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Securities and Exchange Commission
Washington, DC 20549
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SCHEDULE 13E-3
(Amendment No. 1)
RULE 13E-3 TRANSACTION STATEMENT
(PURSUANT TO SECTION 13(e) OF THE
SECURITIES EXCHANGE ACT OF 1934)
LARCAN-TTC INC.
--------------------
(Name of the Issuer)
LARCAN-TTC INC. and LARCAN INC.
------------------------------------
(Name of Person(s) Filing Statement)
Common Stock
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(Title of Class of Securities)
879558 10 4
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(CUSIP Number of Class of Securities)
Ronald M. Eve, Secretary of Larcan-TTC Inc.
650 South Taylor Avenue, Louisville, Colorado 80027
(303) 665-8000
**, Secretary of Larcan Inc.
8 King Street East, Suite 1600
Toronto, Ontario, CANADA M5C 1B5
(416) 364-1616
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(Name, Address and Telephone Number of Person
Authorized to Receive Notices and Communications
on Behalf of Person(s) Filing Statement)
This statement is filed in connection with (check the appropriate
box):
a. [x] The filing of solicitation materials or an information
statement subject to Regulation 14A, Regulation 14C, or Rule 13e-3(c) under the
Securities Exchange Act of 1934.
b. [ ] The filing of a registration statement under the Securities
Act of 1933.
c. [ ] A tender offer.
d. [ ] None of the above.
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<PAGE>
Check the following box if the soliciting materials or information
statement referred to in checking box (a) are preliminary copies. [x]
Calculation of Filing Fee
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Transaction Valuation* Amount of Filing Fee
$155,671.19 $31.13
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[ ] 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: _________________ Filing party: ________________________
Form or registration no.: _______________ Date filed: __________________________
* For purposes of calculation of fee only, this amount is based on (i) 2,490,739
(the number of shares of Common Stock of LARCAN-TTC Inc. outstanding as of
October 27, 1997 ("Common Stock") and not held by Larcan multiplied by $0.0625,
the cash consideration per share, which product has been multiplied by 1/50th of
one percent.
LARCAN-TTC Inc., a Delaware corporation (the "Company") and LARCAN INC., a
Canadian corporation ("Larcan") hereby submit this Rule 13e-3 Transaction
Statement on Schedule 13E-3 (the "Statement"). The Statement relates to a
proposed Agreement and Plan of Merger dated as of July 17, 1997 (the "Merger
Agreement") among Larcan, Larcan Sub Inc., a Delaware corporation and
wholly-owned subsidiary of Larcan ("LSI"), and the Company pursuant to which LSI
will be merged with and into the Company (the "Merger"). Pursuant to the Merger,
each share (a "Share") of Common Stock, par value $0.04 per Share, of the
Company issued and outstanding immediately prior to the effective time of the
Merger (other than (i) Shares held by the Company as treasury stock or owned by
Larcan, which Shares shall be cancelled, and (ii) Shares as to which appraisal
rights have been exercised) will be, subject to certain limitations, converted
at the election of the holder thereof, subject to the terms described in the
proxy statement of the Company (the "Proxy Statement"), into the right to
receive $0.0625 in cash.
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<PAGE>
This Statement is intended to satisfy the reporting requirements of
Section 13(e) of the Securities Exchange Act of 1934, as amended (the "Exchange
Act"). The Proxy Statement is being filed by the Company with the Securities and
Exchange Commission (the "Commission") contemporaneously with the filing of this
Statement.
The cross reference sheet below is being supplied pursuant to General
Instruction F to Schedule 13E-3 and shows the location in the Proxy Statement of
the information required to be included in response to the items of this
Statement. The information in the Proxy Statement, including all exhibits
thereto, is hereby expressly incorporated herein by reference and the responses
to each item in this Statement are qualified in their entirety by the
information contained in the Proxy Statement.
CROSS REFERENCE SHEET
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ITEM IN SCHEDULE 13E-3 WHERE LOCATED IN THE PROXY STATEMENT
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Item 1(a) Cover Page
Item 1(b) SUMMARY--The Merger; THE SPECIAL
MEETING--Date; --Vote Required
Item 1(c)-(d) MARKET PRICES FOR THE COMMON STOCK
Item 1(e) *
Item 1(f) SPECIAL FACTORS--History and Background
Item 2(a)-(g) *
Item 3(a)(1) SPECIAL FACTORS--History and Background
Item 3(a)(2) *
Item 3(b) *
Item 4(a) Cover Page; SUMMARY--The Merger;
GENERAL--Proposal to be Considered at
the Special Meeting; THE MERGER
AGREEMENT
Item 4(b) *
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* The Item is inapplicable or the answer thereto is in the negative.
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<PAGE>
Item 5(a)-(g) SUMMARY--Conduct of Business After the
Merger; SPECIAL FACTORS--History and
Background; --Conduct of Business of
the Company After the Merger
Item 6(a) SUMMARY--Financing the Merger; SPECIAL
FACTORS--Financing of Merger
Consideration; THE MERGER
AGREEMENT--Merger Consideration
Item 6(b) SPECIAL FACTORS--Financing of Merger
Consideration
Item 6(c) *
Item 6(d) *
Item 7(a)-(c) SUMMARY--The Merger; --Purpose and
Reason for the Merger; --Federal Tax
Consequences; SPECIAL FACTORS--History
and Background; --Purpose and Effects
of and Alternatives to the Merger
Item 7(d) SUMMARY--The Special Meeting; --The
Merger; --Effective Time of Merger;
GENERAL--Proposal to be Considered at
the Special Meeting; SPECIAL FACTORS--
Certain Federal Income Tax
Consequences; THE MERGER AGREEMENT
Item 8(a)-(b) SUMMARY--Fairness of the Merger;
SPECIAL FACTORS--History and
Background; --Recommendations of the
Company's Board of Directors; Fairness
of the Merger; --Purpose and Effects of
and Alternatives to the Merger
Item 8(c) SUMMARY--Vote Required; GENERAL--Record
Date; Voting Rights; GENERAL--
Recommendations of the Company's Board
of Directors; Fairness of Merger; THE
MERGER AGREEMENT--Voting Requirements
Item 8(d) *
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* The Item is inapplicable or the answer thereto is in the
negative.
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<PAGE>
Item 8(e) SPECIAL FACTORS--Recommendations of the
Company's Board of Directors; Fairness
of the Merger
Item 8(f) *
Item 9(a)-(c) SPECIAL FACTORS--Recommendations of the
Company's Board of Directors; Fairness
of the Merger
Item 10(a) SUMMARY--Vote Required; GENERAL--Record
Date; Voting Rights; THE MERGER
AGREEMENT--Voting Requirements; MARKET
PRICES FOR THE COMMON STOCK--Principal
Holders of Securities; --Security
Ownership of Management
Item 10(b) *
Item 11 SUMMARY--The Merger; --Vote Required;
THE MERGER AGREEMENT; Annex A
Item 12(a)-(b) SUMMARY--Vote Required; GENERAL--Record
Date; Voting Rights; THE MERGER
AGREEMENT--Voting Requirements
Item 13(a) Cover Page; SUMMARY--The Merger; --
GENERAL--Voting and
Revocation of Proxies; APPRAISAL
RIGHTS; Annex B
Item 13(b) *
Item 13(c) *
Item 14(a) BUSINESS INFORMATION REGARDING LTTC AND
LARCAN--LTTC; FINANCIAL STATEMENTS
Item 14(b) *
Item 15(a)-(b) *
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* The Item is inapplicable or the answer thereto is in the negative.
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<PAGE>
Item 16 *
Item 17(a) *
Item 17(b) *
Item 17(c) Annex A
Item 17(d) *
Item 17(e) Annex B
Item 17(f) *
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ITEM 1. ISSUER AND CLASS OF SECURITIES SUBJECT TO THE TRANSACTION
(a) The information set forth on the cover page of the Proxy Statement is
incorporated herein by reference.
(b) The information set forth under "SUMMARY--The Merger"; "THE SPECIAL
MEETING--Date"; and "--Vote Required" is incorporated herein by reference.
(c)-(d) The information set forth under "MARKET PRICES FOR THE COMMON
STOCK" is incorporated herein by reference.
(e) Not Applicable.
(f) The information set forth under "SPECIAL FACTORS-- History and
Background" is incorporated herein by reference.
ITEM 2. IDENTITY AND BACKGROUND
(a) This Schedule 13E-3 is being filed by LARCAN-TTC Inc., the issuer of
the class of equity securities which is the subject of this Rule 13e-3
transaction and LARCAN INC.
(b)-(c) See Appendix A.
(d)-(g) Not applicable.
ITEM 3. PAST CONTACTS, TRANSACTIONS OR NEGOTIATIONS
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* The Item is inapplicable or the answer thereto is in the negative.
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<PAGE>
(a)(1) The information set forth under "Special Factors--History and
Background" is incorporated herein by reference.
(a)(2) Not Applicable.
(b) Not Applicable.
PAGE 4. TERMS OF THE TRANSACTIONS
(a) The information set forth on the cover page and under "SUMMARY--The
Merger"; "GENERAL--Proposal to be Considered at the Special Meeting"; and "THE
MERGER AGREEMENT" is incorporated herein by reference.
(b) Not Applicable.
ITEM 5. PLANS OR PROPOSALS OF THE ISSUER OF AFFILIATE
(a)-(g) The information set forth under "SUMMARY--Conduct of Business
After the Merger"; "SPECIAL FACTORS--History and Background"; and "--Conduct of
Business of the Company After the Merger" is incorporated herein by reference.
ITEM 6. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION
(a) The information set forth under "SUMMARY--Financing the Merger";
"SPECIAL FACTORS--Financing of Merger Consideration"; and "THE MERGER
AGREEMENT--Merger Consideration" is incorporated herein by reference.
(b) The information set forth under "SPECIAL FACTORS-- Financing of Merger
Consideration" is incorporated herein by reference.
(c) Not applicable.
(d) Not applicable.
ITEM 7. PURPOSES, ALTERNATIVES, REASONS AND EFFECTS
(a)-(c) The information set forth under "SUMMARY--The Merger"; "--Purpose
and Reason for the Merger"; "--Federal Tax Consequences"; "SPECIAL
FACTORS--History and Background"; and "--Purpose and Effects of and Alternatives
to the Merger" is incorporated herein by reference.
(d) The information set forth under "SUMMARY--The Special Meeting"; "--The
Merger"; "--Effective Time of Merger"; "GENERAL--Proposal to be Considered at
the Special Meeting"; "SPECIAL FACTORS--Certain Federal Income Tax
Consequences"; and "THE MERGER AGREEMENT" is incorporated herein by reference.
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<PAGE>
ITEM 8. FAIRNESS OF THE TRANSACTIONS
(a)-(b) The information set forth under "SUMMARY--Fairness of the Merger";
"SPECIAL FACTORS--History and Background"; "--Recommendations of the Company's
Board of Directors; Fairness of the Merger"; and "--Purpose and Effects of and
Alternatives to the Merger is incorporated herein by reference.
(c) The information set forth under "SUMMARY--Vote Required";
"GENERAL--Record Date"; "Voting Rights"; "GENERAL-- Recommendations of the
Company's Board of Directors"; "Fairness of Merger"; and "THE MERGER
AGREEMENT--Voting Requirements" is incorporated herein by reference.
(d) No representative was hired solely on behalf of unaffiliated security
holders.
(e) The information set forth under "SPECIAL FACTORS-- Recommendations of
the Company's Board of Directors"; and "Fairness of the Merger" is incorporated
herein by reference.
(f) Not applicable.
ITEM 9. REPORTS, OPINIONS, APPRAISALS AND CERTAIN NEGOTIATIONS
(a)-(c) The information set forth under "SPECIAL FACTORS-- Recommendations
of the Company's Board of Directors; Fairness of the Merger" is incorporated
herein by reference.
ITEM 10. INTEREST IN SECURITIES OF THE ISSUER
(a) The information set forth under "SUMMARY--Vote Required";
"GENERAL--Record Date; Voting Rights"; "THE MERGER AGREEMENT--Voting
Requirements"; "MARKET PRICES FOR THE COMMON STOCK--Principal Holders of
Securities"; and "--Security Ownership of Management" is incorporated herein by
reference.
(b) No transactions of the type required to be disclosed by Item 10(b)
have been effected in the past 60 days.
ITEM 11. CONTRACTS, ARRANGEMENTS OR UNDERTAKINGS WITH RESPECT TO THE
ISSUER'S SECURITIES
The information set forth under "SUMMARY--The Merger"; "--Vote Required";
"THE MERGER AGREEMENT"; and "Annex A" is incorporated herein by reference.
ITEM 12. PRESENT INTENTION AND RECOMMENDATION OF CERTAIN PERSONS WITH REGARD TO
THE TRANSACTION
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<PAGE>
(a)-(b) The information set forth under "SUMMARY--Vote Required";
"GENERAL--Record Date; Voting Rights"; and "THE MERGER AGREEMENT--Voting
Requirements" is incorporated herein by reference.
ITEM 13. OTHER PROVISIONS OF THE TRANSACTION
(a) The information set forth on the cover page and under "SUMMARY--The
Merger"; "--Appraisal Rights"; "GENERAL--Voting and Revocation of Proxies";
"APPRAISAL RIGHTS"; and "Annex B" is incorporated herein by reference.
(b) Not applicable.
(c) Not applicable.
ITEM 14. FINANCIAL INFORMATION
(a) The information set forth under "BUSINESS INFORMATION REGARDING LTTC
AND LARCAN" in the Proxy Statement and the information set forth under Item 7 in
the Company's Annual Report on Form 10-KSB for the year ended June 30, 1997 is
incorporated herein by reference.
(b) Not Applicable.
ITEM 15. PERSONS AND ASSETS EMPLOYED, RETAINED OR UTILIZED
(a) Not Applicable.
(b) Not Applicable.
ITEM 16. ADDITIONAL INFORMATION
Reference is hereby made to the Proxy Statement and to each exhibit
attached thereto, each of which is incorporated by reference herein.
ITEM 17. MATERIAL TO BE FILED AS EXHIBITS
(a) Not Applicable.
(b) Not Applicable.
(c)(1) Agreement and Plan of Merger dated as of July 17, 1997 by and among
Larcan Inc., Larcan Sub, Inc., and Larcan-TTC Inc. (incorporated by reference to
Annex A to the Proxy Statement).
(c)(2) Not Applicable.
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<PAGE>
(d) Proxy Statement and related Notice of Special Meeting and Proxy
(incorporated by reference to the Proxy Statement filed by LARCAN-TTC Inc. on
the date hereof).
(e) Section 262 of the General Corporation Law of the State of Delaware
(incorporated by reference to Annex B to the Proxy Statement).
(f) Not applicable.
After due inquiry and to the best of its knowledge and belief, the
undersigned certifies that the information set forth in this statement is true,
complete and correct.
Date: December 29, 1997
LARCAN-TTC INC.
By: /s/ Jim Wilson
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Name: G. James Wilson
Title: President
LARCAN INC.
By: /s/ James D. Adamson
---------------------------
Name: James D. Adamson
Title: President
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<PAGE>
APPENDIX A
The name, office, address and present principal occupation or employment of
each executive officer and director of Larcan is:
<TABLE>
<CAPTION>
Office and Principal Residential or
Name Occupation Business Address Citizenship
---- ---------- ---------------- -----------
<S> <C> <C> <C>
P. Clyde Turner Chairman of the Board 228 Ambassador Drive Canada
of Larcan Mississauga, Ontario
CANADA L5T 2J2
James D. Adamson Director and President 228 Ambassador Drive Canada
of Larcan Mississauga, Ontario
CANADA L5T 2J2
Paul A. Dickie Director and Senior Vice 514 Chartwell Road Canada
President of Larcan P.O. Box 880
President of LRE Oakville, Ontario
CANADA L6J 5C5
John E. Tremblay Vice President, 228 Ambassador Drive Canada
Engineering Mississauga, Ontario
CANADA L5T 2J2
Ronald E. Comforth Vice President, 228 Ambassador Drive Canada
Manufacturing Mississauga, Ontario
CANADA L5T 2J2
Stan Maruno Vice President, Sales 228 Ambassador Drive Canada
and Marketing Mississauga, Ontario
CANADA L5T 2J2
Michael P. Gagnon Vice President, Customer 228 Ambassador Drive Canada
Services and Treasurer Mississauga, Ontario
CANADA L5T 2J2
Nancy E. McGee Director and Assistant 514 Chartwell Road Canada
Treasurer of Larcan P.O. Box 880
Senior Vice President, Oakville, Ontario
Chief Financial Officer CANADA L6J 5C5
and Treasurer of LRE
Thomas F. Byrne Director of Larcan 8 King Street East Canada
Secretary of both Larcan Suite 1600
and LRE Toronto, Ontario
Partner in the law firm CANADA M5C 1B5
of Byrne, Crosby
Constance L. Crosby Assistant Secretary of 8 King Street East Canada
Larcan, Partner in the Suite 1600
law firm of Byrne, Crosby Toronto, Ontario
CANADA M5C 1B5
George E. Patton Director of Larcan 514 Chartwell Road Canada
Chairman of the Board and P.O. Box 80
Chief Executive Officer Oakville, Ontario
of LRE CANADA L6J 5C5
</TABLE>
<PAGE>
The name, address and present principal occupation or employment of each
executive officer and director of LARCAN-TTC is:
<TABLE>
<CAPTION>
Office and Principal Residential or
Name Occupation Business Address Citizenship
---- ---------- ---------------- -----------
<S> <C> <C> <C>
Paul A. Dickie Chairman of the Board 514 Chartwell Road Canada
P.O. Box 880
Oakville, Ontario
CANADA L6J 5C5
Nancy E. McGee Director 514 Chartwell Road Canada
P.O. Box 880
Oakville, Ontario
CANADA L6J 5C5
G. James Wilson Director and President 650 South Taylor Avenue U.S./Canada/
of LARCAN-TTC Louisville, CO 80027 Ireland
James D. Adamson Director and Vice 228 Ambassador Drive Canada
President of LARCAN-TTC Mississauga, Ontario
CANADA L5T 2J2
Byron W. St. Clair Director and Assistant 650 South Taylor Avenue U.S.
Secretary Louisville, CO 80027
Dirk B. Freeman Director 650 South Taylor Avenue U.S.
Louisville, CO 80027
David Hale Vice President, 650 South Taylor Avenue U.S.
Operations Louisville, CO 80027
Ronald M. Eve Secretary and Controller 650 South Taylor Avenue U.S.
Louisville, CO 80027
Michael P. Gagnon Treasurer 228 Ambassador Drive Canada
Mississauga, Ontario
CANADA L5T 2J2
</TABLE>
<PAGE>
LARCAN-TTC INC.
650 South Taylor Avenue
Louisville, Colorado 80027
Dear Stockholder:
You are cordially invited to attend a Special Meeting of the stockholders
of Larcan-TTC Inc. (the "Company") to be held at the Company's offices located
at 650 South Taylor Avenue, Louisville, Colorado 80027 on _______, ___________,
1998, at 10:00 a.m., local time.
At the meeting you will be asked to consider and vote on an Agreement and
Plan of Merger by and among the Company, Larcan Inc. ("Larcan"), and Larcan Sub,
Inc., a wholly-owned subsidiary of Larcan. The Agreement and Plan of Merger
generally provides for a taxable exchange in which you will receive $0.0625 for
each share of the common stock of the Company held by you.
