<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
---------------------
SCHEDULE 14D-1
TENDER OFFER STATEMENT
PURSUANT TO SECTION 14(d)(1) OF THE SECURITIES EXCHANGE ACT OF 1934
---------------------
ITT Corporation
(Name of subject company)
Hilton Hotels Corporation
HLT Corporation
(Bidder)
Common Stock, no par value
(Including the associated Series A Participating Cumulative Preferred Stock
Purchase Rights)
(Title of class of securities)
450912100
(CUSIP number of class of securities)
Matthew J. Hart
Executive Vice President & Chief Financial Officer
Hilton Hotels Corporation
9336 Civic Center Drive
Beverly Hills, California 90210
(310) 278-4321
(Name, address and telephone number of person authorized to receive notices and
communications on behalf of bidder)
---------------------
with a copy to:
Steven A. Rosenblum, Esq.
Wachtell, Lipton, Rosen & Katz
51 West 52nd Street
New York, New York 10019
Telephone: (212) 403-1000
Calculation of Filing Fee
Transaction Valuation/*/ Amount of filing fee/**/
$3,363,001,125 $672,601
* For purposes of calculating the filing fee only. This calculation assumes
the purchase of 61,145,475 shares of Common Stock, no par value, of ITT
Corporation and the associated Series A Participating Cumulative Preferred
Stock Purchase Rights at $55 net per share in cash.
** The amount of the filing fee, calculated in accordance with Rule 0-11(d) of
the Securities Exchange Act of 1934, as amended, equals 1/50th of one
percent of the aggregate value of cash offered by HLT Corporation for such
number of shares.
[_] Check box if any part of the fee is offset as provided by Rule 0-11(a)(2)
and identify the filing with which the offsetting fee was previously paid.
Identify the previous filing by registration statement number, or the Form
or Schedule and the date of its filing.
Amount Previously Paid: Not applicable. Filing Party: Not applicable.
Form or Registration No.: Not applicable. Date Filed: Not applicable.
<PAGE>
SCHEDULE 14D-1
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I. NAMES OF REPORTING PERSONS
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
HILTON HOTELS CORPORATION
36-2058176
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II. CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP
(a) [_]
(b) [X]
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III. SEC USE ONLY
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IV. SOURCE OF FUNDS
BK, WC
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V. CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO
ITEMS 2(e) or 2(f) [_]
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VI. CITIZENSHIP OR PLACE OF ORGANIZATION
DELAWARE
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VII. AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
315,500 Shares See Section 8 of the Offer to Purchase, dated January,
31 1997, filed as Exhibit (a)(1) hereto
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VIII. CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (7) EXCLUDES CERTAIN SHARES
[_]
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IX. PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (7)
0.3%
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X. TYPE OF REPORTING PERSON
HC and CO
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<PAGE>
SCHEDULE 14D-1
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A. NAMES OF REPORTING PERSONS
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
HLT CORPORATION
95-4613538
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B. CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP
(a) [_]
(b) [X]
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C. SEC USE ONLY
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D. SOURCE OF FUNDS
AF
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E. CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO
ITEMS 2(e) or 2(f) [_]
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F. CITIZENSHIP OR PLACE OF ORGANIZATION
DELAWARE
---------------------------------------------------------------------------
G. AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
100 Shares
---------------------------------------------------------------------------
H. CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (7) EXCLUDES CERTAIN SHARES
[_]
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I. PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (7)
0.0%
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J. REPORTING PERSON
CO
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<PAGE>
Item 1. Security and Subject Company.
(a) The name of the subject company is ITT Corporation, a Nevada
corporation (the "Company"). The address of the Company's principal
executive offices is 1330 Avenue of the Americas, New York, New York
10019-5490.
(b) This Statement on Schedule 14D-1 relates to the offer by HLT
Corporation (the "Purchaser"), a Delaware corporation and a wholly owned
subsidiary of Hilton Hotels Corporation, a Delaware corporation ("Parent"),
to purchase 61,145,475 shares of Common Stock, no par value, of the
Company (the "Common Stock"), or such greater number of shares of Common
Stock which, when added to the number of shares of Common Stock owned by
the Purchaser and its affiliates, constitutes a majority of the total
number of shares of Common Stock outstanding on a fully diluted basis as of
the expiration of the Offer (as defined herein) and unless and until
validly redeemed by the Board of Directors of the Company, the Series A
Participating Cumulative Preferred Stock Purchase Rights (the "Rights")
associated therewith and issued pursuant to the Rights Agreement, dated as
of November 1, 1995, between the Company and The Bank of New York, as
Rights Agent, upon the terms and subject to the conditions set forth in the
Offer to Purchase (the "Offer to Purchase"), dated January 31, 1997, and in
the related Letter of Transmittal (which, together with any amendments or
supplements thereto, constitute the "Offer"), at a purchase price of $55
per share (and associated Right), net to the tendering stockholder in cash,
without interest thereon. According to the Company's Quarterly Report on
Form 10-Q for the quarter ended September 30, 1996, as of November 6, 1996,
there were issued and outstanding 116.4 million shares of common stock, no
par value, of the registrant. The information set forth in the
"Introduction" of the Offer to Purchase annexed hereto as Exhibit (a)(1) is
incorporated herein by reference.
(c) The information set forth in Section 6 ("Price Range of Shares
and Rights; Dividends") of the Offer to Purchase is incorporated herein by
reference.
Item 2. Identity and Background.
(a)-(d); (g) This Statement is being filed by the Purchaser and
Parent. The information set forth in Section 8 ("Certain Information
Concerning the Purchaser and Parent") of the Offer to Purchase and Schedule
I thereto is incorporated herein by reference.
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<PAGE>
(e) and (f) During the last five years, neither the Purchaser nor
Parent, nor, to the best knowledge of the Purchaser and Parent, any persons
controlling the Purchaser or Parent, or any of the persons listed on
Schedule I to the Offer to Purchase, (i) has been convicted in a criminal
proceeding (excluding traffic violations or similar misdemeanors) or (ii)
was a party to a civil proceeding of a judicial or administrative body of
competent jurisdiction as a result of which any such person was or is
subject to a judgment, decree or final order enjoining future violations
of, or prohibiting activities subject to, federal or state securities laws
or finding any violation of such laws.
Item 3. Past Contacts, Transactions or Negotiations with the Subject
Company.
(a)-(b) The information set forth in the Introduction, Section 8
("Certain Information Concerning the Purchaser and Parent"), Section 10
("Background of the Offer; Contacts with the Company") and Section 11
("Purpose of the Offer and the Proposed Merger; Plans for the Company") of
the Offer to Purchase is incorporated herein by reference.
Item 4. Source and Amount of Funds or Other Consideration.
(a)-(b) The information set forth in Section 9 ("Source and Amount of
Funds") of the Offer to Purchase is incorporated herein by reference.
(c) Not applicable.
Item 5. Purpose of the Tender Offer and Plans or Proposals of the Bidder.
(a)-(e) The information set forth in the Introduction, Section 10
("Background of the Offer; Contacts with the Company") and Section 11
("Purpose of the Offer and the Proposed Merger; Plans for the Company") of
the Offer to Purchase is incorporated herein by reference.
(f)-(g) The information set forth in Section 13 ("Effect of the Offer
on the Market for the Shares; New York Stock Exchange Listing and Exchange
Act Registration") of the Offer to Purchase is incorporated herein by
reference.
-3-
<PAGE>
Item 6. Interest in Securities of the Subject Company.
(a) The information set forth in the Introduction and Section 8
("Certain Information Concerning the Purchaser and Parent") of the Offer to
Purchase is incorporated herein by reference.
(b) The information set forth in Section 8 ("Certain Information
Concerning the Purchaser and Parent") of the Offer to Purchase and Schedule
II thereto is incorporated herein by reference.
Item 7. Contracts, Arrangements, Understandings or Relationships with
Respect to the Subject Company's Securities.
The information set forth in the Introduction and Section 8 ("Certain
Information Concerning the Purchaser and Parent"), Section 10 ("Background
of the Offer; Contacts with the Company") and Section 11 ("Purpose of the
Offer and the Proposed Merger; Plans for the Company") of the Offer to
Purchase is incorporated herein by reference.
Item 8. Persons Retained, Employed or to be Compensated.
The information set forth in the Introduction and Section 16 ("Fees
and Expenses") of the Offer to Purchase is incorporated herein by
reference.
Item 9. Financial Statements of Certain Bidders.
The information set forth in Section 8 ("Certain Information
Concerning the Purchaser and Parent") of the Offer to Purchase and Schedule
III thereto is incorporated herein by reference.
Item 10. Additional Information.
(a) Not applicable.
(b)-(c) The information set forth in the Introduction and Section 15
("Certain Legal Matters; Regulatory Approvals") of the Offer to Purchase is
incorporated herein by reference.
(d) The information set forth in Section 13 ("Effect of the Offer on
the Market for the Shares; New York Stock Exchange Listing and Exchange
-4-
<PAGE>
Act Registration") and Section 15 ("Certain Legal Matters; Regulatory
Approvals") of the Offer to Purchase is incorporated herein by reference.
(e) The information set forth in Section 15 ("Certain Legal Matters;
Regulatory Approvals") of the Offer to Purchase is incorporated herein by
reference.
(f) The information set forth in the Offer to Purchase and the Letter
of Transmittal, copies of which are attached hereto as Exhibits (a)(1) and
(a)(2), respectively, is incorporated herein by reference.
Item 11. Material to be Filed as Exhibits.
(a) (1) Offer to Purchase, dated January 31, 1997.
(2) Letter of Transmittal.
(3) Notice of Guaranteed Delivery.
(4) Letter from the Dealer Manager to Brokers, Dealers, Commercial
Banks, Trust Companies and other Nominees.
(5) Letter to clients for use by Brokers, Dealers, Commercial Banks,
Trust Companies and other Nominees.
(6) Guidelines for Certification of Taxpayer Identification Number on
Substitute Form W-9.
(7) Summary Advertisement as published on January 31, 1997.
(8) Text of Press Release, dated January 27, 1997, issued by Parent.
(b) Not applicable.
(c) Not applicable.
(d) Not applicable.
(e) Not applicable.
(f) None.
(g) (1) Complaint seeking Declaratory and Injunctive Relief filed in the
United States District Court for the District of Nevada on
January 27, 1997.
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<PAGE>
SIGNATURE
After due inquiry and to the best of my knowledge and belief, I
certify that the information set forth in this statement is true, complete
and correct.
Dated: January 31, 1997
HILTON HOTELS CORPORATION
By: /s/ Matthew J. Hart
--------------------------
Name: Matthew J. Hart
Title: Executive Vice President
HLT CORPORATION
By: /s/ Matthew J. Hart
---------------------------
Name: Matthew J. Hart
Title: President
-6-
<PAGE>
EXHIBIT INDEX
Exhibit
No. Description
------- -----------
(a)(1) Offer to Purchase, dated January 31, 1997.
(2) Letter of Transmittal.
(3) Notice of Guaranteed Delivery.
(4) Letter from the Dealer Manager to Brokers, Dealers, Commercial
Banks, Trust Companies and other Nominees.
(5) Letter to clients for use by Brokers, Dealers, Commercial Banks,
Trust Companies and other Nominees.
(6) Guidelines for Certification of Taxpayer Identification Number on
Substitute Form W-9.
(7) Summary Advertisement as published on January 31, 1997.
(8) Text of Press Release, dated January 27, 1997, issued by Parent.
(b) Not applicable.
(c) Not applicable.
(d) Not applicable.
(e) Not applicable.
(f) None.
(g)(1) Complaint seeking Declaratory and Injunctive Relief filed in the
United States District Court for the District of Nevada on January
27, 1997.
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<PAGE>
EXHIBIT (a)(1)
OFFER TO PURCHASE FOR CASH
61,145,475 SHARES OF COMMON STOCK
(INCLUDING THE ASSOCIATED SERIES A PARTICIPATING
CUMULATIVE PREFERRED STOCK PURCHASE RIGHTS)
OF
ITT CORPORATION
BY
HLT CORPORATION
A WHOLLY OWNED SUBSIDIARY
OF
HILTON HOTELS CORPORATION
AT
$55 NET PER SHARE IN CASH
THE OFFER, PRORATION PERIOD AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00
MIDNIGHT, NEW YORK CITY TIME, ON FRIDAY, FEBRUARY 28, 1997, UNLESS THE OFFER
IS EXTENDED.
THE OFFER IS CONDITIONED UPON, AMONG OTHER THINGS, (1) THERE BEING VALIDLY
TENDERED AND NOT WITHDRAWN PRIOR TO THE EXPIRATION DATE A NUMBER OF SHARES,
INCLUDING THE RIGHTS ASSOCIATED THEREWITH, WHICH WHEN ADDED TO THE NUMBER OF
SHARES (AND RIGHTS) BENEFICIALLY OWNED BY HLT CORPORATION (THE "PURCHASER")
AND ITS AFFILIATES, CONSTITUTES A MAJORITY OF THE TOTAL NUMBER OF OUTSTANDING
SHARES (AND RIGHTS) OF ITT CORPORATION (THE "COMPANY") ON A FULLY DILUTED
BASIS, (2) THE RIGHTS HAVING BEEN REDEEMED BY THE BOARD OF DIRECTORS OF THE
COMPANY OR THE PURCHASER BEING SATISFIED, IN ITS SOLE DISCRETION, THAT THE
RIGHTS HAVE BEEN INVALIDATED OR ARE OTHERWISE INAPPLICABLE TO THE OFFER AND
THE PROPOSED MERGER, (3) THE PURCHASER BEING SATISFIED, IN ITS SOLE
DISCRETION, THAT THE NEVADA CONTROL SHARE ACQUISITION STATUTE SHALL BE
INAPPLICABLE TO THE OFFER AND THE PROPOSED MERGER, (4) THE PURCHASER BEING
SATISFIED, IN ITS SOLE DISCRETION, THAT THE NEVADA BUSINESS COMBINATION
STATUTE SHALL BE INAPPLICABLE TO THE OFFER AND THE PROPOSED MERGER, (5) THE
PURCHASER BEING SATISFIED, IN ITS SOLE DISCRETION, THAT ALL MATERIAL GAMING
APPROVALS HAVE BEEN OBTAINED ON TERMS SATISFACTORY TO THE PURCHASER, AND (6)
THE EXPIRATION OR TERMINATION OF ALL WAITING PERIODS IMPOSED BY THE HART-
SCOTT-RODINO ANTITRUST IMPROVEMENTS ACT OF 1976, AS AMENDED, AND THE
REGULATIONS THEREUNDER. SEE SECTION 14.
THE OFFER IS NOT CONDITIONED ON OBTAINING FINANCING.
---------------
IMPORTANT
HILTON HOTELS CORPORATION ("PARENT") AND THE PURCHASER ARE SEEKING TO
NEGOTIATE WITH THE COMPANY WITH RESPECT TO THE ACQUISITION OF THE COMPANY BY
PARENT OR THE PURCHASER. THE PURCHASER RESERVES THE RIGHT TO AMEND THE OFFER
(INCLUDING AMENDING THE NUMBER OF SHARES TO BE PURCHASED, THE PURCHASE PRICE
AND THE PROPOSED SECOND-STEP MERGER CONSIDERATION) UPON ENTERING INTO A MERGER
AGREEMENT WITH THE COMPANY, OR TO NEGOTIATE A MERGER AGREEMENT WITH THE
COMPANY NOT INVOLVING A TENDER OFFER PURSUANT TO WHICH THE PURCHASER WOULD
TERMINATE THE OFFER AND THE SHARES WOULD, UPON CONSUMMATION OF SUCH MERGER, BE
CONVERTED INTO CASH, COMMON STOCK OF PARENT AND/OR OTHER SECURITIES IN SUCH
AMOUNTS AS ARE NEGOTIATED BY PARENT, THE PURCHASER AND THE COMPANY.
---------------
The Dealer Manager for the Offer is:
DONALDSON, LUFKIN & JENRETTE
SECURITIES CORPORATION
January 31, 1997
<PAGE>
Any stockholder desiring to tender all or any portion of such stockholder's
Shares and associated Rights should either (i) complete and sign the Letter of
Transmittal (or a facsimile thereof) in accordance with the instructions set
forth in the Letter of Transmittal and (A) mail or deliver it, together with
the certificate(s) representing tendered Shares (the "Share Certificates")
and, if separate, the certificate(s) representing the associated Rights (the
"Rights Certificates") and any other required documents to the Depositary (as
defined herein) or (B) tender such Shares (and associated Rights, if
applicable) pursuant to the procedures for book-entry transfer set forth in
Section 3 or (ii) request such stockholder's broker, dealer, commercial bank,
trust company or other nominee to effect the transaction for such stockholder.
A stockholder whose Shares (and associated Rights, if applicable) are
registered in the name of a broker, dealer, commercial bank, trust company or
other nominee must contact such broker, dealer, commercial bank, trust company
or other nominee if such stockholder desires to tender such Shares and, if
applicable, the associated Rights.
Stockholders will be required to tender one associated Right for each Share
tendered in order to effect a valid tender of such Share. Until the
Distribution Date (as defined herein) occurs, the Rights are represented by,
and transferred with, the Shares. Accordingly, if the Distribution Date does
not occur prior to the Expiration Date (as defined herein), a tender of Shares
will constitute a tender of the associated Rights. If the Distribution Date
occurs prior to the Expiration Date and the Purchaser waives that portion of
the Rights Condition (as defined herein) requiring that a Distribution Date
not have occurred, the procedures set forth herein with respect to separate
delivery of Rights Certificates must be followed.
A stockholder who desires to tender Shares and associated Rights, and whose
certificates representing such Shares (and, if applicable, associated Rights)
are not immediately available, or who cannot comply with the procedures for
book-entry transfer described in this Offer to Purchase on a timely basis, may
tender such Shares (and, if applicable, associated Rights) by following the
procedures for guaranteed delivery set forth herein.
Questions and requests for assistance, or for additional copies of this
Offer to Purchase, the Letter of Transmittal or other tender offer materials,
may be directed to the Information Agent or the Dealer Manager (as such terms
are defined herein) at their respective addresses and telephone numbers set
forth on the back cover of this Offer to Purchase. Holders of Shares may also
contact brokers, dealers, commercial banks and trust companies for additional
copies of this Offer to Purchase, the Letter of Transmittal or other tender
offer materials.
i
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
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<S> <C>
Introduction............................................................ 1
The Tender Offer........................................................ 7
1. Terms of the Offer.................................................. 7
2. Acceptance for Payment and Payment for Shares....................... 8
3. Procedures for Tendering Shares and Rights.......................... 10
4. Withdrawal Rights................................................... 13
5. Certain United States Federal Income Tax Consequences............... 14
6. Price Range of Shares and Rights; Dividends......................... 16
7. Certain Information Concerning the Company.......................... 16
8. Certain Information Concerning the Purchaser and Parent............. 18
9. Source and Amount of Funds.......................................... 22
10. Background of the Offer; Contacts with the Company.................. 23
11. Purpose of the Offer and the Proposed Merger; Plans for the Compa-
ny.................................................................. 25
12. Dividends and Distributions......................................... 26
13. Effect of the Offer on the Market for the Shares; New York Stock Ex-
change Listing and Exchange Act Registration........................ 26
14. Certain Conditions of the Offer..................................... 27
15. Certain Legal Matters; Regulatory Approvals......................... 30
16. Fees and Expenses................................................... 41
17. Miscellaneous....................................................... 42
Schedule I--Information Concerning the Directors and Executive Officers
of Parent and the Purchaser............................................ I-1
Schedule II--Transactions in Shares During the Past 60 Days by Parent
and the Purchaser...................................................... II-1
Schedule III--Hilton Hotels Corporation Unaudited Pro Forma Condensed
Financial Statements................................................... III-1
</TABLE>
ii
<PAGE>
To the Holders of Shares of Common Stock (Including the Associated Series A
Participating Cumulative Preferred Stock Purchase Rights) of ITT Corporation:
INTRODUCTION
HLT Corporation (the "Purchaser"), a Delaware corporation and a wholly owned
subsidiary of Hilton Hotels Corporation, a Delaware corporation ("Parent"),
hereby offers to purchase (i) 61,145,475 shares of common stock, no par value
per share (the "Shares"), of ITT Corporation, a Nevada corporation (the
"Company"), or such greater number of Shares which, when added to the number
of Shares beneficially owned by the Purchaser and its affiliates, constitutes
a majority of the total number of Shares outstanding on a fully diluted basis
as of the Expiration Date (as defined herein) (the greater of such numbers of
Shares being the "Maximum Number"), and (ii) unless and until validly redeemed
by the Board of Directors of the Company (the "Board"), the Series A
Participating Cumulative Preferred Stock Purchase Rights (the "Rights")
associated therewith and issued pursuant to the Rights Agreement, dated as of
November 1, 1995, between the Company and The Bank of New York, as Rights
Agent (the "Rights Agreement"), at a price of $55 per Share (including
associated Right), net to the seller in cash, without interest thereon (the
"Offer Price"), upon the terms and subject to the conditions set forth in this
Offer to Purchase and in the related Letter of Transmittal (which, as amended
from time to time, together constitute the "Offer"). UNLESS THE CONTEXT
REQUIRES OTHERWISE, ALL REFERENCES TO SHARES HEREIN SHALL INCLUDE THE
ASSOCIATED RIGHTS, AND ALL REFERENCES TO THE RIGHTS SHALL INCLUDE ALL BENEFITS
THAT MAY INURE TO THE HOLDERS OF THE RIGHTS PURSUANT TO THE RIGHTS AGREEMENT.
Tendering stockholders will not be obligated to pay brokerage fees or
commissions or, except as set forth in Instruction 6 of the Letter of
Transmittal, stock transfer taxes on the purchase of Shares pursuant to the
Offer. However, any tendering stockholder or other payee who fails to complete
and sign the Substitute Form W-9 included in the Letter of Transmittal may be
subject to a required backup federal income tax withholding of 31% of the
gross proceeds payable to such stockholder or other payee pursuant to the
Offer. See Section 3. The Purchaser will pay all charges and expenses of
Donaldson, Lufkin & Jenrette Securities Corporation, as Dealer Manager (in
such capacity, the "Dealer Manager"), IBJ Schroder Bank & Trust Company, as
Depositary (the "Depositary"), and MacKenzie Partners, Inc., as Information
Agent (the "Information Agent"), incurred in connection with the Offer. See
Section 16.
The purpose of the Offer is to acquire control of, and ultimately the entire
equity interest in, the Company. Parent is seeking to negotiate with the
Company a definitive acquisition agreement pursuant to which the Company
would, as soon as practicable following consummation of the Offer, consummate
a merger (the "Proposed Merger") with Parent or the Purchaser or another
direct or indirect wholly owned subsidiary of Parent. In the Proposed Merger,
at the effective time of the Proposed Merger, each Share that is issued and
outstanding immediately prior to the effective time of the Proposed Merger
(other than Shares held in the treasury of the Company or owned by Parent, the
Purchaser or any direct or indirect wholly owned subsidiary of Parent) would
be converted into such number of shares of common stock, par value $2.50 per
share, of Parent ("Parent Common Stock") having a value of $55 per Share,
subject to appropriate collar provisions.
Although the Purchaser will seek to have the Company consummate the Proposed
Merger as soon as practicable after consummation of the Offer, if the Board
opposes the Offer and the Proposed Merger, certain terms of the Rights and
provisions of the Nevada General Corporation Law (the "NGCL") may affect the
ability of the Purchaser to consummate the Offer, to obtain control of the
Company and to effect the Proposed Merger. In addition, pursuant to rules
promulgated by the New York Stock Exchange, Inc. (the "NYSE"), approval of the
Proposed Merger by stockholders of Parent prior to the issuance of Parent
Common Stock is required where the present or potential issuance of Parent
Common Stock is or will be equal to or in excess of 20% of the number of
shares of Parent Common Stock outstanding before such issuance of Parent
Common Stock. Accordingly, consummation of the Proposed Merger as currently
contemplated will require approval by stockholders of Parent. The timing of
consummation of the Offer and the Proposed Merger will depend on a variety of
factors and legal requirements, the actions of the Board, the number of Shares
(if any) acquired by the
<PAGE>
Purchaser pursuant to the Offer, and whether the Minimum Condition, the Rights
Condition, the Control Share Condition, the Business Combination Condition and
the Gaming Condition (as such terms are defined herein) are satisfied or
waived.
THIS OFFER TO PURCHASE IS NEITHER AN OFFER TO SELL NOR A SOLICITATION OF
OFFERS TO BUY ANY SECURITIES WHICH MAY BE ISSUED IN ANY MERGER OR SIMILAR
BUSINESS COMBINATION INVOLVING PARENT, THE PURCHASER OR THE COMPANY. THE
ISSUANCE OF SUCH SECURITIES WOULD BE REGISTERED UNDER THE SECURITIES ACT OF
1933, AS AMENDED (THE "SECURITIES ACT"), AND SUCH SECURITIES WOULD BE OFFERED
ONLY BY MEANS OF A PROSPECTUS COMPLYING WITH THE REQUIREMENTS OF THE
SECURITIES ACT.
In connection with the Offer and the Proposed Merger, Parent and the
Purchaser intend, if necessary, to nominate, and solicit proxies for the
election of, a slate of nominees who support the Offer and the Proposed Merger
(the "Parent Nominees"), to replace all the members of the Board at the Annual
Meeting of Stockholders of the Company (the "Annual Meeting"). Parent expects
that, if elected, and subject to their fiduciary duties under applicable law,
the Parent Nominees would cause the Board to: approve the Proposed Merger;
amend the Rights Agreement or redeem the Rights, or otherwise act to ensure
that the Rights Condition is satisfied; satisfy the Control Share Condition;
satisfy the Business Combination Condition; and take any other actions
necessary to permit the Offer and the Proposed Merger to be consummated. Such
solicitation will be made pursuant to separate proxy materials complying with
the requirements of Section 14(a) of the Securities Exchange Act of 1934, as
amended, and the rules and regulations promulgated thereunder (the "Exchange
Act").
THIS OFFER TO PURCHASE DOES NOT CONSTITUTE A SOLICITATION OF A PROXY,
CONSENT OR AUTHORIZATION FOR OR WITH RESPECT TO THE ANNUAL MEETING OR ANY
SPECIAL MEETING OF THE COMPANY'S STOCKHOLDERS. ANY SUCH SOLICITATION WHICH
PARENT AND/OR THE PURCHASER MAY MAKE WILL BE MADE ONLY PURSUANT TO SEPARATE
PROXY SOLICITATION MATERIALS COMPLYING WITH ALL APPLICABLE REQUIREMENTS OF
SECTION 14(a) OF THE EXCHANGE ACT.
On January 27, 1997, Parent and the Purchaser filed a complaint against the
Company in the United States District Court for the District of Nevada (the
"Complaint"). The Complaint seeks, among other things: (i) injunctive relief
requiring the Board to redeem the Rights and to make inapplicable to the Offer
and the Proposed Merger the Nevada Control Share Acquisition Statute and the
Nevada Business Combination Statute (as such terms are defined herein), (ii)
injunctive and declaratory relief to forestall any effort by the Company to
manipulate or otherwise subvert the process of corporate democracy by amending
the Company's bylaws, postponing its Annual Meeting, increasing the size of
the Board or taking other actions to frustrate the proxy contest that Parent
plans to conduct to replace the Board in order to facilitate the Offer and
Proposed Merger and (iii) a declaratory judgment that the Company does not
have standing to institute an action under the federal antitrust laws to block
or impede the Offer or the Proposed Merger and that, in any event, the
consummation of the Offer and the Proposed Merger would not violate such laws.
See Section 15.
THE OFFER IS CONDITIONED UPON, AMONG OTHER THINGS, (1) THERE BEING VALIDLY
TENDERED AND NOT WITHDRAWN PRIOR TO THE EXPIRATION DATE A NUMBER OF SHARES,
INCLUDING THE RIGHTS ASSOCIATED THEREWITH, WHICH WHEN ADDED TO THE NUMBER OF
SHARES (AND RIGHTS) BENEFICIALLY OWNED BY THE PURCHASER AND ITS AFFILIATES,
CONSTITUTES A MAJORITY OF THE TOTAL NUMBER OF OUTSTANDING SHARES (AND RIGHTS)
OF THE COMPANY ON A FULLY DILUTED BASIS (THE "MINIMUM CONDITION"), (2) THE
RIGHTS HAVING BEEN REDEEMED BY THE BOARD, OR THE PURCHASER BEING SATISFIED, IN
ITS SOLE DISCRETION, THAT THE RIGHTS HAVE BEEN INVALIDATED OR ARE OTHERWISE
INAPPLICABLE TO THE OFFER AND THE PROPOSED MERGER (THE "RIGHTS CONDITION"),
(3) THE PURCHASER BEING SATISFIED, IN ITS SOLE DISCRETION, THAT THE NEVADA
CONTROL SHARE ACQUISITION STATUTE SHALL BE INAPPLICABLE TO THE OFFER AND THE
PROPOSED MERGER (THE
2
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"CONTROL SHARE CONDITION"), (4) THE PURCHASER BEING SATISFIED, IN ITS SOLE
DISCRETION, THAT THE NEVADA BUSINESS COMBINATION STATUTE SHALL BE INAPPLICABLE
TO THE OFFER AND THE PROPOSED MERGER (THE "BUSINESS COMBINATION CONDITION"),
(5) THE PURCHASER BEING SATISFIED, IN ITS SOLE DISCRETION, THAT ALL MATERIAL
GAMING APPROVALS (AS DEFINED HEREIN) HAVE BEEN OBTAINED ON TERMS SATISFACTORY
TO THE PURCHASER (THE "GAMING CONDITION"), AND (6) THE EXPIRATION OR
TERMINATION OF ALL WAITING PERIODS IMPOSED BY THE HART-SCOTT-RODINO ANTITRUST
IMPROVEMENTS ACT OF 1976, AS AMENDED, AND THE REGULATIONS THEREUNDER (THE "HSR
ACT"). SEE SECTION 14, WHICH SETS FORTH IN FULL THE CONDITIONS TO THE OFFER.
THE OFFER IS NOT CONDITIONED ON OBTAINING FINANCING.
PARENT AND THE PURCHASER ARE SEEKING TO NEGOTIATE WITH THE COMPANY WITH
RESPECT TO THE ACQUISITION OF THE COMPANY BY PARENT OR THE PURCHASER. THE
PURCHASER RESERVES THE RIGHT TO AMEND THE OFFER (INCLUDING AMENDING THE NUMBER
OF SHARES TO BE PURCHASED, THE PURCHASE PRICE AND THE PROPOSED SECOND-STEP
MERGER CONSIDERATION) UPON ENTERING INTO A MERGER AGREEMENT WITH THE COMPANY,
OR TO NEGOTIATE A MERGER AGREEMENT WITH THE COMPANY NOT INVOLVING A TENDER
OFFER PURSUANT TO WHICH THE PURCHASER WOULD TERMINATE THE OFFER AND THE SHARES
WOULD, UPON CONSUMMATION OF SUCH MERGER, BE CONVERTED INTO CASH, PARENT COMMON
STOCK, AND/OR OTHER SECURITIES IN SUCH AMOUNTS AS ARE NEGOTIATED BY PARENT,
THE PURCHASER AND THE COMPANY.
The Minimum Condition. The Minimum Condition requires that the number of
Shares tendered and not withdrawn before the Expiration Date, together with
the Shares owned by the Purchaser and its affiliates as of such time,
represent a majority of the Shares outstanding on a fully diluted basis.
According to the Company's Quarterly Report on Form 10-Q for the quarterly
period ended September 30, 1996, filed with the Securities and Exchange
Commission (the "Commission") pursuant to the Exchange Act, as of November 6,
1996, there were 116.4 million Shares issued and outstanding. In addition,
according to the Company's Annual Report on Form 10-K for the fiscal year
ended December 31, 1995 (the "Company 1995 10-K"), as of December 31, 1995,
there were outstanding options to purchase 6,276,596 Shares. Parent
beneficially owns 315,500 Shares, 100 of which Shares are beneficially owned
by the Purchaser. The Shares beneficially owned by Parent and the Purchaser
were acquired in open market purchases. See Schedule II. For purposes of the
Offer, "fully diluted basis" assumes that all outstanding stock options are
presently exercisable.
Based on the foregoing and assuming no additional Shares (or options,
warrants or rights exercisable for, or securities convertible into, Shares)
have been issued since November 6, 1996 (other than Shares issued pursuant to
the exercise of the stock options referred to above), or, in the case of
options, since December 31, 1995, if the Purchaser were to purchase 61,145,475
Shares pursuant to the Offer, the Minimum Condition would be satisfied.
The Rights Condition. The Offer is conditioned upon the Rights having been
redeemed by the Board, or the Purchaser being satisfied, in its sole
discretion, that the Rights have been invalidated or are otherwise
inapplicable to the Offer and the Proposed Merger. The Rights are described in
the Company's Amended Registration Statement on Form S-3 dated November 13,
1996 (the "Company Registration Statement"), and a summary of that description
is provided below and in Section 15.
On November 1, 1995, the Company adopted the Rights Agreement and declared a
dividend of one Right for each outstanding Share. The Rights are transferable
only with the Shares until they become exercisable. The Rights will not be
exercisable until the Distribution Date (as defined herein) and will expire on
the tenth anniversary of the Rights Agreement (the "Rights Expiration Date"),
unless earlier redeemed by the Company as described below.
Under the Rights Agreement, the "Distribution Date" is the earlier of (i)
such time as the Company learns that a person or group (including any
affiliate or associate of such person or group) has acquired, or has obtained
the right to acquire, beneficial ownership of more than 15% of the outstanding
Shares (such person or group being an "Acquiring Person"), unless provisions
preventing accidental triggering of the distribution of the Rights apply and
(ii) the close of business on such date, if any, as may be designated by the
Board following the commencement of, or the first public disclosure of an
intent to commence, a tender or exchange offer for 15% or more of the
outstanding Shares.
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Until the Distribution Date, the Rights will be evidenced by the
certificates for Shares registered in the names of the holders thereof. As
soon as practicable following the Distribution Date, separate certificates
evidencing the Rights (the "Rights Certificates") will be mailed to holders of
record of Shares as of the close of business on the Distribution Date (and to
each initial record holder of certain Shares originally issued after the
Distribution Date), and such separate Rights Certificates alone will
thereafter evidence the Rights.
In the event the Company is acquired in a merger or other business
combination by an Acquiring Person or an affiliate or associate of an
Acquiring Person or 50% or more of the Company's assets or assets representing
50% or more of the Company's revenues or cash flow are sold, leased, exchanged
or otherwise transferred (in one or more transactions) to an Acquiring Person
or an affiliate or associate of an Acquiring Person, each Right will entitle
its holder (other than Rights beneficially owned by such Acquiring Person or
its affiliates or associates) to purchase, for the Purchase Price (as defined
herein), that number of common shares of such corporation (or, in the event
that such corporation is not a publicly traded corporation, that number of
common shares of an affiliate of such corporation that has publicly traded
shares) that, at the time of the transaction, would have a market value (or,
in certain circumstances, book value) of twice the Purchase Price.
At any time prior to the earlier of such time as a person or group becomes
an Acquiring Person and the Rights Expiration Date, the Board may redeem the
Rights in whole, but not in part, at a price (in cash or Shares or other
securities of the Company deemed by the Board to be at least equivalent in
value) of $.01 per Right (the "Redemption Price"), which amount shall be
subject to adjustment as provided in the Rights Agreement.
In addition, at any time after there is an Acquiring Person, the Board may
elect to exchange each Right for consideration per Right consisting of one-
half of the securities that would be issuable at such time upon exercise of
one Right pursuant to the terms of the Rights Agreement.
At any time prior to the Distribution Date, the Company may supplement or
amend any provision of the Rights Agreement, except that no supplement or
amendment shall be made that reduces the Redemption Price (other than pursuant
to certain adjustments therein) or provides for an earlier Rights Expiration
Date.
Based on publicly available information, the Purchaser believes that, as of
January 31, 1997, the Rights were not exercisable, Rights Certificates had not
been issued and the Rights were evidenced by the certificates for Shares. The
Purchaser believes that, as a result of the commencement of the Offer made
hereby, the Distribution Date may occur at any time, if the Board so
designates such a Distribution Date.
UNLESS THE RIGHTS CONDITION IS SATISFIED, STOCKHOLDERS WILL BE REQUIRED TO
TENDER ONE RIGHT FOR EACH SHARE TENDERED IN ORDER TO EFFECT A VALID TENDER OF
SHARES IN ACCORDANCE WITH THE PROCEDURES SET FORTH IN SECTION 3. UNLESS THE
DISTRIBUTION DATE OCCURS, A TENDER OF SHARES WILL ALSO CONSTITUTE A TENDER OF
THE ASSOCIATED RIGHTS.
The Purchaser believes that under the circumstances of the Offer, the Board
has a fiduciary obligation to redeem the Rights (or amend the Rights Agreement
to make the Rights inapplicable to the Offer and the Proposed Merger), and the
Purchaser is hereby requesting that the Board do so. However, there can be no
assurance that the Board will redeem the Rights (or amend the Rights
Agreement). The Purchaser has commenced litigation against the Company in the
United States District Court for the District of Nevada seeking, among other
things, an order compelling the Board to redeem the Rights or to amend the
Rights Agreement to make the Rights inapplicable to the Offer and the Proposed
Merger on the grounds that failure to do so would constitute a breach of
fiduciary duty to the Company's stockholders. There can be no assurance that
such an order will be obtained.
The Control Share Condition. The Control Share Condition requires that the
Purchaser be satisfied, in its sole discretion, that Sections 78.378 to
78.3793 of the NGCL (the "Nevada Control Share Acquisition Statute") shall be
inapplicable to the Offer and the Proposed Merger.
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Pursuant to the Nevada Control Share Acquisition Statute, an "acquiring
person," who acquires a "controlling interest" in an "issuing corporation,"
may not exercise voting rights on any "control share" unless such voting
rights are conferred by a majority vote of the disinterested stockholders of
the issuing corporation at a meeting of such stockholders. In the event that
the control shares are accorded full voting rights and the acquiring person
acquires control shares with a majority or more of all the voting power, any
stockholder, other than the acquiring person, who does not vote in favor of
authorizing voting rights for the control shares, is entitled to demand
payment for the fair value of such stockholder's shares, and the corporation
must comply with the demand. For purposes of the provisions under this
subsection, "acquiring person" means any person who, individually or in
association with others, acquires or offers to acquire, directly or
indirectly, the ownership of outstanding voting shares of an issuing
corporation sufficient to enable the acquiring person, individually or in
association with others, directly or indirectly, to exercise (i) one-fifth or
more but less than one-third, (ii) one-third or more but less than a majority,
and/or (iii) a majority or more of the voting power of the issuing corporation
in the election of directors. Voting rights must be conferred by a majority of
the outstanding voting shares of disinterested stockholders as each threshold
is reached and/or exceeded.
"Control share" means those outstanding voting shares of an issuing
corporation which an acquiring person acquires or offers to acquire in an
acquisition or within 90 days immediately preceding the date when the
acquiring person became an acquiring person. "Issuing corporation" means a
corporation that is organized in Nevada, has 200 or more stockholders (at
least 100 or whom are stockholders of record and residents of Nevada) and does
business in Nevada directly or through an affiliated corporation.
