UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported): May 5, 1998
GERBER SCIENTIFIC, INC.
-----------------------------------
(Exact name of Registrant as
specified in its charter)
CONNECTICUT 1-5865 06-0640743
------------------------------ ------------ --------------------
(State or other jurisdiction (Commission (I.R.S. Employer
of incorporation or File No.) Identification No.)
organization)
83 Gerber Road West, South Windsor, Connecticut 06074
- -------------------------------------------------- ---------------
(Address of principal executive offices) (Zip Code)
Registrant's Telephone Number, including area (860) 644-1551
code: ---------------
Not applicable
-----------------------
(Former name or former address, if changes since last report)
<PAGE>1
TABLE OF CONTENTS
-----------------
PAGE
----
Item 2. Acquisition or Disposition of Assets. 2
Item 7(a). Financial Statements of Business Acquired. 2
Item 7(b). Pro Forma Financial Information. 2
Item 7(c). Exhibits. 3
Signatures 4
<PAGE>2
Item 2. Acquisition or Disposition of Assets
On May 5, 1998, Gerber Scientific Inc. ("Gerber") announced the
successful completion of its cash tender offer for the
acquisition of UK-based Spandex PLC ("Spandex"), Europe and North
America's largest distributor of signmaking systems and supplies.
In its results for the year ended December 31, 1997, Spandex
reported sales of 101.3 million GBP ($167 million). The acquisition
of Spandex and the results of its operations will be accounted
for in the Company's new fiscal year, which began May 1, 1998.
Operating out of 13 countries in Europe, Canada and the U.S.,
Spandex is engaged in three main activities: the distribution of
signmaking systems, the distribution of signmaking materials, and
the manufacturing of signmaking materials. In signmaking systems,
the company markets, distributes, and supports computer-
controlled signmaking equipment such as vinyl cutting plotters,
specialist sign printers, and routers manufactured by Gerber
Scientific Products, Inc., a wholly owned subsidiary of Gerber.
In signmaking materials, the company supplies a comprehensive
range of products including self-adhesive vinyls, banner
materials, specialist signmaking films, application tapes, and
sign blanks and substrates, as well as extruded aluminum sign
systems and plastic components. In materials manufacturing, the
company, through its wholly-own subsidiary Ultramark Adhesive
Products Limited, manufactures self-adhesive vinyl films for the
sign and allied industries in addition to labeling films for the
packaging markets. Gerber will continue to market, distribute
and support the Spandex product lines.
The tender price for the shares valued Spandex at approximately
106.4 million GBP ($173 million). In addition, Spandex had bank
debt outstanding at the time of acquisition of approximately 6.2
million GBP ($10 million). The acquisition of the shares and the
refinancing of the Spandex debt will be funded from a new $235
million multi-currency syndicated credit facility which the
Company recently negotiated with a bank group.
Item 7(a). Financial Statements of Business Acquired
As of the date of filing of this Current Report on Form 8-K, it
is impracticable for Gerber to provide the financial statements
required by this Item 7(a). In accordance with Item 7(a)(4) of
Form 8-K, such financial statements shall be filed by amendment
to this Form 8-K no later than 60 days after May 20, 1998.
Item 7(b). Pro Forma Financial Information
As of the date of filing of this Current Report on Form 8-K, it
is impracticable for Gerber to provide the pro forma financial
information required by this Item 7(b). In accordance with Item
7(b) of Form 8-K, such financial statements shall be filed by
amendment to this Form 8-K no later than 60 days after May 20,
1998.
<PAGE>3
Item 7(c). Exhibits.
See Exhibit Index on the last page of this Current Report of Form
8-K, which is incorporated by reference.
<PAGE>4
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of
1934, the Registrant has duly caused this report to be signed on
its behalf by the undersigned hereunto duly authorized.
GERBER SCIENTIFIC, INC.
------------------------
(Registrant)
Date: May 20, 1998 By: / s / Gary K. Bennett
------------------ --------------------------------
Gary K. Bennett
Senior Vice President, Finance
and Principal Accounting Officer
<PAGE>5
EXHIBIT INDEX
Exhibit Index
Number Exhibit Page
- ------------- ------- ----
2 Recommended Cash Offers by Schroders
on behalf of Gerber Scientific, Inc.
for Spandex PLC.*
99.1 Text of Press Release, dated
May 5, 1998.*
*Filed herewith
<PAGE>1
THIS DOCUMENT IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION.
If you are in any doubt about the action you should take, you are
recommended immediately to seek your own personal financial
advice from your stockbroker, bank manager, solicitor, accountant
or other independent financial adviser duly authorised under the
Financial Services Act 1986.
If you have sold or otherwise transferred all your Spandex
Shares, please send this document, the accompanying Forms of
Acceptance, Form W-8, the green form of proxy and the reply-paid
envelope as soon as possible to the purchaser or transferee or to
the stockbroker, bank or other agent through whom the sale or
transfer was effected, for delivery to the purchaser or
transferee. However, such documents should not be forwarded or
transmitted in or into the United States, Canada, Australia or
Japan.
The Offers are not being made, directly or indirectly, in or
into, or by use of the mails or any means or instrumentality
(including, without limitation, telephonically or electronically)
of interstate or foreign commerce of, or any facilities of a
national securities exchange of, the United States, Canada,
Australia or Japan. Accordingly, neither this document nor the
accompanying Forms of Acceptance and Form W-8 are being or may be
mailed or otherwise forwarded, distributed or sent in, into or
from the United States, Canada, Australia or Japan and doing so
may render any purported acceptance of the Offers invalid. All
Spandex Shareholders (including nominees, trustees or custodians)
who may have a contractual or legal obligation, or may otherwise
intend, to forward this document and/or the Forms of Acceptance
and Form W-8, should read the further details in this regard
which are contained in paragraph 7 of Part B and in Part C of
Appendix I before taking any action.
The Loan Notes to be issued pursuant to the terms of the Offers
have not been, and will not be, registered under the Securities
Act, or under the laws of any state of the United States or of
Canada, Australia or Japan. Accordingly, the Loan Notes may not
be offered, sold or delivered, directly or indirectly, in the
United States, Canada, Australia or Japan or to, or for the
account or benefit of, any US persons (as defined in Regulation S
under the Securities Act) or any persons resident in Canada,
Australia or Japan, except pursuant to an exemption from, or in a
transaction not subject to, the requirements of the Securities
Act or relevant securities laws of any state of the United
<PAGE>2
States, Canada, Australia or Japan. The Offers do not constitute
an offer of Loan Notes in the United States.
Recommended Cash Offers by
Schroders on behalf of
Gerber Scientific, Inc.
for Spandex PLC
A letter of recommendation from the Chairman of Spandex is set
out on pages 4 to 9 of this document.
To accept the Offers, the relevant Form of Acceptance (and, if
you wish to elect for the Loan Note Alternative, Form W-8) must
be completed and returned as soon as possible, and in any event
so as to be received by post or by hand by Lloyds Bank
Registrars, Antholin House, 71 Queen Street, London EC4N 1SL no
later than 3.00 pm on 1 May 1998.
Notice of an Extraordinary General Meeting of Spandex to be held
at 1600 Park Avenue, Aztec West, Almondsbury, Bristol BS32 4UA at
10.05 am on 29 April 1998 (or as soon thereafter as the Annual
General Meeting of Spandex convened for the same date and place
shall have concluded or been adjourned), is set out at the end of
this document. The enclosed green form of proxy for use in
connection with the Extraordinary General Meeting of Spandex
should be completed and returned in accordance with the
instructions printed thereon as soon as possible and, in any
event, so as to be received by Computershare Services PLC, P.O.
Box 82, Caxton House, Redcliffe Way, Bristol BS99 7NH by not
later than 10.05 am on 27 April 1998.
