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EXHIBIT (a)(1)(A)
OFFER TO PURCHASE FOR CASH
BY
THE MIDDLEBY CORPORATION
UP TO 1,500,000 SHARES OF ITS COMMON STOCK AT A
PURCHASE PRICE OF $7.00 PER SHARE
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THE OFFER, PRORATION PERIOD AND WITHDRAWAL RIGHTS
EXPIRE AT 12:00 MIDNIGHT, EASTERN TIME, ON WEDNESDAY, NOVEMBER 22, 2000
UNLESS THE OFFER IS EXTENDED.
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The Middleby Corporation, a Delaware corporation (the "Company"), invites
its stockholders to tender shares of its common stock, par value $.01 per share,
to the Company at a price of $7.00 per share in cash, upon the terms and subject
to the conditions set forth in this offer to purchase and the related letter of
transmittal, which together constitute the "offer." We will pay $7.00 per share,
net to the seller in cash, for up to 1,500,000 shares validly tendered and not
withdrawn, upon the terms and subject to the conditions of the offer, including
the proration terms. The Company reserves the right, in its sole discretion, to
purchase more than 1,500,000 shares pursuant to the offer. Whenever this offer
refers to rights "we" have, actions "we" may take or similar matters, it is
referring to rights or actions of the Company.
THE OFFER IS NOT CONDITIONED ON ANY MINIMUM NUMBER OF SHARES BEING TENDERED.
THE OFFER IS, HOWEVER, SUBJECT TO CERTAIN OTHER CONDITIONS. SEE SECTION 6.
The common stock is listed and principally traded on the NASDAQ National
Market System (the "NASDAQ") under the symbol "MIDD." On October 20, 2000, the
last full trading day on the NASDAQ prior to the announcement by the Company of
the offer, including the price and number of shares sought, the closing per
share sales price as reported on the NASDAQ was $5.375. STOCKHOLDERS ARE URGED
TO OBTAIN CURRENT MARKET QUOTATIONS FOR THE SHARES. SEE SECTION 7.
THE BOARD OF DIRECTORS OF THE COMPANY HAS APPROVED THE OFFER. HOWEVER,
STOCKHOLDERS MUST MAKE THEIR OWN DECISION WHETHER TO TENDER SHARES AND, IF SO,
HOW MANY SHARES TO TENDER. NEITHER THE COMPANY NOR ITS BOARD OF DIRECTORS MAKES
ANY RECOMMENDATION AS TO WHETHER TO TENDER OR REFRAIN FROM TENDERING SHARES. THE
COMPANY HAS PROHIBITED EACH OF ITS DIRECTORS AND EXECUTIVE OFFICERS WHO OWN
SHARES FROM PARTICIPATING IN THE TENDER.
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THE DATE OF THIS OFFER TO PURCHASE IS OCTOBER 23, 2000.
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IMPORTANT
Except as described below, any stockholder of the Company desiring to accept
the offer should either:
(1) complete and sign the letter of transmittal or a facsimile thereof
in accordance with the instructions in the letter of transmittal, mail or
deliver it with any required signature guarantee and any other required
documents to Continental Stock Transfer & Trust Company, as the depositary,
and either mail or deliver the stock certificates for such shares to the
depositary, with all such other documents, or follow the procedure for
book-entry delivery set forth in Section 3, or
(2) request the stockholder's broker, dealer, commercial bank, trust
company or other nominee to effect the transaction for him or her. A
stockholder having shares registered in the name of a broker, dealer,
commercial bank, trust company or other nominee must contact that broker,
dealer, commercial bank, trust company or other nominee if such stockholder
desires to tender such shares. Stockholders who desire to tender shares and
whose certificates for such shares are not immediately available or who
cannot comply with the procedure for book-entry transfer on a timely basis
or whose other required documentation cannot be delivered to the depositary,
in any case, by the expiration of the offer should tender such shares by
following the procedures for guaranteed delivery set forth in Section 3. FOR
SHARES TO BE PROPERLY TENDERED, THE DEPOSITARY MUST TIMELY RECEIVE A
PROPERLY COMPLETED LETTER OF TRANSMITTAL.
If you have any questions or requests for assistance or for additional
copies of this offer to purchase, the letter of transmittal or the notice of
guaranteed delivery, please call (847) 741-3300 ext. 7711 or Continental Stock
Transfer & Trust Company at (212) 509-4000 ext. 535.
WE HAVE NOT AUTHORIZED ANY PERSON TO MAKE ANY RECOMMENDATION ON BEHALF OF US AS
TO WHETHER STOCKHOLDERS SHOULD TENDER OR REFRAIN FROM TENDERING SHARES PURSUANT
TO THE OFFER. WE HAVE NOT AUTHORIZED ANY PERSON TO GIVE ANY INFORMATION OR TO
MAKE ANY REPRESENTATION IN CONNECTION WITH THE OFFER ON OUR BEHALF OTHER THAN
THOSE CONTAINED IN THIS OFFER TO PURCHASE OR IN THE LETTER OF TRANSMITTAL. DO
NOT RELY ON ANY SUCH RECOMMENDATION OR ANY SUCH INFORMATION OR REPRESENTATIONS,
IF GIVEN OR MADE, AS HAVING BEEN AUTHORIZED BY US.
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TABLE OF CONTENTS
<TABLE>
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PAGE
<S> <C> <C>
Summary Term Sheet..................................................... 1
Introduction........................................................... 6
The Offer.............................................................. 7
1. Number Of Shares; Proration................................. 7
2. Tenders By Owners Of Fewer Than 100 Shares.................. 8
3. Procedure For Tendering Shares.............................. 9
4. Withdrawal Rights........................................... 12
5. Purchase Of Shares And Payment Of Purchase Price............ 13
6. Certain Conditions Of The Offer............................. 14
7. Price Range Of Shares....................................... 15
8. Background And Purpose Of The Offer; Certain Effects Of The
Offer....................................................... 16
9. Interests Of Directors And Executive Officers; Transactions
And Arrangements Concerning The Shares...................... 17
10. Source And Amount Of Funds.................................. 19
11. Certain Information About The Company....................... 19
12. Effect Of The Offer On The Market For Shares; Registration
Under The Securities Exchange Act........................... 21
13. Certain Legal Matters; Regulatory Approvals................. 21
14. Certain United States Federal Income Tax Consequences....... 22
15. Extension Of The Offer; Termination; Amendment.............. 25
16. Fees And Expenses........................................... 26
17. Miscellaneous............................................... 26
</TABLE>
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SUMMARY TERM SHEET
The Middleby Corporation is offering to purchase up to 1,500,000 shares of
common stock, par value $.01 per share, at a price, net to the seller in cash,
of $7.00 per share. Through a question and answer format, this Summary Term
Sheet will explain to you, the stockholders of The Middleby Corporation, the
important terms of the proposed transaction. This explanation will assist you in
deciding whether to tender your shares to The Middleby Corporation. This Summary
Term Sheet serves only as an introduction, and we urge you to carefully read the
remainder of this offer to purchase and the accompanying letter of transmittal
in order to fully educate yourself on the details of the proposed tender offer.
Cross-referenced text refers to sections within this offer to purchase, unless
otherwise noted.
WHO IS OFFERING TO BUY THE COMMON STOCK OF THE MIDDLEBY CORPORATION?
- The Middleby Corporation, a Delaware corporation, is offering to buy back
its own common stock in a self-tender offer.
WHAT ARE THE CLASSES AND AMOUNTS OF SECURITIES SOUGHT IN THE OFFER? HOW MUCH IS
THE MIDDLEBY CORPORATION OFFERING TO PAY AND WHAT IS THE FORM OF PAYMENT?
- We are offering to purchase up to 1,500,000 shares of common stock for
$7.00 per share, net to you, in cash. What we mean by the term "$7.00 per
share, net to the Seller in cash" is that if you are the record holder of
shares, you will not have to pay any brokerage fees or commissions. If you
own your shares through a broker or other nominee, the Company believes
that the custom in the brokerage industry is not to charge customers for
tendering shares into a tender offer. However, if your shares are owned
through a broker or nominee, we urge you to check with your broker or
nominee to see if you will be charged a fee or commission for tendering
shares. To the extent any such fee or commission is charged, we will not
pay for it. Accordingly, for the purposes of the offer, the term "net to
the Seller in cash" shall be exclusive or any fees or commissions your
broker may charge. See "Introduction" and Section 1 ("Number Of Shares;
Proration").
DOES THE MIDDLEBY CORPORATION HAVE TO ACCEPT FOR PAYMENT ALL OF THE TENDERED
SHARES?
- If the number of shares validly tendered and not withdrawn prior to the
expiration date is less than or equal to 1,500,000 shares (or any greater
number that we may elect to purchase), we will purchase at the purchase
price all shares so tendered. If more than the prescribed number of shares
are validly tendered and not withdrawn, we will purchase shares in the
following order of priority:
- all shares validly tendered and not withdrawn prior to the expiration
date by any odd lot owner (beneficial owner of less than 100 shares
of common stock as of October 20, 2000 who continues to beneficially
own less than 100 shares of common stock on the expiration date) who
(i) tenders all shares beneficially owned and (ii) completes the box
captioned "Odd Lots" on the letter of transmittal and, if applicable,
on the notice of guaranteed delivery; and then all other shares
validly tendered and not withdrawn prior to the expiration date on a
pro rata basis.
- If proration is required, we will determine the final proration factor as
promptly as practicable after the expiration date. See "Introduction,"
Section 1 ("Number Of Shares; Proration"), Section 2 ("Tenders By Owners
Of Fewer Than 100 Shares") and Instruction 8 of the letter of transmittal.
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WILL I BE CHARGED ANY TRANSFER TAXES, FEES OR COMMISSIONS WHEN I TENDER MY
SHARES?
- We will pay all stock transfer taxes payable on the transfer of shares
pursuant to the tender offer. However, if we are going to make payment of
the purchase price to any person other than the registered holder or if
any tendered shares are registered in the name of any person other than
the person signing the letter of transmittal then we will deduct from the
purchase price the amount of any stock transfer taxes payable on account
of the transfer unless we receive satisfactory evidence that such taxes
have been paid or there is an adequate exemption. If you require payment
of the purchase price to any person other than the registered holder or if
any of your tendered shares are registered in the name of any person other
than the person signing the letter of transmittal, you should contact our
transfer agent, Continental Stock Transfer & Trust Company. The transfer
agent will advise you what, if any, state transfer taxes are payable and
what evidence will be satisfactory to show that such taxes have been paid
or an exemption exists.
- If you are the record owner of your shares and you tender shares to us,
you will not have to pay any brokerage fees or commissions. If you own
your shares through a broker or other nominee, and your broker tenders
your shares on your behalf, then your broker or nominee may charge you a
fee or commission for doing so. You should contact your broker or nominee
to determine whether you will be charged a fee. See Section 5 "Purchase Of
Shares And Payment Of Purchase Price," Section 16 ("Fees And Expenses")
and Instruction 6 of the letter of transmittal.
WHAT IS THE PURPOSE OF THE TENDER OFFER?
- The overall purpose of the tender offer is to increase stockholder value.
More specifically, we are making the tender offer, among other reasons,
because we believe that:
- the common stock is undervalued on the public market;
- the tender offer will provide you with an opportunity of cash
liquidity at a premium above recent prices; and
- the tender offer will increase stockholder value for those of you who
own shares after the tender offer.
