<PAGE>
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
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SCHEDULE TO
(RULE 14D-100)
Tender Offer Statement Under Section 14(d)(1) or 13(e)(1) Of
The Securities Exchange Act of 1934
ROBERTSON-CECO CORPORATION
(Name of Subject Company (Issuer))
RHH ACQUISITION CORP. (OFFEROR)
THE HEICO COMPANIES, LLC
(Names of Filing Persons (identifying status as offeror, issuer or other
person))
COMMON STOCK, PAR VALUE $0.01 PER SHARE
(Title of Class of Securities)
770539203
(CUSIP Number of Class of Securities)
Michael E. Heisley, Sr.
The Heico Companies, LLC
5600 Three First National Plaza
Chicago, Illinois 60602
(312) 419-8220
With a copy to:
Helen R. Friedli, P.C.
McDermott, Will & Emery
227 West Monroe Street
Chicago, Illinois 60606
(312) 372-2000
(Name, address, and telephone numbers of person authorized to receive notices
and communications on behalf of filing persons)
CALCULATION OF FILING FEE
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Transaction Valuation* $52,021,113 Amount Of Filing Fee $10,405
</TABLE>
*Estimated for purposes of calculating the amount of the filing fee only.
This amount assumes the purchase of 4,523,575 shares of common stock, par
value $.01 per share (the "Shares"), of Robertson-Ceco Corporation, a
Delaware Corporation (the "Company"), at the tender price of $11.50 per
share net to the seller in cash, without interest thereon. Pursuant to the
Agreement and Plan of Merger, dated as of April 20, 2000, between RHH
Acquisition Corp. ("Purchaser") and the Company, the Company represented
that as of such date, it had 16,096,550 shares outstanding. Purchaser
already beneficially owns 11,572,975 shares which will not be tendered.
Based on the foregoing, the transaction value is equal to the product of
(i) (A) 16,096,550 shares (the number of shares outstanding), minus (b)
11,572,975 (the number of shares beneficially owned by Purchaser),
multiplied by (ii) $11.50. The amount of the filing fee, calculated in
accordance with Rule 0-11 Under the Securities Exchange Act of 1934, as
amended, equals 1/50 of one percent of the aggregate of the cash offered by
the Purchaser.
[_]Check the box if any part of the fee is offset as provided by Rule 0-
11(A)(2) and identify the filing with which the offsetting fee was
previously paid. Identify the previous filing by Registration Statement
Number, or the Form or Schedule and the date of its filing.
Amount Previously Paid:
Not applicable.
Not applicable.
Form or Registration No.:
Not applicable.
Filing Party: Not applicable.
Date Filed: Not applicable.
[_]Check the box if the filing relates solely to preliminary communications
made before the commencement of a tender offer.
Check the appropriate boxes below to designate any transactions to which the
statement relates:
[X]third-party tender offer subject to Rule 14d-1.
[_]issuer tender offer subject to Rule 13e-4.
[X]going-private transaction subject to Rule 13e-3.
[_]amendment to Schedule 13D under Rule 13d-2.
Check the following box if the filing is a final amendment reporting the
results of the tender offer: [_]
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<PAGE>
INTRODUCTION
This Tender Offer Statement on Schedule TO (this "Statement") relates to
the offer by RHH Acquisition Corp., a Delaware corporation ("Purchaser"), to
purchase any and all outstanding shares of Common Stock, par value $.01 per
share, of Robertson-Ceco Corporation, a Delaware corporation (the "Company"),
at a purchase price of $11.50 per share, net to the seller in cash, without
interest thereon, upon the terms and subject to the conditions set forth in
the Offer to Purchase dated May 4, 2000 (the "Offer to Purchase"), and in the
related Letter of Transmittal (which, together with any amendments or
supplements thereto, collectively constitute the "Offer"), copies of which are
filed as Exhibits (a)(1)(i) and (a)(1)(ii) hereto, respectively, and which are
incorporated herein by reference.
All information in the Offer to Purchase, including all schedules thereto,
is incorporated by reference in answer to all of the items in this Statement.
Exhibits
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<CAPTION>
Exhibit
Number Title
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(a)(1)(i) Offer to Purchase, dated May 4, 2000.
(a)(1)(ii) Letter of Transmittal.
(a)(1)(iii) Notice of Guaranteed Delivery.
Letter to Brokers, Dealers, Commercial Banks, Trust Companies and Other
(a)(1)(iv) Nominees.
(a)(2) Not applicable.
(a)(3) Exhibit (a)(1)(i) is incorporated herein by reference.
(a)(4) Not applicable.
(a)(5)(i) Press Release, dated April 20, 2000.
(a)(5)(ii) Letter from Brokers, Dealers, Commercial Banks, Trust Companies and Other
Nominees to Clients.
Guidelines for Certification of Taxpayer Identification Number on
(a)(5)(iii) Substitute Form W-9.
(a)(5)(iv) Agreement and Plan of Merger, dated as of April 20, 2000, between RHH
Acquisition Corp. and the Company.
(a)(5)(v) Audited financial statements for the Company's 1998 and 1999 fiscal years,
beginning on page F-1 of the Company's Annual Report on Form 10-K for the
fiscal year ended December 31, 1999 (incorporated by reference to the
Company's Annual Report on Form 10-K filed with the Commission on March
29, 2000).
(b) Not applicable.
(c)(i) Financial presentation prepared for the Special Committee of the Board of
Directors of the Company by CIBC World Markets Corp., dated April 20,
2000.
(c)(ii) Opinion of CIBC World Markets Corp., dated April 20, 2000 (incorporated by
reference to Annex A of the Solicitation/Recommendation Statement on
Schedule 14D-9 of the Company filed with the Commission on May 4, 2000).
(d) Not applicable.
(f) Section 262 of the Delaware General Corporation Law (included as Schedule
II to the Offer to Purchase filed herewith as Exhibit (a)(1)(i)).
(g) Not applicable.
(h) Not applicable.
(i) Not applicable.
</TABLE>
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SIGNATURE
After due inquiry and to the best of my knowledge and belief, I certify that
the information set forth in this statement is true, complete and correct.
RHH Acquisition Corp.
/s/ Michael E. Heisley
By: _________________________________
Michael E. Heisley
President
The Heico Companies, LLC
/s/ Michael E. Heisley
By: _________________________________
Michael E. Heisley
President and Chief Executive
Officer
Dated: May 4, 2000
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EXHIBIT INDEX
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<CAPTION>
Exhibit
Number Title
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(a)(1)(i) Offer to Purchase, dated May 4, 2000.
(a)(1)(ii) Letter of Transmittal.
(a)(1)(iii) Notice of Guaranteed Delivery.
(a)(1)(iv) Letter to Brokers, Dealers, Commercial Banks, Trust
Companies and Other Nominees.
(a)(2) Not applicable.
(a)(3) Exhibit (a)(1)(i) is incorporated herein by reference.
(a)(4) Not applicable.
(a)(5)(i) Press Release, dated April 20, 2000.
(a)(5)(ii) Letter from Brokers, Dealers, Commercial Banks, Trust
Companies and Other Nominees to Clients.
(a)(5)(iii) Guidelines for Certification of Taxpayer Identification
Number on Substitute Form W-9.
(a)(5)(iv) Agreement and Plan of Merger, dated as of April 20, 2000,
between RHH Acquisition Corp. and the Company.
(a)(5)(v) Audited financial statements for the Company's 1998 and 1999
fiscal years, beginning on page
F-1 of the Company's Annual Report on Form 10-K for the
fiscal year ended December 31, 1999 (incorporated by
reference to the Company's Annual Report on Form 10-K filed
with the Commission on March 29, 2000).
(b) Not applicable.
(c)(i) Financial presentation prepared for the Special Committee of
the Board of Directors of the Company by CIBC World Markets
Corp., dated April 20, 2000.
(c)(ii) Opinion of CIBC World Markets Corp., dated April 20, 2000
(incorporated by reference to Annex A of the
Solicitation/Recommendation Statement on Schedule 14D-9 of
the Company filed with the Commission on May 4, 2000).
(d) Not applicable.
(f) Section 262 of the Delaware General Corporation Law
(included as Schedule II to the Offer to Purchase filed
herewith as Exhibit (a)(1)(i)).
(g) Not applicable.
(h) Not applicable.
(i) Not applicable.
</TABLE>
<PAGE>
Offer to Purchase for Cash
Any and All of the Outstanding Shares of Common Stock
of
ROBERTSON-CECO CORPORATION
at
$11.50 Net Per Share
by
RHH Acquisition Corp.
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 5:00 P.M., NEW YORK CITY TIME,
ON JUNE 2, 2000, UNLESS THE OFFER IS EXTENDED.
THE OFFER IS CONDITIONED UPON, AMONG OTHER THINGS, (I) THERE BEING VALIDLY
TENDERED AND NOT WITHDRAWN PRIOR TO THE EXPIRATION OF THE OFFER THAT NUMBER OF
SHARES OF COMMON STOCK (THE "SHARES" OR "COMMON STOCK") OF ROBERTSON-CECO
CORPORATION (THE "COMPANY") WHICH WHEN COMBINED WITH THE SHARES OWNED BY RHH
ACQUISITION CORP. ("PURCHASER") WOULD RESULT IN PURCHASER OWNING AT LEAST 90%
OF THE SHARES OF COMMON STOCK OF THE COMPANY ISSUED AND OUTSTANDING ON THE
DATE OF PURCHASE, (II) THERE NOT HAVING OCCURRED A MATERIAL ADVERSE CHANGE IN
THE CONDITION OF THE COMPANY, (III) THE COMPANY NOT BREACHING ANY OF ITS
MATERIAL COVENANTS, OBLIGATIONS OR AGREEMENTS CONTAINED IN THE AGREEMENT AND
PLAN OF MERGER, DATED AS OF APRIL 20, 2000 BETWEEN PURCHASER AND THE COMPANY
(THE "MERGER AGREEMENT"), AND (IV) THE COMPANY NOT BREACHING ANY OF ITS
REPRESENTATIONS OR WARRANTIES CONTAINED IN THE MERGER AGREEMENT IN ANY
MATERIAL RESPECT. THE OFFER IS ALSO SUBJECT TO OTHER TERMS AND CONDITIONS SET
FORTH IN THIS OFFER TO PURCHASE.
THE BOARD OF DIRECTORS OF ROBERTSON-CECO CORPORATION BY UNANIMOUS VOTE OF
ALL DIRECTORS PRESENT AT A MEETING HELD ON APRIL 20, 2000, BASED ON, AMONG
OTHER THINGS, THE RECOMMENDATION OF A SPECIAL COMMITTEE COMPRISED OF AN
INDEPENDENT DIRECTOR, (I) DETERMINED THAT THE MERGER IS ADVISABLE AND THAT THE
TERMS OF THE OFFER AND THE MERGER ARE FAIR TO, AND IN THE BEST INTERESTS OF,
THE COMPANY AND ITS STOCKHOLDERS, (II) APPROVED THE OFFER AND THE MERGER AND
APPROVED AND ADOPTED THE MERGER AGREEMENT, AND (III) RECOMMENDED THAT THE
STOCKHOLDERS OF THE COMPANY ACCEPT THE OFFER AND, IF APPROVAL IS REQUIRED BY
APPLICABLE LAW, APPROVE THE MERGER AND APPROVE AND ADOPT THE MERGER AGREEMENT.
THIS TRANSACTION HAS NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION NOR HAS THE COMMISSION PASSED UPON THE FAIRNESS OR MERITS
OF THIS TRANSACTION NOR UPON THE ACCURACY OR ADEQUACY OF THE INFORMATION
CONTAINED IN THIS DOCUMENT. ANY REPRESENTATION TO THE CONTRARY IS UNLAWFUL.
IMPORTANT
Any holder of shares of common stock of Robertson-Ceco Corporation desiring
to tender all or any portion of the shares owned by such holder should either
(i) complete and sign the Letter of Transmittal (as defined in this Offer to
Purchase) or a copy thereof in accordance with the instructions in the
enclosed Letter of Transmittal and mail or deliver it, together with the
certificate(s) evidencing tendered shares, and any other required documents,
to the Depositary (as defined in this Offer to Purchase), (ii) where
applicable, cause the holder's broker, dealer, commercial bank, trust company
or custodian to tender the shares pursuant to the procedures for book-entry
transfer of shares or (iii) comply with the guaranteed delivery procedures, in
each case upon the terms set forth in "THE TENDER OFFER--Procedures for
Tendering Shares." Any holder whose shares are registered in the name of a
broker, dealer, commercial bank, trust company or custodian must contact the
holder's broker, dealer, commercial bank, trust company or custodian if such
holder desires to tender the shares. See "THE TENDER OFFER--Procedures for
Tendering Shares."
Any holder who desires to tender shares of common stock of Robertson-Ceco
Corporation and whose certificate(s) evidencing the shares are not immediately
available, or who cannot comply with the procedures for book-entry transfer
described in this Offer to Purchase on a timely basis, may tender such shares
by following the procedures for guaranteed delivery set forth in "THE TENDER
OFFER--Procedures for Tendering Shares."
Questions and requests for assistance may be directed to the Company, 5000
Executive Parkway, Suite 425, San Ramon, CA 94583, Telephone: (925) 543-7599,
Attention: E.A. Roskovensky or Ronald D. Stevens. Additional copies of this
Offer to Purchase, the Letter of Transmittal or other related tender offer
materials may be obtained from the Company or from brokers, dealers,
commercial banks or trust companies.
The date of this Offer to Purchase is May 4, 2000.
<PAGE>
QUESTIONS AND ANSWERS ABOUT THE OFFER AND THE MERGER
Q: WHO IS OFFERING TO BUY MY SECURITIES?
A: The offer is being made by RHH Acquisition Corp., a newly formed Delaware
corporation (the "Purchaser"). The Purchaser was formed by The Heico
Companies, LLC ("Heico"). E.A. Roskovensky and Andrew G.C. Sage II are also
stockholders of Purchaser. Heico is already a major stockholder of the
Company and is controlled by Michael E. Heisley, Sr. Mr. Heisley is the
Chief Executive Officer of the Company. Mr. Roskovensky is the President and
Chief Operating Officer of the Company and Mr. Sage is the Chairman and a
director of the Company. Heico, Mr. Roskovensky and Mr. Sage (the "Parent
Group") currently beneficially own approximately 71.9% of the Company's
outstanding common stock through various entities. See "SPECIAL FACTORS--
Beneficial Ownership of Shares."
Q: WHAT ARE THE CLASSES AND AMOUNTS OF SECURITIES SOUGHT IN THE OFFER?
A: We are making the offer for any and all shares of common stock of the
Company. See "INTRODUCTION."
Q: HOW MUCH IS THE PURCHASER OFFERING TO PAY AND WHAT IS THE FORM OF PAYMENT?
A: We are offering to pay $11.50 per share in cash, without interest. See
"INTRODUCTION."
Q: DOES THE PURCHASER HAVE THE FINANCIAL RESOURCES TO MAKE PAYMENT?
A: Yes. The Company will loan us the funds necessary to acquire all of the
shares in the offer. See "THE TENDER OFFER--Source and Amount of Funds."
Q: IS THE PURCHASER'S FINANCIAL CONDITION RELEVANT TO MY DECISION ON WHETHER TO
TENDER IN THE OFFER?
A: No. Since we are paying you cash for your shares and the offer is not
subject to any financing condition, we do not believe that the financial
condition of the Purchaser or the Parent Group is important to your decision
to tender in the offer. See "THE TENDER OFFER--Source and Amount of Funds."
Q: HOW LONG DO I HAVE TO DECIDE WHETHER TO TENDER IN THE OFFER?
A: You have until 5:00 p.m. on the expiration date of June 2, 2000 to tender
your shares. We will purchase all properly tendered shares promptly
following the expiration date if the conditions to our offer are then met.
After making these purchases, we may continue for a limited period of time
to purchase shares submitted to us. On the other hand, if the conditions to
our offer are not met on the expiration date, we may extend the offer. See
"THE TENDER OFFER--Terms of the Offer."
Q: HOW WILL I BE NOTIFIED IF THE OFFER IS EXTENDED?
A: If the offer is extended past June 2, 2000, we will make a public
announcement of the new expiration date. See "THE TENDER OFFER--Terms of the
Offer."
Q: WHAT ARE THE MOST SIGNIFICANT CONDITIONS OF THE OFFER?
A: We are not obligated to purchase any shares which are validly tendered
unless that number of shares, when added to the shares we then own,
represents at least 90% of the shares outstanding. Furthermore, we are not
obligated to purchase any shares which are validly tendered if, among other
things, there has occurred a material adverse change in the condition of the
Company, the Company has materially breached its obligations, covenants or
agreements under the Agreement and Plan of Merger, dated April 20, 2000,
between the Purchaser and the Company (the "Merger Agreement"), or if there
has occurred a material breach of any representation or warranty of the
Company contained in the Merger Agreement. See "THE TENDER OFFER--Conditions
of the Offer."
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Q: HOW DO I TENDER MY SHARES?
A: If you hold your shares "of record," you can tender your shares by sending
the enclosed letter of transmittal to the depositary, American Stock
Transfer and Trust Company, at the address listed on the enclosed letter of
transmittal. See "THE TENDER OFFER--Procedures for Tendering Shares."
If your broker holds your shares in "street name" for you, you must direct
your broker to tender. Please contact your broker.
Q: UNTIL WHAT TIME CAN I WITHDRAW PREVIOUSLY TENDERED SHARES?
A: You can withdraw tendered shares at any time prior to 5:00 p.m. on the
expiration date of June 2, 2000. If the expiration date is extended, you
can withdraw tendered shares at any time prior to the new expiration date.
See "THE TENDER OFFER--Withdrawal Rights."
Q: HOW DO I WITHDRAW PREVIOUSLY TENDERED SHARES?
A: You can withdraw shares that you have already tendered by sending a notice
of withdrawal to the depositary. See "THE TENDER OFFER--Withdrawal Rights."
Q: WHAT DOES MY BOARD OF DIRECTORS THINK OF THE OFFER?
A: Your board of directors recommends the offer.
A special committee (the "Special Committee") consisting of an independent
director evaluated the fairness of the offer. The Special Committee
negotiated the terms of the offer and recommended that the full board
approve the offer.
The Board of Directors by unanimous vote of all directors present at a
meeting held on April 20, 2000, based on, among other things, the
recommendation of the Special Committee, (i) determined that the Merger is
advisable and that the terms of the Offer and the Merger are fair to, and
in the best interests of, the Company and its stockholders, (ii) approved
the Offer and the Merger and approved and adopted the Merger Agreement, and
(iii) recommended that the stockholders of the Company accept the Offer
and, if approval is required by applicable law, approve the Merger and
approve and adopt the Merger Agreement. See "SPECIAL FACTORS--
Recommendation of the Special Committee and the Board of Directors of the
Company; Fairness of the Offer and the Merger."
Q: DID THE DIRECTORS WHO ARE NOT EMPLOYEES OF THE PURCHASER OR THE PARENT
GROUP RECEIVE ANY OPINIONS, APPRAISALS, OR REPORTS REGARDING THE FAIRNESS
OF THE PER SHARE PRICE PAYABLE IN THE OFFER?
A: Yes. The Special Committee received a written opinion, dated April 20,
2000, from CIBC World Markets Corp. to the effect that, as of that date and
based on and subject to the matters described in the opinion, the $11.50
per share cash consideration to be received in the Offer and the Merger,
taken together, was fair, from a financial point of view, to the holders of
shares of the Company's common stock (other than Heico, Purchaser and their
respective affiliates). See "SPECIAL FACTORS--Opinion of the Special
Committee's Financial Advisor."
Q: WILL THE COMPANY CONTINUE AS A PUBLIC COMPANY?
A: No. The Offer is the first step in a going private transaction. If the
Offer is consummated, the Offer will be followed by a merger that will
result in the Parent Group owning 100% of the Company. As a result, the
Company will no longer be publicly owned. See "SPECIAL FACTORS--Purpose and
Structure of the Offer and the Merger; Plans for the Company."
Q: IF I DECIDE NOT TO TENDER, HOW WILL THE OFFER AFFECT MY SHARES?
A: Stockholders not tendering in the Offer will receive in the Merger the same
amount of cash per share which they would have received had they tendered
their shares in the Offer. Therefore, if the Merger takes place,
ii
<PAGE>
the difference to you between tendering your shares and not tendering your
shares is that you will be paid earlier if you tender your shares in the
Offer. If the Offer is consummated and the number of shares acquired by
Purchaser pursuant to the Offer, when combined with the shares already
owned by Purchaser, is greater than 90% of the outstanding shares,
Purchaser will immediately commence a merger of the Purchaser with and into
the Company under Delaware law without soliciting approval of the Company's
stockholders. See "SPECIAL FACTORS--Rights of Stockholders in the Offer and
the Merger."
Q: WHAT IS THE MARKET VALUE OF MY SHARES AS OF A RECENT DATE?
A: On December 7, 1999, the last trading day before we announced the original
offer to purchase shares for $10 per share, the closing market price of the
Company's common stock reported on the New York Stock Exchange was $7 7/8
per share.
On April 19, 2000, the last trading day before we announced the proposed
offer to purchase shares for $11.50 per share, the last sale price of the
Company's common stock reported on the New York Stock Exchange was $9 7/8
per share. We advise you to obtain a recent quotation for the Company's
common stock in deciding whether to tender your shares. See "TENDER OFFER--
The Price Range of Shares."
Q: IF I OBJECT TO THE PRICE BEING OFFERED, WILL I HAVE APPRAISAL RIGHTS?
A: Yes. You may elect not to tender your shares, dissent from the Merger and
have the fair value of your shares paid to you in cash provided that you
comply with the applicable provisions of the Delaware General Corporation
Law. See "SPECIAL FACTORS--Rights of Stockholders in the Offer and Merger."
Q: WHO CAN I TALK TO IF I HAVE QUESTIONS ABOUT THE TENDER OFFER?
A: If you have more questions about the tender offer, you should contact:
Robertson-Ceco Corporation
5000 Executive Parkway, Suite 425
San Ramon, CA 94583
Telephone: (925) 543-7599
Attention: E.A. Roskovensky or Ronald D. Stevens
iii
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TABLE OF CONTENTS
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Page
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QUESTIONS AND ANSWERS ABOUT THE OFFER AND THE MERGER...................... i
INTRODUCTION.............................................................. 1
SPECIAL FACTORS
1. Background of the Offer and the Merger; Contacts with the Company... 3
2. Recommendation of the Special Committee and the Board of Directors
of the Company; Fairness of the Offer and the Merger.................. 5
3. Position of Parent Group and Purchaser Regarding Fairness of the
Offer and the Merger................................................... 6
4. Opinion of the Special Committee's Financial Advisor................ 7
5. Purpose and Structure of the Offer and the Merger; Plans for the
Company................................................................ 11
6. Rights of Stockholders in the Offer and the Merger.................. 12
7. The Transaction Documents........................................... 14
8. Interests of Certain Persons in the Offer and the Merger............ 22
9. Beneficial Ownership of Shares...................................... 22
10. Related Party Transactions and Transaction in Common Stock.......... 23
11. Certain United States Federal Income Tax Consequences............... 24
12. Fees and Expenses................................................... 25
THE TENDER OFFER
1. Terms of the Offer.................................................. 26
2. Acceptance for Payment and Payment for Shares....................... 28
3. Procedures for Tendering Shares..................................... 29
4. Withdrawal Rights................................................... 31
5. Price Range of Shares............................................... 32
6. Certain Information Concerning the Company.......................... 32
7. Certain Information Concerning Purchaser and Heico.................. 34
8. Source and Amount of Funds.......................................... 35
9. Effect of the Offer on the Market for the Common Stock; Exchange Act
Registration........................................................... 36
10. Conditions of the Offer............................................. 37
11. Certain Legal Matters; Regulatory Approvals......................... 38
12. Fees and Expenses................................................... 40
13. Miscellaneous....................................................... 41
SCHEDULE I--INFORMATION CONCERNING THE DIRECTORS AND EXECUTIVE OFFICERS OF
HEICO AND PURCHASER...................................................... I-1
SCHEDULE II--SECTION 262 OF THE GENERAL CORPORATION LAW OF THE STATE OF
DELAWARE................................................................. II-1
</TABLE>
iv
<PAGE>
To the Holders of Common Stock of
Robertson-Ceco Corporation:
INTRODUCTION
RHH Acquisition Corp., a Delaware corporation ("Purchaser"), hereby offers
to purchase any and all of the issued and outstanding shares of common stock,
par value $0.01 per share (the "Shares" or "Common Stock"), of Robertson-Ceco
Corporation, a Delaware corporation (the "Company"), at a price of $11.50 per
Share, net to the seller in cash without interest thereon (the "Offer Price"),
upon the terms and subject to the conditions set forth in this Offer to
Purchase and in the related Letter of Transmittal (which, as they may be
amended and supplemented from time to time, together constitute the "Offer").
Holders of Shares whose Shares are registered in their own name and who
tender directly to American Stock Transfer and Trust Company, as Depositary
(the "Depositary"), will not be obligated to pay brokerage fees or commissions
or, except as set forth in Instruction 6 of the Letter of Transmittal, stock
transfer taxes on the purchase of Shares by Purchaser pursuant to the Offer.
Purchaser will pay all charges and expenses incurred in connection with the
Offer. See "SPECIAL FACTORS--Fees and Expenses" and "THE TENDER OFFER--Fees
and Expenses."
The Purchaser was formed by The Heico Companies, LLC ("Heico"). E.A.
Roskovensky and Andrew G.C. Sage II are also stockholders of Purchaser. Heico
is already a major stockholder of the Company and is controlled by Michael E.
Heisley, Sr. Mr. Heisley is the Chief Executive Officer of the Company. Mr.
Roskovensky is the President and Chief Operating Officer of the Company and
Mr. Sage is the Chairman and a director of the Company.
As of April 20, 2000, there were 16,096,550 Shares outstanding. Heico, Mr.
Roskovensky and Mr. Sage (the "Parent Group") currently beneficially own
11,572,975 Shares, constituting approximately 71.9% of the Company's
outstanding Common Stock through various entities.
The Offer is being made pursuant to the terms of the Agreement and Plan of
Merger, dated as of April 20, 2000 (the "Merger Agreement"), between Purchaser
and the Company. The Merger Agreement provides that, among other things, if
Purchaser acquires Shares pursuant to the Offer, as promptly as practicable
after consummation of the Offer and the satisfaction of the other conditions
contained in the Merger Agreement, Purchaser will be merged with and into the
Company (the "Merger"), with the Company continuing as the surviving
corporation (the "Surviving Corporation"). At the effective time of the Merger
(the "Effective Time"), except for Shares held by holders exercising their
rights to dissent in accordance with the Delaware General Corporation Law (the
"DGCL") and Shares held, directly or indirectly, by Parent Group, each then
outstanding Share will, by virtue of the Merger and without any action on the
part of the holder thereof, be canceled and be converted into the right to
receive an amount per Share (the "Merger Consideration") equal to the Offer
Price, without interest. The terms and conditions of the Merger Agreement are
more fully described in "SPECIAL FACTORS--The Transaction Documents--The
Merger Agreement."
AS THE INDIRECT BENEFICIAL OWNER OF MORE THAN 50% OF THE OUTSTANDING
SHARES, PARENT GROUP CURRENTLY POSSESSES SUFFICIENT VOTING POWER TO CAUSE THE
COMPANY TO CONSUMMATE THE MERGER WITHOUT THE VOTE OF ANY OTHER STOCKHOLDERS OF
THE COMPANY. Such ownership, however, does not compel any stockholder to
accept the Offer or tender such stockholder's Shares. Subject to dissenters'
rights under the DGCL, Shares not tendered in the Offer shall be cancelled in
the Merger and converted into the right to receive the Merger Consideration,
without interest. Stockholders who hold their Shares at the time of the Merger
and who fully comply with the statutory dissenters' procedures set forth in
the DGCL, the relevant provisions of which are attached as Schedule II of the
Offer to Purchase, will be entitled to dissent from the Merger and have the
fair value of their Shares (which may be more than, equal to, or less than the
Merger Consideration) judicially determined and paid to them in cash pursuant
to the procedures prescribed by the DGCL. NO DISSENTERS RIGHTS ARE AVAILABLE
1
<PAGE>
TO STOCKHOLDERS IN CONNECTION WITH THE OFFER. See "SPECIAL FACTORS--Rights of
Stockholders in the Offer and the Merger."
The Offer is conditioned upon the satisfaction of certain conditions
described in "THE TENDER OFFER--Conditions of the Offer."
The Board of Directors of the Company (the "Board of Directors"), by
unanimous vote of all directors present at a meeting held on April 20, 2000,
based on, among other things, the recommendation of the Special Committee, (i)
determined that the Merger is advisable and that the terms of the Offer and
the Merger are fair to and in the best interests of the Company and its
stockholders, (ii) approved the Offer and the Merger and approved and adopted
the Merger Agreement, and (iii) recommended that the stockholders of the
Company accept the Offer and, if approval is required by applicable law,
approve the Merger and approve and adopt the Merger Agreement.
The Company has advised Purchaser that CIBC World Markets Corp. ("CIBC
World Markets"), financial advisor to the Special Committee, has delivered to
the Special Committee its written opinion, dated April 20, 2000, to the effect
that, as of that date and based on and subject to the matters described in the
opinion, the $11.50 per Share cash consideration to be received in the Offer
and the Merger, taken together, by the holders of Shares was fair, from a
financial point of view, to such holders (other than Heico, Purchaser and
their respective affiliates). A copy of CIBC World Markets' opinion, which
sets forth the assumptions made, procedures followed, matters considered and
limitations on the review undertaken by CIBC World Markets, is contained in
the Company's Solicitation/Recommendation Statement on Schedule 14D-9 (the
"Schedule 14D-9") filed with the Securities and Exchange Commission (the
"Commission"). The Schedule 14D-9 is being mailed to the stockholders
concurrently with the mailing of this Offer to Purchase. The Schedule 14D-9
may be inspected at, and copies may be obtained from, the same places and in
the manner set forth in "THE TENDER OFFER--Certain Information Concerning the
Company--Additional Information." Holders of Shares are urged to read the
opinion carefully in its entirety.
THIS OFFER TO PURCHASE AND THE LETTER OF TRANSMITTAL CONTAIN IMPORTANT
INFORMATION WHICH SHOULD BE READ CAREFULLY BEFORE ANY DECISION IS MADE
WITH RESPECT TO THE OFFER.
2
<PAGE>
SPECIAL FACTORS
1. Background of the Offer and the Merger; Contacts with the Company
Heico initially acquired an interest in the Company in December, 1993.
Since that time, Heico has acquired additional Shares from time to time and
now beneficially owns a majority of the outstanding Shares.
On December 7, 1999, Heico made a written proposal to the Board of
Directors to acquire all of the Shares not owned by Heico and its affiliates
for a cash purchase price of $10 per Share (the "$10 Offer").
On December 8, 1999, a meeting of the Board of Directors was held. As a
result of the $10 Offer, the Board of Directors appointed a Special Committee
consisting of one independent director. The Special Committee was authorized,
among other things, to evaluate and respond to the $10 Offer. The Board of
Directors also agreed that because of the time and effort involved in
reviewing the transaction, the independent director of the Special Committee
should be entitled to receive compensation in the amount of $25,000 in
addition to a per meeting fee of $1,000. The Board of Directors also
authorized a press release to announce that it had received a proposal from
Heico to acquire all of the outstanding common stock not owned by Heico and
its affiliates for $10 per Share.
On December 9, 1999, the Special Committee met with representatives of CIBC
World Markets and representatives of Winthrop, Stimson, Putnam & Roberts
("Winthrop, Stimson") and engaged CIBC World Markets as its financial advisor
and Winthrop, Stimson as its legal counsel. At this meeting, the Special
Committee discussed with its advisors procedures for evaluating and responding
to the $10 Offer.
On December 9, 1999, a class action lawsuit was filed in the Court of
Chancery of the State of Delaware naming the Company, Heico and certain
officers and directors of the Company and Heico as defendants, and alleging
that the $10 Offer was inadequate and that any agreement between Heico and the
Company to consummate an offer at that price would constitute a breach of the
fiduciary duties owed by the defendants to the Company's minority
stockholders. On December 10, 1999, two similar class action lawsuits were
filed; one in the Court of Chancery of the State of Delaware, and the other in
the Superior Court of the State of California. The two class action lawsuits
filed in the Court of Chancery of the State of Delaware were consolidated into
one action (the "Class Action Litigation").
On December 15, 1999 and December 16, 1999, representatives of CIBC World
Markets met with representatives of the Company's management and conducted
financial due diligence.
Between December 16, 1999 and January 5, 2000, there were several
conversations between Heico and the Special Committee and their respective
legal and financial advisors regarding timetables and procedures for
responding to the $10 Offer.
On January 6, 2000, the Special Committee met with its legal and financial
advisors to discuss valuation parameters for the Company and a response to the
$10 Offer. Following this meeting, the Special Committee notified Heico that
it was the view of the Special Committee that the $10 Offer provided
inadequate value to the Company's minority stockholders. Heico responded that
this information would be taken under advisement and that it would respond in
due course.
On January 21, 2000, Heico communicated to the Special Committee that it
would consider increasing its offer to $10.50, subject to the resolution of
the pending Class Action Litigation. That proposal was rejected by the Special
Committee.
Between January 21, 2000 and March 6, 2000, discussions between Heico and
the Special Committee and their respective legal and financial advisors
regarding the proposed transaction continued. Also during this period, counsel
for the shareholders and Company counsel engaged in arms-length negotiations
concerning a possible settlement of the Class Action Litigation.
3
<PAGE>
On March 7, 2000, Heico delivered to the Board of Directors a modification
of its proposal increasing its offer to $11 per Share, but conditioning it
upon a resolution satisfactory to Heico of the Class Action Litigation.
On March 31, 2000, pursuant to a request of the Special Committee, CIBC
World Markets informed the Special Committee that it was unable to opine that
a price of $11 per Share was fair, from a financial point of view, to the
holders of Shares (other than Heico, Purchaser and their respective
affiliates).
On April 3, 2000, the Special Committee reported to Heico that CIBC World
Markets would be unable to render an opinion at a price of $11 per Share and,
accordingly, any revised offer at a price at or below $11 per Share would be
inadequate.
Between April 3, 2000 and April 19, 2000, negotiations and communications
between the Special Committee and Heico and their respective legal counsel
continued, including the negotiation of the terms of the Merger Agreement and
the mutual exchange of draft portions of certain documents necessary to
consummate a tender offer.
On April 20, 2000, Heico informed the Special Committee that Heico was
prepared to increase its offer to $11.50 per Share. At a meeting of the
Special Committee held on that date, the Special Committee reviewed the terms
of the Offer and the proposed Merger Agreement with its legal and financial
advisors. Also at this meeting, representatives of CIBC World Markets
delivered to the Special Committee an oral opinion (which opinion was
confirmed by delivery of a written opinion dated April 20, 2000) to the effect
that, as of that date and based on and subject to the matters described in the
opinion, the $11.50 per Share cash consideration to be received in the Offer
and the Merger, taken together, by the holders of the Shares was fair, from a
financial point of view, to such holders (other than Heico, Purchaser and
their respective affiliates). After full discussion with its legal and
financial advisors, the Special Committee determined that the Offer, the
Merger and the Merger Agreement are fair to and in the best interests of the
stockholders of the Company (other than Heico, Purchaser and their respective
affiliates) and recommended that the Board of Directors approve the Offer and
the Merger and approve and adopt the Merger Agreement.
On April 20, 2000, following the meeting of the Special Committee with its
legal and financial advisors, the Board of Directors met to consider the
recommendations of the Special Committee. After full discussion of the Offer,
the Merger, the Merger Agreement and the recommendations of the Special
Committee, the Board of Directors voted to approve the Offer and the Merger
and to approve and adopt the Merger Agreement, and to recommend that the
Company's stockholders accept the Offer and, if approval is required by
applicable law, approve the Merger and approve and adopt the Merger Agreement.
On April 20, 2000, the Company reached an agreement in principle, subject
to court approval, to settle the Class Action Litigation (the "Proposed
Settlement") on behalf of a class consisting of all persons (other than the
defendants in the Class Action Litigation and their affiliates) who own Shares
or owned Shares after December 8, 1999, the date of the announcement of the
$10 Offer. The Proposed Settlement is memorialized in a Memorandum of
Understanding. The Proposed Settlement contemplates that the Class Action
Litigation will be dismissed with prejudice, and that releases will be given
to the Company, Heico, their employees, officers and directors, affiliates and
agents, for all matters arising out of this transaction. The Proposed
Settlement is subject to the execution of definitive settlement documents by
co-counsel for the class and all defendants, and to court approval.
In a press release issued by the Company on April 20, 2000, the Company
announced that the Board of Directors had approved the Merger Agreement and
that the Company had reached an agreement in principle for the settlement of
the Class Action Litigation.
4
<PAGE>
2. Recommendation of the Special Committee and the Board of Directors of the
Company; Fairness of the Offer and the Merger
The Special Committee.
In reaching its decision to recommend that the Board of Directors approve
the Offer and the Merger and approve and adopt the Merger Agreement, the
Special Committee considered a number of factors, including the following
material factors, which generally supported a recommendation in favor of the
Offer:
(i) The historical market prices and recent trading activity of the
Shares, including the fact that the $11.50 per Share cash consideration to
be paid in the Offer and the Merger represented (A) a premium of
approximately 46.0% over the December 7, 1999 closing market price per
Share, the last full trading day prior to the announcement of the $10
Offer, (B) a premium of approximately 16.5% over the April 19, 2000 closing
market price per Share, the last full trading day prior to the date the
Merger Agreement was announced and (C) a premium of approximately 4.5% over
the highest closing market price per Share for the previous twelve month
period.
(ii) The historical and projected financial performance of the Company.
(iii) The status of negotiations between the Special Committee and its
representatives and Heico and its representatives, including the fact that
(A) the negotiations resulted in an increase in the per Share offer price
from $10.00 to $11.50 and (B) the Special Committee believed that Heico and
Purchaser would not further increase the per Share offer price.
(iv) The express unwillingness of Heico to consider a sale of its
interest in the Company making pursuit of other potential business
combinations impracticable.
(v) The transaction structure which is designed to, among other things,
result in the receipt by stockholders of the consideration to be paid
pursuant to the Offer at the earliest practicable time, without incurring
transaction costs typically associated with market sales.
(vi) The equality of the consideration to be paid in connection with the
Offer and in connection with the Merger.
(vii) The opinion dated April 20, 2000 of CIBC World Markets to the
Special Committee to the effect that, as of such date and based on and
subject to the matters described in the opinion, the $11.50 per Share cash
consideration to be received in the Offer and the Merger, taken together,
by the holders of Shares was fair, from a financial point of view, to such
holders (other than Heico, Purchaser and their respective affiliates). The
full text of CIBC World Markets' written opinion dated April 20, 2000,
which sets forth the assumptions made, procedures followed, matters
considered and limitations on the review undertaken by CIBC World Markets,
is attached to the Company's Schedule 14D-9 as Annex A and is incorporated
herein by reference. CIBC World Markets' opinion is directed only to the
fairness, from a financial point of view, of the $11.50 per Share cash
consideration to be received in the Offer and the Merger, taken together,
by the holders of Shares (other than Heico, Purchaser and their respective
affiliates) and is not intended to constitute, and does not constitute, a
recommendation as to whether any stockholder should tender Shares pursuant
to the Offer or as to any other matter relating to the Offer or the Merger.
Holders of Shares are urged to read the opinion carefully in its entirety.
(viii) The availability of dissenters' rights with respect to the Merger
under Delaware law.
(ix) The terms and conditions of the Merger Agreement, which were
determined through arm's-length negotiations, including the absence of any
financing condition.
(x) The fact that Parent Group already owns 71.9% of the outstanding
Shares and that additional purchases by Parent Group would reduce the
number of publicly traded shares and possibly adversely affect the market
for the Shares.
In addition to the factors listed above, the Special Committee considered
the fact that the consummation of the Offer and the Merger would eliminate the
opportunity of the stockholders of the Company other than Parent Group and its
affiliates (the "Public Stockholders") to participate in any potential future
growth in the value of
5
<PAGE>
the Company. The Special Committee believed that this loss of opportunity was
appropriately reflected in the $11.50 per Share price to be paid in connection
with the Offer and the Merger.
In light of the number and variety of factors the Special Committee
considered in connection with its evaluation of the Offer, the Merger and the
Merger Agreement, the Special Committee did not find it practicable to
quantify or otherwise assign relative weights to any of the foregoing factors
and, accordingly, the Special Committee did not do so.
The Board of Directors of the Company
All of the directors of the Company other than the member of the Special
Committee (Mr. Berman) may be considered to have an interest in the Offer and
the Merger. Accordingly, the Board of Directors based its determination that
the terms of the Offer are fair to the Public Stockholders primarily upon the
conclusion of the Special Committee described above and the other factors
described above under the caption "The Special Committee."
3. Position of Parent Group and Purchaser Regarding Fairness of the Offer and
the Merger
Because Parent Group currently beneficially owns a majority of the
outstanding Shares, Purchaser, Parent Group and their affiliates are deemed
"affiliates" of the Company engaging in a Rule 13e-3 transaction under Rule
13e-3 of the Securities Exchange Act of 1934, as amended (the "Exchange Act").
Accordingly, Parent Group and Purchaser are required to consider the fairness
of the Offer to the holders of the Shares (other than Heico, Purchaser and
their respective affiliates).
Parent Group and Purchaser believe the Offer and the Merger to be
substantially and procedurally fair to the Public Stockholders. Parent Group
and Purchaser have considered the following factors:
(i) The Board of Directors and the Special Committee concluded that the
Offer and the Merger are fair to and in the best interests of the Public
Stockholders.
(ii) The historical and projected financial performance of the Company.
(iii) The Offer Price represents a premium of approximately 46.0% over
the closing market price for the Shares on December 7, 1999, the last full
trading day prior to the announcement of the $10 Offer.
(iv) The Offer Price represents a premium of approximately 16.5% over
the closing market price for the Shares on April 19, 2000, the last full
trading day prior to the announcement of the execution of the Merger
Agreement.
(v) The Offer is not subject to a financing condition.
(vi) The Offer provides the Public Stockholders who are considering
selling their Shares with the opportunity to sell their Shares at the Offer
Price without incurring the transaction costs typically associated with
market sales.
(vii) The ability of Public Stockholders who object to the Merger to
obtain "fair value" for their Shares if they exercise and perfect their
appraisal rights under the DGCL.
(viii) The terms of the Merger Agreement were determined through arm's-
length negotiations between the Special Committee and its legal and
financial advisors, on the one hand, and representatives of Purchaser, on
the other hand, and provide for the Offer in order to allow Public
Stockholders to receive payment for their Shares on an accelerated basis.
(ix) Heico did not desire to sell or transfer control of the Company and
additional purchases by Heico would reduce the number of publicly traded
shares and possibly adversely affect the market for the Shares.
(x) Notwithstanding that CIBC World Markets' opinion, dated April 20,
2000, was provided for the information and assistance of the Special
Committee and that Parent Group and Purchaser are not entitled
6
<PAGE>
to rely on such opinion, the fact that the Special Committee received an
opinion from CIBC World Markets to the effect that, as of that date and
based on and subject to the matters described in the opinion, the $11.50
per Share cash consideration to be received in the Offer and the Merger,
taken together, by the holders of Shares was fair, from a financial point
of view, to such holders (other than Heico, Purchaser and their respective
affiliates).
Parent Group and Purchaser have reviewed the factors considered by the Board
of Directors in support of its decision, as described above, and have no basis
to question their consideration of or reliance on these factors. Parent Group
and Purchaser did not find it practicable to assign, nor did any of them
assign, specific relative weights to the foregoing factors in reaching their
opinion as to the fairness of the Offer and the Merger to the Public
Stockholders.
4. Opinion of the Special Committee's Financial Advisor
The Special Committee engaged CIBC World Markets to act as its exclusive
financial advisor in connection with the Offer and the Merger. At a meeting of
the Special Committee on April 20, 2000 held to evaluate the proposed Offer and
the Merger, CIBC World Markets delivered an oral opinion, confirmed by delivery
of a written opinion dated April 20, 2000, to the effect that, as of the date
of the opinion and based on and subject to the matters described in the
opinion, the $11.50 per Share cash consideration to be received in the Offer
and the Merger, taken together, was fair, from a financial point of view, to
the holders of Shares (other than Heico, Purchaser and their respective
affiliates).
The full text of CIBC World Markets' opinion, dated April 20, 2000, which
describes the assumptions made, procedures followed, matters considered and
limitations on the review undertaken, is attached to the Company's Schedule
14D-9 as Annex A and is incorporated into this document by reference. CIBC
World Markets' opinion is addressed to the Special Committee and relates only
to the fairness of the $11.50 per Share cash consideration from a financial
point of view to the holders of Shares (other than Heico, Purchaser and their
respective affiliates). The opinion does not address any other aspect of the
Offer, the Merger or any related transaction, and does not constitute a
recommendation to any stockholder as to whether or not such stockholder should
tender Shares in the Offer or as to any other matter relating to the proposed
Offer or the Merger. The description of CIBC World Markets' opinion included in
this document is qualified in its entirety by reference to Annex A of the
Company's Schedule 14D-9. Holders of Shares are urged to read the opinion
carefully in its entirety.
In arriving at its opinion, CIBC World Markets:
. reviewed the merger agreement;
. reviewed audited financial statements for the Company for the fiscal
years ended December 31, 1997, December 31, 1998 and December 31, 1999;
. reviewed unaudited financial statements for the Company for the three-
month period ended March 31, 2000;
. reviewed financial projections for the Company prepared by the management
of the Company;
. reviewed the historical market prices and trading volumes for the Shares;
. held discussions with the senior management of the Company with respect
to the business and prospects for future growth of the Company;
. reviewed and analyzed publicly available financial data for companies
CIBC World Markets deemed comparable to the Company;
. reviewed and analyzed publicly available information for transactions
that CIBC World Markets deemed comparable to the Offer and the Merger;
7
<PAGE>
. performed a discounted cash flow analysis of the Company using
assumptions of future performance provided to CIBC World Markets by the
management of the Company;
. reviewed public information concerning the Company; and
. performed such other analyses and reviewed such other information as CIBC
World Markets deemed appropriate.
In rendering its opinion, CIBC World Markets relied on and assumed, without
independent verification or investigation, the accuracy and completeness of
all of the financial and other information provided to or discussed with CIBC
World Markets by the Company and its employees, representatives and
affiliates. With respect to forecasts of the future financial condition and
operating results of the Company, CIBC World Markets assumed, at the direction
of the Company's management, without independent verification or
investigation, that the forecasts were reasonably prepared on bases reflecting
the best available information, estimates and judgments of the Company's
management.
CIBC World Markets did not make or obtain any independent evaluations or
appraisals of the assets or liabilities, contingent or otherwise, of the
Company or its affiliated entities. CIBC World Markets expressed no opinion as
to the underlying valuation, future performance or long-term viability of the
Company, or the price at which the Shares would trade after announcement or
upon consummation of the Offer and the Merger. In connection with its
engagement, CIBC World Markets was not requested to, and did not, solicit
third party indications of interest in the acquisition of all or a part of the
Company. CIBC World Markets' opinion was necessarily based on the information
available to CIBC World Markets and general economic, financial and stock
market conditions and circumstances as they existed and could be evaluated by
CIBC World Markets as of the date of the opinion. No other instructions or
limitations were imposed by the Company on CIBC World Markets with respect to
the investigations made or procedures followed by CIBC World Markets in
rendering its opinion. It should be understood that, although subsequent
developments may affect its opinion, CIBC World Markets does not have any
obligation to update, revise or reaffirm its opinion.
A copy of CIBC World Markets' written presentation to the Special Committee
has been included as an Exhibit to the Schedule TO filed by Purchaser and is
incorporated herein by reference and will be available for inspection and
copying at the principal executive offices of the Company during regular
business hours by any interested stockholder of the Company or any
representative of such stockholder who has been so designated in writing and
may be inspected and copied at the office of, and obtained by mail from, the
Commission.
In its analyses, CIBC World Markets considered industry performance,
regulatory, general business, economic, market and financial conditions and
other matters, many of which are beyond the control of the Company. No
company, transaction or business used in CIBC World Markets' analyses as a
comparison is identical to the Company or the proposed transaction, and an
evaluation of the results of the analyses is not entirely mathematical.
Rather, the analyses involve complex considerations and judgments concerning
financial and operating characteristics and other factors that could affect
the acquisition, public trading or other values of the companies, business
segments or transactions analyzed.
The estimates contained in CIBC World Markets' analyses and the ranges of
valuations resulting from any particular analysis are not necessarily
indicative of actual values or predictive of future results or values, which
may be significantly more or less favorable than those suggested by its
analyses. In addition, analyses relating to the value of businesses or
securities do not purport to be appraisals or to reflect the prices at which
businesses or securities actually may be sold. Accordingly, CIBC World
Markets' analyses and estimates are inherently subject to substantial
uncertainty.
CIBC World Markets' opinion and financial analyses were only one of many
factors considered by the Special Committee in its evaluation of the Offer and
the Merger and should not be viewed as determinative of the views of the
Company, the Special Committee, the Board of Directors or management with
respect to the Offer or the Merger or the cash consideration payable in the
Offer and the Merger.
8
<PAGE>
The following is a summary of the material financial analyses performed by
CIBC World Markets in connection with its opinion to the Special Committee
dated April 20, 2000:
Selected Companies Analysis. CIBC World Markets compared financial and
operating data for the Company with corresponding information for the
following two selected companies in the pre-engineered metal buildings
industry:
. NCI Building Systems, Inc.
. Butler Manufacturing Company
CIBC World Markets reviewed enterprise values, calculated as equity market
value, plus net debt (calculated as an average of latest four quarters debt,
less cash, in order to take into account seasonal fluctuations in net debt
levels for the selected companies), as multiples of, among other things,
latest 12 months revenues, latest 12 months earnings before interest, taxes,
depreciation and amortization, commonly known as EBITDA, and latest 12 months
earnings before interest and taxes, commonly known as EBIT. CIBC World Markets
also reviewed equity market values as a multiple of estimated calendar year
2000 earnings per share, commonly known as EPS. CIBC World Markets then
applied a range of selected multiples derived from the selected companies of
latest 12 months revenues, EBITDA and EBIT and calendar year 2000 estimated
EPS to corresponding financial data of the Company. All multiples were based
on closing stock prices on April 19, 2000. Estimated financial data for the
selected companies were based on publicly available research analysts'
estimates and estimated financial data for the Company were based on internal
estimates of the management of the Company. This analysis indicated an implied
equity reference range for the Company of approximately $10.50 to $15.75 per
Share, as compared to the cash consideration in the Offer and the Merger of
$11.50 per Share.
Precedent Transaction Analysis. CIBC World Markets analyzed the implied
transaction and purchase price multiples paid in the following four selected
merger and acquisition transactions in the pre-engineered metal buildings
industry:
<TABLE>
<CAPTION>
Target Acquiror
------ --------
<S> <C>
.Miller Building
Systems, Inc. .Modtech Holdings, Inc.
.American Buildings
Company .Onex Corp.
.Associated Building
Systems Inc. .Jenisys Engineered Products, a division of Jannock Ltd.
.Mesco Metal Buildings, .NCI Building Systems, Inc.
a division
of Anderson
Industries, Inc.
</TABLE>
CIBC World Markets compared transaction values in the selected transactions
as multiples of latest 12 months revenues, EBITDA and EBIT, and purchase
prices as a multiple of, among other things, latest 12 months EPS. CIBC World
Markets then applied a range of selected multiples derived from the selected
transactions (excluding the transaction between Miller Building Systems, Inc.
and Modtech Holdings, Inc., which was terminated on October 18, 1999) of
latest 12 months revenues, EBITDA, EBIT and EPS to corresponding financial
data of the Company. All multiples for the selected transactions were based on
publicly available financial information. This analysis indicated an implied
equity reference range for the Company of approximately $13.75 to $17.50 per
Share, as compared to the cash consideration in the Offer and the Merger of
$11.50 per Share. CIBC World Markets noted that each of the selected
transactions involved a change of control of the target company and,
therefore, the results of this analysis were based on generally higher
transaction value and purchase price multiples than those which may be paid in
minority buyout transactions similar to the Offer and the Merger.
Discounted Cash Flow Analysis. CIBC World Markets performed a discounted
cash flow analysis to estimate the present value of the stand-alone,
unlevered, after-tax free cash flows that the Company could generate over
calendar years 2000 through 2003. CIBC World Markets based its analysis on
three scenarios, a management case, a downside case and a recession case, each
prepared by the management of the Company. The management case was based on
the current stand-alone management projections of the Company, the downside
case was based on adjustments to the management case to reflect the potential
for reduced revenues
9
<PAGE>
and increased expenses in the event of an economic downturn in the pre-
engineered metal buildings industry and the recession case was based on
adjustments to the downside case to reflect the potential for further reduced
revenues and increased expenses in the event of a general economic recession.
CIBC World Markets calculated the range of estimated terminal values for the
Company by applying terminal value multiples of 3.5x to 4.5x to the Company's
estimated calendar year 2003 EBITDA under each scenario. The cash flows and
terminal values were then discounted to present value using discount rates
ranging from 12.0% to 15.0%. This analysis indicated an implied equity
reference range for the Company of approximately $13.50 to $16.50 per Share for
the management case, approximately $11.50 to $14.00 per Share for the downside
case and approximately $10.25 to $12.75 per Share for the recession case, as
compared to the cash consideration in the Offer and the Merger of $11.50 per
Share. CIBC World Markets did not consider separately the results for each of
the three scenarios, but rather considered the results of this analysis taken
as a whole.
