into agreements (each, a "Shareholder
Agreement") with each of Forum Holdings, L.P., a Texas limited partnership,
Apollo FG Partners, L.P., a Delaware limited partnership, and Forum/Classic,
L.P., a Delaware limited partnership (the foregoing collectively, the
"Principal Shareholders"). Pursuant to the Shareholder Agreements, each
Principal Shareholder has agreed, among other things, so long as the Offer
Price is at least $13.00 in cash (net to the seller), to tender and not
withdraw its Shares in the Offer. See Section 10.
Based upon representations made by the Principal Shareholders to Parent and
the Purchaser, as of the date of the Shareholder Agreements, the Principal
Shareholders collectively hold 20,709,680 Shares and warrants currently
exercisable to purchase 700,144 Shares in the aggregate.
According to the Company, as of February 15, 1996, (A) 22,539,831 Shares
were validly issued and outstanding, (B) 1,671,750 Shares were reserved for
issuance pursuant to outstanding stock options (rights to stock options
exercisable into 230,500 Shares had vested as of February 15, 1996), (C)
700,144 Shares were reserved for issuance pursuant to warrants, (D) 262,793
Shares were reserved for issuance upon exercise of rights pursuant to the
Company's Third Amended and Restated Joint Plan of Reorganization, dated
January 17, 1992, as amended (the "Plan of Reorganization"), and (E) 6,000
Shares were reserved for issuance to persons who are investors in the
"Hearthside" joint venture with the Company (the "Hearthside Shares").
It is a condition to the Offer that an order of the Bankruptcy Court (the
"Bankruptcy Order") be obtained that, among other things, terminates rights of
persons to receive Shares under the Plan of Reorganization after the date of
the Bankruptcy Order. See Section 15. Also, pursuant to their respective
Shareholder Agreements, Forum Holdings, L.P. and Apollo FG Partners, L.P. have
agreed with the Purchaser and Parent to exercise warrants resulting in the
issuance, in the aggregate, of 700,144 Shares, and that all other warrants
held by them will be cancelled. Based upon information provided by the Company
and assuming (i) the issuance of the Bankruptcy Order as described above, (ii)
the issuance of 700,144 Shares upon exercise of warrants, (iii) the
cancellation of all other warrants as provided in the Shareholder Agreements,
(iv) no issuance of the Hearthside Shares, and (v) no exercise of stock
options prior to consummation of the Offer, then the Purchaser understands
that the Minimum Condition would be satisfied if at least 15,493,317 Shares
are validly tendered and not withdrawn prior to the Expiration Date.
The Purchaser further understands that, after the exercise of warrants as
provided in the applicable Shareholder Agreements, the Principal Shareholders
will hold, collectively, 21,409,824 Shares. The Purchaser thus expects that,
upon a tender of Shares by each Principal Shareholder in accordance with the
applicable Shareholder Agreement, the Minimum Condition would be satisfied.
THIS OFFER TO PURCHASE AND THE RELATED LETTER OF TRANSMITTAL CONTAIN
IMPORTANT INFORMATION AND SHOULD BE READ IN THEIR ENTIRETY BEFORE ANY DECISION
IS MADE WITH RESPECT TO THE OFFER.
1. TERMS OF THE OFFER
Upon the terms and subject to the conditions of the Offer, the Purchaser
will accept for payment and pay for all Shares which are validly tendered
prior to the Expiration Date and not withdrawn in accordance with Section 4.
The term "Expiration Date" means 12:00 midnight, New York City time, on
Thursday, March 21, 1996, unless and until the Purchaser, subject to the terms
of the Merger Agreement, shall have extended the period of time during which
the Offer is open, in which event the term "Expiration Date" shall refer to
the latest time and date at which the Offer, as so extended by the Purchaser,
shall expire.
Pursuant to the Merger Agreement, the Purchaser, subject to the terms and
conditions of the Offer, will extend the period of time during which the Offer
is open if the Offer would otherwise expire before the
2
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Conditions (as defined at Section 15) are satisfied or waived; provided, that
the Purchaser shall be permitted but shall not be obligated to extend the time
the Offer is open if either (x) the Company is in breach in any material
respect of its covenants or agreements contained in the Merger Agreement or
(y) there is a reasonable likelihood that one or more of the Conditions cannot
be satisfied; and provided, further, that the Purchaser shall in no event be
permitted or obligated to extend the period of time the Offer is open beyond
July 15, 1996. The Purchaser will not otherwise extend the period of time
during which the Offer is open unless any of the Conditions shall not have
been satisfied.
Subject to the terms of the Merger Agreement, the Purchaser expressly
reserves the right, in its sole discretion, at any time or from time to time,
and regardless of whether or not any of the events set forth in Section 15
shall have occurred or shall have been determined by the Purchaser to have
occurred, (i) to extend the period of time during which the Offer is open and
thereby delay acceptance for payment of, and the payment for, any Shares, by
giving oral or written notice of such extension to the Depositary and (ii) to
amend the Offer in any respect by giving oral or written notice of such
amendment to the Depositary. Without the consent of the Company, no amendment
may be made which (x) decreases the price per Share or changes the form of
consideration payable in the Offer, (y) decreases the number of Shares sought,
or (z) imposes additional conditions to the Offer or amends any other term of
the Offer in any manner adverse to the holders of Shares.
The Offer is subject to certain conditions set forth in Section 15,
including satisfaction of the Minimum Condition and the expiration or
termination of any waiting period under the Hart-Scott-Rodino Antitrust
Improvements Act of 1976, as amended (the "HSR Act"). If any such condition is
not satisfied prior to the expiration of the Offer, the Purchaser may, subject
to the terms of the Merger Agreement, (i) terminate the Offer and return all
tendered Shares to tendering shareholders, (ii) extend the Offer and, subject
to withdrawal rights as set forth in Section 4, retain all such Shares until
the expiration of the Offer as so extended, (iii) waive such condition and,
subject to any requirement to extend the period of time during which the Offer
is open, purchase all Shares validly tendered and not withdrawn by the
Expiration Date or (iv) delay acceptance for payment of (whether or not the
Shares have theretofore been accepted for payment), or payment for, any Shares
tendered and not withdrawn, subject to applicable law, until satisfaction or
waiver of the conditions to the Offer. In the Merger Agreement, the Purchaser
has agreed, subject to the conditions in Section 15 and its rights under the
Offer, to accept for payment and purchase all validly tendered and not
properly withdrawn Shares as promptly as practicable following the expiration
of the Offer. For a description of the Purchaser's right to extend the period
of time during which the Offer is open, and to amend, delay or terminate the
Offer, see Section 14.
The Company has provided or will provide (upon request of Parent or the
Purchaser) the Purchaser with the Company's shareholder 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 and will be furnished to brokers, banks and
similar persons whose names, or the names of whose nominees, appear on the
shareholder list or, if applicable, who are listed as participants in a
clearing agency's security position listing for subsequent transmittal to
beneficial owners of Shares.
2. ACCEPTANCE FOR PAYMENT AND PAYMENT
Upon the terms and subject to the conditions of the Offer, the Purchaser
will accept for payment and pay for all Shares validly tendered and not
properly withdrawn by the Expiration Date as soon as practicable after the
later of (i) the Expiration Date and (ii) the satisfaction or waiver of the
conditions set forth in Section 15. For a description of the Purchaser's right
to terminate the Offer and not accept for payment or pay for Shares or to
delay acceptance for payment or payment for Shares, see Section 14.
For purposes of the Offer, the Purchaser will be deemed to have accepted for
payment tendered Shares if, as and when the Purchaser gives oral or written
notice to the Depositary of its acceptance of the tender of such Shares.
Payment for Shares purchased pursuant to the Offer will be made by deposit of
the purchase price with the Depositary, which will act as agent for tendering
shareholders for the purpose of receiving payment from the Purchaser and
transmitting such payments to tendering shareholders. In all cases, payment
for Shares accepted
3
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for payment pursuant to the Offer will be made only after timely receipt by
the Depositary of certificates for such Shares (or of a confirmation of a
book-entry transfer of such Shares into the Depositary's account at one of the
Book-Entry Transfer Facilities (as defined in Section 3)), a properly
completed and duly executed Letter of Transmittal (or facsimile thereof) and
any other required documents. For a description of the procedure for tendering
Shares pursuant to the Offer, see Section 3. Accordingly, payment may be made
to tendering shareholders at different times if delivery of the Shares and
other required documents occur at different times. UNDER NO CIRCUMSTANCES WILL
INTEREST BE PAID BY THE PURCHASER ON THE CONSIDERATION PAID FOR SHARES
PURSUANT TO THE OFFER, REGARDLESS OF ANY DELAY IN MAKING SUCH PAYMENT.
If the Purchaser increases the consideration to be paid for Shares pursuant
to the Offer, the Purchaser will pay such increased consideration for all
Shares purchased pursuant to the Offer.
The Purchaser reserves the right to transfer or assign, in whole or from
time to time in part, to one or more of its affiliates the right to purchase
Shares tendered pursuant to the Offer, but any such transfer or assignment
will not relieve the Purchaser of its obligations under the Offer or prejudice
the rights of tendering shareholders to receive payment for Shares validly
tendered and accepted for payment.
If any tendered Shares are not purchased pursuant to the Offer for any
reason, or if certificates are submitted for more Shares than are tendered,
certificates for Shares not purchased or tendered will be returned (or, in the
case of Shares tendered by book-entry transfer, such Shares will be credited
to an account maintained at one of the Book-Entry Transfer Facilities),
without expense to the tendering shareholder, as promptly as practicable after
the expiration or termination of the Offer.
3. PROCEDURES FOR TENDERING SHARES
Valid Tender. To tender Shares pursuant to the Offer, either (a) a properly
completed and duly executed Letter of Transmittal (or facsimile thereof), with
any required signature guarantees 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 and either (i) certificates for Shares to be tendered must be
received by the Depositary along with the Letter of Transmittal or (ii) such
Shares must be delivered to the Depositary pursuant to the procedures for
book-entry transfer described below (and a confirmation of such delivery
received by the Depositary including an Agent's Message (as defined below) if
the tendering shareholder has not delivered a Letter of Transmittal), in each
case prior to the Expiration Date, or (b) the tendering shareholder must
comply with the guaranteed delivery procedures described below. The term
"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 states that such Book-Entry Transfer Facility has received
an express acknowledgement from the participant in such Book-Entry Transfer
Facility tendering the Shares which are the subject of such book-entry
confirmation that such participant has received and agrees to be bound by the
terms of the Letter of Transmittal and that the Company may enforce such
agreement against such participant.
Book-Entry Transfer. The Depositary will establish an account with respect
to the Shares at each of the Depository Trust Company, the Midwest Securities
Trust Company, and the Philadelphia Depository Trust Company (collectively
referred to as the "Book-Entry Transfer Facilities") for purposes of the Offer
within two business days after the date of this Offer to Purchase, and any
financial institution that is a participant in the system of any Book-Entry
Transfer Facility may make book-entry delivery of Shares by causing a Book-
Entry Transfer Facility to transfer such Shares into the Depositary's account
at a Book-Entry Transfer Facility in accordance with the procedures of such
Book-Entry Transfer Facility. However, although delivery of Shares may be
effected through book-entry transfer, the Letter of Transmittal (or facsimile
thereof) properly completed and duly executed, together with any required
signature guarantees 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 prior to the Expiration Date, or the guaranteed
delivery procedures described below must be complied with. Delivery of the
Letter of Transmittal and any other required documents to a Book-Entry
Transfer Facility does not constitute delivery to the Depositary.
4
<PAGE>
Signature Guarantees. Signatures on all Letters of Transmittal must be
guaranteed by a recognized member of a Medallion Signature Guarantee Program
or by any other "eligible guarantor institution" as defined in Rule 17Ad-15
under the Securities Exchange Act of 1934, as amended (the "Exchange Act")
(each of the foregoing, an "Eligible Institution"). Signatures on a Letter of
Transmittal need not be guaranteed (a) if 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" on the Letter of
Transmittal or (b) if such Shares are tendered for the account of an Eligible
Institution.
Guaranteed Delivery. If a shareholder desires to tender Shares pursuant to
the Offer and such shareholder's certificates for Shares are not immediately
available or time will not permit all required documents to reach the
Depositary on or prior to the Expiration Date, or the procedure for book-entry
transfer cannot be completed on a timely basis, such Shares may nevertheless
be tendered if all the following conditions are satisfied:
(i) the tender is made by or through an Eligible Institution;
(ii) a properly completed and duly executed Notice of Guaranteed
Delivery, substantially in the form provided by the Purchaser, is received
by the Depositary prior to the Expiration Date as provided below; and
(iii) the certificates for such Shares, in proper form for transfer (or a
confirmation of a book-entry transfer of such Shares into the Depositary's
account at a Book-Entry Transfer Facility), together with a properly
completed and duly executed Letter of Transmittal or facsimile thereof,
with any required signature guarantees and any other documents required by
the Letter of Transmittal, are received by the Depositary within three
trading days after the date of execution of the Notice of Guaranteed
Delivery. A "trading day" is any day on which the Nasdaq Small Cap Market
(the "Nasdaq Small Cap Market") operated by the National Association of
Securities Dealers (the "NASD") is open for business.
The Notice of Guaranteed Delivery may be delivered by hand or transmitted by
facsimile transmission or mailed to the Depositary and must include a
guarantee by an Eligible Institution in the form set forth in the Notice of
Guaranteed Delivery.
THE METHOD OF DELIVERY OF SHARES, THE LETTER OF TRANSMITTAL AND ANY OTHER
REQUIRED DOCUMENTS, INCLUDING THROUGH BOOK-ENTRY TRANSFER FACILITIES, IS AT
THE OPTION AND RISK OF THE TENDERING SHAREHOLDER AND DELIVERY WILL BE DEEMED
MADE ONLY WHEN ACTUALLY RECEIVED BY THE DEPOSITARY. IF DELIVERY IS BY MAIL,
REGISTERED MAIL WITH RETURN RECEIPT REQUESTED, PROPERLY INSURED, IS
RECOMMENDED.
Back-up Federal Income Tax Withholding. Under the federal income tax laws,
the Depositary will be required to withhold 31% of the amount of any payments
made to certain shareholders pursuant to the Offer. In order to avoid such
backup withholding, each tendering shareholder must provide the Depositary
with such shareholder's correct taxpayer identification number and certify
that such shareholder is not subject to back-up federal income tax withholding
by completing the Substitute Form W-9 included in the Letter of Transmittal
(see Instruction 10 of the Letter of Transmittal) or by filing a Form W-9 with
the Depositary prior to any such payments. If the shareholder is a nonresident
alien or foreign entity not subject to backup withholding, the shareholder
must give the Depositary a completed Form W-8 Certificate of Foreign Status
prior to receipt of any payments.
Other Requirements. By executing a Letter of Transmittal as set forth above,
a tendering shareholder irrevocably appoints designees of the Purchaser as the
shareholder's proxies, in the manner set forth in the Letter of Transmittal,
each with full power of substitution, to the full extent of the shareholder's
rights with respect to the Shares tendered by the shareholder and accepted for
payment by the Purchaser (and any and all other Shares or other securities
issued or issuable in respect of such Shares on or after the date of the
Merger Agreement). All such proxies shall be irrevocable and coupled with an
interest in the tendered Shares. Such appointment is effective only upon
acceptance for payment of the Shares by the Purchaser. Upon such acceptance
for payment,
5
<PAGE>
all prior proxies and consents given by the shareholder with respect to such
Shares and other securities will, without further action, be revoked, and no
subsequent proxies may be given nor any subsequent written consent executed by
such shareholder (and, if given or executed, will not be deemed to be
effective) with respect thereto. The designees of the Purchaser will, with
respect to the Shares and other securities, be empowered to exercise all
voting and other rights of such shareholder as they in their sole discretion
may deem proper at any annual, special or adjourned meeting of the Company's
shareholders, by written consent or otherwise. The Purchaser reserves the
right to require that, in order for Shares to be deemed validly tendered,
immediately upon the Purchaser's acceptance for payment of such Shares, the
Purchaser is able to exercise full voting and other rights with respect to
such Shares (including voting at any meeting of shareholders then scheduled or
acting by written consent without a meeting).
A tender of Shares pursuant to any one of the procedures described above
will constitute the tendering shareholder's acceptance of the terms and
conditions of the Offer, as well as the tendering shareholder's representation
and warranty that such shareholder has the full power and authority to tender
and assign the Shares tendered, as specified in the Letter of Transmittal. The
Purchaser's acceptance for payment of Shares tendered pursuant to the Offer
will constitute a binding agreement between the tendering shareholder and the
Purchaser upon the terms and subject to the conditions of the Offer.
Determination of Validity. All questions as to the form of documents and the
validity, eligibility (including time of receipt) and acceptance for payment
of any tendered Shares will be determined by the Purchaser in its sole
discretion, which determination shall be final and binding. The Purchaser
reserves the absolute right to reject any or all tenders of any Shares
determined by it not to be in proper form or the acceptance for payment of, or
payment for which may, in the opinion of the Purchaser's counsel, be unlawful.