- Other purposes for the tender offer are set forth in "Introduction" and
Section 8 ("Background And Purpose Of The Offer; Certain Effects Of The
Offer").
WHAT ARE THE SIGNIFICANT CONDITIONS TO THE OFFER? UNDER WHAT CONDITIONS CAN THE
MIDDLEBY CORPORATION TERMINATE THE TENDER OFFER?
- The tender offer is not conditioned on the stockholders tendering any
minimum number of shares.
- We can terminate the tender offer, in our reasonable discretion, if, among
other things:
- any action by any governmental agency or other person is instituted or
threatened, that (i) challenges or otherwise adversely affects our
ability to make or complete the tender offer or (ii) could, in our
reasonable judgment, materially affect our business;
- there is a significant decrease in the market price of our shares or
of equity securities generally in the United States; or
- a change or event occurs, is discovered, or is threatened to our
business which, in our reasonable judgment, is material to us.
- Other conditions are set forth in Section 6 ("Certain Conditions Of The
Offer").
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HOW LONG DO I HAVE TO DECIDE WHETHER TO TENDER MY SHARES IN THE OFFER? CAN THE
MIDDLEBY CORPORATION EXTEND THE OFFER PAST THE INITIAL EXPIRATION DATE?
- Our offer to purchase your shares expires at 12:00 midnight, Eastern time,
on Wednesday, November 22, 2000.
- Yes, we can extend the offer past this scheduled expiration date in our
sole discretion. If we choose to do so, you will be able to tender your
shares until the end of the day selected as the new expiration date.
- See Section 1 ("Number Of Shares; Proration") and Section 15 ("Extension
Of The Offer; Termination; Amendment").
CAN THE MIDDLEBY CORPORATION AMEND THE TERMS OF THE TENDER OFFER?
- We reserve the right in our sole discretion to amend the tender offer in
any respect. See Section 15 ("Extension Of The Offer; Termination;
Amendment").
HOW DO I FIND OUT IF THE MIDDLEBY CORPORATION AMENDS THE TERMS OF THE TENDER
OFFER?
- We will announce any amendment to the tender offer by making a public
announcement of the amendment through a release via Business Wire. We may,
but we are under no obligation to, send out a supplement to the offering
to inform you of the amendment. We will announce any extension no later
than 9:00 a.m., Eastern time, on the next business day after the last
previously scheduled or announced expiration date. In the event of a
termination or postponement of the tender offer, we will also give written
or oral notice to the depositary.
- We will disseminate any public announcement promptly to you in a manner
reasonably designed to inform you of the amendment. Without limiting the
manner in which we may choose to make any public announcement, we will
have no obligation to publish, advertise or otherwise communicate any
public announcement other than by making a release via Business Wire.
- See Section 15 ("Extension Of The Offer; Termination; Amendment").
HOW DO I GET PAID FOR MY TENDERED SHARES?
- We will pay for the shares accepted for payment by depositing the
aggregate purchase price with the depositary as soon as practicable after
the expiration date of the tender offer. The depositary will act as your
agent and will transmit to you the payment for all shares accepted for
payment. See Section 5 ("Purchase Of Shares And Payment Of Purchase
Price").
HOW DO I TENDER MY SHARES?
- To tender your shares, you must deliver your share certificates, together
with a completed letter of transmittal, to the depositary on or prior to
the expiration date. If your shares are held in street name, you can
tender the shares by your nominee through the depositary.
- If you are an odd lot owner who is tendering all of your shares, you must
also complete the section entitled "Odd Lots" in the letter of transmittal
in order to qualify for the preferential treatment available to odd lot
owners.
- If you cannot get all of the documents or instruments that you are
required to deliver to the depositary on or prior to the expiration date,
you can still tender your shares if:
- you tender through an eligible institution;
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- the depositary receives, on or prior to the expiration date, a
properly completed and duly executed notice of guaranteed delivery,
including a signature guarantee by an eligible institution; and
- the depositary receives the certificates for all tendered shares with
all other required documentation within three NASDAQ trading days
after the date the depositary receives the notice of guaranteed
delivery.
- For a more detailed explanation of the tendering procedures, see
Section 3 ("Procedure For Tendering Shares").
UNTIL WHEN CAN I WITHDRAW MY PREVIOUSLY TENDERED SHARES?
- You can withdraw your tendered shares at any time on or prior to the
expiration date. After the offer expires, the tender is irrevocable unless
we have not accepted for payment your shares by 12:00 midnight, Eastern
time, on Thursday, December 21, 2000. At this date, you can withdraw your
tendered shares until we accept them for payment. See Section 4
("Withdrawal Rights").
HOW DO I WITHDRAW PREVIOUSLY TENDERED SHARES?
- To withdraw your shares, you must deliver a written, telegraphic or
facsimile transmission of notice of withdrawal to the depositary that
specifies your name, the number of shares being withdrawn, and the name of
the registered holder of the shares, if different from the person who
tendered the shares. If you have tendered pursuant to the procedure for
book-entry transfer, the notice of withdrawal must also specify the name
and the number of the account at the book-entry transfer facility to be
credited with the withdrawn shares. See Section 4 ("Withdrawal Rights").
WHAT ARE THE TAX CONSEQUENCES OF THE SALE OF SHARES TO THE MIDDLEBY CORPORATION?
- The sale of shares to us is a taxable transaction for federal, and
potentially state and foreign, income tax purposes.
- We encourage you to consult with your own tax advisor about the particular
effect the tender will have on you. See Section 14 ("Certain United States
Federal Income Tax Consequences").
WHAT IS THE MARKET VALUE OF MY SHARES AS OF A RECENT DATE?
- On October 20, 2000, the last full trading day before we announced the
tender offer, the closing price per share of the common stock on the
NASDAQ was $5.375.
- We encourage you to obtain a current market quotation for your shares
before deciding whether to tender your shares. See "Introduction" and
Section 7 ("Price Range Of Shares").
WHAT DOES THE BOARD OF DIRECTORS OF THE MIDDLEBY CORPORATION THINK OF THE TENDER
OFFER?
- Our board of directors unanimously adopted resolutions approving the
tender offer. However, neither we nor our board of directors makes any
recommendation to you as to whether to tender or refrain from tendering
shares and neither we nor our board of directors has authorized any person
to make any such recommendation.
- We encourage you to make your own decision whether to tender shares and,
if so, how many shares to tender. See Section 8 ("Background And Purpose
Of The Offer; Certain Effects Of The Offer") and Section 9 ("Interests Of
Directors And Executive Officers; Transactions And Arrangements Concerning
The Shares").
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WHAT IS THE TOTAL AMOUNT OF FUNDS THAT THE MIDDLEBY CORPORATION WILL REQUIRE TO
CONSUMMATE THE TENDER OFFER?
- Assuming we purchase 1,500,000 shares in the tender offer at a purchase
price of $7.00 per share, we expect the maximum aggregate cost, including
all fees, commissions and expenses applicable to the tender offer, to be
approximately $10,700,000. See Section 10 ("Source And Amount Of Funds").
HOW WILL THE MIDDLEBY CORPORATION OBTAIN THE FUNDS TO MAKE PAYMENT?
- We will obtain all necessary funds from borrowings under a multicurrency
revolving credit facility with Bank of America N.A. and available cash and
cash equivalents. The maximum amount available to us under the
multicurrency revolving credit facility is $10,000,000. See Section 10
("Source And Amount Of Funds").
WHAT EFFECT WILL THE TENDER OFFER HAVE ON MY SHARES THAT ARE NOT PURCHASED IN
THE OFFER, OR THAT I DO NOT TENDER?
- Our purchase of the shares in the tender offer will reduce the number of
shares that might otherwise trade publicly and will likely reduce the
number of stockholders. We anticipate, however, that there will still be a
sufficient number of shares outstanding and publicly traded following the
tender offer to ensure a continued trading market in the shares on the
NASDAQ.
- The shares are currently registered under the Securities Exchange Act of
1934, as amended, and we believe that our purchase of the shares in the
tender offer will not result in the shares becoming eligible for
deregistration under these rules. See Section 12 ("Effect Of The Offer On
The Market For Shares; Registration Under The Securities Exchange Act").
WHO CAN I TALK TO IF I HAVE QUESTIONS ABOUT THE TENDER OFFER?
- You can call the Company at (847) 741-3300 ext. 7711 or Continental Stock
Transfer & Trust Company at (212) 509-4000 ext. 535.
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TO THE HOLDERS OF SHARES OF COMMON STOCK OF
THE MIDDLEBY CORPORATION:
INTRODUCTION
We invite the stockholders of The Middleby Corporation, a Delaware
corporation (the "Company"), to tender to the Company shares of its common
stock, par value $.01 per share, at a price of $7.00 per share in cash, upon the
terms and subject to the conditions set forth in this offer to purchase and the
related letter of transmittal, which together constitute the "offer."
We will pay $7.00 per share, net to the seller in cash, for up to 1,500,000
shares validly tendered prior to the expiration date, as defined in Section 1,
and not withdrawn, upon the terms and subject to the conditions of the offer,
including the proration terms described below. We reserve the right, in our sole
discretion, to purchase more than 1,500,000 shares pursuant to the offer.
If, before the expiration date, more than 1,500,000 shares, or such greater
number of shares as the Company may decide to purchase, are validly tendered and
not withdrawn, we will, upon the terms and subject to the conditions of the
offer, purchase shares first from all odd lot owners, as defined in Section 2,
who validly tender all their shares and complete the box captioned "Odd Lots" in
the letter of transmittal, and, if applicable, the notice of guaranteed
delivery; and then on a pro rata basis from all other stockholders who validly
tender shares and do not withdraw them prior to the expiration date. We will
return at our own expense all shares not purchased pursuant to the offer,
including shares not purchased because of proration.
The $7.00 per share purchase price will be paid net to the tendering
stockholder in cash for all shares. Tendering stockholders will not be obligated
to pay brokerage commissions, solicitation fees or, subject to Instruction 6 of
the letter of transmittal, stock transfer taxes on the Company's purchase of
shares pursuant to the offer. HOWEVER, ANY TENDERING STOCKHOLDER OR OTHER PAYEE
WHO FAILS TO COMPLETE, SIGN AND RETURN TO THE DEPOSITARY THE SUBSTITUTE FORM W-9
THAT IS INCLUDED WITH THE LETTER OF TRANSMITTAL MAY BE SUBJECT TO REQUIRED
BACKUP FEDERAL INCOME TAX WITHHOLDING OF 31% OF THE GROSS PROCEEDS PAYABLE TO
SUCH STOCKHOLDER OR OTHER PAYEE PURSUANT TO THE OFFER. SEE SECTION 3.
On October 23, 2000, we announced our intention to make an offer to purchase
up to 1,500,000 shares at $7.00 per share with the offer to commence on
October 25, 2000. We are making the offer because we believe:
(1) the shares are undervalued in the public market;
(2) the offer will provide an opportunity of cash liquidity to
stockholders by allowing them to sell a substantial portion of their stock
at a premium to the NASDAQ trading price at the time of announcement without
payment of brokerage commissions, while allowing those stockholders who do
not wish to sell at the offer price to elect not to do so;
(3) for those stockholders who hold shares after the offer is completed,
the offer has the potential to increase returns on equity capital by
reducing the number of shares outstanding and to improve our over-all
weighted cost of capital;
(4) after the offer is completed, we expect to have sufficient cash flow
and access to funding to meet the Company's cash needs for normal operations
and anticipated capital expenditures for the foreseeable future; and
(5) after considering alternatives, investing in our shares is an
attractive use of capital and an efficient means to provide value to our
stockholders.