Leveraged Buyout Analysis. CIBC World Markets derived an implied equity
reference range for the Company by performing a leveraged buyout analysis based
on each of the management case, the downside case and the recession case and
estimated rates of return for a financial buyer. In this analysis, CIBC World
Markets utilized financial projections for the years 2000 through 2003 prepared
by the management of the Company under each scenario. CIBC World Markets also
assumed a capitalization structure based generally on financing requirements in
the current credit market, a range of required rates of return to a financial
buyer of 30.0% to 40.0% and a range of EBITDA terminal multiples of 3.5x to
4.5x for each scenario. This analysis indicated an implied equity reference
range for the Company of approximately $11.25 to $13.50 per Share for the
management case, approximately $10.50 to $12.00 per Share for the downside case
and approximately $10.25 to $11.75 per Share for the recession case, as
compared to the cash consideration in the Offer and the Merger of $11.50 per
Share.
Premiums Paid Analysis. CIBC World Markets reviewed the premiums paid in 82
domestic minority buyout transactions effected between January 13, 1997 and
March 29, 2000. CIBC World Markets then applied the average of the 25th
percentile, 50th percentile and 75th percentile premiums derived from these
transactions based on the closing stock prices of the target company one
trading day, one week and four weeks prior to public announcement of the
transaction to the closing stock price of the Company one day prior to December
7, 1999 (the date on which the Company publicly announced that it had received
an offer from Heico and its affiliates to acquire all outstanding Shares, other
than those shares held by Heico and its affiliates, for $10.00 per Share). This
analysis indicated an implied equity reference range for the Company of
approximately $9.00 to $11.00 per Share, as compared to the cash consideration
in the Offer and the Merger of $11.50 per Share.
Other Factors. In rendering its opinion, CIBC World Markets also reviewed
and considered, among other things:
. historical market prices and trading volumes for the Shares, including
the fact that the high closing market price for the Shares reported on
the New York Stock Exchange over the period from April 16, 1999 to April
19, 2000 was $11.00 on May 28, 1999; and
. the relationship between movements in the Shares, movements in the common
stock of the selected companies and movements in the S&P 500 Index.
Miscellaneous. The Company has agreed to pay CIBC World Markets upon
delivery of its opinion an aggregate financial advisory fee of $500,000. The
Company also has agreed to reimburse CIBC World Markets for its reasonable out-
of-pocket expenses, including reasonable fees and expenses of legal counsel,
and to indemnify CIBC World Markets and related parties, to the full extent
lawful, from and against liabilities, including liabilities under the federal
securities laws, incurred in connection with CIBC World Markets' engagement.
The Special Committee selected CIBC World Markets because of CIBC World
Markets' reputation, experience and expertise. As part of CIBC World Markets'
investment banking business, CIBC World Markets
10
<PAGE>
is regularly engaged in valuations of businesses and securities in connection
with acquisitions and mergers, underwritings, secondary distributions of
securities, private placements and valuations for other purposes. In the
ordinary course of business, CIBC World Markets and its affiliates may actively
trade securities of the Company and its affiliates for their own account and
for the accounts of customers and, accordingly, may at any time hold a long or
short position in those securities.
5. Purpose and Structure of the Offer and the Merger; Plans for the Company
Purpose and Structure of the Offer and the Merger. The purpose of the Offer
and the Merger is to enable Parent Group, through Purchaser, to acquire the
entire equity interest in the Company. The Offer will enable Parent Group to
acquire as many outstanding Shares not beneficially owned by Parent Group as
possible as a first step in acquiring the entire equity interest in the
Company. Through the Merger, Parent Group will acquire all Shares not purchased
pursuant to the Offer. Upon consummation of the Merger, the Company will be
entirely owned by Parent Group.
Under the DGCL, the approval of the Board of Directors and the affirmative
vote of the holders of a majority of the outstanding Common Stock is required
to approve and adopt the Merger Agreement and the transactions contemplated
thereby, including the Merger. While the approval and adoption of the Merger
Agreement and the transactions contemplated thereby requires the affirmative
vote of a majority of the votes cast by all stockholders of the Company
entitled to vote thereon, Purchaser already has voting power in excess of that
amount. Furthermore, if the Offer is consummated and Purchaser acquires at
least 90% of the outstanding Shares pursuant to the Offer or otherwise,
Purchaser would be able to effect the Merger pursuant to the "short-form"
merger ("Short-Form Merger") provisions of Section 253 of the DGCL, without any
action by any other stockholder of the Company or the Board of Directors. In
such event, Purchaser intends to effect a Short-Form Merger as promptly as
practicable following the purchase of Shares in the Offer.
If the number of Shares tendered in the Offer, when combined with the number
of Shares owned by Purchaser represents less than 90% of the Company's
outstanding Common Stock, the Purchaser will not be obligated to purchase the
tendered Shares or proceed with the Merger. However, Purchaser may waive the
condition to the Offer that the number of Shares tendered, when combined with
the number of shares owned by Purchaser, represents at least 90% of the
Company's outstanding Common Stock. Purchaser may then submit the Merger
Agreement and the consummation of the transactions contemplated thereby for
approval and adoption by a vote of the stockholders of the Company. In such
event, Purchaser's vote in favor of the approval and adoption of the Merger
Agreement and the transactions contemplated thereby would be sufficient to
satisfy the requirements under the DGCL to effect the Merger.
Plans for the Company After the Offer and the Merger. Pursuant to the Merger
Agreement, upon completion of the Offer, Parent Group and Purchaser intend to
effect the Merger in accordance with the Merger Agreement. See "SPECIAL
FACTORS--The Transaction Documents; The Merger Agreement."
Upon consummation of the Merger, the Company will become a privately held
corporation. Accordingly, Public Stockholders will not have the opportunity to
participate in the earnings and growth of the Surviving Corporation after the
consummation of the Merger and will not have any right to vote on corporate
matters. In addition, Public Stockholders will not be entitled to share in any
premium which might be payable by an unrelated third-party acquiror of all of
the issued and outstanding shares of Common Stock in a sale transaction, if
any, occurring after the consummation of the Merger. No such transactions are
pending at this time. However, such Public Stockholders will not face the risk
of losses generated by the Surviving Corporation's operations or any decrease
in the value of the Surviving Corporation after the consummation of the Merger.
The Shares are currently traded on the New York Stock Exchange. However, as
a result of the Merger, the Company will be entirely owned by Parent Group and
there will be no public market for the Shares. Following the consummation of
the Merger, Shares will no longer be quoted on the New York Stock Exchange and
Purchaser intends to terminate the registration of the Shares under the
Exchange Act. Accordingly, after the
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Merger there will be no publicly traded equity securities of the Company.
Moreover, the Company will no longer be required to file periodic reports with
the Commission under the Exchange Act, and will no longer be required to comply
with the proxy rules of Regulation 14A under Section 14 under the Exchange Act.
In addition, the Company's officers, directors and 10% stockholders will be
relieved of the reporting requirements and restrictions on "short-swing"
trading contained in Section 16 of the Exchange Act with respect to the Shares.
See "THE TENDER OFFER--Effect of the Offer on the Market for the Common Stock;
Exchange Act Registration." It is expected that, if Shares are not accepted for
payment by Purchaser pursuant to the Offer and the Merger is not consummated,
the Company's current management, under the general direction of the Board of
Directors, will continue to manage the Company as an ongoing business.
The Merger Agreement provides that the directors of Purchaser immediately
prior to the Effective Time, and the officers of the Company immediately prior
to the Effective Time, will be the directors and the officers, respectively, of
the Surviving Corporation after the Merger, until their respective successors
are elected or appointed and qualified in accordance with applicable law.
It is currently expected that the business and operations of the Surviving
Corporation after the Merger will be conducted substantially as they are
currently being conducted by the Company. Other than by virtue of the Merger
and the other transactions contemplated by the Merger Agreement and except as
otherwise described above or elsewhere in this Offer to Purchase, Parent Group
and Purchaser have no current plans or proposals that relate to or would result
in: (i) an extraordinary corporate transaction, such as a merger,
reorganization or liquidation, involving the Surviving Corporation or any of
its subsidiaries; (ii) a sale or transfer of a material amount of assets of the
Surviving Corporation or any of its subsidiaries; (iii) any material change in
the Surviving Corporation's capitalization or dividend policy or indebtedness;
(iv) any change in the management of the Surviving Corporation, the composition
of the Board of Directors or any change in any material term of the employment
contract of any executive officer; or (v) any other material change in the
Surviving Corporation's corporate structure or business. However, the Surviving
Corporation's management will review proposals or may propose the acquisition
or disposition of assets or other changes in the Surviving Corporation's
business, corporate structure, capitalization, management or individual policy
that it considers to be in the best interests of the Surviving Corporation and
its shareholders. Management may, from time to time, evaluate and revise the
Surviving Corporation's business, operations and properties and make such
changes as are deemed appropriate.
6. Rights of Stockholders in the Offer and the Merger
No dissenter's or appraisal rights are available to stockholders in
connection with the Offer. If the Merger is consummated, however, record
stockholders of the Company who have not validly tendered their Shares or voted
in favor of the Merger (if a vote is required) will have certain rights under
the DGCL to an appraisal of, and to receive payment in cash of the fair value
of, their Shares (the "Appraisal Shares"). Stockholders who perfect appraisal
rights by complying with the procedures set forth in Section 262 of the DGCL
("Section 262"), a copy of which is attached as Schedule II to this Offer to
Purchase, will have the fair value of their Appraisal Shares (exclusive of any
element of value arising from the accomplishment or expectation of the Merger)
determined by the Delaware Court of Chancery and will be entitled to receive a
cash payment equal to such fair value from the Surviving Corporation. Any such
judicial determination of the fair value of Shares could be based upon any
valuation method or combination of methods the court deems appropriate to use.
The value so determined could be more than, equal to, or less than the Offer
Price or Merger Consideration. In addition, such stockholders may be entitled
to receive payment of a fair rate of interest from the Effective Time on the
amount determined to be the fair value of their Appraisal Shares. THE
PRESERVATION AND EXERCISE OF APPRAISAL RIGHTS REQUIRE STRICT ADHERENCE TO THE
APPLICABLE PROVISIONS OF THE DGCL.
Under Section 262, if the Merger is submitted to a vote of the stockholders
of the Company at a meeting thereof, the Company must, not less than 20 days
prior to the meeting held for the purpose of obtaining stockholder approval of
the Merger, notify each of the Company's stockholders entitled to appraisal
rights that such rights are available. If the Merger is approved without a vote
of the stockholders of the Company, the Company, either before the Effective
Time or within ten days thereafter, must notify each of the stockholders
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entitled to appraisal rights of the approval of the Merger and that appraisal
rights are available. In either case, the notice must include a copy of
Section 262.
If the Merger is submitted to a vote of the stockholders of the Company at
a meeting thereof, a holder of Appraisal Shares wishing to exercise appraisal
rights will be required to deliver to the Company before the taking of the
vote on the Merger or within 20 days after the date of mailing the notice
described in the preceding paragraph, a written demand for appraisal of such
holder's Appraisal Shares. A holder of Appraisal Shares wishing to exercise
such holder's appraisal rights must be the record holder of such Appraisal
Shares on the date the written demand for appraisal is made and must continue
to hold of record such Appraisal Shares through the Effective Time.
Accordingly, a holder of Appraisal Shares who is the record holder of
Appraisal Shares on the date the written demand for appraisal is made, but who
thereafter transfers such Appraisal Shares prior to the Effective Time, will
lose any right to appraisal in respect of such Appraisal Shares.
If the Merger is approved without a vote of the stockholders of the
Company, a holder of Appraisal Shares wishing to exercise appraisal rights
will be required to deliver to the Company, within 20 days after the date of
mailing the notice by the Company described above, a written demand for
appraisal of such holder's Appraisal Shares.
A demand for appraisal must be executed by or on behalf of the stockholder
of record and must reasonably inform the Company of the identity of the
stockholder of record and that such stockholder intends thereby to demand an
appraisal of such Appraisal Shares.
A person having a beneficial interest in Appraisal Shares that are held of
record in the name of another person, such as a broker, fiduciary, depository
or other nominee, will have to act to cause the record holder to execute the
demand for appraisal and to follow the requisite steps properly and in a
timely manner to perfect appraisal rights. If Appraisal Shares are owned of
record by more than one person, as in joint tenancy or tenancy in common, the
demand will have to be executed by or for all joint owners. An authorized
agent, including an agent for two or more joint owners, may execute a demand
for appraisal for a stockholder of record, provided that the agent identifies
the record owner and expressly discloses, when the demand is made, that the
agent is acting as agent for the record owner. If a stockholder owns Appraisal
Shares through a broker who in turn holds the Appraisal Shares through a
central securities depository nominee such as CEDE & Co., a demand for
appraisal of such Appraisal Shares will have to be made by or on behalf of the
depository nominee and must identify the depository nominee as the record
holder of Appraisal Shares.
A record holder, such as a broker, fiduciary, depository or other nominee,
who holds Appraisal Shares as a nominee for others, will be able to exercise
appraisal rights with respect to the Appraisal Shares held for all or less
than all of the beneficial owners of those Appraisal Shares as to which such
person is the record owner. In such case, the written demand must set forth
the number of Shares covered by the demand. Where the number of Shares is not
expressly stated, the demand will be presumed to cover all Appraisal Shares
standing in the name of such record owner.
Within 120 days after the Effective Time, but not thereafter, the Company
or any stockholder who has complied with the statutory requirements summarized
above and who is otherwise entitled to appraisal rights may file a petition in
the Delaware Court of Chancery demanding a determination of the fair value of
such holders' Appraisal Shares. There is no present intention on the part of
Purchaser to file an appraisal petition on behalf of the Company, and
stockholders who seek to exercise appraisal rights should not assume that the
Company will file such a petition or that the Company will initiate any
negotiations with respect to the fair value of Appraisal Shares. Accordingly,
it will be the obligation of the stockholders seeking appraisal rights to
initiate all necessary action to perfect any appraisal rights within the time
prescribed in Section 262. Within 120 days after the Effective Time, any
stockholder who has theretofore complied with the provisions of Section 262
will be entitled, upon written request, to receive from the Company a
statement setting forth the aggregate number of Shares not voting in favor of
the Merger (if applicable) and with respect to which demands for appraisal
were
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received as well as the number of holders of such Shares. Such statement must
be mailed within ten days after the written request therefor has been received
by the Company.
If a petition for appraisal is timely filed, after a hearing on such
petition the Delaware Court of Chancery will determine the stockholders
entitled to appraisal rights and will appraise the fair value of their
Appraisal Shares, exclusive of any element of value arising from the
accomplishment or expectation of the Merger, together with a fair rate of
interest, if any, to be paid upon the amount determined to be the fair value
from the Effective Time.
The costs of the proceeding may be determined by the Delaware Court of
Chancery and taxed upon the parties as the Delaware Court of Chancery deems
equitable under the circumstances. However, costs do not include attorneys'
fees or expert witness fees. Upon application of a stockholder, the Delaware
Court of Chancery may also order all or a portion of the expenses incurred by
any stockholder, including reasonable attorneys' fees and the fees and expenses
of experts, to be charged pro rata against the value of all of the Appraisal
Shares entitled to appraisal.
At any time within 60 days after the Effective Time, any stockholder shall
have the right to withdraw its demand for appraisal and to accept the Merger
Consideration. After this period, the stockholder may withdraw such holder's
demand for appraisal only with the consent of Purchaser. If any stockholder who
properly demands appraisal of such holder's Appraisal Shares under Section 262
fails to perfect, or effectively withdraws or loses, such holder's right to
appraisal as provided in the DGCL, the Appraisal Shares of such stockholder
will be converted into the right to receive the Merger Consideration. A
stockholder will fail to perfect, or effectively lose or withdraw, such
stockholder's right to appraisal if, among other things, no petition for
appraisal is filed within 120 days after the Effective Time or if the
stockholder delivers to the Company a written withdrawal of such stockholder's
demand for appraisal.
Except as otherwise disclosed in the Offer to Purchase, none of Purchaser or
Parent Group have made any provision in connection with the Offer or the Merger
to obtain counsel or appraisal services for unaffiliated security holders at
the expense of Purchaser or Parent Group. As of April 20, 2000, Parent Group
beneficially owned an aggregate of 11,572,975 Shares (representing 71.9% of the
then outstanding Shares). As of April 20, 2000, Messrs. Roskovensky and Sage
each beneficially owned 140,000 and 250,112 Shares, respectively (representing
0.9% and 1.6% of the then outstanding Shares, respectively). The directors and
executive officers of the Company (other than Messrs. Heisley, Roskovensky and
Sage), as a group, beneficially owned an aggregate of 267,719 Shares
(representing 1.7% of the then outstanding Shares) as of April 20, 2000.
7. The Transaction Documents
The Merger Agreement
The following is a summary of the material terms of the Merger Agreement.
The summary is qualified in its entirety by reference to the Merger Agreement,
which is incorporated herein by reference and a copy of which has been included
as an exhibit to the Schedule TO. The Merger Agreement may be inspected at, and
copies may be obtained from, the same places and in the manner set forth in
"THE TENDER OFFER--Certain Information Concerning the Company--Additional
Information".
The Offer. The Merger Agreement provides for the commencement of the Offer.
The obligation of Purchaser to commence the Offer and to accept for payment,
and to pay for, any shares of Common Stock tendered pursuant to the Offer, is
subject to the satisfaction of certain conditions that are set forth below the
caption "THE TENDER OFFER--Conditions of the Offer" (such conditions, the
"Offer Conditions"). Purchaser may waive any of the Offer Conditions or make
any other changes in the terms and conditions of the Offer without the prior
written consent of the Company or the Special Committee. Notwithstanding the
foregoing, Purchaser has agreed that, without the prior written consent of the
Company, no changes may be made that (i) reduce the maximum number of Shares
subject to the Offer, (ii) decrease the Offer Price, (iii) change the form of
consideration payable
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in the Offer, or (iv) amend or modify the Offer Conditions in any manner
adverse to the holders of Shares. Under the terms of the Merger Agreement,
Purchaser may, without the consent of the Company, extend the Offer: (i) if at
the then scheduled expiration date of the Offer any of the Offer Conditions
shall not have been satisfied or waived, until such time as all such conditions
shall have been satisfied or waived; (ii) for any period required by any
statute or rule, regulation, interpretation or position of the Commission
applicable to the Offer; (iii) for any period required by applicable law in
connection with an increase in the consideration to be paid pursuant to the
Offer; and (iv) from time to time, for an aggregate period of not more than ten
business days (for all such extensions under this clause (iv)) beyond the
latest expiration date that would be permitted under clause (i), (ii) or (iii)
of this sentence. If at the scheduled Expiration Date of the Offer, all of the
Offer Conditions have been satisfied, Purchaser shall immediately accept and
promptly pay for all Shares tendered.
The Merger. The Merger Agreement provides that, subject to the terms and
conditions set forth in the Merger Agreement and the applicable provisions of
the DGCL, Purchaser will be merged with and into the Company and the separate
existence of Purchaser will cease. The Company will be the Surviving
Corporation of the Merger and will be entirely owned by Parent Group. In the
Merger, each share of common stock of Purchaser outstanding immediately prior
to the Effective Time will be converted into and exchanged for one validly
issued, fully paid and non-assessable share of Common Stock, $.01 par value per
share, of the Surviving Corporation. At the Effective Time, each Share issued
and outstanding immediately prior to the Effective Time (other than Shares
owned by Parent Group or Purchaser or held by the Company, all of which shall
be cancelled, and Shares held by stockholders who perfect appraisal rights
under the DGCL) will, by virtue of the Merger and without any action on the
part of the holder thereof, be converted into the right to receive the Merger
Consideration. The Merger Agreement provides that (subject to the provisions of
the Merger Agreement and the applicable provisions of the DGCL) the closing of
the Merger shall occur promptly following the satisfaction or, to the extent
permitted under the Merger Agreement, waiver of the conditions to the Merger
set forth in the Merger Agreement.
Treatment of Restricted Stock. The Merger Agreement provides that the
vesting of all Shares issued pursuant to the Company's Long Term Incentive Plan
that are then subject to restrictions (the "Restricted Stock") will be
accelerated at or prior to the Effective Time. Each share of Restricted Stock
will be converted into the right to receive the Merger Consideration with the
same terms as the remaining shares of Common Stock (other than Shares owned by
Parent Group, Purchaser or held by the Company and Shares held by stockholders
who perfect appraisal rights under the DGCL).
Stockholder Meeting. The Merger Agreement provides that, if required by
applicable law, the Company, acting through the Board of Directors, shall (i)
call a meeting of its stockholders (the "Stockholder Meeting") for the purpose
of voting on the Merger Agreement and the transactions contemplated thereby,
(ii) unless Purchaser or other stockholders of the Company execute consents in
lieu of a meeting adequate to approve the Merger, hold the Stockholder Meeting
as soon as practicable after the purchase of Shares pursuant to the Offer and
(iii) unless taking such action would be inconsistent with the fiduciary duties
of the directors of the Company or of the Company's directors constituting the
Special Committee, as determined by such directors in good faith after
consultation with independent legal counsel, recommend to its stockholders the
approval of the Merger Agreement and the transactions contemplated thereby. If
a Stockholder Meeting is called, unless Purchaser or other stockholders of the
Company execute consents in lieu of a meeting adequate to approve the Merger,
the Company will use its reasonable best efforts to solicit from the
stockholders of the Company proxies in favor of the approval and adoption of
the Merger Agreement and the transactions contemplated thereby, unless
otherwise required by applicable fiduciary duties of the directors of the
Company or of the Company's directors constituting the Special Committee, as
determined by such directors in good faith after consultation with independent
legal counsel. At the Stockholder Meeting, Purchaser will cause all the Shares
then owned by Purchaser or any subsidiary or affiliate of Purchaser to be voted
in favor of the Merger. The Merger Agreement provides that, notwithstanding the
foregoing, if Purchaser, or any other direct or indirect subsidiary of
Purchaser, acquires at least 90 percent of the outstanding Shares, the parties
to the Merger Agreement shall take all necessary and appropriate action to
cause the Merger to become effective as soon as practicable after the
expiration of the Offer,
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without a vote of stockholders of the Company, in accordance with the "Short-
Form Merger" provisions of the DGCL. Unless Purchaser or other stockholders of
the Company execute consents in lieu of a meeting adequate to approve the
Merger, the Merger Agreement is required to be submitted to the stockholders of
the Company whether or not the Board of Directors determines at any time
subsequent to declaring its advisability that the Merger Agreement is no longer
advisable and recommends that the stockholders reject it.
Representations and Warranties. The Merger Agreement contains various
representations and warranties of the parties thereto. These include
representations and warranties by the Company with respect to (i) the due
organization, existence and, subject to certain limitations, the qualification,
good standing, corporate power and authority of the Company and its
subsidiaries; (ii) the due authorization, execution, and delivery of the Merger
Agreement and certain ancillary documents executed in connection therewith and
the consummation of the transactions contemplated thereby, and the validity and
enforceability thereof; (iii) subject to certain exceptions and limitations,
the compliance by the Company and its subsidiaries with all applicable foreign,
federal, state or local laws, statutes, ordinances, rules, regulations, orders,
judgments, rulings and decrees of any foreign, federal, state or local
judicial, legislative, executive, administrative or regulatory body or
authority, or any court, arbitration, board or tribunal; (iv) the
capitalization of the Company, including the number of shares of capital stock
of the Company outstanding; (v) subject to certain exceptions and limitations,
the absence of consents and approvals necessary for consummation by the Company
of the Merger and the absence of any violations, breaches or defaults which
would result from compliance by the Company with any provision of the Merger
Agreement; (vi) compliance with the Securities Act of 1933, as amended (the
"Securities Act") and the Exchange Act, in connection with each registration
statement, report, proxy statement or information statement (as defined under
the Exchange Act) prepared by the Company since December 31, 1996, the Schedule
14D-9, the information statement, if any, filed by the Company in connection
with the Offer pursuant to Rule 14f-1 under the Exchange Act and any schedule
required to be filed by the Company with the Commission or any amendment or
supplement thereto; (vii) subject to certain exceptions and limitations, the
absence of pending or (to the knowledge of the Company) threatened claims,
actions, suits, proceedings, arbitrations, investigations or audits; (viii) the
absence of certain changes or effects; (ix) certain fees in connection with the
transactions contemplated by the Merger Agreement; (x) receipt of the opinion
of CIBC World Markets; (xi) state takeover statutes; and (xii) the required
vote of stockholders of the Company with respect to the transactions
contemplated by the Merger Agreement.
Purchaser has also made certain representations and warranties, including
with respect to (i) the due incorporation, existence, good standing and,
subject to certain limitations, corporate power and authority of Purchaser;
(ii) the due authorization, execution and delivery of the Merger Agreement and
certain ancillary documents executed in connection therewith and the
consummation of the transactions contemplated thereby, and the validity and
enforceability thereof; (iii) subject to certain exceptions and limitations,
the absence of consents and approvals necessary for consummation of the
transactions contemplated by the Merger Agreement by Purchaser and the absence
of any violations, breaches or defaults which would result from compliance by
Purchaser with any provision of the Merger Agreement; (iv) the interim
operations by Purchaser; (v) the sufficiency of funds available to Purchaser
for the consummation of the Offer and the Merger and (vi) absence of any
material misstatements or omissions in this Offer to Purchase, the Schedule TO
and the exhibits thereto.
Conduct Until the Merger. The Company has agreed that from the date of the
Merger Agreement to the Effective Time, unless disclosed to Purchaser at the
time of the execution of the Merger Agreement or Purchaser has consented in
writing thereto, the Company will, and will cause each of its subsidiaries to:
(i) conduct its operations according to its ordinary course of business
consistent with past practice; (ii) use its reasonable best efforts to preserve
intact its business organizations and goodwill, keep available the services of
its officers and employees and maintain satisfactory relationships with those
persons having business relationships with them; (iii) promptly upon the
discovery thereof, notify Purchaser of the existence of any breach of any
representation or warranty contained in the Merger Agreement (or, in the case
of any representation or warranty that makes no reference to Material Adverse
Effect, any breach of such representation or warranty in any material respect)
or the occurrence of any event that would cause any representation or warranty
contained in the Merger Agreement
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no longer to be true and correct (or, in the case of any representation or
warranty that makes no reference to Material Adverse Effect, to be no longer
true and correct in any material respect). The Merger Agreement defines a
Material Adverse Effect as a material adverse effect on the business,
operations, assets or financial condition of the Company.
The Company has also agreed that from the date of the Merger Agreement to
the Effective Time, unless disclosed to Purchaser at the time of the execution
of the Merger Agreement or Purchaser has consented in writing thereto, the
Company will not, and will not permit any of its subsidiaries to,
(i) amend its certificate of incorporation or by-laws;
(ii) issue, sell or pledge (A) any shares of its capital stock or other
ownership interest in the Company or its subsidiaries, (B) any securities
convertible into or exchangeable for any such shares or other ownership
interest, or (C) any rights, warrants or options to acquire or with respect
to any such shares of capital stock, ownership interest, or convertible or
exchangeable securities (or derivative instruments in respect of the
foregoing);
(iii) effect any stock split or otherwise change its capitalization as
it existed on the date of the Merger Agreement, or directly or indirectly
redeem, purchase or otherwise acquire any shares of its capital stock or
capital stock of its subsidiaries;
(iv) (A) accelerate or waive any or all of the goals, restrictions or
conditions imposed under any restricted stock award, or (B) issue, sell,
grant or award any shares of capital stock or any right to acquire shares
of capital stock under any Company stock plan (except as otherwise required
by such plan);
(v) declare, set aside or pay any dividend or make any other
distribution or payment with respect to any shares of its capital stock or
other ownership interests (other than such payments by the subsidiaries to
the Company);
(vi) mortgage or otherwise encumber, subject to any encumbrance, or
sell, lease or otherwise dispose of any of its property or assets
(including capital stock of its subsidiaries), other than encumbrances that
are incurred in the ordinary course of business, consistent with past
practice, the sale or disposition of inventory in the ordinary course of
business or the sale, lease, encumbrance or other disposition of assets
which, individually or in the aggregate, are obsolete or not material to
the Company and its subsidiaries taken as a whole;
(vii) (A) acquire by merger, purchase or any other manner, any business
or entity or any division thereof for consideration in excess of $500,000
in the aggregate; or (B) otherwise acquire any assets which would be
material, individually or in the aggregate, to the Company and its
subsidiaries taken as a whole, except for purchases of inventory, supplies
or capital equipment in the ordinary course of business consistent with
past practice and the acquisition of assets for consideration in excess of
$500,000 in the aggregate;
(viii) except for borrowings under existing credit facilities and
excepting transactions between the Company and any subsidiary, incur or
assume any long-term or short-term debt or issue any debt securities or
assume, guarantee or otherwise become liable or responsible (whether
directly, contingently or otherwise) for the debt or other obligations of
any other person, other than obligations (other than debt) of its
subsidiaries incurred in the ordinary course of business;
(ix) (A) make any loans, advances or capital continuations to, or
investments in, any other person (other than to subsidiaries of the
Company), except with respect to commitments outstanding on the date of the
Merger Agreement, or (B) forgive any loans, advances or capital
contributions to, or investments in, any other person (other than with
respect to subsidiaries of the Company) for an amount in excess of $500,000
in the aggregate (as to clauses (A) and (B) collectively);
(x) except as contemplated by the Merger Agreement or in the ordinary
course of business consistent with past practice (A) increase the
compensation payable or to become payable to its officers or employees, (B)
other than in accordance with existing policies and arrangements, grant any
severance pay to the Company's officers, directors or employees or (C)
establish, adopt, enter into or amend any collective bargaining, bonus,
profit sharing, thrift, compensation, stock option, restricted stock,
pension, retirement,
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deferred compensation, employment, termination, severance or other plan,
agreement, trust, fund, policy or arrangement for the benefit of any
director, officer or employee, except to the extent required by applicable
law or the terms of a collective bargaining agreement or a contractual
obligation existing on the date of the Merger Agreement;
(xi) change any of the accounting principles or practices used by the
Company, except as may be required by generally accepted accounting
principles;
(xii) pay, discharge or satisfy any material claims, material
liabilities or material obligations (absolute, accrued, asserted or
unasserted, contingent or otherwise), other than the payment, discharge or
satisfaction of (A) any such material claims, material liabilities or
material obligations in the ordinary course of business and consistent with
past practice or (B) material claims, material liabilities or material
obligations reflected or reserved against in, or contemplated by, the
consolidated financial statements (or the notes thereto) contained in the
Company's filings with the Commission;
(xiii) agree to the settlement of any claim or litigation, which
settlement would have a Material Adverse Effect;
(xiv) make, change or rescind any material tax election (other than
recurring elections that customarily are made in connection with the filing
of any tax return; provided that any such elections are consistent with the
past practices of the Company or its Subsidiaries, as the case may be); or
settle or compromise any material tax liability that is the subject of any
audit, claim for delinquent taxes, examination, action, suit, proceeding or
investigation by any taxing authority;
(xv) except to the extent required under existing employee and director
benefit plans, agreements or arrangements as in effect on the date of the
Merger Agreement or as contemplated by the Merger Agreement, accelerate the
payment, right to payment or vesting of any bonus, severance, profit
sharing, retirement, deferred compensation, stock option, insurance or
other compensation or benefits;
(xvi) enter into any agreement, understanding or commitment that
restrains, limits or impedes the ability of the Company or any of its
subsidiaries to compete with or conduct any business or line of business,
including geographic limitations on the activities of the Company or any of
its subsidiaries;
(xvii) materially modify, amend or terminate any material contract, or
waive, relinquish, release or terminate any right or claim, in each case,
except in the ordinary course of business consistent with past practice;
(xviii) other than with respect to commitments outstanding as of the
date of the Merger Agreement, make any capital expenditures for the Company
and its subsidiaries in excess $1,000,000, in the aggregate;
(xix) take any action to cause the Common Stock to be delisted from the
New York Stock Exchange prior to the consummation of the Offer; or
(xx) agree in writing or otherwise to take any of the foregoing actions.
Access to Information. Under the Merger Agreement, from the date of the
Merger Agreement to the closing date of the Merger, the Company has agreed, and
has agreed to cause its subsidiaries to, (i) give Purchaser and its authorized
representatives reasonable access, upon reasonable notice and during reasonable
hours to all books, records, personnel, offices and other facilities and
properties of the Company and its subsidiaries and their accountants and
accountants' work papers, (ii) permit Purchaser to make such copies and
inspections thereof as Purchaser may reasonably request and (iii) furnish
Purchaser with such financial and operating data and other information with
respect to the business and properties of the Company and its subsidiaries as
Purchaser may from time to time reasonably request; provided that no
investigation or information furnished pursuant to the Merger Agreement shall
affect any representations or warranties made by the Company therein or the
conditions to the obligations of Purchaser to consummate the transactions
contemplated thereby. Purchaser has agreed to hold all information furnished on
a confidential basis by or on behalf of the Company or any of its subsidiaries
in confidence.
18
<PAGE>
No Solicitation. The Company has agreed in the Merger Agreement (a) that
from the date of the Merger Agreement to the Effective Time, neither it nor any
of its subsidiaries will, and it will direct and use its best efforts to cause
its officers, directors, employees, agents and representatives (including,
without limitation, any investment banker, attorney or accountant retained by
it or any of its subsidiaries) not to, initiate, solicit or encourage, directly
or indirectly, any inquiries or the making or implementation of any proposal or
offer (including, without limitation, any proposal or offer to its
stockholders) with respect to a merger, acquisition, consolidation or similar
transaction involving, or any purchase of all or any significant portion of the
assets or any equity securities of, the Company or any of its subsidiaries (any
such proposal or offer being hereinafter referred to as an "Alternative
Proposal") or engage in any negotiations concerning, or provide any
confidential information or data to, afford access to the properties, books or
records of the Company or any of its subsidiaries to, or have any discussions
with, any person relating to an Alternative Proposal, or otherwise facilitate
any effort or attempt to make or implement an Alternative Proposal; (b) that it
will immediately cease and cause to be terminated any existing activities,
discussions or negotiations with any parties conducted heretofore with respect
to any of the foregoing, and it will take the necessary steps to inform such
parties of the obligations undertaken under the no solicitation provision of
the Merger Agreement; and (c) that it will notify Purchaser immediately of the
identity of the potential acquiror and the terms of such person's or entity's
proposal if any such inquiries or proposals are received by, any such
information is requested from, or any such negotiations or discussions are
sought to be initiated or continued with, the Company; provided, however, that
the no solicitation provision shall not prohibit the Company or its
subsidiaries, upon approval by the Special Committee, from (i) prior to the
acceptance for payment of Shares pursuant to the Offer, furnishing information
to, or entering into discussions or negotiations with, any person or entity
that makes an unsolicited bona fide proposal to acquire the Company pursuant to
a merger, consolidation, share exchange, purchase of substantially all of the
assets of the Company, a business combination or other similar transaction, if,
and only to the extent that, (A) such proposal was not initially solicited,
encouraged or knowingly facilitated by the Company, its subsidiaries or their
agents in violation of the no solicitation provision of the Merger Agreement,
(B) such proposal is not subject to a financing condition and involves
consideration that provides a higher value per share than the Merger
Consideration, (C) the Board of Directors, or the Special Committee, determines
in good faith based on the advice of outside counsel that the failure to take
such action would be inconsistent with its fiduciary duties to stockholders
imposed by law, and (D) prior to furnishing information to, or entering into
discussions or negotiations with, such person or entity, the Company provides
written notice to Purchaser to the effect that it is furnishing information to,
or entering into discussions or negotiations with, such person or entity; and
(ii) to the extent applicable, complying with Rule 14e-2(a) promulgated under
the Exchange Act with regard to an Alternative Proposal. Nothing in the no
solicitation provision of the Merger Agreement (x) permits the Company to
terminate the Merger Agreement (except as specifically provided in the
termination provisions of the Merger Agreement), (y) permits the Company to
enter into any agreement with respect to an Alternative Proposal during the
term of the Merger Agreement, or (z) affects any other obligation of the
Company under the Merger Agreement.
Fees and Expenses. Except as set forth below or as otherwise provided in the
Merger Agreement, whether or not the Offer or the Merger is consummated, all
fees, costs and expenses incurred in connection with the Merger Agreement and
the transactions contemplated by the Merger Agreement will be paid by the party
incurring such fees, costs and expenses.
In the Merger Agreement, the Company has agreed that, under certain
circumstances, it will reimburse Purchaser and its affiliates for their out-of-
pocket expenses incurred in connection with the Offer, the Merger and the other
transactions contemplated by the Merger Agreement. The Company is obligated to
pay Purchaser's out-of-pocket expenses under the following circumstances: (i)
Purchaser terminates the Merger Agreement because of the failure of the
condition to the Offer that the representations and warranties made by the
Company in the Merger Agreement that are qualified by materiality or Material
Adverse Effect are true and correct in all respects when made or thereafter
have ceased to be true and correct in all respects as if made at the scheduled
or extended expiration of the Offer (except to the extent that any such
representation or warranty refers specifically to another date, in which case
such representation or warranty shall be true and correct in all respects as of
such other date), the other representations and warranties made by the Company
in the Merger Agreement are true and correct in all material respects when made
or thereafter have ceased to be true and correct in all respects as
19
<PAGE>
if made at the scheduled or extended expiration of the Offer (except to the
extent that any such representation or warranty refers specifically to another
date, in which case such representation or warranty shall be true and correct
in all material respects as of such other date) or because the Company has
breached and failed to have complied in all material respects with any of its
obligations under the Merger Agreement; (ii) the Special Committee terminates
the Merger Agreement in accordance with its terms because of an Alternative
Proposal which the Special Committee in good faith determines is more favorable
from a financial point of view to the stockholders of the Company as compared
to the Offer and the Merger and the Special Committee determines in good faith
based on advice of outside counsel that the failure to take such action would
be inconsistent with its fiduciary duties to stockholders imposed by law; or
(iii) if prior to purchasing any Shares pursuant to the Offer, Purchaser
terminates the Merger Agreement because the Special Committee shall have
withdrawn or modified in a manner that is materially adverse to Purchaser its
approval or recommendation of the Merger Agreement, the Offer, the Merger or
any other transaction contemplated by the Merger Agreement or shall have
recommended another merger, consolidation or business combination involving, or
acquisition of, the Company or its assets or another tender offer for the
Shares or the Special Committee shall have resolved to do any of the foregoing.
Under the terms of the Merger Agreement, Purchaser has agreed that, under
certain circumstances, it will reimburse the Company for its out-of-pocket
expenses incurred in connection with the Offer, the Merger and the other
transactions contemplated by the Merger Agreement. Purchaser will be obligated
to pay the Company's out-of-pocket expenses if the Special Committee terminates
the Merger Agreement because Purchaser has breached in any material respect any
of their respective representations, warranties or covenants contained in the
Merger Agreement.
Filings; Other Actions. The Merger Agreement provides that, subject to the
terms and conditions provided in the Merger Agreement, the Company and
Purchaser have agreed to:
(a) use their reasonable best efforts to cooperate with one another in
(i) determining which filings are required to be made prior to the
expiration of the Offer or the Effective Time with, and which consents,
approvals, permits or authorizations are required to be obtained prior to
the Effective Time from, governmental entities or other third parties in
connection with the execution and delivery of the Merger Agreement and
other ancillary documents and the consummation of the transactions
contemplated thereby and (ii) timely make all such filings and timely seek
all such consents, approvals, permits, authorizations and waivers; and
(b) use their reasonable best efforts to take, or cause to be taken, all
other action and do, or cause to be done, all other things necessary,
proper or appropriate to consummate and make effective the transactions
contemplated by the Merger Agreement. If, at any time after the Effective
Time, any further action is necessary or desirable to carry out the purpose
of the Merger Agreement, the proper officers and directors of Purchaser and
the Surviving Corporation are required to take all such necessary action.
Conditions to the Merger. The obligations of Purchaser and the Company to
effect the Merger are subject to the satisfaction or waiver, where permissible,
prior to the Effective Time, of the following conditions: (i) if approval of
the Merger Agreement and the Merger by the holders of Shares is required by
applicable law, the Merger Agreement and the Merger shall have been approved by
the requisite vote of such holders; and (ii) no United States federal or state
governmental authority or other agency or commission or court of competent
jurisdiction shall have enacted, issued, promulgated, enforced or entered any
law, rule, regulation, executive order decree, injunction or other order which
is in effect and prohibits or has the effect of prohibiting the consummation of
the Merger or makes the consummation of the Merger illegal.
Termination. The Merger Agreement, notwithstanding approval thereof by the
stockholders of the Company, may be terminated at any time prior to the
Effective Time:
(a) by mutual written consent of the Purchaser and the Special
Committee;
(b) by Purchaser or the Special Committee,
(i) if either (x) the purchase of Shares pursuant to the Offer has
not been consummated on or before June 19, 2000, or (y) the Effective
Time shall not have occurred on or before September 18,
20
<PAGE>
2000 (provided that the right to terminate this Agreement pursuant to
this clause (i) shall not be available to any party whose failure to
fulfill any obligation under this Agreement has been the cause of or
resulted in the failure of consummation of the purchase of Shares
pursuant to the Offer on or before June 19, 2000 or the Effective Time
to occur on or before September 18, 2000); or
(ii) if there shall be any law that makes consummation of the Offer
or the Merger illegal or prohibited, or if any court of competent
jurisdiction in the United States shall have issued an order, judgment,
decree or ruling, or taken any other action restraining, enjoining or
otherwise prohibiting the Merger and such order, judgment, decree,
ruling or other action shall have become final and non-appealable; or
(c) by the Special Committee,
(i) if there is an Alternative Proposal which the Special Committee
in good faith determines is more favorable from a financial point of
view to the stockholders of the Company as compared to the Offer and
the Merger, and the Special Committee determines in good faith, based
upon advice of outside counsel, that the failure to take such action
would be inconsistent with its fiduciary duties to stockholders imposed
by law; provided, however, that this right to terminate shall not be
available in certain circumstances; or
(ii) if Purchaser shall have breached in any material respect any of
their respective representations, warranties or covenants contained in
the Merger Agreement; or
(d) by Purchaser,
(i) prior to the acceptance of any Shares under the Offer, if due to
an occurrence or circumstance that would result in the failure of any
of the Offer Conditions, Purchaser shall have terminated the Offer
without having accepted any Shares for payment thereunder, unless such
failure to accept Shares for payment or to pay for Shares shall have
been caused by or resulted from the failure of Purchaser to perform any
obligation of either of them contained in the Merger Agreement;
(ii) prior to the purchase of any Shares validly tendered pursuant
to the Offer, if the Special Committee shall have withdrawn or modified
in a manner that is materially adverse to Purchaser its approval or
recommendation of the Merger Agreement, the Offer, the Merger or any
other transaction contemplated by the Merger Agreement or if the
Special Committee shall have recommended another merger, consolidation
or business combination involving, or acquisition of, the Company or
its assets or another tender offer for the Shares, or the Special
Committee shall have resolved to do any of the foregoing.
Indemnification. The Merger Agreement provides that the Surviving
Corporation will maintain in effect for not less than six years after the
Effective Time the Company's current directors and officers insurance
policies, if such insurance is obtainable (or policies of at least the same
coverage containing terms and conditions no less advantageous to the current
and all former directors and officers of the Company), with respect to acts or
failures to act prior to the Effective Time, including acts relating to the
transactions contemplated by the Merger Agreement; provided, however, that in
order to maintain or procure such coverage, the Surviving Corporation shall
not be required to maintain or obtain policies providing such coverage except
to the extent such coverage can be provided at an annual cost of no greater
than 200% of the most recent annual premium paid by the Company prior to the
date of the Merger Agreement (the "Cap"); and provided, further, that if
equivalent coverage cannot be obtained, or can be obtained only by paying an
annual premium in excess of the Cap, the Purchaser or the Surviving
Corporation will only be required to obtain only as much coverage as can be
obtained by paying an annual premium equal to the Cap. Purchaser has agreed
that all rights to indemnification for acts or omissions occurring prior to
the Effective Time now existing in favor of the current or former directors or
officers of the Company and its subsidiaries as provided in their respective
articles of incorporation or by-laws (or similar organizational documents)
shall survive the Offer and the Merger and shall continue in full force and
effect in accordance with their respective terms.
21
<PAGE>
Amendment. To the extent permitted by applicable law, the Merger Agreement
may be amended by action taken by or on behalf of the boards of directors of
the Company and Purchaser and, in the case of the Company, with the approval
of the Special Committee at any time before or after adoption of the Merger
Agreement by the stockholders of the Company (if required); provided, however,
that after any such stockholder approval, no amendment shall be made which
decreases the Merger Consideration or which adversely affects the rights of,
or the income tax consequences to, the Public Stockholders thereunder without
the approval of such stockholders. The Merger Agreement may not be amended
except by an instrument in writing signed on behalf of Purchaser and the
Company.
8. Interests Of Certain Persons In The Offer And The Merger
In considering the recommendations of the Board of Directors and the
Special Committee, stockholders should be aware that certain officers and
directors of Heico, Purchaser and the Company have interests in the Offer and
the Merger which are described below and which may present them with certain
potential conflicts of interest. As a result of Parent Group's current
ownership of approximately 71.9% of the outstanding Shares and five of the
Company's eight directors being officers or directors of Heico, Purchaser or
one of their respective affiliates, Parent Group may be deemed to control the
Company.
Mr. Michael E. Heisely, Sr., a director of the Company and its Chief
Executive Officer, is the Manager, President and Chief Executive Officer of
Heico, and is a director and President of Purchaser. Mr. E.A. Roskovensky, a
director of the Company and its President and Chief Operating Officer, is a
director of Purchaser. Mr. Stanley H. Meadows, a director of the Company, is a
director of Purchaser. Mr. Andrew G.C. Sage II, Chairman and a director of the
Company, is a director of Purchaser. Mr. Michael E. Heisley, Jr., a director
of the Company, is a director of Purchaser.
As of April 20, 2000, the directors and executive officers of the Company
(other than Messrs. Heisley, Roskovensky and Sage), as a group, beneficially
owned an aggregate of 267,719 Shares (representing 1.7% of the then
outstanding Shares). As of April 20, 2000, Mr. Berman, the member of the
Special Committee, beneficially owned an aggregate of 1,127 Shares
(representing less than 1% of the then outstanding Shares). All Shares held by
directors and executive officers (other than Shares held by Messrs. Heisley,
Roskovensky and Sage) will be treated in the Offer and the Merger in the same
manner as Shares held by the Public Stockholders. Shares beneficially owned by
Messrs. Heisley, Roskovensky and Sage (through their ownership of Purchaser)
will not be tendered in the Offer and will be converted into common stock of
the Surviving Corporation. In the aggregate, the directors and executive
officers of the Company (other than Messrs. Heisley, Roskovensky and Sage)
will be entitled to receive approximately $3,078,769 for their Shares upon
consummation of the Offer and the Merger (based upon the number of Shares
owned as of April 20, 2000) and the member of the Special Committee, in
addition to the Compensation described under "--Background of the Offer and
the Merger; Contact with the Company," will be entitled to receive an
aggregate of approximately $12,961 for his Shares upon consummation of the
Offer and the Merger (based upon the number of Shares owned as of April 20,
2000).
Mr. Berman is entitled to receive compensation in the amount of $25,000 in
addition to a per meeting fee of $1,000 for his service on the Special
Committee.
The Special Committee and the Board of Directors were aware of these actual
and potential conflicts of interest and considered them along with the other
matters described under "--Recommendation of the Special Committee and the
Board of Directors; Fairness of the Offer and the Merger."
9. Beneficial Ownership Of Shares
The following table sets forth certain information, as of April 20, 2000,
regarding the ownership of Common Stock by Purchaser, Parent Group and each
director or executive officer of Purchaser or Heico. To the best of the
knowledge of Purchaser and Parent Group, after making reasonable inquiry, all
directors and executive officers of the Company (other than Messrs. Heisley,
Roskovensky and Sage) currently intend to tender their Shares
22
<PAGE>
pursuant to the Offer, except to the extent that tendering would subject any
such director or executive officer to "short-swing profit" under Section 16(b)
of the Exchange Act. In addition, based upon disclosures made by the Company
in its Schedule 14D-9, Purchaser and Parent Group understand that all
executive officers, other directors, affiliates and subsidiaries of the
Company (other than Messrs. Heisley, Roskovensky and Sage) intend to tender
the Shares held of record or beneficially owned by them (other than Restricted
Stock, as defined in the Robertson-Ceco Corporation Long Term Incentive Plan,
which will be converted into the right to receive the Offer Price). Except as
indicated below, the executive officers and directors of Heico and Purchaser
do not own any Shares.
<TABLE>
<CAPTION>
Number of Shares Percent of
Beneficially Common Stock
Name of Beneficial Owner Owned(a) Beneficially Owned
------------------------ ---------------- ------------------
<S> <C> <C>
Andrew G. C. Sage II................. 250,112 1.55%
Michael E. Heisley, Sr............... 11,182,863(b) 69.47%
Stanley G. Berman.................... 1,127 *
Stanley H. Meadows................... 964 *
Gregg C. Sage........................ 250,112(c) 1.55%
E. A. Roskovensky.................... 140,000 *
Ronald D. Stevens.................... 15,000(d) *
Michael E. Heisley, Jr............... 516 *
Larry W. Gies ....................... 0 *
Richard Dentner...................... 0 *
Total of all shares beneficially
owned by all executive officers and
directors as a group (10 Persons)... 11,590,582(e) 72.01%
</TABLE>
- --------
* less than 1%
(a) Unless otherwise indicated, the shares shown in the table are those as to
which the beneficial owner has sole voting and investment power with the
exception of those restricted shares issued under the Company's 1991 Long
Term Incentive Plan (the "Long Term Incentive Plan") as to which such
persons have sole voting power.
(b) Mr. Heisley, the Chief Executive Officer and a director of the Company,
has sole voting and dispositive power over: (a) 1,127 shares owned by Mr.
Heisley, (b) 9,015,236 shares beneficially owned by The Heico Companies,
LLC (formerly known as Heisley Investments Limited Partnership), and (c)
2,166,500 shares beneficially owned by Heico Holding, Inc. (formerly known
as Pettibone Corporation).
(c) Includes all shares owned by Sage Capital Corporation ("Sage Capital") and
deemed to be beneficially owned by Mr. Andrew G. C. Sage II. Mr. Gregg C.
Sage has 25% ownership in and is a Managing Director of Sage Capital, and
may be deemed to share voting and investment power over the shares of
Common Stock held by Sage Capital. Mr. Gregg C. Sage disclaims beneficial
ownership of such Common Stock.
(d) Consists of restricted shares of the Company's Common Stock granted under
the Long Term Incentive Plan the basis of which remain subject to
restrictions.
(e) Includes restricted shares of the Company's Common Stock granted to Mr.
Stevens under the Long Term Incentive Plan.
10. Related Party Transactions and Transactions in Common Stock
The Company paid $240,000 during each of the years ended 1997, 1998 and
1999, to an affiliated company of Mr. Heisley for manufacturing and certain
other consulting services.
On January 7, 1998, Heico entered into a Stock Purchase Agreement with
Hemisphere Investment L.P. whereby Heico would purchase a total of 541,611
shares of Common Stock for $10 per Share, or an aggregate purchase price of
$5,416,110. The terms of such transaction provided that Heico would purchase
491,611 shares of Common Stock on January 7, 1998 for $4,916,110 and 50,000
shares on June 2, 1998 for $500,000. On
23
<PAGE>
October 12, 1999, Heico purchased 374,292 shares of Common Stock at $10 per
share. Heico also purchased 87,700 shares of Common Stock of October 22, 1999
at $10 per share and 152,300 shares of Common Stock on November 9, 1999 at $10
per share. On April 17, 2000, Heico purchased 26,500 shares of Common Stock at
$10.75 per share from Frank A. Benevento II, a director of the Company.
11. Certain United States Federal Income Tax Consequences
THE FOLLOWING IS A SUMMARY OF CERTAIN FEDERAL INCOME TAX CONSEQUENCES OF
THE OFFER AND THE MERGER TO HOLDERS WHOSE SHARES ARE PURCHASED PURSUANT TO THE
OFFER OR WHOSE SHARES ARE CONVERTED INTO THE RIGHT TO RECEIVE CASH IN THE
MERGER. THE SUMMARY IS BASED ON THE PROVISIONS OF THE INTERNAL REVENUE CODE OF
1986, AS AMENDED (THE "CODE"), APPLICABLE CURRENT AND PROPOSED UNITED STATES
TREASURY REGULATIONS ISSUED THEREUNDER, JUDICIAL AUTHORITY AND ADMINISTRATIVE
RULINGS AND PRACTICE, ALL OF WHICH ARE SUBJECT TO CHANGE, POSSIBLY WITH
RETROACTIVE EFFECT, AT ANY TIME AND, THEREFORE, THE FOLLOWING STATEMENTS AND
CONCLUSIONS COULD BE ALTERED OR MODIFIED. THE DISCUSSION DOES NOT ADDRESS
HOLDERS OF SHARES IN WHOSE HANDS SHARES ARE NOT CAPITAL ASSETS, NOR DOES IT
ADDRESS HOLDERS WHO HOLD SHARES AS PART OF A HEDGING, "STRADDLE," CONVERSION
OR OTHER INTEGRATED TRANSACTION, OR WHO RECEIVED SHARES UPON CONVERSION OF
SECURITIES OR EXERCISE OF WARRANTS OR OTHER RIGHTS TO ACQUIRE SHARES OR
PURSUANT TO THE EXERCISE OF EMPLOYEE STOCK OPTIONS OR OTHERWISE AS
COMPENSATION, OR TO HOLDERS OF SHARES WHO ARE IN SPECIAL TAX SITUATIONS (SUCH
AS INSURANCE COMPANIES, TAX-EXEMPT ORGANIZATIONS, FINANCIAL INSTITUTIONS,
UNITED STATES EXPATRIATES OR NON-U.S. PERSONS). FURTHERMORE, THE DISCUSSION
DOES NOT ADDRESS THE TAX TREATMENT OF HOLDERS WHO EXERCISE DISSENTERS' RIGHTS
IN THE MERGER, NOR DOES IT ADDRESS ANY ASPECT OF FOREIGN, STATE OR LOCAL
TAXATION OR ESTATE AND GIFT TAXATION.