The Purchaser also reserves the absolute right to waive any defect or
irregularity in any tender of Shares. No tender of Shares will be deemed to
have been properly made until all defects and irregularities relating thereto
have been cured or waived. The Purchaser's interpretation of the terms and
conditions of the Offer in this regard (including the Letter of Transmittal
and the Instructions thereto) will be final and binding. None of the
Purchaser, Parent, the Depositary, the Information Agent or any other person
will be under any duty to give notification of any defects or irregularities
in tenders or will incur any liability for failure to give any such
notification.
4. WITHDRAWAL RIGHTS
Tenders of Shares made pursuant to the Offer may be withdrawn at any time
prior to the Expiration Date. Thereafter, such tenders are irrevocable, except
that they may be withdrawn after April 22, 1996, unless theretofore accepted
for payment as provided in this Offer to Purchase.
To be effective, a written, telegraphic or facsimile transmission notice of
withdrawal must be timely received by the Depositary at one of its addresses
set forth on the back cover of this Offer to Purchase. Any such notice of
withdrawal must specify the name of the person who tendered the Shares to be
withdrawn, the number of Shares to be withdrawn and the name of the registered
holder, if different from that of the person who tendered such Shares. If the
Shares to be withdrawn have been delivered to the Depositary, a signed notice
of withdrawal with (except in the case of Shares tendered by an Eligible
Institution) signatures guaranteed by an Eligible Institution, must be
submitted prior to the release of such Shares. In addition, such notice must
specify, in the case of Shares tendered by delivery of certificates, the name
of the registered holder (if different from that of the tendering shareholder)
and the serial numbers shown on the particular certificates evidencing the
Shares to be withdrawn. Withdrawals may not be rescinded, and Shares withdrawn
will thereafter be deemed not validly tendered for purposes of the Offer.
However, withdrawn Shares may be retendered by again following one of the
procedures described in Section 3 at any time prior to the Expiration Date.
All questions as to the form and validity (including time of receipt) of
notices of withdrawal will be determined by the Purchaser, in its sole
discretion, whose determination will be final and binding. None of the
Purchaser, Parent, the Depositary, the Information Agent or any other person
will be under any duty to give
6
<PAGE>
notification of any defects or irregularities in any notice of withdrawal or
incur any liability for failure to give any such notification.
5. CERTAIN TAX CONSIDERATIONS
The following summary addresses the material federal income tax consequences
to holders of Shares who sell their Shares in the Offer. The summary does not
address all aspects of federal income taxation that may be relevant to
particular holders of Shares and thus, for example, may not be applicable to
holders of Shares who are not citizens or residents of the United States, who
are employees and who acquired their Shares pursuant to the exercise of
incentive stock options or who are entities that are otherwise subject to
special tax treatment under the Internal Revenue Code of 1986, as amended (the
"Code") (such as insurance companies, tax-exempt entities and regulated
investment companies); nor does this summary address the effect of any
applicable foreign, state, local or other tax laws. The discussion assumes
that each holder of Shares holds such Shares as a capital asset within the
meaning of Section 1221 of the Code. The federal income tax discussion set
forth below is included for general information only and is based upon present
law. The precise tax consequences of the Offer (or the Merger) will depend on
the particular circumstances of the holder. SHAREHOLDERS ARE URGED TO CONSULT
THEIR OWN TAX ADVISORS AS TO THE SPECIFIC FEDERAL, STATE, LOCAL, FOREIGN AND
OTHER TAX CONSEQUENCES TO THEM OF THE PROPOSED TRANSACTION.
The receipt of cash for Shares pursuant to the Offer (or the Merger) will be
a taxable transaction for federal income tax purposes and may also be a
taxable transaction under applicable state, local or foreign tax laws. In
general, a shareholder who receives cash for Shares pursuant to the Offer (or
the Merger) will recognize gain or loss for federal income tax purposes equal
to the difference between the amount of cash received in exchange for the
Shares sold and such shareholder's adjusted tax basis in such Shares. Such
gain or loss will be capital gain or loss, and will be long term capital gain
or loss if the holder has held the Shares for more than one year at the time
of sale. Gain or loss will be calculated separately for each block of Shares
tendered pursuant to the Offer.
Under current law, the maximum federal tax rate applicable to long-term
capital gains recognized by an individual is 28%, and the maximum federal tax
rate applicable to ordinary income (including dividends and short-term capital
gains recognized by individuals) is 39.6%. The maximum federal tax rate
applicable to all capital gains and ordinary income recognized by a
corporation is 35%. It is possible that legislation may be enacted that would
reduce the maximum federal tax rate applicable to long-term capital gains,
possibly with retroactive effect. It is not possible to predict whether or in
what form any such legislation may be enacted.
Dissenters. A holder of Shares who does not sell Shares in the Offer or the
Merger and who exercises and perfects his or her applicable rights under the
Indiana Business Corporation Law ("IBCL") to demand fair value for such Shares
will recognize capital gain or loss (and may recognize an amount of interest
income) attributable to any payment received pursuant to the exercise of such
rights based upon the principles described above. See Section 16.
Withholding. Unless a shareholder complies with certain reporting and/or
certification procedures or is an exempt recipient under applicable provisions
of the Code (and regulations promulgated thereunder), such shareholder may be
subject to a "backup" withholding tax of 31% with respect to any payments
received in the Offer, the Merger or as a result of the exercise of the
holder's dissenters' rights. Shareholders should contact their brokers to
ensure compliance with such procedures. Foreign shareholders should consult
with their tax advisors regarding withholding taxes in general.
7
<PAGE>
6. PRICE RANGE OF SHARES; DIVIDENDS
The Shares are traded in the over-the-counter market and prices are quoted
on the Nasdaq Small Cap Market under the symbol "FOUR." The following table
sets forth, for the fiscal quarters indicated, the high and low bid prices per
Share as reported by the Nasdaq Small Cap Market:
<TABLE>
<CAPTION>
HIGH LOW
------ ------
<S> <C> <C>
Fiscal Year Ended March 31, 1994:
Quarter ended March 31, 1994.............................. $5 7/8 $4
Fiscal Year Ended March 31 1995:
Quarter ended June 30, 1994............................... $7 3/4 $5 3/8
Quarter ended September 30, 1994.......................... $6 3/4 $5 5/8
Quarter ended December 31, 1994........................... $8 1/2 $6 1/8
Quarter ended March 31, 1995.............................. $9 5/8 $6 1/2
Fiscal Year Ending March 31 1996:
Quarter ended June 30, 1995............................... $7 5/8 $6 1/4
Quarter ended September 30, 1995.......................... $9 1/2 $7 3/8
Quarter ended December 31, 1995........................... $8 3/4 $7
</TABLE>
No cash dividends have been declared or paid on the Shares during the two
most recently concluded fiscal years or during the current fiscal year of the
Company. The Merger Agreement prohibits the Company from declaring or paying
any dividends until the consummation of the Offer.
On February 15, 1996, the last full trading day prior to announcement of the
Merger Agreement, the last reported bid price per Share on the Nasdaq Small
Cap Market was $12 1/2. On February 22, 1996, the last full trading day prior
to the commencement of the Offer, the last reported bid price per Share on the
Nasdaq Small Cap Market was $12 13/16.
SHAREHOLDERS ARE URGED TO OBTAIN A CURRENT MARKET QUOTATION FOR THE SHARES.
7. CERTAIN INFORMATION CONCERNING THE COMPANY.
The Company is an Indiana corporation with its principal offices located at
Suite 400, 11320 Random Hills Road, Fairfax, Virginia 22030. The Company
provides senior housing and healthcare services in 15 states through the
ownership and/or operation of 44 retirement communities ("RCs"). The RCs
generally provide a continuum of care, including independent living, assisted
living and skilled nursing. Independent living services consist of residential
accommodations together with amenities such as security, meals and
housekeeping. Assisted living residents, in addition to independent living
amenities, receive certain healthcare services, including medication delivery,
assistance with activities of daily living and other supportive services in
private or semiprivate suites. The skilled nursing section of certain of the
RCs provide residents with a full range of nursing care. In addition to RCs
offering a complete continuum of care, the Company operates RCs providing only
assisted living care, such as the National Guest Homes concept, which manages
seven RCs (two of which are owned by a majority owned subsidiary of the
Company), with five additional projects under construction or commencing
construction this fiscal quarter, and the Hearthside concept (two RCs), which
provides assisted living and care for residents with dementia-related needs.
It is anticipated that the Company will acquire a third recently opened
Hearthside RC upon satisfaction of certain conditions.
The Company owns, leases and/or operates (i) 11 RCs that are wholly owned or
leased by the Company, one nursing facility leased by the Company and two
nonperforming first mortgage notes secured by RCs (ownership of which is
anticipated to be transferred to the Company in the near future), (ii) 19 RCs
owned by partnerships or limited liability companies which are not wholly
owned by the Company but which are consolidated for financial reporting
purposes, including nine RCs owned by Forum Retirement Partners, L.P., a
publicly traded limited partnership, (iii) ten RCs in which the Company has no
ownership interest (two of which are expected to be sold in March 1996), and
(iv) one RC in which the Company has a 50% ownership interest,
8
<PAGE>
but which is not consolidated for financial reporting purposes. As of the date
of the Merger Agreement, the Company's interests in these partnerships and
limited liability companies that own RCs range from 50% to 89.5%. Wholly or
majority owned subsidiaries of the Company act as general partner of each
limited partnership and, in the case of the limited liability companies, are
the sole managing members. It is a Condition of the Offer that the Company
have purchased all ownership interests (other than ownership interests owned
as of the date hereof by the Company or any of its subsidiaries) in Forum
Retirement Communities II, L.P., which owns three RCs, for an aggregate
purchase price of not more than $1,235,000. See Section 15.
The Company is subject to the information requirements of the Exchange Act,
and is required to file reports and other information with the Securities and
Exchange Commission (the "Commission") relating to its business, financial
condition and other matters. Information, as of particular dates, concerning
the Company's directors and officers, their remuneration, options granted to
them, the principal holders of the Company's securities and any material
interest of such persons in transactions with the Company is required to be
described in periodic statements distributed to the Company's shareholders and
filed with the Commission. These reports, proxy statements, and other
information, including the Company's Annual Report on Form 10-K for the year
ended March 31, 1995 (the "Company 10-K") and the Schedule 14D-9, should be
available for inspection and copying at the Commission's principal office at
450 Fifth Street, N.W., Washington, D.C. 20549, and at the regional offices of
the Commission located at 75 Park Place, New York, New York 10007 and Citicorp
Center, 500 West Madison Street, Suite 1400, Chicago, Illinois 60661. Copies
of this material may also be obtained by mail, upon payment of the
Commission's customary fees, from the Commission's principal office. Such
material should also be available for inspection at the offices of Nasdaq
Operations, 1735 K Street, N.W., Washington, DC 20006.
The above information concerning the Company has been taken from or based
upon the Company 10-K and other publicly available documents on file with the
Commission, other publicly available information and information provided by
the Company. Although neither the Purchaser nor Parent has any knowledge that
would indicate that such information is untrue, neither the Purchaser nor
Parent takes any responsibility for, or makes any representation with respect
to, the accuracy or completeness of such information or for any failure by the
Company to disclose events that may have occurred and may affect the
significance or accuracy of any such information but which are unknown to the
Purchaser or Parent.
A copy of this Offer to Purchase, and certain of the agreements referred to
herein, are attached to the Purchaser's Tender Offer Statement on Schedule
14D-1, dated February 23, 1996 (the "Schedule 14D-1"), which has been filed
with the Commission. The Schedule 14D-1 and the exhibits thereto, along with
such other documents as may be filed by the Purchaser with the Commission, may
be examined and copied from the offices of the Commission in the manner set
forth in the third paragraph of this Section 7.
9
<PAGE>
Summary Financial Information for the Company. The following table sets
forth certain summary consolidated financial information with respect to the
Company and its subsidiaries excerpted or derived from the audited financial
statements contained in the Company 10-K and the unaudited financial
information contained in the Company's Quarterly Reports on Form 10-Q for the
nine months ended December 31, 1995 and 1994. More comprehensive financial
information is included in such reports and other documents filed by the
Company with the Commission, and the following summary is qualified in its
entirety by reference to such documents (which may be inspected and obtained
as described above), including the financial statements and related notes
contained therein. Neither Parent nor the Purchaser assumes any responsibility
for the accuracy of the financial information set forth below.
FORUM GROUP, INC.
SUMMARY CONSOLIDATED FINANCIAL INFORMATION
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
NINE MONTHS ENDED FISCAL YEAR
DECEMBER 31 ENDED MARCH 31
------------------ ----------------------------
1995 1994 1995 1994 1993
-------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
INCOME STATEMENT DATA
Net sales and operating
revenues and other revenues. $145,033 $107,504 $151,960 $108,465 $ 93,302
Income (loss) before
extraordinary items......... 16,208 11,168 12,490 2,690 (7,359)
Net income (loss)............ 13,627 10,906 12,228 (7,130) (7,359)
BALANCE SHEET DATA (AT END OF
PERIOD)
Net current assets
(liabilities)............... (52,445) (a) 3,649 (a) (a)
Total assets................. 455,985 371,417 398,346 290,200 348,641
Shareholders' equity......... 81,495 61,095 65,666 44,284 18,445
PER SHARE
Income (loss) per common
share before extraordinary
items....................... 0.68 0.49 0.54 0.16 (0.98)
Extraordinary items.......... (0.11) (0.01) (0.01) (0.57) --
Net income (loss) per common
share (and common share
equivalents)................ 0.57 0.48 0.53 (0.41) (0.98)
Net income per share on a
fully diluted basis......... 0.57 0.48 0.53 (0.41) (0.98)
</TABLE>
- --------
(a) For the Fiscal Years ended March 31, 1994 and 1993 Forum Group, Inc.
presented an unclassified balance sheet.
Projected Financial Information. Prior to entering into the Merger
Agreement, Parent conducted due diligence on the Company and in connection
with such due diligence review received certain non-public information from
the Company. The non-public information included, among other things,
financial projections for the Company. Over the course of its negotiations
with the Company regarding the Merger Agreement, Parent received additional
projections relating to the Company's prospective results of operations under
a range of assumptions. These projections were delivered to Parent, on behalf
of the Company, by one of the Principal Shareholders.
Set forth below is a summary of the projections received by Parent on
January 9 and 10, 1996 (except for the figures relating to the fiscal year
ending March 31, 1996, which were received by Parent on January 30, 1996). The
following projections represent the final version of projections furnished by
the Principal Shareholder after the Principal Shareholder and the Company had
gathered, assimilated and refined relevant data needed for preparation of
projections relating to prospective results of operations. Parent did not rely
on these projections in entering into the Merger Agreement.
10
<PAGE>
The first table set forth below depicts projected results of operations for
the Company based upon existing assets and expansion programs currently under
way or identified. The second table set forth below depicts projected results
of operations based upon existing assets, expansion programs currently under
way or identified, and the Company's estimates of future projects to be
acquired or developed.
FORUM GROUP, INC.
PROJECTED FINANCIAL INFORMATION
(IN MILLIONS)
EXISTING COMMUNITIES AND CURRENT EXPANSION PROGRAMS
<TABLE>
<CAPTION>
FISCAL YEAR ENDING MARCH 31
-----------------------------------------
1996 1997 1998 1999 2000 2001
------ ------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C> <C>
Net Sales............................. $195.9 $225.2 $250.2 $273.1 $286.6 $301.4
EBITDA(1)............................. 51.0 64.8 74.8 84.6 88.0 92.5
Net income(2)......................... 18.3 9.7 16.9 22.2 26.9 31.0
</TABLE>
- --------
(1) Income before interest, taxes, depreciation, amortization, gains on
cooperative membership sales, gain or loss on asset dispositions and other
provisions, minority interests and extraordinary charges.
(2) Includes $14.8M pre-tax gain from the sale of cooperative memberships in
1996 with no such gains or losses projected for 1997 and beyond.
EXISTING COMMUNITIES, CURRENT EXPANSION PROGRAMS
AND PROJECTED NEW COMMUNITIES
<TABLE>
<CAPTION>
FISCAL YEAR ENDING MARCH 31
-----------------------------------------
1996 1997 1998 1999 2000 2001
------ ------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C> <C>
Net Sales............................. $195.9 $237.0 $302.7 $373.4 $447.1 $515.8
EBITDA(1)............................. 51.0 70.0 95.3 121.1 146.2 169.3
Net income(2)......................... 18.3 11.2 21.0 29.2 35.9 42.0
</TABLE>
- --------
(1) Income before interest, taxes, depreciation, amortization, gains on
cooperative membership sales, gain or loss on asset dispositions and other
provisions, minority interests and extraordinary charges.
(2) Includes $14.8M pre-tax gain from the sale of cooperative memberships in
1996 with no such gains or losses projected for 1997 and beyond.
