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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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SCHEDULE 14D-1
Tender Offer Statement
Pursuant to Section 14(d)(1) of the Securities Exchange Act of 1934
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GLOBAL MOTORSPORT GROUP, INC.
(Name of Subject Company)
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GOLDEN CYCLE, LLC
(Bidder)
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COMMON STOCK, PAR VALUE $0.001 PER SHARE
(INCLUDING THE ASSOCIATED PREFERRED SHARE PURCHASE RIGHTS)
(Title of Class of Securities)
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378937106
(CUSIP Number of Class of Securities)
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ROGER GRASS
GOLDEN CYCLE, LLC
ONE WYNNEWOOD ROAD, SUITE 100
WYNNEWOOD, PENNSYLVANIA 19096
(610) 642-8600
(Name, Address and Telephone Number of Persons Authorized to Receive
Notices and Communications on Behalf of Bidder)
Copy To:
HERBERT HENRYSON II, ESQ.
WOLF, BLOCK, SCHORR AND SOLIS-COHEN LLP
111 SOUTH 15TH STREET
PHILADELPHIA, PENNSYLVANIA 19102
(215) 977-2000
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CALCULATION OF FILING FEE
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TRANSACTION VALUATION* AMOUNT OF FILING FEE**
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$105,004,494 $21,000.90
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* Based on the offer to purchase all outstanding shares of Common Stock of
the Subject Company together with the associated preferred share purchase
rights at $18.00 cash per share, the number of shares of Common Stock
reported as outstanding in the Quarterly Report on Form 10-Q of the Subject
Company for the quarter ended October 31, 1997 (5,077,442), and the number
of shares of Common Stock under option reported in the Annual Report on
Form 10-K of the Subject Company for the fiscal year ended January 31, 1997
and the Proxy Statement for the Annual Meeting of Stockholders of the
Subject Company held on November 4, 1997 (756,141).
** 1/50 of 1% of Transaction Valuation.
/ / Check 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. FILING PARTY: Not applicable
FORM OR REGISTRATION NO.: Not applicable. DATE FILED: Not applicable
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<PAGE>
ITEM 1. SECURITY AND SUBJECT COMPANY.
(a) The name of the subject company is Global Motorsport Group, Inc., a
Delaware corporation (the "Company"), and the address of its principal executive
offices is 16100 Jacqueline Court, Morgan Hill, California 95037.
(b) The class of securities to which this statement relates is the Common
Stock, par value $.001 per share (the "Common Stock"), of the Company, including
the associated preferred share purchase rights (the "Rights") issued pursuant to
the Rights Agreement, dated as of November 13, 1996, between the Company and
American Stock Transfer and Trust Company, as Rights Agent (the Common Stock and
Rights are referred to collectively herein as the "Shares"). The information set
forth in the Introduction and Section 1 of the Offer to Purchase (the "Offer to
Purchase") annexed hereto as Exhibit 1 is incorporated herein by reference.
(c) The information set forth in Section 6 of the Offer to Purchase is
incorporated herein by reference.
ITEM 2. IDENTITY AND BACKGROUND.
(a)-(d); (g) The information set forth in Section 9 of the Offer to
Purchase is incorporated herein by reference. The name, business address,
present principal occupation or employment, the material occupations, positions,
offices or employments for the past five years and citizenship of each member
and executive officer of Golden Cycle, LLC, a Pennsylvania limited liability
company (the "Purchaser"), and the name, principal business and address of any
corporation or other organization in which such occupations, positions, offices
and employments are or were carried on are set forth in Schedule I of the Offer
to Purchase and incorporated herein by reference.
(e)-(f) During the last five years, none of the Purchaser or, to the best
of the Purchaser's knowledge, any of the members or executive officers of the
Purchaser has been convicted in a criminal proceeding (excluding traffic
violations or similar misdemeanors) or was a party to a civil proceeding of a
judicial or administrative body of competent jurisdiction as a result of which
any such person was or is subject to a judgment, decree or final order enjoining
future violations of, or prohibiting activities subject to, federal or state
securities laws or finding any violation of such law.
ITEM 3. PAST CONTACTS, TRANSACTIONS OR NEGOTIATIONS WITH THE SUBJECT COMPANY.
(a)-(b) The information set forth in the Introduction and Section 11 of the
Offer to Purchase is incorporated herein by reference.
ITEM 4. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION.
(a)-(b) The information set forth in Section 10 of the Offer to Purchase is
incorporated herein by reference.
ITEM 5. PURPOSE OF THE TENDER OFFER AND PLANS OR PROPOSALS OF THE BIDDER.
(a)-(g) The information set forth in the Introduction and Sections 7 and 12
of the Offer to Purchase is incorporated herein by reference.
ITEM 6. INTEREST IN SECURITIES OF THE SUBJECT COMPANY.
(a)-(b) The information set forth in Sections 9 and 11 and Schedule II of
the Offer to Purchase is incorporated herein by reference.
ITEM 7. CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS OR RELATIONSHIPS WITH RESPECT TO
THE SUBJECT COMPANY'S SECURITIES.
The information set forth in the Introduction and Sections 10, 11 and 16 of
the Offer to Purchase is incorporated herein by reference.
<PAGE>
ITEM 8. PERSONS RETAINED, EMPLOYED OR TO BE COMPENSATED.
The information set forth in Section 16 of the Offer to Purchase is
incorporated herein by reference.
ITEM 9. FINANCIAL STATEMENTS OF CERTAIN BIDDERS.
The information set forth in Section 9 of the Offer to Purchase is
incorporated herein by reference.
ITEM 10. ADDITIONAL INFORMATION.
(a) Not applicable.
(b)-(c) The information set forth in Section 15 of the Offer to Purchase is
incorporated herein by reference.
(d) The information set forth in Section 7 of the Offer to Purchase is
incorporated herein by reference.
(e) The information set forth in the Introduction and Sections 8, 11 and 15
of the Offer to Purchase is incorporated herein by reference. See Exhibits (g)
and (h).
(f) The information set forth in the Offer to Purchase and the Letter of
Transmittal, to the extent not otherwise incorporated herein by reference, is
incorporated herein by reference.
ITEM 11. MATERIAL TO BE FILED AS EXHIBITS.
(a)(1) Offer to Purchase, dated April 7, 1998.
(2) Letter of Transmittal with respect to the Shares and Rights.
(3) Letter, dated April 7, 1998, from Jefferies & Company, Inc. to
brokers, dealers, banks, trust companies and nominees.
(4) Letter to be sent by brokers, dealers, banks, trust companies and
nominees to their clients.
(5) Notice of Guaranteed Delivery.
(6) IRS Guidelines for Certification of Taxpayer Identification Number
on Substitute Form W-9.
(7) Press Release, dated April 6, 1998.
(8) Form of summary advertisement, dated April 7, 1998.
(b) None.
(c) Letter agreement, dated March 6, 1998, between Jefferies & Company,
Inc. and the Purchaser.
(d) None.
(e) Not applicable.
(f) None.
(g) Complaint filed by the Purchaser on April 2, 1998 in the Court of
Chancery of the State of Delaware.
(h) Complaint filed by the Purchaser on April 6, 1998 in the United
States District Court in and for the District of Delaware.
<PAGE>
SIGNATURE
After due inquiry and to the best of my knowledge and belief, I certify
that the information set forth in this statement is true, complete and correct.
Dated: April 7, 1998
GOLDEN CYCLE, LLC
By: /s/ ROGER GRASS
-------------------------------
Name: Roger Grass
Title: Vice President
<PAGE>
INDEX TO EXHIBITS
EXHIBIT
NUMBER EXHIBIT
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(a)(1) Offer to Purchase, dated April 7, 1998
(2) Letter of Transmittal with respect to the Shares and Rights
(3) Letter, dated April 7, 1998, from Jefferies & Company, Inc. to brokers,
dealers, banks, trust companies and nominees.
(4) Letter to be sent by brokers, dealers, banks, trust companies and
nominees to their clients
(5) Notice of Guaranteed Delivery
(6) IRS Guidelines for Certification of Taxpayer Identification Number on
Substitute Form W-9
(7) Press Release, dated April 6, 1998
(8) Form of summary advertisement, dated April 7, 1998
(b) None
(c) Letter agreement, dated March 6, 1998, between Jefferies & Company,
Inc. and the Purchaser
(d) None
(e) Not applicable
(f) None
(g) Complaint filed by the Purchaser on April 2, 1998 in the Court of
Chancery of the State of Delaware.
(h) Complaint filed by the Purchaser on April 6, 1998 in the United States
District Court in and for the District of Delaware.
<PAGE>
Exhibit (1)(a)
Offer to Purchase for Cash
All Outstanding Shares of Common Stock
(Including the Associated Preferred Share Purchase Rights)
of
GLOBAL MOTORSPORT GROUP, INC.
at
$18 NET PER SHARE
by
GOLDEN CYCLE, LLC
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THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY
TIME, ON MONDAY MAY 4, 1998, UNLESS THE OFFER IS EXTENDED.
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THE OFFER IS CONDITIONED UPON, AMONG OTHER THINGS, (I) THERE BEING VALIDLY
TENDERED AND NOT WITHDRAWN PRIOR TO THE EXPIRATION DATE THAT NUMBER OF SHARES
THAT WOULD, TOGETHER WITH THE SHARES BENEFICIALLY OWNED BY THE PURCHASER,
REPRESENT A MAJORITY OF ALL OUTSTANDING SHARES ON A FULLY DILUTED BASIS ON THE
DATE OF PURCHASE, (II) THE COMPANY'S PREFERRED SHARE PURCHASE RIGHTS (THE
"RIGHTS") HAVING BEEN REDEEMED BY THE BOARD OF DIRECTORS OF THE COMPANY OR THE
PURCHASER BEING SATISFIED, IN ITS SOLE DISCRETION, THAT THE RIGHTS HAVE BEEN
INVALIDATED OR ARE OTHERWISE INAPPLICABLE TO THE OFFER AND THE PROPOSED MERGER
(AS DEFINED HEREIN) AND (III) THE ACQUISITION OF SHARES PURSUANT TO THE OFFER
AND THE PROPOSED MERGER HAVING BEEN APPROVED PURSUANT TO SECTION 203 OF THE
DELAWARE GENERAL CORPORATION LAW ("SECTION 203") OR THE PURCHASER BEING
SATISFIED, IN ITS SOLE DISCRETION, THAT THE PROVISIONS OF SECTION 203 ARE
OTHERWISE INAPPLICABLE TO THE ACQUISITION OF SHARES PURSUANT TO THE OFFER AND
THE PROPOSED MERGER.
THE OFFER IS ALSO CONDITIONED UPON THE PURCHASER HAVING OBTAINED SUFFICIENT
FINANCING TO ENABLE IT TO PURCHASE ALL SHARES OUTSTANDING ON A FULLY DILUTED
BASIS, TO REFINANCE CERTAIN INDEBTEDNESS OF THE COMPANY AND TO PAY RELATED COSTS
AND EXPENSES. SEE THE INTRODUCTION AND SECTIONS 1 AND 14.
------------------------------
IMPORTANT
Any stockholder desiring to tender all or any portion of such stockholder's
Shares (and the associated Rights) should either (i) complete and sign the
Letter of Transmittal (or a facsimile thereof) in accordance with the
instructions in the Letter of Transmittal, have such stockholder's signature
thereon guaranteed if required by Instruction 1 to the Letter of Transmittal,
mail or deliver the Letter of Transmittal (or such facsimile), or, in the case
of a book-entry transfer effected pursuant to the procedure set forth in Section
2, an Agent's Message (as defined herein), and any other required documents to
the Depositary and either deliver the certificates for such Shares and, if
separate, the certificate(s) representing the associated Rights to the
Depositary along with the Letter of Transmittal (or facsimile) or deliver such
Shares (and Rights, if applicable) pursuant to the procedure for book-entry
transfer set forth in Section 2 or (ii) request such stockholder's broker,
dealer, bank, trust company or other nominee to effect the transaction for such
stockholder. A stockholder having Shares and, if applicable, Rights registered
in the name of a broker, dealer, bank, trust company or other nominee must
contact such broker, dealer, bank, trust company or other nominee if such
stockholder desires to tender such Shares and, if applicable, Rights. Unless the
Rights Condition (as defined herein) is satisfied, stockholders will be required
to tender one Right for each Share tendered in order to effect a valid tender of
Shares.
If a stockholder desires to tender Shares and Rights and such stockholder's
certificates for Shares (or Rights, if applicable) 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, such stockholder's tender may be effected by following the
procedure for guaranteed delivery set forth in Section 2.
Questions and requests for assistance or for additional copies of this
Offer to Purchase, the Letter of Transmittal and the Notice of Guaranteed
Delivery may be directed to the Information Agent or to the Dealer Manager at
their respective addresses and telephone numbers set forth on the back cover of
this Offer to Purchase.
------------------------------
The Dealer Manager for the Offer is:
[JEFFERIES & COMPANY, INC. LOGO]
April 7, 1998
<PAGE>
TABLE OF CONTENTS
PAGE
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INTRODUCTION.............................................................. 1
THE TENDER OFFER.......................................................... 5
1. Terms of the Offer.................................................... 5
2. Procedure for Tendering Shares and Rights............................. 6
3. Withdrawal Rights..................................................... 9
4. Acceptance for Payment and Payment.................................... 10
5. Certain Federal Income Tax Consequences............................... 11
6. Price Range of the Shares; Dividends on the Shares.................... 12
7. Effect of the Offer on the Market for the Shares; Stock Quotation;
Exchange Act Registration; Margin Regulations.......................... 13
8. Certain Information Concerning the Company............................ 14
9. Certain Information Concerning the Purchaser.......................... 17
10. Source and Amount of Funds............................................ 17
11. Contacts with the Company; Background of the Offer.................... 18
12. Purpose of the Offer; Plans for the Company........................... 21
13. Dividends and Distributions........................................... 23
14. Certain Conditions of the Offer....................................... 24
15. Certain Legal Matters................................................. 27
16. Fees and Expenses..................................................... 29
17. Miscellaneous......................................................... 30
Schedule I -- Members and Executive Officers of the Purchaser.............. I-1
Schedule II -- Schedule of Purchases During the Past 60 Days............... II-1
<PAGE>
To the Holders of Common Stock
(including the Associated Preferred Share Purchase Rights)
of Global Motorsport Group, Inc.:
INTRODUCTION
Golden Cycle, LLC, a Pennsylvania limited liability company (the
"Purchaser"), hereby offers to purchase all outstanding shares of Common Stock,
par value $0.001 per share (the "Shares"), of Global Motorsport Group, Inc., a
Delaware corporation (the "Company"), together with (unless and until the
Purchaser declares that the Rights Condition (as defined below) is satisfied)
the associated preferred share purchase rights (the "Rights") issued pursuant to
the Rights Agreement dated as of November 13, 1996 (the "Rights Agreement"),
between the Company and American Stock Transfer and Trust Company, as Rights
Agent (the "Rights Agent"), at a price of $18 per Share (and associated Right),
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, together with any amendments or
supplements hereto or thereto, collectively constitute the "Offer"). All
references herein to Rights shall include all benefits that may inure to holders
of the Rights pursuant to the Rights Agreement and, unless the context otherwise
requires, all references herein to Shares shall include the Rights.
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, transfer taxes on the purchase of Shares pursuant to the Offer. The
Purchaser will pay all fees and expenses of Jefferies & Company, Inc.
("Jefferies"), which is acting as Dealer Manager (the "Dealer Manager"), Dauphin
Deposit Bank and Trust Company, which is acting as the Depositary (the
"Depositary"), and Innisfree M&A Incorporated, which is acting as Information
Agent (the "Information Agent"), incurred in connection with the Offer. See
Section 16.
The purpose of the Offer is to enable the Purchaser to acquire control of,
and the entire equity interest in, the Company. The Offer, as the first step in
the acquisition of the Company, is intended to facilitate the acquisition of all
of the Shares. The Purchaser intends, as soon as practicable following
consummation of the Offer, to seek to have the Company consummate a merger or
similar business combination with the Purchaser or a subsidiary of the Purchaser
(the "Proposed Merger"). The purpose of the Proposed Merger is to acquire all
Shares not tendered and purchased pursuant to the Offer or otherwise. Pursuant
to the Proposed Merger, each then outstanding Share (other than Shares owned by
the Purchaser, Shares held in the treasury of the Company and Shares owned by
stockholders who perfect any available appraisal rights under the Delaware
General Corporation Law (the "DGCL")) would be converted into the right to
receive an amount in cash equal to the price per Share paid pursuant to the
Offer.
The Purchaser intends to seek to negotiate with the Company with respect to
the acquisition of the Company by the Purchaser. If such negotiations result in
a definitive merger agreement between the Company and the Purchaser, the
consideration to be received by holders of Shares could include or consist of
securities, cash or any combination thereof. Accordingly, such negotiations
could result in, among other things, termination of the Offer (see Section 14)
and submission of a different acquisition proposal to the Company's stockholders
for their approval.
The Purchaser has filed preliminary consent solicitation materials with the
Securities and Exchange Commission (the "Commission") for use in connection with
the solicitation of written consents from stockholders of the Company (the
"Consent Solicitation") for the following purposes: (i) to remove all of the
present members of the Board of Directors of the Company (the "Board of
Directors"), (ii) to amend the By-laws of the Company (the "Company By-laws") to
fix the number of directors of the Company at five, (iii) to elect Aaron H.
Brenner, Alexander Grass, Roger Grass, H. Irwin Levy and George Lindemann
(collectively, the "Nominees") to serve as the directors of the Company and (iv)
to repeal each provision of the Company By-laws or amendment thereto adopted
subsequent to April 30, 1997 and prior to the effectiveness of the proposals
made pursuant to the Consent Solicitation. The Nominees intend, if elected to
the Board of Directors, to (a) redeem the Rights according to their terms (or
amend the Rights Agreement to make the Rights inapplicable to the Offer and the
Proposed Merger) and approve the Offer and the Proposed Merger under Section 203
of the DGCL ("Section 203"), which would satisfy the Rights Condition and the
Business Combination Condition
<PAGE>
(each as defined herein), and take such other actions as may be required to
expedite the prompt consummation of the Offer and the Proposed Merger or (b)
take actions, if any other transaction offering more value to the Company's
stockholders is proposed, to facilitate such a transaction, subject in all cases
to fulfillment of the fiduciary duties that the Nominees would have as directors
of the Company. Accordingly, adoption of the proposals made pursuant to the
Consent Solicitation would expedite the prompt consummation of the Offer and the
Proposed Merger.
THE OFFER DOES NOT CONSTITUTE A SOLICITATION OF CONSENTS FROM THE COMPANY'S
STOCKHOLDERS. ANY SUCH SOLICITATION (INCLUDING THE CONSENT SOLICITATION) WILL BE
MADE ONLY PURSUANT TO SEPARATE CONSENT SOLICITATION MATERIALS COMPLYING WITH THE
REQUIREMENTS OF SECTION 14(a) OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED
(THE "EXCHANGE ACT").
Certain Federal income tax consequences of the sale of Shares pursuant to
the Offer are described in Section 5.
The Offer is subject to the fulfillment of a number of conditions
including, without limitation, the following:
Minimum Tender Condition. THE OFFER IS CONDITIONED UPON THERE BEING
VALIDLY TENDERED AND NOT WITHDRAWN PRIOR TO THE EXPIRATION DATE (AS DEFINED IN
SECTION 1) THAT NUMBER OF SHARES (THE "MINIMUM NUMBER OF SHARES") THAT WOULD,
TOGETHER WITH THE SHARES BENEFICIALLY OWNED BY THE PURCHASER, REPRESENT A
MAJORITY OF ALL OUTSTANDING SHARES ON A FULLY DILUTED BASIS ON THE DATE OF
PURCHASE, WITHOUT GIVING EFFECT TO ANY DILUTION THAT MIGHT ARISE FROM EXERCISE
OF THE RIGHTS (THE "MINIMUM TENDER CONDITION"). THE PURCHASER RESERVES THE RIGHT
(SUBJECT TO THE APPLICABLE RULES AND REGULATIONS OF THE COMMISSION), WHICH IT
PRESENTLY HAS NO INTENTION OF EXERCISING, TO WAIVE OR REDUCE THE MINIMUN TENDER
CONDITION AND TO ELECT TO PURCHASE, PURSUANT TO THE OFFER, FEWER THAN THE
MINIMUM NUMBER OF SHARES. SEE SECTIONS 1 AND 14.
According to the Company's Quarterly Report on Form 10-Q for the quarter
ended October 31, 1997 (the "Company 1997 10-Q"), as of October 31, 1997, there
were 5,077,442 Shares issued and outstanding. According to the Company's Annual
Report on Form 10-K for the fiscal year ended January 31, 1997 (the "Company
1997 10-K"), as of January 31, 1997, there were 863,230 Shares under option
pursuant to the Company's 1991 and 1995 Stock Option Plans. In addition,
according to the Company's Proxy Statement for the Annual Meeting of
Stockholders held on November 4, 1997 (the "Company 1997 Proxy Statement"),
there were, as of August 31, 1997, an additional 389,000 Shares under option
pursuant to the Company's 1997 Stock Plan and options to purchase 7,500
additional Shares would be issued following the 1997 annual meeting of
stockholders pursuant to the Company's 1997 Director Option Plan. The Purchaser
believes that options to purchase 503,589 Shares granted to Ignatius J. Panzica,
the former Chairman of the Board, President and Chief Executive Officer of the
Company, as reported in the Company 1997 Proxy Statement, expired upon his
termination of employment with the Company. Based on the foregoing and assuming
that no options were granted other than those identified above, and no options
were exercised or expired during the period from January 1, 1995 through October
31, 1997, other than the expiration of Mr. Panzica's options, there would be
5,833,583 Shares outstanding on a fully diluted basis. The Purchaser presently
beneficially owns a total of 528,100 Shares, representing approximately 9.0% of
all Shares outstanding on a fully diluted basis (other than potential dilution
due to the Rights), and assuming the exercise of all employee stock options
assumed to be outstanding as of October 31, 1997. Hence, the Minimum Number of
Shares would be 2,388,692. However, the actual Minimum Number of Shares will
depend on the facts as they exist on the date of purchase.
Rights Condition. THE OFFER IS CONDITIONED UPON THE RIGHTS HAVING BEEN
REDEEMED BY THE BOARD OF DIRECTORS OR THE PURCHASER BEING SATISFIED, IN ITS SOLE
DISCRETION, THAT THE RIGHTS HAVE BEEN INVALIDATED OR ARE OTHERWISE INAPPLICABLE
TO THE OFFER AND THE PROPOSED MERGER (THE "RIGHTS CONDITION"). THE RIGHTS ARE
DESCRIBED IN THE COMPANY'S REGISTRATION STATEMENT ON FORM 8-A DATED DECEMBER 9,
1996 (THE "COMPANY 8-A"), AND A SUMMARY OF THAT DESCRIPTION IS PROVIDED BELOW
AND IN SECTION 8.
2
<PAGE>
The Rights Agreement provides that, until the close of business on the
Distribution Date (as defined in Section 8), the Rights will be evidenced by the
certificates for Shares. Until the Distribution Date (or the earlier redemption
or expiration of the Rights), the surrender for transfer of any certificates for
Shares will also constitute the surrender for transfer of the Rights associated
with the Shares represented by such certificates. The Rights Agreement further
provides that, as soon as practicable following the Distribution Date, separate
certificates representing the Rights are to be mailed by the Company or the
Rights Agent to holders of record of Shares as of the close of business on the
Distribution Date.
The Rights Agreement provides that, at any time prior to the close of
business on the earlier of (a) the tenth day following a public announcement
that a person has become an Acquiring Person (as defined in Section 8) (or such
later date as may be determined by a majority of Continuing Directors (as
defined in Section 8) then in office) and (b) the Final Expiration Date (as
defined in Section 8), the Board of Directors may redeem all but not less than
all of the then-outstanding Rights at a price of $0.01 per Right (except as
provided in the Rights Agreement).
Based on publicly available information, the Purchaser believes that, as of
April 7, 1998, the Rights were not exercisable, certificates for Rights had not
been issued and the Rights were evidenced by the certificates for Shares. The
Purchaser believes that, as a result of the Purchaser's announcement on April 6,
1998 of the commencement of the Offer, the Distribution Date may occur as early
as April 20, 1998, unless prior to such date the Board of Directors redeems the
Rights, amends the Rights Agreement to make the Rights inapplicable to the Offer
or delays the Distribution Date.
UNLESS THE RIGHTS CONDITION IS SATISFIED, STOCKHOLDERS WILL BE REQUIRED TO
TENDER ONE RIGHT FOR EACH SHARE TENDERED IN ORDER TO EFFECT A VALID TENDER OF
SHARES IN ACCORDANCE WITH THE PROCEDURES SET FORTH IN SECTION 2. UNLESS THE
DISTRIBUTION DATE OCCURS, A TENDER OF SHARES WILL ALSO CONSTITUTE A TENDER OF
THE ASSOCIATED RIGHTS.
The Purchaser believes that under the circumstances of the Offer, and under
applicable law, the Board of Directors has a fiduciary obligation to redeem the
Rights (or amend the Rights Agreement to make the Rights inapplicable to the
Offer and the Proposed Merger), and the Purchaser is hereby requesting that the
Board of Directors do so. However, there can be no assurance that the Board of
Directors will redeem the Rights (or amend the Rights Agreement). The Purchaser
has commenced litigation against the Company in the Court of Chancery of the
State of Delaware seeking, among other things, an order compelling the Board of
Directors to redeem the Rights or to amend the Rights Agreement to make the
Rights inapplicable to the Offer and the Proposed Merger on the grounds that
failure to do so would constitute a breach of fiduciary duty to the Company's
stockholders.
Pursuant to the Consent Solicitation, the Purchaser intends to seek to
remove the current members of the Board of Directors and to replace them with
the Nominees, who intend to redeem the Rights (or amend the Rights Agreement to
make the Rights inapplicable to the Offer and the Proposed Merger), subject to
the fulfillment of the fiduciary duties that they would have as directors of the
Company. Redemption of the Rights (or such an amendment of the Rights Agreement)
would satisfy the Rights Condition.
Business Combination Condition. THE OFFER IS CONDITIONED UPON THE
ACQUISITION OF SHARES PURSUANT TO THE OFFER AND THE PROPOSED MERGER HAVING BEEN
APPROVED PURSUANT TO SECTION 203 OR THE PURCHASER BEING SATISFIED, IN ITS SOLE
DISCRETION, THAT THE PROVISIONS OF SECTION 203 ARE OTHERWISE INAPPLICABLE TO THE
ACQUISITION OF SHARES PURSUANT TO THE OFFER AND THE PROPOSED MERGER (THE
"BUSINESS COMBINATION CONDITION"). THE PROVISIONS OF SECTION 203 ARE DESCRIBED
MORE FULLY IN SECTION 15.
Section 203, in general, prohibits a Delaware corporation such as the
Company from engaging in a Business Combination (as defined in Section 15) with
an Interested Stockholder (as defined in Section 15) for a period of three years
following the date that such person became an Interested Stockholder unless (a)
prior to the date that such person became an Interested Stockholder, the board
of directors of the corporation approved either the Business Combination or the
transaction that resulted in the stockholder becoming an Interested Stockholder,
3
<PAGE>
(b) upon consummation of the transaction that resulted in the stockholder
becoming an Interested Stockholder, the Interested Stockholder owned at least
85% of the voting stock of the corporation outstanding at the time the
transaction commenced, excluding stock held by directors who are also officers
of the corporation and employee stock plans that do not provide employees with
the right to determine confidentially whether shares held subject to the plan
will be tendered in a tender or exchange offer, or (c) on or subsequent to the
date such person became an Interested Stockholder, the Business Combination is
approved by the board of directors of the corporation and authorized at a
meeting of stockholders, and not by written consent, by the affirmative vote of
the holders of at least 66 2/3% of the outstanding voting stock of the
corporation not owned by the Interested Stockholder. See Section 15.
The Purchaser is hereby requesting that the Board of Directors adopt a
resolution approving the Offer and the Proposed Merger for purposes of Section
203. However, there can be no assurance that the Board of Directors will do so.
The Purchaser has commenced litigation against the Company in the Court of
Chancery of the State of Delaware seeking, among other things, an order
compelling the Board of Directors to approve the Offer and the Proposed Merger
for purposes of Section 203 on the grounds that failure to do so would
constitute a breach of fiduciary duty to the Company's stockholders.
Pursuant to the Consent Solicitation, the Purchaser will seek to remove the
current members of the Board of Directors and to replace them with the Nominees,
who intend to approve the Offer and the Proposed Merger under Section 203,
subject to the fulfillment of the fiduciary duties that they would have as
directors of the Company. Approval of the Offer and the Proposed Merger under
Section 203 would satisfy the Business Combination Condition.
Financing Condition. THE OFFER IS CONDITIONED UPON THE PURCHASER HAVING
OBTAINED SUFFICIENT FINANCING TO ENABLE IT TO PURCHASE ALL SHARES ON A FULLY
DILUTED BASIS, TO REFINANCE CERTAIN INDEBTEDNESS OF THE COMPANY AND TO PAY
RELATED COSTS AND EXPENSES. SEE SECTION 14.
The total amount of funds required by the Purchaser to purchase all Shares
on a fully diluted basis pursuant to the Offer (other than Shares beneficially
owned by the Purchaser), to refinance certain indebtedness of the Company and to
pay costs and expenses related to the Offer and the Consent Solicitation is
estimated to be approximately $155 million. The Purchaser has retained Jefferies
as its exclusive financial advisor in connection with its investment in the
Company and in connection with the Offer, including assisting the Purchaser in
obtaining the financing required to acquire the Company. Jefferies has informed
the Purchaser that, based upon the current condition of the Company (financial
or otherwise), current market and other customary conditions and the commitments
of Alexander Grass and Roger Grass described below, it is highly confident that
it can arrange financing in the approximate amount of $105 million. Alexander
Grass and Roger Grass have committed to purchase an aggregate of $50 million in
equity securities of the Purchaser to the extent that institutional and other
investors do not purchase such securities. See Section 9 and Schedule I for
certain information concerning Alexander Grass and Roger Grass. The funding of
all such purchases will be subject to the satisfaction of some or all of the
conditions to the Offer and to other customary conditions. This Offer to
Purchase constitutes neither an offer to sell nor solicitation of an offer to
buy any of the securities that may be issued in connection with such financings.
Certain other conditions to the Offer are described in Section 14. The
Purchaser reserves the right (but shall not be obligated) to waive any or all
such conditions. See Sections 1, 8, 14 and 15.
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THE TENDER OFFER
1. TERMS OF THE OFFER
Upon the terms and subject to the conditions of the Offer, the Purchaser
will accept for payment and pay for all Shares validly tendered prior to the
Expiration Date and not theretofore withdrawn in accordance with Section 3. The
term "Expiration Date" means 12:00 Midnight, New York City time, on Monday, May
4, 1998, unless and until the Purchaser, in its sole discretion, 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 the Purchaser, will expire.
THE OFFER IS CONDITIONED UPON (A) SATISFACTION OF THE MINIMUM TENDER
CONDITION, THE RIGHTS CONDITION, THE BUSINESS COMBINATION CONDITION AND THE
FINANCING CONDITION, (B) THE EXPIRATION OR TERMINATION OF ALL WAITING PERIODS
IMPOSED BY THE HART-SCOTT-RODINO ANTITRUST IMPROVEMENTS ACT OF 1976, AS AMENDED,
AND THE REGULATIONS THEREUNDER (THE "HSR ACT"), IF APPLICABLE, AND (C) THE
SATISFACTION OF THE OTHER CONDITIONS SET FORTH IN SECTION 14.
