<PAGE> 1
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 14D-1
TENDER OFFER STATEMENT PURSUANT TO SECTION 14(d)(1)
OF THE SECURITIES EXCHANGE ACT OF 1934
GARDEN RIDGE CORPORATION
(NAME OF SUBJECT COMPANY)
GR ACQUISITION CORPORATION
GRDG HOLDINGS LLC
THREE CITIES FUND II, L.P.
THREE CITIES OFFSHORE II C.V.
(BIDDERS)
COMMON STOCK, PAR VALUE $.01 PER SHARE
(INCLUDING THE ASSOCIATED PREFERRED STOCK PURCHASE RIGHTS)
(TITLE OF CLASS OF SECURITIES)
36541P104
(CUSIP NUMBER OF CLASS OF SECURITIES)
J. WILLIAM UHRIG
PRESIDENT
GR ACQUISITION CORPORATION
C/O THREE CITIES RESEARCH, INC.
650 MADISON AVENUE
NEW YORK, NEW YORK 10022
(212) 838-9660
(NAME, ADDRESS AND TELEPHONE NUMBER OF PERSON AUTHORIZED
TO RECEIVE NOTICES AND COMMUNICATIONS ON BEHALF OF BIDDERS)
COPY TO:
DAVID W. BERNSTEIN, ESQ.
ROGERS & WELLS LLP
200 PARK AVENUE
NEW YORK, NEW YORK 10166
(212) 878-8000
CALCULATION OF FILING FEE
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Transaction Valuation*: $128,554,015 Amount of Filing Fee: $25,711
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* For purposes of calculating the fee only. This amount assumes the purchase of
11,178,610 shares of common stock, par value $.01 per share (together with
the associated preferred stock purchase rights, the "Shares") of Garden Ridge
Corporation at a price per share of $11.50 in cash. The number of Shares
outstanding as of November 22, 1999 which are not owned by the Bidders, is
11,178,610. The amount of the filing fee, calculated in accordance with
Section 14(g)(3) and Rule 0-11(d) under the Securities Exchange Act of 1934,
as amended, equals 1/50th of one percent of the aggregate of the cash offered
by the Bidders.
[ ]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.
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Amount Previously Paid: Filing Party:
Form or registration no.: Date Filed:
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(Continued on following pages)
(Page 1 of 9 pages)
<PAGE> 2
14D-1
CUSIP NO. 36541P104 PAGE 2
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1. Name of Reporting Persons
S.S. or I.R.S. Identification Nos. of Above Persons
GR ACQUISITION CORPORATION
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2. Check the Appropriate Box if a Member of a Group
(a) [X]
(b) [ ]
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3. SEC Use Only
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4. Sources of Funds
AF -- Affiliate
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5. Check if Disclosure of Legal Proceedings is Required
Pursuant to Items 2(e) or 2(f)
[ ]
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6. Citizenship or Place of Organization
DELAWARE
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7. Aggregate Amount Beneficially Owned by Each Reporting Person
4,998,190
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8. Check if the Aggregate Amount in Row 7 Excludes Certain
Shares
[ ]
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9. Percent of Class Represented by Amount in Row 7
30.9%
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10. Type of Reporting Person
CO
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</TABLE>
<PAGE> 3
14D-1
CUSIP NO. 36541P104 PAGE 3
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<S> <C> <C>
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1. Name of Reporting Persons
S.S. or I.R.S. Identification Nos. of Above Persons
GRDG HOLDINGS LLC
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2. Check the Appropriate Box if a Member of a Group
(a) [X]
(b) [ ]
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3. SEC Use Only
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4. Sources of Funds
OO -- Member Contributions
BK -- Bank
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5. Check if Disclosure of Legal Proceedings is Required
Pursuant to Items 2(e) or 2(f)
[ ]
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6. Citizenship or Place of Organization
DELAWARE
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7. Aggregate Amount Beneficially Owned by Each Reporting Person
4,998,190
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8. Check if the Aggregate Amount in Row 7 Excludes Certain
Shares
[ ]
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9. Percent of Class Represented by Amount in Row 7
30.9%
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10. Type of Reporting Person
HC
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</TABLE>
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14D-1
CUSIP NO. 36541P104 PAGE 4
<TABLE>
<S> <C> <C>
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1. Name of Reporting Persons
S.S. or I.R.S. Identification Nos. of Above Persons
THREE CITIES FUND II, L.P.
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2. Check the Appropriate Box if a Member of a Group
(a) [X]
(b) [ ]
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3. SEC Use Only
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4. Sources of Funds
Not Applicable
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5. Check if Disclosure of Legal Proceedings is Required
Pursuant to Items 2(e) or 2(f)
[ ]
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6. Citizenship or Place of Organization
DELAWARE
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7. Aggregate Amount Beneficially Owned by Each Reporting Person
4,998,190
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8. Check if the Aggregate Amount in Row 7 Excludes Certain
Shares
[ ]
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9. Percent of Class Represented by Amount in Row 7
30.9%
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10. Type of Reporting Person
PN
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</TABLE>
<PAGE> 5
14D-1
CUSIP NO. 36541P104 PAGE 5
<TABLE>
<S> <C> <C>
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1. Name of Reporting Persons
S.S. or I.R.S. Identification Nos. of Above Persons
THREE CITIES OFFSHORE II C.V.
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2. Check the Appropriate Box if a Member of a Group
(a) [X]
(b) [ ]
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3. SEC Use Only
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4. Sources of Funds
Not Applicable
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5. Check if Disclosure of Legal Proceedings is Required
Pursuant to Items 2(e) or 2(f)
[ ]
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6. Citizenship or Place of Organization
NETHERLANDS ANTILLES
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7. Aggregate Amount Beneficially Owned by Each Reporting Person
4,998,190
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8. Check if the Aggregate Amount in Row 7 Excludes Certain
Shares
[ ]
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9. Percent of Class Represented by Amount in Row 7
30.9%
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10. Type of Reporting Person
PN
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</TABLE>
<PAGE> 6
ITEM 1. SECURITY AND SUBJECT COMPANY.
(a) The name of the subject company is Garden Ridge Corporation, a Delaware
corporation (the "Company"). The address of the Company's principal executive
offices is 19411 Atrium Place, Suite 170, Houston, Texas 77084.
(b) This Statement relates to the offer by GR Acquisition Corporation, a
Delaware corporation (the "Purchaser"), to purchase all the outstanding shares
of common stock, par value $.01 per share (the "Shares") of the Company which
the Purchaser or GRDG Holdings LLC (the Purchaser's sole stockholder) does not
already own, at a purchase price of $11.50 per Share, net to the seller in cash,
upon the terms and subject to the conditions set forth in the Offer to Purchase,
dated November 23, 1999 (the "Offer to Purchase") and the related Letter of
Transmittal (which terms and conditions, as they may be amended or supplemented,
constitute the "Offer"), copies of which are filed as Exhibits (a)(1) and
(a)(2), respectively to this Schedule. The term "Shares" includes the associated
preferred stock purchase rights issued pursuant to an Amended and Restated
Rights Agreement, dated as of July 14, 1999, between the Company and ChaseMellon
Shareholder Services L.L.C. As of November 22, 1999, there were 16,176,800
Shares outstanding. Currently, the Purchaser or its affiliates own 4,998,190
Shares.
(c) The information set forth in the Offer to Purchase in Section 12
("Price Range of Shares") is incorporated by reference.
ITEM 2. IDENTITY AND BACKGROUND.
(a) - (d), (g) This Statement is being filed by the Purchaser, GRDG
Holdings LLC, a Delaware limited liability company ("GRDG Holdings"), Three
Cities Fund II, L.P., a Delaware limited partnership, and Three Cities Offshore
II C.V., a Netherlands Antilles partnership (the "Three Cities Funds," and
collectively, the "Bidders"). The Purchaser is currently owned by GRDG Holdings,
a majority of the interests in which are owned by the Three Cities Funds. The
information set forth in the Offer to Purchase under "Introduction," in Section
14 ("Certain Information Concerning the Purchaser, GRDG Holdings and the Three
Cities Funds") and in Schedule I is incorporated by reference.
(e) - (f) During the last five years, none of the Bidders, nor to the best
of their knowledge, any of the persons listed in Schedule I to the Offer to
Purchase (i) has been convicted in a criminal proceeding (excluding traffic
violations or similar misdemeanors) or (ii) was a party to a civil proceeding of
a judicial or administrative body of competent jurisdiction and as a result of
such proceeding was or is subject to a judgment, decree or final order enjoining
further violations of, or prohibiting activities subject to, federal or state
securities laws or finding any violation of such laws.
ITEM 3. PAST CONTACTS, TRANSACTIONS OR NEGOTIATIONS WITH THE SUBJECT COMPANY.
(a) - (b) The information set forth in the Offer to Purchase in Section 1
("Background of the Offer; Contacts with the Company") is incorporated by
reference.
ITEM 4. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION.
(a) - (b) The information set forth in the Offer to Purchase in Section 15
("Source and Amount of Funds") is incorporated by reference.
(c) Not applicable.
ITEM 5. PURPOSE OF THE TENDER OFFER AND PLANS OR PROPOSALS OF THE BIDDER.
(a) - (e) The information set forth in the Offer to Purchase in Section 2
("Purpose of the Offer and the Proposed Merger; Plans for the Company") and in
Section 16 ("The Merger") is incorporated by reference.
(f) - (g) The information set forth in the Offer to Purchase in Section 4
("Certain Effects of the Transaction") is incorporated by reference.
6
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ITEM 6. INTEREST IN SECURITIES OF THE SUBJECT COMPANY.
(a) - (b) The information set forth in the Offer to Purchase under
"Introduction," Section 14 ("Certain Information Concerning The Purchaser, GRDG
Holdings and the Three Cities Funds"), Section 2 ("Purpose of the Offer and the
Proposed Merger; Plans for the Company") and in Section 16 ("The Merger") is
incorporated by reference.
ITEM 7. CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS OR RELATIONSHIPS WITH RESPECT TO
THE SUBJECT COMPANY'S SECURITIES.
The information set forth in the Offer to Purchase under "Introduction," in
Section 14 ("Certain Information Concerning the Purchaser, GRDG Holdings and the
Three Cities Funds"), Section 1 ("Background of the Offer; Contacts with the
Company"), Section 2 ("Purpose of the Offer and the Proposed Merger; Plans for
the Company") and in Section 16 ("The Merger") is incorporated by reference.
ITEM 8. PERSONS RETAINED, EMPLOYED OR TO BE COMPENSATED.
The information set forth in the Offer to Purchase under "Introduction" and
in Section 19 ("Fees and Expenses") is incorporated by reference.
ITEM 9. FINANCIAL STATEMENTS OF CERTAIN BIDDERS.
Not applicable.
ITEM 10. ADDITIONAL INFORMATION.
(a) The information set forth in the Offer to Purchase in Section 1
("Background of the Offer; Contacts with the Company"); Section 2 ("Purpose of
the Offer and the Proposed Merger; Plans for the Company"); and in Section 16
("The Merger") is incorporated by reference.
(b) - (c) The information set forth in the Offer to Purchase in Section 18
("Certain Legal Matters; Regulatory Approvals") is incorporated by reference.
(d) Not applicable.
(e) The information set forth in the Offer to Purchase in Section 18
("Certain Legal Maters; Regulatory Approvals") is incorporated by reference.
(f) The information set forth in the Offer to Purchase, the Letter of
Transmittal and the Plan and Agreement of Merger, dated November 22, 1999,
copies of which are filed as Exhibits (a)(1), (a)(2) and (c)(1), respectively,
to this Schedule is incorporated herein by reference in its entirety.
ITEM 11. MATERIAL TO BE FILED AS EXHIBITS.
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EXHIBIT
NO. DESCRIPTION
- ------- -----------
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(a)(1) Offer to Purchase, dated November 23, 1999.
(a)(2) Letter of Transmittal.
(a)(3) Notice of Guaranteed Delivery.
(a)(4) Form of letter, dated November 23, 1999, to brokers,
dealers, commercial banks, trust companies and other
nominees.
(a)(5) Form of letter to be used by brokers, dealers, commercial
banks, trust companies and nominees to their clients.
</TABLE>
7
<PAGE> 8
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<CAPTION>
EXHIBIT
NO. DESCRIPTION
- ------- -----------
<S> <C>
(a)(6) Guidelines for Certification of Taxpayer Identification
Number on Substitute Form W-9.
(a)(7) Form of Summary Advertisement, dated November 23, 1999.
(a)(8) Form of Summary Term Sheet
(c)(1) Plan and Agreement of Merger, dated November 22, 1999,
between the Company and the Purchaser.
(c)(2) Form of Share Exchange Agreement between GRDG Holdings LLC
and certain shareholders of Garden Ridge Corporation.
</TABLE>
8
<PAGE> 9
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.
GR ACQUISITION CORPORATION
By:
------------------------------------
Name: J. William Uhrig
Title: President
GRDG HOLDINGS LLC
By:
------------------------------------
Name: J. William Uhrig
Title: President
THREE CITIES FUND II, L.P.
By: TCR Associates II, L.P.
its general partner
By: Three Cities Research, Inc.
its general partner
By:
------------------------------------
Name: Willem de Vogel
Title: President
THREE CITIES OFFSHORE II C.V.