THE COMPANY HAS ADVISED PARENT AND THE PURCHASER THAT THE FOREGOING
PROJECTIONS AND FORECASTS (THE "PROJECTIONS") WERE NOT PREPARED WITH A VIEW TO
PUBLIC DISCLOSURE OR COMPLIANCE WITH THE PUBLISHED GUIDELINES OF THE
COMMISSION OR THE GUIDELINES ESTABLISHED BY THE AMERICAN INSTITUTE OF
CERTIFIED PUBLIC ACCOUNTANTS REGARDING PROJECTIONS. THE PROJECTIONS ARE
INCLUDED IN THIS OFFER TO PURCHASE ONLY BECAUSE THEY WERE PROVIDED TO PARENT.
NONE OF PARENT, THE PURCHASER, THE COMPANY OR ANY OF THEIR RESPECTIVE ADVISORS
OR ANY OTHER PARTY WHO RECEIVED SUCH INFORMATION ASSUMES ANY RESPONSIBILITY
FOR THE ACCURACY OF THE PROJECTIONS. ALTHOUGH PRESENTED WITH NUMERICAL
SPECIFICITY, THE PROJECTIONS ARE BASED UPON A VARIETY OF ASSUMPTIONS RELATING
TO THE BUSINESSES OF THE COMPANY WHICH MAY NOT BE REALIZED AND ARE SUBJECT TO
SIGNIFICANT UNCERTAINTIES AND CONTINGENCIES, MANY OF WHICH ARE BEYOND THE
CONTROL OF THE COMPANY. THERE CAN BE NO ASSURANCE THAT THE PROJECTIONS SET
FORTH ABOVE WILL BE REALIZED, AND ACTUAL RESULTS MAY VARY MATERIALLY FROM
THOSE SHOWN. THE PROJECTIONS HAVE NOT BEEN EXAMINED OR COMPILED BY THE
COMPANY'S INDEPENDENT PUBLIC ACCOUNTANTS. FOR THESE REASONS, AS WELL AS THE
BASES ON WHICH SUCH PROJECTIONS WERE COMPILED, THERE CAN BE NO ASSURANCE THAT
SUCH PROJECTIONS WILL BE REALIZED, OR THAT ACTUAL RESULTS WILL NOT DIFFER FROM
THOSE ESTIMATED. THE INCLUSION OF SUCH PROJECTIONS HEREIN SHOULD NOT BE
REGARDED AS AN INDICATION THAT PARENT, THE PURCHASER, THE COMPANY, ANY OF
THEIR RESPECTIVE ADVISORS OR ANY OTHER PARTY WHO RECEIVED SUCH INFORMATION
CONSIDERS IT AN ACCURATE PREDICTION OF FUTURE EVENTS.
11
<PAGE>
8. CERTAIN INFORMATION CONCERNING THE PURCHASER AND PARENT.
The Purchaser is a newly formed Indiana corporation and a wholly owned
indirect subsidiary of Parent. To date, the Purchaser has not conducted any
business other than in connection with the Offer. Until immediately prior to
the time the Purchaser purchases Shares pursuant to the Offer, it is not
anticipated that the Purchaser will have any significant assets or liabilities
or engage in activities other than those incident to its formation and
capitalization and the transactions contemplated by the Offer. Because the
Purchaser is a newly formed corporation and has minimal assets and
capitalization, no meaningful financial information regarding the Purchaser is
available.
Parent is a Delaware corporation. Parent, together with its consolidated
subsidiaries, is a diversified hospitality company with operations in two
business segments: Lodging, which operates and franchises lodging businesses
under four brand names, and operates a vacation timesharing business; and
Contract Services, consisting of food service and facilities management for
clients in business, education and health care; development, ownership and
operation of retirement communities; and wholesale food distribution.
Until October 8, 1993, Parent was a wholly-owned subsidiary of Marriott
Corporation. Marriott Corporation separated Parent's businesses from its other
businesses through a distribution (the "Distribution") to the holders of
outstanding shares of Marriott Corporation common stock, on a share-for-share
basis, of all the outstanding shares of Parent common stock. Upon the
consummation of the Distribution, Parent became a separate, publicly held
company and Marriott Corporation changed its name to Host Marriott
Corporation.
The principal executive offices of Parent and the Purchaser are located at
10400 Fernwood Road, Bethesda, Maryland 20817. The name, citizenship, business
address, present principal occupation or employment, and material positions
held during the past five years of each of the directors and executive
officers of the Purchaser and of Parent are set forth in Schedule I to this
Offer to Purchase.
Except as set forth in this Offer to Purchase, neither Parent nor the
Purchaser, or, to the best knowledge of Parent or the Purchaser, any of the
persons listed on Schedule I, 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 the voting of any
securities of the Company, joint ventures, loan or option arrangements, puts
or calls, guarantees of loans, guarantees against loss or the giving or
withholding of proxies. Except as set forth in this Offer to Purchase, neither
Parent nor the Purchaser, or, to the best knowledge of Parent or the
Purchaser, any of the persons listed on Schedule I, has had, since April 1,
1992, any business relationships or transactions with the Company or any of
its executive officers, directors or affiliates that would require reporting
under the rules of the Commission. Except as set forth in this Offer to
Purchase, since April 1, 1992, there have been no contacts, negotiations or
transactions between Parent or the Purchaser, or their respective subsidiaries
or, to the best knowledge of any of Parent or the Purchaser, any of the
persons listed on Schedule I, and the Company or its affiliates, concerning a
merger, consolidation or acquisition, tender offer or other acquisition of
securities, election of directors or a sale or other transfer of a material
amount of assets. Except as set forth in this Offer to Purchase, neither
Parent nor the Purchaser or, to the best knowledge of Parent or the Purchaser,
any of the persons listed on Schedule I, or any majority-owned subsidiary or
associate of Parent or the Purchaser or any person so listed beneficially owns
any Shares or has effected any transactions in the Shares in the past 60 days.
Certain Financial Information. Set forth below is a summary of certain
consolidated financial and operating data relating to Parent and its
consolidated subsidiaries excerpted or derived from the information contained
in or incorporated by reference into Parent's Annual Report on Form 10-K for
the year ended December 30, 1994 filed with the Commission pursuant to Rule
15d-2 of the Exchange Act (the "Parent 10-K") and Parent's Quarterly Reports
on Form 10-Q for the quarters ended September 8, 1995 and September 9, 1994.
More comprehensive financial information is included in or incorporated by
reference into the Parent 10-K and other documents filed by Parent with the
Commission, and the financial information summary set forth below is qualified
in its entirety by reference to the Parent 10-K and such other documents and
all the financial information and related notes contained therein.
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<PAGE>
MARRIOTT INTERNATIONAL, INC.
SELECTED CONSOLIDATED FINANCIAL DATA(1)
(IN MILLIONS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
36 WEEKS ENDED FISCAL YEAR ENDED
---------------- -------------------------
SEPT. 8 SEPT. 9 DEC. 30 DEC. 31 JAN. 1
1995 1994 1994 1993(2) 1993(3)
------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C>
INCOME STATEMENT DATA
Net sales and operating revenues and
other revenues........................ $6,051 $5,711 $8,415 $7,430 $6,971
Income before cumulative effect of a
change in accounting principle........ 157 128 200 159 134
Net income............................. 157 128 200 126 134
BALANCE SHEET DATA (AT END OF PERIOD)
Net current assets (liabilities)....... (128) (188) (166) (142) (6)
Total assets........................... 3,844 3,245 3,207 3,092 2,601
Shareholders' equity................... 965 742 767 696 --
PER SHARE (3)
Income per common share before
cumulative effect of a change in
accounting principle (2).............. 1.19 .96 1.51 1.28 --
Change in accounting for income taxes
(2)................................... -- -- -- (.27) --
Net income per common share (and common
share equivalents).................... 1.19 .96 1.51 1.01 --
Net income per share on a fully diluted
basis................................. 1.19 .96 1.51 1.00 --
</TABLE>
- --------
(1) Parent was a wholly-owned subsidiary of Marriott Corporation (now named
Host Marriott Corporation) prior to October 8, 1993, on which date its
common stock was distributed to Marriott Corporation shareholders. The
historical income statement for Parent for 1993 includes 40 weeks of
operating results as a subsidiary of Marriott Corporation and 12 weeks of
operating results as an independent entity. The income statement for
fiscal year 1992 reflects operating results for Parent as a subsidiary of
Marriott Corporation. As a result, 1994 and 1995 operating results are not
directly comparable to the results reported by Parent for fiscal years
1992 and 1993.
(2) Statement of Financial Accounting Standards No. 109, "Accounting for
Income Taxes," was adopted in the first fiscal quarter of 1993.
(3) Per share data has not been presented for fiscal year 1992 because the
Company was not publicly held during that year.
Parent is subject to the informational filing requirements of the Exchange
Act and, in accordance therewith, is required to file periodic reports, proxy
statements and other information with the Commission relating to its business,
financial condition and other matters. Information, as of particular dates,
concerning Parent's directors and officers, their remuneration, stock options
granted to them, the principal holders of Parent's securities and any material
interest of such persons in transactions with Parent is required to be
described in proxy statements distributed to Parent's shareholders and filed
with the Commission. Such reports, proxy statements and other information
should be available for inspection at the public reference facilities
maintained by the Commission at Room 1024, 450 Fifth Street, N.W., Washington,
D.C. 20549, and should also be available for inspection at the Commission's
regional offices located at 75 Park Place, New York, New York 10007 and
Citicorp Center, 500 West Madison Street, Suite 1400, Chicago, Illinois 60661.
Copies of such materials may also be obtained by mail, upon payment of the
Commission's customary fees, by writing to its principal office at 450 Fifth
Street, N.W., Washington, D.C. 20549. The information should also be available
for inspection at the New York Stock Exchange, Inc. ("NYSE"), 20 Broad Street,
New York, New York 10005.
9. SOURCES AND AMOUNTS OF FUNDS.
The Purchaser estimates that the total amount of funds required to purchase
pursuant to the Offer the number of Shares that are outstanding on a fully
diluted basis and to pay fees and expenses related to the Offer and the
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<PAGE>
Merger will be approximately $305 million. The Purchaser plans to obtain all
funds needed for the Offer through a loan from Parent, which will be made by
Parent to the Purchaser at the time Shares tendered pursuant to the Offer are
accepted for payment. To obtain the funds necessary to make this loan, Parent
intends to use its available cash on hand and funds raised in the public or
private securities markets, although the Offer is not conditioned on the
issuance of any securities or the availability of any financing. Parent has
additional financing options available to it, including its Revolving Credit
Facility (defined below) to make this loan.
An unsecured revolving credit facility (the "Revolving Credit Facility") is
available to Parent pursuant to a Credit Agreement dated as of June 9, 1995
(the "Credit Agreement") by and among Parent, Citibank, N.A., as
Administrative Agent (the "Agent"), and certain financial institutions. Parent
may borrow up to an aggregate of $1 billion at any time outstanding under the
Revolving Credit Facility for general corporate purposes, which includes
acquisitions. Loans made under the Credit Agreement mature at the expiration
of the Revolving Credit Facility on June 9, 2000. As of February 22, 1996,
approximately $890 million was available for borrowing under the Revolving
Credit Facility.
Parent's ability to borrow under the Revolving Credit Facility is
conditioned only upon the accuracy at the time of borrowing of customary
representations and warranties, and the absence of a default under the Credit
Agreement. Parent currently satisfies these conditions and believes that these
conditions will be satisfied, and that adequate borrowing capacity will exist
under the Revolving Credit Facility, at the time that funds are required to
pay for Shares tendered in the Offer.
Each loan provided pursuant to the Revolving Credit Facility bears interest,
at Parent's election at (i) one of two identified variable interest rates as
in effect from time to time plus an incremental interest rate that depends on
Parent's senior unsecured long-term debt ratings at the time, or (ii) a rate
determined pursuant to a competitive bidding process among the financial
institutions party to the Credit Agreement. Currently, Parent expects that it
would select the London interbank offer rate plus a currently applicable
margin of 22.5 basis points, if it were to borrow funds under the Credit
Agreement. Parent also pays a quarterly facility fee based upon Parent's
senior unsecured long-term debt ratings at the time.
The preceding description of certain of the terms and conditions of the
Revolving Credit Facility is subject in its entirety to the terms and
conditions of the Credit Agreement, which is incorporated herein by reference
to Exhibit 10.1 to Parent's Quarterly Report on Form 10-Q for the quarter
ended June 16, 1995.
Parent expects that it will repay any amounts borrowed in the public or
private securities markets or under the Revolving Credit Facility with cash
flow from operations and/or with proceeds from subsequent refinancings in the
public or private securities markets or a refinancing of the Revolving Credit
Facility prior to its expiration in June 2000.
10. BACKGROUND OF THE OFFER; THE MERGER AGREEMENT; THE SHAREHOLDER AGREEMENTS.
BACKGROUND OF THE OFFER
In September 1995, a representative of the Company contacted a
representative of Parent to arrange a meeting. During the meeting, the
Company's representative stated that the Company was considering an equity
offering of its common stock in order to raise capital and to give greater
liquidity to its existing shareholders. The Company's representative told
Parent's representatives that the Company wanted to explore other available
options before proceeding with the public sale of equity in the Company,
including the possibility of combining the operations of Marriott's Senior
Living Services Division with those of the Company.
Following this meeting, Parent indicated it was interested in pursuing a
possible acquisition of the Company and the parties agreed to continue
discussions. In October 1995, the Company provided information to Parent
relating to the Company's business and operations. Thereafter, representatives
of Parent conducted due diligence reviews of the Company, and, on December 22,
1995, Parent and the Company signed a non-disclosure
14
<PAGE>
agreement concerning the materials being provided to Parent by the Company and
an agreement limiting the ability of Parent to acquire securities of the
Company. Representatives of the Company and Parent continued to discuss the
terms of a possible transaction after the non-disclosure agreement was
executed.
While Parent's due diligence review of the Company's business and operations
continued, representatives of Parent and the Company met to discuss the
details of a possible acquisition of the Company by Parent. No agreement as to
the terms of a possible transaction was reached during these meetings, either
as to the price Parent was willing to pay or whether all assets of the Company
would be acquired by Parent.
Throughout January and early February of 1996, Parent and its
representatives continued their due diligence review of the Company.
Representatives of Parent and the Company had several telephone conversations
about the terms and conditions of a possible transaction during this period,
but again no agreement was reached.
On February 7, 1996, the Company publicly announced that it was exploring
possible alternatives to maximize value to shareholders.
On February 8 and 9, 1996, representatives of Parent, the Company and the
two principal shareholders of the Company met at the headquarters of Parent to
determine whether they could reach agreement on the terms of a possible
transaction. During the next several days negotiations about the terms of a
possible acquisition of the Company continued. Representatives of Parent and
the Company ultimately agreed to recommend to their Boards of Directors the
terms of an acquisition of the Company by Parent, subject to satisfactory
conclusion of due diligence and negotiation of documentation acceptable to
Parent and the Company.
The Board of Directors of Parent held a special telephonic meeting on
February 12, 1996 at which senior management of Parent apprised the Board of
the status of negotiations with the Company. No action was taken by the Board
at that meeting. On February 15, 1996, Parent's Board of Directors, by
unanimous consent, approved the acquisition of all of the outstanding common
stock of the Company at $13 per Share and the subsequent merger of the
Purchaser with and into the Company. Thereafter, the parties finalized and
executed the Merger Agreement and the Shareholder Agreements. The Company and
Parent publicly announced the transaction on the morning of February 16, 1996.
THE MERGER AGREEMENT
The following is a summary of certain provisions of the Merger Agreement, a
copy of which is filed as an exhibit to the Schedule 14D-1 and which is
incorporated herein by reference. The Merger Agreement may be examined, and
copies may be obtained, as set forth in Section 7 above. The following summary
is qualified in its entirety by reference to the Merger Agreement.
The Offer. The Merger Agreement provides for the making of the Offer by the
Purchaser. Subject only to the Conditions, the Purchaser has agreed to accept
for payment and pay for all Shares tendered pursuant to the Offer as soon as
practicable following the Expiration Date. The Merger Agreement provides that
the Purchaser, subject only to the Conditions, will extend the period of time
during which the Offer is open until the first business day following the date
on which the Conditions are satisfied or waived; provided, that the Purchaser
shall be permitted but shall not be obligated to extend the time the Offer is
open if either (x) the Company is in breach in any material respect of its
covenants or agreements contained in the Merger Agreement or (y) there is a
reasonable likelihood that one or more of the Conditions cannot be satisfied;
and provided, further, that the Purchaser shall in no event be permitted or
obligated to extend the period of time the Offer is open beyond July 15, 1996.
The Purchaser will not otherwise extend the period of time during which the
Offer is open beyond the twentieth business day following commencement of the
Offer unless any of the Conditions shall not have been satisfied.
