<PAGE> 1
As filed with the Securities and Exchange Commission on April 12, 1999
Registration No. 333-
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM S-4
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
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JUNO LIGHTING, INC.
(Exact name of registrant as specified in its charter)
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DELAWARE 3640 36-2852993
(State or other jurisdiction of (Primary Standard Industrial (I.R.S. Employer
incorporation or organization) Classification Code Number) Identification Number)
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1300 S. WOLF ROAD
DES PLAINES, ILLINOIS 60017-5065
(847) 827-9880
(Address, including zip code, and telephone number,
including area code, of registrant's principal
executive offices)
ROBERT S. FREMONT
CHIEF EXECUTIVE OFFICER
JUNO LIGHTING, INC.
1300 S. WOLF ROAD
DES PLAINES, ILLINOIS 60017-5065
(847) 827-9880
(Name, address, including zip code, and telephone
number, including area code, of agent for service)
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Copies to:
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Julius Lewis, Esq. Kenton J. King, Esq.
Michael M. Froy, Esq. Skadden, Arps, Slate, Meagher & Flom, LLP
Sonnenschein Nath & Rosenthal Four Embarcadero Center, Suite 3800
8000 Sears Tower San Francisco, California 94111
Chicago, IL 60606 (415) 984-6400
(312) 876-8000
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APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As soon as
practicable after this Registration Statement becomes effective and after all
other conditions to the transaction described in the enclosed proxy statement/
prospectus have been satisfied or waived.
If the securities being registered on this Form are being offered in
connection with the formation of a holding company and there is compliance with
General Instruction G, check the following box. [ ]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [ ]
If this Form is to be a post-effective amendment filed pursuant to Rule
462(d) under the Securities Act, check the following box and list the
registration statement of the earlier effective registration statement for the
same offering. [ ]
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CALCULATION OF REGISTRATION FEE
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PROPOSED MAXIMUM PROPOSED MAXIMUM
TITLE OF EACH CLASS OF AMOUNT TO BE OFFERING PRICE AGGREGATE OFFERING AMOUNT OF
SECURITIES TO BE REGISTERED REGISTERED(1) PER SHARE(2) PRICE (2) REGISTRATION FEE
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Common Stock, $.01 par value....... 2,400,000 shares $25.00 $60,000,000 $16,680
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(1) Relates to the number of shares of common stock of the Registrant issued in
the merger of Jupiter Acquisition Corp. with and into the Registrant, with
the Registrant as the surviving corporation in such merger.
(2) Estimated solely for the purpose of calculating the registration fee
pursuant to Rule 457(f) under the Securities Act of 1933, as amended. Based
upon the proposed offering price to existing security holders in the merger
of 2,400,000 shares of the Registrant's common stock.
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A),
MAY DETERMINE.
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[JUNO LOGO]
, 1999
Dear Stockholder:
You are invited to attend a special meeting of stockholders of Juno
Lighting, Inc. to consider and vote upon an agreement and plan of
recapitalization and merger pursuant to which Jupiter Acquisition Corp., a
corporation organized by Fremont Investors I, LLC, would merge with and into
Juno. Fremont Investors is controlled by the private equity firm of Fremont
Partners, L.P., and has no relationship, business or otherwise, with Robert S.
Fremont, the Chairman and Chief Executive Officer of Juno. In the merger, you
will be able to elect, with respect to each share of Juno common stock you own,
to either retain such share or to receive $25 in cash, subject to proration as
described below. The merger agreement also provides for the purchase by Fremont
Investors, in connection with the merger, of a new series of convertible
preferred stock of Juno for an aggregate purchase price of $106 million.
In addition to consideration of the merger agreement with Fremont Investors
and the transactions contemplated thereby, you will be asked to consider and
vote upon proposals to amend and restate Juno's certificate of incorporation and
to adopt the Juno Lighting, Inc. 1999 Stock Award and Incentive Plan. Because
all of these proposals arise out of the proposed transaction with Fremont
Investors, approval of each of these proposals is contingent upon approval of
the other proposals. If any of these proposals is not approved by our
stockholders, none of the proposals will be implemented and the merger will not
be consummated.
Detailed information concerning the special meeting and each of the
proposals, including the proposed merger, is set forth in the accompanying proxy
statement/prospectus. I urge you to read the enclosed material carefully.
- If the merger is completed, 2,400,000 shares of Juno common stock, which
constitute approximately 12.9% of the shares outstanding prior to the
merger, will remain outstanding, and all other outstanding shares of Juno
common stock, except for any shares held by stockholders who have
properly exercised dissenters' rights, will be converted into the right
to receive a cash payment of $25 per share.
- You will be able to elect, as to all or a part of your shares of Juno
common stock, to retain such shares and continue to own them after the
merger. If you fail to make an election to retain shares of the surviving
corporation, you will be deemed to have elected to receive cash. However,
because the number of shares of Juno common stock to be retained by
existing Juno stockholders must total exactly 2,400,000 shares, the right
to retain shares or receive cash is subject to proration as set forth in
the merger agreement and described in the proxy statement/prospectus.
- Consummation of the merger is subject to certain conditions, including
approval of the merger agreement by the affirmative vote of the holders
of a majority of the outstanding shares of Juno common stock.
- Following the merger, Fremont Investors would own convertible preferred
stock initially representing, on an as-converted basis, approximately
60.5% of the fully-diluted common stock of Juno and existing Juno
stockholders would own the remaining 39.5%. Dividends payable on the
preferred stock in the form of increases to the stated value of the
preferred stock during the first five years following the merger will, on
an as-converted basis, result in an increase in Fremont's fully-diluted
ownership interest.
Your Board of Directors has carefully reviewed and considered the terms and
conditions of the merger agreement and has unanimously determined that the
merger agreement and the transactions contemplated thereby are fair to and in
the best interests of Juno and its stockholders, and has unanimously approved
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and adopted the merger agreement. In addition, Juno's financial advisor, William
Blair & Company, L.L.C., has rendered its opinion to the effect that, as of the
date of such opinion and based upon and subject to certain matters stated
therein, the consideration to be received by holders of Juno's common stock in
the merger is fair, from a financial point of view, to such holders.
ACCORDINGLY, THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT YOU VOTE "FOR"
APPROVAL AND ADOPTION OF THE MERGER AGREEMENT AND THE OTHER PROPOSALS DESCRIBED
IN THE ACCOMPANYING PROXY STATEMENT/PROSPECTUS.
IT IS VERY IMPORTANT THAT YOUR SHARES BE REPRESENTED AND VOTED AT THE
SPECIAL MEETING. WHETHER OR NOT YOU PLAN TO ATTEND THE SPECIAL MEETING, PLEASE
COMPLETE, SIGN AND DATE THE ENCLOSED PROXY CARD AND RETURN IT PROMPTLY IN THE
ENCLOSED POSTAGE-PREPAID ENVELOPE. Your stock will be voted in accordance with
the instructions that you give in your proxy. If you attend the special meeting,
you may vote in person if you wish, even if you previously have returned your
proxy card.
Sincerely,
Robert S. Fremont
Chairman of the Board and Chief
Executive Officer
PLEASE COMPLETE, SIGN, DATE AND RETURN THE ENCLOSED PROXY CARD.
<PAGE> 4
NOTICE OF SPECIAL MEETING OF STOCKHOLDERS
OF
JUNO LIGHTING, INC.
To the Stockholders of
Juno Lighting, Inc.:
On June , 1999, Juno Lighting, Inc. will hold a special meeting of
stockholders at Juno's headquarters at 1300 South Wolf Road, Des Plaines,
Illinois 60017-5065. The special meeting will begin at :00 p.m. central time.
At the special meeting you will be asked to consider and vote on:
(1) A proposal to approve an Agreement and Plan of Recapitalization and
Merger, dated as of March 26, 1999, by and among Juno, Fremont
Investors I, LLC and Jupiter Acquisition Corp., and the transactions
contemplated by such merger agreement, including (a) the merger of
Jupiter, a wholly-owned subsidiary of Fremont Investors, with and into
Juno, with Juno being the surviving corporation, and (b) the purchase
by Fremont Investors of $106 million of a new series of convertible
preferred stock of Juno;
(2) A proposal to adopt an amended and restated certificate of
incorporation of Juno;
(3) A proposal to adopt the Juno Lighting, Inc. 1999 Stock Award and
Incentive Plan; and
(4) Such other matters as may properly come before the special meeting or
any adjournments or postponements of the special meeting.
Because each of proposals 1, 2 and 3 arise out of the proposed transaction with
Fremont Investors, approval of each of these proposals is contingent upon
approval of the other proposals. If any of these proposals is not approved by
our stockholders, none of the proposals will be implemented and the merger will
not be consummated.
May , 1999 has been fixed as the record date for the determination of
stockholders entitled to notice of and to vote at the special meeting or any
adjournments or postponements thereof. Only holders of record of Juno common
shares at the close of business on that date will be entitled to notice of and
to vote at the special meeting. Juno stockholders will be entitled to
dissenters' rights as a result of the merger.
Also enclosed is a copy of Juno's Annual Report to Stockholders for the
fiscal year ended November 30, 1998.
YOUR VOTE IS IMPORTANT AND WE URGE YOU TO COMPLETE, SIGN, DATE AND RETURN
YOUR PROXY CARD AS PROMPTLY AS POSSIBLE, WHETHER OR NOT YOU EXPECT TO ATTEND THE
SPECIAL MEETING. If you are unable to attend in person and you return your proxy
card, your shares will be voted at the special meeting. A return envelope is
included for your convenience. If your shares are held in "street name" by your
broker or other nominee, only that holder can vote your shares. You should
follow the directions provided by your broker or nominee regarding how to
instruct them to vote your shares.
By Order of the Board of Directors
Julius Lewis
Secretary
Des Plaines, Illinois
, 1999
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THE INFORMATION CONTAINED IN THIS PROSPECTUS IS NOT COMPLETE AND MAY BE AMENDED.
THESE SECURITIES MAY NOT BE SOLD UNTIL THE RELATED REGISTRATION STATEMENT FILED
WITH THE SECURITIES AND EXCHANGE COMMISSION OR ANY APPLICABLE STATE SECURITIES
COMMISSION BECOMES EFFECTIVE. THIS PROSPECTUS IS NOT AN OFFER TO SELL NOR IS IT
SEEKING AN OFFER TO BUY THESE SECURITIES IN ANY STATE WHERE THE OFFER OR SALE IS
NOT PERMITTED.
SUBJECT TO COMPLETION, DATED APRIL , 1999
JUNO LIGHTING, INC.
1300 SOUTH WOLF ROAD
P.O. BOX 5065
DES PLAINES, ILLINOIS 60017-5065
(847) 827-9880
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PROXY STATEMENT/PROSPECTUS
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SPECIAL MEETING OF STOCKHOLDERS
You are being sent this proxy statement/prospectus in connection with the
solicitation of proxies by and on behalf of Juno's Board of Directors for use at
a special meeting of stockholders and at any adjournments or postponements
thereof. The special meeting will be held on , June , 1999, at
:00 p.m., central time, at Juno's headquarters at 1300 South Wolf Road, Des
Plaines, Illinois 60017-5065.
At the special meeting you will be asked to consider and vote upon: (1) an
Agreement and Plan of Recapitalization and Merger, dated as of March 26, 1999,
by and among Juno, Fremont Investors I, LLC and Jupiter Acquisition Corp., and
the transactions contemplated by such merger agreement, including (a) the merger
of Jupiter, a wholly-owned subsidiary of Fremont Investors, with and into Juno,
with Juno being the surviving corporation, and (b) the purchase by Fremont
Investors of $106 million of a new series of convertible preferred stock of
Juno; (2) an amended and restated certificate of incorporation of Juno; (3) the
Juno 1999 Stock Award and Incentive Plan; and (4) such other matters as may
properly come before the special meeting or any adjournment or postponement
thereof. Because each of proposals 1, 2 and 3 arise out of the proposed
transaction with Fremont Investors, approval of each of these proposals is
contingent upon approval of the other proposals. If any of these proposals is
not approved by our stockholders, none of the proposals will be implemented and
the merger will not be consummated.
Juno common stock trades on the Nasdaq National Market under the symbol
"JUNO." The last reported sales price for Juno common stock on April 9, 1999 was
$21 15/16.
This document also serves as the prospectus of Juno, and has been filed
with the Commission as part of a Registration Statement on Form S-4 which
registers the shares of Juno common stock that will be outstanding following the
merger. This proxy statement/prospectus provides you with detailed information
about the special meeting, the merger and related matters and we urge you to
read it carefully. In addition, you may obtain information about Juno from
documents that it has filed with the Commission. See "Where You Can Find More
Information" and "Incorporation of Documents by Reference."
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PLEASE READ THE INFORMATION SET FORTH UNDER "RISK FACTORS" BEGINNING ON
PAGE 13 OF THIS PROXY STATEMENT/PROSPECTUS.
NEITHER THE COMMISSION NOR ANY STATE SECURITIES COMMISSION HAS APPROVED OR
DISAPPROVED OF THIS TRANSACTION OR THESE SECURITIES, PASSED UPON THE FAIRNESS OR
MERITS OF THIS TRANSACTION, OR PASSED UPON THE ADEQUACY OR ACCURACY OF THIS
PROXY STATEMENT/PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS UNLAWFUL.
------------------------
This proxy statement/prospectus is dated , 1999
and is first being mailed to stockholders of Juno on or about ,
1999.
<PAGE> 6
THIS PROXY STATEMENT/PROSPECTUS INCORPORATES IMPORTANT BUSINESS AND
FINANCIAL INFORMATION ABOUT JUNO THAT IS NOT INCLUDED OR DELIVERED WITH THIS
DOCUMENT. SUCH INFORMATION IS AVAILABLE WITHOUT CHARGE TO JUNO STOCKHOLDERS UPON
WRITTEN OR ORAL REQUEST. IF YOU WOULD LIKE TO GET COPIES OF THE DOCUMENTS WE
REFER YOU TO, PLEASE CONTACT:
JUNO LIGHTING, INC. INVESTOR RELATIONS
1300 SOUTH WOLF ROAD
DES PLAINES, ILLINOIS 60017-5065
TELEPHONE: (847) 827-9880
TO OBTAIN TIMELY DELIVERY OF THE REQUESTED DOCUMENTS PRIOR TO THE SPECIAL
MEETING, YOU MUST REQUEST THEM NO LATER THAN , 1999, WHICH IS FIVE
BUSINESS DAYS PRIOR TO THE DATE OF THE SPECIAL MEETING.
IF YOU ARE IN A JURISDICTION WHERE IT IS UNLAWFUL TO OFFER TO EXCHANGE OR
SELL, OR TO ASK FOR OFFERS TO EXCHANGE OR BUY, THE SECURITIES OFFERED BY THIS
PROXY STATEMENT/PROSPECTUS OR TO ASK FOR PROXIES, OR IF YOU ARE A PERSON TO WHOM
IT IS UNLAWFUL TO DIRECT SUCH ACTIVITIES, THEN THE OFFER PRESENTED BY THIS PROXY
STATEMENT/PROSPECTUS DOES NOT EXTEND TO YOU.
A WARNING ABOUT FORWARD-LOOKING STATEMENTS
Juno makes forward-looking statements in this document and in the Juno
public documents to which we refer you. These forward-looking statements are
subject to risks and uncertainties, and there can be no assurance that such
statements will prove to be correct. Forward-looking statements include some of
the statements set forth under "Summary -- Selected Unaudited Pro Forma
Condensed Consolidated Financial Data," "Risk Factors -- Our Company Will Be
Substantially Leveraged and Will Have Decreased Liquidity after the Merger,"
"-- There may be a Loss of Liquidity and Increased Volatility in the Trading of
Juno Common Stock after the Merger," "The Recapitalization and Merger -- Reasons
for the Recapitalization and Merger; Recommendation of the Board of Directors,"
"-- Opinion of Financial Advisor," "-- Certain Estimates of Future Operations
and Other Information," "-- Financing of the Recapitalization and Merger,"
"-- Certain Effects of the Recapitalization and Merger" and "Unaudited Pro Forma
Consolidated Financial Information." In addition, in some cases, you can
identify forward-looking statements by terminology such as "may," "will,"
"should," "plans," "believes," "anticipates," "expects" and "intends," or the
negative of such terms, and similar terminology. Such statements are subject to
certain risks and uncertainties that could cause actual results to differ
materially from those projected. You should consider these risks when you vote
on the merger and the other proposals and are cautioned not to place undue
reliance on these forward-looking statements, which speak only as of the date
hereof. We are not obligated to publicly release the results of any revisions to
these forward-looking statements that may be made to reflect events or
circumstances after the date hereof or to reflect the occurrence of anticipated
events. You should read the information herein in conjunction with the risk
factors and other information contained in this proxy statement/prospectus and
in the public documents to which we referred you.
<PAGE> 7
TABLE OF CONTENTS
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QUESTIONS AND ANSWERS ABOUT THE RECAPITALIZATION AND
MERGER.................................................... 1
DIAGRAM OF THE STRUCTURE OF THE RECAPITALIZATION AND
MERGER.................................................... 3
SUMMARY..................................................... 4
Parties to the Merger Agreement........................... 4
The Juno Stockholders' Meeting............................ 5
The Recapitalization and Merger........................... 6
The Amended and Restated Certificate of Incorporation..... 10
The 1999 Stock Award and Incentive Plan................... 10
Selected Historical Condensed Financial Data.............. 11
Selected Unaudited Pro Forma Condensed Financial Data..... 12
RISK FACTORS................................................ 13
We will be Controlled by Fremont Investors after the
Merger................................................. 13
We will be Substantially Leveraged and will have Decreased
Liquidity after the Merger............................. 13
There may be a Loss of Liquidity and Increased Volatility
in the Trading of Juno Common Stock after the Merger... 14
The Preferred Stock issued to Fremont Investors may
Adversely Affect Common Stockholders................... 15
Potential Dilution of Juno Stockholders May Occur......... 15
We do not Expect to Pay Dividends after the Merger........ 15
The Recapitalization and Merger raise Fraudulent
Conveyance Risks....................................... 15
Certain Proration Risks May Result........................ 16
THE JUNO SPECIAL MEETING.................................... 16
Matters to be Considered.................................. 16
Record Date............................................... 17
Voting at the Special Meeting............................. 17
Quorum Requirement..................................... 17
Voting Rights.......................................... 17
Vote Required.......................................... 17
Abstention and Broker Non-Votes........................ 17
Proxies................................................... 18
Information Concerning the Solicitation of Proxies........ 18
Form of Election.......................................... 19
Recommendation of the Juno Board.......................... 19
THE RECAPITALIZATION AND MERGER............................. 19
Background of the Recapitalization and Merger............. 19
Reasons for the Recapitalization and Merger;
Recommendation of the Board of Directors............... 23
Opinion of Financial Advisor.............................. 25
Certain Estimates of Future Operations and Other
Information............................................ 29
Engagement of Financial Advisors.......................... 30
Merger Consideration...................................... 30
The Sale of Preferred Stock to Fremont Investors.......... 32
Management Services Agreement............................. 32
Financing of the Recapitalization and Merger.............. 33
Effective Time of the Merger.............................. 36
Conversion/Retention of Shares; Procedures for Exchange of
Stock Certificates..................................... 36
Fractional Shares......................................... 37
Certain Federal Income Tax Consequences................... 37
Interests of Certain Persons in the Merger................ 40
Directors of Juno after the Merger........................ 41
Certain Effects of the Recapitalization and Merger........ 42
Governmental and Regulatory Approvals..................... 43
Accounting Treatment...................................... 43
Resale of Retained Common Stock following the Merger...... 43
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CERTAIN PROVISIONS OF THE MERGER AGREEMENT................................................................... 43
The Merger................................................................................................. 43
Closing of the Merger...................................................................................... 44
Effective Time of the Merger............................................................................... 44
Surviving Corporation...................................................................................... 44
Representations and Warranties............................................................................. 44
Certain Covenants.......................................................................................... 45
No Solicitation............................................................................................ 46
Employee Benefits.......................................................................................... 47
Conditions to Consummation of the Merger................................................................... 48
Termination................................................................................................ 48
Termination Fees and Expenses.............................................................................. 49
Transaction Fees........................................................................................... 50
Amendment and Waiver....................................................................................... 50
APPROVAL OF AMENDED AND RESTATED CERTIFICATE OF INCORPORATION................................................ 51
APPROVAL OF THE JUNO 1999 STOCK AWARD AND INCENTIVE PLAN..................................................... 55
STOCK PRICE AND DIVIDEND INFORMATION......................................................................... 60
INFORMATION CONCERNING THE COMPANIES......................................................................... 60
Juno....................................................................................................... 60
Fremont Investors and Fremont Partners..................................................................... 61
Jupiter.................................................................................................... 61
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT............................................... 62
Principal Stockholders..................................................................................... 62
Directors' and Executive Officers' Stock Ownership......................................................... 63
EXECUTIVE COMPENSATION....................................................................................... 64
UNAUDITED PRO FORMA CONSOLIDATED FINANCIAL INFORMATION....................................................... 66
DESCRIPTION OF JUNO CAPITAL STOCK FOLLOWING THE MERGER....................................................... 73
Authorized Capital Stock................................................................................... 73
Common Stock............................................................................................... 73
Preferred Stock............................................................................................ 73
Preemptive Rights.......................................................................................... 73
Anti-Takeover Statute...................................................................................... 74
COMPARISON OF THE RIGHTS OF JUNO STOCKHOLDERS BEFORE AND AFTER THE MERGER.................................... 74
CERTAIN PENDING LITIGATION................................................................................... 75
APPRAISAL RIGHTS OF DISSENTING STOCKHOLDERS.................................................................. 75
LEGAL MATTERS................................................................................................ 77
INDEPENDENT AUDITORS......................................................................................... 77
WHERE YOU CAN FIND MORE INFORMATION.......................................................................... 77
INCORPORATION OF DOCUMENTS BY REFERENCE...................................................................... 78
STOCKHOLDER PROPOSALS........................................................................................ 78
OTHER MATTERS................................................................................................ 79
Annex A -- Agreement and Plan of Recapitalization and Merger
Annex B -- Opinion of William Blair & Company, LLC
Annex C -- Amended and Restated Certificate of Incorporation of Juno Lighting, Inc.
Annex D -- Juno Lighting, Inc. 1999 Stock Award and Incentive Plan
Annex E -- Section 262 of the Delaware General Corporation Law
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QUESTIONS AND ANSWERS ABOUT THE RECAPITALIZATION AND MERGER
THE MERGER AND THE MERGER CONSIDERATION
Q: Why is Juno proposing the recapitalization and merger?
A: The Board of Directors of Juno believes that the recapitalization and merger
are in the best interests of Juno stockholders in light of the value to be
paid to the stockholders in the recapitalization and merger, and in light of
the substantial efforts which have been made by Juno to explore potential
strategic alternatives.
Q: What will I receive for each of my shares of Juno common stock?
A: Subject to proration as described below, you will have the right to elect
with respect to each share of Juno common stock you own either to receive
$25 in cash or to retain one share of common stock of Juno, the surviving
corporation in the merger.
Q: Is there any limit on the number of Juno shares that may be retained?
A: Yes. Exactly 2,400,000 shares of common stock, which constitute
approximately 12.9% of the shares outstanding prior to the merger, will be
retained by existing Juno stockholders in the merger. These retained shares
will represent approximately 39.5% of the fully-diluted common stock of the
surviving corporation immediately after the merger.
Q: What will happen if too few people elect to retain Juno shares?
A: If Juno stockholders elect to retain, in the aggregate, less than 2,400,000
shares, then the amount of shares equal to the difference between 2,400,000
and the number of shares elected to be retained will be allocated pro rata
among stockholders based upon the number of non-electing shares.
Q: What will happen if too many people elect to retain Juno shares?
A: If Juno stockholders elect to retain, in the aggregate, more than 2,400,000
shares, then the 2,400,000 shares will be allocated pro rata among the Juno
stockholders who have elected to retain shares based on the number of shares
each stockholder has elected to retain.
Q: Do I have dissenters' rights in connection with the merger?
A: Yes. If you do not vote in favor of the merger and follow other required
procedures under Delaware law, you will receive neither the $25 per share
cash price nor retain your Juno shares in the merger. Instead, your only
right will be to receive the appraised fair value of your Juno shares in
cash.
INFORMATION REGARDING THE RECAPITALIZATION AND MERGER AND ITS EFFECTS ON JUNO
Q: When do you expect the merger to be completed?
A: We are working toward completing the merger as quickly as possible after the
Juno special meeting. We anticipate that the merger will be completed during
our fiscal quarter ending August 31, 1999.
Q: What percentage of Juno will Fremont Investors own after the merger?
A: In connection with the merger, Fremont Investors will purchase a new series
of convertible preferred stock of Juno with an initial stated value of $106
million, which, on an as-converted basis, will initially represent
approximately 60.5% of the fully-diluted common stock of Juno. Dividends
payable on the preferred stock in the form of increases to the stated value
of the preferred stock during the first five years following the merger
will, on an as-converted basis, result in an increase in Fremont's
fully-diluted ownership percentage.
Q: Who will be on the Juno Board of Directors immediately after the merger?
A: We expect that Juno's Board will consist of Robert Jaunich II and Mark
Williamson, the current directors of Jupiter. In addition to these two
outside directors, Fremont intends to nominate and
1
<PAGE> 10
appoint, as soon as practicable after the effective time of the merger, a
representative of management and additional outside directors unaffiliated with
Fremont to serve on the Juno Board of Directors.
Q: Are there risks associated with retaining Juno common stock after the
recapitalization and merger which are different from the risks of owning
Juno stock prior to the merger?
A: Yes. Following the merger, Juno will be substantially leveraged, will have a
different capital structure, and will have a controlling stockholder. In
addition, the Juno common stock will have reduced trading liquidity. For
more information on these and other risks, see "Risk Factors."
Q: What are the tax consequences of the merger?
A: The merger will be a taxable transaction with respect to any cash received.
Under certain circumstances described below, tax may be imposed on all of
the cash received even if it exceeds the gain inherent in the shares
exchanged for cash. The merger will be tax free to stockholders who do not
receive cash in such transactions. Those Juno stockholders who receive some
cash and retain some stock in the merger may in some cases have ordinary
income rather than capital gain with respect to the cash received. To review
the tax consequences to Juno stockholders in greater detail, see "The
Recapitalization and Merger -- Certain Federal Income Tax Consequences."
Q: Will Juno shares continue to be listed on the Nasdaq National Market
following the merger?
A: We expect that Juno common stock will continue to be publicly traded on
Nasdaq following the merger, but we cannot guarantee that Juno common stock
will be listed on Nasdaq or publicly traded indefinitely. The public float
of Juno shares will be significantly reduced from current levels because
87.1% of the currently outstanding Juno shares will not be outstanding after
the merger.
HOW TO VOTE YOUR SHARES AND ELECT THE FORM OF MERGER CONSIDERATION TO BE
RECEIVED
Q: Is there anything I need to do now?
A: After carefully reading and considering the information contained in this
document, please fill out and sign your proxy card. Then mail your
completed, signed and dated proxy card in the enclosed return envelope as
soon as possible so that your shares can be voted at the Juno special
meeting. Include with your proxy card a completed form of election, where
you should indicate whether you elect to receive cash or retain shares of
common stock of Juno.
Q: If my shares are held in "street name" by my broker, will my broker vote my
shares for me?
A: Your broker will not be able to vote your shares on the merger proposal
without instructions from you. You should follow the directions provided by
your broker to vote your shares.
Q: How do I change my vote or election to retain shares after I have mailed my
signed proxy card and form of election?
A: You may change your vote by sending a written notice stating that you would
like to revoke your proxy or by completing and submitting a new, later dated
proxy card to the Corporate Secretary of Juno. You also can attend the Juno
special meeting and vote in person. You may change your election by sending
a written notice stating that you would like to revoke your election or by
completing and submitting a new, later dated form of election to the
Corporate Secretary of Juno.
Q: Should I send in my stock certificates now?
A: No. After the merger is completed, Juno stockholders will receive written
instructions for exchanging their Juno stock certificates for cash and/or
for Juno stock certificates.
Q: Who can help answer my questions?
A: If you have more questions about the merger, you should contact:
[Proxy Solicitor]
Address
Phone
Fax
2
<PAGE> 11
DIAGRAM OF THE STRUCTURE OF THE RECAPITALIZATION AND MERGER
DIAGRAM
FREMONT INVESTORS I, LLC
1,600,000 SHARES OF
CONVERTIBLE PREFERRED
STOCK (INITIALLY
REPRESENTING, ON AN
AS-CONVERTED BASIS,
60.5% FULLY-DILUTED
OWNERSHIP)
PUBLIC STOCKHOLDERS
(EACH HOLDER MAY ELECT, WITH RESPECT TO
EACH SHARE, TO RETAIN SUCH SHARE OR TO
RECEIVE $25, SUBJECT TO PRORATION)
2,400,000
SHARES OF
COMMON
STOCK (INITIALLY
REPRESENTING
39.5% FULLY-
DILUTED
OWNERSHIP)
AND $405 MILLION
IN CASH
$106 MILLION
JUPITER ACQUISITION CORP.
MERGE
JUNO LIGHTING, INC.
$125 MILLION
$94.9 MILLION*
SENIOR
SUBORDINATED
NOTE HOLDERS
SENIOR
SECURED LENDERS
- -------------------------
* Based on $102.6 million of available cash of Juno as of February 28, 1999.
3
<PAGE> 12
SUMMARY
This Summary, together with the "Questions and Answers About the
Recapitalization and Merger" and the "Diagram of the Structure of the
Recapitalization and Merger" on the preceding pages, highlights important
selected information from this proxy statement/prospectus and may not contain
all of the information that is important to you. To understand fully the
recapitalization and merger and for a more complete description of the legal
terms of the recapitalization and merger, you should read carefully this entire
document and the other documents to which we have referred you. For more
information about Juno, see "Where You Can Find More Information (page 76)." We
have included page references parenthetically to direct you to more complete
descriptions of the topics presented in this summary.
PARTIES TO THE MERGER AGREEMENT
Juno Lighting, Inc
(see page 60)............... Juno is a specialist in the design, manufacture
and marketing of a full line of recessed and
track lighting fixtures for use in remodeling
and new construction of commercial,
institutional and residential buildings. Juno's
principal products use incandescent, high
intensity discharge and fluorescent light
sources and are designed for attractive
appearance, reliable and flexible function,
efficient operation and simple installation and
servicing.
Juno was incorporated in Delaware in 1983 and
its principal offices and corporate
headquarters are located at 1300 South Wolf
Road, Des Plaines, Illinois 60017-5065,
telephone: (847) 827-9880.
Fremont Investors I, LLC (see
page 61).................... Fremont Investors is a Delaware limited
liability company formed by Fremont Partners,
L.P. It is anticipated that, prior to the
purchase of Series A convertible preferred
stock of Juno, Fremont Investors will not have
any significant assets and liabilities and will
not engage in any activities other than those
incident to the recapitalization and merger and
the financing thereof.
Fremont Partners is a private equity fund
which, together with affiliated partnerships,
has committed capital of $605 million. Fremont
Partners is part of The Fremont Group, a
private investment company with approximately
$10 billion of assets under management.
References to Fremont Partners in this document
mean Fremont Partners, L.P. and affiliated
partnerships. We sometimes refer to Fremont
Investors and Fremont Partners as "Fremont" in
this document.
Fremont is not in any way affiliated with
Robert S. Fremont, the Chairman and Chief
Executive Officer of Juno.
Jupiter Acquisition Corp
(see page 61)............... Jupiter, a Delaware corporation, was organized
at the direction of Fremont Investors for the
purpose of effecting the merger. It has not
engaged in any activities except in connection
with the proposed recapitalization and merger.
Jupiter is wholly-owned by Fremont Investors.
The offices of Jupiter, Fremont Investors and
Fremont Partners are located at 50 Fremont
Street, Suite 3700, San Francisco, California
94105-1895, telephone: (415) 284-8500.
4
<PAGE> 13
THE JUNO STOCKHOLDERS' MEETING
Time, Date, and Place (see
page 16)...................... The special meeting will be held on June ,
1999, at :00 p.m., central time, at Juno's
headquarters at 1300 South Wolf Road, Des
Plaines, Illinois 60017-5065.
Matters to be Considered (see
page 16)...................... At the special meeting, stockholders will
consider and vote upon proposals to:
- approve the merger agreement and the
transactions contemplated thereby, including
(a) the merger of Jupiter, a wholly-owned
subsidiary of Fremont Investors, with and
into Juno, with Juno being the surviving
corporation, and (b) the purchase by Fremont
Investors of $106 million of a new series of
convertible preferred stock of Juno;
- adopt an amended and restated certificate of
incorporation of Juno;
- adopt the Juno Lighting, Inc. 1999 Stock
Award and Incentive Plan; and
- consider such other matters that may properly
come before the special meeting or any
adjournment or postponement thereof.
Record Date (see page 17)..... You may vote at the special meeting and any
postponements or adjournments thereof if you
were the record owner of Juno common stock at
the close of business on , 1999.
You will have one vote for each share of Juno
common stock you own.
Voting at the Special Meeting
(see page 17)................. The affirmative vote by the holders of a
majority of the outstanding Juno shares is
required to approve (a) the merger agreement
and the transactions contemplated thereby and
(b) the amended and restated certificate of
incorporation of Juno.
The affirmative vote by the holders of a
majority of the shares present, in person or by
properly executed proxy, at the special meeting
is required to approve the Juno Lighting, Inc.
1999 Stock Award and Incentive Plan.
Because each of the proposals being voted upon
by stockholders relate to the recapitalization
and merger, approval of each proposal is
contingent upon approval of the other
proposals. If any of these proposals is not
approved by stockholders, none of the proposals
will be implemented and the merger will not be
consummated.
Proxies (see page 18)......... All Juno shares which are represented at the
special meeting by properly executed proxies
received and not duly and timely revoked will
be voted at the special meeting in accordance
with the instructions contained therein. In the
absence of contrary
5
<PAGE> 14
instructions, such Juno shares will be voted
"FOR" the approval and adoption of each
proposal.
Shares held by Directors and
Executive Officers (see page
62)......................... On the record date, directors and executive
officers of Juno owned and had the right to
vote shares of Juno common stock
(approximately % of the shares of
Juno common stock then outstanding). We expect
that they will vote all of their shares in
favor of the approval of each proposal.
THE RECAPITALIZATION AND MERGER
General
(see page 30)............... The merger agreement is attached as Annex A to
this proxy statement/prospectus. We encourage
you to read the merger agreement carefully as
it is the legal document that governs the
merger.
If the merger is approved by Juno stockholders
and all other conditions to the merger are
satisfied or, where permissible, waived,
Jupiter will merge with and into Juno, with
Juno as the surviving corporation in the
merger.
Following the merger, Juno will continue to
operate in substantially the same manner as it
has in the past, except that we will be
substantially leveraged, will have a different
capital structure and will have a controlling
stockholder. Fremont Investors will own
convertible preferred stock initially
representing, on an as-converted basis,
approximately 60.5% of the fully-diluted common
stock of Juno and existing Juno stockholders
will own the remaining 39.5%. Dividends payable
on the preferred stock in the form of increases
to the stated value of the preferred stock
during the first five years following the
merger will, on an as converted basis, result
in an increase in Fremont's fully-diluted
ownership.
Effective Time of the Merger
(see page 36)............... We anticipate completing the merger as promptly
as practicable following approval of the merger
agreement by Juno stockholders at the special
meeting.
What You will Receive in the
Merger
(see page 30)............... For each share of Juno common stock owned
before the merger, a Juno stockholder who has
not exercised his or her dissenters' rights in
the merger will be entitled to elect, subject
to proration, to receive $25 in cash or to
retain one share of Juno common stock. Existing
Juno stockholders will retain a total of
2,400,000 shares of common stock in the merger.
Treatment of Stock Options
(see page 40)............... All outstanding options to purchase shares of
Juno common stock will be accelerated and fully
vested as a result of the merger. Each holder
of outstanding options will be free to continue
to hold such options or to exercise them in
accordance with their terms after the merger.
6
<PAGE> 15
Issuance of Convertible
Preferred Stock to Fremont
(see page 32)............... The merger agreement also provides for the
simultaneous purchase by Fremont Investors of
1,060,000 shares of a new series of convertible
preferred stock of Juno at a price of $100.00
per share, or an aggregate initial stated
amount of $106,000,000.
- The preferred stock will generally have the
right to receive the greater of cumulative 2%
quarterly dividends and the amount payable
with respect to the common stock in such
quarter. These quarterly dividends will be
payable by an increase in the stated amount
of the preferred stock for the first five
years following issuance and will become
payable in cash thereafter.
- The preferred stock will be convertible into
a number of shares of common stock derived by
dividing the stated amount by the conversion
price of $26.25 per share.
- The preferred stock has voting rights on all
matters submitted to a vote of Juno
stockholders equal to the number of shares of
common stock into which it is convertible.
- At any time beginning on the ninth
anniversary of the effective time of the
merger, Juno may elect to redeem the
preferred stock at a price equal to the then
stated amount plus any accrued but unpaid
dividends.
Management Services Agreement
and Transaction Fee
(see pages 32).............. Juno and Fremont Partners, L.L.C., an affiliate
of Fremont Partners, will enter into a
Management Services Agreement at the effective
time of the merger pursuant to which Fremont
Partners, L.L.C. will render certain management
services in connection with Juno's business
operations, including strategic planning,
finance, tax and accounting services. Juno will
pay Fremont Partners, L.L.C. an annual fee of
$325,000 to render such services. In addition,
at the effective time of the merger, Juno will
pay Fremont Partners, LLC a transaction fee of
$4.54 million.
Recommendation of Board of
Directors (see page 23)....... Your Board of Directors believes the merger
agreement and the transactions contemplated
thereby are in the best interests of Juno
stockholders in light of the value to be paid
to Juno stockholders in the merger.
ACCORDINGLY, THE BOARD OF DIRECTORS UNANIMOUSLY
RECOMMENDS THAT YOU VOTE "FOR" THE APPROVAL AND
ADOPTION OF THE MERGER AGREEMENT AND THE
TRANSACTIONS CONTEMPLATED THEREBY, INCLUDING
THE MERGER AND THE PURCHASE OF THE CONVERTIBLE
PREFERRED STOCK BY FREMONT.
Opinion of Financial Advisor
(see page 25)............... In deciding to approve the merger, your Board
of Directors considered the opinion delivered
to it by William Blair & Company, L.L.C
("Blair") that, as of the date of the opinion,
and based upon and subject to the assumptions,
limitations and qualifications set forth in the
opinion, the consideration to be received by
the holders of Juno common stock pursuant to
the merger was fair from a financial point of
view to such holders.
7
<PAGE> 16
We have attached as Annex B the written opinion
of Blair dated March 26, 1999. You should read
that document carefully to understand the
assumptions made, matters considered and
limitations of the review undertaken by Blair
in providing their opinion.
Interests of Certain Persons
in the Merger That Are
Different from Yours (see
page 40).................... Certain members of Juno's management and of the
Board of Directors will receive economic
benefits as a result of the merger, including
accelerated vesting of stock options,
maintenance of directors' and officers'
insurance coverage and employee benefits by
Juno for specified periods of time following
the merger, indemnification rights, benefits
under Change of Control Benefits Agreements,
possible continued employment by Juno, possible
future grants of options under the 1999 Stock
Award and Incentive Plan and possible purchase
of shares of the convertible preferred stock of
Juno.
Financing of the
Recapitalization
and Merger (see page 33).... The total amount of funds required to
consummate the transactions contemplated by the
merger agreement and to pay all related fees
and expenses is approximately $428.5 million,
which, based on available cash of Juno as of
February 28, 1999, will be provided through a
combination of:
- approximately $106.0 million in proceeds from
the purchase of the convertible preferred
stock by Fremont Investors;
- borrowings by Juno of up to $94.9 million
under new senior secured credit facilities;
- proceeds of approximately $125.0 million from
Juno's offering of senior subordinated notes
in a private placement; and
- approximately $102.6 million of available
cash of Juno.
Conditions to the Merger
(see page 48)............... The merger is subject to a number of
conditions, including stockholder approval,
expiration of the antitrust waiting period and
receipt of the financing necessary to
consummate the transactions contemplated by the
merger agreement. Fremont Investors has agreed
to use its reasonable best efforts to cause
such funds to be obtained.
Unless prohibited by law, Juno, Fremont
Investors or Jupiter could elect to waive a
condition that has not been satisfied and
complete the merger anyway. We cannot be
certain whether or when any of these conditions
will be satisfied, or, where permissible,
waived, or that we will complete the merger.
Termination of the Merger
Agreement
(see page 48)............... The merger agreement will be subject to
termination at any time prior to the effective
time of the merger by the mutual consent of
Juno and Fremont Investors or by either Juno or
Fremont Investors if: (1) any governmental body
takes any action permanently prohibiting the
merger and such action has become final and
non-appealable; (2) the merger is not
consummated by September 30, 1999; or (3) the
merger agreement is not
8
<PAGE> 17
approved by the holders of at least a majority
of the outstanding Juno shares at the special
meeting.
The merger agreement also will be subject to
termination by either Fremont Investors or Juno
under the circumstances described herein. See
"Certain Provisions of the Merger
Agreement -- Termination." If the merger
agreement is terminated by Juno or Fremont
Investors under some of the circumstances
described herein, Juno will be obligated to pay
Fremont Investors a termination fee of $12
million and transaction expenses of up to $3
million. See "Certain Provisions of the Merger
Agreement -- Termination Fees and Expenses."
Appraisal Rights
(see page 75)............... Delaware law permits holders of Juno common
stock to dissent from the merger and to have
the fair value of their stock appraised and
paid to them in cash. If you hold shares of
Juno common stock, do not vote in favor of the
merger and follow the required procedures, you
will receive neither the $25 per share cash
price nor retain shares of stock of the
surviving corporation. Instead, your only right
will be to receive the appraised fair value of
your Juno shares in cash.
Certain Federal Income Tax
Consequences (see page
37)......................... The merger is intended to be tax-free to you to
the extent that you exchange your shares of
Juno common stock for Juno common stock, and
taxable to you to the extent you exchange your
shares of Juno common stock for cash. The Juno
shares exchanged for cash will be deemed for
federal income tax purposes to be sold to Juno.
A Juno stockholder will recognize capital gain
or loss based upon the difference between the
cash received and the stockholder's basis in
the shares exchanged, unless the cash received
in exchange for such stock is considered to be
substantially equivalent to a dividend. We are
not going to receive any opinion or any ruling
from the IRS concerning the tax treatment of
the merger.
Tax matters can be complicated and the tax
consequences of the merger to you will depend
on the facts of your own situation. You should
consult your own tax advisors to understand
fully the tax consequences of the merger to
you.
Regulatory Approvals
(see page 43)............... The Hart-Scott-Rodino Antitrust Improvements
Act of 1976 prohibits Juno, Fremont Investors,
and Jupiter from completing the merger until
they have furnished certain information and
materials to the Antitrust Division of the
Department of Justice and the Federal Trade
Commission and the required waiting period has
expired. In addition, certain aspects of the
merger may require notification to, and filings
with, certain federal, state and foreign
governmental authorities.
Accounting Treatment
(see page 43)............... We expect the merger to be accounted for as a
recapitalization under generally accepted
accounting principles. Accordingly, the
historical basis of Juno's assets and
liabilities will not be impacted by the
transaction.
9
<PAGE> 18
Stockholder Rights Agreement
(see page 75)............... The Juno Board of Directors has exempted
Jupiter, Fremont Investors and their respective
affiliates and associates from triggering the
rights of stockholders under Juno's stockholder
rights agreement as a result of the merger and
the purchase of the convertible preferred stock
by Fremont Investors. In addition, the Juno
Board of Directors amended the rights agreement
to provide that the rights agreement will
terminate at the effective time of the merger.
Because of these facts, stockholders will have
no right to acquire stock under the rights
agreement either by virtue of the merger or
following the merger.
Market Price of Juno shares
(see page 60)............... The Juno shares are quoted and traded on the
Nasdaq National Market under the symbol "JUNO."
On March 26, 1999, the last trading day before
the public announcement of the merger
agreement, the high and low sale prices of the
Juno shares on Nasdaq were $20.75 and $20.00
per share, respectively. On April 9, 1999, the
last full trading day prior to the date of this
proxy statement/prospectus, the high and low
sale prices of Juno shares on Nasdaq were
$21.75 and $22.25 per share, respectively.
Stockholders are urged to obtain current market
quotations for the Juno shares prior to making
any decision with respect to the merger.
THE AMENDED AND RESTATED CERTIFICATE OF INCORPORATION
Purpose and Background
(see page 51)............... The certificate of incorporation of Juno is
being amended and restated to effect certain
changes in connection with the recapitalization
and merger, including the authorization of five
million shares of "blank check" preferred stock
and the designation of 1,060,000 of such shares
as a new series of convertible preferred stock.
Recommendation of the Board of
Directors................... THE JUNO BOARD OF DIRECTORS UNANIMOUSLY
RECOMMENDS THAT YOU VOTE "FOR" APPROVAL AND
ADOPTION OF THE AMENDED AND RESTATED
CERTIFICATE OF INCORPORATION.
THE 1999 STOCK AWARD AND INCENTIVE PLAN
Purpose and Background
(see page 55)............... The 1999 Stock Award and Incentive Plan
provides for the grant of stock options, stock
appreciation rights, limited stock appreciation
rights, restricted stock and other equity-based
incentive awards to eligible directors,
employees and independent contractors of Juno.
Up to 940,000 shares of Juno common stock may
be issued pursuant to awards granted under the
1999 Stock Award and Incentive Plan. We do not
anticipate that any grants will be made under
any other stock option plan of Juno after the
merger.
Recommendation of the Board of
Directors................... THE JUNO BOARD OF DIRECTORS UNANIMOUSLY
RECOMMENDS THAT YOU VOTE "FOR" APPROVAL AND
ADOPTION OF THE 1999 STOCK AWARD AND INCENTIVE
PLAN.
10
<PAGE> 19
SELECTED HISTORICAL CONDENSED FINANCIAL DATA
The following table sets forth selected historical condensed consolidated
financial data of Juno. The selected historical condensed consolidated financial
data for the three fiscal years ended November 30, 1998, 1997 and 1996 and for
the three months ended February 28, 1999 and 1998 are derived from the
historical consolidated financial statements of Juno and related notes thereto,
which are incorporated by reference in this document. The selected historical
condensed consolidated financial data for the two fiscal years ended November
30, 1995 and 1994 are derived from the historical consolidated financial
statements of Juno, which are not incorporated by reference in this document.
The selected historical condensed financial data of Juno for the three months
ended February 28, 1999 and 1998 are unaudited, but in the opinion of
management, reflect all adjustments necessary for a fair presentation of such
data. Operating results for the three months ended February 28, 1999 do not
necessarily show what the results for a full year will be. See "Where You Can
Find More Information" on page 77.
<TABLE>
<CAPTION>
THREE MONTHS ENDED
FEBRUARY 28, YEAR ENDED NOVEMBER 30,
------------------- ----------------------------------------------------
1999 1998 1998 1997 1996 1995 1994
---- ---- ---- ---- ---- ---- ----
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<S> <C> <C> <C> <C> <C> <C> <C>
CONSOLIDATED STATEMENT OF
OPERATIONS DATA:
Net Sales...................... $ 37,277 $ 34,386 $160,941 $139,855 $131,479 $126,364 $126,777
Gross Profit................... 18,723 16,770 81,059 67,974 63,160 61,279 65,549
Net Income..................... 6,009 4,766 26,625 20,303 19,897 19,974 22,907
Net Income Per Common Share
Basic........................ .32 .26 1.43 1.10 1.08 1.08 1.24
Diluted...................... .32 .26 1.43 1.10 1.08 1.08 1.23
Percent of Net Income to Net
Sales........................ 16.1% 13.9% 16.5% 14.5% 15.1% 15.8% 18.1%
CONSOLIDATED BALANCE SHEET
DATA:
Working Capital................ $129,372 $113,285 $133,409 $110,876 $104,465 $102,294 $ 89,451
Total Assets................... 213,097 191,345 208,839 187,389 178,181 160,089 145,756
Long-Term Debt................. 3,225 3,356 3,265 3,385 4,433 5,976 6,404
Stockholders' Equity........... 195,465 173,944 191,448 170,630 155,661 141,368 126,748
Stockholders' Equity per Common
Share........................ 10.51 9.37 10.30 9.19 8.41 7.66 6.87
OTHER DATA:
Current Ratio.................. 11.0 : 1 10.3 : 1 11.5 : 1 10.5 : 1 7.5 : 1 10.6 : 1 9.5 : 1
EBITDA(1)...................... $ 8,959 $ 7,240 $ 40,654 $ 30,857 $ 29,468 $ 30,430 $ 36,865
Cash Dividends per Common
Share........................ .10 .09 .36 .32 .32 .30 .26
</TABLE>
- -------------------------
(1) EBITDA represents earnings before (a) taxes on income, (b) interest expense,
(c) interest, dividend, and other miscellaneous income, and (d) depreciation
and amortization. EBITDA data are included because management understands
that such information is considered by certain investors as an additional
basis on which to evaluate Juno's ability to pay interest, repay debt and
make capital expenditures. Because all companies do not calculate EBITDA
identically, the presentation of EBITDA herein is not necessarily comparable
to similarly entitled measures of other companies. EBITDA is not intended to
represent and should not be considered more meaningful than, or an
alternative to, measures of operating performance as determined in
accordance with generally accepted accounting principles.
11
<PAGE> 20
SELECTED UNAUDITED PRO FORMA CONDENSED FINANCIAL DATA
The following table sets forth selected pro forma condensed consolidated
financial data of Juno that has been derived by making pro forma adjustments to
Juno's historical consolidated financial statements incorporated by reference
herein. The pro forma condensed consolidated statements of income for the
periods presented give effect to the merger and related transactions as if such
transactions were consummated as of December 1, 1997. The pro forma condensed
consolidated balance sheet data gives effect to the merger and related
transactions as if such transactions had occurred as of February 28, 1999. The
adjustments are described in the notes accompanying the pro forma financial
statements found on page 67. The selected pro forma condensed consolidated
financial data should not be considered indicative of actual results that would
have been achieved had the merger and related transactions been consummated on
the date or for the periods indicated and do not purport to be indicative of
balance sheet data or results of operations as of any future date or for any
future period. This data should be read in conjunction with Juno's historical
financial statements and the notes thereto which are incorporated herein by
reference. See "Where You Can Find More Information" on page 77.
<TABLE>
<CAPTION>
TWELVE MONTHS ENDED THREE MONTHS ENDED YEAR ENDED
FEBRUARY 28, 1999 FEBRUARY 28, 1999 NOVEMBER 30, 1998
------------------- ------------------ -----------------
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<S> <C> <C> <C>
CONSOLIDATED STATEMENT OF OPERATIONS DATA:
Net Sales................................... $ 163,832 $ 37,277 $160,941
Gross Profit................................ 83,012 18,723 $ 81,059
Net Income.................................. 9,690 1,455 $ 8,611
Net Income (Loss) Attributable to Common
Stockholders.............................. 951 (840) (128)
PER SHARE DATA:
Net Income (Loss) Attributable to Common
Stockholders
Basic..................................... $ .40 $ (0.35) $ (0.05)
Diluted(1)................................ $ .38 $ (0.35) $ (0.05)
CONSOLIDATED BALANCE SHEET DATA:
Working Capital............................. $ 42,352
Total Assets................................ $ 120,194
Long-Term Debt.............................. $ 216,446
Stockholders' Deficit....................... $(114,039)
Stockholders' Deficit per Common Share...... $ (47.50)
OTHER DATA:
Current Ratio............................... 3.51
EBITDA(2)................................... $ 42,048 $ 8,878 $ 40,329
</TABLE>
- -------------------------
(1) If the convertible preferred stock were converted, pro forma diluted net
income per share would have been $1.49, $.22, and $1.32 for the twelve
months ended February 28, 1999, the three months ended February 28, 1999 and
the year ended November 30, 1998, respectively. Such conversion is anti-
dilutive, and therefore, excluded from pro forma diluted net income per
share.
(2) EBITDA represents earnings before (a) taxes on income, (b) interest expense,
(c) interest, dividend, and other miscellaneous income, and (d) depreciation
and amortization. EBITDA data are included because management understands
that such information is considered by certain investors as an additional
basis on which to evaluate Juno's ability to pay interest, repay debt and
make capital expenditures. Because all companies do not calculate EBITDA
identically, the presentation of EBITDA herein is not necessarily comparable
to similarly entitled measures of other companies. EBITDA is not intended to
represent and should not be considered more meaningful than, or an
alternative to, measures of operating performance as determined in
accordance with generally accepted accounting principles.
12
<PAGE> 21
RISK FACTORS
You should carefully consider the following risk factors, together with the
other information contained in this proxy statement/prospectus, before
determining whether to vote to approve the merger and the transactions
contemplated thereby.
WE WILL BE CONTROLLED BY FREMONT INVESTORS AFTER THE MERGER
Fremont Investors will own a new series of convertible preferred stock
initially representing, on an as-converted basis, approximately 60.5% of the
fully-diluted common stock of Juno immediately after the merger. Fremont will
have significant voting power to control the direction and policies of Juno, the
election of all of the directors and the outcome of any matter requiring
stockholder approval, including adopting amendments to Juno's certificate of
incorporation and approving the merger or a sale of all or substantially all of
Juno's assets. The directors elected by Fremont will have the authority to
effect decisions affecting the appointment of new management and the capital
structure of Juno, including the issuance of additional capital stock, the
implementation of stock repurchase programs and the declaration of dividends, if
any.
In addition, the existence of a controlling stockholder of Juno may have
the effect of making it more difficult for a third party to acquire, or of
discouraging a third party from seeking to acquire, a majority of the
outstanding common stock. A third party would be required to negotiate any such
transaction with Fremont and Fremont's interests may be different from the
interests of other Juno stockholders.
WE WILL BE SUBSTANTIALLY LEVERAGED AND WILL HAVE DECREASED LIQUIDITY AFTER THE
MERGER
In connection with the recapitalization and merger and based on Juno's
available cash as of February 28, 1999, Juno expects to incur approximately
$219.9 million of indebtedness, consisting of $94.9 million of borrowings under
new senior secured credit facilities and $125.0 million of senior subordinated
notes of Juno. These funds will be used to fund payment of a portion of the
merger consideration and the fees and expenses associated with the merger. The
definitive terms of the senior secured credit facilities and the senior
subordinated notes have not been finalized. However, we expect that such terms
will include significant operating and financial restrictions, such as limits on
our ability to incur indebtedness, create liens, sell assets, engage in mergers
or consolidations, make investments and pay dividends. In addition, under the
senior credit facilities, we will be required to comply with certain financial
covenants. See "The Recapitalization and Merger--Financing of the
Recapitalization and Merger" on page 33.
As of February 28, 1999, after giving pro forma effect to the
recapitalization and merger and the merger financing and the application of the
net proceeds from the financing, Juno would have had approximately $234.2
million of total liabilities. This substantial leverage may have important
consequences for Juno, including the following:
- our ability to obtain additional financing for working capital, capital
expenditures or other purposes may be impaired or any such financing may
not be available on terms favorable to us;
- during certain periods, a substantial portion of our cash flow available
from operations will be dedicated to the payment of principal and
interest expense, thereby reducing the funds that would otherwise be
available to us for operations and future business opportunities;
- certain of our borrowings will be at variable rates of interest, which
could result in higher interest expense;
- a substantial decrease in net operating income and cash flows or an
increase in expenses may make it difficult for us to meet our debt
service requirements or force us to modify our operations; and
- our substantial leverage may make us more vulnerable to economic
downturns and competitive pressure.
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In addition, substantial leverage will have a negative effect on our net
income. Pro forma net income for the fiscal year ended November 30, 1998 and the
three months ended February 28, 1999 would have been $8.6 million and $1.5
million, respectively, as compared to $26.6 million and $6.0 million,
respectively for the same periods on a historical basis, and pro forma interest
expense for fiscal 1998 and the three months ended February 28, 1999 would have
increased to $22.4 million and $5.6 million, respectively.
After the merger is consummated, our principal source of liquidity is
expected to be cash flow from operations. Our ability to make scheduled payments
of the principal of, or to pay interest on, or to refinance our indebtedness and
to make scheduled payments under, our other obligations depends on our future
performance, which is subject to economic, financial, competitive and other
factors beyond our control. Based on the current level of operations and
anticipated growth, we believe that future cash flow from operations will be
adequate to meet our anticipated requirements for capital expenditures, working
capital, interest payments and scheduled principal payments. Our business may
not continue to generate sufficient cash flow from operations in the future to
service our debt and make necessary capital expenditures after satisfying
certain liabilities arising in the ordinary course of business. If unable to do
so, we may be required to refinance all or a portion of our debt, sell assets or
obtain additional financing, and we cannot be assured of being able to complete
such actions.
THERE MAY BE A LOSS OF LIQUIDITY AND INCREASED VOLATILITY IN THE TRADING OF JUNO
COMMON STOCK AFTER THE MERGER
ADVERSE EFFECTS OF REDUCED PUBLIC FLOAT. Following the cashout of 87.1% of
our common stock in the merger, there will be a substantial decrease in the
number of outstanding shares of our common stock. As a result, we expect that
the volume of shares of Juno traded following the merger will be substantially
smaller than the trading volume of Juno shares before the merger. This reduced
public float may result in a significant decrease in the liquidity of our common
stock and could cause the market price of shares of Juno common stock to be
subject to significant fluctuations.
NO GUARANTEE OF CONTINUED NASDAQ LISTING. While we expect Juno common stock
will continue to be publicly traded on Nasdaq after the merger, we cannot assure
you that Juno common stock will continue to be listed on Nasdaq indefinitely. If
Juno was delisted from Nasdaq, shares of Juno common stock may no longer be
publicly traded, and stockholders may experience difficulty selling shares of
Juno common stock or obtaining prices that reflect the value thereof. Pursuant
to the merger agreement, Fremont Investors has agreed that for at least three
years after the effective time of the merger, it will not take any action to
cause Juno common stock to be delisted from Nasdaq. However, Fremont may take
such action in connection with a transaction which results in the termination of
Juno's Exchange Act reporting obligations. Moreover, following the merger, the
total number of beneficial holders of Juno common stock may fall below the 400
beneficial holders required by Nasdaq or other applicable listing criteria may
not be met, although Juno expects that it will satisfy the applicable listing
criteria at the effective time of the merger.
NO GUARANTEE OF CONTINUED EXCHANGE ACT REPORTS. We expect to continue to be
a reporting company under the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), and to continue to file periodic reports, including annual and
quarterly reports and proxy statements, following the effective time of the
merger. However, we may cease to be a reporting company under the Exchange Act
if, for example, the number of holders of our common stock falls below 300. If
Juno were to cease to be a reporting company under the Exchange Act, the
information now available to holders of Juno common stock in the periodic
reports would not be available to them as a matter of right.
THE PREFERRED STOCK ISSUED TO FREMONT INVESTORS MAY ADVERSELY AFFECT COMMON
STOCKHOLDERS
The new series of convertible preferred stock issued to Fremont Investors
will generally pay quarterly dividends in an amount that is the greater of 2.0%
per quarter and the amount that is payable with respect to the common stock in
such quarter, payable by an increase in the stated amount of such stock for the
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first five years from the date of issuance, and thereafter only in cash.
Accordingly, if all of the shares of convertible preferred stock remain
outstanding for five years, the aggregate stated amount per share of such stock
will be approximately $148.59. The convertible preferred stock ranks senior to
the Juno common stock and its liquidation preference entitles the holders, upon
any liquidation of Juno (including any sale of all or substantially all of the
assets of Juno or any acquisition of Juno), to a distribution of Juno's assets
prior to any payment to any other equity holders of Juno, including the holders
of the shares of Juno common stock to be retained in connection with the merger.
The convertible preferred stock is convertible into Juno common stock at a
conversion price of $26.25 per share, subject to adjustments in the event of
stock splits, stock dividends, recapitalizations and the like. Furthermore, we
may not elect to redeem the convertible preferred stock before the ninth
anniversary of the effective time of the merger.
POTENTIAL DILUTION OF JUNO STOCKHOLDERS MAY OCCUR
Following the merger, we intend to grant members of management options to
purchase Juno common stock, the exercise of which would dilute the holdings of
Juno stockholders. Although no specific grants are contemplated at this time,
the 1999 Stock Award and Incentive Plan, if approved by stockholders at the
special meeting, would enable Juno to grant stock options and other equity-based
incentives with respect to 940,000 shares of Juno common stock, which represents
approximately 12% of the outstanding capital stock of Juno on a fully-diluted
basis immediately following the merger. There are currently outstanding options
to purchase 234,300 shares of Juno common stock under other stock option plans
of Juno. We do not anticipate that any grants will be made under other stock
option plans of Juno after the merger.
WE DO NOT EXPECT TO PAY DIVIDENDS AFTER THE MERGER
We do not expect that Juno will pay dividends to stockholders following the
merger. We anticipate that the agreements governing the terms of the
indebtedness will contain covenants limiting the amount of dividends that may be
paid by us. In addition, it is likely that we will use any retained earnings for
working capital and to finance our strategic plans, and not to pay dividends.
Except for the dividend payable on April 15, 1999 to Juno stockholders of record
as of March 15, 1999, we do not anticipate that dividends will be paid pending
completion of the merger.
THE RECAPITALIZATION AND MERGER RAISE FRAUDULENT CONVEYANCE RISKS
The incurrence by Juno of indebtedness, including indebtedness incurred in
connection with the recapitalization and merger, and the subsequent transfer of
a portion of the proceeds thereof to Juno's stockholders to pay the cash
consideration in the merger, is subject to review under relevant federal and
state fraudulent conveyance statutes in a bankruptcy, reorganization or
rehabilitation case or similar proceeding or in a lawsuit by or on behalf of
unpaid creditors of Juno. If a court were to determine that the payment of the
cash merger consideration to stockholders of Juno violated the U.S. Bankruptcy
Code and/or applicable state fraudulent conveyance laws, the bankruptcy trustee,
debtor in possession or unpaid creditors could void the payment of the cash
merger consideration and recover the cash merger consideration from Juno's
stockholders.
Such a finding could be made under these fraudulent conveyance statutes if
a court were to find that, at the time of the recapitalization and merger:
- Juno incurred the indebtedness and paid the cash merger consideration
with the intent of hindering, delaying or defrauding current or future
creditors; or
- Juno received less than reasonably equivalent value or fair consideration
in connection with the recapitalization and merger and Juno:
- was insolvent or was rendered insolvent by reason of the
recapitalization and merger, including the incurrence of the
indebtedness related thereto;
- was engaged in a business or transaction for which its assets
constituted unreasonably small capital; or
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degrees intended to incur, or believed that it would incur obligations
beyond its ability to pay as such obligations matured.
In the course of its deliberations concerning the merger agreement, the
Juno Board of Directors was advised of and considered the post-merger
capitalization of Juno. The Board also considered the requirement in the merger
agreement that, prior to the consummation of the merger, Juno and its Board of
Directors receive an opinion from an independent expert as to the solvency of
Juno after giving effect to the recapitalization and merger. Based upon its
discussions with its advisors and financing sources, Juno fully anticipates
receiving such a solvency opinion.
CERTAIN PRORATION RISKS MAY RESULT
The election of Juno stockholders to retain shares of Juno or receive $25
in cash per share is subject to the proration procedures described in the merger
agreement. If the merger is consummated, you will not necessarily receive the
type of consideration in the amounts specified in your election. See "The
Recapitalization and Merger -- Merger Consideration" on page 30 for a
description of the proration procedures.
THE JUNO SPECIAL MEETING
GENERAL
You were sent this proxy statement/prospectus in connection with the
solicitation of proxies by and on behalf of Juno's Board of Directors for use at
the special meeting and any adjournments or postponements thereof. The special
meeting will be held on , , 1999, at :00 p.m., central
time, at Juno's headquarters at 1300 South Wolf Road, Des Plaines, Illinois
60017-5065.
MATTERS TO BE CONSIDERED
At the special meeting, you will be asked to consider and vote upon
proposals to:
- approve the merger agreement and the transactions contemplated thereby,
including (a) the merger of Jupiter, a wholly-owned subsidiary of Fremont
Investors, with and into Juno, with Juno being the surviving corporation,
and (b) the purchase by Fremont Investors of $106 million of a new series
of convertible preferred stock of Juno;
- adopt an amended and restated certificate of incorporation of Juno;
- adopt the Juno Lighting, Inc. 1999 Stock Award and Incentive Plan; and
- consider such other matters that may properly come before the special
meeting or any adjournment or postponement thereof.
You may also be asked to vote upon a proposal to adjourn or postpone the Juno
special meeting, which adjournment or postponement could be used for the
purpose, among others, of obtaining a quorum or allowing additional time for the
soliciting of additional votes to approve and adopt the proposals being
considered at the special meeting.
The Board has unanimously determined that the merger agreement and the
transactions contemplated thereby, including the merger and the purchase of
convertible preferred stock by Fremont Investors, are fair to and in the best
interests of Juno and its stockholders and has approved and adopted the merger
agreement. THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT YOU VOTE "FOR"
APPROVAL AND ADOPTION OF THE MERGER AGREEMENT. See "The Recapitalization and
Merger -- Background of the Merger" and "-- Reasons for the Recapitalization and
Merger; Recommendation of the Board of Directors." THE BOARD OF DIRECTORS ALSO
UNANIMOUSLY RECOMMENDS THAT YOU VOTE "FOR" APPROVAL AND ADOPTION OF THE AMENDED
AND RESTATED CERTIFICATE OF INCORPORATION OF JUNO AND THE 1999 STOCK AWARD AND
INCENTIVE PLAN.
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Questions or requests for assistance in completing and submitting proxy
cards should be directed to , toll free at ( ) .
RECORD DATE
The Juno Board has fixed , 1999 as the record date for the
determination of the Juno stockholders entitled to receive notice of and to vote
at the special meeting. Accordingly, only Juno stockholders of record at the
close of business on such date will be entitled to notice of and to vote at the
special meeting and any postponements or adjournments thereof. As of the record
date, the only outstanding capital stock of Juno was its common stock. At the
close of business on the record date, shares of Juno common stock
were outstanding and are entitled to vote at the special meeting.