The Notice of Special Meeting of Stockholders and the Proxy Statement
accompanying this letter more fully describe the matters to be considered at the
Special Meeting. We urge you to read the enclosed materials carefully.
YOUR BOARD OF DIRECTORS HAS APPROVED THE AGREEMENT AND PLAN OF MERGER AND
RECOMMENDS A VOTE "FOR" THE AGREEMENT AND PLAN OF MERGER.
Approval of the Agreement and Plan of Merger requires the affirmative vote
of the holders of a majority of the outstanding shares of the Company's common
stock entitled to vote thereon.
LARCAN HAS SUFFICIENT VOTES TO APPROVE THE MERGER WITHOUT THE VOTE OF ANY
OTHER STOCKHOLDER. APPROVAL OF THE MERGER IS NOT CONDITIONED ON APPROVAL BY A
MAJORITY OF THE UNAFFILIATED STOCKHOLDERS.
Whether or not you plan to attend the Special Meeting, we urge you to sign,
date and return the enclosed proxy card in the envelope provided so that as many
shares as possible may be represented at the meeting. The vote of each
stockholder is important and your cooperation in returning your executed proxy
card will be appreciated. Should you desire to attend the meeting and vote in
person, you may do so even though you have previously returned your proxy card.
Thank you.
Sincerely,
Paul A. Dickie
Chairman of the Board
<PAGE>
LARCAN-TTC INC.
650 South Taylor Avenue
Louisville, Colorado 80027
NOTICE OF SPECIAL MEETING OF STOCKHOLDERS
To Be Held On _____ __, 1998
Notice is hereby given that a special meeting of the stockholders of
Larcan-TTC Inc. ("Company" or "LTTC") will be held on Tuesday, _____ __, 1997,
at 10:00 a.m., local time, at the Company's offices, located at 650 South Taylor
Avenue, Louisville, Colorado 80027, for the following purposes:
(1) To consider and vote upon the approval of an Agreement and Plan of
Merger ("Agreement") among the Company, Larcan Inc., a Canadian
corporation ("Larcan"), and Larcan Sub, Inc., a Delaware corporation
and wholly-owned subsidiary of Larcan ("LSI"), pursuant to which (i)
LSI will be merged with and into the Company ("Merger"); (ii) each
outstanding share of common stock of LSI will be converted into the
right to receive one share of common stock of the Company, par value
$.04 per share ("Common Stock"), (iii) each outstanding share of
Common Stock of the Company (other than those owned by Larcan and
those for which appraisal rights have been perfected in accordance
with the General Corporation Law of the State of Delaware) shall be
cancelled in exchange for $0.0625 (the "Merger Consideration"), (iv)
each outstanding share of Common Stock of the Company that is owned by
Larcan shall be cancelled without any consideration therefor, and (v)
the Company's Certificate of Incorporation and By-Laws will be the
Certificate of Incorporation and By-Laws of the surviving corporation;
and
(2) To transact such other business as may properly come before the
meeting or any adjournment or adjournments thereof.
Only stockholders of record at the close of business on ________ __, 1998
are entitled to notice of and to vote at the meeting or any adjournment or
adjournments thereof.
<PAGE>
By Order of the Board of Directors
CORPORATE SECRETARY
Louisville, Colorado
__________ ___, 1998
IT IS DESIRABLE THAT AS MANY STOCKHOLDERS AS POSSIBLE BE REPRESENTED AT THE
MEETING AND, THEREFORE, WHETHER OR NOT YOU ARE ABLE TO BE PRESENT IN PERSON OR
OTHERWISE REPRESENTED AT THE MEETING, YOU ARE REQUESTED TO SIGN AND RETURN THE
ENCLOSED PROXY, SO THAT YOUR SHARES WILL BE REPRESENTED.
THE BOARD OF DIRECTORS RECOMMENDS THAT THE STOCKHOLDERS VOTE FOR THE
APPROVAL OF THE MERGER AGREEMENT.
PLEASE DO NOT SEND IN ANY STOCK CERTIFICATES AT THIS TIME.
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<PAGE>
LARCAN-TTC INC.
PROXY STATEMENT
SPECIAL MEETING OF STOCKHOLDERS
This Proxy Statement is furnished in connection with the solicitation by
the Board of Directors of Larcan-TTC Inc., a Delaware corporation ("LTTC" or the
"Company"), of proxies for use at a special meeting of stockholders to be held
at 10:00 a.m., local time, on Tuesday, _____ __, 1998, at 650 South Taylor
Avenue, Louisville, Colorado 80027, and at any postponements or adjournments
thereof (the "Special Meeting"), for the purpose described below. This Proxy
Statement is first being mailed to stockholders of the Company on or about
January [ ], 1998.
At the Special Meeting, the stockholders of LTTC will be asked to consider
and vote upon a proposal to approve and adopt an Agreement and Plan of Merger,
dated July 17, 1997 (the "Merger Agreement"), by and among the Company, Larcan
Inc., a Canadian corporation ("Larcan"), and Larcan Sub, Inc., a recently-formed
Delaware corporation and a wholly-owned subsidiary of Larcan ("LSI").
The Merger Agreement provides for the merger (the "Merger") of LSI with and
into the Company with the Company being the surviving corporation (the
"Surviving Corporation"). At the effective time of the Merger, each share of the
common stock, $.04 par value per share ("Common Stock") of the Company
outstanding immediately prior thereto (other than those owned by Larcan and
those for which appraisal rights have been perfected in accordance with the
General Corporation Law of the State of Delaware ("DGCL")) will be converted
into the right to receive $0.0625 in cash, without interest (the "Merger
Consideration"). Larcan negotiated the Merger Consideration with the Company's
two largest stockholders after Larcan. Larcan based the Merger Consideration, in
part, on the limited reported market activity in the Company's Common Stock
preceding May 28, 1997. For a more complete description of the Merger Agreement
and the Merger, see "THE MERGER AGREEMENT."
THIS TRANSACTION HAS NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION NOR HAS THE COMMISSION PASSED UPON THE FAIRNESS OR MERITS OF
SUCH TRANSACTION FOR THE ACCURACY OR ADEQUACY OF THE INFORMATION CONTAINED IN
THIS PROXY STATEMENT. ANY REPRESENTATION TO THE CONTRARY IS UNLAWFUL.
<PAGE>
TABLE OF CONTENTS
Page
SUMMARY ...............................................1
The Special Meeting.................................1
The Merger..........................................1
Vote Required.......................................2
The Effective Time of the Merger....................3
Purpose and Reason for the Merger...................3
Fairness of the Merger..............................3
Federal Tax Consequences............................3
Financing the Merger................................3
Conduct of Business After the Merger................4
Appraisal Rights....................................4
SPECIAL MEETING..........................................5
Proposal to be Considered at the Special Meeting....5
Record Date; Voting Rights..........................5
Voting and Revocation of Proxies....................6
Appraisal Rights....................................6
Solicitation of Proxies.............................7
SPECIAL FACTORS........................................7
Background..........................................7
Interests of Mr. Freeman and Dr. St. Clair
in the Merger....................................11
Recommendations of the Company's Board
of Directors; Fairness of the Merger.............12
Recommendations of Larcan as to the Fairness
of the Merger....................................15
Purpose and Effects of and Alternatives to
the Merger.......................................17
Conduct of Business of the Company After
the Merger.......................................18
Certain Federal Income Tax Consequences............19
Accounting Treatment ..............................20
Financing of Merger Consideration..................18
THE MERGER AGREEMENT..................................21
General............................................21
Effective Time of the Merger.......................21
Merger Consideration...............................21
Conditions to Closing..............................22
Termination or Amendment of Merger Agreement.......23
Voting Requirements................................23
APPRAISAL RIGHTS........................................24
INFORMATION REGARDING LTTC AND LARCAN ................28
LTTC ..............................................28
Major Products and Markets....................28
Marketing.....................................31
Competition...................................32
Product Development...........................33
<PAGE>
Single Suppliers..............................34
Customers.....................................34
Employees.....................................34
Properties....................................34
Legal Proceedings.............................34
Larcan and LSI.....................................36
MARKET PRICES FOR THE COMMON STOCK....................36
Principal Holders of Securities....................37
Security Ownership of Management...................37
INDEPENDENT ACCOUNTANTS.................................39
MISCELLANEOUS.........................................39
AVAILABLE INFORMATION...................................39
ANNEX A: Agreement and Plan of Merger.................A-1
ANNEX B: Directors and Executive Officers
of LTTC, Larcan, LSI and
the Surviving Corporation....................B-1
ANNEX C: Section 262 of the DGCL......................C-1
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<PAGE>
SUMMARY
The following is a summary of certain information contained in this Proxy
Statement. This summary is not intended to be a complete statement of all
material features of the Merger and is qualified in its entirety by reference to
the more detailed information appearing elsewhere in this Proxy Statement and
the Annexes hereto. Terms used but not defined in this Summary have the meanings
ascribed to them elsewhere in this Proxy Statement. Stockholders are urged to
read this Proxy Statement and the Annexes hereto in their entirety.
The Special Meeting
A special meeting of the stockholders of Larcan-TTC Inc. (the "Company" or
"LTTC") will be held at 10:00 a.m., local time, on [__________, ________ __,]
1998 at the Company's offices located at 650 South Taylor Avenue, Louisville,
Colorado 80027. At the Special Meeting, the stockholders of the Company will be
asked to consider and vote upon a proposal to approve and adopt an Agreement and
Plan of Merger, dated July 17, 1997, by and among the Company, Larcan Inc.
("Larcan") and Larcan Sub, Inc., a wholly-owned subsidiary of Larcan ("LSI"). A
copy of the Merger Agreement is attached to this Proxy Statement as Annex A.
The Company is a Delaware corporation with its principal executive offices
located at 650 South Taylor Avenue, Louisville, Colorado 80027, telephone: (303)
665-8000. Larcan is a corporation organized under the laws of Canada, the
principal executive offices of which are located at 228 Ambassador Drive,
Mississauga, Ontario, Canada L5T 2J2, telephone: (905) 564-9222.
The Merger
The Merger Agreement provides that, upon approval of the Merger Agreement
by the stockholders of the Company and satisfaction of certain other conditions,
the Company will be merged with LSI, and will be the surviving corporation
("Surviving Corporation" shall hereinafter mean LTTC from and after the
effective time of the Merger.) As a result of the Merger, each outstanding share
of the Company's common stock, $.04 par value per share ("Common Stock"), (other
than those that are owned by Larcan and those for which appraisal rights have
been perfected in accordance with the Delaware General Corporation Law ("DGCL"))
will be converted into the right to receive $0.0625 in cash, without interest
("Merger Consideration"). See "SPECIAL MEETING--Proposal to be
<PAGE>
Considered at the Special Meeting," "The MERGER AGREEMENT-- General," "THE
MERGER AGREEMENT--Effective Time of the Merger," and "THE MERGER
AGREEMENT--Merger Consideration."
As soon as practical after the Merger, Larcan will cause to be mailed to
the Company's stockholders' instructions regarding the surrender of their
certificates, together with a letter of transmittal for that purpose. The Merger
Consideration will be distributed to each stockholder of the Company upon the
surrender by such stockholder of the certificate or certificates which prior to
the Merger represented shares of the Common Stock accompanied by a duly executed
letter of transmittal and such other document as may be required thereby. After
the Merger, each outstanding certificate which prior thereto represented shares
of the Common Stock (other than those shares owned by Larcan and those shares
for which appraisal rights have been perfected in accordance with Section 262 of
the DGCL) will be deemed to represent only the right to receive the Merger
Consideration. See "THE MERGER AGREEMENT--Merger Consideration" and "APPRAISAL
RIGHTS."
Vote Required
The affirmative vote of a majority of the shares of the Common Stock
outstanding on ________ __, 1998 is required for approval and adoption of the
Merger Agreement. Abstentions and broker non-votes will have the effect of a
vote against the Merger. See "SPECIAL MEETING--Record Date; Voting Rights" and
"THE MERGER AGREEMENT--Voting Requirements."
Larcan holds 9,053,195 shares of Common Stock, representing approximately
78.42% of the outstanding shares of the Company, and intends to vote such shares
in favor of the approval and adoption of the Merger Agreement. Mr. Dirk B.
Freeman and Dr. Byron W. St. Clair each holds 905,803 and 517,378 shares,
respectively, of Common Stock, representing approximately 7.85% and 4.48%,
respectively, of the outstanding shares of the Company. Each of Mr. Freeman and
Dr. St. Clair has agreed to vote all of his shares of the Common Stock in favor
of the approval and adoption of the Merger Agreement.
Approval of the Merger is not conditioned on approval by a majority of the
unaffiliated stockholders. Accordingly, the shares of Common Stock held by
Larcan are sufficient to constitute a quorum for transacting business at the
Special Meeting and approve the Merger Agreement without the vote of other
stockholders.
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Effective Time of the Merger
The Merger will become effective upon the filing of a Certificate of Merger
with the Office of the Secretary of State of the State of Delaware. It is
anticipated that the filing will be made promptly following the Special Meeting,
assuming that the conditions to closing have been satisfied or, if permissible,
waived. See "THE MERGER AGREEMENT--Effective Time of the Merger" and
"--Conditions to Closing."
Purpose and Reason for the Merger
The purpose of the Merger is to effect the acquisition by Larcan of the
entire equity interest in the Company. See "THE MERGER--Purpose and Effects of
and Alternatives to the Merger."
Fairness of the Merger
The Company believes that the Merger is fair to unaffiliated holders of the
Common Stock. Larcan believes that the Merger is fair to unaffiliated holders of
the Common Stock based principally upon the procedures utilized by the Company
and Larcan in negotiating the Merger Consideration.
Federal Tax Consequences
The receipt of the Merger Consideration pursuant to the Merger will be a
taxable transaction for the holders of the Common Stock for federal income tax
purposes and may result in taxation to such holders under applicable state,
local and foreign or other tax laws. The gain or loss on the transaction will be
a capital gain or loss if the stock is a capital asset in the hands of the
stockholders. See "THE MERGER--Certain Federal Income Tax Consequences."
EACH STOCKHOLDER IS URGED TO CONSULT SUCH STOCKHOLDER'S OWN TAX ADVISOR TO
DETERMINE THE PARTICULAR TAX CONSEQUENCES TO SUCH STOCKHOLDER OF THE MERGER,
INCLUDING THE APPLICABILITY AND EFFECT OF STATE, LOCAL, FOREIGN AND OTHER TAX
LAWS.
Financing the Merger
The closing of the Merger is not conditioned on the receipt of financing.
The total Merger Consideration of approximately $155,671.19 will be paid from
Larcan's working capital.
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Conduct of Business After the Merger
The Company will survive the Merger as a direct wholly-owned subsidiary of
Larcan and will continue to hold and own all of its properties and assets. It is
contemplated that after the Merger, Larcan will continue to operate the Company
as a wholly-owned subsidiary. Larcan intends to achieve operating efficiencies
by consolidating the overhead of Larcan and the Company. See "THE
MERGER--Conduct of Business of the Company After the Merger."
Appraisal Rights
Pursuant to Section 262 of the DGCL ("Section 262"), a stockholder has the
right to seek appraisal of such holder's shares and to be paid the "fair value"
thereof in cash if the Merger is consummated and the holder strictly complies
with the procedures set forth in Section 262. Failure to comply strictly with
such procedures will result in a loss of such appraisal rights. Unless otherwise
determined by a Court of Chancery in Delaware in an appraisal proceeding, under
Section 262 a stockholder will be responsible for the legal and related costs
associated with asserting appraisal rights. The aggregate Merger Consideration
payable to stockholders other than Mr. Freeman and Dr. St. Clair is
approximately $66,722. A copy of Section 262 is attached to this Proxy Statement
as Annex C. See "SPECIAL MEETING--Record Date; Voting Rights" and "APPRAISAL
RIGHTS" below.
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SPECIAL MEETING
Proposal to be Considered at the Special Meeting
At the Special Meeting, the stockholders of LTTC will be asked to consider
and vote upon a proposal to approve and adopt the Merger Agreement by and among
the Company, Larcan, and LSI.
The Merger Agreement provides for the Merger with LTTC being the Surviving
Corporation and becoming a wholly-owned subsidiary of Larcan.
At the Effective Time, (a) each share of the Common Stock outstanding
immediately prior to the Effective Time (other than shares owned by Larcan or
for which appraisal rights have been perfected in accordance with the DGCL) will
be converted into the right to receive the Merger Consideration, (b) each share
of the Common Stock held in the Treasury of LTTC at the Effective Time, if any,
will be cancelled and retired and cease to exist (and no consideration will be
paid with respect thereto), (c) each share of the Common Stock held by Larcan at
the Effective Time will be cancelled and retired and cease to exist (and no
consideration will be paid with respect thereto), and (d) each share of the
common stock of LSI will be converted into one share of the Common Stock of the
Surviving Corporation. A copy of the Merger Agreement is attached to this Proxy
Statement as Annex A.
Record Date; Voting Rights
Only stockholders of record at the close of business on ________ __, 1998
will be entitled to vote at the Special Meeting. On October 27, 1997, there were
11,543,934 outstanding shares of Common Stock, each of which is entitled to one
vote. The presence in person or by proxy at the Special Meeting of the holders
of a majority of the shares of Common Stock will constitute a quorum for the
transaction of business.
With respect to the Merger Agreement, approval will require the affirmative
vote of a majority of the issued and outstanding shares of Common Stock. Shares
of Common Stock represented at the Special Meeting that are not voted and
abstentions will have the effect of votes cast against approval of the Merger
Agreement.
Brokers who hold shares in street name for customers who are the beneficial
owners do not have the authority to vote on a merger without specific
instruction from their customers. Such broker non-votes (arising from the lack
of instruction
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from beneficial owners) will not be included in the vote total on the proposal
and thus will have the effect of votes cast against the Merger Agreement.
Larcan holds shares of Common Stock representing approximately 78.42% of
the shares of Common Stock entitled to vote on the adoption of the Merger
Agreement and intends to vote such shares in favor of the Merger Agreement. Mr.
Dirk B. Freeman and Dr. Byron W. St. Clair, directors of the Company, each holds
shares of Common Stock representing approximately 7.85% and 4.48%, respectively.
Each of Mr. Freeman and Dr. St. Clair also has agreed to vote all of their
shares of the Common Stock in favor of the approval and adoption of the Merger
Agreement.
Approval of the Merger is not conditioned on approval by a vote of the
unaffiliated stockholders. Accordingly, the shares of Common Stock held by
Larcan will constitute a quorum for the transaction of business at the Special
Meeting and will be sufficient to approve the Merger Agreement without the vote
of other stockholders.
Voting and Revocation of Proxies
If the enclosed form of proxy is properly executed and returned to the
Company in time to be voted at the Special Meeting, the shares represented
thereby will be voted in accordance with the instructions marked thereon.
Executed but unmarked proxies will be voted "FOR" approval of the Merger
Agreement. If any other matters are properly brought before the Special Meeting,
the persons named in the accompanying proxy will vote the shares represented by
the proxies on such matters as determined by a majority of the Board of
Directors.