15
<PAGE>
The obligation of the Purchaser to accept for payment and pay for Shares
tendered pursuant to the Offer is subject to (i) the tender and non-withdrawal
of Shares which, when added to the Shares then beneficially owned by Parent,
constitute two-thirds of the outstanding Shares and represent two-thirds of
the voting power of the outstanding Shares on a Fully Diluted Basis (as
defined below), and (ii) the satisfaction of certain other conditions
described in Section 15. The Purchaser has agreed that, without the written
consent of the Company, no amendment to the Offer may be made which changes
the form of consideration to be paid or decreases the price per Share or the
number of Shares sought in the Offer or which imposes additional conditions to
the Offer other than those described in Section 15 or amends any other term of
the Offer in any manner adverse to holders of Shares. "Fully Diluted Basis"
means, as of any date of determination, a basis that includes all outstanding
Shares, together with all Shares issuable upon exercise of vested Stock
Options (as defined below) and warrants.
The Merger. The Merger Agreement provides that, as soon as practicable
following the purchase of Shares pursuant to the Offer, and the satisfaction
or waiver of the other conditions to the Merger, or on such other date as the
parties thereto may agree (such agreement to require the approval of the
majority of the Continuing Directors (as defined below), if at that time there
shall be any Continuing Directors), the Purchaser will be merged with and into
the Company. The Merger shall become effective by filing with the Secretary of
State of Indiana articles of merger in accordance with the relevant provisions
of the IBCL at such time (the time the Merger becomes effective being the
"Effective Time").
At the Effective Time, (i) each Share issued and outstanding immediately
prior to the Effective Time will be converted into the right to receive $13.00
in cash, or any higher price paid per Share in the Offer, without interest
thereon (the "Merger Price"); (ii) (a) each Share held in the treasury of the
Company or held by any wholly owned subsidiary of the Company and each Share
held by Parent or any wholly owned subsidiary of Parent immediately prior to
the Effective Time will be cancelled and retired and cease to exist; provided,
that Shares held beneficially or of record by any plan, program or arrangement
sponsored or maintained for the benefit of employees of Parent or the Company
or any subsidiaries thereof will not be deemed to be held by Parent or the
Company regardless of whether Parent or the Company has, directly or
indirectly, the power to vote or control the disposition of such Shares; and
(b) each Share held by any holder who has perfected any dissenters' rights
under the IBCL, if applicable (the "Dissenting Shares"), will not be converted
into or be exchangeable for the right to receive the Merger Price; and (iii)
each share of common stock of the Purchaser issued and outstanding immediately
prior to the time of the Effective Date will be converted into and
exchangeable for one share of common stock of the Surviving Corporation.
All options and other rights to acquire Shares ("Stock Options") granted to
employees under any stock option plan, program or similar arrangement of the
Company or any subsidiary of the Company (each as amended, an "Option Plan"),
whether or not then exercisable, will be cancelled by the Company immediately
prior to the earlier of (x) the consummation of the Offer and (y) the
Effective Time, and the holders thereof shall be entitled to receive from the
Company, for each Share subject to such Stock Option, an amount in cash equal
to the difference between the Merger Price and the exercise price per share of
such Stock Option, which amount shall be paid at the time the Stock Option is
cancelled. All applicable withholding taxes attributable to such payments
shall be deducted from the amounts payable and all such taxes attributable to
the exercise of Stock Options shall be withheld from the proceeds received in
respect of Shares issuable on such exercise. Except as provided in the Merger
Agreement or as otherwise agreed to by the parties and to the extent permitted
by the Option Plans, the Option Plans shall terminate as of the Effective Time
and the provisions in any other plan providing for the issuance or grant by
the Company of any interest in respect of the capital stock of the Company
shall be deleted as of the Effective Time.
The Merger Agreement provides that the Articles of Incorporation and By-laws
of the Purchaser as in effect at the Effective Time shall be the Articles of
Incorporation and By-laws of the Surviving Corporation until amended in
accordance with applicable law. The Merger Agreement also provides that (i)
the directors of the Purchaser at the Effective Time will be the initial
directors of the Surviving Corporation, (ii) the officers of the Company at
the Effective Time will be the initial officers of the Surviving Corporation,
and (iii) the initial officers and directors of the Surviving Corporation will
hold office from the Effective Time until their respective
16
<PAGE>
successors are duly elected or appointed and qualify in the manner provided in
the Articles of Incorporation and By-laws of the Surviving Corporation, or as
otherwise provided by applicable law.
Recommendation. In the Merger Agreement, the Company states that the Board
has unanimously (i) determined that the Offer and the Merger are fair to and
in the best interests of the shareholders of the Company and (ii) subject to
the fiduciary duties of the Board, resolved to recommend acceptance of the
Offer and approval and adoption of the Merger Agreement and the Merger by the
shareholders of the Company.
Interim Agreements of Parent, the Purchaser and the Company. Except as
contemplated by the Merger Agreement, the Company has covenanted and agreed
that, during the period from the date of the Merger Agreement to the
consummation of the Offer and, if Parent makes a request pursuant to Section
1.4 of the Merger Agreement, until such time as the directors designated by
Parent in accordance with the Merger Agreement constitute in their entirety a
majority of the Board (the "Board Reorganization"), the Company and its
subsidiaries will each conduct its operations according to its ordinary course
of business, consistent with past practice, and will use all reasonable
efforts to (i) preserve intact its business organization, (ii) maintain its
material rights and franchises, (iii) keep available the services of its
officers and key employees, and (iv) keep in full force and effect insurance
comparable in amount and scope of coverage to that maintained as of the date
of the Merger Agreement.
Without limiting the generality of and in addition to the foregoing, and
except as otherwise contemplated by the Merger Agreement, prior to the
consummation of the Offer and the Board Reorganization, neither the Company
nor any of its subsidiaries will, without the prior written consent of Parent:
(a) amend its charter, by-laws or other governing documents; (b) authorize for
issuance, issue, sell, deliver or agree to commit to issue, sell or deliver
(whether through the issuance or granting of options, warrants, commitments,
subscriptions, rights to purchase or otherwise) any stock of any class or any
other securities or amend any of the terms of any such securities or
agreements (subject to certain exceptions); (c) split, combine or reclassify
any shares of its capital stock, declare, set aside or pay any dividend or
other distribution (whether in cash, stock or property or any combination
thereof) in respect of its capital stock or redeem or otherwise acquire any of
its securities or any securities of its subsidiaries; (d) (i) pledge or
otherwise encumber shares of capital stock of the Company or any of its
subsidiaries; or (ii) incur, assume or prepay any long-term debt; or (iii)
except in the ordinary course of business and consistent with past practices,
(A) incur, assume, or prepay letters of credit or any material short-term
debt, (B) assume, guarantee, endorse or otherwise become liable or responsible
(whether directly, contingently or otherwise) for any material obligations of
any other person except wholly owned subsidiaries of the Company, or (C) make
any material loans, advances or capital contributions to, or investments in,
any other person; or (iv) change the practices of the Company and its
subsidiaries with respect to the timing of payments or collections; or (v)
mortgage or pledge any assets or create or permit to exist any lien thereupon
except certain permitted liens; (e) except (i) for arrangements entered into
in the ordinary course of business consistent with past practices, (ii) as
required by law or (iii) as specifically contemplated in the Merger Agreement,
enter into, adopt or materially amend any bonus, profit sharing, compensation,
severance, termination, stock option, stock appreciation right, restricted
stock, performance unit, pension, retirement, deferred compensation,
employment, severance or other employee benefit agreements, trusts, plans,
funds or other arrangements of or for the benefit or welfare of any Company
employee (or any other person for whom the Company or its subsidiaries will
have any liability), or (except for normal increases in the ordinary course of
business that are consistent with past practices) increase in any manner the
compensation or fringe benefits of any Company employee (or any other person
for whom the Company or its subsidiaries will have any liability) or pay any
benefit not required by any existing plan and arrangement (including the
granting of stock options, stock appreciation rights, shares of restricted
stock or performance units) or enter into any contract, agreement, commitment
or arrangement to do any of the foregoing; (f) (i) transfer, sell, lease,
license or dispose of any lines of business, subsidiaries, divisions,
operating units or facilities (other than facilities that have been closed or
are currently proposed to be closed) outside the ordinary course of business,
(ii) enter into any material joint venture agreements, acquisition agreements
or partnership agreements or (iii) enter into any other material agreement,
commitment or transaction outside the ordinary course of business; (g) acquire
or agree to acquire, by merging or consolidating with, by purchasing an equity
interest in or a portion of the assets of, or by any other manner, (i) any
business or any
17
<PAGE>
corporation, partnership, association or other business organization or
division thereof, or otherwise acquire or agree to acquire any assets of any
other person, in each case where such action would be material to the Company
and its subsidiaries taken as a whole or (ii) any facility or site upon which
the Company intends to locate any facility; (h) except as may be required by
law, take any action to terminate or materially amend any of its pension plans
or retiree medical plans; (i) modify, amend, terminate or waive any rights
under any material contract except in the ordinary course of business
consistent with past practice (other than an arrangement, agreement or
contract proposal previously submitted by the Company or a subsidiary thereof
which proposal, upon acceptance thereof, cannot be revised or withdrawn); (j)
effect any change in any of its methods of accounting in effect as of December
31, 1995, except as may be required by law or generally accepted accounting
principles; (k) enter into any material arrangement, agreement or contract
that, individually or in the aggregate with other material arrangements,
agreements and contracts entered into after the date of the Merger Agreement,
would have or constitute a Material Adverse Effect (as defined below) after
the date of the Merger Agreement; and (l) enter into a legally binding
commitment with respect to, or any agreement to take, any of the foregoing
actions; provided, that with respect to Forum Retirement Partners, L.P.
("FRP") and Forum Retirement, Inc., the general partner of FRP ("FRI"), the
Company is obligated only to use its reasonable efforts to cause FRP to comply
with the foregoing provisions of the Merger Agreement (subject to the
fiduciary duties of FRI, if then applicable). The parties to the Merger
Agreement have agreed upon certain specific actions and transactions the
Company may take prior to consummation of the Offer and the Board
Reorganization upon consultation but without the prior consent of Parent, and
certain other actions and transactions requiring the prior written consent of
Parent.
As used in the Merger Agreement with respect to the Company and its
subsidiaries, "Material Adverse Effect" means any change, effect or
circumstance that has had or could reasonably be expected to have a material
adverse effect on (i) the business, results of operations, financial condition
or prospects of the Company and its subsidiaries taken as a whole, or (ii) the
ability of the Company to perform its material obligations under the Merger
Agreement. In determining whether any change, effect or circumstance is or
constitutes a Material Adverse Effect, effect will be given to any reserves
set forth on the financial statements contained in the Company Quarterly
Report on Form 10-Q for the quarter ending December 31, 1995 that specifically
relates to the change, effect or circumstance in question. When used with
respect to Parent or the Purchaser, however, the term "Material Adverse
Effect" means any change, effect or circumstance that has had or could
reasonably be expected to have a material adverse effect on (i) the business,
results of operations, financial condition or prospects of Parent and its
subsidiaries taken as a whole, or (ii) the ability of Parent or the Purchaser
to perform its material obligations under the Merger Agreement.
Acquisition Proposals. In the Merger Agreement, the Company agrees that it
and its officers, directors, employees, representatives and agents will
immediately cease any existing discussions or negotiations with any parties
conducted prior to the date of the Merger Agreement (subject to exceptions
described below) with respect to any Acquisition Proposal (as defined below).
The Company and its subsidiaries may not, and will use their best efforts to
cause their respective officers, directors, employees and investment bankers,
attorneys, accountants or other agents retained by the Company or any of its
subsidiaries not to, (i) solicit, directly or through an intermediary, any
inquiries with respect to, or the making of, any Acquisition Proposal, or (ii)
except as permitted below, engage in negotiations or discussions with, or
furnish any confidential information relating to the Company or its
subsidiaries to any Third Party (as defined below) relating to an Acquisition
Proposal (other than the transactions contemplated by the Merger Agreement).
Notwithstanding anything to the contrary contained in the Merger Agreement,
the Company (and any person referred to above) may furnish information to, and
participate in discussions or negotiations with, any Third Party which submits
an unsolicited written Acquisition Proposal to the Company if the Board by a
majority vote determines, based as to legal matters upon the advice of legal
counsel, that furnishing such information or participating in such discussions
or negotiations is required by applicable law (including fiduciary principles
thereof); provided, that nothing in the Merger Agreement shall prevent the
Board from taking, and disclosing to the Company's shareholders, a position
contemplated by Rules 14d-9 and 14e-2 promulgated under the Exchange Act with
regard to any tender offer; and provided further, that the Company shall not
enter into a written agreement with respect to a Third Party Proposal (as
defined below) except concurrently with or after the termination of the Merger
Agreement (except with respect to confidentiality
18
<PAGE>
agreements to the extent expressly provided therein). The Company shall
promptly provide Parent with a reasonable description of any Acquisition
Proposal received (including a summary of all material terms of such
Acquisition Proposal and, unless it is prohibited from disclosing the same,
the identity of the person making such Acquisition Proposal). The Company
shall promptly inform Parent of the status and content of any discussions
regarding any Acquisition Proposal with a Third Party. In no event shall the
Company provide material, non-public information to any Third Party making an
Acquisition Proposal unless such party enters into a confidentiality or
similar agreement containing provisions believed by the Company to reasonably
protect the confidentiality of such information. Promptly after entering into
any confidentiality or similar agreement with any person on or after February
6, 1996, the Company shall notify Parent of such event and identify the person
with whom the agreement was executed.
For purposes of the Merger Agreement, the term "Acquisition Proposal" shall
mean any proposal, whether in writing or otherwise, made by a Third Party to
enter into a Third Party Transaction. "Third Party Transaction" means the
acquisition of beneficial ownership of all or a material portion of the assets
of, or a majority equity interest in, the Company pursuant to a merger,
consolidation or other business combination, sale of shares of capital stock,
sale of assets, tender offer or exchange offer or other business acquisition
or combination transaction involving the Company and its subsidiaries,
including any single or multi-step transaction or series of related
transactions which is structured to permit such Third Party to acquire
beneficial ownership of any material portion of the assets of, or a majority
of the equity interest in, the Company (other than the transactions
contemplated by the Merger Agreement). "Third Party" means any person other
than Parent, the Purchaser or any affiliate thereof.
Notwithstanding any provision to the contrary in the foregoing, none of the
Company, its subsidiaries and their respective officers, directors, employees,
representatives, investment bankers, attorneys, accountants or other agents
shall engage in negotiations or discussions with, or furnish any information
to, either (x) any person (each such person, together with its affiliates, a
"Pre-February 6 Party") (i) with whom the Company or any representatives or
agents entered into a confidentiality agreement, (ii) with whom the Company or
any of its representatives or agents have held substantive discussions
regarding a Third Party Transaction or (iii) to whom the Company or its
representatives or agents furnished non-public information, in any such case,
prior to February 6, 1996, or (y) any person who first expressed an interest
in making an Acquisition Proposal or first requested confidential information
regarding the Company and its Subsidiaries after the twentieth business day
after the Offer is actually commenced. With respect to persons (other than
Pre-February 6 Parties) who first expressed interest in making an Acquisition
Proposal or first requested confidential information regarding the Company and
its subsidiaries prior to the twentieth business day after the Offer is
actually commenced, none of the Company, its subsidiaries and their respective
officers, directors, employees, representatives, investment bankers,
attorneys, accountants or other agents shall engage in negotiations or
discussions with, or furnish any information to, such persons after the
twentieth business day after the Offer was actually commenced.
Board Representation. The Merger Agreement provides that in the event that
the Purchaser acquires at least a majority of the Shares outstanding on a
Fully Diluted Basis pursuant to the Offer, Parent will be entitled to
designate for appointment or election to the Board, upon written notice to the
Company, such number of persons (each, a "Designated Director") so that such
designees of Parent constitute the same percentage (but in no event less than
a majority) of the Board (rounded up to the next whole number) as the
percentage of Shares acquired in connection with the Offer. Prior to the
consummation of the Offer, the Company will use reasonable best efforts to
increase the size of the Board or to obtain the resignation of such number of
directors as is necessary to enable such number of Parent designees to be so
elected. In connection therewith, the Company will mail to the shareholders of
the Company the information required by Section 14(f) of the Exchange Act and
Rule 14f-1 thereunder unless such information has previously been provided to
such shareholders in Schedule 14D-9. Parent and the Purchaser will provide to
the Company in writing, and be solely responsible for, any information with
respect to such companies and their nominees, officers, directors and
affiliates required by such Section and Rule. Notwithstanding the foregoing,
the parties to the Merger Agreement will use their respective reasonable best
efforts to ensure that at least three of the members of the Board will, at all
times prior to the Effective Time, be Continuing Directors (as defined below).
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The term "Continuing Director" shall mean (a) any member of the Board as of
the date of the Merger Agreement, (b) any member of the Board who is
unaffiliated with, and not a Designated Director or other nominee of, Parent
or the Purchaser or their respective subsidiaries, and (c) any successor of a
Continuing Director who is (i) unaffiliated with, and not a Designated
Director or other nominee of, Parent or the Purchaser or their respective
Subsidiaries and (ii) recommended to succeed a Continuing Director by a
majority of the Continuing Directors then on the Board.