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As of October 20, 2000 there were 10,132,000 shares outstanding, and 404,125
shares issuable upon exercise of all outstanding stock options of which 172,843
and 185,625 options are exercisable as of October 20, 2000 and November 22,
2000, respectively. The 1,500,000 shares that we are offering to purchase
represent approximately 15% of the outstanding shares and approximately 14%
assuming the exercise of all outstanding options. The shares are listed on the
NASDAQ under the symbol "MIDD." On October 20, 2000, the last full trading day
on the NASDAQ prior to our announcement of the offer, the closing per share
sales price, as reported on the NASDAQ, was $5.375. WE URGE STOCKHOLDERS TO
OBTAIN CURRENT QUOTATIONS ON THE MARKET PRICE OF THE SHARES.
THE OFFER
1. NUMBER OF SHARES; PRORATION
Upon the terms and subject to the conditions of the offer, we will accept
for payment and purchase 1,500,000 shares or such lesser number of shares as are
validly tendered before the expiration date, and not withdrawn in accordance
with Section 4, at a net cash price of $7.00 per share. The term "expiration
date" means 12:00 midnight, Eastern time, on Wednesday, November 22, 2000,
unless we, in our sole discretion, extend the period of time during which the
offer is open, in which event the term "expiration date" shall refer to the
latest time and date at which the offer, as so extended by us, is scheduled to
expire. See Section 15 for a description of our right to extend the time during
which the offer is open and to postpone, terminate or amend the offer. Subject
to Section 2 below, if the offer is oversubscribed, shares tendered and not
withdrawn before the expiration date will be eligible for proration.
We reserve the right, in our sole discretion, to purchase more than
1,500,000 shares pursuant to the offer. See Section 15. In accordance with
applicable regulations of the Securities and Exchange Commission, we may
purchase pursuant to the offer an additional number of shares not to exceed 2%
of the outstanding shares without extending the offer.
If:
(1) (a) we increase or decrease the price to be paid for shares, or
(b) we increase the number of shares being sought and such increase in
the number of shares being sought exceeds 2% of the outstanding shares, or
(c) we decrease the number of shares being sought, and
(2) the offer is scheduled to expire at any time earlier than the
expiration of a period ending on the tenth business day from, and including, the
date that notice of such increase or decrease is first published, sent or given
as specified in Section 15, then we will extend the offer until the expiration
of such ten-business day period. For purposes of the offer, a "business day"
means any day that is not a Saturday, Sunday or federal holiday and consists of
the time period from 12:01 a.m. through 12:00 midnight, Eastern time.
THE OFFER IS NOT CONDITIONED ON ANY MINIMUM NUMBER OF SHARES BEING TENDERED.
THE OFFER IS, HOWEVER, SUBJECT TO CERTAIN OTHER CONDITIONS. SEE SECTION 6.
We will pay the $7.00 per share purchase price for all shares validly
tendered on or prior to the expiration date and not withdrawn, upon the terms
and subject to the conditions of the offer. We will return, at our expense, as
promptly as practicable following the expiration date all shares that we do not
purchase in the offer, including shares we do not purchase because of proration.
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If the number of shares validly tendered and not withdrawn prior to the
expiration date is less than or equal to 1,500,000 shares (or such greater
number of shares as we may elect to purchase), we will, upon the terms and
subject to the conditions of the offer, purchase at the purchase price all
shares so tendered.
PRIORITY. Upon the terms and subject to the conditions of the offer, in the
event that prior to the expiration date more than 1,500,000 shares (or such
greater number of shares as we may elect to purchase in the offer) are validly
tendered and not withdrawn, we will purchase such validly tendered shares in the
following order of priority:
(1) all shares validly tendered and not withdrawn prior to the
expiration date by any odd lot owner who:
(a) tenders all shares beneficially owned by such odd lot owner
(partial tenders will not qualify for this preference); and
(b) completes the box captioned "Odd Lots" on the letter of
transmittal and, if applicable, on the notice of guaranteed delivery; and
(2) after purchase of all of the foregoing shares, all other shares
validly tendered and not withdrawn prior to the expiration date on a pro
rata basis.
PRORATION. If proration is required, we will determine the final proration
factor as promptly as practicable after the expiration date. Proration for each
stockholder tendering shares, other than odd lot owners, shall be based on the
ratio of the number of shares tendered by such stockholder to the total number
of shares tendered by all stockholders, other than odd lot owners. This ratio
will be applied to stockholders tendering shares, other than odd lot owners, by
multiplying the ratio by the number of shares to be purchased after odd lots, to
determine the number of shares that we will purchase from each such stockholder
in the offer. Although we do not expect to be able to announce the final results
of such proration until approximately seven business days after the expiration
date, we will announce preliminary results of the proration by press release as
promptly as practicable after the expiration date. Such preliminary information
can be obtained from the Company and may be available from a stockholder's
broker.
As described in Section 14, the number of shares that we will purchase from
a stockholder may affect the United States federal income tax consequences to
the stockholder of such purchase and therefore may be relevant to a
stockholder's decision whether to tender shares. The letter of transmittal
affords each tendering stockholder the opportunity to designate the order of
priority in which shares tendered are to be purchased in the event of proration.
We will mail this offer to purchase and the related letter of transmittal to
record holders of shares as of October 20, 2000 and furnish to brokers, banks
and similar persons whose names, or the names of whose nominees, appear on our
stockholder list or, if applicable, who are listed as participants in a clearing
agency's security position listing for subsequent transmittal to beneficial
owners of shares.
2. TENDERS BY OWNERS OF FEWER THAN 100 SHARES
Upon the terms and subject to the conditions of the offer, we will accept
for purchase, without proration, all shares validly tendered and not withdrawn
on or prior to the expiration date by or on behalf of odd lot owners, that is
stockholders who beneficially owned as of the close of business on October 20,
2000, and continue to beneficially own as of the expiration date, an aggregate
of fewer than 100 shares. To avoid proration, however, an odd lot owner must
validly tender all such shares that such odd lot owner beneficially owns;
partial tenders will not qualify for this preference. This preference is not
available to partial tenders or to owners of 100 or more shares in the
aggregate, even if such owners have separate stock certificates for fewer than
100 such shares. Any odd lot owner
8
<PAGE>
wishing to tender all such shares beneficially owned by such stockholder in this
offer must complete the box captioned "Odd Lots" in the letter of transmittal
and, if applicable, on the notice of guaranteed delivery. See Section 3 below.
Stockholders owning an aggregate of less than 100 shares whose shares are
purchased pursuant to the offer will avoid both the payment of brokerage
commissions and any applicable odd lot discounts payable on a sale of their
shares.
We also reserve the right, but will not be obligated, to purchase all shares
duly tendered by any stockholder who tendered all shares beneficially owned and
who, as a result of proration, would then beneficially own an aggregate of fewer
than 100 shares. If we exercise this right, we will increase the number of
shares that we are offering to purchase in the offer by the number of shares we
purchase through the exercise of such right.
3. PROCEDURE FOR TENDERING SHARES
PROPER TENDER OF SHARES. For shares to be validly tendered pursuant to the
offer:
(1) the certificates for such shares, or confirmation of receipt of such
shares pursuant to the procedures for book-entry transfer set forth below,
together with a properly completed and duly executed letter of transmittal,
or manually signed facsimile thereof, with any required signature
guarantees, and any other documents required by the letter of transmittal,
must be received prior to 12:00 midnight, Eastern time, on the expiration
date by the depositary at its address set forth on the back cover of this
offer to purchase; or
(2) the tendering stockholder must comply with the guaranteed delivery
procedure set forth below.
Odd lot owners who tender all shares must complete the section entitled "Odd
Lots" on the letter of transmittal in order to qualify for the preferential
treatment available to odd lot owners as set forth in Section 2 above.
SIGNATURE GUARANTEES AND METHOD OF DELIVERY. No signature guarantee is
required on the letter of transmittal if:
(1) the letter of transmittal is signed by the registered holder of the
shares tendered and payment and delivery are to be made directly to such
registered holder. Registered holder, for purposes of this Section 3,
includes any participant in Continental Stock Transfer & Trust Company, as
the book-entry transfer facility, whose name appears on a security position
listing as the holder of the shares, or
(2) shares are tendered for the account of an eligible institution, that
is a member firm of a registered national securities exchange, a member of
the National Association of Securities Dealers, Inc. or a commercial bank or
trust company, not a savings bank or savings and loan association, having an
office, branch or agency in the United States.
In all other cases, all signatures on the letter of transmittal must be
guaranteed by an eligible institution. See Instruction 1 of the letter of
transmittal.
If a certificate representing shares is registered in the name of a person
other than the signer of a letter of transmittal, or if payment is to be made,
or shares not purchased or tendered are to be issued, to a person other than the
registered holder, the certificate must be endorsed or accompanied by an
appropriate stock power, in either case signed exactly as the name of the
registered holder appears on the certificate, with the signature on the
certificate or stock power guaranteed by an eligible institution. In this
regard, see Section 5 for information with respect to applicable stock transfer
taxes. In all cases, payment for shares tendered and accepted for payment
pursuant to the offer will be made only after timely receipt by the depositary
of certificates for such shares, or a timely confirmation of a book-entry
transfer of such shares into the depositary's account at the book-entry transfer
facility as described
9
<PAGE>
above, a properly completed and duly executed letter of transmittal, or manually
signed facsimile thereof, and any other documents required by the letter of
transmittal.
THE METHOD OF DELIVERY OF ALL DOCUMENTS, INCLUDING SHARE CERTIFICATES, THE
LETTER OF TRANSMITTAL AND ANY OTHER REQUIRED DOCUMENTS, IS AT THE ELECTION AND
RISK OF THE TENDERING STOCKHOLDER. IF YOU DECIDE TO MAKE DELIVERY BY MAIL, WE
RECOMMEND YOU USE REGISTERED MAIL WITH RETURN RECEIPT REQUESTED, PROPERLY
INSURED. IN ALL CASES, SUFFICIENT TIME SHOULD BE ALLOWED TO INSURE TIMELY
DELIVERY.
BOOK-ENTRY DELIVERY. The depositary will establish an account with respect
to the shares at the book-entry transfer facility for purposes of the offer
within two business days after the date of this offer to purchase. Any financial
institution that is a participant in the book-entry transfer facility's system
may make book-entry delivery of the shares by causing such facility to transfer
such shares into the depositary's account in accordance with such facility's
procedure for such transfer. Even though delivery of shares may be effected
through book-entry transfer into the depositary's account at the book-entry
transfer facility, a properly completed and duly executed letter of transmittal,
or manually signed facsimile thereof, with any required signature guarantees and
other required documents must, in any case, be transmitted to and received by
the depositary at one of its addresses set forth on the back cover of this offer
to purchase prior to the expiration date. DELIVERY OF THE LETTER OF TRANSMITTAL
AND ANY OTHER REQUIRED DOCUMENTS TO THE BOOK-ENTRY TRANSFER FACILITY DOES NOT
CONSTITUTE DELIVERY TO THE DEPOSITARY.
