<PAGE> 1
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------
SCHEDULE 13E-4
ISSUER TENDER OFFER STATEMENT
(PURSUANT TO SECTION 13(e)(1) OF THE SECURITIES EXCHANGE ACT OF 1934)
STAC, INC.
(NAME OF ISSUER)
STAC, INC.
(NAME OF PERSON(S) FILING STATEMENT)
COMMON STOCK, PAR VALUE $.001 PER SHARE
(TITLE OF CLASS OF SECURITIES)
852323104
(CUSIP NUMBER OF CLASS OF SECURITIES)
JOHN R. WITZEL
VICE PRESIDENT OF FINANCE AND CHIEF FINANCIAL OFFICER
STAC, INC.
12636 HIGH BLUFF DRIVE
SAN DIEGO, CA 92130-2093
(619) 794-4300
(NAME, ADDRESS AND TELEPHONE NUMBER OF PERSON AUTHORIZED TO RECEIVE NOTICES
AND COMMUNICATIONS ON BEHALF OF THE PERSON(S) FILING STATEMENT)
------------------------
COPY TO:
BRYANT B. EDWARDS
LATHAM & WATKINS
633 WEST FIFTH STREET, SUITE 4000
LOS ANGELES, CALIFORNIA 90071
(213) 485-1234
------------------------
AUGUST 14, 1997
(DATE TENDER OFFER FIRST PUBLISHED, SENT OR GIVEN TO SECURITY HOLDERS)
CALCULATION OF FILING FEE
<TABLE>
<CAPTION>
TRANSACTION VALUATION* AMOUNT OF FILING FEE
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<S> <C>
$33,000,000 $6,600
</TABLE>
- ---------------
* Calculated solely for purposes of determining the filing fee pursuant to Rule
0-11(b)(1), based upon the purchase of 6,000,000 shares at the maximum tender
offer price per share of $5.50.
[ ] 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: N/A Filing Party: N/A
Form or Registration No.: N/A Date File: N/A
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<PAGE> 2
This Issuer Tender Offer Statement on Schedule 13E-4 (the "Statement")
relates to the tender offer by Stac, Inc., a Delaware corporation (the
"Company"), to purchase up to 6,000,000 shares of its common stock, par value
$.001 per share (the "Shares"), at prices, net to the seller in cash, not
greater than $5.50 nor less than $4.75 per Share, upon the terms and subject to
the conditions set forth in the Offer to Purchase, dated August 14, 1997 (the
"Offer to Purchase") and the related Letter of Transmittal (which are herein
collectively referred to as the "Offer"). Copies of such documents are filed as
Exhibits (a)(1) and (a)(2), respectively, to this Statement.
ITEM 1. SECURITY AND ISSUER.
(a) The name of the issuer is Stac, Inc., a Delaware corporation. The
address of its principal executive offices is 12636 High Bluff Drive, San Diego,
California 92130-2093.
(b) The information set forth in "Introduction," "Section 1. Number of
Shares; Proration" and "Section 9. Interests of Directors and Executive
Officers; Transactions and Arrangements Concerning the Shares" in the Offer to
Purchase is incorporated herein by reference. The Offer is being made to all
holders of Shares, including officers, directors and affiliates of the Company,
although the Company has been advised that none of its directors or executive
officers intends to tender any Shares pursuant to the Offer.
(c) The information set forth in "Introduction" and "Section 7. Price Range
of Shares; Dividends" in the Offer to Purchase is incorporated herein by
reference.
(d) This Statement is being filed by the issuer.
ITEM 2. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION.
(a) - (b) The information set forth in "Section 10. Source and Amount of
Funds" in the Offer to Purchase is incorporated herein by reference.
ITEM 3. PURPOSE OF THE TENDER OFFER AND PLANS OR PROPOSALS OF THE ISSUER.
(a) - (j) The information set forth in "Introduction," "Section 8.
Background and Purpose of the Offer; Certain Effects of the Offer," "Section 9.
Interests of Directors and Executive Officers; Transactions and Arrangements
Concerning the Shares," "Section 10. Source and Amount of Funds" and "Section
12. Effects of the Offer on the Market for Shares; Registration Under the
Exchange Act" in the Offer to Purchase is incorporated herein by reference.
ITEM 4. INTEREST IN SECURITIES OF THE ISSUER.
The information set forth in "Section 9. Interests of Directors and
Executive Officers; Transactions and Arrangements Concerning the Shares" and
"Schedule I -- Certain Transactions Involving Shares" in the Offer to Purchase
is incorporated herein by reference.
ITEM 5.CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS OR RELATIONSHIPS WITH RESPECT TO
THE ISSUER'S SECURITIES.
The information set forth in "Introduction," "Section 8. Background and
Purpose of the Offer; Certain Effects of the Offer" and "Section 9. Interests of
Directors and Executive Officers; Transactions and Arrangements Concerning the
Shares" in the Offer to Purchase is incorporated herein by reference.
ITEM 6. PERSONS RETAINED, EMPLOYED OR TO BE COMPENSATED.
The information set forth in "Introduction" and "Section 16. Fees and
Expenses" in the Offer to Purchase is incorporated herein by reference.
i
<PAGE> 3
ITEM 7. FINANCIAL INFORMATION.
(a) - (b) The information set forth in "Section 11. Certain Information
About the Company" in the Offer to Purchase is incorporated herein by reference.
The information set forth on (i) pages F-2 through F-11 of the Company's Annual
Report on Form 10-K for the fiscal year ended September 30, 1996 filed as
Exhibit (g)(1) hereto; (ii) pages 1 through 12 of the Company's Quarterly Report
on Form 10-Q for the quarter ended December 31, 1996, filed as Exhibit (g)(2)
hereto; (iii) pages 1 through 14 of the Company's Quarterly Report on Form 10-Q
for the quarter ended March 30, 1997, filed as Exhibit (g)(3) hereto and (iv)
pages 1 through 13 of the Company's Quarterly Report on Form 10-Q for the
quarter ended June 30, 1997, filed as Exhibit (g)(4) hereto are incorporated
herein by reference.
ITEM 8. ADDITIONAL INFORMATION.
(a) Not applicable.
(b) The information set forth in "Section 13. Certain Legal Matters;
Regulatory and Foreign Approvals" in the Offer to Purchase is incorporated
herein by reference.
(c) The information set forth in "Section 12. Effects of the Offer on the
Market for Shares; Registration Under the Exchange Act" in the Offer to Purchase
is incorporated herein by reference.
(d) Not applicable.
(e) The information set forth in the Offer to Purchase and the related
Letter of Transmittal, copies of which are attached hereto as Exhibits (a)(1)
and (a)(2), respectively, is incorporated herein by reference.
ITEM 9. MATERIAL TO BE FILED AS EXHIBITS.
<TABLE>
<S> <C>
(a)(1) Form of Offer to Purchase dated August 14, 1997
(a)(2) Form of Letter of Transmittal
(a)(3) Form of Notice of Guaranteed Delivery
(a)(4) Form of Letter to Brokers, Dealers, Commercial Banks, Trust Companies and Other
Nominees
(a)(5) Form of Letter to Clients for use by Brokers, Dealers, Commercial Banks, Trust
Companies and Other Nominees
(a)(6) Form of Letter dated August 14, 1997 to stockholders from the Chairman of the Board
and Chief Executive Officer of the Company
(a)(7) Form of Press Release issued by the Company dated August 14, 1997
(a)(8) Form of Summary Advertisement
(a)(9) Guidelines for Certification of Taxpayer Identification Number on Substitute Form
W-9
(b) Not applicable
(c) Not applicable
(d) Not applicable
(e) Not applicable
(f) Not applicable
(g)(1) Pages F-2 through F-11 of the Company's Annual Report on Form 10-K for the fiscal
year ended September 30, 1996 (Incorporated herein by reference)
(g)(2) Pages 1 through 12 of the Company's Quarterly Report on Form 10-Q for the quarter
ended December 31, 1996 (Incorporated herein by reference)
(g)(3) Pages 1 through 14 of the Company's Quarterly Report on Form 10-Q for the quarter
ended March 31, 1997 (Incorporated herein by reference)
(g)(4) Pages 1 through 13 of the Company's Quarterly Report on Form 10-Q for the quarter
ended June 30, 1997 (Incorporated herein by reference)
</TABLE>
ii
<PAGE> 4
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.
STAC, INC.
By: /s/ JOHN R. WITZEL
------------------------------------
John R. Witzel
Vice President of Finance and
Chief Financial Officer
Dated: August 14, 1997
iii
<PAGE> 5
INDEX TO EXHIBITS
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ITEM DESCRIPTION PAGE
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<S> <C> <C>
(a)(1) Form of Offer to Purchase dated August 14, 1997...............................
(a)(2) Form of Letter of Transmittal.................................................
(a)(3) Form of Notice of Guaranteed Delivery.........................................
(a)(4) Form of Letter to Brokers, Dealers, Commercial Banks, Trust Companies and
Other Nominees................................................................
(a)(5) Form of Letter to Clients for use by Brokers, Dealers, Commercial Banks, Trust
Companies and Other Nominees..................................................
(a)(6) Form of Letter dated August 14, 1997 to Stockholders from the Chairman of the
Board and Chief Executive Officer of the Company..............................
(a)(7) Form of Press Release issued by the Company dated August 14, 1997.............
(a)(8) Form of Summary Advertisement.................................................
(a)(9) Guidelines for Certification of Taxpayer Identification Number on Substitute
Form W-9......................................................................
(b) Not applicable................................................................
(c) Not applicable................................................................
(d) Not applicable................................................................
(e) Not applicable................................................................
(f) Not applicable................................................................
(g)(1) Pages F-2 through F-11 of the Company's Annual Report on Form 10-K for the
fiscal year ended September 30, 1996 (Incorporated herein by reference).......
(g)(2) Pages 1 through 12 of the Company's Quarterly Report on Form 10-Q for the
quarter ended December 31, 1996 (Incorporated herein by reference)............
(g)(3) Pages 1 through 14 of the Company's Quarterly Report on Form 10-Q for the
quarter ended March 31, 1997 (Incorporated herein by reference)...............
(g)(4) Pages 1 through 13 of the Company's Quarterly Report on Form 10-Q for the
quarter ended June 30, 1997 (Incorporated herein by reference)................
</TABLE>
iv
<PAGE> 1
OFFER TO PURCHASE FOR CASH BY
STAC, INC.
UP TO 6,000,000 SHARES OF ITS COMMON STOCK
AT A PURCHASE PRICE NOT GREATER THAN
$5.50 NOR LESS THAN $4.75 PER SHARE
THE OFFER, PRORATION PERIOD AND WITHDRAWAL RIGHTS EXPIRE AT 12:00 MIDNIGHT, NEW
YORK CITY TIME, ON SEPTEMBER 11, 1997, UNLESS THE OFFER IS EXTENDED.
Stac, Inc., a Delaware corporation (the "Company"), invites its
stockholders to tender shares of its Common Stock, par value $.001 per share
(the "Shares"), to the Company at prices not greater than $5.50 nor less than
$4.75 per Share in cash, specified by tendering stockholders, upon the terms and
subject to the conditions set forth in this Offer to Purchase and the related
Letter of Transmittal (which together constitute the "Offer").
The Company will, upon the terms and subject to the conditions of the
Offer, determine a single per Share price (not greater than $5.50 nor less than
$4.75 per Share), net to the seller in cash (the "Purchase Price"), that it will
pay for Shares validly tendered and not withdrawn pursuant to the Offer, taking
into account the number of Shares so tendered and the prices specified by
tendering stockholders. The Company will select the lowest Purchase Price that
will allow it to buy 6,000,000 Shares (or such lesser number of Shares as are
validly tendered at prices not greater than $5.50 nor less than $4.75 per Share)
validly tendered and not withdrawn pursuant to the Offer. The Company will pay
the Purchase Price for all Shares validly tendered at prices at or below the
Purchase Price and not withdrawn, upon the terms and subject to the conditions
of the Offer including the proration terms hereof. The Company reserves the
right, in its sole discretion, to purchase more than 6,000,000 Shares pursuant
to the Offer.
THE OFFER IS NOT CONDITIONED ON ANY MINIMUM NUMBER OF SHARES BEING
TENDERED. THE OFFER IS, HOWEVER, SUBJECT TO CERTAIN OTHER CONDITIONS. SEE
SECTION 6.
The Shares are listed and principally traded on the Nasdaq Stock Market
("NASDAQ") under the symbol "STAC." On August 13, 1997, the closing per Share
sales price as reported by NASDAQ was $4.125. STOCKHOLDERS ARE URGED TO OBTAIN
CURRENT MARKET QUOTATIONS FOR THE SHARES. SEE SECTION 7.
THE BOARD OF DIRECTORS OF THE COMPANY HAS APPROVED THE OFFER. HOWEVER,
STOCKHOLDERS MUST MAKE THEIR OWN DECISIONS WHETHER TO TENDER SHARES AND, IF SO,
HOW MANY SHARES TO TENDER AND THE PRICE OR PRICES AT WHICH SHARES SHOULD BE
TENDERED. NEITHER THE COMPANY NOR ITS BOARD OF DIRECTORS MAKES ANY
RECOMMENDATION TO ANY STOCKHOLDER AS TO WHETHER TO TENDER OR REFRAIN FROM
TENDERING SHARES. THE COMPANY HAS BEEN ADVISED THAT NONE OF ITS DIRECTORS OR
EXECUTIVE OFFICERS INTENDS TO TENDER ANY SHARES PURSUANT TO THE OFFER.
------------------------
The Dealer Manager for the Offer is:
SMITH BARNEY INC.
AUGUST 14, 1997
<PAGE> 2
IMPORTANT
Any stockholders desiring to tender all or any portion of their Shares
should either (i) complete and sign the Letter of Transmittal or a facsimile
thereof in accordance with the instructions in the Letter of Transmittal, mail
or deliver it with any required signature guarantee and any other required
documents to American Stock Transfer & Trust Company (the "Depositary"), and
either mail or deliver the stock certificates for such Shares to the Depositary
(with all such other documents) or follow the procedure for book-entry delivery
set forth in Section 3, or (ii) request a broker, dealer, commercial bank, trust
company or other nominee to effect the transaction for such stockholder. A
stockholder having Shares registered in the name of a broker, dealer, commercial
bank, trust company or other nominee must contact that broker, dealer,
commercial bank, trust company or other nominee if such stockholder desires to
tender such Shares. Stockholders who desire to tender Shares and whose
certificates for such Shares are not immediately available or who cannot comply
with the procedure for book-entry transfer on a timely basis or whose other
required documentation cannot be delivered to the Depositary, in any case, by
the expiration of the Offer should tender such Shares by following the
procedures for guaranteed delivery set forth in Section 3.
TO EFFECT A VALID TENDER OF SHARES, STOCKHOLDERS MUST VALIDLY COMPLETE THE
LETTER OF TRANSMITTAL, INCLUDING THE SECTION RELATING TO THE PRICE AT WHICH THEY
ARE TENDERING SHARES.
Questions and requests for assistance or for additional copies of this
Offer to Purchase, the Letter of Transmittal or the Notice of Guaranteed
Delivery may be directed to the Information Agent or the Dealer Manager at their
respective addresses and telephone numbers set forth on the back cover of this
Offer to Purchase.
2
<PAGE> 3
SUMMARY
This general summary is provided for the convenience of the Company's
stockholders and is qualified in its entirety by reference to the full text and
more specific details of this Offer to Purchase.
Number of shares to be
Purchased..................... 6,000,000 Shares (or such lesser number of
shares as are validly tendered).
Purchase Price................ The Company will determine a single per Share
net cash price, not greater than $5.50 nor less
than $4.75 per Share, that it will pay for
Shares validly tendered. All Shares acquired in
the Offer will be acquired at the Purchase
Price even if tendered below the Purchase
Price. Each stockholder desiring to tender
Shares must specify in the Letter of
Transmittal the minimum price (not greater than
$5.50 or less than $4.75 per Share) at which
such stockholder is willing to have Shares
purchased by the Company.
How to Tender Shares.......... See Section 3. Call the Information Agent or
consult your broker for assistance.
Brokerage Commissions......... None.
Stock Transfer Tax............ None, if payment is made to the registered
holder.
Expiration and Proration
Times......................... September 11, 1997, at 12:00 Midnight, New York
City time, unless extended by the Company.
Payment Date.................. As soon as practicable after the Expiration
Time.
Position of the Company and
its Directors................. Neither the Company nor its Board of Directors
makes any recommendation to any stockholder as
to whether to tender or refrain from tendering
Shares.
Withdrawal Rights............. Tendered Shares may be withdrawn at any time
until 12:00 Midnight, New York City time, on
September 11, 1997, unless the Offer is
extended by the Company and, unless previously
purchased, after 12:00 Midnight, New York City
time, on October 9, 1997. See Section 4.
Odd Lots...................... There will be no proration of Shares tendered
by any stockholder owning beneficially fewer
than 100 Shares in the aggregate as of the
close of business on August 13, 1997 and as of
the Expiration Time, who tenders all such
Shares at or below the Purchase Price prior to
the Expiration Time and who checks the "Odd
Lots" box in the Letter of Transmittal.
3
<PAGE> 4
THE COMPANY HAS NOT AUTHORIZED ANY PERSON TO MAKE ANY RECOMMENDATION ON
BEHALF OF THE COMPANY AS TO WHETHER STOCKHOLDERS SHOULD TENDER OR REFRAIN FROM
TENDERING SHARES PURSUANT TO THE OFFER. THE COMPANY HAS NOT AUTHORIZED ANY
PERSON TO GIVE ANY INFORMATION OR TO MAKE ANY REPRESENTATION IN CONNECTION WITH
THE OFFER ON BEHALF OF THE COMPANY OTHER THAN THOSE CONTAINED IN THIS OFFER TO
PURCHASE OR IN THE LETTER OF TRANSMITTAL. DO NOT RELY ON ANY SUCH RECOMMENDATION
OR ANY SUCH INFORMATION OR REPRESENTATIONS, IF GIVEN OR MADE, AS HAVING BEEN
AUTHORIZED BY THE COMPANY.
------------------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
SECTION PAGE
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SUMMARY......................................................................... 3
INTRODUCTION.................................................................... 5
THE OFFER....................................................................... 6
1. NUMBER OF SHARES; PRORATION..................................................... 6
2. TENDERS BY OWNERS OF FEWER THAN 100 SHARES...................................... 8
3. PROCEDURE FOR TENDERING SHARES.................................................. 8
4. WITHDRAWAL RIGHTS............................................................... 12
5. PURCHASE OF SHARES AND PAYMENT OF PURCHASE PRICE................................ 12
6. CERTAIN CONDITIONS OF THE OFFER................................................. 13
7. PRICE RANGE OF SHARES........................................................... 15
8. BACKGROUND AND PURPOSE OF THE OFFER; CERTAIN EFFECTS OF THE OFFER............... 15
9. INTERESTS OF DIRECTORS AND EXECUTIVE OFFICERS; TRANSACTIONS AND ARRANGEMENTS
CONCERNING THE SHARES........................................................... 16
10. SOURCE AND AMOUNT OF FUNDS...................................................... 17
11. CERTAIN INFORMATION ABOUT THE COMPANY........................................... 17
12. EFFECTS OF THE OFFER ON THE MARKET FOR SHARES; REGISTRATION UNDER THE EXCHANGE
ACT............................................................................. 24
13. CERTAIN LEGAL MATTERS; REGULATORY AND FOREIGN APPROVALS......................... 24
14. CERTAIN U.S. FEDERAL INCOME TAX CONSEQUENCES.................................... 25
15. EXTENSION OF THE OFFER; TERMINATION; AMENDMENTS................................. 27
16. FEES AND EXPENSES............................................................... 27
17. MISCELLANEOUS................................................................... 28
SCHEDULE I -- Certain Transactions Involving Shares............................. 29
</TABLE>
4
<PAGE> 5
TO THE HOLDERS OF SHARES OF COMMON STOCK OF
STAC, INC.:
INTRODUCTION
Stac, Inc., a Delaware corporation (the "Company"), invites its
stockholders to tender shares of its Common Stock, par value $.001 per share
(the "Shares"), to the Company at prices not greater than $5.50 nor less than
$4.75 per Share in cash, specified by tendering stockholders, upon the terms and
subject to the conditions set forth in this Offer to Purchase and the related
Letter of Transmittal (which together constitute the "Offer").
The Company will, upon the terms and subject to the conditions of the
Offer, determine a single per Share price (not greater than $5.50 nor less than
$4.75 per Share), net to the seller in cash (the "Purchase Price"), that it will
pay for Shares validly tendered and not withdrawn pursuant to the Offer, taking
into account the number of Shares so tendered and the prices specified by
tendering stockholders. The Company will select the lowest Purchase Price that
will allow it to buy 6,000,000 Shares (or such lesser number of Shares as are
validly tendered at prices not greater than $5.50 nor less than $4.75 per Share)
validly tendered and not withdrawn pursuant to the Offer. The Company will pay
the Purchase Price for all Shares validly tendered prior to the Expiration Time
(as defined in Section 1) at prices at or below the Purchase Price and not
withdrawn, upon the terms and subject to the conditions of the Offer including
the proration terms described below. The Company reserves the right, in its sole
discretion, to purchase more than 6,000,000 Shares pursuant to the Offer.
THE OFFER IS NOT CONDITIONED ON ANY MINIMUM NUMBER OF SHARES BEING
TENDERED. THE OFFER IS, HOWEVER, SUBJECT TO CERTAIN OTHER CONDITIONS. SEE
SECTION 6.
If, before the Expiration Time, more than 6,000,000 Shares (or such greater
number of Shares as the Company may elect to purchase) are validly tendered at
or below the Purchase Price and not withdrawn, the Company will, upon the terms
and subject to the conditions of the Offer, purchase Shares first from all Odd
Lot Owners (as defined in Section 2) who validly tender all their Shares at or
below the Purchase Price and then on a pro rata basis from all other
stockholders who validly tender Shares at prices at or below the Purchase Price
(and do not withdraw them prior to the Expiration Time). The Company will return
at its own expense all Shares not purchased pursuant to the Offer, including
Shares tendered at prices greater than the Purchase Price and not withdrawn and
Shares not purchased because of proration. The Purchase Price will be paid net
to the tendering stockholder in cash for all Shares purchased. Tendering
stockholders will not be obligated to pay brokerage commissions, solicitation
fees or, subject to Instruction 7 of the Letter of Transmittal, stock transfer
taxes on the Company's purchase of Shares pursuant to the Offer. HOWEVER, ANY
TENDERING STOCKHOLDER OR OTHER PAYEE WHO FAILS TO COMPLETE, SIGN AND RETURN TO
THE DEPOSITARY (AS DEFINED BELOW) THE SUBSTITUTE FORM W-9 THAT IS INCLUDED WITH
THE LETTER OF TRANSMITTAL MAY BE SUBJECT TO REQUIRED BACKUP FEDERAL INCOME TAX
WITHHOLDING OF 31% OF THE GROSS PROCEEDS PAYABLE TO SUCH STOCKHOLDER OR OTHER
PAYEE PURSUANT TO THE OFFER. SEE SECTION 3. In addition, the Company will pay
all fees and expenses of Smith Barney Inc. (the "Dealer Manager"), Corporate
Investor Communications, Inc. (the "Information Agent") and American Stock
Transfer and Trust Company (the "Depositary") in connection with the Offer. See
Section 16.
THE BOARD OF DIRECTORS OF THE COMPANY HAS APPROVED THE OFFER. HOWEVER,
STOCKHOLDERS MUST MAKE THEIR OWN DECISIONS WHETHER TO TENDER SHARES AND, IF SO,
HOW MANY SHARES TO TENDER AND THE PRICE OR PRICES AT WHICH SHARES SHOULD BE
TENDERED. NEITHER THE COMPANY NOR ITS BOARD OF DIRECTORS MAKES ANY
RECOMMENDATION TO ANY STOCKHOLDER AS TO WHETHER TO TENDER OR REFRAIN FROM
TENDERING SHARES. THE COMPANY HAS BEEN ADVISED THAT NONE OF ITS DIRECTORS OR
EXECUTIVE OFFICERS INTENDS TO TENDER ANY SHARES PURSUANT TO THE OFFER.