VOTING AT THE SPECIAL MEETING
QUORUM REQUIREMENT. The presence, in person or by properly executed proxy,
of the holders of a majority of the outstanding shares of Juno common stock
entitled to vote on the record date is necessary to constitute a quorum at the
special meeting.
VOTING RIGHTS. Each share of Juno common stock outstanding on the record
date entitles its holder to one non-cumulative vote as to each matter that may
properly come before the special meeting.
VOTE REQUIRED. The following vote is required to approve the proposals to
be considered and voted upon at the special meeting:
- Proposals 1 and 2. Approval of (a) the merger agreement and the
transactions contemplated thereby, including the merger and the purchase
of convertible preferred stock by Fremont Investors, and (b) the amended
and restated certificate of incorporation of Juno require the affirmative
vote of the holders of a majority of the outstanding shares of Juno
common stock as of the record date.
- Proposal 3. Approval of the adoption of the Juno Lighting, Inc. 1999
Stock Award and Incentive Plan requires the affirmative vote of a
majority of the shares of Juno common stock present, in person or by
proxy, and entitled to vote at the special meeting.
As of the record date, approximately shares of Juno common stock,
or approximately % of the shares entitled to vote at the special meeting,
were owned by directors and executive officers of Juno. We currently expect that
each such director and executive officer will vote the shares of the Juno common
stock beneficially owned by him or her for approval of each of the proposals
considered at the special meeting.
ABSTENTIONS AND BROKER NON-VOTES. We intend to count shares of Juno common
stock present in person at the special meeting but not voting, and shares of
Juno common stock for which we have received proxies but with respect to which
holders of such shares have abstained, as present at the special meeting for
purposes of determining the presence or absence of a quorum for the transaction
of business. Brokers who hold shares of Juno common stock in "street" name for
customers who are the beneficial owners of such shares are prohibited from
giving a proxy to vote shares held for such customers with respect to the
matters to be considered and voted at the special meeting without specific
instructions from such customers. Shares of Juno common stock represented by
proxies returned by a broker holding such shares in nominee or "street" name
will be counted for purposes of determining whether a quorum exists, even if
such shares are broker non-votes.
Broker non-votes and abstentions will have the following effect on the
approval of the proposals to be considered and voted upon at the special
meeting:
- Proposals 1 and 2. Because approval of the merger agreement and the
transactions contemplated thereby and the amended and restated
certificate of incorporation of Juno require the affirmative vote of a
majority of outstanding shares of Juno common stock, abstentions and
broker non-votes will have the same effect as votes against such
proposals.
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- Proposal 3. With respect to the approval of the Juno Lighting, Inc. 1999
Stock Award and Incentive Plan, (a) abstentions have the same effect as
votes against such proposal and (b) broker non-votes will not be
considered entitled to vote as to such proposal, will not be counted as a
vote for or against such proposal, and, accordingly, will have no effect
on the outcome of such proposal.
PROXIES
If you are a Juno stockholder, you may use the accompanying proxy if you
are unable to attend the special meeting in person or wish to have your shares
voted by proxy even if you do attend the special meeting.
You may revoke any proxy given by you pursuant to this solicitation by
- delivering to the Secretary of Juno, at or before the special meeting, a
written notice bearing a later date than the proxy which notice, by its
terms, revokes the proxy;
- duly executing a subsequent proxy relating to the same shares and
delivering it to the Secretary of Juno at or before the special meeting;
or
- attending the special meeting and voting in person. Attendance at the
special meeting by a stockholder will not in and of itself revoke a
previously delivered proxy.
You should address any written notice of revocation and other
communications regarding the revocation of Juno proxies to the Corporate
Secretary of Juno at 1300 South Wolf Road, Des Plaines, Illinois 60017-5065. In
all cases, the latest dated proxy revokes an earlier dated proxy, regardless of
which method is used to give or revoke a proxy, or if different methods are used
to give and revoke a proxy. For such notice of revocation or later proxy to be
valid, however, it must actually be received by Juno prior to the vote of the
Juno stockholders at the special meeting. If your broker has been instructed to
vote your shares, you must follow directions received from your broker in order
to change your vote.
All shares represented by valid proxies received pursuant to this
solicitation and not revoked before they are exercised will be voted in the
manner specified therein. If you do not specify how your proxy is to be voted,
it will be voted in favor of approval of each of the proposals to be considered
at the special meeting, including the approval and adoption of the merger
agreement. The Juno Board is unaware of any other matters that may be properly
presented for action at the special meeting. If other matters do properly come
before the special meeting, however, it is intended that shares represented by
proxies in the accompanying form will be voted or not voted by the persons named
in the proxies, in their discretion.
INFORMATION CONCERNING THE SOLICITATION OF PROXIES
The accompanying proxy is solicited on behalf of the Juno Board of
Directors. The cost of soliciting proxies will be borne by Juno. In addition to
solicitation by mail, directors, officers and employees of Juno, none of whom
will receive additional compensation for such solicitations, may solicit proxies
in person, by telephone, by telegram, by personal interview, by e-mail, or by
facsimile. Juno will request banks, brokerage houses and other custodians,
nominees and fiduciaries to forward its solicitation materials to the beneficial
owners of the Juno common shares they hold of record and obtain authorization
for, and appropriate certification in connection with, the execution of proxy
cards. Juno will reimburse these record holders for customary mailing expenses
incurred by them in forwarding these materials.
Juno has retained to provide certain services in connection with
the solicitation of proxies and related matters. The fee of is
estimated to be $ plus reasonable out-of-pocket costs and expenses.
will employ approximately people in its proxy solicitation
efforts.
Except as set forth above, neither Juno nor, to the best of Juno's
knowledge, any person acting on its behalf has retained any other person to make
solicitations or recommendations to security holders on its behalf in connection
with the solicitation of proxies.
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FORM OF ELECTION
Along with this proxy statement/prospectus, Juno has mailed a form for
making an election to retain shares of Juno Common Stock with this proxy
statement/prospectus to stockholders of record of Juno common stock. For a form
of election to be effective, you must properly complete the form of election,
and the form of election must be received by , Juno's exchange agent,
at one of the addresses listed on the form of election and not withdrawn, by
, central time, on , 1999. The exchange agent will
determine whether elections to retain shares have been properly made or revoked,
and such determinations will be binding.
RECOMMENDATION OF THE JUNO BOARD
The Juno Board has approved the merger agreement and the transactions
contemplated thereby, including the purchase of the convertible preferred stock
by Fremont Investors. THE JUNO BOARD OF DIRECTORS BELIEVES THAT THE MERGER
AGREEMENT AND THE TRANSACTIONS CONTEMPLATED THEREBY ARE IN THE BEST INTERESTS OF
JUNO AND THE JUNO STOCKHOLDERS, AND UNANIMOUSLY RECOMMENDS THAT THE JUNO
STOCKHOLDERS VOTE "FOR" ADOPTION AND APPROVAL OF THE MERGER AGREEMENT AND
APPROVAL OF THE TRANSACTIONS CONTEMPLATED THEREBY. See "The Recapitalization and
Merger -- Reasons for the Recapitalization and Merger; Recommendation of the
Board of Directors" on page 23.
THE RECAPITALIZATION AND MERGER
BACKGROUND OF THE RECAPITALIZATION AND MERGER
The Board of Directors and management of Juno have from time to time
considered strategic alternatives for Juno. In April and May of 1998, Robert
Fremont, Juno's Chairman and Chief Executive Officer, discussed with outside
directors and Juno's legal advisors, Sonnenschein Nath & Rosenthal, the
desirability of more formally evaluating strategic options for Juno.
Accordingly, Juno entered into discussions with three investment banks and
pursued negotiations with Goldman, Sachs & Co. ("Goldman") regarding the
retention of Goldman as its financial advisor to explore strategic options for
Juno, including the potential sale of Juno.
On May 26, 1998, the Board met with representatives of Sonnenschein.
Sonnenschein reviewed with the Board its duties in connection with exploring
strategic alternatives, including a potential sale of Juno. The Board discussed
the advisability of pursuing a potential sale of Juno and evaluated the three
investment banking firms that had been interviewed by Juno. The Board approved
the retention of Goldman and on June 12, 1998, Juno engaged Goldman to explore
the potential sale of all or part of Juno.
Representatives of Goldman met with Mr. Fremont and other members of Juno
management and Juno's legal advisors to review strategic alternatives for Juno.
Juno determined to proceed with a non-public auction process to seek a potential
buyer for Juno. Goldman developed a list of parties (including both potential
strategic and financial investors) that it determined might be interested in
considering the potential acquisition of Juno and contacted over 25 of those
parties. Confidentiality and standstill agreements were entered into with nine
potential buyers, and copies of a confidential memorandum describing Juno and
its operations were distributed to those potential buyers. Potential buyers also
received a letter setting forth a timetable for submission of preliminary
indications of interest in Juno and other bidding requirements.
By the end of July 1998, three of the parties contacted by Goldman
indicated an interest in pursuing a possible transaction. Each of the parties
was a potential strategic buyer. One of the parties indicated a preliminary
interest in a transaction at a value of between $20 to $23 per share in cash.
The second party indicated a preliminary interest in a potential stock
transaction, to be accounted for as a pooling of interests, at a value to Juno
stockholders of between approximately $23 to $25 per share. The third potential
strategic buyer indicated that it was valuing Juno at Juno's then current
trading market price, but that it might be willing to pay a premium to then
current prices.
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At a board meeting held on July 28, 1998, the Board, with the assistance of
Goldman and Juno's legal advisors, evaluated the status of the indications of
interest. Representatives of Goldman reviewed the process, the preliminary
indications received and its analysis of Juno's value. The Board also reviewed
the potential of repurchasing Juno shares as an alternative to a sale
transaction.
Representatives of Goldman and Juno had discussions with the potentially
interested parties and continued to encourage other parties to participate in
the bid process. Each of the interested parties was requested to submit its best
and highest written offer, including the price per share, proposed transaction
structure and amounts and sources of funds by the third week of September 1998.
The potential buyers also received a draft merger agreement and were instructed
to submit their comments to the agreement with the written offer.
The potential buyers were offered access to a special "Data Room" set up by
Juno, had the opportunity to meet with management of Juno and were able to visit
Juno's principal facilities. In August 1998, three potential buyers conducted
meetings with management and visited Juno's Des Plaines, Illinois facilities. By
late September 1998, the potential strategic buyer that had initially indicated
a potential interest in an all stock transaction valued at between $23 to $25
per share advised Goldman and Juno that it would not be able to structure the
transaction to achieve pooling of interests accounting treatment and that
accordingly it would have difficulty engaging in a transaction with a value to
Juno stockholders in excess of $22 per share in cash. The other two parties
indicated that they would not be interested in pursuing a transaction at any
significant premium to then prevailing market prices. Representatives of Juno
had discussions with representatives of Goldman regarding the process and
considered additional potential buyers.
On October 5, 1998, Juno terminated the engagement of Goldman. Juno
thereafter entered into discussions with William Blair & Company, L.L.C.
("Blair") regarding the possible retention of Blair as financial advisor to
further explore strategic options including the potential sale of Juno. At a
Board meeting held on October 27, 1998, the Board and representatives of Juno
management and Sonnenschein met to discuss the status of the potential sale
process. Mr. Fremont reported on the results of the process performed by Goldman
and that Juno had terminated its engagement of Goldman. Mr. Fremont reported
that he had initiated discussions with Blair regarding the possible retention of
Blair to act as financial advisor to Juno. The Board discussed whether or not it
was in the best interests of Juno and its stockholders to continue the process
of exploring strategic options, including the potential sale of Juno. The Board
determined that it would be advisable to engage Blair and continue pursuing the
potential sale process and evaluation of other strategic options. On October 28,
1998, Juno retained Blair to act as its financial advisor.
After Blair was retained, representatives of Juno, Blair and Sonnenschein
met to discuss the continuation of the sale process. Juno decided to continue
with a non-public sale process, pursuing further discussions with parties
originally contacted by Goldman as well as contacting additional potential
strategic and financial buyers. Blair contacted 53 additional parties interested
in considering a potential acquisition of Juno. Blair also continued discussions
with interested parties that had been contacted by Goldman. Confidentiality and
standstill agreements were entered into with 25 potential buyers and beginning
in November 1998, copies of a confidential memorandum describing Juno and its
operations were sent to such potential buyers; one of the parties contacted was
Fremont Partners. Fremont Partners is not in any way affiliated with Mr.
Fremont, the Chairman and Chief Executive Officer of Juno.
By early December 1998, Juno had not received formal indications of
interest from any potential buyers. However, several financial buyers expressed
an interest in pursuing a transaction and informally indicated preliminary
potential values at then prevailing market prices or at a slight premium to
market. By late December, Mr. Fremont and representatives of Blair met with two
potential financial buyers, including Fremont Partners, and representatives of
Blair met with an additional potential financial buyer.
By mid-December 1998, one strategic buyer had indicated potential interest
in a transaction with a nominal value to Juno stockholders of approximately
$25.50 per share to be paid 55% in cash and 45% in stock. Blair was engaged in
discussions with three other potential strategic buyers that had not provided
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firm indications of interest. Fremont Partners advised Blair that it would
consider a potential recapitalization transaction valued at between $23 to $25
per share.
After discussions between Blair and Mr. Fremont, Blair advised Fremont
Partners that Juno would only consider a transaction at the top end of Fremont
Partners stated value range of $23 to $25 per share. Fremont Partners indicated
that it was interested in discussing a transaction at the top end of its range
and was invited to meet with Juno management and conduct further due diligence.
Two potential buyers, including Fremont Partners, received access to the "Data
Room" and four potential buyers, including Fremont Partners, had the opportunity
to meet with management of Juno and to visit Juno's principal facilities and did
so from December 1998 to March 1999.
Representatives of Blair and Mr. Fremont engaged in numerous discussions
and meetings with the potential strategic buyer that had indicated potential
interest in a combined stock and cash transaction with a nominal value of
approximately $25.50 per share. The strategic buyer indicated that it was
unwilling to offer more in nominal value but would consider changing the
allocation between cash and stock to increase the relative allocation of cash
and would agree to certain price protection "collar" provisions. One of the
other potential strategic buyers indicated that the highest end of the value
range that it would consider was $25 per share. However, such potential buyer
never provided any firm indication of an intention to pursue a transaction at
that value. Finally, Fremont indicated that it might consider a transaction at
$25 per share.
Representatives of Blair and Mr. Fremont had numerous discussions with the
two potential strategic buyers and Fremont Partners. In January 1999, the
strategic buyer that had initially indicated interest in a transaction at $25.50
per share in a combination of stock and cash indicated that it would now only
consider a transaction at a nominal value of $24.50 per share, and the other
potential strategic buyer indicated that it was uncertain whether it could
propose a transaction above then current market prices. Another potential
strategic buyer contacted by Blair had preliminarily indicated that it might
consider a transaction valued at up to $25.50 per share in a combination of 89%
cash and 11% stock of the acquiring entity.
At a Board meeting held on January 19, 1999, Mr. Fremont and
representatives of Blair and Sonnenschein updated the Board on the status of the
potential sale process. As part of the discussion, the Board asked Blair to
review an analysis provided to Juno by Lens, Inc., one of Juno's principal
stockholders, suggesting values for Juno in a variety of transactions
substantially in excess of values implied by the transactions being proposed by
potential buyers. Lens had advised the Board that it had been contacted by
parties interested in acquiring Juno but that Juno had not responded to their
inquiries. The Board requested that representatives of Lens advise Juno of such
potentially interested parties. Lens never furnished the Board with the
identities of such parties. Lens and certain of its affiliates have initiated a
proxy contest seeking to have two of its representatives elected to the Juno
Board and to have Juno's by-laws amended to permit only one director to be an
"interested director."
Representatives of Blair engaged in further discussions with each of the
potential buyers. The potential strategic buyer that had last indicated an
interest in a transaction at $24.50 per share advised Blair that it was entering
into a business combination transaction with another party which was one of the
other potential strategic buyers, and believed that the combined entity might
still be interested in a potential transaction at $25 per share after their
business combination transaction was completed. However, such potential buyer
indicated that no transaction could occur prior to the completion of the other
business combination and never provided any firm indication of an intention to
pursue a transaction at that value. In addition, the potential strategic buyer
that had preliminarily indicated that it might consider a transaction valued at
up to $25.50 per share indicated that it was no longer interested in pursuing
any transaction with Juno.
On February 12, 1999, Fremont Partners submitted to Juno a form of letter
of intent providing for a leveraged recapitalization of Juno in which
stockholders would receive $25 per share in cash for 86% of Juno's outstanding
stock. Fremont Investors would acquire $101 million of preferred stock with a
perpetual 8% annual dividend payable by an increase in the stated value of the
preferred stock. The preferred stock
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<PAGE> 30
was not redeemable and was convertible at $26.25 per share. The transaction was
structured to qualify for recapitalization accounting treatment. The letter of
intent also contemplated that Juno would grant to Fremont an option to acquire
up to 19.9% of Juno's common stock at $25.00 per share, contained binding
exclusive dealing provisions and provided for payment of a $12 million
termination fee plus expenses under certain circumstances. On February 16, 1999,
Fremont Partners transmitted forms of financing commitment and highly confident
letters.
Representatives of Juno, Blair and Sonnenschein discussed the terms of the
proposed letter of intent. Representatives of Blair advised Fremont Partners
that the proposal was not acceptable, that Fremont Partners needed to propose
their best offer and that Juno was interested in entering into a definitive
agreement rather than a letter of intent.
On February 22, 1999, Fremont Partners improved its proposal by proposing
that the dividend payable on the preferred stock would convert to a cash
dividend after six years and proposing that the preferred stock would be
redeemable after 11 years. After further negotiations, Fremont Partners again
improved its proposal by proposing that the dividend payable on the preferred
stock would convert to a cash dividend after five years and providing that the
preferred stock would be redeemable after nine years. Fremont Partners also
proposed increasing the cash to be paid in the merger so that 87.1% of the
outstanding stock would receive cash. The additional cash would be financed by
Fremont Partners acquiring an additional $5 million of preferred stock. Fremont
Partners again stated that it wanted to enter into a letter of intent.
Representatives of Fremont Partners advised Juno that Fremont Partners was
unwilling to proceed with its due diligence and pursue a potential transaction
with Juno unless Juno agreed to negotiate exclusively with Fremont for a
specified time period and agreed to pay Fremont a substantial fee in the event
that Juno breached such agreement. Representatives of Juno and Fremont
negotiated proposed terms of an exclusivity agreement which provided that
Fremont would have until March 26, 1999 to negotiate exclusively with Juno and
that if Juno breached its obligations under the agreement, Juno would pay to
Fremont a fee of $6 million plus expenses not to exceed $500,000.
At a special meeting of the Juno Board held by conference telephone on
March 3, 1999, Juno received a report from Blair regarding the progress of
negotiations with Fremont and the status of discussions with other parties to a
potential transaction. The Board discussed the proposed Fremont transaction,
including its structure and potential financing commitments, as well as the
terms of the proposed exclusivity agreement. The Juno board authorized Juno to
enter into the exclusivity agreement and on March 3, 1999, Juno and Fremont
entered into the exclusivity agreement.
Following the execution of the exclusivity agreement, representatives of
Fremont, its legal advisors and representatives of potential financing
institutions conducted further due diligence of Juno, and met with management to
discuss various matters.
On March 8, 1999, Fremont delivered a draft of a merger agreement. The
merger agreement contemplated a stock option agreement pursuant to which Fremont
would have the option to purchase up to 19.9% of the outstanding stock of Juno
in the event the merger agreement was terminated for various reasons. The
parties extensively negotiated the proposed merger agreement, including the
conditions to the merger and the provisions regarding termination events and
termination fees that would be contained in the merger agreement.
At a special meeting of the Board of Directors on March 22, 1999, Blair and
Juno's legal advisors advised the Board of the progress of the negotiations with
Fremont. The Board, management and Blair discussed the proposed Fremont
transaction, including its structure, financing commitments and the potential
impact of certain provisions of the merger agreement and the proposed stock
option agreement on Juno's ability to enter into alternative business
combination transactions. The Board also discussed the issues that remained open
and unresolved in the negotiations. Legal counsel reviewed the board's
responsibilities and applicable legal principles and the principal terms of the
current form of merger agreement presented to the Board. Blair and the Board
also discussed the potential impact of Juno engaging in a substantial stock
repurchase transaction as a potential alternative to the proposed Fremont
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<PAGE> 31
Partners recapitalization. The Board and its advisors also discussed the terms
of the commitment letters from the financial institutions contacted by Fremont
to provide the necessary financing.
Negotiations continued, particularly with respect to provisions regarding
termination events and termination fees that would be contained in the merger
agreement and whether Juno would grant an option to Fremont Partners to purchase
up to 19.9% of its outstanding stock. Representatives of Fremont Partners and
potential financing sources continued to conduct their due diligence
investigations. In negotiations held on March 25 and 26, 1999, the parties
reached agreement on all remaining issues with respect to the merger agreement,
including agreeing that no option would be granted to Fremont.
At a special meeting of the Board of Directors on March 26, 1999, held by
conference telephone, Blair and Juno's legal advisors updated the Board on the
progress of negotiations with Fremont. The Board discussed the proposed Fremont
transaction, including the structure and the status of the financing
commitments. Legal counsel reviewed the resolution of the open issues that had
been discussed at the March 22, 1999 meeting, the Board's duties, applicable
legal principles and the form of the merger agreement presented for Board
approval. The Board and its advisors also discussed the terms of the commitment
letters from the financial institutions selected by Fremont to provide the
necessary financing, including the qualifications and conditions of such
letters. Copies of the latest draft of the merger agreement and a summary had
previously been distributed to the Board. In the course of its deliberations,
the Board was advised of and considered the post-merger capitalization of Juno.
The Board also considered the requirement in the merger agreement that prior to
the consummation of the merger, the Board and Juno receive an opinion from an
independent expert as to the solvency of Juno after giving effect to the
contemplated transactions. Blair then rendered to the Board its oral opinion
(which opinion was confirmed by delivery of a written opinion) to the effect
that, as of such date and based upon and subject to certain matters stated in
such opinion, the consideration to be received by the holders of common stock in
the merger is fair to such holders from a financial point of view, and reviewed
with the Board the financial analyses performed by it in connection with its
opinion (see "--Opinion of Financial Advisor").
For the reasons summarized above and taking into consideration the factors
listed under "Reasons for the Recapitalization and Merger; Recommendations of
Board of Directors" below, and on the basis of the advice of Blair and its legal
counsel, the Board voted unanimously to approve the merger agreement on the
grounds that it was fair to, and in the best interests of, Juno stockholders and
authorized Juno's officers to execute and deliver the merger agreement.
Immediately following the Board meeting, Juno, Fremont Partners and
affiliates of Fremont Partners entered into the merger agreement and Juno issued
a press release announcing the merger.
REASONS FOR THE RECAPITALIZATION AND MERGER; RECOMMENDATION OF THE BOARD OF
DIRECTORS
At its meeting on March 26, 1999, the Board of Directors unanimously
determined, among other things, that the transactions contemplated by the merger
agreement, including the merger and the sale of convertible preferred stock to
Fremont Investors, taken together, are fair to, and in the best interests of,
the stockholders of Juno. THE BOARD UNANIMOUSLY RECOMMENDS THAT STOCKHOLDERS
VOTE "FOR" APPROVAL AND ADOPTION OF THE MERGER AGREEMENT.
The Board's decision to enter into the merger agreement was based, in large
part, upon balancing the risks and benefits of the merger against the risks and
benefits of the other strategic alternatives available to Juno. Of the strategic
alternatives available to Juno, the recapitalization and merger was deemed by
the Board to be the alternative which would yield the best results to the
stockholders of Juno from a financial point of view. See "-- Background of the
Recapitalization and Merger."
In the course of reaching its decision to approve the merger agreement and
the transactions contemplated thereby, the Board consulted with Juno's legal
counsel and Blair and, applying the Board's
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<PAGE> 32
familiarity with Juno's business, financial condition, prospects, current
business strategy and opportunities and Juno's position in its industry,
considered a number of factors, including, among others, the following:
(1) presentations by Juno's management relating to Juno's financial
performance and future opportunities and prospects, including the risks
involved in achieving these prospects, and current industry, economic and
market conditions;
(2) the presentation of Blair at the March 26, 1999 Board meeting and
the written opinion of Blair dated March 26, 1999 that, based upon and
subject to the matters set forth therein and as of the date thereof, the
consideration to be received by Juno's stockholders in the merger was fair
to Juno's stockholders from a financial point of view. See "-- Opinion of
Financial Advisor";
(3) the fact that Goldman and Blair contacted a substantial number of
potential bidders over an extended period of time in a process designed to
elicit third party proposals to acquire Juno and enhance stockholder value,
that no party had submitted a more favorable definitive offer than Fremont,
and that participants in such process had been afforded sufficient time and
information to submit such a proposal had they wished to do so;
(4) the Board's review, based in part on presentations by Juno's
management and financial advisors, of alternatives to the merger, including
a stock repurchase program, and the fact that none of such alternatives,
even if successfully carried to completion, was in the Board's view
reasonably likely to have resulted in a per share consideration payable to
the holders of Juno common stock higher than the consideration payable in
the merger;
(5) historical market prices and trading information for Juno's common
stock, including the fact that the $25.00 cash price represents a premium
of approximately 22% over the closing price of $20.50 per share on March
26, 1999, the last trading day prior to the public announcement of the
merger;
(6) the fact that the stockholders of Juno would own approximately
39.5% of the fully-diluted common stock of Juno immediately after the
merger, which would decrease, relative to their current interest in Juno,
the stockholders' opportunity as a group to participate in any future
growth of Juno following the consummation of the merger;
(7) the fact that the market price of Juno common stock after the
merger may be influenced by many factors, including, among others, the
financial leverage of Juno and the fact that shares of Juno common stock
after the merger would likely not be as marketable or liquid as prior to
the merger;
(8) the terms and conditions of the merger agreement, including:
- that the financing necessary to consummate the transactions
contemplated by the merger agreement must be received;
- that it is a condition to the consummation of the transactions
contemplated by the merger agreement that the holders of a majority of
the outstanding shares of Juno entitled to vote on the merger
agreement approve the merger agreement and the transactions
contemplated thereby;
- provisions of the merger agreement which permit the Board of Directors
to withdraw its recommendation of the merger in the event of an
unsolicited third party proposal which is superior to the merger and
the related transactions, or to enter into an agreement with a third
party which has proposed a superior proposal, as the Board of
Directors determines in good faith is reasonably necessary to comply
with its fiduciary duties;
- provisions relating to the fee of $12 million and/or expense
reimbursements (for expenses and fees incurred in connection with the
merger up to a maximum of $3.0 million) to Fremont Investors payable
upon termination of the merger agreement as a result of, among other
things, Juno accepting a competing offer that is superior to the
merger and the related transactions;
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<PAGE> 33
- the terms of the convertible preferred stock to be issued to Fremont
Investors, including that during the first five years following the
merger, dividends will be payable by an increase in the stated value
of such stock.
In analyzing these terms and conditions, the Board considered, among other
things, the risk of not consummating the merger. In addition, in analyzing
the termination fee and expense provisions, the Board considered that their
effect would be to increase the costs to a third party other than Fremont
Investors of acquiring Juno in the event the merger did not occur for
certain reasons. In the view of the Board, this amount is not likely to
unduly deter other bidders in the context of the proposed merger;
(9) that the proposed structure of the merger treats all stockholders
equally by giving all stockholders the opportunity, subject to proration,
to receive cash for their shares or to retain their shares of Juno common
stock;
(10) the nature of the financing arrangements made by Fremont
Investors with respect to the merger, including the receipt by Fremont
Investors of a commitment letter from NationsBank, N.A. and Credit Suisse
First Boston with respect to $120.0 million of senior secured credit
facilities and a letter from a nationally recognized investment banking
firm with respect to the offering of senior subordinated notes of Juno in
the aggregate amount of $125.0 million; and
(11) the interest of Fremont in enhancing Juno's businesses and its
intent to continue Juno as an ongoing business.
The foregoing describes all material factors considered and given weight by
the Juno Board of Directors in connection with its decision to approve the
merger agreement and the transactions contemplated thereby. In view of the
variety of factors considered in connection with its evaluation of the merger
and the transactions contemplated thereby, the Board did not find it practicable
to, and did not, quantify or otherwise assign relative weights to the specific
factors considered in reaching its determination. In addition, individual
members of the Board may have given different weight to different factors.
The Juno Board of Directors has approved the merger agreement and the
transactions contemplated thereby. The Juno Board believes that the merger
agreement and the transactions contemplated thereby are in the best interests of
Juno and Juno stockholders, and recommends that Juno stockholders vote "FOR"
adoption and approval of the merger agreement and approval of the transactions
contemplated thereby.
OPINION OF FINANCIAL ADVISOR
Juno retained Blair to act as its financial advisor in connection with the
merger. As part of its engagement, Juno asked Blair to render an opinion as to
whether the consideration to be received by Juno's stockholders pursuant to the
merger agreement is fair to Juno's stockholders from a financial point of view.
No limitations were imposed by the Juno Board of Directors upon Blair with
respect to the investigations made or the procedures followed by it in rendering
its fairness opinion. Blair is a nationally recognized investment banking firm
and, as part of its investment banking activities, is regularly engaged in the
valuation of businesses and their securities in connection with merger
transactions and other types of strategic combinations and acquisitions. Juno
retained Blair as its financial advisor on the basis of Blair's experience and
expertise in transactions similar to the merger, its reputation in the
investment banking community and its existing investment banking relationship
with Juno.
At the March 26, 1999 meeting of the Juno Board of Directors, Blair
rendered its oral opinion (later confirmed in writing as of such date) that, as
of such date, and based upon and subject to the factors and assumptions set
forth in such written opinion, the consideration to be received by Juno's
stockholders in the merger was fair to Juno's stockholders from a financial
point of view. The full text of Blair's opinion to the Juno Board of Directors
dated as of March 26, 1999 is attached hereto as Annex B and is incorporated
herein by reference and should be read in its entirety in connection with this
proxy statement. The following summary of Blair's opinion is qualified in its
entirety by reference to the full text of Blair's
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<PAGE> 34
opinion. Blair's opinion was addressed to the Juno Board of Directors for the
purposes of its evaluation of the merger and does not constitute a
recommendation to any Juno stockholder as to how such stockholder should vote at
the special meeting.
In connection with its opinion, Blair reviewed a final draft of the merger
agreement, as well as certain financial and other information that was publicly
available or furnished to Blair by Juno, including certain internal financial
analyses, financial forecasts, reports and other information prepared by the
management of Juno. Blair held discussions with members of management of Juno
concerning Juno's historical and current operations, financial condition and
prospects. In addition, Blair (1) compared the financial position and operating
results of Juno with those of publicly traded companies Blair deemed relevant
for its opinion; (2) compared certain financial terms of the merger to certain
financial terms of other selected business combinations Blair deemed relevant
for its opinion and (3) conducted such other financial studies, analyses and
investigations and reviewed such other factors as Blair deemed appropriate for
the purposes of rendering its opinion. Blair also considered the process that
resulted in the negotiation of the merger agreement, including discussions with
other potential acquirors held by Blair and Goldman.
In rendering its opinion, Blair relied upon and assumed the accuracy,
completeness and fairness of all of the financial and other information that was
available to it from public sources and that was provided to Blair by Juno. With
respect to the financial projections supplied to Blair, Blair assumed that they
were reasonably prepared and reflected the best currently available estimates
and judgments of the management of Juno as to the future operating and financial
performance of Juno. Blair's opinion relates to financial fairness only; no
opinion is expressed as to the appropriateness of the financial structure or as
to the soundness of the financial condition of Juno subsequent to the effective
time of the merger. Blair did not assume any responsibility for making any
independent evaluation of Juno's assets or liabilities or for making any
independent verification of any of the information reviewed by Blair.
Blair's opinion was necessarily based on economic, market, financial and
other conditions as they existed on March 26, 1999, the date of Blair's opinion,
and on the information made available to Blair as of such date. Blair expressed
no opinion as to the value at which Juno's common stock would trade subsequent
to the merger. It should be understood that, although subsequent developments
may affect its opinion, Blair does not have any obligation to update, revise or
reaffirm its opinion.
VALUATION OF THE CONSIDERATION TO BE RECEIVED IN THE MERGER. In the merger,
holders of Juno common stock will receive in the aggregate, cash for 87.1% of
the shares of Juno common stock outstanding at the effective time of the merger,
and will retain, in the aggregate, 12.9% of the Juno common stock outstanding at
the effective time, such that 2,400,000 shares of Juno common stock will remain
outstanding after the merger. In order to arrive at the effective per share
value to be received by holders of Juno common stock in the merger, Blair made
certain assumptions and determined on an estimated per share basis the value of
cash and equity to be received.
For purposes of calculating the amount of cash to be received per share,
Blair assumed that no holder of Juno common stock would elect to retain shares
of Juno common stock (requiring full proration of the retained shares and
thereby reducing the per share cash amount to be received by the maximum
possible amount). Under this assumption, Blair determined that for each share of
Juno common stock, each holder of Juno common stock would effectively receive
$21.78 per share in cash (87.1% multiplied by $25 per share) and retain 12.9% of
such share.
In order to determine the per share value of the shares of Juno common
stock retained by Juno stockholders, Blair reviewed the implied public market
trading values for shares of Juno common stock outstanding following the
effective time of the merger derived from an application of various multiples to
Juno's pro forma earnings per share giving effect to the merger and based upon
management's projections. Blair applied a range of price earnings multiples to
the projected pro forma earnings per share of Juno in fiscal 1999 and 2000,
which projections were prepared based on management's projections for such years
(see "-- Certain Estimates of Future Operations and Other Information" below)
with certain minor refinements to depreciation expense in the discounted cash
flow analysis only based upon input from management and deemed appropriate by
Blair (the "base case") and assumed that the merger is
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<PAGE> 35
completed with a capital structure substantially similar to the capital
structure proposed by Fremont and reviewed by Blair. Based on this analysis,
Blair used a valuation of $25.00 per share ($21.78 in cash and $3.22 in stock)
for the consideration received and retained by holders of shares of Juno common
stock in the merger for purposes of its other analyses discussed below.
The following is a summary of the material factors considered and principal
financial analyses performed by Blair to arrive at its opinion. Blair performed
certain procedures, including each of the financial analyses described below,
and reviewed with the management of Juno the assumptions upon which such
analyses were based, and other factors. The summary set forth below is not a
complete description of the analyses performed or factors considered by Blair in
this regard.
SUMMARIES OF VALUATION ANALYSES. In connection with its opinion and the
presentation of its opinion to the Board of Directors of Juno, Blair performed
certain valuation analyses, including:
- a comparison with comparable publicly traded companies;
- a discounted cash flow analysis;
- an analysis of certain comparable acquisitions; and
- a premium analysis.
Such analyses are summarized below.
ANALYSIS OF CERTAIN PUBLICLY TRADED COMPANIES. Blair reviewed and compared
certain financial information relating to Juno to corresponding financial
information, ratios and public market multiples for five publicly traded
companies in the lighting industry. The selected companies were (1) Advanced
Lighting Technologies, Inc., (2) The Genlyte Group Incorporated, (3) Holophane
Corporation, (4) LSI Industries Inc. and (5) SLI, Inc. Blair selected these
companies because they are the publicly traded companies whose operations and
financial condition Blair deemed most comparable to Juno's. Although Blair
compared the trading multiples of the selected companies at the date of Blair's
opinion to the implied purchase multiples of Juno, none of the selected
companies is identical to Juno.
Among the information considered were revenue, operating income ("EBIT"),
earnings before interest, taxes, depreciation and amortization ("EBITDA"), net
income, earnings per share ("EPS"), gross profit margins, EBIT margins and net
income margins, growth in revenues and net income, return on assets and equity,
and capital structure. The multiples and ratios for Juno and the comparable
companies were based on the most recent publicly available financial information
and on EPS estimates for 1999 and 2000 from First Call Corporation, and were
based on the closing share prices as of March 24, 1999.
Blair observed that the multiples of common stock share price ("Price") to
EPS, as well as multiples of market equity value plus book value of total debt
less cash and equivalents ("Enterprise Value") to revenues, EBIT and EBITDA
implied by the terms of the merger compared favorably, from Juno's perspective,
to the median of the corresponding multiples of the comparable companies.
Information regarding the multiples implied by the terms of the merger
compared to the median multiples from Blair's analysis of selected lighting
industry companies are set forth in the following table.
<TABLE>
<CAPTION>
THE MEDIAN OF
PROPOSED SELECTED LIGHTING
MULTIPLE JUNO MERGER INDUSTRY COMPANIES
-------- ----------- ------------------
<S> <C> <C>
Enterprise Value to LTM Revenues.................. 2.3x 1.1x
Enterprise Value to LTM EBIT...................... 10.0x 7.6x
Enterprise Value to LTM EBITDA.................... 9.1x 6.2x
Price to LTM EPS.................................. 17.5x 12.5x
Price to estimated 1999 EPS(1).................... 14.6x 12.0x
Price to estimated 2000 EPS(1).................... 12.3x 10.1x
</TABLE>
- -------------------------
(1) Juno estimates are for its fiscal year ended November 30.
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<PAGE> 36
DISCOUNTED CASH FLOW ANALYSIS. Using a discounted cash flow ("DCF")
analysis, Blair estimated the net present value of the unleveraged free cash
flows that Juno could produce on a stand-alone basis over a five year period
from 1999 to 2003. Unleveraged free cash flows means EBIT after taxes plus
depreciation and amortization less capital expenditures and working capital. In
estimating these cash flows Blair made certain assumptions about the operating
performance of Juno over the five year period under two scenarios: (1) the base
case projections and (2) the lower case projections described below. While
Juno's historical compound annual rate of growth in revenues for the period from
1994 to 1998 was 6.1%, the base case projections assumed that revenues would
grow at a rate of 12.6% annually from 1999 to 2003. Therefore, in addition to
reviewing the base case projections, Blair developed the lower case projections
which assumed a compound annual rate of growth in revenues of 10.0% from 1999 to
2003. These lower case projections assumed that operating margins remained
constant throughout such time period. In calculating the "terminal value", Blair
assumed multiples of Enterprise Value to EBITDA ranging from 6.0x to 10.0x,
which multiples Blair believed to be appropriate for such an analysis. The
annual and terminal free cash flows were discounted to determine a net present
value of the unleveraged equity value of Juno. Discount rates in a range of
12.0% to 14.0% were chosen based upon an analysis of the weighted average cost
of capital of the publicly traded comparable group of companies described above.
The DCF analysis conducted by Blair indicated the following:
<TABLE>
<CAPTION>
BASE CASE PROJECTIONS LOWER CASE PROJECTIONS
--------------------- ----------------------
<S> <C> <C>
Valuation of the Equity of Juno.......... $500 million to $390 million to
$749 million $567 million
Per Share Price Range.................... $26.87 to $40.29 $20.97 to $30.50
</TABLE>
COMPARABLE ACQUISITIONS. Blair performed an analysis of selected recent
merger or acquisition transactions in the lighting and building products
industries. The selected transactions were chosen based on Blair's judgment that
they were generally comparable, in whole or in part, to the proposed
transaction. In total Blair examined nine transactions that were announced
between January 27, 1997 and January 27, 1999. The selected transactions were
not intended to be representative of the entire range of possible transactions
in the lighting and building products industries. Although Blair compared the
transaction multiples of these companies to the implied purchase multiples of
Juno, none of the selected companies is identical to Juno.
Blair reviewed the consideration paid in such transactions in terms of the
Enterprise Value of such transactions as a multiple of revenues, EBIT and EBITDA
for the latest twelve months prior to the announcement of such transactions.
Additionally, Blair reviewed the consideration paid in such transactions in
terms of the price paid for the common stock ("Equity Purchase Price") in such
transactions as a multiple of net income for the twelve months prior to the
announcement of such transactions.
<TABLE>
<CAPTION>
MEDIAN BASED ON
ANALYSIS OF NINE
ACQUISITIONS IN THE
THE LIGHTING AND
PROPOSED BUILDING PRODUCTS
MULTIPLE JUNO MERGER INDUSTRIES
-------- ----------- -------------------
<S> <C> <C>
Enterprise Value to LTM Revenues.................. 2.3x 0.9x
Enterprise Value to LTM EBIT...................... 10.0x 12.2x
Enterprise Value to LTM EBITDA.................... 9.1x 9.7x
Equity Purchase Price to LTM Net Income........... 17.5x 17.2x
</TABLE>
PREMIUM ANALYSIS. In addition to evaluating multiples paid in transactions
in the lighting and building products industries, Blair considered, for sixteen
industrial transactions which were announced from January 21, 1998 to January
27, 1999 and whose Enterprise Value ranged from $273 million to $756 million,
the premiums paid over each company's stock price prior to the announcement of a
transaction. The median premium paid in those transactions was 28.5% and 14.5%,
respectively, over each company's stock price one month and one day before each
respective announcement. In comparison, the
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premium paid over Juno's stock price on February 26, 1999, the trading day one
month prior to the public announcement of the merger, and March 26, 1999, the
last full trading day prior to the public announcement of the merger, was 21.6%
and 22.0%, respectively.
The summary set forth above is not a complete description of the analyses
performed by Blair. The preparation of a fairness opinion is a complex process
and involves various determinations as to the most appropriate and relevant
methods of financial analysis and the application of these methods to the
particular circumstances. Therefore, such an opinion is not readily susceptible
to summary description. The preparation of a fairness opinion does not involve a
mathematical evaluation or weighing of the results of the individual analyses
performed, but requires Blair to exercise its professional judgment, based on
its experience and expertise in considering a wide variety of analyses taken as
a whole. Each of the analyses conducted by Blair was carried out in order to
provide a different perspective on the merger and add to the total mix of
information available. Blair did not form a conclusion as to whether any
individual analysis, considered in isolation, supported or failed to support an
opinion as to fairness. Rather, in reaching its conclusion, Blair considered the
results of the analyses in light of each other and ultimately reached its
opinion based on the results of all analyses taken as a whole. Blair did not
place particular reliance or weight on any individual analysis, but instead
concluded that its analyses, taken as a whole, supported its determination.
Accordingly, notwithstanding the separate factors summarized above, Blair
believes that its analyses must be considered as a whole and that selecting
portions of its analyses and the factors considered by it, without considering
all analyses and factors, may create an incomplete view of the evaluation
process underlying its opinion. In performing its analyses, Blair made numerous
assumptions with respect to industry performance, business and economic
conditions and other matters. The analyses performed by Blair are not
necessarily indicative of actual values or future results, which may be
significantly more or less favorable than suggested by such analyses.
CERTAIN ESTIMATES OF FUTURE OPERATIONS AND OTHER INFORMATION
Juno prepared certain nonpublic estimates reflecting management's estimates
as to the possible future performance of Juno over the five fiscal years ending
in 2003. This information was provided to both Fremont and to Blair on a
confidential basis. The following table summarizes these estimates:
<TABLE>
<CAPTION>
($ IN THOUSANDS) 1999 2000 2001 2002 2003
---------------- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
Net Sales................................. $186,041 $210,227 $236,505 $266,068 $299,327
EBITDA.................................... 50,578 59,740 69,413 80,459 93,024
</TABLE>
The key assumptions underlying the preparation of the estimates are as
follows. Sales growth is anticipated to come from the increased sales of current
products, the introduction of new products and increases in market share. Juno
has projected improvements in gross margins due to anticipated stability of raw
material costs and benefits from economies of scale of manufacturing labor and
overhead. Selling, general and administrative expenses generally do not increase
proportionately with the corresponding growth in sales.
These estimates do not give effect to the merger and should be read in
conjunction with "Risk Factors," "Summary -- Unaudited Condensed Consolidated
Pro Forma Financial Data," and the other information included or incorporated by
reference in this proxy statement/prospectus.
The estimates referred to above were prepared for internal planning
purposes and not with a view to public disclosure or compliance with published
guidelines established by the Commission or the American Institute of Certified
Public Accountants regarding projections. The estimates are included in this
proxy statement/prospectus solely because such information was provided to
Fremont and Blair. While presented with numerical specificity these estimates
are based upon numerous assumptions relating to commercial acceptance of Juno's
products, industry performance, general business and economic conditions, the
business of Juno and other matters, all of which may not be realized and are
subject to significant uncertainties and contingencies, many of which are beyond
the control of Juno. There can be no assurance that the estimates will be
realized; actual results may be higher or lower than those estimated. See "A
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<PAGE> 38
Warning about Forward-Looking Statements" Neither Juno's auditors nor any other
independent accountants have compiled, examined or performed any procedures with
respect to the foregoing estimates, nor have they expressed any opinion or any
other form of assurance on such information or its achievability, and assume no
responsibility for, and disclaim any association with, the prospective financial
information. The inclusion of such estimates herein should not be regarded as an
indication that Fremont, Jupiter, Juno or any other party who received such
information considers it an accurate prediction of future events. None of Juno,
Fremont or Jupiter or any other party intends publicly to update or otherwise
publicly revise the estimates set forth above even if experience or future
changes make it clear that the estimates will not be realized.
ENGAGEMENT OF FINANCIAL ADVISORS
William Blair & Company, L.L.C. Juno retained the services of Blair
pursuant to an engagement letter dated October 19, 1998, to render certain
financial advisory and investment banking services in connection with a possible
business combination (through tender offer, merger, sale or exchange of stock,
sale of all or 80% or more of the assets or otherwise) of Juno with another
party. In exchange for the services provided, Juno agreed to pay Blair a
transaction fee equal to 1.0% of the "total consideration" (as defined in the
Blair engagement letter) received by Juno and its stockholders as a result of
the consummation of any such business combination. However, this transaction fee
would be equal to 0.5% if the business combination was consummated with a
certain named party. Juno will also reimburse Blair for all itemized
out-of-pocket expenses, including reasonable fees and expenses of Blair's
counsel and any other independent experts retained by Blair, reasonably incurred
by Blair in connection with its engagement by Juno, with such expenses not to
exceed $50,000 unless otherwise approved by Juno, and payable only if a business
combination is consummated. Juno and Blair also entered into a separate letter
agreement, dated October 19, 1998, whereby Juno agreed to indemnify Blair
against certain liabilities in connection with Blair's engagement.
Blair has provided certain investment banking services to Juno in the past
for which Blair received customary compensation. In the ordinary course of its
business, Blair and its affiliates may actively trade the debt and equity
securities of Juno for their own accounts and for the accounts of customers and,
accordingly, may at any time hold a long or short position in such securities.
Goldman, Sachs & Co. Pursuant to a letter agreement dated June 2, 1998,
between Goldman and Juno, Juno retained Goldman to render certain financial
advisory and investment banking services in connection with a potential sale of
all or a portion of Juno. Such engagement letter provided for the payment to
Goldman of a transaction fee, the amount of which depended upon the outcome of
Goldman's engagement; provided that a transaction fee could be payable following
termination of Goldman's engagement if Juno engaged in a business combination
with certain parties. Juno also agreed to reimburse Goldman for Goldman's
reasonable out-of-pocket expenses, including the fees and expenses of Goldman's
legal counsel, with such fees and expenses not to exceed $100,000 without Juno's
prior consent. In addition, Juno agreed to indemnify Goldman against certain
liabilities, including liabilities arising under federal securities laws. Juno
terminated the services of Goldman in October 1998. Juno and Goldman have agreed
on which parties would be covered by the transaction fee payment provisions of
the engagement letter between Juno and Goldman and such parties do not include
Fremont Investors or Fremont Partners.
In the ordinary course of its business, Goldman and its affiliates may
actively trade the debt and equity securities of Juno for their own accounts and
for the accounts of customers and, accordingly, may at any time hold a long or
short position in such securities.
MERGER CONSIDERATION
Subject to the provisions described in this proxy statement/prospectus with
respect to fractional shares, dissenting shares and shares owned by Juno,
Jupiter, and Fremont, and subject to proration, upon the consummation of the
merger each issued and outstanding share of Juno common stock will be converted
into the right to receive either $25 in cash or, for each issued and outstanding
share of Juno
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<PAGE> 39
common stock with respect to which an election has been made and not withdrawn
in accordance with the merger agreement, the right to retain one fully paid and
non-assessable share of Juno common stock.
Juno stockholders will retain a total of 2,400,000 shares of common stock
of Juno in the merger, which will represent approximately 39.5% of the
fully-diluted common stock of Juno immediately after the merger. If Juno
stockholders elect to retain, in the aggregate, less than 2,400,000 shares, then
the amount of shares equal to the difference between 2,400,000 and the number of
shares elected to be retained will be allocated pro rata among stockholders
based on the number of non-electing shares. If Juno stockholders elect to
retain, in the aggregate, more than 2,400,000 shares, then the 2,400,000 shares
will be allocated pro rata among the Juno stockholders who have elected to
retain shares based on the number of shares each stockholder has elected to
retain.
The following examples illustrate the potential effects of the prorations
described above.
EXAMPLE A
Holder A owns 100 shares and
does not elect to retain any
Juno shares. - If other stockholders elect to retain
2,400,000 or more shares in the aggregate,
then Holder A will receive $2,500 in cash, or
$25 per share for each of his or her 100
shares.
- If other stockholders elect to retain fewer
than 2,400,000 shares in the aggregate, then
Holder A will not receive all cash for all of
his or her 100 shares and will be required to
retain some shares. Each stockholder will be
required to retain a pro rata portion of his
or her shares in order to increase the number
of retained shares to 2,400,000. However,
even in the case where no stockholder elects
to retain shares, Holder A will still be
assured of receiving at least $2,200 in cash
(88 shares at $25 per share) and will retain
12 shares of Juno common stock.
EXAMPLE B
Holder B owns 100 shares and
elects to retain 100 Juno
shares - If the stockholders, including Holder B,
elect to retain more than 2,400,000 shares in
the aggregate, the number of shares retained
by stockholders must be reduced to 2,400,000.
Holder B will not be able to retain all of
his or her shares and will be required to
receive some cash. For example, if
stockholders elected to retain 2,666,667
shares in the aggregate, then each holder
electing to retain shares, including Holder
B, would be able to retain only 90% of the
shares he or she elected to retain in order
to reduce the number of issued shares to
2,400,000. Therefore, Holder B would be able
to retain only 90 shares (or 90% of his 100
shares) and would receive $250 in cash (10
shares at $25 per share). If all stockholders
elect to retain shares, Holder B would be
able to retain only 12 shares (or 12% of his
100 shares) and would receive $2,200 in cash.
- If the stockholders, including Holder B,
elect to retain fewer than 2,400,000 shares
in the aggregate, then Holder B will be able
to retain all 100 of his or her shares.
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<PAGE> 40
EXAMPLE C
Holder C owns 100 shares and
elects to retain 50 shares and
convert 50 shares into cash. - In the event that stockholders, including
Holder C, elect to retain exactly 2,400,000
shares in the aggregate, then Holder C will
be able to retain 50 shares and will receive
$1,250 in cash (50 shares at $25 per share).
- If the stockholders, including Holder C,
elect to retain more than 2,400,000 shares in
the aggregate, then Holder C will not be able
to retain all 50 shares. For example, if
stockholders elected to retain 2,666,667
shares in the aggregate, then each holder,
including Holder C, would be able to retain
only 90% of the shares he or she elected to
retain in order to reduce the number of
retained shares to 2,400,000. Therefore,
Holder C would be able to retain only 45
shares (or 90% of his 50 shares) and would
receive $1,375 in cash (55 shares at $25 per
share). If the stockholders, including Holder
C, elected to retain more than 2,666,667
shares in the aggregate, Holder C would
retain fewer shares than in the example
above, but would receive a proportionately
greater amount of cash.
- If the stockholders, including Holder C,
elect to retain fewer than 2,400,000 shares
in the aggregate, then Holder C would be
required to retain more than 50 shares. For
example, if stockholders elected to retain
2,071,259 shares, then all stockholders must
collectively retain an additional 328,741
shares in order to reach the 2,400,000 share
threshold. In this example, Holder C would be
required to retain an additional share (for a
total of 51 shares) and would receive $1,225
in cash (49 shares at $25 per share). The
additional share is calculated by multiplying
the 50 shares Holder C wants to convert to
cash by a fraction, the numerator of which is
328,741 and the denominator of which is the
total number of outstanding shares less the
electing shares. If the stockholders elected
to retain fewer than the 2,071,259 shares in
the example above, Holder C would retain more
shares than in the example above, but would
receive commensurately less cash.
THE SALE OF PREFERRED STOCK TO FREMONT INVESTORS
Pursuant to the merger agreement, Fremont Investors will purchase 1,060,000
shares of a new series of convertible preferred stock for an aggregate purchase
price of $106 million in connection with the merger. The merger agreement
permits Fremont Investors to assign in part its obligation to purchase the
convertible preferred stock to one or more third parties, and Fremont may
determine to do so prior to the effective time of the merger. Fremont has no
current plans to assign its obligation to purchase the convertible preferred
stock, except that Fremont may offer key management of Juno an opportunity to
purchase up to an aggregate of 10,000 shares of convertible preferred stock. For
a description of the terms of the new series of convertible preferred stock, see
"Approval of Amended and Restated Certificate of Incorporation of
Juno -- Preferred Stock -- Series A Convertible Preferred Stock."
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<PAGE> 41
MANAGEMENT SERVICES AGREEMENT
Pursuant to the merger agreement, Juno and Fremont Partners L.L.C., an
affiliate of Fremont Partners, will enter into a Management Services Agreement
at the effective time of the merger pursuant to which Fremont Partners L.L.C.
will render certain management services in connection with Juno's business
operations, including strategic planning, finance, tax and accounting services.
Juno will pay Fremont Partners L.L.C. an annual fee of $325,000 to render such
services.
FINANCING OF THE RECAPITALIZATION AND MERGER
GENERAL
The total amount of funds required to consummate the transactions
contemplated by the merger agreement and to pay all related fees and expenses is
approximately $428.5 million. Based on available cash of Juno on February 28,
1999, these funds will be provided through a combination of:
- approximately $106.0 million in proceeds from the purchase of the
convertible preferred stock by Fremont Investors;
- borrowings by Juno of up to $94.9 million under new senior secured credit
facilities;
- proceeds of approximately $125.0 million from Juno's offering of senior
subordinated notes in a private placement; and
- available cash of Juno in the amount of approximately $102.6 million.
The approximate sources and uses of funds in connection with the
transactions contemplated by the merger agreement are set forth in the following
table, assuming such transactions occurred on February 28, 1999. The actual
amounts of sources and uses of funds may differ at the closing of the
transactions contemplated by the merger agreement.
SOURCES OF FUNDS
(IN MILLIONS)
<TABLE>
<S> <C>
Senior secured term loans................................... $ 90.0
Senior secured revolving facility(1)........................ 4.9
Senior subordinated notes................................... 125.0
Series A convertible preferred stock........................ 106.0
Available cash.............................................. 102.6
------
Total Sources.......................................... $428.5
======
</TABLE>
USES OF FUNDS
<TABLE>
<S> <C>
Payment of cash consideration in the merger................. $404.9
Repayment of outstanding indebtedness....................... 3.3
Estimated fees and expenses................................. 20.3
------
Total Uses............................................. $428.5
======
</TABLE>
- -------------------------
(1) The total amount available under the senior secured revolving facility will
be $35.0 million.
It is a condition to the obligations of the parties to the merger agreement
that Juno shall have received the funds set forth above from borrowings under
the new senior secured credit facilities and the offering of senior subordinated
notes. Fremont has agreed to use its reasonable best efforts to cause such funds
to be obtained.
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<PAGE> 42
TERM LOAN FACILITIES AND REVOLVING FACILITY
In connection with the recapitalization and merger, Fremont Investors has
received a commitment letter dated March 26, 1999 from NationsBank, N.A. and
Credit Suisse First Boston to provide Juno with senior secured credit facilities
pursuant to a bank credit agreement. Loans under the senior secured credit
facilities will consist of:
- two senior secured term loan facilities in an aggregate principal amount
of $90.0 million to be allocated between Tranche A, with an aggregate
amount of $40.0 million, and Tranche B, with an aggregate amount of $50.0
million; and
- a senior secured revolving credit facility in an aggregate principal
amount of up to $35.0 million, of which approximately $5.0 million will
be funded at closing, and the remainder of which will be available for
working capital requirements and other general corporate purposes of Juno
and its subsidiaries.
Other material terms of the senior secured credit facilities are set forth
in detail below. The following terms are based upon the terms set forth in the
commitment letter and are subject to the syndication of the credit facilities
and the final negotiation and execution of the bank credit agreement and related
documents. As a result, the final terms of the senior secured credit facilities
may vary from those set forth below.
Maturity. Tranche A and the revolving credit facility will mature six years
after the closing date, and Tranche B will mature seven years after the closing
date. Each of Tranche A and Tranche B will amortize in quarterly installments.
The revolving credit facility will be payable in full at the maturity date.
Interest. The term loan facilities and the revolving credit facility will,
in general, bear interest at an annual rate equal to, at the option of Juno,
either:
- LIBOR (the London interbank offered rate for eurodollar deposits as
adjusted for statutory reserve requirements); or
- the Base Rate, which is the higher of (a) NationsBank's Prime Rate and
(b) the Federal Funds Effective Rate plus 0.50%,
in each case, plus a percentage determined by reference to Juno's ratio of total
debt to EBITDA (such terms to be defined in the loan documentation), as of the
end of and for the most recent period of four quarters for which financial
statements have been delivered. Swingline loans will bear interest at the Base
Rate plus 0.50% without regard to Juno's ratio of total debt to EBITDA.
Prior to the delivery to NationsBank, N.A. of Juno's August 31, 1999
financial statements, loans under Tranche A and the revolving facility will bear
interest at LIBOR plus 2.50% or (B) the Base Rate plus 1.00% and loans under
Tranche B will bear interest at (A) LIBOR plus 3.00% or (B) the Base Rate plus
1.50%.
In the event of a default under the senior secured credit facilities, a
default rate of 2.0% per annum above the applicable interest rate shall apply on
all loans.
Fees. A commitment fee on the undrawn portion of the senior secured credit
facilities will begin to accrue on the closing date and will be payable
quarterly in arrears. For purposes of calculating the commitment fee,
outstanding swingline loans will be considered to be undrawn commitments under
the revolving facility. The commitment fee will accrue at a rate of 0.50% per
year, subject to reduction based on Juno's ratio of total debt to EBITDA, as of
the end of and for the most recent period of four quarters for which financial
statements have been delivered. In addition, a letter of credit fee on the
amount available under each letter of credit will begin to accrue on the
issuance date of such letter of credit and will be payable quarterly in arrears.
The letter of credit fee will accrue at a rate of 2.5% per annum, subject to
reduction based on Juno's ratio of total debt to EBITDA, as of the end of and
for the most recent period of four quarters for which financial statements have
been delivered. A fronting fee of 0.25%
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<PAGE> 43
per year on the amount available under each letter of credit will be payable
quarterly in arrears for the account of the issuing bank.
Mandatory Prepayment. Juno will be required to prepay the loans under the
term loan facilities with:
- 100% of the net cash proceeds of all asset sales by Juno and its
subsidiaries (including sales of stock of subsidiaries of Juno), net of
selling expenses and taxes, subject to limited exceptions to be agreed
upon;
- 100% of the net cash proceeds of issuances of equity and debt obligations
of Juno and its subsidiaries, subject to limited exceptions to be agreed
upon; and
- 75% of Excess Cash Flow (to be defined in the loan documentation) if the
Funded Debt to EBITDA ratio (to be defined in the loan documentation) is
equal to or greater than 3.75:1.00, or 50% of Excess Cash Flow if the
Funded Debt to EBITDA ratio is less than 3.75:1.00.
To the extent that the amount of any mandatory prepayment exceeds the
outstanding loans under the term loan facilities, the commitments under the
revolving facility will be reduced.
Voluntary Prepayment. Juno may, at its option, prepay the loans under the
term loan facilities and the revolving credit facility, in minimum principal
amounts to be agreed upon, without premium or penalty, subject to reimbursement
of the lenders' breakage or redeployment costs in the case of prepayment of
LIBOR borrowings.
Guarantees. All obligations of Juno under the term loan facilities and the
revolving facility will be unconditionally guaranteed by each existing and each
subsequently acquired or organized domestic subsidiary of Juno.
Security. The senior secured credit facilities and the related guarantees,
as well as interest rate swap or foreign currency swap agreements entered into
with counterparties that are lenders, will be secured by (1) a first priority
perfected security interest in all of the equity securities of Juno owned by
Fremont Investors and (2) by substantially all the assets of Juno and each
existing and each subsequently acquired or organized domestic subsidiary,
subject to limited exceptions, including but not limited to:
- a pledge of all the capital stock of each existing and each subsequently
acquired or organized subsidiary of Juno (which pledge, in the case of
any foreign subsidiary, will be limited to 65% of the capital stock of
such foreign subsidiary); and
- perfected first priority security interests in substantially all tangible
and intangible domestic assets (including trademarks, copyrights and all
other intellectual property) of Juno and each existing and each
subsequently acquired or organized domestic subsidiary of Juno.
Covenants. The documentation for the senior secured credit facilities will
contain a number of affirmative covenants and negative covenants. The negative
covenants relate, among other things, to limitations on:
- liens and negative pledges;
- mergers, consolidations and sales of assets;
- investments, loans, advances and acquisitions;
- capital expenditures;
- incurrence of debt;
- dividends, stock redemptions and redemption or prepayment of other
indebtedness; and
- transactions with affiliates.
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<PAGE> 44
In addition, the credit agreement will contain the following financial
covenants, with definitions of financial terms and compliance levels to be
agreed upon:
- maintenance on a rolling four quarter basis of a maximum ratio of Total
Debt to EBITDA;
- maintenance on a rolling four quarter basis of a minimum ratio of EBITDA
to Interest Expense; and
- maintenance on a rolling four quarter basis of a minimum ratio of EBITDA
less capital expenditures to cash interest expense plus scheduled
principal repayments.
Events of Default. Events of default under the term loan facilities and the
revolving facility will include, among other things:
- nonpayment of principal, interest, fees or other amounts;
- material inaccuracy of representations and warranties;
- default in the performance of covenants;
- cross-default to material indebtedness and agreements;
- bankruptcy and similar events;
- material judgments;
- failure to satisfy certain material requirements of the Employee
Retirement Income Security Act of 1974, as amended;
- actual or asserted invalidity of any loan documentation or security
interests; and
- the occurrence of a change in control of Juno.
Grace periods with respect to the foregoing events of default will be
agreed upon in the loan documentation.
SENIOR SUBORDINATED NOTES FINANCING
Fremont Investors has received a letter dated March 26, 1999 from a
nationally recognized investment banking firm relating to the offering of senior
subordinated notes of Juno in an aggregate principal amount of $125 million in a
private placement under Rule 144A under the Securities Act (with subsequent
registration rights).
The senior subordinated notes will be general unsecured obligations of
Juno, junior to all existing and future senior indebtedness of Juno and equal in
right of payment to all other existing and future senior subordinated
indebtedness of Juno. Certain subsidiaries of Juno will guarantee payment on the
notes on an unsecured senior subordinated basis. The interest rate, interest
payment dates, maturity and other material terms of the senior subordinated
notes will be determined prior to completion of the merger.
EFFECTIVE TIME OF THE MERGER
The merger will become effective upon the filing of a certificate of merger
with the Secretary of State of Delaware or on such other date as is specified in
such certificate of merger in accordance with the Delaware law. Subject to
certain limitations, the merger agreement may be terminated by either party if,
among other reasons, the merger has not been consummated on or before September
30, 1999. See "Certain Provisions of the Merger Agreement -- Conditions to
Consummation of the Merger" and "--Termination."
CONVERSION/RETENTION OF SHARES; PROCEDURES FOR EXCHANGE OF CERTIFICATES
The conversion of shares of Juno common stock into the right to receive
cash or the right to retain shares of Juno following the merger will occur at
the effective time of the merger.
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<PAGE> 45
As soon as practicable after the effective time of the merger,
, Juno's exchange agent, will send a letter of transmittal
to each holder of Juno common stock. The letter of transmittal will contain
instructions with respect to the surrender of certificates representing shares
of Juno common stock in exchange for cash, certificates representing shares of
Juno common stock or the amount of cash in lieu of any fractional interest in a
share of Juno common stock, if applicable.
You should not forward stock certificates to the exchange agent until you
have received the letter of transmittal.
As soon as practicable after the effective time of the merger and once you
surrender your outstanding certificates representing shares of Juno common stock
to the exchange agent and the exchange agent accepts those certificates, you
will be entitled to receive the cash merger consideration, certificates
representing the number of full shares of Juno common stock and cash in lieu of
fractional shares into which the shares represented by such Juno share
certificates have been converted pursuant to the merger agreement. The exchange
agent will accept such certificates upon compliance with such reasonable terms
and conditions as the exchange agent may impose to effect an orderly exchange in
accordance with normal exchange practices. After the effective time of the
merger, there will be no further transfer on the records of Juno or its transfer
agent of certificates representing shares of stock which have been converted
pursuant to the merger. If such certificates are presented to Juno for transfer,
they will be cancelled against delivery of cash, and if appropriate,
certificates for shares of Juno common stock. Until surrendered as contemplated
by the merger agreement, each certificate for shares of Juno common stock will
be deemed at any time after the effective time of the merger to represent only
the right to receive upon such surrender the consideration contemplated by the
merger agreement. No interest will be paid or will accrue on any cash payable as
consideration in the merger or in lieu of any fractional shares of retained Juno
common stock.
No dividends or other distributions with respect to retained Juno common
stock with a record date after the effective time of the merger will be paid to
the holder of any unsurrendered certificate for shares of Juno common stock with
respect to the shares of retained Juno common stock represented thereby and no
cash payment in lieu of fractional shares will be paid to any such holder
pursuant to the merger agreement until the surrender of such certificate in
accordance with the merger agreement.
Subject to the effect of applicable laws, following surrender of any such
certificate, there will be paid to the holder of the certificate representing
whole shares of retained Juno common stock issued in connection with such
certificates, without interest, (1) at the time of such surrender or as promptly
as practicable after the sale of certain shares representing fractional
interests, the amount of any cash payable in lieu of a fractional share of
retained Juno common stock to which such holder is entitled pursuant to the
merger agreement and the proportionate amount of dividends or other
distributions, if any, with a record date after the effective time of the merger
paid with respect to whole shares of retained Juno common stock, and (2) at the
appropriate payment date, the proportionate amount of dividends or other
distributions, if any, with a record date after the effective time of the merger
but prior to such surrender and a payment date subsequent to such surrender
payable with respect to such whole shares of retained Juno common stock.