Subject to the applicable rules and regulations of the Commission, the
Purchaser reserves the right, in its sole discretion, at any time and from time
to time, and regardless of whether or not any of the events or facts set forth
in Section 14 hereof shall have occurred, to (a) extend the period of time
during which the Offer is open, and thereby delay acceptance for payment of and
the payment for any Shares, by giving oral or written notice of such extension
to the Depositary and (b) amend the Offer in any other respect by giving oral or
written notice of such amendment to the Depositary. UNDER NO CIRCUMSTANCES WILL
INTEREST BE PAID ON THE PURCHASE PRICE FOR TENDERED SHARES, WHETHER OR NOT THE
PURCHASER EXERCISES ITS RIGHT TO EXTEND THE OFFER.
If by 12:00 Midnight, New York City time, on Monday, May 4, 1998 (or any
date or time then set as the Expiration Date), any or all of the conditions to
the Offer have not been satisfied or waived, the Purchaser reserves the right
(but shall not be obligated), subject to the applicable rules and regulations of
the Commission, to (a) terminate the Offer and not accept for payment or pay for
any Shares and return all tendered Shares to tendering stockholders, (b) waive
all the unsatisfied conditions and accept for payment and pay for all Shares
validly tendered prior to the Expiration Date and not theretofore withdrawn, (c)
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 (d) amend the Offer.
There can be no assurance that the Purchaser will exercise its right to
extend the Offer. Any extension, amendment or termination will be followed as
promptly as practicable by a public announcement thereof. In the case of an
extension, Rule 14e-1(d) under the Exchange Act requires that the announcement
be issued no later than 9:00 a.m., New York City time, on the next business day
after the previously scheduled Expiration Date in accordance with the public
announcement requirements of Rule 14d-4(c) under the Exchange Act. Subject to
applicable law (including Rules 14d-4(c) and 14d-6(d) under the Exchange Act,
which require that any material change in the information published, sent or
given to stockholders in connection with the Offer be promptly disseminated to
stockholders in a manner reasonably designed to inform stockholders of such
change), and without limiting the manner in which the Purchaser may choose to
make any public announcement, the Purchaser will not have any obligation to
publish, advertise or otherwise communicate any such public announcement other
than by making a release to the Dow Jones News Service. As used in this Offer to
Purchase, "business day" has the meaning set forth in Rule 14d-1 under the
Exchange Act.
If the Purchaser extends the Offer or if the Purchaser is delayed in its
acceptance for payment of or payment (whether before or after its acceptance for
payment of Shares) for Shares or it is unable to pay for Shares pursuant to the
Offer for any reason, then, without prejudice to the Purchaser's rights under
the Offer, the Depositary may retain tendered Shares on behalf of the Purchaser,
and such Shares may not be withdrawn except to the extent tendering stockholders
are entitled to withdrawal rights as described in Section 3. However, the
ability of the Purchaser to delay the payment for Shares that the Purchaser has
accepted for payment is limited by Rule 14e-1(c) under the Exchange Act, which
requires that a bidder pay the consideration offered or return the securities
deposited by or on behalf of holders of securities promptly after the
termination or withdrawal of such bidder's offer.
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If the Purchaser makes a material change in the terms of the Offer or the
information concerning the Offer or waives a material condition of the Offer,
the Purchaser will disseminate additional tender offer materials and 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 10 business days is generally required to allow for adequate
dissemination to stockholders and investor response.
Requests are being made to the Company pursuant to Rule 14d-5 of the
Exchange Act for the use of the Company's stockholder lists and security
position listings for the purpose of disseminating the Offer to holders of
Shares. The Purchaser has previously requested the Company's stockholder lists
and security position listings pursuant to Section 220 of the DGCL and the
Company has denied that request. A hearing has been set for April 14, 1998 in
the Court of Chancery of the State of Delaware in connection with the
Purchaser's complaint seeking an order from the Court compelling the Company to
produce such information. See Section 11. This Offer to Purchase, the related
Letter of Transmittal and other relevant materials will be mailed to record
holders of Shares, and will be furnished to brokers, dealers, banks, trust
companies and similar persons whose names, or the names of whose nominees,
appear on the stockholder lists, or, if applicable, who are listed as
participants in a clearing agency's security position listing, for subsequent
transmittal to beneficial owners of Shares, by the Purchaser following receipt
of such lists or listings from the Company, or by the Company if it so elects.
2. PROCEDURE FOR TENDERING SHARES AND RIGHTS
Valid Tender. For a stockholder validly to tender Shares and Rights
pursuant to the Offer, either (a) a properly completed and duly executed Letter
of Transmittal (or facsimile thereof), together with any required signature
guarantees, or, in the case of a book-entry transfer, an Agent's Message (as
defined herein), and any other required documents, must be received by the
Depositary at its address set forth on the back cover of this Offer to Purchase
prior to the Expiration Date, and either certificates for tendered Shares and
Rights must be received by the Depositary at such address or such Shares and
Rights must be delivered pursuant to the procedures for book-entry transfer set
forth below (and a Book-Entry Confirmation (as defined below) received by the
Depositary), in each case prior to the Expiration Date, or (b) the tendering
stockholder must comply with the guaranteed delivery procedures set forth below.
UNLESS THE RIGHTS CONDITION IS SATISFIED, STOCKHOLDERS WILL BE REQUIRED TO
TENDER ONE RIGHT FOR EACH SHARE TENDERED IN ORDER TO EFFECT A VALID TENDER OF
SHARES. ACCORDINGLY, STOCKHOLDERS WHO SELL THEIR RIGHTS SEPARATELY FROM THEIR
SHARES AND DO NOT OTHERWISE ACQUIRE RIGHTS MAY NOT BE ABLE TO SATISFY THE
REQUIREMENTS OF THE OFFER FOR A VALID TENDER OF SHARES. As further described in
Section 8, the Rights Agreement provides that until the close of business on the
Distribution Date, the Rights will be evidenced by the certificates for the
Shares and may be transferred with and only with the Shares. The Rights
Agreement further provides that, as soon as practicable following the
Distribution Date, separate certificates representing the Rights are to be
mailed by the Company or the Rights Agent to holders of record of Shares as of
the close of business on the Distribution Date. The Purchaser believes that, as
a result of its announcement on April 6, 1998 of the commencement of the Offer,
the Distribution Date may occur as early as April 20, 1998, unless prior to such
date the Board of Directors redeems the Rights, amends the Rights Agreement to
make the Rights inapplicable to the Offer or delays the Distribution Date.
UNLESS THE DISTRIBUTION DATE OCCURS, A TENDER OF SHARES WILL ALSO CONSTITUTE A
TENDER OF THE ASSOCIATED RIGHTS.
If the Distribution Date occurs and separate certificates representing the
Rights are distributed by the Company or the Rights Agent to holders of Shares
prior to the time a holder's Shares are tendered pursuant to the Offer,
certificates representing a number of Rights equal to the number of Shares
tendered must be delivered to the Depositary, or, if available, a Book-Entry
Confirmation received by the Depositary with respect thereto, in order for such
Shares to be validly tendered. If the Distribution Date occurs and separate
certificates representing the Rights are not distributed prior to the time
Shares are tendered pursuant to the Offer, Rights may be tendered prior to a
stockholder receiving the certificates for Rights by use of the guaranteed
delivery procedures described
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below. A tender of Shares constitutes an agreement by the tendering stockholder
to deliver to the Depositary certificates representing a number of Rights equal
to the number of Shares tendered pursuant to the Offer. Such delivery must be
made prior to expiration of the period permitted by the guaranteed delivery
procedures for delivery of certificates for, or a Book-Entry Confirmation with
respect to, Rights (the "Rights Delivery Period"). However, after expiration of
the Rights Delivery Period, the Purchaser may elect to reject as invalid a
tender of Shares with respect to which certificates for, or a Book-Entry
Confirmation with respect to, an equal number of Rights have not been received
by the Depositary. Nevertheless, the Purchaser will be entitled to accept for
payment Shares tendered by a stockholder prior to receipt of the certificates
for the Rights required to be tendered with such Shares, or a Book-Entry
Confirmation with respect to such Rights, and either (a), subject to complying
with applicable rules and regulations of the Commission, withhold payment for
such Shares pending receipt of the certificates for, or a Book-Entry
Confirmation with respect to, such Rights or (b) make payment for Shares
accepted for payment pending receipt of the certificates for, or a Book-Entry
Confirmation with respect to, such Rights in reliance upon the agreement of a
tendering stockholder to deliver Rights and such guaranteed delivery procedures.
Any determination by the Purchaser to make payment for Shares in reliance upon
such agreement and such guaranteed delivery procedures or, after expiration of
the Rights Delivery Period, to reject a tender as invalid will be made in the
sole and absolute discretion of the Purchaser.
The Depositary will establish accounts with respect to the Shares at The
Depository Trust Company ("DTC") 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 DTC's systems may make book-entry delivery of Shares by causing
DTC to transfer such Shares into the Depositary's account in accordance with
DTC's procedures for such transfer. However, although delivery of Shares may be
effected through book-entry transfer into the Depositary's account at DTC, the
Letter of Transmittal (or facsimile thereof), properly completed and duly
executed, with any required signature guarantees, or an Agent's Message, and any
other required documents, must, in any case, be transmitted to, and received by,
the Depositary at its address set forth on the back cover of this Offer to
Purchase prior to the Expiration Date, or the tendering stockholder must comply
with the guaranteed delivery procedures described below. If the Distribution
Date occurs, the Depositary will also make a request to establish an account
with respect to the Rights at DTC, but no assurance can be given that book-entry
delivery of Rights will be available. If book-entry delivery of Rights is
available, the foregoing book-entry transfer procedures will also apply to
Rights. If book-entry delivery of Rights is not available and the Distribution
Date occurs, a tendering stockholder will be required to tender Rights by means
of physical delivery to the Depositary of certificates for Rights (in which
event references in this Offer to Purchase to Book-Entry Confirmations with
respect to Rights will be inapplicable). The confirmation of a book-entry
transfer of Shares or Rights into the Depositary's account at DTC as described
above is referred to herein as a "Book-Entry Confirmation." DELIVERY OF
DOCUMENTS TO DTC IN ACCORDANCE WITH DTC'S PROCEDURES DOES NOT CONSTITUTE
DELIVERY TO THE DEPOSITARY.
The term "Agent's Message" means a message transmitted by DTC to, and
received by, the Depositary and forming a part of a Book-Entry Confirmation,
which states that DTC has received an express acknowledgment from the
participant in DTC tendering the Shares that such participant has received and
agrees to be bound by the terms of the Letter of Transmittal and that the
Purchaser may enforce such agreement against the participant.
THE METHOD OF DELIVERY OF SHARES, RIGHTS, THE LETTER OF TRANSMITTAL AND ALL
OTHER REQUIRED DOCUMENTS, INCLUDING DELIVERY THROUGH DTC, IS AT THE ELECTION AND
RISK OF THE TENDERING STOCKHOLDER. SHARES WILL BE DEEMED DELIVERED ONLY WHEN
ACTUALLY RECEIVED BY THE DEPOSITARY (INCLUDING, IN THE CASE OF A BOOK-ENTRY
TRANSFER, BY BOOK-ENTRY CONFIRMATION). 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.
Signature Guarantees. No signature guarantee is required on the Letter of
Transmittal if (a) the Letter of Transmittal is signed by the registered
holder(s) (which term, for purposes of this Section, includes any participant in
any of DTC's systems whose name appears on a security position listing as the
owner of the Shares) of Shares and Rights tendered therewith and such registered
holder has not completed either the box entitled "Special Delivery Instructions"
or the box entitled "Special Payment Instructions" on the Letter of Transmittal
or (b) such Shares and Rights are tendered for the account of a financial
institution (including most commercial banks, savings and loan associations and
brokerage houses) that is a participant in the Security
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Transfer Agents Medallion Program, the New York Stock Exchange Medallion
Signature Guarantee Program or the Stock Exchange Medallion Program (an
"Eligible Institution"). In all other cases, all signatures on the Letter of
Transmittal must be guaranteed by an Eligible Institution. See Instructions 1
and 5 to the Letter of Transmittal. If the certificates for Shares or Rights are
registered in the name of a person other than the signer of the Letter of
Transmittal, or if payment is to be made or certificates for Shares or Rights
not tendered or not accepted for payment are to be returned to a person other
than the registered holder of the certificates surrendered, the tendered
certificates must be endorsed or accompanied by appropriate stock powers, in
either case signed exactly as the name or names of the registered holders or
owners appear on the certificates, with the signatures on the certificates or
stock powers guaranteed as aforesaid. See Instructions 1 and 5 to the Letter of
Transmittal.
Guaranteed Delivery. If a stockholder desires to tender Shares and Rights
pursuant to the Offer and (a) such stockholder's certificates for Shares or
Rights are not immediately available (including because certificates for Rights
have not yet been distributed by the Company or the Rights Agent), (b) the
procedure for book-entry transfer cannot be completed on a timely basis or (c)
time will not permit all required documents to reach the Depositary prior to the
Expiration Date, such stockholder's tender may be effected if all of the
following conditions are met:
(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 the Purchaser, is received
by the Depositary, as provided below, prior to the Expiration Date; and
(iii) the certificates for all tendered Shares and/or Rights, in
proper form for transfer (or a Book-Entry Confirmation with respect to all
such Shares and/or Rights), together with a properly completed and duly
executed Letter of Transmittal (or facsimile thereof), with any required
signature guarantees, or, in the case of a book-entry transfer, an Agent's
Message, and any other required documents are received by the Depositary
within (a), in the case of Shares, three trading days after the date of
execution of such Notice of Guaranteed Delivery or (b), in the case of
Rights, a period ending on the later of (1) three trading days after the
date of execution of such Notice of Guaranteed Delivery or (2) three
business days (as defined above) after the date certificates for Rights are
distributed to stockholders by the Company or the Rights Agent. A "trading
day" is any day on which the Nasdaq National Market (the "Nasdaq National
Market") operated by the National Association of Securities Dealers, Inc.
(the "NASD") is open for business.
The Notice of Guaranteed Delivery may be delivered by hand to the
Depositary or transmitted by telegram, facsimile transmission or mail to the
Depositary and must include a guarantee by an Eligible Institution in the form
set forth in such Notice of Guaranteed Delivery.
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 (a) certificates for (or a timely Book-Entry
Confirmation with respect to) such Shares and, if the Distribution Date occurs,
certificates for (or a timely Book-Entry Confirmation, if available, with
respect to) the associated Rights (unless the Purchaser elects to make payment
for such Shares pending receipt of the certificates for, or a Book-Entry
Confirmation with respect to, such Rights as described above), (b) a Letter of
Transmittal (or facsimile thereof), properly completed and duly executed, with
any required signature guarantees, or, in the case of a book-entry transfer, an
Agent's Message, 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 Rights) or Book-Entry
Confirmations with respect to Shares (or Rights, if available) are actually
received by the Depositary. UNDER NO CIRCUMSTANCES WILL INTEREST BE PAID ON THE
PURCHASE PRICE OF THE SHARES TO BE PAID BY THE PURCHASER, REGARDLESS OF ANY
EXTENSION OF THE OFFER OR ANY DELAY IN MAKING SUCH PAYMENT.
If the Rights Condition is satisfied, the guaranteed delivery procedures
with respect to certificates for Rights and the requirement for the tender of
Rights will no longer apply.
The valid tender of Shares and, if applicable, Rights pursuant to one of
the procedures described above will constitute a binding agreement between the
tendering stockholder and the Purchaser upon the terms and subject to the
conditions of the Offer.
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Appointment. By executing a Letter of Transmittal as set forth above, the
tendering stockholder will irrevocably appoint designees of the Purchaser as
such stockholder's attorneys-in-fact and proxies in the manner set forth in the
Letter of Transmittal, each with full power of substitution, to the full extent
of such stockholder's rights with respect to the Shares and Rights tendered by
such stockholder and accepted for payment by the Purchaser and with respect to
any and all other Shares, Rights or other securities or rights issued or
issuable in respect of such Shares and Rights on or after April 6, 1998. All
such proxies will be considered coupled with an interest in the tendered Shares
and Rights. Such appointment will be effective when, and only to the extent
that, the Purchaser accepts for payment Shares tendered by such stockholder as
provided herein. Upon such appointment, all prior powers of attorney, proxies
and consents given by such stockholder with respect to such Shares (except for
any consents issued under the Consent Solicitation), Rights or other securities
or rights will, without further action, be revoked, and no subsequent powers of
attorney, proxies, consents or revocations may be given (and, if given, will not
be deemed effective). The designees of the Purchaser will by virtue of such
appointment be empowered to exercise all voting and other rights with respect to
such Shares, Rights and other securities or rights with respect to any annual,
special or adjourned meeting of the Company's stockholders, actions by written
consent in lieu of any such meeting or otherwise, as such designees in their
sole discretion deem proper. The Purchaser reserves the right to require that,
in order for Shares and Rights to be deemed validly tendered the Purchaser must
be able, immediately upon the Purchaser's acceptance for payment of such Shares
and Rights, to exercise full voting, consent and other rights with respect to
such Shares, Rights and other securities or rights, including the right to vote
at any meeting of stockholders.
Determination of Validity. All questions as to the validity, form,
eligibility (including time of receipt) and acceptance of any tender of Shares
or Rights will be determined by the Purchaser in its sole discretion, which
determination will be final and binding. The Purchaser reserves the absolute
right to reject any or all tenders of Shares or Rights determined by it not to
be in proper form or the acceptance for payment of or payment for which may, in
the opinion of the Purchaser's counsel, be unlawful. The Purchaser also reserves
the absolute right to waive any defect or irregularity in the tender of any
Shares or Rights of any particular stockholder whether or not similar such
defects or irregularities are waived in the case of other stockholders. No
tender of Shares or Rights will be deemed to have been validly made until all
defects or irregularities relating thereto have been cured or waived. None of
the Purchaser, the Depositary, the Information Agent, the Dealer Manager or any
other person will be under any duty to give notification of any defects or
irregularities in tenders or will incur any liability for failure to give any
such notification. The 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.
Backup Withholding. In order to avoid "backup withholding" of Federal
income tax on payments of cash pursuant to the Offer, a stockholder surrendering
Shares pursuant to the Offer must, unless an exemption applies, provide the
Depositary with such stockholder's correct taxpayer identification number
("TIN") on a Substitute Form W-9 and certify under penalties of perjury that
such TIN is correct and that such stockholder is not subject to backup
withholding. If a stockholder surrendering Shares pursuant to the Offer does not
provide such stockholder's correct TIN or fails to provide the certifications
described above, the Internal Revenue Service (the "IRS") may impose a penalty
on such stockholder and payment of cash to such stockholder pursuant to the
Offer may be subject to backup withholding of 31%. All stockholders surrendering
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
the Purchaser and the Depositary). Certain stockholders (including, among
others, all corporations and certain foreign individuals and entities) are not
subject to backup withholding. 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.
3. WITHDRAWAL RIGHTS
Except as otherwise provided in this Section 3, tenders of Shares and
Rights are irrevocable. Shares and Rights tendered pursuant to the Offer may be
withdrawn pursuant to the procedures set forth below at any time prior to the
Expiration Date and, unless theretofore accepted for payment and paid for by the
Purchaser pursuant to the Offer, may also be withdrawn at any time after June 5,
1998. Shares or Rights may not be withdrawn unless the associated Rights or
Shares, as the case may be, are also withdrawn. A withdrawal of Shares or Rights
will also constitute a withdrawal of the associated Rights or Shares, as the
case may be.
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For a withdrawal to be effective, a written, telegraphic or facsimile
transmission notice of withdrawal must be timely received by the Depositary at
its address set forth on the back cover of this Offer to Purchase and must
specify the name of the person having tendered the Shares and Rights to be
withdrawn, the number of Shares and Rights to be withdrawn and the name of the
registered holder of the Shares and Rights to be withdrawn, if different from
the name of the person who tendered the Shares and Rights. If certificates for
Shares or Rights 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, unless such
Shares or Rights have been tendered by an Eligible Institution, the signatures
on the notice of withdrawal must be guaranteed by an Eligible Institution. If
Shares or Rights have been delivered pursuant to the procedure for book-entry
transfer as set forth in Section 2, any notice of withdrawal must also specify
the name and number of the account at DTC to be credited with the withdrawn
Shares or Rights and must otherwise comply with DTC's procedures. Withdrawals of
tenders of Shares and Rights may not be rescinded, and any Shares and Rights
properly withdrawn will thereafter be deemed not validly tendered for purposes
of the Offer. However, withdrawn Shares and Rights may be retendered by again
following one of the procedures described in Section 2 at any time prior to the
Expiration Date.
All questions as to the form and validity (including the time of receipt)
of notices of withdrawal will be determined by the Purchaser in its sole
discretion, which determination will be final and binding. None of the
Purchaser, the Depositary, the Information Agent, the Dealer Manager or any
other person will be under any duty to give notification of any defects or
irregularities in any notice of withdrawal or will incur any liability for
failure to give any such notification.
4. ACCEPTANCE FOR PAYMENT AND PAYMENT
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 such extension
or amendment), the Purchaser will accept for payment and will pay for all Shares
validly tendered prior to the Expiration Date and not properly withdrawn in
accordance with Section 3 promptly after the Expiration Date. All questions as
to the satisfaction of such terms and conditions will be determined by the
Purchaser in its sole discretion, which determination will be final and binding.
See Sections 1 and 14. The Purchaser expressly reserves the right, in its sole
discretion, to delay acceptance for payment of or payment for Shares in order to
comply in whole or in part with any applicable law, including, without
limitation, the HSR Act, if applicable. Any such delays will be effected in
compliance with Rule 14e-1(c) under the Exchange Act (relating to a bidder's
obligation to pay for or return tendered securities promptly after the
termination or withdrawal of such bidder's offer).
Since the Purchaser anticipates that, at the time the Purchaser accepts
Shares for payment pursuant to the Offer, no person will hold 50% or more of the
voting equity securities of the Purchaser, the Purchaser does not believe that
the HSR Act is applicable to the Offer or the Proposed Merger. However, if it is
determined that the HSR Act is applicable to the Offer, the "ultimate parent
entity" of the Purchaser will file a Notification and Report Form with respect
to the Offer under the HSR Act. Consummation of the acquisition of Shares under
the Offer would not, in such a case, occur until expiration of the waiting
period under the HSR Act with respect to the Offer, which expiration would occur
at 11:59 p.m., New York City time, on the 15th day after such filing, unless
early termination of the waiting period is granted. However, the Antitrust
Division of the Department of Justice (the "Antitrust Division") or the Federal
Trade Commission (the "FTC") may extend the waiting period by requesting
additional information or documentary material from the filing person. If such a
request is made, such waiting period would expire at 11:59 p.m., New York City
time, on the 10th day after substantial compliance with such request. See
Section 15 hereof for additional information concerning the HSR Act and the
applicability of the antitrust laws to the Offer.
In all cases, payment for Shares accepted for payment pursuant to the Offer
will be made only after timely receipt by the Depositary of (a) certificates for
(or a timely Book-Entry Confirmation with respect to) such Shares and, if the
Distribution Date occurs, certificates for (or a timely Book-Entry Confirmation,
if available, with respect to) the associated Rights (unless the Purchaser
elects to make payment for such Shares pending receipt of the certificates for,
or a Book-Entry Confirmation with respect to, such Rights as described in
Section 2), (b) a Letter of Transmittal (or facsimile thereof), properly
completed and duly executed, with any required signature guarantees, or, in the
case of a book-entry transfer, an Agent's Message, and (c) any other documents
required by
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<PAGE>
the Letter of Transmittal. The per Share consideration paid to any stockholder
pursuant to the Offer will be the highest per Share consideration paid to any
other stockholder pursuant to the Offer.
For purposes of the Offer, the Purchaser will be deemed to have accepted
for payment, and thereby purchased, Shares properly tendered to the Purchaser
and not withdrawn as, if and when the Purchaser gives oral or written notice to
the Depositary of the Purchaser's acceptance for payment of such Shares. Payment
for Shares accepted for payment 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 payment from the Purchaser
and transmitting payment to tendering stockholders. UNDER NO CIRCUMSTANCES WILL
INTEREST BE PAID ON THE PURCHASE PRICE FOR THE SHARES TO BE PAID BY THE
PURCHASER, REGARDLESS OF ANY EXTENSION OF THE OFFER OR ANY DELAY IN MAKING SUCH
PAYMENT.
If the Purchaser is delayed in its acceptance for payment of or payment for
Shares or is unable to accept for payment or pay for Shares in accordance with
the terms of the Offer for any reason, then, without prejudice to the
Purchaser's rights under the Offer (but subject to compliance with Rule 14e-1(c)
under the Exchange Act), the Depositary may, nevertheless, on behalf of the
Purchaser, retain any or all tendered Shares, and such Shares may not be
withdrawn except to the extent tendering stockholders are entitled to exercise,
and duly exercise, withdrawal rights as described in Section 3.
If any tendered Shares are not purchased pursuant to the Offer for any
reason, certificates for any such Shares and the associated Rights will be
returned, without expense to the tendering stockholder (or, in the case of
Shares or Rights delivered by book-entry transfer of such Shares or Rights into
the Depositary's account at DTC pursuant to the procedure set forth in Section
2, such Shares or Rights will be credited to an account maintained at DTC), as
promptly as practicable after the expiration or termination of the Offer.
The Purchaser reserves the right to transfer or assign, in whole or from
time to time in part, to one or more of its affiliates, the right to purchase
Shares tendered pursuant to the Offer, but any such transfer or assignment will
not relieve the 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.
5. CERTAIN FEDERAL INCOME TAX CONSEQUENCES
The receipt of cash pursuant to the Offer or the Proposed Merger will be a
taxable transaction for Federal income tax purposes under the Internal Revenue
Code of 1986, as amended (the "Code"), and may also be a taxable transaction
under applicable state, local or foreign income or other tax laws. Generally,
for Federal income tax purposes, a tendering stockholder will recognize gain or
loss equal to the difference between the amount of cash received by the
stockholder pursuant to the Offer or the Proposed Merger and the aggregate tax
basis in the Shares (together with the Rights) tendered by the stockholder and
purchased pursuant to the Offer or converted in the Proposed Merger, as the case
may be. Gain or loss will be calculated separately for each block of Shares and
Rights tendered and purchased pursuant to the Offer or converted in the Proposed
Merger, as the case may be.
If Shares (and associated Rights) are held by a stockholder as capital
assets, gain or loss recognized by the stockholder will be capital gain or loss.
Generally, in the case of non-corporate stockholders, if the Shares (and
associated Rights) were held for more than 18 months, any capital gain will be
taxed at a maximum rate of 20%, and if such Shares were held for more than one
year but not for more than 18 months, at a maximum rate of 28%. If the Shares
have not been held for more than one year, the gain will be taxed at ordinary
income tax rates. Capital gains of corporations are taxable at the maximum rate
applicable to corporations, but not at a rate greater than 35%.
A stockholder (other than certain exempt stockholders including, among
others, all corporations and certain foreign individuals and entities) that
tenders Shares may be subject to 31% backup withholding unless the stockholder
provides its TIN and certifies that such number is correct or properly certifies
that it is awaiting a TIN, or unless an exemption applies. A stockholder that
does not furnish its TIN may be subject to a penalty imposed by the IRS. See
"Procedure For Tendering Shares and Rights--Backup Withholding".
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<PAGE>
If backup withholding applies to a stockholder, the Depositary is required
to withhold 31% from payments to such stockholder. Backup withholding is not an
additional tax. Rather, the amount of the backup withholding can be credited
against the Federal income tax liability of the person subject to the backup
withholding, provided that the required information is given to the IRS. If
backup withholding results in an overpayment of tax, a refund can be obtained by
the stockholder upon filing an income tax return.
THE FOREGOING DISCUSSION MAY NOT BE APPLICABLE WITH RESPECT TO SHARES
RECEIVED PURSUANT TO THE EXERCISE OF EMPLOYEE STOCK OPTIONS OR OTHERWISE AS
COMPENSATION OR WITH RESPECT TO HOLDERS OF SHARES WHO ARE SUBJECT TO SPECIAL TAX
TREATMENT UNDER THE CODE, SUCH AS NON-U.S. PERSONS, LIFE INSURANCE COMPANIES,
TAX-EXEMPT ORGANIZATIONS AND FINANCIAL INSTITUTIONS, AND MAY NOT APPLY TO A
HOLDER OF SHARES IN LIGHT OF INDIVIDUAL CIRCUMSTANCES. STOCKHOLDERS ARE URGED TO
CONSULT THEIR OWN TAX ADVISORS TO DETERMINE THE PARTICULAR TAX CONSEQUENCES TO
THEM (INCLUDING THE APPLICATION AND EFFECT OF ANY APPLICABLE STATE, LOCAL OR
FOREIGN INCOME AND OTHER TAX LAWS) OF THE OFFER AND THE PROPOSED MERGER.
6. PRICE RANGE OF THE SHARES; DIVIDENDS ON THE SHARES
The Shares are traded in the over-the-counter market and prices are quoted
on the Nasdaq National Market under the symbol CSTM. The following table sets
forth, for each of the periods indicated, the high and low last reported sales
quotations per Share as reported by the Nasdaq National Market and the Dow Jones
News Retrieval Service.
GLOBAL MOTORSPORT GROUP, INC.
SALES QUOTATION
------------------
CALENDAR YEAR HIGH LOW
- ------------- ------- -------
1996
First Quarter............................................. $26 1/4 $22 1/4
Second Quarter............................................ $27 7/8 $24
Third Quarter............................................. $27 $17 3/4
Fourth Quarter............................................ $21 3/8 $16 1/4
1997
First Quarter............................................. $20 1/4 $11 1/4
Second Quarter............................................ $17 3/4 $10 1/2
Third Quarter............................................. $17 1/2 $15
Fourth Quarter............................................ $16 1/2 $11 1/2
1998
First Quarter............................................. $19 $11
Second Quarter (through April 3, 1998).................... $18 5/8 $18 1/8
On March 20, the last full trading day before the first public announcement
that the Purchaser was prepared to acquire the Company for a cash purchase price
of $18 per Share, the last reported sale quotation of the Shares on the Nasdaq
National Market was $14 15/16 per Share. On April 3, 1998, the last full trading
day before announcement of the Offer, the last reported sale quotation of the
Shares on the Nasdaq National Market was $18 5/8 per share. STOCKHOLDERS ARE
URGED TO OBTAIN CURRENT MARKET QUOTATIONS FOR THE SHARES.
According to the Company 1997 10-K, the Company has never paid any
dividends on the Shares.
As of the date of this Offer to Purchase, the Rights are attached to the
Shares and are not traded separately. As a result, the sales quotations per
Share set forth above are also the high and low sales quotations per Share and
associated Right during such periods. Upon the occurrence of the Distribution
Date, the Rights are to detach, and may trade separately, from the Shares. See
Section 8. The Purchaser believes that, as a result of the Purchaser's
announcement on April 6, 1998 of the commencement the Offer, the Distribution
Date may occur as early as April 20, 1998, unless prior to such date the Board
of Directors redeems the Rights, amends the Rights Agreement to make the Rights
inapplicable to the Offer or delays the Distribution Date. IF THE
12
<PAGE>
DISTRIBUTION DATE OCCURS AND THE RIGHTS BEGIN TO TRADE SEPARATELY FROM THE
SHARES, STOCKHOLDERS SHOULD ALSO OBTAIN A CURRENT MARKET QUOTATION FOR THE
RIGHTS.