Any proxy may be revoked at any time before it is exercised by giving
written notice of such revocation or delivering a later dated proxy to the
Corporate Secretary of the Company prior to the meeting, or by the vote of the
stockholder in person at the meeting.
Appraisal Rights
Holders who do not vote in favor of, or who abstain from voting on, the
Merger Agreement and who comply with the provisions of Section 262 have the
right to be paid in cash the "fair value" of their shares of the Common Stock. A
copy of Section 262 is attached as Annex C to this Proxy Statement. A
stockholder contemplating the exercise of the appraisal rights provided by
Section 262 should carefully review that Section, including without limitation
the procedural steps required to perfect those rights. A summary description of
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those rights is provided under "APPRAISAL RIGHTS" below. A stockholder who fails
to comply strictly with the requirements under Section 262 will lose such
appraisal rights and will be entitled to the Merger Consideration for the shares
of the Common Stock held by such stockholders.
Solicitation of Proxies
The cost of soliciting proxies in the form enclosed herewith will be borne
by the Company. In addition to the solicitation of proxies by mail, the Company,
through its directors, officers and regular employees, may also solicit proxies
personally or by telephone. The Company also will request persons, firms and
corporations holding shares in their names or in the name of their nominees,
which are beneficially owned by others, to send proxy material to and obtain
proxies from the beneficial owners and will reimburse the holders for their
reasonable expenses in so doing.
SPECIAL FACTORS
Background of the Merger
In early 1993, Larcan, an international manufacturer of VHF transmitters,
received a request from a major customer for a solid state UHF transmitter.
Although Larcan was engaged in the development of such a product, at that time
it did not have a transmitter that would satisfy its customer's needs. The
customer stipulated that the transmitter had to be placed "on air" by a date in
advance of the date that Larcan anticipated its own UHF product would be
available.
To meet its customer's needs, Larcan sought to acquire a UHF transmitter
that could be used by the customer on an interim basis pending completion and
delivery of Larcan's own product. Larcan approached Technology Television
Corporation ("TTC") for the product. During the course of purchasing the UHF
transmitter, Larcan identified a potential for synergy between Larcan and TTC
based on their respective product lines. Major products of each company were
viewed as complementary rather than competitive, including the TTC UHF
transmitter acquired by Larcan and the solid state UHF transmitter being
developed by Larcan, each of which was targeted for a different segment of the
transmitter market.
Larcan viewed TTC as a strategic investment opportunity through which
Larcan could strengthen its position in both the domestic and international
markets. Larcan also believed that an association with TTC could lead to a
reduction in the combined research and development expenditures of both
companies and an opportunity to sell TTC products to existing Larcan customers.
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On October 1, 1993, Larcan, TTC and certain of TTC's stockholders entered
into a stock purchase agreement (the "Purchase Agreement") pursuant to which
Larcan purchased an aggregate of 4,053,195 shares of Common Stock, representing
approximately 61.9% of TTC's then outstanding shares, for $.275 per share.
Pursuant to the terms of the Purchase Agreement, Larcan also exercised its right
to designate a majority of the members of TTC's Board of Directors. In February
1994, TTC's stockholders approved a change of the name of TTC to "Larcan-TTC
Inc." See "INFORMATION REGARDING LTTC AND LARCAN--LTTC."
After investing in the Company and changing the Company's corporate name to
Larcan-TTC Inc., Larcan concluded that it would be required to provide more
support to the Company and its business than originally anticipated. The trade
name "Larcan" is associated with premium quality product lines serving the
primary full service broadcast market. In order to meet customers' needs and
improve customers' perception of the Company, Larcan found it necessary to
advance funds to the Company and to provide engineering and other support for
the Company's product lines.
Since 1993, the Company has experienced net losses for each fiscal year.
Such losses have increased from a net loss of $1,200,000 for the fiscal year
ended June 30, 1993 to a net loss of $2,353,000 for the fiscal year ended June
30, 1997 (including adjustments for interest accrued on advances made to the
Company by Larcan, as described below). In addition, the Company's net working
capital deficiency has increased from $409,000 at June 30, 1993 to $6,099,000 at
June 30, 1997.
Larcan has been the principal source of funds for the Company to finance
inventory purchases and its working capital deficit. In the fiscal year ended
June 30, 1997, Larcan advanced a total of $2,700,000 to the Company. At June 30,
1997, the Company's advances from Larcan totalled $6,500,000, exclusive of
interest. Pursuant to the terms of a promissory note delivered pursuant to a
loan agreement between Larcan and the Company, all advances made by Larcan to
the Company became payable on demand as of August 1, 1997.
A portion of Larcan's advances since 1993 have been offset by purchases of
the Company's common and preferred stock. In June 1995, Larcan agreed to
purchase an additional 5,000,000 shares of Common Stock for $500,000 and 500,000
shares of 5% cumulative, convertible preferred stock (the "Preferred Stock") for
$500,000. Each share of Preferred
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Stock, together with accumulated dividends, is convertible at any time into
shares of Common Stock at a price of $0.10 per share. Payment received by the
Company from Larcan for the additional shares of Common Stock and the shares of
Preferred Stock was applied to satisfy a portion of the Company's indebtedness
to Larcan which had arisen through prior advances made by Larcan. The issuance
of such shares of Common Stock and Preferred Stock was approved by the Company's
stockholders. As a result of those purchases, Larcan's beneficial ownership in
the Company increased from approximately 61.9% to approximately 78.4%. The
500,000 shares of Preferred Stock, if converted, would result in an increase to
Larcan's holdings of Common Stock to 14,053,195 and an increase in the total
number of Common Stock issued to 16,543,934. Thus, on a diluted basis, Larcan
would be entitled to vote 85.49% of the Common Stock in favor of the Merger.
Except for the purchase of the Common and Preferred Stock in June 1995
described above, during the last two preceding fiscal years Larcan did not have
any contracts, negotiations or transactions with the Company or any other party
with respect to an acquisition of securities of the Company or a sale or other
transfer of assets of the Company.
Prior to the adoption of industry-wide high definition television ("HDTV")
broadcasting standards in 1997, the Company had been working on the development
of an analog high power UHF transmitter that would become HDTV compatible
through the substitution of a digital modulator available from outside sources.
After the adoption of an industry standard for HDTV and the Federal
Communication Commission's establishment of a DTV implementation schedule,
however, the Company concluded that performance of its analog transmitter would
not meet the anticipated industry needs.
In early 1997, after receiving and reviewing Consolidated Financial
Statements for its fiscal year ended December 31, 1996 and, noting the impact of
underperformance by the Company in the latter part of that year, Larcan began to
reconsider its investment. Larcan was concerned that the Company's weak
financial condition and the modest level of technology attained to date would
preclude realization of a product that would adequately meet the requirements of
the emerging Digital Television ("DTV") market. Also, Larcan was concerned that
in fiscal 1997 unexpected costs relating to the development of a transmitter of
another type had delayed the introduction of that transmitter beyond the date
forecasted, with an adverse effect on the Company's financial condition.
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On May 1, 1997 Larcan's Board of Directors concluded that a major decision
would have to be made quickly with respect to the Company. Representatives from
Larcan's engineering, finance, manufacturing, and sales departments, each of
whom had been closely involved with the Company in preceding months, were
assigned to evaluate the engineering, financial, manufacturing, and sales
aspects of the Company's operations and to assess the Company's future
prospects.
On or about May 10, 1997, Mr. James D. Adamson, President of Larcan,
contacted Mr. Freeman and Dr. St. Clair, the Company's two independent
directors, and asked if they would attend a meeting on May 28, 1997 at Larcan's
headquarters. At that meeting, Larcan's management reported on its evaluation of
the Company's operations. Larcan noted that the Company had been unsuccessful in
trying to compete in the high power UHF transmitter market because of the costs
associated with manufacturing the Company's products. The Company also had
failed to develop and introduce a new low power UHF transmitter to replace its
aging product line. Efforts to reduce costs associated with the Company's
current product line also had been unsuccessful. In light of the foregoing,
Larcan informed Mr. Freeman and Dr. St. Clair that all of the Company's
operations, except financial reporting, were viewed as unsatisfactory to Larcan.
In an informal meeting following that meeting, Mr. Freeman and Dr. St.
Clair were informed by Mr. Adamson that Larcan had determined that it could not
justify funding the Company indefinitely under existing circumstances. The
parties then discussed options available to the Company, specifically seeking
additional capital from a source other than Larcan, scaling down operations,
filing for bankruptcy or joining in a merger with Larcan through which Larcan
would acquire the entire equity interest in the Company. It was agreed that, in
its current financial condition, the Company would be unable to raise new
capital on in its own and that without additional capital, scaling down
operations would achieve no purpose. Without further advances by Larcan, the
Company would have to cease operations and seek formal bankruptcy protection. A
merger with another competitor was not viewed as a viable alternative because of
the financial condition of the Company and lack of attractive assets.
Accordingly, a merger with Larcan was perceived as being the most beneficial to
stockholders.
Larcan believed that if it could agree to an acceptable share price for the
Freeman-St. Clair equity interest in the Company, negotiated on an arm's length
basis, Mr. Freeman and Dr. St. Clair would, in effect, be representing the
interests of all of the Company's minority stockholders. Larcan was
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aware that the Board of Directors of the Company had not formally appointed Mr.
Freeman and Dr. St. Clair to act as an independent committee of the Board to
negotiate the terms of the Merger or the Merger Consideration, or evaluate the
fairness of the Merger Consideration to the minority stockholders, but believed
that Mr. Freeman and Dr. St. Clair, in representing their personal interests as
stockholders, would serve indirectly to establish a benchmark price for Merger
Consideration that would be acceptable, and thus fair, to other stockholders of
the Company. In discussions that followed, Mr. Freeman and Dr. St. Clair reached
an agreement in principle with Larcan with respect to the Merger Consideration.
Neither Mr. Freeman, Dr. St. Clair, nor any third party furnished any
written or oral report, opinion or appraisal to the Board of Directors of the
Company concerning the Merger or the Merger Consideration or the fairness of the
Merger to the Company or its stockholders. Moreover, neither Mr. Freeman nor Dr.
St. Clair has professional experience in valuing businesses or securities nor
has made any recommendation, in his capacity as a stockholder, regarding the
fairness of the Merger or the Merger Consideration. Instead, Larcan negotiated a
price at which Mr. Freeman and Dr. St. Clair, as stockholders, would be willing
to sell their entire holdings of Common Stock. In conducting those negotiations,
each of Mr. Freeman, Dr. St. Clair and Larcan was aware of the limited trading
market for the Common Stock and reviewed the trading history for the Common
Stock in offering the Merger Consideration. In their negotiations with Larcan,
Mr. Freeman and Dr. St. Clair had access to the Company's outside legal counsel.
There are no arrangements, agreements, or understandings with respect to
Mr. Freeman's and Dr. St. Clair's continued employment or role in the Company or
Larcan following the Merger, except that Dr. St. Clair, who has been providing
limited services to the Company as a consultant under a contract made in 1996,
will continue to render such services until the contract expires on February 28,
1998.
The Board of Directors of the Company met on July 17, 1997 and approved the
execution of the Merger Agreement in the form attached hereto as Annex A.
Interests of Mr. Freeman and Dr. St. Clair in the Merger
Neither Mr. Freeman nor Dr. St. Clair have any agreements or understandings
with Larcan regarding employment or any other role with the Company or Larcan
following the Merger, except that Dr. St. Clair will continue to provide
consulting
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services through February 1998. In the Merger, each of Mr. Freeman and Dr. St.
Clair will receive the same per share Merger Consideration as all other
stockholders, representing total consideration of approximately $56,613 and
$32,337, respectively. Such aggregate amounts may exceed the amounts Mr. Freeman
and Dr. St. Clair could receive if each attempted to liquidate their holdings in
the market in light of the limited trading market for the Company's Common
Stock.
Recommendations of the Company's Board of Directors;
Fairness of the Merger
At a special meeting of the Board of Directors held on July 17, 1997 the
Board unanimously determined that the Merger is fair to and in the best
interests of the Company and its stockholders and recommended that the
stockholders approve and adopt the Merger Agreement. In reaching its
determination, the Board consulted with the Company's management, as well as its
legal advisors, and considered a number of factors, including all those material
to its decision as discussed below.
In evaluating the fairness of the Merger, the Board of Directors gave
particular consideration to Mr. Freeman's and Dr. St. Clair's roles in
connection with the Merger. Although Mr. Freeman and Dr. St. Clair were not
formally appointed as a special committee of the Board, Mr. Freeman and Dr. St.
Clair are independent directors who, after Larcan, are the two largest holders
of the Common Stock. Mr. Freeman has been associated with the Company since
1987. Accordingly, each of these stockholders has a comprehensive knowledge of
the Company's business and operations.
Larcan negotiated the Merger Consideration on an arms length basis with Mr.
Freeman and Dr. St. Clair as the principal stockholders of the Company. Mr.
Freeman, Dr. St. Clair and the Company had access to independent legal advisors
in those negotiations. The Board of Directors recognized that the lump sum
payment that Mr. Freeman and Dr. St. Clair would receive as a result of the
Merger might exceed the amount each might otherwise receive as a result of sales
of substantial blocks of Common Stock in the open market. The Board of Directors
did not believe, however, that this factor undermined Mr. Freeman's and Dr. St.
Clair's personal interest in obtaining the best price for their holdings. In
this regard, the Board of Directors noted that either Mr. Freeman or Dr. St.
Clair might be willing to accept less than the Merger Consideration, which
equals the bid price for a share of Common Stock in the open market, in order to
dispose of his entire holdings of Common Stock. In effect, the Board concluded
that Mr. Freeman and Dr. St. Clair represented the
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interests of all of the holders of the Common Stock in an arms length
negotiation of a fair price for the Merger Consideration.
The Board of Directors also evaluated the impact on the Company of not
approving the Merger. The Board of Directors first considered the financial and
other problems facing the Company since 1993. The Board of Directors concluded
that the net losses and working capital deficits likely would continue for the
foreseeable future. Moreover, without Larcan's continued financial support, the
Company's independent accountants advised the Company that its report on the
Company's financial statements would be qualified with respect to the Company's
ability to continue as a going concern. In the absence of the Merger, the Board
of Directors believed that it was unlikely that Larcan or any other investor
would continue to infuse capital into the Company. Accordingly, the Board of
Directors concluded that, absent the Merger, the Company would cease operating
and a dissolution or liquidation would occur in the near future. Although the
Board of Directors did not formally evaluate the value of the Company upon such
a dissolution and liquidation, it believed that, after repayment of the
Company's current liabilities at June 30, 1997 of approximately $8.6 million,
which exceeded total assets of $2.7 million, no proceeds would be available for
distribution to holders of Common Stock. In effect, the Board of Directors
concluded that the receipt by stockholders of the Merger Consideration would be
preferable to not receiving any consideration for their shares of Common Stock.
The Board of Directors also viewed as favorable in its deliberations the
availability of appraisal rights to stockholders under Section 262 of the DGCL.
Any stockholder who believes that the Merger Consideration is inadequate will,
by strictly complying with Section 262, be able to have the fair value of his or
her shares of Common Stock judicially determined. Although a stockholder seeking
to exercise such rights will bear the fees and expenses associated with
asserting such rights under Section 262, the Court of Chancery may allocate such
fees and expenses in appropriate circumstances. Accordingly, the Board did not
believe that the fees and expenses associated with asserting appraisal rights in
any way undercut the availability or value of those statutory rights to
stockholders.
The Board of Directors considered as a negative factor in its deliberations
the fact that the Merger would be approved notwithstanding a potential negative
vote of a majority of the Company's unaffiliated stockholders. The Board of
Directors concluded, however, that this negative factor was offset by
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the consequences to stockholders of bankruptcy and the availability of appraisal
rights as described above.
The Board of Directors was aware that the Merger Consideration did not
represent a premium to the reported market prices for a share of the Common
Stock. The Board of Directors noted, however, that there is no meaningful
trading market for the Common Stock and thus did not give weight to the limited
open market sales of Common Stock at a price equal to the Merger Consideration.
Although the Common Stock is eligible for trading in the over-the-counter
market, at the time of the Board of Directors' recommendation, there were no
reported trades following Larcan's May 28, 1997 agreement with Mr. Freeman and
Dr. St. Clair in excess of the Merger Consideration. Accordingly, the Board of
Directors concluded that the Merger Consideration, which was determined as a
result of arms length negotiations between Larcan, on the one hand, and Mr.
Freeman and Dr. St. Clair on the other hand, more accurately reflected the value
of a share of Common Stock at the current time. The Board also determined that
Mr. Freeman and Dr. St. Clair fairly represented the interests of all of the
holders of the Common Stock and that, the absence of such a premium
notwithstanding, the Merger was fair and in the best interests of the Company's
stockholders.
In connection with the Merger, the Company did not retain a financial
advisor to evaluate and render an opinion with respect to the fairness of the
Merger Consideration from a financial point of view. The Board of Directors
believed that the fees of such an advisor would be disproportionate to the
aggregate Merger Consideration and, accordingly, could reduce funds that
otherwise might be made available to stockholders.
The Board also was aware that an expected benefit of the Merger to Larcan
would be improved operational efficiencies. The Board believed that Larcan's
proposed Merger Consideration took into account such efficiencies, particularly
in light of the extent of Larcan's prior advances and operational support.
The Board did not specifically consider the allocation of the transactional
costs in connection with its consideration of the Merger.
In addition to the various factors discussed above, the Board of Directors
considered that, if the Merger is completed, the Company's stockholders will be
unable to share in any improvement in the Company's financial condition. Such
improvements could result, for example, from the growth in demand for UHF
transmitters or the Company's sale of existing products or new products for the
HDTV market. The Board of Directors concluded, however, that the timing of such
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improvement, if any, is uncertain and speculative, and product development costs
are expected to be significant. Moreover, in order to take advantage of the
growth in demand for UHF transmitters or opportunities in the HDTV market, the
Company will require a continued source of capital to continue to develop, and
ultimately market, new products. As discussed above, without Larcan's continued
financial support, the Board of Directors believes that it is unlikely that
these objectives would be realized.
Based on the foregoing, the Board of Directors concluded that the Merger is
fair to and in the best interests of the Company and its stockholders, including
unaffiliated stockholders. Accordingly, the Board of Directors unanimously voted
to recommend that stockholders vote "FOR" the Agreement.
The discussion of the information and factors considered and given weight
by the Board of Directors is not intended to be exhaustive. In view of the wide
variety of factors considered in connection with its evaluation of the terms of
the Merger, the Board did not find it practicable to, and did not, quantify or
otherwise attempt to assign relative weight to the specific factors considered
in reaching its determinations. In addition, individual members of the Board may
have given different weight to different factors.
Recommendations of Larcan as to the Fairness of the Merger
Larcan was not privy to the deliberations of Mr. Freeman and Dr. St. Clair
and did not receive any written or oral report, opinion or appraisal from any
outside party as to the fairness of the Merger to the stockholders of the
Company. Nevertheless, Larcan believes that the Merger is fair to the
unaffiliated holders of the Common Stock. This opinion is based principally on
Larcan's belief that the procedures used to negotiate the Merger Consideration
resulted in a transaction that is fair to unaffiliated stockholders. It was
significant to Larcan's determination in this regard that the two independent
directors, who, after Larcan, are the two largest shareholders of the Company,
were in favor of the Merger. Such independent directors are not past or present
employees or affiliates of Larcan and there are no agreements or understandings
with respect to their continued role in the Company. See "--History and
Background."