FRACTIONAL SHARES
Fractional shares of Juno common stock will not be issued in the merger.
Any fractional interests will not entitle the owner of such interests to vote or
to have any other rights of a stockholder of Juno after the merger. Each Juno
stockholder who would otherwise be entitled to receive a fraction of a share of
retained Juno common stock will receive, in lieu of such fractional share, a
cash payment, without interest, in lieu of such fractional share in an amount
equal to the product of such fraction multiplied by $25.
CERTAIN FEDERAL INCOME TAX CONSEQUENCES
The following discussion summarizes certain material United States federal
income tax consequences of the merger to Juno and the stockholders of Juno. The
discussion deals only with stockholders that hold
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<PAGE> 46
shares of Juno's common stock as capital assets (generally, property held for
investment). The discussion does not address all aspects of federal income
taxation that may be relevant to particular stockholders in light of their
personal circumstances or to certain types of stockholders subject to special
treatment under the federal income tax laws (including certain financial
institutions, broker dealers, insurance companies, tax-exempt organizations,
foreign persons and persons acquiring shares of Juno's common stock pursuant to
the exercise of employee stock options or otherwise as compensation). In
addition, the discussion does not address any state, local or foreign tax
consequences of any aspect of the merger. The discussion is based upon the
Internal Revenue Code of 1986, as amended (the "Code"), applicable Treasury
regulations promulgated thereunder, judicial decisions and current
administrative pronouncements, all as in effect as of the date hereof and which
are subject to change at any time, potentially with retroactive effect. No
ruling from the Internal Revenue Service will be applied for with respect to the
federal income tax consequences discussed herein and, accordingly, there can be
no assurance that the Internal Revenue Service will agree with the conclusions
stated herein.
Although this discussion sets forth certain material U.S. federal income
tax considerations generally applicable to stockholders of Juno as a consequence
of their receipt of cash and/or Juno common stock pursuant to the merger, the
discussion does not address every U.S. federal income tax concern that may be
applicable to a particular holder of Juno common stock in light of such holder's
particular circumstances. All stockholders are urged to consult their tax
advisors as to the particular tax consequences to them of the merger.
NO GAIN OR LOSS ON RETAINED SHARES.
No gain or loss will be recognized by a stockholder with respect to Juno
common stock retained by such stockholder in the merger. Moreover, a
stockholder's basis and holding period in the retained stock will not change.
GAIN OR LOSS RECOGNIZED UPON RECEIPT OF CASH FOR ALL SHARES.
The receipt of a cash payment pursuant to the merger (including any cash
payment received by dissenting stockholders upon the exercise of their rights of
appraisal) that terminates the interest of the stockholder in Juno will be a
taxable transaction for federal income tax purposes.
Amount of Gain or Loss. Stockholders who surrender all of their Juno common
stock in the merger (after applying the constructive ownership rules under
Section 318 of the Code) will recognize gain or loss as if they had sold all of
their shares for which they received cash. Such gain or loss will equal the
difference between each stockholder's adjusted tax basis in his or her shares
and the amount of cash received therefor.
Character of Gain or Loss. Gain or loss recognized on cash received in the
merger by stockholders who surrender all of their Juno common stock in the
merger will be a capital gain or loss. Such gain or loss will be a long-term
capital gain or loss if the holder has held the shares for more than one year as
of the effective time of the merger. Long-term capital gain of individuals and
other noncorporate taxpayers is currently taxed at a maximum rate of 20% for
federal income tax purposes.
GAIN OR LOSS RECOGNIZED WHERE STOCKHOLDER RECEIVES SOME CASH AND RETAINS
SOME STOCK.
Amount of Gain Recognized. Stockholders who receive cash for some but not
all of their shares will generally be treated as if they had sold the
surrendered shares to Juno for cash. Subject to the discussion below regarding
dividend treatment, such stockholders will recognize gain or loss equal to the
difference between the stockholder's adjusted tax basis in the shares
surrendered and the amount of cash received therefor. Gain or loss must be
determined separately for each block of shares (i.e., shares acquired at the
same cost in a single transaction).
Character of Recognized Gain. Subject to the discussion below regarding
dividend treatment, any recognized gain or loss will be a capital gain or loss.
Such gain or loss will be a long-term capital gain or
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loss if the holder has held the shares for more than one year as of the
effective time of the merger. Long-term capital gains of individuals and other
noncorporate taxpayers currently are taxed at a maximum rate of 20% for federal
income tax purposes.
Dividend Treatment. Some or all of the cash received by a stockholder who
retains or is treated as retaining (as a result of the application of Section
318 of the Code, as described below) some common stock (or acquires some
convertible preferred stock in the same transaction) may be treated as a
distribution, rather than a sale, if it has the effect of a dividend as
determined under Section 302 of the Code.
If the payment of cash for Juno common stock is considered a dividend, the
cash payment will be taxable as ordinary income to the extent of the
stockholder's ratable share of Juno's earnings and profits ("E & P"). If the
cash payment exceeds such holder's pro rata share of the E & P, the excess will
be treated first as a basis-reducing, tax free return of capital to the extent
of the holder's basis in the Juno common stock and then as a capital gain to the
extent of any excess.
A distribution to a stockholder will not be considered to have the effect
of a distribution of a dividend if it is "substantially disproportionate" with
respect to the stockholder or if it is "not essentially equivalent to a
dividend" to the stockholder. A distribution will be "substantially
disproportionate" with respect to a stockholder if the stockholder's
proportionate interest in the Juno common stock after the merger is (a) less
than 50% of the total of all outstanding Juno common stock after the merger and
(b) less than 80% of what the stockholder's proportionate interest was before
the merger. For example, a stockholder who owns 5% of the outstanding common
stock of Juno before the merger, and who receives some cash in the merger, would
have to own less than 4% of the outstanding common stock of Juno after the
merger in order for the distribution to be "substantially disproportionate."
Even though a distribution does not satisfy the substantially
disproportionate test discussed above, it still may be "not essentially
equivalent to a dividend" depending upon the stockholder's particular facts and
circumstances. The United States Supreme Court in Davis v. United States, 397
U.S. 301, 313 (1970), concluded that in order for a distribution to be
considered not essentially equivalent to a dividend, there must be a "meaningful
reduction of the stockholder's proportionate interest." Based on IRS rulings,
even a small reduction in the proportionate interest of a stockholder who holds
only a small proportionate interest in Juno and who exercises no control over
corporate affairs can constitute a meaningful reduction. However, stockholders
who increase their proportionate interest in Juno as a result of the merger (and
any related investment in convertible preferred stock of Juno) will not
experience a meaningful reduction in their proportionate interest in the Juno
common stock, and therefore will be treated as having received a distribution of
cash essentially equivalent to a dividend.
In applying the "substantially disproportionate" and "not essentially
equivalent to a dividend" tests, the constructive ownership rules of Section 318
of the Code (under which stockholders are treated as holding not only their own
shares but also shares held by certain related persons and entities or shares
subject to an option held by the stockholder) are applicable. Also, in applying
the two tests, it is intended that the Series A convertible preferred shares
should be treated as common stock on a fully converted basis, although there can
be no certainty that such treatment is proper and no ruling or opinion is being
obtained with respect thereto.
A Juno stockholder who elects to receive some cash and who will be subject
to dividend treatment may want to consider with a tax advisor whether the
stockholder should be viewed as selling shares (1) to Juno to the extent of the
cash funded by assets or borrowing of Juno, and (2) to Fremont Investors to the
extent of the cash funded by equity contributions of Fremont Investors. Based on
such a view, dividend treatment could be limited to the cash allocable to the
deemed sale of stock to Juno. However, there can be no assurance that such a
bifurcation of the transaction would be proper.
Basis and Holding Period. A stockholder who retains some Juno common stock
and receives some cash will retain the same basis in such stock as before the
merger. The holding period of the retained stock will not change.
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WITHHOLDING.
Payments in connection with the merger may be subject to "backup
withholding" at a rate of 31%, unless a holder of shares (a) is a corporation or
comes within certain exempt categories and, when required, demonstrates this
fact or (b) provides a correct tax identification number ("TIN") to the payor,
certifies as to no loss of exemption from backup withholding and otherwise
complies with applicable requirements of the backup withholding rules. A holder
who does not provide a correct TIN may be subject to penalties imposed by the
Internal Revenue Service. Any amount paid as backup withholding does not
constitute an additional tax and will be creditable against the holder's federal
income tax liability. Each stockholder should consult with his or her own tax
advisor as to his or her qualification for exemption from backup withholding and
the procedure for obtaining such exemption. Holders may prevent backup
withholding by completing a Substitute Form W-9 or, in the case of foreign
holders, a Form W-8, and submitting it to the paying agent along with the letter
of transmittal.
TAX CONSEQUENCES TO JUNO.
Juno will not recognize any gain or loss upon the receipt of the Juno stock
in exchange for the issuance of its own stock.
INTERESTS OF CERTAIN PERSONS IN THE MERGER
Certain directors and executive officers of Juno may have interests which
present them with potential conflicts of interest in connection with the merger.
The Board of Directors was aware of the conflicts described below and considered
them in addition to the other matters described under "-- Reasons for the
Recapitalization and Merger; Recommendation of the Board of Directors."
Indemnification and Insurance. Following the merger, Juno's certificate of
incorporation and bylaws will contain provisions identical to those existing
prior to the merger with respect to elimination of personal liability and
indemnification. These provisions will not be amended, repealed or otherwise
modified for a period of six years in any manner that would adversely affect the
rights of present and former officers and directors of Juno and its subsidiaries
at the time of the merger.
In addition, Juno has agreed to maintain for six years directors' and
officers' liability insurance policies on terms and conditions which are at
least as favorable as those in effect at the effective time of the merger,
covering events occurring prior to the merger. In no event will Juno be required
to spend in any year in excess of 300% of the aggregate premiums paid by Juno in
1998 on an annualized basis for such purpose. If Juno would be required to spend
in excess of 300% of the aggregate premiums paid by Juno in 1998 on an
annualized basis for such purpose for any year, Juno must buy as much insurance
as can be obtained for a cost not exceeding such amount.
Stock Options. All outstanding options to purchase shares of Juno common
stock, including all options held by officers of Juno, will be accelerated and
fully vested as a result of the merger. Each holder of outstanding options will
be free to continue to hold such options or to exercise them in accordance with
their terms after the merger. See "Executive Compensation -- Stock Option Plan
Exercises and Year-End Value Table."
New Option Plan. The Juno Board of Directors has adopted, subject to
stockholder approval, the 1999 Stock Option and Incentive Plan, which covers up
to 940,000 shares of Juno common stock. See "Approval of the 1999 Stock Award
and Incentive Plan." Although no specific grants are contemplated at this time,
directors and executive officers of Juno would be eligible to receive future
grants under this plan.
Change of Control Benefits Arrangements. The Board has approved and Juno
has entered into Change of Control Benefits Agreements with the following
executive officers of Juno: Thomas W. Tomsovic, Charles W. Huber, George J.
Bilek, and Glenn R. Bordfeld, and with three other officers of Juno. Robert S.
Fremont, the Chairman and Chief Executive Officer of Juno, is not a party to any
such severance agreement with Juno. These agreements provide for severance and
other benefits in the event of a change of control of Juno and in the event of
certain terminations of employment under employment contracts
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becoming effective upon the change of control and ending upon six months notice
from Juno, but no earlier than December 31, 2000. Some benefits would be
provided immediately upon the change of control. Severance benefits for
termination of employment after the change of control would be payable only if
an executive's employment is terminated by Juno without "cause" or by the
executive for "good reason". For this purpose, good reason includes material
adverse changes in duties, reduction in salary, or a required move of more than
40 miles. "Cause," for these purposes, means commission of certain felonies,
substance abuse, and serious misconduct or neglect in the course of duties.
The recapitalization and the merger will constitute a change of control
pursuant to these agreements. Upon the consummation of the merger, the principal
benefits that would be provided include (1) an employment contract with (a) a 5%
minimum annual base salary increase, (b) no adverse change in duties, (c) no
required move of more than 40 miles, and (d) participation in benefit and
welfare plans; (2) a transaction bonus of $150,000; (3) a performance bonus
based on projected operating income for the year of the change of control,
prorated for the portion of the year elapsed prior to the change of control, and
multiplied by 115%; and (4) the acceleration of vesting of all unvested stock
options.
The principal benefits that would be provided as severance benefits upon
termination by the executive for good reason or by Juno other than for cause or
disability include: (1) a lump sum payment equal to the greater of (x) six
months' base salary or (y) the base salary which would have been payble through
December 31, 2000; (2) a payment equal to forfeited retirement benefits, if any;
and (3) continuation of medical, dental, life insurance, and other fringe
benefits for the greater of (x) six months or (y) until December 31, 2000. In
addition, the agreements provide reimbursement of legal fees for actions to
enforce the agreements brought in good faith, regardless of whether the
executive prevails in such action. The benefits are capped at the maximum amount
payable without triggering excise tax under the golden parachute provisions of
the Internal Revenue Code.
Payments that would be made to the persons who are parties to the Change of
Control Benefits Agreements in the event of their termination during the
employment period after the merger (other than for cause or by reason of the
executive's death or disability) are a maximum of approximately $4,068,025 for
all officers with Change of Control Benefits Agreements. This amount is based on
numerous assumptions, including that the merger occurs on June 30, 1999, that
all of the parties to the Change of Control Benefit Agreements are terminated on
such date and that the fair market value of one share of Juno common stock is
$25. However, it is not expected that all or any of such persons would be so
terminated.
The foregoing is only a summary and is qualified in its entirety by
reference to the terms of each Change of Control Benefits Agreement.
Convertible Preferred Stock. In Fremont's prior acquisitions, entities
affiliated with Fremont Partners have offered equity ownership opportunities to
the key management of the companies they have acquired, and may offer key
management of Juno an opportunity to purchase from Juno a portion of the new
series of convertible preferred stock. Although general discussions have taken
place with the management of Juno, no decisions have been made at this time,
either as to the identity of the persons who may be offered the opportunity to
invest in Juno or as to the amount of convertible preferred stock any members of
management of Juno may be offered. If and to the extent members of management of
Juno and related entities are given the opportunity to, and do, invest in the
equity of Juno, the equity interest of Fremont Investors in Juno would be
reduced. Fremont anticipates that, if any convertible preferred stock is offered
to members of management of Juno, the aggregate amount of such offering would
not exceed 10,000 shares of convertible preferred stock.
DIRECTORS OF JUNO AFTER THE MERGER
The merger agreement provides that as of the effective time of the merger,
the directors serving on the Board of Directors of Jupiter will become the Board
of Directors of Juno. It is expected that Robert Jaunich II and Mark Williamson
will become directors of Juno at the effective time of the merger. After
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the effective time of the merger, the Board of Directors of Juno will be subject
to change from time to time.
The merger agreement provides that the officers of Juno will continue to
serve as the officers of Juno after the merger. It is expected that the officers
of Juno at the effective time of the merger will be the officers of Juno
following the merger until such time as may be determined by the Board of
Directors following the merger.
Information regarding Mr. Jaunich and Mr. Williamson is as follows:
Robert Jaunich II has served as President and Chief Executive Officer of
Fremont Investors since May 1998, as a Managing Director of Fremont Partners,
L.P. and a member of FP Advisors, L.L.C. since 1996, and as a Managing Director
and a member of the Board of Directors and Executive Committee of The Fremont
Group since 1991. Prior to joining The Fremont Group in 1991, he was Executive
Vice President and a member of the Chief Executive Office of Swiss-based Jacobs
Suchard AG. Previously, he was President of Osborne Computer Corporation,
President of Sara Lee Corporation, and Executive Vice President of Memorex
Corporation. Among the various board positions he holds, Mr. Jaunich is Chairman
of the Board of Directors of Kinetic Concepts, Inc., a director of Kerr Group,
Inc., a director of CNF Transportation, Inc. and Chairman of the Managing
General partner of Crown Pacific Partners, L.P. His previous board associations
include Coldwell Banker Corporation, Petro Stopping Centers, L.P., Sara Lee
Corporation, Douwe Egberts, The Wine Group, Brach Van houten Holding, Inc. and
Nabob Foods.
Mark N. Williamson has served as Vice President and Treasurer of Fremont
Investors since May 1998 and as a Managing Director of Fremont Partners and a
member of FP Advisors, L.L.C. since 1996. Prior to joining Fremont Partners in
May 1996, Mr. Williamson served as a Managing Director at the Harvard Private
Capital Group, Inc. from August 1991. Prior to that time, he was an Associate at
ESL Partners, Inc., a private investment partnership pursuing value-oriented
investments in private and public equity and debt securities. His previous board
associations include Tarquin, P.L.C. and Risk Capital Holdings, Inc.
In addition to these two outside directors, Fremont intends to nominate and
appoint a representative of management and additional outside directors
unaffiliated with Fremont to serve on the Juno Board of Directors as soon as
practicable after the effective time of the merger.
CERTAIN EFFECTS OF THE RECAPITALIZATION AND MERGER
Nasdaq Listing. Although we expect Juno common stock will continue to be
publicly traded on Nasdaq after the merger, we cannot assure you that Juno
common stock will continue to be listed on Nasdaq indefinitely. Fremont
Investors has agreed that for at least three years after the effective time of
the merger, it will not take any action to cause Juno common stock to be
delisted from Nasdaq, unless such action is taken in connection with a
transaction which results in the termination of Juno's Exchange Act reporting
obligations. Although it is currently expected that Juno common stock will
continue to be listed on Nasdaq following the merger, there is also a
possibility that, following the merger, the total number of beneficial holders
of Juno common stock will fall below the 400 beneficial holders required for
Juno common stock to maintain its Nasdaq listing, or that other applicable
listing criteria will not be met, although Juno expects that it will satisfy the
applicable listing criteria at the effective time of the merger. See "Risk
Factors -- There may be a Loss of Liquidity and Increased Volatility in the
Trading of Juno Common Stock after the Merger."
Exchange Act Reports. Juno currently expects to continue to be a reporting
company under the Exchange Act and to continue to file periodic reports
(including annual and quarterly reports) following the effective time off the
merger. Juno will also continue to provide proxy statements to its stockholders
under the Exchange Act if as a result of the elections to retain stock made by
holders of Juno common stock with respect to the effective time, Juno has 300 or
more holders of shares of Juno common stock following the merger. If Juno were
to cease to be a reporting company under the Exchange Act, the information now
available to holders of Juno common stock in the periodic reports would not be
available
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to them as a matter of right. See "Risk Factors -- There may be a Loss of
Liquidity and Increased Volatility in the Trading of Juno Common Stock after the
Merger."
GOVERNMENTAL AND REGULATORY APPROVALS
Under the Hart-Scott-Rodino Improvements Act of 1996, or "HSR Act," and the
rules promulgated thereunder by the Federal Trade Commission, or "FTC," the
merger may not be completed until notifications have been given and certain
information has been furnished to the FTC and the Antitrust Division of the
Department of Justice and specified waiting period requirements have been
satisfied. Juno and Fremont Investors filed notification and report forms under
the HSR Act with the FTC and the Antitrust Division on April , 1999. At any
time before or after consummation of the merger, the Antitrust Division, the FTC
or state attorneys' general could take such action under the antitrust laws as
they deem necessary or desirable in the public interest, including seeking to
enjoin the consummation of the merger. Private parties may also seek to take
legal action under the antitrust laws under certain circumstances.
Based on the information available to them, Juno and Fremont Investors
believe that the merger can be effected in compliance with federal and state
antitrust laws. However, there can be no assurance that a challenge to the
consummation of the merger on antitrust grounds will not be made or that, if
such challenge were made, Juno and Fremont Investors would prevail or would not
be required to accept certain conditions, including the divestitures of certain
assets, in order to consummate the merger.
ACCOUNTING TREATMENT
We expect the merger to be accounted for as a recapitalization under
generally accepted accounting principles. Accordingly, the historical basis of
Juno's assets and liabilities will not be impacted by the transaction.
RESALE OF RETAINED COMMON STOCK FOLLOWING THE MERGER
The Juno common stock to be retained in connection with the merger will be
freely transferable, except that shares retained by any stockholder who may be
deemed to be an "affiliate" (as defined under the Securities Act and generally
including, without limitation, directors, certain executive officers and
beneficial owners of 10% or more of a class of capital stock) of Juno for
purposes of Rule 145 under the Securities Act will not be transferable except in
compliance with the Securities Act. This proxy statement/ prospectus does not
cover sales of Juno common stock retained by any person who may be deemed to be
an affiliate of Juno.
CERTAIN PROVISIONS OF THE MERGER AGREEMENT
This section of the proxy statement/prospectus describes material
provisions of the merger agreement. Because the description of the merger
agreement in this document is a summary, it does not contain all the information
that may be important to you. You should read carefully the entire copy of the
merger agreement attached as Annex A to this document and incorporated herein by
reference before you decide how to vote.
THE MERGER
The merger agreement requires that Juno stockholders approve the merger and
the transactions contemplated thereby by the vote of a majority of the
outstanding shares of Juno common stock entitled to vote on the merger.
Following receipt of this approval and the satisfaction or waiver of the other
conditions to the merger, Juno will consummate the merger. In the merger,
Jupiter, a wholly-owned subsidiary of Fremont, will merge with and into Juno,
with Juno surviving the merger.
You may find more information regarding the merger consideration in the
following sections of this proxy statement/prospectus: "The Recapitalization and
Merger -- Merger Consideration" on page 30,
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"-- Conversion/Retention of Shares; Procedures for Exchange of Certificates" on
page 36 and "-- Fractional Shares" on page 37.
You may find information regarding the treatment in the merger of
outstanding Juno stock options under "The Recapitalization and
Merger -- Interests of Certain Persons in the Merger" on page 40.
You may find information regarding the indemnification of our directors and
officers, and the maintenance of our directors' and officers' liability
insurance under the caption "The Recapitalization and Merger -- Interests of
Certain Persons in the Merger" on page 40.
CLOSING OF THE MERGER
Unless the parties agree otherwise, the closing of the merger will take
place as soon as practicable after the date on which all closing conditions have
been satisfied or waived. The closing of the merger is expected to take place
shortly after the approval of the Juno stockholders at the special meeting,
which is expected to occur in the fiscal quarter ending August 31, 1999.
EFFECTIVE TIME OF THE MERGER
The merger will become effective upon the filing of a certificate of merger
with the Secretary of State of the State of Delaware or such later date as is
agreed upon by the parties and specified in the certificate of merger. The
filing of the certificate of merger will occur as soon as practicable after the
special meeting.
SURVIVING CORPORATION
Juno will be the surviving corporation of the merger and shall continue to
be governed by the laws of the State of Delaware. Immediately prior to the
effective time of the merger, Juno has agreed to file the amended and restated
certificate of incorporation of Juno with the Secretary of State of the State of
Delaware. After the merger, the bylaws of Juno as in effect immediately prior to
the merger will continue to be the certificate of incorporation and bylaws of
Juno, until thereafter further lawfully amended. The initial directors and
senior executive officers of Juno following the merger will be as described in
"The Recapitalization and Merger -- Directors of Juno after the Merger" on page
41.
REPRESENTATIONS AND WARRANTIES
The merger agreement contains customary representations and warranties of
Fremont and Juno relating to, with respect to Juno and its respective
subsidiaries, among other things:
- organization, standing and similar corporate matters;
- capital structure;
- the authorization, execution, delivery, performance and enforceability of
the merger agreement;
- the recommendation of the Board of Directors with respect to the merger
agreement, the merger and related transactions;
- consents and approvals;
- the accuracy of information contained in documents filed by Juno with the
Commission and the absence of undisclosed liabilities;
- the quality and quantity of inventory;
- the absence of certain changes or events since the date of the most
recent audited financial statements filed by Juno with the Commission;
- the absence of pending or threatened material litigation and compliance
with applicable laws;
- benefit plans and other related employment matters;
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- tax matters;
- title to property;
- condition of plant and equipment;
- environmental matters;
- labor matters;
- the absence of defaults under material contracts;
- insurance matters;
- the receipt of an opinion of Juno's financial advisor;
- brokers' fees and expenses;
- intellectual property matters;
- the Board of Directors' exemption of Fremont and Jupiter and the
transactions contemplated by the merger agreement under Juno's
stockholders' rights plan;
- the absence of certain transactions with affiliates;
- the accuracy of information supplied by Juno in connection with this
proxy statement/prospectus;
- legal and accounting fees; and
- cash and marketable securities.
The merger agreement also contains customary representations and warranties
of Fremont Investors and Jupiter relating to, among other things:
- organization, standing and similar corporate matters;
- the authorization, execution, delivery, performance and enforceability of
the merger agreement;
- consents and approvals;
- the financing commitment and highly confident letter obtained from third
parties in connection with the merger;
- ownership of shares of Juno common stock;
- capital structure; and
- brokers' fees and expenses.
All the representations and warranties are subject to various
qualifications and limitations.
CERTAIN COVENANTS
Juno has agreed that, prior to the merger, it will conduct its business
only in the ordinary course and in compliance with applicable laws, and will use
its reasonable best efforts to preserve substantially intact its business
organization, to keep available the services of its present officers and key
employees and to preserve its present relationships with customers, suppliers,
creditors and other persons with which it has significant business relations.
Accordingly, Juno agreed that, it will not, without the prior written
consent of Fremont:
- amend its certificate of incorporation, bylaws or other similar
organizational documents;
- issue, sell, transfer, pledge or otherwise dispose of its securities
other than as specified in the merger agreement;
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- declare or pay dividends except pursuant to the terms of the Juno's
stockholders' rights agreement and except for the cash dividend declared
by Juno on March 15, 1999;
- change its share capital, including, among other things, by effecting a
stock split, combination or reclassification, or repurchase or redeem
capital stock;
- incur or modify any indebtedness or other liability, or materially
modify, amend or terminate any material contract, or waive, release or
assign any material rights, outside the ordinary course of business;
- change the compensation of directors and officers, or other employees
other than in the ordinary course of business, or provide any new or
change any existing employment, severance, consulting or termination
agreement or employee benefit plans;
- permit any insurance policy naming Juno as a beneficiary to be cancelled
or terminated, outside the ordinary course of business;
- enter into any contract relating to the purchase of material assets,
outside the ordinary course of business;
- pay any material liabilities or obligations other than in the ordinary
course of business;
- adopt a plan of liquidation or dissolution, merger or other
reorganization;
- make changes in its accounting methods other than as required by
generally accepted accounting principles, or make any material tax
election;
- take any action reasonably likely to result in any conditions to the
purchase of preferred stock as contemplated by the merger agreement not
being satisfied;
- amend or waive any provision of its rights agreement or redeem the rights
except as contemplated by the merger agreement; or
- take, or offer to take, or agree to take in writing or otherwise, any of
the above actions.
NO SOLICITATION
The merger agreement restricts Juno's ability to take actions with respect
to acquisition proposals other than the recapitalization and merger. We use the
term acquisition proposal to mean any of the following:
- any tender or exchange offer involving Juno;
- any proposal for a merger, consolidation or other business combination
involving Juno;
- any proposal or offer to acquire in any manner 20% or more of the equity
interest in, or 20% or more of the business or assets of, Juno;
- any proposal or offer with respect to any recapitalization or
restructuring with respect to Juno; or
- any proposal or offer with respect to any other transaction similar to
any of the foregoing.
A repurchase of shares by Juno which is consummated without the issuance to
any third party of any equity or convertible debt securities of Juno or any
subsidiary of Juno is not considered an acquisition proposal for purposes of the
merger agreement.
Juno has agreed that it will:
- not encourage, solicit or initiate, or take other action to facilitate an
acquisition proposal or furnish information to any third party concerning
an acquisition proposal;
- not, in the event of an unsolicited acquisition proposal, engage in
discussions or negotiations with, or provide any information to, any
person relating to such acquisition proposal;
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- notify Fremont if Juno receives any offers related to an acquisition
proposal or a possible acquisition proposal, and include in such notice
the name of the person making such proposal or offer and the terms and
conditions of such proposal or offer;
- not withdraw, qualify or modify its recommendation of the
recapitalization and merger or cause Juno to enter into any agreement
with respect to an acquisition proposal.
However, the merger agreement does not prevent Juno from:
- furnishing information to Juno stockholders in order to comply with Rules
14d-9 and 14e-2(a) under the Exchange Act with regard to a tender or
exchange offer made by someone other than Fremont;
- making any disclosures to Juno stockholders, if the Juno Board of
Directors, with the advice of outside counsel, determines in good faith
that the failure to make such disclosures would constitute a breach of
the fiduciary duties of the Juno Board of Directors;
- taking any action which, in the opinion of outside counsel, is required
by a final, non-appealable court order.
The merger agreement also allows Juno to take certain actions after the
receipt by Juno of an unsolicited acquisition proposal which is a superior
proposal. We use the term superior proposal to mean an acquisition proposal
which the Juno Board of Directors determines in good faith, based on the opinion
of its financial advisor, to be more favorable to the Company's stockholders
than the recapitalization and merger agreement, taking into account all relevant
factors. With respect to any such superior proposal, Juno may:
- furnish information to any person or entity which has made such superior
proposal, pursuant to a customary confidentiality agreement; or
- participate in negotiations with respect to such superior proposal, so
long as Juno keeps Fremont informed of the status and terms of such
proposal.
In addition, after determining in good faith, based on the advice of
outside counsel, that the failure to do so would be reasonably likely to result
in a breach of its fiduciary duties, the Juno Board of Directors may, in each
case after providing Fremont with three business days to make adjustments to the
merger agreement which would allow the Juno Board of Directors to proceed with
the recapitalization and merger:
- withdraw, qualify or modify its recommendation of the recapitalization
and merger;
- approve or recommend a superior proposal; or
- cause Juno to enter into an agreement with respect to a superior
proposal.
EMPLOYEE BENEFITS
For at least 12 months following the effective time of the merger, Fremont
will cause Juno and its subsidiaries to provide to their employees benefits
which will, in the aggregate, be substantially comparable to those provided to
employees of Juno as of March 26, 1999. However, Fremont will not be obligated
to provide employees with a plan similar to the equity-based compensation plans
currently maintained by Juno.
The merger agreement also states that Fremont shall cause Juno to honor the
change of control agreements in place between Juno and certain executive
officers and other officers.
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CONDITIONS TO THE CONSUMMATION OF THE MERGER
The respective obligations of Juno, Fremont and Jupiter to effect the
merger are subject to various conditions which include, in addition to other
customary closing conditions, the following:
- the Juno stockholders must approve the merger, the merger agreement and
the transactions contemplated thereby, the amended and restated
certificate of incorporation and the 1999 Stock Award and Incentive Plan;
- there must be no law, order, injunction or other legal restraint or
prohibitions restricting or preventing the consummation of the merger;
- the waiting period under the Hart-Scott-Rodino Act must have terminated
or expired;
- the Board of Directors must have received a solvency opinion;
- there must be no stop order suspending the effectiveness of the
registration statement of which this proxy statement/prospectus is a
part; and
- the debt financing for the merger, substantially on the terms
contemplated by the commitment letters, must have been obtained.
The obligations of Fremont and Jupiter to effect the merger are also
subject, in addition to other customary conditions, to the following additional
conditions:
- since March 26, 1999, no event shall have occurred and be continuing that
shall be materially adverse to the financial condition, business or
results of operations of Juno or its subsidiaries;
- the amended and restated certification of incorporation must have been
filed with the Secretary of State of the State of Delaware; and
- Juno and Fremont Partners L.L.C. must have entered into a management
services agreement.
The obligations of Juno to effect the merger are also subject, in addition
to other customary conditions, to the following additional conditions:
- since March 26, 1999, no event or change shall have occurred which would
have, or is reasonably likely to have, a material adverse effect on
Fremont Investors or Jupiter; and
- Fremont Investors must have purchased the Series A convertible preferred
stock.
TERMINATION
The merger agreement provides that the merger agreement may be terminated
and the transactions contemplated in the merger agreement abandoned at any time
prior to the effective time, whether before or after approval by the Juno
stockholders:
- by mutual written consent of Fremont Investors and Juno;
- by either Fremont Investors or Juno if:
- the merger has not been completed on or prior to September 30, 1999, so
long as the party seeking to terminate did not prevent consummation by
failing to fulfill any of its obligations under the merger agreement; or
- any governmental entity issues a non-appealable final order, decree or
ruling or takes any other final action permanently restraining,
enjoining or otherwise prohibiting the consummation of the merger or any
of the transactions contemplated by the merger agreement.
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- by Juno if:
- Fremont Investors or Jupiter breaches or fails in any material respect
to perform or comply with any of its material covenants and agreements
contained in the merger agreement or breaches its representations and
warranties in any material respect;
- the Juno stockholders fail to approve the merger agreement and the
transactions contemplated thereby, the amended and restated certificate
of incorporation of Juno and the 1999 Stock Award and Incentive Plan; or
- if Juno enters into a written agreement with respect to a superior
proposal.
- by Fremont if:
- Juno breaches or fails in any material respect to perform or comply with
any of its material covenants and agreements contained in the merger
agreement or breaches its representations and warranties in any material
respect;
- the Juno stockholders fail to approve the merger;
- if any person, entity or group, other than Fremont Investors or its
affiliates, acquires beneficial ownership of more than 20% of any class
or series of capital stock of Juno or shall have been granted an option,
warrant or other right to acquire beneficial ownership of more than 20%
of any class or series of capital stock of Juno; or
- if Juno's Board of Directors have (i) failed to include in the proxy
statement its recommendation, without modification or qualification,
that stockholders approve the merger agreement, merger and transactions
contemplated by the merger; (ii) withdrawn, modified or qualified its
recommendation in a manner adverse to the interests of Fremont
Investors; or (iii) approved a superior proposal.
TERMINATION FEES AND EXPENSES
The merger agreement provides that Juno will pay Fremont Investors a
termination fee of $12 million and up to $3 million of reasonable out-of-pocket
expenses of Fremont Investors, Jupiter and their affiliates incurred in
connection with the merger if the merger agreement is terminated under the
following circumstances:
(1) Fremont Investors terminates the merger agreement because:
(a) a person, entity or group, other than Fremont Investors or its
affiliates, shall have acquired beneficial ownership of 20% of any class or
series of capital stock of Juno or shall have been granted an option, right
or warrant to acquire beneficial ownership of more than 20% of any class or
series of capital stock of Juno; or
(b) Juno's Board of Directors:
- failed to include in the Proxy Statement its recommendation, without
modification or qualification, that its stockholders approve the
merger agreement, the merger and the transactions contemplated
thereby;
- has withdrawn, modified or qualified its recommendation in a manner
adverse to the interests of Fremont Investors; or
- approved or recommended a superior proposal.
(2) Juno's Board of Directors terminates the merger agreement because Juno
enters into a written agreement with respect to a superior proposal.
(3) Either (x) Fremont Investors terminates the merger agreement because
Juno breaches or fails in any material way to perform any of the material
covenants and agreements contained in the merger
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agreement or breaches its representations and warranties in any material
respect or (y) either party terminates the merger agreement because the
Juno stockholders failed to approve the merger agreement; and either of the
following occurs:
(a) (i) prior to the meeting of stockholders, there had been a publicly
disclosed acquisition proposal interest and (ii) within one year of
termination under this clause (3), Juno shall have entered into or
consummated a definitive agreement with respect to a acquisition
proposal or similar business combination; or
(b) (i) prior to the meeting of stockholders, there had been a
acquisition proposal interest, whether or not publicly disclosed, and
(ii) within one year of termination under this clause (3), Juno shall
have entered into or consummated a definitive agreement with the person
or entity who made such acquisition proposal interest with respect to a
transaction that is superior in value to the transactions contemplated
by the merger agreement.
When we use "acquisition proposal interest," we mean any inquiry,
expression of interest, proposals or offers relating to an acquisition proposal
or the possibility or consideration of making an acquisition proposal.
Notwithstanding the above, Juno would be obligated to pay Fremont Investors
reasonable out-of-pocket fees and expenses actually paid or incurred by Fremont
Investors, Jupiter, and their affiliates up to $3 million (whether or not Juno
enters into a definitive agreement for a competing acquisition proposal as
described above) if either Fremont Investors or Juno's Board of Directors were
to terminate the merger agreement because:
(1) Juno's stockholders had failed to approve the merger agreement; and
(2) Either (a) prior to the time of the special meeting of Juno
stockholders, there had been a publicly disclosed acquisition proposal
interest, or (b) prior to the time of the special meeting of Juno
stockholders, there had been an acquisition proposal interest (whether
publicly disclosed or not) and within one year of the termination of the
merger agreement between Juno and Fremont, Juno enters into a definitive
agreement with respect to such competing proposal or similar business
combination.
The parties have agreed that the aggregate amount payable by either party
in the event of any material breach of the merger agreement by the other party
shall in no event exceed $15 million.
TRANSACTION FEES
The merger agreement provides that upon the effective time of the merger,
each party's reasonable out-of-pocket expenses incurred in connection with the
merger agreement and the transactions contemplated thereby shall be paid by
Juno. Such expenses include, without limitation, attorneys' fees and expenses of
financial advisors and accountants. In addition, Juno shall pay Fremont
Partners, LLC a transaction fee of $4.54 million.
AMENDMENT AND WAIVER
The parties may amend the merger agreement by written agreement of the
parties, by action taken by their respective managers or Board of Directors, at
any time prior to the closing date of the merger. After Juno stockholders
approve the merger, the parties may not amend the merger agreement in any way
which would reduce the amount or change the form of consideration to be received
by Juno stockholders. At any time prior to the effective time of the merger, any
party may, to the extent legally allowed:
- extend the time for the performance of any of the obligations or other
acts of the other parties;
- waive any inaccuracies in the representations and warranties contained in
the merger agreement or in any document delivered pursuant to the merger
agreement; or
- waive compliance with any of the agreements or conditions in the merger
agreement.
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Any extension or waiver described above will be valid if set forth in
writing and signed by the parties to be bound.
APPROVAL OF THE AMENDED AND RESTATED CERTIFICATE OF INCORPORATION
The Board of Directors of Juno has adopted, subject to stockholder
approval, the amended and restated certificate of incorporation of Juno. The
amended and restated certificate of incorporation is identical to Juno's
existing certificate of incorporation, except that the amended and restated
certificate of incorporation:
- authorizes the issuance of 5,000,000 shares of the Juno preferred stock,
and designates 1,060,000 of those shares as Series A convertible
preferred stock;
- decreases the authorized number of shares of Juno common stock to
45,000,000 from 50,000,000;
- decreases the par value of the Juno common stock to $.001 per share from
$.01 per share; and
- eliminates the current division of the Board of Directors into three
classes.
In accordance with the merger agreement, immediately prior to the effective
time of the merger, Juno has agreed to file the amended and restated certificate
of incorporation with the Secretary of State of the State of Delaware.
VOTE
The affirmative vote by the holders of a majority of the outstanding Juno
shares is required for approval of the amended and restated certificate of
incorporation. Accordingly, abstentions or broker non-votes will have the same
effect as votes against the proposal. Unless instructed to the contrary in the
proxy, the shares represented by the proxies will be voted FOR the proposal to
approve the amended and restated certificate of incorporation.
This section of the proxy statement/prospectus describes the material terms
of the amended and restated certificate of incorporation. Because the
description of the terms in this document is a summary, it does not contain all
the information that may be important to you. You should read carefully the
entire copy of the amended and restated certificate of incorporation attached as
Annex C to this document and incorporated herein by reference before you decide
how to vote.
COMMON STOCK
The amended and restated certificate of incorporation decreases the
authorized number of shares of Juno common stock to 45,000,000 from 50,000,000
and decreases the par value of such stock to $.001 per share from $.01 per
share.
PREFERRED STOCK
The amended and restated certificate of incorporation gives Juno the
authority to issue 5,000,000 shares of Juno preferred stock, par value $.001 per
share, and designates 1,060,000 of those shares as Series A convertible
preferred stock.
SERIES A CONVERTIBLE PREFERRED STOCK. In accordance with the merger
agreement, Juno will issue 1,060,000 shares of Series A convertible preferred
stock with an initial stated amount of $100 per share to Fremont Investors in
connection with the merger. The material terms of the Series A convertible
preferred stock are summarized below.
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Dividends. Holders of the Series A convertible preferred stock will be
entitled to receive cumulative quarterly dividends, whether or not declared by
the Board of Directors, in an amount equal to the greater of:
(1) dividends which would have been payable to the holders of Series A
convertible preferred stock in such quarter had they converted their Series
A convertible preferred stock into Juno common stock prior to the record
date of dividends declared on the common stock in such quarter; and
(2) the stated amount then in effect multiplied by 2%.
For the first five years following issuance, the dividends on the Series A
convertible preferred stock will be payable by an increase in the stated amount
of such stock.
The following example illustrates the effect of a cumulative 2% quarterly
dividend upon the stated amount of a share of Series A convertible preferred
stock during the first four quarters following issuance:
<TABLE>
<CAPTION>
STATED AMOUNT
STATED AMOUNT STATED AMOUNT X 2% AFTER DIVIDEND
------------- ------------------ --------------
<S> <C> <C> <C>
Quarter 1....................... $100.00 $2.00 $102.00
Quarter 2....................... $102.00 $2.04 $104.04
Quarter 3....................... $104.04 $2.08 $106.12
Quarter 4....................... $106.12 $2.12 $108.24
</TABLE>
Assuming that a share of Series A convertible preferred stock remains
outstanding for five years following issuance, the stated amount of such share
would be approximately $148.59.
After five years from the issuance date, and continuing until redemption or
conversion, the dividends on the Series A convertible preferred stock,
calculated as described above, will be payable in cash.
Ranking. The Series A convertible preferred stock will rank senior to all
other capital stock of Juno, including the shares of Juno common stock to be
retained by stockholders in the merger.
Liquidation. The Series A convertible preferred stock will be entitled,
upon any liquidation, dissolution or winding up of Juno (including any sale of
all or substantially all of the assets of Juno or any acquisition of Juno or
other transaction which results in the voting securities of Juno outstanding
immediately prior thereto representing less than 50% of the combined voting
power of Juno immediately after such transaction), to payments out of Juno's
assets prior to any payment to any other equity holders of Juno in an amount
equal to the stated amount of Series A convertible preferred stock then in
effect plus:
- if such liquidation occurs during the first five years following
issuance, a pro-rated amount of the increase to the stated amount that
would have resulted from the next dividend which would otherwise have
been payable on the preferred stock, or
- if such liquidation occurs after the first five years following issuance,
any accrued but unpaid cash dividends on such preferred stock.
Conversion. The Series A convertible preferred stock will be convertible at
the option of the holder at any time after issuance into a number of shares of
Juno common stock equal to the stated amount of the Series A convertible
preferred stock then in effect (including any increase to the stated amount for
unpaid dividends, pro-rated to the date of such conversion) plus accrued but
unpaid cash dividends, if any, divided by the conversion price of $26.25 per
share (which conversion price is subject to adjustment for stock splits, stock
dividends, recapitalizations and similar transactions or events). Juno may elect
to automatically convert the Series A convertible preferred stock into Juno
common stock if at any time there are 250,000 or fewer outstanding shares of
Series A convertible preferred stock.
The following table illustrates the percentage interest, on an as-converted
basis, in shares of Juno's outstanding common stock on a fully-diluted basis
which will be held by the holders of the Series A
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convertible preferred stock assuming they continue to hold such shares for five
years from the issuance date.
<TABLE>
<CAPTION>
PERCENTAGE OF
JUNO COMMON STOCK
BENEFICIALLY ISSUANCE 1ST YEAR 2ND YEAR 3RD YEAR 4TH YEAR 5TH YEAR
OWNED BY DATE ANNIVERSARY ANNIVERSARY ANNIVERSARY ANNIVERSARY ANNIVERSARY
----------------- -------- ----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
Holders of Series A
convertible preferred
stock................... 60.5% 62.4% 64.2% 66.0% 67.8% 69.5%
(4,038,095 (4,370,964 (4,731,272 (5,121,281 (5,543,439 (6,000,397
shares) shares) shares) shares) shares) shares)
Other stockholders
(2,400,000 shares plus
234,300 option
shares)............... 39.5% 37.6% 35.8% 34.0% 32.2% 30.5%
</TABLE>
The foregoing table assumes the exercise of outstanding options to purchase
234,300 shares of Juno common stock following the merger. The foregoing table:
(1) excludes the effect of any future issuances of capital stock by Juno,
including those which may result from 940,000 shares of Juno common stock
underlying options available for future grants under the 1999 Stock Award and
Incentive Plan (see "Approval of the Juno 1999 Stock Award and Incentive Plan");
and (2) assumes no adjustments to the $26.25 conversion price.
Redemption. The Series A convertible preferred stock will be redeemable in
whole at the option of Juno, subject to restrictions under applicable credit
agreements or indentures of Juno, at any time after the ninth anniversary of the
issuance of such stock, at a price per share equal to the stated amount then in
effect (plus any accumulated but unpaid cash dividends as of the date of such
redemption).
Voting Rights. Except as otherwise required by law, the Series A
convertible preferred stock will vote together with Juno common stock on all
matters, on an as-converted basis.
Protective Provisions. For so long as at least 500,000 shares of Series A
convertible preferred stock remain outstanding, the consent of the holders of at
least a majority of the Series A convertible preferred stock will be required
for any action that:
- alters or changes the rights, preferences or privileges of the Series A
convertible preferred stock;
- increases or decreases the authorized number of shares of common stock or
preferred stock;
- creates any new class or series of shares having rights, preferences or
privileges senior to or ranking on parity with the Series A convertible
preferred stock, authorizes any security exchangeable for, convertible
into or evidencing the right to purchase any stock senior to or on parity
with the Series A convertible preferred stock, or reclassifies, converts
or exchanges any existing stock of the company into stock senior to or on
parity with the Series A convertible preferred stock;
- results in the repurchase or redemption of any shares of common stock, or
- amends or waives any provision of the amended and restated certificate of
incorporation or bylaws relating to the Series A convertible preferred
stock.
OTHER PREFERRED STOCK. After the issuance of 1,060,000 shares of Series A
convertible preferred stock to Fremont Investors, Juno, by action of its Board
of Directors, will have the authority under the amended and restated certificate
of incorporation at any time and from time to time to issue up to an additional
3,940,000 shares of preferred stock in one or more classes or series, and to fix
for each such class or series such voting powers, full or limited, or no voting
powers, and such distinctive designations, preferences and relative,
participating, optional or other special rights and such qualifications,
limitations or restrictions
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thereof as are permitted by Delaware law, including, but not limited to, the
authority to provide that any such class or series be:
- subject to redemption at such time or times and at such price or prices;
- entitled to receive dividends (which may be cumulative or non-cumulative)
at such rates, on such conditions, and at such times, and payable in
preference to, or in such relation to, the dividends payable on any other
class or classes or any other series;
- entitled to preferential rights upon the dissolution of, or upon any
distribution of the assets of, Juno; or
- convertible into, or exchangeable for, shares of any class or classes of
stock, or other securities or property, of Juno at such price or prices
or at such rates of exchange and with such adjustments; all as the Board
determines by resolution.
The Board of Directors believes that the authorization of the preferred
stock is in the best interests of Juno and its stockholders and believes that it
is advisable to authorize such shares and have them available in connection with
possible future transactions, such as financing, strategic alliances,
acquisitions and other uses not presently determinable and as may be deemed to
be feasible and in the best interests of Juno. In addition, the Board of
Directors believes that it is desirable that Juno have the flexibility to issue
shares of preferred stock without further stockholder action, except as
otherwise provided by law.
It is not possible to determine the actual effect of the issuance of other
preferred stock on the rights of the stockholders of Juno until the Board of
Directors determines the rights of the holders of a series of such preferred
stock. However, such effects might include: (1) restrictions on the payments of
dividends to holders of Juno common stock; (2) dilution of voting power to the
extent that the holders of shares of preferred stock are given voting rights;
(3) dilution of the equity interests and voting power if the preferred stock is
convertible into common stock; and (4) restrictions upon any distribution of
assets to the holders of the common stock upon liquidation or dissolution and
until the satisfaction of any liquidation preference granted to the holders of
preferred stock. Holders of Juno common stock will not have preemptive rights to
subscribe for shares of preferred stock.
The Board of Directors is required by Delaware law to make any
determination to issue shares of preferred stock based upon its judgment as
advisable and in the best interests of the stockholders and Juno. Although the
Board of Directors has no present intention of doing so, and Fremont has no
present intention of causing it to do so, it could issue shares of preferred
stock (within the limits imposed by applicable law) that could, depending on the
terms of such series, make more difficult or discourage an attempt to obtain
control of Juno by means of a merger, tender offer, proxy contest or other
means, when, in the judgment of the Board of Directors, such action would be in
the best interests of the stockholders and Juno. The issuance of shares of
preferred stock could be used to create voting or other impediments or to
discourage persons seeking to gain control of Juno, for example, by the sale of
preferred stock to purchasers favorable to the Board of Directors. In addition,
the Board of Directors could authorize holders of a series of preferred stock to
vote either separately as a class or with the holders of Juno common stock on
any merger, sale or exchange of assets by Juno or any other extraordinary
corporate transaction. The issuance of new shares of preferred stock could also
be used to dilute the stock ownership of the person or entity seeking to obtain
control of Juno should the Board of Directors consider the action of such entity
or person not to be in the best interests of the stockholders and Juno. Such
issuance of preferred stock could also have the effect of diluting the earnings
per share and book value per share of Juno common stock.
BOARD OF DIRECTORS
Juno's existing certificate of incorporation divides the Board of Directors
into three classes. The directors serve staggered terms of three years, with the
members of one class being elected in any year.
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The amended and restated certificate of incorporation of Juno eliminates
the classified Board of Directors. Accordingly, each director of Juno will serve
for a term which expires at the next annual meeting following his or her
election or until his or her successor is elected and qualified.
OTHER
As authorized by Delaware law, the amended and restated certificate of
incorporation retains the provision in Juno's existing certificate of
incorporation which provides that no director of Juno will be liable to Juno or
its stockholders for monetary damages for breach of fiduciary duty as a
director, except for liability (1) for any breach of the director's duty of
loyalty to Juno or its stockholders, (2) for acts or omissions not in good faith
or which involve intentional misconduct or a knowing violation of law, (3) in
respect of certain unlawful dividend payments or stock redemptions or
repurchases, or (4) for any transaction from which the director derived an
improper personal benefit. The effect of these provisions is to eliminate the
rights of Juno and its stockholders (through stockholders' derivative suits on
behalf of Juno) to recover monetary damages against a director for breach of
fiduciary duty as a director (including breaches resulting from negligent or
grossly negligent behavior) except in the situations described in clauses (1) to
(4) of the preceding sentence.
APPROVAL OF THE JUNO 1999 STOCK AWARD AND INCENTIVE PLAN
The Juno Board of Directors has adopted, subject to stockholder approval,
the Juno Lighting Inc., 1999 Stock Award and Incentive Plan, which provides for
the grant of various types of stock-based compensation to directors (including
non-employee directors not affiliated with Fremont), selected employees and
independent contractors of Juno and any of its subsidiaries and affiliates,
whose employees, directors or independent contractors are participants in the
plan. The plan is designed to comply with the requirements for
"performance-based compensation" under Section 162(m) ("Section 162(m)") of the
Internal Revenue Code of 1986, as amended (the "Code"), and the conditions for
exemption from the short-swing profit recovery rules under Rule 16b-3 ("Rule
16b-3") of the Exchange Act. The summary that follows is subject to the actual
terms of the plan, a copy of which is attached hereto as Annex D.
VOTE
The affirmative vote of a majority of the votes cast regarding the proposal
is required for approval of the plan. Accordingly, abstentions or broker
non-votes will not affect the outcome of the vote on the proposal. Unless
instructed to the contrary in the proxy, the shares represented by the proxies
will be voted FOR the proposal to approve the plan.
THE PLAN
The purposes of the plan are to reinforce the long-term commitment to
Juno's success of those directors (including non-employee directors not
affiliated with Fremont), selected employees and independent contractors of Juno
who are or will be responsible for such success; to facilitate the ownership of
Juno's stock by such individuals, thereby aligning their interests with those of
Juno's stockholders; and to assist Juno in attracting and retaining individuals
with experience and ability.
The plan provides for the granting of "incentive stock options" as
described in Section 422 of the Code ("ISOs"), non-qualified stock options
("NSOs") or both. Options granted under the 1999 Stock Plan may be accompanied
by stock appreciation rights ("SARs"), limited stock appreciation rights
("LSARs") or both. Such stock appreciation rights or limited stock appreciation
rights may also be granted independently of options. NSOs, stock appreciation
rights and limited stock appreciation rights may also be accompanied by dividend
equivalents. The plan also provides for the granting of restricted stock,
deferred stock and performance shares and other stock- and cash-based awards.
The plan also permits the plan administrator to authorize loans to Grantees in
connection with the grant of awards, on terms and conditions determined solely
by the plan administrator. Each of the foregoing awards will be evidenced by an
agreement setting forth the terms and conditions applicable thereto.
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<PAGE> 64
ELIGIBILITY
Awards may be made by the Committee (as defined below) to any director
(including non-employee directors not affiliated with Fremont), selected
employee or independent contractor of Juno who is eligible to participate in the
plan, consistent with the purposes of the Plan; provided that, ISOs may only be
granted to employees of Juno. At the time the plan goes into effect, there will
be approximately , and directors not affiliated
with Fremont (including non-employee directors), selected employees and
independent contractors of Juno, respectively, eligible to participate in the
plan.
PLAN ADMINISTRATION
The plan is administered by the Board of Directors or a committee of the
Board of Directors the composition of which will at all times comply with the
requirements of Rule 16b-3 under the Exchange Act (the "Committee"). Subject to
the terms of the plan, the Committee has the right to grant awards to eligible
participants and to determine the terms and conditions of award agreements,
including the vesting schedule and exercise price of such awards, and the
effect, if any, of a change in control on such awards.
SHARES SUBJECT TO THE PLAN
The plan covers 940,000 shares of Juno common stock. Such shares may be
treasury, authorized but unissued shares or shares reacquired by Juno. In order
to prevent dilution or enlargement of the rights of grantees, the plan permits
the Committee to make adjustments to the aggregate number of shares subject to
the plan or any award, and to the purchase price to be paid or the amount to be
received in connection with the realization of any award. The Committee has the
authority, in the event of any such adjustment, to provide for the cancellation
of any outstanding award in exchange for payment in cash or other property.
TERMS AND CONDITIONS OF OPTIONS
Options will vest and become exercisable over the exercise period, at such
times and upon such conditions as the Committee determines and sets forth in the
award agreement. The Committee may accelerate the exercisability of any
outstanding option at such time and under such circumstances as it deems
appropriate. options that are not exercised within ten years from the date of
grant, however, will expire without value. options are exercisable during a
grantee's lifetime only by the grantee. The award agreements will contain
provisions regarding the exercise of options following termination of employment
with or service to Juno, including terminations due to the death, disability or
retirement of the grantee, or upon a change in control. In addition to the terms
and conditions governing NSOs, ISOs awarded under the plan must comply with the
requirements of Section 422 of the Code.
The option price will be as determined by the Committee and may be fully
paid in cash, by delivery of common stock previously owned by the grantee equal
in value to the option price, by means of a loan from Juno, or by having shares
of common stock with a fair market value (on the date of exercise), equal to the
option price, withheld by Juno or sold by a broker-dealer under qualifying
circumstances (or in any combination of the foregoing). A grantee of an option
award (and any tandem SAR or LSAR) will not have the rights of a stockholder
until certificates for the option shares are actually received.
STOCK APPRECIATION RIGHTS AND LIMITED STOCK APPRECIATION RIGHTS
Unless the Committee determines otherwise, a SAR or LSAR (1) granted in
tandem with an NSO may be granted at the time of grant of the related NSO or at
any time thereafter or (2) granted in tandem with an ISO may be granted only at
the time of grant of the related ISO. A SAR will be exercisable only to the
extent the underlying option is exercisable. Tandem SARs and LSARs will
terminate upon the termination or exercise of the pertinent portion of the
related option, and the pertinent portion of the related option will terminate
upon the exercise of any such SAR or LSAR.
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Upon exercise of a SAR the grantee will receive, with respect to each share
subject thereto, an amount equal in value to the excess of (1) the fair market
value of one share of Juno common stock on the date of exercise over (2) the
grant price of the SAR (which in the case of a SAR granted in tandem with an
option will be the option price, and which in the case of any other SAR will be
the price determined by the Committee).
Upon exercise of a LSAR, the grantee will receive, with respect to each
share subject thereto, automatically upon the occurrence of a change in control,
an amount equal in value to the excess of (1) the consideration payable in
respect of one share of Juno common stock on the date of such change in control
(which in the case of a LSAR granted in tandem with an ISO will be the fair
market value), over (2) the grant price of the LSAR (which in the case of a LSAR
granted in tandem with an option will be the option exercise price, and which in
the case of any other LSAR will be the price determined by the Committee). An
LSAR grantee who is subject to the reporting requirements of Section 16(a) of
the Exchange Act, however, will only be entitled to receive such amount if the
LSAR has been outstanding for at least six months on the date of the change in
control.
RESTRICTED STOCK AWARDS
A restricted stock award is an award of Juno common stock that may not be
sold, assigned, transferred, pledged, hypothecated or otherwise disposed of for
a period of ten years, or such shorter period as the Committee determines, from
the date on which the award is granted (the "Restricted Period"). The Committee
may also impose such other restrictions and conditions on such award as it deems
appropriate. The Committee may provide that the foregoing restrictions will
lapse with respect to specified percentages of the awarded shares on successive
anniversaries of the date of the award. In addition, the Committee has the
authority to cancel all or any portion of any restrictions prior to the
expiration of the Restricted Period. A grant of deferred stock creates a right
to receive Juno common stock at the end of a specified deferral period.
Performance shares are shares of Juno common stock subject to restrictions based
upon the attainment of performance objectives. Such performance objectives may
be based on various financial measures of Juno's performance. In addition,
performance goals may be based upon a grantee's attainment of specific
objectives set by Juno for that grantee's performance.
Upon the award of any restricted stock or performance shares, the grantee
will have the rights of a stockholder with respect to the shares, including
dividend rights, subject to the conditions and restrictions generally applicable
to restricted stock or specifically set forth in the grantee's award agreement.
Upon an award of deferred stock, the grantee will not have stockholder rights,
other than the right to receive dividends, during the specified deferral period.
DIVIDEND EQUIVALENTS
Dividend Equivalents may be granted in conjunction with NSOs and in
conjunction with Rights that do not relate to ISOs. The value of a dividend
equivalent is equal to the product of (1) the number of shares of Juno common
stock subject to the related NSO or right and (2) the cash dividend payable per
share of such Juno common stock. Dividend equivalents may be payable either in
cash or in shares of Juno common stock, and payment may occur either as the
dividend equivalents accrue or at such later time as the related NSO, stock
appreciation right or limited stock appreciation right is exercised. Dividend
equivalents expire at the time the related NSO or right expires, and no
dividends are payable or credited with respect to the dividend equivalents
themselves.
OTHER STOCK OR CASH-BASED AWARDS
The Committee may grant Juno common stock as a bonus or in lieu of Company
commitments to pay cash under other plans or compensatory arrangements of Juno.
The Committee may also grant other stock- or cash-based awards as an element of
or supplement to any other award under the plan. Such awards may be granted with
value and payment contingent upon the attainment of specified individual or
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<PAGE> 66
Company financial goals, or upon any other factors designated by the Committee
The Committee may determine the terms and conditions of such awards at the date
of grant or thereafter.
DEATH -- TERMINATION OF EMPLOYMENT -- RESTRICTIONS ON TRANSFER
The award agreements will state whether and to what extent awards will be
exercisable upon termination of employment or service for any reason, including
death or disability. In no event may any option be exercisable more than ten
years from the date it is granted. Except as otherwise determined by the
Committee in accordance with Rule 16b-3, options, stock appreciation rights and
limited stock appreciation rights are not transferable and are exercisable
during the grantee's lifetime only by the grantee.
AMENDMENT; TERMINATION
The Board may terminate or amend the plan at any time, except that
stockholder approval is required for any such amendment required to fulfill the
conditions of Rule 16b-3, Section 162(m) and any other applicable laws (but only
if Juno intends to fulfill such requirements). Termination or amendment of the
plan will not affect previously granted awards, which will continue in effect in
accordance with their terms.
CERTAIN FEDERAL INCOME TAX CONSEQUENCES
The following discussion of certain relevant Federal income tax effects
applicable to awards granted under the plan is a summary only, and reference is
made to the Code for a complete statement of all relevant Federal tax
provisions. Holders of awards should consult their tax advisors before
realization of any such awards, and holders of Juno common stock pursuant to
awards should consult their tax advisors before disposing of any such shares.
Section 16 Individuals should note that somewhat different rules than those
described below may apply to them.
Under current Federal income tax laws, awards under the plan will generally
have the following tax consequences:
NON-QUALIFIED STOCK OPTIONS. A grantee will generally not be taxed upon the
grant of an NSO. Rather, at the time of exercise of such NSO (and in the case of
an untimely exercise of an ISO), the grantee will recognize ordinary income for
Federal income tax purposes in an amount equal to the excess, if any, of the
fair market value of the shares purchased, over the option exercise price and
will have a tax basis in such shares equal to the option exercise price, plus
the amount taxable as ordinary income to the grantee. Juno will generally be
entitled to a tax deduction at such time and in the same amount as the grantee
recognizes ordinary income.
If shares acquired upon exercise of an NSO (or upon untimely exercise of an
ISO) are later sold or exchanged, then the difference between the sales price
and the fair market value of such shares on the date that ordinary income was
recognized with respect thereto will generally be taxable as long-term or
short-term capital gain or loss (if the Juno common stock is a capital asset of
the grantee) depending upon whether the such shares have been held for more than
one year after such date.
INCENTIVE STOCK OPTIONS. A grantee will generally not be taxed upon the
grant of an ISO or upon its timely exercise. Exercise of an ISO will be timely
if made during its term and if the grantee remains an employee of Juno at all
times during the period beginning on the date of grant of the ISO and ending on
the date three months before the date of exercise (or one year before the date
of exercise in the case of a disabled employee). Exercise of an ISO will also be
timely, if made by the legal representative of a grantee who dies (1) while in
the employ of Juno or (2) within three months after termination of employment.
The tax consequences of an untimely exercise of an ISO is the same as those
described for NSOs, above.
If Juno common stock acquired pursuant to a timely exercised ISO is later
disposed of, the grantee will, except as noted below with respect to a
"disqualifying disposition," recognize long-term capital gain or loss at the
time of the disposition (if the Juno common stock is a capital asset of the
employee) equal
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<PAGE> 67
to the difference between the amount realized upon such sale and the option
price. Juno, under these circumstances, will not be entitled to any Federal
income tax deduction in connection with either the exercise of the ISO or the
sale of such Juno common stock by the grantee.
If, however, a grantee disposes of Juno common stock acquired pursuant to
the exercise of an ISO (1) prior to the expiration of two years from the date of
grant of the ISO or (2) within one year from the date such Juno common stock is
transferred to him upon exercise (a "disqualifying disposition"), generally (a)
the grantee will realize ordinary income at the time of the disposition in an
amount equal to the excess, if any, of the fair market value of the shares at
the time of exercise (or, if less, the amount realized on such disqualifying
disposition) over the option price, and (b) if the Juno common stock is a
capital asset of the grantee, any additional gain recognized will be taxed as
short-term or long-term capital gain. At the time of such disqualifying
disposition Juno may claim a Federal income tax deduction only for the amount
taxable to the grantee as ordinary income. Any capital gain recognized by the
grantee will be long-term capital gain if the grantee's holding period for the
shares at the time of disposition is more than one year; otherwise, it will be
short-term.
The amount by which the fair market value of the shares on the exercise
date of an ISO exceeds the option price will be an item of adjustment for
purposes of the "alternative minimum tax" imposed by Section 55 of the Code.
EXERCISE WITH SHARES. Special rules may pertain to a grantee who exercises
an option and pays the option price with shares already owned.
STOCK APPRECIATION RIGHTS. A grantee will not be taxed at the time of grant
of SARs or LSARs. Upon the exercise of SARs or LSARs (other than a free standing
right that is an LSAR), the amount of any cash and the fair market value as of
the date of exercise of Juno common stock received is taxable to the grantee as
ordinary income. With respect to a free standing right that is an LSAR, however,
a grantee should be required to include as taxable income on the date of a
change in control an amount equal to the amount of cash that could be received
upon the exercise of the LSAR, even if the LSAR is not exercised until a date
subsequent to the date of a change of control. Juno will generally be entitled
to a deduction at the same time and in an amount equal to the amount included in
the grantee's income. Upon the sale of shares acquired upon the exercise of SARs
or LSARs, a grantee will recognize capital gain or loss (assuming such Juno
common stock was held as a capital asset) in an amount equal to the difference
between the amount realized upon such sale and the fair market value of such
Juno common stock on the date that governs the determination of his ordinary
income. The capital gain or loss will be long-term or short-term depending upon
whether the shares have been held for more than one year after the date on which
the income was realized by the grantee.
DIVIDEND EQUIVALENTS. A grantee will not be taxed upon the award of a
dividend equivalent, but will recognize ordinary income in an amount equal to
the value of the dividend equivalent at the time the dividend equivalent becomes
payable. Juno will be entitled to a deduction at such time and in the amount as
the grantee recognizes ordinary income with respect to the dividend equivalent.
RESTRICTED AWARDS. In the case of a restricted award, generally, a grantee
will not be taxed upon the grant of the award. The grantee will recognize
ordinary income in an amount equal to (1) the fair market value of the Juno
common stock at the time the shares become transferable or are otherwise no
longer subject to a "substantial risk of forfeiture" (as defined in the Code),
minus (2) the price, if any, paid by the grantee to purchase such stock. Juno
will be entitled to a deduction at the time when, and in the amount that, the
grantee recognizes ordinary income. However, a grantee may elect (not later than
30 days after acquiring such shares) to recognize ordinary income at the time
the restricted shares are awarded in an amount equal to their fair market value
of the shares at that time, less the purchase price paid for such shares,
notwithstanding the fact that such shares are subject to restrictions on
transfer and a substantial risk of forfeiture. If such an election is made, no
additional taxable income will be recognized by the grantee at the time the
restrictions lapse. Juno will be entitled to a tax deduction at the time when,
and to the extent that, ordinary income is recognized by the grantee. However,
if shares in respect of which such election was made are later forfeited, no tax
deduction is allowable to the grantee for the
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<PAGE> 68
forfeited shares, and Juno will be deemed to recognize ordinary income equal to
the amount of the deduction allowed to Juno at the time of the election.