5
<PAGE> 6
The Offer provides stockholders who are considering a sale of all or a
portion of their Shares with the opportunity to determine the price or prices
(not greater than $5.50 nor less than $4.75 per Share) at which they are willing
to sell their Shares, and, subject to the terms and conditions of the Offer, to
sell those Shares for cash without the usual transaction costs associated with
market sales. In addition, stockholders owning fewer than 100 Shares whose
shares are purchased pursuant to the Offer not only will avoid the payment of
brokerage commissions but also will avoid any applicable odd lot discounts
payable on a sale of their Shares in a NASDAQ transaction. The Offer also allows
stockholders to sell a portion of their Shares while retaining a continuing
equity interest in the Company. Stockholders who determine not to accept the
Offer will realize a proportionate increase in their relative equity interest in
the Company, and thus in the Company's future earnings and assets, subject to
the Company's right to issue additional Shares and other equity securities in
the future.
On June 20, 1997, the Board of Directors authorized the Company to
repurchase up to $20 million of Shares, and as of August 13, 1997, the Company
had repurchased 165,000 Shares on the open market at prices ranging from $3.6875
to $4.2500 per Share (average price of $3.8504 per Share). On August 1, 1997,
the Board of Directors authorized the Company to repurchase 6,000,000 Shares
pursuant to this Offer in replacement of the Share repurchase program authorized
in June 1997.
The Board of Directors has determined that the Company's financial
condition and outlook and current market conditions, including recent trading
prices of the Shares, make this an attractive time to repurchase a significant
portion of the outstanding Shares. In the view of the Board of Directors, the
Offer represents an attractive investment and use of the Company's cash that
should benefit the Company and its stockholders over the long term. In
particular, the Board of Directors believes that the purchase of Shares at this
time is consistent with the Company's long term corporate goal of seeking to
increase stockholder value.
As of August 13, 1997, there were 30,656,388 Shares outstanding and 818,479
Shares issuable upon exercise of outstanding vested stock options under the
Company's stock option plans (the "Options"). The 6,000,000 Shares that the
Company is offering to purchase represent approximately 19.6% of the outstanding
Shares. The Shares are listed and principally traded on NASDAQ under the symbol
"STAC." On August 13, 1997, the closing per Share sales price as reported on
NASDAQ was $4.125. THE COMPANY URGES STOCKHOLDERS TO OBTAIN CURRENT QUOTATIONS
ON THE MARKET PRICE OF THE SHARES.
THE OFFER
1. NUMBER OF SHARES; PRORATION
Upon the terms and subject to the conditions of the Offer, the Company will
accept for payment (and thereby purchase) 6,000,000 Shares or such lesser number
of Shares as are validly tendered before the Expiration Time (and not withdrawn
in accordance with Section 4) at a net cash price (determined in the manner set
forth below) not greater than $5.50 nor less than $4.75 per Share. The term
"Expiration Time" means 12:00 Midnight, New York City time, on September 11,
1997, unless and until the Company in its sole discretion shall have extended
the period of time during which the Offer is open, in which event the term
"Expiration Time" shall refer to the latest time and date at which the Offer, as
so extended by the Company, shall expire. See Section 15 for a description of
the Company's right to extend the time during which the Offer is open and to
delay, terminate or amend the Offer. Subject to Section 2, if the Offer is
oversubscribed, Shares tendered at or below the Purchase Price before the
Expiration Time will be eligible for proration. The proration period also
expires on the Expiration Time.
The Company will, upon the terms and subject to the conditions of the
Offer, determine a single per Share Purchase Price that it will pay for Shares
validly tendered and not withdrawn pursuant to the Offer, taking into account
the number of Shares so tendered and the prices specified by tendering
stockholders. The Company will select the lowest Purchase Price that will allow
it to buy 6,000,000 Shares (or such lesser number as are validly tendered at
prices not greater than $5.50 nor less than $4.75 per Share) validly tendered
and not withdrawn pursuant to the Offer. The Company reserves the right, in its
sole discretion, to purchase
6
<PAGE> 7
more than 6,000,000 Shares pursuant to the Offer. See Section 15. In accordance
with applicable regulations of the Securities and Exchange Commission (the
"Commission"), the Company may purchase pursuant to the Offer an additional
amount of Shares not to exceed 2% of the outstanding Shares without amending or
extending the Offer. If (i) the Company increases or decreases the price to be
paid for Shares, the Company increases or decreases the Dealer Manager's
soliciting fee, the Company increases the number of Shares being sought and such
increase in the number of Shares being sought exceeds 2% of the outstanding
Shares, or the Company decreases the number of Shares being sought and (ii) the
Offer is scheduled to expire at any time earlier than the expiration of a period
ending on the tenth business day from, and including, the date that notice of
such increase or decrease is first published, sent or given in the manner
specified in Section 15, the Offer will be extended until the expiration of ten
business days. For purposes of the Offer, a "business day" means any day other
than a Saturday, Sunday or federal holiday and consists of the time period from
12:01 a.m. through 12:00 midnight, New York City time.
THE OFFER IS NOT CONDITIONED ON ANY MINIMUM NUMBER OF SHARES BEING
TENDERED. THE OFFER IS, HOWEVER, SUBJECT TO CERTAIN OTHER CONDITIONS. SEE
SECTION 6.
In accordance with Instruction 5 of the Letter of Transmittal, each
stockholder desiring to tender Shares must specify the price (not greater than
$5.50 nor less than $4.75 per Share) at which such stockholder is willing to
have the Company purchase Shares. As promptly as practicable following the
Expiration Time, the Company will, in its sole discretion, determine the
Purchase Price (not greater than $5.50 nor less than $4.75 per Share) that it
will pay for Shares validly tendered and not withdrawn pursuant to the Offer,
taking into account the number of Shares so tendered and the prices specified by
tendering stockholders. The Company will pay the Purchase Price, even if such
Shares were tendered below the Purchase Price, for all Shares validly tendered
prior to the Expiration Time at prices at or below the Purchase Price and not
withdrawn, upon the terms and subject to the conditions of the Offer. All Shares
not purchased pursuant to the Offer, including Shares tendered at prices greater
than the Purchase Price and Shares not purchased because of proration, will be
returned to the tendering stockholders at the Company's expense as promptly as
practicable following the Expiration Time.
If the number of Shares validly tendered at or below the Purchase Price and
not withdrawn prior to the Expiration Time is less than or equal to 6,000,000
Shares (or such greater number of Shares as the Company may elect to purchase),
the Company will, upon the terms and subject to the conditions of the Offer,
purchase at the Purchase Price all Shares so tendered.
Priority. Upon the terms and subject to the conditions of the Offer, in
the event that prior to the Expiration Time more than 6,000,000 Shares (or such
greater number of Shares as the Company may elect to purchase pursuant to the
Offer) are validly tendered at or below the Purchase Price and not withdrawn,
the Company will purchase such validly tendered Shares in the following order of
priority:
(i) all Shares validly tendered at or below the Purchase Price and not
withdrawn prior to the Expiration Time by any Odd Lot Owner (as defined in
Section 2) who:
(a) tenders all Shares beneficially owned by such Odd Lot Owner at
or below the Purchase Price (partial tenders will not qualify for this
preference); and
(b) completes the box captioned "Odd Lots" on the Letter of
Transmittal and, if applicable, on the Notice of Guaranteed Delivery;
and
(ii) after purchase of all of the foregoing Shares, all other Shares
validly tendered at or below the Purchase Price and not withdrawn prior to
the Expiration Time on a pro rata basis.
Proration. In the event that proration of tendered Shares is required, the
Company will determine the final proration factor as promptly as practicable
after the Expiration Time. Proration for each stockholder tendering Shares
(other than Odd Lot Owners) shall be based on the ratio of the number of Shares
tendered by such stockholder at or below the Purchase Price to the total number
of Shares tendered by all stockholders (other than Odd Lot Owners) at or below
the Purchase Price. This ratio will be applied to stockholders
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<PAGE> 8
tendering Shares (other than Odd Lot Owners) to determine the number of Shares
that will be purchased from each such stockholder pursuant to the Offer.
Although the Company does not expect to be able to announce the final results of
such proration until approximately five business days after the Expiration Time,
it will announce preliminary results of proration by press release as promptly
as practicable after the Expiration Time. Stockholders can obtain such
preliminary information from the Information Agent and may be able to obtain
such information from their brokers.
As described in Section 14, the number of Shares that the Company will
purchase from a stockholder may affect the United States federal income tax
consequences to the stockholder of such purchase and therefore may be relevant
to a stockholder's decision whether to tender Shares. The Letter of Transmittal
affords each tendering stockholder the opportunity to designate the order of
priority in which Shares tendered are to be purchased in the event of proration.
This Offer to Purchase and the related Letter of Transmittal will be mailed
to record holders of Shares as of August 13, 1997 and will be furnished to
brokers, banks and similar persons whose names, or the names of whose nominees,
appear on the Company's stockholder list or, if applicable, who are listed as
participants in a clearing agency's security position listing for subsequent
transmittal to beneficial owners of Shares.
2. TENDERS BY OWNERS OF FEWER THAN 100 SHARES
The Company, upon the terms and subject to the conditions of the Offer,
will accept for purchase, without proration, all Shares validly tendered at or
below the Purchase Price and not withdrawn on or prior to the Expiration Time by
or on behalf of stockholders who beneficially owned as of the close of business
on August 13, 1997 and continue to beneficially own as of the Expiration Time,
an aggregate of fewer than 100 Shares ("Odd Lot Owners"). To avoid proration,
however, an Odd Lot Owner must validly tender at or below the Purchase Price all
such Shares that such Odd Lot Owner beneficially owns; partial tenders will not
qualify for this preference. This preference is also not available to owners of
100 or more Shares in the aggregate, even if such owners have separate stock
certificates for fewer than 100 such Shares. Any Odd Lot Owner wishing to tender
all such Shares beneficially owned by such stockholder pursuant to this Offer
must complete the box captioned "Odd Lots" in the Letter of Transmittal and, if
applicable, on the Notice of Guaranteed Delivery and must properly indicate in
the section entitled "Price (In Dollars) Per Share At Which Shares Are Being
Tendered" in the Letter of Transmittal the price at which such Shares are being
tendered, except that an Odd Lot Owner may check the box in the section entitled
"Odd Lots" indicating that the stockholder is tendering all of such
stockholder's Shares at the Purchase Price. See Section 3. Stockholders owning
an aggregate of less than 100 Shares whose Shares are purchased pursuant to the
Offer will avoid both the payment of brokerage commissions and any applicable
odd lot discounts payable on a sale of their Shares in transactions on a stock
exchange, including the NASDAQ. However, Odd Lot Owners holding Shares in
"street name" through a bank or brokerage house who elect to tender may be
subject to a tender fee imposed by such bank or brokerage house.
The Company also reserves the right, but will not be obligated, to purchase
all Shares duly tendered by any stockholder who tendered any Shares beneficially
owned at or below the Purchase Price and who, as a result of proration, would
then beneficially own an aggregate of fewer than 100 Shares. If the Company
exercises this right, it will increase the number of Shares that it is offering
to purchase in the Offer by the number of Shares purchased through the exercise
of such right.
3. PROCEDURE FOR TENDERING SHARES
Proper Tender of Shares. For Shares to be validly tendered pursuant to the
Offer:
(i) the certificates for such Shares (or confirmation of receipt of
such Shares pursuant to the procedures for book-entry transfer set forth
below), together with a properly completed and duly executed Letter of
Transmittal (or manually signed facsimile thereof) with any required
signature guarantees, and any other documents required by the Letter of
Transmittal, must be received prior to Expiration Time by the Depositary at
its address set forth on the back cover of this Offer to Purchase; or
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<PAGE> 9
(ii) the tendering stockholder must comply with the guaranteed
delivery procedure set forth below.
AS SPECIFIED IN INSTRUCTION 5 OF THE LETTER OF TRANSMITTAL, EACH
STOCKHOLDER DESIRING TO TENDER SHARES PURSUANT TO THE OFFER MUST PROPERLY
INDICATE IN THE SECTION CAPTIONED "PRICE (IN DOLLARS) PER SHARE AT WHICH SHARES
ARE BEING TENDERED" IN THE LETTER OF TRANSMITTAL THE PRICE (IN MULTIPLES OF
$.125) AT WHICH SUCH STOCKHOLDER'S SHARES ARE BEING TENDERED, EXCEPT THAT AN ODD
LOT OWNER MAY CHECK THE BOX IN THE SECTION OF THE LETTER OF TRANSMITTAL ENTITLED
"ODD LOTS" INDICATING THAT THE STOCKHOLDER IS TENDERING ALL OF SUCH
STOCKHOLDER'S SHARES AT THE PURCHASE PRICE. STOCKHOLDERS DESIRING TO TENDER
SHARES AT MORE THAN ONE PRICE MUST COMPLETE SEPARATE LETTERS OF TRANSMITTAL FOR
EACH PRICE AT WHICH SHARES ARE BEING TENDERED, EXCEPT THAT THE SAME SHARES
CANNOT BE TENDERED (UNLESS PROPERLY WITHDRAWN PREVIOUSLY IN ACCORDANCE WITH THE
TERMS OF THE OFFER) AT MORE THAN ONE PRICE. IN ORDER TO VALIDLY TENDER SHARES,
ONE AND ONLY ONE PRICE BOX MUST BE CHECKED IN THE APPROPRIATE SECTION ON EACH
LETTER OF TRANSMITTAL.
In addition, Odd Lot Owners who tender all Shares must complete the section
entitled "Odd Lots" on the Letter of Transmittal and, if applicable, on the
Notice of Guaranteed Delivery, in order to qualify for the preferential
treatment available to Odd Lot Owners as set forth in Section 2.
Signature Guarantees and Method of Delivery. No signature guarantee is
required on the Letter of Transmittal if (i) the Letter of Transmittal is signed
by the registered holder of the Shares (which term, for purposes of this
Section, includes any participant in The Depository Trust Company or
Philadelphia Depository Trust Company (the "Book-Entry Transfer Facilities")
whose name appears on a security position listing as the holder of the Shares)
tendered therewith and payment and delivery are to be made directly to such
registered holder, or (ii) if Shares are tendered for the account of a member
firm of a registered national securities exchange, a member of the National
Association of Securities Dealers, Inc. or a commercial bank or trust company
(not a savings bank or savings and loan association) having an office, branch or
agency in the United States (each such entity being hereinafter referred to as
an "Eligible Institution"). In all other cases, all signatures on the Letter of
Transmittal must be guaranteed by an Eligible Institution. See Instruction 1 of
the Letter of Transmittal. If a certificate representing Shares is registered in
the name of a person other than the signer of a Letter of Transmittal, or if
payment is to be made, or Shares not purchased or tendered are to be issued, to
a person other than the registered holder, the certificate must be endorsed or
accompanied by an appropriate stock power, in either case signed exactly as the
name of the registered holder appears on the certificate, with the signature on
the certificate or stock power guaranteed by an Eligible Institution. In this
regard see Section 5 for information with respect to applicable stock transfer
taxes. In all cases, payment for Shares tendered and accepted for payment
pursuant to the Offer will be made only after timely receipt by the Depositary
of certificates for such Shares (or a timely confirmation of a book-entry
transfer of such Shares into the Depositary's account at one of the Book-Entry
Transfer Facilities as described above), a properly completed and duly executed
Letter of Transmittal (or manually signed facsimile thereof) and any other
documents required by the Letter of Transmittal. THE METHOD OF DELIVERY OF ALL
DOCUMENTS, INCLUDING SHARE CERTIFICATES, THE LETTER OF TRANSMITTAL AND ANY OTHER
REQUIRED DOCUMENTS, IS AT THE ELECTION AND RISK OF THE TENDERING STOCKHOLDER. IF
DELIVERY IS BY MAIL, REGISTERED MAIL WITH RETURN RECEIPT REQUESTED, PROPERLY
INSURED, IS RECOMMENDED.
Book-Entry Delivery. The Depositary will establish an account with respect
to the Shares at each of the Book-Entry Transfer Facilities 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 a Book-Entry Transfer Facility's
system may make book-entry delivery of the Shares by causing such facility to
transfer such Shares into the Depositary's account in accordance with such
facility's procedure for such transfer. Even though delivery of Shares may be
effected through book-entry transfer into the Depositary's account at one of the
Book-Entry Transfer Facilities, a properly completed and duly executed Letter of
Transmittal (or manually signed facsimile thereof), with any required signature
guarantees and other required documents must, in any case, be transmitted to and
received by the Depositary at one of its addresses set forth on the back cover
of this Offer to Purchase prior to the
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<PAGE> 10
Expiration Time, or the guaranteed delivery procedure set forth below must be
followed. DELIVERY OF THE LETTER OF TRANSMITTAL AND ANY OTHER REQUIRED DOCUMENTS
TO ONE OF THE BOOK-ENTRY TRANSFER FACILITIES DOES NOT CONSTITUTE DELIVERY TO THE
DEPOSITARY.
Guaranteed Delivery. If a stockholder desires to tender Shares pursuant to
the Offer and such stockholder's Share certificates cannot be delivered to the
Depositary prior to the Expiration Time (or the procedures for book-entry
transfer cannot be completed on a timely basis) or time will not permit all
required documents to reach the Depositary before the Expiration Time, such
Shares may nevertheless be tendered provided that all of the following
conditions are satisfied:
(i) such tender is made by or through an Eligible Institution;
(ii) the Depositary receives (by hand, mail, overnight courier,
telegram or facsimile transmission), on or prior to the Expiration Time, a
properly completed and duly executed Notice of Guaranteed Delivery
substantially in the form the Company has provided with this Offer to
Purchase (indicating the price at which the Shares are being tendered),
including (where required) a signature guarantee by an Eligible Institution
in the form set forth in such Notice of Guaranteed Delivery; and
(iii) the certificates for all tendered Shares in proper form for
transfer (or confirmation of book-entry transfer of such Shares into the
Depositary's account at one of the Book-Entry Transfer Facilities),
together with a properly completed and duly executed Letter of Transmittal
(or manually signed facsimile thereof) and any required signature
guarantees or other documents required by the Letter of Transmittal, are
received by the Depositary within three NASDAQ trading days after the date
the Depositary receives such Notice of Guaranteed Delivery.
If any tendered Shares are not purchased, or if less than all Shares
evidenced by a stockholder's certificates are tendered, certificates for
unpurchased Shares will be returned as promptly as practicable after the
expiration or termination of the Offer or, in the case of Shares tendered by
book-entry transfer at a Book-Entry Transfer Facility, such Shares will be
credited to the appropriate account maintained by the tendering stockholder at
the appropriate Book-Entry Transfer Facility, in each case without expense to
such stockholder.
Backup Federal Income Tax Withholding. Under the United States federal
income tax backup withholding rules, unless an exemption applies under the
applicable law and regulations, 31% of the gross proceeds payable to a
stockholder or other payee pursuant to the Offer must be withheld and remitted
to the United States Treasury, unless the stockholder or other payee provides
such person's taxpayer identification number (employer identification number or
social security number) to the Depositary and certifies under penalties of
perjury that such number is correct. Therefore, each tendering stockholder
should complete and sign the Substitute Form W-9 included as part of the Letter
of Transmittal so as to provide the information and certification necessary to
avoid backup withholding, unless such stockholder otherwise establishes to the
satisfaction of the Depositary that the stockholder is not subject to backup
withholding. Certain stockholders (including, among others, all corporations and
certain foreign stockholders (in addition to foreign corporations)) are not
subject to these backup withholding and reporting requirements. In order for a
foreign stockholder to qualify as an exempt recipient, that stockholder must
submit an IRS Form W-8 or a Substitute Form W-8, signed under penalties of
perjury, attesting to that stockholder's exempt status. Such statements can be
obtained from the Depositary. See Instructions 10 and 11 of the Letter of
Transmittal.
TO PREVENT BACKUP FEDERAL INCOME TAX WITHHOLDING EQUAL TO 31% OF THE GROSS
PAYMENTS MADE TO STOCKHOLDERS FOR SHARES PURCHASED PURSUANT TO THE OFFER, EACH
STOCKHOLDER WHO DOES NOT OTHERWISE ESTABLISH AN EXEMPTION FROM SUCH WITHHOLDING
MUST PROVIDE THE DEPOSITARY WITH THE STOCKHOLDER'S CORRECT TAXPAYER
IDENTIFICATION NUMBER AND PROVIDE CERTAIN OTHER INFORMATION BY COMPLETING THE
SUBSTITUTE FORM W-9 INCLUDED WITH THE LETTER OF TRANSMITTAL.
For a discussion of certain United States federal income tax consequences
to tendering stockholders, see Section 14.
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Withholding For Foreign Stockholders. Even if a foreign stockholder has
provided the required certification to avoid backup withholding, the Depositary
will withhold United States federal income taxes equal to 30% of the gross
payments payable to a foreign stockholder or his or her agent unless the
Depositary determines that a reduced rate of withholding is available pursuant
to a tax treaty or that an exemption from withholding is applicable because such
gross proceeds are effectively connected with the conduct of a trade or business
within the United States. For this purpose, a foreign stockholder is any
stockholder that is not (i) a citizen or resident of the United States, (ii) a
corporation, partnership, or other entity created or organized in or under the
laws of the United States, any State or any political subdivision thereof or
(iii) an estate or trust, the income of which is subject to United States
federal income taxation regardless of the source of such income. In order to
obtain a reduced rate of withholding pursuant to a tax treaty, a foreign
stockholder must deliver to the Depositary before the payment a properly
completed and executed IRS Form 1001. In order to obtain an exemption from
withholding on the grounds that the gross proceeds paid pursuant to the Offer
are effectively connected with the conduct of a trade or business within the
United States, a foreign stockholder must deliver to the Depositary a properly
completed and executed IRS Form 4224. The Depositary will determine a
stockholder's status as a foreign stockholder and eligibility for a reduced rate
of, or exemption from, withholding by reference to any outstanding certificates
or statements concerning eligibility for a reduced rate of, or exemption from,
withholding (e.g., IRS Form 1001 or IRS Form 4224) unless facts and
circumstances indicate that such reliance is not warranted. A foreign
stockholder may be eligible to obtain a refund of all or a portion of any tax
withheld if such stockholder meets the "complete redemption", "substantially
disproportionate" or "not essentially equivalent to a dividend" test described
in Section 14 or is otherwise able to establish that no tax or a reduced amount
of tax is due. Backup withholding generally will not apply to amounts subject to
the 30% or a treaty-reduced rate of withholding. Foreign stockholders are urged
to consult their own tax advisors regarding the application of United States
federal income tax withholding, including eligibility for a withholding tax
reduction or exemption, and the refund procedure. See Instructions 10 and 11 of
the Letter of Transmittal.
Tendering Stockholder's Representation and Warranty; Company's Acceptance
Constitutes an Agreement. It is a violation of Rule 14e-4 promulgated under the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), for a person
acting alone or in concert with others, directly or indirectly, to tender Shares
for such person's own account unless at the time of tender and at the Expiration
Time such person has a "net long position" equal to or greater than the amount
tendered in (i) the Shares and will deliver or cause to be delivered such Shares
for the purpose of tender to the Company within the period specified in the
Offer, or (ii) other securities immediately convertible into, exercisable for or
exchangeable into Shares ("Equivalent Securities") and, upon the acceptance of
such tender, will acquire such Shares by conversion, exchange or exercise of
such Equivalent Securities to the extent required by the terms of the Offer and
will deliver or cause to be delivered such Shares so acquired for the purpose of
tender to the Company within the period specified in the Offer. Rule 14e-4 also
provides a similar restriction applicable to the tender or guarantee of a tender
on behalf of another person. A tender of Shares made pursuant to any method of
delivery set forth herein will constitute the tendering stockholder's
representation and warranty to the Company that (i) such stockholder has a "net
long position" in Shares or Equivalent Securities being tendered within the
meaning of Rule 14e-4, and (ii) such tender of Shares complies with Rule 14e-4.