By: TCR Offshore Associates L.P.
its general partner
By: Three Cities Associates N.V.
its general partner
By:
------------------------------------
Name: J. William Uhrig
Title: President
Dated: November 23, 1999
9
<PAGE> 10
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.
GR ACQUISITION CORPORATION
By: /s/ J. WILLIAM UHRIG
------------------------------------
Name: J. William Uhrig
Title: President
GRDG HOLDINGS LLC
By: /s/ J. WILLIAM UHRIG
------------------------------------
Name: J. William Uhrig
Title: President
THREE CITIES FUND II, L.P.
By: TCR Associates II, L.P.
its general partner
By: Three Cities Research, Inc.
its general partner
By: /s/ WILLEM DE VOGEL
------------------------------------
Name: Willem de Vogel
Title: President
THREE CITIES OFFSHORE II C.V.
By: TCR Offshore Associates L.P.
its general partner
By: Three Cities Associates N.V.
its general partner
By: /s/ J. WILLIAM UHRIG
------------------------------------
Name: J. William Uhrig
Title: President
Dated: November 23, 1999
10
<PAGE> 11
EXHIBIT INDEX
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<CAPTION>
EXHIBIT
NO. DESCRIPTION
- ------- -----------
<S> <C>
(a)(1) Offer to Purchase, dated November 23, 1999.
(a)(2) Letter of Transmittal.
(a)(3) Notice of Guaranteed Delivery.
(a)(4) Form of letter, dated November 23, 1999, to brokers,
dealers, commercial banks, trust companies and other
nominees.
(a)(5) Form of letter to be used by brokers, dealers, commercial
banks, trust companies and nominees to their clients.
(a)(6) Guidelines for Certification of Taxpayer Identification
Number on Substitute Form W-9.
(a)(7) Form of Summary Advertisement, dated November 23, 1999.
(a)(8) Form of Summary Term Sheet
(c)(1) Plan and Agreement of Merger, dated November 22, 1999,
between the Company and the Purchaser.
(c)(2) Form of Share Exchange Agreement between GRDG Holdings LLC
and certain shareholders of Garden Ridge Corporation.
</TABLE>
<PAGE> 1
OFFER TO PURCHASE FOR CASH
ALL OUTSTANDING SHARES OF COMMON STOCK
(INCLUDING THE ASSOCIATED PREFERRED STOCK PURCHASE RIGHTS)
OF
GARDEN RIDGE CORPORATION
BY
GR ACQUISITION CORPORATION
A WHOLLY-OWNED SUBSIDIARY OF
GRDG HOLDINGS LLC
WHICH IS MAJORITY-OWNED BY
THREE CITIES FUND II, L.P.
AND
THREE CITIES OFFSHORE II C.V.
FOR
$11.50 NET PER SHARE
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK
CITY TIME, ON WEDNESDAY, DECEMBER 22, 1999, UNLESS THE OFFER IS EXTENDED.
THIS OFFER IS BEING MADE IN ACCORDANCE WITH A PLAN AND AGREEMENT OF MERGER
(THE "MERGER AGREEMENT"), DATED AS OF NOVEMBER 22, 1999, BETWEEN GARDEN RIDGE
CORPORATION (THE "COMPANY") AND GR ACQUISITION CORPORATION (THE "PURCHASER").
THE BOARD OF DIRECTORS OF THE COMPANY (1) HAS APPROVED THE MERGER AGREEMENT, THE
OFFER AND A MERGER OF THE COMPANY AND THE PURCHASER (THE "MERGER") IN WHICH, IF
THE MERGER TAKES PLACE, THE STOCKHOLDER OF THE PURCHASER WILL BECOME THE SOLE
STOCKHOLDER OF THE MERGED COMPANY AND THE STOCKHOLDERS OF THE COMPANY (OTHER
THAN THE PURCHASER AND ITS STOCKHOLDER) WILL RECEIVE THE SAME AMOUNT OF CASH PER
COMMON SHARE AS IS PAID FOR SHARES PURCHASED THROUGH THE OFFER, (2) HAS
DETERMINED THAT THE TERMS OF THE OFFER AND THE MERGER ARE FAIR TO AND IN THE
BEST INTERESTS OF THE COMPANY'S STOCKHOLDERS AND (3) RECOMMENDS THAT HOLDERS OF
COMMON SHARES TENDER THEIR SHARES IN RESPONSE TO THE OFFER.
THIS OFFER IS CONDITIONED ON AT LEAST 51% OF THE OUTSTANDING COMMON SHARES
NEITHER THE PURCHASER NOR ITS STOCKHOLDER, GRDG HOLDINGS LLC ("GRDG HOLDINGS"),
OWNED ON NOVEMBER 22, 1999 BEING PROPERLY TENDERED AND NOT WITHDRAWN. THE
PURCHASER MAY WAIVE THIS CONDITION, BUT EVEN IF IT DOES, THE MERGER WILL NOT
TAKE PLACE UNLESS THE CONDITION WAS FULFILLED. THIS OFFER IS NOT CONDITIONED ON
THE ABILITY OF THE PURCHASER TO OBTAIN FINANCING (BUT IT IS SUBJECT TO SOME
OTHER CONDITIONS -- SEE SECTION 11). GRDG HOLDINGS, WHICH IS MAJORITY-OWNED BY
THREE CITIES FUND II, L.P. AND THREE CITIES OFFSHORE II C.V. (THE "THREE CITIES
FUNDS"), ALREADY OWNS APPROXIMATELY 31% OF THE OUTSTANDING COMMON SHARES.
HOWEVER, THE PURCHASER HAS AGREED NOT TO CARRY OUT THE MERGER UNLESS AT LEAST
51% OF THE COMMON SHARES THAT NEITHER IT NOR GRDG HOLDINGS OWNED ON NOVEMBER 22,
1999 ARE PROPERLY TENDERED IN RESPONSE TO THE OFFER AND NOT WITHDRAWN.
THIS TRANSACTION HAS NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION, NOR HAS THE SECURITIES AND EXCHANGE COMMISSION PASSED UPON
THE FAIRNESS OR MERIT OF THIS TRANSACTION NOR UPON THE ACCURACY OR ADEQUACY OF
THE INFORMATION CONTAINED IN THIS DOCUMENT. ANY REPRESENTATION TO THE CONTRARY
IS UNLAWFUL.
IMPORTANT
Any stockholder who wishes to tender Common Shares should complete and sign
a Letter of Transmittal (or a facsimile of one) in accordance with the
instructions set forth in the Letter of Transmittal and (A) mail or deliver it,
together with the certificate(s) representing the tendered Common Shares (the
"Share Certificates") and any other required documents, to the Depositary named
on the back cover of this Offer to Purchase or (B) tender the Shares using the
procedures for book-entry transfer described in Section 9. A stockholder whose
Common Shares are registered in the name of a broker, dealer, commercial bank,
trust company or other nominee must contact the broker, dealer, commercial bank,
trust company or other nominee if the stockholder wishes to tender Shares.
A stockholder who wishes to tender Common Shares but whose certificates are
not immediately available, or who cannot comply with the procedures for
book-entry transfer described in this Offer to Purchase on a timely basis, may
tender the Common Shares by following the procedures for guaranteed delivery
described in Section 9.
Questions and requests for assistance, or for additional copies of this
Offer to Purchase, the Letter of Transmittal, or other tender offer materials,
may be directed to the Information Agent at its address and telephone number set
forth on the back cover. Holders of Common Shares may also contact brokers,
dealers or banks for additional copies of this Offer to Purchase, the Letter of
Transmittal or other tender offer materials.
November 23, 1999
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<S> <C>
INTRODUCTION................................................ 1
SPECIAL FACTORS............................................. 2
1. Background of the Offer; Contacts with the Company...... 2
2. Purpose of the Offer and the Proposed Merger; Plans for
the Company............................................... 4
3. Certain Federal Income Tax Consequences................. 5
4. Certain Effects of the Transaction...................... 6
5. Fairness of the Transaction............................. 7
6. Reports, Opinions, Appraisals and Certain
Negotiations.............................................. 8
THE TENDER OFFER............................................ 8
7. Terms of the Offer...................................... 8
8. Acceptance for Payment and Payment for Shares........... 9
9. Procedures for Tendering Shares......................... 11
10. Withdrawal Rights....................................... 13
11. Conditions of the Offer................................. 13
12. Price Range of Shares................................... 15
13. Certain Information Concerning the Company.............. 15
14. Certain Information Concerning The Purchaser, GRDG
Holdings and the Three Cities Fund........................ 17
15. Source and Amount of Funds.............................. 18
16. The Merger.............................................. 19
17. Dividends and Distributions............................. 22
18. Certain Legal Matters; Regulatory Approvals............. 22
19. Fees and Expenses....................................... 23
20. Miscellaneous........................................... 23
SCHEDULE I.................................................. I-1
SCHEDULE II................................................. II-1
</TABLE>
<PAGE> 3
TO THE HOLDERS OF COMMON STOCK OF GARDEN RIDGE CORPORATION:
INTRODUCTION
GR Acquisition Corporation (the "Purchaser"), a Delaware corporation which,
at the date of this document, is wholly owned by GRDG Holdings LLC ("GRDG
Holdings"), hereby offers to purchase all the outstanding shares of common
stock, par value $0.01 per share ("Common Shares" or "Shares"), of Garden Ridge
Corporation (the "Company"), a Delaware corporation, which the Purchaser or GRDG
Holdings does not already own, for $11.50 per Common Share, net to the seller in
cash (the "Offer Price"), upon the terms and subject to the conditions set forth
in this Offer to Purchase and in the related Letter of Transmittal (which terms
and conditions, as they may be amended or supplemented constitute the "Offer").
The Offer will expire at 12:00 Midnight, New York City time, on December 22,
1999 (the "Expiration Time") unless it is extended. Unless the context otherwise
requires, all references in this Offer to Purchase to "Common Shares" or
"Shares" will include the related preferred stock purchase rights ("Rights")
issued pursuant to an Amended and Restated Rights Agreement, dated as of July
14, 1999, between the Company and ChaseMellon Shareholder Services, L.L.C. (the
"Rights Agreement").
The Offer is being made as contemplated by a Plan of Agreement of Merger
(the "Merger Agreement") dated November 22, 1999, between the Company and the
Purchaser. The Merger Agreement provides that, if at least 51% of the Shares
which were not owned by the Purchaser or GRDG Holdings on November 22, 1999 are
properly tendered in response to the Offer and not withdrawn, the Purchaser and
GRDG Holdings will take all steps in their power (including voting their Common
Shares) to cause the Purchaser to be merged with the Company (the "Merger") in a
transaction in which GRDG Holdings (the sole stockholder of the Purchaser) will
become the owner of all the stock of the corporation which results from the
Merger (essentially, the Company), and the other stockholders of the Company
will receive the same amount of cash per Share as is paid for Shares tendered in
response to the Offer (unless particular stockholders elect to exercise
statutory rights to demand appraisal of their Common Shares). If less than 51%
of the outstanding Shares that neither the Purchaser nor GRDG Holdings owned on
November 22, 1999, are properly tendered and not withdrawn, the Merger will not
take place. However, the Purchaser will have the right (but will not be
obligated) to purchase the Shares which are properly tendered and not withdrawn.
On November 22, 1999, there were 16,176,800 outstanding Shares, of which
11,178,610 were not owned by the Purchaser or GRDG Holdings. Therefore, the
merger will take place only if at least 5,701,091 Shares are properly tendered
and not withdrawn.
THE ROBINSON-HUMPHREY COMPANY, LLC, THE FINANCIAL ADVISOR TO THE SPECIAL
COMMITTEE OF THE COMPANY'S BOARD OF DIRECTORS FORMED TO REVIEW THE PROPOSAL
WHICH LED TO THE OFFER AND THE PROPOSED MERGER, HAS DELIVERED TO THAT SPECIAL
COMMITTEE ITS WRITTEN OPINION TO THE EFFECT THAT, AS OF THE DATE OF THE MERGER
AGREEMENT, THE $11.50 IN CASH TO BE RECEIVED BY THE HOLDERS OF COMMON SHARES AS
A RESULT OF THE OFFER AND IN THE MERGER IS FAIR TO THOSE HOLDERS FROM A
FINANCIAL POINT OF VIEW. THE FULL TEXT OF THE WRITTEN OPINION OF
ROBINSON-HUMPHREY, CONTAINING THE ASSUMPTIONS MADE, THE MATTERS CONSIDERED AND
THE SCOPE OF THE OPINION, WILL BE INCLUDED WITH THE COMPANY'S
SOLICITATION/RECOMMENDATION STATEMENT ON SCHEDULE 14D-9 (THE "SCHEDULE 14D-9"),
WHICH IS BEING MAILED TO STOCKHOLDERS AT THE SAME TIME AS THIS OFFER TO
PURCHASE. STOCKHOLDERS ARE URGED TO READ THE ROBINSON-HUMPHREY OPINION IN ITS
ENTIRETY.
