<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON FEBRUARY 7, 2000
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------
SCHEDULE 14D-9
SOLICITATION/RECOMMENDATION STATEMENT
UNDER SECTION 14(D)(4) OF
THE SECURITIES EXCHANGE ACT OF 1934
------------------
ZING TECHNOLOGIES, INC.
(Name of Subject Company)
ZING TECHNOLOGIES, INC.
(Name of Person Filing Statement)
COMMON STOCK, PAR VALUE $.01
(Title of Class of Securities)
989601109
(CUSIP Number of Class of Securities)
------------------------
ROBERT E. SCHRADER
CHAIRMAN OF THE BOARD, PRESIDENT AND CHIEF EXECUTIVE OFFICER
ZING TECHNOLOGIES, INC.
115 STEVENS AVENUE
VALHALLA, NEW YORK 10595
(914) 747-7474
------------------------
(Name, address and telephone number of person authorized to
receive notices and communications on behalf of the person filing statement)
WITH A COPY TO:
HENRY A. SINGER, ESQ.
MORRISON COHEN SINGER & WEINSTEIN, LLP
750 LEXINGTON AVENUE
NEW YORK, NEW YORK 10022
(212) 735-8600
/ / Check the box if the filing relates solely to preliminary communications
made before the commencement of a tender offer.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>
ITEM 1. SUBJECT COMPANY INFORMATION
(a) NAME AND ADDRESS. The name of the subject company is Zing
Technologies, Inc., a New York corporation (the "Company"). The address
of the principal executive offices of the Company is 115 Stevens Avenue,
Valhalla, New York, 10595 and the telephone number is (914) 747-7474.
(b) SECURITIES. The title of the class of equity securities to which this
Statement relates is common stock, par value $.01 per share, of the
Company (the "Company Common Stock" or the "Shares"). As of January 26,
2000, there were 2,406,837 shares of Company Common Stock outstanding.
ITEM 2. IDENTITY AND BACKGROUND OF FILING PERSON
(a) NAME AND ADDRESS: This Solicitation/Recommendation Statement (this
"Statement") is being filed by the Company. The address of the principal
executive offices of the Company is 115 Stevens Avenue, Valhalla, New
York, 10595 and the telephone number is (914) 747-7474.
(b) TENDER OFFER. This Statement relates to the tender offer by IRC
Acquisition Corporation (the "Purchaser"), a New York corporation and a
wholly-owned subsidiary of International Rectifier Corporation
("Parent"), a Delaware corporation, and Parent disclosed in a Tender
Offer Statement on Schedule TO (the "Schedule TO"), dated February 7,
2000, offering to purchase all of the outstanding Shares at a price of
$15.36 per Share, net to the seller in cash (the "Offer Price"), upon the
terms and subject to the conditions set forth in the Offer to Purchase
(the "Offer to Purchase"), dated February 7, 2000, and the related Letter
of Transmittal (which, together with the Offer to Purchase, constitute
the "Offer"). The address of the Purchaser as set forth in the Schedule
TO is 233 Kansas Street, El Segundo, California 90245.
The Offer is being made pursuant to an Agreement and Plan of
Reorganization, dated as of January 27, 2000 (the "Merger Agreement"), by
and among the Parent, the Purchaser and the Company. The Merger Agreement
provides, among other things, that following satisfaction or waiver of
the conditions set forth in the Merger Agreement, the Purchaser will be
merged with and into the Company (the "Merger"), the separate corporate
existence of the Purchaser will cease and the Company will continue as
the surviving corporation (the "Surviving Corporation") and a wholly-
owned subsidiary of the Parent. A copy of the Merger Agreement is filed
as Exhibit (b) to this Statement and is incorporated herein by reference.
At meetings held on January 18(th) and 19(th), 2000 all members of the
Board of Directors of the Company (the "Company Board"), approved the
Merger Agreement and the transactions contemplated thereby, including the
Offer and the Merger and determined that the transactions contemplated by
the Merger Agreement, including the Offer and the Merger are fair to and
in the best interests of the shareholders.
ITEM 3. PAST CONTACT, TRANSACTIONS, NEGOTIATIONS AND AGREEMENTS
(a) CONFLICTS OF INTERESTS. Except as set forth in this Item 3, to the
knowledge of the Company, there are no material agreements, arrangements
or understandings and no actual or potential conflicts of interest
between the Company or its affiliates and (i) the Company's executive
officers, directors or affiliates or (ii) Parent or Purchaser or their
respective executive officers, directors or affiliates.
(b) AGREEMENTS WITH PARENT AND PURCHASER. A summary of the material
provisions of the Merger Agreement is included in the Offer to Purchase
under Section 11 "Purpose of the Offer; Plans for the Company; Merger
Agreement; Shareholder Support Agreement; Stock Option Agreement;
Confidentiality Agreement" of the Offer to Purchase, a copy of which is
included as Exhibit(a)(1)(A) to the Schedule TO and is incorporated
herein by this reference. Such summary
2
<PAGE>
does not purport to be complete and is qualified in its entirety by
reference to the complete text of the Merger Agreement, a copy of which
is filed as Exhibit (b) to this Statement and is incorporated herein by
this reference.