GUARANTEED DELIVERY. If a stockholder desires to tender shares pursuant to
the offer and such stockholder's share certificates cannot be delivered to the
depositary on or prior to the expiration date (or the procedures for book-entry
transfer cannot be completed on a timely basis) or time will not permit all
required documents to reach the depositary on or prior to the expiration date,
such shares may nevertheless be tendered provided that all of the following
conditions are satisfied:
(1) such tender is made by or through an eligible institution;
(2) the depositary receives (by hand, mail, overnight courier, telegram
or facsimile transmission), on or prior to the expiration date, a properly
completed and duly executed notice of guaranteed delivery substantially in
the form we have provided with this offer to purchase, including (where
required) a signature guarantee by an eligible institution in the form set
forth in such notice of guaranteed delivery; and
(3) the certificates for all tendered shares in proper form for transfer
(or confirmation of book-entry transfer of such shares into the depositary's
account at the book-entry transfer facility), together with a properly
completed and duly executed letter of transmittal (or manually signed
facsimile thereof) and any required signature guarantees or other documents
required by the letter of transmittal, are received by the depositary within
three NASDAQ trading days after the date the depositary receives such notice
of guaranteed delivery.
RETURN OF CERTIFICATES. If we do not purchase all of the tendered shares,
or if less than all shares evidenced by a stockholder's certificates are
tendered, certificates for unpurchased shares will be returned at our expense as
promptly as practicable after the expiration or termination of the offer. If
shares are tendered by book-entry transfer at the book-entry transfer facility,
such shares will be credited to the appropriate account maintained by the
tendering stockholder at the book-entry transfer facility, without expense to
such stockholder.
BACKUP FEDERAL INCOME TAX WITHHOLDING. Under the United States federal
income tax backup withholding rules, unless an exemption applies under the
applicable law and regulations, 31% of the gross proceeds payable to a
stockholder or other payee pursuant to the offer must be withheld and remitted
to the United States Treasury, unless the stockholder or other payee provides
such person's taxpayer identification number, employer identification number or
social security number, to the
10
<PAGE>
depositary and certifies under penalties of perjury that such number is correct.
Therefore, each tendering stockholder should complete and sign the Substitute
Form W-9 included as part of the letter of transmittal so as to provide the
information and certification necessary to avoid backup withholding, unless such
stockholder otherwise establishes to the satisfaction of the depositary that the
stockholder is not subject to backup withholding. Certain stockholders,
including, among others, corporations and certain foreign stockholders, in
addition to foreign corporations, are not subject to the backup withholding and
reporting requirements described herein. However, for a non-corporate foreign
stockholder to qualify as an exempt recipient, that stockholder must submit an
IRS Form W-8, a Substitute Form W-8 or a W-8BEN, signed under penalties of
perjury, attesting to that stockholder's exempt status. Such statements can be
obtained from the depositary. See Instructions 10 and 11 of the letter of
transmittal.
TO PREVENT BACKUP FEDERAL INCOME TAX WITHHOLDING EQUAL TO 31% OF THE GROSS
PAYMENTS MADE TO STOCKHOLDERS FOR SHARES PURCHASED PURSUANT TO THE OFFER, EACH
STOCKHOLDER WHO DOES NOT OTHERWISE ESTABLISH AN EXEMPTION FROM SUCH WITHHOLDING
MUST PROVIDE THE DEPOSITARY WITH THE STOCKHOLDER'S CORRECT TAXPAYER
IDENTIFICATION NUMBER AND PROVIDE CERTAIN OTHER INFORMATION BY COMPLETING THE
SUBSTITUTE FORM W-9 INCLUDED WITH THE LETTER OF TRANSMITTAL.
For a discussion of certain United States federal income tax consequences to
tendering stockholders, see Section 14.
WITHHOLDING FOR FOREIGN STOCKHOLDERS. Even if a foreign stockholder has
provided the required certification to avoid backup withholding, the depositary
will withhold United States federal income taxes equal to 30% of the gross
payments payable to a foreign stockholder or his or her agent unless the
depositary determines that a reduced rate of withholding is available pursuant
to a tax treaty or that an exemption from withholding is applicable because such
gross proceeds are effectively connected with the conduct of a trade or business
within the United States. For this purpose, a foreign stockholder is any
stockholder that is not (1) a citizen or resident of the United States, (2) a
corporation or other entity taxed as a corporation created or organized in or
under the laws of the United States, any State or any political subdivision
thereof, (3) an estate, the income of which is subject to United States federal
income taxation regardless of the source of such income or (4) a trust if a
court within the United States is able to exercise primary supervision over the
administration of the trust and one or more United States fiduciaries have the
authority to control all substantial decisions relating to the trust. In order
to obtain a reduced rate of withholding pursuant to a tax treaty, a foreign
stockholder must deliver to the depositary before the payment a properly
completed and executed IRS Form 1001 or IRS Form W-8BEN. In order to obtain an
exemption from withholding on the grounds that the gross proceeds paid pursuant
to the offer are effectively connected with the conduct of a trade or business
within the United States, a foreign stockholder must deliver to the depositary a
properly completed and executed IRS Form 4224 or IRS Form W-8ECI. The depositary
will determine a stockholder's status as a foreign stockholder and eligibility
for a reduced rate of, or exemption from, withholding by reference to any
outstanding certificates or statements concerning eligibility for a reduced rate
of, or exemption from, withholding (e.g., IRS Form 1001, IRS Form 4224, IRS
Form W-8BEN or IRS Form W-8ECI), unless facts and circumstances indicate that
such reliance is not warranted. A foreign stockholder may be eligible to obtain
a refund of all or a portion of any tax withheld if such stockholder meets the
"complete termination," "substantially disproportionate" or "not essentially
equivalent to a dividend" test described in Section 14 or is otherwise able to
establish that no tax or a reduced amount of tax is due. Foreign stockholders
are urged to consult their own tax advisors regarding the application of United
States federal income tax withholding, including eligibility for a withholding
tax reduction or exemption, and the refund procedure. See Instructions 10 and 11
of the letter of transmittal.
11
<PAGE>
TENDERING STOCKHOLDER'S REPRESENTATION AND WARRANTY; THE COMPANY'S
ACCEPTANCE CONSTITUTES AN AGREEMENT. It is a violation of Rule 14e-4 under the
Securities Exchange Act of 1934 for a person acting alone or in concert with
others, directly or indirectly, to tender shares for such person's own account
unless at the time of tender and at the expiration date such person (1) has a
"net long position" equal to or greater than the number of shares tendered and
will deliver or cause to be delivered such shares for the purpose of tender to
us within the period specified in the offer, or (2) is the beneficial owner of
equivalent securities (that is other securities immediately convertible into,
exercisable for or exchangeable into shares) and, upon the acceptance of such
tender, will acquire such shares by conversion, exchange or exercise of such
equivalent securities to the extent required by the terms of the offer and will
deliver or cause to be delivered such shares so acquired for the purpose of
tender to us within the period specified in the offer. Rule 14e-4 also provides
a similar restriction applicable to the tender on behalf of another person. A
tender of shares made pursuant to any method of delivery permitted by the offer
will constitute the tendering stockholder's representation and warranty to us
that (1) such stockholder has a "net long position" in shares or equivalent
securities being tendered within the meaning of Rule 14e-4, and (2) such tender
of shares complies with Rule 14e-4. Our acceptance for payment of shares
tendered pursuant to the offer will constitute a binding agreement between the
tendering stockholder and us upon the terms and subject to the conditions of the
offer.
DETERMINATION OF VALIDITY; REJECTION OF SHARES; WAIVER OF DEFECTS; NO
OBLIGATION TO GIVE NOTICE OF DEFECTS. We will determine, in our sole
discretion, all questions as to the number of shares to be accepted, the price
to be paid therefor and the validity, form, eligibility, including time of
receipt, and acceptance for payment of any tender of shares. Our determination
will be final and binding on all parties. We reserve the absolute right to
reject any or all tenders we determine not to be in proper form or the
acceptance of or payment for which may, in the opinion of our counsel, be
unlawful. We also reserve the absolute right to waive any of the conditions of
the offer and any defect or irregularity in the tender of any particular shares
or any particular stockholder. No tender of shares will be deemed to be properly
made until all defects or irregularities have been cured or waived. None of the
Company, the depositary, or any other person is or will be obligated to give
notice of any defects or irregularities in tenders, and none of them will incur
any liability for failure to give any such notice.
Certificates for shares, together with a properly completed letter of
transmittal and any other documents required by the letter of transmittal, must
be delivered to the depositary and not to the Company. Any such documents
delivered to the Company will not be forwarded to the depositary and therefore
will not be deemed to be validly tendered.
4. WITHDRAWAL RIGHTS
Except as otherwise provided in this Section 4, tenders of shares pursuant
to the offer are irrevocable. Shares tendered pursuant to the offer may be
withdrawn at any time on or prior to the expiration date and, unless the Company
has accepted the shares for payment as provided in this offer to purchase, may
also be withdrawn after 12:00 midnight, Eastern time, on Thursday, December 21,
2000.
For a withdrawal of shares to be effective, the depositary must receive, at
its address set forth on the back cover of this offer to purchase, a notice of
withdrawal in written, telegraphic or facsimile transmission form on a timely
basis. Such notice of withdrawal must specify the name of the person who
tendered the shares to be withdrawn, the number of shares tendered, the number
of shares to be withdrawn and the name of the registered holder, if different
from that of the person who tendered such shares. If the certificates have been
delivered or otherwise identified to the depositary, then, prior to the release
of such certificates, the tendering stockholder must also submit the serial
numbers shown on the particular certificates evidencing the shares and the
signature on the notice of withdrawal must be guaranteed by an eligible
institution, except in the case of shares tendered by an eligible institution.
12
<PAGE>
If shares have been tendered pursuant to the procedure for book-entry
transfer set forth in Section 3, the notice of withdrawal must specify the name
and the number of the account at the book-entry transfer facility to be credited
with the withdrawn shares and otherwise comply with the procedures of such
facility.
We will determine, in our sole discretion, all questions as to the form and
validity, including time of receipt, of notices of withdrawal. Our determination
will be final and binding on all parties. Neither the Company, the depositary,
nor any other person is or will be obligated to give any notice of any defects
or irregularities in any notice of withdrawal, and none of them will incur any
liability for failure to give any such notice. Withdrawals may not be rescinded,
and any shares properly withdrawn will thereafter be deemed not tendered for
purposes of the offer. However, withdrawn shares may be re-tendered before the
expiration date by again following any of the procedures described in
Section 3.
If we extend the offer, or if we are delayed in our purchase of shares or
are unable to purchase shares in the offer for any reason, then, without
prejudice to our rights under the offer, the depositary may, subject to
applicable law, retain on our behalf all tendered shares, and such shares may
not be withdrawn except to the extent tendering stockholders are entitled to
withdrawal rights as described in this Section 4.
5. PURCHASE OF SHARES AND PAYMENT OF PURCHASE PRICE
Upon the terms and subject to the conditions of the offer, we will purchase
and pay the $7.00 per share purchase price for all of the shares we accept for
payment in the offer as soon as practicable after the expiration date. In all
cases, we will make prompt payment for shares tendered and accepted for payment
in the offer, subject to possible delay in the event of proration, but only
after the depositary timely receives certificates for shares, or timely
confirmation of a book-entry transfer of such shares into the depositary's
account at one of the book-entry transfer facilities, a properly completed and
duly executed letter of transmittal, or manually signed facsimile thereof, and
any other required documents.
We will pay for the shares purchased in the offer by depositing the
aggregate purchase price therefor with the depositary, which will act as agent
of tendering holders of such shares for the purpose of receiving payment from us
and transmitting payment to the tendering stockholders. In the event of
proration, we will determine the proration factor and pay for those tendered
shares accepted for payment as soon as practicable after the expiration date.
