<PAGE> 1
SCHEDULE 13E-3
(Rule l3e-1)
Transaction Statement Pursuant to Section 13(e) of the Securities
Exchange Act of 1934 and Rule 13e-3 Thereunder
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
Rule 13e-3 Transaction Statement
(Pursuant to Section 13(e)
of the Securities Exchange Act of 1934)
Amendment No. 4
EQUITRAC CORPORATION
(Name of Issuer)
EQUITRAC CORPORATION
CHARGEBACK ACQUISITION CORP.
CORNERSTONE EQUITY INVESTORS IV, L.P.
JOHN T. KANE
GEORGE P. WILSON
STEVE SMITH
CHRISTOPHER RICKBORN
PATRICK RAFTERY
CID YOUSEFI
JOHN P. JONES
(Name of Persons Filing statement)
COMMON STOCK, PAR VALUE $.01 PER SHARE
(Title of Class of Securities)
---------
294599105
(CUSIP Number of Class of Securities)
-----------
George P. Wilson
Equitrac Corporation
836 Ponce de Leon Boulevard
Coral Gables, Florida 3314
Tel: (305) 442-2060
(Name, Address and Telephone Number of Persons Authorized to Receive
Notices and Communications on Behalf of Persons Filing Statement)
Copies to:
Mark Rossi Frederick Tanne
Cornerstone Equity Investors IV, L.P. Kirkland & Ellis
717 Fifth Avenue, Suite 1100 153 East 53rd Street
New York, NY 10022 New York, NY 10022
(212) 753-0901 (212) 446-4800
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This statement is filed in connection with (check the appropriate box):
a. [x] The filing of solicitation materials or an information
statement subject to Regulation 14A, Regulation 14C or Rule
13e-3(c) under the Securities Exchange Act of 1934.
b. [ ] The filing of registration statement under the Securities
Act of 1933.
c. [ ] A tender offer.
d. [ ] None of the above.
Check the following box if the soliciting materials or information
statement referred to in checking box (a) are preliminary copies: [X]
CALCULATION OF FILING FEE
- ---------------------------------- --------------------------------------------
Transaction Valuation* Amount of Filing Fee
- ---------------------------------- --------------------------------------------
$89,077,045 $17,815.40
- ---------------------------------- --------------------------------------------
*$25.25 per share in cash-out merger plus the difference between $25.25 and the
exercise price of each share subject to an option. This transaction valuation
was based on the terms of the original merger agreement.
[x] Check box if any part of the fee is offset as provided by Rule
0-ll(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: $17,815.40
Form or Registration No.: Schedule 14A
Filing Party: Equitrac Corporation
Date Filed: March 17, 1999
- ---------------------------------- --------------------------------------------
INTRODUCTION
This Amendment No. 4 to the Rule 13E-3 Transaction Statement (this
"Statement") relates to the solicitation of proxies by the Equitrac Corporation,
a Florida corporation ("Equitrac"), in connection with a Special Meeting of its
shareholders at which Equitrac's shareholders will be asked to consider and vote
upon a proposal to approve the Amended and Restated Recapitalization Agreement
and Plan of Merger (the "Merger Agreement"), dated June 4, among Equitrac,
Chargeback Acquisition Corp. ("Merger
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Sub"), a Florida corporation formed by Cornerstone Equity Investors IV, L.P.
("Cornerstone"), and John T. Kane and George P. Wilson. The Merger Agreement
has been amended by the first amendment thereto, dated as of July 26, 1999.
The cross reference sheet on the following pages, which is being
supplied pursuant to General Instruction F to Schedule 13E-3, shows the location
in the Definitive Proxy Statement (the "Proxy Statement"), previously filed with
the Securities and Exchange Commission, or, as applicable, the supplement
thereto filed by the Issuer with the Commission on the date hereof of the
information required to be included in response to the items of this Statement.
The information set forth in the Proxy Statement and such supplement, which are
attached hereto as Exhibits (d) and (d)(2), respectively, including all exhibits
thereto, is hereby incorporated herein by reference, and the responses to each
Item herein are qualified in their entirety by the provisions of the Proxy
Statement, as so supplemented.
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CROSS REFERENCE SHEET
(Pursuant to General Instruction F to Schedule 13E-3)
Unless otherwise indicated, all references are to portions of the Proxy
Statement which are incorporated herein and made a part hereof by reference.
Where indicated references are to portions of the supplement to the Proxy
Statement which are incorporated herein and made a part hereof by reference.
- ---------------------------------- --------------------------------------------
SCHEDULE 13E-3 ITEM
NUMBER AND CAPTION RESPONSE/CAPTION IN PROXY STATEMENT
- ---------------------------------- --------------------------------------------
1. Issuer and Class of
Security Subject to the
Transaction.
- ---------------------------------- --------------------------------------------
(a) "SUMMARY -- The Companies"
- ---------------------------------- --------------------------------------------
(b) "SUMMARY -- Record Date; Voting Power;
Quorum"; "SUMMARY -- Market Prices for
Common Stock and Dividends"; and "THE
SPECIAL MEETING --Record Date; Voting Power;
Quorum"
- ---------------------------------- --------------------------------------------
(c) "SUMMARY -- Market Prices for Common Stock
and Dividends"
- ---------------------------------- --------------------------------------------
(d) "SUMMARY -- Market Prices for Common Stock
and Dividends"
- ---------------------------------- --------------------------------------------
(e) *
- ---------------------------------- --------------------------------------------
(f) "SUMMARY -- Market Prices for Common Stock
and Dividends" and "APPENDIX D -
Transactions Involving Equitrac's Common
Stock effected by members of the Management
Group since March 1, 1997"
- ---------------------------------- --------------------------------------------
2. Identity and Background.
- ---------------------------------- --------------------------------------------
(a)-(g) "SUMMARY -- The Companies" and "CERTAIN
INFORMATION CONCERNING MERGER SUB AND THE
EQUITY INVESTORS"
- ---------------------------------- --------------------------------------------
- -------------------------
* Not applicable or answer is negative.
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- ---------------------------------- --------------------------------------------
SCHEDULE 13E-3 ITEM
NUMBER AND CAPTION RESPONSE/CAPTION IN PROXY STATEMENT
- ---------------------------------- --------------------------------------------
3. Past Contacts,
Transactions or
Negotiations.
- ---------------------------------- --------------------------------------------
(a) (1) "SUMMARY -- Market Prices for Common Stock
and Dividends" and "APPENDIX D --
Transactions Involving Equitrac's common
stock effected by members of the Management
Group since March 1, 1997"
- ---------------------------------- --------------------------------------------
(2) "SUMMARY -- Conflicts of Interest";
"SPECIAL FACTORS -- Background of the
Merger"; "SPECIAL FACTORS -- Conflicts of
Interest"; "SUMMARY -- Voting Agreement;
Irrevocable Proxy"; and "THE SPECIAL MEETING
-- Voting Agreement; Irrevocable Proxy"
- ---------------------------------- --------------------------------------------
(b) "SUMMARY --Conflicts of Interest"; "SPECIAL
FACTORS - Background of the Merger ";
"SPECIAL FACTORS -- Conflicts of Interest";
"SUMMARY -- Voting Agreement; Irrevocable
Proxy"; and "THE SPECIAL MEETING -- Voting
Agreement; Irrevocable Proxy"
- ---------------------------------- --------------------------------------------
4. Terms of the
Transaction.
- ---------------------------------- --------------------------------------------
(a) "SUMMARY -- The Recapitalization and
Merger"; "SUMMARY -- Conflicts of Interest";
"SPECIAL FACTORS"; "THE RECAPITALIZATION
AND MERGER" and PROXY SUPPLEMENT -- "The
Proposed Settlement" and "Amendment to the
Merger Agreement"
- ---------------------------------- --------------------------------------------
(b) "SUMMARY -- The Recapitalization and
Merger"; "SUMMARY --Conflicts of Interest";
"SPECIAL FACTORS -- Background of the
Merger"; "SPECIAL FACTORS -- Conflicts of
Interest"; "THE RECAPITALIZATION AND
MERGER" and PROXY SUPPLEMENT -- "The Proposed
Settlement" and "How you can exercise
dissenters' rights"
- ---------------------------------- --------------------------------------------
5. Plans or Proposals of the Issuer or Affiliate.
- ---------------------------------- --------------------------------------------
(a) *
- ---------------------------------- --------------------------------------------
(b) *
- ---------------------------------- --------------------------------------------
- -------------------------
* Not applicable or answer is negative.