Schroders, which is regulated by The Securities and Futures
Authority Limited, is acting for Gerber and no one else in
connection with the Offers and will not be responsible to anyone
other than Gerber for providing the protections afforded to
customers of Schroders nor for giving advice in relation to the
Offers.
Kleinwort Benson Securities Limited ("Dresdner Kleinwort
Benson"), which is regulated by The Securities and Futures
Authority Limited, is acting for Spandex and no one else in
connection with the Offers and will not be responsible to anyone
other than Spandex for providing the protections afforded to
customers of Dresdner Kleinwort Benson nor for giving advice in
relation to the Offers.
<PAGE>3
CONTENTS Page
Letter from the Chairman of Spandex 4
Letter from Schroders 10
1. Introduction 10
2. The Ordinary Offer 11
3. The `A' Share Offer 11
4. Further terms of the Offers 12
5. The Loan Note Alternative 13
6. Extraordinary General Meeting 14
7. Information relating to Gerber 14
8. Information relating to Spandex 15
9. Background to the Offers 16
10. Financial effects of acceptance 16
11. Employees 18
12. Spandex Share Option Schemes 18
13. Procedure for acceptance of the Offers 19
14. Settlement 25
15. United Kingdom taxation 27
16. Further information 31
17. Action to be taken 31
The Offers relate to both Spandex Ordinary Shares and Spandex `A'
Shares.
- - To accept the Ordinary Offer in respect of some or all of
your Spandex Ordinary Shares, you should complete and return the
blue Form of Acceptance
<PAGE>4
- - To accept the `A' Share Offer in respect of some or all of
your Spandex `A' Shares, you should complete and return the pink
Form of Acceptance
- - If you wish to elect for the Loan Note Alternative in
respect of some or all of your Spandex Shares, you should also
complete and return the white Form W-8
- - To vote in favour of the resolution to be proposed at the
Extraordinary General Meeting of Spandex to allow the Offers to
proceed, you should complete and return the green form of proxy
CHAIRMAN'S LETTER
SPANDEX PLC
(Registered in England and Wales No. 1266024)
Directors: Registered Office:
C E Dobson (Chairman) 1600 Park Avenue
E P Bruegger (Managing Director) Aztec West
P D Macklin (Finance Director) Almondsbury
M Dobson Bristol
M D Godden BS32 4UA
G M Bateson
N C P Cockcroft (Non-executive)
H S Brown (Non-executive)
3 April 1998
To holders of Spandex Shares and, for information only, to
participants in the Spandex Share Option Schemes
Dear Shareholder,
It was announced on 24 March 1998, that agreement had been
reached between your board and the board of Gerber on the terms
and conditions of recommended cash offers for Spandex. The Offers
value the entire issued and to be issued share capital of Spandex
at approximately 109 million GBP. In addition, Spandex Shareholders
will be entitled to receive and retain the final dividend,
announced on 10 March 1998, of 2.5 pence per Spandex Share,
recommended by your board in respect of the year ended 31
December 1997.
<PAGE>5
I am writing to you to explain the background to the Offers and
the reasons why your board, which has been so advised by Dresdner
Kleinwort Benson, considers the terms of the Offers to be fair
and reasonable. Accordingly, your board unanimously recommends
all Spandex Shareholders to accept the Offers. The formal Offers
are set out in the letter from Schroders on pages 6 to 16 of this
document.
Terms of the Offers
The Ordinary Offer
The Ordinary Offer, which will be subject to the conditions and
further terms set out in Appendix I of this document, will be
made on the following basis:
for each Spandex Ordinary Share 325 pence in cash
The `A' Share Offer
The `A' Share Offer, which will be conditional upon the Ordinary
Offer becoming or being declared unconditional in all respects,
will be made on the following basis:
for each Spandex `A' Share 325 pence in cash
The Offers represent a premium of 44.4 per cent. to the price of
the Spandex Ordinary Shares at the close of business on 10
February 1998, the date prior to the movement in the price of the
Spandex Ordinary Shares which led to the announcement on 12
February 1998 that Spandex was in talks that might lead to an
offer. The Offers represent a premium of 31.3 per cent. to the
price of the Spandex Ordinary Shares at the close of business on
11 February 1998.
The Offers also represent a multiple of 18.8 times Spandex'
earnings per share for the year ended 31 December 1997.
The Offers are conditional upon the passing of a special
resolution to amend the Articles of Association of Spandex by
removing the restriction on the transfer of Spandex `A' Shares at
the Extraordinary General Meeting, further details of which are
set out in section 6 of the letter from Schroders.
<PAGE>6
Loan Note Alternative
As an alternative to some or all of the cash consideration
receivable by Spandex Shareholders under the Offers, Spandex
Shareholders who accept the Offers (other than certain overseas
shareholders) may elect to receive Loan Notes on the following
basis:
for every 1 GBP of cash consideration under the Offers 1 GBP in
nominal value of Loan Notes
Based on market conditions as at 1 April 1998 (the latest
practicable date prior to the posting of this document), the
value of the Loan Notes has been estimated by Schroders to be
approximately 99 pence per 1 GBP in nominal value of Loan Notes. A
summary of the terms of the Loan Notes and a description of
certain US Federal income tax consequences of holding Loan Notes
are set out in Appendix II of this document.
When deciding which form of consideration to receive, Spandex
Shareholders should consider the information on United Kingdom
taxation set out in section 15 in the letter from Schroders on
pages 15 and 16 of this document. Spandex Shareholders who are in
any doubt as to their tax position should consult their
independent financial adviser.
Background to and reasons for the Offers
Spandex has maintained a close relationship with Gerber since the
commencement of its distribution arrangements in 1983. The
relationship, and both businesses, have flourished and Spandex is
now Gerber's largest distributor of its computer controlled vinyl
cutters, sign printers and routers, and its preferred distributor
in Europe with sole distribution in 12 European countries, and
shared distribution in France.
Since its flotation in 1986, your company has enjoyed unbroken
growth in sales and in the year ended 31 December 1996, increased
profit before taxation to 9.9 million GBP, a record for Spandex.
This was achieved by driving organic growth from within existing
markets and by pursuing an acquisition policy which broadened the
geographical coverage across Europe and into North America.
However, in the year ended 31 December 1997, although turnover
advanced again, to 101.3 million GBP, profit before taxation
declined to 9.0 million GBP as profits in overseas territories were
adversely affected by the strength of sterling.
In addition, I indicated in the preliminary announcement that
although sales for the first two months of 1998 were ahead of the
previous year, the strength of sterling remains an issue for the
company.
<PAGE>7
In the light of the prospects for your company and the importance
of the relationship with Gerber, your board has concluded that
the acquisition of Spandex by Gerber represents the next stage in
the development of your company. The combination of Gerber's
innovative skills and technical abilities with our marketing and
distribution expertise will create a business which will be
better positioned to realise the full potential of the world's
major markets where technology-led change is a principal growth
driver.
Your board believes that as part of the Gerber Group, additional
resources will be available to develop the Spandex business model
in other geographical markets. This represents a significant
opportunity and will be of benefit to Spandex.
Management and employees
Gerber has given assurances to the board of Spandex that the
existing employment rights of all employees of the Spandex Group,
including pension rights, will be fully safeguarded. In addition,
Gerber has indicated that they attach great importance to the
skills and experience of the employees of Spandex and hope that
the similar cultures of the two companies will prove attractive
to Spandex employees.
I am delighted to announce that following the completion of the
acquisition by Gerber, I shall continue in my role as Chairman of
Spandex, and my wife and certain other directors will remain on
the board.