7. EFFECT OF THE OFFER ON THE MARKET FOR THE SHARES; STOCK QUOTATION; EXCHANGE
ACT REGISTRATION; MARGIN REGULATIONS
Market for the Shares. The purchase of Shares pursuant to the Offer will
reduce the number of holders of Shares and the number of Shares that might
otherwise trade publicly, and could thereby adversely affect the liquidity and
market value of the remaining Shares held by the public.
Stock Quotation. Depending upon the number of Shares purchased pursuant to
the Offer, the Shares may no longer meet the requirements of the NASD for
continued inclusion in the Nasdaq National Market, which requirements mandate
that an issuer have at least 200,000 publicly held shares, held by at least 400
shareholders or 300 shareholders of round lots, with an aggregate market value
of at least $1,000,000, and have net tangible assets of at least $1,000,000,
$2,000,000 or $4,000,000, depending on profitability levels during the issuer's
four most recent fiscal years. If these standards are not met, the Shares might
nevertheless continue to be included in the NASD's Nasdaq Stock Market (the
"Nasdaq Stock Market") with quotations published in the Nasdaq "additional list"
or in one of Nasdaq's "local lists," but if the number of holders of the Shares
were to fall below 300, or if the number of publicly held Shares were to fall
below 100,000 or if there were not at least two registered and active market
makers for the Shares, the NASD's rules provide that the Shares would no longer
be "qualified" for Nasdaq Stock Market reporting and the Nasdaq Stock Market
would cease to provide any quotations. Shares held directly or indirectly by
directors, officers or beneficial owners of more than 10% of the Shares are not
considered as being publicly held for this purpose. According to the Company
1997 10-K, as of April 3, 1997, there were 268 holders of record of Shares and,
according to the Company 1997 10-Q, as of October 31, 1997, there were 5,077,442
Shares outstanding. If, as a result of the purchase of Shares pursuant to the
Offer or otherwise, the Shares no longer meet the requirements of the NASD for
continued inclusion in the Nasdaq National Market or in any other tier of the
Nasdaq Stock Market and the Shares are no longer included in the Nasdaq National
Market or in any other tier of the Nasdaq Stock Market, as the case may be, the
market for Shares could be adversely affected.
In the event that the Shares no longer meet the requirements of the NASD
for continued inclusion in any tier of the Nasdaq Stock Market, it is possible
that the Shares would continue to trade in the over-the-counter market and that
price quotations would be reported by other sources. The extent of the public
market for the Shares and the availability of such quotations would, however,
depend upon the number of holders of Shares remaining at such time, the
interests in maintaining a market in Shares on the part of securities firms, the
possible termination of registration of the Shares under the Exchange Act, as
described below, and other factors.
Exchange Act Registration. The Shares are currently registered under the
Exchange Act. Registration of the Shares 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 of the Shares 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 and 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 or 144A promulgated under the Securities Act of
1933, as amended, may be impaired or eliminated. The Purchaser intends to seek
to cause the Company to apply for termination of registration of the Shares
under the Exchange Act as soon after the completion of the Offer as the
requirements for such termination are met.
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<PAGE>
Based on publicly available information, the Rights are registered under
the Exchange Act, but are attached to the Shares and are not currently
separately transferable. The Purchaser believes that, as a result of the
Purchaser's announcement on April 6, 1998 of the commencement of the Offer, the
Distribution Date may occur as early as April 20, 1998, unless prior to such
date the Board of Directors redeems the Rights, amends the Rights Agreement to
make the Rights inapplicable to the Offer or delays the Distribution Date. See
Section 8. According to the Company 8-A, as soon as possible after the
occurrence of the Distribution Date, certificates for Rights will be sent to all
holders of Rights and the Rights will become transferable apart from the Shares.
If the Distribution Date occurs and the Rights separate from the Shares, the
foregoing discussion with respect to the effect of the Offer on Exchange Act
registration would apply to the Rights in a similar manner.
If registration of the Shares is not terminated prior to the Proposed
Merger, then the Shares will be delisted from all stock exchanges and the
registration of the Shares and Rights under the Exchange Act will be terminated
following the consummation of the Proposed Merger.
Margin Regulations. The Shares are currently "margin securities" under the
regulations of the Board of Governors of the Federal Reserve System (the
"Federal Reserve Board"). Such status allows, among other things, 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 qualify as "margin
securities" under the margin regulations of the Federal Reserve Board and
therefore could no longer be used as collateral for loans made by brokers.
8. CERTAIN INFORMATION CONCERNING THE COMPANY
The Company is a Delaware corporation with its principal office at 16100
Jacqueline Court, Morgan Hill, California 95037. According to the Company 1997
10-K, the Company's principal line of business is the development, manufacture
and wholesale distribution of aftermarket parts and accessories for
Harley-Davidson motorcycles.
Set forth below is certain selected consolidated financial information with
respect to the Company and its subsidiaries excerpted from the information
contained in the Company 1997 10-K and the Company 1997 10-Q. More comprehensive
financial information is included in the Company 1997 10-K, the Company 1997
10-Q and other documents filed by the Company with the Commission, and the
following summary is qualified in its entirety by reference to the Company 1997
10-K, the Company 1997 10-Q and such other documents and all of the financial
information (including any related notes) contained therein. The Company 1997
10-K, the Company 1997 10-Q and such other documents should be available for
inspection and copies thereof should be obtainable in the manner set forth below
under "Available Information."
GLOBAL MOTORSPORT GROUP, INC.
SELECTED CONSOLIDATED FINANCIAL INFORMATION
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
YEAR ENDED JANUARY 31, NINE MONTHS ENDED OCT. 31,
----------------------- --------------------------
1997 1996 1995 1997 1996
------ ------ ----- ------ ----
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
SUMMARY OF EARNINGS DATA:
Net sales.................................. $108.6 $ 93.9 $74.9 $ 94.5 $87.2
Gross profit............................... 43.7 39.1 31.6 35.1 35.7
Operating income........................... 15.0 14.0 11.3 9.9 13.8
Net income................................. 7.9 7.9 6.4 4.9 7.3
Net income per share....................... $ 1.48 $ 1.52 $1.27 $ 0.93 $1.38
BALANCE SHEET DATA: (1)
Total current assets....................... $ 67.4 $ 67.4 $ 80.4
Total assets............................... 91.5 89.7 134.0
Total current liabilities.................. 14.7 21.7 17.7
Total liabilities.......................... 31.6 41.7 71.9
Total stockholders' equity................. 59.8 48.0 62.1
</TABLE>
- ------------------
(1) At period end.
14
<PAGE>
The Rights. Set forth below is a summary description of the Rights,
derived from the Company 8-A.
On November 13, 1996, the Board of Directors declared a dividend of one
Right for each Share. Such dividend was payable as of the close of business on
December 13, 1996 to the stockholders of record as of the close of business on
that date. Each Right entitles the registered holder to purchase from the
Company one one-thousandth of a share of Series A Participating Preferred Stock,
par value $0.001 per share (the "Preferred Shares"), of the Company at a price
of $80 per one one-thousandth of a Preferred Share (the "Purchase Price"),
subject to adjustment.
Until the earlier to occur of (a) 10 days (or such later date as may be
determined by action of a majority of the Continuing Directors then in office)
following a public announcement that a person or group of affiliated or
associated persons has acquired beneficial ownership of 15% or more of the
outstanding Shares (an "Acquiring Person") or (b) 10 business days (or such
later date as may be determined by action of a majority of the Continuing
Directors then in office) following the commencement of, or announcement of an
intention to make, a tender offer or exchange offer, the consummation of which
would result in a person or group becoming an Acquiring Person (the earlier of
such dates being called the "Distribution Date"), the Rights will be evidenced
by the certificates for Shares.
The Rights Agreement provides that, until the Distribution Date (or earlier
redemption or expiration of the Rights), the surrender for transfer of any
certificates for Shares will also constitute the surrender for transfer of the
Rights associated with the Shares represented by such certificates. The Rights
Agreement further provides that, as soon as practicable following the
Distribution Date, separate certificates for Rights will be mailed by the
Company or the Rights Agent to holders of record of the Shares as of the close
of business on the Distribution Date.
The Rights will expire on November 13, 2006 (the "Final Expiration Date"),
unless the Final Expiration Date is extended or unless the Rights are earlier
redeemed by the Company, in each case as described below.
The Purchase Price payable and the number of Preferred Shares or other
securities or property issuable upon exercise of the Rights are subject to
adjustment from time to time as provided in the Rights Agreement.
Preferred Shares purchasable upon exercise of the Rights will not be
redeemable. Each Preferred Share will be entitled to an aggregate dividend of
1000 times the aggregate per Share amount of all dividends declared (including
noncash dividends and other distributions) per Share. In the event of
liquidation, the holders of the Preferred Shares will be entitled to receive
1000 times the per Share consideration being distributed with respect to each
Share plus an amount equal to accrued and unpaid dividends and distributions
thereon, whether or not declared, to the date of such payment. Each Preferred
Share will have 1000 votes, voting together with the Shares. Finally, in the
event of any merger, consolidation or other transaction in which Shares are
exchanged, each Preferred Share will be entitled to receive 1000 times the
amount received per Share. Because of the nature of the Preferred Shares'
dividend, liquidation and voting rights, the value of the one one-thousandth
interest in a Preferred Share purchasable upon exercise of each Right should,
according to the Company 8-A, approximate the value of one Share.
If any person becomes an Acquiring Person, then the Rights Agreement
requires that proper provision be made so that each holder of a Right, other
than Rights beneficially owned by the Acquiring Person and certain affiliated or
associated persons (which will thereafter be void), will thereafter have the
right to receive upon exercise that number of Shares (or, in certain
circumstances, other securities or cash) having a market value of two times the
exercise price of the Right. The Rights Agreement requires that, in the event
that the Company is acquired in a merger or other business combination
transaction or that 50% or more of the Company's consolidated assets or earning
power is sold, proper provisions be made so that each holder of a Right will
thereafter have the right to receive, upon the exercise thereof at the
then-current exercise price of the Right, that number of shares of common stock
of the acquiring company that at the time of such transaction will have a market
value of two times the exercise price of the Right.
The Rights Agreement provides that, at any time after any person becomes an
Acquiring Person and prior to the acquisition by such person or group of 50% or
more of the outstanding Shares, the Board of Directors (with the concurrence of
a majority of the directors (the "Continuing Directors") who are not affiliated
or associated with an Acquiring Person) may authorize the exchange of the Rights
(other than Rights owned by the Acquiring Person), in whole or in part, at an
exchange ratio of one Share per Right (subject to adjustment).
15
<PAGE>
The Rights Agreement provides that, at any time prior to the close of
business on the earlier of (a) the tenth day following the public announcement
that a person has become an Acquiring Person (or such later date as may be
determined by a majority of the Continuing Directors then in office) and (b) the
Final Expiration Date, the Board of Directors may redeem all but not less than
all of the then-outstanding Rights at a price of $0.01 per Right; provided,
however, that if the Board of Directors authorizes the redemption of the Rights
after a person becomes an Acquiring Person, then a majority of the Continuing
Directors are required to authorize the redemption of the Rights.
The Rights Agreement may be supplemented or amended by the Board of
Directors in any manner without the approval of the rights holders prior to the
date on which the Rights are distributed separate from the Shares. After such
date, the Rights Agreement may only be amended by the Board of Directors in
order to cure any ambiguity, defect or inconsistency therein, to make changes
therein that do not adversely affect the interests of holders of Rights
(excluding the interests of any Acquiring Person) or to shorten or lengthen any
time period under the Rights Agreement; provided, however, that no amendment to
adjust the time period governing redemption shall be made at any time at which
the Rights are not redeemable.
The foregoing summary of the Rights Agreement does not purport to be
complete and is qualified in its entirety by reference to the Rights Agreement
and the other materials included in the Company 8-A. The Company 8-A should be
available for inspection and copies thereof should be obtainable in the manner
set forth below under "Available Information."
PURSUANT TO THE RIGHTS CONDITION, THE OFFER IS CONDITIONED UPON THE RIGHTS
HAVING BEEN REDEEMED BY THE BOARD OF DIRECTORS OR THE PURCHASER BEING SATISFIED,
IN ITS SOLE DISCRETION, THAT THE RIGHTS HAVE BEEN INVALIDATED OR ARE OTHERWISE
INAPPLICABLE TO THE OFFER AND THE PROPOSED MERGER.
UNLESS THE RIGHTS CONDITION IS SATISFIED, STOCKHOLDERS WILL BE REQUIRED TO
TENDER ONE RIGHT FOR EACH SHARE TENDERED IN ORDER TO EFFECT A VALID TENDER OF
SHARES IN ACCORDANCE WITH THE PROCEDURES SET FORTH IN SECTION 2. UNLESS THE
DISTRIBUTION DATE OCCURS, A TENDER OF SHARES WILL ALSO CONSTITUTE A TENDER OF
THE ASSOCIATED RIGHTS.
The Purchaser believes that under the circumstances of the Offer, and under
applicable law, the Board of Directors has a fiduciary obligation to redeem the
Rights (or amend the Rights Agreement to make the Rights inapplicable to the
Offer and the Proposed Merger), and the Purchaser is hereby requesting that the
Board of Directors do so. However, there can be no assurance that the Board of
Directors will redeem the Rights (or amend the Rights Agreement). The Purchaser
has commenced litigation against the Company in the Court of Chancery of the
State of Delaware seeking, among other things, an order compelling the Board of
Directors to redeem the Rights or to amend the Rights Agreement to make the
Rights inapplicable to the Offer and the Proposed Merger on the grounds that
failure to do so would constitute a breach of fiduciary duty to the Company's
stockholders.
Pursuant to the Consent Solicitation, the Purchaser will seek to remove the
current members of the Board of Directors and to replace them with the Nominees,
who intend to redeem the Rights (or amend the Rights Agreement to make the
Rights inapplicable to the Offer and the Proposed Merger), subject to the
fulfillment of the fiduciary duties that they would have as directors of the
Company. Redemption of the Rights (or such an amendment of the Rights Agreement)
would satisfy the Rights Condition.
Available Information. The Company is subject to the informational
requirements of the Exchange Act and, in accordance therewith, is required to
file reports 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 and other matters, the principal
holders of the Company's securities and any material interest of such persons in
transactions with the Company is required to be disclosed in proxy statements
distributed to the Company's stockholders and filed with the Commission. Such
reports, proxy statements and other information should be available for
inspection and copying at the public reference facilities of the Commission at
450 Fifth Street, N.W., Washington, DC 20549, and at the regional offices of the
Commission located at Seven World Trade Center, Suite 1300, New York, New York
10048 and Citicorp Center, 500 West Madison Street, Suite 1400, Chicago,
Illinois 60661. In addition, such material is publicly available through the
Commission's site on the Internet's World Wide Web, located at
http://www.sec.gov. Copies of such information should be obtainable,
16
<PAGE>
by mail, upon payment of the Commission's customary charges, by writing to the
Commission's Public Reference Section at 450 Fifth Street, N.W., Washington, DC
20549. Such material should also be available for inspection at the offices of
Nasdaq Operations, 1735 K Street, N.W., Washington, DC 20006.
The information concerning the Company contained herein has been taken from
or based upon publicly available documents on file with the Commission and other
publicly available information. Although the Purchaser does not have any
knowledge that any such information is untrue, the Purchaser takes no
responsibility for the accuracy or completeness of such information or for any
failure by the Company to disclose events that may have occurred and may affect
the significance or accuracy of any such information.
9. CERTAIN INFORMATION CONCERNING THE PURCHASER
The Purchaser was recently organized as a limited liability company under
the laws of the Commonwealth of Pennsylvania and has not engaged in any business
since its organization other than in connection with the acquisition of the
Company, the Consent Solicitation and the Offer. The principal office of the
Purchaser is 4025 Crooked Hill Road, Harrisburg, Pennsylvania 17110.
The name, business address, principal occupation or employment and
citizenship of each executive officer of the Purchaser is set forth in Schedule
I. At present, these individuals (Alexander Grass and Roger Grass) are the sole
members of the Purchaser although the Purchaser anticipates that prior to the
acceptance for purchase of Shares in the Offer, additional investors will
purchase equity securities of the Purchaser. The Purchaser owns beneficially
528,100 Shares (representing approximately 10.4% of the Shares outstanding on
October 31, 1997). Such Shares were purchased by the Purchaser in open market
transactions from January 20, 1998 through March 19, 1998, at an average
purchase price of $13.46 per Share. For certain information concerning purchases
of the Shares, see Schedule II hereto. Membership interests in the Purchaser are
presently owned 50% by Alexander Grass and 50% by Roger Grass. Alexander Grass
was a founder of Rite Aid Corporation ("Rite Aid") and was its Chairman of the
Board of Directors, President and Chief Executive Officer until March 1995. He
now serves as a director and Chairman of Rite Aid's Executive Committee. Mr.
Grass has served as President of Super Rite Foods, Inc. ("Super Rite") from 1965
to 1969 and as Chairman of the Board and Chief Executive Officer of Super Rite
from 1969 to 1995. Alexander Grass is also a director of Hasbro, Inc. and the
father of Roger Grass. Roger Grass is Chairman of the Board of Directors of
Biker's Depot, Inc. ("Biker's Depot"), a company engaged in the sale of
aftermarket parts and accessories for Harley-Davidson motorcycles. Biker's Depot
has stores in Glenolden, Pennsylvania and Daytona Beach, Florida. During the
period from February 1997 through January 1998 (which period corresponds to the
Company's last fiscal year), Biker's Depot made purchases from the Company in
the amount of $222,712.
10. SOURCE AND AMOUNT OF FUNDS
The Purchaser estimates that the total amount of funds required to
purchase, pursuant to the Offer, all of the Shares that are outstanding on a
fully diluted basis (other than Shares beneficially owned by the Purchaser), to
refinance certain indebtedness of the Company and to pay costs and expenses
related to the Offer and the Consent Solicitation will be approximately $155
million. The funds required in connection with the Offer are expected to be
provided from the sale of equity securities of the Purchaser (the "Equity
Securities") for an aggregate of approximately $50 million and the sale of debt
securities of the Purchaser (the "Debt Securities") to investors. Alexander
Grass and Roger Grass have committed to purchase an aggregate of $50 million in
Equity Securities to the extent that institutional and other investors do not
purchase such securities. It is anticipated that the Debt Securities will be
purchased by institutional and other investors. In addition, the Purchaser will
consider seeking a bridge loan from a commercial bank in order to provide the
funds required in connection with the Offer and then sell the Equity Securities
and Debt Securities to investors following the consummation of the Offer.
After the completion of the Proposed Merger, the Purchaser may refinance
the Debt Securities with bank and long-term senior debt. The Purchaser has made
no arrangements for and has obtained no commitments in connection with any such
refinancing and there is no assurance that such refinancing can be obtained.
When definitive agreements relating to the equity and debt financing
arrangements described above have been executed or consummated, copies thereof
will be filed as exhibits by amendment to the Schedule 14D-1. Reference is made
to such exhibits for a more complete description of the terms and conditions of
such documents.
17
<PAGE>
The Purchaser has retained Jefferies as its exclusive financial advisor in
connection with its investment in the Company and in connection with the Offer,
including assisting the Purchaser in obtaining the financing required to acquire
the Company. Jefferies has informed the Purchaser that, based upon the current
condition of the Company (financial or otherwise), current market and other
customary conditions and the commitments of Alexander Grass and Roger Grass
described above, it is highly confident that it can arrange financing in the
approximate amount of $105 million. The funding of such financing arrangements
may be subject to satisfaction of some or all of the conditions to the Offer.
The Purchaser has agreed to pay Jefferies a fee equal to (i) 3% of the
gross proceeds raised in connection with the issuance of any Debt Securities
that pay interest in cash, and an amount that is equal to a to-be-agreed-upon
percentage of gross proceeds raised in connection with the issuance of any Debt
Securities that do not pay interest in cash, (ii) 1% of the aggregate amount of
borrowings available to the Purchaser under any bank loan agreement arranged by
Jefferies, (iii) a to-be-agreed-upon percentage of the gross proceeds from the
issuance of any preferred stock of the Purchaser and 5% of the gross proceeds
from the issuance of any common stock of the Purchaser and (iv) 1% of the
aggregate principal amount of any bridge loan arranged by Jefferies. In
addition, for a period of two years from the date of the purchase of the
Company, Jefferies will have the right, but not the obligation, to act as the
exclusive placement agent or underwriter in the event the Purchaser decides to
issue securities in a capital raising transaction in either a private placement
or a public sale of securities. The Purchaser's agreement with Jefferies further
provides that if within twelve months from the date of the agreement any Shares
owned by the Purchaser or any of its affiliates are sold to any person,
Jefferies will be paid a fee equal to 15% of the profit in respect of such sale.
This Offer to Purchase constitutes neither an offer to sell nor
solicitation of an offer to buy any of the securities that may be issued in
connection with such financings.
11. CONTACTS WITH THE COMPANY; BACKGROUND OF THE OFFER
On March 23, 1998, Alexander Grass, President of the Purchaser, telephoned
Mr. Joseph Piazza, President and Chief Executive Officer of the Company, to
discuss with him the Purchaser's interest in acquiring the Company and to
request a meeting with him. Mr. Piazza did not take the call. Alexander Grass
also sent the following letter to Mr. Piazza:
"March 23, 1998
"Mr. Joseph Piazza
President and Chief Executive Officer
Global Motorsport Group, Inc.
16100 Jacqueline Court
Morgan Hill, California 95037
"Dear Mr. Piazza:
"Golden Cycle, LLC is prepared to acquire Global Motorsport Group, Inc. for
a cash purchase price of $18 per share. Based upon our review of publicly
available information, we believe the $18 price is a full and fair one. Our
offer is subject to negotiation of a definitive merger agreement which would
contain customary terms and conditions. Our financial advisor, Jefferies &
Company, Inc., has advised us that they are highly confident in their ability to
arrange the financing for our cash acquisition of the company. We would very
much appreciate the opportunity to negotiate all terms of a transaction,
including the price, with you and your Board of Directors.
"Wholly apart from our willingness to negotiate all aspects of a possible
offer based on what we know about Global Motorsport Group today, we also
recognize that there may be values inherent in the company which we are unable
to perceive without access to nonpublic information and the assistance of you
and your management team. Accordingly, we would request that any pertinent
information which is available to your management or is made available to your
investment bankers or third parties for the purpose of evaluating or pursuing
alternative transactions be made available to us as well, so that any offer and
its terms may be formulated with the full benefit of a level and illuminated
playing field. We would naturally agree to execute a customary confidentiality
agreement with respect to the confidential information supplied to us.
"While we are committed to working with you and your Board of Directors and
pursuing a negotiated transaction, we also believe that if you and your Board of
Directors do not wish to proceed with negotiations or to
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provide us with an opportunity to conduct due diligence so that we can determine
if there is greater value in the company, we will consider attempting to seek
control of the Board of Directors through a consent solicitation which would
elect directors committed to selling the company for the highest price
reasonably available. In view of the possibility that the Board might seek to
erect non-economic obstacles or impediments which prevent stockholders from
having a fair opportunity to consider and respond to any offer we might make, we
will be filing preliminary proxy materials with the Securities and Exchange
Commission with respect to such a consent solicitation. We certainly hope that,
consistent with its fiduciary responsibilities, the Board will not take such
actions which would require us to pursue the proxy contest.
"We are filing a statement on Schedule 13D with the Securities and Exchange
Commission today announcing our acquisition of approximately 10.4% of the
outstanding Global Motorsport Group's shares.
"We and our advisors are prepared to meet promptly with the company's
directors, management and advisors (or designated representatives) at their
convenience in order to negotiate a mutually desirable and beneficial
transaction.
"We look forward to hearing from you at your earliest convenience.
Very truly yours,
/S/ ALEXANDER GRASS"
On March 31, 1998, Mr. Joseph Keenan, Chairman of the Board of Directors of
the Company, sent the following letter to Mr. Alexander Grass.
"March 31, 1998
"Mr. Alex Grass
Golden Cycle, LLC
4025 Crooked Hill Road
Harrisburg, PA 17110
"Re: Global Motorsport Group, Inc.
"Dear Mr. Grass:
"I am in receipt of your letters addressed to Joseph Piazza dated
March 23, 1998 and March 27, 1998. Our Board has requested me, as
Chairman, to respond to such letters. Your letters propose that the
Board of Global Motorsport enter into negotiations with you in order
to sell the Company to you. I am sure you would urge our Board to take
your proposal seriously and to give it serious consideration. However,
if you would like us to do so, you must yourself treat it as a serious
proposal.
As a former CEO of a public company, you must recognize the
gravity of the decision which you have called upon our Board to make.
You must also know that we would be breaching our fiduciary duty to
the Company and all of our stockholders were we to respond to your
offer, either favorably or unfavorably, without gathering adequate
information before responding to your letter and its proposal. I am
also sure that you are not so naive as to miss the point that even a
decision to enter into negotiations with you may set in motion an
irreversible course which cannot be undertaken consistent with the
Board's fiduciary duty until after it has gathered sufficient
information to evaluate what is being proposed.
Your letter of March 27, 1998 states that you are 'extremely
disappointed' that Mr. Piazza has not responded to your letter of
March 23. Let me assure you that your disappointment pales in
comparison to my disappointment that, with absolutely no prior
discussion between you and any representative of the Company, you
faxed Mr. Piazza a letter late in the day on Monday, March 23, 1998
and then filed materials with the Securities and Exchange Commission
on Tuesday, March 24, 1998 calling for the removal of the entire
Board. Then on Wednesday, March 25, 1998, you arranged for Cede &
Company to send us a demand to open up the Company's books and records
to you. Then on Friday, March 27, 1998, less than four days after
receipt of your letter of March 23, you write to chastise Mr. Piazza
for not responding to your proposal for the sale of the Company.
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We understand that you think that your offer is in your best
interest. However, our concern is whether your offer is in the best
interest of the Company and all of its stockholders. The Company has
retained the investment banking firm of Cleary, Gull and the law firm
of Gibson, Dunn and Crutcher to assist in evaluating your proposal. As
soon as we have gathered sufficient information to evaluate the merits
of your proposal, to compare it with alternative courses of action and
to decide on an appropriate course of action, I will respond to your
letter of March 23, 1998. Badgering us with telephone calls and
letters such as your letter of March 27 will neither speed up the
process nor induce us to abandon our fiduciary duty to conduct a
deliberative evaluation of your proposal.
If it is decided, after due deliberation, that the Board would
consider proposals for the sale of the Company, I can presently see no
reason why we would not offer you the same opportunity to obtain
information, evaluate the Company and compete with any other bidders
that might surface. If it is determined to provide confidential
information to potential acquirers, pursuant to confidentiality
agreements, I can presently see no reason why you will not be provided
the opportunity to sign the same confidentiality agreement which would
be offered to other suitors and thereby obtain access to the same
confidential information.
In closing, you may be assured that this Board is fully cognizant
of its duties to all of its stockholders and that we intend to
discharge this duty in a careful, deliberative manner. We will not be
bullied into reacting in a hasty manner in order to accommodate your
personal agendum.
Very truly yours,
/S/ JOSEPH F. KEENAN
CHAIRMAN OF THE BOARD"
On March 25, 1998, pursuant to Section 220 of the DGCL, the Purchaser
requested Cede & Co., the record owner of Shares beneficially owned by the
Purchaser, to demand the right to inspect certain books and records of the
Company, including the stockholder lists. The purpose of the demand was, among
other things, to communicate with other stockholders of the Company regarding
matters relevant to stockholders. The Company has refused that demand. On April
2, 1998, the Purchaser commenced litigation against the Company in the Court of
Chancery of the State of Delaware seeking an order compelling the Company to
produce all documents requested by the demand. An amended demand was sent to the
Company on April 6, 1998. A hearing on the request to produce the stockholder
lists has been set for April 14, 1998. A hearing on the request to inspect
certain other books and records of the Company has been set for May 8, 1998.
The Board of Directors purports to have established that stockholders of
record as of the close of business on March 30, 1998 are entitled to execute
consents pursuant to the Consent Solicitation. The Purchaser has commenced
litigation in the United States District Court in and for the District of
Delaware seeking, among other things, a declaration that the Company's purported
record date is invalid because the Company failed to take reasonable and
adequate actions to communicate the purported record date to brokers, dealers
and other record holders of shares in violation of Rule 14a-13 under the
Exchange Act.
On April 2, 1998, the Company commenced litigation against the Purchaser,
Alexander Grass and Roger Grass in the United States District Court, Northern
District of California, alleging violation of the federal securities laws
including allegedly false and misleading proxy materials and Schedule 13D
filings with the Commission.
In December 1995, Roger Grass proposed that the Company and an investment
vehicle formed by Alexander Grass and Roger Grass engage in a joint retail
marketing venture. The Company indicated an interest in a 50/50 "partnership" in
which Messrs. Alexander Grass and Roger Grass would be responsible for the
entire financial commitment. Roger Grass advised the Company that such a
proposal was not acceptable.
In the Fall of 1996, Roger Grass contacted the Company to express an
interest in acquiring the Company. Shortly thereafter the Company adopted the
Rights Agreement. In response to Mr. Grass' inquiry, Mr. James Kelly, Executive
Vice President and Chief Financial Officer of the Company, contacted Mr. John
Foster, Chief Financial Officer of Biker's Depot, to set up a meeting for
February 4, 1997 at the offices of Biker's Depot. The meeting was not held
because representatives of the Company failed to arrive.
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Roger Grass is Chairman of the Board of Directors of Biker's Depot, a
company engaged in the sale of aftermarket parts and accessories for
Harley-Davidson motorcycles. During the period from February 1997 through
January 1998 (which period corresponds to the Company's last fiscal year),
Biker's Depot made purchases from the Company in the amount of $222,712.
Except as described in this Offer to Purchase (including Schedule II
hereto), none of the Purchaser or, to the best knowledge of the Purchaser, any
of the persons listed on Schedule I hereto, or any associate or affiliate of the
Purchaser or any of the persons so listed, beneficially owns any equity security
of the Company, and none of the Purchaser or, to the best knowledge of the
Purchaser, any of the other persons referred to above, or any of the respective
directors, executive officers or subsidiaries of any of the foregoing, has
effected any transaction in any equity security of the Company during the past
60 days.
Except as described in this Offer to Purchase, as of the date hereof (a)
there have not been any contacts, transactions or negotiations between the
Purchaser or, to the best knowledge of the Purchaser, any of the persons listed
on Schedule I hereto, on the one hand, and the Company or any of its directors,
officers or affiliates, on the other hand, that are required to be disclosed
pursuant to the rules and regulations of the Commission and (b) none of the
Purchaser or, to the best knowledge of the Purchaser, any of the persons listed
on Schedule I hereto has any contract, arrangement, understanding or
relationship with any person with respect to any securities of the Company.
During the Offer, the Purchaser intends to have ongoing contacts and
negotiations with the Company and its directors, officers and stockholders.
12. PURPOSE OF THE OFFER; PLANS FOR THE COMPANY
Purpose. The purpose of the Offer and the Proposed Merger is to enable the
Purchaser to acquire control of, and the entire equity interest in, the Company.
