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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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SCHEDULE 14D-9/A
SOLICITATION/RECOMMENDATION STATEMENT PURSUANT TO
SECTION 14(D)(4) OF THE SECURITIES EXCHANGE ACT OF 1934
(AMENDMENT NO. 2)
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ANDROS INCORPORATED
(NAME OF SUBJECT COMPANY)
ANDROS INCORPORATED
(NAME OF PERSON(S) FILING STATEMENT)
COMMON STOCK, PAR VALUE $.01 PER SHARE
(TITLE OF CLASS OF SECURITIES)
345281
(CUSIP NUMBER OF CLASS OF SECURITIES)
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DANE NELSON
PRESIDENT AND CHIEF EXECUTIVE OFFICER
ANDROS INCORPORATED
2332 FOURTH STREET
BERKELEY, CALIFORNIA 94710-2402
(510) 849-5700
(Name, Address and Telephone Number of Person Authorized to
Receive Notices and Communications on Behalf of
the Person(s) Filing Statement)
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WITH A COPY TO:
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STEVEN J. TONSFELDT, ESQ. SUSAN COOPER PHILPOT, ESQ.
BROBECK, PHLEGER & HARRISON LLP COOLEY GODWARD CASTRO HUDDLESON & TATUM
ONE MARKET, SPEAR STREET TOWER ONE MARITIME PLAZA, SUITE 2000
SAN FRANCISCO, CALIFORNIA 94105 SAN FRANCISCO, CALIFORNIA 94111
(415) 442-0900 (415) 693-2000
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This Amendment No. 2 to the Solicitation/Recommendation Statement on
Schedule 14D-9 dated February 21, 1996 ("Amendment No. 2") relates to the offer
by Andros Acquisition Inc., a corporation organized and existing under the laws
of the State of Delaware ("Purchaser") and wholly owned subsidiary of Andros
Holdings Inc., a Delaware corporation formed at the direction of Genstar Capital
Partners II, L.P., a Delaware limited partnership the sole general partner of
which is Genstar Capital LLC ("GCLLC"), to purchase all outstanding shares of
common stock, par value $.01 per share, of Andros Incorporated, a corporation
organized and existing under the laws of the State of Delaware (the "Company"),
at a price of $18.00 per Share, net to the seller in cash, upon the terms and
subject to the conditions set forth in Purchaser's Offer to Purchase dated
February 20, 1996 and in the related Letter of Transmittal, copies of which were
attached to the Tender Offer Statement on Schedule 14D-1 as Exhibits (a)(1) and
(a)(2), thereto, respectively.
ITEM 4. THE SOLICITATION OR RECOMMENDATION
Item 4 is hereby amended and restated to read in its entirety as follows:
RECOMMENDATION OF THE BOARD OF DIRECTORS. The Board has approved the Merger
Agreement and the transactions contemplated thereby and determined that each of
the Offer and the Merger is fair to, and in the best interests of, the
stockholders of the Company. The Board recommends that all holders of Shares
accept the Offer and tender their Shares pursuant to the Offer.
BACKGROUND. In the period preceding and immediately following the
conclusion of the Company's fiscal year ending July 31, 1994, there developed a
general view among the members of the Board of Directors of the Company that,
while the Company's financial performance had improved significantly as compared
with recent periods, this improvement was generally not reflected in the market
price for the Common Stock. In addition, it was noted that relatively few
research analysts followed the Company and the trading volume in the Common
Stock remained relatively low. There was also a broadly held view among the
members of the Board that, because the Company operated in a number of different
market sectors, the market did not truly understand the Company and its
operations and business plan. Consequently, the members of the Board believed
that the market valuation of the Company did not adequately reflect the
Company's financial performance and prospects and that there was not a
significant likelihood that the market would begin to recognize the true value
of the Company at anytime in the near future. In response to these factors and
after numerous informal discussions among its members, the Board authorized the
formation of a Special Committee, consisting of two members of the Board (Eugene
Kleiner and John M. Huneke), which was charged with the responsibility of
exploring various alternatives to maximize shareholder value. The Special
Committee was further empowered to contact possible financial advisors to assist
it in the performance of this assignment.