Miscellaneous Agreements. Pursuant to the Merger Agreement, if required
under applicable law in order to consummate the Merger, the Company, acting
through its Board, will, in accordance with applicable law, its amended and
restated articles of incorporation and its by-laws: (a) duly call, give notice
of, convene and hold a special meeting of its shareholders as soon as
practicable following the consummation of the Offer for the purpose of
considering and taking action on the Merger Agreement (the "Shareholders'
Meeting"); (b) subject to its fiduciary duties under applicable laws as
advised as to legal matters by counsel, include in the proxy statement or
information statement prepared by the Company for distribution to shareholders
of the Company in advance of the Shareholders' Meeting in accordance with
Regulation 14A or Regulation 14C promulgated under the Exchange Act (the
"Proxy Statement") the recommendation of its Board referred to above; and (c)
use its reasonable efforts to (i) obtain and furnish the information required
to be included by it in the Proxy Statement and, after consultation with
Parent, respond promptly to any comments made by the Commission with respect
to the Proxy Statement and any preliminary version thereof and cause the Proxy
Statement to be mailed to its shareholders following the consummation of the
Offer and (ii) obtain the necessary approvals of the Merger Agreement by its
shareholders. Parent will provide the Company with the information concerning
Parent and the Purchaser required to be included in the Proxy Statement and
will vote, or cause to be voted, all Shares owned by it or its subsidiaries in
favor of approval and adoption of the Merger Agreement.
Indemnification. In the Merger Agreement, Parent agrees that, for six years
after the Effective Time, Parent will cause the Surviving Corporation to
indemnify, defend and hold harmless the present and former officers,
directors, employees, agents and representatives of the Company and its
subsidiaries (including financial and legal advisors to the Company in respect
of the Merger Agreement and the transactions contemplated thereby), and each
person that is an affiliate of the foregoing and has or may have liability in
respect of any of the foregoing under respondeat superior, agency, controlling
person or any other theory of liability for actions or failure to take action
by another such person (the foregoing persons and entities, collectively,
"Indemnified Parties"), against all losses, claims, damages or liabilities
arising out of (i) any action, suit or proceeding based in whole or in part on
the Merger Agreement or the transactions contemplated thereby and (ii) without
limiting the generality or effect of the foregoing, any actions or omissions
occurring on or prior to the Effective Time to the full extent permitted or
required under Indiana law, the Articles of Incorporation and By-Laws of the
Company in effect at the date of the Merger Agreement and under all agreements
to which the Company is a party as of the date of the Merger Agreement set
forth on Schedule 6.10 to the Merger Agreement, including provisions relating
to advances of expenses incurred in the defense of any action or suit
(including attorneys' fees of counsel selected by the Indemnified Party);
provided that (x) no Indemnified Party shall be entitled to indemnification
for acts or omissions that constitute gross negligence, bad faith or willful
misconduct, and (y) any determination required to be made with respect to
whether an Indemnified Party's conduct complies with the standards set forth
under Indiana law, the Articles of Incorporation or By-Laws of the Company or
under the Merger Agreement will be made by independent counsel selected by the
Indemnified Party and reasonably satisfactory to the Surviving Corporation.
Nothing in the Merger Agreement will diminish or impair the rights of any
Indemnified Party under the Articles of Incorporation or By-Laws of the
Company or any agreement set forth on Schedule 6.10 to the Merger Agreement.
The Surviving Corporation will maintain the Company's existing officers' and
directors' liability insurance ("D&O Insurance") in full force and effect
without reduction of coverage for a period of three years after the Effective
Time; provided that the Surviving Corporation will not be required to pay an
annual premium therefor in excess of 150% of the last annual premium paid
prior to the date of the Merger Agreement (the "Current Premium"); and,
provided, further, that if the existing D&O Insurance expires, is terminated
or cancelled during the 3-year period, the Surviving Corporation will use
reasonable efforts to obtain as much D&O Insurance as can be obtained for the
remainder of such period for a premium on an annualized basis not in excess of
150% of the Current Premium.
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Reasonable Efforts; Consents and Certain Arrangements. Subject to the terms
and conditions of the Merger Agreement, each of the parties thereto has agreed
to use all reasonable efforts to take, or cause to be taken, all action, and
to do, or cause to be done, 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 and filing of the Schedule 14D-1, the Schedule
14D-9, the Proxy Statement and any amendments to any thereof; (ii) cooperating
in making available information and personnel in connection with
presentations, whether in writing or otherwise, to prospective lenders to
Parent and the Purchaser that may be asked to provide financing for the
transactions contemplated by the Merger Agreement; (iii) taking all action
reasonably necessary, proper or advisable to secure any necessary consents or
waivers under existing debt obligations of the Company and its subsidiaries or
amend the notes, indentures or agreements relating thereto to the extent
required by such notes, indentures or agreements or redeem or repurchase such
debt obligations; (iv) contesting any pending legal proceeding relating to the
Offer or the Merger; and (v) executing any additional instruments necessary to
consummate the transactions contemplated by the Merger Agreement). In case at
any time after the Effective Time any further action is necessary to carry out
the purposes of the Merger Agreement, the proper officers and directors of
each party thereto shall use all reasonable efforts to take all such necessary
action. Each of the Company, Parent and the Purchaser shall cooperate and use
their respective reasonable efforts to make all filings and obtain all
consents and approvals of governmental authorities and other third parties
necessary to consummate the transactions contemplated by the Merger Agreement.
Each of the parties thereto will furnish to the other party such necessary
information and reasonable assistance as such other persons may reasonably
request in connection with the foregoing. As soon as practicable after the
date of the Merger Agreement, Parent, the Purchaser and the Company will cause
a motion to be filed with the United States Bankruptcy Court for the Southern
District of Indiana, Indianapolis Division (the "Bankruptcy Court"),
requesting, and thereafter use their reasonable efforts to obtain, the
issuance of an order relating to the Plan of Reorganization that, among other
things, requires the Company to replace Shares presently reserved for certain
disputed claims with a cash reserve to be held in a segregated account, with
the amount of the initial reserve to be equal to (i) the number of Shares to
which holders of the remaining disputed claims would have been permitted under
the Plan of Reorganization if the claims had been allowed in full, multiplied
by (ii) the Merger Price. Further, the Company will, upon the specific request
of the Purchaser, use reasonable efforts to (i) exempt the Company, the Offer
and the Merger from the requirements of any state takeover law by action of
its Board and (ii) assist in any challenge by the Purchaser to the validity or
applicability to the Offer or the Merger of any state takeover law.
In addition to and without limiting the agreements of Parent and the
Purchaser described in the preceding paragraph, Parent, the Purchaser and the
Company will (i) take promptly all actions necessary to make the filings
required of Parent, the Purchaser or any of their affiliates under the
applicable Antitrust Laws, (ii) comply at the earliest practicable date with
any request for additional information or documentary material received by
Parent, the Purchaser or any of their affiliates from the Federal Trade
Commission or the Antitrust Division of the Department of Justice pursuant to
the Antitrust Laws, and (iii) cooperate with the Company in connection with
any filing of the Company under applicable Antitrust Laws and in connection
with resolving any investigation or other inquiry concerning the transactions
contemplated by the Merger Agreement or any ancillary agreements commenced by
any of the Federal Trade Commission, the Antitrust Division of the Department
of Justice or any state attorney general.
In furtherance and not in limitation of the covenants of Parent and the
Purchaser described above, Parent, the Purchaser and the Company shall each
use all reasonable efforts to resolve such objections, if any, as may be
asserted with respect to the Offer or the Merger under any Antitrust Law. If
any administrative, judicial or legislative action or proceeding is instituted
(or threatened to be instituted) challenging the Offer or the Merger as
violative of any Antitrust Law, Parent, the Purchaser and the Company shall
each cooperate and use reasonable efforts to contest and resist any such
action or proceeding, and to have vacated, lifted, reversed or overturned any
decree, judgment, injunction or other order (whether temporary, preliminary or
permanent) (any such decree, judgment, injunction or other order is hereafter
referred to as an "Order") that is in effect and that restricts, prevents or
prohibits consummation of the Offer or the Merger, including by pursuing all
reasonable
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avenues of administrative and judicial appeal. The entry by a court of an
Order permitting the Offer or the Merger, but requiring that any of the
businesses, product lines or assets of the Company be held separate
thereafter, or an offer of settlement substantially to the foregoing effect in
any actual or threatened action, suit or proceeding, will not be deemed a
failure of the Condition requiring that the applicable waiting period under
the HSR Act shall have expired or been terminated, so long as such action is,
in the good faith judgment of Parent, unlikely to have a material impact on
the benefits Parent anticipates from the transactions contemplated by the
Merger Agreement.
Each of the Company, Parent and the Purchaser shall promptly inform the
other party of any material communication received by such party from the
Federal Trade Commission, the Antitrust Division of the Department of Justice,
the Commission or any other governmental or regulatory authority regarding any
of the transactions contemplated by the Merger Agreement. Parent and/or the
Purchaser will promptly advise the Company with respect to any understanding,
undertaking or agreement (whether oral or written) which it proposes to make
or enter into with any of the foregoing parties with regard to any of the
transactions contemplated by the Merger Agreement.
"Antitrust Law" means the Sherman Act, as amended, the Clayton Act, as
amended, the HSR Act, the Federal Trade Commission Act, as amended, and all
other federal and state statutes, rules, regulations, orders, decrees,
administrative and judicial doctrines, and other laws that are designed or
intended to prohibit, restrict or regulate actions having the purpose or
effect of monopolization or restraint of trade.
Employee Benefits; Employees. Until December 31, 1996, Parent has agreed to
cause the Surviving Corporation to continue in all material respects the (i)
employee benefit plans (including all employee benefit plans within the
meaning of Section 3(3) of the Employee Retirement Income Security Act of
1974, as amended), practices and policies which provide employee benefits to
employees of the Company or any of its subsidiaries ("Company Employees") and
(ii) compensation arrangements, programs and plans providing employee or
executive compensation or benefits, to Company Employees; provided that no
individual plan or plans must be maintained by the Surviving Corporation so
long as, in the aggregate, a substantially equivalent level of compensation or
benefits is maintained.
Parent has also agreed that the Company will honor and, on and after the
Effective Time, Parent will cause the Surviving Corporation to honor, without
offset, deduction, counterclaims, interruptions or deferment (other than
withholdings under applicable law), all employment, severance, termination,
consulting and retirement agreements to which the Company or any of its
subsidiaries is presently a party ("Benefit Agreements"), subject in all
respects to the right of the Company to amend or otherwise modify the terms
and provisions of any such Benefit Agreements in accordance with the terms
thereof. In addition, the parties have agreed that the Company will take
certain actions with respect to severance and other employment-related
matters.
Representations and Warranties. The Merger Agreement contains certain
representations and warranties of the parties including representations by the
Company as to organization, capitalization, authority relative to the Merger
Agreement, consents and approvals, absence of certain changes concerning the
Company's business, undisclosed liabilities, reports, offer documents,
defaults, litigation and compliance with law, employee benefit plans, assets,
real property and intellectual property, certain contracts and arrangements,
taxes, labor matters, licenses and permits and certain fees.
Conditions to Merger. Pursuant to the Merger Agreement, the respective
obligations of each of Parent, the Purchaser and the Company to effect the
Merger are subject to the satisfaction at or prior to the Effective Time of
the following conditions: (a) the Merger Agreement shall have been adopted by
the affirmative vote of the shareholders of the Company by the requisite vote
in accordance with applicable law, if required by applicable law; (b) no
statute, rule, regulation, order, decree, ruling or injunction shall have been
enacted, entered, promulgated, enforced or deemed applicable by any court or
governmental authority which prohibits the consummation of the Merger; (c) any
waiting period applicable to the Merger under the HSR Act shall have
terminated or expired; and (d) the Offer shall not have been terminated or
expired in accordance with its terms and the terms of the Merger Agreement
prior to the purchase of any Shares.
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Except if the Purchaser has accepted for payment and paid for Shares validly
tendered pursuant to the Offer, or fails to accept for payment any Shares
pursuant to the Offer in violation of the terms thereof, the obligations of
the Company to effect the Merger are further subject to the satisfaction at or
prior to the Effective Time of the following conditions: (a) the
representations and warranties of Parent and the Purchaser contained in the
Merger Agreement shall be true and correct in all material respects at and as
of the Effective Time as if made at and as of such time; and (b) each of
Parent and the Purchaser shall have performed in all material respects its
obligations under the Merger Agreement required to be performed by it at or
prior to the Effective Time pursuant to the terms thereof.
Except if the Purchaser has accepted for payment and paid for Shares validly
tendered pursuant to the Offer, or fails to accept for payment any Shares
pursuant to the Offer in violation of the terms thereof, the obligations of
Parent and the Purchaser to effect the Merger are further subject to the
satisfaction at or prior to the Effective Time of the following conditions:
(a) the representations and warranties of the Company contained in the Merger
Agreement shall be true and correct in all material respects at and as of the
Effective Time as if made at and as such time; and (b) the Company shall have
performed in all material respects each of its obligations under the Merger
Agreement required to be performed by it at or prior to the Effective Time
pursuant to the terms thereof.
Termination. The Merger Agreement may be terminated and the Offer and the
Merger may be abandoned at any time (notwithstanding approval of the Merger by
the shareholders of the Company) prior to the Effective Time: (a) by mutual
written consent of Parent, the Purchaser and the Company; (b) by Parent, the
Purchaser or the Company if any court of competent jurisdiction in the United
States or other United States governmental body shall have issued a final
order, decree or ruling or taken any other final action restraining, enjoining
or otherwise prohibiting the consummation of the Offer or the Merger and such
order, decree, ruling or other action is or shall have become nonappealable;
(c) by Parent and the Purchaser if due to an occurrence or circumstance which
would result in a failure to satisfy any of the Conditions, but subject to the
terms of the Merger Agreement, the Purchaser shall have (i) failed to commence
the Offer within the time required by Regulation 14D under the Exchange Act,
(ii) terminated the Offer or (iii) failed to pay for Shares pursuant to the
Offer on or prior to July 15, 1996; (d) by the Company if (i) there shall not
have been a material breach of any representation, warranty, covenant or
agreement on the part of the Company and the Purchaser shall have (A) failed
to commence the Offer within the time required by Regulation 14D under the
Exchange Act, (B) terminated the Offer or (C) failed to pay for Shares
pursuant to the Offer on or prior to July 15, 1996 or (ii) prior to the
twentieth business day after the Offer was actually commenced, a Third Party
other than a Pre-February 6 Party shall have made an offer that the Board
determines, based as to legal matters on the advice of legal counsel, it is
required to accept by applicable law (including fiduciary principles thereof),
provided, that any such termination of the Merger Agreement in accordance with
clause (d)(ii) of this paragraph shall not be effective until payment of the
fees and expenses required by the immediately succeeding two paragraphs; (e)
by Parent or the Purchaser prior to the purchase of Shares pursuant to the
Offer, if (i) there shall have been a breach of any representation or warranty
on the part of the Company under the Merger Agreement having a Material
Adverse Effect, (ii) there shall have been a breach of any covenant or
agreement on the part of the Company under the Merger Agreement resulting in a
Material Adverse Effect or materially adversely affecting the consummation of
the Offer, which shall not have been cured prior to 20 days following notice
of such breach, (iii) the Board (A) shall have withdrawn its approval or
recommendation of the Offer, the Merger or the Merger Agreement, (B) shall
have modified (including by amendment of Schedule 14D-9) in a manner adverse
to the Purchaser its approval or recommendation of the Offer, the Merger or
the Merger Agreement, (C) shall have recommended to the Company's shareholders
another offer, or (D) shall have adopted any resolution to effect any of the
foregoing; provided that a change in the reasons for any such recommendation
will not be deemed to be adverse to the Purchaser so long as the Board
continues to recommend that shareholders tender their Shares pursuant to the
Offer, or (iv) there shall not have been validly tendered and not withdrawn
prior to the expiration of the Offer at least two-thirds of the Shares,
determined on a Fully Diluted Basis, and on or prior to such date a person or
group (other than Parent or the Purchaser) shall have made and not withdrawn a
proposal with respect to a Third Party Transaction; (f) by the Company if (i)
there shall have been a breach of any representation or warranty in the Merger
Agreement on the part of Parent or the Purchaser which materially adversely
affects the
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consummation of the Offer or (ii) there shall have been a material breach of
any covenant or agreement in the Merger Agreement on the part of Parent or the
Purchaser which materially adversely affects the consummation of the Offer
which shall not have been cured prior to 20 days following notice of such
breach; or (g) by Parent, Purchaser or the Company if the consummation of the
Offer shall not have occurred on or prior to July 15, 1996. Pursuant to the
Merger Agreement, in the event of the termination and abandonment of the
Merger Agreement in accordance with its terms, the Merger Agreement shall
forthwith become void and have no effect, without any liability on the part of
any party thereto or its affiliates, directors, officers or shareholders,
other than the provisions of the Merger Agreement relating to fees and
expenses, governing law and dispute resolution, brokerage fees and
commissions, indemnification and confidentiality of information.