THE FEDERAL INCOME TAX CONSEQUENCES SET FORTH BELOW ARE INCLUDED FOR
GENERAL INFORMATIONAL PURPOSES ONLY. BECAUSE INDIVIDUAL CIRCUMSTANCES MAY
DIFFER, EACH HOLDER OF SHARES SHOULD CONSULT SUCH HOLDER'S OWN TAX ADVISOR TO
DETERMINE THE APPLICABILITY OF THE RULES DISCUSSED BELOW TO SUCH STOCKHOLDER
AND THE PARTICULAR TAX EFFECTS OF THE OFFER AND THE MERGER, INCLUDING THE
APPLICATION AND EFFECT OF STATE, LOCAL AND OTHER INCOME TAX LAWS.
The receipt of cash for Shares pursuant to the Offer or the Merger will be
a taxable transaction for federal income tax purposes under the Code (and also
may be a taxable transaction under applicable state, local, foreign and other
income tax laws). In general, for federal income tax purposes, a holder of
Shares will recognize gain or loss in an amount equal to the difference
between its adjusted tax basis in the Shares sold pursuant to the Offer or
converted into the right to receive cash in the Merger and the amount of cash
received therefor. Gain or loss must be determined separately for each block
of Shares (i.e., Shares acquired at the same cost in a single transaction)
sold pursuant to the Offer or converted to cash in the Merger. Such gain or
loss will be capital gain or loss and will be long-term gain or loss if, on
the date of sale (or, if applicable, the Effective Time), the Shares were held
for more than one year.
Under the United States federal income tax backup withholding rules,
payments in connection with the Offer or the Merger may be subject to "backup
withholding" at a rate of 31%. In order to avoid backup withholding, each
tendering stockholder, unless an exemption applies, must provide the
Depositary with such stockholder's correct taxpayer identification number and
certify that such stockholder is not subject to such backup withholding by
completing the Substitute Form W-9 included in the Letter of Transmittal.
Backup withholding is not an additional tax but merely an advance payment,
which may be refunded to the extent it results in an overpayment of tax.
Certain persons generally are entitled to exemption from backup withholding,
including corporations, financial institutions and certain foreign
individuals. Each stockholder should consult with such holder's own tax
24
<PAGE>
advisor as to such holder's qualification for exemption from backup
withholding and the procedure for obtaining such exemption.
All stockholders tendering Shares pursuant to the Offer should complete and
sign the main signature form and the Substitute Form W-9 included as part of
the Letter of Transmittal to provide the information and certification
necessary to avoid backup withholding (unless an applicable exemption exists
and is proved in a manner satisfactory to Purchaser and the Depositary).
Noncorporate foreign stockholders should complete and sign the main signature
form and a Form W-8, Certificate of Foreign Status, a copy of which may be
obtained from the Depositary, in order to avoid backup withholding. See
Instruction 9 to the Letter of Transmittal.
12. Fees And Expenses
The following is an estimate of expenses to be incurred in connection with
the Offer and the Merger. The fees and expenses of CIBC World Markets are also
discussed in "--Opinion of the Special Committee's Financial Advisor." The
Merger Agreement provides that all costs and expenses incurred in connection
with the Offer and the Merger will be paid by the party incurring such costs
and expenses, except in certain circumstances where Purchaser or the Company
is required to reimburse the other party for its out-of-pocket expenses. See
"--The Transaction Documents; The Merger Agreement--Fees and Expenses."
The following table presents the estimated fees and expenses to be incurred
in connection with the Offer and the Merger:
<TABLE>
<S> <C>
Financial Advisors Fees....................................... $ 500,000
Legal Fees and Expenses....................................... $ 300,000
Printing and Mailing.......................................... $ 75,000
Filing Fees................................................... $ 10,405
Depositary Fees............................................... $ 30,000
Special Committee Fees and Expenses........................... $ 30,000
Miscellaneous................................................. $ 75,000
----------
Total..................................................... $1,020,405
==========
</TABLE>
25
<PAGE>
THE TENDER OFFER
1. Terms of the Offer
Upon the terms and subject to the conditions of the Offer (including, if
the Offer is extended or amended, the terms and conditions of any extension or
amendment), Purchaser will accept for payment and pay for any and all Shares
validly tendered prior to the Expiration Date and not withdrawn in accordance
with the procedures set forth below in "--Withdrawal Rights" as soon as
practicable after the Expiration Date. The term "Expiration Date" means 5:00
p.m., New York City time, on June 2, 2000 unless and until Purchaser, in its
sole discretion (but subject to the terms of the Merger Agreement), shall have
extended the period of time during which the Offer is open, in which event the
term "Expiration Date" shall mean the latest time and date at which the Offer,
as so extended by Purchaser, shall expire.
The Offer is subject to certain conditions set forth in "--Conditions of
the Offer." If the Offer Conditions are not satisfied or any of the events
specified in "--Conditions of the Offer" have occurred or are determined by
Purchaser to have occurred prior to the Expiration Date, Purchaser, subject to
the terms of the Merger Agreement, expressly reserves the right (but is not
obligated) to (i) terminate the Offer and not accept for payment any Shares
and return all tendered Shares to tendering stockholders, (ii) waive all the
unsatisfied conditions and, subject to complying with the terms of the Merger
Agreement and the applicable rules and regulations of the Commission, accept
for payment and pay for all Shares validly tendered prior to the Expiration
Date and not theretofore withdrawn, (iii) extend the Offer and, subject to the
right of stockholders to withdraw Shares until the Expiration Date, retain the
Shares that have been tendered during the period or periods for which the
Offer is extended or (iv) amend the Offer.
Subject to the terms of the Merger Agreement, the applicable rules and
regulations of the Commission and applicable law, Purchaser expressly reserves
the right, in its sole discretion, at any time and from time to time, to waive
any Offer Condition or otherwise amend the Offer in any respect by giving oral
or written notice of such waiver or amendment to the Depositary.
Notwithstanding the foregoing, Purchaser has agreed that, without the prior
written consent of the Company, no changes may be made that (i) reduce the
maximum number of Shares subject to the Offer, (ii) decrease the Offer Price,
(iii) change the form of consideration payable in the Offer or (iv) amend or
modify the Offer Conditions in any manner adverse to the holder of Shares.
In the Merger Agreement, Purchaser has agreed that it will not, without the
prior consent of the Company, extend the Offer if all of the Offer Conditions
are satisfied or waived, except that Purchaser may, without the consent of the
Company, extend the Offer: (i) if at the then scheduled Expiration Date of the
Offer any of the Offer Conditions shall not have been satisfied or waived,
until such time as all such conditions shall have been satisfied or waived;
(ii) for any period required by any statute or rule, regulation,
interpretation or position of the Commission applicable to the Offer; (iii)
for any period required by applicable law in connection with an increase in
the consideration to be paid pursuant to the Offer; and (iv) from time to
time, for an aggregate period of not more than ten business days (for all such
extensions under this clause (iv)) beyond the latest expiration date that
would be permitted under clause (i), (ii) or (iii) of this sentence. However,
Purchaser will not extend the Offer if at the then scheduled Expiration Date
all of the Offer Conditions have been satisfied (and notwithstanding the
provision in the Merger Agreement permitting Purchaser to extend the Offer for
up to 10 business days). During any such extension, all Shares previously
tendered and not withdrawn will remain subject to the Offer. Tendering
stockholders will continue to have the right to withdraw any tendered Shares
during such extension. See "--Withdrawal Rights." Under no circumstances will
interest be paid on the purchase price for tendered Shares, whether or not the
Offer is extended.
Any such extension, delay, termination, waiver or amendment will be
followed, as promptly as practicable, by public announcement thereof, with
such announcement in the case of an extension to be made no later than 9:00
a.m., Eastern time, on the next business day after the previously scheduled
Expiration Date in accordance with the public announcement requirements of
Rule 14e-1 of the Exchange Act. Subject to applicable law (including Rules
14d-4(c), 14d-6(d) and 14e-1 under the Exchange Act, which require that
material changes be
26
<PAGE>
promptly disseminated to stockholders in a manner reasonably designed to inform
them of such changes) and without limiting the manner in which Purchaser may
choose to make any public announcement, Purchaser will have no obligation to
publish, advertise or otherwise communicate any such public announcement other
than by issuing a press release to the Dow Jones News Service or as otherwise
may be required by applicable law.
If Purchaser makes a material change in the terms of the Offer or the
information concerning the Offer, or if it waives a material Offer Condition,
Purchaser will extend the Offer to the extent required by Rules 14d-4(c), 14d-
6(d) and 14e-1 under the Exchange Act. The minimum period during which an offer
must remain open following material changes in the terms of the offer or
information concerning the Offer, other than a change in price or a change in
the percentage of securities sought, will depend upon the facts and
circumstances then existing, including the relative materiality of the changed
terms or information. With respect to a change in price or a change in the
percentage of securities sought, a minimum period of ten business days is
generally required to allow for adequate dissemination to stockholders and
investor response.
Pursuant to Rule 14d-11 under the Exchange Act, Purchaser may, subject to
certain conditions, provide a subsequent offering period ranging from three
business days to twenty business days in length following the purchase of
Shares on the initial Expiration Date (the "Subsequent Offering Period").
Purchaser currently intends to provide a Subsequent Offering Period of at least
three business days and, if Parent Group and Purchaser own less than 90% of the
outstanding Shares following expiration of the initial offering period and the
purchase of all Shares tendered pursuant to the Offer during that period and
the first three days of the Subsequent Offering Period, Purchaser will extend
the Subsequent Offering Period until the earlier of (i) twenty business days
from the initial Expiration Date and (ii) the time at which Parent Group and
Purchaser become the owner of at least 90% of the outstanding Shares. A
Subsequent Offering Period is an additional period of time, following the
expiration of the Offer and the purchase of Shares in the Offer, during which
stockholders may tender Shares that were not tendered prior to the expiration
of the Offer. A Subsequent Offering Period is not an extension of the Offer,
which already will have been completed.
During a Subsequent Offering Period, tendering stockholders will not have
withdrawal rights and Purchaser will promptly purchase and pay for any Shares
tendered at the same price paid in the Offer. Rule 14d-11 provides that
Purchaser may provide a Subsequent Offering Period so long as, among other
things, (i) the initial twenty business days period of the Offer has expired;
(ii) the Purchaser offers the same form and amount of consideration for Shares
in the Subsequent Offering Period as in the Offer; (iii) Purchaser accepts and
promptly pays for all Shares tendered during the Offer prior to the Expiration
Date; (iv) Purchaser announces the results of the Offer, including the
approximate number and percentage of Shares deposited in the Offer, no later
than 9:00 a.m. Eastern time on the next business day after the Expiration Date
and immediately begins the Subsequent Offering Period; and (v) Purchaser
immediately accepts and promptly pays for Shares as they are tendered during
the Subsequent Offering Period. In the event Purchaser elects to extend the
Subsequent Offering Period, it will notify stockholders of the Company
consistent with the requirements of the Commission.
IF SHARES ARE PURCHASED ON THE EXPIRATION DATE, PURCHASER WILL INCLUDE A
SUBSEQUENT OFFERING PERIOD FOR A PERIOD OF THREE BUSINESS DAYS. PURCHASER WILL
EXTEND THE SUBSEQUENT OFFERING PERIOD UNTIL THE EARLIER OF (i) THAT TIME AT
WHICH PARENT GROUP AND PURCHASER OWN AT LEAST 90% OF THE OUTSTANDING SHARES AND
(ii) TWENTY BUSINESS DAYS FROM THE INITIAL EXPIRATION DATE OF THE OFFER.
PURSUANT TO RULE 14D-7 UNDER THE EXCHANGE ACT, NO WITHDRAWAL RIGHTS APPLY TO
SHARES TENDERED DURING THE SUBSEQUENT OFFERING PERIOD. THE OFFER PRICE WILL BE
PAID TO SHAREHOLDERS TENDERING SHARES IN THE SUBSEQUENT OFFERING PERIOD.
The Company has provided Purchaser with the Company's stockholder lists and
security position listings in respect of the Shares for the purpose of
disseminating this Offer to Purchase, the Letter of Transmittal and other
relevant materials to stockholders. This Offer to Purchase, the Letter of
Transmittal and other relevant materials will be mailed to record holders of
Shares whose names appear on the Company's list of stockholders and will be
furnished, for subsequent transmittal to beneficial owners of Shares, to
brokers, dealers, commercial banks,
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<PAGE>
trust companies and similar persons whose names, or the names of whose
nominees, appear on the Company's list of stockholders or, where applicable,
who are listed as participants in the security position listing of The
Depository Trust Company.
2. Acceptance for Payment and Payment for Shares
Upon the terms and subject to the conditions of the Offer (including, if the
Offer is extended or amended, the terms and conditions of the Offer as so
extended or amended), Purchaser will purchase, by accepting for payment, and
will pay for, all Shares validly tendered prior to the Expiration Date (and not
properly withdrawn in accordance with "--Withdrawal Rights") as promptly as
practicable after the Expiration Date. Subject to applicable rules of the
Commission and the terms of the Merger Agreement, Purchaser expressly reserves
the right, in its discretion, to delay acceptance for payment of, or payment
for, Shares in order to comply, in whole or in part, with any applicable law.
See "--Terms of the Offer," and "--Certain Legal Matters--Regulatory
Approvals."
The reservation by Purchaser of the right to delay the acceptance or
purchase of, or payment for, the Shares is subject to the provisions of Rule
14e-1(c) under the Exchange Act, which requires the Purchaser to pay the
consideration offered or to return the Shares deposited by, or on behalf of,
stockholders, promptly after the termination or withdrawal of the Offer.
In all cases, payment for Shares purchased pursuant to the Offer will be
made only after timely receipt by the Depositary of (i) the certificates
evidencing such Shares (the "Certificates") or timely confirmation of a book-
entry transfer (a "Book-Entry Confirmation") of such Shares into the
Depositary's account at The Depositary Trust Company (the "Book-Entry Transfer
Facility"), pursuant to the procedures set forth in "--Procedures for Tendering
Shares", (ii) the Letter of Transmittal (or a manually signed facsimile
thereof), properly completed and duly executed with any required signature
guarantees, or an Agent's Message (as defined below) in connection with a book-
entry transfer and (iii) any other documents required to be included with the
Letter of Transmittal under the terms and subject to the conditions thereof and
of this Offer to Purchase.
The term "Agent's Message" means a message, transmitted by the Book-Entry
Transfer Facility to, and received by, the Depositary and forming a part of a
Book-Entry Confirmation, which states that the Book-Entry Transfer Facility has
received an express acknowledgment from a participant in the Book-Entry
Transfer Facility tendering the Shares that such participant has received and
agrees to be bound by the terms of the Letter of Transmittal and that Purchaser
may enforce such agreement against such participant.
For purposes of the Offer, Purchaser will be deemed to have accepted for
payment (and thereby purchased) Shares validly tendered and not properly
withdrawn if, as and when Purchaser gives oral or written notice to the
Depositary of Purchaser's acceptance for payment of such Shares. Upon the terms
and subject to the conditions of the Offer, payment for Shares accepted
pursuant to the Offer will be made by deposit of the purchase price therefor
with the Depositary, which will act as agent for tendering stockholders for the
purpose of receiving payments from Purchaser and transmitting payments to such
tendering stockholders whose Shares have been accepted for payment.
UNDER NO CIRCUMSTANCES WILL INTEREST ON THE PURCHASE PRICE FOR SHARES BE
PAID BY PURCHASER, REGARDLESS OF ANY DELAY IN MAKING SUCH PAYMENT OR EXTENSION
OF THE EXPIRATION DATE.
If any validly tendered Shares are not accepted for payment for any reason
pursuant to the terms and conditions of the Offer, or if Certificates are
submitted evidencing more Shares than are tendered, certificates evidencing
Shares not purchased will be returned, without expense, to the tendering
stockholder (or, in the case of Shares tendered by book-entry transfer into the
Depositary's account at the Book-Entry Transfer Facility pursuant to the
procedure set forth in "--Procedures for Tendering Shares", such Shares will be
credited to an
28
<PAGE>
account maintained at the Book-Entry Transfer Facility), as promptly as
practicable following the expiration or termination of the Offer.
IF, PRIOR TO THE EXPIRATION DATE, PURCHASER INCREASES THE CONSIDERATION TO
BE PAID PER SHARE PURSUANT TO THE OFFER, PURCHASER WILL PAY SUCH INCREASED
CONSIDERATION FOR ALL SUCH SHARES PURCHASED PURSUANT TO THE OFFER, WHETHER OR
NOT SUCH SHARES WERE TENDERED PRIOR TO SUCH INCREASE IN CONSIDERATION.
Purchaser reserves the right to assign to any other direct or indirect
wholly owned subsidiary of Purchaser, the right to purchase all or any portion
of the Shares tendered pursuant to the Offer, but any such assignment will not
relieve Purchaser of its obligations under the Offer and will in no way
prejudice the rights of tendering stockholders to receive payment for Shares
validly tendered and accepted for payment pursuant to the Offer.
3. Procedures for Tendering Shares
Valid Tender of Shares. In order for Shares to be validly tendered pursuant
to the Offer, a stockholder must, prior to the Expiration Date, either (i)
deliver to the Depositary at one of its addresses set forth on the back cover
of this Offer to Purchase (a) a properly completed and duly executed Letter of
Transmittal (or a manually signed facsimile thereof) with any required
signature guarantees, (b) the Certificates representing Shares to be tendered
and (c) any other documents required to be included with the Letter of
Transmittal under the terms and subject to the conditions thereof and of this
Offer to Purchase, (ii) cause such stockholder's broker, dealer, commercial
bank or trust company to tender applicable Shares pursuant to the procedures
for book-entry transfer described below or (iii) comply with the guaranteed
delivery procedures described below.
THE METHOD OF DELIVERY OF CERTIFICATES, THE LETTER OF TRANSMITTAL AND ALL
OTHER REQUIRED DOCUMENTS, INCLUDING DELIVERY THROUGH THE BOOK-ENTRY TRANSFER
FACILITY, IS AT THE OPTION AND RISK OF THE TENDERING STOCKHOLDER, AND THE
DELIVERY WILL BE DEEMED MADE ONLY WHEN ACTUALLY RECEIVED BY THE DEPOSITARY. IF
DELIVERY IS BY MAIL, REGISTERED MAIL WITH RETURN RECEIPT REQUESTED, PROPERLY
INSURED, IS RECOMMENDED. IN ALL CASES, SUFFICIENT TIME SHOULD BE ALLOWED TO
ENSURE TIMELY DELIVERY.
Book-Entry Transfer. The Depositary will 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 Shares by (i) causing such
securities to be transferred in accordance with the Book-Entry Transfer
Facility's procedures into the Depositary's account and (ii) causing the Letter
of Transmittal to be delivered to the Depositary by means of an Agent's
Message. Although delivery of Shares may be effected through book-entry
transfer, either the Letter of Transmittal (or a manually signed facsimile
thereof), properly completed and duly executed, together with any required
signature guarantees, or an Agent's Message in lieu of the Letter of
Transmittal, and any other required documents, must, in any case, be
transmitted to and received by the Depositary prior to the Expiration Date at
one of its addresses set forth on the back cover of this Offer to Purchase, or
the tendering stockholder must comply with the guaranteed delivery procedures
described below. Delivery of documents or instructions to the Book-Entry
Transfer Facility in accordance with the Book-Entry Transfer Facility's
procedures does not constitute delivery to the Depositary.
Signature Guarantee. All signatures on a Letter of Transmittal must be
guaranteed by a member in good standing of the Securities Transfer Agents
Medallion Program, or by any other firm which is a bank, broker, dealer, credit
union or savings association (each of the foregoing being referred to as an
"Eligible Institution" and collectively as "Eligible Institutions"), unless the
Shares tendered thereby are tendered (i) by the registered holder of Shares who
has not completed the box labeled "Special Delivery Instructions" or the box
labeled "Special Payment Instructions" on the Letter of Transmittal or (ii) for
the account of an Eligible Institution. See Instruction 1 to the Letter of
Transmittal.
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<PAGE>
If a Certificate is registered in the name of a person other than the signer
of the Letter of Transmittal, or if payment is to be made, or a Certificate not
accepted for payment or not tendered is to be returned to, a person other than
the registered holder(s), then the Certificate must be endorsed or accompanied
by appropriate stock powers, in either case signed exactly as the name(s) of
the registered holder(s) appear(s) on the Certificate, with the signature(s) on
such certificate or stock powers guaranteed as described above. See
Instructions 1, 5 and 7 to the Letter of Transmittal.
Guaranteed Delivery. If a stockholder desires to tender Shares pursuant to
the Offer and such stockholder's Certificates are not immediately available or
time will not permit all required documents to reach the Depositary on or prior
to the Expiration Date or the procedures for book-entry transfer cannot be
completed on a timely basis, such Shares may nevertheless be tendered if all
the following guaranteed delivery procedures are duly complied with:
(i) such tender is made by or through an Eligible Institution;
(ii) a properly completed and duly executed Notice of Guaranteed
Delivery, substantially in the form provided by Purchaser, is received by
the Depositary as provided below prior to the Expiration Date; and
(iii) the certificates for all tendered Shares in proper form for
transfer, together with a properly completed and duly executed Letter of
Transmittal (or a manually signed facsimile thereof) with any required
signature guarantee (or, in the case of a book-entry transfer, a Book-Entry
Confirmation along with an Agent's Message) and any other documents
required by such Letter of Transmittal, are received by the Depositary
within three Trading Days after the date of execution of the Notice of
Guaranteed Delivery. A "Trading Day" is any day on which the New York Stock
Exchange is open for business.
Any Notice of Guaranteed Delivery may be delivered by hand, transmitted by
facsimile transmission or mailed to the Depositary and must include a guarantee
by an Eligible Institution in the form set forth in the Notice of Guaranteed
Delivery.
Other Requirements. Notwithstanding any other provision hereof, payment for
Shares accepted for payment pursuant to the Offer will, in all cases, be made
only after timely receipt by the Depositary of (i) certificates evidencing such
Shares or a Book-Entry Confirmation of the delivery of such Shares (unless
Purchaser elects, in its sole discretion, to make payment for such Shares
pending receipt of the Certificates or a Book-Entry Confirmation, if available,
with respect to such Certificates), (ii) a properly completed and duly executed
Letter of Transmittal (or a manually signed facsimile thereof) with any
required signature guarantees (or, in the case of a book-entry transfer, an
Agent's Message) and (iii) any other documents required by the Letter of
Transmittal. UNDER NO CIRCUMSTANCES WILL INTEREST BE PAID ON THE PURCHASE PRICE
OF THE SHARES TO BE PAID BY PURCHASER, REGARDLESS OF ANY EXTENSION OF THE OFFER
OR ANY DELAY IN MAKING SUCH PAYMENT.
Tender Constitutes an Agreement. The valid tender of Shares pursuant to one
of the procedures described above will constitute a binding agreement between
the tendering stockholder and Purchaser on the terms and subject to the
conditions of the Offer.
Determination of Validity. All questions as to the validity, form,
eligibility (including, but not limited to, time of receipt) and acceptance for
payment of any tendered Shares pursuant to any of the procedures described
above will be determined by Purchaser, in its sole discretion, whose
determination will be final and binding on all parties. Purchaser reserves the
absolute right to reject any or all tenders of any Shares determined by it not
to be in proper form or if the acceptance for payment of, or payment for, such
Shares may, in the opinion of Purchaser's counsel, be unlawful. Purchaser also
reserves the absolute right, in its sole discretion, to waive any of the Offer
Conditions (subject to the terms of the Merger Agreement) or any defect or
irregularity in any tender with respect to Shares of any particular
stockholder, whether or not similar defects or irregularities are waived in the
case of other stockholders. No tender of Shares will be deemed to have been
validly made until all defects and irregularities have been cured or waived.
None of Parent Group, Purchaser or any of their respective
30
<PAGE>
affiliates, the Depositary, or any other person or entity will be under any
duty to give any notification of any defects or irregularities in tenders or
incur any liability for failure to give any such notification.
Purchaser's interpretation of the terms and conditions of the Offer
(including the Letter of Transmittal and the instructions thereto) will be
final and binding.
Appointment As Proxy. By executing a Letter of Transmittal (or delivering
an Agent's Message) as set forth above, a tendering stockholder irrevocably
appoints each designee of Purchaser as such stockholder's attorney-in-fact and
proxy, with full power of substitution, to vote in such manner as such
attorney-in-fact and proxy (or any substitute thereof) shall deem proper in
its sole discretion, and to otherwise act (including pursuant to written
consent) to the full extent of such stockholder's rights with respect to the
Shares tendered by such stockholder and accepted for payment by Purchaser (and
any and all dividends, distributions, rights or other securities issued or
issuable in respect of such Shares on or after June 2, 2000). All such proxies
shall be considered coupled with an interest in the tendered Shares and shall
be irrevocable. This appointment will be effective if, when, and only to the
extent that, Purchaser accepts such Shares for payment pursuant to the Offer.
Upon such acceptance for payment, all prior proxies given by such stockholder
with respect to such Shares and other securities will, without further action,
be revoked, and no subsequent proxies may be given (and, if given, will not be
deemed effective). The designees of Purchaser will, with respect to the Shares
and other securities for which the appointment is effective, be empowered to
exercise all voting and other rights of such stockholder as they in their sole
discretion may deem proper at any annual, special, adjourned or postponed
meeting of the Company's stockholders, by written consent in lieu of any such
meeting or otherwise. Purchaser reserves the right to require that, in order
for Shares to be deemed validly tendered, immediately upon Purchaser's
acceptance for payment of such Shares, Purchaser must be able to exercise all
rights (including, without limitation, all voting rights) with respect to such
Shares and receive all dividends and distributions.
Backup Withholding. Under United States federal income tax law, the amount
of any payments made by the Depositary to stockholders (other than corporate
and certain other exempt stockholders) pursuant to the Offer may be subject to
backup withholding tax at a rate of 31%. To avoid such backup withholding tax
with respect to payments made pursuant to the Offer, a non-exempt, tendering
stockholder must provide the Depositary with such stockholder's correct
taxpayer identification number and certify under penalties of perjury that
such stockholder is not subject to backup withholding tax by completing the
Substitute Form W-9 included as part of the Letter of Transmittal. If backup
withholding applies with respect to a stockholder or if a stockholder fails to
deliver a completed Substitute Form W-9 to the Depositary or otherwise
establish an exemption, the Depositary is required to withhold 31% of any
payments made to such stockholder. See "SPECIAL FACTORS--Certain United States
Federal Income Tax Consequences" of this Offer to Purchase and the information
set forth under the heading "Important Tax Information" contained in the
Letter of Transmittal.
4. Withdrawal Rights
Tenders of Shares made pursuant to the Offer are irrevocable except that
such Shares may be withdrawn at any time prior to the Expiration Date and,
unless theretofore accepted for payment by Purchaser pursuant to the Offer,
may also be withdrawn at any time after July 3, 2000, or at such later time as
may apply if the Offer is extended.
If Purchaser extends the Offer, is delayed in its acceptance for payment of
Shares or is unable to accept Shares for payment pursuant to the Offer for any
reason, then, without prejudice to Purchaser's rights under the Offer, the
Depositary may, nevertheless, on behalf of Purchaser, retain tendered Shares,
and such Shares may not be withdrawn except to the extent that tendering
stockholders are entitled to withdrawal rights as described below. Any such
delay will be an extension of the Offer to the extent required by law.
For a withdrawal to be effective, a written or facsimile transmission
notice of withdrawal must be timely received by the Depositary at one of its
addresses set forth on the back cover of this Offer to Purchase. Any such
notice of withdrawal must specify the name of the person who tendered the
Shares to be withdrawn, the number
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<PAGE>
of Shares to be withdrawn, and the name of the registered holder of such
Shares, if different from that of the person who tendered such Shares. If
Certificates evidencing Shares to be withdrawn have been delivered or
otherwise identified to the Depositary, then, prior to the physical release of
such Certificates, the serial numbers shown on such Certificates must be
submitted to the Depositary and the signature(s) on the notice of withdrawal
must be guaranteed by an Eligible Institution, unless such Shares have been
tendered for the account of an Eligible Institution. Shares tendered pursuant
to the procedure for book-entry transfer as set forth in "--Procedures for
Tendering Shares" may be withdrawn only by means of the withdrawal procedures
made available by the Book-Entry Transfer Facility, must specify the name and
number of the account at the Book-Entry Transfer Facility to be credited with
the withdrawn Shares and must otherwise comply with the Book-Entry Transfer
Facility's procedures.
Withdrawals of tendered Shares may not be rescinded without Purchaser's
consent and any Shares properly withdrawn will thereafter be deemed not
validly tendered for purposes of the Offer. All questions as to the form and
validity (including time of receipt) of notices of withdrawal will be
determined by Purchaser in its sole discretion, which determination will be
final and binding. None of Parent Group, Purchaser or any of their affiliates,
the Depositary, or any other person will be under any duty to give
notification of any defects or irregularities in any notice of withdrawal or
incur any liability for failure to give any such notification.
Any Shares properly withdrawn may be re-tendered at any time prior to the
Expiration Date by following any of the procedures described in "--Procedures
for Tendering Shares."
5. Price Range Of Shares
The primary market for the Shares is the New York Stock Exchange. The
ticker symbol for the Shares is "RHH." The following table sets forth, for the
periods indicated, the high and low sales prices per share of Common Stock as
reported on the NYSE Composite Transaction Reporting System. The Company did
not pay cash dividends on its Common Stock during the periods set forth below.
<TABLE>
<CAPTION>
High Low
-------- -------
<S> <C> <C>
1998:
First Quarter.......................................... 11 8 1/4
Second Quarter......................................... 11 9 3/16
Third Quarter.......................................... 10 3/16 8 1/8
Fourth Quarter......................................... 8 5/8 7 1/4
1999:
First Quarter.......................................... 8 7/16 7 1/4
Second Quarter......................................... 11 7 1/4
Third Quarter.......................................... 9 15/16 7 3/4
Fourth Quarter......................................... 10 7
2000:
First Quarter.......................................... 10 9 15/16
Second Quarter (through May 3, 2000)................... 11 7/16 9 3/4
</TABLE>
On December 7, 1999, the last full trading day prior to the announcement of
the $10 Offer, the closing market price per Share on the New York Stock
Exchange was $7 7/8. On April 19, 2000, the last full trading day prior to the
public announcement of the Offer, the closing market price per Share on the
New York Stock Exchange was $9 7/8. On May 3, 2000, the last full trading day
prior to the date of this Offer to Purchase, the closing market price per
Share on the New York Stock Exchange was $11 3/8. Stockholders are urged to
obtain current market quotations for the Company's Common Stock prior to
tendering any Shares.
6. Certain Information Concerning the Company
The Company. The information concerning the Company contained in this Offer
to Purchase, including financial information, has been taken from or is based
upon publicly available documents and records on file
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<PAGE>
with the Commission and other public sources. None of Parent Group, Purchaser
or any of their affiliates assumes any responsibility for the accuracy or
completeness of the information concerning the Company contained in such
documents and records or for any failure by the Company to disclose events
which may have occurred or may affect the significance or accuracy of any such
information but which are unknown to them.
The Company was formed on November 8, 1990 by the merger (the
"Combination") of H.H. Robertson, Inc. ("Robertson") and Ceco Industries, Inc.
("Ceco Industries") with and into The Ceco Corporation ("Ceco"), a wholly-
owned subsidiary of Ceco Industries, with Ceco continuing as the surviving
corporation under the name Robertson-Ceco Corporation. The Combination was
accounted for using the purchase method, with Robertson deemed the acquirer.
After the Combination, the Company and its subsidiaries operated in four
business segments: (1) the Metal Buildings Group, which operated primarily in
North America and is engaged in the manufacture, sale and installation of
custom engineered metal buildings for commercial and industrial users; (2) the
Building Products Group, which operated on a worldwide basis and was engaged
in the manufacture, sale and installation of non-residential building
components, including wall, roof and floor systems; (3) the Door Products
Group which operated primarily throughout the United States and was engaged in
the manufacture and distribution of metal, wood and fiberglass doors and
frames for commercial and residential markets; and (4) the Concrete
Construction Group, which operated throughout the United States and was
engaged in the provision of subcontracting services for forming poured-in-
place, reinforced concrete structures.
Divestitures. During 1991, management began to develop and implement a
series of restructuring actions designed to improve the Company's operational
performance and liquidity. In connection with these restructuring initiatives,
during the first quarter of 1992, the Company sold its Door Products Group,
certain domestic Building Products businesses, and its Building Products
subsidiary located in South Africa.
In November 1993, the Company sold its Building Products subsidiary located
in the United Kingdom. During the fourth quarter of 1994, the Company sold its
remaining U.S. Building Products operation and the Cupples Products Division,
which manufactured curtainwall systems, and commenced a plan to sell or
dispose of its remaining European Building Products operations. In 1995, the
Company sold its subsidiaries located in Holland and Spain and sold the
Concrete Construction Group to a company which is controlled by the Company's
Chief Executive Officer. In 1996, the Company sold its subsidiary located in
Norway and its Building Products operations located in Australia, Northeast
Asia and Southeast Asia. The Canadian Building Products business closed in
1999.
In addition to the sale of and exit from the businesses discussed above, a
series of other operational and financial restructuring actions have been
taken during the period 1993 to the present, including downsizing the
corporate office, closing or selling metal building plants and redistributing
manufacturing operations and equipment from closed operations, consolidating
and improving capacity and cost control at the remaining plants, reducing work
force levels, and redefining management and operating policies.
Metal Buildings Group. Today, the operations of the Company consist solely
of the Metal Buildings Group. The Metal Buildings Group consists of three
custom engineered metal building operations: Ceco Building Systems, Star
Building Systems, and H.H. Robertson Building Systems (Canada). Custom
engineered metal buildings account for a significant portion of the market for
nonresidential low-rise buildings under 150,000 sq. ft. in size that are built
in North America. Historically aimed at the one-story small to medium building
market, the use of the product is expanding to large (up to 1 million sq.
ft.), more complex, and multi-story (up to 4 floors) buildings. The product
provides the customer with a custom designed building which generally is lower
in cost than other construction and faster from concept to job completion.
The Company's metal building systems are manufactured at six U.S. plants
with one located in each of California, Mississippi, North Carolina and
Tennessee (began operations in March 2000) and two in Iowa. The Company has
one plant outside of the U.S. located in Ontario, Canada. The buildings are
primarily sold through
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builder/dealer networks located throughout the United States and Canada. In
addition to sales in North America, the Company sells its buildings to the
Asian market. Buildings are distributed to the Asian market through a network
of domestic and international builders.
The principal materials used in the manufacture of custom engineered metal
buildings are hot and cold rolled steel products that are readily available
from many sources. The buildings consist of three components: primary
structural steel, secondary structural steel and cladding. The buildings are
erected by the builder/dealer network supplemented by subcontractors and, in
certain cases, by Company erection crews.
Financial Information. Certain financial information relating to the
Company is hereby incorporated by reference to the audited financial
statements for the Company's 1998 and 1999 fiscal years set forth in the
Company's Annual Report on Form 10-K for the fiscal year ended December 31,
1999 (the "1999 10-K"), beginning on page F-1 of such reports. This report may
be inspected at, and copies may be obtained from, the same places and in the
manner set forth below under "--Available Information," below.
Available Information. The Company is subject to the information and
reporting requirements of the Exchange Act and is required to file reports and
other information with the Commission relating to its business, financial
condition and other matters. Information, as of particular dates, concerning
the Company's directors and officers, their remuneration, stock options
granted to them, the principal holders of the Company's securities, any
material interests of such persons in transactions with the Company and other
matters is required to be disclosed in reports filed with the Commission.
These reports and other information should be available for inspection at the
public reference facilities of the Commission located in Judiciary Plaza, 450
Fifth Street, N.W., Washington, D.C. 20549, and also should be available for
inspection and copying at prescribed rates at regional offices of the
Commission located at Seven World Trade Center, New York, New York 10048 and
500 West Madison Street, Suite 1400, Chicago, Illinois 60661. Copies of this
material may also be obtained by mail, upon payment of the Commission's
customary fees, from the Commission's principal office at 450 Fifth Street,
N.W., Washington, D.C. 20549. Electronic filings filed through the
Commission's Electronic Data Gathering, Analysis and Retrieval, or EDGAR,
system, including those made by or in respect of the Company, are publicly
available through the Commission's home page on the Internet at
http://www.sec.gov.
7. Certain Information Concerning Purchaser and Heico.
Purchaser. Purchaser, a newly incorporated Delaware corporation, has not
conducted any business other than in connection with the Offer and the Merger
Agreement. All of the issued and outstanding shares of capital stock of
Purchaser are held by Heico, Mr. Roskovensky and Mr. Sage. The principal
address of Purchaser is c/o The Heico Companies, LLC, 5600 Three First
National Plaza, Chicago, Illinois 60602. The telephone number is (312) 419-
8220.
Heico. Heico, a Delaware limited liability company, is a privately owned
holding company headquartered in Chicago, Illinois which owns and operates a
diversified portfolio of over thirty companies. Activities include
construction equipment and services, heavy machinery, materials handling, food
processing, and other interests. The principal executive offices of Heico are
located at 5600 Three First National Plaza, Chicago, Illinois 60602. The
telephone number is (312) 419-8220.
The name, business address, citizenship, present principal occupation and
employment history for the past five years of each of the directors and
executive officers of Purchaser and Heico are set forth in Schedule I to this
Offer to Purchase.
During the last five years, none of Purchaser or Parent Group, or, to the
best of their knowledge, any of the persons listed in Schedule I to this Offer
to Purchase (i) has been convicted in a criminal proceeding (excluding traffic
violations and similar misdemeanors) or (ii) was a party to any judicial or
administrative proceeding that resulted in a judgment, decree or final order
enjoining the person from future violations of, or prohibiting
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activities subject to, federal or state securities laws, or a finding of any
violation of federal or state securities laws.
Except as described in this Offer to Purchase (i) none of Purchaser or
Parent Group, or, to the best of their knowledge, any of the persons listed in
Schedule I to this Offer to Purchase, or any associate or majority-owned
subsidiary of Parent Group, Purchaser or the Company, beneficially owns or has
any right to acquire, directly or indirectly, any equity securities of the
Company and (ii) none of Purchaser or Parent Group or to the best of their
knowledge, any of the persons or entities referred to above has effected any
transaction in such equity securities during the past 60 days.
Except as described in this Offer to Purchase, none of Purchaser or Parent
Group, or, to the best of their knowledge, any of the persons listed in
Schedule I to this Offer to Purchase has any contract, arrangement,
understanding or relationship with any other person with respect to any
securities of the Company, including, but not limited to, any contract,
arrangement, understanding or relationship concerning the transfer or voting
of such securities, joint ventures, loan or option arrangements, puts or
calls, guarantees of loans, guarantees against loss or the giving or
withholding of proxies. Except as set forth in this Offer to Purchase, since
January 1, 1998, none of Purchaser or Parent Group, or to the best of their
knowledge, any of the persons listed on Schedule I to this Offer to Purchase
has had any business relationship or transaction with the Company or any of
its executive officers, directors or affiliates that is required to be
reported under the rules and regulations of the Commission applicable to the
Offer. Except as set forth in this Offer to Purchase, since January 1, 1998,
there have been no contacts, negotiations or transactions between any of
Purchaser, Parent Group, or their affiliates or, to the best of their
knowledge, any of the persons listed in Schedule I to this Offer to Purchase,
on the one hand, and the Company or its affiliates, on the other hand,
concerning a merger, consolidation or acquisition, tender offer or other
acquisition of securities, an election of directors or a sale or other
transfer of a material amount of assets.
Available Information. None of Purchaser or Parent Group is subject to the
informational reporting requirements of the Exchange Act, nor are any of them
required to file reports and other information with the Commission relating to
its businesses, financial condition or other matters. Except as otherwise
disclosed in this Offer to Purchase, none of Purchaser or Parent Group have
made, or are making, any provision in connection with the Offer or the Merger
to grant unaffiliated security holders access to the files of any of Purchaser
or Parent Group.
8. Source And Amount Of Funds
The Offer is not conditioned upon any financing arrangements. The amount of
funds required by Purchaser to purchase all of the outstanding Common Stock
pursuant to the Offer and to pay related fees and expenses is expected to be
approximately $53,041,518.
Contemporaneously with the consummation of the Offer, the Company will make
a loan to Purchaser, to the extent not prohibited by applicable law, in an
amount sufficient to allow Purchaser to acquire all of the shares of Common
Stock pursuant to the Offer. Purchaser will pledge all shares of Common Stock
held by Purchaser as security for the loan to the extent such pledge is not
prohibited by applicable law and to the extent such pledge would not render
the loan violative of applicable law. The loan will bear interest at a rate
equal to the Company's cost of funds which will be payable in arrears on
maturity. The loan will have a maturity of 120 days, unless extended by the
Company and Purchaser. The loan will require the consent of the Company's
lenders under the Credit Agreement (described below), which consent the
Company believes it will be able to obtain prior to consummation of the Offer.
The margin regulations promulgated by the Board of Governors of the Federal
Reserve System (the "Federal Reserve Board") place restrictions on the amount
of credit that may be extended for the purposes of purchasing margin stock,
including if such credit is secured directly or indirectly by margin stock.
Purchaser believes that the financing of the acquisition of the Shares will be
in full compliance with the margin regulations.
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The following information concerning the Company's financing agreements has
been taken from or is based upon publicly available documents and records on
file with the Commission and other public sources. None of Parent Group,
Purchaser or any of their affiliates assumes any responsibility for the
accuracy or completeness of the information contained in such documents and
records or for any failure by the Company to disclose events which may have
occurred or may affect the significance or accuracy of any such information
but which are unknown to Parent Group, Purchaser or any of their affiliates.
On December 31, 1996, the Company entered into a credit agreement ("Credit
Agreement") with a group of banks. Under the terms of the Credit Agreement,
the lenders agreed to provide a term loan of up to $20 million, due June 30,
2001, which was paid in full in September 1998. At that date, the Company also
reduced the amount available under the revolving credit and letter of credit
facility from $25 million to $15 million maturing December 31, 2001. Up to $12
million of the revolving credit facility can be used to support outstanding
letters of credit. Interest on the loans under the Credit Agreement is based
on the prime or the Eurodollar rate plus a factor which depends on the
Company's ratio of debt to earnings before taxes, interest, depreciation and
amortization. In addition, the Company pays a commitment fee on the unused
amounts of the credit facility. Availability under the revolving credit
facility is based on eligible accounts receivable and inventory. As of
December 31, 1999, the borrowing base was approximately $28.5 million. As
collateral under the Credit Agreement, the Company has granted the lenders a
security interest in all of the assets of the Company and certain
subsidiaries. The Credit Agreement contains certain financial covenants
restricting dividend payments, repurchase of Shares and issuance of additional
debt, among other matters. Under the terms of the Company's Credit Agreement,
$50.7 million was available for dividends or repurchase of Shares at December
31, 1999.
At December 31, 1999, the Company had outstanding performance and financial
bonds of $3.8 million, which generally provide a guarantee as to the Company's
performance under contracts and other commitments. As of December 31, 1999,
the Company had outstanding letters of credit of $4.7 million used principally
to support insurance and bonding programs. The outstanding letters of credit
were reduced to $2.7 million subsequent to December 31, 1999.
9. Effect of the Offer on the Market for the Common Stock; Exchange Act
Registration
Market For Shares. The purchase of Shares pursuant to the Offer will reduce
the number of Shares that might otherwise trade publicly and could adversely
affect the liquidity and market value of the remaining Shares held by the
public.
Stock Quotation. Shares are traded primarily on the New York Stock
Exchange. According to published guidelines of the New York Stock Exchange,
the Shares might no longer be eligible for quotation on the New York Stock
Exchange if, among other things, the number of Shares publicly held was less
than 1,100,000, there were fewer than 2,000 holders of round lots, the
aggregate market value of the publicly held Shares was less than $40,000,000,
net tangible assets were less than $40,000,000 and there were fewer than two
registered and active market makers for the Shares. Shares held directly or
indirectly by directors, officers or beneficial owners of more than 10 percent
of the Shares are not considered as being publicly held for this purpose.
According to the Company, as of April 20, 2000, there were approximately 1,740
holders of record of Shares (not including beneficial holders of Shares in
street name), and as of April 20, 2000, there were 16,096,550 Shares
outstanding.
If the Shares were to cease to be quoted on the New York Stock Exchange,
the market for the Shares could be adversely affected. It is possible that the
Shares would be traded or quoted on other securities exchanges or in the over-
the-counter market, and that price quotations would be reported by such
exchanges, or through Nasdaq or other sources. The extent of the public market
for the Shares and the availability of such quotations would, however, depend
upon the number of stockholders and/or the aggregate market value of the
Shares remaining at such time, the interest in maintaining a market in the
Shares on the part of securities firms, the possible termination of
registration of the Shares under the Exchange Act and other factors.
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Exchange Act Registration. The Shares are currently registered under the
Exchange Act. Such registration under the Exchange Act may be terminated upon
application of the Company to the Commission if the Shares are neither listed
on a national securities exchange nor held by 300 or more holders of record.
Termination of registration under the Exchange Act would substantially reduce
the information required to be furnished by the Company to its stockholders and
to the Commission and would make certain provisions of the Exchange Act no
longer applicable to the Company, such as the short-swing profit recovery
provisions of Section 16(b) of the Exchange Act, the requirement of furnishing
a proxy statement pursuant to Section 14(a) of the Exchange Act in connection
with stockholders' meetings, the related requirement of furnishing an annual
report to stockholders and the requirements of Rule 13e-3 under the Exchange
Act with respect to "going private" transactions. Furthermore, the ability of
"affiliates" of the Company and persons holding "restricted securities" of the
Company to dispose of such securities pursuant to Rule 144 promulgated under
the Securities Act may be impaired or eliminated. Parent Group intends to seek
to cause the Company to apply for termination of registration of the Common
Stock under the Exchange Act as soon after the consummation of the Offer as the
requirements for such termination are met.
If registration of the Shares is not terminated prior to the Merger, then
the Shares will be delisted from all stock exchanges and the registration of
the Shares under the Exchange Act will be terminated following the consummation
of the Merger.
Margin Regulations. The Shares are currently "margin securities," as such
term is defined under the regulations of the Federal Reserve Board, which has
the effect, among other things, of allowing brokers to extend credit on the
collateral of the Shares. Depending upon factors similar to those described
above regarding listing and market quotations, it is possible that, following
the Offer, the Shares would no longer constitute "margin securities" for the
purposes of the margin regulations of the Federal Reserve Board and therefore
could no longer be used as collateral for loans made by brokers. In any event,
the Shares will cease to be "margin securities" if registration of the Shares
under the Exchange Act is terminated.
10. Conditions of the Offer
Notwithstanding any other term of the Offer or the Merger Agreement,
Purchaser is not required to accept for payment or to pay for any shares of
Common Stock not theretofore accepted for payment or paid for, and may
terminate or amend the Offer if at any time on or after the date of the Merger
Agreement and before the acceptance of such Shares for payment or the payment
therefor, any of the following conditions exist or shall occur and remain in
effect:
(a) there shall have been instituted, pending or threatened any
litigation by the Government of the United States or by any agency or
instrumentality thereof or by any other third person (including any
individual, corporation, partnership, limited liability company,
association, trust, unincorporated organization, entity or group (as
defined in the Exchange Act)) or nongovernmental entity that would be
reasonably likely to (i) restrict the acquisition by Purchaser (or any of
its affiliates) of Shares pursuant to the Offer or restrain, prohibit or
delay the making or consummation of the Offer or the Merger, (ii) make the
purchase of or payment for some or all of the Shares pursuant to the Offer
or the Merger illegal, (iii) impose limitations on the ability of Purchaser
(or any of its affiliates) effectively to acquire or hold, or to require
Purchaser or the Company or any of their respective affiliates or
subsidiaries to dispose of or hold separate, any portion of their assets or
the business of any one of them, (iv) impose material limitations on the
ability of Purchaser or its affiliates to exercise full rights of ownership
of the shares of Common Stock purchased by it, including, without
limitation, the right to vote the shares purchased by it on all matters
properly presented to the stockholders of the Company, (v) limit or
prohibit any material business activity by Purchaser or any of its
affiliates, including, without limitation, requiring the prior consent of
any person or entity (including the Government of the United States of
America, and any instrumentality thereof) to future transactions by
Purchaser or any of its affiliates or (vi) make materially more costly (A)
the making of the Offer, (B) the acceptance for payment of, or payment for,
some or all of the Shares pursuant to the Offer, (C) the purchase of Shares
pursuant to the Offer or (D) the consummation of the Merger; or
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(b) there shall have been a subsequent development in any action or
proceeding relating to the Company or any of its subsidiaries that would
(i) be reasonably likely to be materially adverse either to Purchaser or to
Company and its subsidiaries taken as a whole or (ii) make materially more
costly (A) the making of the Offer, (B) the acceptance for payment of, or
payment for, some or all of the Shares pursuant to the Offer, (C) the
purchase of Shares pursuant to the Offer or (D) the consummation of the
Merger; or
(c) there shall have been any action taken, or any law promulgated,
enacted, entered, enforced or deemed applicable to the Offer or the Merger
by any governmental entity that could directly or indirectly result in any
of the consequences referred to in subsection (a) above; or
(d) the Merger Agreement shall have been terminated in accordance with
its terms; or
(e) (i) any of the representations and warranties made by the Company in
the Merger Agreement that are qualified by materiality or Material Adverse
Effect shall not have been true and correct in all respects when made, or
shall thereafter have ceased to be true and correct in all respects as if
made at the scheduled or extended expiration of the Offer (except to the
extent that any such representation or warranty refers specifically to
another date, in which case such representation or warranty shall be true
and correct in all respects as of such other date), or the other
representations and warranties made by the Company in the Merger Agreement
shall not have been true and correct in all material respects when made, or
shall thereafter have ceased to be true and correct in all material
respects as if made at the scheduled or extended expiration of the Offer
(except to the extent that any such representation or warranty refers
specifically to another date, in which case such representation or warranty
shall be true and correct in all material respects as of such other date),
or (ii) the Company shall have breached or failed to comply in any material
respect with any of its obligations under the Merger Agreement; or
(f) Purchaser and the Special Committee shall have agreed that Purchaser
will terminate the Offer or postpone the acceptance for payment of or
payment for Shares thereunder; or
(g) there shall have occurred (i) any general suspension of, or
limitation on prices for, trading in securities on any national securities
exchange or in the over-the-counter market in the United States, (ii) a
declaration of any banking moratorium by federal or state authorities or
any suspension of payments in respect of banks or any limitation (whether
or not mandatory) imposed by federal or state authorities on the extension
of credit by lending institutions in the United States, (iii) a
commencement of a war, armed hostilities or any other international or
national calamity directly or indirectly involving the United States, or
(iv) in the case of any of the foregoing existing at the time of the
commencement of the Offer, in the sole judgment of the Purchaser, a
material acceleration or worsening thereof; or
(h) there shall not have been validly tendered and not withdrawn prior
to the expiration of the offer, a number of shares of Common Stock which,
when combined with the Shares owned by Purchaser, would result in Purchaser
owning at least 90% of the shares of Common Stock issued and outstanding on
the date of purchase; or
(i) there shall have been a Material Adverse Effect with respect to the
Company, and there shall have been a change or event which could reasonably
be expected to have a Material Adverse Effect on the Company.
The foregoing conditions are for the sole benefit of Purchaser and may be
asserted by Purchaser regardless of the circumstances giving rise to any such
condition and may be waived by Purchaser, in whole or in part, at any time and
from time to time in their discretion. The failure by Purchaser at any time to
exercise any of the foregoing rights shall not be deemed a waiver of any such
right, the waiver of any such right with respect to particular facts and other
circumstances shall not be deemed a waiver with respect to any other facts and
circumstances, and each such right shall be deemed an ongoing right that may be
asserted at any time and from time to time.
11. Certain Legal Matters; Regulatory Approvals
General. Except as otherwise disclosed herein, neither Parent Group nor
Purchaser is aware of (i) any license or regulatory permit that appears to be
material to the business of the Company and its subsidiaries, taken
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as a whole, that might be adversely affected by the acquisition of Shares by
Purchaser pursuant to the Offer or the Merger or otherwise or (ii) any approval
or other action by any governmental, administrative or regulatory agency or
authority, domestic or foreign, that would be required for the acquisition or
ownership of Shares by Purchaser as contemplated herein. Should any such
approval or other action be required, Purchaser currently contemplates that it
would seek such approval or action. Purchaser's obligation under the Offer to
accept for payment and pay for Shares is subject to certain conditions. See "--
Conditions of the Offer." While, except as described in this Offer to Purchase,
Purchaser does not currently intend to delay the acceptance for payment of
Shares tendered pursuant to the Offer pending the outcome of any such matter,
there can be no assurance that any such approval or action, if needed, would be
obtained or would be obtained without substantial conditions, that adverse
consequences might not result to the business of the Company, Parent Group or
Purchaser or that certain parts of the businesses of the Company, Parent Group
or Purchaser might not have to be disposed of in the event that such approvals
were not obtained or any other actions were not taken.
State Takeover Laws. The Company is incorporated under the laws of the State
of Delaware. In general, Section 203 of the DGCL prevents an "interested
stockholder" (generally a person who owns or has the right to acquire 15% or
more of a corporation's outstanding voting stock, or an affiliate or associate
thereof) from engaging in a "business combination" (defined to include mergers
and certain other transactions) with a Delaware corporation for a period of
three years following the date such person became an interested stockholder
unless, among other things, prior to the date the interested stockholder became
an interested stockholder, the board of directors of the corporation approved
either the business combination or the transaction in which the interested
stockholder became an interested stockholder. The Company has represented to
Purchaser in the Merger Agreement that the Board of Directors has taken all
necessary action so that the restrictions contained in Section 203 of the DGCL
applicable to a "business combination" will not apply to the execution,
delivery or performance of the Merger Agreement, the Offer, the Merger or the
transactions contemplated by the Merger.
