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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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SCHEDULE 14D-9
SOLICITATION/RECOMMENDATION STATEMENT PURSUANT TO
SECTION 14(D)(4) OF THE SECURITIES EXCHANGE ACT OF 1934
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QMS, INC.
(Name of Subject Company)
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QMS, INC.
(Name of Person Filing Statement)
COMMON STOCK, PAR VALUE $0.01 PER SHARE
(TITLE OF CLASS OF SECURITIES)
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[74726G102]
(CUSIP NUMBER OF CLASS OF SECURITIES)
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EDWARD E. LUCENTE
PRESIDENT AND CHIEF EXECUTIVE OFFICER
QMS, INC.
ONE MAGNUM PASS
MOBILE, ALABAMA 36618
(334) 633-4301
(Name, Address and Telephone Number of Person Authorized to Receive
Notices and Communications on Behalf of the Person Filing this Statement)
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COPIES TO:
ROBERT K. MONTGOMERY, ESQ.
GIBSON, DUNN & CRUTCHER LLP
333 SOUTH GRAND AVENUE
LOS ANGELES, CA 90071-3197
(213) 229-7000
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INTRODUCTION
This Solicitation/Recommendation Statement on Schedule 14D-9 (the "Schedule
14D-9") relates to an offer by Minolta Investments Company, a Delaware
corporation ("Purchaser") and a wholly owned subsidiary of Minolta Co., Ltd., a
Japanese corporation ("Parent"), to purchase 5,440,000 issued and outstanding
Shares (as hereinafter defined) of QMS, Inc., a Delaware corporation (the
"Company").
ITEM 1. SECURITY AND SUBJECT COMPANY
The name of the subject company is QMS, Inc. The address of the principal
executive office of the Company is One Magnum Pass, Mobile, Alabama 36618. The
title of the class of equity securities to which this Schedule 14D-9 relates is
the Company's common stock, par value $0.01 per share (the "Common Stock").
ITEM 2. TENDER OFFER OF THE BIDDER
This Schedule 14D-9 relates to the tender offer disclosed in the Schedule
14D-1, dated June 14, 1999 (the "Schedule 14D-1"), filed with the Securities and
Exchange Commission (the "Commission") by Parent and Purchaser, relating to an
offer by Purchaser to purchase 5,440,000 issued and outstanding shares of Common
Stock of the Company and the associated rights to purchase shares of the Series
A Participating Preferred Stock of the Company (the "Rights" and, together with
the Common Stock, the "Shares") issued pursuant to the Rights Agreement, dated
as of March 8, 1999, by and between the Company and South Alabama Trust Company,
Inc., as Rights Agent, for an amount equal to $6.25 per Share, net to the seller
in cash, without interest (the "Offer Price"), upon the terms and subject to the
conditions set forth in the Offer to Purchase, dated June 14, 1999, and the
related Letter of Transmittal (which, together with the Offer to Purchase, as
amended or supplemented from time to time, constitute the "Offer"), copies of
which are filed as Exhibits (a)(1) and (a)(2) hereto, and are incorporated
herein by reference in their entirety. As set forth in the Schedule 14D-1, the
principal executive office of Parent is located at 3-13, Azuchi-machi 2-chome,
Chuo-ku, Osaka 541-8556, Japan and Purchaser is located at c/o Minolta
Corporation, 101 Williams Drive, Ramsey, New Jersey 07446.
The Offer is being made pursuant to the Stock Purchase Agreement, dated as
of June 7, 1999 (the "Stock Purchase Agreement"), among Parent, Purchaser and
the Company. Pursuant to the Stock Purchase Agreement, Purchaser purchased
2,130,000 Shares (constituting approximately 16.6% of the outstanding common
stock of the Company, after giving effect to such purchase) (the "Stock
Purchase"). As a result of the Stock Purchase and the consummation of the Offer,
Purchaser will own a majority of the outstanding Shares and acquire control of
the Company. A copy of the Stock Purchase Agreement is filed as Exhibit (c)(1)
to this Schedule 14D-9 and is incorporated herein by reference in its entirety.
The Stock Purchase Agreement and the Offer are described in the Offer to
Purchase under the captions "Introduction," and "Terms of the Offer; Expiration
Date; Proration," "Acceptance for Payment and Payment," and "Certain Information
Concerning Purchaser and Parent," all of which are incorporated herein by
reference.
ITEM 3. IDENTITY AND BACKGROUND
(a) The name and business address of the Company, which is the person filing
this Schedule 14D-9, are set forth in Item 1 of this Schedule 14D-9.
(b) The information contained in the Offer to Purchase under the captions
"Introduction," "Terms of the Offer; Expiration Date; Proration," "Acceptance
for Payment and Payment for Shares," "Background of the Offer; Contacts with the
Company," "Certain Information Concerning Purchaser and Parent," "Purpose of the
Offer; Plans for the Company," "Purpose of the Offer; Plans for the
Company--Stock Purchase Agreement" and "Purpose of the Offer; Plans for the
Company--Loan Agreement," in the Proxy
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Statement of the Company, dated as of December 15, 1998 and in the Executive
Agreements entered into with James L. Busby, Donald L. Parker, Ph.D., and
Charles D. Daley the form of which is included as an exhibit to the Company's
annual report on Form 10-K for the fiscal year ended September 29, 1989, is
incorporated herein by reference. Each material contract, agreement, arrangement
and understanding and actual or potential conflict of interest between the
Company or its affiliates and (i) certain of the Company's executive officers,
directors or affiliates or (ii) Parent and Purchaser and their respective
executive officers, directors or affiliates, is incorporated herein by reference
as a result of the previous sentence.
ITEM 4. THE SOLICITATION OR RECOMMENDATION
(a) RECOMMENDATION OF THE BOARD OF DIRECTORS. On June 7, 1999, the Board of
Directors of the Company (the "Board"), by the unanimous vote of all directors,
acting on the unanimous recommendation of the Executive Committee, (i)
determined that the Stock Purchase Agreement, the Loan Agreement (attached
hereto as Exhibit (c)(3), and incorporated herein by reference in its entirety)
and the transactions contemplated thereby, including the Offer, are fair to, and
in the best interests of, the Company and the stockholders of the Company and
(ii) approved and adopted the Stock Purchase Agreement, the Loan Agreement and
the transactions contemplated thereby, including the Offer. The Board recommends
to the Company's stockholders that they accept the Offer and tender their Shares
pursuant to the Offer.
A letter to the Company's stockholders communicating the recommendation of
the Board and a press release announcing the execution of the Stock Purchase
Agreement are filed herewith as Exhibits (a)(5) and (a)(3) hereto and are
incorporated herein by reference in their entirety.
(b) BACKGROUND OF THE OFFER; REASONS FOR RECOMMENDATION.
BACKGROUND
In November 1998, the Company engaged The Robinson-Humphrey Company, LLC
("Robinson-Humphrey") to render financial advisory services to the Company
concerning proposed acquisitions by the Company of QMS Europe B.V. and QMS
Australia Pty. Ltd. (collectively, "BV"), which acquisitions were being
considered by the Company with a view to enhancing the Company's strategic and
financial positions. In December 1998, two members of the Board were contacted
by a representative of a corporation (the "Other Bidder") regarding a possible
transaction in which the Other Bidder would acquire the Company. Such contact
was referred to Mr. Edward E. Lucente, President and Chief Executive Officer of
the Company.
On February 17, 1999, the Board met and, following substantial discussion,
approved the proposed transactions pursuant to which the Company would acquire
BV. It was determined by the Board that it would be in the best interests of the
Company to consider various methods of financing the BV acquisitions and
achieving efficient structures for replacing existing indebtedness of the
Company.
During February and early March, 1999, the Company engaged in a number of
discussions and exchanges with the Other Bidder, with respect to the potential
acquisition of the Company by the Other Bidder. In early March, 1999, Takenaka &
Company LLC ("Takenaka") contacted the Company on behalf of Parent to ascertain
the Company's interest in pursuing an alliance with Parent. On March 18, 1999,
the Executive Committee of the Board (the "Executive Committee") met to consider
possible transactions with Parent and the Other Bidder. The Executive Committee
analyzed the advantages and disadvantages of the two potential transactions.
On March 18, 1999, the Company and Parent executed a confidentiality
agreement. On the same day, Mr. Lucente, Mr. James A. Wallace, Vice President
and Chief Financial Officer of the Company, and other senior executives of
Company met with representatives of Takenaka in Mobile, Alabama to discuss a
potential strategic partnership or other business combination between Parent and
the Company. Also on
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March 18, 1999, the Company dispatched informational materials to the Other
Bidder. On March 19, 1999, representatives of Parent initiated a preliminary due
diligence review of the Company.
On March 24, 1999, the Company held extensive discussions with the Other
Bidder with respect to a potential combination of the businesses of the two
companies in a transaction. On March 25, 1999, additional information materials
were dispatched to Takenaka and the Other Bidder.
On March 29, 1999, the Company engaged Robinson-Humphrey as its financial
advisor with respect to the consideration of the Company's strategic
alternatives, including a possible change of control transaction.
Over a period of days in early April, Messrs. Lucente and Wallace met with
representatives of Parent and Takenaka in Tokyo and Osaka, Japan, to provide
information on the Company's plans to acquire BV and to engage in further
discussion of a potential transaction between Parent and the Company. As a
result of the meeting, Parent and the Company agreed to continue discussions and
the due diligence review.
On April 5, 1999, the Board met. The Board considered the fact that the
acquisition of BV would need to be postponed in order to enable the Company to
obtain appropriate financing for such acquisition. The Board also considered and
discussed alternative financing proposals, in consultation with Robinson-
Humphrey.
On April 12, 1999, the Company received a letter from the Other Bidder
indicating the Other Bidder's interest in acquiring the Company. The Other
Bidder indicated a transaction price of between $4 and $5 per Share.
On April 13, 1999, the Executive Committee met to discuss and analyze the
advantages and disadvantages of the proposed transactions with Parent and the
Other Bidder. The Executive Committee discussed, among other factors, the
strategic possibilities inherent in the transaction with Parent.
On April 13, 1999, Parent sent the Company a letter confirming Parent's
interest in a potential transaction and requested the Company to allow Parent to
conduct certain additional due diligence. From April 19, 1999 through April 21,
1999, representatives of Parent met with representatives of the Company in
Mobile, Alabama to conduct further due diligence.
On April 21, 1999, the Board met. Following a discussion of financing
proposals with respect to the BV acquisitions, the Board engaged in a lengthy
discussion of the proposed transactions with the Other Bidder and Parent. In
particular, the Board took note of the fact that the Other Bidder had indicated
a transaction price of between $4 and $5 per Share. Robinson-Humphrey advised
the Board that the price indicated by the Other Bidder did not appear to reflect
the value of the BV acquisitions, in which the Other Bidder had not indicated
much interest. The Board also engaged in a lengthy discussion of the proposal by
Parent. The Board was advised that the indicated value that had been discussed
with Parent was substantially higher than the indicated value proposed by the
Other Bidder. The Board discussed different potential structures for the
transaction with Parent as well as the prospect that a transaction with Parent
would produce substantial synergies, which might well lead to collective greater
strength in the market and higher stockholder value. By way of contrast,
Robinson-Humphrey expressed the view that the Other Bidder's principal interest
in a transaction with the Company appeared to be acquiring the technology and
engineering staff of the Company. Following additional extensive discussion, the
Board directed management to approach Parent with a proposal that Parent assist
the Company in obtaining financing for the BV acquisitions, as well as the
replacement of the Company's current credit facility.
Between April 21, 1999 and April 28, 1999 due diligence and negotiations
continued between the Company and Parent.
On April 28, 1999, the Board met. Following a discussion of cash flow issues
and of the fact that the lender that had appeared to be the most likely source
of financing for the BV acquisitions had decided not to participate, the Board
considered and analyzed the proposals from Parent and the Other Bidder. The
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Board discussed in detail the proposed structure of the transaction with Parent,
in which Parent would not only invest in the Company but also make or arrange
for a loan to the Company. On April 28, 1999, at the direction of the Board,
Robinson-Humphrey informed a representative of the Other Bidder that the Company
believed that the $4 to $5 per Share proposed by the Other Bidder was
inadequate, but requested that the Other Bidder continue the dialogue with
Robinson-Humphrey if the Other Bidder were in a position to increase its
indicated transaction price.
On April 28, 1999 the Company sent a letter to Parent to ascertain Parent's
interest in a transaction whereby Parent would invest in and loan money to the
Company to, among other things, help the Company finance the BV acquisitions.
Subsequently, Parent indicated it would be interested in such a transaction with
certain modifications. During this period, the Company, directly and through
Robinson-Humphrey, continued its contact with the Other Bidder. The Other
Bidder, however, did not state a willingness to increase its indicated
transaction price above the $4 to $5 per share level.
Intensive negotiations took place between Parent, the Company and their
respective financial and legal representatives during the weeks following April
28, 1999. On May 7, 1999, the Board met to review the status of the negotiations
with Parent, including, particularly, the proposed transaction structure and
terms. The parties met in Osaka, Japan on May 11, 1999 and continued to
negotiate throughout the week. On May 11, 1999, the Board met and discussed in
detail the status of the negotiations with the Parent, with particular attention
to the amount of funds to be provided to the Company in the form of a loan. In
addition, the Board discussed the timing of the proposed transaction and
directed management to continue negotiation for an early closing of the
transaction.
On May 17, 1999, the Board met to consider a proposed letter of intent that
had been heavily negotiated between the parties, as well as to decide whether to
proceed with the BV acquisitions. The Board extensively discussed the likely
structure, operations and strategic posture of the Company following
consummation of the proposed transaction with Parent. The Board closely
questioned representatives of Robinson-Humphrey with respect to the fairness of
the proposed transaction, alternatives to the proposed transaction and the
assumptions underlying the analysis that had been performed by Robinson-Humphrey
with respect to such matters. The Board was advised that it was
Robinson-Humphrey's opinion that the transaction contemplated by the proposed
letter of intent was fair, from a financial point of view. The Board also
discussed at length with its financial and legal advisors the provision in the
letter of intent that provided that the Company would grant Parent an exclusive
30-day period to conclude negotiation of definitive agreements for the proposed
transaction. Following further extensive discussions, the Board authorized and
directed management to execute and deliver the letter of intent and to proceed
with Parent to negotiate definitive agreements leading to an early closing of
the proposed transaction.
On May 17, 1999, Parent and the Company signed the letter of intent whereby
(i) Parent agreed to advance the Company $5 million in respect of certain
payments to be owed by Parent to the Company with respect to ordinary commercial
transactions and (ii) the Company agreed to negotiate exclusively with Parent
for a period of 30 days concerning the potential transaction between the Company
and Parent.
During the period from May 24 through June 7, 1999, Parent continued its due
diligence review of the Company and, along with its legal representative and
Takenaka, negotiated with the Company the specific terms of the Stock Purchase
Agreement (including this Offer) and the Loan Agreement, attached hereto as
Exhibit (c)(3).
On May 27, 1999, the Executive Committee met. The Executive Committee
discussed the business effects of a strategic alliance between the Company and
Parent. Robinson-Humphrey expressed the view that the Company's revenue, growth
and profitability prospects would be significantly improved if the transaction
with Parent were consummated.
On June 7, 1999, the Board met to determine whether or not the Company
should enter into the Stock Purchase Agreement and the Loan Agreement with
Parent. A detailed presentation was made to the
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Board reviewing the substantive terms and conditions of the Stock Purchase
Agreement and the Loan Agreement. Members of the Board closely questioned
management and the Board's financial and legal advisors concerning the terms and
conditions of the Stock Purchase Agreement (including those with respect to the
Offer) and the Loan Agreement, with particular focus on the circumstances under
which the Company could consider alternative proposals received after the
execution and delivery of the Stock Purchase Agreement, as well as the
provisions with respect to the "break-up fee" payable by the Company to Parent
under those or other circumstances.
Robinson-Humphrey made a lengthy presentation to the Board, at the
conclusion of which it rendered its opinion that "from a financial point of
view, the consideration to be offered in the Proposed Transaction is fair to the
shareholders of the Company." Robinson-Humphrey detailed for the Board the
methodologies Robinson-Humphrey had used in arriving at its opinion, pursuant to
which methodologies Robinson-Humphrey did the following:
(1) reviewed the Stock Purchase Agreement; (2) reviewed certain publicly
available information concerning the Company which Robinson-Humphrey believed to
be relevant to its analysis; (3) reviewed certain internal financial statements
and other financial and operating data concerning the Company and BV prepared by
the management of the Company; (4) analyzed certain financial assumptions
prepared by the Company and BV; (5) conducted discussions with members of
management of the Company and BV concerning their respective businesses,
operations and prospects; (6) reviewed the trading performance of the Company's
common shares over the last three years; (7) reviewed the historical trading
performance of the Company's common shares in comparison with those of certain
other public companies which Robinson-Humphrey deemed relevant as well as
certain market indexes over the last three years; (8) compared the results of
operations and present financial condition of the Company with those of other
public companies which Robinson-Humphrey deemed relevant; (9) reviewed the
financial terms of certain merger and acquisition transactions which
Robinson-Humphrey deemed relevant; (10) reviewed the financial terms of certain
acquisitions and tender offers involving the purchase of a majority equity
interest which Robinson-Humphrey deemed relevant; (11) reviewed premiums paid in
acquisitions of public companies from 1987 to 1999; (12) performed certain
financial analyses with respect to the Company's projected future operating
performance, including a discounted cash flow analysis; (13) reviewed the draft
Loan Agreement dated May 28, 1999 and the draft Stock Purchase Agreement dated
June 2, 1999; and (14) undertook such other financial studies and analyses as
well as performed such other investigations Robinson-Humphrey deemed necessary.
The Board closely questioned Robinson-Humphrey with respect to the
assumptions on which Robinson-Humphrey's opinion was based. In addition, the
Board questioned Robinson-Humphrey concerning its views on strategic
alternatives available to the Company, including remaining independent. The
Board further discussed the current and projected financial condition of the
Company, and, in particular, its situation with respect to earnings and cash
flows. The Board also addressed the need to provide a more stable financial
basis for the Company and to enhance its strategic position in the markets in
which it operates. Following further discussion, the Board unanimously adopted
resolutions approving the Stock Purchase Agreement and the Loan Agreement,
authorizing and directing management to execute and deliver such agreements and
recommending that the Company's stockholders accept the Offer and tender their
shares pursuant to the Offer.
On June 7, 1999, (i) Parent, Purchaser and the Company entered into the
Stock Purchase Agreement and Purchaser purchased 2,130,000 Shares for an
aggregate price of approximately $12.248 million and (ii) Parent and the Company
entered into the Loan Agreement and Parent loaned the Company $12.8 million. On
the same day, the Company closed the BV acquisitions. On June 8, 1999, Parent
and the Company announced the Stock Purchase Agreement, the closing of the loan
contemplated by the Loan Agreement and the Offer. On June 14, 1999, pursuant to
the terms of the Stock Purchase Agreement, Purchaser commenced the Offer.
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REASONS FOR THE RECOMMENDATION OF THE BOARD; FAIRNESS OF THE OFFER.
On June 7, 1999, the Board, by the unanimous vote of all directors,
determined that the Stock Purchase Agreement and the transactions contemplated
thereby, including the Offer, are fair to and in the best interests of the
Company and its stockholders, approved and adopted the Stock Purchase Agreement
and the transactions contemplated thereby, including the Offer, and recommended
that the Company's stockholders accept the Offer and tender their Shares. As set
forth in the Stock Purchase Agreement, subject to the terms and conditions
thereof, Purchaser will purchase 5,440,000 Shares tendered prior to the
expiration of the Offer if the conditions to the Offer have been satisfied (or
waived).
In reaching its determination referred to above, the Board considered the
following factors, each of which in the view of the Board, supported such
determinations:
(a) The historical market prices and trading activity of the Shares over the
last three months: the Offer Price of $6.25 per share represents a 72.3% premium
over the average closing price of the Common Stock during the three calendar
months preceding the date of the public announcement of the Stock Purchase
Agreement (the "Announcement"), a 23.5% premium over the closing price on the
third trading day prior to the Announcement and a 108% premium over the closing
price on the thirtieth trading day prior to the Announcement;
(b) The history of the negotiations between the Company and its
representatives and Parent and its representatives, including the Company's
belief that Parent would not further increase the price of the Offer or improve
the terms of the Offer, and, accordingly $6.25 per Share was, in the opinion of
the Board the highest price that could be obtained from Parent;
(c) The opinion of Robinson-Humphrey that, based upon and subject to the
various assumptions and limitations set forth therein, and the analyses
presented to the Board in connection therewith, as of the date thereof, the
$6.25 per Share to be received by the stockholders of the Company in the Offer
was fair to the stockholders from a financial point of view. THE FULL TEXT OF
THE ROBINSON-HUMPHREY COMPANY, LLC OPINION IS ATTACHED AS ANNEX A HERETO AND IS
INCORPORATED BY REFERENCE. STOCKHOLDERS ARE URGED TO READ SUCH OPINION IN ITS
ENTIRETY;
(d) The history of the negotiations with the Other Bidder, and the absence
of other bidders despite efforts by Robinson-Humphrey to contact other potential
bidders;
(e) The possibility that the consideration the Company's stockholders might
obtain in a future transaction or through continued ownership of shares in an
independent QMS, Inc., would likely be less advantageous than the consideration
they would receive pursuant to the Offer, because of the Company's loss for the
first fiscal quarter of 1999, the uncertainty concerning whether the Company
would be able to improve its performance in the remainder of fiscal year 1999,
and cash flow issues;
(f) The effect of the condition in the Stock Purchase Agreement that,
without the consent of the Company, no change in the Offer may be made by Parent
or Purchaser which (i) decreases the $6.25 per Share payable in the Offer, (ii)
reduces the maximum number of Shares to be purchased in the Offer, (iii) imposes
conditions to the Offer in addition to those set forth in the Stock Purchase
Agreement or (iv) broadens the scope of such conditions except as expressly
provided in the Stock Purchase Agreement.
(g) The review by the Board of alternatives to the transaction with Parent,
including a possible transaction with the Other Bidder or remaining independent,
in light of the advice of Robinson-Humphrey that it was unlikely that another
transaction would be proffered, or that an alternative, including remaining
independent, could be structured that would produce value to the Company's
stockholders at levels similar to $6.25 per share;
(h) The terms and conditions of the Stock Purchase Agreement and the Loan
Agreement;
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(i) The Company's need for financing in order to consummate the BV
acquisitions;
(j) The value to the Company of replacing its existing credit facility;
(k) The fact that pursuant to the Stock Purchase Agreement, the Company is
not prohibited from responding to any unsolicited requests for information, and
may participate in discussions and negotiate with the entity or group making
such request concerning any merger, sale of assets, sale of shares of capital
stock or similar transaction involving the Company, if such entity or group has
submitted a written proposal to the Board relating to any such transaction and
the Board by a majority vote determines in its good faith judgment, in
consultation with counsel, that (A) the proposal is superior to the transactions
contemplated by the Stock Purchase Agreement and the Loan Agreement and (B) the
Board is required to do so in the exercise of its fiduciary duties under
Delaware law, in which event, after giving notice to Purchaser, the Company may
elect to terminate the Stock Purchase Agreement and pay the break-up fee
provided for in the Stock Purchase Agreement; and
(m) The structure of the transaction, which is designed, among other things,
to result in receipt by the stockholders of the Company at the earliest
practicable time of the consideration to be paid in the Offer.
CONSIDERATIONS OF THE BOARD
The foregoing discussion of the information and factors considered by the
Board is not meant to be exhaustive but includes the material factors considered
by the Board in reaching its conclusions and recommendations. The members of the
Board evaluated the various factors listed above in light of their knowledge of
the business, financial condition and prospects of the Company and based upon
the advice of financial and legal advisors. In light of the number and variety
of factors that the Board considered in connection with its evaluation of the
Stock Purchase Agreement, the Loan Agreement and the transactions contemplated
thereby (including the Offer), the Board did not find it practicable to assign
relative weights to the foregoing factors, and accordingly, the Board did not do
so. In addition, individual members of the Board may have given different
weights to different factors.
The Board determined that the Offer was the result of a process that was
fair to the stockholders of the Company because, among other things, (a) the
Executive Committee and the Board conducted numerous meetings, during which the
Executive Committee and the Board evaluated and analyzed the proposed
transaction, determined the negotiating strategy and reached informed
conclusions based, in part, on the advice of independent financial and legal
advisors, (b) the Executive Committee and the Board deliberated with respect
both to the transactions with Parent and a variety of alternative strategies and
(c) the $6.25 per share price and the other terms and conditions of the Stock
Purchase Agreement resulted from active arm's-length bargaining between the
Company and its representatives, on the one hand, and Parent and its
representatives, on the other.
IN LIGHT OF ALL THE FACTORS SET FORTH ABOVE, THE BOARD OF DIRECTORS OF THE
COMPANY HAS UNANIMOUSLY DETERMINED THAT THE OFFER AND THE STOCK PURCHASE
AGREEMENT ARE FAIR TO, AND IN THE BEST INTERESTS OF, THE COMPANY AND ITS
STOCKHOLDERS, HAS UNANIMOUSLY APPROVED THE OFFER AND THE STOCK PURCHASE
AGREEMENT, AND RECOMMENDS THAT THE STOCKHOLDERS ACCEPT THE OFFER AND TENDER
THEIR SHARES PURSUANT THERETO.
ITEM 5. PERSONS RETAINED, EMPLOYED OR TO BE COMPENSATED
The Company retained The Robinson-Humphrey Company, LLC as its financial
advisor in connection with the Stock Purchase Agreement, the Offer, the BV
acquisitions and related financing. The Company has agreed to pay customary fees
to Robinson-Humphrey in connection with the rendering of its fairness opinion
and the consummation of the transactions.
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In addition to the foregoing compensation, the Company has agreed to
reimburse Robinson-Humphrey for its reasonable expenses (including fees and
disbursements of its attorneys) and to indemnify Robinson-Humphrey and certain
related persons against certain liabilities arising out of the engagement and
the transactions in connection therewith, including certain liabilities under
the federal securities laws.
Except as set forth above, neither the Company nor any person acting on its
behalf has or currently intends to employ, retain or compensate any person to
make solicitations or recommendations to the stockholders of the Company on its
behalf with respect to the Offer.
ITEM 6. RECENT TRANSACTIONS AND INTENT WITH RESPECT TO SECURITIES
(a) During the past 60 days, no transactions in Shares have been effected by
the Company or, to the best of the Company's knowledge, by any of its executive
officers, directors, affiliates or subsidiaries, except that Mr. Charles
Gammill, the Company's Vice President, Sales, exercised options to purchase
9,400 Shares on June 14, 1999.
(b) To the best of the Company's knowledge, to the extent permitted by
applicable securities laws, rules or regulations, the chief executive officer
and all other senior exectuive officers of the Company presently intend to
tender to Purchaser, pursuant to the Offer, all shares of which he is the record
or beneficial owner, and each other officer, director and affiliate of the
Company presently intends to tender to Purchaser, pursuant to the Offer, some or
all Shares of which he is the record or beneficial owner.
ITEM 7. CERTAIN NEGOTIATIONS AND TRANSACTIONS BY THE SUBJECT COMPANY
(a) Except as set forth herein and in the portions of the Offer to Purchase
incorporated herein by reference, the Company is not engaged in any negotiation
in response to the Offer which relates to or would result in: (1) an
extraordinary transaction, such as a merger or reorganization involving the
Company or any subsidiary thereof; (2) a purchase, sale or transfer of a
material amount of assets by the Company or any subsidiary thereof; (3) a tender
offer for or other acquisition of securities by or of the Company; or (4) any
material change in the present capitalization or dividend policy of the Company.
(b) Except as set forth herein and in the portions of the Offer to Purchase
incorporated therein by reference, there is no transaction, board resolution,
agreement in principle, or signed contract in response to the Offer which
relates to or would result in one or more of the matters referred to in Item
7(a)(1), (2), (3) or (4).
ITEM 8. ADDITIONAL INFORMATION TO BE FURNISHED
The information contained in all of the Exhibits referred to in Item 9 below
is incorporated herein by reference in its entirety.
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ITEM 9. MATERIALS TO BE FILED AS EXHIBITS
<TABLE>
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(a)(1) Offer to Purchase, dated June 14, 1999.*+
(a)(2) Letter of Transmittal.*+
(a)(3) Press release issued by the Company on June 8, 1999.+
(a)(4) Opinion of The Robinson-Humphrey Company, LLC, dated June 7, 1999.*+
(a)(5) Letter to Stockholders, dated June 14, 1999, from the Company's Board of
Directors.*+
(c)(1) Stock Purchase Agreement, dated as of June 7, 1999, among Parent, Purchaser and the
Company (incorporated by reference to Exhibit (c) to Purchaser's Tender Offer
Statement on Schedule 14D-1, dated June 14, 1999).
(c)(2) Proxy Statement of the Company, dated as of December 15, 1998 (incorporated by
reference to the Company's proxy statement on Schedule 14A, filed with the
Commission on December 15, 1998).
(c)(3) Loan Agreement, dated June 14, 1999, by and between the Company and Parent.+
</TABLE>
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* Included with Schedule 14D-9 mailed to shareholders.
+ Filed herewith.
10
<PAGE>
SIGNATURE
After reasonable inquiry and to the best of my knowledge and belief, I
certify that the information set forth in this statement is true, complete, and
correct.
QMS, INC.
BY: /S/ EDWARD E. LUCENTE
-----------------------------------------
Edward E. Lucente
PRESIDENT AND CHIEF EXECUTIVE OFFICER
Dated: June 14, 1999
11
<PAGE>
ANNEX B
QMS, INC.
ONE MAGNUM PASS,
MOBILE, ALABAMA 36618
INFORMATION STATEMENT PURSUANT TO SECTION 14(F)
OF THE SECURITIES EXCHANGE ACT OF 1934 AND
RULE 14F-1 THEREUNDER
This Information Statement is being mailed on or about June 14, 1999 as part
of the Solicitation/ Recommendation Statement on Schedule 14D-9 (the "Schedule
14D-9") to holders of shares of common stock, par value $0.01 per share (the
"Common Stock"), of QMS, Inc., a Delaware corporation (the "Company").
Capitalized terms used herein and not otherwise defined herein shall have the
meanings set forth in the Schedule 14D-9. You are receiving this Information
Statement in connection with the designation of persons by Minolta Investments
Company, a Delaware corporation ("Purchaser"), and a wholly owned subsidiary of
Minolta Co., Ltd., a Japanese corporation ("Parent"), to the board of directors
of the Company (the "Company Board"). Such designation is to be made pursuant to
a Stock Purchase Agreement, dated as of June 7, 1999 (the "Stock Purchase
Agreement"), by and among Parent, Purchaser and the Company, whereby Purchaser
purchased shares representing approximately 16.6% of the Common Stock of the
Company outstanding after giving effect to such purchase (the "Stock Purchase").
This Information Statement is required by Section 14(f) of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and Rule 14f-1
thereunder. YOU ARE URGED TO READ THIS INFORMATION STATEMENT CAREFULLY. YOU ARE
NOT, HOWEVER, REQUIRED TO TAKE ANY ACTION.
Pursuant to the Stock Purchase Agreement, Purchaser commenced a cash tender
offer (the "Offer") on June 14, 1999 to purchase 5,440,000 issued and
outstanding shares of Common Stock of the Company and the associated rights to
purchase shares of the Series A Participating Preferred Stock of the Company
(the "Rights" and, together with the Common Stock, the "Shares"), issued
pursuant to the Rights Agreement, dated as of March 8, 1999, by and between the
Company and South Alabama Trust Company, Inc., as Rights Agent, for an amount
equal to $6.25 per Share, net to the seller in cash, without interest, upon the
terms and subject to the conditions set forth in the Offer to Purchase, dated
June 14, 1999, and the related Letter of Transmittal. As a result of the Stock
Purchase and the consummation of the Offer, Purchaser will own a majority of the
outstanding Shares and acquire control of the Company. The Offer is scheduled to
expire at 12:00 Midnight, New York City time, on Monday, July 12, 1999, unless
the Offer is extended.
GENERAL INFORMATION REGARDING THE COMPANY
The Shares are the only class of voting securities of the Company
outstanding. Each Share has one vote. Immediately prior to the Stock Purchase,
there were 10,708,335 Shares outstanding.
PROPOSED CHANGES TO THE COMPANY BOARD
Under the Stock Purchase Agreement, Purchaser is entitled to designate two
(2) persons on the Company Board on and after the date of the Stock Purchase
(the "Minolta Designees"). The Company has agreed to use its best efforts to
promptly, but in no event later than the purchase of and payment for the Shares
pursuant to the Offer, secure the resignations of such number of its incumbent
directors as is necessary to enable the designees of Purchaser to be so elected
or appointed to the Company Board, and to take all action available to the
Company to cause such designees of Purchaser to be elected or appointed to fill
the vacancies created by such action.
<PAGE>
On and after the purchase of and payment for the Shares by Purchaser
pursuant to the Offer, in the event that Purchaser and its Affiliates
beneficially own less than a majority of the then outstanding Shares, the Stock
Purchase Agreement provides that Purchaser will be entitled to designate the
greater of (i) two (2) directors on the Company Board or (ii) such number of
directors on the Company Board, rounded up to the next whole number, equal to
the product of the total number of directors on the Company Board multiplied by
the percentage that the number of Shares beneficially owned by Purchaser and its
Affiliates bears to the total number of Shares then outstanding. The Company
will either (i) use its best efforts to promptly secure the resignations of such
number of its incumbent directors as is necessary to enable the designees of
Purchaser to be so elected or appointed to the Company Board or (ii) take such
action as is necessary to increase the size of the Company Board by such number
of directors, and, in either case, the Company will take all action available to
the Company to cause such designees of Purchaser to be elected or appointed to
fill the vacancies created by such action.
The Stock Purchase Agreement further provides that promptly after (i) the
purchase of and payment for any Shares by Purchaser and any of its Affiliates
pursuant to the Offer as a result of which Purchaser and its Affiliates
beneficially own at least a majority of the Shares then outstanding and (ii)
compliance with Section 14(f) of the Exchange Act and Rule 14f-1 promulgated
thereunder, whichever occurs later, Parent, Purchaser and the Company will take
all action available and within their respective control so that the number of
directors on the Company Board will be established at nine (9) directors
consisting of (A) five (5) persons designated by Purchaser, (B) Messrs. Edward
E. Lucente and James A. Wallace and (C) two independent directors, who will be
Messrs. F. Rigdon Currie and Michael C. Dow.
Upon any such designation by Purchaser pursuant to the Stock Purchase
Agreement, the Company will, if requested by Purchaser, also take all action
necessary to cause the persons designated by Purchaser to constitute at least
the same percentage (rounded up to the next whole number) as is on the Company
Board of (i) each committee of the Company Board, (ii) each board of directors
(or similar body) of each subsidiary of the Company and (iii) each committee (or
similar body) of each such subsidiary board.
MINOLTA DESIGNEES
Purchaser has informed the Company that Purchaser will choose the Minolta
Designees from the list of persons set forth in the following table. With
respect to the Minolta Designees, the following table, prepared from information
furnished to the Company by Purchaser, sets forth the name, age, citizenship,
present principal occupation or employment and five-year employment history for
each of the persons who may be designated by Purchaser as Minolta Designees. If
necessary, Purchaser may choose additional or other Minolta Designees, subject
to the requirements of Rule 14f-1. Unless otherwise indicated below, the
business address of each person is Minolta Co., Ltd., 3-13, Azuchi-machi
2-chome, Chuo-ku, Osaka 541-8556, Japan, and such person is a Japanese citizen.
<TABLE>
<CAPTION>
PRESENT PRINCIPAL OCCUPATION OR EMPLOYMENT;
NAME AGE MATERIAL POSITIONS HELD DURING THE PAST FIVE YEARS
- ---------------------------- --- ------------------------------------------------------------------------------
<S> <C> <C>
Hiroshi Fujii............... 55 Director of Minolta Co., Ltd. since 1995. Mr. Fujii has been President and CEO
of Minolta Corporation (which is a wholly owned subsidiary of Minolta Co.,
Ltd.) since 1993 and is currently a director of Minolta Corporation, Mohawk
Marketing, Inc., Astro-Tec Manufacturing, Inc., Minolta Advance Technology,
Inc., and Minolta Systems Laboratory Inc. Prior to his election as President
of Minolta Corporation, Mr. Fujii served in the capacity of Executive Vice
President and Treasurer of that company and had held a number of other
executive positions with both Minolta Corporation and Minolta Co., Ltd. Mr.
Fujii's business address is that for Purchaser.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
PRESENT PRINCIPAL OCCUPATION OR EMPLOYMENT;
NAME AGE MATERIAL POSITIONS HELD DURING THE PAST FIVE YEARS
- ---------------------------- --- ------------------------------------------------------------------------------
<S> <C> <C>
Yoshisuke Takekida.......... 54 Senior General Manager of Image Information Products Development Headquarters
of Minolta Co., Ltd. since July, 1995 and is a director of Minolta Systems
Laboratory Inc. He joined Minolta Co., Ltd. in January 1995. Prior thereto,
Mr. Takekida was General Manager of PPC Business Unit of NEC Corporation
Allen A. Hans............... 48 Vice President, General Counsel and Secretary of Minolta Corporation and
Secretary of Minolta Business Systems, Inc., Mohawk Marketing Corporation,
Minolta Information Systems, Inc., Astro-Tec Manufacturing, Inc. Minolta
Advance Technology, Inc. and Minolta Systems Laboratory Inc. Mr. Hans, who is
an American citizen, joined Minolta Corporation in 1987 as General Counsel and
was promoted to Vice President in 1993. From 1977 to 1980, he served as the
Principal Law Clerk to the Chief Judge of the New York Court of Appeals and
from 1980 to 1987, he was a practicing attorney in the New York law firm then
known as Whitman & Ransom, having been elected partner in 1986. Mr. Hans'
business address is that for Purchaser.
Shoei Yamana................ 44 General Manager of Corporate Strategy Division of Minolta Co., Ltd. since July
1996. Mr. Yamana joined Minolta Co., Ltd. in 1977 and served Minolta Co., Ltd.
in various capacities, including Manager of Corporate Strategy Division from
April 1995 to June 1996, Manager of Asia Division from July 1994 to March
1995, Manager of China Division from April 1994 to June 1994 and Manager of
Camera Sales Department from April 1990 to March 1994.
Keisuke Mochida............. 41 Staff Manager of Peripheral Marketing Division of Minolta Co., Ltd. since
August 1998. He joined Minolta Co., Ltd. in 1981 and served Minolta Co.,
Ltd.'s wholly owned U.S. subsidiary, Minolta Corporation, in various
capacities, including Assistant to General Manager, Strategic Planning Manager
and Product Manager from January 1992 to July 1998. Prior thereto, Mr. Mochida
assumed various responsibilities in Corporate Planning Division and System
Equipment Operations.
</TABLE>
Purchaser has advised the Company that to the best knowledge of Purchaser,
none of the Minolta Designees currently is a director of, or holds any position
with, the Company, and except as disclosed in the Offer to Purchase, none of the
Minolta Designees beneficially owns any securities (or rights to acquire any
securities) of the Company or has been involved in any transactions with the
Company or any of its directors, executive officers or affiliates that are
required to be disclosed pursuant to the rules of the Securities and Exchange
Commission (the "SEC"), except as may be disclosed in the Offer to Purchase.
None of the Minolta Designees has any family relationship with any director or
executive officer of the Company.
Purchaser has advised the Company that each of the persons listed in the
table above has consented to act as a director, and that none of such persons
has during the last five years been convicted in a criminal proceeding
(excluding traffic violations and similar misdemeanors) or was a party to a
civil proceeding of a judicial or administrative body of competent jurisdiction
and as a result of such proceeding was, or is, subject to a judgment, decree or
final order enjoining future violations of, or prohibiting activities subject
to, federal or state securities laws or finding any violation of such laws or is
involved in any other legal proceeding which is required to be disclosed under
Item 401(f) of Regulation S-K promulgated by the SEC.
<PAGE>
It is expected that the Minolta Designees may assume office at any time
following the ownership by Purchaser of a majority of outstanding Shares
pursuant to the Stock Purchase and the Offer, which cannot be earlier than July
12, 1999, and that, upon assuming office, the Minolta Designees will thereafter
constitute at least a majority of the Company Board.
INCORPORATION BY REFERENCE
The information contained in the Proxy Statement of the Company, dated as of
December 15, 1998, relating to the 1999 Annual Meeting of Stockholders, attached
as Exhibit (c)(2) to the Company's Schedule 14D-9, under the captions "Directors
and Director Nominees," "Nominees for Directors," "Directors Continuing in
Office," "Meetings and Committees of the Board of Directors," "Director
Compensation," "Executive Compensation," "Section 16(A) Beneficial Ownership
Reporting Compliance," "Executive Officers," "Beneficial Ownership of Common
Stock," "Executive Compensation Tables," "Executive Agreements," "Report of the
Compensation Committee of the Board of Directors of QMS, Inc.," "Cash
Compensation- Annual Incentive Programs," "Stock Option Programs," "Limitation
on the Deductibility of Compensation," "Compensation Committee Interlocks and
Insider Participation," and "Certain Transactions and Matters," is incorporated
herein by reference in its entirety.
<PAGE>
EXHIBIT INDEX
<TABLE>
<S> <C>
(a)(1) Offer to Purchase, dated June 14, 1999.*+
(a)(2) Letter of Transmittal.*+
(a)(3) Press release issued by the Company on June 8, 1999.+
(a)(4) Opinion of The Robinson-Humphrey Company, LLC, dated June 7, 1999.*+
(a)(5) Letter to Stockholders, dated June 14, 1999, from the Company's Board of
Directors.*+
(c)(1) Stock Purchase Agreement, dated as of June 7, 1999, among Parent, Purchaser and the
Company (incorporated by reference to Exhibit (c) to Purchaser's Tender Offer
Statement on Schedule 14D-1, dated June 14, 1999).
(c)(2) Proxy Statement of the Company, dated as of December 15, 1998 (incorporated by
reference to the Company's proxy statement on Schedule 14A, filed with the
Commission on December 15, 1998).
(c)(3) Loan Agreement, dated June 14, 1999, by and between the Company and Parent.+
</TABLE>
- ------------------------
* Included with Schedule 14D-9 mailed to shareholders.
+ Filed herewith.
<PAGE>
OFFER TO PURCHASE FOR CASH
5,440,000 SHARES OF COMMON STOCK
(INCLUDING THE ASSOCIATED PREFERRED SHARE PURCHASE RIGHTS)
OF
QMS, INC.
AT
$6.25 NET PER SHARE
BY
MINOLTA INVESTMENTS COMPANY,
A WHOLLY-OWNED SUBSIDIARY OF
MINOLTA CO., LTD.
THE OFFER, PRORATION PERIOD AND WITHDRAWAL RIGHTS WILL EXPIRE
AT 12:00 MIDNIGHT, NEW YORK CITY TIME ON MONDAY, JULY 12, 1999
UNLESS THE OFFER IS EXTENDED.
THE BOARD OF DIRECTORS OF QMS, INC. (THE "COMPANY") HAS UNANIMOUSLY
DETERMINED THAT THE OFFER AND THE STOCK PURCHASE AGREEMENT (EACH AS DEFINED
HEREIN) ARE FAIR TO, AND IN THE BEST INTERESTS OF, THE COMPANY AND ITS
STOCKHOLDERS, HAS UNANIMOUSLY APPROVED THE OFFER AND THE STOCK PURCHASE
AGREEMENT (AS DEFINED HEREIN), AND RECOMMENDS THAT THE COMPANY'S STOCKHOLDERS
ACCEPT THE OFFER AND TENDER THEIR SHARES PURSUANT THERETO.
THE OFFER IS BEING MADE PURSUANT TO A STOCK PURCHASE AGREEMENT BETWEEN
PARENT, PURCHASER AND THE COMPANY PURSUANT TO WHICH, AMONG OTHER THINGS,
PURCHASER PURCHASED 2,130,000 SHARES (CONSTITUTING APPROXIMATELY 16.6% OF THE
COMPANY'S OUTSTANDING SHARES AFTER GIVING EFFECT TO SUCH PURCHASE).
THE OFFER IS CONDITIONED UPON, AMONG OTHER THINGS, THERE BEING VALIDLY
TENDERED AND NOT PROPERLY WITHDRAWN PRIOR TO THE EXPIRATION DATE THAT NUMBER OF
SHARES WHICH, WHEN COMBINED WITH THOSE SHARES ALREADY OWNED BY PARENT AND
PURCHASER, WOULD REPRESENT 51% OF THE OUTSTANDING SHARES ON A FULLY DILUTED
BASIS. THE OFFER IS ALSO SUBJECT TO CERTAIN OTHER CONDITIONS CONTAINED IN THIS
OFFER TO PURCHASE. SEE INTRODUCTION AND SECTIONS 1 AND 14 HEREOF.
------------------------
IMPORTANT
Any stockholder desiring to tender all or any portion of his Shares (as
defined herein) should either (a) complete and sign the Letter of Transmittal
(or a facsimile thereof) in accordance with the instructions in the Letter of
Transmittal and mail or deliver it together with the certificate(s) representing
tendered Shares, and any other required documents, to the Depositary or tender
such Shares pursuant to the procedures for book-entry transfer set forth in
Section 3 or (b) request his broker, dealer, commercial bank, trust company or
other nominee to effect the transaction for him. A stockholder whose Shares are
registered in the name of a broker, dealer, commercial bank, trust company or
other nominee must contact such broker, dealer, commercial bank, trust company
or other nominee if he desires to tender such Shares.
A stockholder who desires to tender his Shares and whose certificates
representing such Shares are not immediately available or who cannot comply with
the procedures for book-entry transfer on a timely basis may tender such Shares
by following the procedures for guaranteed delivery set forth in Section 3.
Questions and requests for assistance may be directed to the Information
Agent at the address and telephone number set forth on the back cover of this
Offer to Purchase. Additional copies of this Offer to Purchase, the Letter of
Transmittal, the Notice of Guaranteed Delivery and other related materials may
be obtained from the Information Agent or from brokers, dealers, commercial
banks and trust companies.
THE INFORMATION AGENT FOR THE OFFER IS:
[LOGO]
June 14, 1999
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
-----
<S> <C> <C>
INTRODUCTION.................................................................................................... 1
THE TENDER OFFER................................................................................................ 2
1. Terms of the Offer; Expiration Date; Proration....................................................... 2
2. Acceptance for Payment and Payment................................................................... 4
3. Procedures for Accepting the Offer and Tendering Shares.............................................. 5
4. Withdrawal Rights.................................................................................... 8
5. Certain Tax Consequences............................................................................. 9
6. Price Range of the Shares; Dividends................................................................. 9
7. Effect of the Offer on the Market for the Shares; Stock Exchange Listing; Exchange Act Registration;
Margin Regulations................................................................................... 10
8. Certain Information Concerning the Company........................................................... 11
9. Certain Information Concerning Purchaser and Parent.................................................. 12
10. Background of the Offer; Contacts with the Company................................................... 18
11. Purpose of the Offer; Plans for the Company.......................................................... 18
12. Source and Amount of Funds........................................................................... 28
13. Dividends and Distributions.......................................................................... 28
14. Certain Conditions of the Offer...................................................................... 29
15. Certain Legal Matters; Required Regulatory Approvals................................................. 31
16. Certain Fees and Expenses............................................................................ 33
17. Miscellaneous........................................................................................ 33
SCHEDULE I...................................................................................................... 34
</TABLE>
i
<PAGE>
TO: ALL HOLDERS OF SHARES OF COMMON STOCK
(INCLUDING THE ASSOCIATED PREFERRED SHARE PURCHASE RIGHTS) OF QMS, INC.:
INTRODUCTION
Minolta Investments Company, a Delaware corporation ("Purchaser") and a
wholly-owned subsidiary of Minolta Co., Ltd., a Japanese corporation ("Parent"),
hereby offers to purchase 5,440,000 shares of common stock, par value $0.01 per
share (the "Common Stock"), of QMS, Inc., a Delaware corporation (the
"Company"), and the associated rights to purchase shares of the Series A
Participating Preferred Stock of the Company (the "Rights" and, together with
the Common Stock, the "Shares") issued pursuant to the Rights Agreement, dated
as of March 8, 1999, by and between the Company and South Alabama Trust Company,
Inc., as Rights Agent (the "Rights Agreement"), at a price of $6.25 per Share,
net to the seller in cash, without interest thereon (the "Offer Price"), upon
the terms and subject to the conditions set forth in this Offer to Purchase and
in the related Letter of Transmittal (which together constitute the "Offer").
Parent and Purchaser are sometimes collectively referred to herein as the
"Acquirors."
The Offer is being made pursuant to a Stock Purchase Agreement (the "Stock
Purchase Agreement"), dated as of June 7, 1999, among the Company, Parent and
Purchaser. Pursuant to the Stock Purchase Agreement, Purchaser purchased
2,130,000 Shares, constituting approximately 16.6% of the outstanding Common
Stock of the Company after giving effect to such purchase (the "Stock
Purchase"). As a result of the Stock Purchase and the consummation of the Offer,
Purchaser will own a majority of the outstanding Shares and acquire control of
the Company.
THE BOARD OF DIRECTORS OF THE COMPANY (THE "BOARD") HAS UNANIMOUSLY
DETERMINED THAT THE OFFER AND THE STOCK PURCHASE AGREEMENT ARE FAIR TO, AND IN
THE BEST INTERESTS OF, THE COMPANY AND ITS STOCKHOLDERS, HAS UNANIMOUSLY
APPROVED THE OFFER AND THE STOCK PURCHASE AGREEMENT AND RECOMMENDS THAT THE
COMPANY'S STOCKHOLDERS ACCEPT THE OFFER AND TENDER THEIR SHARES PURSUANT
THERETO.
THE ROBINSON-HUMPHREY COMPANY, LLC, THE COMPANY'S FINANCIAL ADVISOR
("ROBINSON-HUMPHREY"), HAS DELIVERED TO THE COMPANY ITS WRITTEN OPINION, DATED
JUNE 7, 1999, THAT, FROM A FINANCIAL POINT OF VIEW, THE CONSIDERATION OFFERED
PURSUANT TO THE OFFER IS FAIR TO STOCKHOLDERS OF THE COMPANY. A COPY OF THE
OPINION OF ROBINSON-HUMPHREY IS CONTAINED IN THE COMPANY'S SOLICITATION/
RECOMMENDATION STATEMENT ON SCHEDULE 14D-9 (THE "SCHEDULE 14D-9") FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION (THE "COMMISSION") IN CONNECTION WITH THE
OFFER, A COPY OF WHICH IS BEING FURNISHED TO STOCKHOLDERS CONCURRENTLY HEREWITH.