Spandex Share Option Schemes
In relation to the Spandex 1996 Unapproved Employee Share Option
Scheme and the Spandex 1986 Share Option Scheme, Gerber is
offering participants an opportunity either to surrender their
existing options in consideration for a cash sum calculated by
reference to the difference between 325 pence and the exercise
price of their options or to exercise their options and accept
the Ordinary Offer. Details of these proposals are set out in a
separate document addressed to the holders of such options. All
but one (whose options are soon to expire) of the holders of
outstanding options under these two schemes have given
undertakings to accept one of these proposals in due course.
If the Ordinary Offer becomes or is declared unconditional in all
respects, Gerber will make appropriate proposals to participants
in the Spandex 1995 Overseas and UK Savings-Related Share Option
<PAGE>8
Scheme. No options have been granted under the Spandex 1996
Approved Employee Share Option Scheme.
Report and accounts
The report and accounts for the year ended 31 December 1997 is
today being posted to Spandex Shareholders. Summary financial
information on Spandex is set out in Appendix IV to this
document.
Extraordinary General Meeting
The Articles of Association of Spandex prohibit the transfer of
the Spandex `A' Shares other than by existing holders to members
of their families or to family settlements. Accordingly, the
directors of Spandex have today convened an Extraordinary General
Meeting of Spandex to be held on 29 April 1998 at which a special
resolution will be proposed to amend the Articles of Association
so as to remove the restriction on the transfer of Spandex `A'
Shares contained in the Articles of Association in order to allow
the Offers to proceed.
The directors of Spandex believe that the proposed amendment to
the Articles of Association of Spandex is in the best interests
of Spandex Shareholders taken as a whole and unanimously
recommend all Spandex Shareholders to vote in favour of the
resolution to be proposed at the Extraordinary General Meeting,
as they intend to do in respect of their own beneficial holdings
of Spandex Shares and as the trusts and companies with which they
are connected intend to do.
A notice convening an Extraordinary General Meeting of Spandex is
set out at the end of this document and Spandex Shareholders will
find enclosed the green form of proxy to be used in connection
with the Extraordinary General Meeting (see "Action to be taken"
below).
Action to be taken
The procedure for acceptance of the Offers is set out on pages 11
to 14 of this document and in the Forms of Acceptance. To accept
the Offers you should ensure that you complete and return your
Form(s) of Acceptance as soon as possible and, in any event, no
later than 3.00 pm on 1 May 1998. If your Spandex Shares are in
certificated form (i.e. not in CREST), your share certificate(s)
should be enclosed with your completed Form(s) of Acceptance.
<PAGE>9
Spandex Shareholders will find enclosed with this document the
green form of proxy to be used in connection with the
Extraordinary General Meeting. Whether or not you intend to
attend this meeting, please complete and sign the green form of
proxy and return it in accordance with the instructions printed
thereon to Spandex' registrars, Computershare Services PLC at
P.O. Box 82, Caxton House, Redcliffe Way, Bristol BS99 7NH, so as
to be received as soon as possible and, in any event, not later
than 10.05 am on 27 April 1998.
Recommendation
The directors of Spandex, who have been so advised by Dresdner
Kleinwort Benson, consider the terms of the Offers to be fair and
reasonable. In providing advice to the directors of Spandex,
Dresdner Kleinwort Benson has taken into account the directors'
commercial assessments.
The directors of Spandex unanimously recommend all Spandex
Shareholders to accept the Offers. The directors and members of
their families have irrevocably undertaken to accept the Ordinary
Offer in respect of their holdings, amounting, in aggregate to
480,166 Spandex Ordinary Shares. My wife, Mary, and I, and trusts
and companies with which we are connected, have irrevocably
undertaken to accept the `A' Share Offer in respect of our
shareholdings amounting, in aggregate, to 17,828,000 Spandex `A'
Shares. The irrevocable undertakings relate to approximately 54.5
per cent. of the total issued and to be issued share capital of
Spandex.
Yours sincerely
C E Dobson
Chairman
<PAGE>10
3 April 1998
To Spandex Shareholders and, for information only, to
participants in the Spandex Share Option Schemes
Dear Sir or Madam,
RECOMMENDED CASH OFFERS FOR SPANDEX PLC
1. Introduction
On 24 March 1998 the boards of Gerber and Spandex announced that
they had agreed the terms of recommended cash offers to be made
by Schroders, on behalf of Gerber, to acquire the entire issued
and to be issued share capital of Spandex. The Offers value the
share capital of Spandex (which comprises the Spandex Ordinary
Shares and the Spandex `A' Shares) on a fully diluted basis at
approximately 109.2 million GBP. The Spandex `A' Shares, whilst not
listed, rank pari passu with the Spandex Ordinary Shares as to
dividend, capital and voting rights.
The Offers represent a premium of 44.4 per cent. to the price of
the Spandex Ordinary Shares at the close of business on 10
February 1998, the date prior to the movement in the price of the
Spandex Ordinary Shares which led to an announcement on 12
February 1998 that Spandex was in talks that might lead to an
offer. The Offers represent a premium of 31.3 per cent. to the
price of the Spandex Ordinary Shares at the close of business on
11 February 1998.
The Offers are final and will not be increased. However, Gerber
reserves the right to increase and/or otherwise revise the Offers
in the event of a competitive situation arising or otherwise with
the consent of the Panel.
Your attention is drawn to the letter of recommendation from the
Chairman of Spandex on pages 3 to 5 of this document which sets
out the reasons why the directors of Spandex consider the terms
of the Offers to be fair and reasonable and why they unanimously
recommend Shareholders to accept the Offers.
Edmund Bruegger and Mark Bateson, directors of Spandex, and
members of their families and Julian Dobson have given
irrevocable undertakings to accept the Ordinary Offer in respect
of their own aggregate beneficial holdings of 480,166 Spandex
Ordinary Shares. In addition, Gerber has received irrevocable
undertakings to accept the `A' Share Offer from Charles and Mary
<PAGE>11
Dobson, directors of Spandex, and trusts and companies connected
with them in respect of their shareholdings amounting, in
aggregate, to 17,828,000 Spandex `A' Shares. Accordingly, in
aggregate Gerber has irrevocable undertakings to accept the
Offers in respect of approximately 54.5 per cent. of the total
issued and to be issued share capital of Spandex. The terms of
all of these irrevocable undertakings require acceptance of the
Offers even in the event of a competing offer from a third party.
The procedures for accepting the Offers are set out in section 13
of this letter and detailed instructions are contained in the
Forms of Acceptance.
Regulated by SFA J. Henry Schroder & Co. Limited
120 Cheapside, London EC2V 6DS
Registered office at above address
Registered number 532081 England
2. The Ordinary Offer
On behalf of Gerber, Schroders hereby offers to acquire, on the
terms and subject to the conditions set out in this document and
in the blue Form of Acceptance, the Spandex Ordinary Shares on
the following basis:
for each Spandex Ordinary Share 325 pence in cash
The Ordinary Offer values the Spandex Ordinary Share capital on a
fully diluted basis at approximately 51.2 million GBP.
In addition, holders of Spandex Ordinary Shares will be entitled
to receive and retain the final dividend, announced on 10 March
1998, of 2.5 pence per Spandex Ordinary Share recommended by the
board of Spandex in respect of the year ended 31 December 1997.
3. The `A' Share Offer
On behalf of Gerber, Schroders hereby offers to acquire, on the
terms and subject to the conditions set out in this document and
in the pink Form of Acceptance, the Spandex `A' Shares on the
following basis:
for each Spandex `A' Share 325 pence in cash
<PAGE>12
The `A' Share Offer values the Spandex `A' Share capital on a
fully diluted basis at approximately 57.9 million GBP.