The above provisions do not apply if the articles of incorporation or bylaws
of the Company in effect on the tenth day following the acquisition of a
controlling interest by an acquiring person provide that said provisions do
not apply. The Company's Restated Articles of Incorporation, as amended (the
"Articles"), and its Amended and Restated Bylaws (the "Bylaws") currently do
not exclude the Company from the restrictions imposed by such provisions. The
Control Share Condition would be satisfied if the Bylaws were amended such
that, on the tenth day following consummation of the Offer, the Bylaws provide
that the provisions of the Nevada Control Share Acquisition Statute do not
apply, or if the Purchaser, in its sole discretion, were satisfied that the
Nevada Control Share Acquisition Statute was invalid or its restrictions were
otherwise inapplicable to the Purchaser in connection with the Offer and the
Proposed Merger for any reason, including, without limitation, those specified
in the Nevada Control Share Acquisition Statute.
The Business Combination Condition. The Business Combination Condition
requires that the Purchaser be satisfied, in its sole discretion, that
Sections 78.411 to 78.444 of the NGCL (the "Nevada Business Combination
Statute") are inapplicable to the Offer and the Proposed Merger.
The Nevada Business Combination Statute restricts the ability of a "resident
domestic corporation" to engage in any combination with an "interested
stockholder" for three years following the interested stockholder's date of
acquiring the shares that caused such stockholder to become an interested
stockholder, unless the combination or the purchase of shares by the
interested stockholder on the interested stockholder's date of acquiring the
shares that caused such stockholder to become an interested stockholder is
approved by the board of directors of the resident domestic corporation before
that date.
If the combination was not previously approved, the interested stockholder
may effect a combination after the three-year period only if such stockholder
receives approval from a majority of the disinterested shares or the offer
meets certain fair price criteria.
For purposes of the above provisions, "resident domestic corporation" means
a Nevada corporation that has 200 or more stockholders. "Interested
stockholder" means any person, other than the resident domestic corporation or
its subsidiaries, who is (i) the beneficial owner, directly or indirectly, of
10% or more of the voting power of the outstanding voting shares of the
resident domestic corporation, or (ii) an affiliate or associate of the
resident domestic corporation and, at any time within three years immediately
before the date in question was the beneficial owner, directly or indirectly,
of 10% or more of the voting power of the then outstanding shares of
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the resident domestic corporation. The above provisions do not apply to
corporations that so elect in their articles of incorporation or in a charter
amendment approved by a majority of the outstanding voting shares of
disinterested stockholders. Such a charter amendment, however, would not
become effective for 18 months after its passage and could apply only to stock
acquisitions occurring after its effective date. The Articles do not exclude
the Company from the restrictions imposed by such provisions.
The Business Combination Condition would be satisfied if the Board approved
the Offer and the Proposed Merger prior to consummation of the Offer and the
Proposed Merger or if the Purchaser, in its sole discretion, were satisfied
that the Nevada Business Combination Statute was invalid or its restrictions
were otherwise inapplicable to the Purchaser in connection with the Offer and
the Proposed Merger for any reason, including, without limitation, those
specified in the Nevada Business Combination Statute.
Gaming Condition. The Gaming Condition requires that the Purchaser be
satisfied, in its sole discretion, that all material consents, approvals,
orders or authorizations of, or registrations, declarations or filing with,
any governmental authority with jurisdiction in respect of the Company's
active gaming operations required or necessary in connection with the Offer,
the Proposed Merger and the transactions contemplated thereunder (including
the changes in the composition of the Board brought about by the nomination
and solicitation by Parent of proxies for the election of the Parent Nominees)
have been obtained and are in full force and effect and, in the case of New
Jersey, that the New Jersey Casino Control Commission (the "CCC") has approved
all arrangements with respect to a trust holding Shares (or, if approved by
the New Jersey authorities, shares of a subsidiary of the Company) and that
the directors of the Purchaser have been qualified, on a permanent or
temporary basis, to serve as directors of a company (including the Company)
that either directly or through its subsidiary holds a New Jersey casino
license (collectively, the "Gaming Approvals"). See Section 15.
Parent is currently registered in Nevada as a publicly traded corporation
and has been found suitable to own the shares of subsidiaries that have been
licensed to conduct gaming operations in Nevada. The CCC has found Parent
qualified to hold a casino license. Additionally, the Ontario authorities have
conducted an investigation of, and have found suitable, Parent (as well as the
Company) in connection with the Ontario registration of Windsor Casino
Limited, which Parent owns with the Company. To date, Parent has obtained all
gaming licenses or permits necessary for the operation of its gaming
activities. Accordingly, Parent does not expect significant delays in
obtaining final action on its applications for necessary Gaming Approvals.
However, there can be no assurances as to whether any or all Gaming Approvals
will be granted or as to the timing of such Gaming Approvals.
Certain other conditions to consummation of the Offer are described in
Section 14. The Purchaser expressly reserves the right, in its sole
discretion, to waive any one or more of the conditions to the Offer. See
Section 14.
THIS OFFER TO PURCHASE AND THE LETTER OF TRANSMITTAL CONTAIN IMPORTANT
INFORMATION WHICH SHOULD BE READ CAREFULLY BEFORE ANY DECISION IS MADE WITH
RESPECT TO THE OFFER.
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THE TENDER OFFER
1. TERMS OF THE OFFER. Upon the terms and subject to the conditions of the
Offer (including, if the Offer is extended or amended, the terms and
conditions of any extension or amendment), the Purchaser will accept for
payment and pay for the Maximum Number of Shares validly tendered prior to the
Expiration Date and not withdrawn in accordance with Section 4. The term
"Expiration Date" means 12:00 midnight, New York City time, on Friday,
February 28, 1997, unless and until the Purchaser, in its sole discretion,
shall have extended the period of time during which the Offer is open, in
which event the term "Expiration Date" shall mean the latest time and date at
which the Offer, as so extended by the Purchaser, shall expire.
Consummation of the Offer is conditioned upon, among other things,
satisfaction or waiver by the Purchaser of each of the Minimum Condition, the
Rights Condition, the Control Share Condition, the Business Combination
Condition and the Gaming Condition. If any or all of such conditions are not
satisfied or any or all of the other events set forth in Section 14 shall have
occurred or shall be determined by the Purchaser to have occurred prior to the
Expiration Date, the Purchaser reserves the right (but shall not be obligated)
to (i) decline to purchase any or all of the Shares tendered and terminate the
Offer, and return all such tendered Shares to tendering stockholders, (ii)
waive or reduce the Minimum Condition or waive any or all other conditions
and, subject to complying with applicable rules and regulations of the
Commission, purchase all or the Maximum Number of Shares validly tendered,
(iii) extend the Offer and, subject to the right of stockholders to withdraw
Shares until the Expiration Date, retain the Shares which have been tendered
during the period or periods for which the Offer is extended or (iv) otherwise
amend the Offer.
Upon the terms and subject to the conditions of the Offer, if more than the
Maximum Number of Shares shall be validly tendered and not withdrawn prior to
the Expiration Date, the Purchaser will purchase the Maximum Number of Shares
on a pro rata basis (with adjustments to avoid purchases of fractional Shares)
based upon the number of Shares validly tendered and not withdrawn prior to
the Expiration Date.
Because of the difficulty of determining the precise number of Shares
properly tendered and not withdrawn, if proration is required, the Purchaser
may not be able to announce the final proration factor until approximately six
NYSE trading days after the Expiration Date. Preliminary results of proration
will be announced by press release as promptly as practicable after the
Expiration Date. Stockholders may obtain such preliminary information from the
Information Agent and may be able to obtain such information from their
brokers. The Purchaser will not pay for any Shares accepted for payment
pursuant to the Offer until the final proration factor is known.
The Purchaser expressly reserves the right, in its sole discretion, at any
time and from time to time, to extend for any reason the period of time during
which the Offer is open, including as a result of the occurrence of any of the
events specified in Section 14, by giving oral or written notice of such
extension to the Depositary and by making a public announcement thereof, as
described below. During any such extension, all Shares previously tendered and
not withdrawn will remain subject to the Offer, subject to the rights of a
tendering stockholder to withdraw any tendered Shares. See Section 4.
Subject to the applicable regulations of the Commission, the Purchaser also
expressly reserves the right, in its sole discretion at any time and from time
to time, to (i) delay acceptance for payment of, or, regardless of whether
such Shares were theretofore accepted for payment, payment for, any Shares
pending receipt of any regulatory or third-party approval specified in Section
15 or in order to comply in whole or in part with any other applicable law,
(ii) terminate the Offer and not accept for payment any Shares if any of the
conditions referred to in Section 14 have not been satisfied or upon the
occurrence of any of the events specified in Section 14 and (iii) waive any
condition or otherwise amend the Offer in any respect, in each case, by giving
oral or written notice of such delay, termination, waiver or amendment to the
Depositary and by making a public announcement thereof, as described below.
The Purchaser acknowledges that (i) Rule 14e-1(c) under the Exchange Act
requires the Purchaser to pay the consideration offered or return the Shares
tendered promptly after the termination or withdrawal of the Offer
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and (ii) the Purchaser may not delay acceptance for payment of, or payment for
(except as provided in clause (i) of the first sentence of the preceding
paragraph or, if proration is required, as discussed above), any Shares upon
the occurrence of any of the events specified in Section 14 without extending
the period of time during which the Offer is open.
Any such extension, delay, termination, waiver or amendment will be followed
as promptly as practicable by public announcement thereof, such announcement
in the case of an extension to be made no later than 9:00 a.m., New York City
time, on the next business day (as defined herein) after the previously
scheduled Expiration Date. Subject to applicable law (including, without
limitation, Rules 14d-4(c), 14d-6(d) and 14e-1 under the Exchange Act, which
require that material changes be promptly disseminated to stockholders in a
manner reasonably designed to inform them of such changes) and without
limiting the manner in which the Purchaser may choose to make any public
announcement, the Purchaser shall have no obligation to publish, advertise or
otherwise communicate any such public announcement other than by issuing a
press release or other public announcement.
If the Purchaser makes a material change in the terms of the Offer or the
information concerning the Offer or if it waives a material condition of the
Offer, the Purchaser will extend the Offer to the extent required by Rules
14d-4(c), 14d-6(d) and 14e-1 under the Exchange Act. The Purchaser reserves
the right (but shall not be obligated) to accept for payment more than the
Maximum Number of Shares pursuant to the Offer. The Purchaser has no present
intention of exercising such right. If a number of additional Shares in excess
of 2% of the outstanding Shares is to be accepted for payment and, at the time
notice of the Purchaser's decision to accept for payment such additional
Shares is first published, sent or given to holders of Shares, the Offer is
scheduled to expire at any time earlier than the tenth business day from the
date that such notice is so published, sent or given, the Offer will be
extended until the expiration of such period of ten business days.
If, prior to the Expiration Date, the Purchaser should decide to increase or
decrease the number of Shares being sought or to increase or decrease the
consideration being offered in the Offer, such increase or decrease in the
number of Shares being sought or such increase or decrease in the
consideration being offered will be applicable to all stockholders whose
Shares are accepted for payment pursuant to the Offer and, if at the time
notice of any such increase or decrease in the number of Shares being sought
or such increase or decrease in the consideration being offered is first
published, sent or given to holders of such Shares, the Offer is scheduled to
expire at any time earlier than the period ending on the tenth business day
from and including the date that such notice is first so published, sent or
given, the Offer will be extended at least until the expiration of such ten-
business-day period. For purposes of the Offer, a "business day" means any day
other than a Saturday, Sunday or federal holiday and consists of the time
period from 12:01 a.m. through 12:00 midnight, New York City time.
A demand is being made to the Company pursuant to Rule 14d-5 under the
Exchange Act for the use of the Company's stockholder list, its list of
holders of Rights, if any, and security position listings for the purpose of
disseminating the Offer to holders of Shares. Upon compliance by the Company
with such request, this Offer to Purchase and the related Letter of
Transmittal and, if required, other relevant materials will be mailed to
record holders of Shares or to brokers, dealers, commercial banks, trust
companies and similar persons whose names, or the names of whose nominees,
appear on the Company's stockholder list and its list of holders of Rights, if
any, or, if applicable, who are listed as participants in a clearing agency's
security position listing for subsequent transmittal to beneficial owners of
Shares and Rights.
2. ACCEPTANCE FOR PAYMENT AND PAYMENT FOR SHARES. Upon the terms and subject
to the conditions of the Offer (including, if the Offer is extended or
amended, the terms and conditions of any such extension or amendment), the
Purchaser will purchase, by accepting for payment, and will pay for, the
Maximum Number of Shares validly tendered prior to the Expiration Date (and
not properly withdrawn in accordance with Section 4) as soon as practicable
after the later to occur of (i) the Expiration Date and (ii) the satisfaction
or waiver of the conditions set forth in Section 14. Any determination
concerning the satisfaction of such terms and conditions shall be within the
sole discretion of the Purchaser. See Section 14. The Purchaser expressly
reserves the right, in its sole discretion, to delay acceptance for payment
of, or, subject to the applicable rules of the Commission, payment for, Shares
in order to comply in whole or in part with any applicable law. See Section
15.
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In all cases, payment for Shares tendered and accepted for payment pursuant
to the Offer will be made only after timely receipt by the Depositary of (a)
the certificate(s) representing tendered Shares (the "Share Certificates")
and, if applicable, the Rights Certificates, or timely confirmation of a book-
entry transfer (a "Book-Entry Confirmation") of such Shares and, if
applicable, Rights (if such procedure is available) into the Depositary's
account at The Depository Trust Company or the Philadelphia Depository Trust
Company (each a "Book-Entry Transfer Facility" and, collectively, the "Book-
Entry Transfer Facilities") pursuant to Section 3, (b) the Letter of
Transmittal (or facsimile thereof), properly completed and duly executed, or
an Agent's Message (as defined herein) in connection with a book-entry
transfer, and (c) any other documents required by the Letter of Transmittal.
The term "Agent's Message" means a message, transmitted by a Book-Entry
Transfer Facility to, and received by, the Depositary and forming a part of a
Book-Entry Confirmation, which states that such Book-Entry Transfer Facility
has received an express acknowledgment from the participant in such Book-Entry
Transfer Facility tendering the Shares and, if applicable, the Rights, that
such participant has received and agrees to be bound by the terms of the
Letter of Transmittal and that the Purchaser may enforce such agreement
against the participant.
If Rights Certificates have been distributed to holders of Shares, such
holders are required to tender, or (if such procedure is available) make book-
entry transfer of, Rights Certificates representing a number of Rights equal
to the number of Shares being tendered in order to effect a valid tender of
such Shares.
Payment for the Shares accepted for payment pursuant to the Offer will be
delayed in the event of proration due to the difficulty of determining the
number of Shares validly tendered and not withdrawn. See Section 1.
For purposes of the Offer, the Purchaser will be deemed to have accepted for
payment, and thereby purchased, tendered Shares if, as and when the Purchaser
gives oral or written notice to the Depositary of the Purchaser's acceptance
of such Shares for payment. Payment for Shares accepted pursuant to the Offer
will be made by deposit of the aggregate purchase price therefor with the
Depositary, which will act as agent for tendering stockholders for the purpose
of receiving payment from the Purchaser and transmitting payment to such
tendering stockholders. UNDER NO CIRCUMSTANCES WILL INTEREST ON THE OFFER
PRICE FOR SHARES BE PAID BY THE PURCHASER BY REASON OF ANY DELAY IN MAKING
SUCH PAYMENT. Upon the deposit of funds with the Depositary for the purpose of
making payments to tendering stockholders, the Purchaser's obligation to make
such payment shall be satisfied and tendering stockholders must thereafter
look solely to the Depositary for payment of amounts owed to them by reason of
the acceptance for payment of Shares pursuant to the Offer. If, for any reason
whatsoever, acceptance for payment of or payment for any Shares tendered
pursuant to the Offer is delayed, or the Purchaser is unable to accept for
payment or pay for Shares tendered pursuant to the Offer, then, without
prejudice to the Purchaser's rights set forth herein, the Depositary may,
nevertheless, on behalf of the Purchaser and subject to Rule 14e-1(c) under
the Exchange Act, retain tendered Shares and such Shares may not be withdrawn
except to the extent that the tendering stockholder is entitled to and duly
exercises withdrawal rights as described in Section 4. The Purchaser will pay
any stock transfer taxes incident to the transfer to it of validly tendered
Shares, except as otherwise provided in Instruction 6 of the Letter of
Transmittal, as well as any charges and expenses of the Depositary and the
Information Agent.
If any tendering Shares are not accepted for payment for any reason pursuant
to the terms and conditions of the Offer (including proration due to tenders
of Shares pursuant to the Offer in excess of the Maximum Number of Shares) or
if Share Certificates are submitted evidencing more Shares than are tendered,
Share Certificates evidencing unpurchased or untendered Shares will be
returned, without expense to the tendering stockholder (or, in the case of
Shares tendered by book-entry transfer into the Depositary's account at a
Book-Entry Transfer Facility pursuant to the procedure set forth in Section 3,
such Shares will be credited to an account maintained at such Book-Entry
Transfer Facility), as promptly as practicable following the expiration or
termination of the Offer. In the event separate Rights Certificates are
issued, similar action will be taken with respect to unpurchased and
untendered Rights.
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IF, PRIOR TO THE EXPIRATION DATE, THE PURCHASER SHALL INCREASE THE
CONSIDERATION OFFERED TO HOLDERS OF SHARES PURSUANT TO THE OFFER, SUCH
CONSIDERATION WILL BE PAID TO ALL HOLDERS WHOSE SHARES ARE PURCHASED IN THE
OFFER.
The Purchaser reserves the right to transfer or assign, in whole at any time
or in part from time to time, to one or more of its affiliates the right to
purchase all or any portion of the Shares and Rights tendered pursuant to the
Offer, but any such transfer or assignment will not relieve the Purchaser of
its obligations under the Offer and will in no way prejudice the rights of
tendering stockholders to receive payment for Shares validly tendered and
accepted for payment pursuant to the Offer.
3. PROCEDURES FOR TENDERING SHARES AND RIGHTS.
Valid Tender of Shares and Rights. Except as set forth below, in order for
Shares and, prior to the Distribution Date, Rights to be validly tendered
pursuant to the Offer, the Letter of Transmittal or a facsimile thereof,
properly completed and duly executed, with any required signature guarantees,
or an Agent's Message in connection with a book-entry delivery of Shares and,
prior to the Distribution Date, Rights and any other required documents must
be received by the Depositary at one of its addresses set forth on the back
cover of this Offer to Purchase prior to the Expiration Date and (i) the Share
Certificates and, if applicable, Rights Certificates evidencing tendered
Shares and, if applicable, Rights, must be received by the Depositary along
with the Letter of Transmittal, (ii) Shares and Rights must be tendered
pursuant to the procedure for book-entry transfer described below and a Book-
Entry Confirmation must be received by the Depositary, in each case, prior to
the Expiration Date, or (iii) the tendering stockholder must comply with the
guaranteed delivery procedures described below.
UNLESS THE RIGHTS ARE REDEEMED PRIOR TO THE EXPIRATION DATE, HOLDERS OF
SHARES WILL BE REQUIRED TO TENDER ONE ASSOCIATED RIGHT FOR EACH SHARE TENDERED
IN ORDER TO EFFECT A VALID TENDER OF SUCH SHARE. ACCORDINGLY, STOCKHOLDERS WHO
SELL THEIR RIGHTS SEPARATELY FROM THEIR SHARES AND DO NOT OTHERWISE ACQUIRE
RIGHTS MAY NOT BE ABLE TO SATISFY THE REQUIREMENTS OF THE OFFER FOR THE TENDER
OF SHARES.
Separate Delivery of Rights Certificates. If the Distribution Date has not
occurred prior to the Expiration Date, a tender of Shares will also constitute
a tender of the associated Rights. If the Distribution Date has occurred, the
Purchaser has waived that portion of the Rights Condition requiring that a
Distribution Date not have occurred and Rights Certificates have been
distributed to holders of Shares prior to the time a holder's Shares are
purchased pursuant to the Offer, in order for Rights (and the corresponding
Shares) to be validly tendered, Rights Certificates representing a number of
Rights equal to the number of Shares tendered must be delivered to the
Depositary or, if available, a Book-Entry Confirmation must be received by the
Depositary with respect thereto. If the Distribution Date has occurred, the
Purchaser has waived that portion of the Rights Condition requiring that a
Distribution Date not have occurred and Rights Certificates have not been
distributed prior to the time Shares are purchased pursuant to the Offer,
Rights may be tendered prior to a stockholder receiving Rights Certificates by
use of the guaranteed delivery procedure described below. In any case, a
tender of Shares constitutes an agreement by the tendering stockholder to
deliver Rights Certificates representing a number of Rights equal to the
number of Shares tendered pursuant to the Offer to the Depositary within three
business days after the date that Rights Certificates are distributed. The
Purchaser reserves the right to require that the Depositary receive Rights
Certificates, or a Book-Entry Confirmation, if available, with respect to such
Rights prior to accepting the related Shares for payment pursuant to the Offer
if the Distribution Date has occurred prior to the Expiration Date.
THE METHOD OF DELIVERY OF SHARE CERTIFICATES, RIGHTS CERTIFICATES (IF
APPLICABLE), THE LETTER OF TRANSMITTAL AND ALL OTHER REQUIRED DOCUMENTS,
INCLUDING DELIVERY THROUGH ANY BOOK-ENTRY TRANSFER FACILITY, IS AT THE OPTION
AND RISK OF THE TENDERING STOCKHOLDER, AND THE DELIVERY WILL BE DEEMED MADE
ONLY WHEN ACTUALLY RECEIVED BY THE DEPOSITARY. IF DELIVERY IS BY MAIL,
REGISTERED MAIL WITH RETURN RECEIPT REQUESTED, PROPERLY INSURED, IS
RECOMMENDED. IN ALL CASES, SUFFICIENT TIME SHOULD BE ALLOWED TO ENSURE TIMELY
DELIVERY.
10
<PAGE>
Book-Entry Transfer. The Depositary will make a request to establish an
account with respect to the Shares at each Book-Entry Transfer Facility for
purposes of the Offer within two business days after the date of this Offer to
Purchase, and any financial institution that is a participant in any of the
Book-Entry Transfer Facilities' systems may make book-entry delivery of Shares
by causing a Book-Entry Transfer Facility to transfer such Shares into the
Depositary's account at a Book-Entry Transfer Facility in accordance with such
Book-Entry Transfer Facility's procedures for transfer. Although delivery of
Shares may be effected through book-entry transfer at a Book-Entry Transfer
Facility, the Letter of Transmittal or a facsimile thereof, with any required
signature guarantees, or an Agent's Message in connection with a book-entry
delivery of Shares, and any other required documents, must, in any case, be
transmitted to and received by the Depositary at one of its addresses set
forth on the back cover of this Offer to Purchase prior to the Expiration Date
or the guaranteed delivery procedures described below must be complied with.
If the Distribution Date occurs and the Purchaser waives that portion of the
Rights Condition requiring that a Distribution Date not have occurred, to the
extent that the Rights become eligible for book-entry transfer under
procedures established by a particular Book-Entry Transfer Facility, the
Depositary also will make a request to establish an account with respect to
the Rights at each of the Book-Entry Transfer Facilities, but no assurance can
be given that book-entry delivery of Rights will be available. If book-entry
delivery of Rights is available, the foregoing book-entry transfer procedures
will also apply to Rights. Otherwise, if Rights Certificates have been issued,
a tendering stockholder will be required to tender Rights by means of physical
delivery to the Depositary of Rights Certificates (in which event references
in this Offer to Purchase to Book-Entry Confirmations with respect to Rights
will be inapplicable) or pursuant to the guaranteed delivery procedure set
forth below.
REQUIRED DOCUMENTS MUST BE TRANSMITTED TO AND RECEIVED BY THE DEPOSITARY AT
ONE OF ITS ADDRESSES SET FORTH ON THE BACK COVER PAGE OF THIS OFFER TO
PURCHASE. DELIVERY OF DOCUMENTS TO A BOOK-ENTRY TRANSFER FACILITY IN
ACCORDANCE WITH THE BOOK-ENTRY TRANSFER FACILITY'S PROCEDURES DOES NOT
CONSTITUTE DELIVERY TO THE DEPOSITARY.
Signature Guarantees. Signatures on all Letters of Transmittal must be
guaranteed by a firm which is a bank, broker, dealer, credit union, savings
association or other entity that is a member in good standing of the
Securities Transfer Agents Medallion Program (each, an "Eligible
Institution"), unless the Shares (or Rights, if applicable) tendered thereby
are tendered (i) by a registered holder of Shares (or Rights, if applicable)
who has not completed either the box entitled "Special Delivery Instructions"
or the box entitled "Special Payment Instructions" on the Letter of
Transmittal or (ii) for the account of an Eligible Institution. See
Instruction 1 of the Letter of Transmittal.
If a Share Certificate or Rights Certificate is registered in the name of a
person other than the signer of the Letter of Transmittal or if payment is to
be made, or a Share Certificate or Rights Certificate not accepted for payment
or not tendered is to be returned, to a person other than the registered
holder(s), then the Share Certificate or Rights Certificate must be endorsed
or accompanied by appropriate stock powers, in either case, signed exactly as
the name(s) of the registered holder(s) appear on the Share Certificate or
Rights Certificate, with the signature(s) on such Share Certificate or Rights
Certificate or stock powers guaranteed as described above. See Instructions 1
and 5 of the Letter of Transmittal.
If the Share Certificates and Rights Certificates are forwarded separately
to the Depositary, a properly completed and duly executed Letter of
Transmittal (or facsimile thereof) must accompany each such delivery.
Guaranteed Delivery. If a stockholder desires to tender Shares and Rights
pursuant to the Offer and such stockholder's Share Certificates or, if
applicable, Rights Certificates are not immediately available (including, if
the Distribution Date has occurred and the Purchaser waives that portion of
the Rights Condition requiring that a Distribution Date not have occurred,
because Rights Certificates have not yet been distributed) or time will not
11
<PAGE>
permit all required documents to reach the Depositary prior to the Expiration
Date or the procedure for book-entry transfer cannot be completed on a timely
basis, such Shares or Rights may nevertheless be tendered if all the following
conditions are satisfied:
(i) the tender is made by or through an Eligible Institution;
(ii) a properly completed and duly executed Notice of Guaranteed
Delivery, substantially in the form provided by the Purchaser herewith, is
received by the Depositary as provided below prior to the Expiration Date;
and
(iii) the Share Certificates and Rights Certificates (or a Book-Entry
Confirmation) representing all tendered Shares and Rights, in proper form
for transfer together with a properly completed and duly executed Letter of
Transmittal (or facsimile thereof), with any required signature guarantees
(or, in the case of a book-entry transfer, an Agent's Message) and any
other documents required by the Letter of Transmittal are received by the
Depositary within (a) in the case of Shares, three NYSE trading days after
the date of execution of such Notice of Guaranteed Delivery or (b) in the
case of Rights, a period ending on the later of (x) three NYSE trading days
after the date of execution of such Notice of Guaranteed Delivery or (y)
three business days after the date Rights Certificates are distributed to
stockholders.
Any Notice of Guaranteed Delivery may be delivered by hand or transmitted by
telegram, facsimile transmission or mail to the Depositary and must include a
guarantee by an Eligible Institution in the form set forth in the Notice of
Guaranteed Delivery.
Notwithstanding any other provisions hereof, payment for Shares accepted for
payment pursuant to the Offer will in all cases be made only after timely
receipt by the Depositary of Share Certificates for, or of Book-Entry
Confirmation with respect to, such Shares, and if the Distribution Date has
occurred, Rights Certificates for, or a Book-Entry Confirmation, if available,
with respect to such Rights (unless the Purchaser elects, in its sole
discretion, to make payment for such Shares pending receipt of the Rights
Certificates for, or a Book-Entry Confirmation, if available, with respect to
such Rights), a properly completed and duly executed Letter of Transmittal (or
facsimile thereof), together with any required signature guarantees (or, in
the case of a book-entry transfer, an Agent's Message) and any other documents
required by the Letter of Transmittal. Accordingly, payment might not be made
to all tendering stockholders at the same time and will depend upon when Share
Certificates (or Rights Certificates) are received by the Depositary or Book-
Entry Confirmations with respect to such Shares (or Rights, if available) are
received into the Depositary's account at a Book-Entry Transfer Facility.
Backup United States Federal Withholding Tax. Under the United States
federal income tax laws, the Depositary will be required to withhold 31% of
the amount of any payments made to certain stockholders pursuant to the Offer.
To prevent backup federal income tax withholding with respect to payment to
certain stockholders of the Offer Price of Shares purchased pursuant to the
Offer, each such stockholder must provide the Depositary with such
stockholder's correct taxpayer identification number and certify that such
stockholder is not subject to backup federal income tax withholding by
completing the Substitute Form W-9 included in the Letter of Transmittal. See
Instruction 10 of the Letter of Transmittal.
Appointment as Proxy. By executing a Letter of Transmittal as set forth
above, a tendering stockholder irrevocably appoints designees of the Purchaser
as such stockholder's attorneys-in-fact and proxies, in the manner set forth
in the Letter of Transmittal, each with full power of substitution, to the
full extent of such stockholder's rights with respect to the Shares and, if
applicable, Rights tendered by such stockholder and accepted for payment by
the Purchaser (and any and all non-cash dividends, distributions, rights or
other securities issued or issuable in respect of such Shares or Rights on or
after the date of this Offer to Purchase). All such proxies shall be
considered coupled with an interest in the tendered Shares and Rights. This
appointment will be effective if, when and only to the extent that the
Purchaser accepts such Shares and Rights for payment pursuant to the Offer.
Upon such acceptance for payment, all prior proxies given by such stockholder
with respect to such Shares and Rights and other securities will, without
further action, be revoked, and no subsequent proxies may be given. The
designees of the Purchaser will, with respect to the Shares and Rights and
other
12
<PAGE>
securities for which the appointment is effective, be empowered to exercise
all voting and other rights of such stockholder as they, in their sole
discretion, may deem proper at any annual, special, adjourned or postponed
meeting of the Company's stockholders, and the Purchaser reserves the right to
require that in order for Shares and Rights or other securities to be deemed
validly tendered, immediately upon the Purchaser's acceptance for payment of
such Shares and Rights, the Purchaser must be able to exercise full voting
rights with respect to such Shares and Rights. See Section 15.
The foregoing proxies are effective only upon acceptance for payment of
Shares pursuant to the Offer. The Offer does not constitute a solicitation of
proxies, absent a purchase of Shares, for any meeting of the Company's
stockholders, which will be made only pursuant to separate proxy solicitation
materials complying with the Exchange Act. See "Introduction."
Determination of Validity. All questions as to the validity, form,
eligibility (including time of receipt) and acceptance for payment of any
tendered Shares or Rights pursuant to any of the procedures described above
will be determined by the Purchaser, in its sole discretion, whose
determination will be final and binding on all parties. The Purchaser reserves
the absolute right to reject any or all tenders of Shares or Rights determined
by it not to be in proper form or if the acceptance for payment of, or payment
for, such Shares or Rights may, in the opinion of the Purchaser's counsel, be
unlawful. The Purchaser also reserves the absolute right, in its sole
discretion, to waive any of the conditions of the Offer or any defect or
irregularity in any tender with respect to Shares or Rights of any particular
stockholder, whether or not similar defects or irregularities are waived in
the case of other stockholders. No tender of Shares or Rights will be deemed
to have been validly made until all defects and irregularities have been cured
or waived.
The Purchaser's interpretation of the terms and conditions of the Offer
(including the Letter of Transmittal and the instructions thereto) will be
final and binding. None of Parent, the Purchaser, the Dealer Manager, the
Depositary, the Information Agent or any other person will be under any duty
to give notification of any defects or irregularities in tenders or will incur
any liability for failure to give any such notification.
Other Requirements. The Purchaser's acceptance for payment of Shares and, if
applicable, Rights tendered pursuant to the Offer will constitute a binding
agreement between the tendering stockholder and the Purchaser upon the terms
and subject to the conditions of the Offer.
4. WITHDRAWAL RIGHTS. Except as otherwise provided in this Section 4,
tenders of Shares and Rights made pursuant to the Offer are irrevocable.
Shares and Rights tendered pursuant to the Offer may be withdrawn at any time
prior to the Expiration Date and, unless theretofore accepted for payment by
the Purchaser pursuant to the Offer, may also be withdrawn at any time after
March 31, 1997 or at such later time as may apply if the Offer is extended. A
withdrawal of Shares will also constitute a withdrawal of the associated
Rights. Rights may not be withdrawn unless the associated Shares are also
withdrawn.
If the Purchaser extends the Offer, is delayed in its acceptance for payment
of Shares or is unable to accept Shares for payment pursuant to the Offer for
any reason, then, without prejudice to the Purchaser's rights under the Offer,
the Depositary may, nevertheless, on behalf of the Purchaser, retain tendered
Shares, and such Shares may not be withdrawn except to the extent that
tendering stockholders are entitled to withdrawal rights as described in this
Section 4. Any such delay will be by an extension of the Offer to the extent
required by law.
For a withdrawal to be effective, a written or facsimile transmission notice
of withdrawal must be timely received by the Depositary at one of its
addresses set forth on the back cover of this Offer to Purchase. Any such
notice of withdrawal must specify the name of the person who tendered the
Shares or Rights to be withdrawn, the number of Shares or Rights to be
withdrawn and (if Share Certificates or Rights Certificates have been
tendered) the name of the registered holder, if different from that of the
person who tendered such Shares or Rights. If Share Certificates or Rights
Certificates evidencing Shares or Rights to be withdrawn have been delivered
or otherwise identified to the Depositary, then prior to the release of such
Share Certificates or Rights Certificates, the serial numbers shown on the
particular Share Certificates or Rights Certificates to be withdrawn
13
<PAGE>
must be submitted to the Depositary, and the signature(s) on the notice of
withdrawal must be guaranteed by an Eligible Institution, unless such Shares
or Rights have been tendered for the account of an Eligible Institution. If
Shares or Rights have been tendered pursuant to the procedure for book-entry
transfer as set forth in Section 3, any notice of withdrawal must also specify
the name and number of the account at the Book-Entry Transfer Facility to be
credited with the withdrawn Shares or Rights, in which case a notice of
withdrawal will be effective if delivered to the Depositary by any method of
delivery described in the first sentence of this paragraph. Withdrawals of
Shares or Rights may not be rescinded.
All questions as to the form and validity (including, without limitation,
time of receipt) of notices of withdrawal will be determined by the Purchaser,
in its sole discretion, the determination of which will be final and binding.
None of Parent, the Purchaser, the Dealer Manager, the Depositary, the
Information Agent or any other person will be under any duty to give
notification of any defects or irregularities in any notice of withdrawal or
incur any liability for failure to give any such notification.
Any Shares or Rights properly withdrawn will thereafter be deemed to not
have been validly tendered for purposes of the Offer. However, withdrawn
Shares or Rights may be retendered at any time prior to the Expiration Date by
following one of the procedures described in Section 3.
5. CERTAIN UNITED STATES FEDERAL INCOME TAX CONSEQUENCES. The following
discussion is a summary of certain United States federal income tax
consequences of the Offer and the Proposed Merger to stockholders of the
Company who hold their Shares as capital assets. The discussion set forth
below is for general information only and may not apply to particular
stockholders that are subject to special treatment under the Internal Revenue
Code of 1986, as amended (the "Code"), such as foreign stockholders and
stockholders who acquired such Shares pursuant to an exercise of an employee
stock option or otherwise as compensation.
General Consequences of the Offer and the Proposed Merger. If the Proposed
Merger is consummated, the Offer and Proposed Merger should be treated as a
single integrated transaction for United States federal income tax purposes.
It is possible, although it cannot be determined at this time, that the Offer
and Proposed Merger, taken together, will constitute a "reorganization" within
the meaning of Section 368(a) of the Code. Parent is under no obligation to
undertake to qualify the Offer and Proposed Merger as a "reorganization." If,
for any reason, the Proposed Merger were not consummated, the receipt of cash
pursuant to the Offer would be a taxable exchange.
If the Offer and Proposed Merger do not qualify as a "reorganization", the
United States federal income tax consequences generally would be as follows:
(i) A stockholder of the Company who, pursuant to the Offer and the
Proposed Merger, exchanges Shares for cash and Parent Common Stock, if any,
would recognize capital gain or loss in an amount equal to the difference,
if any, between (a) the amount of cash and the fair market value of the
Parent Common Stock, if any, received and (b) the stockholder's adjusted
tax basis in the Shares surrendered pursuant to the Offer and the Proposed
Merger. The gain or loss would be long-term capital gain or loss, if the
stockholder's holding period for such Shares were more than one year.
(ii) If a holder of Shares owns more than one "block" of stock (i.e.,
Shares acquired at the same time in a single transaction), gain or loss
would be determined separately for each block held. In general, the amount
of cash or Parent Common Stock received would be allocated ratably among
the blocks in the proportion that the number of Shares in a particular
block bears to the total number of Shares held by such stockholder.
As discussed above, it is possible, although it cannot be determined at this
time, that the Offer and Proposed Merger, taken together, will constitute a
"reorganization" within the meaning of Section 368(a) of the Code. However,
there can be no assurance that the Proposed Merger will be effected in such a
way that the Offer and Proposed Merger will qualify as a "reorganization," and
Parent is under no obligation to undertake to qualify the transactions as
such. If the Offer and Proposed Merger were to qualify as a "reorganization"
within the meaning of Section 368(a) of the Code, the United States federal
income tax consequences generally should be as follows:
14
<PAGE>
(i) In general, a stockholder of the Company who, pursuant to the Offer,
exchanges all of his Shares for cash would recognize capital gain or loss
in an amount equal to the difference, if any, between the amount of cash
received and the stockholder's adjusted tax basis in the Shares accepted
for payment in the Offer. The gain or loss would be long-term capital gain
or loss if, as of the date of the exchange pursuant to the Offer, the
holder thereof had held such Shares for more than one year. However,
because of the possibility of proration, there is a substantial probability
that a stockholder who tenders all of such stockholder's Shares pursuant to
the Offer would have fewer than all of such Shares purchased pursuant to
the Offer.
(ii) A stockholder who has a portion of such stockholder's Shares
purchased for cash pursuant to the Offer and who exchanges the balance of
his Shares for Parent Common Stock pursuant to the Proposed Merger should
realize gain or loss measured by the difference, if any between (a) the
fair market value of the total consideration received by such stockholder
in the transactions, and (b) such stockholder's adjusted tax basis in
Shares surrendered. However, the amount of such gain, if any, which would
be taxable would not exceed the amount of cash received in the
transactions. Any loss realized by such a stockholder would not be
recognized. A stockholder of the Company who did not sell any of his Shares
pursuant to the Offer, and who exchanged all of his Shares for Parent
Common Stock pursuant to the Proposed Merger would not recognize any gain
or loss (other than gain attributable to the receipt of cash in lieu of
fractional shares of Parent Common Stock, as discussed below).
(iii) The aggregate basis of the shares of Parent Common Stock received
by such a stockholder in the Proposed Merger should be the same as the
aggregate basis of the Shares surrendered in exchange therefor plus the
aggregate basis of the Shares sold pursuant to the Offer (reduced by any
amount allocated to a fractional share interest for which cash is received)
increased by the amount of any gain recognized by the stockholder (as
described in paragraph (ii), above) and decreased by the amount of cash
received by the stockholder pursuant to the Offer and the Proposed Merger.