While Larcan recognizes that approval of the Merger does not require the
affirmative vote of a majority of the shares of Common Stock held by
non-affiliates of the Company, Larcan believes that the procedures employed by
the Company were reasonably implemented to ensure fairness to such holders.
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In determining that the Merger is fair to the unaffiliated stockholders of
the Company, Larcan also considered the following factors which Larcan believes
bear on the Company's business and the Merger:
(i) the competitive conditions of, and the Company's position and
reputation in, the radio and television broadcasting and communications
industry;
(ii) the fact that it is unlikely that the Company will continue as a going
concern without Larcan's continued financial support;
(iii) the current and historical market price and limited trading volume of
the Common Stock; and
(iv) Larcan's belief that upon dissolution and liquidation of the Company
and repayment of the Company's indebtedness, no proceeds would remain for
stockholders.
While Larcan did not quantify the importance of the foregoing factors, the
role of Mr. Freeman and Dr. St. Clair described above, as well as factors (ii),
(iii), and (iv) received the greatest weight in Larcan's consideration of
fairness of the Merger. Larcan also recognized that the Merger Consideration
does not reflect a premium to the reported market prices for a share of Common
Stock, but concluded that $.0625 was at least equal to the highest price paid
for a share of Common Stock since 1996.
As also noted by the Company's Board of Directors in its discussion of
fairness of the Merger to the unaffiliated stockholders of the Company (see
"--Recommendations of the Company's Board of Directors; Fairness of the
Merger"), Larcan believes that absent a continued capital infusion, the Company
is at a competitive disadvantage vis-a-vis many other companies in the same
industry and consequently would have only a limited ability to participate in
the development, production and marketing of new products and technologies. On
balance, Larcan believes that the Merger will provide the unaffiliated
stockholders of the Company fair value for their investment in the Company
without requiring that such stockholders undertake the risk attendant to the
Company's remaining independent.
In addition to the procedures discussed above, Larcan noted that Section
262 affords the Company's stockholders with appraisal rights such that any
stockholder who believes that $0.0625 per share is unfair or inadequate, and who
strictly complies with Section 262, will be able to have the fair value of his,
her or its shares of Common Stock judicially determined.
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No other factors were considered by Larcan in arriving at their
determination that the Merger is fair to the unaffiliated stockholders of the
Company.
Purpose and Effects of and Alternatives to the Merger
The purpose of the Merger is to effect the acquisition by Larcan of the
entire equity interest in the Company. Larcan believes that a combination at
this time of the Company and Larcan will enhance the efficient use and focus of
management, engineering and capital resources and generally promote strategic,
operational and financial synergies. In addition, the Merger is expected to
eliminate annual fees and expenses associated with being a public company of
approximately $10,000.
Larcan has concluded that it will continue to bear the risks of its
investment in the Company only if it can operate the Company as a wholly-owned
subsidiary, and thereby fully integrate the Company and its products into the
Larcan corporate structure. Larcan believes that if the Company is a
wholly-owned subsidiary, Larcan will be better able to direct the Company's
business and respond to the Company's engineering needs, and generally promote
strategic operational and financial synergies. Larcan also will be able to
benefit from the future success, if any, of HDTV-related products, should the
development of these products be completed by the Company.
The acquisition of the Company by Larcan has been structured as a merger of
LSI into the Company with the Company as the surviving entity in order to
effectuate the foregoing purposes and to preserve the Company's existing
contractual arrangements with third parties. While the Company's Board of
Directors considered other alternatives to the Merger, including (i) seeking
capital elsewhere, (ii) scaling down or closing the Company's operations, and
(iii) commencing a voluntary case under either Federal or state bankruptcy law,
the Company concluded that, in light of Larcan's current equity interest in the
Company and the significant indebtedness of the Company to Larcan, the Merger
was the Company's most viable alternative. The Company's Board of Directors
concluded that (i) it would not be possible to obtain capital from an entity
other than Larcan or without Larcan's guarantees and (ii) scaling down the
Company's operations would preclude the Company from successfully developing
products that would enable the Company to continue as a going concern in the
future (e.g. HDTV and DTV).
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As a result of the Merger, the entire equity interest of the Company will
be owned by Larcan. Following the Merger, the present holders of the Common
Stock will no longer have an equity interest in the Company and will no longer
share in any future earnings or growth of the Company, the risks associated with
achieving any such earnings and growth, or the potential to realize greater
value for their shares of the Common Stock through divestitures, strategic
acquisitions or other corporate opportunities that could have been pursued by
the Company. Instead, each such holder of shares of the Common Stock will have
the right to receive a cash payment of $0.0625 per share of Common Stock held or
to seek appraisal rights as described below under "APPRAISAL RIGHTS" pursuant to
a transaction which has been determined by the Board of Directors, as discussed
above, to be fair to such stockholders. See "Recommendations of the Company's
Board of Directors; Fairness of the Merger."
Subsequent to the Merger, the registration of the Common Stock under the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), will be
terminated and the Company will cease filing reports with the Commission.
The Merger Agreement is not structured so that approval of at least a
majority of unaffiliated stockholders is required. Based upon the steps taken by
the Company and its Board of Directors described in detail elsewhere in this
Proxy Statement, the Company believes that the procedures followed approving the
Merger Agreement for recommendation to the stockholders of the Company were
fair.
Holders of the Common Stock have the right to demand appraisal of, and
obtain payment for, the "fair value" of their shares by following the procedures
prescribed in Section 262, a copy of which is attached as Annex C to this Proxy
Statement, and is summarized under "APPRAISAL RIGHTS" below. Failure to take any
of the steps required under Section 262 on a timely basis could result in the
loss of appraisal rights.
Conduct of Business of the Company After the Merger
Following consummation of the Merger, LTTC, as the Surviving Corporation,
will be operated as a direct wholly-owned subsidiary of Larcan and will continue
to hold and own all of its properties and assets. The persons identified in
Annex B as the directors of LSI will be the initial directors of the Surviving
Corporation. The persons identified as such in Annex B will be the initial
officers of the Surviving Corporation. The Merger is anticipated to result in
overall savings as the overhead of Larcan and the Company are consolidated.
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Certain Federal Income Tax Consequences
The receipt of the Merger Consideration for the Common Stock pursuant to
the Merger will be a taxable transaction for the holders of the Common Stock for
federal income tax purposes under the Internal Revenue Code of 1986, as amended
(the "Code"), and also may result in taxation to such holders under applicable
state, local, foreign and other tax laws.
In general, under the Code, a stockholder will recognize gain or loss equal
to the difference between the tax basis for the shares of the Common Stock sold
and the amount of cash received in exchange therefor. Such gain or loss will be
long-term capital gain or loss if the holding period for the shares of the
Common Stock is more than one year. The distinction between capital gain and
ordinary income may be relevant for certain other purposes, including the
taxpayer's ability to utilize capital loss carryovers to offset any gain
recognized.
Federal income tax rates on long-term capital gain received by individuals
vary based on the individuals' income and the holding period for the asset. In
particular, different maximum federal income tax rates will apply to gains
recognized by an individual from the sale or exchange of the Common Stock (i)
held for more than one year but not more than 18 months (presently 28 percent)
and (ii) held for more than 18 months (presently 20 percent).
The foregoing discussion of the federal income tax consequences may not be
applicable to stockholders who acquired their shares of the Common Stock
pursuant to the exercise of options or other compensation arrangements or who
are not citizens or residents of the United States or who are otherwise subject
to special tax treatment under the Code. The tax effects of the transaction
under state, local, foreign and other tax laws may be different.
THE FOREGOING DISCUSSION OF CERTAIN FEDERAL INCOME TAX CONSEQUENCES OF THE
MERGER IS INCLUDED FOR GENERAL INFORMATION ONLY AND IS BASED ON EXISTING TAX LAW
AS OF THE DATE OF THIS PROXY STATEMENT, WHICH MAY DIFFER ON THE DATE OF THE
CONSUMMATION OF THE MERGER OR AT THE EFFECTIVE TIME. EACH STOCKHOLDER IS URGED
TO CONSULT SUCH STOCKHOLDER'S OWN TAX ADVISOR TO DETERMINE THE PARTICULAR TAX
CONSEQUENCES TO SUCH STOCKHOLDER OF THE TRANSACTION, INCLUDING THE APPLICABILITY
AND EFFECT OF STATE, LOCAL, FOREIGN AND OTHER TAX LAWS.
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Accounting Treatment
The Merger will be accounted for as a "purchase" as that term is used under
generally accepted accounting principles for accounting and financial reporting
purposes.
Financing of Merger Consideration
Larcan intends to finance the Merger through its working capital.
The aggregate of the fees and expenses that are estimated to be incurred by
the Company, Larcan and LSI in connection with the Merger are as follows:
Legal fees and expenses $60,000.00
Accounting fees and expenses $ 5,000.00
Printing and mailing expenses $ 4,750.00
Filing fees $ 31.13
Transfer Agent and Paying Agent fees $ 3,500.00
----------
TOTAL $73,281.13
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THE MERGER AGREEMENT
General
The Merger Agreement provides for the merger of LSI with and into the
Company, with the Company being the Surviving Corporation. As a result of the
Merger, the Company will be a wholly-owned subsidiary of Larcan. LTTC's
Certificate of Incorporation and Bylaws will be the charter documents of the
Surviving Corporation.
The following summary of the material terms of the Merger and the Merger
Agreement which is attached as Annex A to this Proxy Statement.
Effective Time of the Merger
The Effective Time will occur upon the filing of a Certificate of Merger
with the Secretary of State of the State of Delaware in the manner provided
under the DGCL. The Company anticipates that the closing of the Merger
transaction and the filing of the Certificate of Merger will occur promptly
following the Special Meeting.
Merger Consideration
Under the terms of the Merger Agreement, at the Effective Time, (a) each
share of the Common Stock outstanding immediately prior to the Effective Time
(other than shares owned by Larcan and shares for which appraisal rights under
the DGCL have been perfected) will be converted into the right to receive the
Merger Consideration, (b) each share of Common Stock owned by Larcan immediately
prior to the Effective Time will be cancelled and retired and cease to exist
(and no consideration will be paid with respect thereto) (c) each share of the
Common Stock held in the treasury of the Company at the Effective Time, if any,
will be cancelled and retired and cease to exist (and no consideration will be
paid with respect thereto), and (d) each share of the common stock of LSI will
be converted into one share of the Common Stock of the Surviving Corporation.
Instructions with regard to the surrender of certificates representing
shares of the Common Stock which are entitled to receive the Merger
Consideration, together with a letter of transmittal to be used for that
purpose, will be mailed to each holder thereof as soon as practicable after the
Effective Time. American Securities Transfer and Trust, Inc., as the paying
agent (the "Paying Agent"), as soon as practicable following receipt from a
stockholder of a duly executed letter of transmittal, together with certificates
representing the
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shares being surrendered and any other items specified in the letter of
transmittal, shall pay such stockholder, by check, the Merger Consideration to
which he, she or it is entitled.
STOCKHOLDERS SHOULD NOT SEND ANY STOCK CERTIFICATES FOR SHARES OF THE
COMMON STOCK WITH THE ENCLOSED PROXY CARD
After the Effective Time, holder of certificates representing shares of the
Common Stock who do not perfect their appraisal rights under the DGCL will cease
to have any rights as a stockholder of the Company and such holder's sole right
will be to receive the Merger Consideration to which he, she or it is entitled.
In no event will any holder be entitled to receive any interest on the Merger
Consideration to be distributed in connection with the Merger.
At the Effective Time, the stock transfer books of the Company will be
closed with respect to shares of the Common Stock issued and outstanding
immediately prior to the Effective Time and no transfers will be made thereafter
on the Company's stock transfer books. Certificates representing former shares
of the Common Stock of the Company which are presented to the Paying Agent will
be cancelled in exchange for the Merger Consideration.
At or prior to the Effective Time, Larcan will provide the Paying Agent
with sufficient funds to enable the Paying Agent to pay the aggregate Merger
Consideration. The Paying Agent will hold the funds in trust and deliver the
funds (in the form of checks of the Paying Agent) to the person entitled thereto
upon surrender of their certificates representing shares of the former Common
Stock. Any cash delivered to the Paying Agent pursuant to the Merger Agreement
and not paid upon the surrender of such certificates within one year after the
Effective Time will be returned to Larcan, subject of the rights of holders of
unsurrendered certificates.
Conditions to Closing
The obligations of Larcan and LSI to consummate the transactions
contemplated by the Merger Agreement are subject to the satisfaction of certain
conditions including without limitation (a) approval and adoption of the Merger
Agreement by the requisite vote of the stockholders of the Company, (b) receipt
by the Company of all required consents and approvals and all other requirements
prescribed by law which are necessary to the consummation of the transactions
contemplated by the Merger Agreement, and all statutory waiting periods in
respect thereof shall have expired, (c) the absence of (i) any inquiry, action
or proceeding which, in the
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opinion of Larcan, is material, that is instituted to restrain or prohibit the
carrying out of the transactions contemplated by the Merger Agreement or to
challenge the validity of such transactions or any part thereof, or seeking
damages on account or as a result thereof or (ii) any material adverse change in
the financial condition, results of operations, business or prospects of the
Company since June 30, 1997.
Neither the Company nor Larcan is aware of any material condition or
necessary approval that would prevent the closing of the Merger promptly
following stockholder approval of the Merger Agreement.
Termination or Amendment of Merger Agreement
At any time prior to the Effective Time the Merger Agreement may be
terminated by the Boards of Directors of the Company, Larcan and LSI
notwithstanding approval thereof by the stockholders of the Company. Subject to
the applicable provisions of the DGCL, the Boards of Directors of such entities
also may amend the Merger Agreement at any time prior to the Effective Time.
Under the DGCL, no amendment made after stockholder approval will (i) alter the
amount of the Merger Consideration, (ii) change the certificate of incorporation
of the surviving corporation or (iii) alter any terms and conditions of the
Merger Agreement if such alteration would adversely effect the stockholders.
Voting Requirements
Under the DGCL, the Merger Agreement must be approved by the holders of a
majority of the outstanding shares of the Common Stock entitled to vote at the
Special Meeting. Abstentions and broker non-votes will not be voted for or
against the proposal to approve and adopt the Merger Agreement but will have the
effect of a negative vote because the affirmative vote of holders of a majority
of the shares of the Common Stock entitled to vote is required to pass such
proposal.
Mr. Dirk B. Freeman and Dr. Byron W. St. Clair each has agreed with Larcan
to vote all of their respective shares of the Common Stock of LTTC in favor of
the approval and adoption of the Merger Agreement, which shares in the aggregate
represent approximately 12.33% of the shares of the Common Stock entitled to
vote at the Special Meeting. Larcan holds 9,053,195 shares, which shares
represent approximately 78.42% of the shares of the Common Stock entitled to
vote at the Special Meeting. The number of shares of the Common Stock held or
controlled by Larcan, Mr. Freeman and Dr. St. Clair represents a majority of the
shares of the Common Stock
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entitled to vote on the Merger Agreement and, if voted in favor of the Merger
Agreement, will be a sufficient number to approve the Merger Agreement.
THE BOARD OF DIRECTORS OF THE COMPANY RECOMMENDS A VOTE FOR ADOPTION AND
APPROVAL OF THE MERGER AGREEMENT.
APPRAISAL RIGHTS
Holders of record of the Common Stock who comply with the applicable
statutory procedures summarized herein will be entitled to appraisal rights
under Section 262 of the DGCL. A person having a beneficial interest in the
Common Stock held of record in the name of another person, such as a broker or
nominee, must act promptly to cause the record holder to follow the steps
summarized below properly and in a timely manner to perfect appraisal rights.
The following discussion is not a complete statement of the law pertaining
to appraisal rights under the DGCL. The full text of Section 262 which is
reprinted in its entirety as Annex C to this Proxy Statement. All references in
Section 262 and in this summary to a "stockholder" are to the record holder of
shares of the Common Stock as to which appraisal rights are asserted.
The failure of a stockholder to vote against a proposal will not, in and of
itself, constitute a waiver of such stockholder's appraisal rights under Section
262. In addition, the delivery of a signed, but unmarked, proxy will constitute
a vote in favor of the Merger and thus a waiver of appraisal rights under
Section 262.
Under the DGCL, holders of shares of the Common stock who follow the
procedures set forth in Section 262 will be entitled to have their shares
appraised by the Delaware Chancery Court and to receive payment in cash of the
"fair value" of such shares at the Effective Time, exclusive of any element of
value arising from the accomplishment or expectation of the Merger, together
with a fair rate of interest, if any, as determined by such court.
Under Section 262, where a proposed merger is to be submitted for approval
at a meeting of stockholders, the corporation, not less than 20 days prior to
the meeting, must notify its stockholders who were stockholders on the record
date for such meeting that appraisal rights are so available, and must include
in such notice a copy of Section 262. This Proxy Statement constitutes such
notice to the holders of the Common Stock of the Company on the Record Date and
a copy of
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Section 262 is attached to this Proxy Statement as Annex C. Any stockholder who
wishes to exercise such appraisal rights or who wishes to preserve his, her or
its right to do so should review the following discussion and the full text of
Section 262 carefully because the failure to timely and properly comply with the
procedures specified will result in the loss of appraisal rights under Section
262.
A holder of shares of the Common Stock wishing to exercise such holder's
appraisal rights (i) must not vote in favor of an adoption of the Merger
Agreement and (ii) must deliver to the Company prior to the vote on the Merger
Agreement at the Special Meeting, a written demand for appraisal of such
holder's shares of the Common Stock. The written demand must inform the Company
of the identity of the stockholder and that he, she or it intends thereby to
demand appraisal of his, her or its shares. Voting against (whether in person or
by proxy), abstaining from voting or failing to vote on approval and adoption of
the Merger Agreement will not constitute a demand for appraisal within the
meaning of Section 262. All written demands of appraisal should be sent or
delivered to the Company at 650 South Taylor Avenue, Louisville, Colorado 80027,
Attention: Corporate Secretary.
A holder of shares of the Common Stock wishing to exercise such holder's
appraisal rights must be the record holder of such shares on the date the
written demand of appraisal is made and must continue to hold such shares of
record until the Effective Time. Accordingly, a holder of the Common Stock who
is the record holder of shares of the Common Stock on the date that written
demand for appraisal is made, but who thereafter transfers such shares prior to
the Effective Time, will lose any right to appraisal in respect of such shares.
Only a holder of record of shares of the Common Stock is entitled to assert
appraisal rights for shares of the Common Stock registered in that holder's
name. A demand for appraisal should be executed by or on behalf of the holder of
record, fully and correctly, as such holder's name appears on such holder's
stock certificates. If shares of the Common Stock are owned of record in a
fiduciary capacity, such as by a trustee, guardian or custodian, execution of
the demand should be made in that capacity, and if the shares of the Common
Stock are owned of record by more than one person as in a joint tenancy or
tenancy in common, the demand should be executed by or on behalf of all joint
owners. An authorized agent, including an agent for two or more joint owners,
may execute a demand for appraisal on behalf of a holder of record; however the
agent must identify the record owner or owners and expressly disclose the fact
that in executing the
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demand, the agent is agent for such owner or owners. A record holder such as a
broker who holds shares of the Common Stock as nominee for several beneficial
owners may exercise appraisal rights with respect to shares of the Common Stock
held for one or more beneficial owners while not exercising such rights with
respect to the shares of the Common Stock held for other beneficial owners. In
such case, the written demand should set forth the number of shares of the
Common Stock as to which appraisal is sought. If the number of shares is not set
forth, the demand will be treated as a demand as to all shares of the Common
Stock held in the name of the record owners. Stockholders who hold their Common
Stock in brokerage accounts or other nominee form and who wish to exercise
appraisal rights are urged to consult with their brokers to determine the
appropriate procedures for the making of a demand for appraisal by such a
nominee.