However, we do not expect to be able to announce the final results of any
such proration until approximately seven business days after the expiration
date.
Under no circumstances will we pay interest on the purchase price including,
without limitation, by reason of any delay in making payment. Certificates for
all shares not purchased, including all shares not purchased due to proration,
will be returned, or, in the case of shares tendered by book-entry transfer,
such shares will be credited to the account maintained with the book-entry
transfer facility by the participant who so delivered such shares, as promptly
as practicable following the expiration date or termination of the offer without
expense to the tendering stockholder. In addition, if certain events occur, we
may not be obligated to purchase any shares in the offer. See Section 6.
We will pay all stock transfer taxes, if any, payable on the transfer to us
of shares purchased pursuant to the offer; provided, however, that if payment of
the purchase price is to be made to, or, in the circumstances permitted by the
offer, if unpurchased shares are to be registered in the name of, any person
other than the registered holder, or if tendered certificates are registered in
the name of any person other than the person signing the letter of transmittal,
the amount of all stock transfer taxes, if any, whether imposed on the
registered holder or such other person, payable on account of the transfer to
such person will be deducted from the purchase price unless evidence
satisfactory to us of
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<PAGE>
the payment of such taxes or exemption therefrom is submitted. See Instruction 7
of the letter of transmittal. Any tendering stockholder or other payee who fails
to complete fully, sign and return to the depositary the Substitute Form W-9
included with the letter of transmittal may be subject to required backup
federal income tax withholding of 31% of the gross proceeds paid to such
stockholder or other payee pursuant to the offer. See Section 3. Also see
Section 3 regarding federal income tax consequences for foreign stockholders.
6. CERTAIN CONDITIONS OF THE OFFER
Notwithstanding any other provision of the offer, we will not be required to
accept for payment, purchase or pay for any shares tendered, and may terminate
or amend the offer, subject to Rule 13e-4(f) promulgated under the Securities
Exchange Act, if at any time on or after October 23, 2000 and prior to the
expiration of this offer, any of the following events occur, or are determined
by us to have occurred, that, in our reasonable judgment regardless of the cause
of the event, including any action or omission to act by us, makes it
inadvisable to proceed with the offer:
(1) any action, suit or proceeding by any government or governmental,
regulatory or administrative agency or authority or by any other person,
domestic or foreign, is threatened, instituted or pending before any court,
agency, authority or other tribunal, or any judgment, order or injunction is
entered, enforced or deemed applicable by any such court, authority, agency
or tribunal, that (a) challenges or seeks to make illegal, or to delay or
otherwise directly or indirectly to restrain, prohibit or otherwise affect
the making of the offer, the acquisition of shares pursuant to the offer or
is otherwise related in any manner to, or otherwise affects, the offer; or
(b) could, in our reasonable judgment, materially affect our business,
condition, financial or otherwise, income, operations or prospects, taken as
a whole, or otherwise materially impair in any way the contemplated future
conduct of our business, taken as a whole, or materially impair the offer's
contemplated benefits to us;
(2) any action is threatened or taken, or any approval is withheld, or
any statute, rule or regulation is invoked, proposed, sought, promulgated,
enacted, entered, amended, enforced or deemed to be applicable to the offer
or us or any of our subsidiaries, by any government or governmental,
regulatory or administrative authority or agency or tribunal, domestic or
foreign, which, in our reasonable judgment, would or might directly or
indirectly result in any of the consequences referred to in clause (a) or
(b) of paragraph (1) above;
(3) the declaration of any banking moratorium or any suspension of
payments in respect of banks in the United States (whether or not
mandatory);
(4) any general suspension of trading in, or limitation on prices for,
securities on any United States national securities exchange or in the
over-the-counter market;
(5) the commencement of a war, armed hostilities or any other national
or international crisis directly or indirectly involving the United States;
(6) any limitation (whether or not mandatory) by any governmental,
regulatory or administrative agency or authority on, or any event that, in
our reasonable judgment, might materially affect, the extension of credit by
banks or other lending institutions in the United States;
(7) any significant decrease in the market price of the shares or in the
market prices of equity securities generally in the United States or any
change in the general political, market, economic or financial conditions or
in the commercial paper markets in the United States or abroad that could
have, in our reasonable judgment, a material adverse effect on our business,
condition, financial or otherwise, income, operations or prospects, taken as
a whole, or on the trading in the shares;
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<PAGE>
(8) in the case of any of the foregoing existing at the time of the
announcement of the offer, a material acceleration or worsening thereof;
(9) any decline in the NASDAQ Composite Index, the Dow Jones Industrial
Average or the S&P 500 Composite Index by an amount in excess of 10%
measured from the close of business on October 23, 2000;
(10) any change or event occurs, is discovered, or is threatened to our
business, condition, financial or otherwise, income, operations, stock
ownership or prospects, taken as a whole, which in our reasonable judgment
is or may be materially adverse to us;
(11) a tender or exchange offer with respect to some or all of our
outstanding shares, other than the offer, or a merger or acquisition
proposal for us, is proposed, announced or made by another person or is
publicly disclosed, or we learn that any person or "group," within the
meaning of Section 13(d)(3) of the Securities Exchange Act, has acquired or
proposes to acquire beneficial ownership of more than 5% of the outstanding
shares, or any new group is formed that beneficially owns more than 5% of
our outstanding shares; or
(12) any person or group files a Notification and Report Form under the
Hart-Scott-Rodino Antitrust Improvements Act of 1976 reflecting an intent to
acquire us or any of our shares.
The foregoing conditions are for our sole benefit and may be asserted by us
regardless of the circumstances giving rise to any such condition, including any
action or inaction by us, or may be waived by us in whole or in part. Our
failure at any time to exercise any of the foregoing rights shall not be deemed
a waiver of any such right, and each such right shall be deemed an ongoing right
that may be asserted by us at any time and from time to time. Our determination
concerning the events described above and any related judgment or decision by us
regarding the inadvisability of proceeding with the purchase of or payment for
any shares tendered will be final and binding on all parties.
7. PRICE RANGE OF SHARES
The shares are listed on the NASDAQ under the symbol "MIDD". The high and
low closing sales prices per share on the NASDAQ as compiled from published
financial sources for the periods indicated are listed below:
<TABLE>
<CAPTION>
HIGH LOW
-------- --------
<S> <C> <C>
Fiscal 1998
1st Fiscal Quarter...................................... 7.25 6.6875
2nd Fiscal Quarter...................................... 8.00 6.00
3rd Fiscal Quarter...................................... 6.3125 3.9375
4th Fiscal Quarter...................................... 4.00 3.50
Fiscal 1999
1st Fiscal Quarter...................................... 5.6875 3.5625
2nd Fiscal Quarter...................................... 6.625 3.9375
3rd Fiscal Quarter...................................... 7.5625 4.625
4th Fiscal Quarter...................................... 5.875 4.375
Fiscal 2000
1st Fiscal Quarter...................................... 7.0625 5.5625
2nd Fiscal Quarter...................................... 7.3281 5.1875
3rd Fiscal Quarter...................................... 7.50 5.50
4th Fiscal Quarter (through October 20, 2000)........... 6.375 4.9375
</TABLE>
On October 20, 2000, the last full trading day on the NASDAQ prior to our
announcement of the purchase price and the number of shares sought in the offer,
the closing per share price on the
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<PAGE>
NASDAQ was $5.375. WE URGE STOCKHOLDERS TO OBTAIN CURRENT QUOTATIONS OF THE
MARKET PRICE OF THE SHARES.
8. BACKGROUND AND PURPOSE OF THE OFFER; CERTAIN EFFECTS OF THE OFFER
We believe the repurchase of our common stock is consistent with our
long-term goal of increasing stockholder value. In July, 1998, the board of
directors of the Company approved a share repurchase program based on the view
that the Company's shares were undervalued. Since July, 1998, the Company has
repurchased 899,800 shares in the open market under its share repurchase
program. Of the total 899,800 shares repurchased, 877,500 shares were
repurchased at prices below $7.00 per share. In June of 2000 the Company
purchased 22,300 shares for amounts ranging between $7.00 and $7.25. All
repurchases made after July, 2000 were made at, or, in most cases, below the
tender offer price.
As of September 30, 2000, the Company had approximately $7,800,000 of cash
and cash equivalents on its balance sheet. The Board of Directors of the Company
believes that its operating cash flow will be adequate to pay off the revolving
credit line as necessary. During the course of 2001 and 2002, the Company will
use its revolving credit line as cash balances are needed.
We are now making the offer because we believe:
(1) the shares are undervalued in the public market;
(2) the offer will provide an opportunity of cash liquidity to
stockholders by allowing them to sell a substantial portion of their stock
at a premium to the NASDAQ trading price at the time of announcement without
the payment of brokerage commissions, while allowing those stockholders who
do not wish to sell at the offer price to elect not to do so;
(3) for those stockholders who hold shares after the offer is completed,
the offer has the potential to increase returns on equity capital by
reducing the number of shares outstanding and to improve our over-all
weighted cost of capital;
(4) after the offer is completed, we expect to have sufficient cash flow
and access to funding to meet the Company's cash needs for normal operations
and anticipated capital expenditures for the foreseeable future; and
(5) after considering alternatives, investing in our shares is an
attractive use of capital and an efficient means to provide value to our
stockholders.
Our board of directors has approved the offer. However, stockholders must
make their own decision whether to tender shares and, if so, how many shares to
tender. Neither we nor our board of directors makes any recommendation to any
stockholder as to whether to tender or refrain from tendering shares and neither
we nor our board of directors has authorized any person to make any such
recommendation.
We may in the future repurchase additional shares, options or warrants in
the open market, private transactions, tender offers or otherwise. Any such
purchases may be on the same terms as, or on terms more or less favorable to
stockholders than, the terms of the offer. However, Rule 13e-4 under the
Securities Exchange Act generally prohibits us and our affiliates from
purchasing any shares, other than through the offer, until at least ten business
days after the expiration or termination of the offer. Any possible future
purchases by us will depend on many factors, including the market price of the
shares, the results of the offer, our business and financial position and
general economic and market conditions.
Except as required by applicable law or, if required, the rules of any
securities exchange or over-the-counter market, such as the NASDAQ, on which our
shares are listed or traded, shares we acquire pursuant to the offer will be
retained as treasury stock by us, unless and until we determine to
16
<PAGE>
retire such shares, and will be available for us to issue without further
stockholder action, for purposes including, but not limited to, the acquisition
of other businesses, the raising of additional capital for use in our business
and the satisfaction of obligations under existing or future employee benefit
plans. We have no current plans for issuance of the shares repurchased pursuant
to the offer.
9. INTERESTS OF DIRECTORS AND EXECUTIVE OFFICERS; TRANSACTIONS AND ARRANGEMENTS
CONCERNING THE SHARES
The following table sets forth certain information regarding the beneficial
ownership of our common stock as of October 20, 2000 for each of our executive
officers and directors and all of our directors and executive officers as a
group. The business address of each director and executive officer is 1400
Toastmaster Drive, Elgin, IL 60120, unless otherwise set forth below.
<TABLE>
<CAPTION>
Name of Amount and Nature of Percent
Beneficial Owner Beneficial Ownership of Class
---------------- -------------------- --------
<S> <C> <C>
William F. Whitman, Jr. 1,943,571 shares(1) 19.2%
Robert R. Henry 822,500 shares(2)(3)(7) 8.1%
Robert Henry & Co., Inc.