The Company's acceptance for payment of Shares tendered pursuant to the Offer
will constitute a binding agreement between the tendering stockholder and the
Company upon the terms and subject to the conditions of the Offer.
Determinations of Validity; Rejection of Shares; Waiver of Defects; No
Obligation to Give Notice of Defects. All questions as to the number of Shares
to be accepted, the price to be paid therefor and the validity, form,
eligibility (including time of receipt) and acceptance for payment of any tender
of Shares will be determined by the Company, in its sole discretion, which
determination shall be final and binding on all parties. The Company reserves
the absolute right to reject any or all tenders it determines not to be in
proper form or the acceptance of or payment for which may, in the opinion of the
Company's counsel, be unlawful. The Company also reserves the absolute right to
waive any of the conditions of the Offer and any defect or irregularity in the
tender of any particular Shares or any particular stockholder. No tender of
Shares will be deemed to be properly made until all defects or irregularities
have been cured or waived. None of the Company, the Dealer Manager, the
Depositary, the Information Agent or any other person is or will be
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obligated to give notice of any defects or irregularities in tenders, and none
of them will incur any liability for failure to give any such notice.
CERTIFICATES FOR SHARES, TOGETHER WITH A PROPERLY COMPLETED LETTER OF
TRANSMITTAL AND ANY OTHER DOCUMENTS REQUIRED BY THE LETTER OF TRANSMITTAL, MUST
BE DELIVERED TO THE DEPOSITARY AND NOT TO THE COMPANY. ANY SUCH DOCUMENTS
DELIVERED TO THE COMPANY WILL NOT BE FORWARDED TO THE DEPOSITARY AND THEREFORE
WILL NOT BE DEEMED TO BE VALIDLY TENDERED.
4. WITHDRAWAL RIGHTS
Except as otherwise provided in this Section 4, tenders of Shares pursuant
to the Offer are irrevocable. Shares tendered pursuant to the Offer may be
withdrawn at any time before the Expiration Time and, unless accepted for
payment by the Company as provided in this Offer to Purchase, may also be
withdrawn after 12:00 Midnight, New York City time, on October 9, 1997.
For a withdrawal to be effective, the Depositary must receive (at its
address set forth on the back cover of this Offer to Purchase) a notice of
withdrawal in written, telegraphic or facsimile transmission form on a timely
basis. Such notice of withdrawal must specify the name of the person who
tendered the Shares to be withdrawn, the number of Shares tendered, the number
of Shares to be withdrawn and the name of the registered holder, if different
from that of the person who tendered such Shares. If the certificates have been
delivered or otherwise identified to the Depositary, then, prior to the release
of such certificates, the tendering stockholder must also submit the serial
numbers shown on the particular certificates evidencing the Shares and the
signature on the notice of withdrawal must be guaranteed by an Eligible
Institution (except in the case of Shares tendered by an Eligible Institution).
If Shares have been tendered pursuant to the procedure for book-entry transfer
set forth in Section 3, the notice of withdrawal must specify the name and the
number of the account at the applicable Book-Entry Transfer Facility to be
credited with the withdrawn Shares and otherwise comply with the procedures of
such facility. All questions as to the form and validity, including time of
receipt, of notices of withdrawal will be determined by the Company, in its sole
discretion, which determination shall be final and binding on all parties. None
of the Company, the Dealer Manager, the Depositary, the Information Agent or any
other person is or will be obligated to give any notice of any defects or
irregularities in any notice of withdrawal, and none of them will incur any
liability for failure to give any such notice. Withdrawals may not be rescinded,
and any Shares properly withdrawn will thereafter be deemed not tendered for
purposes of the Offer. However, withdrawn Shares may be retendered before the
Expiration Time by again following any of the procedures described in Section 3.
If the Company extends the Offer, is delayed in its purchase of Shares or
is unable to purchase Shares pursuant to the Offer for any reason, then, without
prejudice to the Company's rights under the Offer, the Depositary may, subject
to applicable law, retain on behalf of the Company all tendered Shares, and such
Shares may not be withdrawn except to the extent tendering stockholders are
entitled to withdrawal rights as described in this Section 4.
5. PURCHASE OF SHARES AND PAYMENT OF PURCHASE PRICE
The Company will, upon the terms and subject to the conditions of the
Offer, determine a single per Share Purchase Price that it will pay for Shares
validly tendered and not withdrawn pursuant to the Offer, taking into account
the number of Shares so tendered and the prices specified by tendering
stockholders, and will accept for payment and pay for (and thereby purchase)
Shares validly tendered at or below the Purchase Price and not withdrawn as soon
as practicable after the Expiration Time. For purposes of the Offer, the Company
will be deemed to have accepted for payment (and therefore purchased), subject
to proration, Shares that are validly tendered at or below the Purchase Price
and not withdrawn when, as and if it gives oral or written notice to the
Depositary of its acceptance of such Shares for payment pursuant to the Offer.
Upon the terms and subject to the conditions of the Offer, the Company will
purchase and pay a single per Share Purchase Price for all of the Shares
accepted for payment pursuant to the Offer as soon as practicable after the
Expiration Time. In all cases, payment for Shares tendered and accepted for
payment
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pursuant to the Offer will be made promptly (subject to possible delay in the
event of proration) but only after timely receipt by the Depositary of
certificates for Shares (or of a timely confirmation of a book-entry transfer of
such Shares into the Depositary's account at one of the Book-Entry Transfer
Facilities), a properly completed and duly executed Letter of Transmittal (or
manually signed facsimile thereof) and any other required documents.
Payment for Shares purchased pursuant to the Offer will be made by
depositing the aggregate Purchase Price therefor with the Depositary, which will
act as agent for tendering stockholders for the purpose of receiving payment
from the Company and transmitting payment to the tendering stockholders. In the
event of proration, the Company will determine the proration factor and pay for
those tendered Shares accepted for payment as soon as practicable after the
Expiration Time. However, the Company does not expect to be able to announce the
final results of any such proration until approximately five business days after
the Expiration Time. Under no circumstances will the Company pay interest on the
Purchase Price including, without limitation, by reason of any delay in making
payment. Certificates for all Shares not purchased, including all Shares
tendered at prices greater than the Purchase Price and Shares not purchased due
to proration, will be returned (or, in the case of Shares tendered by book-entry
transfer, such Shares will be credited to the account maintained with one of the
Book-Entry Transfer Facilities by the participant who so delivered such Shares)
as promptly as practicable following the Expiration Time or termination of the
Offer without expense to the tendering stockholder. In addition, if certain
events occur, the Company may not be obligated to purchase Shares pursuant to
the Offer. See Section 6.
The Company will pay all stock transfer taxes, if any, payable on the
transfer to it of Shares purchased pursuant to the Offer; provided, however,
that if payment of the Purchase Price is to be made to, or (in the circumstances
permitted by the Offer) if unpurchased Shares are to be registered in the name
of, any person other than the registered holder, or if tendered certificates are
registered in the name of any person other than the person signing the Letter of
Transmittal, the amount of all stock transfer taxes, if any (whether imposed on
the registered holder or such other person), payable on account of the transfer
to such person will be deducted from the Purchase Price unless evidence
satisfactory to the Company of the payment of such taxes or exemption therefrom
is submitted. See Instruction 7 of the Letter of Transmittal.
ANY TENDERING STOCKHOLDER OR OTHER PAYEE WHO FAILS TO COMPLETE FULLY, SIGN
AND RETURN TO THE DEPOSITARY THE SUBSTITUTE FORM W-9 INCLUDED WITH THE LETTER OF
TRANSMITTAL MAY BE SUBJECT TO REQUIRED BACKUP FEDERAL INCOME TAX WITHHOLDING OF
31% OF THE GROSS PROCEEDS PAID TO SUCH STOCKHOLDER OR OTHER PAYEE PURSUANT TO
THE OFFER. SEE SECTION 3. ALSO SEE SECTION 3 REGARDING CERTAIN FEDERAL INCOME
TAX CONSEQUENCES FOR FOREIGN STOCKHOLDERS.
6. CERTAIN CONDITIONS OF THE OFFER
Notwithstanding any other provision of the Offer, the Company shall not be
required to accept for payment, purchase or pay for any Shares tendered, and may
terminate or amend the Offer or may postpone the acceptance for payment of, or
the purchase of and the payment for Shares tendered, subject to Rule 13e-4(f)
promulgated under the Exchange Act, if at any time on or after August 14, 1997
and prior to the time of payment for any such Shares (whether any Shares have
theretofore been accepted for payment, purchased or paid for pursuant to the
Offer) any of the following events shall have occurred (or shall have been
determined by the Company to have occurred) that, in the Company's judgment in
any such case and regardless of the circumstances giving rise thereto (including
any action or omission to act by the Company), makes it inadvisable to proceed
with the Offer or with such acceptance for payment or payment:
(i) there shall have been threatened, instituted or pending before any
court, agency, authority or other tribunal any action, suit or proceeding
by any government or governmental, regulatory or administrative agency or
authority or by any other person, domestic or foreign, or any judgment,
order or injunction entered, enforced or deemed applicable by any such
court, authority, agency or tribunal, which (a) challenges or seeks to make
illegal, or to delay or otherwise directly or indirectly to restrain,
prohibit
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or otherwise affect the making of the Offer, the acquisition of Shares
pursuant to the Offer or is otherwise related in any manner to, or
otherwise affects, the Offer; or (b) could, in the sole judgment of the
Company, materially affect the business, condition (financial or other),
income, operations or prospects of the Company and its subsidiaries, taken
as a whole, or otherwise materially impair in any way the contemplated
future conduct of the business of the Company and its subsidiaries, taken
as a whole, or materially impair the Offer's contemplated benefits to the
Company; or
(ii) there shall have been any action threatened or taken, or any
approval withheld, or any statute, rule or regulation invoked, proposed,
sought, promulgated, enacted, entered, amended, enforced or deemed to be
applicable to the Offer or the Company or any of its subsidiaries, by any
government or governmental, regulatory or administrative authority or
agency or tribunal, domestic or foreign, which, in the sole judgment of the
Company, would or might directly or indirectly result in any of the
consequences referred to in clause (a) or (b) of paragraph (i) above; or
(iii) there shall have occurred (a) the declaration of any banking
moratorium or any suspension of payments in respect of banks in the United
States (whether or not mandatory); (b) any general suspension of trading
in, or limitation on prices for, securities on any United States national
securities exchange or in the over-the-counter market; (c) the commencement
of a war, armed hostilities or any other national or international crisis
directly or indirectly involving the United States; (d) any limitation
(whether or not mandatory) by any governmental, regulatory or
administrative agency or authority on, or any event which, in the sole
judgment of the Company, might materially affect, the extension of credit
by banks or other lending institutions in the United States; (e) any
significant decrease in the market price of the Shares or in the market
prices of equity securities generally in the United States or any change in
the general political, market, economic or financial conditions or in the
commercial paper markets in the United States or abroad that could have in
the sole judgment of the Company a material adverse effect on the business,
condition (financial or otherwise), income, operations or prospects of the
Company and its subsidiaries, taken as a whole, or on the trading in the
Shares; (f) in the case of any of the foregoing existing at the time of the
announcement of the Offer, a material acceleration or worsening thereof; or
(g) any decline in either the Dow Jones Industrial Average or the S&P 500
Composite Index by an amount in excess of 10% measured from the close of
business on August 13, 1997; or
(iv) any change shall occur or be threatened in the business,
condition (financial or other), income, operations or prospects of the
Company and its subsidiaries, taken as a whole, which in the sole judgment
of the Company is or may be material to the Company and its subsidiaries
taken as a whole; or
(v) a tender or exchange offer with respect to some or all of the
Shares (other than the Offer), or a merger or acquisition proposal for the
Company, shall have been proposed, announced or made by another person or
shall have been publicly disclosed, or the Company shall have learned that
(a) any person 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 the outstanding Shares, or (b) any new group
shall have been formed that beneficially owns more than 5% of the
outstanding Shares; or
(vi) any person or group shall have filed a Notification and Report
Form under the Hart-Scott-Rodino Antitrust Improvements Act of 1976
reflecting an intent to acquire the Company or any of its Shares.
The foregoing conditions are for the Company's sole benefit and may be
asserted by the Company regardless of the circumstances giving rise to any such
condition (including any action or inaction by the Company) or may be waived by
the Company in whole or in part. The Company's failure at any time to exercise
any of the foregoing rights shall not be deemed a waiver of any such right, and
each such right shall be deemed an ongoing right that may be asserted at any
time and from time to time. Any determination by the Company concerning the
events described above and any related judgment or decision by the Company
regarding the inadvisability of proceeding with the purchase of or payment for
any Shares tendered will be final and binding on all parties.
14
<PAGE> 15
7. PRICE RANGE OF SHARES
The Shares are listed and traded on NASDAQ. The high and low sales prices
per Share on NASDAQ as compiled from published financial sources for the periods
indicated are listed below:
<TABLE>
<CAPTION>
HIGH LOW
------- ------
<S> <C> <C>
Calendar Year 1995:
1st Quarter............................................... $ 6.375 $4.875
2nd Quarter............................................... $ 8.125 $5.375
3rd Quarter............................................... $10.250 $7.250
4th Quarter............................................... $15.125 $6.750
Calendar Year 1996:
1st Quarter............................................... $14.500 $8.750
2nd Quarter............................................... $13.875 $9.875
3rd Quarter............................................... $11.250 $6.875
4th Quarter............................................... $ 8.625 $6.000
Calendar Year 1997:
1st Quarter............................................... $ 7.313 $4.375
2nd Quarter............................................... $ 5.250 $3.000
3rd Quarter (through August 13, 1997)..................... $ 4.375 $3.438
</TABLE>
On August 13, 1997, the closing per Share sales price as reported on NASDAQ
was $4.125. THE COMPANY URGES STOCKHOLDERS TO OBTAIN CURRENT QUOTATIONS OF THE
MARKET PRICE OF THE SHARES.
8. BACKGROUND AND PURPOSE OF THE OFFER; CERTAIN EFFECTS OF THE OFFER
For information with respect to certain events relating to the Company, see
"Certain Information about the Company -- Recent Events" in Section 11. The
Company announced on August 14, 1997 its intention to commence the Offer on
August 14, 1997 and included in such announcement certain terms of the Offer
consistent with those set forth in this Offer to Purchase.
The Offer provides stockholders who are considering a sale of all or a
portion of their Shares the opportunity to determine the price or prices (not
greater than $5.50 nor less than $4.75 per Share) at which they are willing to
sell their Shares and, if any such Shares are purchased pursuant to the Offer,
to sell those Shares for cash to the Company. Any Odd Lot Owners whose Shares
are purchased pursuant to the Offer will avoid both the payment of brokerage
commissions and any applicable odd lot discounts payable on sales of odd lots.
However, Odd Lot Owners holding Shares in "street name" through a bank or
brokerage house who elect to tender may be subject to a tender fee imposed by
such bank or brokerage house. To the extent the purchase of Shares in the Offer
results in a reduction in the number of stockholders of record, the costs to the
Company for services to stockholders will be reduced. Stockholders who determine
not to accept the Offer will increase their proportionate interest in the
Company's equity, and thus in the Company's future earnings and assets, subject
to the Company's right to issue additional Shares and other equity securities in
the future.
On June 20, 1997, the Board of Directors authorized the Company to
repurchase up to $20.0 million of Shares, and as of August 13, 1997, the Company
had repurchased 165,000 Shares on the open market at prices ranging from $3.6875
to $4.2500 per Share (average price of $3.8504 per Share). On August 1, 1997,
the Board of Directors authorized the Company to repurchase 6,000,000 Shares
pursuant to the Offer in replacement of the Share repurchase program authorized
in June 1997.
The Board of Directors has determined that the Company's financial
condition and outlook and current market conditions, including recent trading
prices of the Shares, make this purchase of Shares an attractive investment and
use of the Company's cash reserves that should benefit the Company and its
stockholders over the long term. In particular, the Board of Directors believes
that the purchase of Shares at this time is consistent with the Company's long
term corporate goal of seeking to increase stockholder value.
15
<PAGE> 16
THE BOARD OF DIRECTORS OF THE COMPANY HAS APPROVED THE OFFER. HOWEVER,
STOCKHOLDERS MUST MAKE THEIR OWN DECISIONS WHETHER TO TENDER SHARES AND, IF SO,
HOW MANY SHARES TO TENDER AND THE PRICE OR PRICES AT WHICH SHARES SHOULD BE
TENDERED. NEITHER THE COMPANY NOR ITS BOARD OF DIRECTORS MAKES ANY
RECOMMENDATION TO ANY STOCKHOLDER AS TO WHETHER TO TENDER OR REFRAIN FROM
TENDERING SHARES AND NEITHER THE COMPANY NOR ITS BOARD OF DIRECTORS HAS
AUTHORIZED ANY PERSON TO MAKE ANY SUCH RECOMMENDATION. THE COMPANY HAS BEEN
ADVISED THAT NONE OF ITS DIRECTORS OR EXECUTIVE OFFICERS INTENDS TO TENDER ANY
SHARES PURSUANT TO THE OFFER.
With respect to, and in addition to, the open market purchase program
announced by the Company in June 1997, the Company may in the future purchase
additional Shares on the open market, in private transactions, through tender
offers or otherwise. Any such purchases may be on the same terms as, or on terms
that are more or less favorable to stockholders than, the terms of the Offer.
However, Rule 13e-4 promulgated under the Exchange Act generally prohibits the
Company and its affiliates from purchasing any Shares, other than pursuant to
the Offer, until at least ten business days after the expiration or termination
of the Offer. Any possible future purchases by the Company will depend on many
factors, including the market price of the Shares, the results of the Offer, the
Company's business and financial position and general economic and market
conditions.
Shares the Company acquires pursuant to the Offer will be retained as
treasury stock by the Company (unless and until the Company determines to retire
such Shares) and will be available for the Company to issue without further
stockholder action (except as required by applicable law or, if retired, the
rules of any securities exchange on which Shares are listed) for purposes
including, but not limited to, the acquisition of other businesses, the raising
of additional capital for use in the Company's business and the satisfaction of
obligations under existing or future employee benefit plans. The Company has no
current plans for issuance of the Shares repurchased pursuant to the Offer.
9. INTERESTS OF DIRECTORS AND EXECUTIVE OFFICERS; TRANSACTIONS AND ARRANGEMENTS
CONCERNING THE SHARES
As of August 13, 1997, there were 30,656,388 Shares outstanding and
3,273,944 Shares issuable upon exercise of all outstanding Options. As of August
13, 1997, the Company's directors and executive officers as a group (10 persons)
beneficially owned 5,436,400 Shares (including 633,000 Shares issuable to such
persons upon exercise of Options exercisable within 60 days of such date) which
constituted 17.3% of the outstanding Shares (including Shares issuable if
Options held by the Company's directors and executive officers exercisable
within sixty days of such date were exercised) at such time. If the Company
purchases 6,000,000 Shares pursuant to the Offer (19.6% of the outstanding
Shares as of August 13, 1997) and no director or executive officer tenders
Shares pursuant to the Offer, then after the purchase of Shares pursuant to the
Offer, the Company's directors and executive officers as a group would
beneficially own approximately 21.5% of the outstanding Shares (including Shares
issuable if Options held by the Company's directors and executive officers
exercisable within sixty days of such date were exercised).
Except as set forth in Schedule I hereto, based upon the Company's records
and upon information provided to the Company by its directors, executive
officers, associates and subsidiaries, neither the Company nor any of its
associates or subsidiaries or persons controlling the Company nor, to the best
of the Company's knowledge, any of the directors or executive officers of the
Company or any of its subsidiaries, nor any associates or subsidiaries of any of
the foregoing, has effected any transactions in the Shares during the 40
business days prior to the date hereof.
Except as set forth in this Offer to Purchase, neither the Company or any
person controlling the Company nor, to the Company's knowledge, any of its
directors or executive officers, is a party to any contract, arrangement,
understanding or relationship with any other person relating, directly or
indirectly, to the Offer with respect to any securities of the Company
(including, but not limited to, any contract, arrangement, understanding or
relationship concerning the transfer or the voting of any such securities, joint
ventures, loan
16
<PAGE> 17
or option arrangements, puts or calls, guarantees of loans, guarantees against
loss or the giving or withholding of proxies, consents or authorizations).
10. SOURCE AND AMOUNT OF FUNDS
Assuming that the Company purchases 6,000,000 Shares pursuant to the Offer
at a purchase price of $5.50 per Share, the Company expects the maximum
aggregate cost, including all fees and expenses applicable to the Offer, to be
approximately $34.0 million. The Company estimates that substantially all of the
funds necessary to pay such amounts will come from cash and marketable
securities on hand.
11. CERTAIN INFORMATION ABOUT THE COMPANY
The Company designs, develops, markets and supports high-performance, easy
to deploy, distributed business systems recovery software solutions for
enterprise customers which implement the Company's lossless data compression
technologies. In addition, through its Original Equipment Manufacturer ("OEM")
networking products subsidiary, Hi/fn, Inc. ("Hi/fn"), the Company designs,
develops and markets semiconductor and software solutions to improve the
efficiency, security and manageability of networks and to enhance the storage
capacity of high capacity/high speed tape storage devices. The Company also
supports a remote access software suite, which is managed as a mature business
unit. The Company intends to focus its development and marketing resources on
the business segments it believes have the highest growth potential, and to
continually evaluate its strategic objectives with respect to its mature remote
access software business. The Company's products are sold through a variety of
domestic and international channels.
The Company's storage systems recovery software business is comprised of
Replica, a high-performance, easy to deploy distributed business systems
recovery software product, which enables fast PC server replication and disaster
recovery. Replica for NetWare was introduced in February 1996, and Replica for
NT was made available in April 1997. In July 1997, as a result of the Company's
sales and marketing efforts, Stac received a significant order for Replica for
NT through a large international systems integrator for a national retail chain.
The Company intends to continue to focus on development of such relationships
and to invest significant amounts of its future product development, marketing
and sales resources in Replica and extensions to Replica.
The Company provides communications software which is comprised of ReachOut
Remote Control software ("ReachOut"), a remote access software suite which
allows users to access a remote PC using another PC through the Internet, or
over ISDN lines, modems or networks. ReachOut works with Microsoft Corporation's
Windows NT, Windows 95, Windows 3.x and DOS operating systems.
Hi/fn is focused on improving the efficiency, security and manageability of
networks by providing solutions in software and silicon to packet processing
bottlenecks. Hi/fn implements its patented lossless data compression in software
libraries and semiconductors, which are marketed and sold to manufacturers of
routers, firewalls, remote access servers, ISDN connectivity products, tape
storage devices and printers. Currently, the majority of Hi/fn's sales are to a
single storage hardware OEM. Hi/fn is also implementing data encryption
standards in software and silicon to use with its data compression to provide
fast, efficient and secure data transmission capabilities for its customers'
products. Hi/fn's products are sold world-wide to OEMs both directly and through
manufacturers' representatives.
Hi/fn has licensed its data compression software to companies such as
Microsoft, Cisco Systems Inc., Netscape Communications Corporation, Ascend
Communications Inc. and Bay Networks Inc., all of which play significant roles
in the development and marketing of Internet and virtual private network
products. In addition, Hi/fn, Microsoft and Cisco have co-authored a proposal to
the Internet Engineering Task Force (the "IETF") for implementation of lossless
data compression in the IP Security ("IPSEC") protocol. However, there can be no
assurance that these proposals will ultimately be adopted by the IETF, or that
alternatives using other data compression technology will not be proposed and
adopted.