In connection with its approval of the Merger Agreement, the Company's
Board of Directors approved GRDG Holdings' and the Purchaser's acquiring more
than 15% of the outstanding Shares, and amended the Company's Rights Agreement
so the acquisition of Shares by GRDG Holdings, the Purchaser, Three Cities Fund
III, L.P. and their respective affiliates or the Purchaser would not cause
Rights to be distributed to stockholders. GRDG Holdings then acquired from
approximately 30 of the Company's shareholders, in exchange for 48.93% of GRDG
Holdings, a total of 30.9% of the outstanding Common Shares. The purpose of the
Offer and the Merger is to enable the Purchaser to acquire all the Common Shares
which GRDG Holdings or the Purchaser does not already own. However, as noted
above, the Purchaser has agreed that,
1
<PAGE> 4
unless at least 51% of the outstanding Common Shares the Purchaser or GRDG
Holdings did not own on November 22, 1999, are properly tendered in response to
the Offer and not withdrawn, the Merger will not take place. Because the
Purchaser will have the right to purchase the shares which are properly tendered
and not withdrawn, even if that is less than the minimum amount needed for the
Merger to take place, it is possible that through the Offer, the Purchaser and
its stockholder will become the majority stockholders of the Company, but the
Merger will not take place.
Tendering stockholders will not be required to pay brokerage fees or
commissions or, except as set forth in Instruction 6 to the Letter of
Transmittal, stock transfer taxes as a result of the sale of Shares to the
Purchaser in response to the Offer.
Any tendering stockholder who fails to complete and sign the Substitute
Form W-9 included in the Letter of Transmittal may be subject to a required
backup Federal income tax withholding of 31% of the gross proceeds payable to
the stockholder or another payee pursuant to the Offer. See Section 3. The
Purchaser will pay all charges and expenses of ChaseMellon Shareholder Services,
L.L.C., as Depositary (the "Depositary"), and D.F. King & Co., Inc., as
Information Agent (the "Information Agent"), incurred in connection with the
Offer. See Section 19.
THE BOARD OF DIRECTORS OF THE COMPANY (1) HAS APPROVED THE OFFER AND THE
MERGER WHICH MAY FOLLOW THE OFFER, (2) HAS DETERMINED THAT THE TERMS OF THE
OFFER AND THE MERGER ARE FAIR TO AND IN THE BEST INTERESTS OF THE COMPANY'S
STOCKHOLDERS, AND (3) RECOMMENDS THAT THE COMPANY'S STOCKHOLDERS ACCEPT THE
OFFER AND TENDER THEIR SHARES IN RESPONSE TO THE OFFER.
Conditions to the Offer The Offer is subject to some conditions. They are
described in Section 11. However, the Offer is not conditioned on the
Purchaser's obtaining financing. The Purchaser expressly reserves the right, in
its sole discretion, to waive any of the conditions to the Offer. See Section
11.
THIS OFFER TO PURCHASE AND THE LETTER OF TRANSMITTAL CONTAIN IMPORTANT
INFORMATION WHICH YOU SHOULD READ CAREFULLY BEFORE YOU MAKE ANY DECISION WITH
RESPECT TO THE OFFER.
SPECIAL FACTORS
1. BACKGROUND OF THE OFFER; CONTACTS WITH THE COMPANY.
In July 1992, a group of entities advised by Three Cities Research, Inc.
("TCR") and other investors acquired the Company. At that time, the Company
entered into an Advisory Agreement with TCR under which it agreed that, for five
years, it would pay TCR a fee of $50,000 per year for advisory services and
reimburse TCR for out-of-pocket expenses up to $25,000 per year. That Advisory
Agreement was renewed in 1996 for another five years.
In November 1994, the entities advised by TCR sold some stock of the
Company to additional private investors.
In May 1995 and April 1996, the Company and some of its stockholders sold
Common Shares in underwritten public offerings. Also, between August 1995 and
June 1996, the entities advised by TCR distributed some of their shares to their
investors. The public offerings and distributions of shares to investors reduced
the shares owned by the entities advised by TCR to 2% of the outstanding Common
Shares. However, Teribe Ltd., one of the investors in those entities (which
subsequently has been renamed Quilvest American Equity Ltd.) owned an additional
11.95% of the outstanding Common Shares. It subsequently increased its ownership
to 19.89%.
During the second and third quarters of 1996, the Company's Common Shares
traded at prices in excess of $20 per share (giving effect to a June 1996 stock
split), reaching a high of $30 per share in May 1996. However, late in 1997, the
price of the Common Shares fell to below $10 per share and, although it rose
back
2
<PAGE> 5
to slightly more than $20 per share during the second quarter of 1998, by
October 1998 it had fallen below $7 per share and by April 1999 it had fallen to
slightly more than $5 per share.
During the early summer of 1999, while TCR was speaking with investors in
its prior funds about their investing in Three Cities Fund III, L.P. (which was
being formed), several of those investors complained about the performance of
the Company's Common Shares. Because TCR believed the Common Shares were
under-priced, H. Whitney Wagner, a managing director of TCR who is a member of
the Company's Board, suggested that the Company purchase back some of its Common
Shares. Subsequently, on August 26, 1999, the Company began a tender offer for
up to 3,000,000 Common Shares at $7 per share. A total of 1,189,411 shares were
tendered in response to this tender offer, which ended on September 23, 1999.
On September 30, 1999, J. William Uhrig, a managing director of TCR, sent a
letter to Paul Davies, the Chief Executive Officer of the Company, proposing
that funds advised by TCR and a group of investors in prior TCR funds who still
hold Common Shares acquire all the stock of the Company through a tender offer
and a merger in which all the Company's stockholders, other than those who
participated in the acquisition, would receive $9.50 per share. In that letter,
Mr. Uhrig requested that, in order to be sure that TCR's arranging to have
stockholders contribute their Common Shares to the Purchaser would not cause the
contemplated tender offer and merger to be subject to the special requirements
of Section 203 of the Delaware General Corporation Law, the Company's Board
approve the acquisition by the Purchaser of some or all of the shares of the
Company's stock held by former investors in funds advised by TCR. That letter
made it clear that the Board's taking that action would in no way commit it to
approve the transaction proposed in the letter or any other transaction.
However, it would make it possible for TCR to form the Purchaser and put it in a
position to proceed with a transaction if the Company's Board approved one.
After receiving TCR's September 30 letter, the Company's Board formed a
Special Committee, consisting of four directors who had no relationship with TCR
or funds advised by it. In particular, the Special Committee did not include H.
Whitney Wagner, who is a managing director of TCR, Ira Neimark, who serves at
TCR's request on the board of another company in which funds advised by TCR have
a controlling interest (and who subsequently has resigned from the Company's
Board prior to the formation of the Special Committee), Armand Shapiro, who is
one of the stockholders of the Company who subsequently exchanged his Shares for
interests in GRDG Holdings, or Allyson Henning, who has invested in funds
advised by TCR.
On October 22, 1999, Mr. Davies met with Mr. Uhrig and discussed TCR's
proposal. He told Mr. Uhrig that the Board had formed the Special Committee,
that the Special Committee would be retaining The Robinson-Humphrey Company, LLC
to advise it with regard to the transaction, and that Robinson-Humphrey was
analyzing TCR's proposal. Mr. Davies suggested that Mr. Uhrig speak with a
representative of Robinson-Humphrey to explain in more detail what TCR was
contemplating. Mr. Uhrig did that on the following day.
On October 26, 1999, the representative of Robinson-Humphrey told Mr. Uhrig
that the Special Committee had met with its advisors and had decided it would
not recommend a transaction in which a fund advised by TCR acquired the Company
for $9.50 per share. When Mr. Uhrig called Mr. Davies and asked why the Special
Committee had taken that action, in view of the fact that $9.50 per share was
substantially higher than the market price of the Company's Common Stock (which
was slightly more than $6.50 per share), Mr. Davies said he thought the actions
of the Special Committee had not been fully communicated, and suggested that Mr.
Uhrig meet in person with the representative of Robinson-Humphrey.
On November 1, 1999, Mr. Uhrig and an attorney for TCR and funds it advised
met in TCR's offices with the representative of Robinson-Humphrey and an
attorney for the Company (with another attorney for the Company participating by
conference telephone). At this meeting, the representatives of the Company said
the Special Committee had decided it could not recommend a transaction at $9.50
per share. In response to a question, they said the Special Committee had not
picked a price which it thought it could recommend. Mr. Uhrig then discussed the
possibility that the funds might consider making a tender offer at $9 per share
without the recommendation of the Company's Board, if the Board would not
recommend against the tender offer. The Company's representatives said they
would ask the Special Committee to meet to discuss what price might be
acceptable to it.
3
<PAGE> 6
On November 4, 1999, Mr. Uhrig called the representative of
Robinson-Humphrey and told him that the funds would be willing to increase the
price they would pay to $11 per share, but would not go higher than that.
On the following day, the representative of Robinson-Humphrey told Mr.
Uhrig by telephone that the Special Committee had determined it would recommend
an offer at $12.25 per share. Mr. Uhrig said the funds would not make an offer
at that price, but that they would offer $11.50 per share if (i) the Special
Committee and the Board would recommend the offer, (ii) the Company would agree
not to solicit offers from anyone else, (iii) the Company would agree that if it
received a higher, unsolicited offer, the funds would be given an opportunity to
match that higher offer and (iv) the Company would agree that if it terminated
its agreement with the funds in order to accept a higher offer from somebody
else, the Company would make a termination payment to the funds equal to 3% of
the value of the Company's shares at the price the funds had agreed to pay and
would reimburse the funds for their expenses up to 1% of that amount.
On November 8, 1999, the Special Committee voted to authorize
Robinson-Humphrey to inform Mr. Uhrig that the Special Committee was inclined to
pursue a transaction at $11.50 per share, subject to negotiation of a definitive
agreement and receipt of assurance that the funds could obtain the necessary
financing. In addition, the Special Committee voted to recommend that the Board
approve the acquisition of more than 15% of the outstanding Common Shares by the
Purchaser or GRDG Holdings.
On November 8, 1999, the attorneys for the funds sent a draft of a Plan and
Agreement of Merger to the attorneys for the Company. Negotiations regarding
that Plan and Agreement of Merger took place over the following two weeks.
On November 22, 1999, the Special Committee recommended that the Board
approve the Merger Agreement and the transactions contemplated by it, and the
Board did that. In addition, at the recommendation of the Special Committee, the
Board amended the Company's Rights Plan so none of the Purchaser, GRDG Holdings
or their affiliates would be an "acquiring person" for purposes of that Plan.
Shortly after that, the Merger Agreement was signed. It contains the terms
described under "Description of Plan and Agreement of Merger."
2. PURPOSE OF THE OFFER AND THE PROPOSED MERGER; PLANS FOR THE COMPANY.
Purpose. The purpose of the Offer and the Merger is to enable GRDG
Holdings, through the Purchaser, to acquire all the outstanding stock of the
Company. GRDG Holdings was formed to acquire the Company, and already owns
approximately 31% of the outstanding Common Shares. When the Merger takes place,
the stock of the Purchaser (all of which is owned by GRDG Holdings) will be
converted into all the outstanding stock of the Company. The directors of the
Company other than Armand Shapiro (who exchanged his stock of the Company for
interests in GRDG Holdings), who together own less than 1% of the outstanding
Common Shares, have told the Purchaser they intend to tender their Shares in
response to the Offer (unless a tender by a particular director might lead to
liability under Section 16(b) of the Securities Exchange Act of 1934, as
amended, in which case the director will vote in favor of the Merger). Unless
(i) at least 51% of the Shares which neither the Purchaser nor GRDG Holdings
owned on November 22, 1999 are properly tendered in response to Offer and not
withdrawn and (ii) the Purchaser purchases those Shares, the Merger will not
take place.
If at least 51% of the outstanding Common Shares that neither the Purchaser
nor GRDG Holdings owned on November 22, 1999, are properly tendered and not
withdrawn, and the other conditions set forth in the Merger Agreement are
satisfied or waived, the Purchaser is required by the Merger Agreement to take
all steps in its power to effect the Merger.
The Company may not, and may not authorize or permit its or any of its
subsidiaries' officers, directors, employees, agents or representatives
(including any investment banker, attorney or accountant retained by it or by
any of its subsidiaries) directly or indirectly to initiate, solicit, encourage
or otherwise facilitate any inquiry or the making of any proposal or offer with
respect to a merger, reorganization, share exchange, consolidation or similar
transaction involving the Company, or any purchase of or tender for, all or any
significant portion of the Company's equity securities or any significant
portion of the assets of the Company
4
<PAGE> 7
and its subsidiaries on a consolidated basis. However, this will not prevent the
Company from, in response to an acquisition proposal which the Company receives
despite complying with the previous sentence and which the Company's Board
determines, in good faith after consultation with its independent financial
advisor, would result (if consummated in accordance with its terms) in a
transaction which (i) would result in the Company's stockholders' receiving cash
consideration which is greater than the Offer Price and (ii) would be more
favorable to the Company's stockholders than the Offer and the Merger,
furnishing non-public information (after receipt of an appropriate
confidentiality agreement) to the person, entity or group which makes the
acquisition proposal and entering into discussions and negotiations with that
potential acquiror.
If the Company receives an acquisition proposal, or the Company learns that
someone other than the Purchaser is contemplating soliciting tenders of Common
Shares or otherwise proposes to acquire the Company or its Common Shares if the
Company's stockholders do not tender their Common Shares to the Purchaser in
response to the Offer or do not approve the Merger, the Company has agreed
promptly to notify the Purchaser of that fact and to provide the Purchaser with
all information in the Company's possession which the Purchaser reasonably
requests regarding the acquisition proposal, solicitation of tenders or other
proposed transaction, and the Company will promptly, from time to time, provide
the Purchaser with any additional information the Company obtains regarding the
acquisition proposal, the solicitation of tenders or the other proposed
transaction.