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- ---------------------------------- --------------------------------------------
SCHEDULE 13E-3 ITEM
NUMBER AND CAPTION RESPONSE/CAPTION IN PROXY STATEMENT
- ---------------------------------- --------------------------------------------
(c) "SUMMARY -- The Recapitalization and
Merger"; "THE RECAPITALIZATION AND MERGER --
Consequences of the Recapitalization and
Merger" and "CERTAIN INFORMATION CONCERNING
MERGER SUB AND THE EQUITY INVESTORS"
- ---------------------------------- --------------------------------------------
(d) "SUMMARY -- Financing of the Merger"; "THE
RECAPITALIZATION AND MERGER -- Consequences
of the Recapitalization and Merger"; and
"THE RECAPITALIZATION AND MERGER --
Financing"
- ---------------------------------- --------------------------------------------
(e) "SUMMARY -- The Recapitalization and
Merger"; and "THE RECAPITALIZATION AND
MERGER -- Consequences of the
Recapitalization and Merger"
- ---------------------------------- --------------------------------------------
(f) "SUMMARY -- The Recapitalization and
Merger"; "THE RECAPITALIZATION AND MERGER --
Consequences of the Recapitalization and
Merger"; and "THE RECAPITALIZATION AND
MERGER -- Delisting and
Deregistration of Common Stock"
- ---------------------------------- --------------------------------------------
(g) "SUMMARY -- The Recapitalization and
Merger"; "THE RECAPITALIZATION AND MERGER --
Consequences of the Recapitalization and
Merger"; and "THE RECAPITALIZATION AND
MERGER -- Delisting and
Preregistration of Common Stock"
- ---------------------------------- --------------------------------------------
6. Source and Amount of Funds or Other Consideration.
- ---------------------------------- --------------------------------------------
(a) "SUMMARY -- Financing of the Merger" and
"THE RECAPITALIZATION AND MERGER --
Financing"
- ---------------------------------- --------------------------------------------
(b) "THE MERGER AGREEMENT -- Fees and Expenses"
and PROXY SUPPLEMENT -- "Estimated Fees
and Expenses of the Merger"
- ---------------------------------- --------------------------------------------
(c) (1) "SUMMARY--Financing of the Merger" and "THE
RECAPITALIZATION AND MERGER -- Financing"
- ---------------------------------- --------------------------------------------
(2) "SUMMARY -- Financing of the Merger" and
"THE RECAPITALIZATION AND MERGER --
Financing"
- ---------------------------------- --------------------------------------------
- -------------------------
* Not applicable or answer is negative.
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- ---------------------------------- --------------------------------------------
SCHEDULE 13E-3 ITEM
NUMBER AND CAPTION RESPONSE/CAPTION IN PROXY STATEMENT
- ---------------------------------- --------------------------------------------
(d) *
- ---------------------------------- --------------------------------------------
7. Purpose(s), Alternatives, Reasons and Effects.
- ---------------------------------- --------------------------------------------
(a) "SPECIAL FACTORS -- Background of the
Merger"; "SPECIAL FACTORS -- Recommendations
of the Special Committee and Board of
Directors"; and "SPECIAL FACTORS - Equity
Investors' Purpose and Reasons for the
Recapitalization and Merger"
- ---------------------------------- --------------------------------------------
(b) "SPECIAL FACTORS -- Background of the
Merger" and "SPECIAL FACTORS -- Equity
Investors' Purpose and Reasons for the
Recapitalization and Merger"
- ---------------------------------- --------------------------------------------
(c) "SPECIAL FACTORS -- Background of the
Merger"; "SPECIAL FACTORS -- Recommendations
of the Special Committee and Board of
Directors"; and "SPECIAL FACTORS -- Equity
Investors' Purpose and Reasons for the
Recapitalization and Merger"
- ---------------------------------- --------------------------------------------
(d) "SUMMARY"; "SPECIAL FACTORS -- Conflicts of
Interest"; "THE RECAPITALIZATION AND MERGER
-- Consequences of the Recapitalization and
Merger"; "THE RECAPITALIZATION AND MERGER
--Federal Income Tax Consequences"; "THE
RECAPITALIZATION AND MERGER -- Accounting
Treatment"; "SPECIAL FACTORS --
Recommendations of the Special Committee and
Board of Directors"; and "SPECIAL FACTORS -
Equity Investors' Purpose and Reasons for
the Recapitalization Merger"
- ---------------------------------- --------------------------------------------
8. Fairness of the Transaction.
- ---------------------------------- --------------------------------------------
(a) "SPECIAL FACTORS -- Recommendations of the
Special Committee and Board of Directors";
and "SPECIAL FACTORS -- Equity Investors'
Purpose and Reasons for the Recapitalization
and Merger"
- ---------------------------------- --------------------------------------------
- -------------------------
* Not applicable or answer is negative.
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- ---------------------------------- --------------------------------------------
SCHEDULE 13E-3 ITEM
NUMBER AND CAPTION RESPONSE/CAPTION IN PROXY STATEMENT
- ---------------------------------- --------------------------------------------
(b) "SPECIAL FACTORS -- Background of the
Merger"; "SPECIAL FACTORS - Recommendations
of the Special Committee and Board of
Directors"; "SPECIAL FACTORS -- Equity
Investors' Purpose and Reasons for the
Recapitalization and Merger"; and "SPECIAL
FACTORS -- Opinion of Financial Advisor"
- ---------------------------------- --------------------------------------------
(c) "SUMMARY -- Vote Required; Security
Ownership of Management"; "THE SPECIAL
MEETING -- Vote Required; Security Ownership
of Management" and PROXY SUPPLEMENT -- "The
Proposed Settlement"
- ---------------------------------- --------------------------------------------
(d) "SUMMARY - Recommendations of the Board of
Directors and Special Committee" and
"SPECIAL FACTORS - Recommendations of the
Special Committee and Board of Directors"
- ---------------------------------- --------------------------------------------
(e) "SUMMARY - Recommendations of the Board of
Directors and Special Committee" and
"SPECIAL FACTORS -Recommendations of the
Special Committee and Board of Directors"
- ---------------------------------- --------------------------------------------
(f) *
- ---------------------------------- --------------------------------------------
9. Reports, Opinions, Appraisals and Certain Negotiations.
- ---------------------------------- --------------------------------------------
(a) "SUMMARY -- Opinion of Financial Advisor"
and "SPECIAL FACTORS -- Opinion of Financial
Advisor"
- ---------------------------------- --------------------------------------------
(b) "SUMMARY -- Opinion of Financial Advisor"
and "SPECIAL FACTORS -- Opinion of Financial
Advisor"
- ---------------------------------- --------------------------------------------
(c) "SUMMARY -- Opinion of Financial Advisor"
and "SPECIAL FACTORS -- Opinion of Financial
Advisor"
- ---------------------------------- --------------------------------------------
10. Interest in Securities of the Issuer.
- ---------------------------------- --------------------------------------------
- -------------------------
* Not applicable or answer is negative.
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- ---------------------------------- --------------------------------------------
SCHEDULE 13E-3 ITEM
NUMBER AND CAPTION RESPONSE/CAPTION IN PROXY STATEMENT
- ---------------------------------- --------------------------------------------
(a) "SUMMARY -- Vote Required; Security
Ownership of Management"; "SUMMARY --
Conflicts of Interest"; "SPECIAL FACTORS
-"Conflicts of Interest"; "THE SPECIAL
MEETING -- Vote Required; Security Ownership
of Management"; and "BENEFICIAL OWNERSHIP OF
COMMON STOCK"
- ---------------------------------- --------------------------------------------
(b) "SUMMARY -- Market Prices for Common Stock
and Dividends" and "APPENDIX D -
Transactions Involving Equitrac's Common
Stock effected by members of the Management
Group since March 1, 1997"
- ---------------------------------- --------------------------------------------
11. Contracts, Arrangements or "SUMMARY -- Vote Required; Security
Understandings with Ownership of Management"; "SUMMARY
Respect to the Issuer's Voting Agreement; Irrevocable Proxy";
Securities. -- THE SPECIAL MEETING -- Vote
Required; Security Ownership of Management";
and "THE SPECIAL MEETING -- Voting Agreement;
Irrevocable Proxy"
- ---------------------------------- --------------------------------------------
12. Present Intention and Recommendation of Certain Persons with Regard to
the Transaction.
- ---------------------------------- --------------------------------------------
(a) "SUMMARY -- Vote Required; Security
Ownership of Management"; "SUMMARY -- Voting
Agreement; Irrevocable Proxy"; "THE SPECIAL
MEETING -- Vote Required; Security Ownership
of Management"; and "THE SPECIAL MEETING --
Voting Agreement; Irrevocable Proxy"
- ---------------------------------- --------------------------------------------
(b) "SUMMARY -- Recommendations of the Board of
Directors and Special Committee" and
"SPECIAL FACTORS -- Recommendations of the
Special Committee and Board of Directors"
- ---------------------------------- --------------------------------------------
13. Other Provisions of the Transaction.
- ---------------------------------- --------------------------------------------
(a) PROXY SUPPLEMENT -- "The Proposed Settlement"
and "How you can exercise dissenters' rights"
- ---------------------------------- --------------------------------------------
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- ---------------------------------- --------------------------------------------
SCHEDULE 13E-3 ITEM
NUMBER AND CAPTION RESPONSE/CAPTION IN PROXY STATEMENT
- ---------------------------------- --------------------------------------------
(b) *
- ---------------------------------- --------------------------------------------
(c) *
- ---------------------------------- --------------------------------------------
14. Financial Information.
- ---------------------------------- --------------------------------------------
(a) "SUMMARY -- FINANCIAL INFORMATION" and
"DOCUMENTS INCORPORATED BY REFERENCE"
- ---------------------------------- --------------------------------------------
(b) *
- ---------------------------------- --------------------------------------------
15. Persons and Assets Employed, Retained or Utilized.
- ---------------------------------- --------------------------------------------
(a) "SUMMARY -- Conflicts of Interest"; "THE
SPECIAL MEETING -- Solicitation of Proxies";
and "SPECIAL FACTORS - Conflicts of
Interest"
- ---------------------------------- --------------------------------------------
(b) *
- ---------------------------------- --------------------------------------------
16. Additional Information. *
- ---------------------------------- --------------------------------------------
Item 1. Issuer and Class of Security Subject to the Transaction.