The Surviving Corporation will within 10 days after the Effective Date of
the Merger notify such stockholders of the Company who have complied with the
statutory requirements summarized above that the Merger has become effective.
Within 120 days after the effective date of the Merger, but not thereafter, the
Surviving Corporation or any stockholder who has complied with the statutory
requirements summarized above may file a petition in the Delaware Chancery Court
demanding a certification of the value of the stock of all such stockholders.
The Company has no obligation to and has no present intention to file petition
with respect to the appraisal of the fair value of the shares of the Common
Stock. Accordingly, it is the obligation of the stockholders to initiate all
necessary action to perfect their appraisal rights within the time prescribed in
Section 262.
Within 120 days after the effective date of the Merger, any stockholder who
has complied with the requirements for exercising appraisal rights will be
entitled, upon written request, to receive from the Surviving Corporation a
written statement setting forth the aggregate number of shares of the Common
Stock not voted in favor of adoption and approval of the Merger Agreement and
with respect to which demands for appraisal have been received and the aggregate
number of holders of such shares. Such statements must be mailed within 10 days
after a written request therefor has been received by the Company.
If a petition for an appraisal is timely filed, after a hearing on such
petition, the Delaware Chancery Court will determine the stockholders entitled
to appraisal rights and will appraise the "fair value" of their shares of the
Common Stock, exclusive of any element of value arising from the accomplishment
or expectation of the Merger, together with a
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fair rate of interest, if any, to be paid upon the amount determined to be the
fair value. Stockholders considering seeking appraisal should be aware that the
fair value of their shares of the Common Stock as determined under Section 262
could be more than, the same as, or less than the Merger Consideration they
would receive pursuant to the Merger Agreement if they did not seek appraisal of
their shares of the Common Stock. The Delaware Supreme Court has stated that
proof of value by any techniques or methods which are generally considered
acceptable in the financial community and otherwise admissible in court should
be considered in the appraisal proceedings.
The costs of the action may be determined by the Delaware Chancery Court
and taxed upon the parties, as the Delaware Chancery Court deems equitable in
the circumstances. Upon application of a stockholder, the Delaware Chancery
Court may also order that all or a portion of the expenses incurred by a
stockholder in connection with an appraisal, including, without limitation,
reasonable attorney's fees and the fees and expenses of experts utilized in the
appraisal proceeding, be charged pro rata against the value of all of the shares
entitled to an appraisal.
Any holder of shares of the Common Stock who has duly demanded an appraisal
in compliance with Section 262 will not, after the Effective Time, be entitled
to vote the shares subject to such demand for any purpose or be entitled to the
payment of dividends or other distributions on those shares (except dividends or
other distributions payable to holders of record of shares of the Common Stock
as of a record date prior to the effective date of the Merger).
If any stockholder who properly demands appraisal of such stockholder's
shares of the Common Stock under Section 262 fails to perfect, or effectively
withdraws or loses, such stockholder's right to appraisal, the shares of the
Common Stock of such stockholder will be converted into the right to receive the
Merger Consideration. A stockholder will fail to perfect, or effectively
withdraw or lose, such stockholder's right to appraisal if, among other things,
no petition for appraisal is filed within 120 days after the Effective Time, or
if the stockholder delivers to the Company a written withdrawal of such
stockholder's demand for appraisal and acceptance of the Merger Consideration.
Any such attempt to withdraw an appraisal demand more than 60 days after the
Effective Time of the Merger will require the written approval of the Company.
Failure to follow the steps required by Section 262 for perfecting
appraisal rights will result in the loss of such
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rights (in which event a stockholder will be entitled to receive the Merger
Consideration with respect to his, her or its shares of the Common Stock in
accordance with the Merger Agreement).
INFORMATION REGARDING LTTC AND LARCAN
LTTC
The Company is a Delaware corporation whose executive offices and
manufacturing plant are located at 650 South Taylor Avenue, Louisville, Colorado
80027. The Company's principal telephone number is (303) 665-8000. The Company
has been in existence continuously since 1967 when it was incorporated as a
Maryland corporation under the name Television Technology Corporation ("TTC").
It was reincorporated in 1983 under the laws of the State of Delaware.
LTTC is a fully integrated producer of television and FM radio transmission
equipment. At its Louisville, Colorado facility, LTTC designs, develops, and
manufactures a variety of FM and television broadcast transmitters/translators
including low power television equipment and high power UHF television
equipment. LTTC also provides system design services, sells accessory items
manufactured by LTTC and others, and performs installation as requested by its
customers.
Major Products and Markets
The Company's major products and markets are described below.
Translators and Low Power Television ("LPTV")
Translators (sometimes known as transposers in the international
marketplace) function to rebroadcast the signal of a regular (primary) radio or
TV station automatically. They operate unattended, and retransmit the signal of
the primary station on a different (i.e., translated) channel. They are commonly
financed as a public service by local organizations or governmental entities.
They may also be owned and operated by primary stations to extend their signal
into areas which are not able to receive a clean signal (i.e., shadowed areas)
or to extend the station coverage area.
In contrast, LPTV stations have Federal Communication Commission ("FCC")
authority to originate programs. Some of these stations operate a small general
purpose studio, while
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others maintain no studio, but continuously transmit programs obtained from
external sources. These purchased programs may be delivered directly to the
transmitter by satellite. While the low transmitter power restricts the coverage
area, LPTV stations operate under much more flexible and less complex rules than
traditional "full service" TV stations. LPTV stations typically have much
smaller start-up costs and operating budgets. As a result, they are feasible as
either commercial or non-profit stations serving a small community or a
specialized audience with an interest in a particular programming format.
One watt to 1kW television products are normally considered by the Company
to be in the low power transmitter/ translator class. The range of list prices
for the Company's line of translators and LPTV transmitters is $4,995 to
$45,000. This price is dependent primarily on the power level of the
transmitter, with special features, if any, also having an impact.
The Company believes that its continued commitment to the domestic
LPTV/Translator market has allowed the Company to maintain a reasonable share of
this market.
UHF High Power Television
Around the world, television broadcasting exists primarily in two bands,
Very High Frequency ("VHF") and Ultra High Frequency ("UHF"). The VHF band which
came into use first, consists in the U.S. of Channels 2-13. The UHF band
consists in the U.S. of Channels 14-69. The Company manufactures UHF high power
transmitters, but does not manufacture VHF high power transmitters.
The Company believes those agencies responsible for telecommunications
around the world will continue to authorize a steady expansion of the number of
UHF television stations.
Transmitters rated at greater than 1kW constitute the Company's UHF high
power television broadcasting line. In major metropolitan areas, UHF
transmitters may be rated as high as 280kW. The Company currently markets
"IOT/Klystrode type" transmitters ranging in output power from 10kW to 240kW.
The range of list prices for the Company's line of UHF high power transmitters
ranges from $250,000 to $2,000,000. The price is based primarily on the power
level of the equipment with special features and design configurations also
having an impact.
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<PAGE>
FM Radio Transmitters
The Company offers solid-state FM radio transmitters/ transposers. This
product line satisfies the technical requirements of the broadcast regulatory
authorities of most countries and sales are made throughout the world.
The FM transmitter generates the necessary power to carry the station's
program to the listening public on the assigned frequency. These transmitters
range in power from 30 watts to 12kW. Customers include commercial and
non-commercial broadcast organizations and governmental entities worldwide.
The range of list prices for the Company's FM radio
transmitters/transposers is from $5,990 to $103,000. These prices are based
primarily on the power level of the equipment.
The Company's radio product line includes a power line surge protector
offered for use in all types of electronic installations. It also includes an FM
broadcast exciter which can be sold as a stand-alone 30-watt transmitter or as
an upgrade for older FM transmitters, regardless of manufacturer. The current
sales volume in these products continues to be small but consistent.
Supplementary Products and Accessories
A number of products purchased by the Company from other manufacturers are
offered to complement the Company's own products. Typical items are
pre-amplifiers, filters, antennas, transmission line, studio equipment, and test
equipment. These products are obtained from a number of different sources and no
one supplier is considered critical. The Company estimates that less than 10
percent of its sales for the fiscal year ended June 1997 was derived from the
resale of these products, exclusive of products sold as components of the
Company's products or as part of an installed broadcast system.
From time to time, at the specific request of the customer, the Company
will perform system design and/or coverage design services. The Company has
in-house expertise, or can obtain the necessary expertise, to perform these
services.
Governmental Regulation
Suppliers of broadcast transmitters intended for use in the more developed
countries are generally required to obtain approval of the technical
characteristics of their
- 30 -
<PAGE>
transmitters from the appropriate regulatory authority in their country. In the
U.S., the Company must have FCC "Type Acceptance/Notice" of its transmitters.
FCC requirements are generally less stringent than those imposed by competitive
forces and, accordingly, the Company generally does not experience difficulties
obtaining FCC Type Acceptances for new or revised models. The Company has FCC
Type Acceptances/ Notices for required products.
Customers of the Company constructing new broadcast stations of any class
in the U.S. generally must obtain a permit from the FCC. Such a permit is
granted to an applicant for an available channel based on an application showing
that the proposed station would meet the technical, legal, and financial
requirements of the FCC.
Marketing
During fiscal 1997, the Company continued to refine its internal Sales and
Marketing Department and its technical service and support capabilities, with
the goal of exceeding industry standards. The Company continues to investigate
new ways to enhance its marketing effort and maximize its market penetration. A
more aggressive sales effort is being formulated for 1997 and 1998 along with
pursuing greater synergy with the Larcan sales force.
Domestic
The Company's rural translator business depends heavily on a network of
dealers who buy the Company's products, related supplementary products and
accessories at a discount and resell the equipment to an end user. This is
usually done as part of an installed system. In some instances, business
relationships between these dealers and employees of the Company have continued
for more than twenty years. In some circumstances the Company acts as its own
installer when contracted to do so and has the equipment, knowledge, and
personnel to complete these installations.
In the LPTV sector, equipment is sold both directly to an end user and
through distributors, some of whom focus on certain areas of interest (i.e.
religious, educational, etc.), rather than strictly on geographic areas. The
Company's internal sales/marketing staff coordinates, motivates, and assists
dealers/distributors as necessary, and makes direct sales to the Company's end
user customers when appropriate.
Beginning in fiscal 1994, the Company primarily focused its sales efforts
for high power transmitters in the United States through the efforts of LDL
Communications, Inc. ("LDL")
- 31 -
<PAGE>
an affiliate of LARCAN. LDL functions as a dealer, and buys and resells the
Company's UHF high power transmitters for resale in a stand-alone configuration
or as a part of larger systems containing materials from other manufacturers.
Sales by the Company to LDL were $1,470,000 and $1,646,000 for the fiscal
years ended June 30, 1997 and 1996, respectively. Such sales accounted for 27%
and 22% of total sales by the Company during the fiscal years ended June 30,
1997 and 1996, respectively.
The Company's FM radio products are sold through a network of dealers and
representatives, and when appropriate, directly to end users.
International
On a regular basis the Company receives requests for quotations and
proposals from many parts of the world. There continues to be an upward trend in
the number of such requests which the Company believes is due to the increasing
breadth of the Company's product line and its increasing reputation in the world
market.
The Company exports directly to both end users and to dealers or agents.
Some of these dealers/agents are based in the destination country and others
concentrate on particular countries from a business location in the United
States. Internationally, the Company sells its high power transmitters to end
users directly paying a commission to independent manufacturers' representatives
where appropriate.
One of the major goals of the Company has been to achieve significant
penetration of the international low power and high power television markets by
making major sales to customers in developing countries. The Company will
continue to emphasize quality and customer satisfaction in expanding its market
share.
Competition
The Company's products compete in the marketplace on the basis of their
performance characteristics, price, and the Company's reputation for the quality
of its products and service to its customers. Many of the Company's competitors
have substantially greater financial resources than the Company has available to
it. As a result, the Company believes that some of its competitors are better
positioned to pursue the development and introduction of new products.
- 32 -
<PAGE>
In the translator and LPTV market, the Company and its three domestic
competitors (Acrodyne, ADC/ITS, and EMCEE) account for most of the sales of
television translators and LPTV transmitters in the United States.
In the UHF high power transmitter market, the Company competes against two
domestic manufacturers (Harris and Comark). The Company believes these domestic
competitors each have greater sales volume than the Company. Additionally, there
are other minor manufacturers of directly competing equipment which the Company
believes account for less than five percent of the domestic market.
In the international market, large companies such as NEC, Thomcast,
Marconi, Harris, Itelco and Rhode & Schwarz dominate in most developed countries
due to their long-standing and well-established direct sales organizations.
Developing countries currently offer the greatest potential for the Company's
products. The growing emergence of non-state controlled broadcast stations, both
FM and TV, continues to represent new and growing opportunities for the
Company's products.
The Company estimates there are more than 25 FM radio transmitter
manufacturers worldwide, several of which are substantially larger than the
Company. Almost half of these firms actively compete with the Company. The
Company believes several competitors have significantly greater sales volume of
these products than the Company.
Product Development
The Company's engineering and support group pursues product development
efforts aimed at improving current products and developing new products. Only a
small effort is made toward applied research and none towards fundamental
research. The Company expended $726,000, and $898,000 respectively, for research
and development ("R&D") during fiscal 1997 and 1996. Reduction in R&D costs
resulted from the suspension of the development of the high power products of
the RMS series. After a detailed review of the RMS 1000 portion of the
development program, it became doubtful that the product would be cost
competitive.
The Company's product development efforts, including efforts targeted at
the emerging high definition television market, have been adversely affected by
the Company's financial condition. The Company's working capital deficit and
cash flow deficiency have caused the Company to delay and curtail certain
development efforts.
- 33 -
<PAGE>
Single Suppliers
Most materials and equipment used in manufacturing the Company's products
are available from more than one supplier and many are available from numerous
suppliers. While the Company's transmitters have been developed using some
component parts from a particular vendor, it is the Company's belief that, with
only moderate redesign efforts, a transition to another supplier could be made.
The Company strives to maintain good relationships with all suppliers and is not
aware of any plans that any of these suppliers have to discontinue supplying
these materials and components.
Customers
A domestic high power sale accounted for 10% of the Company's sales in
fiscal 1997.
Sales to foreign customers are subject to unique risks which are not
present in sales to domestic customers. The Company attempts to mitigate these
risks by carefully considering the political and economic conditions in a
foreign country along with the financial viability of its customer before doing
business there. Generally, sales to foreign customers are priced in U.S. dollars
to avoid currency fluctuations and are sold under irrevocable letters of credit,
confirmed by a major U.S. bank, when the political, economic, or financial
viability is uncertain.
Employees
As of June 30, 1997 the Company employed 48 full-time employees at its
headquarters in Louisville, CO. The Company's employees are not covered by any
collective bargaining agreement and management believes its employee relations
are satisfactory.
Properties
The Company occupies a 44,000 square foot facility in Louisville, Colorado
under a five-year non-cancelable operating lease, expiring on April 30, 1998.
All manufacturing, warehousing, marketing, engineering, and administrative
functions are based at this location.
Legal Proceedings
The Company is presently engaged in litigation concerning the collection of
outstanding accounts receivable. There are no material legal proceedings to
which the Company is a party.
- 34 -
<PAGE>
Transmitter Industry Overview and Effect of
Recent Developments on Operations
During 1997 the Company saw the FCC adopt a transmission standard for DTV.
Under the FCC DTV rules, each primary broadcaster in the U.S. has been offered a
second channel to be used for the broadcast of a DTV signal while still
continuing to broadcast the current broadcast standard. The market demand for
DTV transmitters is expected to develop rapidly over a period of a few years,
necessitating a substantial development effort on the Company's part in order to
participate in this opportunity.
While, as stated above, the Company believes it has maintained a reasonable
share of the domestic LPTV/Translater market, a decline in its traditional
market is forecasted due to the uncertainties surrounding the introduction of
DTV to the U.S. marketplace. A significant portion of LPTV stations presently in
service may be forced to cease broadcasting due to interference created with
newly deployed DTV channels. This uncertainty is apt to prevail through the
transition from analog to digital service in the U.S.
Forward Looking Statements
This Proxy Statement contains certain forward looking statements within the
meaning of Section 27A of the Securities Act and Section 21E of the Exchange Act
which are intended to be covered by the safe harbors created thereby. These
statements include the plans and objectives of management for future operations
based on current expectations that involve numerous risks and uncertainties.
These plans involve judgments with respect to, among other things, future
economic, competitive and market conditions and future business decisions, all
of which are difficult or impossible to predict accurately and many of which are
beyond the control of the Company. Although the Company believes that the
assumptions underlying the forward-looking statements are reasonable, any of the
assumptions could be inaccurate and, therefore, there can be no assurance that
the forward-looking statements included in this annual report will prove to be
accurate. In light of the significant uncertainties inherent in forward-looking
statements, the inclusion of such information should not be regarded as a
representation by the Company or any other person that the objectives and plans
of the Company will be achieved.
Financial Statements
Attached hereto and filed as a part of this Proxy Statement are the
financial statements and Management's Discussion and Analysis of Financial
Condition and Results of Operations
- 35 -
<PAGE>
Larcan and LSI
Larcan was established in 1981 when the employees of Canadian General
Electric ("CGE"), in association with LeBlanc & Royle Enterprises Inc.,
purchased CGE's broadcast operation. Larcan and its predecessor have been a
major supplier of premium quality VHF television transmitters for over
thirty-five years. Larcan designs, manufactures, sells, and services VHF solid
state television transmitters with powers from 10 watts to 60,000 watts and has
more recently manufactured and delivered 10,000 watt solid state UHF
transmitters.
Larcan is a majority-owned subsidiary of Le Blanc and Royle Enterprises
Inc., a telecommunications investment holding company organized under the laws
of Canada. The principal executive offices of LeBlanc and Royle Enterprises Inc.
are located at 514 Chartwell Road, P.O. Box 880, Oakville, Ontario, L6J 5C5 and
the telephone number is (905) 844-1242.
LSI is a recently-formed Delaware corporation organized by Larcan for the
purpose of enabling Larcan to acquire LTTC. LSI has not conducted any activities
other than those related to its formation, the preparation of this Proxy
Statement and the Schedule 13E-3 filed with the Commission and the negotiation
of the Merger Agreement and its obligations thereunder.
The principal executive offices of each of Larcan and LSI are located at
228 Ambassador Drive, Mississauga, Ontario, Canada L5T 2J2 and the telephone
number of each is (905) 564-9222.
Certain information regarding the directors and executive officers of
Larcan is set forth in Annex B hereto.