(iv) The holding period of the shares of Parent Common Stock received by
stockholders of the Company in the Proposed Merger should include the
period during which the Shares surrendered in exchange therefor were held,
provided such Shares were held as a capital asset at the effective time of
the Proposed Merger.
(v) Stockholders who receive cash in lieu of fractional shares of Parent
Common Stock in the Proposed Merger should be treated as if the fractional
share had been distributed to such holder as part of the Proposed Merger
and then redeemed by Parent in exchange for the cash distributed in lieu of
the fractional share in a transaction qualifying as an exchange under
Section 302 of the Code. As a result, a stockholder generally should
recognize capital gain or loss with respect to the cash payment received in
lieu of a fractional share.
Transfer Taxes. The transfer of a controlling interest in a company such as
the Company which owns and/or leases property in inter alia New York State
and/or New York City may be subject to real property transfer taxes. In
connection with the Offer and the Proposed Merger, Parent will pay, or cause
to be paid, any real property transfer taxes (the "Transfer Taxes") imposed
upon stockholders of the Company by reason of the Offer or the Proposed Merger
and will file or cause to be filed any tax returns required with respect to
those Transfer Taxes. Such payment will likely constitute additional
consideration to the stockholders for their Shares, taxable as described above
with respect to cash proceeds. Stockholders should consult their tax advisors
about the possibility that any such Transfer Taxes paid on their behalf would
reduce the amount realized and/or be added to tax basis of any Parent Common
Stock received in the Proposed Merger.
Withholding. Unless a stockholder complies with certain reporting and/or
certification procedures or is an exempt recipient under applicable provisions
of the Code and Treasury Regulations promulgated thereunder, such stockholder
may be subject to backup withholding at a rate of 31% with respect to any
consideration received pursuant to the Offer and Proposed Merger. See Section
3. Stockholders should consult their brokers to ensure compliance with such
procedures. Foreign stockholders should consult with their own tax advisors
regarding withholding taxes.
15
<PAGE>
THE DISCUSSION OF UNITED STATES FEDERAL INCOME TAX CONSEQUENCES SET FORTH
ABOVE IS FOR GENERAL INFORMATION ONLY AND IS BASED ON EXISTING LAW AS OF THE
DATE OF THIS OFFER TO PURCHASE. THIS DISCUSSION DOES NOT ADDRESS ALL UNITED
STATES FEDERAL INCOME TAX CONSIDERATIONS THAT MAY BE RELEVANT TO PARTICULAR
STOCKHOLDERS IN LIGHT OF THEIR SPECIFIC CIRCUMSTANCES, SUCH AS STOCKHOLDERS
WHO ARE DEALERS IN SECURITIES, FOREIGN PERSONS OR STOCKHOLDERS WHO ACQUIRED
THEIR SHARES PURSUANT TO THE EXERCISE OF AN EMPLOYEE STOCK OPTION OR OTHERWISE
AS COMPENSATION. STOCKHOLDERS OF THE COMPANY ARE URGED TO CONSULT THEIR OWN
TAX ADVISORS TO DETERMINE THE PARTICULAR TAX CONSEQUENCES TO THEM OF THE OFFER
AND THE PROPOSED MERGER (INCLUDING THE APPLICABILITY AND EFFECT OF FEDERAL,
STATE, LOCAL, FOREIGN AND OTHER TAX LAWS, AND POSSIBLE CHANGES IN SUCH TAX
LAWS, WHICH MAY HAVE RETROACTIVE EFFECT).
6. PRICE RANGE OF SHARES AND RIGHTS; DIVIDENDS. The Shares trade on the NYSE
under the symbol "ITT." The following table sets forth, for the periods
indicated, the high and low sales prices per Share on the NYSE as reported by
the Dow Jones News Service.
<TABLE>
<CAPTION>
MARKET PRICE
---------------
HIGH LOW
<S> <C> <C>
1995
Fourth Quarter (from December 20)......................... $53.125 $47.500
1996
First Quarter............................................. 62.625 47.375
Second Quarter............................................ 68.250 56.875
Third Quarter............................................. 66.625 43.000
Fourth Quarter............................................ 46.500 40.875
1997
First Quarter (through January 30)........................ 58.875 41.125
</TABLE>
On January 27, 1997, the last reported sales price of the Shares on the NYSE
prior to the public announcement by Parent that the Purchaser would make the
Offer (the "Announcement") was $42.625. On January 30, 1997, the last full
trading day prior to the date of this Offer to Purchase, the last reported
sales price of the Shares on the NYSE was $56.875 per Share. STOCKHOLDERS ARE
URGED TO OBTAIN A CURRENT MARKET QUOTATION FOR THE SHARES.
The Company has not declared or paid any cash dividends on the Shares to
date.
Prior to the occurrence of a Distribution Date, the Rights are attached to
outstanding Shares and may not be traded separately. As a result, the sales
prices per Share set forth above are also the high and low sales prices per
Share including the associated Right during those periods in which the Rights
are outstanding and attached to outstanding Shares. As a result of the
commencement of the Offer, the Board may designate a Distribution Date, after
which the Rights will separate and will begin trading apart from the Shares.
See Section 15. In such event, stockholders of the Company are urged to obtain
a current market quotation, if any, for the Rights.
7. CERTAIN INFORMATION CONCERNING THE COMPANY. The information concerning
the Company contained in this Offer to Purchase, including financial
information and information relating to the Rights and the Rights Agreement,
has been taken from or is based upon publicly available documents and records
on file with the Commission and other public sources. Neither Parent, the
Purchaser nor the Dealer Manager assumes any responsibility for the accuracy
or completeness of the information concerning the Company contained in such
documents and records or for any failure by the Company to disclose events
which may have occurred or may affect the significance or accuracy of any such
information but which are unknown to Parent, the Purchaser or the Dealer
Manager.
16
<PAGE>
The Company is a Nevada corporation and its principal executive offices are
located at 1330 Avenue of the Americas, New York, New York 10019-5490. The
following description of the Company's business has been taken from the
Company 1995 10-K:
ITT is engaged, through subsidiaries, in the hospitality, gaming and
entertainment business and the information services business. ITT conducts
its hospitality and entertainment business through ITT Sheraton Corporation
("ITT Sheraton"), Ciga S.p.A. ("Ciga"), Caesars World, Inc. ("Caesars") and
Madison Square Garden, L.P. ("MSG") and conducts its information services
business through ITT World Directories, Inc. ("ITT World Directories") and
ITT Educational Services, Inc. ("ITT Educational"). In addition, ITT owns
approximately 6% of the outstanding capital shares of Alcatel Alsthom, a
French company which owns, among other things, Alcatel, N.V., one of the
largest telecommunications equipment manufacturers in the world.
Set forth below is a summary of certain consolidated financial information
with respect to the Company, excerpted or derived from the audited financial
information of the Company contained in the Company 1995 10-K and unaudited
information of the Company contained in the Quarterly Report on Form 10-Q of
the Company for the quarterly period ended September 30, 1996. More
comprehensive financial information is included in such reports and other
documents filed with the Commission, and the following summary is qualified in
its entirety by reference to such reports and other documents, including the
financial information and related notes contained therein. Such reports and
other documents may be inspected and copies may be obtained from the offices
of the Commission or the NYSE in the manner set forth below.
ITT CORPORATION(1)
SUMMARY CONSOLIDATED FINANCIAL DATA
(IN MILLIONS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
NINE MONTHS ENDED
SEPTEMBER 30, YEARS ENDED DECEMBER 31,
----------------------- --------------------------
1996 1995 1995 1994 1993
<S> <C> <C> <C> <C> <C>
OPERATING INFORMATION:
Revenues................... $4,805 $4,558 $ 6,346 $ 4,760 $ 4,169
Costs and Expenses......... 4,278 4,164 5,775 4,468 4,027
Operating Income........... 527 394 571 292 142
Net Income................. 183 103 147 74 39
Earnings Per Share(2)...... 1.54 .87 1.24 .63 .33
Weighted Average Common
Equivalent Shares(2)...... 118 117 118 117 117
<CAPTION>
AT SEPTEMBER 30, AT DECEMBER 31,
---------------- ---------------
1996 1995 1994
<S> <C> <C> <C>
BALANCE SHEET INFORMATION:
Current Assets............. $1,736 $1,143 $ 965
Total Assets............... 9,167 8,692 5,012
Current Liabilities........ 1,350 1,430 624
Long-term Debt............. 3,875 3,575 600
Total Liabilities.......... 6,120 5,756 1,659
Stockholders' Equity....... 3,047 2,936 3,353
</TABLE>
- ---------------------
(1) On December 19, 1995, the former ITT Corporation ("Old ITT," which has
been renamed ITT Industries, Inc.) distributed to its stockholders of
record at the close of business on such date all of the outstanding shares
of common stock of the Company, then a wholly owned subsidiary of Old ITT
(the "Distribution"). In the Distribution, holders of common stock of Old
ITT received one Share for every one share of Old ITT common stock held.
The summary financial information of the Company set forth herein is
presented as if the Company were a separate entity for all periods
presented. Old ITT's historical basis in the assets and liabilities of the
Company has been carried over and all majority-owned subsidiaries have
been consolidated.
(2) Pro forma to reflect the Distribution for the nine months ended September
30, 1995 and the years ended December 31, 1994 and 1993.
17
<PAGE>
On January 23, 1997, the Company issued a press release announcing fourth
quarter net income of $66 million and earnings per share of $.57, compared
with the 1995 fourth quarter pro forma net income of $68 million, or $.59 per
share.
The Company is subject to the informational and reporting requirements of
the Exchange Act and is required to file reports and other information with
the Commission relating to its business, financial condition and other
matters. Information, as of particular dates, concerning the Company's
directors and officers, their remuneration, stock options granted to them, the
principal holders of the Company's securities, any material interests of such
persons in transactions with the Company and other matters is required to be
disclosed in proxy statements distributed to the Company's stockholders and
filed with the Commission. These reports, proxy statements and other
information should be available for inspection at the public reference
facilities of the Commission located in Judiciary Plaza, 450 Fifth Street,
N.W., Washington, D.C. 20549, and also should be available for inspection and
copying at prescribed rates at the following regional offices of the
Commission: Seven World Trade Center, New York, New York 10048; and Citicorp
Center, 500 West Madison Street, Suite 1400, Chicago, Illinois 60661. Copies
of this material may also be obtained by mail, upon payment of the
Commission's customary fees, from the Commission's principal office at 450
Fifth Street, N.W., Washington, D.C. 20549. The Commission also maintains an
Internet site on the world wide web at http://www.sec.gov that contains
reports, proxy statements and other information. Reports, proxy statements and
other information concerning the Company should also be available for
inspection at the NYSE, 20 Broad Street, New York, New York 10005. All of the
information with respect to the Company and its affiliates set forth in this
Offer to Purchase has been derived from publicly available information.
8. CERTAIN INFORMATION CONCERNING THE PURCHASER AND PARENT.
The Purchaser. The Purchaser is a newly incorporated Delaware corporation
organized in connection with the Offer and the Proposed Merger and has not
carried on any activities other than in connection with the Offer and Proposed
Merger. The principal executive offices of the Purchaser are located at 9336
Civic Center Drive, Beverly Hills, California 90210. The Purchaser is a wholly
owned subsidiary of Parent. Until immediately prior to the time that the
Purchaser will purchase Shares pursuant to the Offer, it is not expected that
the Purchaser will have any significant assets or liabilities or engage in
activities other than those incidental to its formation and capitalization and
the transactions contemplated by the Offer and Proposed Merger. Due to the
fact that the Purchaser is newly formed and has minimal assets and
capitalization, no meaningful financial information regarding the Purchaser is
available.
Parent. Parent, a Delaware corporation, is a leading owner and operator of
full-service hotels and gaming properties located in gateway cities, urban and
suburban centers and resort areas throughout the United States and in selected
international cities. The principal executive offices of Parent are located at
9336 Civic Center Drive, Beverly Hills, California 90210. Parent's operations
include 231 hotel properties representing approximately 84,000 rooms and 17
gaming properties with approximately 950,000 square feet of casino space. At
December 31, 1996, Parent owned or partially owned 22 and managed 23 domestic
full-service hotel properties. An additional 172 hotels were operated by
franchisees, under the Hilton, Hilton Garden Inn and Hilton Suites brand
names. Parent's international hotel operations currently include seven full-
service hotel properties. Parent's owned or partially owned hotels include
such well-known urban and resort properties as the Waldorf=Astoria in New
York, the New York Hilton & Towers, the Palmer House Hilton in Chicago, the
Chicago Hilton & Towers, the Washington Hilton & Towers and the Capital Hilton
in Washington, D.C., the O'Hare Hilton in Chicago, the New Orleans Hilton
Riverside & Towers, the Hilton Hawaiian Village in Honolulu and the San
Francisco Hilton & Towers.
In December 1996, Parent acquired (the "Bally Merger") Bally Entertainment
Corporation ("Bally"). Parent operates its domestic gaming business under the
Hilton, Bally and Flamingo brand names. Parent's Nevada casino operations
include the Las Vegas Hilton, the Flamingo Hilton-Las Vegas, Bally's Las
Vegas, the Flamingo Hilton-Laughlin, the Reno Hilton and the Flamingo Hilton-
Reno. Parent's Atlantic City casinos are Bally's Park Place and The Atlantic
City Hilton, formerly The Grand casino hotel resort. Under its Conrad
18
<PAGE>
International brand, the Company also partially owns and manages casinos in
Brisbane and the Gold Coast in Queensland, Australia, Punta del Este, Uruguay
and Istanbul, Turkey.
In December 1996, subsequent to the Bally Merger, Parent consummated cash
tender offers to purchase the outstanding debt securities of certain Bally
subsidiaries and related consent solicitations (collectively, the "Bally
Offers"). In total, Parent received tenders and consents of approximately $1.1
billion, or 98% of the total aggregate principal amount of the securities
subject to the Bally Offers. Parent funded the Bally Offers primarily with
commercial paper. In January 1997, Parent called for redemption its 6%
Convertible Subordinated Debentures due 1998 (the "6% Notes") and its 10%
Convertible Subordinated Debentures due 2006 (the "10% Notes"). Each of these
issues was originally incurred by Bally and was assumed by Parent in the Bally
Merger. At December 31, 1996, approximately $1.4 million aggregate principal
amount of the 6% Notes and $69.5 million aggregate principal amount of the 10%
Notes were outstanding. The 6% Notes and the 10% Notes are redeemable at 100%
of their respective principal amounts.
In January 1997, Parent and Ladbroke Group PLC ("Ladbroke"), which owns the
rights to the Hilton name outside the United States, entered into a strategic
alliance with respect to 400 hotels in 49 countries. Parent believes the
alliance will improve the performance of Parent's operations as its properties
benefit from the worldwide integration of the Hilton brand, reservation
systems, marketing programs and sales organizations. The companies have
already integrated their reservation systems and plan to launch the Hilton
HHonors Worldwide loyalty program in February 1997. In addition, the agreement
permits Parent and Ladbroke to acquire a 20% equity interest in each other and
provides for mutual participation in future hotel development focusing
primarily upon management contracts and franchises. Implementation of certain
features of the alliance is subject to the receipt of regulatory approvals.
Set forth below is a summary of certain consolidated financial data with
respect to Parent and its subsidiaries, excerpted or derived from audited
financial information presented in Parent's Annual Report on Form 10-K for the
fiscal year ended December 31, 1995 (the "Parent 1995 10-K") and the unaudited
financial information contained in Parent's Quarterly Report on Form 10-Q for
the quarterly period ended September 30, 1996 (the "Parent 10-Q"). More
comprehensive financial information is included in such reports and other
documents filed by Parent with the Commission, including additional unaudited
operating information of Parent contained in Parent's Current Report on Form
8-K dated January 24, 1997 (the "Parent 8-K"). The financial information
summary set forth below is qualified in its entirety by reference to the
Parent 1995 10-K, Parent 10-Q, Parent 8-K and other documents, financial
information and related notes contained therein which have been filed with the
Commission, which are hereby incorporated herein by reference. Such reports
and other documents may be inspected and copies may be obtained from the
Commission, the NYSE or the Pacific Stock Exchange, Inc. (the "PSE") in the
manner set forth below.
19
<PAGE>
HILTON HOTELS CORPORATION
SUMMARY CONSOLIDATED FINANCIAL DATA
(IN MILLIONS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
NINE MONTHS ENDED YEARS ENDED DECEMBER
SEPTEMBER 30, 31,
----------------------- --------------------
1996 1995 1995 1994 1993
<S> <C> <C> <C> <C> <C>
OPERATING INFORMATION:
Revenues......................... $1,353 $1,192 $1,649 $1,514 $1,394
Expenses......................... 1,060 960 1,296 1,229 1,154
Operating Income................. 293 232 353 285 240
Income Before Cumulative Effect
of
Accounting Changes.............. 150 110 173 122 103
Net Income....................... 150 110 173 122 106
Net Income Per Share............. .77 .57 .89 .63 .55
Weighted Average Common
Equivalent Shares............... 195 194 194 193 192
<CAPTION>
AT DECEMBER
AT SEPTEMBER 30, 31,
---------------- -------------
1996 1995 1994
<S> <C> <C> <C>
BALANCE SHEET INFORMATION:
Current Assets................... $ 610 $ 717 $ 674
Total Assets..................... 3,019 3,060 2,926
Current Liabilities.............. 355 535 328
Long-term Debt................... 1,087 1,070 1,252
Total Liabilities................ 1,627 1,806 1,798
Stockholders' Equity............. 1,392 1,254 1,128
</TABLE>
On January 21, 1997, Parent reported unaudited fourth quarter income, before
an extraordinary item, of $6.0 million, or $.03 per share, compared to $63.1
million, or $.32 per share, for the same period a year ago. The extraordinary
item relates to costs and expenses incurred to extinguish or acquire
approximately $1.1 billion of Bally debt securities (discussed above), and
resulted in a charge to earnings of $74.1 million, net of tax, or $.36 per
share. Fourth quarter earnings from operations were adversely affected by
abnormally low baccarat drop and win percentage at the Las Vegas Hilton. In
addition, Parent incurred other non-recurring charges in the fourth quarter
totaling $73 million pre-tax. These charges included the write-off of pre-
opening expenses for the Flamingo Casino-Kansas City, which opened in October,
costs associated with the relocation of the Flamingo Casino-New Orleans to
Shreveport, Louisiana, which received approval in October, and costs
associated with changes to the Parent's defined benefit pension plan. More
information is contained in the Parent 8-K; the information contained in this
paragraph is qualified in its entirety by reference to the Parent 8-K.
20
<PAGE>
Set forth below is a summary of certain consolidated financial information
with respect to Bally, excerpted or derived from the audited financial
information of Bally contained in Bally's Annual Report on Form 10-K for the
fiscal year ended December 31, 1995, and the unaudited information contained
in Bally's Quarterly Report on Form 10-Q for the quarterly period ended
September 30, 1996. More comprehensive financial information is included in
such reports and other documents filed with the Commission, and the following
summary is qualified in its entirety by reference to such reports and other
documents, including the financial information and related notes contained
therein. Such reports and other documents may be inspected and copies may be
obtained from the offices of the Commission or the NYSE in the manner set
forth below.
BALLY ENTERTAINMENT CORPORATION
SUMMARY CONSOLIDATED FINANCIAL DATA
(IN MILLIONS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
NINE MONTHS ENDED YEARS ENDED
SEPTEMBER 30, DECEMBER 31,
----------------- -------------------
1996 1995 1995 1994 1993
<S> <C> <C> <C> <C> <C>
OPERATING INFORMATION:
Revenues............................... $ 874 $ 752 $1,010 $ 933 $ 622
Expenses............................... 705 616 837 817 520
Operating Income....................... 169 136 173 116 102
Income (Loss) from Continuing
Operations............................ 54 31 77 (2) 10
Net Income (Loss)...................... 51 20 66 (68) (47)
Income (Loss) From Continuing
Operations
Per Share............................. .77 .57 1.34 (.10) .16
Net Income (Loss) Per Share............ .73 .36 1.15 (1.52) (1.06)
Weighted Average Common Equivalent
Shares................................ 68 51 56 47 47
</TABLE>
<TABLE>
<CAPTION>
AT DECEMBER
AT SEPTEMBER 30, 31,
---------------- ------------
1996 1995 1994
<S> <C> <C> <C>
BALANCE SHEET INFORMATION:
Current Assets............................... $ 381 $ 374 $ 249
Total Assets................................. 1,888 1,889 1,936
Current Liabilities.......................... 145 154 178
Long-term Debt............................... 1,209 1,278 1,259
Total Liabilities and Minority Interests..... 1,576 1,638 1,642
Stockholders' Equity......................... 312 251 294
</TABLE>
Set forth on Schedule III attached hereto is certain unaudited pro forma
condensed financial data giving effect to the Bally Merger.
Parent is and, prior to the Bally Merger, Bally was subject to the
informational and reporting requirements of the Exchange Act and Parent is
and, prior to the Bally Merger, Bally was required to file reports and other
information with the Commission relating to their respective businesses,
financial condition and other matters. Information, as of particular dates,
concerning Parent's and Bally's respective directors and officers, their
remuneration, stock options granted to them, the principal holders of Parent's
and Bally's respective securities, any material interests of such persons in
transactions with Parent and Bally, respectively, and other matters are
required to be disclosed in proxy statements distributed to Parent's and
Bally's respective stockholders and filed with the Commission. These reports,
proxy statements and other information should be available for inspection and
copies may be obtained in the same manner as set forth for the Company in
Section 7. Parent Common Stock is listed on the NYSE and the PSE, and reports,
proxy statements and other information concerning Parent should be available
for inspection at the offices of the NYSE in the same manner as set forth for
the Company in Section 7 and at the offices of the PSE at 301 Pine Street, San
Francisco, California 94104 and 618 South Spring Street, Los Angeles,
California 90014.
21
<PAGE>
The name, citizenship, business address, principal occupation or employment
and five-year employment history for each of the directors and executive
officers of the Purchaser and Parent are set forth in Schedule I hereto.
Schedule II hereto sets forth transactions in the Shares effected during the
past 60 days by Parent, the Purchaser and their affiliates. Except as set
forth in this Offer to Purchase and Schedule II hereto, none of Parent, the
Purchaser or, to the best knowledge of Parent or the Purchaser, any of the
persons listed in Schedule I hereto or any associate or majority owned
subsidiary of such persons beneficially owns any equity security of the
Company, and none of Parent or the Purchaser or, to the best knowledge of
Parent or the Purchaser, any of the other persons referred to above, or any of
the respective directors, executive officers or subsidiaries of any of the
foregoing has effected any transaction in any equity security of the Company
during the past 60 days.
Except as set forth in this Offer to Purchase, none of Parent or the
Purchaser or, to the best knowledge of Parent or the Purchaser, any of the
persons listed in Schedule I hereto has any contract, arrangement,
understanding or relationship with any other person with respect to any
securities of the Company, including, without limitation, any contract,
arrangement, understanding or relationship concerning the transfer or the
voting of any securities of the Company, joint ventures, loan or option
arrangements, puts or calls, guarantees of loans, guarantees against loss or
the giving or withholding of proxies. Except as set forth in this Offer to
Purchase, none of Parent or the Purchaser or, to the best knowledge of Parent
or the Purchaser, any of the persons listed in Schedule I hereto has had any
transactions with the Company or any of its executive officers, directors or
affiliates that would require reporting under the rules of the Commission.
Except as set forth in this Offer to Purchase, since January 1, 1994, there
have been no contacts, negotiations or transactions between Parent or the
Purchaser, or their respective subsidiaries, or, to the best knowledge of
Parent or the Purchaser, any of the persons listed in Schedule I hereto, on
the one hand, and the Company or its executive officers, directors or
affiliates, on the other hand, concerning a merger, consolidation or
acquisition, tender offer or other acquisition of securities, election of
directors or a sale or other transfer of a material amount of assets.
9. SOURCE AND AMOUNT OF FUNDS. The Purchaser estimates that the total amount
of funds required to acquire the outstanding Shares pursuant to the Offer and
to pay related fees and expenses will be approximately $3.5 billion. See
Section 16. Purchaser expects to obtain the funds required to consummate the
Offer through capital contributions or advances made by Parent. Parent plans
to obtain the funds for such capital contributions or advances from a
combination of its available cash, working capital, existing credit
facilities, borrowings under credit facilities that Parent will seek to obtain
from commercial banks and/or issuance of public debt. Although there are no
commitments by such borrowing sources at this time, Parent intends to have
such credit facility or facilities in effect prior to the satisfaction or
waiver of the conditions to the Offer. See Section 14.
It is anticipated that the indebtedness incurred by Parent in connection
with the Offer and the Proposed Merger will be repaid from funds generated
internally by Parent and its subsidiaries (including, after the Proposed
Merger, if consummated, dividends paid by the surviving corporation and its
subsidiaries), through additional borrowings, through application of proceeds
of dispositions or through a combination of two or more such sources. In
addition, in the event that Parent consummates a transaction with HFS
Incorporated ("HFS"), as described herein under Section 11, Parent expects
that the ongoing cash flows from such transaction or a monetization thereof
would be contributed to the Purchaser in connection with the Offer or used to
repay indebtedness incurred in connection with the Offer and assumed in the
Proposed Merger. No final decisions have been made, however, concerning the
method Parent will employ to repay such indebtedness. Such decisions, when
made, will be based on Parent's review from time to time of the advisability
of particular actions, as well as on prevailing interest rates and financial
and other economic conditions.
Parent and the Purchaser have not had access to all of the instruments and
agreements under which the Company has issued existing debt or other
obligations (collectively "Company Debt"). There can be no
22
<PAGE>
assurance that the purchase of the Shares and the Proposed Merger will not
result in an event of default, cross default or other adverse consequences
under any or all of the instruments defining the rights of the holders of
Company Debt. As a result, it is possible that holders of certain of the
Company Debt may have the right to require its immediate payment and Parent
may need to refinance additional indebtedness. In the event that the holders
of some or all of the Company Debt have the right to demand its immediate
payment upon purchase of the Shares pursuant to the Offer or consummation of
the Proposed Merger, Parent presently intends to seek such holders' consent to
the Purchaser's assumption of the Company Debt pursuant to the same terms and
conditions as such Company Debt presently outstanding or to refinance such
Company Debt through additional borrowings.
10. BACKGROUND OF THE OFFER; CONTACTS WITH THE COMPANY. In the fourth
quarter of 1996, Parent contacted one of the Company's principal financial
advisers to determine whether the Company would be interested in discussing a
potential business combination. The Company adviser reported back that the
Company had no interest in pursuing such a combination.
On January 27, 1997, Stephen F. Bollenbach, President and Chief Executive
Officer of Parent, attempted to telephone Rand V. Araskog, Chairman of the
Board and Chief Executive Officer of the Company, to inform him of the Offer
and the Proposed Merger and Parent's belief in the opportunities offered by
the Proposed Merger. Mr. Bollenbach was unable to reach Mr. Araskog and spoke
with another executive officer of the Company.
Following that telephone call, Mr. Bollenbach sent the following letter to
Mr. Araskog:
January 27, 1997
Mr. Rand V. Araskog
Chairman and Chief Executive Officer
ITT Corporation
1330 Avenue of Americas
New York, NY 10019-5490
Dear Rand:
I am writing on behalf of the board of directors and management of Hilton
Hotels Corporation to confirm our offer to acquire ITT Corporation in a
transaction in which your shareholders would receive $55 for each ITT share.
This represents a 29% premium over today's closing price for ITT's stock. We
will be announcing shortly the commencement of a cash tender offer at $55 per
share for half of the outstanding ITT shares, to be followed by a second step
merger at $55 per share in Hilton common stock.
The combination of ITT and Hilton would bring together two of the world's
most respected lodging operations, as well as two premier gaming businesses
with powerful brand names. We believe this combination would be of enormous
benefit to each company and its respective shareholders, employees and other
constituencies.
In particular, our offer represents an extremely attractive opportunity for
your shareholders to realize both the long-term potential of their investment
in ITT and to participate in the exciting potential of our combined companies.
I should note that our proposal was prepared solely on the basis of publicly
available data. We hope that, with your help, an ensuing review of private
information could result in an even higher offer.
The advantages to be gained from the combination of our two companies are
compelling:
- HILTON'S MANAGEMENT IS UNIQUELY POSITIONED TO HELP ITT REALIZE ITS
POTENTIAL. Our senior management has a longstanding record of
emphasizing and creating shareholder value. We believe that, with our
strategic experience and operating background in hotels and gaming
entertainment, we can bring tremendous value to our combined shareholder
base and generate superior returns relative to those realized
historically by ITT shareholders.
23
<PAGE>
As part of our strategy, we have reached a preliminary understanding
with HFS Incorporated under which HFS would license, on a long-term,
worldwide basis, the Sheraton trademark, franchise system and management
agreements. HFS' expertise in brand management, as well as its own
superior record of creating shareholder value, will add to the strength
of this combination.
- ATTRACTIVE OPPORTUNITY FOR ITT SHAREHOLDERS. Despite ITT's collection of
assets, its returns to shareholders have been disappointing relative to
the S&P 500 and to its peer group of lodging and gaming companies since
its spin-off in 1995. Our bid is specifically designed to allow ITT
shareholders to obtain a substantial premium over the current stock
price, and at the same time to participate in the combined company's
upside potential. We believe that through the monetization of
nonstrategic assets, and by focusing on ITT's core businesses, we will
create even more value for the shareholders of the combined companies.
- CREATES SUBSTANTIAL COST SAVINGS. ITT's shareholders will benefit from
substantial operating and financial savings that are unique to a merger
with Hilton. We believe the combination will produce more than $100
million in annual cost savings. Our recent merger with Bally
Entertainment Corporation will generate annual savings of approximately
$60 million; based on our preliminary review of publicly available
information, we believe our savings estimate is not only achievable but
conservative.
- RATIONALIZED CAPITAL SPENDING PROGRAM. Given the complementary nature of
our combined companies, a substantial portion of ITT's announced $3
billion-plus capital spending program, which amounts to more than $25
per ITT share, will be unnecessary. Rationalization of the spending
program will serve the dual purposes of immediately enhancing
shareholder value and still allowing for the growth and expansion of our
combined businesses.
We would strongly prefer to work with you and your board and management
colleagues towards the prompt consummation of a negotiated transaction. We
welcome the opportunity to meet with you and your advisors, and are ready at a
moment's notice to commence discussions about the details of the combination.
Let me stress, however, that we are committed to making this combination a
reality. Although we would much rather work directly with you, we are prepared
if necessary to solicit proxies from your shareholders to replace your board
of directors in order to complete this transaction.
We hope that you will be as excited as we are about the benefits of this
combination for both our companies. We look forward to hearing from you.
Sincerely,
/s/ Steve
Stephen F. Bollenbach
On January 31, 1997, the Purchaser commenced the Offer.
Previous Contacts
From December 1992 through February 1993 and again from February 1996
through May 1996, Arthur M. Goldberg, as Chairman of the Board and Chief
Executive Officer of Bally, engaged in various discussions and negotiations
with the Company with respect to a potential purchase of Bally by the Company.
In neither instance did such contacts result in a business combination between
Bally and the Company.
In February 1996, Peter M. George, as Chief Executive Officer of Ladbroke,
engaged in various discussions and negotiations with representatives of the
Company concerning a possible joint venture or merger between the Company and
Ladbroke. Such contacts did not result in a business combination between
Ladbroke and the Company.
24
<PAGE>
11. PURPOSE OF THE OFFER AND THE PROPOSED MERGER; PLANS FOR THE COMPANY.
General. The purpose of the Offer is to acquire control of, and ultimately
the entire equity interest in, the Company. The purpose of the Proposed Merger
is to acquire all Shares not beneficially owned by the Purchaser following
consummation of the Offer.
Parent is seeking to enter into the Proposed Merger with the Company as
promptly as practicable following consummation of the Offer. In the Proposed
Merger, at the effective time of the Proposed Merger, each Share that is
issued and outstanding immediately prior to the effective time of the Proposed
Merger (other than Shares held in the treasury of the Company or owned by
Parent, the Purchaser or any direct or indirect wholly owned subsidiary of
Parent) would be converted into such number of shares of Parent Common Stock
having a value of $55 per Share, subject to appropriate collar provisions.
Consummation of the Proposed Merger will require approval by the Board and
the affirmative vote of the holders of a majority of the outstanding Shares.
In addition, pursuant to rules promulgated by the NYSE, stockholder approval
prior to the issuance of Parent Common Stock is required where the present or
potential issuance of such Parent Common Stock is or will be equal to or in
excess of 20% of the number of shares of Parent Common Stock outstanding
before the issuance of the Parent Common Stock. Accordingly, consummation of
the Proposed Merger as currently contemplated will require approval by
stockholders of Parent. The timing of consummation of the Offer and the
Proposed Merger will depend on a variety of factors and legal requirements,
the actions of the Board, the number of Shares (if any) acquired by the
Purchaser pursuant to the Offer, and whether the conditions to the Offer have
been satisfied or waived.
In connection with the Offer and Proposed Merger, Parent and the Purchaser
intend, if necessary, to nominate, and solicit proxies for the election of,
the Parent Nominees to replace all the members of the Board at the Annual
Meeting. Parent expects that, if elected, and subject to their fiduciary
duties under applicable law, the Parent Nominees would cause the Board to:
approve the Proposed Merger; amend the Rights Agreement or redeem the Rights,
or otherwise act to ensure that the Rights Condition is satisfied; satisfy the
Control Share Condition; satisfy the Business Combination Condition; and take
any other actions necessary to permit the Offer and the Proposed Merger to be
consummated. Such solicitation will be made pursuant to separate proxy
materials complying with the requirements of Section 14(a) of the Exchange
Act.
THIS OFFER TO PURCHASE DOES NOT CONSTITUTE A SOLICITATION OF A PROXY,
CONSENT OR AUTHORIZATION FOR OR WITH RESPECT TO THE ANNUAL MEETING OR ANY
SPECIAL MEETING OF THE COMPANY'S STOCKHOLDERS. ANY SUCH SOLICITATION WHICH
PARENT AND/OR THE PURCHASER MAY MAKE WILL BE MADE ONLY PURSUANT TO SEPARATE
PROXY SOLICITATION MATERIALS COMPLYING WITH ALL APPLICABLE REQUIREMENTS OF
SECTION 14(a) OF THE EXCHANGE ACT, AND THE RULES AND REGULATIONS PROMULGATED
THEREUNDER.
Plans for the Company. In connection with the Offer, Parent and the
Purchaser have reviewed, and will continue to review, on the basis of publicly
available information, various possible business strategies that they might
consider in the event that the Purchaser acquires control of the Company. In
addition, if and to the extent that the Purchaser acquires control of the
Company or otherwise obtains access to the books and records of the Company,
Parent and the Purchaser intend to conduct a detailed review of the Company
and its assets, financial projections, corporate structure, dividend policy,
capitalization, operations, properties, policies, management and personnel and
consider and determine what, if any, changes would be desirable in light of
the circumstances which then exist. Such strategies could include, among other
things, changes in the Company's business, facility locations, corporate
structure, marketing strategies, capitalization, management or dividend
policy. In particular, following consummation of the Proposed Merger, the
Company's entertainment business, including Madison Square Garden, the New
York Knicks, the New York Rangers and WBIS+, as well as ITT World Directories
and ITT Education, would be carefully reviewed as to their long-term strategic
fit with the combined company. The Company has previously announced a $3
billion capital expenditure plan. Parent has stated that it believes, based on
information available to it, that a substantial portion of this spending would
be unnecessary in light of
25
<PAGE>
the complementary asset base of the combined company. Further, Parent has
identified numerous potential cost savings, estimated at more than $100
million annually, that could be realized in a business combination of Parent
and the Company.
Additionally, Parent has announced that it has reached a preliminary
understanding with HFS under which HFS would license, on a long-term,
worldwide basis, the Company's "Sheraton" trademark, franchise system and
management agreements.
Appraisal Rights and "Going-Private" Transactions. Upon consummation of the
Proposed Merger, if, as of the record date fixed to determine the stockholders
of the Company entitled to receive notice of and to vote at the meeting of
stockholders of the Company to act upon the Proposed Merger, shares of Common
Stock are neither (i) listed on a national securities exchange or designated
as a national market system security on an interdealer quotation system by the
National Association of Securities Dealers, Inc. (the "NASD") nor (ii) held of
record by more than 2,000 holders, holders of Shares who do not vote in favor
of the Proposed Merger and who comply with applicable statutory procedures
under the NGCL will be entitled to receive a judicial determination and
payment of the "fair value" (excluding any element of value arising from the
accomplishment or expectation of the Offer and Proposed Merger) of their
Shares (subject to certain exceptions). The value so determined could be the
same as, or more or less than, the price per Share offered pursuant to the
Offer or proposed to be paid in the Proposed Merger. The Commission has
adopted Rule 13e-3 under the Exchange Act which is applicable to certain
"going-private" transactions and which may under certain circumstances be
applicable to the Proposed Merger. Rule 13e-3 would be inapplicable if (i) the
Shares were deregistered under the Exchange Act prior to the Proposed Merger
or other business combination or (ii) if holders of Shares receive only equity
securities of Parent in the Proposed Merger. If applicable, Rule 13e-3 would
require, among other things, that certain financial information concerning the
Company and certain information relating to the fairness of the Proposed
Merger and the consideration offered to minority stockholders be filed with
the Commission and distributed to minority stockholders before the
consummation of any such transaction.
12. DIVIDENDS AND DISTRIBUTIONS. If, on or after January 27, 1997, the
Company should split, combine or otherwise change the Shares or its
capitalization, or shall disclose that it has taken any such action, then,
subject to the provisions of Section 14, the Purchaser may, in its sole
judgment, make such adjustments in the Offer Price and the other terms of the
Offer as it deems appropriate to reflect such split, combination or other
change (including, without limitation, the number and type of securities
offered to be purchased, the amounts payable therefor and the fees payable
hereunder).
If, on or after January 27, 1997, the Company should declare or pay any cash
or stock dividend or other distribution on or issue any rights (other than the
Rights) with respect to the Shares payable or distributable to stockholders of
record on a date before the transfer to the name of the Purchaser or its
nominee or transferee on the Company's stock transfer records of the Shares
accepted for payment pursuant to the Offer, then, subject to the provisions of
Section 14, (i) the Offer Price payable by the Purchaser pursuant to the Offer
will be reduced by the amount of any such cash dividend or cash distribution
and (ii) the whole of any such non-cash dividend, distribution or right will
be received and held by the tendering stockholder for the account of the
Purchaser and shall be required to be promptly remitted and transferred by
each tendering stockholder to the Depositary for the account of the Purchaser,
accompanied by appropriate documentation of transfer. Pending such remittance,
the Purchaser will be entitled to all rights and privileges as owner of any
such non-cash dividend, distribution or right and may withhold the entire
purchase price or deduct from the purchase price the amount or value thereof,
as determined by the Purchaser, in its sole discretion.