(a) The information set forth in "SUMMARY -- The Companies" of the Proxy
Statement is incorporated herein by reference.
(b) The information set forth in "SUMMARY -- Record Date; Voting Power;
Quorum"; "SUMMARY -- Market Prices for Common Stock and Dividends"; and "THE
SPECIAL MEETING --Record Date; Voting Power; Quorum" of the Proxy Statement is
incorporated herein by reference.
(c) The information set forth in "SUMMARY -- Market Prices for Common
Stock and Dividends" of the Proxy Statement is incorporated herein by
reference.
(d) The information set forth in "SUMMARY -- Market Prices for Common
Stock and Dividends" of the Proxy Statement is incorporated herein by
reference.
(e) Not applicable.
- -------------------------
* Not applicable or answer is negative.
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(f) The information set forth in "SUMMARY -- Market Prices for Common
Stock and Dividends" and "APPENDIX D -- Transactions Involving Equitrac's
common stock effected by members of the Management Group since March 1, 1997"
of the Proxy Statement is incorporated herein by reference.
Item 2. Identity and Background.
(a)-(g) The information set forth in "SUMMARY -- The Companies" and
"CERTAIN INFORMATION CONCERNING MERGER SUB AND THE EQUITY INVESTORS" of the
Proxy Statement is incorporated herein by reference.
Item 3. Past Contacts, Transactions or Negotiations.
(a)(1) The information set forth in "SUMMARY -- Market Prices for Common
Stock and Dividends" and "APPENDIX D -- Transactions Involving Equitrac's common
stock effected by members of the Management Group since March 1, 1997" of the
Proxy Statement is incorporated herein by reference.
(a)(2) The information set forth in "SUMMARY -- Conflicts of Interest";
"SPECIAL FACTORS -- Background of the Merger"; "SPECIAL FACTORS -- Conflicts of
Interest"; "SUMMARY -- Voting Agreement; Irrevocable Proxy"; and "THE SPECIAL
MEETING -- Voting Agreement; Irrevocable Proxy" of the Proxy Statement is
incorporated herein by reference.
(b) The information set forth in "SUMMARY --Conflicts of Interest";
"SPECIAL FACTORS - Background of the Merger"; "SPECIAL FACTORS -- Conflicts of
Interest"; "SUMMARY -- Voting Agreement; Irrevocable Proxy"; and "THE SPECIAL
MEETING -- Voting Agreement; Irrevocable Proxy" of the Proxy Statement is
incorporated herein by reference.
Item 4. Terms of the Transaction.
(a) The information set forth in "SUMMARY -- The Recapitalization and
Merger"; "SUMMARY -- Conflicts of Interest"; "SPECIAL FACTORS"; and "THE
RECAPITALIZATION AND MERGER" of the Proxy Statement and in "The Proposed
Settlement" and "Amendment to the Merger Agreement" of the supplement to the
Proxy Statement is incorporated herein by reference.
(b) The information set forth in "SUMMARY -- The Recapitalization and
Merger"; "SUMMARY --Conflicts of Interest"; "SPECIAL FACTORS -- Background of
the Merger"; "SPECIAL FACTORS -- Conflicts of Interest"; and "THE
RECAPITALIZATION AND MERGER" of the Proxy Statement and "The Proposed
Settlement" and "How you can exercise dissenters' rights" of the supplement to
the Proxy Statement is incorporated herein by reference.
Item 5. Plans or Proposals of the Issuer or Affiliate.
(a) Not applicable.
(b) Not applicable.
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(c) The information set forth in "SUMMARY -- The Recapitalization and
Merger"; "THE RECAPITALIZATION AND MERGER -- Consequences of the
Recapitalization and Merger"; and "CERTAIN INFORMATION CONCERNING MERGER SUB
AND THE EQUITY INVESTORS" of the Proxy Statement is incorporated herein by
reference.
(d) The information set forth in "SUMMARY -- Financing of the Merger";
"THE RECAPITALIZATION AND MERGER -- Consequences of the Recapitalization and
Merger"; and "THE RECAPITALIZATION AND MERGER -- Financing" of the Proxy
Statement is incorporated herein by reference.
(e) The information set forth in "SUMMARY -- The Recapitalization and
Merger"; and "THE RECAPITALIZATION AND MERGER -- Consequences of the
Recapitalization and Merger" of the Proxy Statement is incorporated herein by
reference.
(f) The information set forth in "SUMMARY -- The Recapitalization and
Merger";"THE RECAPITALIZATION AND MERGER -- Consequences of the
Recapitalization and Merger"; and "THE RECAPITALIZATION AND MERGER -- Delisting
and Deregistration of the Stock" of the Proxy Statement is incorporated herein
by reference.
(g) "SUMMARY -- The Recapitalization and Merger"; "THE RECAPITALIZATION
AND MERGER -- Consequences of the Recapitalization and Merger; and "THE
RECAPITALIZATION AND MERGER -- Delisting and Deregistration of Common Stock"
Item 6. Source and Amount of Funds or Other Consideration.
(a) The information set forth in "SUMMARY -- Financing of the Merger";
and "THE RECAPITALIZATION AND MERGER -- Financing" of the Proxy Statement is
incorporated herein by reference.
(b) The information set forth in "THE MERGER AGREEMENT -- Fees and
Expenses" of the Proxy Statement and in "Estimated Fees and Expenses of the
Merger" of the supplement to the Proxy Statement is incorporated herein by
reference.
(c)(1) The information set forth in "SUMMARY -- Financing of the Merger"
and "THE RECAPITALIZATION AND MERGER -- Financing" of the Proxy Statement is
incorporated herein by reference.
(2) The information set forth in "SUMMARY -- Financing of the Merger"
and "THE RECAPITALIZATION AND MERGER -- Financing" of the Proxy Statement is
incorporated herein by reference.
(d) Not applicable.
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Item 7. Purpose(s), Alternatives, Reasons and Effects.
(a) The information set forth in "SPECIAL FACTORS -- Background of the
Merger"; "SPECIAL FACTORS -- Recommendations of the Special Committee and Board
of Directors"; and "SPECIAL FACTORS - Equity Investors' Purpose and Reasons for
the Recapitalization and Merger" of the Proxy Statement is incorporated herein
by reference.
(b) The information set forth in "SPECIAL FACTORS -- Background of the
Merger and "SPECIAL FACTORS -- Equity Investors' Purpose and Reasons for the
Recapitalization and Merger" of the Proxy Statement is incorporated herein by
reference.
(c) The information set forth in "SPECIAL FACTORS -- Background of the
Merger"; "SPECIAL FACTORS -- Recommendations of the Special Committee and Board
of Directors"; and "SPECIAL FACTORS -- Equity Investors' Purpose and Reasons
for the Recapitalization and Merger" of the Proxy Statement is incorporated
herein by reference.
(d) The information set forth in "SUMMARY"; "SPECIAL FACTORS --
Conflicts of Interest"; "THE RECAPITALIZATION AND MERGER -- Consequences of the
Recapitalization and Merger"; "THE RECAPITALIZATION AND MERGER --Federal Income
Tax Consequences"; "THE RECAPITALIZATION AND MERGER -- Accounting Treatment";
"SPECIAL FACTORS -- Recommendations of the Special Committee and Board of
Directors; and "SPECIAL FACTORS - Equity Investors' Purpose and Reasons for the
Recapitalization Merger" of the Proxy Statement is incorporated herein by
reference.
Item 8. Fairness of the Transaction.
(a) The information set forth in "SPECIAL FACTORS -- Recommendations of
the Special Committee and Board of Directors"; and "SPECIAL FACTORS -- Equity
Investors' Purpose and Reasons for the Recapitalization and Merger" of the
Proxy Statement is incorporated herein by reference.
(b) The information set forth in "SPECIAL FACTORS -- Background of the
Merger"; "SPECIAL FACTORS Recommendations of the Special Committee and Board of
Directors"; and "SPECIAL FACTORS -- Equity Investors' Purpose and Reasons for
the Recapitalization and Merger"; and "SPECIAL FACTORS -- Opinion of Financial
Advisor" of the Proxy Statement is incorporated herein by reference.
(c) The information set forth in "SUMMARY -- Vote Required; Security
Ownership of Management" and "THE SPECIAL MEETING -- Vote Required; Security
Ownership of Management" of the Proxy Statement and "The Proposed Settlement"
of the supplement to the Proxy Statement is incorporated herein by reference.
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(d) The information set forth in "SUMMARY -- Recommendations of the
Board of Directors and Special Committee" and "SPECIAL FACTORS --
Recommendations of the Special Committee and Board of Directors" of the Proxy
Statement is incorporated herein by reference.
(e) The information set forth in "SUMMARY -- Recommendations of the
Board of Directors and Special Committee" and "SPECIAL FACTORS --
Recommendations of the Special Committee and Board of Directors" of the Proxy
Statement is incorporated herein by reference.
(f) Not applicable.
Item 9. Reports, Opinions, Appraisals and Certain Negotiations.
(a) The information set forth in "SUMMARY -- Opinion of Financial
Advisor" and "SPECIAL FACTORS -- Opinion of Financial Advisor" of the Proxy
Statement is incorporated herein by reference.