THE OFFER IS CONDITIONED UPON, AMONG OTHER THINGS, THERE BEING VALIDLY
TENDERED AND NOT PROPERLY WITHDRAWN PRIOR TO THE EXPIRATION DATE (AS DEFINED IN
SECTION 1 BELOW) THAT NUMBER OF SHARES WHICH, TOGETHER WITH THE SHARES OWNED BY
THE ACQUIRORS (COLLECTIVELY, THE "MINIMUM NUMBER OF SHARES"), WOULD REPRESENT
51% OF THE OUTSTANDING SHARES ON A FULLY DILUTED BASIS (THE "MINIMUM
CONDITION"). THE OFFER IS ALSO SUBJECT TO CERTAIN OTHER CONDITIONS. SEE SECTIONS
1 AND 14.
The Company has informed Purchaser that immediately prior to the Stock
Purchase, (i) 10,708,335 Shares were outstanding, (ii) 200,000 Shares were
reserved for issuance upon the exercise of the Company's 1995 warrant to
purchase 100,000 Shares, issued to Foothill Capital Corporation and the
Company's 1997 warrant to purchase 100,000 Shares, issued to INK (AL) QRS 12-21,
Inc. and (iii) 1,800,709 Shares were reserved for issuance upon the exercise of
outstanding options to purchase Shares granted to officers and directors of the
Company pursuant to the Company's 1987 Stock Incentive Plan, 1997 Stock
Incentive Plan and Stock Option Plan for Directors. Accordingly, based on this
information, there are 12,709,044 Shares outstanding on a fully-diluted basis,
assuming (i) that no Shares were issued (other than those reserved for issuance
on June 7, 1999 for options or warrants then outstanding) or acquired by the
Company after June 7, 1999, (ii) the exercise of all options and warrants
outstanding as of June 7, 1999 and (iii) as of the date of purchase there are no
other obligations to issue Shares. Based on the foregoing, the Minimum Condition
would be satisfied if 5,440,000 Shares are validly tendered pursuant to the
Offer and not withdrawn.
1
<PAGE>
Upon the terms and subject to the conditions of the Offer, if more than the
Minimum Number of Shares are validly tendered prior to the Expiration Date and
not withdrawn in accordance with Section 4 of this Offer to Purchase, Purchaser
will accept for payment and pay for 5,440,000 Shares, on a pro rata basis (with
appropriate adjustments to avoid purchases of fractional Shares) according to
the number of Shares properly tendered by each stockholder at or prior to the
Expiration Date and not withdrawn. See Section 1.
Certain other conditions to the consummation of the Offer are described in
Section 14. Purchaser expressly reserves the right to waive any one or more of
the conditions to the Offer. See Sections 12, 14 and 15.
Tendering stockholders will not be obligated to pay brokerage fees or
commissions or, except as set forth in Instruction 6 of the Letter of
Transmittal, stock transfer taxes on the purchase of Shares by Purchaser
pursuant to the Offer. Purchaser will pay all charges and expenses of Harris
Trust Company of New York, as Depositary (the "Depositary"), and Innisfree M&A
Incorporated, as Information Agent (the "Information Agent"), incurred in
connection with the Offer. See Section 16.
The purpose of the Offer is to enable the Acquirors to acquire a significant
equity interest in, and control of, the Company. Parent currently intends to
integrate certain of the Company's business activities with Parent's worldwide
operations in an effort to take advantage of anticipated synergies and potential
for growth. In furtherance of this goal, pursuant to the Stock Purchase
Agreement, upon consummation of the Offer, Parent will be entitled to designate
a majority of the members on the Company's Board. See Sections 10 and 11.
The Company has distributed one Right for each outstanding Share pursuant to
the Rights Agreement. The Company has represented in the Stock Purchase
Agreement that it has taken all necessary action under the Rights Agreement so
that (x) none of the execution or delivery of the Stock Purchase Agreement,
consummation of the Offer or any other transaction contemplated by the Stock
Purchase Agreement will cause (i) the Rights to become exercisable under the
Rights Agreement, (ii) Parent or Purchaser to be deemed an "Acquiring Person"
(as defined in the Rights Agreement), or (iii) the "Stock Acquisition Date" (as
defined in the Rights Agreement) to occur upon any such event and (y) Parent,
Purchaser and their affiliates will be excluded from the definition of Acquiring
Person under the Rights Agreement for the purpose of the transactions
contemplated in the Stock Purchase Agreement.
THIS OFFER TO PURCHASE AND THE LETTER OF TRANSMITTAL CONTAIN IMPORTANT
INFORMATION WHICH SHOULD BE READ CAREFULLY BEFORE ANY DECISION IS MADE WITH
RESPECT TO THE OFFER.
THE TENDER OFFER
1. TERMS OF THE OFFER; EXPIRATION DATE; PRORATION. Upon the terms and
subject to the conditions of the Offer (including, if the Offer is extended or
amended, the terms and conditions of any such extension or amendment), Purchaser
will accept for payment and thereby purchase 5,440,000 Shares validly tendered
and not withdrawn in accordance with the procedures set forth in Section 4 on or
prior to the Expiration Date (as hereinafter defined). The term "Expiration
Date" means 12:00 midnight, New York City time, on July 12, 1999, unless and
until Purchaser, in its sole discretion, shall have extended the period of time
for which the Offer is open, in which event the term "Expiration Date" shall
mean the time and date at which the Offer, as so extended by Purchaser, shall
expire (provided, however, that, without the consent of the Company, the
Expiration Date will not be extended beyond September 1, 1999).
Purchaser expressly reserves the right, in its sole discretion, at any time
and from time to time, to extend the period during which the Offer is open for
any reason, including the occurrence of any of the conditions specified in
Section 14, by giving oral or written notice of such extension to the
Depositary. During any such extension, all Shares previously tendered and not
withdrawn will remain subject to the Offer and subject to the right of a
tendering stockholder to withdraw such stockholder's Shares. See Section 4.
2
<PAGE>
Purchaser will not, without the prior written consent of the Company,
decrease the Offer Price or decrease the Minimum Number of Shares or impose
additional conditions; provided, however, that if on the initially scheduled
Expiration Date, all conditions to the Offer have not been satisfied or waived,
Purchaser may, from time to time until such time as all conditions are satisfied
or waived, in its sole discretion, extend the Expiration Date (provided,
however, that, without the consent of the Company, the Expiration Date will not
be extended beyond September 1, 1999).
Purchaser will, on the terms and subject to the prior satisfaction or waiver
of the conditions of the Offer, accept for payment and pay for the Shares
validly tendered as promptly as practicable; provided, however, that, if
immediately prior to the initially scheduled Expiration Date, the Minimum
Condition has not been achieved, Purchaser may extend the Offer for a period not
to exceed 20 business days, notwithstanding that all other conditions to the
Offer are satisfied as of such expiration date of the Offer.
Subject to the applicable regulations of the Commission, Purchaser also
expressly reserves the right, in its sole discretion, at any time or from time
to time, to (i) delay acceptance for payment of or, regardless of whether such
Shares were theretofore accepted for payment, payment for any Shares pending
receipt of any regulatory or governmental approvals specified in Section 15,
(ii) terminate the Offer (whether or not any Shares have theretofore been
accepted for payment) if any of the conditions referred to in Section 14 has not
been satisfied or upon the occurrence of any of the events specified in Section
14 and (iii) waive any condition or otherwise amend the Offer in any respect, in
each case, by giving oral or written notice of such delay, termination, waiver
or amendment to the Depositary and by making a public announcement thereof.
Purchaser acknowledges (i) that Rule 14e-1(c) under the Securities Exchange Act
of 1934, as amended (the "Exchange Act"), requires Purchaser to pay the
consideration offered or return the Shares tendered promptly after the
termination or withdrawal of the Offer and (ii) that Purchaser may not delay
acceptance for payment of, or payment for (except as provided in clause (i) of
the preceding sentence), any Shares upon the occurrence of any of the conditions
specified in Section 14 without extending the period of time during which the
Offer is open.
Any such extension, delay, termination, waiver or amendment will be followed
as promptly as practicable by public announcement thereof, and such announcement
in the case of an extension will be made no later than 9:00 a.m., New York City
time, on the next business day after the previously scheduled Expiration Date.
Without limiting the manner in which Purchaser may choose to make any public
announcement, subject to applicable law (including Rules 14d-4(c) and 14d-6(d)
under the Exchange Act, which require that material changes be promptly
disseminated to holders of Shares), Purchaser will have no obligation to
publish, advertise or otherwise communicate any such public announcement other
than by issuing a release to the Dow Jones News Service.
If Purchaser makes a material change in the terms of the Offer, or if it
waives a material condition to the Offer, Purchaser will extend the Offer and
disseminate additional tender offer materials to the extent required by Rules
14d-4(c) and 14d-6(d) under the Exchange Act. The minimum period during which an
Offer must remain open following material changes in the terms of the Offer,
other than a change in price or a change in percentage of securities sought or a
change in any dealer's soliciting fee, will depend upon the facts and
circumstances, including the materiality, of the changes. With respect to a
change in price or, subject to certain limitations, a change in the percentage
of securities sought or a change in any dealer's soliciting fee, a minimum ten
business day period from the date of such change is generally required to allow
for adequate dissemination to stockholders. Accordingly, if prior to the
Expiration Date, Purchaser increases (other than increases of not more than two
percent of the outstanding Shares) or decreases the number of Shares being
sought, or increases or decreases the consideration offered pursuant to the
Offer,
and if the Offer is scheduled to expire at any time earlier than the period
ending on the tenth business day from the date that notice of such increase or
decrease is first published, sent or given to holders of Shares, the Offer will
be extended at least until the expiration of such ten business day period. For
purposes of the Offer, a "business day" means any day other than a Saturday,
Sunday or a Federal holiday and consists of the time period from 12:01 a.m.
through 12:00 midnight, New York City time.
3
<PAGE>
Upon the terms and subject to the conditions of the Offer, if more than
5,440,000 Shares are validly tendered and not withdrawn in accordance with
Section 4 of this Offer to Purchase prior to the Expiration Date, Purchaser will
accept for payment and pay for 5,440,000 Shares, on a pro rata basis (with
appropriate adjustments to avoid purchases of fractional Shares) according to
the number of Shares properly tendered and not withdrawn by each stockholder at
or prior to the Expiration Date. In the event that proration of tendered Shares
is required, because of the difficulty of determining the precise number of
Shares properly tendered and not withdrawn (due in part to the guaranteed
delivery procedure described in Section 3), Purchaser does not expect that it
will be able to announce the final results of such proration or pay for any
Shares until at least seven New York Stock Exchange ("NYSE") trading days after
the Expiration Date. Preliminary results of proration will be announced by press
release as promptly as practicable after the Expiration Date. Stockholders may
obtain such preliminary information from the Information Agent and may be able
to obtain such information from their brokers.
Purchaser reserves the right (but shall not be obligated) to accept for
payment more than the Minimum Number of Shares pursuant to the Offer. Purchaser
has no present intention of exercising such right. If a number of additional
Shares in excess of two percent of the outstanding Shares is to be accepted for
payment, and, at the time notice of Purchaser's decision to accept for payment
such additional Shares is first published, sent or given to holders of Shares,
the Offer is scheduled to expire at any time earlier than the tenth business day
from the date that such notice is so published, sent or given, the Offer will be
extended until the expiration of such period of ten business days.
The Company has provided Purchaser with the Company's stockholder lists and
security position listings for the purpose of disseminating the Offer to holders
of Shares. This Offer to Purchase and the related Letter of Transmittal will be
mailed to record holders of Shares and will be furnished to brokers, dealers,
banks and similar persons whose names, or the names of whose nominees, appear on
the stockholder lists or, if applicable, who are listed as participants in a
clearing agency's security position listing, for subsequent transmittal to
beneficial owners of Shares.
2. ACCEPTANCE FOR PAYMENT AND PAYMENT. Upon the terms and subject to the
conditions of the Offer (including, if the Offer is extended or amended, the
terms and conditions of the Offer as so extended or amended), Purchaser will
purchase, by accepting for payment, and will pay for, 5,440,000 Shares validly
tendered and not withdrawn (as permitted by Section 4) prior to the Expiration
Date promptly after the later to occur of (i) the Expiration Date and (ii) the
satisfaction or waiver of the conditions to the Offer set forth in Section 14,
including without limitation the expiration or termination of the waiting period
applicable to the acquisition of Securities pursuant to the Offer under the
Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (the "HSR
Act"). In addition, subject to applicable rules of the Commission, Purchaser
expressly reserves the right to delay acceptance for payment of, or payment for,
Shares pending receipt of any regulatory or governmental approvals specified in
Section 15.
Purchaser has filed on June 14, 1999 with the Federal Trade Commission (the
"FTC") and the Antitrust Division of the Department of Justice (the "Antitrust
Division") a Premerger Notification and Report Form under the HSR Act with
respect to the Offer. Accordingly, the waiting period under the HSR Act
applicable to the Offer will expire at 11:59 P.M., New York City time, on June
29, 1999, unless prior to the expiration or termination of the waiting period,
the FTC or the Antitrust Division extends the waiting period by requesting
additional information from Parent. If such a request is made, the waiting
period applicable to the Offer will expire on the tenth calendar day after the
date of substantial compliance by Parent with such request. Thereafter, the
waiting period may only be extended by court order. The waiting period under the
HSR Act may be terminated by the FTC and the Antitrust Division prior to its
expiration. For information with respect to approvals required to be obtained
prior to the consummation of the Offer, including under the HSR Act and other
approvals, see Section 15.
In all cases, payment for Shares purchased pursuant to the Offer will be
made only after timely receipt by the Depositary of (i) certificates
representing such Shares or timely confirmation (a "Book-Entry Confirmation") of
the book-entry transfer of such Shares into the Depositary's account at The
Depository
4
<PAGE>
Trust Company (the "Book-Entry Transfer Facility"), pursuant to the procedures
set forth in Section 3, (ii) the Letter of Transmittal (or a facsimile thereof),
properly completed and duly executed, with any required signature guarantees, or
an Agent's Message (as defined below) in connection with a book-entry transfer,
and (iii) any other documents required by the Letter of Transmittal.
The term "Agent's Message" means a message, transmitted by a Book-Entry
Transfer Facility to, and received by, the Depositary and forming a part of a
Book-Entry Confirmation, which states that such Book-Entry Transfer Facility has
received an express acknowledgment from the participant in such Book-Entry
Transfer Facility tendering the Shares which are the subject of such Book-Entry
Confirmation, that such participant has received and agrees to be bound by the
terms of the Letter of Transmittal and that Purchaser may enforce such agreement
against such participant.
Payment for Shares accepted for payment pursuant to the Offer may be delayed
in the event of proration due to the difficulty of determining the number of
Shares validly tendered and not withdrawn. See Section 1.
For purposes of the Offer, Purchaser will be deemed to have accepted for
payment, and thereby purchased, Shares validly tendered and not withdrawn as, if
and when Purchaser gives oral or written notice to the Depositary of Purchaser's
acceptance of such Shares for payment pursuant to the Offer. In all cases, upon
the terms and subject to the conditions of the Offer, payment for Shares
purchased pursuant to the Offer will be made by deposit of the purchase price
therefor with the Depositary, which will act as agent for tendering stockholders
for the purpose of receiving payment from Purchaser and transmitting payment to
validly tendering stockholders. UNDER NO CIRCUMSTANCES WILL INTEREST ON THE
PURCHASE PRICE FOR SHARES BE PAID BY PURCHASER BY REASON OF ANY DELAY IN MAKING
SUCH PAYMENT.
If any tendered Shares are not purchased pursuant to the Offer for any
reason (including because of proration), or if certificates representing Shares
are submitted representing more Shares than are tendered, certificates
representing unpurchased or untendered Shares will be returned, without expense
to the tendering stockholder (or, in the case of Shares delivered by book-entry
transfer into the Depositary's account at the Book-Entry Transfer Facility
pursuant to the procedures set forth in Section 3, such Shares will be credited
to an account maintained within such Book-Entry Transfer Facility), as promptly
as practicable following the expiration, termination or withdrawal of the Offer
and determination of the final results of proration.
IF, PRIOR TO THE EXPIRATION DATE, PURCHASER SHALL INCREASE THE CONSIDERATION
OFFERED TO HOLDERS OF SHARES PURSUANT TO THE OFFER, SUCH INCREASED CONSIDERATION
SHALL BE PAID TO ALL HOLDERS OF SHARES THAT ARE PURCHASED PURSUANT TO THE OFFER,
WHETHER OR NOT SUCH SHARES WERE TENDERED PRIOR TO SUCH INCREASE IN
CONSIDERATION.
Purchaser reserves the right to transfer or assign, in whole or from time to
time in part, to one or more of Purchaser's subsidiaries or affiliates the right
to purchase all or any portion of the Shares tendered pursuant to the Offer, but
any such transfer or assignment will not relieve Purchaser of its obligations
under the Offer or prejudice the rights of tendering stockholders to receive
payment for Shares validly tendered and accepted for payment pursuant to the
Offer.
3. PROCEDURES FOR ACCEPTING THE OFFER AND TENDERING SHARES.
VALID TENDER OF SHARES
Except as set forth below, in order for Shares to be validly tendered
pursuant to the Offer, the Letter of Transmittal (or a facsimile thereof),
properly completed and duly executed, together with any required signature
guarantees, or an Agent's Message in connection with a book-entry delivery of
Shares, and any other documents required by the Letter of Transmittal, must be
received by the Depositary at one of its addresses set forth on the back cover
of this Offer to Purchase on or prior to the Expiration Date and either (i)
certificates representing tendered Shares must be received by the Depositary, or
such Shares must be tendered pursuant to the procedure for book-entry transfer
set forth below and a Book-Entry Confirmation must be received by the
Depositary, in each case on or prior to the Expiration Date, or (ii) the
guaranteed delivery procedures set forth below must be complied with.
5
<PAGE>
THE METHOD OF DELIVERY OF CERTIFICATES REPRESENTING TENDERED SHARES, THE
LETTER OF TRANSMITTAL AND ALL OTHER REQUIRED DOCUMENTS IS AT THE OPTION AND SOLE
RISK OF THE TENDERING STOCKHOLDER, AND THE DELIVERY WILL BE DEEMED MADE ONLY
WHEN ACTUALLY RECEIVED BY THE DEPOSITARY. IF DELIVERY IS BY MAIL, REGISTERED
MAIL WITH RETURN RECEIPT REQUESTED, PROPERLY INSURED, IS RECOMMENDED. IN ALL
CASES, SUFFICIENT TIME SHOULD BE ALLOWED TO ENSURE TIMELY DELIVERY.
BOOK-ENTRY TRANSFER
The Depositary will make a request to establish accounts with respect to the
Shares at the Book-Entry Transfer Facility for purposes of the Offer within two
business days after the date of this Offer to Purchase. Any financial
institution that is a participant in the system of the Book-Entry Transfer
Facility may make book-entry delivery of Shares by causing such Book-Entry
Transfer Facility to transfer such Shares into the Depositary's account at such
Book-Entry Transfer Facility in accordance with such Book-Entry Transfer
Facility's procedures for such transfer. However, although delivery of Shares
may be effected through book-entry transfer into the Depositary's account at a
Book-Entry Transfer Facility, the Letter of Transmittal (or facsimile thereof),
properly completed and duly executed, with any required signature guarantees, or
an Agent's Message in connection with a book-entry transfer, and any other
required documents must, in any case, be transmitted to and received by the
Depositary at one of its addresses set forth on the back cover of this Offer to
Purchase on or prior to the Expiration Date, or the guaranteed delivery
procedure set forth below must be complied with.
DELIVERY OF DOCUMENTS TO A BOOK-ENTRY TRANSFER FACILITY IN ACCORDANCE WITH
SUCH BOOK-ENTRY TRANSFER FACILITY'S PROCEDURES DOES NOT CONSTITUTE DELIVERY TO
THE DEPOSITARY.
SIGNATURE GUARANTEES
No signature guarantee is required on the Letter of Transmittal (i) if the
Letter of Transmittal is signed by the registered holder(s) (which term, for
purposes of this Section, includes any participant in the Book Entry Transfer
Facility's systems whose name appears on a security position listing as the
owner of the Shares) of Shares tendered therewith and such registered holder has
not completed either the box entitled "Special Delivery Instructions" or the box
entitled "Special Payment Instructions" on the Letter of Transmittal or (ii) if
such Shares are tendered for the account of a financial institution (including
most commercial banks, savings and loan associations and brokerage houses) that
is a participant in the Security Transfer Agents Medallion Program, the New York
Stock Exchange Medallion Signature Guarantee Program or the Stock Exchange
Medallion Program (each, an "Eligible Institution" and, collectively, "Eligible
Institutions"). In all other cases, all signatures on Letters of Transmittal
must be guaranteed by an Eligible Institution. See Instructions 1 and 5 to the
Letter of Transmittal. If the certificates for Shares are registered in the name
of a person other than the signer of the Letter of Transmittal, or if payment is
to be made, or certificates for Shares not tendered or not accepted for payment
are to be returned, to a person other than the registered holder of the
certificates surrendered, then the tendered certificates for such Shares must be
endorsed or accompanied by appropriate stock powers, in either case, signed
exactly as the name or names of the registered holders or owners appear on the
certificates, with the signatures on the certificates or stock powers guaranteed
as aforesaid. See Instruction 5 to the Letter of Transmittal.
GUARANTEED DELIVERY
If a stockholder desires to tender Shares pursuant to the Offer and such
stockholder's certificates for Shares are not immediately available or the
procedures for book-entry transfer cannot be completed on a timely basis or time
will not permit all required documents to reach the Depositary prior to the
Expiration Date, such stockholder's tender may be effected if all the following
conditions are met:
(i) such tender is made by or through an Eligible Institution;
(ii) a properly completed and duly executed Notice of Guaranteed
Delivery, substantially in the form provided by Purchaser, is received by
the Depositary, as provided below, prior to the Expiration Date; and
6
<PAGE>
(iii) the certificates for (or a Book-Entry Confirmation with respect
to) such Shares, together with a properly completed and duly executed Letter
of Transmittal (or facsimile thereof), with any required signature
guarantees, or, in the case of a book-entry transfer, an Agent's Message,
and any other required documents, are received by the Depositary within
three (3) trading days after the date of execution of such Notice of
Guaranteed Delivery. A "trading day" is any day on which NYSE is open for
business.
The Notice of Guaranteed Delivery may be delivered by hand to the Depositary
or transmitted by telegram, facsimile transmission or mailed to the Depositary
and must include a guarantee by an Eligible Institution in the form set forth in
such Notice of Guaranteed Delivery.
Notwithstanding any other provision hereof, payment for Shares accepted for
payment pursuant to the Offer will in all cases be made only after timely
receipt by the Depositary of certificates for, or of Book-Entry Confirmation
with respect to, such Shares, a properly completed and duly executed Letter of
Transmittal (or facsimile thereof), together with any required signature
guarantees (or, in the case of a book-entry transfer, an Agent's Message), and
any other documents required by the Letter of Transmittal. Accordingly, payment
might not be made to all tendering stockholders at the same time, and will
depend upon when certificates representing, or Book-Entry Confirmations of, such
Shares are received into the Depositary's account at a Book-Entry Transfer
Facility.
BACKUP FEDERAL TAX WITHHOLDING
UNDER THE FEDERAL INCOME TAX LAWS, THE DEPOSITARY WILL BE REQUIRED TO
WITHHOLD 31% OF THE AMOUNT OF ANY PAYMENTS MADE TO CERTAIN STOCKHOLDERS PURSUANT
TO THE OFFER. TO PREVENT BACKUP FEDERAL INCOME TAX WITHHOLDING ON PAYMENTS WITH
RESPECT TO THE PURCHASE PRICE OF SHARES PURCHASED PURSUANT TO THE OFFER, EACH
STOCKHOLDER SHOULD PROVIDE THE DEPOSITARY WITH HIS CORRECT TAXPAYER
IDENTIFICATION NUMBER AND CERTIFY THAT HE IS NOT SUBJECT TO BACKUP FEDERAL
INCOME TAX WITHHOLDING BY COMPLETING THE SUBSTITUTE FORM W-9 INCLUDED IN THE
LETTER OF TRANSMITTAL. SEE INSTRUCTION 9 OF THE LETTER OF TRANSMITTAL.
APPOINTMENT AS PROXY
By executing the Letter of Transmittal, a tendering stockholder irrevocably
appoints designees of Purchaser, and each of them, as such stockholder's
attorneys-in-fact and proxies, with full power of substitution, in the manner
set forth in the Letter of Transmittal, to the full extent of such stockholder's
rights with respect to the Shares tendered by such stockholder and accepted for
payment and paid for by Purchaser and with respect to any and all other Shares
and other securities or rights issued or issuable in respect of such Shares on
or after the date of this Offer to Purchase. All such powers of attorney and
proxies shall be considered irrevocable and coupled with an interest in the
tendered Shares. Such appointment will be effective when, and only to the extent
that, Purchaser pays for such Shares by depositing the purchase price therefor
with the Depositary. Upon such payment, all powers of attorney and proxies given
by such stockholder with respect to such Shares, and such other securities or
rights prior to such payment will be revoked, without further action, and no
subsequent powers of attorney and proxies may be given by such stockholder (and,
if given, will not be deemed effective). The designees of Purchaser will, with
respect to the Shares for which such appointment is effective, be empowered to
exercise all voting and other rights of such stockholder as they in their sole
discretion may deem proper at any annual or special meeting of the Company's
stockholders, or any adjournment or postponement thereof. Purchaser reserves the
right to require that, in order for Shares to be deemed validly tendered,
immediately upon the payment for such Shares, Purchaser or its designee must be
able to exercise full voting rights with respect to such Shares and other
securities, including voting at any meeting of stockholders.
DETERMINATION OF VALIDITY
All questions as to the form of documents and validity, eligibility
(including time of receipt) and acceptance for payment of any tender of Shares
will be determined by Purchaser, in its sole discretion, whose determination
shall be final and binding on all parties. Purchaser reserves the absolute right
to
7
<PAGE>
reject any or all tenders determined by it not to be in proper form or the
acceptance of or payment for which may, in the opinion of Purchaser's counsel,
be unlawful. Purchaser also reserves the absolute right to waive any of the
conditions of the Offer or any defect or irregularity in any tender of Shares of
any particular stockholder whether or not similar defects or irregularities are
waived in the case of other stockholders.
Purchaser's interpretation of the terms and conditions of the Offer
(including the Letter of Transmittal and the instructions thereto) will be final
and binding. No tender of Shares will be deemed to have been validly made until
all defects and irregularities with respect to such tender have been cured or
waived. None of Purchaser, Parent or any of their affiliates or assigns, if any,
the Depositary, the Information Agent or any other person will be under any duty
to give any notification of any defects or irregularities in tenders or incur
any liability for failure to give any such notification.
Purchaser's acceptance for payment of Shares tendered pursuant to any of the
procedures described above will constitute a binding agreement between the
tendering stockholder and Purchaser upon the terms and subject to the conditions
of the Offer.
4. WITHDRAWAL RIGHTS. Except as otherwise provided in this Section 4,
tenders of Shares made pursuant to the Offer are irrevocable. Shares tendered
pursuant to the Offer may be withdrawn at any time on or prior to the Expiration
Date and, unless theretofore accepted for payment as provided herein, may also
be withdrawn at any time after August 12, 1999 (or such later date as may apply
in case the Offer is extended). A withdrawal of a share of Common Stock will
also constitute a withdrawal of the associated Right. Rights may not be
withdrawn unless the associated shares of Common Stock are also withdrawn.
If, for any reason whatsoever, acceptance for payment of any Shares tendered
pursuant to the Offer is delayed, or Purchaser is unable to accept for payment
or pay for Shares tendered pursuant to the Offer, then, without prejudice to
Purchaser's rights set forth herein, the Depositary may, nevertheless, on behalf
of Purchaser, retain tendered Shares and such Shares may not be withdrawn except
to the extent that the tendering stockholder is entitled to and duly exercises
withdrawal rights as described in this Section 4. Any such delay will be by an
extension of the Offer to the extent required by law.
To be effective, a written, telegraphic or facsimile transmission notice of
withdrawal must be timely received by the Depositary at one of its addresses set
forth on the back cover of this Offer to Purchase. Any such notice of withdrawal
must specify the name of the person who tendered the Shares to be withdrawn, the
number of Shares to be withdrawn and the name of the registered holder of the
Shares to be withdrawn, if different from the name of the person who tendered
the Shares. If certificates evidencing Shares to be withdrawn have been
delivered or otherwise identified to the Depositary, then, prior to the physical
release of such certificates, the serial numbers shown on such certificates must
be submitted to the Depositary and, unless such Shares have been tendered by an
Eligible Institution, the signatures on the notice of withdrawal must be
guaranteed by an Eligible Institution. If Shares have been delivered pursuant to
the procedures for book-entry transfer as set forth in Section 3, any notice of
withdrawal must also specify the name and number of the account at the
Book-Entry Transfer Facility to be credited with the withdrawn Shares and
otherwise comply with such Book-Entry Transfer Facility's procedures.
Withdrawals of Shares may not be rescinded. Any Shares properly withdrawn
will be deemed not validly tendered for purposes of the Offer, but may be
retendered at any subsequent time prior to the Expiration Date by following any
of the procedures described in Section 3.
All questions as to the form and validity (including time of receipt) of
notices of withdrawal will be determined by Purchaser, in its sole discretion,
whose determination shall be final and binding. None of Purchaser, Parent or any
of their affiliates or assigns, if any, the Depositary, the Information Agent or
any other person will be under any duty to give any notification of any defects
or irregularities in any notice of withdrawal or incur any liability for failure
to give any such notification.
8
<PAGE>
5. CERTAIN TAX CONSEQUENCES.
FEDERAL INCOME TAX
Sales of Shares pursuant to the Offer will be taxable transactions for
federal income tax purposes and may also be taxable transactions under
applicable state, local, foreign and other tax laws. A stockholder who accepts
the Offer will generally recognize gain or loss for federal income tax purposes
in an amount equal to the difference, if any, between the amount of cash
received and his adjusted tax basis for the Shares sold pursuant to the Offer.
Such gain or loss will be capital gain or loss (assuming the Shares are held as
capital assets) and any such capital gain or loss will be long term if, as of
the date of sale, the Shares were held for more than one year or will be short
term if, as of such date, the Shares were held for one year or less.
The foregoing discussion may not be applicable to certain types of
stockholders, including stockholders who acquired Shares pursuant to the
exercise of options or otherwise as compensation, individuals who are not
citizens or residents of the United States and foreign corporations, or entities
that are otherwise subject to special tax treatment under the Internal Revenue
Code of 1986, as amended (such as dealers in securities or foreign currency,
insurance companies, regulated investment companies, tax-exempt entities and
investors in pass-through entities).
THE FEDERAL INCOME TAX DISCUSSION SET FORTH ABOVE IS INCLUDED FOR GENERAL
INFORMATION ONLY. EACH STOCKHOLDER IS URGED TO CONSULT HIS TAX ADVISOR WITH
RESPECT TO THE TAX CONSEQUENCES TO HIM OF THE OFFER, INCLUDING THE EFFECTS OF
PRORATION AND FEDERAL, STATE, LOCAL, FOREIGN AND OTHER TAX CONSEQUENCES.
6. PRICE RANGE OF THE SHARES; DIVIDENDS. According to the Company's Annual
Report on Form 10-K for the fiscal year ended October 2, 1998 (the "1998 Annual
Report"), the Shares are listed and traded principally on the NYSE under the
symbol "AQM." The following table sets forth, for the periods indicated, the
reported high and low sale prices for the Shares on the NYSE Composite Tape, all
as reported in published financial sources.
<TABLE>
<CAPTION>
FISCAL YEAR ENDING DECEMBER
29, 1999 HIGH LOW
- ------------------------------ ------- -------
<S> <C> <C>
Second Quarter (through June
11, 1999).................... $ 6 $ 2 7/8
First Quarter................. 4 2 5/8
Transition Period from October
3, 1998 to January 1, 1999... 4 1/4 2 7/8
<CAPTION>
FISCAL YEAR ENDING OCTOBER 2,
1998 HIGH LOW
- ------------------------------ ------- -------
<S> <C> <C>
Fourth Quarter................ $ 4 9/16 $ 2 3/4
Third Quarter................. 5 3 3/8
Second Quarter................ 5 2 11/16
First Quarter................. 3 3/16 2 1/4
<CAPTION>
FISCAL YEAR ENDING OCTOBER 3,
1997 HIGH LOW
- ------------------------------ ------- -------
<S> <C> <C>
Fourth Quarter................ $ 3 1/2 $ 2 1/2
Third Quarter................. 4 5/8 2 3/8
Second Quarter................ 5 7/8 4 1/4
</TABLE>
On June 7, 1999, the last full day of trading prior to the public
announcement of the execution of the Stock Purchase Agreement, the reported
closing price on the NYSE Composite Tape for the Shares was $5 11/16 per Share.
On June 11, 1999, the last full day of trading prior to the commencement of the
Offer, according to published sources, the reported closing price on the NYSE
Composite Tape for the Shares was $5 3/8 per Share. STOCKHOLDERS ARE URGED TO
OBTAIN A CURRENT MARKET QUOTATION FOR THE SHARES.
The Company did not declare or pay any cash dividends with respect to the
Shares during any of the periods indicated in the above table, and according to
the Company's 1998 Annual Report, the Company has no present intention to pay
cash dividends in the foreseeable future.
9
<PAGE>
7. EFFECT OF THE OFFER ON THE MARKET FOR THE SHARES; STOCK EXCHANGE LISTING;
EXCHANGE ACT REGISTRATION; MARGIN REGULATIONS.
EFFECT OF THE OFFER ON THE MARKET FOR THE SHARES
The purchase of Shares pursuant to the Offer will reduce the number of
Shares that might otherwise trade publicly and could adversely affect the
liquidity and market value of the remaining Shares held by the public. The
purchase of Shares pursuant to the Offer can also be expected to reduce the
number of holders of Shares.
STOCK EXCHANGE LISTING
According to the NYSE's published guidelines, the NYSE would consider
delisting the Shares if, among other things, the number of record holders of at
least 100 Shares should fall below 400, the number of record holders of at least
100 Shares should fall below 1,200 and the average monthly trading volume should
be less than 100,000 Shares for the most recent 12 month period, the number of
publicly held Shares (exclusive of holdings of officers, directors, their
immediate families and other concentrated holdings of 10% or more ("NYSE
Excluded Holdings")) should fall below 600,000 or the aggregate market value of
publicly held Shares (exclusive of NYSE Excluded Holdings) should fall below
$5,000,000.
Depending upon the number of Shares acquired pursuant to the Offer, the
Shares may no longer meet the requirements for continued listing on the NYSE or
any other exchanges upon which the Shares are listed. Purchaser, however, does
not believe that under the published guidelines described above, the purchase of
5,440,000 Shares pursuant to the Offer is likely to result in a delisting of the
Shares by the NYSE. According to the Company's 1998 Annual Report, there were
approximately 1,425 holders of record of Shares as of November 30, 1998. If,
however, as a result of the purchase of Shares pursuant to the Offer or
otherwise, the Shares no longer meet the requirements of the NYSE for continued
listing and/or trading and such trading of the Shares were discontinued, the
market for the Shares could be adversely affected.
In the event that the Shares were no longer listed or traded on the NYSE, it
is possible that the Shares would trade on another securities exchange or in the
over-the-counter market and that price quotations would be reported by such
exchange, through the Nasdaq or other sources. Such trading and the availability
of such quotations would, however, depend upon the number of stockholders and/or
the aggregate market value of the Shares remaining at such time, the interest in
maintaining a market in the Shares on the part of securities firms, the possible
termination of registration of the Shares under the Exchange Act as described
below and other factors.
EXCHANGE ACT REGISTRATION
The Shares are currently registered under the Exchange Act. The purchase of
the Shares pursuant to the Offer may result in the Shares becoming eligible for
deregistration under the Exchange Act. Registration of the Shares may be
terminated upon application by the Company to the Commission if the Shares are
not listed on a "national securities exchange" and there are fewer than 300
record holders of Shares. Termination of registration of the Shares under the
Exchange Act would substantially reduce the information required to be furnished
by the Company to its stockholders and the Commission and would make certain
provisions of the Exchange Act, such as the short-swing profit recovery
provisions of Section 16(b) and the requirements of furnishing a proxy statement
in connection with stockholders' meetings pursuant to Section 14(a), no longer
applicable to the Company. If the Shares are no longer registered under the
Exchange Act, the requirements of Rule 13e-3 under the Exchange Act with respect
to "going private" transactions would no longer be applicable to the Company.
Furthermore, the ability of "affiliates" of the Company and persons holding
"restricted securities" of the Company to dispose of such securities pursuant to
Rule 144 promulgated under the Securities Act of 1933, as amended, may be
impaired or eliminated. If, as a result of the purchase of Shares pursuant to
the Offer, the Company is no
10
<PAGE>
longer required to maintain registration of the Shares under the Exchange Act,
Purchaser does not intend to cause the Company to apply for termination of such
registration. See Section 11.
MARGIN REGULATIONS
The Shares are currently "margin securities" under the regulations of the
Board of Governors of the Federal Reserve System (the "Federal Reserve Board"),
which have the effect, among other things, of allowing brokers to extend credit
on the collateral of such Shares for the purpose of buying, carrying or trading
in securities ("Purpose Loans"). Depending upon factors such as the number of
record holders of the Shares and the number and market value of publicly held
Shares, following the purchase of Shares pursuant to the Offer the Shares might
no longer constitute "margin securities" for purposes of the Federal Reserve
Board's margin regulations and, therefore, could no longer be used as collateral
for Purpose Loans made by brokers. In addition, if registration of the Shares
under the Exchange Act were terminated, the Shares would no longer constitute
"margin securities."
8. CERTAIN INFORMATION CONCERNING THE COMPANY. The Company was incorporated
under the laws of the State of Alabama in 1977 and reincorporated as a Delaware
corporation in 1982. Its principal executive offices are located at One Magnum
Pass, Mobile, Alabama 36618. The following description of the Company has been
taken from the 1998 Annual Report:
The Company designs and manufacturers intelligent controllers which enhance
the graphics capabilities and performance of computer printing and imaging
systems. The Company incorporates its controllers, which consist of software
implemented on printed circuit boards, into computer printing and imaging
systems which it markets, sells, and supports. The Company also markets its
controllers separately for incorporation into products marketed by others and
offers service support for products not manufactured by the Company.
The selected financial information of the Company and its consolidated
subsidiaries set forth below has been excerpted and derived from the 1998 Annual
Report, the Company's Transition Report on Form 10-Q for the transition period
from October 3, 1998 to January 1, 1999 and the Company's Quarterly Report on
Form 10-Q for the quarter ended April 1999 (each, a "Form 10-Q"). More
comprehensive financial information is included in such reports (including
management's discussion and analysis of results of operations and financial
position) and other documents filed with the Commission. The following financial
information is qualified in its entirety by reference to the 1998 Annual Report,
the Form 10-Qs, and all other such reports and documents filed with the
Commission and all of the financial statements and related notes contained
therein. The 1998 Annual Report, the Form 10-Qs and certain other reports may be
examined and copies may be obtained at the offices of the Commission in the
manner set forth below.
11
<PAGE>
SELECTED CONSOLIDATED FINANCIAL DATA OF THE COMPANY
<TABLE>
<CAPTION>
AT AND FOR 13 WEEKS ENDED
(UNAUDITED) AT AND FOR THE FISCAL YEAR ENDED
---------------------------- -----------------------------------------
JANUARY 1, OCTOBER 2, OCTOBER 3, SEPTEMBER 27,
APRIL 2, 1999 1999 1998 1997 1996
-------------- ------------ -------------- ---------- -------------
<S> <C> <C> <C> <C> <C>
(IN THOUSANDS, EXCEPT PER SHARE DATA)
INCOME STATEMENT DATA:
Net sales............................... $ 35,827 $ 39,338 $ 133,491 $ 124,589 $ 147,174
Net income (loss)....................... (891) 112 1,825 (26,122) 4,253
Basic and diluted income (loss) per
common share.......................... (0.08) 0.01 0.17 (2.44) 0.40
BALANCE SHEET DATA:
Total assets............................ $ 80,789 $ 70,294 $ 69,355 $ 58,589 $ 91,718
Capital lease obligations and other
liabilities........................... 5,284 5,014 5,330 7,581 3,745
Stockholders' equity.................... 25,326 26,439 26,038 24,324 47,432
</TABLE>
The Company is subject to the information and reporting requirements of the
Exchange Act and in accordance therewith is required to file periodic reports,
proxy statements and other information with the Commission relating to its
business, financial condition and other matters. Certain information, as of
particular dates, concerning the Company's directors and officers (including
their remuneration and the stock options granted to them), the principal holders
of the Company's securities, any material interests of such persons in
transactions with the Company and certain other matters is required to be
disclosed in proxy statements and annual reports distributed to the Company's
stockholders and filed with the Commission. Such reports, proxy statements and
other information may be inspected and copied at the Commission's public
reference facilities at Room 1024, Judiciary Plaza, 450 Fifth Street, N.W.,
Washington, D.C. 20549, and should also be available for inspection at the
following regional offices of the Commission: 7 World Trade Center, New York,
New York 10048; and 500 West Madison Street, Chicago, Illinois 60621; and copies
may be obtained by mail at prescribed rates, from the principal office of the
Commission at 450 Fifth Street, N.W., Washington, D.C. 20549. The Commission
also maintains a website at http://www.sec.gov that contains reports, proxy
statements and other information relating to the Company which have been filed
electronically via the EDGAR system. Reports, proxy statements and other
information concerning the Company also should be available for inspection at
the NYSE, 20 Broad Street, New York, New York 10005.
9. CERTAIN INFORMATION CONCERNING PURCHASER AND PARENT. The principal
executive offices of Parent are located at 3-13, Azuchi-machi 2-chome, Chuo-ku,
Osaka 541-8556, Japan. Established in 1928, Parent is a leading manufacturer of
photocopiers, printers, and other image information products; conventional
cameras, digital cameras, and other optical products; radiometric instruments;
and planetariums. Parent's manufacturing network includes facilities and
subsidiaries in Japan, the United States, France, Malaysia, China, and Brazil.
Its products are marketed throughout the world via an extensive network of
subsidiaries, affiliates, and distributors.
Purchaser was incorporated on June 2, 1999 under the laws of the State of
Delaware for the purpose of acquiring the Company. Purchaser is a wholly owned
subsidiary of Parent. Purchaser has not, and is not expected to, engage in any
business other than in connection with its organization, the Offer, the Stock
Purchase and the related financing. The principal executive offices of Purchaser
are c/o Minolta Corporation, 101 Williams Drive, Ramsey, New Jersey 07446.
The name, business address, citizenship, present principal occupation and
employment history of each of the directors and executive officers of Parent and
Purchaser are set forth in Schedule I of this Offer to Purchase.
12
<PAGE>
Parent is not subject to the information and reporting requirements of the
Exchange Act, and, accordingly, does not file reports or other information with
the Commission relating to its business, financial condition and other matters.
Set forth below is certain selected consolidated financial information
relating to Parent and its subsidiaries for the fiscal years ended March 31,
1999, 1998, 1997 and 1996 (the "Financial Statements"). The selected
consolidated financial information is denominated in Japanese yen and prepared
in accordance with generally accepted accounting principles in Japan ("Japanese
GAAP"). Japanese GAAP differs in certain significant respects from generally
accepted accounting principles in the United States ("U.S. GAAP"). Immediately
following the selected consolidated financial information set forth below is a
brief summary of certain differences between Japanese GAAP and U.S. GAAP. Parent
has not examined whether adjustments necessary to conform its Financial
Statements with U.S. GAAP would be material. Parent's financial statements for
the fiscal years ended March 31, 1998 and 1997 have been filed with the
Commission as an exhibit to the Schedule 14D-1 and may be inspected at the
Commission's public reference facilities in Washington, D.C. Copies thereof may
be obtained from such facilities upon payment of the Commission's customary
charges, in the manner set forth in Section 8 above under "Available
Information" (although they will not be available at the regional offices of the
Commission). The selected information below is qualified in its entirety by
reference to the Financial Statements and all the financial information and
related notes contained therein.
13
<PAGE>
SELECTED CONSOLIDATED FINANCIAL DATA OF PARENT
<TABLE>
<CAPTION>
AT AND FOR THE FISCAL YEAR ENDED MARCH 31,
----------------------------------------------
<S> <C> <C> <C> <C>
1999(1) 1998 1997 1996
---------- ---------- ---------- ----------
<CAPTION>
(IN MILLIONS OF YEN, EXCEPT PER SHARE
INFORMATION)
<S> <C> <C> <C> <C>
INCOME STATEMENT INFORMATION:
Net sales...................................................... Y506,075 Y490,259 Y448,074 Y365,751
Operating profit............................................... 29,085 27,093 20,358 14,020
Income before taxes and minority interests..................... 15,908 11,899 11,608 6,355
Net income..................................................... 9,002 16,429 10,290 4,245
Per share of common stock(2)............................... 32.13 58.83 36.85 15.20
BALANCE SHEET INFORMATION (AT PRIOR END):
Total current assets........................................... Y274,892 Y316,188 Y274,438 Y237,892
Total assets................................................... 419,731 455,090 404,425 355,987
Total current liabilities...................................... 261,444 308,843 275,340 248,761
Long-term liabilities.......................................... 73,287 64,961 62,433 48,573
Shareholder's equity........................................... 84,093 80,550 66,076 57,933
</TABLE>
Note:
(1) Unaudited
(2) Net income per share is computed based upon the weighted average number of
shares of common stock outstanding during each fiscal year, adjusted for the
free distribution of common stock
<TABLE>
<CAPTION>
1999 1998 1997 1996
--------- --------- --------- ---------
<S> <C> <C> <C> <C>
YEN EXCHANGE RATES PER U.S. DOLLAR
Year-end............................................................ Y120.55 Y132.10 Y124.10 Y106.35
Average............................................................. 128.02 122.78 112.70 96.48
High................................................................ 146.40 134.10 124.65 107.35
Low................................................................. 110.45 112.15 104.85 80.20
</TABLE>
14
<PAGE>
SUMMARY OF DIFFERENCES BETWEEN JAPANESE GAAP AND U.S. GAAP
The accompanying consolidated financial statements of Parent and
consolidated subsidiaries have been prepared on the basis of Japanese GAAP and
have been compiled from the financial statements filed with the Ministry of
Finance as required by the Securities and Exchange Law of Japan, which differs
from U.S. GAAP in certain respects.
The significant differences between Japanese GAAP and U.S. GAAP relating to
Parent's consolidated financial statements are summarized as follows:
(1) Consolidation.
Under Japanese GAAP, the consolidation of subsidiaries is not required as
long as the aggregate amounts of total assets, net sales, net income and
retained earnings of the subsidiaries are not significant compared with those of
the consolidated totals.
Under U.S. GAAP, the existing guidance of the Financial Accounting Standards
Board ("FASB") on consolidation policy requires the consolidation of all
entities in which the parent has a majority voting interest. Consolidation,
however, is not required where control is expected to be temporary or does not
rest with the owner of the majority interest.
(2) Equity Method of Accounting
Under Japanese GAAP, investments in subsidiaries or affiliates (companies
owned 20% to 50%) are not accounted for by the equity method in the
non-consolidated financial statements of the parent. The equity method is
applied only in the consolidated financial statements.
Under U.S. GAAP, the equity method is required in all investments in
affiliates.
(3) Foreign Currency Translation
Under Japanese GAAP, long-term monetary assets and liabilities denominated
in foreign currencies are translated at the applicable historical exchange rates
prevailing at the time of the transactions, and short-term monetary assets and
liabilities denominated in foreign currencies are translated at the exchange
rate in effect at the balance sheet date, except for assets and liabilities
hedged by forward exchange contracts which are translated at the respective
contracted exchange rates.
Under U.S. GAAP, monetary assets and liabilities denominated in foreign
currencies, whether short-term or long-term, are translated at the exchange rate
in effect at the balance sheet date.
U.S. GAAP requires that gain or loss on a forward exchange contract intended
as a hedge (other than a firm foreign currency commitment or a net investment in
a foreign entity) be measured and included in income currently and the discount
or premium be amortized to income over the life of the contract. If a forward
contract is not intended as a hedge, the gain or loss together with the discount
or premium is required to be included in income currently.
(4) Valuation of Securities
Under Japanese GAAP, investments in listed securities (other than those in
subsidiaries which are carried at cost in the non-consolidated financial
statements) can be valued at the lower of cost or market. However, if any
significant impairment in the value of such investments in subsidiaries is
deemed permanent, the appropriate write-down is required.
15
<PAGE>
Under U.S. GAAP, investments in marketable equity securities with readily
determinable fair value and all investments in debt securities are classified
into three categories (i.e., held-to-maturity, trading and available-for-sale)
and are accounted for as follows:
(1) Investments in debt securities classified as held-to-maturity are
carried at amortized cost, and unrealized holding gains and losses are
not reported in the financial statements until realized or until a
decline in fair value below cost is deemed to be other-than-temporary.
(2) Investments in equity securities and debt securities classified as
trading are reported at fair value, with unrealized gains and losses
included in earnings.
(3) Investments in equity securities and debt securities classified as
available-for-sale are reported at fair value, with unrealized gains and
losses excluded from earnings and reported as other comprehensive income.
(5) Accounting for Income Taxes
Under Japanese GAAP, income taxes are required to be accrued based on
taxable income for the period, determined in accordance with the applicable tax
laws. Tax effect accounting had not been generally permitted up to the fiscal
year ended December 31, 1998. Due to the amendment of the Commercial Code of
Japan and the Securities and Exchange Law of Japan, tax effect accounting is
allowed for the financial years ended or ending on January 1, 1999 and
thereafter.
U.S. GAAP requires that deferred tax assets and liabilities be recognized
with respect to the differences between the financial reporting and tax bases of
such assets and liabilities, and be measured using the enacted tax rates and
laws which will be in effect when the differences are expected to reverse.
(6) Impairment of Long-Lived Assets and those to be Disposed of
Under Japanese GAAP, no losses on impairment of long-lived assets or on
those to be disposed of are required to be recognized.
U.S. GAAP requires that long-lived assets and certain identifiable
intangibles to be held and used by Parent be reviewed for impairment whenever
there is an indication that the carrying amount of an asset may not be
recoverable. Measurement of an impairment loss should be based on the fair value
of the asset. It also requires that any such assets which are to be disposed of
be reported at the lower of carrying amount or fair value, less cost to sell.
(7) Leases Capitalized as Assets
Under Japanese GAAP, financial leases which do not transfer ownership and do
not have bargain purchase provisions may be accounted for in the same manner as
operating leases.
U.S. GAAP requires the capitalization of all leases which essentially
transfer all the risks and rewards of ownership incident to the leased property
from the lessor to the lessee.
(8) Accounting for Compensated Absences
Japanese GAAP is silent as to accounting for compensated absences and
recognition of the related liability is not a general practice in Japan.
