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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
----------------
SCHEDULE 14D-1
TENDER OFFER STATEMENT PURSUANT TO SECTION
14(D)(1) OF 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)
CALCULATION OF FILING FEE
- -------------------------------------------------------------------------------
Transaction Valuation(1): $305,194,175 Amount of Filing Fee(2): $61,039
- -------------------------------------------------------------------------------
(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 warrants (other than warrants which are to be cancelled
pursuant to agreements with the holders thereof), and (iv) all shares
issuable pursuant to certain contractual obligations of Forum Group, Inc.
and its subsidiaries, 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.
[_]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: Not applicable Filing Party: Not Applicable
Form or registration no.: Not applicable Date Filed: Not Applicable
(CONTINUED ON FOLLOWING PAGE(S))
(PAGE 1 OF 9 PAGES)
EXHIBIT INDEX IS LOCATED ON PAGE 9
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SCHEDULE 14D-1
- -------------------------------------------------------------------------------
CUSIP NO. 349841304 14D-1 PAGE 2 OF 9 PAGES
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
1. Name of Reporting Person S.S. or I.R.S. Identification
Nos. of Above Person
FG Acquisition Corp.
- -------------------------------------------------------------------------------
2. Check the Appropriate Box if a Member of a Group (a) [_]
(b) [X]
- -------------------------------------------------------------------------------
3. SEC Use Only
- -------------------------------------------------------------------------------
4. Sources of Funds
AF
- -------------------------------------------------------------------------------
5. Check Box if Disclosure of Legal Proceedings is Required Pursuant to
Items 2(e) or 2(f) [_]
- -------------------------------------------------------------------------------
6. Citizenship or Place of Organization
Indiana
- -------------------------------------------------------------------------------
7. Aggregate Amount Beneficially Owned by Each Reporting Person
None
- -------------------------------------------------------------------------------
8. Check Box if the Aggregate Amount in Row (7) Excludes
Certain Shares [_]
- -------------------------------------------------------------------------------
9. Percent of Class Represented by Amount in Row (7)
Not applicable
- -------------------------------------------------------------------------------
10. Type of Reporting Person
CO
- -------------------------------------------------------------------------------
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SCHEDULE 14D-1
- --------------------------------------------------------------------------------
CUSIP NO. 349841304 14D-1 PAGE 3 OF 9 PAGES
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
1. Name of Reporting Person
S.S. or I.R.S. Identification Nos. of Above Person
Marriott International, Inc.
- --------------------------------------------------------------------------------
2. Check the Appropriate Box if a Member of a Group (a) [_]
(b) [X]
- --------------------------------------------------------------------------------
3. SEC Use Only
- --------------------------------------------------------------------------------
4. Sources of Funds
WC, BK
- --------------------------------------------------------------------------------
5. Check Box if Disclosure of Legal Proceedings is Required Pursuant to
Items 2(e) or 2(f) [_]
- --------------------------------------------------------------------------------
6. Citizenship or Place of Organization
Delaware
- --------------------------------------------------------------------------------
7. Aggregate Amount Beneficially Owned by Each Reporting Person
None
- --------------------------------------------------------------------------------
8. Check Box if the Aggregate Amount in Row (7) Excludes Certain Shares [_]
- --------------------------------------------------------------------------------
9. Percent of Class Represented by Amount in Row (7)
Not applicable
- --------------------------------------------------------------------------------
10. Type of Reporting Person
CO, HC
- --------------------------------------------------------------------------------
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ITEM 1. SECURITY AND SUBJECT COMPANY.
(a) The name of the subject company is Forum Group, Inc., an Indiana
corporation (the "Subject Company"). The address of the Subject Company's
principal executive offices is 11320 Random Hills Road, Suite 400, Fairfax, VA
22030.
(b) This Statement on Schedule 14D-1 relates to the offer by FG Acquisition
Corp. (the "Purchaser"), an Indiana corporation and a wholly owned indirect
subsidiary of Marriott International, Inc. ("Parent"), a Delaware corporation,
to purchase all outstanding shares of common stock, without par value (the
"Common Stock"), of the Subject Company upon the terms and subject to the
conditions set forth in the Offer to Purchase, dated February 23, 1996, and in
the related Letter of Transmittal (which together constitute the "Offer"), at
a purchase price of $13.00 per share, net to the seller in cash. According to
the Subject Company, as of February 15, 1996, 22,539,831 Shares of the Common
Stock were outstanding, 700,144 Shares were issuable pursuant to currently
exercisable warrants, stock options exercisable into 230,500 Shares had vested
and 6,000 Shares were issuable under certain circumstances under contracts and
obligations of the Subject Company. The information set forth in the
Introduction and Section 1 ("Terms of the Offer") of the Offer to Purchase
annexed hereto as Exhibit (a)(1) is incorporated herein by reference.
(c) The information set forth in Section 6 ("Price Range of Shares;
Dividends") of the Offer to Purchase annexed hereto as Exhibit (a)(1) is
incorporated herein by reference.
ITEM 2. IDENTITY AND BACKGROUND.
(a)-(d), (g) This Statement is being filed by the Purchaser and Parent. The
information set forth in Section 8 ("Certain Information Concerning the
Purchaser and Parent") of the Offer to Purchase annexed hereto as Exhibit
(a)(1) and Schedule I thereto is incorporated herein by reference.
(e) and (f) During the last five years, neither the Purchaser, Parent, nor
any persons controlling the Purchaser or Parent, nor, to the best knowledge of
the Purchaser or Parent, any of the persons listed on Schedule I to the Offer
to Purchase, (i) has been convicted in a criminal proceeding (excluding
traffic violations and similar misdemeanors) or (ii) was a party to a civil
proceeding of a judicial or administrative body of competent jurisdiction as a
result of which such person was or is subject to a judgment, decree or final
order enjoining future violations of, or prohibiting activities subject to,
Federal or State securities laws or finding any violation of such laws.
ITEM 3. PAST CONTACTS, TRANSACTIONS OR NEGOTIATIONS WITH THE SUBJECT COMPANY.
(a)-(b) The information set forth in the Introduction, Section 8 ("Certain
Information Concerning the Purchaser and Parent"), Section 10 ("Background of
the Offer; the Merger Agreement; the Shareholder Agreements") and Section 11
("Purpose of the Offer and the Merger; Plans for the Company") of the Offer to
Purchase annexed hereto as Exhibit (a)(1) is incorporated herein by reference.
ITEM 4. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION.
(a)-(c) The information set forth in Section 9 ("Source and Amounts of
Funds") of the Offer to Purchase annexed hereto as Exhibit (a)(1) is
incorporated herein by reference.
ITEM 5. PURPOSE OF THE TENDER OFFER AND PLANS OR PROPOSALS OF THE BIDDER.
(a)-(e) The information set forth in the Introduction, Section 10
("Background of the Offer; the Merger Agreement; the Shareholder Agreements"),
Section 11 ("Purpose of the Offer and the Merger; Plans for the Company") and
Section 13 ("Dividends and Distributions") of the Offer to Purchase annexed
hereto as Exhibit (a)(1) is incorporated herein by reference.
4
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(f)-(g) The information set forth in Section 12 ("Effect on the Market for
the Shares; Exchange Act Registration; Margin Regulations") of the Offer to
Purchase annexed hereto as Exhibit (a)(1) is incorporated herein by reference.
ITEM 6. INTEREST IN SECURITIES OF SUBJECT COMPANY.
(a)-(b) The information set forth in Section 8 ("Certain Information
Concerning the Purchaser and Parent") of the Offer to Purchase annexed hereto
as Exhibit (a)(1) is incorporated herein by reference.
ITEM 7. CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS OR RELATIONSHIPS WITH RESPECT
TO THE SUBJECT COMPANY'S SECURITIES.
The information set forth in the Introduction, Section 8 ("Certain
Information Concerning the Purchaser and Parent"), Section 10 ("Background of
the Offer; the Merger Agreement; the Shareholder Agreements") and Section 11
("Purpose of the Offer and the Merger; Plans for the Company") of the Offer to
Purchase annexed hereto as Exhibit (a)(1) is incorporated herein by reference.
ITEM 8. PERSONS RETAINED, EMPLOYED OR TO BE COMPENSATED.
The information set forth in Section 17 ("Fees and Expenses") of the Offer to
Purchase annexed hereto as Exhibit (a)(1) is incorporated herein by reference.
ITEM 9. FINANCIAL STATEMENTS OF CERTAIN BIDDERS.
The information set forth in (i) Section 8 ("Certain Information Concerning
the Purchaser and Parent") of the Offer to Purchase annexed hereto as Exhibit
(a)(1), (ii) 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") (Item 8. Financial Statements and Supplementary Data, pages
20-40) and (iii) Parent's Quarterly Report on Form 10-Q for the quarter ended
September 8, 1995 (the "Parent 10-Q") (Item 1. Financial Statements, pages 3-
9), is incorporated herein by reference.
ITEM 10. ADDITIONAL INFORMATION.
(a) The information set forth in Section 10 ("Background of the Offer; the
Merger Agreement; the Shareholder Agreements") of the Offer to Purchase annexed
hereto as Exhibit (a)(1) is incorporated herein by reference.
(b)-(c) The information set forth in the Introduction, Section 1 ("Terms of
the Offer"), Section 10 ("Background of the Offer; the Merger Agreement; the
Shareholder Agreements"), Section 12 ("Effect on the Market for the Shares;
Exchange Act Registration; Margin Regulations"), Section 16 ("Certain Legal
Matters; Regulatory Approvals") and Section 18 ("Miscellaneous") of the Offer
to Purchase annexed hereto as Exhibit (a)(1) is incorporated herein by
reference.
(d) The information set forth in Section 12 ("Effect on the Market for the
Shares; Exchange Act Registration; Margin Regulations") and Section 16
("Certain Legal Matters; Regulatory Approvals") of the Offer to Purchase
annexed hereto as Exhibit (a)(1) is incorporated herein by reference.
(e) The information set forth in Section 16 ("Certain Legal Matters;
Regulatory Approvals") of the Offer to Purchase annexed hereto as Exhibit
(a)(1) is incorporated herein by reference.
(f) The information set forth in the Offer to Purchase, annexed hereto as
Exhibit (a)(1), and the Letter of Transmittal, annexed hereto as Exhibit
(a)(2), is incorporated herein by reference.
5
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ITEM 11. MATERIAL TO BE FILED AS EXHIBITS.
(a)(1) Offer to Purchase, dated February 23, 1996.
(2) Letter of Transmittal.
(3) Guidelines for Certification of Taxpayer Identification Number on
Substitute Form W-9
(4) Notice of Guaranteed Delivery.
(5) Letter to Brokers, Dealers, Commercial Banks, Trust Companies and
Other Nominees.
(6) Letter to Clients for use by Brokers, Dealers, Commercial Banks,
Trust Companies and Other Nominees.
(7) Text of Press Release dated February 16, 1996 is incorporated herein
by reference to Exhibit 99(1) to Parent's Current Report on Form 8-K
filed with the Commission on February 16, 1996.
(8) Summary Advertisement dated February 23, 1996.
(b)(1) Credit Agreement dated as of June 9, 1995 by and among Marriott
International, Inc., Citibank, N.A., as Administrative Agent and
certain financial institutions 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.
(c)(1) Agreement and Plan of Merger, dated as of February 15, 1996, by and
among Forum Group, Inc., Marriott International, Inc. and FG
Acquisition Corp.
(2) Agreement and Irrevocable Proxy dated as of February 15, 1996, by and
among Marriott International, Inc., FG Acquisition Corp., Forum
Holdings, L.P. and Forum Group, Inc.
(3) Agreement and Irrevocable Proxy dated as of February 15, 1996, by and
among Marriott International, Inc., FG Acquisition Corp., Apollo FG
Partners, L.P. and Forum Group, Inc.
(4) Agreement dated as of February 15, 1996, by and among Marriott
International, Inc., FG Acquisition Corp. and Forum/Classic, L.P.
(5) Irrevocable Proxy dated as of February 20, 1996, by Apollo FG
Partners, L.P.
(6) Irrevocable Proxy dated as of February 20, 1996, by Forum Holdings,
L.P.
(d) Not applicable
(e) Not applicable
(f) None
6
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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.
February 23, 1996
FG ACQUISITION CORP.
/s/ WILLIAM J. SHAW
By: _________________________________
Name: William J. Shaw
Title: President
7
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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.
February 23, 1996
MARRIOTT INTERNATIONAL, INC.
/s/ WILLIAM J. SHAW
By: _________________________________
Name: William J. Shaw
Title: Executive Vice President
8
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14D-1 EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT DESCRIPTION
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<C> <S>
(a) (1) Offer to Purchase, dated February 23, 1996.
(2) Letter of Transmittal.
(3) Guidelines for Certification of Taxpayer Identification Number on
Substitute Form W-9
(4) Notice of Guaranteed Delivery.
(5) Letter to Brokers, Dealers, Commercial Banks, Trust Companies and
Other Nominees.
(6) Letter to Clients for use by Brokers, Dealers, Commercial Banks, Trust
Companies and Other Nominees.
(7) Text of Press Release dated February 16, 1996 is incorporated herein
by reference to Exhibit 99(1) to Parent's Current Report on Form 8-K
filed with the Commission on February 16, 1996.
(8) Summary Advertisement dated February 23, 1996.
(b) (1) Credit Agreement dated as of June 9, 1995 by and among Marriott
International, Inc., Citibank, N.A., as Administrative Agent and
certain financial institutions is incorporated by reference to Exhibit
10.1 to Parent's Quarterly Report on Form 10-Q for the quarter ended
June 16, 1995.
(c) (1) Agreement and Plan of Merger, dated as of February 15, 1996, by and
among Forum Group, Inc., Marriott International, Inc. and FG
Acquisition Corp.
(2) Agreement and Irrevocable Proxy dated as of February 15, 1996, by and
among Marriott International, Inc., FG Acquisition Corp., Forum
Holdings, L.P. and Forum Group, Inc.
(3) Agreement and Irrevocable Proxy dated as of February 15, 1996, by and
among Marriott International, Inc., FG Acquisition Corp., Apollo FG
Partners, L.P. and Forum Group, Inc.
(4) Agreement dated as of February 15, 1996, by and among Marriott
International, Inc., FG Acquisition Corp. and Forum/Classic, L.P.
(5) Irrevocable Proxy dated as of February 20, 1996, by Apollo FG
Partners, L.P.
(6) Irrevocable Proxy dated as of February 20, 1996, by Forum Holdings,
L.P.
(d) Not applicable
(e) Not applicable
(f)None
</TABLE>
9
<PAGE>
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
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<C> <S> <C>
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
<PAGE>
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
<PAGE>
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.
12
<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
13
<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
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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
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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
31
<PAGE>
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
32
<PAGE>
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
<PAGE>
LETTER OF TRANSMITTAL
TO TENDER SHARES OF COMMON STOCK
OF
FORUM GROUP, INC.
PURSUANT TO THE OFFER TO PURCHASE
DATED FEBRUARY 23, 1996
OF
FG ACQUISITION CORP.
A WHOLLY OWNED INDIRECT SUBSIDIARY OF
MARRIOTT INTERNATIONAL, INC.
THE OFFER AND WITHDRAWAL RIGHTS WILL
EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY TIME, ON THURSDAY,
MARCH 21, 1996, UNLESS THE OFFER IS EXTENDED.
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 DEPOSITARY AT ONE
OF ITS ADDRESSES SET FORTH BELOW.
THE DEPOSITARY FOR THE OFFER IS:
FIRST CHICAGO TRUST COMPANY OF NEW YORK
By Mail: By Hand or Overnight Courier:
P.O. Box 2559 14 Wall Street
Suite 4660-FGI 8th Floor, Suite 4680-FGI
Jersey City, New Jersey 07303-2559 New York, New York 10005
DELIVERY OF THIS LETTER OF TRANSMITTAL TO AN ADDRESS OTHER THAN AS SET FORTH
ABOVE DOES NOT CONSTITUTE A VALID DELIVERY.
THE INSTRUCTIONS ACCOMPANYING THIS LETTER OF TRANSMITTAL SHOULD BE READ
CAREFULLY BEFORE THIS LETTER OF TRANSMITTAL IS COMPLETED.
This Letter of Transmittal is to be completed by shareholders either if
certificates are to be forwarded herewith or if delivery is to be made by
book-entry transfer to the Depositary's account at the Depository Trust
Company ("DTC"), the Midwest Securities Trust Company ("MSTC") or the
Philadelphia Depository Trust Company ("PDTC") (each a "Book-Entry Transfer
Facility" and collectively, the "Book-Entry Transfer Facilities") pursuant to
the procedures set forth in Section 3 of the Offer to Purchase (as defined
below).
Shareholders whose certificates evidencing Shares ("Share Certificates") are
not immediately available or who cannot deliver their Share Certificates and
all other documents required hereby to the Depositary prior to the Expiration
Date (as defined in Section 1 of the Offer to Purchase) or who cannot comply
with the book-entry transfer procedures on a timely basis must tender their
Shares (as defined below) according to the guaranteed delivery procedure set
forth in Section 3 of the Offer to Purchase. See Instruction 2. DELIVERY OF
DOCUMENTS TO A BOOK-ENTRY TRANSFER FACILITY DOES NOT CONSTITUTE DELIVERY TO
THE DEPOSITARY.
<PAGE>
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------
DESCRIPTION OF SHARES TENDERED
- ---------------------------------------------------------------------------------------------------------------------
NAME(S) AND ADDRESS(ES) OF REGISTERED HOLDER(S)
(PLEASE FILL IN, IF BLANK, EXACTLY AS NAME(S) APPEAR(S) ON SHARE CERTIFICATE(S) AND SHARE(S) TENDERED
SHARE CERTIFICATE(S) AND SHARE(S) TENDERED) (ATTACH ADDITIONAL LIST IF NECESSARY)
- ---------------------------------------------------------------------------------------------------------------------
TOTAL NUMBER
OF SHARES
REPRESENTED NUMBER OF
SHARE CERTIFICATE BY SHARE SHARES
NUMBER(S) CERTIFICATE(S)* TENDERED**
<S> <C> <C> <C>
------------------------------------------------------
------------------------------------------------------
------------------------------------------------------
------------------------------------------------------
------------------------------------------------------
------------------------------------------------------
TOTAL SHARES:
- ---------------------------------------------------------------------------------------------------------------------
</TABLE>
* Need not be completed by shareholders tendering by book-entry transfer.
** Unless otherwise indicated, it will be assumed that all Shares evidenced by
each Share Certificate delivered to the Depositary are being tendered
hereby. See Instruction 4.
[_] CHECK HERE IF TENDERED SHARES ARE BEING DELIVERED BY BOOK-ENTRY TRANSFER
MADE TO THE ACCOUNT MAINTAINED BY THE DEPOSITARY WITH ONE OF THE BOOK-ENTRY
TRANSFER FACILITIES AND COMPLETE THE FOLLOWING:
Name of Tendering Institution _____________________________________________
Check Box of Book-Entry Transfer Facility (check one):
[_] DTC [_] MSTC [_] PDTC
Account Number ____________________________________________________________
Transaction Code Number ___________________________________________________
[_] CHECK HERE IF TENDERED SHARES ARE BEING DELIVERED PURSUANT TO A NOTICE OF
GUARANTEED DELIVERY SENT TO THE DEPOSITARY PRIOR TO THE DATE HEREOF AND
COMPLETE THE FOLLOWING:
Name(s) of Registered Owner(s) ____________________________________________
Window Ticket Number (if any) _____________________________________________
Date of Execution of Notice of Guaranteed Delivery ________________________
Name of Institution that Guaranteed Delivery ______________________________
Check Box of Book-Entry Transfer Facility if Delivered by Book-Entry
Transfer (check one):
[_] DTC [_] MSTC [_] PDTC
Account Number (if delivered by Book-Entry Transfer) ______________________
Transaction Code Number ___________________________________________________
BOXES ABOVE FOR USE BY ELIGIBLE INSTITUTIONS ONLY
<PAGE>
NOTE: SIGNATURES MUST BE PROVIDED BELOW
PLEASE READ THE ACCOMPANYING INSTRUCTIONS CAREFULLY
Ladies and Gentlemen:
The undersigned hereby tenders to FG Acquisition Corp. (the "Purchaser"), an
Indiana corporation and a wholly owned indirect subsidiary of Marriott
International, Inc., a Delaware corporation ("Parent"), the above-described
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, without interest thereon, upon the terms and subject to the
conditions set forth in the Offer to Purchase, dated February 23, 1996 (the
"Offer to Purchase"), receipt of which is hereby acknowledged, and in this
Letter of Transmittal (which, together with the Offer to Purchase, constitutes
the "Offer"). The undersigned understands that the Purchaser reserves the
right to transfer or assign, in whole or in part from time to time or to
Parent or one or more direct or indirect wholly owned subsidiaries of Parent,
the right to purchase Shares tendered pursuant to the Offer.
Subject to and effective upon acceptance for payment of the Shares tendered
herewith in accordance with the terms and subject to the conditions of the
Offer, the undersigned hereby sells, assigns and transfers to, or upon the
order of, the Purchaser all right, title and interest in and to all of the
Shares that are being tendered hereby and all other Shares or other securities
or property issued or issuable in respect thereof on or after February 15,
1996 (such other Shares, securities or property other than the Shares being
referred to herein as the "Other Securities") and irrevocably appoints the
Depositary the true and lawful agent and attorney-in-fact of the undersigned
with respect to such Shares and all Other Securities with full power of
substitution (such power of attorney being deemed to be an irrevocable power
coupled with an interest), to (a) deliver Share Certificates evidencing such
Shares and all Other Securities, or transfer ownership of such Shares and all
Other Securities on the account books maintained by any of the Book-Entry
Transfer Facilities, together, in either case, with all accompanying evidences
of transfer and authenticity, to or upon the order of the Purchaser, upon
receipt by the Depositary, as the undersigned's agent, of the purchase price
(adjusted, if appropriate, as provided in the Offer to Purchase), (b) present
such Shares and all Other Securities for transfer on the books of the Company,
and (c) receive all benefits and otherwise exercise all rights of beneficial
ownership of such Shares and all Other Securities, all in accordance with the
terms of the Offer.
The undersigned hereby irrevocably appoints Parent, William J. Shaw and Paul
E. Johnson, Jr., and each of them or any other designees of the Purchaser, the
attorneys and proxies of the undersigned, each with full power of
substitution, to exercise such voting and other rights as each such attorney
and proxy or his (or her) substitute shall, in his (or her) sole discretion,
deem proper, and otherwise act (including pursuant to written consent) with
respect to all of the Shares tendered hereby which have been accepted for
payment by the Purchaser prior to the time of such vote or action and any and
all Other Securities issued or issuable in respect thereof, which the
undersigned is entitled to vote at any meeting of shareholders of the Company
(whether annual or special and whether or not an adjourned meeting), or
written consent in lieu of such meeting, or otherwise. This proxy and power of
attorney is coupled with an interest in the Shares tendered hereby and is
irrevocable and is granted in consideration of, and is effective upon, the
acceptance for payment of such Shares by the Purchaser in accordance with the
terms of the Offer. Such acceptance for payment shall revoke all prior proxies
granted by the undersigned with respect to such Shares (and all Shares and
other securities issued in Other Securities in respect of such Shares), and no
subsequent proxy or power of attorney shall be given (and if given or
executed, shall be deemed not to be effective) with respect thereto by the
undersigned. 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).
The undersigned hereby represents and warrants that the undersigned has full
power and authority to tender, sell, assign and transfer the Shares tendered
hereby and all Other Securities, and that when such Shares are
<PAGE>
accepted for payment by the Purchaser, the Purchaser will acquire good,
marketable and unencumbered title thereto, free and clear of all liens,
restrictions, charges and encumbrances, and that none of such Shares and Other
Securities will be subject to any adverse claim. The undersigned, upon
request, shall execute and deliver any signature guarantees or additional
documents deemed by the Depositary or the Purchaser to be necessary or
desirable to complete the sale, assignment and transfer of the Shares tendered
hereby and all Other Securities. In addition, the undersigned shall promptly
remit and transfer to the Depositary for the account of the Purchaser all
Other Securities in respect of the Shares tendered hereby, accompanied by
appropriate documentation of transfer, and pending such remittance or
appropriate assurance thereof, the Purchaser shall be entitled to all rights
and privileges as owner of such Other Securities and may withhold the entire
purchase price or deduct from the purchase price the amount or value thereof,
as determined by the Purchaser in its sole discretion.
All authority herein conferred or agreed to be conferred shall survive the
death or incapacity of the undersigned, and any obligation of the undersigned
hereunder shall be binding upon the successors, assigns, heirs, executors,
administrators and legal representatives of the undersigned. Except as stated
in the Offer to Purchase, this tender is irrevocable.
The undersigned understands that tenders of Shares pursuant to any one of
the procedures described in Section 3 of the Offer to Purchase and in the
instructions hereto will constitute a binding agreement between the
undersigned and the Purchaser upon the terms and subject to the conditions of
the Offer. The undersigned recognizes that under certain circumstances set
forth in the Offer to Purchase, the Purchaser may not be required to accept
for payment any of the Shares tendered hereby.
Unless otherwise indicated herein under "Special Payment Instructions,"
please issue the check for the purchase price and/or return any Share
Certificates evidencing Shares not tendered or not accepted for payment in the
name(s) of the registered holder(s) appearing under "Description of Shares
Tendered." Similarly, unless otherwise indicated under "Special Delivery
Instructions," please mail the check for the purchase price and/or return any
Share Certificates evidencing Shares not tendered or accepted for payment (and
accompanying documents, as appropriate) to the address(es) of the registered
holder(s) appearing under "Description of Shares Tendered." In the event that
both the Special Delivery Instructions and the Special Payment Instructions
are completed, please issue the check for the purchase price and/or return any
Share Certificates evidencing Shares not purchased (together with accompanying
documents as appropriate) in the name(s) of, and deliver said check and/or
return such Share Certificates to, the person or persons so indicated.
Shareholders tendering Shares by book-entry transfer may request that any
Shares not accepted for payment be returned by crediting such account
maintained at DTC, MSTC or PDTC as such shareholder may designate by making an
appropriate entry under "Special Payment Instructions." The undersigned
recognizes that the Purchaser has no obligation pursuant to the Special
Payment Instructions to transfer any Shares from the name of the registered
holder(s) thereof if the Purchaser does not accept for payment any of the
Shares so tendered.
<PAGE>
- ------------------------------------ ------------------------------------
SPECIAL PAYMENT INSTRUCTIONS SPECIAL DELIVERY INSTRUCTIONS
(SEE INSTRUCTIONS 1, 5, 6 AND 7) (SEE INSTRUCTIONS 5 AND 7)
To be completed ONLY if the To be completed ONLY if the
check for the purchase price of check for the purchase price of
Shares purchased or Share Cer- Shares purchased or Share Cer-
tificates evidencing Shares not tificates evidencing Shares not
tendered or not purchased are to tendered or not purchased are to
be issued in the name of someone be mailed to someone other than
other than the undersigned. the undersigned, or to the un-
dersigned at an address other
Issue [_] Check and/or than that shown under "Descrip-
[_] Certificate(s) to: tion of Shares Tendered."
Name ____________________________ Mail [_] Check and/or
[_] Certificates to:
_________________________________
Name_____________________________
_________________________________
(PLEASE PRINT) _________________________________
Address _________________________ _________________________________
(PLEASE PRINT)
_________________________________
(INCLUDE ZIP CODE) Address _________________________
_________________________________ _________________________________
(TAXPAYER IDENTIFICATION OR (INCLUDE ZIP CODE)
SOCIAL SECURITY NO.)
(SEE SUBSTITUTE FORM W-9)
- ------------------------------------ ------------------------------------
<PAGE>
- --------------------------------------------------------------------------------
SHAREHOLDERS SIGN HERE
(ALSO COMPLETE SUBSTITUTE FORM W-9)
___________________________________________________________________________
SIGNATURE(S) OF SHAREHOLDER(S)
___________________________________________________________________________
Dated __________________ , 1996
(MUST BE SIGNED BY REGISTERED HOLDER(S) EXACTLY AS NAME(S) APPEAR(S) ON
SHARE CERTIFICATE(S) OR ON A SECURITY POSITION LISTING OR BY PERSON(S)
AUTHORIZED TO BECOME REGISTERED HOLDER(S) BY CERTIFICATES AND DOCUMENTS
TRANSMITTED HEREWITH. IF SIGNATURE IS BY TRUSTEE, EXECUTOR, ADMINISTRATOR,
GUARDIAN, ATTORNEY-IN-FACT, AGENT, OFFICER OF A CORPORATION OR ANY OTHER
PERSON ACTING IN A FIDUCIARY OR REPRESENTATIVE CAPACITY, PLEASE PROVIDE
THE FOLLOWING INFORMATION. SEE INSTRUCTION 5.)
Name(s) ___________________________________________________________________
___________________________________________________________________________
___________________________________________________________________________
(PLEASE PRINT OR TYPE)
Capacity (full title) _____________________________________________________
Address ___________________________________________________________________
___________________________________________________________________________
(INCLUDE ZIP CODE)
Area Code and Telephone No.
(home) ____________________________________________________________________
(business) ________________________________________________________________
Tax Identification or Social Security Number: _____________________________
(COMPLETE SUBSTITUTE FORM W-9)
GUARANTEE OF SIGNATURE(S)
(IF REQUIRED--SEE INSTRUCTIONS 1 AND 5)
Authorized Signature ______________________________________________________
Name ______________________________________________________________________
(PLEASE PRINT OR TYPE)
Name of Firm ______________________________________________________________
Address ___________________________________________________________________
___________________________________________________________________________
(INCLUDE ZIP CODE)
Area Code and Telephone Number ____________________________________________
Dated __________________ , 1996
- --------------------------------------------------------------------------------
<PAGE>
INSTRUCTIONS
FORMING PART OF THE TERMS AND CONDITIOINS OF THE OFFER
1. GUARANTEE OF SIGNATURES. All signatures on this Letter of Transmittal
must be guaranteed by a recognized member of a Medallion Signature Guarantee
Program or by any other "eligible guarantor institution," as such term is
defined in Rule 17Ad-15 under the Securities Exchange Act of 1934, as amended
(each of the foregoing being referred to as an "Eligible Institution"), unless
(i) this Letter of Transmittal is signed by the registered holder(s) of Shares
(which term, for the purposes of this document, shall include any participant
in a Book-Entry Transfer Facility whose name appears on a security position
listing as the owner of Shares) tendered hereby and such holder(s) has (have)
not completed either the box entitled "Special Delivery Instructions" or the
box entitled "Special Payment Instructions" on this Letter of Transmittal or
(ii) such shares are tendered for the account of an Eligible Institution. See
Instruction 5.