The Board was of the view that it was advisable to form a Special Committee
to consider various strategic and financial alternatives for the Company,
including a possible sale of the Company, given that if a transaction involving
a sale of the Company were pursued, there existed a substantial likelihood that
Dane Nelson, the President and Chief Executive Officer of the Company as well as
a member of its Board of Directors, would be asked by any potential acquirer to
join with it following the completion of the transaction as an equity
participant or as a key employee or both. It was also determined at the outset
of this process that Mr. Nelson would abstain from the consideration by the
Board of any proposed transaction involving the sale of the Company.
In September 1994, the Special Committee (to which Moshe Alafi, a director
of the Company who did not stand for re-election in 1995, had been added)
approached DLJ concerning a possible engagement to consider various strategic
and financial alternatives for the Company. On October 25, 1994, a letter
agreement (the "Engagement Letter") was entered into between the Special
Committee (to which Karl H. Schimmer, M.D. had been added) and DLJ, pursuant to
which the Special Committee engaged DLJ to consider and advise it with respect
to various strategic and financial alternatives and to evaluate, and as
appropriate to render a "fairness opinion" regarding, (i) any proposal which the
Company might receive for the acquisition of all or a substantial amount of its
business, stock or
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assets, whether by means of merger, consolidation, or other business
combination, tender or exchange offer, public or private purchase of the
Company's securities or assets, or otherwise, or (ii) any other similar
transaction, including any leveraged buyout, recapitalization, recapitalization
involving management or employee stock or stock option plans and incentives,
divestiture, sale or spinoff. At the time DLJ was retained to serve as the
Company's financial advisor, the Special Committee also retained special outside
counsel to advise it with respect to any strategic or financial proposals that
it might be asked to consider.
Following a presentation in December 1994 by DLJ to the Board regarding
various strategic and financial alternatives that the Board might consider, the
Board (upon the recommendation of the Special Committee and with Mr. Nelson
abstaining) directed DLJ to begin exploring a possible sale of the Company,
among other financial alternatives. Acting on that direction, the Company and
DLJ prepared a descriptive memorandum regarding the Company which set forth
certain information regarding the Company's operations and its financial
performance and prospects. DLJ, on behalf of the Company, contacted
approximately 75 corporations and other entities which the Company and DLJ
believed might have an interest in purchasing the Company ("Potential
Purchasers"), and based upon interest expressed by certain of such Potential
Purchasers, distributed to 21 Potential Purchasers copies of the descriptive
memorandum on a confidential basis.
From time to time thereafter, Potential Purchasers who expressed interest in
a transaction were given the opportunity to tour the Company's facilities, talk
with management and conduct other due diligence inquiries. The Company, through
DLJ, invited such Potential Purchasers to submit proposals regarding an
acquisition. The invitation stated that the proposals should include, among
other things, the proposed purchase price and form of consideration, as well as
a description of sources of financing and evidence of firm lending commitments,
if any. No assurances were given that the Company would enter into an agreement
with any party, it being the Company's intention to enter into a definitive
agreement only on the basis of a proposal which it, in its sole discretion,
considered satisfactory.
From December 1994 until it entered into the Letter of Intent (as defined
below) pursuant to which it committed to the Exclusivity Period (each as defined
below), the Company entertained proposals from and engaged in discussions with
several Potential Purchasers. No definitive agreement was reached with any such
Potential Purchaser. Also, during the summer months of 1995, Mr. Robert C.
Wilson was appointed to the Special Committee and Mr. Alafi ceased to be a
member at the time he ceased to be a member of the Company's Board of Directors.