U.S. GAAP requires recognition of a liability representing employees' rights
to receive compensation for future absences when certain conditions are met.
(9) Accounting for Retirement Benefits and Pension Costs
Under Japanese GAAP, accounting for retirement benefits and pension plans,
which qualify as defined benefit plans, is left to the discretion of each
business enterprise. With respect to a pension plan, however, the amount of the
contributions to the pension fund is generally charged to income when such
16
<PAGE>
payments are made. With respect to an unfunded retirement benefits plan, the
liability is provided generally at 100% or 40% of the amount which would be
required to be paid under the plan if all eligible employees voluntarily
terminated their services at the balance sheet date.
Under U.S. GAAP, retirement benefits including pension costs and the related
liability are recognized and computed using a particular actuarial approach
known as the projected unit credit method.
(10) Capitalization of Interest Expense
Under Japanese GAAP, interest expense is charged to income as incurred
rather than capitalized, except in certain specified industries.
U.S. GAAP requires that interest expense incurred during the qualifying
assets' acquisition period be capitalized as part of the historical cost of the
acquired assets.
(11) Valuation of Bad Debts
Under Japanese GAAP, bad debts should be measured and stated at an amount
deemed to be management's best estimate based on past experience and existence
of collateral and guarantor, and written down accordingly.
U.S. GAAP requires that an impaired loan be measured based on the present
value of expected future cash flows discounted at the loan's effective interest
rate or, as a practical expedient, at the loan's observable market price or at
the fair value of the collateral if the loan is collateral-dependent.
Except as set forth elsewhere in this Offer to Purchase: (i) none of the
Acquirors nor, to the best knowledge of the Acquirors, any of the persons listed
in Schedule I hereto or any associate or majority-owned subsidiary of Parent or
any of the persons so listed, beneficially owns or has a right to acquire any
Shares or any other equity securities of the Company; (ii) none of the Acquirors
nor, to the knowledge of the Acquirors, any of the persons or entities referred
to in clause (i) above or any of their executive officers, directors or
subsidiaries has effected any transaction in the Shares or any other equity
securities of the Company during the past 60 days; (iii) none of the Acquirors
nor, to the knowledge of the Acquirors, any of the persons listed in Schedule I
hereto, has any contract, arrangement, understanding or relationship with any
other person with respect to any securities of the Company, including, but not
limited to, the transfer or voting thereof, joint ventures, loan or option
arrangements, puts or calls, guarantees of loans, guarantees against loss or the
giving or withholding of proxies, consents or authorizations; (iv) except as set
forth below or as described in Item 11 below, since March 31, 1996, there have
been no transactions which would require reporting under the rules and
regulations of the Commission between any of the Acquirors or any of their
respective subsidiaries or, to the best knowledge of the Acquirors, any of the
persons listed in Schedule I hereto, on the one hand, and the Company or any of
its executive officers, directors or affiliates, on the other hand; and (v)
except as described in Item 10 below, since March 31, 1996 there have been no
contracts, negotiations or transactions between any of the Acquirors or any of
their respective subsidiaries or, to the best knowledge of the Acquirors, any of
the persons listed in Schedule I hereto, on the one hand, and the Company or its
subsidiaries or affiliates, on the other hand, concerning a merger,
consolidation or acquisition, tender offer or other acquisition of securities,
an election of directors or a sale or other transfer of a material amount of
assets of the Company.
Parent and the Company have executed supply agreements, pursuant to which
Parent has agreed to supply the Company and the Company's subsidiaries with
customized laser beam printer engines, imaging cartridges and accessories.
Pursuant to these agreements, Parent and the Company engaged in transactions
valued at approximately in Y894,492,000 in fiscal year 1996 ($9,271,268.66 using
the average exchange rate for the period of $1.00 to Y96.48), Y1,279,347,000 in
fiscal year 1997 ($11,351,792.37 using the average exchange rate for the period
of $1.00 to Y112.70) and Y2,479,041,000 in fiscal year 1998 ($20,190,918.72
using the average exchange rate for the period of $1.00 to Y122.78). In
addition, Parent and the Company have entered into a letter of intent, pursuant
to which the Company has agreed to develop printer controller related
technologies for Parent's laser beam printers. Pursuant to this letter of
intent, Parent paid to the Company a development fee in fiscal year 1998 of
$400,000 (Y49,112,000 using the average exchange rate for the period of $1.00 to
Y122.78).
17
<PAGE>
10. BACKGROUND OF THE OFFER; CONTACTS WITH THE COMPANY.
In the Fall of 1998, Parent retained Takenaka & Company LLC ("Takenaka") to
conduct a strategic review of its position in the image information systems
market. As a result of such review, Parent began considering a strategic
partnership with, or acquisition of, a U.S. company in such market.
In February 1999, Parent decided to focus its efforts on the Company. In
early March, Parent requested that Takenaka contact the Company to ascertain the
Company's interest in pursuing an alliance with Parent. On March 18, 1999, the
Company and Parent executed a confidentiality agreement which provides for the
confidential treatment of their discussions regarding a possible transaction
relating to the business of the Company and the exchange of certain information
about their respective businesses, including all discussions regarding the
Offer, the Stock Purchase Agreement and Loan Agreement (as hereinafter defined).
On the same day, representatives of Takenaka met with Mr. Edward E. Lucente,
President and Chief Executive Officer of the Company, Mr. James A. Wallace, Vice
President and Chief Financial Officer of the Company, and other senior
executives of the Company in Mobile, Alabama to discuss a potential strategic
partnership or other business combination between Parent and the Company. On
March 19, 1999, representatives of Parent initiated a preliminary due diligence
review of the Company.
Over a period of several days in early April, Messrs. Lucente and Wallace
met with representatives of Parent and Takenaka in Tokyo and Osaka, Japan, to
provide information on the Company's plans to reacquire QMS Europe B.V. and QMS
Australia Pty. Ltd. (collectively, the "Foreign Subsidiaries") and to engage in
further discussion of a potential transaction. As a result of the meeting,
Parent and the Company agreed to continue discussions and the due diligence
review.
On April 13, 1999, Parent sent the Company a letter confirming Parent's
interest in a potential transaction and requested the Company allow Parent to
conduct certain additional due diligence.
From April 19, 1999 to April 21, 1999, representatives of Parent met with
representatives of the Company in Mobile, Alabama to conduct further due
diligence. On April 28, 1999, the Company sent a letter to Parent to ascertain
Parent's interest in a transaction whereby Parent would invest in and loan money
to the Company to help the Company finance its acquisition of the Foreign
Subsidiaries. Subsequently, Parent indicated it would be interested in such a
transaction with certain modifications. Intensive negotiations took place
between Parent, the Company and their respective financial and legal
representatives during the following weeks. The parties met in Osaka, Japan on
May 11, 1999 and continued to negotiate throughout the week.
On May 17, 1999, Parent and the Company signed a letter of intent whereby
(i) Parent agreed to advance the Company $5 million in respect of certain
payments to be owed by Parent to the Company with respect to ordinary commercial
transactions and (ii) the Company agreed to negotiate exclusively with Parent
for a period of 30 days concerning a potential transaction between the Company
and Parent.
During the period from May 24 through June 7, 1999, Parent continued its due
diligence review of the Company and, along with its legal representatives and
Takenaka, negotiated the specific terms of the Stock Purchase Agreement
(including this Offer) and the Loan Agreement with the Company.
On June 7, 1999, (i) Parent, Purchaser and the Company executed the Stock
Purchase Agreement and Purchaser purchased 2,130,000 Shares for an aggregate
price of approximately $12.248 million and (ii) Parent and the Company entered
into the Loan Agreement and Parent loaned the Company $12.8 million. On the same
day, the Company closed the acquisition of the Foreign Subsidiaries. On June 8,
1999, Parent and the Company announced the Stock Purchase, the closing of the
loan contemplated by the Loan Agreement and the Offer. On June 14, 1999,
pursuant to the terms of the Stock Purchase Agreement, Purchaser commenced the
Offer.
11. PURPOSE OF THE OFFER; PLANS FOR THE COMPANY.
The purpose of the Offer is to enable the Acquirors to acquire a significant
equity interest in, and control of, the Company.
18
<PAGE>
Following consummation of the Offer, Parent intends to review the Company's
printer related operations, including those of its subsidiaries, with a view to
determining how to optimally realize potential synergies which may exist between
the operations of the Company and Parent.
Following such review, Parent will consider what, if any, changes to the
Company's and Parent's printer related operations, including those of their
respective subsidiaries, would be desirable to realize any potential synergies
identified by the review.
Parent expects that the Company will play a major role in Parent's worldwide
printer operations. Parent believes the Company will participate in the
implementation of printer sales and marketing strategies, planning of product
development and research and development of printer controllers.
Parent also intends to enter into sales and purchase agreements for printer
engines and cross license agreements for intellectual property with the Company.
If the Minimum Number of Shares are tendered in the Offer, Parent plans to
promptly exercise its right, pursuant to the Stock Purchase Agreement, to obtain
majority representation on the Company's Board. Parent intends to cause the
Company to elect to the Company's Board the following persons: Hiroshi Fujii,
Yoshisuke Takekida, Allen A. Hans, Shoei Yamana and Keisuke Mochida. Information
with respect to such persons is contained in an information statement annexed to
the Schedule 14D-9 filed by the Company. Also pursuant to the Stock Purchase
Agreement, the name of the Company may be changed to a name including the word
"Minolta."
STOCK PURCHASE AGREEMENT
THE FOLLOWING IS A SUMMARY OF CERTAIN PROVISIONS OF THE STOCK PURCHASE
AGREEMENT. THIS SUMMARY IS NOT A COMPLETE DESCRIPTION OF THE TERMS AND
CONDITIONS OF THE STOCK PURCHASE AGREEMENT AND IS QUALIFIED IN ITS ENTIRETY BY
REFERENCE TO THE FULL TEXT OF THE STOCK PURCHASE AGREEMENT FILED WITH THE
COMMISSION AS AN EXHIBIT TO THE SCHEDULE 14D-1 AND IS INCORPORATED HEREIN BY
REFERENCE. CAPITALIZED TERMS NOT OTHERWISE DEFINED BELOW SHALL HAVE THE MEANINGS
SET FORTH IN THE STOCK PURCHASE AGREEMENT. THE STOCK PURCHASE AGREEMENT MAY BE
EXAMINED, AND COPIES OBTAINED, AS SET FORTH IN SECTION 9 OF THIS OFFER TO
PURCHASE.
REPRESENTATION AND WARRANTIES. In the Stock Purchase Agreement, the Company
has made customary representations and warranties to Parent and Purchaser with
respect to, among other things, corporate organization, capitalization,
authority to enter into the Stock Purchase Agreement, filings with the
Commission, absence of certain changes and events, disclosures in the Offer
documents, required consents and approvals, rights to property, absence of
litigation, compliance with applicable laws, labor, employment, environmental
and tax matters, absence of questionable payments, material contracts, related
party transactions, insurance, intellectual property, Year 2000, customers and
suppliers, brokers' fees, receipt of financial advisor's opinion, product
liability, applicability of state takeover statutes, the Rights Agreement, truth
of the representations and warranties in the Stock Purchase Agreement and
absence of conflicts between the Stock Purchase Agreement and related documents,
on one hand, and the certificate of incorporation and by-laws of the Company,
applicable laws or orders and material agreements or instruments to which the
Company or its assets may be subject, on the other hand.
In the Stock Purchase Agreement, each of Parent and Purchaser has made
customary representations and warranties to the Company with respect to, among
other things, corporate organization, authority to enter into the Stock Purchase
Agreement, disclosures in the Offer documents, required consents, investment
representations for the Stock Purchase and availability of financing for the
Offer.
THE COMPANY'S BOARD. Under the Stock Purchase Agreement, Purchaser is
entitled to designate two (2) persons on the Company's Board on and after the
date of the Stock Purchase. The Company has agreed to use its best efforts to
promptly, but in no event later than the purchase of and payment for the Shares
pursuant to the Offer, secure the resignations of such number of its incumbent
directors as is necessary to enable the designees of Purchaser to be so elected
or appointed to the Company's Board, and
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<PAGE>
to take all action available to the Company to cause such designees of Purchaser
to be elected or appointed to fill the vacancies created by such action.
On and after the purchase of and payment for the Shares by Purchaser
pursuant to the Offer, in the event that Purchaser and its Affiliates
beneficially own less than a majority of the then outstanding Shares, the Stock
Purchase Agreement provides that Purchaser will be entitled to designate the
greater of (i) two (2) directors on the Company's Board or (ii) such number of
directors on the Company's Board (rounded up to the next whole number which is
less than a majority) equal to the product of the total number of directors on
the Company's Board multiplied by the percentage that the number of Shares
beneficially owned by Purchaser and its Affiliates bears to the total number of
Shares then outstanding. The Company will either (i) use its best efforts to
promptly secure the resignations of such number of its incumbent directors as is
necessary to enable the designees of Purchaser to be so elected or appointed to
the Company's Board or (ii) take such action as is necessary to increase the
size of the Company's Board by such number of directors, and, in either case,
the Company will take all action available to the Company to cause such
designees of Purchaser to be elected or appointed to fill the vacancies created
by such action.
The Stock Purchase Agreement further provides that promptly after (i) the
purchase of and payment for any Shares by Purchaser and any of its Affiliates
pursuant to the Offer as a result of which Purchaser and its Affiliates
beneficially own at least a majority of the Shares then outstanding and (ii)
compliance with Section 14(f) of the Exchange Act and Rule 14f-1 promulgated
thereunder, whichever occurs later, Parent, Purchaser and the Company will take
all action available and within their respective control so that the number of
directors on the Company's Board will be established at nine (9) directors
consisting of (A) five (5) persons designated by Purchaser, (B) Messrs. Edward
E. Lucente and James A. Wallace and (C) two (2) persons not affiliated with the
Company, Purchaser or Parent.
Upon any such designation by Purchaser pursuant to the Stock Purchase
Agreement, the Company will, if requested by Purchaser, also take all action
necessary to cause the persons designated by Purchaser to constitute at least
the same percentage (rounded up to the next whole number) as is on the Company's
Board of (i) each committee of the Company's Board, (ii) each board of directors
(or similar body) of each subsidiary of the Company and (iii) each committee (or
similar body) of each such subsidiary board.
USE OF PROCEEDS. The Stock Purchase Agreement provides that the Company
will use the proceeds from the Stock Purchase for the acquisition of the Foreign
Subsidiaries and to pay in full all obligations outstanding under the Foothill
Credit Facility (as defined in the Loan Agreement) and any expenses incurred in
connection therewith and with the Stock Purchase Agreement and the Related
Agreements. However, the Company will not be required to pay in full all
obligations outstanding under the Foothill Credit Facility if the Foothill
Credit Facility becomes a Permitted Credit Facility (as defined in the Loan
Agreement) within 60 days after the date of the Stock Purchase.
INTERIM OPERATIONS. The Stock Purchase Agreement provides that from and
after the date of the Stock Purchase (unless Purchaser has given its prior
written consent) and until the Expiration Date, except as contemplated by the
Stock Purchase Agreement or the Related Agreements, the Company will, and will
cause each of its subsidiaries to, conduct its operations in the ordinary and
usual course of business consistent with past practice and, to the extent
consistent therewith, with no less diligence and effort than would be applied in
the absence of the Stock Purchase Agreement, seek to preserve intact its current
business organizations, seek to keep available the service of its current
officers and employees and seek to preserve its relationships with customers,
suppliers and others having business dealings with it to the end that goodwill
and ongoing businesses will be unimpaired.
Without limiting the generality of the foregoing, the Stock Purchase
Agreement provides that, except as otherwise expressly provided in the Stock
Purchase Agreement or in the Disclosure Schedule, prior to
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the Expiration Date, neither the Company nor any of its subsidiaries will,
without the prior written consent of Purchaser:
(a) amend its certificate of incorporation or bylaws (or other similar
governing instrument) or amend, modify or terminate the Rights Agreement;
(b) authorize for issuance, issue, sell, deliver or agree or commit to
issue, sell or deliver (whether through the issuance or granting of options,
warrants, commitments, subscriptions, rights to purchase or otherwise) any stock
of any class or any other securities convertible into or exchangeable for any
stock or any equity equivalents (including, without limitation, any stock
options or stock appreciation rights), except for the issuance or sale of Shares
pursuant to outstanding Company Stock Options;
(c) (i) split, combine or reclassify any shares of its capital stock; (ii)
declare, set aside or pay any dividend or other distribution (whether in cash,
stock or property or any combination thereof) in respect of its capital stock;
(iii) make any other actual, constructive or deemed distribution in respect of
any shares of its capital stock or otherwise make any payments to stockholders
in their capacity as such; or (iv) redeem, repurchase or otherwise acquire any
of its securities or any securities of any of its subsidiaries (including
redeeming any Rights);
(d) adopt a plan of complete or partial liquidation, dissolution, merger,
consolidation, restructuring, recapitalization or other reorganization of the
Company or any of its subsidiaries;
(e) alter through merger, liquidation, reorganization, restructuring or in
any other fashion the corporate structure or ownership of any subsidiary;
(f) except as permitted under the Loan Agreement, (i) incur or assume any
long-term or short-term debt or issue any debt securities, except for borrowings
under existing lines of credit in the ordinary and usual course of business
consistent with past practice and in amounts not material to the Company and its
subsidiaries taken as a whole; (ii) assume, guarantee, endorse or otherwise
become liable or responsible (whether directly, contingently or otherwise) for
the obligations of any other person; (iii) make any loans, advances or capital
contributions to, or investments in, any other person (other than to the wholly
owned subsidiaries of the Company or customary loans or advances to employees in
the ordinary and usual course of business consistent with past practice and in
amounts not material to the maker of such loan or advance); (iv) pledge or
otherwise encumber shares of capital stock of the Company or its subsidiaries;
or (v) mortgage or pledge any of its material assets, tangible or intangible, or
create or suffer to exist any material Lien thereupon;
(g) except as may be required by Law, enter into, adopt or amend or
terminate any bonus, profit sharing, compensation, severance, termination, stock
option, stock appreciation right, restricted stock, performance unit, stock
equivalent, stock purchase agreement, pension, retirement, deferred
compensation, employment, severance or other employee benefit agreement, trust,
plan, fund, award or other arrangement for the benefit or welfare of any
director, officer or employee in any manner or increase in any manner the
compensation or fringe benefits of any director, officer or employee or pay any
benefit not required by any plan and arrangement as in effect as of the date
hereof (including, without limitation, the granting of stock appreciation rights
or performance units) or take any action to accelerate the vesting of any
Company Stock Options;
(h) acquire, sell, lease or dispose of any assets outside the ordinary and
usual course of business consistent with past practice or any assets which in
the aggregate are material to the Company and its subsidiaries taken as a whole,
enter into any commitment or transaction outside the ordinary and usual course
of business consistent with past practice or grant any exclusive distribution
rights;
(i) except as may be required as a result of a change in Law or in U.S.
GAAP, change any of the accounting principles or practices used by it;
(j) revalue in any material respect any of its assets, including, without
limitation, writing down the value of inventory or writing-off notes or accounts
receivable other than in the ordinary and usual course of business consistent
with past practice or as required by U.S. GAAP;
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(k) except for the acquisition of the Foreign Subsidiaries, (i) acquire (by
merger, consolidation, or acquisition of stock or assets) any corporation,
partnership or other business organization or division thereof or any equity
interest therein; (ii) enter into any license or cross license, joint
development or other agreements with respect to any Intellectual Property of the
Company; (iii) enter into any agreement for the purchase of engines for printer
products; (iv) enter into or amend in any material respect any other contract or
agreement, other than in the ordinary and usual course of business consistent
with past practice; (v) authorize any new capital expenditure or expenditures
which, individually, is in excess of $100,000 or, in the aggregate, are in
excess of $300,000; or (vi) enter into or amend any contract, agreement,
commitment or arrangement providing for the taking of any action that would be
prohibited hereunder;
(l) settle or compromise any Tax liability material to the Company and its
subsidiaries taken as a whole or, except as may be required by law, make or
revoke any Tax election or change (or make a request to any taxing authority to
change) any aspect of its method of accounting for Tax purposes;
(m) pay, discharge or satisfy any material claims, liabilities or
obligations (absolute, accrued, asserted or unasserted, contingent or
otherwise), other than the payment, discharge or satisfaction in the ordinary
and usual course of business consistent with past practice of liabilities
reflected or reserved against in the consolidated financial statements of the
Company and its subsidiaries or incurred in the ordinary and usual course of
business consistent with past practice or waive the benefits of, or agree to
modify in any manner, any confidentiality, standstill or similar agreement to
which the Company or any of its subsidiaries is a party;
(n) settle or compromise any pending or threatened suit, action or claim
relating to the transactions contemplated by the Stock Purchase Agreement,
including the Stock Purchase and the Offer; or
(o) take, propose to take, or agree in writing or otherwise to take, any of
the actions described in clauses (a) through (n) above or any action which would
make any of the representations or warranties of the Company contained in the
Stock Purchase Agreement (i) which are qualified as to materiality untrue or
incorrect or (ii) which are not so qualified untrue or incorrect in any material
respect.
NO SOLICITATION. In the Stock Purchase Agreement, the Company has agreed
that, from and after the date of the Stock Purchase until the Expiration Date
and except as expressly permitted by this paragraph, the Company will not, nor
will it permit any of its subsidiaries to, nor will it authorize or permit any
officer, director or employee of or any investment banker, attorney, accountant
or other advisor or representative of, the Company or any of its subsidiaries
to, directly or indirectly, (i) solicit, initiate or encourage the submission of
any Acquisition Proposal (as hereinafter defined) or (ii) participate in any
discussions or negotiations regarding, or furnish to any person any information
with respect to, or take any other action to facilitate, any Acquisition
Proposal or any inquiries or the making of any proposal that constitutes, or may
reasonably be expected to lead to, any Acquisition Proposal; PROVIDED, HOWEVER,
that the Company's Board will not be prohibited from furnishing information to,
or entering into discussions or negotiations with, any person that makes an
unsolicited bona fide written Acquisition Proposal if, and only to the extent
that (A) the Company's Board, after consultation with and based upon
consultation with independent legal counsel, determines in good faith that such
action is necessary for the Company's Board to comply with its fiduciary duties
to the Company and its stockholders under applicable Law, (B) the Company's
Board determines in good faith that such Acquisition Proposal (which will not be
subject to any financing condition), if accepted, is reasonably likely to be
consummated, taking into account all legal, financial, regulatory and other
aspects of the proposal and the person making the proposal, and believes in good
faith, after consultation with its Financial Advisor and after taking into
account the strategic benefits to be derived from the Offer, would, if
consummated, result in a transaction more favorable to the Company and its
stockholders from a financial point of view than the Offer (any such more
favorable Acquisition Proposal being referred to herein as a "Superior
Proposal"), and (C) prior to taking such action, the Company (x) provides
reasonable notice to Parent to the effect that it is taking such action and (y)
receives from such person an executed confidentiality/standstill agreement in
reasonably customary form and in any
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event containing terms at least as stringent as those among Parent, Purchaser
and the Company. Prior to providing any information to or entering into
discussions or negotiations with any person in connection with an Acquisition
Proposal by such person, the Company will notify Parent of any Acquisition
Proposal (including, without limitation, the material terms and conditions
thereof and the identity of the person making it) as promptly as practicable
(but in no case later than 24 hours) after its receipt thereof, and will provide
Parent with a copy of any written Acquisition Proposal or amendments or
supplements thereto, and will thereafter inform Parent on a prompt basis of the
status of any discussions or negotiations with such a third party, and any
material changes to the terms and conditions of such Acquisition Proposal, and
will promptly give Parent a copy of any information delivered to such person
which has not previously been reviewed by Parent. Immediately after the
execution and delivery of the Stock Purchase Agreement, the Company will, and
will cause its subsidiaries and affiliates, and their respective officers,
directors, employees, investment bankers, attorneys, accountants and other
agents to cease and terminate any existing activities, discussions or
negotiations with any parties conducted heretofore with respect to any possible
Acquisition Proposal and will notify each party that it, or any officer,
director, investment advisor, financial advisor, attorney or other
representative retained by it, has had discussions with during the 30 days prior
to the date of the Stock Purchase that the Company's Board no longer seeks the
making of any Acquisition Proposal. The Company has agreed that it will take the
necessary steps to promptly inform the individuals or entities referred to in
the first sentence hereof of the obligations undertaken in this paragraph.
Pursuant to the Stock Purchase Agreement, the Company's Board will not
withdraw or modify, or propose to withdraw or modify, in a manner adverse to
Purchaser, its approval or recommendation of the Offer unless the Company's
Board after consultation with and based upon the advice of independent legal
counsel, determines in good faith that such action is necessary for the
Company's Board to comply with the fiduciary duties to the Company and its
stockholders under applicable Law; PROVIDED, HOWEVER, the Company's Board may
not approve or recommend (and in connection therewith, withdraw or modify its
approval or recommendation of the Stock Purchase Agreement or the Offer) an
Acquisition Proposal unless such an Acquisition Proposal is a Superior Proposal
and unless it has first consulted with independent legal counsel, and has
determined, based upon such advice, that such action is necessary for the
Company's Board to comply with its fiduciary duties to the Company and its
stockholders. Nothing contained in this paragraph prohibits the Company from
taking and disclosing to its stockholders a position contemplated by Rule
14e-2(a) promulgated under the Exchange Act or from making any disclosure to the
Company's stockholders which, in the good faith reasonable judgment of the
Company's Board, based on the advice of independent legal counsel, is required
under applicable Law; PROVIDED, HOWEVER, that except as otherwise permitted in
this paragraph, the Company does not withdraw or modify, or propose to withdraw
or modify, its position with respect to the Offer or approve or recommend, or
propose to approve or recommend, an Acquisition Proposal. Any action by the
Company's Board permitted by, and taken in accordance with, this paragraph will
not constitute a breach of the Stock Purchase Agreement by the Company.
AMENDMENT OF CERTIFICATE OF INCORPORATION. The Stock Purchase Agreement
provides that the Company's Board will take all necessary action under the
Certificate of Incorporation of the Company so that (i) Parent, Purchaser and
their Affiliates will be excluded from the definition of "Interested
Stockholder" under Article 10 of the Certificate of Incorporation or (ii) any
"Business Combination" (as defined in such Article 10) between the Company and
Parent or Purchaser will be approved by the requisite action of the Company's
Board.
COMPANY NAME. Under the Stock Purchase Agreement, upon the acquisition by
Purchaser and its Affiliates of at least a majority of the outstanding Shares,
the Company has agreed to take all action available to the Company, including
submitting a proposal at a meeting of stockholders, to change the name of the
Company to a name which will include the word "Minolta" and be reasonably
acceptable to Purchaser.
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INTEGRATION COMMITTEE. In the Stock Purchase Agreement, the Company and
Parent have agreed to establish a committee (the "Integration Committee") on or
prior to the acquisition by Purchaser and/or its Affiliates of the Shares
pursuant to the Offer and maintain the Integration Committee after such
acquisition until such time as Purchaser and its Affiliates hold less than a
majority of the Shares then outstanding. The Company and Parent will, through
the Integration Committee, use commercially reasonable best efforts to integrate
the Company's and Parent's printer related operations.
STRATEGIC MEETINGS. Pursuant to the Stock Purchase Agreement, from and
after the acquisition by Purchaser and/or its Affiliates of the Shares pursuant
to the Offer until such time as Purchaser and its Affiliates hold less than a
majority of the Shares then outstanding, representatives of the Company will
meet from time to time, but no less than four (4) times per year, with
representatives of Parent to review corporate strategies, improvement of
operations and such other matters relating to the business of the Company as
Parent and the Company reasonably will determine.
GOVERNANCE. The Stock Purchase Agreement provides that, during the period
from and after the date of the Stock Purchase until such time as Purchaser and
its Affiliates hold less than 35% of the Shares then outstanding, the Company's
Board, without the approval of a majority of the Company's Board, including a
majority of the directors designated by Purchaser, will not authorize or
approve:
(a) any annual or quarterly operating or capital budget or business plan, or
any material amendment or modification thereto;
(b) any change in the Company's principal line of business, entry into a new
line of business or any change in the Company's corporate strategy; or
(c) the election, appointment or employment of any officer of the Company.
CROSS LICENSE AGREEMENTS. In the Stock Purchase Agreement, the Company and
Parent have agreed, through the Integration Committee, to negotiate in good
faith and use commercially reasonable best efforts to enter into cross license
agreements, on terms satisfactory to each party and to the extent authorized by
a third party licensor, on a worldwide basis without charge, with respect to
certain Intellectual Property of each party. Such Intellectual Property will
include, without limitation, trademarks, copyrights and proprietary technology
with respect to, in the case of the Company, the source code of page description
languages and, in the case of Parent, engine video interface, image enhancement,
color calibration used in laser beam printers and the know-how regarding
multi-function products.
ENGINE SALES AND PURCHASE AGREEMENT. Pursuant to the Stock Purchase
Agreement, on or prior to the acquisition by Purchaser and/or its Affiliates of
the Shares pursuant to the Offer, the Company and Parent will, through the
Integration Committee, negotiate in good faith and use commercially reasonable
best efforts to enter into a sales and purchase agreement, on terms satisfactory
to each party, in which agreement the Company will (i) designate Parent as the
primary provider of engines to the Company and (ii) set forth terms and
conditions with respect to the selection and purchase by the Company of engines
manufactured by Parent.
EMPLOYMENT AGREEMENTS. The Stock Purchase Agreement provides that, on or
prior to the acquisition by Purchaser and/or its Affiliates of the Shares
pursuant to the Offer, the Company will use commercially reasonable best efforts
to enter into employment agreements on terms satisfactory to Purchaser with each
of Edward E. Lucente, to serve as President and Chief Executive Officer, and
James A. Wallace, to serve as Vice President and Chief Financial Officer.
REGISTRATION RIGHTS. Pursuant to the Stock Purchase Agreement, if Purchaser
and its Affiliates hold less than a majority of the outstanding Shares
immediately following the Offer, the Company, Purchaser
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and Parent will negotiate and execute a registration rights agreement granting
three (3) demand registration rights and an unlimited number of piggyback
registration rights with respect to the Shares purchased in the Stock Purchase.
INDEMNIFICATION. The Stock Purchase Agreement provides that the
representations, warranties, covenants and agreements made therein will survive
the execution and delivery of the Stock Purchase Agreement and the Closing
thereof. All statements as to factual matters contained in any certificate or
other instrument delivered by or on behalf of the Company pursuant to the Stock
Purchase Agreement in connection with the transactions contemplated thereby will
be deemed to be representations and warranties by the Company thereunder solely
as of the date of such certificate or instrument. The representations and
warranties of the Company will terminate on the date 18 months after the date of
the Stock Purchase, except with respect to any representation and warranty with
respect to which Parent or Purchaser has furnished a written claim of breach to
the Company prior to such termination date, in which event such representation
and warranty will survive in effect until such claim is resolved.
In the Stock Purchase Agreement, the Company has agreed to indemnify and
hold harmless Parent and Purchaser and their respective directors, officers,
employees, Affiliates, agents, successors and assigns (collectively the
"Indemnified Parties") from and against any and all liabilities, obligations,
losses, damages, penalties, actions, judgments, suits, claims, costs, attorneys'
fees, expenses and disbursements of any kind, including, without limitation,
those arising from third-party claims (collectively, "Losses"), which may be
imposed upon, incurred by or asserted against the Indemnified Parties based
upon, attributable to or resulting from (i) the failure of any representation or
warranty of the Company, contained in the Stock Purchase Agreement or in any
certificate or document delivered pursuant thereto, to be true and correct in
all respects as of the date made or (ii) the breach of any covenant or other
agreement on the part of the Company under the Stock Purchase Agreement;
PROVIDED, HOWEVER, that (i) the Company will not have any liability under this
paragraph unless and until the aggregate amount of the Losses finally determined
to arise thereunder exceeds $300,000 and (ii) the aggregate amount that the
Indemnified Parties will be entitled to recover under the Stock Purchase
Agreement will be limited to $12,247,500.
FEES AND EXPENSES. The Stock Purchase Agreement provides that each party
thereto will pay all of its respective costs and expenses, including, without
limitation, legal, accounting and all other similarly related costs, incurred
with respect to the negotiation, execution and delivery of the Stock Purchase
Agreement and the Related Agreements. Notwithstanding the foregoing, if the
Company breaches or fails to perform or comply with any of the terms set forth
under the paragraph entitled "No Solicitation" above or the Company's Board (i)
accepts a Superior Proposal, (ii) withdraws, or modifies or changes in a manner
adverse to Parent or Purchaser (including by amendment of the Schedule 14D-9),
its recommendation of the Offer, (iii) recommends an Acquisition Proposal, (iv)
adopts any resolution to effect any of the foregoing or (v) upon request of
Parent or Purchaser, fails to reaffirm its approval or recommendation of the
Offer, the Company will pay, or cause to be paid to Parent, or Purchaser, at the
time of such event, an amount equal to $1,000,000 (the "Break-up Fee") plus an
amount equal to Parent's and Purchaser's actual and reasonably documented
out-of-pocket expenses incurred by Parent or Purchaser in connection with the
Offer, the Stock Purchase Agreement and the consummation of the transactions
contemplated thereby, including, without limitation, the fees (other than any
break-up, success or other contingent fee) and out-of-pocket expenses payable to
all banks, investment banking firms and other financial institutions and persons
and their respective agents and counsel incurred in connection with acting as
Parent's and Purchaser's financial advisor with respect to, or arranging or
committing to provide or providing any financing for, the transactions
contemplated by the Stock Purchase Agreement up to an aggregate of $1,000,000
(the "Expenses"). In addition, if (i) Purchaser terminates the Offer without
Purchaser purchasing any Shares thereunder, (ii) at or prior to the time of such
termination of the Offer, a person has made an Acquisition Proposal and, (iii)
within 12 months after such termination of the Offer, the Company announces its
intention to enter into an agreement with respect to an Acquisition Proposal or
enters into an agreement with respect to an Acquisition Proposal, then the
Company will pay the Break-up Fee and
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the Expenses concurrently with such announcement or the execution of such
agreement; PROVIDED, HOWEVER, that the Company will not be required to pay the
Expenses unless such Acquisition Proposal is a Superior Proposal.
LOAN AGREEMENT
Parent has entered into a Loan Agreement (the "Loan Agreement"), dated as of
June 7, 1999, with the Company, principally to fund the acquisition by the
Company of the Foreign Subsidiaries and to offer the opportunity to refinance
the Loan and Security Agreement, dated as of November 7, 1995, by and between
the Company and Foothill Capital Corporation (as amended, the "Foothill Credit
Facility").
The Loan Agreement provides for a one-time advance of $12.8 million in the
aggregate (the "Advance"), the proceeds of which are to be used solely to fund a
portion of the cash purchase price for the acquisition of the Foreign
Subsidiaries and to refinance the Foothill Credit Facility. The Company has
agreed that it will either (i) pay in full all obligations outstanding under the
Foothill Credit Facility within 60 days after June 7, 1999 or (ii) amend such
facility to ensure such facility will terminate within 3 years of June 7, 1999,
limit the amount to be borrowed under such facility to $30 million, ensure the
shares of the Foreign Subsidiaries are not taken as security for the repayment
of such facility and otherwise amend such facility to the satisfaction of
Parent. The Company has agreed that any other indebtedness it incurs will meet
the requirements described in (ii) above.
The Advance is scheduled to be repaid in thirty-five equal installments of
$355,500 due on the tenth day of each calendar month starting on July 10, 2000
and ending on May 10, 2003 with the balance due on June 10, 2003. Amounts repaid
may not be reborrowed.
The Advance bears interest at a rate per annum equal to LIBOR plus 2.5%.
Interest is due on the tenth (10th) of each calendar month, upon prepayment or
acceleration and at maturity. The rate of interest upon default is equal to
LIBOR plus 4.5%. All computations are made on the basis of a 360-day year. The
Loan Agreement contains additional customary provisions in case of illegality or
where the interest rate is found to be unascertainable, inadequate or unfair, in
which case the loans will bear interest at the U.S. prime rate, as published in
the Wall Street Journal.
Optional prepayments of the Advance in whole or in part are allowed at the
end of each month with prior notice and for a minimum amount of $100,000. The
Advance must be repaid in full upon a change of control of the Company. Change
of control is defined to include (i) any third-party purchase of a 25% interest
in the Company, (ii) changes in the board of directors of the Company other than
the election of directors by Parent or the incumbent board and (iii)
stockholders' approval of a reorganization, merger or consolidation where it is
not true that substantially all of the previous stockholders of the Company own
more than 50% of the resulting company.
The Loan Agreement is secured solely by a pledge of all of the outstanding
capital stock of each of the Foreign Subsidiaries.
In the Loan Agreement, the Company has made customary representations and
warranties to Parent with respect to, among other things, corporate
organization, ownership and capitalization of subsidiaries, authority to own
assets and transact business, authority to enter into and enforceability of the
Loan Agreement and related loan documents, required consents, existing liens,
solvency and adequate capitalization, truth of the representations and
warranties in the Loan Agreement and absence of conflicts between the Loan
Agreement and the related loan documents, on the one hand, and the certificate
of incorporation and by-laws of the Company, applicable laws or orders and
material credit or other agreements or instruments to which the Company or its
assets may be subject, on the other hand.
The Company has entered into customary affirmative covenants with Parent
with respect to, among other things, maintenance of the corporate existence of
the Company and preservation of its rights, compliance with all laws, orders and
credit and other agreements, filing and payment of all taxes,
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maintenance of proper books and records, giving further assurances, authorizing
Parent to inspect the Company's facilities, as well as monthly, quarterly,
yearly and other reporting requirements. The Company has also entered into
customary negative covenants with Parent prohibiting, among other things,
incurring certain new liens, merging and disposing of substantially all of its
assets, encumbering or disposing of the collateral, incurring additional debt,
making distributions to its shareholders, issuing new voting securities,
defaulting in the performance of any material obligation, engaging in any
affiliate transactions other than on an arm's length basis, amending its
corporate organizational documents, changing its accounting practices, becoming
an affiliate of any person other than the lender and entering into an agreement
that would prohibit performance of any of these covenants or the granting of a
first-priority security interest in the collateral.
Events of default under the Loan Agreement include, without limitation,
failure to pay either principal or interest when due (with a five-day grace
period), breach of a representation or warranty, failure to pay when due any
obligation in excess of $1 million, bankruptcy or insolvency of the Company,
being subject to a judgment or order for the payment of money in excess of $0.5
million for which enforcement proceedings are being commenced or which has not
been appealed or stayed for ten days, any event of default under the Foothill
Credit Facility and the failure of the Loan Agreement or other loan documents to
remain enforceable.
The Loan Agreement provides that the Company will indemnify Parent and its
affiliates (including, without limitation, directors and shareholders),
employees and attorneys against any liabilities or other losses relating to or
arising out of the Loan Agreement, the related loan documents, any transaction
(actual or proposed) thereunder or any action or omission taken thereunder
except for those liabilities and losses resulting from the adjudicated gross
negligence or willful misconduct of the indemnitee. The Company is required to
pay all costs of Parent in relation to the negotiation, execution or enforcement
of the Loan Agreement. The indemnification provision will survive the repayment
of the Advance. Finally, Parent has been granted a right of set-off against any
indebtedness owing to the Company in case of an event of default.
APPRAISAL RIGHTS
No appraisal rights are available in connection with the Offer.
RULE 13E-3
Rule 13e-3 under the Exchange Act, which Purchaser does not believe would be
applicable to the Offer, requires, among other things, that certain financial
information concerning the Company and certain information relating to the
fairness of the proposed transaction and the consideration offered to
stockholders of the Company therein, be filed with the Commission and disclosed
to stockholders of the Company prior to consummation of the transaction.
12. SOURCE AND AMOUNT OF FUNDS. The total amount of funds required by
Purchaser and Parent to consummate the Offer and to pay related fees and
expenses is estimated to be approximately $ 35 million. Purchaser will obtain
the funds required to consummate the Offer with funds provided through capital
contributions or advances made by Parent. Parent expects to fund any necessary
capital contributions or advances to Purchaser through the use of internally
generated funds and the issuance in a private placement of a fixed rate bond due
2002 in the aggregate amount of five billion Japanese yen (approximately $41.8
million based on an exchange rate of $1.00 to Y119.45 on June 9, 1999).
Purchaser expects the interest rate for the bond to be fixed on or about June
16, 1999, with funding on June 23, 1999.
13. DIVIDENDS AND DISTRIBUTIONS. If, on or after June 7, 1999, the Company
(i) splits, combines or otherwise changes the Shares or its capitalization, (ii)
acquires Shares or otherwise causes a reduction in the number of Shares or (iii)
issues or sells additional Shares (other than those reserved for issuance on
June 7, 1999 for options then outstanding) or any shares of any other class of
capital stock, other voting
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securities or any securities convertible into or exchangeable for, or rights,
warrants or options, conditional or otherwise, to acquire, any of the foregoing
or (iv) discloses that it has taken such action, then, without prejudice to
Purchaser's rights under Section 14, Purchaser, in its sole discretion, may make
such adjustments in the purchase price and other terms of the Offer as it deems
appropriate to reflect such split, combination or other change including,
without limitation, the number or type of securities offered to be purchased.
If on or after June 7, 1999, the Company declares or pays any dividend on
the Shares or any distribution (including, without limitation, the issuance of
additional Shares pursuant to a stock dividend or stock split, the issuance of
other securities or the issuance of rights for the purchase of any securities)
with respect to the Shares that is payable or distributable to stockholders of
record on a date prior to the transfer into the name of Purchaser or its
nominees or transferees on the Company's stock transfer records of the Shares
purchased pursuant to the Offer, and if Shares are purchased in the Offer, then,
without prejudice to Purchaser's rights under Section 14, (i) the purchase price
per Share payable by Purchaser pursuant to the Offer shall be reduced by the
amount of any such cash dividend or cash distribution and (ii) any such noncash
dividends, distributions, issuances, proceeds or rights to be received by the
tendering stockholders shall (a) be received and held by the tendering
stockholders for the account of Purchaser and will be required to be promptly
remitted and transferred by each tendering stockholder to the Depositary for the
account of Purchaser, accompanied by appropriate documentation of transfer or
(b) at the direction of Purchaser, be exercised for the benefit of Purchaser, in
which case the proceeds of such exercise will promptly be remitted to Purchaser.
Pending such remittance and subject to applicable law, Purchaser will be
entitled to all rights and privileges as owner of any such noncash dividend,
distribution, issuance, proceed or right and may withhold the entire purchase
price or deduct from the purchase price the amount or value thereof, as
determined by Purchaser in its sole discretion.
14. CERTAIN CONDITIONS OF THE OFFER. Notwithstanding any other provision of
the Offer, Purchaser shall not be required to accept for payment or, subject to
any applicable rules and regulations of the Commission, including Rule 14e-1(c)
under the Exchange Act (relating to Purchaser's obligation to pay for or return
tendered Shares promptly after termination or withdrawal of the Offer), pay for,
and may delay the acceptance for payment of or, subject to the restriction
referred to above, the payment for, any tendered Shares, and, subject to the
terms of the Stock Purchase Agreement, may amend the Offer or terminate the
Offer and not accept for payment any tendered Shares, if (i) the Minimum
Condition shall not have been satisfied (ii) any applicable waiting period under
the HSR Act has not expired or been terminated prior to the expiration of the
Offer, and/or (iii) at any time on or after the date of the Stock Purchase
Agreement and prior to the Expiration Date, any of the following events shall
occur:
(a) there shall be threatened or pending any suit, action or proceeding (i)
seeking to prohibit or impose any material limitations on Purchaser's ownership
or operation (or that of any of its affiliates) of all or a material portion of
their or the Company's businesses or assets, (ii) seeking to compel Purchaser or
its affiliates to dispose of or hold separate any material portion of the
business or assets of the Company, Parent or Purchaser and their respective
subsidiaries, in each case taken as a whole, (iii) challenging the acquisition
by Purchaser of any Shares pursuant to the Offer, (iv) seeking to restrain or
prohibit the making or consummation of the Offer or the performance of any of
the other transactions contemplated by the Stock Purchase Agreement, (v) seeking
to obtain from the Company any damages that would be reasonably likely to have a
Material Adverse Effect (as defined below) on the Company, (vi) seeking to
impose material limitations on the ability of Purchaser, or rendering Purchaser
unable, to accept for payment, pay for or purchase some or all of the Shares
pursuant to the Offer, (vii) seeking to impose material limitations on the
ability of Purchaser effectively to exercise full rights of ownership of the
Shares, including, without limitation, the right to vote the Shares purchased by
it on all matters properly presented to the Company's stockholders, or (viii)
which otherwise is reasonably likely to have a Material Adverse Effect on the
Company or, as a result of the transactions contemplated by the Stock Purchase
Agreement, Parent or Purchaser; or
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<PAGE>
(b) there shall be any statute, rule, regulation, judgment, order or
injunction enacted, entered, enforced, promulgated or deemed applicable to the
Offer, or any other action shall be taken by any government entity, other than
the application to the Offer of applicable waiting periods under the HSR Act,
that is reasonably likely to result, directly or indirectly, in any of the
consequences referred to in clauses (i) through (viii) of paragraph (a) above;
or
(c) there shall have occurred (1) any general suspension of trading in, or
limitation on prices for, securities on the NYSE, the American Stock Exchange,
the Tokyo Stock Exchange or in the Nasdaq National Market System, for a period
in excess of 24 hours (excluding suspensions or limitations resulting solely
from physical damage or interference with such exchanges not related to market
conditions), (2) a declaration of a banking moratorium or any suspension of
payments in respect of banks in the United States or Japan (whether or not
mandatory), (3) the commencement of a war, armed hostilities or other
international or national calamity directly or indirectly involving the United
States or Japan or, in the case of any such circumstance in existence on the
date hereof, any material deterioration of the situation, (4) any limitation or
proposed limitation (whether or not mandatory) by any United States or Japanese
governmental authority or agency that has a Material Adverse Effect generally on
the extension of credit by banks or other financial institutions, (5) any change
in general financial bank or capital market conditions which has a Material
Adverse Effect on the ability of financial institutions in the United States or
Japan to extend credit or syndicate loans, (6) any decline in either the Dow
Jones Industrial Average, the Nikkei Average or the Standard & Poor's Index of
500 Industrial Companies by an amount in excess of 20% measured from the close
of business on the date of the Stock Purchase Agreement or (7) in the case of
any of the situations in clauses (1) through (6) inclusive, existing at the time
of the commencement of the Offer, a material acceleration or worsening thereof;
or
(d) the representations and warranties of the Company set forth in the Stock
Purchase Agreement shall not be true and accurate in all material respects as of
the date of consummation of the Offer as though made on or as of such date
(except for those representations and warranties that address matters only as of
a particular date or only with respect to a specific period of time which need
only be true and accurate as of such date or with respect to such period) or the
Company shall have breached or failed to perform or comply in all material
respects with any obligation, agreement or covenant required by the Stock
Purchase Agreement to be performed or complied with by it; or
(e) there shall have occurred any events or changes which have had or which
are reasonably likely to have or constitute, individually or in the aggregate, a
Material Adverse Effect on the Company; or
(f) the Company's Board (i) shall have withdrawn, or modified or changed in
a manner adverse to Parent or Purchaser (including by amendment of the Schedule
14D-9), its recommendation of the Offer, (ii) shall have recommended an
Acquisition Proposal (as defined below), (iii) shall have adopted any resolution
to effect any of the foregoing, or (iv) upon request of Parent or Purchaser,
shall fail to reaffirm its approval or recommendation of the Offer; or
(g) any person or "group" (as defined in Section 13(d)(3) of the Exchange
Act), other than Parent, Purchaser or their respective affiliates or any group
of which any of them is a member, shall have acquired or announced its intention
to acquire beneficial ownership (as determined pursuant to Rule 13d-3
promulgated under the Exchange Act) of 20% or more of the Shares; which in the
sole good faith judgment of Purchaser, in any such case, and regardless of the
circumstances (including any action or inaction by Purchaser, other than a
breach of the Stock Purchase Agreement, the Loan Agreement or the instruments
contemplated thereby) giving rise to such condition makes it inadvisable to
proceed with the Offer and/or with such acceptance for payment of or payments
for Shares.
The foregoing conditions are for the sole benefit of Parent and Purchaser
and may be waived by Parent of Purchaser, in whole or in part, at any time and
from time to time, in the sole discretion of Parent or Purchaser. The failure by
Parent or Purchaser at any time to exercise any of the foregoing rights shall
30
<PAGE>
not be deemed a waiver of any right and each such right shall be deemed an
ongoing right which may be asserted at any time and from time to time.
"Material Adverse Effect" means with respect to any entity, any change,
circumstance or effect that, individually or in the aggregate with all other
changes, circumstances and effects, is or is reasonably likely to be materially
adverse to (i) the assets, properties, condition (financial or otherwise),
results of operations or prospects of such entity and its subsidiaries taken as
a whole or (ii) the ability of such party to consummate the transactions
contemplated by the Stock Purchase Agreement.
"Acquisition Proposal" means any bona fide proposal or offer by a person
other than Parent, Purchaser and their respective affiliates to acquire
beneficial ownership (as defined in Section 13(d) of the Exchange Act) of all or
a material portion of the Company's assets on a consolidated basis or 25% or
more of the outstanding Shares of the Company pursuant to a merger,
consolidation or other business combination, sale of shares of capital stock or
assets, tender offer, exchange offer or similar transaction with respect to the
Company.
15. CERTAIN LEGAL MATTERS; REQUIRED REGULATORY APPROVALS. Except as set
forth in this Offer to Purchase, based on its review of publicly available
filings by the Company with the Commission and other publicly available
information regarding the Company, Purchaser is not aware of any licenses or
regulatory permits that would be material to the business of the Company and its
subsidiaries, taken as a whole, and that might be adversely affected by
Purchaser's acquisition of Shares (and the indirect acquisition of the stock of
the Company's subsidiaries) as contemplated herein, or any filings, approvals or
other actions by or with any domestic, foreign or supranational governmental
authority or administrative or regulatory agency that would be required prior to
the acquisition of Shares (or the indirect acquisition of the stock of the
Company's subsidiaries) by Purchaser pursuant to the Offer as contemplated
herein. Should any such approval or other action be required, there can be no
assurance that any such additional approval or action, if needed, would be
obtained without substantial conditions or that adverse consequences might not
result to the Company's business, or that certain parts of the Company's or
Purchaser's business might not have to be disposed of or held separate or other
substantial conditions complied with in order to obtain such approval or action
or in the event that such approvals were not obtained or such actions were not
taken. Purchaser's obligation to purchase and pay for Shares is subject to
certain conditions, including conditions with respect to governmental actions.
See the Introduction and Section 14 for a description of certain conditions to
the Offer, including with respect to litigation and governmental actions.