No awards have been made under the 1999 plan.
STOCK PRICE AND DIVIDEND INFORMATION
Shares of Juno common stock are traded on the Nasdaq National Market under
the symbol "JUNO." The table below sets forth, for the fiscal quarters
indicated, the high and low closing prices of shares of Juno common stock as
reported by the Nasdaq National Market.
<TABLE>
<CAPTION>
DIVIDENDS
HIGH LOW PER SHARE
------------ ------------ ---------
<S> <C> <C> <C> <C> <C>
FISCAL 1997
First Quarter........................................ 16 7/8 14 1/2 $.08
Second Quarter....................................... 17 1/8 14 1/2 .08
Third Quarter........................................ 17 1/2 14 7/8 .08
Fourth Quarter....................................... 19 5/8 14 3/4 .08
FISCAL 1998
First Quarter........................................ 21 3/8 15 3/4 $.09
Second Quarter....................................... 22 3/4 19 1/2 .09
Third Quarter........................................ 24 1/4 18 1/2 .09
Fourth Quarter....................................... 25 18 1/4 .09
FISCAL 1999
First Quarter........................................ 24 1/2 19 3/4 $.10
Second Quarter (through April 9, 1999)............... 23 3/4 19 1/8 .10(1)
</TABLE>
- -------------------------
(1) Payable on April 15, 1999 to stockholders of record on March 15, 1999.
As of January 31, 1999 there were 397 holders of record of common stock, at
least 300 of which own 100 or more shares.
On March 26, 1999, the last full trading day prior to the public
announcement of the proposed merger, the reported closing price of Juno common
stock on the Nasdaq National Market was $20.50 per share.
On April 9, 1999, the most recent practicable date prior to the printing of
this proxy statement/ prospectus, the reported closing price of Juno common
stock on the Nasdaq National Market was $21 15/16 per share.
Juno's ability to pay dividends depends upon limitations under applicable
law, certain covenants under its financing agreements and other factors your
Board of Directors deems relevant, including results of operations, financial
condition and capital and surplus requirements. Except for the dividend payable
on April 15, 1999, Juno does not expect to pay dividends on its common stock
prior to or after the merger.
INFORMATION CONCERNING THE COMPANIES
JUNO
General. Juno is a specialist in the design, manufacture and marketing of a
full line of recessed and track lighting fixtures for use in remodeling and new
construction of commercial, institutional and residential buildings. Juno's
principal products use incandescent, high intensity discharge and fluorescent
light sources and are designed for attractive appearance, reliable and flexible
function, efficient operation and simple installation and servicing. Through
Indy Lighting, Inc., a wholly-owned subsidiary of Juno, Juno is also engaged in
the marketing, design and manufacture of other incandescent and fluorescent
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<PAGE> 69
lighting products with application in the commercial lighting market, primarily
in department and chain stores. New product development is of prime importance
to Juno and Juno has been innovative and responsive to its customers' needs both
in the styling and technical development of its products.
Approximately 93% of Juno's sales in fiscal 1998 were in the United States
and most of the balance in Canada. Juno's sales are made primarily to electrical
distributors, as well as to certain wholesale lighting outlets.
Juno's products are marketed primarily to distributors who resell the
products for use in remodeling residential, commercial and institutional
structures and in new construction. Juno's sales, like those of the lighting
fixture industry in general, are partly dependent on levels of activity in
remodeling and new construction. No assurances can be given that historic levels
of activity will increase or be maintained.
Management and Additional Information. Certain information relating to
various benefits plans (including Juno's stock option plans), certain
relationships and related transactions and other related matters as to Juno is
set forth in the Juno Annual Report on Form 10-K, as amended, for the year ended
November 30, 1998, which is incorporated herein by reference. Juno was
incorporated in Delaware in 1983 and its principal offices and corporate
headquarters are located at 1300 South Wolf Road, Des Plaines, Illinois
60017-5065, telephone: (847) 827-9880.
FREMONT INVESTORS AND FREMONT PARTNERS
Fremont Investors is a Delaware limited liability company, formed by
Fremont Partners. It is not anticipated that, prior to the consummation of the
purchase of Series A convertible preferred stock of Juno, Fremont Investors will
have any significant assets or liabilities or will engage in any activities
other than those incident to the recapitalization and merger and the financing
thereof. Fremont Partners is a private equity fund with committed capital of
$605 million. Fremont Partners, together with affiliated partnerships, is part
of The Fremont Group, a private investment company with approximately $10
billion of assets under management. The offices of Fremont Investors and Fremont
Partners are located at 50 Fremont Street, Suite 3700, San Francisco, California
94105-1895.
JUPITER
Jupiter, a Delaware corporation, was recently organized at the direction of
Fremont Investors for the purpose of effecting the merger. It has not engaged in
any activities except in connection with the proposed merger. Jupiter is
wholly-owned by Fremont Investors. The offices of Jupiter are located at 50
Fremont Street, Suite 3700, San Francisco, California 94105-1895.
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<PAGE> 70
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
PRINCIPAL STOCKHOLDERS
The following table sets forth, as of March 15, 1999, the number and
percentage of outstanding shares of common stock beneficially owned by each
person known to Juno to be the beneficial owner of more than five percent of the
outstanding shares of common stock.
<TABLE>
<CAPTION>
SHARES PERCENTAGE OF
BENEFICIALLY SHARES
NAME AND ADDRESS OWNED OUTSTANDING
---------------- ------------ -------------
<S> <C> <C>
Harris Associates L.P....................................... 1,742,700(1) 9.37%
Two North LaSalle Street, Suite 500
Chicago, Illinois 60602-3790
National Rural Electric Cooperative Association............. 1,340,000(2) 7.21%
4301 Wilson Blvd
Arlington, Virginia 22203
LENS Investment Management, LLC............................. 1,214,908(3) 6.53%
1200 G Street, N.W., Suite 800
Washington, D.C. 30005
Royce & Associates, Inc., Royce Management
Company and Charles M. Royce................................ 975,800(4) 5.25%
1414 Avenue of the Americas
New York, New York 10019
Bank One Corporation........................................ 945,800(5) 5.09%
One First National Plaza
Chicago, Illinois 60670
</TABLE>
- -------------------------
(1) Harris Associates L.P. ("Harris") beneficially owns 1,742,700 shares, has
shared power to vote or direct the votes of such shares, has sole power to
dispose or direct the disposition of 581,400 shares and has shared power to
dispose or direct the disposition of 1,161,300 shares of which 1,085,000
shares are owned by the Oakmark Fund, an investment trust whereby Harris
serves as investment advisor.
(2) National Rural Electric Cooperative Association beneficially owns 1,340,000
shares, has sole power to vote or direct the vote and dispose or direct the
disposition of such shares.
(3) LENS Investment Management, LLC ("LENS") beneficially owns 1,214,908 shares,
has sole power to vote or direct the vote and dispose or direct the
disposition of 835,236 shares. Ram Trust Services, Inc. ("RAM") has sole
power to vote or direct the vote and dispose or direct the disposition of
375,147 shares. Mr. Robert B. Holmes, a client of LENS, has sole power to
vote or direct the vote and dispose or direct the disposition of 2,800
shares. As a result of Mr. Holmes' participation in the management and
ownership of LENS, Mr. Holmes and LENS may be deemed to be acting in concert
and to have beneficial ownership of each others' shares within the meaning
of Section 13(d) of the Exchange Act. Mr. John B. Goodrich, an employee of
RAM and a client of LENS, has sole power to vote and dispose or direct the
disposition of 1,725 shares. As a result of Mr. Goodrich's status as an
employee of RAM and his participation in the ownership of RAM and in LEN'S
activities relating to the shares of Juno common stock, Mr. Goodrich and
LENS may be deemed to be acting in concert and to have beneficial ownership
of each others' shares within the meaning of Section 13(d) of the Exchange
Act.
(4) Royce & Associates, Inc. ("Royce") beneficially owns 949,100 shares, has
sole power to vote or direct the vote and dispose or to direct the
disposition of such shares. Royce Management Company ("RMC") beneficially
owns 26,700 shares, has sole power to vote or direct the vote and dispose or
to direct the disposition of such shares. Mr. Royce may be deemed to be a
controlling person of Royce and RMC, and, as such, may be deemed to
beneficially own the shares, beneficially owned by Royce and RMC. Mr. Royce
disclaims beneficial ownership of such shares.
(5) Bank One Corporation ("Bank One") beneficially owns 945,800 shares and has
sole power to vote or direct the vote of 882,250 of such shares. Bank One
has sole power to dispose or to direct the disposition of 922,300 shares and
shared power to dispose or to direct the disposition of 18,000 shares.
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<PAGE> 71
DIRECTORS' AND EXECUTIVE OFFICERS' STOCK OWNERSHIP
The following table sets forth, as of March 15, 1999, the number and
percentage of outstanding shares of Juno common stock beneficially owned by each
director, certain executive officers and all executive officers and directors as
a group. The persons named hold sole voting and investment power with respect to
the shares of Juno common stock listed below, except as otherwise indicated.
<TABLE>
<CAPTION>
SHARES PERCENTAGE
BENEFICIALLY OF SHARES
NAME OWNED OUTSTANDING
---- ------------ -----------
<S> <C> <C>
Robert S. Fremont(1)................................... 619,856 3.33%
Glenn R. Bordfeld(4)(5)................................ 10,400 *
Thomas W. Tomsovic(1)(2)............................... 16,000 *
Julius Lewis(3)........................................ 4,000 *
Allan Coleman(3)....................................... 2,000 *
George M. Ball(3)...................................... 2,500 *
George J. Bilek(4)(6).................................. 26,350 *
Charles F. Huber(4)(7)................................. 20,800 *
All Directors and Executive Officers as a group(8)..... 703,006 3.78%
</TABLE>
- -------------------------
(1) Executive Officer and Director
(2) Represents 16,000 shares which Mr. Tomsovic has the right to acquire within
60 days of March 15, 1999.
(3) Director
(4) Executive Officer
(5) Includes 4,000 shares which Mr. Bordfeld has the right to acquire within 60
days of March 15, 1999.
(6) Includes 16,000 shares which Mr. Bilek has the right to acquire within 60
days of March 15, 1999.
(7) Includes 16,000 shares which Mr. Huber has the right to acquire within 60
days of March 15, 1999.
(8) Includes 53,000 shares which five executive officers have the right to
acquire within 60 days of March 15, 1999.
* Less than 1%
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<PAGE> 72
EXECUTIVE COMPENSATION
The following Summary Compensation Table includes individual compensation
information regarding all compensation awarded to, earned by, or paid during the
fiscal years ended November 30, 1998, 1997 and 1996 to Juno's Chief Executive
Officer, Mr. Fremont and the four other most highly compensated executive
officers in the fiscal year ended November 30, 1998 in all capacities in which
they served during the years in which they have been executive officers.
As reflected in the following table, Mr. Fremont and the four other most
highly paid executive officers of Juno currently participate in Juno's 401(k)
Plan. In addition, the named executives participate in, and (except for Mr.
Fremont) have received grants under, Juno's Stock Option Plans, effective July
18, 1983 (the "1983 Stock Option Plan") and December 2, 1993 (the "1993 Stock
Option Plan"). No option grants were made to any of such named executive
officers in the fiscal year ended November 30, 1998.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM COMPENSATION
ANNUAL COMPENSATION ---------------------------------
---------------------- AWARDS OPTIONS ALL OTHER
NAME & PRINCIPAL POSITION YEAR SALARY BONUS (# OF SHARES) COMPENSATION(1)
------------------------- ---- ------ ----- -------------- ---------------
<S> <C> <C> <C> <C> <C>
Robert S. Fremont.................... 1998 $504,400 $ -- -- $21,479(2)
Chairman of the Board and 1997 504,400 -- -- 17,504(3)
Chief Executive Officer 1996 504,000 -- -- 30,000(4)
Glenn R. Bordfeld.................... 1998 $186,539(5) $23,491 -- $12,000
President and Chief Operating 1997 176,154 -- -- 9,750
Officer
1996 166,346 -- -- 9,750
Thomas W. Tomsovic................... 1998 $230,000 $23,491 -- $12,000
Vice President, Operations 1997 220,000 -- -- 9,750
1996 210,000 -- -- 9,750
George J. Bilek...................... 1998 $186,539 $23,491 -- $12,000
Vice President, Finance and 1997 176,154 -- -- 9,750
Treasurer
1996 165,481 -- -- 9,750
Charles F. Huber..................... 1998 $190,721 $23,491 -- $12,000
Vice President, Corporate 1997 180,077 -- -- 9,750
Development
1996 169,471 -- -- 9,750
</TABLE>
- -------------------------
(1) Includes Juno's matching and discretionary contributions under the 401(k)
Plan. Amounts are included without regard to vesting of any Company
discretionary contributions.
(2) Includes $9,479 for miscellaneous personal expenses.
(3) Includes $7,754 for miscellaneous personal expenses.
(4) Includes $20,250 for miscellaneous personal expenses.
(5) Mr. Bordfeld became Juno's President and Chief Operating Officer on January
19, 1999. Mr. Bordfeld previously served as Vice President-Sales.
Juno and the named executive officers have entered into Change of Control
Benefits Agreements. See "Interests of Certain Persons in the Merger -- Change
in Control Benefits Arrangements."
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<PAGE> 73
STOCK OPTION PLAN EXERCISES AND YEAR-END VALUE TABLE
The following table discloses, for each of the executive officers listed,
information regarding stock options exercised during, or held at the end of, the
fiscal year ended November 30, 1998 pursuant to Juno's 1983 and 1993 Stock
Option Plans.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR-END OPTION
VALUES
<TABLE>
<CAPTION>
TOTAL NUMBER OF TOTAL VALUE OF UNEXERCISED
NUMBER UNEXERCISED OPTIONS HELD IN-THE-MONEY OPTIONS
OF SHARES AT FISCAL YEAR END(1) HELD AT FISCAL YEAR(1)(2)
ACQUIRED VALUE ------------------------------- -------------------------------
NAME ON EXERCISE REALIZED EXERCISABLE UNEXERCISABLE(3) EXERCISABLE UNEXERCISABLE(3)
---- ----------- -------- ----------- ---------------- ----------- ----------------
<S> <C> <C> <C> <C> <C> <C>
Robert S. Fremont....... -- $ 0 0 0 $ 0 $ 0
Glenn R. Bordfeld....... 12,000 45,250 4,000 4,000 25,375 35,750
Thomas W. Tomsovic...... -- 0 16,000 4,000 91,125 35,750
George J. Bilek......... -- 0 16,000 4,000 91,125 35,750
Charles H. Huber........ -- 0 16,000 4,000 91,125 35,750
</TABLE>
- -------------------------
(1) All options outstanding at the end of the fiscal year ended November 30,
1998, are incentive stock options and were granted at 100% of the fair
market value of Juno's common stock on the date of the grant. For all such
options, up to 20% of the shares covered by each option may be purchased
commencing on the first anniversary of the date of the grant and the amount
increases by 20% on each anniversary thereafter. Such options will expire at
various dates between December 9, 2003 and October 19, 2008. For incentive
stock options granted after December 31, 1986, the aggregate fair market
value of common stock with respect to which Incentive Stock Options become
exercisable for the first time by any individual grantee during any calendar
year may not exceed $100,000.
(2) Total value of options is based on the difference between the fair market
value of Juno common stock of $23.375, as of November 30, 1998, and the
exercise price per share of the options.
(3) If the merger is completed, all outstanding stock options will vest and
become fully exercisable.
COMPENSATION OF DIRECTORS
Directors who are not employees of the Company are compensated at the rate
of $1,000 per Board of Directors meeting attended.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
Mr. Fremont is a member of the Board and an executive officer of Juno. Mr.
Lewis is a Board member and an officer of Juno but not an executive officer. Mr.
Coleman and Mr. Ball are members of the Board but are not executive officers or
officers of Juno. Other than the Compensation Committee members and Mr. Fremont,
who attends meetings of the Compensation Committee at the request of the
Compensation Committee and makes recommendations regarding the compensation
level of executive officers other than himself, no current or former officer or
employee of Juno or its subsidiaries participated in the deliberations of the
Board concerning executive compensation during the fiscal year ended November
30, 1998. Mr. Lewis is a partner of the law firm of Sonnenschein Nath &
Rosenthal, which provided legal services to Juno in the fiscal year ended
November 30, 1998, and Mr. Ball is the Chairman of Philpott, Ball & Co., an
investment banking firm which provided investment banking services to Juno in
such fiscal year.
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<PAGE> 74
UNAUDITED PRO FORMA CONSOLIDATED FINANCIAL DATA
The following pro forma consolidated financial statements of Juno (the "Pro
Forma Consolidated Financial Statements"), include the unaudited pro forma
consolidated balance sheet as of February 28, 1999 (the "Pro Forma Consolidated
Balance Sheet") and the unaudited pro forma consolidated statements of income
for the twelve months and the three months ended February 28, 1999 and for the
year ended November 30, 1998 (the "Pro Forma Consolidated Statements of
Income").
The Pro Forma Consolidated Balance Sheet is based on the unaudited
consolidated balance sheet of Juno as of February 28, 1999, and is adjusted to
give effect to the merger and related transactions as if they had occurred on
such date.
The Pro Forma Consolidated Statements of Income are based on the audited
consolidated statement of income of Juno for the year ended November 30, 1998
and the unaudited consolidated statements of income of Juno for each of the four
quarters in the twelve month period ended February 28, 1999, are adjusted to
give effect to the merger and related transactions as though they had occurred
as of December 1, 1997.
The Pro Forma Consolidated Financial Statements and the accompanying notes
should be read in conjunction with Juno's historical consolidated financial
statements and related notes thereto incorporated by reference herein.
The Pro Forma Consolidated Financial Statements do not purport to represent
what Juno's financial condition or the results of operations would actually have
been had the merger and related transactions in fact occurred on the assumed
date, nor do they project Juno's financial condition or results of operations
for any future period or date.
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<PAGE> 75
UNAUDITED PRO FORMA CONSOLIDATED BALANCE SHEET
AS OF FEBRUARY 28, 1999
(IN THOUSANDS)
<TABLE>
<CAPTION>
HISTORICAL ADJUSTMENTS PRO FORMA
---------- ----------- ---------
<S> <C> <C> <C>
ASSETS
Current Assets:
Cash and Cash Equivalents............................. $ 4,008 $ (3,008)(a) $ 1,000
Marketable Securities................................. 79,992 (79,992)(b) --
Accounts Receivable, net.............................. 24,773 -- 24,773
Inventories........................................... 29,284 -- 29,284
Prepaid Expenses...................................... 4,197 -- 4,197
-------- --------- ---------
Total Current Assets............................... 142,254 (83,000) 59,254
Property and Equipment, net............................. 46,691 -- 46,691
Marketable Securities................................... 19,650 (19,650)(b) --
Deferred Financing Costs................................ -- 9,747(c) 9,747
Other Assets, net....................................... 4,502 -- 4,502
-------- --------- ---------
Total Assets....................................... $213,097 $ (92,903) $ 120,194
======== ========= =========
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
Current Liabilities:
Accounts Payable...................................... $ 4,477 $ -- $ 4,477
Accrued Liabilities................................... 8,285 640(d) 8,925
Current Maturities of Existing Long-Term Debt......... 120 (120)(e) --
Current Maturities of New Senior Secured Term Loans... -- 3,500(f) 3,500
-------- --------- ---------
Total Current Liabilities.......................... 12,882 4,020 16,902
Deferred Income Taxes................................... 1,525 (640)(d) 885
Existing Long-Term Debt, less Current Maturities........ 3,225 (3,225)(e) --
New Senior Secured Revolving Facility................... -- 4,946(f) 4,946
New Senior Secured Term Loans, less Current
Maturities............................................ -- 86,500(f) 86,500
New Senior Subordinated Notes........................... -- 125,000(f) 125,000
Stockholders' Equity(Deficit)
Series A Convertible Preferred Stock.................. -- 106,000(g) 106,000
Common Stock.......................................... 186 (162)(h) 24
Paid-in Capital....................................... 5,509 (4,798)(h) 711
Cumulative Marketable Securities Valuation
Adjustment......................................... 1,048 (1,048)(b) --
Cumulative Loss on Foreign Currency Translation....... (601) -- (601)
Retained Earnings (Deficit)........................... 189,323 (399,966)(h) (220,173)
(9,530)(i)
-------- --------- ---------
Total Stockholders' Equity (Deficit)............... 195,465 (309,504) (114,039)
-------- --------- ---------
Total Liabilities and Stockholders' Equity
(Deficit)........................................ $213,097 $ (92,903) $ 120,194
======== ========= =========
</TABLE>
See Notes to Unaudited Pro Forma Consolidated Balance Sheet
67
<PAGE> 76
NOTES TO UNAUDITED PRO FORMA CONSOLIDATED BALANCE SHEET
(a) The net adjustment to cash and cash equivalents is anticipated to be as
follows (in thousands):
<TABLE>
<S> <C>
Increases --
Marketable securities..................................... $ 99,642
Senior secured revolving facility......................... 4,946
Senior secured term loans................................. 90,000
Senior subordinated notes................................. 125,000
Series A convertible preferred stock...................... 106,000
---------
425,588
Decreases --
Payment of cash consideration in the merger............... (404,926)
Repayment of outstanding indebtedness..................... (3,345)
Estimated fees and expenses............................... (20,325)
---------
(428,596)
---------
Net adjustment to cash and cash equivalents................. $ (3,008)
=========
</TABLE>
(b) Reflects the sale of Juno's marketable securities to finance a portion of
the transactions contemplated by the merger agreement, including recognition
of the after-tax gain which was previously recorded as a separate component
of stockholders' equity.
(c) Represents deferred financing costs related to the transactions contemplated
by the merger agreement financing.
(d) Reflects income taxes currently payable resulting from Juno's sale of
marketable securities described in note (b) above, which were previously
recorded as deferred income tax liabilities.
(e) Reflects the repayment of Juno's pre-existing debt obligations.
(f) Reflects new borrowings associated with the transactions contemplated by the
merger agreement.
(g) Reflects the issuance of 1,060,000 shares of a new series of convertible
preferred stock at a price of $100.00 per share.
(h) Reflects the redemption of 16,197,027 common shares at $25.00 per share.
(i) Reflects the net adjustment to retained earnings for the following
non-recurring items directly attributable to the transactions contemplated
by the merger agreement: (i) estimated transaction costs of $10,578,000 and
(ii) an after-tax gain of $1,048,000 generated by the sale of Juno's
marketable securities to finance a portion of the transactions contemplated
by the merger agreement.
68
<PAGE> 77
UNAUDITED PRO FORMA CONSOLIDATED STATEMENT OF INCOME
FOR THE TWELVE MONTHS ENDED FEBRUARY 28, 1999
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
HISTORICAL ADJUSTMENTS(A) PRO FORMA
---------- -------------- ---------
<S> <C> <C> <C>
Net Sales............................................. $163,832 $ -- $163,832
Cost of Sales......................................... 80,820 -- 80,820
-------- -------- --------
Gross Profit.......................................... 83,012 -- 83,012
Selling, General and Administrative Expenses.......... 44,412 325(b) 44,737
-------- -------- --------
Operating Income...................................... 38,600 (325) 38,275
Other Income (Expense)
Interest expense.................................... (204) (22,171)(c) (22,375)
Interest and dividend income........................ 4,563 (4,563)(d) --
Miscellaneous....................................... 250 -- 250
-------- -------- --------
Total Other Income (Expense)..................... 4,609 (26,734) (22,125)
-------- -------- --------
Income Before Taxes on Income......................... 43,209 (27,059) 16,150
Taxes on Income....................................... 15,341 (8,881)(e) 6,460
-------- -------- --------
Net Income............................................ $ 27,868 $(18,178) $ 9,690
======== ======== ========
Less: Preferred Stock Dividends....................... -- 8,739(f) 8,739
-------- -------- --------
Income Available to Common Stockholders............... $ 27,868 $(26,917) $ 951
======== ======== ========
Per Share Data
Net income
Basic............................................ $ 1.50 $ 0.40
Diluted (g)...................................... $ 1.50 $ 0.38
Shares used in per share calculation
Basic............................................ 18,581 2,400
Diluted (g)...................................... 18,629 2,473
Other Data
Depreciation and Amortization (h)................... $ 3,773 $ 3,773
EBITDA (i).......................................... $ 42,373 $ 42,048
EBITDA Margin (j)................................... 25.9% 25.7%
</TABLE>
See Notes to Unaudited Pro Forma Consolidated Statements of Income
69
<PAGE> 78
UNAUDITED PRO FORMA CONSOLIDATED STATEMENT OF INCOME
FOR THE THREE MONTHS ENDED FEBRUARY 28, 1999
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
HISTORICAL ADJUSTMENTS(A) PRO FORMA
---------- -------------- ---------
<S> <C> <C> <C>
Net Sales................................................ $37,277 $ -- $37,277
Cost of Sales............................................ 18,554 -- 18,554
------- -------- -------
Gross Profit............................................. 18,723 -- 18,723
Selling, General and Administrative Expenses............. 10,797 81(b) 10,878
------- -------- -------
Operating Income......................................... 7,926 (81) 7,845
Other Income (Expense)
Interest expense....................................... (38) (5,556)(c) (5,594)
Interest and dividend income........................... 1,123 (1,123)(d) --
Miscellaneous.......................................... 174 -- 174
------- -------- -------
Total Other Income (Expense)........................ 1,259 (6,679) (5,420)
------- -------- -------
Income Before Taxes on Income............................ 9,185 (6,760) 2,425
Taxes on Income.......................................... 3,176 (2,206)(e) 970
------- -------- -------
Net Income............................................... $ 6,009 $ (4,554) $ 1,455
======= ======== =======
Less: Preferred Stock Dividends.......................... -- 2,295(f) 2,295
------- -------- -------
Income (Loss) Attributable to Common Stockholders........ $ 6,009 $ (6,849) $ (840)
======= ======== =======
Per Share Data
Net income
Basic............................................... $ 0.32 $ (0.35)
Diluted (g)......................................... $ 0.32 $ (0.35)
Shares used in per share calculation
Basic............................................... 18,596 2,400
Diluted (g)......................................... 18,651 2,400
Other Data
Depreciation and Amortization(h)....................... $ 1,033 $ 1,033
EBITDA(i).............................................. $ 8,959 $ 8,878
EBITDA Margin(j)....................................... 24.0% 23.8%
</TABLE>
See Notes to Unaudited Pro Forma Consolidated Statements of Income
70
<PAGE> 79
UNAUDITED PRO FORMA CONSOLIDATED STATEMENT OF INCOME
FOR THE YEAR ENDED NOVEMBER 30, 1998
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
HISTORICAL ADJUSTMENTS(A) PRO FORMA
---------- -------------- ---------
<S> <C> <C> <C>
Net Sales.............................................. $160,941 $ -- $160,941
Cost of Sales.......................................... 79,882 -- 79,882
-------- -------- --------
Gross Profit........................................... 81,059 -- 81,059
Selling, General and Administrative Expenses........... 44,083 325(b) 44,408
-------- -------- --------
Operating Income....................................... 36,976 (325) 36,651
Other Income (Expense)
Interest expense..................................... (166) (22,209)(c) (22,375)
Interest and dividend income......................... 4,371 (4,371)(d) --
Miscellaneous........................................ 76 -- 76
-------- -------- --------
Total other income (expense)................. 4,281 (26,580) (22,299)
-------- -------- --------
Income Before Taxes on Income.......................... 41,257 (26,905) 14,352
Taxes on Income........................................ 14,632 (8,891)(e) 5,741
-------- -------- --------
Net Income............................................. $ 26,625 $(18,014) $ 8,611
======== ======== ========
Less: Preferred Stock Dividends........................ -- 8,739(f) 8,739
-------- -------- --------
Income (Loss) Attributable to Common Stockholders...... $ 26,625 $(26,753) $ (128)
======== ======== ========
Per Share Data
Net income
Basic............................................. $ 1.43 $ (0.05)
Diluted (g)....................................... $ 1.43 $ (0.05)
Shares used in per share calculation
Basic............................................. 18,576 2,400
Diluted (g)....................................... 18,615 2,400
Other Data
Depreciation and Amortization(h)..................... $ 3,678 $ 3,678
EBITDA(i)............................................ $ 40,654 $ 40,329
EBITDA Margin(j)..................................... 25.3% 25.1%
</TABLE>
See Notes to Unaudited Pro Forma Consolidated Statements of Income
71
<PAGE> 80
NOTES TO UNAUDITED PRO FORMA CONSOLIDATED STATEMENTS OF INCOME
(a) The pro forma adjustments do not include the following non-recurring items
directly attributable to the transactions contemplated by the merger
agreement: (i) an after-tax charge of $630,000 for management bonuses; and
(ii) an after-tax realized gain of $1,048,000 generated by the sale of the
Company's marketable securities to finance a portion of the transactions
contemplated by the merger agreement.
(b) Reflects the fee Juno will pay Fremont Investors under the Management
Services Agreement.
(c) The net adjustment to interest expense consists of the following (in
thousands):
<TABLE>
<CAPTION>
THREE MONTHS
TWELVE MONTHS ENDED YEAR ENDED
ENDED FEBRUARY 28, FEBRUARY 28, NOVEMBER 30,
1999 1999 1998
------------------ ------------ ------------
<S> <C> <C> <C>
Elimination of interest expense related to
the existing indebtedness repaid in
connection with the transactions
contemplated by the merger agreement...... $ 204 $ 38 $ 166
Interest on the transactions contemplated by
the merger agreement financing at an
assumed weighted average interest rate of
9.6% per annum............................ (21,206) (5,302) (21,206)
Amortization expense for deferred financing
costs related to the above................ (1,169) (292) (1,169)
-------- ------- --------
Total interest increment.................. $(22,171) $(5,556) $(22,209)
======== ======= ========
</TABLE>
A 0.5% increase or decrease in the assumed weighted average
interest rate on the transactions contemplated by the merger
agreement financing would change pro forma interest expense by
$1,109 for the twelve months ended February 28, 1999, and the year
ended November 30, 1998, and by $277 for the three months ended
February 28, 1999.
(d) Reflects the elimination of interest income generated by the marketable
securities sold in connection with the transactions contemplated by the
merger agreement.
(e) Reflects the adjustment necessary to state the pro forma taxes on income at
an assumed effective tax rate of 40%. The increase in the effective tax rate
relates to the elimination of interest income described in note (d) above.
(f) Reflects the cumulative series A convertible preferred stock dividend at a
rate of 2% per quarter.
(g) If the convertible preferred stock were converted, pro forma diluted net
income per share would have been $1.49, $.22, and $1.32 for the twelve
months ended February 28, 1999, the three months ended February 28, 1999 and
the year ended November 30, 1998, respectively. Such conversion is anti-
dilutive, and therefore, excluded from pro forma diluted net income per
share.
(h) Excludes amortization of deferred financing costs.
(i) EBITDA represents earnings before (a) taxes on income, (b) interest expense,
(c) interest, dividend, and other miscellaneous income, and (d) depreciation
and amortization. EBITDA data are included because management understands
that such information is considered by certain investors as an additional
basis on which to evaluate Juno's ability to pay interest, repay debt and
make capital expenditures. Because all companies do not calculate EBITDA
identically, the presentation of EBITDA herein is not necessarily comparable
to similarly entitled measures of other companies. EBITDA is not intended to
represent and should not be considered more meaningful than, or an
alternative to, measures of operating performance as determined in
accordance with generally accepted accounting principles.
(j) EBITDA margin represents EBITDA as a percentage of revenues.
72
<PAGE> 81
DESCRIPTION OF JUNO CAPITAL STOCK FOLLOWING THE MERGER
The following description of Juno's capital stock does not purport to be
complete and is subject in all respects to applicable Delaware law and to the
provisions of the amended and restated certificate of incorporation attached as
Annex C to this document and incorporated herein by reference.
AUTHORIZED CAPITAL STOCK
Under the amended and restated certificate of incorporation, the total
number of shares of all classes of capital stock that Juno has authority to
issue is 50,000,000, par value $.001 per share, of which 45,000,000 are shares
of Juno common stock and 5,000,000 are shares of Juno preferred stock.
COMMON STOCK
Holders of Juno common stock are entitled to one vote per share on all
matters submitted to a vote of the stockholders, including the election of
directors, and are entitled to receive ratably such dividends, if any, as may be
declared from time to time by the Juno Board of Directors out of funds legally
available. In the event of a liquidation, dissolution or winding up of Juno,
holders of Juno common stock are entitled to share ratably in all assets
remaining after payment of Juno's liabilities and payment of the liquidation
preference of the Series A convertible preferred stock. Holders of Juno common
stock have no right to convert their shares of Juno common stock into other
securities, and there are no redemptive provisions with respect to such shares.
All of the outstanding shares of Juno are, and the shares of Juno common stock
following the merger will be, fully paid and non-assessable.
The rights, preferences and privileges of holders of Juno common stock are
subject to, and may be adversely affected by, the rights of holders of the
Series A convertible preferred stock and the shares of any other series of Juno
preferred stock which Juno may designate and issue in the future.
PREFERRED STOCK
Under the amended and restated certificate of incorporation, the Juno Board
of Directors is authorized at any time and from time to time to provide for the
issuance of all or any shares of the Juno preferred stock in one or more classes
or series, and to fix for each such class or series such voting powers, full or
limited, or no voting powers, and such distinctive designations, preferences and
relative, participating, optional or other special rights and such
qualifications, limitations or restrictions thereof as are permitted by Delaware
law, including, but not limited to, the authority to provide that any such class
or series be: (a) subject to redemption at such time or times and at such price
or prices; (b) entitled to receive dividends (which may be cumulative or
non-cumulative) at such rates, on such conditions, and at such times, and
payable in preference to, or in such relation to, the dividends payable on any
other class or classes or any other series; (c) entitled to such rights upon the
dissolution of, or upon any distribution of the assets of, Juno; or (d)
convertible into, or exchangeable for, shares of any class or classes of stock,
or other securities or property, of Juno at such price or prices or at such
rates of exchange and with such adjustments; all as the Board determines by
resolution.
Under the amended and restated certificate of incorporation, Juno has
designated 1,060,000 shares of Juno preferred stock as the Series A convertible
preferred stock, which shares will be issued to Fremont Investors in connection
with the merger.
You may find more information regarding the Series A convertible preferred
stock under "The Approval of Amended and Restated Certificate of Incorporation."
PREEMPTIVE RIGHTS
No holder of any shares of any class of stock of Juno will have any
preemptive or preferential right to acquire or subscribe for any unissued shares
of any class of stock or any authorized securities convertible into or carry any
right, option or warrant to subscribe for or acquire shares of any class of
stock.
73
<PAGE> 82
ANTI-TAKEOVER STATUTE
Juno is a Delaware corporation that is subject to Section 203 of the
Delaware General Corporation Law ("Section 203"). Section 203 provides, with
certain exceptions, that a Delaware corporation may not engage in any of a broad
range of business combinations with a person, or an affiliate or associate of
such person, who is an "interested stockholder" for a period of three years from
the date that such person became an interested stockholder unless: (1) the
transaction resulting in the person becoming an interested stockholder, or the
business combination, is approved by the board of directors of the corporation
before the person becomes an interested stockholder; (2) the interested
stockholder owned or acquired 85% or more of the outstanding voting stock of the
corporation (excluding shares owned by persons who are both officers and
directors of the corporation, and shares held by certain employee stock
ownership plans) as a result of the transactions by which it became a interested
stockholder; or (3) on or after the date the person becomes an interested
stockholder, the business combination is approved by the corporation's board of
directors and by the holders of at least 66 2/3% of the corporation's
outstanding voting stock, excluding shares owned by the interested stockholder,
at an annual or special meeting. Under Section 203, an "interested stockholder"
is defined (with certain limited exceptions) as any person that is (a) the owner
of 15% or more of the outstanding voting stock of the corporation or (b) an
affiliate or associate of the corporation and was the owner of 15% or more of
the outstanding voting stock of the corporation at any time within the
three-year period immediately prior to the date on which it is sought to be
determined whether such person is an interested stockholder.
A corporation may, at its option, exclude itself from the coverage of
Section 203 by amending its certificate of incorporation or bylaws by action of
its stockholders to exempt itself from coverage; provided that, with certain
limited exceptions, such bylaw or charter amendment shall not become effective
until 12 months after the date it is adopted. Neither the amended and restated
Certificate of incorporation nor the Juno bylaws contains any such exclusion.
COMPARISON OF THE RIGHTS OF JUNO STOCKHOLDERS
BEFORE AND AFTER THE MERGER
The rights of Juno stockholders are currently governed by Delaware law and
the existing certificate of incorporation and bylaws of Juno. In accordance with
the merger agreement, immediately prior to the effective time of the merger,
Juno will file the amended and restated certificate of incorporation with the
Secretary of State of the State of Delaware. In addition, the bylaws of Juno in
effect at the effective time of the merger will be the bylaws of Juno following
the merger until thereafter changed or amended as provided therein or by
applicable law. Accordingly, upon consummation of the merger, the rights of Juno
stockholders will be governed by Delaware law, the amended and restated
certificate of incorporation and the Juno bylaws. The following are summaries of
certain differences between the current rights of Juno stockholders and those of
Juno stockholders following the merger.
The rights of the holders of Juno common stock will be substantially the
same under Delaware law and the amended and restated certificate of
incorporation and Juno bylaws as they were under the Delaware law and bylaws
with the following exceptions.
The following summary is not intended to be complete and is qualified by
reference to Delaware law, the amended and restated certificate of incorporation
and the Juno bylaws. The amended and restated certificate of incorporation is
attached as Annex C to this document and incorporated herein by reference.
AUTHORIZED CAPITAL
Under the amended and restated certificate of incorporation, the total
number of authorized shares of Juno common stock will be reduced to 45,000,000
from 50,000,000 and Juno will have the authority to issue 5,000,000 shares of
preferred stock, of which 1,060,000 shares will be designated as Series A
convertible preferred stock.
74
<PAGE> 83
PAR VALUE
The amended and restated certificate of incorporation reduces the par value
of all of Juno's capital stock to $.001 per share from $.01 per share.
CLASSIFIED BOARD
The amended and restated certificate of incorporation eliminates the
classification of the Board of Directors into three classes. Accordingly, each
director will serve until the next annual meeting of stockholders after his or
her election.
ABSENCE OF RIGHTS PLAN
In 1989, Juno entered into a stockholders' rights agreement, which has been
amended so that it will not apply to the merger. Juno will not have an effective
rights plan following the merger.
CERTAIN PENDING LITIGATION
Juno, its directors, Fremont Investors and Fremont Partners have been named
as defendants in a purported class action lawsuit commenced on or about April 1,
1999 in the Court of Chancery in and for New Castle County, Delaware. Such
action is captioned Linda Barnes v. George M. Ball, Thomas Tomsovic, Allan
Coleman, Robert S. Fremont, Julius Lewis, Fremont Investors I, LLC, Fremont
Partners, L.P. and Juno Lighting, Inc. (Case No. 17084NC). The complaint in such
lawsuit alleges, among other things, that the Juno Board of Directors breached
their fiduciary duties to Juno stockholders by failing to appoint additional
independent directors and by entering into the merger agreement, and that
Fremont Investors and Fremont Partners aided and abetted such breach of
fiduciary duties. More specifically, the plaintiff alleges, among other things,
that the Juno Board of Directors failed to engage in any market check and agreed
to sell control of Juno to Fremont Investors for a price that was less than
Juno's true worth. As relief, the complaint seeks, among other things, an
injunction against consummation of the merger or, to the extent the merger is
concluded, a rescission of the merger, damages in an unspecified amount, a court
order compelling Juno to appoint two additional independent directors, and an
award to plaintiff of her costs and expenses, including attorneys' and expert's
fees, incurred in connection with such lawsuit.
Juno believes that the allegations contained in the complaint are without
merit and intends to vigorously contest the action, on behalf of itself and its
directors, if the plaintiff elects to proceed with her action.
APPRAISAL RIGHTS OF DISSENTING STOCKHOLDERS
If the merger is consummated, stockholders of Juno: (1) who make the demand
described below with respect to their shares, who continuously are the record
holders of such shares through the effective time of the merger, (2) who
otherwise comply with the statutory requirements of Section 262 of the Delaware
General Corporation Law (a copy of which is attached hereto as Annex E to this
proxy statement/ prospectus) and (3) who neither vote in favor of the merger
agreement nor consent thereto in writing will be entitled to an appraisal by the
Court of Chancery in Delaware ("Delaware Court") of the fair value of their
shares of Juno common stock. Except as described herein, stockholders of Juno
will not be entitled to appraisal rights in connection with the merger.
A holder of shares of Juno common stock wishing to exercise dissenters'
rights of appraisal must, before the taking of the vote on the merger at the
special meeting, deliver to Juno a written demand for appraisal of such shares.
A demand for appraisal will be sufficient if it reasonably informs Juno of the
identity of the stockholder and that the stockholder intends thereby to demand
the appraisal of his or her shares.
75
<PAGE> 84
Within 10 days after the effective time of the merger, Juno is required to,
and will, notify each stockholder of Juno who has satisfied the foregoing
conditions on the date on which the merger became effective. Within 120 days
after the effective time, either Juno or any stockholder who has complied with
the required conditions of Section 262 may file a petition in the Delaware
Court, with a copy served on Juno in the case of a petition filed by a
stockholder, demanding a determination of the fair value of the shares of all
dissenting stockholders. There is no present intent on the part of Juno to file
an appraisal petition and stockholders seeking to exercise appraisal rights
should not assume that Juno will file such a petition or that Juno will initiate
any negotiations with respect to the fair value of such shares. Accordingly,
stockholders who desire to have their shares appraised should initiate any
petitions necessary for the perfection of their appraisal rights within the time
periods and in the manner prescribed in Section 262. Within 120 days after the
effective time, any stockholder who has theretofore complied with the applicable
provisions of Section 262 will be entitled, upon written request, to receive
from Juno, a statement setting forth the aggregate number of shares of Juno
common stock not voting in favor of the merger agreement and with respect to
which demands for appraisal were received by Juno and the number of holders of
such shares. Such statement must be mailed within 10 days after the written
request therefor has been received by Juno.
If a petition for an appraisal is timely filed, at the hearing on such
petition, the Delaware Court will determine which stockholders are entitled to
appraisal rights. The Delaware Court may require the stockholders who have
demanded an appraisal for their shares and who hold stock represented by
certificates to submit their certificates of stock to the Register in Chancery
for notation thereon of the pendency of the appraisal proceedings; and if any
stockholder fails to comply with such direction, the Delaware Court may dismiss
the proceedings as to such stockholder. Where proceedings are not dismissed, the
Delaware Court will appraise the shares of Juno common stock owned by such
stockholders, determining the fair value of such shares exclusive of any element
of value arising from the accomplishment or expectation of the merger, together
with a fair rate of interest, if any, to be paid upon the amount determined to
be the fair value. In determining fair value, the Delaware Court is to take into
account all relevant factors. In Weinberger v. UOP Inc., the Delaware Supreme
Court discussed the factors that could be considered in determining fair value
in an appraisal proceeding, stating that "proof of value by any techniques or
methods which are generally considered acceptable in the financial community and
otherwise admissible in court" should be considered, and that "fair price
obviously requires consideration of all relevant factors involving the value of
a company." The Delaware Supreme Court stated that in making this determination
of fair value the court must consider market value, asset value, dividends,
earnings prospects, the nature of the enterprise and any other facts which could
be ascertained as of the date of the merger which throw lights on future
prospects of the merged corporation. In Weinberger, the Delaware Supreme Court
stated that "elements of future value, including the nature of the enterprise,
which are known or susceptible of proof as of the date of the merger and not the
product of speculation, may be considered." Section 262, however, provides that
fair value is to be "exclusive of any element of value arising from the
accomplishment or expectation of the merger."
Holders of shares of Juno common stock considering seeking appraisal should
recognize that the fair value of their shares determined under Section 262 could
be more than, the same as or less than the consideration they are entitled to
receive pursuant to the merger Agreement if they do not seek appraisal of their
shares. The cost of the appraisal proceeding may be determined by the Delaware
Court and taxed against the parties as the Delaware Court deems equitable in the
circumstances. Upon application of a dissenting stockholder of Juno, the
Delaware Court may order that all or a portion of the expenses incurred by any
dissenting stockholder in connection with the appraisal proceedings, including
without limitation, reasonable attorney's fees and the fees and expenses of
experts, be charged pro rata against the value of all shares of stock entitled
to appraisal.
At any time within 60 days after the effective time, any stockholder will
have the right to withdraw such demand for appraisal and to accept the terms
offered in the merger; after this period, the stockholder may withdraw such
demand for appraisal only with the consent of Juno. If no petition for appraisal
is filed with the Delaware Court within 120 days after the effective time,
stockholders' rights to appraisal shall
76
<PAGE> 85
cease, and all holders of shares of Juno common stock will be entitled to
receive the consideration offered pursuant to the merger Agreement. Inasmuch as
Juno has no obligation to file such a petition, and Juno has no present
intention to do so, any holder of shares of Juno common stock who desires such a
petition to be filed is advised to file it on a timely basis. Any stockholder
may withdraw such stockholder's demand for appraisal by delivering to Juno a
written withdrawal of his or her demand for appraisal and acceptance of the
merger, except (1) that any such attempt to withdraw made more than 60 days
after the effective time will require written approval of Juno, and (2) that no
appraisal proceeding in the Delaware Court shall be dismissed as to any
stockholder without the approval of the Delaware Court, and such approval may be
conditioned upon such terms as the Delaware Court deems just.
The foregoing is only a summary of Section 262, and is qualified in its
entirety by reference to the provisions thereof, the full text of which is set
forth as Annex E to this proxy statement/prospectus. Each stockholder of Juno is
urged to read carefully the full text of Section 262.
Failure to take any required step in connection with the exercise of
appraisal rights may result in termination of such rights. In view of the
complexity of these provisions of the Delaware law, stockholders who are
considering exercising their rights under Section 262 should consult with their
legal advisors.
LEGAL MATTERS
The legality of the shares of Juno common stock to be issued or retained in
connection with the merger and certain federal income tax consequences of the
merger will be passed upon by Sonnenschein Nath & Rosenthal, Chicago, Illinois,
counsel to Juno. A partner of such firm, who is a director of Juno, owns 4,000
shares of Juno common stock.
INDEPENDENT AUDITORS
The consolidated financial statements of Juno at November 30, 1998 and
November 30, 1997, and for each of the three years in the period ended November
30, 1998, included in Juno's Annual Report on Form 10-K, as amended, for the
year ended November 30, 1998, incorporated by reference in this proxy
statement/prospectus, have been audited by PricewaterhouseCoopers LLP,
independent auditors, as stated therein. Representatives of
PricewaterhouseCoopers LLP are expected to be present at the special meeting.
Such representatives will be available to respond to appropriate questions.
WHERE YOU CAN FIND MORE INFORMATION
Juno is subject to the informational requirements of the Exchange Act, and
files annual, quarterly and special reports, proxy statements and other
information with the Commission. You may read and copy any reports, statements
or other information that the companies file with the Commission at the
Commission's public reference rooms in Washington, D.C., New York, New York, and
Chicago, Illinois. Please call the Commission at 1-800-SEC-0330 for further
information on the public reference rooms. These Commission filings are also
available to the public from commercial document retrieval services at the
Internet world wide web site maintained by the Commission at http://www.sec.gov.
Juno filed a Registration Statement on Form S-4 to register with the
Commission its shares of common stock to be issued to Juno stockholders in the
merger. This proxy statement/prospectus is a part of the Registration Statement
and constitutes a prospectus of Juno. As allowed by Commission rules, this proxy
statement/prospectus does not contain all of the information you can find in
Juno's Registration Statement or in the exhibits to that Registration Statement.
All information contained in this proxy statement/prospectus concerning
Jupiter and its affiliates, including Fremont, has been supplied by Jupiter and
has not been independently verified by Juno. Except as otherwise indicated, all
other information contained in this proxy statement/prospectus (or, as permitted
by applicable rules and regulations of the Commission, incorporated by reference
herein) has been supplied or prepared by Juno.
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We have not authorized anyone to give any information or make any
representation about the matters to be considered at the special meeting or Juno
that differs from or adds to the information in this proxy statement/prospectus
or in our documents that are publicly filed with the Commission and incorporated
by reference herein. Therefore, if anyone does give you different or additional
information, you should not rely on it. You should not assume that the
information contained in this proxy statement/prospectus is accurate as of any
date other than its date or such other date as this proxy statement/prospectus
indicates. The mailing date of this proxy statement/prospectus to Juno
stockholders does not create any implication to the contrary.
INCORPORATION OF DOCUMENTS BY REFERENCE
As allowed by the Commission rules, this proxy statement/prospectus does
not contain all the information set forth in Juno's Annual Report on Form 10-K,
as amended for the year ended November 30, 1998. The Commission allows Juno to
"incorporate by reference" information into this proxy statement/prospectus,
which means that Juno can disclose important information to you by referring you
to another document filed separately with the Commission. The information
incorporated by reference is considered part of this proxy statement/prospectus,
except for any information superseded by information contained directly in this
proxy statement/prospectus or in later filed documents incorporated by reference
in this proxy statement/prospectus.
This proxy statement/prospectus incorporates by reference the documents set
forth below that Juno has previously filed with the Commission. These documents
contain important information about Juno and its finances and should be
carefully reviewed. Some of these filings have been amended by later filings,
which are also listed.
- Juno's Annual Report on Form 10-K for the fiscal year ended November 30,
1998, as amended by the Form 10-K/A filed with the Commission on March
29, 1999;
- Juno's Quarterly Report on Form 10-Q for the quarter ended February 28,
1999;
- Juno's Current Report on Form 8-K dated March 29, 1999; and
- The description of Juno (a) common stock contained in Juno's Registration
Statement on Form 8-A, dated February 24, 1984, and any amendment or
report filed for the purpose of updating such description; and (b) common
stock purchase rights contained in Juno's Registration Statement on Form
8-A, dated August 9, 1989, and any amendment or report filed for the
purpose of updating such description.
All documents filed by Juno with the Commission pursuant to Sections 13(a),
13(d), 14 and 15(d) of the Exchange Act after the date of this proxy
statement/prospectus and prior to the date of the special meeting will be
considered to be incorporated by reference in this proxy statement/prospectus
from the date such documents are filed. To the extent the terms set forth in
this Proxy Statement or any document currently or subsequently incorporated by
reference differ from each other, rely on the terms set forth in the most
recently filed document.
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Juno will provide without charge to each person to whom this Proxy
Statement is delivered, on such person's request, copies of all documents that
are incorporated herein by reference (not including the exhibits to such
documents, unless the exhibits are themselves specifically incorporated by
reference). Requests should be directed to:
Juno Investor Relations
1300 South Wolf Road
Des Plaines, Illinois 60017-5065
(847) 827-9880
To obtain timely delivery of the requested documents prior to the special
meeting, you must request them no later than , 1999, which is five
business days prior to the date of the special meeting.
STOCKHOLDER PROPOSALS
Juno will schedule and hold its 1999 annual meeting of Juno stockholders
after the special meeting. Any proposals of Juno stockholders intended to be
presented at the 1999 annual meeting of Juno stockholders should be addressed to
Juno's Vice President, Finance, 1300 South Wolf Road, P.O. Box 5065, Des
Plaines, Illinois 60017-5065, and must be received by the Corporate Secretary of
Juno no later than in order to be considered for inclusion in the Juno
1999 annual meeting proxy materials.
OTHER MATTERS
As of the date of this proxy statement/prospectus, the Juno Board knows of
no matters that will be presented for consideration at the special meeting other
than as described in this proxy statement/prospectus. If any other matters shall
properly come before either the special meeting or any adjournments or
postponements thereof to be voted upon, the enclosed proxies will be deemed to
confer discretionary authority on the individuals named as proxies therein to
vote the shares represented by such proxies as to any such matters. The persons
named as proxies intend to vote or not to vote in accordance with the
recommendation of the Board of Directors of Juno.
By Order of the Board of Directors
JULIUS LEWIS
Secretary
, 1999
Des Plaines, Illinois
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ANNEX A
AGREEMENT AND PLAN OF
RECAPITALIZATION AND MERGER
BY AND AMONG
FREMONT INVESTORS I, LLC
JUPITER ACQUISITION CORP.
AND
JUNO LIGHTING, INC.
DATED AS OF
MARCH 26, 1999
<PAGE> 89
TABLE OF CONTENTS
ARTICLE I
THE MERGER
<TABLE>
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<S> <C> <C>
Section 1.1 The Merger.................................................. 1
Section 1.2 Effective Time.............................................. 2
Section 1.3 Closing..................................................... 2
Section 1.4 Directors and Officers of the Surviving Corporation......... 2
Section 1.5 Subsequent Actions.......................................... 2
Section 1.6 Stockholders' Meeting....................................... 2
ARTICLE II
EFFECT OF THE MERGER ON THE CAPITAL STOCK OF THE CONSTITUENT CORPORATIONS
Section 2.1 Effect on Capital Stock..................................... 3
Section 2.2 Dissenting Shares........................................... 4
Section 2.3 Share Elections............................................. 4
Section 2.4 Proration................................................... 5
Section 2.5 Stock Options............................................... 6
Section 2.6 Surrender of Shares; Transfer Books......................... 6
ARTICLE III
STOCK PURCHASE AND SALE
Section 3.1 Amendment of Certificate of Incorporation................... 8
Section 3.2 Purchase and Sale of Preferred Shares....................... 8
Section 3.3 Purchase Price.............................................. 8
Section 3.4 Closing..................................................... 8
Section 3.5 Closing Deliveries by the Company........................... 8
Section 3.6 Closing Deliveries by Fremont............................... 8
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
Section 4.1 Organization; Qualification................................. 8
Section 4.2 Subsidiaries and Affiliates................................. 9
Section 4.3 Capitalization.............................................. 9
Section 4.4 Authorization; Validity of Agreement; Company Action........ 10
Section 4.5 Board Approvals Regarding Transactions...................... 10
Section 4.6 Consents and Approvals; No Violations....................... 10
Section 4.7 SEC Reports and Financial Statements........................ 10
Section 4.8 No Undisclosed Liabilities.................................. 11
Section 4.9 Inventory................................................... 11
Section 4.10 Absence of Certain Changes.................................. 11
Section 4.11 Litigation.................................................. 11
Section 4.12 Employee Benefit Plans...................................... 12
Section 4.13 Taxes....................................................... 13
Section 4.14 Title to Properties; Encumbrances........................... 14
Section 4.15 Plant and Equipment......................................... 14
</TABLE>
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<TABLE>
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<S> <C> <C>
Section 4.16 Environmental Laws.......................................... 14
Section 4.17 Intellectual Property....................................... 15
Section 4.18 Labor Matters............................................... 15
Section 4.19 Employment Matters.......................................... 16
Section 4.20 Compliance with Laws........................................ 16
Section 4.21 Contracts................................................... 16
Section 4.22 Insurance................................................... 17
Section 4.23 Opinion of Financial Advisor................................ 17
Section 4.24 Rights Agreement............................................ 17
Section 4.25 Brokers or Finders.......................................... 17
Section 4.26 Transactions with Affiliates................................ 17
Section 4.27 Full Disclosure............................................. 17
Section 4.28 Legal and Accounting Fees................................... 17
Section 4.29 Cash and Marketable Securities.............................. 17
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF PARENT AND SUB
Section 5.1 Organization................................................ 18
Section 5.2 Authorization; Validity of Agreement; Necessary Action...... 18
Section 5.3 Consents and Approvals; No Violations....................... 18
Section 5.4 Sufficient Funds............................................ 18
Section 5.5 Share Ownership............................................. 19
Section 5.6 Sub's Capitalization and Operations......................... 19
Section 5.7 Brokers or Finders.......................................... 19
ARTICLE VI
COVENANTS
Section 6.1 Interim Operations of the Company........................... 19
Section 6.2 Access; Confidentiality..................................... 21
Section 6.3 Reasonable Best Efforts..................................... 22
Section 6.4 Proxy Statement; Form S-4................................... 23
Section 6.5 No Solicitation of Competing Transaction.................... 23
Section 6.6 Publicity................................................... 25
Section 6.7 Notification of Certain Matters............................. 25
Section 6.8 Directors' and Officers' Insurance and Indemnification...... 25
Section 6.9 State Takeover Laws......................................... 26
Section 6.10 Actions Regarding the Rights................................ 26
Section 6.11 Recapitalization............................................ 26
Section 6.12 Financial Statements........................................ 26
Section 6.13 Employee Plan and Benefit Arrangements...................... 27
Section 6.14 NASDAQ Listing.............................................. 27
ARTICLE VII
CONDITIONS
Section 7.1 Conditions to the Stock Purchase............................ 27
Conditions to Each Party's Obligation to Effect the
Section 7.2 Merger...................................................... 27
Section 7.3 Conditions to the Obligations of Fremont and Sub............ 28
Section 7.4 Conditions to the Obligations of the Company................ 28
</TABLE>
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<TABLE>
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ARTICLE VIII
TERMINATION
Section 8.1 Termination................................................. 29
Section 8.2 Effect of Termination....................................... 30
ARTICLE IX
DEFINITIONS AND INTERPRETATION
Section 9.1 Definitions................................................. 30
Section 9.2 Interpretation.............................................. 34
ARTICLE X
MISCELLANEOUS
Section 10.1 Fees and Expenses........................................... 35
Section 10.2 Amendment and Modification.................................. 36
Section 10.3 Nonsurvival of Representations and Warranties............... 36
Section 10.4 Notices..................................................... 36
Section 10.5 Counterparts................................................ 37
Section 10.6 Entire Agreement; No Third Party Beneficiaries.............. 37
Section 10.7 Severability................................................ 37
Section 10.8 Governing Law............................................... 37
Section 10.9 Enforcement................................................. 37
Section 10.10 Time of Essence............................................. 38
Section 10.11 Extension; Waiver........................................... 38
Section 10.12 Assignment.................................................. 38
</TABLE>
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AGREEMENT AND PLAN OF RECAPITALIZATION AND MERGER
AGREEMENT AND PLAN OF RECAPITALIZATION AND MERGER, dated as of March 26,
1999, by and among Fremont Investors I, LLC, a Delaware limited liability
company ("Fremont"), Jupiter Acquisition Corp., a Delaware corporation and a
wholly owned subsidiary of Fremont ("Sub") and Juno Lighting, Inc., a Delaware
corporation (the "Company"). Certain capitalized terms used in this Agreement
have the meanings ascribed to them in Article IX hereof.
WHEREAS, the Board of Managers of Fremont and the respective Boards of
Directors of the Company and Sub have determined that the merger of Sub with and
into the Company (the "Merger"), upon the terms and subject to the conditions
set forth in this Agreement, would be advisable and in the best interests of
their respective members or stockholders, and have approved the Merger, pursuant
to which each Share issued and outstanding immediately prior to the Effective
Time, will, except as otherwise provided herein, be converted into either (i)
the right to retain such Shares at the election of the holder thereof and
subject to the terms hereof or (ii) the right to receive $25.00 per Share in
cash; and
WHEREAS, the Company Board of Directors has resolved to recommend that the
holders of such Shares approve the Merger and this Agreement and the
consummation of the transactions contemplated hereby upon the terms and subject
to the conditions set forth herein; and
WHEREAS, in furtherance thereof, the Board of Managers of Fremont and the
Board of Directors of each of Sub and the Company have approved this Agreement
and the Merger in accordance with the DGCL and upon the terms and subject to the
conditions set forth herein; and
WHEREAS, also in furtherance thereof, the Board of Managers of Fremont and
the Board of Directors of the Company have approved the purchase by Fremont
concurrently with the consummation of the Merger, of an aggregate of 1,060,000
shares of newly-authorized and issued Preferred Stock of the Company at a
purchase price of $100 per share (the "Stock Purchase"); and
WHEREAS, the parties hereto intend that the transactions contemplated
hereby be treated as a recapitalization for financial accounting purposes; and
WHEREAS, Fremont, Sub and the Company desire to make certain
representations, warranties, covenants and agreements in connection with the
Merger and the Stock Purchase.
NOW, THEREFORE, in consideration of the foregoing and the mutual
representations, warranties, covenants and agreements set forth herein,
intending to be legally bound hereby, the parties hereto agree as follows:
ARTICLE I
THE MERGER
Section 1.1 The Merger. Subject to the terms and conditions of this
Agreement, and in accordance with the provisions of the DGCL, at the Effective
Time, the Company and Sub shall consummate the Merger, pursuant to which (a) Sub
shall be merged with and into the Company and the separate corporate existence
of Sub shall thereupon cease, (b) the Company shall be the successor or
surviving corporation in the Merger and shall continue to be governed by the
laws of the State of Delaware, and (c) the separate corporate existence of the
Company with all its rights, privileges, immunities, powers and franchises shall
continue unaffected by the Merger, except as set forth in this Section. Pursuant
to the Merger, (x) the certificate of incorporation of the Company in effect
immediately prior to the Effective Time shall be the certificate of
incorporation of the Surviving Corporation until thereafter amended as provided
by law and such certificate of incorporation, and (y) the by-laws of the
Company, as in effect immediately prior to the Effective Time, shall be the
by-laws of the Surviving Corporation until thereafter amended as provided by
law, by such certificate of incorporation or by such by-laws. The Merger shall
have the effects specified in the DGCL.
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Section 1.2 Effective Time. Fremont and the Company shall cause a
certificate of merger to be executed and filed on the Closing Date (or on such
other date as Fremont and the Company may agree) with the Secretary of State of
Delaware as provided in the DGCL. The Merger shall become effective at such time
as such certificate of merger is duly filed with the Secretary of State of the
State of Delaware or such other time as is agreed upon by the parties and
specified in the certificate of merger.
Section 1.3 Closing. The closing of the Merger shall take place at the
offices of Skadden, Arps, Slate, Meagher & Flom LLP, 333 West Wacker Drive,
Chicago, IL at 10:00 a.m. on a date to be specified by the parties which shall
be no later than the second business day after satisfaction or waiver of the
conditions set forth in Article VII hereof (the "Closing Date"), unless another
date, time or place is agreed to in writing by the parties hereto.
Section 1.4 Directors and Officers of the Surviving Corporation. The
directors of Sub at the Effective Time shall, from and after the Effective Time,
be the directors of the Surviving Corporation until their successors shall have
been duly elected or appointed or qualified or until their earlier death,
resignation or removal in accordance with the certificate of incorporation and
the by-laws of the Surviving Corporation. The officers of the Company at the
Effective Time shall, from and after the Effective Time, be the officers of the
Surviving Corporation until their successors shall have been duly elected or
appointed or qualified or until their earlier death, resignation or removal in
accordance with the certificate of incorporation and the by-laws of the
Surviving Corporation. If, at the Effective Time, a vacancy shall exist on the
Company Board of Directors or in any office of the Surviving Corporation, such
vacancy may thereafter be filled in the manner provided by law.
Section 1.5 Subsequent Actions. If at any time after the Effective Time
the Surviving Corporation will consider or be advised that any deeds, bills of
sale, instruments of conveyance, assignments, assurances or any other actions or
things are necessary or desirable to vest, perfect or confirm of record or
otherwise in the Surviving Corporation its right, title or interest in, to or
under any of the rights, properties or assets of either of the Company or Sub
acquired or to be acquired by the Surviving Corporation as a result of, or in
connection with, the Merger or otherwise to carry out this Agreement, the
officers and directors of the Surviving Corporation shall be authorized to
execute and deliver, in the name and on behalf of either the Company or Sub, all
such deeds, bills of sale, instruments of conveyance, assignments and assurances
and to take and do, in the name and on behalf of each of such corporations or
otherwise, all such other actions and things as may be necessary or desirable to
vest, perfect or confirm any and all right, title and interest in, to and under
such rights, properties or assets in the Surviving Corporation or otherwise to
carry out this Agreement.
Section 1.6 Stockholders' Meeting.
(a) In order to consummate the Merger, the Company, acting through its
Board of Directors, shall, in accordance with applicable law:
(i) duly call, give notice of, convene and hold a special or annual
meeting of its stockholders (the "Special Meeting") as promptly as
practicable for the purpose of considering and taking action upon the
approval of the Merger, the approval and adoption of this Agreement, the
approval of the Amendment of the Certificate of Incorporation of the
Company (the "Amendment") as described in Section 3.1 hereof, the approval
of the Stock Purchase and the approval of the creation of a new stock
option plan of the Company having a share reserve of 940,000 shares of
Common Stock (the "New Option Plan") in the form attached hereto as Exhibit
A;
(ii) prepare and file with the SEC a preliminary Proxy Statement
relating to the Merger, this Agreement, the Amendment, the Stock Purchase
and the New Option Plan and use its reasonable best efforts to obtain and
furnish the information required to be included by the SEC in the Proxy
Statement and in the Registration Statement on Form S-4 in which the Proxy
Statement shall be included (the "Form S-4") and, after consultation with
Fremont, to respond promptly to any comments made by the SEC with respect
to the Form S-4 and cause a definitive Proxy Statement, including any
amendment or supplement thereto, to be mailed to its stockholders, provided
that no
A-2
<PAGE> 94
amendment or supplement to such Proxy Statement will be made by the Company
without consultation with Fremont and its counsel;
(iii) subject to Section 6.5 hereof, include in the Proxy Statement
the recommendation of the Company Board of Directors that stockholders of
the Company vote in favor of the approval of the Merger, the approval and
adoption of this Agreement, the approval of the Amendment, the approval of
the Stock Purchase and the approval of the New Option Plan;
(iv) subject to Section 6.5 hereof, use its reasonable best efforts to
solicit from holders of Shares proxies in favor of the Merger, the
Agreement, the Amendment, the Stock Purchase and the New Option Plan.
(b) Fremont will provide the Company with the information concerning
Fremont and Sub required to be included in the Proxy Statement. Fremont shall
vote, or cause to be voted, all of the Shares then owned by it, Sub or any of
its other Subsidiaries or Affiliates in favor of the approval of the Merger, the
approval and adoption of this Agreement, and the approval of the Amendment, the
Stock Purchase and the New Option Plan.
ARTICLE II
EFFECT OF THE MERGER ON THE CAPITAL STOCK OF THE
CONSTITUENT CORPORATIONS
Section 2.1 Effect on Capital Stock. As of the Effective Time, by virtue
of the Merger and without any action on the part of the Company, Sub or any
holder of any Shares or any shares of capital stock of Sub:
(a) Each share of capital stock of Sub issued and outstanding
immediately prior to the Effective Time shall automatically be cancelled
and retired and shall cease to exist.