P.O. Box 115
Far Hills, NJ 07931
Laura B. Whitman 456,625 shares(3)(4)(7) 4.5%
David P. Riley 331,545 shares(5) 3.3%
A. Don Lummus 151,300 shares(6)(7) 1.5%
Selim A. Bassoul 204,530 shares(8) 2.0%
Sabin C. Streeter 29,000 shares(7) (9)
John R. Miller III 29,000 shares(7) (9)
Philip G. Putnam 21,000 shares(3)(7) (9)
Joseph G. Tompkins 25,000 shares(3)(7) (9)
Robert L. Yohe 48,000 shares(3)(7) (9)
David B. Baker 11,165 shares(10) (9)
All directors and executive 4,073,236 shares 40%
officers of the Company (2)(3)(4)(5)(6)(7)(8)(9)(10)
</TABLE>
------------------------
NOTES:
(1) Does not include 718,500 shares owned by the trusts described in
Note (2) below, as to which Mr. Whitman disclaims beneficial ownership. Includes
255,300 shares owned by Mr. Whitman's spouse. Also included are 40,000 shares of
common stock deemed issued upon exercise of stock options granted in
February 1998.
(2) Includes 718,500 shares of common stock held by Mr. Henry as trustee
under trusts as follows: (a) 437,250 shares for the benefit of Mr. Whitman's two
adult children, W. Fifield Whitman III and Laura B. Whitman (218,625 shares
owned by a trust for the benefit of Laura B. Whitman and 218,625 shares owned by
a trust for the benefit of W. Fifield Whitman III, and (b) 281,250 shares for
the benefit of Mr. Whitman's spouse. Mr. Henry disclaims beneficial ownership of
these shares.
(3) Includes 15,000 shares of common stock deemed issued upon exercise of
stock options granted in February 1996.
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(4) Does not include shares owned by Mr. Henry as trustee for the benefit of
Ms. Whitman described in Note (2) above.
(5) Includes 56,854 shares of common stock owned by trusts for the benefit
of Mr. Riley's two adult children, for which Mr. Riley and his wife serve as
trustees. Mr. Riley disclaims beneficial ownership of these shares. Also
includes 173,670 shares of common stock held by Mr. Riley's spouse in trust and
40,000 shares of common stock deemed issued upon exercise of stock options
granted in February 1998.
(6) Includes 1,000 shares of common stock deemed issued upon exercise of
stock options granted in May 1992.
(7) Includes 3,000 shares of common stock deemed issued upon exercise of
stock options granted May, 2000.
(8) Mr. Bassoul, age 43, is the Chief Operating Officer of the Company. His
holdings include 15,750 shares of common stock deemed issued upon exercise of
stock options. His holdings further include 100,000 shares of common stock
issued pursuant to a promissory note as part of a special executive compensation
program. Pursuant to the note, one-third of the value of the note is retired
each year over a three-year period upon the achievement of certain revenue
targets.
(9) Represents less than 1% of all common shares outstanding.
(10) Mr. Baker, age 43, is the Vice President, Chief Financial Officer and
Secretary of the Company. His holdings include 1,125 shares of common stock
deemed issued upon exercise of stock options.
As of October 20, 2000, there were 10,132,000 shares outstanding and 404,125
shares issuable upon exercise of all outstanding options. As of October 20,
2000, our directors and executive officers as a group beneficially owned
4,073,236 shares, including 196,875 shares issuable to such persons upon
exercise of options and warrants exercisable within 60 days of such date, which
constituted approximately 40% of the outstanding shares. Percentages are based
on 10,132,000 common shares outstanding, as adjusted for options and warrants to
purchase common shares held by the person or group indicated that are
exercisable over the next 60 days.
Based upon our records and upon information provided to us by our directors,
executive officers, associates and subsidiaries, neither we nor any of our
associates or subsidiaries or persons controlling us nor, to the best of our
knowledge, any of our directors or executive officers or any of our
subsidiaries, nor any associates or subsidiaries of any of the foregoing, has
effected any transactions in the shares during the 60 days prior to the date
hereof.
Except for outstanding options or warrants to purchase shares granted to
certain employees (including executive officers) and except as otherwise
described herein, neither we nor any person controlling us nor, to our
knowledge, any of our directors or executive officers, is a party to any
contract, arrangement, understanding or relationship with any other person
relating, directly or indirectly, to the offer with respect to any of our
securities, including, but not limited to, any contract, arrangement,
understanding or relationship concerning the transfer or the voting of any such
securities, joint ventures, loan or option arrangements, puts or calls,
guarantees of loans, guarantees against loss or the giving or withholding of
proxies, consents or authorizations.
Except as disclosed herein, we currently have no plans or proposals which
relate to or would result in:
- an extraordinary transaction, such as a merger, reorganization or
liquidation, involving us or any of our subsidiaries;
- a purchase, sale or transfer of a material amount of our assets or any of
our subsidiaries;
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- any material change in our present dividend rate or policy, indebtedness
or capitalization, provided, however, that although the Company has no
specific plan at this time, the board of directors reserves the right,
from time to time, to declare a dividend in light of the expected change
in capital structure resulting from a tender under this offer, subject to
sufficient available cash flow;
- any change in our present board of directors or management;
- any other material change in our corporate structure or business;
- a class of our equity security being delisted from a national securities
exchange or ceasing to be authorized to be quoted in an automated
quotations system of a registered national securities association;
- a class of our equity securities becoming eligible for termination of
registration pursuant to Section 12(g)(4) of the Exchange Act;
- the suspension of our obligation to file reports pursuant to
Section 15(d) of the Exchange Act;
- the acquisition by any person of additional securities of ours or the
disposition of our securities; or
- any changes in our charter, bylaws or other governing instruments or other
acquisitions that could impede acquisition or control of the Company.
10. SOURCE AND AMOUNT OF FUNDS
Assuming we purchase 1,500,000 shares in the offer at a purchase price of
$7.00 per share, we expect the maximum aggregate cost, including all fees and
expenses applicable to the offer, to be approximately $10,700,000. This amount
will be paid from borrowings under the Company's multicurrency revolving credit
facility with Bank of America N.A. and available cash and cash equivalents. As
of September 30, 2000, the Company had approximately $7,800,000 of cash and cash
equivalents on its balance sheet. Although the Company's current credit facility
with Bank of America restricts the Company's ability to use the funds available
thereunder for the purposes of purchasing shares in a self-tender, the Company
has received a waiver from Bank of America which allows the Company to use the
credit facility to fund this offer.
The maximum amount available to the Company under the Bank of America
facility is $10,000,000, of which currently there is approximately $6,500,000
available to the Company. Any funds borrowed under the Bank of America facility
used to fund this offer will bear interest at approximately 7.3%; which is
approximately 0.5% over the LIBOR rate. Interest is payable quarterly. The Bank
of America facility matures on February 28, 2002. The Company does not currently
have any plans or arrangements with respect to repayment of funds borrowed under
the multicurrency revolving line of credit which will be used to fund this
offer.
The Company is currently negotiating a new three-year line of credit with
Bank of America in the amount of $25,000,000 which the Company expects will be
in place on or about November 22, 2000. The new $25,000,000 line of credit will
not restrict the Company's ability to use the line to fund this offer. In the
event the Company uses the new line of credit to fund this offer, such funds
will bear interest at a rate of approximately 7.7%, which is approximately 0.9%
over the LIBOR rate.
11. CERTAIN INFORMATION ABOUT THE COMPANY
The Middleby Corporation, a Delaware corporation, through its operating
subsidiary Middleby Marshall Inc. ("Middleby Marshall") and its subsidiaries, is
a leader in the design, manufacture, marketing, distribution, and service of a
broad line of cooking and warming equipment used in all types
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of foodservice operations, including quick-service restaurants, full-service
restaurants, retail outlets, hotels and other institutions. The Company's
products include Middleby Marshall-Registered Trademark- and
CTX-Registered Trademark- conveyor oven equipment,
Southbend-Registered Trademark- ranges, convection ovens, heavy-duty cooking
equipment and steam cooking equipment and Toastmaster-Registered Trademark-
toasters and counterline cooking and warming equipment.
ADDITIONAL INFORMATION. We are subject to the informational filing
requirements of the Securities Exchange Act of 1934 and, in accordance
therewith, are obligated to file reports and other information with the
Securities and Exchange Commission (the "Commission") relating to our business,
financial condition and other matters. Information, as of particular dates,
concerning our directors and officers, their remuneration, options granted to
them, the principal holders of our securities and any material interest of such
persons in transactions with us is required to be disclosed in proxy statements
distributed to our stockholders and filed with the Commission. Such reports,
proxy statements and other information can be inspected and copied at the public
reference facilities maintained by the Commission at 450 Fifth Street, N.W.,
Room 2120, Washington D.C. 20549; and at its regional offices located at 500
West Madison Street, Suite 1400, Chicago, Illinois 60661-2511 and 7 World Trade
Center, New York, New York 10048. Copies of such material may also be obtained
by mail, upon payment of the Commission's customary charges, from the Public
Reference Section of the Commission at Judiciary Plaza, 450 Fifth Street, N.W.,
Washington D.C. 20549. The Commission also maintains a Web site at
http://www.sec.gov that contains reports, proxy and information statements and
other information regarding registrants that file electronically with the
Commission. Such reports, proxy statements and other information concerning us
also can be inspected at the offices of the NASDAQ, Reports Section, 1735 K
Street, N.W., Washington, D.C. 20549.
FORWARD-LOOKING STATEMENTS. This offer to purchase, and the documents
incorporated by reference contain statements that are not historical facts and
constitute projections, forecasts or forward-looking statements. These
statements relate to analyses and other information which are based on forecasts
of future results and estimates of amounts not yet determinable. These
statements also relate to our future prospects, developments and business
strategies. These forward-looking statements are identified by their use of
terms and phrases such as "anticipate," "believe," "could," "estimate,"
"expect," "intend," "may," "plan," "predict," "project," "will" and similar
terms and phrases, including references to assumptions. Such forward-looking
statements and the Company's operations, financial condition and results of
operations involve known and unknown risks, and uncertainties that could cause
our future results and shareholder value to differ materially from those
expressed in these statements. Our actual actions or results may differ
materially from those expected or anticipated in the forward-looking statements.
Specific factors that might cause such a difference, include, but are not
limited to, the following:
- a decrease in the number of new store openings by the Company's key
customers;
- factors affecting the Company's ability to sustain its international sales
manufacturing operations, such as quotas, duties, taxes or other charges
or restrictions that may be implemented by the U.S. or any other country
upon the impact or export of the Company's products;
- factors affecting political and economic instability that may have a
material adverse effect upon the Company's domestic and/or international
operations;
- added competition from new or existing competitors;
- the loss of key executives or the ability to hire new qualified employees;
- the inability to improve and market existing products, and to develop,
obtain regulatory approval for and successfully market new products and
product extensions;
- potential exposure to product liability claims from third parties for
personal injury or property damage due to alleged design or manufacturing
defects in the Company's products;
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- the inability to maintain the Company's proprietary rights;
- the inability to effectively enforce the Company's intellectual property
rights in a cost-efficient manner;
- the loss of certain outside suppliers of raw materials and components
which the Company depends upon;
- the loss of certain distribution agreements on which the Company depends;
and
- the failure of the Company to comply with environmental regulations
relating to the use, storage, discharge and disposal or hazardous
chemicals used during manufacturing.