FEDERAL RESERVE BOARD REGULATIONS. Regulations G, U and X of the Federal
Reserve Board restrict the extension or maintenance of credit for the purpose of
buying or carrying margin stock, including the Shares, if the credit is secured
directly or indirectly by margin stock. Such secured credit may not be extended
or maintained in an amount that exceeds the maximum loan value of all the direct
and indirect collateral securing the credit, including margin stock and other
collateral.
STATE TAKEOVER LAWS. A number of states (including Delaware, where the
Company is incorporated) have adopted takeover laws and regulations which
purport, to varying degrees, to be applicable to attempts to acquire securities
of corporations which are incorporated in such states or which have substantial
assets, security holders, principal executive offices or principal places of
business therein. In EDGAR V. MITE CORP., the Supreme Court of the United States
(the "Supreme Court") invalidated on constitutional grounds the Illinois
Business Takeover statute, which, as a matter of state securities law, made
certain corporate acquisitions more difficult. However, in 1987, in CTS CORP V.
DYNAMICS CORP. OF AMERICA, the Supreme Court held that the State of Indiana may,
as a matter of corporate law and, in particular, with respect to those aspects
of corporate law concerning corporate governance, constitutionally disqualify a
potential acquiror from voting on the affairs of a target corporation without
the prior approval of the remaining stockholders. The state law before the
Supreme Court was by its terms applicable only to corporations that had a
substantial number of stockholders in the state and were incorporated there.
31
<PAGE>
The Company has taken all actions required to be taken by it in order to
exempt the Stock Purchase, the Offer and the other transactions contemplated by
the Stock Purchase Agreement from the requirements of any "moratorium," "control
share," "fair price," "affiliate transaction," "business combination" or other
antitakeover laws and regulations of any state, including, without limitation,
Section 203 of the General Corporation Law of the State of Delaware.
Parent and Purchaser do not believe that the antitakeover laws and
regulations of any state other than the State of Delaware will by their terms
apply to the Offer, and except as described herein, Purchaser has not attempted
to comply with any state takeover statutes in connection with the Offer.
Purchaser reserves the right to challenge the validity or applicability of any
state law allegedly applicable to the Offer and nothing in this Offer to
Purchase nor any action taken in connection herewith is intended as a waiver of
that right. In the event that any state takeover statute is found applicable to
the Offer, Purchaser might be unable to accept for payment or purchase Shares
tendered pursuant to the Offer or be delayed in continuing or consummating the
Offer. In such case, Purchaser may not be obligated to accept for purchase, or
pay for, any Shares tendered. See Section 14.
ANTITRUST. Under the HSR Act, and the rules and regulations that have been
promulgated thereunder by the FTC, certain acquisition transactions may not be
consummated until certain information and documentary material has been
furnished for review by the Antitrust Division of the Department of Justice and
the FTC and certain waiting period requirements have been satisfied. The
acquisition of shares pursuant to the Offer is subject to such requirements. On
June 14, 1999, Purchaser filed a Premerger Notification and Report Form with the
Antitrust Division and the FTC in connection with the purchase of Shares
pursuant to the Offer.
Under the provisions of the HSR Act applicable to the Offer, the purchase of
Shares pursuant to the Offer may not be consummated until the expiration of a
15-calendar-day waiting period following the filing by Purchaser, unless such
waiting period is earlier terminated by the FTC and the Antitrust Division.
Accordingly, the waiting period under the HSR Act which is applicable to the
Offer will expire at 11:59 p.m., New York City time, on June 29, 1999, unless
earlier terminated by the Antitrust Division and the FTC or Purchaser receives a
request for additional information or documentary material from the Antitrust
Division or the FTC prior thereto. If either the FTC or the Antitrust Division
were to request additional information or documentary material from Purchaser,
the waiting period with respect to the Offer would expire at 11:59 p.m., New
York City time, on the tenth calendar day after the date of substantial
compliance with such request by Purchaser. Thereafter, the waiting period could
be extended only by court order or with the consent of Purchaser. The additional
10-calendar-day waiting period may be terminated sooner by the FTC and the
Antitrust Division. Although the Company is required to file certain information
and documentary material with the Antitrust Division and the FTC in connection
with the Offer, neither the Company's failure to make such filings nor a request
made to the Company from the Antitrust Division or the FTC for additional
information or documentary material will extend the waiting period with respect
to the Offer.
The Antitrust Division and the FTC frequently scrutinize the legality under
the antitrust laws of transactions such as the acquisition of Shares by
Purchaser pursuant to the Offer. At any time before or after Purchaser's
purchase of Shares, the Antitrust Division or the FTC could take such action
under the antitrust laws as either deems necessary or desirable in the public
interest, including seeking to enjoin the purchase of Shares pursuant to the
Offer, the divestiture of Shares purchased pursuant to the Offer or the
divestiture of substantial assets of the Company or Purchaser. Private parties
as well as state attorneys general may also bring legal actions under the
antitrust laws under certain circumstances. See Section 14.
Based upon an examination of publicly available information relating to the
businesses in which the Company is engaged, Purchaser believes that the
acquisition of Shares pursuant to the Offer would not violate the antitrust
laws. Purchaser believes that retention of all of the operations of the Company
and Purchaser should be permitted under the antitrust laws. Nevertheless, there
can be no assurance that a
32
<PAGE>
challenge to the Offer on antitrust grounds will not be made, or, if such
challenge is made, what the result will be. See Section 14.
16. CERTAIN FEES AND EXPENSES. Parent retained Takenaka to serve as its
investment banker in connection with the transactions contemplated by the Stock
Purchase Agreement. Takenaka was responsible for assisting Parent in defining
and implementing a strategy to increase its color based output business.
Takenaka will receive reasonable and customary compensation for its services, be
reimbursed for certain reasonable out-of-pocket expenses and be indemnified
against certain liabilities in connection with their services.
Innisfree M&A Incorporated has been retained by Purchaser as Information
Agent in connection with the Offer. The Information Agent may contact holders of
Shares by mail, telephone, telex, telegraph and personal interview and may
request brokers, dealers and other nominee stockholders to forward material
relating to the Offer to beneficial owners. Customary compensation will be paid
for all such services in addition to reimbursement of reasonable out-of-pocket
expenses. Purchaser has agreed to indemnify the Information Agent against
certain liabilities and expenses, including liabilities under the federal
securities laws.
In addition, Harris Trust Company of New York has been retained as the
Depositary. The Depositary has not been retained to make solicitations or
recommendations in its role as Depositary. The Depositary will receive
reasonable and customary compensation for its services in connection with the
Offer, will be reimbursed for its reasonable out-of-pocket expenses and will be
indemnified against certain liabilities and expenses in connection therewith.
Except as set forth above, Purchaser will not pay any fees or commissions to
any broker, dealer or other person (other than the Information Agent) for
soliciting tenders of Shares pursuant to the Offer. Brokers, dealers, commercial
banks and trust companies and other nominees will, upon request, be reimbursed
by Purchaser for customary clerical and mailing expenses incurred by them in
forwarding materials to their customers.
17. MISCELLANEOUS. The Offer is not being made to (nor will tenders be
accepted from or on behalf of) holders of Shares residing in any jurisdiction in
which the making of the Offer or the acceptance thereof would not be in
compliance with the securities, blue sky or other laws of such jurisdiction.
However, Purchaser may, in its discretion, take such action as it may deem
necessary to make the Offer in any jurisdiction and extend the Offer to holders
of Shares in such jurisdiction.
In any jurisdiction where the securities, blue sky or other laws require the
Offer to be made by a licensed broker or dealer, the Offer will be deemed to be
made on behalf of Purchaser by one or more registered brokers or dealers that
are licensed under the laws of such jurisdiction.
Purchaser has filed with the Commission the Schedule 14D-1, together with
exhibits, pursuant to Rule 14d-3 of the General Rules and Regulations under the
Exchange Act, furnishing certain additional information with respect to the
Offer, and may file amendments thereto. Such Schedule 14D-1 and any amendments
thereto, including exhibits, may be examined and copies may be obtained from the
office of the Commission in the same manner as described in Section 8 with
respect to information concerning the Company, except that they will not be
available at the regional offices of the Commission.
No person has been authorized to give any information or to make any
representation on behalf of Purchaser not contained in this Offer to Purchase or
in the Letter of Transmittal and, if given or made, any such information or
representation must not be relied upon as having been authorized. Neither the
delivery of the Offer to Purchase nor any purchase pursuant to the Offer shall,
under any circumstances, create any implication that there has been no change in
the affairs of Purchaser or the Company since the date as of which information
is furnished or the date of this Offer to Purchase.
MINOLTA INVESTMENTS COMPANY
June 14, 1999
33
<PAGE>
SCHEDULE I
DIRECTORS AND EXECUTIVE OFFICERS OF PARENT AND PURCHASER
Set forth below are the name, business address and present principal
occupation or employment, and material occupations, positions, offices or
employments for the past five years of each director and executive officer of
Parent and Purchaser. Except as otherwise noted, the positions of each such
person are with Parent, the business address of each such person is Minolta Co.,
Ltd., 3-13, Azuchi-machi 2-chome, Chuo-ku, Osaka 541-8556, Japan, and such
person is a Japanese citizen.
1. DIRECTORS AND EXECUTIVE OFFICERS OF PARENT
<TABLE>
<CAPTION>
PRESENT PRINCIPAL OCCUPATION OR EMPLOYMENT;
NAME MATERIAL POSITIONS HELD DURING THE PAST FIVE YEARS
- ------------------------------------- --------------------------------------------------------------------------
<S> <C>
HIDEO TASHIMA........................ Mr. Tashima has been Chairman and Representative Director since 1993.
Director since 1974
OSAMU KANAYA......................... Mr. Kanaya has been President and Representative Director since 1993.
Director since 1985
YOSHIHIKO HIGASHIYAMA................ Mr. Higashiyama has been Senior Executive Director since 1995 and was an
Director since 1993 Executive Director from 1993 to 1995. He has been General Manager of
Finance, Information Systems & Overseas Distribution Headquarters since
1993.
NORIO TASHIMA........................ Mr. Tashima has been an Executive Director since 1982. He has been the
Director since 1978 General Manager of Parent's Tokyo Office since 1993 and General Manager of
Research and Development Headquarters since 1996.
YOSHIKATSU OTA....................... Mr. Ota has been an Executive Director since 1995. Prior thereto, he was a
Director since 1991 Director from 1991 to 1995. He has been General Manager of Image
Information Products General Headquarters and Image Information Products
Marketing Headquarters since 1994.
NORIKATSU SHIMIZU.................... Mr. Shimizu has been an Executive Director since 1996. Prior thereto, he
Director since 1993 was a Director from 1993 to 1996. He has been the General Manager of
Planning Headquarters since 1996. Prior thereto, he was President of
Minolta Sales Co., Ltd. from 1993 to 1996.
TADASHI ARAI......................... Mr. Arai has been an Executive Director since 1996. Prior thereto, he was
Director since 1993 a Director from 1993 to 1996. He has been the General Manager of Human
Resources and General Affairs Headquarters since 1996. Prior thereto, he
was General Manager of the Mizuho Factory and Tokai Office from 1993 to
1996.
ISAMU KUBOTA......................... Mr. Kubota has been a Director since 1989 and was an Executive Director
Director since 1989 from 1994 to March, 1999. He was General Manager of Optical Products
Headquarters from 1996 to March, 1999. Prior thereto, he was General
Manager of the Legal Affairs Headquarters and the Research and Development
Headquarters from 1994 to 1996.
</TABLE>
34
<PAGE>
<TABLE>
<CAPTION>
PRESENT PRINCIPAL OCCUPATION OR EMPLOYMENT;
NAME MATERIAL POSITIONS HELD DURING THE PAST FIVE YEARS
- ------------------------------------- --------------------------------------------------------------------------
<S> <C>
MASAYOSHI INOUE...................... Mr. Inoue has been a Director since 1992. He has been the General Manager
Director since 1992 of Image Information Products Development Headquarters since 1994.
TOSHIO KOBORI........................ Mr. Kobori has been a Director since 1993. He has been the Manager of the
Director since 1993 Industrial Design Division since 1998 and the General Manager of Legal
Affairs Headquarters since 1996. Prior thereto, he was the General Manager
of Optical Products Headquarters from 1992 to 1996.
RYUSHO KUTANI........................ Mr. Kutani has been a Director since 1995. He has been the President of
Director since 1995 Minolta GmbH since 1993.
TORU KISANUKI........................ Mr. Kisanuki has been a Director since 1995. He has been the President of
Director since 1995 Minolta Sales Co., Ltd. since 1996. Prior thereto, he was the General
Manager of Radiometric Instruments Operations from 1993 to 1996.
HIROSHI FUJII........................ Mr. Fujii has been a Director since 1995. He has been the President of
Director since 1995 Minolta Corporation since 1993.
NORIO URYU........................... Mr. Uryu has been a Director since 1996. He has been the General Manager
Director since 1996 of Image Information Products Manufacturing Headquarters and Tokai Office
since 1996. Prior thereto, he was a Deputy General Manager of Image
Information Products Manufacturing Headquarters from 1994 to 1996.
AKIO KAWANO.......................... Mr. Kawano has been a Director since 1996 and General Manager of Optical
Director since 1996 Product Headquarters since April, 1999. Prior thereto, he was the Deputy
General Manager of Optical Products Headquarters since 1996. He was the
President of Minolta Camera Sales Co., Ltd. from 1993 to 1998.
SHIGEYUKI SEKI....................... Mr. Seki has been a Director since 1997. He has been the Deputy General
Director since 1997 Manager of Image Information Products Marketing Headquarters since 1997
and Manager of Reprographic Marketing Division, Image Information Products
General Headquarters since 1994.
TOSHIAKI ISHIHARA.................... Mr. Ishihara has been a Director since 1997. He has been the Deputy
Director since 1997 General Manager of Image Information Products General Headquarters since
1997 and the Manager of Business Planning Division, Image Information
Products General Headquarters since 1994.
TATEOMI KONO......................... Mr. Kono has been a Director since 1997. He has been the Deputy General
Director since 1997 Manager of Image Information Products Development Headquarters since 1997.
Prior thereto, he was the Manager of the Engineering Division, Image
Information Products Development Headquarters from 1994 to 1996 and has
been Manager of Engineering Divisions I and III, Image Information
Products Development Headquarters since 1996.
</TABLE>
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<PAGE>
2. DIRECTORS AND EXECUTIVE OFFICERS OF PURCHASER.
The following table sets forth the name and present principal occupation or
employment, and material occupations, positions, offices or employments for the
past five years, of each director and executive officer of Purchaser. The
business address of each such person is c/o Minolta Corporation, 101 Williams
Drive, Ramsey, New Jersey 07446.
<TABLE>
<CAPTION>
PRESENT PRINCIPAL OCCUPATION OR EMPLOYMENT;
NAME MATERIAL POSITIONS HELD DURING THE PAST FIVE YEARS
- ------------------------------------- --------------------------------------------------------------------------
<S> <C>
HIROSHI FUJII........................ President, Treasurer and a Director of Purchaser. See Part 1 of this
Schedule I.
ALLEN A. HANS........................ Vice President and Secretary of Purchaser. Mr. Hans is Vice President,
General Counsel and Secretary of Minolta Corporation and Secretary of
Minolta Business Systems, Inc., Mohawk Marketing Corporation, Minolta
Information Systems Inc., Astro-Tec Manufacturing, Inc., Minolta Advance
Technology, Inc. and Minolta Systems Laboratory Inc. He joined Minolta
Corporation in 1987 as General Counsel and was promoted to Vice President
in 1993. Mr. Hans is a citizen of the United States.
</TABLE>
36
<PAGE>
Facsimile copies of the Letter of Transmittal, properly completed and duly
executed, will be accepted. The Letter of Transmittal, certificates for Shares
and any other required documents should be sent or delivered by each stockholder
of the Company or his broker, dealer, commercial bank, trust company or other
nominee to the Depositary at one of its addresses set forth below:
THE DEPOSITARY FOR THE OFFER IS:
HARRIS TRUST COMPANY OF NEW YORK
<TABLE>
<S> <C>
BY MAIL: BY HAND/OVERNIGHT DELIVERY:
Wall Street Station Receive Window
P.O. Box 1023 Wall Street Plaza
New York, NY 10268-1023 88 Pine Street, 19th Floor
New York, NY 10005
</TABLE>
BY FACSIMILE TRANSMISSIONS:
(FOR ELIGIBLE INSTITUTIONS ONLY)
(212) 701-7636
FOR INFORMATION (CALL COLLECT):
(212) 701-7624
Questions and requests for assistance may be directed to the Information
Agent at its address and telephone numbers listed below. Additional copies of
this Offer to Purchase, the Letter of Transmittal and other tender offer
materials may be obtained from the Information Agent as set forth below, and
will be furnished promptly at Purchaser's expense. Stockholders may also contact
their brokers, dealers, commercial banks, trust companies or other nominees for
assistance concerning the Offer.
THE INFORMATION AGENT FOR THE OFFER IS:
[LOGO]
501 Madison Avenue, 20th Floor
New York, New York 10022
Telephone: (212) 750-5833
or
Call Toll Free: (888) 750-5834
<PAGE>
LETTER OF TRANSMITTAL
TO TENDER SHARES OF
COMMON STOCK
(INCLUDING THE ASSOCIATED PREFERRED SHARE PURCHASE RIGHTS)
OF
QMS, INC.
PURSUANT TO THE OFFER TO PURCHASE
DATED JUNE 14, 1999
OF
MINOLTA INVESTMENTS COMPANY,
A WHOLLY-OWNED SUBSIDIARY
OF
MINOLTA CO., LTD.
- -----------------------------------------------------------------------------
THE OFFER, PRORATION PERIOD AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT,
NEW YORK CITY TIME, ON MONDAY, JULY 12, 1999 UNLESS THE OFFER IS EXTENDED.
- --------------------------------------------------------------------------------
THE DEPOSITARY FOR THE OFFER IS:
HARRIS TRUST COMPANY OF NEW YORK
<TABLE>
<S> <C> <C>
BY MAIL: BY HAND/OVERNIGHT DELIVERY:
Wall Street Station Receive Window
P.O. Box 1023 Wall Street Plaza
New York, NY 10268-1023 88 Pine Street, 19th Floor
(registered or certified mail New York, NY 10005
recommended)
</TABLE>
BY FACSIMILE TRANSMISSION:
(FOR ELIGIBLE INSTITUTIONS ONLY)
(212) 701-7636
CONFIRM FACSIMILE BY TELEPHONE
(212) 701-7624
DELIVERY OF THIS LETTER OF TRANSMITTAL TO AN ADDRESS OTHER THAN AS SET FORTH
ABOVE, OR TRANSMISSION OF INSTRUCTIONS VIA FACSIMILE TO A NUMBER OTHER THAN AS
SET FORTH ABOVE, WILL NOT CONSTITUTE A VALID DELIVERY TO THE DEPOSITARY.
THE INSTRUCTIONS CONTAINED WITHIN THIS LETTER OF TRANSMITTAL SHOULD BE READ
CAREFULLY BEFORE THIS LETTER OF TRANSMITTAL IS COMPLETED.
This Letter of Transmittal is to be used by stockholders of QMS, Inc. if
certificates for Shares (as such term is defined below) are to be forwarded
herewith or, unless an Agent's Message (as defined in Instruction 2 below) is
utilized, if delivery of Shares is to be made by book-entry transfer to an
account maintained by the Depositary at the Book-Entry Transfer Facility (as
defined in and pursuant to the procedures set forth in the Offer to Purchase).
Stockholders who deliver Shares by book-entry transfer are referred to herein as
"Book-Entry Stockholders" and other stockholders who deliver shares are referred
to herein as "Certificate Stockholders."
Stockholders whose certificates for Shares are not immediately available or
who cannot deliver either the certificates for, or a Book-Entry Confirmation (as
defined in Section 2 of the Offer to Purchase) with respect to, their Shares and
all other documents required hereby to the Depositary prior to the Expiration
Date (as defined in Section 1 of the Offer to Purchase) must tender their Shares
pursuant to the guaranteed delivery procedures set forth in Section 3 of the
Offer to Purchase. See Instruction 2. DELIVERY OF DOCUMENTS TO THE BOOK-ENTRY
TRANSFER FACILITY WILL NOT CONSTITUTE DELIVERY TO THE DEPOSITARY.
1
<PAGE>
CHECK HERE IF TENDERED SHARES ARE BEING DELIVERED BY BOOK-ENTRY TRANSFER
MADE TO THE DEPOSITARY'S ACCOUNT AT THE BOOK-ENTRY TRANSFER FACILITY AND
COMPLETE THE FOLLOWING (ONLY PARTICIPANTS IN THE BOOK-ENTRY TRANSFER FACILITY
MAY DELIVER SHARES BY BOOK-ENTRY TRANSFER):
Name of Tendering Institution:
Account Number: Transaction Code Number:
CHECK HERE IF TENDERED SHARES ARE BEING DELIVERED PURSUANT TO A NOTICE OF
GUARANTEED DELIVERY PREVIOUSLY SENT TO THE DEPOSITARY AND COMPLETE THE
FOLLOWING:
Name(s) of Registered Owner(s):
Window Ticket No. (if any):
Date of Execution of Notice of Guaranteed Delivery:
Name of Institution which Guaranteed Delivery:
If delivered by Book-Entry Transfer, check box:
Account Number: Transaction Code Number
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------
DESCRIPTION OF SHARES TENDERED
- ---------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
NAME(S) AND ADDRESS(ES) OF REGISTERED HOLDER(S) (PLEASE FILL SHARES TENDERED
IN, IF BLANK, EXACTLY AS NAME(S) APPEAR(S) ON SHARE (ATTACH ADDITIONAL SIGNED LIST IF NECESSARY)
CERTIFICATE(S))
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
CERTIFICATE TOTAL NUMBER OF NUMBER OF
NUMBER(S)(1) SHARES SHARES
REPRESENTED TENDERED(2)
BY
CERTIFICATE(S)(1)
----------------------------------------------
----------------------------------------------
----------------------------------------------
----------------------------------------------
----------------------------------------------
TOTAL SHARES
- ---------------------------------------------------------------------------------------------------------------
(1) NEED NOT BE COMPLETED BY BOOK-ENTRY STOCKHOLDERS.
(2) UNLESS OTHERWISE INDICATED, IT WILL BE ASSUMED THAT ALL SHARES REPRESENTED BY SHARE CERTIFICATES DELIVERED
TO THE DEPOSITARY ARE BEING TENDERED HEREBY. SEE INSTRUCTION 4.
- ---------------------------------------------------------------------------------------------------------------
</TABLE>
2
<PAGE>
NOTE: SIGNATURES MUST BE PROVIDED BELOW.
PLEASE READ THE INSTRUCTIONS SET FORTH IN THIS LETTER OF TRANSMITTAL CAREFULLY.
Ladies and Gentlemen:
The undersigned hereby tenders to Minolta Investments Company, a Delaware
corporation ("Purchaser") and wholly-owned subsidiary of Minolta Co., Ltd., a
Japanese corporation ("Parent"), the above-described shares of common stock, par
value $0.01 per share (the "Common Stock"), including the preferred share
purchase rights associated therewith issued pursuant to the Rights Agreement (as
defined in the Offer of Purchase) (the "Rights" and, together with the Common
Stock, the "Shares"), of QMS, Inc., a Delaware corporation (the "Company"),
pursuant to Purchaser's offer to purchase 5,440,000 Shares at a price of $6.25
per Share, net to the seller in cash, without interest, upon the terms and
subject to the conditions set forth in the Offer to Purchase, dated June 14,
1999, and in this Letter of Transmittal (which, together with any amendments or
supplements thereto or hereto, collectively constitute the "Offer"). The
undersigned understands that Purchaser reserves the right to transfer or assign,
in whole at any time, or in part from time to time, to one or more of its
affiliates, the right to purchase all or any portion of the Shares tendered
pursuant to the Offer, but any such transfer or assignment will not relieve
Purchaser of its obligations under the Offer and will in no way prejudice the
rights of tendering stockholders to receive payment for Shares validly tendered
and accepted for payment pursuant to the Offer. Receipt of the Offer is hereby
acknowledged.
The Offer is being made pursuant to a Stock Purchase Agreement, dated as of
June 7, 1999 (the "Stock Purchase Agreement"), between Parent, Purchaser and the
Company.
Upon the terms and subject to the conditions of the Offer, if more than the
Minimum Number of Shares are validly tendered prior to the Expiration Date and
not withdrawn in accordance with Section 4 of the Offer to Purchase, Purchaser
will accept for payment and pay for 5,440,000 Shares, on a pro rata basis (with
appropriate adjustments to avoid purchases of fractional Shares) according to
the number of Shares properly tendered by each stockholder at or prior to the
Expiration Date and not withdrawn. See Section 1 of the Offer to Purchase.
The Company has distributed one Right for each outstanding Share pursuant to
the Rights Agreement. The Rights are currently evidenced by and trade with
certificates evidencing the Common Stock. The Company has taken such action so
as to make the Rights Agreement inapplicable to Purchaser and its affiliates and
associates in connection with the Stock Purchase Agreement and the transactions
contemplated thereby.
Upon the terms and subject to the conditions of the Offer (and if the Offer
is extended or amended, the terms of any such extension or amendment), subject
to, and effective upon, acceptance for payment of, and payment for, the Shares
tendered herewith in accordance with the terms of the Offer, the undersigned
hereby sells, assigns and transfers to, or upon the order of, Purchaser all
right, title and interest in and to, and any and all claims in respect of or
arising or having arisen as a result of the undersigned's status as a holder of,
all the Shares that are being tendered hereby (and any and all non-cash
dividends, distributions, rights, other Shares or other securities issued or
issuable in respect thereof on or after June 7, 1999 (collectively,
"Distributions")) and irrevocably constitutes and appoints the Depositary the
true and lawful agent and attorney-in-fact of the undersigned with respect to
such Shares (and all Distributions), with full power of substitution (such power
of attorney being deemed to be an irrevocable power coupled with an interest),
to (i) deliver certificates for such Shares (and any and all Distributions), or
transfer ownership of such Shares (and any and all Distributions) on the account
books maintained by the Book-Entry Transfer Facility, together, in any such
case, with all accompanying evidences of transfer and authenticity, to or upon
the order of Purchaser, (ii) present such Shares (and any and all Distributions)
for transfer on the books of the Company and (iii) receive all benefits and
otherwise exercise all rights of beneficial ownership of such Shares (and any
and all Distributions), all in accordance with the terms of the Offer.
By executing this Letter of Transmittal, the undersigned hereby irrevocably
appoints Hiroshi Fujii and Allen A. Hans in their respective capacities as
officers of Purchaser, and any individual who shall thereafter succeed to any
such office of Purchaser, and each of them, the attorneys-in-fact and proxies of
the undersigned, each with full power of substitution, to vote at any annual or
special meeting of the Company's stockholders or any adjournment or postponement
thereof or otherwise in such manner as each such attorney-in-fact and proxy or
his substitute shall in his sole discretion deem proper with respect to, to
execute any written consent concerning any matter as each such attorney-in-fact
and proxy or his substitute shall in his sole discretion deem proper with
respect to, and to otherwise act as each such attorney-in-fact and proxy or his
substitute shall in his sole discretion deem proper with respect to, all of the
Shares (and any and all Distributions) tendered hereby and accepted for payment
by Purchaser. This appointment will be effective if and when, and only to the
extent that, Purchaser accepts such Shares for payment pursuant to the Offer.
This power of attorney and proxy are irrevocable and are granted in
consideration of the acceptance for payment of such Shares in accordance with
the terms of the Offer. Such acceptance for payment shall, without further
action, revoke any prior powers of attorney and proxies granted by the
undersigned at any time with respect to such Shares (and any and all
Distributions), and no subsequent powers of attorney, proxies, consents or
revocations may be given by the undersigned with respect thereto (and, if given,
will not be deemed effective). Purchaser reserves the right to require that, in
order for Shares or other securities to be deemed validly tendered, immediately
upon Purchaser's acceptance for payment of such Shares, Purchaser must be able
to exercise full voting, consent and other rights with respect to such Shares
(and any and all Distributions), including voting at any meeting of the
Company's stockholders.
3
<PAGE>
The undersigned hereby represents and warrants that the undersigned has full
power and authority to tender, sell, assign and transfer the Shares tendered
hereby and all Distributions, that the undersigned owns the Shares tendered
hereby within the meaning of Rule 14e-4 promulgated under the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), that the tender of the
tendered Shares complies with Rule 14e-4 under the Exchange Act, and that when
the same are accepted for payment by Purchaser, Purchaser will acquire good,
marketable and unencumbered title thereto and to all Distributions, free and
clear of all liens, restrictions, charges and encumbrances and the same will not
be subject to any adverse claims. The undersigned will, upon request, execute
and deliver any additional documents deemed by the Depositary or Purchaser to be
necessary or desirable to complete the sale, assignment and transfer of the
Shares tendered hereby and all Distributions. In addition, the undersigned shall
remit and transfer promptly to the Depositary for the account of Purchaser all
Distributions in respect of the Shares tendered hereby, accompanied by
appropriate documentation of transfer, and, pending such remittance and transfer
or appropriate assurance thereof, Purchaser shall be entitled to all rights and
privileges as owner of each such Distribution and may withhold the entire
purchase price of the Shares tendered hereby or deduct from such purchase price,
the amount or value of such Distribution as determined by Purchaser in its sole
discretion.
All authority herein conferred or agreed to be conferred shall survive the
death or incapacity of the undersigned, and any obligation of the undersigned
hereunder shall be binding upon the heirs, executors, administrators, personal
representatives, trustees in bankruptcy, successors and assigns of the
undersigned. Except as stated in the Offer, this tender is irrevocable.
The undersigned understands that the valid tender of Shares pursuant to any
one of the procedures described in Section 3 of the Offer to Purchase and in the
Instructions hereto will constitute a binding agreement between the undersigned
and Purchaser upon the terms and subject to the conditions of the Offer (and if
the Offer is extended or amended, the terms or conditions of any such extension
or amendment). Without limiting the foregoing, if the price to be paid in the
Offer is amended in accordance with the terms of the Stock Purchase Agreement,
the price to be paid to the undersigned will be the amended price
notwithstanding the fact that a different price is stated in this Letter of
Transmittal. The undersigned recognizes that under certain circumstances set
forth in the Offer to Purchase, Purchaser may not be required to accept for
payment any of the Shares tendered hereby.
Upon the terms and subject to the conditions of the Offer, if more than
5,440,000 Shares are validly tendered and not withdrawn in accordance with
Section 4 of the Offer to Purchase prior to the Expiration Date, Purchaser will
accept for payment and pay for 5,440,000 Shares, on a pro rata basis (with
appropriate adjustments to avoid purchases of fractional Shares) according to
the number of Shares properly tendered and not withdrawn by each stockholder at
or prior to the Expiration Date. In the event that proration of tendered Shares
is required, because of the difficulty of determining the precise number of
Shares properly tendered and not withdrawn (due in part to the guaranteed
delivery procedure described in Section 3 of the Offer to Purchase), Purchaser
does not expect that it will be able to announce the final results of such
proration or pay for any Shares until at least seven New York Stock Exchange
trading days after the Expiration Date. Preliminary results of proration will be
announced by press release as promptly as practicable after the Expiration Date.
Stockholders may obtain such preliminary information from Innisfree M & A
Incorporated (the "Information Agent") and may be able to obtain such
information from their brokers.
Unless otherwise indicated herein in the box entitled "Special Payment
Instructions," please issue the check for the purchase price of all Shares
purchased and/or return any certificates for Shares not tendered or accepted for
payment in the name(s) of the registered holder(s) appearing above under
"Description of Shares Tendered." Similarly, unless otherwise indicated under
"Special Delivery Instructions," please mail the check for the purchase price of
all Shares purchased and/or return any certificates for Shares not tendered or
not accepted for payment (and any accompanying documents, as appropriate) to the
address(es) of the registered holder(s) appearing above under "Description of
Shares Tendered." In the event that the boxes entitled "Special Payment
Instructions" and "Special Delivery Instructions" are both completed, please
issue the check for the purchase price of all Shares purchased and/or return any
certificates evidencing Shares not tendered or not accepted for payment (and any
accompanying documents, as appropriate) in the name(s) of, and deliver such
check and/or return any such certificates (and any accompanying documents, as
appropriate) to, the person(s) so indicated. Unless otherwise indicated herein
in the box entitled "Special Payment Instructions," please credit any Shares
tendered herewith by book-entry transfer that are not accepted for payment by
crediting the account at the Book-Entry Transfer Facility designated above. The
undersigned recognizes that Purchaser has no obligation, pursuant to the
"Special Payment Instructions," to transfer any Shares from the name of the
registered holder thereof if Purchaser does not accept for payment any of the
Shares so tendered.
4
<PAGE>
CHECK HERE IF ANY OF THE CERTIFICATES REPRESENTING SHARES THAT YOU OWN HAVE
BEEN LOST, DESTROYED OR STOLEN AND SEE INSTRUCTION 11.
NUMBER OF SHARES REPRESENTED BY LOST, DESTROYED OR STOLEN CERTIFICATES:
- -----------------------------------------------------
SPECIAL PAYMENT INSTRUCTIONS
(SEE INSTRUCTIONS 1, 5, 6 AND 7)
To be completed ONLY if the check for the purchase price of Shares
accepted for payment is to be issued in the name of someone other than the
undersigned, if certificates for Shares not tendered or not accepted for
payment are to be issued in the name of someone other than the undersigned
or if Shares tendered hereby and delivered by book-entry transfer that are
not accepted for payment are to be returned by credit to an account
maintained at a Book-Entry Transfer Facility other than the account
indicated above.
Issue check and/or Share certificate(s) to:
Name: ______________________________________________________________________
(PLEASE PRINT)
Address ____________________________________________________________________
____________________________________________________________________________
____________________________________________________________________________
(INCLUDE ZIP CODE)
____________________________________________________________________________
(TAXPAYER IDENTIFICATION OR SOCIAL SECURITY NUMBER)
(SEE SUBSTITUTE FORM W-9)
Credit Shares delivered by book-entry transfer and not purchased to the
Book-Entry Transfer Facility account.
____________________________________________________________________________
(ACCOUNT NUMBER)
- ------------------------------------------------------------
- ------------------------------------------------------------
SPECIAL DELIVERY INSTRUCTIONS
(SEE INSTRUCTIONS 1, 5, 6 AND 7)
To be completed, ONLY if certificates for Shares not tendered or not
accepted for payment and/or the check for the purchase price of Shares
accepted for payment is to be sent to someone other than the undersigned or
to the undersigned at an address other than that shown under "Description of
Shares Tendered."
Mail check and/or Share certificates to:
Name _______________________________________________________________________
(PLEASE PRINT)
Address ____________________________________________________________________
____________________________________________________________________________
____________________________________________________________________________
(INCLUDE ZIP CODE)
____________________________________________________________________________
(TAXPAYER IDENTIFICATION OR SOCIAL SECURITY NUMBER)
(SEE SUBSTITUTE FORM W-9)
- -----------------------------------------------------
5
<PAGE>
- --------------------------------------------------------------------------------
IMPORTANT--SIGN HERE
(ALSO COMPLETE SUBSTITUTE FORM W-9 BELOW)
____________________________________________________________________________
(SIGNATURE(S) OF STOCKHOLDER(S))
Dated: ____________, 1999
(Must be signed by registered holder(s) exactly as name(s) appear(s) on
the Share certificate(s) or on a security position listing or by person(s)
authorized to become registered holder(s) by certificates and documents
transmitted herewith. If signature is by trustee, executor, administrator,
guardian, attorney-in-fact, officer of a corporation or other person acting
in a fiduciary or representative capacity, please provide the following
information and see Instruction 5.)
Name(s): ___________________________________________________________________
____________________________________________________________________________
(PLEASE PRINT)
Name of Firm: ______________________________________________________________
Capacity (full title): _____________________________________________________
(SEE INSTRUCTION 5)
Address: ___________________________________________________________________
____________________________________________________________________________
____________________________________________________________________________
____________________________________________________________________________
(INCLUDE ZIP CODE)
Area Code and Telephone Number: ( )_______________________________________
Taxpayer Identification or Social Security Number: _________________________
(SEE SUBSTITUTE FORM W-9)
GUARANTEE OF SIGNATURE(S) (SEE INSTRUCTIONS 1 AND 5)
Authorized Signature: ______________________________________________________
Name(s): ___________________________________________________________________
(PLEASE PRINT)
Title: _____________________________________________________________________
Name of Firm: ______________________________________________________________
Address: ___________________________________________________________________
____________________________________________________________________________
(INCLUDE ZIP CODE)
Area Code and Telephone Number: ____________________________________________
- --------------------------------------------------------------------------------
6
<PAGE>
INSTRUCTIONS
FORMING PART OF THE TERMS AND CONDITIONS OF THE OFFER
1. GUARANTEE OF SIGNATURES. No signature guarantee is required on this
Letter of Transmittal (a) if this Letter of Transmittal is signed by the
registered holder(s) (which term, for purposes of this Section, includes any
participant in any of the Book-Entry Transfer Facility's systems whose name
appears on a security position listing as the owner of the Shares) of Shares
tendered herewith, unless such registered holder(s) has(have) completed either
the box entitled "Special Payment Instructions" or the box entitled "Special
Delivery Instructions" on the Letter of Transmittal or (b) if such Shares are
tendered for the account of a financial institution (including most commercial
banks, savings and loan associations and brokerage houses) that is a participant
in the Security Transfer Agents Medallion Program, the New York Stock Exchange
Medallion Signature Guarantee Program or the Stock Exchange Medallion Program
(each, an "Eligible Institution"). In all other cases, all signatures on this
Letter of Transmittal must be guaranteed by an Eligible Institution. See
Instruction 5.
2. DELIVERY OF LETTER OF TRANSMITTAL AND SHARES; GUARANTEED DELIVERY
PROCEDURES. This Letter of Transmittal is to be completed by stockholders of the
Company either if Share certificates are to be forwarded herewith or, unless an
Agent's Message is utilized, if delivery of Shares is to be made by book-entry
transfer pursuant to the procedures set forth herein and in Section 3 of the
Offer to Purchase. For a stockholder validly to tender Shares pursuant to the
Offer, either (a) a properly completed and duly executed Letter of Transmittal
(or facsimile thereof), together with any required signature guarantees or an
Agent's Message (in connection with book-entry transfer) and any other required
documents, must be received by the Depositary at one of its addresses set forth
herein prior to the Expiration Date and either (i) certificates for tendered
Shares must be received by the Depositary at one of such addresses prior to the
Expiration Date or (ii) Shares must be delivered pursuant to the procedures for
book-entry transfer set forth herein and in Section 3 of the Offer to Purchase
and a Book-Entry Confirmation must be received by the Depositary prior to the
Expiration Date or (b) the tendering stockholder must comply with the guaranteed
delivery procedures set forth herein and in Section 3 of the Offer to Purchase.
Stockholders whose certificates for Shares are not immediately available or
who cannot deliver their certificates and all other required documents to the
Depositary prior to the Expiration Date or who cannot comply with the book-entry
transfer procedures on a timely basis may tender their Shares by properly
completing and duly executing the Notice of Guaranteed Delivery pursuant to the
guaranteed delivery procedure set forth herein and in Section 3 of the Offer to
Purchase.
Pursuant to such guaranteed delivery procedures, (i) such tender must be
made by or through an Eligible Institution, (ii) a properly completed and duly
executed Notice of Guaranteed Delivery, substantially in the form provided by
Purchaser, must be received by the Depositary prior to the Expiration Date and
(iii) the certificates for all tendered Shares, in proper form for transfer (or
a Book-Entry Confirmation with respect to all tendered Shares), together with a
properly completed and duly executed Letter of Transmittal (or a facsimile
thereof), with any required signature guarantees, or, in the case of a
book-entry transfer, an Agent's Message, and any other required documents, must
be received by the Depositary within three trading days after the date of
execution of such Notice of Guaranteed Delivery. A "trading day" is any day on
which the New York Stock Exchange is open for business.
The term "Agent's Message" means a message transmitted by the Book-Entry
Transfer Facility to, and received by, the Depositary and forming a part of a
Book-Entry Confirmation, which states that such Book-Entry Transfer Facility has
received an express acknowledgment from the participant in such Book-Entry
Transfer Facility tendering the Shares, that such participant has received and
agrees to be bound by the terms of the Letter of Transmittal and that Purchaser
may enforce such agreement against the participant.
The signatures on this Letter of Transmittal cover the Shares tendered
hereby.
THE METHOD OF DELIVERY OF THE SHARES, THIS LETTER OF TRANSMITTAL AND ALL
OTHER REQUIRED DOCUMENTS, INCLUDING DELIVERY THROUGH THE BOOK-ENTRY TRANSFER
FACILITY, IS AT THE ELECTION AND RISK OF THE TENDERING STOCKHOLDER. THE SHARES
WILL BE DEEMED DELIVERED ONLY WHEN ACTUALLY RECEIVED BY THE DEPOSITARY
(INCLUDING, IN THE CASE OF A BOOK-ENTRY TRANSFER, BY BOOK-ENTRY CONFIRMATION).
IF DELIVERY IS BY MAIL, REGISTERED MAIL WITH RETURN RECEIPT REQUESTED, PROPERLY
INSURED, IS RECOMMENDED. IN ALL CASES, SUFFICIENT TIME SHOULD BE ALLOWED TO
ENSURE TIMELY DELIVERY.
No alternative, conditional or contingent tenders will be accepted, and no
fractional Shares will be purchased. All tendering stockholders, by executing
this Letter of Transmittal (or facsimile thereof), waive any right to receive
any notice of acceptance of their Shares for payment.
3. INADEQUATE SPACE. If the space provided herein under "Description of
Shares Tendered" is inadequate, the number of Shares tendered and the Share
certificate numbers with respect to such Shares should be listed on a separate
signed schedule attached hereto.
4. PARTIAL TENDERS. (Not applicable to stockholders who tender by book-entry
transfer). If fewer than all the Shares evidenced by any Share certificate
delivered to the Depositary herewith are to be tendered hereby, fill in the
number of Shares that are to be tendered in the box entitled "Number of Shares
Tendered." In any such case, new certificate(s) for the remainder of the Shares
that were evidenced by the old certificates will be sent to the registered
holder, unless otherwise provided in the appropriate box on this Letter of
Transmittal, as soon as practicable after the Expiration Date or the termination
of the Offer. All Shares represented by certificates delivered to the Depositary
will be deemed to have been tendered unless otherwise indicated.
5. SIGNATURES ON LETTER OF TRANSMITTAL; STOCK POWERS AND ENDORSEMENTS. If
this Letter of Transmittal is signed by the registered holder(s) of the Shares
tendered hereby, the signature(s) must correspond with the name(s) as written on
the face of the certificate(s) without alteration, enlargement or any change
whatsoever.
If any of the Shares tendered hereby are held of record by two or more joint
owners, all such owners must sign this Letter of Transmittal.
7
<PAGE>
If any of the tendered Shares are registered in different names on several
certificates, it will be necessary to complete, sign and submit as many separate
Letters of Transmittal as there are different registrations of certificates.
If this Letter of Transmittal or any Share certificate or stock power is
signed by a trustee, executor, administrator, guardian, attorney-in-fact,
officer of a corporation or other person acting in a fiduciary or representative
capacity, such person should so indicate when signing, and proper evidence
satisfactory to Purchaser of the authority of such person so to act must be
submitted.
If this Letter of Transmittal is signed by the registered holder(s) of the
Shares listed and transmitted hereby, no endorsements of Share certificates or
separate stock powers are required unless payment or certificates for Shares not
tendered or not accepted for payment are to be issued in the name of a person
other than the registered holder(s). Signatures on any such Share certificates
or stock powers must be guaranteed by an Eligible Institution.
If this Letter of Transmittal is signed by a person other than the
registered holder(s) of the Shares evidenced by certificates listed and
transmitted hereby, the Share certificates must be endorsed or accompanied by
appropriate stock powers, in either case signed exactly as the name(s) of the
registered holder(s) appear(s) on the Share certificates. Signature(s) on any
such Share certificates or stock powers must be guaranteed by an Eligible
Institution.
6. STOCK TRANSFER TAXES. Except as otherwise provided in this Instruction 6,
Purchaser will pay all stock transfer taxes with respect to the transfer and
sale of any Shares to it or its order pursuant to the Offer. If, however,
payment of the purchase price of any Shares purchased is to be made to, or if
certificates for Shares not tendered or not accepted for payment are to be
registered in the name of, any person other than the registered holder(s), or if
tendered certificates are registered in the name of any person other than the
person(s) signing this Letter of Transmittal, the amount of any stock transfer
taxes (whether imposed on the registered holder(s) or such other person) payable
on account of the transfer to such other person will be deducted from the
purchase price of such Shares purchased unless evidence satisfactory to
Purchaser of the payment of such taxes, or exemption therefrom is submitted.
Except as provided in this Instruction 6, it will not be necessary for
transfer tax stamps to be affixed to the Share certificates evidencing the
Shares tendered hereby.
7. SPECIAL PAYMENT AND DELIVERY INSTRUCTIONS. If a check for the purchase
price of any Shares accepted for payment is to be issued in the name of, and/or
Share certificates for Shares not accepted for payment or not tendered are to be
issued in the name of and/or returned to, a person other than the signer of this
Letter of Transmittal or if a check is to be sent, and/or such certificates are
to be returned, to a person other than the signer of this Letter of Transmittal,
or to an address other than that shown above, the appropriate boxes on this
Letter of Transmittal should be completed. Any stockholder(s) delivering Shares
by book-entry transfer may request that Shares not purchased be credited to such
account maintained at the Book-Entry Transfer Facility as such stockholder(s)
may designate in the box entitled "Special Payment Instructions." If no such
instructions are given, any such Shares not purchased will be returned by
crediting the account at the Book-Entry Transfer Facility designated above as
the account from which such Shares were delivered.
8. REQUESTS FOR ASSISTANCE OR ADDITIONAL COPIES. Questions and requests for
assistance or additional copies of the Offer to Purchase, this Letter of
Transmittal, the Notice of Guaranteed Delivery and the Guidelines for
Certification of Taxpayer Identification Number on Substitute Form W-9 may be
directed to the Information Agent at its address and phone number set forth
below, or from brokers, dealers, commercial banks or trust companies.
9. WAIVER OF CONDITIONS. Subject to the Stock Purchase Agreement, Purchaser
reserves the absolute right in its sole discretion to waive, at any time or from
time to time, any of the specified conditions of the Offer, in whole or in part,
in the case of any Shares tendered.
10. BACKUP WITHHOLDING. In order to avoid "backup withholding" of federal
income tax on payments pursuant to the Offer, a stockholder surrendering Shares
in the Offer must, unless an exemption applies, provide the Depositary with such
stockholder's correct taxpayer identification number ("TIN") on Substitute Form
W-9 in this Letter of Transmittal and certify, under penalties of perjury, that
such TIN is correct and that such stockholder is not subject to backup
withholding.
Backup withholding is not an additional income tax. Rather, the amount of
the backup withholding can be credited against the federal income tax liability
of the person subject to the backup withholding, provided that the required
information is given to the Internal Revenue Service. If backup withholding
results in an overpayment of tax, a refund can be obtained by the stockholder
upon filing an income tax return.
The stockholder is generally required to give the Depositary the TIN (i.e.,
social security number or employer identification number) of the record owner of
the Shares. If the Shares are held in more than one name or are not in the name
of the actual owner, consult the enclosed "Guidelines for Certification of
Taxpayer Identification Number on Substitute Form W-9" for additional guidance
on which number to report.
The box in Part 3 of the Substitute Form W-9 may be checked if the tendering
stockholder has not been issued a TIN and has applied for a TIN or intends to
apply for a TIN in the near future. If the box in Part 3 is checked, the
stockholder or other payee must also complete the Certificate of Awaiting
Taxpayer Identification Number below in order to avoid backup withholding.
Notwithstanding that the box in Part 3 is checked and the Certificate of
Awaiting Taxpayer Identification Number is completed, the Depositary will
withhold 31% on all payments made prior to the time a properly certified TIN is
provided to the Depositary. However, such amounts will be refunded to such
stockholder if a TIN is provided to the Depositary within 60 days.
8
<PAGE>
Certain stockholders (including, among others, most corporations and certain
foreign individuals and entities) are not subject to backup withholding.
Noncorporate foreign stockholders should complete and sign both the main
signature form and a Form W-8, Certificate of Foreign Status, a copy of which
may be obtained from the Depositary, in order to avoid backup withholding. See
the enclosed "Guidelines for Certification of Taxpayer Identification Number on
Substitute Form W-9" for more instructions.
11. LOST, DESTROYED OR STOLEN SHARE CERTIFICATES. If any certificate(s)
representing Shares has (have) been lost, destroyed or stolen, the stockholder
should promptly notify the Depositary by checking the box immediately preceding
the special payment/special delivery instructions and indicating the number of
Shares lost. The stockholder will then be instructed as to the steps that must
be taken in order to replace the Share certificate(s). This Letter of
Transmittal and related documents cannot be processed until the procedures for
replacing lost, destroyed or stolen Share certificates have been followed.
IMPORTANT: THIS LETTER OF TRANSMITTAL (OR FACSIMILE HEREOF) TOGETHER WITH
ANY REQUIRED SIGNATURE GUARANTEES, OR, IN THE CASE OF A BOOK-ENTRY TRANSFER, AN
AGENT'S MESSAGE, AND ANY OTHER REQUIRED DOCUMENTS, MUST BE RECEIVED BY THE
DEPOSITARY PRIOR TO THE EXPIRATION DATE AND EITHER CERTIFICATES FOR TENDERED
SHARES MUST BE RECEIVED BY THE DEPOSITARY OR SHARES MUST BE DELIVERED PURSUANT
TO THE PROCEDURES FOR BOOK-ENTRY TRANSFER, IN EACH CASE PRIOR TO THE EXPIRATION
DATE, OR THE TENDERING STOCKHOLDER MUST COMPLY WITH THE PROCEDURES FOR
GUARANTEED DELIVERY.
IMPORTANT TAX INFORMATION
Under federal income tax law, a stockholder whose tendered Shares are
accepted for payment is generally required to provide the Depositary (as payer)
with such stockholder's correct taxpayer identification number on Substitute
Form W-9 below. If such stockholder is an individual, the taxpayer
identification number is his social security number. If a tendering stockholder
is subject to backup withholding, such stockholder must cross out item (2) of
Part 2 (the Certification box) on the Substitute Form W-9. If the Depositary is
not provided with the correct taxpayer identification number, the stockholder
may be subject to a $50 penalty imposed by the Internal Revenue Service. In
addition, payments that are made to such stockholder or other payee with respect
to Shares purchased pursuant to the Offer may be subject to backup withholding.