The Company may terminate the Merger Agreement if the Company receives a
proposal for a cash acquisition of the Company, or somebody commences an all
cash tender offer for all of the outstanding Common Shares, which (x) would
result in the Company's stockholders' receiving consideration which is greater
than the Offer Price, (y) is not subject to the outcome of due diligence or any
other investigation, is not subject to a financing contingency and is from a
proposed acquiror which the Board reasonably determines in good faith after
consultation with its independent financial advisor has the financial resources
necessary to carry out the transaction, and (z) the Board determines in good
faith after consultation with its independent financial advisor to be more
favorable to the Company's stockholders than the Offer and the Merger. However,
the Company may only cancel the Merger Agreement if, after the Company has
received the proposal and given the Purchaser at least 5 business days' prior
notice that the Merger Agreement will terminate if the Purchaser does not
increase the Offer Price to an amount at least as great as the cash
consideration, and the fair value of the non-cash consideration, the Company's
stockholders would receive under the proposal or tender offer by the other
person, (A) the Purchaser does not increase the Offer Price to an amount at
least as great as the cash or cash value per share the Company's stockholders
would receive as a result of the proposal or tender offer by the other person,
and (B) the Company has (1) paid the Purchaser $3,850,000 and (2) reimbursed the
Purchaser (or agreed in writing to reimburse the Purchaser) for all the expenses
related to the transactions which are the subject of the Merger Agreement which
the Purchaser or its affiliates (including Three Cities Research, Inc., GRDG
Holdings and the Three Cities Funds) incurred in connection with the Merger
Agreement and the transactions contemplated by it, up to a maximum of $1,285,000
of expenses. If the Company notifies the Purchaser that the Merger Agreement
will terminate unless the Purchaser increases the Offer Price, the Company will
not be able to revoke that notice without the Purchaser's consent.
3. CERTAIN FEDERAL INCOME TAX CONSEQUENCES.
The following summary is a general discussion of certain of the expected
Federal income tax consequences of the Offer. The summary is based on the
Internal Revenue Code of 1986, as amended (the "Code"), and published
regulations, rulings and judicial decisions in effect at the date of this Offer
to Purchase, all of which are subject to change. The summary does not discuss
all aspects of Federal income taxation that may be relevant to a particular
holder in light of his or her personal circumstances or to certain types of
holders subject to special treatment under the Federal income tax laws, such as
life insurance companies, financial institutions, tax-exempt organizations and
non-U.S. persons. The following summary may not be applicable with respect to
Shares acquired through exercise of employee stock options or otherwise as
compensation. It also does not discuss any aspects of state or local tax laws or
of tax laws of jurisdictions outside the United States of America.
5
<PAGE> 8
THE DESCRIPTION OF FEDERAL INCOME TAX CONSEQUENCES SET FORTH BELOW IS FOR
GENERAL INFORMATION ONLY. HOLDERS ARE URGED TO CONSULT THEIR TAX ADVISORS AS TO
THE PARTICULAR TAX CONSEQUENCES TO THEM OF THE SALE OF THEIR SHARES, INCLUDING
THE APPLICATION OF FEDERAL, STATE, LOCAL AND FOREIGN TAX LAWS AND POSSIBLE
CHANGES IN TAX LAWS.
Sales of Shares in response to the Offer will be taxable transactions for
Federal income tax purposes, and may also be taxable transactions under
applicable state, local, foreign and other tax laws. For Federal income tax
purposes, a tendering stockholder will generally recognize gain or loss equal to
the difference between the amount of cash received by the stockholder upon sale
of the Shares and the stockholder's tax basis in the Shares which are sold.
Under present law, gain or loss will be calculated separately for each block of
Shares tendered and purchased pursuant to the Offer.
If tendered Shares are held by a tendering stockholder as capital assets,
gain or loss recognized by the tendering stockholder will be capital gain or
loss, which will be long-term or short term depending on whether the tendering
stockholder's holding period for the Shares exceeds one year. Long-term capital
gains recognized by a stockholder who is an individual will generally be taxed
at a maximum Federal marginal tax rate of 20%. Short term capital gains
recognized by an individual will generally be taxed at the individual's ordinary
income tax rate. Capital gains recognized by a tendering corporate stockholder
will be taxed at a maximum Federal marginal tax rate of 35%.
A stockholder (other than certain exempt stockholders, including all
corporations and certain foreign individuals) who tenders Shares may be subject
to 31% backup withholding unless the stockholder provides its taxpayer
identification number ("TIN") and certifies that the TIN is correct or properly
certifies that it is awaiting a TIN. This should be done by completing and
signing the substitute Form W-9 included as part of the Letter of Transmittal. A
stockholder that does not furnish its TIN also may be subject to a penalty
imposed by the IRS.
If backup withholding applies to a stockholder, the Depositary is required
to withhold 31% from each payment to that stockholder. Backup withholding is not
an additional tax. Rather, the amount of the backup withholding can be credited
against the Federal income tax liability of the person subject to the backup
withholding, provided that the required information is given to the IRS. If
backup withholding results in an overpayment of tax, a refund can be obtained by
the stockholder upon filing an income tax return.
4. CERTAIN EFFECTS OF THE TRANSACTION.
Nasdaq National Market. The purchase of the Shares tendered in response to
the Offer will reduce the number of Shares that might otherwise trade publicly
and probably will significantly reduce the number of holders of Shares, which
could adversely affect the liquidity and market value of the remaining Shares
held by the public. Depending upon the number of Common Shares purchased
pursuant to the Offer, the Shares may no longer meet the standards of the
National Association of Securities Dealers, Inc. (the "NASD") for continued
inclusion in the Nasdaq National Market (the top tier market of the Nasdaq Stock
Market), which require that an issuer have at least 200,000 publicly held shares
with a market value of $1 million held by at least 400 stockholders (or 300
stockholders holding round lots) and have net tangible assets of at least $1
million, $2 million or $4 million depending on profitability levels during the
issuer's four most recent fiscal years. If these standards are not met, the
Common Shares might nevertheless continue to be included in the NASD's Nasdaq
National Market with quotations published in the Nasdaq "additional list" or in
one of the "local lists." However, if the number of holders of Common Shares
falls below 300 or the number of publicly held Common Shares falls below
100,000, or if there are not at least two market makers for Common Shares, the
Common Shares would no longer qualify for Nasdaq Stock Market reporting, and the
Nasdaq Stock Market would cease to provide any quotations. Common Shares held
directly or indirectly by an officer or director of the Company, or by a
beneficial owner of more than 10% of the Common Shares, ordinarily will not be
considered as being publicly held for this purpose. According to the Company, as
of November 22, 1999, there were approximately 145 holders of record of Common
Shares and approximately 4,000 beneficial owners and 16,176,800 Common Shares
were outstanding, of which GRDG Holdings owned 4,998,190 Shares. If, as a result
of the purchase of Common Shares pursuant to the Offer or otherwise, the Common
Shares no longer
6
<PAGE> 9
meet the NASD requirements for continued inclusion on the Nasdaq National Market
or in any other tier of the Nasdaq Stock Market, the market for the Common
Shares could be adversely affected.
If the Common Shares no longer meet the requirements for inclusion in any
tier of the Nasdaq Stock Market, quotations might or might not still be
available from other sources. The extent of the public market, and availability
of quotations, for the Common Shares would depend upon the number of holders of
Common Shares after the purchase of the Shares tendered in response to the
Offer, whether securities firms are interested in maintaining a market in the
Common Shares, the possible termination of registration under the Securities and
Exchange Act of 1934, as amended (the "Exchange Act"), as described below, and
other factors.
Exchange Act Registration. The Common Shares are currently registered
under the Exchange Act. That registration may be terminated upon application of
the Company to the Securities and Exchange Commission if the Shares are not
listed on a national securities exchange or quoted on the Nasdaq Stock Market
and there are fewer than 300 record holders of the Common Shares. The
termination of registration of the Common Shares under the Exchange Act would
substantially reduce the information the Company would be required to furnish to
holders of Common Shares and to the SEC and would make certain provisions of the
Exchange Act, such as the short-swing profit recovery provisions of Section
16(b) of the Exchange Act, the requirement that the Company furnish a proxy
statement or information statement in connection with stockholder actions
pursuant to Section 14 of the Exchange Act, and the requirements of Rule 13e-3
under the Exchange Act with respect to "going-private" transactions, no longer
applicable to the Company. See Section 18. In addition, "affiliates" of the
Company and persons holding "restricted securities" of the Company may be
deprived of the ability to dispose of those securities pursuant to Rule 144
under the Securities Act of 1933, as amended. If at least 51% of the Shares
which neither the Purchaser nor GRDG Holdings owned on November 22, 1999, are
properly tendered in response to the Offer and not withdrawn, the Purchaser
intends to seek to cause the Company to terminate quotation of the Common Shares
on the Nasdaq Stock Market and to apply to terminate the registration of the
Common Shares under the Exchange Act as soon as practicable. As a result, the
Purchaser may be able to give the required stockholder approval of the Merger
(if stockholder approval is required) without the Company's sending a proxy
statement or an information statement to its stockholders. Even if less than 51%
of the outstanding Common Shares which neither the Purchaser nor GRDG Holdings
owned on November 22, 1999 are properly tendered and not withdrawn, if the
Purchaser purchases the Common Shares which are properly tendered and not
withdrawn (which the Purchaser would have the right, but not the obligation, to
do), the Common Shares may no longer be eligible for inclusion on the Nasdaq
Stock Market and the Company may be able to terminate the registration of the
Common Shares under the Exchange Act. If that is the case, the Purchaser will
seek to cause the Company to terminate the registration of the Common Shares
under the Exchange Act as soon as practicable after they are no longer quoted on
the Nasdaq Stock Market.
5. FAIRNESS OF THE TRANSACTION. The Purchaser, GRDG Holdings and the Three
Cities Funds believe that the Offer and the Merger are fair to holders of Common
Shares who are not affiliated with the Purchaser, GRDG Holdings, the Three
Cities Funds or the Company. An important reason for this belief is the fact
that the $11.50 per share which the Purchaser is offering for the Common Shares
in the Offer, and which holders of Common Shares will receive as a result of the
Merger if it occurs, is more than 58% higher than the last sale price of the
Common Shares reported on the Nasdaq National Market on November 19, 1999, the
last full day of trading prior to the day on which the execution of the Merger
Agreement and the transactions contemplated by it (including the Offer) were
announced to the public. Other factors which contribute to the Purchaser's
belief that the Offer and the Merger are fair to holders of Common Shares who
are not affiliated with the Purchaser, GRDG Holdings, the Three Cities Fund or
the Company are (a) in addition to exceeding the last reported sale price of the
Common Shares on November 19, 1999, by more than 58%, the Offer Price exceeds by
more than 21% the highest price at which the Common Shares were traded during
the twelve months prior to that (which was $9.50 per Share); (b) during the
twenty-six weeks ended August 1, 1999, the Company and its subsidiaries had a
consolidated loss from operations of $11,458,000 (of which $11,359,000 was
incurred during the thirteen weeks ended August 1, 1999) and a net loss of
$7,025,000 (equal to $.40 per share), including one time changes totalling
$6,600,000 after tax effect, to reflect inventory write-downs, expenses of
recruiting a new chief executive officer, and write offs of proprietary
management information
7
<PAGE> 10
systems which were being replaced; (c) during the 13 weeks ended October 31,
1999, the Company and its subsidiaries had net income of only $151,000
(resulting in a net loss for the thirty-nine weeks ended October 31, 1999 of
$6,874,000, equal to $.40 per share); and (d) the Offer Price substantially
exceeds the Company's shareholders' equity per Common Share at August 1, 1999
(which was $6.76 per share).
H. Whitney Wagner, a managing director of TCR (which is the adviser to the
Three Cities Funds) is a director of the Company. In that capacity, he receives
information which is not made available to the investing public. The information
Mr. Wagner has received as a director included, in March 1999, the Company's
planned and projected income statements and balance sheets for the fiscal years
ending in January 2000 through 2003. They showed planned (as to the fiscal year
ending in January 2000) or projected (as to the fiscal years ending in January
2001 through 2003) net income, earnings per share (EPS), earnings before
interest, taxes, depreciation and amortization (EBITDA) and year end
stockholders equity as follows:
<TABLE>
<CAPTION>
FISCAL YEAR ENDING IN JANUARY
--------------------------------------------
2000 2001 2002 2003
-------- -------- -------- --------
(IN THOUSANDS, EXCEPT EPS)
<S> <C> <C> <C> <C>
Net Income.............................. $ 14,604 $ 17,861 $ 24,988 $ 31,024
EPS..................................... 0.83 1.00 1.38 1.70
EBITDA.................................. 35,518 42,085 56,004 68,801
Capital Expenditures.................... 18,315 10,550 18,900 22,300
Stockholders Equity..................... 146,285 164,146 189,133 220,158
</TABLE>
Since the fiscal year 2000 plan and the projections for the fiscal years
ending in 2001 through 2003 were prepared, there has been a change in the
Company's chief executive officer and the Company has repurchased 2,279,411
shares of its Common Stock for a total of approximately $14,582,000 (an average
of $6.40 per repurchased share). During the first eight months of fiscal 2000,
the Company's net loss was $8,282,000 more than had been anticipated in its
original Plan and $6,319,000 more than had been anticipated in a revised Plan,
and its EBITDA was $14,507,000 less than had been anticipated in its original
Plan and $10,764,000 less than had been anticipated in the revised Plan. The
Company's stockholders' equity at October 3, 1999 was $31,977,000 less than had
been anticipated in its Plan (in part because of the repurchase of 2,279,411
Shares for $14,582,000).