We believe we will have the cash flow to service the debt incurred in this
transaction based upon our projections of future sales and earnings. However,
the above factors could result in us failing to meet such projections, which
could impair our ability to expand and to service such debt. For further
information regarding these factors, please refer to the Company's Form 10-K for
the year ended January 1, 2000 filed with the Securities and Exchange
Commission.
We undertake no obligation to make any revision to the forward-looking
statements contained in this document or to update them to reflect events or
circumstances occurring after the date of this document.
12. EFFECT OF THE OFFER ON THE MARKET FOR SHARES; REGISTRATION UNDER THE
SECURITIES EXCHANGE ACT
Our purchase of shares in the offer will reduce the number of shares that
might otherwise trade publicly and is likely to reduce the number of
stockholders. Nonetheless, the Company anticipates that there will still be a
sufficient number of shares outstanding and publicly traded following the offer
to ensure a continued trading market in the shares. Based on the published
guidelines of the NASDAQ, we do not believe that our purchase of shares pursuant
to the offer will cause our remaining shares to be delisted from the NASDAQ.
The shares are currently "margin securities" under the rules of the Federal
Reserve Board. This has the effect, among other things, of allowing brokers to
extend credit on the collateral of the shares. The Company believes that,
following the purchase of shares pursuant to the offer, the shares will continue
to be "margin securities" for purposes of the Federal Reserve Board's margin
regulations. Eligibility for treatment as "margin securities" will, however,
continue to depend on maintenance of a minimum daily trading volume.
The shares are registered under the Securities Exchange Act, which requires,
among other things, that we furnish certain information to our stockholders and
to the Commission and comply with the Commission's proxy rules in connection
with meetings of our stockholders. We believe that our purchase of shares in the
offer will not result in the shares becoming eligible for deregistration under
the Securities Exchange Act.
13. CERTAIN LEGAL MATTERS; REGULATORY APPROVALS
We are not aware of any license or regulatory permit that appears to be
material to our business that might be adversely affected by our acquisition of
shares as contemplated in the offer or of any approval or other action by any
government or governmental, administrative or regulatory authority or agency,
domestic or foreign, that would be required for our acquisition or ownership of
shares as contemplated by the offer. Should any such approval or other action be
required, we currently contemplate that we will seek such approval or other
action. We cannot predict whether we may determine that we are required to delay
the acceptance for payment of, or payment for, shares tendered in the offer
pending the outcome of any such matter. There can be no assurance that any
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<PAGE>
such approval or other action, if needed, would be obtained at all or without
substantial conditions or that the failure to obtain any such approval or other
action might not result in adverse consequences to our business. Our obligations
under the offer to accept for payment and pay for shares are subject to certain
conditions. See Section 6.
14. CERTAIN UNITED STATES FEDERAL INCOME TAX CONSEQUENCES
IN GENERAL. The following summary describes certain United States federal
income tax consequences relevant to the offer. The discussion contained in this
summary is based upon the Internal Revenue Code of 1986, as amended (the
"Code"), existing, final, temporary and proposed United States Treasury
regulations promulgated thereunder, rulings, administrative pronouncements and
judicial decisions, changes to which could materially affect the tax
consequences described herein and could be made on a retroactive or prospective
basis. As discussed below, depending upon a stockholder's particular
circumstances, our purchase of such stockholder's shares pursuant to the offer
will be treated either as a sale or a dividend for United States federal income
tax purposes. Accordingly, such a purchase generally will be referred to in this
section of the offer to purchase as an "exchange" of shares for cash.
SCOPE. This summary does not apply to shares acquired as compensation,
including shares acquired upon the exercise of options or which were or are
subject to forfeiture restrictions. The summary also does not address the state,
local or foreign tax consequences of participating in the offer. The summary
discusses only shares held as capital assets, within the meaning of
Section 1221 of the Code, and does not address all of the tax consequences that
may be relevant to particular stockholders in light of their personal
circumstances, or to certain types of stockholders, such as certain financial
institutions, dealers in securities or commodities, insurance companies,
tax-exempt organizations or persons who hold shares as a position in a
"straddle" or as a part of a "hedging", "conversion" or "constructive sale"
transaction for United States federal income tax purposes or persons whose
functional currency is not the United States dollar.
In particular, the discussion of the consequences of an exchange of shares
for cash pursuant to the offer applies only to a United States stockholder. For
purposes of this summary, a "stockholder" is a holder of shares that is (1) a
citizen or resident of the United States, (2) a corporation or other entity
taxable as a corporation created or organized in or under the laws of the United
States, any state or any political subdivision thereof, (3) an estate, the
income of which is subject to United States federal income taxation regardless
of its source or (4) a trust if a court within the United States is able to
exercise primary supervision over the administration of the trust and one or
more United States fiduciaries have the authority to control all substantial
decisions relating to the trust.
This discussion does not address the tax consequences to foreign
stockholders who will be subject to United States federal income tax on a net
basis on the proceeds of their exchange of shares pursuant to the offer because
such income is effectively connected with the conduct of a trade or business
within the United States. Such stockholders are generally taxed in a manner
similar to United States holders. Foreign stockholders who are not subject to
United States federal income tax on a net basis should see Section 3 for a
discussion of the applicable United States withholding rules and the potential
for obtaining a refund of all or a portion of the tax withheld. Each stockholder
should consult such stockholder's tax advisor as to the particular consequences
of participation in the offer.
CHARACTERIZATION OF THE SALE. An tender of shares by a stockholder pursuant
to the offer will be a taxable transaction for United States federal income tax
purposes and may also be a taxable transaction under any applicable state, local
and foreign tax laws. The United States federal income tax consequences of such
exchange to a stockholder may vary depending upon the stockholder's particular
facts and circumstances. Under Section 302 of the Code, an exchange of shares by
a stockholder to the Company pursuant to the offer will be treated as a "sale or
exchange" of such shares for United States
22
<PAGE>
federal income tax purposes, rather than as a distribution by the Company with
respect to shares continued to be held, or deemed to be constructively held, by
the tendering stockholder, if the receipt of cash upon such exchange (1) is
"substantially disproportionate" with respect to the stockholder, (2) results in
a "complete termination" of the stockholder's interest in the Company, or
(3) is "not essentially equivalent to a dividend" with respect to the
stockholder. These Section 302 tests are explained more fully below.
If any of the Section 302 tests are satisfied, and the sale of the tendered
shares is therefore treated as a "sale or exchange" of such shares for United
States federal income tax purposes, the tendering stockholder will recognize
capital gain or loss equal to the difference between the amount of cash received
by the stockholder pursuant to the offer and the stockholder's adjusted tax
basis in the shares sold pursuant to the offer. Any such gain or loss recognized
by individuals, trusts or estates will be long-term capital gain or loss if the
shares have been held for more than 12 months. Therefore, a tendering
stockholder may want to take the various adjusted tax bases and holding periods
of his shares, if such characteristics are not uniform, into account in
determining which shares to tender.
If none of the Section 302 tests is satisfied, then, to the extent of our
current and accumulated earnings and profits, the tendering stockholder will be
treated as having received a dividend taxable as ordinary income in an amount
equal to the entire amount of cash received by the stockholder pursuant to the
offer, without reduction for the adjusted tax basis of the shares sold pursuant
to the offer, no loss will be recognized, and, subject to reduction as described
below for corporate stockholders eligible for the dividends-received deduction,
the tendering stockholder's adjusted tax basis in the shares exchanged pursuant
to the offer will be added to such stockholder's adjusted tax basis in its
remaining shares, if any. No assurance can be given that any of the Section 302
tests will be satisfied as to any particular stockholder (other than odd lot
stockholders who tender according to Section 2 above) and thus no assurance can
be given that any particular stockholder will not be treated as having received
a dividend taxable as ordinary income. If the exchange of shares by a
stockholder is not treated as a sale or exchange for federal income tax
purposes, any cash received for shares pursuant to the offer in excess of our
current and accumulated earnings and profits will be treated, first, as a
nontaxable return of capital to the extent of the stockholder's adjusted tax
basis in such shares, and thereafter, as taxable capital gain, to the extent the
cash received exceeds such basis.
CONSTRUCTIVE OWNERSHIP OF STOCK. In determining whether any of the
Section 302 tests are satisfied, a stockholder must take into account not only
the shares which are actually owned by the stockholder, but also shares which
are constructively owned by the stockholder by reason of the attribution rules
set forth in Section 318 of the Code. Under Section 318 of the Code, a
stockholder may be treated as owning (1) shares that are actually owned, and in
some cases constructively owned, by certain related individuals or entities in
which the stockholder owns an interest, or, in the case of stockholders that are
entities, by certain individuals or entities that own an interest in the
stockholder, and (2) shares which the stockholder has the right to acquire by
exercise of an option or a conversion right contained in another instrument held
by the stockholder. Contemporaneous dispositions or acquisitions of shares by a
stockholder or related individuals or entities may be deemed to be part of a
single integrated transaction which will be taken into account in determining
whether any of the Section 302 tests have been satisfied in connection with
shares sold pursuant to the offer. Each stockholder should be aware that because
proration may occur in the offer, even if all the shares actually and
constructively owned by a stockholder are tendered pursuant to the offer, we may
purchase fewer than all of such shares. Thus, proration may affect whether a
sale by a stockholder pursuant to the offer will meet any of the Section 302
tests.
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SECTION 302 TESTS. One of the following tests must be satisfied in order
for the exchange of shares pursuant to the offer to be treated as a sale or
exchange for federal income tax purposes.
(1) SUBSTANTIALLY DISPROPORTIONATE TEST. The receipt of cash by a
stockholder will be "substantially disproportionate" if the percentage of
the outstanding shares actually and constructively owned by the stockholder
immediately following the exchange of shares pursuant to the offer (treating
all shares purchased pursuant to the offer as not being outstanding) is less
than 80% of the percentage of the outstanding shares actually and
constructively owned by such stockholder immediately before the exchange of
shares pursuant to the offer (treating all shares purchased pursuant to the
offer as outstanding). Stockholders should consult their own tax advisors
with respect to the application of the "substantially disproportionate" test
to their particular situation and circumstances.
(2) COMPLETE TERMINATION TEST. The receipt of cash by a stockholder will
be a "complete termination" of the stockholder's interest in the Company if
either (1) all of the shares actually and constructively owned by the
stockholder are exchanged pursuant to the offer, or (2) all of the shares
actually owned by the stockholder are exchanged pursuant to the offer and,
with respect to the shares constructively owned by the stockholder which are
not exchanged pursuant to the offer, the stockholder is eligible to waive
(and effectively waives) constructive ownership of all such shares under
procedures described in Section 302(c) of the Code. Stockholders considering
making such a waiver should do so in consultation with their own tax
advisors.
(3) NOT ESSENTIALLY EQUIVALENT TO A DIVIDEND TEST. Even if the receipt
of cash by a stockholder fails to satisfy the "substantially
disproportionate" test and the "complete termination" test, a stockholder
may nevertheless satisfy the "not essentially equivalent to a dividend" test
if the stockholder's exchange of shares pursuant to the offer results in a
"meaningful reduction" in the stockholder's proportionate interest in the
Company. Whether the receipt of cash by a stockholder who exchanges shares
pursuant to the offer will be "not essentially equivalent to a dividend"
will depend upon the stockholder's particular facts and circumstances. The
IRS has indicated in published Revenue Rulings that even a small reduction
in the proportionate interest of a small minority stockholder in a publicly
held corporation who exercises no control over corporate affairs may
constitute such a "meaningful reduction." Stockholders expecting to rely on
the "not essentially equivalent to a dividend" test should consult their own
tax advisors as to its application to their particular situation and
circumstances.