Notwithstanding the foregoing, no party will be relieved from liability that
it may have for any breach of the Merger Agreement.
Fees and Expenses. Pursuant to the Merger Agreement, if (i) Parent or the
Purchaser terminates the Merger Agreement pursuant to clause (e)(ii) or
(e)(iv) of the immediately preceding paragraph and within 12 months thereafter
the Company consummates a transaction constituting a Third Party Transaction
involving any person (or any affiliate thereof) (A) with whom the Company (or
its representatives or agents) have had substantive discussions regarding a
Third Party Transaction, (B) to whom the Company (or its representatives or
agents) furnished non-public information with a view to a Third Party
Transaction or (C) who had submitted a proposal or expressed an interest in a
Third Party Transaction, in the case of each of clauses (A), (B) and (C) after
the date of the Merger Agreement and prior to such termination; provided that
a sale of assets by the Company will constitute a Third Party Transaction for
purposes of this clause (i) only if a majority of the assets of the Company
are involved; or (ii) Parent or the Purchaser terminates the Merger Agreement
pursuant to clause (e)(iii) of the immediately preceding paragraph; or (iii)
the Company terminates the Merger Agreement pursuant to clause (d)(ii) of the
immediately preceding paragraph; then, in each case, the Company shall pay to
Parent, within one business day following the execution and delivery of such
agreement or such occurrence, as the case may be, a fee, in cash, of $14
million; provided, that the Company in no event shall be obligated to pay more
than one such $14 million fee with respect to all such agreements and
occurrences and such termination.
If Parent is entitled to receive the $14 million fee as described in the
preceding paragraph, then the Company shall reimburse Parent, the Purchaser
and their affiliates (not later than one business day after submission of
statements therefor) for up to $1 million of actual documented out-of-pocket
fees and expenses actually incurred by any of them or on their behalf in
connection with the Offer and the proposed Merger (including fees payable to
consultants, outside contractors, counsel to any of the foregoing and
accountants), whether incurred prior to or after the date of the Merger
Agreement. The Company shall in any event pay the amount requested within one
business day of such request, subject to the Company's right to demand a
return of any portion as to which invoices are not received in due course.
Except as specifically provided in the Merger Agreement, each party shall
bear its own respective expenses incurred in connection with the Merger
Agreement, the Offer and the Merger, including the preparation, execution and
performance of the Merger Agreement and the transactions contemplated thereby,
and all fees and expenses of investment bankers, finders, brokers, agents,
representatives, counsel and accountants.
Non-Solicitation. For a period of one year from any termination of the
Merger Agreement, (i) the Company and its subsidiaries will not solicit for
hire any of the employees of Parent or its subsidiaries with whom the Company
and its subsidiaries and their representatives and agents have had contact
during the investigation and negotiation of the Merger Agreement or otherwise
prior to the termination of the Merger Agreement and (ii) Parent and its
subsidiaries will not solicit for hire any of the employees of the Company or
its subsidiaries with whom the Parent and its subsidiaries and their
representatives and agents have had contact during the investigation and
negotiation of the Merger Agreement or otherwise prior to the termination of
the Merger Agreement.
Amendment. The Merger Agreement may be amended by action taken by the
Company, Parent and the Purchaser at any time before or after adoption of the
Merger by the shareholders of the Company, if any; provided that (a) in the
event that any Designated Directors constitute in their entirety a majority of
the Board,
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no amendment shall be made which decreases the cash price per Share or which
adversely affects the rights of the Company's shareholders hereunder without
the approval of a majority of the Continuing Directors if at the time there
shall be any Continuing Directors and (b) after the date of adoption of the
Merger Agreement by the shareholders of the Company (if shareholder approval
of the Merger is required by applicable law), no amendment shall be made which
decreases the cash price per Share or which adversely affects the rights of
the Company's shareholders hereunder without the approval of such
shareholders. The Merger Agreement may not be amended except by an instrument
in writing signed on behalf of the parties.
SHAREHOLDER AGREEMENTS
The following is a summary of certain provisions of the Shareholder
Agreements. A copy of each Shareholder Agreement is filed as an exhibit to the
Schedule 14D-1 and is incorporated herein by reference. The Shareholder
Agreements may be examined, and copies may be obtained, as set forth in
Section 7 above. The following summary is qualified in its entirety by
reference to the Shareholder Agreements.
The Purchaser and Parent have also entered into a Shareholder Agreement with
each Principal Shareholder. Each Shareholder Agreement contains, among other
representations and warranties, a representation and warranty by the
Shareholder as to its beneficial ownership of a specified number of Shares and
Shares issuable upon exercise of warrants.
Tender of Shares; Exercise of Warrants. Pursuant to the applicable
Shareholder Agreement, the Principal Shareholder has agreed to tender and not
withdraw all Shares beneficially owned by it (or to cause the record owner
thereof to tender and not withdraw such Shares), pursuant to and in accordance
with the terms of the Offer. The parties have agreed that the Principal
Shareholder will, for all Shares tendered by the Principal Shareholder in the
Offer and accepted for payment and paid for by the Purchaser, receive the same
per Share consideration paid to other holders of Shares who have tendered into
the Offer.
The Principal Shareholders holding warrants have further agreed, prior to
the expiration of the Offer, to exercise all such warrants that are currently
exercisable for Shares and agreed that, prior to the purchase of Shares
pursuant to the Offer, all other warrants shall be cancelled and extinguished
for no additional consideration. Upon exercise of the warrants, and the
purchase of Shares in accordance with the terms thereof, the Principal
Shareholders receiving such Shares have agreed to tender (and not withdraw)
such Shares pursuant to the Offer.
Restrictions on Transfer and Proxies; No Solicitation. Each Principal
Shareholder has agreed that it shall not directly or indirectly, except as
expressly provided in the Shareholder Agreement, (i) transfer (including the
transfer of any securities of an affiliate which is the record holder of
Shares if, as the result of such transfer, such person would cease to be an
affiliate of the Principal Shareholder) to any person any or all Shares; (ii)
grant any proxies or powers of attorney, deposit any Shares into a voting
trust or enter into a voting agreement, understanding or arrangement with
respect to such Shares; or (iii) take any action that would make any
representation or warranty of the Principal Shareholder contained in the
Shareholder Agreement untrue or incorrect or would result in a breach by the
Principal Shareholder of its obligations under the Shareholder Agreement.
Each Principal Shareholder shall, and shall cause its affiliates, and its
and their officers, directors, employees, representatives and agents (the
"Covered Persons") to, immediately cease any existing discussions or
negotiations with any parties conducted prior to execution of the Shareholder
Agreement with respect to any Acquisition Proposal. Each Principal Shareholder
will not, and will cause its Covered Persons not to, (i) solicit, directly or
through an intermediary, any inquiries with respect to, or the making of, any
Acquisition Proposal, or (ii) engage in negotiations or discussions with, or
furnish any confidential information relating to the Company or its
subsidiaries to, any Third Party relating to an Acquisition Proposal;
provided, that nothing in the Shareholder Agreement shall prohibit a Principal
Shareholder or any Covered Person in their capacities as officers, directors,
employees, representatives and agents of the Company from taking or omitting
to take any action permitted to be taken or omitted to be taken by the Company
under Section 6.2 of the Merger Agreement.
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Termination. Each Shareholder Agreement shall terminate on the earliest of
(i) the purchase by the Purchaser pursuant to the Offer of the Shares
beneficially owned by the Principal Shareholder, (ii) termination of the
Merger Agreement pursuant to and in conformity with Article VIII of the Merger
Agreement (except that the Shareholder Agreement shall not terminate based
upon a termination of the Merger Agreement by the Company following (a) a
breach of a representation or warranty in the Merger Agreement on the part of
Parent or the Purchaser which materially adversely affects the consummation of
the Offer or (b) a material breach of any covenant or agreement in the Merger
Agreement on the part of Parent or the Purchaser which materially adversely
affects the consummation of the Offer which shall not have been cured prior to
20 days following notice of such breach, in each case if Parent and the
Purchaser are challenging the ability of the Company to terminate the Merger
Agreement pursuant to such provision(s)), and (iii) July 16, 1996.
Voting of Owned Shares; Irrevocable Proxy. Each of Forum Holdings, L.P. and
Apollo FG Partners, L.P. (but not Forum/Classic, L.P.) further agreed, in the
Shareholder Agreement to which it is a party, upon the request of Parent, to
deliver to the Purchaser an irrevocable proxy in the form attached to its
Shareholder Agreement (each, an "Irrevocable Proxy"). At the request of
Parent, such Irrevocable Proxies were delivered to Parent by Forum Holdings,
L.P. and Apollo FG Partners, L.P. on February 20 and 21, 1996, respectively.
Each Irrevocable Proxy grants to representatives of the Purchaser the right to
vote all Shares held by the person providing such proxy under specified
conditions.
Each Irrevocable Proxy provides, among other things, that, so long as the
Merger Price is at least $13.00 in cash (net to the seller), at any meeting of
the Company's shareholders, the named proxies are authorized to vote all
Shares covered by the Irrevocable Proxy in favor of the Merger, the execution
and delivery by the Company of the Merger Agreement and the approval and
adoption of the Merger Agreement and the terms thereof and each of the other
actions contemplated by the Merger Agreement and the Shareholder Agreement and
any actions required in furtherance thereof and against any actions that are
adverse thereto.
11. PURPOSE OF THE OFFER AND THE MERGER; PLANS FOR THE COMPANY.
The purpose of the Offer and the Merger is for the Purchaser to acquire the
entire equity interest in the Company. Consummation of the Offer in accordance
with its terms and conditions will provide the Purchaser with at least a two-
thirds equity interest in the Company. Assuming tender of Shares in the Offer
by each Principal Shareholder in accordance with the terms of the Shareholder
Agreement to which it is a party, consummation of the Offer will provide the
Purchaser with at least a 91% equity interest in the Company. The Merger will
allow the Purchaser to acquire all outstanding Shares not tendered and
purchased pursuant to the Offer. The acquisition of the entire equity interest
in the Company has been structured as a cash tender offer and a cash merger in
order to provide a prompt and orderly transfer of ownership of the Company
from the public shareholders of the Company to Parent. The purchase of Shares
pursuant to the Offer will increase the likelihood that the Merger will be
consummated.
Parent plans to integrate the operations of the Company's RCs with its
existing operations. Parent believes that this combination will allow for
better utilization of centralized resources, thereby reducing costs and
improving effectiveness. As a part of the integration process, Parent will add
the Marriott name to the name of the RCs. Where possible, the Purchaser will
pursue opportunities to reduce borrowing costs by selectively refinancing
existing debt of the Company or its affiliates.
The Company's 1,000 room expansion program at existing RCs will continue as
planned. The Purchaser also intends to expand several of the Company's new
concepts. In addition to the five National Guest Homes projects now under
construction or commencing construction this fiscal quarter, the Purchaser
plans to expand this moderate-tier assisted living concept into additional
markets. Expansion is also planned for the Hearthside assisted living and
alzheimer's care facilities, and the Company's home health care businesses.
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12. EFFECT OF THE OFFER ON THE MARKET FOR THE SHARES; EXCHANGE ACT
REGISTRATION; MARGIN REGULATIONS
The purchase of Shares pursuant to the Offer will reduce the number of
Shares that might otherwise trade publicly and the number of holders of Shares
and could adversely affect the liquidity and market value of the remaining
Shares held by the public, and may also have other consequences with respect
to Nasdaq Small Cap Market listing, Exchange Act registration and availability
of margin credit.
Depending upon the number of Shares purchased pursuant to the Offer, the
Shares may no longer meet the requirements of the NASD for continued inclusion
in the Nasdaq Small Cap Market, which require that an issuer have at least
100,000 publicly held shares, held by at least 300 shareholders, with a market
value of at least $1,000,000, and have net tangible assets of at least
$2,000,000. If these standards are not met, or if there are not at least two
registered and active market makers for the Shares, the NASD's rules provide
that the Shares would no longer be "qualified" for Nasdaq Stock Market
reporting and the Nasdaq Stock Market would cease to provide any quotations.
Shares held directly or indirectly by directors, officers or beneficial owners
of more than 10% of the Shares are not considered as being publicly held for
this purpose. If, as a result of the purchase of Shares pursuant to the Offer
or otherwise, the Shares no longer meet the requirements of the NASD for
continued inclusion in the Nasdaq Small Cap Market or in any other tier of the
Nasdaq Stock Market and the Shares are no longer included in the Nasdaq Small
Cap Market or in any other tier of the Nasdaq Stock Market, as the case may
be, the market for Shares could be adversely affected.
In the event that the Shares no longer meet the requirements of the NASD for
continued inclusion in any tier of the Nasdaq Stock Market, it is possible
that the Shares would continue to trade in the over-the-counter market and
that price quotations would be reported by other sources. The extent of the
public market for the Shares and the availability of such quotations would,
however, depend upon the number of holders of Shares remaining at such time,
the interest in maintaining a market in Shares on the part of securities
firms, the possible termination of registration of the Shares under the
Exchange Act, as described below, and other factors.
The Shares are currently registered under the Exchange Act. Registration of
the Shares under the Exchange Act may be terminated upon application of the
Company to the Commission if the Shares are neither listed on a national
securities exchange nor held by 300 or more holders of record. Termination of
registration of the Shares under the Exchange Act would substantially reduce
the information required to be furnished by the Company to its shareholders
and to the Commission 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 shareholders' meetings and the related requirement of furnishing an
annual report to shareholders 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
or 144A promulgated under the Securities Act of 1933, as amended, may be
impaired or eliminated. It is the current intention of Parent to deregister
the Shares after consummation of the Offer if the requirements for termination
of registration are met.
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 listing and market 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.
In addition, the Merger will have to comply with other applicable procedural
and substantive requirements of Indiana law, including any duties to minority
shareholders imposed upon a controlling or, if applicable, majority
shareholder.
The Commission has adopted Rule 13e-3 under the Exchange Act, which is
applicable to certain "going private" transactions and which may under certain
circumstances be applicable to the Merger or another business combination
following the purchase of Shares pursuant to the Offer in which the Purchaser
seeks to acquire the
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remaining Shares not held by it. Purchaser believes, however, that if the
Merger is consummated within one year of its purchase of Shares pursuant to
the Offer, Rule 13e-3 will not be applicable to the Merger. Purchaser believes
that if the Merger is not consummated within one year of its purchase of
Shares pursuant to the Offer, Rule 13e-3 will be applicable to the Merger.
Rule 13e-3 requires, among other things, that certain financial information
concerning the Company and certain information relating to the fairness of the
proposed transaction and the consideration offered to minority shareholders in
such transaction be filed with the Commission and disclosed to shareholders
prior to consummation of the transaction.
13. DIVIDENDS AND DISTRIBUTIONS.
If, on or after the date of the Merger Agreement, the Company should (a)
split, combine or otherwise change the Shares or its capitalization, (b)
acquire or otherwise cause a reduction in the number of outstanding Shares or
other securities or (c) issue or sell additional Shares (other than the
issuance of Shares under option prior to the date of the Merger Agreement, in
accordance with the terms of such options as then publicly disclosed), shares
of any other class of capital stock, other voting securities or any securities
convertible into or exchangeable for, or rights, warrants or options,
conditional or otherwise, to acquire, any of the foregoing, then, without
prejudice to the Purchaser's rights under Sections 1 and 15, the Purchaser, in
its sole discretion, may make such adjustments as it deems appropriate in the
Offer Price and other terms of the Offer, including, without limitation, the
number or type of securities offered to be purchased.
If, on or after the date of the Merger Agreement, the Company should declare
or pay any dividend on the Shares or make any distribution (including, without
limitation, cash dividends, the issuance of additional Shares pursuant to a
stock dividend or stock split, the issuance of other securities or the
issuance of rights for the purchase of any securities) with respect to the
Shares, payable or distributable to shareholders of record on a date prior to
the transfer of the Shares purchased pursuant to the Offer to the Purchaser or
its nominee or transferee on the Company's stock transfer records, then,
without prejudice to the Purchaser's rights under Sections 1 and 15, (a) the
Offer Price may, in the sole discretion of the Purchaser, be reduced by the
amount of any such cash dividend or cash distribution and (b) the whole of any
such noncash dividend, distribution or issuance to be received by the
tendering shareholders will (i) be received and held by the tendering
shareholders for the account of the Purchaser and will be required to be
promptly remitted and transferred by each tendering shareholder to the
Depositary for the account of the Purchaser, accompanied by appropriate
documentation of transfer, or (ii) at the direction of the Purchaser, be
exercised for the benefit of the Purchaser, in which case the proceeds of such
exercise will promptly be remitted to the Purchaser. Pending such remittance
and subject to applicable law, the Purchaser will be entitled to all rights
and privileges as owner of any such dividend, distribution or right and may
withhold the entire purchase price for Shares tendered in the Offer or deduct
from the purchase price the amount or value thereof, as determined by the
Purchaser in its sole discretion.