In addition, holders of Spandex `A' Shares will be entitled to
receive and retain the final dividend, announced on 10 March
1998, of 2.5 pence per Spandex `A' Share recommended by the board
of Spandex in respect of the year ended 31 December 1997.
4. Further terms of the Offers
The Spandex Shares will be acquired by Gerber fully paid and free
from all liens, equities, charges, encumbrances and other
interests and together with all rights now or hereafter attaching
thereto, including the right to receive and retain all dividends
and other distributions declared, made or paid on or after 24
March 1998 save for the final dividend, announced on 10 March
1998, of 2.5 pence per Spandex Share recommended by the board of
Spandex in respect of the year ended 31 December 1997.
The Ordinary Offer extends to any Spandex Ordinary Shares which
are unconditionally allotted or issued prior to the date on which
the Ordinary Offer closes (or such earlier date, not being
earlier than the date on which the Ordinary Offer becomes
unconditional as to acceptances or, if later, 1 May 1998 (being
the first closing date of the Ordinary Offer), as Gerber may,
subject to the City Code, decide) including any such shares
allotted or issued pursuant to the exercise of options under the
Spandex Share Option Schemes or which arise on conversion of
Spandex `A' Shares.
The `A' Share Offer extends to any Spandex `A' Shares which are
unconditionally allotted or issued prior to the date on which the
`A' Share Offer closes (or such earlier date, not being earlier
than the date on which the `A' Share Offer becomes unconditional
as to acceptances or, if later, 1 May 1998 (being the first
closing date of the `A' Share Offer), as Gerber may, subject to
the City Code, decide).
It is anticipated that each of the Offers will remain open for
acceptance until 3.00 pm on the fourteenth day after the later of
1 May 1998 (being the first closing date of the Ordinary Offer)
or the closing date following the Ordinary Offer becoming or
being declared unconditional as to acceptances. However, the
right is reserved to keep either of the Offers open for
acceptance after such date.
<PAGE>13
The Ordinary Offer is conditional on, inter alia, the passing of
a special resolution at an Extraordinary General Meeting of
Spandex as further explained in section 6 of this letter. The `A'
Share Offer is conditional upon the Ordinary Offer becoming or
being declared unconditional in all respects.
The conditions and further terms of the Offers are set out in
Appendix I of this document and in the Forms of Acceptance.
5. The Loan Note Alternative
As an alternative to any or all of the cash consideration of 325
pence per Spandex Ordinary Share or 325 pence per Spandex `A'
Share which would otherwise be receivable under the Offers,
accepting Spandex Shareholders (other than certain overseas
shareholders) who validly accept the Offers may elect to exchange
all or part of their holdings of Spandex Ordinary Shares or
Spandex `A' Shares for Loan Notes to be issued by Gerber on the
following basis:
for every 1 GBP of cash consideration under the Offers
1 GBP in nominal value of Loan Notes
The Loan Notes will be unsecured and will be issued, credited as
fully paid, in amounts and integral multiples of 1 GBP in nominal
value; all fractional entitlements will be disregarded and not
paid. The Loan Notes will bear interest at a rate of 1 per cent.
per annum below six month LIBOR.
Schroders has advised that, based on market conditions on 1 April
1998 (the latest practicable date prior to the publication of
this document), in its opinion, if the Loan Notes had then been
in issue, the value of the Loan Notes would have been
approximately 99 pence per 1 GBP in nominal value of Loan Notes.
The Loan Note Alternative is conditional on the Ordinary Offer
becoming or being declared unconditional in all respects and will
remain open for so long as the Offers remain open for acceptance.
No Loan Notes will be issued unless, by the time the Ordinary
Offer becomes or is declared wholly unconditional, valid
elections have been received for at least 1.0 million GBP in nominal
value of Loan Notes. If insufficient elections are received,
Spandex Shareholders who validly elect for the Loan Note
Alternative will instead receive cash in accordance with the
terms of the Offers. A summary of the terms of the Loan Notes is
set out in Appendix II to this document.
<PAGE>14
The Loan Notes have not been, and will not be, registered under
the Securities Act or under the laws of any state of the United
States and may not be offered, sold, or delivered, directly or
indirectly, in the United States or to, or for the account or
benefit of, any US person (as defined in Regulation S under the
Securities Act) except pursuant to an applicable exemption from,
or in a transaction not subject to, the applicable requirements
thereof and subject to certain restrictions on transfers set out
in the terms of the Loan Notes. The Offers do not constitute an
offer of Loan Notes in the United States. Any person who elects
to have Loan Notes issued to it shall be required to deliver a
properly completed Form W-8, a copy of which is provided with
this document, or any subsequent versions thereof or successors
thereto or any other document reasonably requested by Gerber in
respect thereof.
6. Extraordinary General Meeting
The Articles of Association of Spandex prohibit the transfer of
Spandex `A' Shares other than by existing holders to members of
their families or to family settlements. Accordingly, the Offers
are conditional on a resolution being passed at an Extraordinary
General Meeting of Spandex to remove the restriction on transfers
of Spandex `A' Shares contained in the Articles of Association
and on the consent to or sanction of such resolution by the
holders of Spandex `A' Shares. The irrevocable undertakings
referred to in section 1 of this letter include an undertaking on
behalf of the holders of all of the Spandex `A' Shares to consent
to or sanction such resolution.
A Notice convening an Extraordinary General Meeting of Spandex,
at which a resolution to remove the restriction on transfers of
Spandex `A' Shares will be proposed, is set out at the end of
this document. You will see from the letter from the Chairman of
Spandex set out on pages 3 to 5 of this document that the
directors of Spandex unanimously recommend Spandex Shareholders
to vote in favour of this resolution. The irrevocable
undertakings referred to in section 1 of this letter, which
relate to 480,166 Spandex Ordinary Shares and 17,828,000 Spandex
`A' Shares, include irrevocable undertakings to vote in favour of
this resolution.
7. Information relating to Gerber
Gerber provides diverse industries with advanced computer-based
systems and equipment for automation of product design, pre-
production, manufacturing and quality control. Industries served
<PAGE>15
include apparel and sewn goods, signmaking, graphic arts,
ophthalmic, automotive and aerospace.
Gerber has three main subsidiaries:
Gerber Garment Technology is the world leader in providing
automation solutions to the apparel and sewn goods industries,
from conceptual design through assembly;
Gerber Scientific Products produces automated hardware and
software systems for signmaking as well as materials and is the
only supplier to offer fully integrated systems. Among its
principal products is the Gerber Edge with its proprietary dry
and clean thermal colour printing process; and
Gerber Coburn is the world leader in ophthalmic lens processing
systems. Gerber's equipment is used in all aspects of surfacing
prescriptions in lens blanks and in matching lenses to fit
patients' frames. This business has recently been enhanced
through the acquisition, for approximately US$ 63 million, of
Coburn Optical Industries, Inc.
On 30 March 1998, Gerber announced that it had agreed to sell
Gerber Systems Corporation, a supplier of computer automated
systems for the commercial printing and electronics industries,
to BARCO, Inc.
In the year to 30 April 1997, Gerber reported profit before tax
of US$ 22.2 million (1996: US$ 27.9 million), on turnover of US$
380.9 million (1996: US$ 359.1 million). In the nine months ended
31 January 1998, Gerber reported profit before tax of US$ 24.0
million (1997: US$ 15.1 million), on turnover of US$ 310.2
million (1997: US$ 275.4 million).
8. Information relating to Spandex
Founded in 1976, Spandex is a leading marketer and distributor of
equipment and related materials to the sign and allied
industries. Operating out of 13 countries in Europe, Spandex has
recently acquired sign supplies distribution companies in Canada
and the United States.