2. DELIVERY OF LETTER OF TRANSMITTAL AND CERTIFICATES; GUARANTEED DELIVERY
PROCEDURES. This Letter of Transmittal is to be completed by shareholders
either if Share Certificates are to be forwarded herewith or if a tender of
Shares is to be made pursuant to the procedures for delivery by book-entry
transfer set forth in Section 3 of the Offer to Purchase. Share Certificates
evidencing all physically tendered Shares, or confirmation ("Book-Entry
Confirmation") of any book-entry transfer into the Depositary's account at a
Book-Entry Transfer Facility of Shares delivered by book-entry transfer as
well as a properly completed and duly executed Letter of Transmittal, must be
received by the Depositary, at one of the addresses set forth herein prior to
the Expiration Date (as defined in Section 1 of the Offer to Purchase). If
Share Certificates are forwarded to the Depositary in multiple deliveries, a
properly completed and duly executed Letter of Transmittal must accompany each
such delivery. Shareholders whose Share Certificates are not immediately
available, who cannot deliver their Share Certificates and all other required
documents to the Depositary prior to the Expiration Date or who cannot comply
with the book-entry transfer procedures on a timely basis may tender their
Shares by properly completing and duly executing a Notice of Guaranteed
Delivery pursuant to the guaranteed delivery procedure set forth in Section 3
of the Offer to Purchase. Pursuant to such procedure, (i) such tender must be
made by or through an Eligible Institution, (ii) a properly completed and duly
executed Notice of Guaranteed Delivery, substantially in the form provided by
the Purchaser, must be received by the Depositary (as provided in (iii) below)
prior to the Expiration Date and (iii) the Share Certificates evidencing all
physically tendered Shares (or Book-Entry Confirmation with respect to such
Shares), as well as a properly completed and duly executed Letter of
Transmittal (or a facsimile thereof) with any required signature guarantees
and any other documents required by this Letter of Transmittal, must be
received by the Depositary within three Nasdaq Small Cap Market trading days
after the date of execution of such Notice of Guaranteed Delivery, all as
provided in Section 3 of the Offer to Purchase.
THE METHOD OF DELIVERY OF THIS LETTER OF TRANSMITTAL, SHARE CERTIFICATES AND
ALL OTHER REQUIRED DOCUMENTS, INCLUDING DELIVERY THROUGH ANY BOOK-ENTRY
TRANSFER FACILITY, IS AT THE OPTION AND RISK OF THE TENDERING SHAREHOLDER AND
THE DELIVERY WILL BE DEEMED MADE ONLY WHEN ACTUALLY RECEIVED BY THE
DEPOSITARY. IF DELIVERY IS BY MAIL, IT IS RECOMMENDED THAT SUCH CERTIFICATES
AND DOCUMENTS BE SENT BY REGISTERED MAIL, PROPERLY INSURED, WITH RETURN
RECEIPT REQUESTED. IN ALL CASES, SUFFICIENT TIME SHOULD BE ALLOWED TO INSURE
TIMELY DELIVERY.
No alternative, conditional or contingent tenders will be accepted and no
fractional Shares will be purchased. All tendering shareholders, by execution
of this Letter of Transmittal (or facsimile thereof), waive any right to
receive any notice of the acceptance of their Shares for payment.
3. INADEQUATE SPACE. If the space provided herein under "Description of
Shares Tendered" is inadequate, the certificate numbers and/or the number of
Shares tendered should be listed on a separate signed schedule and attached
hereto.
<PAGE>
4. PARTIAL TENDERS. (Not applicable to shareholders who tender by book-entry
transfer.) If fewer than all the Shares evidenced by any Share Certificate
submitted are to be tendered, fill in the number of Shares which are to be
tendered in the box entitled "Number of Shares Tendered." In such case, new
Share Certificate(s) evidencing the remainder of the Shares that were
evidenced by the old Share Certificate(s) will be sent to the registered
holder, unless otherwise provided in the appropriate box on this Letter of
Transmittal, as soon as practicable after the Expiration Date. All Shares
represented by Share Certificates delivered to the Depositary will be deemed
to have been tendered unless otherwise indicated.
5. SIGNATURES ON LETTER OF TRANSMITTAL, STOCK POWERS AND ENDORSEMENTS. If
this Letter of Transmittal is signed by the registered holder(s) of the Shares
tendered hereby, the signature(s) must correspond exactly with the name(s) as
written on the face of the Share Certificate(s) without alteration,
enlargement or any change whatsoever. If any of the Shares tendered hereby are
held of record by two or more persons, all such persons must sign this Letter
of Transmittal.
If any tendered Shares are registered in different names on several Share
Certificates, it will be necessary to complete, sign and submit as many
separate Letters of Transmittal as there are different registrations of such
Shares.
If this Letter of Transmittal is signed by the registered holder(s) of the
Shares evidenced by Share Certificates listed and transmitted hereby, no
endorsements of Share Certificates or separate stock powers are required
unless payment is to be made to or Share Certificates evidencing Shares not
tendered or purchased are to be issued in the name of a person other than the
registered holder(s), in which case the Share Certificate(s) evidencing the
Shares tendered hereby must be endorsed or accompanied by appropriate stock
powers, in either case signed exactly as the name(s) of the registered
holder(s) appear(s) on such Share Certificate(s). Signatures on such
certificates and stock powers must be guaranteed by an Eligible Institution.
If this Letter of Transmittal is signed by a person other than the
registered holder(s) of the Shares tendered hereby, the Share Certificate(s)
evidencing the Shares tendered hereby must be endorsed or accompanied by
appropriate stock powers, in either case signed exactly as the name or names
of the registered holder or holders appear on the Share Certificate(s).
Signatures on such Share Certificate(s) or stock powers must be guaranteed by
an Eligible Institution.
If this Letter of Transmittal or any Share Certificates or stock power is
signed by a trustee, executor, administrator, guardian, attorney-in-fact,
agent, officer of a corporation or any person acting in a fiduciary or
representative capacity, such person should so indicate when signing, and
proper evidence satisfactory to the Purchaser of such person's authority so to
act must be submitted.
6. STOCK TRANSFER TAXES. Except as set forth in this Instruction 6, the
Purchaser will pay or cause to be paid any stock transfer taxes with respect
to the transfer and sale of Shares to it or its order pursuant to the Offer.
If, however, payment of the purchase price is to be made to, or if Share
Certificates evidencing Shares not tendered or purchased are to be registered
in the name of, any person other than the registered holder(s), or if Share
Certificates evidencing tendered shares are registered in the name of any
person other than the person(s) signing this letter of transmittal, the amount
of any stock transfer taxes (whether imposed on the registered holder(s) or
such other person) payable on account of the transfer to such person will be
deducted from the purchase price unless satisfactory evidence of the payment
of such taxes or exemption therefrom is submitted.
EXCEPT AS PROVIDED IN THIS INSTRUCTION 6, IT WILL NOT BE NECESSARY FOR
TRANSFER TAX STAMPS TO BE AFFIXED TO THE CERTIFICATE(S) LISTED IN THIS LETTER
OF TRANSMITTAL.
7. SPECIAL PAYMENT AND DELIVERY INSTRUCTIONS. If a check for the purchase
price of any Shares tendered hereby is to be issued, or Share Certificate(s)
evidencing Shares not tendered or not purchased are to be issued, in the name
of a person other than the person(s) signing this Letter of Transmittal or
<PAGE>
if such check or any such Share Certificate is to be sent and/or any Share
Certificates are to be returned to someone other than the signer above, or to
the signer above but at an address other than that shown in the box entitled
"Description of Shares Tendered" on the reverse hereof, the appropriate boxes
on this Letter of Transmittal should be completed. Shareholders tendering
Shares by book-entry transfer may request that Shares not purchased be
credited to such account maintained at any of the Book-Entry Transfer
Facilities as such shareholder may designate under "Special Delivery
Instructions". If no such instructions are given, any such Share not purchased
will be returned by crediting the account at the Book-Entry Transfer
Facilities designated above.
8. REQUEST FOR ASSISTANCE OR ADDITIONAL COPIES. Requests for assistance may
be directed to, or additional copies of the Offer to Purchase, this Letter of
Transmittal and the Notice of Guaranteed Delivery may be obtained from, the
Information Agent at the telephone numbers and address set forth below.
Shareholders may also contact their broker, dealer, commercial bank or trust
company.
9. WAIVER OF CONDITIONS. Except as otherwise provided in the Offer to
Purchase, the Purchaser reserves the right in its sole discretion to waive in
whole or in part at any time or from time to time any of the specified
conditions of the Offer or any defect or irregularity in tender with regard to
any Shares tendered.
10. SUBSTITUTE FORM W-9. The tendering shareholder is required to provide
the Depositary with a correct Taxpayer Identification Number ("TIN"),
generally the shareholder's social security or employer identification number,
on Substitute Form W-9, which is provided under "Important Tax Information"
below, and to certify, under penalties of perjury, whether he or she is
subject to backup withholding of federal income tax. If a tendering
shareholder is subject to backup withholding, he or she must cross out item
(2) of the Certification Box on Substitute Form W-9. Failure to provide the
information on Substitute Form W-9 may subject the tendering shareholder to
31% federal income tax withholding on the payment of the purchase price. If
the tendering shareholder has not been issued a TIN and has applied for a
number or intends to apply for a number in the near future, he or she should
write "Applied For" in the space provided for the TIN in Part I, sign and date
the Substitute Form W-9 and sign and date the Certificate of Awaiting Taxpayer
Identification Number. If "Applied For" is written in Part I and the
Depositary is not provided with a TIN within 60 days, the Depositary will
withhold 31% of payments for surrendered Shares thereafter until a TIN is
provided to the Depositary.
IMPORTANT: THIS LETTER OF TRANSMITTAL (OR A FACSIMILE HEREOF), PROPERLY
COMPLETED AND DULY EXECUTED, OR AN AGENT'S MESSAGE IN THE CASE OF A BOOK-ENTRY
DELIVERY, TOGETHER WITH CERTIFICATES (OR BOOK-ENTRY CONFIRMATION) AND ALL
OTHER REQUIRED DOCUMENTS OR A PROPERLY COMPLETED AND DULY EXECUTED NOTICE OF
GUARANTEED DELIVERY MUST BE RECEIVED BY THE DEPOSITARY ON OR PRIOR TO THE
EXPIRATION DATE (AS DEFINED IN THE OFFER TO PURCHASE).
<PAGE>
IMPORTANT TAX INFORMATION
Under federal tax law, a shareholder whose tendered Shares are accepted for
payment is required to provide the Depositary (as payor) with such
shareholder's correct TIN on Substitute Form W-9 below. If such shareholder is
an individual, the TIN is such shareholder's Social Security Number. If the
Depositary is not provided with the correct TIN or an adequate basis for
exemption, the shareholder may be subject to a $50 penalty imposed by the
Internal Revenue Service. In addition, payments that are made to such
shareholder with respect to Shares purchased pursuant to the Offer may be
subject to backup withholding in an amount equal to 31% of the gross proceeds
resulting from the Offer.
Certain shareholders (including, among others, all corporations and certain
foreign individuals) are not subject to these backup withholding and reporting
requirements. In order for a foreign individual to qualify as an exempt
recipient, that shareholder must submit an IRS Form W-8, signed under
penalties of perjury, attesting to that individual's exempt status. Such
statements can be obtained from the Depositary. See the enclosed Guidelines
for Certification of Taxpayer Identification Number on Substitute Form W-9 for
additional instructions.
If backup withholding applies, the Depositary is required to withhold 31% of
any payments made to the shareholder. Backup withholding is not an additional
tax. Rather, the tax liability of persons subject to backup withholding will
be reduced by the amount of tax withheld. If withholding results in an
overpayment of taxes, a refund may be obtained from the Internal Revenue
Service.
PURPOSE OF SUBSTITUTE FORM W-9
To prevent backup withholding on payments that are made to a shareholder
with respect to Shares purchased pursuant to the Offer, the shareholder is
required to notify the Depositary of his correct TIN by completing the
Substitute Form W-9 contained herein, certifying that the TIN provided on the
Substitute Form W-9 is correct (or that such shareholder is awaiting a TIN)
and that (1) the shareholder is exempt from backup withholding, (2) the
shareholder has not been notified by the Internal Revenue Service that he is
subject to backup withholding as a result of failure to report all interest or
dividends, or (3) the Internal Revenue Service has notified the shareholder
that he or she is no longer subject to backup withholding.
WHAT NUMBER TO GIVE THE DEPOSITARY
The shareholder is required to give the Depositary the social security
number or employer identification number of the record owner of the Shares. If
the Shares are in more than one name or are not in the name of the actual
owner, consult the enclosed Guidelines for Certification of Taxpayer
Identification Number on Substitute Form W-9 for additional guidance on which
number to report. If the tendering shareholder has not been issued a TIN and
has applied for a number or intends to apply for a number in the near future,
he or she should write "Applied For" in the space provided for the TIN in Part
I, sign and date the Substitute Form W-9 and sign and date the Certificate of
Awaiting Taxpayer Identification Number. If "Applied For" is written in Part I
and the Depositary is not provided with a TIN within 60 days, the Depositary
will withhold 31% of all payments of the purchase price until a TIN is
provided to the Depositary.
<PAGE>
PAYOR'S NAME: FIRST CHICAGO TRUST COMPANY OF NEW YORK
- --------------------------------------------------------------------------------
PART 1--PLEASE PROVIDE TIN _________________
SUBSTITUTE YOUR TIN IN THE BOX AT Social Security
FORM W-9 RIGHT AND CERTIFY BY Number or Employer
SIGNING AND DATING Identification
BELOW: Number
If Awaiting TIN write
DEPARTMENT OF THE TREASURY "Applied for"
INTERNAL REVENUE SERVICE
PAYOR'S REQUEST FOR TAXPAYER
IDENTIFICATION NUMBER (TIN)
----------------------------------------------------
NAME (PLEASE PRINT) PART II--For Payees
NOT subject to backup
-------------------------- withholding, see the
ADDRESS enclosed Guidelines
for Certification
-------------------------- of Taxpayer
CITY STATE ZIP CODE Identification Number
on Substitute Form W-9
and complete as
instructed therein.
----------------------------------------------------
CERTIFICATION--Under the penalties of perjury, I
certify that:
(1) The number shown on this form is my correct
taxpayer identification number (or I am
waiting for a number to be issued to me), and
(2) I am not subject to backup withholding
because either (a) I am exempt from backup
withholding, (b) I have not been notified by
the Internal Revenue Service ("IRS") that I
am subject to backup withholding as a result
of a failure to report all interest or
dividends, or (c) the IRS has notified me
that I am no longer subject to backup
withholding.
SIGNATURE ___________________ DATE _________, 1996
CERTIFICATION INSTRUCTIONS--You must cross out
item (2) above if you have been notified by the
IRS that you are subject to backup withholding
because of underreporting interest or dividends
on your tax return. However, if after being
notified by the IRS that you were subject to
backup withholding you received another
notification from the IRS that you are no longer
subject to backup withholding, do not cross out
item (2). (Also see instructions in the enclosed
Guidelines.)
- -------------------------------------------------------------------------------
NOTE: FAILURE TO COMPLETE AND RETURN THIS FORM MAY RESULT IN BACKUP
WITHHOLDING OF 31% OF ANY PAYMENTS MADE TO YOU PURSUANT TO THE OFFER.
PLEASE REVIEW THE ENCLOSED GUIDELINES FOR CERTIFICATION OF TAXPAYER
IDENTIFICATION NUMBER ON SUBSTITUTE FORM W-9 FOR ADDITIONAL DETAILS.
YOU MUST COMPLETE THE FOLLOWING CERTIFICATE IF YOU WROTE "APPLIED FOR"
IN PART I OF SUBSTITUTE FORM W-9.
- -------------------------------------------------------------------------------
CERTIFICATE OF AWAITING TAXPAYER IDENTIFICATION NUMBER
I certify under penalties of perjury that a taxpayer identification number
has not been issued to me and either (a) I have mailed or delivered an
application to receive a taxpayer identification number to the appropriate
Internal Revenue Service Center or Social Security Administration Officer,
or (b) I intend to mail or deliver an application in the near future. I
understand that if I do not provide a taxpayer identification number within
sixty (60) days, 31% of all reportable payments made to me thereafter will
be withheld until I provide a number.
SIGNATURE(S) _____________________________ DATE: , 1996
- -------------------------------------------------------------------------------
<PAGE>
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
<PAGE>
GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION NUMBER
ON SUBSTITUTE FORM W-9
SECTION REFERENCES ARE TO THE INTERNAL REVENUE CODE
Purpose of Form. -- A person who is required to file an information return
with the Internal Revenue Service ("IRS") must obtain your correct taxpayer
identification number ("TIN") to report income paid to you, real estate
transactions, mortgage interest you paid, the acquisition or abandonment of
secured property, or contributions you made to an IRA. Use Form W-9 to furnish
your correct TIN to the requester (the person asking you to furnish your TIN)
and, when applicable, (1) to certify that the TIN you are furnishing is
correct (or that you are waiting for a number to be issued), (2) to certify
that you are not subject to backup withholding, and (3) to claim exemption
from backup withholding if you are an exempt payee. Furnishing your correct
TIN and making the appropriate certifications will prevent certain payments
from being subject to backup withholding.
Note: If a requester gives you a form other than W-9 to request your TIN,
you must use the requester's form.
How To Obtain a TIN. -- If you do not have a TIN, apply for one immediately.
To apply, get Form SS-5, Application for a Social Security Card (for
individuals), from your local office of the Social Security Administration, or
Form SS-4, Application for Employer Identification Number (for businesses and
all other entities), from your local IRS office.
To complete Form W-9 if you do not have a TIN, write "Applied for" in the
space for the TIN in Part I, sign and date the form, and give it to the
requester. Generally, you will then have 60 days to obtain a TIN and furnish
it to the requester. If the requester does not receive your TIN within 60
days, backup withholding, if applicable, will begin and continue until you
furnish your TIN to the requester. For reportable interest or dividend
payments, the payor must exercise one of the following options concerning
backup withholding during this 60-day period. Under option (1), a payor must
backup withhold on any withdrawals you make from your account after 7 business
days after the requester receives this form back from you. Under option (2),
the payor must backup withhold on any reportable interest or dividend payments
made to your account, regardless of whether you make any withdrawals. The
backup withholding under option (2) must begin no later than 7 business days
after the requester receives this form back. Under option (2), the payor is
required to refund the amounts withheld if your certified TIN is received
within the 60-day period and you were not subject to backup withholding during
that period.
Note: Writing "Applied for" on the form means that you have already applied
for a TIN or that you intend to apply for one in the near future.
As soon as you receive your TIN, complete another Form W-9, include your
TIN, sign and date the form, and give it to the requester.
What Is Backup Withholding? -- persons making certain payments to you after
1992 are required to withhold and pay to the IRS 31% of such payments under
certain conditions. This is called "backup withholding." Payments that could
be subject to backup withholding include interest, dividends, broker and
barter exchange transactions, rents, royalties, nonemployee compensation, and
certain payments from fishing boat operators, but do not include real estate
transactions.
If you give the requester your correct TIN, make the appropriate
certifications, and report all your taxable interest and dividends on your tax
return, your payments will not be subject to backup withholding. Payments you
receive will be subject to backup withholding if:
1. You do not furnish your TIN to the requester, or
2. The IRS notifies the requester that you furnished an incorrect TIN, or
3. You are notified by the IRS that you are subject to backup withholding
because you failed to report all your interest and dividends on your tax
return (for reportable interest and dividends only), or
4. You do not certify to the requester that you are not subject to backup
withholding under 3 above (for reportable interest and dividend accounts
opened after 1983 only), or
1
<PAGE>
5. You do not certify your TIN. This applies only to reportable interest,
dividend, broker, or barter exchange accounts opened after 1983, or broker
accounts considered inactive in 1983.
Except as explained in 5 above, other reportable payments are subject to
backup withholding only if 1 or 2 above applies. Certain payees and payments
are exempt from backup withholding and information reporting. See Payees and
Payments Exempt From Backup Withholding, below, and Exempt Payees and Payments
under Specific Instructions, below, if you are an exempt payee.
Payees and Payments Exempt From Backup Withholding. -- The following is a
list of payees exempt from backup withholding and for which no information
reporting is required. For interest and dividends, all listed payees are
exempt except as listed in item (9). For broker transactions, payees listed in
items (1) through (13) and a person registered under the Investment Advisers
Act of 1940 who regularly acts as a broker are exempt. Payments subject to
reporting under sections 6041 and 6041A are generally exempt from backup
withholding only if made to payees described in items (1) through (7), except
a corporation that provides medical and health care services or bills and
collects payments for such services is not exempt from backup withholding or
information reporting. Only payees described in items (2) through (6) are
exempt from backup withholding for barter exchange transactions, patronage
dividends, and payments by certain fishing boat operators.
(1) A corporation.
(2) An organization exempt from tax under section 501(a), an IRA, or a
custodial account under section 403(b)(7).
(3) The United States or any of its agencies or instrumentalities.
(4) A state, the District of Columbia, a possession of the United States,
or any of their political subdivisions or instrumentalities.
(5) A foreign government or any of its political subdivisions, agencies, or
instrumentalities.
(6) An international organization or any of its agencies or
instrumentalities.
(7) A foreign central bank of issue.
(8) A dealer in securities or commodities required to register in the
United States or a possession of the United States.
(9) A futures commission merchant registered with the Commodity Futures
Trading Commission.
(10) A real estate investment trust.
(11) An entity registered at all times during the tax year under the
Investment Company Act of 1940.
(12) A common trust fund operated by a bank under section 584(a).
(13) A financial institution.
(14) A middleman known in the investment community as a nominee or listed
in the most recent publication of the American Society of Corporate
Secretaries, Inc., Nominee List.
(15) A trust exempt from tax under section 664 or described in section
4947.
Payments of dividend and patronage dividends generally not subject to backup
withholding include the following:
. Payments to nonresident aliens subject to withholding under section 1441.
. Payments to partnerships not engaged in a trade or business in the United
States and that have at least one nonresident partner.
. Payments of patronage dividends not paid in money.
. Payments made by certain foreign organizations.
Payments of interest generally not subject to backup withholding include the
following:
. Payments of interest on obligations issued by individuals.
2
<PAGE>
Note: You may be subject to backup withholding if this interest is $600 or
more and is paid in the course of the payor's trade or business and you have
not provided your correct TIN to the payor.
. Payments of tax-exempt interest (including exempt-interest dividends
under section 852).
. Payments described in section 6049(b)(5) to nonresident aliens.
. Payments on tax-free covenant bonds under section 1451.
. Payments made by certain foreign organizations.
. Mortgage interest paid by you.
Payments that are not subject to information reporting are also not subject
to backup withholding. For details, see sections 6041, 6041A(a), 6042, 6044,
6045, 6049, 6050A, and 6050N, and the regulations under those sections.
PENALTIES
Failure To Furnish TIN. -- If you fail to furnish your correct TIN to a
requester, you are subject to a penalty of $50 for each such failure unless
your failure is due to reasonable cause and not to willful neglect.
Civil Penalty for False Information With Respect to Withholding. -- If you
make a false statement with no reasonable basis that results in no backup
withholding, you are subject to a $500 penalty.
Criminal Penalty for Falsifying Information. -- Willfully falsifying
certifications or affirmations may subject you to criminal penalties including
fines and/or imprisonment.
Misuse of TINs. -- If the requester discloses or uses TINs in violation of
Federal law, the requester may be subject to civil and criminal penalties.
SPECIFIC INSTRUCTIONS
Name: -- If you are an individual, you must generally provide the name shown
on your social security card. However, if you have changed your last name, for
instance, due to marriage, without informing the Social Security
Administration of the name change, please enter your first name, the last name
shown on your social security card, and your new last name.
If you are a sole proprietor, you must furnish your individual name and
either your SSN or EIN. You may also enter your business name or "doing
business as" name on the business name line. Enter your name(s) as shown on
your social security card and/or as it was used to apply for your EIN on Form
SS-4.
SIGNING THE CERTIFICATION
1. Interest, Dividend, and Barter Exchange Accounts Opened Before 1984 and
Broker Accounts Considered Active During 1983. You are required to furnish
your correct TIN, but you are not required to sign the certification.
2. Interest, Dividend, Broker, and Barter Exchange Accounts Opened After
1983 and Broker Accounts Considered Inactive During 1983. You must sign the
certification or backup withholding will apply. If you are subject to backup
withholding and you are merely providing your correct TIN to the requester,
you must cross out item 2 in the certification before signing the form.
3. Real Estate Transactions. You must sign the certification. You may cross
out item 2 of the certification.
4. Other Payments. You are required to furnish your correct TIN, but you are
not required to sign the certification unless you have been notified of an
incorrect TIN. Other payments include payments made in the course of the
requester's trade or business for rents, royalties, goods (other than bills
for merchandise), medical and health care services, payments to a nonemployee
for services (including attorney and accounting fees), and payments to certain
fishing boat crew members.
3
<PAGE>
5. Mortgage Interest Paid by You, Acquisition or Abandonment of Secured
Property, or IRA Contributions. You are required to furnish your correct TIN,
but you are not required to sign the certification.
6. Exempt Payees and Payments. If you are exempt from backup withholding,
you should complete this form to avoid possible erroneous backup withholding.
Enter your correct TIN in Part I, write "EXEMPT" in the block in Part II, and
sign and date the form. If you are a nonresident alien or foreign entity not
subject to backup withholding, give the requester a complete Form W-8,
Certificate of Foreign Status.
7. TIN "Applied for." Follow the instructions under How To Obtain a TIN, on
page 1, and sign and date this form.
Signature: -- For a joint account, only the person whose TIN is shown in
Part I should sign.
Privacy Act Notice: -- Section 6109 requires you to furnish your correct TIN
to persons who must file information returns with the IRS to report interest,
dividends, and certain other income paid to you, mortgage interest you paid,
the acquisition or abandonment of secured property, or contributions you made
to an IRA. The IRS uses the numbers for identification purposes and to help
verify the accuracy of your tax return. You must provide your TIN whether or
not you are required to file a tax return. Payors must generally withhold 31%
of taxable interest, dividends, and certain other payments to a payee who does
not furnish a TIN to a payor. Certain penalties may also apply.
WHAT NAME AND NUMBER TO GIVE THE REQUESTER
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
FOR THIS TYPE OF ACCOUNT: GIVE NAME AND SSN OF:
- --------------------------------------------------------------------------------
<S> <C>
1. Individual The individual
2. Two or more individuals (joint The actual owner of the
account) account or, if combined
funds, the first individual on
the account (1)
3. Custodian account of a minor The minor (2)
(Uniform Gift to Minors Act)
4.a. The usual revocable savings trust The grantor-trustee (1)
(grantor is also trustee)
b. So-called trust account that is not a The actual owner (1)
legal or valid trust under state law
5. Sole proprietorship The owner (3)
- --------------------------------------------------------------------------------
<CAPTION>
- --------------------------------------------------------------------------------
FOR THIS TYPE OF ACCOUNT: GIVE NAME AND EIN OF:
- --------------------------------------------------------------------------------
<S> <C>
6. Sole proprietorship The owner (3)
7. A valid trust, estate, or pension trust Legal entity (4)
8. Corporate The corporation
9. Association, club, religious, The organization
charitable, educational, or other tax-
exempt organization
10. Partnership The partnership
11. A broker or registered nominee The broker or nominee
12. Account with the Department of The public entity
Agriculture in the name of a public
entity (such as a state or local
government, school district or
prison) that receives agriculture
program payments
- --------------------------------------------------------------------------------
</TABLE>
- -------
(1) List first and circle the name of the person whose number you furnish.
(2) Circle the minor's name and furnish the minor's SSN.
(3) Show your individual name. You may also enter your business name. You may
use your SSN or EIN.
(4) List first and circle the name of the legal trust, estate, or pension
trust. (Do not furnish the TIN of the personal representative or trustee
unless the legal entity itself is not designated in the account title).
Note: If no name is circled when there is more than one name, the number will
be considered to be that of the first name listed.
4
<PAGE>
NOTICE OF GUARANTEED DELIVERY
FOR
TENDER OF SHARES OF COMMON STOCK
OF
FORUM GROUP, INC.
This form, or a form substantially equivalent to this form, must be used to
accept the Offer (as defined below) if the certificates representing shares of
common stock, without par value, of Forum Group, Inc. (the "Shares") are not
immediately available or if the procedure for book-entry transfer cannot be
completed on a timely basis or if time will not permit all required documents
to reach the Depositary at or prior to the expiration of the Offer. Such form
may be delivered by hand or transmitted by telegram, facsimile transmission or
mail to the Depositary. See Section 3 of the Offer to Purchase.
The Depositary for the Offer is:
FIRST CHICAGO TRUST COMPANY OF NEW YORK
By Facsimile By Hand or By Overnight
By Mail: Transmission: Courier:
Tenders & Exchanges (201) 222-4720 Tenders & Exchanges
P.O. Box 2559--Suite 4660-- or 14 Wall Street, Suite
FGI (201) 222-4721 4680--FGI
Jersey City, New Jersey New York, New York 10005
07303-2559
Confirm Receipt of Notice of Guaranteed Delivery by Telephone:
(201) 222-4707
----------------
DELIVERY OF THIS NOTICE OF GUARANTEED DELIVERY TO AN ADDRESS OTHER THAN AS
SET FORTH ABOVE, OR TRANSMISSION OF INSTRUCTIONS VIA A FACSIMILE NUMBER OTHER
THAN AS LISTED ABOVE, WILL NOT CONSTITUTE A VALID DELIVERY.