(c) AGREEMENTS WITH EXECUTIVE OFFICERS, DIRECTORS OR AFFILIATES OF THE
COMPANY. Certain agreements, arrangements or understandings between the
Company and certain of its directors, executive officers and affiliates
are set forth in Item 10 "Executive Compensation and Other Information"
to the Company's Annual Report on Form 10-KSB/A dated October 28, 1999
and is incorporated herein by this reference.
On January 18, 2000 the Company Board had a meeting to discuss the
Merger. On January 19, 2000, the Company Board held a continuation of the
January 18, 2000 meeting, which had been adjourned. At the January 19,
2000 meeting the Company Board discussed the Merger Agreement, the
structure of the transaction and the terms of the Offer, and at such
meeting unanimously determined that the Merger, the stock option
agreement and the transactions contemplated thereby, including the Offer
and the Merger were fair to and in the best interests of the Company's
shareholders. The Company Board also discussed the contributions made to
the Company by each of Robert Schrader, Chief Executive Officer, Martin
Fawer, Chief Financial Officer, Michelle Mastropolo, Administrative
Assistant and Donald Guarnieri, Comptroller (the "Employees"). The
Company Board proposed termination bonuses for each of the Employees, to
reward them for their service to the Company during their respective
terms of employment with the Company. Mr. Schrader and Mr. Fawer did not
participate in the discussion or vote with respect to their respective
proposed termination bonuses. The Company Board approved the following
termination bonuses:
<TABLE>
<CAPTION>
NAME: AMOUNT OF BONUS:
- ----- ----------------
<S> <C>
Robert Schrader............................................. $440,000
Martin Fawer................................................ $300,000
Michelle Mastropolo......................................... $ 36,000
Donald Guarnieri............................................ $ 30,000
</TABLE>
On January 27, 2000, Mr. John Catrambone, President and Chief Executive
Officer of Omnirel LLC entered into an incentive compensation agreement
with Parent (the "Catrambone Incentive Compensation Agreement"). In order
to induce Mr. Catrambone to become an employee of Parent, Parent agreed,
pursuant to the Catrambone Incentive Compensation Agreement, to pay
incentive bonuses to Mr. Catrambone as follows: $250,000 within ten days
of the effective date of the Merger and $250,000 within ten days
following the one year anniversary of the effective date. The above is a
summary, and is qualified in its entirety by reference to the Catrambone
Incentive Compensation Agreement incorporated herein by this reference, a
copy of which has been filed as Exhibit (d)(9) to the Schedule TO.
ITEM 4. THE SOLICITATION OR RECOMMENDATION
(a) SOLICITATION OR RECOMMENDATION. At meetings held on January 18(th) and
19(th), 2000, the Company Board, by unanimous vote of all directors
approved the Merger Agreement and the transactions contemplated thereby,
including the Offer and the Merger, and determined that the terms of the
Offer and the Merger, taken together, are fair to, and in the best
interests of, the Company and its shareholders.
The Company Board recommends that the shareholders accept the Offer and
tender their shares pursuant to the Offer.
3
<PAGE>
A letter to the Company's shareholders communicating the Company Board's
recommendation and a press release announcing the execution of the Merger
Agreement are filed herewith as Exhibits 1 and 2, respectively, and are
incorporated herein by this reference.
(b) REASONS FOR THE RECOMMENDATION OF THE COMPANY'S BOARD OF DIRECTORS.
The Company Board is constantly seeking to maximize shareholder value,
and from time to time has considered various financial and strategic
alternatives. In November 1998, the Company Board approached FleetBoston
Robertson Stephens Inc. ("Fleet"), a bank that the Company has engaged in
various matters, to discuss various strategies for increasing shareholder
value.
Pursuant to a mandate letter dated March 3, 1999 (the "Engagement
Letter"), the Company retained Fleet as its financial advisor in
considering the Company's financial and strategic alternatives, including
the possible sale of (or other extraordinary transactions involving) the
Company and its subsidiaries. The Company has had a relationship with
Fleet since June 1994, during which time Fleet has performed a variety of
financial, banking and advisory services.
The Company agreed in the Engagement Letter to pay to Fleet in cash
(i) a monthly project fee of $7,500, not to exceed $37,500 (to be applied
against the completion fee), (ii) a completion fee of 2% of the
transaction value of Omnirel LLC, the Company's wholly-owned limited
liability company ("Omnirel"), if the aggregate fair market value of the
net proceeds received by the Company's shareholders for Omnirel (the
"Purchase Price") was less than $22,500,000 and (iii) an incentive fee of
3% of the amount by which the Purchase Price exceeded $22,500,000, which
completion fee and incentive shall be approximately $575,000. The fees
are payable in cash upon closing of a transaction, or in the case of a
tender offer, upon the first purchase of shares pursuant to such tender
offer. Whether or not any transaction is proposed or consummated, the
Company has agreed to reimburse Fleet for reasonable out-of-pocket
expenses. In the Engagement Letter, the Company agreed to indemnify Fleet
against certain liabilities arising out of Fleet's engagement.
On June 10, 1999, Fleet prepared an Offering Memorandum for use in
connection with its representation of the Company. Fleet produced a list
of potential strategic buyers. Between June 10, 1999 and October 15,
1999, Fleet contacted approximately 40 strategic buyers and more than 100
financial buyers, including private equity firms. The Company executed 45
Confidentiality Agreements with prospective purchasers.