(b) The information set forth in "SUMMARY -- Opinion of Financial
Advisor" and "SPECIAL FACTORS -- Opinion of Financial Advisor" of the Proxy
Statement is incorporated herein by reference.
(c) The information set forth in "SUMMARY -- Opinion of Financial
Advisor" and "SPECIAL FACTORS -- Opinion of Financial Advisor" of the Proxy
Statement is incorporated herein by reference.
Item 10. Interest in Securities of the Issuer.
(a) The information set forth in "SUMMARY -- Vote Required; Security
Ownership of Management"; "SUMMARY -- Conflicts of Interest"; "SPECIAL FACTORS
- -- Conflicts of Interest"; "THE SPECIAL MEETING -- Vote Required; Security
Ownership of Management"; and BENEFICIAL OWNERSHIP OF COMMON STOCK" of the
Proxy Statement is incorporated herein by reference.
(b) The information set forth in "SUMMARY -- Market Prices for Common
Stock and Dividends" and "APPENDIX D -- Transactions Involving Equitrac's
Common Stock effected by members of the Management Group since March 1, 1997"
of the Proxy Statement is incorporated herein by reference.
Item 11. Contracts, Arrangements or Understandings with Respect to the
Issuer's Securities.
The information set forth in "SUMMARY -- Vote Required; Security Ownership
of Management"; "SUMMARY -- Voting Agreement; Irrevocable Proxy"; THE SPECIAL
MEETING
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- -- Vote Required; Security Ownership of Management"; and "THE SPECIAL
MEETING -- Voting Agreement; Irrevocable Proxy" of the Proxy Statement is
incorporated herein by reference.
Item 12. Present Intention and Recommendation of Certain Persons with Regard
to the Transaction.
(a) The information set forth in "SUMMARY -- Vote Required; Security
Ownership of Management"; "SUMMARY -- Voting Agreement; Irrevocable Proxy";
"THE SPECIAL MEETING -- Vote Required; Security Ownership of Management"; and
"THE SPECIAL MEETING -- Voting Agreement; Irrevocable Proxy" of the Proxy
Statement is incorporated herein by reference.
(b) The information set forth in "SUMMARY -- Recommendations of the
Board of Directors and Special Committee" and "SPECIAL FACTORS --
Recommendations of the Special Committee and Board of Directors" of the Proxy
Statement is incorporated herein by reference.
Item 13. Other Provisions of the Transaction.
(a) The information set forth in "The Proposed Settlement" and "How you
can exercise dissenters' rights" of the supplement to the Proxy Statement is
incorporated herein by reference.
(b) Not applicable.
(c) Not applicable.
Item 14. Financial Information.
(a) The information set forth in "SUMMARY -- FINANCIAL INFORMATION" and
"DOCUMENTS INCORPORATED BY REFERENCE" of the Proxy Statement is incorporated
herein by reference. The Issuer's fixed charge coverage ratio for fiscal 1998
and fiscal 1999 was 2.78 to 1 and 3.67 to 1, respectively.
(b) Not applicable.
Item 15. Persons and Assets Employed, Retained or Utilized.
(a) The information set forth in "THE SPECIAL MEETING -- Solicitation
of Proxies" and "SPECIAL FACTORS Conflicts of Interest" of the Proxy Statement
is incorporated herein by reference.
(b) Negative.
15
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Item 16. Additional Information.
Not applicable.
16
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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.
July 27, 1999 CORNERSTONE EQUITY INVESTORS IV, L.P.
By: /s/ Mark Rossi
--------------------------------
Name: Mark Rossi
Title: Senior Managing Director
EQUITRAC CORPORATION
By: /s/ George P. Wilson
--------------------------------
Name: George P. Wilson
Title: President and Chief Executive
Officer
CHARGEBACK ACQUISITION CORP.
By: /s/ Mark Rossi
--------------------------------
Name: Mark Rossi
Title: President
/s/ John T. Kane
------------------------------------
John T. Kane
/s/ George P. Wilson
------------------------------------
George P. Wilson
17
<PAGE> 18
/s/ Steve Smith
------------------------------------
Steve Smith
/s/ Christopher Rickborn
------------------------------------
Christopher Rickborn
/s/ Patrick Raftery
------------------------------------
Patrick Raftery
/s/ Cid Yousefi
------------------------------------
Cid Yousefi
/s/ John P. Jones
------------------------------------
John P. Jones
18
<PAGE> 19
INDEX TO EXHIBITS
- ----------------------- -------------------------------------------------------
EXHIBIT NO. DESCRIPTION
- ----------------------- -------------------------------------------------------
(a) Commitment letters for Senior Secured Credit Facility
and Senior Subordinated Notes.*
- ----------------------- -------------------------------------------------------
(b)(1) Opinion of Prudential Securities Incorporated.
Included as Appendix B to Exhibit (d) hereto.*
- ----------------------- -------------------------------------------------------
(b)(2) Presentation of Prudential Securities
Incorporated.*
- ----------------------- -------------------------------------------------------
(c)(1) Amended and Restated Recapitalization Agreement and Plan
of Merger, dated February 17, 1999, among Equitrac
Corporation, Chargeback Acquisition Corp., John T. Kane
and George P. Wilson.*
- ----------------------- -------------------------------------------------------
(c)(2) First Amendment to Amended and Restated Merger Agreement
included as Appendix A to Exhibit (d)(2) hereto.
- ----------------------- -------------------------------------------------------
(d)(1) Definitive Proxy Statement of Equitrac Corporation.*
- ----------------------- -------------------------------------------------------
(d)(2) Proxy Supplement of Equitrac Corporation dated
July 27, 1999.
- ----------------------- -------------------------------------------------------
(e) Not applicable.
- ----------------------- -------------------------------------------------------
(f) Not applicable.
- ----------------------- -------------------------------------------------------
*Previously filed.
19
<PAGE> 1
EQUITRAC CORPORATION
836 PONCE DE LEON BOULEVARD
CORAL GABLES, FLORIDA 33134
SUPPLEMENT, DATED JULY 27, 1999, TO PROXY STATEMENT DATED JULY 2, 1999
This is a supplement to our Proxy Statement dated July 2, 1999 in
connection with the special meeting of shareholders, originally scheduled to be
held on July 27, 1999. The purpose of this supplement is to inform you of the
terms of a proposed settlement of a stockholder class action complaint. This
supplement and its appendices contain new information that supersedes some of
the information in the proxy statement.
We have adjourned the special meeting until Friday, August 6, 1999. The
adjourned special meeting will be held at 9:30 a.m., local time, at the Omni
Colonnade Hotel, 180 Aragon Avenue, Coral Gables, Florida.
As we described on pages 9 and 40 of the proxy statement, on June 15, 1999,
a shareholder class action complaint was filed in the Circuit Court of the 11th
Judicial Circuit, in and for Miami-Dade County, Florida by Gary Silverstein, one
of our stockholders, against Equitrac, its directors and some of its officers.
Among other things, the plaintiff alleged that the cash merger consideration of
$21.00 per share was inadequate and unfair. On July 19, 1999, the plaintiff
amended the complaint to name Chargeback Acquisition Corp., Cornerstone Equity
Investors, LLC, Cornerstone Equity Investors IV, L.P., Prudential Securities
Incorporated and additional members of the Management Group as additional
defendants.
On July 25, 1999, attorneys for the plaintiff and certain defendants
entered into a stipulation to fully settle all of the claims in the complaint,
as amended. On July 26, 1999, the court conditionally approved the proposed
settlement described in the stipulation. The proposed settlement is subject to a
procedure required by the Florida Rules of Civil Procedure, under which a notice
of the settlement will be mailed to the members of the settlement class (which
includes you) and members of the settlement class will have rights to object to
or opt out of the proposed settlement. You should note that the proposed
settlement is not final and may not become final. The proposed settlement will
only become final if the court finds it to be fair and reasonable. Below is a
summary of the proposed settlement. If it does not become final, you will not
have all of the rights described below, including dissenters' rights.
THE PROPOSED SETTLEMENT. The terms and conditions of the proposed
settlement of the stockholder class action complaint are as follows:
- We have agreed that the Recapitalization and Merger will not be completed
unless the Merger Agreement is approved both: (1) by a majority of the
shares outstanding; and (2) by a majority of the votes cast (whether by
proxy or otherwise) by shareholders other than members of the Management
Group. Because satisfaction of the second condition depends on the number
of votes actually cast for and against the Recapitalization and Merger by
shareholders other than members of the Management Group without regard to
the number of these shares not voted, you should vote against the
Recapitalization and the Merger if you are opposed to them, rather than
abstaining from voting.
- Subject to the approval of the court (including approval of the proposed
settlement), we have agreed that Equitrac shareholders who meet the
procedural requirements described below will be entitled to exercise
dissenters' rights, as if Equitrac's Articles of Incorporation allowed
shareholders these dissenting rights. The procedure for exercising
dissenters' rights is described below under the caption "How you can
exercise dissenters' rights."
- Subject to the approval of the court, we and Cornerstone have agreed to
pay the attorneys for the plaintiff an amount found to be reasonable by
the court for their fees and expenses. This amount will not be more than
$310,000.