The Company receives royalties from Microsoft and IBM Corporation for
licenses of its data compression technology. The Company will receive $4.0
million in royalties quarterly through the December 1997 quarter
17
<PAGE> 18
and $1.3 million in the March 1998 quarter, after which the license agreements
will be fully paid-up. On an after tax basis, the license fees from Microsoft
and IBM have been contributing approximately $2.4 million per quarter to net
income.
Fluctuations in annual and quarterly results may occur as a result of
factors affecting demand for the Company's products such as the timing of the
Company's and competitors' new product introductions and upgrades. Due to such
fluctuations, historical results and percentage relationships are not
necessarily indicative of the operating results for any future period.
Except for the historical information contained herein, the following
discussion contains forward-looking statements that involve risk and
uncertainties. The Company's future results could differ materially from those
discussed here. Factors that could cause or contribute to such differences
include but are not limited to, fluctuations in the Company's operating results,
continued new product introductions by the Company, market acceptance of the
Company's new product introductions, new product introductions by competitors,
OEM and distributor inventory levels and customer demand for the products
incorporating Hi/fn semiconductors, technological changes in the personal
computer and communications industries, uncertainties regarding intellectual
property rights and the other factors referred to herein (including, but not
limited to, the factors discussed below under "Revenues", "Quarterly Trends and
Channel Inventories," "Seasonality," "Operating Systems," "Competition and Risks
Associated with New Product Introductions" and "Stock Price Volatility") and in
the Company's Annual Report on Form 10-K for the year ended September 30, 1996
and Quarterly Reports on Form 10-Q for the periods ended December 31, 1996,
March 31, 1997 and June 30, 1997.
Pro Forma Financial Information. The following unaudited pro forma
financial information gives effect to the purchase of the Shares pursuant to the
Offer, based on certain assumptions described in the Notes to the Summary
Unaudited Pro Forma Financial Information and gives effect to the purchase of
the Shares pursuant to the Offer as if it had occurred on October 1, 1995 with
respect to income statement data and on September 30, 1996 and June 30, 1997
with respect to balance sheet data. The Summary Unaudited Pro Forma Financial
Information should be read in conjunction with the summary historical financial
information and does not purport to be indicative of the results that would
actually have been obtained had the purchase of the Shares pursuant to the Offer
been completed at the dates indicated or that may be obtained in the future.
18
<PAGE> 19
SUMMARY UNAUDITED PRO FORMA FINANCIAL INFORMATION
<TABLE>
<CAPTION>
FISCAL YEAR ENDED SEPTEMBER 30, 1996 NINE MONTHS ENDED JUNE 30, 1997
---------------------------------------------- ----------------------------------------------
PRO FORMA(A) PRO FORMA(A)
--------------------------------- ---------------------------------
ASSUMED ASSUMED ASSUMED ASSUMED
$4.75 PER SHARE $5.50 PER SHARE $4.75 PER SHARE $5.50 PER SHARE
HISTORICAL PURCHASE PRICE PURCHASE PRICE HISTORICAL PURCHASE PRICE PURCHASE PRICE
---------- --------------- --------------- ---------- --------------- ---------------
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<S> <C> <C> <C> <C> <C> <C>
Consolidated Statements
of Operations Data:
Revenues................. $ 46,765 $46,765 $46,765 $ 34,104 $34,104 $34,104
Operating income......... 2,352 2,352 2,352 5,142 5,142 5,142
Net income (loss)........ $ (1,675) $(2,784) $(2,953) $ 4,588 $ 3,756 $ 3,629
Weighted average shares
outstanding........... 30,068 24,068 24,068 31,122 25,122 25,122
Income (loss) per share:
Net income (loss) per
share............... $ (0.06) $ (0.12) $ (0.13) $ 0.15 $ 0.15 $ 0.14
Net income (loss) per
share (fully
diluted)............ $ (0.05) $ (0.11) $ (0.12) $ 0.15 $ 0.15 $ 0.14
Net income per share
before nonrecurring
adjustments(b)...... $ 0.36 $ 0.40 $ 0.40 $ 0.15 $ 0.15 $ 0.14
Ratio of earnings to
fixed charges......... na na na na na na
</TABLE>
<TABLE>
<CAPTION>
AS OF SEPTEMBER 30, 1996 AS OF JUNE 30, 1997
---------------------------------------------- ----------------------------------------------
PRO FORMA(A) PRO FORMA(A)
--------------------------------- ---------------------------------
ASSUMED ASSUMED ASSUMED ASSUMED
$4.75 PER SHARE $5.50 PER SHARE $4.75 PER SHARE $5.50 PER SHARE
HISTORICAL PURCHASE PRICE PURCHASE PRICE HISTORICAL PURCHASE PRICE PURCHASE PRICE
---------- --------------- --------------- ---------- --------------- ---------------
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<S> <C> <C> <C> <C> <C> <C>
Consolidated Balance
Sheet Data
(at end of period):
Working capital.......... $ 68,498 $38,998 $34,498 $ 72,623 $43,123 $38,623
Total assets............. 83,690 54,190 49,690 88,488 58,988 54,488
Long-term debt........... -- -- -- -- -- --
Other noncurrent
liabilities........... 242 242 242 233 233 233
Total liabilities........ 4,691 4,691 4,691 4,415 4,415 4,415
Stockholders' equity..... 78,999 49,499 44,999 84,073 54,573 50,073
Book value per share..... $ 2.57 $ 2.01 $ 1.82 $ 2.73 $ 2.20 $ 2.02
Shares outstanding....... 30,687 24,687 24,687 30,807 24,807 24,807
</TABLE>
- ---------------
(a) The pro forma information assumes 6,000,000 shares are purchased by the
Company at $4.75 per Share and $5.50 per Share, with the proceeds being
financed from the Company's available cash and marketable securities. The
assumed annualized interest rate used for pro forma income statement
purposes is 3.8%, net of applicable taxes, for the year ended September 30,
1996 and the nine months ended June 30, 1997, which represents the average
interest rate experienced by the Company. Expenses directly related to the
Offer are assumed to be $1.0 million and are included as part of the cost of
the Shares acquired.
(b) Financial information for the year ended September 30, 1996 includes a
charge of $12.5 million for purchased research and development incurred from
the acquisition of California Software, Inc. and the related investment in
DynaNet, Inc. and non-recurring charges related to the acquisition of
Crossware Development Corp.
19
<PAGE> 20
Historical Financial Information and Incorporation of Documents by
Reference. The table below sets forth summary historical consolidated financial
information of the Company and its subsidiaries. The historical financial
information as of and for the fiscal years ended September 30, 1995 and 1996 has
been derived from, and should be read in conjunction with, the audited
consolidated financial statements of the Company as reported in the Company's
Annual Reports on Form 10-K for the fiscal years ended September 30, 1995 and
1996, each of which, along with the unaudited consolidated financial statements
of the Company as reported in each of the Company's Quarterly Reports on Form
10-Q for the periods ended December 31, 1996, March 31, 1997 and June 30, 1997
are hereby incorporated herein by reference. The summary historical financial
information should be read in conjunction with, and is qualified in its entirety
by reference to, the audited financial statements and the related notes thereto
from which it has been derived. Copies of reports maybe inspected or obtained
from the Commission in the manner specified in "-- Additional Information"
below.
SUMMARY HISTORICAL FINANCIAL INFORMATION
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
THREE MONTHS
ENDED NINE MONTHS ENDED YEAR ENDED
JUNE 30, JUNE 30, SEPTEMBER 30,
----------------- ----------------- -----------------
1997 1996 1997 1996 1996 1995
------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C>
Consolidated Statements of Operations
Data:
Revenues.............................. $11,584 $10,988 $34,104 $34,532 $46,765 $45,804
Operating income (loss)............... 912 2,618 5,142 (861) 2,352 (1,035)
Net income (loss)..................... $ 1,104 $ 1,916 $ 4,588 $(4,202) $(1,675) $ 1,496
Weighted average shares outstanding... 31,070 31,423 31,122 29,886 30,068 25,391
Income (loss) per share:
Net income (loss) per share........ $ 0.04 $ 0.06 $ 0.15 $ (0.15) $ (0.06) $ 0.00
Net income (loss) per share (fully
diluted)......................... $ 0.04 $ 0.06 $ 0.15 $ (0.14) $ (0.05) $ 0.00
Ratio of earnings to fixed charges...... na na na na na na
</TABLE>
<TABLE>
<CAPTION>
YEAR ENDED
UNAUDITED SEPTEMBER 30,
JUNE 30, ------------------
1997 1996 1995
--------- ------- -------
<S> <C> <C> <C>
Consolidated Balance Sheets Data:
Working Capital................................................ $72,623 $68,498 $65,186
Total assets................................................... 88,488 83,690 80,611
Long-term debt................................................. -- -- --
Other non-current liabilities.................................. 233 242 315
Total liabilities.............................................. 4,415 4,691 4,256
Stockholders' equity........................................... 84,073 78,999 36,395
Book value per share........................................... $ 2.73 $ 2.57 $ 1.42
Shares outstanding............................................. 30,807 30,687 25,671
</TABLE>
Management's Discussion and Analysis of Financial Condition and Results of
Operations
Revenues. Revenues increased 5% to $11.6 million for the quarter ended June
30, 1997 from $11.0 million in the quarter ended June 30, 1996. Revenues
decreased 1% to $34.1 million for the nine months ended June 30, 1997 from $34.5
million in the comparable period of fiscal 1996. The increase in revenue for the
quarter as compared to the comparable quarter of the prior fiscal year is due to
higher revenues in both the
20
<PAGE> 21
Hi/fn semiconductor business and the software product group. Revenues for the
nine month period ended June 30, 1997 were lower than those in the nine months
ended June 30, 1996 due to lower revenues generated by Hi/fn during the period,
partially offset by higher software revenues.
Software sales, which are comprised of domestic and international sales and
licenses through distributors, retailers, solution providers, OEMs and direct
channels, accounted for $3.7 million, or 32% of revenues for the quarter ended
June 30, 1997 compared to $3.4 million, or 31% of revenues in the quarter ended
June 30, 1996, and $13.1 million, or 39% of revenues for the nine months ended
June 30, 1997 compared to $12.8 million, or 37% of revenues in the comparable
period of fiscal 1996. The increase in revenues for the quarter and nine months
ended June 30, 1997 over the same periods in fiscal 1996 is due primarily to
increases in ReachOut and Replica revenues, offset by decreasing sales of the
Company's Stacker disk compression software. Stacker sales continued to decline
from the comparable periods of fiscal 1996 due primarily to the inclusion of
disk compression in Windows and DOS and the availability of large capacity, low
cost per megabyte hard disk drives. The Company does not expect any significant
future Stacker sales.
Revenues from Hi/fn, which are comprised of sales and licenses of
semiconductors and software libraries derived from the Company's data
compression technology, were $3.9 million, or 34% of revenues for the quarter
ended June 30, 1997 compared to $3.6 million, or 33% of revenues in the quarter
ended June 30, 1996, and $9.0 million, or 26% of revenues for the nine months
ended June 30, 1997 compared to $9.7 million, or 28% of revenues in the
comparable period of fiscal 1996. The increase in Hi/fn's revenues in the June
30, 1997 quarter, over those in the comparable quarter of the prior fiscal year
is due primarily to increased revenues from licenses of data compression
libraries. The decrease in Hi/fn's revenues for the nine months ended June 30,
1997 from the comparable period in fiscal 1996 is due primarily to high levels
of inventory held by some OEM customers in the December 1996 quarter, consistent
with OEM's practice of building product in large lots in order to achieve
manufacturing efficiencies.
The majority of semiconductor sales in the June 1997 quarter were from
shipments of data compression coprocessors to Quantum Corporation, an OEM
producer of high speed/high capacity tape storage devices. Hi/fn's order backlog
as of June 30, 1997 was $5.5 million for products shippable in the September
1997 quarter, the majority of which are to Quantum. Due to the scheduled release
of new versions of the Company's semiconductor products, the Company expects to
record a significant reserve for possible returns in the September 1997 quarter.
The Company expects Hi/fn's net revenues for the September 1997 quarter, after
any reserves taken, to increase from those of the June 1997 quarter.
Royalties from licenses of Stac's data compression technology to operating
systems vendors were $4.0 million in each of the quarters ended June 30, 1997
and 1996, or 34% and 36% of total revenues, respectively, and $12.0 million in
each of the nine month periods ended June 30, 1997 and 1996, or 35% of total
revenues, for each nine month period. The Company will receive a total of $4.0
million per quarter in license fees from Microsoft and IBM through the December
1997 quarter and will receive $1.3 million in the March 1998 quarter, after
which the licenses will be fully paid up and the license fees will end. On an
after tax basis, the license fees from Microsoft and IBM have been contributing
approximately $2.4 million per quarter to net income.
International sales, which are included in the above sales, are comprised
primarily of software products and were $1.2 million, or 10% of revenues for the
quarter ended June 30, 1997 compared to $0.8 million, or 7% of revenues in the
quarter ended June 30, 1996, and $3.7 million, or 11% of revenues for the nine
months ended June 30, 1997 compared to $3.2 million, or 9% of revenues in the
comparable period of fiscal 1996. Stac markets and sells to its European
accounts from its office in the United Kingdom and markets and sells to the
other principal international markets through sales personnel in its San Diego
office and through relationships with distributors and resellers abroad.
Cost of Revenues and Gross Margin. Cost of revenues consists primarily of
Hi/fn's proprietary design semiconductors which are manufactured by third party
foundries for resale by Hi/fn, and the user manuals, packaging, media and
assembly associated with the Company's software products. Gross margins
increased to 86% for the quarter ended June 30, 1997 from 83% in the quarter
ended June 30, 1996 primarily due to higher margins on semiconductor sales.
Gross margins increased to 88% for the nine months ended June 30, 1997
21
<PAGE> 22
from 86% in the comparable period of fiscal 1996 primarily due to the higher
percentage of high margin software sales and royalties to total sales.
Research and Development. The cost of product development consists
primarily of salaries, employee benefits, overhead, outside contractors and
non-recurring engineering fees. Such expenses were $3.0 million and $2.1 million
for the quarters ended June 30, 1997 and 1996, respectively, and $8.2 million
and $5.8 million for the nine months then ended, respectively. The increase in
product development costs for the quarter and nine months ended June 30, 1997
over the comparable periods of fiscal 1996 was due primarily to increased
developmental activity associated with a Windows NT version for the Replica
product line, and increased developmental activity for semiconductor products.
Additionally, spending on the ReachOut product line was higher during the nine
months ended June 30, 1997 than in the comparable period of the prior fiscal
year due to increased spending on a Windows NT version. The Company expects to
continue to invest in the development of products for which it believes there is
a need in the market. However, there can be no assurance that product
development programs invested in by the Company will be successful or that
products resulting from such programs will achieve market acceptance.
Purchased research and development for the nine months ended June 30, 1996
includes $12.2 million recognized in connection with the October 1995
acquisition of California Software, Inc. and the related investment in DynaNet,
Inc.
Sales and Marketing Expense. Selling and marketing expenses consist
primarily of the salaries, commissions and benefits of sales, marketing and
customer support personnel, and consulting, advertising, promotion and overhead
expenses. Such expenses were $4.7 million and $3.4 million for the quarters
ended June 30, 1997 and 1996, respectively, and $12.6 million and $9.4 million
for the nine months then ended, respectively. The increase in marketing and
sales expense for the quarter and nine months ended June 30, 1997 over the
comparable periods of fiscal 1996 was the result of the addition of personnel
and program costs intended to create end user demand for the Company's products.
In July 1997, after reviewing its earlier additions of personnel and
programs, the Company reduced its sales and marketing personnel and, as a
result, expects its sales and marketing expenses to decrease in the September
1997 quarter. The Company expects to incur a related reorganization charge of
$0.75 million in the September 1997 quarter.
General and Administrative. General and administrative expenses are
comprised primarily of salaries for administrative and corporate services
personnel, legal, and other professional fees. Such expenses were $1.4 million
and $1.0 million for the quarters ended June 30, 1997 and 1996, respectively,
and $3.9 million and $3.2 million for the nine month periods then ended,
respectively. The increase in the current period's general and administrative
expenses over expenses incurred in the comparable period of the prior fiscal
year is primarily due to the addition of management personnel and to the costs
of outside consulting services which will continue through the September 1997
quarter.
Interest Income. Interest income was $0.6 million for the quarter ended
June 30, 1997, and $0.5 million for the quarter ended June 30, 1996, and $1.8
million and $1.6 million for the nine months then ended, respectively. The
increase in interest income for the quarter and nine months ended June 30, 1997
over the comparable periods of fiscal 1996 is due primarily to higher average
investment balances.
Income Taxes. The effective income tax rate was 29% and 39% for the
quarters ended June 30, 1997 and 1996, respectively. The effective income tax
rate for the nine month periods then ended was 34% and 38%, respectively, before
the charge in the December 1995 quarter for purchased research and development
stemming from the acquisition of California Software, Inc. and related
investment in DynaNet, Inc.. Changes in effective tax rates are impacted by the
proportion of earnings from interest income and foreign operations and the
different statutory tax rates associated with them. Consistent with statutory
guidelines, no tax benefit was recognized in the December 1995 quarter on the
purchased research and development charged to operations related to the
acquisition of California Software, Inc. and related investment in DynaNet, Inc.
due to the tax attributes of the underlying acquisition.
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Quarterly Trends, Channel Inventories, New Product Introductions. The
Company historically has experienced significant fluctuations in its revenues
and operating results, including net income, and anticipates that these
fluctuations will continue. The Company operates with relatively little backlog
of its software sales, and the majority of its software revenues each quarter
result from orders received in that quarter. Consequently, if near-term demand
for the Company's products weakens in a given quarter or if inventory of the
Company's products in the retail and distribution channels satisfies near-term
retail demand, the Company's operating results for that quarter could be
adversely affected. In addition, when the Company announces enhanced versions of
its software products, the announcement may have the effect of slowing sales of
the current version of the product as buyers delay their purchase. Quarterly
results have been or may in the future be influenced by the timing of
announcements or introductions of new products and product upgrades by the
Company or its competitors, distributor ordering patterns, product returns,
delays in product development and licensing of the Company's products. In
addition, products typically have a lengthy evaluation period before any
purchase is made.
Hi/fn's customers order semiconductor products to meet production schedules
based on forecasts of demand for their products. Additionally, OEMs contract
with third party manufacturers to build their products in large lot sizes to
achieve manufacturing efficiencies. As a result of these practices, OEM
semiconductor and finished product inventories can vary significantly depending
on actual sales, the continuation of sales trends, and the timing of contractor
manufacturing cycles, with the result that demand for the Company's
semiconductor products may have cyclical increases and decreases.
Seasonality. The software industry has experienced some seasonal variations
in demand, with sales activity declining somewhat in the summer months. The
Company believes that its software sales are subject to similar seasonal
variations which, when combined with the other factors described above, may
result in fluctuations in the Company's quarterly results. As a result,
historical quarter-to-quarter comparisons should not be relied upon as
indicative of future performance.
Operating Systems. Stac's ReachOut and Replica products currently operate
on a limited number of personal computer and network operating systems. ReachOut
supports Microsoft Windows NT, Windows 95, Windows 3.x and DOS operating
systems. Replica supports Windows NT and Novell NetWare network operating
systems. Replica customers may require support of the Unix operating system,
which the Company does not currently provide. In addition, future versions of
Microsoft's Windows operating systems may require significant changes to the
Company's products in order to maintain compatibility.
Competition and Risks Associated with New Product Introductions. The market
for the Company's products is intensely competitive. Increased competition could
result not only in a decline in sales volume, but also in price reductions that
could have a material adverse effect on the Company's business, operating
results and financial condition.
The Company's ReachOut product competes in the remote control software
market against more established products such as Symantec Corporation's
pcAnywhere and Traveling Software, Inc.'s Laplink. ReachOut also competes
against remote access products from companies such as Citrix, Inc. and Shiva
Corporation. Further, Microsoft could elect to incorporate remote control or
additional remote access capabilities into its operating systems which are
pre-installed on most personal computers. The Company believes that the growth
rate of the remote control market has decreased from prior years' growth rates
and will have a negative effect on the Company's ability to increase its remote
control revenues.
The Company began shipping Replica back-up and disaster recovery software
for Novell NetWare during the second quarter of fiscal 1996 and Replica for
Windows NT in April 1997. Replica competes with well established back-up
products from Cheyenne Software, Inc., recently purchased by Computer
Associates, Inc., and Seagate Software, Inc. (owned by Seagate Technologies,
Inc.), Legato Systems, Inc. and Veritas Software Corporation, all of which have
established channels of distribution and installed customer bases. Resellers
could choose not to sell Replica over competitors' products with the result that
significant sales of Replica could fail to materialize, or products similar to
Replica could be successfully introduced to resellers by the Company's
competitors. In addition, Microsoft's current operating systems incorporate
back-up functionality, and future operating systems are expected to include some
disaster recovery functionality.
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Replica is being introduced into sophisticated server environments and, while
the Company has invested significant resources in testing Replica under a
variety of conditions, configurations and circumstances, there are likely to be
environments which have not been anticipated for which additional development of
Replica will be necessary.
The Company's license agreement with IBM Corporation grants IBM the right
to implement, but not sublicense, the Company's patented data compression
technology in IBM hardware and software products. Also, microprocessor and chip
set suppliers, customers and others could seek to expand their product offerings
by designing and selling products using competitive data compression, or could
rely on software implementations of data compression and data encryption, or use
other technologies, any of which could render obsolete or adversely affect sales
of Hi/fn's semiconductor and software products.
Stock Price Volatility. Due to the factors noted above, the Company's
future earnings and stock price may be subject to significant volatility,
particularly on a quarterly basis. Any shortfall in earnings from levels
expected by securities analysts could have an immediate and significant adverse
effect on the trading price of the Company's common stock in any given period.
Shortfalls could be caused by shortfalls in revenues, timing of the receipt of
technology license fees, and/or increased levels of expenditures. Additionally,
the Company participates in a highly dynamic industry, which often results in
significant volatility of the Company's stock price.
Liquidity and Capital Resources
The Company's cash and marketable securities increased by $3.7 million to
$69.1 million at June 30, 1997 from that at September 30, 1996. The increase was
primarily attributable to cash generated from operations. Working capital
increased by $4.1 million to $72.6 million at June 30, 1997 from that at
September 30, 1996.
During the December 1995 quarter the Company paid $0.2 million in dividends
on its Series A Preferred Stock. The obligation to pay the preferred dividend
terminated when the preferred stock was converted to common stock in November
1995.
On August 14, 1997, the Company announced the Offer. If the maximum number
of Shares is tendered at the maximum price in the range, the Company will expend
$33.0 million plus expenses to satisfy the offer. The Offer replaces the Share
repurchase program approved by the Company's Board of Directors in June 1997.
The Company believes that, notwithstanding the completion of the Offer,
existing cash balances and funds provided by operations will be sufficient to
finance its working capital requirements for the foreseeable future.
Additional Information
The Company is subject to the informational filing requirements of the
Exchange Act and, in accordance therewith, is obligated to file reports and
other information with the Commission relating to its business, financial
condition and other matters. Information, as of particular dates, concerning the
Company's directors and officers, their remuneration, options granted to them,
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 can be
inspected and copied at the public reference facilities maintained by the
Commission at 450 Fifth Street, N.W., Room 2120, Washington D.C. 20549; at its
regional offices located at 500 West Madison Street, Suite 1400, Chicago,
Illinois 60661-2511; and 7 World Trade Center, New York, New York 10048. Copies
of such material may also be obtained by mail, upon payment of the Commission's
customary charges, from the Public Reference Section of the Commission at
Judiciary Plaza, 450 Fifth Street, N.W., Washington D.C. 20549. The Commission
also maintains a Web site on the World Wide Web at http://www.sec.gov that
contains reports, proxy and information statements and other information
regarding registrants that file electronically with the Commission. Such
reports, proxy statements and other information
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<PAGE> 25
concerning the Company also can be inspected at the offices of NASDAQ, 1735 K
Street, NW, Washington, D.C. 20006, on which the Shares are listed.