Beginning on June 16, 1999, Fleet distributed copies of the Offering
Memorandum to 17 strategic buyers and to 28 financial buyers.
During an approximately three month period beginning on July 13, 1999,
Fleet received a total of nine formal acquisition proposals, four of them
in writing. The four top bidders, including Parent, were eventually
invited to meet with Omnirel and Zing management.
In July of 1999, Mr. Nick Thornburn, an employee of Omnirel and a former
employee of Parent, spoke to Mr. Robert Mueller, a member of the board of
directors for Parent, about the possibility of Omnirel and Parent
conducting regular commercial business with each other. Mr. Mueller spoke
with Mr. Walt Lifsey, Vice President of Government and Space Products for
Parent, who, through Mr. Thornburn, contacted Mr. John Catrambone,
president and chief executive officer of Omnirel, towards the end of
July, 1999. Mr. Lifsey and Mr. Catrambone arranged for a meeting for this
purpose on August 10, 1999, while Mr. Lifsey was visiting some of
Parent's distributors in New York.
On August 10, 1999, Mr. Lifsey and Mr. Catrambone met and exchanged
general industry and company information, including a general discussion
of business conditions in the space, military, and high reliability
markets. Following the meeting, Mr. Catrambone gave Mr. Lifsey an
escorted
4
<PAGE>
tour of the Omnirel manufacturing facility in Leominster, Massachusetts.
During the course of their conversation, Mr. Lifsey advised
Mr. Catrambone that Parent was exploring the possibility of making
strategic acquisitions, and Mr. Catrambone informed Mr. Lifsey that the
Company had retained Fleet for the purpose of exploring financial and
strategic alternatives.
On October 13, 1999, the Company held its first management meeting with a
prospective purchaser. On October 14 and October 15, 1999 management
personnel from Parent visited Omnirel. After the management meetings with
each of the four final bidders were held, each of the bidders was asked
to submit a more detailed proposal. Each of the four bidders submitted
more detailed proposals with higher valuation ranges. At this point, the
process was run as a competitive limited auction.
On November 18, 1999, during the course of the bidding and negotiation
process, the Company consulted with legal counsel and determined that it
would be in the best interests of the shareholders of the Company to
change the structure of the transaction, and to offer the Company, rather
than offering Omnirel. It was determined that offering the Company rather
than Omnirel would avoid the potential double taxation to the
shareholders of the Company that might occur if Omnirel were sold. The
participants in the bidding process were advised of the preferred deal
structure, and discussions with the participants proceeded on this basis.
The bidding process was subsequently focused on the two highest bidders,
based upon price, structure and timing. One of the bidders was Parent.
On December 13, 1999, following a conversation between Company counsel
and Parent counsel on December 11, 1999, Parent determined to alter the
structure of the transaction from a merger to a tender offer for the
Company, followed by a merger, based upon the belief that the tender
offer structure would be the most efficient means to consummate the
transaction.
During the week of January 10, 2000, negotiations occurred between the
Company and the second highest bidder. At this time, the other bidder was
unable to match the terms proposed by Parent, which terms were more
advantageous to the shareholders of the Company.
On January 18, 2000, the Company Board held a meeting to discuss the
transaction. Mr. Robert Snape, Director, Mergers and Acquisitions at
Fleet, attended the meeting and provided a brief history of the
transaction beginning with Fleet's engagement in March 1999. The Company
Board discussed whether or not a fairness opinion should be obtained.
Mr. Henry Singer, a director of the Company and a partner of Morrison
Cohen Singer & Weinstein, LLP, counsel to the Company, explained the law
on the issue and indicated that if a company had sufficiently explored
the marketplace to determine fair market value, then the directors could
conclude that obtaining a fairness opinion would be an unnecessary
expense. The Company Board determined that a fairness opinion would be a
waste of corporate assets, in light of the fact that the Company had
retained Fleet and that Fleet had actively explored the marketplace.
Mr. Singer reviewed the terms of the Merger Agreement with the Company
Board.
On January 19, 2000, the Company Board held a continuation of the
January 18, 2000 meeting, which had been adjourned, to continue its
discussion of the transaction. The Company Board discussed the Merger
Agreement, the structure of the transaction and the terms of the Offer,
and at such meeting unanimously determined that the Merger, the Stock
Option Agreement and the Transactions, including the Offer and the Merger
were fair to and in the best interests of the Company's shareholders.
On January 27, 2000, the Company accepted the offer proposed by Parent
and the Merger Agreement was executed by the parties thereto.
5
<PAGE>
(c) INTENT TO TENDER. To the best knowledge of the Company, all of its
executive officers, directors, affiliates and subsidiaries currently
intend to tender pursuant to the Offer all Shares held of record or
beneficially owned by such persons (other than shares issuable upon the
exercise of Options and Shares, if any, which if tendered could cause
such persons to incur liability under the provisions of Section 16(b) of
the Exchange Act), subject to and consistent with any fiduciary
obligations of such persons.