AMENDMENT TO THE MERGER AGREEMENT. We have amended the Merger Agreement to
incorporate the terms of the proposed settlement. In addition, we have amended
the Merger Agreement to permit Cornerstone to refuse to complete the Merger if
shareholders holding more than 10% of the total number of shares outstanding
notify us of their intention to exercise dissenters' rights. A copy of the
amendment to the Merger Agreement is attached as Appendix A.
<PAGE> 2
SPECIAL MEETING. On July 27, 1999, the special shareholders' meeting was
called to order at 9:30 a.m. as scheduled. A quorum was present for all
purposes, but no business was transacted at the meeting. The meeting has been
adjourned until Friday, August 6, 1999 at 9:30 a.m., local time, at the Omni
Colonnade Hotel, 180 Aragon Avenue, Coral Gables, Florida. Shareholders of
record as of June 18, 1999 are still entitled to vote at the August 6 meeting.
If you have already voted but you want to change your vote before your
proxy is voted at the August 6 meeting, you may do so in one of three ways:
- You can send a written notice stating that you would like to revoke
your proxy;
- You can complete and submit a new proxy card; or
- You can attend the special meeting and vote in person.
If you have submitted a proxy and take none of these three actions, your
proxy will be voted as indicted.
If your shares are held in "street name" by your broker and you have
already instructed your broker to vote your shares then you must follow
directions received from your broker to change your vote.
If you need an additional proxy card, please contact our information agent:
Corporate Investor Communications, Inc.
(201) 896-1900
111 Commerce Road
Carlstadt, New Jersey 07072-2586
HOW YOU CAN EXERCISE DISSENTERS' RIGHTS. Subject to approval by the court
(including approval of the proposed settlement), we have agreed that Equitrac's
shareholders will be entitled to exercise dissenters' rights, even though
subsection (4) of Section 607.1302 of the Florida Business Corporation Act says
that holders of shares quoted on the Nasdaq National Market are not entitled to
dissenters' rights unless the Articles of a Nasdaq traded company expressly
allow dissenters' rights.
The method of exercising dissenters' right is specified in Section 607.1320
of the Florida Business Corporation Act, the complete text of which is attached
to this supplement as part of Appendix B. The summary set forth below is not
complete. If you desire to exercise dissenters' rights, you should read Appendix
B in its entirety. You must follow the procedures described below and in
Appendix B, although all of our obligations described below are subject to the
final approval of the proposed settlement by the court.
To exercise dissenters' rights, you must:
- deliver to Equitrac before the vote is taken at the special meeting a
written notice of your intent to demand payment for your shares of
Equitrac common stock if the Merger is completed, and
- not vote your shares in favor of the Merger Agreement.
A proxy or vote against the Merger Agreement alone will not constitute a notice
of intent to demand payment for your shares under the dissenters' rights
procedures.
If the Merger Agreement is approved at the special meeting, within 10 days
after the meeting we will send a written notice to each shareholder who filed a
notice of intent to demand payment for his or her shares and did not vote in
favor of the Merger Agreement. If you receive this notice and you still desire
to dissent from the Merger, then within 20 days after we give you this notice
you must send us a notice demanding payment of the fair value of your shares of
Equitrac common stock, telling us you name, address and the number of shares as
to which you dissent. You can elect to dissent from the Merger for all or part
of your shares. You must also deposit with us your stock certificates for the
shares for which you are dissenting. If you fail to file this election within 20
days after our notice, you will lose your right to dissent and will be bound by
the Transactions.
After you file a notice of election to dissent, assuming that the court
ultimately approves the proposed settlement and that the court enters a final
order recognizing the availability of dissenters' rights in connection with the
Recapitalization and Merger, you will only be entitled to payment of the fair
value of your shares, and you will no longer be entitled to vote or to exercise
any other rights of an Equitrac shareholder.
2
<PAGE> 3
Within 10 days after the end of the period in which you may file a notice
of election to dissent, or within 10 days after the Merger is completed,
whichever is later, we will make you a written offer to pay you the amount we
estimate to be the fair value of your shares. This offer will be accompanied by
a recent Equitrac balance sheet and a profit and loss statement of Equitrac for
the 12-month period ended on the date of such balance sheet.
If you accept our offer within 30 days, we will pay you for your shares
within 90 days after the date we made our offer or the consummation of the
Merger, whichever is later. You will cease to have any interest in your shares
after we pay you the agreed value.
If we fail to make an offer within the period specified above, or if we
make an offer and you do not accept it within 30 days, then we will file an
action in a court of competent jurisdiction in Dade County, Florida requesting
that the court determine the fair value of your shares, and those of any other
dissenting shareholder, either:
- within 30 days after we receive a written demand from any dissenting
shareholder to file such an action, if such demand is given within 60
days after the Merger is completed, or
- at our own election at any time within this 60-day period.
If we fail to institute a court action within the above time period, any
dissenting shareholder may do so in the name of the corporation.
All dissenting shareholders (whether or not residents of Florida), other
than shareholders who have agreed with us on the value of their shares, will be
made parties to the proceeding. We will serve a copy of the initial pleading in
this proceeding upon each dissenting shareholder who is a resident of Florida in
the manner provided by law for the service of a summons and complaint and upon
each dissenting shareholder who is not a resident of Florida either by
registered or certified mail and publication or in such other manner as is
permitted by law.
All shareholders who are proper parties to the proceeding will be entitled
to judgment against Equitrac for the amount of the fair value of their shares.
The court may appoint one or more persons as appraisers to receive evidence and
recommend a decision on the question of fair value. The appraisers will have
such power and authority as is specified in the order of their appointment or an
amendment thereof. We will pay each dissenting shareholder the amount found to
be due him or her within 10 days after final determination of the proceedings.
The judgment may, at the discretion of the court, include a fair rate of
interest, to be determined by the court. Upon payment of the judgment, all
dissenting shareholders will cease to have any interest in their shares.
The costs and expenses of the court proceeding will be determined by the
court and will be paid by Equitrac. However, if we have made the dissenting
shareholders an offer to pay the fair value of their shares and the court finds
that any or all of such dissenting shareholders' failure to accept our offer was
arbitrary, vexatious, or not in good faith, the court may require any or all of
the dissenting shareholders to pay for some or all of the costs and expenses of
the proceeding. Expenses of the proceeding will include reasonable compensation
for, and reasonable expenses of, the appraisers, but will exclude the fees and
expenses of counsel for, and experts employed by, any party. If the fair value
of the shares, as determined, materially exceeds the amount which we offered to
pay, or if we never made an offer, the court in its discretion may award to any
shareholder who is a party to the proceeding such sum as the court determines to
be reasonable compensation to any attorney or expert employed by the shareholder
in the proceeding.
You may withdraw your election to dissent in writing at any time before we
make an offer to pay for the fair value of your shares. After we make such an
offer, you may not withdraw your notice of election to dissent without our
consent.
If the court does not approve the proposed extension of dissenters' rights
or does not approve the proposed settlement (or if for some other reason
permitted by the settlement agreement, the parties terminate or do not complete
the settlement), you will not have dissenters' rights.
3
<PAGE> 4
ESTIMATED FEES AND EXPENSES OF THE MERGER. Estimated fees and expenses
incurred or to be incurred by the Surviving Corporation in connection with the
Merger are approximately as follows:
<TABLE>
<CAPTION>
DESCRIPTION AMOUNT
----------- ----------
<S> <C>
Advisory fees and expenses(1)............................... $1,475,000
Debt financing fees and expenses(2)......................... 1,250,000
Legal fees and expenses(3).................................. 800,000
Litigation costs(4)......................................... 450,000
Paying Agent fees and expenses.............................. 10,000
Transaction fees and expenses(5)............................ 800,000
Accounting fees and expenses................................ 12,000
Proxy solicitation fees and expenses........................ 10,000
Securities and Exchange Commission filing fee............... 17,815
Printing and mailing costs.................................. 75,000
Miscellaneous expenses...................................... 100,185
Total....................................................... $5,000,000
</TABLE>
- ---------------
(1) Includes the fees and expenses of Prudential Securities Incorporated.
(2) Includes the fees and expenses of Fleet National Bank and Mainsail Capital.
(3) Includes the estimated fees and expenses of counsel for Equitrac and the
Cornerstone Group. Also includes the estimated fees and expenses of counsel
for Messrs. Kane and Wilson, which are expected to be reimbursed by the
Surviving Corporation following the Merger.
(4) Represents the estimated fees and expenses related to the shareholder suit,
including fees and expenses of counsel. Some of these amounts may be
recoverable under Equitrac's directors' and officers' insurance policy.
(5) Represents transaction fees payable to Cornerstone under the advisory
agreement described on page 31 and 32 of the proxy statement.
4
<PAGE> 5
APPENDIX A
FIRST AMENDMENT TO RECAPITALIZATION AGREEMENT AND PLAN OF MERGER
This First Amendment (this "Amendment"), dated as of July 26, 1999 to the
certain Amended and Restated Recapitalization Agreement and Plan of Merger (the
"Recapitalization Agreement") dated as of June 4, 1999 by and among Chargeback
Acquisition Corp. ("Merger Sub"), Equitrac Corporation (the "Company"), John T.
Kane ("Kane") and George P. Wilson ("Wilson," and together with Kane, the
"Shareholders").
WHEREAS, Merger Sub, the Company and the Shareholders (collectively, the
"Parties") desire to amend the Recapitalization Agreement on the terms and
conditions set forth herein.