A number of other states have adopted laws and regulations applicable to
attempts to acquire securities of corporations which are incorporated, or have
substantial assets, stockholders, principal executive offices or principal
places of business, or whose business operations otherwise have substantial
economic effects, in such states. In EDGAR V. MITE CORP., the Supreme Court of
the United States invalidated on constitutional grounds the Illinois Business
Takeover Statute, which, as a matter of state securities law, made takeovers of
corporations meeting certain requirements more difficult. However, in 1987 in
CTS CORP. V. DYNAMICS CORP. OF AMERICA, the Supreme Court held that the State
of Indiana may, as a matter of corporate law and, in particular, with respect
to those aspects of corporate law concerning corporate governance,
constitutionally disqualify a potential acquirer from voting on the affairs of
a target corporation without the prior approval of the remaining stockholders.
The state law before the Supreme Court was by its terms applicable only to
corporations that had a substantial number of holders in the state and were
incorporated there.
The Company, directly or through subsidiaries, conducts business in a number
of states throughout the United States, some of which have enacted takeover
laws. Purchaser does not believe that any state takeover statutes apply to the
Offer. Neither Parent Group nor Purchaser has currently complied with any state
takeover statute or regulation. Purchaser reserves the right to challenge the
applicability or validity of any state law purportedly applicable to the Offer
or the Merger and nothing in this Offer to Purchase or any action taken in
connection with the Offer or the Merger is intended as a waiver of such right.
In the event it is asserted that one or more state takeover laws is applicable
to the Offer or the Merger, and an appropriate court does not determine that it
is inapplicable or invalid as applied to the Offer or the Merger, Purchaser
might be required to file certain information with, or receive approvals from,
the relevant state authorities. In addition, if enjoined, Purchaser might be
unable to accept for payment any Shares tendered pursuant to the Offer or be
delayed in continuing or consummating the Offer and the Merger. In such case,
Purchaser may not be obligated to accept for payment any Shares tendered. See
"--Conditions of the Offer."
Antitrust. Under the Hart-Scott-Rodino Antitrust Improvements Act of 1976,
as amended, and the rules that have been promulgated thereunder by the Federal
Trade Commission (the "FTC"), certain transactions may not be consummated
unless certain information has been furnished to the Antitrust Division of the
Department of
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Justice and the FTC and certain waiting period requirements have been
satisfied. However, the acquisition of Shares by Purchaser pursuant to the
Offer is not subject to these requirements because Parent Group and its
affiliates currently owns in excess of 50% of the outstanding Shares.
Other Matters. In December 1999, two individual stockholders of the Company,
namely Edward Aboff and Charles Schmitz, filed complaints (the "Complaints") in
the Court of Chancery for the State of Delaware, against the Company, Heico and
certain officers and directors of the Company and Heico (the "Defendants") with
respect to the Company's December 8, 1999 announcement that it had received
from Heico an offer to purchase all of the outstanding shares it and its
affiliates did not already own at a price of $10.00 per share. The Complaints,
which are substantially identical, purport to assert class action claims on
behalf of all persons, other than the Defendants and their affiliates, who own
Shares. The essence of the Complaints is that the price per share of $10.00
contained in the December 8, 1999 announcement is inadequate, and that any
agreement between Heico and the Company to consummate an offer at that price
would constitute a breach of the fiduciary duties owed by the defendants to the
minority shareholders of the Company. The Complaints seek injunctive relief,
recission, damages, costs (including attorneys' and experts' fees) and other
relief. The Complaints have been consolidated into a single class action
litigation (the "Class Action Litigation").
In addition to the Class Action Litigation, an individual stockholder of the
Company, namely Rob Mayer, filed a complaint (the "California Action") in the
Superior Court for the State of California purporting to assert similar claims
and seeking comparable relief as the Complaints.
The co-lead counsel for the class and counsel for the Defendants
subsequently engaged in arms-length negotiations concerning a possible
settlement of the Class Action Litigation. Co-lead counsel requested and were
provided with various financial information about and analysis of the value of
the Company.
On March 7, 2000, Heico submitted a revised acquisition proposal to the
Company's Board of Directors (the "Revised Proposal"). The Revised Proposal
increased the offer price to $11.00 per Share, conditioned upon a resolution
satisfactory to Heico of the Class Action Litigation.
On April 20, 2000, the Heico increased the price offered under the Revised
Proposal to $11.50 per Share. On the same day, counsel for the Defendants and
co-counsel for the class reached an agreement in principle, subject to court
approval, to settle the Class Action Litigation (the "Proposed Settlement") on
behalf of a class consisting of all persons (other than the Defendants and
their affiliates) who own Shares or owned Shares after December 8, 1999, the
date of the announcement of the $10 Offer. The Proposed Settlement is
memorialized in a Memorandum of Understanding. The Proposed Settlement
contemplates that the Class Action Litigation will be dismissed with prejudice,
and that releases will be given to the Company, Heico, their employees,
officers and directors, affiliates and agents, for all matters arising out of
this transaction. The Proposed Settlement is subject to the execution of
definitive settlement documents by co-counsel for the class and all defendants,
and to court approval.
Purchaser believes that under existing Delaware precedents and law, an
informed stockholder who accepts the benefits of this transaction by having
such stockholder's Shares purchased pursuant to the Offer or by voting for the
Merger and accepting the consideration paid in connection therewith has
accepted the transaction and, accordingly, were the settlement not approved,
should not be included as a member of the purported class which participates in
any subsequent class action recovery.
12. Fees and Expenses
Except as set forth in this Offer to Purchase, neither Parent Group nor
Purchaser will pay any fees or expenses to any broker, dealer or other person
for soliciting tenders of Shares pursuant to the Offer.
Purchaser and Parent Group have also retained American Stock Transfer and
Trust Company as the Depositary. The Depositary has not been retained to make
solicitations or recommendations in its role as
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Depositary. The Depositary will receive reasonable and customary compensation
for its services, will be reimbursed for certain reasonable out-of-pocket
expenses and will be indemnified against certain liabilities and expenses in
connection therewith, including certain liabilities under the United States
federal securities laws.
Brokers, dealers, commercial banks and trust companies will be reimbursed
by Purchaser for customary mailing and handling expenses incurred by them in
forwarding offering material to their customers.
13. Miscellaneous
Purchaser is not aware of any jurisdiction where the making of the Offer is
prohibited by any administrative or judicial action pursuant to any valid
state statute. If Purchaser becomes aware of any valid state statute
prohibiting the making of the Offer or the acceptance of Shares pursuant
thereto, Purchaser will make a good faith effort to comply with such state
statute or seek to have such statute declared inapplicable to the Offer. If,
after such good faith effort, Purchaser cannot comply with any such state
statute, the Offer will not be made to (and tenders will not be accepted from
or on behalf of) the stockholders in such state. In any jurisdiction where the
securities, blue sky or other laws require the Offer to be made by a licensed
broker or dealer, the Offer shall be deemed to be made on behalf of Purchaser
by one or more registered brokers or dealers which are licensed under the laws
of such jurisdiction.
No person has been authorized to give any information or make any
representation on behalf of Parent Group or Purchaser not contained in this
Offer to Purchase or in the Letter of Transmittal and, if given or made, such
information or representation must not be relied upon as having been
authorized.
Parent Group and Purchaser have filed with the Commission the Schedule TO,
together with exhibits, pursuant to Sections 13(e) and 14(d)(1) of the
Exchange Act and Rules 13e-3 and 14d-3 promulgated thereunder, furnishing
certain additional information with respect to the Offer, and may file
amendments thereto. The Schedule TO and any amendments thereto, including
exhibits, may be inspected at, and copies may be obtained from, the same
places and in the manner set forth in "--Certain Information Concerning the
Company--Additional Information" (except that they will not be available at
the regional offices of the Commission).
May 4, 2000
RHH Acquisition Corp.
41
<PAGE>
SCHEDULE I
INFORMATION CONCERNING THE DIRECTORS AND EXECUTIVE OFFICERS OF
THE HEICO COMPANIES, LLC AND RHH ACQUISITION CORP.
1. Managers and Executive Officers of The Heico Companies, LLC
Set forth below is the name, present principal occupation or employment and
material occupations, positions, offices or employment for the past five years
of each manager and executive officer of The Heico Companies, LLC. The
principal address of The Heico Companies, LLC and the current business address
for each individual listed below is c/o The Heico Companies, LLC, 5600 Three
First National Plaza, Chicago, Illinois 60602. Telephone: (312) 419-8220.
Unless otherwise noted, each individual listed below is a citizen of the
United States.
<TABLE>
<CAPTION>
Name Age Position
---- --- --------
<S> <C> <C>
Michael E.
Heisley, Sr. 63 Manager, President and Chief Executive Officer
Larry W. Gies 59 Executive Vice President, Chief Financial Officer,
Secretary
Richard O.
Dentner 61 Executive Vice President
</TABLE>
Mr. Michael E. Heisley, Sr. is the Manager, President and Chief Executive
Officer of The Heico Companies, LLC. Mr. Heisley has served as Director and
Chief Executive Officer of Robertson-Ceco, Inc. since 1993. Mr. Heisley serves
as Chairman of the board of directors of Davis Wire Corporation and Tom's
Foods, Inc. Mr. Heisley serves as Director and President of RHH Acquisition
Corporation.
Mr. Larry W. Gies has served as Executive Vice President, Chief Financial
Officer and Secretary of The Heico Companies, LLC since 1989. Mr. Gies is also
the Vice President and Secretary of RHH Acquisition Corp.
Mr. Richard O. Dentner has served as Executive Vice President of the Heico
Companies since 1995.
2. Directors and Executive Officers of RHH Acquisition Corp.
Set forth below is the name, present principal occupation or employment and
material occupations, positions, offices or employment for the past five years
of each director and executive officer of RHH Acquisition Corp. Each person
identified below has held his position since the formation of RHH Acquisition
Corp. on April 19, 2000. The principal address of RHH Acquisition Corp. and,
unless indicated below, the current business address for each individual
listed below is c/o The Heico Companies, LLC, 5600 Three First National Plaza,
Chicago, Illinois 60602. Telephone: (312) 419-8220. Unless otherwise noted,
each individual listed below is a citizen of the United States.
<TABLE>
<CAPTION>
Name Age Position
---- --- --------
<S> <C> <C>
Michael E. Heisley, Sr. 63 Director, President
Larry W. Gies 59 Vice President, Secretary
Michael E. Heisley, Jr. 38 Director
Stanley H. Meadows 55 Director
E.A. Roskovensky 54 Director
Andrew G.C. Sage II 74 Director
</TABLE>
Mr. Michael E. Heisley, Sr. serves as Director and President of RHH
Acquisition Corp. Mr. Heisely has served as Director and Chief Executive
Officer of Robertson-Ceco Corporation since 1993. Mr. Heisley serves as
Manager, Chief Executive Officer and President of The Heico Companies, LLC.
Mr. Heisley serves as Chairman of the board of directors of Davis Wire
Corporation and Tom's Foods, Inc. Mr. Heisley is the father of Michael E.
Heisley, Jr.
I-1
<PAGE>
Mr. Larry W. Gies serves as Vice President and Secretary of RHH Acquisition
Corp. Mr. Gies has served as Executive Vice President, Chief Financial Officer
and Secretary of The Heico Companies, LLC since 1989.
Mr. Michael E. Heisley, Jr. serves as Director of RHH Acquisition Corp. Mr.
Heisley has served as Director of Robertson-Ceco Corporation since 1998. Mr.
Heisley served as the Executive Vice President of The Heico Companies, LLC
from 1997 to 1999. From 1995-1997, Mr. Heisely was the President of Spartan
Tool Company. Mr. Heisley is the son of Michael E. Heisley, Sr.
Mr. Stanley H. Meadows serves as Director of RHH Acquisition Corp. Mr.
Meadows has also served as Director of Robertson-Ceco Corporation since 1996.
Mr. Meadows is the president of a professional corporation that is a partner
at the law firm of McDermott, Will & Emery since 1985. McDermott, Will & Emery
provides legal services to the Company.
Mr. E.A. Roskovensky serves as Director of RHH Acquisition Corp. Mr.
Roskovensky has served as Director, President and Chief Operating Officer of
Robertson-Ceco Corporation since November 1994. He is also the President and
Chief Executive Officer of Davis Wire Corporation. Mr. Roskovensky serves on
the board of directors of Quadra Med.
Mr. Andrew G.C. Sage II serves as Director of RHH Acquisition Corp. Mr.
Sage has served as Chairman of Robertson-Ceco Corporation since 1993 and is
also the President of Sage Capital Corporation. Mr. Sage serves on the board
of directors of American Superconductor Corporation, Tom's Foods, Inc. and
WorldPort Communications.
I-2
<PAGE>
SCHEDULE II
SECTION 262 OF THE GENERAL CORPORATION LAW OF THE STATE OF DELAWARE
SECTION 262. APPRAISAL RIGHTS
(a) Any stockholder of a corporation of this State who holds shares of
stock on the date of the making of a demand pursuant to subsection (d) of this
section with respect to such shares, who continuously holds such shares
through the effective date of the merger or consolidation, who has otherwise
complied with subsection (d) of this section and who has neither voted in
favor of the merger or consolidation nor consented thereto in writing pursuant
to (S)228 of this title shall be entitled to an appraisal by the Court of
Chancery of the fair value of the stockholder's shares of stock under the
circumstances described in subsections (b) and (c) of this section. As used in
this section, the word "stockholder" means a holder of record of stock in a
stock corporation and also a member of record of a nonstock corporation; the
words "stock" and "share" mean and include what is ordinarily meant by those
words and also membership or membership interest of a member of a nonstock
corporation; and the words "depository receipt" mean a receipt or other
instrument issued by a depository representing an interest in one or more
shares, or fractions thereof, solely of stock of a corporation, which stock is
deposited with the depository.
(b) Appraisal rights shall be available for the shares of any class or
series of stock of a constituent corporation in a merger or consolidation to
be effected pursuant to (S) 251 (other than a merger effected pursuant to
(S)251(g) of this title), (S)252, (S)254, (S)257, (S)258, (S)263 or (S)264 of
this title:
(1) Provided, however, that no appraisal rights under this section shall
be available for the shares of any class or series of stock, which stock,
or depository receipts in respect thereof, at the record date fixed to
determine the stockholders entitled to receive notice of and to vote at the
meeting of stockholders to act upon the agreement of merger or
consolidation, were either (i) listed on a national securities exchange or
designated as a national market system security on an interdealer quotation
system by the National Association of Securities Dealers, Inc. or (ii) held
of record by more than 2,000 holders; and further provided that no
appraisal rights shall be available for any shares of stock of the
constituent corporation surviving a merger if the merger did not require
for its approval the vote of the stockholders of the surviving corporation
as provided in subsection (f) of (S)251 of this title.
(2) Notwithstanding paragraph (1) of this subsection, appraisal rights
under this section shall be available for the shares of any class or series
of stock of a constituent corporation if the holders thereof are required
by the terms of an agreement of merger or consolidation pursuant to
(S)(S)251, 252, 254, 257, 258, 263 and 264 of this title to accept for such
stock anything except:
a. Shares of stock of the corporation surviving or resulting from
such merger or consolidation, or depository receipts in respect
thereof;
b. Shares of stock of any other corporation, or depository receipts
in respect thereof, which shares of stock (or depository receipts in
respect thereof) or depository receipts at the effective date of the
merger or consolidation will be either listed on a national securities
exchange or designated as a national market system security on an
interdealer quotation system by the National Association of Securities
Dealers, Inc. or held of record by more than 2,000 holders;
c. Cash in lieu of fractional shares or fractional depository
receipts described in the foregoing subparagraphs a. and b. of this
paragraph; or
d. Any combination of the shares of stock, depository receipts and
cash in lieu of fractional shares or fractional depository receipts
described in the foregoing subparagraphs a., b. and c. of this
paragraph.
(3) In the event all of the stock of a subsidiary Delaware corporation
party to a merger effected under (S)253 of this title is not owned by the
parent corporation immediately prior to the merger, appraisal rights shall
be available for the shares of the subsidiary Delaware corporation.
II-1
<PAGE>
(c) Any corporation may provide in its certificate of incorporation that
appraisal rights under this section shall be available for the shares of any
class or series of its stock as a result of an amendment to its certificate of
incorporation, any merger or consolidation in which the corporation is a
constituent corporation or the sale of all or substantially all of the assets
of the corporation. If the certificate of incorporation contains such a
provision, the procedures of this section, including those set forth in
subsections (d) and (e) of this section, shall apply as nearly as is
practicable.
(d) Appraisal rights shall be perfected as follows:
(1) If a proposed merger or consolidation for which appraisal rights are
provided under this section is to be submitted for approval at a meeting of
stockholders, the corporation, not less than 20 days prior to the meeting,
shall notify each of its stockholders who was such on the record date for
such meeting with respect to shares for which appraisal rights are
available pursuant to subsection (b) or (c) hereof that appraisal rights
are available for any or all of the shares of the constituent corporations,
and shall include in such notice a copy of this section. Each stockholder
electing to demand the appraisal of such stockholder's shares shall deliver
to the corporation, before the taking of the vote on the merger or
consolidation, a written demand for appraisal of such stockholder's shares.
Such demand will be sufficient if it reasonably informs the corporation of
the identity of the stockholder and that the stockholder intends thereby to
demand the appraisal of such stockholder's shares. A proxy or vote against
the merger or consolidation shall not constitute such a demand. A
stockholder electing to take such action must do so by a separate written
demand as herein provided. Within 10 days after the effective date of such
merger or consolidation, the surviving or resulting corporation shall
notify each stockholder of each constituent corporation who has complied
with this subsection and has not voted in favor of or consented to the
merger or consolidation of the date that the merger or consolidation has
become effective; or
(2) If the merger or consolidation was approved pursuant to (S)228 or
(S)253 of this title, each constituent corporation, either before the
effective date of the merger or consolidation or within ten days
thereafter, shall notify each of the holders of any class or series of
stock of such constituent corporation who are entitled to appraisal rights
of the approval of the merger or consolidation and that appraisal rights
are available for any or all shares of such class or series of stock of
such constituent corporation, and shall include in such notice a copy of
this section; provided that, if the notice is given on or after the
effective date of the merger or consolidation, such notice shall be given
by the surviving or resulting corporation to all such holders of any class
or series of stock of a constituent corporation that are entitled to
appraisal rights. Such notice may, and, if given on or after the effective
date of the merger or consolidation, shall, also notify such stockholders
of the effective date of the merger or consolidation. Any stockholder
entitled to appraisal rights may, within 20 days after the date of mailing
of such notice, demand in writing from the surviving or resulting
corporation the appraisal of such holder's shares. Such demand will be
sufficient if it reasonably informs the corporation of the identity of the
stockholder and that the stockholder intends thereby to demand the
appraisal of such holder's shares. If such notice did not notify
stockholders of the effective date of the merger or consolidation, either
(i) each such constituent corporation shall send a second notice before the
effective date of the merger or consolidation notifying each of the holders
of any class or series of stock of such constituent corporation that are
entitled to appraisal rights of the effective date of the merger or
consolidation or (ii) the surviving or resulting corporation shall send
such a second notice to all such holders on or within 10 days after such
effective date; provided, however, that if such second notice is sent more
than 20 days following the sending of the first notice, such second notice
need only be sent to each stockholder who is entitled to appraisal rights
and who has demanded appraisal of such holder's shares in accordance with
this subsection. An affidavit of the secretary or assistant secretary or of
the transfer agent of the corporation that is required to give either
notice that such notice has been given shall, in the absence of fraud, be
prima facie evidence of the facts stated therein. For purposes of
determining the stockholders entitled to receive either notice, each
constituent corporation may fix, in advance, a record date that shall be
not more than 10 days prior to the date the notice is given, provided, that
if the notice is given on or after the effective date of the merger or
consolidation, the record date shall be such effective date. If no record
date is fixed and the notice is given prior to the effective date, the
record date shall be the close of business on the day next preceding the
day on which the notice is given.
II-2
<PAGE>
(e) Within 120 days after the effective date of the merger or
consolidation, the surviving or resulting corporation or any stockholder who
has complied with subsections (a) and (d) hereof and who is otherwise entitled
to appraisal rights, may file a petition in the Court of Chancery demanding a
determination of the value of the stock of all such stockholders.
Notwithstanding the foregoing, at any time within 60 days after the effective
date of the merger or consolidation, any stockholder shall have the right to
withdraw such stockholder's demand for appraisal and to accept the terms
offered upon the merger or consolidation. Within 120 days after the effective
date of the merger or consolidation, any stockholder who has complied with the
requirements of subsections (a) and (d) hereof, upon written request, shall be
entitled to receive from the corporation surviving the merger or resulting
from the consolidation a statement setting forth the aggregate number of
shares not voted in favor of the merger or consolidation and with respect to
which demands for appraisal have been received and the aggregate number of
holders of such shares. Such written statement shall be mailed to the
stockholder within 10 days after such stockholder's written request for such a
statement is received by the surviving or resulting corporation or within 10
days after expiration of the period for delivery of demands for appraisal
under subsection (d) hereof, whichever is later.
(f) Upon the filing of any such petition by a stockholder, service of a
copy thereof shall be made upon the surviving or resulting corporation, which
shall within 20 days after such service file in the office of the Register in
Chancery in which the petition was filed a duly verified list containing the
names and addresses of all stockholders who have demanded payment for their
shares and with whom agreements as to the value of their shares have not been
reached by the surviving or resulting corporation. If the petition shall be
filed by the surviving or resulting corporation, the petition shall be
accompanied by such a duly verified list. The Register in Chancery, if so
ordered by the Court, shall give notice of the time and place fixed for the
hearing of such petition by registered or certified mail to the surviving or
resulting corporation and to the stockholders shown on the list at the
addresses therein stated. Such notice shall also be given by 1 or more
publications at least 1 week before the day of the hearing, in a newspaper of
general circulation published in the City of Wilmington, Delaware or such
publication as the Court deems advisable. The forms of the notices by mail and
by publication shall be approved by the Court, and the costs thereof shall be
borne by the surviving or resulting corporation.
(g) At the hearing on such petition, the Court shall determine the
stockholders who have complied with this section and who have become entitled
to appraisal rights. The Court may require the stockholders who have demanded
an appraisal for their shares and who hold stock represented by certificates
to submit their certificates of stock to the Register in Chancery for notation
thereon of the pendency of the appraisal proceedings; and if any stockholder
fails to comply with such direction, the Court may dismiss the proceedings as
to such stockholder.
(h) After determining the stockholders entitled to an appraisal, the Court
shall appraise the shares, determining their fair value exclusive of any
element of value arising from the accomplishment or expectation of the merger
or consolidation, together with a fair rate of interest, if any, to be paid
upon the amount determined to be the fair value. In determining such fair
value, the Court shall take into account all relevant factors. In determining
the fair rate of interest, the Court may consider all relevant factors,
including the rate of interest which the surviving or resulting corporation
would have had to pay to borrow money during the pendency of the proceeding.
Upon application by the surviving or resulting corporation or by any
stockholder entitled to participate in the appraisal proceeding, the Court
may, in its discretion, permit discovery or other pretrial proceedings and may
proceed to trial upon the appraisal prior to the final determination of the
stockholder entitled to an appraisal. Any stockholder whose name appears on
the list filed by the surviving or resulting corporation pursuant to
subsection (f) of this section and who has submitted such stockholder's
certificates of stock to the Register in Chancery, if such is required, may
participate fully in all proceedings until it is finally determined that such
stockholder is not entitled to appraisal rights under this section.
(i) The Court shall direct the payment of the fair value of the shares,
together with interest, if any, by the surviving or resulting corporation to
the stockholders entitled thereto. Interest may be simple or compound, as the
Court may direct. Payment shall be so made to each such stockholder, in the
case of holders uncertificated stock forthwith, and the case of holders of
shares represented by certificates upon the surrender to the corporation
II-3
<PAGE>
of the certificates representing such stock. The Court's decree may be
enforced as other decrees in the Court of Chancery may be enforced, whether
such surviving or resulting corporation be a corporation of this State or of
any state.
(j)The costs of the proceeding may be determined by the Court and taxed
upon the parties as the Court deems equitable in the circumstances. Upon
application of a stockholder, the Court may order all or a portion of the
expenses incurred by any stockholder in connection with the appraisal
proceeding, including, without limitation, reasonable attorney's fees and the
fees and expenses of experts, to be charged pro rata against the value of all
the shares entitled to an appraisal.
(k) From and after the effective date of the merger or consolidation, no
stockholder who has demanded appraisal rights as provided in subsection (d) of
this section shall be entitled to vote such stock for any purpose or to
receive payment of dividends or other distributions on the stock (except
dividends or other distributions payable to stockholders of record at a date
which is prior to the effective date of the merger or consolidation);
provided, however, that if no petition for an appraisal shall be filed within
the time provided in subsection (e) of this section, or if such stockholder
shall deliver to the surviving or resulting corporation a written withdrawal
of such stockholder's demand for an appraisal and an acceptance of the merger
or consolidation, either within 60 days after the effective date of the merger
or consolidation as provided in subsection (e) of this section or thereafter
with the written approval of the corporation, then the right of such
stockholder to an appraisal shall cease. Notwithstanding the foregoing, no
appraisal proceeding in the Court of Chancery shall be dismissed as to any
stockholder without the approval of the Court, and such approval may be
conditioned upon such terms as the Court deems just.
(l) The shares of the surviving or resulting corporation to which the
shares of such objecting stockholders would have been converted had they
assented to the merger or consolidation shall have the status of authorized
and unissued shares of the surviving or resulting corporation. (Last amended
by Ch. 339, L. '98, eff. 7-1-98.)
II-4
<PAGE>
LETTER OF TRANSMITTAL
Manually signed copies of the Letters of Transmittal, properly completed
and duly signed, will be accepted. The Letter of Transmittal and certificates
for Shares and any other required documents should be sent by each stockholder
or such stockholder's broker, dealer, commercial bank, trust company or other
nominee to the Depositary at the address set forth below:
The Depositary for the Offer is:
American Stock Transfer and Trust Company
By Mail: By Facsimile Transmission: By Hand or Overnight
Courier:
American Stock (718) 234-5001 American Stock
Transfer and Trust Transfer and Trust
Company Reorganization Company Reorganization
Department 40 Wall Department 40 Wall
Street, 46th Floor New Street, 46th Floor New
York, NY 10005 York, NY 10005
For Information Telephone:
(718) 921-8200
Questions and requests for assistance may be directed to the Company at the
address and telephone number set forth below. Additional copies of this Offer
to Purchase, the Letter of Transmittal, or other related tender offer
materials may be obtained from the Company or from brokers, dealers,
commercial banks or trust companies.
Robertson-Ceco Corporation
5000 Executive Parkway, Suite 425
San Ramon, CA 94583
Telephone: (925) 543-7599
Attention: E.A. Roskovensky or Ronald D. Stevens
<PAGE>
LETTER OF TRANSMITTAL
To Tender Shares Of Common Stock
of
ROBERTSON-CECO CORPORATION
Pursuant To The Offer To Purchase Dated May 4, 2000
by
RHH ACQUISITION CORP.
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 5:00 P.M., NEW YORK CITY
TIME, ON JUNE 2, 2000, UNLESS THE OFFER IS EXTENDED.
The Depositary for the Offer is:
American Stock Transfer and Trust Company
By Mail: By Facsimile Transmission: By Hand or Overnight
Courier:
American Stock Transfer (718) 234-5001
and Trust Company American Stock Transfer
Reorganization Department For Information Telephone: and Trust Company
40 Wall Street, 46th Reorganization Department
Floor
(718) 921-8200 40 Wall Street, 46th
New York, NY 10005 Floor
New York, NY 10005
DELIVERY OF THIS LETTER OF TRANSMITTAL TO AN ADDRESS OTHER THAN AS SET
FORTH ABOVE OR TRANSMISSION OF INSTRUCTIONS VIA A FACSIMILE TRANSMISSION TO A
NUMBER OTHER THAN AS SET FORTH ABOVE WILL NOT CONSTITUTE A VALID DELIVERY TO
THE DEPOSITARY. YOU MUST SIGN THIS LETTER OF TRANSMITTAL IN THE APPROPRIATE
SPACE PROVIDED BELOW AND COMPLETE THE SUBSTITUTE FORM W-9 SET FORTH BELOW.
THE INSTRUCTIONS ACCOMPANYING THIS LETTER OF TRANSMITTAL SHOULD BE READ
CAREFULLY BEFORE THIS LETTER OF TRANSMITTAL IS COMPLETED.
This Letter of Transmittal is to be completed by stockholders of Robertson-
Ceco Corporation, if either certificates evidencing Shares (as defined below)
("Certificates") are to be forwarded with this Letter of Transmittal or,
unless an Agent's Message (as defined in the Offer to Purchase (as defined
below)) is utilized, if delivery of Shares is to be made by book-entry
transfer to an account maintained by the Depositary at the Book-Entry Transfer
Facility (as defined under "THE TENDER OFFER--Acceptance for Payment and
Payment for Shares" of the Offer to Purchase) pursuant to the procedures set
forth under "THE TENDER OFFER--Procedures for Tendering Shares" of the Offer
to Purchase. DELIVERY OF DOCUMENTS TO THE BOOK-ENTRY TRANSFER FACILITY DOES
NOT CONSTITUTE DELIVERY TO THE DEPOSITARY.
Stockholders whose Certificates are not immediately available or who cannot
deliver their Certificates and all other required documents to the Depositary
prior to the Expiration Date (as defined under "THE TENDER OFFER--Terms of the
Offer" of the Offer to Purchase), or who cannot complete the procedures for
book-entry transfer on a timely basis, must tender their Shares according to
the guaranteed delivery procedures set forth under "THE TENDER OFFER--
Procedures for Tendering Shares" of the Offer to Purchase. See Instruction 2.
<PAGE>
NAME(S) AND ADDRESS(ES) OF REGISTERED HOLDER(S) (Please fill in, if blank,
exactly as name(s) appear(s) on the enclosed Certificate(s))
- --------------------------------------------------------------------------------
DESCRIPTION OF SHARES TENDERED (Attach Additional Signed List, If Necessary)
- --------------------------------------------------------------------------------
Total Number of Shares
Certificate Number(s)* Represented By Certificate(s)*
Number of Shares Tendered**
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Total Number of Shares Tendered....................
- --------------------------------------------------------------------------------
* Need not be completed by stockholders delivering Shares by book-entry
transfer through the Depositary.
** Unless otherwise indicated, it will be assumed that all Shares
represented by any certificates delivered to the Depositary are being
tendered. See Instruction 4.
[_]CHECK HERE IF CERTIFICATES HAVE BEEN LOST OR MUTILATED. SEE INSTRUCTION
12.
[_]CHECK HERE IF TENDERED SHARES ARE BEING DELIVERED BY BOOK-ENTRY TRANSFER
MADE TO AN ACCOUNT MAINTAINED BY THE DEPOSITARY WITH THE BOOK-ENTRY
TRANSFER FACILITY AND COMPLETE THE FOLLOWING (ONLY PARTICIPANTS IN THE
BOOK-ENTRY TRANSFER FACILITY MAY DELIVER SHARES BY BOOK-ENTRY TRANSFER):
Name of Tendering Institution: ___________________________________________
Account Number: __________________________________________________________
Transaction Code Number: _________________________________________________
[_]CHECK HERE IF TENDERED SHARES ARE BEING DELIVERED PURSUANT TO A NOTICE OF
GUARANTEED DELIVERY PREVIOUSLY SENT TO THE DEPOSITARY AND COMPLETE THE
FOLLOWING. PLEASE ENCLOSE A PHOTOCOPY OF SUCH NOTICE OF GUARANTEED
DELIVERY.
Name(s) of Registered Stockholder(s): ____________________________________
Window Ticket Number (if any): ___________________________________________
Date of Execution of Notice of Guaranteed Delivery: ______________________
Name of Institution which Guaranteed Delivery: ___________________________
2
<PAGE>
NOTE: SIGNATURES MUST BE PROVIDED BELOW.
PLEASE READ THE ACCOMPANYING INSTRUCTIONS CAREFULLY.
Ladies and Gentlemen:
The undersigned hereby tenders to RHH Acquisition Corp., a Delaware
corporation ("Purchaser"), the above-described shares of Common Stock, par
value $0.01 per share (the "Shares"), of Robertson-Ceco Corporation, a
Delaware corporation (the "Company"), pursuant to Purchaser's offer to
purchase any and all of the outstanding Shares at a purchase price of $11.50
per Share, net to the seller in cash, without interest thereon, upon the terms
and subject to the conditions set forth in the Offer to Purchase, dated May 4,
2000 (the "Offer to Purchase"), receipt of which is hereby acknowledged, and
in this Letter of Transmittal (which, as amended from time to time, together
with the Offer to Purchase collectively constitute the "Offer"). The Offer is
being made pursuant to an Agreement and Plan of Merger, dated as of April 20,
2000 (the "Merger Agreement"), between Purchaser and the Company. The
Purchaser was formed by The Heico Companies, LLC. E.A. Roskovensky and Andrew
G.C. Sage II are also stockholders of Purchaser. The undersigned understands
that Purchaser reserves the right to assign its right to purchase all or any
portion of the Shares tendered pursuant to the Offer to a wholly owned
subsidiary of Purchaser, but any such assignment will not relieve Purchaser of
its obligations under the Offer or prejudice the rights of the tendering
stockholders to receive payment for Shares validly tendered and accepted for
payment pursuant to the Offer.
Subject to, and effective upon, acceptance for payment of, or payment for,
the Shares tendered herewith, the undersigned hereby sells, assigns and
transfers to, or upon the order of, Purchaser all right, title and interest in
and to all the Shares that are being tendered hereby (and any and all other
shares or other securities issued or issuable in respect of such Shares on or
after the date of the Offer to Purchase) and irrevocably appoints American
Stock Transfer and Trust Company (the "Depositary") the true and lawful agent
and attorney-in-fact of the undersigned with respect to such Shares (and such
other shares or securities), with full power of substitution (such power of
attorney being deemed to be an irrevocable power coupled with an interest), to
(a) deliver certificates for such Shares (and such other shares or
securities), or transfer ownership of such Shares (and such other Shares or
securities) on the account books maintained by the Book-Entry Transfer
Facility, together, in any such case, with all accompanying evidences of
transfer and authenticity, to or upon the order of the Purchaser, (b) present
such Shares (and such other shares or securities) for transfer on the books of
the Company and (c) receive all benefits and otherwise exercise all rights of
beneficial ownership of such Shares (and such other shares or securities), all
in accordance with the terms and subject to the conditions of the Offer.
The undersigned hereby irrevocably appoints each designee of Purchaser as
the attorney-in-fact and proxy of the undersigned, each with full power of
substitution, to the full extent of the rights of the undersigned with respect
to the Shares tendered herewith and accepted for payment by Purchaser prior to
the time of any vote or other action (and any and all other shares or other
securities issued or issuable in respect of such Shares on or after the date
of the Offer to Purchase). All such powers of attorney and proxies shall be
considered irrevocable and coupled with an interest. Such appointment will be
effective when, and only to the extent that, Purchaser accepts such Shares for
payment. Upon such acceptance for payment, all prior powers of attorney and
proxies given by the stockholder with respect to such Shares (and such other
shares and securities) will, without further action, be revoked and no
subsequent powers of attorney and proxies may be given nor any subsequent
written consents executed (and, if given or executed, will not be deemed
effective). The designees of Purchaser will, with respect to the Shares (and
such other shares and securities) for which such appointment is effective, be
empowered to exercise all voting and other rights of such stockholder as they
in their sole discretion may deem proper at any annual or special meeting of
the Company's stockholders, or any adjournment or postponement thereof, by
written consent in lieu of any such meeting or otherwise. Purchaser reserves
the right to require that, in order for Shares to be deemed validly tendered,
immediately upon Purchaser's payment for such Shares, Purchaser must be able
to exercise full voting and other rights with respect to such Shares (and such
other shares and securities), including voting at any meeting of stockholders
then scheduled.
The undersigned hereby represents and warrants that the undersigned has
full power and authority to tender, sell, assign and transfer the Shares
tendered hereby (and any and all other shares or other securities issued or
issuable in respect of such Shares on or after the date of the Offer to
Purchase) and that when the same are
3
<PAGE>
accepted for payment by Purchaser, Purchaser will acquire good and
unencumbered title thereto, free and clear of all liens, restrictions, charges
and encumbrances and not subject to any adverse claim. The undersigned, upon
request, will execute and deliver any additional documents deemed by the
Depositary or Purchaser to be necessary or desirable to complete the sale,
assignment and transfer of the Shares tendered hereby (and such other shares
or securities).
All authority herein conferred or agreed to be conferred shall survive the
death or incapacity of the undersigned, and any obligation of the undersigned
hereunder shall be binding upon the heirs, personal representatives,
successors and assigns of the undersigned. Except as stated in the Offer, this
tender is irrevocable.
The undersigned understands that tenders of Shares pursuant to any one of
the procedures described under "THE TENDER OFFER--Terms of the Offer" of the
Offer to Purchase and in the instructions hereto will constitute a binding
agreement between the undersigned and Purchaser upon the terms and subject to
the conditions of the Offer.
The undersigned recognizes that, under certain circumstances set forth in
the Offer to Purchase, Purchaser may not be required to accept for payment any
of the Shares tendered hereby.
Unless otherwise indicated in this Letter of Transmittal under "Special
Payment Instructions," please issue the check for the purchase price and
return any Shares not tendered or not purchased in the name(s) of the
undersigned. Similarly, unless otherwise indicated under "Special Delivery
Instructions," please mail the check for the purchase price and return any
Certificates not tendered or not purchased (and accompanying documents, as
appropriate) to the undersigned at the address shown below the undersigned's
signature(s). In the event that both "Special Payment Instructions" and
"Special Delivery Instructions" are completed, please issue the check for the
purchase price and return any Shares not tendered or not purchased in the
name(s) of, and mail such check and any certificates to, the person(s) so
indicated. Unless otherwise indicated under "Special Payment Instructions," in
the case of book-entry delivery of Shares, please credit the account
maintained at the Book-Entry Transfer Facility with respect to any Shares not
accepted for payment. The undersigned recognizes that Purchaser has no
obligation, pursuant to the "Special Payment Instructions," to transfer any
Shares from the name of the registered holder(s) thereof if Purchaser does not
accept for payment any of the Shares so tendered.
SPECIAL DELIVERY INSTRUCTIONS
SPECIAL PAYMENT INSTRUCTIONS (See Instructions 1, 5, 6 and 7)
(See Instructions 1, 5, 6 and 7)
To be completed ONLY if the check
To be completed ONLY if the check for the purchase price of Shares
for the purchase price of Shares accepted for payment and/or
accepted for payment and/or Certificates for Shares not
Certificates for Shares not tendered or not accepted for
tendered or not accepted for payment are to be mailed to
payment are to be issued in the someone other than the undersigned
name of someone other than the or to the undersigned at an
undersigned, or if Shares address other than that shown
delivered by book-entry transfer above.
that are not accepted for payment
are to be returned by credit to an
account maintained at the Book-
Entry Transfer Facility other than
the account indicated above.
Mail check and/or certificate(s)
to:
Name ______________________________
(Please Type or Print)
Address ___________________________
Issue check and/or certificate(s) -----------------------------------
to: -----------------------------------
Name ______________________________ (Include a Zip Code)
(Please Type or Print)
Address ___________________________
-----------------------------------
-----------------------------------
(Include a Zip Code)
-----------------------------------
(Recipient's Tax Identification or
Social Security Number)
(Also Complete Substitute Form W-9
Below)
4
<PAGE>
PLEASE SIGN HERE:
(To Be Completed By All Stockholders)
(Please Complete Substitute Form W-9 Below)
X Dated: , 2000
X Dated: , 2000
SIGNATURE(S) OF STOCKHOLDER(S)
(Must be signed by registered holder(s) exactly as name(s) appear(s) on
certificate(s) or on a security position listing or by the person(s)
authorized to become registered holder(s) by certificates and documents
transmitted herewith. If signature is by a trustee, executor,
administrator, guardian, attorney-in-fact, agent, officer of a
corporation or other person acting in a fiduciary or representative
capacity, please set forth full title and see Instruction 5).
Name(s): _________________________________________________________________
(Please Type or Print)
Capacity (full title): ___________________________________________________
Address: _________________________________________________________________
(Include a Zip Code)
Area Code and Telephone No.: _____________________________________________
(Home)
----------------------------------------------------
(Business)
Tax Identification Number or Social Security Number: _____________________
(Complete Substitute Form W-9 Below)
GUARANTEE OF SIGNATURE(S)
(See Instructions 1 and 5)
FOR USE BY FINANCIAL INSTITUTIONS ONLY, PLACE MEDALLION GUARANTEE IN
SPACE BELOW.
Authorized Signature(s): _________________________________________________
Name: ____________________________________________________________________
(Please Type or Print)
Title: ___________________________________________________________________
Name of Firm: ____________________________________________________________
Address: _________________________________________________________________
(Include a Zip Code)
Area Code and Telephone Number: __________________________________________
Dated: , 2000
<PAGE>
INSTRUCTIONS
Forming Part of the Terms and Conditions of the Offer
1. Guarantee of Signatures. Except as otherwise provided below, signatures
on Letters of Transmittal must be guaranteed by a member in good standing of
the Securities Transfer Agents Medallion Program, or by any other firm which
is a bank, broker, dealer, credit union or savings association (each of the
foregoing being referred to as an "Eligible Institution" and, collectively, as
"Eligible Institutions"), except in cases where Shares are tendered (a) by a
registered holder of Shares who has not completed either the box labeled
"Special Delivery Instructions" or the box labeled "Special Payment
Instructions" on the Letter of Transmittal or (b) for the account of any
Eligible Institution. See Instruction 5. If the Certificates are registered in
the name of a person other than the signer of this Letter of Transmittal, or
if payment is to be made, or Certificates not accepted for payment or not
tendered are to be returned, to a person other than the registered holder,
then the Certificates must be endorsed or accompanied by duly executed stock
powers, in either case, signed exactly as the name of the registered holder
appears on such Certificates, with the signatures on such Certificates or
stock powers guaranteed by an Eligible Institution as provided herein. See
Instruction 5.
2. Requirements of Tender. This Letter of Transmittal is to be used if
either Certificates are to be forwarded herewith or, unless an Agent's Message
is utilized, if the delivery of Shares is to be made by book-entry transfer
pursuant to the procedures set forth under "THE TENDER OFFER--Procedures for
Tendering Shares" of the Offer to Purchase. Certificates for all physically
delivered Shares, or a confirmation of a book-entry transfer into the
Depositary's account at the Book-Entry Transfer Facility of all Shares
delivered electronically, as well as a properly completed and duly executed
Letter of Transmittal (or a manually signed facsimile thereof) and any other
documents required by this Letter of Transmittal or an Agent's Message (as
defined in the Offer to Purchase) in the case of a book-entry delivery, must
be received by the Depositary at one of its addresses set forth on the front
page of this Letter of Transmittal by the Expiration Date (as defined in the
Offer to Purchase). Stockholders who cannot deliver their Shares and all other
required documents to the Depositary by the Expiration Date must tender their
Shares pursuant to the guaranteed delivery procedures set forth under "THE
TENDER OFFER--Procedures for Tendering Shares" of the Offer to Purchase.
Pursuant to such procedures, (a) such tender must be made by or through an
Eligible Institution; (b) a properly completed and duly executed Notice of
Guaranteed Delivery, substantially in the form provided by Purchaser, must be
received by the Depositary prior to the Expiration Date; and (c) the
Certificates for all tendered Shares, in proper form for transfer (or a Book-
Entry Confirmation (as defined in the Offer to Purchase)), together with a
properly completed and duly executed Letter of Transmittal (or a manually
signed facsimile thereof), and any required signature guarantees, or, in the
case of a book-entry transfer, an Agent's Message, and any other documents
required by this Letter of Transmittal must be received by the Depositary
within three trading days after the date of execution of such Notice of
Guaranteed Delivery, all as provided under "THE TENDER OFFER--Procedures for
Tendering Shares" of the Offer to Purchase. The term "trading day" is any day
on which the New York Stock Exchange is open for business.
THE METHOD OF DELIVERY OF SHARES, THE LETTER OF TRANSMITTAL AND ALL OTHER
REQUIRED DOCUMENTS, INCLUDING DELIVERY THROUGH THE BOOK-ENTRY TRANSFER
FACILITY, IS AT THE OPTION AND RISK OF THE TENDERING STOCKHOLDER. IF DELIVERY
IS BY MAIL, REGISTERED MAIL WITH RETURN RECEIPT REQUESTED, PROPERLY INSURED,
IS RECOMMENDED.
No alternative, conditional or contingent tenders will be accepted, and no
fractional Shares will be purchased. By executing this Letter of Transmittal
(or a manually signed facsimile thereof), the tendering stockholder waives any
right to receive any notice of the acceptance for payment of the Shares.
3. Inadequate Space. If the space provided in this Letter of Transmittal is
inadequate, the information required under "Description of Shares Tendered"
should be listed on a separate schedule attached hereto.
4. Partial Tenders (Not Applicable to Stockholders Who Tender by Book-Entry
Transfer). If fewer than all the Shares represented by any Certificate
delivered to the Depositary are to be tendered, fill in the number of
<PAGE>
Shares which are to be tendered in the box entitled "Number of Shares
Tendered." In such case, a new Certificate for the remainder of the Shares
represented by the old Certificate(s) will be sent to the person(s) signing
this Letter of Transmittal unless otherwise provided in the appropriate box on
this Letter of Transmittal, as promptly as practicable after the Expiration
Date. All Shares represented by Certificate(s) delivered to the Depositary
will be deemed to have been tendered unless otherwise indicated.
5. Signatures on Letter of Transmittal; Instruments of Transfer and
Endorsements. If this Letter of Transmittal is signed by the registered
holder(s) of the Shares tendered hereby, the signature(s) must correspond with
the name(s) as written on the face of the Certificates without alteration,
enlargement or any change whatsoever.
If any of the Shares tendered hereby are held of record by two or more
persons, all such persons must sign this Letter of Transmittal.
If any of the Shares tendered hereby are registered in different names on
different Certificates, it will be necessary to complete, sign and submit as
many separate Letters of Transmittal as there are different registrations of
Certificates.
If this Letter of Transmittal is signed by the registered holder(s) of the
Shares tendered hereby, no endorsements of Certificates or separate stock
powers are required unless payment of the purchase price is to be made, or
Shares not tendered or not purchased are to be returned, in the name of any
person other than the registered holder(s), in which case, the Certificate(s)
for such Shares tendered hereby must be endorsed, or accompanied by
appropriate stock powers, in either case, signed exactly as the name(s) of the
registered holder(s) appears(s) on the Certificate(s) for such Shares.
Signatures on any such Certificates or stock powers must be guaranteed by an
Eligible Institution.
If this Letter of Transmittal is signed by a person other than the
registered holder(s) of the Shares tendered hereby, the Certificate must be
endorsed or accompanied by appropriate stock powers, in either case, signed
exactly as the name(s) of the registered holder(s) appear(s) on the
Certificates for such Shares. Signature(s) on any such Certificates or stock
powers must be guaranteed by an Eligible Institution.
If this Letter of Transmittal or any Certificate or stock power is signed
by a trustee, executor, administrator, guardian, attorney-in-fact, officer of
a corporation or other person acting in a fiduciary or representative
capacity, such person should so indicate when signing, and proper evidence
satisfactory to Purchaser of the authority of such person so to act must be
submitted.
6. Stock Transfer Taxes. Except as set forth in this Instruction 6,
Purchaser will pay any stock transfer taxes with respect to the sale and
transfer of any Shares to it or its order pursuant to the Offer. If, however,
payment of the purchase price is to be made to, or Shares not tendered or not
purchased are to be returned in the name of, any person other than the
registered holder(s), then the amount of any stock transfer taxes (whether
imposed on the registered holder(s), such other person or otherwise) payable
on account of the transfer to such person will be deducted from the purchase
price unless satisfactory evidence of the payment of such taxes, or exemption
therefrom, is submitted.
EXCEPT AS PROVIDED IN THIS INSTRUCTION 6, IT WILL NOT BE NECESSARY FOR
TRANSFER TAX STAMPS TO BE AFFIXED TO THE CERTIFICATES LISTED IN THIS LETTER OF
TRANSMITTAL.
7. Special Payment and Delivery Instructions. If the check for the purchase
price of any Shares purchased is to be issued, or any Shares not tendered or
not purchased are to be returned, in the name of a person other than the
person(s) signing this Letter of Transmittal or if the check or any
Certificates not tendered or not purchased are to be mailed to someone other
than the person(s) signing this Letter of Transmittal or to the person(s)
signing this Letter of Transmittal at an address other than that shown above,
the appropriate boxes on this Letter of Transmittal should be completed.
Stockholders tendering Shares by book-entry transfer may request that Shares
not purchased be credited to an account maintained at the Book-Entry Transfer
Facility as such stockholder may designate under "Special Payment
Instructions." If no such instructions are given, any such Shares not
purchased will be credited to an account maintained at the Book-Entry Transfer
Facility.
<PAGE>
8. Substitute Form W-9. Each tendering stockholder is required to provide
the Depositary with a correct Taxpayer Identification Number ("TIN") on
Substitute Form W-9, which is provided under "Important Tax Information" below
and to certify that the stockholder is not subject to backup withholding.
Failure to provide the information on the Substitute Form W-9 may subject the
tendering stockholder to a penalty and 31% federal income tax backup
withholding on the payment of the purchase price for the Shares. If the
tendering stockholder has not been issued a TIN and has applied for a TIN or
intends to apply for a TIN in the near future, the tendering stockholder
should follow the instructions set forth in the Substitute Form W-9 and sign
and date both the Substitute Form W-9 and the "Certification of Awaiting
Taxpayer Identification Number." If the stockholder has indicated in the
Substitute Form W-9 that a TIN has been applied for and the Depositary is not
provided with a TIN by the time of payment, the Depositary will withhold 31%
of all payments of the purchase price, if any, made thereafter pursuant to the
Offer until a TIN is provided to the Depositary. Such amounts, however, will
be refunded if a TIN is provided to the Depositary within 60 days.
9. Foreign Holders. Foreign holders must submit a completed IRS Form W-8 to
avoid 31% backup withholding. IRS Form W-8 may be obtained by contacting the
Depositary at the address on the face of this Letter of Transmittal.
10. Requests for Assistance or Additional Copies. Requests for assistance
or additional copies of the Offer to Purchase and this Letter of Transmittal
may be obtained from the Company, 5000 Executive Parkway, Suite 425, San
Ramon, CA 94583, Telephone: (925) 543-7599, Attention: E.A. Roskovensky or
Ronald D. Stevens.
11. Waiver of Conditions. The conditions of the Offer may be waived by
Purchaser, in whole or in part, at any time or from time to time, in
Purchaser's sole discretion, as set forth in the Offer to Purchase.
12. Lost or Destroyed Certificates. If any Certificate(s) representing
Shares has been lost or destroyed, the holders should promptly notify the
Depositary, which also acts as the Company's transfer agent. The holders will
then be instructed as to the procedure to be followed in order to replace the
Certificate(s). This Letter of Transmittal and related documents cannot be
processed until the procedures for replacing lost or destroyed Certificates
have been followed.
IMPORTANT: THIS LETTER OF TRANSMITTAL OR A MANUALLY SIGNED FACSIMILE COPY
HEREOF (TOGETHER WITH CERTIFICATES OR CONFIRMATION OF BOOK-ENTRY TRANSFER AND
ALL OTHER REQUIRED DOCUMENTS) OR A NOTICE OF GUARANTEED DELIVERY MUST BE
RECEIVED BY THE DEPOSITARY PRIOR TO THE EXPIRATION DATE.
<PAGE>
PAYER'S NAME: AMERICAN STOCK TRANSFER AND TRUST COMPANY
- -------------------------------------------------------------------------------
TIN:
SUBSTITUTE Part 1--Please provide your -----------------------
FORM W-9 TIN in the box at right and Social Security Number
Department of the certify by signing and dating or
Treasury, Internal below. Employer
Revenue Service Identification Number
(If waiting for TIN,
write "Applied For")
Payer's Request
for Taxpayer ----------------------------------------------------------
Identification Part 2--For payees exempt from
Number ("TIN") backup withholding, please
write "EXEMPT" in the box at
right.
-----------------------
----------------------------------------------------------
Part 3--Certification--UNDER PENALTIES OF PERJURY, I
CERTIFY THAT:
(1) The number shown on this form is my correct
taxpayer identification number (or I am waiting for
a number to be issued to me)
(2) I am not subject to backup withholding because:
(a) I am exempt from backup withholding, or (b) I
have not been notified by the Internal Revenue
Service (the "IRS") that I am subject to backup
withholding as a result of a failure to report all
interest or dividends, or (c) the IRS has notified
me that I am no longer subject to backup
withholding.
Certification Instructions--You must cross out item
(2) above if you have been notified by the IRS that
you are subject to backup withholding because of
underreporting interest or dividends on your tax
return and you have not been notified by the IRS that
you are no longer subject to backup withholding.
----------------------------------------------------------
_________________________ _____________________
Signature Date
Name:___________________________________________________
(Please Print)
NOTE: FAILURE TO COMPLETE AND RETURN THIS FORM W-9 MAY RESULT IN BACKUP
WITHHOLDING OF 31% OF ANY CASH PAYMENTS MADE TO YOU PURSUANT TO THE
OFFER. PLEASE REVIEW THE ENCLOSED GUIDELINES FOR CERTIFICATION OF
TAXPAYER IDENTIFICATION NUMBER ON SUBSTITUTE FORM W-9 FOR ADDITIONAL
DETAILS.