Robinson-Humphrey gave an opinion to a Special Committee of the Company's
Board of Directors regarding the fairness of the Offer and the Merger. See Item
6. Even though Mr. Wagner is a director of the Company, and another director
(Armand Shapiro) holds interests in GRDG Holdings, neither of them was a member
of the Special Committee. Therefore, the opinion of Robinson-Humphrey as to the
fairness of the Offer and the Merger from a financial point of view was, in
effect, an opinion of an unaffiliated representative acting solely on behalf of
unaffiliated securityholders.
The Purchaser, GRDG Holdings and the Three Cities Funds understand that all
the members of the Board of Directors of the Company who voted with regard to
the Offer and the Merger Agreement voted to approve them. Therefore, the Merger
Agreement was approved by all the directors of the Company who are not employees
of the Company, who voted with regard to it. The directors who did not vote,
either have relationships with GRDG Holdings or, as to one director, was out of
the country.
6. REPORTS, OPINIONS, APPRAISALS AND CERTAIN NEGOTIATIONS. None of the
Purchaser, GRDG Holdings or the Three Cities Funds have received a report,
opinion or appraisal from an outside party related to the Offer or the Merger,
including, but not limited to, any report, opinion or appraisal relating to the
consideration or the fairness of the consideration being offered to holders of
Common Shares or the fairness of the transaction to the Company, to the
Purchaser or its stockholders (including GRDG Holdings) or to holders of Common
Shares or other securities of the Company who are not affiliates of the Company.
The Schedule 14D-9, which will be filed by the Company with the SEC, copies of
which will be sent to the Company's stockholders, describes an opinion of
Robinson-Humphrey regarding the fairness of the Offer and the Merger to the
Company's shareholders (other than GRDG Holdings) from a financial point of
view.
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<PAGE> 11
THE TENDER OFFER
7. TERMS OF THE OFFER. On the terms and subject to the conditions of the
Offer (including, if the Offer is extended or amended, the terms and conditions
of the extension or amendment), the Purchaser will accept for payment and pay
for all Common Shares which are validly tendered prior to the Expiration Time
and not withdrawn in accordance with Section 10. The term "Expiration Time"
means 12:00 midnight, New York City time, on December 22, 1999, unless the
Purchaser extends the period during which the Offer is open, in which event the
term "Expiration Time" will mean the time and date at which the Offer, as
extended, will expire.
In the Merger Agreement, the Purchaser has agreed that it will not (a)
decrease the number of Common Shares it is offering to purchase, (b) reduce the
Offer Price, (c) modify or add to the conditions described in Section 11, (d)
change the form of consideration it is offering, or (e) extend the Offer, except
as required or permitted by the Merger Agreement (which is described below).
The Purchaser reserves the right, at any time and from time to time (except
as limited by the Merger Agreement), to extend the period during which the Offer
is open, by giving oral or written notice of the extension to the Depositary and
by making a public announcement of it as described below. The Merger Agreement
permits the Purchaser to extend the Expiration Time until up to 60 days after
the date of this Offer to Purchase. During any extension, all Shares previously
tendered and not withdrawn will remain tendered in response to the Offer,
subject to the rights of a tendering stockholder to withdraw tendered Shares.
See Section 10.
Subject to the Merger Agreement and the applicable regulations of the
Securities and Exchange Commission (the "SEC"), the Purchaser reserves the
right, at any time and from time to time, to (i) delay acceptance for payment
of, or, regardless of whether Shares were already accepted for payment, payment
for, Shares pending receipt of any regulatory or third-party approval described
in Section 18 or in order to comply in whole or in part with any other
applicable law, (ii) terminate the Offer and not accept for payment any Shares
if any of the conditions described to in Section 11 has not been satisfied or
upon the occurrence of any of the events described in Section 11 or (iii) waive
any condition or otherwise amend the Offer in any respect, in each case, by
giving oral or written notice of the delay, termination, waiver or amendment to
the Depositary and by making a public announcement of it, as described below.
The Purchaser acknowledges that (i) Rule 14e-1(c) under the Exchange Act
requires the Purchaser to pay the consideration offered or return the tendered
Shares promptly after the termination or withdrawal of the Offer and (ii) the
Purchaser may not delay acceptance for payment of, or payment for (except as
provided in clause (i) of the first sentence of the preceding paragraph), any
Shares upon the occurrence of any of the events described in Section 11 without
extending the period of time during which the Offer is open.
The Purchaser will make a public announcement of any extension, delay,
termination, waiver or amendment as promptly as practicable after it takes
place. In the case of an extension, the Purchaser will make a public
announcement no later than 9:00 a.m., New York City time, on the business day
after the day of the previously scheduled Expiration Time. Subject to applicable
law (including Rules 14d-4(c), 14d-6(d) and 14e-1 under the Exchange Act, which
require that material changes be promptly disseminated to stockholders in a
manner reasonably designed to inform them of the changes), the Purchaser will
have no obligation to publish, advertise or otherwise communicate any public
announcement other than by issuing a press release.
If the Purchaser makes a material change in the terms of the Offer or the
information concerning the Offer or if it waives a material condition to the
Offer, the Purchaser will extend the Offer to the extent required by Rules
14d-4(c), 14d-6(d) and 14e-1 under the Exchange Act. Consummation of the Offer
is conditioned upon satisfaction of the conditions set forth in Section 11. The
Purchaser reserves the right (but will not be obligated) to waive any or all of
those conditions.
The Company has given the Purchaser a stockholder list and security
position listings for the purpose of enabling the Purchaser to disseminate the
Offer to holders of Shares. This Offer to Purchase and the related Letter of
Transmittal and other relevant materials will be mailed to record holders of
Shares and to brokers,
9
<PAGE> 12
dealers, commercial banks, trust companies and similar persons whose names, or
the names of whose nominees, appear on the Company's stockholder list, or who
are listed as participants in a clearing agency's security position listing for
subsequent transmittal to beneficial owners of Shares.
8. ACCEPTANCE FOR PAYMENT AND PAYMENT FOR SHARES. On the terms and subject
to the conditions of the Offer (including, if the Offer is extended or amended,
the terms and conditions of the extension or amendment), the Purchaser will
purchase, by accepting for payment, and will pay for, all Shares which are
validly tendered (and not properly withdrawn in accordance with Section 10)
prior to the Expiration Time. Shares will be accepted as soon as practicable
after the later to occur of (i) the Expiration Time and (ii) the satisfaction or
waiver of the conditions set forth in Section 11. Any determination concerning
the satisfaction of the terms and conditions of the Offer will be in the sole
discretion of the Purchaser. See Section 11. The Purchaser expressly reserves
the right, in its sole discretion, to delay acceptance for payment of, or,
subject to the applicable SEC rules, payment for, Shares in order to comply in
whole or in part with any applicable law. See Section 18.
In all cases, payment for Shares which are tendered in response to the
Offer and accepted for payment will be made only after timely receipt by the
Depositary of (a) the certificate(s) representing the tendered Shares (the
"Share Certificates"), or timely confirmation of a book-entry transfer (a
"Book-Entry Confirmation") of the Shares (if that procedure is available) into
the Depositary's account at The Depository Trust Company (the "Book-Entry
Transfer Facility"), as described in Section 9, (b) a properly completed and
duly executed Letter of Transmittal (or facsimile of one), or an Agent's Message
in connection with a book-entry transfer, and (c) any other documents required
by the Letter of Transmittal.
An "Agent's Message" is a message, transmitted by the Book-Entry Transfer
Facility to, and received by, the Depositary and forming a part of the
Book-Entry Confirmation, which states that the Book-Entry Transfer Facility has
received an express acknowledgment from a participant in the Book-Entry Transfer
Facility which is tendering Shares that the participant has received, and agrees
to be bound by the terms of, the Letter of Transmittal and that the Purchaser
may enforce that agreement against the participant.
For purposes of the Offer, the Purchaser will be deemed to have accepted
for payment, and thereby purchased, tendered Shares when the Purchaser gives
oral or written notice to the Depositary of the Purchaser's acceptance of the
Shares for payment. Payment for Shares which are accepted will be made by
deposit of the aggregate purchase price for all the Shares which are accepted
for payment with the Depositary, which will act as agent for tendering
stockholders for the purpose of receiving payment from the Purchaser and
transmitting payment to the tendering stockholders. UNDER NO CIRCUMSTANCES WILL
THE PURCHASER PAY INTEREST ON THE OFFER PRICE BY REASON OF ANY DELAY IN PAYING
FOR SHARES. Upon the deposit of funds with the Depositary for the purpose of
making payments to tendering stockholders, the Purchaser's obligation to pay for
Shares will be satisfied and tendering stockholders must look solely to the
Depositary for payment of amounts owed to them by reason of the acceptance of
their Shares pursuant to the Offer. If, for any reason, acceptance for payment
of or payment for any Shares tendered in response to the Offer is delayed, or
the Purchaser is prevented from accepting for payment or paying for Shares which
are tendered in response to the Offer, the Depositary may, nevertheless, retain
tendered Shares on behalf of the Purchaser and those Shares may not be
withdrawn, except to the extent the tendering stockholder exercises withdrawal
rights as described in Section 10. The Purchaser will pay any stock transfer
taxes incident to the transfer to it of validly tendered Shares, except as
otherwise provided in Instruction 6 of the Letter of Transmittal, as well as the
charges and expenses of the Depositary and the Information Agent.
If any tendered Shares are not accepted for payment for any reason, or if
certificates which are submitted evidence more Shares than are tendered,
certificates representing unpurchased or untendered Shares will be returned or
sent, without expense to the tendering stockholder (or, in the case of Shares
tendered by book-entry transfer into the Depositary's account at the Book-Entry
Transfer Facility, Shares which are not purchased will be credited to an account
at that Book-Entry Transfer Facility), as promptly as practicable following the
expiration or termination of the Offer.
10
<PAGE> 13
The Purchaser reserves the right to transfer or assign, in whole, or in
part from time to time, to one or more of its affiliates the right to purchase
all or any portion of the Shares which are tendered in response to the Offer,
but such a transfer or assignment will not relieve the Purchaser of its
obligations under the Offer and will in no way prejudice the rights of tendering
stockholders to receive payment for Shares which are validly tendered in
response to the Offer and accepted for payment.
9. PROCEDURES FOR TENDERING SHARES.
Valid Tender of Shares. Except as set forth below, in order for Shares to
be validly tendered in response to the Offer, (a) a Letter of Transmittal or a
facsimile of one, properly completed and duly executed, with any required
signature guarantees, or an Agent's Message in connection with a book-entry
delivery of Shares, and any other required documents, must be received by the
Depositary at one of its addresses set forth on the back cover of this Offer to
Purchase prior to the Expiration Time and (b) either (i) the certificates
representing the tendered Shares must be received by the Depositary along with
the Letter of Transmittal, (ii) the Shares must be tendered using the procedure
for book-entry transfer described below, and the Book-Entry Confirmation must be
received by the Depositary prior to the Expiration Time, or (iii) the tendering
stockholder must comply with the guaranteed delivery procedures described below.
THE METHOD OF DELIVERY OF SHARE CERTIFICATES, THE LETTER OF TRANSMITTAL,
AND OTHER REQUIRED DOCUMENTS, INCLUDING DELIVERY THROUGH THE BOOK-ENTRY TRANSFER
FACILITY, IS AT THE OPTION AND RISK OF THE TENDERING STOCKHOLDER. ITEMS WILL BE
DEEMED DELIVERED ONLY WHEN THEY ARE ACTUALLY RECEIVED BY THE DEPOSITARY. IF
DELIVERY IS BY MAIL, REGISTERED MAIL WITH RETURN RECEIPT REQUESTED, PROPERLY
INSURED, IS RECOMMENDED. IN ALL CASES, SUFFICIENT TIME SHOULD BE ALLOWED TO
ENSURE TIMELY DELIVERY.
Book-Entry Transfer. The Depositary will establish an account with respect
to the Shares at The Depository Trust Company (the "Book-Entry Transfer
Facility") for purposes of the Offer within two business days after the date of
this Offer to Purchase, and any financial institution that is a participant in
the Book-Entry Transfer Facility's system may make book-entry delivery of Shares
by causing the Book-Entry Transfer Facility to transfer the Shares into the
Depositary's account at the Book-Entry Transfer Facility. Although delivery of
Shares may be effected through book-entry transfer at the Book-Entry Transfer
Facility, a Letter of Transmittal or a facsimile of one, with any required
signature guarantees, or an Agent's Message in connection with a book-entry
delivery of Shares, and any other required documents, as well as the Book Entry
Confirmation relating to the Shares, must be transmitted to and received by the
Depositary at one of its addresses set forth on the back cover of this Offer to
Purchase prior to the Expiration Time or the guaranteed delivery procedures
described below must be followed.
REQUIRED DOCUMENTS MUST BE TRANSMITTED TO AND RECEIVED BY THE DEPOSITARY AT
ONE OF ITS ADDRESSES SET FORTH ON THE BACK COVER PAGE OF THIS OFFER TO PURCHASE.