13. EFFECT OF THE OFFER ON THE MARKET FOR THE SHARES; NEW YORK STOCK
EXCHANGE LISTING AND EXCHANGE ACT REGISTRATION. The purchase of Shares
pursuant to the Offer will reduce the number of Shares that might otherwise
trade publicly and could reduce the number of holders of Shares, which could
adversely affect the liquidity and market value of the remaining Shares held
by the public. According to the NYSE's published guidelines, the NYSE would
consider delisting the Shares if, among other things, the number of record
holders of at least 100 Shares should fall below 1,200, the number of publicly
held Shares (exclusive of holdings of officers, directors and their families
and other concentrated holdings of 10% or more ("NYSE Excluded
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Holdings")) should fall below 600,000 or the aggregate market value of
publicly held Shares (exclusive of NYSE Excluded Holdings) should fall below
$5,000,000. If, as result of the purchase of Shares pursuant to the Offer or
otherwise, the Shares no longer meet the requirements of the NYSE for
continued listing and the listing of the Shares is discontinued, the market
for the Shares could be adversely affected. Based on these guidelines and
publicly available information, however, Parent and the Purchaser do not
believe that the purchase of the Maximum Number of Shares is likely to result
in the delisting of the Shares on the NYSE. If the NYSE were to delist the
Shares, it is possible that the Shares would continue to trade on another
securities exchange or in the over-the-counter market and that price or other
quotations would be reported by such exchange or through the National
Association of Securities Dealers Automated Quotation Systems ("NASDAQ") or
other sources. The extent of the public market therefor and the availability
of such quotations would depend, however, upon such factors as the number of
stockholders and/or the aggregate market value of such securities remaining at
such time, the interest in maintaining a market in the Shares on the part of
securities firms, the possible termination of registration under the Exchange
Act as described below and other factors. The Purchaser cannot predict whether
the reduction in the number of Shares that might otherwise trade publicly
would have an adverse or beneficial effect on the market price for or
marketability of the Shares or whether it would cause future market prices to
be greater or less than the Offer Price.
The Shares are currently "margin securities" under the regulations of the
Board of Governors of the Federal Reserve System (the "Federal Reserve
Board"), which has the effect, among other things, of allowing brokers to
extend credit on the collateral of the Shares. Depending upon factors similar
to those described above regarding listing and market quotations, following
the Offer, it is possible that the Shares might no longer constitute "margin
securities" for purposes of the margin regulations of the Federal Reserve
Board, in which event such Shares could no longer be used as collateral for
loans made by brokers.
The Shares are currently registered under the Exchange Act. Such
registration may be terminated upon application of the Company to the
Commission if the Shares are not listed on a national securities exchange or
quoted on the NASDAQ and there are fewer than 300 record holders of the
Shares. The termination of registration of the Shares under the Exchange Act
would substantially reduce the information required to be furnished by the
Company to holders of Shares and to the Commission and would make certain
provisions of the Exchange Act, such as the short-swing profit recovery
provisions of Section 16(b) of the Exchange Act, the requirement of furnishing
a proxy statement in connection with stockholders' meetings pursuant to
Section 14(a) of the Exchange Act, and the requirements of Rule 13e-3 under
the Exchange Act with respect to "going-private" transactions, no longer
applicable to the Company. See Section 11. In addition, "affiliates" of the
Company and persons holding "restricted securities" of the Company may be
deprived of the ability to dispose of such securities pursuant to Rule 144
promulgated under the Securities Act. If registration of the Shares under the
Exchange Act were terminated, the Shares would no longer be "margin
securities" or be eligible for listing on the NYSE. The Purchaser intends to
seek to cause the Company to make an application for termination of
registration of the Shares under the Exchange Act as soon after consummation
of the Offer as the requirements for termination of the registration of the
Shares are met.
As soon as practicable after the Distribution Date has been designated,
Rights Certificates are to be sent to all holders of Rights. If the
Distribution Date has occurred and the Rights separate from the Shares, the
foregoing discussion with respect to the effect of the Offer on the market for
the Shares, the NYSE listing and Exchange Act registration would apply to the
Rights in a similar manner.
14. CERTAIN CONDITIONS OF THE OFFER. Notwithstanding any other provisions of
the Offer, and in addition to (and not in limitation of) the Purchaser's
rights to extend and amend the Offer at any time, in its sole discretion, the
Purchaser shall not be required to accept for payment or, subject to any
applicable rules and regulations of the Commission, including Rule 14e-1(c)
under the Exchange Act (relating to the Purchaser's obligation to pay for or
return tendered Shares promptly after termination or withdrawal of the Offer),
pay for, and may delay the acceptance for payment of or, subject to the
restriction referred to above, the payment for, any tendered Shares, and may
terminate the Offer, if, in the sole judgment of the Purchaser (i) at or prior
to the Expiration Date, any one or more of the Minimum Condition, the Rights
Condition, the Control Share Condition,
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the Business Combination Condition and the Gaming Condition has not been
satisfied, or (ii) at any time on or after January 27, 1997 and before the
time of payment for any such Shares (whether or not any Shares have
theretofore been accepted for payment pursuant to the Offer), any of the
following events shall occur or shall be determined by the Purchaser to have
occurred:
(a) there shall be threatened, instituted or pending any action or
proceeding by any government or governmental authority or agency, domestic
or foreign, or by any other person, domestic or foreign, (i) (A)
challenging or seeking to make illegal, to delay or otherwise directly or
indirectly to restrain or prohibit the making of the Offer, the acceptance
for payment of, or payment for, some or all the Shares by the Purchaser or
Parent or any other affiliates of Parent or the consummation by the
Purchaser or Parent or any other affiliates of Parent of the Proposed
Merger or other business combination with the Company, (B) seeking to
obtain damages in connection therewith or (C) otherwise directly or
indirectly relating to the transactions contemplated by the Offer, the
Proposed Merger or any such business combination, (ii) seeking to prohibit
the ownership or operation by Parent, the Purchaser or any other affiliates
of Parent of all or any portion of the business or assets of the Company
and its subsidiaries or of the Purchaser, or to compel Parent, the
Purchaser or any other affiliates of Parent to dispose of or hold
separately all or any portion of the business or assets of the Purchaser or
the Company or any of its subsidiaries or seeking to impose any limitation
on the ability of Parent, the Purchaser or any other affiliates of Parent
to conduct their respective businesses or own such assets, (iii) seeking to
impose or confirm limitations on the ability of Parent, the Purchaser or
any other affiliates of Parent effectively to exercise full rights of
ownership of the Shares or Rights, including, without limitation, the right
to vote any Shares acquired by any such person on all matters properly
presented to the Company's stockholders, (iv) seeking to require
divestiture by Parent, the Purchaser or any other affiliates of Parent of
any Shares, (v) which otherwise, in the sole judgment of the Purchaser,
might materially adversely affect Parent, the Purchaser or any other
affiliates of Parent or the value of the Shares or (vi) in the sole
judgment of the Purchaser, materially adversely affecting the business,
properties, assets, liabilities, capitalization, stockholders' equity,
condition (financial or otherwise), operations, licenses or franchises,
results of operations or prospects of the Company or any of its
subsidiaries, joint ventures or partnerships; provided that the condition
specified in this paragraph (a) shall not be deemed to exist by reason of
any court proceeding pending on the date hereof and known to the Purchaser,
unless, in the sole judgment of the Purchaser, there is any adverse
development in any such proceeding after the date hereof, or before the
date hereof if not known to the Purchaser on the date hereof, which might,
directly or indirectly, result in any of the consequences referred to in
clauses (i) through (vi) above;
(b) there shall be any action taken or any statute, rule, regulation,
interpretation, judgment, order or injunction proposed, enacted, enforced,
promulgated, amended, issued or deemed applicable (i) to the Purchaser,
Parent or any affiliate of Parent or (ii) to the Offer or the Proposed
Merger or other business combination by the Purchaser or Parent or any
affiliate of Parent with the Company, by any court, government or
governmental, administrative or regulatory authority or agency, domestic or
foreign, which, in the sole judgment of the Purchaser, might directly or
indirectly result in any of the consequences referred to in clauses (i)
through (vi) of paragraph (a) above;
(c) any change (or any condition, event or development involving a
prospective change) shall have occurred or been threatened in the business,
properties, assets, liabilities, capitalization, stockholders' equity,
condition (financial or otherwise), operations, licenses, franchises,
permits, permit applications, results of operations or prospects of the
Company or any of its subsidiaries which, in the sole judgment of the
Purchaser, is or may be materially adverse, or the Purchaser shall have
become aware of any fact which, in the sole judgment of the Purchaser, has
or may have material adverse significance with respect to either the value
of the Company or any of its subsidiaries or the value of the Shares to the
Purchaser;
(d) there shall have occurred (i) any general suspension of trading in,
or limitation on prices for, securities on the NYSE, for a period in excess
of three hours (excluding suspensions or limitations resulting solely from
physical damage or interference with the NYSE not related to market
conditions), (ii) a declaration of a banking moratorium or any suspension
of payments in respect of banks by federal or state authorities in the
United States, (iii) any limitation (whether or not mandatory) by any
governmental
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authority or agency on, or other event which, in the sole judgment of the
Purchaser, might materially adversely affect the extension of credit by
banks or other lending institutions, (iv) commencement of a war, armed
hostilities or other national or international calamity directly or
indirectly involving the United States, (v) a material change in United
States or any other currency exchange rates or a suspension of, or
limitation on, the markets therefor, (vi) any decline in either the Dow
Jones Industrial Average or the Standard & Poor's Index of 500 Industrial
Companies by an amount in excess of 15% measured from the close of business
on January 27, 1997 or (vii) in the case of any of the foregoing existing
on January 27, 1997, a material acceleration or worsening thereof;
(e) the Company or any of its subsidiaries, joint ventures or
partnerships or other affiliates shall have (i) split, combined or
otherwise changed, or authorized or proposed the split, combination or
other change, of the Shares or its capitalization, (ii) acquired or
otherwise caused a reduction in the number of, or authorized or proposed
the acquisition or other reduction in the number of, any presently
outstanding Shares or other securities or other equity interests, (iii)
issued, distributed or sold, or authorized or proposed the issuance,
distribution or sale of, additional Shares, other than Shares issued or
sold upon the exercise or conversion (in accordance with the publicly
disclosed terms thereof) of employee stock options outstanding on December
31, 1995 or issued since that date in the ordinary course of business
consistent with past practice, shares of any other class of capital stock
or other equity interests, other voting securities, debt securities or any
securities convertible into, or rights, warrants or options, conditional or
otherwise, to acquire, any of the foregoing, (iv) declared, paid or
proposed to declare or pay any cash dividend or other distribution on any
shares of capital stock of the Company, (v) altered or proposed to alter
any material term of any outstanding security or material contract, permit
or license, (vi) incurred any debt otherwise than in the ordinary course of
business or any debt containing, in the sole judgment of the Purchaser,
burdensome covenants or security provisions, (vii) authorized, recommended,
proposed or entered into an agreement with respect to any merger,
consolidation, recapitalization, liquidation, dissolution, business
combination, acquisition of assets, disposition of assets, release or
relinquishment of any material contractual or other right of the Company or
any of its subsidiaries or any comparable event not in the ordinary course
of business, (viii) authorized, recommended, proposed or entered into, or
announced its intention to authorize, recommend, propose or enter into, any
agreement or arrangement with any person or group that, in the Purchaser's
sole opinion, could adversely affect either the value of the Company or any
of its subsidiaries, joint ventures or partnerships or the value of the
Shares to the Purchaser, (ix) entered into any new employment, change in
control, severance, executive compensation or similar agreement,
arrangement or plan with or for one or more of its employees, consultants
or directors, or entered into or amended, or made grants or awards pursuant
to, any agreements, arrangements or plans so as to provide for increased
benefits to one or more employees, consultants or directors, whether or not
as a result of or in connection with the transactions contemplated by the
Offer, (x) except as may be required by law, taken any action to terminate
or amend any employee benefit plan (as defined in Section 3(c) of the
Employee Retirement Income Security Act of 1974, as amended) of the Company
or any of its subsidiaries, or the Purchaser shall have become aware of any
such action which was not previously disclosed in publicly available
filings or (xi) amended or authorized or proposed any amendment to its
Articles or Bylaws or similar organizational documents, or the Purchaser
shall become aware that the Company or any of its subsidiaries shall have
proposed or adopted any such amendment which shall not have been previously
disclosed;
(f) a tender or exchange offer for any Shares shall be made or publicly
proposed to be made by any other person (including the Company or any of
its subsidiaries or affiliates) or it shall be publicly disclosed or the
Purchaser shall otherwise learn that (i) any person, entity (including the
Company or any of its subsidiaries) or "group" (within the meaning of
Section 13(d)(3) of the Exchange Act) shall have acquired or proposed to
acquire beneficial ownership of more than 5% of any class or series of
capital stock of the Company (including the Shares), through the
acquisition of stock, the formation of a group or otherwise, or shall have
been granted any right, option or warrant, conditional or otherwise, to
acquire beneficial ownership of more than 5% of any class or series of
capital stock of the Company (including the Shares) other than acquisitions
for bona fide arbitrage purposes only and except as disclosed in a Schedule
13D or Schedule 13G on file with the Commission on the date of this Offer
to Purchase, (ii) any such person, entity
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or group, which before the date of this Offer to Purchase, had filed such a
Schedule with the Commission has acquired or proposes to acquire, through
the acquisition of stock, the formation of a group or otherwise, beneficial
ownership of an additional 1% or more of any class or series of capital
stock of the Company (including the Shares), or shall have been granted any
right, option or warrant, conditional or otherwise, to acquire beneficial
ownership of an additional 1% or more of any class or series of capital
stock of the Company (including the Shares), (iii) any person or group
shall enter into a definitive agreement or an agreement in principle or
make a proposal with respect to a tender offer or exchange offer or a
merger, consolidation or other business combination with or involving the
Company, or (iv) any person shall file a Notification and Report Form under
the HSR Act or make a public announcement reflecting an intent to acquire
the Company or any assets or securities of the Company;
(g) the Purchaser shall have reached an agreement or understanding with
the Company providing for termination of the Offer, or the Purchaser or any
of its affiliates shall have entered into a definitive agreement or
announced an agreement in principle with the Company providing for a merger
or other business combination with the Company or the purchase of stock or
assets of the Company which does not contemplate the Offer;
(h) (i) any material contractual right of the Company or any of its
subsidiaries or affiliates shall be impaired or otherwise adversely
affected or any material amount of indebtedness of the Company or any of
its subsidiaries, joint ventures or partnerships shall become accelerated
or otherwise become due before its stated due date, in either case, with or
without notice or the lapse of time or both, as a result of the
transactions contemplated by the Offer or the Proposed Merger or (ii) any
covenant, term or condition in any of the Company's or any of its
subsidiaries', joint ventures' or partnerships' instruments or agreements
is or may be materially adverse to the value of the Shares in the hands of
the Purchaser (including, but not limited to, any event of default that may
ensue as a result of the consummation of the Offer or the Proposed Merger
or the acquisition by Parent of control of the Company);
(i) Parent or the Purchaser shall not have obtained any waiver, consent,
extension, approval, action or non-action from any governmental authority
or agency which is necessary to consummate the Offer; or
(j) any waiting periods under the HSR Act applicable to the purchase of
the Shares pursuant to the Offer shall not have expired or been terminated,
any waiting periods under the Competition Act (as defined herein)
applicable to the purchase of the Shares pursuant to the Offer shall not
have expired or been terminated, or any other approval, permit,
authorization, consent or other action of any domestic, foreign or
supranational governmental, administrative or regulatory agency, authority,
tribunal or third party shall not have been obtained on terms satisfactory
to the Purchaser, in its sole discretion;
which, in the sole judgment of the Purchaser in any such case, and regardless
of the circumstances (including any action or inaction by the Purchaser or any
of its affiliates) giving rise to any such condition, makes it inadvisable to
proceed with the Offer and/or with such acceptance for payment or payment.
The foregoing conditions are for the sole benefit of the Purchaser and may
be asserted by the Purchaser, in its sole discretion, regardless of the
circumstances (including any action or omission by the Purchaser) giving rise
to any such conditions or may be waived by the Purchaser, in its sole
discretion, in whole or in part, at any time and from time to time. The
failure by the Purchaser at any time to exercise any of the foregoing rights
shall not be deemed a waiver of any such right and each such right shall be
deemed an ongoing right which may be asserted at any time and from time to
time. Any determination by the Purchaser concerning any condition or event
described in this Section 14 shall be final and binding upon all parties.
15. CERTAIN LEGAL MATTERS; REGULATORY APPROVALS.
General. Except as otherwise disclosed herein, based on a review of publicly
available filings by the Company with the Commission, the Purchaser is not
aware of (i) any license or regulatory permit that appears to be material to
the business of the Company and its subsidiaries, taken as a whole, that might
be adversely affected by the acquisition of Shares by the Purchaser pursuant
to the Offer or the Proposed Merger or (ii) any
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approval or other action by any governmental, administrative or regulatory
agency or authority, domestic or foreign, that would be required for the
acquisition or ownership of Shares by the Purchaser as contemplated herein.
Should any such approval or other action be required, the Purchaser currently
contemplates that such approval or action would be sought. While the Purchaser
does not currently intend to delay the acceptance for payment of Shares
tendered pursuant to the Offer pending the outcome of any such matter, there
can be no assurance that any such approval or action, if needed, would be
obtained or would be obtained without substantial conditions or that adverse
consequences might not result to the business of the Company, the Purchaser or
that certain parts of the businesses of the Company or the Purchaser might not
have to be disposed of in the event that such approvals were not obtained or
any other actions were not taken. The Purchaser's obligation under the Offer
to accept for payment and pay for Shares is subject to certain conditions. See
Section 14.
Antitrust Compliance. Under the HSR Act, and the rules that have been
promulgated thereunder by the United States Federal Trade Commission (the
"FTC"), certain acquisition transactions may not be consummated unless certain
information has been furnished to the Antitrust Division of the United States
Department of Justice (the "Antitrust Division") and the FTC and certain
waiting period requirements have been satisfied.
A Notification and Report Form with respect to the Offer is expected to be
filed under the HSR Act shortly, and the waiting period with respect to the
Offer under the HSR Act will expire at 11:59 p.m., New York City time, on the
fifteenth calendar day after such filing, unless terminated prior thereto.
Before such time, however, either the FTC or the Antitrust Division may extend
the waiting period by requesting additional information or material from the
Purchaser. If such request is made, the waiting period will expire at 11:59
p.m., New York City time, on the tenth calendar day after the Purchaser has
substantially complied with such request. Thereafter, the waiting period may
be extended only by court order or with the Purchaser's consent. The waiting
period will not be affected either by the failure of the Company (as opposed
to Parent and the Purchaser) to file a Notification and Report form or to
comply with any request for additional information or materials issued by the
FTC or the Antitrust Division.
The FTC and the Antitrust Division frequently scrutinize the legality under
the antitrust laws of transactions such as the proposed acquisition of Shares
by the Purchaser pursuant to the Offer. At any time before or after the
purchase of Shares pursuant to the Offer by the Purchaser, the FTC or the
Antitrust Division could take such action under the antitrust laws as it deems
necessary or desirable in the public interest, including seeking to enjoin the
purchase of Shares pursuant to the Offer or seeking the divestiture of Shares
purchased by the Purchaser or the divestiture of substantial assets of the
Purchaser, the Company or their respective subsidiaries. Private parties and
state attorneys general may also bring legal action under federal or state
antitrust laws under certain circumstances. Based upon an examination of
information available to the Purchaser relating to the businesses in which
Parent, the Purchaser, the Company and their respective subsidiaries are
engaged, the Purchaser believes that the Offer will not violate the antitrust
laws. Nevertheless, there can be no assurance that a challenge to the Offer on
antitrust grounds will not be made or, if such a challenge is made, what the
result would be. See Section 14 for certain conditions to the Offer, including
conditions with respect to litigation.
Investment Canada Act. According to publicly available information, the
Company conducts certain operations in Canada. The Investment Canada Act (the
"ICA") may require that a notice of the "acquisition of control" (as defined
in the ICA) by a "non-Canadian" (as defined in the ICA) of any "Canadian
business" (as defined in the ICA) be furnished to the Director of Investments
(the "ICA Director") and that certain of these investments to acquire control
of a Canadian business be reviewed and approved by the Minister of the
Canadian federal cabinet responsible for the ICA (the "Minister") as an
investment that is "likely to be of net benefit to Canada" based upon criteria
set forth in the ICA. An acquisition of control of a corporation incorporated
outside Canada that controls, directly or indirectly, an entity in Canada
carrying on the Canadian business (an "indirect acquisition") does not require
approval under the ICA before the acquisition is implemented, although some
indirect acquisitions may require approval after implementation. Direct
acquisitions may require the Minister's approval before they can be
implemented. Under the ICA, the acquisition of more than a majority of the
voting shares of a corporation is deemed to be an acquisition of control.
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Most indirect acquisitions of control of a Canadian business by a "WTO
investor" (as defined in the ICA with reference to nationals of members of the
World Trade Organization) are not reviewable under the ICA, provided that the
value of the assets of all the acquired entities carrying on a Canadian
business is not more than 50% of the value of the assets of all entities
acquired in the transaction, wherever located. Where the value of the assets
of entities carrying on a Canadian business exceeds that amount, and, in the
case of most direct acquisitions of control of a Canadian business by or from
a "WTO investor," the transaction is reviewable under the ICA if the value of
the assets of all the acquired entities carrying on a Canadian business is
Cdn. $172 million or more (for transactions implemented any time in 1997).
However, where any of the acquired Canadian businesses is a "cultural
business" (as defined in the ICA) or provides any transportation services,
which may include certain businesses of the Company, the ICA subjects an
indirect acquisition to review where the value of the assets of all acquired
entities carrying on a Canadian business exceeds (i) Cdn. $50 million or (ii)
if such value also amounts to more than 50% of the value of the assets of all
entities, wherever located, acquired in the transaction, Cdn. $5 million. A
direct acquisition of an entity carrying on such a Canadian business is
subject to review where the value of the assets of all acquired entities
carrying on a Canadian business exceeds Cdn. $5 million. Under the ICA, the
federal cabinet may also require a review if the operations of the acquired
Canadian business include certain cultural activities, without regard to the
value of the assets of the Canadian business.
The Purchaser intends to file within the prescribed time period a notice
with respect to the Offer and the Proposed Merger with the ICA Director and to
seek approval of the Minister, if required. If the Purchaser were to acquire
control of a Canadian business in a transaction reviewable under the ICA and,
within certain specified periods of time provided in the ICA, the Minister
decides that he is not satisfied that the acquisition is "likely to be of net
benefit to Canada," the Minister could issue a notice, the effect of which
would be to prohibit the "acquisition of control" of all or part of the
Company's Canadian businesses by the Purchaser, or, where such acquisition has
already been made, to compel divestiture of control of all or part of the
Company's Canadian businesses. In assessing whether a transaction is likely to
be of net benefit to Canada, the ICA requires that the Minister consider any
representations and undertakings that are submitted by an acquiror. If the
Offer and the Proposed Merger are subject to review under the ICA, there can
be no assurance that the Minister would be satisfied that the acquisition is
"likely to be of net benefit to Canada" and, if not, what remedy he might seek
or what the outcome would be.
Competition Act (Canada). Certain provisions of the Canadian Competition Act
(the "Competition Act") require pre-merger notification to the Director of
Investigation and Research (the "Canadian Director") of significant
transactions, which may include the acquisition of a large percentage of the
stock of a public company which has Canadian operations, or a merger or
amalgamation involving such an entity. Pre-merger notification is generally
required with respect to transactions in which the parties to the transaction
and their affiliates have assets in Canada, or annual gross revenues from
sales in, from or into Canada, in excess of Cdn. $400 million and which
involve the direct or indirect acquisition of an operating business in Canada
of which the value of the Canadian assets, or the annual gross revenues from
sales in or from Canada generated from such assets, exceeds Cdn. $35 million
(or, in the case of an amalgamation of two or more corporations one or more of
which carries on an operating business in Canada, the value of the Canadian
assets or the annual gross revenues from sales in or from Canada of the entity
resulting from such amalgamation or the entities controlled by such entity
exceeds Cdn. $70 million). In the case of an acquisition of shares of a public
company, the transaction must also result in the acquiror holding voting
shares which carry more than 20% of the outstanding votes (or more than 50% if
the acquiror already holds 20% or more) attached to all the voting shares of
the public company. If a transaction is subject to the pre-merger notification
requirements, then notice must be given either seven or 21 days (depending on
the information required by the Canadian Director) prior to the completion of
the transaction. The Canadian Director may waive or seek an extension of the
waiting period. After the applicable waiting period expires or is waived, the
transaction may be completed.
The Canadian Director may apply to the "Competition Tribunal," a specialized
tribunal empowered to deal with certain matters governed by the Competition
Act, with respect to a "merger" (as defined in the Competition Act) and, if
the Competition Tribunal finds that the merger prevents or lessens or is
likely to prevent or lessen
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competition substantially, it may order that the merger not proceed or, in the
event that the merger has been completed, order its dissolution or the
disposition of some or all the assets or shares involved. A merger may be
subjected to an order of the Competition Tribunal whether or not it is a
notifiable transaction. In some instances, the Canadian Director may issue an
"advance ruling certificate" to the effect that he would not have sufficient
grounds on which to apply to the Competition Tribunal under the merger
provisions of the Competition Act or a "no-action" advisory opinion following
a notification or voluntary submission. If the Canadian Director issues an
advance ruling certificate in respect of a proposed transaction, that
transaction is exempt from the pre-merger notification provisions.
The Purchaser intends to file an application for an advance ruling
certificate and any required notice with respect to the Offer and the Proposed
Merger with the Canadian Director and, to the extent necessary, observe any
applicable waiting period. There can be no assurance that a challenge to the
Offer and the Proposed Merger will not be made pursuant to the Competition
Act, or, if such a challenge is made, what the outcome will be.
Other Foreign Approvals. According to publicly available information, the
Company also owns property and conducts business in a number of other foreign
countries and jurisdictions. In connection with the acquisition of the Shares
pursuant to the Offer or the Proposed Merger, the laws of certain of those
foreign countries and jurisdictions may require the filing of information
with, or the obtaining of the approval of, governmental authorities in such
countries and jurisdictions. The governments in such countries and
jurisdictions might attempt to impose additional conditions on the Company's
operations conducted in such countries and jurisdictions as a result of the
acquisition of the Shares pursuant to the Offer or the Proposed Merger. There
can be no assurance that the Purchaser will be able to cause the Company or
its subsidiaries to satisfy or comply with such laws or that compliance or
noncompliance will not have adverse consequences for the Company or any
subsidiary after purchase of the Shares pursuant to the Offer or the Proposed
Merger.
Federal Communications Commission Approvals. According to the Company
Registration Statement, on July 1, 1996, in partnership with Dow Jones & Co.,
the Company acquired television station WNYC-TV (which has since been renamed
WBIS+) from the City of New York. The Communications Act of 1934, as amended
(the "Communications Act") and applicable Federal Communications Commission
("FCC") regulations require prior FCC approval for the transfer or deemed
transfer of control or ownership of companies holding FCC licenses.
Applications must be filed with the FCC seeking such approval. The
Communications Act requires that the FCC find that the proposed transfer would
serve the public interest, convenience and necessity as a prerequisite to
granting its approval. To this end, the FCC requires that the transferee
demonstrate that it possesses the requisite legal, financial, technical and
other qualifications to operate the licensed entities in order for the
transfer to be approved.
Before Parent or the Purchaser can acquire ownership or control of the
Company's interests in the WBIS+ partnership ("WBIS+"), prior FCC approval
will be required. Parent and the Purchaser intend to file with the FCC, as
soon as practicable, application(s) seeking FCC approval to take control of
the Company (the "Long Form Approval"). There can be no assurance that the FCC
will grant such approval or that, if granted, such FCC approval will be on
terms and conditions acceptable to Parent.
Parent and the Purchaser also will submit to the FCC for its approval a
request for special temporary authority to enter into a voting trust agreement
(the "Voting Trust Agreement") which, if approved by the FCC (the "Voting
Trust Approval"), would permit the Purchaser to purchase Shares pursuant to
the Offer prior to receipt of the Long Form Approval. Parent expects that the
Voting Trust Agreement will provide among other things that, pending grant of
the Long Form Approval, an independent voting trustee approved by the FCC (the
"Trustee") would hold the Company's equity interests in WBIS+ and take such
action as may be necessary to maintain the present management and operations
of WBIS+. Following receipt of the Long Form Approval, the voting trust would
be dissolved, and the Trustee would transfer control of the Company's equity
interests in WBIS+ to Parent and the Purchaser. In the event that the Long
Form Approval is denied, the Trustee would be obligated to sell such interests
as soon as practicable. Such disposition by the Trustee would likewise require
prior FCC approval.
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Parent intends to proceed with the purchase of Shares pursuant to the Offer
unless, at the time at which the Offer would otherwise be consummated, the
Voting Trust Approval contains conditions unacceptable to Parent, in its sole
discretion, or Parent has any reason to believe that the Long Form Approval
will not be obtained within a reasonable time thereafter. Although in the past
the FCC generally has expedited its consideration of such applications, Parent
cannot predict how long such consideration will take. Nor can there be any
assurance that the FCC will grant the Long Form Approval or the Voting Trust
Approval or that, if granted, such approvals will be on terms and conditions
acceptable to Parent.
Third-Party Approvals. According to the Company 1995 10-K, in March 1995,
the Company acquired, through its investment in Madison Square Garden, L.P.
("MSG") in partnership with subsidiaries of Cablevision Systems Corporation,
the New York Knickerbockers basketball and New York Rangers hockey franchises
and the Madison Square Garden arena. Parent and the Purchaser may be required
to obtain approval from the National Basketball Association and the National
Hockey League prior to consummation of the Offer and the Proposed Merger.
Additionally, Parent and the Purchaser may be required to obtain approvals
from or make filings with certain regulatory bodies governing ITT Educational
in connection with the Offer and the Proposed Merger. Parent does not expect
there to be significant impediments to obtaining these approvals; however,
there can be no assurance when or if such approvals will be granted.
State Takeover Statutes. The Company is incorporated under the laws of
Nevada. As described above, pursuant to the Nevada Control Share Acquisition
Statute an "acquiring person", who acquires a "controlling interest" in an
"issuing corporation," may not exercise voting rights on any "control share"
unless such voting rights are conferred by a majority vote of the
disinterested stockholders of the issuing corporation at a meeting of such
stockholders. See "Introduction."
The above provisions do not apply if the articles of incorporation or bylaws
of the Company in effect on the tenth day following the acquisition of a
controlling interest by an acquiring person provide that said provisions do
not apply. The Articles and Bylaws currently do not exclude the Company from
the restrictions imposed by such provisions. The Control Share Condition would
be satisfied if the Bylaws were amended such that, on the tenth day following
consummation of the Offer, the Bylaws provide that the provisions of the
Nevada Control Share Acquisition Statute do not apply, or, if the Purchaser,
in its sole discretion, were satisfied that the Nevada Control Share
Acquisition Statute was invalid or its restrictions were otherwise
inapplicable to the Purchaser in connection with the Offer and the Proposed
Merger for any reason, including, without limitation, those specified in the
Nevada Control Share Acquisition Statute.
As further described above, the Nevada Business Combination Statute
restricts the ability of a "resident domestic corporation" to engage in any
combination with an "interested stockholder" for three years following the
interested stockholder's date of acquiring the shares that caused such
stockholder to become an interested stockholder, unless the combination or the
purchase of shares by the interested stockholder on the interested
stockholder's date of acquiring the shares that caused such stockholder to
become an interested stockholder is approved by the board of directors of the
resident domestic corporation before that date. See "Introduction." If the
combination was not previously approved, the interested stockholder may effect
a combination after the three-year period only if such stockholder receives
approval from a majority of the disinterested shares or the offer meets
certain fair price criteria.
The Business Combination Condition would be satisfied if the Board approved
the Offer and the Proposed Merger prior to consummation of the Offer and the
Proposed Merger or if the Purchaser, in its sole discretion, were satisfied
that the Nevada Business Combination Statute was invalid or its restrictions
were otherwise inapplicable to the Purchaser in connection with the Offer and
the Proposed Merger for any reason, including, without limitation, those
specified in the Nevada Business Combination Statute.
A number of other states have adopted laws and regulations applicable to
attempts to acquire securities of corporations which are incorporated, or have
substantial assets, stockholders, principal executive offices or principal
places of business, or whose business operations otherwise have substantial
economic effects, in such
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states. In 1982, in Edgar v. MITE Corp., the Supreme Court of the United
States invalidated on constitutional grounds the Illinois Business Takeover
Statute, which, as a matter of state securities law, made takeovers of
corporations meeting certain requirements more difficult. However, in 1987, in
CTS Corp. v. Dynamics Corp. of America, the Supreme Court held that the State
of Indiana may, as a matter of corporate law, and, in particular, with respect
to those aspects of corporate law concerning corporate governance,
constitutionally disqualify a potential acquiror from voting on the affairs of
a target corporation without the prior approval of the remaining stockholders.
The state law before the Supreme Court was by its terms applicable only to
corporations that had a substantial number of stockholders in the state and
were incorporated there.
The Company, directly or through subsidiaries, conducts business in a number
of states throughout the United States, some of which have enacted takeover
laws. The Purchaser does not know whether any of these laws will, by their
terms, apply to the Offer and has not complied with any such laws. Should any
person seek to apply any state takeover law, the Purchaser will take such
action as then appears desirable, which may include challenging the validity
or applicability of any such statute in appropriate court proceedings. In the
event it is asserted that one or more state takeover laws is applicable to the
Offer and the Proposed Merger and an appropriate court does not determine that
it is inapplicable or invalid as applied to the Offer, the Purchaser might be
required to file certain information with, or receive approvals from, the
relevant state authorities. In addition, if enjoined, the Purchaser might be
unable to accept for payment any Shares tendered pursuant to the Offer or be
delayed in continuing or consummating the Offer or the Proposed Merger. In
such case, the Purchaser may not be obligated to accept for payment any Shares
tendered. See Section 14.
The Rights. The following is a summary of the material terms of the Rights
Agreement. This summary is qualified in its entirety by reference to the
Rights Agreement, a copy of which was filed with the Commission as an Exhibit
to the Company 1995 10-K and should be available for inspection, and copies
may be obtained, in the same manner as set forth in Section 7. The Company
Registration Statement describes the Rights substantially as follows:
On November 1, 1995, the Company adopted the Rights Agreement and
declared a dividend of one Right for each outstanding share of Common
Stock. The Rights are transferable only with the Common Stock until they
become exercisable. The Rights will not be exercisable until the
Distribution Date and will expire on the tenth anniversary of the Rights
Agreement (the "Rights Expiration Date"), unless earlier redeemed by the
Company as described below. Each Right, when it becomes exercisable as
described below, will entitle the registered holder to purchase from the
Company one one-thousandths (1/1000ths) of a share of Preferred Stock of
the Company (the "Preferred Shares") at a price (substantially above the
expected current trading value of the Company) to be determined, subject to
adjustment in certain circumstances (the "Purchase Price").
Under the Rights Agreement, the plan distribution date (the "Distribution
Date") is the earlier of (i) such time as the Company learns that a person
or group (including any affiliate or associate of such person or group) has
acquired, or has obtained the right to acquire, beneficial ownership of
more than 15% of the outstanding shares of Common Stock (such person or
group being an "Acquiring Person"), unless provisions preventing accidental
triggering of the distribution of the Rights apply and (ii) the close of
business on such date, if any, as may be designated by the Board of
Directors following the commencement of, or first public disclosure of an
intent to commence, a tender or exchange offer for 15% or more of the
outstanding shares of Common Stock.
Until the Distribution Date, the Rights will be evidenced by the
certificates for Common Stock registered in the names of the holders
thereof. As soon as practicable following the Distribution Date, separate
certificates evidencing the Rights ("Rights Certificates") will be mailed
to holders of record of the Common Stock as of the close for business on
the Distribution Date (and to each initial record holders of certain Common
Stock originally issued after the Distribution Date), and such separate
Rights Certificates alone will thereafter evidence the Rights. Until a
Right is exercised, the holder thereof, as such, will have no rights as a
shareholder of the Company, including, without limitation, the right to
vote or to receive dividends with respect to the Rights or the Preferred
Shares relating thereto.
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At such time as there is an Acquiring Person, the Rights will entitle
each holder (other than such Acquiring Person) of a Right to purchase, for
the Purchase Price, that number of one one-thousandths (1/1000ths) of a
Preferred Share equivalent to the number of shares of Common Stock that, at
the time of such event, would have a market value of twice the Purchase
Price.
In the event the Company is acquired in a merger or other business
combination by an Acquiring Person or an affiliate or associate of an
Acquiring Person or 50% or more of the Company's assets or assets
representing 50% or more of the Company's revenues or cash flow are sold,
leased, exchanged or otherwise transferred (in one or more transactions) to
an Acquiring Person or an affiliate or associate of an Acquiring Person,
each Right will entitle its holder (other than Rights beneficially owned by
such Acquiring Person or its affiliates or associates) to purchase, for the
Purchase Price, that number of common shares of such corporation (or, in
the event that such corporation is not a publicly traded corporation, that
number of common shares of an affiliate of such corporation that has
publicly traded shares) that, at the time of the transaction, would have a
market value (or, in certain circumstances, book value) of twice the
Purchase Price.
At any time prior to the earlier of such time as a person or group
becomes an Acquiring Person and the Rights Expiration Date, the Board may
redeem the Rights in whole, but not in part, at a price (in cash or Common
Stock or other securities of the Company deemed by the Board to be at least
equivalent in value) of $0.01 per Right (the "Redemption Price"), which
amount shall be subject to adjustment as provided in the Rights Agreement.
In addition, at any time after there is an Acquiring Person, the Board of
Directors may elect to exchange each Right for consideration per Right
consisting of one-half of the securities that would be issuable at such
time upon exercise of on Right pursuant to the terms of the Rights
Agreement.
At any time prior to the Distribution Date, the Company may supplement or
amend any provision of the Rights Agreement, except that no supplement or
amendment shall be made that reduces the Redemption Price (other than
pursuant to certain adjustments therein) or provides for an earlier Rights
Expiration Date. From and after the Distribution Date, the Company may
amend the Rights Agreement (i) to cure any ambiguity or to correct or
supplement any provision contained in the Rights Agreement which may be
defective or inconsistent with any other provision or (ii) to make any
other provisions that the Company may deem necessary or desirable and that
shall not adversely affect the interests of the holders of Rights
Certificates (other than an Acquiring Person or its affiliates or
associates).
Nevada Gaming Regulation. The ownership and operation of casino gaming
facilities in Nevada are subject to: (i) The Nevada Gaming Control Act and the
regulations promulgated thereunder (collectively, the "Nevada Act") and (ii)
various local ordinances and regulations. Parent's and the Company's
respective gaming operations are subject to the licensing and regulatory
control of the Nevada Gaming Commission ("Nevada Commission"), the Nevada
State Gaming Control Board ("Nevada Board"), the Clark County Liquor and
Gaming Licensing Board (the "CCLGLB"), the City of Reno and the Douglas County
Commission (the "DCC") (the Nevada Commission, the Nevada Board, the CCLGLB,
the City of Reno and the DCC, collectively, the "Nevada Gaming Authorities").
The policy of the State of Nevada with respect to corporate acquisitions
such as the Offer is to (i) assure the financial stability of corporate gaming
licensees and their affiliates, (ii) preserve the beneficial aspects of
conducting business in the corporate form, and (iii) promote a neutral
environment for the orderly governance of corporate affairs.
Parent and the Company are each registered with the Nevada Commission as a
publicly traded corporation (a "Registered Corporation") and have each been
found suitable to own the stock of subsidiaries that are licensed to conduct
gaming operations in the State of Nevada. Changes in control of a Registered
Corporation through merger, consolidation, stock or asset acquisitions,
management or consulting agreements, proxy or power of attorney, consummation
of a tender offer or any act or conduct by a person whereby it obtains
control, may not occur without the prior approval of the Nevada Commission
upon the recommendation of the Nevada Board.