On January 27, 2000, each of John Catrambone, Robert E. Schrader IRA,
Robert and Deborah Schrader, The Robert Schrader 1998 Grantor Retained
Annuity Trust, Robert Schrader and John Allwein (each a "Shareholder" and
collectively, the "Shareholders") entered into a separate agreement
(collectively, the "Shareholder Support Agreements") with Purchaser,
filed as Exhibit (e)(1), (e)(2), (e)(3), (e)(4), (e)(5) and (e)(6),
respectively, to this Statement, each of which is incorporated herein by
this reference. The Shareholders own approximately 57% of the outstanding
Company Common Stock. Pursuant to the terms of the Shareholder Support
Agreements, each Shareholder irrevocably and unconditionally agrees to
validly tender in accordance with the terms of the Offer, all of the
Shares owned by such Shareholder as of the date of such Shareholder
Support Agreement. The above is a summary of the terms of the Shareholder
Support Agreement and is qualified in its entirety by reference to the
Shareholder Support Agreements, incorporated herein by this reference,
copies of which have been filed as Exhibits to this Statement.
ITEM 5. PERSONS/ASSETS, RETAINED, EMPLOYED COMPENSATED OR USED
The information set forth in Item 4 above is incorporated herein by this
reference.
Fleet and its affiliates have rendered various investment banking and
other advisory services to the Company and its affiliates in the past
for which Fleet received customary compensation. In the ordinary course
of business, Fleet and its affiliates may actively trade securities of
the Company, Parent and their affiliates 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.
Except as disclosed herein and in the Offer to Purchase, a copy of which
is attached as Exhibit(a)(1)(A) to the Schedule TO and portions of which
are incorporated herein by reference, neither the Company nor any person
acting on its behalf has employed, retained or agreed to compensate any
person to make solicitations or recommendations to the shareholders
concerning the Offer or the Merger.
ITEM 6. INTEREST IN SECURITIES OF THE SUBJECT COMPANY
(a) During the past 60 days, no transactions in Shares have been effected by
the Company or, to the best of the Company's knowledge, by any of its
executive officers, directors, affiliates or subsidiaries.
ITEM 7. CERTAIN NEGOTIATIONS AND TRANSACTIONS BY THE SUBJECT COMPANY
(a) Except as set forth in this Schedule 14D-9, the Company is not engaged
in any negotiation in response to the Offer that relates to or would
result in (i) an extraordinary transaction, such as a merger,
reorganization or liquidation, involving the Company or any subsidiary of
the Company, (ii) a purchase, sale or transfer of a material amount of
assets by the Company or any subsidiary of the Company, (iii) a tender
offer for or other acquisition of securities by or of the Company or
(iv) any material change in the present dividend policy or indebtedness
or capitalization of the Company.
6
<PAGE>
(b) Except as described in Item 3 above (the provisions of which are hereby
incorporated by reference), there are no transactions, Board of Directors
resolutions, agreements in principle or signed contracts in response to
the Offer that relate to or would result in one or more of the events
referred to in Item 7(a) above.
ITEM 8. ADDITIONAL INFORMATION
(a) As a New York company, the anti-takeover provisions of Section 912 of
the Business Corporation Law of the State of New York ("New York Law") by
their terms apply to the Company. A description of these provisions and
their applicability to the Company is contained in Section 15 "Certain
Legal Matters and Regulatory Approvals" of the Offer to Purchase which is
attached as Exhibit (a)(1)(A) to the Schedule TO and is incorporated
herein by this reference. At its meeting held on January 19, 2000, the
Company Board approved the Merger Agreement and the transactions
contemplated thereby, which approval rendered Section 912 of the New York
Law inapplicable to the Merger Agreement and the transactions
contemplated thereby including the Offer and the Merger.
(c) For a description of appraisal rights applicable to the Merger (such
rights not being applicable to the Offer), see Section 15 "Certain Legal
Matters and Regulatory Approvals" of the Offer to Purchase which is
attached as Exhibit (a)(1)(A) to the Schedule TO and is incorporated
herein by this reference.
(d) Reference is hereby made to the Letter of Transmittal which is attached
as Exhibit (a)(1)(B) to the Schedule TO and is incorporated herein by
reference.
ITEM 9. EXHIBITS
<TABLE>
<S> <C>
(a)(1) Letter to Shareholders dated February 7, 2000.
(a)(2) Press release dated January 28, 2000 (previously filed with
the Securities and Exchange Commission on January 31, 2000
as Exhibit 1 to Schedule 14D-9).
(b) Agreement and Plan of Reorganization, dated as of
January 27, 2000 by and among Zing Technologies, Inc., IRC
Acquisition Corporation and International Rectifier
Corporation (filed as Exhibit d(1) to Schedule TO filed by
IRC Acquisition Corporation and International Rectifier
Corporation with the Securities and Exchange Commission on
February 7, 2000 and incorporated herein by this reference).
(c) Letter Agreement dated as of March 3, 1999 by and among
Fleet National Bank, Zing Technologies, Inc. and Omnirel,
LLC.
(d) Annual Report for Zing Technologies, Inc. on Form 10-KSB/A
dated October 28, 1999 (previously filed with the Securities
and Exchange Commission on October 28, 1999 and incorporated
herein by this reference).
(e)(1) Shareholder Support Agreement, dated January 27, 2000, by
and among International Rectifier Corporation, IRC
Acquisition Corporation and John F. Catrambone (filed as
Exhibit (d)(3) to Schedule TO filed by IRC Acquisition
Corporation and International Rectifier Corporation with the
Securities and Exchange Commission on February 7, 2000 and
incorporated herein by this reference).