This Notice of Guaranteed Delivery is not to be used to guarantee
signatures. If a signature on a Letter of Transmittal is required to be
guaranteed by an "Eligible Institution" under the instructions thereto, such
signature guarantee must appear in the applicable space provided in the
signature box on the Letter of Transmittal.
<PAGE>
Ladies and Gentlemen:
The undersigned hereby tenders to FG Acquisition Corp. (the "Purchaser"), an
Indiana corporation and a wholly owned indirect subsidiary of Marriott
International, Inc., a Delaware corporation, upon the terms and subject to the
conditions set forth in the Offer to Purchase, dated February 23, 1996 (the
"Offer to Purchase"), and the related Letter of Transmittal (which together
constitute the "Offer"), receipt of which is hereby acknowledged, the number
of Shares indicated below pursuant to the guaranteed delivery procedure set
forth in Section 3 of the Offer to Purchase.
- --------------------------------------- --------------------------------------
Number of Shares: _________________ Name(s) of Record Holder(s):
Share Certificate Numbers (if ___________________________________
available):
___________________________________
___________________________________ Please Type or Print
___________________________________ Address(es) _______________________
___________________________________
If Shares will be delivered by Zip Code
book-entry transfer, check one box:
Area Code and Telephone Number:
[_] The Depository Trust Company
___________________________________
[_] Midwest Securities Trust
Company ___________________________________
[_] Philadelphia Depository Trust ___________________________________
Company
___________________________________
Account Number ____________________ Signature(s)
Dated: _______________ , 1996 Dated: _______________ , 1996
- --------------------------------------- --------------------------------------
GUARANTEE
(NOT TO BE USED FOR SIGNATURE GUARANTEE)
The undersigned, a member firm of a registered national securities exchange,
a member of the National Association of Securities Dealers, Inc. or a
commercial bank or trust company having an office or correspondent in the
United States (each, an "Eligible Institution"), hereby guarantees that either
the certificates representing the Shares tendered hereby in proper form for
transfer, or timely confirmation of a book-entry transfer of such Shares into
the Depositary's account at The Depository Trust Company, the Midwest
Securities Trust Company or the Philadelphia Depository Trust Company
(pursuant to guaranteed delivery procedures set forth in Section 3 of the
Offer to Purchase), together with a properly completed and duly executed
Letter of Transmittal (or manually signed facsimile thereof) with any required
signature guarantee and any other required documents, will be received by the
Depositary at one of its addresses set forth above within three (3) Nasdaq
Small Cap Market trading days after the date of execution hereof.
The Eligible Institution that completes this form must communicate the
guarantee to the Depositary and must deliver the Letter of Transmittal and
certificates for Shares to the Depositary within the time period shown herein.
Failure to do so could result in a financial loss to such Eligible
Institution.
Name of Firm: _______________________ _____________________________________
Authorized Signature
Address: ____________________________
Name: _______________________________
____________________________ Please Type or Print
Zip Code
Title: ______________________________
Area Code and
Telephone Number: ___________________ Dated: _______________________ , 1996
NOTE: DO NOT SEND CERTIFICATES FOR SHARES WITH THIS NOTICE OF GUARANTEED
DELIVERY. CERTIFICATES FOR SHARES ARE TO BE DELIVERED WITH THE LETTER OF
TRANSMITTAL.
2
<PAGE>
OFFER TO PURCHASE FOR CASH
ALL OUTSTANDING SHARES OF COMMON STOCK
OF
FORUM GROUP, INC.
BY
FG ACQUISITION CORP.
A WHOLLY OWNED INDIRECT SUBSIDIARY OF
MARRIOTT INTERNATIONAL, INC.
AT
$13.00 NET PER SHARE
- --------------------------------------------------------------------------------
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY
TIME, ON THURSDAY, MARCH 21, 1996, UNLESS THE OFFER IS EXTENDED.
- --------------------------------------------------------------------------------
To Brokers, Dealers, Commercial Banks, February 23, 1996
Trust Companies and Other Nominees:
We have been appointed by FG Acquisition Corp. (the "Purchaser"), an Indiana
corporation and a wholly owned indirect subsidiary of Marriott International,
Inc., a Delaware corporation ("Parent"), to act as Information Agent in
connection with its offer 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, without
interest, upon the terms and subject to the conditions set forth in the
Purchaser's Offer to Purchase, dated February 23, 1996 (the "Offer to
Purchase"), and the related Letter of Transmittal (which together constitute
the "Offer"), copies of which are enclosed herewith. The Offer is being made
in connection with the Agreement and Plan of Merger, dated as of February 15,
1996, among the Purchaser, Parent and the Company.
For your information and for forwarding to your clients for whose accounts
you hold Shares registered in your name or in the name of your nominee, we are
enclosing the following documents:
1. Offer to Purchase;
2. Letter of Transmittal for your use and for the information of your
clients, together with Guidelines for Certification of Taxpayer
Identification Number on Substitute Form W-9 providing information
relating to backup federal income tax withholding;
3. Notice of Guaranteed Delivery to be used to accept the Offer if the
Shares and all other required documents cannot be delivered to the
Depositary by the Expiration Date (as defined in the Offer to Purchase);
4. A form of letter which may be sent to your clients for whose accounts
you hold Shares registered in your name or in the name of your nominee,
with space provided for obtaining such clients' instructions with regard
to the Offer;
5. Solicitation/Recommendation Statement on Schedule 14D-9 issued by the
Company; and
6. Return envelope addressed to First Chicago Trust Company of New York, as
the Depositary.
Upon the terms and subject to the conditions of the Offer (including, if the
Offer is extended or amended, the terms and conditions of any such extension
or amendment), the Purchaser will be deemed to have accepted for payment, and
will pay for, all Shares validly tendered and not properly withdrawn prior to
the Expiration Date (as defined in the Offer to Purchase) when, as and if the
Purchaser gives oral or written notice to the Depositary of the Purchaser's
acceptance of such Shares for payment pursuant to the Offer. Payment for
Shares purchased pursuant to the Offer will be made only after timely receipt
by the Depositary of certificates for such
<PAGE>
Shares (or 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 the Offer to Purchase)), a properly completed and duly executed Letter of
Transmittal (or facsimile thereof) (unless, in the case of a book-entry
transfer, an Agent's Message (as defined in the Offer to Purchase) is
utilized) and any other documents required by the Letter of Transmittal.
In order to take advantage of the Offer, a duly executed and properly
completed Letter of Transmittal, with any required signature guarantees and
any other required documents, should be sent to the Depositary, and
certificates representing the tendered Shares should be delivered, all in
accordance with the instructions set forth in the Letter of Transmittal and
the Offer to Purchase.
If holders of Shares wish to tender their Shares, but it is impracticable
for them to deliver their certificates on or prior to the Expiration Date or
to comply with the book-entry transfer procedures on a timely basis, a tender
may be effected by following the guaranteed delivery procedures specified in
Section 3 of the Offer to Purchase.
The Purchaser will not pay any fees or commissions to any broker, dealer or
other person (other than the Information Agent and Depositary as described in
the Offer to Purchase) in connection with the solicitation of tenders of
Shares pursuant to the Offer. The Purchaser will, however, upon request,
reimburse brokers, dealers, commercial banks and trust companies for
reasonable and necessary costs and expenses incurred by them in forwarding
materials to their customers. The Purchaser will pay all stock transfer taxes
applicable to its purchase of Shares pursuant to the Offer, subject to
Instruction 6 of the Letter of Transmittal.
YOUR PROMPT ACTION IS REQUESTED. WE URGE YOU TO CONTACT YOUR CLIENTS AS
PROMPTLY AS POSSIBLE. THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00
MIDNIGHT, NEW YORK CITY TIME, ON THURSDAY, MARCH 21, 1996, UNLESS THE OFFER IS
EXTENDED.
Any inquiries you may have with respect to the Offer should be addressed to,
and additional copies of the enclosed materials may be obtained from, the
Information Agent or the undersigned at the addresses and telephone numbers
set forth on the back cover page of the Offer to Purchase.
Very truly yours,
MacKenzie Partners, Inc.
- --------------------------------------------------------------------------------
NOTHING CONTAINED HEREIN OR IN THE ENCLOSED DOCUMENTS SHALL CONSTITUTE YOU
OR ANY PERSON AS AN AGENT OF THE PURCHASER, PARENT, THE COMPANY, ANY
AFFILIATE OF THE COMPANY, THE INFORMATION AGENT OR THE DEPOSITARY, OR
AUTHORIZE YOU OR ANY OTHER PERSON TO USE ANY DOCUMENT OR MAKE ANY STATEMENT
ON BEHALF OF ANY OF THEM IN CONNECTION WITH THE OFFER OTHER THAN THE
DOCUMENTS ENCLOSED HEREWITH AND THE STATEMENTS CONTAINED THEREIN.
- --------------------------------------------------------------------------------
2
<PAGE>
OFFER TO PURCHASE FOR CASH
ALL OUTSTANDING SHARES OF COMMON STOCK
OF
FORUM GROUP, INC.
BY
FG ACQUISITION CORP.
A WHOLLY OWNED INDIRECT SUBSIDIARY OF
MARRIOTT INTERNATIONAL, INC.
AT
$13.00 NET PER SHARE
- ------------------------------------------------------------------------------
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY
TIME, ON THURSDAY, MARCH 21, 1996, UNLESS THE OFFER IS EXTENDED.
- ------------------------------------------------------------------------------
February 23, 1996
To Our Clients:
Enclosed for your consideration are the Offer to Purchase, dated February
23, 1996 (the "Offer to Purchase"), and the related Letter of Transmittal
(which together constitute the "Offer") and other materials relating to the
Offer by FG Acquisition Corp. (the "Purchaser"), an Indiana corporation and a
wholly owned indirect subsidiary of Marriott International, Inc., a Delaware
corporation ("Parent"), 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, without
interest, upon the terms and subject to the conditions set forth in the Offer.
This material is being sent to you as the beneficial owner of Shares held by
us for your account but not registered in your name. A TENDER OF SUCH SHARES
CAN BE MADE ONLY BY US AS THE HOLDER OF RECORD AND PURSUANT TO YOUR
INSTRUCTIONS. THE LETTER OF TRANSMITTAL ACCOMPANYING THIS LETTER IS FURNISHED
TO YOU FOR YOUR INFORMATION ONLY AND CANNOT BE USED BY YOU TO TENDER SHARES
HELD BY US FOR YOUR ACCOUNT.
We request instructions as to whether you wish to have us tender any or all
of the Shares held by us for your account, upon the terms and subject to the
conditions set forth in the Offer.
Your attention is directed to the following:
1. The tender price is $13.00 per Share, net to the seller in cash, without
interest.
2. The Offer and withdrawal rights will expire at 12:00 Midnight, New York
City time, on Thursday, March 21, 1996 unless the Offer is extended.
3. The Offer is being made as part of a series of transactions pursuant to
an Agreement and Plan of Merger dated as of February 15, 1996 (the
"Merger Agreement") by and among the Company, the Purchaser and Parent,
pursuant to which, as promptly as practicable following the completion
of the Offer and the satisfaction or waiver of certain conditions and
the approval and adoption of the Merger Agreement, 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 not owned by Parent, the
Purchaser, the Company or any of their 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.
4. The Board of Directors of 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, subject to the fiduciary duties of the
Board, recommends acceptance of the Offer and approval and adoption of
the Merger Agreement and the Merger by the shareholders of the Company.
<PAGE>
5. The Offer is conditioned upon, among other things, there being validly
tendered and not withdrawn prior to the Expiration Date (as defined in
the Offer to Purchase) a number of Shares which, when added to the
number of shares then beneficially owned by Parent and its affiliates,
represents at least two-thirds of the total number of Shares outstanding
and two-thirds of the voting power of the Shares outstanding on a fully
diluted basis. Any or all conditions to the Offer may be waived by the
Purchaser.
6. Any stock transfer taxes applicable to the sale of Shares to the
Purchaser pursuant to the Offer will be paid by the Purchaser, except as
otherwise provided in Instruction 6 of the Letter of Transmittal.
The Offer is being made to all holders of Shares. The Offer is not being
made to, nor will tenders be accepted from or on behalf of, holders of Shares
in any jurisdiction in which the making of the Offer or acceptance thereof
would not be in compliance with the laws of such jurisdiction. In any
jurisdiction where the securities, blue sky or other laws require the Offer to
be made by a licensed broker or dealer, the Offer shall be deemed to be made
on behalf of the Purchaser by one or more registered brokers or dealers
licensed under the laws of such jurisdictions.
If you wish to have us tender any or all of the Shares held by us for your
account, please so instruct us by completing, executing and returning to us
the instruction form set forth below. Please forward your instructions to us
in ample time to permit us to submit a tender on your behalf prior to the
expiration of the Offer. If you authorize the tender of your Shares, all such
Shares will be tendered unless otherwise specified on the instruction form set
forth below.
<PAGE>
INSTRUCTIONS WITH RESPECT TO
OFFER TO PURCHASE FOR CASH
ALL OUTSTANDING SHARES OF COMMON STOCK
OF
FORUM GROUP, INC.
BY
FG ACQUISITION CORP.
The undersigned acknowledge(s) receipt of your letter and the enclosed Offer
to Purchase, dated February 23, 1996, and the related Letter of Transmittal,
in connection with the offer by FG Acquisition Corp., an Indiana corporation
and a wholly owned indirect subsidiary of Marriott International, Inc., a
Delaware corporation, to purchase for cash all outstanding shares of common
stock, without par value (the "Shares"), of Forum Group, Inc., an Indiana
corporation.
This will instruct you to tender the number of Shares indicated below (or if
no number is indicated below, all Shares) that are held by you for the account
of the undersigned, upon the terms and subject to the conditions set forth in
the Offer.
Dated: , 1996
NUMBER OF SHARES TO BE TENDERED:
SHARES*
-------
-------------------------------------
-------------------------------------
Signature(s)
-------------------------------------
Please Print Name(s)
-------------------------------------
-------------------------------------
Please Print Address(es)
-------------------------------------
Area Code and Telephone Number(s)
-------------------------------------
Tax, Identification, or Social
Security Number(s)
- --------
*I (We) understand that if I (we) sign this instruction form without
indicating a lesser number of Shares in the space above, all Shares held by
you for my (our) account will be tendered.
<PAGE>
This announcement is neither an offer to purchase nor a solicitation of an offer
to sell Shares (as defined below). The Offer (as defined below) is made solely
by the Offer to Purchase dated February 23, 1996 and the related Letter of
Transmittal and is not being made to, nor will tenders be accepted from or on
behalf of, holders of Shares in any jurisdiction in which the making of the
Offer or acceptance thereof would not be in compliance with the laws of such
jurisdiction. In those jurisdictions where securities, blue sky or other laws
require the Offer to be made by a licensed broker or dealer, the Offer shall be
deemed to be made on behalf of the Purchaser by one or more registered brokers
or dealers licensed under the laws of such jurisdictions.
Notice of 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.
<PAGE>
FG Acquisition Corp. (the "Purchaser"), an Indiana corporation and a wholly
owned indirect subsidiary of Marriott International, Inc., a Delaware
corporation ("Parent"), is offering 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,
without interest thereon, upon the terms and subject to the conditions set forth
in the Offer to Purchase dated February 23, 1996 (the "Offer to Purchase") and
in the related Letter of Transmittal (which, together with any supplements or
amendments, collectively constitute the "Offer").
- --------------------------------------------------------------------------------
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY
TIME, ON THURSDAY, MARCH 21, 1996, UNLESS THE OFFER IS EXTENDED.
- --------------------------------------------------------------------------------
The Offer is conditioned upon, among other things, there being validly
tendered and not withdrawn prior to the Expiration Date (as defined in the Offer
to Purchase) a number of Shares which, when added to the number of Shares then
beneficially owned by Parent and its affiliates, represents at least two-thirds
of the total number of Shares outstanding and two-thirds of the voting power of
the Shares outstanding on a basis that includes all outstanding Shares, together
with all Shares issuable upon exercise of vested options and warrants as of the
Expiration Date (a "Fully Diluted Basis").
The Offer is being made pursuant to an Agreement and Plan of Merger, dated as
of February 15, 1996 (the "Merger Agreement"), among Parent, the Purchaser and
the Company. The Merger Agreement provides that, among other things, the
Purchaser will make the Offer and that following the purchase of Shares pursuant
to the Offer and the satisfaction of the other conditions set forth in the
Merger Agreement and in accordance with relevant provisions of the Indiana
Business Corporation Law, the Purchaser will be merged with and into the Company
(the "Merger"). Following consummation of the Merger, the Company will continue
as the surviving corporation and will be a wholly owned indirect subsidiary of
Parent. At the effective time of the Merger (the "Effective Time"), each Share
issued and outstanding immediately prior to the Effective Time (other than
Shares held by the Company as treasury stock or by any wholly owned subsidiary
of the Company or by Parent, the Purchaser or any other wholly owned subsidiary
of Parent and other than Shares held by a holder who has perfected such holder's
dissenters' rights in accordance with Chapter 44 of the Indiana Business
Corporation Law) will be converted into the right to receive cash without
interest in an amount equal to the price per Share paid in the Offer.
The Purchaser and Parent have also entered into agreements (each, a
"Shareholder Agreement") with each of certain shareholders of the Company (the
"Principal Shareholders"). Pursuant to the Shareholder Agreements, each
Principal Shareholder has agreed, among other things, so long as the price per
share in the Offer is at least $13.00 in cash (net to the seller) to tender and
not withdraw its Shares in the Offer. The Shareholder Agreements cover
21,409,834 Shares (including presently exercisable warrants to purchase Shares)
in the aggregate owned by the Principal Shareholders, representing approximately
91% of the outstanding Shares calculated on a Fully Diluted Basis.
The Board of Directors of 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, subject to the fiduciary duties of the Board, 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 subject to certain conditions set forth in the Offer to Purchase.
Subject to the terms of the Merger Agreement, if any such condition is not
satisfied, 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. The
Purchaser may waive any or all of the conditions to the Offer in whole or in
part at any time in its sole discretion.
The Purchaser reserves the right, at any time or from time to time in
accordance with the terms of the Merger Agreement, to extend the period of time
during which the Offer is open by giving oral or written notice of such
extension to First Chicago Trust Company of New York (the "Depositary"). Any
such extension will be followed as promptly as practicable by a public
announcement thereof no later than 9:00 a.m., New York City time, on the next
business day after the previously scheduled date on which the Offer was to
expire. During any such extension, all Shares previously tendered and not
withdrawn will remain subject to the Offer subject to the right of a tendering
shareholder to withdraw such shareholder's Shares.
For purposes of the Offer, the Purchaser shall be deemed to have accepted for
payment tendered Shares when, as and if the Purchaser gives oral or written
notice to the Depositary of its acceptance of the tenders of such Shares.
Payment for Shares accepted for payment pursuant to the Offer will be made only
after timely receipt by the Depositary of certificates for such Shares (or 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 the Offer to
Purchase)), a properly completed and duly executed Letter of Transmittal (or
facsimile thereof) and any other documents required by the Letter of
Transmittal.
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 at any time after April 22, 1996 unless theretofore
accepted for payment as provided in the Offer to Purchase. To be effective, a
written, telegraphic, telex or facsimile transmission notice of withdrawal must
be timely received by the Depositary at one of its addresses set forth in the
Offer to Purchase and must specify the name of the person who tendered the
Shares to be withdrawn and the number of Shares to be withdrawn. 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 (as defined in the Offer to Purchase)) 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, or, in the case of Shares
tendered by book-entry transfer, the name and number of the account at one of
the Book-Entry Transfer Facilities to be credited with the withdrawn Shares.
The information required to be disclosed by paragraph (e)(1)(vii) of Rule 14d-
6 of the General Rules and Regulations under the Securities Exchange Act of
1934, as amended, is contained in the Offer to Purchase and is incorporated
herein by reference.
The Company has agreed to provide the Purchaser with the Company's shareholder
list and security position listings for the purpose of disseminating the Offer
to holders of Shares.
The 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. The Offer to Purchase and the related Letter of Transmittal contain
important information which should be read carefully before any decision is made
with respect to the Offer.
Requests for copies of the Offer to Purchase, the related Letter of
Transmittal and other tender offer materials may be directed to the Information
Agent as set forth below, and copies will be furnished promptly at the
Purchaser's expense. The Purchaser will not pay any fees or commissions to any
broker or dealer or any other person (other than the Information Agent and the
Depositary) in connection with the solicitation of tenders of Shares pursuant to
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
February 23, 1996
<PAGE>
AGREEMENT AND PLAN OF MERGER
DATED AS OF FEBRUARY 15, 1996
BY AND AMONG
FORUM GROUP, INC.,
MARRIOTT INTERNATIONAL, INC.
AND
FG ACQUISITION CORP.
<PAGE>
ARTICLE I
<TABLE>
<CAPTION>
THE OFFER
<S> <C> <C>
SECTION 1.1. THE OFFER................................................ 1
SECTION 1.2. COMPANY ACTIONS.......................................... 3
SECTION 1.3. SHAREHOLDER LISTS........................................ 3
SECTION 1.4. COMPOSITION OF THE BOARD OF DIRECTORS; SECTION 14(F)..... 3
ARTICLE II
<CAPTION>
THE MERGER
<S> <C> <C>
SECTION 2.1. THE MERGER............................................... 4
SECTION 2.2. EFFECTIVE TIME........................................... 4
SECTION 2.3. EFFECTS OF THE MERGER.................................... 4
SECTION 2.4. ARTICLES OF INCORPORATION AND BY-LAWS.................... 4
SECTION 2.5. DIRECTORS................................................ 5
SECTION 2.6. OFFICERS................................................. 5
SECTION 2.7. CONVERSION OF SHARES..................................... 5
SECTION 2.8. CONVERSION OF PURCHASER'S COMMON STOCK................... 5
SECTION 2.9. STOCK OPTIONS............................................ 6
SECTION 2.10. SHAREHOLDERS' MEETING.................................... 6
SECTION 2.11. CLOSING.................................................. 7
ARTICLE III
<CAPTION>
DISSENTING SHARES; EXCHANGE OF SHARES
<S> <C> <C>
SECTION 3.1. DISSENTING SHARES........................................ 7
SECTION 3.2. EXCHANGE OF SHARES....................................... 7
ARTICLE IV
<CAPTION>
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
<S> <C> <C>
SECTION 4.1. ORGANIZATION............................................. 8
SECTION 4.2. CAPITALIZATION........................................... 9
SECTION 4.3. AUTHORITY RELATIVE TO THIS AGREEMENT..................... 10
SECTION 4.4. CONSENTS AND APPROVALS; NO VIOLATIONS.................... 10
SECTION 4.5. ABSENCE OF CERTAIN CHANGES............................... 11
SECTION 4.6. NO UNDISCLOSED LIABILITIES............................... 11
SECTION 4.7. REPORTS.................................................. 11
SECTION 4.8. SCHEDULE 14D-9; OFFER DOCUMENTS; PROXY STATEMENT......... 12
SECTION 4.9. NO DEFAULT............................................... 12
</TABLE>
i
<PAGE>
<TABLE>
<S> <C> <C>
SECTION 4.10. LITIGATION; COMPLIANCE WITH LAWS......................... 13
SECTION 4.11. EMPLOYEE BENEFIT PLANS; ERISA............................ 14
SECTION 4.12. ASSETS; REAL PROPERTY; INTELLECTUAL PROPERTY............. 15
SECTION 4.13. CERTAIN CONTRACTS AND ARRANGEMENTS....................... 16
SECTION 4.14. TAXES.................................................... 16
SECTION 4.15. LABOR MATTER............................................. 18
SECTION 4.16. LICENSES AND PERMITS..................................... 18
SECTION 4.17. BROKERS.................................................. 18
ARTICLE V
<CAPTION>
REPRESENTATIONS AND WARRANTIES OF PARENT AND PURCHASER
<S> <C> <C>
SECTION 5.1. ORGANIZATION............................................. 19
SECTION 5.2. AUTHORITY RELATIVE TO THIS AGREEMENT..................... 19
SECTION 5.3. CONSENTS AND APPROVALS; NO VIOLATIONS.................... 19
SECTION 5.4. OFFER DOCUMENTS; PROXY STATEMENT; SCHEDULE 14D-9......... 20
SECTION 5.5. FINANCING................................................ 20
SECTION 5.6. BROKERS.................................................. 20
ARTICLE VI
<CAPTION>
COVENANTS
<S> <C> <C>
SECTION 6.1. CONDUCT OF BUSINESS OF THE COMPANY....................... 21
SECTION 6.2. ACQUISITION PROPOSALS.................................... 23
SECTION 6.3. ACCESS TO INFORMATION.................................... 24
SECTION 6.4. REASONABLE EFFORTS....................................... 25
SECTION 6.5. CONSENTS AND CERTAIN ARRANGEMENTS........................ 25
SECTION 6.6. ANTITRUST FILINGS........................................ 26
SECTION 6.7. PUBLIC ANNOUNCEMENTS..................................... 27
SECTION 6.8. EMPLOYEE BENEFITS; EMPLOYEES............................. 27
SECTION 6.9. PRE-CLOSING CONSULTATION................................. 28
SECTION 6.10. INDEMNIFICATION.......................................... 28
ARTICLE VII
<CAPTION>
CONDITIONS TO CONSUMMATION OF THE MERGER
<S> <C> <C>
SECTION 7.1. CONDITIONS TO EACH PARTY'S OBLIGATION TO EFFECT
THE MERGER............................................... 29
SECTION 7.2. CONDITIONS TO THE OBLIGATION OF THE COMPANY
TO EFFECT THE MERGER..................................... 29
SECTION 7.3. CONDITIONS TO OBLIGATIONS OF PARENT AND
PURCHASER TO EFFECT THE MERGER........................... 30
SECTION 7.4. EXCEPTION................................................ 30
</TABLE>
ii
<PAGE>
ARTICLE VIII
<TABLE>
<CAPTION>
TERMINATION; AMENDMENT; WAIVER
<S> <C> <C>
SECTION 8.1. TERMINATION.............................................. 30
SECTION 8.2 EFFECT OF TERMINATION.................................... 31
SECTION 8.3 FEES AND EXPENSES........................................ 32
SECTION 8.4. AMENDMENT................................................ 33
SECTION 8.5. EXTENSION; WAIVER........................................ 33
ARTICLE IX
<CAPTION>
MISCELLANEOUS
<S> <C> <C>
SECTION 9.1. SURVIVAL................................................ 34
SECTION 9.2. ENTIRE AGREEMENT........................................ 34
SECTION 9.3. GOVERNING LAW........................................... 34
SECTION 9.4. NOTICES................................................. 34
SECTION 9.5. SUCCESSORS AND ASSIGNS; NO THIRD PARTY
BENEFICIARIES........................................... 35
SECTION 9.6. COUNTERPARTS............................................ 36
SECTION 9.7. INTERPRETATION.......................................... 36
SECTION 9.8. SCHEDULES............................................... 36
SECTION 9.9. LEGAL ENFORCEABILITY.................................... 36
SECTION 9.10. SPECIFIC PERFORMANCE.................................... 36
</TABLE>
<TABLE>
<CAPTION>
EXHIBITS
--------
<S> <C>
Exhibit A ............................................. Conditions to Offer
</TABLE>
iii
<PAGE>
Schedules to Agreement and Plan of Merger
Schedule 4.1(a) Certain Information
Schedule 4.2(b) Shares of or Ownership Interests in
Subsidiaries of the Company
Schedule 4.2(c) Voting Trusts, Etc.
Schedule 4.4 Consents and Approvals
Schedule 4.5 Absence of Certain Changes
Schedule 4.6 Certain Liabilities
Schedule 4.9 Certain Defaults or Violations
Schedule 4.10(a) Litigation
Schedule 4.10(b) Compliance with Laws
Schedule 4.10(c) Compliance with Environmental Laws
Schedule 4.11(a) Information Relating to Employee Benefit
Plans
Schedule 4.11(c) Information Relating to Employee Benefit
Plans Subject to Title IV of ERISA
Schedule 4.11(e) Severance or Acceleration of
Compensation
Schedule 4.11(f) Employment and Consulting Agreements
Schedule 4.12(a) Ownership of Assets Necessary to Conduct
Business
Schedule 4.12(b) Owned Real Property
Schedule 4.12(d) Summary of Owned Operated and Managed
Facilities
Schedule 4.13 Material Contracts Terminated in Prior
12 Months
Schedule 4.14 Taxes
Schedule 4.14(h) Certain Payments
Schedule 4.15 Labor Matters
Schedule 4.17 Brokers
Schedule 5.3 Consents and Approvals
Schedule 6.1 Conduct of Business
Schedule 6.5 POR Amendment
Schedule 6.8(b) Certain Benefit Agreements
Schedule 6.8(c) Certain Actions
Schedule 6.10 Certain Indemnity Agreements
<PAGE>
TABLE OF DEFINED TERMS
<TABLE>
<CAPTION>
Term Section No.
- ---- -----------
<S> <C>
Acquisition Proposal..................................................... 6.2(b)
Antitrust Law............................................................ 6.6(d)
Audit................................................................ 4.14(i)(1)
Bankruptcy Court......................................................... 6.5(b)
Bankruptcy Order......................................................... 6.5(b)
Benefit Agreements....................................................... 6.8(b)
Board....................................................................... 1.2
Certificates............................................................. 3.2(b)
Code.................................................................... 4.11(a)
Company................................................................ Preamble
Company Employee............................................................ 6.8
Company Representative...................................................... 6.9
Company SEC Documents.................................................... 4.7(a)
Conditions.................................................................. 1.1
Confidentiality Agreement................................................ 6.3(b)
Continuing Director......................................................... 8.4
Current Premium............................................................ 6.10
D&O Insurance.............................................................. 6.10
Designated Directors........................................................ 8.4
Dissenting Shares........................................................... 3.1
Effective Time.............................................................. 2.2
Environmental Laws...................................................... 4.10(c)
ERISA................................................................... 4.11(a)
ERISA Affiliate......................................................... 4.11(a)
Exchange Act................................................................ 1.2
Exchange Agent........................................................... 3.2(a)
Facility................................................................ 4.12(d)
FRI......................................................................... 6.1
FRP......................................................................... 6.1
Form 10-K................................................................... 4.5
Fully Diluted Basis......................................................... 1.4
Hearthside Shares........................................................ 4.2(a)
HSR Act..................................................................... 4.4
IBCL........................................................................ 2.1
Indemnified Parties........................................................ 6.10
Intellectual Property................................................... 4.12(c)
IRS..................................................................... 4.11(a)
</TABLE>
iv
<PAGE>
<TABLE>
<S> <C>
Law.................................................................... 2.4
Lien................................................................... 4.2(B)
<CAPTION>
Term Section No.