MARKET PRICES FOR THE COMMON STOCK
The Common Stock is quoted on the Over the Counter System. The following
table sets forth, for the quarterly periods indicated, the ask and bid prices or
the Common Stock as reported on NASDAQ's Over the Counter System. Such market
quotations reflect interdealer prices without retail mark-up, mark-down or
commission and do not necessarily represent actual transactions.
- 36 -
<PAGE>
Quarter Ending High Low
-------------- ---- ---
September 30, 1995 6/16 3/16
December 31, 1995 6/16 3/16
March 31, 1996 6/16 3/16
June 30, 1996 6/16 3/16
September 30, 1996 4/16 3/16
December 31, 1996 1/16 1/16
March 31, 1997 1/16 1/16
June 30, 1997 1/16 1/16
At June 30, 1997, the approximate number of holders of the Company's
common stock was 475, including both record and beneficial shareholders in
security position listings.
The Company has never declared or paid any cash dividends on its Common
Stock.
On July 17, 1997, the last trading day before Larcan and LTTC publicly
announced the anticipated Merger, the ask and bid prices of the Common Stock of
the Company on the NASDAQ Over the Counter System was $.2188 and $.0625,
respectively. On July 18, 1997, the ask and bid price for the Common Stock of
the Company on the NASDAQ Over the Counter System were $.2188 and $.0625,
respectively.
Principal Holders of Securities
The following table sets forth as of October 10, 1997, the number and
percentage of shares of the Company's Common Stock beneficially owned by each
person who was known by the Company to be the beneficial owner of more than 5%
of the shares of the Common Stock.
Amount and
Nature of
Name and Address Beneficial Percent
of Beneficial Owner Ownership(1) of Class
- ------------------- ------------ --------
Larcan Inc. 14,053,195* 85.49%
228 Ambassador Drive
Mississauga, Ontario
Canada L5T 2J2
- --------------------
(1) Nature of ownership is possession of sole investment and voting power unless
otherwise indicated.
- 37 -
<PAGE>
Dirk B. Freeman 905,803 7.85%
Director
650 South Taylor Avenue
Louisville, Colorado 80027
- ---------------
* Includes 5,000,000 shares of Common Stock issuable upon conversion of Series
A, 5% Cumulative Convertible Preferred shares.
Security Ownership of Management
The following table sets forth, as of October 10, 1997, the number and
percentage of shares of the Common Stock owned beneficially by each member of
the Company's Board of Directors and the executive officers of the Company.
Amount and
Nature of
Beneficial Percent
Name Ownership(2) of Class
- ---- ------------ --------
Byron W. St. Clair, Ph.D. 517,379 4.48%
Director
Paul A. Dickie 0 0.00%
Chairman of the Board
Dirk B. Freeman 905,803 7.85%
Director
Nancy E. McGee 0 0.00%
Director
James D. Adamson
Director, Vice President 0 0.00%
G. James Wilson 0 0.00%
Director and President
All Directors and Executive
Officers 1,423,182 12.33%
Attached as Annex B to this Proxy Statement is information regarding the
directors and executive officers of the Company, Larcan, LSI and the Surviving
Corporation. None
- --------------------
(2) Except as otherwise indicated, nature of beneficial ownership is possession
of sole voting and investment power.
- 38 -
<PAGE>
of the directors or executive officers identified in Annex B, other than those
identified in the chart above and the footnotes thereto, or as specified in
Annex B, beneficially owns any shares of the Common Stock as of the date of this
Proxy Statement.
INDEPENDENT ACCOUNTANTS
The financial statements for the Company and the notes thereto, together
with supplementary financial information for the fiscal year ended June 30, 1997
included in this Proxy Statement have been audited by Ehrhardt, Keefe, Steiner &
Hoffman PC ("EKSH"), the Company's independent public accountants for the fiscal
year ending June 30, 1997.
Representatives of EKSH are expected to be present at the meeting with the
opportunity to make a statement if they so desire and are expected to be
available to respond to appropriate questions.
MISCELLANEOUS
If the Merger is not consummated for any reason, the Company intends to
hold the 1997 Annual Meeting of Stockholders on or about December 30, 1997. Any
stockholder of the Company wishing to include proposals in the proxy materials
for such meeting must meet the requirements of the rules of the Commission
relating to stockholders' proposals. Such proposals must have been received by
the Secretary of the Company in writing at the principal executive office of the
Company prior to __________, 1998.
AVAILABLE INFORMATION
The Company is subject to information requirements of the Exchange Act,
and, in accordance therewith, files reports, proxy statements and other
information with the Securities and Exchange Commission ("Commission"). Such
reports and other information may be inspected and copied or obtained by mail
upon payment of the Commission's prescribed rates at the public reference
facilities maintained by the Commission at 450 Fifth Street, N.W., Room 1024,
Washington, D.C. 20549.
This Proxy Statement includes information required by the Commission to be
disclosed pursuant to Rule 13E-3 under the Exchange Act, which governs so-called
"going private" transactions by certain issuers or their affiliates. In
- 39 -
<PAGE>
accordance with such rule, the Company, Larcan and LSI have jointly filed with
the Commission, under the Exchange Act, a Transaction Statement on Schedule
13E-3 with respect to the Merger. This Proxy Statement does not contain all of
the information set forth in the Schedule 13E-3, parts of which are omitted in
accordance with the regulations of the Commission. The Schedule 13E-3, and any
amendments thereto, including exhibits filed as a part thereof, will be
available for inspection and copying at the offices of the Commission as set
forth above.
BY ORDER OF THE BOARD OF DIRECTORS
Louisville, Colorado
__________ __, 1998
- 40 -
<PAGE>
Table of Contents
Page
----
Audited Financial Statements
Independent Auditors' Report....................................... F-2
Balance Sheet at June 30, 1997 and 1996............................ F-3
Statements of Operations for the Years
Ended June 30, 1997 and 1996....................................... F-4
Statement of Stockholders' Deficit for
the Years Ended June 30, 1997 and 1996............................. F-5
Statements of Cash Flows for the Years
Ended June 30, 1997 and 1996....................................... F-6
Management's Discussion and Analysis of
Financial Condition and Results of
Operations......................................................... F-7
Interim Financial Statements
Balance Sheet at September 30, 1997
and June 30, 1997 (restated)...................................... F-10
Statements of Operations (unaudited) for
the Three Months Ended September 30,
1997 and September 30, 1996....................................... F-12
Statements of Cash Flows (unaudited) for
the Three Months Ended September 30,
1997 and September 30, 1996 (restated)............................ F-13
Notes to Financial Statements..................................... F-15
Management's Discussion and Analysis
of Financial Condition and Results of
Operations........................................................ F-16
F-1
<PAGE>
INDEPENDENT AUDITORS' REPORT
To the Board of Directors and Stockholders
LARCAN-TTC, INC.
Louisville, Colorado
We have audited the balance sheets of LARCAN-TTC, INC. as of June 30, 1997 and
1996 and the related statements of operations, stockholders' deficit and cash
flows for the years then ended. These financial statements are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatements. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of LARCAN-TTC, INC. as of June 30,
1997 and 1996 and the results of its operations and its cash flows for the years
then ended, in conformity with generally accepted accounting principles.
The accompanying financial statements have been prepared assuming that the
Company will continue as a going concern. As further discussed in Note 2 to the
financial statements, the Company has a net working capital deficiency of
$6,099,000 and a net stockholders' deficiency of $5,804,000 at June 30, 1997,
that raises substantial doubt about its ability to continue as a going concern.
Current management's plans in regard to these matters are also described in Note
2. The financial statements do not include any adjustments that might result
from this uncertainty.
/s/ Ehrhardt Keefe Steiner & Hottman PC
----------------------------------------
August 15, 1997
Denver, Colorado
F-2
<PAGE>
LARCAN-TTC, INC.
Balance Sheet
June 30,
-----------------
1997 1996
---- ----
Assets
Current Sheets
Cash and cash equivalents $ 65,000 $ 98,000
Accounts receivable - trade, less allowance for
doubtful accounts of $173,000 (1997) and
$154,000 (1996) (Note 6) 378,000 363,000
Accounts receivable - related party (Note 7) 96,000 782,000
Inventories, net (Notes 3 and 6) 1,871,000 1,797,000
Other 42,000 23,000
Total current assets 2,563,000 3,073,000
Equipment and improvements (Notes 5 and 6) 2,034,000 1,923,000
Less accumulated depreciation and amortization (1,772,000) (1,695,000)
262,000 228,000
Total assets $ 2,747,000 $3,339,000
Liabilities and Stockholders' Deficit
Current liabilities
Line-of-credit (Note 6) $ 154,000 $ 200,000
Advances from stockholder (Note 7) 6,895,000 -
Accounts payable - trade 456,000 1,410,000
Accounts payable - related party (Note 7) 78,000 698,000
Accrued payroll and payroll taxes 145,000 181,000
Other accrued expenses and other liabilities 158,000 142,000
Accrued warranty and other reserves 110,000 32,000
Customer advances 555,000 302,000
Total current liabilities 8,551,000 2,965,000
Advances from stockholder (Note 7) - 3,825,000
Commitments (Note 9)
Stockholders' deficit (Notes 7, 10 and 13)
Preferred stock, $1.00 par value; 1,000,000 shares
authorized
Series A 5% cumulative convertible, 500,000 shares
issued and outstanding, liquidation preference
of $550,000 500,000 500,000
Common stock, $.04 par value; 30,000,000 shares
authorized,
11,543,934 shares issued and outstanding 462,000 462,000
Additional paid-in capital 4,694,000 4,744,000
Accumulated deficit (11,450,000) (9,147,000)
Common stock held in treasury, at cost;
1,796 shares (10,000) (10,000)
Total stockholders' deficit (5,804,000) (3,451,000)
Total liabilities and stockholders' deficit $ 2,747,000 $3,339,000
F-3
<PAGE>
LARCAN-TTC, INC.
Statements of Operations
Fiscal Years Ended June 30,
---------------------------
1997 1996
---- ----
Sales (Notes 7 and 11) $5,436,000 $7,474,000
Operating expenses
Cost of sales 5,089,000 7,293,000
Selling, general and administrative 1,489,000 1,573,000
Research and development 726,000 898,000
Total operating expenses 7,304,000 9,764,000
Loss from Operations (1,868,000) (2,290,000)
Other income and (expense)
Interest (436,000) (21,000)
Other 1,000 (15,000)
Total other income and (expense) (435,000) (36,000)
Net loss (2,303,000) (2,326,000)
Preferred stock dividends 50,000 -
Net loss applicable to common stockholders $(2,353,000) $(2,326,000)
Net loss per common share $ (.20) (.23)
Weighted average number of common shares
outstanding 11,543,934 10,293,561
F-4
<PAGE>
LARCAN-TTC, INC.
Statement of Stockholders' Deficit
For the Years Ended June 1997 and 1996
<TABLE>
<CAPTION>
LARCAN-TTC, INC.
Statement of Stockholders' Deficit
For the Year Ended June 1997 and 1996
Preferred Stock, Series A Common Stock
------------------------- ------------
Subscribed Subscribed
---------- ----------
Shares Amount Shares Amount Shares Amount Shares Amount Capital
------ ------ ------ ------ ------ ------ ------ ------ -------
Year Ended
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
June 30, 1995 - $ - 500,000 $500,000 6,543,934 $262,000 5,000,000 $ 200,000 $
Issuance of
subscribed
common stock - - - - 5,000,000 200,000 (5,000,000) (200,000)
Issuance of
subscribed
preferred stock
for cash 500,000 500,000 (500,000) (500,000) - - - -
Net loss - - - - - - - -
------- ------- --------- -------- ----------- --------- ---------- -------- --------
Year Ended
June 30, 1996 500,000 500,000 - - 11,543,934 462,000 - -
Preferred stock
dividends - - - - - - - -
Net loss - - - - - - - - -
------- -------- -------- -------- ----------- --------- ---------- -------- --------
Year Ended
June 30, 1997 500,000 $500,000 - - $11,543,934 $ 462,000 - $ - $
======= ======== ======== ======== =========== ========= ========== ======== ========
</TABLE>
F-5
<PAGE>
Statements of Cash Flows
For the Years Ended June 30
---------------------------
1997 1996
---- ----
Cash flows from operating activities
Net loss $(2,303,000) $(2,326,000)
Adjustments to reconcile net loss to net
cash used in operating activities
Depreciation and amortization 77,000 94,000
Provision for losses on accounts receivable 19,000 (49,000)
Provision for inventory reserves 68,000 72,000
Change in assets and liabilities
Accounts receivable 662,000 (756,000)
Inventories (142,000) (305,000)
Other current assets (19,000) (13,000)
Accounts payable (1,574,000) 1,373,000
Accrued payroll and payroll taxes (36,000) 4,000
Other accrued expenses and other
liabilities (34,000) 42,000
Accrued warranty reserves 78,000 (2,000)
Customer deposits 253,000 (180,000)
(648,000) 280,000
Net cash used in operating
activities (2,951,000) (2,046,000)
Cash flows from investing activities
Purchases of equipment and improvements (111,000) (135,000)
Net change of note receivable 6,000 (19,000)
Net change in other assets (1,000) -
Net cash used in investing activities (106,000) (154,000)
Cash flows from financing activities
Payments on note payable and line-of-credit (46,000) (70,000)
Borrowings from stockholder 3,270,000 2,250,000
Payments to stockholder (200,000) -
Net cash provided by financing activities 3,024,000 2,180,000
Net decrease in cash and cash equivalents (33,000) (20,000)
Cash and cash equivalents at beginning of year 98,000 118,000
---------- ----------
Cash and cash equivalents at end of year $ 65,000 $ 98,000
========== ==========
Supplemental disclosures of cash flow information:
Cash paid for interest was $16,000 and $21,000 for 1997 and 1996,
respectively.
Supplemental disclosure of non-cash financing activities:
Accrual of undeclared, cumulative preferred stock dividends was $50,000 and
$0 for June 30, 1997 and 1996, respectively.
F-6
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
Operating Results
For the fiscal year ended June 30, 1997 the Company reported a net loss of
$2,353,000. This compares to a net loss of $2,326,000 for the fiscal year ended
June 30, 1996. Overall sales decreased 27% from 1996. Sales were adversely
impacted by the hesitancy of broadcasters to place orders for high power product
due to the uncertainty surrounding the market situation for digital TV. Radio
revenues also decreased during the year due to no large international order
comparable to the one for Saudi Arabia in 1996. Sales of LPTV products increased
by 11% in fiscal 1997 as quality and reliability issues addressed previously had
a positive impact.
Cost of sales as a percent of net sales in fiscal 1997 were 94% compared to
98% in fiscal 1996. As a result, gross margin, as a percentage of sales,
increased in fiscal 1997 to 6% from 2% in fiscal 1996. Improved cost control
especially in manufacturing overhead and in distribution costs, coupled with a
modest selling price increase were the primary reasons for improvement which was
seen mostly in the core LPTV product line. While an increase was achieved, the
6% level of gross margin attained remains well below industry standards for
companies profitability engaged in the development, production and sale of
products like those of the Company. The Company continues to be challenged in
its efforts to reduce manufacturing costs and improve margins with respect to
all of its product lines.
Selling, general, and administrative ("SG&A") expenses decreased 5% from
fiscal 1996 to fiscal 1997. These expenses were reduced from $1,573,000 in 1996
to $1,489,000 in 1997. However due to the reduced revenue base, SG&A costs
increased as a percent of sales from 21% in fiscal 1996 to 27% in fiscal 1997.
Selling expenses were reduced 23% from the prior fiscal year. Selling
expense fell from $574,000 to $444,000 in 1997. A smaller in-house sales force
coupled with lower travel expenses contributed to the majority of the reduction
in selling expense. A better utilization of space at the National Association of
Broadcasters show also held costs down. General and administrative costs
increased 5% in comparison to fiscal 1996 from $999,000 to $1,045,000. An
increase in staffing to enhance customer service response time was a major
factor. Other costs were held to general inflation or reduced.
Research and product development costs, reflecting the changing emphasis
from high power projects to low power improvements, were reduced during the year
by $172,000 or 19%
F-7
<PAGE>
from the prior year. As a percentage of revenues, however, spending increased
slightly from 12% in fiscal 1996 to 13% in 1997. The Company experienced
unexpected development costs associated with a new transmitter expected to be
marketed in the current fiscal year. It became evident that the revenue stream
originally projected would not occur in the near future and that engineering and
other development costs were exceeding projections. As a result the Company
suspended this particular project and concentrated on new marketing efforts for
existing products. In addition, the Company defined more modest engineering
objectives focused on current product enhancements and cost reductions. It is
believed by the Company that this new focus is more appropriate for current
market conditions.
The reduction in research and product development costs also is
attributable, in part, to the financial condition of the Company. The Company's
working capital deficit and cash flow deficiency have led to delays in product
development.
Interest expense increased dramatically in recognition of the interest due
Larcan on advances made for working capital and other purposes. The fiscal 1997
adjustment for interest due on these advances was $420,000. Other interest
expense decreased during the year from $21,000 in 1996 to $16,000 in 1997. This
reflects a decreasing balance on the bank line of credit.
Liquidity and Capital Resources
During fiscal 1997 cash advances from Larcan of $2,650,00 (excluding
interest) were used primarily to reduce trade payables (including intercompany
payables) from $2,108,000 as of June 30, 1996 to $534,000 at June 30, 1997. As
noted in the opinion of the Company's independent auditors, there is no
substantial doubt about the Company's ability to continue as a going concern.
The deficiency in working capital grew to $6,099,000 versus $108,000 of
working capital in fiscal 1996 primarily due to the reclassification of
shareholder advances as a current liability in fiscal 1997. Had shareholder
advances been classified as a current liability in the prior fiscal year, the
comparable working capital deficiency would have been $3,717,000 at June 30,
1996.
Subsequent to fiscal 1997 the Company renegotiated its bank line of credit
reducing the outstanding balance to $75,000 with an additional $75,000 term
note. The line of credit note is due June 1, 1998 and the term note expires
September 15, 1998.
As of June 30, 1997 the Company had cash and short term investments of
$65,000, other current assets of $2,387,000 and
F-8
<PAGE>
current liabilities (including the note to Larcan) of $8,551,000. The Company's
current ratio at June 30, 1997, was .29, compared to 1.04 at June 30, 1996. The
major impact was the increase in cash advances from Larcan during the year. Had
shareholder advances been classified as a current liability in the prior fiscal
year the comparable current ratio would have been .45 at June 30, 1996.
Due to the Company's current cash flow constraints, there are no current
plans for significant capital expenditures. In addition, until the Company's
operations provide adequate working capital, the Company will be dependent on
Larcan for its cash needs. The cash needs of the Company are expected to remain
at current levels until such time as the operating efficiencies of overhead
consolidation with Larcan are achieved.
F-9
<PAGE>
LARCAN-TTC INC.