In the last week of September 1995, DLJ received, on behalf of the Company,
two formal acquisition proposals, one of which was a proposal from GCLLC (the
"GCLLC Proposal") regarding an acquisition of the Company in a leveraged buy-out
transaction for $20.00 per Share. The second formal proposal contemplated a
recapitalization of the Company in which the offeror would initially acquire 25%
of the Company's fully diluted equity at a price of approximately $4.00 per
Share and receive warrants with a ten-year term to raise its ownership level to
51% and in which the Company would incur certain additional indebtedness in
order to pay a one-time extraordinary dividend of $14.00 per Share to its
stockholders. The Potential Purchaser making the offer recited its belief that
the transaction would have a nominal value in excess of $20.00 per Share in the
near term. DLJ informed the Board, however, that it was DLJ's view that it was
likely that the transaction would have a value of less than $18.00 per Share due
to the lack of liquidity for the stub share of Common Stock to be held by the
Company's stockholders post-transaction and the anticipated adverse market
reaction to the relatively small capitalization of the Company following the
transaction. DLJ also had received as of that time several informal indications
of interest from seven other Potential Purchasers; however, no formal proposals
were forthcoming during this period from any of them. The Company believes that
its declining financial performance during this time period was a factor in
dissuading these Potential Purchasers from presenting a formal acquisition
proposal to the Company at that time.
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The GCLLC Proposal set forth a plan pursuant to which an affiliate of GCLLC
would commence a tender offer for all of the Shares at $20.00 per Share, payable
in cash, subject to certain conditions, to be followed by a merger of such
affiliate with and into the Company. The GCLLC Proposal was conditioned upon
completion of financing arrangements, execution of a definitive merger agreement
and reaching understandings with senior management of the Company as to their
future levels of compensation and their equity investments in Parent.
The Board (upon the recommendation of the Special Committee and with Mr.
Nelson abstaining), with the advice and assistance of its legal and financial
advisors, determined that of the acquisition proposals received, the GCLLC
Proposal provided the most value to the Company's stockholders, given the
immediate value to the stockholders provided by GCLLC's proposal, the
requirement that the Company incur significant amounts of indebtedness under the
recapitalization proposal, the characteristics of the equity arrangements under
the recapitalization proposal, including the ten-year term of the proposed
warrants, and the perceived likelihood that the transaction would be completed
given similar successful past transactions by affiliates of GCLLC. At this
point, continuing contact with the offeror proposing the recapitalization was
terminated in order to permit the Company to devote the necessary resources to
pursuing a transaction with GCLLC.
A letter of intent between the Company and GCLLC was signed on September 29,
1995 (the "Letter of Intent"). The Letter of Intent contemplated that the Offer
would be made at a price of $20.00 per Share and provided that consummation of
the proposed transaction would be conditioned upon, among other things,
satisfactory completion by GCLLC of a due diligence review of the Company and
completion of financing arrangements by GCLLC. The Letter of Intent also
provided that the Company would not solicit, encourage or negotiate with others
concerning any proposal for the sale of the Company until November 14, 1995 (the
"Exclusivity Period") and that the Company would reimburse GCLLC for up to
$75,000 of GCLLC's expenses in the event that the Company elected not to proceed
with the contemplated transactions for any reason.
Between September 29, 1995 and November 10, 1995, GCLLC and its
representatives continued their due diligence investigation of the Company and
their efforts to complete their financing arrangements. On November 10, 1995, an
amendment to the Letter of Intent was executed pursuant to which (i) the Offer
price was set at $20.25, (ii) certain conditions, including the condition
regarding due diligence, were deleted, and (iii) the Exclusivity Period was
extended until December 21, 1995, by which time the parties contemplated that
the Offer would be commenced.
Between November 10, 1995 and December 21, 1995, GCLLC, its representatives
and financing sources continued their due diligence investigations of the
Company. On December 21, 1995, another amendment to the Letter of Intent was
signed pursuant to which the Exclusivity Period was extended until January 10,
1996 and the Company's obligation to reimburse GCLLC for expenses was deleted.