- ---- -----------
<S> <C>
Material Adverse Effect............................................... 4.1, 5.1
Material Contracts........................................................ 4.13
Merger..................................................................... 2.1
Merger Price............................................................ 2.7(a)
Offer................................................................... 1.1(a)
Offer Documents......................................................... 1.1(c)
Option Plan............................................................. 2.9(a)
Order................................................................... 6.6(b)
Ordinary Course Obligations................................................ 6.1
Parent................................................................ Preamble
Parent Representative...................................................... 6.9
PBGC................................................................... 4.11(a)
Permits................................................................... 4.16
Permitted Liens........................................................ 4.12(b)
Person.................................................................. 1.1(b)
Plans.................................................................. 4.11(a)
POR..................................................................... 4.2(a)
Pre-February 6 Party.................................................... 6.2(c)
Proxy Statement........................................................ 2.10(b)
Purchaser............................................................. Preamble
Schedule 14D-9............................................................. 1.2
SEC..................................................................... 1.1(c)
Securities Act............................................................. 4.4
Shares.................................................................. 1.1(a)
Stock Options........................................................... 2.9(a)
Shareholders' Meeting.................................................. 2.10(a)
Subsidiary.............................................................. 1.1(b)
Surviving Corporation...................................................... 2.1
Taxes............................................................... 4.14(i)(2)
Tax Returns......................................................... 4.14(i)(3)
Third Party............................................................. 6.2(b)
Third Party Transaction................................................. 6.2(b)
Warrants................................................................... 4.2
</TABLE>
v
<PAGE>
AGREEMENT AND PLAN OF MERGER
THIS AGREEMENT AND PLAN OF MERGER, dated as of February 15, 1996, is among
MARRIOTT INTERNATIONAL, INC., a Delaware corporation ("PARENT"), FG ACQUISITION
CORP., an Indiana corporation and a wholly-owned indirect subsidiary of Parent
("PURCHASER"), and FORUM GROUP, INC., an Indiana corporation (the "COMPANY").
RECITALS
WHEREAS, the Boards of Directors of the Company, Parent and Purchaser deem
it advisable and in the best interests of their respective shareholders that
Parent acquire the Company pursuant to the terms and conditions set forth in
this Agreement;
NOW, THEREFORE, in consideration of the premises and the representations,
warranties, covenants and agreements herein contained, and intending to be
legally bound hereby, Parent, Purchaser and the Company hereby agree as follows:
ARTICLE I
THE OFFER
SECTION 1.1. THE OFFER.
(a) Subject to this Agreement not having been terminated in accordance
with the provisions of Section 8.1 hereof, Purchaser shall, and Parent shall
cause Purchaser to, as promptly as practicable, but in no event later than five
business days from the date of the public announcement of the terms of this
Agreement or the Offer, commence an offer to purchase for cash (as it may be
amended in accordance with the terms of this Agreement, the "OFFER") all of the
Company's outstanding shares of common stock, no par value (the "SHARES"),
subject to the conditions set forth in Exhibit A hereto (the "CONDITIONS"), at a
price of $13.00 per Share, net to the seller in cash. Subject only to the
Conditions, Purchaser shall, and Parent shall cause Purchaser to, (i) accept for
payment and pay for all Shares tendered pursuant to the Offer as promptly as
practicable following the expiration date of the Offer, and (ii) extend the
period of time the Offer is open until the first business day following the date
on which the Conditions are satisfied or waived in accordance with the
provisions thereof; provided that (x) Purchaser shall be permitted but shall not
--------
be obligated to extend the time the Offer is open if the Company is in breach in
any material respect of its covenants or agreements contained herein and (y)
Purchaser shall be permitted but shall not be obligated to extend the time the
Offer is open if 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 permitted to extend the period of time the Offer is
open beyond July 15, 1996. Neither Purchaser nor Parent will extend the
expiration
1
<PAGE>
date of the Offer beyond the twentieth business day following commencement
thereof unless one or more of the Conditions shall not be satisfied. Purchaser
expressly reserves the right to amend the terms and conditions of the Offer;
provided, that without the consent of the Company, no amendment may be made
- --------
which (i) decreases the price per Share or changes the form of consideration
payable in the Offer, (ii) decreases the number of Shares sought, or (iii)
imposes additional conditions to the Offer or amends any other term of the Offer
in any manner adverse to the holders of Shares. Upon the terms and subject to
the Conditions, Purchaser will accept for payment and purchase, as soon as
permitted under the terms of the Offer, all Shares validly tendered and not
withdrawn prior to the expiration of the Offer.
(b) The Company will not, nor will it permit any of its wholly owned
Subsidiaries (as defined below) to, tender into the Offer any Shares
beneficially owned by it; provided, that Shares held beneficially or of record
--------
by any plan, program or arrangement sponsored or maintained for the benefit of
employees of the Company or any of its Subsidiaries shall not be deemed to be
held by the Company regardless of whether the Company has, directly or
indirectly, the power to vote or control the disposition of such Shares. For
purposes of this Agreement, "SUBSIDIARY" means, as to any Person (as defined
below), any corporation, partnership or joint venture, whether now existing or
hereafter organized or acquired: (a) in the case of a corporation, of which at
least a majority of the outstanding shares of stock having by the terms thereof
ordinary voting power to elect a majority of the board of directors of such
corporation (other than stock having such voting power solely by reason of the
happening of any contingency) is at the time directly or indirectly owned or
controlled by such Person and/or one or more of its Subsidiaries or (b) in the
case of a partnership or joint venture, in which such Person or a Subsidiary of
such Person is a general partner or joint venturer or of which a majority of the
partnership or other ownership interests are at the time owned by such Person
and/or one or more of its Subsidiaries. For purposes of this Agreement,
"PERSON" means any individual, corporation, company, voluntary association,
partnership, joint venture, trust, unincorporated organization or other entity.
(c) On the date of the commencement of the Offer, Purchaser shall file with
the Securities and Exchange Commission (the "SEC") a Tender Offer Statement on
Schedule 14D-1 with respect to the Offer which will contain an offer to purchase
and form of the related letter of transmittal (together with any supplements or
amendments thereto, the "OFFER DOCUMENTS"). The Company and its counsel shall
be given a reasonable opportunity to review and comment on the Offer Documents
prior to the filing of such Offer Documents with the SEC. Purchaser agrees to
provide the Company and its counsel copies of any written comments Purchaser and
its counsel may receive from the SEC or its staff with respect to the Offer
Documents and a summary of any such comments received orally promptly after the
receipt thereof.
2
<PAGE>
SECTION 1.2. COMPANY ACTIONS. The Company hereby consents to the Offer
and represents that its Board of Directors (the "BOARD") (at a meeting duly
called and held) has unanimously (a) determined as of the date hereof that the
Offer and the Merger (as defined in Section 2.1 hereof) are fair to and in the
best interests of the shareholders of the Company and (b) subject to the
fiduciary duties of the Board, resolved to recommend acceptance of the Offer and
approval and adoption of this Agreement and the Merger by the shareholders of
the Company. The Company further represents that Smith Barney Inc. has
delivered to the Board its opinion to the effect that, as of the date of this
Agreement, the cash consideration to be received by the holders of Shares (other
than Parent and its affiliates) in the Offer and the Merger is fair to such
holders from a financial point of view. The Company hereby agrees to file a
Solicitation/Recommendation Statement on Schedule 14D-9 (the "SCHEDULE 14D-9")
containing such recommendation with the SEC (and the information required by
Section 14(f) of the Securities Exchange Act of 1934, as amended (together with
all rules and regulations thereunder, the "EXCHANGE ACT"), so long as Parent
shall have furnished such information to the Company in a timely manner) and to
mail such Schedule 14D-9 to the shareholders of the Company; provided, that
--------
subject to the provisions of Section 6.2(a) hereof, such recommendation may be
withdrawn, modified or amended. The Company will use reasonable efforts so that
such Schedule 14D-9 shall be, if so requested by Purchaser, filed on the same
date as Purchaser's Schedule 14D-1 is filed and mailed together with the Offer
Documents; provided, that in any event the Schedule 14D-9 shall be filed and
--------
mailed no later than 10 business days following the commencement of the Offer.
Purchaser and its counsel shall be given a reasonable opportunity to review and
comment on such Schedule 14D-9 prior to the Company's filing of the Schedule
14D-9 with the SEC. The Company agrees to provide Parent and its counsel copies
of any written comments the Company or its counsel may receive from the SEC or
its staff with respect to such Schedule 14D-9 and a summary of any such comments
received orally promptly after the receipt thereof.
SECTION 1.3. SHAREHOLDER LISTS. In connection with the Offer, at the
request of Parent or Purchaser, from time to time after the date hereof, the
Company will promptly furnish Purchaser with mailing labels, security position
listings and any available listing or computer file maintained for or by the
Company containing the names and addresses of the record holders of the Shares
as of a recent date and shall furnish Purchaser with such information reasonably
available to the Company and assistance as Purchaser or its agents may
reasonably request in communicating the Offer to the record and beneficial
holders of Shares.
SECTION 1.4. COMPOSITION OF THE BOARD OF DIRECTORS; SECTION 14(F). In the
event that Purchaser acquires at least a majority of the Shares outstanding on a
Fully Diluted Basis (as defined below) pursuant to the Offer, Parent shall be
entitled to designate for appointment or election to the Board, upon written
notice to the Company, such number of persons so that the 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
pursuant to the Offer. Prior to the purchase of Shares pursuant to the Offer
(sometimes referred to herein as 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
3
<PAGE>
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 the Schedule 14D-9; provided, however, that Parent and Purchaser
-------- -------
provide to the Company in writing, and will 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
provisions of this Section 1.4, the parties hereto shall use their respective
reasonable best efforts to ensure that at least three of the members of the
Board shall, at all times prior to the Effective Time (as defined in Section 2.2
hereof) be, Continuing Directors (as defined in Section 8.4 hereof). As used in
this Agreement, "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 in Section 2.9(a)) and
Warrants (as defined in Section 4.2).
ARTICLE II
THE MERGER
SECTION 2.1. THE MERGER. Upon the terms and subject to the conditions
hereof, and in accordance with the applicable provisions of the Indiana Business
Corporation Law ("IBCL"), Purchaser shall be merged (the "MERGER") with and into
the Company as soon as practicable following the satisfaction or waiver of the
conditions set forth in Article VII hereof or on such other date as the parties
hereto may agree (such agreement to require the approval of a majority of the
Continuing Directors if at the time there shall be any Continuing Directors).
Following the Merger the Company shall continue as the surviving corporation
(the "SURVIVING CORPORATION") and the separate corporate existence of Purchaser
shall cease.
SECTION 2.2. EFFECTIVE TIME. 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 (the time the Merger becomes effective being the
"EFFECTIVE TIME").
SECTION 2.3. EFFECTS OF THE MERGER. The Company will continue to be
governed by the laws of the State of Indiana, and the separate corporate
existence of the Company and all of its rights, privileges, powers and
franchises as well of a public as of a private nature, and being subject to all
of the restrictions, disabilities and duties as a corporation organized under
the IBCL, will continue unaffected by the Merger. The Merger will have the
effects specified in the IBCL. As of the Effective Time the Company shall be a
wholly-owned Subsidiary of Parent.
SECTION 2.4. ARTICLES OF INCORPORATION AND BY-LAWS. The Articles of
Incorporation and By-laws of 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 (as defined below). For purposes of
this Agreement, "LAW" or "LAWS" means
4
<PAGE>
any valid constitutional provision, statute, ordinance or other law (including
common law), rule, regulation, decree, injunction, judgment, order, ruling,
assessment or writ of any governmental entity, as any of these may be in effect
from time to time.
SECTION 2.5. DIRECTORS. The directors of Purchaser at the Effective Time
shall be the initial directors of the Surviving Corporation and will hold office
from the Effective Time until their respective 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 Law.
SECTION 2.6. OFFICERS. The officers of the Company at the Effective Time
shall be the initial officers of the Surviving Corporation and will hold office
from the Effective Time until their respective 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 Law.
SECTION 2.7. CONVERSION OF SHARES. At the Effective Time:
(a) Each Share issued and outstanding immediately prior to the Effective
Time (other than Shares held in the treasury of the Company or held by any
wholly-owned Subsidiary, and other than Dissenting Shares (as defined in Section
3.1 hereof)) shall, by virtue of the Merger and without any action on the part
of the holder thereof, be converted into the right to receive $13.00 in cash,
or any higher price paid per Share in the Offer (the "MERGER PRICE"), payable to
the holder thereof, without interest thereon, upon the surrender of the
certificate formerly representing such Share.
(b) 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 shall, by
virtue of the Merger and without any action on the part of the holder thereof,
be cancelled and retired and cease to exist; provided, that Shares held
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beneficially or of record by any plan, program or arrangement sponsored or
maintained for the benefit of employees of the Company or any Subsidiaries
thereof shall not be deemed to be held by the Company regardless of whether the
Company has, directly or indirectly, the power to vote or control the
disposition of such Shares.
SECTION 2.8. CONVERSION OF PURCHASER'S COMMON STOCK. Each share of common
stock, no par value, of Purchaser issued and outstanding immediately prior to
the Effective Time shall, by virtue of the Merger and without any action on the
part of the holder thereof, be converted into and exchangeable for one share of
common stock of the Surviving Corporation.
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SECTION 2.9. STOCK OPTIONS.
(a) All outstanding 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 Subsidiaries (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 the
payments made hereunder or to distributions contemplated hereby shall be
deducted from the amounts payable under this Section 2.9 and all such taxes
attributable to the exercise of Stock Options shall be withheld from the
proceeds received in respect of the Shares issuable on such exercise.
(b) Except as provided herein 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.
SECTION 2.10. SHAREHOLDERS' MEETING. If required by applicable Law in
order to consummate the Merger, the Company, acting through its Board, shall, 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 upon this 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 in Section 1.2 hereof; 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 SEC 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 this Agreement by its
shareholders.
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Parent will provide the Company with the information concerning Parent and
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 this Agreement.
SECTION 2.11. CLOSING. Prior to the filings referred to in Section 2.2, a
closing will be held at the offices of O'Melveny & Myers, 555 Thirteenth Street,
N.W., Washington, D.C. (or such other place as the parties may agree), for the
purpose of confirming all of the foregoing. The closing will take place one
business day after the later of (i) the business day immediately following the
receipt of approval or adoption of this Agreement by the Company's shareholders
and (ii) the business day on which the last of the conditions set forth in
Article VII is satisfied or duly waived, or at such other time as the parties
may agree.
ARTICLE III
DISSENTING SHARES; EXCHANGE OF SHARES
SECTION 3.1. DISSENTING SHARES. Notwithstanding anything in this
Agreement to the contrary, Shares which are issued and outstanding immediately
prior to the Effective Time and which are held by shareholders who have
perfected any dissenters' rights provided under the IBCL, if applicable (the
"DISSENTING SHARES"), shall not be converted into or be exchangeable for the
right to receive the consideration provided in Section 2.7 of this Agreement,
unless and until such holder shall have failed to perfect or shall have
effectively withdrawn or lost such holder's right to appraisal and payment under
the IBCL. If such holder shall have so failed to perfect or shall have
effectively withdrawn or lost such right, such holder's Shares shall thereupon
be deemed to have been converted into and to have become exchangeable for, at
the Effective Time, the right to receive the consideration provided for in
Section 2.7(a) of this Agreement, without any interest thereon.
SECTION 3.2. EXCHANGE OF SHARES.
(a) Prior to the Effective Time, Parent shall designate a bank or trust
company to act as exchange agent in the Merger (the "EXCHANGE AGENT").
Immediately prior to the Effective Time, Parent will take all steps necessary to
enable and cause the Company to deposit with the Exchange Agent the funds
necessary to make the payments contemplated by Section 2.7 and, if applicable,
the Bankruptcy Order (as defined in Section 6.5(b)) on a timely basis.
(b) Promptly after the Effective Time, the Exchange Agent shall mail to
each record holder, as of the Effective Time, of an outstanding certificate or
certificates which immediately prior to the Effective Time represented Shares
(the "CERTIFICATES") a form letter of transmittal (which shall specify that
delivery shall be effected, and risk of loss and title to the Certificates shall
pass, only upon proper delivery of the Certificates to the Exchange Agent) and
instructions for use in effecting the surrender of the Certificates for payment
therefor, in each case
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customary for transactions such as the Merger. Upon surrender to the Exchange
Agent of a Certificate, together with such letter of transmittal duly executed,
and any other required documents, the holder of such Certificate shall be
entitled to receive in exchange therefor the consideration set forth in Section
2.7(a) hereof, and such Certificate shall forthwith be cancelled. No interest
will be paid or accrued on the cash payable upon the surrender of the
Certificates. If payment is to be made to a Person other than the Person in
whose name the Certificate surrendered is registered, it shall be a condition of
payment that the Certificate so surrendered shall be properly endorsed or
otherwise in proper form for transfer and that the Person requesting such
payment shall pay any transfer or other taxes required by reason of the payment
to a Person other than the registered holder of the Certificate surrendered or
establish to the satisfaction of the Surviving Corporation that such tax has
been paid or is not applicable. Until surrendered in accordance with the
provisions of this Section 3.2, each Certificate (other than Certificates
representing Shares held by Parent or any wholly owned Subsidiary of Parent,
Shares held in the treasury of the Company or held by any wholly owned
Subsidiary of the Company and Dissenting Shares) shall represent for all
purposes only the right to receive the consideration set forth in Section 2.7(a)
hereof, without any interest thereon.
(c) After the Effective Time there shall be no transfers on the stock
transfer books of the Surviving Corporation of the Shares which were outstanding
immediately prior to the Effective Time. If, after the Effective Time,
Certificates are presented to the Surviving Corporation, they shall be cancelled
and exchanged for the consideration provided in Section 2.7 hereof in accordance
with the procedures set forth in this Article III.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company represents, warrants and covenants to and with Parent and
Purchaser as follows:
SECTION 4.1. ORGANIZATION. Except as set forth on Schedule 4.1, each of
the Company and its Subsidiaries is a corporation or other legal entity duly
organized, validly existing and in good standing under the Laws of the
jurisdiction of its incorporation or organization and has the requisite
corporate, partnership or other power and authority to own, lease, manage and
operate its properties and to carry on its business as now being conducted.
Except as set forth on Schedule 4.1, each of the Company and its Subsidiaries is
duly qualified or licensed and in good standing to do business in each
jurisdiction in which the property owned, leased, managed or operated by it or
the nature of the business conducted by it makes such qualification or licensing
necessary, except in such jurisdictions where the failure to be so duly
qualified or licensed and in good standing would not in the aggregate have or
constitute a Material Adverse Effect (as defined below). The Company has
heretofore delivered or made available to Parent accurate and complete copies of
the articles or certificate of incorporation and by-laws (or other similar
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organizational documents in the event of any Person other than a corporation),
as currently in effect, of the Company and each of its Subsidiaries. For
purposes of this Agreement (except as provided in Article V hereof), the term
"MATERIAL ADVERSE EFFECT" shall mean 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 this 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.
SECTION 4.2. CAPITALIZATION.
(a) As of the date hereof, the authorized capital stock of the Company
consists of: (i) 48,000,000 Shares and (ii) 2,000,000 shares of preferred stock
("PREFERRED STOCK"). As of the date hereof, (a) 22,539,831 Shares were validly
issued and outstanding, fully paid and nonassessable and not subject to
preemptive rights, (b) 1,671,750 Shares were reserved for issuance pursuant to
outstanding Stock Options (rights to Stock Options exercisable into 230,500
shares have vested as of the date hereof), (c) 700,144 Shares were reserved for
issuance pursuant to the warrants set forth on Schedule 4.2(c) (the "Warrants"),
(d) 262,793 Shares were reserved for issuance pursuant to the Company's Third
Amended and Restated Joint Plan of Reorganization, dated January 17, 1992, as
amended (the "POR"), (e) 6,000 Shares were reserved for issuance to certain
Persons who are investors in the "Hearthside" joint venture (the "Hearthside
Shares") and (f) no shares of Preferred Stock were issued and outstanding. Since
December 31, 1995, the Company has not issued any additional shares of capital
stock other than pursuant to the exercise or conversion of Stock Options and
Warrants or pursuant to the POR. Except for the Stock Options and Warrants or
pursuant to the POR, Shares issued pursuant thereto and as set forth above in
this Section 4.2(a), there are not now, and at the Effective Time there will not
be, any shares of capital stock of the Company issued or outstanding or any
subscriptions, options, warrants, calls, rights, convertible securities or other
agreements or commitments of any character obligating the Company to issue,
transfer or sell any of its securities. Immediately prior to the consummation of
the Offer, after giving effect to the transactions contemplated by Section
2.9(a), assuming (i) the Bankruptcy Order is obtained, (ii) the Warrants are
fully exercised, (iii) the warrants issued pursuant to an Acquisition Agreement
dated as of April 18, 1994 are cancelled and extinguished, and (iv) the rights
of Persons to receive the Hearthside Shares are cancelled, 23,239,975 Shares
will be issued and outstanding and, except for the Stock Options, there will not
be any subscriptions, options, warrants, calls, rights, convertible securities
or other agreements or commitments of any character obligating the Company to
issue, transfer or sell any of its securities.
(b) Schedule 4.2(b) sets forth the outstanding shares of capital stock of,
or ownership interests in, each Subsidiary of the Company and the registered
owners thereof. All of such shares and interests have been validly issued and
are fully paid and nonassessable and, with respect to shares and interests owned
by the Company and its Subsidiaries, are owned free
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and clear of all Liens (as defined below) except as set forth on Schedule
4.2(b). Except as set forth on Schedule 4.2(b), there are not now, and at the
Effective Time there will not be, any outstanding subscriptions, options,
warrants, calls, rights, convertible securities or other agreements or
commitments of any character relating to the issued or unissued capital stock or
other securities of any of the Company's Subsidiaries, or otherwise obligating
the Company or any such Subsidiary to issue, transfer or sell any such
securities. For purposes of this Agreement, "LIEN" means, with respect to any
asset, any mortgage, lien, pledge, charge, security interest or encumbrance of
any kind whatsoever in respect of such asset.
(c) Except as set forth on Schedule 4.2(c), there are no voting trusts or
shareholder agreements or agreements providing for the issuance of capital stock
to which the Company or any of its Subsidiaries is a party with respect to the
voting of the capital stock of the Company or any of its Subsidiaries.
SECTION 4.3. AUTHORITY RELATIVE TO THIS AGREEMENT. The Company has the
requisite corporate power and authority to execute and deliver this Agreement
and to consummate the transactions contemplated hereby. The execution and
delivery of this Agreement by the Company and the consummation of the
transactions contemplated hereby have been duly and validly authorized by the
Board and no other corporate proceedings on the part of the Company, including
any approval by the shareholders of the Company, are necessary to authorize this
Agreement or to consummate the transactions contemplated hereby (other than with
respect to the Merger, the approval and adoption of this Agreement by the
holders of the requisite number of the outstanding Shares). This Agreement has
been duly and validly executed and delivered by the Company and constitutes a
valid and binding agreement of the Company, enforceable against the Company in
accordance with its terms. The affirmative vote of the holders of two-thirds of
the Shares is the only vote of the holders of any class or series of Company
capital stock necessary to approve the Merger.
SECTION 4.4. CONSENTS AND APPROVALS; NO VIOLATIONS. Except for any
applicable requirements of the Exchange Act, the Securities Act of 1933, as
amended, and all rules and regulations thereunder (the "SECURITIES ACT"), the
Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (the "HSR
ACT"), the filing and recordation of articles of merger as required by the IBCL,
filing with and approval of the any national securities exchange (including
NASDAQ) on which the Shares are listed and traded and the SEC with respect to
the delisting and deregistering of the Shares, and such filings and approvals as
may be required under the "takeover" or "blue sky" Laws of various states,
neither the execution and delivery of this Agreement by the Company nor the
consummation by the Company of the transactions contemplated hereby will (i)
conflict with or result in any breach of any provision of the articles or
certificate of incorporation or by-laws of the Company or any of its
Subsidiaries, (ii) require on the part of the Company or any of its Subsidiaries
any filing with, or the obtaining of any permit, authorization, consent or
approval of, any governmental or regulatory authority or any third party, (iii)
result in a violation or breach of, or constitute (with or without due notice or
lapse of time or both) a default (or give rise to any right of termination,
amendment, cancellation, acceleration or payment, or to the
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creation of a lien or encumbrance) under any of the terms, conditions or
provisions of any note, mortgage, indenture, other evidence of indebtedness,
guarantee, license, agreement or other contract, instrument or obligation to
which the Company or any of its Subsidiaries is a party or by which any of them
or any of their assets may be bound or (iv) violate any order, writ, injunction,
decree, statute, rule or regulation applicable to the Company or any of its
Subsidiaries or any of their assets, except for such of the foregoing in clauses
(ii), (iii) and (iv) above that are set forth on Schedule 4.4 or which could not
in the aggregate have or constitute a Material Adverse Effect.
SECTION 4.5. ABSENCE OF CERTAIN CHANGES. Except (a) as set forth in
Schedule 4.5 or as disclosed to Parent by the Company in a writing which makes
express reference to this Section 4.5, (b) as set forth in the Company's Annual
Report on Form 10-K for the year ended March 31, 1995 (the "FORM 10-K") or any
other document filed prior to the date hereof pursuant to Section 13(a) or 15(d)
of the Exchange Act, or (c) as contemplated by this Agreement, from December 31,
1995 until the date hereof, neither the Company nor any of its Subsidiaries has
(x) taken any of the actions prohibited by Section 6.1 hereof or suffered any
events or changes that, in each case, either individually or in the aggregate,
would result in or constitute a Material Adverse Effect, (y) conducted its
business or operations other than in the ordinary and usual course of business,
consistent with past practices or (z) changed any accounting principles used for
purposes of financial reporting.
SECTION 4.6. NO UNDISCLOSED LIABILITIES. Except (a) for liabilities
incurred in the ordinary course of business consistent with past practice, (b)
transaction expenses incurred in connection with this Agreement, (c) liabilities
which singly or in the aggregate could not reasonably be expected to have a
Material Adverse Effect, and (d) as set forth in Schedule 4.6, from December 31,
1995 until the date hereof, neither the Company nor any of its Subsidiaries has
incurred any liabilities that would be required to be reflected or reserved
against in a consolidated balance sheet of the Company and its Subsidiaries
prepared in accordance with generally accepted accounting principles as applied
in preparing the consolidated balance sheet of the Company and its Subsidiaries
as of March 31, 1995 contained in the Form 10-K.
SECTION 4.7. REPORTS.
(a) The Company has filed all reports, forms, statements and other
documents required to be filed with the SEC pursuant to the Exchange Act from
and including June 30, 1993 (collectively, including any financial statements or
schedules included or incorporated by reference therein, the "COMPANY SEC
DOCUMENTS"). Each of the Company SEC Documents, as of its filing date and at
each time thereafter when the information included therein was required to be
updated pursuant to the rules and regulations of the SEC, complied in all
material respects with all applicable requirements of the Securities Act and the
Exchange Act. None of the Company SEC Documents, as of their respective filing
dates or any date thereafter when the information included therein was required
to be updated pursuant to the rules and regulations of the SEC, contained or
will contain any untrue statement of a material fact or omitted or will omit to
state
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a material fact required to be stated therein or necessary in order to make the
statements therein, in light of the circumstances under which they were made,
not misleading. Each of the consolidated balance sheets (including the related
notes) included in the Company SEC Documents filed prior to or after the date of
this Agreement (but prior to the date on which the Offer is consummated, and
excluding the Company SEC Documents described in Section 4.8 hereof) fairly
presents or will fairly present in all material respects the consolidated
financial position of the Company and its Subsidiaries as of the respective
dates thereof, and the other related statements (including the related notes)
included therein fairly present or will fairly present in all material respects
the consolidated results of operations and the cash flows of the Company and its
Subsidiaries for the respective periods or as of the respective dates set forth
therein. Each of the financial statements (including the related notes) included
in the Company SEC Documents filed prior to or after the date of this Agreement
(but prior to the date on which the Offer is consummated, and excluding the
Company SEC Documents described in Section 4.8 hereof) has been prepared or will
be prepared in all material respects in accordance with generally accepted
accounting principles consistently applied during the periods involved, except
(i) as otherwise noted therein, (ii) to the extent required by changes in
generally accepted accounting principles or (iii) in the case of unaudited
financial statements, normal year-end audit adjustments.
(b) The Company has heretofore made available or promptly will make
available to Purchaser a complete and correct copy of any amendments or
modifications, which have not yet been filed with the SEC, to agreements,
documents or other instruments which previously had been filed by the Company
with the SEC pursuant to the Exchange Act.
SECTION 4.8. SCHEDULE 14D-9; OFFER DOCUMENTS; PROXY STATEMENT. None of
the information (other than information provided in writing by Parent or
Purchaser for inclusion therein) included in the Schedule 14D-9, the Proxy
Statement or any other document filed or to be filed by or on behalf of the
Company with the SEC or any other governmental entity in connection with the
transactions contemplated by this Agreement, or supplied by the Company for
inclusion in the Offer Documents, including any amendments to any of the
foregoing, will be false or misleading with respect to any material fact or will
omit to state any material fact required to be stated therein or necessary in
order to make the statements therein, in light of the circumstances under which
they are made, not misleading; provided, that the foregoing shall not apply to
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information supplied by or on behalf of Parent or Purchaser in writing
specifically for inclusion or incorporation by reference in any such document.