</TABLE>
7
<PAGE>
<TABLE>
<S> <C>
(e)(2) Shareholder Support Agreement, dated January 27, 2000, by
and among International Rectifier Corporation, IRC
Acquisition Corporation and Robert E. Schrader IRA (filed as
Exhibit (d)(4) to Schedule TO filed by IRC Acquisition
Corporation and International Rectifier Corporation with the
Securities and Exchange Commission on February 27, 2000 and
incorporated herein by this reference).
(e)(3) Shareholder Support Agreement, dated January 27, 2000, by
and among International Rectifier Corporation, IRC
Acquisition Corporation and Robert and Deborah Schrader
(filed as Exhibit (d)(5) to Schedule TO filed by IRC
Acquisition Corporation and International Rectifier
Corporation with the Securities and Exchange Commission on
February 7, 2000 and incorporated herein by this reference).
(e)(4) Shareholder Support Agreement, dated January 27, 2000, by
and among International Rectifier Corporation, IRC
Acquisition Corporation and The Robert Schrader 1998 Grantor
Retained Annuity Trust (filed as Exhibit (d)(6) to Schedule
TO filed by IRC Acquisition Corporation and International
Rectifier Corporation with the Securities and Exchange
Commission on February 7, 2000 and incorporated herein by
this reference).
(e)(5) Shareholder Support Agreement, dated January 27, 2000, by
and among International Rectifier Corporation, IRC
Acquisition Corporation and Robert Schrader (filed as
Exhibit (d)(7) to Schedule TO filed by IRC Acquisition
Corporation and International Rectifier Corporation with the
Securities and Exchange Commission February 7, 2000 and
incorporated herein by this reference).
(e)(6) Shareholder Support Agreement, dated January 27, 2000, by
and among International Rectifier Corporation, IRC
Acquisition Corporation and John Allwein (filed as
Exhibit (d)(8) to Schedule TO filed by IRC Acquisition
Corporation and International Rectifier Corporation with the
Securities and Exchange Commission on February 7, 2000 and
incorporated herein by this reference).
</TABLE>
8
<PAGE>
SIGNATURE
After due inquiry and to the best of my knowledge and belief, I certify that
the information set forth in this Statement is true, complete and correct.
<TABLE>
<S> <C> <C>
ZING TECHNOLOGIES, INC.
By: /s/ ROBERT E. SCHRADER
-----------------------------------------
Name: Robert E. Schrader
Title: Chairman of the Board,
President and Chief
Executive Officer
</TABLE>
Dated: February 7, 2000
9
<PAGE>
Exhibit (a)(1)
[LETTERHEAD]
February 7, 2000
Dear Shareholder:
I am pleased to inform you that on January 27, 2000, Zing
Technologies, Inc. entered into an Agreement and Plan of Reorganization (the
"Merger Agreement") with International Rectifier Corporation and its
newly-formed subsidiary IRC Acquisition Corporation, which provides for the
acquisition of the Company by International Rectifier. IRC Acquisition has
commenced a tender offer for all outstanding shares of Common Stock of the
Company at a price of $15.36 per share payable all in cash. International
Rectifier will, after the completion of the tender offer, effect a merger of
the Company with IRC Acquisition in order to make the Company a wholly-owned
subsidiary. Any shares not tendered in the offer will be converted into the
right to receive $15.36 in cash, or any higher price that may be paid in the
offer.
The Company's Board of Directors unanimously (i) determined that the
terms of the offer and the merger are fair to and in the best interests of
the Company's shareholders, (ii) approved the Merger Agreement and the
transactions contemplated thereby, and (iii) recommended that shareholders
accept the offer and tender their shares. In arriving at its recommendation,
the Board considered the factors described in the accompanying Offer to
Purchase, which is being sent to you by International Rectifier. Additional
information with respect to the offer and the merger accompany this letter.
These documents set forth all of the terms of the offer and provide
instructions as to how to tender your shares. Also included is a Schedule
14D-9 prepared by the Company which contains a discussion of the background
and the Board's reasons for the approval of the Offer and the Merger. I urge
you to read all these materials carefully and in their entirety.
John Catrambone, the Chief Executive Officer of Omnirel LLC, and a
few other shareholders and I have already agreed to tender our shares, which
represent in the aggregate approximately 57% of the shares outstanding.
On behalf of myself, the other members of management and directors
of the Company, I want to sincerely thank you for the support you have given
us over the years. If you have any questions about the offer, please feel
free to call Morrow & Co., Inc., the Information Agent, at (800) 662-5200.