Spandex is engaged in three main activities:
Signmaking computers - the company markets, distributes and
supports computer controlled signmaking equipment such as vinyl
<PAGE>16
cutting plotters, specialist sign printers and routers
manufactured by Gerber Scientific Products;
Signmaking materials - the company supplies a comprehensive range
of signmaking materials including self-adhesive vinyls, banner
materials, specialist signmaking films, application tapes, sign
blanks and substrates in addition to extruded aluminium sign
systems and plastic components; and
Materials manufacturing - the company manufactures self-adhesive
vinyl films for the sign and allied industries in addition to
labelling films for the packaging markets through its wholly-
owned subsidiary, Ultramark Adhesive Products Limited.
In the year ended 31 December 1997, Spandex reported profits
before tax of 9.0 million GBP (1996: 9.9 million GBP), on turnover of
101.3 million GBP (1996: 98.5 million GBP). Earnings per share were
17.3 pence (1996: 19.5 pence).
9. Background to the Offers
Spandex has maintained a close relationship with Gerber since the
commencement of its distribution arrangements in 1983. The
relationship, and both businesses, have flourished and Spandex is
now Gerber's largest distributor of its computer controlled vinyl
cutters, sign printers and routers, and its preferred distributor
in Europe with sole distribution in 12 European countries, and
shared distribution in France.
In addition to driving organic growth within its existing
markets, Spandex has pursued an acquisition policy which has
broadened its geographical coverage to include a growing presence
in North America.
The boards of Spandex and Gerber believe that the combination of
Gerber's innovative skills and technical abilities with the
marketing and distribution expertise of Spandex will create a
business which will be better positioned to realise the full
potential of the world's major markets where technology-led
change is a principal growth driver.
10. Financial effects of acceptance
The following tables set out, for illustrative purposes only and
on the bases and assumptions set out below, the financial effects
of acceptance on capital value and income for a holder of one
<PAGE>17
Spandex Share accepting the Offers if the Offers become or are
declared unconditional in all respects:
The Offers
with full
The Loan Note
Offers Alternative
Notes (Pence) (Pence)
A. Increase in capital value
Cash consideration/Loan Notes
received (i) 325.00 321.75
Market value of one Spandex
Share (ii) 247.50 247.50
------ ------
Increase in capital value 77.50 74.25
This represents an increase of 31.3% 30.0%
B. Increase in income
Gross interest income from
cash consideration (iii) 19.1 -
Gross interest income from
Loan Notes received (iv) - 21.3
----- ------
Net dividend income from one
Spandex Share (v) 3.7 3.7
----- ------
Increase in income 15.4 17.6
This represents an increase of 416% 476%
Notes:
(i) Based on Schroders' valuation of the Loan Notes set out in
section 5 above.
(ii) Based on the closing middle-market quotation of 247.5 pence
per Spandex Ordinary Share as published in the London Stock
Exchange Daily Official List on 11 February 1998, the last
business day prior to the announcement of talks on 12 February
1998.
(iii) The gross income from the cash consideration has been
calculated on the assumption that the cash is re-invested to
yield 5.87 per cent. per annum, being the gross yield shown by
the FTSE Actuaries average gross redemption yield for medium
coupon British Government securities of maturities of five to
fifteen years on 1 April 1998 as published in the Financial Times
on 2 April 1998 (the latest practicable date prior to the
<PAGE>18
publication of this document).
(iv) Gross interest on the Loan Notes has been calculated at the
rate of 6.56 per cent per annum payable on the Loan Notes, being
1 per cent. Below six month LIBOR as at 1 April 1998 (the latest
practicable date prior to the publication of this document).
(v) The net dividend income from a Spandex Share is equal to the
sum of the interim net dividend of 1.2 pence per Spandex Share in
respect of the period ended 30 June 1997 and the final dividend
of 2.5 pence per Spandex Share in respect of the year ended 31
December 1997.
(vi) No account has been taken of any liability to taxation.
(vii) It is assumed for the purposes of the above table that
the Spandex `A' Shares have an equivalent market value to the
Spandex Ordinary Shares.
11. Employees
Gerber attaches great importance to the skills and experience of
the employees of Spandex. It is hoped that the similarity of the
cultures of the two companies will prove attractive to Spandex
employees.
The board of Gerber confirms that the existing rights, including
pension rights, of all employees of the Spandex Group will be
fully safeguarded. Upon the Offers being declared wholly
unconditional, Charles and Mary Dobson and certain of the
directors of the Spandex Group will remain on the board of
Spandex.
12. Spandex Share Option Schemes
In relation to the Spandex 1996 Unapproved Employee Share Option
Scheme and the Spandex 1986 Share Option Scheme, Gerber is
offering participants an opportunity either to surrender their
existing options in consideration for a cash sum calculated by
reference to the difference between 325 pence and the exercise
price of their options or to exercise their options and accept
the Ordinary Offer. Details of these proposals are set out in a
separate document addressed to the holders of such options. All
but one (whose options are soon to expire) of the holders of
outstanding options under these two schemes have given
undertakings to accept one of these proposals in due course.
If the Ordinary Offer becomes or is declared unconditional in all
respects, Gerber will make appropriate proposals to participants
<PAGE>19
in the Spandex 1995 Overseas and UK Savings-Related Share Option
Scheme.
No options have been granted under the Spandex 1996 Approved
Employee Share Option Scheme.
13. Procedure for acceptance of the Offers
This section should be read together with the notes on the Forms
of Acceptance. The Offers relate to both Spandex Ordinary Shares
and Spandex `A' Shares. You should note that the blue Form of
Acceptance should be completed in respect of Spandex Ordinary
Shares and that the pink Form of Acceptance should be completed
in respect of Spandex `A' Shares.
(a) Completion of Forms of Acceptance
If you hold Spandex Ordinary Shares in both certificated and
uncertificated form (that is to say, in CREST), you should
complete a separate blue Form of Acceptance for each holding. In
addition, you should complete separate blue Forms of Acceptance
for Spandex Ordinary Shares held in uncertificated form but under
different member account IDs and for Spandex Ordinary Shares held
in uncertificated form but under different designations.
Additional blue Forms of Acceptance are available from Lloyds
Bank Registrars, Antholin House, 71 Queen Street, London EC4N 1SL
(telephone number 0171 489 3039). All Spandex `A' Shares are held
in certificated form.
(i) To accept the Ordinary Offer
To accept the Ordinary Offer in respect of all your
Spandex Ordinary Shares, you must complete Boxes 1
and 4 and, where appropriate, Boxes 5 and 6 and, if
your Spandex Ordinary Shares are in CREST, Box 7 on
the blue Form of Acceptance. In all cases you must
sign Box 3 on the blue Form of Acceptance in the
presence of a witness, who should also sign in
accordance with the instructions printed thereon.
(ii) To accept the Ordinary Offer in respect of less than all
your Spandex Ordinary Shares
To accept the Ordinary Offer in respect of less than
all your Spandex Ordinary Shares, you must insert in
Box 1 on the blue Form of Acceptance such lesser
number of Spandex Ordinary Shares in respect of
which you wish to accept the Ordinary Offer in
accordance with the instructions printed thereon.
<PAGE>20
You should then follow the procedure set out in (i)
above in respect of such lesser number of Spandex
Ordinary Shares. If you do not insert a number in
Box 1, a valid acceptance will be deemed to be in
respect of all the Spandex Ordinary Shares held by
you.
(iii) To accept the `A' Share Offer
To accept the `A' Share Offer in respect of all your
Spandex `A' Shares, you must complete Boxes 1 and 4
and, where appropriate, Boxes 5 and 6 on the pink
Form of Acceptance. You must also sign Box 3 on the
pink Form of Acceptance in the presence of a
witness, who should also sign in accordance with the
instructions printed thereon.