The Schedule 14D-9 and the Proxy Statement, including any amendments thereto,
will comply in all material respects with the Exchange Act and the Securities
Act.
SECTION 4.9. NO DEFAULT. Except as set forth in Schedule 4.9 and except for
defaults or violations which, in the aggregate, would not have or constitute a
Material Adverse Effect, neither the Company nor any of its Subsidiaries is in
default or violation (and no event has occurred which with notice or the lapse
of time or both would constitute a default or violation) of any term, condition
or provision of (i) its charter, by-laws or other governing documents, (ii) any
note, mortgage, indenture, other evidence of indebtedness, guarantee, license,
agreement or
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other contract, instrument or contractual obligation to which the Company or any
of its Subsidiaries is now a party or by which they or any of their assets may
be bound, or (iii) any order, writ, injunction, decree, statute, rule or
regulation applicable to the Company or any of its Subsidiaries.
SECTION 4.10. LITIGATION; COMPLIANCE WITH LAWS.
(a) Except as set forth in the Company SEC Documents or on Schedule
4.10(a), there are no actions, suits, claims, proceedings or investigations
pending or, to the knowledge of the executive officers of the Company,
threatened, involving the Company or any of its Subsidiaries or any of their
respective assets (or any Person whose liability therefrom may have been
retained or assumed by the Company or any of its Subsidiaries either
contractually or by operation of Law), by or before any court, governmental or
regulatory authority or by any third party which, either individually or in the
aggregate, would have or constitute a Material Adverse Effect. None of the
Company, any of its Subsidiaries or any of their respective assets is subject to
any outstanding order, writ, injunction or decree which individually or in the
aggregate, in the future would have or constitute a Material Adverse Effect.
(b) Except as disclosed by the Company in the Company SEC Documents or
Schedule 4.10(b), the Company and its Subsidiaries are now being and in the past
have been operated in substantial compliance with all Laws except for violations
which individually or in the aggregate do not and will not have or constitute a
Material Adverse Effect.
(c) Without limiting the foregoing, except for those matters which
individually or in the aggregate would not have or constitute a Material Adverse
Effect and those matters set forth in Schedule 4.10(c), to the knowledge of the
executive officers of the Company, (i) the business of the Company is not being,
and has not in the last five years been, conducted in violation of any
applicable Environmental Laws (as defined below); (ii) the business of the
Company has not made, caused or contributed to any material release of any
hazardous or toxic waste, substance or constitute, into the environment, and
there are no hazardous wastes or toxic substances in, on, over or under the real
property owned, leased, managed or used by the Company on any of its
Subsidiaries; and (iii) neither the Company nor any of its Subsidiaries is
subject to any compliance agreement or settlement agreement from an alleged
violation of any Environmental Laws. For purposes of this Agreement,
"ENVIRONMENTAL LAWS" means all applicable Laws relating to pollution or
protection of the environment, including the Resource Conservation and Recovery
Act, the Clean Air Act, the Federal Water Pollution Control Act, the Toxic
Substances Control Act and the Comprehensive Environmental Response,
Compensation and Liability Act.
SECTION 4.11. EMPLOYEE BENEFIT PLANS; ERISA.
(a) Except for those matters set forth in Schedule 4.11(a) and such of the
following as would not have a Material Adverse Effect, (i) each "employee
benefit plan" (as
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defined in Section 3(3) of the Employee Retirement Income Security Act of 1974,
as amended ("ERISA")), and all other employee benefit, bonus, incentive, stock
option (or other equity-based), severance, change in control, welfare (including
post-retirement medical and life insurance) and fringe benefit plans (whether or
not subject to ERISA) maintained or sponsored by the Company or its Subsidiaries
or any trade or business, whether or not incorporated, that would be deemed a
"single employer" within the meaning of Section 4001 of ERISA (an "ERISA
AFFILIATE"), for the benefit of any employee or former employee of the Company
or any of its ERISA Affiliates (the "PLANS") is, and has been, operated in all
material respects in accordance with its terms and in substantial compliance
(including the making of governmental filings) with all applicable Laws,
including ERISA and the applicable provisions of the Internal Revenue Code of
1986, as amended (the "CODE"), (ii) each of the Plans intended to be "qualified"
within the meaning of Section 401(a) of the Code has been determined by the
Internal Revenue Service (the "IRS") to be so qualified, (iii) no material
withdrawal liability with respect to any "multiemployer pension plan" (as
defined in Section 3(37) of ERISA) would be incurred by the Company and its
ERISA Affiliates if withdrawal from such plan were to occur on the Effective
Time, (iv) no "reportable event," as such term is defined in Section 4043(c) of
ERISA (for which the 30-day notice requirement to the Pension Benefit Guaranty
Corporation ("PBGC") has not been waived), has occurred with respect to any Plan
that is subject to Title IV of ERISA, and (v) there are no material pending or,
to the knowledge of the executive officers of the Company, threatened claims
(other than routine claims for benefits) by, on behalf of or against any of the
Plans or any trusts related thereto other than routine benefit claim matters.
(b) (i) No Plan has incurred an "accumulated funding deficiency" (as
defined in Section 302 of ERISA or Section 412 of the Code), whether or not
waived, (ii) neither the Company nor any ERISA Affiliate has incurred any
liability under Title IV of ERISA except for required premium payments to the
PBGC, which payments have been made when due, and no events have occurred which
are reasonably likely to give rise to any liability of the Company or an ERISA
Affiliate under Title IV of ERISA or which could reasonably be anticipated to
result in any claims being made against Purchaser by the PBGC, and (iii) neither
the Company nor any ERISA Affiliate has incurred any material withdrawal
liability (including any contingent or secondary withdrawal liability) within
the meaning of Sections 4201 and 4204 of ERISA to any "multiemployer plan"
(within the meaning of Section 3(37) of ERISA) which has not been satisfied in
full.
(c) Except as set forth on Schedule 4.11(c), with respect to each Plan that
is subject to Title IV of ERISA, (i) the Company has provided to Purchaser
copies of the most recent actuarial valuation report prepared for such Plan
prior to the date hereof, (ii) the assets and liabilities in respect of the
accrued benefits as set forth in the most recent actuarial valuation report
prepared by the Plan's actuary fairly present the funded status of such Plan in
all material respects, and (iii) since the date of such valuation report there
has been no material adverse change in the funded status of any such Plan.
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(d) Neither the Company nor any ERISA Affiliate has failed to make any
contribution or payment to any Plan or multiemployer plan which, in either case
has resulted or could result in the imposition of a material Lien or the posting
of a material bond or other material security under ERISA or the Code.
(e) Except as otherwise set forth on Schedule 4.11(e) or as expressly
provided for in this Agreement, the consummation of the transactions
contemplated by this Agreement will not (i) entitle any current or former
employee or officer of the Company or any ERISA Affiliate to severance pay,
unemployment compensation or any other payment, or (ii) accelerate the time of
payment or vesting, or increase the amount of compensation due any such employee
or officer.
(f) Except as set forth on Schedule 4.11(f), the Company and its
Subsidiaries do not have any employment or consulting agreements, written or
oral, with any Company Employees (as defined in Section 6.8).
SECTION 4.12. ASSETS; REAL PROPERTY; INTELLECTUAL PROPERTY; FACILITIES.
(a) Except as set forth on Schedule 4.12(a), the Company and its
Subsidiaries own or have rights to use all assets (other than real property)
necessary to permit the Company and its Subsidiaries to conduct their business
as it is currently being conducted except where the failure to own or have the
right to use such assets would not, individually or in the aggregate, have or
constitute a Material Adverse Effect.
(b) Schedule 4.12(b) identifies all real property owned or leased by the
Company or its Subsidiaries. Except as set forth on Schedule 4.12(b), the
Company has, either directly or through its Subsidiaries, (i) good, valid and
marketable or indefeasible title to, free and clear of any Liens other than
Permitted Liens (as defined below), or (ii) rights by lease or other agreement
to use, all such real property. The term "PERMITTED LIENS" shall mean (i) Liens
for water, sewage and similar charges and current taxes and assessments not yet
due and payable or being contested in good faith, (ii) mechanics', carriers',
workers', repairers', materialmen's, warehousemen's and other similar Liens
arising or incurred in the ordinary course of business, (iii) Liens that do not
secure debt as would not in the aggregate have a Material Adverse Effect, (iv)
Liens arising or resulting from any action taken by Parent or Purchaser, and (v)
Liens securing indebtedness described in, or created pursuant to documents filed
as exhibits pursuant to, the Company SEC Documents. All real property leases of
property (excluding for purposes of this sentence leases with residents of
Facilities) under which the Company or any of its Subsidiaries is a lessee or
lessor are valid, binding and enforceable in all material respects in accordance
with their terms, and there are no existing material defaults thereunder.
(c) Neither the Company or any of its Subsidiaries now or in the past has
used Intellectual Property (as defined below) which conflicts with or infringes
upon any proprietary rights of others except where such conflict or infringement
would not, individually or in the aggregate, have or constitute a Material
Adverse Effect. "INTELLECTUAL PROPERTY" means
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trademarks, trade names, service marks, service names, mark registrations,
logos, assumed names, copyright registrations, patents and all applications
therefor and all other similar proprietary rights.
(d) Schedule 4.12(d) sets forth each residential community, retirement
housing community, continuing care community, skilled nursing facility, assisted
living facility or other residence or group of residences (each, a "FACILITY")
owned, operated, managed or used by the Company or any of its Subsidiaries,
whether such Facility is owned, operated, managed or used by the Company or one
of its Subsidiaries and, if a Subsidiary, the ownership interest of the Company
and its Subsidiaries in such Subsidiary and the nature of any minority ownership
interests, if any, in such Subsidiary.
SECTION 4.13. CERTAIN CONTRACTS AND ARRANGEMENTS. Except as set forth on
Schedule 4.13, during the twelve months immediately prior to the date hereof, no
Material Contract (as defined below) to which the Company or any of its
Subsidiaries is a party has been cancelled or otherwise terminated and during
such time the Company has not been threatened with any such cancellation or
termination except, in each case, for cancelled or terminated contracts which,
individually or in the aggregate, would not have or constitute a Material
Adverse Effect. "Material Contract" mean any agreement, written or oral, to
which the Company or one of its Subsidiaries is a party or by which any of their
assets are bound that either (i) obligates the Company and its Subsidiaries to
pay amounts in excess of $500,000, (ii) is a Facility management or similar
agreement, (iii) relates to the provision or procurement of goods or services to
or from an affiliate, (iv) involves a material joint venture or partnership
arrangement, (v) involves an acquisition or divestiture with a price in excess
of $1,000,000 or (vi) relates to the ownership or lease of material real
property.
SECTION 4.14. TAXES. Except as otherwise disclosed on Schedule 4.14 and
except for those matters which, either individually or in the aggregate, would
not result in a Material Adverse Effect:
(a) The Company and each of its Subsidiaries have filed (or have had filed
on their behalf) or will file or cause to be filed, all Tax Returns (as defined
in Section 4.14(i)(3) hereof) required by applicable Law to be filed by any of
them prior to the consummation of the Offer, and all such Tax Returns and
amendments thereto are or (when filed prior to the consummation of the Offer)
will be true, complete and correct in all material respects.
(b) The Company and each of its Subsidiaries have paid (or have had paid on
their behalf) all Taxes (as defined in Section 4.14(i)(2) hereof) due with
respect to any period ending prior to or as of the expiration of the Offer), or
where payment of Taxes is not yet due, have established (or have had established
on their behalf and for their sole benefit and recourse), or will establish or
cause to be established before the consummation of the Offer, an adequate
accrual in accordance with generally accepted accounting principles for the
payment of all such Taxes which have accrued prior to the expiration of the
Offer. No claim has been made by any
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tax authority that the Company or any of its Subsidiaries is or may be subject
to the payment of taxes in jurisdiction in which the Company and its
Subsidiaries have not filed Tax Returns.
(c) There are no Liens for any Taxes upon the assets of the Company or any
of its Subsidiaries, other than statutory liens for Taxes not yet due and
payable and Liens for real estate Taxes being contested in good faith.
(d) No Audit (as defined in Section 4.14(i)(1)) is pending with respect to
any Taxes due from the Company or any of its Subsidiaries. There are no
outstanding waivers extending any statute of limitations relating to the payment
of Taxes due from the Company or any of its Subsidiaries for any taxable period
ending prior to the expiration of the Offer.
(e) Neither the Company nor any of its Subsidiaries has received any
written notice of deficiency, assessment or adjustment from the Internal Revenue
Service or any other domestic or foreign governmental tax authority that has not
been fully paid or finally settled, and any such deficiency, adjustment or
assessment shown on Schedule 4.14 is being contested in good faith through
appropriate proceedings and adequate reserves have been established on the
Company's financial statements therefor. There are no deficiencies, assessments
or adjustments pending, assessed or, to the knowledge of the executive officers
of the Company, threatened, with respect to the Company or any of its
Subsidiaries for which written notice has not been received.
(f) Neither the Company nor any of its Subsidiaries is a party to, is bound
by, or has any obligation under, a tax sharing or tax allocation agreement or
arrangement for the allocation, apportionment, sharing, indemnification or
payment of Taxes.
(g) Neither the Company nor any of its Subsidiaries has filed a consent
under Section 341(f) of the Code.
(h) Except as provided in this Agreement, as disclosed in the Company SEC
Documents or as described in Schedule 4.14(h), neither the Company nor any of
its Subsidiaries is a party to any agreement, contract, or other arrangement
that would result, separately or in the aggregate, in the requirement to pay any
"excess parachute payments" within the meaning of Section 280G of the Code or
any gross-up or additional payment in connection with such an agreement,
contract or arrangement.
(i) For purposes of this Section 4.14, the following capitalized terms have
the following meanings:
(1) "AUDIT" shall mean any audit, assessment or other
examination of Taxes or Tax Returns by the IRS or by any other domestic or
foreign governmental authority responsible for the administration of any
Taxes, proceeding or appeal of such proceeding relating to Taxes.
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(2) "TAXES" shall mean all federal, state, local and foreign
taxes, and other assessments of a similar nature (whether imposed directly
or through withholding) including but not limited to income, excise,
property, gross receipts, sales, use (or any similar taxes), gains,
transfer, franchise, payroll, value-added, withholding, Social Security,
business license fees, customs, duties and other taxes, assessments,
charges, or other fees imposed by a governmental authority, including any
interest, additions to tax or penalties applicable thereto, whether or not
contested.
(3) "TAX RETURNS" shall mean all Federal, state, local and
foreign tax returns, declarations, statements, reports, schedules, forms
and information returns and any amended Tax Return relating to Taxes.
SECTION 4.15. LABOR MATTERS. Except as set forth on Schedule 4.15,
neither the Company nor any of its Subsidiaries has, since July 1, 1993, (i)
been subject to, or threatened with, any material strike, lockout or other labor
dispute or engaged in any unfair labor practice, the result of which had or
constituted, or could reasonably be expected to have or constitute, a Material
Adverse Effect, or (ii) received notice of any pending petition for
certification before the National Labor Relations Board with respect to any
material group of Company Employees who are not currently organized.
SECTION 4.16. LICENSES AND PERMITS. Each of the Company and its
Subsidiaries holds all licenses, permits, certificates of authority or
franchises (collectively, "PERMITS") that are required by any governmental
entity to permit each of them to conduct their respective businesses as now
conducted, and all such Permits are valid and in full force and effect and will
remain so upon consummation of the transactions contemplated by this Agreement,
except where the failure to hold any such Permits or the failure to keep such
Permits in effect could not, individually or in the aggregate, have or
constitute a Material Adverse Effect. To the knowledge of the executive
officers of the Company, no suspension, cancellation or termination of any of
such Permits is threatened or imminent that could be or constitute a Material
Adverse Effect.
SECTION 4.17. BROKERS. Except as set forth on Schedule 4.17, no
broker, finder, investment banker or other intermediary is entitled to any
brokerage, finder's or other fee or commission in connection with the
transactions contemplated by this Agreement based upon arrangements made by and
on behalf the Company or any of its Subsidiaries.
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ARTICLE V
REPRESENTATIONS AND WARRANTIES OF PARENT AND PURCHASER
Parent and Purchaser represent, warrant and covenant to and with the
Company as follows:
SECTION 5.1. ORGANIZATION. Each of Parent and Purchaser is a
corporation duly organized, validly existing and in good standing under the Laws
of the state of its incorporation and has the requisite corporate power and
authority to own, lease and operate its properties and to carry on its business
as now being conducted, except where the failure to be so organized, existing
and in good standing or to have such power and authority would not, in the
aggregate, have a Material Adverse Effect (as defined below) on Parent or
Purchaser. When used in connection with Parent or Purchaser, the term "MATERIAL
ADVERSE EFFECT" means any change, effect or circumstance that could reasonably
be expected to have a material adverse effect on 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 Purchaser to perform their
material obligations under this Agreement. Parent beneficially owns, directly
or indirectly, all of the outstanding capital stock of Purchaser.
SECTION 5.2. AUTHORITY RELATIVE TO THIS AGREEMENT. Each of
Parent and Purchaser has the requisite corporate power and authority to execute
and deliver this Agreement and to consummate the transactions contemplated
hereby. The execution and delivery of this Agreement and the consummation of
the transactions contemplated hereby have been duly and validly authorized by
the Boards of Directors of Purchaser and Parent and no other corporate or other
proceedings on the part of Parent, Purchaser or any of their affiliates are
necessary to authorize this Agreement or to consummate the transactions so
contemplated. This Agreement has been duly and validly executed and delivered
by each of Parent and Purchaser and constitutes the valid and binding agreement
of each of Parent and Purchaser, enforceable against each of Parent and
Purchaser in accordance with its terms.
SECTION 5.3. CONSENTS AND APPROVALS; NO VIOLATIONS. Except for
applicable requirements of the Securities Act, the Exchange Act, the HSR Act,
the filing and recordation of articles of merger as required by the IBCL, and
any such filings and approvals as may be required under the "takeover" or "blue
sky" Laws of various states and as contemplated by this Agreement, neither the
execution and delivery of this Agreement by Parent or Purchaser nor the
consummation by Parent or Purchaser of the transactions contemplated hereby will
(i) conflict with or result in any breach of any provision of the charter or by-
laws of Parent or Purchaser, (ii) require on the part of Parent or Purchaser any
filing with, or the obtaining of any permit, authorization, consent or approval
of, any governmental or regulatory authority or any third party, (iii) result in
a violation or breach of, or constitute (with or without due notice or lapse of
time or both) a default (or give rise to any right of termination, amendment,
cancellation, acceleration or payment, or to the creation of a lien or
encumbrance) under any of the terms, conditions or
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provisions of any note, mortgage, indenture, other evidence of indebtedness,
guarantee, license, agreement or other contract, instrument or contractual
obligation to which Parent, Purchaser or any of their respective Subsidiaries is
a party or by which any of them or any of their assets may be bound, or (iv)
violate any order, writ, injunction, decree, statute, rule or regulation
applicable to Parent, Purchaser, any of their Subsidiaries or any of their
assets, except for such of the foregoing in clauses (ii), (iii) and (iv) above
that are set forth on Schedule 5.3 or which would not in the aggregate have or
constitute a Material Adverse Effect.
SECTION 5.4. OFFER DOCUMENTS; PROXY STATEMENT; SCHEDULE 14D-9.
Neither the Offer Documents nor any other document filed or to be filed by or on
behalf of Parent or Purchaser with the SEC or any other governmental entity in
connection with the transactions contemplated by this Agreement contained when
filed or will, at the respective times filed with the SEC or other governmental
entity, or at any time thereafter when the information included therein is
required to be updated pursuant to applicable law, contain any untrue statement
of a material fact or omit to state any material fact required to be stated
therein or necessary in order to make the statements made therein, in light of
the circumstances under which they were made, not misleading; provided, that the
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foregoing shall not apply to information supplied by or on behalf of the Company
specifically for inclusion or incorporation by reference in any such document.
The Offer Documents will comply as to form in all material respects with the
provisions of the Exchange Act. None of the information supplied by Parent or
Purchaser in writing for inclusion in the Proxy Statement or the Schedule 14D-9
will, at the respective times that the Proxy Statement and the Schedule 14D-9 or
any amendments or supplements thereto are filed with the SEC and are first
published or sent or given to holders of Shares, and in the case of the Proxy
Statement, at the time that it or any amendment or supplement thereto is mailed
to the Company's shareholders, at the time of the Shareholders' Meeting or at
the Effective Time, contain any untrue statement of a material fact or omit to
state any material fact required to be stated therein or necessary in order to
make the statements therein, in light of the circumstances under which they were
made, not misleading.
SECTION 5.5. FINANCING. Prior to the expiration of the Offer,
Purchaser will have all funds necessary for the purchase of the Shares pursuant
to the Offer. Prior to the Effective Time, Purchaser will have all funds
necessary to consummate the Merger and to consummate all other transactions
contemplated hereunder to be consummated by it, Parent or the Company.
SECTION 5.6. BROKERS. No broker, finder, investment banker or other
intermediary is entitled to any brokerage, finder's or other fee or commission
in connection with the transactions contemplated by this Agreement based upon
arrangements made by and on behalf of Parent or Purchaser.
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ARTICLE VI
COVENANTS
SECTION 6.1. CONDUCT OF BUSINESS OF THE COMPANY. Except as
contemplated by this Agreement or as set forth on Schedule 6.1, during the
period from the date of this Agreement to the consummation of the Offer and, if
Parent has made a request therefor pursuant to Section 1.4 hereof, until its
Designated Directors (as defined in Section 8.4 hereof) shall constitute in
their entirety a majority of the Board, 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 hereof (collectively, the
"ORDINARY COURSE OBLIGATIONS"). Without limiting the generality of and in
addition to the foregoing, and except as set forth on Schedule 6.1 or otherwise
contemplated by this Agreement, prior to the time specified in the preceding
sentence, 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 or 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 (except by the Company in connection with
Stock Options, Warrants and the POR) or amend any of the terms of any such
securities outstanding on the date hereof;
(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; (ii) incur, assume or prepay any long-term
debt; (iii) except in the ordinary course of business consistent with past
practices, (A) incur, assume or prepay any obligations with respect to letters
of credit or any 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, (C) make any material loans, advances or capital contributions to,
or investments in, any other Person; (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 other than a Permitted Lien;
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(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
otherwise contemplated hereby, enter into, adopt or 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 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; provided, that the provisions of this Section 6.1(i) shall not apply
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to any 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;
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(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 hereof, would have or constitute a
Material Adverse Effect after the date hereof; 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
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Forum Retirement Partners, L.P. ("FRP") and Forum Retirement, Inc., FRP's
general partner ("FRI"), the Company shall be obligated only to use its
reasonable efforts to cause FRP to comply with the provisions of this Section
6.1 (subject to the fiduciary duties of FRI, if then applicable).
SECTION 6.2. ACQUISITION PROPOSALS.
(a) The Company shall, and shall cause its officers, directors,
employees, representatives and agents to, immediately cease any existing
discussions or negotiations with any parties conducted heretofore with respect
to any Acquisition Proposal (as defined in Section 6.2(b) hereof). The Company
and its Subsidiaries will not, and will 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 in
Section 6.2(b)) relating to an Acquisition Proposal (other than the transactions
contemplated hereby). Notwithstanding anything to the contrary contained in
this Section 6.2, 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 herein shall prevent the
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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
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enter into a written agreement providing for a Third Party Transaction (as
defined in Section 6.2(b)) except concurrently with or after the termination of
this Agreement (except with respect to confidentiality agreements to the extent
expressly provided below). 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
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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.
(b) For purposes of this 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 this Agreement). "THIRD
PARTY" means any Person other than Parent, Purchaser or any affiliate thereof.
(c) Notwithstanding any provision to the contrary herein, 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 was 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 was 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. The Company has previously provided to Parent a complete and
accurate list of all Pre-February 6 Parties.
SECTION 6.3. ACCESS TO INFORMATION.
(a) Between the date of this Agreement and the Effective Time, upon
reasonable notice and at reasonable times, and subject to any access,
disclosure, copying or other limitations imposed by applicable Law or any of the
Company's or its Subsidiaries' contracts, the Company will give Parent and its
authorized representatives reasonable access to all Facilities, offices and
other properties and assets and to all books and records of it and its
Subsidiaries, and will permit
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Parent to make such inspections as it may reasonably require, and will cause
its officers and those of its Subsidiaries to furnish Parent with (i) such
financial and operating data and other information with respect to the Company
and its Subsidiaries as Parent may from time to time reasonably request, or (ii)
any other financial and operating data which materially affects the Company and
its Subsidiaries. Parent and its authorized representatives will conduct all
such inspections in a manner which will minimize any disruptions of the business
and operations of the Company and its Subsidiaries.
(b) Parent, Purchaser and the Company agree that the provisions of the
Confidentiality Agreement dated December 22, 1995 and the related undertaking
(collectively, the "CONFIDENTIALITY AGREEMENT") by and between Parent and the
Company shall remain binding and in full force and effect and that the terms of
the Confidentiality Agreement are incorporated herein by reference; provided
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that nothing in such undertaking shall prohibit Parent and Purchaser from
consummating the transactions contemplated by this Agreement and the Offer.
SECTION 6.4. REASONABLE EFFORTS. Subject to the terms and conditions
of this Agreement and without limitation to the provisions of Section 6.6
hereof, each of the parties hereto agrees 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 this Agreement
(including (i) cooperating in the preparation and filing of the Offer Documents,
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 Purchaser that may be asked to provide financing for the transactions
contemplated by this Agreement; (iii) taking of 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 hereby). In case at any time after the Effective Time
any further action is necessary to carry out the purposes of this Agreement, the
proper officers and directors of each party hereto shall use all reasonable
efforts to take all such necessary action.
SECTION 6.5. CONSENTS AND CERTAIN ARRANGEMENTS.
(a) Each of the Company, Parent and 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 this Agreement. Each of the parties
hereto will furnish to the other party such necessary information and reasonable
assistance as such other Persons may reasonably request in connection with the
foregoing.
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(b) As soon as practicable after the date hereof, Parent, 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 POR substantially to
the effect set forth on Schedule 6.5 (the "BANKRUPTCY ORDER"). Immediately
after receipt of the Bankruptcy Order, the Company will cancel all Shares
reserved for issuance under the POR.
(c) The Company will, upon the specific request of 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 Purchaser to the validity or applicability to the Offer or the
Merger of any state takeover Law.
SECTION 6.6. ANTITRUST FILINGS.
(a) In addition to and without limiting the agreements of Parent and
Purchaser contained in Section 6.5 hereof, Parent, Purchaser and the Company
will (i) take promptly all actions necessary to make the filings required of
Parent, 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, 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 this Agreement or the
Ancillary Agreements commenced by any of the Federal Trade Commission, the
Antitrust Division of the Department of Justice or any state attorney general.
(b) In furtherance and not in limitation of the covenants of Parent
and Purchaser contained in Section 6.5 and Section 6.6(a) hereof, Parent,
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, 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 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 specified in clause (i)(A) of Exhibit A, so
long as such action is, in the good faith judgment of Parent, unlikely to have a
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material impact on the benefits Parent anticipates from the transactions
contemplated by this Agreement.
(c) Each of the Company, Parent and 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 SEC or any other governmental or regulatory authority regarding any of the
transactions contemplated hereby. Parent and/or 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 hereby.
(d) "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.
SECTION 6.7. PUBLIC ANNOUNCEMENTS. Parent, Purchaser and the Company
will consult with each other before issuing any press release or otherwise
making any public statements with respect to the Offer, or the Merger and shall
not issue any such press release or make any such public statement prior to such
consultation, except as may be required by Law or by obligations pursuant to any
listing agreement with any securities exchange or the NASDAQ.
SECTION 6.8. EMPLOYEE BENEFITS; EMPLOYEES.
(a) Until December 31, 1996, Parent agrees 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.
(b) Parent agrees 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.
All of the Benefit Agreements
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providing for payments in excess of $100,000 are identified in reports made
available to the Purchaser pursuant to Section 4.11 or on Schedule 6.8(b).
(c) The parties will take the actions with respect to severance and
other employment-related matters set forth on Schedule 6.8(c).
SECTION 6.9. PRE-CLOSING CONSULTATION. Following the date hereof
and prior to the Effective Time, the Company shall designate a senior officer of
the Company (the "COMPANY REPRESENTATIVE") to consult with an officer of Parent
designated by Parent (the "PARENT REPRESENTATIVE") with respect to major
business decisions to be made concerning the operation of the Company and its
Subsidiaries. Such consultation shall be made on as frequent a basis as may be
reasonably requested by Parent. The parties hereto acknowledge and agree that
the agreements set forth in this Section 6.9 shall be subject to any
restrictions or limitations required under applicable Law.
SECTION 6.10. INDEMNIFICATION. 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 this Agreement and the transactions
contemplated hereby), 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 this Agreement or the transactions contemplated hereby
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 hereof and under all agreements to
which the Company is a party as of the date hereof set forth in Schedule 6.10,
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 under this Section 6.10 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 this Section 6.10 will be made
by independent counsel selected by the Indemnified Party and reasonably
satisfactory to the Surviving Corporation. Notwithstanding the foregoing,
nothing in this 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. 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
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prior to the date hereof (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.
ARTICLE VII
CONDITIONS TO CONSUMMATION OF THE MERGER
SECTION 7.1. CONDITIONS TO EACH PARTY'S OBLIGATION TO EFFECT THE
MERGER. The respective obligation of each party to effect the Merger is subject
to the satisfaction at or prior to the Effective Time of the following
conditions:
(a) This 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 this Agreement prior to the purchase of any
Shares.
SECTION 7.2. CONDITIONS TO THE OBLIGATION OF THE COMPANY TO
EFFECT THE MERGER. The obligation of the Company to effect the Merger is
further subject to the satisfaction at or prior to the Effective Time of the
following conditions:
(a) The representations and warranties of Parent and Purchaser
contained in this 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 Purchaser shall have performed in all material
respects its obligations under this Agreement required to be performed by it at
or prior to the Effective Time pursuant to the terms hereof.