NOW THEREFORE, in consideration of the mutual agreements set forth herein,
the Parties agree as follows:
1. Capitalized Terms. Capitalized terms used herein without
definition shall have the meanings ascribed to such terms in the
Recapitalization Agreement.
2. Transitory Preferred Stock. The fourth "whereas clause" of the
Recapitalization Agreement is hereby amended in its entirety to read as
follows:
"WHEREAS, the Board of Directors of the Company has deemed it
advisable in connection with the transactions contemplated by this
Agreement and subject to the terms and conditions hereof that the
Company amend its Articles of Incorporation and file an Articles of
Amendment (collectively, the "Preference Amendment") to provide for the
authorization to create and issue up to (i) 2,000,000 shares of Series A
Transitory Preferred Stock, $0.01 par value, of the Company (the "Series
A Preference Stock") and (ii) 2,000,000 shares of Series B Transitory
Preferred Stock, $0.01 par value, of the Company (the "Series B
Preference Stock" and, together with the Series A Preference Stock, the
"Preference Stock");"
3. Conversion into Series B Preference Stock. The fifth "whereas
clause" of the Recapitalization Agreement is hereby amended in its entirety
to read as follows:
"WHEREAS, immediately prior to the Effective Time (as defined
below), the Shareholders and John Jones ("Jones") (collectively, the
"Converting Shareholders") shall convert an aggregate of 161,723 shares
(the "Conversion Common Shares") of Common Stock, par value $0.01, of
the Company (the "Company Common Stock") then owned by the Converting
Shareholders into 107,510.6 shares (the "Converted Series B Preference
Shares") of Series B Preference Stock, in each case, allocated among the
Converting Shareholders in the amounts set forth on Exhibit A (the
"Preference Exchange");"
4. Purchase of Series A Preference Stock. The sixth "whereas clause"
of the Recapitalization Agreement is hereby amended in its entirety to read
as follows:
"WHEREAS, immediately prior to the Effective Time, Cornerstone,
Randolph Street Partners ("RSP") and Randolph Street Partners 1998 DIF,
LLC ("DIF") (collectively, the "Investors") shall make a $24,926,677
equity contribution into the Company in exchange for 789,091.2 shares
(the "Purchased Series A Preference Shares") of Series A Preference
Stock, in each case, allocated among the Investors as set forth on
Exhibit A (the "Equity Contribution");"
5. Preference Exchange. Section 1.01(b) of the Recapitalization
Agreement is hereby amended in its entirety to read as follows:
"(b) Preference Exchange. Upon the terms and subject to the
conditions set forth in this Agreement, immediately prior to the
Effective Time, the Shareholders agree to cause the Converting
Shareholders to consummate the Preference Exchange."
A-1
<PAGE> 6
6. Equity Contribution. Section 1.01(c) of the Recapitalization
Agreement is hereby amended in its entirety to read as follows:
"(c) Equity Contribution. Upon the terms and subject to the
conditions set forth in this Agreement, immediately prior to the
Effective Time, Cornerstone agrees, by affixing the signature of its
duly authorized officer on the signature page attached hereto, to cause
the Investors to consummate the Equity Contribution."
7. Conversion of Company Common Stock. Section 2.01(c) of the
Recapitalization Agreement is hereby amended in its entirety to read as
follows:
"(c) Conversion of Company Common Stock. Each share of Company
Common Stock issued and outstanding immediately prior to Effective Time
(other than shares of the Company Common Stock referred to in Section
2.01(b) and Dissenting Shares (as defined below), if any) shall be
converted into (as provided in and subject to the limitations set forth
in this Article II) the right to receive from the Surviving Corporation
in cash, without interest thereon, $21.00 (the "Merger Consideration")
upon surrender of the certificate previously representing such share of
Company Common Stock. As of the Effective Time, all such shares of
Company Common Stock shall no longer be outstanding and shall
automatically be canceled and retired and shall cease to exist, and each
holder of a certificate representing any such share of Company Common
Stock shall cease to have any rights with respect thereto, except the
right to receive the cash into which their shares of Company Common
Stock have been converted by the Merger as provided in this Section
2.01(c)."
8. Conversion of Preference Stock. Section 2.01(d) of the
Recapitalization Agreement is hereby amended in its entirety to read as
follows:
"(d) Conversion of Preference Stock.
(i) Each share of Series A Preference Stock issued and
outstanding immediately prior to the Effective Time (other than
shares of Series A Preference Stock to be canceled pursuant to
Section 2.01(b)) shall be converted into (as provided in and subject
to the limitations set forth in this Article II) and become ten fully
paid and nonassessable shares of Common Stock, par value $0.001, of
the Surviving Corporation (the "Surviving Corporation Common Stock")
and ten fully paid and nonassessable shares of Series A Preferred
Stock, par value $0.01, of the Surviving Corporation (the "Surviving
Corporation Series A Preferred Stock") having the terms set forth on
Exhibit B hereof and otherwise being acceptable to Shareholders and
Cornerstone, upon the surrender of the certificates previously
representing such shares of Series A Preference Stock.
(ii) Each share of Series B Preference Stock issued and
outstanding immediately prior to the Effective Time (other than
shares of Series B Preference Stock to be canceled pursuant to
Section 2.01(b)) shall be converted into (as provided in and subject
to the limitations set forth in this Article II) and become ten fully
paid and nonassessable shares of Surviving Corporation Common Stock
and ten fully paid and nonassessable shares of Series B Preferred
Stock, par value $0.01, of the Surviving Corporation (the "Surviving
Corporation Series B Preferred Stock" and, together with the
Surviving Corporation Series A Preferred Stock, the "Surviving
Corporation Preferred Stock") having the terms set forth on Exhibit B
hereof and otherwise being acceptable to Shareholders and
Cornerstone, upon the surrender of the certificates previously
representing such shares of Series B Preference Stock."
9. Shares of Dissenting Stockholders. Section 2.04 shall be added to
the Recapitalization Agreement to read as follows:
"SECTION 2.04 Shares of Dissenting Stockholders.
(a) Subject to the approval of the Circuit Court of the 11th
Judicial Circuit in and for Miami-Dade County, Florida (the "Court") and
any appellate court hearing any appeal in connection with
A-2
<PAGE> 7
the determination of the Court, which approval must be manifested by an
entry of "final order" (as defined below in Section 2.04(d)) and
notwithstanding anything in this Agreement to the contrary, any holder
of shares of Company Common Stock issued and outstanding as of the
Effective Time (i) who has not voted in favor of the Merger or consented
thereto in writing and (ii) who has delivered to the Company prior to
the Shareholders' Meeting (as defined in Section 7.01) a notice of such
holder's intent to demand payment for his or her shares if the Merger is
consummated, shall have the right to dissent (the "Right to Dissent")
from, and obtain payment of the fair value of such holder's shares (the
"Dissenting Shares") pursuant to Section 607.1302 of Florida Law as if
paragraph 4 of Section 607.1302 was not applicable to the Company (it
being understood that any holder who exercises the Right to Dissent
shall be deemed a dissenter under Florida Law and shall no longer be
entitled to vote or to exercise any other rights as a shareholder);
provided, that such holder had properly exercised his or her appraisal
rights under Section 607.1320 of Florida Law. The Dissenting Shares
shall not be converted, prior to the Effective Time, into the right to
receive the Merger Consideration, unless and until such holder shall
have failed to perfect, or shall have effectively withdrawn or lost, his
or her Right to Dissent from the Merger under Florida Law and to receive
such consideration as may be determined to be due with respect to such
Dissenting Shares pursuant to and subject to the requirements of Florida
Law. If, after the Effective Time, (i) any such holder shall have failed
to perfect or shall have effectively withdrawn or lost his or her Right
to Dissent, or (ii) the Court fails to enter a final order approving the
Right to Dissent, each share of such holder's Company Common Stock shall
thereupon be deemed to have been converted into and to have become, as
of the Effective Time, the right to receive, without interest or
dividends thereon, the consideration provided for in this Article II.
(b) The Company shall give Merger Sub (i) prompt notice of any
notices or demands for appraisal or payment for shares of Company Common
Stock received by the Company in connection with the Right to Dissent
and (ii) the opportunity to participate in and direct all negotiations
and proceedings with respect to any such demands or notices. The Company
shall not, without prior written consent of Merger Sub, make any
payments with respect to, or settle, offer to settle or otherwise
negotiate, with respect to any such demands or notices.
(c) Dissenting Shares, if any, after payments of fair value in
respect thereto have been made to the holders thereof pursuant to
Florida Law, shall be canceled.
(d) For purposes of paragraph (a), "final order" shall mean the
first business day on which: (i) the Court has entered such order or
judgment; (ii) the order or judgment has not been withdrawn, rescinded,
modified, vacated or reversed either by the Court or on appeal; and
(iii) the order or judgment is no longer subject to any potential
further review by the Court or on appeal (including without limitation
rehearing, reargument, or review en banc or on certiorari).
(e) Notwithstanding anything contained herein to the contrary, the
Company shall have no obligations pursuant to Section 607.1320 of
Florida Law unless and until the Court enters a final order approving
the Right to Dissent."