(b) Each Share that is owned by Sub, Fremont or any Subsidiary or
Affiliate of Sub or Fremont shall automatically be cancelled and retired
and shall cease to exist, and no cash, Shares or other consideration shall
be delivered or deliverable in exchange therefor.
(c) Except as otherwise provided herein and subject to Section 2.4,
each issued and outstanding Share (other than any such Shares to be
cancelled pursuant to Section 2.1(b) and any Dissenting Shares) shall be
converted into the following (the "Merger Consideration"):
(i) for each Share with respect to which an election to retain a
Share has been effectively made and not revoked or lost, pursuant to
Sections 2.3(c), (d) and (e) (such Shares, "Electing Shares"), the right
to retain one fully paid and nonassessable Share (a "Non-Cash Election
Share"); and
(ii) for each Share (other than Electing Shares), the right to
receive in cash from the Company following the Merger an amount equal to
$25.00 (the "Cash Election Price").
(d) As of the Effective Time, all Shares (other than Shares referred
to in Section 2.1(c)(i) (but subject to Section 2.4) and Section 2.2)
issued and outstanding immediately prior to the Effective Time shall no
longer be outstanding and shall automatically be cancelled and retired and
shall cease to exist, and each holder of a certificate representing any
such Shares shall, to the extent such certificate represents such Shares,
cease to have any rights with respect thereto, except the right to receive
cash, including cash in lieu of fractional shares to be issued or paid in
consideration therefor upon surrender of such certificate in accordance
with Section 2.6.
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Section 2.2 Dissenting Shares.
(a) Notwithstanding anything in this Agreement to the contrary, Dissenting
Shares shall not be converted into the right to receive the Merger
Consideration, but, instead, the holders thereof shall be entitled only to such
rights as are granted by the DGCL; provided, however, that if any holder of
Shares who demands appraisal of his Shares under the DGCL effectively withdraws
or loses (through failure to perfect or otherwise) his right to appraisal, then
as of the Effective Time or the occurrence of such event, whichever later
occurs, such holder's Shares shall automatically be converted and represent only
the right to receive the Merger Consideration set forth in Section 2.1(c) of
this Agreement, but subject to Section 2.4 of this Agreement, without any
interest thereon, upon surrender of the certificate or certificates representing
such Shares pursuant to Section 2.6 hereof.
(b) The Company shall give Fremont (i) prompt notice of any written demands
for appraisal or payment of the fair value of any Shares, withdrawals of such
demands and any other instruments served pursuant to the DGCL and received by
the Company and (ii) the opportunity to direct all negotiations and proceedings
with respect to demands for appraisal under the DGCL. The Company shall not,
except with the prior written consent of Fremont, make any payment with respect
to any such demands for appraisal or settle or offer to settle any such demands.
Section 2.3 Share Elections.
(a) Each person who, on or prior to the Election Date referred to in
Section 2.3(c) below, is a record holder of Shares will be entitled, with
respect to all or any portion of his Shares, to make an unconditional election
(a "Non-Cash Election") on or prior to such Election Date to retain Non-Cash
Election Shares, on the basis hereinafter set forth.
(b) Not later than five (5) business days prior to the mailing of the
definitive Proxy Statement, Fremont shall appoint a nationally recognized bank
or trust company (or another entity reasonably satisfactory to the Company) to
act as exchange agent (the "Exchange Agent") for the payment of the Merger
Consideration.
(c) Fremont shall prepare a form of election, which form shall be subject
to the reasonable approval of the Company (the "Form of Election"), and such
Form of Election shall be mailed with the Proxy Statement to the record holders
of Shares as of the record date for the Stockholders Meeting, which Form of
Election shall be used by each record holder of Shares who wishes to elect to
retain Non-Cash Election Shares for any or all Shares held, subject to the
provisions of Section 2.4 hereof, by such holder. The Company will use its
reasonable best efforts to make the Form of Election and the Proxy Statement
available to all persons who become holders of Shares during the period between
such record date and the date of the Stockholders Meeting (the "Election Date").
Any such holder's election to retain Non-Cash Election Shares shall have been
properly made only if the Exchange Agent shall have received at its designated
office, by 5:00 p.m., New York City time on the Election Date, a Form of
Election properly completed and signed and accompanied by certificates for the
Shares to which such Form of Election relates, duly endorsed in blank or
otherwise in form acceptable for transfer on the books of the Company (or by an
appropriate guarantee of delivery of such certificates as set forth in such Form
of Election from a firm which is a member of a registered national securities
exchange or of the National Association of Securities Dealers, Inc. or a
commercial bank or trust company having an office or correspondent in the United
States, provided such certificates are in fact delivered to the Exchange Agent
within five NASDAQ trading days after the date of execution of such guarantee of
delivery).
(d) Any Form of Election may be revoked by the stockholder submitting it to
the Exchange Agent only by written notice received by the Exchange Agent prior
to 5:00 p.m., New York City time, on the Election Date. In addition, all Forms
of Election shall automatically be revoked if the Exchange Agent is notified in
writing by Fremont and the Company that the Merger has been abandoned. If a Form
of Election is revoked, the certificate or certificates (or guarantees of
delivery, as appropriate) for the Shares to which such Form of Election relates
shall be promptly returned by the Exchange Agent to the stockholder submitting
the same to the Exchange Agent.
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(e) The determination of the Exchange Agent shall be binding as to (i)
whether or not elections to retain Non-Cash Election Shares have been properly
made or revoked pursuant to this Section 2.3 with respect to Shares and (ii)
when elections and revocations were received by the Exchange Agent. If the
Exchange Agent determines that any election to retain Non-Cash Election Shares
was not properly made with respect to Shares, such Shares shall be treated by
the Exchange Agent as Shares which were not Electing Shares at the Effective
Time, and, subject to Section 2.4, such Shares shall be exchanged in the Merger
for cash pursuant to Section 2.1(c)(ii). The Exchange Agent shall also make all
computations as to the allocation and the proration contemplated by Section 2.4,
and any such computation shall be conclusive and binding on the holders of
Shares. The Exchange Agent may, with the mutual agreement of Fremont and the
Company, make such rules as are consistent with this Section 2.3 for the
implementation of the elections provided for herein as shall be necessary or
desirable to effect fully such elections.
Section 2.4 Proration.
(a) Notwithstanding anything in this Agreement to the contrary, the
aggregate number of Shares to be converted into the right to retain Shares at
the Effective Time shall be equal to 2,400,000 shares (the "Non-Cash Election
Number") (excluding for this purpose any Shares to be cancelled pursuant to
Section 2.1(b)).
(b) If the number of Electing Shares exceeds the Non-Cash Election Number,
then each Electing Share shall be converted into the right to retain Non-Cash
Election Shares and receive cash in accordance with the terms of Section 2.1(c)
in the following manner:
(i) A proration factor (the "Non-Cash Proration Factor") shall be
determined by dividing the Non-Cash Election Number by the total number of
Electing Shares;
(ii) The number of Electing Shares covered by each Non-Cash Election
to be converted into the right to retain Non-Cash Election Shares shall be
determined by multiplying the Non-Cash Proration Factor by the total number
of Electing Shares covered by such Non-Cash Election;
(iii) All Electing Shares, other than those shares converted into the
right to receive Non-Cash Election Shares in accordance with Section
2.4(b)(ii), shall be converted into cash (on a consistent basis among
stockholders who made the election referred to in Section 2.1(c)(i), pro
rata in accordance with the number of shares as to which they made such
election) as if such shares were not Electing Shares in accordance with
terms of Section 2.1(c)(ii).
(c) If the number of Electing Shares is less than the Non-Cash Election
Number, then:
(i) all Electing Shares shall be converted into the right to retain
Non-Cash Election Shares in accordance with the terms of Section 2.1(c)(i);
(ii) additional Shares other than Electing Shares and Dissenting
Shares shall be converted into the right to retain Non-Cash Election Shares
in accordance with the terms of 2.1(c)(i) in the following manner:
(A) a proration factor (the "Cash Proration Factor") shall be
determined by dividing (x) the Non-Cash Election Number less the number
of Electing Shares, by (y) the total number of Shares issued and
outstanding immediately prior to the Effective Time other than Electing
Shares and Dissenting Shares; and
(B) the number of Shares in addition to Electing Shares to be
converted into the right to retain Non-Cash Election Shares shall be
determined by multiplying the Cash Proration Factor by the total number
of Shares issued and outstanding immediately prior to the Effective Time
other than Electing Shares and Dissenting Shares.
(iii) subject to Section 2.2, Shares subject to clause (ii) of this
paragraph (c) shall be converted into the right to retain Non-Cash Election
Shares in accordance with Section 2.1(c)(i) (on a consistent basis among
stockholders who held Shares as to which they did not make the election
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referred to in Section 2.1(c)(i), pro rata in accordance with the number of
shares as to which they did not make such election).
(d) If the number of Electing Shares equals the Non-Cash Election Number,
then there shall be no proration pursuant to this Section 2.4.
Section 2.5 Stock Options.
Stock Options outstanding as of the Effective Time shall remain outstanding
subject to the terms of such Stock Option and the applicable Company Stock Plan.
The Company will take all actions reasonably necessary to provide that, after
June 30, 1999, no new offering period will be commenced under the Company's 1996
Employee Stock Purchase Plan.
Section 2.6 Surrender of Shares; Transfer Books.
(a) As soon as reasonably practicable as of or after the Effective Time,
the Company shall deposit with the Exchange Agent, for the benefit of the
holders of Shares, the cash portion of the Merger Consideration for exchange in
accordance with this Article 2. Such funds shall be invested by the Exchange
Agent as directed by the Company. Any net profit resulting from, or interest or
income produced by, such investments will be payable to the Company.
(b) Promptly after the Effective Time, the Exchange Agent shall mail to
each holder of Shares of record at the Effective Time who did not submit a valid
Form of Election in accordance with Section 2.3 hereof a letter of transmittal
and instruction for use in surrendering the certificates for such shares in
return for the Merger Consideration. Each holder of an outstanding certificate
or certificates which prior thereto represented Shares shall, upon surrender to
the Exchange Agent of such certificate or certificates and acceptance thereof by
the Exchange Agent, be entitled to a certificate or certificates representing
the number of full Non-Cash Election Shares, if any, to be retained by the
holder thereof pursuant to this Agreement and the amount of cash, if any, into
which the number of Shares previously represented by such certificate or
certificates surrendered shall have been converted pursuant to this Agreement.
The Exchange Agent shall accept such certificates upon compliance with such
reasonable terms and conditions as the Exchange Agent may impose to effect an
orderly exchange thereof in accordance with normal exchange practices. After the
Effective Time, there shall be no further transfer on the records of the Company
or its transfer agent of certificates representing Shares which have been
converted, in whole or in part, pursuant to this Agreement into the right to
receive cash, and if such certificates are presented to the Company for
transfer, they shall be against delivery of cash and, if appropriate,
certificates for Non-Cash Election Shares. If any certificate of such Non-Cash
Election Shares is to be issued in, or if cash is to be remitted to, a name
other than that in which the certificate for Shares surrendered for exchange is
registered, it shall be a condition of such exchange that the certificate so
surrendered shall be properly endorsed, with signature guaranteed, or otherwise
in proper form for transfer and that the person requesting such exchange shall
pay to the Company or its transfer agent any transfer or other taxes required by
reason of the issuance of certificates for such Non-Cash Election Shares in a
name other than that of the registered holder of the certificate surrendered, or
establish to the satisfaction of the Company or its transfer agent that such tax
has been paid or is not applicable. Until surrendered as contemplated by this
Section 2.6(b), each certificate for Shares shall be deemed at any time after
the Effective Time to represent only the right to receive upon such surrender
the Merger Consideration as contemplated by Section 2.1. No interest will be
paid or will accrue on any cash payable as Merger Consideration or in lieu of
any fractional shares of Non-Cash Election Shares.
(c) No dividends or other distributions with respect to Non-Cash Election
Shares with a record date after the Effective Time shall be paid to the holder
of any unsurrendered certificate for Shares with respect to the Non-Cash
Election Shares represented thereby and no cash payment in lieu of fractional
shares shall be paid to any such holder pursuant to Section 2.6(e) until the
surrender of such certificate in accordance with this Article 2. Subject to the
effect of applicable laws, following surrender of any such certificate, there
shall be paid to the holder of the certificate representing whole Non-Cash
Election Shares issued in connection therewith, without interest, (i) at the
time of such surrender the amount of any cash
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payable in lieu of a fractional share of Non-Cash Election Shares to which such
holder is entitled pursuant to Section 2.6(e) and the proportionate amount of
dividends or other distributions with a record date after the Effective Time
theretofore paid with respect to such whole Non-Cash Election Shares, and (ii)
at the appropriate payment date, the proportionate amount of dividends or other
distributions with a record date after the Effective Time but prior to such
surrender and a payment date subsequent to such surrender payable with respect
to such whole Non-Cash Election Shares.
(d) All cash paid upon the surrender for exchange of certificates
representing Shares in accordance with the terms of this Article 2 (including
any cash paid pursuant to Section 2.6(e)) shall be deemed to have been issued
(and paid) in full satisfaction of all rights pertaining to the Shares (and the
associated Rights) exchanged for cash theretofore represented by such
certificates.
(e) With respect to fractional shares:
(i) No certificates or scrip representing fractional shares of
Non-Cash Election Shares shall be issued in connection with the Merger, and
such fractional share interests will not entitle the owner thereof to vote
or to any rights of a stockholder of the Company after the Merger; and
(ii) Notwithstanding any other provision of this Agreement, each
record holder of Shares exchanged pursuant to the Merger who would
otherwise have been entitled to receive a fraction of a Non-Cash Election
Share (after taking into account all Shares delivered by such holder) shall
receive, in lieu thereof, a cash payment (without interest) in lieu of such
fractional shares in an amount equal to the Cash Election Price.
(f) In the event any certificate for Shares shall have been lost, stolen or
destroyed, the Exchange Agent shall issue in exchange for such lost, stolen or
destroyed certificate, upon the making of an affidavit of that fact by the
holder thereof, such Non-Cash Election Shares and cash (and cash in lieu of
fractional shares) as may be required pursuant to the foregoing provisions of
this Section 2.6; provided, however, that Fremont or the Surviving Corporation
may, in its discretion and as a condition precedent to the issuance thereof,
require the owner of such lost, stolen or destroyed certificate to deliver a
bond in such sum as it may reasonably direct against any claim that may be made
against Fremont, the Surviving Corporation or the Exchange Agent with respect to
the certificate alleged to have been lost, stolen or destroyed.
(g) Any portion of the Merger Consideration deposited with the Exchange
Agent pursuant to this Section 2.6 (the "Exchange Fund") which remains
undistributed to the holders of the certificates representing Shares for six
months after the Effective Time shall be delivered to the Company upon demand,
and any holders of Shares prior to the Merger who have not theretofore complied
with this Article 2 shall thereafter look only to the Company and only as
general creditors thereof for payment of their claim for cash, if any, Non-Cash
Election Shares, if any, any cash in lieu of fractional shares of Non-Cash
Election Shares, or any dividends or distributions with respect to Non-Cash
Election Shares, as applicable, to which such holders my be entitled.
(h) None of Fremont, Sub, the Company nor the Exchange Agent shall be
liable to any person in respect of any shares of Non-Cash Election Shares (or
dividends or distributions with respect thereto) or cash from the Exchange Fund
delivered to a public official pursuant to any applicable abandoned property,
escheat or similar law. If any certificates representing Shares shall not have
been surrendered prior to one year after the Effective Time (or immediately
prior to such earlier date on which any cash, if any, any cash in lieu of
fractional shares of Non-Cash Election Shares, or any dividends or distributions
with respect to Non-Cash Election Shares in respect of such certificate would
otherwise escheat to or become the property of any Governmental Entity), any
such cash, dividends or distributions in respect of such certificate shall, to
the extent permitted by applicable law, become the property of the Company, free
and clear of all claims or interest of any person previously entitled thereto.
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ARTICLE III
STOCK PURCHASE AND SALE
Section 3.1 Amendment of Certificate of Incorporation. The Company shall
take all actions necessary, subject to the required approval of the stockholders
of the Company, to file with the Secretary of State of the State of Delaware,
immediately prior to the Effective Time, the Amendment to the Certificate of
Incorporation of the Company, in the form attached hereto as Exhibit B, creating
a new class of stock of the Company, to be entitled "Preferred Stock,"
authorizing for issuance 5,000,000 shares of such Preferred Stock and
designating 2,000,000 of such shares as "Series A Convertible Preferred Stock"
(the "Series A Preferred").
Section 3.2 Purchase and Sale of Preferred Shares.
(a) Upon the terms and subject to the conditions of this Agreement, the
Company shall sell to Fremont, and Fremont shall purchase from the Company, an
aggregate of 1,060,000 shares of Series A Preferred (the "Preferred Shares").
(b) The Company represents and warrants that the Preferred Shares, when
issued in accordance with the terms hereof, will be validly issued, fully paid
and nonassessable and will be issued free of preemptive rights, options, liens,
encumbrances or security interests.
Section 3.3 Purchase Price. The purchase price for the Preferred Shares
shall be $100 per share, or an aggregate of $106,000,000 (the "Purchase Price").
Section 3.4 Closing. Upon the terms and subject to the conditions of this
Agreement, the sale and purchase of the Preferred Shares contemplated by this
Agreement shall take place on the Closing Date, as such date may be determined
in accordance with Section 1.3.
Section 3.5 Closing Deliveries by the Company. At the Closing, the
Company shall deliver or cause to be delivered to Fremont:
(a) stock certificates evidencing the Preferred Shares; and
(b) a receipt for the amounts paid to the Company pursuant to Section
3.6 hereto.
Section 3.6 Closing Deliveries by Fremont. At the Closing, Fremont shall
deliver to the Company, in immediately available funds by check or by wire
transfer to an account at a United States bank designated in writing by the
Company, which designation shall be delivered to Fremont at least three (3)
business days prior to the Closing, an amount equal to the Purchase Price.
ARTICLE IV
REPRESENTATIONS AND
WARRANTIES OF THE COMPANY
Except as set forth in the Disclosure Schedule prepared and signed by the
Company and delivered to Fremont simultaneously with the execution hereof, the
Company represents and warrants to Fremont and Sub that as of the date hereof
(or, if made as of a specified date, as of such date):
Section 4.1 Organization; Qualification. The Company (i) is a corporation
duly incorporated, validly existing and in good standing under the laws of its
state of incorporation; (ii) has full corporate power and authority to carry on
its business as it is now being conducted and to own the properties and assets
it now owns; and (iii) is duly qualified or licensed to do business as a foreign
corporation in good standing in every jurisdiction in which such qualification
is required or, if the Company is not so qualified in any such jurisdiction, it
can become so qualified in such jurisdiction without any Company Material
Adverse Effect. As used in this Agreement, "Company Material Adverse Effect" or
"Company Material Adverse Change" means any change(s) or effect(s) that,
individually or in the aggregate, are materially adverse to the financial
condition, business or results of operations of the Company and the Company
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Subsidiaries, taken as a whole, excluding in all cases: (i) events or conditions
generally affecting the industry in which the Company and the Company
Subsidiaries operate or arising from changes in general business or economic
conditions; (ii) any change or effect resulting from any change in law or
generally accepted accounting principles, which generally affects entities such
as the Company; and (iii) any change or effect resulting from compliance by the
Company with the terms of this Agreement or any agreement contemplated hereby.
Section 4.2 Subsidiaries and Affiliates. Section 4.2 of the Disclosure
Schedule sets forth the name, jurisdiction of incorporation and capitalization
of each Company Subsidiary and the jurisdictions in which each Company
Subsidiary is qualified to do business and the Company does not own, directly or
indirectly, any capital stock or other equity securities of any other
corporation or have any direct or indirect equity or ownership interest in any
other business, other than publicly traded securities constituting less than
five percent of the outstanding equity of the issuing entity. All the
outstanding capital stock of each Company Subsidiary is owned directly or
indirectly by the Company free and clear of all Liens and is validly issued,
fully paid and nonassessable, and there are no outstanding options, rights or
agreements of any kind relating to the issuance, sale or transfer of any capital
stock or other equity securities of any such Company Subsidiary to any person
except the Company. Each Company Subsidiary (i) is a corporation duly
incorporated, validly existing and in good standing under the laws of its state
of incorporation; (ii) has full corporate power and authority to carry on its
business as it is now being conducted and to own the properties and assets it
now owns; and (iii) is duly qualified or licensed to do business as a foreign
corporation in good standing in every jurisdiction in which such qualification
is required or, if a Company Subsidiary is not so qualified in any such
jurisdiction, it can become so qualified in such jurisdiction without a Company
Material Adverse Effect. The Company has heretofore delivered to Fremont
complete and correct copies of the certificate of incorporation and by-laws or
comparable charter documents of each Company Subsidiary, as presently in effect.
Section 4.3 Capitalization.
(a) The authorized capital stock of the Company consists of 50,000,000
Shares. As of March 26, 1999, (i) 18,597,027 Shares are issued and outstanding,
(ii) no Shares were issued and held in the treasury of the Company, (iii)
600,000 Shares were reserved for issuance upon exercise of Company Options under
the Company's 1993 Stock Option Plan (the "1993 Plan") and (iv) 400,000 shares
were reserved for issuance under the Company's 1996 Employee Stock Purchase Plan
(the "1996 Plan"). All the outstanding shares of the Company's capital stock
are, and all Shares which may be issued pursuant to the exercise of outstanding
Company Options will be, when issued in accordance with the respective terms
thereof, duly authorized, validly issued, fully paid and non-assessable. There
is no Voting Debt of the Company or any Company Subsidiary issued and
outstanding. Except as set forth above and except for (i) the Rights, (ii) the
Transactions, and (iii) changes in the number of outstanding Shares since March
26, 1999, resulting from the exercise of Stock Options outstanding as of March
26, 1999, under the 1993 Plan, and the exercise of options to purchase up to
11,064 shares under the 1993 Plan (x) there are no shares of capital stock of
the Company authorized, issued or outstanding; (y) there are no existing
options, warrants, calls, pre-emptive rights, subscriptions or other rights,
agreements, arrangements or commitments of any character, relating to the issued
or unissued capital stock of the Company or any Company Subsidiary, obligating
the Company or any Company Subsidiary to issue, transfer or sell or cause to be
issued, transferred or sold any shares of capital stock or Voting Debt of, or
other equity interest in, the Company or any Company Subsidiary or securities
convertible into or exchangeable for such shares or equity interests, or
obligating the Company or any Company Subsidiary to grant, extend or enter into
any such option, warrant, call, subscription or other right, agreement,
arrangement or commitment and (z) there are no outstanding contractual
obligations of the Company or any Company Subsidiary to repurchase, redeem or
otherwise acquire any Shares, or the capital stock, of the Company, or any
Company Subsidiary or Affiliate of the Company or to provide funds to make any
investment (in the form of a loan, capital contribution or otherwise) in any
Company Subsidiary or any other entity.
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(b) There are no voting trusts or other agreements or understandings to
which the Company or any Company Subsidiary is a party with respect to the
voting of the capital stock of the Company or any of the Company Subsidiaries.
(c) No material indebtedness of the Company or any Company Subsidiary
contains any restriction upon (i) the prepayment of any such indebtedness of the
Company or any Company Subsidiary, (ii) the incurrence of indebtedness by the
Company or any Company Subsidiary or (iii) the ability of the Company or any
Company Subsidiary to grant any lien on the properties or assets of the Company
or any Company Subsidiary.
Section 4.4 Authorization; Validity of Agreement; Company Action. The
Company has full corporate power and authority to execute and deliver this
Agreement and assuming the required approval of the stockholders of the Company
as contemplated by Section 1.6 hereof to consummate the Transactions. The
execution, delivery and performance by the Company of this Agreement and the
consummation by it of the Transactions have been duly authorized by the Company
Board of Directors and, except for obtaining the approval of its stockholders as
contemplated by Section 1.6, no other corporate action on the part of the
Company is necessary to authorize the execution and delivery by the Company of
this Agreement or the consummation by it of the Transactions. This Agreement has
been duly executed and delivered by the Company and, assuming due and valid
authorization, execution and delivery thereof by the other parties thereto, this
Agreement is a valid and binding obligation of the Company enforceable against
the Company in accordance with its terms.
Section 4.5 Board Approvals Regarding Transactions. The Company Board of
Directors, at a meeting duly called and held, has unanimously (i) determined
that each of the Agreement, the Merger, the Stock Purchase, the Amendment and
the New Stock Option Plan are fair to and in the best interests of the
stockholders of the Company, (ii) approved the Transactions, and (iii) resolved
to recommend (subject to Section 6.5 hereof) that the stockholders of the
Company approve and adopt this Agreement, the Merger, the Amendment, the Stock
Purchase and the New Stock Option Plan and none of the aforesaid actions by the
Company Board of Directors has been amended, rescinded or modified. The action
taken by the Company Board of Directors constitutes approval of the Merger, the
Amendment, the Stock Purchase and the other Transactions by the Company Board of
Directors under the provisions of Section 203 of the DGCL such that Section 203
of the DGCL does not apply to this Agreement or the other Transactions and, to
the Company's knowledge, no other state takeover statute is applicable to the
Merger or the other Transactions.
Section 4.6 Consents and Approvals; No Violations. Except for such
filings, permits, authorizations, consents and approvals as may be required
under, and other applicable requirements of the Securities Act, the Exchange
Act, the HSR Act, the DGCL and any applicable state securities or blue sky laws,
none of the execution, delivery or performance of this Agreement by the Company,
the consummation by the Company of the Transactions or compliance by the Company
with any of the provisions hereof will (i) conflict with or result in any breach
of any provision of the certificate of incorporation, the by-laws or similar
organizational documents of the Company or any Company Subsidiary, (ii) require
any filing with, or permit, authorization, consent or approval of, any
Governmental Entity or any private third party, (iii) result in a violation or
breach of, or constitute (with or without due notice or the passage of time or
both) a default (or give rise to any right of termination, amendment,
cancellation or acceleration) under, any of the terms, conditions or provisions
of any Company Agreement, or (iv) violate any order, writ, injunction, decree,
statute, rule or regulation applicable to the Company, any Company Subsidiary or
any of their properties or assets, excluding from the foregoing clauses (ii),
(iii) and (iv) such failures to make such filings, or obtain such permits,
authorizations, consents or approvals or such violations, breaches or defaults
which would not have a Company Material Adverse Effect.
Section 4.7 SEC Reports and Financial Statements. The Company has filed
with the SEC, and has heretofore made available to Fremont, true and complete
copies of, the Company SEC Documents. As of their respective dates or, if
amended, as of the date of the last such amendment filed prior to the date
hereof, the Company SEC Documents, including, without limitation, any financial
statements or schedules
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included therein (a) did not 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 made therein, in the light of the circumstances
under which they were made, not misleading and (b) complied in all material
respects with the applicable requirements of the Exchange Act and the Securities
Act, as the case may be, and the applicable rules and regulations of the SEC
thereunder. None of the Company Subsidiaries is required to file any forms,
reports or other documents with the SEC. The Financial Statements have been
prepared from, and are in accordance with, in all material respects, the books
and records of the Company and the Company Subsidiaries, on a consolidated
basis, comply in all material respects with applicable accounting requirements
and with the published rules and regulations of the SEC with respect thereto,
have been prepared in accordance with GAAP (except, in the case of unaudited
financial statements, as permitted by Rule 10.01 of Regulation S-X promulgated
under the Exchange Act) applied on a consistent basis during the periods
involved (except as may be stated in the notes thereto) and fairly present, in
all material respects, the consolidated financial position and the consolidated
results of operations and cash flows (and changes in financial position, if any)
of the Company and the Company Subsidiaries, on a consolidated basis, as of the
times and for the periods referred to therein (subject, in the case of unaudited
financial statements, to customary year-end audit adjustments).
Section 4.8 No Undisclosed Liabilities. Except (a) as disclosed in the
Financial Statements or the Company SEC Documents filed prior to the date
hereof, (b) for liabilities and obligations incurred in the ordinary course of
business and consistent with past practice since the Balance Sheet Date and (c)
liabilities incurred in connection with the Transactions, neither the Company
nor any Company Subsidiary has any liabilities or obligations of any nature,
whether or not accrued, contingent or otherwise, that have, or would be
reasonably likely to have, a Company Material Adverse Effect. To the knowledge
of the Company, the reserves reflected in the Financial Statements are adequate,
appropriate and reasonable and have been calculated in a consistent manner.
Section 4.9 Inventory. All of the inventories of the Company and each
Company Subsidiary, whether reflected in the Balance Sheet or otherwise,
consist, in all material respects, of a quality and quantity usable and salable
in the ordinary and usual course of business, except for items of obsolete
materials and materials of below-standard quality, all of which have been
written off or written down on the Balance Sheet to fair market value or for
which reserves believed by the Company to be adequate have been provided
therein. All material inventories not written off have been priced at the lower
of average cost or market. The quantities of each type of inventory (whether raw
materials, work-in-process, or finished goods) are not excessive in any material
respect, but are reasonable and warranted in the present circumstances of the
Company and each Company Subsidiary. All work in process and finished goods
inventory is free of any material defect or other material deficiency.
Section 4.10 Absence of Certain Changes. Since the Balance Sheet Date,
except as disclosed in the Company SEC Documents filed prior to the date hereof,
(i) the Company and each Company Subsidiary has conducted its respective
business only in the ordinary and usual course, (ii) there has not occurred any
events or changes (including the incurrence of any liabilities of any nature,
whether or not accrued, contingent or otherwise or any changes in the Company's
relationships with its customers and suppliers) having or reasonably likely to
have a Company Material Adverse Effect, and (iii) the Company has not taken any
action which would have been prohibited under Section 6.1 if such section
applied to the period between the Balance Sheet Date and the date of execution
of this Agreement.
Section 4.11 Litigation. Except as disclosed in the Company SEC Documents
filed prior to the date hereof, there is no action, suit, inquiry, proceeding or
investigation by or before any court or governmental or other regulatory or
administrative agency or commission pending or, to the knowledge of the Company,
threatened against or involving the Company or any Company Subsidiary which, if
determined or resolved adversely to the Company or any Company Subsidiary, would
have a Company Material Adverse Effect. Neither the Company nor any Company
Subsidiary is subject to any judgment, order or decree which may have a Company
Material Adverse Effect.
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Section 4.12 Employee Benefit Plans.
(a) The Disclosure Schedule contains a true and complete list of each
deferred compensation and each incentive compensation, stock purchase, stock
option and other equity compensation plan, program, agreement or arrangement
(the "Company Stock Plans"); each severance or termination pay, medical,
surgical, hospitalization, life insurance and other "welfare" plan, fund or
program (within the meaning of Section 3(1) of ERISA); each profit-sharing,
stock bonus or other "pension" plan, fund or program (within the meaning of
Section 3(2) of ERISA); each employment, termination or severance agreement; and
each other employee benefit plan, fund, program, agreement or arrangement, in
each case, that is sponsored, maintained or contributed to or required to be
contributed to by the Company or by any ERISA Affiliate, or to which the Company
or an ERISA Affiliate is party, whether written or oral, for the benefit of any
employee or former employee of the Company or any Company Subsidiary (each, a
"Plan"). Neither the Company, any Company Subsidiary nor any ERISA Affiliate has
any commitment or formal plan to create any additional employee benefit plan or
modify or change any existing Plan that would affect any employee or former
employee of the Company or any Company Subsidiary, except for modifications or
changes contemplated herein or required by law as a condition of obtaining or
retaining the Company's intended ERISA, tax, securities or accounting treatment
with respect to such Plan.
(b) The Company has heretofore delivered to Fremont true and complete
copies of each Plan and any amendments thereto (or if a Plan is not a written
Plan, a description thereof), any related trust or other funding vehicle, any
reports or summaries required under ERISA or the Code and the most recent
determination letter received from the Internal Revenue Service with respect to
each Plan intended to qualify under Section 401 of the Code.
(c) No liability under Title IV or Section 302 of ERISA has been incurred
by the Company or any ERISA Affiliate that has not been satisfied in full, and
no condition exists that presents a material risk to the Company or any ERISA
Affiliate of incurring any such liability, other than liability for premiums due
the PBGC (which premiums have been paid when due). Insofar as the representation
made in this Section 4.12(c) applies to Sections 4064, 4069 or 4204 of Title IV
of ERISA, it is made with respect to any employee benefit plan, program,
agreement or arrangement subject to Title IV of ERISA to which the Company or
any ERISA Affiliate made, or was required to make, contributions during the five
year period ending on the last day of the most recent plan year ended prior to
the Closing Date.
(d) The PBGC has not instituted proceedings to terminate any Title IV Plan
and no condition exists that presents a material risk that such proceedings will
be instituted.
(e) With respect to each Title IV Plan, the present value of accrued
benefits under such plan, based upon the actuarial assumptions used for funding
purposes in the most recent actuarial report prepared by such plan's actuary
with respect to such plan, did not exceed, as of its latest valuation date, the
then current value of the assets of such plan allocable to such accrued
benefits.
(f) No Title IV Plan or any trust established thereunder has incurred any
"accumulated funding deficiency" (as defined in Section 302 of ERISA and Section
412 of the Code), whether or not waived, as of the last day of the most recent
fiscal year of each Title IV Plan ended prior to the Closing Date. All
contributions required to be made with respect to any Plan on or prior to the
Closing Date have been timely made.
(g) No Title IV Plan is a "multi-employer pension plan," as defined in
Section 3(37) of ERISA, nor is any Title IV Plan a plan described in Section
4063(a) of ERISA. Neither the Company nor any ERISA Affiliate has made or
suffered a "complete withdrawal" or a "partial withdrawal," as such terms are
respectively defined in Sections 4203 and 4205 of ERISA (or any liability
resulting therefrom has been satisfied in full).
(h) Neither the Company or any Company Subsidiary, any Plan, any trust
created thereunder, nor any trustee or administrator thereof has engaged in a
transaction in connection with which the Company or any Company Subsidiary, any
Plan, any such trust, or any trustee or administrator thereof, or any party
dealing with any Plan or any such trust could reasonably be expected to be
subject to either a civil penalty
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assessed pursuant to Section 409 or 502(i) of ERISA or a tax imposed pursuant to
Section 4975 or 4976 of the Code.
(i) Each Plan has been operated and administered in all material respects
in accordance with its terms and applicable law, including, but not limited to,
ERISA and the Code, except where the failure to so operate or administer such
Plan would have a Company Material Adverse Effect.
(j) Each Plan intended to be "qualified" within the meaning of Section
401(a) of the Code is so qualified, and the trusts maintained thereunder are
exempt from taxation under Section 501(a) of the Code. Each Plan intended to
satisfy the requirements of Section 501(c)(9) has satisfied such requirements.
(k) No Plan provides medical, surgical, hospitalization, death or similar
benefits (whether or not insured) for employees or former employees of the
Company or any Company Subsidiary for periods extending beyond their retirement
or other termination of service, other than (i) coverage mandated by applicable
law, (ii) death benefits under any "pension plan," or (iii) benefits the full
cost of which is borne by the current or former employee (or his beneficiary).
(l) No amounts payable under the Plans will fail to be deductible for
federal income tax purposes by virtue of Section 280G of the Code.
(m) The consummation of the Transactions will not, either alone or in
combination with another event, (i) entitle any current or former employee or
officer of the Company or any ERISA Affiliate to severance pay, unemployment
compensation or any other payment, except as expressly provided in this
Agreement, or (ii) accelerate the time of payment or vesting, or increase the
amount of compensation due any such employee or officer.
(n) There are no pending or, to the knowledge of the Company, threatened
claims by or on behalf of any Plan, by any employee or beneficiary covered under
any such Plan, or otherwise involving any such Plan (other than routine claims
for benefits).
Section 4.13 Taxes.
(a) The Company and the Company Subsidiaries have timely filed (or have had
timely filed on their behalf) with the appropriate Tax Authorities (as
hereinafter defined) all material Tax Returns (as hereinafter defined) required
to be filed by Company and the Company Subsidiaries and such Tax Returns are
true, correct, and complete in all material respects;
(b) The Company and the Company Subsidiaries have paid, or where payment is
not yet due, have established (or have had established on their behalf and for
their sole benefit and recourse) an adequate accrual in accordance with GAAP for
the payment of, all Taxes (as hereinafter defined) for all periods ending
through the Closing Date;
(c) There are no material Liens for Taxes upon any property or assets of
the Company or the Company Subsidiaries, except for Liens for Taxes not yet due
or being contested in good faith and for which adequate reserves have been
established in accordance with GAAP;
(d) No Federal, state, local or foreign audits, investigations, claims or
other administrative proceedings ("Audits") are presently pending with regard to
any material Taxes or material Tax Returns of the Company or the Company
Subsidiaries, and to the knowledge of Company and the Company Subsidiaries, no
Audit is threatened;
(e) The Tax Returns of the Company and the Company Subsidiaries have been
examined by the applicable Tax Authority, and for any year that a Tax Return was
examined, no material adjustments were asserted as a result of such examination
which have not been resolved and fully paid, and no issue has been raised by any
Tax Authority in any Audit of the Company or the Company Subsidiaries that, if
raised with respect to any other period not so audited, could be expected to
result in a proposed deficiency for any such period not so audited which, if
such deficiency were finally resolved against the Company or the Company
Subsidiaries, would have a Company Material Adverse Effect;
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(f) There are no outstanding requests, agreements, consents or waivers to
extend the statutory period of limitations applicable to the assessment of any
Taxes or deficiencies against the Company or the Company Subsidiaries, and no
power of attorney granted by the Company or the Company Subsidiaries with
respect to any Taxes is currently in force;
(g) Neither the Company nor any Company Subsidiary is a party to any
agreement providing for the allocation, indemnification, or sharing of Taxes;
and
(h) Neither the Company nor any Company Subsidiary has been a member of any
"affiliated group" (as defined in section 1504(a) of the Code) and is not
subject to Treas. Reg. 1.1502-6 for any period.
Section 4.14 Title to Properties; Encumbrances. Each of the Company and
the Company Subsidiaries has good, valid and marketable title to all the
material properties and assets which it purports to own (real, personal and
mixed, tangible and intangible), including, without limitation, all the
properties and assets reflected in the Balance Sheet (except for property
disposed of since the Balance Sheet Date in the ordinary course of business and
consistent with past practice), and all the material properties and assets
purchased by the Company and the Company Subsidiaries since the Balance Sheet
Date, which subsequently acquired material properties and assets (other than
inventory and short term investments) are listed in the Disclosure Schedule. All
properties and assets reflected in the Balance Sheet are free and clear of all
Liens except, with respect to all such properties and assets, (a) Liens shown on
the Balance Sheet and Liens incurred in connection with the purchase of property
and/or assets, if such purchase was effected after the date of the Balance
Sheet, with respect to which no default exists; (b) Liens which do not
materially detract from the value or impair the use of the property subject
thereto, or materially impair the operations of the Company or any Company
Subsidiary; and (c) Liens for current taxes not yet due. The rights, properties
and other assets presently owned, leased or licensed by the Company and the
Company Subsidiaries and described elsewhere in this Agreement include all
rights, properties and other assets reasonably necessary to permit the Company
and the Company Subsidiaries to conduct their businesses in all material
respects in the same manner as their businesses have been conducted prior to the
date hereof.
Section 4.15 Plant and Equipment. The plants, structures and equipment of
the Company and each Company Subsidiary are in reasonably good operating
condition and repair, ordinary wear and tear excepted, and are reasonably
adequate for the uses to which they are being put. None of such plants,
structures or equipment are in need of maintenance or repairs except for
ordinary, routine maintenance and repairs which are not material in nature or
cost.
Section 4.16 Environmental Laws. Except as disclosed in the Company SEC
Documents filed prior to the date hereof, (a) the Company and each Company
Subsidiary are in compliance in all respects with all Environmental Laws,
including, but not limited to, compliance with any permits or other governmental
authorizations or the terms and conditions thereof except where the failure to
so comply would not have a Company Material Adverse Effect; (b) neither the
Company nor any Company Subsidiary has received any communication or notice,
whether from a Governmental Entity or otherwise, alleging any violation of or
noncompliance with any Environmental Laws by the Company any Company Subsidiary
or for which the any of them is responsible, and there is no pending or, to the
Company's knowledge, threatened Environmental Claim, except where such
Environmental Claim would not have a Company Material Adverse Effect or
otherwise require disclosure in the Company SEC Documents; and (c) to the
Company's knowledge, there are no past or present facts or circumstances that
could form the basis of any Environmental Claim against the Company or any
Company Subsidiary or against any person or entity whose liability for any
Environmental Claim the Company or any Company Subsidiary has retained or
assumed either contractually or by operation of law, except where such
Environmental Claim, if made, would not have a Company Material Adverse Effect
or otherwise require disclosure in the Company SEC Documents. All material
permits and other governmental authorizations currently held or required to be
held by the Company and the Company Subsidiaries pursuant to any Environmental
Laws are identified in the Disclosure Schedule. The Company has provided to
Fremont all material assessments, reports, data, results of investigations or
audits, and other information that is in the possession of the Company regarding
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environmental matters pertaining to, or the environmental condition of the
business of, the Company and the Company Subsidiaries, or the compliance (or
noncompliance) by the Company or any Company Subsidiary with any Environmental
Laws.
Section 4.17 Intellectual Property.
(a) The Company owns or has the right to use all the Company Intellectual
Property, free and clear of all Liens, except where the failure to own or posses
such Company Intellectual Property would not have a Company Material Adverse
Effect. The Company or one of the Company Subsidiaries is listed in the records
of the appropriate United States, state or foreign agency as the sole owner of
record for all material applications, registrations or patents included in the
Company Intellectual Property, and all of the foregoing are listed on Section
4.17(a) of the Disclosure Schedule and are validly subsisting.
(b) Section 4.17(b) of the Disclosure Schedule sets forth a list of all
license agreements under which the Company or any of the Company Subsidiaries
has granted the right to use the Company Intellectual Property or received the
right to use any Intellectual Property of any third party, and the Company is
not in default under any such license.
(c) No person has a right to receive a royalty or similar payment in
respect of any item of the Company Intellectual Property pursuant to any
contractual arrangements entered into by the Company or otherwise. To the
knowledge of the Company, no former or present employees, officers or directors
of the Company hold any right, title or interest, directly or indirectly, in
whole or in part, in or to any of the Company Intellectual Property.
(d) To the knowledge of the Company, the conduct of the business of the
Company does not violate or infringe upon any Intellectual Property right of any
third party, and there is no pending or, to the knowledge of the Company,
threatened opposition, interference, re-examination, cancellation, claim of
invalidity or other legal or governmental proceeding in any jurisdiction
involving any of the Company Intellectual Property. There are no claims or suits
pending or, to the knowledge of the Company, threatened, and the Company has
received no written notice of any claim or suit (i) alleging that the conduct of
the Company's business infringes upon or constitutes the unauthorized use of the
proprietary rights of any third party or (ii) challenging the ownership, use,
validity or enforceability of the Company Intellectual Property which, if
adversely determined, would have a Company Material Adverse Effect. To the
knowledge of the Company, none of the Company Intellectual Property of the
Company is being violated or infringed upon by any third party. There are no
settlements, consents, judgments, orders or other agreements which restrict the
Company's rights to use any of the Company Intellectual Property.
(e) The Company has taken reasonable steps to ensure that all Date Data and
Date-Sensitive Systems of the Company and the Company Subsidiaries will be Year
2000 Compliant by December 31, 1999. As used herein: (i) "Date Data" means any
data of any type that includes date information or which is otherwise derived
from, dependent on or related to date information, (ii) "Date-Sensitive System"
means any software, microcode or hardware system or component, including any
electronic or electronically controlled system or component, that processes any
Date Data and that is installed, in development or on order by the Company or
any Company Subsidiary for its internal use, or which the Company or any Company
Subsidiary sells, leases, licenses, assigns or otherwise provides, or the
provision or operation of which the Company or any Company Subsidiary provides
the benefit, to its customers, vendors, suppliers, affiliates or any other third
party, and (iii) "Year 2000 Compliant" means (A) with respect to Date Data, that
such data is in proper format and accurate for all dates in the twentieth and
twenty-first centuries, and (B) with respect to Date-Sensitive Systems, that
each such system accurately processes all Date Data, including for the twentieth
and twenty-first centuries, without loss of any functionality, including but not
limited to calculating, comparing, sequencing, storing and displaying such Date
Data (including all leap year considerations), when used as a stand-alone system
or in combination with other software or hardware.
Section 4.18 Labor Matters. Neither the Company nor any Company
Subsidiary is a party to or bound by any collective bargaining or similar
agreement with any labor organization, or work rules or
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practices agreed to with any labor organization or employee association
applicable to employees of the Company or any Company Subsidiary. None of the
employees of the Company or any Company Subsidiary are represented by any labor
organization and neither the Company or any Company Subsidiary has any knowledge
of any current union organizing activities among the employees of the Company or
any Company Subsidiary, nor does any question concerning representation exist
concerning such employees. Within the past twelve (12) months, neither the
Company nor any Company Subsidiary has received notice from any union of its
desire to terminate any collective bargaining agreements. There is no unfair
labor practice charge or complaint against the Company or any Company Subsidiary
pending or, to the knowledge of the Company or any Company Subsidiary,
threatened before the National Labor Relations Board. There is no labor strike,
dispute, slowdown, stoppage or lockout actually pending or, to the knowledge of
the Company, threatened against or affecting the Company or any Company
Subsidiary and during the past five (5) years there has not been any such
action. There is no grievance or arbitration proceeding which could reasonably
have a Company Material Adverse Effect. No collective bargaining agreement which
is binding on the Company or any Company Subsidiary restricts any of them from
relocating or closing any of their operations.
Section 4.19 Employment Matters.
(a) There are no employment contracts or severance agreements with any
employees of the Company or any Company Subsidiary and there are no written
personnel policies, rules or procedures applicable to employees of the Company
or any Company Subsidiary. To the Company's knowledge, no key employee or group
of employees has any plans to terminate their employment with the Company or any
Company Subsidiary as a result of the Transactions or otherwise.
(b) To the knowledge of the Company, since the enactment of the Worker
Adjustment and Retraining Notification Act of 1988 (the "WARN Act"), the Company
and the Company Subsidiaries have not effectuated (i) a "plant closing" (as
defined in the WARN Act) affecting any site of employment or one or more
facilities or operating units within any site of employment of facility of the
Company or any Company Subsidiary, or (ii) a "mass layoff" (as defined in the
WARN Act) affecting any site of employment or facility of the Company or any
Company Subsidiary; nor has the Company or any Company Subsidiary been affected
by any transaction or engaged in layoffs or employment terminations sufficient
in number to trigger application of any similar state or local law. To the
knowledge of the Company, none of the employees of the Company and the Company
Subsidiaries has suffered an "employment loss" (as defined in the WARN Act) in
the past five years.
Section 4.20 Compliance with Laws. The Company and the Company
Subsidiaries are in compliance with, and have not violated any applicable law,
rule or regulation of any United States federal, state, local, or foreign
government or agency thereof which materially affects the business, properties
or assets of the Company and the Company Subsidiaries except where such
non-compliance or violation would not have a Company Material Adverse Effect,
and no notice, charge, claim, action or assertion has been received by the
Company or any Company Subsidiary or has been filed, commenced or, to the
Company's knowledge, threatened against the Company or any Company Subsidiary
alleging any such violation, except for any matter which does not have a Company
Material Adverse Effect. All licenses, permits and approvals required under such
laws, rules and regulations are in full force and effect except where the
failure to be in full force and effect would not have a Company Material Adverse
Effect.
Section 4.21 Contracts. Each Company Agreement is valid, binding and
enforceable and in full force and effect, except where failure to be valid,
binding and enforceable and in full force and effect would not have a Company
Material Adverse Effect, and there are no defaults thereunder, except those
defaults that would not have a Company Material Adverse Effect. Section 4.21 of
the Disclosure Schedule sets forth a true and complete list of (i) all material
Company Agreements entered into by the Company or any of the Company
Subsidiaries since November 30, 1998 and all amendments to any Company
Agreements included as an exhibit to the Company's Annual Report on Form 10-K
for the fiscal year ended November 30, 1998 and (ii) all non-competition
agreements imposing restrictions on the ability of the Company or any of the
Company Subsidiaries to conduct business in any jurisdiction or territory.
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Section 4.22 Insurance. The Disclosure Schedule contains an accurate and
complete description of all material policies of fire, liability, workmen's
compensation and other forms of insurance owned or held by the Company and each
Company Subsidiary. All such policies are in full force and effect, all premiums
due and payable have been paid, and no notice of cancellation or termination has
been received with respect to any such policy.
Section 4.23 Opinion of Financial Advisor. The Company has received the
opinion of the Financial Advisor dated as of the date hereof, to the effect
that, as of such date and based upon and subject to the matters set forth
therein, the consideration to be received in the Merger by the Company's
stockholders is fair to the Company's stockholders from a financial point of
view. The Company has been authorized by to include such opinion in its entirety
in the Proxy Statement.
Section 4.24 Rights Agreement. The Company has taken all action which may
be necessary under the Rights Agreement, including entering into any necessary
amendments to the Rights Agreement and the approval of such amendments by the
Company Board of Directors, so that the execution of this Agreement and any
amendments thereto by the parties hereto and the consummation of the
Transactions shall not cause (i) Fremont and/or Sub to become an Acquiring
Person (as defined in the Rights Agreement), (ii) a Distribution Date or a
Shares Acquisition Date (as such terms are defined in the Rights Agreement) to
occur, or (iii) the provisions of Section 13 of the Rights Agreement to be
triggered.
Section 4.25 Brokers or Finders. No agent, broker, investment banker,
financial advisor or other firm or person is or will be entitled to any brokers'
or finder's fee or any other commission or similar fee in connection with any of
the Transactions except for the Financial Advisor. True and correct copies of
all agreements between the Company and the Financial Advisor including, without
limitation, any fee arrangements have been provided to Fremont prior to the date
hereof.
Section 4.26 Transactions with Affiliates. Except to the extent disclosed
in the Company SEC Documents filed prior to the date of this Agreement or as
disclosed in Section 4.26 of the Disclosure Schedule, since November 30, 1998,
there have been no transactions, agreements, arrangements or understandings
between the Company and its affiliates that would be required to be disclosed
under Item 404 of Regulation S-K under the Securities Act.
Section 4.27 Full Disclosure. The Company has not failed to disclose to
Fremont any facts material to the business, results of operations, assets,
liabilities, financial condition or prospects of the Company. No representation
or warranty by the Company in this Agreement and no statement contained in any
document (including, without limitation, financial statements and the Disclosure
Schedule), certificate, or other writing furnished or to be furnished by the
Company to Fremont or any of its representatives pursuant to the provisions
hereof or in connection with the Transactions, contains or will contain any
untrue statement of material fact or omits or will omit to state any material
fact necessary, in light of the circumstances under which it was made, in order
to make the statements herein or therein not misleading. The representations and
warranties contained in this Section 4.27 shall not apply to (i) financial
projections or pro forma information, or (ii) any event or condition generally
affecting the industry in which the Company and the Company Subsidiaries
operate.
Section 4.28 Legal and Accounting Fees. As of February 28, 1999, there
were unpaid, incurred and accrued legal and accounting fees and disbursements of
the Company and the Company Subsidiaries aggregating approximately $500,000.
Section 4.29 Cash and Marketable Securities. As of February 28, 1999, the
Company possessed cash and marketable securities in an amount at least equal to
$103,650,000.
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ARTICLE V
REPRESENTATIONS AND WARRANTIES
OF PARENT AND SUB
Fremont and Sub represent and warrant to the Company that:
Section 5.1 Organization. Fremont is a limited liability company and Sub
is a corporation and each is duly organized, validly existing and in good
standing under the laws of Delaware and has all requisite corporate or other
power and authority and all necessary governmental approvals to own, lease and
operate its properties and to carry on its business as now being conducted. Each
of Fremont and Sub is duly qualified or licensed to do business as a foreign
corporation in good standing in every jurisdiction in which such qualification
is required or, if Fremont or Sub is not so qualified in any such jurisdiction,
it can become so qualified in such jurisdiction without preventing or materially
delaying the consummation of the Transactions or impairing its ability to
perform its obligations hereunder.
Section 5.2 Authorization; Validity of Agreement; Necessary Action. Each
of Fremont and Sub has full corporate or other power and authority to execute
and deliver this Agreement and to consummate the Transactions. The execution,
delivery and performance by Fremont and Sub of this Agreement and the
consummation of the Merger, the Stock Purchase and the Transactions have been
duly authorized by the Board of Managers of Fremont, Board of Directors of Sub
and by Fremont as the sole stockholder of Sub, and no other corporate or other
action on the part of Fremont or Sub is necessary to authorize the execution and
delivery by Fremont and Sub of this Agreement or the consummation of the
Transactions. This Agreement has been duly executed and delivered by Fremont and
Sub, and, assuming due and valid authorization, execution and delivery hereof by
the Company, is a valid and binding obligation of each of Fremont and Sub,
enforceable against each of them in accordance with its terms.
Section 5.3 Consents and Approvals; No Violations. Except for the
filings, permits, authorizations, consents and approvals as may be required
under, and other applicable requirements of the Securities Act, the Exchange
Act, the HSR Act, the DGCL, and any applicable state securities or blue sky
laws, none of the execution, delivery or performance of this Agreement by
Fremont or Sub, the consummation by Fremont or Sub of the Transactions or
compliance by Fremont or Sub with any of the provisions hereof will (i) conflict
with or result in any breach of any provision of the respective certificate of
incorporation or formation, by-laws, operating agreement, or similar
organizational documents of Fremont or Sub, (ii) require any filing with, or
permit, authorization, consent or approval of, any Governmental Entity or any
private third party, (iii) 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, cancellation or acceleration) 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 Fremont, or any
of its Subsidiaries or Sub is a party or by which any of them or any of their
respective properties or assets may be bound, or (iv) violate any order, writ,
injunction, decree, statute, rule or regulation applicable to Fremont, any of
its Subsidiaries or any of their properties or assets, excluding from the
foregoing clauses (ii), (iii) and (iv) such violations, breaches or defaults
which would not, individually or in the aggregate, either prevent the
consummation of the Transactions or impair its ability to perform its
obligations hereunder.
Section 5.4 Sufficient Funds. Fremont has obtained, on behalf of the
Company, (i) an executed commitment letter dated March 26, 1999 from
NationsBank, N.A. and NationsBanc Montgomery Securities, LLC for a senior
secured credit facility in the aggregate amount of $125,000,000, and (ii) an
executed highly confident letter dated March 26, 1999 from NationsBanc
Montgomery Securities, LLC for a private placement offering of debt securities
which contemplates the Company receiving gross proceeds of not less than
$125,000,000 (such credit facility and private placement offering, collectively,
the "Debt Financing" and such commitment letter and highly confident letter,
collectively, the "Debt Financing Letters"). Fremont will have available to it
at the Closing the funds necessary to pay the Purchase Price for the Preferred
Shares. Assuming the accuracy of the representations and warranties of the
Company contained herein and that the Company has unrestricted cash of at least
$107,000,000 immediately prior to the Effective Time (the "Unrestricted Cash"),
the Debt Financing, the Unrestricted Cash and the
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proceeds received by the Company from the issuance of the Preferred Shares to
Fremont will provide sufficient funds to (i) pay the aggregate Merger
Consideration, (ii) prepay, redeem, refinance or renegotiate the Company's
existing indebtedness, if required to consummate the Merger and the other
transactions contemplated hereby, (iii) pay the fees and expenses of the
Financial Advisor and the Company's legal counsel, (iv) consummate all of the
other transactions contemplated by this Agreement, and (v) provide sufficient
working capital needs of the Company following the Merger. True and complete
copies of the Debt Financing Letters have been furnished to the Company. Neither
Fremont, Sub nor any of their Affiliates will terminate, amend or modify in any
respect the Debt Financing Letters in a manner which will prevent the
consummation of such financing, or materially delay the timing thereof, without
prior written consent of the Company. Fremont has fully paid any and all
commitment fees or other fees required by the Debt Financing Letters to be paid
as of the date hereof (and, subject to Section 10.1(b), will duly pay any such
fees after the date hereof). Fremont expects that it will cause the Surviving
Corporation to pay all outstanding trade payables and other liabilities of the
Company incurred prior to the Closing in the ordinary course of business
consistent with past practice. The Debt Financing Letters are valid and in full
force and effect and no event has occurred which (with or without notice, lapse
of time or both) would constitute a default on the part of Fremont or Sub
thereunder or would prevent the consummation of the Debt Financing. As of the
date hereof, Fremont does not know of any facts or circumstances that may
reasonably be expected to result in any of the conditions set forth in the Debt
Financing Letters not being satisfied. Fremont believes that the Debt Financing
will not create any liability to the directors and stockholders of the Company
under any federal or state fraudulent conveyance or transfer law. Fremont is
currently solvent and further believes that, upon the consummation of the
Transactions and any other transactions or operations involving the Surviving
Corporation hereafter, including, without limitation, the Debt Financing, the
Surviving Corporation (i) will not become insolvent, (ii) will not be left with
unreasonably small capital, (iii) will not have incurred debts beyond its
ability to pay such debts as they mature, and that the capital of the Company
will not become impaired.
Section 5.5 Share Ownership. None of Fremont, Sub or any of their
respective Affiliates or Associates beneficially owns any Shares.
Section 5.6 Sub's Capitalization and Operations. The authorized capital
stock of Sub consists of one thousand (1,000) shares of Common Stock, one
hundred (100) of which are outstanding and owned by Fremont. Sub was formed
solely for the purpose of engaging in the Transactions and has not engaged in
any business activities or conducted any operations other than in connection
with the Transactions. Except for (i) obligations or liabilities incurred in
connection with its incorporation and (ii) this Agreement, Sub has not incurred,
directly or indirectly, any obligation or liabilities of any type or kind
whatsoever, or entered into any agreements or arrangements with any Person.
Section 5.7 Brokers or Finders. Neither Fremont nor any of its
Subsidiaries or its Affiliates has entered into any agreement or arrangement
entitling any agent, broker, investment banker, financial advisor or other firm
or person to any brokers' or finders' fee or any other commission or similar fee
in connection with any of the Transactions, except for fees payable in
connection with the financing of the Transactions.
ARTICLE VI
COVENANTS
Section 6.1 Interim Operations of the Company. The Company covenants and
agrees that prior to the Effective Time, except (i) as expressly contemplated by
this Agreement, (ii) as set forth in Section 6.1 of the Disclosure Schedule, or
(iii) as consented to in writing by Fremont (which consent shall not be
unreasonably withheld), after the date hereof:
(a) the business of the Company and the Company Subsidiaries shall be
conducted only in the usual, regular and ordinary course and substantially
in the same manner as heretofore conducted, and each of the Company and the
Company Subsidiaries shall use its reasonable best efforts to preserve its
business organization intact, keep available the services of its current
officers and key employees
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and maintain its existing relations with franchisees, customers, suppliers,
creditors, business partners and others having business dealings with it;
(b) neither the Company nor any Company Subsidiary shall: (i) amend
its certificate of incorporation or by-laws or similar organizational
documents, (ii) issue, sell, transfer, pledge, dispose of or encumber any
shares of any class or series of its capital stock or Voting Debt, or
securities convertible into or exchangeable for, or options, warrants,
calls, commitments or rights of any kind to acquire, any shares of any
class or series of its capital stock or any Voting Debt, other than Shares
(and associated Rights) reserved for issuance on the date hereof pursuant
to the exercise of Stock Options outstanding on the date hereof, (iii)
declare, set aside or pay any dividend or other distribution payable in
cash, stock or property with respect to any shares of any class or series
of its capital stock except (A) pursuant to the Rights Agreement and (B)
for a cash dividend in the amount of $0.10 per share declared by the Board
of Directors on March 15, 1999 and payable on April 15, 1999; (iv) split,
combine or reclassify any shares of any class or series of its stock; or
(v) redeem, purchase or otherwise acquire directly or indirectly any shares
of any class or series of its capital stock, or any instrument or security
which consists of or includes a right to acquire such shares;
(c) neither the Company nor any of the Company Subsidiaries shall (i)
incur or modify any indebtedness or other liability, other than in the
ordinary and usual course of business and consistent with past practice; or
(ii) materially modify, amend or terminate any of its material contracts or
waive, release or assign any material rights or claims, except in the
ordinary course of business and consistent with past practice;
(d) neither the Company nor any of the Company Subsidiaries shall: (i)
incur or assume any long-term debt, or except in the ordinary course of
business, incur or assume any short-term indebtedness in amounts not
consistent with past practice; (ii) materially modify the terms of any
indebtedness or other liability, other than modifications of short term
debt in the ordinary and usual course of business and consistent with past
practice; (iii) assume, guarantee, endorse or otherwise become liable or
responsible (whether directly, contingently or otherwise) for the
obligations of any other person, except as described in the Disclosure
Schedule as being in the ordinary course of business and consistent with
past practice; (iv) make any loans, advances or capital contributions to,
or investments in, any other person (other than to or in wholly owned
Subsidiaries of the Company); or (v) enter into any material commitment or
transaction (including, but not limited to, any capital expenditure or
purchase, sale or lease of assets or real estate) except in the ordinary
course of business consistent with past practice;
(e) neither the Company nor any Company Subsidiary shall transfer,
lease, license, sell, mortgage, pledge, dispose of, or encumber any
material assets other than in the ordinary and usual course of business and
consistent with past practice;
(f) except as otherwise specifically provided in this Agreement, make
any change in the compensation payable or to become payable to any of its
officers, directors, employees, agents or consultants (other than normal
recurring increases in wages to employees who are not officers or directors
or Affiliates in the ordinary course of business consistent with past
practice) or to Persons providing management services, except as required
by any Plan, or enter into or amend any employment, severance, consulting,
termination or other agreement or employee benefit plan or make any loans
to any of its officers, directors, employees, Affiliates, agents or
consultants or make any change in its existing borrowing or lending
arrangements for or on behalf of any of such Persons pursuant to an
employee benefit plan or otherwise;
(g) except as otherwise specifically contemplated by this Agreement or
as specifically set forth in the Disclosure Schedule and except as required
by law, pay or make any accrual or arrangement for payment of any pension,
retirement allowance or other employee benefit not required by any Plan to
any officer, director, employee or Affiliate or pay or agree to pay or make
any accrual or arrangement for payment to any officers, directors,
employees or Affiliates of the Company of any amount relating
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to unused vacation days, except payments and accruals made in the ordinary
course of business consistent with past practice; adopt or (except as
required pursuant to any Plan) pay, grant, issue, accelerate or accrue
salary or other payments or benefits pursuant to any pension,
profit-sharing, bonus, extra compensation, incentive, deferred
compensation, stock purchase, stock option, stock appreciation right, group
insurance, severance pay, retirement or other employee benefit plan,
agreement or arrangement, or any employment or consulting agreement with or
for the benefit of any director, officer, employee, agent or consultant,
whether past or present; or, except as required by law, amend in any
material respect any such existing plan, agreement or arrangement in a
manner inconsistent with the foregoing;
(h) except in the ordinary course of business consistent with past
practice, neither the Company nor any Company Subsidiary shall permit any
insurance policy naming it as a beneficiary or a loss payable payee to be
cancelled or terminated without notice to Fremont;
(i) neither the Company nor any of the Company Subsidiaries shall
enter into any contract or transaction relating to the purchase of material
assets other than in the ordinary course of business consistent with prior
practices;
(j) neither the Company nor any Company Subsidiary shall pay,
repurchase, discharge or satisfy any of its material claims, liabilities or
obligations (absolute, accrued, asserted or unasserted, contingent or
otherwise), other than the payment, discharge or satisfaction in the
ordinary course of business and consistent with past practice, or as
required by law;
(k) neither the Company nor any of the Company Subsidiaries will adopt
a plan of complete or partial liquidation, dissolution, merger,
consolidation, restructuring, recapitalization or other reorganization of
the Company or any Company Subsidiary (other than the Merger and the
Transactions);
(l) neither the Company nor any Company Subsidiary will (i) change any
of the accounting methods used by it unless required by GAAP or (ii) make
any material election relating to Taxes, change any material election
relating to Taxes already made, adopt any material accounting method
relating to Taxes, change any material accounting method relating to Taxes,
enter into any closing agreement relating to Taxes, settle any claim or
assessment relating to Taxes or consent to any claim or assessment relating
to Taxes or any waiver of the statute of limitations for any such claim or
assessment;
(m) neither the Company nor any of the Company Subsidiaries will take,
or agree to commit to take, any action that would or is reasonably likely
to result in any of the conditions to the Stock Purchase or the Merger set
forth in Article VII not being satisfied, or would make any representation
or warranty of the Company contained herein (other than representations and
warranties which address matters only at a certain date or dates)
inaccurate in any respect at, or as of any time prior to, the Effective
Time, or that would materially impair the ability of the Company, Fremont,
Sub or the holders of Shares to consummate the Merger or the Stock Purchase
in accordance with the terms hereof or materially delay such consummation;
and
(n) neither the Company nor any of the Company Subsidiaries will enter
into an agreement, contract, commitment or arrangement to do any of the
foregoing, or to authorize, recommend, propose or announce an intention to
do any of the foregoing.
Section 6.2 Access; Confidentiality. Upon prior notice by Fremont, the
Company shall (and shall cause each of the Company Subsidiaries to) afford to
the officers, employees, accountants, counsel, financing sources and other
representatives of Fremont, reasonable access during normal business hours prior
to the Effective Time, to all its properties, books, contracts, commitments and
records and, during such period, the Company shall (and shall cause each of the
Company Subsidiaries to) furnish promptly to the Fremont (a) a copy of each
report, schedule, registration statement and other document filed or received by
it during such period pursuant to the requirements of federal securities laws
and (b) all other information concerning its business, properties and personnel
as Fremont may reasonably request. Access
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shall include the right to conduct such environmental studies as Fremont, in its
discretion, shall deem appropriate, subject to the limitations set forth in the
preceding sentence. Until the Effective Time, unless otherwise required by law
or in order to comply with disclosure requirements applicable to the Financing
Documents (as defined in Section 6.3 below) or the Proxy Statement, Fremont will
hold, and will cause its officers, employees, accountants, counsel, financing
sources and other representatives to hold, any such information which is
nonpublic in confidence in accordance with the provisions of the Confidentiality
Agreement.