BALANCE SHEETS
(Unaudited)
ASSETS
September 30, June 30,
1997 1997 (restated)
---- ---------------
CURRENT ASSETS
Cash and cash equivalents $ 61,000 $ 65,000
Trade accounts receivable less
allowance for doubtful accounts of
$181,000 (September) and $173,000
(June) 200,000 378,000
Accounts Receivable - related party 399,000 96,000
Inventories (Net) 1,738,000 1,871,000
Other 31,000 42,000
TOTAL CURRENT ASSETS 2,429,000 2,452,000
Equipment and Improvements 1,809,000 2,034,000
Less accumulated depreciation
and amortization (1,578,000) (1,772,000)
Net equipment and Improvements 231,000 262,000
Note Receivable 11,000 13,000
Other Assets 20,000 20,000
----------- -----------
TOTAL ASSETS 2,691,000 2,747,000
=========== ===========
LIABILITIES AND STOCKHOLDERS' DEFICIT
CURRENT LIABILITIES
Line of Credit $ 75,000 $ 154,000
Note Payable 69,000 ---
Advances from Stockholder 6,475,000 6,475,000
Accounts Payable-Trade 664,000 456,000
Accounts Payable - related party 324,000 78,000
Salaries, wages and employee
benefits 115,000 145,000
Accrued expenses and other
liabilities 214,000 158,000
Accrued warranty and other
reserves 130,000 110,000
Accrued interest payable 557,000 420,000
Customer Advances 227,000 555,000
TOTAL CURRENT LIABILITIES 8,850,000 8,551,000
F-10
<PAGE>
STOCKHOLDERS' DEFICIT
Preferred stock, $1.00 par value;
1,000,000 shares authorized
Series A 5% cumulative convertible,
500,000 shares issued and
outstanding, liquidation
preferences $1.00 per share 500,000 500,000
Common stock, $0.04 par value;
30,000,000 shares authorized,
11,543,934 shares issued 462,000 462,000
Additional paid-in capital 4,682,000 4,694,000
Accumulated deficit (11,793,000) (11,450,000)
Common stock held in treasury, at
cost; 1,796 shares (10,000) (10,000)
TOTAL STOCKHOLDERS' DEFICIT (6,159,000) (5,804,000)
----------- -----------
TOTAL LIABILITIES AND STOCKHOLDERS'
DEFICIT 2,691,000 2,747,000
=========== ===========
See note to financial statements
F-11
<PAGE>
LARCAN-TTC INC.
STATEMENTS OF OPERATIONS
(Unaudited)
For the Three Months Ended
--------------------------
September 30, September 30,
1997 1996 (restated)
---- --------------
NET SALES $ 1,617,000 $ 1,526,000
COST OF GOODS SOLD 1,359,000 1,492,000
OPERATING EXPENSES:
Selling, general and
administrative 337,000 359,000
Research and development 151,000 251,000
TOTAL EXPENSES 1,847,000 2,102,000
LOSS FROM OPERATIONS (230,000) (576,000)
OTHER INCOME (EXPENSE)
Interest expense (140,000) (71,000)
Other income 27,000 (3,000)
TOTAL OTHER (113,000) (74,000)
----------- -----------
NET LOSS $ (343,000) $ (650,000)
=========== ===========
Preferred stock dividends 6,000 6,000
----------- -----------
Net loss applicable to common
stockholders $ (349,000) $ (656,000)
=========== ===========
NET LOSS PER COMMON SHARE $ (0.03) $ (0.06)
=========== ===========
WEIGHTED AVERAGE NUMBER OF
SHARES OUTSTANDING 11,543,934 11,543,934
========== ==========
See note to financial statements
F-12
<PAGE>
LARCAN-TTC INC.
STATEMENTS OF CASH FLOWS
(Unaudited)
For the Three Months Ended
--------------------------
September 30, September 30,
1997 1996 (restated)
---- ---------------
Cash flows from operating activities:
Net Loss
$ (343,000) $ (650,000)
Adjustments to reconcile net loss
to net cash provided by (used in)
operating activities:
Depreciation & Amortization
Provision for losses on A/R 26,000 18,000
Provision for losses on inventory 8,000 10,000
Gain on sale of fixed assets 15,000 15,000
Change in operating assets and (57,000) --
liabilities:
Trade A/R
Inventories (133,000) 15,000
Other Current Assets 118,000 75,000
Trade A/P 11,000 (18,000)
Salaries, Wages & Benefits 454,000 (470,000)
Accrued Expenses & Other (30,000) (36,000)
Liabilities
Accrued Warranty & Other 44,000 (15,000)
Reserves
Accrued interest payable 20,000 87,000
Customer Advances 137,000 66,000
(328,000) 336,000
Total adjustments
285,000 83,000
Net cash used in operating activities
(58,000) (567,000)
Cash flows from investing activities:
Purchase of Equip. & Improvements
Proceeds from sale of fixed assets (4,000) (13,000)
Net change of note receivable 6,000 --
Net cash used in investing 2,000 --
activities
64,000 (13,000)
Cash flows from financing activities
Payments on note payable and
line-of-credit
Borrowings from stockholder (10,000) (12,000)
Net cash provided by financing -- 650,000
activities
(10,000) 638,000
Increase/Decrease in Cash
(4,000) 58,000
Cash and cash equivalents at the
beginning of the fiscal year
65,000 98,000
F-13
<PAGE>
Cash and cash equivalents at the end
of three months 61,000 156,000
Supplemental disclosures of cash flow information: Cash paid for interest
was $3,000 and $6,000 for September 30, 1997 and 1996, respectively.
Supplemental disclosure of non-cash financing activities: Accrual of
undeclared, cumulative preferred stock dividends was $12,000 and $0 for
September 30, 1997 and 1996, respectively.
See note to financial statements
F-14
<PAGE>
LARCAN-TTC INC.
NOTES TO FINANCIAL STATEMENTS
Reference is made to the financial statements included in the LARCAN-TTC INC.
(the Company) annual report on Form 10-KSB for the year ended June 30, 1997,
which describes the accounting policies of the Company for annual reporting
purposes.
The Statement of Operations and the Statement of Cash Flows for the period ended
September 30, 1996 have been restated to reflect the accrual of interest due on
shareholder notes and the accrual for cumulative dividends on preferred stock
for the three months ended September 30, 1996. As referenced in note 12 to the
financial statements as of June 30, 1997 included in the Company's annual report
on form 10-KSB, the Company accrued the annual interest payable in the fourth
quarter of the year ended June 30, 1997.
In the opinion of management, the accompanying unaudited financial statements
contain all adjustments (consisting of only normal recurring accruals) necessary
to present fairly the Company's financial position, and the results of its
operations and cash flows for the periods presented. The results of the interim
period are not necessarily indicative of results to be expected for the full
year.
F-15
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
RESULTS OF OPERATIONS AND FINANCIAL CONDITION
Operating Results
First quarter revenues increased marginally (5%, $91,000) from the prior year.
All product lines generated an increase except high power which declined 37%.
Low power products increased 33%, more than compensating for the decrease in
high power. Radio revenues were also up over prior year while repair sales were
flat. Market demand for high power transmitters continues to be adversely
affected by the transition to a digital market. The market uncertainties
surrounding this transition are also forecast to impact low power products as
well. The traditional low power market will consolidate into a replacement
market until the transition to digital service is clarified.
The forecasted trend in revenues is evidenced by the Company's backlog which
declined $937,000 (64%) from prior year and $674,000 (56%) from June 30, 1997.
As of September 30, 1997, sales booked but not yet shipped were $511,000. The
backlog for all product lines has decreased from the fiscal year ending June 30,
1997 and new orders for the quarter were the lowest in the last twelve fiscal
quarters.
Gross margins increased to 16% from 2% in the prior year. Even though a
mid-teen gross margin percentage continues the upward trend of the
previous three quarters, the Company remains well below the industry
standards required for profitability.
The decrease in operating expenses of $122,000 (20%) in comparison to the first
quarter of the prior year was due primarily to the reduction in engineering
spending reflecting the suspension in the development program for the high power
members of the RMS series.
Interest expense increased under the terms of the interest bearing loan
agreement with LARCAN.
Other income reflected the sale of excess machine shop equipment no longer used
in the production process.
Capital Resources
The deficiency in working capital grew by $322,000 to $6,421,000 from June 30,
1997. The primary reason was the operating losses of $343,000 in the quarter.
The reclassification of advances from LARCAN to current liabilities as of June
1997 unfavorably impacts comparisons with prior year, when the company reported
working capital of $180,000.
F-16
<PAGE>
Reflecting the renegotiation of the Company's short term bank borrowings, the
revolving line of credit was reduced to $75,000 from $150,000 at June 30, 1997
with $75,000 being converted to a term note payable. During the quarter the
balance on the term note payable was reduced to $69,000. The line of credit note
is due June 1, 1998 and the term note expires September 15, 1998.
This forgoing discussion contains certain forward-looking statements within the
meaning of Section 27A of the Securities Act and Section 21E of the Exchange Act
which are intended to be covered by the safe harbors created thereby. These
statements include the plans and objectives of management for future operations
based on current expectations that involve numerous risks and uncertainties.
These plans involve judgments with respect to, among other things, future
economic, competitive and market conditions and future business decisions, all
of which are difficult or impossible to predict accurately and many of which are
beyond the control of the Company. Although the Company believes that the
assumptions underlying the forward-looking statements are reasonable, any of the
assumptions could be inaccurate and, therefore, there can be no assurance that
any forward-looking statements included in this 10-QSB will prove to be
accurate. In light of the significant uncertainties inherent in the
forward-looking statements included herein, the inclusion of such information
should not be regarded as a representation by the Company or any other person
that the objectives and plans of the Company will be achieved.
F-17
<PAGE>
Annex A
AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER (this "Agreement") dated as of July 17, 1997
by and among Larcan Inc., a Canadian corporation ("Larcan"), Larcan Sub, Inc., a
Delaware corporation and wholly-owned subsidiary of Larcan ("LSI"), and
Larcan-TTC Inc., a Delaware corporation ("LTTC"). (LSI and LTTC are referred to
herein collectively as the "Constituent Corporations.")
RECITALS
WHEREAS, the Boards of Directors of Larcan and LTTC each have determined
that it is in the best interests of their stockholders to effect the merger
provided for herein upon the terms and subject to the conditions set forth
herein; and
NOW,THEREFORE, in consideration of the premises, and of the agreements
contained herein, the parties hereto agree as follows:
ARTICLE I
The Merger; Effective Time
1.1 The Merger. At the Effective Time (as defined in Section 1.2) LSI
shall be merged with and into LTTC and the separate corporate existence of
LSI shall thereupon cease (the "Merger"). LTTC shall be the surviving
corporation in the Merger (the "Surviving Corporation") and shall continue
to be governed by the laws of the State of Delaware, and the separate
corporate existence of LTTC with all its rights, privileges, immunities,
powers and franchises shall continue unaffected by the Merger. The Merger
shall have the effects specified in the Delaware General Corporation Law
(the "DGCL").
1.2. Effective Time. The Merger shall be effective at 5:00 p.m.
Eastern Time on the day on which a Certificate of Merger is filed with the
Secretary of State of Delaware (the "Effective Time").
A-1
<PAGE>
ARTICLE II
Certificate of Incorporation and By-Laws
of the Surviving Corporation
2.1. The Certificate of Incorporation. The Certificate of
Incorporation of LTTC in effect at the Effective Time shall be the
Certificate of Incorporation of the Surviving Corporation, until duly
amended in accordance with the terms thereof and the DGCL.
2.2. The By-Laws. The By-Laws of LTTC in effect at the Effective Time
shall be the By-Laws of the Surviving Corporation, until duly amended in
accordance with the terms thereof and the DGCL.
ARTICLE III
Officers and Directors
of the Surviving Corporation
3.1. Officers and Directors. The directors of LSI at the Effective
Time shall, from and after the Effective Time, be the directors of the
Surviving Corporation and the officers of LTTC shall, from and after the
Effective Time, be the officers of the Surviving Corporation, in each case
until their successors have been duly elected or appointed and qualified or
until their earlier death, resignation or removal in accordance with the
Surviving Corporation's Certificate of Incorporation and By-Laws and the
DGCL.
ARTICLE IV
Effect of the Merger on Capital Stock
At the Effective Time, by virtue of the Merger and without any action
on the part of the holders of any capital stock of the Constituent
Corporations:
(a) Each share of the Common Stock, par value $.01 per share, of
LSI (the "LSI Shares") issued and outstanding immediately prior to the
Effective Time shall be converted into one share of the Common Stock,
par value $0.04 per share of LTTC (the "LTTC Shares").
(b) Each LTTC Share issued and outstanding immediately prior to
the Effective Time (other than
A-2
<PAGE>
those owned by Larcan) shall be cancelled at the Effective Time in
exchange for the Merger Consideration (as defined below).
(c) Each LTTC Share issued and outstanding immediately prior to
the Effective Time that is owned by Larcan shall be cancelled at the
Effective Time without any consideration therefor.
(d) As used herein Merger Consideration means $0.0625, which
equals the sale price of each and every LTTC Share traded on its
principal trading market for 30 days immediately prior to the date
hereof.
(e) At and after the Effective Time, each holder of a certificate
or certificates theretofore representing LTTC Shares ("OLD LTTC
Shares") that were converted into the Merger Consideration in the
Merger (a "Certificate") may surrender the same to LTTC or its agent
for cancellation, and each such holder shall be entitled upon such
surrender to receive in exchange therefor a check in an amount equal
to the aggregate amount of cash to which such holder is entitled to be
paid pursuant to this Article IV, without interest. Until so
surrendered, each Certificate, after the Effective Time, shall be
deemed for all purposes to evidence the right to receive such payment.
If any amount is to be paid to a person other than the person to which
the Certificate surrendered for exchange is issued, the Certificate so
surrendered shall be properly endorsed and otherwise in proper form
for transfer and the person requesting such exchange shall affix any
requisite stock transfer tax stamps to the Certificate surrendered or
provide funds for their purchase or establish to the reasonable
satisfaction of LTTC or its agent that such taxes are not payable.
(f) At the Effective Time, the stock transfer books of LTTC shall
be closed regarding Old LTTC Shares and no transfer of Old LTTC Shares
shall thereafter be made or recognized. Any other provision of this
Agreement notwithstanding, neither LTTC nor its agent nor any party to
the Merger shall be liable to a holder of Old LTTC Shares for any
amount paid or property delivered in good faith to a public official
pursuant to any applicable abandoned property, escheat or similar law.
(g) Notwithstanding any other provision hereof, any holder of Old
LTTC Shares that perfects appraisal rights under the Section 262 of
the DGCL shall
A-3
<PAGE>
have their Old LTTC Shares converted into the consideration determined
in accordance with such statute.
ARTICLE V
Conditions; Termination
5.1 Conditions. Consummation of the Merger shall be subject to
satisfaction of the following conditions (unless waived by Larcan):
(a) The stockholders of LTTC shall have approved this Agreement
and the Merger by the vote required under the DGCL.
(b) No inquiry, action or proceeding which, in the opinion of
Larcan, is material shall have been instituted to restrain or prohibit
the carrying out of the transactions contemplated by this Agreement or
to challenge the validity of such transactions or any part thereof, or
seeking damages on account or as a result thereof.
(c) There shall have been no material adverse change in the
financial condition, results of operations, business or prospects of
LTTC since March 31, 1997.
(d) All required consents and approvals shall have been obtained,
all other requirements prescribed by law which are necessary to the
consummation of the transactions contemplated hereby shall have been
obtained, and all statutory waiting periods in respect thereof shall
have expired.
5.2 Termination. This Agreement may be terminated and the Merger
abandoned as follows:
(a) Larcan and LTTC may terminate this Agreement at any time
prior to the Effective Time, before or after the approval by the
stockholders of LTTC, by their mutual agreement;
(b) Larcan may terminate this Agreement at any time prior to the
Effective Time if it concludes in good faith that (i) there has been a
material adverse change in the financial condition, results of
operations, business or prospects of LTTC since
A-4
<PAGE>
March 31, 1997 or (ii) any of the conditions specified in Section 5.1
is unlikely to be satisfied in a timely manner.
5.3 Effect of Termination and Abandonment. In the event of termination
of this Agreement and abandonment of the Merger pursuant to this Article V,
no party hereto (or any of its directors or officers) shall have any
liability or further obligation to any other party to this Agreement.
ARTICLE VI
Miscellaneous and General
6.1. Modification or Amendment. Subject to the applicable provisions
of the DGCL, at any time prior to the Effective Time, Larcan and LTTC may
modify or amend this Agreement, by written agreement executed and delivered
by their duly authorized officers.
6.2. Counterparts; Effectiveness. For convenience of the parties
hereto, this Agreement may be executed in any number of counterparts, each
such counterpart being deemed to be an original instrument, and all such
counterparts shall together constitute the same agreement. This Agreement
shall become effective when duly executed and delivered by Larcan and LTTC.
Larcan shall use reasonable efforts to form LSI promptly and shall cause
LSI to execute and deliver this Agreement promptly after its formation.
6.3. Governing Law. This Agreement shall be governed by and construed
in accordance with the laws of the State of Delaware without regard to
principles of conflicts of laws thereof.
6.4. Captions. The Article, Section and paragraph captions herein are
for convenience of reference only, do not constitute part of this Agreement
and shall not be deemed to limit or otherwise affect any of the provisions
hereof.
A-5
<PAGE>
IN WITNESS WHEREOF, this Agreement has been duly executed and delivered by
the duly authorized officers of the parties hereto on the date first hereinabove
written.
LARCAN INC.
By
----------------------------------
Name:
----------------------------
Title:
---------------------------
LARCAN SUB, INC.
By
----------------------------------
Name:
----------------------------
Title:
---------------------------
LARCAN TTC INC.
By
----------------------------------
Name:
----------------------------
Title:
---------------------------
A-6
<PAGE>
ANNEX B
The name, office, address and present principal occupation or employment
of each executive officer and director of Larcan is:
<TABLE>
<CAPTION>
Office and Principal Residential or
Name Occupation Business Address Citizenship
---- ---------- ---------------- -----------
<S> <C> <C> <C>
P. Clyde Turner Chairman of the Board 228 Ambassador Drive Canada
of Larcan Mississauga, Ontario
CANADA L5T 2J2
James D. Adamson Director and President 228 Ambassador Drive Canada
of Larcan Mississauga, Ontario
CANADA L5T 2J2
Paul A. Dickie Director and Senior Vice 514 Chartwell Road Canada
President of Larcan P.O. Box 880
President of LRE Oakville, Ontario
CANADA L6J 5C5
John E. Tremblay Vice President, 228 Ambassador Drive Canada
Engineering Mississauga, Ontario
CANADA L5T 2J2
Ronald E. Comforth Vice President, 228 Ambassador Drive Canada
Manufacturing Mississauga, Ontario
CANADA L5T 2J2
Stan Maruno Vice President, Sales 228 Ambassador Drive Canada
and Marketing Mississauga, Ontario
CANADA L5T 2J2
Michael P. Gagnon Vice President, Customer 228 Ambassador Drive Canada
Services and Treasurer Mississauga, Ontario
CANADA L5T 2J2
Nancy E. McGee Director and Assistant 514 Chartwell Road Canada
Treasurer of Larcan P.O. Box 880
Senior Vice President, Oakville, Ontario
Chief Financial Officer CANADA L6J 5C5
and Treasurer of LRE
Thomas F. Byrne Director of Larcan 8 King Street East Canada
Secretary of both Larcan Suite 1600
and LRE Toronto, Ontario
Partner in the law firm CANADA M5C 1B5
of Byrne, Crosby
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Office and Principal Residential or
Name Occupation Business Address Citizenship
---- ---------- ---------------- -----------
<S> <C> <C> <C>
Constance L. Crosby Assistant Secretary of 8 King Street East Canada
Larcan, Partner in the Suite 1600
law firm of Byrne, Crosby Toronto, Ontario
CANADA M5C 1B5
George E. Patton Director of Larcan 514 Chartwell Road Canada
Chairman of the Board and P.O. Box 80
Chief Executive Officer Oakville, Ontario
of LRE CANADA L6J 5C5
</TABLE>
The name, address and present principal occupation or employment of each
executive officer and director of LARCAN-TTC is:
<TABLE>
<CAPTION>
Office and Principal Residential or
Name Occupation Business Address Citizenship
---- ---------- ---------------- -----------
<S> <C> <C> <C>
Paul A. Dickie Chairman of the Board 514 Chartwell Road Canada
P.O. Box 880
Oakville, Ontario
CANADA L6J 5C5
Nancy E. McGee Director 514 Chartwell Road Canada
P.O. Box 880
Oakville, Ontario
CANADA L6J 5C5
G. James Wilson Director and President 650 South Taylor Avenue U.S./Canada/
of LARCAN-TTC Louisville, CO 80027 Ireland
James D. Adamson Director and Vice President 228 Ambassador Drive Canada
of LARCAN-TTC Mississauga, Ontario
CANADA L5T 2J2
Byron W. St. Clair Director 650 South Taylor Avenue U.S.