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Because the Offer will result in Parent acquiring control of the Company, the
Offer may not be consummated without the prior approval of the Nevada
Commission upon the recommendation of the Nevada Board. Consummation of the
Offer may also require the approval of, or notices to, the CCLGLB, the City of
Reno and the DCC.
In seeking approval to acquire control of the Company, Parent and the
Purchaser must satisfy the Nevada Board and Nevada Commission as to a variety
of specific standards. The Nevada Board and Nevada Commission will consider
all relevant material facts in determining whether to grant such approval, and
may consider not only the effects of the Offer and the Proposed Merger but
also any other facts that are deemed relevant. Such facts may include, among
other things, (i) the business history of Parent, including its record of
financial stability, integrity, and success of its operations, as well as its
current business activities; and (ii) whether the Offer and the Proposed
Merger will create a significant risk that Parent, the Company or their
subsidiaries will not satisfy their financial obligations as they become due
or satisfy all financial and regulatory requirements imposed by the Nevada
Act. The Nevada Board or Nevada Commission may also require controlling
stockholders, officers, directors and other persons having a material
relationship or involvement with the entity proposing to acquire control of a
Registered Corporation, to be investigated and licensed as part of the
approval process relating to the transaction. The Nevada Gaming Authorities
may deny an application for licensing or a finding of suitability for any
cause that they deem reasonable. A finding of suitability is comparable to
licensing and both require the submission of detailed personal and financial
information followed by a thorough investigation.
The Nevada Act also requires that beneficial owners of more than 10% of a
Registered Corporation's voting securities apply to the Nevada Commission for
a finding of suitability within thirty days after the Chairman of the Nevada
Board mails the written notice requiring such filing. Purchaser will be
required to be found suitable to own more than 10% of the Company's voting
securities in connection with the Offer and Parent will be required to be
found suitable to own the stock of Purchaser.
The Nevada Act requires that the Nevada Commission use its best efforts to
take final action upon an application to acquire control of a Registered
Corporation by a person making a tender offer within sixty days after the
application is filed and any fees are paid. If the Nevada Commission cannot
take final action upon the application within sixty days of the filing of such
application, it must provide the applicant with written notice of a time
certain for completion of the investigation and the final action at least ten
days prior to the sixtieth day after filing of the application. There can be
no assurances that the Nevada Commission will consider the applications of
Parent and Purchaser within such sixty day period. Because Parent is currently
a Registered Corporation, it does not expect significant delays in final
action being taken by the Nevada Commission although there can be no
assurances in that regard. Furthermore, any such approval of the Offer, if
granted, does not constitute a finding, recommendation or approval by the
Nevada Board or Nevada Commission as to the accuracy or adequacy of the Offer
to Purchase or the merits of the Offer and the Proposed Merger. Any
representation to the contrary is unlawful.
Parent may not make a public offering of its securities without the prior
approval of the Nevada Commission if the securities or proceeds therefrom are
intended to be used to construct, acquire or finance gaming facilities in
Nevada, or to retire or extend obligations incurred for such purposes. The
issuance of Parent Common Stock in the Proposed Merger will qualify as a
public offering. On September 20, 1996, Parent received approval to make
public offerings for a period of one year, subject to certain conditions (the
"Shelf Approval"). On November 21, 1996, the Nevada Commission issued a
revised Shelf Approval effective for a period of ten months to include
approvals relating to Parent's acquiring control of Bally. The Shelf Approval
may be rescinded for good cause without prior notice upon the issuance of an
interlocutory stop order by the Chairman of the Nevada Board. The Shelf
Approval does not constitute a finding, recommendation or approval by the
Nevada Commission or the Nevada Board as to the accuracy or adequacy of the
prospectus or the investment merits of the securities offered. Any
representation to the contrary is unlawful. Parent intends to apply for a
renewal of the Shelf Approval (the "New Shelf Approval") and anticipates that
the application for the New Shelf Approval will be considered by the Nevada
Board and Nevada Commission prior to the expiration of the Shelf Approval.
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The issuance of Parent Common Stock in the Proposed Merger will be made
pursuant to the Shelf Approval or, if necessary, the New Shelf Approval.
If Parent and Purchaser receive prior approval from the Nevada Commission for
the Offer and for the acquisition of control of the Company, the Proposed
Merger will require additional prior approvals, including, but not limited to,
(i) a finding of suitability for Parent, Purchaser, or another direct or
indirect wholly owned subsidiary of Parent ("Sub") to own the stock of the
Company or ITT Sheraton, (ii) registration of Purchaser, Sub or the Company as
an intermediary company, and (iii) de-registration of the Company as a
Registered Corporation. Parent does not currently believe that the nomination
and solicitation of proxies for the Parent Nominees will require the approval
of the Nevada Commission. In the event Parent determines to solicit proxies to
elect the Parent Nominees, approval of the Nevada Commission may be required.
In the event it is determined that such approval is required, Parent will apply
for such approval and request that such application be considered by the Nevada
Board and Nevada Commission at the same time as they consider the applications
for approval of the Offer and acquisition of control of the Company.
Parent and Purchaser intend to file on the date of this Offer to Purchase
applications with the Nevada Board and Nevada Commission requesting approvals
of the Offer and the acquisition of control of the Company and approvals for
the Proposed Merger. Parent and Purchaser will promptly file any required
applications or notices with the CCLGLB, the City of Reno and the DCC. No
assurances can be given that such applications will be approved or that they
will be considered on a timely basis.
New Jersey Gaming Regulations. Casino gaming activities in New Jersey are
subject to the New Jersey Casino Control Act ("Casino Control Act"), the
regulations of the CCC and other applicable laws. The Casino Control Act
requires approval from the CCC before control of a casino licensee can be
transferred. In the case of transfer to an individual or entity not currently
deemed qualified under the standards of the Casino Control Act, Section 95.12
of the Casino Control Act ("Interim Casino Authorization") permits an
individual or entity that obtains publicly traded securities conferring control
of a casino licensee to hold such securities on an interim basis prior to
obtaining approval from the CCC. During the period of interim authorization,
the publicly traded securities that have been acquired by the as yet
unqualified individual or entity must be held in a trust ("ICA Trust") pursuant
to the provisions of the Casino Control Act. Parent is currently qualified
under the provisions of the Casino Control Act as a holding company of a New
Jersey casino licensee.
As a result of the transfer of Shares to the Purchaser pursuant to the Offer
and the Proposed Merger, the Purchaser will be required to qualify as an
intermediary company of a New Jersey casino licensee. Qualification of the
Purchaser would include review and approval of the Purchaser as an entity and
of its officers and directors as individuals. If at the time of the transfer of
Shares to the Purchaser, pursuant to the Offer and the Proposed Merger, the
Purchaser has been found qualified under the provisions of the Casino Control
Act, it will not be subject to the requirements of an ICA Trust under Section
95.12 of the Casino Control Act.
If a person holding debt or equity securities is required to place such
securities into an ICA trust pending qualification, the person retains the
ability to direct the trustee as to how to vote or whether to dispose of such
securities, unless and until the CCC has reason to believe such person may not
qualify. If the CCC denies interim authorization or has reasonable cause to
believe that a person required to be qualified may be found unqualified, it
shall order that the trust become operative. During the time the trust is
operative, the person required to be qualified may not participate in the
earnings of the casino hotel or receive any return on its investment. If the
CCC thereafter denies qualification, the trustee shall dispose of the trust
property. In such event, the proceeds distributed to the unqualified applicant
may not exceed the lower of the actual cost of the securities to the
unqualified applicant or their value calculated as if the investment had been
made on the date the trust became operative. Any excess remaining proceeds
shall be paid to the Casino Revenue Fund maintained in the New Jersey
Department of the Treasury.
The qualification criteria with respect to a holding or intermediary company
of a casino licensee include its financial stability, integrity and
responsibility, the integrity and adequacy of its financial resources which
bear any relation to the casino project; its good character, honesty and
integrity; and the sufficiency of its business ability and casino experience to
establish the likelihood of a successful, efficient casino operation.
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If the CCC finds that a holder of such securities is not qualified under the
Casino Control Act, the CCC has the right to take any remedial action it may
deem appropriate. Such action may include an order to divest such securities.
In the event that certain disqualified holders fail to divest such securities,
the CCC has the power to revoke or suspend the casino license of the entity
affiliated with the issuer of such securities. If a holder is found
unqualified, it is unlawful for the holder (i) to exercise, directly or
through any trustee or nominee, any right conferred by such securities, or
(ii) to receive any dividends or interest upon any such securities or any
remuneration, in any form, from its affiliated casino licensee, whether for
services rendered or otherwise.
Mississippi Gaming Regulations. The ownership and operation of casino
gaming facilities in Mississippi are subject to: (i) the Mississippi Gaming
Control Act (the "Mississippi Act"), (ii) the regulations of the Mississippi
Gaming Commission (the "Mississippi Commission"), and (iii) other applicable
laws. Parent's and the Company's respective gaming operations are subject to
the licensing and regulatory control of the Mississippi Commission.
The policy of the State of Mississippi with respect to corporate
acquisitions, such as the Offer, is to (i) assure the financial stability of
corporate gaming licensees and their affiliates, (ii) preserve the beneficial
aspects of conducting business in the corporate form and (iii) promote a
neutral environment for the orderly governance of corporate affairs.
No direct or indirect changes in control of a registered, publicly traded
corporation, such as the Company, can occur without the prior approval of the
Mississippi Commission. The staff of the Mississippi Commission reviews and
investigates applications for such approvals and makes recommendations on such
applications to the Mississippi Commission for final action.
In seeking approval to acquire control of the Company, Parent and Purchaser
must satisfy the Mississippi Commission as to a variety of specific standards.
The Mississippi Commission will consider all relevant material facts in
determining whether to grant such approval, and may consider not only the
effects of the Offer and the Proposed Merger but also any other facts that are
deemed relevant. Such facts may include, among others, (i) the business
history of the applicant, including its record of financial stability,
integrity, and success of its operations, as well as its current business
activities, and (ii) whether the Offer and the Proposed Merger will create a
significant risk that Parent, the Company or their subsidiaries will not
satisfy their financial obligations as they become due or satisfy all
financial and regulatory requirements imposed by the Mississippi Act.
Officers, directors and other persons having a material involvement or
relationship with Parent and Purchaser prior to the Proposed Merger who will
be actively and directly involved in gaming activities may also be required to
be found suitable or licensed by the Mississippi Commission as a part of the
approval process relating to the transaction. The Mississippi Commission may
deny an application for licensing or registration for any cause that it deems
reasonable. A finding of suitability is comparable to licensing, and both
require the submission of detailed personal and financial information followed
by a thorough investigation.
The Mississippi Act also requires beneficial owners of more than 10% of the
voting securities of a corporation registered with the Mississippi Commission
to apply for a finding of suitability within 30 days after receiving a request
from the Executive Director of the Mississippi Commission. In addition to
obtaining approval of the application to acquire control, Purchaser may be
required to be found suitable to own more than 10% of the Company's voting
securities in connection with the Offer and Parent may be required to be found
suitable to own the stock of Purchaser.
Parent has registered with the Mississippi Commission as a publicly traded
corporation and has been found suitable to own the shares of a subsidiary that
operates a casino in Tunica County, Mississippi; therefore, Parent does not
expect significant delays in obtaining necessary approvals. However, there can
be no assurances that such approvals will be granted or as to the timing of
such approvals. Furthermore, any such approval, if granted, does not
constitute a finding, recommendation or approval by the Mississippi Commission
as to the accuracy or adequacy of the Offer to Purchase or the merits of the
Offer and the Proposed Merger. Any representation to the contrary is unlawful.
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Generally, no corporation registered with the Mississippi Commission may
make a public offering of its securities without the prior approval of the
Mississippi Commission if the securities or proceeds therefrom are intended to
be used to construct, acquire or finance gaming facilities in Mississippi, or
to retire or extend obligations incurred for such purposes. The sale by Parent
of any equity or debt securities in the Proposed Merger may qualify as a
public offering. On October 17, 1996, Parent received continuous approval to
make public offerings for a period of one year, subject to certain conditions
(the "Continuous Approval"). The Continuous Approval does not constitute a
finding, recommendation or approval by the Mississippi Commission as to the
accuracy or adequacy of the prospectus or the investment merits of the
securities offered. Any representation to the contrary is unlawful. It is
anticipated that the issuance by Parent of any equity or debt securities in
the Proposed Merger will be made pursuant to the Continuous Approval.
If Parent and Purchaser receive prior approval from the Mississippi
Commission for the Offer and for the acquisition of control of the Company,
the Proposed Merger may require additional prior approvals, including, but not
limited to, (i) a finding of suitability for Parent, Purchaser, or another
direct or indirect wholly owned subsidiary of Parent to own the stock of the
Company or ITT Sheraton and (ii) registration of Purchaser, such other direct
or indirect wholly owned subsidiary or the Company as an intermediary company.
In the event Parent determines to solicit proxies to elect the Parent
Nominees, approval of the Mississippi Commission may be required. In the event
it is determined that such approval is required, Parent will apply for such
approval and request that such application be considered by the Mississippi
Commission at the same time as, and as a part of, the application for approval
of the Offer and acquisition of control of the Company.
Parent and Purchaser have not yet filed applications with the Mississippi
Commission requesting approvals of the Offer and the acquisition of control of
the Company and approvals for the Proposed Merger, but expect to do so
shortly. It is also anticipated that all individuals required to file
applications for findings of suitability as officers and directors of
Purchaser will promptly have applications filed on their behalf for the
necessary approvals with the Mississippi Commission. No assurances can be
given that such applications will be approved or that they will be considered
on a timely basis.
Nova Scotia Gaming Regulations. The Company, through a subsidiary (the
"Subsidiary"), operates casinos in Halifax and Sydney, Nova Scotia and is
required to be registered and comply with licensing requirements and
operational regulations under the Gaming Control Act (the "Nova Scotia Act").
Under the Nova Scotia Act, the Director of Registration of the Nova Scotia
Gaming Control Commission must be notified, within fifteen days, of any change
in the officers or directors of the Subsidiary. The Subsidiary is also
required to file a disclosure form with the Director of Registration within
fifteen days of (i) a person acquiring a beneficial interest in the business
of the Subsidiary; (ii) a person exercising control, either directly or
indirectly, over the business of the Subsidiary; or (iii) a person providing
financing, either directly or indirectly, to the business of the Subsidiary.
The Purchaser intends to file any required disclosure forms within the
applicable time period. No prior approval or consent is required under the
Nova Scotia Act in respect of the Offer or the Proposed Merger. However, under
the Nova Scotia Act, the Director of Registration may require information or
material from the Subsidiary or any person who has an interest in the
Subsidiary. Parent and the Purchaser will submit to the Director of
Registration any information required with respect to them. The Director of
Registration may, at any time, subject to the provisions of the Nova Scotia
Act, revoke or suspend the Subsidiary's registration under the Nova Scotia
Act, or refuse to grant a renewal of its registration. Although Parent does
not anticipate any unfavorable action by the Director of Registration or the
Nova Scotia Gaming Control Commission prior to the consummation of the Offer
or the Proposed Merger, there can be no assurance that the Subsidiary will not
have its registration revoked or suspended prior to the consummation of the
Offer.
Ontario Gaming Regulations. Windsor Casino Limited, an Ontario corporation
which operates a Windsor, Ontario gaming facility and of which each of Parent
and the Company owns a one-half interest, is registered under the Gaming
Control Act, 1992 (the "Ontario Act") and is required to comply with licensing
requirements and operational regulations under the Ontario Act. Under the
Ontario Act, the Registrar of the Gaming Control Commission (the "Registrar")
must approve any change in the directors or officers of Windsor Casino
Limited. No prior approval or consent is required under the Ontario Act in
respect of the Offer or the Proposed Merger.
40
<PAGE>
However, under the Ontario Act, the Registrar may require information and
material from Windsor Casino Limited or any person who has an interest in
Windsor Casino Limited. Parent and the Purchaser will submit to the Registrar
any information required with respect to them. The Registrar may, at any time,
subject to the provisions of the Ontario Act, revoke or suspend Windsor Casino
Limited's registration under the Ontario Act, or refuse to grant a renewal of
its registration. Although Parent does not anticipate unfavorable action by
the Registrar or the Gaming Control Commission prior to the consummation of
the Offer or the Proposed Merger, there can be no assurance that Windsor
Casino Limited will not have its registration revoked or suspended prior to
the consummation of the Offer.
Other Gaming Regulations. The Company owns and operates gaming facilities in
a number of domestic and foreign jurisdictions in addition to those discussed
above. The relevant statutes and regulatory schemes governing such gaming
operations may require that prior to or following consummation of the Offer
and/or the Proposed Merger, Parent and/or the Purchaser must qualify or
otherwise be approved to conduct such gaming operations. It is the intention
of Parent and the Purchaser to comply with any such statutes and regulations
and to seek any required approvals or to otherwise become qualified as may be
necessary to consummate the Offer and the Proposed Merger. There can be no
assurance that Parent and the Purchaser will receive such approvals or become
so qualified or as to the timing of any such approvals or qualifications.
Certain Litigation. On January 27, 1997, Parent and the Purchaser filed a
Complaint against the Company in the United States District Court for the
District of Nevada. The Complaint seeks, among other things: (i) injunctive
relief requiring the Board to redeem the Rights and to make inapplicable to
the Offer and the Proposed Merger the Nevada Control Share Acquisition Statute
and the Nevada Business Combination Statute, (ii) injunctive and declaratory
relief to forestall any effort by the Company to manipulate or otherwise
subvert the process of corporate democracy by amending the Company's bylaws,
postponing its Annual Meeting, increasing the size of the Board or taking
other actions to frustrate the proxy contest that Parent plans to conduct to
replace the Board in order to facilitate the Offer and Proposed Merger and
(iii) a declaratory judgment that the Company does not have standing to
institute an action under the federal antitrust laws to block or impede the
Offer or the Proposed Merger and that, in any event, the consummation of the
Offer and the Proposed Merger would not violate such laws.
On January 27, 1997, Parent and the Purchaser filed a motion for a
preliminary injunction enjoining the Company from (a) increasing the size of
the Board, or in the alternative, requiring the Company to give Parent and the
Purchaser the opportunity to supplement their written notice of intention to
nominate individuals for election as directors in the event that the Company
does increase the size of the Board, or (b) amending the Company's bylaws to
impede in any way the effective exercise of the stockholder franchise in
connection with the election of directors at the Annual Meeting. A hearing on
the motion has been scheduled for March 5, 1997.
On January 29, 1997, the Nevada court denied a motion filed by Parent and
the Purchaser for a temporary restraining order and preliminary injunction
enjoining the Company from filing and prosecuting any action against Parent or
the Purchaser in connection with or arising out of the Offer in any
jurisdiction other than the United States District Court for the District of
Nevada. In its ruling, the Nevada court stated that if the Company does bring
suit regarding the Offer in any other jurisdiction, Parent and Purchaser, at
that time, can apply for an injunction or other relief to prevent duplicative
litigation.
Parent has been advised that stockholders of the Company have filed suit in
a number of jurisdictions alleging claims against the Company similar to the
claims alleged in the Complaint. One such stockholder has filed suit in the
Nevada Federal District Court and has moved for consolidation of her action
with the action brought by Parent and Purchaser.
16. FEES AND EXPENSES. Except as set forth below, neither Parent nor the
Purchaser will pay any fees or commissions to any broker, dealer or other
person for soliciting tenders of Shares pursuant to the Offer.
Donaldson, Lufkin & Jenrette Securities Corporation ("DLJ") is acting as the
Dealer Manager in connection with the Offer and is acting as financial advisor
to Parent in connection with its effort to acquire the
41
<PAGE>
Company. DLJ is acting as the Dealer Manager in connection with the Offer and
is acting as financial advisor to Parent in connection with its effort to
acquire the Company. In connection with the Offer, in addition to a fee of $1
million paid upon execution of the engagement letter, Parent has agreed to pay
DLJ for its services (i) $250,000 upon the commencement of the Offer, (ii) an
additional $1.25 million upon mailing of any proxy statement to the
stockholders of the Company, and (iii) $15 million (less the amount of the
opinion fee described below, if any) if Parent completes a transaction (as
defined in the engagement letter, but including an acquisition of a majority
of the Shares) with the Company. In the event DLJ notifies the Board of
Directors of Parent that it is prepared to deliver an opinion as to the
fairness of the consideration to by paid by the Parent, from a financial point
of view, then Parent shall pay an additional $1 million to DLJ. Parent has
also agreed that in the event a transaction is not consummated and Parent
receives cash, securities or assets from the Company, Parent shall also pay to
DLJ an amount in cash equal to 15% of such cash, securities or assets (less
credits for amounts previously paid to DLJ). Parent has also agreed to
reimburse DLJ (in its capacity as Dealer Manager and financial advisor) for
its reasonable out-of-pocket expenses, including the reasonable fees and
expenses of its legal counsel, incurred in connection with its engagement, and
to indemnify DLJ and certain related persons against certain liabilities and
expenses in connection with their engagement, including certain liabilities
under the federal securities laws. DLJ renders various investment banking and
other advisory services to Parent and its affiliates and is expected to
continue to render such services, for which it has received and will continue
to receive customary compensation from Parent and its affiliates.
The Purchaser has retained MacKenzie Partners, Inc. to act as the
Information Agent in connection with the Offer. The Information Agent may
contact holders of Shares by mail, telephone, facsimile, telegraph and
personal interviews and may request brokers, dealers and other nominee
stockholders to forward materials relating to the Offer to beneficial owners
of Shares. The Information Agent will receive reasonable and customary
compensation together with reimbursement for its reasonable out-of-pocket
expenses and will be indemnified against certain liabilities and expenses,
including certain liabilities under the federal securities laws.
In addition, IBJ Schroder Bank & Trust Company has been retained as the
Depositary. The Depositary has not been retained to make solicitations or
recommendations in its role as Depositary. The Depositary will receive
reasonable and customary compensation for its services, will be reimbursed for
certain reasonable out-of-pocket expenses and will be indemnified against
certain liabilities and expenses in connection therewith. Brokers, dealers,
commercial banks and trust companies will be reimbursed by the Purchaser for
customary mailing and handling expenses incurred by them in forwarding
offering material to their customers.
17. MISCELLANEOUS. The Purchaser is not aware of any jurisdiction where the
making of the Offer is prohibited by any administrative or judicial action
pursuant to any valid state statute. If the Purchaser becomes aware of any
valid state statute prohibiting the making of the Offer or the acceptance of
the Shares pursuant thereto, Purchaser will make a good faith effort to comply
with such state statute. If, after such good faith effort the Purchaser cannot
comply with any such state statute, the Offer will not be made to (nor will
tenders be accepted from or on behalf of) the holders of Shares in such state.
In any jurisdiction where the securities, Blue Sky or other laws require the
Offer to be made by a licensed broker or dealer, the Offer shall be deemed to
be made on behalf of the Purchaser by the Dealer Manager or one or more
registered brokers or dealers which are licensed under the laws of such
jurisdiction.
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR MAKE ANY
REPRESENTATION ON BEHALF OF THE PURCHASER NOT CONTAINED IN THIS OFFER TO
PURCHASE OR IN THE LETTER OF TRANSMITTAL, AND IF GIVEN OR MADE, SUCH
INFORMATION OR REPRESENTATION MUST NOT BE RELIED UPON AS HAVING BEEN
AUTHORIZED.
Parent and the Purchaser have filed with the Commission a Tender Offer
Statement on Schedule 14D-1 (the "Schedule 14D-1"), together with exhibits,
pursuant to Rule 14d-3 of the General Rules and Regulations under the Exchange
Act, furnishing certain additional information with respect to the Offer and
may file amendments thereto. The Schedule 14D-1 and any amendments thereto,
including exhibits, may be inspected at, and copies may be obtained from, the
same places and in the same manner as set forth in Section 8 (except that they
will not be available at the regional offices of the Commission).
HLT Corporation
January 31, 1997
42
<PAGE>
SCHEDULE I
INFORMATION CONCERNING THE DIRECTORS AND EXECUTIVE
OFFICERS OF PARENT AND THE PURCHASER
Directors and Executive Officers of Parent and the Purchaser. Set forth
below is the name, current business address, citizenship and the present
principal occupation or employment and material occupations, positions,
offices or employments for the past five years of each director and executive
officer of Parent and the Purchaser. The principal address of Parent and the
Purchaser and, unless otherwise indicated below, the current business address
for each individual listed below is 9336 Civic Center Drive, Beverly Hills,
California 90210. Directors of Parent are identified by an asterisk. Unless
otherwise indicated, each such person is a citizen of the United States and
each occupation set forth opposite the individual's name refers to employment
with Parent.
<TABLE>
<CAPTION>
PRESENT PRINCIPAL OCCUPATION OR EMPLOYMENT;
MATERIAL POSITIONS HELD DURING THE PAST
NAME AND CURRENT BUSINESS ADDRESS FIVE YEARS
- --------------------------------- --------------------------------------------
<S> <C>
*Stephen F. Bollenbach........ President and Chief Executive Officer, Parent,
since February 1996. Prior thereto, Chief
Financial Officer, The Trump Organization, until
March 1992, Chief Financial Officer, Marriott
Corporation, until October 1993, President and
Chief Executive Officer, Host Marriott
Corporation, until April 1995, Senior Executive
Vice President and Chief Financial Officer, The
Walt Disney Co., until February 1996. He is also
a director of America West Airlines, Inc.
*A. Steven Crown.............. General Partner, Henry Crown and Company, a
Henry Crown and Company holding company which includes diversified
222 North LaSalle Street manufacturing operations, marine operations and
Suite 2000 real estate ventures.
Chicago, Illinois 60601
*Peter M. George.............. Chief Executive Officer, Ladbroke Group PLC
Maple Court, Central Park ("Ladbroke"). He is a citizen of the United
Reeds Crescent, Watford Kingdom.
Herts WD11H2 U.K.
*Arthur M. Goldberg........... Executive Vice President and President--Gaming
380 Middlesex Avenue Operations, Parent, since December 1996. Prior
Carteret, New Jersey 07008 thereto, Chairman and Chief Executive Officer,
Bally Entertainment Corporation ("Bally") from
October 1990 to December 1996. He is also
Chairman, President and Chief Executive Officer,
DiGiorgio Corporation since February 1990 and
Managing Partner, Averon Investments, LP since
1986.
Matthew J. Hart............... Executive Vice President and Chief Financial
Officer, Parent, since May 1996. Prior thereto,
Senior Vice President and Treasurer, Marriott
Corporation, January 1992 until October 1993,
Executive Vice President and Chief Financial
Officer, Host Marriott Corporation, until
October 1995, Senior Vice President and
Treasurer, The Walt Disney Company until May
1996. He is President, Treasurer, Secretary and
the sole director of the Purchaser and is also a
director of Kilroy Realty Corporation since
January 1997.
</TABLE>
I-1
<PAGE>
<TABLE>
<CAPTION>
PRESENT PRINCIPAL OCCUPATION OR EMPLOYMENT;
MATERIAL POSITIONS HELD DURING THE PAST
NAME AND CURRENT BUSINESS ADDRESS FIVE YEARS
- --------------------------------- -------------------------------------------
<S> <C>
*Barron Hilton................ Chairman of the Board, Parent, since February
1996. Prior thereto, Chairman of the Board,
President and Chief Executive Officer, Parent,
until February 1993, Chairman of the Board and
Chief Executive Officer, Parent, until February
1996.
*Eric M. Hilton............... Vice Chairman of the Board, Parent, since May
1993. Prior thereto, Senior Vice President--Real
Estate Development, International, Parent, until
May 1992, Executive Vice President--
International Operations, Parent, May 1992 until
May 1993.
*Dieter H. Huckestein......... Executive Vice President, Parent, and
President--Hotel Division, Parent, since May
1994. Prior thereto, Senior Vice President--
Hawaii/California/Arizona Region, Parent, until
May 1991, Senior Vice President--
Hawaii/California/Arizona Region, Parent, until
May 1994. He is a citizen of Germany.
*Robert L. Johnson............ Chairman and Chief Executive Officer of Black
BET Holdings, Inc. Entertainment Television, a cable programming
One BET Plaza service, and Chairman, President and Chief
1900 "W" Place, N.E. Executive Officer of BF Holdings, Inc., a
Washington, D.C. 20018 diversified media holding company, since August
1991, and Chairman and Chief Executive Officer
of District Cablevision, cable operator in the
District of Columbia.
*Donald R. Knab............... President, Donald R. Knab Associates, Inc., an
Residence: investment advisory firm, since January 1988.
33 Little Bay Harbor Prior thereto, Vice Chairman, Deansbank
Ponte Vedra Beach, Florida Investment, Inc.--property investments, January
32082 1992 until December 1996, Chairman and Chief
Executive Officer, BPT Properties, L.P., a
commercial real estate development company,
until January 1992 and, until December 1992,
Senior Consultant thereto.
*Benjamin V. Lambert.......... Chairman and Chief Executive Officer, 333 Corp.,
Eastdil Realty, Co. since January 1995. Prior thereto, Chairman and
40 West 57th Street Chief Executive Officer, Eastdil Realty, Co.
New York, New York 10019 L.L.C., real estate investment bankers.
</TABLE>
I-2
<PAGE>
<TABLE>
<CAPTION>
PRESENT PRINCIPAL OCCUPATION OR EMPLOYMENT;
MATERIAL POSITIONS HELD DURING THE PAST
NAME AND CURRENT BUSINESS ADDRESS FIVE YEARS
- --------------------------------- -------------------------------------------
<S> <C>
*Donna F. Tuttle.............. Owner and Officer, Elmore/Tuttle Sports Group,
Korn Tuttle Capital Group owns three minor league baseball teams, since
1800 Century Park East, #210 1993, President, Korn Tuttle Capital Group, a
Los Angeles, California 90067 financial consulting and investments firm, and a
director of Phoenix Duff & Phelps, Inc., a
financial services firm, since 1992. Prior
thereto, Chairman and Chief Executive Officer,
Ayer Tuttle, the western division of NW Ayer
Incorporated, an international advertising firm,
1989 until 1992 and 1989 until 1995, President,
Donna F. Tuttle, Inc., a travel and tourism
consulting and public relations firm. She is
also a director of Silver Dollar City, an
entertainment company.
*Sam D. Young, Jr............. Chairman, Trans West Enterprises, Inc., an
P.O. Box 3443 investment company, and director, Texas Commerce
395 Mt. Lake Court Bank--El Paso.
Incline Village, Nevada 89450
</TABLE>
I-3
<PAGE>
SCHEDULE II
TRANSACTIONS IN SHARES DURING THE PAST 60 DAYS
BY PARENT AND THE PURCHASER
<TABLE>
<CAPTION>
SHARES
TRANSACTION DATE ACQUIRED PRICE PER SHARE(1)
- ---------------- -------- ------------------
<S> <C> <C>
January 21, 1997.................................. 11,500 $43.250
30,000(2) $43.125
3,200 $43.000
January 22, 1997.................................. 14,000 $44.625
31,000 $44.500
20,500 $44.375
13,000 $44.250
10,000 $44.125
3,000 $43.875
2,000 $43.750
2,000 $43.625
January 23, 1997.................................. 13,000 $45.125
26,500 $45.000
51,300 $44.875
17,000 $44.750
16,000 $44.625
7,000 $44.500
6,500 $44.375
8,000 $44.250
6,000 $44.125
January 24, 1997.................................. 1,000 $44.250
1,500 $44.125
4,000 $44.000
9,000 $43.875
8,500 $43.750
</TABLE>
- ---------------------
(1) All prices are exclusive of commissions.
(2) On January 21, Parent contributed 100 of such Shares to the capital of
Purchaser for no consideration.
II-1
<PAGE>
SCHEDULE III
HILTON HOTELS CORPORATION
UNAUDITED PRO FORMA CONDENSED FINANCIAL STATEMENTS
The unaudited pro forma condensed financial statements are based upon the
historical consolidated financial statements of Parent and Bally and should be
read in conjunction with those consolidated financial statements and related
notes.
The unaudited pro forma condensed statements of income for the nine months
ended September 30, 1996 and the year ended December 31, 1995 give effect to
(i) the acquisition of Bally applying the purchase method of accounting, and
(ii) certain adjustments that are directly attributable to the merger and
anticipated to have continuing impact, including certain estimated operational
benefits and an assumed refinancing of Bally's existing indebtedness, as if
such transactions were consummated as of January 1, 1995.
The unaudited pro forma condensed balance sheet presents the combined
financial position of Parent and Bally as of September 30, 1996. The unaudited
pro forma condensed balance sheet reflects (i) the acquisition of Bally
applying the purchase method of accounting, and (ii) certain adjustments that
are directly attributable to the merger, including the assumed refinancing of
Bally's existing indebtedness. Such data further assume that the transactions
described above were consummated as of September 30, 1996.
The unaudited pro forma condensed financial statements have been prepared
based upon currently available information and assumptions deemed appropriate
by Parent and may not be indicative of actual results, nor do such data
purport to represent the results for future periods.
III-1
<PAGE>
HILTON HOTELS CORPORATION
UNAUDITED PRO FORMA CONDENSED STATEMENT OF INCOME
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1996
(IN MILLIONS, EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
PRO FORMA
PARENT BALLY MERGER PARENT
HISTORICAL HISTORICAL(1) ADJUSTMENTS AS ADJUSTED
---------- ------------- ----------- -----------
<S> <C> <C> <C> <C>
Revenue:
Casino.................. $ 340.3 $697.0 $ -- $1,037.3
Rooms................... 475.5 70.9 -- 546.4
Food and beverage....... 208.9 57.0 -- 265.9
Management and franchise
fees................... 92.7 -- -- 92.7
Other................... 165.4 49.5 -- 214.9
Operating income from
unconsolidated
affiliates............. 70.6 -- -- 70.6
-------- ------ ------ --------
1,353.4 874.4 -- 2,227.8
-------- ------ ------ --------
Expenses:
Casino.................. 177.6 341.9 -- 519.5
Rooms................... 146.2 24.0 -- 170.2
Food and beverage....... 177.7 50.3 -- 228.0
Other costs and
expenses............... 522.0 274.7 (8.5)(3)(4) 788.2
Corporate expense....... 37.0 14.2 (11.7)(3) 39.5
-------- ------ ------ --------
1,060.5 705.1 (20.2) 1,745.4
-------- ------ ------ --------
Operating income.......... 292.9 169.3 20.2 482.4
Interest and dividend
income................. 25.4 19.2 -- 44.6
Interest expense........ (55.2) (98.8) 35.1 (5)(6) (118.9)
Interest expense, net,
from unconsolidated
affiliates............. (9.4) -- -- (9.4)
-------- ------ ------ --------
Income from continuing
operations before income
taxes and minority
interest................. 253.7 89.7 55.3 398.7
Provision for income
taxes.................. 99.9 31.0 29.6 (7) 160.5
Minority interest, net.. 3.5 4.5 .6 (8) 8.6
-------- ------ ------ --------
Income from continuing
operations............... $ 150.3 $ 54.2 $ 25.1 $ 229.6
======== ====== ====== ========
Income from continuing
operations per share(2).. $ .77 $ .88
======== ========
Average common and
equivalent shares........ 195.1 261.9
======== ========
</TABLE>
(Footnotes on following pages)
III-2
<PAGE>
HILTON HOTELS CORPORATION
UNAUDITED PRO FORMA CONDENSED STATEMENT OF INCOME
FOR THE YEAR ENDED DECEMBER 31, 1995
(IN MILLIONS, EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
PRO FORMA
PARENT BALLY MERGER PARENT
HISTORICAL HISTORICAL(1) ADJUSTMENTS AS ADJUSTED
---------- ------------- ----------- -----------
<S> <C> <C> <C> <C>
Revenue:
Casino.................. $ 511.0 789.9 -- 1,300.9
Rooms................... 587.2 87.5 -- 674.7
Food and beverage....... 265.7 73.6 -- 339.3
Management and franchise
fees................... 100.5 -- -- 100.5
Other................... 125.4 59.2 -- 184.6
Operating income from
unconsolidated
affiliates............. 59.6 -- -- 59.6
------- ------- ----- -------
1,649.4 1,010.2 -- 2,659.6
------- ------- ----- -------
Expenses:
Casino.................. 234.9 386.6 -- 621.5
Rooms................... 186.4 31.2 -- 217.6
Food and beverage....... 229.4 65.5 -- 294.9
Other costs and
expenses............... 613.2 336.7 (10.8)(3)(4) 939.1
Corporate expense....... 31.9 17.1 (13.9)(3) 35.1
------- ------- ----- -------
1,295.8 837.1 (24.7) 2,108.2
------- ------- ----- -------
Operating income: 353.6 173.1 24.7 551.4
Interest and dividend
income................. 35.2 16.2 -- 51.4
Interest expense........ (93.5) (132.4) 43.6 (5)(6) (182.3)
Interest expense, net,
from unconsolidated
affiliates............. (16.5) -- -- (16.5)
Property transactions... 1.5 -- -- 1.5
------- ------- ----- -------
Income from continuing
operations before income
taxes and minority
interest................. 280.3 56.9 68.3 405.5
Provision (benefit) for
income taxes........... 102.6 (18.7) 37.3 (7) 121.2
Minority interest, net.. 4.9 (1.1) .6 (8) 4.4
------- ------- ----- -------
Income from continuing
operations............... $ 172.8 76.7 30.4 279.9
======= ======= ===== =======
Income from continuing
operations per share
(2)...................... $ .89 1.07
======= =======
Average common equivalent
shares................... 194.1 260.9
======= =======
</TABLE>
(Footnotes on following pages)
III-3
<PAGE>
HILTON HOTELS CORPORATION
UNAUDITED PRO FORMA CONDENSED BALANCE SHEET
AS OF SEPTEMBER 30, 1996
(IN MILLIONS)
<TABLE>
<CAPTION>
PRO FORMA
PARENT BALLY MERGER PARENT
HISTORICAL HISTORICAL(1) ADJUSTMENTS AS ADJUSTED
---------- ------------- ----------- -----------
<S> <C> <C> <C> <C>
ASSETS:
Current assets
Cash and equivalents... $ 211.4 $ 280.5 $ -- $ 491.9
Temporary investments.. 56.3 7.6 -- 63.9
Deferred income taxes.. 26.4 22.3 114.4(14) 163.1
Other current assets... 315.7 70.8 -- 386.5
-------- -------- -------- --------
Total current
assets.............. 609.8 381.2 114.4 1,105.4
Investments.............. 590.0 20.9 (9.6)(9) 601.3
Property and equipment,
net..................... 1,757.1 1,255.1 967.4 (10) 3,979.6
Goodwill................. 6.4 121.7 1,151.3 (11) 1,279.4
Other assets............. 56.1 108.9 (54.7)(12) 110.3
-------- -------- -------- --------
Total investments,
property and other
assets.............. 2,409.6 1,506.6 2,054.4 5,970.6
-------- -------- -------- --------
Total assets......... $3,019.4 $1,887.8 $2,168.8 $7,076.0
======== ======== ======== ========
LIABILITIES AND
STOCKHOLDERS' EQUITY
Current liabilities...... $ 355.0 $ 144.8 $ 184.2 (13) $ 684.0
Long-term debt........... 1,087.2 1,208.7 121.0 (5) 2,416.9
Deferred income taxes.... 125.0 170.6 377.3 (14) 672.9
Insurance reserves and
other................... 60.1 51.9 (10.2)(8) 101.8
-------- -------- -------- --------
Total liabilities.... 1,627.3 1,576.0 672.3 3,875.6
Stockholders' equity..... 1,392.1 311.8 1,496.5 (15) 3,200.4
-------- -------- -------- --------
Total liabilities and
stockholders'
equity.............. $3,019.4 $1,887.8 $2,168.8 $7,076.0
======== ======== ======== ========
</TABLE>
(Footnotes on following pages)
III-4
<PAGE>
NOTES TO UNAUDITED PRO FORMA CONDENSED FINANCIAL STATEMENTS
The following table sets forth the determination and allocation of the
purchase price based on a market value of $28.16 per share of Parent Common
Stock. This market value is based on the average of the quoted market price of
Parent Common Stock for three day periods both before and after the Bally
Merger was announced.