(iv) To accept the `A' Share Offer in respect of less than all
your Spandex `A' Shares
To accept the `A' Share Offer in respect of less
than all your Spandex `A' Shares, you must insert in
Box 1 on the pink Form of Acceptance such lesser
number of Spandex `A' Shares in respect of which you
wish to accept the `A' Share Offer in accordance
with the instructions printed thereon. You should
then follow the procedure set out in (iii) above in
respect of such lesser number of Spandex `A' Shares.
If you do not insert a number in Box 1, a valid
acceptance will be deemed to be in respect of all
the Spandex `A' Shares held by you.
(v) To elect for the Loan Note Alternative
To elect for the Loan Note Alternative in respect of
some or all of your Spandex Shares, you must
complete the relevant Form(s) of Acceptance as set
out in (i) to (iv) above and in addition complete
Box 2 on the relevant Form(s) of Acceptance. In all
cases you must sign Box 3 on the relevant Form of
Acceptance in the presence of a witness, who should
also sign in accordance with the instructions
printed thereon. In addition, if you wish to elect
for the Loan Note Alternative, you must properly
complete the white Form W-8 and return it with your
completed Form(s) of Acceptance. See Appendix II of
this document for a description of certain US
Federal income tax considerations of holding Loan
Notes.
<PAGE>21
If you have any questions as to how to complete the Form(s) of
Acceptance, please telephone Lloyds Bank Registrars on 0171 489
3039.
(b) Return of Form of Acceptance
To accept the Offers, completed Form(s) of Acceptance should be
returned (whether or not your Spandex Ordinary Shares are in
CREST) signed and witnessed by post or by hand to Lloyds Bank
Registrars, Antholin House, 71 Queen Street, London EC4N 1SL
together (subject to paragraph (d) below) with the relevant share
certificate(s) and/or other document(s) of title as soon as
possible, but in any event so as to arrive no later than 3.00 pm
on 1 May 1998. A reply-paid envelope for use in the UK only is
enclosed for your convenience. No acknowledgement of receipt of
documents will be given by or on behalf of Gerber. The
instructions printed on the Forms of Acceptance are deemed to
form part of the terms of the Offers.
Any Form of Acceptance received in an envelope postmarked in the
United States, Canada, Australia or Japan or otherwise appearing
to Gerber or its agents to have been sent from the United States,
Canada, Australia or Japan may be rejected as an invalid
acceptance of the Offers. For further information on overseas
shareholders, see paragraph (g) below.
(c) Documents of title
If your Spandex Ordinary Shares are in certificated form and in
any event in respect of your Spandex `A' Shares, a completed,
signed and witnessed Form of Acceptance should be accompanied by
the relevant share certificate(s) and/or other document(s) of
title and Form W-8, if electing for Loan Notes. If for any reason
the relevant share certificate(s) and/or other document(s) of
title is/are lost or not readily available, you should
nevertheless complete, sign and return Form(s) of Acceptance and
the white Form W-8, if electing for Loan Notes, as stated above,
so as to be received by Lloyds Bank Registrars by no later than
3.00 pm on 1 May 1998. You should send with the Form(s) of
Acceptance any share certificate(s) and/or other document(s) of
title which you may have available and a letter stating that the
remaining documents will follow as soon as possible or that you
have lost one or more of your share certificate(s) and/or other
document(s) of title. No acknowledgement of receipt of documents
will be given. If you have lost your share certificate and/or
other document(s) of title, you should contact Spandex'
registrars, Computershare Services PLC, P.O. Box 82, Caxton
House, Redcliffe Way, Bristol BS99 7NH, for a letter of indemnity
<PAGE>22
for lost share certificate(s) and/or other document(s) of title
which, when completed in accordance with the instructions given,
should be returned by post or by hand to Lloyds Bank Registrars,
Antholin House, 71 Queen Street, London EC4N 1SL.
(d) Additional procedures for Spandex Ordinary Shares in
uncertificated form (that is, in CREST)
If your Spandex Ordinary Shares are in uncertificated form, you
should insert in Box 7 of the blue Form of Acceptance the
participant ID and member account ID under which such Spandex
Ordinary Shares are held by you in CREST and otherwise complete
and return the blue Form of Acceptance, as described above, and
the white Form W-8, if electing for Loan Notes. In addition, you
should take (or procure to be taken) the action set out below to
transfer the Spandex Ordinary Shares in respect of which you wish
to accept the Ordinary Offer to an escrow balance (that is, a TTE
instruction) specifying Lloyds Bank Registrars, (in its capacity
as a CREST participant under its participant ID referred to
below) as the Escrow Agent, as soon as possible and in any event
so that the transfer to escrow settles no later than 3.00 pm on 1
May 1998.
If you are a CREST sponsored member, you should refer to your
CREST sponsor before taking any action. Your CREST sponsor will
be able to confirm details of your participant ID and the member
account ID under which your Spandex Ordinary Shares are held. In
addition, only your CREST sponsor will be able to send the
required TTE instruction to CRESTCo in relation to your Spandex
Ordinary Shares.
You should send (or, if you are a CREST sponsored member, procure
that your CREST sponsor sends) a TTE instruction to CRESTCo which
must be properly authenticated in accordance with CRESTCo's
specifications and which must contain, in addition to the other
information that is required for a TTE instruction to settle in
CREST, the following details:
- - the number of Spandex Ordinary Shares to be transferred to
an escrow balance;
- - your member account ID. This must be the same member account
ID as that inserted in Box 7 of the blue Form of Acceptance;
- - your participant ID. This must be the same participant ID as
that inserted in Box 7 of the blue Form of Acceptance;
- - the member account ID of the Escrow Agent. This is RA583101;
<PAGE>23
- - the participant ID of the Escrow Agent, Lloyds Bank
Registrars, in its capacity as CREST receiving agent. This is
2RA34;
- - the Form of Acceptance Reference Number. This is the
reference number that appears at the foot of page 1 of the blue
Form of Acceptance. This reference number should be inserted in
the first eight characters of the shared note field on the TTE
instruction. Such insertion will enable Lloyds Bank Registrars to
match the TTE to your blue Form of Acceptance. You should keep a
separate record of this reference number for future reference;
and
- - the intended settlement date. This should be as soon as
possible and in any event not later than 3.00 pm on 1 May 1998.
After settlement of the TTE instruction, you will not be able to
access the Spandex Ordinary Shares concerned in CREST for any
transaction or charging purposes. If the Ordinary Offer becomes
or is declared unconditional in all respects, the Escrow Agent
will transfer the Spandex Ordinary Shares concerned to itself in
accordance with paragraph (e) of Part C of Appendix I to this
document.
You are recommended to refer to the CREST manual published by
CRESTCo for further information on the CREST procedures outlined
above. For ease of processing, you are requested, wherever
possible, to ensure that a blue Form of Acceptance relates to
only one TTE instruction.
If no blue Form of Acceptance reference number, or an incorrect
blue Form of Acceptance reference number, is included in the TTE
instruction, Gerber may treat any amount of Spandex Ordinary
Shares transferred to an escrow balance in favour of the Escrow
Agent specified above from the participant ID and member account
ID identified in the TTE instruction as relating to any blue
Form(s) of Acceptance which relate(s) to the same member account
ID and participant ID (up to the amount of Spandex Ordinary
Shares inserted or deemed to be inserted on the blue Form(s) of
Acceptance concerned).
You should note that CRESTCo does not make available special
procedures in CREST for any particular corporate action. Normal
system timings and limitations will therefore apply in connection
with a TTE instruction and its settlement. You should therefore
ensure that all necessary action is taken by you (or by your
CREST sponsor) to enable a TTE instruction relating to your
Spandex Ordinary Shares to settle prior to 3.00 pm on 1 May 1998.