YOU MUST COMPLETE THE FOLLOWING CERTIFICATE IF YOU ARE WAITING (OR SOON
WILL APPLY FOR) A TAXPAYER IDENTIFICATION NUMBER.
CERTIFICATION OF AWAITING TAXPAYER IDENTIFICATION NUMBER
I certify under penalties of perjury that a taxpayer identification number
has not been issued to me, and either (1) I have mailed or delivered an
application to receive a taxpayer identification number to the appropriate
Internal Revenue Service Center or Social Security Administration office or
(2) I intend to mail or deliver an application in the near future. I
understand that if I do not provide a taxpayer identification number by the
time of payment, 31% of all reportable cash payments made to me thereafter
will be withheld until I provide a taxpayer identification number to the
payer and that, if I do not provide my taxpayer identification number within
sixty days, such retained amounts shall be remitted to the IRS as backup
withholding.
_____________________________________ _____________________________________
Signature Date
Name:________________________________________________________________________
(Please Print)
9
<PAGE>
IMPORTANT TAX INFORMATION
Under federal income tax law, a stockholder whose tendered Shares are
accepted for payment is required to provide the Depositary (as payer) with
such stockholder's correct TIN on the Substitute Form W-9. If such stockholder
is an individual, the TIN is such stockholder's social security number. If the
Depositary is not provided with the correct TIN, the stockholder may be
subject to a $50 penalty imposed by the IRS. In addition, payments that are
made to such stockholder with respect to Shares purchased pursuant to the
Offer may be subject to backup withholding.
Certain stockholders (including, among others, all corporations and certain
foreign individuals) are not subject to these backup withholding and reporting
requirements and should indicate their status by writing "EXEMPT" in response
to Part 2 of the Substitute Form W-9, and by signing and dating, the
substitute Form W-9. In order for a foreign individual to qualify as an exempt
recipient, that stockholder must submit a statement, signed under penalties of
perjury, attesting to that individual's exempt status. Such statements may be
obtained from the Depositary. All exempt recipients (including foreign persons
wishing to qualify as exempt recipients) should see the enclosed Guidelines
for Certification of Taxpayer Identification Number on Substitute Form W-9 for
additional instructions.
If backup withholding applies, the Depositary is required to withhold 31%
of any payments made to the stockholder. Backup withholding is not an
additional tax. Rather, the tax liability of persons subject to backup
withholding will be reduced by the amount of tax withheld. If backup
withholding results in an overpayment of taxes, a refund may be obtained from
the IRS.
PURPOSE OF SUBSTITUTE FORM W-9
To prevent backup federal income tax withholding on payments that are made
to a stockholder with respect to Shares purchased pursuant to the Offer, the
stockholder is required to notify the Depositary of such stockholder's correct
TIN by completing the form certifying that the TIN provided on the Substitute
Form W-9 is correct.
WHAT NUMBER TO GIVE THE DEPOSITARY
The stockholder is required to give the Depositary the social security
number or employer identification number of the record owner of the Shares. If
the Shares are registered in more than one name or are not in the name of the
actual owner, consult the enclosed Guidelines for Certification of Taxpayer
Identification Number on Substitute Form W-9 for additional guidelines on
which number to report.
MANUALLY SIGNED FACSIMILE COPIES OF THE LETTER OF TRANSMITTAL, PROPERLY
COMPLETED AND DULY EXECUTED, WILL BE ACCEPTED. THE LETTER OF TRANSMITTAL,
CERTIFICATES FOR SHARES AND ANY OTHER REQUIRED DOCUMENTS SHOULD BE SENT OR
DELIVERED BY EACH STOCKHOLDER OF THE COMPANY OR HIS BROKER, DEALER, COMMERCIAL
BANK, TRUST COMPANY OR OTHER NOMINEE TO THE DEPOSITARY AT ITS ADDRESS SET
FORTH ON THE FIRST PAGE OF THIS LETTER OF TRANSMITTAL.
Questions and requests for assistance may be directed to the Company, 5000
Executive Parkway, Suite 425, San Ramon, CA 94583, Telephone: (925) 543-7599,
Attention: E.A. Roskovensky or Ronald D. Stevens. Additional copies of the
Offer to Purchase, the Letter of Transmittal and other tender offer materials
may be obtained from the Company as set forth below, and will be promptly
furnished at the Purchaser's expense. You may also contact your broker,
dealer, commercial bank, trust company or other nominee for assistance
concerning the Offer.
10
<PAGE>
NOTICE OF GUARANTEED DELIVERY
FOR TENDER OF SHARES OF COMMON STOCK
OF
ROBERTSON-CECO CORPORATION
This form, or one substantially equivalent hereto, must be used to accept
the Offer (as defined below) if certificates for shares of Common Stock, par
value $0.01 per share (the "Shares"), of Robertson-Ceco Corporation, a
Delaware corporation, are not immediately available or the procedure for book-
entry transfer cannot be completed on a timely basis or time will not permit
all required documents to reach the Depositary prior to the Expiration Date
(as defined in the Offer to Purchase, dated May 4, 2000 (the "Offer to
Purchase")). This Notice of Guaranteed Delivery may be delivered by hand,
facsimile transmission or mailed to American Stock Transfer and Trust Company
(the "Depositary"). See "THE TENDER OFFER--Procedures for Tendering Shares" of
the Offer to Purchase.
The Depositary for the Offer is:
American Stock Transfer and Trust Company
By Mail: By Facsimile Transmission: By Hand or Overnight
Courier:
American Stock (718) 234-5001 American Stock
Transfer and Trust Transfer and Trust
Company Reorganization Company Reorganization
Department 40 Wall Department 40 Wall
Street, 46th Floor New Street, 46th Floor New
York, NY 10005 For Information Telephone: York, NY 10005
(718) 921-8200
DELIVERY OF THIS NOTICE OF GUARANTEED DELIVERY TO AN ADDRESS, OR
TRANSMISSION OF INSTRUMENTS VIA FACSIMILE TRANSMISSION, OTHER THAN AS SET
FORTH ABOVE, DOES NOT CONSTITUTE A VALID DELIVERY.
This Notice of Guaranteed Delivery is not to be used to guarantee
signatures. If a signature on a Letter of Transmittal is required to be
guaranteed by an "Eligible Institution" under the instructions thereto, such
signature guarantee must appear in the applicable space provided in the
signature box on the Letter of Transmittal.
The Eligible Institution that completes this form must communicate the
guarantee to the Depositary and must deliver the Letter of Transmittal or an
Agent's Message (as defined in the Offer to Purchase) and certificates for
Shares to the Depositary within the time period shown herein. Failure to do so
could result in a financial loss to such Eligible Institution.
<PAGE>
Ladies and Gentlemen:
The undersigned hereby tenders to RHH Acquisition Corp., upon the terms and
subject to the conditions set forth in the Offer to Purchase and in the
related Letter of Transmittal (which, together with any amendments or
supplements thereto, collectively constitute the "Offer"), receipt of each of
which is hereby acknowledged, the number of Shares indicated below, pursuant
to the guaranteed delivery procedure set forth under "THE TENDER OFFER--
Procedures for Tendering Shares" of the Offer to Purchase.
Number of Shares: _____________________________________________________________
Certificate No(s). (if available): ____________________________________________
Name(s) of Record Holder(s): __________________________________________________
If Shares will be tendered by book-entry transfer:
Name of Tendering Institutions: _____________________________________________
Account No.: ________________________________________________________________
Address: ______________________________________________________________________
Include Zip Code
Signature(s): _________________________________________________________________
Dated: , 2000
<PAGE>
THE GUARANTEE SET FORTH BELOW MUST BE COMPLETED
GUARANTEE
(NOT TO BE USED FOR SIGNATURE GUARANTEE)
The undersigned, as Eligible Institution (as such term is defined under
"THE TENDER OFFER--Procedures for Tendering Shares" of the Offer to Purchase),
hereby guarantees to deliver to the Depositary at one of its addresses set
forth above the certificates representing the Shares tendered hereby, in
proper form for transfer, or a Book-Entry Confirmation (as defined under "THE
TENDER OFFER--Acceptance for Payment and Payment for Shares" of the Offer to
Purchase) with respect to transfer of such Shares into the Depositary's
account at The Depository Trust Company, together with a properly completed
and duly executed Letter of Transmittal (or a manually signed facsimile
thereof) with any required signature guarantees or an Agent's Message (as
defined in the Offer to Purchase) in the case of a book-entry delivery of
Shares, and any other documents required by the Letter of Transmittal, all
within three New York Stock Exchange trading days after the date hereof.
Name of Firm: _________________________________________________________________
_______________________________________________________________________________
(Authorized Signature)
Name(s): ______________________________________________________________________
(Please Type or Print)
Title: ________________________________________________________________________
Address: ______________________________________________________________________
(Include a Zip Code)
Area Code and Telephone No.: __________________________________________________
Date: , 2000
DO NOT SEND CERTIFICATES FOR SHARES WITH THIS NOTICE OF GUARANTEED DELIVERY.
CERTIFICATES SHOULD BE SENT TOGETHER WITH A LETTER OF TRANSMITTAL.
<PAGE>
OFFER TO PURCHASE FOR CASH
ANY AND ALL OUTSTANDING SHARES OF COMMON STOCK
OF
ROBERTSON-CECO CORPORATION
AT
$11.50 NET PER SHARE
BY
RHH ACQUISITION CORP.
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 5:00 P.M., NEW YORK CITY
TIME, ON JUNE 2, 2000, UNLESS THE OFFER IS EXTENDED.
To Brokers, Dealers, Commercial Banks, Trust Companies and Other Nominees:
May 4, 2000
We are writing to you in connection with the offer by RHH Acquisition
Corp., a Delaware corporation ("Purchaser"), to purchase any and all
outstanding shares of Common Stock, par value $0.01 per share (the "Shares"),
of Robertson-Ceco Corporation, a Delaware corporation (the "Company"), at a
price of $11.50 per Share, net to the seller in cash, without interest
thereon, upon the terms and subject to the conditions set forth in the Offer
to Purchase, dated May 4, 2000 (the "Offer to Purchase"), and in the related
Letter of Transmittal (which, together with any amendments or supplements
thereto, collectively constitute the "Offer") enclosed herewith. The Offer is
being made in connection with the Agreement and Plan of Merger, dated as of
April 20, 2000 (the "Merger Agreement"), between Purchaser and the Company.
The Purchaser was formed by The Heico Companies, LLC. E.A. Roskovensky and
Andrew G.C. Sage II are also stockholders of Purchaser. Holders of Shares
whose certificates for such Shares (the "Certificates") are not immediately
available or who cannot deliver their Certificates and all other required
documents to American Stock Transfer and Trust Company (the "Depositary") or
complete the procedures for book-entry transfer prior to the Expiration Date
(as defined under "THE TENDER OFFER--Terms of the Offer" of the Offer to
Purchase) must tender their Shares according to the guaranteed delivery
procedures set forth under "THE TENDER OFFER--Procedures for Tendering Shares"
of the Offer to Purchase.
Please furnish copies of the enclosed materials to those of your clients
for whose accounts you hold Shares in your name or in the name of your
nominee.
Enclosed herewith for your information and for forwarding to your clients
are copies of the following documents:
1. The Offer to Purchase, dated May 4, 2000.
2. The Letter of Transmittal to tender Shares for your use and for the
information of your clients. Facsimile copies of the Letter of Transmittal
may be used to tender Shares.
3. A letter to stockholders of the Company from Stanley G. Berman,
Chairman of the Special Committee of the Board of Directors, together with
a Solicitation/Recommendation Statement on Schedule 14D-9 filed by the
Company with the Securities and Exchange Commission and mailed to the
stockholders of the Company.
4. The Notice of Guaranteed Delivery for Tender of Shares to be used to
accept the Offer if the guaranteed delivery procedures set forth under "THE
TENDER OFFER--Procedures for Tendering Shares" of the Offer to Purchase are
to be followed.
5. A printed form of a letter which may be sent to your clients for
whose accounts you hold Shares registered in your name, with space provided
for obtaining such clients' instructions with regard to the Offer.
6. Guidelines of the Internal Revenue Service for Certification of
Taxpayer Identification Number on Substitute Form W-9.
<PAGE>
7. A return envelope addressed to the Depositary.
YOUR PROMPT ACTION IS REQUESTED. WE URGE YOU TO CONTACT YOUR CLIENTS AS
PROMPTLY AS POSSIBLE. PLEASE NOTE THAT THE OFFER AND WITHDRAWAL RIGHTS WILL
EXPIRE AT 5:00 P.M., NEW YORK CITY TIME, ON JUNE 2, 2000, UNLESS THE OFFER IS
EXTENDED.
Please note the following:
1. The tender price is $11.50 per Share, net to the seller in cash,
without interest.
2. The Offer is being made for any and all of the outstanding Shares,
subject to the conditions set forth in the Offer to Purchase.
3. Tendering stockholders will not be obligated to pay brokerage fees or
commissions or, except as set forth in Instruction 6 of the Letter of
Transmittal, stock transfer taxes on the transfer of Shares pursuant to the
Offer. However, federal income tax backup withholding at a rate of 31% may
be required unless an exemption is available or unless the required
taxpayer identification information is provided. See "Important Tax
Information" of the Letter of Transmittal.
4. The Board of Directors of the Company (the "Board") by unanimous vote
of all directors present at a meeting held on April 20, 2000, based on,
among other things, the recommendation of a special committee of the Board
comprised of an independent director, (i) determined that the Merger is
advisable and that the terms of the Offer and Merger (as defined in the
Offer to Purchase) are fair to and in the best interests of the Company and
its stockholders, (ii) approved the Offer and the Merger and adopted and
approved the Merger Agreement and (iii) recommended that the Company's
stockholders accept the Offer and, if approval is required by applicable
law, approve the Merger and approve and adopt the Merger Agreement.
5. Notwithstanding any other provision of the Offer, payment for Shares
accepted for payment pursuant to the Offer will in all cases be made only
after timely receipt by the Depositary of (a) Certificates pursuant to the
procedures set forth under "THE TENDER OFFER--Procedures for Tendering
Shares" of the Offer to Purchase or a timely Book-Entry Confirmation (as
defined in the Offer to Purchase) with respect to such Shares, (b) a
properly completed and duly executed Letter of Transmittal (or a manually
signed facsimile thereof) with any required signature guarantees or an
Agent's Message (as defined in the Offer to Purchase) in connection with a
book-entry delivery of Shares, and (c) any other documents required by the
Letter of Transmittal. Accordingly, tendering stockholders may be paid at
different times depending upon when Certificates for Shares or Book-Entry
Confirmations are actually received by the Depositary.
In order to take advantage of the Offer, (i) a properly completed and duly
executed Letter of Transmittal (or a manually signed facsimile thereof) with
any required signature guarantees or an Agent's Message in connection with a
book-entry delivery of Shares, and any other documents required by the Letter
of Transmittal should be sent to the Depositary and (ii) Certificates
representing the tendered Shares or a timely Book-Entry Confirmation should be
delivered to the Depositary in accordance with the instructions set forth in
the Letter of Transmittal and the Offer to Purchase.
If holders of Shares wish to tender, but it is impracticable for them to
forward their Certificates or other required documents or complete the
procedures for book-entry transfer prior to the Expiration Date, a tender may
be effected by following the guaranteed delivery procedures specified under
"THE TENDER OFFER--Procedures for Tendering Shares" of the Offer to Purchase.
None of Purchaser or any officer, director, agent or other representative
of Purchaser will pay any fees or commissions to any broker, dealer or other
person (other than the Depositary as described in the Offer to Purchase) for
soliciting tenders of Shares pursuant to the Offer. Purchaser will, however,
upon request, reimburse you for customary mailing and handling expenses
incurred by you in forwarding any of the enclosed materials to your clients.
Purchaser will pay or cause to be paid any transfer taxes payable on the
transfer of Shares to it, except as otherwise provided in Instruction 6 of the
Letter of Transmittal.
<PAGE>
Any inquiries you may have with respect to the Offer should be addressed to
the Company, 5000 Executive Parkway, Suite 425, San Ramon, CA 94583,
Telephone: (925) 543-7599, Attention: E.A. Roskovensky or Ronald D. Stevens.
Additional copies of the enclosed materials may be obtained from the
Company or from brokers, dealers, commercial banks or trust companies.
Very truly yours,
RHH ACQUISITION CORP.
NOTHING CONTAINED HEREIN OR IN THE ENCLOSED DOCUMENTS SHALL CONSTITUTE YOU
OR ANY OTHER PERSON THE AGENT OF PURCHASER, THE DEPOSITARY, OR ANY AFFILIATE
OF ANY OF THEM, OR AUTHORIZE YOU OR ANY OTHER PERSON TO MAKE ANY STATEMENT OR
USE ANY DOCUMENT ON BEHALF OF ANY OF THEM IN CONNECTION WITH THE OFFER OTHER
THAN THE ENCLOSED DOCUMENTS AND THE STATEMENTS CONTAINED THEREIN.
<PAGE>
Robertson-Ceco Accepts Acquisition Proposal
- -------------------------------------------
San Ramon, California, April 20, 2000 (Dollar amounts in thousands except
share and per share amounts) - Robertson-Ceco Corporation (NYSE: RHH)
("Robertson-Ceco") announced today that it has accepted a proposal made by The
Heico Companies, LLC ("Heico") for the acquisition by Heico of all of the
outstanding common stock of Robertson-Ceco not now owned by Heico and its
affiliates for $11.50 per share. Heico and its affiliates currently own
approximately 11,182,863 shares of Robertson-Ceco common stock, or about 69.5%
of all outstanding common shares. Michael E. Heisley, Sr. is the Chief Executive
Officer of Robertson-Ceco, Heico and Heico Holding, Inc.
The Robertson-Ceco Board of Directors approved an Agreement and Plan of
Merger (the "Agreement") with RHH Acquisition Corp. ("RHH Acquisition"), a
subsidiary of Heico, after an independent director Special Committee, determined
the transaction was fair to Robertson-Ceco shareholders. The Special Committee
was advised by CIBC World Markets Corp. and legal counsel, Winthrop, Stimson,
Putnam & Roberts. Pursuant to the Agreement, which contains customary
conditions, RHH Acquisition will commence as promptly as practicable a cash
tender offer for any and all shares of Robertson-Ceco common stock at a price of
$11.50 net to the seller in cash,
<PAGE>
subject to the condition that the number of shares tendered when combined with
those already owned by Heico equal at least 90% of the shares of common stock
issued and outstanding. Following the tender offer, RHH Acquisition will be
merged with and into Robertson-Ceco and holders of Robertson-Ceco common stock
(other than Heico and its affiliates) will have their shares converted into the
right to receive $11.50 in cash. If RHH Acquisition acquires enough shares in
the tender offer so that Heico and its affiliates own more than 90% of all
outstanding shares of Robertson-Ceco common stock, the merger will take place
without a vote of Robertson-Ceco's shareholders immediately after the tender
offer is consummated.
Robertson-Ceco also announced today that it has reached an agreement for
the settlement of the two class action lawsuits filed in the Court of Chancery
of the State of Delaware following the announcement in December of Heico's
original acquisition proposal.
Also today, Robertson-Ceco reported net income for the quarter ended March
31, 2000 of $3,561 or $.22 per share, compared to $3,728, or $.23 per share,
last year, a .4% decrease. Revenues were $68,603 in the first quarter of 2000
compared to the prior year's $59,864, a 14.6% increase.
"Operating results for the first quarter of 2000 were good considering we
incurred approximately $1.1 million in start up losses at the new Tennessee
plant," said Mr. E.A. Roskovensky, President and Chief Operating Officer. "The
strong backlog at the beginning of the year resulted in higher revenues than in
the prior year. Incoming orders have continued to be good in most of the
regions. Excluding the Tennessee startup costs,
<PAGE>
first quarter margins still declined slightly. Quarter end backlog is close to
beginning of the year levels", he concluded.
Headquartered in San Ramon, California, Robertson-Ceco Corporation is a
leading manufacturer of custom-engineered metal buildings for commercial and
industrial uses.
The Heico Companies, LLC, a privately owned holding company headquartered
in Chicago, owns and operates a diversified portfolio of over thirty companies.
Activities include construction equipment and services, heavy machinery,
materials handling, food processing, and other interests.
Investors and security holders are strongly advised to read both the tender
offer statement and the solicitation/recommendation statement regarding the
tender offer referred to in this press release, when they become available,
because they will contain important information. The tender offer statement will
be filed by RHH Acquisition with the Securities and Exchange Commission ("SEC"),
and the solicitation/recommendation statement will be filed by Robertson-Ceco
with the SEC. Investors and security holders may obtain a free copy of these
statements (when available) and other documents filed by RHH Acquisition and
Robertson-Ceco at the SEC's web site at www.sec.gov. The tender offer statement
and related materials and the solicitation/recommendation statement and related
materials may be obtained for free by directing such requests to Robertson-Ceco.
<PAGE>
ROBERTSON-CECO CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
-----------------------------------------------
(In thousands, except per share data)
(Unaudited)
Three Months Ended
March 31
------------------
2000 1999
------- -------
Net Revenues......................... $68,603 $59,864
Costs of Sales....................... 56,673 48,284
------- -------
Gross Profit......................... 11,930 11,580
Selling, General and Administrative.. 6,898 6,050
------- -------
Operating Income..................... 5,032 5,530
------- -------
Other Income (Expense):
Interest expense................... (182) (47)
Other income - net................. 906 544
------- -------
724 497
Income Before Income Taxes........... 5,756 6,027
Income Taxes......................... 2,195 2,299
------- -------
Net Income........................... $ 3,561 $ 3,728
======= =======
Basic/Diluted Income Per Common Share: $ .22 $ .23
======= =======
Weighted average number of common
shares outstanding................. 16,063 16,063
======= =======
<PAGE>
OFFER TO PURCHASE FOR CASH
ANY AND ALL OUTSTANDING SHARES OF COMMON STOCK
OF
ROBERTSON-CECO CORPORATION
AT
$11.50 NET PER SHARE
BY
RHH ACQUISITION CORP.
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 5:00 P.M., NEW YORK CITY
TIME, ON JUNE 2, 2000, UNLESS THE OFFER IS EXTENDED.
To Our Clients:
Enclosed for your consideration are the Offer to Purchase, dated May 4,
2000 (the "Offer to Purchase"), and the related Letter of Transmittal (which,
together with any amendments or supplements thereto, collectively constitute
the "Offer") relating to an offer by RHH Acquisition Corp., a Delaware
corporation ("Purchaser"), to purchase any and all outstanding shares of
Common Stock, par value $0.01 per share (the "Shares"), of Robertson-Ceco
Corporation, a Delaware corporation (the "Company"), at a price of $11.50 per
Share, net to the seller in cash, without interest thereon, upon the terms and
subject to the conditions set forth in the Offer. The Offer is being made in
connection with the Agreement and Plan of Merger, dated as of April 20, 2000
(the "Merger Agreement"), between Purchaser and the Company. The Purchaser was
formed by The Heico Companies, LLC. E.A. Roskovensky, and Andrew G.C. Sage II
are also stockholders of Purchaser. This material is being forwarded to you as
the beneficial owner of Shares carried by us in your account but not
registered in your name.
WE ARE (OR OUR NOMINEE IS) THE HOLDER OF RECORD OF SHARES HELD BY US FOR
YOUR ACCOUNT. A TENDER OF SUCH SHARES CAN BE MADE ONLY BY US AS THE HOLDER OF
RECORD AND PURSUANT TO YOUR INSTRUCTIONS. THE LETTER OF TRANSMITTAL IS
FURNISHED TO YOU FOR YOUR INFORMATION ONLY AND CANNOT BE USED BY YOU TO TENDER
SHARES HELD BY US FOR YOUR ACCOUNT.
Accordingly, we request instructions as to whether you wish to have us
tender any or all of the Shares held by us for your account pursuant to the
terms and conditions set forth in the Offer.
Please note the following:
1. The tender price is $11.50 per Share, net to the seller in cash,
without interest.
2. The Offer is being made for any and all of the outstanding Shares,
subject to the conditions set forth in the Offer to Purchase.
3. Tendering stockholders will not be obligated to pay brokerage fees or
commissions or, except as set forth in Instruction 6 of the Letter of
Transmittal, stock transfer taxes on the transfer of Shares pursuant to the
Offer. However, federal income tax backup withholding at a rate of 31% may
be required, unless an exemption is available or unless the required
taxpayer identification information is provided. See "Important Tax
Information" of the Letter of Transmittal.
4. The Board of Directors of the Company (the "Board") by unanimous vote
of all directors present at a meeting held on April 20, 2000, based on,
among other things, the recommendation of a special committee of the Board
comprised of an independent director, (i) determined that the Merger is
advisable and that the terms of the Offer and Merger (as defined in the
Offer to Purchase) are fair to and in the best interests of the Company and
its stockholders, (ii) approved the Offer and the Merger and adopted and
approved the Merger Agreement and (iii) recommended that the Company's
stockholders accept the Offer and, if approval is required by applicable
law, approve the Merger and approve and adopt the Merger Agreement.
<PAGE>
5. Notwithstanding any other provision of the Offer, payment for Shares
accepted for payment pursuant to the Offer will in all cases be made only
after timely receipt by American Stock Transfer and Trust Company (the
"Depositary") of (a) certificates for Shares pursuant to the procedures set
forth under "THE TENDER OFFER--Procedures for Tendering Shares" of the
Offer to Purchase or a timely Book-Entry Confirmation (as defined in the
Offer to Purchase) with respect to such Shares, (b) a properly completed
and duly executed Letter of Transmittal (or a manually signed facsimile
thereof) with any required signature guarantees or an Agent's Message (as
defined in the Offer to Purchase) in connection with a book-entry delivery
of Shares, and (c) any other documents required by the Letter of
Transmittal. Accordingly, tendering stockholders may be paid at different
times depending upon when certificates for Shares or Book-Entry
Confirmations are actually received by the Depositary.
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 5:00 P.M., NEW YORK CITY
TIME, ON JUNE 2, 2000, UNLESS THE OFFER IS EXTENDED.
If you wish to have us tender any or all of the Shares held by us for your
account, please so instruct us by completing, executing, detaching and
returning to us the instruction form set forth below. If you authorize the
tender of your Shares, all such Shares will be tendered unless otherwise
indicated in such instruction form. An envelope to return your instruction to
us is enclosed. PLEASE FORWARD YOUR INSTRUCTIONS TO US AS SOON AS POSSIBLE TO
ALLOW US AMPLE TIME TO TENDER YOUR SHARES ON YOUR BEHALF PRIOR TO THE
EXPIRATION OF THE OFFER.
The Offer is not being made to, nor will tenders be accepted from or on
behalf of, holders of Shares residing in any jurisdiction in which the making
of the Offer or acceptance thereof would not be in compliance with the
securities laws of such jurisdiction. However, Purchaser may, in its
discretion, take such action as it may deem necessary to make the Offer in any
jurisdiction and extend the Offer to holders of Shares in such jurisdiction.
In any jurisdiction where the securities, blue sky or other laws require
the Offer to be made by a licensed broker or dealer, the Offer will be deemed
to be made on behalf of Purchaser by one or more registered brokers or dealers
licensed under the laws of such jurisdiction.
<PAGE>
INSTRUCTIONS WITH RESPECT TO
THE OFFER TO PURCHASE FOR CASH
ANY AND ALL OUTSTANDING SHARES OF COMMON STOCK
OF
ROBERTSON-CECO CORPORATION
The undersigned acknowledge(s) receipt of your letter and the enclosed
Offer to Purchase, dated May 4, 2000, and the related Letter of Transmittal
(which, together with any amendments or supplements thereto, collectively
constitute the "Offer") in connection with the offer by RHH Acquisition Corp.,
a Delaware corporation ("Purchaser"), to purchase any and all outstanding
shares of Common Stock, par value $0.01 per share (the "Shares"), of
Robertson-Ceco Corporation, a Delaware corporation (the "Company"), at a price
of $11.50 per Share, net to the seller in cash, without interest thereon, upon
the terms and subject to the conditions set forth in the Offer. The Offer is
being made in connection with the Agreement and Plan of Merger dated as of
April 20, 2000, between Purchaser and the Company. The Purchaser was formed by
The Heico Companies, LLC. E.A. Roskovensky and Andrew G.C. Sage II are also
stockholders of Purchaser.
This will instruct you to tender to Purchaser the number of Shares
indicated below (or if no number is indicated below, all Shares) which are
held by you for the account of the undersigned, upon the terms and subject to
the conditions set forth in the Offer.
Number of Shares to be Tendered:* ___ -------------------------------------
Signature
Account Number: _____________________ -------------------------------------
Print Name
Date: _______________________________ -------------------------------------
Print Address
-------------------------------------
Area Code and Telephone
-------------------------------------
Taxpayer I.D.
- --------
*Unless otherwise indicated, it will be assumed that all Shares held by us
for your account are to be tendered.
<PAGE>
GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION
NUMBER ON SUBSTITUTE FORM W-9
Guidelines for Determining the Proper Identification Number to Give the
Payer.--Social Security numbers have nine digits separated by two hyphens:
i.e. 000-00-0000. Employer identification numbers have nine digits separated
by only one hyphen: i.e. 00-0000000. The table below will help determine the
number to give the payer.
- --------------------------------------- ---------------------------------------
<TABLE>
<CAPTION>
Give the
For this type of account: SOCIAL SECURITY
number of--
- -----------------------------------------------
<S> <C>
1. An individual's account The individual
2. Two or more individuals The actual owner
(joint account) of the account
or, if combined
funds, any one of
the
individuals(1)
3. Husband and wife (joint The actual owner
account) of the account
or, if joint
funds, either
person(1)
4. Custodian account of a The minor(2)
minor (Uniform Gift to
Minors Act)
5. Adult and minor (joint The adult or, if
account) the minor is the
only contributor,
the minor(1)
6. Account in the name of The ward, minor,
guardian or committee for a or incompetent
designated ward, minor, or person(3)
incompetent person
7. a. The usual revocable The grantor-
savings trust account trustee(1)
(grantor is also
trustee);
b. So-called trust account The actual
that is not a legal or owner(1)
valid trust under State
law
8. Sole proprietorship The owner(4)
account
</TABLE>
<TABLE>
<CAPTION>
Give the EMPLOYER
For this type of account: IDENTIFICATION
number of--
--------
<S> <C>
9. A valid trust, estate, or The legal entity
pension trust (Do not furnish
the identifying
number of the
personal
representative or
trustee unless
the legal entity
itself is not
designated in the
account
title.)(5)
10. Corporate account The corporation
11. Religious, charitable, or The organization
educational organization
account
12. Partnership account held The partnership
in the name of the business
13. Association, club, or The organization
other tax-exempt
organization
14. A broker or registered The broker or
nominee nominee
15. Account with the The public entity
Department of Agriculture
in the name of a public
entity (such as a State or
local government, school
district, or prison) that
receives agricultural
program payments.
</TABLE>
---------------------------------------
(1) List first and circle the name of the person whose number you furnish.
- ---------------------------------------
(2) Circle the minor's name and furnish the minor's social security number.
(3) Circle the ward's, minor's or incompetent person's name and furnish such
person's social security number.
(4) You must show your individual name, but you may also enter business or
"doing business as" name. You may use either your SSN or EIN (if you have
one).
(5) List first and circle the name of the legal trust, estate, or pension
trust.
Note: If no name is circled when there is more than one name, the number will
be considered to be that of the first name listed.
<PAGE>
GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION
NUMBER OF SUBSTITUTE FORM W-9
Page 2
Obtaining a Number
If you don't have a taxpayer identification number or you don't know your
number, obtain Form SS-5, Application for a Social Security Number Card (for
individuals), or Form SS-4, Application for Employer Identification Number
(for businesses and all other entities), at the local office of the Social
Security Administration or the Internal Revenue Service and apply for a
number.
Payees Exempt from Backup Withholding
Payees specifically exempted from backup withholding on ALL payments include
the following:
. A corporation.
. A financial institution.
. An organization exempt from tax under section 501(a), or an individual re-
tirement plan, or a custodial account under Section 403(b)(7).
. The United States or any agency or instrumentality thereof.
. A State, the District of Columbia, a possession of the United States, or
any subdivision or instrumentality thereof.
. A foreign government, a political subdivision of a foreign government, or
any agency or instrumentality thereof.
. An international organization or any agency, or instrumentality thereof.
. A registered dealer in securities or commodities registered in the U.S. or
a possession of the U.S.
. A real estate investment trust.
. A common trust fund operated by a bank under section 584(a).
. An exempt charitable remainder trust, or a non-exempt trust described in
section 4947(a)(1).
. An entity registered at all times under the Investment Company Act of
1940.
. A foreign central bank of issue.
Payments Exempt from Backup Withholding
Payments of dividends and patronage dividends not generally subject to backup
withholding include the following:
. Payments to partnerships not engaged in a trade or business in the U.S.
and which have at least one nonresident partner.
. Payments of patronage dividends not paid in money.
. Payments made by certain foreign corporations.
. Payments to nonresident aliens subject to withholding under section 1441.
. Section 404(k) payments made by an ESOP.
Payments of interest not generally subject to backup withholding include the
following:
. Payments of interest on obligations issued by individuals. Note: You may
be subject to backup withholding if this interest is $600 or more and is
paid in the course of the payer's trade or business and you have not pro-
vided your correct taxpayer identification number to the payer.
. Payments of tax-exempt interest (including exempt-interest dividends under
section 852).
. Payments described in section 6049(b)(5) to nonresident aliens.
. Payments on tax-free covenant bonds under section 1451.
. Payments made by certain foreign organizations.
. Payments made to a nominee.
Exempt payees described above should file a Substitute Form W-9 to avoid
possible erroneous backup withholding.
FILE THIS FORM WITH THE PAYER, FURNISH YOUR TAXPAYER IDENTIFICATION NUMBER,
WRITE "EXEMPT" ON THE FACE OF THE FORM. SIGN AND DATE THE FORM AND RETURN IT
TO THE PAYER. IF YOU ARE NOT A NON-RESIDENT OR FOREIGN ENTITY NOT SUBJECT TO
BACKUP WITHHOLDING, FILE WITH PAYER A COMPLETED INTERNAL REVENUE FORM W-8
(CERTIFICATE OF FOREIGN STATUS).
Certain payments other than interest, dividends, and patronage dividends,
that are not subject to information reporting are also not subject to backup
withholding. For details, see sections 6041, 6041A(a), 6042, 6044, 6045, 6049,
6050A, and 6050N, and the regulations under those sections.
Privacy Act Notice.--Section 6109 requires most recipients of dividend, inter-
est, or other payments to give taxpayer identification numbers to payers who
must report the payments to IRS. IRS uses the numbers for identification pur-
poses and to help verify the accuracy of tax returns. Payers must be given the
numbers whether or not recipients are required to file a tax return. Payer
must generally withhold 31% of taxable interest, dividend, and certain other
payments to a payee who does not furnish a taxpayer identification number to a
payer. Certain penalties may also apply.
Penalties
(1) Penalty for Failure to Furnish Taxpayer Identification Number.--If you
fail to furnish your taxpayer identification number to a payer, you are sub-
ject to a penalty of $50 for each such failure unless your failure is due to
reasonable cause and not to willful neglect.
(2) Civil Penalty for False Information With Respect to Withholding.--If you
make a false statement with no reasonable basis which results in no imposition
of backup withholding, you are subject to a penalty of $500.
(3) Criminal Penalty for Falsifying Information.--Willfully falsifying certi-
fications or affirmations may subject you to criminal penalties including
fines and/or imprisonment.
FOR ADDITIONAL INFORMATION CONTACT YOUR TAX CONSULTANT OR THE INTERNAL REVENUE
SERVICE
Unless otherwise noted herein, all references to section numbers or regula-
tions are references to the Internal Revenue Code of 1986, as amended, and the
regulations promulgated thereunder.
<PAGE>
AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER (this "AGREEMENT"), dated as of April 20,
2000, between RHH Acquisition Corp., a Delaware corporation ("PURCHASER"), and
Robertson-Ceco Corporation, a Delaware corporation (the "COMPANY").
RECITALS
WHEREAS, Purchaser beneficially owns, directly and through its affiliates,
an aggregate of 11,182,863 shares (the "PURCHASER SHARES") of common stock, par
value $.01 per share (the "SHARES" or the "COMMON STOCK"), of the Company,
constituting approximately 69.5% of the total outstanding Shares, and has
proposed to the Company that Purchaser acquire all of the remaining issued and
outstanding Shares;
WHEREAS, Purchaser is an indirect subsidiary of The Heico Companies, LLC;
WHEREAS, the board of directors of the Company (the "COMPANY BOARD")
established a special committee of one independent director to consider
Purchaser's proposal (the "SPECIAL COMMITTEE") and the Special Committee has
unanimously recommended that the Company Board approve the Offer (as defined
below), and approve and authorize the Merger (as defined below) and this
Agreement;
WHEREAS, in furtherance of Purchaser's acquisition of all the remaining
issued and outstanding Shares, it is proposed that Purchaser may elect to make a
cash tender offer (the "OFFER") in compliance with Section 14(d)(i) of the
Securities Exchange Act of 1934, as amended (the "EXCHANGE ACT"), to acquire any
and all of the issued and outstanding Shares for $11.50 per Share (the "PER
SHARE AMOUNT"), net to the sellers in cash, upon the terms and subject to the
conditions of this Agreement and the Offer;
WHEREAS, the respective boards of directors of Purchaser and the Company
have deemed it advisable and in the best interests of their respective
stockholders to consummate, and have approved, the merger of Purchaser with and
into the Company (the "MERGER"), upon the terms and subject to the conditions
set forth herein;
WHEREAS, the Company Board has approved the Offer and resolved to recommend
the Offer to the Company's stockholders; and
WHEREAS, the parties hereto desire to make certain representations,
warranties, covenants and agreements in connection with the transactions
contemplated by this Agreement.
NOW, THEREFORE, in consideration of the foregoing, and of the
representations, warranties, covenants and agreements contained herein, the
parties hereto hereby agree as follows:
<PAGE>
ARTICLE 1
1. THE OFFER.
1.1. THE OFFER. (a) Subject to the provisions of this Agreement and
this Agreement not having been terminated, Purchaser shall commence, as promptly
as practicable, within the meaning of Rule 14d-2 under the Exchange Act, the
Offer. The obligation of Purchaser to commence the Offer and to accept for
payment, and to pay for any shares of Common Stock tendered pursuant to the
Offer shall be subject to the satisfaction of the conditions set forth in
EXHIBIT A and the terms and conditions of this Agreement (the "OFFER
CONDITIONS"). Subject to the provisions of this Agreement, the Offer shall
initially expire on the 20th business day from and after the date the Offer is
commenced, including the date of the commencement of the Offer as the first
business day in accordance with Rule 14d-2, unless this Agreement is terminated
in accordance with ARTICLE 8, in which case the Offer (whether or not previously
extended in accordance with the terms hereof) shall expire on such date of
termination.
(b) Purchaser expressly reserves the right to waive any condition set
forth on Exhibit A without the consent of the Company, and to make any other
changes in the terms and conditions of the Offer. However, without the prior
written consent of the Company, Purchaser shall not (i) reduce the maximum
number of Shares subject to the Offer, (ii) decrease the Per Share Amount, (iii)
change the form of consideration payable in the Offer, or (iv) amend or modify
the Offer Conditions in any manner adverse to the holders of Shares.
Notwithstanding the foregoing, Purchaser may, without the consent of the
Company, extend the Offer at any time and from time to time: (i) if at the then
scheduled expiration date of the Offer any of the Offer Conditions shall not
have been satisfied or waived, until such time as all such conditions shall have
been satisfied or waived; (ii) for any period required by any statute or rule,
regulation, interpretation or position of the Securities and Exchange Commission
(the "SEC") or its staff applicable to the Offer; (iii) for any period required
by applicable law in connection with an increase in the consideration to be paid
pursuant to the Offer; and (iv) from time to time, for an aggregate period of
not more than ten (10) business days (for all such extensions under this clause
(iv)) beyond the latest expiration date that would be permitted under clause
(i), (ii) or (iii) of this sentence. So long as this Agreement is in effect and
the Offer Conditions have not been satisfied or waived, Purchaser shall cause
the Offer not to expire. Subject to and in accordance with the terms and
conditions of the Offer and this Agreement (but subject to the right of
termination in accordance with ARTICLE 8), Purchaser shall accept for payment
and pay for, in accordance with the terms of the Offer, all Shares validly
tendered and not withdrawn pursuant to the Offer as soon as practicable after
the expiration of the Offer. In addition to the foregoing, Purchaser may provide
for a "subsequent offering period" to the extent provided in Rule 14d-11 under
the Exchange Act, as in effect as of January 24, 2000, after the purchase of
Shares pursuant to the Offer.
1.2. ACTIONS BY PURCHASER. (a) As soon as reasonably practicable following
execution of this Agreement, Purchaser shall file with the SEC a Tender Offer
Statement and a Rule 13e-3 Transaction Statement on Schedule TO, including all
exhibits thereto (together with all amendments and supplements thereto, the
"SCHEDULE TO") with respect to the Offer, the
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Merger and the other transactions contemplated hereby. The Schedule TO shall
contain or incorporate by reference an offer to purchase (the "OFFER TO
PURCHASE") and forms of the related letter of transmittal and any related
documents (the Schedule TO, the Offer to Purchase and such other documents,
together with all supplements or amendments thereto, collectively, the "OFFER
DOCUMENTS"). The Offer Documents shall comply in all material respects with the
requirements of the Exchange Act. On the date filed with the SEC and on the date
first published, sent or given to the Company's stockholders, the Offer
Documents shall not contain any untrue statement of a material fact or omit to
state any material fact required to be stated therein or necessary in order to
make the statements therein, in light of the circumstances under which they were
made, not misleading, except that no representation is made by Purchaser with
respect to information supplied by the Company for inclusion in the Offer
Documents. Purchaser agrees to correct promptly, and the Company agrees to
notify Purchaser promptly as to, any information provided by it for use in the
Offer Documents, if and to the extent such information shall have become false
or misleading in any material respect, and Purchaser further agrees to take all
steps necessary to cause the Offer Documents as so corrected to be filed with
the SEC and to be disseminated to all of the holders of Shares, in each case as
and to the extent required by applicable federal securities laws. Purchaser
agrees to provide the Company and the Special Committee and its counsel in
writing any comments Purchaser or its counsel may receive from the SEC or its
staff with respect to the Offer Documents promptly after receipt of such
comments. Purchaser shall use its reasonable best efforts to respond to such
comments promptly and shall provide the Company copies of any written responses
and telephonic notification of any verbal responses by Purchaser or its counsel.
1.3. ACTIONS BY THE COMPANY. (a) The Company hereby approves the Offer and
represents and warrants that (i) the Special Committee has recommended that the
Company Board approve the Offer and the Merger, and approve and authorize this
Agreement, and the other transactions contemplated hereby and (ii) the Company
Board at a meeting duly called and held, has, based on the recommendation of the
Special Committee described in the preceding clause (i), duly adopted
resolutions: (A) approving the Offer and the Merger and approving and adopting
this Agreement, (B) determining that the Merger is advisable and that the terms
of the Offer and Merger are fair to, and in the best interests of, the Company
and the Company's stockholders, and (C) recommending that the Company's
stockholders accept the Offer and, if approval is required by applicable law,
approve the Merger and approve and adopt this Agreement. The Company hereby
consents to the inclusion in the Offer Documents of the recommendation of the
Company Board and the recommendation of the Special Committee described in the
first sentence of this SECTION 1.3(a). The Company shall provide for inclusion
in the Offer Documents any information reasonably requested by Purchaser, and to
the extent requested by Purchaser, the Company shall cooperate in the
preparation of the Offer Documents. The Company further represents and warrants
that (i) the Special Committee has been duly authorized and constituted, and
(ii) the Special Committee, at a meeting thereof duly called, determined that
this Agreement, the Merger and the Offer are fair to and in the best interests
of the stockholders of the Company (other than Purchaser and its affiliates).
(b) As soon as reasonably practicable on the date of the commencement
of the Offer, the Company shall file with the SEC a Solicitation/Recommendation
Statement on Schedule 14d-9 with respect to the Offer (such Schedule 14d-9,
together with all amendments
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and supplements thereto, "SCHEDULE 14D-9") containing the recommendations of the
Company Board and the Special Committee described in SECTION 1.3(a) and shall
disseminate the Schedule 14D-9 to the stockholders of the Company to the extent
required by Rule 14D-9 promulgated under the Exchange Act and any other
applicable federal or state securities laws. To the extent practicable, the
Company shall cooperate with Purchaser in mailing or otherwise disseminating the
Schedule 14D-9 with the appropriate Offer Documents to the Company's
stockholders. Purchaser and its counsel shall be given an opportunity to review
and comment upon the Schedule 14D-9 prior to the filing thereof with the SEC.
The Schedule 14D-9 shall comply in all material respects with the requirements
of the Exchange Act. On the date filed with the SEC and on the date first
published, sent or given to the Company's stockholders, the Schedule 14D-9 shall
not contain any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary in order to make the
statements therein, in light of the circumstances under which they were made,
not misleading, except that no representation is made by the Company with
respect to information supplied by Purchaser for inclusion in the Schedule 14D-
9. The Company agrees to correct promptly, and Purchaser agrees to notify the
Company promptly as to, any information provided by it for use in the Schedule
14D-9, if and to the extent such information shall have become false or
misleading in any material respect, and the Company further agrees to take all
steps necessary to cause the Schedule 14D-9 as so corrected to be filed with the
SEC and to be disseminated to all of the holders of Shares, in each case as and
to the extent required by applicable federal securities laws. The Company agrees
to provide Purchaser and its counsel in writing any comments the Company or its
counsel may receive from the SEC or its staff with respect to the Schedule 14D-9
promptly after the receipt of such comments. The Company agrees to use its
reasonable best efforts, after consultation with Purchaser, to respond promptly
to all such comments of and requests by the SEC. The Company shall provide
Purchaser copies of any written responses and telephonic notification of any
verbal responses by the Company and its counsel.
(c) In connection with the Offer, the Company shall promptly, or shall
cause its transfer agent to promptly, furnish Purchaser with mailing labels
containing the names and addresses of the record holders of Shares, each as of
the most recent date together with copies of all lists of stockholders and
security position listings and all other information in the Company's possession
or control regarding the beneficial owners of Common Stock, and shall furnish to
Purchaser such information and assistance (including updated lists of
stockholders, security position listings and computer files) as Purchaser may
reasonably request in communicating the Offer to the Company's stockholders.
Subject to the requirements of applicable law, and except for such steps as are
necessary to disseminate the Offer Documents and any other documents necessary
to consummate the Offer and the Merger, Purchaser shall hold in confidence the
information contained in any of such labels, lists and files, shall use such
information only in connection with the Offer and the Merger, and, if this
Agreement is terminated in accordance with Section 8.1, shall deliver to the
Company all copies of such information then in their possession.
(d) Contemporaneously with the consummation of the Offer, the Company
shall make a loan (the "LOAN") to the extent not prohibited by applicable law to
Purchaser in an amount sufficient to allow Purchaser to acquire all of the
shares of Common Stock pursuant to the Offer. Purchaser shall pledge all shares
of Common Stock held by Purchaser as security for
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<PAGE>
the Loan to the extent such pledge is not prohibited by applicable law and to
the extent such pledge would not render the Loan violative of applicable law.
The Loan will bear interest at a rate equal to the Company's cost of funds which
shall be payable in arrears on maturity. The Loan will have a maturity of 120
days, unless extended by the Company and Purchaser.
ARTICLE 2
2. THE MERGER.
2.1. THE MERGER. At the Effective Time, subject to the terms and conditions
of this Agreement and the applicable provisions of the Delaware General
Corporation Law (the "DGCL"), Purchaser shall be merged with and into the
Company and the separate corporate existence of Purchaser shall thereupon cease.
The Company shall be the surviving corporation in the Merger (sometimes
hereinafter referred to as the "SURVIVING CORPORATION"). The Merger shall have
the effects specified in the DGCL.
2.2. THE CLOSING. Subject to the terms and conditions of this Agreement,
the closing of the Merger (the "CLOSING") shall take place at the offices of
McDermott, Will & Emery, 227 West Monroe Street, Chicago, Illinois 60606, at
10:00 a.m., local time, as soon as practicable following the satisfaction (or
waiver if permissible) of the conditions set forth in ARTICLE 7. The date on
which the Closing occurs is hereinafter referred to as the "CLOSING DATE."
2.3. EFFECTIVE TIME. If all the conditions to the Merger set forth in
ARTICLE 7 shall have been fulfilled or waived in accordance herewith and this
Agreement shall not have been terminated as provided in ARTICLE 8 (and subject
to SECTION 3.6), the parties hereto shall cause a certificate of merger meeting
the requirements of Section 251 of the DGCL ("CERTIFICATE OF MERGER") to be
properly executed and filed with the Secretary of State of the State of Delaware
in accordance with such Section on the Closing Date. The Merger shall become
effective at the time of filing of the Certificate of Merger with the Secretary
of State of the State of Delaware in accordance with the DGCL or at such later
time which the parties hereto shall have agreed upon and designated in such
filing as the effective time of the Merger (the "EFFECTIVE TIME").
2.4 CERTIFICATE OF INCORPORATION, BY-LAWS, DIRECTORS AND OFFICERS OF THE
SURVIVING CORPORATION. Unless otherwise agreed by the Company and Purchaser
prior to the Closing, at the Effective Time:
(a) The certificate of incorporation of Purchaser as in effect
immediately prior to the Effective Time shall be the certificate of
incorporation of the Surviving Corporation, until duly amended in accordance
with applicable law and the terms thereof;
(b) The by-laws of Purchaser as in effect immediately prior to the
Effective Time shall be the by-laws of the Surviving Corporation, until duly
amended in accordance with applicable law, the terms thereof, and the Surviving
Corporation's certificate of incorporation;
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(c) The officers of the Company immediately prior to the Effective
Time shall continue to serve in their respective offices of the Surviving
Corporation from and after the Effective Time, until their successors are duly
appointed or elected in accordance with applicable law and the Surviving
Corporation's certificate of incorporation and by-laws; and
(d) The directors of Purchaser immediately prior to the Effective Time
shall be the directors of the Surviving Corporation from and after the Effective
Time, until their successors are duly appointed or elected in accordance with
applicable law, and the Surviving Corporation's certificate of incorporation and
by-laws.
ARTICLE 3
3. EFFECT OF THE MERGER ON SECURITIES OF PURCHASER AND THE COMPANY.
3.1. PURCHASER STOCK. At the Effective Time, each share of common stock,
$.01 par value per share, of Purchaser that is outstanding immediately prior to
the Effective Time shall be converted into and exchanged for one validly issued,
fully paid and non-assessable share of common stock, $.01 par value per share,
of the Surviving Corporation.
3.2. COMPANY SECURITIES. (a) Other than as set forth in the immediately
following sentence, at the Effective Time, each share of Common Stock issued and
outstanding immediately prior to the Effective Time shall, by virtue of the
Merger and without any action on the part of Purchaser, the Company or the
holder thereof, be converted into the right to receive the Per Share Amount or
any higher per share price as may be paid in the Offer, without interest (the
"MERGER CONSIDERATION") in accordance with SECTION 3.3 upon the surrender of a
certificate or certificates (a "CERTIFICATE") representing such shares of Common
Stock. The following Shares shall not be converted into the right to receive the
Per Share Amount at the Effective Time: (i) shares of Common Stock owned by
Purchaser or held by the Company, all of which shall be canceled; and (ii)
Dissenting Shares (as defined below).
(b) Each Share issued and held in the Company's treasury at the
Effective Time, or held by Purchaser, or any wholly owned subsidiary of
Purchaser, shall, by virtue of the Merger and without any action on the part of
Purchaser, the Company or the holder thereof, cease to be outstanding and shall
be canceled and retired without payment of any consideration therefor.
(c) The Company shall, immediately prior to the Effective Time, (A)
terminate each Company stock option, stock appreciation rights, restricted stock
or similar plan, and any other plan, program or arrangement providing for the
issuance, grant or purchase of any other interest in respect of the capital
stock of the Company or any of its Subsidiaries (as defined below), and (B)
amend the provisions of any other Company Employee Benefit Plan (as defined
below), or related trust or funding vehicle, providing for the issuance,
holding, transfer or grant of any Shares, or any interest in respect of any
Shares (such plans set forth in clauses (A) or (B), collectively, the "COMPANY
STOCK PLANS"), to provide no continuing rights to acquire, hold, transfer, or
grant any Shares or any interest in any Shares. With respect to the Company's
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Long Term Incentive Plan, prior to the Effective Time, the Company shall cause
all vesting to be accelerated and all outstanding restricted stock thereunder to
be fully vested on a date no later than the date of the Effective Time.
3.3. EXCHANGE OF CERTIFICATES REPRESENTING COMMON STOCK. (a) Prior to the
Effective Time, Purchaser shall appoint a commercial bank or trust company,
subject to the reasonable satisfaction of the Company, to act as paying agent
hereunder for payment of the Merger Consideration upon surrender of Certificates
(the "PAYING AGENT"). Purchaser shall take all steps necessary to cause the
Surviving Corporation to provide the Paying Agent with cash in amounts necessary
to pay for all the shares of Common Stock pursuant to SECTION 3.2(a) and
pursuant to SECTION 3.2(c), as and when such amounts are needed by the Paying
Agent. Such amounts shall hereinafter be referred to as the "EXCHANGE FUND."