The Offer, as the first step in the acquisition of the Company, is intended to
facilitate the acquisition of all of the Shares. The Purchaser currently
intends, as soon as practicable following consummation of the Offer, to propose
and seek to consummate the Proposed Merger. The purpose of the Proposed Merger
is to acquire all Shares not tendered and purchased pursuant to the Offer or
otherwise. Pursuant to the Proposed Merger, each then outstanding Share (other
than Shares owned by the Purchaser, Shares held in the treasury of the Company
and Shares owned by stockholders who perfect any available appraisal rights
under the DGCL) would be converted into the right to receive an amount in cash
equal to the price per Share paid by the Purchaser pursuant to the Offer.
Under the DGCL, except in the case of a "short-form" merger as described
below, the approval of the Board of Directors and the affirmative vote of
holders of a majority of the outstanding Shares (including any Shares owned by
the Purchaser) would be required to approve the Proposed Merger. If the
Purchaser acquires, through the Offer or otherwise, voting power with respect to
at least a majority of the outstanding Shares, which would be the case if the
Minimum Tender Condition were satisfied and the Purchaser were to accept for
payment Shares tendered pursuant to the Offer, it would have sufficient voting
power to effect the Proposed Merger without the vote of any other stockholder of
the Company. If, following the consummation of the Offer, the current members of
the Board of Directors have not previously been removed pursuant to the Consent
Solicitation and do not either resign and cause nominees of the Purchaser to be
elected to fill the resulting vacancies or approve the Proposed Merger, then the
Purchaser intends to act by written consent to remove the members of the Board
of Directors and to cause to be elected to fill the resulting vacancies nominees
of the Purchaser who intend to approve the Proposed Merger as soon as
practicable thereafter, subject to the fiduciary duties they would have as
directors of the Company.
The DGCL also provides that if a parent company owns at least 90% of each
class of stock of a subsidiary, the parent company can effect a "short-form"
merger with that subsidiary without a stockholder vote. Accordingly, if, as a
result of the Offer or otherwise, the Purchaser acquires or controls the voting
power of at least 90% of the outstanding Shares, the Purchaser could, and
intends to, effect the Proposed Merger without prior notice to, or any action
by, any other stockholder of the Company.
If the Proposed Merger has not been consummated, the Purchaser or an
affiliate of the Purchaser may, either immediately following the consummation or
termination of the Offer (whether or not the Purchaser purchases Shares pursuant
to the Offer), or from time to time thereafter, seek to acquire additional
Shares through open market purchases, privately negotiated transactions, a
tender offer or exchange offer or otherwise, upon such terms and at such prices
as it may determine, which may be more or less than the price to be paid
pursuant to the
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Offer. Alternatively, the Purchaser and its affiliates reserve the right to sell
or otherwise dispose of any or all of the Shares acquired by them pursuant to
the Offer or otherwise, upon such terms and at such prices as they shall
determine.
The precise timing and other details of any merger or other business
combination transaction will depend on a variety of factors such as general
economic conditions and prospects, the future prospects, asset value and
earnings of the Company, the number of Shares acquired by the Purchaser pursuant
to the Offer or otherwise and the statutory requirements described above. The
Purchaser can give no assurance that a merger or other business combination will
be proposed or that, if it is proposed, it will not be delayed or abandoned. The
Purchaser expressly reserves the right not to propose any merger or similar
business combination involving the Company, or to propose a merger or other
business combination on terms other than those set forth herein, and its
ultimate decision could be affected by information hereafter obtained by the
Purchaser, changes in general economic or market conditions or in the business
of the Company or other factors.
The Purchaser intends to seek to negotiate with the Company with respect to
the acquisition of the Company by the Purchaser. If such negotiations result in
a definitive merger agreement with the Company, the consideration to be received
by holders of Shares could include or consist of securities, cash or any
combination thereof. Accordingly, such negotiations could result in, among other
things, termination of the Offer (see Section 14) and submission of a different
acquisition proposal to the Company's stockholders for their approval.
The Purchaser has filed preliminary consent solicitation materials with the
Commission for use in connection with the Consent Solicitation. Pursuant to the
Consent Solicitation, the Purchaser will seek written consents from stockholders
of the Company for the following purposes: (i) to remove all of the present
members of the Board of Directors, (ii) to amend the Company By-laws to fix the
number of directors of the Company at five, (iii) to elect the Nominees to serve
as the directors of the Company and (iv) to repeal each provision of the Company
By-laws or amendment thereto adopted subsequent to April 30, 1997 and prior to
the effectiveness of the proposals made pursuant to the Consent Solicitation.
The Nominees intend, if elected to the Board of Directors, to (a) redeem the
Rights according to their terms (or amend the Rights Agreement to make the
Rights inapplicable to the Offer and the Proposed Merger) and approve the Offer
and the Proposed Merger under Section 203, which would satisfy the Rights
Condition and the Business Combination Condition, and take such other actions as
may be required to expedite the prompt consummation of the Offer and the
Proposed Merger or (b) take actions, if any other transaction offering more
value to the Company's stockholders than do the Offer and the Proposed Merger is
proposed, to facilitate such a transaction, subject in all cases to fulfillment
of the fiduciary duties that the Nominees would have as directors of the
Company. Accordingly, adoption of the proposals made pursuant to the Consent
Solicitation would expedite the prompt consummation of the Offer and the
Proposed Merger.
THE OFFER DOES NOT CONSTITUTE A SOLICITATION OF CONSENTS FROM THE COMPANY'S
STOCKHOLDERS. ANY SUCH SOLICITATION (INCLUDING THE CONSENT SOLICITATION) WILL BE
MADE ONLY PURSUANT TO SEPARATE CONSENT SOLICITATION MATERIALS COMPLYING WITH THE
REQUIREMENTS OF SECTION 14(A) OF THE EXCHANGE ACT.
Plans for the Company. In connection with the Offer, the Purchaser has
reviewed, and will continue to review, on the basis of available information,
various possible business strategies that it might consider in the event that it
acquires all or substantially all of the equity interests in the Company. The
Purchaser intends to elect nominees of its choice to the Board of Directors at
the earliest possible date, whether pursuant to the Consent Solicitation or
otherwise, and to conduct a detailed review of the Company and its assets,
corporate structure, dividend policy, capitalization, operations, properties,
policies, management and personnel and consider what, if any, changes would be
desirable in light of the circumstances which then exist. Such strategies could
include, among other things, changes in the Company's business, corporate
structure, certificate of incorporation, by-laws, capitalization, Board of
Directors, management or dividend policy, and consideration of the divestiture
of certain assets or lines of business of the Company.
Except as noted above, or elsewhere in this Offer to Purchase, the
Purchaser has no present plans or proposals that would result in an
extraordinary corporate transaction, such as a merger, reorganization or
liquidation, or sale or transfer of a material amount of assets, involving the
Company or any of its subsidiaries, or any material changes in the Company's
corporate structure or business or any change in its present Board of Directors
or management.
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Appraisal Rights. Holders of Shares do not have appraisal rights as a
result of the Offer. However, if the Proposed Merger is consummated, holders of
Shares will, at the effective time of the Proposed Merger, have certain rights
pursuant to the provisions of Section 262 of the DGCL ("Section 262") to dissent
and demand appraisal of their Shares. Under Section 262, dissenting stockholders
who comply with the applicable statutory procedures are entitled to receive a
judicial determination of the fair value of their Shares (exclusive of any
element of value arising from the accomplishment or expectation of the Proposed
Merger) and to receive payment of such fair value in cash, together with a fair
rate of interest, if any. Any such judicial determination of the fair value of
Shares could be based upon factors other than, or in addition to, the price per
Share to be paid in the Proposed Merger or the market value of the Shares. The
value so determined could be more or less than the price per Share to be paid in
the Proposed Merger.
The foregoing summary of Section 262 does not purport to be complete and is
qualified in its entirety by reference to Section 262. In addition, the
Purchaser intends to continue to negotiate with the Company with respect to the
acquisition of the Company by the Purchaser. If such negotiations result in a
definitive merger agreement between the Company and the Purchaser (other than
with respect to the Proposed Merger), holders of Shares may or may not have
appraisal rights under Section 262 in connection with the consummation of the
merger contemplated thereby, depending upon the terms of any such merger.
Going Private Transactions. The Commission has adopted Rule 13e-3 under
the Exchange Act, which rule is applicable to certain "going private"
transactions and which rule may, under certain circumstances, be applicable to
the Proposed Merger or any other merger involving the Company. However, Rule
13e-3 would be inapplicable if (a) the Shares are deregistered under the
Exchange Act prior to the merger or (b) such merger is consummated within one
year after the purchase of the Shares pursuant to the Offer and such merger
provides for stockholders to receive cash for their Shares in an amount at least
equal to the amount paid per Share in the Offer. If applicable, Rule 13e-3 would
require, among other things, that certain financial information concerning the
fairness of the proposed transaction and the consideration offered to minority
stockholders in such transaction be filed with the Commission and disclosed to
stockholders prior to the consummation of the transaction.
13. DIVIDENDS AND DISTRIBUTIONS
If, on or after April 6, 1998, the Company should (a) split, combine or
otherwise change the Shares or its capitalization (other than by redemption of
the Rights in accordance with their terms as publicly disclosed prior to April
6, 1998), (b) acquire or otherwise cause a reduction in the number of
outstanding Shares or other securities (other than as aforesaid) or (c) issue or
sell additional Shares (other than the issuance of Shares under option prior to
April 6, 1998 in accordance with the terms of such options as publicly disclosed
prior to April 6, 1998), shares of any other class of capital stock, other
voting securities or any securities convertible into, or rights, warrants or
options, conditional or otherwise, to acquire, any of the foregoing, then,
subject to the provisions of Section 14, the Purchaser, in its sole discretion,
may make such adjustments as it deems appropriate in the Offer Price and other
terms of the Offer, including, without limitation, the number or type of
securities offered to be purchased.
If, on or after April 6, 1998, the Company should declare or pay any cash
dividend on the Shares or other distribution on the Shares, or issue with
respect to the Shares any additional Shares, shares of any other class of
capital stock, other voting securities or any securities convertible into, or
rights, warrants or options, conditional or otherwise, to acquire, any of the
foregoing, payable or distributable to stockholders of record on a date prior to
the transfer of the Shares purchased pursuant to the Offer to the Purchaser or
its nominee or transferee on the Company's stock transfer records, then, subject
to the provisions of Section 14, (a) the Offer Price may, in the sole discretion
of the Purchaser, be reduced by the amount of any such cash dividend or cash
distribution and (b) the whole of any such noncash dividend, distribution or
issuance to be received by the tendering stockholders will (i) be received and
held by the tendering stockholders for the account of the Purchaser and will be
required to be promptly remitted and transferred by each tendering stockholder
to the Depositary for the account of the Purchaser, accompanied by appropriate
documentation of transfer or (ii) at the direction of the Purchaser, be
exercised for the benefit of the Purchaser, in which case the proceeds of such
exercise will promptly be remitted to the Purchaser. Pending such remittance and
subject to applicable law, the Purchaser will be entitled to all rights and
privileges as owner of any such noncash dividend, distribution, issuance or
proceeds and may withhold the entire Offer Price or deduct from the Offer Price
the amount or value thereof, as determined by the Purchaser in its sole
discretion.
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14. CERTAIN CONDITIONS OF THE OFFER
Notwithstanding any other term or provision of the Offer, the Purchaser
will not be required to accept for payment or, subject to any applicable rules
and regulations of the Commission, including Rule 14e-1(c) under the Exchange
Act (relating to a bidder's obligation to pay for or return tendered securities
promptly after the termination or withdrawal of such bidder's offer), to pay for
any Shares not theretofore accepted for payment or paid for unless (1) the
Minimum Tender Condition shall have been satisfied, (2) the Rights Condition
shall have been satisfied, (3) the Business Combination Condition shall have
been satisfied, (4) the Financing Condition shall have been satisfied and (5)
any waiting period under the HSR Act applicable to the purchase of Shares
pursuant to the Offer shall have expired or been terminated. Furthermore,
notwithstanding any other term or provision of the Offer, the Purchaser will not
be required to accept for payment or, subject as aforesaid, to pay for any
Shares not theretofore accepted for payment or paid for, and may terminate or
amend the Offer if, at any time on or after April 6, 1998, and before the
acceptance of such Shares for payment or the payment therefor, any of the
following events or facts shall have occurred:
(a) there shall be threatened, instituted or pending any action,
proceeding, application or counterclaim by any government or governmental,
regulatory or administrative authority or agency, domestic, foreign or
supranational (each, a "Governmental Entity"), or by any other person,
domestic or foreign, before any court or Governmental Entity, (i) (A)
challenging or seeking to, or which is reasonably likely to, make illegal,
delay or otherwise directly or indirectly restrain or prohibit, or seeking
to, or which is reasonably likely to, impose voting, procedural, price or
other requirements, in addition to those required by Federal securities
laws and the DGCL (each as in effect on the date of this Offer to
Purchase), including, without limitation, any assertion that Section 2115
of the California General Corporation Law is applicable to the Company, in
connection with, the making of the Offer, the acceptance for payment of, or
payment for, some of or all the Shares by the Purchaser or any affiliate of
the Purchaser or the consummation by the Purchaser or any affiliate of the
Purchaser of a merger or other similar business combination with the
Company, (B) seeking to obtain material damages or (C) otherwise directly
or indirectly relating to the transactions contemplated by the Offer or any
such merger or business combination, (ii) seeking to prohibit the ownership
or operation by the Purchaser or any affiliate of the Purchaser of all or
any portion of the business or assets of the Company and its subsidiaries
or of the Purchaser or any affiliate of the Purchaser or to compel the
Purchaser or any affiliate of the Purchaser to dispose of or hold separate
all or any portion of the business or assets of the Company or any of its
subsidiaries or of the Purchaser or any affiliate of the Purchaser or
seeking to impose any limitation on the ability of the Purchaser or any
affiliate of the Purchaser to conduct such business or own such assets,
(iii) seeking to impose or confirm limitations on the ability of the
Purchaser or any affiliate of the Purchaser effectively to exercise full
rights of ownership of the Shares, including, without limitation, the right
to vote any Shares acquired or owned by the Purchaser or any affiliate of
the Purchaser on all matters properly presented to the Company's
stockholders, (iv) seeking to require divestiture by the Purchaser or any
affiliate of the Purchaser of any Shares, (v) seeking any material
diminution in the benefits expected to be derived by the Purchaser or any
affiliate of the Purchaser as a result of the transactions contemplated by
the Offer or any merger or other similar business combination with the
Company, (vi) otherwise directly or indirectly relating to the Offer or
which otherwise, in the sole judgment of the Purchaser, might materially
adversely affect the Company or any of its subsidiaries or the Purchaser or
any affiliate of the Purchaser or the value of the Shares or (vii) in the
sole judgment of the Purchaser, materially adversely affecting the
business, properties, assets, liabilities, capitalization, stockholders'
equity, condition (financial or otherwise), operations, licenses or
franchises, results of operations or prospects of the Company or any of its
subsidiaries;
(b) there shall be any action taken, or any statute, rule, regulation,
legislation, interpretation, judgment, order or injunction proposed,
enacted, enforced, promulgated, amended, issued or deemed applicable to (i)
the Purchaser or any affiliate of the Purchaser or the Company or any of
its subsidiaries or (ii) the Offer or any merger or other similar business
combination by the Purchaser or any affiliate of the Purchaser with the
Company, by any government, legislative body or court, domestic, foreign or
supranational, or Governmental Entity, other than the routine application
of the waiting period provisions of the HSR Act to the Offer, if
applicable, that, in the sole judgment of the Purchaser, might, directly or
indirectly, result in any of the consequences referred to in clauses (i)
through (vii) of paragraph (a) above;
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(c) any change shall have occurred or been threatened (or any
condition, event or development shall have occurred or been threatened
involving a prospective change) in the business, properties, assets,
liabilities, capitalization, stockholders' equity, condition (financial or
otherwise), operations, licenses or franchises, results of operations or
prospects of the Company or any of its subsidiaries that, in the sole
judgment of the Purchaser, is or may be materially adverse to the Company
or any of its subsidiaries, or the Purchaser shall have become aware of any
facts that, in the sole judgment of the Purchaser, have or may have
material adverse significance with respect to either the value of the
Company or any of its subsidiaries or the value of the Shares to the
Purchaser or any affiliate of the Purchaser;
(d) there shall have occurred or been threatened (i) any general
suspension of trading in, or limitation on prices for, securities on any
national securities exchange or in the over-the-counter market in the
United States, (ii) any extraordinary or material adverse change in the
financial markets or major stock exchange indices in the United States or
abroad or in the market price of Shares, (iii) any change in the general
political, market, economic or financial conditions in the United States or
abroad that could, in the sole judgment of the Purchaser, have a material
adverse effect upon the business, properties, assets, liabilities,
capitalization, stockholders' equity, condition (financial or otherwise),
operations, licenses or franchises, results of operations or prospects of
the Company or any of its subsidiaries or the trading in, or value of, the
Shares, (iv) any material change in United States currency exchange rates
or any other currency exchange rates or a suspension of, or limitation on,
the markets therefor, (v) a declaration of a banking moratorium or any
suspension of payments in respect of banks in the United States, (vi) any
limitation (whether or not mandatory) by any government, domestic, foreign
or supranational, or Governmental Entity on, or other event that, in the
sole judgment of the Purchaser, might affect, the extension of credit by
banks or other lending institutions, (vii) a commencement of a war or armed
hostilities or other national or international calamity directly or
indirectly involving the United States or (viii) in the case of any of the
foregoing existing at the time of the commencement of the Offer, a material
acceleration or worsening thereof;
(e) the Company or any of its subsidiaries shall have (i) split,
combined or otherwise changed, or authorized or proposed a split,
combination or other change of, the Shares or its capitalization (other
than by redemption of the Rights in accordance with their terms as publicly
disclosed prior to April 5, 1998), (ii) acquired or otherwise caused a
reduction in the number of, or authorized or proposed the acquisition or
other reduction in the number of, outstanding Shares or other securities
(other than as aforesaid), (iii) issued, distributed or sold, or authorized
or proposed the issuance, distribution or sale of, additional Shares (other
than the issuance of Shares under option prior to April 6, 1998 in
accordance with the terms of such options as publicly disclosed prior to
April 6, 1998), shares of any other class of capital stock, other voting
securities or any securities convertible into, or rights, warrants or
options, conditional or otherwise, to acquire, any of the foregoing, (iv)
declared or paid, or proposed to declare or pay, any dividend or other
distribution, whether payable in cash, securities or other property, on or
with respect to any shares of capital stock of the Company, (v) altered or
proposed to alter any material term of any outstanding security (including
the Rights) other than to amend the Rights Agreement to make the Rights
inapplicable to the Offer and the Proposed Merger, (vi) incurred any debt
other than in the ordinary course of business or any debt containing
burdensome covenants, (vii) authorized, recommended, proposed or entered
into an agreement with respect to any merger, consolidation, liquidation,
dissolution, business combination, acquisition of assets, disposition of
assets, release or relinquishment of any material contractual or other
right of the Company or any of its subsidiaries or any comparable event not
in the ordinary course of business, (viii) authorized, recommended,
proposed or entered into, or announced its intention to authorize,
recommend, propose or enter into, any agreement or arrangement with any
person or group that in the sole judgment of the Purchaser could adversely
affect either the value of the Company or any of its subsidiaries or the
value of the Shares to the Purchaser or any affiliate of the Purchaser,
(ix) entered into any employment, severance or similar agreement,
arrangement or plan with or for the benefit of any of its employees other
than in the ordinary course of business or entered into or amended any
agreements, arrangements or plans so as to provide for increased or
accelerated benefits to the employees as a result of or in connection with
the transactions contemplated by the Offer, (x) except as may be required
by law, taken any action to terminate or amend any employee benefit plan
(as defined in Section 3(2) of the Employee Retirement Income Security Act
of 1974, as amended) of the Company or any of its subsidiaries, or the
Purchaser shall have become aware of any such action that was not disclosed
in publicly available filings prior to April 6, 1998, or (xi) amended, or
authorized or proposed any amendment to, its certificate of incorporation
or its by-laws
25
<PAGE>
(other than any amendment effected as a result of the adoption of certain
of the proposals contained in the Consent Solicitation), or the Purchaser
shall become aware that the Company or any of its subsidiaries shall have
proposed or adopted any such amendment that was not disclosed in publicly
available filings prior to April 6, 1998;
(f) a tender or exchange offer for any Shares shall have been made or
publicly proposed to be made by any other person (including the Company or
any of its subsidiaries or affiliates), or it shall have been publicly
disclosed or the Purchaser shall have otherwise learned that (i) any
person, entity (including the Company or any of its subsidiaries) or
"group" (within the meaning of Section 13(d)(3) of the Exchange Act) shall
have acquired or proposed to acquire beneficial ownership of more than 5%
of any class or series of capital stock of the Company (including the
Shares), through the acquisition of stock, the formation of a group or
otherwise, or shall have been granted any right, option or warrant,
conditional or otherwise, to acquire beneficial ownership of more than 5%
of any class or series of capital stock of the Company (including the
Shares), other than acquisitions for bona fide arbitrage purposes only and
other than as disclosed in a Schedule 13G on file with the Commission prior
to April 6, 1998, (ii) any such person, entity or group that, prior to
April 6, 1998, had filed such a Schedule with the Commission has acquired
or proposes to acquire, through the acquisition of stock, the formation of
a group or otherwise, beneficial ownership of 1% or more of any class or
series of capital stock of the Company (including the Shares), or shall
have been granted any right, option or warrant, conditional or otherwise,
to acquire beneficial ownership of 1% or more of any class or series of
capital stock of the Company (including the Shares), (iii) any person or
group shall have entered into a definitive agreement or an agreement in
principle or made a proposal with respect to a tender offer or exchange
offer or a merger, consolidation or other business combination with or
involving the Company or (iv) any person shall have filed a Notification
and Report Form under the HSR Act (or amended a prior filing to increase
the applicable filing threshold set forth therein) or made a public
announcement reflecting an intent to acquire the Company or any assets or
subsidiaries of the Company;
(g) any approval, permit, authorization, favorable review or consent
of any Governmental Entity (including those described or referred to in
Section 15) shall not have been obtained on terms satisfactory to Purchaser
in its sole discretion; or
(h) the Purchaser shall have reached an agreement or understanding
with the Company providing for termination of the Offer, or the Purchaser
or any affiliate of the Purchaser shall have entered into a definitive
agreement or announced an agreement in principle with the Company providing
for a merger or other business combination with the Company or the purchase
of stock or assets of the Company;
which, in the sole judgment of the Purchaser in any such case, and regardless of
the circumstances (including any action or inaction by the Purchaser or any
affiliate of the Purchaser) giving rise to any such condition, makes it
inadvisable to proceed with the Offer and/or with such acceptance for payment or
payment.
The foregoing conditions are for the sole benefit of the Purchaser and may
be asserted by the Purchaser regardless of the circumstances giving rise to any
such condition or may be waived by the Purchaser in whole or in part at any time
and from time to time in its sole discretion. The failure by the Purchaser at
any time to exercise any of the foregoing rights will not be deemed a waiver of
any such right, the waiver of any such right with respect to particular facts
and circumstances will not be deemed a waiver with respect to any other facts
and circumstances and each such right will be deemed an ongoing right that may
be asserted at any time and from time to time. Any determination by the
Purchaser concerning the events described in this Section 14 will be final and
binding upon all parties.
15. CERTAIN LEGAL MATTERS
Except as described in this Section 15, based on a review of publicly
available filings made by the Company with the Commission and other publicly
available information concerning the Company, the Purchaser is not aware of any
license or regulatory permit that appears to be material to the business of the
Company and its subsidiaries, taken as a whole, that might be adversely affected
by the Purchaser's acquisition of Shares (and the indirect acquisition of the
stock of the Company's subsidiaries) as contemplated herein or of any approval
or other action by any Governmental Entity that would be required or desirable
for the acquisition or ownership of Shares by the Purchaser as contemplated
herein. Should any such approval or other action be required or
26
<PAGE>
desirable, the Purchaser currently contemplates that such approval or other
action will be sought, except as described below under "State Takeover Laws."
While except as otherwise expressly described in this Section 15, the Purchaser
does not presently intend to delay the acceptance for payment of or payment for
Shares tendered pursuant to the Offer pending the outcome of any such matter,
there can be no assurance that any such approval or other action, if needed,
would be obtained or would be obtained without substantial conditions or that
failure to obtain any such approval or other action might not result in
consequences adverse to the Company's business or that certain parts of the
Company's business might not have to be disposed of if such approvals were not
obtained or such other actions were not taken or in order to obtain any such
approval or other action. If certain types of adverse action are taken with
respect to the matters discussed below, the Purchaser could decline to accept
for payment or pay for any Shares tendered. See Section 14 for certain
conditions to the Offer.
State Takeover Laws. A number of states throughout the United States have
enacted takeover statutes that purport, in varying degrees, to be applicable to
attempts to acquire securities of corporations that are incorporated or have
assets, stockholders, executive offices or places of business in such states. In
Edgar v. MITE Corp., the Supreme Court of the United States held that the
Illinois Business Takeover Act, which involved state securities laws that made
the takeover of certain corporations more difficult, imposed a substantial
burden on interstate commerce and therefore was unconstitutional. In CTS Corp.
v. Dynamics Corp. of America, however, the Supreme Court of the United States
held that a state may, as a matter of corporate law and, in particular, those
laws concerning corporate governance, constitutionally disqualify a potential
acquiror from voting on the affairs of a target corporation without prior
approval of the remaining stockholders, provided that such laws were applicable
only under certain conditions. Subsequently, a number of Federal courts ruled
that various state takeover statutes were unconstitutional insofar as they apply
to corporations incorporated outside the state of enactment.
Except as described herein, the Purchaser has not attempted to comply with
any state takeover statutes in connection with the Offer. The Purchaser reserves
the right to challenge the validity or applicability of any state law allegedly
applicable to the Offer, and nothing in this Offer to Purchase nor any action
taken in connection herewith is intended as a waiver of that right. In the event
that any state takeover statute is found applicable to the Offer, the Purchaser
might be unable to accept for payment or pay for Shares tendered pursuant to the
Offer or be delayed in continuing or consummating the Offer. In such case, the
Purchaser may not be obligated to accept for payment or pay for any Shares
tendered. See Section 14.
Section 203 of the DGCL. Section 203, in general, prohibits a Delaware
corporation such as the Company from engaging in a "Business Combination"
(defined as a variety of transactions, including mergers, as set forth below)
with an "Interested Stockholder" (defined generally as a person that is the
beneficial owner of 15% or more of a corporation's outstanding voting stock) for
a period of three years following the date that such person became an Interested
Stockholder unless (a) prior to the date such person became an Interested
Stockholder, the board of directors of the corporation approved either the
Business Combination or the transaction that resulted in the stockholder
becoming an Interested Stockholder, (b) upon consummation of the transaction
that resulted in the stockholder becoming an Interested Stockholder, the
Interested Stockholder owned at least 85% of the voting stock of the corporation
outstanding at the time the transaction commenced, excluding stock held by
directors who are also officers of the corporation and employee stock ownership
plans that do not provide employees with the right to determine confidentially
whether shares held subject to the plan will be tendered in a tender or exchange
offer or (c) on or subsequent to the date such person became an Interested
Stockholder, the Business Combination is approved by the board of directors of
the corporation and authorized at a meeting of the stockholders of the
corporation, and not by written consent, by the affirmative vote of the holders
of at least 66 2/3% of the outstanding voting stock of the corporation not owned
by the Interested Stockholder.
Under Section 203, the restrictions described above do not apply if, among
other things (a) the corporation's original certificate of incorporation
contains a provision expressly electing not to be governed by Section 203, (b)
the corporation, by action of its stockholders, adopts an amendment to its
certificate of incorporation or by-laws expressly electing not to be governed by
Section 203, provided that, in addition to any other vote required by law, such
amendment to the certificate of incorporation or by-laws must be approved by the
affirmative vote of a majority of the shares entitled to vote, which amendment
would not be effective until 12 months after the adoption of such amendment and
would not apply to any Business Combination between the corporation and any
person who became an Interested Stockholder of the corporation on or prior to
the date of such adoption, (c) the corporation does not have a class of voting
stock that is (i) listed on a national securities exchange, (ii) authorized
27
<PAGE>
for quotation on an inter-dealer quotation system of a registered national
securities association or (iii) held of record by more than 2,000 stockholders,
unless any of the foregoing results from action taken, directly or indirectly,
by an Interested Stockholder or from a transaction in which a person becomes an
Interested Stockholder or (d) a stockholder becomes an Interested Stockholder
"inadvertently" and thereafter divests itself of a sufficient number of shares
so that such stockholder ceases to be an Interested Stockholder. Under Section
203, the restrictions described above also do not apply to certain Business
Combinations proposed by an Interested Stockholder following the announcement or
notification of one of certain extraordinary transactions involving the
corporation and a person who had not been an Interested Stockholder during the
previous three years or who became an Interested Stockholder with the approval
of a majority of the corporation's directors.
Section 203 provides that, during such three-year period, the corporation
may not merge or consolidate with an Interested Stockholder or any affiliate or
associate thereof, and also may not engage in certain other transactions with an
Interested Stockholder or any affiliate or associate thereof, including, without
limitation, (a) any sale, lease, exchange, mortgage, pledge, transfer or other
disposition of assets (except proportionately as a stockholder of the
corporation) having an aggregate market value equal to 10% or more of the
aggregate market value of all assets of the corporation determined on a
consolidated basis or the aggregate market value of all the outstanding stock of
a corporation, (b) any transaction that results in the issuance or transfer by
the corporation or by certain subsidiaries thereof of any stock of the
corporation or such subsidiaries to the Interested Stockholder, except pursuant
to a transaction that effects a pro rata distribution to all stockholders of the
corporation, (c) any transaction involving the corporation or certain
subsidiaries thereof that has the effect of increasing the proportionate share
of the stock of any class or series, or securities convertible into the stock of
any class or series, of the corporation or any such subsidiary that is owned
directly or indirectly by the Interested Stockholder (except as a result of
immaterial changes due to fractional share adjustments) or (d) any receipt of
the Interested Stockholder of the benefit (except proportionately as a
stockholder of such corporation) of any loans, advances, guarantees, pledges or
other financial benefits provided by or thorough the corporation.
PURSUANT TO THE BUSINESS COMBINATION CONDITION, THE OFFER IS CONDITIONED
UPON THE ACQUISITION OF SHARES PURSUANT TO THE OFFER AND THE PROPOSED MERGER
HAVING BEEN APPROVED PURSUANT TO SECTION 203 OR THE PURCHASER BEING SATISFIED,
IN ITS SOLE DISCRETION, THAT THE PROVISIONS OF SECTION 203 ARE OTHERWISE
INAPPLICABLE TO THE ACQUISITION OF SHARES PURSUANT TO THE OFFER AND THE PROPOSED
MERGER.
The Purchaser has commenced litigation against the Company in the Court of
Chancery of the State of Delaware seeking, among other things, an order
compelling the Board of Directors to approve the Offer and the Proposed Merger
for purposes of Section 203 on the grounds that failure to do so would
constitute a breach of fiduciary duty to the Company's stockholders.