Very truly yours,
/s/ Robert E. Schrader
---------------------------------------
Robert E. Schrader
CHAIRMAN OF THE BOARD, PRESIDENT
AND CHIEF EXECUTIVE OFFICER
<PAGE>
EXHIBIT 99(c)
FLEET KENNETH A. CSAPLAR
Managing Director
Mergers and Acquisitions
FLEET CORPORATE FINANCE
Mail Stop MA OF DOSL
One Federal Street
Boston, MA 02110
617-346-4203
Fax-617-346-0091
Kenneth_a [email protected]
March 3, 1999
PRIVATE AND CONFIDENTIAL
Omnirel LLC
205 Crawford Street
Leominster, MA 01453
ATTENTION: MR. JOHN F. CATRAMBONE
President & Chief Executive Officer
Gentlemen:
Zing Technologies, Inc. ("Zing") has advised representatives of Fleet
National Bank ("Fleet") that Zing wishes to retain Fleet to act as its exclusive
financial advisor in regard to a possible Transaction (as defined below)
involving Omnirel, LLC ("Omnirel" or the "Company"), a wholly-owned subsidiary
of Zing and a third party (the "Acquirer").
Fleet is pleased to serve Zing in this regard, and this letter sets
forth the basis on which Fleet will serve as the Company's financial advisor.
SECTION 1. SERVICES TO BE RENDERED. Fleet is prepared, as requested, to assist
as follows:
(1) advise as to the probable range of proceeds obtainable from a Transaction
involving the Company under current market conditions and with likely
competition among potential
<PAGE>
Page 2
Acquirers and assuming an Acquirer has full access to all material facts
concerning the Company's business;
(2) advise as to an effective strategy and means for effecting a Transaction
involving the Company;
(3) prepare, with the Company's assistance, descriptive material (the "Offering
Memorandum") necessary for potential Acquirers to conduct a business and
financial evaluation of the Company;
(4) identify potential Acquirers and submit the names of potential Acquirers to
the Company;
(5) contact potential Acquirers to determine their level of interest in a
Transaction;
(6) obtain confidentiality agreements acceptable to the Company from potential
Acquirers and provide such potential Acquirers who execute such
confidentiality agreements with descriptive or other material relating to
the Company;
(7) assist the Company in assessing the respective interest of potential
Acquirers in consummating a Transaction involving the Company;
(8) assist the Company's management in preparing for and engaging in direct
discussions with potential Acquirers concerning the business and financial
performance and prospects of the Company;
(9) assist the Company in the preparation of various supplementary materials
that potential Acquirers might reasonably request;
(10) assist in the design, presentation, discussion, and evaluation of specific
Transactions to be proposed to or discussed with potential Acquirers;
(11) advise the Company on the procedures for procuring, evaluating, and
responding to definitive offers;
(12) attend meetings between the Company and potential Acquirers and participate
in negotiations with respect to the terms of any proposed Transaction;
(13) advise on the consequences of financial-market-related developments for the
timing and success of any proposed Transaction;
(14) to the extent necessary, or useful, assist other professional firms whose
services may be required by the Company, including attorneys, accountants,
consultants, and others.
<PAGE>
Page 3
In providing the services described above, Fleet agrees that it will
not release any information regarding the Company to any third party without
receipt from such third party of a signed confidentiality agreement acceptable
to the Company.
SECTION 2. FEES AND EXPENSES. For providing its financial advisory services to
Zing and the Company, Fleet shall be entitled to a monthly project fee (the
"Project Fee"). The Parties agree that the Project commenced January 28, 1999
("the Commencement Date"). The total Project Fee shall be equal to $7,500 per
month, the first such payment covering from the Commencement Date until the date
of this letter agreement will be payable upon the execution of this letter
agreement. The cumulative Project Fee shall not exceed $37,500, as adjusted
pursuant to Section 5 hereof. The Project Fee shall be subject to the
termination provisions described below. The total Project Fee paid will be
credited against any Completion Fee (as hereinafter defined) which might
otherwise be payable.
If Fleet, with or without the consent of Zing or the Company, engages
any other party to assist it in providing its financial advisory services under
this Agreement, or any person successfully claims to have provided such services
through Fleet, Fleet shall be solely responsible for the fees and expenses of
such party and shall indemnify and hold Zing, the Company and its affiliates
harmless from such claims and the fees and expenses incurred in defending
against such claims, including reasonable attorney's fees, except to the extent
assumed by the Indemnifying Party as provided in Section 4(c).
In connection with its services in advising Zing and the Company as set
forth above, Zing or the Company will reimburse Fleet for reasonable
out-of-pocket disbursements made in the course of the foregoing assignment.
Fleet will not incur out-of-pocket expenses in excess of $10,000 or retain any
outside attorneys, accountants or other professionals to advise it with regard
to the proposed Transaction without the prior written consent of the Company.
In the event that, (a) during the period Fleet is retained by Zing and
the Company or (b) within twelve months thereafter (unless Fleet has elected to
terminate the relationship), a Transaction is consummated with an Acquirer (i)
as to which Fleet advised Zing or the Company or (ii) with which Fleet
contacted, Zing or the Company agrees to pay Fleet (or cause Fleet to be paid) a
fee (the "Completion Fee") in an amount equal to 2% of the Purchase Price (as
defined below) if the Purchase Price is an amount less than $22,500,000. In
addition to the Completion Fee, Fleet will be entitled to an additional
Incentive Fee (the "Incentive Fee") (as defined below) if the Purchase Price
exceeds $22,500,000. The Incentive Fee is defined as the sum of (i) 3.00% of the
amount by which the Purchase Price exceeds $22,500,000. The Completion Fee and
the Incentive Fee are payable in cash upon the closing of such Transaction or,
in the case of a tender offer or exchange offer, upon the first purchase or
exchange of shares pursuant to such tender offer or exchange offer, as the case
may be.