Certain stockholders (including, among others, most corporations, and
certain foreign individuals) are not subject to these backup withholding and
reporting requirements. In order for a foreign individual to qualify as an
exempt recipient, that stockholder must submit a statement on a Form W-8, signed
under penalties of perjury, attesting to that individual's exempt status. Such
statements can be obtained from the Depositary. Exempt stockholders, other than
foreign individuals, should furnish their TIN, write "Exempt" on the face of the
Substitute Form W-9 below, and sign, date and return the Substitute Form W-9 to
the Depositary. See the enclosed "Guidelines for Certification of Taxpayer
Identification Number on Substitute Form W-9" for additional instructions.
If backup withholding applies, the Depositary is required to withhold 31% of
any payments made to the stockholder or other payee. Backup withholding is not
an additional tax. Rather, the tax liability of persons subject to backup
withholding will be reduced by the amount of tax withheld provided the required
information is given to the Internal Revenue Service. If withholding results in
an overpayment of taxes, a refund may be obtained from the Internal Revenue
Service, provided the stockholder files a federal income tax return.
PURPOSE OF SUBSTITUTE FORM W-9
To prevent backup withholding on payments that are made to a stockholder
with respect to Shares purchased pursuant to the Offer, the stockholder is
generally required to notify the Depositary of such stockholder's correct
taxpayer identification number by completing the form contained herein
certifying that the taxpayer identification number provided on Substitute Form
W-9 is correct (or that such stockholder is awaiting a taxpayer identification
number) and that such stockholder is not subject to backup withholding.
WHAT NUMBER TO GIVE THE DEPOSITARY
The stockholder is generally required to give the Depositary the social
security number or employer identification number of the record owner of the
Shares. If the Shares are in more than one name or are not in the name of the
actual owner, consult the enclosed "Guidelines for Certification of Taxpayer
Identification Number on Substitute Form W-9" for additional guidance on which
number to report. If the tendering stockholder has not been issued a TIN and has
applied for a number or intends to apply for a number in the near future, such
stockholder should write "Applied For" in the space provided for in the TIN in
Part 1 and sign and date the Substitute Form W-9. If "Applied For" is written in
Part 1 and the Depositary is not provided with a TIN within sixty (60) days, all
payments of the purchase price will be subject to a 31% withholding by the
Depositary.
9
<PAGE>
PAYER'S NAME: HARRIS TRUST COMPANY OF NEW YORK
<TABLE>
<S> <C> <C>
- -------------------------------------------------------------------------------------------------------------
SUBSTITUTE Part 1--PLEASE PROVIDE YOUR TIN IN THE BOX AT Social Security Number
FORM W-9 RIGHT AND CERTIFY BY SIGNING AND DATING BELOW (If awaiting TIN write
DEPARTMENT OF THE TREASURY "Applied For")
INTERNAL REVENUE SERVICE OR
Employer Identification Number
(If awaiting TIN write
"Applied For")
--------------------------------------------------------------------------------
PAYER'S REQUEST FOR PART 2--CERTIFICATE--Under penalties of perjury, I certify that:
TAXPAYER (1) The number shown on this form is my correct Taxpayer Identification Number
IDENTIFICATION (or I am waiting for a number to be issued for me), and
NUMBER (TIN) (2) I am not subject to backup withholding because: (a) I am exempt from backup
withholding, or (b) I have not been notified by the Internal Revenue Service
(the "IRS") that I am subject to backup withholding as a result of a failure
to report all interest or dividends, or (c) the IRS has notified me that I
am no longer subject to backup withholding.
--------------------------------------------------------------------------------
CERTIFICATION INSTRUCTIONS--You must cross out item (2) above if you have been
notified by the IRS that you are currently subject to backup withholding because
of under-reporting interest or dividends on your tax returns. However, if after
being notified by the IRS that you are subject to backup withholding, you
receive another notification from the IRS that you are no longer subject to
backup withholding, do not cross out such item (2). (Also see instructions in
the enclosed GUIDELINES).
--------------------------------------------------------------------------------
SIGNATURE DATE , 1999 PART 3--AWAITING TIN
- -------------------------------------------------------------------------------------------------------------
</TABLE>
NOTE: FAILURE TO COMPLETE AND RETURN THIS FORM MAY RESULT IN BACKUP WITHHOLDING
OF 31% OF ANY PAYMENTS MADE TO YOU PURSUANT TO THE OFFER. PLEASE REVIEW THE
ENCLOSED GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION NUMBER ON
SUBSTITUTE FORM W-9 FOR ADDITIONAL DETAILS.
YOU MUST COMPLETE THE FOLLOWING CERTIFICATE IF YOU CHECKED
THE BOX IN PART 3 OF THE SUBSTITUTE FORM W-9.
- --------------------------------------------------------------------------------
CERTIFICATE OF AWAITING TAXPAYER IDENTIFICATION NUMBER
I certify under penalties of perjury that a Taxpayer Identification Number has
not been issued to me, and either (1) I have mailed or delivered an application
to receive a Taxpayer Identification Number to the appropriate Internal Revenue
Service Center or Social Security Administration Officer or (2) I intend to
mail or deliver an application in the near future. I understand that if I do
not provide a Taxpayer Identification Number to the Depositary by the time of
payment, 31% of all reportable payments made to me thereafter will be withheld,
but that such amounts will be refunded to me if I provide a certified Taxpayer
Identification Number to the Depositary within sixty (60) days.
SIGNATURE ______________________________________ DATE ___________________, 1999
- --------------------------------------------------------------------------------
Questions and requests for assistance or additional copies of the Offer to
Purchase, this Letter of Transmittal and other tender offer materials may be
directed to the Information Agent at its address and telephone number set forth
below:
THE INFORMATION AGENT FOR THE OFFER IS:
LOGO
501 Madison Avenue, 20th Floor
New York, New York 10022
Telephone: (212) 750-5833
or
Call Toll Free: (888) 750-5834
10
<PAGE>
QMS AND MINOLTA ANNOUNCE STRATEGIC PARTNERSHIP PAGE 1 of 2
[LETTERHEAD OF QMS]
FOR IMMEDIATE RELEASE CONTACT:
===================== --------
Tony Wallace
Vice President & CFO
(334) 633-4300
http://www.qms.com
================================================================================
QMS AND MINOLTA ANNOUNCE STRATEGIC PARTNERSHIP TO
CONSOLIDATE THEIR PRESENCE IN THE LASER PRINTER MARKET
================================================================================
QMS ALSO ANNOUNCES COMPLETION OF EUROPEAN MASTER DISTRIBUTOR REACQUISITION.
- -------------------------------------------------------------------------------
JUNE 8, 1999 - MOBILE, ALA -- QMS, Inc. (NYSE:AQM) announced today that Minolta
Co., Ltd. (Tokyo Stock Exchange:7753) is making a strategic investment in QMS to
consolidate their positions in the laser printer market. This investment
consists of two primary parts:
o A capital infusion through purchase by Minolta of approximately 2.1 million
shares of QMS stock directly from the company at $5.75 per share and a term
loan of approximately $12.8 million dollars.
o A tender offer for additional shares of QMS stock to bring Minolta's
cumulative ownership position in QMS to approximately 51%. The tender offer
price will be $6.25 per share.
QMS will still operate as a publicly traded NYSE corporation.
As part of its agreement with Minolta, QMS has amended its stockholder rights
plan in such a way that it would not be applicable to the tender offer to be
made by Minolta. In addition, the rights under the plan would not be
distributable due to the tender offer.
QMS also announced it has completed the reacquisition of its European Master
Distributor at a total purchase price of $27.4 million through a combination of
notes and cash.
QMS, as a member of the Minolta Group, will assume a leadership role in key
areas of the branded printer operations. These areas will include product
planning, R&D,
<PAGE>
QMS AND MINOLTA ANNOUNCE STRATEGIC PARTNERSHIP PAGE 2 of 2
integration, logistics, sales, marketing, service, and support. Going forward,
the companies will pursue opportunities to integrate these functions.
With the completed reacquisition of the European Master Distributor and the
combination of the Minolta and QMS printer business operations worldwide, this
partnership is expected to become the 3rd largest supplier of color laser
printers in the world. This relationship brings additional products and sales
channel capabilities to both the Minolta and QMS operations.
"We have enjoyed an excellent cooperative relationship with Minolta since 1993,
when it began supplying printer engines to QMS," stated Edward E. Lucente, CEO
and Chairman of QMS. "Now, we are combining world class engine and controller
technology that will allow us to provide better products, coordinating our sales
and marketing efforts into a unified co-branded offering, expanding our
respective positions in our target markets, and integrating our logistical
operations to create a major worldwide player in the laser printer marketplace."
Lucente continued, "By joining forces with Minolta, we plan to achieve greater
market penetration than would be possible for either business acting
independently, while maintaining cost-efficient operations."
"The alliance with QMS will accelerate the realization of our plans for
Minolta's printer business, an area where we are enjoying significant growth.
This is in line with a key objective of our new five year plan to strengthen our
core competence in promising businesses," stated Yoshikatsu Ohta, Executive
Director of Minolta. "QMS' product line, R&D, sales and software development
capabilities make the company highly attractive to Minolta as we sharpen our
focus on color output devices in the field of digital imaging and move forward
to lead the market in the convergence of printers and copiers."
Convergence teams will immediately be formed to create and implement plans to
maximize the benefits of this transaction. Significant results from convergence
are not expected before April 1, 2000.
- --------------------------------------------------------------------------------
QMS, INC.
QMS and the QMS logo are registered trademarks of QMS, Inc.
Statements made by the Company's management which are intended to be "forward
looking statements" within the meaning of the Private Securities Litigation
Reform Act of 1995 (words and phrases such as "expects", "will continue",
"should", "is anticipated", "estimate", "hope" or expressions of a similar
nature) denote uncertainties that could cause actual results to differ
materially from historical results or from those results presently anticipated
or projected. QMS wishes to caution listeners not to place undue reliance on
such forward-looking statements.
- --------------------------------------------------------------------------------
<PAGE>
EXHIBIT (a)(4)
[LOGO]
June 7, 1999
Board of Directors
QMS, Inc.
One Magnum Pass
Mobile, AL 36618
Dear Sirs:
We understand that Minolta Co., Ltd. ("Minolta") plans to initiate a tender
offer on or before
June 15, 1999 (based on signing the Minolta Stock Purchase Agreement on June 7,
1999) at an offer price of not less than $6.25 per share (the "Proposed
Transaction") in order to accumulate a majority interest in the issued and
outstanding shares of QMS, Inc. (the "Company"). The terms and conditions of the
Proposed Transaction are set forth in more detail in the letter agreement
between Minolta and the Company dated May 17, 1999 (the "Agreement"). We have
been requested by the Company to render our Opinion with respect to the
fairness, from a financial point of view, to the shareholders of the Company of
the consideration to be offered in the Proposed Transaction.
In arriving at our Opinion, we have assumed that, pursuant to the Agreement,
the following events will have transpired prior to the consummation of the
Proposed Transaction: (1) Minolta will have invested approximately $12.2 million
in QMS through a private placement of common stock at $5.75 per share; (2)
Minolta will have extended a loan to QMS, secured by the stock of QMS Europe BV
and QMS Australia PTY Ltd. (collectively referred to herein as "BV"), in amount
equal to approximately $12.8 million; and (3) the Company will have acquired the
stock of BV.
In arriving at our Opinion, we have performed the following: (1) reviewed
the Agreement; (2) reviewed certain publicly available information concerning
the Company which we believe to be relevant to our analysis; (3) reviewed
certain internal financial statements and other financial and operating data
concerning the Company and BV prepared by the management of the Company; (4)
analyzed certain financial assumptions prepared by the Company and BV; (5)
conducted discussions with members of management of the Company and BV
concerning their respective business, operations and prospects; (6) reviewed the
trading performance of the Company's common shares over the last three years;
(7) reviewed the historical trading performance of the Company's common shares
in comparison with those of certain other public companies which we deemed
relevant as well as certain market indexes over the last three years; (8)
compared the results of operations and present financial condition of the
Company with those of other public companies which we deemed relevant; (9)
reviewed the financial terms of certain merger and acquisition transactions
which we deemed relevant; (10) reviewed the financial terms of certain
acquisitions and tender offers involving the purchase of a majority equity
interest which we deemed relevant; (11) reviewed premiums paid in acquisitions
of public companies from 1987 to 1999; (12) performed certain financial analyses
with respect to the Company's projected future operating performance, including
a discounted cash flow analysis; (13) reviewed the draft Minolta Loan Agreement
dated May 28, 1999 and the draft Minolta Stock Purchase Agreement dated June 2,
1999; and (14) undertook such other financial studies and analysis as well as
performed such other investigations as we deemed necessary.
ATLANTA FINANCIAL CENTER
3333 PEACHTREE ROAD, NE - ATLANTA, GEORGIA 30326
(404) 266-6000
<PAGE>
We have assumed and relied upon the accuracy and completeness of the
financial and other information regarding the Company and BV used by us in
arriving at our Opinion without independent verification. With respect to the
financial projections of the Company and BV, we have assumed that such
projections have been reasonably prepared on bases reflecting the best currently
available estimates and judgments of the management of the Company and BV as to
the future financial performance of the Company and BV. In arriving at our
Opinion, we have conducted a physical inspection of the properties and
facilities of the Company and BV but have not made or obtained any evaluations
or appraisals of the assets or liabilities of the Company and BV. Our Opinion is
necessarily based upon market, economic and other conditions as they exist on,
and can be evaluated as of, the date of this letter.
We have acted as financial advisor to the Company in connection with the
Proposed Transaction and certain other recent transactions and have received and
will receive a fee for these services, a significant portion of which is
contingent upon the consummation of the Proposed Transaction. In addition, the
Company has agreed to indemnify us for certain liabilities arising out of the
rendering of this Opinion.
Based upon and subject to the foregoing, we are of the opinion as of the
date hereof that, from a financial point of view, the consideration to be
offered in the Proposed Transaction is fair to the shareholders of the Company.
Very truly yours,
/s/ THE ROBINSON-HUMPHREY COMPANY, LLC
------------------------------------------------------------------------------
THE ROBINSON-HUMPHREY COMPANY, LLC
<PAGE>
QMS, INC.
ONE MAGNUM PASS,
MOBILE, ALABAMA 36618
June 14, 1999
To Our Stockholders:
On behalf of the Board of Directors (the "Board") of QMS, Inc., a Delaware
corporation (the "Company"), we are pleased to inform you that on June 7, 1999,
the Company entered into a Stock Purchase Agreement (the "Stock Purchase
Agreement") with Minolta Co., Ltd., a Japanese corporation ("Parent"), and its
wholly-owned subsidiary, Minolta Investments Company, a Delaware corporation
("Purchaser"), pursuant to which Purchaser today has commenced a cash tender
offer (the "Offer") to purchase 5,440,000 outstanding shares of the Company's
common stock, par value $0.01 per share (the "Common Stock") and the associated
rights to purchase shares of the Series A Participating Preferred Stock of the
Company (the "Rights" and, together with the Common Stock, the "Shares") issued
pursuant to the Rights Agreement, dated as of March 8, 1999, by and between the
Company and South Alabama Trust Company, Inc., as Rights Agent, at a price of
$6.25 per Share, net to the seller in cash, without interest. The Offer is
currently scheduled to expire at midnight, New York City time, on Monday, July
12, 1999.
Following the successful completion of the Offer, Purchaser will own a
majority of the outstanding Shares and acquire control of the Company.
THE BOARD OF DIRECTORS OF THE COMPANY HAS UNANIMOUSLY DETERMINED THAT THE
OFFER AND THE STOCK PURCHASE AGREEMENT ARE FAIR TO, AND IN THE BEST INTERESTS
OF, THE COMPANY AND ITS STOCKHOLDERS, HAS UNANIMOUSLY APPROVED THE OFFER AND THE
STOCK PURCHASE AGREEMENT AND RECOMMENDS THAT THE COMPANY'S STOCKHOLDERS ACCEPT
THE OFFER AND TENDER THEIR SHARES PURSUANT THERETO.
In arriving at its recommendation, the Board gave careful consideration to
the factors described in the attached Solicitation/Recommendation Statement on
Schedule 14D-9 (the "Schedule 14D-9") that is being filed today with the
Securities and Exchange Commission. Among other things, the Board considered the
opinion of its financial advisor, The Robinson-Humphrey Company, LLC that the
terms of the Offer are fair, from a financial point of view, to the stockholders
of the Company.
In addition to the attached Schedule 14D-9, enclosed also is the Offer to
Purchase dated June 14, 1999, together with related materials, including a
Letter of Transmittal, to be used for tendering your Shares in the Offer. These
documents state the terms and conditions of the Offer and provide instructions
as to how to tender your Shares. We urge you to read these documents carefully
in making your decision with respect to tendering your Shares pursuant to the
Offer.
On behalf of the Board of Directors,
Edward E. Lucente
Chairman of the Board
<PAGE>
Exhibit 99(c)
STOCK PURCHASE AGREEMENT
by and among
QMS, INC.,
MINOLTA INVESTMENTS COMPANY
and
MINOLTA CO., LTD.
Dated as of June 7, 1999
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
1. AGREEMENT TO SELL AND PURCHASE.................................................................1
1.1 Sale and Purchase.....................................................................1
2. CLOSING, DELIVERY AND PAYMENT..................................................................2
2.1 Closing...............................................................................2
2.2 Delivery..............................................................................2
2.3 Company Board Representation..........................................................2
3. TENDER OFFER...................................................................................2
3.1 The Offer.............................................................................2
3.2 Company Actions.......................................................................3
3.3 SEC Documents.........................................................................4
3.4 Company Board Representation; Section 14(f)...........................................5
4. REPRESENTATIONS AND WARRANTIES OF THE COMPANY..................................................6
4.1 Organization..........................................................................6
4.2 Capitalization; Voting Rights.........................................................6
4.3 Authorization; Binding Obligations....................................................7
4.4 SEC Reports; Financial Statements.....................................................7
4.5 No Undisclosed Liabilities............................................................8
4.6 Absence of Changes....................................................................8
4.7 Schedule 14D-9; Offer Documents.......................................................8
4.8 Consents and Approvals................................................................9
4.9 No Default............................................................................9
4.10 Rights to Property....................................................................9
4.11 Litigation...........................................................................10
4.12 Compliance with Applicable Law.......................................................10
4.13 Employee Plans.......................................................................11
4.14 Labor Matters........................................................................13
4.15 Environmental Matters................................................................14
4.16 Tax Matters..........................................................................16
4.17 Absence of Questionable Payments.....................................................17
4.18 Material Contracts...................................................................18
4.19 Related Party Transactions...........................................................19
</TABLE>
i
<PAGE>
TABLE OF CONTENTS
(CONTINUED)
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
4.20 Insurance............................................................................19
4.21 Intellectual Property................................................................19
4.22 Year 2000............................................................................20
4.23 Customers and Suppliers..............................................................21
4.24 Opinion of Financial Advisor.........................................................21
4.25 Brokers..............................................................................21
4.26 Product Liability; Product Warranty..................................................21
4.27 Takeover Statute; Certificate of Incorporation.......................................21
4.28 Amendment to the Rights Agreement....................................................22
4.29 Offering of Company Shares...........................................................22
4.30 No Misrepresentation.................................................................22
5. REPRESENTATIONS AND WARRANTIES OF PARENT AND PURCHASER........................................22
5.1 Organization.........................................................................22
5.2 Authorization; Binding Obligation....................................................23
5.3 Offer Documents......................................................................23
5.4 Consents and Approvals; No Violations................................................23
5.5 Investment Representations...........................................................24
5.6 Financing............................................................................24
6. COVENANTS.....................................................................................24
6.1 Use of Proceeds......................................................................24
6.2 Conduct of Business..................................................................24
6.3 Access to Information................................................................26
6.4 No Solicitation......................................................................27
6.5 Certificate of Incorporation.........................................................28
6.6 Company Name.........................................................................28
6.7 Integration Committee................................................................28
6.8 Strategic Meetings...................................................................29
6.9 Governance...........................................................................29
6.10 Indemnification of Directors.........................................................29
6.11 Cross License Agreements.............................................................29
6.12 Engine Sales and Purchase Agreement..................................................29
</TABLE>
ii
<PAGE>
TABLE OF CONTENTS
(CONTINUED)
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
6.13 Employment Agreements................................................................29
6.14 Registration Rights..................................................................30
7. CONDITIONS TO CLOSING.........................................................................30
7.1 Conditions to Purchaser's Obligations at the Closing.................................30
(a) Representations and Warranties True; Performance of Obligations.............30
(b) Consents, Permits and Waivers...............................................30
(c) Certificates................................................................30
(d) Acquisition of QMS Europe B.V. and QMS Australia Pty. Ltd...................30
(e) Related Agreements..........................................................30
(f) Foothill Credit Facility....................................................30
(g) Listing on NYSE.............................................................30
(h) Legal Opinion...............................................................31
(i) Proceedings and Documents...................................................31
7.2 Conditions to Obligations of the Company.............................................31
(a) Representations and Warranties True.........................................31
(b) Performance of Obligations..................................................31
(c) Compliance Certificate......................................................31
(d) Consents, Permits and Waivers...............................................31
(e) Legal Opinion...............................................................31
8. INDEMNIFICATION...............................................................................31
8.1 Survival of Representations, Warranties and Covenants................................31
8.2 Indemnification......................................................................32
8.3 Indemnification Procedures...........................................................32
9. MISCELLANEOUS.................................................................................33
9.1 Definitions..........................................................................33
9.2 Governing Law........................................................................35
9.3 Jurisdiction; Service of Process.....................................................35
9.4 Successors and Assigns...............................................................35
9.5 Entire Agreement.....................................................................35
9.6 Severability.........................................................................36
9.7 Amendment and Waiver.................................................................36
</TABLE>
iii
<PAGE>
TABLE OF CONTENTS
(CONTINUED)
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
9.8 Delays or Omissions..................................................................36
9.9 Notices..............................................................................36
9.10 Expenses.............................................................................37
9.11 Titles and Subtitles.................................................................38
9.12 Counterparts.........................................................................38
9.13 Pronouns.............................................................................38
9.14 Currency.............................................................................38
9.15 Publicity............................................................................38
9.16 Confidentiality......................................................................38
</TABLE>
iv
<PAGE>
INDEX OF ANNEXES AND EXHIBITS
<TABLE>
<S> <C>
Conditions to the Offer Annex A
Terms of Registration Rights Exhibit A
Form of Legal Opinion of Hand Exhibit B
Arendall LLC
Form of Legal Opinion of Weil, Gotshal & Exhibit C
Manges LLP
</TABLE>
<PAGE>
QMS, INC.
STOCK PURCHASE AGREEMENT
This STOCK PURCHASE AGREEMENT (this "Agreement") is entered into as of
June 7, 1999, by and among QMS, INC., a Delaware corporation (the "Company"),
MINOLTA INVESTMENTS COMPANY, a Delaware corporation (the "Purchaser"), and
MINOLTA CO., LTD., a corporation organized under the laws of Japan (the
"Parent").
RECITALS
WHEREAS, the Company and the Parent entered into a letter agreement,
dated May 17, 1999 (the "Letter"), regarding future negotiations which may lead
to (i) the issuance and sale by the Company to the Parent (or a wholly owned
subsidiary of the Parent) of 2,130,000 Shares (the "Company Shares"),
representing 19.9% of the outstanding Shares, (ii) a cash tender offer by the
Parent (or one of its Affiliates) to purchase 5,440,000 Shares, which when added
to the Company Shares, would constitute an aggregate of approximately 51% of the
outstanding Shares on a fully-diluted basis, including the associated Rights (as
hereinafter defined) and (iii) a term loan (the "Loan") in the aggregate
original principal amount of $12,800,000 from the Parent (or one of its
Affiliates) to the Company;
WHEREAS, pursuant to the Letter, the Parent advanced to the Company an
aggregate amount of $5,000,000 to be applied against certain amounts expected to
be owed by the Parent to the Company with respect to ordinary commercial
transactions between the Parent and the Company;
WHEREAS, the Company and the Parent are, as of the date hereof,
entering into a Loan Agreement (the "Loan Agreement"), pursuant to which the
Purchaser shall provide to the Company the Loan;
WHEREAS, the Company, the Purchaser and the Parent have approved this
Agreement and the Company has authorized the sale and issuance of the Company
Shares; and
WHEREAS, certain capitalized terms used herein are defined in Section
9.1 hereof;
NOW, THEREFORE, in consideration of the foregoing recitals and of the
mutual promises hereinafter set forth, the parties hereto agree as follows:
1. AGREEMENT TO SELL AND PURCHASE.
1.1 SALE AND PURCHASE. Subject to the terms and conditions hereof,
the Company hereby agrees to issue and sell to the Purchaser, and the
Purchaser agrees to purchase from the Company, at the Closing (as hereinafter
defined), the Company Shares at a purchase price (the "Purchase Price") of
$5.75 per Share (for an aggregate purchase price of $12,247,500 or $5.75
multiplied by 2,130,000 Shares).
<PAGE>
2. CLOSING, DELIVERY AND PAYMENT.
2.1 CLOSING. The closing of the sale and purchase of the Company Shares
under this Agreement (the "Closing") shall take place at the offices of Weil,
Gotshal & Manges LLP, 767 Fifth Avenue, New York, New York 10153 on June 7, 1999
or at such other date and time as the Company and the Purchaser may mutually
agree in writing (such date is hereinafter referred to as the "Closing Date").
2.2 DELIVERY. At the Closing, subject to the terms and conditions
hereof, including the deliveries required by Article 7 hereof, (i) the Company
shall deliver to the Purchaser duly and validly executed certificates
representing the Company Shares to be purchased by the Purchaser against payment
of the Purchase Price by wire transfer of immediately available funds in lawful
money of the United States to an account designated by the Company, and (ii) the
Company, the Purchaser and the Parent shall each execute the Related Agreements
(as hereinafter defined) to which it is a party.
2.3 COMPANY BOARD REPRESENTATION. On and after the Closing Date, the
Purchaser shall be entitled to designate two (2) persons on the Company Board.
The Company shall use its best efforts to promptly, but in no event later than
the purchase of and payment for the Shares by the Purchaser pursuant to the
Offer, secure the resignations of such number of its incumbent directors as is
necessary to enable the designees of the Purchaser to be so elected or appointed
to the Company Board, and the Company shall take all action available to the
Company to cause such designees of the Purchaser to be elected or appointed at
such time to fill the vacancies created by such action. At such time, the
Company shall, if requested by the Purchaser, also take all action necessary to
cause the persons designated by the Purchaser to constitute at least the same
percentage (rounded up to the next whole number which is less than a majority)
as is on the Company Board of (i) each committee of the Company Board, (ii) each
board of directors (or similar body) of each subsidiary of the Company and (iii)
each committee (or similar body) of each such subsidiary board. The provisions
of this Section 2.3 are in addition to and shall not limit any rights which the
Purchaser or any of its Affiliates may have as a holder or beneficial owner of
Shares as a matter of applicable Law with respect to the election of directors
or otherwise.
3. TENDER OFFER.
3.1 THE OFFER.
(a) As promptly as practicable (but in no event later than
five business days after the public announcement of the execution hereof), the
Purchaser shall commence (within the meaning of Rule 14d-2 under the Securities
Exchange Act of 1934, as amended (the "Exchange Act")) a tender offer (the
"Offer") to purchase 5,440,000 Shares, including the associated rights to
purchase shares of the Series A Participating Preferred Stock of the Company
(the "Rights") pursuant to the Company Rights Agreement, dated as of March 8,
1999, between the Company and South Alabama Trust Company, Inc., as Rights Agent
(the "Rights Agreement"), at a price of $6.25 per Share, net to the seller in
cash (such price, or such higher price per Share as may be paid in the Offer,
being referred to herein as the "Offer Price"), subject to the conditions set
forth in Annex A hereto.
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(b) The obligations of the Purchaser to commence the Offer and
to accept for payment and to pay for any Shares validly tendered on or prior to
the expiration of the Offer and not withdrawn shall be subject only to the
conditions set forth in Annex A hereto. The Offer shall be made by means of an
offer to purchase (the "Offer to Purchase") containing the terms set forth in
this Agreement and the conditions set forth in Annex A hereto.
(c) The Purchaser expressly reserves the right to modify the
terms of the Offer; PROVIDED, HOWEVER, that, without the Company's prior written
consent, the Purchaser shall not decrease the Offer Price or decrease the number
of Shares sought or impose additional conditions; PROVIDED, FURTHER, that, if on
the initial scheduled expiration date of the Offer, which shall be 20 business
days after the date that the Offer is commenced, all conditions to the Offer
shall not have been satisfied or waived, the Purchaser may, from time to time
until such time as all such conditions are satisfied or waived, in its sole
discretion, extend the expiration date; provided, FURTHER, that the expiration
date of the Offer may not be extended beyond September 1, 1999. In addition, the
Offer Price may be increased and the Offer may be extended to the extent
required by applicable Law (as hereinafter defined) in connection with such
increase, in each case without the consent of the Company. The Purchaser shall,
on the terms and subject to the prior satisfaction or waiver of the conditions
of the Offer, accept for payment and pay for the Shares validly tendered as
promptly as practicable; PROVIDED, HOWEVER, that, if, immediately prior to the
initial expiration date of the Offer, the Shares validly tendered and not
withdrawn pursuant to the Offer, in the aggregate with the Company Shares, equal
less than 51% of the outstanding Shares on a fully diluted basis, the Purchaser
may extend the Offer for a period not to exceed 20 business days,
notwithstanding that all other conditions to the Offer are satisfied as of such
expiration date of the Offer.
3.2 COMPANY ACTIONS.
(a) The Company hereby approves of and consents to the Offer
and represents that the Company Board, at a meeting duly called and held, has
(i) unanimously determined that each of this Agreement and the Offer are
advisable and fair to, and in the best interests of, the Company and its
stockholders, (ii) unanimously approved, without condition or qualification,
this Agreement and the Transactions contemplated hereby, including the Offer and
the acquisition of the Shares pursuant to this Agreement and the Offer, for
purposes of Section 203 of the DGCL (the "Section 203 Approval"), so that the
provisions of Section 203 of the DGCL are not applicable to the transactions
provided for, referred to, or contemplated by, this Agreement, (iii) received
the opinion of The Robinson Humphrey Company, financial advisor to the Company
(the "Financial Advisor"), to the effect that the Offer Price to be received by
holders of the Shares pursuant to the Offer is fair to the stockholders of the
Company from a financial point of view; and (iv) resolved to unanimously
recommend that the stockholders of the Company accept the Offer and tender their
Shares thereunder to the Purchaser.
(b) In connection with the Offer, the Company shall promptly
furnish or cause to be furnished to the Purchaser mailing labels, security
position listings and any available listings or computer files containing the
names and addresses of all holders of record of the Shares as of a recent date,
and shall furnish the Purchaser with such additional information (including, but
not limited to, updated lists of holders of the Shares and their addresses,
mailing labels and lists of security positions) and such assistance as the
Purchaser or its agents may reasonably request in communicating the Offer to the
record and beneficial holders of the Shares. Subject to the requirements of
applicable Law, and except for such steps as are necessary to disseminate the
Offer Documents (as hereinafter defined), the Purchaser and its affiliates and
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associates shall hold in confidence the information contained in any such
labels, listings and files and all other information delivered pursuant to this
Section 3.2(b), shall use such information only in connection with the Offer
and, if this Agreement shall be terminated, shall deliver to the Company all
copies, extracts or summaries of such information in their possession or the
possession of their agents.
3.3 SEC DOCUMENTS.
(a) On the date the Offer is commenced, the Parent and the
Purchaser shall file with the United States Securities and Exchange Commission
(the "SEC") a Tender Offer Statement on Schedule 14D-1 in accordance with the
Exchange Act with respect to the Offer (together with all amendments and
supplements thereto and including the exhibits thereto, the "Schedule 14D-1").
The Schedule 14D-1 will include, as exhibits, the Offer to Purchase and a form
of letter of transmittal (collectively, together with any amendments and
supplements thereto, the "Offer Documents"). Concurrently with the filing of the
Schedule 14D-1 by the Parent and the Purchaser, the Company shall file with the
SEC a Solicitation/Recommendation Statement on Schedule 14D-9 in accordance with
the Exchange Act (together with all amendments and supplements thereto and
including the exhibits thereto, the "Schedule 14D-9"), which shall, except as
otherwise provided herein, contain the recommendation referred to in clause (iv)
of Section 3.2(a) hereof. The Company and its counsel shall be given a
reasonable opportunity to review and comment upon the Schedule 14D-1 and all
amendments and supplements thereto prior to their filing with the SEC or
dissemination to stockholders of the Company.
(b) The Parent and the Purchaser shall take all steps
necessary to ensure that the Offer Documents, and the Company shall take all
steps necessary to ensure that the Schedule 14D-9, will comply in all material
respects with the provisions of applicable federal and state securities Laws.
The information provided and to be provided by the Parent, the Purchaser or the
Company for use in the Schedule 14D-1, the Offer Documents and the Schedule
14D-9 shall not, on the date first filed with the SEC or first published, sent
or provided to stockholders, as the case may be, contain any untrue statement of
a material fact or omit to state a material fact required to be stated therein
or necessary in order to make the statements therein, in light of the
circumstances under which they were made, not misleading. Each of the Parent and
the Purchaser shall take all steps necessary to cause the Offer Documents, and
the Company shall take all steps necessary to cause the Schedule 14D-9, to be
filed with the SEC and to be disseminated to holders of the Shares, in each case
as and to the extent required by applicable federal and state securities Laws.
Each of the Parent and the Purchaser, on one hand, and the Company, on the other
hand, shall promptly correct any information provided by it for use in the Offer
Documents and the Schedule 14D-9 if and to the extent that it shall have become
false and misleading in any material respect. The Purchaser shall take all steps
necessary to cause the Offer Documents, and the Company shall take all steps
necessary to cause the Schedule 14D-9, as so corrected, to be filed with the SEC
and to be disseminated to holders of the Shares, in each case as and to the
extent required by applicable federal and state securities Laws. The Purchaser
and its counsel shall be given a reasonable opportunity to review and comment
upon the Schedule 14D-9 and all amendments and supplements thereto prior to
their filing with the SEC or dissemination to stockholders of the Company. The
Company agrees to provide the Purchaser and its counsel with copies of any
written comments that the Company or its counsel may receive from the SEC or its
staff with respect to the Schedule 14D-9 promptly after the receipt of such
comments and each of the Parent and the Purchaser agrees to provide the Company
and its counsel with copies of any written comments that the Parent, the
Purchaser or their respective
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counsel may receive from the SEC or its staff with respect to the Offer
Documents promptly after the receipt of such comments.
3.4 COMPANY BOARD REPRESENTATION; SECTION 14(f).
(a) Promptly after (i) the purchase of and payment for any
Shares by the Purchaser or any of its Affiliates as a result of which the
Purchaser and its Affiliates own beneficially at least a majority of the then
outstanding Shares and (ii) compliance with Section 14(f) of the Exchange Act
and Rule 14f-1 promulgated thereunder, whichever shall occur later, the Parent,
the Purchaser and the Company shall take all action available and within their
respective control so that the number of directors on the Company Board shall be
established at nine (9) directors consisting of (A) five (5) persons designated
by the Purchaser, (B) Messrs. Edward E. Lucente and James A. Wallace and (C) two
(2) persons not affiliated with the Company, the Purchaser or the Parent. The
Company shall use its best efforts to promptly secure the resignations of such
number of its incumbent directors as is necessary to enable the designees of the
Purchaser to be so elected or appointed to the Company Board. At such time, the
Company shall, if requested by the Purchaser, also take all action necessary to
cause the persons designated by the Purchaser to constitute at least the same
percentage (rounded up to the next whole number) as is on the Company Board of
(i) each committee of the Company Board (other than the Audit Committee), (ii)
each board of directors (or similar body) of each subsidiary of the Company and
(iii) each committee (or similar body) of each such subsidiary board. The
provisions of this Section 3.4(a) are in addition to and shall not limit any
rights which the Parent, the Purchaser or any of their Affiliates may have as a
holder or beneficial owner of Shares as a matter of applicable Law with respect
to the election of directors or otherwise.
(b) The Company shall promptly take all actions required
pursuant to Section 14(f) of the Exchange Act and Rule 14f-1 promulgated
thereunder in order to fulfill its obligations under Section 3.4(a), including
mailing to stockholders the information required by such Section 14(f) and Rule
14f-1 (or, at the Purchaser's request, furnishing such information to the
Purchaser for inclusion in the Offer Documents initially filed with the SEC and
distributed to the stockholders of the Company) as is necessary to enable the
Purchaser's designees to be elected to the Company Board. The Purchaser shall
supply the Company any information with respect to either of them and their
nominees, officers, directors and affiliates required by such Section 14(f) and
Rule 14f-1.
(c) On and after the purchase of and payment for the Shares by
the Purchaser pursuant to the Offer, in the event that the Purchaser and its
Affiliates beneficially own less than a majority of the then outstanding Shares,
the Purchaser shall be entitled to designate (to the extent not already
designated pursuant to Section 2.3 hereof) the greater of (i) two (2) directors
on the Company Board or (ii) such number of directors on the Company Board
(rounded up to the next whole number which is less than a majority) equal to the
product of the total number of directors on the Company Board multiplied by the
percentage that the number of Shares beneficially owned by the Purchaser and its
Affiliates bears to the total number of Shares then outstanding. The Company
shall either (i) use its best efforts to promptly secure the resignations of
such number of its incumbent directors as is necessary to enable the designees
of the Purchaser to be so elected or appointed to the Company Board or (ii) take
such action as is necessary to increase the size of the Company Board by such
number of directors, and, in either case, the Company shall take all action
available to the Company to cause such designees of the Purchaser to be elected
or appointed to fill the vacancies created by such action. At such time, the
Company shall, if requested by the Purchaser, also take all action necessary to
cause the
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persons designated by the Purchaser to constitute at least the same percentage
(rounded up to the next whole number which is less than a majority) as is on the
Company Board of (i) each committee of the Company Board, (ii) each board of
directors (or similar body) of each subsidiary of the Company and (iii) each
committee (or similar body) of each such subsidiary board. The provisions of
this Section 3.4(c) are in addition to and shall not limit any rights which the
Purchaser or any of its Affiliates may have as a holder or beneficial owner of
Shares as a matter of applicable Law with respect to the election of directors
or otherwise.
4. REPRESENTATIONS AND WARRANTIES OF THE COMPANY.
Except as set forth on the disclosure schedule delivered by the Company
to the Parent prior to the execution of this Agreement (the "Disclosure
Schedule"), the Company hereby represents and warrants to each of the Parent and
the Purchaser as follows:
4.1 ORGANIZATION. The Company is a corporation duly organized, validly
existing and in good standing under the laws of Delaware. The Company has all
requisite corporate power and authority to own and operate its properties and
assets, and has all requisite corporate power and authority to execute and
deliver this Agreement and the Loan Agreement and the agreements and instruments
contemplated thereby (collectively, the "Related Agreements"), to issue and sell
the Shares hereunder, and to carry out the provisions of this Agreement and the
Related Agreements. Section 4.1 of the Disclosure Schedule sets forth a list of
all subsidiaries of the Company. Except as listed in Section 4.1 of the
Disclosure Schedule, the Company does not own, directly or indirectly,
beneficially or of record, equity securities of any other corporation, limited
partnership or similar entity, and the Company is not a participant in any joint
venture, partnership, trust or similar arrangement. The Company is duly
qualified and is authorized to do business and is in good standing as a foreign
corporation in all jurisdictions in which the nature of its activities and of
its properties (both owned and leased) makes such qualification necessary,
except for those jurisdictions in which failure to do so would not have a
Material Adverse Effect on the business, assets, liabilities, financial
condition, operations or prospects of the Company.
4.2 CAPITALIZATION; VOTING RIGHTS. The authorized capital stock of the
Company, immediately prior to the Closing, will consist of (i) 25,000,000 shares
of Common Stock of which, as of the date hereof, 10,708,335 are issued and
outstanding and (ii) 500,000 shares of Preferred Stock, no par value, of which
(A) 250,000 shares have been designated Series A Participating Preferred Stock
and reserved for issuance upon the exercise of the Rights distributed to the
holders of the Common Stock pursuant to the Rights Agreement and (B) none of
which are issued and outstanding as of the date hereof. All issued and
outstanding shares of the Company's Common Stock (i) have been duly authorized
and validly issued, (ii) are fully paid and non-assessable, (iii) were issued in
compliance with all applicable federal and state Laws concerning the issuance of
securities and (iv) are free of preemptive rights. As of the date hereof, (i)
1,800,709 Shares were reserved for issuance and issuable upon or otherwise
deliverable in connection with the exercise of outstanding options issued to
directors, officers, employees and consultants pursuant to the Stock Option
Plans (the "Company Stock Options") and (ii) 200,000 Shares were reserved for
issuance and issuable upon or otherwise deliverable in connection with the
exercise of warrants (the "Warrants"), consisting of (A) the Warrant to Purchase
100,000 Shares, exercisable until November 7, 1999 at an exercise price of
$5.00, issued to Foothill Capital Corporation and (B) the Warrant to Purchase
100,000 Shares, exercisable until December 31, 2001 at an exercise price of
$6.50, issued to INK (AL) QRS 12-21, Inc. Except as and to the extent publicly
disclosed by the Company in the Company SEC Reports (as hereinafter defined),
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since October 2, 1998, no shares of the Company's capital stock have been issued
other than pursuant to Company Stock Options already in existence on such date,
and no Company Stock Options have been granted. Except as set forth on Section
4.2 of the Disclosure Schedule, the execution and delivery of this Agreement and
the Related Agreements or the consummation of the transactions contemplated
hereby and thereby will not cause any outstanding Company Stock Options or
Warrants to become exercisable. Except as set forth above, as of the date
hereof, there are outstanding (i) no shares of capital stock or other voting
securities of the Company; (ii) no securities of the Company or any of its
subsidiaries convertible into or exchangeable for shares of capital stock or
voting securities of the Company; (iii) except for the Rights Agreement, no
options or other rights to acquire from the Company or any of its subsidiaries,
and no obligations of the Company or any of its subsidiaries to issue, any
capital stock, voting securities or securities convertible into or exchangeable
for capital stock or voting securities of the Company; and (iv) no equity
equivalents, interests in the ownership or earnings of the Company or any of its
subsidiaries or other similar rights (including stock appreciation rights)
(collectively, "Company Securities"). There are no outstanding obligations of
the Company or any of its subsidiaries to repurchase, redeem or otherwise
acquire any Company Securities. There are no stockholder agreements, voting
trusts or other agreements or understandings to which the Company or any of its
subsidiaries is a party or to which it is bound relating to the voting of any
shares of capital stock of the Company. Section 4.2 of the Disclosure Schedule
sets forth information regarding the current exercise price, date of grant and
number granted of Company Stock Options for each holder thereof.
4.3 AUTHORIZATION; BINDING OBLIGATIONS.
(a) The Company has all necessary corporate power and
authority to execute and deliver this Agreement and the Related Agreements and
to consummate the transactions contemplated hereby and thereby. No other
corporate proceedings on the part of the Company are necessary to authorize this
Agreement and the Related Agreements or to consummate the transactions
contemplated hereby and thereby. This Agreement and the Related Agreements have
been duly and validly executed and delivered by the Company and constitute
valid, legal and binding agreements of the Company, enforceable against the
Company in accordance with their respective terms, subject to applicable
bankruptcy, insolvency, reorganization, moratorium and similar laws affecting
creditors' rights and remedies generally, and subject, as to enforceability, to
general principles of equity, including principles of commercial reasonableness,
good faith and fair dealing (regardless of whether enforcement is sought in a
proceeding at law or in equity).
(b) The Company Board has, by unanimous vote of those present
(who constituted 100% of the directors then in office), duly and validly
authorized the execution and delivery of this Agreement and the Related
Agreements and approved the consummation of the transactions contemplated hereby
and thereby, and taken all corporate actions required to be taken by the Company
Board for the consummation of the transactions, including the authorization,
issuance, sale and delivery of the Company Shares and the Offer, contemplated
hereby and thereby and has resolved to deem this Agreement and the Transactions
advisable and fair to, and in the best interests of, the Company and its
stockholders.
4.4 SEC REPORTS; FINANCIAL STATEMENTS. The Company has filed all
required forms, reports and documents with the SEC since September 27, 1996,
each of which has complied in all material respects with all applicable
requirements of the Securities Act of 1933, as amended (the "Securities Act"),
and the Exchange Act, each as in effect on the dates such forms, reports and
documents were filed. The Company has heretofore delivered to the Parent, in the
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form filed with the SEC (including any amendments thereto), (i) its Annual
Reports on Form 10-K for each of the fiscal years ended on or after September
27, 1996; (ii) all definitive proxy statements relating to the Company's
meetings of stockholders (whether annual or special) held since September 27,
1996; and (iii) all other reports or registration statements filed by the
Company with the SEC since October 2, 1998 (the "Company SEC Reports"). None of
such forms, reports or documents, including, without limitation, any financial
statements or schedules included or incorporated by reference therein,
contained, when filed, any untrue statement of a material fact or omitted to
state a material fact required to be stated or incorporated by reference therein
or necessary in order to make the statements therein, in light of the
circumstances under which they were made, not misleading. The consolidated
financial statements of the Company included in the Company SEC Reports complied
as to form in all material respects with applicable accounting requirements and
the published rules and regulations of the SEC with respect thereto and fairly
present, in conformity with GAAP on a consistent basis (except as may be
indicated in the notes thereto), the consolidated financial position of the
Company and its consolidated subsidiaries as of the dates thereof and their
consolidated results of operations and changes in financial position for the
periods then ended (subject, in the case of the unaudited interim financial
statements, to normal year-end adjustments). Except as and to the extent
publicly disclosed by the Company in the Company SEC Reports, since October 2,
1998, there has not been any change, or any application or request for any
change, by the Company or any of its subsidiaries, in accounting principles,
methods or policies for financial accounting or Tax purposes (subject, in the
case of the unaudited interim financial statements, to normal year-end
adjustments).
4.5 NO UNDISCLOSED LIABILITIES. Except as and to the extent publicly
disclosed by the Company in the Company SEC Reports, as of October 2, 1998 (the
"Audit Date"), none of the Company or its subsidiaries has any material
liabilities or obligations of any nature, whether or not accrued, contingent or
otherwise, and whether due or to become due or asserted or unasserted.
4.6 ABSENCE OF CHANGES. Except as and to the extent publicly disclosed
by the Company in the Company SEC Reports, since the Audit Date, the business of
the Company and its subsidiaries has been carried on only in the ordinary and
usual course consistent with past practice, none of the Company or its
subsidiaries has taken any of the actions described in Sections 6.2 (a) through
6.2(n) or incurred any liabilities of any nature, whether or not accrued,
contingent or otherwise, which do or which would reasonably be expected to have,
and there have been no events, changes or effects with respect to the Company or
its subsidiaries, which do or which would reasonably be expected to have,
individually or in the aggregate, a Material Adverse Effect on the Company.
4.7 SCHEDULE 14D-9; OFFER DOCUMENTS. The Schedule 14D-9, any other
document required to be filed by the Company with the SEC in connection with the
Transactions or any information supplied by the Company for inclusion in the
Offer Documents will not, at the respective times the Schedule 14D-9, any such
other filings by the Company, the Offer Documents or any amendments or
supplements thereto are filed with the SEC or are first published, sent or given
to stockholders of the Company, as the case may be, contain any untrue statement
of a material fact or omit to state any material fact required to be stated
therein or necessary in order to make the statements made therein, in light of
the circumstances under which they are made, not misleading. The Schedule 14D-9
and any other document required to be filed by the Company with the SEC in
connection with the Transactions will, when filed by the Company with the SEC,
comply as to form in all material respects with the applicable provisions
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of the Exchange Act and the rules and regulations thereunder. Notwithstanding
the foregoing, the Company makes no representation or warranty with respect to
the statements made in any of the foregoing documents based on and in conformity
with information supplied in writing by or on behalf of the Parent or the
Purchaser specifically for inclusion therein.
4.8 CONSENTS AND APPROVALS. Except for filings, permits,
authorizations, consents and approvals as may be required under, and other
applicable requirements of, the Securities Act, the Exchange Act, state
securities or blue sky Laws, the Hart-Scott-Rodino Antitrust Improvements Act of
1976, as amended (the "HSR Act"), and as otherwise set forth in Section 4.8 to
the Disclosure Schedule, no filing with or notice to, and no permit,
authorization, consent or approval of, any court or tribunal or administrative,
governmental or regulatory body, agency or authority in the United States (a
"Governmental Entity") is necessary for the execution and delivery by the
Company of this Agreement or the Related Agreements or the consummation by the
Company of the transactions contemplated hereby or thereby.
4.9 NO DEFAULT. Neither the Company nor any of its subsidiaries is in
violation of any term of (i) its certificate of incorporation, bylaws or other
organizational documents, (ii) any agreement or instrument related to
indebtedness for borrowed money or any other agreement to which it is a party or
by which it is bound, or (iii) any domestic (or to the Knowledge of the Company,
foreign) law, order, writ, injunction, decree, ordinance, award, stipulation,
statute, judicial or administrative doctrine, rule or regulation entered by a
Governmental Entity ("Law") applicable to the Company, its subsidiaries or any
of their respective properties or assets, the consequence of which violation
does or would reasonably be expected to (A) have, individually or in the
aggregate, a Material Adverse Effect on the Company or (B) prevent or materially
delay the performance of this Agreement and the Related Agreements by the
Company. The execution, delivery and performance of this Agreement and the
Related Agreements and the consummation of the transactions contemplated hereby
and thereby will not (i) result in any violation of or conflict with, constitute
a default under, require any consent, waiver or notice under any term of, or
result in the reduction or loss of any benefit or the creation or acceleration
of any right or obligation under, (A) the certificate of incorporation, bylaws
or other organizational document of the Company (or any of its subsidiaries),
(B) any material agreement, note, bond, mortgage, indenture, contract, lease,
Company Permit (as hereinafter defined) or other obligation or right to which
the Company or any of its subsidiaries is a party or by which any of the assets
or properties of the Company or any of its subsidiaries is bound or (C) any
instrument or Law or (ii) other than pursuant to the Loan Agreement, result in
the creation of (or impose any obligation on the Company or any of its
subsidiaries to create) any Lien upon any of the properties or assets of the
Company or any of its subsidiaries pursuant to any such term, except where any
of the foregoing do not or would not reasonably be expected to have,
individually or in the aggregate, a Material Adverse Effect on the Company.
4.10 RIGHTS TO PROPERTY.
(a) Section 4.10 of the Disclosure Schedule sets forth all of
the real property owned in fee by the Company and its subsidiaries. Each of the
Company and its subsidiaries has good and marketable title to each parcel of
real property owned by it free and clear of all Liens, except (i) Liens for
Taxes not yet due and payable and general and special assessments not in default
and payable without penalty and interest, and (ii) other Liens which do not
materially interfere with the Company's or any of its subsidiaries' use and
enjoyment of such real property or materially detract from or diminish the value
thereof.