Pursuant to the Consent Solicitation, the Purchaser will seek to remove the
current members of the Board of Directors and to replace them with the Nominees,
who intend to approve the Offer and the Proposed Merger under Section 203,
subject to the fulfillment of the fiduciary duties that they would have as
directors of the Company. Approval of the Offer and the Proposed Merger under
Section 203 would satisfy the Business Combination Condition.
Antitrust. The Purchaser does not believe that a filing under the HSR Act
is required in connection with the Offer or the Proposed Merger. However, if it
is determined that the provisions of the HSR Act are applicable to the Offer,
the acquisition of Shares under the Offer may only be consummated following the
expiration of a 15-calendar day waiting period following the filing by the
"ultimate parent entity" of the Purchaser of a Notification and Report Form with
respect to the Offer, unless, during such waiting period, such person or persons
receive a request for additional information or documentary material from the
Antitrust Division or the FTC or unless early termination of the waiting period
is granted. If, within the initial 15-day waiting period, either the Antitrust
Division or the FTC requests additional information or material from the
"ultimate parent entity" of the Purchaser concerning the Offer, the waiting
period will be extended and would expire at 11:59 p.m., New York City time, on
the tenth calendar day after the date of substantial compliance with such
request. Only one extension of the waiting period pursuant to a request for
additional information is authorized by the HSR Act. Thereafter, such waiting
period may be extended only by court order or with the consent of the "ultimate
parent entity" of the Purchaser. In practice, complying with a request for
additional information or material can take a significant amount of time. In
addition, if the Antitrust Division or the FTC raises substantive
28
<PAGE>
issues in connection with a proposed transaction, the parties frequently engage
in negotiations with the relevant governmental agency concerning possible means
of addressing those issues and may agree to delay consummation of the
transaction while such negotiations continue.
Whether or not the provisions of the HSR Act are applicable to the Offer
and the Merger, the Antitrust Division and the FTC frequently scrutinize the
legality under the antitrust laws of transactions such as the Purchaser's
proposed acquisition of the Company. At any time before or after the Purchaser's
acquisition of Shares pursuant to the Offer, the Antitrust Division or the FTC
could take such action under the antitrust laws as it deems necessary or
desirable in the public interest, including seeking to enjoin the purchase of
Shares pursuant to the Offer or the consummation of the Proposed Merger or
seeking the divestiture of Shares acquired by the Purchaser or the divestiture
of substantial assets of the Company or its subsidiaries or the Purchaser or its
affiliates. Private parties may also bring legal action under the antitrust laws
under certain circumstances. There can be no assurance that a challenge to the
Offer on antitrust grounds will not be made or, if such a challenge is made, of
the result thereof.
Foreign Laws. The Company 1997 10-K indicates that the Company and certain
of its subsidiaries conduct business in foreign countries where regulatory
filings or approvals may be required or desirable in connection with the
consummation of the Offer. Certain of such filings or approvals, if required or
desirable, may not be made or obtained prior to the expiration of the Offer.
After commencement of the Offer, the Purchaser will seek further information
regarding the applicability of any such laws, and currently intends to take such
action as may be required or desirable. If any government or governmental
authority or agency takes any action prior to the completion of the Offer that,
in the sole judgment of the Purchaser, might have certain adverse effects, the
Purchaser will not be obligated to accept for payment or pay for any Shares
tendered. See Section 14.
16. FEES AND EXPENSES
Jefferies is acting as Dealer Manager in connection with the Offer and is
providing certain financial advisory services to the Purchaser in connection
with the Offer. The Purchaser has agreed to pay Jefferies as compensation for
such services: (i) financial advisory and other related fees aggregating $50,000
plus other amounts to be agreed upon and (ii) a transaction fee of $1,200,000,
payable upon the acquisition of 50% or more of the Shares in the Offer. The
Purchaser has also agreed to reimburse Jefferies for its out-of-pocket expenses,
including the reasonable fees and expenses of its counsel and any other advisor
retained by Jefferies, in connection with its engagement and to indemnify
Jefferies and certain related persons against certain liabilities and expenses,
including certain liabilities and expenses under the Federal securities laws.
In the ordinary course of its business, Jefferies engages in securities
trading, market-making and brokerage activities and may, at any time, hold long
or short positions and may trade or otherwise effect transactions in securities
of the Company. As of April 6, 1998, Jefferies had no position in the Shares
held for its own account.
The Purchaser has retained Innisfree M&A Incorporated to act as the
Information Agent and Dauphin Deposit Bank and Trust Company to serve as the
Depositary in connection with the Offer. The Information Agent and the
Depositary each will receive reasonable and customary compensation for their
services, be reimbursed for certain reasonable out-of-pocket expenses and be
indemnified against certain liabilities and expenses in connection therewith,
including certain liabilities and expenses under the Federal securities laws.
Neither the Purchaser nor any of its affiliates will pay any fees or
commissions to any broker or dealer or other person (other than the Dealer
Manager and the Information Agent) in connection with the solicitation of
tenders of Shares pursuant to the Offer. Brokers, dealers, banks and trust
companies will be reimbursed by the Purchaser upon request for customary mailing
and handling expenses incurred by them in forwarding material to their
customers.
17. MISCELLANEOUS
The Offer is not being made to (nor will tenders be accepted from or on
behalf of) holders of Shares in any jurisdiction in which the making of the
Offer or the acceptance thereof would not be in compliance with the laws of such
jurisdiction. Neither the Purchaser nor any of its affiliates is aware of any
jurisdiction in which the making of the Offer or the acceptance thereof would
not be in compliance with the laws of such jurisdiction. To the extent the
Purchaser or any of its affiliates becomes aware of any state law that would
limit the class of offerees in the Offer, the Purchaser will amend the Offer
and, depending on the timing of such amendment, if
29
<PAGE>
any, will extend the Offer to provide adequate dissemination of such information
to holders of Shares prior to the expiration of the Offer. In any jurisdiction
the securities, blue sky or other laws of which require the Offer to be made by
a licensed broker or dealer, the Offer is being made on behalf of the Purchaser
by the Dealer Manager or one or more registered brokers or dealers licensed
under the laws of such jurisdiction.
No person has been authorized to give any information or to make any
representation on behalf of the Purchaser or any of its affiliates not contained
herein or in the Letter of Transmittal and, if given or made, such information
or representation must not be relied upon as having been authorized.
The Purchaser has filed with the Commission the Schedule 14D-1 pursuant to
Rule 14d-3 under the Exchange Act, together with exhibits, furnishing certain
additional information with respect to the Offer, and may file amendments
thereto. Such Schedule 14D-1 and any amendments thereto, including exhibits,
should be available for inspection and copies should be obtainable in the manner
set forth in Section 8 (except that such material will not be available at the
regional offices of the Commission).
GOLDEN CYCLE, LLC
April 7, 1998
30
<PAGE>
SCHEDULE I
MEMBERS AND EXECUTIVE OFFICERS OF
THE PURCHASER
The name, business address, present principal occupation or employment and
five-year employment history of each of the members and executive officers of
the Purchaser are set forth below. All such members and executive officers
listed below are citizens of the United States. Unless otherwise indicated, the
principal business address of each director or executive officer is c/o Biker's
Depot, One Wynnewood Road, Wynnewood, PA 19096.
<TABLE>
<CAPTION>
POSITION WITH THE PURCHASER;
NAME, AGE AND BUSINESS ADDRESS PRINCIPAL OCCUPATION OR EMPLOYMENT; 5-YEAR EMPLOYMENT HISTORY
- ------------------------------ -------------------------------------------------------------
<S> <C>
Alexander Grass (70) President and Secretary of the Purchaser. Director, Honorary
c/o Golden Cycle, LLC Chairman of the Board of Directors and Chairman of the
4029 Crooked Hill Road Executive Committee of the Board of Directors of Rite Aid
Harrisburg, PA 17110 Corporation since March 1995. Prior to that time, he served
as Rite Aid's Chairman of the Board, President and Chief
Executive Officer. Mr. Grass has served as President of Super
Rite from 1965 to 1969 and as Chairman of the Board and Chief
Executive Officer of Super Rite from 1969 to 1995. Mr. Grass
is also a director of Hasbro, Inc. and the father of Roger
Grass.
Roger Grass (42) Vice President and Treasurer of the Purchaser. Chairman of
c/o Golden Cycle, LLC the Board of Directors of Biker's Depot, Inc., a company
4029 Crooked Hill Road engaged in the sale of aftermarket parts and accessories for
Harrisburg, PA 17110 Harley- Davidson motorcycles, since 1996. From 1989 through
1993 he was President and Chief Executive Officer of Reliable
Drug Stores, Inc.
</TABLE>
I-1
<PAGE>
SCHEDULE II
SCHEDULE OF PURCHASES DURING THE PAST 60 DAYS
AVERAGE
PRICE
DATE SHARES PURCHASED PER SHARE (1)
---- ---------------- -------------
2/09/98 20,000 13.68
2/10/98 2,000 13.55
2/13/98 40,000 13.74
2/19/98 20,000 13.80
2/20/98 20,600 13.74
3/12/98 50,000 13.55
3/13/98 50,000 13.80
3/17/98 125,000 13.75
3/19/98 48,000 15.00
- ------------------
(1) Represents the average price paid, including commission, for all
transactions on such date.
II-1
<PAGE>
Manually signed facsimile copies of the Letter of Transmittal will be
accepted. The Letter of Transmittal, certificates for Shares and/or Rights and
any other required documents should be sent or delivered by each stockholder of
the Company or such stockholder's broker, dealer, bank, trust company or other
nominee to the Depositary at its address set forth below.
The Depositary for the Offer is:
DAUPHIN DEPOSIT BANK AND TRUST COMPANY
(717) 255-2213
By Mail or Overnight Delivery:
213 Market Street
Harrisburg, Pennsylvania 17101
Attn: Corporate Trust Services
Mail Code: 001-01-02
By Facsimile Transmission:
(717) 231-2615
------------------------
Questions and requests for assistance or for additional copies of this
Offer to Purchase, the Letter of Transmittal and the Notice of Guaranteed
Delivery may be directed to the Information Agent or the Dealer Manager at their
respective telephone numbers and locations listed below. You may also contact
your broker, dealer, bank, trust company or other nominee for assistance
concerning the Offer.
The Information Agent for the Offer is:
[INNISFREE LOGO]
501 Madison Avenue
20th Floor
New York, New York 10022
Toll Free (888) 750-5833
Banks and Brokerage
Firms please call collect:
(212) 750-5833
The Dealer Manager for the Offer is:
[JEFFERIES & COMPANY, INC. LOGO]
11100 Santa Monica Boulevard
10th Floor
Los Angeles, California 90025
Toll Free (800) 933-6656
LETTER OF TRANSMITTAL
To Tender Shares of Common Stock
(Including the Associated Preferred Share Purchase Rights)
of
GLOBAL MOTORSPORT GROUP, INC.
Pursuant to the Offer to Purchase
Dated April 7, 1998
by
GOLDEN CYCLE, LLC
- --------------------------------------------------------------------------------
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT,
NEW YORK CITY TIME,
ON MONDAY, MAY 4, 1998, UNLESS THE OFFER IS EXTENDED.
- --------------------------------------------------------------------------------
TO: DAUPHIN DEPOSIT BANK AND TRUST COMPANY, DEPOSITARY
(717) 255-2213
By Mail or Overnight Delivery:
213 Market Street
Harrisburg, Pennsylvania 17101
Attn: Corporate Trust Services
Mail Code: 001-01-02
By Facsimile Transmission:
(717) 231-2615
DELIVERY OF THIS LETTER OF TRANSMITTAL TO AN ADDRESS, OR TRANSMISSION OF
INSTRUCTIONS VIA A FACSIMILE NUMBER, IN EITHER CASE OTHER THAN AS SET FORTH
ABOVE, DOES NOT CONSTITUTE A VALID DELIVERY.
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 used either if certificates for Shares
and/or Rights (as such terms are defined herein) are to be forwarded herewith
or, unless an Agent's Message (as defined in Section 2 of the Offer to Purchase)
is utilized, if delivery of Shares and/or Rights is to be made by book-entry
transfer (in the case of Rights, if available) to an account maintained by the
Depositary at DTC (as defined in and pursuant to the procedures set forth in
Section 2 of the Offer to Purchase). UNLESS THE RIGHTS CONDITION (AS DEFINED IN
THE OFFER TO PURCHASE) IS SATISFIED, STOCKHOLDERS WILL BE REQUIRED TO TENDER ONE
RIGHT FOR EACH SHARE TENDERED IN ORDER TO EFFECT A VALID TENDER OF SHARES.
UNLESS THE DISTRIBUTION DATE (AS DEFINED IN THE INTRODUCTION TO THE OFFER TO
PURCHASE) OCCURS, A TENDER OF SHARES WILL ALSO CONSTITUTE A TENDER OF THE
ASSOCIATED RIGHTS. Stockholders who deliver Shares and/or Rights by book-entry
transfer are referred to herein as "Book-Entry Stockholders" and other
stockholders are referred to herein as "Certificate Stockholders." Stockholders
whose certificates for Shares and/or Rights are not immediately available or who
cannot deliver either the certificates for, or a Book-Entry Confirmation (as
defined in Section 2 of the Offer to Purchase) with respect to, their Shares
and/or Rights and all other documents required hereby to the Depositary prior to
the Expiration Date (as defined in Section 1 of the Offer to Purchase) must
tender their Shares and/or Rights in accordance with the guaranteed delivery
procedures set forth in Section 2 of the Offer to Purchase. See Instruction 2.
DELIVERY OF DOCUMENTS TO DTC DOES NOT CONSTITUTE DELIVERY TO THE DEPOSITARY.
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------------------------------------
DESCRIPTION OF SHARES TENDERED
- ------------------------------------------------------------------------------------------------------------------------------------
NAME(S) AND ADDRESS(ES) OF REGISTERED OWNER(S) SHARES TENDERED
(PLEASE FILL IN, IF BLANK, EXACTLY AS NAME(S) APPEAR(S) ON CERTIFICATE(S)) (ATTACH ADDITIONAL LIST IF NECESSARY)
- ------------------------------------------------------------------------------------------------------------------------------------
TOTAL NUMBER
OF SHARES NUMBER OF
CERTIFICATE REPRESENTED BY SHARES
NUMBER(S)(1) CERTIFICATE(S)(1) TENDERED(2)
----------------------------------------------------
----------------------------------------------------
----------------------------------------------------
----------------------------------------------------
----------------------------------------------------
TOTAL SHARES
- ------------------------------------------------------------------------------------------------------------------------------------
(1) Need not be completed by Book-Entry Stockholders.
(2) Unless otherwise indicated, it will be assumed that all Shares described above are being tendered. See Instruction 4.
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------------------------------------
DESCRIPTION OF RIGHTS TENDERED(1)
- ------------------------------------------------------------------------------------------------------------------------------------
NAME(S) AND ADDRESS(ES) OF REGISTERED HOLDER(S) RIGHTS TENDERED
(PLEASE FILL IN, IF BLANK) (ATTACH ADDITIONAL LIST IF NECESSARY)
- ------------------------------------------------------------------------------------------------------------------------------------
TOTAL NUMBER
OF RIGHTS NUMBER OF
CERTIFICATE REPRESENTED BY RIGHTS
NUMBER(S)(2)(3) CERTIFICATE(S)(3) TENDERED(4)
- ------------------------------------------------------------------------------------------------------------------------------------
----------------------------------------------------
----------------------------------------------------
----------------------------------------------------
----------------------------------------------------
----------------------------------------------------
TOTAL RIGHTS
- ------------------------------------------------------------------------------------------------------------------------------------
(1) Need not be completed if the Distribution Date has not occurred.
(2) If the tendered Rights are represented by separate certificates, complete
using the certificate numbers of such certificates for Rights. If the
tendered Rights are not represented by separate certificates, or if such
certificates have not been distributed, complete using the certificate
numbers of the Shares with respect to which the Rights were issued.
Stockholders tendering Rights that are not represented by separate
certificates should retain a copy of this description in order to accurately
complete the Notice of Guaranteed Delivery if the Distribution Date occurs.
(3) Need not be completed by Book-Entry Stockholders who are delivering Rights
by book-entry transfer.
(4) Unless otherwise indicated, it will be assumed that all Rights described
herein are being tendered. See Instruction 4.
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
/ / CHECK HERE IF TENDERED SHARES AND/OR RIGHTS ARE BEING DELIVERED BY
BOOK-ENTRY TRANSFER MADE TO AN ACCOUNT MAINTAINED BY THE DEPOSITARY WITH DTC
AND COMPLETE THE FOLLOWING (ONLY PARTICIPANTS IN DTC MAY DELIVER SHARES
AND/OR RIGHTS BY BOOK-ENTRY TRANSFER):
Name of Tendering Institution __________________________________________________
Account Number at The Depository Trust Company _________________________________
Transaction Code Number ________________________________________________________
/ / CHECK HERE IF TENDERED SHARES AND/OR RIGHTS ARE BEING DELIVERED PURSUANT TO
A NOTICE OF GUARANTEED DELIVERY PREVIOUSLY SENT TO THE DEPOSITARY AND
COMPLETE THE FOLLOWING:
Name(s) of Registered Owner(s) _________________________________________________
Date of Execution of Notice of Guaranteed Delivery _____________________________
Name of Institution that Guaranteed Delivery ___________________________________
If delivered by Book-Entry Transfer, check box: / /
Account Number at The Depository Trust Company _________________________________
Transaction Code Number ________________________________________________________
<PAGE>
NOTE: SIGNATURES MUST BE PROVIDED BELOW.
PLEASE READ THE ACCOMPANYING INSTRUCTIONS CAREFULLY.
Ladies and Gentlemen:
The undersigned hereby tenders to Golden Cycle, LLC, a Pennsylvania limited
liability company (the "Purchaser"), the above-described shares of Common Stock,
par value $0.001 per share (the "Shares"), of Global Motorsport Group, Inc., a
Delaware corporation (the "Company"), together with an equal number of the
associated preferred share purchase rights (the "Rights") issued pursuant to the
Rights Agreement, dated as of November 13, 1996 (the "Rights Agreement"),
between the Company and American Stock Transfer and Trust Company, as Rights
Agent (the "Rights Agent"), upon the terms and subject to the conditions set
forth in the Purchaser's Offer to Purchase, dated April 7, 1998 and this Letter
of Transmittal (which, together with any amendments or supplements thereto or
hereto, collectively constitute the "Offer"), receipt of which is hereby
acknowledged.
Upon the terms of the Offer, subject to, and effective upon, acceptance for
payment of, and payment for, the Shares and Rights tendered herewith in
accordance with the terms of the Offer, the undersigned hereby sells, assigns
and transfers to, or upon the order of, the Purchaser all right, title and
interest in and to all of the Shares and Rights that are being tendered hereby
(and any and all other Shares, Rights or other securities or rights issued or
issuable in respect thereof on or after June 6, 1995), and irrevocably
constitutes and appoints Dauphin Deposit Bank and Trust Company (the
"Depositary"), the true and lawful agent and attorney-in-fact of the
undersigned, with full power of substitution (such power of attorney being
deemed to be an irrevocable power coupled with an interest), to the full extent
of the undersigned's rights with respect to such Shares and Rights (and any such
other Shares, Rights or securities or rights), to (a) deliver certificates for
such Shares and Rights (and any such other Shares, Rights or securities or
rights) or transfer ownership of such Shares and Rights (and any such other
Shares, Rights or securities or rights) on the account books maintained by DTC
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 Rights (and any such other Shares, Rights or securities or rights) for
transfer on the Company's books and (c) receive all benefits and otherwise
exercise all rights of beneficial ownership of such Shares and Rights (and any
such other Shares, Rights or securities or rights), all in accordance with the
terms of the Offer.
The undersigned hereby represents and warrants that the undersigned has full
power and authority to tender, sell, assign and transfer the tendered Shares and
Rights (and any and all other Shares, Rights or other securities or rights
issued or issuable in respect of such Shares or Rights on or after April 7,
1998) and, when the same are accepted for payment by the Purchaser, the
Purchaser will acquire good title thereto, free and clear of all liens,
restrictions, claims and encumbrances, and the same will not be subject to any
adverse claim. The undersigned will, upon request, execute any additional
documents deemed by the Depositary or the Purchaser to be necessary or desirable
to complete the sale, assignment and transfer of the tendered Shares and Rights
(and any and all other Shares, Rights or other securities or rights issued or
issuable in respect thereof on or after April 7, 1998).
THE UNDERSIGNED UNDERSTANDS THAT, UNLESS THE RIGHTS CONDITION IS SATISFIED,
STOCKHOLDERS WILL BE REQUIRED TO TENDER ONE RIGHT FOR EACH SHARE TENDERED IN
ORDER TO EFFECT A VALID TENDER OF SHARES IN ACCORDANCE WITH THE PROCEDURES SET
FORTH IN SECTION 2 OF THE OFFER TO PURCHASE. If the Distribution Date occurs and
separate certificates representing the Rights are distributed to holders of
Shares prior to the time Shares are tendered herewith, certificates representing
a number of Rights equal to the number of Shares being tendered herewith must be
delivered to the Depositary or, if available, a Book-Entry Confirmation must be
received by the Depositary with respect thereto, in order for such Shares
tendered herewith to be validly tendered. If the Distribution Date occurs and
separate certificates representing the Rights are not distributed prior to the
time Shares are tendered herewith, Rights may be tendered prior to a stockholder
receiving separate certificates for Rights by use of the guaranteed delivery
procedures described in Section 2 of the Offer to Purchase. A tender of Shares
constitutes an agreement by the tendering stockholder to deliver to the
Depositary certificates representing a number of Rights equal to the number of
Shares tendered pursuant to the Offer. Such delivery must be made prior to
expiration of the period permitted by the guaranteed delivery procedures
described in Section 2 of the Offer to Purchase for delivery of certificates
for, or a Book-Entry Confirmation with respect to, Rights (the "Rights Delivery
Period"). However, after expiration of the Rights Delivery Period, the Purchaser
may elect to reject as invalid a tender of Shares with respect to which
certificates for, or a Book-Entry Confirmation with respect to, an equal number
of Rights has not been received by the Depositary. Nevertheless, the Purchaser
will be entitled to accept for payment Shares tendered by the undersigned prior
to the receipt of the certificates for the Rights required to be tendered with
such Shares, or a Book-Entry Confirmation with respect to such Rights, and
either (a), subject to complying with the applicable rules and regulations of
the Securities and Exchange Commission, withhold payment for such Shares pending
receipt of the certificates for, or a Book-Entry Confirmation with respect to,
such Rights or (b) make payment for Shares accepted for payment pending receipt
of the certificates for, or a Book-Entry Confirmation with respect to, such
Rights in reliance upon the agreement of a tendering stockholder to deliver
Rights and such guaranteed delivery procedures. Any determination by the
Purchaser to make payment for Shares in reliance upon such agreement and such
guaranteed delivery procedures or, after the expiration of the Rights Delivery
Period, to reject a tender as invalid will be made in the sole and absolute
discretion of the Purchaser.
All authority conferred or agreed to be conferred pursuant to this Letter of
Transmittal shall be binding upon the successors, assigns, heirs, executors,
administrators and legal representatives of the undersigned and shall not be
affected by, and shall survive, the death or incapacity of the undersigned.
Except as stated in the Offer to Purchase, this tender is irrevocable.
The undersigned hereby irrevocably appoints Alexander Grass and Roger Grass,
and each of them, and any other designees of the Purchaser, the
attorneys-in-fact and proxies of the undersigned, each with full power of
substitution, to vote at any annual, special or adjourned meeting of the
Company's stockholders or otherwise in such manner as each such attorney-in-fact
and proxy or his substitute shall in his sole discretion deem proper with
respect to, to execute any written consent concerning any matter as each such
attorney-in-fact and proxy or his substitute shall in his sole discretion deem
proper with respect to, and to otherwise act as each such attorney-in-fact and
proxy or his substitute shall in his sole discretion deem proper with respect
to, the Shares and Rights tendered hereby that have been accepted for payment by
the Purchaser prior to the time any such action is taken and with respect to
which the undersigned is entitled to vote (and any and all other Shares, Rights
or other securities or rights issued or issuable in respect of such Shares and
Rights on or after April 6, 1998). This appointment is effective when, and only
to the extent that, the Purchaser accepts for payment such Shares as provided in
the Offer to Purchase. This power of attorney and proxy are irrevocable and are
granted in consideration of the acceptance for payment of such Shares and Rights
in accordance with the terms of the Offer. Upon such acceptance for payment, all
prior powers of attorney, proxies and consents given by the undersigned with
respect to such Shares (except for any consents issued under the Consent
Solicitation (as defined in the Offer to Purchase)), Rights or other securities
or rights will, without further action, be revoked and no subsequent powers of
attorney, proxies, consents or revocations may be given (and, if given, will not
be deemed effective) by the undersigned.
The undersigned understands that the valid tender of Shares and, if
applicable, Rights pursuant to any of the procedures described in Section 2 of
the Offer to Purchase and in the Instructions hereto will constitute a binding
agreement between the undersigned and the Purchaser upon the terms and subject
to the conditions of the Offer. Without limiting the foregoing, if the price to
be paid in the Offer is amended in accordance with the Offer, the price to be
paid to the undersigned will be the amended price notwithstanding the fact that
a different price is stated in this Letter of Transmittal.
Unless otherwise indicated herein under "Special Payment Instructions,"
please issue the check for the purchase price and/or return any certificates for
Shares or Rights not tendered or accepted for payment in the name(s) of the
registered holder(s) appearing under "Description of Shares Tendered" and
"Description of Rights Tendered," respectively. Similarly, unless otherwise
indicated under "Special Delivery Instructions," please mail the check for the
purchase price and/or return any certificates for Shares or Rights not tendered
or accepted for payment (and accompanying documents, as appropriate) to the
address(es) of the registered holder(s) appearing under "Description of Shares
<PAGE>
Tendered" and "Description of Rights Tendered," respectively. In the event that
both the Special Delivery Instructions and the Special Payment Instructions are
completed, please issue the check for the purchase price and/or return any
certificates for Shares or Rights not tendered or accepted for payment (and any
accompanying documents, as appropriate) in the name of, and deliver such check
and/or return such certificates (and any accompanying documents, as appropriate)
to, the person or persons so indicated. Unless otherwise indicated herein under
"Special Payment Instructions," please credit any Shares and Rights tendered
herewith by book-entry transfer that are not accepted for payment by crediting
the account at DTC. The undersigned recognizes that the Purchaser has no
obligation pursuant to the Special Payment Instructions to transfer any Shares
or Rights from the name of the registered holder thereof if the Purchaser does
not accept for payment any of the Shares or Rights, respectively, so tendered.
/ / CHECK HERE IF ANY OF THE CERTIFICATES REPRESENTING SHARES THAT YOU OWN HAVE
BEEN LOST OR DESTROYED AND SEE INSTRUCTION 11.
NUMBER OF SHARES REPRESENTED BY THE LOST OR DESTROYED
CERTIFICATES:________________________________
SPECIAL PAYMENT INSTRUCTIONS
(SEE INSTRUCTIONS 5, 6 AND 7)
To be completed ONLY if certificates for Shares or Rights not tendered or
not accepted for payment and/or the check for the purchase price of Shares or
Rights accepted for payment are to be issued in the name of someone other than
the undersigned, or if Shares or Rights delivered by book-entry transfer that
are not accepted for payment are to be returned by credit to an account
maintained at DTC other than the account indicated above.
Issue: / / Check / / Certificate(s) to:
Name: __________________________________________________________________________
(PLEASE PRINT)
Address: _______________________________________________________________________
________________________________________________________________________________
(INCLUDE ZIP CODE)
________________________________________________________________________________
(EMPLOYER IDENTIFICATION OR SOCIAL SECURITY NUMBER)
/ / Credit unpurchased Shares or Rights delivered by book-entry transfer to the
DTC account set forth below:
________________________________________________________________________________
(ACCOUNT NUMBER)
SPECIAL DELIVERY INSTRUCTIONS
(SEE INSTRUCTIONS 5, 6 AND 7)
To be completed ONLY if certificates for Shares or Rights are not tendered
or not accepted for payment and/or the check for the purchase price of Shares or
Rights accepted for payment are to be sent to someone other than the
undersigned, or to the undersigned at an address other than that above.
Mail: / / Check / / Certificate(s) to:
Name: __________________________________________________________________________
(PLEASE PRINT)
Address: _______________________________________________________________________
________________________________________________________________________________
(INCLUDE ZIP CODE)
________________________________________________________________________________
(EMPLOYER IDENTIFICATION OR SOCIAL SECURITY NUMBER)
<PAGE>
<TABLE>
STOCKHOLDERS SIGN HERE
(ALSO COMPLETE SUBSTITUTE FORM W-9 BELOW)
<S> <C> <C>
arrow ---------------------------------------------------------------------- arrow
arrow ---------------------------------------------------------------------- arrow
(Signature(s) of Stockholder(s))
</TABLE>
(Must be signed by registered holder(s) as name(s) appear(s) on the
certificate(s) for the Shares or Rights or on a security position
listing or by person(s) authorized to become registered holder(s) by
certificates and documents transmitted herewith. If signature is by
trustees, executors, administrators, guardians, attorneys-in-fact,
officers of corporations or others acting in a fiduciary or
representative capacity, please provide the following information and
see Instruction 5.)
Dated: _____________________________, 1998
Name(s):________________________________________________________________________
(Please Print)
Capacity (Full Title):__________________________________________________________
Address:________________________________________________________________________
________________________________________________________________________________
(Include Zip Code)
Daytime Area Code and Telephone No.:(_____)_____________________________________
Employer Identification or Social Security No.:_________________________________
GUARANTEE OF SIGNATURE(S)
(See Instructions 1 and 5)
Authorized Signature:___________________________________________________________
Name:___________________________________________________________________________
(Please Print)
Name of Firm:___________________________________________________________________
Address:________________________________________________________________________
________________________________________________________________________________
(Include Zip Code)
Area Code and Telephone No.:(_____)_____________________________________________
Dated:_______________________________, 1998
<PAGE>
INSTRUCTIONS
FORMING PART OF THE TERMS AND CONDITIONS OF THE OFFER
1. Guarantee of Signatures. No signature guarantee is required on this
Letter of Transmittal (a) if this Letter of Transmittal is signed by the
registered holder(s) (which term, for purposes of this Section, includes any
participant in DTC's system whose name appears on a security position listing as
the owner of the Shares) of Shares and Rights tendered herewith, unless such
registered holder(s) has completed either the box entitled "Special Payment
Instructions" or the box entitled "Special Delivery Instructions" on this Letter
of Transmittal or (b) if such Shares and Rights are tendered for the account of
a financial institution (including most commercial banks, savings and loan
associations and brokerage houses) that is a participant in the Security
Transfer Agents Medallion Program, the New York Stock Exchange Medallion
Signature Guarantee Program or the Stock Exchange Medallion Program (an
"Eligible Institution"). In all other cases, all signatures on this Letter of
Transmittal must be guaranteed by an Eligible Institution. See Instruction 5.