<TABLE>
<CAPTION>
(IN MILLIONS)
-------------
<S> <C>
Merger exchange of share (53.2 million shares of Bally
Common Stock converted to Parent Common Stock and 14.8
million shares of Bally PRIDES converted to Parent
PRIDES at a common stock equivalent ratio of .92 to
one).................................................... $1,882.1
Assumption of Bally debt................................. 1,222.1
Transaction costs and expenses........................... 30.0
--------
Pro forma purchase price................................. $3,134.2
========
The preliminary allocation of the pro forma purchase price is as follows:
Land..................................................... $ 462.7
Buildings, vessels and furniture, fixtures and equip-
ment.................................................... 1,759.8
Goodwill................................................. 1,273.0
Other, net............................................... (361.3)
--------
$3,134.2
========
</TABLE>
- ---------------------
(1) There are no significant adjustments required to the historical financial
data of Bally to conform to the accounting policies of Parent. Certain
reclassifications have been made to the historical amounts of Bally to
conform the financial presentation of the two companies. Specifically,
selling, general and administrative expenses and depreciation and
amortization have been reclassified to other costs and expenses, and
interest income has been reclassified from other revenue to interest and
dividend income. Other reclassifications made to conform the financial
presentation are not material to the unaudited pro forma condensed
financial statements.
(2) Historical income from continuing operations per share of Parent is
presented after giving effect to the 4 for 1 stock split completed in
September 1996. Pro forma income from continuing operations per share is
computed on the basis of the combined weighted average number of shares of
Parent Common Stock and Parent Common Stock equivalents after giving
effect to the stock split and the issuance of shares to consummate the
Bally Merger.
(3) To record certain estimated operational efficiencies derived from the
historical cost of those items which are expected to be eliminated or
reduced as a result of the Bally Merger. The elimination of duplicative
corporate office and operational support functions is estimated to reduce
other costs and expenses and corporate expense by $17.0 million and $11.7
million, respectively, for the nine months ended September 30, 1996, and
to reduce other costs and expenses and corporate expense by $22.3 million
and $13.9 million, respectively, for the year ended December 31, 1995.
(4) To adjust depreciation expense due to the revaluation and change in useful
life of acquired property and equipment and adjust goodwill amortization
resulting from the allocation of the purchase price of Bally. Depreciation
expense is reduced $11.8 million for the nine months ended September 30,
1996 and $15.8 million for the year ended December 31, 1995. Goodwill
amortization is increased $20.3 million for the nine months ended
September 30, 1996 and $27.3 million for the year ended December 31, 1995.
Goodwill is amortized over 40 years.
(5) Pro forma results and financial position are adjusted by an assumed
refinancing of Bally debt as follows:
(i)Bally debt is adjusted to estimated fair market value; and
III-5
<PAGE>
(ii) Refinancing the balance of Bally debt, including refinancing costs,
with available Parent debt capacity under its revolving bank line-of-
credit at an average floating rate of 5.94% for the nine months ended
September 30, 1996 and 6.22% for the year ended December 31, 1995.
Each 1/8 percent change in the floating rate on this refinancing would
result in a change in interest expense of $1.3 million for the nine
months ended September 30, 1996 and $1.8 million for the year ended
December 31, 1995.
The refinancing decreases interest expense by $34.7 million for the nine
months ended September 30, 1996 and $42.5 million for the year ended
December 31, 1995 due to lower interest rates.
(6) Interest expense is reduced $.4 million for the nine months ended
September 30, 1996 and $1.1 million for the year ended December 31, 1995
due to the conversion of Bally's 8% Convertible Senior Subordinated
Debentures due 2000.
(7) To record the tax effect of pro forma adjustments to depreciation
expense, interest expense and cost reductions associated with estimated
operational efficiencies. The amortization of goodwill is not deductible
for tax purposes.
(8) Adjustment to minority interest is attributable to the following:
(i) The cancellation and conversion of the Series A Cumulative Exchangeable
Preferred Stock of Bally's Casino, Inc. (the "Subsidiary Preferred
Stock") into the right to receive shares of Bally Common Stock in
connection with the merger of Bally's Casino, Inc. with and into Bally,
and
(ii) The impact of the Bally debt refinancing.
(9) To reduce an investment to Parent's estimate of fair market value.
(10) To increase Bally's property and equipment to estimated fair market
value.
(11) To reflect the excess purchase price over fair value of net tangible
assets acquired and liabilities assumed.
(12) The reduction in other assets reflects (i) deferred financing costs of
Bally not valued due to the adjustment of debt to estimated fair market
value (ii) the forgiveness of a tax-sharing receivable of Bally pursuant
to the Bally Merger Agreement and (iii) a reserve to reduce an asset to
Parent's estimate of fair market value.
(13) The net increase in current liabilities reflects the accrual of
severance, option buyout and other direct merger costs of Parent and
Bally.
(14) To record the deferred tax effect of the pro forma balance sheet
adjustments, primarily related to property and equipment, refinancing
costs, and estimated severance, option buyout and other direct merger
costs.
(15) The net increase in stockholders' equity results from the following:
(i) The issuance of one share of Parent Common Stock (after giving effect
to the stock split) for each share of Bally Common Stock outstanding
after giving effect to the cancellation and conversion of the
Subsidiary Preferred Stock into Bally Common Stock,
(ii)Parent PRIDES issued in exchange for Bally PRIDES,
(iii)Costs to refinance Bally's debt, and
(iv)The elimination of Bally's historical net assets.
III-6
<PAGE>
Facsimile copies of the Letter of Transmittal, properly completed and duly
signed, will be accepted. The Letter of Transmittal, certificates for the
Shares and, if applicable, the Rights and any other required documents should
be sent by each stockholder of the Company or such stockholder's broker,
dealer, commercial bank, trust company or other nominee to the Depositary as
follows:
The Depositary for the Offer is:
IBJ SCHRODER BANK & TRUST COMPANY
By Mail: By Facsimile Transmission: By Hand or Overnight
Delivery:
P.O. Box 84 (212) 858-2611
Bowling Green Station Attn: Reorganization One State Street
New York, New York Operations Department New York, New York 10004
10274-0084 Attn: Securities
Attn: Reorganization Processing Window,
Operations Department Subcellar One
Confirm Facsimile by Telephone:
(212) 858-2103
Any questions or requests for assistance or additional copies of the Offer
to Purchase, the Letter of Transmittal and the Notice of Guaranteed Delivery
may be directed to the Information Agent or the Dealer Manager at their
respective telephone numbers and locations listed below. You may also contact
your broker, dealer, commercial bank or trust company or other nominee for
assistance concerning the Offer.
The Information Agent for the Offer is:
MACKENZIE
PARTNERS, INC.
156 Fifth Avenue New York, New York 10010 (212) 929-5500 (Call Collect) or
CALL TOLL-FREE (800) 322-2885
The Dealer Manager for the Offer is:
DONALDSON, LUFKIN & JENRETTE
SECURITIES CORPORATION
2121 Avenue of the Stars
Suite 3000
Los Angeles, CA 90067
(310) 282-5513 (Collect)
or
CALL TOLL-FREE (800) 237-5022, EXT. 5513
<PAGE>
EXHIBIT (a)(2)
LETTER OF TRANSMITTAL
TO TENDER SHARES OF COMMON STOCK
(INCLUDING THE ASSOCIATED SERIES A PARTICIPATING CUMULATIVE PREFERRED STOCK
PURCHASE RIGHTS)
OF
ITT CORPORATION
AT
$55 NET PER SHARE IN CASH
PURSUANT TO THE OFFER TO PURCHASE DATED JANUARY 31, 1997
BY
HLT CORPORATION
A WHOLLY OWNED SUBSIDIARY
OF
HILTON HOTELS CORPORATION
THE OFFER, PRORATION PERIOD AND WITHDRAWAL RIGHTS WILL EXPIRE AT
12:00 MIDNIGHT, NEW YORK CITY TIME, ON FRIDAY, FEBRUARY 28, 1997
UNLESS THE OFFER IS EXTENDED.
The Depositary for the Offer is:
IBJ SCHRODER BANK & TRUST COMPANY
By Mail: By Facsimile Transmission:
By Hand or Overnight
Delivery:
P.O. Box 84 (212) 858-2611 One State Street
Bowling Green Station Attn: Reorganization New York, New York
New York, New York Operations Department 10004
10274-0084 Attn: Securities
Attn: Reorganization Processing Window,
Operations Department Subcellar One
Confirm Facsimile by Telephone:
(212) 858-2103
---------------
DELIVERY OF THIS LETTER OF TRANSMITTAL TO AN ADDRESS OTHER THAN AS SET
FORTH ABOVE OR TRANSMISSION OF INSTRUCTIONS VIA FACSIMILE
TRANSMISSION OTHER THAN AS SET FORTH ABOVE WILL NOT CONSTITUTE A
VALID DELIVERY TO THE DEPOSITARY.
THE INSTRUCTIONS ACCOMPANYING THIS LETTER OF TRANSMITTAL SHOULD BE READ
CAREFULLY BEFORE THIS LETTER OF TRANSMITTAL IS COMPLETED.
NOTE: SIGNATURES MUST BE PROVIDED BELOW.
PLEASE READ CAREFULLY THE ACCOMPANYING INSTRUCTIONS.
DESCRIPTION OF SHARES TENDERED
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
NAME(S) AND
ADDRESS(ES)
OF
REGISTERED
HOLDER(S)
(PLEASE
FILL IN, IF SHARE CERTIFICATE(S) TENDERED
BLANK) (ATTACH ADDITIONAL LIST IF NECESSARY)
- ---------------------------------------------------------------
TOTAL NUMBER OF NUMBER
CERTIFICATE SHARES REPRESENTED OF SHARES
NUMBER(S)* BY CERTIFICATE(S)* TENDERED**
------------------------
------------------------
------------------------
------------------------
------------------------
------------------------
<S> <C> <C> <C>
TOTAL SHARES
</TABLE>
- -------------------------------------------------------------------------------
* Need not be completed by stockholders tendering by book-entry transfer.
** Unless otherwise indicated, it will be assumed that all Shares being
delivered to the Depositary are being tendered. See Instruction 4.
The names and addresses of the registered holders should be printed, if not
already printed above, exactly as they appear on the certificates representing
Shares tendered hereby. The certificates and number of Shares that the
undersigned wishes to tender should be indicated in the appropriate boxes.
<PAGE>
DESCRIPTION OF RIGHTS TENDERED
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
NAME(S) AND
ADDRESS(ES)
OF
REGISTERED
HOLDER(S)
(PLEASE
FILL IN, IF RIGHTS CERTIFICATE(S) TENDERED
BLANK) (ATTACH ADDITIONAL LIST IF NECESSARY)
- ----------------------------------------------------------------
TOTAL NUMBER OF NUMBER
CERTIFICATE RIGHTS REPRESENTED OF RIGHTS
NUMBER(S)** BY CERTIFICATE(S) TENDERED***
------------------------
------------------------
------------------------
------------------------
------------------------
------------------------
<S> <C> <C> <C>
TOTAL RIGHTS
</TABLE>
- --------------------------------------------------------------------------------
* If the tendered Rights are represented by separate Rights Certificates,
complete the certificate numbers of such Rights Certificates.
Stockholders tendering Rights which are not represented by separate
certificates will need to submit an additional Letter of Transmittal if
Rights Certificates are distributed.
** Need not be completed by stockholders tendering by book-entry transfer.
*** Unless otherwise indicated, it will be assumed that all Rights being
delivered to the Depositary are being tendered. See Instruction 4.
The names and addresses of the registered holders should be printed, if not
already printed above, exactly as they appear on the certificates representing
Rights tendered hereby. The certificates and number of Rights that the
undersigned wishes to tender should be indicated in the appropriate boxes.
This Letter of Transmittal is to be used either if certificates evidencing
Shares and/or Rights (each as defined below) are to be forwarded herewith or,
unless an Agent's Message (as defined in the Offer to Purchase dated January
31, 1997 (the "Offer to Purchase")) is utilized, if delivery of Shares and/or
Rights is to be made by book-entry transfer to the account maintained by IBJ
Schroder Bank & Trust Company (the "Depositary") at The Depository Trust
Company or Philadelphia Depository Trust Company (each, a "Book-Entry Transfer
Facility" and, collectively, the "Book-Entry Transfer Facilities") pursuant to
the procedures set forth in Section 3 of the Offer to Purchase.
Holders of Shares will be required to tender one Right for each Share
tendered to effect a valid tender of such Share. Until the Distribution Date
(as defined in the Offer to Purchase) occurs, the Rights are represented by and
transferred with the Shares. Accordingly, if the Distribution Date does not
occur prior to the Expiration Date (as defined in the Offer to Purchase), a
tender of Shares will constitute a tender of the associated Rights. If a
Distribution Date has occurred, the Purchaser (as defined below) has waived
that portion of the Rights Condition (as defined in the Offer to Purchase)
requiring that a Distribution Date not have occurred and separate certificates
("Rights Certificates") have been distributed by the Company (as defined below)
to holders of Shares prior to the date of tender pursuant to the Offer (as
defined below), Rights Certificates representing a number of Rights equal to
the number of Shares being tendered must be delivered to the Depositary in
order for such Shares to be validly tendered. If a Distribution Date has
occurred, the Purchaser (as defined below) has waived that portion of the
Rights Condition (as defined in the Offer to Purchase) requiring that a
Distribution Date not have occurred and Rights Certificates have not been
distributed prior to the time Shares are tendered pursuant to the Offer, a
tender of Shares without Rights constitutes an agreement by the tendering
stockholder to deliver Rights Certificates representing a number of Rights
equal to the number of Shares tendered pursuant to the Offer to the Depositary
within three business days after the date Rights Certificates are distributed.
The Purchaser reserves the right to require that it receive such Rights
Certificates prior to accepting Shares for payment. Payment for Shares tendered
and purchased pursuant to the Offer will be made only after timely receipt by
the Depositary of, among other things, Rights Certificates, if such
certificates have been distributed to holders of Shares. The Purchaser will not
pay any additional consideration for the Rights tendered pursuant to the Offer.
<PAGE>
Holders whose certificates for Shares and, if applicable, Rights, are not
immediately available (including, if the Distribution Date has occurred, but
Rights Certificates have not yet been distributed by the Company), or who
cannot deliver confirmation of the book-entry transfer of their Shares into
the Depositary's account at a Book-Entry Transfer Facility ("Book-Entry
Confirmation") and all other documents required hereby to the Depositary on or
prior to the Expiration Date (as defined in the Offer to Purchase), must
tender their Shares and Rights according to the guaranteed delivery procedures
set forth in Section 3 of the Offer to Purchase. See Instruction 2 of this
Letter of Transmittal. Delivery of documents to a Book-Entry Transfer Facility
does not constitute delivery to the Depositary.
[_]
CHECK HERE IF TENDERED SHARES ARE BEING DELIVERED BY BOOK-ENTRY TRANSFER
MADE TO THE ACCOUNT MAINTAINED BY THE DEPOSITARY WITH A BOOK-ENTRY
TRANSFER FACILITY AND COMPLETE THE FOLLOWING:
Name of Tendering Institution: ____________________________________________
Check Box of Book-Entry Transfer Facility:
[_] The Depository Trust Company
[_] Philadelphia Depository Trust Company
Account Number ________________________________________________________________
Transaction Code Number ______________________________________________________
[_]
CHECK HERE IF TENDERED SHARES ARE BEING DELIVERED PURSUANT TO A NOTICE OF
GUARANTEED DELIVERY (AS DEFINED IN THE OFFER TO PURCHASE) PREVIOUSLY SENT
TO THE DEPOSITARY AND COMPLETE THE FOLLOWING:
Name(s) of Registered Owner(s): ___________________________________________
Date of Execution of Notice of Guaranteed Delivery: _______________________
Name of Institution that Guaranteed Delivery: _____________________________
If Delivered by Book-Entry Transfer, Check Box of Book-Entry Transfer
Facility:
[_] The Depository Trust Company
[_] Philadelphia Depository Trust Company
Account Number ________________________________________________________________
Transaction Code Number _______________________________________________________
<PAGE>
LADIES AND GENTLEMEN:
The undersigned hereby tenders to HLT Corporation, a Delaware corporation
(the "Purchaser") and wholly owned subsidiary of Hilton Hotels Corporation, a
Delaware corporation ("Parent"), (i) the above described shares (the "Shares")
of common stock, no par value per share (the "Common Stock"), of ITT
Corporation, a Nevada corporation (the "Company"), and (ii) unless and until
validly redeemed by the Board of Directors of the Company (the "Board"), the
Series A Participating Cumulative Preferred Stock Purchase Rights (the
"Rights") associated therewith and issued pursuant to the Rights Agreement,
dated as of November 1, 1995, between the Company and The Bank of New York, as
Rights Agent (the "Rights Agreement"), at a price of $55 per Share (including
associated Right), net to the seller in cash, without interest thereon (the
"Offer Price"), upon the terms and subject to the conditions set forth in the
Offer to Purchase and in this related Letter of Transmittal (which, as amended
from time to time, together constitute the "Offer"). Unless the context
requires otherwise, all references to Shares herein shall include the
associated Rights, and all references to the Rights shall include all benefits
that may inure to the holders of the Rights pursuant to the Rights Agreement.
Subject to, and effective upon, acceptance for payment of the Shares and
Rights tendered herewith in accordance with the terms and subject to the
conditions of the Offer, the undersigned hereby sells, assigns, and transfers
to, or upon the order of, the Purchaser all right, title and interest in and
to all the Shares and Rights that are being tendered hereby (and any and all
other Shares, rights or other securities issued or issuable in respect thereof
on or after January 31, 1997) and irrevocably constitutes and appoints the
Depositary the true and lawful agent and attorney-in-fact of the undersigned
with respect to such Shares and Rights (and any such other shares, rights or
securities) with full power of substitution (such power of attorney being
deemed to be an irrevocable power coupled with an interest), to (a) deliver
certificates for such Shares and Rights (individually, a "Share Certificate"
and a "Rights Certificate," respectively) (and any such other shares, rights
or securities), or transfer ownership of such Shares and Rights (and any such
other shares, rights or securities) on the account books maintained by a Book-
Entry Transfer Facility, together in either such case with all accompanying
evidences of transfer and authenticity to, or upon the order of, the Purchaser
upon receipt by the Depositary, as the undersigned's agent, of the purchase
price (adjusted, if appropriate, as provided in the Offer to Purchase), (b)
present such Shares and Rights (and any such other Shares, rights or
securities) for transfer on the books of the Company and (c) receive all
benefits and otherwise exercise all rights of beneficial ownership of such
Shares and Rights (and any other such shares, rights or securities), all in
accordance with the terms of the Offer.
The undersigned understands that, unless the Rights are redeemed prior to
the expiration of the Offer, stockholders will be required to tender one Right
for each Share tendered in order to effect a valid tender of such Share. The
undersigned understands that if the Distribution Date has occurred, the
Purchaser has waived that portion of the Rights Condition requiring that a
Distribution Date not have occurred, and Rights Certificates have been
distributed to holders of Shares prior to the date of tender pursuant to the
Offer, Rights Certificates representing a number of Rights equal to the number
of Shares being tendered herewith must be delivered to the Depositary or, if
available, a Book-Entry Confirmation must be received by the Depositary with
respect thereto. If the Distribution Date has occurred, the Purchaser has
waived that portion of the Rights Condition requiring that a Distribution Date
not have occurred, and Rights Certificates have not been distributed prior to
the time Shares are tendered herewith, the undersigned agrees hereby to
deliver Rights Certificates representing a number of Rights equal to the
number of Shares tendered herewith to the Depositary within three business
days after the date such Rights Certificates are distributed. The Purchaser
reserves the right to require that the Depositary receive such Rights
Certificates, or a Book-Entry Confirmation, if available, with respect to such
Rights prior to accepting Shares for payment. Payment for Shares tendered and
accepted for payment pursuant to the Offer will be made only after timely
receipt by the Depositary of, among other things, Rights Certificates if such
certificates have been distributed to holders of Shares. The Purchaser will
not pay any additional consideration for the Rights tendered pursuant to the
Offer.
<PAGE>
If, on or after January 27, 1997, the Company should declare or pay any cash
or stock dividend or other distribution on or issue any rights (other than the
Rights) with respect to the Shares payable or distributable to stockholders of
record on a date before the transfer to the name of the Purchaser or its
nominee or transferee on the Company's stock transfer records of the Shares
accepted for payment pursuant to the Offer, then, subject to the provisions of
Section 14 of the Offer to Purchase, (i) the purchase price per Share payable
by the Purchaser pursuant to the Offer will be reduced by the amount of any
such cash dividend or cash distribution and (ii) the whole of any such non-
cash dividend, distribution or right will be received and held by the
tendering stockholder for the account of the Purchaser and shall be required
to be promptly remitted and transferred by each tendering stockholder to the
Depositary for the account of the Purchaser, accompanied by appropriate
documentation of transfer. Pending such remittance, the Purchaser will be
entitled to all rights and privileges as owner of any such non-cash dividend,
distribution or right and may withhold the entire purchase price or deduct
from the purchase price the amount of value thereof, as determined by the
Purchaser in its sole discretion.
The undersigned hereby irrevocably appoints Stephen F. Bollenbach, Matthew
J. Hart and Scott A. LaPorta and each of them, the attorneys-in-fact and
proxies of the undersigned, each with full power of substitution to the full
extent of such stockholder's rights with respect to tendered Shares and Rights
(and any and all other Shares, rights or securities issued or issuable in
respect thereof on or after January 31, 1997), to vote in such manner as each
such attorney and proxy or his substitute shall in his sole discretion deem
proper, and otherwise act with respect to all the Shares and Rights tendered
hereby which have been accepted for payment by the Purchaser prior to the time
of such vote which the undersigned is entitled to vote at any meeting of
stockholders (whether annual or special and whether or not an adjourned
meeting) of the Company, or otherwise. This proxy is coupled with an interest
in the Company and in the Shares and Rights and is irrevocable and is granted
in consideration of, and is effective when, if and to the extent that the
Purchaser accepts such Shares and Rights for payment pursuant to the Offer.
Such acceptance for payment shall revoke, without further action, all prior
proxies granted by the undersigned at any time with respect to such Shares and
Rights (and any such other Shares or other securities) and no subsequent
proxies will be given (and if given will be deemed not to be effective) with
respect thereto by the undersigned. The undersigned acknowledges that in order
for Shares and Rights to be deemed validly tendered, immediately upon the
acceptance for payment of such Shares and Rights, the Purchaser or the
Purchaser's designee must be able to exercise full voting and all other rights
which inure to a record and beneficial holder with respect to such Shares and
Rights.
The undersigned hereby represents and warrants that the undersigned has full
power and authority to tender, sell, assign and transfer the Shares and Rights
tendered hereby (and any and all other Shares or other securities issued or
issuable in respect thereof on or after January 31, 1997), and that, when the
same are accepted for payment by the Purchaser, the Purchaser will acquire
good, marketable and unencumbered title thereto, free and clear of all liens,
restrictions, charges and encumbrances and the same will not be subject to any
adverse claim. The undersigned, upon request, will execute and deliver any
additional documents deemed by the Depositary or the Purchaser to be necessary
or desirable to complete or confirm the sale, assignment and transfer of the
Shares and Rights tendered hereby (and any and all such other Shares, rights
or other securities).
All authority herein conferred or agreed to be conferred in this Letter of
Transmittal shall not be affected by, and shall survive, the death or
incapacity of the undersigned, and any obligation of the undersigned hereunder
shall be binding upon the successors, assigns, heirs, executors,
administrators, trustees in bankruptcy, personal and legal representatives of
the undersigned. Except as stated in the Offer to Purchase, this tender is
irrevocable, provided that Shares and Rights tendered pursuant to the Offer
may be withdrawn at any time prior to their acceptance for payment.
The undersigned understands that tenders of Shares and Rights pursuant to
any one of the procedures described in Section 3 of the Offer to Purchase and
the instructions hereto will constitute a binding agreement between the
undersigned and the Purchaser upon the terms and subject to the conditions of
the Offer. The undersigned recognizes that under certain circumstances set
forth in the Offer to Purchase, the Purchaser may not be required to accept
for payment any of the Shares and Rights tendered hereby.
Unless otherwise indicated herein under "Special Payment Instructions,"
please issue the check for the purchase price and/or return any certificates
for Shares or Rights not tendered or accepted for payment in the
<PAGE>
name(s) of the undersigned. Similarly, unless otherwise indicated under
"Special Delivery Instructions," please mail the check for the purchase price
and/or return any certificates for Shares or Rights not tendered or accepted
for payment (and accompanying documents, as appropriate) to the undersigned at
the address shown below the undersigned's signature. In the event that both
the Special Delivery Instructions and the Special Payment Instructions are
completed, please issue the check for the purchase price and/or return any
certificates for Shares or Rights not tendered or accepted for payment in the
name of, and deliver such check and/or return such certificates to the person
or persons so indicated. Stockholders delivering Shares or rights by book-
entry transfer may request that any Shares or Rights not accepted for payment
be returned by crediting such account maintained at a Book-Entry Transfer
Facility as such stockholder may designate by making an appropriate entry
under "Special Payment Instructions." The undersigned recognizes that the
Purchaser has no obligation pursuant to the Special Payment Instructions to
transfer any Shares or Rights from the name of the registered holder thereof
if the Purchaser does not accept for payment any of the Shares or Rights so
tendered.
SPECIAL PAYMENT INSTRUCTIONS (SEE SPECIAL DELIVERY INSTRUCTIONS
INSTRUCTIONS 1, 5, 6 AND 7 OF (SEE INSTRUCTIONS 1, 5, 6 AND 7
THIS LETTER OF TRANSMITTAL) OF THIS LETTER OF TRANSMITTAL)
To be completed ONLY if certifi- To be completed ONLY if certifi-
cates for Shares and/or Rights cates for Shares and/or Rights
not tendered or not purchased not tendered or not purchased
and/or the check for the purchase and/or the check for the purchase
price of Shares and/or Rights price of Shares and/or Rights
purchased are to be issued in the purchased are to be sent to some-
name of someone other than the one other than the undersigned,
undersigned, or if Shares and/or or to the undersigned at an ad-
Rights delivered by book-entry dress other than that shown
transfer which are not purchased above.
are to be returned by credit to
an account maintained at a Book-
Entry Transfer Facility other
than that designated above.
Mail [_] Check and/or [_] Certificates
to:
Name______________________________
(PLEASE PRINT)
Issue [_] Check and/or [_] Certificates Address __________________________
to: __________________________________
(ZIP CODE)
Name _____________________________
(PLEASE PRINT)
Address __________________________
__________________________________
(ZIP CODE)
__________________________________
(TAXPAYER IDENTIFICATION OR
SOCIAL SECURITY NUMBER)
(ALSO COMPLETE SUBSTITUTE FORM W-
9 BELOW)
[_] Credit unpurchased Shares
and/or Rights delivered by
book-entry transfer to the
Book-Entry Transfer Facility
account set forth below:
Check appropriate box:
[_] The Depository Trust Company
[_] Philadelphia Depository Trust
Company
__________________________________
(ACCOUNT NUMBER)
<PAGE>
SIGN HERE
(COMPLETE SUBSTITUTE FORM W-9 ON REVERSE)
...............................................................
...............................................................
(SIGNATURE(S) OF HOLDER(S))
Dated: ................................................... 1997
(Must be signed by registered holder(s) exactly as name(s)
appear(s) on stock certificate(s) or on a security position
listing or by person(s) authorized to become registered
holder(s) by certificates and documents transmitted herewith.
If signature is by trustees, executors, administrators,
guardians, attorneys-in-fact, officers of corporations or
others acting in a fiduciary or representative capacity,
please provide the following information. See Instruction 5 of
this Letter of Transmittal.)
Name(s)........................................................
.......................................................
(PLEASE PRINT)
Capacity (Full title)..........................................
Address........................................................
.......................................................
(INCLUDE ZIP CODE)
Area Code and Telephone Number.................................
Tax Identification or Social Security No.......................
(COMPLETE SUBSTITUTE FORM W-9 ON REVERSE)
GUARANTEE OF SIGNATURE(S) (SEE INSTRUCTIONS 1 AND 5 OF THIS LETTER OF
TRANSMITTAL)
Authorized Signature...........................................
Name...........................................................
(PLEASE PRINT)
Title..........................................................
Name of Firm...................................................
Address........................................................
...............................................................
(INCLUDE ZIP CODE)
Area Code and Telephone Number.................................
Dated: .................................................., 1997
<PAGE>
INSTRUCTIONS
FORMING PART OF THE TERMS AND CONDITIONS OF THE OFFER
1. Guarantee of Signatures. No signature guarantee on this Letter of
Transmittal is required (i) if this Letter of Transmittal is signed by the
registered holder of the Shares and/or Rights (which term, for purposes of
this document, shall include any participant in a Book-Entry Transfer Facility
whose name appears on a security position listing as the owner of Shares or
Rights) tendered herewith, unless such holder has completed either the box
entitled "Special Delivery Instructions" or the box entitled "Special Payment
Instructions" on the reverse hereof or (ii) if such Shares and/or Rights are
tendered for the account of a firm which is a bank, broker, dealer, credit
union, savings association or other entity that is a member in good standing
of the Securities Transfer Agents Medallion Program (each, an "Eligible
Institution"). In all other cases, all signatures on this Letter of
Transmittal must be guaranteed by an Eligible Institution. See Instruction 5
of this Letter of Transmittal.
2. Delivery of Letter of Transmittal and Certificates. This Letter of
Transmittal is to be completed by stockholders either if certificates are to
be forwarded herewith or if tenders are to be made pursuant to the procedures
for delivery by book-entry transfer set forth in Section 3 of the Offer to
Purchase. Certificates for all physically tendered Shares and/or Rights, or
any Book-Entry Confirmation of Shares and/or Rights, as the case may be, as
well as a properly completed and duly executed Letter of Transmittal (or
manually signed facsimile thereof), with any required signature guarantees, or
an Agent's Message (as defined below), in the case of a book-entry delivery,
and any other documents required by this Letter of Transmittal must be
transmitted to and received by the Depositary at one of its addresses set
forth herein prior to the Expiration Date and, if a Distribution Date has
occurred and the Purchaser has waived that portion of the Rights Condition
requiring that a Distribution Date not have occurred, Rights Certificates, or
Book-Entry Confirmation of a transfer of Rights into the Depositary's account
at a Book-Entry Transfer Facility, if available (together with, if Rights are
forwarded separately from Shares, a properly completed and duly executed
Letter of Transmittal (or a facsimile thereof) with any required signature
guarantee, or an Agent's Message in the case of a book-entry delivery, and any
other documents required by the Letter of Transmittal), must be received by
the Depositary at one of its addresses set forth herein prior to the
Expiration Date or, if later, within three business days after the date on
which such Rights Certificates are distributed. If a holder's Share
Certificates and, if applicable, Rights Certificates, are not immediately
available (including, if Rights Certificates have not yet been distributed) or
time will not permit all required documents to reach the Depositary prior to
the Expiration Date, or the procedure for book-entry transfer cannot be
completed on a timely basis, such holder's Shares and/or Rights may
nevertheless be tendered by properly completing and duly executing the Notice
of Guaranteed Delivery pursuant to the guaranteed delivery procedure set forth
in Section 3 of the Offer to Purchase. Pursuant to such procedure, (i) such
tender must be made by or through an Eligible Institution, (ii) a properly
completed and duly executed Notice of Guaranteed Delivery, substantially in
the form provided by the Purchaser, must be received by the Depositary prior
to the Expiration Date and (iii) in the case of a guarantee of Shares and/or
Rights, the certificates for all tendered Shares and/or Rights, in proper form
for transfer, or a Book-Entry Confirmation, together with a properly completed
and duly executed Letter of Transmittal (or manually signed facsimile thereof)
with any required signature guarantee (or, in the case of a book-entry
transfer, an Agent's Message) and any other documents required by such Letter
of Transmittal, must be received by the Depositary (a) in the case of Shares,
within three NYSE trading days after the date of execution of such Notice of
Guaranteed Delivery or (b) in the case of Rights, within a period ending on
the later of (i) three NYSE trading days after the date of execution of such
Notice of Guaranteed Delivery or (ii) three business days after Rights
Certificates are distributed to stockholders by the Company. If Share
Certificates and Rights Certificates are forwarded separately to the
Depositary, a properly completed and duly executed Letter of Transmittal (or
facsimile thereof) must accompany each such delivery. The term "Agent's
Message" means a message, transmitted by a Book-Entry Transfer Facility to,
and received by, the Depositary and forming a part of a Book-Entry
Confirmation, which states that
<PAGE>
such Book-Entry Transfer Facility has received an express instruction from the
participant in such Book-Entry Transfer Facility tendering the Shares or
Rights, that such participant has received and agrees to be bound by the terms
of this Letter of Transmittal and that the Purchaser may enforce such
agreement against the participant.
THE METHOD OF DELIVERY OF THIS LETTER OF TRANSMITTAL, SHARES CERTIFICATES,
AND, IF APPLICABLE, RIGHTS CERTIFICATES, AND ALL OTHER REQUIRED DOCUMENTS,
INCLUDING DELIVERY THROUGH ANY BOOK-ENTRY TRANSFER FACILITY, IS AT THE OPTION
AND RISK OF THE TENDERING STOCKHOLDER, AND THE DELIVERY WILL BE DEEMED MADE
ONLY WHEN ACTUALLY RECEIVED BY THE DEPOSITARY. IF DELIVERY IS BY MAIL,
PROPERLY INSURED REGISTERED MAIL WITH RETURN RECEIPT REQUESTED IS RECOMMENDED.
IN ALL CASES, SUFFICIENT TIME SHOULD BE ALLOWED TO ENSURE TIMELY DELIVERY.
EXCEPT AS OTHERWISE PROVIDED IN INSTRUCTION 2 OF THIS LETTER OF TRANSMITTAL,
THE DELIVERY WILL BE DEEMED MADE ONLY WHEN ACTUALLY RECEIVED BY THE
DEPOSITARY.
No alternative, conditional or contingent tenders will be accepted and no
fractional Shares or Rights will be purchased. All tendering stockholders, by
execution of this Letter of Transmittal (or a manually signed facsimile
thereof), waive any right to receive any notice of the acceptance of their
Shares or Rights for payment.
3. Inadequate Space. If the space provided herein is inadequate, the
certificate numbers and/or the number of Shares and, if applicable, Rights
should be listed on a separate signed schedule attached hereto.
4. Partial Tenders. (Not applicable to stockholders who tender by book-entry
transfer.) If fewer than all the Shares or Rights evidenced by any certificate
submitted are to be tendered, fill in the number of Shares or Rights which are
to be tendered in the box entitled "Description of Shares to be Tendered" and
"Description of Rights to be Tendered" respectively. In such case, new
certificate(s) for the remainder of the Shares or Rights that were evidenced
by your old certificate(s) will be sent to you, unless otherwise provided in
the appropriate box on this Letter of Transmittal, as soon as practicable
after the Expiration Date. All Shares and Rights represented by certificates
delivered to the Depositary will be deemed to have been tendered unless
otherwise indicated.
5. Signatures on Letter of Transmittal, Stock Powers and Endorsements. If
this Letter of Transmittal is signed by the registered holder(s) of the Shares
and Rights tendered hereby, the signature(s) must correspond exactly to the
name(s) as written on the face of the certificate(s) without alteration,
enlargement or any change whatsoever.
If any of the Shares or Rights tendered hereby are owned of record by two or
more joint owners, all such owners must sign this Letter of Transmittal.
If any tendered Shares or Rights are registered in different names on
several certificates, it will be necessary to complete, sign and submit as
many separate Letters of Transmittal as there are different registrations of
certificates.
If this Letter of Transmittal or any certificates or stock powers are signed
by a trustee, executor, administrator, guardian, attorney-in-fact, officer of
a corporation or other person acting in a fiduciary or representative
capacity, such person should so indicate when signing, and proper evidence
satisfactory to the Purchaser of such person's authority so to act must be
submitted.
When this Letter of Transmittal is signed by the registered owner(s) of the
Shares or Rights listed and transmitted hereby, no endorsement of certificates
or separate stock powers is required unless payment or certificates for Shares
or Rights not tendered or purchased are to be issued to a person other than
the registered owner(s). Signatures on such certificates or stock powers must
be guaranteed by an Eligible Institution.
If this Letter of Transmittal is signed by a person other than the
registered owner(s) of the Shares or Rights listed, the certificates must be
endorsed or accompanied by appropriate stock powers, in either case signed
exactly as the name(s) of the registered holder(s) appear on the certificates.
Signatures on such certificates or stock powers must be guaranteed by an
Eligible Institution.
<PAGE>
6. Stock Transfer Taxes. Except as set forth in this Instruction 6 of this
Letter of Transmittal, the Purchaser will pay or cause to be paid any stock
transfer taxes with respect to the transfer and sale of purchased Shares and
Rights to it or its order pursuant to the Offer. If payment of the purchase
price is to be made, or if certificates for Shares and/or Rights not tendered
or purchased are to be registered in the name of any person other than the
registered holder, or if tendered certificates are registered in the name of
any person other than the person(s) signing this Letter of Transmittal, the
amount of any stock transfer taxes (whether imposed on the registered holder
or such person) payable on account of the transfer to such person will be
deducted from the purchase price unless satisfactory evidence of the payment
of such taxes or exemption therefrom is submitted.
EXCEPT AS PROVIDED IN THIS INSTRUCTION 6 OF THIS LETTER OF TRANSMITTAL, IT
WILL NOT BE NECESSARY FOR TRANSFER TAX STAMPS TO BE AFFIXED TO THE
CERTIFICATES LISTED IN THIS LETTER OF TRANSMITTAL.
7. Special Payment and Delivery Instructions. If a check and/or certificates
for unpurchased Shares or Rights are to be issued in the name of a person
other than the signer of this Letter of Transmittal or if a check is to be
sent and/or such certificates are to be returned to someone other than the
signer of this Letter of Transmittal or to an address other than that shown
above, the appropriate boxes on this Letter of Transmittal should be
completed. Stockholders tendering Shares or Rights by book-entry transfer may
request that Shares and Rights not purchased be credited to such account
maintained at a Book-Entry Transfer Facility as such stockholder may designate
hereon. If no such instructions are given, such Shares and Rights not
purchased will be returned by crediting the account at the Book-Entry Transfer
Facility designated above.