DELIVERY OF DOCUMENTS TO THE BOOK-ENTRY TRANSFER FACILITY OR TO THE PURCHASER
DOES NOT CONSTITUTE DELIVERY TO THE DEPOSITARY.
Signature Guarantees. Signatures on Letters of Transmittal need not be
guaranteed, unless, in the case of the Letter of Transmittal, the Shares to
which they relate are being tendered by a registered holder of Shares who has
completed either the box entitled "Special Delivery Instructions" or the box
entitled "Special Payment Instructions" on the Letter of Transmittal. Signatures
on Letters of Transmittal on which either of those boxes has been completed must
be guaranteed by a firm which is a bank, broker, dealer, credit union, savings
association or other entity that is a member in good standing of the Securities
Transfer Agents Medallion Program (each an "Eligible Institution"). See
Instruction 1 of the Letter of Transmittal.
If a Share Certificate is registered in the name of a person other than the
signer of the Letter of Transmittal, or if payment is to be made, or
certificates representing Shares which are not tendered or are not accepted for
payment are to be returned, to a person other than the registered holder(s),
then the Share Certificate must be endorsed or accompanied by appropriate stock
powers, in either case, signed exactly as the
11
<PAGE> 14
name(s) of the registered holder(s) appear on the Share Certificate, with the
signature(s) on the Share Certificate or stock powers guaranteed. See
Instructions 1 and 5 of the Letter of Transmittal.
If Share certificates are delivered to the Depositary at different times, a
properly completed and duly executed Letter of Transmittal (or facsimile of one)
must accompany each delivery.
Guaranteed Delivery. If a stockholder wishes to tender Shares in response
to the Offer but the Share Certificates are not immediately available or time
will not permit all required documents to reach the Depositary prior to the
Expiration Time, or the procedure for book-entry transfer cannot be completed on
a timely basis, the Shares may nevertheless be tendered as follows:
(i) the 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 with this Offer to Purchase,
must be received by the Depositary before the Expiration Time; and
(iii) the Share Certificates representing all tendered Shares, in
proper form for transfer, or the Book-Entry Confirmation, together with a
properly completed and duly executed Letter of Transmittal (or facsimile of
one), with any required signature guarantees (or, in the case of a
book-entry transfer, an Agent's Message) and any other documents required
by the Letter of Transmittal must be received by the Depositary within
three Nasdaq National Market trading days after the date of execution of
the Notice of Guaranteed Delivery.
A Notice of Guaranteed Delivery may be delivered by hand or transmitted by
telegram, facsimile transmission or mail to the Depositary, but must include a
guarantee by an Eligible Institution in the form set forth in the Notice of
Guaranteed Delivery distributed with this Offer to Purchase.
Payment for Shares which are accepted for payment will be made only after
timely receipt by the Depositary of (i) Share Certificates for, or of Book-Entry
Confirmation with respect to, the Shares, (ii) a properly completed and duly
executed Letter of Transmittal (or facsimile of one), together with any required
signature guarantees (or, in the case of a book-entry transfer, an Agent's
Message) and (iii) any other documents required by the Letter of Transmittal.
Accordingly, it is possible that payment will not be made to all tendering
stockholders at the same time.
Backup United States Federal Withholding Tax. Under the United States
Federal income tax laws, the Depositary may be required to withhold 31% of the
amount of any payments made to certain stockholders. To prevent backup Federal
income tax withholding, each tendering stockholder must provide the Depositary
with the stockholder's correct taxpayer identification number, or certify that
the stockholder is exempt from backup Federal income tax withholding, by
completing the Substitute Form W-9 included in the Letter of Transmittal. See
Instruction 10 of the Letter of Transmittal.
Appointment as Proxy. By executing a Letter of Transmittal, a tendering
stockholder irrevocably appoints designees of the Purchaser as the tendering
stockholder's attorneys-in-fact and proxies, in the manner set forth in the
Letter of Transmittal, each with full power of substitution, to the full extent
of the stockholder's rights with respect to the Shares tendered by the
stockholder and accepted for payment by the Purchaser (and with respect to any
other securities issued in respect of those Shares on or after the date of this
Offer to Purchase). That proxy is considered coupled with an interest in the
tendered Shares. This appointment will be effective if, when and to the extent
that the Purchaser accepts the tendered Shares for payment pursuant to the
Offer. When tendered Shares are accepted for payment, all prior proxies given by
the stockholder with respect to the tendered Shares and any other securities
issued in respect of them will, without further action, be revoked, and no
subsequent proxies may be given. The designees of the Purchaser will, with
respect to the tendered Shares and any other securities for which the
appointment is effective, be empowered to exercise all voting and other rights
of the tendering stockholder as they, in their sole discretion, deem proper at
any annual, special, adjourned or postponed meeting of the Company's
stockholders, and the Purchaser reserves the right to require that in order for
Shares or other securities to be deemed validly tendered,
12
<PAGE> 15
immediately upon the Purchaser's acceptance for payment of the Shares, the
Purchaser will be able to exercise full voting rights with respect to the
Shares.
Proxies are effective only as to Shares accepted for payment pursuant to
the Offer. The Offer does not constitute a solicitation of proxies, absent a
purchase of Shares, for any meeting of the Company's stockholders. Any
solicitation of proxies will be made only pursuant to separate proxy soliciting
materials complying with the Exchange Act.
Determinations Regarding Tenders. All questions as to the validity, form,
eligibility (including time of receipt) and acceptance for payment of any Shares
using any of the procedures described above will be determined by the Purchaser,
in its sole discretion, and the Purchaser's determination will be final and
binding on all parties. The Purchaser reserves the absolute right to reject any
or all tenders of Shares which it determines were not in proper form or if the
acceptance for payment of, or payment for, the Shares may, in the opinion of the
Purchaser's counsel, be unlawful. The Purchaser also reserves the absolute
right, in its sole discretion, to waive any of the conditions of the Offer or
any defect or irregularity in any tender with respect to Shares of any
particular stockholder, whether or not similar defects or irregularities are
waived in the case of other stockholders. No tender of Shares will be deemed to
have been validly made until all defects and irregularities have been cured or
waived.
The Purchaser's interpretation of the terms and conditions of the Offer
(including the Letter of Transmittal and the instructions to it) will be final
and binding. None of the Purchaser, the Depositary, the Information Agent or any
other person will be under any duty to give notification of any defects or
irregularities in tenders or will incur any liability for failure to give any
such notification.
Binding Agreement. The Purchaser's acceptance for payment of Shares
tendered in response to the Offer will constitute a binding agreement by the
tendering stockholder to sell, and by the Purchaser to purchase, the tendered
Shares on the terms and subject to the conditions of the Offer.
10. WITHDRAWAL RIGHTS. Except as otherwise provided in this Section 10,
tenders of Shares made in response to the Offer are irrevocable. Shares tendered
in response to the Offer may be withdrawn at any time prior to the Expiration
Time and, unless they have been accepted for payment by the Purchaser, may also
be withdrawn at any time after January 22, 2000.
If the Purchaser extends the Offer, is delayed in accepting Shares for
payment or is unable to accept Shares for payment for any reason, then, without
prejudice to the Purchaser's rights under the Offer, the Depositary may,
nevertheless, retain tendered Shares on behalf of the Purchaser, and those
Shares may not be withdrawn except to the extent that tendering stockholders are
entitled to withdraw them as described in this Section 10. Any such delay will
be accompanied by an extension of the Offer to the extent required by law.
For a withdrawal to be effective, a written or facsimile transmission of a
notice of withdrawal must be timely received by the Depositary at one of its
addresses set forth on the back cover of this Offer to Purchase. A notice of
withdrawal must specify the name of the person who tendered the Shares to be
withdrawn, the number of Shares to be withdrawn and (if Share Certificates have
been tendered) the name of the registered holder, if different from that of the
person who tendered the Shares. If Share Certificates evidencing Shares to be
withdrawn have been delivered or otherwise identified to the Depositary, then
prior to the release of those Share Certificates, the serial numbers shown on
the particular Share Certificates to be withdrawn must be submitted to the
Depositary, and the signature(s) on the notice of withdrawal must be guaranteed
by an Eligible Institution, unless the Shares have been tendered for the account
of an Eligible Institution. If Shares have been tendered pursuant to the
procedure for book-entry transfer, any notice of withdrawal must also specify
the name and number of the account at the Book-Entry Transfer Facility to be
credited with the withdrawn Shares.
Withdrawals of Shares may not be rescinded. After Shares are properly
withdrawn, they will be deemed not to have been validly tendered for purposes of
the Offer. However, withdrawn Shares may be retendered at any time prior to the
Expiration Time using one of the procedures described in Section 9.
13
<PAGE> 16
All questions as to the form and validity (including, without limitation,
time of receipt) of notices of withdrawal will be determined by the Purchaser,
in its sole discretion, and its determination will be final and binding. None of
the Purchaser, the Depositary, the Information Agent or any other person will be
under any duty to give notification of any defects or irregularities in any
notice of withdrawal or will incur any liability for failure to give any such
notification.
11. CONDITIONS OF THE OFFER. The Purchaser will not be required to accept
for payment or, subject to any applicable SEC rules, including Rule 14e-1(c)
under the Exchange Act (relating to the Purchaser's obligation to pay for or
return tendered Shares promptly after termination or withdrawal of the Offer),
pay for, the Shares which are tendered in response to the Offer if:
(a) Any statute, rule, regulation, order or injunction has been
enacted, promulgated, entered or enforced by any national or state
government or governmental authority or by any United States court of
competent jurisdiction, that would make the acquisition of the Shares by
the Purchaser illegal or otherwise prohibit consummation of the Offer or
the Merger; or
(b) There has been (i) a general suspension of trading in, or
limitation on prices for, securities on the New York Stock Exchange or
Nasdaq National Market which continued for at least three business days,
(ii) the declaration of a banking moratorium or any suspension of payments
in respect of banks in the United States (whether or not mandatory) which
continued for at least three business days, (iii) the commencement of a war
or armed hostilities or any other international or national calamity
directly or indirectly involving the United States, which has a significant
adverse effect on the functioning of financial markets in the United
States, (iv) any limitation (whether or not mandatory) by any United States
governmental authority or agency on the extension of credit by banks or
other financial institutions which would have a material adverse effect on
the Purchaser's ability to pay for all the Shares which are tendered in
response to the Offer and to carry out the Merger on the terms contemplated
by the Merger Agreement or (v) there is a material acceleration or
worsening of any of the conditions described in clauses (i) through (iv)
which exists at the date of the commencement of the Offer.
(c) Any of the representations and warranties of the Company set forth
in the Merger Agreement is not true and correct as of the date of the
Merger Agreement except failures to be true and correct which would not, in
the aggregate, have a material adverse effect upon the Company or adversely
affect the Purchaser's legal ownership of the Shares, the Purchaser's legal
ability to consummate the Merger, or the ownership of the surviving
corporation after the Merger;
(d) The Purchaser, GRDG Holdings or the Three Cities Fund learn that
the Company's Annual Report on Form 10-K for the year ended January 31,
1999, or Quarterly Report on Form 10-Q for the six months ended August 1,
1999 was misleading in a material respect (other than with regard to
matters which are the subject of the Stockholder Suits);
(e) Since August 1, 1999, there has been a material adverse change in
the business or financial condition of the Company and its subsidiaries
taken as a whole (other than a reduction of its assets and net worth due to
purchases by the Company of its own Common Stock, including purchases
through a tender offer which expired on September 23, 1999) or the
consolidated results of operations of the Company and its subsidiaries
compared with the consolidated results of their operations for the same
period of the prior year.
(f) The Company has not performed all the obligations it is required
to have performed under the Merger Agreement by the Expiration Date, except
failures which (i) would, in the aggregate, not materially impair or delay
the ability of the Purchaser to consummate the purchase of the Shares which
are tendered in response to the Offer or the ability of the Purchaser and
the Company to effect the Merger, (ii) have been caused by or result from a
breach of the Merger Agreement by the Purchaser; or (iii) do not, and are
not reasonably expected to, have a material adverse effect on the Company;
(g) The Merger Agreement has been terminated in accordance with its
terms; or
14
<PAGE> 17
(h) The Board of Directors of the Company withdraws or modifies in a
manner adverse to the Purchaser the Board's approval or recommendation of
the Offer or the Merger.
(i) At least 51% of the Shares which neither the Purchaser nor GRDG
owned on November 22, 1999 have been properly tendered and not withdrawn.
The conditions set forth above are for the sole benefit of the Purchaser,
and may be waived by the Purchaser, in whole or in part. Any delay by the
Purchaser in exercising the right to terminate the Offer because any of the
conditions are not fulfilled will not be deemed a waiver of its right to do so.