10. Appraisal Rights. Section 3.28 of the Recapitalization Agreement
is hereby amended in its entirety to read as follows:
"SECTION 3.28 Appraisal Rights. Except and only to the extent as
expressly provided in Section 2.04, none of the holders of shares of
Company Common Stock has any appraisal or dissenter rights under Florida
Law in connection with this Agreement, the Merger, the Preference
Amendment or the other Transactions."
11. Condition to the Obligations of Each Party. Section 8.01(a) of
the Recapitalization Agreement is hereby amended in its entirety to read as
follows:
"(a) this Agreement and the Transactions shall have been approved
and adopted by the affirmative vote of the (i) holders of a majority of
the outstanding shares of Company Common Stock in accordance with
Florida Law and the Company's Articles of Incorporation and (ii) holders
A-3
<PAGE> 8
of a majority of the shares of Company Common Stock (other than such
shares held by the Shareholders, Jones, Patrick Raftery, Chris Rickborn,
Steve Smith and Cid Yousefi) voting (whether by proxy or otherwise, and
including any proxy granted to the Shareholders) at the Shareholders'
Meeting;"
12. Conditions to the Obligations of Merger Sub.
(a) Sections 8.02(g), 8.02(i) and 8.02(j) of the Recapitalization
Agreement are hereby amended in their entirety to read as follows:
"(g) Since the date of this Agreement, no event shall have occurred
which has or which would reasonably be expected to have a Company
Material Adverse Effect; provided, however, that any changes, effects,
events, occurrences, conditions or developments substantially consistent
with items 3, 4, 7, 9 and 10 of the Disclosed Information shall not be
deemed to constitute a Company Material Adverse Effect; provided
further, that neither the execution, delivery or performance of the
obligations by the Company of the Stipulation of Settlement, Compromise
and Release (the "Settlement") relating to the class action entitled
Gary Silverstein, et al. v. Equitrac Corporation, et al., Case No.
99-14316 CA 01 in the Court (as defined in Section 2.04(a)), nor any
cash payment owed or made by the Company under such Settlement, nor the
unenforceability of such Settlement, shall be deemed to constitute a
Company Material Adverse Effect.
(i) The Converting Shareholders shall have converted the Conversion
Common Shares into the Converted Series B Preference Shares;
(j) The Company shall have issued the Purchased Series A Preference
Shares to the Investors in exchange for the Equity Contribution;"
(b) Subsection (p) shall be added to Section 8.02 of the
Recapitalization Agreement and shall read as follows:
"(p) The shares of Company Common Stock held by holders who deliver
written notice to the Company prior to the Shareholders' Meeting of
their intention to exercise their Right to Dissent pursuant to Section
2.04 hereof (and in accordance with Section 607.1320 of Florida Law)
shall not exceed ten percent (10%) of the total number of shares of
Company Common Stock outstanding immediately prior to the Effective
Time."
13. Conditions to the Obligations of the Company and the
Shareholders. Section 8.03(g) of the Recapitalization Agreement is hereby
amended in its entirety to read as follows:
"(g) With respect to the obligations of the Company, the Converting
Shareholders shall have converted the Conversion Common Shares into the
Converted Series B Preference Shares;"
In addition, the phrase "Kirkland & Ellis" contained in Section
8.02(b) is hereby amended to read "Shutts & Bowen LLP".
14. Exhibit A. Exhibit A of the Recapitalization Agreement is hereby
amended in its entirety to read as set forth on the Exhibit A attached to
this Agreement.
15. Governing Law. This Amendment shall be governed by, and construed
in accordance with, the laws of the State of Florida, regardless of the
laws that might otherwise govern under the applicable principles of
conflicts of laws thereof.
16. Counterparts. This Amendment may be executed in any number of
counterparts, each of which shall be deemed an original, but all of which
together shall constitute a single instrument.
17. Agreement. In all other respects the Recapitalization Agreement
is ratified and shall, as so changed by these amendments, continue in full
force and effect.
A-4
<PAGE> 9
[SIGNATURE PAGE TO FIRST AMENDMENT TO THE AMENDED AND RESTATED RECAPITALIZATION
AGREEMENT AND PLAN OF MERGER]
IN WITNESS WHEREOF, the parties hereto have executed this Amendment as of
the date first set forth above.
CHARGEBACK ACQUISITION CORP.
By:
------------------------------------
Name:
Title:
EQUITRAC CORPORATION
By:
------------------------------------
Name:
Title:
--------------------------------------
George P. Wilson
--------------------------------------
John T. Kane
Accepted and Consented to:
CORNERSTONE EQUITY INVESTORS IV, L.P.
By: Cornerstone IV, L.L.C.
Its: General Partner
By:
----------------------------------
Name:
Title:
A-5
<PAGE> 10
EXHIBIT A
PREFERENCE EXCHANGE
<TABLE>
<CAPTION>
NUMBER OF SHARES OF NUMBER OF SHARES OF
COMPANY COMMON STOCK SERIES B PREFERENCE STOCK TO
TO BE CONVERTED INTO BE ISSUED UPON SUCH
CONVERTING SHAREHOLDER SERIES B PREFERENCE STOCK CONVERSION
- ---------------------- ------------------------- ----------------------------
<S> <C> <C>
John T. Kane...................................... 89,749 59,663.6
George P. Wilson.................................. 66,574 44,257.2
John Jones........................................ 5,400 3,589.8
------- ----------
Totals.......................................... 161,723 107,510.6
======= ==========
</TABLE>
EQUITY CONTRIBUTION
<TABLE>
<CAPTION>
NUMBER OF SHARES
AMOUNT OF OF SERIES A
INVESTOR EQUITY CONTRIBUTION PREFERENCE STOCK
- -------- ------------------- ----------------
<S> <C> <C>
Cornerstone Equity Investors IV, L.P........................ $24,626,677 779,594.3
Randolph Street Partners.................................... $ 100,000 3,165.6
Randolph Street Partners 1998 DIF, LLC...................... $ 200,000 6,331.3
----------- ----------
Totals................................................. $24,926,766 789,091.2
=========== ==========
</TABLE>
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<PAGE> 11
APPENDIX B
SECTIONS 607.1301, 607.1302 AND 607.1320 OF THE FLORIDA BUSINESS CORPORATION ACT
607.1301 DISSENTERS' RIGHTS; DEFINITIONS. -- The following definitions apply to
ss. 607.1302 and 607.1320:
(1) "Corporation" means the issuer of the shares held by a dissenting
shareholder before the corporate action or the surviving or acquiring
corporation by merger or share exchange of that issuer.
(2) "Fair value," with respect to a dissenter's shares, means the
value of the shares as of the close of business on the day prior to the
shareholders' authorization date, excluding any appreciation or
depreciation in anticipation of the corporate action unless exclusion would
be inequitable.
(3) "Shareholders' authorization date" means the date on which the
shareholders' vote authorizing the proposed action was taken, the date on
which the corporation received written consents without a meeting from the
requisite number of shareholders in order to authorize the action, or, in
the case of a merger pursuant to s. 607.1104, the day prior to the date on
which a copy of the plan of merger was mailed to each shareholder of record
of the subsidiary corporation.
HISTORY. -- s. 118, ch. 89-154.
607.1302 RIGHT OF SHAREHOLDERS TO DISSENT. --
(1) Any shareholder of a corporation has the right to dissent from, and
obtain payment of the fair value of his or her shares in the event of, any of
the following corporate actions:
(a) Consummation of a plan of merger to which the corporation is a
party:
1. If the shareholder is entitled to vote on the merger, or
2. If the corporation is a subsidiary that is merged with its
parent under s. 607.1104, and the shareholders would have been entitled
to vote on action taken, except for the applicability of s. 607.1104;
(b) Consummation of a sale or exchange of all, or substantially all,
of the property of the corporation, other than in the usual and regular
course of business, if the shareholder is entitled to vote on the sale or
exchange pursuant to s. 607.1202, including a sale in dissolution but not
including a sale pursuant to court order or a sale for cash pursuant to a
plan by which all or substantially all of the net proceeds of the sale will
be distributed to the shareholders within 1 year after the date of sale;
(c) As provided in s. 607.0902(11), the approval of a control-share
acquisition;
(d) Consummation of a plan of share exchange to which the corporation
is a party as the corporation the shares of which will be acquired, if the
shareholder is entitled to vote on the plan;
(e) Any amendment of the articles of incorporation if the shareholder
is entitled to vote on the amendment and if such amendment would adversely
affect such shareholder by:
1. Altering or abolishing any preemptive rights attached to any of
his or her shares;
2. Altering or abolishing the voting rights pertaining to any of
his or her shares, except as such rights may be affected by the voting
rights of new shares then being authorized of any existing or new class
or series of shares;
3. Effecting an exchange, cancellation, or reclassification of any
of his or her shares, when such exchange, cancellation, or
reclassification would alter or abolish the shareholder's voting rights
or alter his or her percentage of equity in the corporation, or
effecting a reduction or cancellation of accrued dividends or other
arrearages in respect to such shares;
4. Reducing the stated redemption price of any of the shareholder's
redeemable shares, altering or abolishing any provision relating to any
sinking fund for the redemption or purchase of any of his
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or her shares, or making any of his or her shares subject to redemption
when they are not otherwise redeemable;
5. Making noncumulative, in whole or in part, dividends of any of
the shareholder's preferred shares which had theretofore been
cumulative;
6. Reducing the stated dividend preference of any of the
shareholder's preferred shares; or
7. Reducing any stated preferential amount payable on any of the
shareholder's preferred shares upon voluntary or involuntary
liquidation; or
(f) Any corporate action taken, to the extent the articles of
incorporation provide that a voting or nonvoting shareholder is entitled to
dissent and obtain payment for his or her shares.