On January 8, 1996, certain prospective purchasers of subordinated debt of
the Purchaser notified GCLLC that they were no longer interested in providing
financing to the Purchaser in connection with the Offer and the Merger on the
terms originally contemplated under their financing proposal in light of certain
developments with respect to the Company, including its deteriorating operating
performance and regulatory and market uncertainties with respect to its
products. On January 10, 1996, GCLLC informed the Company of the development,
and that therefore the Offer and the Merger could not be consummated at a price
of $20.25. GCLLC further stated that, while it would not be possible to enter
into a transaction at $20.25 per Share, it remained interested in pursuing a
transaction with the Company and accordingly asked it be given several days to
make arrangements to put forward a revised proposal. Given the large number of
Potential Purchasers that had been contacted by DLJ, on behalf of the Company,
over the preceding year and the fact that none of such Potential Purchasers
remained interested in pursuing a transaction with the Company other than GCLLC,
the Board granted GCLLC's request. In order to ascertain that there was no
continuing interest in the Company on the part of any of the Potential
Purchasers who had expressed interest at an earlier time, DLJ contacted during
this period, and at various other times during the months of
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January and February 1996, three of the other Potential Purchasers who had
indicated an interest in a transaction in or prior to September 1995. None of
these Potential Purchasers, including the party who had proposed the
recapitalization of the Company, indicated any continuing interest in a
transaction with the Company.
At GCLLC's request, the Special Committee convened a meeting on January 13,
1996 to consider a revised proposal from GCLLC. At that meeting GCLLC made an
oral presentation of alternatives which it believed addressed the Company's
changed circumstances and would be satisfactory to prospective financing
sources. On January 23, 1996, GCLLC reiterated in writing its proposal to the
Company that the cash tender offer price for all of the Shares would be reduced
to $18.00 per Share. At a meeting of the Board held on January 26, 1996, the
Board voted (upon the recommendation of the Special Committee and with Mr.
Nelson abstaining and with Mr. Huneke voting against the proposal, both in his
capacity as a member of the Special Committee and as a member of the Board) to
pursue an agreement with Parent and the Purchaser based on an all cash tender
offer for all outstanding Shares at a price of $18.00 per Share. Mr. Huneke's
reasons for his vote against the proposed Offer were that: (a) the Company had
commenced recruiting additional management talent who would assist in focusing
and enhancing the Company's strategic direction; (b) the Company should employ
that talent and its other assets to continue as a stand alone organization and
to grow its targeted technologies and markets through both acquisition and
internal development; and (c) the increased size of the Company and the
diversification of its business from this potential expansion might result in
the Company's Common Stock being valued higher than the $18.00 per Share offered
in the transaction.
Between January 26, 1996 and February 14, 1996, the parties completed
negotiations regarding the Merger Agreement and GCLLC completed its arrangement
of financing. At a meeting on February 5, 1996, the Board, after presentations
by the Special Committee's financial and legal advisors and the Company's
outside counsel, voted (upon the recommendation of the Special Committee and
with Mr. Nelson abstaining and with Mr. Huneke voting against the proposal, both
in his capacity as a member of the Special Committee and as a member of the
Board, for the reasons previously stated) to approve the form of Merger
Agreement presented to it, as well as the Offer and the Merger. On February 14,
1996, Parent, the Purchaser and the Company executed the Merger Agreement, and
the financing commitment letters were signed and delivered to GCP II.
On February 21, 1996, the Purchaser commenced the Offer.