<PAGE>24
In this regard, you are referred in particular to those sections
of the CREST manual concerning practical limitations of the CREST
system and timings.
Gerber will make an appropriate announcement if any of the
details contained in this paragraph (d) alter for any reason in
any respect that is material to Spandex Shareholders.
(e) Deposits of Spandex Ordinary Shares into, and withdrawals of
Spandex Ordinary Shares from, CREST
Normal CREST procedures (including timings) apply in relation to
any Spandex Ordinary Shares that are, or are to be, converted
from uncertificated to certificated form, or from certificated to
uncertificated form, during the course of the Ordinary Offer
(whether any such conversion arises as a result of a transfer of
Spandex Ordinary Shares or otherwise). Holders of Spandex
Ordinary Shares who are proposing so to convert any such Spandex
Ordinary Shares are recommended to ensure that the conversion
procedures are implemented in sufficient time to enable the
person holding or acquiring the Spandex Ordinary Shares as a
result of the conversion to take all necessary steps in
connection with an acceptance of the Ordinary Offer (in
particular, as regards delivery of share certificate(s) and/or
other document(s) of title or transfers to an escrow balance as
described above) prior to 3.00 pm on 1 May 1998.
(f) Validity of acceptances
Without prejudice to Parts B and C of Appendix I, Gerber reserves
the right (subject to the terms of the Offers and the City Code)
to treat as valid in whole or in part any acceptance of the
Offers which is not entirely in order or which is not accompanied
by the relevant TTE instruction or (as applicable) the relevant
share certificate(s) and/or other document(s) of title and the
white Form W-8, if electing for Loan Notes. In that event, no
payment of cash or issue of Loan Notes under the Offers will be
made until after the relevant TTE instruction has settled or (as
applicable) the relevant share certificate(s) and/or other
document(s) of title and the white Form W-8, if electing for Loan
Notes, or indemnities satisfactory to Gerber have been received.
(g) Overseas shareholders
The attention of Spandex Shareholders who are citizens or
residents of jurisdictions outside the United Kingdom is drawn to
paragraph 7 of Part B and paragraphs (b) and (t) of Part C of
Appendix I and to the relevant provisions of the Forms of
Acceptance.
<PAGE>25
The availability of the Offers to persons not resident in the
United Kingdom may be affected by the laws of the relevant
jurisdictions. Persons who are not resident in the United Kingdom
should inform themselves about and observe any applicable
requirements.
The Offers are not being made, directly or indirectly, in or into
the United States, Canada, Australia or Japan. Accordingly, any
accepting Spandex Shareholder who is unable to give the
warranties set out in paragraph (b) of Part C of Appendix I may
be deemed not to have accepted the Offers.
The Loan Notes to be issued pursuant to the Offers have not been,
and will not be registered under the Securities Act, or under the
securities laws of any State of the United States, no steps have
been taken to enable the Loan Notes to be offered or traded in
compliance with the applicable securities laws of Canada or Japan
and no prospectus in relation to the Loan Notes has been or will
be lodged with or registered by the Australian Securities
Commission. Accordingly, the Loan Notes may not be offered, sold
or delivered, directly or indirectly, in the United States,
Canada, Japan or Australia nor to or for the account or benefit
of any US person (as defined in Regulation S under the Securities
Act) or person resident in Canada, Australia or Japan (except
pursuant to an exemption from, or in transactions not subject to,
the registration requirements of the Securities Act or the
relevant securities laws of any State of the United States,
Canada, Australia or Japan). The Offers do not constitute an
offer of Loan Notes in the United States.
All Spandex Shareholders (including nominees, trustees or
custodians) who would, or otherwise intend, to forward this
document and/or the Form of Acceptance, should read the further
details in this regard which are contained in paragraph 7 of Part
B and in Part C of Appendix I before taking any action.
If you are in any doubt as to the procedure for acceptance,
please contact Lloyds Bank Registrars by telephone on 0171 489
3039. You are reminded that, if you are a CREST sponsored member
in respect of your Spandex Ordinary Shares, you should contact
your CREST sponsor before taking any action.
14. Settlement
Subject to the Offers becoming or being declared unconditional in
all respects, settlement of the consideration to which any
<PAGE>26
Spandex Shareholder is entitled under the Offers (except as
provided in paragraphs 6(c) and 7 of Part B of Appendix I in the
case of certain overseas Spandex Shareholders), will be effected
(i) in the case of acceptances received, complete in all
respects, by the date on which the Offers become or are declared
unconditional in all respects, within 14 days of such date, or
(ii) in the case of acceptances received, complete in all
respects, after the date on which the Offers become or are
declared unconditional in all respects but while the Offers
remain open for acceptance, within 14 days of such receipt, in
the following manner:
(a) Spandex Ordinary Shares in uncertificated form (that is, in
CREST)
Where an acceptance relates to Spandex Ordinary Shares in
uncertificated form, the cash consideration to which the
accepting Spandex Shareholder is entitled will be paid by means
of CREST by Gerber procuring the creation of an assured payment
obligation in favour of the accepting Spandex Shareholder's
payment bank in respect of the cash consideration due, in
accordance with the CREST assured payment arrangements.
Gerber reserves the right to settle all or any part of the
consideration referred to in this paragraph (a), for all or any
accepting Spandex Shareholder(s), in the manner referred to in
paragraph (b) below, if, for any reason, it wishes to do so.
(b) Spandex Ordinary Shares in certificated form and Spandex `A'
Shares
Where an acceptance relates to Spandex Ordinary Shares in
certificated form or Spandex `A' Shares, settlement of any cash
due will be despatched by first class post (or by such other
method as the Panel may approve). All such cash payments will be
made in pounds sterling by cheque drawn on a branch of a UK
clearing bank. No payments will be made to addresses in the
United States, Canada, Australia or Japan.
(c) Loan Notes
If a Spandex Shareholder validly elects for the Loan Note
Alternative (including in respect of Spandex Ordinary Shares held
in uncertificated form), definitive certificates for the Loan
Notes will be despatched by first class post (or by such other
method as may be approved by the Panel). No certificates for Loan
Notes will be despatched to addresses in the United States,
Canada, Australia or Japan.
<PAGE>27
(d) General
If the Offers do not become or are not declared unconditional in
all respects (i) share certificate(s) and/or other document(s) of
title will be returned by post (or such other method as may be
approved by the Panel) within 14 days of the Offers lapsing, to
the person or agent whose name and address is set out in Box 6 of
the Forms of Acceptance or, if none is set out, to the first
named holder at his or her registered address and (ii) the Escrow
Agent will, immediately after the lapsing of the Offers (or
within such longer period, not exceeding 14 days after the Offers
lapsing, as the Panel may approve), give TFE instructions to
CRESTCo to transfer all relevant Spandex Ordinary Shares held in
escrow balances and in relation to which it is the Escrow Agent
for the purposes of the Ordinary Offer to the original available
balances of the Spandex Shareholders concerned. All documents and
remittances sent by, to or from Spandex Shareholders or their
appointed agents will be sent at their own risk.
15. United Kingdom taxation
The following paragraphs, which are intended as a general guide
only, are based on current UK legislation and UK Inland Revenue
practice and take account of certain changes announced in the
Budget Statement of 17 March 1998 of the Chancellor of the
Exchequer (the "Budget"). They summarise certain limited aspects
of the UK taxation consequences of acceptance of the Offers and
election for the Loan Note Alternative, and they relate only to
the position of certain classes of taxpayer and only those
Spandex Shareholders who hold their Spandex Shares beneficially
as an investment, otherwise than under a personal equity plan,
and who are resident or ordinarily resident in the UK for
taxation purposes. If you are in any doubt as to your taxation
position or if you are subject to taxation in any jurisdiction
other than the UK, you should consult an appropriate professional
adviser immediately.