(b) As soon as practicable after the Effective Time, Purchaser shall
cause the Paying Agent to mail to each holder of record of shares of Common
Stock (i) a letter of transmittal which shall specify that delivery shall be
effected, and risk of loss and title to such Certificates shall pass, only upon
delivery of the Certificates to the Paying Agent and which letter shall be in
such form and have such other provisions as are customary for letters of this
nature and (ii) instructions for effecting the surrender of such Certificates in
exchange for the Merger Consideration. Upon surrender of a Certificate to the
Paying Agent together with such letter of transmittal, duly executed and
completed in accordance with the instructions thereto, and such other documents
as may be reasonably required by the Paying Agent, the holder of such
Certificate shall be entitled to receive in exchange therefor the amount of cash
into which shares of Common Stock theretofore represented by such Certificate
shall have been converted pursuant to SECTION 3.2, and the shares represented by
the Certificate so surrendered shall forthwith be canceled. No interest will be
paid or will accrue on the cash payable upon surrender of any Certificate. In
the event of a transfer of ownership of Shares that is not registered in the
transfer records of the Company, payment may be made with respect to such Common
Stock to such a transferee if the Certificate representing such shares of Common
Stock is presented to the Paying Agent, accompanied by all documents required to
evidence and effect such transfer and to evidence that any applicable stock
transfer taxes have been paid. Until surrendered as contemplated by this SECTION
3.3, each Certificate shall be deemed, at any time after the Effective Time, to
represent only the right to receive on such surrender the amount, without any
interest thereon, of cash into which shares of Common Stock theretofore
represented by such Certificate shall have been converted pursuant to SECTION
3.2.
(c) At or after the Effective Time, there shall be no transfers on the
stock transfer books of the Company of the Shares that were outstanding
immediately prior to the Effective Time. If, after the Effective Time,
Certificates are presented to the Surviving Corporation, they shall be canceled
and exchanged as provided in this ARTICLE 3.
(d) Any portion of the Exchange Fund (including the proceeds of any
interest and other income received by the Paying Agent in respect of all such
funds) that remains unclaimed by the former stockholders of the Company six
months after the Effective Time shall be delivered to the Surviving Corporation.
Any former stockholders of the Company who have not theretofore complied with
this ARTICLE 3 may thereafter look only to the Surviving
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Corporation for payment of any Merger Consideration, without any interest
thereon, that may be payable in respect of each share of Common Stock such
stockholder holds as determined pursuant to this Agreement.
(e) None of Purchaser, the Company, the Surviving Corporation, the
Paying Agent or any other Person shall be liable to any former holder of shares
of Common Stock for any amount properly delivered to a public official pursuant
to applicable abandoned property, escheat or similar laws.
(f) In the event any Certificate shall have been lost, stolen or
destroyed, upon the making of an affidavit of that fact by the Person claiming
such Certificate to be lost, stolen or destroyed and, if required by the
Surviving Corporation, the posting by such Person of a bond in such reasonable
amount as the Surviving Corporation may direct as indemnity against any claim
which may be made against it with respect to such Certificate, the Paying Agent
will issue in exchange for such lost, stolen or destroyed Certificate the Merger
Consideration payable in respect thereof pursuant to this Agreement.
3.4. ADJUSTMENT OF MERGER CONSIDERATION. In the event that, subsequent to
the date of this Agreement but prior to the Effective Time, the outstanding
shares of Common Stock shall have been changed into a different number of shares
or a different class as a result of a stock split, reverse stock split, stock
dividend, subdivision, reclassification, split, combination, exchange,
recapitalization or other similar transaction, the Merger Consideration shall be
appropriately adjusted to eliminate the effects of that event.
3.5. DISSENTING COMPANY STOCKHOLDERS. Notwithstanding any provision of this
Agreement to the contrary, if required by the DGCL, but only to the extent
required thereby, Shares that are issued and outstanding immediately prior to
the Effective Time and which are held by holders of such Shares who have
properly exercised appraisal rights with respect thereto in accordance with
Section 262 of the DGCL (the "DISSENTING SHARES") will not be exchangeable for
the right to receive the Merger Consideration. Each holder of such Dissenting
Shares will be entitled to receive payment of the appraised value of such Shares
in accordance with the provisions of such Section 262 unless and until such
holder fails to perfect or effectively waives, withdraws or loses his or her
rights to appraisal and payment under the DGCL. If, after the Effective Time,
any such holder fails to perfect or effectively waives, withdraws or loses such
right, such Shares will thereupon be treated as if they had been converted into
and to have become exchangeable for, at the Effective Time, the right to receive
the Merger Consideration, without any interest or dividends thereon. The Company
will give Purchaser prompt notice of any demands received by the Company for
appraisals of Shares prior to the Effective Time and, prior to the Effective
Time, the Purchaser shall have the right to participate in all negotiations and
proceedings with respect to such demands. The Company shall not, except with the
prior written consent of Purchaser, voluntarily make any payment with respect to
any demands for appraisal or offer to settle or settle any such demands.
3.6. MERGER WITHOUT MEETING OF STOCKHOLDERS. Notwithstanding the foregoing,
in the event that Purchaser, or any other direct or indirect subsidiary of
Purchaser, shall acquire at least 90 percent of the outstanding Shares, the
parties hereto shall take all
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necessary and appropriate action to cause the Merger to become effective as soon
as practicable after the expiration of the Offer without a meeting of
stockholders of the Company, in accordance with Section 253 of the DGCL.
ARTICLE 4
4. REPRESENTATIONS AND WARRANTIES OF THE COMPANY. The Company hereby
represents and warrants to Purchaser as of the date of this Agreement as
follows:
4.1. EXISTENCE; GOOD STANDING; CORPORATE AUTHORITY. Each of the Company and
each of its Subsidiaries is duly organized, validly existing and in good
standing under the laws of its jurisdiction of incorporation. Each of the
Company and each of its Subsidiaries has all requisite power and authority to
own or lease and operate its properties and carry on its business as now
conducted, except where the failure to have such power and authority would not
result, individually or in the aggregate, in a Material Adverse Effect (defined
below). The Company has heretofore made available to Purchaser true, accurate
and complete copies of the certificate of incorporation and by-laws, each as
amended to date as and currently in effect.
4.2. AUTHORIZATION, VALIDITY AND EFFECT OF AGREEMENTS. (a) The Company has
the requisite corporate power and authority to execute and deliver this
Agreement and all agreements and documents contemplated hereby (the "ANCILLARY
DOCUMENTS"), to perform its obligations hereunder and thereunder, and to
consummate the transactions contemplated hereby and thereby. The execution and
delivery of this Agreement and the Ancillary Documents by the Company and the
consummation by the Company of the transactions contemplated hereby and thereby
have been duly and validly authorized by all necessary corporate action
(including without limitation the approval of the Company Board), and no other
corporate proceedings on the part of the Company are necessary to authorize this
Agreement and the Ancillary Documents or to consummate the transactions
contemplated hereby and thereby (other than the approval of this Agreement by
the holders of a majority of the Shares if required by applicable law). This
Agreement has been, and any Ancillary Document at the time of execution will
have been, duly and validly executed and delivered by the Company, and (assuming
this Agreement and such Ancillary Documents to which Purchaser is a party each
constitutes a valid and binding obligation of Purchaser) constitutes and will
constitute valid and binding obligations of the Company, enforceable in
accordance with their respective terms, subject to applicable bankruptcy,
insolvency, moratorium or other similar laws relating to creditors' rights and
general principles of equity.
4.3. COMPLIANCE WITH LAWS. Neither the Company nor any of its Subsidiaries
is in violation of any order of any foreign, federal, state or local judicial,
legislative, executive, administrative or regulatory body or authority or any
court, arbitration board or tribunal ("GOVERNMENTAL ENTITY"), or any foreign,
federal, state or local law, statute, ordinance, rule, regulation, order,
judgment or decree ("LAWS") applicable to the Company or its Subsidiaries or any
of their respective properties or assets, except for violations which,
individually or in the aggregate, would not have or be likely to have a material
adverse effect on the business, operations, assets, or financial condition of
the Company (a "MATERIAL
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ADVERSE EFFECT") or prevent or delay or be likely to prevent or delay the
consummation of the transactions contemplated hereby.
4.4. CAPITALIZATION, ETC. The authorized capital stock of the Company
consists of 30,000,000 shares of Common Stock. As of the date hereof, (a)
16,096,550 shares of Common Stock are outstanding, (b) no shares of Common Stock
are held by the Company in its treasury, and (c) no shares of capital stock of
the Company are held by the Company's Subsidiaries. The Company has no
outstanding options to acquire Common Stock or bonds, debentures, notes or other
obligations entitling the holders thereof to vote (or which are convertible into
or exercisable for securities having the right to vote) with the holders of the
Common Stock on any matter. All issued and outstanding shares of Common Stock
are duly authorized, validly issued, fully paid, nonassessable and free of
preemptive rights. There are no other shares of capital stock or voting
securities of the Company, and no existing options, warrants, calls,
subscriptions, convertible securities, and no stock appreciation rights or
limited stock appreciation rights or other rights (including rights of first
refusal), agreements or commitments which obligate the Company or any of its
Subsidiaries to issue, transfer or sell any shares of capital stock of, or
equity interests in, or any material assets of, the Company or any of its
Subsidiaries. There are no outstanding obligations of the Company or any
Subsidiaries to repurchase, redeem or otherwise acquire any shares of capital
stock of the Company. After the Effective Time, the Surviving Corporation will
have no obligation to issue, transfer or sell any shares of capital stock of the
Company or the Surviving Corporation pursuant to any Company Employee Benefit
Plan. There are no voting trusts or other agreements or understandings to which
the Company or any of its Subsidiaries is a party with respect to the voting of
capital stock of the Company or any of its Subsidiaries.
4.5. NO VIOLATION. (a) Neither the execution and delivery by the Company of
this Agreement or any of the Ancillary Documents nor the consummation by the
Company of the transactions contemplated hereby or thereby (assuming requisite
shareholder approval is obtained) will: (i) violate, conflict with or result in
a breach of any provision of the certificate of incorporation or by-laws of the
Company or any Subsidiary; (ii) violate, conflict with, result in a breach of
any provision of, constitute a default (or an event which, with notice or lapse
of time or both, would constitute a default) under, result in the termination or
in a right of termination of, accelerate the performance required by or benefit
obtainable under, result in the triggering of any payment or other obligations
pursuant to, result in the creation of any lien, pledge, charge, assessment,
security interest, mortgage, claim, option, easement, imperfection of title,
tenancy or other legal or equitable right of others, or other encumbrance of any
character whatsoever (including, without limitation, right of first refusal)
(each an "ENCUMBRANCE") upon any of the properties of the Company or any of its
Subsidiaries under, or result in there being declared void, voidable, or without
further binding effect, any of the terms, conditions or provisions of any note,
bond, mortgage, indenture, deed of trust or any license, franchise, permit,
lease, contract, agreement or other instrument, commitment or obligation to
which the Company or any of its Subsidiaries is a party, or by which the Company
or any of its Subsidiaries or any of their respective properties is bound (each,
a "CONTRACT" and, collectively, "CONTRACTS"), except for any of the foregoing
matters specified in this clause (ii) which, individually or in the aggregate,
would not have or be likely to have a Material Adverse Effect or prevent or
delay or be likely to prevent or delay the consummation of the transactions
contemplated hereby; (iii)
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other than the filings provided for in SECTION 2.3 and the filings required
under the Exchange Act, require any consent, approval or authorization of, or
declaration, filing or registration with, any Governmental Entity, the lack of
which, individually or in the aggregate, would have or be likely to have a
Material Adverse Effect or, by law, prevent or delay the consummation of the
transactions contemplated hereby; or (iv) violate any Laws applicable to the
Company, any of its Subsidiaries or any of their respective assets.
(b) For purposes of this Agreement, a "SUBSIDIARY" means, with respect
to Purchaser, the Company or any other Person, any entity of which Purchaser,
the Company or such other Person, as the case may be (either alone or through or
together with any other Subsidiary), owns, directly or indirectly, stock or
other equity interests the holders of which are generally entitled to more than
50% of the vote for the election of the board of directors or other governing
body of such corporation or other legal entity.
4.6. COMPANY REPORTS; OFFER DOCUMENTS. (a) The Company has made available
to Purchaser each registration statement, report, proxy statement or information
statement (as defined under the Exchange Act) prepared by it since December 31,
1996, each in the form (including exhibits and any amendments thereto) filed
with the SEC (collectively, the "COMPANY REPORTS"). As of their respective
dates, the Company Reports (i) complied as to form in all material respects with
the applicable requirements of the Securities Act of 1933, as amended, the
Exchange Act, and the rules and regulations thereunder and (ii) did not contain
any untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements made therein,
in the light of the circumstances under which they were made, not misleading.
Each of the consolidated balance sheets of the Company included in the Company
Reports (including the related notes and schedules) fairly presented in all
material respects the consolidated financial position of the Company and its
Subsidiaries as of its date, and each of the consolidated statements of
operations, cash flows and stockholders' equity of the Company included in or
incorporated by reference into the Company Reports (including the related notes
and schedules) fairly presented in all material respects the results of
operations, cash flows and shareholders' equity of the Company and its
Subsidiaries for the periods set forth therein, in each case in accordance with
generally accepted accounting principles ("GAAP") consistently applied during
the periods involved, except as may be noted therein and except that the
unaudited interim financial statements are subject to normal year-end
adjustments and do not contain all of the footnote disclosures required by GAAP.
(b) None of the Schedule 14D-9, the information statement, if any,
filed by the Company in connection with the Merger pursuant to Rule 14F-1 under
the Exchange Act (the "INFORMATION STATEMENT"), any schedule required to be
filed by the Company with the SEC or any amendment or supplement thereto, at the
respective times such documents are filed with the SEC or first published, sent
or given to the Company's stockholders, will contain any untrue statement of a
material fact or will omit to state any material fact required to be stated
therein or necessary in order to make the statements therein, in the light of
the circumstances under which they are made, not misleading except that no
representation is made by the Company with respect to information supplied by
Purchaser specifically for inclusion in the Schedule 14D-9 or Information
Statement or any amendment or supplement. None of the information supplied or to
be supplied by the Company for inclusion or incorporation by
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reference in the Offer Documents, at the time such documents are filed with the
SEC, or first published, sent or given to the Company's stockholders, will
contain any untrue statement of a material fact or omit to state any material
fact required to be stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they were made, not
misleading. If at any time prior to the Effective Time the Company shall obtain
knowledge of any facts with respect to itself, any of its officers and directors
or any of its Subsidiaries that would require the supplement or amendment to the
Schedule 14D-9 or the information supplied by the Company for inclusion or
incorporation by reference in the Offer Documents in order to make the
statements therein, in the light of the circumstances under which they were
made, not misleading, or to comply with applicable Laws, such amendment or
supplement shall be promptly filed with the SEC and, as required by Law,
disseminated to the stockholders of the Company, and in the event Purchaser
shall advise the Company as to its obtaining knowledge of any facts that would
make it necessary to supplement or amend any of the foregoing documents, the
Company shall promptly amend or supplement such document as required and
distribute the same to its stockholders.
4.7. LITIGATION. As of the date hereof, except as set forth in the Company
Reports or in SECTION 4.7 of the disclosure letter delivered by the Company to
Purchaser as of the date of this Agreement (the "COMPANY DISCLOSURE LETTER") or
as may have been or may be brought as a result of Purchaser's offer to purchase
the Company and related transactions, (i) there are no claims, actions, suits,
proceedings, arbitrations, investigations or audits (collectively, "LITIGATION")
pending or, to the knowledge of the Company, threatened against the Company or
any of its Subsidiaries, except Litigation which, individually or in the
aggregate, would not have or be likely to have a Material Adverse Effect or
prevent or delay or be likely to prevent or delay the consummation of the
transactions contemplated hereby, nor does the Company have knowledge of any
facts or circumstances that it believes would be likely to form the basis for
any such claims, actions, suits, proceedings, arbitrations, investigations or
audits; (ii) no Governmental Entity has indicated in writing an intention to
conduct any audit, investigation or other review with respect to the Company or
any of its Subsidiaries; and (iii) there is no material judgment, decree, order,
injunction, writ or rule of any court, governmental department, commission,
agency, instrumentality or authority or any arbitrator outstanding against the
Company or any Subsidiary (except that the Company makes no representation with
respect to any such items as may result from litigation brought as a result of
Purchaser's offer to purchase the Company and related transactions).
4.8. ABSENCE OF CERTAIN CHANGES. Since December 31, 1999, there has not
been (i) any event, occurrence or condition, except any event, occurrence or
condition which, individually or in the aggregate, would not have or be likely
to have a Material Adverse Effect, (ii) any amendments or changes in the
certificate of incorporation or by-laws of the Company, (iii) any material
change by the Company or any of its Subsidiaries in its accounting methods,
principles or practices, (iv) any declaration, setting aside or payment of any
dividend or distribution in respect of any capital stock of the Company or any
redemption, repurchase or other acquisition of any of its securities, or (v) any
increase in or establishment of any bonus, insurance, severance, deferred
compensation, pension, retirement, profit sharing, stock option (including,
without limitation, the granting of stock options, stock appreciation rights,
performance awards, or restricted stock awards), stock purchase or other
employee benefit plan,
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or any other increase in the compensation payable or to become payable to any
officers or key employees of the Company or any Subsidiary, except in the
ordinary course of business consistent with past practice.
4.9. BROKERS. Except for CIBC World Markets Corp. (the "FINANCIAL
ADVISOR"), the arrangements of which have been disclosed to Purchaser in
writing, no broker, finder or financial advisor is entitled to any brokerage,
finder's or other fee or commission in connection with the transactions
contemplated by this Agreement that is based upon any arrangement made by or on
behalf of the Company.
4.10. OPINION OF FINANCIAL ADVISOR. The Special Committee has received the
opinion of the Financial Advisor to the effect that, as of the date of this
Agreement, the Per Share Amount to be received in the Offer and the Merger,
taken together, by the holders of Shares (other than Purchaser and its
affiliates) is fair, from a financial point of view, to such holders of Shares
(other than Purchaser and its affiliates) (the "OPINION"). The Company hereby
represents and warrants that it has been authorized by the Financial Advisor to
permit the inclusion of the Opinion and references thereto, subject to prior
review and consent by the Financial Advisor (such consent not to be unreasonably
withheld), in the Offer to Purchase, the Schedule TO, the Schedule 14D-9 and the
Information Statement (as defined above).
4.11. STATE TAKEOVER STATUTES. The Company Board has taken all necessary
action so that the restrictions contained in Section 203 of the DGCL applicable
to a "business combination" (as defined in such Section 203) will not apply to
the execution, delivery or performance of the Agreement or to the Offer, the
Merger or the transactions contemplated hereby.
4.12. REQUIRED VOTE OF COMPANY STOCKHOLDERS. Unless the Merger may be
consummated in accordance with Section 253 of the DGCL, the only vote of the
stockholders of the Company required to adopt this Agreement, the Ancillary
Documents and to approve the Merger and the transactions contemplated hereby and
thereby, is the affirmative vote of the holders of a majority of the outstanding
shares of Common Stock.
ARTICLE 5
5. REPRESENTATIONS AND WARRANTIES OF PURCHASER. Purchaser hereby represents
and warrants to the Company as of the date of this Agreement as follows:
5.1. EXISTENCE; GOOD STANDING; CORPORATE AUTHORITY. Purchaser is a
corporation duly incorporated, validly existing and in good standing under the
laws of its jurisdiction of incorporation and has all requisite corporate power
and authority to own, operate and lease its properties and carry on its business
as now conducted, except where the failure to have such power and authority,
individually or in the aggregate, would not materially adversely affect the
ability of Purchaser to consummate the transactions contemplated hereby and by
the Ancillary Documents.
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5.2. AUTHORIZATION, VALIDITY AND EFFECT OF AGREEMENTS. Purchaser has the
requisite corporate power and authority to execute and deliver this Agreement
and the Ancillary Documents and to consummate the transactions contemplated
hereby and thereby. The execution and delivery of this Agreement and the
Ancillary Documents and the consummation by Purchaser of the transactions
contemplated hereby and thereby have been duly and validly authorized by the
Boards of Directors of Purchaser and no other corporate proceedings on the part
of Purchaser are necessary to authorize this Agreement and the Ancillary
Documents or to consummate the transactions contemplated hereby and thereby.
This Agreement has been, and any Ancillary Documents at the time of execution
will have been, duly and validly executed and delivered by Purchaser, and
(assuming this Agreement and such Ancillary Documents each constitutes a valid
and binding obligation of the Company) constitutes and will constitute the valid
and binding obligations of Purchaser, enforceable in accordance with their
respective terms, subject to applicable bankruptcy, insolvency, moratorium or
other similar laws relating to creditors' rights and general principles of
equity.
5.3. NO VIOLATION. Neither the execution and delivery of this Agreement or
any of the Ancillary Documents by Purchaser, nor the consummation by it of the
transactions contemplated hereby or thereby, will (i) violate, conflict with or
result in any breach of any provision of the certificate of incorporation or by-
laws of Purchaser; (ii) other than the filings provided for in SECTION 2.3 and
the filings required under the Exchange Act, require any consent, approval or
authorization of, or declaration, filing or registration with, any Governmental
Entity, the lack of which, individually or in the aggregate, would have or be
likely to have a material adverse effect on the ability of Purchaser to
consummate the transactions contemplated hereby, (iii) violate any Laws
applicable to Purchaser or any of its assets, and (iv) violate, conflict with or
result in a breach of any provision of, constitute a default (or an event which,
with notice or lapse of time or both, would constitute a default) under, result
in the termination or in a right of termination of, accelerate the performance
required by or benefit obtainable under, result in the creation of any
Encumbrance upon any of the properties of Purchaser under, or result in there
being declared void, voidable, or without further binding effect, any of the
terms, conditions or provisions of any note, bond, mortgage, indenture, deed of
trust or any license, franchise, permit, lease, contract, agreement or other
instrument, commitment or obligation to which Purchaser is bound.
5.4. INTERIM OPERATIONS OF PURCHASER. Purchaser was formed solely for the
purpose of engaging in the transactions contemplated hereby, has engaged in no
other business activities and has conducted its operations as contemplated
hereby. Purchaser has no liabilities, other than liabilities arising pursuant to
this Agreement or in connection with the transactions contemplated hereby.
5.5. FINANCING. At the consummation of the Offer and at the Effective Time,
Purchaser will have funds available to it sufficient to consummate the Offer and
the Merger on the terms contemplated hereby.
5.6. INFORMATION SUPPLIED. None of the Offer Documents or any amendment or
supplement thereto, at the respective times such documents are filed with the
SEC or first published, sent or given to the Company's stockholders, will
contain any untrue statement of a
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<PAGE>
material fact or will omit to state any material fact required to be stated
therein or necessary in order to make the statements therein, in the light of
the circumstances under which they are made, not misleading except that no
representation is made by Purchaser with respect to information supplied by the
Company specifically for inclusion in the Offer Documents or any amendment or
supplement. None of the information supplied or to be supplied by Purchaser for
inclusion or incorporation by reference in the Schedule 14D-9 will, at the time
such documents are filed with the SEC or distributed to the Company's
stockholders, contains any untrue statements of a material fact or omit to state
any material fact required to be stated therein or necessary to make the
statements therein, in the light of the circumstances under which they were
made, not misleading. If at any time prior to the Effective Time the Purchaser
shall obtain knowledge of any facts with respect to itself, any of its officers
and directors or any of its Subsidiaries that would require the supplement or
amendment to the Offer Documents or the information supplied by Purchaser for
inclusion or incorporation by reference in the Schedule 14D-9 in order to make
the statements therein, in the light of the circumstances under which they are
made, not misleading, or to comply with applicable Laws, such amendment or
supplement shall be promptly filed with the SEC and, as required by Law,
disseminated to the stockholders of the Company, and in the event the Company
shall advise Purchaser as to its obtaining knowledge of any facts that would
make it necessary to supplement or amend any of the foregoing documents,
Purchaser shall promptly amend or supplement such document as required and
distribute the same to the Company's stockholders.
ARTICLE 6
6. COVENANTS.
6.1. ALTERNATIVE PROPOSALS. The Company agrees (a) that, between the date
hereof and the Effective Time, neither it nor any of its Subsidiaries shall, and
it shall direct and use its best efforts to cause its officers, directors,
employees, agents and representatives (including, without limitation, any
investment banker, attorney or accountant retained by it or any of its
Subsidiaries) not to, initiate, solicit or encourage, directly or indirectly,
any inquiries or the making or implementation of any proposal or offer
(including, without limitation, any proposal or offer to its stockholders) with
respect to a merger, acquisition, consolidation or similar transaction
involving, or any purchase of all or any significant portion of the assets or
any equity securities of, the Company or any of its Subsidiaries (any such
proposal or offer being hereinafter referred to as an "ALTERNATIVE PROPOSAL") or
engage in any negotiations concerning, or provide any confidential information
or data to, afford access to the properties, books or records of the Company or
any of its Subsidiaries to, or have any discussions with, any Person relating to
an Alternative Proposal, or otherwise facilitate any effort or attempt to make
or implement an Alternative Proposal; (b) that it will immediately cease and
cause to be terminated any existing activities, discussions or negotiations with
any parties conducted heretofore with respect to any of the foregoing, and it
will take the necessary steps to inform such parties of the obligations
undertaken in this SECTION 6.1; and (c) that it will notify Purchaser
immediately of the identity of the potential acquirer and the terms of such
Person's or entity's proposal if any such inquiries or proposals are received
by, any such information is requested from, or any such negotiations or
discussions are sought to be initiated or continued with, the Company; provided,
however, that nothing contained in this SECTION 6.1 shall prohibit the Company
or its
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Subsidiaries, upon approval of the Special Committee, from (i) prior to the
acceptance for payment of shares of Common Stock by Purchaser pursuant to the
Offer, furnishing information to, or entering into discussions or negotiations
with, any Person or entity that makes an unsolicited bona fide proposal to
acquire the Company pursuant to a merger, consolidation, share exchange,
purchase of substantially all of the assets of the Company, a business
combination or other similar transaction, if, and only to the extent that, (A)
such proposal was not initially solicited, encouraged or knowingly facilitated
by the Company, its Subsidiaries or their agents in violation of this SECTION
6.1, (B) such proposal is not subject to a financing condition and involves
consideration that provides a higher value per share than the Merger
Consideration, (C) the Company Board, or the Company's directors constituting
the Special Committee, determines in good faith based on the advice of outside
counsel that the failure to take such action would be inconsistent with its
fiduciary duties to stockholders imposed by Law, and (D) prior to furnishing
information to, or entering into discussions or negotiations with, such Person
or entity, the Company provides written notice to Purchaser to the effect that
it is furnishing information to, or entering into discussions or negotiations
with, such Person or entity. The Company shall keep Purchaser informed of the
status of any such discussions or negotiations (including the identity of such
Person or entity and the terms of any proposal) and, to the extent applicable,
shall comply with Rule 14e-2(a) promulgated under the Exchange Act with regard
to an Alternative Proposal. Nothing in this SECTION 6.1 shall (x) permit the
Company to terminate this Agreement (except as specifically provided in ARTICLE
8 hereof), (y) permit the Company to enter into any agreement with respect to an
Alternative Proposal during the term of this Agreement, or (z) affect any other
obligation of the Company under this Agreement. Notwithstanding anything to the
contrary in this SECTION 6.1, Purchaser has advised the Company Board that it
has no intention of selling the Purchaser Shares or the Shares acquired by
Purchaser in the Offer pursuant to such an Alternative Proposal.
6.2. INTERIM OPERATIONS OF THE COMPANY. (a) From the date of this Agreement
until the Effective Time, unless Purchaser has consented in writing thereto, the
Company shall, and shall cause its Subsidiaries to, (i) conduct its operations
according to its ordinary course of business consistent with past practice; (ii)
use its reasonable best efforts to preserve intact its business organizations
and goodwill, keep available the services of its officers and employees, and
maintain satisfactory relationships with those Persons having business
relationships with them; and (iii) upon the discovery thereof, promptly notify
Purchaser of the existence of any breach of any representation or warranty
contained herein (or, in the case of any representation or warranty that makes
no reference to Material Adverse Effect, any breach of such representation or
warranty in any material respect) or the occurrence of any event that would
cause any representation or warranty contained herein no longer to be true and
correct (or, in the case of any representation or warranty that makes no
reference to Material Adverse Effect, to no longer be true and correct in any
material respect).
(b) From and after the date of this Agreement until the Effective
Time, unless Purchaser has consented in writing thereto or this Agreement has
been terminated pursuant to ARTICLE 8 hereof, the Company shall not, and shall
cause each of its Subsidiaries not to:
(i) amend its certificate of incorporation or by-laws;
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(ii) issue, sell or pledge any shares of its capital stock or
other ownership interest in the Company or its Subsidiaries, or any
securities convertible into or exchangeable for any such shares or
ownership interest, or any rights, warrants or options to acquire or
with respect to any such shares of capital stock, ownership interest,
or convertible or exchangeable securities (or derivative instruments
in respect of the foregoing);
(iii) effect any stock split or otherwise change its
capitalization as it exists on the date hereof, or directly or
indirectly redeem, purchase or otherwise acquire any shares of its
capital stock or capital stock of its Subsidiaries;
(iv) (A) accelerate or waive any or all of the goals,
restrictions or conditions imposed under any restricted stock award,
or (B) issue, sell, grant or award any shares of capital stock or any
right to acquire shares of capital stock under any Company Stock Plan
(except as otherwise required by such plan);
(v) declare, set aside or pay any dividend or make any other
distribution or payment with respect to any shares of its capital
stock or other ownership interests (other than such payments by the
Subsidiaries to the Company);
(vi) mortgage or otherwise encumber or subject to any
Encumbrance, or sell, lease or otherwise dispose of any of its
property or assets (including capital stock of its Subsidiaries),
other than Encumbrances that are incurred in the ordinary course of
business, consistent with past practice, the sale or disposition of
inventory in the ordinary course of business or the sale, lease,
encumbrance or other disposition of assets which, individually or in
the aggregate, are obsolete or not material to the Company and its
Subsidiaries taken as a whole;
(vii) (A) acquire by merger, purchase or any other manner, any
business or entity or any division thereof for consideration in excess
of $500,000 in the aggregate; or (B) otherwise acquire any assets
which would be material, individually or in the aggregate, to the
Company and its Subsidiaries taken as a whole, except for purchases of
inventory, supplies or capital equipment in the ordinary course of
business consistent with past practice and the acquisition of assets
for consideration in excess of $500,000 in the aggregate;
(viii) except for borrowings under existing credit facilities and
excepting transactions between the Company and any Subsidiary, incur
or assume any long-term or short-term debt or issue any debt
securities or assume, guarantee or otherwise become liable or
responsible (whether directly, contingently or otherwise) for the debt
or other obligations of any other Person, other than obligations
(other than debt) of its Subsidiaries incurred in the ordinary course
of business;
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(ix) (A) make any loans, advances or capital contributions to, or
investments in, any other Person (other than Subsidiaries), except
with respect to commitments outstanding as of the date hereof, or (B)
forgive any loans, advances or capital contributions to, or
investments in, any other Person (other than Subsidiaries), for an
aggregate amount in excess of $500,000 (as to clauses (A) and (B)
collectively);
(x) except as contemplated by this Agreement or in the ordinary
course of business consistent with past practices (A) increase the
compensation payable or to become payable to its officers or
employees, (B) other than in accordance with existing policies and
arrangements, grant any severance pay to its officers, directors or
employees or (C) establish, adopt, enter into or amend any collective
bargaining, bonus, profit sharing, thrift, compensation, stock option,
restricted stock, pension, retirement, deferred compensation,
employment, termination, severance or other plan, agreement, trust,
fund, policy or arrangement for the benefit of any director, officer
or employee, except to the extent required by applicable law or the
terms or a collective bargaining agreement or a contractual obligation
existing on the date hereof;
(xi) change any of the accounting principles or practices used by
the Company, except as may be required by GAAP;
(xii) pay, discharge or satisfy any material claims, material
liabilities or material obligations (absolute, accrued, asserted or
unasserted, contingent or otherwise), other than the payment,
discharge or satisfaction (A) of any such material claims, material
liabilities or material obligations in the ordinary course of business
and consistent with past practice or (B) of material claims, material
liabilities or material obligations reflected or reserved against in,
or contemplated by, the consolidated financial statements (or the
notes thereto) contained in the Company Reports;
(xiii) agree to the settlement of any claim or litigation, which
settlement would have a Material Adverse Effect;
(xiv) make, change or rescind any material Tax election (other
than recurring elections that customarily are made in connection with
the filing of any Tax Return; provided that any such elections are
consistent with the past practices of the Company or its Subsidiaries,
as the case may be) or settle or compromise any material Tax liability
that is the subject of any audit, claim for delinquent Taxes,
examination, action, suit, proceeding or investigation by any Taxing
authority;
(xv) except to the extent required under existing employee and
director benefit plans, agreements or arrangements as in effect on the
date of this Agreement or as contemplated by this Agreement,
accelerate the payment, right to
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payment or vesting of any bonus, severance, profit sharing,
retirement, deferred compensation, stock option, insurance or other
compensation or benefits;
(xvi) enter into any agreement, understanding or commitment that
restrains, limits or impedes the ability of the Company or any of its
Subsidiaries to compete with or conduct any business or line of
business, including geographic limitations on the activities of the
Company or any of its Subsidiaries;
(xvii) materially modify, amend or terminate any material
contract, or waive, relinquish, release or terminate any right or
claim, in each case, except in the ordinary course of business
consistent with past practice;
(xviii) other than with respect to commitments outstanding as of
the date hereof, make any capital expenditures in the aggregate for
the Company and its Subsidiaries in excess $1,000,000, in the
aggregate;
(xix) take any action to cause the Common Stock to be delisted
from the New York Stock Exchange prior to the completion of the offer;
and
(xx) agree in writing or otherwise to take any of the foregoing
actions.
6.3. COMPANY STOCKHOLDER APPROVAL; INFORMATION STATEMENT. (a) If approval
or action in respect of the Merger by the stockholders of the Company is
required by applicable Law, the Company, acting through the Company Board, shall
(i) call a meeting of its stockholders (the "STOCKHOLDERS MEETING") for the
purpose of voting upon this Agreement and the transactions contemplated hereby,
(ii) unless Purchaser or other stockholders execute consents in lieu of a
meeting adequate to approve the Merger, hold the Stockholders Meeting as soon as
practicable following the purchase of shares of Common Stock pursuant to the
Offer, and (iii) unless taking such action would be inconsistent with the
fiduciary duties of the directors of the Company or of the Company's directors
constituting the Special Committee, as determined by such directors in good
faith, and after consultation with independent legal counsel, recommend to its
stockholders the approval of this Agreement and the transactions contemplated
hereby. In the event a Stockholders Meeting is called, unless Purchaser or other
stockholders execute consents in lieu of a meeting adequate to approve the
Merger, the Company shall use its reasonable best efforts to solicit from the
stockholders of the Company proxies in favor of the approval and adoption of
this Agreement, and the transactions contemplated hereby and to secure the vote
or consent of stockholders required by the DGCL to approve and adopt this
Agreement, unless otherwise required by the applicable fiduciary duties of the
directors of the Company or of the Company's directors constituting the Special
Committee, as determined by such directors in good faith, and after consultation
with independent legal counsel. Unless Purchaser or other stockholders execute
consents in lieu of a meeting adequate to approve the Merger, this Agreement
must be submitted to the stockholders of the Company whether or not the Company
Board determines at any time subsequent to declaring its advisability that the
Agreement is no longer advisable and recommends that the stockholders reject it.
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(b) If required by applicable Law, the Company will, as soon as practicable
following the expiration of the Offer, prepare and file a preliminary Proxy
Statement (such proxy statement, and any amendments or supplements thereto, the
"PROXY STATEMENT") or, if applicable, an Information Statement with the SEC with
respect to the Stockholders Meeting and will use its best efforts to respond to
any comments of the SEC or its staff and to cause the Proxy Statement or, if
applicable, Information Statement, to be cleared by the SEC. The Company will
notify Purchaser of the receipt of any comments from the SEC or its staff and of
any request by the SEC or its staff for amendments or supplements to the Proxy
Statement or, if applicable, Information Statement, or for additional
information and will supply Purchaser promptly with copies of all correspondence
between the Company or any of its representatives, on the one hand, and the SEC,
on the other hand. The Company shall give Purchaser and its counsel the
opportunity to review the Proxy Statement or, if applicable, Information
Statement, prior to it being filed with the SEC and shall give Purchaser and its
counsel the opportunity to review all amendments and supplements to the Proxy
Statement and all responses to requests for additional information and replies
to comments prior to their being filed with, or sent to, the SEC. Each of the
Company and Purchaser agrees to use its best efforts, after consultation with
the other parties hereto, to respond promptly to all such comments of and
requests by the SEC. As promptly as practicable after the Proxy Statement or, if
applicable, Information Statement, has been cleared by the SEC, the Company
shall mail the Proxy Statement or, if applicable, Information Statement, to the
stockholders of the Company. If at any time prior to the approval of this
Agreement by the Company's stockholders there shall occur any event which should
be set forth in an amendment or supplement to the Proxy Statement or, if
applicable, Information Statement, the Company will prepare and mail to its
stockholders such an amendment or supplement.
(c) The Company represents and warrants that the Proxy Statement or, if
applicable, Information Statement, will comply in all material respects with the
Exchange Act and, at the respective times filed with the SEC and distributed to
stockholders of the Company, will not contain any untrue statement of a material
fact or omit to state any material fact required to be stated therein or
necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading; provided that the
Company makes no representation or warranty as to any information included in
the Proxy Statement that was provided by Purchaser. Purchaser represents and
warrants that none of the information supplied by Purchaser for inclusion in the
Proxy Statement or, if applicable, Information Statement, will, at the
respective times filed with the SEC and distributed to stockholders of the
Company, contain any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary in order to make the
statements therein, in the light of the circumstances under which they were
made, not misleading. Purchaser agrees that Purchaser will promptly inform the
Company of the discovery by Purchaser of any information that should be set
forth in an amendment or supplement to the Proxy Statement or, if applicable,
Information Statement.
(d) Subject to the terms of this Agreement, the Company shall use its best
efforts to obtain the necessary approvals by its stockholders of the Merger,
this Agreement and the transactions contemplated hereby.
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(e) Purchaser agrees to cause all shares of Common Stock purchased by
Purchaser pursuant to the Offer and all other shares of Common Stock owned by
Purchaser or any other subsidiary or affiliate of Purchaser to be voted in favor
of the approval of the Merger or to sign a written consent in lieu of a meeting
in favor of approval of the Merger.
6.4. FILINGS; OTHER ACTION. Subject to the terms and conditions herein
provided, the Company, and Purchaser shall: (a) use their reasonable best
efforts to cooperate with one another in (i) determining which filings other
than under the Exchange Act are required to be made prior to the expiration of
the Offer or the Effective Time with, and which consents, approvals, permits or
authorizations are required to be obtained prior to the Effective Time from,
Governmental Entities or other third parties in connection with the execution
and delivery of this Agreement and any other Ancillary Documents and the
consummation of the transactions contemplated hereby and thereby and (ii) timely
making all filings under the Exchange Act and all such other filings and timely
seek all required consents, approvals, permits, authorizations and waivers; and
(b) use their reasonable best efforts to take, or cause to be taken, all other
action and do, or cause to be done, all other things necessary, proper or
appropriate to consummate and make effective the transactions contemplated by
this Agreement. If, at any time after the Effective Time, any further action is
necessary or desirable to carry out the purpose of this Agreement, the proper
officers and directors of Purchaser and the Surviving Corporation shall take all
such necessary action.
6.5. ACCESS TO INFORMATION. (a) From the date of this Agreement until the
Closing, the Company shall, and shall cause its Subsidiaries to, (i) give
Purchaser and its authorized representatives reasonable access, upon reasonable
notice and during reasonable business hours to all books, records, personnel,
offices and other facilities and properties of the Company and its Subsidiaries
and their accountants and accountants' work papers, (ii) permit Purchaser to
make such copies and inspections thereof as Purchaser may reasonably request and
(iii) furnish Purchaser with such financial and operating data and other
information with respect to the business and properties of the Company and its
Subsidiaries as Purchaser may from time to time reasonably request; provided
that no investigation or information furnished pursuant to this SECTION 6.5
shall affect any representation or warranty made herein by the Company or the
conditions to the obligations of Purchaser to consummate the transactions
contemplated by this Agreement.
(b) Purchaser shall hold all information furnished on a confidential basis
by or on behalf of the Company or any of the Company's Subsidiaries or
representatives pursuant to Section 6.5(a) in confidence.
6.6. PUBLICITY. The initial press release relating to this Agreement shall
be issued jointly by the Company and Purchaser. Thereafter, the Company and
Purchaser shall obtain the prior consent of each other before issuing any press
release or otherwise making public statements with respect to the transactions
contemplated hereby, except as may be required by Law or any listing agreement
with any national securities exchange with respect thereto.
6.7. FURTHER ACTION. Each party hereto shall, subject to the fulfillment at
or before the Effective Time of each of the conditions of performance set forth
herein or the waiver
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thereof, perform such further acts and execute such documents as may be
reasonably required to effect the transactions contemplated hereby, including
the Merger.
6.8. INSURANCE. (a) Purchaser will (and the Surviving Corporation as
successor to the Purchaser as a result of the Merger will) maintain in effect
for not less than six years after the Effective Time, the Company's current
directors and officers insurance policies, if such insurance is obtainable (or
policies of at least the same coverage containing terms and conditions no less
advantageous to the current and all former directors and officers of the
Company) with respect to acts or failures to act prior to the Effective Time,
including acts relating to the transactions contemplated by this Agreement;
provided, however, that in order to maintain or procure such coverage, the
Surviving Corporation shall not be required to maintain or obtain policies
providing such coverage except to the extent such coverage can be provided at an
annual cost of no greater than 200% of the most recent annual premium paid by
the Company prior to the date hereof (the "CAP"); and provided, further, that if
equivalent coverage cannot be obtained, or can be obtained only by paying an
annual premium in excess of the Cap, Purchaser or the Surviving Corporation
shall only be required to obtain as much coverage as can be obtained by paying
an annual premium equal to the Cap.
(b) Purchaser agrees that all rights to indemnification for acts or
omissions occurring prior to the Effective Time now existing in favor of the
current or former directors or officers of the Company and its Subsidiaries (the
"INDEMNIFIED PARTIES") as provided in their respective articles of incorporation
or by-laws (or similar organizational documents) shall survive the Offer and the
Merger and shall continue in full force and effect in accordance with their
respective terms. The provisions of this SECTION 6.8 are intended to be for the
benefit of, and shall be enforceable by, each of the Indemnified Parties, their
heirs and their representatives.
6.9. INTERIM OPERATIONS OF PURCHASER. From the date of this Agreement until
the Effective Time, Purchaser shall not incurr any liabilities, other than
liabilities arising pursuant to this Agreement or in connection with the
transactions contemplated hereby.
ARTICLE 7
7. CONDITIONS.
7.1. CONDITIONS TO EACH PARTY'S OBLIGATION TO EFFECT THE MERGER. The
respective obligation of each party to effect the Merger shall be subject to the
satisfaction or waiver, where permissible, prior to the Effective Time, of the
following conditions:
(a) If approval of this Agreement and the Merger by the holders of Common
Stock is required by applicable Law, this Agreement and the Merger shall have
been approved by the requisite vote of such holders.
(b) No United States federal or state governmental authority or other
agency or commission or court of competent jurisdiction shall have enacted,
issued, promulgated, enforced or entered any law, rule, regulation, executive
order decree, injunction or other order which is in
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effect and prohibits or has the effect of prohibiting the consummation of the
Merger or makes such consummation illegal.
ARTICLE 8
8. TERMINATION.
8.1. TERMINATION. This Agreement, notwithstanding approval thereof by the
stockholders of the Company, may be terminated at any time prior to the
Effective Time:
(a) by mutual written consent of Purchaser and the Special Committee; or
(b) by the Purchaser or the Special Committee:
(i) if either (x) the purchase of Shares pursuant to the Offer has not
been consummated on or before June 19, 2000, or (y) the Effective Time shall not
have occurred on or before September 18, 2000 (provided that the right to
terminate this Agreement pursuant to this clause (i) shall not be available to
any party whose failure to fulfill any obligation under this Agreement has been
the cause of or resulted in the failure of consummation of the purchase of
Shares pursuant to the Offer on or before June 19, 2000 or the Effective Time to
occur on or before September 18, 2000) or
(ii) if there shall be any Law that makes consummation of the Offer or
the Merger illegal or prohibited, or if any court of competent jurisdiction in
the United States shall have issued an order, judgment, decree or ruling, or
taken any other action restraining, enjoining or otherwise prohibiting the
Merger and such order, judgment, decree, ruling or other action shall have
become final and non-appealable; or
(c) by the Special Committee:
(i) if there is an Alternative Proposal which the Special Committee in
good faith determines is more favorable from a financial point of view to the
stockholders of the Company as compared to the Offer and the Merger, and the
Special Committee determines in good faith based upon advice of outside counsel,
that the failure to take such action would be inconsistent with its fiduciary
duties to stockholders imposed by Law; provided, however, that the right to
terminate this Agreement pursuant to this SECTION 8.1(c) shall not be available
(i) if the Company has breached its obligations under SECTION 6.1, or (ii) if
the Alternative Proposal (x) is subject to a financing condition or (y) involves
consideration that is not entirely cash or does not permit stockholders to
receive the payment of the offered consideration in respect of all shares at the
same time, unless the Special Committee in good faith determines after
consultation with the Financial Advisor or other nationally recognized
investment banking firm that (in the case of clause (x)) the Alternative
Proposal is financeable and (in the case of clause (y)) that such offer provides
a higher value per share than the consideration per share pursuant to the Offer
or the Merger, or (iii) if, prior to or concurrently with any purported
termination pursuant to this SECTION 8.1(c), the Company shall not have paid the
fees and expenses contemplated by SECTION 8.2, or (iv) if the Company has not
provided Purchaser
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with five business days prior written notice of its intent to so terminate this
Agreement and delivered to Purchaser a copy of the written agreement embodying
the Alternative Proposal in its then most definitive form; or
(ii) if Purchaser shall have breached in any material respect any of
its representations, warranties or covenants contained in this Agreement; or
(d) by Purchaser:
(i) prior to the acceptance of any shares of Common Stock under the
Offer, if due to an occurrence or circumstance that would result in the failure
of any condition specified in Exhibit A, Purchaser shall have terminated the
Offer without having accepted any Shares for payment thereunder unless such
occurrence or circumstance that would result in the failure of any such
condition shall have been caused by or resulted from the failure of Purchaser to
perform any obligation of either of them contained in this Agreement; or
(ii) prior to the purchase of any Common Stock validly tendered
pursuant to the Offer, if the Special Committee shall have withdrawn or
modified, in a manner that is materially adverse to Purchaser, its approval or
recommendation of this Agreement, the Offer, the Merger or any other transaction
contemplated hereby or shall have recommended another merger, consolidation or
business combination involving, or acquisition of, the Company or its assets or
another tender offer for Common Stock, or shall have resolved to do any of the
foregoing.
8.2. EFFECT OF TERMINATION AND ABANDONMENT. In the event of termination of
this Agreement and the abandonment of the Merger pursuant to this ARTICLE 8, all
obligations of the parties hereto shall terminate, except the obligations of the
parties pursuant to this SECTION 8.2 and SECTIONS 6.5(b), 9.5 and 9.6, and there
shall be no liability on the part of the Company, Purchaser or their respective
officers or directors, except for any breach of a party's obligations under such
provisions. If this Agreement shall terminate pursuant to Section 8.1(b)(i) as a
result of the failure of the Company to satisfy the condition set forth in
paragraphs (e) of EXHIBIT A, or pursuant to 8.1(c) or 8.1(d)(ii), the Company
shall promptly, but in no event later than two business days after any such
termination, reimburse Purchaser and its affiliates for the out-of-pocket
expenses of Purchaser and its affiliates, incurred in connection with or arising
out of the Offer, the Merger or the transactions contemplated hereby or by the
Ancillary Documents, including reasonable attorneys' fees. If this Agreement
shall terminate pursuant to Section 8.1(c)(ii), Purchaser shall promptly, but in
no event later than two business days after any such termination, reimburse the
Company its out-of-pocket expenses incurred in connection with or arising out of
the Offer, the Merger or the transactions contemplated hereby or by the
Ancillary Documents, including reasonable attorneys' fees. The parties agree
that such reimbursement of expenses shall be Purchaser's exclusive remedy for
any loss, liability, damage or claim arising out of or in connection with any
such termination of this Agreement. The Company acknowledges that the agreements
contained in this SECTION 8.2 are an integral part of the transactions
contemplated by this Agreement, and that, without these agreements, Purchaser
would not enter into this Agreement. Notwithstanding the foregoing, no party
hereto shall be relieved from liability for any willful, material breach of this
Agreement.
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8.3. AMENDMENT. To the extent permitted by applicable law, this Agreement
may be amended by action taken by or on behalf of the board of directors of each
of the parties hereto and, in the case of the Company, with the approval of the
Special Committee at any time before or after adoption of this Agreement by the
stockholders of the Company (if required); PROVIDED, HOWEVER, that after any
such stockholder approval (if required), no amendment shall be made which
decreases the Merger Consideration or which adversely affects the rights of, or
the income tax consequences to, the Company's stockholders (other than Purchaser
and its Affiliates) hereunder without the approval of such stockholders. This
Agreement may not be amended except by an instrument in writing signed on behalf
of all of the parties.
8.4. EXTENSION; WAIVER. At any time prior to the Effective Time, any party
hereto, by action taken by its board of directors, may, to the extent legally
allowed, (a) extend the time for the performance of any of the obligations or
other acts of the other parties hereto, (b) waive any inaccuracies in the
representations and warranties made to such party contained herein or in any
document delivered pursuant hereto and (c) waive compliance with any of the
agreements or conditions for the benefit of such party contained herein;
PROVIDED, HOWEVER, that, if the Company seeks to make such extension or waiver
as provided in (a), (b) or (c) above, it must first obtain the approval of the
Special Committee. Any agreement on the part of a party hereto to any such
extension or waiver shall be valid only if set forth in an instrument in writing
signed on behalf of such party.
ARTICLE 9
9. GENERAL PROVISIONS.
9.1. NONSURVIVAL OF REPRESENTATIONS AND WARRANTIES. None of the
representations and warranties in this Agreement, or in any instrument delivered
pursuant to this Agreement, shall survive the Effective Time.
9.2. NOTICES. All notices and other communications given or made pursuant
hereto shall be in writing and shall be deemed to have been duly given or made
as of the date of receipt and shall be delivered personally or mailed by
registered or certified mail (postage prepaid, return receipt requested), or
sent by overnight courier or sent by facsimile, to the applicable party at the
following addresses or facsimile numbers (or at such other address or telecopy
number for a party as shall be specified by like notice):
If to Purchaser:
c/o The Heico Companies, LLC
5600 Three First National
Chicago, IL 60602
Facsimile: (312) 419-9417
Attention: Michael Heisley
with a copy to:
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McDermott, Will & Emery
227 West Monroe Street
Suite 4400
Chicago, IL 60606-5096
Facsimile: (312) 984-3669
Attention: Helen R. Friedli, P.C.
If to the Company:
Robertson-Ceco Corporation
5000 Executive Parkway, Suite 425
San Ramon, CA 94583
Facsimile: (925) 543-7597
Attention: E. A. Roskovensky
With a copy to:
Winthrop, Stimson, Putnam & Roberts
One Battery Park Plaza
New York, NY 10004
Facsimile: (212) 858-1500
Attention: Stephen R. Rusmisel, Esq.
9.3. ASSIGNMENT; BINDING EFFECT. Neither this Agreement nor any of the
rights, interests or obligations hereunder shall be assigned by any of the
parties hereto (whether by operation of law or otherwise) without the prior
written consent of the other parties; provided, however, that either Purchaser
may assign its rights hereunder (including, without limitation, the right to
make the Offer and/or to purchase shares of Common Stock pursuant to the Offer)
to a wholly owned subsidiary of Purchaser; and, further provided that nothing
shall relieve the assignor from its obligations hereunder. Subject to the
preceding sentence, this Agreement shall be binding upon and shall inure to the
benefit of the parties hereto and their respective successors and assigns.
Notwithstanding anything contained in this Agreement to the contrary, except for
the provisions of SECTION 6.8 which may be enforced directly by the
beneficiaries thereof, nothing in this Agreement, expressed or implied, is
intended to confer on any Person other than the parties hereto or their
respective heirs, successors, executors, administrators and assigns any rights,
remedies, obligations or liabilities under or by reason of this Agreement.
9.4. ENTIRE AGREEMENT. This Agreement, the Company Disclosure Letter, the
Exhibits, the Ancillary Documents and any other documents delivered by the
parties in connection herewith constitute the entire agreement among the parties
with respect to the subject matter hereof and supersede all prior agreements and
understandings among the parties with respect thereto.
9.5. GOVERNING LAW. This Agreement shall be governed by and construed in
accordance with the laws of the State of Delaware without regard to its rules of
conflict of laws.
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Each of the Company and Purchaser hereby irrevocably and unconditionally
consents to submit to the exclusive jurisdiction of the United States District
Court for the State of Delaware or any court of the State of Delaware (the
"DELAWARE COURTS") for any litigation arising out of or relating to this
Agreement and the transactions contemplated hereby (and agrees not to commence
any litigation relating thereto except in such courts), waives any objection to
the laying of venue of any such litigation in the Delaware Courts and agrees not
to plead or claim in any Delaware Court that such litigation brought therein has
been brought in an inconvenient forum. Purchaser hereby appoints The Corporation
Trust Company as agent for service of process. The address of such agent for
service of process is Corporation Trust Center, 1209 Orange Street, Wilmington,
Delaware 19801.
9.6. FEES AND EXPENSES. Except as otherwise provided in SECTION 8.2,
whether or not the Merger is consummated, all fees, costs and expenses incurred
in connection with this Agreement and the transactions contemplated hereby shall
be paid by the party incurring such fees, costs and expenses.
9.7. CERTAIN DEFINITIONS. For purposes of this Agreement, the following
terms shall have the following meanings:
(i) "AFFILIATE" of a Person means a Person that directly or
indirectly, through one or more intermediaries, controls, is controlled by, or
is under common control with, the first mentioned Person.