REASONS FOR THE BOARD'S CONCLUSIONS. In approving the Merger Agreement and
the transactions contemplated thereby and recommending that all stockholders
tender their Shares pursuant to the Offer, the Board considered a number of
factors, including:
-Information relating to the financial condition and results of operations
of the Company and management's estimates of the prospects of the Company
which, in the Board's view, supported a determination that the Offer and
the Merger were fair to the Company's stockholders;
-The Board's general belief that the market price for the Common Stock would
not adequately reflect the true value of the Company and its business (with
reference to its financial performance and prospects) for the foreseeable
future due to the fact or Board's perception, among other things, that (i)
relatively few research analysts follow the Company, (ii) trading volume in
the Common Stock remains relatively low and is anticipated to remain
relatively low in the foreseeable future, and (iii) because the Company
will continue to operate in a number of different market sectors, the
market does not, and would continue not to, truly understand the Company
and its operations and business plan;
-The fact that the Company had made a public announcement in April 1995 that
it had retained DLJ to explore strategic and financial alternatives on the
Company's behalf, thereby alerting the market that the Company would be
open to inquiries and possible proposals from potential purchasers or
partners;
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-The relationship of the Offer price to recent historical market prices of
the Shares, particularly that the $18.00 per share Offer price represents a
premium of approximately 22% over the closing sales price for shares in the
Nasdaq National Market on February 5, 1996, the last trading day prior to
the approval of the Merger Agreement and the transactions contemplated
thereby by the Company's Board of Directors, and a premium of approximately
16% over the closing sales price for shares in the Nasdaq National Market
on February 14, 1996, the last trading day prior to the public announcement
of the execution of the Merger Agreement;
-The financial and valuation analyses presented to the Board by DLJ, the
financial advisor to the Company, at various Board meetings beginning in
December 1994 and continuing through February 1996, including market prices
and financial data relating to other companies engaged in business
considered comparable to the Company, and the prices and premiums paid in
recent selected acquisitions of companies engaged in business considered by
DLJ to be comparable to that of the Company;
-The written opinion (the "Fairness Opinion") of DLJ, dated February 14,
1996, that the consideration to be received by the stockholders of the
Company pursuant to the Merger Agreement, is fair to the Company's
stockholders from a financial point of view. The Fairness Opinion contains
a description of the factors considered, the assumptions made and the scope
of review undertaken by DLJ in rendering the Fairness Opinion and is
attached hereto as Exhibit 5 and is incorporated by reference herein.
STOCKHOLDERS ARE URGED TO READ THE FAIRNESS OPINION CAREFULLY AND IN ITS
ENTIRETY;
-The likelihood that the proposed acquisition would be consummated,
including the experience, reputation and financial condition of GCLLC and
its affiliates; and
-The terms and conditions of the Merger Agreement, including, without
limitation, the fact that, the Company is not prohibited from responding to
any unsolicited proposal made in writing to acquire the Company pursuant to
a merger, consolidation, share exchange, business combination, or other
similar transaction or to acquire all or substantially all of the assets of
the Company, to the extent the Board, after consultation with independent
legal counsel, determines in good faith that such action is required for
the Board to comply with its fiduciary duty to the Company's stockholders
imposed by the DGCL.
The members of the Board evaluated the factors listed above in light of
their knowledge of the business and operations of the Company and their business
judgment. In view of the wide variety of factors considered in connection with
its evaluation of the Offer and the Merger, the Board did not find it
practicable to, and did not, quantify or otherwise attempt to assign relative
weights to the specific factors considered in reaching its determination. The
Board recognized that the Merger is not structured to require the approval of a
majority of the stockholders of the Company other than the Purchaser, and that
the Purchaser, if it purchases a sufficient number of Shares to satisfy the
Minimum Condition, would have sufficient voting power to approve the Merger
without the affirmative vote of any other stockholder of the Company. While
consummation of the Offer would result in the stockholders of the Company
receiving a premium for their Shares over the trading prices of the Shares prior
to the announcement of the Offer and the Merger, it would eliminate any
opportunity for stockholders of the Company other than Parent and the Purchaser
to participate in the potential future growth prospects of the Company. The
Board, however, believed that this was reflected in the Offer price to be paid
and also recognized that there can be no assurance as to the level of growth, if
any, to be attained by the Company in the future.
The Board determined that it was necessary to appoint a committee of
independent directors for the purpose of negotiating the terms of the Merger
Agreement. In making such determination, the Board considered that one of the
directors is employed by the Company and will have a financial interest in the
Company following consummation of the Merger. As noted above, the Board has
determined that each of the Offer and the Merger is fair to, and in the best
interests of, the stockholders of the Company. In addition, the Board recognized
that certain officers of the Company may have
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interests in the Offer and the Merger that could be deemed to present them with
certain conflicts of interest. The Board was aware of these potential conflicts
of interest and considered them along with the other matters described above.