12. EFFECTS OF THE OFFER ON THE MARKET FOR SHARES; REGISTRATION UNDER THE
EXCHANGE ACT
The Company's purchase of Shares pursuant to the Offer will reduce the
number of Shares that might otherwise trade publicly and is likely to reduce the
number of stockholders. Nonetheless, there will still be a sufficient number of
Shares outstanding and publicly traded following the Offer to ensure a continued
trading market in the Shares. Based on the published guidelines of the NASDAQ,
the Company does not believe that its purchase of Shares pursuant to the Offer
will cause its remaining Shares to be delisted from such exchange.
The Shares are currently "margin securities" under the rules of the Federal
Reserve Board. This has the effect, among other things, of allowing brokers to
extend credit on the collateral of the Shares. The Company believes that,
following the purchase of Shares pursuant to the Offer, the Shares will continue
to be "margin securities" for purposes of the Federal Reserve Board's margin
regulations.
The Shares are registered under the Exchange Act, which requires, among
other things, that the Company furnish certain information to its stockholders
and to the Commission and comply with the Commission's proxy rules in connection
with meetings of the Company's stockholders. The Company believes that its
purchase of Shares pursuant to the Offer will not result in the Shares becoming
eligible for deregistration under the Exchange Act.
13. CERTAIN LEGAL MATTERS; REGULATORY AND FOREIGN APPROVALS
The Company is not aware of any license or regulatory permit that appears
to be material to its business that might be adversely affected by its
acquisition of Shares as contemplated in the Offer or of any approval or other
action by any government or governmental, administrative or regulatory authority
or agency, domestic or foreign, that would be required for the Company's
acquisition or ownership of Shares as contemplated by the Offer. Should any such
approval or other action be required, the Company currently contemplates that it
will seek such approval or other action. The Company cannot predict whether it
may determine that it is required 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 the failure to obtain any such approval or other action might not result
in adverse consequences to the Company's business. The Company's obligations
under the Offer to accept for payment and pay for Shares are subject to certain
conditions. See Section 6.
14. CERTAIN U.S. FEDERAL INCOME TAX CONSEQUENCES
The following summary describes certain United States federal income tax
consequences relevant to the Offer. The discussion contained in this summary is
based upon the Internal Revenue Code of 1986, as amended to the date hereof (the
"Code"), existing and proposed United States Treasury regulations promulgated
thereunder, rulings, administrative pronouncements and judicial decisions,
changes to which could materially affect the tax consequences described herein
and could be made on a retroactive basis. As discussed below, depending upon a
stockholder's particular circumstances, the Company's purchase of such
stockholder's Shares pursuant to the Offer may be treated either as a sale or a
dividend for United States federal income tax purposes. Accordingly, such a
purchase generally will be referred to in this section of the Offer to Purchase
as an exchange of Shares for cash.
This summary does not address the state, local or foreign tax consequences
of participating in the Offer. The summary relates only to Shares held as
capital assets, within the meaning of Section 1221 of the Code, and does not
address all of the tax consequences that may be relevant to particular
stockholders in light of their personal circumstances, or to certain types of
stockholders (such as certain financial institutions, dealers in securities or
commodities, insurance companies, tax-exempt organizations or persons who hold
Shares as a position in a "straddle" or as a part of a "hedging" or "conversion"
transaction for United States federal income tax purposes). In particular, the
discussion of the consequences of an exchange of Shares for cash
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<PAGE> 26
pursuant to the Offer applies only to a United States Holder. For purposes of
this summary, a "United States Holder" generally is a holder of Shares that is
(i) a citizen or resident of the United States, (ii) a corporation, partnership
or other entity created or organized in or under the laws of the United States,
any State or any political subdivision thereof, or (iii) an estate or trust, the
income of which is subject to United States federal income taxation regardless
of its source. This discussion does not address the tax consequences to foreign
stockholders who will be subject to United States federal income tax on a net
basis on the proceeds of their exchange of Shares pursuant to the Offer because
such income is effectively connected with the conduct of a trade or business
within the United States. Such stockholders are generally taxed in a manner
similar to United States Holders; however, certain special rules apply. Foreign
stockholders who are not subject to United States federal income tax on a net
basis should see Section 3 for a discussion of the applicable United States
withholding rules and the potential for obtaining a refund of all or a portion
of the tax withheld. EACH STOCKHOLDER SHOULD CONSULT SUCH STOCKHOLDER'S TAX
ADVISOR AS TO CERTAIN PARTICULAR CONSEQUENCES OF PARTICIPATION IN THE OFFER.
United States Holders Who Receive Cash Pursuant to the Offer. An exchange
of Shares for cash pursuant to the Offer by a United States Holder will be a
taxable transaction for United States federal income tax purposes. As a
consequence of the exchange, a United States Holder will, depending on such
holder's particular circumstances, be treated either as having sold such
holder's Shares or as having received a dividend distribution from the Company,
with the tax consequences described below.
Under Section 302 of the Code, a United States Holder whose Shares are
exchanged pursuant to the Offer will be treated as having sold such holder's
Shares, and thus will recognize gain or loss if the exchange (i) is "not
essentially equivalent to a dividend" with respect to the holder, (ii) is
"substantially disproportionate" with respect to such holder or (iii) results in
a "complete termination" of such holder's equity interest in the Company, each
as discussed below. In applying these tests, a United States Holder will be
treated as owning Shares actually or constructively owned by certain related
individuals and entities.
If a United States Holder sells Shares to persons other than the Company at
or about the time such holder also sells Shares to the Company pursuant to the
Offer, and the various sales effected by the holder are part of an overall plan
to reduce or terminate such holder's proportionate interest in the Company, then
the sales to persons other than the Company may, for United States federal
income tax purposes, be integrated with the holder's exchange of Shares pursuant
to the Offer and, if integrated, should be taken into account in determining
whether the holder satisfies any of the three tests described below.
A United States Holder will satisfy the "not essentially equivalent to a
dividend" test if the reduction in such holder's proportionate interest in the
Company constitutes a "meaningful reduction" given such holder's particular
facts and circumstances. The IRS has indicated in published rulings that any
reduction in the percentage interest of a stockholder whose relative stock
interest in a publicly-held corporation is minimal (an interest of less than 1%
should satisfy this requirement) and who exercises no control over corporate
affairs should constitute such a "meaningful reduction."
An exchange of Shares for cash will be "substantially disproportionate"
with respect to a United States Holder if the percentage of the then outstanding
Shares actually and constructively owned by such holder immediately after the
exchange is less than 80% of the percentage of the Shares actually and
constructively owned by such holder immediately before the exchange.
A United States Holder that exchanges all Shares actually or constructively
owned by such holder for cash pursuant to the Offer will be treated as having
completely terminated such holder's equity interest in the Company.
If a United States Holder is treated as having sold such holder's Shares
under the tests described above, such holder will recognize gain or loss equal
to the difference between the amount of cash received and such holders' tax
basis in the Shares exchanged therefor. Any such gain or loss will be capital
gain or loss and will be long-term capital gain or loss if the holding period of
the Shares exceeds 18 months as of the date of the exchange.
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<PAGE> 27
If a United States Holder who exchanges Shares pursuant to the Offer is not
treated under Section 302 as having sold such holder's Shares for cash, the
entire amount of cash received by such holder will be treated as a dividend to
the extent of the Company's current and accumulated earnings and profits, which
the Company anticipates will be sufficient to cover the amount of any such
dividend and will be includible in the holder's gross income as ordinary income
in its entirety, without reduction for the tax basis of the Shares exchanged,
except pursuant to the "extraordinary dividend" provisions of the Code that are
mentioned below. No loss will be recognized. The United States Holder's tax
basis in the Shares exchanged generally will be added to such holder's tax basis
in such holder's remaining Shares. To the extent that cash received in exchange
for Shares is treated as a dividend to a corporate United States Holder, such
holder will be, (i) eligible for a dividends-received deduction (subject to
applicable limitations) and (ii) subject to the "extraordinary dividend"
provisions of the Code. To the extent, if any, that the cash received by a
United States Holder exceeds the Company's current and accumulated earnings and
profits, it generally will be treated first as a tax-free return of such
holder's tax basis in the Shares and thereafter as capital gain.
The Company cannot predict whether or to what extent the Offer will be
over-subscribed. If the Offer is oversubscribed, proration of tenders pursuant
to the Offer will cause the Company to accept fewer Shares than are tendered.
Therefore, a Holder can be given no assurance that a sufficient number of such
Holder's Shares will be exchanged pursuant to the Offer to ensure that such
exchange will be treated as a sale, rather than as a dividend, for United States
federal income tax purposes pursuant to the rules discussed above.
Stockholders, none of whose Shares are exchanged pursuant to the Offer,
will not incur any tax liability as a result of the consummation of the Offer.
See Section 3 with respect to the application of United States federal
income tax withholding to payments made to foreign stockholders and backup
withholding.
THE TAX DISCUSSION SET FORTH ABOVE IS INCLUDED FOR GENERAL INFORMATION
ONLY. EACH STOCKHOLDER IS URGED TO CONSULT SUCH HOLDER'S OWN TAX ADVISOR TO
DETERMINE THE PARTICULAR TAX CONSEQUENCES TO HIM OR HER OF THE OFFER, INCLUDING
THE APPLICABILITY AND EFFECT OF STATE, LOCAL AND FOREIGN TAX LAWS.
15. EXTENSION OF THE OFFER; TERMINATION; AMENDMENTS
The Company expressly 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
set forth in Section 6 shall have occurred or shall be deemed by the Company to
have occurred, to extend the period of time during which the Offer is open and
thereby delay acceptance for payment of, and payment for, any Shares by giving
oral or written notice of such extension to the Depositary and making a public
announcement thereof. The Company also expressly reserves the right, in its sole
discretion, to terminate the Offer and not accept for payment or pay for any
Shares not theretofore accepted for payment or paid for or, subject to
applicable law, to postpone payment for Shares upon the occurrence of any of the
conditions specified in Section 6 hereof by giving oral or written notice of
such termination or postponement to the Depositary and making a public
announcement thereof. The Company's reservation of the right to delay payment
for Shares which it has accepted for payment is limited by Rule 13e-4(f)(5)
promulgated under the Exchange Act, which requires that the Company must pay the
consideration offered or return the Shares tendered promptly after termination
or withdrawal of a tender offer. Subject to compliance with applicable law, the
Company further reserves the right, in its sole discretion, and regardless of
whether any of the events set forth in Section 6 shall have occurred or shall be
deemed by the Company to have occurred, to amend the Offer in any respect
(including, without limitation, by decreasing or increasing the consideration
offered in the Offer to holders of Shares or by decreasing or increasing the
number of Shares being sought in the Offer). Amendments to the Offer may be made
at any time and from time to time effected by public announcement thereof, such
announcement, in the case of an extension, to be issued no later than 9:00 a.m.,
New York City time, on the next business day after the last previously scheduled
or announced Expiration Time. Any public announcement made pursuant to the Offer
will be disseminated promptly to stockholders in a manner reasonably designated
to inform stockholders of such
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change. Without limiting the manner in which the Company may choose to make any
public announcement, except as provided by applicable law (including Rule
13e-4(e)(2) promulgated under the Exchange Act), the Company shall have no
obligation to publish, advertise or otherwise communicate any such public
announcement other than by making a release to the Dow Jones News Service.
If the Company makes a material change in the terms of the Offer or the
information concerning the Offer, or if it waives a material condition of the
Offer, the Company will extend the Offer to the extent required by Rules
13e-4(d)(2) and 13e-4(e)(2) promulgated under the Exchange Act, which require
that 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 percentage of securities sought)
will depend upon the facts and circumstances, including the relative materiality
of such terms or information. If (i) the Company increases or decreases the
price to be paid for Shares, the Company increases or decreases the Dealer
Manager's soliciting fee, the Company increases the number of Shares being
sought and such increase in the number of Shares being sought exceeds 2% of the
outstanding Shares, or the Company decreases the number of Shares being sought,
and (ii) the Offer is scheduled to expire at any time earlier than the
expiration of a period ending on the tenth business day from, and including, the
date that notice of such increase or decrease is first published, sent or given,
the Offer will be extended until the expiration of such period of ten business
days.
16. FEES AND EXPENSES
The Company has retained Smith Barney Inc. ("Smith Barney") to act as the
Dealer Manager in connection with the Offer. Pursuant to the terms of Smith
Barney's engagement, Smith Barney will receive a fee for its services as Dealer
Manager of $.10 for each Share purchased by the Company pursuant to the Offer.
The Company also has agreed to reimburse Smith Barney for certain expenses
incurred in connection with the Offer, including out-of-pocket expenses and the
reasonable fees and disbursements of its counsel and to indemnify Smith Barney
and certain related parties against certain liabilities in connection with the
Offer, including certain liabilities under the federal securities laws arising
out of Smith Barney's engagement. Smith Barney has rendered various investment
banking services to the Company in the past, for which it has received customary
compensation, and can be expected to render similar services to the Company in
the future. In the ordinary course of business, Smith Barney and its affiliates
may actively trade or hold the securities of the Company for their own account
or for the account of customers and, accordingly, may at any time hold a long or
short position in such securities. The Company has retained Corporate Investors
Communications, Inc. as Information Agent and American Stock Transfer and Trust
Company as Depositary in connection with the Offer. The Information Agent and
the Depositary will receive reasonable and customary compensation for their
services. The Company will also reimburse the Information Agent and the
Depositary for out-of-pocket expenses and has agreed to indemnify the
Information Agent and the Depositary against certain liabilities in connection
with the Offer, including certain liabilities under the federal securities laws.
The Dealer Manager and Information Agent may contact stockholders by mail,
telephone, telex, telegraph and personal interviews, and may request brokers,
dealers and other nominee stockholders to forward materials relating to the
Offer to beneficial owners. Neither the Information Agent nor the Depositary has
been retained to make solicitations or recommendations in connection with the
Offer.
The Company will not pay fees or commissions to any broker, dealer,
commercial bank, trust company or other person (other than the Dealer Manager)
for soliciting any Shares pursuant to the Offer. The Company will, however, on
request, reimburse such persons for customary handling and mailing expenses
incurred in forwarding materials in respect of the Offer to the beneficial
owners for which they act as nominees. No such broker, dealer, commercial bank
or trust company has been authorized to act as the Company's agent for purposes
of the Offer. The Company will pay (or cause to be paid) any stock transfer
taxes on its purchase of Shares, except as otherwise provided in Instruction 7
of the Letter of Transmittal.
17. MISCELLANEOUS
The Company is not aware of any jurisdiction where the making of the Offer
is not in compliance with applicable law. If the Company becomes aware of any
jurisdiction where the making of the Offer is not in
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compliance with any valid applicable law, the Company will make a good faith
effort to comply with such law. If, after such good faith effort, the Company
cannot comply with such law, the Offer will not be made to (nor will tenders be
accepted from or on behalf of) the holders of Shares residing in such
jurisdiction. In any jurisdiction the securities or blue sky laws of which
require the Offer to be made by a licensed broker or dealer, the Offer is being
made on the Company's behalf by the Dealer Manager or one or more registered
brokers or dealers licensed under the laws of such jurisdiction.
Pursuant to Rule 13e-4 promulgated under the Exchange Act, the Company has
filed with the Commission an Issuer Tender Offer Statement on Schedule 13E-4
(the "Schedule 13E-4") which contains additional information with respect to the
Offer. The Schedule 13E-4, including the exhibits and any amendments thereto,
may be examined, and copies may be obtained, at the same places and in the same
manner as is set forth in Section 11 with respect to information concerning the
Company.
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR MAKE ANY
REPRESENTATION ON BEHALF OF THE COMPANY OR THE DEALER MANAGER IN CONNECTION WITH
THE OFFER OTHER THAN THOSE CONTAINED IN THIS OFFER TO PURCHASE OR IN THE RELATED
LETTER OF TRANSMITTAL. IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATION MUST
NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE COMPANY OR THE DEALER
MANAGER.
Stac, Inc.
August 14, 1997
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SCHEDULE I
CERTAIN TRANSACTIONS INVOLVING SHARES
Except as set forth below, based upon the Company's records and upon
information provided to the Company by its directors, executive officers,
associates and subsidiaries, neither the Company nor any of its associates or
subsidiaries or persons controlling the Company nor, to the best of the
Company's knowledge, any of the directors or executive officers of the Company
or any of its subsidiaries, nor any associates or subsidiary of any of the
foregoing, has effected any transactions in the Shares during the 40 business
days prior to August 14, 1997.
1. The Company repurchased 165,000 Shares at prices ranging from $3.6875 to
$4.2500 between July 23, 1997 and July 31, 1997 pursuant to its previously
authorized Share repurchase program.
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Facsimile copies of the Letter of Transmittal will be accepted. The Letter
of Transmittal and certificates for the Shares and any other required documents
should be sent or delivered by each stockholder or such stockholder's broker,
dealer, commercial bank, trust company or other nominee to the Depositary at its
address set forth below:
The Depositary for the Offer is:
AMERICAN STOCK TRANSFER & TRUST COMPANY
<TABLE>
<S> <C>
By Mail, By Hand or By Overnight Courier: By Facsimile Transmission:
40 Wall Street (for Eligible Institutions Only)
46th Floor (718) 234-5001
New York, New York 10005
Confirm by Telephone:
(718) 921-8222
</TABLE>
Any questions or requests for assistance or for additional copies of this
Offer to Purchase, the Letter of Transmittal or the Notice of Guaranteed
Delivery may be directed to the Information Agent or to the Dealer Manager at
their respective addresses and telephone numbers below. Stockholders may also
contact their broker, dealer, commercial bank or trust company for assistance
concerning the Offer. To confirm delivery of Shares, stockholders are directed
to contact the Depositary.
The Information Agent for the Offer is:
CORPORATE INVESTOR COMMUNICATIONS, INC.
111 Commerce Road
Carlstadt, New Jersey 07072
Banks and Brokers call collect: (201) 896-1900
All others call toll-free: (800) 459-8554
The Dealer Manager for the Offer is:
SMITH BARNEY INC.
388 Greenwich Street
New York, New York 10013
(800) 968-9368
August 14, 1997
<PAGE> 1
Letter of Transmittal
To Tender Shares Of Common Stock
Of
STAC, INC.
Pursuant To The Offer To Purchase Dated August 14, 1997
THE OFFER, PRORATION PERIOD AND WITHDRAWAL RIGHTS EXPIRE
AT 12:00 MIDNIGHT, NEW YORK CITY TIME,
ON SEPTEMBER 11, 1997, UNLESS THE OFFER IS EXTENDED.
THE DEPOSITARY FOR THE OFFER IS:
AMERICAN STOCK TRANSFER & TRUST COMPANY
By Mail, By Hand or By Overnight Courier:
40 Wall Street
46th Floor
New York, New York 10005
By Facsimile Transmission:
(for Eligible Institutions Only)
(718) 234-5001
Confirm by Telephone:
(718) 921-8222
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C> <C>
DESCRIPTION OF SHARES TENDERED (SEE INSTRUCTIONS 3 AND 4)
- ---------------------------------------------------------------------------------------------------------
NAME(S) AND ADDRESS(ES) OF REGISTERED HOLDER(S)
(PLEASE FILL IN EXACTLY AS NAME(S) APPEAR(S) ON SHARES TENDERED
CERTIFICATE(S)) (ATTACH ADDITIONAL LIST, IF NECESSARY)
- ---------------------------------------------------------------------------------------------------------
TOTAL NUMBER
OF SHARES NUMBER OF
CERTIFICATE REPRESENTED BY SHARES
NUMBER(S)(1) CERTIFICATE(S) TENDERED(2)
---------------------------------------------------
===================================================
---------------------------------------------------
---------------------------------------------------
TOTAL SHARES
- ------------------------------------------------------
</TABLE>
Indicate in this box the order (by certificate number) in which Shares are
to be purchased in the event of proration.(3) (Attach additional signed
list of necessary.)
See Instruction 14.
1st 2nd 3rd 4th 5th
- --------------------------------------------------------------------------------
(1) Need not be completed by stockholders tendering Shares by book-entry
transfer.
(2) Unless otherwise indicated, it will be assumed that all Shares
represented by each Share certificate delivered to the Depositary are
being tendered hereby. See Instruction 4.
(3) If you do not designate an order, then in the event less than all
Shares tendered are purchased due to proration, Shares will be
selected for purchase by the Depositary. See Instruction 14.
- --------------------------------------------------------------------------------
DELIVERY OF THIS INSTRUMENT TO AN ADDRESS OTHER THAN AS SET FORTH ABOVE OR
TRANSMISSION OF INSTRUCTIONS VIA A FACSIMILE NUMBER OTHER THAN THE ONES LISTED
ABOVE WILL NOT CONSTITUTE A VALID DELIVERY. DELIVERIES TO THE COMPANY WILL NOT
BE FORWARDED TO THE DEPOSITARY AND THEREFORE WILL NOT CONSTITUTE VALID DELIVERY.
DELIVERIES TO BOOK-ENTRY TRANSFER FACILITIES WILL NOT CONSTITUTE VALID DELIVERY
TO THE DEPOSITARY.
<PAGE> 2
NOTE: SIGNATURES MUST BE PROVIDED BELOW.
PLEASE READ THE ACCOMPANYING INSTRUCTIONS CAREFULLY.
This Letter of Transmittal is to be used only if certificates are to be
forwarded herewith or if delivery of Shares (as defined below) is to be made by
book-entry transfer to the Depositary's account at The Depository Trust Company
("DTC") or Philadelphia Depository Trust Company ("PDTC") (hereinafter
collectively referred to as the "Book-Entry Transfer Facilities") pursuant to
the procedures set forth in Section 3 of the Offer to Purchase (as defined
below).
Stockholders who cannot deliver their Share certificates and any other
documents required to the Depositary by the Expiration Time (as defined in the
Offer to Purchase) must tender their Shares using the guaranteed delivery
procedure set forth in Section 3 of the Offer to Purchase. See Instruction 2.
(BOXES BELOW FOR USE BY ELIGIBLE INSTITUTIONS ONLY)
- --------------------------------------------------------------------------------
[ ] CHECK HERE IF TENDERED SHARES ARE BEING DELIVERED BY BOOK-ENTRY
TRANSFER TO THE DEPOSITARY'S ACCOUNT AT ONE OF THE BOOK-ENTRY TRANSFER
FACILITIES AND COMPLETE THE FOLLOWING:
Name of Tendering Institution: ____________________________________________
Check Applicable Box: [ ] DTC [ ] PDTC
Account No. _______________________________________________________________
Transaction Code No.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
[ ] CHECK HERE IF TENDERED SHARES ARE BEING DELIVERED PURSUANT TO A NOTICE
OF GUARANTEED DELIVERY PREVIOUSLY SENT TO THE DEPOSITARY AND COMPLETE
THE FOLLOWING:
Name(s) of Registered Holder(s) ___________________________________________
Date of Execution of Notice of Guaranteed Delivery ________________________
Name of Institution that Guaranteed Delivery ______________________________
If delivery is by book-entry transfer: ____________________________________
Name of Tendering Institution _____________________________________________
Check Applicable Box: [ ] DTC [ ] PDTC
Account No. _______________________________________________________________
Transaction Code No.
- --------------------------------------------------------------------------------
2
<PAGE> 3
Ladies and Gentlemen:
The undersigned hereby tenders to Stac, Inc., a Delaware corporation (the
"Company"), the above-described shares of its common stock, par value $.001 per
share (the "Shares"), at the price per Share indicated in this Letter of
Transmittal, net to the seller in cash, upon the terms and subject to the
conditions set forth in the Offer to Purchase, dated August 14, 1997 (the "Offer
to Purchase"), receipt of which is hereby acknowledged, and in this Letter of
Transmittal (which together constitute the "Offer").