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(b) Section 4.10 of the Disclosure Schedule sets forth all
leases, subleases and other agreements (the "Real Property Leases") under which
the Company or any of its subsidiaries uses or occupies or has the right to use
or occupy, now or in the future, any real property. The Company has heretofore
delivered to the Parent true, correct and complete copies of all Real Property
Leases (and all modifications, amendments and supplements thereto and all side
letters to which the Company or any of its subsidiaries is a party affecting the
obligations of any party thereunder). Each Real Property Lease constitutes the
valid and legally binding obligation of the Company or its subsidiaries,
enforceable in accordance with its terms (except as enforceability may be
limited by applicable bankruptcy, insolvency, reorganization, moratorium,
fraudulent transfer and similar Laws of general applicability relating to or
affecting creditors' rights or by general equity principles), and is in full
force and effect. All rent and other sums and charges payable by the Company and
its subsidiaries as tenants under each Real Property Lease are current, no
termination event or condition or uncured default of a material nature on the
part of the Company or any such subsidiary or, to the Knowledge of the Company,
the landlord, exists under any Real Property Lease. Each of the Company and its
subsidiaries has a good and valid leasehold interest in each parcel of real
property leased by it free and clear of all Liens, except (i) Liens for Taxes
not yet due and payable and general and special assessments not in default and
payable without penalty and interest, and (ii) other Liens which do not
materially interfere with the Company's or any of its subsidiaries' use and
enjoyment of such real property or materially detract from or diminish the value
thereof. No party to any such Real Property Leases has given notice to the
Company or any of its subsidiaries of or made a claim against the Company or any
of its subsidiaries with respect to any breach or default thereunder.
(c) Subject only to the Liens (as defined in the Loan
Agreement) permitted under Section 4.1(f) of the Loan Agreement, each of the
Company and its subsidiaries has good and marketable title to all other
properties and assets it purports to own, including those reflected in the most
recent consolidated financial statements contained in the Company SEC Reports.
4.11 LITIGATION. Except as and to the extent disclosed by the Company
in the Company SEC Reports or Section 4.11 of the Disclosure Schedule, there is
no suit, claim, action, proceeding or investigation pending or, to the Company's
Knowledge, threatened against the Company or any of its subsidiaries or any of
their respective properties or assets which (a) seeks monetary damages in excess
of $500,000, seeks equitable relief or would reasonably be expected to have,
individually or in the aggregate, a Material Adverse Effect on the Company or
(b) as of the date hereof, questions the validity of this Agreement, the Related
Agreements or any action to be taken by the Company in connection with the
consummation of the transactions contemplated hereby or thereby or could
otherwise prevent or delay the consummation of the transactions contemplated by
this Agreement or the Related Agreements. Except as and to the extent publicly
disclosed by the Company in the Company SEC Reports, none of the Company or its
subsidiaries is subject to any outstanding order, writ, injunction or decree.
4.12 COMPLIANCE WITH APPLICABLE LAW. The Company and its subsidiaries
hold all permits, licenses, variances, exemptions, orders and approvals of all
Governmental Entities necessary for the lawful conduct of their respective
businesses (the "Company Permits"), except for failures to hold such permits,
licenses, variances, exemptions, orders and approvals which do not or would not
reasonably be expected to have, individually or in the aggregate, a Material
Adverse Effect on the Company. The Company and its subsidiaries are in
compliance in all material respects with the terms of the Company Permits. The
Company and its subsidiaries are in compliance in all material respects with all
Laws applicable to the Company, its subsidiaries or
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their respective assets or operations. No investigation or review by any
Governmental Entity with respect to the Company or its subsidiaries is pending
or, to the Company's Knowledge, threatened, nor, to the Company's Knowledge, has
any Governmental Entity indicated an intention to conduct the same.
4.13 EMPLOYEE PLANS.
(a) Section 4.13(a) of the Disclosure Schedule sets forth a
list of (i) all "employee benefit plans," as defined in Section 3(3) of ERISA,
and all other employee benefit plans or other benefit arrangements or payroll
practices including, without limitation, bonus plans, executive compensation,
consulting or other compensation agreements, incentive, equity or equity-based
compensation, or deferred compensation arrangements, stock purchase, severance
pay, sick leave, vacation pay, salary continuation for disability,
hospitalization, medical insurance, life insurance, scholarship programs and
directors' benefit, bonus or other incentive compensation, which the Company or
any of its subsidiaries maintains, contributes to or has any obligation to or
liability for (each an "Employee Benefit Plan" and collectively, the "Employee
Benefit Plans"); and (ii) all "employee pension plans", as defined in Section
3(2) of ERISA, subject to Title IV of ERISA or Section 412 of the Code, to which
the Company, any of its subsidiaries or any trade or business (whether or not
incorporated) which is or has ever been under common control, or which is or has
ever been treated as a single employer, with the Company or any subsidiary under
Section 414(b), (c), (m) or (o) of the Code ("ERISA Affiliate") has ever
sponsored, maintained, contributed or been obligated to contribute in the last
six years (the "Title IV Plans"). Except as separately set forth on Section
4.13(a) of the Disclosure Schedule, none of the Employee Benefit Plans is a
multiemployer plan, as defined in Section 3(37) of ERISA ("Multiemployer Plan"),
or is or has been subject to Sections 4063 or 4064 of ERISA ("Multiple Employer
Plans"), nor has the Company, its subsidiaries or any ERISA Affiliate ever been
obligated to contribute to a Multiemployer Plan.
(b) True, correct and complete copies of the following
documents, with respect to each of the Employee Benefit Plans and Title IV Plans
(other than a Multiemployer Plan) have been made available or delivered to the
Parent by the Company: (i) any plans and related trust documents, and amendments
thereto; (ii) the three most recent Forms 5500 and schedules thereto; (iii) the
most recent Internal Revenue Service ("IRS") determination letter; (iv) the
three most recent financial statements and actuarial valuations, if applicable;
(v) summary plan descriptions; (vi) written communications to employees relating
to the Employee Benefit Plans; and (vii) written descriptions of all non-written
agreements relating to the Employee Benefit Plans.
(c) As of the date hereof, (i) all payments required to be
made by or under any Employee Benefit Plan, any related trusts, or any
collective bargaining agreement or pursuant to Law have been made by the due
date thereof (including any valid extension), and all contributions for any
period ending on or before the Closing Date which are not yet due will have been
paid or accrued on the balance sheet on or prior to the Closing Date; (ii) the
Company and its subsidiaries have performed all material obligations required to
be performed by them under any Employee Benefit Plan; (iii) the Employee Benefit
Plans have been administered in material compliance with their terms and the
requirements of ERISA, the Code and other applicable Laws; (iv) there are no
material actions, suits, arbitrations or claims (other than routine claims for
benefit) pending or threatened with respect to any Employee Benefit Plan; and
(v) the Company and its subsidiaries have no material liability as a result of
any "prohibited transaction" (as
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defined in Section 406 of ERISA and Section 4975 of the Code) for any excise Tax
or civil penalty.
(d) Except as set forth in Section 4.13(d) of the Disclosure
Schedule:
(i) There is no "amount of unfunded benefit
liabilities" as defined in Section 4001(a)(18) of ERISA in any of the
respective Title IV Plans. Each of the respective Title IV Plans are
fully funded in accordance with the actuarial assumptions used by the
Pension Benefit Guaranty Corporation ("PBGC") to determine the level of
funding required in the event of the termination of such Title IV Plan
and the "benefit liabilities" as defined in Section 4001(a)(16) of
ERISA of such Title IV Plan using such PBGC assumptions do not exceed
the assets of such Title IV Plan.
(ii) There has been no "reportable event" as that
term is defined in Section 4043 of ERISA and the regulations thereunder
with respect to the Title IV Plans which would require the giving of
notice or any event requiring disclosure under Section 4041(c)(3)(C) or
4063(a) of ERISA.
(iii) Neither the Company nor any ERISA Affiliate has
terminated any Title IV Plan, or incurred any outstanding liability
under Section 4062 of ERISA to the PBGC, or to a trustee appointed
under Section 4042 of ERISA. All premiums due the PBGC with respect to
the Title IV Plans have been paid.
(iv) Neither the Company nor any ERISA Affiliate or
any organization to which the Company or any ERISA Affiliate is a
successor or parent corporation, within the meaning of Section 4069(b)
of ERISA, has engaged in any transaction within the last five years
which might be alleged to come within the meaning of Section 4069 of
ERISA.
(v) The Company and its subsidiaries are not subject
to any unsatisfied withdrawal liability with respect to any
Multiemployer Plan.
(vi) Each of the Employee Benefit Plans which is
intended to be "qualified" within the meaning of Section 401(a) of the
Code has been determined by the IRS to be so "qualified" and the trusts
maintained pursuant thereto are exempt from federal income taxation
under Section 501 of the Code, and the Company knows of no fact which
would adversely affect the qualified status of any such Pension Plan or
the exemption of such trust.
(vii) None of the Employee Benefit Plans provide for
continuing post-employment health or life insurance coverage for any
participant or any beneficiary of a participant except as may be
required under the Consolidated Omnibus Budget Reconciliation Act of
1985, as amended.
(viii) No stock or other security issued by the
Company forms or has formed a material part of the assets of any
Employee Benefit Plan.
(ix) Neither the execution and delivery of this
Agreement nor the consummation of the Transactions will by itself or in
combination with any other event (i) result in any material payment
becoming due, or materially increase the amount of
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compensation due, to any current or former employee of the Company or
any of its subsidiaries; (ii) materially increase any benefits
otherwise payable under any Employee Benefit Plan; or (iii) result in
the acceleration of the time of payment or vesting of any such material
benefits.
(x) All amendments and actions required to bring the
Employee Benefit Plans into conformity in all material respects with
all of the applicable provisions of the Code, ERISA and other
applicable laws have been made or taken except to the extent that such
amendments or actions are not required by law to be made or taken until
a date after the Closing Date.
(xi) Any bonding required with respect to the
Employee Benefit Plans in accordance with applicable provisions of
ERISA has been obtained and is in full force and effect.
(xii) Any individual who performs services for the
Company (other than through a contract with an organization other than
such individual) and who is not treated as an employee for federal
income tax purposes by the Company is not an employee for such
purposes.
4.14 LABOR MATTERS.
(a) Section 4.14 of the Disclosure Schedule sets forth a list
of all employment, labor or collective bargaining agreements to which the
Company or any subsidiary is party and except as set forth therein, there are no
employment, labor or collective bargaining agreements which pertain to employees
of the Company or any of its subsidiaries. The Company has heretofore made
available to the Parent true and complete copies of (i) the employment
agreements listed on Section 4.14 of the Disclosure Schedule and (ii) the labor
or collective bargaining agreements listed on Section 4.14 of the Disclosure
Schedule, together with all amendments, modifications, supplements and side
letters affecting the duties, rights and obligations of any party thereunder.
(b) No employees of the Company or any of its subsidiaries are
represented by any labor organization; no labor organization or group of
employees of the Company or any of its subsidiaries has made a pending demand
for recognition or certification; and, to the Company's Knowledge, there are no
representation or certification proceedings or petitions seeking a
representation proceeding presently pending or threatened in writing to be
brought or filed with the National Labor Relations Board or any other labor
relations tribunal or authority. To the Company's Knowledge, there are no
organizing activities involving the Company or any of its subsidiaries pending
with any labor organization or group of employees of the Company or any of its
subsidiaries.
(c) There are no unfair labor practice charges, grievances or
complaints pending or threatened in writing by or on behalf of any employee or
group of employees of the Company or any of its subsidiaries.
(d) Except as disclosed in Section 4.11 of the Disclosure
Schedule, there are no complaints, charges or claims against the Company or any
of its subsidiaries pending, or threatened in writing to be brought or filed,
with any Governmental Entity or arbitrator based on,
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arising out of, in connection with, or otherwise relating to the employment or
termination of employment of any individual by the Company or any of its
subsidiaries.
(e) The Company and each of its subsidiaries is in compliance
in all material respects with all Laws relating to the employment of labor,
including all such Laws and orders relating to wages, hours, collective
bargaining, discrimination, civil rights, safety and health workers'
compensation and the collection and payment of withholding and/or Social
Security Taxes and similar Taxes (as defined in Section 4.16).
(f) There has been no "mass layoff" or "plant closing" as
defined by the Worker Adjustment and Retraining Notification Act ("WARN") and
any similar state or local "plant closing" law with respect to Seller Entity
within the six (6) months prior to Closing.
4.15 ENVIRONMENTAL MATTERS.
(a) For purposes of this Agreement:
(i) "ENVIRONMENTAL COSTS AND LIABILITIES" means any
and all losses, liabilities, obligations, damages (including
compensatory, punitive and consequential damages), fines, penalties,
judgments, actions, claims, costs and expenses (including, without
limitation, fees, disbursements and expenses of legal counsel, experts,
engineers and consultants and the costs of investigation and
feasibility studies and clean up, remove, treat, or in any other way
address any Hazardous Materials (as hereinafter defined)) arising from,
under or pursuant to any Environmental Law (as hereinafter defined);
(ii) "ENVIRONMENTAL LAW" means any applicable
federal, state, local or foreign Law (including common Law), statute,
rule, regulation, ordinance, decree or other legal requirement relating
to the protection of natural resources, the environment and public and
employee health and safety or pollution or the release or exposure to
Hazardous Materials (as hereinafter defined), as such Laws have been
and may be amended or supplemented through the Closing Date;
(iii) "HAZARDOUS MATERIAL" means any substance,
material or waste which is regulated, classified or otherwise
characterized as hazardous, toxic, pollutant, contaminant or words of
similar meaning or regulatory effect by any Governmental Entity or the
United States, and includes, without limitation, petroleum, petroleum
by-products and wastes, asbestos and polychlorinated biphenyls;
(iv) "RELEASE" means any release, spill, effluent,
emission, leaking, pumping, injection, deposit, disposal, discharge,
dispersal, leaching, or migration into the indoor or outdoor
environment, or into or out of any property owned, operated or leased
by the applicable party or its subsidiaries; and
(v) "REMEDIAL ACTION" means all actions, including,
without limitation, any capital expenditures, required by a
Governmental Entity or required under or taken pursuant to any
Environmental Law, or voluntarily undertaken to (A) clean up, remove,
treat, or in any other way, ameliorate or address any Hazardous
Materials or other substance in the indoor or outdoor environment; (B)
prevent the Release or threat of Release, or minimize the further
Release of any Hazardous Material so it does not
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endanger or threaten to endanger the public health or welfare of the
indoor or outdoor environment; (C) perform pre-remedial studies and
investigations or post-remedial monitoring and care pertaining or
relating to a Release; or (D) bring the applicable party into
compliance with any Environmental Law.
(b) Except as set forth in Section 4.15 of the Disclosure
Schedule:
(i) The operations of the Company and its
subsidiaries have been and, as of the Closing Date, will be, in
material compliance with all Environmental Laws, and the Company is not
aware of any facts, circumstances or conditions, which without
significant capital expenditures, would prevent material compliance in
the future;
(ii) The Company and its subsidiaries have obtained
and will, as of the Closing Date, maintain all material permits,
authorizations, licenses or similar approvals required under applicable
Environmental Laws for the continued operations of their respective
businesses;
(iii) The Company and its subsidiaries are not
subject to any outstanding written orders or material contracts with
any Governmental Entity or other person respecting (A) Environmental
Laws, (B) Remedial Action or (C) any Release or threatened Release of a
Hazardous Material;
(iv) The Company and its subsidiaries have not
received any written communication alleging, with respect to any such
party, the violation of or liability (real or potential) under any
Environmental Law;
(v) Neither the Company nor any of its subsidiaries
has any contingent liability in connection with the Release of any
Hazardous Material (whether on-site or off-site);
(vi) The operations of the Company or its
subsidiaries do not involve the generation, transportation, treatment,
storage or disposal of hazardous waste, as defined and regulated under
40 C.F.R. Parts 260-270 (in effect as of the date of this Agreement) or
any state equivalent;
(vii) There is not now, nor, to the Company's
Knowledge, has there been in the past, on or in any property of the
Company or its subsidiaries any of the following: (A) any underground
storage tanks or surface impoundments, (B) any asbestos-containing
materials, or (C) any polychlorinated biphenyls; and
(viii) No judicial or administrative proceedings are
pending or, to the Company's Knowledge, threatened against the Company
and its subsidiaries alleging the violation of or seeking to impose
liability pursuant to any Environmental Law and there are no
investigations pending or, to the Company's Knowledge, threatened
against the Company or any of its subsidiaries under Environmental
Laws.
(c) None of the exceptions set forth on Section 4.15 of the
Disclosure Schedule is reasonably likely to result in the Company and its
Subsidiaries incurring Environmental Costs and Liabilities in excess of $300,000
individually or in the aggregate.
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(d) The Company has provided the Parent with copies of all
environmentally related assessments, audits, investigations, sampling or similar
reports relating to the Company or its subsidiaries or any real property
currently or formerly owned, operated or leased by or for the Company and its
subsidiaries.
4.16 TAX MATTERS.
(a) The Company and each of its subsidiaries, and each
affiliated, unitary or combined group (within the meaning of Section 1504 of the
Code or comparable provisions of state, local or foreign Tax law) of which the
Company or any of its subsidiaries is or has been a member, has timely filed all
Tax Returns and reports required to be filed by it. All such Tax Returns are
complete and correct in all material respects.
(b) The Company and each of its subsidiaries has paid (or the
Company has paid on its subsidiaries' behalf) all Taxes due for the periods
covered by such Tax Returns. The most recent consolidated financial statements
contained in the Company SEC Reports reflect an adequate reserve for all Taxes
payable by the Company and its subsidiaries for all Taxable periods and portions
thereof through the date of such financial statements.
(c) The Company and its subsidiaries have complied in all
material respects with all applicable Laws with respect to the payment and
withholding of Taxes.
(d) No federal, state, local or foreign audits or other
administrative proceedings or court proceedings are presently pending with
regard to any federal income or material state, local or foreign Taxes or Tax
Returns of the Company or its subsidiaries and neither the Company nor any of
its subsidiaries has received a written notice that any taxing authority intends
to conduct any audit or proceeding. To the Company's Knowledge, no claim has
been made within the past two years by a taxing authority in a jurisdiction
where the Company or any of its subsidiaries does not file Tax Returns to the
effect that the Company or any of its subsidiaries is or may be subject to
Taxation by that jurisdiction.
(e) Neither the Company nor any of its subsidiaries has
received any private letter rulings from the IRS or comparable rulings from
other taxing authorities.
(f) Neither the Company nor any of its subsidiaries has (A)
agreed to or is required to make any adjustments pursuant to Section 481(a) of
the Code (or any predecessor provision) or any similar provision of domestic or
foreign state or local law by reason of a change in accounting methods initiated
by Company or any subsidiary, (B) executed or entered into a closing agreement
pursuant to Section 7121 of the Code or any predecessor provision thereof or any
similar provision of domestic or foreign state or local law with respect to the
Company or any subsidiary, (C) filed a consent pursuant to Section 341(f) of the
Code or agreed to have Section 341(f)(2) of the Code apply to any disposition of
a subsection (f) asset (as such term is defined in Section 341(f)(4) of the
Code) owned by Company or any subsidiary.
(g) No property owned by Company or any subsidiary (A) is
required to be treated as being owned by another Person pursuant to the
provisions of Section 168(f)(8) of the Internal Revenue Code of 1954, as amended
and in effect immediately prior to the enactment of the Tax Reform Act of 1986,
(B) is "tax-exempt use property" within the meaning of Section 168(h)(1) of the
Code, (C) is "tax-exempt bond financed property" within the meaning of Section
168(g) of the Code or (D) is subject to Section 168(g)(1)(A) of the Code.
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(h) There is no contract, plan or arrangement involving the
Company or any subsidiary that, individually or collectively, could give rise to
the payment of any amount that would not be deductible by the Company or any
subsidiary by reason of Section 280G or Section 162(m) of the Code.
(i) Except for the group of which the Company is the common
parent that files a consolidated federal income Tax Return, neither the Company
nor any of its subsidiaries is or was a member of any consolidated, combined or
affiliated group of corporations that filed or was required to file a
consolidated, combined or unitary Tax Return.
(j) Neither Company nor any subsidiary is a party to, bound
by, or obligated under, any Tax sharing agreement.
(k) Neither Company nor any of its subsidiaries has
constituted either a "distributing corporation" or a "controlled corporation"
(within the meaning of Section 355(a)(1)(A) of the Code) in a distribution of
stock qualifying for tax-free treatment under Section 355 of the Code (A) in the
two years prior to the date of this Agreement or (B) in a distribution which
could otherwise constitute part of a "plan" or "series of related transactions"
(within the meaning of Section 355(e) of the Code) in conjunction with the
Transactions.
(l) Neither the Company nor any of its subsidiaries is a
"United States real property holding company" within the meaning of Section 897
of the Code.
(m) The net operating loss carryovers of the Company and its
subsidiaries as at the close of their taxable year ended October 2, 1998 for
federal income Tax purposes were at least $38 million and, except as a result of
the Transactions, were not subject to any limitations or restrictions on their
utilization.
(n) For purposes of this Agreement, "Tax" or "Taxes" shall
mean all taxes, charges, fees, imposts, levies, duties, gaming or other
assessments, including, without limitation, all net income, gross receipts,
capital, sales, use, ad valorem, value added, transfer, franchise, profits,
alternative or add-on minimum, inventory, capital stock, license, withholding,
payroll, employment, social security, unemployment, excise, severance, stamp,
occupation, property and estimated taxes, customs duties, fees, assessments and
charges of any kind whatsoever, together with any interest and any penalties,
fines, additions to tax or additional amounts imposed by any taxing authority
(domestic or foreign) and shall include any transferee liability in respect of
Taxes, and any liability in respect of Taxes imposed by contract, operation of
law, assumption, Tax sharing agreement, Tax indemnity agreement, any similar
agreement or otherwise. "Tax Returns" shall mean any report, return, document,
declaration or any other information or filing required to be supplied to any
taxing authority or jurisdiction (foreign or domestic) with respect to Taxes,
including, without limitation, information returns, any document with respect to
or accompanying payments of estimated Taxes, or with respect to or accompanying
requests for the extension of time in which to file any such report, return
document, declaration or other information.
4.17 ABSENCE OF QUESTIONABLE PAYMENTS. Neither the Company nor any of
its subsidiaries nor, to the Company's Knowledge, any director, officer, agent,
employee or other person acting on behalf of the Company or any of its
subsidiaries, has used any corporate or other funds for unlawful contributions,
payments, gifts, or entertainment, or made any unlawful expenditures relating to
political activity to government officials or others or established or
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maintained any unlawful or unrecorded funds in violation of Section 30A of the
Exchange Act. Neither the Company nor any of its subsidiaries nor, to the
Company's Knowledge, any director, officer, agent, employee or other person
acting on behalf of the Company or any of its subsidiaries, has accepted or
received any unlawful contributions, payments, gifts, or expenditures. To the
Company's Knowledge, the Company and each of its subsidiaries which is required
to file reports pursuant to Section 12 or 15(d) of the Exchange Act is in
compliance with the provisions of Section 13(b) of the Exchange Act.
4.18 MATERIAL CONTRACTS.
(a) Section 4.18 of the Disclosure Schedule sets forth a list
of all Material Contracts (as hereinafter defined). The Company has heretofore
made available to the Parent true, correct and complete copies of all written or
oral contracts and agreements (and all amendments, modifications and supplements
thereto and all side letters to which the Company or any of its subsidiaries is
a party affecting the obligations of any party thereunder) to which the Company
or any of its subsidiaries is a party or by which any of its properties or
assets are bound that are material to the business, properties or assets of the
Company and its subsidiaries taken as a whole, including, without limitation, to
the extent any of the following are, individually or in the aggregate, material
to the business, properties or assets of the Company and its subsidiaries taken
as a whole, all: (i) employment, severance, product design or development,
personal services, consulting, non-competition or indemnification contracts
(including, without limitation, any contract to which the Company or any of its
subsidiaries is a party involving employees of the Company) involving an amount
in excess of $100,000; (ii) licensing, merchandising or distribution agreements;
(iii) contracts granting a right of first refusal or first negotiation; (iv)
partnership or joint venture agreements; (v) agreements for the acquisition,
sale or lease of material properties or assets, in excess of $250,000, of the
Company (by merger, purchase or sale of assets or stock or otherwise) entered
into since January 1, 1997; (vi) loan or credit agreements, mortgages,
indentures or other agreements or instruments evidencing indebtedness for
borrowed money by the Company or any of its subsidiaries or any such agreement
pursuant to which indebtedness for borrowed money may be incurred; (vii)
agreements that purport to limit, curtail or restrict the ability of the Company
or any of its subsidiaries to compete in any geographic area or line of
business; and (viii) commitments and agreements to enter into any of the
foregoing (collectively, together with any such contracts entered into in
accordance with Section 6.1 hereof, the "Material Contracts"). Neither the
Company nor any of its subsidiaries is a party to or bound by any severance or
other agreement with any employee or consultant pursuant to which such person
would be entitled to receive any additional compensation or an accelerated
payment of compensation as a result of the consummation of the Transactions.
(b) Each of the Material Contracts constitutes the valid and
legally binding obligation of the Company or its subsidiaries, enforceable in
accordance with its terms (except as enforceability may be limited by applicable
bankruptcy, insolvency, reorganization, moratorium, fraudulent transfer and
similar Laws of general applicability relating to or affecting creditors' rights
or by general equity principles), and is in full force and effect. There is no
default under any Material Contract so listed either by the Company or, to the
Company's Knowledge, by any other party thereto, and no event has occurred that
with the lapse of time or the giving of notice or both would constitute a
default thereunder by the Company or, to the Company's Knowledge, any other
party.
(c) No party to any such Material Contract has given notice to
the Company of or made a claim against the Company with respect to any breach or
default thereunder.
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4.19 RELATED PARTY TRANSACTIONS. Except for agreements expressly
contemplated hereby, agreements between the Company and its employees with
respect to the grant of Company Stock Options pursuant to the Stock Option
Plans, and agreements listed on the Disclosure Schedule, there are no
agreements, understandings or proposed transactions between the Company and any
of its officers or directors or any Affiliate thereof. Except as set forth on
the Disclosure Schedule, there are no obligations of the Company to officers,
directors, shareholders or employees of the Company, other than (a) for payment
of salary for services rendered, (b) for reimbursement for reasonable expenses
incurred on behalf of the Company, (c) for other employee benefits (including
stock option agreements outstanding under the Stock Option Plans), and (d)
pursuant to applicable Law. Except as may be disclosed in the Company SEC
Reports, the Company is not a guarantor or indemnitor of any indebtedness of any
other person, firm or corporation.
4.20 INSURANCE. The insurance policies maintained by the Company or any
of its subsidiaries have been issued by insurers, which, to the Company's
Knowledge, are reputable and financially sound and provide coverage for the
operations conducted by the Company and its subsidiaries of a scope and coverage
consistent with customary industry practice.
4.21 INTELLECTUAL PROPERTY.
(a) Section 4.21 of the Disclosure Schedule sets forth a list
of all Intellectual Property of the Company and its subsidiaries.
(b) The Company and its subsidiaries own or possess adequate
licenses or other valid rights to use (in each case, free and clear of any
Liens), all Intellectual Property used or held for use in connection with the
business of the Company and its subsidiaries as currently conducted or as
contemplated to be conducted.
(c) The use of any Intellectual Property by the Company and
its subsidiaries does not infringe on or otherwise violate the rights of any
person and is in accordance with any applicable license pursuant to which the
Company or any of its subsidiaries acquired the right to use any Intellectual
Property.
(d) No person is challenging, infringing on or otherwise
violating any right of the Company or any of its subsidiaries with respect to
any Intellectual Property owned by and/or licensed to the Company or its
subsidiaries.
(e) Neither the Company nor any of its subsidiaries has
received any notice written or otherwise of any assertion or claim, pending or
not, with respect to any Intellectual Property used by the Company or its
subsidiaries.
(f) No Intellectual Property owned and/or licensed by the
Company or its subsidiaries is being used or enforced in a manner that would
result in the abandonment, cancellation or unenforceability of such Intellectual
Property.
(g) For purposes of this Agreement, "Intellectual Property"
means (i) all trademarks, trademark rights, trade names, trade name rights,
trade dress and other indications of origin, corporate names, brand names,
logos, certification rights, service marks, applications for trademarks and for
service marks, know-how and other proprietary rights and information, the
goodwill associated with the foregoing and registration in any jurisdiction of,
and applications in
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any jurisdictions to register, the foregoing, including any extension,
modification or renewal of any such registration or application; (ii) all
inventions, discoveries and ideas (whether patentable or unpatentable and
whether or not reduced to practice), in any jurisdiction, all improvements
thereto, and all patents, patent rights, applications for patents (including,
without limitation, divisions, continuations, continuations in part and renewal
applications), and any renewals, extensions or reissues thereof, in any
jurisdiction; (iii) nonpublic information, trade secrets and confidential
information and rights in any jurisdiction to limit the use or disclosure
thereof by any person; (iv) writings and other works, whether copyrightable or
not, in any jurisdiction, and all registrations or applications for registration
of copyrights in any jurisdiction, and any renewals or extensions thereof; (v)
all mask works and all applications, registrations and renewals in connection
therewith, in any jurisdiction; (vi) all computer software (including data and
related documentation); (vii) any similar intellectual property or proprietary
rights; and (viii) all copies and tangible documentation thereof and any claims
or causes of action arising out of or relating to any infringement or
misappropriation of any of the foregoing.
4.22 YEAR 2000.
(a) All of the Computer Programs (as hereinafter defined),
computer firmware, computer hardware (whether general or special purpose) and
other similar or related items of automated, computerized and/or software
system(s) that are used or relied on by the Company or by any of its
subsidiaries in the conduct of their respective businesses will not malfunction,
will not cease to function, will not generate incorrect data, and will not
provide incorrect results when processing, providing, and/or receiving (i)
date-related data into and between the twentieth and twenty-first centuries and
(ii) date-related data in connection with any valid date in the twentieth and
twenty-first centuries.
(b) All of the products and services sold, licensed, rendered
or otherwise provided after December 31, 1993 by the Company or by any of its
subsidiaries in the conduct of their respective businesses will not malfunction,
will not cease to function, will not generate incorrect data and will not
produce incorrect results when processing, providing and/or receiving (i)
date-related data into and between the twentieth and twenty-first centuries and
(ii) date-related data in connection with any valid date in the twentieth and
twenty-first centuries; and neither the Company nor any of its subsidiaries is
or will be subject to claims or liabilities arising from their failure to do so.
(c) Neither the Company nor any of its subsidiaries has made
other representations or warranties regarding the ability of any product or
service sold, licensed, rendered or otherwise provided by the Company or by any
of its subsidiaries in the conduct of their respective businesses to operate
without malfunction, to operate without ceasing to function, to generate correct
data and to produce correct results when processing, providing and/or receiving
(i) date-related data into and between the twentieth and twenty-first centuries
and (ii) date-related data in connection with any valid date in the twentieth
and twenty-first centuries.
(d) For the purposes of this Agreement, "Computer Programs"
means (i) any and all computer software programs, including all source and
object code; (ii) databases and compilations, including any and all data and
collections of data, whether machine readable or otherwise; (iii) billing,
reporting, and other management information systems; (iv) all descriptions,
flow-charts and other work product used to design, plan, organize and develop
any of the foregoing; (v) all content contained on any Internet site(s); and
(vi) all documentation, including user manuals and training materials, relating
to any of the foregoing.
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4.23 CUSTOMERS AND SUPPLIERS. Section 4.23 of the Disclosure Schedule
sets forth a list of the twenty (20) largest customers and the ten (10) largest
suppliers of the Company, as measured by the dollar amount of purchases thereby
or therefrom, during the fiscal year ended October 2, 1998, showing the
approximate total sales by the Company to each such customer and the approximate
total purchases by the Company from each such supplier, during such period. The
Company has not received notice (oral or written) from any such customer or
supplier that (i) the Company is no longer in good standing with such customer
or supplier or (ii) that such customer or supplier plans to materially reduce
the volume of its business with the Company.
4.24 OPINION OF FINANCIAL ADVISOR. The Financial Advisor has delivered
to the Company Board its opinion, dated the date of this Agreement, to the
effect that, as of such date, the Offer Price to be received by holders of the
Shares pursuant to the Offer is fair to the stockholders of the Company from a
financial point of view, and such opinion has not been withdrawn or modified.
The Company has been authorized by the Financial Advisor to permit the inclusion
of such opinion in its entirety in the Offer Documents and the Schedule 14D-9,
so long as such inclusion is in form and substance reasonably satisfactory to
the Financial Advisor and its counsel.
4.25 BROKERS. No broker, finder or investment banker (other than the
Financial Advisor, a true and correct copy of whose engagement agreement has
been provided to the Parent) is entitled to any brokerage, finder's or other fee
or commission or expense reimbursement in connection with the Transactions based
upon arrangements made by and on behalf of the Company or any of its Affiliates.
4.26 PRODUCT LIABILITY; PRODUCT WARRANTY. All products and services
sold, rented, leased, provided or delivered by the Company or its subsidiaries
to customers on or prior to the Closing Date conform or will conform to
applicable contractual commitments, express and implied warranties, product and
service specifications and quality standards, and, to the Knowledge of the
Company, the Company has no liability (and there is no basis for any present or
future action, suit, proceeding, hearing, investigation, charge, complaint,
claim or demand against the Company giving rise to any liability) for
replacement or repair thereof or other damages in connection therewith. Except
as set forth on Section 4.26 of the Disclosure Schedule, no product or service
sold, leased, rented, provided or delivered by the Company to customers on or
prior to the Closing Date is subject to any guaranty, warranty or other
indemnity beyond the applicable standard terms and conditions of sale, rent or
lease (which standard terms and conditions have been disclosed to the Parent in
Section 4.26 of the Disclosure Schedule). Except as set forth on Section 4.26 of
the Disclosure Schedule, the Company has no liability (and there is no basis for
any present or future action, suit, proceeding, hearing, investigation, charge,
complaint, claim or demand against the Company which might give rise to any
liability) arising out of any injury to a person or property as a result of the
ownership, possession, provision or use of any equipment, product or service
sold, rented, leased, provided or delivered by the Company on or prior to the
Closing Date. All product liability claims that have been asserted against the
Company since January 1, 1992, and that individually seek damages in excess of
$100,000, whether covered by insurance or not and whether litigation has
resulted or not, are listed and summarized on Section 4.26 of the Disclosure
Schedule.
4.27 TAKEOVER STATUTE; CERTIFICATE OF INCORPORATION. The Company has
taken all actions required to be taken by it in order to exempt this Agreement,
the Related Agreements, the Offer, the acquisition of Shares pursuant to this
Agreement and the Offer and the transactions contemplated hereby and thereby
from, and this Agreement, the Related Agreements, the Offer,
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the acquisition of Shares pursuant to this Agreement and the Offer and the
transactions contemplated hereby and thereby (the "Covered Transactions") are
exempt from (i) the requirements of any "moratorium," "control share," "fair
price," "affiliate transaction," "business combination" or other antitakeover
Laws and regulations of any state (collectively, "Takeover Statutes"),
including, without limitation, Section 203 of the DGCL, or any (ii) antitakeover
provision in the Company's certificate of incorporation and bylaws, including
Article 10 thereof. The provisions of Section 203 of the DGCL do not apply to
the Covered Transactions.
4.28 AMENDMENT TO THE RIGHTS AGREEMENT. The Company Board has taken all
necessary action (including any amendment thereof) under the Rights Agreement so
that (a) neither the execution or delivery of this Agreement or the Related
Agreements nor any other transaction contemplated hereby or thereby, including
the making of the Offer or the purchase of the Shares pursuant thereto, will
cause (i) the Rights to become exercisable under the Rights Agreement, (ii) the
Parent or the Purchaser to be deemed an "Acquiring Person" (as defined in the
Rights Agreement) or (iii) the "Stock Acquisition Date" (as defined in the
Rights Agreement) to occur upon any such event and (b) the Parent, the Purchaser
and their Affiliates will be excluded from the definition of Acquiring Person
under the Rights Agreement for purposes of the Transactions. The Company has
provided the Parent with an executed copy of the Rights Agreement, and any
amendments thereto, substantially in form and substance satisfactory to the
Parent.
4.29 OFFERING OF COMPANY SHARES. Assuming the accuracy of the
representations and warranties of the Parent and the Purchaser contained in
Section 5.5, the issuance, offer and sale of the Company Shares will be exempt
from the registration requirements of the Securities Act and will have been
registered or qualified (or are exempt from registration and qualification)
under the registration, permit or qualification requirements of all applicable
state securities Laws. Neither the Company nor any agent on its behalf has
solicited or will solicit any offers to sell or has offered to sell or will
offer to sell all or any part of the Company Shares to any person or persons so
as to bring the sale of such Company Shares by the Company within the
registration provisions of the Securities Act.
4.30 NO MISREPRESENTATION. No representation or warranty of the
Company, contained herein or in any certificate or document delivered pursuant
hereto, contains any untrue statement of a material fact or omits to state a
material fact necessary to make the statements contained herein or therein not
misleading.
5. REPRESENTATIONS AND WARRANTIES OF PARENT AND PURCHASER.
The Parent and the Purchaser hereby represent and warrant to the
Company as follows:
5.1 ORGANIZATION. Each of the Parent and the Purchaser is a corporation
duly organized, validly existing and in good standing under the Laws of the
jurisdiction of its incorporation and has all requisite corporate power and
authority to own, lease and operate its properties and to carry on its
businesses as now conducted or proposed by the Parent to be conducted, except
where the failure to be duly organized, existing and in good standing or to have
such power and authority would not reasonably be expected to have, individually
or in the aggregate, a Material Adverse Effect on the Parent.
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5.2 AUTHORIZATION; BINDING OBLIGATION. Each of the Parent and the
Purchaser has all necessary corporate power and authority to execute and deliver
this Agreement and the Related Agreements and to consummate the transactions
contemplated hereby and thereby. No other corporate proceedings on the part of
the Parent or the Purchaser are necessary to authorize this Agreement and the
Related Agreements or to consummate the transactions contemplated hereby or
thereby. This Agreement and the Related Agreements have been duly and validly
executed and delivered by each of the Parent and the Purchaser and constitute
valid, legal and binding agreements of each of the Parent and the Purchaser,
enforceable against each of the Parent and the Purchaser in accordance with
their respective terms, subject to applicable bankruptcy, insolvency,
reorganization, moratorium and similar laws affecting creditors' rights and
remedies generally, and subject, as to enforceability, to general principles of
equity, including principles of commercial reasonableness, good faith and fair
dealing (regardless of whether enforcement is sought in a proceeding at law or
in equity).
5.3 OFFER DOCUMENTS. The Offer Documents and any other documents to be
filed by the Parent and the Purchaser with the SEC or any other Government
Entity in connection with the Offer and the other transactions will comply as to
form in all material respects with the requirements of the Exchange Act and the
Securities Act, respectively, and will not, on the date of filing with the SEC,
contain any untrue statement of a material fact, or omit to state any material
fact required to be stated therein or necessary in order to make the statements
made therein, in the light of the circumstances under which they are made, not
misleading. Notwithstanding the foregoing, neither the Parent nor the Purchaser
makes any representation or warranty with respect to the statements made in any
of the foregoing documents based on and in conformity with information supplied
by or on behalf of the Company specifically for inclusion therein.
5.4 CONSENTS AND APPROVALS; NO VIOLATIONS. Except for filings, permits,
authorizations, consents and approvals as may be required under, and other
applicable requirements of, the Securities Act, the Exchange Act, state
securities or blue sky Laws, the HSR Act, no filing with or notice to, and no
permit, authorization, consent or approval of, any Governmental Entity is
necessary for the execution and delivery by the Parent or the Purchaser of this
Agreement or the Related Agreements or the consummation by the Parent or the
Purchaser of the transactions contemplated hereby or thereby, except where the
failure to obtain such permits, authorizations, consents or approvals or to make
such filings or give such notice do not or would not reasonably be expected to
have, individually or in the aggregate, a Material Adverse Effect on the Parent.
Neither the execution, delivery and performance of this Agreement and the
Related Agreements by the Parent or the Purchaser nor the consummation by the
Parent or the Purchaser of the transactions contemplated hereby or thereby will
(i) conflict with or result in any breach of any provision of the respective
certificate of incorporation or bylaws (or similar governing documents) of the
Parent or the Purchaser, (ii) result in a violation or breach of, or constitute
(with or without due notice or lapse of time or both) a default (or give rise to
any right of termination, amendment, cancellation or acceleration or Lien)
under, any of the terms, conditions or provisions of any note, bond, mortgage,
indenture, lease, license, contract, agreement or other instrument or obligation
to which the Parent or the Purchaser is a party or by which any of them or any
of their respective properties or assets may be bound or (iii) violate any Law
applicable to the Parent or the Purchaser, except in the case of (ii) or (iii)
for violations, breaches or defaults which do not or would not reasonably be
expected to have, individually or in the aggregate, a Material Adverse Effect on
the Parent.
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5.5 INVESTMENT REPRESENTATIONS. The Purchaser is purchasing the Company
Shares for its own account and not with a view to the distribution thereof. The
Purchaser understands that the Company Shares have not been registered under
Securities Act and may be resold only if registered pursuant to the provisions
of the Securities Act or if an exemption from registration is available, except
under circumstances where neither such registration nor such an exemption is
required by law.
5.6 FINANCING. The Parent and the Purchaser have sufficient financial
capacity to consummate the purchase of the Company Shares, the Offer, the Loan
and other transactions contemplated by this Agreement and the Related
Agreements.
6. COVENANTS.
6.1 USE OF PROCEEDS. The Company shall use the proceeds from the sale
of the Company Shares hereunder solely for the acquisition of QMS Europe B.V.
and QMS Australia Pty. Ltd. and the payment in full of all obligations
outstanding under the Foothill Credit Facility (as defined in the Loan
Agreement) and any expenses incurred in connection therewith and with this
Agreement and the Related Agreements; PROVIDED, HOWEVER, that the Company shall
not be required to pay in full all obligations outstanding under the Foothill
Credit Facility in the event the Foothill Credit Facility has become a Permitted
Credit Facility (as defined in the Loan Agreement) within 60 days after the
Closing Date.
6.2 CONDUCT OF BUSINESS. From and after the date hereof (unless the
Purchaser has given its prior written consent) and until the expiration date of
the Offer, as it may be extended pursuant to Section 3.1 (the "Expiration
Date"), except as contemplated by this Agreement or the Related Agreements, the
Company shall, and shall cause each of its subsidiaries to, conduct its
operations in the ordinary and usual course of business consistent with past
practice and, to the extent consistent therewith, with no less diligence and
effort than would be applied in the absence of this Agreement, seek to preserve
intact its current business organizations, seek to keep available the service of
its current officers and employees and seek to preserve its relationships with
customers, suppliers and others having business dealings with it to the end that
goodwill and ongoing businesses shall be unimpaired. Without limiting the
generality of the foregoing, and except as otherwise expressly provided in this
Agreement or in the Disclosure Schedule, prior to the Expiration Date, neither
the Company nor any of its subsidiaries shall, without the prior written consent
of the Purchaser:
(a) amend its certificate of incorporation or bylaws (or other
similar governing instrument) or amend, modify or terminate the Rights Agreement
(other than as contemplated by Section 4.27);
(b) authorize for issuance, issue, sell, deliver or agree or
commit to issue, sell or deliver (whether through the issuance or granting of
options, warrants, commitments, subscriptions, rights to purchase or otherwise)
any stock of any class or any other securities convertible into or exchangeable
for any stock or any equity equivalents (including, without limitation, any
stock options or stock appreciation rights), except for the issuance or sale of
Shares pursuant to outstanding Company Stock Options;
(c) (i) split, combine or reclassify any shares of its capital
stock; (ii) declare, set aside or pay any dividend or other distribution
(whether in cash, stock or property or any
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combination thereof) in respect of its capital stock; (iii) make any other
actual, constructive or deemed distribution in respect of any shares of its
capital stock or otherwise make any payments to stockholders in their capacity
as such; or (iv) redeem, repurchase or otherwise acquire any of its securities
or any securities of any of its subsidiaries (including redeeming any Rights);
(d) adopt a plan of complete or partial liquidation,
dissolution, merger, consolidation, restructuring, recapitalization or other
reorganization of the Company or any of its subsidiaries;
(e) alter through merger, liquidation, reorganization,
restructuring or in any other fashion the corporate structure or ownership of
any subsidiary;
(f) except as permitted under the Loan Agreement, (i) incur or
assume any long-term or short-term debt or issue any debt securities, except for
borrowings under existing lines of credit in the ordinary and usual course of
business consistent with past practice and in amounts not material to the
Company and its subsidiaries taken as a whole; (ii) assume, guarantee, endorse
or otherwise become liable or responsible (whether directly, contingently or
otherwise) for the obligations of any other person; (iii) make any loans,
advances or capital contributions to, or investments in, any other person (other
than to the wholly owned subsidiaries of the Company or customary loans or
advances to employees in the ordinary and usual course of business consistent
with past practice and in amounts not material to the maker of such loan or
advance); (iv) pledge or otherwise encumber shares of capital stock of the
Company or its subsidiaries; or (v) mortgage or pledge any of its material
assets, tangible or intangible, or create or suffer to exist any material Lien
thereupon;
(g) except as may be required by Law or as contemplated by
this Agreement, enter into, adopt or amend or terminate any bonus, profit
sharing, compensation, severance, termination, stock option, stock appreciation
right, restricted stock, performance unit, stock equivalent, stock purchase
agreement, pension, retirement, deferred compensation, employment, severance or
other employee benefit agreement, trust, plan, fund, award or other arrangement
for the benefit or welfare of any director, officer or employee in any manner or
increase in any manner the compensation or fringe benefits of any director,
officer or employee or pay any benefit not required by any plan and arrangement
as in effect as of the date hereof (including, without limitation, the granting
of stock appreciation rights or performance units) or take any action to
accelerate the vesting of any Company Stock Options;
(h) acquire, sell, lease or dispose of any assets outside the
ordinary and usual course of business consistent with past practice or any
assets which in the aggregate are material to the Company and its subsidiaries
taken as a whole, enter into any commitment or transaction outside the ordinary
and usual course of business consistent with past practice or grant any
exclusive distribution rights;
(i) except as may be required as a result of a change in Law
or in GAAP, change any of the accounting principles or practices used by it;
(j) revalue in any material respect any of its assets,
including, without limitation, writing down the value of inventory or
writing-off notes or accounts receivable other than in the ordinary and usual
course of business consistent with past practice or as required by GAAP;
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(k) except for the acquisition of QMS Europe B.V. and QMS
Australia Pty. Ltd. pursuant to Section 6.1, (i) acquire (by merger,
consolidation, or acquisition of stock or assets) any corporation, partnership
or other business organization or division thereof or any equity interest
therein; (ii) enter into any license or cross license, joint development or
other agreements with respect to any Intellectual Property of the Company; (iii)
enter into any agreement for the purchase of engines for printer products; (iv)
enter into or amend in any material respect any other contract or agreement,
other than in the ordinary and usual course of business consistent with past
practice; (v) authorize any new capital expenditure or expenditures which,
individually, is in excess of $100,000 or, in the aggregate, are in excess of
$300,000; or (vi) enter into or amend any contract, agreement, commitment or
arrangement providing for the taking of any action that would be prohibited
hereunder;
(l) settle or compromise any Tax liability material to the
Company and its subsidiaries taken as a whole or, except as may be required by
law, make or revoke any Tax election or change (or make a request to any taxing
authority to change) any aspect of its method of accounting for Tax purposes;
(m) other than as permitted under this Agreement and the
Related Agreements, pay, discharge or satisfy any material claims, liabilities
or obligations (absolute, accrued, asserted or unasserted, contingent or
otherwise), other than the payment, discharge or satisfaction in the ordinary
and usual course of business consistent with past practice of liabilities
reflected or reserved against in the consolidated financial statements of the
Company and its subsidiaries or incurred in the ordinary and usual course of
business consistent with past practice or waive the benefits of, or agree to
modify in any manner, any confidentiality, standstill or similar agreement to
which the Company or any of its subsidiaries is a party;
(n) settle or compromise any pending or threatened suit,
action or claim relating to the Transactions; or
(o) take, propose to take, or agree in writing or otherwise to
take, any of the actions described in Sections 6.2(a) through 6.2(n) or any
action which would make any of the representations or warranties of the Company
contained in this Agreement (i) which are qualified as to materiality untrue or
incorrect or (ii) which are not so qualified untrue or incorrect in any material
respect.
6.3 ACCESS TO INFORMATION.
(a) From and after the date hereof and until the Expiration
Date, the Company shall give the Parent, the Purchaser and their authorized
representatives (including counsel, financial advisors and auditors) reasonable
access during normal business hours to all employees, plants, offices,
warehouses and other facilities and to all books and records of the Company and
its subsidiaries, shall permit the Parent to make such inspections as the Parent
may reasonably require and shall cause the Company's officers and those of its
subsidiaries to furnish the Parent with such financial and operating data and
other information with respect to the business, properties and personnel of the
Company and its subsidiaries as the Parent may from time to time reasonably
request, provided that no investigation pursuant to this Section 6.3(a) shall
affect or be deemed to modify any of the representations or warranties made by
the Company.
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(b) During the period from and after the date hereof until
such time as the Purchaser and its Affiliates hold less than 14% of the Shares
then outstanding, the Company shall furnish to the Parent or the Purchaser (i)
such monthly financial statements and data as are regularly prepared for
distribution to Company management and (ii) at the earliest time they are
available, such quarterly and annual financial statements as are prepared for
the Company's SEC filings, which (in the case of this clause (ii)) shall be in
accordance with the books and records of the Company.