The Company has been advised by each of its directors and executive officers
that they intend either to tender all Shares beneficially owned by them to the
Purchaser pursuant to the Offer or to vote such Shares in favor of the approval
and adoption by the stockholders of the Company of the Merger Agreement and the
transactions contemplated hereby.
In connection with advising the Special Committee regarding potential
acquisitions, DLJ prepared a presentation to the Company's Board of Directors
disseminated to the Board on or about September 22, 1995, which included a
comparable publicly traded companies analysis, an analysis of comparable merger
and acquisition transactions and an internal rate of return analysis. Based on
the analyses conducted by DLJ, DLJ's preliminary valuation range for the Company
as of September 22, 1995 was $18.00-$22.00 per share.
As a result of the Company's continued failure to meet management's
financial projections, on February 5, 1996, DLJ provided to the Board of
Directors a revised and updated comparable publicly traded companies analysis,
analysis of comparable merger and acquisition transactions and internal rate of
return analysis, as well as a control premium analysis. Based on DLJ's revised
analyses, DLJ's preliminary valuation range for the Company as of February 5,
1996 was $16.00-$19.50 per share.
In connection with the foregoing, DLJ advised the Board of Directors
regarding certain matters relating to the preparation of these analyses, which
are described below. The preparation of such analyses is a complex process and
is not necessarily susceptible to partial analysis or summary description.
Selecting portions of the analyses or of the summary set forth above, without
considering the analyses as a whole, could create an incomplete view of the
process underlying DLJ's opinion. In arriving at its fairness determination, DLJ
considered the results of all such analyses. No company or transaction used in
the above analyses as a comparison is identical to the Company or GCLLC or the
contemplated transaction. The analyses were prepared solely for purposes of
DLJ's providing its opinion to the Board of Directors of the Company as to the
fairness of the contemplated transaction and do not purport to be appraisals or
necessarily reflect the prices at which businesses or securities actually may be
sold. Analyses based upon forecasts of future results are not necessarily
indicative of actual future results, which may be significantly more or less
favorable than suggested by such analyses. Because such analyses are inherently
subject to uncertainty, being based upon numerous factors or events beyond the
control of the parties or their respective advisors, none of the Company, GCLLC,
DLJ or any other person assumes responsibility if future results are materially
different from those forecasted.
ITEM 5. PERSONS RETAINED, EMPLOYED OR TO BE COMPENSATED
Item 5 is hereby amended and restated to read in its entirety as follows:
Pursuant to a letter agreement dated October 25, 1994 (the "Engagement
Letter"), the Company retained DLJ to act as the exclusive financial advisor to
the Company and the Special Committee of the Company's Board of Directors with
respect to the sale, merger, consolidation or any other business combination, in
one or a series of transactions, involving all or a substantial amount of the
business, securities or assets of the Company. The Company agreed to compensate
the DLJ for its services in an amount of (a) $100,000, payable upon the
execution of the Engagement Letter, (b) $300,000 as compensation for the
delivery of the Fairness Opinion, payable at the time DLJ notifies the Special
Committee that it is prepared to deliver the Fairness Opinion, and (c) an amount
equal to one percent (1%) of the aggregate amount of consideration received by
the Company and/or its stockholders in connection with any of the
above-mentioned transactions less any amounts paid by the Company pursuant to
clause (a) or (b) above. The Company also agreed to reimburse DLJ for all
reasonable out-of-pocket expenses (including reasonable fees and expenses of
counsel) incurred by DLJ in connection with its engagement, whether or not a
transaction is consummated. The Company further agreed to indemnify DLJ against
certain liabilities and expenses in connection with its engagement, including
liabilities arising under federal securities laws. The Board of Directors of the
Company was aware
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of, and consented in advance to, the placement by DLJ's private placement group
of senior subordinated notes and warrants used by GCLLC to fund the acquisition.