The term "Transaction" means, whether effected in one transaction or a
series of transactions, (a) any merger, consolidation, reorganization or other
business combination pursuant to which the business or the Company is combined
with one or more Acquirers or one or more persons formed by or affiliated with
an Acquirer, including, without limitation, any joint
<PAGE>
Page 4
venture, (b) the acquisition, directly or indirectly, by one or more Acquirers
of more than 25% of the then outstanding capital stock of the Company, on a
fully diluted basis, by way of a tender or exchange offer, negotiated purchase
or other means, or (c) the acquisition, directly or indirectly by one or more
Acquirers of all or a substantial portion of the stock, assets, or real estate
used by the Company, or of any right to all or a substantial portion of the
revenues or income of, the Company by way of a negotiated purchase a lease,
license, exchange, or joint venture with the Company.
The term "Purchase Price" means an amount equal to the sum of the
aggregate fair market value of the net proceeds that the equity holders of the
Company actually receive from the Transaction. The fair market value of any
securities issued, established escrow accounts and/or any non-cash consideration
paid to, delivered or retained by the equity holders of the Company in
connection with a Transaction will be the value reasonably determined by the
Company and Fleet upon the closing of a Transaction. In determining the Purchase
Price, the Company acknowledges there will be included in the Purchase Price any
dividends or any other non-ordinary course of business disbursements, in the
form of cash or in kind made by the Company to Zing, its shareholders, parent
company or like entity. Additionally, the Company will not cause a material
change of its business or a material change of the composition or net amounts of
the various components of the Company's balance sheet, as shown in Appendix A
attached hereto, without the prior consent of Fleet. Fleet understands that the
Company paid a $1,000,000 dividend prior to Fleet's engagement hereunder and
Fleet acknowledges that said dividend changes the Company's balance sheet, as
shown in Appendix A, and is not within the definition of Purchase Price for a
Transaction contemplated herein. For purposes of determining Purchase Price
Fleet acknowledges that there will be deducted an amount equal to the cash, cash
equivalents, marketable securities and the like of Zing if and only if to the
extent that the ownership of Zing is being directly or indirectly acquired as
part of the Transaction.
SECTION 3. DISCLOSURE AND CONFIDENTIALITY. In connection with Fleet's
engagement, the Company will furnish Fleet with all information concerning the
Company (all such information so furnished being the "Information"), it is being
understood that Fleet: (a) will rely primarily upon the Information supplied by
the Company and on information available from generally recognized public
sources in performing the services contemplated by this letter agreement and
without assuming any responsibility for independent investigation or
verification thereof, (b) does not assume responsibility for the accuracy or
completeness of the information and such other information and (c) will not make
an appraisal of any assets of the Company.
Fleet agrees to keep confidential all non-public information concerning
the Company provided to Fleet by the Company, whether prior to or after the date
of this letter agreement, except as otherwise required by law. In the event
Fleet believes it is required by law to disclose any such information it will
provide the Company with 10 days prior written notice in reasonable detail of
the proposed disclosure and the reasons for providing such disclosure. All such
non-public information shall be used solely for the purpose of performing the
services contemplated hereunder and for no other purpose.
<PAGE>
Page 5
SECTION 4. INDEMNIFICATION. Zing and the Company agree to indemnify Fleet for
certain liabilities and expenses or contribute to Fleet payments with respect
thereto in accordance with the following provisions:
(a) Whether or not the transactions contemplated herein are
consummated, Zing and the Company agree to indemnify and hold harmless Fleet,
its affiliates and the respective directors, officers, employees, agents,
advisors and representatives and each person who controls Fleet or any of its
affiliates (each an "Indemnified Party"), against and Zing and the Company agree
that no Indemnified Party shall have any liability (whether direct or indirect,
in contract or tort or otherwise) to Zing and the Company or any other person
for any losses, claims, damages, liabilities or expenses, joint or several,
under the Securities Act of 1933, the Securities Exchange Act of 1934, as
amended, or other federal or state statutory law or regulation, at common law or
otherwise, insofar as such losses, claims, damages, liabilities or expenses (or
actions, claims, investigations or proceedings in respect thereof, whether
commenced or threatened ("Proceedings")) arise out of or relate to Fleet's
engagement under this Agreement or the transactions contemplated hereby;
PROVIDED that Zing and the Company shall not be liable hereunder (1) for any
amount paid in settlement of claims without the consent of Zing and the Company,
or (2) to the extent, but only to the extent that, any losses, claims, damages
or liabilities of an Indemnified Party are judicially determined by a court of
competent jurisdiction to have resulted from the negligence or willful
misconduct of such Indemnified Party. Zing and the Company agree to reimburse
each Indemnified Party for all expenses (including reasonable fees and
disbursements of counsel, except to the extent assumed by the Indemnifying Party
as provided in Section 4(c)) as they are incurred by it in connection with
investigating or defending any loss, claim damage or liability or action in
respect of which indemnification may be sought hereunder (whether or not it is a
party to any such Proceeding), provided such reimbursement of expenses shall be
refunded to Zing or the Company to the extent that it is judicially determined
that the liabilities in question resulted from the willful malfeasance or
negligence, as the case maybe, of such Indemnified Party.