2. Requirements of Tender. This Letter of Transmittal is to be completed
by stockholders either if certificates are to be forwarded herewith or, unless
an Agent's Message (as defined herein) is utilized, if delivery of Shares and/or
Rights is to be made pursuant to the procedures for book-entry transfer set
forth in Section 2 of the Offer to Purchase. For a stockholder validly to tender
Shares and Rights pursuant to the Offer, either (a) a properly completed and
duly executed Letter of Transmittal (or facsimile thereof), together with any
required signature guarantees, or, in the case of a book-entry transfer, an
Agent's Message, and any other required documents, must be received by the
Depositary at one of its addresses set forth herein prior to the Expiration Date
and either certificates for tendered Shares and Rights must be received by the
Depositary at one of such addresses or Shares and Rights must be delivered
pursuant to the procedures for book-entry transfer set forth herein (and a
Book-Entry Confirmation received by the Depositary), in each case prior to the
Expiration Date, or (b) the tendering stockholder must comply with the
guaranteed delivery procedures set forth below and in Section 2 of the Offer to
Purchase.
UNLESS THE RIGHTS CONDITION IS SATISFIED, STOCKHOLDERS WILL BE REQUIRED TO
TENDER ONE RIGHT FOR EACH SHARE TENDERED IN ORDER TO EFFECT A VALID TENDER OF
SHARES. Unless the Distribution Date occurs, a tender of Shares will also
constitute a tender of the associated Rights. The Rights are currently
represented by the certificates for the Shares with respect to which the Rights
were issued. The Rights Agreement provides that until the close of business on
the Distribution Date, the Rights will be evidenced by the certificates for the
Shares and may be transferred with and only with the Shares. The Rights
Agreement further provides that, as soon as practicable following the
Distribution Date, separate certificates representing the Rights are to be
mailed by the Company or the Rights Agent to holders of record of Shares as of
the close of business on the Distribution Date. If the Distribution Date occurs
and separate certificates representing the Rights are distributed prior to the
time Shares are tendered herewith, certificates representing a number of Rights
equal to the number of Shares being tendered herewith must be delivered to the
Depositary or, if available, a Book-Entry Confirmation must be received by the
Depositary with respect thereto, in order for such Shares tendered herewith to
be validly tendered. If the Distribution Date occurs and separate certificates
representing the Rights are not distributed prior to the time Shares are
tendered herewith, Rights may be tendered prior to a stockholder receiving
separate certificates for Rights by use of the guaranteed delivery procedures
described below.
Stockholders whose certificates for Shares or Rights are not immediately
available (including because certificates for Rights have not yet been
distributed by the Company or the Rights Agent) or who cannot deliver their
certificates and all other required documents to the Depositary or complete the
procedures for book-entry transfer prior to the Expiration Date may tender their
Shares and Rights by properly completing and duly executing the Notice of
Guaranteed Delivery pursuant to the guaranteed delivery procedures set forth in
Section 2 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 the Purchaser, must be received by the Depositary prior to the Expiration
Date and (c) the certificates for all tendered Shares and/or Rights, in proper
form for transfer (or a Book-Entry Confirmation with respect to all such Shares
and/or Rights), together with a properly completed and duly executed Letter of
Transmittal (or facsimile thereof), with any required signature guarantees, or,
in the case of a book-entry transfer, an Agent's Message, and any other required
documents are received by the Depositary within (a), in the case of Shares,
three trading days after the date of execution of such Notice of Guaranteed
Delivery or (b), in the case of Rights, a period ending on the later of (1)
three trading days after the date of execution of such Notice of Guaranteed
Delivery or (2) three business days (as defined in the Offer to Purchase) after
the date certificates for Rights are distributed to stockholders by the Company
or the Rights Agent, all as provided in Section 2 of the Offer to Purchase. A
"trading day" is any day on which the Nasdaq National Market operated by the
National Association of Securities Dealers, Inc. is open for business.
Stockholders may not extend the foregoing time period for delivery of Rights to
the Depositary by providing a second Notice of Guaranteed Delivery with respect
to such Rights.
The term "Agent's Message" means a message, transmitted by DTC to, and
received by, the Depositary and forming a part of a Book-Entry Confirmation,
which states that DTC has received an express acknowledgment from the
participant in DTC tendering the Shares that such participant has received and
agrees to be bound by the terms of the Letter of Transmittal and that the
Purchaser may enforce such agreement against the participant.
The signatures on this Letter of Transmittal cover the Shares and the
Rights tendered hereby whether or not such Rights are delivered simultaneously
with such Shares.
THE METHOD OF DELIVERY OF SHARES, RIGHTS, THE LETTER OF TRANSMITTAL AND ALL
OTHER REQUIRED DOCUMENTS, INCLUDING DELIVERY THROUGH DTC, IS AT THE ELECTION AND
RISK OF THE TENDERING STOCKHOLDER. SHARES WILL BE DEEMED DELIVERED ONLY WHEN
ACTUALLY RECEIVED BY THE DEPOSITARY (INCLUDING, IN THE CASE OF A BOOK-ENTRY
TRANSFER, BY BOOK-ENTRY CONFIRMATION). 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.
No alternative, conditional or contingent tenders will be accepted and no
fractional Shares or Rights will be purchased. All tendering stockholders, by
execution of this Letter of Transmittal (or facsimile thereof), waive any right
to receive any notice of the acceptance of their Shares or Rights for payment.
<PAGE>
3. Inadequate Space. If the space provided herein is inadequate, the
certificate numbers and/or the number of Shares or Rights should be listed on a
separate schedule attached hereto.
4. Partial Tenders (Applicable to Certificate Stockholders Only). If fewer
than all of the Shares or Rights evidenced by any certificate submitted are to
be tendered, fill in the number of Shares or Rights that are to be tendered in
the box entitled "Number of Shares Tendered" or "Number of Rights Tendered," as
appropriate. In any such case, new certificate(s) for the remainder of the
Shares or Rights that were evidenced by the old certificate(s) will be sent to
the registered holder, unless otherwise provided in the appropriate box on this
Letter of Transmittal, as soon as practicable after the expiration of the Offer.
All Shares and Rights represented by certificates delivered to the Depositary
will be deemed to have been tendered unless otherwise indicated.
5. Signatures on Letter of Transmittal, Stock Powers and Endorsements. If
this Letter of Transmittal is signed by the registered holder of the Shares and
Rights tendered hereby, the signature must correspond with the name as written
on the face of the certificate(s) without any change whatsoever.
If any of the Shares or Rights tendered hereby are owned of record by two
or more joint owners, all such owners must sign this Letter of Transmittal.
If any tendered Shares or Rights are registered in different names on
several 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 or any certificates or stock powers are
signed by trustees, executors, administrators, guardians, attorneys-in-fact,
officers of corporations or others acting in a fiduciary or representative
capacity, such persons should so indicate when signing, and proper evidence
satisfactory to the Purchaser of their authority so to act must be submitted.
When this Letter of Transmittal is signed by the registered owner(s) of the
Shares and Rights listed and transmitted hereby, no endorsements of certificates
or separate stock powers are required unless payment or certificates for Shares
or Rights not tendered or accepted for payment are to be issued to a person
other than the registered owner(s). Signatures on 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 owner(s) of the certificates listed, the certificates must be
endorsed or accompanied by appropriate stock powers, in either case signed
exactly as the name or names of the registered owner or owners appear on the
certificates. Signatures on such certificates or stock powers must be guaranteed
by an Eligible Institution.
6. Stock Transfer Taxes. The Purchaser will pay any stock transfer taxes
with respect to the transfer and sale of Shares or Rights to it or its order
pursuant to the Offer. If, however, payment of the purchase price is to be made
to, or if certificates for Shares or Rights not tendered or accepted for payment
are to be registered in the name of, any person(s) other than the registered
holder(s), or if tendered certificates are registered in the name(s) of any
person(s) other than the person(s) signing this Letter of Transmittal, the
amount of any stock transfer taxes (whether imposed on the registered holder(s)
or such person(s)) payable on account of the transfer to such person(s) 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 a check is to be issued
in the name of, and/or certificates for Shares or Rights not accepted for
payment are to be returned to, a person other than the signer of this Letter of
Transmittal or if a check is to be sent and/or such certificates are to be
returned to a person other than the signer of this Letter of Transmittal or to
an address other than that shown above, the appropriate boxes on this Letter of
Transmittal should be completed. Any stockholder(s) delivering Shares or Rights
by book-entry transfer may request that Shares or Rights not accepted for
payment be credited to such account maintained at DTC as such stockholder(s) may
designate.
8. Waiver of Conditions. The Purchaser reserves the absolute right in its
sole discretion to waive any of the specified conditions of the Offer, in whole
or in part, in the case of any Shares or Rights tendered.
9. 31% Backup Withholding. In order to avoid "backup withholding" of
Federal income tax on payments of cash pursuant to the Offer, a stockholder
surrendering Shares pursuant to the Offer must, unless an exemption applies,
provide the Depositary with such stockholder's correct taxpayer identification
number ("TIN") on Substitute Form W-9 included as part of this Letter of
Transmittal and certify under penalties of perjury that such TIN is correct and
that such stockholder is not subject to backup withholding. If a stockholder
surrendering Shares pursuant to the Offer does not provide such stockholder's
correct TIN or fails to provide the certifications described above, the Internal
Revenue Service (the "IRS") may impose a $50 penalty on such stockholder and
payment of cash to such stockholder pursuant to the Offer may be subject to
backup withholding of 31%.
Backup withholding is not an additional income tax. Rather, the amount of
the backup withholding can be credited against the Federal income tax liability
of the person subject to the backup withholding, provided that the required
information is given to the IRS. If backup withholding results in an overpayment
of tax, a refund can be obtained by the stockholder upon filing an income tax
return.
The stockholder is required to give the Depositary the TIN (i.e., social
security number or employer identification number) of the record owner of the
Shares. If the Shares are held 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 guidance on which
number to report.
The box in Part 3 of the Substitute Form W-9 may be checked 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. If the box in Part 3 is checked,
the stockholder or other payee must also complete the Certificate of Awaiting
Taxpayer Identification Number below in order to avoid backup withholding.
Notwithstanding that the box in Part 3 is checked and the Certificate of
Awaiting Taxpayer Identification Number is completed, the Depositary will
withhold 31% on all payments made prior to the time a properly certified TIN is
provided to the Depositary. However, such amounts will be refunded to such
stockholder if a TIN is provided to the Depositary within 60 days.
<PAGE>
Certain stockholders (including, among others, all corporations and certain
foreign individuals and entities) are not subject to backup withholding.
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 the
enclosed "Guidelines for Certification of Taxpayer Identification Number on
Substitute Form W-9" for more instructions.
10. Requests for Assistance or Additional Copies. Questions and requests
for assistance or additional copies of the Offer to Purchase, the Letter of
Transmittal, the Notice of Guaranteed Delivery and the Guidelines for
Certification of Taxpayer Identification Number on Substitute Form W-9 may be
directed to the Information Agent or the Dealer Manager at their respective
addresses set forth below.
11. Lost, Destroyed or Stolen Certificates. If any certificate
representing Shares or Rights has been lost, destroyed or stolen, the
stockholder should promptly notify the Depositary by checking the box
immediately preceding the special payment/special delivery instructions and
indicating the number of Shares or Rights lost. The stockholder will then be
instructed as to the steps that must be taken in order to replace the
certificate. 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 FACSIMILE THEREOF), TOGETHER WITH
ANY REQUIRED SIGNATURE GUARANTEES, OR, IN THE CASE OF A BOOK-ENTRY TRANSFER, AN
AGENT'S MESSAGE, AND ANY OTHER REQUIRED DOCUMENTS, MUST BE RECEIVED BY THE
DEPOSITARY PRIOR TO THE EXPIRATION DATE AND EITHER CERTIFICATES FOR TENDERED
SHARES AND RIGHTS MUST BE RECEIVED BY THE DEPOSITARY OR SHARES AND RIGHTS MUST
BE DELIVERED PURSUANT TO THE PROCEDURES FOR BOOK-ENTRY TRANSFER, IN EACH CASE
PRIOR TO THE EXPIRATION DATE, OR THE TENDERING STOCKHOLDER MUST COMPLY WITH THE
PROCEDURES FOR GUARANTEED DELIVERY.
<PAGE>
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
PAYOR'S NAME: GOLDEN CYCLE, LLC
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
SUBSTITUTE PART 1 -- PLEASE PROVIDE YOUR TIN IN THE
FORM W-9 BOX AT RIGHT AND CERTIFY BY SIGNING ----------------------------------------------------
AND DATING BELOW. Social Security Number
OR__________________________________________________
Employer Identification
-----------------------------------------------------------------------------------------------------------
DEPARTMENT OF THE PART 2 -- CERTIFICATION -- Under penalties of perjury, I certify that:
TREASURY (1) The number shown on this form is my correct Taxpayer Identification Number (or I am waiting for a
INTERNAL REVENUE number to be issued to me) and
SERVICE (2) I am not subject to backup withholding because a) I am exempt from backup withholding or (b) I have
Payor's Request for not been notified by the Internal Revenue Service (the "IRS") that I am subject to backup
Taxpayer withholding as a result of a failure to report all interest or dividends or (c) the IRS has
Identification notified me that I am no longer subject to backup withholding.
Number (TIN) CERTIFICATION INSTRUCTIONS -- You must cross out item (2) in Part 2 above if you have been notified
by the IRS that you are subject to backup withholding because of under-reporting interest or
dividends on your tax returns. However, if after being notified by the IRS that you were subject to
backup withholding you receive another notification from the IRS stating that you are no longer
subject to backup withholding, do not cross out such item (2). If you are exempt from backup
withholding, check the box in Part 4 below.
-----------------------------------------------------------------------------------------------------------
SIGNATURE _______________________________DATE ______________, 1998 PART 3 -- Awaiting TIN / /
PART 4 -- Exempt TIN / /
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
NOTE: FAILURE TO COMPLETE AND RETURN THIS SUBSTITUTE FORM W-9 MAY RESULT IN
BACKUP WITHHOLDING OF 31% OF ANY 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 INFORMATION.
YOU MUST COMPLETE THE FOLLOWING CERTIFICATE IF YOU CHECKED THE BOX IN PART 3 OF
SUBSTITUTE FORM W-9.
- --------------------------------------------------------------------------------
CERTIFICATE OF AWAITING TAXPAYER IDENTIFICATION NUMBER
I certify under penalties of perjury that a Taxpayer Identification Number
has not been issued to me, and either (a) I have mailed or delivered an
application to receive a Taxpayer Identification Number to the appropriate
Internal Revenue Service Center or Social Security Administration Officer or
(b) I intend to mail or deliver an application in the near future. I understand
that if I do not provide a Taxpayer Identification Number to the Depositary,
31% of all reportable payments made to me will be withheld, but will be
refunded if I provide a certified Taxpayer Identification Number within 60
days.
Signature__________________________________ Date___________________
The Information Agent for the Offer is:
[INNISFREE LOGO]
501 Madison Avenue
20th Floor
New York, New York 10022
Toll Free (888) 750-5833
Banks and Brokerage
Firms please call collect:
(212) 750-5833
The Dealer Manager for the Offer is:
[JEFFERIES & COMPANY, INC. LOGO]
11100 Santa Monica Boulevard
10th Floor
Los Angeles, California 90025
Toll Free (800) 933-6656
[JEFFERIES & COMPANY, INC. LOGO]
11100 Santa Monica Boulevard
10th Floor
Los Angeles, California
90025
Toll Free (800) 933-6656
Offer to Purchase for Cash
All Outstanding Shares of Common Stock
(Including the Associated Preferred Stock Purchase Rights)
of
GLOBAL MOTORSPORT GROUP, INC.
at
$18.00 NET PER SHARE
by
GOLDEN CYCLE, LLC
- --------------------------------------------------------------------------------
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY
TIME, ON MONDAY, MAY 4, 1998, UNLESS THE OFFER IS EXTENDED.
- --------------------------------------------------------------------------------
April 7, 1998
TO BROKERS, DEALERS, BANKS,
TRUST COMPANIES AND OTHER NOMINEES:
We have been engaged by Golden Cycle, LLC, a Pennsylvania limited liability
company (the "Purchaser"), to act as Dealer Manager in connection with the
Purchaser's offer to purchase all outstanding shares of Common Stock, par value
$0.001 per share (the "Shares"), of Global Motorsport Group, Inc., a Delaware
corporation (the "Company"), together with the associated preferred share
purchase rights (the "Rights") issued pursuant to the Rights Agreement, dated as
of November 13, 1996, between the Company and American Stock Transfer and Trust
Company, as Rights Agent, at $18 per Share (and associated Right), net to the
seller in cash, without interest thereon, upon the terms and subject to the
conditions set forth in the Purchaser's Offer to Purchase dated April 7, 1998
(the "Offer to Purchase") and in the related Letter of Transmittal (which,
together with any amendments or supplements thereto, collectively constitute the
"Offer"). Please furnish copies of the enclosed materials to those of your
clients for whom you hold Shares registered in your name or in the name of your
nominee.
Unless the Rights Condition (as defined in the Offer to Purchase) is
satisfied, stockholders will be required to tender one Right for each Share
tendered in order to effect a valid tender of Shares in accordance with the
procedures set forth in Section 2 of the Offer to Purchase. Unless the
Distribution Date (as defined in the Offer to Purchase) occurs, a tender of
Shares will also constitute a tender of the associated Rights.
Enclosed herewith are copies of the following documents:
1. Offer to Purchase dated April 7, 1998;
2. Letter of Transmittal to be used by stockholders of the Company in
accepting the Offer;
3. A printed form of letter that may be sent to your clients for whose
account you hold Shares or Rights in your name or in the name of a nominee,
with space provided for obtaining such clients' instructions with regard to
the Offer;
4. Notice of Guaranteed Delivery;
5. Guidelines for Certification of Taxpayer Identification Number on
Substitute Form W-9; and
6. Return envelope addressed to Dauphin Deposit Bank & Trust Company,
the Depositary.
<PAGE>
THE OFFER IS CONDITIONED UPON, AMONG OTHER THINGS, (1) THERE BEING VALIDLY
TENDERED AND NOT WITHDRAWN PRIOR TO THE EXPIRATION DATE (AS DEFINED IN THE OFFER
TO PURCHASE) THAT NUMBER OF SHARES THAT WOULD REPRESENT A MAJORITY OF ALL
OUTSTANDING SHARES ON A FULLY DILUTED BASIS ON THE DATE OF PURCHASE, (2) THE
RIGHTS HAVING BEEN REDEEMED BY THE BOARD OF DIRECTORS OF THE COMPANY OR THE
PURCHASER BEING SATISFIED, IN ITS SOLE DISCRETION, THAT THE RIGHTS HAVE BEEN
INVALIDATED OR ARE OTHERWISE INAPPLICABLE TO THE OFFER AND THE PROPOSED MERGER
(AS DEFINED IN THE OFFER TO PURCHASE), (3) THE ACQUISITION OF SHARES PURSUANT TO
THE OFFER AND THE PROPOSED MERGER HAVING BEEN APPROVED PURSUANT TO SECTION 203
OF THE DELAWARE GENERAL CORPORATION LAW ("SECTION 203") OR THE PURCHASER BEING
SATISFIED, IN ITS SOLE DISCRETION, THAT THE PROVISIONS OF SECTION 203 ARE
OTHERWISE INAPPLICABLE TO THE ACQUISITION OF SHARES PURSUANT TO THE OFFER AND
THE PROPOSED MERGER AND (4) THE PURCHASER HAVING OBTAINED SUFFICIENT FINANCING
TO ENABLE IT TO PURCHASE ALL SHARES OUTSTANDING ON A FULLY DILUTED BASIS, TO
REFINANCE CERTAIN INDEBTEDNESS OF THE COMPANY AND TO PAY RELATED COSTS AND
EXPENSES.
We urge you to contact your clients promptly. Please note that the Offer and
withdrawal rights will expire at 12:00 Midnight, New York City time, on Monday,
May 4, 1998, unless extended.
The Purchaser will not pay any fees or commissions to any broker or dealer
or other person (other than the Dealer Manager and the Information Agent as
described in the Offer to Purchase) in connection with the solicitation of
tenders of Shares and Rights pursuant to the Offer. You will be reimbursed upon
request for customary mailing and handling expenses incurred by you in
forwarding the enclosed offering materials to your customers.
Additional copies of the enclosed material may be obtained by contacting the
Information Agent or the Dealer Manager at their respective addresses and
telephone numbers set forth on the back cover of the enclosed Offer to Purchase.
Very truly yours,
JEFFERIES & COMPANY, INC.
NOTHING CONTAINED HEREIN OR IN THE ENCLOSED DOCUMENTS SHALL RENDER YOU OR
ANY OTHER PERSON THE AGENT OF THE PURCHASER, THE DEPOSITARY, THE INFORMATION
AGENT OR THE DEALER MANAGER OR AUTHORIZE YOU OR ANY OTHER PERSON TO GIVE ANY
INFORMATION OR MAKE ANY REPRESENTATION ON BEHALF OF ANY OF THEM WITH RESPECT TO
THE OFFER NOT CONTAINED IN THE OFFER TO PURCHASE OR THE LETTER OF TRANSMITTAL.
2
Offer to Purchase for Cash
All Outstanding Shares of Common Stock
(Including the Associated Preferred Stock Purchase Rights)
of
GLOBAL MOTORSPORT GROUP, INC.
at
$18 NET PER SHARE
by
GOLDEN CYCLE, LLC
- --------------------------------------------------------------------------------
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY
TIME, ON MONDAY, MAY 4, 1998, UNLESS THE OFFER IS EXTENDED.
- --------------------------------------------------------------------------------
TO OUR CLIENTS:
Enclosed for your consideration is an Offer to Purchase dated April 7, 1998
(the "Offer to Purchase") and the related Letter of Transmittal (which, together
with any amendments or supplements thereto, collectively constitute the "Offer")
relating to the Offer by Golden Cycle, LLC, a Pennsylvania limited liability
company (the "Purchaser"), to purchase for cash all outstanding shares of Common
Stock, par value $0.001 per share (the "Shares"), of Global Motorsport Group,
Inc., a Delaware corporation (the "Company"), together with the associated
preferred share purchase rights (the "Rights") issued pursuant to the Rights
Agreement dated as of November 13, 1996, between the Company and American Stock
Transfer and Trust Company, as Rights Agent. UNLESS THE RIGHTS CONDITION (AS
DEFINED IN THE OFFER TO PURCHASE) IS SATISFIED, STOCKHOLDERS WILL BE REQUIRED TO
TENDER ONE RIGHT FOR EACH SHARE TENDERED IN ORDER TO EFFECT A VALID TENDER OF
SHARES IN ACCORDANCE WITH THE PROCEDURES SET FORTH IN SECTION 2 OF THE OFFER TO
PURCHASE. UNLESS THE DISTRIBUTION DATE (AS DEFINED IN THE OFFER TO PURCHASE)
OCCURS, A TENDER OF SHARES WILL ALSO CONSTITUTE A TENDER OF THE ASSOCIATED
RIGHTS.
We are the holder of record of Shares and Rights held by us for your
account. A TENDER OF SUCH SHARES AND RIGHTS 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 TO TENDER SHARES
OR RIGHTS HELD BY US FOR YOUR ACCOUNT.
We request instructions as to whether you wish to tender any or all of the
Shares and Rights held by us for your account, pursuant to the terms and
conditions set forth in the Offer.
Your attention is invited to the following:
1. The offer price is $18 per Share (and associated Right), net to the
seller in cash, without interest thereon, upon the terms and subject to the
conditions of the Offer.
2. The Offer is being made for all outstanding Shares and Rights.
3. THE OFFER AND WITHDRAWAL RIGHTS EXPIRE AT 12:00 MIDNIGHT, NEW YORK
CITY TIME, ON MONDAY, MAY 4, 1998, UNLESS THE OFFER IS EXTENDED BY THE
PURCHASER.
<PAGE>
4. The Offer is conditioned upon, among other things, (1) there being
validly tendered and not withdrawn prior to the Expiration Date (as defined
in the Offer to Purchase) that number of Shares that would represent a
majority of all outstanding Shares on a fully diluted basis on the date of
purchase, (2) the Rights having been redeemed by the Board of Directors of
the Company or the Purchaser being satisfied, in its sole discretion, that
the Rights have been invalidated or are otherwise inapplicable to the Offer
and the Proposed Merger (as defined in the Offer to Purchase), (3) the
acquisition of Shares pursuant to the Offer and the Proposed Merger having
been approved pursuant to Section 203 of the Delaware General Corporation
Law ("Section 203") or the Purchaser being satisfied, in its sole
discretion, that the provisions of Section 203 are otherwise inapplicable to
the acquisition of Shares pursuant to the Offer and the Proposed Merger and
(4) the Purchaser having obtained sufficient financing to enable it to
purchase all Shares outstanding on a fully diluted basis, to refinance
certain indebtedness of the Company and to pay related costs and expenses.
5. Any stock transfer taxes applicable to a sale of Shares or Rights to
the Purchaser will be borne by the Purchaser, except as otherwise provided
in Instruction 6 of the Letter of Transmittal.
Your instructions to us should be forwarded promptly to permit us to submit
a tender on your behalf prior to the expiration of the Offer.
If you wish to have us tender any or all of the Shares and Rights held by us
for your account, please so instruct us by completing, executing, detaching and
returning to us the instruction form on the detachable part hereof. An envelope
to return your instructions to us is enclosed. If you authorize the tender of
your Shares and Rights, all such Shares and Rights will be tendered unless
otherwise specified on the detachable part hereof. Your instructions should be
forwarded to us in ample time to permit us to submit a tender on your behalf
prior to the expiration of the Offer.
Payment for Shares accepted for payment pursuant to the Offer will in all
cases be made only after timely receipt by Dauphin Deposit Bank and Trust
Company (the "Depositary"), of (a) certificates for (or a timely Book-Entry
Confirmation (as defined in the Offer to Purchase) with respect to) such Shares
and, if the Distribution Date occurs, certificates for (or a timely Book-Entry
Confirmation, if available, with respect to) the associated Rights (unless the
Purchaser elects to make payment for such Shares pending receipt of the
certificates for, or a Book-Entry Confirmation with respect to, such Rights as
described in Section 2 of the Offer to Purchase), (b) a Letter of Transmittal
(or facsimile thereof), properly completed and duly executed, with any required
signature guarantees, or, in the case of a book-entry transfer effected pursuant
to the procedure set forth in Section 2 of the Offer to Purchase, an Agent's
Message, 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 Rights) or Book-Entry Confirmations with
respect to Shares (or Rights, if available) are actually received by the
Depositary. UNDER NO CIRCUMSTANCES WILL INTEREST BE PAID ON THE PURCHASE PRICE
FOR THE SHARES TO BE PAID BY THE PURCHASER, REGARDLESS OF ANY EXTENSION OF THE
OFFER OR ANY DELAY IN MAKING SUCH PAYMENT.
The Offer is not being made to, nor will tenders be accepted from, or on
behalf of, holders of Shares and Rights in any jurisdiction in which the making
or acceptance of the Offer would not be in compliance with the laws of such
jurisdiction.
2
<PAGE>
INSTRUCTIONS WITH RESPECT TO THE
OFFER TO PURCHASE FOR CASH
ALL OUTSTANDING SHARES OF COMMON STOCK
(INCLUDING THE ASSOCIATED PREFERRED SHARE PURCHASE RIGHTS)
OF
GLOBAL MOTORSPORT GROUP, INC.
The undersigned acknowledge(s) receipt of your letter, the Offer to Purchase
of Golden Cycle, LLC dated April 7, 1998 (the "Offer to Purchase") and the
related Letter of Transmittal relating to shares of Common Stock, par value
$.001 per share (the "Shares"), of Global Motorsport Group, Inc., a Delaware
corporation (the "Company"), together with the associated preferred share
purchase rights (the "Rights").
This will instruct you to tender the number of Shares and Rights indicated
below held by you for the account of the undersigned, on the terms and subject
to the conditions set forth in such Offer to Purchase and Letter of Transmittal.
- ------------------------------------ SIGN HERE
Number of Shares to be Tendered:*
___________________________ Shares
- ------------------------------------
------------------------------------------
- ------------------------------------
Number of Rights to be Tendered:* ------------------------------------------
SIGNATURE(S)
___________________________ Rights
- ------------------------------------
Dated: _______________________, 1998 __________________________________________
__________________________________________
(PLEASE PRINT NAME(S) AND ADDRESS(ES) HERE
- ------------------
* UNLESS THE RIGHTS CONDITION (AS DEFINED IN THE OFFER TO PURCHASE) IS
SATISFIED, STOCKHOLDERS WILL BE REQUIRED TO TENDER ONE RIGHT FOR EACH SHARE
TENDERED TO EFFECT A VALID TENDER OF SHARES. UNLESS THE DISTRIBUTION DATE (AS
DEFINED IN THE OFFER TO PURCHASE) OCCURS, A TENDER OF SHARES WILL ALSO
CONSTITUTE A TENDER OF THE ASSOCIATED RIGHTS. Unless otherwise indicated, it
will be assumed that all your Shares and Rights are to be tendered.
3
NOTICE OF GUARANTEED DELIVERY
for
TENDER OF SHARES OF COMMON STOCK
(Including the Associated Preferred Share Purchase Rights)
of
GLOBAL MOTORSPORT GROUP, INC.
As set forth in Section 2 of the Offer to Purchase (as defined below), 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 $0.001 per
share (the "Shares"), of Global Motorsport Group, Inc., a Delaware corporation
(the "Company"), and/or certificates for the associated preferred share purchase
rights (the "Rights") issued pursuant to the Rights Agreement dated as of
November 13, 1996, between the Company and American Stock Transfer and Trust
Company, as Rights Agent (the "Rights Agent"), are not immediately available
(including because certificates for Rights have not yet been distributed by the
Company or the Rights Agent) or if 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). This form may be delivered by hand to the Depositary or transmitted
by telegram, facsimile transmission or mail to the Depositary and must include a
guarantee by an Eligible Institution (as defined in the Offer to Purchase). See
Section 2 of the Offer to Purchase.
TO: DAUPHIN DEPOSIT BANK AND TRUST COMPANY, DEPOSITARY
(717) 255-2213
By Mail or Overnight Delivery:
213 Market Street
Harrisburg, Pennsylvania 17101
Attn: Corporate Trust Services
Mail Code: 001-01-02
By Facsimile Transmission:
(717) 231-2615
-------------------------------------
DELIVERY OF THIS INSTRUMENT TO AN ADDRESS, OR TRANSMISSION OF INSTRUCTIONS
VIA A FACSIMILE NUMBER, IN EITHER CASE OTHER THAN AS SET FORTH ABOVE, DOES NOT
CONSTITUTE A VALID DELIVERY.
This form 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.
<PAGE>
Ladies and Gentlemen:
The undersigned hereby tenders to Golden Cycle, LLC, a Pennsylvania limited
liability company (the "Purchaser"), upon the terms and subject to the
conditions set forth in the Purchaser's Offer to Purchase dated April 7, 1998
(the "Offer to Purchase") and the related Letter of Transmittal, receipt of
which is hereby acknowledged, the number of Shares and Rights (as such terms are
defined in the Offer to Purchase) set forth below, all pursuant to the
guaranteed delivery procedures set forth in Section 2 of the Offer to Purchase.
Name of Shares Name(s) of Record Holder(s):
-------------------------
Number of Rights
------------------------ --------------------------------------
PLEASE PRINT
Certificate Nos. (if available): --------------------------------------
- ---------------------------------------- --------------------------------------
Address(es)
- ---------------------------------------- ---------------------------
--------------------------------------
ZIP CODE
--------------------------------------
AREA CODE AND TELEPHONE NO.