Subject to, and effective upon, acceptance for payment of and payment for
the Shares tendered herewith in accordance with 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 undersigned hereby
sells, assigns and transfers to, or upon the order of, the Company all right,
title and interest in and to all the Shares that are being tendered hereby or
orders the registration of such Shares tendered by book-entry transfer that are
purchased pursuant to the Offer to or upon the order of the Company and hereby
irrevocably constitutes and appoints the Depositary the true and lawful agent
and attorney-in-fact of the undersigned with respect to such Shares, with full
power of substitution (such power of attorney being deemed to be an irrevocable
power coupled with an interest), to:
(i) deliver certificates for such Shares, or transfer ownership of
such Shares on the account books maintained by any of the Book-Entry
Transfer Facilities, together, in any such case, with all accompanying
evidences of transfer and authenticity, to or upon the order of the Company
upon receipt by the Depositary, as the undersigned's agent, of the Purchase
Price (as defined below) with respect to such Shares;
(ii) present certificates for such Shares for cancellation and
transfer on the books of the Company; and
(iii) receive all benefits and otherwise exercise all rights of
beneficial ownership of such Shares, all in accordance with the terms of
the Offer.
The undersigned hereby represents and warrants to the Company that the
undersigned has full power and authority to tender, sell, assign and transfer
the Shares tendered hereby and that, when and to the extent the same are
accepted for payment by the Company, the Company will acquire good, marketable
and unencumbered title thereto, free and clear of all liens, restrictions,
charges, encumbrances, conditional sales agreements or other obligations
relating to the sale or transfer thereof, and the same will not be subject to
any adverse claims. The undersigned will, upon request, execute and deliver any
additional documents deemed by the Depositary or the Company to be necessary or
desirable to complete the sale, assignment and transfer of the Shares tendered
hereby.
The undersigned represents and warrants to the Company that the undersigned
has read and agrees to all of the terms of the Offer. All authority herein
conferred or agreed to be conferred shall not be affected by and shall survive
the death or incapacity of the undersigned, and any obligation of the
undersigned hereunder shall be binding upon the heirs, personal representatives,
successors and assigns of the undersigned. Except as stated in the Offer, this
tender is irrevocable.
The undersigned understands that tenders of Shares pursuant to any one of
the procedures described in Section 3 of the Offer to Purchase and in the
Instructions will constitute the undersigned's representation and warranty to
the Company that (i) the undersigned has a net long position in the Shares or
equivalent securities being tendered within the meaning of Rule 14e-4
promulgated under the Securities Exchange Act of 1934, as amended, and (ii) the
tender of such Shares complies with Rule 14e-4. The Company's acceptance for
payment of Shares tendered pursuant to the Offer will constitute a binding
agreement between the undersigned and the Company upon the terms and subject to
the conditions of the Offer.
The names and addresses of the registered holders should be printed, if
they are not already printed above, exactly as they appear on the certificates
representing Shares tendered hereby. The certificate numbers, the number of
Shares represented by such certificates, the number of Shares that the
undersigned wishes to tender and the purchase price at which such Shares are
being tendered should be indicated in the appropriate boxes on this Letter of
Transmittal.
The undersigned understands that the Company will determine a single per
Share price (not greater than $5.50 nor less than $4.75 per Share), net to the
Seller in cash (the "Purchase Price"), that it will pay for Shares validly
tendered and not withdrawn pursuant to the Offer, taking into account the number
of Shares so tendered and the prices specified by tendering stockholders. The
undersigned understands that the Company will select the lowest Purchase Price
that will allow it to purchase 6,000,000 Shares (or such lesser number of Shares
as are validly tendered at prices not greater than $5.50 nor less than $4.75 per
Share) and not withdrawn pursuant to the Offer. The undersigned understands that
all Shares validly tendered at prices at or below the Purchase Price and not
withdrawn will be purchased at the Purchase Price, net to the seller in cash,
upon the terms and subject to the conditions of the Offer, including its
proration provisions, and that the Company will return all other Shares,
including Shares tendered at prices greater than the Purchase Price and not
withdrawn and Shares not purchased because of proration.
3
<PAGE> 4
The undersigned recognizes that, under certain circumstances set forth in
the Offer to Purchase, the Company may terminate or amend the Offer or may
postpone the acceptance for payment of, or the payment for, Shares tendered or
may not be required to purchase any of the Shares tendered hereby or may accept
for payment fewer than all of the Shares tendered hereby.
Unless otherwise indicated under "Special Payment Instructions," please
issue the check for the Purchase Price of any Shares purchased, and/or return
any Shares not tendered or not purchased, in the name(s) of the undersigned
(and, in the case of Shares tendered by book-entry transfer, by credit to the
account at the applicable Book-Entry Transfer Facility). Similarly, unless
otherwise indicated under "Special Delivery Instructions," please mail the check
for the Purchase Price of any Shares purchased and/or any certificates for
Shares not tendered or not purchased (and accompanying documents, as
appropriate) to the undersigned at the address shown below the undersigned's
signature(s). In the event that both "Special Payment Instructions" and "Special
Delivery Instructions" are completed, please issue the check for the Purchase
Price of any Shares purchased and/or return any Shares not tendered or not
purchased in the name(s) of, and mail such check and/or any certificates to, the
person(s) so indicated. The undersigned recognizes that the Company has no
obligation, pursuant to the "Special Payment Instructions," to transfer any
Shares from the name of the registered holder(s) thereof if the Company does not
accept for payment any of the Shares so tendered.
The undersigned understands that acceptance of Shares by the Company for
payment will constitute a binding agreement between the undersigned and the
Company upon the terms and subject to the conditions of the Offer.
4
<PAGE> 5
NOTE: SIGNATURES MUST BE PROVIDED BELOW
<TABLE>
<S> <C> <C>
- -------------------------------------------------------------------------------------------------------------------
PRICE (IN DOLLARS) PER SHARE AT WHICH SHARES ARE BEING TENDERED.
- -------------------------------------------------------------------------------------------------------------------
IF SHARES ARE BEING TENDERED AT MORE THAN ONE PRICE, A SEPARATE LETTER OF TRANSMITTAL FOR EACH PRICE SPECIFIED MUST
BE USED. (SEE INSTRUCTION 5.)
- -------------------------------------------------------------------------------------------------------------------
CHECK ONLY ONE BOX. IF MORE THAN ONE BOX IS CHECKED, OR IF NO BOX IS CHECKED
(EXCEPT AS PROVIDED IN THE ODD LOTS BOX AND INSTRUCTIONS BELOW),
THERE IS NO VALID TENDER OF SHARES.
- -------------------------------------------------------------------------------------------------------------------
[ ] $4.750 [ ] $5.000 [ ] $5.250
[ ] $4.875 [ ] $5.125 [ ] $5.375
[ ] $5.500
- -------------------------------------------------------------------------------------------------------------------
</TABLE>
- --------------------------------------------------------------------------------
ODD LOTS
(SEE INSTRUCTION 9)
- --------------------------------------------------------------------------------
This section is to be completed ONLY if Shares are being tendered by
or on behalf of a person who owns beneficially, as of the close of
business on August 13, 1997 and who continues to own beneficially as of
the Expiration Time, an aggregate of fewer than 100 Shares.
The undersigned either (check one box):
[ ] owned beneficially, as of the close of business on August 13,
1997 and continues to own beneficially as of the Expiration Date,
an aggregate of fewer than 100 Shares, all of which are being
tendered, or
[ ] is a broker, dealer, commercial bank, trust company or other
nominee that (i) is tendering, for the beneficial owners thereof,
Shares with respect to which it is the record owner, and (ii)
believes, based upon representations made to it by each such
beneficial owner, that such beneficial owner owned beneficially,
as of the close of business on August 13, 1997, and continues to
own beneficially as of the Expiration Date, an aggregate of fewer
than 100 Shares and is tendering all of such Shares.
If you do not wish to specify a purchase price, check the following box,
in which case you will be deemed to have tendered at the Purchase Price
determined by the Company in accordance with the terms of the Offer
(persons checking this box need not indicate the price per Share in the
box entitled "Price (In Dollars) Per Share At Which Shares are Being
Tendered" in this Letter of Transmittal). [ ]
- --------------------------------------------------------------------------------
============================================================
<TABLE>
<S> <C>
SPECIAL PAYMENT INSTRUCTIONS SPECIAL DELIVERY INSTRUCTIONS
(SEE INSTRUCTIONS 1, 6, 7 AND 8) (SEE INSTRUCTIONS 6 AND 8)
To be completed ONLY if the check for the To be completed ONLY if the check for the
aggregate Purchase Price of Shares purchased Purchase Price of Shares purchased and/or
and/or certificates for Shares not tendered or certificates for Shares not tendered or not
not purchased are to be issued in the name of purchased are to be mailed to someone other
someone other than the undersigned. than the undersigned or to the undersigned at
an address other than that shown below the
undersigned's signature(s).
Issue [ ] check Mail [ ] check
and/or [ ] certificate(s) to: and/or [ ] certificate(s) to:
Name: Name:
---------------------------------------------- ----------------------------------------------
---------------------------------------------- ----------------------------------------------
(PLEASE PRINT) (PLEASE PRINT)
Address: Address:
(INCLUDE ZIP CODE) (INCLUDE ZIP CODE)
----------------------------------------------
(TAX IDENTIFICATION OR SOCIAL SECURITY NUMBER)
</TABLE>
============================================================
5
<PAGE> 6
PLEASE SIGN HERE
(TO BE COMPLETED BY ALL STOCKHOLDERS)
________________________________________________________________________________
SIGNATURE(S) OF OWNER(S)
Dated: ____________________________ , 1997
Name: __________________________________________________________________________
(PLEASE PRINT)
________________________________________________________________________________
Capacity: ______________________________________________________________________
(FULL TITLE)
Address: _______________________________________________________________________
(INCLUDE ZIP CODE)
Area Code and Telephone No.:
(Must be signed by registered holder(s) exactly as name(s) appear(s) on Share
Certificate(s) or on a security position listing or by person(s) authorized to
become registered holder(s) by certificates and documents transmitted with. If
signature is by a trustee, executor, administrator, guardian, attorney-in-fact,
officer of a corporation or other person acting in a fiduciary or representative
capacity, please set forth full title and see Instruction 6.)
GUARANTEE OF SIGNATURE(S)
(SEE INSTRUCTIONS 1 AND 6)
Firm Name: _____________________________________________________________________
(PLEASE PRINT)
Name: __________________________________________________________________________
Authorized Signature:___________________________________________________________
(FULL TITLE)
Address: _______________________________________________________________________
(INCLUDE ZIP CODE)
Area Code and Telephone No.: ___________________________________________________
Dated: ____________________________ , 1997
6
<PAGE> 7
INSTRUCTIONS
FORMING PART OF THE TERMS AND CONDITIONS OF THE OFFER
1. GUARANTEE OF SIGNATURES. Except as otherwise provided below, all
signatures on this Letter of Transmittal must be guaranteed by a firm that is a
recognized member of an Eligible Institution (as defined in the Offer to
Purchase), unless (i) this Letter of Transmittal is signed by the registered
holder(s) of the Shares (which term, for purposes of this document, shall
include any participant in a Book-Entry Transfer Facility whose name appears on
a security position listing as the owner of Shares) tendered herewith and such
holder(s) have not completed the box entitled "Special Payment Instructions" or
the box entitled "Special Delivery Instructions" on this Letter of Transmittal,
or (ii) such Shares are tendered for the account of an Eligible Institution. See
Instruction 6.
2. DELIVERY OF LETTER OF TRANSMITTAL AND SHARE CERTIFICATES; GUARANTEED
DELIVERY PROCEDURES. This Letter of Transmittal is to be used either if Share
certificates are to be forwarded herewith or if delivery of Shares is to be made
by book-entry transfer pursuant to the procedures set forth in Section 3 of the
Offer to Purchase. Certificates for all physically delivered Shares, or a
confirmation of a book-entry transfer into the Depositary's account at one of
the Book-Entry Transfer Facilities of all Shares delivered electronically, as
well as a properly completed and duly executed Letter of Transmittal (or
manually signed facsimile thereof) and any other documents required by this
Letter of Transmittal, must be received by the Depositary at one of its
addresses set forth on the front page of this Letter of Transmittal prior to the
Expiration Date. If certificates are forwarded to the Depositary in multiple
deliveries, a properly completed and duly executed Letter of Transmittal must
accompany each such delivery.
Stockholders whose Share certificates are not immediately available, who
cannot deliver their Shares and all other required documents to the Depositary
or who cannot complete the procedure for delivery by book-entry transfer prior
to the Expiration Date may tender their Shares pursuant to the guaranteed
delivery procedure set forth in Section 3 of the Offer to Purchase. Pursuant to
such procedure: (i) such tender must be 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 Company (with any required
signature guarantees) must be received by the Depositary prior to the Expiration
Date, and (iii) the certificates for all physically delivered Shares in proper
form for transfer by delivery, or a confirmation of a book-entry transfer into
the Depositary's account at one of the Book-Entry Transfer Facilities of all
Shares delivered electronically, in each case together with a properly completed
and duly executed Letter of Transmittal (or facsimile thereof) and any other
documents required by this Letter of Transmittal, must be received by the
Depositary within three New York Stock Exchange, Inc. trading days after the
date the Depositary receives such Notice of Guaranteed Delivery, all as provided
in Section 3 of the Offer to Purchase.
THE METHOD OF DELIVERY OF ALL DOCUMENTS, INCLUDING SHARE CERTIFICATES, THE
LETTER OF TRANSMITTAL AND ANY OTHER REQUIRED DOCUMENTS, IS AT THE ELECTION AND
RISK OF THE TENDERING STOCKHOLDER, AND THE DELIVERY WILL BE DEEMED MADE ONLY
WHEN ACTUALLY RECEIVED BY THE DEPOSITARY. IF DELIVERY IS BY MAIL, REGISTERED
MAIL WITH RETURN RECEIPT REQUESTED, PROPERLY INSURED, IS RECOMMENDED. IN ALL
CASES, SUFFICIENT TIME SHOULD BE ALLOWED TO ENSURE TIMELY DELIVERY.
No alternative or contingent tenders will be accepted. By executing this
Letter of Transmittal (or facsimile thereof), the tendering stockholder waives
any right to receive any notice of the acceptance for payment of the Shares.
3. INADEQUATE SPACE. If the space provided herein is inadequate, the
certificate numbers and/or the number of Shares should be listed on a separate
signed schedule and attached to this Letter of Transmittal.
4. PARTIAL TENDERS (NOT APPLICABLE TO STOCKHOLDERS WHO TENDER BY
BOOK-ENTRY TRANSFER). If fewer than all the Shares represented by any
certificate delivered to the Depositary are to be tendered, fill in the number
of Shares that are to be tendered in the box entitled "Number of Shares
Tendered." In such case, a new certificate for the remainder of the Shares
represented by the old certificate will be sent to the person(s) signing this
Letter of Transmittal, unless otherwise provided in the "Special Payment
Instructions" or "Special Delivery Instructions" boxes on this Letter of
Transmittal, as promptly as practicable following the expiration or termination
of the Offer. All Shares represented by certificates delivered to the Depositary
will be deemed to have been tendered unless otherwise indicated.
5. INDICATION OF PRICE AT WHICH SHARES ARE BEING TENDERED. For Shares to
be validly tendered, the stockholder must check the box indicating the price per
Share at which such stockholder is tendering Shares under "Price (In Dollars)
Per Share At Which Shares Are Being Tendered" in this Letter of Transmittal,
except that Odd Lot Owners (as defined in Section 2 of the Offer to Purchase)
may check the box above in the section entitled "Odd Lots" indicating that
7
<PAGE> 8
such stockholder is tendering all Shares at the Purchase Price determined by the
Company. ONLY ONE BOX MAY BE CHECKED. IF MORE THAN ONE BOX IS CHECKED OR (OTHER
THAN AS DESCRIBED ABOVE FOR ODD LOT OWNERS) IF NO BOX IS CHECKED, THERE IS NO
VALID TENDER OF SHARES. A stockholder wishing to tender portions of such
stockholder's Share holdings at different prices must complete a separate Letter
of Transmittal for each price at which such stockholder wishes to tender each
such portion of such stockholder's Shares. The same Shares cannot be tendered
(unless previously validly withdrawn as provided in Section 4 of the Offer to
Purchase) at more than one price.
6. SIGNATURES ON LETTER OF TRANSMITTAL; STOCK POWERS AND ENDORSEMENTS. If
this Letter of Transmittal is signed by the registered holder(s) of the Shares
tendered hereby, the signatures(s) must correspond with the name(s) as written
on the face of the certificates without alteration, enlargement or any change
whatsoever.
If any of the Shares tendered hereby is held of record by two or more
persons, all such persons must sign this Letter of Transmittal.
If any of the Shares tendered hereby are registered in different names on
different certificates, it will be necessary to complete, sign and submit as
many separate Letters of Transmittal (or facsimiles thereof) as there are
different registrations of certificates.
If this Letter of Transmittal is signed by the registered holder(s) of the
Shares tendered hereby, no endorsements of certificates or separate stock powers
are required unless payment of the purchase price is to be made to, or Shares
not tendered or not purchased are to be registered in the name of, any person
other than the registered holder(s), in which case the certificate(s) evidencing
the Shares tendered hereby must be endorsed or accompanied by appropriate stock
powers, in either case signed exactly as the name(s) of the registered holder(s)
appear(s) on such certificates. Signatures on any such certificates or stock
powers must be guaranteed by an Eligible Institution. See Instruction 1.
If this Letter of Transmittal is signed by a person other than the
registered holder(s) of the Shares tendered hereby, certificates evidencing the
Shares tendered hereby must be endorsed or accompanied by appropriate stock
powers, in either case, signed exactly as the name(s) of the registered
holder(s) appear(s) on such certificate(s). Signature(s) on any such
certificates or stock powers must be guaranteed by an Eligible Institution. See
Instruction 1.
If this Letter of Transmittal or any certificate or stock power is signed
by a trustee, executor, administrator, guardian, attorney-in-fact, officer of a
corporation or other person acting in a fiduciary or representative capacity,
such person should so indicate when signing, and proper evidence satisfactory to
the Company of the authority of such person so to act must be submitted.
7. STOCK TRANSFER TAXES. The Company will pay or cause to be paid any
stock transfer taxes with respect to the sale and transfer of any Shares to it
or its order pursuant to the Offer. If, however, payment of the aggregate
Purchase Price is to be made to, or Shares not tendered or not purchased are to
be registered in the name of, any person other than the registered holder(s), or
if tendered Shares are registered in the name of any person other than the
person(s) signing this Letter of Transmittal, the amount of any stock transfer
taxes (whether imposed on the registered holder(s), such other person or
otherwise) payable on account of the transfer to such person will be deducted
from the purchase price unless satisfactory evidence of the payment of such
taxes, or exemption therefrom, is submitted. See Section 5 of the Offer to
Purchase. Except as provided in this Instruction 7, it will not be necessary to
affix transfer tax stamps to the certificates representing Shares tendered
hereby.
8. SPECIAL PAYMENT AND DELIVERY INSTRUCTIONS. If a check for the purchase
price of any Shares tendered hereby is to be issued in the name of, and/or any
Shares not tendered or not purchased are to be returned to, a person other than
the person(s) signing this Letter of Transmittal, or if the check and/or any
certificates for Shares not tendered or not purchased are to be mailed to
someone other than the person(s) signing this Letter of Transmittal or to an
address other than that shown above in the box captioned "Description of Shares
Tendered," then the boxes captioned "Special Payment Instructions" and/or
"Special Delivery Instructions" on this Letter of Transmittal should be
completed. Stockholders tendering Shares by book-entry transfer will have any
Shares not accepted for payment returned by crediting the account maintained by
such stockholder at the Book-Entry Transfer Facility from which such transfer
was made.
9. ODD LOTS. As described in Section 1 of the Offer to Purchase, if fewer
than all Shares validly tendered at or below the Purchase Price and not
withdrawn prior to the Expiration Date are to be purchased, the Shares purchased
first will consist of all Shares tendered by any stockholder who owned
beneficially, as of the close of business on August 13, 1997, and continues to
own beneficially as of the Expiration Date, an aggregate of fewer than 100
Shares and who validly tendered all such Shares at or below the Purchase Price
(including by not designating a purchase price as described
8
<PAGE> 9
above). Partial tenders of Shares will not qualify for this preference and this
preference will not be available unless the box captioned "Odd Lots" in this
Letter of Transmittal and the Notice of Guaranteed Delivery, if any, is
completed.
10. SUBSTITUTE FORM W-9 AND FORM W-8. Under the United States federal
income tax backup withholding rules, unless an exemption applies under the
applicable law and regulations, 31% of the gross proceeds payable to a
stockholder or other payee pursuant to the Offer must be withheld and remitted
to the United States Treasury, unless the stockholder or other payee provides
such person's taxpayer identification number (employer identification number or
social security number) to the Depositary and certifies that such number is
correct. Therefore, each tendering stockholder should complete and sign the
Substitute Form W-9 included as part of the Letter of Transmittal so as to
provide the information and certification necessary to avoid backup withholding,
unless such stockholder otherwise establishes to the satisfaction of the
Depositary that it is not subject to backup withholding. Certain stockholders
(including, among others, all corporations and certain foreign stockholders (in
addition to foreign corporations)) are not subject to these backup withholding
and reporting requirements. In order for a foreign stockholder to qualify as an
exempt recipient, that stockholder must submit an IRS Form W-8 or a Substitute
Form W-8, signed under penalties of perjury, attesting to that stockholder's
exempt status. Such statements may be obtained from the Depositary.
11. WITHHOLDING ON FOREIGN STOCKHOLDERS. Even if a foreign stockholder
has provided the required certification to avoid backup withholding, the
Depositary will withhold United States federal income taxes equal to 30% of the
gross payments payable to a foreign stockholder or his or her agent unless the
Depositary determines that a reduced rate of withholding is available pursuant
to a tax treaty or that an exemption from withholding is applicable because such
gross proceeds are effectively connected with the conduct of a trade or business
in the United States. For this purpose, a foreign stockholder is any stockholder
that is not (i) a citizen or resident of the United States, (ii) a corporation,
partnership or other entity created or organized in or under the laws of the
United States, any State or any political subdivision thereof or (iii) an estate
or trust, the income of which is subject to United States federal income
taxation regardless of the source of such income. In order to obtain a reduced
rate of withholding pursuant to a tax treaty, a foreign stockholder must deliver
to the Depositary a properly completed IRS Form 1001. In order to obtain an
exemption from withholding on the grounds that the gross proceeds paid pursuant
to the Offer are effectively connected with the conduct of a trade or business
within the United States, a foreign stockholder must deliver to the Depositary a
properly completed IRS Form 4224. The Depositary will determine a stockholder's
status as a foreign stockholder and eligibility for a reduced rate of, or an
exemption from, withholding by reference to outstanding certificates or
statements concerning eligibility for a reduced rate of, or exemption from,
withholding (e.g., IRS Form 1001 or IRS Form 4224) unless facts and
circumstances indicate that such reliance is not warranted. A foreign
stockholder may be eligible to obtain a refund of all or a portion of any tax
withheld if such stockholder meets the "complete redemption," "substantially
disproportionate" or "not essentially equivalent to a dividend" test described
in Section 14 of the Offer to Purchase or is otherwise able to establish that no
tax or a reduced amount of tax is due. Backup withholding generally will not
apply to amounts subject to the 30% or treaty-reduced rate of withholding.
Foreign stockholders are urged to consult their tax advisors regarding the
application of United States federal income tax withholding, including
eligibility for a withholding tax reduction or exemption and refund procedures.
12. REQUESTS FOR ASSISTANCE OR ADDITIONAL COPIES. Any questions or
requests for assistance may be directed to the Information Agent or to the
Dealer Manager at their respective addresses and telephone numbers below.