(2) A shareholder dissenting from any amendment specified in paragraph
(1)(e) has the right to dissent only as to those of his or her shares which are
adversely affected by the amendment.
(3) A shareholder may dissent as to less than all the shares registered in
his or her name. In that event, the shareholder's rights shall be determined as
if the shares as to which he or she has dissented and his or her other shares
were registered in the names of different shareholders.
(4) Unless the articles of incorporation otherwise provide, this section
does not apply with respect to a plan of merger or share exchange or a proposed
sale or exchange of property, to the holders of shares of any class or series
which, on the record date fixed to determine the shareholders entitled to vote
at the meeting of shareholders at which such action is to be acted upon or to
consent to any such action without a meeting, were either registered on a
national securities exchange or designated as a national market system security
on an interdealer quotation system by the National Association of Securities
Dealers, Inc., or held of record by not fewer than 2,000 shareholders.
(5) A shareholder entitled to dissent and obtain payment for his or her
shares under this section may not challenge the corporate action creating his or
her entitlement unless the action is unlawful or fraudulent with respect to the
shareholder or the corporation.
HISTORY. -- s. 119, ch. 89-154; s. 5, ch. 94-327; s. 31, ch. 97-102.
607.1320 PROCEDURE FOR EXERCISE OF DISSENTERS' RIGHTS. --
(1)(a) If a proposed corporate action creating dissenters' rights under s.
607.1302 is submitted to a vote at a shareholders' meeting, the meeting notice
shall state that shareholders are or may be entitled to assert dissenters'
rights and be accompanied by a copy of ss. 607.1301, 607.1302, and 607.1320. A
shareholder who wishes to assert dissenters' rights shall:
1. Deliver to the corporation before the vote is taken written notice
of the shareholder's intent to demand payment for his or her shares if the
proposed action is effectuated, and
2. Not vote his or her shares in favor of the proposed action. A proxy
or vote against the proposed action does not constitute such a notice of
intent to demand payment.
(b) If proposed corporate action creating dissenters' rights under s.
607.1302 is effectuated by written consent without a meeting, the corporation
shall deliver a copy of ss. 607.1301, 607.1302, and 607.1320 to each shareholder
simultaneously with any request for the shareholder's written consent or, if
such a request is not made, within 10 days after the date the corporation
received written consents without a meeting from the requisite number of
shareholders necessary to authorize the action.
(2) Within 10 days after the shareholders' authorization date, the
corporation shall give written notice of such authorization or consent or
adoption of the plan of merger, as the case may be, to each shareholder who
filed a notice of intent to demand payment for his or her shares pursuant to
paragraph (1)(a) or, in the case of action authorized by written consent, to
each shareholder, excepting any who voted for, or consented in writing to, the
proposed action.
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(3) Within 20 days after the giving of notice to him or her, any
shareholder who elects to dissent shall file with the corporation a notice of
such election, stating the shareholder's name and address, the number, classes,
and series of shares as to which he or she dissents, and a demand for payment of
the fair value of his or her shares. Any shareholder failing to file such
election to dissent within the period set forth shall be bound by the terms of
the proposed corporate action. Any shareholder filing an election to dissent
shall deposit his or her certificates for certificated shares with the
corporation simultaneously with the filing of the election to dissent. The
corporation may restrict the transfer of uncertificated shares from the date the
shareholder's election to dissent is filed with the corporation.
(4) Upon filing a notice of election to dissent, the shareholder shall
thereafter be entitled only to payment as provided in this section and shall not
be entitled to vote or to exercise any other rights of a shareholder. A notice
of election may be withdrawn in writing by the shareholder at any time before an
offer is made by the corporation, as provided in subsection (5), to pay for his
or her shares. After such offer, no such notice of election may be withdrawn
unless the corporation consents thereto. However, the right of such shareholder
to be paid the fair value of his or her shares shall cease, and the shareholder
shall be reinstated to have all his or her rights as a shareholder as of the
filing of his or her notice of election, including any intervening preemptive
rights and the right to payment of any intervening dividend or other
distribution or, if any such rights have expired or any such dividend or
distribution other than in cash has been completed, in lieu thereof, at the
election of the corporation, the fair value thereof in cash as determined by the
board as of the time of such expiration or completion, but without prejudice
otherwise to any corporate proceedings that may have been taken in the interim,
if:
(a) Such demand is withdrawn as provided in this section;
(b) The proposed corporate action is abandoned or rescinded or the
shareholders revoke the authority to effect such action;
(c) No demand or petition for the determination of fair value by a
court has been made or filed within the time provided in this section; or
(d) A court of competent jurisdiction determines that such shareholder
is not entitled to the relief provided by this section.
(5) Within 10 days after the expiration of the period in which shareholders
may file their notices of election to dissent, or within 10 days after such
corporate action is effected, whichever is later (but in no case later than 90
days from the shareholders' authorization date), the corporation shall make a
written offer to each dissenting shareholder who has made demand as provided in
this section to pay an amount the corporation estimates to be the fair value for
such shares. If the corporate action has not been consummated before the
expiration of the 90-day period after the shareholders' authorization date, the
offer may be made conditional upon the consummation of such action. Such notice
and offer shall be accompanied by:
(a) A balance sheet of the corporation, the shares of which the
dissenting shareholder holds, as of the latest available date and not more
than 12 months prior to the making of such offer; and
(b) A profit and loss statement of such corporation for the 12-month
period ended on the date of such balance sheet or, if the corporation was
not in existence throughout such 12-month period, for the portion thereof
during which it was in existence.
(6) If within 30 days after the making of such offer any shareholder
accepts the same, payment for his or her shares shall be made within 90 days
after the making of such offer or the consummation of the proposed action,
whichever is later. Upon payment of the agreed value, the dissenting shareholder
shall cease to have any interest in such shares.
(7) If the corporation fails to make such offer within the period specified
therefor in subsection (5) or if it makes the offer and any dissenting
shareholder or shareholders fail to accept the same within the period of 30 days
thereafter, then the corporation, within 30 days after receipt of written demand
from any dissenting shareholder given within 60 days after the date on which
such corporate action was effected, shall, or at its election at any time within
such period of 60 days may, file an action in any court of competent
jurisdiction in
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the county in this state where the registered office of the corporation is
located requesting that the fair value of such shares be determined. The court
shall also determine whether each dissenting shareholder, as to whom the
corporation requests the court to make such determination, is entitled to
receive payment for his or her shares. If the corporation fails to institute the
proceeding as herein provided, any dissenting shareholder may do so in the name
of the corporation. All dissenting shareholders (whether or not residents of
this state), other than shareholders who have agreed with the corporation as to
the value of their shares, shall be made parties to the proceeding as an action
against their shares. The corporation shall serve a copy of the initial pleading
in such proceeding upon each dissenting shareholder who is a resident of this
state in the manner provided by law for the service of a summons and complaint
and upon each nonresident dissenting shareholder either by registered or
certified mail and publication or in such other manner as is permitted by law.
The jurisdiction of the court is plenary and exclusive. All shareholders who are
proper parties to the proceeding are entitled to judgment against the
corporation for the amount of the fair value of their shares. The court may, if
it so elects, appoint one or more persons as appraisers to receive evidence and
recommend a decision on the question of fair value. The appraisers shall have
such power and authority as is specified in the order of their appointment or an
amendment thereof. The corporation shall pay each dissenting shareholder the
amount found to be due him or her within 10 days after final determination of
the proceedings. Upon payment of the judgment, the dissenting shareholder shall
cease to have any interest in such shares.
(8) The judgment may, at the discretion of the court, include a fair rate
of interest, to be determined by the court.
(9) The costs and expenses of any such proceeding shall be determined by
the court and shall be assessed against the corporation, but all or any part of
such costs and expenses may be apportioned and assessed as the court deems
equitable against any or all of the dissenting shareholders who are parties to
the proceeding, to whom the corporation has made an offer to pay for the shares,
if the court finds that the action of such shareholders in failing to accept
such offer was arbitrary, vexatious, or not in good faith. Such expenses shall
include reasonable compensation for, and reasonable expenses of, the appraisers,
but shall exclude the fees and expenses of counsel for, and experts employed by,
any party. If the fair value of the shares, as determined, materially exceeds
the amount which the corporation offered to pay therefor or if no offer was
made, the court in its discretion may award to any shareholder who is a party to
the proceeding such sum as the court determines to be reasonable compensation to
any attorney or expert employed by the shareholder in the proceeding.
(10) Shares acquired by a corporation pursuant to payment of the agreed
value thereof or pursuant to payment of the judgment entered therefor, as
provided in this section, may be held and disposed of by such corporation as
authorized but unissued shares of the corporation, except that, in the case of a
merger, they may be held and disposed of as the plan of merger otherwise
provides. The shares of the surviving corporation into which the shares of such
dissenting shareholders would have been converted had they assented to the
merger shall have the status of authorized but unissued shares of the surviving
corporation.
HISTORY. -- s. 120, ch. 89-154; s. 35, ch. 93-281; s. 32, ch. 97-102.
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