Section 6.3 Reasonable Best Efforts.
(a) Prior to the Closing, upon the terms and subject to the conditions of
this Agreement, Fremont, Sub and the Company agree to use their respective
reasonable best efforts to take, or cause to be taken, all actions, and to do,
or cause to be done, all things necessary, proper or advisable (subject to any
applicable laws) to consummate and make effective the Merger and the other
Transactions as promptly as practicable, including, but not limited to, (i) the
preparation and filing of all forms, registrations and notices required to be
filed to consummate the Merger and the other Transactions and the taking of such
actions as are necessary to obtain any requisite approvals, consents, orders,
exemptions or waivers by any third party or Governmental Entity, (ii) the
preparation of any disclosure documents requested by Fremont in order to
facilitate financing of any of the Transactions (the "Financing Documents"),
(iii) the use of reasonable best efforts to avoid the entry of, or to have
vacated or terminated, any decree, order or judgment that would constrain,
prevent or delay the consummation of the Merger and the Transactions, and (iv)
the satisfaction of the other parties' conditions to Closing. In addition, no
party hereto shall take any action after the date hereof that would reasonably
be expected to materially delay the obtaining of, or result in not obtaining,
any permission, approval or consent from any third party or Governmental Entity
necessary to be obtained prior to Closing. Notwithstanding the foregoing, or any
other covenant herein contained, in connection with the receipt of any necessary
approvals under the HSR Act, neither the Company nor any of the Company
Subsidiaries shall be entitled to divest or hold separate or otherwise take or
commit to take any action that limits Fremont's or Sub's freedom of action with
respect of, or its ability to retain, the Company or any of the Company
Subsidiaries or any material portions thereof or any of the businesses, product
lines, properties or assets of the Company or any of the Company Subsidiaries,
without Fremont's prior written consent.
(b) Prior to the Closing, and subject to the Confidentiality Agreement,
each party shall promptly consult with the other parties hereto with respect to,
provide any necessary information with respect to, and provide the other parties
(or their respective counsel) with copies of, all filings made by such party
with any Governmental Entity or any other information supplied by such party to
a Governmental Entity in connection with this Agreement, the Merger, the Stock
Purchase, and the other Transactions; provided, however, that Fremont and/or Sub
shall not be required to provide the Company with copies of any filings made by
Fremont and/or Sub pursuant to the HSR Act. Each party hereto shall promptly
inform the other of any communication from any Governmental Entity regarding any
of the Transactions. If any party hereto or Affiliate thereof receives a request
for additional information or documentary material from any such Governmental
Entity with respect to any of the Transactions, then such party shall endeavor
in good faith to make, or cause to be made, as soon as reasonably practicable
and after consultation with the other parties, an appropriate response in
compliance with such request. To the extent that transfers, amendments or
modifications of permits (including environmental permits) are required as a
result of the execution of this Agreement or consummation of any of the
Transactions, the Company shall use its reasonable best efforts to effect such
transfers, amendments or modifications.
(c) The Company and Fremont shall file as soon as practicable notifications
under the HSR Act and respond as promptly as practicable to any inquiries
received from the Federal Trade Commission and the Antitrust Division of the
Department of Justice for additional information or documentation and respond as
promptly as practicable to all inquiries and requests received from any State
Attorney General or other Governmental Entity in connection with antitrust
matters. Concurrently with the filing of notifications under the HSR Act or as
soon thereafter as practicable, the Company and Fremont shall each request early
termination of the HSR Act waiting period.
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(d) Notwithstanding the foregoing, nothing in this Agreement shall be
deemed to require Fremont or Sub to commence any litigation against any entity
in order to facilitate the consummation of any of the Transactions.
(e) Fremont shall use its reasonable best efforts to cause the Debt
Financing to be obtained substantially on the terms set forth in the Debt
Financing Letters and Schedule 7.2(f) or to obtain alternative financing on
terms no more onerous than the terms of the Debt Financing Letters and Schedule
7.2(f).
(f) The Company agrees to provide, and will cause the Company, the Company
Subsidiaries and its and their respective officers, employees and advisers to
provide, reasonable cooperation in connection with the arrangement of the Debt
Financing; provided that the terms and conditions of such financing may not
require, prior to the Effective Time, the payment of any commitment or other
similar fees by the Company, or the incurrence of any liabilities by the
Company. Subject to Section 10.1(b), the parties acknowledge that the payment of
any fees by the Company in connection with the Debt Financing shall be
conditioned upon the consummation of the Merger.
Section 6.4 Proxy Statement; Form S-4. Promptly following the date of
this Agreement, the Company shall prepare the preliminary Proxy Statement, and
the Company shall prepare and file with the SEC the Form S-4, in which the Proxy
Statement will be included. The Company will use its reasonable best efforts to
have the Form S-4 declared effective as promptly as practicable after such
filings. The Company will use its reasonable best efforts to cause the
definitive Proxy Statement to be mailed to the Company's stockholders as
promptly as practicable after the Form S-4 is declared effective under the
Securities Act. The Company shall also take any action required to be taken
under any applicable state securities laws in connection with the registration
and qualification of common stock of the Company following the Merger. The
information provided by the Company for use in the Form S-4 and the Proxy
Statement, and to be supplied by Fremont and Sub in writing specifically for use
in the Form S-4 and the Proxy Statement shall, at the time the Form S-4 becomes
effective and at the time of the mailing of the Proxy Statement and on the date
of the Special Meeting referred to in Section 1.6, be true and correct in all
material respects and shall not omit to state any material fact required to be
stated therein or necessary in order to make such information not misleading.
The Company, Fremont and Sub each agree to correct any information provided by
it for use in the Form S-4 or the Proxy Statement which shall have become false
or misleading. Fremont, Sub and the Company will cooperate with each other in
the preparation of the Form S-4 and the Proxy Statement; without limiting the
generality of the foregoing, the Company will notify Fremont as promptly as
practicable of the receipt of any comments from the SEC with respect to the Form
S-4, of any request by the SEC for any amendment to the Form S-4 or for
additional information, and of the effectiveness of the Form S-4. All filings
with the SEC, including the Form S-4 and any amendment thereto, and all mailings
to the Company's stockholders in connection with the Merger, including the Proxy
Statement, shall be subject to the prior review, comment and approval of Fremont
(which consent or approval by Fremont shall not be unreasonably withheld or
delayed). Fremont and Sub will furnish to the Company the information relating
to it required by the Exchange Act and the rules and regulations promulgated
thereunder to be set forth in the Proxy Statement. The Company agrees to use its
reasonable best efforts, after consultation with the other parties hereto, to
respond promptly to any comments made by the SEC with respect to the Form S-4
and any preliminary version of the Proxy Statement filed by it and to cause the
definitive Proxy Statement to be mailed to the Company's stockholders at the
earliest practicable time.
Section 6.5 No Solicitation of Competing Transaction.
(a) The Company (and the Company Subsidiaries and Affiliates of the
Company) will not, and the Company (and the Company Subsidiaries and Affiliates
of the Company) will use their reasonable best efforts to ensure that their
respective officers, directors, employees, investment bankers, attorneys,
accountants and other agents do not, directly or indirectly: (i) initiate,
solicit or encourage, or take any action to knowingly facilitate the making of,
any offer or proposal which constitutes or is reasonably likely to lead to any
Takeover Proposal (as defined below) of the Company or any Company Subsidiary or
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Affiliate or an inquiry with respect thereto or (ii) in the event of an
unsolicited written Takeover Proposal for the Company or any Company Subsidiary
or Affiliate of the Company, engage in negotiations or discussions with, or
provide any information or data to, any Person (other than Fremont or any of its
Affiliates or representatives) relating to any Takeover Proposal. The Company
shall notify Fremont as promptly as practicable of any inquiries, expressions of
interest, proposals or offers received by the Company or any of the Company's
representatives relating to any Takeover Proposal or the possibility or
consideration of making a Takeover Proposal (a "Takeover Proposal Interest")
indicating, in connection with such notice, the name of the Person indicating
such Takeover Proposal Interest and the terms and conditions of any proposals or
offers. At any time prior to adoption of this Agreement by the holders of
Shares, the Company Board of Directors may, and may direct its officers,
directors, employees, investment bankers, attorneys, accountants and other
agents to, in response to any such Takeover Proposal Interest that has been
determined by it to be a Superior Proposal (as defined in Section 6.5(d)), that
was not solicited by it and that did not otherwise result from a breach of this
Section 6.5(a), (x) furnish information with respect to the Company and the
Company Subsidiaries to any Person pursuant to a customary confidentiality
agreement containing terms no less restrictive than the terms of the
Confidentiality Agreement and (y) participate in negotiations regarding such
Takeover Proposal. The Company agrees that it shall keep Fremont informed, on a
current basis, of the status and terms of any Takeover Proposal Interest.
(b) As used in this Agreement, "Takeover Proposal" when used in connection
with the Company shall mean any tender or exchange offer involving the Company,
any proposal for a merger, consolidation or other business combination involving
the Company, any proposal or offer to acquire in any manner 20% or more of the
equity interest in, or 20% or more of the business or assets of, the Company,
any proposal or offer with respect to any recapitalization or restructuring with
respect to the Company or any proposal or offer with respect to any other
transaction similar to any of the foregoing with respect to such Person or any
Subsidiary of such Person other than pursuant to the Transactions).
Notwithstanding the foregoing, a "Takeover Proposal" shall not include any
repurchase of Shares by the Company which is consummated without the issuance,
directly or indirectly, to any third party of any equity securities of the
Company or any Company Subsidiary or of debt securities of the Company or any
Company Subsidiary convertible into equity securities, whether by direct
issuance, merger or other transaction or series of transactions.
(c) Nothing contained in this Agreement shall prevent the Company or the
Company Board of Directors from (i) taking and disclosing to its stockholders a
position contemplated by Rule 14e-9 or complying with Rule 14e-2(a) promulgated
under the Exchange Act, (ii) making any disclosure to its stockholders, if, in
the good faith judgment of the Company Board of Directors, with the advice of
outside counsel, failure to disclose would constitute a breach of its fiduciary
duties to the Company's stockholders under applicable law (including a duty of
candor), (iii) issuing a press release or publicly disclosing the terms of this
Agreement in accordance with Section 6.6 hereof; (iv) proceeding with the
Transactions or (v) taking any action which in the opinion of outside counsel is
required pursuant to a final, non-appealable order entered by a court of
competent jurisdiction.
(d) Neither the Company Board of Directors nor any committee thereof shall
(i) withdraw, qualify or modify, or propose publicly to withdraw, qualify or
modify, in a manner adverse to Fremont, the approval or recommendation of the
Company Board of Directors or such committee of the Merger, this Agreement and
the Transactions, (ii) approve or recommend, or propose publicly to approve or
recommend, any Takeover Proposal, or (iii) enter into any agreement, letter of
intent, or agreement in principle with respect to any Takeover Proposal.
Notwithstanding the foregoing, in the event that prior to the adoption of this
Agreement by the holders of Shares, the Company Board of Directors determines in
good faith, after it has received an unsolicited Superior Proposal (as defined
below) in writing that was not solicited in violation of Section 6.5(a) hereof,
that, based on the advice of the Company's outside counsel, the failure to do so
would be reasonably likely to constitute a breach by the Company Board of
Directors of its fiduciary duties to the Company's stockholders, the Company
Board of Directors may (subject to this sentence and the following sentences)
withdraw, qualify or modify its approval or recommendation of this Agreement or
the Merger, approve or recommend any Superior Proposal or, immediately following
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termination of this Agreement and concurrent payment of the Termination Fee,
cause the Company to enter into an agreement with respect to a Superior
Proposal, in each case only at a time that is after the third business day
following Fremont's receipt of written notice advising Fremont that the Company
Board of Directors has received a Superior Proposal specifying the material
terms and conditions of such Superior Proposal (and including a copy thereof
with all accompanying documentation), identifying the person making such
Superior Proposal and stating that it intends to take one of the foregoing
actions. After providing such notice during such three business day period, the
Company shall provide a reasonable opportunity to Fremont to make such
adjustments in the terms and conditions of this Agreement as would enable the
Company to proceed with the transactions contemplated herein on such adjusted
terms without taking any of the foregoing actions; provided, however, that any
such adjustment shall be at the discretion of Fremont. For purposes of this
Agreement, a "Superior Proposal" means any proposal (on its most recently
amended or modified terms, if amended or modified) made by any Person other than
Fremont or its Affiliates (an "Offering Party") to enter into a Takeover
Proposal which the Company Board of Directors determines in its good faith
judgment (based on the opinion of the Financial Advisor or another financial
advisor of nationally recognized reputation) to be more favorable to the
Company's stockholders than the Merger, taking into account all relevant factors
(including whether, in the good faith judgment of the Company Board of
Directors, after obtaining the opinion of a financial advisor of nationally
recognized reputation, the Offering Party is reasonably able to finance the
transaction, and changes to this Agreement that are proposed by Fremont, if any,
in response to such Takeover Proposal).
Section 6.6 Publicity. The initial press release with respect to the
execution of this Agreement shall be a joint press release acceptable to Fremont
and the Company. Thereafter, until the Effective Time, or the date the
Transactions are terminated or abandoned pursuant to Article VIII, neither the
Company, Fremont nor any of their respective Affiliates shall issue or cause the
publication of any press release or other announcement with respect to the
Merger, the Stock Purchase, this Agreement or the other Transactions without
prior agreement with the other party, except as may be required by law or by any
listing agreement with a national securities exchange or trading market and, in
such event, only after prior consultation with the other party.
Section 6.7 Notification of Certain Matters. The Company and Fremont
shall give prompt notice to each other, of (i) the occurrence or non-occurrence
of any event the occurrence or non-occurrence of which would cause any
representation or warranty contained in this Agreement to be untrue or
inaccurate in any material respect at or prior to the Effective Time and (ii)
any material failure of the Company or Fremont, as the case may be, to comply
with or satisfy any covenant, condition or agreement to be complied with or
satisfied by it hereunder; provided, however, that the delivery of any notice
pursuant to this Section 6.7 shall not limit or otherwise affect the remedies
available hereunder to any party.
Section 6.8 Directors' and Officers' Insurance and Indemnification.
(a) For six years after the Effective Time, Fremont shall, and shall cause
the Surviving Corporation (or any successor to the Surviving Corporation) to,
indemnify, defend and hold harmless each Indemnified Party against all losses,
claims, damages, liabilities, costs, fees and expenses, including reasonable
fees and disbursements of counsel and judgments, fines, losses, claims,
liabilities and amounts paid in settlement (provided that any such settlement is
effected with the written consent of the Fremont or the Surviving Corporation)
arising out of actions or omissions occurring at or prior to the Effective Time
to the full extent permitted under applicable Delaware law, and the terms of the
Company's certificate of incorporation or the by-laws or similar organizational
documents, as in effect at the date hereof (which, except as otherwise set forth
herein, will survive the Merger and continue in full force and effect after the
Effective Time); provided that, in the event any claim or claims are asserted or
made within such six-year period, all rights to indemnification in respect of
any such claim or claims shall continue until disposition of any and all such
claims. Without limiting the foregoing, (i) Fremont shall, and shall cause the
Surviving Corporation to, periodically advance expenses (including attorney's
fees) as incurred by an Indemnified Party with respect to the foregoing to the
full extent permitted under applicable law, and (ii) any determination required
to be made with respect to whether an Indemnified Party shall be entitled
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to indemnification shall, if requested by such Indemnified Party, be made by
independent legal counsel selected by Fremont or the Surviving Corporation and
reasonably satisfactory to such Indemnified Party.
(b) The Surviving Corporation shall maintain the Company's existing
officers' and directors' liability insurance for a period of not less than six
years after the Effective Time; provided, that there may be substituted therefor
policies of providing at least as favorable coverage and amounts containing
terms no less favorable to such former directors or officers so long as such
substitution does not result in any gaps or lapses in coverage with respect to
matters occurring prior to the Effective Time; provided, further, that in no
event shall the Company be required to pay aggregate premiums for insurance
under this Section 6.8(b) in excess of 300% of the aggregate premiums paid by
the Company in 1998 on an annualized basis for such purpose; and provided,
further, that if the Surviving Corporation is unable to obtain the amount of
insurance required by this Section 6.8(b) for such aggregate premium, the
Surviving Corporation shall obtain as much insurance as can be obtained for an
annual premium not in excess of 300% of the aggregate premiums paid by the
Company in 1998 on an annualized basis for such purpose.
(c) This covenant is intended to be for the benefit of, and shall be
enforceable by, each of the Indemnified Parties and their respective heirs and
successors. The indemnification provided for herein shall not be deemed
exclusive of any other rights to which an Indemnified Party is entitled, whether
pursuant to law, contract or otherwise. The Surviving Corporation shall pay all
expenses, including reasonable attorneys' fees, that may be incurred by any
Indemnified Party which is the prevailing party in any action or proceeding to
enforce the indemnity and other obligations provided for in this Section 6.8.
(d) In the event that the Surviving Corporation or any of its successors or
assigns (i) consolidates with or merges into any other Person and shall not be
the continuing or surviving corporation or entity of such consolidation or
merger or (ii) transfers or conveys all or substantially all of its properties
and assets to any Person, then, and in each such case, to the extent necessary
to effectuate the purpose of this Section 6.8, proper provision shall be made so
that the successors and assigns of the Surviving Corporation shall succeed to
the obligations set forth in this Section 6.8 and none of the actions described
in clauses (i) or (ii) shall be taken until such provision is made.
Section 6.9 State Takeover Laws. Notwithstanding any other provision in
this Agreement, in no event shall the Section 203 Approval be withdrawn, revoked
or modified by the Board of Directors of the Company. If any state takeover
statute other than Section 203 of the DGCL becomes or is deemed to become
applicable to the Agreement, the Merger, the Stock Purchase or the other
Transactions, the Company shall take reasonable steps to assist in any effort by
Fremont to render such statute inapplicable to all of the foregoing.
Section 6.10 Actions Regarding the Rights. The Company shall not, except
as specifically provided herein, (i) modify or waive the terms of its Rights
Agreement, or (ii) take any action to redeem the Rights; provided, however, that
the Company may take any action necessary to prevent or delay a Distribution
Date (as defined in the Rights Agreement) in the event any Person other than
Fremont or an Affiliate of Fremont acquires more than 15% of the outstanding
Shares.
Section 6.11 Recapitalization. The Company shall cooperate with Fremont
or the SEC as necessary or appropriate with respect to the reporting of the
Transactions as a recapitalization for financial reporting purposes, including,
without limitation, assisting Fremont and its Affiliates with any presentation
to the SEC with regard to such reporting, including appropriate disclosure with
regard to such reporting in all filings with the SEC and mailings to the
stockholders of the Company made in connection with the Merger. In furtherance
of the foregoing, the Company shall provide to Fremont for the approval of
Fremont's advisors (which approval shall not be unreasonably withheld) any
description of the Transactions which is meant to be disseminated. The Company
will use its reasonable best efforts not to take any action that would adversely
affect the ability of the Transactions to be accounted for as a recapitalization
for financial reporting purposes.
Section 6.12 Financial Statements. The Company shall promptly prepare at
the end of each month and promptly deliver to Fremont upon completion the
balance sheet, income statement and statement of
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cash flows prepared in accordance with GAAP of the Company for each month ended
between the date of this Agreement and the Effective Time. The Company shall
promptly prepare in accordance with GAAP all financial statements required to be
included in the Financing Documents.
Section 6.13 Employee Plan and Benefit Arrangements.
(a) From and after the Effective Time, subject to applicable law, the
Surviving Corporation will honor obligations incurred pursuant to the Change of
Control Benefits Agreements described on Section 4.10 of the Disclosure
Schedule.
(b) For at least one year from the Effective Time, subject to applicable
law, Fremont will cause the Surviving Corporation and its Subsidiaries to, and
the Surviving Corporation and its Subsidiaries will, provide benefits to their
employees which will, in the aggregate, be substantially comparable to those
currently provided by the Company and its Subsidiaries to their employees.
Notwithstanding the foregoing, nothing herein shall obligate or require the
Surviving Corporation or any of its Subsidiaries to provide its employees with a
plan or arrangement similar to the equity-based compensation plans currently
maintained by the Company.
Section 6.14 NASDAQ Listing. Neither the Company nor Fremont will take
any action, for at least three years after the Effective Time, to cause the
Shares to be delisted from The NASDAQ National Market System; provided, however,
that Fremont may cause or permit the Shares to be delisted in connection with a
transaction which results in the termination of registration of such securities
under Section 12 of the Exchange Act.
ARTICLE VII
CONDITIONS
Section 7.1 Conditions to the Stock Purchase. The respective obligations
of each party to effect the Stock Purchase shall be subject to the satisfaction
(or waiver by each party) at or prior to the Stock Purchase Closing Date of the
conditions to the Merger set forth in Sections 7.2, 7.3 and 7.4 hereof other
than the condition set forth in Section 7.4(e).
Section 7.2 Conditions to Each Party's Obligation to Effect the
Merger. The respective obligations of each party to effect the Merger shall be
subject to the satisfaction at or prior to the Effective Time of each of the
following conditions, any and all of which may be waived in whole or in part by
the Company, Fremont or Sub, as the case may be, to the extent permitted by
applicable law:
(a) The vote of the stockholders necessary for the approval of the
Merger, the approval and adoption of this Agreement, the approval of the
Amendment, the approval of the Stock Purchase and the approval of the New
Option Plan shall have been obtained;
(b) No Governmental Entity shall have enacted, issued, promulgated,
enforced or entered any law, rule, regulation, executive order, decree,
injunction or other order (whether temporary, preliminary or permanent)
which is then in effect and has the effect of making any of the
Transactions illegal or otherwise restricting, preventing or prohibiting
consummation of the Transactions;
(c) The applicable waiting period under the HSR Act shall have expired
or been terminated;
(d) The Board of Directors of the Company shall have received a
solvency letter, in form and substance and from an independent evaluation
firm reasonably satisfactory to it, as to the solvency of the Company and
its Subsidiaries on a consolidated basis after giving effect to the
Transactions, including the Debt Financings;
(e) The Form S-4 shall have become effective under the Securities Act
and shall not be the subject of any stop order or proceedings seeking a
stop order; and
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(f) The Company shall have received the Debt Financing substantially
on the terms contemplated by the Debt Financing Letters and Schedule 7.2(f)
or alternative financing on terms no less favorable than those set forth in
the Debt Financing Letters and Schedule 7.2(f).
Section 7.3 Conditions to the Obligations of Fremont and Sub. The
obligations of Fremont and Sub to consummate the Merger are subject to the
satisfaction (or waiver by Fremont) of the following further conditions:
(a) The representations and warranties made by the Company herein
shall be true and correct in all material respects (except for
representations qualified by materiality or Company Material Adverse Effect
which shall be correct in all respects) on the Closing Date, with the same
force and effect as though such representations and warranties had been
made on and as of the Closing Date, except for changes permitted or
contemplated by this Agreement and except for representations and
warranties that are made as of a specified date or time, which shall be
true and correct in all material respects (except for representations
qualified by materiality or material adverse effect which shall be correct
in all respects) only as of such specific date or time, provided that,
notwithstanding any other term or provision hereof, the entering into or
modification or amendment of any contract or agreement, in form and
substance mutually agreeable to the parties hereto, in contemplation of the
completion of the Merger (including, without limitation, employment
agreements (and the options granted pursuant thereto), any option plan, any
management services agreement and any indemnity agreements) shall not be
deemed to cause any breach of, or inaccuracy in, any of the representations
and warranties or covenants of the parties contained in this Agreement;
(b) The Company shall have performed in all material respects all of
its obligations hereunder required to be performed by it at or prior to the
Effective Time;
(c) Since the date of this Agreement, no Company Material Adverse
Effect shall have occurred and be continuing;
(d) The Amendment shall have been filed with the Secretary of State of
the State of Delaware;
(e) The Company shall have furnished Fremont with a certificate dated
the Closing Date signed on behalf of it by the President or any Vice
President to the effect that the conditions set forth in Sections 7.3(a),
(b) and (c) have been satisfied; and
(f) The Company and Fremont (or an Affiliate of Fremont) shall have
entered into a management services agreement, to be effective upon the
Effective Time, in the form attached hereto as Exhibit C.
Section 7.4 Conditions to the Obligations of the Company. The obligations
of the Company to consummate the Merger are subject to the satisfaction (or
waiver by the Company) of the following further conditions:
(a) The representations and warranties made by Fremont and Sub herein
shall be true and correct in all material respects (except for
representations qualified by materiality or material adverse effect which
shall be correct in all respects) on the Closing Date, with the same force
and effect as though such representations and warranties had been made on
and as of the Closing Date, except for changes permitted or contemplated by
this Agreement and except for representations and warranties that are made
as of a specified date or time, which shall be true and correct in all
material respects (except for representations qualified by materiality or
material adverse effect which shall be correct in all respects) only as of
such specific date or time;
(b) Each of Fremont and Sub shall have performed in all material
respects all of the respective obligations hereunder required to be
performed by Fremont or Sub, as the case may be, at or prior to the
Effective Time;
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(c) Since the date of this Agreement, there shall not have occurred
any event, change or effect having, or which would be reasonably likely to
have, individually or in the aggregate, a material adverse effect on
Fremont or Sub;
(d) Fremont shall have furnished the Company with a certificate dated
the Closing Date signed on behalf of it by any duly authorized officer to
the effect that the conditions set forth in Sections 7.4(a) through (c)
have been satisfied; and
(e) Fremont (and/or its assignee(s)) shall have purchased the
Preferred Shares.
ARTICLE VIII
TERMINATION
Section 8.1 Termination. Anything herein or elsewhere to the contrary
notwithstanding, this Agreement may be terminated and the Merger, the Stock
Purchase and other transactions contemplated herein may be abandoned at any time
prior to the Effective Time, whether before or after stockholder approval
thereof (and regardless of any time that may have elapsed since the event giving
rise to the right to terminate hereunder) solely as follows:
(a) By the mutual consent of Fremont and the Board of Directors of the
Company.
(b) By either of the Company Board of Directors or Fremont, as
follows:
(i) if the Merger shall not have occurred on or prior to September
30, 1999; provided, however, that the right to terminate this Agreement
under this Section 8.1(b)(i) shall not be available to any party whose
failure to fulfill any obligation under this Agreement has been the
cause of, or resulted in, the failure of the Merger to occur on or prior
to such date; or
(ii) if any Governmental Entity shall have issued an order, decree
or ruling or taken any other action (which order, decree, ruling or
other action the parties hereto shall use their reasonable efforts to
lift), in each case permanently restraining, enjoining or otherwise
prohibiting the transactions contemplated by this Agreement and such
order, decree, ruling or other action shall have become final and
non-appealable.
(c) By the Company Board of Directors, as follows:
(i) if Fremont or Sub breaches or fails in any material respect to
perform or comply with any of its material covenants and agreements
contained herein or breaches its representations and warranties in any
material respect; or
(ii) if the approval of the stockholders of the Company
contemplated by this Agreement shall not have been obtained by reason of
the failure to obtain the required vote at a duly held meeting of
stockholders or any adjournment thereof.
(iii) if the Company enters into a written agreement with respect
to a Superior Proposal.
(d) By Fremont, as follows:
(i) if the Company breaches or fails in any material respect to
perform or comply with any of its material covenants and agreements
contained herein or breaches its representations and warranties in any
material respect;
(ii) if the approval of the stockholders of the Company
contemplated by this Agreement shall not have been obtained by reason of
the failure to obtain the required vote at a duly held meeting of
stockholders or any adjournment thereof;
(iii) if any person, entity or "group" (as that term is defined in
Section 13(d)(3) of the Exchange Act) (an "Acquiring Person"), other
than Fremont or its affiliates or any group of which any of them is a
member, shall have acquired beneficial ownership (determined pursuant
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to Rule 13d-3 promulgated under the Exchange Act) of more than 20% of
any class or series of capital stock of the Company, through the
acquisition of stock, the formation of a group or otherwise, or shall
have been granted an option, right, or warrant, conditional or
otherwise, to acquire beneficial ownership of more than 20% of any class
or series of capital stock of the Company; or
(iv) if the Company Board of Directors shall have (i) failed to
include in the Proxy Statement, its recommendation without modification
or qualification that such stockholders approve this Agreement, the
Merger and the Transactions, (ii) withdrawn, modified or qualified such
recommendation in a manner adverse to the interests of Fremont or (iii)
approved or recommended any Superior Proposal.
Section 8.2 Effect of Termination. In the event of the termination of
this Agreement as provided in Section 8.1, written notice thereof shall
forthwith be given to the other party or parties specifying the provision hereof
pursuant to which such termination is made, and except for the obligation of the
parties under the Confidentiality Agreement, as set forth in Section 6.2 hereof,
this Agreement shall forthwith become null and void, and there shall be no
liability on the part of the Fremont, Sub or the Company (or any of their
directors, officers, employees, agents, legal and financial advisors or other
representatives) except (A) for fraud or for material breach of this Agreement
and/or (B) as set forth in Section 10.1 hereof; provided, however, that (x) the
aggregate amount payable by the Company pursuant to this Agreement (including
Section 10.1 hereof) with respect to any damages incurred, if any, as a result
of any or all material breaches of this Agreement by the Company shall in no
event exceed the sum of the Termination Fee and the Termination Expenses and (y)
the aggregate amount payable by Fremont and Sub pursuant to this Agreement with
respect to any damages incurred, if any, as a result of any or all material
breaches of this Agreement by Fremont and/or Sub shall in no event exceed the
sum of $15,000,000.
ARTICLE IX
DEFINITIONS AND INTERPRETATION
Section 9.1 Definitions. For all purposes of this Agreement, except as
otherwise expressly provided or unless the context clearly requires otherwise:
"1993 Plan" shall have the meaning set forth in Section 4.3(a).
"1996 Plan" shall have the meaning set forth in Section 4.3(a).
"Affiliate" shall have the meaning set forth in Rule 12b-2 of the
Exchange Act.
"Agreement" or "this Agreement" shall mean this Agreement and Plan of
Recapitalization and Merger, together with the Exhibits hereto and the
Disclosure Schedule.
"Amendment" shall have the meaning set forth in Section 1.6(a)(i).
"Associate" shall have the meaning set forth in Rule 12b-2 of the
Exchange Act.
"Audit" shall have the meaning set forth in Section 4.13.
"Balance Sheet" shall mean the most recent audited balance sheet of
the Company and its consolidated subsidiaries included in the Financial
Statements.
"Balance Sheet Date" shall mean the date of the Balance Sheet.
"Cash Election Price" shall have the meaning set forth in Section
2.1(c)(ii).
"Cash Proration Factor" shall have the meaning set forth in Section
2.4(c)(ii)(A).
"Closing Date" shall have the meaning set forth in Section 1.3.
"Code" shall mean the Internal Revenue Code of 1986, as amended.
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"Company" shall have the meaning set forth in the preamble.
"Company Agreement" shall mean any note, bond, mortgage, indenture,
lease, license, contract, agreement or other instrument or obligation to
which the Company or any Company Subsidiary is a party or by which any of
them or any of their properties or assets may be bound.
"Company Board of Directors" shall mean the board of directors of the
Company.
"Company Intellectual Property" shall mean all Intellectual Property
that is currently used in the business of the Company or any Company
Subsidiary or that is necessary to conduct the business of the Company and
the Company Subsidiaries as presently conducted or as currently proposed to
be conducted.
"Company Material Adverse Effect" shall have the meaning set forth in
Section 4.1.
"Company SEC Documents" shall mean each form, report, schedule,
statement and other document required to be filed by the Company since
January 1, 1997 under the Exchange Act or the Securities Act, including any
amendment to such document, whether or not such amendment is required to be
so filed.
"Company Stock Plans" shall have the meaning set forth in Section
4.12(a).
"Company Subsidiary" shall mean each Person which is a Subsidiary of
the Company.
"Company's knowledge" or "knowledge of the Company" shall mean the
knowledge that each of Robert S. Fremont, Glenn R. Bordfeld, Joel W.
Chemers, Charles F. Huber, George J. Bilek, Thomas W. Tomsovic, Scott Roos
and Jacques LeFevre have or would possess after reasonable investigation
and inquiry.
"Confidentiality Agreement" shall mean a letter agreement between the
Company or the Financial Advisor and Fremont.
"Copyrights" shall mean U.S. and foreign registered and unregistered
copyrights (including, but not limited to, those in computer software and
databases), rights of publicity and all registrations and applications to
register the same.
"Date Data" shall have the meaning set forth in Section 4.17(e).
"Date-Sensitive System" shall have the meaning set forth in Section
4.17(e).
"Debt Financing" shall have the meaning set forth in Section 5.4.
"DGCL" shall mean the General Corporation Law of the State of
Delaware, as now or hereafter amended.
"Disclosure Schedule" shall mean the disclosure schedule of even date
herewith prepared and signed by the Company and delivered to Fremont
simultaneously with the execution hereof.
"Dissenting Shares" shall mean any Shares as to which the holder
thereof has demanded appraisal with respect to the Merger in accordance
with Section 262 of the DGCL and as of the Effective Time has neither
effectively withdrawn nor lost the right to such appraisal.
"Effective Time" shall mean the date and time at which the certificate
of merger referred to in Section 1.1 is duly filed with the Secretary of
State of the State of Delaware or such other date and time as is specified
in such certificate of merger as the date and time the Merger becomes
effective.
"Electing Shares" shall have the meaning set forth in Section
2.1(c)(i).
"Election Date" shall have the meaning set forth in Section 2.3(c).
"Environmental Claim" shall mean any claim, action, investigation or
notice by any person or entity alleging potential liability for
investigatory, cleanup or governmental response costs, or natural resources
or property damages, or personal injuries, attorney's fees and expenses or
penalties relating
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to (i) the presence, or release into the environment, of any Materials of
Environmental Concern at any location owned or operated by the Company or
any Company Subsidiary, now or in the past, or (ii) any violation, or
alleged violation, of any Environmental Law.
"Environmental Law" shall mean each federal, state, local and foreign
law and regulation relating to pollution, protection or preservation of
human health or the environment, including, without limitation, ambient
air, surface water, ground water, land surface or subsurface strata, and
natural resources, and including, without limitation, each law and
regulation relating to emissions, discharges, releases or threatened
releases of Materials of Environmental Concern, or otherwise relating to
the generation, storage, containment (whether above ground or underground),
disposal, transport or handling of Materials of Environmental Concern, or
the preservation of the environment or mitigation of adverse effects
thereon and each law and regulation with regard to record keeping,
notification, disclosure and reporting requirements respecting Materials of
Environmental Concern.
"ERISA" shall mean the Employee Retirement Income Security Act of
1974, as amended.
"ERISA Affiliate" shall mean any trade or business, whether or not
incorporated, that together with the Company would be deemed a "single
employer" within the meaning of Section 4001(b) of ERISA.
"Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended.
"Exchange Agent" shall have the meaning set forth in Section 2.3(b).
"Exchange Fund" shall have the meaning set forth in Section 2.6(g).
"Financial Advisor" shall mean William Blair & Company, LLC.
"Financial Statements" shall mean the financial statements and related
notes of the Company included in the Company SEC Documents.
"Financing Documents" shall have the meaning set forth in Section
6.3(a).
"Form of Election" shall have the meaning set forth in Section 2.3(c).
"Form S-4" shall have the meaning set forth in Section 1.6(a)(ii).
"Fremont" shall have the meaning set forth in the preamble.
"GAAP" shall mean United States generally accepted accounting
principles, applied on a consistent basis.
"Governmental Entity" shall mean a court, arbitral tribunal,
administrative agency or commission or other governmental or other
regulatory authority or agency.
"HSR Act" shall mean the Hart-Scott-Rodino Antitrust Improvements Act
of 1976, as amended.
"Indemnified Party" shall mean each present and former officer and
director of the Company and the Company Subsidiaries.
"Intellectual Property" shall mean all of the following: Trademarks,
Patents, Copyrights, Trade Secrets and Licenses.
"Licenses" shall mean all licenses and agreements pursuant to which
the Company has acquired rights in or to any Trademarks, Patents, or
Copyrights, or licenses and agreements pursuant to which the Company has
licensed or transferred the right to use any of the foregoing.
"Liens" shall mean any and all liens, claims, charges, security
interests, mortgages, title defects or objections, or other encumbrances of
any nature whatsoever, including, without limitation, leases, chattel
mortgages, conditional sales contracts, collateral security arrangements
and other title or interest retention contracts.
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"Materials of Environmental Concern" shall mean pollutants,
contaminants, toxic or hazardous substances, materials and wastes,
petroleum and petroleum products, asbestos and asbestos-containing
materials, polychlorinated biphenyls, radon and lead or lead-based paints
and materials.
"Merger" shall mean the merger of Sub into the Company referred to in
the Recitals.
"Merger Consideration" shall have the meaning set forth in Section
2.1(c).
"Non-Cash Election" shall have the meaning set forth in Section
2.3(a).
"Non-Cash Election Number" shall have the meaning set forth in Section
2.4(a).
"Non-Cash Election Share" shall have the meaning set forth in Section
2.1(c)(i).
"Non-Cash Proration Factor" shall have the meaning set forth in
Section 2.4(b)(i).
"NASDAQ" shall mean the National Association of Securities Dealers
Automated Quotation System.
"Offering Party" shall have the meaning set forth in Section 6.5(d).
"Patents" shall mean issued U.S. and foreign patents and pending
patent applications, patent disclosures, and any and all divisions,
continuations, continuations-in-part, reissues, reexaminations, and
extension thereof, any counterparts claiming priority therefrom, utility
models, patents of importation/confirmation, certificates of invention and
like statutory rights.
"PBGC" shall mean the Pension Benefit Guaranty Corporation.
"Plan" shall mean a plan, program, agreement, arrangement or program
required to be included in the Disclosure Schedule pursuant to Section
4.12(a).
"Person" shall mean a natural person, partnership, corporation,
limited liability company, business trust, joint stock company, trust,
unincorporated association, joint venture, Governmental Entity or other
entity or organization.
"Preferred Shares" shall have the meaning set forth in Section 3.2(a).
"Preferred Stock" shall have the meaning set forth in Section 3.1.
"Proxy Statement" shall mean the proxy statement to be filed by the
Company with the SEC pursuant to Section 1.6(a)(ii), together with all
amendments and supplements thereto and including the exhibits thereto.
"Purchase Price" shall have the meaning set forth in Section 3.3.
"Rights" shall mean the rights to purchase Shares granted pursuant to
the Rights Agreement.
"Rights Agreement" shall mean the Rights Agreement between the Company
and The First National Bank of Chicago, as Rights Agent, dated as of August
3, 1989.
"SEC" shall mean the United States Securities and Exchange Commission.
"Securities Act" shall mean the Securities Act of 1933, as amended.
"Section 203 Approval" shall mean the action taken by the Company
Board of Directors referred to in Section 4.5 causing Section 203 of the
DGCL not to apply to this Agreement or the other Transactions.
"Series A Preferred" shall have the meaning set forth in Section 3.1.
"Shares" shall mean the shares of common stock, par value $0.01, of
the Company, including, for all purposes of this Agreement, the associated
Rights.
"Special Meeting" shall mean the special meeting of stockholders of
the Company referred to in Section 1.6(a)(i).
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"Stock Option" shall mean an option to purchase Shares granted
pursuant to the Company's 1993 Stock Option Plan or pursuant to the
Company's 1996 Employee Stock Purchase Plan.
"Stock Purchase" shall have the meaning set forth in the Recitals.
"Sub" shall have the meaning set forth in the preamble.
"Subsidiary" shall mean, with respect to any party, any corporation or
other organization, whether incorporated or unincorporated, of which (a) at
least a majority of the securities or other interests having by their terms
ordinary voting power to elect a majority of the Board of Directors or
others performing similar functions with respect to such corporation or
other organization is directly or indirectly owned or controlled by such
party or by any one or more of its Subsidiaries, or by such party and one
or more of its Subsidiaries or (b) such party or any other Subsidiary of
such party general partner (excluding any such partnership where such party
or any Subsidiary of such party does not have a majority of the voting
interest in such partnership).
"Superior Proposal" shall have the meaning set forth in Section
6.5(d).
"Surviving Corporation" shall mean the successor or surviving
corporation in the Merger.
"Takeover Proposal" shall have the meaning set forth in Section
6.5(b).
"Takeover Proposal Interest" shall have the meaning set forth in
Section 6.5(a).
"Tax" or "Taxes" shall mean all taxes, charges, fees, duties, levies,
penalties or other assessments imposed by any federal, state, local or
foreign Tax Authority.
"Tax Authority" shall mean any Governmental Authority responsible for
the imposition of Taxes.
"Tax Return" shall mean any return, declaration, report, claim for
refund, or information return or other statement relating to Taxes,
including any schedule or attachment thereto, and including any amendment
thereof.
"Termination Fee" shall mean the sum of $12,000,000 in U.S. currency.
"Title IV Plan" shall mean a Plan that is subject to Section 302 or
Title IV of ERISA or Section 412 of the Code.
"Trademarks" shall mean U.S. and foreign registered and unregistered
trademarks, trade dress, service marks, logos, trade names, corporate names
and all registrations and applications to register the same.
"Trade Secrets" shall mean all categories of trade secrets as defined
in the Uniform Trade Secrets Act, including, but not limited to, business
information.
"Transactions" shall mean the transactions provided for or
contemplated by this Agreement, including, but not limited to, the Merger,
the Stock Purchase and the creation of the New Option Plan.
"Trigger Event" shall have the meaning set forth in Section 10.1(a).
"Voting Debt" shall mean indebtedness having general voting rights and
debt convertible into securities having such rights.
"WARN Act" shall have the meaning set forth in Section 4.19(b).
"Year 2000 Compliant" shall have the meaning set forth in Section
4.17(e).
Section 9.2 Interpretation.
(a) When a reference is made in this Agreement to a section or article,
such reference shall be to a section or article of this Agreement unless
otherwise clearly indicated to the contrary.
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(b) Whenever the words "include", "includes" or "including" are used in
this Agreement they shall be deemed to be followed by the words "without
limitation."
(c) The words "hereof", "herein" and "herewith" and words of similar import
shall, unless otherwise stated, be construed to refer to this Agreement as a
whole and not to any particular provision of this Agreement, and article,
section, paragraph, exhibit and schedule references are to the articles,
sections, paragraphs, exhibits and schedules of this Agreement unless otherwise
specified.
(d) The plural of any defined term shall have a meaning correlative to such
defined term, and words denoting any gender shall include all genders. Where a
word or phrase is defined herein, each of its other grammatical forms shall have
a corresponding meaning.
(e) A reference to any party to this Agreement or any other agreement or
document shall include such party's successors and permitted assigns.
(f) A reference to any legislation or to any provision of any legislation
shall include any modification or re-enactment thereof, any legislative
provision substituted therefor and all regulations and statutory instruments
issued thereunder or pursuant thereto.
(g) The parties have participated jointly in the negotiation and drafting
of this Agreement. In the event an ambiguity or question of intent or
interpretation arises, this Agreement shall be construed as if drafted jointly
by the parties, and no presumption or burden of proof shall arise favoring or
disfavoring any party by virtue of the authorship of any provisions of this
Agreement.
ARTICLE X
MISCELLANEOUS
Section 10.1 Fees and Expenses.
(a) If (x) Fremont shall terminate this Agreement pursuant to Section
8.1(d)(iii) or 8.1(d)(iv) hereof or the Company Board of Directors shall
terminate this Agreement pursuant to Section 8.1(c)(iii), or (y) Fremont shall
terminate this Agreement pursuant to Section 8.1(d)(i) or 8.1(d)(ii) hereof, or
the Company Board of Directors shall terminate this Agreement pursuant to
Section 8.1(c)(ii) hereof, and, in any event, either (i) (A) prior to the time
of the Special Meeting there had been a publicly disclosed Takeover Proposal
Interest and (B) within one year of any such termination under this clause
(y)(i), a definitive agreement is entered into with the Company or is
consummated with respect to a Takeover Proposal or similar business combination
or (ii) (A) prior to the time of the Special Meeting there had been a Takeover
Proposal Interest (whether or not publicly disclosed) and (B) within one year of
any such termination under this clause (y)(ii), a definitive agreement is
entered into between the Company and a Person who made any such Takeover
Proposal Interest or is consummated by a Person who made any such Takeover
Proposal Interest, in either case described in this clause (B) with respect to a
transaction that is superior in value to the Transactions, then, in any such
case as described in clause (x) or (y) (each such case of termination being
referred to as a "Trigger Event"), the Company shall (i) pay to Fremont (not
later than simultaneously with any such Trigger Event) the Termination Fee and
(ii) promptly after being furnished documentation in respect thereto by Fremont,
pay, or reimburse Fremont for, all reasonable out-of-pocket fees and expenses
actually paid or incurred by Fremont, Sub and their Affiliates (including the
fees and expenses of legal counsel, accountants, financial advisors, other
consultants, financial printers and financing sources but excluding any fees
payable to Fremont, Sub or any of their respective affiliates) in connection
with the Merger and the consummation of the Transactions contemplated by this
Agreement (the "Termination Expenses") up to a maximum amount of $3,000,000;
provided, however, that in the event that Fremont or the Company Board of
Directors shall terminate this Agreement pursuant to Section 8.1(d)(ii) or
Section 8.1(c)(ii) hereof, respectively, and either (X) prior to the time of the
Special Meeting there had been a publicly disclosed Takeover Proposal Interest
notwithstanding that none of the events described in clause (y)(i)(B) has yet
occurred, or (Y) prior to the time of the Special Meeting there had been a
Takeover Proposal Interest (whether publicly disclosed
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or not) and within one year of such termination, a definitive agreement is
entered into with the Company or is consummated with respect to a Takeover
Proposal or similar business combination, the Company shall promptly, after
being furnished documentation in respect thereto by Fremont, pay the Termination
Expenses, up to a maximum of $3,000,000.
(b) Upon the Effective Time, all reasonable out-of-pocket costs and
expenses incurred by each party hereto in connection with this Agreement and the
Transactions (including, without limitation, fees and disbursements of counsel,
financial advisors and accountants) shall be paid by the Company, or the Company
shall promptly reimburse such party, as the case may be, and a transaction fee
equal to $4,540,000 shall be paid to Fremont by the Company.
(c) Except as otherwise specifically provided in this Section 10.1 each
party shall bear its own expenses in connection with this Agreement and the
Transactions.
(d) Notwithstanding anything to the contrary in this Agreement, in no event
shall there be more than one payment each of the Termination Fee and the
Termination Expenses.
Section 10.2 Amendment and Modification. Subject to applicable law, this
Agreement may be amended, modified and supplemented in any and all respects,
whether before or after any vote of the stockholders of the Company contemplated
hereby, by written agreement of the parties hereto, by action taken by their
respective Board of Managers or Boards of Directors, as applicable, at any time
prior to the Closing Date with respect to any of the terms contained herein;
provided, however, that after the approval of this Agreement by the stockholders
of the Company, no such amendment, modification or supplement shall reduce the
amount or change the form of the Merger Consideration.
Section 10.3 Nonsurvival of Representations and Warranties. None of the
representations and warranties in this Agreement or in any schedule, instrument
or other document delivered pursuant to this Agreement shall survive the
Effective Time. The foregoing sentence shall not limit any covenant or agreement
of the parties which by its terms contemplates performance after the Effective
Time.
Section 10.4 Notices. All notices and other communications hereunder
shall be in writing and shall be deemed given if delivered personally,
telecopied (which is confirmed) or sent by an overnight courier service, such as
Federal Express, to the parties at the following addresses (or at such other
address for a party as shall be specified by like notice):
(a) if to Fremont or Sub, to:
Fremont Investors I, LLC
50 Fremont Street; Ste. 3700
San Francisco, CA 94105
Attention: Mark Williamson and Kevin Baker
Telephone No.: (415) 284-8701
Telecopy No.: (415) 512-7121
with a copy to:
Skadden, Arps, Slate, Meagher & Flom LLP
Four Embarcadero Center, Suite 3800
San Francisco, California 94111
Attention: Kenton J. King, Esq.
Telephone No.: (415) 984-6400
Telecopy No.: (415) 984-2698
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(b) if to the Company, to:
Juno Lighting, Inc.
1300 S. Wolf Road
P.O. Box 5065
Des Plaines, Illinois 60017
Attention: Robert S. Fremont
Telephone No.: (847) 827-9880
Telecopy No.: (847) 813-8201
with a copy to:
Sonnenschein Nath & Rosenthal
8000 Sears Tower
Chicago, IL 60606-6404
Attention: Julius Lewis
Telephone No.: (312) 876-8000
Telecopy No.: (312) 876-7934
Section 10.5 Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be considered one and the same agreement and
shall become effective when two or more counterparts have been signed by each of
the parties and delivered to the other parties.
Section 10.6 Entire Agreement; No Third Party Beneficiaries. This
Agreement and the Confidentiality Agreement (including the documents and the
instruments referred to herein and therein): (a) constitute the entire agreement
and supersede all prior agreements and understandings, both written and oral,
among the parties with respect to the subject matter hereof and thereof, and (b)
except with respect to Section 6.8 and 6.13(a) hereof, are not intended to
confer upon any person other than the parties hereto and thereto any rights or
remedies hereunder.
Section 10.7 Severability. Any term or provision of this Agreement that
is held by a court of competent jurisdiction or other authority to be invalid,
void or unenforceable in any situation in any jurisdiction shall not affect the
validity or enforceability of the remaining terms and provisions hereof or the
validity or enforceability of the offending term or provision in any other
situation or in any other jurisdiction. If the final judgment of a court of
competent jurisdiction or other authority declares that any term or provision
hereof is invalid, void or unenforceable, the parties agree that the court
making such determination shall have the power to reduce the scope, duration,
area or applicability of the term or provision, to delete specific words or
phrases, or to replace any invalid, void or unenforceable term or provision with
a term or provision that is valid and enforceable and that comes closest to
expressing the intention of the invalid or unenforceable term or provision.
Section 10.8 Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of Delaware without giving
effect to the principles of conflicts of law thereof.
Section 10.9 Enforcement. The parties agree that irreparable damage would
occur in the event that any of the provisions of this Agreement were not
performed in accordance with their specific terms or were otherwise breached. It
is accordingly agreed that the parties shall be entitled to an injunction or
injunctions to prevent breaches of this Agreement and to enforce specifically
the terms and provisions of this Agreement in any court of the United States
located in the State of Delaware or in Delaware state court, this being in
addition to any other remedy to which they are entitled at law or in equity. In
addition, each of the parties hereto (a) consents to submit itself to the
personal jurisdiction of any Federal court located in the State of Delaware or
any Delaware state court in the event any dispute arises out of this Agreement
or any of the Transactions contemplated by this Agreement, (b) agrees that it
will not attempt to deny or defeat such personal jurisdiction by motion or other
request for leave from any such court and (c) agrees that it will not bring any
action relating to this Agreement or any of the Transactions
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contemplated by this Agreement in any court other than a Federal or state court
sitting in the State of Delaware.
Section 10.10 Time of Essence. Each of the parties hereto hereby agrees
that, with regard to all dates and time periods set forth or referred to in this
Agreement, time is of the essence.
Section 10.11 Extension; Waiver. At any time prior to the Effective Time,
the parties may (a) extend the time for the performance of any of the
obligations or other acts of the other parties, (b) waive any inaccuracies in
the representations and warranties of the other parties contained in this
Agreement or in any document delivered pursuant to this Agreement or (c) waive
compliance by the other parties with any of the agreements or conditions
contained in this Agreement. Any agreement on the part of a party to any such
extension or waiver shall be valid only if set forth in an instrument in writing
signed on behalf of such party. The failure of any party to this Agreement to
assert any of its rights under this Agreement or otherwise shall not constitute
a waiver of those rights.
Section 10.12 Assignment. Neither this Agreement nor any of the rights,
interests or obligations hereunder shall be assigned by any of the parties
hereto (whether by operation of law or otherwise) without the prior written
consent of the other parties, except that Fremont may assign, in part, its right
to purchase Preferred Shares and Sub may assign, in its sole discretion, any or
all of its rights, interests and obligations hereunder to Fremont or to any
direct or indirect wholly owned Subsidiary of Fremont provided that any such
assignment by Fremont or Sub shall not relieve it of its obligations hereunder.
Subject to the preceding sentence, this Agreement will be binding upon, inure to
the benefit of and be enforceable by the parties and their respective successors
and assigns
IN WITNESS WHEREOF, Fremont, Sub and the Company have caused this Agreement
to be signed by their respective officers thereunto duly authorized as of the
date first written above.
FREMONT INVESTORS I, LLC
By: /s/ M. N. WILLIAMSON
------------------------------------
Name: M. N. Williamson
Title: Vice President, CFO
JUNO LIGHTING, INC.
By: /s/ ROBERT S. FREMONT
------------------------------------
Name: Robert S. Fremont
Title: Chief Executive Officer and
Chairman
JUPITER ACQUISITION CORP.
By: /s/ KEVIN BAKER
------------------------------------
Name: Kevin Baker
Title: Vice President & Secretary
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The undersigned, Fremont Partners, L.P., a Delaware limited partnership,
hereby undertakes and agrees to cause each of Fremont and Sub to perform its
obligations and agreements under this Agreement and the undersigned expressly
agrees to be liable for such obligations and agreements in the event Fremont or
Sub fails to perform any of its obligations or agreements under this Agreement;
provided, however, that this undertaking and agreement shall terminate at the
Effective Time. The undersigned hereby represents and warrants to the Company
that (i) it has full power and authority to execute and deliver this Agreement
and perform its obligations hereunder, (ii) it has taken all actions necessary
to authorize the execution, delivery and performance of this Agreement by it,
(iii) such execution, delivery and performance do not conflict with, violate or
otherwise result in a default under its organizational documents, and (iv) this
Agreement is the legal, valid and binding obligation of Fremont Partners, L.P.,
enforceable in accordance with its terms.
FREMONT PARTNERS, L.P.
By: FP Advisors, L.L.C.
Its: General Partner
By: Fremont Group, L.L.C.
Its: Managing Member
By: Fremont Investors, Inc.
Its: Manager
By: /s/ R.S. KOPF
------------------------------
Name: R.S. Kopf
Title: Managing Director
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ANNEX B
[WILLIAM BLAIR LETTERHEAD]
March 26, 1999
Board of Directors
Juno Lighting, Inc.
1300 S. Wolf Road
P.O. Box 5065
Des Plaines, Illinois 60017-5065
Dear Directors:
You have requested our opinion as to the fairness, from a financial point
of view, to the shareholders (the "Shareholders") of Juno Lighting, Inc. (the
"Company") of the consideration to be received pursuant to the terms of the
Agreement and Plan of Recapitalization and Merger dated as of March 26, 1999
(the "Merger Agreement") by and among the Company, Fremont Investors I, LLC
("Parent") and Jupiter Acquisition Corp., a wholly-owned subsidiary of Parent
("Purchaser").
Pursuant to the terms of, and subject to the conditions of, the Merger
Agreement, Purchaser will be merged (the "Merger") into the Company in a merger
in which each of the outstanding shares of common stock of the Company will be
converted at the election of the holder thereof into either (i) the right to
receive $25.00 in cash, or (ii) the right to retain one share of common stock of
the Company, subject to proration as more fully described in the Merger
Agreement (the "Stock Consideration"); provided that the aggregate number of
shares of common stock to be converted into the Stock Consideration will be
2,400,000. In addition, pursuant to the terms of, and subject to the conditions
of the Merger Agreement, simultaneously with the closing of the Merger, the
Company will sell to Parent, and Parent will buy from the Company, 1,060,000
shares of Series A Preferred Stock of the Company, containing the terms set
forth in the Amended and Restated Certificate of Incorporation attached as an
Exhibit to the Merger Agreement (the "Amended Certificate") (the "Preferred
Stock Issuance" and, together with the Merger, the "Transactions").
We have acted as financial advisor to the Company in connection with the
Transactions. In connection with our review of the Transactions and the
preparation of our opinion herein, we have: (a) reviewed the terms and
conditions of the Merger Agreement (including the Amended Certificate) and the
financial terms of the Transactions as set forth in the Merger Agreement
(including the Amended Certificate); (b) analyzed the historical revenue,
operating earnings, net income, dividend capacity and capitalization of both the
Company and certain other publicly held companies in businesses we believe to be
comparable to the Company; (c) analyzed certain financial and other information
relating to the prospects of the Company provided to us by the Company's
management, including financial projections and information regarding certain
pro forma effects on the Company's capital structure after giving effect to the
Transactions; (d) discussed the past and current operations and financial
condition and prospects of the Company with senior executives of the Company;
(e) reviewed the historical market prices and trading volume of the common stock
of the Company; (f) reviewed the financial terms, to the extent publicly
available, of selected actual business combinations we believe to be relevant;
and (g) performed such other analyses as we have deemed appropriate. In
connection with our engagement, we were requested to approach, and held
discussions with, third parties to solicit indications of interest in a possible
acquisition of the Company.
We have assumed the accuracy and completeness of all such information and
have not attempted to verify independently any of such information, nor have we
made or obtained an independent valuation or appraisal of any of the assets or
liabilities of the Company. With respect to financial forecasts and information
regarding certain pro forma effects on the Company's capital structure after
giving effect to the Transactions, we have assumed that they have been
reasonably prepared on bases reflecting the best
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currently available estimates and judgments of the Company's management, as to
the future financial performance of the Company and as to such pro forma effects
on the Company's capital structure, respectively. We assume no responsibility
for, and express no view as to, such forecasts or the assumptions on which they
are based. Our opinion relates to financial fairness only, and we express no
opinion as to the appropriateness of the financial structure or the soundness of
the financial condition of the Company subsequent to the consummation of the
Merger. Our opinion is necessarily based solely upon information available to us
and business, market, economic and other conditions as they exist on, and can be
evaluated as of, the date hereof. It should be understood that, although
subsequent developments may affect this opinion, we do not have any obligation
to update, revise or reaffirm this opinion (except as provided in the Merger
Agreement). We have further assumed, with your consent, that the Merger will be
accounted for as a recapitalization under generally accepted accounting
principles.
In rendering our opinion, we have assumed that the Transactions will be
consummated on the terms described in the Merger Agreement, without any waiver
of any material terms or conditions by the Company and that obtaining the
necessary regulatory approvals for the Transactions will not have an adverse
effect on the Company.
William Blair & Company has been engaged in the investment banking business
since 1935. We undertake the valuation of investment securities in connection
with public offerings, private placements, business combinations, estate and
gift tax valuations and similar transactions. For our services, including the
rendering of this opinion, the Company will pay us a fee, a significant portion
of which is contingent upon consummation of the Merger, and indemnify us against
certain liabilities. William Blair & Company has provided investment banking and
financial advisory services to the Company in the past for which we have
received customary compensation.
We are expressing no opinion herein as to the price at which the common
stock of the Company will trade at any future time or as to the effect of the
Transactions on the trading price of the common stock of the Company. Such
trading price may be effected by a number of factors, including but not limited
to (i) dispositions of the common stock of the Company by stockholders within a
short period of time after the effective date of the Transactions, (ii) changes
in prevailing interest rates and other factors which generally influence the
price of securities, (iii) adverse changes in the current capital markets, (iv)
the occurrence of adverse changes in the financial condition, business, assets,
results of operations or prospects of the Company, (v) any necessary actions by
or restrictions of federal, state or other governmental agencies or regulatory
authorities, and (vi) timely completion of the Transactions on terms and
conditions that are acceptable to all parties at interest.
Our engagement and the opinion expressed herein are solely for the benefit
of the Company's Board of Directors and are not on behalf of, and are not
intended to confer rights or remedies upon the Company, Shareholders of the
Company or any other person. It is understood that this letter may not be
disclosed or otherwise referred to without our prior written consent, except
that this opinion may be included in a proxy statement mailed to Shareholders by
the Company with respect to the Transactions and the Form S-4 to be filed with
the Securities and Exchange Commission in connection with the Transactions.
Based upon and subject to the foregoing, it is our opinion as investment
bankers that, as of March 26, 1999, the consideration to be received by the
Shareholders of the Company in the Merger pursuant to the Merger Agreement is
fair, from a financial point of view, to such Shareholders.
Very truly yours,
WILLIAM BLAIR & COMPANY, L.L.C.
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<PAGE> 133
ANNEX C
AMENDED AND RESTATED
CERTIFICATE OF INCORPORATION
OF
JUNO LIGHTING, INC.
Juno Lighting, Inc. (the "Corporation"), a corporation organized and duly
existing under the General Corporation Law of the State of Delaware (the "GCL")
does hereby certify as follows:
(a) The original certificate of incorporation of the Corporation was
filed with the office of the Secretary of State of the State of Delaware on
July 13, 1983.
(b) This Amended and Restated Certificate of Incorporation was duly
adopted by the Board of Directors of the Corporation (the "Board of
Directors") and by the stockholders of the Corporation in accordance with
Sections 242 and 245 of the GCL.
(c) This Amended and Restated Certificate of Incorporation restates
and integrates and further amends the certificate of incorporation of the
Corporation, as heretofore amended or supplemented (the "Certificate of
Incorporation").
(d) The text of the Certificate of Incorporation is hereby amended and
restated in its entirety as follows:
FIRST: The name of the Corporation is Juno Lighting, Inc.
(hereinafter the "Corporation").
SECOND: The address of the registered office of the Corporation in
the State of Delaware is 1209 Orange Street, in the City of Wilmington,
County of New Castle. The name of its registered agent at that address
is The Corporation Trust Company
THIRD: The purpose of the Corporation is to engage in any lawful
act or activity for which a corporation may be organized under the
General Corporation Law of the State of Delaware as set forth in Title 8
of the Delaware Code (the "GCL").
FOURTH:
A. The total number of shares of stock which the Corporation
shall have authority to issue is Fifty Million (50,000,000) shares of
capital stock, consisting of Forty-Five Million (45,000,000) shares
of Common Stock, each having a par value of $0.001 per share, and
Five Million (5,000,000) shares of Preferred Stock, each having a par
value of $0.001 per share, of which One Million Sixty Thousand
(1,060,000) shares shall be designated Series A Convertible Preferred
Stock (the "Series A Preferred").
B. The Board of Directors is expressly authorized to provide for
the issuance of all or any of the remaining shares of the Preferred
Stock in one or more classes or series, and to fix for each such
class or series such voting powers, full or limited, or no voting
powers, and such distinctive designations, preferences and relative,
participating, optional or other special rights and such
qualifications, limitations or restrictions thereof, as shall be
stated and expressed in the resolution or resolutions adopted by the
Board of Directors providing for the issuance of such class or series
and as may be permitted by the GCL, including, without limitation,
the authority to provide that any such class or series may be (i)
subject to redemption at such time or times and at such price or
prices; (ii) entitled to receive dividends (which may be cumulative
or non-cumulative) at such rates, on such conditions, and at such
times, and payable in preference to, or in such relation to, the
dividends payable on any other class or classes or any other series;
(iii) entitled to such rights upon the dissolution of, or upon any
distribution of the assets of, the Corporation; or (iv) convertible
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into, or exchangeable for, shares of any other class or classes of
stock, or of any other series of the same or any other class or
classes of stock, of the Corporation at such price or prices or at
such rates of exchange and with such adjustments; all as may be
stated in such resolution or resolutions.
C. The rights, preferences, privileges, restrictions and other
matters relating to the Series A Preferred are as follows:
1. Dividends
(a) The holders of shares of Series A Preferred shall be entitled to
receive, whether or not declared by the Board of Directors, cumulative quarterly
dividends equal to the greater of: (i) dividends which would have been payable
to such holders of shares of Series A Preferred in such quarter had such holders
converted such shares of Series A Preferred into Common Stock immediately prior
to the record date of any dividend declared on the Common Stock in such quarter,
or (ii) 2% of the Stated Amount (as defined below) per share. Dividends payable
in respect of outstanding shares of Series A Preferred shall begin to accrue and
compound quarterly (by virtue of the increase to the Stated Amount per share in
accordance with Section 1(b) hereof) on the last day of each of November,
February, May and August in each year (each such date being a "Quarterly
Dividend Accrual Date") commencing in respect of each outstanding share of
Series A Preferred on the first Quarterly Dividend Accrual Date occurring on or
after the date that the first share of Preferred Stock is issued (the "Original
Issuance Date"), and continuing up to and including the last Quarterly Dividend
Accrual Date occurring on or prior to the fifth anniversary of the Original
Issuance Date (the "Final Quarterly Dividend Accrual Date"). For purposes
hereof, the Stated Amount shall mean $100 per share, as adjusted pursuant to
Section 1(b).
(b) The dividend set forth in Section 1(a) hereof shall be not be payable
in cash, but shall be payable by an increase, effective on each Quarterly
Dividend Accrual Date, in the Stated Amount Per Share equal to all dividends
which have accumulated on each outstanding share of Series A Preferred during
the quarterly period ending on the Quarterly Dividend Accrual Date (or for such
shorter period beginning on the date of issuance in the case of the initial
Quarterly Dividend Accrual Date).
(c) With respect to periods after the Final Quarterly Dividend Accrual
Date, the holders of shares of Series A Preferred shall be entitled to receive,
on the last day of such fiscal quarter and each fiscal quarter thereafter (each
such date, a "Cash Dividend Payment Date") out of funds legally available for
such purpose, cash dividends in an amount equal to the greater of: (i) dividends
which would have been payable to such holders of shares of Series A Preferred in
such quarter had such holders converted such shares of Series A Preferred into
Common Stock immediately prior to the record date of any dividend declared on
the Common Stock in such quarter, or (ii) 2% of the Stated Amount then in
effect. Such dividends shall be cumulative and shall accrue from and after each
Cash Dividend Payment Date whether or not declared by the Board of Directors and
whether or not there are any funds of the Corporation legally available for the
payment of dividends. Accrued but unpaid dividends shall not bear interest.
(d) The Board of Directors of the Corporation may fix a record date for the
determination of holders of Series A Preferred entitled to receive payment of a
dividend thereon pursuant to Section 1(a) or Section 1(c) hereof, which record
date shall be no more than sixty (60) days prior to the date fixed for the
payment thereof. All cash payments shall be made in such coin or currency of the
United States of America as at the time of payment is legal tender for payment
of public and private debts.