The Merger Agreement prohibits the Company from taking any of the foregoing
actions without the prior written consent of Parent.
14. EXTENSION OF TENDER PERIOD; AMENDMENT; TERMINATION.
The Purchaser expressly reserves the right, in its sole discretion, at any
time or from time to time, regardless of whether or not any of the Conditions
set forth at Section 15 will have occurred or will have been determined by the
Purchaser to have occurred, subject to the terms of the Merger Agreement and
the applicable rules of the Commission, (i) to extend the period of time
during which the Offer is open and thereby delay acceptance for payment of,
and the payment for, any Shares, by giving oral or written notice of such
extension to the Depositary and (ii) to amend the Offer in any respect by
giving oral or written notice of such amendment to the Depositary. In the
Merger Agreement, Parent and the Purchaser have agreed to extend the period of
time the Offer is open until the first business day following the date on
which the Conditions set forth in Section 15 are satisfied or waived in
accordance with the provisions thereof; provided that the Purchaser shall be
permitted but shall not be obligated to extend the time the Offer is open if
either (x) the Company is in breach in any material respect of its covenants
or agreements contained herein or (y) there is a reasonable likelihood that
one or more of the Conditions cannot be satisfied; and provided, further, that
the Purchaser shall in no event be obligated or
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permitted to extend the period of time the Offer is open beyond July 15, 1996.
In the Merger Agreement, the Purchaser and Parent also have agreed not to
extend the expiration date of the Offer beyond the twentieth business day
following commencement thereof unless one or more of the Conditions shall not
be satisfied.
The Purchaser also reserves the right, in its sole discretion, subject to
the terms of the Merger Agreement, in the event any of the conditions
specified in Section 15 will not have been satisfied and so long as Shares
have not theretofore been accepted for payment, to delay (except as otherwise
required by applicable law) acceptance for payment of or payment for Shares or
to terminate the Offer and not accept for payment or pay for Shares.
If the Purchaser extends the Offer, or if the Purchaser (whether before or
after its acceptance for payment of Shares) is delayed in its purchase of or
payment for Shares or is unable to pay for Shares pursuant to the Offer for
any reason, then, without prejudice to the Purchaser's rights under the Offer,
the Depositary may retain tendered Shares on behalf of the Purchaser, and such
Shares may not be withdrawn except to the extent tendering shareholders are
entitled to withdrawal rights as described in Section 4. However, the ability
of the Purchaser to delay the payment for Shares which the Purchaser has
accepted for payment is limited by Rule 14e-1(c) under the Exchange Act, which
requires that a bidder pay the consideration offered or return the securities
deposited by or on behalf of holders of securities promptly after the
termination or withdrawal of such bidder's offer.
If the Purchaser makes a material change in the terms of the Offer or the
information concerning the Offer (including the Minimum Condition), the
Purchaser will disseminate additional tender offer materials and extend the
Offer to the extent required by Rules 14d-4(c) and 14d-6(d) under the Exchange
Act. The minimum period during which the Offer must remain open following
material changes in the terms of the Offer or information concerning the
Offer, other than a change in price or a change in percentage of securities
sought, will depend upon the facts and circumstances, including the relative
materiality of the terms or information. With respect to a change in price or
a change in percentage of securities sought, a minimum ten business day period
is generally required to allow for adequate dissemination to shareholders and
investor response. If prior to the Expiration Date, the Purchaser should
decide to increase the price per Share being offered in the Offer, such
increase will be applicable to all shareholders whose Shares are accepted for
payment pursuant to the Offer. As used in this Offer to Purchase, "business
day" means any day other than a Saturday, Sunday or a federal holiday and
consists of the time period from 12:01 AM through 12:00 midnight, New York
City time as computed in accordance with Rule 14d-1 under the Exchange Act.
15. CONDITIONS TO THE OFFER.
Notwithstanding any other provision of the Offer, the Purchaser shall not be
required to accept for payment or pay for, and may delay the acceptance for
payment of (whether or not the Shares have theretofore been accepted for
payment), or the payment for, any Shares tendered, and may terminate or extend
the Offer and not accept for payment any Shares, if:
(i) immediately prior to the expiration of the Offer (as extended in
accordance with the terms of the Offer), (A) the applicable waiting period
under the HSR Act shall not have expired or been terminated, or (B) the
number of Shares validly tendered and not withdrawn when added to the
Shares then beneficially owned by Parent does not constitute two-thirds of
the Shares then outstanding and represent two-thirds of the voting power of
the Shares then outstanding on a Fully Diluted Basis on the date of
purchase; OR
(ii) on or after the date of the Merger Agreement and prior to the
acceptance for payment of Shares, any of the following conditions exist and
be continuing:
(a)(1) any of the representations or warranties of the Company
contained in the Merger Agreement shall not have been true and correct
in all material respects at the date when made or (except for those
representations and warranties expressly made only as of a particular
date which need only be true and correct in all material respects as of
such date) shall cease to be true and correct in all material respects
at any time prior to consummation of the Offer; or (2) (i) one or more
circumstances or conditions exist, or changes have occurred since the
date of the Merger Agreement, that would constitute a breach or
violation of any of the representations or warranties made by the
Company in Article IV of the Merger Agreement if such representations
or warranties had been made without any
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materiality qualifications (e.g., if such representations and
warranties were not qualified by "in all material respects" or except
for such matters "as would not, individually or in the aggregate, have
or constitute a Material Adverse Effect") and (ii) all such
circumstances, conditions or changes, in the aggregate, have or
constitute a Material Adverse Effect; or
(b) the Company shall have breached in any material respect any of
its covenants or agreements contained in the Merger Agreement; provided
that, if any such breach is curable by the Company through the exercise
of its reasonable efforts, then the Purchaser may not terminate the
Offer as a result of such breach until 20 days after written notice
thereof has been given to the Company by Parent or the Purchaser and
unless at such time the breach has not been cured; or
(c) there shall have been any statute, rule, regulation, judgment,
order or injunction promulgated, enacted, entered, enforced or deemed
applicable to the Offer, or any other legal action shall have been
taken, by any state, federal or foreign government or governmental
authority or by any U.S. court, other than the routine application to
the Offer or the Merger of waiting periods under the HSR Act, that (1)
makes the acceptance for payment of, or the payment for, some or all of
the Shares illegal or otherwise prohibits or restricts consummation of
the Offer, (2) imposes material limitations on the ability of the
Purchaser or Parent to acquire or hold or to exercise any rights of
ownership of the Shares, or effectively to manage or control the
Company and its business, assets and properties or (3) has or
constitutes a Material Adverse Effect with respect to Company and its
subsidiaries or with respect to Parent or the Purchaser.
(d) facts or circumstances exist or shall have occurred in respect of
the Company or any of its subsidiaries that in the aggregate have or
constitute a Material Adverse Effect; or
(e) there shall have occurred (1) any general suspension of trading
in, or limitation on prices for, securities on the NYSE, (2) the
declaration of a banking moratorium or any suspension of payments in
respect of banks in the United States (whether or not mandatory), (3)
the commencement of a war, armed hostilities or other international or
national calamity directly or indirectly involving the United States
and having or constituting a Material Adverse Effect or materially
adversely affecting (or materially delaying) the consummation of the
Offer, (4) any limitation or proposed limitation (whether or not
mandatory) by any U.S. governmental authority or agency, or any other
event, that materially adversely affects generally the extension of
credit by banks or other financial institutions, (5) from the date of
the Merger Agreement through the date of termination or expiration of
the Offer, a decline of at least 25% in the Standard & Poor's 500 Index
or (6) in the case of any of the situations described in clauses (1)
through (5) inclusive, existing at the date of the commencement of the
Offer, a material acceleration, escalation or worsening thereof; or
(f) any person or any group, other than the Purchaser, any of its
affiliates, any current holder of more than 25% of the outstanding
shares or any group of which any of them is a member, shall have
acquired beneficial ownership of more than 25% of the outstanding
Shares or shall have entered into a definitive agreement with the
Company with respect to a tender offer or exchange offer for any Shares
or merger, consolidation or other business combination with or
involving the Company or any of its Subsidiaries; or
(g) prior to the purchase of Shares pursuant to the Offer, the Board
(1) shall have withdrawn its approval or recommendation of the Offer,
the Merger Agreement or the Merger, (2) shall have or modified
(including by amendment of the Schedule 14D-9) in a manner adverse to
the Purchaser its approval or recommendation of the Offer, the Merger
Agreement or the Merger, (3) shall have recommended to the Company's
shareholders another offer, or (4) shall have adopted any resolution to
effect any of the foregoing; provided that a change in the reasons for
any such recommendation will not be deemed to be adverse to the
Purchaser so long as the Board continues to recommend that shareholders
tender their Shares pursuant to the Offer; or
(h) the Merger Agreement shall have been terminated in accordance
with its terms; or
(i) the Bankruptcy Court shall not have entered the Bankruptcy Order;
or
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(j) the Company shall have failed to purchase all ownership interests
(other than ownership interests owned as of the date hereof by the
Company or any of its Subsidiaries) in the Forum Retirement Communities
II, L.P., or shall have purchased such ownership interests for an
aggregate purchase price in excess of $1,235,000; or
(k) the Company shall have failed to obtain written confirmation of
the oral waiver received by the Company of the actual or potential
breaches under the Amended and Restated Loan Agreement dated as of June
8, 1995, as amended, by and among Forum Investments I, L.L.C., Nomura
Asset Capital Corporation and Midland Loan Services, L.P.
The foregoing conditions (the "Conditions") are for the sole benefit of the
Purchaser and may be asserted by the Purchaser regardless of the circumstances
giving rise to such conditions, or may be waived by the Purchaser in whole or
in part at any time and from time to time in its sole discretion. The failure
by the Purchaser at any time to exercise any of the foregoing rights will not
be deemed a waiver of any other rights and each such right will be deemed an
ongoing right which may be asserted at any time and from time to time.
16. CERTAIN LEGAL MATTERS; REGULATORY APPROVALS
Except as described in this Section 16, based upon a review of publicly
available filings by the Company with the Commission and other publicly
available information concerning the Company, neither Parent nor the Purchaser
is aware of any license or regulatory permit that appears to be material to
the business of the Company and its subsidiaries, taken as a whole, that might
be adversely affected by the acquisition of Shares by the Purchaser or Parent
pursuant to the Offer, the Merger or otherwise or, except as set forth below,
of any approval or other action by any governmental, administrative or
regulatory agency or authority, domestic or foreign, that would be required
prior to the acquisition of Shares by the Purchaser pursuant to the Offer, the
Merger or otherwise. Should any such approval or other action be required, the
Purchaser and Parent currently contemplate that it will be sought. While the
Purchaser does not currently intend to delay the acceptance for payment of
Shares tendered pursuant to the Offer pending the outcome of any such matter,
there can be no assurance that any such approval or other action, if needed,
would be obtained or would be obtained without substantial conditions or that
adverse consequences might not result to the Company's business or that
certain parts of the business of the Company or Parent might not have to be
disposed of in the event that such approvals were not obtained or any other
actions were not taken. The Purchaser's obligation under the Offer to accept
for payment and pay for Shares is subject to certain conditions, including
conditions relating to certain of the legal matters discussed in this Section
16. See Section 15.
Dissenters' Rights. Under Indiana law, the affirmative vote of the holders
of a majority of the outstanding Shares entitled to vote, including the Shares
owned by Parent and its affiliates (including the Purchaser), would be
required to adopt the Merger, although the Articles of Incorporation of the
Company may require the affirmative vote of two-thirds of the outstanding
Shares entitled to vote thereon. No dissenters' or appraisal rights are
available in connection with the Offer. However, if the Merger is consummated,
shareholders of the Company would have certain rights under Indiana law to
dissent and demand appraisal of, and payment in cash of the fair value of,
their Shares. Such rights, if the statutory procedures were 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 Shares. Any
such judicial determination of the fair value of Shares held by such
dissenting holders could be based upon considerations other than or in
addition to the price paid in the Offer and the market value of the Shares,
including asset values and the investment value of the Shares. The value so
determined could be greater or less than the purchase price per Share pursuant
to the Offer or the consideration per Share to be paid in the Merger. The
foregoing summary of rights of dissenting shareholders does not purport to be
a complete statement of the procedures to be followed by shareholders desiring
to exercise their dissenters' rights. The preservation and exercise of
dissenters' rights are conditioned upon strict adherence with Indiana law.
Short-Form Merger. Section 23-1-40-4 of the IBCL provides that if a parent
company owns at least 90 percent of each class of stock of a subsidiary, the
parent company can effect a merger with the subsidiary without
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the authorization of the other shareholders of the subsidiary (a "short-form
merger"). While Parent has been advised by counsel that a short-form merger
could be effected if the Purchaser acquires at least 90% of the Shares
pursuant to the Offer, Parent currently intends to effect the Merger in
accordance with the provisions of Section 23-1-40-1 of the IBCL, which is the
provision applicable to mergers of corporations not effected through short-
form mergers.
State Takeover Statutes. A number of states, including Indiana, have adopted
"takeover" statutes that purport to apply to attempts to acquire corporations
that are incorporated in such states, or whose business operations have
substantial economic effects in such states, or which have substantial assets,
security holders, employees, principal executive offices or principal places
of business in such states.
In Edgar v. MITE Corporation, the Supreme Court of the United States
invalidated on constitutional grounds the Illinois Business Takeover Act,
which, as a matter of state securities law, made takeovers of corporations
meeting certain requirements more difficult. However, in CTS Corp. v. Dynamics
Corp. of America, addressing Indiana's Control Share Acquisition Act, the
Supreme Court held that a state may, as a matter of corporate law and, in
particular, those laws concerning corporate governance, constitutionally
disqualify a potential acquiror from voting on the affairs of a target
corporation without prior approval of the remaining shareholders, provided
that such laws were applicable under certain conditions, in particular, that
the corporation has a substantial number of shareholders in the state and is
incorporated there.
The Company's Articles of Incorporation expressly provide that Chapter 42 of
the IBCL, governing "control share acquisitions," will not apply to
acquisitions of Shares of the Company, and that the Chapter 43, governing
"business combinations" of a corporation with an "interested shareholder,"
will not apply to the Company. In addition, the Board of the Company has
approved the Offer and the Merger prior to the acquisition of Shares by the
Purchaser. Accordingly, the Purchaser and Parent do not intend to comply with
the requirements of Chapters 42 or 43 of the IBCL.
The Company conducts business in a number of states throughout the United
States, some of which have enacted "takeover" statutes. The Purchaser does not
know whether any of these statutes will, by their terms, apply to the Offer,
and has not complied with any such statutes, except the Indiana Takeover Offers
Act (Section 23-2-3.1-1 et seq. of the IBCL). To the extent that certain
provisions of these statutes purport to apply to the Offer, the Purchaser
believes that there are reasonable bases for contesting such statutes. If any
person should seek to apply any state takeover statute, the Purchaser would
take such action as then appears desirable, which action may include
challenging the validity or applicability of any such statute in appropriate
court proceedings. If it is asserted that one or more takeover statutes apply
to the Offer, and it is not determined by an appropriate court that such
statute or statutes do not apply or are invalid as applied to the Offer, the
Purchaser might be required to file certain information with, or receive
approvals from, the relevant state authorities, and the Purchaser might be
unable to purchase or pay for Shares tendered pursuant to the Offer, or be
delayed in continuing or consummating the Offer. In such case, the Purchaser
may not be obligated to accept for payment or pay for Shares tendered. See
Section 14.
Antitrust. Under the provisions of the HSR Act applicable to the Offer, the
acquisition of Shares under the Offer may be consummated following the
expiration of a 15-calendar day waiting period following the filing by Parent
of a Notification and Report Form with respect to the Offer, unless Parent
receives a request for additional information or documentary material from the
Antitrust Division or the FTC or unless early termination of the waiting
period is granted. If, within the initial 15-calendar day waiting period,
either the Antitrust Division or the FTC requests additional information or
material from Parent concerning the Offer, the waiting period will be extended
and would expire at 11:59 p.m., New York City time, on the tenth calendar day
after the date of substantial compliance by Parent with such request. Only one
extension of the waiting period pursuant to a request for additional
information is authorized by the HSR Act. Thereafter, such waiting period may
be extended only by court order or with the consent of Parent. In practice,
complying with a request for additional information or material can take a
significant amount of time.