12. PRICE RANGE OF SHARES. The Shares trade on the Nasdaq National Market
under the symbol "GRDG." The following table sets forth, for the periods
indicated, the high and low sales prices per Share on the Nasdaq National Market
as reported by the Nasdaq National Market and the Dow Jones News Retrieval
Service:
<TABLE>
<CAPTION>
SALES PRICE
------------------
HIGH LOW
------- -------
<S> <C> <C>
FISCAL YEAR ENDED JANUARY 25, 1998
First Quarter.......................................... $9 15/16 $ 6 1/4
Second Quarter......................................... 14 3/4 7 3/4
Third Quarter.......................................... 15 7/8 11 3/4
Fourth Quarter......................................... 16 1/2 13 1/8
FISCAL YEAR ENDED JANUARY 31, 1999
First Quarter.......................................... $21 15/16 $14 13/16
Second Quarter......................................... 22 1/2 13 3/4
Third Quarter.......................................... 14 5/8 4 7/8
Fourth Quarter......................................... 9 1/16 6 13/32
FISCAL YEAR ENDED JANUARY 30, 2000
First Quarter.......................................... $ 7 3/4 $5 1/16
Second Quarter......................................... 7 7/16 4 3/4
Third Quarter.......................................... 7 3/4 5 3/4
Fourth Quarter, through November 19, 1999.............. 7 1/4 6 7/16
</TABLE>
On November 19, 1999, the last full day of trading before the day on which
the Offer and the Merger were publicly announced, the last sale price of the
Shares reported on the Nasdaq National Market was $7.25 per Share. On November
22, 1999, the last full day of trading prior to the commencement of the Offer,
the last sale price reported on the Nasdaq National Market was $11 1/16 per
Share. STOCKHOLDERS ARE URGED TO OBTAIN CURRENT MARKET QUOTATIONS FOR THE
SHARES.
13. CERTAIN INFORMATION CONCERNING THE COMPANY. The information concerning
the Company contained in this Offer to Purchase, including financial
information, has been taken from or is based upon publicly available documents
and records on file with the Commission and other public sources. None of the
Purchaser, GRDG Holdings or the Three Cities Funds assumes any responsibility
for the accuracy or completeness of the information concerning the Company
contained in those documents and records or for any failure by the Company to
disclose events which may have occurred or may affect the significance or
accuracy of that information of which none of the Purchaser, GRDG Holdings or
the Three Cities Funds is aware.
The Company is a Delaware corporation with its principal executive offices
located at 19411 Atrium Place, Suite 170, Houston, Texas 77084. According to the
Company's Annual Report on Form 10-K for the year ended January 31, 1999 (the
"Company 10-K"), the Company is a specialty retailer of decorative home
accessories, seasonal products and crafts. At January 31, 1999, the Company was
operating 29 retail locations in twelve states, primarily in the southern United
States.
15
<PAGE> 18
The following selected consolidated financial data relating to the Company
and its subsidiaries has been taken or derived from the audited financial
statements contained in the Company 10-K and the unaudited financial statements
contained in the Company's Quarterly Report on Form 10-Q for the fiscal quarter
ended July 26, 1998 and its Quarterly Report on Form 10-Q for the fiscal quarter
ended August 1, 1999 (the "Company 10-Q's"). More comprehensive financial
information is included in the Company 10-K and the Company 10-Q's and the other
documents filed by the Company with the SEC, and the financial data set forth
below is qualified in its entirety by reference to those reports and other
documents. They may be examined and copies may be obtained from the SEC's
offices in the manner set forth below.
16
<PAGE> 19
GARDEN RIDGE CORPORATION
SELECTED CONSOLIDATED FINANCIAL DATA
<TABLE>
<CAPTION>
TWENTY-SIX WEEKS
ENDED
FISCAL YEAR ENDED JANUARY --------------------
---------------------------------------------------- JULY 26, AUGUST 1,
1995 1996 1997 1998 1999 1998 1999
-------- -------- -------- -------- -------- -------- ---------
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<S> <C> <C> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:
Sales.............................. $100,002 $148,087 $225,315 $304,732 $364,742 $138,268 $176,053
Cost of Sales...................... 61,938 92,328 144,054 195,290 232,441 90,243 115,986
-------- -------- -------- -------- -------- -------- --------
Gross profit..................... 38,064 55,759 81,261 109,442 132,301 48,025 60,067
Operating expenses:
Store operating.................. 24,146 37,318 60,320 80,912 100,282 40,917 53,521
General and administrative....... 4,287 5,157 6,672 10,280 14,451 5,659 9,716
Amortization of intangibles and
deferred charges............... 621 612 717 735 599 290 298
Preopening costs................. 1,017 1,395 2,368 1,122 2,219 369 1,421
Asset impairment................. -- -- -- -- -- -- 6,569
-------- -------- -------- -------- -------- -------- --------
Total operating expenses........... 30,071 44,482 70,077 93,049 117,551 47,235 71,525
-------- --------
Income (loss) from operations.... 7,993 11,277 11,184 16,393 14,750 790 (11,458)
Interest expense................... (1,859) (744) (67) (59) (44) -- --
Interest income.................... 459 735 1,538 1,478 1,694 1,106 480
-------- -------- -------- -------- -------- -------- --------
Income (loss) before income
taxes.......................... 6,593 11,268 12,655 17,812 16,400 1,896 (10,978)
Income taxes (benefit)............. 2,441 4,390 4,619 6,379 5,904 683 (3,953)
-------- -------- -------- -------- -------- -------- --------
Net income (loss)................ 4,152 6,878 8,036 11,433 10,496 1,213 (7,025)
Preferred stock dividends.......... (562) (153) -- -- -- -- --
-------- -------- -------- -------- -------- -------- --------
Net income available to common
stockholders................... $ 3,590 $ 6,725 $ 8,036 $ 11,433 $ 10,496 $ 1,213 $ (7,025)
======== ======== ======== ======== ======== ======== ========
</TABLE>
<TABLE>
<CAPTION>
TWENTY-SIX WEEKS
ENDED
FISCAL YEAR ENDED JANUARY --------------------
------------------------------------- JULY 26, AUGUST 1,
1995 1996 1997 1998 1998 1999
------- ------- ------- ------- -------- ---------
<S> <C> <C> <C> <C> <C> <C>
PER SHARE DATA:
Selected income (loss) per common and common
equivalent share:
Net income (loss) available to common
stockholders, basic.......................... $ 0.40 $ 0.51 $ 0.47 $ 0.64 $ 0.07 $ (0.40)
Net income (loss) available to common
stockholders, diluted........................ $ 0.36 $ 0.46 $ 0.45 $ 0.62 $ 0.07 $ (0.40)
Weighted average number of common shares and
equivalents outstanding, basic................. 8,978 13,083 17,158 17,904 18,015 17,405
Weighted average number of common shares and
equivalents outstanding(1), diluted............ 10,096 14,515 17,925 18,473 18,632 17,405
</TABLE>
17
<PAGE> 20
<TABLE>
<CAPTION>
JANUARY 29, JANUARY 28, JANUARY 26, JANUARY 25, JANUARY 31, JULY 26, AUGUST 1,
1995 1996 1997 1998 1999 1998 1999
----------- ----------- ----------- ----------- ----------- --------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
BALANCE SHEET DATA:
Working capital............ $12,168 $23,076 $ 63,277 $ 77,527 $ 79,481 $ 73,639 $ 70,200
Total assets............... 43,992 73,326 137,382 160,212 170,524 162,486 166,634
Long-term debt
obligations.............. 16,730 300 200 100 -- 100 --
Redeemable 8% cumulative
preferred stock.......... 7,345 -- -- -- -- -- --
Common stockholders'
equity................... 7,922 55,531 113,763 125,953 137,197 127,538 124,046
</TABLE>
- ---------------
(1) Computed based on the weighted average number of shares of Common Stock and
common stock equivalents, which consist of warrants and options, outstanding
during the period presented.
For the three fiscal quarters ended October 31, 1999, the Company had a net
loss of $6,874,000 ($0.40 per share) on net sales of $281,271,000, compared with
net income of $209,000 ($0.01 per share) on net sales of $224,375,000 during the
same fiscal period of the prior year. The loss during the period ended October
31, 1999 included one time charges totaling $6,600,000 after tax effect for
inventory write-downs, costs of recruiting a new chief executive officer and
write-offs of proprietary management information systems which are being
replaced.
The Company is subject to the informational and reporting requirements of
the Exchange Act and is required to file reports and other information with the
Commission relating to its business, financial condition and other matters.
Information, as of particular dates, concerning the Company's directors and
officers, their remuneration, stock options granted to them, the principal
holders of the Company's securities, any material interests of those persons in
transactions with the Company and other matters is required to be disclosed in
proxy statements distributed to the Company's stockholders and filed with the
Commission. These reports, proxy statements and other information can be
inspected and copied at the public reference facilities of the Commission
located at Room 1024, Judiciary Plaza, 450 Fifth Street, N.W., Washington, D.C.
20549, and at the following regional offices of the Commission: Seven World
Trade Center, New York, New York 10048; and Citicorp Center, 500 West Madison
Street, Chicago, Illinois 60661. Copies of this material may be obtained by
mail, upon payment of the Commission's customary fees, from the Commission's
principal office at 450 Fifth Street, N.W., Washington, D.C. 20549. The
Commission also maintains a Web site on the World Wide Web at http://www.sec.gov
that contains reports, proxy statements and other information. Reports, proxy
statements and other information concerning the Company should also be available
for inspection at the offices of NASDAQ, 1735 K Street, N.W., Washington, D.C.
20006. All of the information with respect to the Company and its affiliates set
forth in this Offer to Purchase has been derived from publicly available
information.
14. CERTAIN INFORMATION CONCERNING THE PURCHASER, GRDG HOLDINGS AND THE
THREE CITIES FUNDS.
The Purchaser. The Purchaser is a Delaware corporation organized in order
to enter into the transactions which are the subject of the Merger Agreement
(including the Offer). The principal executive offices of the Purchaser are
located at the offices of Three Cities Research, Inc., 650 Madison Avenue, New
York, New York 10022. The Purchaser is wholly owned by GRDG Holdings. The
Purchaser does not have any significant assets or liabilities and has not
engaged in activities other than those incidental to its formation and
capitalization, its execution of the Merger Agreement and preparation for the
Offer and the Merger. Because the Purchaser is newly formed and has minimal
assets and capitalization, no meaningful financial information regarding the
Purchaser is available.
GRDG Holdings. GRDG Holdings is a Delaware limited liability company
organized in order to acquire Common Stock from a limited number of stockholders
of the Company and then enter into the transactions which are the subject of the
Merger Agreement (including the Offer). The principal executive offices of GRDG
Holdings are located at the offices of Three Cities Research, Inc., 650 Madison
Avenue, New York, New York 10022. Three Cities Fund II, L.P. and Three Cities
Offshore II C.V. together own 51.07% of GRDG Holdings. However, they expect that
before the Offer expires, they will transfer two-thirds of their interests in
GRDG Holdings to Three Cities Fund III, L.P. and two affiliated investment
funds. As a
18
<PAGE> 21
result, Three Cities Fund II, L.P. will own 6.32%, Three Cities Offshore II C.V.
will own 10.8% and Three Cities Fund III, L.P. and the two affiliated investment
funds will own 32.34% of GRDG Holdings. Before the Offer began, GRDG Holdings
acquired approximately 30.9% of the outstanding Common Shares in exchange for
interests in GRDG Holdings. Most of the persons from whom GRDG Holdings acquired
Common Shares were former investors in funds advised by Three Cities Research
which had acquired most of the Company's stock in 1992, but subsequently sold a
portion of that stock and distributed the remainder to their investors. The
persons from whom GRDG Holdings acquired Common Shares also included Armand
Shapiro, the former chief executive officer of the Company and still a director
of the Company. Because GRDG Holdings is newly formed, no meaningful financial
information regarding GRDG Holdings prior to November 22, 1999, when it acquired
30.9% of the outstanding Common Stock is available.
The Three Cities Funds. Three Cities Fund II, L.P. and Three Cities Fund
III, L.P. each is a Delaware limited partnership. Three Cities Offshore II C.V.
is a Netherlands Antilles partnership. Each of the Three Cities Funds is
principally engaged in investing in securities selected by its investment
committee. The principal executive offices of each of the Three Cities Funds are
located at the offices of Three Cities Research, Inc., 650 Madison Avenue, New
York, New York 10022.
During the last 5 years none of the Purchaser's, GRDG Holdings' or any of
the Three Cities Funds' officers, directors or general partners was (1)
convicted in a criminal proceeding or (2) party to a civil proceeding of a
judicial or administrative body and as a result of the proceeding was or is
subject to a judgment enjoining future violations of or prohibiting activities
subject to, Federal or state securities laws or finding any violation of such
laws.
Neither GRDG Holdings nor any of the Three Cities Funds is subject to the
informational and reporting requirements of the Exchange Act and neither GRDG
Holdings nor the any of the Three Cities Funds is required to file reports and
other information with the Commission relating to its businesses, financial
condition or other matters.
The name, citizenship, business address, principal occupation or employment
and five-year employment history for each of the directors and executive
officers of the Purchaser, GRDG Holdings and each of the Three Cities Funds are
set forth in Schedule I.
Except for 4,998,190 Shares acquired by GRDG Holdings on November 22, 1999,
none of the Purchaser, GRDG Holdings, any of the Three Cities Funds or, to the
best of their knowledge, any of the persons listed on Schedule I or any
associate or majority owned subsidiary of any of those persons beneficially owns
any equity security of the Company, and none of the Purchaser, GRDG Holdings,
the Three Cities Funds or, to the best of their knowledge, any of the other
persons referred to above, or any of their respective directors, executive
officers or subsidiaries, has effected any transaction in any equity security of
the Company during the past 60 days.