(e) As long as any shares of Series A Preferred shall remain outstanding,
in no event shall any dividend be declared or paid upon, nor shall any
distribution be made upon, any capital stock of the Corporation other than the
Series A Preferred ("Junior Capital Stock"), including the Common Stock, other
than a dividend or distribution payable solely in shares of Common Stock, nor
shall any Junior Capital Stock be purchased or redeemed by the Corporation, nor
shall any monies be paid to or made available for a sinking fund for the
purchase or redemption of shares of any Junior Capital Stock, unless, in each
such case, (i) full cumulative dividends payable pursuant to Section 1(c) hereof
on the
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outstanding shares of Series A Preferred have been declared and paid and (ii)
any arrears or defaults in any redemption of shares of Series A Preferred shall
have been cured.
2. Protective Provisions
So long as at least 500,000 shares of Series A Preferred shall be
outstanding and unless the consent or approval of a greater number of shares
shall then be required by law, without first obtaining the consent or approval
of the holders of a majority of the number of then-outstanding shares of Series
A Preferred Stock, given in person or by proxy at a meeting at which the holders
of such shares shall be entitled to vote separately as a class, or by written
consent, the Corporation shall not:
(a) authorize or create any class or series, or any shares of any
class or series, of capital stock of the Corporation having any preference
or priority (either as to dividends or upon redemption, liquidation,
dissolution, or winding up) over the Series A Preferred ("Senior Stock");
(b) authorize or create any class or series, or any shares of any
class or series, of capital stock of the Corporation ranking on parity
(either as to dividends or upon redemption, liquidation, dissolution or
winding up) with the Series A Preferred ("Parity Stock"); or
(c) reclassify, convert or exchange any shares of any capital stock of
the Corporation into shares of Senior Stock or Parity Stock;
(d) authorize any security exchangeable for, convertible into, or
evidencing the right to purchase any shares of Senior Stock or Parity
Stock;
(e) amend, alter, repeal or waive any provision of the Corporation's
Certificate of Incorporation, as it may be amended from time to time, or
the Corporation's By-Laws, as they may be amended from time to time, to
alter or change the powers, designations, preferences, rights and
qualifications, limitations or restrictions of Series A Preferred Stock;
(f) redeem or repurchase any, shares of Junior Capital Stock, other
than from time to time during the period in which shares of Series A
Preferred Stock are outstanding, redemptions or repurchases of Junior Stock
held by management of the Corporation in connection with termination of
employment, retirement and similar circumstances; or
(g) increase or decrease the number of authorized shares of Preferred
Stock, Common Stock or any other capital stock of the Company.
3. Redemption
(a) Subject to the provisions of any credit agreement, loan agreement or
indenture entered into by the Corporation, the Corporation may, at any time
after the ninth anniversary of the original Issuance Date, redeem, out of funds
legally available therefor, all, but not less than all, outstanding shares of
Series A Preferred Stock by paying for each share of Series A Preferred an
amount in cash equal to the Stated Amount then in effect plus the amount of any
accumulated but unpaid cash dividends as of the Redemption Date (as defined
below).
(b) Notice of any redemption of shares of Series A Preferred pursuant to
Section 3(a) (the "Redemption Notice") shall be mailed not less than 60 days
prior to the date fixed for redemption to each holder of shares of Series A
Preferred to be redeemed, at such holder's address as it appears on the transfer
books of the Corporation, notifying each such holder of the redemption to be
effected and specifying the redemption date (the "Redemption Date"), redemption
price (the "Redemption Price"), the place at which payment may be obtained and
requesting each such holder to surrender to the Corporation, in the manner and
at the place designated, his certificate or certificates representing the shares
of Series A Preferred to be redeemed. On or after the Redemption Date, each
holder of Series A Preferred who has not previously elected to convert its
shares of Series A Preferred into Common Stock pursuant to Section 5 hereof
shall surrender to the Corporation the certificate or certificates representing
such shares, in the manner and at the place designated in the Redemption Notice,
and thereupon the Redemption Price of such shares shall be payable to the order
of the person whose name appears on such
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certificate or certificates as the owner thereof and each surrendered
certificate shall be cancelled. In order to facilitate the redemption of shares
of Series A Preferred, the Board may fix a record date for the determination of
the holders of shares of Series A Preferred to be redeemed, not more than 60
days or less than 10 days prior to the date fixed for such redemption.
(c) From and after any Redemption Date, unless there shall have been a
default in payment of the Redemption Price, all rights of the holders of shares
of Series A Preferred shall cease with respect to such shares, and such shares
shall not thereafter be transferred on the books of the Corporation or be deemed
to be outstanding for any purpose whatsoever.
(d) On or prior to any Redemption Date, the Corporation shall deposit the
aggregate Redemption Price of all shares of Series A Preferred with a bank or
trust corporation having aggregate capital and surplus in excess of $100,000,000
as a trust fund for the benefit of the respective holders of the shares of
Series A Preferred not yet redeemed, with irrevocable instructions and authority
to the bank or trust corporation to pay the Redemption Price for such shares to
their respective holders on or after the Redemption Date upon receipt of
notification from the Corporation that such holder has surrendered his share
certificate to the Corporation pursuant to section 3(b) above. As of the
Redemption Date, the deposit shall constitute full payment of the shares to
their holders, and from and after the Redemption Date the shares so called for
redemption shall be redeemed and deemed to be no longer outstanding, and the
holders thereof shall cease to be stockholders with respect to such shares and
shall have no rights with respect thereto except the right to receive from the
bank or trust corporation payment of the Redemption Price of the shares, without
interest, upon surrender of certificates therefor. Such instructions shall also
provide that any moneys deposited by the Corporation pursuant to this Section
3(d) for the redemption of shares thereafter converted into shares of the
Corporation's Common Stock pursuant to Section 5 hereof prior to the Redemption
Date shall be returned to the Corporation forthwith upon such conversion. The
balance of any moneys deposited by the Corporation pursuant to this Section 3(d)
remaining unclaimed at the expiration of two (2) years following the Redemption
Date shall thereafter be returned to the Corporation upon its request expressed
in a resolution of the Board of Directors.
4. Liquidation, Dissolution or Winding Up
(a) In the event of any voluntary or involuntary liquidation, dissolution
or winding up of the Corporation, the holders of shares of Series A Preferred
then outstanding shall be entitled to be paid out of the assets of the
Corporation available for distribution to its stockholders, before any payment
shall be made to the holders of any shares of Junior Capital Stock by reason of
their ownership thereof, an amount (the "Liquidation Preference") equal to the
greater of (i) the amount the holders of Series A Preferred would have received
had they converted their shares of Preferred Stock into Common Stock, in
accordance with the provisions of Section 5 hereof, immediately prior to such
liquidation, dissolution or winding up and (ii) the Stated Amount then in effect
plus (A) if such liquidation, dissolution or winding up occurs prior to the
Final Quarterly Dividend Accrual Date, the increase in the Stated Amount which
would have occurred on the Quarterly Dividend Accrual Date next following such
liquidation, dissolution or winding up, pro rated to the date of such
liquidation, dissolution or winding up or (B) if such liquidation, dissolution
or winding up occurs after the Final Quarterly Dividend Accrual Date, the amount
of any accumulated but unpaid cash dividends as of the date of such event. If
upon any such liquidation, dissolution or winding up of the Corporation the
remaining assets of the Corporation available for distribution to its
stockholders shall be insufficient to pay the holders of shares of Series A
Preferred the full amount to which they shall be entitled pursuant to this
Section 4(a), the holders of shares of Series A Preferred, and any other shares
ranking on a parity therewith, shall share ratably in any distribution of the
remaining assets and funds of the Corporation in proportion to the respective
amounts which would otherwise be payable in respect of the shares of Series A
Preferred held by them upon such distribution if all amounts payable on or with
respect to such shares were paid in full.
(b) After the payment of all amounts required to be paid pursuant to
Section 4(a) to the holders of shares of Series A Preferred, and any other
shares ranking on a parity therewith, upon the dissolution, liquidation or
winding up of the Corporation, the holders of shares of Junior Capital Stock
then
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outstanding shall share in any distribution of the remaining assets and funds of
the Corporation in the manner provided by law, in the Restated Certificate of
Incorporation of the Corporation, as amended, or as provided in any pertinent
Certificate of Designations of the Corporation, as the case may be.
(c) For purposes of this Section 4, (i) any acquisition of the Corporation
by means of a merger or other form of corporate reorganization in which
outstanding shares of the Corporation are exchanged for securities or other
consideration issued, or caused to be issued, by the acquiring corporation or
its subsidiary (other than a mere reincorporation transaction), (ii) any other
transaction or series of transactions which result in the voting securities of
the Company outstanding immediately prior thereto representing less than 50% of
the combined voting power of the Corporation immediately after such transaction
or (iii) any sale of all or substantially all of the assets of the Corporation
other than to a subsidiary of the Corporation, shall be treated as a
liquidation, dissolution or winding up of the Corporation and shall entitle the
holders of Preferred Stock to receive at the closing of such transaction the
Liquidation Preference.
5. Conversion
(a) Subject to the terms and conditions of this Section 5, the holder of
any share or shares of Series A Preferred shall have the right, at his, her or
its option at any time, to convert any such shares of Series A Preferred into
such number of fully paid and nonassessable whole shares of Common Stock as is
obtained by dividing (i) the Stated Amount per share then in effect plus (A) if
such conversion occurs prior to the Final Quarterly Dividend Accrual Date, the
increase in the Stated Amount which would have occurred on the Quarterly
Dividend Accrual Date next following such conversion, pro rated to the date of
such conversion or (B) if such conversion occurs after the Final Quarterly
Dividend Accrual Date, the amount of any accumulated but unpaid cash dividends
as of the date of such conversion, by (ii) the conversion price of $26.25 per
share, or, if there has been an adjustment of the conversion price, by the
conversion price as last adjusted and in effect at the date any share or shares
of Series A Preferred are surrendered for conversion (such price, or such price
as last adjusted, being referred to herein as the "Conversion Price"). Such
right of conversion shall be exercised by the holder thereof by giving written
notice that the holder elects to convert a stated number of shares of Series A
Preferred into Common Stock and by surrender of a certificate or certificates
for the shares so to be converted to the Corporation at its principal office (or
such other office or agency of the Corporation as the Corporation may designate
by notice in writing to the holder or holders of the Series A Preferred) at any
time during its usual business hours on the date set forth in such notice,
together with a statement of the name or names (with address), subject to
compliance with applicable laws to the extent such designation shall involve a
transfer, in which the certificate or certificates for shares of Common Stock
shall be issued.
(b) Promptly after the receipt by the Corporation of the written notice
referred to in Section 5(a) above and surrender of the certificate or
certificates for the share or shares of the Series A Preferred to be converted,
the Corporation shall issue and deliver, or cause to be issued and delivered, to
the holder, registered in such name or names as such holder may direct, subject
to compliance with applicable laws to the extent such designation shall involve
a transfer, a certificate or certificates for the number of whole shares of
Common Stock issuable upon the conversion of such share or shares of Series A
Preferred. To the extent permitted by law, such conversion shall be deemed to
have been effected and the Conversion Price shall be determined as of the close
of business on the date on which such written notice shall have been received by
the Corporation and the certificate or certificates for such share or shares
shall have been surrendered as aforesaid, and at such time the rights of the
holder of such shares or shares of Series A Preferred shall cease, and the
person or persons in whose name or names any certificate or certificates for
shares of Common Stock shall be issuable upon such conversion shall be deemed to
have become the holder or holders of record of the shares represented thereby.
(c) (i) No fractional shares shall be issued upon conversion of the Series
A Preferred into Common Stock and the number of shares of Common Stock to be
issued shall be rounded to the nearest whole share. If any fractional interest
in a share of Common Stock would, except for the provisions of this Section
5(c), be deliverable upon any such conversion, the Corporation, in lieu of
delivering the fractional
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share thereof, shall pay to the holder surrendering the Preferred Stock for
conversion an amount in cash equal to the current fair market value of such
fractional interest based upon the closing price of the Common Stock on the
NASDAQ National Market or, any other national securities exchange on which such
Common Stock is then traded, on the trading day prior to the date of the notice
of conversion, or if such Common Stock is not then traded on a national
securities exchange, as determined in good faith by the Board of Directors of
the Corporation.
(ii) In case the number of shares of Series A Preferred represented by the
certificate or certificates surrendered pursuant to Section 5(a) exceeds the
number of shares converted, the Corporation shall, upon such conversion, execute
and deliver to the holder thereof, at the expense of the Corporation, a new
certificate or certificates for the number of shares of Series A Preferred Stock
represented by the certificate or certificates surrendered which are not to be
converted.
(d) In the event that the Corporation shall declare or pay, without
consideration, any dividend or other distribution on the then outstanding shares
of Common Stock payable in Common Stock or in any right to acquire Common Stock
for no consideration (other than any dividend or distribution made pursuant to
any rights agreement entered into by the Company after the date hereof, the
terms of which provide for a dividend or distribution to be made upon the
occurrence of events substantially similar to those events which would have
resulted in a dividend or distribution under the terms of that certain Rights
Agreement between the Company and The First National Bank of Chicago, as Rights
Agent, dated as of August 3, 1989, as in effect immediately prior to the date
hereof (any such dividend or distribution, a "Rights Plan Distribution")), or
shall effect a subdivision of the outstanding shares of Common Stock into a
greater number of shares of Common Stock (by stock split, reclassification or
otherwise than by payment of a dividend in Common Stock or in any right to
acquire Common Stock), or in the event that the then outstanding shares of
Common Stock shall be combined or consolidated, by reclassification or
otherwise, into a lesser number of shares of Common Stock, then the applicable
Conversion Price for the Series A Preferred in effect immediately prior to such
event shall, concurrently with the effectiveness of such event, be
proportionately decreased or increased, as appropriate. In the event that the
Corporation shall declare or pay, without consideration, any dividend on the
then outstanding shares of Common Stock payable in any right to acquire Common
Stock for no consideration, then the Corporation shall be deemed to have made a
dividend payable in Common Stock in an amount of shares equal to the maximum
number of shares issuable upon exercise of such rights to acquire Common Stock.
(e) In the event that the Corporation shall declare or pay, without
consideration, any dividend or other distribution on the then outstanding shares
of Common Stock payable in securities of the Corporation other than Common Stock
or in any right to acquire securities of the Corporation other than Common Stock
for no consideration (other than a Rights Plan Distribution) and other than as
otherwise adjusted in this Section 5, then in each such event provision shall be
made so that the holders of the Series A Preferred shall be entitled to receive
a proportionate share of any such dividend or distribution as though they were
the holders of the number of shares of Common Stock of the corporation into
which their shares of Series A Preferred are convertible as of the record date
fixed for the determination of the holders of Common Stock of the corporation
entitled to receive such dividend or other distribution.
(f) If the Common Stock issuable upon conversion of the Series A Preferred
shall be changed into the same or a different number of shares of any other
class or classes of stock, whether by capital reorganization, reclassification
or otherwise (other than a subdivision or combination of shares provided for in
Section 5(d) above or a merger or other reorganization referred to in Section
4(c) above), the Conversion Price then in effect shall, concurrently with the
effectiveness of such reorganization or reclassification, be proportionately
adjusted so that the Series A Preferred shall be convertible into, in lieu of
the number of shares of Common Stock which the holders would otherwise have been
entitled to receive, a number of shares of such other class of classes of stock
equivalent to the number of shares of Common Stock that would have been subject
to receipt by the holders upon conversion of the Series A Preferred immediately
before that change. In any such case, appropriate adjustment shall be made in
the application of the provisions of this Section 5 with respect to the rights
of the holders of Series A Preferred after the capital reorganization,
reclassification or other action to the end that the provisions of
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this Section 5 (including adjustment of the Conversion Price then in effect and
the number of shares issuable upon conversion of the Series A Preferred) shall
be applicable after such action and be as nearly equivalent as possible.
(g) Upon any adjustment of the Conversion Price, then and in each such case
the Corporation shall give written notice thereof, by first class mail, postage
prepaid, addressed to each holder of shares of Series A Preferred at the address
of such holder as shown on the books of the Corporation (or its transfer agent,
if any), which notice shall state the Conversion Price resulting from such
adjustment, setting forth in reasonable detail the method of calculation and the
facts upon which such calculation is based.
(h) In case at any time:
(i) the Corporation shall declare any dividend upon its Common stock
or make any other distribution to the holders of its Common Stock;
(ii) the Corporation shall offer for subscription pro rata to the
holders of its Common Stock any additional shares of stock of any class or
other rights;
(iii) there shall be any reorganization, recapitalization or
reclassification of the capital stock of the Corporation (a
"Reorganization") or the Corporation shall enter into an agreement with
respect to any transaction described in Section 4(c) hereof (a "Change of
Control Transaction"); or
(iv) there shall be a voluntary or involuntary dissolution,
liquidation or winding up of the Corporation;
then, in any one or more of said cases, the Corporation shall give, by first
class mail, postage prepaid, addressed to each holder of any shares of Series A
Preferred at the address of such holder as shown on the books of the Corporation
(or its transfer agent, if any), (A) at least 15 days' prior written notice of
the date on which the books of the Corporation (or its transfer agent) shall
close or a record shall be taken for such dividend, distribution or subscription
rights or for determining rights to vote in respect of any such Reorganization
or Change of Control Transaction, and (B) in the case of any such Reorganization
or Change of Control Transaction, at least 15 days' prior written notice of the
date when the same shall take place. Such notice in accordance with the
foregoing clause (A) shall also specify, in the case of any such dividend,
distribution or subscription rights, the date on which the holders of Common
Stock shall be entitled thereto, and such notice in accordance with the
foregoing clause (B) shall also specify the date on which the holders of Common
Stock shall be entitled to exchange their Common Stock for securities or other
property deliverable upon such Reorganization or Change of Control Transaction,
as the case may be.
(i) All outstanding shares of Convertible Preferred Stock shall, at the
option of the Corporation, be automatically converted into Common Stock, in
accordance with the provisions of this Section 5, if at any time the number of
outstanding shares of Series A Preferred is less than or equal to 250,000.
(j) The Corporation will at all times reserve and keep available out of its
authorized but unissued Common Stock, solely for the purpose of issuance upon
the conversion of the Series A Preferred as herein provided, such number of
shares of Common Stock as shall then be issuable upon the conversion of all
outstanding shares of Series A Preferred. All shares of Common Stock which shall
be so issued shall be duly and validly issued and fully paid and nonassessable
and free from all taxes, liens and charges arising out of or by reason of the
issue thereof, and, without limiting the generality of the foregoing, the
Corporation covenants that it will from time to time take all such action as may
be requisite to assure that the par value per share of the Common Stock is at
all times equal to or less than the effective Conversion Price. The Corporation
will take all such action within its control as may be necessary on its part to
assure that all such shares of Common Stock may be so issued without violation
of any applicable law or regulation, or of any requirements of any national
securities exchange upon which the Common Stock of the Corporation may be
listed.
(k) Shares of Series A Preferred that are converted into shares of Common
Stock as provided herein shall not be reissued.
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(l) The issuance of certificates for shares of Common Stock upon conversion
of the Series A Preferred Stock shall be made without charge to the holders
thereof for any issuance tax in respect thereof, provided that the Corporation
shall not be required to pay any tax which may be payable in respect of any
transfer involved in the issuance and delivery of any certificate in a name
other than that of the holder of Series A Preferred which is being converted.
(m) The Corporation will not, by amendment of its Certificate of
Incorporation or through any reorganization, transfer of assets, consolidation,
merger, dissolution, issue or sale of securities or any other voluntary action,
avoid or seek to avoid the observance or performance of any of the terms to be
observed or performed hereunder by the corporation, but will at all times in
good faith assist in the carrying out of all the provisions of this Section 5
and in the taking of all such action as may be necessary or appropriate in order
to protect the conversion rights of the holders of the Series A Preferred
against impairment.
6. Voting Except as otherwise provided by law or in Section 2 above, the
holders of the Series A Preferred shall vote together with the holders of Common
Stock on all matters to be voted on by the stockholders of the Corporation, and
each holder of Series A Preferred shall be entitled to one vote for each whole
share of Common Stock that would be issuable to such holder upon the conversion
of all the shares of Series A Preferred held by such holder on the record date
for the determination of stockholders entitled to vote.
SIXTH: The following provisions are inserted for the management of the
business and the conduct of the affairs of the Corporation, and for further
definition, limitation and regulation of the powers of the Corporation and of
its directors and stockholders:
(1) The business and affairs of the Corporation shall be managed by or
under the direction of the Board of Directors.
(2) The directors shall have concurrent power with the stock holders to
make, alter, amend, change, add to or repeal the By-Laws of the Corporation.
(3) The number of directors of the Corporation shall be as from time to
time fixed by, or in the manner provided in, the By-Laws of the Corporation.
Election of directors need not be by written ballot unless the By-Laws so
provide.
(4) No director shall be personally liable to the Corporation or any of its
stockholders for monetary damages for breach of fiduciary duty as a director,
except for liability (i) for any breach of the director's duty of loyalty to the
Corporation or its stockholders, (ii) for acts or omissions not in good faith or
which involve intentional misconduct or a knowing violation of law, (iii)
pursuant to Section 174 of the Delaware General Corporation Law or (iv) for any
transaction from which the director derived an improper personal benefit. Any
repeal or modification of this Article SIXTH by the stockholders of the
Corporation shall not adversely affect any right or protection of a director of
the Corporation existing at the time of such repeal or modification with respect
to acts or omissions occurring prior to such repeal or modification.
(5) In addition to the powers and authority hereinbefore or by statute
expressly conferred upon them, the directors are hereby empowered to exercise
all such powers and do all such acts and things as may be exercised or done by
the Corporation, subject, nevertheless, to the provisions of the GCL, this
Certificate of Incorporation, and any By-Laws adopted by the stockholders;
provided, however, that no ByLaws hereafter adopted by the stockholders shall
invalidate any prior act of the directors which would have been valid if such
By-Laws had not been adopted.
SEVENTH: Meetings of stockholders may be held within or without the State
of Delaware, as the By-Laws may provide. The books of the Corporation may be
kept (subject to any provision contained in the GCL) outside the State of
Delaware at such place or places as may be designated from time to time by the
Board of Directors or in the By-Laws of the Corporation.
EIGHTH: The Corporation reserves the right to amend, alter, change or
repeal any provision contained in this Certificate of Incorporation, in the
manner now or hereafter prescribed by statute, and all rights conferred upon
stockholders herein are granted subject to this reservation.
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I, THE UNDERSIGNED, being the President of the Corporation hereby declare
and certify that this is my act and deed and the facts herein stated are true,
and accordingly have hereunto set my hand this day of , 1999.
--------------------------------------
Name:
Title:
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ANNEX D
JUNO LIGHTING, INC.
1999 STOCK AWARD AND INCENTIVE PLAN
<PAGE> 143
JUNO LIGHTING, INC.
1999 STOCK AWARD AND INCENTIVE PLAN
1. PURPOSE; TYPES OF AWARDS; CONSTRUCTION.
The purpose of the Juno Lighting, Inc. 1999 Stock Award and Incentive Plan
(the "Plan") is to afford an incentive to directors (including non-employee
directors), selected employees and independent contractors of Juno Lighting,
Inc. (the "Company"), or any Subsidiary or Affiliate which now exists or
hereafter is organized or acquired, to acquire a proprietary interest in the
Company, to continue as directors, employees or independent contractors, as the
case may be, to increase their efforts on behalf of the Company and to promote
the success of the Company's business in the interest of its stockholders.
Pursuant to Section 6 of the Plan, there may be granted Stock Options (including
"incentive stock options" and "nonqualified stock options"), stock appreciation
rights and limited stock appreciation rights (either in connection with options
granted under the Plan or independently of options), restricted stock,
restricted stock units, dividend equivalents, performance shares and other
stock- or cash-based awards. The Plan also provides the authority to make loans
to purchase shares of common stock of the Company. The Plan is designed to
comply with the requirements of Regulation T (12 C.F.R. Section 220) and
Regulation U (12 C.F.R. Section 221) and the requirements for "performance-based
compensation" under Section 162(m) of the Code and the conditions for exemption
from short-swing profit recovery rules under Rule 16b-3 of the Exchange Act, and
shall be interpreted in a manner consistent with the requirements thereof.
2. DEFINITIONS.
For purposes of the Plan, the following terms shall be defined as set forth
below:
(a) "Affiliate" means any entity if, at the time of granting of an
Award or a Loan, (i) the Company, directly or indirectly, owns at least 50%
of the combined voting power of all classes of stock of such entity or at
least 50% of the ownership interests in such entity or (ii) such entity,
directly or indirectly, owns at least 50% of the combined voting power of
all classes of stock of the Company.
(b) "Award" means any Option, SAR (including a Limited SAR),
Restricted Stock, Restricted Stock Unit, Dividend Equivalent, Performance
Share or Other Stock-Based Award or Other Cash-Based Award granted under
the Plan.
(c) "Award Agreement" means any written agreement, contract, or other
instrument or document evidencing an Award.
(d) "Beneficiary" means the person, persons, trust or trusts which
have been designated by a Grantee in his or her most recent written
beneficiary designation filed with the Company to receive the benefits
specified under the Plan upon his or her death, or, if there is no
designated Beneficiary or surviving designated Beneficiary, then the
person, persons, trust or trusts entitled by will or the laws of descent
and distribution to receive such benefits.
(e) "Board" means the Board of Directors of the Company.
(f) "Change in Control" means a change in control of the Company which
will be deemed to have occurred if:
(i) any "person," as such term is used in Section 3(a)(9) of the
Exchange Act, as modified and used in Sections 13(d) and 14(d) thereof
except that such term shall not include (A) the Company or any of its
subsidiaries, (B) any trustee or other fiduciary holding securities
under an employee benefit plan of the Company or any of its affiliates,
(C) an underwriter temporarily holding securities pursuant to an
offering of such securities, (D) any corporation owned, directly or
indirectly, by the stockholders of the Company in substantially the same
proportions as their ownership of Stock, or (E) any person or group as
used in Rule 13d-1(b) under the Exchange
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Act, is or becomes the Beneficial Owner, as such term is defined in Rule
13d-3 under the Exchange Act, directly or indirectly, of securities of
the Company (not including in the securities beneficially owned by such
Person any securities acquired directly from the Company or its
affiliates other than in connection with the acquisition by the Company
or its affiliates of a business) representing 50% or more of the
combined voting power of the Company's then outstanding securities;
(ii) there is consummated a merger or consolidation of the Company
with any other corporation, other than (A) a merger or consolidation
which would result in the voting securities of the Company outstanding
immediately prior thereto continuing to represent (either by remaining
outstanding or by being converted into voting securities of the
surviving entity or any parent thereof) in combination with the
ownership of any trustee or other fiduciary holding securities under an
employee benefit plan of the Company or any subsidiary of the Company,
at least 40% of the combined voting power of the securities of the
Company or such surviving entity or any parent thereof outstanding
immediately after such merger or consolidation, or (B) a merger or
consolidation effected to implement a recapitalization of the Company
(or similar transaction) in which no person (as defined above) is or
becomes the beneficial owner, directly or indirectly, of securities of
of the Company (not including in the securities beneficially owned by
such person any securities acquired directly from the Company or its
affiliates other than in connection with the acquisition by the Company
or its affiliates of a business) representing 60% or more of the
combined voting power of the Company's then outstanding securities; or
(iii) the stockholders of the Company approve a plan of complete
liquidation or dissolution of the Company or there is consummated an
agreement for the sale or disposition by the Company of all or
substantially all of the Company's assets (or any transaction having a
similar effect) other than a sale or disposition by the Company of all
or substantially all of the Company's assets to an entity, at least 40%
of the combined voting power of the voting securities of which are owned
by stockholders of the Company in substantially the same proportions as
their owner ship of the Company immediately prior to such sale.
(g) "Change in Control Price" means the higher of (i) the highest
price per share paid in any transaction constituting a Change in Control or
(ii) the highest Fair Market Value per share at any time during the 60-day
period preceding or following a Change in Control.
(h) "Code" means the Internal Revenue Code of 1986, as amended from
time to time.
(i) "Committee" means the Board or the commit tee established by the
Board to administer the Plan, the composition of which shall at all times
satisfy the provisions of Rule 16b-3.
(j) "Company" means Juno Lighting, Inc., a corporation organized under
the laws of the State of Delaware, or any successor corporation.
(k) "Dividend Equivalent" means a right, granted to a Grantee under
Section 6(g), to receive cash, Stock, or other property equal in value to
dividends paid with respect to a specified number of shares of Stock.
Dividend Equivalents may be awarded on a free-standing basis or in
connection with another Award, and may be paid currently or on a deferred
basis.
(l) "Exchange Act" means the Securities Exchange Act of 1934, as
amended from time to time, and as now or hereafter construed, interpreted
and applied by regulations, rulings and cases.
(m) "Fair Market Value" means, with respect to Stock or other
property, the fair market value of such Stock or other property determined
by such methods or procedures as shall be established from time to time by
the Committee. Unless otherwise determined by the Committee in good faith,
the per share Fair Market Value of Stock as of a particular date shall mean
(i) the closing sales price per share of Stock on the national securities
exchange on which the Stock is principally traded, for the last preceding
date on which there was a sale of such Stock on such exchange, or (ii) if
the shares of Stock are then traded in an over-the-counter market, the
average of the closing bid and
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asked prices for the shares of Stock in such over-the-counter market for
the last preceding date on which there was a sale of such Stock in such
market, or (iii) if the shares of Stock are not then listed on a national
securities exchange or traded in an over-the-counter market, such value as
the Committee, in its sole discretion, shall determine.
(n) "Grantee" means a person who, as an employee or independent
contractor of the Company, a Subsidiary or an Affiliate, has been granted
an Award or Loan under the Plan.
(o) "ISO" means any Option intended to be and designated as an
incentive stock option within the meaning of Section 422 of the Code.
(p) "Limited SAR" means a right granted pursuant to Section 6(c) which
shall, in general, be automatically exercised for cash upon a Change in
Control.
(q) "Loan" means the proceeds from the Company borrowed by a Plan
participant under Section 8 of the Plan.
(r) "NQSO" means any Option that is designated as a nonqualified stock
option.
(s) "Option" means a right, granted to a Grantee under Section 6(b),
to purchase shares of Stock. An Option may be either an ISO or an NQSO;
provided that, ISO's may be granted only to employees of the Company, a
Subsidiary or an Affiliate.
(t) "Other Cash-Based Award" means cash awarded under Section 6(h),
including cash awarded as a bonus or upon the attainment of specified
performance criteria or otherwise as permitted under the Plan.
(u) "Other Stock-Based Award" means a right or other interest granted
to a Grantee under Section 6(h) that may be denominated or payable in,
valued in whole or in part by reference to, or otherwise based on, or
related to, Stock, including, but not limited to (1) unrestricted Stock
awarded as a bonus or upon the attainment of specified performance criteria
or otherwise as permitted under the Plan, and (2) a right granted to a
Grantee to acquire Stock from the Company for cash and/or a promissory note
containing terms and conditions prescribed by the Committee.
(v) "Performance Share" means an Award of shares of Stock to a Grantee
under Section 6(h) that is subject to restrictions based upon the
attainment of specified performance criteria.
(w) "Plan" means this Juno Lighting, Inc. 1999 Stock Award and
Incentive Plan, as amended from time to time.
(x) "Restricted Stock" means an Award of shares of Stock to a Grantee
under Section 6(d) that may be subject to certain restrictions and to a
risk of forfeiture.
(y) "Restricted Stock Unit" means a right granted to a Grantee under
Section 6(e) to receive Stock or cash at the end of a specified deferral
period, which right may be conditioned on the satisfaction of specified
performance or other criteria.
(z) "Rule 16b-3" means Rule 16b-3, as from time to time in effect
promulgated by the Securities and Exchange Commission under Section 16 of
the Exchange Act, including any successor to such Rule.
(aa) "Stock" means shares of the common stock, par value $.001 per
share, of the Company.
(ab) "SAR" or "Stock Appreciation Right" means the right, granted to a
Grantee under Section 6(c), to be paid an amount measured by the
appreciation in the Fair Market Value of Stock from the date of grant to
the date of exercise of the right, with payment to be made in cash, Stock,
or property as specified in the Award or determined by the Committee.
(ac) "Securities Act" means the Securities Act of 1933, as amended
from time to time, and as now or hereafter construed, interpreted and
applied by regulations, rulings and cases.
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(ad) "Subsidiary" means any corporation in an unbroken chain of
corporations beginning with the Company if, at the time of granting of an
Award, each of the corporations (other than the last corporation in the
unbroken chain) owns stock possessing 50% or more of the total combined
voting power of all classes of stock in one of the other corporations in
the chain.
3. Administration.
The Plan shall be administered by the Committee. The Committee shall have
the authority in its discretion, subject to and not inconsistent with the
express provisions of the Plan, to administer the Plan and to exercise all the
powers and authorities either specifically granted to it under the Plan or
necessary or advisable in the administration of the Plan, including, without
limitation, the authority to grant Awards and make Loans; to determine the
persons to whom and the time or times at which Awards shall be granted and Loans
shall be made; to determine the type and number of Awards to be granted and the
amount of any Loan, the number of shares of Stock to which an Award may relate
and the terms, conditions, restrictions and performance criteria relating to any
Award or Loan; and to determine whether, to what extent, and under what
circumstances an Award may be settled, cancelled, forfeited, exchanged, or
surrendered; to reduce the exercise price of any Stock Option to the then Fair
Market Value, if the Fair Market Value of the Stock covered by such Stock Option
has declined since the date the Stock Option was granted; to make adjustments in
the terms and conditions of, and the criteria and performance objectives (if
any) included in, Awards and Loans in recognition of unusual or non-recurring
events affecting the Company or any Subsidiary or Affiliate or the financial
statements of the Company or any Subsidiary or Affiliate, or in response to
changes in applicable laws, regulations, or accounting principles; to designate
Affiliates; to construe and interpret the Plan and any Award or Loan; to
prescribe, amend and rescind rules and regulations relating to the Plan; to
determine the terms and provisions of the Award Agreements and any promissory
note or agreement related to any Loan (which need not be identical for each
Grantee); and to make all other determinations deemed necessary or advisable for
the administration of the Plan.
The Committee may appoint a chairperson and a secretary and may make such
rules and regulations for the conduct of its business as it shall deem
advisable, and shall keep minutes of its meetings. All determinations of the
Committee shall be made by a majority of its members either present in person or
participating by conference telephone at a meeting or by written consent. The
Committee may delegate to one or more of its members or to one or more agents
such administrative duties as it may deem advisable, and the Committee or any
person to whom it has delegated duties as aforesaid may employ one or more
persons to render advice with respect to any responsibility the Committee or
such person may have under the Plan. All decisions, determinations and
interpretations of the Committee shall be final and binding on all persons,
including the Company, and any Subsidiary, Affiliate or Grantee (or any person
claiming any rights under the Plan from or through any Grantee) and any
stockholder.
No member of the Board or Committee shall be liable for any action taken or
determination made in good faith with respect to the Plan or any Award granted
or Loan made hereunder.
4. ELIGIBILITY.
Subject to the conditions set forth below, Awards and Loans may be granted
to directors, including non-employee directors, selected employees and
independent contractors of the Company and its present or future Subsidiaries
and Affiliates, in the discretion of the Committee. In determining the persons
to whom Awards and Loans shall be granted and the type of any Award or the
amount of any Loan (including the number of shares to be covered by such Award),
the Committee shall take into account such factors as the Committee shall deem
relevant in connection with accomplishing the purposes of the Plan.
5. STOCK SUBJECT TO THE PLAN.
The maximum number of shares of Stock reserved for the grant of Awards
under the Plan shall be [940,000] shares of Stock, subject to adjustment as
provided herein. No more than 40% of the total shares
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available for grant may be awarded to a single individual in a single year. Such
shares may, in whole or in part, be authorized but unissued shares or shares
that shall have been or may be reacquired by the Company in the open market, in
private transactions or otherwise. If any shares subject to an Award are
forfeited, cancelled, exchanged or surrendered or if an Award otherwise
terminates or expires without a distribution of shares to the Grantee, the
shares of Stock with respect to such Award shall, to the extent of any such
forfeiture, cancellation, exchange, surrender, termination or expiration, again
be available for Awards under the Plan; provided that, in the case of
forfeiture, cancellation, exchange or surrender of shares of Restricted Stock or
Restricted Stock Units with respect to which dividends or Dividend Equivalents
have been paid or accrued, the number of shares with respect to such Awards
shall not be available for Awards hereunder unless, in the case of shares with
respect to which dividends or Dividend Equivalents were accrued but unpaid, such
dividends and Dividend Equivalents are also forfeited, cancelled, exchanged or
surrendered. Upon the exercise of any Award granted in tandem with any other
Awards or awards, such related Awards or awards shall be cancelled to the extent
of the number of shares of Stock as to which the Award is exercised and,
notwithstanding the foregoing, such number of shares shall no longer be
available for Awards under the Plan.
In the event that the Committee shall determine that any dividend or other
distribution (whether in the form of cash, stock, or other property),
recapitalization, stock split, reverse split, reorganization, merger,
consolidation, spin-off, combination, repurchase, or share ex change, or other
similar corporate transaction or event, affects the Stock such that an
adjustment is appropriate in order to prevent dilution or enlargement of the
rights of Grantees under the Plan, then the Commit tee shall make such equitable
changes or adjustments as it deems necessary or appropriate to any or all of (i)
the number and kind of shares of Stock or other securities which may thereafter
be issued in connection with Awards, (ii) the number and kind of shares of Stock
or other securities issued or issuable in respect of outstanding Awards, and
(iii) the exercise price, grant price, or purchase price relating to any Award;
provided that, with respect to ISOs, such adjustment shall be made in accordance
with Section 424(h) of the Code.
6. SPECIFIC TERMS OF AWARDS.
(a) General. The term of each Award shall be for such period as may be
determined by the Committee. Subject to the terms of the Plan and any applicable
Award Agreement, payments to be made by the Company or a Subsidiary or Affiliate
upon the grant, maturation, or exercise of an Award may be made in such forms as
the Commit tee shall determine at the date of grant or thereafter, including,
without limitation, cash, Stock, or other property, and may be made in a single
payment or transfer, in installments, or on a deferred basis. The Commit tee may
make rules relating to installment or deferred payments with respect to Awards,
including the rate of interest to be credited with respect to such payments. In
addition to the foregoing, the Committee may impose on any Award or the exercise
thereof, at the date of grant or thereafter, such additional terms and
conditions, not inconsistent with the provisions of the Plan, as the Committee
shall determine.
(b) Options. The Committee is authorized to grant Options to Grantees on
the following terms and conditions:
(i) Type of Award. The Award Agreement evidencing the grant of an
Option under the Plan shall designate the Option as an ISO or an NQSO.
(ii) Exercise Price. The exercise price per share of Stock
purchasable under an Option shall be deter mined by the Committee; provided
that, in the case of an ISO, such exercise price shall be not less than the
Fair Market Value of a share on the date of grant of such Option, and in no
event shall the exercise price for the purchase of shares be less than par
value. The exercise price for Stock subject to an Option may be paid in
cash or by an exchange of Stock previously owned by the Grantee, or a
combination of both, in an amount having a combined value equal to such
exercise price. A Grantee may also elect to pay all or a portion of the
aggregate exercise price by having shares of Stock with a Fair Market Value
on the date of exercise equal to the aggregate exercise price
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withheld by the Company or sold by a broker-dealer under circumstances
meeting the requirements of 12 C.F.R. Section 220 or any successor thereof.
(iii) Term and Exercisability of Options. Unless otherwise provided
in an Award Agreement, the date on which the Committee adopts a resolution
expressly granting an Option shall be considered the day on which such
Option is granted. Options shall be exercisable over the exercise period
(which shall not exceed ten years from the date of grant), at such times
and upon such conditions as the Committee may determine, as reflected in
the Award Agreement; provided that, the Committee shall have the authority
to accelerate the exercisability of any outstanding Option at such time and
under such circumstances as it, in its sole discretion, deems appropriate.
An Option may be exercised to the extent of any or all full shares of Stock
as to which the Option has become exercisable, by giving written notice of
such exercise to the Committee or its designated agent.
(iv) Termination of Employment, etc. An Option may not be exercised
unless the Grantee is then in the employ of, or then maintains an
independent contractor relationship with, the Company or a Subsidiary or an
Affiliate (or a company or a parent or subsidiary company of such company
issuing or assuming the Option in a transaction to which Section 424(a) of
the Code applies), and unless the Grantee has remained continuously so
employed, or continuously maintained such relationship, since the date of
grant of the Option; provided that, the Award Agreement may contain
provisions extending the exercisability of Options, in the event of
specified terminations, to a date not later than the expiration date of
such Option.
(v) The Committee may require the voluntary surrender of all or a
portion of any Option granted under the Plan as a condition precedent to
the grant of a new Option. Subject to the provisions of the Plan, such new
Option shall be exercisable at the price, during such period and on such
other terms and conditions as are specified by the Committee at the time
the new Option is granted. Consistent with the provisions of Section
162(m), to the extent applicable, upon their surrender, Options shall be
canceled and the shares previously subject to such canceled Options shall
again be available for grants of Options and other Awards hereunder.
(vi) Other Provisions. Options may be subject to such other
conditions including, but not limited to, restrictions on transferability
of the shares acquired upon exercise of such Options, as the Committee may
prescribe in its discretion or as may be required by applicable law.
(c) SARs and Limited SARs. The Committee is authorized to grant SARs and
Limited SARs to Grantees on the following terms and conditions:
(i) In General. Unless the Committee deter mines otherwise, an SAR or
a Limited SAR (1) granted in tandem with an NQSO may be granted at the time
of grant of the related NQSO or at any time thereafter or (2) granted in
tandem with an ISO may only be granted at the time of grant of the related
ISO. An SAR or Limited SAR granted in tandem with an Option shall be
exercisable only to the extent the underlying Option is exercisable.
(ii) SARs. An SAR shall confer on the Grantee a right to receive an
amount with respect to each share subject thereto, upon exercise thereof,
equal to the excess of (1) the Fair Market Value of one share of Stock on
the date of exercise over (2) the grant price of the SAR (which in the case
of an SAR granted in tandem with an Option shall be equal to the exercise
price of the underlying Option, and which in the case of any other SAR
shall be such price as the Committee may determine).
(iii) Limited SARs. A Limited SAR shall confer on the Grantee a right
to receive with respect to each share subject thereto, automatically upon
the occurrence of a Change in Control, an amount equal in value to the
excess of (1) the Change in Control Price (in the case of a LSAR granted in
tandem with an ISO, the Fair Market Value), of one share of Stock on the
date of such Change in Control over (2) the grant price of the Limited SAR
(which in the case of a Limited SAR granted in tandem with an Option shall
be equal to the exercise price of the underlying Option, and which in the
case of any other Limited SAR shall be such price as the Committee
determines); provided that,
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in the case of a Limited SAR granted to a Grantee who is subject to the
reporting requirements of Section 16(a) of the Exchange Act (a "Section 16
Individual"), such Section 16 Individual shall only be entitled to receive
such amount if such Limited SAR has been outstanding for at least six (6)
months as of the date of the Change in Control.
(d) Restricted Stock. The Committee is authorized to grant Restricted
Stock to Grantees on the following terms and conditions:
(i) Issuance and Restrictions. Restricted Stock shall be subject to
such restrictions on transferability and other restrictions, if any, as the
Committee may impose at the date of grant or thereafter, which restrictions
may lapse separately or in combination at such times, under such
circumstances, in such installments, or otherwise, as the Committee may
determine. Such restrictions may include factors relating to the increase
in the value of the Stock or to individual or Company performance such as
the attainment of certain specified individual, divisional or Company-wide
performance goals, sales volume increases or increases in earnings per
share. Except to the extent restricted under the Award Agreement relating
to the Restricted Stock, a Grantee granted Restricted Stock shall have all
of the rights of a stockholder including, without limitation, the right to
vote Restricted Stock and the right to receive dividends thereon.
(ii) Forfeiture. Upon termination of employment with or service to
the Company, or upon termination of the independent contractor
relationship, as the case may be, during the applicable restriction period,
Restricted Stock and any accrued but unpaid dividends or Dividend
Equivalents that are at that time subject to restrictions shall be
forfeited; provided that, the Committee may provide, by rule or regulation
or in any Award Agreement, or may determine in any individual case, that
restrictions or forfeiture conditions relating to Restricted Stock will be
waived in whole or in part in the event of terminations resulting from
specified causes, and the Committee may in other cases waive in whole or in
part the forfeiture of Restricted Stock.
(iii) Certificates for Stock. Restricted Stock granted under the Plan
may be evidenced in such manner as the Committee shall determine. If
certificates representing Restricted Stock are registered in the name of
the Grantee, such certificates shall bear an appropriate legend referring
to the terms, conditions, and restrictions applicable to such Restricted
Stock, and the Company shall retain physical possession of the certificate.
(iv) Dividends. Dividends paid on Restricted Stock shall be either
paid at the dividend payment date, or deferred for payment to such date as
determined by the Committee, in cash or in shares of unrestricted Stock
having a Fair Market Value equal to the amount of such dividends. Stock
distributed in connection with a stock split or stock dividend, and other
property distributed as a dividend, shall be subject to restrictions and a
risk of forfeiture to the same extent as the Restricted Stock with respect
to which such Stock or other property has been distributed.
(e) Restricted Stock Units. The Committee is authorized to grant
Restricted Stock Units to Grantees, subject to the following terms and
conditions:
(i) Award and Restrictions. Delivery of Stock or cash, as determined
by the Committee, will occur upon expiration of the deferral period
specified for Restricted Stock Units by the Committee. In addition,
Restricted Stock Units shall be subject to such restrictions as the
Committee may impose, at the date of grant or thereafter, which
restrictions may lapse at the expiration of the deferral period or at
earlier or later specified times, separately or in combination, in
installments or otherwise, as the Committee may determine. Such
restrictions may include factors relating to the increase in the value of
the Stock or to individual or Company performance such as the attainment of
certain specified individual, divisional or Company-wide performance goals,
sales volume increases or increases in earnings per share.
(ii) Forfeiture. Upon termination of employment or termination of the
independent contractor relation ship during the applicable deferral period
or portion thereof to which forfeiture conditions apply, or upon failure to
satisfy any other conditions precedent to the delivery of Stock or cash to
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which such Restricted Stock Units relate, all Restricted Stock Units that
are then subject to deferral or restriction shall be forfeited; provided
that, the Committee may provide, by rule or regulation or in any Award
Agreement, or may determine in any individual case, that restrictions or
forfeiture conditions relating to Restricted Stock Units will be waived in
whole or in part in the event of termination resulting from specified
causes, and the Committee may in other cases waive in whole or in part the
forfeiture of Restricted Stock Units.
(f) Stock Awards in Lieu of Cash Awards. The Committee is authorized to
grant Stock as a bonus, or to grant other Awards, in lieu of Company commitments
to pay cash under other plans or compensatory arrangements. Stock or Awards
granted hereunder shall have such other terms as shall be determined by the
Committee.
(g) Dividend Equivalents. The Committee is authorized to grant
Dividend Equivalents to Grantees. The Committee may provide, at the date of
grant or thereafter, that Dividend Equivalents shall be paid or distributed
when accrued or shall be deemed to have been reinvested in additional
Stock, or other investment vehicles as the Committee may specify, provided
that Dividend Equivalents (other than freestanding Dividend Equivalents)
shall be subject to all conditions and restrictions of the underlying
Awards to which they relate.
(h) Performance Shares and Other Stock- or Cash-Based Awards. The
Committee is authorized to grant to Grantees Performance Shares and/or
Other Stock-Based Awards or Other Cash-Based Awards as an element of or
supplement to any other Award under the Plan, as deemed by the Committee to
be consistent with the purposes of the Plan. Such Awards may be granted
with value and payment contingent upon performance of the Company or any
other factors designated by the Committee, or valued by reference to the
performance of specified Subsidiaries or Affiliates. The Committee shall
determine the terms and conditions of such Awards at the date of grant or,
to the extent permitted by Section 162(m) of the Code, thereafter;
provided, that performance objectives for each year shall be established by
the Committee not later than the latest date permissible under Section
162(m) of the Code. Such performance objectives may be expressed in terms
of one or more financial or other objective goals. Financial goals may be
expressed, for example, in terms of sales, earnings per share, stock price,
return on equity, net earnings growth, net earnings, related return ratios,
cash flow, earnings before interest, taxes, depreciation and amortization
(EBITDA), return on assets or total stockholder return. Other objective
goals may include the attainment of various productivity and long-term
growth objectives, including, without limitation reductions in the
Company's overhead ratio and expense to sales ratios. Any criteria may be
measured in absolute terms or as compared to another corporation or
corporations. To the extent applicable, any such performance objective
shall be determined (i) in accordance with the Company's audited financial
statements and generally accepted accounting principles and reported upon
by the Company's independent accountants or (ii) so that a third party
having knowledge of the relevant facts could determine whether such
performance objective is met. Performance objectives shall include a
threshold level of performance below which no Award payment shall be made,
levels of performance above which specified percentages of target Awards
shall be paid, and a maximum level of performance above which no additional
Award shall be paid. Performance objectives established by the Committee
may be (but need not be) different from year-to-year and different
performance objectives may be applicable to different Grantees.
7. CHANGE IN CONTROL PROVISIONS.
The following provisions shall apply in the event of a Change of Control
unless otherwise determined by the Committee or the Board in writing, at or
after the grant of an Award, but prior to the occurrence of such Change in
Control:
(a) no Award carrying a right to exercise that was not previously
exercisable and vested shall become fully exercisable and vested; and
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(b) the restrictions, deferral limitations, payment conditions, and
forfeiture conditions applicable to any other Award granted under the Plan
shall remain in full force and effect.
8. LOAN PROVISIONS.
Subject to the provisions of the Plan and all applicable federal and state
laws, rules and regulations (including, if applicable, the requirements of
Regulation T (12 C.F.R. Section 220) and Regulation U (12 C.F.R. Section 221)),
the Committee shall have the authority to make Loans to Grantees (on such terms
and conditions as the Committee shall deter mine), to enable such Grantees to
purchase shares in connection with the realization of Awards under the Plan.
Loans shall be evidenced by a promissory note or other agreement, signed by the
borrower, which shall contain provisions for repayment and such other terms and
conditions as the Committee shall determine.
9. GENERAL PROVISIONS.
(a) Approval of Shareholders. The Plan shall take effect upon its adoption
by the Board but the Plan (and any grants of Awards made prior to the
shareholder approval mentioned herein) shall be subject to ratification by the
holder(s) of a majority of the issued and outstanding shares of voting
securities of the Company entitled to vote, which ratification must occur within
twelve (12) months of the date that the Plan is adopted by the Board. In the
event that the shareholders of the Company do not ratify the Plan at a meeting
of the shareholders at which such issue is considered and voted upon, then upon
such event the Plan and all rights hereunder shall immediately terminate and no
Grantee (or any permitted transferee thereof) shall have any remaining rights
under the Plan or any Award Agreement entered into in connection herewith.
(b) Nontransferability. Awards shall not be transferable by a Grantee
except by will or the laws of descent and distribution or, if then permitted
under Rule 16b-3, pursuant to a qualified domestic relations order as defined
under the Code or Title I of the Employee Retirement Income Security Act of
1974, as amended, or the rules thereunder, and shall be exercisable during the
lifetime of a Grantee only by such Grantee or his guardian or legal
representative.
(c) No Right to Continued Employment, etc. Nothing in the Plan or in any
Award or Loan granted or any Award Agreement, promissory note or other agreement
entered into pursuant hereto shall confer upon any Grantee the right to continue
in the employ of or to continue as an independent contractor of the Company, any
subsidiary or any Affiliate or to be entitled to any remuneration or benefits
not set forth in the Plan or such Award Agreement, promissory note or other
agreement or to interfere with or limit in any way the right of the Company or
any such Subsidiary or Affiliate to terminate such Grantee's employment or
independent contractor relationship.
(d) Taxes. The Company or any Subsidiary or Affiliate is authorized to
withhold from any Award granted, any payment relating to an Award under the
Plan, including from a distribution of Stock, or any other payment to a Grantee,
amounts of withholding and other taxes due in connection with any transaction
involving an Award, and to take such other action as the Committee may deem
advisable to enable the Company and Grantees to satisfy obligations for the
payment of withholding taxes and other tax obligations relating to any Award.
This authority shall include authority to withhold or receive Stock or other
property and to make cash payments in respect thereof in satisfaction of a
Grantee's tax obligations.
(e) Amendment and Termination of the Plan. The Board may at any time and
from time-to-time alter, amend, suspend, or terminate the Plan in whole or in
part; provided that, no amendment which requires stockholder approval in order
for the Plan to continue to comply with Rule 16b-3, shall be effective unless
the same shall be approved by the requisite vote of the stockholders of the
Company entitled to vote thereon. Notwithstanding the foregoing, no amendment
shall affect adversely any of the rights of any Grantee, without such Grantee's
consent, under any Award or Loan theretofore granted under the Plan.
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(f) No Rights to Awards or Loans; No Stockholder Rights. No Grantee shall
have any claim to be granted any Award or Loan under the Plan, and there is no
obligation for uniformity of treatment of Grantees. Except as provided
specifically herein, a Grantee or a transferee of an Award shall have no rights
as a stockholder with respect to any shares covered by the Award until the date
of the issuance of a stock certificate to him for such shares.
(g) Unfunded Status of Awards. The Plan is intended to constitute an
"unfunded" plan for incentive and deferred compensation. With respect to any
payments not yet made to a Grantee pursuant to an Award, nothing contained in
the Plan or any Award shall give any such Grantee any rights that are greater
than those of a general creditor of the Company.
(h) No Fractional Shares. No fractional shares of Stock shall be issued or
delivered pursuant to the Plan or any Award. The Committee shall determine
whether cash, other Awards, or other property shall be issued or paid in lieu of
such fractional shares or whether such fractional shares or any rights thereto
shall be forfeited or otherwise eliminated.
(i) Regulations and Other Approvals.
(i) The obligation of the Company to sell or deliver Common Stock with
respect to any Award granted under the Plan shall be subject to all
applicable laws, rules and regulations, including all applicable federal
and state securities laws, and the obtaining of all such approvals by
governmental agencies as may be deemed necessary or appropriate by the
Committee.
(ii) Each Award is subject to the requirement that, if at any time the
Committee determines, in its absolute discretion, that the listing,
registration or qualification of Common Stock issuable pursuant to the Plan
is required by any securities exchange or under any state or federal law,
or the consent or approval of any governmental regulatory body is necessary
or desirable as a condition of, or in connection with, the grant of an
Award or the issuance of Common Stock, no such Award shall be granted or
payment made or Common Stock issued, in whole or in part, unless listing,
registration, qualification, consent or approval has been effected or
obtained free of any conditions not accept able to the Committee.
(iii) In the event that the disposition of Common Stock acquired
pursuant to the Plan is not covered by a then current registration
statement under the Securities Act and is not otherwise exempt from such
registration, such Common Stock shall be restricted against transfer to the
extent required by the Securities Act or regulations thereunder, and the
Committee may require a Grantee receiving Common Stock pursuant to the
Plan, as a condition precedent to receipt of such Common Stock, to
represent to the Company in writing that the Common Stock acquired by such
Grantee is acquired for investment only and not with a view to
distribution.
(j) Governing Law. The Plan and all determinations made and actions taken
pursuant hereto shall be governed by the laws of the State of Delaware without
giving effect to the conflict of laws principles thereof.
(k) Effective Date; Plan Termination. The Plan shall take effect upon its
adoption by the Board (the "Effective Date"), but the Plan (and any grants of
Awards made prior to the stockholder approval mentioned herein), shall be
subject to the approval of the holder(s) of a majority of the issued and
outstanding shares of voting securities of the Company entitled to vote, which
approval must occur within twelve months of the date the Plan is adopted by the
Board. In the absence of such approval, such Awards shall be null and void.
Notwithstanding the foregoing, the effectiveness of the Plan and the validity of
any Award or Loan granted hereunder is conditioned upon the consummation of the
merger of Jupiter Acquisition Corp. with and into the Company (the "Merger") and
shall be of no force and effect if the Merger is not consummated.
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ANNEX E
GENERAL CORPORATION LAW OF DELAWARE
SEC. 262 APPRAISAL RIGHTS.
(a) Any stockholder of a corporation of this State who holds shares of
stock on the date of the making of a demand pursuant to subsection (d) of this
section with respect to such shares, who continuously holds such shares through
the effective date of the merger or consolidation, who has otherwise complied
with subsection (d) of this section and who has neither voted in favor of the
merger or consolidation nor consented thereto in writing pursuant to sec. 228 of
this title shall be entitled to an appraisal by the Court of Chancery of the
fair value of the stockholder's shares of stock under the circumstances
described in subsections (b) and (c) of this section. As used in this section,
the word "stockholder" means a holder of record of stock in a stock corporation
and also a member of record of a nonstock corporation; the words "stock" and
"share" mean and include what is ordinarily meant by those words and also
membership or membership interest of a member of a nonstock corporation; and the
words "depository receipt" mean a receipt or other instrument issued by a
depository representing an interest in one or more shares, or fractions thereof,
solely of stock of a corporation, which stock is deposited with the depository.
(b) Appraisal rights shall be available for the shares of any class or
series of stock of a constituent corporation in a merger or consolidation to be
effected pursuant to sec. 251 (other than a merger effected pursuant to sec.
251(g) of this title), sec. 252, sec. 254, sec. 257, sec. 258, sec. 263 or sec.
264 of this title:
(1) Provided, however, that no appraisal rights under this section
shall be available for the shares of any class or series of stock, which
stock, or depository receipts in respect thereof, at the record date fixed
to determine the stockholders entitled to receive notice of and to vote at
the meeting of stockholders to act upon the agreement of merger or
consolidation, were either (i) listed on a national securities exchange or
designated as a national market system security on an interdealer quotation
system by the National Association of Securities Dealers, Inc. or (ii) held
of record by more than 2,000 holders; and further provided that no
appraisal rights shall be available for any shares of stock of the
constituent corporation surviving a merger if the merger did not require
for its approval the vote of the stockholders of the surviving corporation
as provided in subsection (f) of sec. 251 of this title.
(2) Notwithstanding paragraph (1) of this subsection, appraisal rights
under this section shall be available for the shares of any class or series
of stock of a constituent corporation if the holders thereof are required
by the terms of an agreement of merger or consolidation pursuant to
sec.sec. 251, 252, 254, 257, 258, 263 and 264 of this title to accept for
such stock anything except:
a. Shares of stock of the corporation surviving or resulting from
such merger or consolidation, or depository receipts in respect thereof;
b. Shares of stock of any other corporation, or depository receipts
in respect thereof, which shares of stock (or depository receipts in
respect thereof) or depository receipts at the effective date of the
merger or consolidation will be either listed on a national securities
exchange or designated as a national market system security on an
interdealer quotation system by the National Association of Securities
Dealers, Inc. or held of record by more than 2,000 holders;
c. Cash in lieu of fractional shares or fractional depository
receipts described in the foregoing subparagraphs a. and b. of this
paragraph; or
d. Any combination of the shares of stock, depository receipts and
cash in lieu of fractional shares or fractional depository receipts
described in the foregoing subparagraphs a., b. and c. of this
paragraph.
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(3) In the event all of the stock of a subsidiary Delaware corporation
party to a merger effected under ss. 253 of this title is not owned by the
parent corporation immediately prior to the merger, appraisal rights shall
be available for the shares of the subsidiary Delaware corporation.
(c) Any corporation may provide in its certificate of incorporation that
appraisal rights under this section shall be available for the shares of any
class or series of its stock as a result of an amendment to its certificate of
incorporation, any merger or consolidation in which the corporation is a
constituent corporation or the sale of all or substantially all of the assets of
the corporation. If the certificate of incorporation contains such a provision,
the procedures of this section, including those set forth in subsections (d) and
(e) of this section, shall apply as nearly as is practicable.
(d) Appraisal rights shall be perfected as follows:
(1) If a proposed merger or consolidation for which appraisal rights
are provided under this section is to be submitted for approval at a
meeting of stockholders, the corporation, not less than 20 days prior to
the meeting, shall notify each of its stockholders who was such on the
record date for such meeting with respect to shares for which appraisal
rights are available pursuant to subsection (b) or (c) hereof that
appraisal rights are available for any or all of the shares of the
constituent corporations, and shall include in such notice a copy of this
section. Each stockholder electing to demand the appraisal of such
stockholder's shares shall deliver to the corporation, before the taking of
the vote on the merger or consolidation, a written demand for appraisal of
such stockholder's shares. Such demand will be sufficient if it reasonably
informs the corporation of the identity of the stockholder and that the
stockholder intends thereby to demand the appraisal of such stockholder's
shares. A proxy or vote against the merger or consolidation shall not
constitute such a demand. A stockholder electing to take such action must
do so by a separate written demand as herein provided. Within 10 days after
the effective date of such merger or consolidation, the surviving or
resulting corporation shall notify each stockholder of each constituent
corporation who has complied with this subsection and has not voted in
favor of or consented to the merger or consolidation of the date that the
merger or consolidation has become effective; or
(2) If the merger or consolidation was approved pursuant to sec. 228
or sec. 253 of this title, each constituent corporation, either before the
effective date of the merger or consolidation or within ten days
thereafter, shall notify each of the holders of any class or series of
stock of such constituent corporation who are entitled to appraisal rights
of the approval of the merger or consolidation and that appraisal rights
are available for any or all shares of such class or series of stock of
such constituent corporation, and shall include in such notice a copy of
this section; provided that, if the notice is given on or after the
effective date of the merger or consolidation, such notice shall be given
by the surviving or resulting corporation to all such holders of any class
or series of stock of a constituent corporation that are entitled to
appraisal rights. Such notice may, and, if given on or after the effective
date of the merger or consolidation, shall, also notify such stockholders
of the effective date of the merger or consolidation. Any stockholder
entitled to appraisal rights may, within 20 days after the date of mailing
of such notice, demand in writing from the surviving or resulting
corporation the appraisal of such holder's shares. Such demand will be
sufficient if it reasonably informs the corporation of the identity of the
stockholder and that the stockholder intends thereby to demand the
appraisal of such holder's shares. If such notice did not notify
stockholders of the effective date of the merger or consolidation, either
(i) each such constituent corporation shall send a second notice before the
effective date of the merger or consolidation notifying each of the holders
of any class or series of stock of such constituent corporation that are
entitled to appraisal rights of the effective date of the merger or
consolidation or (ii) the surviving or resulting corporation shall send
such a second notice to all such holders on or within 10 days after such
effective date; provided, however, that if such second notice is sent more
than 20 days following the sending of the first notice, such second notice
need only be sent to each stockholder who is entitled to appraisal rights
and who has demanded appraisal of such holder's shares in accordance with
this subsection. An affidavit of the secretary or assistant secretary or of
the transfer agent of the corporation that is required to give either
notice that such notice has been given shall, in the absence of fraud, be
prima facie evidence of the facts stated
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therein. For purposes of determining the stockholders entitled to receive
either notice, each constituent corporation may fix, in advance, a record
date that shall be not more than 10 days prior to the date the notice is
given, provided, that if the notice is given on or after the effective date
of the merger or consolidation, the record date shall be such effective
date. If no record date is fixed and the notice is given prior to the
effective date, the record date shall be the close of business on the day
next preceding the day on which the notice is given.
(e) Within 120 days after the effective date of the merger or
consolidation, the surviving or resulting corporation or any stockholder who has
complied with subsections (a) and (d) hereof and who is otherwise entitled to
appraisal rights, may file a petition in the Court of Chancery demanding a
determination of the value of the stock of all such stockholders.
Notwithstanding the foregoing, at any time within 60 days after the effective
date of the merger or consolidation, any stockholder shall have the right to
withdraw such stockholder's demand for appraisal and to accept the terms offered
upon the merger or consolidation. Within 120 days after the effective date of
the merger or consolidation, any stockholder who has complied with the
requirements of subsections (a) and (d) hereof, upon written request, shall be
entitled to receive from the corporation surviving the merger or resulting from
the consolidation a statement setting forth the aggregate number of shares not
voted in favor of the merger or consolidation and with respect to which demands
for appraisal have been received and the aggregate number of holders of such
shares. Such written statement shall be mailed to the stockholder within 10 days
after such stockholder's written request for such a statement is received by the
surviving or resulting corporation or within 10 days after expiration of the
period for delivery of demands for appraisal under subsection (d) hereof,
whichever is later.
(f) Upon the filing of any such petition by a stockholder, service of a
copy thereof shall be made upon the surviving or resulting corporation, which
shall within 20 days after such service file in the office of the Register in
Chancery in which the petition was filed a duly verified list containing the
names and addresses of all stockholders who have demanded payment for their
shares and with whom agreements as to the value of their shares have not been
reached by the surviving or resulting corporation. If the petition shall be
filed by the surviving or resulting corporation, the petition shall be
accompanied by such a duly verified list. The Register in Chancery, if so
ordered by the Court, shall give notice of the time and place fixed for the
hearing of such petition by registered or certified mail to the surviving or
resulting corporation and to the stockholders shown on the list at the addresses
therein stated. Such notice shall also be given by 1 or more publications at
least 1 week before the day of the hearing, in a newspaper of general
circulation published in the City of Wilmington, Delaware or such publication as
the Court deems advisable. The forms of the notices by mail and by publication
shall be approved by the Court, and the costs thereof shall be borne by the
surviving or resulting corporation.
(g) At the hearing on such petition, the Court shall determine the
stockholders who have complied with this section and who have become entitled to
appraisal rights. The Court may require the stockholders who have demanded an
appraisal for their shares and who hold stock represented by certificates to
submit their certificates of stock to the Register in Chancery for notation
thereon of the pendency of the appraisal proceedings; and if any stockholder
fails to comply with such direction, the Court may dismiss the proceedings as to
such stockholder.
(h) After determining the stockholders entitled to an appraisal, the Court
shall appraise the shares, determining their fair value exclusive of any element
of value arising from the accomplishment or expectation of the merger or
consolidation, together with a fair rate of interest, if any, to be paid upon
the amount determined to be the fair value. In determining such fair value, the
Court shall take into account all relevant factors. In determining the fair rate
of interest, the Court may consider all relevant factors, including the rate of
interest which the surviving or resulting corporation would have had to pay to
borrow money during the pendency of the proceeding. Upon application by the
surviving or resulting corporation or by any stockholder entitled to participate
in the appraisal proceeding, the Court may, in its discretion, permit discovery
or other pretrial proceedings and may proceed to trial upon the appraisal prior
to the final determination of the stockholder entitled to an appraisal. Any
stockholder whose name appears on the list filed by the surviving or resulting
corporation pursuant to subsection (f) of this section and who has
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submitted such stockholder's certificates of stock to the Register in Chancery,
if such is required, may participate fully in all proceedings until it is
finally determined that such stockholder is not entitled to appraisal rights
under this section.