6.4 NO SOLICITATION.
(a) From and after the date hereof until the Expiration Date
and except as expressly permitted by the following provisions of this Section
6.4, the Company shall not, nor shall it permit any of its subsidiaries to, nor
shall it authorize or permit any officer, director or employee of or any
investment banker, attorney, accountant or other advisor or representative of,
the Company or any of its subsidiaries to, directly or indirectly, (i) solicit,
initiate or encourage the submission of any Acquisition Proposal (as hereinafter
defined) or (ii) participate in any discussions or negotiations regarding, or
furnish to any person any information with respect to, or take any other action
to facilitate, any Acquisition Proposal or any inquiries or the making of any
proposal that constitutes, or may reasonably be expected to lead to, any
Acquisition Proposal; PROVIDED, HOWEVER, that nothing contained in this Section
6.4(a) shall prohibit the Company Board from furnishing information to, or
entering into discussions or negotiations with, any person that makes an
unsolicited bona fide written Acquisition Proposal if, and only to the extent
that (A) the Company Board, after consultation with and based upon consultation
with independent legal counsel, determines in good faith that such action is
necessary for the Company Board to comply with its fiduciary duties to the
Company and its stockholders under applicable Law, (B) the Company Board
determines in good faith that such Acquisition Proposal (which shall not be
subject to any financing condition), if accepted, is reasonably likely to be
consummated, taking into account all legal, financial, regulatory and other
aspects of the proposal and the person making the proposal, and believes in good
faith, after consultation with its Financial Advisor and after taking into
account the strategic benefits to be derived from the Offer, would, if
consummated, result in a transaction more favorable to the Company and its
stockholders from a financial point of view than the Offer (any such more
favorable Acquisition Proposal being referred to herein as a "Superior
Proposal"), and (C) prior to taking such action, the Company (x) provides
reasonable notice to the Parent to the effect that it is taking such action and
(y) receives from such person an executed confidentiality/standstill agreement
in reasonably customary form and in any event containing terms at least as
stringent as those among the Parent, the Purchaser and the Company. Prior to
providing any information to or entering into discussions or negotiations with
any person in connection with an Acquisition Proposal by such person, the
Company shall notify the Parent of any Acquisition Proposal (including, without
limitation, the material terms and conditions thereof and the identity of the
person making it) as promptly as practicable (but in no case later than 24
hours) after its receipt thereof, and shall provide the Parent with a copy of
any written Acquisition Proposal or amendments or supplements thereto, and shall
thereafter inform the Parent on a prompt basis of the status of any discussions
or negotiations with such a third party, and any material changes to the terms
and conditions of such Acquisition Proposal, and shall promptly give the Parent
a copy of any information delivered to such person which has not previously been
reviewed by the Parent. Immediately after the execution and delivery of this
Agreement, the Company shall, and shall cause its subsidiaries and affiliates,
and their respective officers, directors, employees, investment bankers,
attorneys, accountants and other agents to cease and terminate any existing
activities,
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discussions or negotiations with any parties conducted heretofore with respect
to any possible Acquisition Proposal and shall notify each party that it, or any
officer, director, investment advisor, financial advisor, attorney or other
representative retained by it, has had discussions with during the 30 days prior
to the date of this Agreement that the Company Board no longer seeks the making
of any Acquisition Proposal. The Company agrees that it will take the necessary
steps to promptly inform the individuals or entities referred to in the first
sentence hereof of the obligations undertaken in this Section 6.4(a).
(b) The Company Board shall not withdraw or modify, or propose
to withdraw or modify, in a manner adverse to the Purchaser, its approval or
recommendation of the Offer unless the Company Board after consultation with and
based upon the advice of independent legal counsel, determines in good faith
that such action is necessary for the Company Board to comply with the fiduciary
duties to the Company and its stockholders under applicable Law; PROVIDED,
HOWEVER, the Company Board may not approve or recommend (and in connection
therewith, withdraw or modify its approval or recommendation of this Agreement
or the Offer) an Acquisition Proposal unless such an Acquisition Proposal is a
Superior Proposal and unless it shall have first consulted with independent
legal counsel, and have determined, based upon such advice, that such action is
necessary for the Company Board to comply with its fiduciary duties to the
Company's stockholders. Nothing contained in this Section 6.4(b) shall prohibit
the Company from taking and disclosing to its stockholders a position
contemplated by Rule 14e-2(a) promulgated under the Exchange Act or from making
any disclosure to the Company's stockholders which, in the good faith reasonable
judgment of the Company Board, based on the advice of independent legal counsel,
is required under applicable Law; PROVIDED, HOWEVER, that except as otherwise
permitted in this Section 6.4(b), the Company does not withdraw or modify, or
propose to withdraw or modify, its position with respect to the Offer or approve
or recommend, or propose to approve or recommend, an Acquisition Proposal.
Notwithstanding anything contained in this Agreement to the contrary, any action
by the Company Board permitted by, and taken in accordance with, this Section
6.4 shall not constitute a breach of this Agreement by the Company. Nothing in
this Section 6.4 shall (i) permit the Company to terminate this Agreement or
(ii) affect any other obligations of the Company under this Agreement.
6.5 CERTIFICATE OF INCORPORATION. The Company Board shall take all
necessary action under the Certificate of Incorporation of the Company so that
(i) the Parent, the Purchaser and their Affiliates shall be excluded from the
definition of "Interested Stockholder" under Article 10 of the Certificate of
Incorporation or (ii) any "Business Combination" (as defined in such Article 10)
between the Company and the Parent or the Purchaser shall be approved by the
requisite action of the Company Board.
6.6 COMPANY NAME. Upon the acquisition by the Purchaser and its
Affiliates of at least a majority of the outstanding Shares, the Company shall
take all action available to the Company, including submitting a proposal at a
meeting of stockholders, to change the name of the Company to a name which shall
include the word "Minolta" and be reasonably acceptable to the Purchaser.
6.7 INTEGRATION COMMITTEE. The Company and the Parent shall agree to
establish a committee (the "Integration Committee") on or prior to the
acquisition by the Purchaser and/or its Affiliates of the Shares pursuant to the
Offer and maintain the Integration Committee after such acquisition until such
time as the Purchaser and its Affiliates hold less than a majority of the Shares
then outstanding. The Company and the Parent shall, through the Integration
Committee,
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use commercially reasonable best efforts to integrate the Company's and the
Parent's printer related operations.
6.8 STRATEGIC MEETINGS. From and after the acquisition by the Purchaser
and/or its Affiliates of the Shares pursuant to the Offer until such time as the
Purchaser and its Affiliates hold less than a majority of the Shares then
outstanding, representatives of the Company shall meet from time to time, but no
less than four (4) times per year, with representatives of the Parent to review
corporate strategies, improvement of operations and such other matters relating
to the business of the Company as the Parent and the Company shall reasonably
determine.
6.9 GOVERNANCE. During the period from and after the Closing Date until
such time as the Purchaser and its Affiliates hold less than 35% of the Shares
then outstanding, the Company Board, without the approval of a majority of the
Company Board, including a majority of the directors designated by the
Purchaser, shall not authorize or approve:
(a) any annual or quarterly operating or capital budget or
business plan, or any material amendment or modification thereto;
(b) any change in the Company's principal line of business,
entry into a new line of business or any change in the Company's corporate
strategy; or
(c) the election, appointment or employment of any officer of
the Company.
6.10 INDEMNIFICATION OF DIRECTORS. The Company shall indemnify any
director designated by the Purchaser to the full extent permitted by the DGCL.
The Company shall maintain in effect directors and officers liability insurance
for the benefit of the directors and officers of the Company, including, without
limitation, any directors designated by the Purchaser.
6.11 CROSS LICENSE AGREEMENTS. The Company and the Parent shall,
through the Integration Committee, negotiate in good faith and use commercially
reasonable best efforts to enter into cross license agreements, on terms
satisfactory to each party and to the extent authorized by a third party
licensor, on a worldwide basis without charge, with respect to certain
Intellectual Property of each party. Such Intellectual Property shall include,
without limitation, trademarks, copyrights and proprietary technology with
respect to, in the case of the Company, the source code of page description
languages and, in the case of the Parent, engine video interface, image
enhancement, color calibration used in laser beam printers and the know-how
regarding multi-function products.
6.12 ENGINE SALES AND PURCHASE AGREEMENT. On or prior to the
acquisition by the Purchaser and/or its Affiliates of the Shares pursuant to the
Offer, the Company and the Parent shall, through the Integration Committee,
negotiate in good faith and use commercially reasonable best efforts to enter
into a sales and purchase agreement, on terms satisfactory to each party, in
which agreement the Company shall (i) designate the Parent as the primary
provider of engines to the Company and (ii) set forth terms and conditions with
respect to the selection and purchase by the Company of engines manufactured by
the Parent.
6.13 EMPLOYMENT AGREEMENTS. On or prior to the acquisition by the
Purchaser and/or its Affiliates of the Shares pursuant to the Offer, the Company
shall use commercially reasonable best efforts to enter into employment
agreements on terms satisfactory to the
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Purchaser with each of Edward E. Lucente, to serve as President and Chief
Executive Officer, and James A. Wallace, to serve as Vice President and Chief
Financial Officer.
6.14 REGISTRATION RIGHTS. If immediately following the Offer, the
Purchaser and its Affiliates hold less than a majority of the outstanding
Shares, the Company, the Purchaser and the Parent shall negotiate and execute a
registration rights agreement for the Company Shares on the terms and conditions
set forth on Exhibit A hereto.
7. CONDITIONS TO CLOSING.
7.1 CONDITIONS TO PURCHASER'S OBLIGATIONS AT THE CLOSING. The
Purchaser's obligations to purchase the Shares at the Closing are subject to the
satisfaction, at or prior to the Closing, of the following conditions:
(a) REPRESENTATIONS AND WARRANTIES TRUE; PERFORMANCE OF
OBLIGATIONS. The representations and warranties made by the Company in Section 4
hereof shall be true and correct in all material respects as of the Closing Date
with the same force and effect as if they had been made as of the Closing Date,
and the Company shall have performed all obligations and conditions herein
required to be performed or observed by it on or prior to the Closing.
(b) CONSENTS, PERMITS AND WAIVERS. The Company shall have
obtained any and all material consents, permits and waivers necessary or
appropriate for the consummation of the transactions contemplated by this
Agreement and the Related Agreements.
(c) CERTIFICATES. The Company shall have delivered to the
Parent (i) a Compliance Certificate, executed by the President of the Company,
dated the date of the Closing, to the effect that the conditions specified in
subsections (a) and (b) of this Section 7.1 have been satisfied and (ii) a copy
of the Company's certificate of incorporation and by-laws, certified by the
Secretary or Assistant Secretary of the Company as true and correct and as to
their continuing effect as of the date of the Closing.
(d) ACQUISITION OF QMS EUROPE B.V. AND QMS AUSTRALIA PTY. LTD.
On or prior to the Closing, the Company shall have acquired 100% of the
outstanding shares of the capital stock of QMS Europe B.V. and QMS Australia
Pty. Ltd. pursuant to the Share Purchase Agreement, dated May 17, 1999, among
the Company, Alto Imaging Group N.V. and Jalak Investments B.V.
(e) RELATED AGREEMENTS. The Parent shall have received the
Related Agreements, in form and substance satisfactory to the Parent, duly
executed by the Company.
(f) FOOTHILL CREDIT FACILITY. The Foothill Credit Facility
shall have been amended to authorize (or Foothill Capital Corporation shall
otherwise have consented in writing to) the transactions contemplated in this
Agreement and the Related Agreements.
(g) LISTING ON NYSE. The Company Shares shall have been
approved for listing on the New York Stock Exchange, subject to official notice
of issuance unless the failure to be so approved was due to any action or
inaction on the part of the Parent or the Purchaser.
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(h) LEGAL OPINION. The Parent and the Purchaser shall have
received from Hand Arendall, LLC an opinion addressed to the Parent and the
Purchaser, dated as of the Closing Date, in form and substance reasonably
satisfactory to the Parent, substantially in the form attached hereto as Exhibit
B.
(i) PROCEEDINGS AND DOCUMENTS. All corporate and other
proceedings in connection with the transactions contemplated at the Closing and
all documents and instruments incident to such transactions shall be reasonably
satisfactory in substance and form to the Parent and its counsel, and the Parent
and its counsel shall have received all such counterpart originals or certified
or other copies of such documents as they may reasonably request.
7.2 CONDITIONS TO OBLIGATIONS OF THE COMPANY. The Company's obligation
to issue and sell the Shares is subject to the satisfaction, on or prior to the
Closing, of the following conditions:
(a) REPRESENTATIONS AND WARRANTIES TRUE. The representations
and warranties made by the Parent and the Purchaser in Section 5 hereof shall be
true and correct in all material respects at the date of the Closing, with the
same force and effect as if they had been made on and as of said date.
(b) PERFORMANCE OF OBLIGATIONS. Each of the Parent and the
Purchaser shall have performed and complied with all agreements and conditions
herein required to be performed or complied with by each of the Parent and the
Purchaser on or before the Closing.
(c) COMPLIANCE CERTIFICATE. The Purchaser shall have delivered
to the Company a Compliance Certificate, executed by an officer of the
Purchaser, dated the date of the Closing, to the effect that the conditions
specified in subsections (a) and (b) of this Section 7.2 have been satisfied.
(d) CONSENTS, PERMITS AND WAIVERS. The Parent and the
Purchaser shall have obtained any and all consents, permits and waivers
necessary or appropriate for the consummation of the transactions contemplated
by this Agreement and the Related Agreements.
(e) LEGAL OPINION. The Company shall have received from Weil,
Gotshal & Manges LLP an opinion addressed to the Company, dated as of the
Closing Date, in form and substance reasonably satisfactory to the Company,
substantially in the form attached hereto as Exhibit C.
8. INDEMNIFICATION.
8.1 SURVIVAL OF REPRESENTATIONS, WARRANTIES AND COVENANTS. The
representations, warranties, covenants and agreements made herein shall survive
the execution and delivery of this Agreement and the Closing hereof. All
statements as to factual matters contained in any certificate or other
instrument delivered by or on behalf of the Company pursuant hereto in
connection with the Transactions shall be deemed to be representations and
warranties by the Company hereunder solely as of the date of such certificate or
instrument. The representations and warranties of the Company shall terminate on
the date 18 months after the date hereof, except with respect to any
representation and warranty with respect to which the Parent or the Purchaser
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has furnished a written claim of breach to the Company prior to such termination
date, in which event such representation and warranty shall survive in effect
until such claim is resolved.
8.2 INDEMNIFICATION. The Company hereby agrees to indemnify and hold
harmless the Parent and the Purchaser and their respective directors, officers,
employees, Affiliates, agents, successors and assigns (collectively the
"Indemnified Parties") from and against any and all liabilities, obligations,
losses, damages, penalties, actions, judgments, suits, claims, costs, attorneys'
fees, expenses and disbursements of any kind, including, without limitation,
those arising from third-party claims (collectively, "Losses"), which may be
imposed upon, incurred by or asserted against the Indemnified Parties based
upon, attributable to or resulting from (i) the failure of any representation or
warranty of the Company, contained herein or in any certificate or document
delivered pursuant hereto, to be true and correct in all respects as of the date
made or (ii) the breach of any covenant or other agreement on the part of the
Company under this Agreement; PROVIDED, HOWEVER, that (i) the Company shall not
have any liability under this Section 8.2 unless and until the aggregate amount
of the Losses finally determined to arise thereunder exceeds $300,000 and (ii)
the aggregate amount that the Indemnified Parties shall be entitled to recover
hereunder shall be limited to $12,247,500.
8.3 INDEMNIFICATION PROCEDURES.
(a) The Indemnified Parties may make a claim for
indemnification under Section 8.2 not involving a claim or action by a third
party, by giving written notice of the assertion of such claim covered by this
indemnity to the Company. In the event that any Legal Proceedings shall be
instituted by any third party or that any claim or demand shall be asserted by
any third party in respect of which indemnification may be sought under Section
8.2 (a "Third-Party Claim"), the Parent shall reasonably promptly cause written
notice of the assertion of such Third-Party Claim of which it has knowledge to
be forwarded to the Company. The Company shall have the right, at its sole
option and expense, to be represented by counsel of its choice (as approved by
the independent directors of the Company) and to defend against, negotiate,
settle or otherwise deal with any Third-Party Claim (as approved by the
independent directors of the Company). If the Company elects to defend against,
negotiate, settle or otherwise deal with any Third-Party Claim, the Company's
choice of counsel must be reasonably satisfactory to the Parent, and the Company
shall within five (5) days of such notice (or sooner, if the nature of the
Third-Party Claim so requires) notify the Parent of its intent to do so. If the
Company elects not to defend against, negotiate, settle or otherwise deal with
any Third-Party Claim, fails to notify the Parent of its election as herein
provided or contests its obligation to indemnify the Parent or the Purchaser for
such Losses under this Agreement, the Parent may defend against, negotiate,
settle or otherwise deal, with such Third-Party Claim. If the Parent defends any
Third-Party Claim, then the Company shall reimburse the Parent for the expenses
of defending such Third-Party Claim with respect to which it is entitled to be
indemnified hereunder, together with interest accrued on such expenses at the
rate of eight percent (8%) per annum, commencing from the date such expenses are
paid by the Parent through to the date such expenses are reimbursed by the
Company (the "Accrued Interest"). If the Company shall assume the defense of any
Third-Party Claim, the Parent may participate, at its own expense, in the
defense of such Third-Party Claim; PROVIDED, HOWEVER, that the Parent shall be
entitled to participate in any such defense with separate counsel at the expense
of the Company (as provided above) if (i) so requested by the Company to
participate or (ii) in the reasonable opinion of counsel to the Parent, a
conflict or potential conflict exists between the Parent and the Company that
would make such separate representation advisable. The parties hereto agree to
cooperate fully with each other in
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connection with the defense, negotiation or settlement of any such Third-Party
Claim, including, without limitation, by providing reasonable access (with any
out-of-pocket costs to be borne by the Company) to the books, records, employees
and agents of the Company and its subsidiaries.
(b) After any final judgment or award shall have been rendered
by a court, arbitration board or administrative agency of competent jurisdiction
and the expiration of the time in which to appeal therefrom, or a settlement
(which is approved by the independent directors of the Company) shall have been
consummated, or the Parent and the Company (as approved by the independent
directors of the Company) shall have arrived at a mutually binding agreement
with respect to a claim for indemnification under Section 8.2, including,
without limitation, any Third-Party Claim, the Parent shall forward to the
Company notice (the "Resolution Notice") of any sums due and owing by the
Company pursuant to this Agreement with respect to such matter, including,
without limitation, all expenses and Accrued Interest related to such Losses
(the "Indemnified Amount") and the Company shall be required to pay the
Indemnified Amount to the Parent or the Purchaser by wire transfer of
immediately available funds within ten (10) business days after the date of such
notice.
(c) The failure of the Parent to give reasonably prompt notice
of any Third-Party Claim shall not release, waive or otherwise affect the
Company's obligations with respect thereto except to the extent that the Company
can demonstrate actual loss and prejudice as a result of such failure.
9. MISCELLANEOUS.
9.1 DEFINITIONS. Capitalized terms not defined herein and defined in
the Related Agreements shall have the meanings herein as therein defined. As
used in this Agreement, the following terms shall have the following respective
meanings:
"AFFILIATE" of a Person means (i) any Person who directly or
indirectly, through one or more intermediaries, controls, is controlled by or is
under common control with such other Person, (ii) a Person owning or controlling
a majority of the outstanding voting securities or other voting interest of such
Person, (iii) any trust or beneficiary of a trust of which such Person is the
sole trustee and (iv) any lineal descendants, ancestors, spouse or former
spouses of such Person (as part of a marital dissolution) (or any trust for the
benefit of such Person). For the purpose of this definition, the terms
"CONTROL," "CONTROLLED BY" and "UNDER COMMON CONTROL WITH," with respect to the
relationship between or among two or more Persons, means the possession,
directly or indirectly or as trustee or executor, of the power to direct or
cause the direction of the affairs or management of a Person, whether through
the ownership of voting securities, as trustee or executor, by contract or
otherwise, including, without limitation, the ownership, directly or indirectly,
of securities having the power to elect a majority of the board of directors or
similar body governing the affairs of such Person.
"ACQUISITION PROPOSAL" means any bona fide proposal or offer
by a person other than the Parent, the Purchaser and their respective Affiliates
to acquire beneficial ownership (as defined in Section 13(d) of the Exchange
Act) of all or a material portion of the Company's assets on a consolidated
basis or 25% or more of the outstanding Shares of the Company pursuant to a
merger, consolidation or other business combination, sale of shares of capital
stock or assets, tender offer, exchange offer or similar transaction with
respect to the Company.
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"CODE" means the Internal Revenue Code of 1986, as amended.
"COMPANY STOCK OPTION" means each then outstanding option to
purchase any shares of capital stock of the Company.
"DGCL" means the General Corporation Law of the State of
Delaware.
"ERISA" means the Employee Retirement Income Security Act of
1974, as amended.
"EXCHANGE ACT" means the Securities Exchange Act of 1934, as
amended.
"GAAP" means generally accepted accounting principles utilized
in the United States, as set forth in the Statement on Auditing Standards No. 69
entitled "The Meaning of Present Fairly in Conformity with Generally Accepted
Accounting Principles in the Independent Auditors Report" promulgated by the
American Institute of Certified Public Accountants (or any successor statement
or amendment thereto) in effect on the date hereof unless otherwise specified
herein as in effect on another date or dates.
"GOVERNMENTAL AUTHORITY" means any nation or government, any
state or other political subdivision thereof, and any agency, department or
other entity exercising executive, legislative, judicial, regulatory or
administrative functions of or pertaining to government.
"KNOWLEDGE OF THE COMPANY" or "THE COMPANY'S KNOWLEDGE" means
the actual knowledge after due inquiry of any relevant personnel at the Company.
"LIEN" means, with respect to any asset (including, without
limitation, any security) any mortgage, lien, pledge, charge, security interest
or encumbrance of any kind in respect of such asset.
"MATERIAL ADVERSE EFFECT" means with respect to any entity,
any change, circumstance or effect that, individually or in the aggregate with
all other changes, circumstances and effects, is or is reasonably likely to be
materially adverse to (i) the assets, properties, condition (financial or
otherwise), results of operations or prospects of such entity and its
subsidiaries taken as a whole or (ii) the ability of such party to consummate
the Transactions.
"OFFER" is defined in the recitals to this Agreement.
"PERSON" means any individual, partnership, joint-stock
company, firm, corporation, association, unincorporated organization, joint
venture, trust or other entity.
"SECURITIES ACT" means the Securities Act of 1933, as amended.
"SEC" or "COMMISSION" means the Securities and Exchange
Commission.
"SHARES" means shares of the Common Stock, par value $0.01
per share, of the Company.
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"STOCK OPTION PLANS" means the 1987 Stock Option Plan, the
1997 Stock Incentive Plan and the Stock Option Plan for Directors, as such Plans
may be amended and modified from time to time.
"TRANSACTIONS" means the transactions contemplated by this
Agreement, including the purchase of the Company Shares and the Offer.
9.2 GOVERNING LAW. This Agreement shall be governed in all respects by
the laws of the State of Delaware.
9.3 JURISDICTION; SERVICE OF PROCESS. The parties hereto hereby
irrevocably submit to the non-exclusive jurisdiction of any federal or state
court located within the State of Delaware over any dispute arising out of or
relating to this Agreement or any of the Transactions, and each party hereby
irrevocably agrees that all claims in respect of such dispute or any suit,
action, or proceeding related thereto may be heard and determined in such
courts. The parties hereto hereby irrevocably waive, to the fullest extent
permitted by applicable law, any objection which they may now or hereafter have
to the laying of venue of any such dispute brought in such court or any defense
of inconvenient forum for the maintenance of such dispute. Each of the parties
hereto agrees that a judgment in any such dispute may be enforced in other
jurisdictions by suit on the judgment or in any other manner provided by law.
Each of the parties hereto hereby consents to process being served by the other
party hereto in any suit, action or proceeding by the mailing of a copy thereof
in accordance with the provisions of Section 9.9. EACH PARTY HERETO HEREBY
WAIVES TRIAL BY JURY IN ANY JUDICIAL PROCEEDING BROUGHT BY THE COMPANY, THE
PURCHASER OR THE PARENT INVOLVING, DIRECTLY OR INDIRECTLY, ANY MATTER IN ANY WAY
ARISING OUT OF, RELATED TO OR CONNECTED WITH THIS AGREEMENT OR THE TRANSACTIONS.
9.4 SUCCESSORS AND ASSIGNS. This Agreement shall be binding upon and
inure to the benefit of the parties and their respective successors and
permitted assigns. Nothing in this Agreement shall create or be deemed to create
any third party beneficiary rights in any person or entity not a party to this
Agreement except as provided below. No assignment of this Agreement or of any
rights or obligations hereunder may be made by any party hereto (by operation of
law or otherwise) without the prior written consent of the other parties hereto
and any attempted assignment without the required consents shall be void;
PROVIDED, HOWEVER, that the Parent and the Purchaser may assign this Agreement
or any or all rights or obligations hereunder (including, without limitation,
the Purchaser's rights to purchase the Shares and the Parent's and the
Purchaser's right to seek indemnification hereunder) to any direct or indirect
wholly owned subsidiary of the Parent, but no such assignment shall relieve the
Parent or the Purchaser of their respective obligations hereunder. Upon any such
permitted assignment, the references in this Agreement to the Parent or the
Purchaser, as the case may be, shall also apply to any such assignee unless the
context otherwise requires.
9.5 ENTIRE AGREEMENT. This Agreement, the Exhibits and Schedules
hereto, the Related Agreements and the other documents delivered pursuant hereto
constitute the full and entire understanding and agreement between the parties
with regard to the subjects hereof and thereof and, except for the parties'
agreement regarding the confidentiality of information exchanged by the parties,
supersedes any and all prior agreements, understandings and promises between the
parties with respect to the subject matter hereof, including, without
limitation, the Letter of Intent.
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9.6 SEVERABILITY. In case any provision of this Agreement shall be
invalid, illegal or unenforceable, the validity, legality and enforceability of
the remaining provisions shall not in any way be affected or impaired thereby.
9.7 AMENDMENT AND WAIVER. This Agreement may be amended or modified
only upon the written consent of the parties hereto.
9.8 DELAYS OR OMISSIONS. It is agreed that no delay or omission to
exercise any right, power or remedy accruing to one party, upon any breach,
default or noncompliance by the other party under this Agreement or the Related
Agreements, shall impair any such right, power or remedy, nor shall it be
construed to be a waiver of any such breach, default or noncompliance, or any
acquiescence therein, or of or in any similar breach, default or noncompliance
thereafter occurring. It is further agreed that any waiver, permit, consent or
approval of any kind or character on the part or the Parent or the Purchaser of
any breach, default or noncompliance under this Agreement or the Related
Agreements or any waiver on such party's part of any provisions or conditions of
this Agreement or the Related Agreements must be in writing and shall be
effective only to the extent specifically set forth in such writing. All
remedies, either under this Agreement, the Related Agreements or the Company's
By-Laws or otherwise afforded to any party, shall be cumulative and not
alternative.
9.9 NOTICES. All notices required or permitted hereunder shall be in
writing and shall be deemed effectively given: (i) upon personal delivery to the
party to be notified; (ii) when sent by confirmed telex or facsimile if sent
during normal business hours of the recipient, and, if not, then on the next
business day; (iii) five (5) days after having been sent by registered or
certified mail, return receipt requested, postage prepaid; or (iv) one (1) day
after deposit with a nationally recognized overnight courier, specifying next
day delivery, with written verification of receipt. All communications shall be
sent:
If to the Company, to:
QMS, Inc.
One Magnum Pass
Mobile, AL 36618
Attn: Edward E. Lucente
Fax: 334-633-0020
with a copy to:
Hand Arendall, LLC
AmSouth Bank Building, Suite 3000
Mobile, AL 36601
Attn: Gregory R. Jones, Esq.
Fax: 334-694-6375
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If to the Parent or the Purchaser, to:
Minolta Co., Ltd.
3-13, 2-Chome, Azuchi-Machi, Chuo-Ku
Osaka 541-8556, Japan
Attn: Shoei Yamana
Manager, Corporate Strategy Division
Fax: 81-6-6263-3788
with a copy to:
Weil, Gotshal & Manges LLP
767 Fifth Avenue,
New York, NY 10153
Attn: Stephen M. Besen, Esq,
Fax: 212-310-8715
9.10 EXPENSES.
(a) Each party hereto shall pay all of its respective costs
and expenses, including, without limitation, legal, accounting and all other
similarly related costs, incurred with respect to the negotiation, execution and
delivery of this Agreement and the Related Agreements.
(b) If (i) the Company Board accepts a Superior Proposal, (ii)
the Company breaches or fails to perform or comply with any of the terms of
Section 6.4 or (iii) any of the events set forth in clause (f) of Annex A hereto
occurs and, in any case, the Purchaser fails to purchase Shares pursuant to the
Offer, the Company shall pay, or cause to be paid to the Parent, or the
Purchaser, at the time of such event, an amount equal to $1,000,000 (the
"Break-up Fee") plus an amount equal to the Parent's and the Purchaser's actual
and reasonably documented out-of-pocket expenses incurred by Parent or the
Purchaser in connection with the Offer, this Agreement and the consummation of
the Transactions, including, without limitation, the fees (other than any
break-up, success or other contingent fee) and out-of-pocket expenses payable to
all banks, investment banking firms and other financial institutions and persons
and their respective agents and counsel incurred in connection with acting as
the Parent's and the Purchaser's financial advisor with respect to, or arranging
or committing to provide or providing any financing for, the Transactions up to
an aggregate of $1,000,000 (the "Expenses"). In addition, if (i) the Purchaser
terminates the Offer without the Purchaser purchasing any Shares thereunder,
(ii) at or prior to the time of such termination of the Offer, a person has made
an Acquisition Proposal and, (iii) within 12 months after such termination of
the Offer, the Company announces its intention to enter into an agreement with
respect to an Acquisition Proposal or enters into an agreement with respect to
an Acquisition Proposal, then the Company shall pay the Break-up Fee and the
Expenses concurrently with such announcement or the execution of such agreement;
PROVIDED, HOWEVER, that the Company shall not be required to pay the Expenses
unless such Acquisition Proposal is a Superior Proposal. Any payments required
to be made pursuant to this Section 9.10(b) shall be made by wire transfer of
same day funds to an account designated by Parent.
(c) The Company acknowledges that the agreements contained in
this Section 9.10 are an integral part of the Transactions, and that, without
these agreements, the
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Company, the Parent and the Purchaser would not have entered into this
Agreement; accordingly, if the Company fails to promptly pay the amount due
pursuant to Section 9.10, and, in order to obtain such payment, the Parent
commences a suit which results in a judgment against the Company for the fee set
forth in this Section 9.10, the Company shall pay to the Parent its costs and
expenses (including attorneys' fees) in connection with such suit, together with
interest on the amount owed at the prime rate of Citibank, N.A. in effect from
time to time during such period plus two percent, commencing from the date such
amount became due through the date such amount is paid by the Company.
9.11 TITLES AND SUBTITLES. The titles of the sections and subsections
of this Agreement are for convenience of reference only and are not to be
considered in construing this Agreement.
9.12 COUNTERPARTS. This Agreement may be executed in any number of
counterparts, each of which shall be an original, but all of which together
shall constitute one instrument.
9.13 PRONOUNS. All pronouns contained herein and any variations thereof
shall be deemed to refer to the masculine, feminine or neuter, singular or
plural, as the identity of the parties hereto may require.
9.14 CURRENCY. Unless otherwise provided herein, all currency amounts
set forth herein shall be in United States Dollars.
9.15 PUBLICITY. Except as may be required by applicable Law or by
obligations pursuant to any listing agreement with the New York Stock Exchange,
none of the Parent, the Purchaser or the Company shall issue any press release
or make any public disclosure regarding the Transactions unless such press
release or public disclosure is approved by the other party in advance.
9.16 CONFIDENTIALITY. Each party agrees not to disclose or use (except
as permitted or required for performance by the party receiving such
Confidential Information of its right or duties hereunder) any Confidential
Information of the other party obtained prior to the Expiration Date in
connection with the Transactions, this Agreement and the Related Agreements for
a period of five (5) years after the receiving party's receipt of such
confidential information. Each party further agrees to take appropriate measures
to prevent any such prohibited disclosure by its present and future employees,
officers, agents, subsidiaries or consultants during such period.
THIS SPACE INTENTIONALLY LEFT BLANK.
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IN WITNESS WHEREOF, the parties hereto have executed this Stock
Purchase Agreement as of the date set forth in the first paragraph hereof.
COMPANY:
QMS, INC.
By: /S/ EDWARD E. LUCENTE
----------------------------------------
Name: Edward E. Lucente
Title: Chairman and President
PURCHASER:
MINOLTA INVESTMENTS COMPANY
By: /S/ ALLEN A. HANS
----------------------------------------
Name: Allen A. Hans
Title: Vice President and Secretary
PARENT:
MINOLTA CO., LTD.
By: /S/ HIROSHI FUJII
----------------------------------------
Name: Hiroshi Fujii
Title: Director
STOCK PURCHASE AGREEMENT
<PAGE>
ANNEX A
CONDITIONS TO THE OFFER
Capitalized terms used but not defined herein shall have the
meanings set forth in the Stock Purchase Agreement of which this Annex A is a
part. Notwithstanding any other provision of the Offer, the Purchaser shall not
be required to accept for payment or, subject to any applicable rules and
regulations of the SEC, including Rule 14e-1(c) under the Exchange Act (relating
to the Purchaser's obligation to pay for or return tendered Shares promptly
after termination or withdrawal of the Offer), pay for, and may delay the
acceptance for payment of or, subject to the restriction referred to above, the
payment for, any tendered Shares, and, subject to the terms of the Stock
Purchase Agreement, may amend the Offer or terminate the Offer and not accept
for payment any tendered Shares, if (i) there shall not have been validly
tendered and not withdrawn prior to the expiration of the Offer such number of
Shares which, when added to the Shares, if any, beneficially owned by the
Purchaser and its Affiliates, would constitute at least a majority of the Shares
outstanding on a fully diluted basis (the "Minimum Condition"), (ii) any
applicable waiting period under the HSR Act has not expired or been terminated
prior to the expiration of the Offer, and/or (iii) at any time on or after the
date of the Stock Purchase Agreement and prior to the Expiration Date, any of
the following events shall occur:
(a) there shall be threatened or pending any suit, action or
proceeding (i) seeking to prohibit or impose any material limitations on the
Purchaser's ownership or operation (or that of any of its Affiliates) of all or
a material portion of their or the Company's businesses or assets, (ii) seeking
to compel the Purchaser or its Affiliates to dispose of or hold separate any
material portion of the business or assets of the Company, the Parent or the
Purchaser and their respective subsidiaries, in each case taken as a whole,
(iii) challenging the acquisition by the Purchaser of any Shares pursuant to the
Offer, (iv) seeking to restrain or prohibit the making or consummation of the
Offer or the performance of any of the other Transactions, (v) seeking to obtain
from the Company any damages that would be reasonably likely to have a Material
Adverse Effect on the Company, (vi) seeking to impose material limitations on
the ability of the Purchaser, or rendering the Purchaser unable, to accept for
payment, pay for or purchase some or all of the Shares pursuant to the Offer,
(vii) seeking to impose material limitations on the ability of the Purchaser
effectively to exercise full rights of ownership of the Shares, including,
without limitation, the right to vote the Shares purchased by it on all matters
properly presented to the Company's stockholders, or (viii) which otherwise is
reasonably likely to have a Material Adverse Effect on the Company or, as a
result of the Transactions, the Parent or the Purchaser; or
(b) there shall be any statute, rule, regulation, judgment,
order or injunction enacted, entered, enforced, promulgated or deemed applicable
to the Offer, or any other action shall be taken by any Governmental Entity,
other than the application to the Offer of applicable waiting periods under the
HSR Act, that is reasonably likely to result, directly or indirectly, in any of
the consequences referred to in clauses (i) through (viii) of paragraph (a)
above; or
(c) there shall have occurred (1) any general suspension of
trading in, or limitation on prices for, securities on the New York Stock
Exchange, the American Stock Exchange, the Tokyo Stock Exchange or in the Nasdaq
National Market System, for a period in excess of 24 hours (excluding
suspensions or limitations resulting solely from physical damage or interference
with such exchanges not related to market conditions), (2) a declaration of a
banking moratorium or any suspension of payments in respect of banks in the
United States or Japan (whether or not mandatory), (3) the commencement of a
war, armed hostilities or other
<PAGE>
international or national calamity directly or indirectly involving the United
States or Japan or, in the case of any such circumstance in existence on the
date hereof, any material deterioration of the situation, (4) any limitation or
proposed limitation (whether or not mandatory) by any United States or Japanese
governmental authority or agency that has a Material Adverse Effect generally on
the extension of credit by banks or other financial institutions, (5) any change
in general financial bank or capital market conditions which has a Material
Adverse Effect on the ability of financial institutions in the United States or
Japan to extend credit or syndicate loans, (6) any decline in either the Dow
Jones Industrial Average, the Nikkei Average or the Standard & Poor's Index of
500 Industrial Companies by an amount in excess of 20% measured from the close
of business on the date of this Agreement or (7) in the case of any of the
situations in clauses (1) through (6) inclusive, existing at the time of the
commencement of the Offer, a material acceleration or worsening thereof; or
(d) the representations and warranties of the Company set
forth in the Stock Purchase Agreement shall not be true and accurate in all
material respects as of the date of consummation of the Offer as though made on
or as of such date (except for those representations and warranties that address
matters only as of a particular date or only with respect to a specific period
of time which need only be true and accurate as of such date or with respect to
such period) or the Company shall have breached or failed to perform or comply
in all material respects with any obligation, agreement or covenant required by
the Stock Purchase Agreement to be performed or complied with by it; or
(e) there shall have occurred any events or changes which have
had or which are reasonably likely to have or constitute, individually or in the
aggregate, a Material Adverse Effect on the Company; or
(f) the Company Board (i) shall have withdrawn, or modified or
changed in a manner adverse to the Parent or the Purchaser (including by
amendment of the Schedule 14D-9), its recommendation of the Offer, (ii) shall
have recommended an Acquisition Proposal, (iii) shall have adopted any
resolution to effect any of the foregoing, or (iv) upon request of the Parent or
the Purchaser, shall fail to reaffirm its approval or recommendation of the
Offer; or
(g) any Person or "group" (as defined in Section 13(d)(5)
of the Exchange Act), other than the Parent, the Purchaser or their
respective Affiliates or any group of which any of them is a member, shall
have acquired or announced its intention to acquire beneficial ownership (as
determined pursuant to Rule 13d-3 promulgated under the Exchange Act) of 20%
or more of the Shares; which in the sole good faith judgment of the
Purchaser, in any such case, and regardless of the circumstances (including
any action or inaction by the Purchaser, other than a breach of this
Agreement or the Related Agreements) giving rise to such condition makes it
inadvisable to proceed with the Offer and/or with such acceptance for payment
of or payments for Shares.
The foregoing conditions are for the sole benefit of the
Parent and the Purchaser and may be waived by the Parent or the Purchaser, in
whole or in part, at any time and from time to time, in the sole discretion of
the Parent or the Purchaser. The failure by the Parent or the Purchaser at any
time to exercise any of the foregoing rights shall not be deemed a waiver of any
right and each such right shall be deemed an ongoing right which may be asserted
at any time and from time to time.
<PAGE>
Exhibit 99(c)(3)
Loan Agreement
Minolta Co., Ltd.
QMS, Inc.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
LOAN AGREEMENT
by and between
QMS, INC.
and
MINOLTA CO., LTD.
----------------------------------
Dated as of June 7, 1999
----------------------------------
Weil, Gotshal & Manges LLP
767 Fifth Avenue
New York, NY 10153-0119
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>
Loan Agreement
Minolta Co., Ltd.
QMS, Inc.
<PAGE>
Loan Agreement
Minolta Co., Ltd.
QMS, Inc.
LOAN AGREEMENT, dated as of June 7, 1999, by and between QMS,
INC., a Delaware corporation (the "BORROWER"), and Minolta Co., Ltd., a Japanese
corporation (together with its successors and permitted assigns, the "LENDER").
W I T N E S S E T H:
WHEREAS, the Borrower has entered into a Share Purchase
Agreement (as amended from time to time, the "SUBSIDIARIES STOCK PURCHASE
AGREEMENT"), dated as of May 17, 1999, with Alto Imaging Group N.V. and Jalak
Investments B.V., for the purchase of all of the issued and outstanding shares
of the capital stock of QMS Europe B.V., a company organized and existing under
the laws of The Netherlands ("QMS EUROPE"), and QMS Australia PTY Ltd., a
company organized and existing under the laws of Victoria, Australia ("QMS
AUSTRALIA");
WHEREAS, the Lender and Borrower have entered into a Stock
Purchase Agreement, of even date herewith, for the purchase of two million one
hundred and thirty thousand (2,130,000) shares of common stock, par value $0.01
per share, of the Borrower, representing approximately nineteen and nine-tenths
of a percent (19.9%) of all issued and outstanding shares of the capital stock
of the Borrower (as amended from time to time, the "BORROWER STOCK PURCHASE
AGREEMENT"); and
WHEREAS, to finance a portion of the purchase price of the
capital stock of QMS Europe and QMS Australia, the Borrower has requested that
the Lender make available, and the Lender has agreed to make available, a term
loan facility under which the Lender makes a term loan to the Borrower of up to
twelve million and eight hundred thousand Dollars ($12,800,000) in aggregate
principal amount outstanding upon the terms and subject to the conditions set
forth herein;
NOW, THEREFORE, in consideration of the premises and the
covenants and agreements contained herein, the parties hereto hereby agree as
follows:
Article I
DEFINITIONS
1.1 DEFINITIONS. As used in this Agreement, the following terms have
the following meanings:
"AFFILIATE" means, as to any Person, any other Person which, directly
or indirectly, controls, is controlled by or is under common control with such
Person and includes each officer, director, general partner or joint-venturer of
such Person, and each Person who is
<PAGE>
Loan Agreement
Minolta Co., Ltd.
QMS, Inc.
the beneficial owner of ten percent (10%) or more of any class of voting Stock
of such Person. For the purposes of this definition, "control" means the
possession of the power to direct or cause the direction of management and
policies of such Person, whether through the ownership of voting securities, by
contract or otherwise.
"AGREEMENT" means this Loan Agreement, together with all Exhibits and
Schedules hereto, as the same may be amended, supplemented or otherwise modified
from time to time.
"APPLICABLE MARGIN" means, as of any date, a rate equal to two and
one-half percent (2.5%) per annum; PROVIDED, HOWEVER, that, in the event
pursuant to SECTION 2.8 the Loan bear interest by reference to the Base Rate,
the "APPLICABLE MARGIN" shall be zero.
"AUSTRALIAN STOCK PLEDGE AGREEMENT" means the Share Mortgage,
substantially in the form of EXHIBIT B-1 hereto, dated as of the date hereof, by
and between the Borrower and the Lender, pursuant to which the Borrower grants
to the Lender a first-priority equitable interest on one hundred percent (100%)
of all of the issued and outstanding share capital of QMS Australia, as such
agreement may be amended, supplemented or modified from time to time.
"BASE RATE" means, on any day, a fluctuating interest rate per annum as
shall be in effect from time to time equal to the U.S. "prime rate" as published
in the WALL STREET JOURNAL on the most recent Business Day.
"BORROWER" has the meaning ascribed to such term in the preamble
hereto.
"BORROWER STOCK PURCHASE AGREEMENT" has the meaning ascribed to such
term in the recitals hereto.
"BUSINESS DAY" means a day of the year on which banks are not required
or authorized to close in New York City or Tokyo and a day on which dealings in
Dollar deposits are also carried on in the London interbank market.
"CHANGE OF CONTROL" means any of the following:
(a) The acquisition, other than by the Lender or its Affiliates, by any
Person or group (within the meaning of Section 13(d)(3) or 14(d)(2) of the U.S.
Securities Exchange Act of 1934 (as amended, the "EXCHANGE ACT")) of beneficial
ownership of twenty-five percent (25%) or more of the outstanding voting
securities of the Borrower, but excluding, for this purpose, any such
acquisition if, at the time of such acquisition, the Lender together with its
Affiliates owns at least a majority of the outstanding voting securities of the
Borrower on a fully-diluted basis.
<PAGE>
Loan Agreement
Minolta Co., Ltd.
QMS, Inc.
(b) Individuals who, as of the date hereof, constitute the Board of
Directors of the Borrower (the "INCUMBENT BOARD") cease for any reason to
constitute at least a majority of such Board; PROVIDED, HOWEVER, that any
individual becoming a director subsequent to the date hereof whose election, or
nomination for election, by the Borrower's stockholders was approved by a vote
of at least a majority of the directors then comprising the Incumbent Board
shall be considered as though such individual were a member of the Incumbent
Board, but excluding, for this purpose, any such individual whose initial
assumption of office is in connection with an actual or threatened election
contest relating to the election of the directors of the Borrower (as such terms
are used in Rule 14a-11 of Regulation 14A promulgated under the Exchange Act);
PROVIDED, HOWEVER, that any that any individual becoming a director subsequent
to the date hereof who shall have been elected or nominated for election by the
Lender (including, without limitation, pursuant to SECTION 2.3 of the Borrower
Stock Purchase Agreement) shall be considered as though such individual were a
member of the Incumbent Board.
(c) Approval by the stockholders of the Borrower of a reorganization,
merger or consolidation, in each case with respect to which all or substantially
all of the individuals and entities who were the respective beneficial owners of
the voting securities of the Borrower immediately prior to such reorganization,
merger or consolidation do not, following such reorganization, merger or
consolidation, beneficially own, directly or indirectly, more than fifty percent
(50%) of the combined voting power of the then outstanding voting securities
entitled to vote generally in the election of directors of the corporation
resulting from such reorganization, merger or consolidation.
(d) The sale or other disposition of all or substantially all the
assets of the Borrower in one transaction or series of related transactions.
(e) An agreement to the effect of any of the foregoing.
"CLOSING" means the funding of the Loan pursuant to SECTION 2.1(b) upon
fulfillment of the applicable conditions set forth in ARTICLE 3.
"CLOSING DATE" means the date on which the Closing occurs, which is
anticipated to occur on June 7, 1999, or such later date as the Lender and the
Borrower may mutually agree.
"COLLATERAL" means the shares in which the Lender has a perfected
first-priority security interest (or a first-priority equitable interest, as the
case may be) pursuant to the Stock Pledge Agreements .
"CUSTOMARY PERMITTED LIENS" means:
(i) Liens with respect to the payment of Taxes, assessments or
<PAGE>
Loan Agreement
Minolta Co., Ltd.
QMS, Inc.
governmental charges in all cases which are not yet due or which are
being contested in good faith by appropriate proceedings and with
respect to which adequate reserves or other appropriate provisions are
being maintained in accordance with GAAP consistently applied;
(ii) Statutory Liens of landlords and Liens of suppliers,
mechanics, carriers, materialmen, warehousemen or workmen and other
Liens imposed by law created in the ordinary course of business for
amounts not yet due or which are being contested in good faith by
appropriate proceedings and with respect to which adequate reserves or
other appropriate provisions are being., maintained in accordance with
GAAP consistently applied;
(iii) Liens incurred or deposits made in the ordinary course
of business in connection with worker's compensation, unemployment
insurance or other types of social security benefits or to secure the
performance of bids, tenders, sales, contracts (other than for the
repayment of borrowed money), surety, appeal and performance bonds and
contractual landlord liens; PROVIDED, HOWEVER, that (A) all such Liens
do not in the aggregate materially detract from the value of the
Borrower's assets or property or materially impair the use thereof in
the operation of its business, and (B) all Liens of attachment or
judgment and Liens securing bonds to stay judgments or in connection
with appeals do not secure at any time an aggregate amount exceeding
one million Dollars ($1,000,000); and
(iv) Liens arising with respect to zoning restrictions,
easements, licenses, reservations, covenants, rights-of-way, utility
easements, building restrictions and other similar charges or
encumbrances on the use of real property which do not materially
interfere with the ordinary conduct of the business of the Borrower.
"DEBT" means (i) indebtedness for borrowed money, (ii) obligations
evidenced by bonds, debentures, notes or other similar instruments, (iii)
obligations to pay the deferred purchase price of property or services, (iv)
obligations as lessee under leases which shall have been or should be recorded
as capital leases in accordance with GAAP consistently applied, and the present
value of all future rental payments under all synthetic leases and (v)
obligations under direct or indirect guaranties in respect of, and obligations
(contingent or otherwise) to purchase or otherwise acquire, or otherwise to
assure a creditor against loss in respect of, indebtedness or obligations of
others of the kinds referred to in clauses (i) through (iv) above.
"DEFAULT" means an event which, with the giving of notice or lapse of
time, or both, would constitute an Event of Default.
"DOLLARS" and "$" mean the lawful money of the United States of
America.
<PAGE>
Loan Agreement
Minolta Co., Ltd.
QMS, Inc.
"EUROPEAN STOCK PLEDGE AGREEMENT" means the Stock Pledge Agreement,
substantially in the form of EXHIBIT B-2 hereto, dated as of the date hereof, by
and between the Borrower and the Lender, pursuant to which the Borrower grants
to the Lender a perfected first priority security interest on one hundred
percent (100%) of all of the issued and outstanding share capital of QMS Europe,
as such agreement may be amended, supplemented or modified from time to time.
"EVENT OF DEFAULT" means any of the occurrences set forth in SECTION
6.1 after the expiration of any applicable grace period and the giving of any
applicable notice, in each case as expressly provided in SECTION 6.1.
"FOOTHILL CREDIT FACILITY" means the Loan and Security Agreement, dated
as of November 7, 1995, by and between the Borrower and Foothill Capital
Corporation, as amended.
"GAAP" means generally accepted accounting principles utilized in the
United States, as set forth in the Statement on Auditing Standards No. 69
entitled "The Meaning of Present Fairly in Conformity with Generally Accepted
Accounting Principles in the Independent Auditors Report" promulgated by the
American Institute of Certified Public Accountants (or any successor statement
or amendment thereto) in effect on the date hereof unless otherwise specified
herein as in effect on another date or dates.
"INDEMNITEES" has the meaning ascribed to such term in SECTION 7.9.
"INTEREST PAYMENT DATE" means the last day of each Interest Period.
"INTEREST PERIOD" means the time period from the eleventh (11th) day of
each calendar month through the tenth (10th) day of the next succeeding calendar
month; PROVIDED, HOWEVER, that (a) if any Interest Period would otherwise expire
on a day which is not a Business Day, such Interest Period shall expire on the
next succeeding Business Day or, if such Business Day falls in the next calendar
month, on the next preceding Business Day, (b) each successive Interest Period
shall commence on the day on which the next preceding Interest Period expires
and (c) when interest first accrues to any Obligation, the first "INTEREST
PERIOD" in respect of such Obligation shall be the time period from the time
such interest first accrues until the tenth (10th) day of the next succeeding
calendar month.
"INTEREST RATE DETERMINATION DATE" has the meaning ascribed to such
term in SECTION 2.8(a).
"LENDER" has the meaning ascribed to such term in the preamble hereto.
"LENDING OFFICE" means the office or offices of the Lender set forth
opposite such Lender's name under the heading "Lending Office" on the signature
pages hereof or such
<PAGE>
Loan Agreement
Minolta Co., Ltd.
QMS, Inc.
other office or offices of such Lender as it may from time to time specify by
written notice to the Borrower.
