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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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AMENDMENT NO. 1
TO
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 and Mr. Lloyd Adams, the Corporate Controller,
instructed the administrator of the Company's 401(k) plan to purchase 2,366
Shares on June 11, 1999 for Mr. Adams' 401(k) plan account.
(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
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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>
- ------------------------
* Included with Schedule 14D-9 mailed to shareholders.
+ Previously filed.
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 21, 1999
11
<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.
+ Previously filed.