Requests for additional copies of the Offer to Purchase, this Letter of
Transmittal or other tender offer materials may be directed to the Information
Agent, and such copies will be furnished promptly at the Company's expense.
Stockholders may also contact their local broker, dealer, commercial bank or
trust company for documents relating to, or assistance concerning, the Offer.
13. IRREGULARITIES. All questions as to the number of Shares to be
accepted, the price to be paid therefor and the validity, form, eligibility
(including time of receipt) and acceptance for payment of any tender of Shares
will be determined by the Company, in its sole discretion, which determination
shall be final and binding on all parties. The Company reserves the absolute
right to reject any or all tenders it determines not to be in proper form or the
acceptance of or payment for which may, in the opinion of the Company's counsel,
be unlawful. The Company also reserves the absolute right to waive any of the
conditions of the Offer and any defect or irregularity in the tender of any
particular Shares or any particular stockholder. No tender of Shares will be
deemed to be validly made until all defects or irregularities have been cured or
waived. None of the Company, the Dealer Manager, the Depositary, the Information
Agent or any other person is or will be obligated to give notice of any defects
or irregularities in tenders, and none of them will incur any liability for
failure to give any such notice.
9
<PAGE> 10
14. ORDER OF PURCHASE IN EVENT OF PRORATION. As described in Section 1 of
the Offer to Purchase, stockholders may designate the order in which their
Shares are to be purchased in the event of proration. The order of purchase may
have an effect on the United States federal income tax classification of any
gain or loss on the Shares purchased. See Sections 1 and 14 of the Offer to
Purchase.
IMPORTANT: THIS LETTER OF TRANSMITTAL (OR A FACSIMILE THEREOF) TOGETHER
WITH SHARE CERTIFICATES OR CONFIRMATION OF BOOK-ENTRY TRANSFER AND ALL OTHER
REQUIRED DOCUMENTS MUST BE RECEIVED BY THE DEPOSITARY, OR THE NOTICE OF
GUARANTEED DELIVERY MUST BE RECEIVED BY THE DEPOSITARY, PRIOR TO THE EXPIRATION
TIME. STOCKHOLDERS ARE ENCOURAGED TO RETURN A COMPLETED SUBSTITUTE FORM W-9 WITH
THEIR LETTER OF TRANSMITTAL.
- --------------------------------------------------------------------------------
SUBSTITUTE
FORM W-9
DEPARTMENT OF THE TREASURY INTERNAL REVENUE SERVICE
PAYER'S REQUEST FOR TAXPAYER IDENTIFICATION NUMBER (TIN) AND CERTIFICATION
- --------------------------------------------------------------------------------
PAYER'S NAME: AMERICAN STOCK TRANSFER & TRUST COMPANY
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
PART 1 -- Please provide your TIN in the box at TIN __________________________
right and certify by signing and dating below. Social Security Number
or
- ----------------------------------------------- Employee Identification Number
NAME (Please Print)
PART 2 -- For Payees exempt from backup
- ----------------------------------------------- withholding, see the Important Tax Informa-
tion above and Guidelines for Certification of
- ----------------------------------------------- Taxpayer Identification Number on Substitute
Form W-9 enclosed herewith and complete as
- ----------------------------------------------- instructed herein.
CITY STATE ZIP CODE
AWAITING TIN [ ]
</TABLE>
- --------------------------------------------------------------------------------
PART 3 -- CERTIFICATION -- UNDER THE PENALTIES OF PERJURY, I CERTIFY THAT
(i) the number shown on this form is my correct Taxpayer Identification Number
(or I am waiting for a number to be issued to me) and either (a) I have mailed
or delivered an application to receive a PAYER'S REQUEST FOR taxpayer
identification number to the appropriate IRS center or Social Security TAXPAYER
IDENTIFICATION Administration office or (b) I intend to mail or deliver an
application in the near NUMBER (TIN) future) and (ii) I am not subject to
backup withholding because: (a) I am exempt from backup withholding; or (b) I
have not been notified by the IRS that I am subject to backup withholding as a
result of a failure to report all interest or dividends; or (c) the IRS has
notified me that I am no longer subject to backup withholding.
SIGNATURE _______________________________________________ DATE ________________
Certification instructions -- You must cross out Item (ii) above if you have
been notified by the IRS that you are currently subject to backup withholding
because of underreporting interest or dividends on your tax return.
- --------------------------------------------------------------------------------
NOTE: FAILURE TO COMPLETE AND RETURN THIS FORM MAY RESULT IN BACKUP WITHHOLDING
OF 31% OF ANY PAYMENTS MADE TO YOUR PURSUANT TO THIS OFFER. PLEASE REVIEW THE
ENCLOSED GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION NUMBER ON
SUBSTITUTE FORM W-9 FOR ADDITIONAL DETAILS.
- --------------------------------------------------------------------------------
<PAGE> 11
THE INFORMATION AGENT FOR THE OFFER IS:
CORPORATE INVESTOR COMMUNICATIONS, INC.
111 Commerce Road
Carlstadt, New Jersey 07072
Banks and Brokers call collect: (201) 896-1900
All others call toll-free: (800) 459-8554
THE DEALER MANAGER FOR THE OFFER IS:
SMITH BARNEY INC.
388 Greenwich Street
New York, New York 10013
(800) 968-9368
<PAGE> 1
STAC, INC.
NOTICE OF GUARANTEED DELIVERY
OF SHARES OF COMMON STOCK
This form, or a form substantially equivalent to this form, must be used to
accept the Offer (as defined below) if certificates for the shares of common
stock of Stac, Inc. are not immediately available, if the procedure for
book-entry transfer cannot be completed on a timely basis, or if time will not
permit all other documents required by the Letter of Transmittal to be delivered
to the Depositary (as defined below) prior to the Expiration Time (as defined in
Section 1 of the Offer to Purchase defined below). Such form may be delivered by
hand or transmitted by mail or overnight courier, or (for Eligible Institutions
only) by facsimile transmission, to the Depositary. See Section 3 of the Offer
to Purchase.
THE ELIGIBLE INSTITUTION, WHICH COMPLETES THIS FORM, MUST COMMUNICATE THE
GUARANTEE TO THE DEPOSITARY AND MUST DELIVER THE LETTER OF TRANSMITTAL AND
CERTIFICATES FOR SHARES TO THE DEPOSITARY WITHIN THE TIME SHOWN HEREIN. FAILURE
TO DO SO COULD RESULT IN A FINANCIAL LOSS TO SUCH ELIGIBLE INSTITUTION.
THE DEPOSITARY FOR THE OFFER IS:
AMERICAN STOCK TRANSFER & TRUST COMPANY
By Mail, By Hand or By Overnight Courier:
40 Wall Street
46th Floor
New York, New York 10005
By Facsimile Transmission:
(for Eligible Institutions Only)
(718) 234-5001
Confirm by Telephone:
(718) 921-8222
DELIVERY OF THIS INSTRUMENT TO AN ADDRESS OTHER THAN AS SET FORTH ABOVE OR
TRANSMISSION OF INSTRUCTIONS VIA A FACSIMILE NUMBER OTHER THAN THE ONES LISTED
ABOVE WILL 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> 2
Ladies and Gentlemen:
The undersigned hereby tenders to Stac, Inc., a Delaware corporation (the
"Company"), upon the terms and subject to the conditions set forth in the Offer
to Purchase, dated August 14, 1997 (the "Offer to Purchase"), and the related
Letter of Transmittal (which together constitute the "Offer"), receipt of which
is hereby acknowledged, the number of shares of common stock, par value $.001
per share (the "Shares"), of the Company listed below, pursuant to the
guaranteed delivery procedure set forth in Section 3 of the Offer to Purchase.
<TABLE>
<S> <C>
- ------------------------------------------------------ ------------------------------------------------------
NUMBER OF SHARES NAME(S)
- ------------------------------------------------------ ------------------------------------------------------
CERTIFICATE NOS.: (IF AVAILABLE) (ADDRESS)
If shares will be tendered by book entry transfer: ------------------------------------------------------
AREA CODE/TELEPHONE NUMBER
- ------------------------------------------------------ ------------------------------------------------------
NAME OF TENDERING INSTITUTION SIGNATURE(S)
- ------------------------------------------------------ Dated: ---------------------------------------, 1997
ACCOUNT NO. AT (CHECK ONE)
</TABLE>
[ ] The Depository Trust Company
[ ] Philadelphia Depository Trust Company
<PAGE> 3
- --------------------------------------------------------------------------------
PRICE (IN DOLLARS) PER SHARE AT WHICH SHARES ARE BEING TENDERED.
- --------------------------------------------------------------------------------
IF SHARES ARE BEING TENDERED AT MORE THAN ONE PRICE, A SEPARATE NOTICE OF
GUARANTEED DELIVERY FOR EACH PRICE SPECIFIED MUST BE USED.
- --------------------------------------------------------------------------------
CHECK ONLY ONE BOX. IF MORE THAN ONE BOX IS CHECKED, OR IF NO BOX IS CHECKED
(EXCEPT AS PROVIDED IN THE ODD LOTS BOX AND INSTRUCTIONS BELOW), THERE IS NO
VALID TENDER OF SHARES.
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
[ ] $4.750 [ ] $5.000 [ ] $5.250
[ ] $4.875 [ ] $5.125 [ ] $5.375
[ ] $5.500
</TABLE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
ODD LOTS
This section is to be completed ONLY if Shares are being tendered by
or on behalf of a person who owned beneficially, as of the close of
business on August 13, 1997, and who continues to own beneficially as of
the Expiration Time, an aggregate of fewer than 100 Shares.
The undersigned either (check one box):
[ ] owned beneficially, as of the close of business on August 13,
1997 and continues to own beneficially as of the Expiration Time, an
aggregate of fewer than 100 Shares, all of which are being tendered, or
[ ] is a broker, dealer, commercial bank, trust company or other
nominee that (i) is tendering, for the beneficial owners thereof, Shares
with respect to which it is the record owner, and (ii) believes, based
upon representations made to it by each such beneficial owner, that such
beneficial owner owned beneficially, as of the close of business on August
13, 1997, and continues to own beneficially as of the Expiration Time, an
aggregate of fewer than 100 Shares and is tendering all of such Shares.
If you do not wish to specify a purchase price, check the following
box, in which case you will be deemed to have tendered at the Purchase
Price determined by the Company in accordance with the terms of the Offer
(persons checking this box need not indicate the price per Share in the
box entitled "Price (In Dollars) Per Share At Which Shares Are Being
Tendered" above). [ ]
- --------------------------------------------------------------------------------
<PAGE> 4
GUARANTEE
(NOT TO BE USED FOR SIGNATURE GUARANTEE)
The undersigned, a firm that is a member of a registered national
securities exchange or the National Association of Securities Dealers, Inc. or a
commercial bank or trust company (not a savings bank or savings and loan
association) having an office, branch or agency in the United States hereby
guarantees (i) that the above-named person(s) has a net long position in the
Shares being tendered within the meaning of Rule 14e-4 promulgated under the
Securities Exchange Act of 1934, as amended, (ii) that such tender of Shares
complies with Rule 14e-4, and (iii) to deliver to the Depositary at one of its
addresses set forth above certificate(s) for the Shares tendered hereby, in
proper form for transfer, or a confirmation of the book-entry transfer of the
Shares tendered hereby into the Depositary's account at The Depository Trust
Company or Philadelphia Depository Trust Company in each case together with a
properly completed and duly executed Letter(s) of Transmittal (or facsimile(s)
thereof), with any required signature guarantee(s) and any other required
documents, all within three Nasdaq Stock Market, Inc. trading days after the
date hereof.
<TABLE>
<S> <C>
------------------------------------------------------- -------------------------------------------------------
NAME OF FIRM AUTHORIZED SIGNATURE
------------------------------------------------------- -------------------------------------------------------
ADDRESS NAME (PLEASE PRINT)
------------------------------------------------------- -------------------------------------------------------
CITY, STATE, ZIP CODE TITLE
------------------------------------------------------- -------------------------------------------------------
AREA CODE AND TELEPHONE NUMBER
-------------------------------------------------------
Dated: _______________, 1997
</TABLE>
DO NOT SEND SHARE CERTIFICATES WITH THIS FORM.
YOUR SHARE CERTIFICATES MUST BE SENT WITH
THE LETTER OF TRANSMITTAL.
<PAGE> 1
SMITH BARNEY INC.
388 GREENWICH STREET
NEW YORK, NEW YORK 10013
STAC, INC.
OFFER TO PURCHASE FOR CASH
UP TO 6,000,000 SHARES OF ITS COMMON STOCK
AT A PURCHASE PRICE NOT GREATER THAN
$5.50 NOR LESS THAN $4.75 PER SHARE
- --------------------------------------------------------------------------------
THE OFFER, PRORATION PERIOD AND WITHDRAWAL RIGHTS EXPIRE AT 12:00
MIDNIGHT, NEW YORK CITY TIME, ON SEPTEMBER 11, 1997, UNLESS THE OFFER IS
EXTENDED
- --------------------------------------------------------------------------------
August 14, 1997
To Brokers, Dealers, Commercial Banks, Trust Companies and Other Nominees:
In our capacity as Dealer Manager, we are enclosing the material listed
below relating to the offer of Stac, Inc., a Delaware corporation (the
"Company"), to purchase up to 6,000,000 shares of its common stock, par value
$.001 per share, (the "Shares"), at prices not greater than $5.50 nor less than
$4.75 per Share, net to the seller in cash, specified by tendering stockholders,
upon the terms and subject to the conditions set forth in the Offer to Purchase,
dated August 14, 1997 (the "Offer to Purchase"), and in the related Letter of
Transmittal (which together constitute the "Offer").
The Company will determine a single price (not greater than $5.50 nor less
than $4.75 per Share), net to the seller in cash, that it will pay for Shares
validly tendered and not withdrawn pursuant to the Offer (the "Purchase Price"),
taking into account the number of Shares so tendered and the prices specified by
tendering stockholders. The Company will select the lowest Purchase Price that
will allow it to purchase 6,000,000 Shares (or such lesser number of Shares as
is validly tendered at prices not greater than $5.50 nor less than $4.75 per
Share) and not withdrawn pursuant to the Offer. The Company will purchase all
Shares validly tendered at prices at or below the Purchase Price and not
withdrawn, upon the terms and subject to the conditions of the Offer, including
the provisions relating to proration described in the Offer to Purchase. See
Section 1 of the Offer to Purchase.
The Purchase Price will be paid in cash, net to the seller, with respect to
all Shares purchased. Shares tendered at prices in excess of the Purchase Price
and Shares not purchased because of proration will be returned.
THE OFFER IS NOT CONDITIONED ON ANY MINIMUM NUMBER OF SHARES BEING
TENDERED. THE OFFER IS, HOWEVER, SUBJECT TO CERTAIN OTHER CONDITIONS. SEE
SECTION 6 OF THE OFFER TO PURCHASE.
We are asking you to contact your clients for whom you hold Shares
registered in your name (or in the name of your nominee) or who hold Shares
registered in their own names. Please bring the Offer to their attention as
promptly as possible. The Company will, upon request, reimburse you for
reasonable and customary handling and mailing expenses incurred by you in
forwarding any of the enclosed materials to your clients.
For your information and for forwarding to your clients, we are enclosing
the following documents:
1. The Offer to Purchase, dated August 14, 1997.
2. The Letter of Transmittal for your use and for the information of
your clients.
3. A letter to stockholders of the Company from Gary W. Clow, the
Chairman of the Board and Chief Executive Officer of the Company.
4. The Notice of Guaranteed Delivery to be used to accept the Offer
if the Shares and all other required documents cannot be delivered to the
Depositary by the Expiration Time (each as defined in the Offer to
Purchase).
5. A form of letter that may be sent to your clients for whose
accounts you hold Shares registered in your name or in the name of your
nominee, with space for obtaining such clients' instructions with regard to
the Offer.
<PAGE> 2
6. Guidelines for Certification of Taxpayer Identification Number on
Substitute Form W-9 providing information relating to backup federal income
tax withholding.
7. A return envelope addressed to American Stock Transfer & Trust
Company, the Depositary.
WE URGE YOU TO CONTACT YOUR CLIENTS AS PROMPTLY AS POSSIBLE. PLEASE NOTE
THAT THE OFFER, PRORATION PERIOD AND WITHDRAWAL RIGHTS EXPIRE AT 12:00 MIDNIGHT,
NEW YORK CITY TIME, ON SEPTEMBER 11, 1997, UNLESS THE OFFER IS EXTENDED.
The Company will not pay any fees or commissions to any broker, dealer or
other person for soliciting tenders of Shares pursuant to the Offer (other than
the Dealer Manager and the Information Agent). The Company will, upon request,
reimburse brokers, dealers, commercial banks and trust companies for reasonable
and customary handling and mailing expenses incurred by them in forwarding
materials relating to the Offer to their customers. The Company will pay all
stock transfer taxes applicable to its purchase of Shares pursuant to the Offer,
subject to Instruction 7 of the Letter of Transmittal.
As described in the Offer to Purchase, if more than 6,000,000 Shares have
been validly tendered at or below the Purchase Price and not withdrawn prior to
the Expiration Time, as defined in Section 1 of the Offer to Purchase, the
Company will accept Shares for purchase in the following order of priority: (i)
all Shares validly tendered at or below the Purchase Price and not withdrawn
prior to the Expiration Time by any stockholder who owned beneficially, as of
the close of business on August 13, 1997, and who continues to own beneficially
as of the Expiration Time, an aggregate of fewer than 100 Shares who validly
tenders all of such Shares (partial tenders will not qualify for this
preference) and completes the box captioned "Odd Lots" in the Letter of
Transmittal and, if applicable, the Notice of Guaranteed Delivery; and (ii)
after purchase of all of the foregoing Shares, all other Shares validly tendered
at or below the Purchase Price and not withdrawn prior to the Expiration Time on
a pro rata basis.
THE BOARD OF DIRECTORS OF THE COMPANY HAS APPROVED THE OFFER. HOWEVER,
STOCKHOLDERS MUST MAKE THEIR OWN DECISIONS WHETHER TO TENDER SHARES AND, IF SO,
HOW MANY SHARES TO TENDER AND THE PRICE OR PRICES AT WHICH SHARES SHOULD BE
TENDERED. NEITHER THE COMPANY NOR ITS BOARD OF DIRECTORS MAKES ANY
RECOMMENDATION TO ANY STOCKHOLDER AS TO WHETHER TO TENDER OR REFRAIN FROM
TENDERING SHARES. THE COMPANY HAS BEEN ADVISED THAT NONE OF ITS DIRECTORS OR
EXECUTIVE OFFICERS INTENDS TO TENDER ANY SHARES PURSUANT TO THE OFFER.
Any questions or requests for assistance or additional copies of the
enclosed materials may be directed to 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,
SMITH BARNEY INC.
NOTHING CONTAINED HEREIN OR IN THE ENCLOSED DOCUMENTS SHALL CONSTITUTE YOU
OR ANY OTHER PERSON THE AGENT OF THE COMPANY, THE DEALER MANAGER, THE
INFORMATION AGENT OR THE DEPOSITARY, OR ANY AFFILIATE OF ANY OF THE FOREGOING,
OR AUTHORIZE YOU OR ANY OTHER PERSON TO USE ANY DOCUMENT OR MAKE ANY STATEMENT
ON BEHALF OF ANY OF THEM IN CONNECTION WITH THE OFFER OTHER THAN THE DOCUMENTS
ENCLOSED HEREWITH AND THE STATEMENTS CONTAINED THEREIN.
2
<PAGE> 1
STAC, INC.
OFFER TO PURCHASE FOR CASH
UP TO 6,000,000 SHARES OF ITS COMMON STOCK
AT A PURCHASE PRICE NOT GREATER THAN
$5.50 NOR LESS THAN $4.75 PER SHARE
- --------------------------------------------------------------------------------
THE OFFER, PRORATION PERIOD AND WITHDRAWAL RIGHTS EXPIRE AT 12:00
MIDNIGHT, NEW YORK CITY TIME, ON SEPTEMBER 11, 1997, UNLESS THE OFFER IS
EXTENDED
- --------------------------------------------------------------------------------
To Our Clients:
Enclosed for your consideration are the Offer to Purchase, dated August 14,
1997 (the "Offer to Purchase"), and the related Letter of Transmittal (which
together constitute the "Offer") setting forth an offer by Stac, Inc., a
Delaware corporation (the "Company"), to purchase up to 6,000,000 shares of its
common stock, no par value per share (the "Shares"), at prices not greater than
$5.50 nor less than $4.75 per Share, net to the seller in cash, specified by
tendering stockholders, upon the terms and subject to the conditions of the
Offer. Also enclosed herewith is certain other material related to the Offer,
including a letter from Gary W. Clow, Chairman of the Board and Chief Executive
Officer of the Company, to stockholders.
The Company will determine a single per Share price (not greater than $5.50
nor less than $4.75 per Share) (the "Purchase Price") that it will pay for the
Shares validly tendered pursuant to the Offer and not withdrawn, taking into
account the number of Shares so tendered and the prices specified by tendering
stockholders. The Company will select the lowest Purchase Price that will allow
it to purchase 6,000,000 Shares (or such lesser number of Shares as are validly
tendered at prices not greater than $5.50 nor less than $4.75 per Share) and not
withdrawn pursuant to the Offer. The Company will purchase all Shares validly
tendered at prices at or below the Purchase Price and not withdrawn, upon the
terms and subject to the conditions of the Offer, including the provisions
thereof relating to proration. See Section 1 of the Offer to Purchase.
WE ARE THE HOLDER OF RECORD OF SHARES HELD FOR YOUR ACCOUNT. AS SUCH, A
TENDER OF SUCH SHARES CAN BE MADE ONLY BY US AS THE HOLDER OF RECORD AND
PURSUANT TO YOUR INSTRUCTIONS. THE LETTER OF TRANSMITTAL IS FURNISHED TO YOU FOR
YOUR INFORMATION ONLY AND CANNOT BE USED BY YOU TO TENDER SHARES HELD BY US FOR
YOUR ACCOUNT.
We request instructions as to whether you wish us to tender any or all of
the Shares held by us for your account, upon the terms and subject to the
conditions set forth in the Offer to Purchase and the Letter of Transmittal.
Your attention is invited to the following:
1. You may tender Shares at prices (in multiples of $0.125), which
cannot be greater than $5.50 nor less than $4.75 per Share, as indicated in
the attached Instruction Form, net to you in cash.
2. The Offer is extended for up to 6,000,000 Shares, constituting
approximately 19.6% of the total Shares outstanding as of August 13, 1997.
The Offer is not conditioned on any minimum number of Shares being
tendered. The Offer is, however, subject to certain other conditions set
forth in the Offer to Purchase.
3. The Offer, proration period and withdrawal rights will expire at
12:00 Midnight, New York City time, on September 11, 1997, unless the Offer
is extended. Your instructions to us should be forwarded to us in ample
time to permit us to submit a tender on your behalf.
<PAGE> 2
4. As described in the Offer to Purchase, if more than 6,000,000
Shares have been validly tendered at or below the Purchase Price and not
withdrawn prior to the Expiration Time, as defined in Section 1 of the
Offer to Purchase, the Company will purchase Shares in the following order
of priority:
(i) all Shares validly tendered at or below the Purchase Price and
not withdrawn prior to the Expiration Time by any stockholder who owned
beneficially, as of the close of business on August 13, 1997, and who
continues to own beneficially as of the Expiration Time, an aggregate of
fewer than 100 Shares and who validly tenders all of such Shares
(partial tenders will not qualify for this preference) and completes the
box captioned "Odd Lots" in the Letter of Transmittal and, if
applicable, the Notice of Guaranteed Delivery; and
(ii) after purchase of all the foregoing Shares, all other Shares
validly tendered at or below the Purchase Price and not withdrawn prior
to the Expiration Time on a pro rata basis. See Section 1 of the Offer
to Purchase for a discussion of proration.