(b) If the indemnification provided for in the immediately preceding
paragraph is determined to be unavailable (other than in accordance with the
terms hereof) to any Indemnified Party in respect of any liabilities then, in
lieu of indemnifying such Indemnified Party, hereunder, Zing or the Company
shall contribute to the amount paid or payable by such Indemnified Party in
respect of such liabilities (and expenses relating thereto) in such proportion
as is appropriate to reflect the relative economic interests of the relevant
Indemnified Party, on the one hand, and Zing and the Company and its
stockholders, on the other hand, in the transactions which are the subject
matter of the engagement of Fleet hereunder, as well as the relative fault of
such persons; provided that in no event shall the amount paid or payable by all
Indemnified Parties, as a group exceed the aggregate amount of fees actually
received by Fleet hereunder this letter.
(c) If any claim, litigation or proceeding that might give rise to any
obligation of the Indemnifying Parties under Section 2 or the indemnifying
provisions of this Agreement shall come to the attention of any of the
Indemnified Parties, such Indemnified Party shall promptly notify Zing and the
Company of the existence and amount thereof. Zing and the Company shall be
entitled to participate in and direct the defense thereof at its/their expense
with counsel of
<PAGE>
Page 6
its/their choosing, but such defense shall be conducted by legal counsel
reasonably satisfactory to the Indemnified Parties, except in the event of a
conflict of interest between the Indemnified Parties and Zing and/ or the
Company, in which case the parties may engage separate counsel. Upon the
assumption of such defense by Zing or the Company or its affiliates, they shall
not be responsible for the fees or disbursements of any other Indemnified
Parties' counsel Zing, the Company, or its affiliates, as the case may be, shall
have the right to compromise or settle any such claim, proceeding or litigation,
provided that the amount involved in any such compromise or settlement is paid
in full directly by the Indemnifying Parties or on their behalf and such
compromise or settlement does not (i) acknowledge any liability of or
wrong-doing by the Indemnified Parties, Zing, the Company, or its affiliates, as
the case may be; (ii) adversely affect the business of the Indemnified Parties,
Zing, the Company, or its affiliates, as the case may be; or (iii) limit the
future conduct of any Indemnified Party, Zing, the Company, or its affiliates,
as the case may be, whether by injunction, consent decree or other decree, or
otherwise. If any claim for indemnification is made by Zing or the Company
against Fleet pursuant to Section 2 hereof, the provisions of this Section 4(c)
shall apply by substituting "Fleet" wherever "Zing and the Company" appears and
by substituting "Zing and the Company wherever "Indemnified Party" or
Indemnified Parties" appears. The failure of a party to promptly notify the
other of a claim, litigation or proceeding that might give rise to an
indemnification obligation hereunder shall not reduce or affect such other
parties' indemnification obligation except to the extent they are actually
prejudiced thereby.
SECTION 5. TERMINATION. The Company shall be entitled to terminate the advisory
relationship set forth herein at any time by giving written notice to that
effect to Fleet. Fleet shall also be entitled to terminate the advisory
relationship set forth herein at anytime by giving written notice to that effect
to the Company. The foregoing provisions regarding the Project Fee, Completion
Fee, Incentive Fee, expenses, indemnification, and confidentiality shall survive
any termination; provided, however, if an Offering Memorandum, reasonably
satisfactory to the Company, has not been completed and delivered to the Company
in final form by the time of such termination, the aggregate Project Fee shall
not exceed one-half (1/2) of the cumulative Project Fee (as stated in Section 2
hereof) and any amount in excess thereof shall be promptly repaid by Fleet to
the Company.
SECTION 6. MISCELLANEOUS. This letter agreement shall be governed by and be
construed in accordance with the laws of the State of New York applicable to
agreements made and to be performed entirely in such state. This letter
agreement may not be amended or otherwise modified except by an instrument
signed by both Fleet and the Company. If any provision hereof shall be
determined to be invalid or unenforceable in any respect, such determination
shall not affect such provision in any other respect or any other provision of
this letter agreement, which shall remain in full force and effect. Fleet and
the Company (on its own behalf and, to the extent permitted by applicable law,
on behalf of its shareholders) each waives any right to trial by jury in action,
proceeding or counterclaim (whether based upon contract, tort or otherwise)
related to or arising out of the engagement of Fleet pursuant to, or the
performance by Fleet of the services contemplated by, this letter agreement.
<PAGE>
Page 7
The financial advisory services contemplated herein are to be provided
by the Corporate Finance Department of Fleet and shall be under the primary
supervision of Messrs. Kenneth A. Csaplar, Managing Director, Robert Snape,
Director, and Ashish Parikh, Assistant Vice President, who may be joined from
time to time by other executives of Fleet.
If the foregoing accurately sets forth our understanding, please
execute the enclosed copy of this letter below and return same to us.
Yours very truly,
/s/Kenneth A. Csaplar
---------------------
Fleet National Bank
Accepted and Agreed
/s/Robert E. Schrader /s/John Catrambone
- --------------------- ------------------
Zing Technologies, Inc. Omnirel, LLC
By: Robert E. Schrader By: John Catrambone
------------------ ---------------
Title: President Title: President
------------------ ---------------
Date: 3/26/99 Date: 3/19/99
------------------- ---------------