Louisville, CO 80027
Dirk B. Freeman Director and Assistant 650 South Taylor Avenue U.S.
Secretary Louisville, CO 80027
David Hale Vice President, Operations 650 South Taylor Avenue U.S.
Louisville, CO 80027
Ronald M. Eve Secretary and Controller 650 South Taylor Avenue U.S.
Louisville, CO 80027
Michael P. Gagnon Treasurer 228 Ambassador Drive Canada
Mississauga, Ontario
CANADA L5T 2J2
</TABLE>
- 2 -
<PAGE>
The name, office, address and present principal occupation or employment
of each executive officer and director of LSI is:
<TABLE>
<CAPTION>
Office and Principal Residential or
Name Occupation Business Address Citizenship
---- ---------- ---------------- -----------
<S> <C> <C> <C>
James D. Adamson Director and President 228 Ambassador Drive Canada
Mississauga, Ontario
CANADA L5T 2J2
Paul A. Dickie Director and Chairman 514 Chartwell Road Canada
of the Board P.O. Box 880
Oakville, Ontario
CANADA L6J 5C5
Nancy E. McGee Director and Vice President 514 Chartwell Road Canada
P.O. Box 880
Oakville, Ontario
CANADA L6J 5C5
G. James Wilson Director 650 South Taylor Avenue U.S./Canada/
Louisville, CO 80027 Ireland
Michael P. Gagnon Treasurer 228 Ambassador Drive Canada
Mississauga, Ontario
CANADA L5T 2J2
Thomas F. Byrne Secretary 8 King Street East Canada
Suite 1600
Toronto, Ontario
CANADA M5C 1B5
</TABLE>
The name, office, address and present principal occupation or employment
of each executive officer and director of the Surviving Corporation is:
<TABLE>
<CAPTION>
Office and Principal Residential or
Name Occupation Business Address Citizenship
---- ---------- ---------------- -----------
<S> <C> <C> <C>
Paul A. Dickie Director and Chairman 514 Chartwell Road Canada
of the Board P.O. Box 880
Oakville, Ontario
CANADA L6J 5C5
Nancy E. McGee Director 514 Chartwell Road Canada
P.O. Box 880
Oakville, Ontario
CANADA L6J 5C5
</TABLE>
- 3 -
<PAGE>
<TABLE>
<CAPTION>
Office and Principal Residential or
Name Occupation Business Address Citizenship
---- ---------- ---------------- -----------
<S> <C> <C> <C>
G. James Wilson Director and President 650 South Taylor Avenue U.S./Canada/
Louisville, CO 80027 Ireland
James D. Adamson Director and Vice President 228 Ambassador Drive Canada
Mississauga, Ontario
CANADA L5T 2J2
David Hale Vice President 650 South Taylor Avenue U.S.
Louisville, CO 80027
Ronald M. Eve Secretary 650 South Taylor Avenue U.S.
Louisville, CO 80027
Michael P. Gagnon Treasurer 228 Ambassador Drive Canada
Mississauga, Ontario
CANADA L5T 2J2
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Annex C
SECTION 262 OF THE DGCL
Section 262. Appraisal Rights.
(a) Any stockholder of a corporation of this State who holds shares of
stock on the date of the making of a demand pursuant to subsection (d) of this
section with respect to such shares, who continuously holds such shares through
the effective date of the merger or consolidation, who has otherwise complied
with subsection (d) of this section and who has neither voted in favor of the
merger or consolidation nor consented thereto in writing pursuant to ss. 228 of
this title shall be entitled to an appraisal by the Court of Chancery of the
fair value of his shares of stock under the circumstances described in
subsections (b) and (c) of this section. As used in this section, the word
"stockholder" means a holder of record of stock in a stock corporation and also
a member of record of a nonstock corporation; the words "stock" and "share" mean
and include what is ordinarily meant by those words and also membership or
membership interest of a member of a nonstock corporation; and the words
"depository receipt" mean a receipt or other instrument issued by a depository
representing an interest in one or more shares, or fractions thereof, solely of
stock of a corporation, which stock is deposited with the depository.
(b) Appraisal rights shall be available for the shares of any class or
series of stock of a constituent corporation in a merger or consolidation to be
effected pursuant to ss. 251 (other than a merger effected pursuant to
subsection (g) of Section 251), 252, 254, 257, 258, 263 or 264 of this title:
(1) Provided, however, that no appraisal rights under this section
shall be available for the shares of any class or series of stock, which
stock, or depository receipts in respect thereof, at the record date fixed
to determine the stockholders entitled to receive notice of and to vote at
the meeting of stockholders to act upon the agreement of merger or
consolidation, were either (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. or (ii) held
of record by more than 2,000 holders; and further provided that no
appraisal rights shall be available for any shares of stock of the
constituent corporation surviving a merger if the merger did not require
for its approval the vote of the holders of the surviving corporation as
provided in subsection (f) of ss. 251 of this title.
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(2) Notwithstanding paragraph (1) of this subsection, appraisal rights
under this section shall be available for the shares of any class or series
of stock of a constituent corporation if the holders thereof are required
by the terms of an agreement of merger or consolidation to ss. 251, 252,
254, 257, 258, 263 and 264 of this title to accept for such stock anything
except:
a. Shares of stock of the corporation surviving or resulting from
such merger or consolidation, or depository receipts in respect
thereof;
b. Shares of stock of any other corporation, or depository
receipts in respect thereof, which shares of stock (or depository
receipts in respect thereof) or depository receipts at the effective
date of the merger or consolidation will be either 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. or held of record by more than
2,000 holders;
c. Cash in lieu of fractional shares or fractional depository
receipts described in the foregoing subparagraphs a. and b. of this
paragraph; or
d. Any combination of the shares of stock, depository receipts
and cash in lieu of fractional shares or fractional depository
receipts described in the foregoing subparagraphs a., b. and c. of
this paragraph.
(3) In the event all of the stock of a subsidiary Delaware corporation
party to a merger effected under 253 of this title is not owned by the
parent corporation immediately prior to the merger, appraisal rights shall
be available for the shares of the subsidiary Delaware corporation.
(c) Any corporation may provide in its certificate of incorporation that
appraisal rights under this section shall be available for the shares of any
class or series of its stock as a result of an amendment to its certificate of
incorporation, any merger or consolidation in which the corporation is a
constituent corporation or the sale of all or substantially all of the assets of
the corporation. If the certificate of incorporation contains such a provision,
the procedures of this section, including those set forth in subsections (d) and
(e) of this section, shall apply as nearly as is practicable.
(d) Appraisal rights shall be perfected as follows:
(1) If a proposed merger or consolidation for which appraisal rights
are provided under this section is to be
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submitted for approval at a meeting of stockholders, the corporation, not
less than 20 days prior to the meeting, shall notify each of its
stockholders who was such on the record date for such meeting with respect
to shares for which appraisal rights are available pursuant to subsections
(b) or (c) hereof that appraisal rights are available for any or all of the
shares of the constituent corporations, and shall include in such notice a
copy of this section. Each stockholder electing to demand the appraisal of
his shares shall deliver to the corporation, before the taking of the vote
on the merger or consolidation, a written demand for appraisal of his
shares. Such demand will be sufficient if it reasonably informs the
corporation of the identity of the stockholder and that the stockholder
intends thereby to demand the appraisal of his shares. A proxy or vote
against the merger or consolidation shall not constitute such a demand. A
stockholder electing to take such action must do so by a separate written
demand as herein provided. Within 10 days after the effective date of such
merger or consolidation, the surviving or resulting corporation shall
notify each stockholder of each constituent corporation who has complied
with this subsection and has not voted in favor of or consented to the
merger or consolidation of the date that the merger or consolidation has
become effective; or
(2) If the merger or consolidation was approved pursuant to ss. 228 or
ss. 253 of this title, each constituent corporation, either before the
effective date of the merger or consolidation or within ten days
thereafter, shall notify each of the holders of any class or series of
stock of such constituent corporation who are entitled to appraisal rights
of the approval of the merger or consolidation and that appraisal rights
are available for any or all shares of such class or series of stock of
such constituent corporation, and shall include in such notice a copy of
this section; provided that, if the notice is given on or after the
effective date of the merger or consolidation, such notice shall be given
by the surviving or resulting corporation to all such holders of any class
or series of stock of a constituent corporation that are entitled to
appraisal rights. Such notice may, and, if given on or after the effective
date of the merger or consolidation, shall, also notify such stockholders
of the effective date of the merger or consolidation. Any stockholder
entitled to appraisal rights may, within twenty days after the date of
mailing of such notice, demand in writing from the surviving or resulting
corporation the appraisal of such holder's shares. Such demand will be
sufficient if it reasonably informs the corporation of the identity of the
stockholder and that the stockholder intends thereby to demand the
appraisal of such holder's shares. If such notice did not notify
stockholders of the effective date of the merger or consolidation, either
(i) each such constituent corporation shall send a second notice before the
effective date of the merger or consolidation
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notifying each of the holders of any class or series of stock of such
constituent corporation that are entitled to appraisal rights of the
effective date of the merger or consolidation or (ii) the surviving or
resulting corporation shall send such a second notice to all such holders
on or within 10 days after such effective date; provided, however, that if
such second notice is sent more than 20 days following the sending of the
first notice, such second notice need only be sent to each stockholder who
is entitled to appraisal rights and who has demanded appraisal of such
holder's shares in accordance with this subsection. An affidavit of the
secretary or assistant secretary or of the transfer agent of the
corporation that is required to give either notice that such notice has
been given shall, in the absence of fraud, be prima facie evidence of the
facts stated therein. For purposes of determining the stockholders entitled
to receive either notice, each constituent corporation may fix, in advance,
a record date that shall be not more than 10 days prior to the date the
notice is given; provided that, if the notice is given on or after the
effective date of the merger or consolidation, the record date shall be
such effective date. If no record date is fixed and the notice is given
prior to the effective date, the record date shall be the close of business
on the day next preceding the day on which the notice is given.
(e) Within 120 days after the effective date of the merger or
consolidation, the surviving or resulting corporation or any stockholder who has
complied with subsections (a) and (d) hereof and who is otherwise entitled to
appraisal rights, may file a petition in the Court of Chancery demanding a
determination of the value of the stock of all such stockholders.
Notwithstanding the foregoing, at any time within 60 days after the effective
date of the merger or consolidation, any stockholder shall have the right to
withdraw his demand for appraisal and to accept the terms offered upon the
merger or consolidation. Within 120 days after the effective date of the merger
or consolidation, any stockholder who has complied with the requirements of
subsections (a) and (d) hereof, upon written request, shall be entitled to
receive from the corporation surviving the merger or resulting from the
consolidation a statement setting forth the aggregate number of shares not voted
in favor of the merger or consolidation and with respect to which demands for
appraisal have been received and the aggregate number of holders of such shares.
Such written statement shall be mailed to the stockholder within 10 days after
his written request for such a statement is received by the surviving or
resulting corporation or within 10 days after expiration of the period for
delivery of demands for appraisal under subsection (d) hereof, whichever is
later.
(f) Upon the filing of any such petition by a stockholder, service of a
copy thereof shall be made upon the
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surviving or resulting corporation, which shall within 20 days after such
service file in the office of the Register in Chancery in which the
petition was filed a duly verified list containing the names and addresses
of all stockholders who have demanded payment for their shares and with
whom agreements as to the value of their shares have not been reached by
the surviving or resulting corporation. If the petition shall be filed by
the surviving or resulting corporation, the petition shall be accompanied
by such a duly verified list. The Register in Chancery, if so ordered by
the Court, shall give notice of the time and place fixed for the hearing of
such petition by registered or certified mail to the surviving or resulting
corporation and to the stockholders shown on the list at the addresses
therein stated. Such notice shall also be given by 1 or more publications
at least 1 week before the day of the hearing, in a newspaper of general
circulation published in the City of Wilmington, Delaware or such
publication as the Court deems advisable. The forms of the notices by mail
and by publication shall be approved by the Court, and the costs thereof
shall be borne by the surviving or resulting corporation.
(g) At the hearing on such petition, the Court shall determine the
stockholders who have complied with this section and who have become entitled to
appraisal rights. The Court may require the stockholders who have demanded an
appraisal for their shares and who hold stock represented by certificates to
submit their certificates of stock to the Register in Chancery for notation
thereon of the pendency of the appraisal proceedings; and if any stockholder
fails to comply with such direction, the Court may dismiss the proceedings as to
such stockholder.
(h) After determining the stockholders entitled to an appraisal, the Court
shall appraise the shares, determining their fair value exclusive of any element
of value arising from the accomplishment or expectation of the merger or
consolidation, together with a fair rate of interest, if any, to be paid upon
the amount determined to be the fair value. In determining such fair value, the
Court shall take into account all relevant factors. In determining the fair rate
of interest, the Court may consider all relevant factors, including the rate of
interest which the surviving or resulting corporation would have had to pay to
borrow money during the pendency of the proceeding. Upon application by the
surviving or resulting corporation or by any stockholder entitled to participate
in the appraisal proceeding, the Court may, in its discretion, permit discovery
or other pretrial proceedings and may proceed to trial upon the appraisal prior
to the final determination of the stockholder entitled to an appraisal. Any
stockholder whose name appears on the list filed by the surviving or resulting
corporation pursuant to subsection (f) of this section and who has submitted his
certificates of stock to the Register in Chancery, if such is
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required, may participate fully in all proceedings until it is finally
determined that he is not entitled to appraisal rights under this section.
(i) The Court shall direct the payment of the fair value of the shares,
together with interest, if any, by the surviving or resulting corporation to the
stockholders entitled thereto. Interest may be simple or compound, as the Court
may direct. Payment shall be so made to each such stockholder, in the case of
holders of uncertificated stock forthwith, and the case of holders of shares
represented by certificates upon the surrender to the corporation of the
certificates representing such stock. The Court's decree may be enforced as
other decrees in the Court of Chancery may be enforced, whether such surviving
or resulting corporation be a corporation of this State or of any state.
(j) The costs of the proceeding may be determined by the Court and taxed
upon the parties as the Court deems equitable in the circumstances. Upon
application of a stockholder, the Court may order all or a portion of the
expenses incurred by any stockholder in connection with the appraisal
proceeding, including, without limitation, reasonable attorney's fees and the
fees and expenses of experts, to be charged pro rata against the value of all
the shares entitled to an appraisal.
(k) From and after the effective date of the merger or consolidation, no
stockholder who has demanded his appraisal rights as provided in subsection (d)
of this section shall be entitled to vote such stock for any purpose or to
receive payment of dividends or other distributions on the stock (except
dividends or other distributions payable to stockholders of record at a date
which is prior to the effective date of the merger or consolidation); provided,
however, that if no petition for an appraisal shall be filed within the time
provided in subsection (e) of this section, or if such stockholder shall deliver
to the surviving or resulting corporation a written withdrawal of his demand for
an appraisal and an acceptance of the merger or consolidation, either within 60
days after the effective date of the merger or consolidation as provided in
subsection (e) of this section or thereafter with the written approval of the
corporation, then the right of such stockholder to an appraisal shall cease.
Notwithstanding the foregoing, no appraisal proceeding in the Court of Chancery
shall be dismissed as to any stockholder without the approval of the Court, and
such approval may be conditioned upon such terms as the Court deems just.
(l) The shares of the surviving or resulting corporation to which the
shares of such objecting stockholders would have been converted had they
assented to the merger or consolidation shall have the status of authorized and
unissued shares of the surviving or resulting corporation. (Last amended by Ch.
120, L.'97, eff. 7/1/97.)
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REVOCABLE PROXY
LARCAN-TTC INC.
SPECIAL MEETING OF SHAREHOLDERS
__________ [ ], 1998
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS
The undersigned hereby appoints Paul A. Dickie and James D. Adamson, or any
successors, with full powers of substitution, to act as attorneys and proxies
for the undersigned to vote all shares of the common stock of Larcan-TTC, Inc.
("LTTC"), par value $.04 per share ("LTTC Common Stock"), which the undersigned
is entitled to vote at the Special Meeting of Shareholders (the "Special
Meeting"), to be held at LTTC's offices, located at 650 South Taylor Avenue,
Louisville, Colorado 80027 at 10:00 a.m., local time, and at any and all
adjournments thereof, as follows:
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1. Proposal to approve and adopt the Agreement and Plan of Merger, dated
July 17, 1997, by and among Larcan-TTC Inc., Larcan, Inc., and Larcan
Sub, Inc., a copy of which is attached as Appendix A to the Proxy
Statement, and each of the transactions contemplated thereby.
____ For ____ Against ____ Abstain
2. To transact such other business as may properly come before the Special
Meeting or any adjournments thereof.
THIS PROXY WILL BE VOTED AS DIRECTED, BUT IF NO INSTRUCTIONS ARE SPECIFIED, THIS
PROXY WILL BE VOTED FOR PROPOSAL 1. IF ANY OTHER BUSINESS IS PRESENTED AT THE
SPECIAL MEETING, INCLUDING MATTERS RELATING TO THE CONDUCT OF THE SPECIAL
MEETING, THIS PROXY WILL BE VOTED BY THOSE NAMED IN THIS PROXY IN ACCORDANCE
WITH THE DETERMINATION OF A MAJORITY OF THE BOARD OF DIRECTORS. AT THE PRESENT
TIME, THE BOARD OF DIRECTORS KNOWS OF NO OTHER BUSINESS TO BE PRESENTED AT THE
SPECIAL MEETING.
The undersigned acknowledges receipt from LTTC prior to the execution of
this proxy of the notice of Special Meeting and the Proxy Statement. The
undersigned hereby revokes any and all proxies heretofore given, with respect to
the undersigned's share of LTTC Common Stock.
Dated: ________________, 1998
Print Name of Shareholder: _____________________________
Signature of Shareholder: ______________________________
Please sign exactly as your name appears on this card. When signing as attorney,
executor, administrator, trustee or guardian, please give your full title. If
shares are held jointly, each holder should sign.
PLEASE COMPLETE, DATE, SIGN AND MAIL THIS PROXY
PROMPTLY IN THE ENCLOSED POSTAGE PREPAID ENVELOPE.