(a) UK taxation on chargeable gains
Liability to UK taxation on chargeable gains will depend on the
individual circumstances of Spandex Shareholders and on the form
of consideration received.
(i) Cash
To the extent that a Spandex Shareholder receives cash
under the Offers, that will constitute a disposal, or
part disposal, of his or her Spandex Shares for the
<PAGE>28
purposes of UK taxation on chargeable gains. Such a
disposal, or part disposal, may, depending on the
Shareholder's individual circumstances (including the
availability of exemptions and allowable losses), give
rise to a liability to UK taxation on chargeable gains.
(ii) Loan Notes
A Spandex Shareholder who (either alone or together
with persons connected with him or her) does not hold
more than 5 per cent. of, or of any class of, shares in
or debentures of Spandex will not be treated as having
made a disposal of his or her Spandex Shares for the
purposes of UK taxation on chargeable gains to the
extent that he or she receives Loan Notes in exchange
for his or her Spandex Shares under the Offers.
(A) Non-corporate Spandex Shareholders
Any gain or loss which would otherwise have arisen
on a disposal of Spandex Shares by an individual
or other non-corporate Shareholder will be "rolled
over" into the Loan Notes and the Loan Notes will
be treated as the same asset as his or her Spandex
Shares acquired at the same time and price as his
or her Spandex Shares.
A subsequent disposal of Loan Notes (including
redemption) may, depending on individual
circumstances, give rise to a liability to UK
taxation on chargeable gains. Any chargeable gain
or allowable loss on the disposal (including
redemption) of the Loan Notes will be calculated
taking into account the original cost to the
holder of acquiring the relevant Spandex Shares,
and (when calculating a chargeable gain but not an
allowable loss) indexation allowance on that cost.
In the Budget, the Chancellor of the Exchequer
announced proposals which, if enacted, will result
in the withdrawal of the indexation allowance for
periods after April 1998 and the introduction of a
tapering relief in relation to disposals made
after that date. The indexation allowance for
periods up to April 1998 will continue to be
available in relation to such disposals.
<PAGE>29
(B) Corporate Spandex Shareholders
For a corporate Spandex Shareholder within the
charge to UK corporation tax, the Loan Notes will
be "qualifying corporate bonds" for the purposes
of UK taxation on chargeable gains, so that any
gain or loss which would have arisen on a disposal
of its Spandex Shares for a consideration equal to
market value at the time of the exchange of the
Spandex Shares for Loan Notes will be "held over"
and deemed to accrue on a subsequent disposal
(including redemption) of the Loan Notes. No
indexation allowance will be available to a
corporate Shareholder for the period during which
any gain is "held over" in this way.
Any Spandex Shareholder who (either alone or together
with persons connected with such Shareholder) holds
more than 5 per cent. of, or of any class of, shares in
or debentures of Spandex is advised that an application
for clearance will be made to the UK Inland Revenue
under Section 138 of the Taxation of Chargeable Gains
Act 1992 in respect of the Loan Note Alternative. If
such clearance is given, any such Spandex Shareholder
will be treated in the manner described in the
preceding paragraphs. Neither the Offers nor the Loan
Note Alternative is conditional on such clearance being
obtained.
(iii)Taxation of company loan relationships
A corporate Spandex Shareholder within the charge to UK
corporation tax in respect of the Loan Notes will
generally be charged to (or, as the case may be, obtain
relief from) UK corporation tax on income in respect of
all profits, gains and losses arising from its holding
or disposal of the Loan Notes broadly in accordance
with its authorised accounting method.
(b) Taxation of interest on the Loan Notes
(i) Withholding tax
For a description of certain US Federal income tax
consequences of holding Loan Notes, see the final
section of Appendix II to this document.
(ii) Non-corporate holders of Loan Notes
<PAGE>30
The gross amount of the interest on the Loan Notes will
form part of the recipient's income for the purposes of
UK income tax. No credit will be allowed for any US tax
withheld as under the UK/US double tax treaty, the
interest is exempt from tax in the United States.
On a transfer of Loan Notes by an individual, a charge
may arise under the "accrued income scheme" in respect
of the interest on the Loan Notes which has accrued
since the preceding interest payment.
(iii)Corporate holders of Loan Notes
A corporate holder of Loan Notes within the charge to
UK corporation tax in respect of the Loan Notes will be
charged to UK corporation tax in respect of interest on
the Loan Notes which relates to that holder's relevant
accounting period broadly in accordance with its
authorised accounting method. No credit will be allowed
for any US tax withheld as under the UK/US double tax
treaty, the interest is exempt from tax in the United
States.
(c) Other direct tax matters
Special tax provisions may apply to Spandex Shareholders who
have acquired or acquire their Spandex Ordinary Shares by
exercising options under the Spandex Share Option Schemes
including provisions imposing a charge to income tax when
such an option is exercised.
(d) Stamp duty and stamp duty reserve tax ("SDRT")
(i) Acceptance of the Offer and/or the Loan Note Alternative
No stamp duty or SDRT will be payable by Spandex
Shareholders as a result of accepting the Offers and/or
the Loan Note Alternative.
(ii) Loan Notes
No stamp duty or SDRT will be payable on the issue,
transfer or sale of (or an agreement to transfer) Loan
Notes.
<PAGE>31
16. Further information
Your attention is drawn to the further information contained in
the Appendices.
17. Action to be taken
To accept the Offers, Form(s) of Acceptance must be completed and
returned in respect of your Spandex Ordinary Shares and Spandex
`A' Shares, whether or not your Spandex Ordinary Shares are in
CREST, together with Form W-8 (if you wish to elect for the Loan
Note Alternative). Forms of Acceptance should be returned as soon
as possible and, in any event, so as to be received by post or by
hand by Lloyds Bank Registrars, Antholin House, 71 Queen Street,
London EC4N 1SL no later than 3.00 pm on 1 May 1998.
Spandex Shareholders will find enclosed with this document the
green form of proxy to be used in connection with the
Extraordinary General Meeting. Whether or not you intend to
attend this meeting, please complete and sign the green form of
proxy and return it in accordance with the instructions printed
thereon to Spandex' registrars, Computershare Services PLC, P.O.
Box 82, Caxton House, Redcliffe Way, Bristol BS99 7NH so as to
arrive as soon as possible and, in any event, not later than
10.05 am on 27 April 1998.
Yours faithfully,
for J. Henry Schroder & Co. Limited
Richard Lazarus
Director
Contact: Robert J. Goehring For Immediate Release
(860) 648-8041 May 5, 1998
Gerber Scientific, Inc. Announces Successful Tender for
Spandex PLC
South Windsor, CT -- Gerber Scientific, Inc. (NYSE: GRB)
announced today that it had received valid acceptances of its
offers for the share capital of Spandex PLC (Spandex)
representing 95.2% of the company's outstanding shares. The
offers have now been declared wholly unconditional and will
remain open for additional acceptances until further notice. The
offers value the company at approximately 109.2 million GBP
(approximately $183 million). Spandex is the largest distributor
of equipment and related materials to the signmaking industry in
Europe and North America.
George Gentile, Chairman and Chief Executive Officer of Gerber
said, "I am delighted that the offers have been successfully
completed. We welcome the employees of Spandex and look forward
to working with them to continue Spandex's success and replicate
this success in new markets."
Gerber Scientific, Inc. (http://www.gerberscientific.com)
designs, manufactures and sells sophisticated automation hardware
and software products for use in the optical, apparel and
flexible goods, signmaking and specialty graphics, automotive,
and aerospace industries. Headquartered in South Windsor,
Connecticut, the company operates through four wholly-owned
subsidiaries: Gerber Coburn, Gerber Technology, Gerber
Scientific Products, and Spandex PLC.