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Parent and Purchaser will furnish the Company with such certificates and other
documents to evidence the fulfillment of the conditions set forth in this
Section 7.2 as the Company may reasonably request.
SECTION 7.3. CONDITIONS TO OBLIGATIONS OF PARENT AND PURCHASER TO
EFFECT THE MERGER. The obligations of Parent and 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
this 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 this Agreement required to be performed by it at or prior
to the Effective Time pursuant to the terms hereof.
The Company will furnish Parent and Purchaser with such certificates and other
documents to evidence the fulfillment of the conditions set forth in this
Section 7.3 as Parent or Purchaser may reasonably request.
SECTION 7.4. EXCEPTION. The conditions set forth in Sections 7.2
and 7.3 hereof shall cease to be conditions to the obligations of any of the
parties hereto if Purchaser shall have accepted for payment and paid for Shares
validly tendered pursuant to the Offer or if Purchaser fails to accept for
payment any Shares pursuant to the Offer in violation of the terms thereof.
ARTICLE VIII
TERMINATION; AMENDMENT; WAIVER
SECTION 8.1. TERMINATION. This 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, Purchaser and the Company;
(b) by Parent, 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;
30
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(c) by Parent and 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 this Agreement, 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 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 such termination under this clause (ii)
--------
shall not be effective until payment of the fee required by Section 8.3(a)
hereof and the fees and expenses of Section 8.3(b) hereof;
(e) by Parent or 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 this 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 this 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 this Agreement, (B) shall have modified (including by
amendment of Schedule 14D-9) in a manner adverse to Purchaser its approval or
recommendation of the Offer, the Merger or this 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
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 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 this Agreement on the part of Parent or Purchaser
which materially adversely affects the consummation of the Offer or (ii) there
shall have been a material breach of any covenant or agreement in this Agreement
on the part of Parent or 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
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(g) by Parent, Purchaser or the Company if the consummation of the
Offer shall not have occurred on or prior to July 15, 1996.
SECTION 8.2 EFFECT OF TERMINATION. In the event of the termination and
abandonment of this Agreement pursuant to and in conformity with Section 8.1,
this Agreement shall forthwith become void and have no effect, without any
liability on the part of any party hereto or its affiliates, directors, officers
or shareholders, other than the provisions of this Section 8.2 and Sections
6.3(b), 8.3, 9.3 and 9.10 hereof. Nothing contained in this Section 8.2 shall
relieve any party from liability for any breach of this Agreement. For a period
of one year from any termination of this Agreement, (i) the Company and its
Subsidiaries will not solicit for hire any of the employees of Purchaser or its
Subsidiaries with whom the Company and its Subsidiaries and their
representatives and agents have had contact during the investigation and
negotiation of this Agreement or otherwise prior to the termination of this
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 this Agreement or otherwise prior to the
termination of this Agreement.
SECTION 8.3 FEES AND EXPENSES.
(a) If:
(i) Parent or Purchaser terminates this Agreement pursuant to
Section 8.1(e)(ii) or 8.1(e)(iv) hereof 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 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 hereof and prior to such termination; provided, that a sale
--------
of assets by the Company shall constitute a Third Party Transaction for
purposes of this Section 8.3(a)(i) only if a majority of the assets of the
Company are involved;
(ii) Parent or Purchaser terminates this Agreement pursuant to
Section 8.1(e)(iii) hereof; or
(iii) the Company terminates this Agreement pursuant to
Section 8.1(d)(ii) hereof;
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,
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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.
(b) If Parent is entitled to receive the $14 million fee under Section
8.3(a) hereof, then the Company shall reimburse Parent, 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 hereof. 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.
(c) Except as specifically provided in this Section 8.3 each party
shall bear its own respective expenses incurred in connection with this
Agreement, the Offer and the Merger, including the preparation, execution and
performance of this Agreement and the transactions contemplated hereby and
thereby, and all fees and expenses of investment bankers, finders, brokers,
agents, representatives, counsel and accountants.
SECTION 8.4. AMENDMENT. This Agreement may be amended by action
taken by the Company, Parent and 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 persons designated by Parent pursuant to Section 1.4 hereof
(such directors are hereinafter referred to as the "DESIGNATED DIRECTORS")
constitute in their entirety a majority of the Company's Board, 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 (as hereafter defined) 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.
This Agreement may not be amended except by an instrument in writing signed on
behalf of the parties. For purposes hereof, the term "CONTINUING DIRECTOR"
shall mean (a) any member of the Board as of the date hereof, (b) any member of
the Board who is unaffiliated with, and not a Designated Director or other
nominee of, Parent or 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 Purchaser or their respective
Subsidiaries and (ii) recommended to succeed a Continuing Director by a majority
of the Continuing Directors then on the Board.
SECTION 8.5. EXTENSION; WAIVER. At any time prior to the Effective
Time, the parties may (a) extend the time for the performance of any of the
obligations or other acts of the other parties hereto, (b) waive any
inaccuracies in the representations and warranties of the other parties
contained herein or in any document, certificate or writing delivered pursuant
hereto or
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(c) waive compliance with any of the agreements or conditions of the other
parties hereto contained herein; provided that (x) in the event that any
--------
Designated Directors constitute in their entirety a majority of the Board, no
extensions or waivers shall be made which adversely affect 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
(y) after the date of adoption of the Merger Agreement by the shareholders of
the Company, no extensions or waivers shall be made which adversely affect the
rights of the Company's shareholders hereunder without the approval of such
shareholders. Any agreement on the part of any party to any such extension or
waiver shall be valid only if set forth in an instrument in writing signed on
behalf of such party.
ARTICLE IX
MISCELLANEOUS
SECTION 9.1. SURVIVAL. If the Merger occurs, the representations,
warranties, covenants and agreements made herein shall not survive beyond the
Effective Time; provided that the covenants and agreements contained in Sections
--------
2.7, 2.9, 3.1, 3.2, 6.4, 6.5, 6.6, 6.8, 6.10, 8.2, 8.3, 8.4, 8.5, 9.3, 9.5 and
9.10 hereof shall survive beyond the Effective Time without limitation. If the
Agreement is terminated in accordance with Article VIII, the representations,
warranties, covenants and agreements made herein shall not survive beyond such
termination; provided that the covenants and agreements contained in Sections
--------
6.3(b), 8.1, 8.2, 8.3 and 9.3 shall survive any such termination without
limitation.
SECTION 9.2. ENTIRE AGREEMENT. Except for the provisions of the
Confidentiality Agreement which shall continue in full force and effect, this
Agreement (including the schedules and exhibits and the agreements and other
documents referred to herein) constitutes the entire agreement among the parties
with respect to the subject matter hereof and supersedes all other prior
negotiations, commitments, agreements and understandings, both written and oral,
between the parties or any of them with respect to the subject matter hereof.
SECTION 9.3. GOVERNING LAW. Except to the extent the IBCL is
required to apply, this Agreement shall be governed by and construed in
accordance with the Laws of the State of Delaware (regardless of the Laws that
might otherwise govern under applicable principles of conflict of laws) as to
all matters, including matters of validity, construction, effect, performance
and remedies.
SECTION 9.4. NOTICES. All notices and other communications
hereunder shall be in writing and shall be deemed given upon (a) transmitter's
confirmation of a receipt of a facsimile transmission, (b) confirmed delivery by
a standard overnight carrier or when delivered by hand or (c) the expiration of
five business days after the day when mailed by certified or registered
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mail, postage prepaid, addressed at the following addresses (or at such other
address for a party as shall be specified by like notice):
(a) If to the Parent or Purchaser, to:
Marriott International, Inc.
10400 Fernwood Road
Bethesda, Maryland 20817
Telephone: (301) 380-9555
Telecopy: (301) 380-8150
Attention: General Counsel
with a copy to:
O'Melveny & Myers
555 Thirteenth Street, N.W.
Washington, D.C. 20004
Telephone: (202) 383-5300
Telecopy: (202) 383-5414
Attention: Jeffrey J. Rosen
David G. Pommerening
(b) If to the Company, to:
Forum Group, Inc.
11320 Random Hills Road, Suite 400
Fairfax, Virginia 22066
Telephone: (703) 277-7000
Telecopy: (703) 277-7090
Attention: Chief Executive Officer
with a copy to:
Jones, Day, Reavis & Pogue
599 Lexington Avenue
New York, New York 10022
Telephone: (212) 326-3800
Telecopy: (212) 755-7306
Attention: Robert A. Profusek
SECTION 9.5. SUCCESSORS AND ASSIGNS; NO THIRD PARTY BENEFICIARIES.
This Agreement and all of the provisions hereof shall be binding upon and inure
to the benefit of the parties and their respective successors and permitted
assigns, but neither this Agreement nor any
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of the rights, interests or obligations hereunder shall be assigned by either
party (whether by operation of Law or otherwise) without the prior written
consent of the other party; provided, that Purchaser may assign its rights and
--------
obligations hereunder to Parent or any Subsidiary of Parent, but no such
assignment shall relieve Purchaser of its obligations hereunder. This Agreement
shall be binding upon and inure solely to the benefit of each party hereto, and
except for Sections 2.7, 2.9, 6.8 and 6.10 hereof nothing in this Agreement,
express or implied, is intended to or shall confer upon any other Person any
rights, benefits or remedies of any nature whatsoever under or by reason of this
Agreement.
SECTION 9.6. COUNTERPARTS. This Agreement may be executed in two or
more counterparts, each of which shall be deemed to be an original, but all of
which shall constitute one and the same instrument.
SECTION 9.7. INTERPRETATION. The descriptive headings herein are
inserted for convenience of reference only and are not intended to be part of or
to affect the meaning or interpretation of this Agreement. "Include,"
"includes," and "including" shall be deemed to be followed by "without
limitation" whether or not they are in fact followed by such words or words of
like import.
SECTION 9.8. SCHEDULES. The Schedules hereto shall be construed
with and as an integral part of this Agreement to the same extent as if the same
had been set forth verbatim herein.
SECTION 9.9. LEGAL ENFORCEABILITY. Any provision of this
Agreement which is prohibited or unenforceable in any jurisdiction shall, as to
such jurisdiction, be ineffective to the extent of such prohibition or
unenforceability without affecting the validity or enforceability of the
remaining provisions hereof. Any such prohibition or unenforceability in any
jurisdiction shall not invalidate or render unenforceable such provision in any
other jurisdiction. If any provision of this Agreement is so broad as to be
unenforceable, the provision shall be interpreted to be only so broad as is
enforceable.
SECTION 9.10. SPECIFIC PERFORMANCE. Each of the parties hereto
acknowledges and agrees that in the event of any breach of this Agreement, each
non-breaching party would be irreparably and immediately harmed and could not be
made whole by monetary damages. It is accordingly agreed that the parties
hereto (a) will waive, in any action for specific performance, the defense of
adequacy of a remedy at law and (b) shall be entitled, in addition to any other
remedy to which they may be entitled at law or in equity, to compel specific
performance of this Agreement in any action instituted in any state or federal
court sitting in Delaware. The parties hereto consent to personal jurisdiction
in any such action brought in any state or federal court sitting in Delaware and
to service of process upon it in the manner set forth in Section 9.4 hereof.
[The remainder of this page has been left blank intentionally.]
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IN WITNESS WHEREOF, each of the parties has caused this Agreement and
Plan of Merger to be executed on its behalf by its officers thereunto duly
authorized, all as of the day and year first above written.
FORUM GROUP, INC.
By: /s/ MARK PACALA
---------------------------------
Name: Mark Pacala
Title: Chairman and Chief
Executive Officer
MARRIOTT INTERNATIONAL, INC.
By: /s/ WILLIAM J. SHAW
---------------------------------
Name: William J. Shaw
Title: Executive Vice President
FG ACQUISITION CORP.
By: /s/ WILLIAM J. SHAW
----------------------------------
Name: William J. Shaw
Title: Vice President
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EXHIBIT A
CONDITIONS OF THE OFFER
Notwithstanding any other provision of the Offer, 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 and the Agreement), (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 this 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 this Agreement, that would constitute a breach or violation of any of
the representations or warranties made by the Company in Article IV of this
Agreement if such representations or warranties had been made without any
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 Purchaser may not terminate the Offer under
this subsection (b) until 20 days after written notice thereof has been
given to the Company by Parent or Purchaser and unless at such time the
breach has not been cured; or
A-1
<PAGE>
(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 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
as defined in either Section 4.1 or Section 5.1 of the Merger Agreement; or
(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 New York Stock
Exchange, Inc., (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 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 Purchaser its
approval or recommendation of the Offer, the Merger
A-2
<PAGE>
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 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
(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 of the actual or potential breaches under the loan
agreement referred to in item 3 of Schedule 4.9 of the Merger Agreement.
The foregoing conditions are for the sole benefit of Purchaser and may
be asserted by Purchaser regardless of the circumstances giving rise to such
conditions, or may be waived by Purchaser in whole or in part at any time and
from time to time in its sole discretion. The failure by 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.
A-3
<PAGE>
AGREEMENT AND IRREVOCABLE PROXY
THIS AGREEMENT AND IRREVOCABLE PROXY (this "Agreement"), dated as of
February 15, 1996, is by and among MARRIOTT INTERNATIONAL, INC., a Delaware
corporation ("PARENT"), FG ACQUISITION CORP., an Indiana corporation and a
subsidiary of Parent ("PURCHASER"), FORUM HOLDINGS, L.P., a Texas limited
partnership ("SHAREHOLDER") and, solely for the purpose of Section 2(c) hereof,
FORUM GROUP, INC., an Indiana corporation (the "COMPANY").
W I T N E S S E T H:
-------------------
WHEREAS, simultaneously with the execution of this Agreement, Parent,
Purchaser and the Company have entered into an Agreement and Plan of Merger (as
such Agreement may hereafter be amended from time to time, the "MERGER
AGREEMENT"), pursuant to which (i) Purchaser has agreed, among other things, to
commence a cash tender offer (as such tender offer may hereafter be amended from
time to time in accordance with the Merger Agreement, the "OFFER") to purchase
all shares of common stock, no par value, of the Company (the "COMPANY COMMON
STOCK") and (ii) Purchaser will be merged with and into the Company (the
"MERGER");
WHEREAS, as of the date hereof, Shareholder is the beneficial owner
of, and has the sole right to vote and dispose of, 9,079,568 shares of Company
Common Stock; and
WHEREAS, as of the date hereof, Shareholder holds warrants (the
"CITICORP WARRANTS") exercisable into 350,072 shares of Company Common Stock
(the "CITICORP WARRANT SHARES"); and
WHEREAS, as of the date hereof, Shareholder holds warrants (the
"INVESTOR WARRANTS"), issued pursuant to an Acquisition Agreement dated as of
April 18, 1993 (the "ACQUISITION AGREEMENT"), which Investor Warrants are not
currently exercisable into any shares of Company Common Stock; and
WHEREAS, as an inducement and a condition to its entering into the
Merger Agreement and incurring the obligations set forth therein, including the
Offer and the Merger, Parent has required that Shareholder enter into this
Agreement;
NOW, THEREFORE, in consideration of the foregoing and the mutual
premises, representations, warranties, covenants and agreements contained herein
and in the Merger Agreement, the parties hereto, intending to be legally bound
hereby, agree as follows:
<PAGE>
1. Certain Definitions. Capitalized terms used and not defined
-------------------
herein have the respective meanings ascribed to them in the Merger Agreement. In
addition, for purposes of this Agreement:
"AFFILIATE" means, with respect to any specified Person, any Person
that directly, or indirectly through one or more intermediaries, controls, or is
controlled by, or is under common control with, the Person specified. For
purposes of this Agreement, with respect to Shareholder, "AFFILIATE" shall not
include (i) the Company and the Persons that directly, or indirectly through one
or more intermediaries, are controlled by the Company or (ii) any Person in
which Shareholder has a material direct or indirect ownership interest that is
an operating company or otherwise is not in the business of making direct or
indirect equity and/or debt investments in other Persons.
"BENEFICIALLY OWN," "BENEFICIAL OWNER" or "BENEFICIAL OWNERSHIP" with
respect to any securities means having "BENEFICIAL OWNERSHIP" of such securities
(as determined pursuant to Rule 13d-3 under the Exchange Act). Without
duplicative counting of the same securities by the same holder, securities
Beneficially Owned by a Person shall include securities Beneficially Owned by
all other Persons with whom such Person would constitute a "GROUP" within the
meaning of Section 13(d) of the Exchange Act and the rules promulgated
thereunder.
"EXCHANGE ACT" means the Securities Exchange Act of 1934, as amended.
"OWNED SHARES" means the shares of Company Common Stock owned by
Shareholder (either of record or through a nominee), together with any other
shares of Company Common Stock and any securities (other than Investor Warrants)
convertible into or exercisable or exchangeable for such securities (whether or
not subject to contingencies with respect to any matter or proposal submitted
for the vote or consent of shareholders of the Company) now or hereafter
Beneficially Owned by Shareholder.
"PERSON" means an individual, corporation, partnership, joint venture,
association, trust, unincorporated organization or other entity.
"TRANSFER" means, with respect to a security, the sale, transfer,
pledge, hypothecation, encumbrance, assignment or disposition of such security
or the Beneficial Ownership thereof, the offer to make such a sale, transfer or
other disposition, and each option, agreement, arrangement or understanding,
whether or not in writing, to effect any of the foregoing. As a verb,
"TRANSFER" shall have a correlative meaning.
2. Tender of Shares; Exercise of Warrants.
--------------------------------------
(a) So long as the per share price in the Offer is not less than
$13.00 in cash (net to the seller), Shareholder hereby agrees to tender and not
withdraw all Owned Shares (or
2
<PAGE>
cause the record owner thereof to tender and not withdraw such Owned Shares),
pursuant to and in accordance with the terms of the Offer. Shareholder hereby
acknowledges and agrees that Parent's and Purchaser's obligation to accept for
payment and pay for shares of Company Common Stock in the Offer, including any
Owned Shares tendered by Shareholder, is subject to the terms and conditions of
the Offer. The parties agree that Shareholder will, for all Owned Shares
tendered by Shareholder in the offer and accepted for payment and paid for by
Purchaser, receive the same per share consideration paid to other shareholders
who have tendered into the Offer.
(b) Prior to the expiration of the Offer, Shareholder will exercise
all of the Citicorp Warrants. Upon exercise of the Citicorp Warrants, and the
purchase of the Citicorp Warrant Shares in accordance with the terms thereof,
the Citicorp Warrant Shares shall be deemed to be Owned Shares, and Shareholder
agrees to tender (and not withdraw) such Warrant Shares pursuant to the Offer in
accordance with Section 2(a) hereof.
(c) In order to induce Parent and Purchaser to enter into the Merger
Agreement, the Company and the holders of the Investor Warrants agree that,
notwithstanding any provision of the Investor Warrants or the Acquisition
Agreement to the contrary, immediately prior to the purchase of Shares pursuant
to the Offer and without further action, each Investor Warrant then outstanding
will be cancelled and extinguished for no additional consideration whatsoever.
Shareholder will not exercise any Investor Warrants for any reason whatsoever.
(d) Shareholder will take all actions necessary to terminate,
immediately prior to the consummation of the Offer, the Shareholders' Agreement,
dated as of June 14, 1993, and amended and restated as of July 28, 1995, by and
between Shareholder and another shareholder of the Company.
3. Voting of Owned Shares; Irrevocable Proxy. At the request
-----------------------------------------
of Parent, Shareholder, in furtherance of the transactions contemplated hereby
and by the Merger Agreement, and in order to secure the performance by
Shareholder of its duties under this Agreement, shall promptly execute and
deliver to Purchaser an irrevocable proxy in the form of Exhibit A hereto.
4. Restrictions on Transfer and Proxies; No Solicitation.
-----------------------------------------------------
(a) Shareholder shall not directly or indirectly: (i) except as
provided in Section 2 hereof, Transfer (including the Transfer of any securities
of an Affiliate which is the record holder of Owned Shares if, as the result of
such Transfer, such Person would cease to be an Affiliate of Shareholder) to any
Person any or all Owned Shares; (ii) except as provided in Section 3 of this
Agreement, grant any proxies or powers of attorney, deposit any Owned Shares
into a voting trust or enter into a voting agreement, understanding or
arrangement with respect to such Owned Shares; or (iii) take any action that
would make any representation or
3
<PAGE>
warranty of Shareholder contained herein untrue or incorrect or would result in
a breach by Shareholder of its obligations under this Agreement.
(b) 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 heretofore with respect to any Acquisition Proposal.
Shareholder will not, and will cause the 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 this Agreement shall prohibit 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.
5. Representations and Warranties of Shareholder. Shareholder hereby
---------------------------------------------
represents, warrants and covenants to Parent and Purchaser as follows:
(a) Shareholder has all necessary partnership power and authority to
execute and deliver this Agreement and perform its obligations hereunder. The
execution and delivery by Shareholder of this Agreement and the performance by
Shareholder of its obligations hereunder have been duly and validly authorized
by the requisite partnership action on the part of Shareholder, and no other
partnership proceedings on the part of Shareholder are necessary to authorize
the execution, delivery or performance of this Agreement by Shareholder or the
consummation of the transactions contemplated hereby by Shareholder.
(b) This Agreement has been duly and validly executed and delivered
by Shareholder and constitutes the valid and binding agreement of Shareholder,
enforceable against Shareholder in accordance with its terms except to the
extent (i) such enforcement may be limited by applicable bankruptcy, insolvency
or similar laws affecting creditors rights and (ii) the remedy of specified
performance and injunctive and other forms of equitable relief may be subject to
equitable defenses and to the discretion of the court before which any
proceeding therefor may be brought.
(c) Shareholder is the Beneficial Owner of 9,429,640 shares of
Company Common Stock (350,072 shares of which are Beneficially Owned by virtue
of the Citicorp Warrants) and has the right to tender such shares as
contemplated by this Agreement so that, upon the consummation of the Offer,
Purchaser will own such shares free and clear of all liens, claims, options,
proxies, voting agreements, security interests, charges and encumbrances.
Shareholder holds warrants for the purchase of 350,072 Citicorp Warrant Shares.
Upon exercise of the Citicorp Warrants and purchase of the Citicorp Warrant
Shares in accordance with the terms thereof, Shareholder will have the right to
tender such shares as
4
<PAGE>
contemplated by this Agreement so that, upon the consummation of the Offer,
Purchaser will own such shares, free and clear of all liens, claims, options,
proxies, voting agreements, security interests, charges and encumbrances. Except
for the Owned Shares, the Citicorp Warrants and the Investor Warrants (and the
shares of Company Common Stock purchasable upon exercise of such warrants),
neither Shareholder nor any of its Affiliates Beneficially Owns any shares of
Company Common Stock or any securities convertible into Company Common Stock.
Except as provided in this Agreement or referred to in Schedule 4.2(b) to the
Merger Agreement, Shareholder has sole power to vote and to dispose of the Owned
Shares, and sole power to issue instructions with respect to the Owned Shares to
the extent appropriate in respect of the matters set forth in this Agreement,
sole power to demand appraisal rights and sole power to agree to all of the
matters set forth in this Agreement, in each case which respect to all of the
Owned Shares, with no limitations, qualifications or restrictions on such
rights, subject to applicable securities laws and the terms of this Agreement.
(d) Except for filings, authorizations, consents and approvals as
may be required under, and other applicable requirements of the Hart-Scott-
Rodino Antitrust Improvements Act of 1976 (the "HSR ACT") and the Exchange Act,
in each case as amended, (i) no filing will, and no permit, authorization,
consent or approval of, any state or federal governmental body or authority is
necessary for the execution of this Agreement by Shareholder and the
consummation by Shareholder of the transactions contemplated hereby and (ii)
none of the execution and delivery of this Agreement by Shareholder, the
consummation by Shareholder of the transactions contemplated hereby or
compliance by Shareholder with any of the provisions hereof shall (A) conflict
with or result in any breach of the partnership agreement or other
organizational documents of Shareholder, (B) result in a violation or breach of,
or constitute (with or without notice or lapse of time or both) a default (or
give rise to any third party right of termination, cancellation, material
modification or acceleration) under any of the terms, conditions or provisions
of any note, loan agreement, bond, mortgage, indenture, license, contract,
commitment, arrangement, understanding, agreement or other instrument or
obligation of any kind to which Shareholder is a party or by which Shareholder
or any of its properties or assets (including the Owned Shares) may be bound, or
(C) violate any order, writ, injunction, decree, judgment, statute, rule or
regulation applicable to Shareholder or any of its properties or assets. As of
immediately prior to the execution of this Agreement, no litigation is pending
or, to the knowledge of Shareholder, threatened involving Shareholder or the
Company relating in any way, this Agreement, the Merger Agreement or any
transactions contemplated hereby or thereby.
(e) Shareholder understands and acknowledges that Parent is entering
into, and causing the Purchaser to enter into, the Merger Agreement, and is
incurring the obligations set forth therein, in reliance upon Shareholder's
execution and delivery of this Agreement.
(f) Shareholder agrees with and covenants to Parent that Shareholder
shall not request that the Company or Parent, as the case may be, register the
Transfer (book-entry
5
<PAGE>
or otherwise) of any certificated or uncertificated interest representing any of
the securities of the Company or of Parent, as the case may be, unless such
Transfer is made in compliance with this Agreement.
6. Representations and Warranties of Parent and Purchaser. Parent
-----------------------------------------------------
and Purchaser hereby represent, warrant and covenant to Shareholder as follows:
(a) Parent is a corporation duly organized and validly existing
under the laws of the State of Delaware, and Purchaser is a corporation duly
organized and validly existing under the laws of the State of Delaware and each
of them is in good standing under the laws of the state of its incorporation.
Parent and Purchaser have all necessary corporate power and authority to execute
and deliver this Agreement and perform their respective obligations hereunder.
The execution and delivery by Parent and Purchaser of this Agreement and the
performance by Parent and Purchaser of their respective obligations hereunder
have been duly and validly authorized by the Board of Directors of each of
Parent and Purchaser and no other corporate proceedings on the part of Parent or
Purchaser are necessary to authorize the execution, delivery or performance of
this Agreement or the consummation of the transactions contemplated hereby.
(b) This Agreement has been duly and validly executed and delivered
by Parent and Purchaser and constitutes a valid and binding agreement each of
Parent and Purchaser, enforceable against each of them in accordance with its
terms except to the extent (i) such enforcement may the limited by applicable
bankruptcy, insolvency or similar laws affecting creditors rights and (ii) the
remedy of specific performance and injunctive and other forms of equitable
relief may be subject to equitable defenses and to the discretion of the court
before which any proceeding therefor may be brought.
(c) Except for filings, authorizations, consents and approvals as
may be required under, and other applicable requirements of the HSR Act and the
Exchange Act, (i) no filing with, and no permit, authorization, consent or
approval of, any state or federal public body or authority is necessary for the
execution of this Agreement by Parent or Purchaser and the consummation by
Parent or Purchaser of the transactions contemplated hereby and (ii) none of the
execution and delivery of this Agreement by Parent or Purchaser, the
consummation by Parent or Purchaser of the transactions contemplated hereby or
compliance by Parent or Purchaser with any of the provisions hereof shall (A)
conflict with or result in any breach of the certificate of incorporation or by-
laws of Parent or Purchaser, or (B) result in a violation or breach of, or
constitute (with or without notice or lapse of time or both) a default (or give
rise to any third party right of termination, cancellation, material
modification or acceleration) under any of the terms, conditions or provisions
of any note, loan agreement, bond, mortgage, indenture, license, contract,
commitment, arrangement, understanding, agreement or other instrument or
obligation of any kind to which Parent or Purchaser is a party or by which
Parent or Purchaser or any of their respective properties or assets may be
bound, or violate any order, writ, injunction, decree, judgment, statute, rule
or regulation applicable to
6
<PAGE>
Parent or Purchaser or any of their respective properties or assets. As of
immediately prior to the execution of this Agreement, no litigation is pending
or, to the knowledge of Parent and Purchaser, threatened involving Parent or
Purchaser relating in any way to this Agreement, the Merger Agreement or any
transactions contemplated hereby or thereby.
7. Termination. This Agreement (and all covenants of Shareholder
-----------
hereunder) shall terminate on the earliest of (i) the purchase by Purchaser of
the Owned Shares pursuant to the Offer, (ii) termination of the Merger Agreement
pursuant to and in conformity with Article VIII of the Merger Agreement;
provided that this Agreement shall not terminate based on a termination under
- --------
Section 8.1(f) of the Merger Agreement if Parent and Purchaser are challenging
the ability of the Company to terminate the Merger Agreement pursuant to such
Section 8.1(f) and (iii) July 16, 1996.
8. Miscellaneous.
-------------
(a) This Agreement constitutes the entire agreement among the
parties with respect to the subject matter hereof and supersedes all other prior
agreements and understandings, both written and oral, among the parties with
respect to the subject matter hereof.
(b) Shareholder agrees that this Agreement and the respective
rights and obligations of Shareholder hereunder shall attach to any shares of
Company Common Stock, and any securities convertible into such shares, that may
become Beneficially Owned by Shareholder.
(c) All costs and expenses incurred in connection with this
Agreement and the transactions contemplated hereby shall be paid by the party
incurring such expenses, and each of Parent and Purchaser, on the one hand, and
Shareholder, on the other hand, shall indemnify and hold the other harmless from
and against any and all claims, liabilities or obligations with respect to any
brokerage fees, commissions or finders' fees asserted by any person on the basis
of any act or statement alleged to have been made by such party or its
Affiliates.
(d) This Agreement and all of the provisions hereof shall be binding
upon and inure to the benefit of the parties and their respective successors and
permitted assigns, but neither this Agreement nor any of the rights, interests
or obligations hereunder shall be assigned or delegated by any party (whether by
operation of Law or otherwise) without the prior written consent of the other
parties; provided, that Purchaser may assign or delegate its rights and
--------
obligations hereunder to Parent or any Subsidiary of Parent, but no such
assignment or delegation shall relieve Purchaser of its obligations hereunder.
This Agreement shall be binding upon and inure solely to the benefit of each
party hereto, and nothing in this Agreement, express or implied, is intended to
or shall confer upon any other Person any rights, benefits or remedies of any
nature whatsoever under or by reason of this Agreement.