5. Tendering stockholders will not be obligated to pay any brokerage
commissions or solicitation fees on the Company's purchase of Shares in the
Offer. Any stock transfer taxes applicable to the purchase of Shares by the
Company pursuant to the Offer will be paid by the Company, except as
otherwise provided in Instruction 7 of the Letter of Transmittal.
6. If you wish to tender portions of your Shares at different prices,
you must complete a separate Instruction Form for each price at which you
wish to tender each portion of your Shares. We must submit separate Letters
of transmittal on your behalf for each price you will accept.
7. If you owned beneficially, as of the close of business on August
13, 1997, and continue to own beneficially as of the Expiration Time, an
aggregate of fewer than 100 Shares and you instruct us to tender at or
below the Purchase Price on your behalf all such Shares prior to the
Expiration Time and check the box captioned "Odd Lots" in the Instruction
Form, all such Shares will be accepted for purchase before proration, if
any, of the other tendered Shares.
THE BOARD OF DIRECTORS OF THE COMPANY HAS APPROVED THE OFFER. HOWEVER,
STOCKHOLDERS MUST MAKE THEIR OWN DECISIONS WHETHER TO TENDER SHARES AND, IF SO,
HOW MANY SHARES TO TENDER AND THE PRICE OR PRICES AT WHICH SHARES SHOULD BE
TENDERED. NEITHER THE COMPANY NOR ITS BOARD OF DIRECTORS MAKES ANY
RECOMMENDATION TO ANY STOCKHOLDER AS TO WHETHER TO TENDER OR REFRAIN FROM
TENDERING SHARES. THE COMPANY HAS BEEN ADVISED THAT NONE OF ITS DIRECTORS OR
EXECUTIVE OFFICERS INTENDS TO TENDER ANY SHARES PURSUANT TO THE OFFER.
If you wish to have us tender any or all of your Shares held by us for your
account upon the terms and subject to the conditions set forth in the Offer to
Purchase, please so instruct us by completing, executing and returning to us the
attached Instruction Form. An envelope to return your instructions to us is
enclosed. If you authorize tender of your Shares, all such Shares will be
tendered unless otherwise specified on the Instruction Form.
YOUR INSTRUCTIONS SHOULD BE FORWARDED TO US IN AMPLE TIME TO PERMIT US TO
SUBMIT A TENDER ON YOUR BEHALF BY THE EXPIRATION OF THE OFFER.
The Offer is being made to all holders of Shares. The Company is not aware
of any jurisdiction where the making of the Offer is not in compliance with
applicable law. If the Company becomes aware of any jurisdiction where the
making of the Offer is not in compliance with any valid applicable law, the
Company will make a good faith effort to comply with such law. If, after such
good faith effort, the Company cannot comply with such law, the Offer will not
be made to (nor will tenders be accepted from or on behalf of) the holders of
Shares residing in such jurisdiction. In any jurisdiction the securities or blue
sky laws of which require the Offer to be made by a licensed broker or dealer,
the Offer is being made on the Company's behalf by the Dealer Manager or one or
more registered brokers or dealers licensed under the laws of such jurisdiction.
2
<PAGE> 3
INSTRUCTION FORM
WITH RESPECT TO OFFER TO PURCHASE FOR CASH
UP TO 6,000,000 SHARES OF COMMON STOCK
OF
STAC, INC.
AT A PURCHASE PRICE NOT GREATER THAN
$5.50 NOR LESS THAN $4.75 PER SHARE
The undersigned acknowledge(s) receipt of your letter and the enclosed
Offer to Purchase, dated August 14, 1997, and the related Letter of Transmittal
(which together constitute the "Offer") in connection with the Offer by Stac,
Inc. (the "Company") to purchase up to 6,000,000 shares of its common stock, par
value $.001 per share (the "Shares"), at prices not greater than $5.50 nor less
than $4.75 per Share, net to the undersigned in cash, specified by the
undersigned, upon the terms and subject to the terms and conditions of the
Offer.
This will instruct you to tender to the Company the number of Shares
indicated below (or, if no number is indicated below, all Shares) that are held
by you for the account of the undersigned, at the price per Share indicated
below, upon the terms and subject to the conditions of the Offer.
SHARES TENDERED
[ ] By checking this box, all Shares held by us for your account will be
tendered. If fewer than all Shares held by us for your account are to be
tendered, please check the box and indicate below the aggregate number of Shares
to be tendered by us. [ ]*
------------------ SHARES
* Unless otherwise indicated, it will be assumed that all Shares held by us
for your account are to be tendered.
- --------------------------------------------------------------------------------
PRICE (IN DOLLARS) PER SHARE AT WHICH SHARES ARE BEING TENDERED
- --------------------------------------------------------------------------------
IF SHARES ARE BEING TENDERED AT MORE THAN ONE PRICE,
A SEPARATE INSTRUCTION FORM FOR EACH PRICE SPECIFIED MUST BE USED.
- --------------------------------------------------------------------------------
CHECK ONLY ONE BOX.
IF MORE THAN ONE BOX IS CHECKED,
OR IF NO BOX IS CHECKED (EXCEPT AS PROVIDED IN THE ODD LOTS
BOX AND INSTRUCTIONS BELOW), THERE IS NO VALID TENDER OF SHARES.
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
[ ] $4.750 [ ] $5.000 [ ] $5.250
[ ] $4.875 [ ] $5.125 [ ] $5.375
[ ] $5.500
</TABLE>
================================================================================
<PAGE> 4
- --------------------------------------------------------------------------------
ODD LOTS
[ ] By checking this box, the undersigned represents that the
undersigned owned beneficially, as of the close of business on August 13,
1997 and continues to own beneficially as of the Expiration Time, an
aggregate of fewer than 100 Shares and is tendering all of such Shares.
If you do not wish to specify a purchase price, check the following
box, in which case you will be deemed to have tendered at the Purchase
Price determined by the Company in accordance with the terms of the Offer
(persons checking this box need not indicate the price per Share in the
box entitled "Price (In Dollars) Per Share At Which Shares Are Being
Tendered" above). [ ]
- --------------------------------------------------------------------------------
THE METHOD OF DELIVERY OF THIS DOCUMENT IS AT THE ELECTION AND RISK OF THE
TENDERING STOCKHOLDERS. IF DELIVERY IS BY MAIL, REGISTERED MAIL WITH RETURN
RECEIPT REQUESTED, PROPERLY INSURED, IS RECOMMENDED. IN ALL CASES, SUFFICIENT
TIME SHOULD BE ALLOWED TO ASSURE DELIVERY.
SIGN HERE
<TABLE>
<S> <C>
Date: __________________________ Signature(s): _____________________
Name(s): __________________________
Address: __________________________
Telephone Number: _________________
</TABLE>
2
<PAGE> 1
[Stac Logo]
August 14, 1997
Dear Stockholder:
Stac, Inc. is offering to purchase up to 6,000,000 shares of its common
stock at a price not greater than $5.50 nor less than $4.75 per share. The
Company is conducting the Offer through a procedure commonly referred to as a
"Dutch Auction." This procedure allows you to select the price within the
specified price range at which you are willing to sell all or a portion of your
shares to the Company.
The Offer is explained in detail in the enclosed Offer to Purchase and
Letter of Transmittal. If you wish to tender your shares, instructions on how to
tender shares are provided in the enclosed materials. I encourage you to read
these materials carefully before making any decision with respect to the Offer.
Neither the Company nor its Board of Directors makes any recommendation to any
shareholder whether to tender any or all shares.
Please note that the Offer is scheduled to expire at 12:00 Midnight, New
York City time, on September 11, 1997, unless extended by the Company. Questions
regarding the Offer should not be directed to the Company but should instead be
directed to the Information Agent, Corporate Investor Communications, Inc. at
(800) 459-8554.
Sincerely,
/s/ Gary W. Clow
Gary W. Clow
Chairman of the Board
and Chief Executive Officer
<PAGE> 1
Contact: John R. Witzel
or Sylvia Evans
(619) 794-4399
FOR IMMEDIATE RELEASE
STAC, INC.
TO COMMENCE TENDER OFFER FOR ITS COMMON STOCK
SAN DIEGO, August 14, 1997 -- Stac, Inc. (NASDAQ: STAC) (the "Company")
announced today that it will commence a Dutch Auction tender offer to purchase
for cash up to 6,000,000 shares of its issued and outstanding common stock, par
value $.001 per share ("Common Stock"). The tender offer begins today, August
14, 1997, and will expire, unless extended, at 12:00 Midnight New York City time
on September 11, 1997.
Terms of the Dutch Auction tender offer, which are described more fully in
the Offer to Purchase and Letter of Transmittal pursuant to which the offer is
being made, include a purchase price not greater than $5.50 nor less than $4.75
per share, net to the seller in cash, without interest thereon.
In a Dutch Auction, the Company sets a price range, and holders have an
opportunity to specify prices within that range at which they are willing to
sell shares. After the expiration of the tender offer, the Company will
determine a single per share price to be paid for each share purchased, taking
into consideration the number of shares tendered and the prices specified by
tendering stockholders. If the tender offer is oversubscribed, only shares
validly tendered at or below the purchase price determined by the Company will
be eligible for proration. Subject to applicable law, the Company reserves the
right to purchase more than 6,000,000 shares pursuant to the tender offer, but
does not currently plan to do so. The tender offer is not conditioned on any
minimum number of shares being tendered.
The Offer to Purchase, Letter of Transmittal and related documents will be
mailed to stockholders of record of Common Stock and will also be made available
for distribution to beneficial owners of Common Stock.
On August 13, 1997, the closing price of the Common Stock was $4.125 per
share.
The pending tender offer replaces the Company's plans, announced in June
1997, to repurchase $20 million of its Common Stock. As of August 13, 1997, the
Company had repurchased approximately 165,000 shares of its Common Stock and
there were 30,656,388 shares outstanding, excluding treasury shares.
The dealer manager for the tender offer is Smith Barney Inc. and the
information agent is Corporate Investors Communications, Inc.
Founded in 1983, Stac, Inc. is known worldwide for its innovations in data
compression. The company builds on these advancements to create
high-performance, easy to deploy distributed business systems recovery software
solutions for enterprise customers. Through its OEM networking products
subsidiary, Hi/fn, Stac also provides semiconductor solutions to improve the
efficiency, security and manageability of networks. Stac's products are sold
through a variety of domestic and international channels. Information on Stac's
award-winning products can be accessed via the Internet at http://www.stac.com,
by calling the company's North American Headquarters in San Diego, California:
1-800-279-7822 (U.S. and Canada), Stac's European Headquarters in the United
Kingdom; +44(0) 1344-302900 (Europe) or +(619) 794-3741 in other countries.
<PAGE> 1
This announcement is neither an offer to purchase nor a solicitation of an
offer to sell Shares. The Offer is made solely by the Offer to Purchase and the
related Letter of Transmittal. Capitalized terms not defined in this
announcement have the respective meanings ascribed in such terms in the Offer to
Purchase. The Offer is not being made to, nor will the Company accept tenders
from, holders of Shares in any jurisdiction in which the Offer or its acceptance
would violate that jurisdiction's laws. The Company is not aware of any
jurisdiction in which the making of the Offer or the tender of Shares would not
be in compliance with the laws of such jurisdiction. In jurisdictions whose laws
require that the Offer be made by a licensed broker or dealer, the Offer shall
be deemed to be made on the Company's behalf by Smith Barney Inc., or by one or
more registered brokers or dealers licensed under the laws of such jurisdiction.
NOTICE OF OFFER TO PURCHASE FOR CASH BY
STAC, INC.
UP TO 6,000,000 SHARES OF ITS COMMON STOCK
AT A PURCHASE PRICE NOT GREATER THAN
$5.50 NOR LESS THAN $4.75 PER SHARE
Stac, Inc., a Delaware corporation (the "Company"), invites its
stockholders to tender up to 6,000,000 shares of its common stock, par value
$.001 per share (the "Shares"), to the Company at prices not greater than $5.50
nor less that $4.75 per Share in cash, specified by tendering stockholders, upon
the terms and subject to the conditions set forth in the Offer to Purchase dated
August 14, 1997 (the "Offer to Purchase"), and the related Letter of Transmittal
(which together constitute the "Offer").
THE OFFER, PRORATION PERIOD AND WITHDRAWAL RIGHTS EXPIRE AT 12:00 MIDNIGHT, NEW
YORK CITY TIME, ON SEPTEMBER 11, 1997, UNLESS THE OFFER IS EXTENDED.
The Offer is not conditioned on any minimum number of Shares being
tendered. The Offer is, however, subject to certain other conditions set forth
in the Offer to Purchase.
THE BOARD OF DIRECTORS OF THE COMPANY HAS APPROVED THE OFFER. HOWEVER,
STOCKHOLDERS MUST MAKE THEIR OWN DECISIONS WHETHER TO TENDER SHARES AND, IF SO,
HOW MANY SHARES TO TENDER AND THE PRICE OR PRICES AT WHICH SHARES SHOULD BE
TENDERED. NEITHER THE COMPANY NOR ITS BOARD OF DIRECTORS MAKES ANY
RECOMMENDATION TO ANY STOCKHOLDER AS TO WHETHER TO TENDER OR REFRAIN FROM
TENDERING SHARES. THE COMPANY HAS BEEN ADVISED THAT NONE OF ITS DIRECTORS OR
EXECUTIVE OFFICERS INTENDS TO TENDER ANY SHARES PURSUANT TO THE OFFER.
The Company will, upon the terms and subject to the conditions of the
Offer, determine a single per Share price (not greater than $5.50 nor less than
$4.75 per Share), net to the seller in cash (the "Purchase Price"), that it will
pay for Shares validly tendered and not withdrawn pursuant to the Offer, taking
into account the number of Shares so tendered and the prices specified by
tendering stockholders. The Company will select the lowest Purchase Price that
will allow it to buy 6,000,000 Shares (or such lesser number of Shares as are
validly tendered at prices not greater than $5.50 nor less than $4.75 per Share)
validly tendered and not withdrawn pursuant to the Offer. The Company will pay
the Purchase Price for all Shares validly tendered prior to the Expiration Time
at prices at or below the Purchase Price and not withdrawn, upon the terms and
subject to the conditions of the Offer including the proration terms described
below. The Company reserves the right, in its sole discretion, to purchase more
than 6,000,000 Shares pursuant to the Offer.
Upon the terms and subject to the conditions of the Offer, in the event
that prior to the Expiration Time more than 6,000,000 Shares (or such greater
number of Shares as the Company may elect to purchase pursuant to the Offer) are
validly tendered at or below the Purchase Price and not withdrawn, the Company
will purchase such validly tendered Shares in the following order of priority:
(i) all Shares validly tendered at
<PAGE> 2
or below the Purchase Price and not withdrawn prior to the Expiration Time by
any Odd Lot Owner who tenders all such Shares beneficially owned by such Odd Lot
Owner at or below the Purchase Price (partial tenders will not qualify for this
Preference) and who completes the box captioned "Odd Lots" on the Letter of
Transmittal and, if applicable, on the Notice of Guaranteed Delivery, and (ii)
after purchase of all the foregoing Shares, all other Shares validly tendered at
or below the Purchase Price and not withdrawn prior to the Expiration Time on a
pro rata basis.
Shares tendered pursuant to the Offer may be withdrawn at any time before
the Expiration Time and, unless accepted for payment by the Company as provided
in the Offer to Purchase, may also be withdrawn after 12:00 Midnight, New York
City time, on October 9, 1997.
THE OFFER TO PURCHASE AND THE LETTER OF TRANSMITTAL CONTAIN IMPORTANT
INFORMATION WHICH SHOULD BE READ CAREFULLY BEFORE STOCKHOLDERS DECIDE WHETHER TO
ACCEPT OR REJECT THE OFFER AND, IF ACCEPTED, AT WHICH PRICE OR PRICES TO TENDER
THEIR SHARES.
These materials are being mailed to record holders of Shares and are being
furnished to brokers, banks and similar persons whose names, or the names of
whose nominees, appear on the Company's stockholder list or, if applicable, who
are listed as participants in a clearing agency's security position listing for
transmittal to beneficial owners of Shares. The information required to be
disclosed by Rule 13e-4(d)(1) under the Securities Exchange Act of 1934, as
amended, is contained in the Offer to Purchase and is incorporated by reference
herein.
Additional copies of the Offer to Purchase and the Letter of Transmittal
may be obtained from the Information Agent and will be furnished at the
Company's expense. Questions and requests for assistance may be directed to the
Information Agent as set forth below.
The Information Agent For The Offer Is:
CORPORATE INVESTOR COMMUNICATIONS, INC.
111 Commerce Road
Carlstadt, New Jersey 07072
Banks and Brokers call collect: (201) 896-1900
All others call toll-free: (800) 459-8554
The Dealer Manager For The Offer Is:
SMITH BARNEY INC.
388 Greenwich Street
New York, New York 10013
(800) 968-9368
August , 1997
2
<PAGE> 1
GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION
NUMBER ON SUBSTITUTE FORM W-9
GUIDELINES FOR DETERMINING THE PROPER IDENTIFICATION NUMBER TO GIVE THE
PAYER -- Social Security numbers have nine digits separated by two hyphens:
i.e., 000-00-0000. Employer identification numbers have nine digits separated by
only one hyphen, i.e. 00-0000000. The table below will help determine the number
to give the payer.
================================================================================
GIVE THE
SOCIAL SECURITY
FOR THIS TYPE OF ACCOUNT: NUMBER OF --
================================================================================
1. An individual's account The individual.
2. Two or more individuals The actual owner of the account or,
(joint account) if combined funds, any one of the
individuals.(2)
3. Husband and wife The actual owner of the account or,
(joint account) if joint funds, either person.(2)
4. Custodian account of a The minor.(3)
minor (Uniform Gift to
Minors Act)
5. Adult and minor The adult or, if the minor is the
(joint account) only contributor, the minor.(1)
6. Account in the name The ward, minor, or incompetent
of guardian or person.(4)
committee for a
designated ward,
minor, or
incompetent person
7. a. The usual The grantor-trustee.(1)
revocable savings
trust account
(grantor is also
trustee)
b. So-called trust The actual owner.(1)
account that is
not a legal or
valid trust under
State law.
8. Sole proprietorship The owner.(5)
account
================================================================================
================================================================================
GIVE THE EMPLOYER
IDENTIFICATION
FOR THIS TYPE OF ACCOUNT: NUMBER OF --
================================================================================
9. A valid trust, estate, or The legal entity (do not furnish the
pension trust identifying number of the personal
representative or trustee unless
the legal entity itself is not
designated in the account title).(1)
10. Corporate account The corporation.
11. Religious, charitable, or edu- The organization.
cational organization account
12. Partnership account held in The partnership.
the name of the business
13. Association, club, or other The organization.
tax-exempt organization
14. A broker or registered The broker or nominee.
nominee
15. Account with the Department The public entity.
of Agriculture in the name of
a public entity (such as a State
or local government, school
district, or prison) that receives
agricultural program payments
================================================================================
1 List first and circle the name of the legal trust, estate, or pension trust.
2 List first and circle the name of the person whose number you furnish.
3 Circle the minor's name and furnish the minor's social security number.
4 Circle the ward, minor's or incompetent person's name and furnish such
person's social security number.
5 Show the name of the owner.
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> 2
GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION
NUMBER ON SUBSTITUTE FORM W-9
OBTAINING A NUMBER
If you don't have a TIN or you don't know your number, obtain Internal Revenue
Service Form SS-5 (Application for Social Security Number Card) or Form SS-4
(Application for Employer Identification Number) from your local office of the
Social Security Administration or the Internal Revenue Service and apply for a
number. As soon as you receive your TIN, complete another W-9, include your TIN,
sign and date the form, and send it to the Exchange Agent.
PAYEES AND PAYMENTS EXEMPT FROM BACKUP WITHHOLDING
Payees specifically exempted from backup withholding on ALL payments include the
following:
- - A corporation.
- - A financial institution.
- - An organization exempt from tax under Section 501(a) of the Internal Revenue
Code of 1986, as amended (the "Code"), or an individual retirement plan.
- - The United States or any agency or instrumentality thereof.
- - A state, the District of Columbia, a possession of the United States or any
subdivision or instrumentality thereof.
- - A foreign government, a political subdivision of a foreign government, or
any agency or instrumentality thereof.
- - An international organization or any agency or instrumentality thereof.
- - A registered dealer in securities or commodities registered in the United
States or a possession of the United States.
- - A real estate investment trust.
- - A common trust fund operated by a bank under Section 584(a) of the Code.
- - An exempt charitable remainder trust, or a non-exempt trust described in
Section 4947(a)(1) of the Code.
- - An entity registered at all times under the Investment Company Act of 1940.
- - A foreign central bank of issue.
Payments of dividends and patronage dividends not generally subject to backup
withholding include the following:
- - Payments to nonresident aliens subject to withholding under Section 1441 of
the Code.
- - Payments to partnerships not engaged in a trade or business in the United
States and which have at least one nonresidential partner.
- - Payments of patronage dividends where the amount received is not paid in
money.
- - Payments made by certain foreign organizations.
- - Payments made to a nominee.
Payments of interest not generally subject to backup withholding include the
following:
- - Payments of interest on obligations issued by individuals. Note: You may be
subject to backup withholding if this interest is $600 or more and is paid
in the course of the payer's trade or business and you have not provided
your correct taxpayer identification number to the payer.
- - Payments of tax-exempt interest (including exempt interest dividends under
Section 852 of the Code).
- - Payments described in Section 6049(b)(5) of the Code to nonresident aliens.
- - Payments on tax-free covenant bonds under Section 1451 of the Code.
- - Payments made by certain foreign organizations.
- - Payments made to a nominee.
Exempt payees described above should file Substitute Form W-9 to avoid possible
erroneous backup withholding. FILE THIS FORM WITH THE PAYER. FURNISH YOUR
TAXPAYER IDENTIFICATION NUMBER. WRITE "EXEMPT" ON THE FACE OF THE FORM AND
RETURN IT TO THE PAYER. IF THE PAYMENTS ARE INTEREST, DIVIDENDS, OR PATRONAGE
DIVIDENDS, ALSO SIGN AND DATE THE FORM. IF YOU ARE A NONRESIDENT ALIEN OR A
FOREIGN ENTITY NOT SUBJECT TO BACKUP WITHHOLDING, FILE WITH PAYER A COMPLETED
INTERNAL REVENUE FORM W-8 (CERTIFICATE OF FOREIGN STATUS).
Certain payments other than interest, dividends, and patronage dividends that
are not subject to information reporting are also not subject to backup
withholding. For details, see Sections 6041, 6041A(a), 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
payers who must report the payments to the Internal Revenue Service. The
Internal Revenue Service uses the numbers for identification purposes. Payers
must be given the numbers whether or not recipients are required to file tax
returns. Beginning January 1, 1993, payers must generally withhold 31% of
taxable interest, dividend, and certain other payments to a payee who does not
furnish a taxpayer identification number to a payer. Certain penalties may also
apply.
PENALTIES
(1) PENALTY FOR FAILURE TO FURNISH TAXPAYER IDENTIFICATION NUMBER--If you fail
to furnish your taxpayer identification number to a payer, you are subject to a
penalty of $50 for each such failure unless your failure is due to reasonable
cause and not to willful neglect.
(2) FAILURE TO REPORT CERTAIN DIVIDEND AND INTEREST PAYMENTS--If you fail to
properly include any portion of an includible payment for interest, dividends,
or patronage dividends in gross income, such failure will be treated as being
due to negligence and will be subject to a penalty of 5% on any portion of an
underpayment attributable to that failure unless there is clear and convincing
evidence to the contrary.
(3) 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.
(4) CRIMINAL PENALTY FOR FALSIFYING INFORMATION--Falsifying certifications or
affirmations may subject you to criminal penalties including fines and/or
imprisonment.
FOR ADDITIONAL INFORMATION CONTACT YOUR TAX
CONSULTANT OR THE INTERNAL REVENUE SERVICE.