(ii) "KNOWLEDGE" of any party hereto shall mean the knowledge of any
of the executive officers of that party.
(iii) "PERSON" means an individual, corporation, partnership, limited
liability company, association, trust, unincorporated organization, entity or
group (as defined in the Exchange Act).
9.8. HEADINGS. Headings of the Articles and Sections of this Agreement are
for the convenience of the parties only, and shall be given no substantive or
interpretive effect whatsoever. The table of contents contained in this
Agreement is for reference purposes only and shall not affect in any way the
meaning or interpretation of this Agreement.
9.9. INTERPRETATION. In this Agreement, unless the context otherwise
requires, words describing the singular number shall include the plural and vice
versa, and words denoting any gender shall include all genders and words
denoting natural Persons shall include corporations and partnerships and vice
versa. Whenever the words "include," "includes" or "including" are used in this
Agreement, they shall be understood to be followed by the words "without
limitation."
9.10. WAIVERS. No action taken pursuant to this Agreement, including,
without limitation, any investigation by or on behalf of any party, shall be
deemed to constitute a waiver by the party taking such action of compliance with
any representations, warranties, covenants or agreements contained in this
Agreement or in any of the Ancillary Documents. The waiver by
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any party hereto of a breach of any provision hereunder shall not operate or be
construed as a waiver of any prior or subsequent breach of the same or any other
provision hereunder.
9.11. SEVERABILITY. Any term or provision of this Agreement that is invalid
or unenforceable in any jurisdiction shall, as to that jurisdiction, be
ineffective to the extent of such invalidity or unenforceability without
rendering invalid or unenforceable the remaining terms and provisions of this
Agreement or affecting the validity or enforceability of any of the terms or
provisions of this Agreement in any other jurisdiction. If any provision of this
Agreement is so broad as to be unenforceable, the provision shall be interpreted
to be only so broad as is enforceable.
9.12. ENFORCEMENT OF AGREEMENT. The parties hereto agree that irreparable
damage would occur in the event that any of the provisions of this Agreement
were not performed in accordance with its specific terms or was otherwise
breached. It is accordingly agreed that the parties shall be entitled to an
injunction or injunctions to prevent breaches of this Agreement and to enforce
specifically the terms and provisions hereof in any Delaware Court, this being
in addition to any other remedy to which they are entitled at law or in equity.
9.13. COUNTERPARTS. This Agreement may be executed by the parties hereto in
separate counterparts, each of which, when so executed and delivered, shall be
an original. All such counterparts shall together constitute one and the same
instrument. Each counterpart may consist of a number of copies hereof, each
signed by less than all, but together signed by all, of the parties hereto.
IN WITNESS WHEREOF, the parties have executed this Agreement and caused the
same to be duly delivered on their behalf on the day and year first written
above.
ROBERTSON-CECO CORPORATION
By: /s/ E.A. Roskovensky
-----------------------------------------
Name: E.A. Roskovensky
---------------------------------------
Title: President and Chief Operating Officer
--------------------------------------
RHH ACQUISITION CORP.
By: /s/ Stanley H. Meadows
--------------------------------
Name: Stanley H. Meadows
------------------------------
Title: Assistant Secretary
-----------------------------
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EXHIBIT A
CONDITIONS OF THE OFFER
Notwithstanding any other term of the Offer or this Agreement, Purchaser
shall not be required to accept for payment or to pay for any shares of Common
Stock not theretofore accepted for payment or paid for, and may terminate or
amend the Offer if at any time on or after the date of this Agreement and before
the acceptance of such Shares for payment or the payment therefor, any of the
following conditions exist or shall occur and remain in effect:
(a) there shall have been instituted, pending or threatened any
litigation by the Government of the United States or by any agency or
instrumentality thereof or by any other third Person or nongovernmental
entity that would be reasonably likely to (i) restrict the acquisition by
Purchaser (or any of its affiliates) of shares of Common Stock pursuant to
the Offer or restrain, prohibit or delay the making or consummation of the
Offer or the Merger, (ii) make the purchase of or payment for some or all
of the shares of Common Stock pursuant to the Offer or the Merger illegal,
(iii) impose limitations on the ability of Purchaser (or any of its
affiliates) effectively to acquire or hold, or to require Purchaser or the
Company or any of their respective affiliates or subsidiaries to dispose of
or hold separate, any portion of their assets or the business of any one of
them, (iv) impose material limitations on the ability of Purchaser or its
affiliates to exercise full rights of ownership of the shares of Common
Stock purchased by it, including, without limitation, the right to vote the
shares purchased by it on all matters properly presented to the
stockholders of the Company, (v) limit or prohibit any material business
activity by Purchaser or any of its affiliates, including, without
limitation, requiring the prior consent of any Person or entity (including
the Government of the United States of America and any instrumentality
thereof) to future transactions by Purchaser or any of its affiliates or
(vi) make materially more costly (A) the making of the Offer, (B) the
acceptance for payment of, or payment for, some or all of the Shares
pursuant to the Offer, (C) the purchase of Shares pursuant to the Offer or
(D) the consummation of the Merger; or
(b) there shall have been a subsequent development in any action or
proceeding relating to the Company or any of its Subsidiaries that would
(i) be reasonably likely to be materially adverse to Purchaser or to
Company and its Subsidiaries taken as a whole or (ii) make materially more
costly (A) the making of the Offer, (B) the acceptance for payment of, or
payment for, some or all of the shares pursuant to the Offer, (C) the
purchase of shares pursuant to the Offer or (D) the consummation of the
Merger; or
(c) there shall have been any action taken, or any Law promulgated,
enacted, entered, enforced or deemed applicable to the Offer or the Merger
by any
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<PAGE>
Governmental Entity that could directly or indirectly result in any of the
consequences referred to in subsection (a) above; or
(d) this Agreement shall have been terminated in accordance with its
terms; or
(e) (i) any of the representations and warranties made by the Company
in this Agreement that are qualified by materiality or Material Adverse
Effect shall not have been true and correct in all respects when made, or
shall thereafter have ceased to be true and correct in all respects as if
made at the scheduled or extended expiration of the Offer (except to the
extent that any such representation or warranty refers specifically to
another date, in which case such representation or warranty shall be true
and correct in all respects as of such other date), or the other
representations and warranties made by the Company in this Agreement shall
not have been true and correct in all material respects when made, or shall
thereafter have ceased to be true and correct in all material respects as
if made at the scheduled or extended expiration of the Offer (except to the
extent that any such representation or warranty refers specifically to
another date, in which case such representation or warranty shall be true
and correct in all material respects as of such other date) or (ii) the
Company shall have breached or failed to comply in any material respect
with any of its obligations under this Agreement; or
(f) Purchaser and the Special Committee shall have agreed that
Purchaser shall terminate the Offer or postpone the acceptance for payment
of or payment for Shares thereunder; or
(g) there shall have occurred (i) any general suspension of, or
limitation on prices for, trading in securities on any national securities
exchange or in the over the counter market in the United States, (ii) a
declaration of any banking moratorium by federal or state authorities or
any suspension of payments in respect of banks or any limitation (whether
or not mandatory) imposed by federal or state authorities on the extension
of credit by lending institutions in the United States, (iii) a
commencement of a war, armed hostilities or any other international or
national calamity directly or indirectly involving the United States, or
(iv) in the case of any of the foregoing existing at the time of the
commencement of the Offer, in the sole judgment of Purchaser, a material
acceleration or worsening thereof; or
(h) there shall not have been validly tendered and not withdrawn prior
to the expiration of the Offer, a number of shares of Common Stock which,
when combined with the Shares owned by Purchaser, would result in Purchaser
owning at least 90% of the shares of Common Stock issued and outstanding on
the date of purchase; or
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<PAGE>
(i) there shall have been a Material Adverse Effect with respect to
the Company, or there shall have been a change or event which could
reasonably be expected to have a Material Adverse Effect on the Company.
The foregoing conditions are for the sole benefit of Purchaser and may be
asserted by Purchaser regardless of the circumstances giving rise to any such
condition and may be waived by Purchaser, in whole or in part, at any time and
from time to time, in the sole discretion of Purchaser. The failure by Purchaser
at any time to exercise any of the foregoing rights will not be deemed a waiver
of any right, the waiver of such right with respect to any particular facts or
circumstances shall not be deemed a waiver with respect to any other facts or
circumstances, and each right will be deemed an ongoing right which may be
asserted at any time and from time to time.
Should the Offer be terminated pursuant to the foregoing provisions, all
tendered shares of Common Stock not theretofore accepted for payment shall
promptly be returned by the depositary to the tendering stockholders.
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<PAGE>
Project Redwood
PRESENTATION TO THE SPECIAL COMMITTEE
Confidential
- ------------
April 20, 2000
<PAGE>
CONFIDENTIAL PROJECT REDWOOD | APRIL 20, 2000
================================================================================
Confidential Material for the Special Committee
The following pages contain material provided to the Special Committee of the
Board of Directors of Redwood ("Redwood" or the "Company") by CIBC World
Markets Corp. ("CIBC") in connection with the proposed transaction involving
Redwood and the Heico Companies, LLC ("Heico"). The accompanying material was
compiled or prepared on a confidential basis solely for the use of the Special
Committee of the Company and not with a view toward public disclosure under
state and federal securities laws or otherwise. The information contained in
this material was obtained from the Company and public sources, and was relied
upon by CIBC without assuming responsibility of independent verification as to
the accuracy or completeness of such information. Any estimates and
projections for the Company contained herein have been supplied by the
management of the Company, and involve numerous and significant subjective
determinations, which may not be correct. No representation or warranty,
express or implied, is made as to the accuracy or completeness of such
information and nothing contained herein is, or shall be relied upon as, a
representation or warranty, whether as to the past or the future. This
material was not prepared for use by readers not as familiar with the business
and affairs of the Company as the Special Committee and, accordingly, neither
the Special Committee, the Company nor CIBC or their respective legal or
financial advisors or accountants take any responsibility for the accompanying
material when used by persons other than the Special Committee.
2
<PAGE>
TABLE OF CONTENTS PROJECT REDWOOD | APRIL 20, 2000
================================================================================
1 EXECUTIVE SUMMARY
2 REDWOOD OVERVIEW
3 INDUSTRY OVERVIEW
4 VALUATION OVERVIEW
5 APPENDICES
A Management Projections
B Comparable Companies Analysis
C Precedent Transactions Analysis
D Leveraged Buyout Analysis
E Minority Buyout Transactions Analysis
3
<PAGE>
PROJECT REDWOOD | APRIL 20, 2000
1 EXECUTIVE SUMMARY
4
<PAGE>
PROJECT REDWOOD | APRIL 20, 2000
EXECUTIVE SUMMARY
================================================================================
Introduction
On December 8, 1999, the Company received a proposal from the Heico
Companies, LLC for the acquisition by Heico, Heico Holding, Inc. and
Michael E. Heisley, Sr. (collectively, "Heico" or the "Acquiror") of all of
the Company's outstanding common stock not owned by Heico for $10 per
share.
On December 9, 1999 and December 10, 1999, class action lawsuits were filed
in Delaware and California courts alleging breach of fiduciary duties on
the part of the directors of Redwood in connection with the Heico proposal.
On December 22, 1999, the Company announced that the special committee
formed for the purpose of evaluating and responding to an acquisition
proposal received from Heico selected CIBC as its financial advisor and
Winthrop, Stimson, Putnam & Roberts as its legal counsel.
On March 7, 2000, Heico revised its offer to $11 per share in cash.
On April 20, 2000, Heico revised its offer to $11.50 per share in cash.
Heico has indicated that it would not consider selling its position to
another party should an alternative proposal arise. In its role as
financial advisor to the special committee, CIBC has evaluated the
fairness, from a financial point of view, of the consideration to be paid
to the holders of the Company's common stock (other than the Acquiror and
affiliates). As part of the due diligence process, CIBC has, among other
things:
Met with management of the Company to discuss the business, financial
performance and current projections for the Company
Visited selected facilities of the Company and conducted plant tours
Performed such analyses and investigations and reviewed such other
information as CIBC deemed appropriate
Held discussions with the Company's accountants regarding, among other
things, the Company's financial accounting and other work with the
Company
5
<PAGE>
PROJECT REDWOOD | APRIL 20, 2000
EXECUTIVE SUMMARY
================================================================================
Redwood Current Situation
Company Financial Overview
Over the past 5 years, Redwood has achieved an average revenue growth
of approximately 2.4% while consistently improving profitability
margins
Revenues have grown from $265 million in 1995 to $286 million for
1999
During the same period, operating margins have risen from
approximately 6.0% in 1995 to 12.3% in 1999
The Company maintains a strong cash position. As of 3/31/00, the
Company had approximately $63.1 million of cash on its books with $8.9
million of debt
Market Performance
Redwood's stock price has significantly underperformed the overall
markets as measured by the Dow Jones Industrial Average ("DJIA") and
the S&P 500 Index ("S&P 500")
As measured from the closing stock price of $7.875 on 12/7/99 (1
trading day prior to public announcement of the Heico proposal),
Redwood's stock price returned 0.0% and -1.6% over a 1 year and 3 year
period, respectively
During the 1 year period from 12/7/98 to 12/7/99, the DJIA and the S&P
500 returned 22.5% and 18.7%, respectively, compared to a return of
0.0% for the stock price of Redwood
During the 3 year period from 12/6/96 to 12/7/99, the DJIA and the S&P
500 returned 74.0% and 90.5%, respectively, compared to a return of -
1.6% for the stock price of Redwood
During the 1 year period from 12/7/98 to 12/7/99 and 3 year period
from 12/6/96 to 12/7/99, an index of comparable companies returned -
20.9% and -4.2%, respectively
6
<PAGE>
PROJECT REDWOOD | APRIL 20, 2000
EXECUTIVE SUMMARY
================================================================================
Redwood Current Situation
Factors Affecting Valuation
Heico majority ownership overhang (approximately 69.5%)
Small market capitalization ($127 million at unaffected stock price
of $7.875)
No Wall Street research coverage
Limited public float (approximately 4.6 million shares available)
Limited trading liquidity (average of 6,100 shares traded daily
over past year prior to proposal announcement)
Perceived legacy issues involving environmental claims and divested
businesses
7
<PAGE>
PROJECT REDWOOD | APRIL 20, 2000
2 REDWOOD OVERVIEW
8
<PAGE>
PROJECT REDWOOD | APRIL 20, 2000
REDWOOD OVERVIEW
================================================================================
Business Overview
Redwood was formed on November 8, 1990 by the merger of Red and Cedar;
today the operations of the Company consist solely of the Metal
Buildings Group
The Metal Buildings Group consists of three custom engineered metal
building operations: Cedar Building Systems, Sandal Building Systems,
and Red Building Systems (Canada)
The Company's metal building systems are currently manufactured at five
U.S. plants with one located in each of California, Mississippi and
North Carolina and two in Iowa (a Tennessee plant is currently in
production). The Company has one plant outside of the U.S. located in
Ontario, Canada
Redwood Sales by Operations Redwood Sales by Region
[CHART APPEARS HERE]
[PLOT POINTS TO COME]
9
<PAGE>
PROJECT REDWOOD | APRIL 20, 2000
REDWOOD OVERVIEW
================================================================================
Financial Review/(1)/
(Figures in Thousands)
[GRAPHS APPEAR HERE]
[PLOT POINTS TO COME]
(1) 1996 net income normalized for tax credits
10
<PAGE>
PROJECT REDWOOD | APRIL 20, 2000
REDWOOD OVERVIEW
================================================================================
Financial Forecast/(1)/
(Figures in Millions)
<TABLE>
<CAPTION>
Management Case Downside Case
------------------------------------------------ ------------------------------------------------
1999 2000 2001 2002 2003 1999 2000 2001 2002 2003
-------- -------- -------- ------- ------- -------- -------- -------- ------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Revenues $285.8 $343.4 $356.9 $369.5 $383.4 $285.8 $343.4 $291.9 $291.9 $343.4
Growth -- 20.2% 3.9% 3.5% 3.8% -- 20.2% -15.0% 0.0% 17.6%
EBITDA 40.5 42.0 47.3 48.9 50.8 40.5 42.0 28.6 29.2 42.0
Margin 14.2% 12.2% 13.2% 13.2% 13.2% 14.2% 12.2% 9.8% 10.0% 12.2%
EBIT 35.1 35.5 39.3 40.4 41.7 35.1 35.5 20.8 21.0 33.4
Margin 12.3% 10.3% 11.0% 10.9% 10.9% 12.3% 10.3% 7.1% 7.2% 9.7%
Net Income 22.8 22.2 25.3 26.5 27.9 22.8 22.2 13.7 14.0 22.0
Margin 8.0% 6.5% 7.1% 7.2% 7.3% 8.0% 6.5% 4.7% 4.8% 6.4%
<CAPTION>
Recession Case
-----------------------------------------------
1999 2000 2001 2002 2003
-------- -------- -------- ------- ------
<S> <C> <C> <C> <C> <C>
Revenues $285.8 $343.4 $280.6 $280.6 $343.4
Growth -- 20.2% -18.3% 0.0% 22.4%
EBITDA 40.5 42.0 6.4 6.8 42.0
Margin 14.2% 12.2% 2.3% 2.4% 12.2%
EBIT 35.1 35.5 (1.4) (1.4) 33.4
Margin 12.3% 10.3% -0.5% -0.5% 9.7%
22.8 22.2 0.0 0.0 22.0
Net Income 8.0% 6.5% 0.0% 0.0% 6.4%
Margin
</TABLE>
(1) Source: Management estimatES
[GRAPHS APPEARS HERE]
[PLOT POINTS TO COME]
11
<PAGE>
PROJECT REDWOOD | APRIL 20, 2000
REDWOOD OVERVIEW
================================================================================
Price Volume Graph - 4/16/99-4/19/00
[GRAPH APPEARS HERE]
[PLOT POINTS TO COME]
(A) 4/19/99: Redwood announced 1/st/ quarter profit rise ($0.23 1Q99 vs.
$0.22 1Q98).
(B) 7/16/99: Redwood announced 2/nd/ quarter results ($0.34 2Q99 vs. $0.41
2Q98).
(C) 10/15/99: Redwood announced 3/rd/ quarter results ($0.42 3Q99 vs. $0.39
3Q98).
(D) 12/8/99: Redwood announced it received a proposal from Heico for $10 per
share.
(E) 12/22/99: Redwood's Special Committee announced selection of advisors and
announced 2 class action lawsuits against the proposed
transaction.
(F) 2/7/00: Redwood announced 4/th/ quarter results ($0.42 4Q99 vs. $0.39
4Q98).
(G) 3/28/00: Redwood acquisition proposal under discussion.
12
<PAGE>
PROJECT REDWOOD | APRIL 20, 2000
REDWOOD OVERVIEW
================================================================================
Price Volume Graph - 4/16/99-4/19/00
[Graph appears here]
[Plot Points to come]
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CIBC
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13
<PAGE>
PROJECT REDWOOD | APRIL 20, 2000
REDWOOD OVERVIEW
================================================================================
Relative Price Performance - 4/16/99-4/19/00
[Graph appears here]
[Plot Points to come]
Building Products Composite consists of NCS, BBR, JM, OWC, USG, DSD, KVCO, CGM,
SIDE, MBSI Comparable Companies Composite consists of NCS and BBR
[LOGO]
CIBC
World Markets
14
<PAGE>
PROJECT REDWOOD | APRIL 20, 2000
REDWOOD OVERVIEW
================================================================================
Relative Price Performance - 4/18/97-4/19/00
[Graph appears here]
[Plot Points to come]
Building Products Composite consists of NCS, BBR, JM, OWC, USG, DSD, KVCO, CGM,
SIDE, MBSI Comparable Companies Composite consists of NCS and BBR
[LOGO]
CIBC
World Markets
15
<PAGE>
PROJECT REDWOOD | APRIL 20, 2000
REDWOOD OVERVIEW
================================================================================
Volume Traded at Various Prices - 4/16/99-4/19/00
[Graph appears here]
[Plot Points to come]
Note: 2.0 mm cumulative shares were traded during the LTM period, representing
12% of the 16 mm shares outstanding and 43% of Redwood's public float
[LOGO]
CIBC
World Markets
16
<PAGE>
PROJECT REDWOOD | APRIL 20, 2000
REDWOOD OVERVIEW
================================================================================
Volume Traded at Various Prices - 4/17/98-4/19/00
[Graph appears here]
[Plot Points to come]
Note: 3.2 mm cumulative shares were traded during the last two year period,
representing 20% of the 16 mm shares outstanding and 70% of Redwood's public
float
[LOGO]
CIBC
World Markets
17
<PAGE>
PROJECT REDWOOD | APRIL 20, 2000
REDWOOD OVERVIEW
==============================================================================
Ownership Profile
Source: CDA dated 12/31/99, Proxy dated 4/26/99.
Institutional Holders
Cumulative
Institutional Holders Shares Percent Percent
- ----------------------------- ------------- ---------- -------------
FIDELITY MGMT & RESEARCH CO 1,017,600 6.3% 6.3%
.............................................................................
INGALLS & SNYDER LLC 392,154 2.4% 8.8%
DIMENSIONAL FD ADVISORS, INC. 336,576 2.1% 10.8%
INVERNESS COUNSEL, INC. 250,000 1.6% 12.4%
BARCLAYS BANK PLC 198,966 1.2% 13.6%
WELLS FARGO & (NORWEST CORP) 188,707 1.2% 14.8%
PARADIGM CAPITAL MANAGEMENT 171,700 1.1% 15.9%
BRANDYWINE ASSET MGMT, INC. 70,600 0.4% 16.3%
TOWNELEY CAPITAL MANAGEMENT 52,800 0.3% 16.6%
NORTHERN TRUST COMPANY OF CT 35,800 0.2% 16.9%
CONNING ASSET MANAGEMENT CO 33,100 0.2% 17.1%
MELLON PRIVATE ASSET MGMT 24,651 0.2% 17.2%
NORTHERN TRUST COMPANY 22,950 0.1% 17.4%
SCUDDER KEMPER INVTS, INC. 21,400 0.1% 17.5%
WACHOVIA ASSET MANAGEMENT 19,671 0.1% 17.6%
Other Institutional 11,202 0.1% 17.7%
- ----------------------------- ------------ ---------- -------------
Total Institutional Ownership 2,847,877 17.7% 17.7%
Insider Ownership
Cumulative
Insiders Shares Percent Percent
- ----------------------------- ------------- ---------- -------------
Michael Heisley (1) 10,542,071 65.5% 65.5%
Andrew & Gregg Sage 250,112 1.6% 67.0%
E.A. Roskovensky 140,000 0.9% 67.9%
Ronald Stevens 15,000 0.1% 68.0%
Stanley Berman 1,127 0.0% 68.0%
Stanley Meadows 964 0.0% 68.0%
Michael Heisley, Jr. 516 0.0% 68.0%
- ----------------------------- ------------- ---------- -------------
Total Insiders 10,949,790 68.0% 68.0%
Distribution Summary
Shares Percent
----------- ---------
Institutional Holders (Excl. 5% Holders) 1.830,277 11.5%
5% Institutional Holders 1,017,600 6.3%
Insider Ownership 10,949,790 68.0%
Retail 2,298,883 14.3%
- ----------------------------------- ----------- ---------
Total Shares Outstanding 16,096,550 100.0%
(1) Michael Heisley shares, as stated in press release dated 12/8/99, is
11,156,363.
[Pie Chart appears here]
[Plot Points to come]
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<PAGE>
PROJECT REDWOOD | APRIL 20, 2000
3 INDUSTRY OVERVIEW
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CIBC
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19
<PAGE>
PROJECT REDWOOD | APRIL 20, 2000
INDUSTRY OVERVIEW
==============================================================================
Industry Review
The Prefabricated Metal Buildings Industry is composed of firms that
fabricate the components of complete low-rise nonresidential building
systems such as office buildings, retail stores, fast-food
restaurants, warehouses, recreational facilities, manufacturing
facilities, schools, churches, storage buildings, and agricultural
buildings
The Metal Buildings Industry is dominated by a few key players
Factors driving demand include:
Faster construction speed
Lower, more stable material costs
Lower construction costs
Improved aesthetics
Ease of expansion and flexibility of design
Industry demand for Metal Building Systems is cyclical and highly
sensitive to overall economic conditions, dependent to a large degree
upon the level of non-residential construction activity, the
availability of financing for construction projects, interest rates
and other factors that affect the construction industry
According to the Metal Building Manufacturers Association ("MBMA"),
demand in the industry has risen from $2.3 billion in 1996 to $2.5
billion in 1997 and $2.7 billion in 1998
Source: OneSource Information Services; MBMA; First Call Estimates
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<PAGE>
PROJECT REDWOOD | APRIL 20, 2000
INDUSTRY OVERVIEW
=============================================================================
Industry Overview
The five largest Metal Buildings manufacturers accounted for
approximately 69% of the industry in 1996, 68% in 1997 and 63% in 1998
The non-residential market for metal buildings consisted of three
distinct markets according to industry sales: Manufacturing,
Commercial, and Institutional/Others Buildings
[Pie Chart appears here]
[Plot Points to come]
Source: OneSource Information Services; MBMA; First Call Estimates
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<PAGE>
PROJECT REDWOOD | APRIL 20, 2000
INDUSTRY OVERVIEW
==============================================================================
Industry Overview
Presently, metal building systems dominate the one and two story
nonresidential building market, typically 150,000 square feet or less
in size, with nearly 70% market penetration
The Metal Building Industry has also been capturing a larger share of
the total construction market since 1990
Metal building construction (metal systems represent 15-20% on average
of a construction project cost) has increased its share of the
construction market from 4.0% in 1990 to 5.6% in 1998
Metal Building Construction as a % of Adjusted Value of
Construction (1) 1990-1998
[Graph appears here]
[Plot Points to come]
Source: OneSource Information Services; MBMA; First Call Estimates; Department
of Commerce (1) Adjusted value of construction data includes nonresidential
buildings, farm nonresidential and public construction - (buildings) as defined
by the Department of Commerce.
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<PAGE>
PROJECT REDWOOD | APRIL 20, 2000
INDUSTRY OVERVIEW
==============================================================================
Relative Price Performance - 4/18/90-4/19/00
[Graph appears here]
[Plot Points to come]
Building Products Composite consists of NCS, BBR, JM, OWC, USG, DSD, KVCO, CGM,
SIDE, MBSI Comparable Companies Composite consists of NCS and BBR
[LOGO]
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23
<PAGE>
PROJECT REDWOOD | APRIL 20, 2000
INDUSTRY OVERVIEW
==============================================================================
Industry Outlook
A 2-3% annual average growth in product shipments is anticipated
through 2003
Growth should be driven by better penetrating primary markets and new
areas such as the institutional/others market, which includes: schools,
prisons and churches
Demand should be less cyclical than in the past as the industry has
become less reliant on the industrial sector
Exports offer prospects for growth
Exports represent only about 5% of domestic output
[Graphs appear here]
[Plot Points to come]
Source: OneSource Information Services; MBMA; First Call Estimates
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<PAGE>
PROJECT REDWOOD | APRIL 20, 2000
4 VALUATION OVERVIEW
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CIBC
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25
<PAGE>
PROJECT REDWOOD | APRIL 20, 2000
CIBC World Markets reviewed various market indicators and employed the following
methodologies
VALUATION OVERVIEW
================================================================================
Description of Methodologies
<TABLE>
<CAPTION>
Methodology Advantages Limitations
<S> <C> <C>
Publicly Traded Reflects current, market-based . Financial information available for the companies is generally
Companies Analysis valuation information limited to historical data and 1-2 years EPS forecasts - no long-
term projections
. Current market multiples may be market driven and may not be
representative of long-term growth prospects
. Does not take into account control premium
- ------------------------------------------------------------------------------------------------------------------------------------
Precedent Reflects direct evidence of value . Similar constraints as publicly traded companies analysis
Transactions Analysis in an acquisition context -
including any `control premium' . Precedent multiples depend on market conditions at the time of the
transaction
- ------------------------------------------------------------------------------------------------------------------------------------
Discounted Cash Reflects expected future cash flow . Financial information is necessarily based on the judgement of
Flow Analysis of the business - directly related management preparing projections
to the business being valued
. Does not include any "synergies" available to an acquiror
- ------------------------------------------------------------------------------------------------------------------------------------
Leveraged Buyout Reflects what a financial buyer . Stand-alone LBO does not include synergies and may to
Analysis can afford to pay for a company underestimate strategic sale value
subject financing limitations and
required rates of return on . Value obtained is sensitive to projections and operating
investment assumptions
- ------------------------------------------------------------------------------------------------------------------------------------
Premiums Paid in Reflects premiums paid in minority . May be impacted by liquidity of stock
Minority Buyout buyout transactions
Transactions Analysis . Typically does not involve change of control premium
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
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26
<PAGE>
PROJECT REDWOOD | APRIL 20, 2000
VALUATION OVERVIEW
================================================================================
Valuation Summary
(Figures in Dollars per Share)
[GRAPH APPEARS HERE]
[PLOT POINTS APPEAR HERE]
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27
<PAGE>
PROJECT REDWOOD | APRIL 20,2000
VALUATION OVERVIEW
================================================================================
Valuation Summary
(Figures in Millions, Except per Share Data)
<TABLE>
<CAPTION>
-------------------------------------------------
Average Net Debt $44.2
Fully Diluted Shares Outstanding 16.1
-------------------------------------------------
I. Comparable Company Analysis
- --------------------------------------------------------------------------------------------------------------------------------
Financial Multiple Range Enterprise Value Equity Value Per Share Amount
---------------------- ---------------------- -------------------- ---------------------
Statistic Low High Low High Low High Low High
------------ ---------- --------- --------- -------- -------- -------- --------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
LTM Revenues $294.5 0.20x 0.83x $ 57.8 $245.5 $101.9 $289.6 $ 6.33 $17.99
LTM EBITDA 41.2 3.5 5.6 142.4 230.9 186.6 275.1 11.59 17.09
LTM EBIT 36.7 5.4 7.1 196.8 259.2 240.9 303.4 14.97 18.85
2000E E.P.S. (1) $ 1.38 6.6 6.6 -- -- -- -- 9.07 9.14
-----------------------------------------
Reference Range $10.50 $15.75
-----------------------------------------
II. Precedent Transaction Analysis
- --------------------------------------------------------------------------------------------------------------------------------
Financial Multiple Range Enterprise Value Equity Value Per Share Amount
---------------------- ---------------------- -------------------- ---------------------
Statistic Low High Low High Low High Low High
------------ ---------- --------- --------- -------- -------- -------- --------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
LTM Revenues $294.5 0.58x 0.71x $ 170.8 $209.1 $215.0 $253.3 $13.36 $15.74
LTM EBITDA 41.2 4.7 6.0 193.7 247.3 237.9 291.4 14.78 18.11
LTM EBIT 36.7 5.0 7.5 183.4 275.1 227.6 319.3 14.14 19.84
LTM E.P.S.(2) $ 1.45 8.9 11.4 -- -- -- -- 12.96 16.60
-----------------------------------------
Reference Range $13.75 $17.50
-----------------------------------------
</TABLE>
__________________________________
(1) Based on management estimates.
(2) Excludes approximately $1.2 million of one time non-recurring expenses.
[LOGO]
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28
<PAGE>
PROJECT REDWOOD | APRIL 20, 2000
VALUATION OVERVIEW
===============================================================================
Valuation Summary
(Figures in Millions, Except per Share Data)
<TABLE>
<CAPTION>
III. Discounted Cash Flow Analysis/(1)/
- ------------------------------------------------------------------------------------------------------------------------------------
Discount Rate EBITDA Exit Multiple Equity Value Per Share Amount
--------------- -------------------- ---------------- ------------------
Low High Low High Low High Low High
----- ---- ------- ------ ------- ------- ------ ------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Based upon Management Case 2000-2003 projections 12% 15% 3.5x 4.5x $215.2 $263.9 $13.37 $16.40
-----------------------------------------
Reference Range $13.50 $16.50
-----------------------------------------
Discount Rate EBITDA Exit Multiple Equity Value Per Share Amount
--------------- -------------------- ---------------- ------------------
Low High Low High Low High Low High
----- ---- ------- ------ ------- ------- ------ ------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Based upon Downside Case 2000-2003 projections 12% 15% 3.5x 4.5x $184.4 $224.3 $11.45 $13.93
-----------------------------------------
Reference Range $11.50 $14.00
-----------------------------------------
Discount Rate EBITDA Exit Multiple Equity Value Per Share Amount
--------------- -------------------- ---------------- ------------------
Low High Low High Low High Low High
----- ---- ------- ------ ------- ------- ------ ------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Based upon Recession Case 2000-2003 projections 12% 15% 3.5x 4.5x $165.1 $203.7 $10.26 $12.65
-----------------------------------------
Reference Range $10.25 $12.75
-----------------------------------------
IV. Leveraged Buyout Analysis/(1)/
- ------------------------------------------------------------------------------------------------------------------------------------
Discount Rate EBITDA Exit Multiple Equity Value Per Share Amount
--------------- -------------------- ---------------- ------------------
Low High Low High Low High Low High
----- ---- ------- ------ ------- ------- ------ ------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Based upon Management Case 2000-2003 projections 3.5x 4.5x 30.0% 40.0% $182.7 $215.4 $11.35 $13.38
-----------------------------------------
Reference Range $11.25 $13.50
-----------------------------------------
Discount Rate EBITDA Exit Multiple Equity Value Per Share Amount
--------------- -------------------- ---------------- ------------------
Low High Low High Low High Low High
----- ---- ------- ------ ------- ------- ------ ------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Based upon Downside Case 2000-2003 projections 3.5x 4.5x 30.0% 40.0% $169.4 $192.8 $10.53 $11.98
-----------------------------------------
Reference Range $10.25 $11.75
-----------------------------------------
</TABLE>
__________________________________
(1) Based on management estimates.
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29
<PAGE>
PROJECT REDWOOD | APRIL 20, 2000
VALUATION OVERVIEW
================================================================================
Valuation Summary
(Figures in Millions, Except per Share Data)
<TABLE>
<CAPTION>
V. Premiums Paid in Minority Buyout Transactions
- ------------------------------------------------------------------------------------------------------------------------------------
Price Prior to Average Premium (1 Day, 1 Week, 4 Weeks) Per Share Amount
---------------------------------------- -----------------------------
Announcement 25th % 50th % 75th % Low High
------------ ------------ ---------- -------------- ------------ --------------
<S> <C> <C> <C> <C> <C> <C>
Premiums Prior to Announcement Date $7.88 15.7% 24.9% 39.0% $9.11 $10.95
---------------------------------------------------
Reference Range $9.00 $11.00
---------------------------------------------------
</TABLE>
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<PAGE>
PROJECT REDWOOD | APRIL 20, 2000
VALUATION OVERVIEW
================================================================================
Comparable Companies Analysis
(Figures in Millions, Except per Share Data)
<TABLE>
<CAPTION>
Market
Ticker Current Shares Value of Total
Symbol/ Share Price Outstanding Common Total Enterprise
Company Name Exchange 4/19/00 (MM) Stock Net Debt (2) Value
- ----------------------------- ---------- ------------- ------------- ------------ -------------- ------------
<S> <C> <C> <C> <C> <C> <C>
Pre-Engineered Metal Buildings
NCI Building Systems, Inc. NCS $19.00 18.6 $353.3 $442.0 $795.3
Butler Manufacturing Company BBR 23.25 6.9 160.3 33.7 194.0
- ---------------------------------------------------------------------------------------------------------------------
Redwood (1) $11.50 16.1 $185.1 ($44.2) $141.0
- ---------------------------------------------------------------------------------------------------------------------
<CAPTION>
Enterprise Value to LTM Price/Earnings
--------- --------------- ----------------
Company Name Sales EBITDA EBIT LTM 2000E
- ----------------------------- --------- --------------- ----------------
<S> <C> <C> <C> <C> <C>
Pre-Engineered Metal Buildings
NCI Building Systems, Inc. 0.83x 5.6x 7.1x 7.3x 6.6x
Butler Manufacturing Company 0.20x 3.5x 5.4x 7.2x 6.6x
- -----------------------------------------------------------------------------------------------
Redwood (1) 0.48x 3.4x 3.9x 7.9x 8.3x
- -----------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
-------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
High 0.83x 5.6x 7.1x 7.3x 6.6x
Mean 0.51x 4.5x 6.2x 7.2x 6.6x
Median 0.51x 4.5x 6.2x 7.2x 6.6x
Low 0.20x 3.5x 5.4x 7.2x 6.6x
-------------------------------------------------------------------
</TABLE>
Legend:
NM = Not Meaningful
UA = Unavailable
(1) Caculations based upon $11.50 per share
(2) Average net debt of last four quarters used to adjust for seasonality of
business.
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<PAGE>
PROJECT REDWOOD | APRIL 20, 2000
VALUATION OVERVIEW
================================================================================
Precedent Transactions Analysis
(Figures in Thousands, Except per Share Data)
<TABLE>
<CAPTION>
Date Offer Net Firm Offer
Target Acquiror Announced Value Debt (a) Value(b) Price(c)
- -------------------------------- ----------------------- ------------------- ------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
Miller Building Systems, Inc. Modtech Inc. (Public) 9/23/99 $24,190 $8,027 $32,217 $7.15
(Public) (d)
American Building Co. (Public) Onex Corp (Public) 4/8/99 183,800 70,543 254,343 36.00
Associated Building Systems Jenisys (Division of 12/16/97 95,000 0 95,000 NA
(Private) Jannock)
Mesco Metal Building (Division of NCI Building Systems Inc. 3/5/96 22,000 (1,423) 20,577 NA
Anderson) (Public)
- -------------------------------------------------------------------------------------------------------------------
High
Median
Mean
Low
- -------------------------------------------------------------------------------------------------------------------
Redwood (Public) Heico (Private) 12/8/99 $185,110 ($44,159) $140,951 $11.50
- -------------------------------------------------------------------------------------------------------------------
<CAPTION>
Offer Price / EPS Firm Value (b) / LTM
------------------- ----------------------
Target (c) LTM FY + 1 Rev. EBITDA EBIT
- ---------------------------------------------- -------- --------- ------ ------ -----
<S> <C> <C> <C> <C> <C>
Miller Building Systems, Inc. (Public) (d) 9.8 x 7.9 x 0.49x 5.3 x 6.7 x
American Building Co. (Public) 11.4 11.1 0.58 6.0 7.5
Associated Building Systems (Private) NM NA 0.71 NA NA
Mesco Metal Building (Division of 8.9 NM 0.64 4.7 5.0
Anderson)
- ---------------------------------------------------------------------------------------------------------
High 11.4 x 11.1 x 0.7 x 6.0 x 7.5 x
Median 10.2 11.1 0.6 5.4 6.3
Mean 10.2 11.1 0.6 5.4 6.3
Low 8.9 11.1 0.6 4.7 5.0
- ---------------------------------------------------------------------------------------------------------
Redwood (Public) Heico (Private) 7.9 x 8.3 x 0.48x 3.4 x 3.9x
- ---------------------------------------------------------------------------------------------------------
</TABLE>
Note: EBITDA, EBIT and EPS adjusted for unusual and nonrecurring items.
LTM: Latest Twelve Months.
NM: Not Meaningful. NA: Not Available.
(a) Net Debt equals straight debt, minority interest, straight preferred
stock, all convertibles (if applicable), less investments in
unconsolidated affiliates and cash.
(b) Firm Value (FV) equals Offer Value for the Equity of the Target plus Net
Debt.
(c) If more than one class of shares exist, refers to price of Class A shares.
(d) Transaction was terminated on 10/18/99 and excluded as a transaction
multiple.
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<PAGE>
PROJECT REDWOOD | APRIL 20, 2000
<TABLE>
<CAPTION>
VALUATION OVERVIEW
=======================================================================================================
Discounted Cash Flow Analysis - Management Case
(Figures in Millions, Except per Share Data)
Projected Fiscal Year Ending December 31,
-----------------------------------------
2000 2001 2002 2003
-----------------------------------------
<S> <C> <C> <C> <C>
Revenue $ 343.4 $ 356.9 $ 369.5 $ 383.4
EBITDA 42.0 47.3 48.9 50.8
Less: Depreciation (5.7) (7.1) (7.8) (8.2)
-----------------------------------------
EBITA 36.3 40.1 41.2 42.6
Less: Taxes @ 38.50% (14.0) (15.5) (15.9) (16.4)
-----------------------------------------
Tax-effected EBITA 22.3 24.7 25.3 26.2
Plus: Depreciation 5.7 7.1 7.8 8.2
Less: Capital Expenditures (10.0) (10.0) (8.0) (6.0)
Less: Changes in Working Capital 7.0 (0.1) 0.3 0.3
-----------------------------------------
Free Cash Flow (d) $ 18.8 $ 21.8 $ 25.4 $ 28.6
=========================================
</TABLE>
<TABLE>
<CAPTION>
A + B = C +
--- ---- ----
Discounted (a) PV of Terminal Value as a
Cash Flows Multiple of 2003 EBITDA (b) Firm Value
--------------------------- ------------------------------
Discount Rate (2000-2003) 3.5x 4.0x 4.5x 3.5x 4.0x 4.5x
- ------------- ----------- --------------------------- ------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
12.0% $ 70.4 $ 116.2 $ 132.8 $ 149.4 $ 186.6 $ 203.2 $ 219.8
13.0% 68.8 112.4 128.4 144.5 181.2 197.3 213.3
14.0% 67.3 108.7 124.2 139.8 176.0 191.6 207.1
15.0% 65.9 105.2 120.2 135.3 171.1 186.1 201.1
</TABLE>
<TABLE>
<CAPTION>
- D = E
---- ----
Average Total Equity Value Equity Value per Share (c)
Net Debt + -------------------------- -------------------------
Discount Rate Preferred (e) 3.5x 4.0x 4.5x 3.5x 4.0x 4.5x
- ------------- ------------ -------------------------- -------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
12% ($44.2) $230.7 $247.3 $263.9 $14.33 $15.37 $16.40
13% ($44.2) 225.4 241.4 257.5 14.00 15.00 16.00
14% ($44.2) 220.2 235.7 251.3 13.68 14.65 15.61
15% ($44.2) 215.2 230.3 245.3 13.37 14.31 15.24
-------------------------
</TABLE>
_______________________________________________________________________________
(a) Present values calculated as of March 31, 2000.
(b) Discounted 3.75 years; based on FYE December 31, 2003 EBITDA multiple.
(c) Based on 16.1 million shares outstanding.
(d) Full year 2000 free cash flow adjusted to 75% to estimate valuation as of
3/31/00.
(e) Average net debt used to reflect seasonality of business.
Source: Management estimates
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<PAGE>
PROJECT REDWOOD | APRIL 20, 2000
VALUATION OVERVIEW
================================================================================
Discounted Cash Flow Analysis - Downside Case
(Figures in Millions, Except per Share Data)
<TABLE>
<CAPTION>
Projected Fiscal Year Ending December 31,
------------------------------------------
2000 2001 2002 2003
------------------------------------------
<S> <C> <C> <C> <C>
Revenue $ 343.4 $ 291.9 $ 291.9 $ 343.4
EBITDA 42.0 28.6 29.2 42.0
Less: Depreciation (5.7) (7.0) (7.4) (7.8)
-----------------------------------------
EBITA 36.3 21.7 21.8 34.2
Less: Taxes @ 38.50% (14.0) (8.3) (8.4) (13.2)
-----------------------------------------
Tax-effected EBITA 22.3 13.3 13.4 21.0
Plus: Depreciation 5.7 7.0 7.4 7.8
Less: Capital Expenditures (10.0) (5.0) (5.0) (6.0)
Less: Changes in Working Capital 7.0 5.2 0.3 (4.2)
-----------------------------------------
Free Cash Flow (d) $ 18.8 $ 20.4 $ 16.1 $ 18.7
=========================================
</TABLE>
<TABLE>
<CAPTION>
A + B = C +
---------- ------------------------- ------------------------
Discounted (a) PV of Terminal Value as a
Cash Flows Multiple of 2003 EBITDA (b) Firm Value
-------------------------- ------------------------
Discount Rate (2000-2003) 3.5x 4.0x 4.5x 3.5x 4.0x 4.5x
- ------------- ---------- -------------------------- ------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
12.0% $ 56.4 $ 96.2 $ 109.9 $ 123.7 $ 152.6 $ 166.4 $ 180.1
13.0% 55.3 93.0 106.3 119.6 148.3 161.6 174.9
14.0% 54.2 90.0 102.9 115.7 144.2 157.0 169.9
15.0% 53.1 87.1 99.5 112.0 140.2 152.6 165.1
- D = E
--------- --------------------------
Average
Net Debt + Total Equity Value Equity Value per Share (c)
-------------------------- --------------------------
Discount Rate Preferred (e) 3.5x 4.0x 4.5x 3.5x 4.0x 4.5x
- ------------- ------------- -------------------------- --------------------------
12% ($ 44.2) $ 196.8 $ 210.5 $ 224.3 $ 12.23 $ 13.08 $ 13.93
13% ($ 44.2) 192.5 205.8 219.1 11.96 12.78 13.61
14% ($ 44.2) 188.3 201.2 214.1 11.70 12.50 13.30
15% ($ 44.2) 184.4 196.8 209.2 11.45 12.23 13.00
--------------------------
</TABLE>
____________________________
(a) Present values calculated as of March 31, 2000.
(b) Discounted 3.75 years; based on FYE December 31,
2003 EBITDA multiple.
(c) Based on 16.1 million shares outstanding.
(d) Full year 2000 free cash flow adjusted to 75% to estimate
valuation as of 3/31/00.
(e) Average net debt used to reflect seasonality of
business.
Source: Management estimates
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<PAGE>
PROJECT REDWOOD / APRIL 20, 2000
VALUATION OVERVIEW
================================================================================
Discounted Cash Flow Analysis - Recession Case
(Figures in Millions, Except per Share Data)
Projected Fiscal Year Ending December 31,
-----------------------------------------
2000 2001 2002 2003
-----------------------------------------
Revenue $ 343.4 $ 280.6 $ 280.6 $ 343.4
EBITDA 42.0 6.4 6.8 42.0
Less: Depreciation (5.7) (7.0) (7.4) (7.8)
-----------------------------------------
EBITA 36.3 (0.6) (0.6) 34.2
Less: Taxes @ 38.50% (14.0) 0.2 0.2 (13.2)
-----------------------------------------
Tax-effected EBITA 22.3 (0.4) (0.4) 21.0
Plus: Depreciation 5.7 7.0 7.4 7.8
Less: Capital Expenditures (10.0) (5.0) (5.0) (6.0)
Less: Changes in Working Capital 7.1 6.1 0.9 (5.7)
-----------------------------------------
Free Cash Flow (d) $ 18.8 $ 7.7 $ 3.0 $ 17.1
=========================================
<TABLE>
<CAPTION>
A + B = C +
---------- ---------------------------- ----------------------------
Discounted (a) PV of Terminal Value as a
Cash Flows Multiple of 2003 EBITDA (b) Firm
---------------------------- -----------------------------
Discount Rate (2000-2003) 3.5x 4.0x 4.5x 3.5x 4.0x 4.5x
- ------------- ----------- ---------------------------- -----------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
12.0% $ 36.0 $ 96.1 $ 109.8 $ 123.6 $ 132.1 $ 145.8 $ 159.5
13.0% 35.3 93.0 106.2 119.5 128.2 141.5 154.8
14.0% 34.6 89.9 102.8 115.6 124.5 137.4 150.2
15.0% 33.9 87.0 99.5 111.9 121.0 133.4 145.9
<CAPTION>
D = E
------------- ----------------------------
Average
Net Debt + Total Equity Value Equity Value per Share (c)
---------------------------- --------------------------
Discount Rate Preferred (e) 3.5x 4.0x 4.5x 3.5x 4.0x 4.5x
- ------------- ------------- ---------------------------- --------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
12% ($44.2) $176.2 $190.0 $203.7 $10.95 $11.80 $12.65
13% ($44.2) 172.4 185.7 198.9 10.71 11.53 12.36
14% ($44.2) 168.7 181.5 194.4 10.48 11.28 12.08
15% ($44.2) 165.1 177.6 190.0 10.26 11.03 11.80
--------------------------
</TABLE>
_______________________________________________
(a) Present values calculated as of March 31, 2000.
(b) Discounted 3.75 years; based on FYE December 31, 2003 EBITDA multiple.
(c) Based on 16.1 million shares outstanding.
(d) Full year 2000 free cash flow adjusted to 75% to estimate valuation as of
3/31/00.
(e) Average net debt used to reflect seasonality of business.
Source: Management estimates
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<PAGE>
PROJECT REDWOOD | APRIL 20, 2000
VALUATION OVERVIEW
================================================================================
LBO Returns Summary - Management Case
(Figures in Millions, Except per Share Data)
Purchase Price @ $11.25 Purchase Price @ $13.50
- --------------------------------------------------------------------------------
Sources and Uses of Funds Sources and Uses of Funds
- --------------------------------------------------------------------------------
Sources Sources
- ------- -------
Cash on Hand $ 37.5 Cash on Hand $ 37.5
New Senior Bank 113.0 New Senior Bank 113.0
New Equity 37.3 New Equity 70.0
------ ------
$187.9 $220.6
Uses Uses
- ---- ----
Purchase Price $182.7 Purchase Price $215.4
Estimated Transaction Costs 5.2 Estimated Transaction Costs 5.2
------ ------
$187.9 $220.6
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Credit Ratios Credit Ratios
- --------------------------------------------------------------------------------
LTM LTM
---- ----
Net Debt/EBITDA 2.5x Net Debt/EBITDA 2.5x
EBITDA/Total Interest Expense 3.3x EBITDA/Total Interest Expense 3.3x
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
IRR IRR
- --------------------------------------------------------------------------------
2002 2003 2002 2003
3.5x 45% 40% 3.5x 18% 20%
4.0x 55% 46% 4.0x 26% 25%
4.5x 64% 51% 4.5x 33% 30%
- --------------------------------------------------------------------------------
36
<PAGE>
PROJECT REDWOOD | APRIL 20, 2000
VALUATION OVERVIEW
================================================================================
LBO Returns Summary - Downside Case
(Figures in Millions, Except per Share Data)
Purchase Price @ $10.50 Purchase Price @ $12.00
- --------------------------------------------------------------------------------
Sources and Uses of Funds Sources and Uses of Funds
- --------------------------------------------------------------------------------
Sources Sources
- ------- -------
Cash on Hand $ 37.5 Cash on Hand $ 37.5
New Senior Bank 113.0 New Senior Bank 113.0
New Equity 24.1 New Equity 47.5
------ ------
$174.6 $198.0
Uses Uses
- ---- ----
Purchase Price $169.4 Purchase Price $192.8
Estimated Transaction Costs 5.2 Estimated Transaction Costs 5.2
------ ------
$174.6 $198.0
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Credit Ratios Credit Ratios
- --------------------------------------------------------------------------------
LTM LTM
--- ---
Net Debt/EBITDA 2.5x Net Debt/EBITDA 2.5x
EBITDA/Total Interest Expense 3.3x EBITDA/Total Interest Expense 3.3x
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
IRR IRR
- --------------------------------------------------------------------------------
2002 2003 2002 2003
------------------- -----------------
3.5x 13% 40% 3.5x NM 18%
4.0x 27% 47% 4.0x 2% 25%
4.5x 38% 54% 4.5x 11% 30%
- --------------------------------------------------------------------------------
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<PAGE>
PROJECT REDWOOD | APRIL 20, 2000
VALUATION OVERVIEW
================================================================================
LBO Returns Summary - Recession Case
(Figures in Millions, Except per Share Data)
Purchase Price @ $10.25 Purchase Price @ $11.75
------------------------------------ ------------------------------------
Sources and Uses of Funds Sources and Uses of Funds
------------------------------------ ------------------------------------
Sources Sources
--------------- ---------------
Cash on Hand $ 37.5 Cash on Hand $ 37.5
New Senior Bank 113.0 New Senior Bank 113.0
New Equity 18.7 New Equity 43.0
--------- ---------
$169.3 $193.5
Uses Uses
--------------- ---------------
Purchase Price $164.1 Purchase Price $188.3
Estimated Transaction Estimated Transaction
Costs 5.2 Costs 5.2
--------- ---------
$169.3 $193.5
------------------------------------ ------------------------------------
------------------------------------ ------------------------------------
Credit Ratios Credit Ratios
------------------------------------ ------------------------------------
LTM LTM
------------ ----------
Net Debt/EBITDA 2.5x Net Debt/EBITDA 2.5x
EBITDA/Total Interest EBITDA/Total Interest
Expense 3.3x Expense 3.3x
------------------------------------ ------------------------------------
------------------------------------ ------------------------------------
IRR IRR
------------------------------------ ------------------------------------
2002 2003 2002 2003
3.5x NM 40% 3.5x NM 16%
4.0x NM 50% 4.0x NM 23%
4.5x NM 58% 4.5x NM 30%
------------------------------------ ------------------------------------
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<PAGE>
PROJECT REDWOOD | APRIL 20, 2000
VALUATION OVERVIEW
================================================================================
Minority Buyout Premiums Paid Analysis
Parameters:
Announced domestic minority buyout transactions for the period
12/17/97 - 3/29/99 Offer price premium measured as premium over
share price of the target as of one day, one week, and four weeks
prior to the announcement date
<TABLE>
<CAPTION>
Premium Above Share Price Prior to Announcement
One Day One Week Four Weeks Average
<S> <C> <C> <C> <C>
High 185.7% 135.3% 107.4% 140.3%
75th Percentile 31.5% 42.9% 51.5% 39.0%
50th Percentile 20.6% 24.7% 30.9% 24.9%
25th Percentile 8.3% 13.7% 18.9% 15.7%
Low -11.1% -5.1% -31.1% -6.9%
------ ------- ------- -------
Average 25.1% 29.6% 34.7% 29.6%
</TABLE>
<TABLE>
<CAPTION>
Price Prior to Average Premium
Annoucement (1 Day, 1 Week, 4 Weeks) Per Share Amount
12/7/99 25th % 50th % 75th % Low High
<S> <C> <C> <C> <C> <C>
$7.88 15.7% 24.9% 39.0% $9.11 $10.95
</TABLE>
Source: Securities Data Corporation
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<PAGE>
PROJECT REDWOOD | APRIL 20, 2000
5 APPENDICES
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<PAGE>
PROJECT REDWOOD | APRIL 20, 2000
A Management Projections
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<PAGE>
PROJECT REDWOOD | APRIL 20, 2000
MANAGEMENT PROJECTIONS
================================================================================
Redwood Income Statement - Management Case
(Figures in Millions, Except per Share Data)
<TABLE>
<CAPTION>
Historical Fiscal Years
Ended December 31, Projected Fiscal Year Ending December 31,
----------------------------- ------- -----------------------------------------
1997 1998 1999 LTM 2000 2001 2002 2003
------- ------- ------- ------- -------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Revenue $288.2 $294.8 $285.8 $294.5 $343.4 $356.9 $369.5 $383.4
Cost of Goods Sold (1) (229.6) (230.8) (219.7) (226.9) (273.4) (280.8) (290.6) (301.6)
------ ------ --------------- ----------------------------------------
Gross Profit 58.5 64.0 66.1 67.7 70.0 76.2 78.9 81.8
Selling, General and Administrative (2) (23.2) (23.8) (25.6) (26.5) (28.0) (28.9) (29.9) (31.1)
Other Expenses 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0
------ ------ --------------- ----------------------------------------
EBITDA 35.3 40.2 40.5 41.2 42.0 47.3 48.9 50.8
Depreciation Expense (3.7) (4.2) (4.6) (4.6) (5.7) (7.1) (7.8) (8.2)
Amortization of Goodwill (0.9) (0.8) (0.9) 0.0 (0.8) (0.8) (0.8) (0.8)
------ ------ --------------- ----------------------------------------
EBIT 30.7 35.2 35.1 36.7 35.5 39.3 40.4 41.7
Non-Recurring Transaction Cost 0.0 0.0 0.0 0.0
Net Interest Expense 1.0 1.8 2.7 3.7
EBT 36.5 41.1 43.1 45.4
----------------------------------------
Taxes (14.3) (15.8) (16.6) (17.5)
----------------------------------------
Net Income $ 22.2 $ 25.3 $ 26.5 $ 27.9
========================================
Preferred Dividends $ 0.0 $ 0.0 $ 0.0 $ 0.0
</TABLE>
(1) Excludes depreciation expense.