7
<PAGE>
(e) This Agreement may not be amended, changed, supplemented, or
otherwise modified or terminated, except upon the execution and delivery of a
written agreement executed by each of the parties hereto. The parties may waive
compliance by the other parties hereto with any representation, agreement or
condition otherwise required to be complied with by such other party hereunder,
but any such waiver shall be effective only if in writing executed by the
waiving party.
(f) All notices and other communications hereunder shall be in
writing and shall be deemed given upon (a) transmitter's confirmation of a
receipt of a facsimile transmission, (b) confirmed delivery by a standard
overnight carrier or when delivered by hand or (c) the expiration of five
business days after the day when mailed by certified or registered mail, postage
prepaid, addressed at the following addresses (or at such other address for a
party as shall be specified by like notice):
If to Shareholder:
Forum Holdings, L.P.
c/o The Hampstead Group
2200 Ross Avenue, Suite 4200 West
Dallas, Texas 75201-6799
Telephone No.: (214) 220-4900
Telecopy No.: (214) 220-4949
Attention: Robert Whitman
copy to:
Robert A. Profusek
Jones, Day, Reavis & Pogue
599 Lexington Avenue, 32nd Floor
New York, New York 10022
Telephone No.: (212) 326-3800
Telecopy No.: (212) 755-7306
If to Parent or
Purchaser:
Marriott International, Inc.
10400 Fernwood Road
Bethesda, Maryland 20817
Telephone No.: (301) 380-9555
Telecopy No.: (301) 380-8150
Attention: General Counsel
8
<PAGE>
copy to:
O'Melveny & Myers
555 13th Street, NW
Washington, D.C. 20004
Telephone No.: (202) 383-5300
Telecopy No.: (202) 383-5414
Attention: Jeffrey J. Rosen
David G. Pommerening
(g) Each of the parties hereto acknowledges and agrees that in the
event of any breach of this Agreement, each non-breaching party would be
irreparably and immediately harmed and could not be made whole by monetary
damages. It is accordingly agreed that the parties hereto (a) will waive, in
any action for specific performance, the defense of adequacy of a remedy at law
and (b) shall be entitled, in addition to any other remedy to which they may be
entitled at law or in equity, to compel specific performance of this Agreement
in any action instituted in any state or federal court sitting in Delaware. The
parties hereto consent to personal jurisdiction in any such action brought in
any state or federal court sitting in Delaware and to service of process upon it
in the manner set forth in Section 8(f) hereof.
(h) All rights, powers and remedies provided under this Agreement or
otherwise available in respect hereof at law or in equity shall be cumulative
and not alternative, and the exercise of any thereof by any party shall not
preclude the simultaneous or later exercise of any other such right, power or
remedy by such party. The failure of any party hereto to exercise any right,
power or remedy provided under this Agreement or otherwise available in respect
hereof at law or in equity, or to insist upon compliance by any other party
hereto with its obligations hereunder, and any custom or practice of the parties
at variance with the terms hereof, shall not constitute a waiver by such party
of its right to exercise any such or other right, power or remedy or to demand
such compliance.
(i) This Agreement shall be governed and construed in accordance
with the Laws of the State of Delaware (regardless of the Laws that might
otherwise govern under applicable principles of conflict of laws) as to all
matters, including matters of validity, construction, effect, performance and
remedies.
(j) The descriptive headings used herein are inserted for
convenience of reference only and are not intended to be part of or to affect
the meaning or inter pretation of this Agreement. "Include," "includes" and
"including" shall be deemed to be followed by "without limitation" whether or
not they are in fact followed by such words or words of like import.
9
<PAGE>
(k) This Agreement may be executed in counterparts, each of which
shall be deemed to be an original, but all of which, taken together, shall
constitute one and the same instrument.
10
<PAGE>
IN WITNESS WHEREOF, Parent, Purchaser and Shareholder have caused this
Agreement to be duly executed as of the day and year first above written.
MARRIOTT INTERNATIONAL, INC.
By: /s/ WILLIAM J. SHAW
-------------------------------
Name: William J. Shaw
Title: Executive Vice President
FG ACQUISITION CORP.
By: /s/ WILLIAM J. SHAW
-------------------------------------
Name: William J. Shaw
Title: Vice President
FORUM HOLDINGS, L.P.
By: HRP Management, Ltd.,
Its General Partner
By: HH Genpar Partners,
Its General Partner
By: Hampstead Associates, Inc.,
Its Managing General Partner
By:/s/ DANIEL DECKER
-----------------
Name:
Title:
Solely for the purpose of Section 2(c)
hereof:
FORUM GROUP, INC.
By: /s/ MARK PACALA
------------------
Name: Mark Pacala
11
<PAGE>
Title: Chairman and Chief Executive
Officer
12
<PAGE>
EXHIBIT A
---------
IRREVOCABLE PROXY
-----------------
The undersigned hereby revokes any previous proxies and appoints
Marriott International, Inc. ("PARENT"), William J. Shaw and Paul E. Johnson,
Jr., and each of them, with full power of substitution, as attorney and proxy of
the undersigned (this "PROXY") to attend any and all meetings of shareholders of
Forum Group Inc., an Indiana corporation (the "COMPANY") (and any adjournments
or postponements thereof), to vote all shares of Common Stock, no value, of the
Company that the undersigned is then entitled to vote, and to represent and
otherwise to act for the undersigned in the same manner and with the same effect
as if the undersigned were personally present, with respect to all matters
specified herein. This is the proxy referred to in Section 3 of the Agreement
and Irrevocable Proxy (the "AGREEMENT") dated as of February 15, 1996, by and
among Parent, Purchaser, the undersigned and the Company. Capitalized terms
used and not defined herein have the respective meanings ascribed to them in, or
as prescribed by, the Agreement.
So long as the Merger Price is at least $13.00 in cash (net to the
seller), the undersigned hereby agrees that at any meeting (whether annual or
special, and whether or not an adjourned or postponed meeting) of the Company's
shareholders, however called, or in connection with any written consent of the
Company's shareholders, subject to the absence of a preliminary or permanent
injunction or other final order by any United States federal court or state
court barring such action, the proxies named above are authorized to vote all
Owned Shares: (i) in favor of the Merger, the execution and delivery by the
Company of the Merger Agreement and the Agreement and the approval and adoption
of the Merger Agreement and the Agreement and the terms thereof and each of the
other actions contemplated by the Merger Agreement and the Agreement and any
actions required in furtherance thereof; (ii) against any action or agreement
that would (A) result in a breach of any covenant, representation or warranty or
any other obligation or agreement of the Company under the Merger Agreement or
of the Company or the undersigned under the Agreement or (B) impede, interfere
with, delay, postpone or adversely affect the Offer, the Merger or the
transactions contemplated thereby or by the Agreement; and (iii) except as
otherwise agreed to in writing in advance by Parent, against the following
actions (other than the Merger and the transactions contemplated by the Merger
Agreement, the Agreement and this Proxy: (A) any extraordinary corporate
transaction, such as a merger, consolidation or other business combination
involving the Company or any of its Subsidiaries (including any Acquisition
Proposal or any Third Party Transaction); (B) any sale, lease or transfer of a
substantial portion of the assets or business of the Company or its
Subsidiaries, or reorganization, restructuring, recapitalization, special
dividend, dissolution or liquidation of the Company or its Subsidiaries; or (C)
any change in the present capitalization of the Company including any proposal
to sell any equity interest in the Company or any of its Subsidiaries. The
undersigned shall not enter into any binding
13
<PAGE>
agreement, arrangement or understanding with any Person the effect of which
would be inconsistent or violative of the provisions and agreements contained in
this Proxy.
The undersigned acknowledges and agrees that this Proxy (w) shall be
coupled with an interest, (x) shall constitute, among other things, an
inducement for Parent to enter into the Agreement and the Merger Agreement, (y)
shall be irrevocable and (z) shall not terminate (by operation of law or
otherwise), except upon the termination of the Agreement pursuant to and in
conformity with Section 7 thereof.
The undersigned authorizes such attorney and proxy to substitute any
other person to act hereunder, to revoke any substitution and to file this Proxy
and any substitution or revocation with the Secretary of the Company.
Dated: February 15, 1996
FORUM HOLDINGS, L.P.
By: HRP Management, Ltd.,
Its General Partner
By: HH Genpar Partners,
Its General Partner
By: Hampstead Associates, Inc.,
Its Managing General Partner
By:____________________________
Name:
Title:
Exhibit A-2
<PAGE>
Exhibit A-2
15
<PAGE>
AGREEMENT AND IRREVOCABLE PROXY
THIS AGREEMENT AND IRREVOCABLE PROXY (this "Agreement"), dated as of
February 15, 1996, is by and among MARRIOTT INTERNATIONAL, INC., a Delaware
corporation ("PARENT"), FG ACQUISITION CORP., an Indiana corporation and a
subsidiary of Parent ("PURCHASER"), APOLLO FG PARTNERS, L.P., a Delaware limited
partnership ("SHAREHOLDER") and, solely for the purpose of Section 2(c) hereof,
FORUM GROUP, INC., an Indiana corporation (the "COMPANY").
W I T N E S S E T H:
-------------------
WHEREAS, simultaneously with the execution of this Agreement, Parent,
Purchaser and the Company have entered into an Agreement and Plan of Merger (as
such Agreement may hereafter be amended from time to time, the "MERGER
AGREEMENT"), pursuant to which (i) Purchaser has agreed, among other things, to
commence a cash tender offer (as such tender offer may hereafter be amended from
time to time in accordance with the Merger Agreement, the "OFFER") to purchase
all shares of common stock, no par value, of the Company (the "COMPANY COMMON
STOCK") and (ii) Purchaser will be merged with and into the Company (the
"MERGER");
WHEREAS, as of the date hereof, Shareholder is the beneficial owner
of, and has the sole right to vote and dispose of, 9,079,568 shares of Company
Common Stock; and
WHEREAS, as of the date hereof, Shareholder holds warrants (the
"CITICORP WARRANTS") exercisable into 350,072 shares of Company Common Stock
(the "CITICORP WARRANT SHARES"); and
WHEREAS, as of the date hereof, Shareholder holds warrants (the
"INVESTOR WARRANTS"), issued pursuant to an Acquisition Agreement dated as of
April 18, 1993 (the "ACQUISITION AGREEMENT"), which Investor Warrants are not
currently exercisable into any shares of Company Common Stock; and
WHEREAS, as an inducement and a condition to its entering into the
Merger Agreement and incurring the obligations set forth therein, including the
Offer and the Merger, Parent has required that Shareholder enter into this
Agreement;
NOW, THEREFORE, in consideration of the foregoing and the mutual
premises, representations, warranties, covenants and agreements contained herein
and in the Merger Agreement, the parties hereto, intending to be legally bound
hereby, agree as follows:
<PAGE>
1. Certain Definitions. Capitalized terms used and not defined
-------------------
herein have the respective meanings ascribed to them in the Merger Agreement. In
addition, for purposes of this Agreement:
"AFFILIATE" means, with respect to any specified Person, any Person
that directly, or indirectly through one or more intermediaries, controls, or is
controlled by, or is under common control with, the Person specified. For
purposes of this Agreement, with respect to Shareholder, "AFFILIATE" shall not
include (i) the Company and the Persons that directly, or indirectly through one
or more intermediaries, are controlled by the Company or (ii) any Person in
which Shareholder has a material direct or indirect ownership interest that is
an operating company or otherwise is not in the business of making direct or
indirect equity and/or debt investments in other Persons.
"BENEFICIALLY OWN," "BENEFICIAL OWNER" or "BENEFICIAL OWNERSHIP" with
respect to any securities means having "BENEFICIAL OWNERSHIP" of such securities
(as determined pursuant to Rule 13d-3 under the Exchange Act ). Without
duplicative counting of the same securities by the same holder, securities
Beneficially Owned by a Person shall include securities Beneficially Owned by
all other Persons with whom such Person would constitute a "GROUP" within the
meaning of Section 13(d) of the Exchange Act and the rules promulgated
thereunder.
"EXCHANGE ACT" means the Securities Exchange Act of 1934, as amended.
"OWNED SHARES" means the shares of Company Common Stock owned by
Shareholder (either of record or through a nominee), together with any other
shares of Company Common Stock and any securities (other than Investor Warrants)
convertible into or exercisable or exchangeable for such securities (whether or
not subject to contingencies with respect to any matter or proposal submitted
for the vote or consent of shareholders of the Company) now or hereafter
Beneficially Owned by Shareholder.
"PERSON" means an individual, corporation, partnership, joint venture,
association, trust, unincorporated organization or other entity.
"TRANSFER" means, with respect to a security, the sale, transfer,
pledge, hypothecation, encumbrance, assignment or disposition of such security
or the Beneficial Ownership thereof, the offer to make such a sale, transfer or
other disposition, and each option, agreement, arrangement or understanding,
whether or not in writing, to effect any of the foregoing. As a verb,
"TRANSFER" shall have a correlative meaning.
2. Tender of Shares; Exercise of Warrants.
--------------------------------------
(a) Shareholder hereby agrees to tender and not withdraw all Owned
Shares (or cause the record owner thereof to tender and not withdraw such Owned
Shares), pursuant
2
<PAGE>
to and in accordance with the terms of the Offer. Shareholder hereby
acknowledges and agrees that Parent's and Purchaser's obligation to accept for
payment and pay for shares of Company Common Stock in the Offer, including any
Owned Shares tendered by Shareholder, is subject to the terms and conditions of
the Offer. The parties agree that Shareholder will, for all Owned Shares
tendered by Shareholder in the offer and accepted for payment and paid for by
Purchaser, receive the same per share consideration paid to other shareholders
who have tendered into the Offer.
(b) Prior to the expiration of the Offer, Shareholder will exercise
all of the Citicorp Warrants. Upon exercise of the Citicorp Warrants, and the
purchase of the Citicorp Warrant Shares in accordance with the terms thereof,
the Citicorp Warrant Shares shall be deemed to be Owned Shares, and Shareholder
agrees to tender (and not withdraw) such Warrant Shares pursuant to the Offer in
accordance with Section 2(a) hereof.
(c) In order to induce Parent and Purchaser to enter into the
Merger Agreement, the Company and the holders of the Investor Warrants agree
that, notwithstanding any provision of the Investor Warrants or the Acquisition
Agreement to the contrary, immediately prior to the purchase of Shares pursuant
to the Offer and without further action, each Investor Warrant then outstanding
will be cancelled and extinguished for no additional consideration whatsoever.
Shareholder will not exercise any Investor Warrants for any reason whatsoever.
(d) Shareholder will take all actions necessary to terminate,
immediately prior to the consummation of the Offer, the Shareholders' Agreement,
dated as of June 14, 1993, and amended and restated as of July 28, 1995, by and
between Shareholder and another shareholder of the Company.
3. Voting of Owned Shares; Irrevocable Proxy. At the request of
-----------------------------------------
Parent, Shareholder, in furtherance of the transactions contemplated hereby and
by the Merger Agreement, and in order to secure the performance by Shareholder
of its duties under this Agreement, shall promptly execute and deliver to
Purchaser an irrevocable proxy in the form of Exhibit A hereto.
4. Restrictions on Transfer and Proxies; No Solicitation.
-----------------------------------------------------
(a) Shareholder shall not directly or indirectly: (i) except as
provided in Section 2 hereof, Transfer (including the Transfer of any securities
of an Affiliate which is the record holder of Owned Shares if, as the result of
such Transfer, such Person would cease to be an Affiliate of Shareholder) to any
Person any or all Owned Shares; (ii) except as provided in Section 3 of this
Agreement, grant any proxies or powers of attorney, deposit any Owned Shares
into a voting trust or enter into a voting agreement, understanding or
arrangement with respect to such Owned Shares; or (iii) take any action that
would make any representation or
3
<PAGE>
warranty of Shareholder contained herein untrue or incorrect or would result in
a breach by Shareholder of its obligations under this Agreement.
(b) 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 heretofore with respect to any Acquisition Proposal.
Shareholder will not, and will cause the 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 this Agreement shall prohibit 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.
5. Representations and Warranties of Shareholder. Shareholder hereby
---------------------------------------------
represents, warrants and covenants to Parent and Purchaser as follows:
(a) Shareholder has all necessary partnership power and authority
to execute and deliver this Agreement and perform its obligations hereunder. The
execution and delivery by Shareholder of this Agreement and the performance by
Shareholder of its obligations hereunder have been duly and validly authorized
by the requisite partnership action on the part of Shareholder, and no other
partnership proceedings on the part of Shareholder are necessary to authorize
the execution, delivery or performance of this Agreement by Shareholder or the
consummation of the transactions contemplated hereby by Shareholder.
(b) This Agreement has been duly and validly executed and Delivered
by Shareholder and constitutes the valid and binding agreement of Shareholder,
enforceable against Shareholder in accordance with its terms except to the
extent (i) such enforcement may be limited by applicable bankruptcy, insolvency
or similar laws affecting creditors rights and (ii) the remedy of specified
performance and injunctive and other forms of equitable relief may be subject to
equitable defenses and to the discretion of the court before which any
proceeding therefor may be brought.
(c) Shareholder is the Beneficial Owner of 9,079,568 shares of
Company Common Stock and has the right to tender such shares as contemplated by
this Agreement so that, upon the consummation of the Offer, Purchaser will own
such shares free and clear of all liens, claims, options, proxies, voting
agreements, security interests, charges and encumbrances. Shareholder holds
warrants for the purchase of 350,072 Citicorp Warrant Shares. Upon exercise of
the Citicorp Warrants and purchase of the Citicorp Warrant Shares in accordance
with the terms thereof, Shareholder will be the Beneficial Owner of the Citicorp
Warrant Shares and will have the right to tender such shares as contemplated by
this
4
<PAGE>
Agreement so that, upon the consummation of the Offer, Purchaser will own such
shares, free and clear of all liens, claims, options, proxies, voting
agreements, security interests, charges and encumbrances. Except for the Owned
Shares, the Citicorp Warrants and the Investor Warrants (and the shares of
Company Common Stock purchasable upon exercise of such warrants), neither
Shareholder nor any of its Affiliates Beneficially Owns any shares of Company
Common Stock or any securities convertible into Company Common Stock. Except as
provided in this Agreement or referred to in Schedule 4.2(b) to the Merger
Agreement, Shareholder has sole power to vote and to dispose of the Owned
Shares, and sole power to issue instructions with respect to the Owned Shares to
the extent appropriate in respect of the matters set forth in this Agreement,
sole power to demand appraisal rights and sole power to agree to all of the
matters set forth in this Agreement, in each case which respect to all of the
Owned Shares, with no limitations, qualifications or restrictions on such
rights, subject to applicable securities laws and the terms of this Agreement.
(d) Except for filings, authorizations, consents and approvals as
may be required under, and other applicable requirements of the Hart-Scott-
Rodino Antitrust Improvements Act of 1976 (the "HSR ACT") and the Exchange Act,
in each case as amended, (i) no filing will, and no permit, authorization,
consent or approval of, any state or federal governmental body or authority is
necessary for the execution of this Agreement by Shareholder and the
consummation by Shareholder of the transactions contemplated hereby and (ii)
none of the execution and delivery of this Agreement by Shareholder, the
consummation by Shareholder of the transactions contemplated hereby or
compliance by Shareholder with any of the provisions hereof shall (A) conflict
with or result in any breach of the partnership agreement or other
organizational documents of Shareholder, (B) result in a violation or breach of,
or constitute (with or without notice or lapse of time or both) a default (or
give rise to any third party right of termination, cancellation, material
modification or acceleration) under any of the terms, conditions or provisions
of any note, loan agreement, bond, mortgage, indenture, license, contract,
commitment, arrangement, understanding, agreement or other instrument or
obligation of any kind to which Shareholder is a party or by which Shareholder
or any of its properties or assets (including the Owned Shares) may be bound, or
(C) violate any order, writ, injunction, decree, judgment, statute, rule or
regulation applicable to Shareholder or any of its properties or assets. As of
immediately prior to the execution of this Agreement, no litigation is pending
or, to the knowledge of Shareholder, threatened involving Shareholder or the
Company relating in any way, this Agreement, the Merger Agreement or any
transactions contemplated hereby or thereby.
(e) Shareholder understands and acknowledges that Parent is
entering into, and causing the Purchaser to enter into, the Merger Agreement,
and is incurring the obligations set forth therein, in reliance upon
Shareholder's execution and delivery of this Agreement.
(f) Shareholder agrees with and covenants to Parent that
Shareholder shall not request that the Company or Parent, as the case may be,
register the Transfer (book-entry
5
<PAGE>
or otherwise) of any certificated or uncertificated interest representing any of
the securities of the Company or of Parent, as the case may be, unless such
Transfer is made in compliance with this Agreement.
6. Representations and Warranties of Parent and Purchaser. Parent
------------------------------------------------------
and Purchaser hereby represent, warrant and covenant to Shareholder as follows:
(a) Parent is a corporation duly organized and validly existing
under the laws of the State of Delaware, and Purchaser is a corporation duly
organized and validly existing under the laws of the State of Delaware and each
of them is in good standing under the laws of the state of its incorporation.
Parent and Purchaser have all necessary corporate power and authority to execute
and deliver this Agreement and perform their respective obligations hereunder.
The execution and delivery by Parent and Purchaser of this Agreement and the
performance by Parent and Purchaser of their respective obligations hereunder
have been duly and validly authorized by the Board of Directors of each of
Parent and Purchaser and no other corporate proceedings on the part of Parent or
Purchaser are necessary to authorize the execution, delivery or performance of
this Agreement or the consummation of the transactions contemplated hereby.
(b) This Agreement has been duly and validly executed and delivered
by Parent and Purchaser and constitutes a valid and binding agreement each of
Parent and Purchaser, enforceable against each of them in accordance with its
terms except to the extent (i) such enforcement may the limited by applicable
bankruptcy, insolvency or similar laws affecting creditors rights and (ii) the
remedy of specific performance and injunctive and other forms of equitable
relief may be subject to equitable defenses and to the discretion of the court
before which any proceeding therefor may be brought.
(c) Except for filings, authorizations, consents and approvals as
may be required under, and other applicable requirements of the HSR Act and the
Exchange Act, (i) no filing with, and no permit, authorization, consent or
approval of, any state or federal public body or authority is necessary for the
execution of this Agreement by Parent or Purchaser and the consummation by
Parent or Purchaser of the transactions contemplated hereby and (ii) none of the
execution and delivery of this Agreement by Parent or Purchaser, the
consummation by Parent or Purchaser of the transactions contemplated hereby or
compliance by Parent or Purchaser with any of the provisions hereof shall (A)
conflict with or result in any breach of the certificate of incorporation or by-
laws of Parent or Purchaser, or (B) result in a violation or breach of, or
constitute (with or without notice or lapse of time or both) a default (or give
rise to any third party right of termination, cancellation, material
modification or acceleration) under any of the terms, conditions or provisions
of any note, loan agreement, bond, mortgage, indenture, license, contract,
commitment, arrangement, understanding, agreement or other instrument or
obligation of any kind to which Parent or Purchaser is a party or by which
Parent or Purchaser or any of their respective properties or assets may be
bound, or violate any order, writ, injunction, decree, judgment, statute, rule
or regulation applicable to
6
<PAGE>
Parent or Purchaser or any of their respective properties or assets. As of
immediately prior to the execution of this Agreement, no litigation is pending
or, to the knowledge of Parent and Purchaser, threatened involving Parent or
Purchaser relating in any way to this Agreement, the Merger Agreement or any
transactions contemplated hereby or thereby.
7. Termination. This Agreement (and all covenants of Shareholder
-----------
hereunder) shall terminate on the earliest of (i) the purchase by Purchaser of
the Owned Shares pursuant to the Offer, (ii) termination of the Merger Agreement
pursuant to and in conformity with Article VIII of the Merger Agreement;
provided that this Agreement shall not terminate based on a termination under
- --------
Section 8.1(f) of the Merger Agreement if Parent and Purchaser are challenging
the ability of the Company to terminate the Merger Agreement pursuant to such
Section 8.1(f) and (iii) July 16, 1996.
8. Miscellaneous.
-------------
(a) This Agreement constitutes the entire agreement among the
parties with respect to the subject matter hereof and supersedes all other prior
agreements and understandings, both written and oral, among the parties with
respect to the subject matter hereof.
(b) Shareholder agrees that this Agreement and the respective
rights and obligations of Shareholder hereunder shall attach to any shares of
Company Common Stock, and any securities convertible into such shares, that may
become Beneficially Owned by Shareholder.
(c) All costs and expenses incurred in connection with this
Agreement and the transactions contemplated hereby shall be paid by the party
incurring such expenses, and each of Parent and Purchaser, on the one hand, and
Shareholder, on the other hand, shall indemnify and hold the other harmless from
and against any and all claims, liabilities or obligations with respect to any
brokerage fees, commissions or finders' fees asserted by any person on the basis
of any act or statement alleged to have been made by such party or its
Affiliates.
(d) This Agreement and all of the provisions hereof shall be
binding upon and inure to the benefit of the parties and their respective
successors and permitted assigns, but neither this Agreement nor any of the
rights, interests or obligations hereunder shall be assigned or delegated by any
party (whether by operation of Law or otherwise) without the prior written
consent of the other parties; provided, that Purchaser may assign or delegate
--------
its rights and obligations hereunder to Parent or any Subsidiary of Parent, but
no such assignment or delegation shall relieve Purchaser of its obligations
hereunder. This Agreement shall be binding upon and inure solely to the benefit
of each party hereto, and nothing in this Agreement, express or implied, is
intended to or shall confer upon any other Person any rights, benefits or
remedies of any nature whatsoever under or by reason of this Agreement.
7
<PAGE>
(e) This Agreement may not be amended, changed, supplemented, or
otherwise modified or terminated, except upon the execution and delivery of a
written agreement executed by each of the parties hereto. The parties may waive
compliance by the other parties hereto with any representation, agreement or
condition otherwise required to be complied with by such other party hereunder,
but any such waiver shall be effective only if in writing executed by the
waiving party.
(f) All notices and other communications hereunder shall be in
writing and shall be deemed given upon (a) transmitter's confirmation of a
receipt of a facsimile transmission, (b) confirmed delivery by a standard
overnight carrier or when delivered by hand or (c) the expiration of five
business days after the day when mailed by certified or registered mail, postage
prepaid, addressed at the following addresses (or at such other address for a
party as shall be specified by like notice):
If to Shareholder:
Apollo FG Partners, L.P.
1999 Avenue of the Stars, Suite 1900
Los Angeles, California 90067
Telephone No.: (310) 201-4100
Telecopy No.: (310) 201-4119
Attention: Michael D. Weiner
copy to:
Robert A. Profusek
Jones, Day, Reavis & Pogue
599 Lexington Avenue, 32d Floor
New York, New York 10022
Telephone No.: (212) 326-3800
Telecopy No.: (212) 755-7306
If to Parent or
Purchaser:
Marriott International, Inc.
10400 Fernwood Road
Bethesda, Maryland 20817
Telephone No.: (301) 380-9555
Telecopy No.: (301) 380-8150
Attention: General Counsel
8
<PAGE>
copy to:
O'Melveny & Myers
555 13th Street, NW
Washington, D.C. 20004
Telephone No.: (202) 383-5300
Telecopy No.: (202) 383-5414
Attention: Jeffrey J. Rosen
David G. Pommerening
(g) Each of the parties hereto acknowledges and agrees that in the
event of any breach of this Agreement, each non-breaching party would be
irreparably and immediately harmed and could not be made whole by monetary
damages. It is accordingly agreed that the parties hereto (a) will waive, in
any action for specific performance, the defense of adequacy of a remedy at law
and (b) shall be entitled, in addition to any other remedy to which they may be
entitled at law or in equity, to compel specific performance of this Agreement
in any action instituted in any state or federal court sitting in Delaware. The
parties hereto consent to personal jurisdiction in any such action brought in
any state or federal court sitting in Delaware and to service of process upon it
in the manner set forth in Section 8(f) hereof.
(h) All rights, powers and remedies provided under this Agreement
or otherwise available in respect hereof at law or in equity shall be cumulative
and not alternative, and the exercise of any thereof by any party shall not
preclude the simultaneous or later exercise of any other such right, power or
remedy by such party. The failure of any party hereto to exercise any right,
power or remedy provided under this Agreement or otherwise available in respect
hereof at law or in equity, or to insist upon compliance by any other party
hereto with its obligations hereunder, and any custom or practice of the parties
at variance with the terms hereof, shall not constitute a waiver by such party
of its right to exercise any such or other right, power or remedy or to demand
such compliance.
(i) This Agreement shall be governed and construed in accordance
with the Laws of the State of Delaware, (regardless of the Laws that might
otherwise govern under applicable principles of conflict of laws) as to all
matters, including matters of validity, construction, effect, performance and
remedies.
(j) The descriptive headings used herein are inserted for
convenience of reference only and are not intended to be part of or to affect
the meaning or inter pretation of this Agreement. "Include," "includes" and
"including" shall be deemed to be followed by "without limitation" whether or
not they are in fact followed by such words or words of like import.
9
<PAGE>
(k) This Agreement may be executed in counterparts, each of which
shall be deemed to be an original, but all of which, taken together, shall
constitute one and the same instrument.
10
<PAGE>
IN WITNESS WHEREOF, Parent, Purchaser and Shareholder have caused this
Agreement to be duly executed as of the day and year first above written.
MARRIOTT INTERNATIONAL, INC.
By: /s/ WILLIAM J. SHAW
-------------------------------
Name: William J. Shaw
Title: Executive Vice President
FG ACQUISITION CORP.
By: /s/ WILLIAM J. SHAW
------------------------
Name: William J. Shaw
Title: President
APOLLO FG PARTNERS, L.P.
By: Apollo Advisors, L.P.,
Its Managing General Partner
By: Apollo Capital Management, Inc.,
Its General Partner
By: /s/ PETER COPSES
--------------------------
Name: Peter Copses
Title: Vice President
Solely for the purpose of Section 2(c) hereof:
FORUM GROUP, INC.