"LIBO RATE" means, with respect to any applicable Interest Period, an
interest rate per annum determined by the Lender to be the British Banker's
Association's London interbank offered rate (rounded upward to the nearest whole
multiple of one sixteenth (1/16) of one percent (1%) per annum) for deposits in
Dollars for the applicable Interest Period which appears on Dow Jones Markets
Telerate Page 3750 (or any successor page) at approximately 11:00 A.M. (London
time) on the second full Business Day next preceding the first day of such
Interest Period (unless such date is not a Business Day, in which event the next
succeeding Business Day will be used) as the London interbank offered rate for
deposits in Dollars for a term comparable to such Interest Period. In the event
that such rate does not appear on Dow Jones Markets Telerate Page 3750 (or on
any successor page or otherwise on the Dow Jones Markets screen), the LIBO Rate
for the purposes of this definition shall be determined by reference to such
other comparable publicly available service for displaying LIBO rates as may be
selected by the Lender.
"LIEN" means any mortgage, deed of trust, pledge, hypothecation,
assignment, deposit arrangement, encumbrance, lien (statutory or other),
security interest or preference, priority or other security agreement or
preferential arrangement of any kind or nature whatsoever intended to assure
payment of any Debt or other obligation, including, without limitation, any
conditional sale or other title retention agreement, the interest of a lessor
under leases which shall have been or should be, in accordance with GAAP
consistently applied, recorded as capital leases, any financing lease having
substantially the same economic effect as any of the foregoing, and the filing,
under the UCC or comparable law of any jurisdiction, of any financing statement
naming the owner of the asset to which such Lien relates as debtor.
"LOAN" has the meaning ascribed to such term in SECTION 2.1(a).
"LOAN DOCUMENTS" means this Agreement, the Note, the Stock Pledge
Agreements and any other document or instrument executed and delivered by the
Borrower or the Lender in connection with this Agreement.
"NOTE" has the meaning ascribed to such term in SECTION 2.1(a).
"OBLIGATIONS" means all loans, advances, debts, liabilities,
obligations, covenants and duties of any kind or nature, present or future,
whether or not evidenced by any note, guaranty or other instrument, due to the
Lender from Borrower, arising under this Agreement, the Note, the other Loan
Documents, whether or not for the payment of money, whether arising by reason of
an extension of credit, opening of a letter of credit, loan, guaranty,
indemnification or in any other manner, whether direct or indirect
<PAGE>
Loan Agreement
Minolta Co., Ltd.
QMS, Inc.
(including those acquired by assignment), absolute or contingent, due or to
become due, now or hereafter arising and however acquired, together with all
interest, charges, expenses, attorneys' fees and other sums chargeable to the
Borrower under this Agreement (it being understood and agreed that "OBLIGATIONS"
shall not include obligations of the Borrower to the Lender in respect of trade
payables that do not arise out of or in connection with this Agreement or the
other Loan Documents).
"PERSON" means an individual, partnership, corporation, limited
liability company, business trust, joint stock company, trust, unincorporated
association, joint venture, governmental authority or other entity of whatever
nature.
"PERMITTED CREDIT FACILITIES" means either (i) a revolving credit
facility to be made available to the Borrower after the Closing Date, which
facility (A) shall have a termination date at least three (3) years after the
Closing Date, (B) shall provide for loans and other financial accommodations for
the Borrower for an aggregate principal amount not in excess of thirty million
Dollars ($30,000,000), (C) may be secured by a first-priority security interest
or first-priority equitable interest in the assets of the Borrower other than
the Collateral and (D) is on terms and conditions reasonably satisfactory to the
Lender or (ii) the Foothill Credit Facility; PROVIDED, HOWEVER, that (A) such
facility is amended to authorize the transactions contemplated in the Borrower
Stock Purchase Agreement, this Loan Agreement and the other Loan Documents and
(B) such facility is otherwise amended to meet the requirements of clause (i) of
this definition.
"QMS AUSTRALIA" has the meaning ascribed to such term in the recitals
hereto.
"QMS EUROPE" has the meaning ascribed to such term in the recitals
hereto.
"STOCK PLEDGE AGREEMENTS" means the European Stock Pledge Agreement and
the Australian Stock Pledge Agreement.
"SUBSIDIARY" means, with respect to any Person, any corporation,
partnership, limited liability company or other business entity of which an
aggregate of more than fifty percent (50%) of the issued and outstanding capital
stock having ordinary voting power to elect a majority of the board of
directors, managers, trustees or other controlling persons, is, at the time,
directly or indirectly, owned or controlled by such Person and/or one or more
Subsidiaries of such Person (irrespective of whether, at the time, Stock of any
other class or classes of such entity shall have or might have voting power by
reason of the happening of any contingency).
"SUBSIDIARIES STOCK PURCHASE AGREEMENT" has the meaning ascribed to
such term in the recitals hereto.
"TAXES" has the meaning ascribed to such term in SECTION 2.9(a).
<PAGE>
Loan Agreement
Minolta Co., Ltd.
QMS, Inc.
"TERMINATION DATE" means the day which is the earlier of (A) June 10,
2003 or (B) the payment in full of the Obligations.
"UCC" means the Uniform Commercial Code as enacted in the State of New
York, as it may be amended from time to time.
1.2 COMPUTATION OF TIME PERIODS. In this Agreement, in the computation
of periods of time from a specified date to a later specified date, the word
"FROM" means "from and including", the words "TO" and "UNTIL" each mean "to but
excluding" and the word "THROUGH" means "to and including".
1.3 ACCOUNTING TERMS. All accounting terms not specifically defined
herein shall be construed in conformity with GAAP consistently applied and all
accounting determinations required to be made pursuant hereto shall, unless
expressly otherwise provided herein, be made in conformity with GAAP
consistently applied.
1.4 CERTAIN TERMS. The words "HEREIN," "HEREOF" and "HEREUNDER" and
other words of similar import refer to this Agreement as a whole, and not to any
particular Article, Section, subsection or clause in this Agreement. References
herein to an Exhibit, Schedule, Article, Section, subsection or clause refer to
the appropriate Exhibit or Schedule to, or Article, Section, subsection or
clause in this Agreement.
Article 2
AMOUNT AND TERM OF THE LOAN
2.1 THE LOAN: THE NOTE. The Lender agrees, on the terms and subject to
the conditions hereinafter set forth, to make a term loan to the Borrower in the
aggregate principal amount of up to twelve million eight hundred thousand
Dollars ($12,800,000) (the "LOAN"). The Loan shall be evidenced by a promissory
note of the Borrower to the Lender substantially in the form of EXHIBIT A hereto
delivered to the Lender pursuant to ARTICLE 3 (Conditions of Lending) (the
"NOTE"), which Note shall evidence the Borrower's promise to repay principal and
interest on the Loan.
(b) Upon fulfillment of the applicable conditions set forth in ARTICLE
3 (Conditions of Lending), the Lender shall make the Loan available to the
Borrower in immediately available funds.
2.2 USE OF PROCEEDS. The Borrower shall apply proceeds of the Loan
solely to pay in full all obligations outstanding under the Foothill Credit
Facility, to fund a portion of the Cash Balance under the Subsidiaries Share
Purchase Agreement (and as defined therein) and to pay in full expenses incurred
in connection therewith and with this Agreement;
<PAGE>
Loan Agreement
Minolta Co., Ltd.
QMS, Inc.
PROVIDED, HOWEVER, that the Borrower shall not be required to pay in full all
obligations outstanding under the Foothill Credit Facility in the event the
Foothill Credit Facility has become a Permitted Credit Facilities within sixty
(60) days after the Closing Date.
2.3 REPAYMENT OF LOAN; EVIDENCE OF DEBT. (a) The Borrower shall repay
the Loan in thirty-five (35) equal installments of three hundred fifty five
thousand five hundred Dollars ($355,500) due on the tenth (10th) day of each
calendar month starting on the full calendar month next succeeding the first
anniversary of the Closing Date until May 10, 2003 and the Borrower shall repay
the entire unpaid principal amount of the Loan on the Termination Date, and
agrees to pay in cash all unpaid interest accrued thereon, in accordance with
the terms of this Agreement and the Note, and further agrees that all
outstanding Obligations shall be paid in full on or before the Termination Date.
(b) The Lender shall maintain an account evidencing any Debt of the
Borrower to the Lender resulting from the Loan, including, without limitation,
the amounts of principal and interest payable and paid to the Lender from time
to time under this Agreement. The entries made in such account shall, to the
extent permitted by applicable law, be prima facie evidence of the existence and
amounts of the obligations recorded therein; PROVIDED, HOWEVER, that the failure
of the Lender to maintain such an account or any error therein shall not in any
manner affect the obligation of the Borrower to repay the Loan in accordance
with its terms.
2.4 OPTIONAL PREPAYMENTS. The Borrower shall have no right to prepay
the principal amount of the Loan other than as provided in this SECTION 2.4. The
Borrower may, upon at least two (2) Business Days' prior written notice (seven
(7) Business Day's prior written notice in the case of a payment in full of the
Loan) to the Lender stating the proposed date and principal amount of the
prepayment, and if such notice is given the Borrower shall, prepay the
outstanding principal amount of the Loan in whole or in part, together with
accrued interest to the date of such prepayment on the principal amount prepaid;
PROVIDED, HOWEVER, that (x) each partial prepayment shall be in an aggregate
principal amount not less than one hundred thousand Dollars ($100,000), (y) any
Loan may only be prepaid in whole or in part (i) on the expiration date of the
then applicable Interest Period or (ii) upon payment of the amounts described in
SECTION 2.8(d) (Compensation) and (z) any optional prepayment made under this
SECTION 2.4 will be applied, FIRST, to any unpaid accrued interest to the date
of such prepayment on the principal amount prepaid and, SECOND, to installments
due hereunder in the inverse order of their maturity.
2.5 MANDATORY PREPAYMENTS. Immediately upon the occurrence of any
Change of Control, the outstanding principal of the Loan and all interest
thereon and all other amounts payable under this Agreement and the Note shall
become and be forthwith due and payable, including, without limitation, any
amounts payable pursuant to SECTION 2.8 (Special Interest Rate Provisions),
without presentment, demand, protest or further notice
<PAGE>
Loan Agreement
Minolta Co., Ltd.
QMS, Inc.
of any kind, all of which are hereby expressly waived by the Borrower.
2.6 INTEREST ON THE LOAN AND OTHER OBLIGATIONS.
(a) RATE OF INTEREST. The Loan and the outstanding principal balance of
all other Obligations shall bear interest on the unpaid principal amount thereof
from the date such Loan was made and such other Obligations are due and payable
until paid in full, except as otherwise provided in SECTION 2.6(c) (Default
Interest) and except that such interest rate shall not exceed the maximum rate
permitted by applicable law, at a rate per annum equal to the sum of (A) the
LIBO Rate determined for the applicable Interest Period PLUS (B) the Applicable
Margin.
(b) INTEREST PAYMENTS. Interest accrued on the Loan or all other
Obligations shall be payable in arrears (i) on each applicable Interest Payment
Date, (ii) upon the payment or prepayment thereof in full or in part and (iii)
if not theretofore paid in full, at maturity (whether by acceleration or
otherwise) of such Loan or when such other Obligation otherwise becomes due and
payable (whether by acceleration or otherwise).
(c) DEFAULT INTEREST. Notwithstanding the rates of interest specified
in SECTION 2.6(a) or elsewhere in this Agreement, effective immediately upon (i)
the occurrence of an Event of Default described in SECTION 6.1(a) or (b) or (ii)
the occurrence of any other Event of Default and notice from the Lender of the
effectiveness of this SECTION 2.6(c), and for as long thereafter as such Event
of Default shall be continuing, the principal balance of the Loan and all other
Obligations shall bear interest at a rate equal to two percent (2%) per annum in
excess of the LIBO Rate PLUS the Applicable Margin.
2.7 PAYMENTS AND COMPUTATIONS. (a) The Borrower shall make each
payment, hereunder and under the Note, of principal and interest on the Loan and
other Obligations without condition or reservation of right, in immediately
available funds, not later than 11:00 A.M. (New York City time) on the day when
due in Dollars to the Lender at its address referred to in SECTION 7.2 (Notices,
Etc.).
(b) All computations of interest shall be made by the Lender on the
basis of a three hundred and sixty (360)-day year and the actual number of days
(including the first day but excluding the last day) occurring in the period for
which such interest is payable. Each determination by the Lender of an interest
rate hereunder shall be conclusive and binding for all purposes, absent manifest
error.
(c) Whenever any payment hereunder or under the Note shall be stated to
be due on a day other than a Business Day, such payment shall be made on the
next succeeding Business Day, and such extension of time shall be included in
the computation of payment of interest; PROVIDED, HOWEVER, that if such
extension would cause payment of interest on or principal of the Loan to be made
in the next following calendar month, such
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Loan Agreement
Minolta Co., Ltd.
QMS, Inc.
payment shall be made on the next preceding Business Day.
2.8 SPECIAL INTEREST RATE PROVISIONS.
(a) DETERMINATION OF INTEREST RATE. As soon as practicable on the
second Business Day prior to the first day of each Interest Period (the
"INTEREST RATE DETERMINATION DATE"), the Lender shall determine (pursuant to the
procedures set forth in the definition of "LIBO RATE") the interest rate which
shall apply to the principal amount of the Loan for which an interest rate is
then being determined for the applicable Interest Period and shall promptly give
notice thereof (in writing or by telephone confirmed in writing) to the
Borrower. The Lender's determination shall be presumed to be correct, absent
manifest error, and shall be binding upon the Borrower.
(b) INTEREST RATE UNASCERTAINABLE, INADEQUATE OR UNFAIR. In the event
that at least one (1) Business Day before the Interest Rate Determination Date:
(i) The Lender determines that adequate and fair means do not
exist for ascertaining the applicable interest rates by reference to which the
LIBO Rate then being determined is to be fixed; or
(ii) The LIBO Rate for the Loan will not adequately reflect
the cost to the Lender of obtaining funds in Dollars in the London interbank
market in the amount substantially equal to such Loan in Dollars and for a
period equal to such Interest Period;
then the Lender shall forthwith give notice thereof to the Borrower, whereupon
(until the Lender notifies the Borrower that the circumstances giving rise to
such conversion no longer exist) the Loan shall bear interest at the Base Rate
PLUS the Applicable Margin.
(c) ILLEGALITY. If at any time the Lender determines (which
determination shall, absent manifest error, be final and conclusive and binding
upon all parties) that the making or continuation of the Loan at the LIBO Rate
has become unlawful or impermissible by compliance by the Lender with any law,
governmental rule, regulation or order of any governmental authority (whether or
not having the force of law and whether or not failure to comply therewith would
be unlawful or would result in costs or penalties), then, and in any such event,
the Lender may give notice of that determination, in writing, to the Borrower,
whereupon (until the Lender notifies the Borrower that the circumstances giving
rise to such conversion no longer exist) the Loan shall bear interest at the
Base Rate PLUS the Applicable Margin. If at any time after the Lender gives
notice under this SECTION 2.8(C) the Lender determines that the Loan may
lawfully bear interest at the LIBO Rate, the Lender shall promptly give notice
of that determination, in writing, to the Borrower. The Loan shall, upon receipt
of such notice pursuant to SECTION 7.2 (Notices, Etc.), bear interest at the
LIBO Rate.
<PAGE>
Loan Agreement
Minolta Co., Ltd.
QMS, Inc.
(d) COMPENSATION. In addition to all amounts required to be paid by the
Borrower pursuant to SECTION 2.6 (Interest on the Loan and Other Obligations),
the Borrower shall compensate the Lender, upon demand, for all losses, expenses
and liabilities (including, without limitation, any loss or expense incurred by
reason of the liquidation or reemployment of funds acquired by the Lender to
fund or maintain the Loan to the Borrower but excluding any loss of Applicable
Margin thereon) which the Lender may sustain (i) if for any reason the Loan is
prepaid (including, without limitation, pursuant to SECTION 2.5 (Mandatory
Prepayments)) on a date which is not the last day of the applicable Interest
Period or (ii) as a consequence of any failure by the Borrower to repay the Loan
when required by the terms of this Agreement. The Lender shall deliver to the
Borrower concurrently with such demand a written statement in reasonable detail
as to such losses, expenses and liabilities, and this statement shall become
conclusive within thirty (30) days as to the amount of compensation due to the
Lender, absent manifest error. During such thirty (30)-day period, the Borrower
shall have the opportunity to request more detailed information if it reasonably
feels such information is necessary, and the Borrower shall be afforded a
reasonable opportunity to review and comment on the calculation (such review in
any case not to exceed thirty (30) days).
(e) AFFILIATES NOT OBLIGATED. No Affiliate of the Lender shall be
deemed a party to this Agreement or shall have any liability or obligation under
this Agreement.
2.9 TAXES.
(a) PAYMENT OF TAXES. Any and all payments by the Borrower hereunder or
under the Note or other document evidencing any Obligations shall be made free
and clear of and without reduction for any and all present or future taxes,
levies, imposts, deductions, charges, and all stamp or documentary taxes, excise
taxes, ad valorem taxes and other taxes imposed on the value of the property,
charges or levies which arise from the execution, delivery or registration, or
from payment or performance under, any of the Loan Documents and all other
liabilities with respect thereto excluding, any withholding taxes and taxes
imposed on or measured by net income or overall gross receipts and capital and
franchise taxes now or hereafter imposed on the Lender by (i) the United States
or any political subdivision thereof, (ii) the governmental authority of the
jurisdiction (or any political subdivision thereof) in which the Lender's
Lending Office is located or (iii) any governmental authority in the
jurisdiction in which the Lender is organized, managed and controlled or any
political subdivision thereof (all such non-excluded taxes, levies, imposts,
deductions, charges and withholdings being hereinafter referred to as "TAXES").
If the Borrower shall be required by law to withhold or deduct any Taxes from or
in respect of any sum payable hereunder or under the Note or such document to
the Lender, (x) the Borrower shall make such withholding or deductions and (y)
the Borrower shall pay the full amount withheld or deducted to the relevant
taxation authority or other authority in accordance with applicable law.
<PAGE>
Loan Agreement
Minolta Co., Ltd.
QMS, Inc.
(b) INDEMNIFICATION. The Borrower will indemnify the Lender against,
and reimburse the Lender on demand for, the full amount of all Taxes (including,
without limitation, any Taxes imposed by any governmental authority on amounts
payable under this SECTION 2.9 and any additional income or franchise taxes
resulting therefrom) incurred or paid by the Lender and any liability (including
penalties, interest, and out-of-pocket expenses paid to third parties) arising
therefrom or with respect thereto, whether or not such Taxes were lawfully
payable. A certificate as to any additional amount payable to any Person under
this SECTION 2.9 submitted by it to the Borrower shall, absent manifest error,
be final, conclusive and binding upon all parties hereto. The Lender agrees,
within a reasonable time after receiving a written request from the Borrower, to
provide the Borrower with such certificates as are reasonably required, and take
such other action as are reasonably necessary to claim such exemptions as the
Lender may be entitled to claim in respect of all or a portion of any Taxes
which are otherwise required to be paid or deducted or withheld pursuant to this
SECTION 2.9 in respect of any payments under this Agreement or under the Note.
(c) RECEIPTS. Within thirty (30) days after the date of any payment of
Taxes by the Borrower, it will furnish to the Lender, at its address referred to
in SECTION 7.2 (Notices, Etc.), the original or a certified copy of a receipt or
other documentation reasonably satisfactory to the Lender, evidencing payment
thereof.
Article 3
CONDITIONS OF LENDING
3.1 CONDITION PRECEDENT TO THE LOAN. The obligation of the Lender to
make the Loan hereunder is subject to fulfillment (or waiver in writing by the
Lender) of the following conditions precedent (it being understood and agreed
that the delivery of the stock certificates in SECTION 3.1(F)(II) shall be
deemed to have occurred simultaneously with the Closing):
(a) The Closing (as defined under the Borrower Stock Purchase
Agreement) shall have occurred and the Borrower shall have acquired all of the
capital stock of QMS Europe and QMS Australia.
(b) The representations and warranties made by the Borrower in the
Borrower Stock Purchase Agreement and in ARTICLE 4 (Representations and
Warranties) shall be true and correct on and as of the date of the Loan, before
and after giving effect to the Loan and to the application of the proceeds
therefrom, as though made on and as of such date.
(c) No event shall have occurred and be continuing, or would result
from the Loan, or from the application of the proceeds therefrom, which would
constitute a Default or an
<PAGE>
Loan Agreement
Minolta Co., Ltd.
QMS, Inc.
Event of Default in effect on, and as of the date of, the Loan.
(d) There shall not have occurred any material adverse change in the
consolidated assets, liabilities, operations, business, customer base, condition
(financial or otherwise) or prospects of the Borrower since April 30, 1999.
(e) The Foothill Credit Facility shall have been amended to authorize
(or Foothill Capital Corporation shall otherwise have consented in writing to)
the transactions contemplated in the Borrower Stock Purchase Agreement, this
Loan Agreement and the other Loan Documents.
(f) There shall have been delivered to the Lender on or before the
Closing Date the following, each in form and substance satisfactory to the
Lender:
(i) The Note duly executed by the Borrower;
(ii) The Stock Pledge Agreements duly executed by the Borrower
(together with stock certificates and stock powers, as appropriate, and, in the
case of the Australian Stock Pledge Agreement, transfers of shares in QMS
Australia duly executed in blank by the Borrower);
(iii) A true and complete copy of the Certificate of
Incorporation and By-laws of the Borrower, and certified copies of the
resolutions of the Board of Directors of the Borrower approving this Agreement,
the Stock Pledge Agreements, the Note and all other Loan Documents delivered on
the Closing Date, and of all documents evidencing other necessary corporate
action and governmental approvals, if any, with respect to this Agreement, the
Stock Pledge Agreements, the Note and such other Loan Documents;
(iv) A certificate of the Secretary or an Assistant Secretary
of the Borrower certifying the names and true signatures of the officers of the
Borrower authorized to sign this Agreement, the Stock Pledge Agreements and the
Note and other documents to be delivered hereunder to which it is a party;
(v) Favorable opinions of Hand Arendall, LLC, as counsel for
the Borrower, De Brauw Blackstone Westbroek, as Dutch local counsel for the
Borrower, and Mallesons Stephen Jaques, as Australian local counsel for the
Borrower, all in form and substance satisfactory to the Lender and its counsel;
(vi) Any document in the applicable jurisdiction necessary or
appropriate for the Lender to obtain or evidence the perfection and priority of
the Lender's first-priority security interest (or equitable interest, as the
case may be) in the Collateral; and
(vii) Such other documents and instruments (including, without
limitation, financial and other information) as the Lender shall reasonably
request.
<PAGE>
Loan Agreement
Minolta Co., Ltd.
QMS, Inc.
Article 4
REPRESENTATIONS AND WARRANTIES
4.1 REPRESENTATIONS AND WARRANTIES OF THE BORROWER. The Borrower
represents and warrants on and as of the date hereof and on the Closing Date as
follows:
(a) The Borrower is duly incorporated, validly existing and in good
standing under the laws of Delaware, has the corporate power and authority to
own its assets and to transact the business in which it is now engaged or
proposed to be engaged.
(b) The execution, delivery and performance by the Borrower of the Loan
Documents to which it is a party have been duly authorized by all necessary
corporate actions and do not and will not (i) contravene its charter or by-laws;
(ii) violate any provision of, or require any filing, registration, consent or
approval under, any law, rule, regulation, order, writ, judgment, injunction,
decree, determination or award having applicability to the Borrower; (iii)
result in a breach of or constitute a default or require any consent under any
material indenture or loan or credit agreement or any other agreement, lease or
instrument to which the Borrower or its Subsidiaries are a party or by which
they or their properties may be bound or affected (including, without
limitation, the existing facilities listed on SCHEDULE 4.1(F) and, if not repaid
in full and terminated at the Closing Date, the Foothill Credit Facility); or
(iv) cause the Borrower to be in default (with or without notice or lapse of
time or both) under any such law, rule, regulation, order, writ, judgment,
injunction, decree, determination or award or any such indenture, agreement,
lease or instrument.
(c) Each of the Loan Documents to which the Borrower is a party has
been duly executed and delivered and constitutes its legal, valid and binding
obligation enforceable against it in accordance with its terms, except as such
enforcement may be limited by applicable bankruptcy, insolvency, fraudulent
conveyance, reorganization, moratorium and similar laws affecting creditors'
rights and remedies generally and general principles of equity (regardless of
whether such enforceability is considered in a proceeding at law or in equity).
(d) No authorization or approval or other action by, and no notice to
or filing with, any governmental authority or regulatory body is required for
the due execution, delivery and performance by the Borrower of this Agreement,
the Stock Pledge Agreements, the Note or the other Loan Documents to which it is
a party.
(e) Set forth on SCHEDULE 4.1(E) is a complete and accurate list
showing, as of the date hereof, after giving effect to the share purchase
contemplated in the Subsidiaries Stock Purchase Agreement, all Subsidiaries of
the Borrower and, as to each such Subsidiary, the
<PAGE>
Loan Agreement
Minolta Co., Ltd.
QMS, Inc.
jurisdiction of its incorporation, the number of shares of each class of capital
stock authorized, the number outstanding on the date hereof and the percentage
of the outstanding shares of each such class owned, directly or indirectly, by
the Borrower. None of the capital stock of any such Subsidiary is subject to any
outstanding option, warrant, right of conversion or purchase or any similar
right other than those of the Borrower and its Affiliates. All of the issued and
outstanding capital stock of each such Subsidiary has been validly issued, fully
paid and non-assessable and is owned by the Borrower (after giving effect to the
share purchase contemplated in the Subsidiaries Stock Purchase Agreement) free
and clear of all Liens other than Liens in favor of the Lender and its
Affiliates. Neither the Borrower nor any such Subsidiary is a party to, or has
knowledge of, any agreement restricting the transfer or hypothecation of any
shares of capital stock of any such Subsidiary, other than the Loan Documents.
The Borrower does not own or hold directly or indirectly, any capital stock or
equity security of, or any equity interest in, any Person other than such
Subsidiaries.
(f) There are no Liens of any nature whatsoever on the Collateral or
any properties of the Borrower, any of its Subsidiaries, QMS Australia or QMS
Europe other than those permitted by SECTION 5.2(A) (Negative Covenants) and, in
respect of QMS Australia and QMS Europe, those listed on SCHEDULE 4.1(F). The
Liens granted to the Lender pursuant to the Stock Pledge Agreements are fully
perfected first priority Liens in and to the Collateral.
(g) Both before and after giving effect to the Loan, the application of
the proceeds thereof in connection with SECTION 2.2 (Use of Proceeds) and the
payment of all estimated legal, accounting and other fees relating hereto and
thereto, (A) the value of the assets of the Borrower (both at fair value and at
present fair saleable value) will be greater than the total amount of its
liabilities (including, without limitation, contingent and unliquidated
liabilities), (B) the Borrower will be able to pay all of its liabilities as
they mature, (C) the Borrower's stockholders' equity shall be above twelve
million and eight hundred thousand Dollars ($12,800,000) and (D) the Borrower
will not have unreasonably small capital.
(h) All representations and warranties of the Borrower contained in the
Borrower Stock Purchase Agreement are true and correct.
(i) All representations and warranties of the Borrower contained in
this Agreement, the other Loan Documents, the Borrower Stock Purchase Agreement
and all certificates, documents and other information, including, without
limitation, financial information delivered by the Borrower to the Lender in
connection therewith, do not contain any untrue statement of material fact or
omit to state a material fact necessary in order to make the statements
contained therein not misleading.
<PAGE>
Loan Agreement
Minolta Co., Ltd.
QMS, Inc.
Article 5
COVENANTS OF THE BORROWER
5.1 AFFIRMATIVE COVENANTS. So long as the Note shall remain unpaid
hereunder and until all the Obligations are paid in full, the Borrower shall,
unless the Lender shall otherwise consent in writing:
(a) CORPORATE MAINTENANCE. At all times maintain its corporate
existence and preserve and keep in full force and effect its rights, privileges
and franchises necessary or desirable to its business.
(b) COMPLIANCE WITH LAWS, ETC. Comply in all material respects with (i)
all applicable laws, rules, regulations and orders and (ii) all indentures, or
loan or credit agreements or any other agreement, lease or instrument to which
it is a party or by which it or its properties may be bound or affected.
(c) TAXES. Duly file all tax returns with respect to the Borrower and
its property which are required to be filed, duly pay all taxes shown thereon to
be due and payable by the Borrower, including all quarterly tax assessments.
(d) BOOKS AND RECORDS. Keep proper books of record and account in which
entries in conformity with GAAP consistently applied shall be made of all
dealings and transactions in relation to their businesses and activities.
(e) INSPECTION. Permit the Lender and its representatives at any time
to inspect the facilities, the location and condition of the Collateral and
other assets of the Borrower and the books and records thereof, to make copies
and extracts therefrom and to discuss its affairs, finances and accounts with
its officers, employees and independent auditors (and by this provision the
Borrower authorizes such independent auditors to discuss with the Lender and its
representatives such affairs, finances and accounts and to obtain all
information concerning the Borrower's business, and all financial and any other
information the Lender may require).
(f) REPORTING REQUIREMENTS. Furnish to the Lender:
(i) As soon as available, and in any event within ninety (90)
days after the Closing Date, an audited, pro forma consolidated and
consolidating balance sheet of the Borrower and its Subsidiaries as of the
Closing Date prepared in accordance with GAAP consistently applied, which
balance sheet gives effect to the transactions contemplated in the Subsidiaries
Stock Purchase Agreement, the transactions contemplated hereby, and the payment
or accrual of all fees and expenses related to the foregoing;
(ii) As soon as available, and in any event within thirty (30)
days after the end of each fiscal month, consolidated and consolidating
unaudited balance sheets of the Borrower and its subsidiaries as of the end of
such month and the related statements of income, stockholders' equity and cash
flow of the Borrower and its subsidiaries for the period commencing at the
beginning of the fiscal year and ending at the close of such fiscal month,
including comparative statements which reflect the same period(s) of the
previous fiscal year, certified by the chief financial officer of the Borrower;
(iii) As soon as available, and in any event within forty-five
(45) days after the end of each fiscal quarter, consolidated and consolidating
unaudited balance sheets of the Borrower and its subsidiaries as of the end of
such quarter and the related statements of income, stockholders' equity and cash
flow of the Borrower and its subsidiaries for the period commencing at the
beginning of the then current fiscal year and ending at the close of such
quarter, including comparative statements which reflect the same period(s) of
the previous fiscal year, certified by the chief financial officer of the
Borrower;
(iv) As soon as available and in any event within ninety (90)
days after the end of each fiscal year of the Borrower, a copy of the annual
report for such year for the Borrower containing financial statements for such
year and consolidated and consolidating balance sheets for the twelve month
period then ended, statements of income, stockholders' equity, cash flow and
changes in stockholders' equity of the Borrower for such fiscal year, together
with comparative information for the previous fiscal year, and copies of all
reports and management letters from independent certified public accountants to
the Borrower reasonably acceptable to the Lender, all certified by the chief
financial officer of the Borrower;
(v) As soon as possible and in any event within five (5) days
after the occurrence of each Default and Event of Default, continuing on the
date of such statement, a statement of the chief financial officer of the
Borrower setting forth details of such Default or Event of Default and the
action which the Borrower has taken and proposes to take with respect thereto;
(vi) Promptly upon the filing thereof or the mailing thereof
to the public shareholders or debt-holders of the Borrower generally, the
Borrower shall deliver to the Lender copies of all filings or reports made with
the U.S. Securities and Exchange Commission (or the governmental or
quasi-governmental entity or entities receiving substantially equivalent filings
in any relevant jurisdiction) by the Borrower or any of its subsidiaries and all
communications made by the Borrower to its shareholders generally; and
(vii) Such other information respecting the condition or
operations, financial or otherwise, of the Borrower as the Lender may from time
to time reasonably request.
<PAGE>
Loan Agreement
Minolta Co., Ltd.
QMS, Inc.
(g) FURTHER ASSURANCES. Execute and deliver from time to time to the
Lender all such further documents and instruments and do all such other acts and
things as may be reasonably required by the Lender to enable the Lender to
exercise and enforce its rights hereunder and under the other documents referred
to herein and to perfect, continue the perfection of, preserve and protect its
lien on the Collateral.
(h) FOOTHILL CREDIT FACILITY. On or before the sixtieth (60th) day
following the Closing Date, the Foothill Credit Facility and all Liens granted
thereunder shall have been terminated in form and substance satisfactory to the
Lender or the Foothill Credit Facility shall have become a Permitted Credit
Facility and shall remain a Permitted Credit Facility.
5.2 NEGATIVE COVENANTS. So long as the Note shall remain unpaid
hereunder and until all the Obligations are paid in full, the Borrower will not
without the written consent of the Lender:
(a) Create or suffer to exist, any Lien upon or with respect to any of
its properties, whether now owned or hereafter acquired, or assign any right to
receive income, in each case to secure or provide for the payment of any Debt of
any person or entity, other than (i) purchase money liens or purchase money
security interests upon or in any personal property acquired or held by the
Borrower in the ordinary course of business to secure the purchase price of such
personal property or to secure Debt incurred solely for the purpose of financing
the acquisition of such personal property, (ii) Liens existing on such
properties at the time of its acquisition (other than any such Lien created in
contemplation of such acquisition), (iii) Customary Permitted Liens and (iv)
Liens in favor of the Lender or created to secure the obligations under the
Permitted Credit Facilities; PROVIDED, HOWEVER, that the aggregate principal
amount at any time outstanding of the Debt secured by the Liens referred to in
clauses (i) and (ii) above shall not exceed one million Dollars ($1,000,000);
PROVIDED, FURTHER, that the aggregate principal amount of all obligations owing
to ING Bank Corporate Investments B.V. (or its affiliates) under the ING credit
facilities listed in CLAUSE (I) of SCHEDULE 4.1(F) shall not exceed four million
Dollars ($4,000,000).
(b) Merge or consolidate with or into, or convey, transfer, lease or
otherwise dispose of (whether in one transaction or in a series of transactions)
all or substantially all of its assets (whether now owned or hereafter acquired)
to, acquire all or substantially all of the assets of, any Person or division of
any Person or materially change the nature or conduct of its business as
conducted on the date hereof.
(c) Sell, assign, pledge, grant any Lien on, transfer, dispose or
otherwise encumber the Collateral or any part thereof.
(d) Directly or indirectly create, incur, assume or otherwise become or
remain directly
<PAGE>
Loan Agreement
Minolta Co., Ltd.
QMS, Inc.
or indirectly liable with respect to any Debt, except for such debts,
obligations and liabilities outstanding as of the date hereof and identified as
such on SCHEDULE 4.1(F) (other than any such liabilities under the Foothill
Credit Facility) and liabilities in respect of the Permitted Credit Facilities.
(e) Declare, pay or make any dividend or distribution on any shares of
capital stock of the Borrower or purchase, repurchase, redeem or otherwise
acquire for value any shares of any capital stock of the Borrower.
(f) Issue any new shares of capital stock or any other voting
securities.
(g) Default in the repayment of any material debt or performance of any
material obligation of the Borrower or any of its Subsidiaries.
(h) Except as expressly contemplated hereby, engage in any transaction
with an Affiliate (other than transactions involving only the Borrower, the
Lender and/or wholly owned subsidiaries thereof) on terms more favorable to such
Affiliate than would have been obtainable in an arm's-length dealing.
(i) Amend, modify or otherwise change any of the terms or provisions in
its articles/certificate of incorporation, its by-laws, any document setting
forth the designation, amount, relative rights, limitations and preferences of
any class or series of capital stock of the Borrower, and in each case, any
equivalent documents as in effect on the Closing Date.
(j) Change its accounting treatment and reporting practices or tax
reporting treatment, except as required by GAAP consistently applied or law and
disclosed to the Lender; PROVIDED, HOWEVER, that the Borrower may from time to
time, with the prior written consent of the Lender , change its accounting
treatment and reporting practices if it reasonably believes such change would be
appropriate to implement proposed changes in GAAP.
(k) Become an Affiliate of any Person other than the Lender.
(l) Enter into any agreement that would not permit the Borrower to (i)
comply fully with all of the provisions of this ARTICLE 5 or (ii) grant to the
Lender a perfected first-priority exclusive Lien on the Collateral.
<PAGE>
Loan Agreement
Minolta Co., Ltd.
QMS, Inc.
Article 6
EVENTS OF DEFAULT
6.1 EVENTS OF DEFAULT. If any of the following Events of Default shall
occur and be continuing:
(a) The Borrower shall fail to pay any principal of the Note when the
same becomes due and payable and such non-payment continues for a period of more
than five (5) days; or
(b) The Borrower shall fail to pay any interest on the Note or any
other amount payable hereunder or under any of the other Loan Documents to which
it is a party when the same becomes due and payable and such non-payment
continues for a period of more than five (5) days; or
(c) Any representation or warranty made by the Borrower herein or in
the other Loan Documents to which it is a party or in any certificate agreement
or statement contemplated by or made and delivered to the Lender in connection
with this Agreement shall prove to have been incorrect in any material respect
when made; or
(d) The Borrower shall (i) fail to perform or observe any term,
covenant or agreement binding on such Person under SECTION 5.1(A) (Corporate
Maintenance) or SECTION 5.1(E) (Inspection), or SECTION 5.2 (Negative Covenants)
or (ii) default in the performance or compliance with any term contained in this
Agreement (other than as covered by paragraphs (a), (b) or (c) or clause (i) of
this paragraph (d) of this Section 6.1) or any default or event of default shall
occur under any of the other Loan Documents and such default or event of default
continues for a period of more than thirty (30) days after the occurrence
thereof; or
(e) The Borrower shall fail to pay any principal of or premium or
interest on any Debt (but excluding Debt evidenced by the Note) of the Borrower
that has an aggregate principal amount in excess of one million Dollar
($1,000,000), when the same becomes due and payable (whether by scheduled
maturity, required prepayment, acceleration, demand or otherwise), and such
failure shall continue after the applicable grace period, if any, specified in
the agreement or instrument relating to such Debt; or any other event shall
occur or condition shall exist under any agreement or instrument relating to any
such Debt and shall continue after the applicable grace period, if any,
specified in such agreement or instrument, if the effect of such event or
condition is to accelerate, or to permit the acceleration of, the maturity of
such Debt; or any such Debt shall be declared to be due and payable, or required
to be prepaid (other than by a regularly scheduled required prepayment),
redeemed, purchased or defeased, or an offer to prepay, redeem, purchase or
defease such Debt shall be required to be made, in each case prior to the stated
maturity thereof; or
(f) The Borrower shall generally not pay its debts as such debts become
due, or shall admit in writing their inability to pay its debts generally, or
shall make a general
<PAGE>
Loan Agreement
Minolta Co., Ltd.
QMS, Inc.
assignment for the benefit of creditors; or any proceeding shall be instituted
by or against the Borrower seeking to adjudicate it bankrupt or insolvent, or
seeking the liquidation, winding up, reorganization, arrangement, adjustment,
protection, relief, or composition of the Borrower or of its debts under any law
relating to bankruptcy, insolvency or reorganization or relief of debtors, or
seeking the entry of an order for relief or the appointment of a receiver,
trustee, custodian or other similar official for either of them or for any
substantial part of their property and, in the case of any such proceeding
instituted against either of them (but not instituted by either of them), either
such proceeding shall remain undismissed or unstayed for a period of 45 days, or
any of the actions sought in such proceeding (including, without limitation, the
entry of an order for relief against, or the appointment of a receiver, trustee,
custodian or other similar official for, either of them or for any substantial
part of their property) shall occur; or the Borrower shall take any corporate
action to authorize any of the actions set forth above in this subsection (f);
or
(g) Any judgment or order for the payment of money in excess of five
hundred thousand Dollars ($500,000) shall be rendered against the Borrower and
either (i) enforcement proceedings shall have been commenced by any creditor
upon such judgment or order or (ii) there shall be any period of ten consecutive
days during which a stay of enforcement of such judgment or order, by reason of
a pending appeal or otherwise, shall not be in effect; or
(h) Any default under, or Event of Default as defined in, any of the
Permitted Credit Facilities) shall have occurred and be continuing which has not
been waived in accordance with the terms of the Permitted Credit Facilities; or
(i) This Agreement, the Note or the Stock Pledge Agreements shall, at
any time after their respective execution and delivery and for any reason, cease
to be in full force and effect or shall be declared null and void and not
replaced by substantially similar instruments in form and substance reasonably
satisfactory to the Lender, or the validity or enforceability thereof or the
security interests (or equitable interests, as the case may be) granted
thereunder shall be contested by the Borrower, or the Borrower shall deny that
such person has any further liability or obligation under this Agreement, the
Note or the Stock Pledge Agreements, as the case may be;
then, and in any such event, the Lender may, by notice to the Borrower, declare
the Note, all interest thereon and all of the Obligations to be forthwith due
and payable, whereupon the Note, all such interest and all of the Obligations
shall become and be forthwith due and payable, without presentment, demand,
protest, or further notice of any kind, all of which are hereby expressly waived
by the Borrower; PROVIDED, HOWEVER, that in the event of an actual or deemed
entry of an order for relief with respect to the Borrower under the Federal
Bankruptcy Code, the Loan, the Note, all such interest and all the Obligations
shall automatically become and be due and payable, without presentment, demand,
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Loan Agreement
Minolta Co., Ltd.
QMS, Inc.
protest or any notice of any kind, all of which are hereby expressly waived by
the Borrower. Notwithstanding any other rights the Lender may have under
applicable law and hereunder, the Borrower agrees that upon the occurrence and
during the continuance of an Event of Default, the Lender shall have the right
to apply (including by way of set-off) any of the property of the Borrower held
by the Lender or thereafter coming into the Lender's possession (including
account balances of the Borrower) to a reduction of the Obligations of the
Borrower.
Article 7
MISCELLANEOUS
7.1 AMENDMENTS, ETC. No amendment or waiver of any provision of this
Agreement or the Note, nor consent to any departure by the Borrower therefrom,
shall in any event be effective unless the same shall be in writing and signed
by the Lender, and then such waiver or consent shall be effective only in the
specific instance and for the specific purpose for which given.
7.2 NOTICES, ETC. All notices and other communications provided for
hereunder shall be in writing (including telecopier, telegraphic, telex or cable
communication) and mailed, telecopied, telegraphed, telexed, cabled or
delivered, if to the Borrower, at its address at One Magnum Pass, Mobile, AL
36618, Attention: Chief Executive Officer, Fax: (334) 633-0020, with a copy to
Hand Arendall, LLC, First National Bank Building, Suite 3000, Mobile, AL 36601,
Attention: Gregory R. Jones, Esq., Fax: (334) 694-6375; and if to the Lender, at
its address at 3-13, 2-Chome, Azuchi-Machi, Chuo-Ku, Osaka 541-8556, Japan,
Attention: General Manager of Finance Division, Fax: 011-81-6-6266-0343, with a
copy to Weil, Gotshal & Manges, LLP, 767 Fifth Avenue, New York, NY 10153, Fax:
(212) 310-8007, Attention: Stephen M. Besen, Esq.; or, as to each party, at such
other address as shall be designated by such party in a written notice to the
other party. All such notices and communications shall, when mailed, telecopied,
telegraphed, telexed or cabled, be effective when deposited in the mails,
telecopied, delivered to the telegraph company, confirmed by telex answerback or
redelivered to the cable company, respectively, except that notices to the
Lender pursuant to the provisions of ARTICLE 2 (Amount and Term of the Loan)
shall not be effective until received by the Lender.
7.3 NO WAIVER; REMEDIES. No failure on the part of the Lender to
exercise, and no delay in exercising, any right hereunder or under the Note
shall operate as a waiver thereof; nor shall any single or partial exercise of
any such right preclude any other or further exercise thereof or the exercise of
any other right. The remedies herein provided are cumulative and not exclusive
of any remedies provided by law.
7.4 COSTS, EXPENSES AND TAXES. The Borrower agrees to pay on demand all
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Loan Agreement
Minolta Co., Ltd.
QMS, Inc.
reasonable costs and expenses in connection with the preparation, execution,
delivery, administration, modification and amendment of this Agreement, the
Note, the Stock Pledge Agreements and the other Loan Documents, including,
without limitation, the reasonable fees and out-of-pocket expenses of counsel
for the Lender with respect thereto and with respect to advising the Lender as
to its rights and responsibilities under this Agreement. The Borrower further
agrees to pay after an Event of Default on demand all costs and expenses, if any
(including reasonable counsel fees and expenses), (i) in connection with the
enforcement (whether through negotiations, legal proceedings or otherwise) of
this Agreement, the Note, the Stock Pledge Agreements and the other Loan
Documents, including, without limitation, reasonable counsel fees and expenses
in connection with the enforcement of rights under this SECTION 7.4; (ii) in
connection with any refinancing or restructuring of the credit arrangements
provided under this Agreement in the nature of a "work out" or in any insolvency
or bankruptcy proceeding; and (iii) in commencing, defending or intervening in
any litigation or in filing a petition, complaint, motion or other pleadings in
any legal proceeding relating to the Obligations, the Collateral, the Borrower
and related to or arising out of the transactions contemplated hereby or by any
of the other Loan Documents. In addition, the Borrower shall pay any and all
stamp and other taxes (other than those taxes excluded pursuant to SECTION 2.9
(Taxes)) payable or determined to be payable in connection with the execution
and delivery of this Agreement, the Note, the Stock Pledge Agreements and the
other Loan Documents to be delivered hereunder, and agrees to save the Lender
harmless from and against any and all liabilities with respect to or resulting
from any delay in paying or omission to pay such taxes.
7.5 RIGHT OF SET-OFF. Upon the occurrence and during the continuance of
an Event of Default, the Lender is hereby authorized at any time and from time
to time, to the fullest extent permitted by law, to set off and apply any Debt
at any time owing by the Lender to or for the credit or the account of the
Borrower against any and all of the Obligations of the Borrower now or hereafter
existing, whether or not the Lender shall have made any demand under this
Agreement, the Note or any other Loan Document and although such Obligations may
be unmatured. The Lender agrees promptly to notify the Borrower after any such
set-off and application, provided that the failure to give such notice shall not
affect the validity of such set-off and application. The rights of the Lender
under this SECTION 7.5 are in addition to other rights and remedies (including,
without limitation, other rights of set-off) which the Lender may have.
7.6 BINDING EFFECT; ASSIGNMENT. This Agreement shall be binding upon
and inure to the benefit of the Borrower and the Lender and their respective
successors and assigns, except that the Borrower shall not have the right to
assign its rights hereunder or any interest herein without the prior written
consent of the Lender. The Lender may assign all or a portion of its rights and
obligations under this Agreement upon notice to the Borrower.
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Loan Agreement
Minolta Co., Ltd.
QMS, Inc.
7.7 EXECUTION IN COUNTERPARTS. This Agreement may be executed in any
number of counterparts and by different parties hereto in separate counterparts,
each of which when so executed shall be deemed to be an original and all of
which taken together shall constitute one and the same agreement. One or more
counterparts of this Agreement (or portions hereof) may be delivered via
telecopier, with the intention that they shall have the same effect as an
original counterpart hereof (or such portions hereof). All signature pages need
not be on the same counterpart.
7.8 ENTIRE AGREEMENT; SEVERABILITY OF PROVISIONS. The Loan Documents
contain the entire agreement of the parties hereto and supersede all prior
agreements and understandings, oral and otherwise, among the parties hereto with
respect to the matters contained in the Loan Documents. If any provision of this
Agreement or the application thereof to any Person or circumstance is invalid or
unenforceable, or contravenes any law, regulation or document applicable to such
Person, such provision or application shall be deemed ineffective ab initio, but
the remainder of this Agreement and the application of such provision to other
Persons or circumstances shall not be affected thereby, and the provisions of
this Agreement shall be severable in any such instances.
7.9 INDEMNIFICATION. The Borrower agrees to indemnify the Lender and
its Affiliates and each of their respective stockholders, directors, officers,
agents, attorneys and employees, and the successors and assigns of the foregoing
(collectively, "INDEMNITEES"), from and against any and all liabilities,
obligations, losses, damages, penalties, actions, judgments, suits, costs,
expenses, disbursements of any kind or nature whatsoever which may be imposed
on, incurred by, or asserted against any Indemnitee in any way relating to or
arising out of the Loan Documents or any related transactions (whether actual or
proposed), or any action taken or omitted by the Lender under the Loan
Documents; PROVIDED, HOWEVER, that the Borrower shall not be liable for any
portion of such liabilities, obligations, losses, damages, penalties, actions,
judgments, suits, costs, expenses or disbursements resulting from the gross
negligence or willful misconduct of such Indemnitee as determined in a final,
non-appealable judgment by a court of competent jurisdiction. The foregoing
agreements shall survive the making and repayment of the Loan.
7.10 GOVERNING LAW. This Agreement and the Note shall be governed by,
and construed in accordance with, the laws of the State of New York applicable
to agreements entered into and to be executed entirely within the State of New
York.
7.11 CONSENT TO JURISDICTION. The Borrower represents that it has no
immunity with respect to any action or proceeding brought in connection with
this Agreement or the other Loan Documents, and agrees that any legal or
equitable action or proceeding with respect to this Agreement, the Note or the
other Loan Documents to which it is a party or the enforcement thereof may be
brought in any Federal or State court of competent jurisdiction located in the
City of New York and, by execution and delivery of this
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Loan Agreement
Minolta Co., Ltd.
QMS, Inc.
Agreement, it accepts for itself and its property, generally and
unconditionally, the exclusive jurisdiction of the aforesaid courts and any
related appellate court, irrevocably agrees to be bound by any judgment rendered
thereby in connection with this Agreement or the other Loan Documents, and
irrevocably waives any objection it may now or hereafter have as to the venue of
any such action or proceeding brought in such a court or that such court is an
inconvenient forum. The Borrower consents to the service of process out of any
of the aforementioned courts in any such action or proceeding by mailing of
copies thereof by registered mail, postage prepaid, such service to become
effective seven (7) Business Days after such mailing. Nothing herein shall
affect the Lender's right to serve process in any other manner prescribed by law
or the right to bring legal or equitable actions or proceedings in other
competent jurisdictions. Any judicial proceeding by the Borrower against the
Lender involving, directly or indirectly, any matter in any way arising out of,
related to or connected with this Agreement, the Note or the other Loan
Documents shall be brought only in a court located in the City of New York. EACH
OF BORROWER AND THE LENDER HEREBY WAIVES TRIAL BY JURY IN ANY JUDICIAL
PROCEEDING BROUGHT BY THE BORROWER OR THE LENDER INVOLVING, DIRECTLY OR
INDIRECTLY, ANY MATTER IN ANY WAY ARISING OUT OF RELATED TO, OR CONNECTED WITH
THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED THEREBY.
<PAGE>
Loan Agreement
Minolta Co., Ltd.
QMS, Inc.
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be executed by their respective officers thereunto duly authorized,
as of the date first above written.
QMS, Inc.
By: /s/ Edward E. Lucente
Name: Edward E. Lucente
Title: Chairman and President
MINOLTA CO., LTD.
By: /s/ Hiroshi Fujii
Name: Hiroshi Fujii
Title: Director