(2) Excludes amortization expense.
Source: Management estimates
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<PAGE>
PROJECT REDWOOD | APRIL 20, 2000
MANAGEMENT PROJECTIONS
================================================================================
Redwood Income Statement - Downside Case
(Figures in Millions, Except per Share Data)
<TABLE>
<CAPTION>
Historical Fiscal Years
Ended December 31, Projected Fiscal Year Ending December 31,
------------------------------ ------- -----------------------------------------
1997 1998 1999 LTM 2000 2001 2002 2003
------- ------- ------- ------- -----------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Revenue $288.2 $294.8 $285.8 $294.5 $343.4 $291.9 $291.9 $343.4
Cost of Goods Sold (1) (229.6) (230.8) (219.7) (226.9) (273.4) (239.4) (239.4) (273.4)
------ ------ ---------------- --------------------------------------
Gross Profit 58.5 64.0 66.1 67.7 70.0 52.5 52.5 70.0
Selling, General and Administrative (2) (23.2) (23.8) (25.6) (26.5) (28.0) (23.9) (23.4) (28.0)
Other Expenses 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0
------ ------ ---------------- --------------------------------------
EBITDA 35.3 40.2 40.5 41.2 42.0 28.6 29.2 42.0
Depreciation Expense (3.7) (4.2) (4.6) (4.6) (5.7) (7.0) (7.4) (7.8)
Amortization of Goodwill (0.9) (0.8) (0.9) 0.0 (0.8) (0.8) (0.8) (0.8)
------ ------ ---------------- --------------------------------------
EBIT 30.7 35.2 35.1 36.7 35.5 20.8 21.0 33.4
Non-Recurring Transaction Cost 0.0 0.0 0.0 0.0
Net Interest Expense 1.0 1.4 1.7 2.4
EBT 36.6 22.2 22.7 35.8
--------------------------------------
Taxes (14.3) (8.6) (8.7) (13.8)
--------------------------------------
Net Income $ 22.2 $ 13.7 $ 14.0 $ 22.0
======================================
Preferred Dividends $ 0.0 $ 0.0 $ 0.0 $ 0.0
</TABLE>
(1) Excludes depreciation expense.
(2) Excludes amortization expense.
Source: Management estimates
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<PAGE>
PROJECT REDWOOD | APRIL 20, 2000
MANAGEMENT PROJECTIONS
================================================================================
Redwood Income Statement - Recession Case
(Figures in Millions, Except per Share Data)
<TABLE>
<CAPTION>
Historical Fiscal Years
Ended December 31, Projected Fiscal Year Ending December 31,
------------------------------ ------- -----------------------------------------
1997 1998 1999 LTM 2000 2001 2002 2003
------- ------- ------- ------- -----------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Revenue $288.2 $294.8 $285.8 $294.5 $343.4 $280.6 $280.6 $343.4
Cost of Goods Sold (1) (229.6) (230.8) (219.7) (226.9) (273.4) (250.2) (249.8) (273.4)
------ ------ --------------- ---------------------------------------
Gross Profit 58.5 64.0 66.1 67.7 70.0 30.3 30.8 70.0
Selling, General and Administrative (2) (23.2) (23.8) (25.6) (26.5) (28.0) (24.0) (24.0) (28.0)
Other Expenses 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0
------ ------ --------------- ---------------------------------------
EBITDA 35.3 40.2 40.5 41.2 42.0 6.4 6.8 42.0
Depreciation Expense (3.7) (4.2) (4.6) (4.6) (5.7) (7.0) (7.4) (7.8)
Amortization of Goodwill (0.9) (0.8) (0.9) 0.0 (0.8) (0.8) (0.8) (0.8)
------ ------ --------------- ---------------------------------------
EBIT 30.7 35.2 35.1 36.7 35.5 (1.4) (1.4) 33.4
Non-Recurring Transaction Cost 0.0 0.0 0.0 0.0
Net Interest Expense 1.0 1.4 1.4 2.4
EBT 36.5 0.0 0.0 35.8
---------------------------------------
Taxes (14.3) (0.0) (0.0) (13.8)
---------------------------------------
Net Income $ 22.2 $ 0.0 $ 0.0 $ 22.0
=======================================
Preferred Dividends $ 0.0 $ 0.0 $ 0.0 $ 0.0
</TABLE>
(1) Excludes depreciation expense.
(2) Excludes amortization expense.
Source: Management estimates
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<PAGE>
PROJECT REDWOOD | APRIL 20, 2000
B Comparable Companies Analysis
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<PAGE>
PROJECT REDWOOD | APRIL 20, 2000
COMPARABLE COMPANIES ANALYSIS
================================================================================
Comparable Companies Overview
Company Description
Pre-Engineered Metal Buildings
- --------------------------------------------------------------------------------
Butler Manufacturing Company Markets, designs and produces systems and
components for nonresidential structures.
- --------------------------------------------------------------------------------
NCI Building Systems, Inc. Manufactures and markets metal building
and framing systems, self-storage
buildings and other building components.
- --------------------------------------------------------------------------------
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<PAGE>
COMPARABLE COMPANIES ANALYSIS
================================================================================
Comparable Companies Overview /(1)/
LTm Price Earnings Firm Value/LTM Revenue
Firm Value/LTM EBITDA Firm Value/LTM EBIT
(1) Redwood figures based on per share price of $11.50
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<PAGE>
PROJECT REDWOOD | APRIL 20, 2000
COMPARABLE COMPANIES ANALYSIS
================================================================================
Comparable Companies Overview
[Graphs appears here]
[Plot Points to come]
48
<PAGE>
PROJECT REDWOOD | APRIL 20, 2000
COMPARABLE COMPANIES ANALYSIS
================================================================================
Comparable Companies Analysis
(Figures in Millions, Except per Share Data)
<TABLE>
<CAPTION>
Market
Ticker Current Percentage Shares Value of Total
Symbol/ Share Price 52 Week of 52 Outstanding Common Total Enterprise
--------------
Company Name Exchange 4/19/00 Low High Week High (MM) Stock Net Debt(2) Value
- ------------------------------ -------- ----------- -------- ------ ---------- ----------- --------- ------------ ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Pre-Engineered Metal Buildings
NCI Building Systems, Inc. NCS $19.00 $14.50 $27.00 70.4% 18.6 $353.3 $442.0 $795.3
Butler Manufacturing Company BBR 23.25 21.00 29.94 77.7% 6.9 160.3 33.7 194.0
- ------------------------------------------------------------------------------------------------------------------------------------
Redwood (1) $11.50 7.00 11.00 104.5% 16.1 $185.1 ($44.2) $141.0
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
Legend:
NM = Not Meaningful
UA = Unavailable
(1) Calculations based upon $11.50 per share.
(2) Average net debt of last four quarters used to adjust for seasonality of
business.
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<PAGE>
PROJECT REDWOOD | APRIL 20, 2000
COMPARABLE COMPANIES ANALYSIS
================================================================================
Comparable Companies Analysis
(Figures in Millions, Except per Share Data)
<TABLE>
<CAPTION>
Market
Ticker Current Shares Value of Total
Symbol/ Share Price Outstanding Common Total Enterprise Enterprise Value to LTM
------------------------
Company Name Exchange 4/19/00 (MM) Stock Net Debt (2) Value Sales EBITDA EBIT
- ------------------------------- ---------- ------------- ------------- --------- -------------- ----------- -------- -------- ------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Pre-Engineered Metal Buildings
NCI Building Systems, Inc. NCS $19.00 18.6 $353.3 $442.0 $795.3 0.83x 5.6x 7.1x
Butler Manufacturing Company BBR 23.25 6.9 160.3 33.7 194.0 0.20x 3.5x 5.4x
- ------------------------------------------------------------------------------------------------------------------------------------
Redwood (1) $11.50 16.1 $185.1 ($44.2) $141.0 0.48x 3.4x 3.9x
- ------------------------------------------------------------------------------------------------------------------------------------
-----------------------------------------------------
High 0.83x 5.6x 7.1x
Mean 0.51x 4.5x 6.2x
Median 0.51x 4.5x 6.2x
Low 0.20x 3.5x 5.4x
-----------------------------------------------------
<CAPTION>
Price/Earnings
-------------------
Company Name LTM 2000E
- ------------------------------- ------ -------
<S> <C> <C>
Pre-Engineered Metal Buildings
NCI Building Systems, Inc. 7.3x 6.6x
Butler Manufacturing Company 7.2x 6.6x
- -----------------------------------------------------
Redwood (1) 7.9% 6.3x
- -----------------------------------------------------
- -----------------------------------------------------
High 7.3x 6.6x
Mean 7.2x 6.6x
Median 7.2x 6.6x
Low 7.2x 6.6x
- -----------------------------------------------------
</TABLE>
Legend:
NM = Not Meaningful
UA = Unavailable
(1) Calculations based upon $11.50 per share.
(2) Average net debt of last four quarters used to adjust for seasonality of
business.
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<PAGE>
PROJECT REDWOOD | APRIL 20, 2000
COMPARABLE COMPANIES ANALYSIS
================================================================================
Comparable Companies Analysis
(Figures in Millions, Except per Share Data)
<TABLE>
<CAPTION>
Market
Ticker Current Shares Value of
Symbol/ Share Price Outstanding Common LTM
EPS -------------------------
------------------ EBITDA
Company Name Exchange 4/19/00 (MM) Stock LTM 2000E Sales EBITDA Margin
- ------------------------------- ---------- ------------- ------------- ---------- ------- --------- ------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Pre-Engineered Metal Buildings
NCI Building Systems, Inc. NCS $19.00 18.6 $353.3 $2.61 $2.90 $954.3 $141.9 14.9%
Butler Manufacturing Company BBR 23.25 6.9 160.3 3.23 3.52 988.9 56.1 5.7%
- ------------------------------------------------------------------------------------------------------------------------------------
Redwood (1) $11.50 16.1 $185.1 $1.45 $1.38 $294.5 $41.2 14.0%
- ------------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
2000E
--------------------------------
Company Name Sales EBITDA EBIT
- ------------------------------- --------- ---------- --------
<S> <C> <C> <C>
Pre-Engineered Metal Buildings
NCI Building Systems, Inc. $1,034.4 $157.8 $125.3
Butler Manufacturing Company 956.0 UA 42.5
- -------------------------------------------------------------------
Redwood $343.4 $42.0 $35.5
- -------------------------------------------------------------------
</TABLE>
Legend:
NM = Not Meaningful
UA = Unavailable
(1) Calculations based upon $11.50 per share.
(2) Average net debt of last four quarters used to adjust for seasonality of
business.
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51
<PAGE>
PROJECT REDWOOD | APRIL 20, 2000
C Precedent Transactions Analysis
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52
<PAGE>
PROJECT REDWOOD | APRIL 20, 2000
PRECEDENT TRANSACTIONS ANALYSIS
================================================================================
Precedent Transactions Overview
Pre-engineered Metal Buildings
<TABLE>
<CAPTION>
Target Description Acquiror Description
- -------------------------------------- -------------------------------------- --------------------- -----------------------------
<S> <C> <C> <C>
Miller Building Systems, Inc. (Public) Designs, manufactures and markets Modtech Inc. (Public) Designs, manufactures,
factory-built markets and installs
buildings. Serves the modular building modular relocatable
and mobile- classrooms and other modular
office markets, and buildings for commercial
telecommunications-shelters use, sold primarily to
market. California school districts
and third parties.
- -----------------------------------------------------------------------------------------------------------------------------------
American Building Co. (Public) Manufacturer of pre-engineered metal Onex Corp (Public) Diversified company that
building systems, metal roofing operates through autonomous
systems, roll-up metal doors, and subsidiaries that are
other products used in the commercial leaders in their industries.
and residential construction segments. They include Sky Chefs,
Celestica Inc., ClientLogic
Corporation, Lantic Sugar
Limited, Dura Automotive
Systems, Inc., J.L. French
Automotive Castings, Inc.,
American Buildings Company,
Phoenix Pictures Inc. and
Vencap, Inc.
- -----------------------------------------------------------------------------------------------------------------------------------
Associated Building Systems (Private) Manufacturer of pre-engineered metal Jenisys (Division of Manufacturer and distributor
building systems for commercial Jannock) of building products for
and industrial markets in the U.S. North American constuction
markets. Jannock's business is
organized into three groups:
Metal, Vinyl, and Brick.
- -----------------------------------------------------------------------------------------------------------------------------------
Mesco Metal Building (Division of Manufacturer of pre-engineered metal NCI Building Systems Manufactures and markets
Anderson) building systems for commercial and Inc. (Public) metal building and framing
industrial markets. systems, self-storage
buildings, over-head doors and
other components for the
residential, commercial,
industrial and agricultural
markets.
</TABLE>
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53
<PAGE>
<TABLE>
<CAPTION>
PROJECT REDWOOD | APRIL 20, 2000
PRECEDENT TRANSACTIONS ANALYSIS
====================================================================================================================================
Precedent Transactions Analysis
(Figures in Thousands, Except per Share Data)
Date Offer Net Firm Offer Offer Price / EPS
-----------------
Target Acquiror Announced Value Debt (a) Value (b) Price (c) LTM FY + 1
- ------------------------------- ------------------------ ------------------- --------- ---------- ---------- ------ ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Miller Building Systems, Inc. Modtech Inc. (Public) 9/23/99 $ 24,190 $ 8,027 $ 32,217 $ 7.15 9.8 x 7.9 x
(Public) (d)
American Building Co. (Public) Onex Corp (Public) 4/8/99 183,800 70,543 254,343 36.00 11.4 11.1
Associated Building Systems Jenisys (Division of 12/16/97 95,000 0 95,000 NA NM NA
(Private) Jannock)
Mesco Metal Building (Division NCI Building Systems Inc. 3/5/96 22,000 (1,423) 20,577 NA 8.9 NM
of Anderson) (Public)
- ------------------------------------------------------------------------------------------------------------------------------------
High 11.4 x 11.1 x
Median 10.2 11.1
Mean 10.2 11.1
Low 8.9 11.1
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
Redwood (Public) Heico (Private) 12/8/99 $185,110 $ 44,159 $ 140,951 $ 11.50 7.9 x 8.3 x
- ------------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
Firm Value (b) / LTM
----------------------
Target Rev. EBITDA EBIT
- ------------------------------- ------ -------- ------
<S> <C> <C> <C>
Miller Building Systems, Inc. 0.49 x 5.3 x 6.7x
(Public) (d)
American Building Co. (Public) 0.58 6.0 7.5
Associated Building Systems 0.71 NA NA
(Private)
Mesco Metal Building (Division 0.64 4.7 5.0
of Anderson)
- ---------------------------------------------------------
High 0.7 x 6.0 x 7.5x
Median 0.6 5.4 6.3
Mean 0.6 5.4 6.3
Low 0.6 4.7 5.0
- ---------------------------------------------------------
- ---------------------------------------------------------
0.48x 3.4 x 3.9x
- ---------------------------------------------------------
</TABLE>
Note: EBITDA, EBIT and EPS adjusted for unusual and nonrecurring items.
LTM: Latest Twelve Months.
NM: Not Meaningful. NA: Not Available.
(a) Net Debt equals straight debt, minority interest, straight preferred
stock, all convertibles (if applicable), less investments in
unconsolidated affiliates and cash.
(b) Firm Value (FV) equals Offer Value for the Equity of the Target plus Net
Debt.
(c) If more than one class of shares exist, refers to price of Class A
shares.
(d) Transaction was terminated on 10/18/99 and excluded as a transaction
multiple.
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54
<PAGE>
<TABLE>
<CAPTION>
PROJECT REDWOOD APRIL 20, 2000
PRECEDENT TRANSACTIONS ANALYSIS
====================================================================================================================================
Precedent Transactions Analysis
(Figures in Thousands, Except per Share Data)
Date Offer Net Firm Offer
Target Acquiror Announced Value Debt (b) Value (c) Price (d)
- ------------------------------------------------------------------- ----------- -------- --------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
Miller Building Systems, Inc. (Public) Modtech Inc. (Public) 9/23/99 $ 24,190 $ 8,027 $ 32,217 $ 7.15
American Building Co. (Public) Onex Corp (Public) 4/8/99 183,800 70,543 254,343 36.00
Associated Building Systems (Private) Jenisys (Division of Jannock) 12/16/97 95,000 0 95,000 NA
Mesco Metal Building (Division of NCI Building Systems Inc.
Anderson) (Public) 3/5/96 22,000 (1,423) 20,577 NA
- ----------------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------------
Redwood
- ----------------------------------------------------------------------------------------------------------------------------
<CAPTION>
Premium Analysis (a)
-------------------------------------
One Five Twenty
Target Acquiror Day Prior Day Prior Day Prior
- ------------------------------------------------------------------- -------------------------------------
<S> <C> <C> <C> <C>
Miller Building Systems, Inc. (Public) Modtech Inc. (Public) 12.2 % 10.0 % (1.4)%
American Building Co. (Public) Onex Corp (Public) 64.6 90.7 82.3
Associated Building Systems (Private) Jenisys (Division of Jannock) NA NA NA
Mesco Metal Building (Division of NCI Building Systems Inc. NM NM NM
Anderson) (Public)
- -------------------------------------------------------------------------------------------------------------
High 64.6 % 90.7 % 82.3 %
Median 64.6 90.7 82.3
Mean 64.6 90.7 82.3
Low 64.6 90.7 82.3
- -------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------
Redwood 46.0 % 43.8 % 23.1 %
- -------------------------------------------------------------------------------------------------------------
</TABLE>
(a) Premium based on price of common stock for period specified. If more than
one class of shares trade, refers to Class A shares.
(b) Net Debt equals straight debt, minority interest, straight preferred stock,
all convertibles (if applicable), less investments in unconsolidated
affiliates and cash.
(c) Firm Value (FV) equals Offer Value for the Equity of the Target plus Net
Debt.
(d) If more than one Class of shares exist, refers to price of Class A shares.
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55
<PAGE>
<TABLE>
<CAPTION>
PROJECT REDWOOD | APRIL 20, 2000
PRECEDENT TRANSACTIONS ANALYSIS
====================================================================================================================================
Precedent Transactions Analysis
(Figures in Thousands, Except per Share Data)
Date Offer Net Firm Offer LTM
Target Acquiror Announced Value Debt (a) Value (b) Price (c) Ended
- ---------------------------------------- ------------------------ ------------ -------- ----------- ---------- ---------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
Miller Building Systems, Inc. Modtech Inc. (Public) 9/23/99 $ 24,190 $ 8,027 $ 32,217 $ 7.15 Jul-99
(Public)
American Building Co. (Public) Onex Corp (Public) 4/8/99 183,800 70,543 254,343 36.00 Dec-98
Associated Building Systems (Private) Jenisys (Division of 12/16/97 95,000 0 95,000 NA Dec-97
Jannock)
Mesco Metal Building (Division NCI Building Systems 3/5/96 22,000 (1,423) 20,577 NA Dec-94
of Anderson) Inc. (Public)
- ------------------------------------------------------------------------------------------------------------------------------------
High
Median
Mean
Low
- ------------------------------------------------------------------------------------------------------------------------------------
Redwood Mar-00
- ------------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
LTM Operating Results
-------------------------------------------------------
Net Gross Net
Target Revenues Profit SG&A EBITDA EBIT Income
- -------------------------------------- ----------- -------- ------- --------- ------- --------
<S> <C> <C> <C> <C> <C> <C>
Miller Building Systems, Inc. $ 65,637 $ 11,982 $ 7,140 $ 6,029 $ 4,834 $ 2,611
(Public)
American Building Co. (Public) 44O,660 71,719 37,885 42,089 33,834 17,745
Associated Building Systems (Private) 133,000 NA NA NA NA NA
Mesco Metal Building (Division 32,236 9,036 4,928 4,412 4,108 2,465
of Anderson)
- -----------------------------------------------------------------------------------------------
High $440,660 $ 71,719 $37,885 $ 42,089 $33,834 $ 17,745
Median 133,000 40,378 21,407 23,251 18,971 10,105
Mean 201,965 40,378 21,407 23,251 18,971 10,105
Low 32,236 9,036 4,928 4,412 4,108 2,465
- -----------------------------------------------------------------------------------------------
Redwood $294,547 $ 63,119 $27,315 $ 41,212 $35,804 $ 23,328
- -----------------------------------------------------------------------------------------------
</TABLE>
Note: EBITDA, EBIT, Net Income, and EPS adjusted for unusual and nonrecurring
items.
LTM: Latest Twelve Months.
NA: Not applicable
(a) Net Debt equals straight debt, minority interest, straight preferred
stock, all convertibles (if applicable), less investments in
unconsolidated affiliates and cash.
(b) Firm Value (FV) equals Offer Value for the Equity of the Target plus Net
Debt.
(c) If more than one class of shares exist, refers to price of Class A shares.
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PROJECT REDWOOD | APRIL 20, 2000
PRECEDENT TRANSACTIONS ANALYSIS
================================================================================
Precedent Transactions Analysis
(Figures in Thousands, Except per Share Data)
<TABLE>
<CAPTION>
LTM Margins
--------------------------------------------
Date Offer Net Firm Offer LTM Gross Net
Target Acquiror An- Value Debt Value Price Ended Profit SG&A R&D EBITDA EBIT In- Capex. NWC
nounced (a) (b) (c) come
- ---------------------- ------------ -------- ------ ---- ----- ----- ----- ------ ---- --- ------ ---- ---- ----- -----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Miller Building Modtech Inc.
Systems, Inc. (Public)
(Public) 9/23/99 $ 24,19 $ 8,027 $ 32,217 7.15 Jul-99 18.3% 10.9% NM 9.2% 7.4% 4.0% 0.0% 20.1%
American Building Onex Corp
Co. (Public) (Public) 4/8/99 183,800 70,543 254,343 $36.00 Dec-98 16.3 8.6 NM 9.6 7.7 4.0 0.0 11.1
Associated Building Jenisys
(Division
Systems (Private) of Jannock) 12/16/97 95,000 0 95,000 NA Dec-97 NA NA NA NA NA NA NA NA
Mesco Metal Building NCI Building
Systems
(Division of Anderson) Inc. (Public) 3/5/96 22,000 (1,423) 20,577 NA Dec-94 28.0 15.3 NM 13.7 12.7 7.6 0.0 12.3
- -----------------------------------------------------------------------------------------------------------------------------------
High 28.0% 15.3% NM 13.7% 12.7% 7.6% 0.0% 12.3%
Median 22.2 11.9 NM 11.6 10.2 5.8 0.0 11.7
Mean 22.2 11.9 NM 11.6 10.2 5.8 0.0 11.7
Low 16.3 8.6 NM 9.6 7.7 4.0 0.0 11.1
- ------------------------------------------------------------------------------------------------------------------------------------
Redwood Mar-00 21.4% 9.3% NM 14.0% 12.2% 7.9% 0.1 % 7.4%
</TABLE>
Note: EBITDA, EBIT, Net Income, and EPS adjusted for unusual and nonrecurring
items.
LTM: Latest Twelve Months.
NM: Not Meaningful. NA: Not Available.
(a) Net Debt equals straight debt, minority interest, straight preferred
stock, all convertibles (if applicable), less investments in
unconsolidated affiliates and cash.
(b) Firm Value (FV) equals Offer Value for the Equity of the Target plus Net
Debt.
(c) If more than one Class of shares exist, refers to price of Class A shares.
57
<PAGE>
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PROJECT REDWOOD | APRIL 20, 2000
D Leveraged Buyout Analysis
58
<PAGE>
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PROJECT REDWOOD | APRIL 20, 2000
LEVERAGED BUYOUT ANALYSIS
===============================================================================
Transaction Summary - Management Case
(Figures in Millions, Except per Share Data)
<TABLE>
<S> <C> <C> <C>
Sources of Funds: Uses of Funds:
Cash on Hand $ 37.5 Purchase Price $ 215.4
New Senior Revolver 0.0 Estimated Transaction Costs 5.2
New Senior Bank Term Loan - A 0.0 -------
New Senior Bank Term Loan - B 0.0 Total Uses of Funds $ 220.6
New Senior Notes 0.0 =======
New Senior Bank Debt 113.0
Preferred Stock 0.0
Preferred Stock - Management 0.0 Fees
Common Stock 0.0 ----
Equity Rollover - Heisley 0.0 Bank Debt $ 3.4
New Equity 70.0 Notes 0.0
Preferred Equity 0.0
------- Other 1.8
Total Sources of Funds $ 220.6 --------
======= Total $ 5.2
--------
Purchase Price Analysis:
Current Share Price (3/29/00) $ 9.94 Total Enterprise Value $ 167.8
Share Price pre-Announcement (12/7/99) 7.88
Purchase Price per Share 13.38 LTM EBITDA $ 41.2
------- 1999 EBITDA 40.5
Premium to Current Share Price 34.64% 2000 EBITDA 42.0
Premium to Share Price pre-Announcement 69.90%
Total Enterprise Value as a Multiple of:
Total Shares Outstanding 16,097 LTM EBITDA 4.1x
Shares Owned by Heisley 11,156
------- 1999 EBITDA 4.1x
Shares to be Purchased by Heisley 4,940 2000 EBITDA 4.0x
Total Purchase Price of All Shares
Outstanding $ 215.4
=======
</TABLE>
<TABLE>
<CAPTION>
Interest % of Total Mult. Of Years % Cash
Rate Maturity $ (12/31/999 99 EBITDA PIK Pay
-----------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Pro Forma Capitalization:
New Senior Revolver 0.00% 0 $ 0.0 0.0% 0.0x 0 100.0%
New Senior Bank Term Loan - A 0.00% 0 0.0 0.0% 0.0x 0 100.0%
New Senior Bank Term Loan - B 0.00% 0 0.0 0.0% 0.0x 0 100.0%
New Senior Notes 0.00% 0 0.0 0.0% 0.0x 0 100.0%
New Senior Bank Debt 11.00% 0 113.0 62.4% 2.8x 0 100.0%
Existing Debt 0.00% 0 0.0 0.0% 0.0x
---------------------------
Total Debt 113.0 62.4% 2.8x
Preferred Stock 0.00% 0 0.0 0.0% 0 0.0%
Preferred Stock - Management 0.00% 0 0.0 0.0% 0 0.0%
Common Stock 0.0 0.0%
New Equity 68.2 37.6%
-----------------
Total Equity 68.2 37.6%
-----------------
Total Capitalization $181.2 100.0%
=================
</TABLE>
59
<PAGE>
PROJECT REDWOOD | APRIL 20, 2000
LEVERAGED BUYOUT ANALYSIS
===============================================================================
Leveraged Buyout Analysis - Management Case
(Figures in Millions, Except per Share Data)
<TABLE>
<CAPTION>
Historical Fiscal Years
Ended December 31, Projected Fiscal Year Ending December 31,
------------------------------------- -----------------------------------------
1997 1998 1999 LTM 2000 2001 2002 2003
------------------------------------- ----------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Revenue $288.2 $294.8 $285.8 $294.5 $343.4 $356.9 $369.5 $383.4
Revenue Growth NA 2.3% -3.1% 20.2% 3.9% 3.5% 3.8%
EBITDA $35.3 $40.2 $40.5 $41.2 $42.0 $47.3 $48.9 $50.8
EBITDA Margin 12.3% 13.6% 14.2% 14.0% 12.2% 13.2% 13.2% 13.2%
Interest Expense $12.4 $12.8 $12.8 $9.6 $7.5
Preferred Dividends 0.0 0.0 0.0 0.0 0.0
Capital Expenditures 17.8 10.0 10.0 8.0 6.0
Cash and Cash Equivalents 10.0 10.0 10.0 10.0 10.0
Senior Debt 113.0 98.2 84.3 64.9 40.8
Total Debt 113.0 98.2 84.3 64.9 40.8
Net Debt 103.0 88.2 74.3 54.9 30.8
Preferred Stock 0.0 0.0 0.0 0.0 0.0
- ------------------------------------------------------------------------------------------------------------------------------------
Coverage Ratios
EBITDA/Total Interest Expense 3.3x 3.3x 3.7x 5.1x 6.8x
EBITDA/(Total Int. Exp.+ Pref. Div.) 3.3x 3.3x 3.7x 5.1x 6.8x
(EBITDA-Capex)/Total Interest Expense 1.9x 2.5x 2.9x 4.3x 6.0x
(EBITDA-Capex)/(Total Int. Exp.+ Pref. Div.) 1.9x 2.5x 2.9x 4.3x 6.0x
Leverage Ratios
Senior Debt/EBITDA 2.7x 2.3x 1.8x 1.3x 0.8x
Total Debt/EBITDA 2.7x 2.3x 1.8x 1.3x 0.8x
Net Debt/EBITDA 2.5x 2.1x 1.6x 1.1x 0.6x
Total Debt + Preferred Stock/EBITDA 2.7x 2.3x 1.8x 1.3x 0.8x
Total Debt/Book Capitalization 62.4% 55.2% 47.4% 37.1% 24.1%
</TABLE>
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<PAGE>
PROJECT REDWOOD | APRIL 20, 2000
LEVERAGED BUYOUT ANALYSIS
================================================================================
Transaction Summary - Recession Case
(Figures in Millions, Except per Share Data)
<TABLE>
<S> <C> <C>
-----------------------------------------------------------------------------------------------------------------------------
Sources of Funds: Uses of Funds:
Cash on Hand $37.5 Purchase Price $164.1
New Senior Revolver 0.0 Estimated Transaction Costs 5.2
New Senior Bank Term Loan - A 0.0 ------
New Senior Bank Term Loan - B 0.0 Total Uses of Funds $169.3
New Senior Notes 0.0 ======
New Senior Bank Debt 113.0
Preferred Stock 0.0 --------------------------------------------------
Preferred Stock - Management 0.0 Fees
----
Common Stock 0.0 Bank Debt $3.4
Equity Rollover - Heisley 0.0 Notes 0.0
New Equity 18.7 Preferred Equity 0.0
------ Other 1.8
Total Sources of Funds $169.3 ------
====== Total $5.2
------------------------------------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------------------------------------
Purchase Price Analysis:
Current Share Price (3/29/00) $ 9.94 Total Enterprise Value $116.6
Share Price pre-Announcement (12/7/99) 7.88
Purchase Price per Share 10.20 LTM EBITDA $ 41.2
---------
Premium to Current Share Price 2.59% 1999 EBITDA 40.5
Premium to Share Price pre-Announcement 29.46% 2000 EBITDA 44.0
Total Shares Outstanding 16,097 Total Enterprise Value as a Multiple of:
Shares Owned by Heisley 11,156 LTM EBITDA 2.8x
---------
Shares to be Purchased by Heisley 4,940 1999 EBITDA 2.9x
2000 EBITDA 2.6x
Total Purchase Price of All Shares Outstanding $ 164.1
=========
------------------------------------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------------------------------------
Interest % of Total Mult. Of Years % Cash
Rate Maturity $ (12/31/99) 99 EBITDA PIK Pay
----------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Pro Forma Capitalization:
New Senior Revolver 0.00% 0 $ 0.0 0.0% 0.0x 0 100.0%
New Senior Bank Term Loan - A 0.00% 0 0.0 0.0% 0.0x 0 100.0%
New Senior Bank Term Loan - B 0.00% 0 0.0 0.0% 0.0x 0 100.0%
New Senior Notes 0.00% 0 0.0 0.0% 0.0x 0 100.0%
New Senior Bank Debt 11.00% 0 113.0 87.0% 2.8x 0 100.0%
Existing Debt 0.00% 0 0.0 0.0% 0.0x
------------------------------------
Total Debt 113.0 87.0% 2.8x
Preferred Stock 0.00% 0 0.0 0.0% 0 0.0%
Preferred Stock - Management 0.00% 0 0.0 0.0% 0 0.0%
Common Stock 0.0 0.0%
New Equity 16.9 13.0%
-----------------------
Total Equity 16.9 13.0%
-----------------------
Total Capitalization $130.0 100.0%
=======================
------------------------------------------------------------------------------------------------------------------------------
</TABLE>
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<PAGE>
PROJECT REDWOOD | APRIL 20, 2000
LEVERAGED BUYOUT ANALYSIS
================================================================================
Leveraged Buyout Analysis - Recession Case
(Figures in Millions, Except per Share Data)
<TABLE>
<CAPTION>
Historical Fiscal Years
Ended December 31, Projected Fiscal Year Ending December 31,
--------------------------------------- -----------------------------------------
1997 1998 1999 LTM 2000 2001 2002 2003
--------- ------- ------- ------- -----------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Revenue $288.2 $294.8 $285.8 $294.5 $343.4 $280.6 $280.6 $343.4
Revenue Growth NA 2.3% -3.1% 20.2% -18.3% 0.0% 22.4%
EBITDA $35.3 $ 40.2 $ 40.5 $ 41.2 $ 44.0 $ 8.4 $ 8.8 $ 44.0
EBITDA Margin 12.3% 13.6% 14.2% 14.0% 12.8% 3.0% 3.1% 12.8%
Interest Expense $ 12.4 $ 12.8 $ 12.8 $ 11.3 $ 11.7
Preferred Dividends 0.0 0.0 0.0 0.0 0.0
Capital Expenditures 17.8 10.0 5.0 5.0 6.0
Cash and Cash Equivalents 10.0 10.0 10.0 10.0 10.0
Senior Debt 113.0 99.3 99.8 103.3 92.0
Total Debt 113.0 99.3 99.8 103.3 92.0
Net Debt 103.0 89.3 89.8 93.3 82.0
Preferred Stock 0.0 0.0 0.0 0.0 0.0
- ------------------------------------------------------------------------------------------------------------------------------------
Coverage Ratios
EBITDA/Total Interest Expense 3.3x 3.4x 0.7x 0.8x 3.8
EBITDA/Total Int. Exp.+ Pref. Div.) 3.3x 3.4x 0.7x 0.8x 3.8
(EBITDA-Capex)/Total Interest Expense 1.9x 2.7x 0.3x 0.3x 3.2
(EBITDA-Capex)/(Total Int. Exp.+ Pref. Div.) 1.9x 2.7x 0.3x 0.3x 3.2
Leverage Ratios
Senior Debt/EBITDA 2.7x 2.3x 11.9x 11.8x 2.1x
Total Debt/EBITDA 2.7x 2.3x 11.9x 11.8x 2.1x
Net Debt/EBITDA 2.5x 2.0x 10.7x 10.6x 1.9x
Total Debt + Preferred Stock/EBITDA 2.7x 2.3x 11.9x 11.8x 2.1x
Total Debt/Book Capitalization 87.0% 76.4% 82.0% 88.1% 77.2%
</TABLE>
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<PAGE>
PROJECT REDWOOD | APRIL 29,2000
________________________________________________________________________________
E Minority Buyout Transactions Analysis
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63
<PAGE>
PROJECT REDWOOD | APRIL 20, 2000
MINORITY BUYOUT TRANSACTIONS ANALYSIS
================================================================================
Minority Buyout Transactions
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
Date Date Value of 1 day 1 week 4 weeks
Announced Effective Target Name Acquiror Name Transaction premium premium premium Average % Acquired
($ mil)
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
03/23/2000 Pending Homestead Village Inc Security Capital Group Inc $ 130.1 23.6% 29.5% 64.8% 39.3% 13.0%
03/21/2000 Pending Travelers Property
Casualty Citigroup Inc 2423.0 23.2 38.0 33.6 31.6 15.0
03/21/2000 Pending CNA Surety Corp(CNA Continental Casualty
Financial) (CNA Finl) 218.4 -7.1 10.6 18.9 7.5 37.0
03/17/2000 Pending Vastar Resources Inc BP Amoco PLC 1335.5 -0.6 15.4 44.9 19.9 18.1
02/22/2000 Pending IXnet Inc(IPC
Information) Global Crossing Ltd 876.9 18.1 22.8 25.9 22.3 27.0
02/14/2000 Pending CareInsite Inc(Medical
Mgr) Healtheon/WebMD Inc 1883.8 5.3 -0.7 -3.4 0.4 31.0
01/31/2000 Pending Thermo BioAnalysis Thermo Instrument Systems
(Thermo) Inc 167.9 51.4 55.6 53.4 53.4 --
01/31/2000 Pending ThermoQuest Corp Thermo Instrument Systems Inc 96.9 36.0 47.0 61.9 48.3 --
01/31/2000 Pending Metrika Systems Corp Thermo Instrument Systems Inc 14.2 -6.5 0 46.9 20.2 29.5
01/31/2000 Pending ONIX Systems Inc Thermo Instrument Systems Inc 23.1 2.9 16.1 38.5 19.1 --
01/31/2000 Pending Thermo Optek Corp Thermo Instrument Systems Inc 51.8 6.7 -5.1 41.2 14.2 --
01/31/2000 Pending Thermo Sentron Inc Thermedics(Thermo
(Thermedics) Electron) 30.7 7.4 6.9 6.9 7.1 --
01/31/2000 Pending Thermedics Detection Inc Thermedics(Thermo Electron) 17.0 0.8 0.8 14.3 5.3 --
01/31/2000 Pending Sunrise Intl Leasing Inc King Management Corp 37.6 -4.5 0 1.2 -1.7 41.0
01/19/2000 02/09/2000 Trigen Energy Corp Elyo(Suez Lyonnaise des Eaux) 159.2 38.2 42.4 31.9 37.5 4.0
01/19/2000 Pending Conning Corp Metropolitan Life Insurance Co 73.5 15.6 38.9 52.1 35.5 39.0
01/11/2000 Pending Hayes Lemmerz
International Investor Group 165.2 1.2 23.5 38.8 21.2 22.4
12/02/1999 Pending Boise Cascade Office
Products Boise Cascade Corp 163.9 9.8 24.7 30.9 21.8 18.8
11/22/1999 Pending ERC Industries Inc(John
Wood) John Wood Group PLC 5.1 185.7 135.3 100.0 140.3 11.0
11/12/1999 Pending Howmet International Inc Cordant Technologies Inc 261.4 20.9 18.8 38.1 25.9 15.0
10/21/1999 Pending Student Loan Corporation Citigroup Inc 180.0 11.5 11.6 .8 8.0 20.0
10/20/1999 Pending Randers Killam Gr Thermo Electron Corp 4.6 12.5 12.5 33.3 19.4 4.0
09/20/1999 Pending Trigen Energy Corp Elyo(Suez Lyonnaise des
Eaux) 132.7 14.3 20.5 18.1 17.7 47.3
07/29/1999 Pending Western Beef Inc Cactus Acquisitions Inc 89.2 40.0 42.9 38.6 40.5 28.4
07/13/1999 Pending Thermo Vision(Thermo Thermo Instrument Systems
Inst) Inc 10.7 75.0 60.0 107.4 80.8 --
06/22/1999 Pending National Processing Inc National City, Cleveland, Ohio 58.2 23.6 33.3 60.0 39.0 12.0
06/10/1999 Pending Hawks Industries Inc North Star Exploration 23.0 16.4 60.0 55.2 43.8 --
06/04/1999 08/25/1999 Intek Global Corp Securicor Communications 51.9 32.1 26.9 22.0 27.0 39.0
05/07/1999 07/30/1999 J Ray McDermott SA McDermott International Inc 514.5 16.8 13.1 19.2 16.4 37.0
05/05/1999 10/29/1999 Thermo Power Corp Thermo Electron Corp 34.8 5.5 -1.5 41.2 15.0 22.0
04/29/1999 08/09/1999 Killearn Properties Inc Killearn Inc 1.9 10.0 10.0 7.3 9.1 --
04/12/1999 06/30/1999 Meadowcraft Inc Investor Group 53.2 64.9 63.3 77.8 68.7 27.0
04/01/1999 08/15/1999 Aqua Alliance Inc Vivendi SA 117.1 28.9 19.0 101.7 49.9 17.0
03/24/1999 11/04/1999 Knoll Inc(Warburg, Warburg, Pincus Ventures
Pincus) Inc 490.8 83.6 51.9 46.4 60.6 40.0
03/21/1999 07/01/1999 Spelling Viacom Inc(Natl
Entertainment Group Amusements) 191.6 8.3 43.1 54.5 35.3 20.0
03/08/1999 12/01/1999 ENStar Inc Investor Group 13.2 56.3 58.7 51.5 55.5 35.0
03/08/1999 08/10/1999 LabOne Inc(Lab Lab Holdings Inc
Holdings Inc) 34.3 17.2 10.3 8.5 12.0 19.5
01/22/1999 06/11/1999 Treadco Inc Arkansas Best Corp 22.7 38.5 46.9 24.1 36.5 --
12/03/1998 04/08/1999 Banner Aerospace Inc Fairchild Corp 82.4 25.7 41.9 40.8 36.1 15.0
11/30/1998 10/01/1999 Miami Subs Corp Nathan's Famous Inc 14.0 40.0 27.3 40.0 35.8 --
11/12/1998 05/14/1999 Aquila Gas Pipeline Corp UtiliCorp United Inc 43.2 23.1 17.4 68.4 36.3 18.0
</TABLE>
Source: Securities Data Corporation
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World Markets
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<PAGE>
PROJECT REDWOOD APRIL 20, 2000
MINORITY BUYOUT TRANSACTIONS ANALYSIS
================================================================================
Minority Buyout Transactions
<TABLE>
<CAPTION>
Value of
Date Date Transaction 1 day 1 week
Announced Effective Target Name Acquiror Name ($ mil) premium premium
<S> <C> <C> <C> <C> <C> <C>
10/27/1998 12/14/1998 Citizens Corp(Hanover Ins Co) Allmerica Financial Corp $212.4 20.6% 17.2%
10/22/1998 04/29/1999 BA Merchant Svcs(BankAmerica) Bank of America National Trust 339.4 47.1 56.2
10/21/1998 11/30/1998 Capital Factors Holdings Inc Union Planters Bk Nat Assoc 22.2 4.5 8.9
10/16/1998 02/12/1999 BRC Holdings Inc Affiliated Computer Services 131.9 17.1 16.9
09/29/1998 10/07/1998 Newmont Gold Co Newmont Mining Corp 264.8 -5.2 20.8
09/23/1998 12/17/1998 J&L Specialty Steel Inc Usinor SA 115.0 100.0 112.5
09/23/1998 02/25/1999 Ryerson Tull Inc Inland Steel Industries Inc 61.2 7.5 2.9
09/08/1998 12/15/1998 PEC Israel Economic Corp Investor Group 125.0 31.5 28.0
08/24/1998 11/19/1998 Tele-Commun Intl(Tele-Commun) Liberty Media(Tele-Commun) 379.1 6.9 3.2
07/21/1998 03/09/1999 Forum Retirement Partners LP Forum Group(Crestline Capital) 6.5 24.3 24.3
07/07/1998 12/23/1998 Life Technologies Inc(Dexter) Dexter Corp 215.8 25.2 24.7
06/11/1998 07/02/1998 Imo Industries Inc Constellation Capital Partners 9.1 -1.1 4.4
04/30/1998 11/02/1998 Mycogen Corp(Dow AgroSciences) Dow AgroSciences(Dow Chemical) 379.3 41.8 40.0
04/29/1998 09/25/1998 Group 1 Software Inc COMNET Corp 11.8 71.6 61.5
03/31/1998 03/26/1999 Thermo Voltek Corp Thermedics(Thermo Electron) 43.9 45.5 60.0
03/27/1998 07/15/1998 Intl Specialty Prods ISP Holdings Inc 324.5 4.3 1.7
03/17/1998 07/31/1998 BET Holdings Inc Investor Group 462.3 53.7 58.5
03/05/1998 05/20/1998 XLConnect Solutions Inc Xerox Corp 93.0 -11.1 15.1
01/22/1998 09/29/1998 BT Office Products Intl Inc. Koninklijke KNP BT NV 138.1 32.5 78.9
01/20/1998 04/16/1998 NACT Telecommunications(GST) World Access Inc 53.1 12.0 12.5
01/09/1998 09/30/1998 Wandel & Goltermann Tech Inc Wandel & Goltermann Management 34.2 23.5 21.1
01/08/1998 01/30/1998 Rayonier Timberlands LP Rayonier Inc 65.8 11.2 25.3
12/23/1997 03/20/1998 American Paging Inc Telephone and Data Systems Inc 9.1 17.6 33.3
10/23/1997 01/08/1999 Brad Ragan Inc(Goodyear Tire) Goodyear Tire & Rubber Co 20.7 6.7 -1.2
09/18/1997 12/16/1997 Guaranty National Corp Orion Capital Corp 117.2 10.8 23.9
09/04/1997 12/30/1997 Cinergi Pictures Entertainment Investor Group 16.3 26.9 24.7
07/09/1997 12/23/1997 Seaman Furniture Co Investor Group 45.6 21.5 25.3
06/26/1997 11/26/1997 Rhone-Poulenc Rorer Inc Rhone-Poulenc SA 4831.6 22.1 22.8
06/20/1997 03/30/1998 Wheelabrator Technologies Inc Waste Management Inc 869.7 26.9 28.2
06/13/1997 03/26/1998 Bally's Grand Inc Hilton Hotels Corp 42.6 27.9 29.8
06/03/1997 01/15/1998 Faulding Inc(FH Faulding & Co) FH Faulding & Co Ltd 77.3 25.6 22.7
06/02/1997 07/15/1997 Acordia Inc(Anthem Inc) Anthem Inc 193.2 12.7 11.5
05/22/1997 07/09/1998 Chaparral Steel Co(Texas Ind) Texas Industries Inc 72.8 20.4 25.3
05/14/1997 11/18/1997 Enron Global Power & Pipelines Enron Corp 428.0 11.8 13.7
04/16/1997 01/30/1998 Steck-Vaughn Publishing Corp Harcourt General Inc 40.3 21.6 32.6
02/25/1997 08/05/1998 Fina Inc Petrofina SA 257.0 19.7 18.5
02/20/1997 12/09/1997 NHP Inc(Apartment Investment) Apartment Investment & Mgmt Co 114.5 28.3 25.2
02/18/1997 07/01/1998 Contour Medical(Retirement) Sun Healthcare Group Inc 55.2 21.4 47.8
01/28/1997 05/21/1997 Calgene Inc(Monsanto Co) Monsanto Co 242.6 62.0 60.0
01/21/1997 07/09/1997 Mafco Consolidated Grp(Mafco) Mafco Holdings Inc 116.8 23.5 23.5
01/13/1997 09/02/1997 Zurich Reinsurance Centre Zurich Versicherungs GmbH 319.0 17.1 18.5
------- -------
Average 24.6 29.1
<CAPTION>
Date Date 4 weeks %
Announced Effective Target Name Acquiror Name premium Average Acquired
<S> <C> <C> <C> <C> <C> <C>
10/27/1998 12/14/1998 Citizens Corp(Hanover Ins Co) Allmerica Financial Corp 20.9% 19.6% 16.8%
10/22/1998 04/29/1999 BA Merchant Svcs(BankAmerica) Bank of America National Trust 42.0 48.4 4.8
10/21/1998 11/30/1998 Capital Factors holidings Inc Union Planters Bk Nat Assoc 2.9 5.5 7.7
10/16/1998 02/12/1999 BRC Holdings Inc Affiliated Computer Services 15.2 16.4 -
09/29/1998 10/07/1998 Newmont Gold Co Newmont Mining Corp 62.4 26.0 6.3
09/23/1998 12/17/1998 J&L Specialty Steel Inc Usinor SA 37.8 83.4 46.5
09/23/1998 02/25/1999 Ryerson Tull Inc Inland Steel Industries Inc -31.1 -6.9 13.0
09/08/1998 12/15/1998 PEC Israel Economic Corp Investor Group 23.7 27.7 18.7
08/24/1998 11/19/1998 Tele-Commun Intl(Tele-Commun) Liberty Media(Tele-Commun) -10.7 -.2 8.0
07/21/1998 03/09/1999 Forum Retirement Partners LP Forum Group(Crestline Capital) 24.3 24.3 7.0
07/07/1998 12/23/1998 Life Technologies Inc(Dexter) Dexter Corp 19.0 23.0 48.0
06/11/1998 07/02/1998 Imo Industries Inc Constellation Capital Partners 2.5 2.0 -
04/30/1998 11/02/1998 Mycogen Corp(Dow AgroSciences) Dow AgroSciences(Dow Chemical) 52.4 44.7 32.0
04/29/1998 09/25/1998 Group 1 Software Inc COMNET Corp 71.6 68.2 18.8
03/31/1998 03/26/1999 Thermo Voltek Corp Thermedics(Thermo Electron) 40.0 48.5 33.0
03/27/1998 07/15/1998 Intl Specialty Prods ISP Holdings Inc 14.5 6.8 16.0
03/17/1998 07/31/1998 BET Holdings Inc Investor Group 58.2 56.8 10.0
03/05/1998 05/20/1998 XLConnect Solutions Inc Xerox Corp 22.1 8.7 20.0
01/22/1998 09/29/1998 BT Office Products Intl Inc Koninklijke KNP BT NV 78.9 63.4 30.0
01/20/1998 04/16/1998 NACT Telecommunications(GST) World Access Inc 16.7 13.7 33.0
01/09/1998 09/30/1998 Wandel & Goltermann Tech Inc Wandel & Goltermann Management 31.1 25.3 38.0
01/08/1998 01/30/1998 Rayonier Timberlands LP Rayonier Inc 17.5 18.0 -
12/23/1997 03/20/1998 American Paging Inc Telephone and Data Systems Inc 29.0 26.7 18.0
10/23/1997 01/08/1999 Brad Ragan Inc(Goodyear Tire) Goodyear Tire & Rubber Co 5.4 3.6 25.0
09/18/1997 12/16/1997 Guaranty National Corp Orion Capital Corp 27.7 20.8 19.0
09/04/1997 12/30/1997 Cinergi Pictures Entertainment Investor Group 56.6 36.1 -
07/09/1997 12/23/1997 Seaman Furniture Co Investor Group 21.5 22.7 20.0
06/26/1997 11/26/1997 Rhone-Poulenc Rorer Inc Rhone-Poulenc SA 29.3 24.7 -
06/20/1997 03/30/1998 Wheelabrator Technologies Inc Waste Management Inc 30.7 28.6 33.0
06/13/1997 03/26/1998 Bally's Grand Inc Hilton Hotels Corp 31.1 29.6 15.0
06/03/1997 01/15/1998 Faulding Inc(FH Faulding & Co) FH Faulding & Co Ltd 45.9 31.4 38.0
06/02/1997 07/15/1997 Acordia Inc(Anthem Inc) Anthem Inc 26.0 16.7 33.0
05/22/1997 07/09/1998 Chaparral Steel Co(Texas Ind) Texas Industries Inc 29.2 24.9 15.0
05/14/1997 11/18/1997 Enron Global Power & Pipelines Enron Corp 19.7 15.1 48.0
04/16/1997 01/30/1998 Steck-Vaughn Publishing Corp Harcourt General Inc 24.2 26.1 18.0
02/25/1997 08/05/1998 Fina Inc Petrofina SA 21.5 19.9 14.0
02/20/1997 12/09/1997 NHP Inc(Apartment Investment) Apartment Investment & Mgmt Co 16.9 23.4 -
02/18/1997 07/01/1998 Contour Medical(Retirement) Sun Healthcare Group Inc 58.1 42.5 35.0
01/28/1997 05/21/1997 Calgene Inc(Monsanto Co) Monsanto Co 60.0 60.7 45.0
01/21/1997 07/09/1997 Mafco Consolidated Grp(Mafco) Mafco Holdings Inc 27.6 24.9 15.0
01/13/1997 09/02/1997 Zurich Reinsurance Centre Zurich Versicherungs GmbH 11.6 15.7 34.0
------- ------- --------
33.6 28.9 23.5
</TABLE>
Source: Securities Data Corporation
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65