By: /s/ MARK PACALA
--------------------------
Name: Mark Pacala
11
<PAGE>
Title: Chairman and Chief Executive
Officer
12
<PAGE>
EXHIBIT A
---------
IRREVOCABLE PROXY
-----------------
The undersigned hereby revokes any previous proxies and appoints
Marriott International, Inc. ("PARENT"), William J. Shaw and Paul E. Johnson,
Jr., and each of them, with full power of substitution, as attorney and proxy of
the undersigned (this "PROXY") to attend any and all meetings of shareholders of
Forum Group, Inc., an Indiana corporation (the "COMPANY") (and any adjournments
or postponements thereof), to vote all shares of Common Stock, no value, of the
Company that the undersigned is then entitled to vote, and to represent and
otherwise to act for the undersigned in the same manner and with the same effect
as if the undersigned were personally present, with respect to all matters
specified herein. This is the proxy referred to in Section 3 of the Agreement
and Irrevocable Proxy (the "AGREEMENT") dated as of February 15, 1996, by and
among Parent, Purchaser, the undersigned and the Company. Capitalized terms
used and not defined herein have the respective meanings ascribed to them in, or
as prescribed by, the Agreement.
So long as the Merger Price is at least $13.00 in cash (net to the
seller), the undersigned hereby agrees that at any meeting (whether annual or
special, and whether or not an adjourned or postponed meeting) of the Company's
shareholders, however called, or in connection with any written consent of the
Company's shareholders, subject to the absence of a preliminary or permanent
injunction or other final order by any United States federal court or state
court barring such action, the undersigned shall vote (or cause to be voted) all
Owned Shares: (i) in favor of the Merger, the execution and delivery by the
Company of the Merger Agreement and the Agreement and the approval and adoption
of the Merger Agreement and the Agreement and the terms thereof and each of the
other actions contemplated by the Merger Agreement and the Agreement and any
actions required in furtherance thereof; (ii) against any action or agreement
that would (A) result in a breach of any covenant, representation or warranty or
any other obligation or agreement of the Company under the Merger Agreement or
of the Company or the undersigned under the Agreement or (B) impede, interfere
with, delay, postpone or adversely affect the Offer, the Merger or the
transactions contemplated thereby or by the Agreement; and (iii) except as
otherwise agreed to in writing in advance by Parent, against the following
actions (other than the Merger and the transactions contemplated by the Merger
Agreement, the Agreement and this Proxy: (A) any extraordinary corporate
transaction, such as a merger, consolidation or other business combination
involving the Company or any of its Subsidiaries (including any Acquisition
Proposal or any Third Party Transaction); (B) any sale, lease or transfer of a
substantial portion of the assets or business of the Company or its
Subsidiaries, or reorganization, restructuring, recapitalization, special
dividend, dissolution or liquidation of the Company or its Subsidiaries; or (C)
any change in the present capitalization of the Company including any proposal
to sell any equity interest in the Company or any of its Subsidiaries. The
undersigned shall not enter into any binding
13
<PAGE>
agreement, arrangement or understanding with any Person the effect of which
would be inconsistent or violative of the provisions and agreements contained in
this Proxy.
The undersigned acknowledges and agrees that this Proxy (w) shall be
coupled with an interest, (x) shall constitute, among other things, an
inducement for Parent to enter into the Agreement and the Merger Agreement, (y)
shall be irrevocable and (z) shall not terminate (by operation of law or
otherwise), except upon the termination of the Agreement pursuant to and in
conformity with Section 7 thereof.
The undersigned authorizes such attorney and proxy to substitute any
other person to act hereunder, to revoke any substitution and to file this Proxy
and any substitution or revocation with the Secretary of the Company.
Dated: February 15, 1996
APOLLO FG PARTNERS, L.P.
By: Apollo Advisors, L.P.,
Its Managing General Partner
By: Apollo Capital Management, Inc.,
Its General Partner
By:_______________________________
Name:
Title:
Exhibit A-1
<PAGE>
AGREEMENT
THIS AGREEMENT (this "Agreement"), dated as of February 15, 1996, is
by and among MARRIOTT INTERNATIONAL, INC., a Delaware corporation ("PARENT"), FG
ACQUISITION CORP., an Indiana corporation and a subsidiary of Parent
("PURCHASER"), and FORUM/CLASSIC, L.P., a Delaware limited partnership
("SHAREHOLDER").
W I T N E S S E T H:
-------------------
WHEREAS, simultaneously with the execution of this Agreement, Parent,
Purchaser and Forum Group Inc., an Indiana corporation, (the "COMPANY") have
entered into an Agreement and Plan of Merger (as such Agreement may hereafter be
amended from time to time, the "MERGER AGREEMENT"), pursuant to which (i)
Purchaser has agreed, among other things, to commence a cash tender offer (as
such tender offer may hereafter be amended from time to time in accordance with
the Merger Agreement, the "OFFER") to purchase all shares of common stock, no
par value, of the Company (the "COMPANY COMMON STOCK") and (ii) Purchaser will
be merged with and into the Company (the "MERGER");
WHEREAS, as of the date hereof, Shareholder is the beneficial owner
of, and has the sole right to vote and dispose of, 2,550,554 shares of Company
Common Stock; and
WHEREAS, as an inducement and a condition to its entering into the
Merger Agreement and incurring the obligations set forth therein, including the
Offer and the Merger, Parent has required that Shareholder enter into this
Agreement;
NOW, THEREFORE, in consideration of the foregoing and the mutual
premises, representations, warranties, covenants and agreements contained herein
and in the Merger Agreement, the parties hereto, intending to be legally bound
hereby, agree as follows:
1. Certain Definitions. Capitalized terms used and not defined
-------------------
herein have the respective meanings ascribed to them in the Merger Agreement. In
addition, for purposes of this Agreement:
"AFFILIATE" means, with respect to any specified Person, any Person
that directly, or indirectly through one or more intermediaries, controls, or is
controlled by, or is under common control with, the Person specified. As used
herein, "CONTROL" means the ownership of fifty percent (50%) or more of the
voting securities of a Person. For purposes of this Agreement, with respect to
Shareholder, "AFFILIATE" shall not include (i) the Company and the Persons that
directly, or indirectly through one or more intermediaries, are controlled by
the Company or (ii) any Person in which Shareholder has a material direct or
indirect ownership interest that is an operating company or otherwise is not in
the business of making direct or indirect equity and/or debt investments in
other Persons.
<PAGE>
"BENEFICIALLY OWN," "BENEFICIAL OWNER" or "BENEFICIAL OWNERSHIP" with
respect to any securities means having "BENEFICIAL OWNERSHIP" of such securities
(as determined pursuant to Rule 13d-3 under the Exchange Act ). Without
duplicative counting of the same securities by the same holder, securities
Beneficially Owned by a Person shall include securities Beneficially Owned by
all other Persons with whom such Person would constitute a "GROUP" within the
meaning of Section 13(d) of the Exchange Act and the rules promulgated
thereunder.
"EXCHANGE ACT" means the Securities Exchange Act of 1934, as amended.
"OWNED SHARES" means the shares of Company Common Stock owned by
Shareholder (either of record or through a nominee), together with any other
shares of Company Common Stock and any securities convertible into or
exercisable or exchangeable for such securities (whether or not subject to
contingencies with respect to any matter or proposal submitted for the vote or
consent of shareholders of the Company) now or hereafter Beneficially Owned by
Shareholder.
"PERSON" means an individual, corporation, partnership, joint venture,
association, trust, unincorporated organization or other entity.
"TRANSFER" means, with respect to a security, the sale, transfer,
pledge, hypothecation, encumbrance, assignment or disposition of such security
or the Beneficial Ownership thereof, the offer to make such a sale, transfer or
other disposition, and each option, agreement, arrangement or understanding,
whether or not in writing, to effect any of the foregoing. As a verb,
"TRANSFER" shall have a correlative meaning.
2. Tender of Shares.
----------------
So long as the per share price in the Offer is not less than $13 in
cash (net to the seller), Shareholder hereby agrees to tender and not withdraw
all Owned Shares (or cause the record owner thereof to tender and not withdraw
such Owned Shares), pursuant to and in accordance with the terms of the Offer.
Shareholder hereby acknowledges and agrees that Parent's and Purchaser's
obligation to accept for payment and pay for shares of Company Common Stock in
the Offer, including any Owned Shares tendered by Shareholder, is subject to the
terms and conditions of the Offer. The parties agree that Shareholder will, for
all Owned Shares tendered by Shareholder in the Offer and accepted for payment
and paid for by Purchaser, receive the same per share consideration paid to
other shareholders who have tendered into the Offer.
2
<PAGE>
3. Restrictions on Transfer and Proxies; No Solicitation.
-----------------------------------------------------
(a) So long as the per share price in the Offer is not less than $13
in cash (net to the seller), Shareholder shall not directly or indirectly: (i)
except as provided in Section 2 hereof, Transfer (including the Transfer of any
securities of an Affiliate which is the record holder of Owned Shares if, as the
result of such Transfer, such Person would cease to be an Affiliate of
Shareholder) to any Person any or all Owned Shares; (ii) grant any proxies or
powers of attorney, deposit any Owned Shares into a voting trust or enter into a
voting agreement, understanding or arrangement with respect to such Owned
Shares; or (iii) take any action that would make any representation or warranty
of Shareholder contained herein untrue or incorrect or would result in a breach
by Shareholder of its obligations under this Agreement.
(b) 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 heretofore with respect to any Acquisition Proposal.
Shareholder will not, and will cause the 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 this Agreement shall prohibit 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.
4. Representations and Warranties of Shareholder. Shareholder
---------------------------------------------
hereby represents, warrants and covenants to Parent and Purchaser as follows:
(a) Shareholder has all necessary partnership power and authority
to execute and deliver this Agreement and perform its obligations hereunder. The
execution and delivery by Shareholder of this Agreement and the performance by
Shareholder of its obligations hereunder have been duly and validly authorized
by the requisite partnership action on the part of Shareholder, and no other
partnership proceedings on the part of Shareholder are necessary to authorize
the execution, delivery or performance of this Agreement by Shareholder or the
consummation of the transactions contemplated hereby by Shareholder.
(b) This Agreement has been duly and validly executed and delivered
by Shareholder and constitutes the valid and binding agreement of Shareholder,
enforceable against Shareholder in accordance with its terms except to the
extent (i) such enforcement may be limited by applicable bankruptcy, insolvency
or similar laws affecting creditors rights and (ii) the remedy of specified
performance and injunctive and other forms of equitable relief may be subject to
equitable defenses and to the discretion of the court before which any
proceeding therefor may be brought.
3
<PAGE>
(c) Shareholder is the Beneficial Owner of 2,550,544 shares of
Company Common Stock and has the right to tender such shares as contemplated by
this Agreement so that, upon the consummation of the Offer, Purchaser will own
such shares free and clear of all liens, claims, options, proxies, voting
agreements, security interests, charges and encumbrances. Except for the Owned
Shares, the Citicorp Warrants and the Investor Warrants (and the shares of
Company Common Stock purchasable upon exercise of such warrants), neither
Shareholder nor any of its Affiliates Beneficially Owns any shares of Company
Common Stock or any securities convertible into Company Common Stock.
Shareholder has sole power to vote and to dispose of the Owned Shares, and sole
power to issue instructions with respect to the Owned Shares to the extent
appropriate in respect of the matters set forth in this Agreement, sole power to
demand appraisal rights and sole power to agree to all of the matters set forth
in this Agreement, in each case which respect to all of the Owned Shares, with
no limitations, qualifications or restrictions on such rights, subject to
applicable securities laws and the terms of this Agreement.
(d) Except for filings, authorizations, consents and approvals as
may be required under, and other applicable requirements of the Hart-Scott-
Rodino Antitrust Improvements Act of 1976 (the "HSR ACT") and the Exchange Act,
in each case as amended, (i) no filing will, and no permit, authorization,
consent or approval of, any state or federal governmental body or authority is
necessary for the execution of this Agreement by Shareholder and the
consummation by Shareholder of the transactions contemplated hereby and (ii)
none of the execution and delivery of this Agreement by Shareholder, the
consummation by Shareholder of the transactions contemplated hereby or
compliance by Shareholder with any of the provisions hereof shall (A) conflict
with or result in any breach of the partnership agreement or other
organizational documents of Shareholder, (B) result in a violation or breach of,
or constitute (with or without notice or lapse of time or both) a default (or
give rise to any third party right of termination, cancellation, material
modification or acceleration) under any of the terms, conditions or provisions
of any note, loan agreement, bond, mortgage, indenture, license, contract,
commitment, arrangement, understanding, agreement or other instrument or
obligation of any kind to which Shareholder is a party or by which Shareholder
or any of its properties or assets (including the Owned Shares) may be bound, or
(C) violate any order, writ, injunction, decree, judgment, statute, rule or
regulation applicable to Shareholder or any of its properties or assets. As of
immediately prior to the execution of this Agreement, no litigation is pending
or, to the knowledge of Shareholder, threatened involving Shareholder relating
in any way to this Agreement, the Merger Agreement or any transactions
contemplated hereby or thereby.
(e) Shareholder understands and acknowledges that Parent is
entering into, and causing the Purchaser to enter into, the Merger Agreement,
and is incurring the obligations set forth therein, in reliance upon
Shareholder's execution and delivery of this Agreement.
(f) Shareholder agrees with and covenants to Parent that
Shareholder shall not request that the Company or Parent, as the case may be,
register the Transfer (book-entry
4
<PAGE>
or otherwise) of any certificated or uncertificated interest representing any of
the securities of the Company or of Parent, as the case may be, unless such
Transfer is made in compliance with this Agreement.
5. Representations and Warranties of Parent and Purchaser.
------------------------------------------------------
Parent and Purchaser hereby represent, warrant and covenant to Shareholder as
follows:
(a) Parent is a corporation duly organized and validly existing
under the laws of the State of Delaware, and Purchaser is a corporation duly
organized and validly existing under the laws of the State of Delaware and each
of them is in good standing under the laws of the state of its incorporation.
Parent and Purchaser have all necessary corporate power and authority to execute
and deliver this Agreement and perform their respective obligations hereunder.
The execution and delivery by Parent and Purchaser of this Agreement and the
performance by Parent and Purchaser of their respective obligations hereunder
have been duly and validly authorized by the Board of Directors of each of
Parent and Purchaser and no other corporate proceedings on the part of Parent or
Purchaser are necessary to authorize the execution, delivery or performance of
this Agreement or the consummation of the transactions contemplated hereby.
(b) This Agreement has been duly and validly executed and delivered
by Parent and Purchaser and constitutes a valid and binding agreement each of
Parent and Purchaser, enforceable against each of them in accordance with its
terms except to the extent (i) such enforcement may the limited by applicable
bankruptcy, insolvency or similar laws affecting creditors rights and (ii) the
remedy of specific performance and injunctive and other forms of equitable
relief may be subject to equitable defenses and to the discretion of the court
before which any proceeding therefor may be brought.
(c) Except for filings, authorizations, consents and approvals as
may be required under, and other applicable requirements of the HSR Act and the
Exchange Act, (i) no filing with, and no permit, authorization, consent or
approval of, any state or federal public body or authority is necessary for the
execution of this Agreement by Parent or Purchaser and the consummation by
Parent or Purchaser of the transactions contemplated hereby and (ii) none of the
execution and delivery of this Agreement by Parent or Purchaser, the
consummation by Parent or Purchaser of the transactions contemplated hereby or
compliance by Parent or Purchaser with any of the provisions hereof shall (A)
conflict with or result in any breach of the certificate of incorporation or by-
laws of Parent or Purchaser, or (B) result in a violation or breach of, or
constitute (with or without notice or lapse of time or both) a default (or give
rise to any third party right of termination, cancellation, material
modification or acceleration) under any of the terms, conditions or provisions
of any note, loan agreement, bond, mortgage, indenture, license, contract,
commitment, arrangement, understanding, agreement or other instrument or
obligation of any kind to which Parent or Purchaser is a party or by which
Parent or Purchaser or any of their respective properties or assets may be
bound, or violate any order, writ, injunction, decree, judgment, statute, rule
or regulation applicable to Parent or Purchaser or any of their respective
properties or assets. As of immediately prior to
5
<PAGE>
the execution of this Agreement, no litigation is pending or, to the knowledge
of Parent and Purchaser, threatened involving Parent or Purchaser relating in
any way to this Agreement, the Merger Agreement or any transactions contemplated
hereby or thereby.
6. Termination. This Agreement (and all covenants of Shareholder
-----------
hereunder) shall terminate on the earliest of (i) the purchase by Purchaser of
the Owned Shares pursuant to the Offer, (ii) termination of the Merger Agreement
pursuant to and in conformity with Article VIII of the Merger Agreement;
provided that this Agreement shall not terminate based on a termination under
- --------
Section 7.1(f) of the Merger Agreement if Parent and Purchaser are challenging
the ability of the Company to terminate the Merger Agreement pursuant to such
Section 7.1(f), and (iii) July 16, 1996.
7. Miscellaneous.
-------------
(a) This Agreement constitutes the entire agreement among the
parties with respect to the subject matter hereof and supersedes all other prior
agreements and understandings, both written and oral, among the parties with
respect to the subject matter hereof.
(b) Shareholder agrees that this Agreement and the respective
rights and obligations of Shareholder hereunder shall attach to any shares of
Company Common Stock, and any securities convertible into such shares, that may
become Beneficially Owned by Shareholder.
(c) All costs and expenses incurred in connection with this
Agreement and the transactions contemplated hereby shall be paid by the party
incurring such expenses, and each of Parent and Purchaser, on the one hand, and
Shareholder, on the other hand, shall indemnify and hold the other harmless from
and against any and all claims, liabilities or obligations with respect to any
brokerage fees, commissions or finders' fees asserted by any person on the basis
of any act or statement alleged to have been made by such party or its
Affiliates.
(d) This Agreement and all of the provisions hereof shall be
binding upon and inure to the benefit of the parties and their respective
successors and permitted assigns, but neither this Agreement nor any of the
rights, interests or obligations hereunder shall be assigned or delegated by any
party (whether by operation of Law or otherwise) without the prior written
consent of the other parties; provided, that Purchaser may assign or delegate
--------
its rights and obligations hereunder to Parent or any Subsidiary of Parent, but
no such assignment or delegation shall relieve Purchaser of its obligations
hereunder. This Agreement shall be binding upon and inure solely to the benefit
of each party hereto, and nothing in this Agreement, express or implied, is
intended to or shall confer upon any other Person any rights, benefits or
remedies of any nature whatsoever under or by reason of this Agreement.
6
<PAGE>
(e) This Agreement may not be amended, changed, supplemented, or
otherwise modified or terminated, except upon the execution and delivery of a
written agreement executed by each of the parties hereto. The parties may waive
compliance by the other parties hereto with any representation, agreement or
condition otherwise required to be complied with by such other party hereunder,
but any such waiver shall be effective only if in writing executed by the
waiving party.
(f) All notices and other communications hereunder shall be in
writing and shall be deemed given upon (a) transmitter's confirmation of a
receipt of a facsimile transmission, (b) confirmed delivery by a standard
overnight carrier or when delivered by hand or (c) on receipt, unless receipt
fails to occur because of a refusal to accept delivery or inability to effect
delivery because of a change of address of which no notice was given, in which
case notice shall be deemed given upon the expiration of five business days
after the day when mailed by certified or registered mail, postage prepaid,
addressed at the following addresses (or at such other address for a party as
shall be specified by like notice):
If to Shareholder:
Forum/Classic, L.P.
Suite 3900
200 West Madison
Chicago, Illinois 60606
Telephone No.: (312) 750-8103
Telecopy No.: (312) 750-8566
Attention: Kenneth R. Posner
copy to:
Forum/Classic, L.P.
Suite 3900
200 West Madison
Chicago, Illinois 60606
Telephone No.: (312) 750-8415
Telecopy No.: (312) 750-8597
Attention: John Kevin Poorman
If to Parent or
Purchaser:
Marriott International, Inc.
10400 Fernwood Road
Bethesda, Maryland 20817
Telephone No.: (301) 380-9555
Telecopy No.: (301) 380-8150
7
<PAGE>
Attention: General Counsel
copy to:
O'Melveny & Myers
555 13th Street, NW
Washington, D.C. 20004
Telephone No.: (202) 383-5300
Telecopy No.: (202) 383-5414
Attention: Jeffrey J. Rosen
David G. Pommerening
(g) Each of the parties hereto acknowledges and agrees that in the
event of any breach of this Agreement, each non-breaching party would be
irreparably and immediately harmed and could not be made whole by monetary
damages. It is accordingly agreed that the parties hereto (a) will waive, in
any action for specific performance, the defense of adequacy of a remedy at law
and (b) shall be entitled, in addition to any other remedy to which they may be
entitled at law or in equity, to compel specific performance of this Agreement
in any action instituted in any state or federal court sitting in Delaware. The
parties hereto consent to personal jurisdiction in any such action brought in
any state or federal court sitting in Delaware and to service of process upon it
in the manner set forth in Section 7(f) hereof.
(h) All rights, powers and remedies provided under this Agreement
or otherwise available in respect hereof at law or in equity shall be cumulative
and not alternative, and the exercise of any thereof by any party shall not
preclude the simultaneous or later exercise of any other such right, power or
remedy by such party. The failure of any party hereto to exercise any right,
power or remedy provided under this Agreement or otherwise available in respect
hereof at law or in equity, or to insist upon compliance by any other party
hereto with its obligations hereunder, and any custom or practice of the parties
at variance with the terms hereof, shall not constitute a waiver by such party
of its right to exercise any such or other right, power or remedy or to demand
such compliance.
(i) This Agreement shall be governed and construed in accordance
with the Laws of the State of Delaware (regardless of the Laws that might
otherwise govern under applicable principles of conflict of laws) as to all
matters, including matters of validity, construction, effect, performance and
remedies.
(j) The descriptive headings used herein are inserted for
convenience of reference only and are not intended to be part of or to affect
the meaning or inter pretation of this Agreement. "Include," "includes" and
"including" shall be deemed to be followed by "without limitation" whether or
not they are in fact followed by such words or words of like import.
8
<PAGE>
(k) This Agreement may be executed in counterparts, each of which
shall be deemed to be an original, but all of which, taken together, shall
constitute one and the same instrument.
9
<PAGE>
IN WITNESS WHEREOF, Parent, Purchaser and Shareholder have caused this
Agreement to be duly executed as of the day and year first above written.
MARRIOTT INTERNATIONAL, INC.
By: /s/ WILLIAM J. SHAW
-----------------------------------
Name: William J. Shaw
Title: Executive Vice President
FG ACQUISITION CORP.
By: /s/ WILLIAM J. SHAW
-----------------------------------
Name: William J. Shaw
Title: Vice President
FORUM/CLASSIC, L.P.
By: FORUM/CLASSIC GP CO., its general
partner
By: /s/ JOHN KEVIN POORMAN
---------------------------------
Name: John Kevin Poorman
Title: Vice President
10
<PAGE>
IRREVOCABLE PROXY
-----------------
The undersigned hereby revokes any previous proxies and appoints
Marriott International, Inc. ("PARENT"), William J. Shaw and Paul E. Johnson,
Jr., and each of them, with full power of substitution, as attorney and proxy of
the undersigned (this "PROXY") to attend any and all meetings of shareholders of
Forum Group, Inc., an Indiana corporation (the "COMPANY") (and any adjournments
or postponements thereof), to vote all shares of Common Stock, no value, of the
Company that the undersigned is then entitled to vote, and to represent and
otherwise to act for the undersigned in the same manner and with the same effect
as if the undersigned were personally present, with respect to all matters
specified herein. This is the proxy referred to in Section 3 of the Agreement
and Irrevocable Proxy (the "AGREEMENT") dated as of February 20, 1996, by and
among Parent, Purchaser, the undersigned and the Company. Capitalized terms used
and not defined herein have the respective meanings ascribed to them in, or as
prescribed by, the Agreement.
So long as the Merger Price is at least $13.00 in cash (net to the
seller), the undersigned hereby agrees that at any meeting (whether annual or
special, and whether or not an adjourned or postponed meeting) of the Company's
shareholders, however called, or in connection with any written consent of the
Company's shareholders, subject to the absence of a preliminary or permanent
injunction or other final order by any United States federal court or state
court barring such action, the proxies named above are authorized to vote all
Owned Shares: (i) in favor of the Merger, the execution and delivery by the
Company of the Merger Agreement and the Agreement and the approval and adoption
of the Merger Agreement and the Agreement and the terms thereof and each of the
other actions contemplated by the Merger Agreement and the Agreement and any
actions required in furtherance thereof; (ii) against any action or agreement
that would (A) result in a breach of any covenant, representation or warranty or
any other obligation or agreement of the Company under the Merger Agreement or
of the Company or the undersigned under the Agreement or (B) impede, interfere
with, delay, postpone or adversely affect the Offer, the Merger or the
transactions contemplated thereby or by the Agreement; and (iii) except as
otherwise agreed to in writing in advance by Parent, against the following
actions (other than the Merger and the transactions contemplated by the Merger
Agreement, the Agreement and this Proxy: (A) any extraordinary corporate
transaction, such as a merger, consolidation or other business combination
involving the Company or any of its Subsidiaries (including any Acquisition
Proposal or any Third Party Transaction); (B) any sale, lease or transfer of a
substantial portion of the assets or business of the Company or its
Subsidiaries, or reorganization, restructuring, recapitalization, special
dividend, dissolution or liquidation of the Company or its Subsidiaries; or (C)
any change in the present capitalization of the Company including any proposal
to sell any equity interest in the Company or any of its Subsidiaries. The
undersigned shall not enter into any binding agreement, arrangement or
understanding with any Person the effect of which would be inconsistent or
violative of the provisions and agreements contained in this Proxy.
1
<PAGE>
The undersigned acknowledges and agrees that this Proxy (w) shall be
coupled with an interest, (x) shall constitute, among other things, an
inducement for Parent to enter into the Agreement and the Merger Agreement, (y)
shall be irrevocable and (z) shall not terminate (by operation of law or
otherwise), except upon the termination of the Agreement pursuant to and in
conformity with Section 7 thereof.
The undersigned authorizes such attorney and proxy to substitute any
other person to act hereunder, to revoke any substitution and to file this Proxy
and any substitution or revocation with the Secretary of the Company.
Dated: February 20, 1996
APOLLO FG PARTNERS, L.P.
By: Apollo Advisors, L.P.,
Its Managing General Partner
By: Apollo Capital Management, Inc.,
Its General Partner
By: /s/ Peter Copses
-------------------------------
Name: Peter Copses
Title: Vice President
2
<PAGE>
IRREVOCABLE PROXY
-----------------
The undersigned hereby revokes any previous proxies and appoints
Marriott International, Inc. ("PARENT"), William J. Shaw and Paul E. Johnson,
Jr., and each of them, with full power of substitution, as attorney and proxy of
the undersigned (this "PROXY") to attend any and all meetings of shareholders of
Forum Group Inc., an Indiana corporation (the "COMPANY") (and any adjournments
or postponements thereof), to vote all shares of Common Stock, no value, of the
Company that the undersigned is then entitled to vote, and to represent and
otherwise to act for the undersigned in the same manner and with the same effect
as if the undersigned were personally present, with respect to all matters
specified herein. This is the proxy referred to in Section 3 of the Agreement
and Irrevocable Proxy (the "AGREEMENT") dated as of February 20, 1996, by and
among Parent, Purchaser, the undersigned and the Company. Capitalized terms
used and not defined herein have the respective meanings ascribed to them in, or
as prescribed by, the Agreement.
So long as the Merger Price is at least $13.00 in cash (net to the
seller), the undersigned hereby agrees that at any meeting (whether annual or
special, and whether or not an adjourned or postponed meeting) of the Company's
shareholders, however called, or in connection with any written consent of the
Company's shareholders, subject to the absence of a preliminary or permanent
injunction or other final order by any United States federal court or state
court barring such action, the proxies named above are authorized to vote all
Owned Shares: (i) in favor of the Merger, the execution and delivery by the
Company of the Merger Agreement and the Agreement and the approval and adoption
of the Merger Agreement and the Agreement and the terms thereof and each of the
other actions contemplated by the Merger Agreement and the Agreement and any
actions required in furtherance thereof; (ii) against any action or agreement
that would (A) result in a breach of any covenant, representation or warranty or
any other obligation or agreement of the Company under the Merger Agreement or
of the Company or the undersigned under the Agreement or (B) impede, interfere
with, delay, postpone or adversely affect the Offer, the Merger or the
transactions contemplated thereby or by the Agreement; and (iii) except as
otherwise agreed to in writing in advance by Parent, against the following
actions (other than the Merger and the transactions contemplated by the Merger
Agreement, the Agreement and this Proxy: (A) any extraordinary corporate
transaction, such as a merger, consolidation or other business combination
involving the Company or any of its Subsidiaries (including any Acquisition
Proposal or any Third Party Transaction); (B) any sale, lease or transfer of a
substantial portion of the assets or business of the Company or its
Subsidiaries, or reorganization, restructuring, recapitalization, special
dividend, dissolution or liquidation of the Company or its Subsidiaries; or (C)
any change in the present capitalization of the Company including any proposal
to sell any equity interest in the Company or any of its Subsidiaries. The
undersigned shall not enter into any binding agreement, arrangement or
understanding with any Person the effect of which would be inconsistent or
violative of the provisions and agreements contained in this Proxy.
1
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The undersigned acknowledges and agrees that this Proxy (w) shall be
coupled with an interest, (x) shall constitute, among other things, an
inducement for Parent to enter into the Agreement and the Merger Agreement, (y)
shall be irrevocable and (z) shall not terminate (by operation of law or
otherwise), except upon the termination of the Agreement pursuant to and in
conformity with Section 7 thereof.
The undersigned authorizes such attorney and proxy to substitute any
other person to act hereunder, to revoke any substitution and to file this Proxy
and any substitution or revocation with the Secretary of the Company.
Dated: February 20, 1996
FORUM HOLDINGS, L.P.
By: HRP Management, Ltd.,
Its General Partner
By: HH Genpar Partners,
Its General Partner
By: Hampstead Associates, Inc.,
Its Managing General Partner
By:/s/ DANIEL DECKER
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Name:
Title:
2