8. Requests for Assistance or Additional Copies. Requests for assistance may
be directed to the Dealer Manager or the Information Agent (as such terms are
defined in the Offer to Purchase) at the addresses set forth below. Additional
copies of the Offer to Purchase, this Letter of Transmittal, the Notice of
Guaranteed Delivery and the Guidelines for Certification of Taxpayer
Identification Number on Substitute Form W-9 may be obtained from the Dealer
Manager or the Information Agent at the addresses set forth below or from your
broker, dealer, commercial bank or trust company.
9. Waiver of Conditions. The conditions of the Offer may be waived, in whole
or in part, by the Purchaser, in its sole discretion, at any time and from
time to time, in the case of any Shares or Rights tendered.
10. Substitute Form W-9. Each tendering stockholder is required to provide
the Depositary with a correct Taxpayer Identification Number ("TIN") on the
Substitute Form W-9, which is provided under "Important Tax Information"
below, and to certify, under penalties of perjury, that such number is correct
and that such stockholder is not subject to backup withholding of federal
income tax. If a tendering stockholder has been notified by the Internal
Revenue Service that such stockholder is subject to backup withholding, such
stockholder must cross out item (2) of the Certification box of the Substitute
Form W-9, unless such stockholder has since been notified by the Internal
Revenue Service that such stockholder is no longer subject to backup
withholding. Failure to provide the information on the Substitute Form W-9 may
subject the tendering stockholder to 31% federal income tax withholding with
respect to any payments received pursuant to the Offer and Proposed Merger (as
defined in the Offer to Purchase). If the tendering stockholder has not been
issued a TIN and has applied for one or intends to apply for one in the near
future, such stockholder should write "Applied For" in the space provided for
the TIN in Part I of the Substitute Form W-9, and sign and date the Substitute
Form W-9. If "Applied For" is written in Part I and the Depositary is not
provided with a TIN within 60 days, the Depositary will withhold 31% on all
payments of the purchase price to such stockholder until a TIN is provided to
the Depositary.
11. Lost, Destroyed or Stolen Certificates. If any certificate(s)
representing Shares or Rights has been lost, destroyed or stolen, the
stockholder should promptly notify the Depositary. The stockholder will then
be instructed as to the steps that must be taken in order to replace the
certificate(s). This Letter of Transmittal and related documents cannot be
processed until the procedures for replacing lost or destroyed certificates
have been followed.
IMPORTANT: THIS LETTER OF TRANSMITTAL (OR A FACSIMILE HEREOF), PROPERLY
COMPLETED AND DULY EXECUTED, TOGETHER WITH CERTIFICATES OR CONFIRMATION OF
BOOK-ENTRY TRANSFER AND ALL OTHER REQUIRED DOCUMENTS OR THE NOTICE OF
GUARANTEED DELIVERY, MUST BE RECEIVED BY THE DEPOSITARY AT ONE OF ITS
ADDRESSES SET FORTH HEREIN PRIOR TO THE EXPIRATION DATE.
<PAGE>
IMPORTANT TAX INFORMATION
Under United States federal income tax law, a stockholder whose tendered
Shares are accepted for payment is required by law to provide the Depositary
with such stockholder's correct TIN on Substitute Form W-9 below. If such
stockholder is an individual, the TIN is such stockholder's social security
number. If the Depositary is not provided with the correct TIN, the
stockholder may be subject to a $50 penalty imposed by the Internal Revenue
Service. In addition, payments that are made to such stockholder with respect
to Shares and Rights purchased pursuant to the Offer may be subject to backup
withholding of 31%.
Certain stockholders (including, among others, all corporations and certain
foreign individuals) are not subject to these backup withholding and reporting
requirements. In order for a foreign individual to qualify as an exempt
recipient, such individual must submit a statement, signed under penalties of
perjury, attesting to such individual's exempt status. Forms of such
statements can be obtained from the Depositary. See the enclosed Guidelines
for Certification of Taxpayer Identification Number on Substitute Form W-9 for
additional instructions.
If backup withholding applies with respect to a stockholder, the Depositary
is required to withhold 31% of any payments made to such stockholder. Backup
withholding is not an additional tax. Rather, the tax liability of persons
subject to backup withholding will be reduced by the amount of tax withheld.
If withholding results in an overpayment of taxes, a refund may be obtained
from the Internal Revenue Service.
PURPOSE OF SUBSTITUTE FORM W-9
To prevent backup withholding on payments that are made to a stockholder
with respect to Shares or Rights purchased pursuant to the Offer, the
stockholder is required to notify the Depositary of such stockholder's correct
TIN by completing the form below certifying (a) that the TIN provided on the
Substitute Form W-9 is correct (or that such stockholder is awaiting a TIN),
and (b) that such stockholder is not subject to backup withholding because (i)
such stockholder is exempt from backup withholding, (ii) such stockholder has
not been notified by the Internal Revenue Service that such stockholder is
subject to backup withholding as a result of a failure to report all interest
or dividends or (iii) such stockholder has been notified by the Internal
Revenue Service that such stockholder is no longer subject to backup
withholding.
WHAT NUMBER TO GIVE THE DEPOSITARY
The stockholder is required to give the Depositary the social security
number or employer identification number of the record owner of the Shares
and/or Rights tendered hereby. If the Shares and/or Rights are in more than
one name or are not in the name of the actual owner, consult the enclosed
Guidelines for Certification of Taxpayer Identification Number on Substitute
Form W-9 for additional guidance on which number to report. If the tendering
stockholder has not been issued a TIN and has applied for a number or intends
to apply for a number in the near future, the stockholder should write
"Applied For" in the space provided for in the TIN in Part I, and sign and
date the Substitute Form W-9. If "Applied For" is written in Part I and the
Depositary is not provided with a TIN within 60 days, the Depositary will
withhold 31% of all payments of the purchase price to such stockholder until a
TIN is provided to the Depositary.
<PAGE>
PAYER'S NAME: IBJ SCHRODER BANK & TRUST COMPANY, AS DEPOSITARY
PART I--PLEASE PROVIDE YOUR
TIN IN THE BOX AT RIGHT AND ----------------------
CERTIFY BY SIGNING AND Social Security Number
DATING BELOW. OR
SUBSTITUTE
FORM W-9
DEPARTMENT OF
THE TREASURY ----------------------
INTERNAL Employer Identification
REVENUE Number (If awaiting TIN
SERVICE write "Applied For")
--------------------------------------------------------
PAYER'S REQUEST PART II--For Payees exempt from backup withholding,
FOR TAXPAYER see the enclosed Guidelines for Certification of
IDENTIFICATION Taxpayer Identification Number on Substitute Form W-9
NUMBER (TIN) and complete as instructed therein.
CERTIFICATION--Under penalties of perjury, I certify
that:
(1) The number shown on this form is my correct
Taxpayer Identification Number (or a Taxpayer
Identification Number has not been issued to me)
and either (a) I have mailed or delivered an
application to receive a Taxpayer Identification
Number to the appropriate Internal Revenue
Service ("IRS") or Social Security Administration
office or (b) I intend to mail or deliver an
application in the near future. I understand that
if I do not provide a Taxpayer Identification
Number within 60 days, 31% of all reportable
payments made to me thereafter will be withheld
until I provide a number, and
(2) I am not subject to backup withholding either
because (a) I am exempt from backup withholding,
(b) I have not been notified by the IRS that I am
subject to backup withholding as a result of a
failure to report all interest or dividends, or
(c) the IRS has notified me that I am no longer
subject to backup withholding.
CERTIFICATION INSTRUCTIONS--You must cross out item
(2) above if you have been notified by the IRS that
you are subject to backup withholding because of
underreporting interest or dividends on your tax
return. However, if after being notified by the IRS
that you were subject to backup withholding you
received another notification from the IRS that you
are no longer subject to backup withholding, do not
cross out item (2). (Also see instructions in the
enclosed Guidelines.)
- --------------------------------------------------------------------------------
SIGNATURE _______________________________ DATE ____________________, 1997
NOTE: FAILURE TO COMPLETE AND RETURN THIS FORM MAY RESULT IN BACKUP
WITHHOLDING OF 31% OF ANY PAYMENTS MADE TO YOU PURSUANT TO THE OFFER.
PLEASE REVIEW THE ENCLOSED GUIDELINES FOR CERTIFICATION OF TAXPAYER
IDENTIFICATION NUMBER ON SUBSTITUTE FORM W-9 FOR ADDITIONAL DETAILS.
<PAGE>
Questions and requests for assistance or additional copies of the Offer to
Purchase, Letter of Transmittal and other tender offer materials may be
directed to the Information Agent or the Dealer Manager as set forth below:
The Information Agent for the Offer is:
LOGO
156 Fifth Avenue
New York, New York 10010
(212) 929-5500 (Call Collect)
or
CALL TOLL-FREE (800) 322-2885
The Dealer Manager for the Offer is:
DONALDSON, LUFKIN & JENRETTE
SECURITIES CORPORATION
2121 Avenue of the Stars
Suite 3000
Los Angeles, CA 90067
(310) 282-5513 (Collect)
or
CALL TOLL-FREE (800) 237-5022, EXT. 5513
<PAGE>
EXHIBIT (a)(3)
NOTICE OF GUARANTEED DELIVERY
FOR
TENDER OF SHARES OF COMMON STOCK
(INCLUDING THE ASSOCIATED SERIES A PARTICIPATING
CUMULATIVE PREFERRED STOCK PURCHASE RIGHTS)
OF
ITT CORPORATION
TO
HLT CORPORATION
A WHOLLY OWNED SUBSIDIARY
OF
HILTON HOTELS CORPORATION
(NOT TO BE USED FOR SIGNATURE GUARANTEES)
This Notice of Guaranteed Delivery, or one substantially in the form hereof,
must be used to tender Shares (as defined below) and Rights (as defined below)
pursuant to the Offer (as defined below) if (i) certificates ("Share
Certificates") representing shares (the "Shares") of common stock, no par
value per share (the "Common Stock"), of ITT Corporation, a Nevada corporation
(the "Company"), or if applicable, certificates ("Rights Certificates") for
the associated Series A Participating Cumulative Preferred Stock Purchase
Rights (the "Rights") issued pursuant to the Rights Agreement, dated as of
November 1, 1995, between the Company and The Bank of New York, as Rights
Agent (the "Rights Agreement"), are not immediately available (including, if a
Distribution Date (as defined in the Offer to Purchase, dated January 31, 1997
(the "Offer to Purchase") has occurred, because Rights Certificates have not
yet been distributed); (ii) time will not permit all required documents to
reach the IBJ Schroder Bank & Trust Company, as Depositary (the "Depositary"),
prior to the Expiration Date (as defined in the Offer to Purchase); or (iii)
the procedure for delivery by book-entry transfer cannot be completed on a
timely basis. This Notice of Guaranteed Delivery may be delivered by hand or
mail or transmitted by telegram or facsimile to the Depositary. See Section 3
of the Offer to Purchase.
The Depositary for the Offer is:
IBJ SCHRODER BANK & TRUST COMPANY
By Mail: By Facsimile Transmission: By Hand or Overnight
Delivery:
P.O. Box 84 (212) 858-2611
Bowling Green Station Attn: Reorganization One State Street
New York, New York Operations Department New York, New York 10004
10274-0084 Attn: Securities
Attn: Reorganization Processing Window,
Operations Department Subcellar One
Confirm Facsimile by Telephone:
(212) 858-2103
DELIVERY OF THIS NOTICE OF GUARANTEED DELIVERY TO AN ADDRESS OTHER THAN AS
SET FORTH ABOVE OR TRANSMISSION OF INSTRUCTIONS VIA FACSIMILE TRANSMIS- SION
OTHER THAN AS SET FORTH ABOVE WILL NOT CONSTITUTE A VALID DELIVERY TO THE
DEPOSITARY.
This form is not to be used to guarantee signatures. If a signature on a
Letter of Transmittal is required to be guaranteed by an "Eligible
Institution" under the instructions thereto, such signature guarantee must
appear in the applicable space provided in the signature box on the Letter of
Transmittal.
<PAGE>
LADIES AND GENTLEMEN:
The undersigned hereby tenders to HLT Corporation, a Delaware
corporation and a wholly owned subsidiary of Hilton Hotels Corporation, a
Delaware corporation, upon the terms and subject to the conditions set
forth in the Offer to Purchase and in the related Letter of Transmittal
(which together constitute the "Offer"), receipt of which is hereby
acknowledged, the number of Shares and Rights indicated below pursuant to
the guaranteed delivery procedures set forth in Section 3 of the Offer to
Purchase.
Number of Shares: _________________________________________________________
Number of Rights: _________________________________________________________
Name(s) of Record Holder(s) _______________________________________________
___________________________________________________________________________
Please Type or Print
___________________________________________________________________________
Address(es): ______________________________________________________________
Zip Code
Area Code and Tel. No.: ___________________________________________________
Certificate No(s). (if available) _________________________________________
___________________________________________________________________________
Share Certificates: _______________________________________________________
Rights Certificates: ______________________________________________________
Check ONE box if Shares or Rights will be tendered by book-entry transfer:
[_]The Depository Trust Company
[_]Philadelphia Depository Trust Company
Signature(s): _____________________________________________________________
___________________________________________________________________________
Account Number ____________________________________________________________
Dated ____________ , 1997
<PAGE>
GUARANTEE
(NOT TO BE USED FOR SIGNATURE GUARANTEE)
The undersigned, a firm which is a bank, broker, dealer, credit union,
savings association or other entity that is a member in good standing of
the Securities Transfer Agents Medallion Program, hereby (a) represents
that the tender of Shares (or Rights, if applicable) effected hereby
complies with Rule 14e-4 under the Securities Exchange Act of 1934, as
amended and (b) guarantees delivery to the Depositary, at one of its
addresses set forth above, of certificates representing the Shares and
Rights tendered hereby in proper form for transfer, or confirmation of
book-entry transfer of such Shares and Rights into the Depositary's
accounts at The Depository Trust Company or Philadelphia Depository Trust
Company, in each case with delivery of a properly completed and duly
executed Letter of Transmittal (or facsimile thereof), and any other
required documents, within (a) in the case of Shares, three New York Stock
Exchange, Inc. ("NYSE") trading days after the date hereof or (b) in the
case of Rights, a period ending on the later of (i) three NYSE trading
days after the date hereof or (ii) three business days after the date
Rights Certificates are distributed to stockholders.
The Eligible Institution that completes this form must communicate the
guarantee to the Depositary and must deliver the Letter of Transmittal and
the certificates for Shares and Rights to the Depositary within the time
period shown herein. Failure to do so could result in a financial loss to
such Eligible Institution.
Name of Firm: _____________________________________________________________
___________________________________________________________________________
Authorized Signature
Address: __________________________________________________________________
Zip Code
Area Code and Tel. No.: ___________________________________________________
Name: _____________________________________________________________________
Please Type or Print
Title: ____________________________________________________________________
Date _____________ , 1997
NOTE: DO NOT SEND CERTIFICATES FOR SHARES OR RIGHTS WITH THIS NOTICE.
CERTIFICATES FOR SHARES OR RIGHTS SHOULD BE SENT WITH YOUR LETTER
OF TRANSMITTAL.
<PAGE>
EXHIBIT (a)(4)
OFFER TO PURCHASE FOR CASH
61,145,475 SHARES OF COMMON STOCK
(INCLUDING THE ASSOCIATED SERIES A PARTICIPATING
CUMULATIVE PREFERRED STOCK PURCHASE RIGHTS)
OF
ITT CORPORATION
BY
HLT CORPORATION
A WHOLLY OWNED SUBSIDIARY OF
HILTON HOTELS CORPORATION
AT
$55 NET PER SHARE IN CASH
THE OFFER, PRORATION PERIOD AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00
MIDNIGHT, NEW YORK CITY TIME, ON FRIDAY, FEBRUARY 28, 1997, UNLESS THE
OFFER IS EXTENDED.
January 31, 1997
To Brokers, Dealers, Commercial Banks, Trust Companies And Other Nominees:
We have been engaged by HLT Corporation, a Delaware corporation (the
"Purchaser") and a wholly owned subsidiary of Hilton Hotels Corporation, a
Delaware corporation ("Parent"), to act as Dealer Manager in connection with
the Purchaser's offer to purchase (i) 61,145,475 shares (the "Shares") of
common stock, no par value per share, of ITT Corporation, a Nevada corporation
(the "Company"), or such greater number of Shares which, when added to the
number of Shares beneficially owned by the Purchaser and its affiliates,
constitutes a majority of the total number of Shares outstanding on a fully
diluted basis as of the Expiration Date (as defined in the Offer to Purchase)
(the greater number of such Shares being the "Maximum Number"), and (ii)
unless and until the Purchaser declares that the Rights Condition (as defined
in the Offer to Purchase dated January 31, 1997 (the "Offer to Purchase")) is
satisfied, the associated preferred stock purchase rights (the "Rights")
issued pursuant to the Rights Agreement, dated as of November 1, 1995, by and
between the Company and The Bank of New York, as Rights Agent (the "Rights
Agreement"). The Purchaser is tendering for 61,145,475 Shares at a purchase
price of $55 per Share (including the associated Right), net to the seller in
cash, without interest thereon (the "Offer Price"), upon the terms and subject
to the conditions set forth in the Offer to Purchase and in the Letter of
Transmittal (which, as amended from time to time, together constitute the
"Offer").
Unless the Rights are redeemed prior to the Expiration Date, holders of
Shares will be required to tender one associated Right for each Share tendered
in order to effect a valid tender of such Share. Accordingly, stockholders who
sell their Rights separately from their Shares and do not otherwise acquire
Rights may not be able to satisfy the requirements of the Offer for the tender
of Shares. If the Distribution Date (as defined in the Offer to Purchase) has
not occurred prior to the Expiration Date, a tender of Shares will also
constitute a tender of the associated Rights. If the Distribution Date has
occurred, the Purchaser has waived that portion of the Rights Condition
requiring that a Distribution Date not have occurred and Rights Certificates
(as defined in the Offer to Purchase) have been distributed to holders of
Shares prior to the time a holder's Shares are purchased pursuant to the
Offer, in order for Rights (and the corresponding Shares) to be validly
tendered, Rights Certificates representing a number of Rights equal to the
number of Shares tendered must be delivered to the Depositary (as defined in
the Offer to Purchase) or, if available, a Book-Entry Confirmation (as defined
in the Offer to Purchase) must be received by the Depositary with respect
thereto. If the Distribution Date has occurred, the Purchaser has waived that
portion of the Rights Condition requiring that a Distribution Date not have
occurred and Rights Certificates have not been distributed prior to the time
Shares are purchased pursuant to the Offer, Rights may be tendered prior to a
stockholder receiving Rights Certificates by use of the guaranteed
<PAGE>
delivery procedure described in Section 3 of the Offer to Purchase. In any
case, a tender of Shares constitutes an agreement by the tendering stockholder
to deliver Rights Certificates representing a number of Rights equal to the
number of Shares tendered pursuant to the Offer to the Depositary within three
business days after the date Rights Certificates are distributed. The
Purchaser reserves the right to require that the Depositary receive Rights
Certificates, or a Book-Entry Confirmation, if available, with respect to such
Rights prior to accepting the related Shares for payment pursuant to the Offer
if the Distribution Date has occurred prior to the Expiration Date.
If a stockholder desires to tender Shares and Rights pursuant to the Offer
and such stockholder's Share Certificates (as defined in the Offer to
Purchase) or, if applicable, Rights Certificates are not immediately available
(including, if the Distribution Date has occurred and the Purchaser waives
that portion of the Rights Condition requiring that a Distribution Date not
have occurred, because Rights Certificates have not yet been distributed) or
time will not permit all required documents to reach the Depositary prior to
the Expiration Date or the procedure for book-entry transfer cannot be
completed on a timely basis, such Shares or Rights may nevertheless be
tendered according to the guaranteed delivery procedures set forth in Section
3 of the Offer to Purchase. See Instruction 2 of the Letter of Transmittal.
Delivery of documents to a Book-Entry Transfer Facility (as defined in the
Offer to Purchase) in accordance with the Book-Entry Transfer Facility's
procedures does not constitute delivery to the Depositary.
THE OFFER IS CONDITIONED UPON, AMONG OTHER THINGS, THERE BEING VALIDLY
TENDERED AND NOT WITHDRAWN PRIOR TO THE EXPIRATION OF THE OFFER A NUMBER OF
SHARES, INCLUDING THE RIGHTS ASSOCIATED THEREWITH, WHICH WHEN ADDED TO THE
NUMBER OF SHARES (AND RIGHTS) BENEFICIALLY OWNED BY PURCHASER AND ITS
AFFILIATES CONSTITUTES AT LEAST A MAJORITY OF THE TOTAL NUMBER OF OUTSTANDING
SHARES OF THE COMPANY ON A FULLY DILUTED BASIS.
For your information and for forwarding to your clients for whom you hold
Shares registered in your name or in the name of your nominee, or who hold
Shares registered in their own names, we are enclosing the following
documents:
1. Offer to Purchase;
2. Letter of Transmittal to be used by holders of Shares and Rights in
accepting the Offer and tendering Shares and Rights;
3. A letter which may be sent to your clients for whose account you hold
Shares registered in your name or in the name of your nominees, with space
provided for obtaining such clients' instructions with regard to the Offer;
4. Notice of Guaranteed Delivery to be used to accept the Offer if
certificates for Shares and Rights are not immediately available (including
if certificates for Rights have not yet been distributed) or if time will
not permit all required documents to reach the Depositary by the Expiration
Date or if the procedure for book-entry transfer cannot be completed on a
timely basis;
5. Guidelines of the Internal Revenue Service for Certification of
Taxpayer Identification Number on Substitute Form W-9; and
6. Return envelope addressed to the Depositary.
Upon the terms and subject to the conditions of the Offer (including, if the
Offer is extended or amended, the terms and conditions of any such extension
or amendment), the Purchaser will accept for payment and pay for the Maximum
Number of Shares (and, if applicable, the Rights) which are validly tendered
prior to the Expiration Date and not theretofore properly withdrawn when, as
and if the Purchaser gives oral or written notice to the Depositary of the
Purchaser's acceptance of such Shares and Rights for payment pursuant to the
Offer. Payment for Shares and Rights purchased pursuant to the Offer will in
all cases be made only after timely receipt by the Depositary of certificates
for such Shares, and, if applicable, certificates for the Rights or timely
confirmation of a book-entry transfer of such Shares and Rights into the
Depositary's account at The Depository
<PAGE>
Trust Company or Philadelphia Depository Trust Company, pursuant to the
procedures described in Section 3 of the Offer to Purchase, a properly
completed and duly executed Letter of Transmittal (or manually signed
facsimile thereof) or an Agent's Message (as defined in the Offer to Purchase)
in connection with a book-entry transfer, and all other documents required by
the Letter of Transmittal.
The Purchaser will not pay any fees or commissions to any broker or dealer
or other person (other than the Dealer Manager and Depositary) in connection
with the solicitation of tenders of Shares and Rights pursuant to the Offer.
The Purchaser will, however, upon request, reimburse you for customary mailing
and handling expenses incurred by you in forwarding the enclosed materials to
your clients.
The Purchaser will pay or cause to be paid any transfer taxes payable on the
transfer of Shares and Rights to it, except as otherwise provided in
Instruction 6 of the Letter of Transmittal.
YOUR PROMPT ACTION IS REQUESTED. WE URGE YOU TO CONTACT YOUR CLIENTS AS
PROMPTLY AS POSSIBLE. THE OFFER, PRORATION PERIOD AND WITHDRAWAL RIGHTS WILL
EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY TIME, ON FRIDAY, FEBRUARY 28, 1997,
UNLESS THE OFFER IS EXTENDED.
In order to take advantage of the Offer, a duly executed and properly
completed Letter of Transmittal (or facsimile thereof), with any required
signature guarantees and any other required documents, should be sent to the
Depositary, and certificates representing the tendered Shares and Rights
should be delivered or such Shares and Rights should be tendered by book-entry
transfer, all in accordance with the Instructions set forth in the Letter of
Transmittal and the Offer to Purchase.
If holders of Shares and Rights wish to tender, but it is impracticable for
them to forward their certificates or other required documents prior to the
expiration of the Offer, a tender may be effected by following the guaranteed
delivery procedures specified under Section 3 of the Offer to Purchase.
Any inquiries you may have with respect to the Offer should be addressed to
the Dealer Manager (as defined in the Offer to Purchase) or the Information
Agent (as defined in the Offer to Purchase) at their respective addresses and
telephone numbers set forth on the back cover page of the Offer to Purchase.
Additional copies of the enclosed materials may be obtained from the
undersigned, Donaldson, Lufkin & Jenrette Securities Corporation, by telephone
310-282-5063 (collect) or by calling the Information Agent, MacKenzie
Partners, Inc., at (212) 929-5500 (collect), or Toll-Free 800-322-2885, or
from brokers, dealers, commercial banks or trust companies.
Very truly yours,
Donaldson, Lufkin & Jenrette
Securities Corporation
NOTHING CONTAINED HEREIN OR IN THE ENCLOSED DOCUMENTS SHALL CONSTITUTE YOU
OR ANY PERSON AS AN AGENT OF PARENT, THE PURCHASER, THE DEPOSITARY, THE
INFORMATION AGENT OR THE DEALER MANAGER, OR ANY AFFILIATE OF ANY OF THE
FOREGOING, OR AUTHORIZE YOU OR ANY OTHER PERSON TO USE ANY DOCUMENT OR MAKE
ANY STATEMENT ON BEHALF OF ANY OF THEM IN CONNECTION WITH THE OFFER OTHER THAN
THE DOCUMENTS ENCLOSED AND THE STATEMENTS CONTAINED THEREIN.
<PAGE>
EXHIBIT (a)(5)
OFFER TO PURCHASE FOR CASH
61,145,475 SHARES OF COMMON STOCK
(INCLUDING THE ASSOCIATED SERIES A PARTICIPATING
CUMULATIVE PREFERRED STOCK PURCHASE RIGHTS)
OF
ITT CORPORATION
BY
HLT CORPORATION
A WHOLLY OWNED SUBSIDIARY
OF
HILTON HOTELS CORPORATION
AT
$55 NET PER SHARE IN CASH
January 31, 1997
To Our Clients:
Enclosed for your consideration is the Offer to Purchase, dated January 31,
1997 (the "Offer to Purchase") and the Letter of Transmittal (which, as
amended from time to time, together constitute the "Offer") relating to an
offer by HLT Corporation, a Delaware corporation (the "Purchaser") and a
wholly owned subsidiary of Hilton Hotels Corporation, a Delaware corporation
("Parent"), to purchase (i) 61,145,475 shares (the "Shares") of common stock,
no par value per share, of ITT Corporation, a Nevada corporation (the
"Company"), or such greater number of Shares which, when added to the number
of Shares beneficially owned by the Purchaser and its affiliates, constitutes
a majority of the total number of Shares outstanding on a fully diluted basis
as of the Expiration Date (as defined in the Offer to Purchase), and (ii)
(unless and until the Purchaser declares that the Rights Condition (as defined
in the Offer to Purchase) is satisfied) the associated preferred stock
purchase rights (the "Rights") issued pursuant to the Rights Agreement, dated
as of November 1, 1995, by and between the Company and The Bank of New York,
as Rights Agent. The Purchaser is tendering for 61,145,475 Shares at a
purchase price of $55 per Share (including the associated Right), net to the
seller in cash, without interest thereon (the "Offer Price") upon the terms
and subject to the conditions set forth in the Offer to Purchase.
Unless the Rights are redeemed prior to the Expiration Date, holders of
Shares will be required to tender one associated Right for each Share tendered
in order to effect a valid tender of such Share. Accordingly, stockholders who
sell their Rights separately from their Shares and do not otherwise acquire
Rights may not be able to satisfy the requirements of the Offer for the tender
of Shares. If the Distribution Date (as defined in the Offer to Purchase) has
not occurred prior to the Expiration Date, a tender of Shares will also
constitute a tender of the associated Rights. If the Distribution Date has
occurred, the Purchaser has waived that portion of the Rights Condition
requiring that a Distribution Date not have occurred and Rights Certificates
(as defined in the Offer to Purchase) have been distributed to holders of
Shares prior to the time a holder's Shares are purchased pursuant to the
Offer, in order for Rights (and the corresponding Shares) to be validly
tendered, Rights Certificates representing a number of Rights equal to the
number of Shares tendered must be delivered to the Depositary (as defined in
the Offer to Purchase) or, if available, a Book-Entry Confirmation (as defined
in the Offer to Purchase) must be received by the Depositary with respect
thereto. If the Distribution Date has occurred, the Purchaser has waived that
portion of the Rights Condition requiring that a Distribution Date not have
occurred and Rights Certificates have not been distributed prior to the time
Shares are purchased pursuant to the Offer, Rights may be tendered prior to a
stockholder receiving Rights Certificates by use of the guaranteed delivery
procedure described in Section 3 of the Offer to Purchase. In any case, a
tender of Shares constitutes an agreement by the tendering stockholder to
deliver Rights Certificates representing a number of Rights equal to the
number of Shares tendered pursuant to the Offer to the Depositary within three
business days after the date Rights Certificates are distributed. The
Purchaser reserves the right to require that the Depositary receive Rights
Certificates, or a Book-Entry Confirmation, if available, with respect to such
Rights prior to accepting the related Shares for payment pursuant to the Offer
if the Distribution Date has occurred prior to the Expiration Date.
<PAGE>
If a stockholder desires to tender Shares and Rights pursuant to the Offer
and such stockholder's Share Certificates (as defined in the Offer to
Purchase) or, if applicable, Rights Certificates are not immediately available
(including, if the Distribution Date has occurred and the Purchaser waives
that portion of the Rights Condition requiring that a Distribution Date not
have occurred, because Rights Certificates have not yet been distributed) or
time will not permit all required documents to reach the Depositary prior to
the Expiration Date or the procedure for book-entry transfer cannot be
completed on a timely basis, such Shares or Rights may nevertheless be
tendered according to the guaranteed delivery procedures set forth in Section
3 of the Offer to Purchase. See Instruction 2 of the Letter of Transmittal.
Delivery of documents to a Book-Entry Transfer Facility (as defined in the
Offer to Purchase) in accordance with the Book-Entry Transfer Facility's
procedures does not constitute delivery to the Depositary.
A tender of such Shares and Rights can be made only by us as the holder of
record and pursuant to your instructions. THE LETTER OF TRANSMITTAL IS
FURNISHED TO YOU FOR YOUR INFORMATION ONLY AND CANNOT BE USED BY YOU TO TENDER
SHARES OR RIGHTS HELD BY US FOR YOUR ACCOUNT.
We request instructions as to whether you wish to tender any or all of such
Shares and Rights held by us for your account, pursuant to the terms and
conditions set forth in the Offer.
Your attention is directed to the following:
1. The tender price is $55 per Share, including the associated Rights,
net to the seller in cash without interest.
2. The Offer, proration period and withdrawal rights will expire at 12:00
midnight, New York City time, on Friday, February 28, 1997, unless the
Offer is extended.
3. The Offer is being made for at least a majority of outstanding Shares.
4. The Offer is conditioned upon, among other things, there being validly
tendered and not withdrawn prior to the expiration of the Offer a number of
Shares, including the Rights, which when added to the number of Shares (and
Rights) beneficially owned by Purchaser and its affiliates constitutes at
least a majority of the outstanding Shares of the Company on a fully
diluted basis.
5. Stockholders who tender Shares and Rights will not be obligated to pay
brokerage commissions, solicitation fees or, except as set forth in
Instruction 6 of the Letter of Transmittal, transfer taxes on the purchase
of Shares and Rights by the Purchaser pursuant to the Offer.
The Purchaser is not aware of any jurisdiction where the making of the Offer
is prohibited by administrative or judicial action pursuant to any valid state
statute. If the Purchaser becomes aware of any valid state statute prohibiting
the making of the Offer or the acceptance of the Shares or Rights pursuant
thereto, Purchaser will make a good faith effort to comply with such state
statute. If, after such good faith effort, the Purchaser cannot comply with
any such state statute, the Offer will not be made to (nor will tenders be
accepted from or on behalf of) the holders of Shares or Rights in such state.
In any jurisdiction where the securities, blue sky or other laws require the
Offer to be made by a licensed broker or dealer, the Offer shall be deemed to
be made on behalf of the Purchaser by the Dealer Manager (as defined in the
Offer to Purchase) or one or more registered brokers or dealers which are
licensed under the laws of such jurisdiction.
If you wish to have us tender any or all of your Shares and Rights, please
complete, sign and return to us the form set forth below. An envelope to
return your instructions to us is enclosed. Your instructions to us should be
forwarded in ample time to permit us to submit a tender on your behalf prior
to the expiration of the Offer. If you authorize the tender of your Shares and
Rights, all such Shares and Rights will be tendered unless otherwise specified
on the instruction form set forth below.
<PAGE>
INSTRUCTIONS WITH RESPECT TO THE OFFER
TO PURCHASE FOR CASH 61,145,475 SHARES OF COMMON STOCK
(INCLUDING THE ASSOCIATED SERIES A PARTICIPATING
CUMULATIVE PREFERRED STOCK PURCHASE RIGHTS)
OF
ITT CORPORATION
The undersigned acknowledge(s) receipt of your letter, the enclosed Offer to
Purchase, dated January 31, 1997, and the Letter of Transmittal (which,
together as amended from time to time constitute the "Offer") relating to the
offer by HLT Corporation, a Delaware corporation (the "Purchaser"), to
purchase (i) 61,145,475 shares (the "Shares") of common stock, no par value
per share (the "Common Stock"), of ITT Corporation, a Nevada corporation (the
"Company"), and (ii) (unless and until the Purchaser declares that the Rights
Condition (as defined in the Offer to Purchase) is satisfied) the associated
preferred stock purchase rights (the "Rights") issued pursuant to the Rights
Agreement, dated as of November 1, 1995, between the Company and The Bank of
New York, as Rights Agent (the "Rights Agreement").
This will instruct you to tender to the Purchaser the number of Shares and
Rights indicated below (or if no number is indicated below, all Shares and
Rights) held by you for the account of the undersigned, on the terms and
subject to the conditions set forth in the Offer.
NUMBER OF SHARES AND RIGHTS TO SIGN HERE
BE TENDERED:* -------------------------------------
-------------------------------------
SHARES AND RIGHTS:
Signature(s)
Account Number: _______________ -------------------------------------
Dated: __________________, 1997 -------------------------------------
Please Print Name(s) and address(es)
here
-------------------------------------
Area Code and Telephone Number
-------------------------------------
Tax Identification or Social
- -------- Security Number(s)
* Unless otherwise indicated, it will be assumed that all of your Shares and
Rights held by us for your account are to be tendered.
<PAGE>
EXHIBIT (a)(6)
GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION
NUMBER ON SUBSTITUTE FORM W-9
GUIDELINES FOR DETERMINING THE PROPER IDENTIFICATION NUMBER TO GIVE THE PAYER.
Social security numbers have nine digits separated by two hyphens: i.e. 000-
00-0000. Employer identification numbers have nine digits separated by only
one hyphen: i.e. 00-0000000. The table below will help determine the number to
give the payer.
<TABLE>
- ---------------------------------------------
<CAPTION>
GIVE THE
FOR THIS TYPE OF ACCOUNT: SOCIAL SECURITY
NUMBER OF--
- ---------------------------------------------
<S> <C>
1. An individual's account The individual
2. Two or more individuals The actual owner
(joint account) of the account
or, if combined
funds, any one
of the
individuals(1)
3. Husband and wife (joint The actual owner
account) of the account
or, if joint
funds, either
person(1)
4. Custodian account of a The minor(2)
minor (Uniform Gift to
Minors Act)
5. Adult and minor (joint The adult or, if
account) the minor is the
only
contributor, the
minor(1)
6. Account in the name of The ward, minor,
guardian or committee or incompetent
for a designated ward, person(3)
minor, or incompetent
person
7.a. The usual revocable The grantor-
savings trust account trustee(1)
(grantor is also
trustee)
b. So-called trust account The actual owner
that is not a legal or (1)
valid trust under State
law
8. Sole proprietorship The owner(4)
account
- ---------------------------------------------
</TABLE>
<TABLE>
------
<CAPTION>
GIVE THE EMPLOYER
FOR THIS TYPE OF ACCOUNT: IDENTIFICATION
NUMBER OF--
------
<S> <C>
9. A valid trust, estate The legal entity
or pension trust (Do not furnish
the identifying
number of the
personal
representative
or trustee
unless the legal
entity itself is
not designated
in the account
title.)(5)
10. Corporate account The corporation
11. Religious, charitable, The organization
or educational
organization account
12. Partnership account The partnership
held in the name of
the business
13. Association, in, or The organization
other tax-exempt
organization
14. A broker or registered The broker or
nominee nominee
15. Account with the The public
Department of entity
Agriculture in the
name of a public
entity (such as a
State or local
government, school
district, or prison)
that receives
agricultural program
payments
------
</TABLE>
(1) List first and circle the name of the person whose number you furnish.
(2) Circle the minor's name and furnish the minor's social security number.
(3) Circle the ward's, minor's or incompetent person's name and furnish such
person's social security number.
(4) Show the name of the owner.
(5) List first and circle the name of the legal trust, estate, or pension
trust.
NOTE: If no name is circled when there is more than one name, the number will
be considered to be that of the first name listed.
<PAGE>
GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION
NUMBER OF SUBSTITUTE FORM W-9
PAGE 2
OBTAINING A NUMBER
If you don't have a taxpayer identification number or you don't know your num-
ber, obtain Form SS-5, Application for a Social Security Number Card, or Form
SS-4, Application for Employer Identification Number, at the local office of
the Social Security Administration or the Internal Revenue Service (the "IRS")
and apply for a number.
PAYEES EXEMPT FROM BACKUP WITHHOLDING
Payees specifically exempted from backup withholding on ALL payments include
the following:
. A corporation.
. A financial institution.
. An organization exempt from tax under section 501(a), or an individual re-
tirement plan.
. The United States or any agency or instrumentality thereof.
. A State, the District of Columbia, a possession of the United States, or
any subdivision or instrumentality thereof.
. A foreign government, a political subdivision of a foreign government, or
any agency or instrumentality thereof.
. An international organization or any agency, or instrumentality thereof.
. A registered dealer in securities or commodities registered in the U.S. or
a possession of the U.S.
. A real estate investment trust.
. A common trust fund operated by a bank under section 584(a).
. An exempt charitable remainder trust, or a nonexempt trust described in
section 4947(a)(1).
. An entity registered at all times under the Investment Company Act of
1940.
. A foreign central bank of issue.
Payments of dividends and patronage dividends not generally subject to backup
withholding including the following:
. Payments to nonresident aliens subject to withholding under section 1441.
. Payments to partnerships not engaged in a trade or business in the U.S.
and which have at least one non-resident partner.
. Payments of patronage dividends where the amount received is not paid in
money.
. Payments made by certain foreign organizations.
. Payments made to a nominee.
Payments of interest not generally subject to backup withholding include the
following:
. Payments of interest on obligations issued by individuals. Note: You may
be subject to backup withholding if this interest is $600 or more and is
paid in the course of the payer's trade or business and you have not pro-
vided your correct taxpayer identification number to the payer.
. Payments of tax-exempt interest (including exempt-interest dividends under
section 852).
. Payments described in section 6049(b)(5) to non-resident aliens.
. Payments on tax-free covenant bonds under section 1451.
. Payments made by certain foreign organizations.
. Payments made to a nominee.