The Board of Directors was also aware of the fact that the DLJ private placement
group had attempted to assist other Potential Purchasers in securing financing
for a possible transaction with the Company. In granting such consent, the Board
considered and evaluated the potential conflict of interest as well as the
potential benefits to the Company from the placement of financing for the GCLLC
transaction that would result from such arrangement and ultimately concluded
that the potential conflict of interest would not have a material adverse impact
on the transaction or the rendition of services by DLJ.
ITEM 8. ADDITIONAL INFORMATION TO BE FURNISHED
Item 8 is hereby amended and restated to read in its entirety as follows:
On March 4, 1996, a putative class action was filed in the Court of Chancery
of the State of Delaware on behalf of the stockholders of the Company alleging
causes of action arising out of the Offer and the proposed Merger. IRA FBO
DANIEL W. KRASNER, DLJSC AS CUSTODIAN V. ANDROS INCORPORATED, ET AL., Civil
Action No. 14872. The defendants in this action include the Company and its
directors. The action alleges that the Board breached its fiduciary duties and
specifically alleges that the Board breached its fiduciary duties by failing to
undertake an adequate evaluation of the Company as a potential acquisition
candidate and to take adequate steps to enhance the Company's value as an
acquisition candidate, and by failing to provide all material information to
stockholders in the Company's original Solicitation/Recommendation Statement on
Schedule 14D-9. The action seeks, INTER ALIA, to enjoin the defendants from
taking steps to accomplish the Offer and the proposed Merger under their present
terms.
Pursuant to a preliminary settlement agreement reached among the parties,
the pending legal proceedings against the Company and the Company's Board of
Directors are to be dismissed with prejudice. The preliminary settlement
agreement provides, INTER ALIA, that the defendants will (i) disseminate to the
stockholders of the Company the information contained in this Amendment No. 2;
and (ii) not object to the application of plaintiff's counsel for legal fees not
exceeding $175,000 and expenses actually and reasonably incurred not exceeding
$15,000 to be paid by the Company. The contemplated settlement is subject, among
other conditions, to execution by the parties of an appropriate Stipulation of
Settlement and the approval of the Delaware Court of Chancery. Mailing of this
Amendment No. 2 to the stockholders of the Company commenced on March 14, 1996.
ITEM 9. MATERIAL TO BE FILED AS EXHIBITS
Item 9 is hereby amended and supplemented by adding thereto the following:
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Exhibit 8 Letter to Stockholders of Company dated March 14, 1996.*
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* Included with Schedule 14D-9/A (Amendment No. 2) mailed to stockholders.
After reasonable inquiry and to the best of my knowledge and belief, I
certify that the information set forth in this statement is true, complete and
correct.
Dated: March 14, 1996 ANDROS INCORPORATED
By: /s/ Dane Nelson
-----------------------------------
Dane Nelson
President and Chief Executive
Officer
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EXHIBIT 8
[ANDROS INCORPORATED LETTERHEAD]
2332 Fourth Street
Berkeley, California 94710-2402
Telephone: (510) 849-5700
FAX: (510) 849-5849
March 14, 1996
Dear Andros Stockholders:
As you may be aware, a claim was brought against Andros Incorporated
("Andros") and the members of its Board of Directors in the Delaware
Chancery Court by a stockholder of Andros in connection with the tender offer
currently being made by Andros Acquisition Inc., an indirect wholly owned
subsidiary of Genstar Capital Partners II, L.P., for all of the outstanding
shares of common stock of Andros at $18.00 per share in cash.
The plaintiff's lawsuit maintains, among other things, that stockholders
did not receive adequate information on which to base a decision as to
whether to tender their shares in the tender offer. Although we believe the
lawsuit to be without merit, rather than engage in protracted litigation that
might further delay the tender offer, the parties to the litigation have
determined to settle the litigation by having additional information sent to
the stockholders of Andros. Such information is included herewith.
Sincerely,
/s/ DANE NELSON
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Dane Nelson
President and Chief Executive Officer