(Check box if Shares or Rights will be tendered by book-entry transfer) / /
Account Number at DTC
----------------------------
Dated , 1998
-------------------
GUARANTEE
(NOT TO BE USED FOR SIGNATURE GUARANTEE)
The undersigned, a participant in the Security Transfer Agents Medallion
Program, the New York Stock Exchange Medallion Signature Guarantee Program or
the Stock Exchange Medallion Program, hereby guarantees to deliver to the
Depositary either the certificates representing the Shares and/or Rights
tendered hereby, in proper form for transfer, or a Book-Entry Confirmation with
respect to such Shares and/or Rights, in any such case together with a properly
completed and duly executed Letter of Transmittal (or facsimile thereof), with
any required signature guarantees, or an Agent's Message, and any other required
documents (a) in the case of Shares, within three trading days after the date
hereof and (b) in the case of Rights, within a period ending on the later of (i)
three trading days after the date hereof or (ii) three business days after the
date certificates for Rights are distributed to stockholders by the Company or
the Rights Agent.
The Eligible Institution that completes this form must communicate the
guarantee to the Depositary and must deliver the Letter of Transmittal and
certificates for Shares and/or Rights to the Depositary within the time period
shown herein. Failure to do so could result in a financial loss to such Eligible
Institution. All terms used herein have the meanings set forth in the Offer to
Purchase.
Name of Firm:
-------------------------------------------------------------------
AUTHORIZED SIGNATURE
Address: Name:
-------------------------------- -----------------------------------
PLEASE PRINT
Title:
- ---------------------------------------- ---------------------------------
ZIP CODE
Area Code and
Tel No.: Dated:
-------------------------------- ---------------------------------
NOTE: DO NOT SEND CERTIFICATES FOR SHARES AND/OR RIGHTS WITH THIS
NOTICE; CERTIFICATES FOR SHARES AND/OR RIGHTS SHOULD BE SENT WITH
YOUR LETTER OF TRANSMITTAL.
GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION
NUMBER ON SUBSTITUTE FORM W-9
GUIDELINES FOR DETERMINING THE PROPER IDENTIFICATION NUMBER TO GIVE THE
PAYOR.--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 payor.
- --------------------------------------------------------------------------------
GIVE THE
SOCIAL SECURITY
FOR THIS TYPE OF ACCOUNT: NUMBER OF--
- --------------------------------------------------------------------------------
1. An individual's account The individual
2. Two or more individuals (joint The actual owner of the account or,
account) if combined funds, the first
individual on the account(1)
3. Custodian account of a minor (Uniform The minor(2)
Gift to Minors Act)
4. a. The usual revocable savings trust The grantor-trustee(1)
account (grantor is also trustee)
b. So-called trust account that is The actual owner(1)
not a legal or valid trust under
State law
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
GIVE THE EMPLOYER
IDENTIFICATION
FOR THIS TYPE OF ACCOUNT: NUMBER OF--
- --------------------------------------------------------------------------------
5. Sole proprietorship account The owner(3)
6. A valid trust, estate or pension The legal entity (Do not furnish the
trust identifying number of the personal
representative or trustee unless the
legal entity itself is not designated
in the account title.)(4)
7. Corporate account The corporation
8. Religious, charitable or educational The organization
organization account
9. Partnership account The partnership
10. Association, club or other tax-exempt The organization
organization
11. A broker or registered nominee The broker or nominee
12. Account with the Department of The public entity
Agriculture in the name of a public
entity (such as a State or local
government, school district, or
prison) that receives agricultural
program payments
- --------------------------------------------------------------------------------
(1) List first and circle the name of the person whose number you furnish. If
only one person on a joint account has a SSN, that person's number must be
furnished.
(2) Circle the minor's name and furnish the minor's social security number.
(3) Show the name of the owner, but you may also enter your business or "doing
business as" name. You may use either your SSN or EIN (if you have one).
(4) 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 ON 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 Card, or Form SS-4,
Application for Employer Identification Number, at the local office of the
Social Security Administration or the Internal Revenue Service (the "IRS") and
apply for a number.
PAYEES EXEMPT FROM BACKUP WITHHOLDING
Payees specifically exempted from backup withholding on ALL payments include the
following:
o An organization exempt from tax under section 501(a) of the Internal Revenue
Code of 1986, as amended (the "Code"), or an individual retirement plan or a
custodial account under section 403(b)(7) of the Code, if the account
satisfies the requirements of section 401(f)(2) of the Code.
o The United States or any agency or instrumentality thereof.
o A State, the District of Columbia, a possession of the United States or any
subdivision or instrumentality thereof.
o A foreign government, a political subdivision of a foreign government, or any
agency or instrumentality thereof.
o An international organization or any agency or instrumentality thereof.
Other Payees that may be exempt from backup withholding include:
o A corporation.
o A financial institution.
o A registered dealer in securities or commodities registered in the United
States, the District of Columbia, or a possession of the United States.
o A real estate investment trust.
o A common trust fund operated by a bank under section 584(a) of the Code.
o An exempt charitable remainder trust, or a non-exempt trust described in
section 4947(a)(1) of the Code.
o An entity registered at all times under the Investment Company Act of 1940, as
amended.
o A foreign central bank of issue.
o A futures commission merchant registered with the Commodity Futures Trading
Commission.
o A middleman known in the investment community as a nominee.
Payments of dividends and patronage dividends not generally subject to backup
withholding include the following:
o Payments to nonresident aliens subject to withholding under section 1441 of
the Code.
o Payments to partnerships not engaged in a trade or business in the United
States and which have at least one nonresident alien partner.
o Payments of patronage dividends where the amount received is not paid in
money.
o Payments made by certain foreign organizations.
o Section 404(k) payments made by an employee stock option plan.
Payments of interest not generally subject to backup withholding include the
following:
o 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 payor's trade or business and you have not
provided your correct taxpayer identification number to the payor.
o Payments of tax-exempt interest (including exempt interest dividends under
section 852 of the Code).
o Payments described in section 6049(b)(5) of the Code to nonresident aliens.
o Payments on tax-free covenant bonds under section 1451 of the Code.
o Payments made by certain foreign organizations.
o Mortgage interest paid to you.
Exempt payees described above should file Form W-9 to avoid possible erroneous
backup withholding. FILE THIS FORM WITH THE PAYOR, FURNISH YOUR TAXPAYER
IDENTIFICATION NUMBER IN PART I, WRITE "EXEMPT" IN PART II AND RETURN IT TO THE
PAYOR. SIGN AND DATE THE FORM IN PART II.
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 the regulations under sections 6041, 6041A(a),
6045 and 6050A of the Code.
PRIVACY ACT NOTICE.--Section 6109 of the Code requires most recipients of
dividend, interest, or other payments to give taxpayer identification numbers to
payors who must report the payments to IRS. The IRS uses the numbers for
identification purposes. Payors must be given the numbers whether or not
recipients are required to file tax returns. Payors 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 payor. Certain penalties may
also apply.
PENALTIES
(1) PENALTY FOR FAILURE TO FURNISH TAXPAYER IDENTIFICATION NUMBER.--If you fail
to furnish your correct taxpayer identification number to a payor, you are
subject 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
certifications or affirmations may subject you to criminal penalties including
fines and/or imprisonment.
(4) FAILURE TO REPORT CERTAIN DIVIDEND AND INTEREST PAYMENTS.--If you fail to
include any portion of an includible payment for interest, dividends or
patronage dividends in gross income and such failure is due to negligence, a
penalty of 20% is imposed on any portion of any underpayment attributable to the
failure.
FOR ADDITIONAL INFORMATION CONTACT YOUR TAX CONSULTANT OR THE INTERNAL REVENUE
SERVICE.
[INNISFREE LOGO]
NEWS RELEASE FOR IMMEDIATE RELEASE
For further information, call:
Alan Miller
Innisfree M&A Incorporated
(212) 750-5831
GOLDEN CYCLE ANNOUNCES OFFER TO ACQUIRE
GLOBAL MOTORSPORT GROUP FOR $18 PER SHARE IN CASH
WYNNEWOOD, PA, April 16, 1998 -- Golden Cycle, LLC today announced that it
expects to commence tomorrow a cash tender offer for all of the outstanding
shares and preferred share purchase rights of Global Motorsport Group, Inc.
(NASDAQ: CSTM) at a price of $18 per common share (and associated right).
The terms and conditions of the offer will be set forth in offering documents
expected to be filed tomorrow with the Securities and Exchange Commission. This
filing will include conditions relating to the acquisition of a majority of all
outstanding shares of Global Motorsport common stock on a fully diluted basis.
The filing also includes conditions related to the elimination of Global's
"poison pill".
Alexander Grass, President of Golden Cycle, said "I am disappointed that Global
Motorsport refuses to meet with us to negotiate the terms of a transaction. The
actions of Global's directors demonstrate that they are more interested in
preventing stockholders from having a fair opportunity to consider and respond
to our offer than in maximizing value for stockholders. We therefore believe it
is now necessary to commence the tender offer and, as soon as possible, begin
our consent solicitation."
On March 23rd, Golden Cycle delivered a letter to Mr. Piazza advising him of
Golden Cycle's interest in acquiring the company for a cash purchase price of
$18 per share and filed with the Securities and Exchange Commission announcing
its acquisition of approximately 10.4% of the outstanding Global Motorsport
Group's shares. On March 25th, Golden Cycle, LLC, announced that it had filed
preliminary consent solicitation materials with the SEC in connection with its
proposed acquisition of Global Motorsport Group, Inc. Golden Cycle also sent a
letter to the company demanding the right, under Delaware law, to inspect
certain books and records of the company.
Golden Cycle, LLC was formed by Alex Grass and Roger Grass. Alex Grass, who
founded Rite Aid Corporation and was Chairman of the Board, President and Chief
Executive Officer until March 1995, now serves as a director and Chairman of
Rite Aid's Executive Committee. Alex Grass is also a director of Hasbro, Inc.
and the father of Roger Grass. Roger Grass is Chairman of the Board of Directors
of Biker's Depot, Inc., a company engaged in the sale of aftermarket parts and
accessories for Harley-Davidson motorcycles.
501 Madison Avenue, 20th Floor, New York, NY 10022
212-750-5833 (tel) 212-750-5799 (fax)
This announcement is neither an offer to purchase nor a solicitation of an offer
to sell Shares or Rights. The Offer is made solely by the Offer to Purchase
dated April 7, 1998 and the related Letter of Transmittal, and is not being made
to (nor will tenders be accepted from or on behalf of) holders of Shares or
Rights in any jurisdiction in which the making of the Offer or the acceptance
thereof would not be in compliance with the laws of such jurisdiction. In any
jurisdictions where securities, blue sky or other laws require the Offer to be
made by a licensed broker or dealer, the Offer is being made on behalf of the
Purchaser by Jefferies & Company, Inc. ("Jefferies") or one or more registered
brokers or dealers licensed under the laws of such jurisdiction.
Notice of Offer to Purchase for Cash
All Outstanding Shares of Common Stock
(Including the Associated Preferred Share Purchase Rights)
of
Global Motorsport Group, Inc.
at
$18 Net Per Share
by
Golden Cycle, LLC
Golden Cycle, LLC, a Pennsylvania limited liability company
(the "Purchaser"), is offering to purchase all outstanding shares of Common
Stock, par value $.001 per share (the "Shares"), of Global Motorsport Group,
Inc., a Delaware corporation (the "Company"), together with the associated
preferred share purchase rights (the "Rights") issued pursuant to the Rights
Agreement dated as of November 13, 1996 (the "Rights Agreement"), between the
Company and American Stock Transfer and Trust Company, as Rights Agent, at a
price of $18 per Share (and associated Right), 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 April 7, 1998 (the "Offer to Purchase") and in
the related Letter of Transmittal (which, together with any amendments or
supplements thereto, collectively constitute the "Offer"). Unless the context
otherwise requires, all references herein to Shares shall include the Rights.
UNLESS THE RIGHTS ARE REDEEMED OR THE PURCHASER IS SATISFIED,
IN ITS SOLE DISCRETION, THAT THE RIGHTS HAVE BEEN INVALIDATED OR ARE OTHERWISE
INAPPLICABLE TO THE OFFER AND THE PROPOSED MERGER (AS DEFINED IN THE OFFER TO
PURCHASE), STOCKHOLDERS ARE REQUIRED TO TENDER ONE RIGHT FOR EACH SHARE TENDERED
IN ORDER TO EFFECT A VALID TENDER OF SHARES IN ACCORDANCE WITH THE PROCEDURES
SET FORTH IN SECTION 2 OF THE OFFER TO PURCHASE. UNLESS THE DISTRIBUTION DATE
(AS DEFINED IN THE OFFER TO PURCHASE) OCCURS, A TENDER OF SHARES WILL ALSO
CONSTITUTE A TENDER OF THE ASSOCIATED RIGHTS.
The purpose of the Offer is to enable the Purchaser to acquire
control of, and the entire equity interest in, the Company. The Offer, as the
first step in the acquisition of the Company, is intended to facilitate the
acquisition of all the Shares.
<PAGE>
- -------------------------------------------------------------------------------
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY
TIME, ON MONDAY, MAY 4, 1998, 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 DATE (AS
DEFINED IN THE OFFER TO PURCHASE) THAT NUMBER OF SHARES THAT WOULD REPRESENT A
MAJORITY OF ALL OUTSTANDING SHARES ON A FULLY DILUTED BASIS ON THE DATE OF
PURCHASE, (II) THE RIGHTS HAVING BEEN REDEEMED BY THE BOARD OF DIRECTORS OF THE
COMPANY OR THE PURCHASER BEING SATISFIED, IN ITS SOLE DISCRETION, THAT THE
RIGHTS HAVE BEEN INVALIDATED OR ARE OTHERWISE INAPPLICABLE TO THE OFFER AND THE
PROPOSED MERGER, (III) THE ACQUISITION OF SHARES PURSUANT TO THE OFFER AND THE
PROPOSED MERGER HAVING BEEN APPROVED PURSUANT TO SECTION 203 OF THE DELAWARE
GENERAL CORPORATION LAW ("SECTION 203") OR THE PURCHASER BEING SATISFIED, IN ITS
SOLE DISCRETION, THAT THE PROVISIONS OF SECTION 203 ARE OTHERWISE INAPPLICABLE
TO THE ACQUISITION OF SHARES PURSUANT TO THE OFFER AND THE PROPOSED MERGER AND
(IV) THE PURCHASER HAVING OBTAINED SUFFICIENT FINANCING TO ENABLE IT TO PURCHASE
ALL SHARES OUTSTANDING ON A FULLY DILUTED BASIS, TO REFINANCE CERTAIN
INDEBTEDNESS AND TO PAY RELATED COSTS AND EXPENSES.
For purposes of the Offer, the Purchaser will be deemed to
have accepted for payment, and thereby purchased, Shares properly tendered to
the Purchaser and not withdrawn as, if and when the Purchaser gives oral or
written notice to Dauphin Deposit Bank and Trust Company (the "Depositary"), of
the Purchaser's acceptance for payment of such Shares. Upon the terms and
subject to the conditions of the Offer, payment for Shares accepted for payment
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 payment from the Purchaser and transmitting payment to
tendering stockholders. In all cases, payment for Shares accepted for payment
pursuant to the Offer will be made only after timely receipt by the Depositary
of (i) certificates for (or a timely Book-Entry Confirmation (as defined in the
Offer to Purchase) with respect to) such Shares and, if the Distribution Date
occurs, certificates for (or a timely Book-Entry Confirmation with respect to)
the associated Rights (unless the Purchaser elects to make payment for such
Shares pending receipt of the certificates for, or a Book-Entry Confirmation
with respect to, such Rights), (ii) a Letter of Transmittal (or facsimile
thereof), properly completed and duly executed, with any required signature
guarantees, or, in the case of a book-entry transfer, an Agent's Message (as
defined in the Offer to Purchase), 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 the Purchaser, regardless of any
extension of the Offer or any delay in making such payment.
<PAGE>
Except as otherwise provided below, tenders of Shares and
Rights are irrevocable. Shares and Rights tendered pursuant to the Offer may be
withdrawn at any time prior to the Expiration Date and, unless theretofore
accepted for payment and paid for by the Purchaser pursuant to the Offer, may
also be withdrawn at any time after June 5, 1998. Shares or Rights may not be
withdrawn unless the associated Rights or Shares, as the case may be, are also
withdrawn. A withdrawal of Shares or Rights will also constitute a withdrawal of
the associated Rights or Shares, as the case may be. For a withdrawal to be
effective, a written, telegraphic or facsimile transmission notice of withdrawal
must be timely received by the Depositary at one of its addresses as set forth
in the Offer to Purchase and must specify the name of the person having tendered
the Shares and Rights to be withdrawn, the number of Shares and Rights to be
withdrawn and the name of the registered holder of the Shares and Rights to be
withdrawn, if different from the name of the person who tendered the Shares and
Rights. If certificates for Shares or Rights 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, unless such Shares or Rights have been tendered by an
Eligible Institution (as defined in Section 2 of the Offer to Purchase), the
signatures on the notice of withdrawal must be guaranteed by an Eligible
Institution. If Shares or Rights have been delivered pursuant to the procedure
for book-entry transfer as set forth in Section 2 of the Offer to Purchase, any
notice of withdrawal must also specify the name and number of the account at The
Depository Trust Company ("DTC") to be credited with the withdrawn Shares or
Rights and otherwise comply with DTC's procedures. Withdrawals of tenders of
Shares and Rights may not be rescinded, and any Shares and Rights properly
withdrawn will thereafter be deemed not validly tendered for any purposes of the
Offer. However, withdrawn Shares and Rights may be retendered by again following
one of the procedures described in Section 2 of the Offer to Purchase at any
time prior to the Expiration Date. All questions as to the form and validity
(including time of receipt) of notices of withdrawal will be determined by the
Purchaser in its sole discretion, which determination will be final and binding.
The Purchaser expressly reserves the right, in its sole
discretion, at any time or from time to time, to extend the period of time
during which the Offer is open by giving oral or written notice of such
extension to the Depositary.
The information required to be disclosed by paragraph
(e)(1)(vii) of Rule 14d-6 under the Securities Exchange Act of 1934, as amended,
is contained in the Offer to Purchase and is incorporated herein by reference.
Requests are being made to the Company for the use of the
Company's stockholder lists and security position listings for the purpose of
disseminating the Offer to holders of Shares. The Offer to Purchase, the related
Letter of Transmittal and other relevant materials will be mailed to record
holders of Shares, and will be furnished to brokers, dealers, banks, trust
companies and similar persons whose names, or the names of whose nominees,
appear on the stockholder lists, or, if applicable, who are listed as
participants in a clearing agency's security position listing, for subsequent
transmittal to beneficial owners of Shares.
THE OFFER TO PURCHASE AND THE LETTER OF TRANSMITTAL CONTAIN
IMPORTANT INFORMATION THAT SHOULD BE READ BEFORE ANY DECISION IS MADE WITH
RESPECT TO THE OFFER.
Questions and requests for assistance or for copies of the
Offer to Purchase, the Letter of Transmittal and other tender offer documents
may be directed to the Information Agent or the Dealer Manager, as set forth
below, and copies will be furnished at the Purchaser's expense. No fees or
commissions will be payable to brokers, dealers or other persons other than the
Dealer Manager and the Information Agent for soliciting tenders of Shares and
Rights pursuant to the Offer.
The Information Agent for the Offer is:
[INNISFREE LOGO]
501 Madison Avenue
20th Floor
New York, NY 10022
Toll Free (888) 750-5834
Banks and Brokerage
Firms please call collect:
(212) 750-5833
<PAGE>
The Dealer Manager for the Offer is:
[JEFFERIES & COMPANY, INC. LOGO]
11100 Santa Monica Boulevard
10th Floor
Los Angeles, CA 90025
Toll Free (800) 933-6656
April 7, 1998
[JEFFERIES & COMPANY, INC. LOGO]
11100 Santa Monica Boulevard
10th Floor
Los Angeles, California 90025
Telephone (310) 575-5200
(800) 933-6656
Fax (310) 575-5165
CORPORATE FINANCE
March 6, 1998
Mr. Alexander Grass
President and Secretary
Mr. Roger Grass
Vice President and Treasurer
GLOBAL CYCLE, LLC
380 North Highland Avenue
Merion Station, PA 19066
1. Retention. This letter agreement (the "Agreement") confirms that Global
Cycle, LLC (the "Sponsor") and its affiliates which may include a to be formed
or to be acquired corporate entity (the "Issuer") controlled by the Sponsor have
engaged Jefferies & Company, Inc. ("Jefferies" or the "Financial Advisor") to
act as exclusive financial advisor and sole placement agent or underwriter to
the Sponsor and the Issuer in connection with any financing, investment or
acquisition activities that the Sponsor and the Issuer may undertake during the
next twelve months (each such transaction, a "Transaction") with respect to
Global Motorsport Group, Inc. (the "Company"). During the term of the Agreement,
the Sponsor and the Issuer agree that they will not, directly or indirectly,
offer any debt or equity securities (the "Securities") for sale to, or solicit
any offer to purchase any of the same from, or otherwise contact, approach or
negotiate with respect thereto with any person or persons, other than through
Jefferies as agent. In addition, for a period of one year from the date of this
Agreement (or two years from the date of purchase of the Company), Jefferies
shall have the right, but shall not have the obligation, to act as the exclusive
placement agent or underwriter in the event the Issuer decides to issue
Securities in a capital raising transaction in either a private placement or a
public sale of securities. Notwithstanding the foregoing, Jefferies acknowledges
and agrees that in the event it would be necessary or desirable to engage a
co-underwriter or co-placement agent in order to effectuate a successful
Transaction, Jefferies will agree to reasonable terms in connection with such an
engagement. In addition, Jefferies acknowledges that the Sponsor and the Issuer
have relationships with certain banks (the "Relationship Banks") which may
provide financing in connection with a Transaction and agrees that the Sponsor
and the Issuer shall have the right to seek financing from such banks.
In connection with our activities hereunder, we propose to undertake certain
services on your behalf, to the extent requested by you, which shall consist of
the following: (i) assisting you in evaluating the Company, its operations, its
historical performance and its future prospects; (ii) advising on a proposed
purchase price and form of consideration; (iii) assisting you in structuring the
Transaction; and (iv) negotiating the financial aspects of any Transaction under
your guidance. In addition, we will act as exclusive dealer manager for the
Sponsor and the Issuer
<PAGE>
in any tender or exchange offer relating to a Transaction. The specific terms
and conditions of such engagement as dealer manager will be further set forth in
a separate agreement which shall contain normal and customary provisions for
such an agreement. Jefferies will also assist the Sponsor and the Issuer in
arranging the financing required to consummate a Transaction and upon the
request of the Sponsor and the Issuer will provide the Sponsor with a highly
confident letter to facilitate any Transaction.
2. Information on the Company. In connection with our activities hereunder
you will furnish us and our counsel upon reasonable request with all material
and information available to you regarding the business and financial condition
of the Sponsor or its affiliates including the Issuer (all such information so
furnished being the "Information") and with a private placement memorandum with
respect to the Issuer and the Securities (such memorandum authorized by the
Issuer, including any exhibits or supplements thereto, to the extent expressly
authorized by the Issuer being the "Offering Materials"). The Sponsor and the
Issuer recognize and confirm that Jefferies: (a) will use and rely primarily on
the Information, the Offering Materials and on information available from public
sources in performing the services contemplated by this Agreement without having
independently verified the same; (b) is authorized as the Sponsor's and Issuer's
exclusive financial advisor and sole placement agent, to transmit to any
prospective purchaser of the Securities, subject to appropriate confidentiality
agreements, a copy or copies of the Offering Materials, forms of purchase
agreements and any other legal documentation supplied to the Financial Advisor
expressly for transmission to any prospective purchaser by or on behalf of the
Issuer or by any of the Issuer's officers, directors, employees, representatives
or agents, in connection with the performance of Jefferies' services hereunder
or any transaction contemplated hereby; (c) does not assume responsibility for
the accuracy or completeness of the Information, the Offering Materials and such
other information; and (d) retains the right to continue to perform due
diligence on the Issuer and the Sponsor during the course of the engagement.
Jefferies agrees to keep the Information confidential so long as it is and
remains non-public, unless disclosure is required by law or requested by any
government, regulatory or self-regulatory agency or body, and Jefferies will not
make use thereof, except in connection with its services hereunder for the
Sponsor and/or Issuer. In the event that Jefferies becomes compelled to disclose
to any non-public person any Information, Jefferies shall provide the Sponsor
and the Issuer with prompt prior written notice of such requirement so that the
Sponsor and the Issuer may seek a protective order or other appropriate remedy
or waive compliance with the terms of this Agreement. In the event that such
protective order or other remedy is not obtained, or that the Sponsor or the
Issuer waive compliance with the terms hereof, Jefferies agrees to furnish only
that portion of the Information which Jefferies is advised by counsel is legally
required and to exercise its reasonable efforts to obtain assurance that
confidential treatment will be accorded to such Information.
3. Use of Name. The Sponsor and Issuer agree that any reference to the
Financial Advisor in any release, communication, or material distributed to
prospective purchasers of the Securities, is subject to the Financial Advisor's
prior written approval. If the Financial Advisor resigns prior to the
dissemination of any such release, communication or material, except as
<PAGE>
required by law, no reference shall be made therein to the Financial Advisor,
despite any prior written approval that may have been given therefor.
4. Use of Advice. No statements made or advice rendered by the Financial
Advisor in connection with the services performed by the Financial Advisor
pursuant to this Agreement will be quoted by, nor will any such statements or
advice be referred to, in any report, document, release or other communication,
whether written or oral, prepared, issued or transmitted by, the Sponsor or
Issuer or any person or corporation controlling, controlled by or under common
control with, the Sponsor or Issuer or any director, officer, employee, agent or
representative of any such person, without the prior written authorization of
the Financial Advisor, except to the extent required by law (in which case the
appropriate party shall so advise the Financial Advisor in writing prior to such
use and shall consult with the Financial Advisor with respect to the form and
timing of disclosure).
5. Compensation. In payment for services rendered and to be rendered
hereunder by Jefferies, the Sponsor and Issuer agree to pay Jefferies as
follows:
(a) In consideration of the services rendered by Jefferies hereunder as
exclusive financial advisor, the Sponsor and Issuer agree to pay Jefferies a
cash fee in the amount of $50,000 upon execution of this Agreement and a monthly
amount to be mutually agreed upon as a retainer (collectively the "Retainer")
during the Term (as hereinafter defined) of the Agreement. In the event that the
Sponsor or Issuer complete a Transaction involving the acquisition of a
controlling stake in the Company, the Sponsor and Issuer agree to pay Jefferies
a cash fee of $1.2 million (the "M & A Fee"). For purposes of this Agreement, a
Transaction involving the acquisition of a controlling stake in the Company
shall be deemed to have occurred upon the earliest of any of the following
events: (i) the acquisition by the Sponsor and the Issuer of a majority of the
outstanding common stock of the Company on a fully diluted basis; (ii) a merger
or consolidation of the Company with the Sponsor or the Issuer; (iii) the
acquisition by the Sponsor or the Issuer of assets of the Company representing
the majority of the Company's book value; or (iv) control by the Sponsor or the
Issuer of the majority of the seats on the Company's Board of Directors. Any
payment made pursuant to the Retainer, and not already credited against this or
any other payment required to be made pursuant to this Section 5 will be
credited against the payment of the M & A Fee.
(b) In consideration of the services rendered by Jefferies hereunder as sole
placement agent of any debt securities, upon consummation of the sale of the
debt Securities, the Sponsor and Issuer agree to pay Jefferies in cash a fee in
an amount that is equal to 3.0% of the gross proceeds raised in connection with
the issuance of debt securities, which pay interest in cash, and an amount that
is equal to an agreed upon percentage of the gross proceeds raised in connection
with the issuance of debt securities, which do not pay interest in cash (the
"Debt Placement Fee"). Any payment made pursuant to the Retainer, and not
already credited against this or any other payment required to be made pursuant
to this Section 5 will be credited against the payment of the Debt Placement
Fee.
(c) In consideration of the services rendered by Jefferies hereunder as
financial advisor in connection with the Sponsor's or Issuer's execution of a
bank loan agreement, the Sponsor and Issuer agree to pay to Jefferies in cash a
placement fee in the amount of 1.0% of the
<PAGE>
aggregate amount of borrowings available to the Sponsor and Issuer under any
such bank loan agreement ("Bank Fee") arranged by Jefferies, excluding any such
bank loan agreement arranged by the Sponsor or the Issuer with a Relationship
Bank. The Bank Fee is in addition to any customary lender fees associated with
the bank loan. Any payment made pursuant to the Retainer, and not already
credited against this or any other payment required to be made pursuant to this
Section 5 will be credited against the payment of the Bank Fee.
(d) In consideration of the services rendered by Jefferies hereunder as sole
placement agent or underwriter of equity Securities, upon consummation of the
sale of the equity Securities, the Sponsor and Issuer agree to pay Jefferies in
cash a fee in an amount that is equal to an agreed upon percentage of the gross
proceeds from the issuance of the preferred stock and 5.0% of the gross proceeds
from the issuance of common stock ("Equity Fee"). Any payment made pursuant to
the Retainer, and not already credited against this or any other payment
required to be made pursuant to this Section 5 will be credited against the
payment of the Equity Fee.
(e) In consideration of the services rendered by Jefferies hereunder as
financial advisor in connection with the Sponsor or Issuer's securing a bridge
loan, the Sponsor and Issuer agree to pay Jefferies in cash a fee in an amount
that is equal to 1.0% of the aggregate principal amount of the bridge loan
("Bridge Fee") arranged by Jefferies, excluding any bridge loan arranged by the
Sponsor or the Issuer with a Relationship Bank. The Bridge Fee is in addition to
any customary lender fees associated with the bridge loan. Any payment made
pursuant to the Retainer, and not already credited against this or any other
payment required to be made pursuant to this Section 5 will be credited against
the payment of the Bridge Fee.
(f) In consideration of Jefferies issuing a highly confident letter to
facilitate any Transaction, the Sponsor and Issuer agree to pay Jefferies a fee
to be agreed upon at such time that the highly confident letter is sent.
(g) In addition to the fees referred to above, the Sponsor and the Issuer
shall promptly pay to Jefferies a fee equal to 15% of the Profit (as defined
below) received by the Sponsor and the Issuer (whether realized or unrealized)
if (i) within twelve months after the date hereof the Sponsor, the Issuer or any
affiliate sell to any person any securities of the Company which they own on the
date hereof or which the Sponsor, the Issuer or any affiliate acquired prior to
the termination of this Agreement or (ii) after twelve months from the date
hereof the Sponsor and the Issuer have not consummated a purchase of the Company
and the Sponsor, the Issuer or any affiliate have unrealized Profit in any
security of the Company which they own on the date hereof or which the Sponsor,
the Issuer or any affiliate acquired prior to the termination of this Agreement.
For the purposes thereof, "Profit" is defined as the amount (whether realized or
unrealized) by which the consideration received or the value of the securities
owned by the Sponsor, the Issuer or any affiliate exceeds the cost of acquiring
such securities including interest expense incurred in carrying the securities.
In the case of unrealized amounts, the value of the securities shall be equal to
the number of securities multiplied by the average closing price of the
securities over the twenty preceding trading days to the date thereof.