Exempt payees described above should file Form W-9 to avoid possible erroneous
backup withholding. FILE THIS FORM WITH THE PAYER, FURNISH YOUR TAXPAYER IDEN-
TIFICATION NUMBER, WRITE "EXEMPT" ON THE FACE OF THE FORM, AND RETURN IT TO
THE PAYER. IF THE PAYMENTS ARE INTEREST, DIVIDENDS, OR PATRONAGE DIVIDENDS,
ALSO SIGN AND DATE THE FORM.
Certain payments other than interest, dividends, and patronage dividends,
that are not subject to information reporting are also not subject to backup
withholding. For details, see the regulations under sections 6041, 6041A(a),
6045, and 6050A.
PRIVACY ACT NOTICE.--Section 6109 requires most recipients of dividend, inter-
est, or other payments to give taxpayer identification numbers to payers who
must report the payments to the IRS. The IRS uses the numbers for identifica-
tion purposes. Payers must be given the numbers whether or not recipients are
required to file tax returns. Beginning January 1, 1984, payers must generally
withhold 20% of taxable interest, dividend, and certain other payments to a
payee who does not furnish a taxpayer identification number to a payer. Cer-
tain penalties may also apply.
PENALTIES
(1) PENALTY FOR FAILURE TO FURNISH TAXPAYER IDENTIFICATION NUMBER.--If you
fail to furnish your taxpayer identification number to a payer, you are sub-
ject to a penalty of $50 for each such failure unless your failure is due to
reasonable cause and not to willful neglect.
(2) FAILURE TO REPORT CERTAIN DIVIDEND AND INTEREST PAYMENTS.--If you fail to
include any portion of an includible payment for interest, dividends, or pat-
ronage dividends in gross income, such failure will be treated as being due to
negligence and will be subject to a penalty of 5% on any portion of an under-
payment attributable to that failure unless there is clear and convincing evi-
dence to the contrary.
(3) CIVIL PENALTY FOR FALSE INFORMATION WITH RESPECT TO WITHHOLDING.--If you
make a false statement with no reasonable basis which results in no imposition
of backup withholding, you are subject to a penalty of $500.
(4) CRIMINAL PENALTY FOR FALSIFYING INFORMATION.--Falsifying certifications or
affirmations may subject you to criminal penalties including fines and/or im-
prisonment.
FOR ADDITIONAL INFORMATION CONTACT YOUR TAX CONSULTANT OR THE INTERNAL REVENUE
SERVICE
<PAGE>
EXHIBIT (a)(7)
This announcement is neither an offer to purchase nor a solicitation of an offer
to sell Shares or Rights. The Offer is made solely by the Offer to Purchase
dated January 31, 1997 and the related Letter of Transmittal and is not being
made to (nor will tenders be accepted from or on behalf of) holders of Shares or
Rights in any jurisdiction in which the making of the Offer or the acceptance
thereof would not be in compliance with the laws of such jurisdiction. In those
jurisdictions where securities, blue sky or other laws require the Offer to be
made by a licensed broker or dealer, the Offer shall be deemed to be made on
behalf of HLT Corporation by Donaldson, Lufkin & Jenrette Securities Corporation
or one or more registered brokers or dealers licensed under the laws of such
jurisdiction.
Notice of Offer to Purchase for Cash
61,145,475 Shares of Common Stock
(Including the Associated Series A Participating
Cumulative Preferred Stock Purchase Rights)
of
ITT Corporation
by
HLT Corporation
a wholly owned subsidiary
of
Hilton Hotels Corporation
at
$55 Net Per Share in Cash
HLT Corporation (the "Purchaser"), a Delaware corporation and a wholly owned
subsidiary of Hilton Hotels Corporation, a Delaware corporation ("Parent"), is
offering to purchase (i) 61,145,475 shares of common stock, no par value per
share (the "Shares"), of ITT Corporation, a Nevada corporation (the "Company"),
or such greater number of Shares which, when added to the number of Shares
beneficially owned by the Purchaser and its affiliates, constitutes a majority
of the total number of Shares outstanding on a fully diluted basis as of the
Expiration Date (as defined in the Offer to Purchase) (the greater of such
numbers of Shares being the "Maximum Number"), and (ii) unless and until validly
redeemed by the Board of Directors of the Company, the Series A Participating
Cumulative Preferred Stock Purchase Rights (the "Rights") associated therewith,
at a price of $55 per Share (including the associated Right), net to the seller
in cash, without interest thereon, upon the terms and subject to the conditions
set forth in the Offer to Purchase dated January 31, 1997 (the "Offer to
Purchase") and in the related Letter of Transmittal (which, as amended from time
to time, together constitute the "Offer"). Unless the context requires
otherwise, all references to Shares herein shall include the associated Rights,
and all references to the Rights shall include all benefits that may inure to
the holders of the Rights pursuant to the Rights Agreement. Unless the Rights
are redeemed prior to the Expiration Date, holders of Shares will be required to
tender one associated Right for each
-1-
<PAGE>
Share tendered in order to effect a valid tender of such Share. Accordingly,
stockholders who sell their Rights separately from their Shares and do not
otherwise acquire Rights may not be able to satisfy the requirements of the
Offer for the tender of Shares.
THE OFFER, PRORATION PERIOD AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00
MIDNIGHT, NEW YORK CITY TIME, ON FRIDAY, FEBRUARY 28, 1997, UNLESS THE OFFER IS
EXTENDED.
The Offer is conditioned upon, among other things, (1) there being validly
tendered and not withdrawn prior to the Expiration Date a number of Shares,
including the Rights associated therewith, which when added to the number of
Shares (and Rights) beneficially owned by the Purchaser and its affiliates,
constitutes a majority of the total number of outstanding Shares (and Rights) of
the Company on a fully diluted basis, (2) the Rights having been redeemed by the
Board of Directors of the Company or the Purchaser being satisfied, in its sole
discretion, that the Rights have been invalidated or are otherwise inapplicable
to the Offer and the Proposed Merger (as defined in the Offer to Purchase), (3)
the Purchaser being satisfied, in its sole discretion, that the Nevada Control
Share Acquisition Statute (as defined in the Offer to Purchase) shall be
inapplicable to the Offer and the Proposed Merger, (4) the Purchaser being
satisfied, in its sole discretion, that the Nevada Business Combination Statute
(as defined in the Offer to Purchase) shall be inapplicable to the Offer and the
Proposed Merger, (5) the Purchaser being satisfied, in its sole discretion, that
all material Gaming Approvals (as defined in the Offer to Purchase) have been
obtained on terms satisfactory to the Purchaser, and (6) the expiration or
termination of all waiting periods imposed by the Hart-Scott-Rodino Antitrust
Improvements Act of 1976, as amended, and the regulations thereunder. The Offer
is also subject to other terms and conditions contained in the Offer to
Purchase.
The Offer is not conditioned on obtaining financing.
Parent and the Purchaser are seeking to negotiate with the Company with respect
to the acquisition of the Company by Parent or the Purchaser. The Purchaser
reserves the right to amend the Offer (including amending the number of Shares
to be purchased, the purchase price and the proposed second-step merger
consideration) upon entering into a merger agreement with the Company, or to
negotiate a merger agreement with the Company not involving a tender offer
pursuant to which the Purchaser would terminate the Offer and the Shares would,
upon consummation of such merger, be converted into cash, common stock of Parent
and/or other securities in such amounts as are negotiated by Parent, the
Purchaser and the Company.
The purpose of the Offer is to acquire control of, and ultimately the entire
equity interest in, the Company. Parent is seeking to negotiate with the Company
a definitive acquisition agreement pursuant to which the Company would, as soon
as practicable following consummation of the Offer, consummate a merger (the
"Proposed Merger") with Parent or Purchaser or another direct or indirect wholly
owned subsidiary of Parent. In the Proposed Merger, at the effective time of the
Proposed Merger, each
-2-
<PAGE>
Share that is issued and outstanding immediately prior to the effective time of
the Proposed Merger (other than Shares held in the treasury of the Company or
owned by Parent, the Purchaser or any direct or indirect wholly owned subsidiary
of Parent) would be converted into such number of shares of common stock, par
value $2.50 per share, of Parent ("Parent Common Stock") having a value of $55
per Share, subject to appropriate collar provisions.
The Purchaser expressly reserves the right, in its sole discretion, at any time
and from time to time, to extend for any reason the period of time during which
the Offer is open, including as a result of the occurrence of any of the events
specified in Section 14 of the Offer to Purchase, by giving oral or written
notice of such extension to the Depositary (as defined in the Offer to Purchase)
and by making a public announcement thereof. During any such extension, all
Shares previously tendered and not withdrawn will remain subject to the Offer,
subject to the rights of a tendering stockholder to withdraw any tendered
Shares.
Upon the terms and subject to the conditions of the Offer, if more than the
Maximum Number of Shares shall be validly tendered and not withdrawn prior to
the Expiration Date in accordance with Section 4 of the Offer to Purchase, the
Purchaser will purchase the Maximum Number of Shares on a pro rata basis (with
adjustments to avoid purchases of fractional Shares) based upon the number of
Shares validly tendered and not withdrawn prior to the Expiration Date.
For purposes of the Offer, the Purchaser will be deemed to have accepted for
payment, and thereby purchased, tendered Shares if, as and when the Purchaser
gives oral or written notice to the Depositary of the Purchaser's acceptance of
such Shares for payment. Payment for Shares accepted pursuant to the Offer will
be made by deposit of the aggregate purchase price therefor with the Depositary,
which will act as agent for tendering stockholders for the purpose of receiving
payment from the Purchaser and transmitting payment to such tendering
stockholders. Under no circumstances will interest on the Offer Price (as
defined in the Offer to Purchase) for Shares be paid by the Purchaser by reason
of any delay in making such payment. Upon the deposit of funds with the
Depositary for the purpose of making payments to tendering stockholders, the
Purchaser's obligation to make such payment shall be satisfied and tendering
stockholders must thereafter look solely to the Depositary for payment of
amounts owed to them by reason of the acceptance for payment of Shares pursuant
to the Offer. In all cases, payment for Shares tendered and accepted for payment
pursuant to the Offer will be made only after timely receipt by the Depositary
of (a) certificates evidencing such Shares ("Share Certificates") and, if
applicable, certificates representing the associated Rights (the "Rights
Certificates"), or a timely confirmation of the book-entry transfer of such
Shares and, if applicable, Rights into the Depositary's account at a Book-Entry
Transfer Facility (as defined in the Offer to Purchase), pursuant to the
procedures set forth in Section 3 of the Offer to Purchase, (b) the Letter of
Transmittal (or facsimile thereof), properly completed and duly executed, with
any required signature guarantees, or an Agent's Message (as
-3-
<PAGE>
defined in the Offer to Purchase) in connection with a book-entry transfer, and
(c) any other documents required by the Letter of Transmittal.
If, for any reason whatsoever, acceptance for payment of or payment for any
Shares tendered pursuant to the Offer is delayed, or the Purchaser is unable to
accept for payment or pay for Shares tendered pursuant to the Offer, then,
without prejudice to the Purchaser's rights set forth herein, the Depositary
may, nevertheless, on behalf of the Purchaser and subject to Rule 14e-1(c) under
the Securities Exchange Act of 1934, as amended (the "Exchange Act"), retain
tendered Shares and such Shares may not be withdrawn except to the extent that
the tendering stockholder is entitled to and duly exercises withdrawal rights as
described in Section 4 of the Offer to Purchase. The Purchaser will pay any
stock transfer taxes incident to the transfer to it of validly tendered Shares,
except as otherwise provided in Instruction 6 of the Letter of Transmittal, as
well as any charges and expenses of the Depositary and the Information Agent.
If any tendering Shares are not accepted for payment for any reason pursuant to
the terms and conditions of the Offer (including proration due to tenders of
Shares pursuant to the Offer in excess of the Maximum Number of Shares) or if
Share Certificates are submitted evidencing more Shares than are tendered, Share
Certificates evidencing unpurchased or untendered Shares will be returned,
without expense to the tendering stockholder (or, in the case of Shares tendered
by book-entry transfer into the Depositary's account at a Book-Entry Transfer
Facility pursuant to the procedure set forth in Section 3 of the Offer to
Purchase, such Shares will be credited to an account maintained at such Book-
Entry Transfer Facility), as promptly as practicable following the expiration or
termination of the Offer. In the event separate Rights Certificates are issued,
similar action will be taken with respect to unpurchased and untendered Rights.
Except as otherwise provided in Section 4 of the Offer to Purchase, tenders of
Shares and Rights made pursuant to the Offer are irrevocable. Shares and Rights
tendered pursuant to the Offer may be withdrawn at any time prior to the
Expiration Date and, unless theretofore accepted for payment by the Purchaser
pursuant to the Offer, may also be withdrawn at any time after March 31, 1997 or
at such later time as may apply if the Offer is extended. A withdrawal of Shares
will also constitute a withdrawal of the associated Rights. Rights may not be
withdrawn unless the associated Shares are also withdrawn.
If the Purchaser extends the Offer, is delayed in its acceptance for payment of
Shares or is unable to accept Shares for payment pursuant to the Offer for any
reason, then, without prejudice to the Purchaser's rights under the Offer, the
Depositary may, nevertheless, on behalf of the Purchaser, retain tendered
Shares, and such Shares may not be withdrawn except to the extent that tendering
stockholders are entitled to withdrawal rights as described in Section 4 of the
Offer to Purchase. Any such delay will be by an extension of the Offer to the
extent required by law.
For a withdrawal to be effective, a written or facsimile transmission notice of
-4-
<PAGE>
withdrawal must be timely received by the Depositary at one of its addresses set
forth on the back cover of the Offer to Purchase. Any such notice of withdrawal
must specify the name of the person who tendered the Shares or Rights to be
withdrawn, the number of Shares or Rights to be withdrawn and (if Share
Certificates or Rights Certificates have been tendered) the name of the
registered holder, if different from that of the person who tendered such Shares
or Rights. If Share Certificates or Rights Certificates evidencing Shares or
Rights to be withdrawn have been delivered or otherwise identified to the
Depositary, then prior to the release of such Share Certificates or Rights
Certificates, the serial numbers shown on the particular Share Certificates or
Rights Certificates to be withdrawn must be submitted to the Depositary, and the
signature(s) on the notice of withdrawal must be guaranteed by an Eligible
Institution (as defined in the Offer to Purchase), unless such Shares or Rights
have been tendered for the account of an Eligible Institution. If Shares or
Rights have been tendered pursuant to the procedure for book-entry transfer as
set forth in Section 3 of the Offer to Purchase, any notice of withdrawal must
also specify the name and number of the account at the Book-Entry Transfer
Facility to be credited with the withdrawn Shares or Rights, in which case a
notice of withdrawal will be effective if delivered to the Depositary by any
method of delivery described in the first sentence of this paragraph.
Withdrawals of Shares or Rights may not be rescinded, but the holder thereof may
retender such Shares and Rights pursuant to the procedures set forth in the
Offer to Purchase.
The information required to be disclosed by Rule 14d-6(e)(1)(vii) of the General
Rules and Regulations under the Exchange Act is contained in the Offer to
Purchase and is incorporated herein by reference.
A demand is being made to the Company, pursuant to Rule 14d-5 under the Exchange
Act, for the use of the Company's stockholder list, its list of holders of
Rights, if any, and security position listings for the purpose of disseminating
the Offer to holders of Shares. Upon compliance by the Company with such
request, the Offer to Purchase and the related Letter of Transmittal and, if
required, other relevant materials will be mailed to record holders of Shares or
to brokers, dealers, commercial banks, trust companies and similar persons whose
names, or the names of whose nominees, appear on the Company's stockholder list
and its list of holders of Rights, if any, or, if applicable, who are listed as
participants in a clearing agency's security position listing, for subsequent
transmittal to beneficial owners of Shares and Rights.
The Offer to Purchase and the Letter of Transmittal contain important
information which should be read carefully before any decision is made with
respect to the Offer.
Questions and requests for assistance, and requests for copies of the Offer to
Purchase, the Letter of Transmittal and other tender offer materials, may be
directed to the Information Agent or the Dealer Manager at their respective
addresses and telephone numbers set forth below. Holders of Shares may also
contact brokers, dealers, commercial banks and trust companies for additional
copies of the Offer to Purchase, the Letter of Transmittal or other tender offer
materials.
-5-
<PAGE>
The Information Agent for the Offer is:
[MacKenzie Partners, Inc. Logo]
156 Fifth Avenue
New York, New York 10010
(212) 929-5500 (Collect)
or
Call Toll-Free (800) 322-2885
The Dealer Manager for the Offer is:
Donaldson, Lufkin & Jenrette
Securities Corporation
2121 Avenue of the Stars, Suite 3000
Los Angeles, CA 90067
(310) 282-5513 (Collect)
January 31, 1997
-6-
<PAGE>
EXHIBIT (a)(8)
[LOGO]
Hilton
CORPORATE NEWS Hotels Corporation
Contact: Marc Grossman
Sr. Vice President - Corporate Affairs
310-205-4030
Kathy Shepard
Corporate Communications
310-205-7676
Joele Frank
Abernathy MacGregor Group
212-371-5999
HILTON OFFERS TO ACQUIRE ITT CORPORATION
----------------------------------------
BEVERLY HILLS, Calif., Jan. 27, 1997, Hilton Hotels Corp. (NYSE:HLT)
Monday said that it has offered to acquire ITT Corp. (NYSE:ITT) in a combination
cash and stock transaction. Hilton offered a price of $55 for each ITT share,
for a consideration of approximately $6.5 billion. The total transaction,
including assumption of ITT's outstanding debt, would be valued at approximately
$10.5 billion. The company further announced that it intends to commence a cash
tender offer at $55 per share for half of the outstanding ITT shares, to be
followed by a second step merger at $55 per share in Hilton common stock. The
company made the proposal to ITT management in a telephone conversation earlier
Monday, and subsequently confirmed the offer in writing.
"The combination of ITT and Hilton would bring together two of the
world's leading lodging companies as well as two premier gaming businesses,"
said Stephen F. Bollenbach, president and chief executive officer of Hilton
Hotels. "We believe this combination would be of enormous benefit to each
company and its respective shareholders, employees and other constituencies."
ITT's lodging operations consist of 415 hotels with more than 130,000
rooms throughout the world, with 75 percent of the company's cash flow derived
from its owned hotels. ITT's gaming business includes 14 casinos with more than
320,000 square feet of gaming space in Las Vegas, Atlantic City, N.J., and other
domestic and international jurisdictions. Hilton's hotel business includes 240
properties with nearly 100,000 rooms, as well as 16 casinos with more than
900,000 square feet of gaming space. Based on estimated 1996 EBITDA, the Hilton-
ITT combination would be the world's largest lodging and gaming company.
"Our desire to combine these two companies is in line with Hilton's
strategy of building our hotel business by acquiring full-service properties,
and being a winner in the consolidation of the gaming business," Bollenbach
said. "ITT's owned full-service hotel portfolio, along with its major gaming
presence in Las Vegas, Atlantic City and other jurisdictions, fits perfectly
with our stated growth objectives."
In its communication with ITT, Hilton noted that its management, with
its long-standing record of emphasizing and creating shareholder value, is
uniquely positioned to help ITT realize its potential.
Hilton said that it believes that its strategic experience and operating
background in hotels and gaming will bring tremendous value to the combined
shareholder base and generate superior returns relative to those realized
historically by ITT shareholders.
<PAGE>
The company also noted that its proposal was prepared solely on the
basis of publicly available data, and that, with ITT's cooperation, an ensuing
review of private information could result in an even higher offer.
Hilton further announced that it has reached a preliminary understanding
with HFS Inc. (NYSE:HFS) under which HFS would license, on a long-term,
worldwide basis, the Sheraton trademark, franchise system and management
agreements. "HFS' expertise in brand management, as well as its own superior
record of crating shareholder value, will add to the strength of this
combination," Bollenbach said.
Hilton noted that despite ITT's collection of assets, ITT's returns to
shareholders have been disappointing relative to the S&P 500 and ITT's peer
group of lodging and gaming companies since its spin off in 1995. "Our bid is
specifically designed to allow ITT shareholders to obtain a 29 percent premium
over the current stock price, and at the same time to participate in the
combined company's upside potential," Bollenbach said.
The company also cited numerous potential cost savings, estimated at
more than $100 million annually, adding that its recently completed merger with
Bally Entertainment Corp. will generate annual savings of approximately $60
million.
With regard to ITT's announced $3 billion-plus capital expenditure and
expansion program, which amounts to more than $25 per ITT share, Hilton said
that a substantial portion of this spending would be unnecessary in light of the
complementary asset base of the combined companies.
ITT's entertainment business, including Madison Square Garden, the New
York Knicks, the New York Rangers and WBIS+, as well as ITT World Directories
and ITT Educations, would be carefully reviewed as to their long-term strategic
fit with the combined company. "We believe that through the monetization of
nonstrategic assets, and a focus on the company's core business lines, we will
create even more value for the shareholders of the combined companies,"
Bollenbach said.
"We will bring added value to ITT's shareholders by virtue of our
articulated, focused and achievable growth strategy and our management's proven
history of creating value for shareholders," he added. "Our proposed mix of cash
and securities together with the cash-flow generating capability of the combined
entity, shows strong debt-service coverage and is designed to preserve our
company's investment grade rating and be accretive to earnings.
"Hilton continues to demonstrate tremendous growth in our full-service
hotel business, with double-digit EBITDA and REVPAR gains," he added, "and we
are excited about new gaming projects coming on line in 1997 in both Las Vegas
and Atlantic City, as well as the revenue enhancement opportunities provided by
our newly
<PAGE>
signed global alliance with Ladbroke, which owns the Hilton name outside the
U.S. "We are confident in our ability to put these assets and growth prospects
to work -- together with ITT's wide-ranging asset base and opportunities for
eliminating duplicate costs -- for the benefit of both ITT and Hilton
shareholders."
Note to editors: The full text of Bollenbach's letter to Mr. Araskog is
attached
Note to analysts: There will be an analyst conference call with Steve
Bollenbach Jan. 28, at 9 a.m. EST, memorandum follows
Note to media: There will be a media conference call Jan. 28, at 11:05
a.m. EST, memorandum follows
B-roll of Hilton Hotels Corp. is available via satellite uplink at the
following times:
Monday, Jan. 27, at 6 p.m. - 6:30 p.m. EST
C-band GE 1; Transponder 1
Tuesday, Jan. 28, at 8 a.m. - 8:30 a.m. EST
C-band Galaxy 6; Transponder 17
<PAGE>
[LOGO]
Hilton
Hotels Corporation
Office of the
President and Chief Executive Officer
January 27, 1997
Mr. Rand V. Araskog
Chairman and Chief Executive Officer
ITT Corporation
1330 Avenue of the Americas
New York, NY 10019-5490
Dear Rand:
I am writing on behalf of the board of directors and management of
Hilton Hotels Corporation to confirm our offer to acquire ITT Corporation in a
transaction in which your shareholders would receive $55 for each ITT share.
This represents a 29% premium over last Friday's closing price for ITT's stock.
We will be announcing shortly the commencement of a cash tender offer at $55 per
share for half of the outstanding ITT shares, to be followed by a second step
merger at $55 per share in Hilton common stock.
The combination of ITT and Hilton would bring together two of the
world's most respected lodging operations, as well as two premier gaming
businesses with powerful brand names. We believe this combination would be of
enormous benefit to each company and its respective shareholders, employees and
other constituencies.
In particular, our offer represents an extremely attractive opportunity
for your shareholders to realize both the long-term potential of their
investment in ITT and to participate in the exciting potential of our combined
companies. I should note that our proposal was prepared solely on the basis of
publicly available data. We hope that, with your help, an ensuing review of
private information could result in an even higher offer.
The advantages to be gained from the combination of our two companies
are compelling:
-- Hilton's management is uniquely positioned to help ITT realize its
potential. Our senior management has a longstanding record of emphasizing and
creating shareholder value. We believe that, with our strategic experience and
operating background in hotels and gaming entertainment, we can bring tremendous
value to our combined shareholder base and generate superior returns relative to
those realized historically by ITT shareholders.
As part of our strategy, we have reached a preliminary understanding
with HFS Incorporated under which HFS would license, on a long-term, worldwide
basis, the Sheraton trademark, franchise system and management agreements. HFS'
expertise in brand management, as well as its own superior record of creating
shareholder value, will add to the strength of this combination.
--Attractive opportunity for ITT shareholders. Despite ITT's collection
of assets,its returns to shareholders have been disappointing relative to the
S&P 500 and to its peer group of lodging and gaming companies since its spin-off
in 1995. Our bid is specifically designed to allow ITT shareholders to obtain a
substantial premium over the current stock price, and at the same time to
participate in the combined company's upside potential. We believe that through
the monetization of non-strategic assets, and by focusing on ITT's core
businesses, we will create even more value for the shareholders of the combined
companies.
-- Creates substantial cost savings. ITT's shareholders will benefit
from substantial operating and financial savings that are unique to a merger
with Hilton. We believe the combination will produce more than $100 million in
annual cost savings. Our recent merger with Bally Entertainment Corporation
will generate annual savings of approximately $60 million; based on our
preliminary review of publicly available information, we believe our savings
estimate is not only achievable but conservative.
-- Rationalize capital spending program. Given the complementary nature
of our combined companies, a substantial portion of ITT's announced $3
billion-plus capital spending program, which amounts to more than $25 per ITT
share, will be unnecessary. Rationalization of the spending program will serve
the dual purposes
<PAGE>
of immediately enhancing shareholder value and still allowing for the growth and
expansion of our combined businesses.
We would strongly prefer to work with you and your board and management
colleagues towards the prompt consummation of a negotiated transaction. We
welcome the opportunity to meet with you and your advisors, and are ready at a
moment's notice to commence discussions about the details of the combination.
Let me stress, however, that we are committed to making this combination a
reality. Although we would much rather work directly with you, we are prepared
if necessary to solicit proxies from your shareholders to replace your board of
directors in order to complete this transaction.
We hope that you will be as excited as we are about the benefits of this
combination for both our companies. We look forward to hearing from you.
Sincerely,
Stephen F. Bollenbach
<PAGE>
EXHIBIT (g)(1)
SCHRECK MORRIS
STEVE MORRIS
M. KRISTINA PICKERING
1200 Bank of America Plaza
300 South Fourth Street
Las Vegas, Nevada 89101
(702) 382-2101
WACHTELL, LIPTON, ROSEN & KATZ
BERNARD W. NUSSBAUM
ERIC M. ROTH
MARC WOLINSKY
SCOTT L. BLACK
51 West 52nd Street
New York, New York 10019
(212) 403-1000
Attorneys for Plaintiffs
HILTON HOTELS CORPORATION
and HLT CORPORATION
UNITED STATES DISTRICT COURT
DISTRICT OF NEVADA
HILTON HOTELS CORPORATION )
and HLT CORPORATION, )
)
Plaintiffs, )
) CV-S-97-________________
-vs- )
)
ITT CORPORATION, )
)
Defendant. )
)
__________________________________)
COMPLAINT FOR INJUNCTIVE AND DECLARATORY RELIEF
-----------------------------------------------
Plaintiffs Hilton Hotels Corporation ("Hilton") and HLT Corporation
("HLT"), by their attorneys, allege upon knowledge with respect to themselves
and their own acts, and upon information and belief as to all other matters, as
follows.
<PAGE>
Nature of the Action
--------------------
1. Hilton has today announced that it will commence a tender offer
for the stock of defendant ITT Corporation ("ITT") at $55 per share, a price
representing a 25% premium over the closing trading price of ITT common stock on
Friday, January 24, the last trading day before Hilton's announcement. This
action for injunctive and declaratory relief is brought to forestall any effort
by ITT to manipulate or otherwise subvert the process of corporate democracy by
amending ITT's by-laws or taking any other action to frustrate the proxy contest
that Hilton is preparing to conduct to replace the ITT Board of Directors in
order to facilitate the tender offer. This action also seeks injunctive relief
requiring ITT to dismantle its takeover defenses, including its "poison pill,"
and a declaratory judgment that ITT does not have standing to institute an
action under the federal antitrust laws to block or impede Hilton's tender offer
and that, in any event, the consummation of that offer would not violate such
laws.
Parties
-------
2. Plaintiff Hilton Hotels Corporation is a Delaware corporation
with its principal executive offices in Beverly Hills, California.
3. Plaintiff HLT Corporation is a Delaware corporation with its
principal place of business in Beverly Hills, California. HLT is a wholly-owned
subsidiary of Hilton and is the record and beneficial owner of 100 shares of ITT
stock.
-2-
<PAGE>
4. Defendant ITT Corporation is a Nevada corporation with its
principal executive offices in New York, New York.
Jurisdiction and Venue
----------------------
5. This Court has jurisdiction over this action pursuant to 28
U.S.C. Sections 1331, 1332(a) and 1337, and 15 U.S.C. Sections 4 and 26. The
amount in controversy is in excess of $50,000.
6. Venue is proper in this District under 28 U.S.C. Section 1391(b)
and (c) and 15 U.S.C. Sections 15, 22 and 26.
The Proxy Contest
-----------------
7. In the last quarter of 1996, Hilton contacted one of ITT's
principal financial advisers to determine whether ITT would be interested in
pursuing a business combination with Hilton. The ITT adviser reported back that
ITT had no interest in pursuing such a combination.
8. On January 27, 1997, Hilton announced its intention to commence a
tender offer pursuant to which Hilton is seeking to acquire 50.1% of the
outstanding shares of ITT stock at $55 per share. Upon consummation of the
tender offer, Hilton intends to acquire the remaining shares of ITT in a second-
step merger in which ITT shareholders will receive $55 in Hilton stock for each
ITT share that they own.
9. The Hilton tender offer and second-step merger cannot be
consummated unless the ITT Board -- voluntarily or by direction of a court --
removes or makes inapplicable various anti-takeover devices, including ITT's
"poison pill" and the
-3-
<PAGE>
provisions of Nevada Rev. Statutes Sections 78.378 et seq. and 78.411 et seq.
-- --- -- ---
10. In light of ITT's prior rejection of Hilton's attempt to explore
a business combination with ITT, the current ITT Board cannot be expected to
facilitate Hilton's tender offer and second-step merger, but can be expected,
instead, to maintain ITT's anti-takeover devices in place and actively oppose
and resist any such acquisition. For this reason, Hilton and HLT are preparing
to conduct a proxy contest to replace the current members of the ITT Board of
Directors with individuals nominated by Hilton and HLT, who will run on a
platform to sell ITT to Hilton, subject to their fiduciary duties to ITT
shareholders.
ITT's By-Laws
-------------
11. Section 2.2 of ITT's Amended and Restated By-Laws provides that
"[t]he number of Directors which shall constitute the whole Board shall be such
as from time to time shall be determined by resolution adopted by a majority of
the entire Board, but the number shall not be less than one nor more than
twenty-five . . . ." Section 2.2 further provides that "[a]ny stockholder
entitled to vote for the election of Directors may nominate a person or persons
for election as Directors only if written notice of such stockholder's intent to
make such nomination is given . . . 90 days in advance of the anniversary date
of the immediately preceding annual meeting." Section 2.2 does not provide any
mechanism for shareholders to supplement their written notice of intention to
nominate a director in the event that the ITT Board votes to increase the
-4-
<PAGE>
size of the ITT Board after the time to provide such notice purportedly has
lapsed. ITT's former corporate parent has publicly acknowledged that the "Board
of Directors of [ITT] may be able to prevent any shareholder from obtaining
majority representation on the Board of Directors by increasing the size of the
board and filling the newly created directorships with its own nominees."
12. The 1996 annual meeting of ITT stockholders was held on May 14,
1996, when ITT's stockholders elected 11 directors to the ITT board to serve
until their successors are elected at the next annual meeting. Under ITT's by-
laws, Hilton and HLT must give written notice of their intention to nominate
persons for election as directors on or before February 13, 1997, which Hilton
and HLT are preparing to do.
First Claim for Relief
----------------------
(Injunctive Relief)
13. Plaintiffs repeat and reallege each of the allegations set forth
in paragraphs 1 through 12 hereof as if fully set forth at length herein.
14. ITT and its directors are prohibited by Nevada law from amending
ITT's by-laws in any manner or taking any other action that would have the
purpose or effect of impeding the effective exercise of the stockholder
franchise in connection with the election of directors.
15. Under the ITT by-laws, Hilton and HLT may nominate directors for
election at the next annual meeting of ITT if they give written notice of their
intention to do so on or before February 13, 1997. Such annual meeting would,
in the
-5-
<PAGE>
ordinary course, proceed on or about May 14, 1997, i.e., approximately
----
one year after the May 14, 1996 annual meeting of ITT shareholders. Unless the
ITT board adopts a resolution changing the size of the ITT board, ITT
shareholders would be asked to elect 11 individuals to the ITT board at such
annual meeting.
16. Plaintiffs intend to nominate directors for election at the 1997
annual meeting of ITT shareholders in accordance with the Amended and Restated
By-Laws of ITT.
17. Any effort by ITT or the ITT board: (a) to amend ITT's by-laws
in any way that would impede the effective exercise of the stockholder franchise
in connection with the 1997 annual meeting; (b) to materially delay the conduct
of the 1997 annual meeting; or (c) to enlarge the size of the ITT board in order
to preserve the position of the incumbent directors as a majority would be
illegal.
18. Plaintiffs have no adequate remedy at law.
SECOND CLAIM FOR RELIEF
-----------------------
(Injunctive Relief)
19. Plaintiffs repeat and reallege each of the allegations set forth
in paragraphs 1 through 18 hereof as if fully set forth at length herein.
20. ITT has a number of anti-takeover provisions in place, such as
its shareholders' "rights plan," better known as a "poison pill." In the event
that a third-party like Hilton acquires 15% or more of ITT's shares, the "poison
pill" enables all ITT shareholders other than the third-party to purchase ITT
preferred shares at a 50% discount from market value. ITT's
-6-
<PAGE>
former corporate parent has publicly acknowledged that the "poison pill" "may
render an unsolicited takeover of [ITT] more difficult or less likely to occur
or might prevent such a takeover, even though such takeover may offer [ITT's]
shareholders the opportunity to sell their stock at a price above the prevailing
market rate and may be favored by a majority of the shareholders of [ITT]."
21. Defendant ITT also has the anti-takeover protections of Nevada
Rev. Statutes Sections 78.378 et seq. (the "Control Share Acquisition Statute")
-- ---
and Nevada Rev. Statutes Sections 78.411 et seq. (the "Business Combination
-- ---
Statute"). ITT's former corporate parent has publicly acknowledged that the
Control Share Acquisition and Business Combination Statutes "may delay or make
more difficult acquisitions or changes of control of [ITT]", "may have the
effect of preventing changes in the management of [ITT]" and "could make it more
difficult to accomplish transactions which [ITT] shareholders may otherwise deem
to be in their best interests."
22. Under the Control Share Acquisition Statute, a third-party like
Hilton that acquires a "controlling interest" in the shares of ITT cannot vote
those shares unless: (a) such voting rights are conferred by a majority vote of
the disinterested shareholders of the corporation; or (b) the ITT board adopts a
by-law opting out of the coverage of the Statute, something that the ITT board
has not done.
23. Under the Business Combination Statute, a third-party like Hilton
that acquires 10% or more of the voting power of ITT's stock cannot engage in a
business combination with ITT
-7-
<PAGE>
for three years unless the acquisition of the shares or the business combination
is approved by the ITT board in advance.
24. The effect of ITT's anti-takeover devices is to frustrate and
impede the ability of ITT shareholders to decide for themselves whether they
wish to receive the benefits of the Hilton tender offer and proposed second-step
merger. These devices unreasonably and inequitably frustrate and impede the
ability of Hilton to consummate its offer and merger proposal. The failure of
ITT and its board to redeem the ITT "poison pill," to adopt a by-law opting out
of the Control Share Acquisition Statute, and to adopt a resolution approving
the Hilton tender offer for purposes of the Business Combination Statute is
clearly a breach of their fiduciary duty and thus a violation of Nevada law.
25. Plaintiffs have no adequate remedy at law.
THIRD CLAIM FOR RELIEF
----------------------
(Declaratory Relief)
26. Plaintiffs repeat and reallege each of the allegations set forth
in paragraphs 1 through 25 hereof as if fully set forth at length herein.
27. Hilton and ITT, through their respective subsidiaries, compete in
the hotel and gaming businesses. ITT has described these businesses as "highly
competitive" in its Form 10-K filing with the Securities and Exchange Commission
for the fiscal year ending December 31, 1995.
28. As part of its overall strategy to prevent its shareholders from
considering the Hilton tender offer, there is a real and immediate threat that
ITT will allege that it has
-8-
<PAGE>
standing under the federal antitrust laws to file an action to enjoin Hilton's
tender offer.
29. ITT does not have standing to pursue an action to enjoin the
consummation of the Hilton tender offer under any antitrust theory because the
consummation of the offer would not cause ITT injury of the type that the
antitrust laws are intended to redress. If ITT had standing, the threatened
action would be without merit because an acquisition of ITT by Hilton would not
substantially lessen competition or tend to create a monopoly in any line of
commerce.
30. By reason of the foregoing, an actual controversy exists between
Hilton and ITT regarding whether ITT has standing to pursue an injunction
against the Hilton tender offer under the federal antitrust laws and whether the
consummation of that offer would violate such laws.
31. Pursuant to 28 U.S.C. Section 2201, Hilton is therefore entitled
to declaratory relief from this Court.
WHEREFORE, plaintiffs seek judgment:
(a) Enjoining ITT from amending its by-laws to in any way impede the
effective exercise of the stockholder franchise in connection with election of
directors at the 1997 annual meeting of ITT shareholders;
(b) Requiring ITT to honor any nomination for the election of
directors by Hilton or HLT at the 1997 annual meeting of ITT shareholders;
(c) Enjoining ITT from increasing the size of its board at or before
its 1997 annual meeting or, in the alternative, requiring ITT to give Hilton and
HLT an opportunity to
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supplement their written notice of intention to nominate individuals for
election of directors in the event that ITT does increase the size of its board;
(d) Enjoining ITT from delaying its 1997 annual meeting beyond May 14,
1997;
(e) Enjoining ITT from refusing to redeem ITT's "poison pill" and
refusing to make the provisions of the Nevada Control Share Acquisition and
Business Combination Statutes inapplicable to Hilton's tender offer for ITT
stock;
(f) Declaring that ITT lacks standing and may not institute an action
seeking to enjoin the Hilton tender offer under any theory of federal antitrust
law;
(g) Declaring that the consummation of the Hilton tender offer for ITT
stock will not substantially lessen competition or tend to create a monopoly in
any line of commerce;
(h) Awarding plaintiffs their costs of suit, including reasonable
attorneys' fees; and
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<PAGE>
(i) Granting plaintiffs such other and further relief as the Court may
deem just and proper.
Dated: January 27, 1997
Las Vegas, Nevada
SCHRECK MORRIS
By: /s/ Steve Morris
-------------------------
STEVE MORRIS
M. KRISTINA PICKERING
1200 Bank of America Plaza
300 South Fourth Street
Las Vegas, Nevada 89101
(702) 382-2101
WACHTELL, LIPTON, ROSEN & KATZ
BERNARD W. NUSSBAUM
ERIC M. ROTH
MARC WOLINSKY
SCOTT L. BLACK
51 West 52nd Street
New York, New York 10019
(212) 403-1000
Attorneys for Plaintiffs
HILTON HOTELS CORPORATION
and HLT CORPORATION
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