Although the issue is not free from doubt, it may be possible for a
tendering stockholder to satisfy one of the above three tests by
contemporaneously selling or otherwise disposing of all or some of the shares
that are actually owned (or by causing another to sell or otherwise dispose of
all or some of the shares that are constructively owned) by such stockholder but
are not purchased pursuant to the offer. Correspondingly, a tendering
stockholder may not be able to satisfy one of the above three tests because of
contemporaneous acquisitions of shares by such stockholder or by some person or
entity whose shares would be treated as constructively owned by such
stockholder. Stockholders should consult their tax advisors regarding the tax
consequences of such sales or acquisitions in their particular circumstances.
CORPORATE STOCKHOLDER DIVIDEND TREATMENT. If an exchange of shares pursuant
to the offer by a corporate stockholder is treated as a dividend, the corporate
stockholder may be entitled to claim a deduction in an amount equal to 70% of
the gross dividend under Section 243 of the Code, subject to applicable
limitations. Corporate stockholders should consider the effect of
Section 246(c) of the Code, which disallows the 70% dividends-received deduction
with respect to any dividend on any share of stock that is held for 45 days or
less during the 90-day period beginning on the date which is 45 days before the
date on which such share becomes ex-dividend with respect to such dividend. For
this purpose, the length of time a taxpayer is deemed to have held stock may be
reduced by periods during
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which the taxpayer's risk of loss with respect to the stock is diminished by
reason of the existence of certain options or other hedging transactions.
Moreover, under Section 246A of the Code, if a corporate stockholder has
incurred indebtedness directly attributable to an investment in shares, the 70%
dividends-received deduction may be reduced by a percentage generally computed
based on the amount of such indebtedness and the stockholder's total adjusted
tax basis in the shares. In addition, any amount received by a corporate
stockholder pursuant to the offer that is treated as a dividend will generally
constitute an "extraordinary dividend" under Section 1059 of the Code.
Generally, an "extraordinary dividend" is a dividend that (1) equals or exceeds
10% of the stockholder's tax basis in its shares (treating all dividends having
ex-dividend dates within an 85-day period as a single dividend) or (2) exceeds
20% of the stockholder's adjusted tax basis in the shares (treating all
dividends having ex-dividend dates within a 365-day period as a single
dividend). Accordingly, a corporate stockholder would be required under
Section 1059(a) of the Code to reduce its adjusted tax basis, but not below
zero, in its shares by the non-taxed portion of the extraordinary dividend
(i.e., the portion of the dividend for which a deduction is allowed) and, if
such portion exceeds the stockholder's adjusted tax basis in its shares, to
treat the excess as gain from the sale of such shares in the year in which the
dividend is received. These basis reduction and gain recognition rules would be
applied by taking account only of the stockholder's adjusted tax basis in the
shares that were sold, without regard to other shares that the stockholder may
continue to own. Corporate stockholders should consult their own tax advisors as
to the application of Sections 243, 246, 246A and 1059 of the Code to the offer,
and to any dividends which may be treated as paid with respect to shares sold
pursuant to the offer.
We cannot predict whether or to what extent the offer will be
oversubscribed. If the offer is oversubscribed, proration of the tenders
pursuant to the offer will cause us to accept fewer shares than are tendered.
Therefore, a stockholder (other than an odd lot stockholder who tenders
according to Section 2 above) can be given no assurance that a sufficient number
of such stockholder's shares will be exchanged pursuant to the offer to ensure
that such exchange will be treated as a sale, rather than as a dividend, for
United States federal income tax purposes pursuant to the rules discussed above.
BACKUP WITHHOLDING. See Section 3 with respect to the application of United
States federal income tax backup withholding.
THE TAX CONSEQUENCES OF A SALE OF SHARES IN THE OFFER MAY VARY DEPENDING
UPON, AMONG OTHER THINGS, THE PARTICULAR SITUATION AND CIRCUMSTANCES OF THE
TENDERING STOCKHOLDER. NO INFORMATION IS PROVIDED HEREIN AS TO THE STATE, LOCAL
OR FOREIGN TAX CONSEQUENCES OF THE TRANSACTION CONTEMPLATED BY THE OFFER.
STOCKHOLDERS ARE URGED TO CONSULT THEIR OWN TAX ADVISORS TO DETERMINE THE
SPECIFIC FEDERAL, STATE, LOCAL, FOREIGN AND OTHER TAX CONSEQUENCES OF SALES MADE
BY THEM PURSUANT TO THE OFFER, INCLUDING THE EFFECT OF THE STOCK OWNERSHIP
ATTRIBUTION RULES MENTIONED ABOVE.
15. EXTENSION OF THE OFFER; TERMINATION; AMENDMENT
We expressly reserve the right, in our sole discretion, at any time and from
time to time, and regardless of whether or not any of the events set forth in
Section 6 occur or are deemed by us to have occurred, to extend the period of
time during which the offer is open and thereby delay acceptance for payment of,
and payment for, any shares by giving oral or written notice of such extension
to the depositary and making a public announcement of the extension. We also
expressly reserve the right, in our sole discretion, to terminate the offer and
not accept for payment or pay for any shares not already accepted for payment or
paid for or, subject to applicable law, to postpone payment for shares upon the
occurrence of any of the conditions specified in Section 6 by giving oral or
written notice of such termination or postponement to the depositary and making
a public announcement of the termination or postponement. Our reservation of the
right to delay payment for shares which we have accepted for
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payment is limited by Rule 13e-4(f)(5) under the Securities Exchange Act, which
requires that we must pay the consideration offered or return the shares
tendered promptly after termination or withdrawal of a tender offer.
Subject to compliance with applicable law, we further reserve the right, in
our sole discretion, and regardless of whether any of the events set forth in
Section 6 will occur or are deemed by us to have occurred, to amend the offer in
any respect, including, without limitation, by decreasing or increasing the
consideration offered in the offer to holders of shares or by decreasing or
increasing the number of shares being sought in the offer. Amendments to the
offer may be made at any time and from time to time effected by public
announcement. Such announcement, in the case of an extension, shall be issued no
later than 9:00 a.m., Eastern time, on the next business day after the last
previously scheduled or announced expiration date. Any public announcement made
pursuant to the offer will be disseminated promptly to stockholders in a manner
reasonably designed to inform stockholders of such change. Without limiting the
manner in which we may choose to make any public announcement, except as
provided by applicable law, including Rule 13e-4(e)(2) promulgated under the
Securities Exchange Act, we shall have no obligation to publish, advertise or
otherwise communicate any such public announcement other than by making a
release via Business Wire. If we make a material change in the terms of the
offer or the information concerning the offer, or if we waive a material
condition of the offer, we will extend the offer to the extent required by
Rules 13e-4(d)(2) and 13e-4(e)(3) under the Securities Exchange Act. If (1) we
increase or decrease the price to be paid for shares, we increase the number of
shares being sought and such increase in the number of shares being sought
exceeds 2% of the outstanding shares, or we decrease the number of shares being
sought, and (2) the offer is scheduled to expire at any time earlier than the
expiration of a period ending on the tenth business day from, and including, the
date that notice of such increase or decrease is first published, sent or given,
we will extend the offer until the expiration of such period of ten business
days.
16. FEES AND EXPENSES
We have retained Continental Stock Transfer & Trust Company as the
depositary in connection with the offer. The depositary will receive reasonable
and customary compensation for their services. We will also reimburse the
depositary for out-of-pocket expenses and have agreed to indemnify the
depositary against certain liabilities in connection with the offer, including
certain liabilities under the federal securities laws. The depositary has not
been retained to make solicitations or recommendations in connection with the
offer. We will pay each broker through which shares are tendered pursuant to
this offer a commission of $.05 for each share actually purchased pursuant to
this offer; otherwise, we will not pay fees or commissions to any broker,
dealer, commercial bank, trust company or other person for soliciting any shares
pursuant to the offer. We will, however, on request, reimburse such persons for
customary handling and mailing expenses incurred in forwarding materials in
respect of the offer to the beneficial owners for which they act as nominees. No
such broker, dealer, commercial bank or trust company has been authorized to act
as our agent for purposes of the offer. We will pay, or cause to be paid, any
stock transfer taxes on our purchase of shares, except as otherwise provided in
Instruction 6 of the letter of transmittal.
17. MISCELLANEOUS
We are not aware of any jurisdiction where the making of the offer is not in
compliance with applicable law. If we become aware of any jurisdiction where the
making of the offer is not in compliance with any valid applicable law, we will
make a good faith effort to comply with such law. If, after such good faith
effort, we cannot comply with such law, we will not make the offer to, nor will
we accept tenders from or on behalf of, the holders of shares residing in such
jurisdiction. In any jurisdiction where the securities or blue sky laws require
the offer to be made by a licensed broker or
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dealer, the offer is being made on our behalf by one or more registered brokers
or dealers licensed under the laws of such jurisdiction.
Pursuant to Rule 13e-4 promulgated under the Securities Exchange Act, we
have filed with the Commission an Issuer Tender Offer Statement on Schedule TO
that contains additional information with respect to the offer. The Schedule TO,
including the exhibits and any amendments thereto, may be examined, and copies
may be obtained, at the same places and in the same manner as is set forth in
Section 11 with respect to information concerning us.
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR MAKE ANY
REPRESENTATION ON BEHALF OF US IN CONNECTION WITH THE OFFER OTHER THAN THOSE
CONTAINED IN THIS OFFER TO PURCHASE OR IN THE RELATED LETTER OF TRANSMITTAL. IF
GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATION MUST NOT BE RELIED UPON AS
HAVING BEEN AUTHORIZED BY US.
THE MIDDLEBY CORPORATION
October 23, 2000
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Facsimile copies of the letter of transmittal will be accepted. A holder of
shares or such stockholder's broker, dealer, commercial bank, trust company or
other nominee should properly complete and send or deliver the letter of
transmittal and certificates for the shares and any other required documents to
the depositary at its address set forth below:
CONTINENTAL STOCK TRANSFER & TRUST COMPANY
The Depositary Agent
<TABLE>
<S> <C>
BY MAIL: BY HAND OR OVERNIGHT DELIVERY:
Reorganization Department Reorganization Department
2 Broadway 2 Broadway, 19th Floor
New York, New York 10004 New York, New York 10004
</TABLE>
BY FACSIMILE TRANSMISSION
(For Eligible Institutions Only)
(212) 616-7610
FOR CONFIRMATION BY TELEPHONE:
(212) 509-4000 ext. 545
Any questions or requests for assistance or for additional copies of this
offer to purchase, the letter of transmittal or the notice of guaranteed
delivery may be directed to the Company at (847) 741-3300 ext. 7711 or by mail
to The Middleby Corporation, 1400 Toastmaster Drive, Elgin, IL 60120, attention
Martin M. Lindsay or Continental Stock Transfer & Trust Company, 2 Broadway, New
York, NY 10004, (212) 509-4000 ext. 545. Stockholders may also contact their
broker, dealer, commercial bank or trust company for assistance concerning the
offer. To confirm delivery of shares, stockholders are directed to contact the
depositary.
October 23, 2000