The Antitrust Division and the FTC frequently scrutinize the legality under
the antitrust laws of transactions such as the Purchaser's acquisition of the
Shares pursuant to the Offer and the Merger Agreement. At any time
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before or after the Purchaser's acquisition of Shares, the Antitrust Division
or the FTC could take such action under the antitrust laws as it deems
necessary or desirable in the public interest, including seeking to enjoin the
acquisition of Shares pursuant to the Offer or otherwise or seeking
divestiture of Shares acquired by the Purchaser or divestiture of substantial
assets of Parent or its subsidiaries. Private parties and state attorneys
general may also bring legal action under the antitrust laws in certain
circumstances. Based upon an examination of publicly available information
relating to the business in which Parent and the Company are engaged, Parent
and the Purchaser believe that the acquisition of Shares by the Purchaser will
not violate the antitrust laws. Nevertheless, there can be no assurance that a
challenge to the Offer or other acquisition of Shares by the Purchaser on
antitrust grounds will not be made or, if such challenge is made, of the
result. See Section 15 for certain conditions to the Offer, including
conditions with respect to litigation and certain governmental actions.
Federal Reserve Board Regulations. The margin regulations promulgated by the
Federal Reserve Board place restrictions on the amount of credit that may be
extended for the purpose of purchasing margin stock (including the Shares) if
such credit is secured directly or indirectly by margin stock. The Purchaser
and Parent believe that the financing of the acquisition of the Shares will
not be subject to the margin regulations.
17. FEES AND EXPENSES
The Purchaser and Parent have retained MacKenzie Partners, Inc. to act as
the Information Agent and First Chicago Trust Company of New York, to serve as
the Depositary in connection with the Offer. The Information Agent and the
Depositary each will receive reasonable and customary compensation for their
services, be reimbursed for certain reasonable out-of-pocket expenses and be
indemnified against certain liabilities and expenses in connection therewith,
including certain liabilities and expenses under the federal securities laws.
Neither the Purchaser nor Parent will pay any fees or commissions to any
broker or dealer or other person (other than the Depositary and the
Information Agent) in connection with the solicitation of tenders of Shares
pursuant to the Offer. Brokers, dealers, banks and trust companies will be
reimbursed by the Purchaser upon request for customary mailing and handling
expenses incurred by them in forwarding material to their customers.
18. MISCELLANEOUS
The Purchaser is not aware of any jurisdiction in which the making of the
Offer is not in compliance with applicable law. If the Purchaser becomes aware
of any jurisdiction in which the making of the Offer would not be in
compliance with applicable law, the Purchaser will make a good faith effort to
comply with any such law. If, after such good faith effort, the Purchaser
cannot comply with any such law, the Offer will not be made to (nor will
tenders be accepted from or on behalf of) the holders of Shares residing in
such jurisdiction. In those jurisdictions whose securities or blue sky laws
require the Offer to be made by a licensed broker or dealer, the Offer is
being made on behalf of the Purchaser by one or more registered brokers or
dealers which are licensed under the laws of such jurisdiction.
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR MAKE ANY
REPRESENTATION ON BEHALF OF THE PURCHASER NOT CONTAINED IN THIS OFFER TO
PURCHASE OR IN THE LETTER OF TRANSMITTAL AND, IF GIVEN OR MADE, SUCH
INFORMATION OR REPRESENTATION MUST NOT BE RELIED UPON AS HAVING BEEN
AUTHORIZED.
The Purchaser and Parent have filed with the Commission the Tender Offer
Statement on Schedule 14D-1 pursuant to Rule 14d-3 under the Exchange Act,
together with exhibits, furnishing certain additional information with respect
to the Offer, and may file amendments thereto. Such Schedule 14D-1 and any
amendments thereto, including exhibits, should be available for inspection and
copies should be obtainable in the manner set forth in Section 7 (except that
such material will not be available at the regional offices of the
Commission).
FG ACQUISITION CORP.
February 23, 1996
33
<PAGE>
SCHEDULE I
DIRECTORS AND EXECUTIVE OFFICERS OF PARENT
The name, business address, present principal occupation or employment and
five-year employment history of each director and executive officer of Parent
and certain other information are set forth below. Unless otherwise indicated
below, the address of each director and officer is c/o 10400 Fernwood Road,
Bethesda, Maryland 20817. Unless otherwise indicated, each occupation set
forth opposite an individual's name refers to employment with Parent. All
directors and officers listed below are citizens of the United States.
<TABLE>
<CAPTION>
AGE
---
<C> <C> <S>
J.W. Marriott, Jr.* 64 Mr. Marriott is Chairman of the Board,
Chairman of the Board and CEO President and Chief Executive Officer
of Parent. Mr. Marriott has been a
Director of Parent since 1964
(including the period prior to the
spin-off of Parent in 1993 from
Marriott Corporation (now known as Host
Marriott Corporation) (the
"Distribution")), and is currently
serving a three-year term expiring at
the 1996 Annual Meeting of
Shareholders. He also serves as a
Director of Host Marriott Corporation,
Host Marriott Services Corporation,
General Motors Corporation, Outboard
Marine Corporation and the U.S.-Russia
Business Roundtable. He also serves on
the Board of Trustees of the Mayo
Foundation, the National Geographic
Society and Georgetown University, and
on the Advisory Board of the Boy Scouts
of America. He is on the President's
Advisory Committee of the American Red
Cross and the Executive Committee of
the World Travel & Tourism Council.
Prior to the Distribution, he served as
Chairman of the Board, President and
Chief Executive Officer of Marriott
Corporation.
Richard E. Marriott* 57 Mr. Marriott has been a Director of
Director Parent since 1979 (including the period
prior to the Distribution), and is
currently serving a three-year term
expiring at the 1998 Annual Meeting of
Shareholders. Mr. Marriott is Chairman
of the Board of Host Marriott
Corporation. He is also Chairman of the
Board of First Media Corporation and
serves as a Director of Host Marriott
Services Corporation, Potomac Electric
Power Company, Riggs National Bank,
Gallaudet University, Polynesian
Cultural Center, Primary Children's
Medical Center, Boys and Girls Clubs of
America SE Region and The J. Willard
Marriott Foundation. He also serves on
the Board of Trustees of Federal City
Council and Marriott Foundation for
People with Disabilities. Prior to the
Distribution, Mr. Marriott served as an
Executive Vice President and member of
the Board of Directors of Marriott
Corporation.
Gilbert M. Grosvenor 64 Mr. Grosvenor has been a Director of
Director Parent since 1987 (including the period
prior to the Distribution), and is
currently serving a three-year term
expiring at the 1998 Annual Meeting of
Shareholders. Mr. Grosvenor is
President and Chairman of the Board of
the National Geographic Society (a
publisher
of books and magazines and producer of
television documentaries) and a
director or trustee of Bell Atlantic-
Washington, D.C., Inc., Chevy Chase
Federal Savings Bank, Ethyl
Corporation, Charles Allmon Trust,
Albemarle and Saul Centers, Inc. Prior
to the Distribution, Mr. Grosvenor
served as a member of the Board of
Directors of Marriott Corporation.
</TABLE>
* Messrs. J.W. Marriott, Jr. and Richard E. Marriott are brothers.
I-1
<PAGE>
<TABLE>
<CAPTION>
AGE
---
<C> <C> <S>
Floretta Dukes McKenzie 60 Dr. McKenzie has been a Director of
Director Parent since 1992 (including the period
prior to the Distribution), and is
currently serving a three-year term
expiring at the 1997 Annual Meeting of
Shareholders. Dr. McKenzie is the
founder, President and a Director of The
McKenzie Group, Inc. (an educational
consulting firm). She is also a director
or trustee of the Potomac Electric Power
Company, the National Geographic Society,
the Acacia Group, Group Hospitalization
and Medical Services, Inc., Reading is
Fundamental (RIF), Howard University,
WETA public television, University of
Maryland-College Park Campus Board of
Visitors and the American Woman's
Economic Development Corporation. From
1981 to 1988, she served as
Superintendent of the District of
Columbia Public Schools. Prior to the
Distribution, Dr. McKenzie served as a
member of the Board of Directors of
Marriott Corporation.
Harry J. Pearce 53 In August 1995 the Board appointed Mr.
Director Pearce as a Director of Parent for a term
to expire at the 1998 Annual Meeting of
Shareholders. Mr. Pearce is Vice Chairman
of the Board of General Motors
Corporation (an automobile manufacturer)
and a director of General Motors
Acceptance Corporation, Hughes
Electronics Corporation, Electronic Data
Systems Corporation, American Automobile
Manufacturers Association and Economic
Strategy Institute. He also serves on the
Board of Trustees of Howard University.
W. Mitt Romney 49 Mr. Romney has been a director of Parent
Director since 1993 (including the period prior to
the Distribution), and is currently
serving a three-year term expiring at the
1996 Annual Meeting of Shareholders. Mr.
Romney is a Director, President and Chief
Executive Officer of Bain Capital, Inc.
(a private equity investment firm). He is
also a director of NeoStar Retail Group,
Sports Authority, Duane Reade and
Staples, Inc. Prior to the Distribution,
Mr. Romney served as a member of the
Board of Directors of Marriott
Corporation.
Roger W. Sant 64 Mr. Sant has been a director of Parent
Director since 1993, and is currently serving a
three-year term expiring at the 1997
Annual Meeting of Shareholders. Mr. Sant
is Chairman of the Board and a co-founder
of The AES Corporation (an international
independent power business). He is also
Chairman of the Board of World Wildlife
Fund (U.S.) and a member of the Board of
World Resources Institute and World Wide
Fund for Nature.
Lawrence M. Small 54 Mr. Small has been a director of Parent
Director since 1995, and is currently serving a
term to expire at the 1997 Annual Meeting
of Shareholders. Mr. Small is President,
Chief Operating Officer and a member of
the Board of Directors of Fannie Mae,
formerly known as Federal National
Mortgage Association (a congressionally
chartered mortgage financing
corporation). Prior to joining Fannie
Mae, Mr. Small was Vice Chairman and
Chairman of the Executive Committee of
the Boards of Directors of
Citicorp/Citibank. He also serves as a
Director of The Chubb Corporation,
Chairman of the Financial Advisory
Committee of Trans-Resources
International, a member of the Board of
Trustees of Morehouse College and New
York University Medical Center and a
member of the U.S. Holocaust Memorial
Council.
</TABLE>
I-2
<PAGE>
<TABLE>
<CAPTION>
AGE
---
<C> <C> <S>
Clifford J. Ehrlich 57 Mr. Ehrlich joined Marriott Corporation
Senior Vice President in 1973 and was Marriott Corporation's
chief human resources executive from
April 1978 until the Distribution in
1993. In 1980, Mr. Ehrlich was elected
Senior Vice President--Human Resources of
Marriott Corporation.
Joseph Ryan 54 Mr. Ryan joined Parent in December 1994
Executive Vice President and as Executive Vice President and General
General Counsel Counsel. Prior to that time, he was a
partner in the law firm of O'Melveny &
Myers, serving as the Managing Partner
from 1993 until his departure. He joined
O'Melveny & Myers in 1967 and was
admitted as a partner in 1976.
William J. Shaw 50 Mr. Shaw was elected President of the
Executive Vice President and Marriott Service Group in February 1992,
President--Marriott Service which now comprises Parent's Contract
Group Services Group. He joined Marriott
Corporation in 1974, was Corporate
Controller in 1979 and a Vice President
in 1982. In 1985, he assumed
responsibility for Marriott Corporation's
tax department and risk management
department and was elected Senior Vice
President--Finance. In 1986, Mr. Shaw was
elected Senior Vice President--Finance
and Treasurer of Marriott Corporation. He
was elected Executive Vice President of
Marriott Corporation and promoted to
Chief Financial Officer in April 1988.
Michael A. Stein 46 Mr. Stein joined Marriott Corporation in
Executive Vice President, Chief 1989 as Vice President, Finance and Chief
Financial Officer and Acting Accounting Officer. In 1990, he assumed
Corporate Controller responsibility for Marriott Corporation's
financial analysis and functions. In
1991, he was elected Senior Vice
President--Finance and Corporate
Controller of Marriott Corporation and
also assumed responsibility for Marriott
Corporation's internal audit function. In
October 1993, he was named Executive Vice
President and Chief Financial Officer.
Prior to joining Marriott Corporation,
Mr. Stein spent 18 years with Arthur
Anderson LLP where, since 1982, he was a
partner.
William R. Tiefel 61 Mr. Tiefel joined Marriott Corporation in
Executive Vice President and 1961 and was named President of Marriott
President--Marriott Lodging Hotels, Resorts and Suites in 1988. Mr.
Group Tiefel previously served as a resident
manager and general manager at several
Marriott Hotels prior to being appointed
Regional Vice President and later
Executive Vice President of Marriott
Hotels, Resorts and Suites and Marriott
Ownership Resorts. Mr. Tiefel was elected
Executive Vice President of Marriott
Corporation in November 1989. In March
1992, Mr. Tiefel was elected President--
Marriott Lodging Group and assumed
responsibility for all of Parent's
lodging brands.
</TABLE>
I-3
<PAGE>
DIRECTORS AND EXECUTIVE OFFICERS OF THE PURCHASER
The name, business address, present principal occupation or employment and
five-year employment history of each director and executive officer of
Purchaser and certain other information are set forth below. Unless otherwise
indicated below, the address of each director and officer is c/o 10400
Fernwood Road, Bethesda, Maryland 20817. Unless otherwise indicated, each
occupation set forth opposite an individual's name refers to employment with
Purchaser. All directors and officers listed below are citizens of the United
States.
<TABLE>
<CAPTION>
AGE
---
<C> <C> <S>
William J. Shaw 50 Mr. Shaw is President and a Director of
President the Purchaser. He is also an officer of
Parent. See above.
Paul E. Johnson, Jr. 48 Mr. Johnson is Vice President and a
Vice President and Director of Director of the Purchaser, and Executive
Purchaser; Executive Vice Vice President and General Manager of the
President and General Manager Senior Living Services Division of
of the Senior Living Services Parent. Mr. Johnson joined Marriott
Division of Parent Corporation in 1983 in Corporate
Financial Planning & Analysis. In 1987,
he was promoted to Group Vice President
of Finance and Development for the
Marriott Service Group and later assumed
responsibility for real estate
development for Marriott Senior Living
Services. During 1989, he served as Vice
President and General Manager of
Marriott's Travel Plazas division. Mr.
Johnson subsequently served as Vice
President and General Manager of Marriott
Family Restaurants from December 1989
through 1991. In October 1991, he was
appointed to his present position as
Executive Vice President and General
Manager of Marriott Senior Living
Services.
Terrence P. Morrow 48 Mr. Morrow is Treasurer and a Director of
Treasurer and Director of the Purchaser. Mr. Morrow is Vice
Purchaser; Vice President-- President of Finance for Marriott Senior
Finance of the Senior Living Living Services with responsibility for
Services Division of Parent the Accounting, Finance and Information
Systems functions of the business. Mr.
Morrow has worked for Marriott since 1970
and has been in his current job since
1990. Previously, he was Vice President
of Marriott Suites and Vice President of
Internal Audit for Marriott Corporation.
Mr. Morrow also spent 17 years in the
Hotel Division where he held positions as
a Hotel Controller, Regional Controller
and Vice President Area Controller.
Lawrence B. Murphy 38 Mr. Murphy is a Vice President of the
Vice President of Purchaser; Purchaser. Mr. Murphy joined Parent in
Vice President--Operations of 1983 and served in various capacities in
the Senior Living Services its Lodging Division, including Vice
Division of Parent President of Rooms Operations, Vice
President of Service Development and
General Manager, until March 1995 when he
joined the Senior Living Services
Division as Vice President for
Operations.
Edward L. Bednarz 53 Mr. Bednarz is a Vice President of the
Vice President of Purchaser; Purchaser. Mr. Bednarz joined the Law
Associate General Counsel of Department of Parent in 1973 and has
Parent served as the principal attorney for the
Senior Living Services Division since
1992.
G. Cope Stewart III 54 Mr. Stewart is a Vice President of the
Vice President of Purchaser; Purchaser. Mr. Stewart has served as
Associate General Counsel of Associate General Counsel, Corporate
Parent Affairs Department, of Parent since
February 1994. From 1986 to 1994, Mr.
Stewart was a partner in the Washington,
D.C. law firm of Arent Fox Kintner
Plotkin & Kahn. Prior to 1986, Mr.
Stewart was engaged in the private
practice of law in Washington, D.C.
</TABLE>
I-4
<PAGE>
The Letter of Transmittal, certificates for Shares and any other required
documents should be sent or delivered by each shareholder 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:
FIRST CHICAGO TRUST COMPANY OF NEW YORK
By Mail: Facsimile Transmission By Hand or Overnight
(For Eligible Institutions Courier:
Only):
P.O. Box 2559 14 Wall Street
Suite 4660-FGI 201-222-4720 8th Floor, Suite 4680-FGI
Jersey City, New Jersey or New York, New York 10005
07303-2559 201-222-4721
CONFIRM RECEIPT OF NOTICE OF GUARANTEED DELIVERY:
(201) 222-4707
Any questions or requests for assistance or additional copies of this Offer
to Purchase, the 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:
MACKENZIE PARTNERS, INC.
156 Fifth Avenue
New York, New York 10010
(212) 929-5500 (Call Collect)
or
Call Toll-Free: (800) 322-2885