(i) The Court shall direct the payment of the fair value of the shares,
together with interest, if any, by the surviving or resulting corporation to the
stockholders entitled thereto. Interest may be simple or compound, as the Court
may direct. Payment shall be so made to each such stockholder, in the case of
holders of uncertified stock forthwith, and the case of holders of shares
represented by certificates upon the surrender to the corporation of the
certificates representing such stock. The Court's decree may be enforced as
other decrees in the Court of Chancery may be enforced, whether such surviving
or resulting corporation be a corporation of this State or of any state.
(j) The costs of the proceeding may be determined by the Court and taxed
upon the parties as the Court deems equitable in the circumstances. Upon
application of a stockholder, the Court may order all or a portion of the
expenses incurred by any stockholder in connection with the appraisal
proceeding, including, without limitation, reasonable attorney's fees and the
fees and expenses of experts, to be charged pro rata against the value of all
the shares entitled to an appraisal.
(k) From and after the effective date of the merger or consolidation, no
stockholder who has demanded appraisal rights as provided in subsection (d) of
this section shall be entitled to vote such stock for any purpose or to receive
payment of dividends or other distributions on the stock (except dividends or
other distributions payable to stockholders of record at a date which is prior
to the effective date of the merger or consolidation); provided, however, that
if no petition for an appraisal shall be filed within the time provided in
subsection (e) of this section, or if such stockholder shall deliver to the
surviving or resulting corporation a written withdrawal of such stockholder's
demand for an appraisal and an acceptance of the merger or consolidation, either
within 60 days after the effective date of the merger or consolidation as
provided in subsection (e) of this section or thereafter with the written
approval of the corporation, then the right of such stockholder to an appraisal
shall cease. Notwithstanding the foregoing, no appraisal proceeding in the Court
of Chancery shall be dismissed as to any stockholder without the approval of the
Court, and such approval may be conditioned upon such terms as the Court deems
just.
(l) The shares of the surviving or resulting corporation to which the
shares of such objecting stockholders would have been converted had they
assented to the merger or consolidation shall have the status of authorized and
unissued shares of the surviving or resulting corporation.
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<PAGE> 157
PART II: INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 20. INDEMNIFICATION OF DIRECTORS AND OFFICERS
As authorized by the Delaware General Corporation Law ("DGCL"), the
Certificate of Incorporation of Juno provides that no director of Juno shall be
personally liable to Juno or its stockholders for monetary damages for any
breach of fiduciary duty as a director, except for liability (i) for any breach
of the director's duty of loyalty to Juno or its stockholders, (ii) for acts or
omissions not in good faith or which involve intentional misconduct or a knowing
violating of law, (iii) under Section 174 of the DGCL (relating to any willful
or negligent declaration of an unlawful dividend, stock purchase or redemption)
or (iv) for any transaction from which the director derived any improper
personal benefits. The effect of this provision is to eliminate the rights of
Juno and its stockholders (through stockholders' derivative suits on behalf of
Juno) to recover monetary damages against a director for breach of his fiduciary
duty as a director (including breaches resulting from grossly negligent
behavior), except in the situations described above. This provision does not
limit the liability of directors under federal securities laws and have no
effect on non-monetary remedies that may be available to Juno or its
stockholders.
The By-Laws of Juno provides for indemnification by Juno of its directors
and officers to the fullest extent permitted by the DGCL. The By-Laws also
provide that Juno may advance litigation expenses to a director, officer,
employee or agent upon receipt of an undertaking by or on behalf of such
director, officer, employee or agent to repay such amount if it is ultimately
determined that the director, officer, employee or agent is not entitled to be
indemnified by Juno.
ITEM 21. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
(a) Exhibits
<TABLE>
<CAPTION>
EXHIBIT NO. EXHIBIT DESCRIPTION
- ----------- -------------------
<S> <C>
2.1 Agreement and Plan of Merger, dated as of March 26, 1999, by
and between Fremont Investors I, LLC Jupiter Acquisition
Corp. and the Registrant (included as Annex A to the proxy
statement/ prospectus which forms a part of this
Registration Statement).
3.1 Form of Amended and Restated Certificate of Incorporation of
Juno to become effective upon consummation of the merger
(included as Annex C to the proxy statement/prospectus which
forms a part of this Registration Statement).
3.2 By-Laws of Juno Lighting, Inc., as amended. Filed as Exhibit
3.1 to the Company's Annual Report on Form 10-K (SEC File
No. 0-11631) for the fiscal year ended November 30, 1990 and
incorporated herein by reference.
3.2(a) Amendment to By-Laws of Juno Lighting, Inc. Filed as Exhibit
3.1 to the Company's quarterly report on Form 10-Q (SEC File
No. 0-11631) for the quarter ended May 31, 1991 and
incorporated herein by reference.
4.1 Commitment letter, from NationsBank, N.A. and Credit Suisse
First Boston.
5.1* Opinion of Sonnenschein Nath & Rosenthal as to the legality
of the securities.
8.1* Opinion of Sonnenschein Nath & Rosenthal as to certain tax
matters.
10.1 Juno Lighting, Inc. 1993 Stock Option Plan, as amended.
Filed as Exhibit 10.1 to the Company's quarterly report on
Form 10-Q (SEC File No. 0-11631) for the quarter ended May
31, 1994 and incorporated herein by reference.
10.2 Loan Agreement dated as of December 1, 1991 by and between
Juno Lighting, Inc. and the Indiana Development Finance
Authority. Filed as Exhibit 10.1 to the Company's Annual
Report on Form 10-K (SEC File No. 0-11631) for the fiscal
year ended November 30, 1992 and incorporated herein by
reference.
</TABLE>
II-1
<PAGE> 158
<TABLE>
<CAPTION>
EXHIBIT NO. EXHIBIT DESCRIPTION
- ----------- -------------------
<S> <C>
10.2(a) Trust Indenture dated as of December 1, 1991 by and between
the Indiana Development Finance Authority and First
Wisconsin Trust Company, as Trustee, with respect to
Industrial Development Revenue Bonds, Series 1991 (Juno
Lighting, Inc. Project). Filed as Exhibit 10.1(a) to the
Company's Annual Report on Form 10-K (SEC File No. 0-11631)
for the fiscal year ended November 30, 1992 and incorporated
herein by reference.
10.3 Agreement among Juno Lighting, Inc., the City of Des Plaines
and American National Bank and Trust Company of Chicago.
Filed as Exhibit 10.1 to the Company's Registration
Statement on Form S-1, made effective September 1, 1983
(Registration No. 2-85267) and incorporated herein by
reference.
10.4 Juno Lighting, Inc. 1983 Stock Option Plan, as amended.
Filed as Exhibit 10.1 to the Company's Annual Report on Form
10-K (SEC File No. 0-11631) for the fiscal year ended
November 30, 1983 and incorporated herein by reference.
10.4(a) First Amendment to the Juno Lighting, Inc. 1983 Stock Option
Plan dated April 9, 1986. Filed as Exhibit 10.2(a) to the
Company's Annual Report on Form 10-K (SEC File No. 0-11631)
for the fiscal year ended November 30, 1986 and incorporated
herein by reference.
10.4(b) Third Amendment to the Juno Lighting, Inc. 1983 Stock Option
Plan dated May 6, 1987. Filed as Exhibit 10.2(b) to the
Company's Annual Report on Form 10-K (SEC File No. 0-11631)
for the fiscal year ended November 30, 1987 and incorporated
herein by reference.
10.4(c) Fourth Amendment to the Juno Lighting, Inc. 1983 Stock
Option Plan dated September 24, 1987. Filed as Exhibit
10.2(c) to the Company's Annual Report on Form 10-K (SEC
File No. 0-11631) for the fiscal year ended November 30,
1987 and incorporated herein by reference.
10.4(d) Fifth Amendment to the Juno Lighting, Inc. 1983 Stock Option
Plan dated December 3, 1988. Filed as Exhibit 10.2(d) to the
Company's Annual Report on Form 10-K (SEC File No. 0-11631)
for the fiscal year ended November 30, 1988 and incorporated
herein by reference.
10.5 Agreement dated as of July 1, 1984 among Juno Lighting,
Inc., the City of Des Plaines, Illinois and American
National Bank and Trust Company of Chicago. Filed as Exhibit
10.1(b) to the Company's Registration Statement on Form S-1,
made effective December 13, 1984 (Registration No. 2-94147)
and incorporated herein by reference.
10.6 Juno Lighting, Inc. 401(k) Plan, Amended and Restated
effective December 1, 1987, executed June 1, 1994.
10.6(a) Juno Lighting, Inc. 401(k) Trust, effective December 1,
1985, executed June 1, 1994.
10.6(b) Amendment to Juno Lighting, Inc. 401(k) Plan, effective
September 1, 1994, executed September 12, 1994.
10.7 Juno Lighting, Inc. Rights Agreement dated as of August 3,
1989 between Juno Lighting, Inc. and the First National Bank
of Chicago, as Rights Agent. Filed as Exhibit 1 to the
Company's Current Report on Form 8-K (SEC File No. 0-11631)
filed with the Securities and Exchange Commission on August
9, 1989 and incorporated herein by reference.
10.7(a) First Amendment to Juno Lighting, Inc. Rights Agreement
dated as of June 17, 1991 between Juno Lighting, Inc. and
The First National Bank of Chicago, as Rights Agent. Filed
as Exhibit 10.5(a) to the Company's Annual Report on Form
10-K (SEC File No. 0-11631) for the fiscal year ended
November 30, 1991 and incorporated herein by reference.
10.7(b) Second Amendment to Juno Lighting, Inc. Rights Agreement
dated as of June 17, 1991 between Juno Lighting, Inc. and
The First Chicago Trust Company of New York, as successor
Rights Agent to The First National Bank of Chicago. Filed as
Exhibit 1 to the Company's Current Report on Form 8-K (SEC
File No. 0-11631) filed with the Securities and Exchange
Commission on July 17, 1991 and incorporated herein by
reference.
</TABLE>
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<PAGE> 159
<TABLE>
<CAPTION>
EXHIBIT NO. EXHIBIT DESCRIPTION
- ----------- -------------------
<S> <C>
10.7(c) Third Amendment to Juno Lighting, Inc. Rights Agreement
dated as of March 26, 1999 between Juno Lighting, Inc. and
The First Chicago Trust Company, as successor Rights Agent.
Filed as Exhibit 10.7(c) to the Company's Current Report on
Form 8-K (SEC File No. 0-11631) filed with the Securities
and Exchange Commission on March 29, 1999 and incorporated
herein by reference.
10.8 Form of Change of Control Benefits Agreement. Filed as
Exhibit 10.8 to the Company's Annual Report on Form 10-K/A
(SEC File No. 0-11631) for the fiscal year ended November
30, 1998, and incorporated herein by reference.
11.1 Computations of Net Income Per Common Share. Filed as
Exhibit 11.1 to the Company's Annual Report on Form 10-K
(SEC File No. 011631) for the fiscal year ended November 30,
1998, and incorporated herein by reference.
21.1 Subsidiaries of the Registrant filed as Exhibit 21.1 to the
Company's Annual Report on Form 10-K (SEC File No. 011631)
for the fiscal year ended November 30, 1998, and
incorporated herein by reference.
23.1 Consent of PricewaterhouseCoopers LLP.
23.2* Consent of Sonnenschein Nath & Rosenthal (included in
Exhibit 5.1 and 8.1)
24.1 Powers of Attorney (included on signature page to
Registration Statement).
99.1* Non-Cash Election Form to be used in connection with the
merger.
99.2* Form of Letter of Transmittal to be used in connection with
the merger.
99.3 Consent of William Blair & Company, L.L.C.
99.4* Consent of Robert Jaunich II to serve as a director of Juno
after the merger
99.5* Consent of Mark N. Williamson to serve as a director of Juno
after the merger
</TABLE>
- -------------------------
* To be filed by amendment
(b) FINANCIAL STATEMENT SCHEDULES
All schedules have either been incorporated by reference or have been
omitted as not applicable or not required under the rules of Regulation S-X.
(c) REPORTS, OPINIONS AND APPRAISALS OF OUTSIDE PARTIES
The opinion of William Blair & Company, L.L.C. is included as Annex B to
the proxy statement/ prospectus.
ITEM 22. UNDERTAKINGS
The undersigned registrant hereby undertakes:
(1) to file, during any period in which offers or sales are being
made, a post-effective amendment to this registration statement:
(i) to include any prospectus required by Section 10(a)(3) of the
Securities Act of 1933, as amended;
(ii) to reflect in the prospectus any facts or events arising after
the effective date of the registration statement (or the most recent
post-effective amendment thereof) which, individually or in the
aggregate, represent a fundamental change in the information set forth
in the registration statement. Notwithstanding the foregoing, any
increase or decrease in volume of securities offered (if the total
dollar value of securities offered would not exceed that which was
registered) and any deviation from the low or high end of the estimated
maximum offering range may be reflected in the form of prospectus filed
with the Commission pursuant to Rule 424(b) if, in the aggregate, the
changes in volume and price represent no more than a 20% "Calculation of
Registration Fee" table in the effective registration statement;
II-3
<PAGE> 160
(iii) to include any material information with respect to the plan
of distribution not previously disclosed in the registration statement
or any material change to such information in the registration
statement;
(2) that, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall be deemed
to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed
to be the initial bona fide offering thereof;
(3) to remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the
termination of the offering;
(4) that, for purposes of determining any liability under the
Securities Act of 1933, each filing of the registrant's annual report
pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934
(and, where applicable, each filing of an employee benefit plan's annual
report pursuant to Section 15(d) of the Securities Exchange Act of 1934)
that is incorporated by reference in the registration statement shall be
deemed to be a new registration statement relating to the securities
offered therein, and the offering of such securities at that time shall be
deemed to be the initial bona fide offering thereof.
(5) (a) that prior to any public reoffering of the securities
registered hereunder through use of a prospectus which is a part of this
registration statement, by any person or party who is deemed to be an
underwriter within the meaning of Rule 145(c), the issuer undertakes that
such reoffering prospectus will contain the information called for by the
applicable registration form with respect to reofferings by persons who may
be deemed underwriters, in addition to the information called for by the
other items of the applicable form.
(b) that every prospectus: (A) that is filed pursuant to paragraph
(5)(a) immediately preceding, or (B) that purports to meet the
requirements of Section 10(a)(3) of the Act and is used in connection
with an offering of securities subject to Rule 415, will be filed as a
part of an amendment to the registration statement and will not be used
until such amendment is effective, and that, for purposes of determining
any liability under the Securities Act of 1933, each such post-effective
amendment shall be deemed to be a new registration statement relating to
the securities offered therein, and the offering of such securities at
that time shall be deemed to be the initial bona fide offering thereof.
(6) Insofar as indemnification for liabilities arising under the
Securities Act may be permitted to directors, officers and controlling
persons of the registrant pursuant to the foregoing provisions, or
otherwise, the registrant has been advised that in the opinion of the
Securities and Exchange Commission such indemnification is against public
policy as expressed in the Securities Act and is, therefore, unenforceable.
In the event that a claim for indemnification against such liabilities
(other than the payment by the registrant of expenses incurred or paid by a
director, officer or controlling person of the registrant in the successful
defense of any action, suit or proceeding) is asserted by such director,
officer or controlling person in connection with the securities being
registered, the registrant will, unless in the opinion of its counsel the
matter has been settled by controlling precedent, submit to a court of
appropriate jurisdiction the question whether such indemnification by it is
against public policy as expressed in the Securities Act and will be
governed by the final adjudication of such issue.
(a) to respond to requests for information that is incorporated by
reference into the prospectus pursuant to Item 4, 10(b), 11 or 13 of
this Form S-4, within one business day of receipt of such request, and
to send the incorporated documents by first-class mail or other equally
prompt means. This includes information contained in documents filed
subsequent to the effective date of the registration statement through
the date of responding to the request.
(b) to supply by means of a post-effective amendment all
information concerning a transaction, and the company being acquired
involved therein, that was not the subject of and included in the
registration statement when it became effective.
II-4
<PAGE> 161
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended, the
registrant has duly caused this Registration Statement to be signed on its
behalf by the undersigned, thereunto duly authorized, in the City of Des
Plaines, State of Illinois, on the 12th day of April, 1999.
JUNO LIGHTING, INC.
By: /s/ ROBERT S. FREMONT
------------------------------------
Robert S. Fremont,
Chairman of the Board
and Chief Executive Officer
POWER OF ATTORNEY AND SIGNATURES
Each person whose individual signature appears below hereby authorizes and
appoints Robert S. Fremont, George J. Bilek and Julius Lewis, and each of them,
with full power of substitution and resubstitution and full power to act without
the other, as his true and lawful attorney-in-fact and agent to act in his name,
place and stead and to execute in the name and on behalf of each person,
individually and in each capacity stated below, and to file, any and all
amendments to this Registration Statement, including any and all post-effective
amendments and amendments thereto and any registration statement relating to the
same offering as this Registration Statement that is to be effective upon filing
pursuant to Rule 462(b) under the Securities Act of 1933, as amended, and to
file the same, with all exhibits thereto, and other documents in connection
therewith, with the Securities and Exchange Commission, granting unto said
attorneys-in-fact and agents, and each of them, full power and authority to do
and perform each and every act and thing, ratifying and confirming all that said
attorneys-in-fact and agents or any of them or their and his substitute or
substitutes, may lawfully do or cause to be done by virtue thereof.
Pursuant to the requirements of the Securities Act of 1933, as amended,
this Registration Statement has been signed by the following persons in the
capacities indicated below on the 12th day of April, 1999.
<TABLE>
<C> <S>
/s/ ROBERT S. FREMONT Chairman of the Board of Directors and Chief
- --------------------------------------------- Executive Officer (Principal Executive Officer)
Robert S. Fremont
/s/ GEORGE J. BILEK Vice President, Finance and Treasurer (Principal
- --------------------------------------------- Financial and Accounting Officer)
George J. Bilek
/s/ THOMAS W. TOMSOVIC Director
- ---------------------------------------------
Thomas W. Tomsovic
/s/ JULIUS LEWIS Director
- ---------------------------------------------
Julius Lewis
/s/ ALLAN COLEMAN Director
- ---------------------------------------------
Allan Coleman
/s/ GEORGE M. BALL Director
- ---------------------------------------------
George M. Ball
</TABLE>
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<PAGE> 162
JUNO LIGHTING, INC.
1300 SOUTH WOLF ROAD
P.O. BOX 5065
DES PLAINES, IL 60017-5065
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints Robert S. Fremont and George J. Bilek, or
either of them, with full power of substitution (the action of one, if only one
be present and acting, to be in any event controlling), as proxies to represent
the undersigned at the special meeting of Stockholders of Juno Lighting, Inc. to
be held on June , 1999, and at any and all adjournments thereof, and to vote
all shares which the undersigned would be entitled to vote thereat.
COMMENTS: (CHANGE OF ADDRESS)
You are encouraged to specify your choices by marking the appropriate boxes
ON THE REVERSE SIDE. If you do not mark any boxes, your proxy will be voted in
accordance with the Board of Director's recommendations. The Proxies cannot vote
your shares unless you sign and return this card.
IMPORTANT--PLEASE DATE AND SIGN ON THE OTHER SIDE
<PAGE> 163
Please mark your votes
[X] as in this example.
This proxy when properly executed will be voted in the manner directed
herein. If no direction is made, this proxy will be voted FOR proposal 1,
proposal 2 and proposal 3.
The Board of Directors recommends a vote FOR proposal 1.
1. Proposal to approve an Agreement and Plan of Recapitalization and
Merger, dated as of March 26, 1999, by and among Juno Lighting, Inc.,
Fremont Investors I, L.L.C. and Jupiter Acquisition Corp., and the
transactions contemplated thereby, including (a) the merger of Jupiter
Investors I, L.L.C., a wholly-owned subsidiary of Fremont Investors
L.P., with and into Juno Lighting, Inc., with Juno being the surviving
corporation, and (b) the purchase by Fremont Investors I, L.L.C. of $106
million of a new series of convertible preferred stock of Juno Lighting,
Inc.
<TABLE>
<S> <C> <C>
FOR WITHHELD ABSTAIN
[ ] [ ] [ ]
</TABLE>
- --------------------------------------------------------------------------------
The Board of Directors recommends a vote FOR proposal 2.
2. Proposal to adopt an amended and restated certificate of incorporation
of Juno Lighting, Inc.
<TABLE>
<S> <C> <C>
FOR AGAINST ABSTAIN
[ ] [ ] [ ]
</TABLE>
- --------------------------------------------------------------------------------
The Board of Directors recommends a vote FOR proposal 3.
3. Proposal to adopt the Juno Lighting, Inc. 1999 Stock Award and Incentive
Plan.
<TABLE>
<S> <C> <C>
FOR AGAINST ABSTAIN
[ ] [ ] [ ]
</TABLE>
- --------------------------------------------------------------------------------
4. In their discretion on any other matters that may properly come before
the meeting.
Change of Address [ ]
Please mark this box if
you will personally be
attending the meeting [ ]
Please date and sign exactly as name
appears hereon. Joint owners should
each sign. When signing as attorney,
executor, administrator, trustee or
guardian, please give full title as
such.
------------------------------------
------------------------------------
Signature(s) Date
<PAGE> 1
EXHIBIT 4.1
NATIONSBANK, N.A.
NATIONSBANC MONTGOMERY SECURITIES LLC
CREDIT SUISSE FIRST BOSTON
April 5, 1999
Fremont Investors I, LLC
Fifty Fremont Street, Suite 3700
San Francisco, CA 94105
Attention: Mark N. Williamson
Re: $125,000,000 Senior Secured Credit Facilities
Commitment Letter
Ladies and Gentlemen:
You have advised NationsBank, N.A. ("NATIONSBANK"), NationsBanc Montgomery
Securities LLC ("NMS") and Credit Suisse First Boston ("CSFB") that Fremont
Investors I, LLC or one of its affiliates (the "BUYER") intends to invest in a
leveraged recapitalization (the "TRANSACTION") of Juno Lighting, Inc. (the
"BORROWER"), as more specifically described in the Sources and Uses Table
attached hereto as Schedule I, with the respective amounts expended in
connection therewith being set forth therein. References herein to the
"Transaction" shall include the financing described herein, and all other
transactions related to the Transaction.
You have also advised NationsBank, NMS and CSFB that you propose to finance the
Transaction, the related premiums, fees and expenses and the ongoing general
corporate needs of the Borrower and its subsidiaries after completion of the
Transaction from the following sources: (a) not less than $106 million in common
and preferred equity on terms to be agreed upon by you and us (the "EQUITY
FINANCING"), (b) approximately $90.5 million from senior credit facilities (the
"SENIOR CREDIT FACILITIES") of the Borrower comprised of term loan facilities
aggregating $90 million (the "TERM LOAN FACILITIES") and a $35 million revolving
credit facility (the "REVOLVING CREDIT FACILITY"), (c) at least $125 million in
gross proceeds from the Borrower's issuance of senior subordinated unsecured
notes (the "SENIOR SUBORDINATED NOTES") and (d) existing cash balances of the
Borrower. The Revolving Credit Facility will also be used to finance the
continuing operations of the Borrower and its subsidiaries after consummation of
the Transaction.
In connection with the foregoing and upon and subject to the terms and
conditions of this letter and the Summary of Terms and Conditions attached
hereto as Exhibit A (the "TERM SHEET"), (a) NationsBank is pleased to advise you
of its commitment (this letter being the "COMMITMENT LETTER") to provide
$81,250,000 of the Senior Credit Facilities, and (b) CSFB is pleased to advise
you of its commitment to provide $43,750,000 of the Senior Credit Facilities.
The commitments of NationsBank and CSFB are several and shall be allocated
ratably among the Senior Credit Facilities. NMS is pleased to advise you of its
willingness to form a syndicate of financial institutions (the "LENDERS")
reasonably acceptable to you, NationsBank and CSFB for the Senior Credit
Facilities.
NationsBank will act as the sole and exclusive administrative agent (in such
capacity, the "ADMINISTRATIVE AGENT") for the Senior Credit Facilities. NMS will
act as the sole and exclusive lead arranger and book manager for the Senior
Credit Facilities. CSFB will be named as syndication agent (the "SYNDICATION
AGENT") for the Senior Credit Facilities. No additional agents, co-agents or
arrangers will be appointed and no other titles will be awarded without the
prior written approval of NationsBank, NMS and CSFB.
NMS will syndicate and arrange the Senior Credit Facilities, in consultation
with CSFB. You agree to take reasonable steps to actively assist, and to cause
the Borrower to assist, NMS in achieving a syndication of
<PAGE> 2
Fremont Investors I, LLC
April 5, 1999
Page 2
the Senior Credit Facilities that is reasonably satisfactory to NMS and CSFB.
Such assistance by you and the Borrower shall include (a) your providing and
causing your advisors to provide NMS, NationsBank, CSFB and the other Lenders
upon request with all information reasonably deemed necessary by NMS to complete
syndication, including, but not limited to, information and evaluations prepared
by the Buyer, the Borrower and their advisors, or on their behalf, relating to
the Transaction; (b) assistance in the preparation of an Offering Memorandum to
be used in connection with the syndication; (c) your using commercially
reasonable efforts to ensure that the syndication efforts benefit materially
from existing lending relationships of the Buyer and the Borrower; and (d)
otherwise assisting NMS in its syndication efforts, including by making senior
management and advisors of the Buyer, the Borrower and its subsidiaries
available from time to time on reasonable notice to attend and make
presentations regarding the business and prospects of the Borrower and its
subsidiaries, as appropriate, at one or more meetings of prospective Lenders.
It is understood and agreed that NationsBank and NMS, after consultation with
CSFB and you, will manage and control all aspects of the syndication, including
decisions as to the selection of proposed Lenders and any titles offered to
proposed Lenders, when commitments will be accepted and the final allocations of
the commitments among the Lenders. It is understood that no Lender participating
in the Senior Credit Facilities will receive compensation from you in order to
obtain its commitment, except on the terms contained herein and in the Term
Sheet. It is also understood and agreed that the amount and distribution of the
fees among the Lenders will be at NMS's sole discretion and that any syndication
prior to execution of the definitive documentation for the Senior Credit
Facilities will reduce ratably the commitments of NationsBank and CSFB.
In the event that such syndication cannot be achieved in a manner satisfactory
to NationsBank and NMS under the structure outlined in the Term Sheet, you agree
that NationsBank and NMS shall be entitled, in consultation with CSFB and you,
to change the pricing (exclusive of the fees provided for in the Fee Letter, as
later defined herein), structure or other terms of the Senior Credit Facilities
if NationsBank and NMS determine that such changes are advisable to achieve a
syndication that is reasonably satisfactory to NationsBank and NMS, provided
that (i) the total amount of the Senior Credit Facilities remains unchanged,
(ii) interest rates on the Senior Credit Facilities shall not be increased by
more than 0.25% over the applicable percentages as shown in the attached Term
Sheet, (iii) the maturity and amortization schedule of the Senior Credit
Facilities as set forth in the attached Term Sheet shall not be changed in such
a manner which shall materially restrict the Borrower's operational flexibility,
(iv) the financial covenant ratios contained in the Credit Agreement signed at
closing shall not be made materially more restrictive after closing, and (v) the
pricing, terms and structure of the Senior Credit Facilities are reasonably
consistent with comparable syndications occurring in the market. The agreement
in this paragraph shall survive closing of the Senior Credit Facilities.
The commitments of NationsBank and CSFB hereunder and the agreement of NMS to
provide the services described herein are subject to the agreement in the
preceding paragraph and the satisfaction of each of the following conditions
precedent in a manner acceptable to each of NMS, NationsBank and CSFB in their
sole discretion: (a) each of the terms and conditions set forth herein and in
the Term Sheet; (b) the proceeds from the Senior Subordinated Notes, the Equity
Financing, and the cash balances of the Borrower at the closing of the Senior
Credit Facilities, together with approximately $91 million from the Senior
Credit Facilities, shall be sufficient to finance the Transaction; (c) the
absence of a material breach of any representation, warranty or agreement of the
Buyer set forth herein; (d) execution by the Buyer and the Borrower and/or other
appropriate parties of a definitive purchase agreement and other related
documentation for the Transaction (collectively, the "TRANSACTION DOCUMENTS"),
which Transaction Documents shall be in form and substance reasonably
satisfactory to NMS, NationsBank and CSFB; (e) NMS, NationsBank and CSFB shall
be satisfied that prior to and during the syndication of the Senior Credit
Facilities there shall be no competing offering, placement or arrangement of any
debt securities or bank financing by or on behalf of the Borrower (other than
the Senior Subordinated Notes described herein); (f) the negotiation, execution
and delivery of definitive documentation for the Senior Credit Facilities
consistent with the Term Sheet and otherwise reasonably satisfactory to NMS,
NationsBank and CSFB (the "CREDIT AGREEMENT DOCUMENTS"); (g) no material adverse
change in or material disruption of conditions in
<PAGE> 3
Fremont Investors I, LLC
April 5, 1999
Page 3
the financial, banking or capital markets which NMS, NationsBank or CSFB, in
their reasonable discretion, deem material in connection with the syndication of
the Senior Credit Facilities shall have occurred and be continuing; (h) no
change, occurrence or development that could, in the reasonable opinion of NMS,
NationsBank or CSFB, have a material adverse effect on the business, assets,
liabilities (actual or contingent), operations, condition (financial or
otherwise) or prospects of the Borrower and its subsidiaries taken as a whole,
shall have occurred or become known to NMS, NationsBank or CSFB; and (i) NMS,
NationsBank and CSFB not becoming aware after the date hereof of any information
or other matter which in any of their judgment is inconsistent in a material and
adverse manner with any information or other matter disclosed to any of them
prior to the date hereof (in which case NMS may, in its sole discretion, suggest
alternative financing amounts or structures that ensure adequate protection for
the Lenders or terminate this letter and any commitment or undertaking
hereunder).
You hereby represent, warrant and covenant that (a) to your knowledge, all
information, other than the Projections (defined below), which has been or is
hereafter made available to NMS, NationsBank, CSFB or the Lenders by you or any
of your repres.entatives in connection with the transactions contemplated hereby
(the "INFORMATION") is and, as of its date, will be complete and correct in all
material respects and does not and will not contain any untrue statement of a
material fact or omit to state a material fact necessary to make the statements
contained therein not misleading, and (b) all financial projections concerning
the Borrower and its subsidiaries that have been or are hereafter made available
to NMS, NationsBank, CSFB or the Lenders by you or any of your representatives
(the "PROJECTIONS") have been or will be prepared in good faith based upon
assumptions you believe to be reasonable. You agree to furnish NMS, NationsBank
and CSFB with such Information and Projections as they may reasonably request
(including due diligence investigations of the Borrower prepared by accountants
and advisors of the Buyer to the extent permitted by such accountants and
advisors) and to supplement the Information and the Projections from time to
time until the closing date for the Senior Credit Facilities so that the
representation, warranty and covenant in the preceding sentence is correct on
such closing date. You understand that in arranging and syndicating the Senior
Credit Facilities, NationsBank, NMS and CSFB will be using and relying on the
Information and the Projections without independent verification thereof. We
acknowledge that the Projections are subject to significant contingencies and
uncertainties, many of which are beyond your control, and that there can be no
assurance that the Projections will be realized.
By acceptance of this offer, you agree to pay all reasonable out-of-pocket fees
and expenses (including the reasonable fees and expenses of Jones, Day, Reavis &
Pogue, counsel for the Administrative Agent and the Syndication Agent, and due
diligence expenses) incurred before or after the date hereof by NMS, NationsBank
and CSFB in connection with the Senior Credit Facilities, the syndication
thereof and the other transactions contemplated hereby; provided, however, that
the aggregate fees and expenses incurred before March 26, 1999, shall not exceed
$6,500 for NMS and NationsBank and $3,500 for CSFB.
You agree to indemnify and hold harmless NationsBank, NMS, CSFB and each of
their respective affiliates and their respective directors, officers, employees,
advisors and agents (each, an "INDEMNIFIED PARTY") from and against (and will
reimburse each Indemnified Party as the same are incurred) any and all losses,
claims, damages, liabilities, and expenses (including, without limitation, the
reasonable fees and expenses of outside counsel) that may be incurred by or
asserted or awarded against any Indemnified Party, in each case arising out of
or in connection with or by reason of (including, without limitation, in
connection with any investigation, litigation or proceeding or preparation of a
defense in connection therewith) (a) the Transaction or any similar transaction
and any of the other transactions contemplated thereby, or (b) the Senior Credit
Facilities or any other financings, or any use made or proposed to be made with
the proceeds thereof (including any arising out of the negligence of any
Indemnified Party), unless and only to the extent that, as to any Indemnified
Party, it shall be determined in a final, non-appealable judgment by a court of
competent jurisdiction that such losses, claims, damages, liabilities or
expenses resulted from the gross negligence or willful misconduct of such
Indemnified Party. In the case of any investigation, litigation or proceeding to
which the indemnity in this paragraph applies, such indemnity shall be effective
whether or not such investigation, litigation or proceeding is brought by you,
your shareholders or creditors or an Indemnified Party and whether or not the
Transaction is consummated. You agree that no Indemnified
<PAGE> 4
Fremont Investors I, LLC
April 5, 1999
Page 4
Party shall have any liability to you or your subsidiaries or affiliates or to
your or their respective security holders or creditors for any indirect or
consequential damages arising out of, related to or in connection with the
Transaction or any of the financings.
The terms of this Commitment Letter, the Term Sheet and the fee letter among
you, NMS, NationsBank and CSFB of even date herewith (the "FEE LETTER") are
confidential and, except for disclosure on a confidential basis to your
accountants, attorneys and other professional advisors retained by you in
connection with the Senior Credit Facilities or as may be required by law, may
not be disclosed in whole or in part to any other person or entity (including
the Borrower) without the prior written consent of NMS, NationsBank and CSFB;
provided, however, it is understood and agreed that you may disclose the terms
of this Commitment Letter and the Term Sheet (but not the Fee Letter) (i) on a
confidential basis to the board of directors and advisors of the Borrower in
connection with their consideration of the Transaction, and (ii) after your
acceptance of this Commitment Letter and the Fee Letter, in filings with the SEC
and other applicable regulatory authorities and stock exchanges, and in proxy
and other materials disseminated to stockholders and other purchasers of
securities of the Borrower.
The provisions of the immediately preceding three paragraphs shall remain in
full force and effect regardless of whether any definitive documentation for the
Senior Credit Facilities shall be executed and notwithstanding the termination
of this Commitment Letter or any commitment or undertaking hereunder; provided,
however, that the Buyer shall be deemed released from its reimbursement and
indemnification obligations hereunder upon the execution of all the Credit
Agreement Documents.
In connection with the services and transactions contemplated hereby, the Buyer
agrees that NationsBank, NMS and CSFB are permitted to access, use and share (on
a confidential basis) with any of their respective bank or non-bank affiliates,
agents, advisors (legal or otherwise) or representatives, any information
concerning the Buyer, the Borrower or any of their respective affiliates that is
or may come into the possession of NationsBank, NMS, CSFB or any of such
affiliates. NationsBank, NMS, CSFB and their respective affiliates will treat
confidential information relating to the Buyer, the Borrower and their
respective affiliates with the same degree of care as they treat their own
confidential information.
This Commitment Letter and the Fee Letter shall be governed by laws of the State
of New York. Each of us hereby irrevocably waives all right to trial by jury in
any action, proceeding or counterclaim (whether based on contract, tort or
otherwise) arising out of or relating to this Commitment Letter, the Term Sheet,
the Fee Letter, the transactions contemplated hereby and thereby or the actions
of NationsBank, NMS and CSFB in the negotiation, performance or enforcement
hereof.
This Commitment Letter supersedes that certain commitment letter dated March 26,
1999, issued by NMS and NationsBank to Fremont Investors I, LLC (the "PRIOR
COMMITMENT LETTER"), and this Commitment Letter, together with the Term Sheet
and the Fee Letter, set forth the entire understanding of the parties with
respect to the Senior Credit Facilities. The Buyer, NMS, and NationsBank hereby
terminate the Prior Commitment Letter and agree that neither NMS, NationsBank
nor Fremont Investors I, LLC shall have any liabilities or obligations
thereunder, including those obligations that expressly survive any termination
of the Prior Commitment Letter. This Commitment Letter may be modified or
amended only by the written agreement of all of the parties hereto. This
Commitment Letter is not assignable by you without the prior written consent of
NMS, NationsBank and CSFB and is intended to be solely for the benefit of the
parties hereto and the Indemnified Parties. Upon execution of a Credit Agreement
by the Borrower, the Buyer shall be released from all obligations hereunder, and
this Commitment Letter shall be of no further force or effect, except to the
extent that the Buyer's obligations hereunder are assumed by the Borrower.
This offer will expire at 5:00 p.m. CST on April 7, 1999 unless you execute this
Commitment Letter and the Fee Letter and return them to NMS prior to that time
(which may be by facsimile transmission), whereupon this Commitment Letter and
the Fee Letter (each of which may be signed in one or more counterparts) shall
become binding agreements. Thereafter, this undertaking and commitment will
expire on the earliest to occur of (a) the closing of the Transaction without
the use of the Senior Credit Facilities, (b) the acceptance
<PAGE> 5
Fremont Investors I, LLC
April 5, 1999
Page 5
by the Borrower or any of its affiliates of an offer for all or any substantial
part of the capital stock or assets of the Borrower other than the offer
contemplated hereby, and (c) July 31, 1999, unless definitive documentation for
the Senior Credit Facilities is executed and delivered prior to such date.
THIS WRITTEN AGREEMENT (WHICH INCLUDES THE SUMMARY OF TERMS AND CONDITIONS) AND
THE FEE LETTER REPRESENT THE FINAL AGREEMENT BETWEEN THE PARTIES AND MAY NOT BE
CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS, OR SUBSEQUENT ORAL
AGREEMENTS OF THE PARTIES. THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE
PARTIES.
We are pleased to have the opportunity to work with you in connection with this
important financing.
Very truly yours,
NATIONSBANK, N.A.
By:
----------------------------------
Title: Senior Vice President
NATIONSBANC MONTGOMERY SECURITIES LLC
By:
----------------------------------
Title: Principal
CREDIT SUISSE FIRST BOSTON
By:
----------------------------------
Title:
----------------------------------
By:
----------------------------------
Title:
----------------------------------
Accepted and Agreed to
as of ________________, ____:
FREMONT INVESTORS I, LLC
By:
----------------------------------
Title:
----------------------------------
<PAGE> 6
SCHEDULE I
SOURCES AND USES TABLE
The Buyer will invest not less than $106.0 million of equity in the Borrower and
the Borrower will borrow (i) approximately $90.5 million under newly arranged
Senior Credit Facilities in the amount of $125.0 million and (ii) not less than
$125.0 million under newly issued Senior Subordinated Notes. The proceeds, along
with existing cash balances of the Borrower of approximately $107.0 million
shall be applied by the Borrower to (i) purchase approximately $404.9 million of
outstanding capital stock of the Borrower (ii) refinance substantially all
existing debt of the Borrower in the approximate amount of $3.3 million, and
(iii) pay fees and expenses estimated at approximately $20.3 million. Upon
completion of the Transaction, the Buyer will own at least 55% of the capital
stock of the Borrower on a fully diluted basis, with the remainder being held
publicly and by the management of the Borrower.
<TABLE>
<CAPTION>
SOURCES ($ MILLIONS)
- --------------------
<S> <C>
Existing Cash Balances $ 107.0
Revolving Credit Facilities (Amount funded at Closing)* 0.5
Tranche A Term Loan Facility 40.0
Tranche B Term Loan Facility 50.0
Senior Subordinated Notes 125.0
Equity Financing 106.0
Existing Equity Rolled 60.0
------
Total Sources $488.5
USES ($ MILLIONS)
- -----------------
Purchase capital stock of Borrower $404.9
Existing Equity Rolled 60.0
Refinance substantially all existing debt of Borrower 3.3
Payment of fees & expenses 20.3
------
Total Uses $488.5
</TABLE>
- --------------------
* Total amount of Revolving Credit Facility will be $35.0 million.
<PAGE> 7
EXHIBIT A
JUNO LIGHTING, INC.
SUMMARY OF TERMS AND CONDITIONS
APRIL 5, 1999
Unless otherwise defined herein, capitalized terms shall have the definitions
assigned to them in the Senior Secured Credit Facilities Commitment Letter (the
"COMMITMENT LETTER"), dated of even date herewith, to which this Summary of
Terms and Conditions is attached.
================================================================================
BORROWER: Juno Lighting, Inc. (the "BORROWER").
GUARANTORS: The Senior Credit Facilities (defined
below) shall be guaranteed by each
existing and future direct and
indirect domestic subsidiary of the
Borrower (collectively, the
"GUARANTORS"). All guarantees shall be
guarantees of payment and not of
collection.
ADMINISTRATIVE AGENT: NationsBank, N.A. (the
"ADMINISTRATIVE AGENT" or
"NATIONSBANK") will act as sole and
exclusive administrative and
collateral agent. As such,
NationsBank, in consultation with
CSFB, will negotiate with the
Borrower, act as the primary contact
for the Borrower and perform all other
duties associated with the role of
exclusive Administrative Agent.
LEAD ARRANGER
AND BOOK
MANAGER: NationsBanc Montgomery Securities LLC
("NMS").
SYNDICATION AGENT: Credit Suisse First Boston ("CSFB" or
the "SYNDICATION AGENT").
LENDERS: A syndicate of financial institutions
(including NationsBank and CSFB)
arranged by NMS in consultation with
CSFB, which institutions shall be
reasonably acceptable to the Borrower
and the Administrative Agent
(collectively, the "LENDERS").
SENIOR CREDIT
FACILITIES: An aggregate principal amount of up to
$125 million will be available upon
the terms and conditions hereinafter
set forth:
Revolving Credit Facility: $35 million
revolving credit facility (the
"REVOLVING CREDIT FACILITY"), which
will include a sublimit for the
issuance of standby and commercial
letters of credit (each a "LETTER OF
CREDIT") in an amount to be mutually
determined, and a $3 million sublimit
for swingline loans (each a "SWINGLINE
LOAN"). Letters of Credit will be
issued by NationsBank (in such
capacity, the "FRONTING BANK"), and
Swingline Loans will be made available
by NationsBank, and each Lender will
purchase an irrevocable and
unconditional participation in each
Letter of Credit.
Tranche A Term Loan Facility: $40
million term loan facility (the
"TRANCHE A TERM FACILITY").
<PAGE> 8
Tranche B Term Loan Facility: $50
million term loan facility (the
"TRANCHE B TERM FACILITY" and,
together with the Tranche A Term
Facility, the "TERM LOAN FACILITIES").
The Revolving Credit Facility and the
Term Loan Facilities are collectively
referred to herein as the "SENIOR
CREDIT FACILITIES".
SWINGLINE OPTION: Swingline Loans will be made available
by the Administrative Agent on a same
day basis in an aggregate amount not
exceeding $3 million. The
Administrative Agent, in its sole
discretion, may make Revolving Credit
Loans to repay Swingline Loans. Each
Lender will agree to provide its pro
rata portion of Revolving Credit Loans
if so requested by the Administrative
Agent, regardless of the existence of
any default or event of default.
PURPOSE: The proceeds of the Senior Credit
Facilities shall be used: (i) to
refinance the outstanding principal
amount of existing indebtedness of the
Borrower and its subsidiaries; (ii) to
purchase approximately 16.2 million
shares of the Borrower's capital stock
pursuant to the Transaction Documents
(defined below); (iii) to pay fees and
expenses incurred in connection with
the Transaction; and (iv) to provide
for working capital and other general
corporate purposes of the Borrower and
its subsidiaries.
CLOSING: The execution of definitive loan
documentation, to occur on or before
July 31, 1999 but no earlier than six
weeks following the Buyer's acceptance
of the Commitment Letter ("CLOSING").
INTEREST RATES: As set forth in Addendum I.
MATURITY: The Revolving Credit Facility shall
terminate and all amounts outstanding
thereunder shall be due and payable in
full six years from Closing.
The Term Loan Facilities shall be
subject to repayment according to the
Scheduled Amortization, with the final
payment of all amounts outstanding
thereunder being due and payable in
full six years from Closing for the
Tranche A Term Facility and seven
years from Closing for the Tranche B
Term Facility.
AVAILABILITY: Revolving Credit Facility: Loans under
the Revolving Credit Facility (the
"REVOLVING CREDIT LOANS") (including
Swingline Loans) may be made, and
Letters of Credit may be issued, on a
revolving basis up to the full amount
of the Revolving Credit Facility.
Term Loan Facilities: Loans made under
the Tranche A Term Facility ("TRANCHE
A TERM LOANS") and loans made under
the Tranche B Term Facility ("TRANCHE
B TERM LOANS") will be available in a
single borrowing at Closing. The Term
Loan Facilities will be subject to
quarterly amortization of principal,
based upon the annual amounts set
forth below (the "SCHEDULED
AMORTIZATION").
2
<PAGE> 9
<TABLE>
<CAPTION>
Tranche A Tranche B
<S> <C> <C>
Loan year 1 $ 3,000,000 $ 500,000
Loan year 2 $ 5,000,000 $ 500,000
Loan year 3 $ 6,000,000 $ 500,000
Loan year 4 $ 8,000,000 $ 500,000
Loan year 5 $ 8,000,000 $ 500,000
Loan year 6 $ 10,000,000 $ 500,000
Loan year 7 -- $ 47,000,000
Total $ 40,000,000 $ 50,000,000
</TABLE>
SECURITY: Concurrently with the Transaction, the
Administrative Agent (on behalf of the
Lenders) shall receive a first
priority perfected security interest
in (i) all of the capital stock of the
Borrower owned by the Buyer, all
capital stock of each of the domestic
subsidiaries (direct or indirect) of
the Borrower owned by a domestic
company and 65% of the capital stock
of each foreign subsidiary (direct or
indirect) of the Borrower owned by a
domestic company, which capital stock
shall not be subject to any other lien
or encumbrance; and (ii) all other
present and future domestic assets and
properties of the Borrower and its
domestic subsidiaries (including,
without limitation, accounts
receivable, inventory, real property,
machinery, equipment, contracts,
trademarks, copyrights, patents,
license rights and general
intangibles).
The priority of the lien and security
interest of the Administrative Agent
shall be supported by such landlord
and mortgagee waivers, warehousemen
and bailee letters, material third
party consents, intercreditor
agreements and other agreements as
shall be reasonably requested by the
Administrative Agent, in each case in
form and substance reasonably
satisfactory to the Administrative
Agent.
The foregoing security shall ratably
secure the Senior Credit Facilities
and any interest rate swap/foreign
currency swap or similar agreements
with a Lender or its affiliates under
the Senior Credit Facilities.
MANDATORY PREPAYMENTS
AND COMMITMENT
REDUCTIONS: In addition to the Scheduled
Amortization, the Senior Credit
Facilities will be prepaid by an
amount equal to (i) 100% of the net
cash proceeds of all asset sales by
the Borrower or any subsidiary of the
Borrower (including sales of stock of
subsidiaries), subject to de minimus
baskets and reinvestment provisions to
be agreed upon and net of selling
expenses and taxes to the extent such
taxes are paid; (ii) 75% (if the
Funded Debt to EBITDA Ratio (to be
defined in the loan documentation) is
equal to or greater than 3.75:1.00.)
or 50% (if the Funded Debt to EBITDA
Ratio is less than 3.75:1.00) of
Excess Cash Flow (to be defined in the
loan documentation); (iii) 100% of the
net cash proceeds from the issuance of
any debt (excluding certain permitted
debt to be agreed upon) by the
Borrower or any subsidiary of the
Borrower; and (iv) 100% of the net
cash proceeds from the issuance of
equity by the Borrower or any
subsidiary of the Borrower, with
certain exceptions to be mutually
agreed upon. Prepayments
3
<PAGE> 10
shall be applied pro rata to reduce
the Tranche A Term Loans and the
Tranche B Term Loans and within each
tranche pro rata with respect to each
remaining installment of principal.
Lenders holding the Tranche B Term
Loans may, so long as there is a
principal balance outstanding with
respect to the Tranche A Term Loans,
decline to accept any mandatory
prepayment described above and, under
such circumstances, all amounts that
would otherwise be used to prepay
Tranche B Term Loans above shall be
used to prepay Tranche A Term Loans.
In the event that the Term Loan
Facilities shall have been fully
repaid, the mandatory prepayments
described above shall be applied to
the Revolving Credit Facility (without
any corresponding commitment
reductions except in the case of
prepayments pursuant to clause (i)
above).
OPTIONAL PREPAYMENTS
AND COMMITMENT
REDUCTIONS: The Borrower may prepay the Senior
Credit Facilities in whole or in part
at any time without penalty, subject
to reimbursement of the Lenders'
breakage and redeployment costs in the
case of prepayment of LIBOR
borrowings. Prepayments shall be
applied pro rata to reduce the Tranche
A Term Loans and the Tranche B Term
Loans and within each tranche pro rata
with respect to each remaining
installment of principal. The
unutilized portion of any commitment
under the Senior Credit Facilities in
excess of the Swingline Loans and the
stated amount of all Letters of Credit
may be irrevocably canceled in whole
or in part.
CONDITIONS
PRECEDENT TO
CLOSING: The Closing (and the initial funding)
of the Senior Credit Facilities will
be subject to satisfaction of the
conditions precedent deemed
appropriate by the Administrative
Agent, the Syndication Agent and the
Lenders for leveraged financings
generally and for this transaction in
particular, including, but not limited
to, the following:
(i) Concurrent Transactions;
Documentation. The Equity
Financing and the Senior
Subordinated Notes shall have
been issued on terms reasonably
satisfactory to the
Administrative Agent and the
Syndication Agent pursuant to
definitive documentation in form
and substance reasonably
satisfactory to the
Administrative Agent and the
Syndication Agent. The
Transaction shall have been
consummated on terms reasonably
satisfactory to the
Administrative Agent and the
Syndication Agent pursuant to
the Transaction Documents, and
all conditions precedent to the
consummation of the Transaction
Documents shall have been
satisfied or, with the prior
approval of the Administrative
Agent and the Syndication Agent,
waived. The Borrower and the
Guarantors shall have entered
into the Credit Agreement
Documents in form and substance
reasonably satisfactory to the
Administrative Agent, the
Syndication Agent and the
Lenders, and all conditions
precedent to the initial
borrowings shall have been
satisfied.
(ii) Capitalization; Etc. After
giving effect to the
Transaction, the Administrative
Agent and the Syndication Agent
shall be reasonably satisfied
with the corporate, capital and
ownership
4
<PAGE> 11
structure (including articles of
incorporation and by-laws),
stockholders' agreements and
management of the Borrower and
its subsidiaries.
Notwithstanding the foregoing
(a) at Closing, the Borrower
shall have not less than $33
million of availability under
the Revolving Credit Facility,
and (b) the Borrower's pro forma
ratio of total debt/EBITDA shall
not exceed 5.20 to 1.00 (based
upon the Borrower's pro-forma
total debt and trailing 12 month
EBITDA as set forth in the pro
forma financial statements to be
delivered pursuant to (iii) (c)
and (d) below).
(iii) Financial Statements. The
Administrative Agent and the
Syndication Agent shall have
received (a) audited financial
statements of the Borrower and
its subsidiaries for its most
recent three fiscal years, (b)
the most recent unaudited
quarterly financial statements
of the Borrower and its
subsidiaries, (c) an unaudited
pro forma balance sheet of the
Borrower and its subsidiaries
which gives effect to the
Transaction as if it had
occurred on the last day of the
most recently completely fiscal
quarter of the Borrower and its
subsidiaries, and (d) an
unaudited pro forma income
statement of the Borrower and
its subsidiaries (including a
calculation of EBITDA) which
gives effect to the Transaction
for the trailing 12 months of
operations ending on the most
recently completed fiscal
quarter end of the Borrower and
its subsidiaries. All financial
statements shall be prepared in
accordance with the requirements
of Regulation S-X under the
Securities Act of 1933, as
amended, applicable to a
Registration Statement under
such Act on Form S-1.
(iv) Solvency. The Administrative
Agent and the Syndication Agent
shall have received
certification as to the
financial condition and solvency
of the Borrower and its
subsidiaries after giving effect
to the Transaction, from an
independent firm satisfactory to
the Agent.
(v) Other Obligations. On or prior
to Closing, (a) all fees and
expenses due and payable to NMS,
NationsBank, the Syndication
Agent, any other Lender and/or
their affiliates pursuant to the
Commitment Letter, the Fee
Letter or otherwise shall have
been paid in full as
contemplated therein, and (b)
the Borrower and the Buyer shall
have complied with all of their
obligations under the Commitment
Letter and the Fee Letter, and
each such letter shall be in
full force and effect.
(vi) Consents. All governmental,
shareholder and third-party
consents (including
Hart-Scott-Rodino clearance) and
approvals necessary or desirable
in connection with the
Transaction and the other
transactions contemplated hereby
shall have been obtained; all
such consents and approvals
shall be in full force and
effect; and all applicable
waiting periods shall have
expired without any action being
taken by any authority that
could restrain, prevent or
impose any material adverse
conditions on the Transaction or
such other transactions or that
could seek or threaten any of
the foregoing.
(vii) Judgments, Etc. There shall not
exist (a) any order, decree,
judgment, ruling or injunction
which restrains the consummation
of the Transaction in the manner
contemplated by the
5
<PAGE> 12
Transaction Documents and (b)
any pending or threatened
action, suit, investigation or
proceeding which, if adversely
determined, could reasonably be
expected to materially adversely
affect the ability of the
Borrower or the Guarantors to
perform any of their respective
obligations under the Credit
Agreement Documents or the
ability of the Lenders to
exercise their rights
thereunder.
(viii)Opinions, Etc. The
Administrative Agent and the
Syndication Agent shall have
received (a) satisfactory
opinions of counsel to the
Borrower and the Guarantors
(which shall cover, among other
things, authority, legality,
validity, binding effect and
enforceability of the Credit
Agreement Documents) and such
corporate resolutions,
certificates, and other
documents as the Administrative
Agent shall reasonably require
and (b) satisfactory evidence
that the Administrative Agent
holds a perfected, first
priority lien in all collateral
for the Senior Credit
Facilities, subject to no other
liens except for permitted liens
to be determined.
(ix) Other Reports. The
Administrative Agent and the
Syndication Agent shall have
received, in form and substance
reasonably satisfactory to it,
all environmental reports, Year
2000 questionnaires, field
audits, and such other reports,
audits or certifications and is
it may reasonably request.
REPRESENTATIONS AND
WARRANTIES: Usual and customary for leveraged
financings generally and for this
transaction in particular, including,
but not limited to, the following: (i)
corporate existence and status; (ii)
corporate power and
authority/enforceability; (iii) no
violation of law or contracts or
organizational documents; (iv) no
material litigation; (v) correctness
of specified financial statements and
other information and no material
adverse change; (vi) no required
governmental or third party approvals;
(vii) use of proceeds/compliance with
margin regulations; (viii) status
under Investment Company Act; (ix)
ERISA matters; (x) environmental
matters; (xi) perfected liens and
security interests; (xii) payment of
taxes; (xiii) accuracy of disclosure;
(xiv) Year 2000 preparedness; and (xv)
consummation of the Transaction.
COVENANTS: Usual and customary for leveraged
financings generally and for this
transaction in particular, including,
but not limited to, the following: (i)
delivery of financial statements and
other reports; (ii) delivery of
compliance certificates; (iii)
delivery of notices of default,
material litigation and material
governmental and environmental
proceedings; (iv) compliance with laws
(including environmental laws and
ERISA matters) and material
contractual obligations; (v) payment
of taxes; (vi) maintenance of
insurance; (vii) limitation on liens
and negative pledges; (viii)
limitation on mergers, consolidations
and sales of assets; (ix) limitation
on incurrence of debt; (x) limitation
on dividends, stock redemptions and
the redemption and/or prepayment of
other debt; (xi) limitation on
investments (including loans and
advances) and acquisitions; (xii)
limitation on capital expenditures;
(xiii) limitation on transactions with
affiliates; (xiv) satisfactory
interest rate protection, and (xv)
Year 2000 compliance. Each of the
6
<PAGE> 13
foregoing shall contain certain
mutually agreed upon exceptions as are
customary for leveraged financings
generally.
Financial covenants to include (but
not be limited to):
- Maintenance on a rolling four
quarter basis of a Maximum
Leverage Ratio (total debt/
EBITDA),
- Maintenance on a rolling four
quarters basis of a Minimum
Interest Coverage Ratio (EBITDA
/ Interest Expense), and
- Maintenance on a rolling four
quarter basis of a Minimum Fixed
Charge Coverage Ratio (EBITDA
less capital expenditures) /
(cash interest expense plus
scheduled principal repayments).
EVENTS OF DEFAULT: Usual and customary for leveraged
financings generally and for this
transaction in particular, including,
but not limited to, the following
(with customary grace periods to be
mutually agreed upon): (i) nonpayment
of principal, interest, fees or other
amounts, (ii) violation of covenants,
(iii) material inaccuracy of
representations and warranties, (iv)
cross-default to other material
agreements and indebtedness, (v)
bankruptcy and other insolvency
events, (vi) material judgments, (vii)
ERISA matters, (viii) actual or
asserted invalidity of any loan
documentation or security interests,
or (ix) change of control of the
Borrower (to be defined).
ASSIGNMENTS AND
PARTICIPATIONS: Each Lender will be permitted to make
assignments in acceptable minimum
amounts to other financial
institutions approved by the Borrower,
which approval shall not be
unreasonably withheld; provided,
however, that the approval of the
Borrower shall not be required in
connection with assignments to other
Lenders or any of their affiliates.
Lenders will be permitted to sell
participations with voting rights
limited to significant matters such as
changes in amount, rate and maturity
date and releases of all or
substantially all of the collateral
and the Guarantors. An assignment fee
of $3,500 shall be payable by the
Lender to the Administrative Agent
upon the effectiveness of any such
assignment (including, but not limited
to, an assignment by a Lender to any
other Lender).
WAIVERS AND
AMENDMENTS: Amendments and waivers of the
provisions of the loan agreement and
other definitive credit documentation
will require the approval of Lenders
holding loans and commitments
representing more than 50% of the
aggregate amount of loans and
commitments under the Senior Credit
Facilities, except that (i) the
consent of all of the Lenders affected
thereby shall be required with respect
to (a) increases in the commitment of
such Lenders, (b) reductions of
principal, interest, or fees, (c)
extensions of scheduled maturities or
times for payment, (d) releases of all
or substantially all of the
collateral, and (e) releases of all or
substantially all of the Guarantors,
and (ii) the consent of the Lenders
holding at least 50% each of the
Tranche A Term Facility and the
Tranche B Term Facility shall be
required with respect to any amendment
that changes the allocation of any
payments between the Term Loan
Facilities.
7
<PAGE> 14
INDEMNIFICATION: The Borrower shall indemnify the
Administrative Agent, NMS, CSFB and
the Lenders and their respective
affiliates from and against all
losses, liabilities, claims, damages
or expenses arising out of or relating
to the Transaction, the Senior Credit
Facilities, the Borrower's use of loan
proceeds or the commitments,
including, but not limited to,
reasonable attorneys' fees and
settlement costs (subject to customary
qualifications to be mutually agreed
upon).
GOVERNING LAW: New York
FEES/EXPENSES: As set forth in Addendum I.
OTHER: This Summary of Terms and Conditions
is intended as an outline of certain
of the material terms of the
Transaction and the Senior Credit
Facilities and does not purport to
summarize all of the conditions,
covenants, representations, warranties
and other provisions which would be
contained in definitive legal
documentation for the Senior Credit
Facilities contemplated hereby. The
Borrower and each Guarantor shall each
waive its right to a trial by jury.
8
<PAGE> 15
ADDENDUM I
JUNO LIGHTING, INC.
INTEREST RATES, FEES AND EXPENSES
APRIL 5, 1999
COMMITMENT FEE The Borrower will pay a per annum fee
(the "COMMITMENT FEE") on the unused
portion of the Senior Credit
Facilities at an applicable percentage
as set forth in the Pricing Grid
below. The Commitment Fee is payable
quarterly in arrears commencing upon
Closing. Swingline Loans will not be
deemed to be utilized for purposes of
calculating the Commitment Fee.
INTEREST RATES: The Revolving Credit Facilities
shall bear interest at the Borrower's
option of (a) LIBOR, or (b) the Base
Rate (to be defined as the higher of
(i) the NationsBank prime rate and
(ii) the Federal Funds rate plus
.50%); in each case plus an applicable
percentage as set forth in the Pricing
Grid below.
The Borrower may select interest
periods of 1, 2, 3 or 6 months for
LIBOR loans, subject to availability.
Interest shall be payable at the end
of the selected interest period, but
no less frequently than quarterly.
In the event of default under the
Senior Credit Facilities, a default
rate of 2% above the applicable
interest rate shall apply on all
loans.
If during the 30 day period following
the Closing, any breakage costs,
charges or fees are incurred with
respect to LIBOR loans on account of
the syndication of the Senior Credit
Facilities, the Borrower shall
immediately reimburse the
Administrative Agent and the
Syndication Agent for any such costs,
charges or fees. Such right of
reimbursement shall be in addition to
and not in limitation of customary
cost and yield protections.
LETTER OF
CREDIT FEES: The Borrower will pay a per annum fee
(the "LETTER OF CREDIT FEE") on the
amount available to be drawn under
each Letter of Credit at an applicable
percentage as set forth in the Pricing
Grid below. Letter of Credit Fees are
payable quarterly in arrears to be
shared proportionately among the
Lenders. The Borrower will also pay a
fronting fee (the "FRONTING FEE") of
0.25% per annum on the amount
available to be drawn under each
Letter of Credit. Fronting Fees are
payable quarterly in arrears for the
sole account of the Fronting Bank.
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<PAGE> 16
PRICING GRID: Applicable percentages are determined
based upon the Borrower's Leverage
Ratio (defined as total debt/EBITDA).
Set forth below are the LIBOR
applicable percentages for loans
outstanding under the Senior Credit
Facilities, the Letter of Credit Fee
applicable percentage and the
Commitment Fee applicable percentage.
The Base Rate applicable percentages
for loans outstanding under each of
the Senior Credit Facilities will be
1.50% less than the LIBOR Applicable
Percentage set forth in the Pricing
Grid. Swingline Loans will bear
interest at the Base Rate + 0.50%
without regard to the Leverage Ratio.
Prior to the Administrative Agent's
receipt of the Borrower's August 31,
1999 financial statements, the
applicable percentages shall assume a
Leverage Ratio of x > 4.00.
-
<TABLE>
<CAPTION>
PRICING GRID APPLICABLE PERCENTAGE
- ------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Leverage Ratio = x x > 4.00 3.50 < x < 4.00 2.75 < x < 3.50 x < 2.75
- - -
Revolving Credit Loans 2.500% 2.250% 2.000% 1.625%
Tranche A Term Loans 2.500% 2.250% 2.000% 1.625%
Tranche B Term Loans 3.000% 3.000% 2.750% 2.750%
Letters of Credit 2.500% 2.250% 2.000% 1.625%
Commitment Fee 0.500% 0.500% 0.500% 0.375%
</TABLE>
CALCULATION OF
INTEREST AND FEES: Other than calculations in
respect of interest at the Base Rate
(which shall be made on the basis of
actual number of days elapsed in a
365/366 day year), all calculations of
interest and fees shall be made on the
basis of actual number of days elapsed
in a 360 day year.
COST AND YIELD
PROTECTION: Customary for transactions and
facilities of this type, including,
without limitation, in respect of
breakage or redeployment costs
incurred in connection with
prepayments, changes in capital
adequacy and capital requirements or
their interpretation, illegality,
unavailability, reserves without
proration or offset and payments free
and clear of withholding or other
taxes.
EXPENSES: The Borrower will pay all reasonable
out-of-pocket costs and expenses
associated with the preparation, due
diligence, administration, syndication
and enforcement of all documentation
executed in connection with the Senior
Credit Facilities, including, without
limitation, the reasonable legal fees
of Jones, Day, Reavis & Pogue, counsel
to the Administrative Agent and the
Syndication Agent. The Borrower will
also pay the expenses of each Lender
in connection with the enforcement of
any of the Credit Agreement Documents.
10
<PAGE> 1
EXHIBIT 23.1
Consent of Independent Accountants
We hereby consent to the incorporation by reference in the Prospectus
constituting part of this Registration Statement on Form S-4 of Juno Lighting,
Inc. of our report dated January 14, 1999, appearing on page 17 of Juno
Lighting, Inc.'s Annual Report on Form 10-K for the year ended November 30,
1998. We also consent to the incorporation by reference of our report on the
Financial Statement Schedule, appearing on page 32 of Juno Lighting, Inc.'s
Annual Report on Form 10-K for the year ended November 30, 1998.
PricewaterhouseCoopers LLP
April 12, 1999
<PAGE> 1
EXHIBIT 99.3
April 12, 1999
[Letterhead of William Blair & Company, L.L.C.]
Consent of William Blair & Company, L.L.C.
------------------------
We hereby consent to the use of our opinion letter dated March 26, 1999
to the Board of Directors of Juno Lighting, Inc. ("Juno") included as Annex B to
the Proxy Statement/Prospectus which forms a part of the Registration Statement
on Form S-4 relating to the proposed merger of Jupiter Acquisiton Corp., a
wholly owned subsidiary of Fremont Investors I, LLC, with Juno and to the
references to such opinion in such Proxy Statement/Prospectus under the captions
"Summary-- "The Recapitalization and Merger," "The Recapitalization and
Merger--Background of the Recapitalization and Merger," "The Recapitalization
and Merger--Reasons for the Recapitalization and Merger; Recommendation of the
Board of Directors" and "The Recapitalization and Merger--Opinion of Financial
Advisor." In giving such consent, we do not admit that we come within the
category of persons whose consent is required under Section 7 of the Securities
Act of 1933, as amended, or the rules and regulations of the Securities and
Exchange Commission thereunder, nor do we thereby admit that we are experts with
respect to any part of such Registration Statement within the meaning of the
term "experts" as used in the Securities Act of 1933, as amended, or the rules
and regulations of the Securities and Exchange Commission thereunder.
/s/ William Blair & Company
WILLIAM BLAIR & COMPANY