(h) In addition to the compensation to be paid to Jefferies as provided in
Section 5(a), 5(b), 5(c), 5(d), 5(e), 5(f) and 5(g) hereof, without regard to
whether a Transaction is consummated or this Agreement is terminated, the
Sponsor shall pay to, or on behalf of,
<PAGE>
Jefferies, promptly as billed, all fees, disbursements and out-of-pocket travel,
lodging and miscellaneous expenses (word processing charges, messenger and
duplicating services, facsimile expenses and other customary expenditures), up
to $25,000 incurred by Jefferies in connection with its services to be rendered
hereunder and, without limitation, all the fees and disbursements of Jefferies'
counsel in connection with its services to be rendered hereunder.
(i) Jefferies may resign at any time and the Sponsor may terminate
Jefferies' services at any time, each by giving notice to the other. If
Jefferies resigns or the Sponsor terminates Jefferies' services for any reason,
Jefferies and its counsel shall be entitled to receive all of the amounts due
pursuant to Sections 5(a), 5(b), 5(c), 5(d), 5(e), 5(f), 5(g) and 5(h) hereof up
to and including the effective date of such termination or resignation, as the
case may be. Jefferies hereby represents to the Sponsor that if Jefferies makes
a good faith determination that it is unable to assist the Sponsor and the
Issuer in effecting the Transaction, Jefferies will immediately resign as the
Sponsor and the Issuer's Financial Advisor. If Jefferies' services hereunder are
terminated by the Sponsor or the Issuer, and the Sponsor or the Issuer completes
a Transaction or any similar transaction within twelve months of Jefferies'
being terminated, then the Sponsor and the Issuer shall pay Jefferies within
five (5) days of the closing of such transaction in cash the fees as outlined in
Section 5(a), 5(b), 5(c), 5(d), 5(e), 5(f), and 5(g) as applicable.
(j) Except as otherwise provided in this Section 5, no fee paid or payable
to Jefferies or any of its affiliates shall be credited against any other fee
paid or payable to Jefferies or any of its affiliates.
6. Representations and Warranties. The Sponsor represents and warrants to
Jefferies that (a) this Agreement has been duly authorized, executed and
delivered by the Sponsor; and, assuming the due execution by the Financial
Advisor, constitutes a legal, valid and binding agreement of the Sponsor,
enforceable against the Sponsor in accordance with its terms, (b) the Offering
Materials will not, when delivered nor at the Closing of the sale of any
securities, contain any untrue statement of a material fact or omit to state a
material fact necessary to make the statements therein in light of the
circumstances under which they were made not misleading and (c) the Sponsor will
arrange for the Issuer to execute this Agreement at such time as the Issuer has
been formed or otherwise identified. The Sponsor shall advise the Financial
Advisor promptly of the occurrence of any event or any other change prior to the
closing which results in the Information or the Offering Materials containing
any untrue statement of a material fact or omitting to state any material fact
necessary to make the statements contained therein, in light of the
circumstances under which they were made, not misleading.
7. Indemnity. In partial consideration of the services to be rendered
hereunder the Sponsor and the Issuer shall indemnify Jefferies and certain other
indemnified persons in accordance with Schedule A attached hereto.
8. Conditions of Placement. It is understood that the execution of this
Agreement shall not be deemed or construed as obligating the Financial Advisor
to purchase any securities and there is no obligation on the part of the
Financial Advisor to place any securities. The Financial Advisor's services to
be performed hereunder are subject to certain conditions, including, among
others, (i) approval of Jefferies' Underwriting Assistance Committee, (ii)
<PAGE>
satisfactory completion of due diligence on the Sponsor and Issuer by the
Financial Advisor, (iii) the form and terms of any securities being mutually
acceptable to the Sponsor, the Issuer, the Financial Advisor and prospective
purchasers of any securities, (iv) market conditions, and (v) no adverse change
in the condition of the Issuer.
9. Underwriting Agreement. Neither the Sponsor, the Issuer, nor the
underwriter will be obligated to proceed with a public offering of the
Securities unless and until a firm commitment underwriting agreement is
executed. The obligations of the underwriters and those of the Sponsor and the
Issuer will be subject to the representations, warranties, covenants,
conditions, indemnities and provisions respecting contribution contained in the
form of underwriting agreement executed by the parties.
10. Survival of Certain Provisions. All provisions of this Agreement shall
survive any investigation made by or on behalf of the Financial Advisor, or by
or on behalf of any affiliate of the Financial Advisor or any person controlling
either. In addition, the indemnity and contribution agreements contained in
Section 7 and Schedule A to this Agreement, the provisions of Sections 3, 4,
5(i) and the last three sentences of Section 2 of this Agreement and the
provision in Section 1 which gives the Financial Advisor the right to act as the
Sponsor and the Issuer's exclusive placement agent or underwriter for a period
of one year from the date of this Agreement (or two years from the date of
purchase of the Company) shall remain operative and in full force and effect
regardless of (a) the resignation of the Financial Advisor or any termination of
the Financial Advisor's services, (b) completion of the sale of any securities
in connection with this Agreement or (c) the expiration or termination of this
Agreement. This Agreement shall be binding upon, and shall inure to the benefit
of, any successors, assigns, heirs and personal representatives of the Sponsor,
the Issuer, the Financial Advisor and the Indemnified Persons.
11. Notices. Notice given pursuant to any of the provisions of this
Agreement shall be in writing and shall be mailed or delivered (a) if to the
Sponsor, at the address set forth above, and (b) if to Jefferies, at the offices
of Jefferies at 11100 Santa Monica Boulevard, Suite 1000, Los Angeles,
California 90025, Attention: Jerry M. Gluck, Executive Vice President and
General Counsel.
12. Counterparts. This Agreement may be executed simultaneously in two or
more counterparts, each of which shall be deemed an original, but all of which
shall constitute one and the same instrument.
13. Assignment. This Agreement may not be assigned by either party hereto
without the prior written consent of the other, to be given in the sole
discretion of the party from whom such consent is being requested. Any attempted
assignment of this Agreement made without such consent may be void, at the
option of the non-assigning party.
14. Third Party Beneficiaries. This Agreement has been and is made solely
for the benefit of the Sponsor, the Issuer, the Financial Advisor and the
Indemnified Persons referred to in Schedule A hereof and their respective
successors and assigns, and no other person shall acquire or have any right
under or by virtue of this Agreement.
<PAGE>
15. Construction. This Agreement incorporates the entire understanding of
the parties and supersedes all previous agreements relating to the subject
matter hereof should they exist and shall be governed by, and construed in
accordance with, the laws of the State of New York, without regard to principles
of conflicts of law.
16. Headings. The section headings in this Agreement have been inserted as a
matter of convenience of reference and are not part of this Agreement.
17. Press Announcements. At any time after the consummation of a Transaction
or the consummation or other public announcement of the sale of any securities,
the Financial Advisor may place an announcement in such newspapers and
publications as it may choose, stating that the Financial Advisor has acted as
exclusive financial advisor or placement agent or underwriter to the Sponsor and
the Issuer in connection with a Transaction or with the sale of any securities
contemplated by this Agreement provided, however, that no such announcement
shall be made without prior written consent of the Sponsor and the Issuer, which
consent shall not be unreasonably withheld.
18. Amendment. This Agreement may not be modified or amended except in a
writing duly executed by the parties hereto.
19. Term. Except as provided herein, this Agreement shall run from the date
of this letter to a date of twelve months thereafter, unless extended by mutual
consent of the parties (the "Term").
<PAGE>
Please sign and return an original and one copy of this letter to the
undersigned to indicate your acceptance of the terms set forth herein, whereupon
this letter and your acceptance shall constitute a binding agreement between the
Sponsor and Jefferies as of the date first above written.
Sincerely,
JEFFERIES & COMPANY, INC.
By: /s/ Andrew Whittaker
-------------------------------
Andrew Whittaker
Executive Vice President and
Co-Head of Corporate Finance
Accepted and Agreed:
GLOBAL CYCLE, LLC
By: /s/ Roger Grass
----------------------------
Mr. Roger Grass
Vice President and Treasurer
<PAGE>
SCHEDULE A
March 6, 1998
JEFFERIES & COMPANY, INC.
11100 Santa Monica Boulevard, 10th Floor
Los Angeles, CA 90025
Ladies and Gentlemen:
This letter agreement is entered into pursuant to, and in order to induce
Jefferies & Company, Inc. ("Jefferies"or the "Financial Advisor") to enter into,
the engagement letter, dated March 6, 1998 (as amended from time to time in
accordance with the terms thereof, the "Agreement"), between Global Cycle, LLC
(the "Sponsor") and its affiliates, which may include a to be formed or to be
acquired corporate entity (the "Issuer") controlled by the Sponsor, and
Jefferies. Unless otherwise noted, all capitalized terms used herein shall have
the meanings set forth in the Agreement.
Since Jefferies will be acting on behalf of the Sponsor and the Issuer in
connection with the transactions contemplated by the Agreement, and as part of
the consideration for the agreement of Jefferies to furnish its services
pursuant to such Agreement, the Sponsor and the Issuer agree to indemnify and
hold harmless Jefferies and its affiliates and their respective officers,
directors, partners, counsel, employees and agents, and any other persons
controlling Jefferies or any of its affiliates within the meaning of either
Section 15 of the Securities Act of 1933 or Section 20 of the Securities
Exchange Act of 1934, and the respective agents, employees, officers, directors,
partners, counsel and shareholders of such persons (Jefferies and each such
other person being referred to as an "Indemnified Person"), to the fullest
extent lawful, from and against all claims, liabilities, losses, damages and
expenses (or actions in respect thereof), as incurred, related to or arising out
of or in connection with (i) actions taken or omitted to be taken by the
Sponsor, its affiliates, employees or agents, (ii) actions taken or omitted to
be taken by any Indemnified Person (including acts or omissions constituting
ordinary negligence) pursuant to the terms of, or in connection with services
rendered pursuant to, the Agreement or any Transaction or proposed transaction
contemplated thereby or any Indemnified Person's role in connection therewith,
provided, however, that the Sponsor and the Issuer shall not be responsible for
any losses, claims, damages, liabilities or expenses of any Indemnified Person
to the extent, and only to the extent, that it is finally judicially determined
that they result solely from actions taken or omitted to be taken by such
Indemnified Person in bad faith or to be due solely to such Indemnified Person's
gross negligence, and/or (iii) any untrue statement or alleged untrue statement
of a material fact contained in any of the Offering Materials, or arising out of
or based upon any omission or alleged omission of a
<PAGE>
material fact required to be stated therein or necessary to make the statements
therein not misleading.
Each Indemnified Person shall give prompt written notice to the Sponsor and
the Issuer after the receipt by such Indemnified Person of any written notice of
the commencement of any action, suit or proceeding for which such Indemnified
Person will claim indemnification or contribution pursuant to this Agreement
within 10 business days after the receipt of written notice from such
Indemnified Person. The Sponsor and the Issuer shall have the right, exercisable
by giving written notice to an Indemnified Person of such commencement, to
assume, at its expense, the defense of any such action, suit or proceeding;
provided, however, that an Indemnified Person shall have the right to employ
counsel in any such action, suit or proceeding, and to participate in the
defense thereof, but the fees and expenses of such counsel shall be at the
expense of such Indemnified Person unless: (i) the Sponsor and the Issuer fail
to assume the defense of such action, suit or proceeding or fail to employ
separate counsel reasonably satisfactory to such Indemnified Person in any such
action, suit or proceeding; or (ii) the Sponsor and the Issuer and such
Indemnified Person shall have been advised by counsel that there may be one or
more defenses available to such Indemnified Person which are in conflict with,
different from or additional to those available to the Sponsor and the Issuer,
any of its affiliates, or another Indemnified Person, as the case may be (in
which case, if such Indemnified Person notifies the Sponsor and the Issuer in
writing that it elects to employ separate counsel at the expense of the Sponsor
and the Issuer, the Sponsor and the Issuer shall not have the right to assume
the defense of such action, suit or proceeding on behalf of such Indemnified
Person); it being understood, however, that the Sponsor and the Issuer shall
not, in connection with any one such action or proceeding or separate but
substantially similar or related actions or proceedings arising out of the same
general allegations or circumstances, be liable for the fees and expenses of
more than one separate firm of attorneys (together with appropriate local
counsel) at any time acting for each Indemnified Person in any one jurisdiction.
The Sponsor and the Issuer shall not settle or compromise or consent to the
entry of any judgment in or otherwise seek to terminate any pending or
threatened action, claim, suit or proceeding in which any Indemnified Person is
or could be a party and as to which indemnification or contribution could have
been sought by such Indemnified Person hereunder (whether or not such
Indemnified Person is a party thereto), unless such Indemnified Person has given
its prior written consent or the settlement, compromise, consent or termination
includes an express unconditional release of such Indemnified Person,
satisfactory in form and substance to such Indemnified Person, from all losses,
claims, damages or liabilities arising out of such action, claim, suit or
proceeding.
If for any reason (other than the bad faith or gross negligence of an
Indemnified Person as provided above) the foregoing indemnity is unavailable to
an Indemnified Person or insufficient to hold an Indemnified Person harmless,
then the Sponsor, to the fullest extent permitted by law, shall contribute to
the amount paid or payable by such
<PAGE>
Indemnified Person as a result of such claims, liabilities, losses, damages or
expenses in such proportion as is appropriate to reflect the relative benefits
received by the Sponsor on the one hand and by Jefferies on the other, from the
Transaction or proposed transaction under the Agreement or, if allocation on
that basis is not permitted under applicable law, in such proportion as is
appropriate to reflect not only the relative benefits received by the Sponsor on
the one hand and Jefferies on the other, but also the relative fault of the
Sponsor or the Issuer and Jefferies, as well as any relevant equitable
considerations. Notwithstanding the provisions hereof, the aggregate
contribution of all Indemnified Persons to all claims, liabilities, losses,
damages and expenses shall not exceed the amount of fees actually received by
Jefferies pursuant to the Agreement with respect to the Transaction. It is
hereby further agreed that the relative benefits to the Sponsor and the Issuer
on the one hand and Jefferies on the other with respect to any Transaction or
proposed transaction contemplated by the Agreement shall be deemed to be in the
same proportion as (i) the total value of the Transaction bears to (ii) the fees
paid to Jefferies with respect to such Transaction. The relative fault of the
Sponsor and the Issuer on the one hand and Jefferies on the other with respect
to the Transaction shall be determined by reference to, among other things,
whether any untrue or alleged untrue statement of a material fact or the
omission or alleged omission to state a material fact relates to information
supplied by the Sponsor or by Jefferies and the parties' relative intent,
knowledge, access to information and opportunity to correct or prevent such
statement or omission. No Indemnified Person shall have any liability to the
Sponsor, the Issuer or any other officer, director, employee or affiliate
thereof in connection with the services rendered pursuant to the Agreement
except for any liability for claims, liabilities, losses or damages finally
judicially determined to have resulted solely from actions taken or omitted to
be taken by such Indemnified Person in bad faith or as a result of such
Indemnified Person's gross negligence.
In addition, the Sponsor and the Issuer agree to reimburse the Indemnified
Persons for all expenses (including, without limitation, fees and expenses of
counsel) as they are incurred in connection with investigating, preparing,
defending or settling any such action or claim, whether or not in connection
with litigation in which any Indemnified Person is a named party. If any of
Jefferies' personnel appears as witnesses, are deposed or are otherwise involved
in the defense of any action against Jefferies, the Sponsor, the Issuer or their
respective directors, officers, employees, representatives or agents, the
Sponsor and the Issuer will pay Jefferies (i) with respect to each day that one
of Jefferies' professional personnel appears as a witness or is deposed and/or
(ii) with respect to each day that one of Jefferies' professional personnel is
involved in the preparation therefor, (a) a fee of $2,000 per day for each such
person with respect to each appearance as a witness or for a deposition and (b)
at a rate of $200 per hour with respect to each hour of preparation for any such
appearance and the Sponsor and the Issuer will reimburse Jefferies for all
reasonable out-of-pocket expenses incurred by Jefferies by reason of any of its
personnel being involved in any such action.
<PAGE>
The indemnity, contribution and expense reimbursement obligations set forth
herein (i) shall be in addition to any liability the Sponsor may have to any
Indemnified Person at common law or otherwise, (ii) shall survive the expiration
of the Agreement, (iii) shall apply to any modification of Jefferies' engagement
and shall remain in full force and effect following the completion or
termination of the Agreement, (iv) shall remain operative and in full force and
effect regardless of any investigation made by or on behalf of Jefferies or any
other Indemnified Person and (v) shall be binding on any successor or assign of
the Sponsor, the Issuer and successors or assigns to all or substantially all of
the Sponsor's or Issuer's business and assets.
Please sign and return an original and one copy of this letter to the
undersigned to indicate your acceptance of the terms set forth herein, whereupon
this letter and your acceptance shall constitute a binding agreement between the
Sponsor and Jefferies as of the date of the Agreement.
Sincerely,
GLOBAL CYCLE, LLC
By /s/ Roger Grass
----------------------------
Mr. Roger Grass
Vice President and Treasurer
Accepted and Agreed:
JEFFERIES & COMPANY, INC.
By /s/ Andrew Whittaker
----------------------------
Andrew Whittaker
Executive Vice President and
Co-Head of Corporate Finance
IN THE COURT OF CHANCERY OF THE STATE OF DELAWARE
IN AND FOR NEW CASTLE COUNTY
- --------------------------------------------------------
)
)
GOLDEN CYCLE, LLC, )
and CEDE & CO., )
Petitioner, )
Nominal Petitioner, )
) C.A. No. ________
v. )
)
GLOBAL MOTORSPORT GROUP, INC. )
Respondent. )
)
- --------------------------------------------------------
PETITION UNDER 8 DEL. C. SECTION 220
Petitioner Golden Cycle, LLC, and nominal Petitioner Cede & Co. ("Cede"),
by and through their undersigned counsel, for their petition allege as follows:
1. Petitioner and Cede bring this action pursuant to Section 220 of the
Delaware General Corporation Law for an order compelling Respondent Global
Motorsport Group, Inc. to produce for inspection and copying all documents
requested for inspection by demand dated March 25, 1998.
THE PARTIES
2. Petitioner is the beneficial owner of 528,700 shares of common stock,
$0.001 par value (the "Shares"), of the Company. The Common Stock represents
over ten percent of the Company's issued and outstanding capital stock.
3. Cede is the record owner of most of the Shares, which it holds for the
benefit of Petitioner.
4. Respondent is a Delaware corporation. Its registered agent for service
of process in Delaware is The Corporation Trust Company, 1209 Orange Street,
Wilmington, Delaware 19801.
THE DEMAND
5. On March 25, 1998, Cede executed a written demand under oath on behalf
of Petitioner (the "Demand Letter"), which was delivered to Respondent at its
principal place of business and its registered agent on the same day. The Demand
Letter demanded the right, pursuant to Section 220 of the Delaware General
Corporation Law, 8 Del. C., Section 220 ("Section 220"), to inspect and make
copies and extracts from documents in the possession of Respondent. A true and
correct copy of the Demand Letter is attached as Exhibit A.
6. The Demand Letter set forth Petitioner's purposes in seeking to inspect
Global's books and records. These purposes included:
a. to evaluate the current direction of Respondent and its management;
b. to ascertain the value of the Shares;
c. to determine whether to sell or hold its Shares or whether to
acquire additional Global stock; and
d. to communicate with other holders of Global stock regarding matters
relevant to stockholders.
These purposes are reasonably related to Petitioner's interests as a beneficial
holder of over ten percent of Respondent's capital stock.
<PAGE>
7. Petitioner and Cede have complied with all of the provisions of Section
220 with respect to the form and manner of making a demand for inspection and
copying of the demanded materials.
8. In a letter dated April 1, 1998, Respondent's counsel stated Respondent
"is unable to make a determination as to what information [Petitioners] request
... and for what purpose." Respondent's counsel also contended the purposes for
the inspection are "inconsistent with other statements by Global Cycle." The
April 1 letter is attached as Exhibit B.
9. The April 1 letter constitutes a refusal to permit the requested
inspection.
10. By reason of the foregoing, Petitioner and Cede are entitled, pursuant
to Section 220, to inspect and make copies of the demanded materials.
WHEREFORE, Petitioner and Cede pray that this Court, pursuant to Section
220:
a. Summarily order Respondent to permit Petitioner and Cede and their
designated agents to inspect and copy all of the demanded materials, or,
alternatively, order Respondent immediately to furnish Petitioner and Cede
with copies of all the demanded materials;
b. Summarily order Respondent to provide Petitioner and Cede with
updated demanded materials as they become available; and
c. Grant such other relief, including reasonable attorneys' fees and
costs, as the Court may deem just and proper.
WOLF, BLOCK, SCHORR &
SOLIS-COHEN LLP
BY: __________________________________
David J. Margules
Todd C. Schiltz
One Rodney Square
920 King Street, Suite 300
Wilmington, DE 19801
(302) 777-5860
DATE: April 2, 1998
2
IN THE UNITED STATES DISTRICT COURT FOR
THE DISTRICT OF DELAWARE
GOLDEN CYCLE, LLC, a Pennsylvania )
limited liability company, )
)
Plaintiff, )
)
v. ) Civil Action No. _______
)
LIONEL M. ALLAN, JAMES J. KELLY, JR., )
JOSEPH F. KEENAN, JOSEPH PIAZZA and )
GLOBAL MOTORSPORT GROUP, INC., )
)
Defendants. )
COMPLAINT
Golden Cycle, LLC ("Golden Cycle"), as and for its Complaint, alleges on
knowledge with respect to itself and its own acts, and upon information and
belief as to all other matters, as follows:
NATURE OF THE ACTION
1. On March 24, 1998, Plaintiff Golden Cycle filed with the Securities
and Exchange Commission (the "SEC") preliminary proxy materials relating to a
planned solicitation of consents to remove and to replace the individual
Defendants as directors of Defendant Global Motorsport Group, Inc. ("Global").
Golden Cycle seeks to replace the Board in order to remove impediments to its
Proposed Acquisition (defined below) to acquire Global, or to other transactions
that would maximize stockholder value.
2. On April 1, 1998, Global issued a press release stating it had
purported to set a March 30, 1998, record date for determining stockholders
authorized to express consents. As shown below, Global chose a record date
before Golden Cycle's proxy materials had cleared the SEC in an apparent effort
to impede the consent solicitation.
<PAGE>
3. The federal securities laws require Global to communicate the record
date as promptly as practicable to entities holding shares for beneficial owners
and to request lists of such beneficial holders as of the record date. On
information and belief, Global has failed to do so and has communicated
incorrect and misleading information about the record date.
4. Defendants' actions violate the federal securities laws and are
unfairly and inequitably interfering with Golden Cycle's consent solicitation
and its Proposed Acquisition. Plaintiff has no adequate remedy at law.
THE PARTIES, JURISDICTION AND VENUE
5. Plaintiff Golden Cycle is a Pennsylvania limited liability company
with its principal place of business in Harrisburg, Pennsylvania. Golden Cycle
is the registered owner of 100 shares of Global's common stock, and the
beneficial owner of 528,700 shares. Golden Cycle's holdings represent about
10.4% of Global's outstanding capital stock.
6. Defendant Global is a Delaware corporation with its principal place of
business in California. Global is the largest independent supplier of
aftermarket parts and accessories, including replacement parts, custom parts and
apparel, for Harley-Davidson motorcycles. As of October 31, 1997, Global had
5,077,442 shares of common stock outstanding.
7. The Individual Defendants are Defendant Global's directors. In
addition, Defendant Joseph Piazza is Global's President and Chief Executive
Officer, Defendant Joseph F. Keenan is the Chairman of the Board, and Defendant
James J. Kelly, Jr. is the Chief Financial Officer.
<PAGE>
8. This Court has subject matter jurisdiction pursuant to 15 U.S.C. ss.
78aa. Acts giving rise to Golden Cycle's claim have occurred in this District
and Global is incorporated in Delaware. Venue properly lies within this District
pursuant to 28 U.S.C. ss. 1391.
FACTUAL BACKGROUND
9. On March 23, 1998, Golden Cycle submitted its Proposed Acquisition to
Global in writing. The Proposed Acquisition contemplates a merger between Golden
Cycle and Global in which each share of Global common stock would be purchased
for a price of $18 (the "Proposed Acquisition") -- a 26% premium over the market
value just prior to delivery of the Proposed Acquisition. Golden Cycle also
advised Global of its intent to file with the SEC preliminary materials for
soliciting written consents from Global's stockholders to remove Global's
directors and to replace them with nominees committed to removing impediments to
the consummation of the Proposed Acquisition or other value maximizing
transactions (the "Consent Solicitation").
10. Golden Cycle filed preliminary consent solicitation materials with
the SEC on March 24, 1998. On April 3, the SEC provided Golden Cycle with
technical comments on the proxy materials. Golden Cycle is responding to the
SEC's comments, intends to commence the Consent Solicitation promptly on
receiving SEC clearance, and hopes to receive such clearance within the next few
days.
11. Global has made plain its intent to disrupt and impede the Consent
Solicitation. In a March 25, 1998, press release, Global warned the market that
"[i]t should not be assumed that any transaction will occur."
12. On March 31, after ignoring repeated requests to engage in
negotiations with Golden Cycle, Global's chairman, Defendant Keenan, wrote an
invective-filled letter to
<PAGE>
Golden Cycle's president accusing Golden Cycle of a lack of "serious[ness]," of
"naivete" and of attempting to "bull[y]" Global. Defendant Keenan's letter also
expressed "disappointment that, with absolutely no prior discussion between you
and any representative of the Company, you faxed ... a letter late in the day on
Monday, March 23, 1988 and then filed materials with the [SEC] on Tuesday, March
24, 1998, calling for the removal of the entire Board."
DEFENDANT SETS A RECORD DATE
13. On April 1, Global issued a release announcing it had set a March 30
record date for the Consent Solicitation (the "Record Date"). Although Global
has not disclosed the date on which it took the action setting the Record Date,
to be valid under Delaware law that action must have been taken on or before
March 30. Therefore, the Board must have waited until at least the second
business day after it set the Record Date to announce its action.
14. By selecting a Record Date earlier than the date on which Golden
Cycle can begin soliciting consents, Defendants created an impediment to the
Consent Solicitation and, consequently, to the Proposed Acquisition. As shares
continue to trade, the set of investors with an economic interest in the Consent
Solicitation diverges with the set of investors as of the Record Date.
Defendants compounded the effect by delaying the public announcement that it had
set the Record Date, thereby depriving purchasers of the ability to demand from
sellers a proxy to express consents.
15. On information and belief, on or about April 2, 1998, agents of
Defendants contacted at least one Global stock record holder who holds shares as
a fiduciary for beneficial holders and informed the record holder that April 3
was the record date for the Consent Solicitation.
<PAGE>
16. The disclosure of the wrong record is materially false and
misleading. It creates confusion in the market about the Consent Solicitation
and constitutes a further impediment to Golden Cycle's Proposed Acquisition.
COUNT I
(for violation of Rule 14a-13)
17. Plaintiff repeats the allegations of the Complaint as if fully set
forth here.
18. Rule 14a-13, promulgated by the SEC under the Exchange Act of 1934
(the "Exchange Act"), 17 C.F.R. ss. 240.14a-13, provides, in pertinent part:
(a) If the registrant knows that securities... entitled to vote... by
written consent... with respect to which the registrant intends to
solicit... consents... are held of record by a broker, dealer, voting
trustee, bank, association, or other entity that exercises fiduciary powers
in nominee name or otherwise, the registrant shall:
(1) By first class mail or other equally prompt means:
(i) Inquire of each such record holder:
(A) Whether other persons are the beneficial owners of
such securities and if so the number of copies of the proxy
and other soliciting materials necessary to supply such
material to such beneficial owners.
* * *
(3) Make the inquiry required by paragraph (a)(1) of this section
at least 20 business days prior to the record date or the meeting of the
security holders, or
* * *
(ii) If consents or authorizations are solicited, and such
inquiry is impracticable 20 business days before the earliest date on which they
may be used to effect corporate action, as many days before that date as is
practicable....
<PAGE>
19. On information and belief, Global intends to and will solicit
consents (or revocations of consents) in response to the Consent Solicitation,
either of which constitutes a "solicitation" under the Exchange Act.
20. On information and belief, Defendants are aware that Global's common
stock is held of record by brokers, dealers, voting trustees, banks,
associations and other entities that exercise fiduciary powers.
21. By purporting to set a March 30 Record Date, by delaying a public
announcement of its purported setting of the Record Date, by delaying direct
contacts with fiduciaries holding shares in record name regarding the Record
Date and by misinforming fiduciaries of the true Record Date, Defendants have
failed to take the steps required by Rule 14a-3 to request and to obtain
beneficial holder lists.
22. Golden Cycle has demanded pursuant to Delaware law the right to
inspect and copy Global's stockholder lists. Global is resisting the demand, as
a result of which Golden Cycle has brought suit in the Delaware Chancery Court
to enforce its right to the information. If Global has the beneficial holder
lists it is required to request under Rule 14a-3, it will be obligated to
provide them to Golden Cycle. By delaying its request for beneficial holder
lists, Global apparently hopes to forestall any obligation to provide those
materials to Golden Cycle.
23. Golden Cycle has no adequate remedy at law.
COUNT II
(for violation of Rule 10b-5)
24. Plaintiff repeats the allegations of the Complaint as if fully set
forth here.
25. Rule 10b-5, 17 C.F.R. ss. 240.10b-5, promulgated by the SEC under the
Exchange Act, provides:
<PAGE>
It shall be unlawful for any person, directly or indirectly, by the
use of any means or instrumentality of interstate commerce, or of the mails or
of any facility of a national securities exchange,
(a) To deploy any device, scheme or artifice to defraud,
(b) To make any untrue statement of a material fact or to omit to
state a materials fact necessary in order to make the statements made, in light
of the circumstances under which they were made, not misleading,
(c) To engage in any act, practice, or course of business which
operates or would operate as a fraud or deceit upon any person, in connection
with the purchase or sale of any security.
26. Defendant's statement to fiduciaries that it had set an April 3
record date is materially false and misleading and was made for the purpose of
obstructing, and is obstructing, Golden Cycle's Proposed Acquisition to acquire
the balance of Global shares by interfering with the Consent Solicitation.
27. Golden Cycle has no adequate remedy at law.
COUNT III
(for controlling person liability)
28. Plaintiff repeats the allegations of the Complaint as if fully set
forth here.
29. The Individual Defendants have been directly involved, and have
actually directed, the actions of Global alleged in this Complaint. As a
consequence, they are "controlling persons" under the Federal Securities Laws
and are liable for the wrongful conduct alleged here.
WHEREFORE, Plaintiff Golden Cycle, LLC, prays that this Court enter and
Order as follows:
a. Declaring that Defendants violated Rules 14a-13 and Rule 10b-5;
b. Declaring that March 30, 1998, is not the valid and effective
record date for purposes of the Consent Solicitation;
<PAGE>
c. Temporarily, preliminarily and permanently enjoining the Defendants
from further violations of federal law in connection with the Consent
Solicitation and the Proposed Acquisition;
d. Awarding Plaintiff its damages, attorneys' fees and costs; and
e. Granting such other relief as the Court deems just and equitable.
WOLF, BLOCK, SCHORR & SOLIS-COHEN LLP
BY:
------------------------------------
David J. Margules (No. 2254)
Todd C. Schiltz (No. 3253)
One Rodney Square
920 King Street, Suite 300
Wilmington, DE 19801
(302) 777-5860
Attorneys for Plaintiff
OF THE PENNSYLVANIA BAR:
M. Norman Goldberger
Matthew A. White
DATE: April 6, 1998