Except as described in this Offer to Purchase, none of the Purchaser, GRDG
Holdings, any of the Three Cities Funds or, to the best of their knowledge, any
of the persons listed on Schedule I has any contract, arrangement, understanding
or relationship with any other person with respect to any securities of the
Company, including, without limitation, any contract, arrangement, understanding
or relationship concerning the transfer or the voting of any securities of the
Company, joint ventures, loan or option arrangements, puts or calls, guarantees
of loans, guarantees against loss or the giving or withholding of proxies.
Except as described in this Offer to Purchase, none of the Purchaser, GRDG
Holdings, any of the Three Cities Funds or, to the best of their knowledge, any
of the persons listed on Schedule I has had any transactions with the Company or
any of its executive officers, directors or affiliates that would require
reporting under the rules of the Commission.
Except as described in this Offer to Purchase, since January 26, 1997,
there have been no contacts, negotiations or transactions between the Purchaser,
GRDG Holdings, any of the Three Cities Funds, or their respective subsidiaries,
or, to the best of their knowledge, any of the persons listed in Schedule I, on
the one hand, and the Company or its executive officers, directors or
affiliates, on the other hand, concerning a merger,
19
<PAGE> 22
consolidation or acquisition, tender offer or other acquisition of securities,
election of directors or a sale or other transfer of a material amount of
assets.
15. SOURCE AND AMOUNT OF FUNDS. If all the outstanding Shares not owned by
the Purchaser, GRDG Holdings or the Three Cities Funds were tendered in response
to the Offer, the Purchaser would be required to pay a total of approximately
$129,000,000 to purchase the tendered Shares and pay the fees and other expenses
related to the Offer. See Section 19. The Purchaser expects to obtain the funds
required to consummate the Offer through capital contributions or advances made
by GRDG Holdings, bank borrowings and senior subordinated borrowings from Allied
Capital Corporation. GRDG Holdings intends to use capital provided by the Three
Cities Funds to make capital contributions and advances to the Purchaser. Until
the Merger takes place, both the bank borrowings and the senior subordinated
borrowings (which would total approximately $69,000,000 if all the Shares not
owned by the Purchaser or GRDG Holdings were tendered) will be secured by all
the Shares owned by the Purchaser or GRDG Holdings, including the Shares
purchased through the Offer. If the Merger takes place, the borrowings will
become obligations of the Company, and will be secured by the inventory and
accounts receivable, and other assets, of the Company. The bank borrowings will
bear interest at a floating rate based on the prime rate or on LIBOR, and will
mature one year after the Merger. The senior subordinated borrowings will bear
interest at 13% per annum and will mature six months after the bank borrowings
(as they may be refinanced), but not more than six years after they are
incurred.
16. THE MERGER.
The Merger Agreement. The Merger Agreement requires that if at least 51%
of the outstanding Common Shares which neither the Purchaser nor GRDG Holdings
owned on November 22, 1999 are tendered in response to the Offer and not
withdrawn, following the satisfaction or waiver of the conditions described
below under "Conditions to the Merger", the Purchaser will be merged into the
Company, which will be the surviving corporation of the Merger (the "Surviving
Corporation"). As a result of the Merger (i) the stockholders of the Purchaser
will become the sole stockholders of the Company, and (ii) all the pre-Merger
stockholders of the Company, other than the Purchaser and its stockholders
(including GRDG Holdings), will receive cash equal to the Offer Price (i.e.,
$11.50 per share).
Recommendation. The Merger Agreement states that the Company's Board of
Directors has (i) determined that the Merger Agreement and the transactions
contemplated by it are fair to and in the best interests of the Company and its
stockholders and (ii) resolved to recommend that the Company's stockholders
accept the Offer, tender their Shares in response to the Offer and adopt and
approve the Merger Agreement and the Merger. The Board may withdraw, modify or
amend its recommendation if its legal counsel advises the Board in writing that
its failure to do so could reasonably be expected to be a breach of the
directors' fiduciary duties under applicable law. Each of the directors of the
Company who has not already exchanged his or her shares for interests in GRDG
Holdings has informed the Purchaser that he or she intends to tender and sell
his or her shares in response to the Offer, except that if sales in response to
the tender offer might result in liability under Section 16(b) of the Exchange
Act, the director will vote his or her Shares in favor of the Merger,
Stock of the Company. AT THE EFFECTIVE TIME, (a) EACH COMMON SHARE WHICH
IS NOT OWNED BY THE PURCHASER OR GRDG HOLDINGS WILL BECOME THE RIGHT TO RECEIVE
$11.50 IN CASH, OR ANY OTHER PRICE PER SHARE PAID WITH REGARD TO THE COMMON
SHARES TENDERED IN RESPONSE TO THE OFFER (WHICH MAY NOT BE LESS THAN $11.50 PER
SHARE) AND (b) EACH SHARE OWNED BY THE PURCHASER OR GRDG HOLDINGS, OR BY THE
COMPANY OR ITS SUBSIDIARIES, WILL BE CANCELLED AND NO PAYMENT WILL BE MADE WITH
RESPECT TO THOSE SHARES.
Stock of the Purchaser. At the Effective Time, each share of stock of the
Purchaser which is outstanding immediately before the Effective Time will be
converted into and become one share of the same class of stock of the Surviving
Corporation. Therefore, the stockholders of the Purchaser will become the sole
stockholders of the Company.
Company Options and Warrants. At the Effective Time, each outstanding
option or warrant issued by the Company will become the right to receive (i) the
amount, if any, by which the Offer Price exceeds the
20
<PAGE> 23
exercise price of the option or warrant, times (ii) the number of Common Shares
issuable upon exercise of the option or warrant in full.
Stock Purchase Plan. The Company has a Stock Purchase Plan to which
employees make periodic contributions, which are used quarterly to purchase
Common Shares from the Company for 85% of their market price. Participants will
receive $11.50 for each $9.775 in their accounts at the time of the Merger.
Stockholder Vote Required to Approve Merger. Under the DGCL, the
affirmative vote of holders of a majority of the outstanding Shares (including
any Shares owned by the Purchaser) is required to approve the Merger. GRDG
Holdings already owns 30.9% of the outstanding Common Shares and the Merger will
not be presented to the stockholders unless the Purchaser has acquired through
the Offer at least 51% of the remaining Common Shares. Therefore, if the Merger
is presented to the stockholders for approval, the Purchaser and its affiliates
will be able to cause the Merger to be approved, even if no other stockholders
vote for it. If the Purchaser acquires at least 90% of the outstanding shares,
stockholder approval will not be required under Section 253 of the DGCL.
Stockholders Meeting. If approval by the Company's stockholders is
required in order to consummate the Merger and, if the Shares acquired by the
Purchaser through the Offer total at least 51% of the outstanding Common Shares
which neither the Purchaser nor GRDG Holdings owned on November 22, 1999, the
Company will hold a special meeting of its stockholders as soon as practicable
after the Expiration Time for the purpose of adopting the Merger Agreement and
approving the Merger.
Amendment of Rights Agreement. The Company amended its Amended and
Restated Rights Agreement, dated as of July 14, 1999, with ChaseMellon
Shareholder Services, L.L.C. (the "Rights Agreement"), to exclude GRDG Holdings,
its members (as such) and the Purchaser from the persons whose acquisitions of
Common Shares could cause Rights to be distributed and become exercisable under
the Rights Agreement. Therefore, neither the Offer nor the Merger will cause
there to be a Distribution Date under the Rights Agreement.
Conditions to the Merger. Neither the Company nor the Purchaser is
contractually obligated to complete the Merger unless at least 51% of the
outstanding Common Shares that neither the Purchaser nor GRDG Holdings owned on
November 22, 1999 are tendered in response to the Offer and not withdrawn. If
that occurs, the Purchaser and GRDG Holdings will be contractually obligated to
vote in favor of the Merger. The obligations of the Company to carry out the
Merger will be conditioned on the Merger's being approved by the holders of a
majority of the outstanding Shares. In addition, the obligations of the Company
and of the Purchaser to complete the Merger are subject to the conditions that:
(a) the representations and warranties of the Purchaser and the Company
contained in the Merger Agreement will, except as contemplated by the Merger
Agreement, be true and correct in all material respects at the Merger Date; (b)
the Purchaser and the Company will have fulfilled in all material respects all
its obligations under the Merger Agreement required to have been fulfilled on or
before the Merger Date; (c) no order will have been entered by any court or
governmental authority and be in force which invalidates the Merger Agreement or
restrains the Company or the Purchaser from completing the transactions
contemplated by the Merger Agreement; and (d) if stockholder approval of the
Merger is required by applicable law or by the rules of the Nasdaq National
Market (if they are applicable), the Merger will have been approved by the
holders of at least a majority of the outstanding Shares. Furthermore, the
obligations of the Purchaser to complete the Merger are subject to the following
additional conditions that: (a) no action will be pending against the Company,
the Purchaser, GRDG Holdings or any of GRDG Holdings' members relating to the
transactions which are the subject of the Merger Agreement which represents
reasonable likelihood of resulting in an award of damages against the Company or
the Purchaser which would be material after the Merger to the surviving
corporation and its subsidiaries taken as a whole or an award of damages against
GRDG Holdings or a member of GRDG Holdings which would be material to GRDG
Holdings or any of its members; and (b) if stockholder approval of the Merger is
required by applicable law or by the rules of the Nasdaq National Market (if
they are applicable), the Effective Time of the Merger will occur not later than
120 days after the Expiration Time of the Offer unless the Effective Time is
delayed until after then because of the actions of the Purchaser or its
21
<PAGE> 24
Affiliates (other than the Company and its subsidiaries), or because of the
Purchaser's failure to fulfill obligations under the Merger Agreement.
Termination of the Merger Agreement. The Merger Agreement may be
terminated at any time prior to the Effective Time of the Merger, whether before
or after approval of the terms of the Merger Agreement by the stockholders of
the Company:
(1) by mutual consent of the Company and the Purchaser;
(2) by the Purchaser if, without fault of the Purchaser, the Effective
Time of the Merger is later than 120 days after the Expiration Time;
(3) by the Company if (i) any of the representations and warranties of
the Purchaser contained in the Merger Agreement was not complete and
accurate in all material respects on the date of the Merger Agreement or
(ii) any of the conditions to the Company's obligations to complete the
Merger are not satisfied or waived by the Company prior to or on the date
of the Merger;
(4) by the Purchaser if (i) any of the representations or warranties
of the Company contained in the Merger Agreement was not complete and
accurate in all material respects on the date of the Merger Agreement, or
(ii) any of the conditions to the Purchaser's obligations to complete the
Merger are not satisfied or waived by the Purchaser prior to or on the date
of the Merger;
(5) by the Company if (A) it receives a Firm Proposal or a potential
acquiror commences a cash tender offer for all the Company's outstanding
stock (other than that already owned by potential acquiror), (B) within 10
business days after the Company receives the Firm Proposal or the tender
offer is commenced, the Company's Board of Directors determines the Firm
Proposal or the tender offer is a Superior Proposal and resolves to accept
the Superior Proposal or to recommend that stockholders tender their shares
in response to the Superior Proposal unless the Purchaser will increase the
Offer Price to an amount at least as great as that offered in the Superior
Proposal, and (C) the Company has given the Purchaser at least 5 business
days' prior notice (i) of the terms of the Superior Proposal (including the
consideration per Share, valuing non-cash consideration as provided in the
Merger Agreement, the Company's stockholders would receive as a result of
the Superior Proposal), and (ii) that unless the Purchaser increases the
Offer Price to an amount per share at least as great as the consideration
per share the Company's stockholders would receive as a result of the
Superior Proposal, the Merger Agreement will terminate as set forth in the
notice and (E) the Company has paid the Purchaser $3,850,000 million, and
reimbursed or agreed to reimburse the Purchaser for its out of pocket
expenses incurred in connection with the Merger Agreement and the
transactions contemplated by it up to a maximum amount of $1,285,000. A
"Superior Proposal" is an Acquisition Proposal which (A) would result in
the Company's stockholders receiving consideration which is greater than
the Offer Price, (B) is not subject to the outcome of due diligence or any
other form of investigation, (C) is not subject to a financing contingency
and is from a proposed acquiror which the Board determines in good faith,
after consultation with its independent financial advisor, has the
financial resources necessary to carry out the transaction and (D) the
Board determines in good faith after consultation with its independent
financial advisor, to be more favorable to the Company's stockholders than
the Offer and the Merger.
The Company will not be able to withdraw a notice that it will terminate
the Merger Agreement which it gives as described in condition (5) unless the
Purchaser consents to the withdrawal.
Effect of Termination of the Merger Agreement. If the Merger Agreement is
terminated, neither the Company nor the Purchaser will be required to complete
the Merger. Termination of the Merger Agreement will not relieve either party of
liability for any breach of the Merger Agreement which occurs before the Merger
Agreement is terminated. If the Merger Agreement is terminated after the
Purchaser has accepted Shares tendered in response to the Offer, the termination
will not affect the Purchaser's purchase of the Shares it has accepted or its
obligation to pay for those Shares.
Acquisition Proposals. The Merger Agreement contains prohibitions against
the Company's soliciting, or authorizing its officers, directors, employees or
agents to solicit, acquisition proposals, and regarding what
22
<PAGE> 25
the Company may do if it receives unsolicited acquisition proposals. It permits
the Company to furnish non-public information (after receiving a Confidentiality
Agreement) to, and to enter into discussions and negotiations with, a person who
submits an unsolicited proposal which the Special Committee determines, after
consultation with its financial advisor would, if consummated, result in the
stockholders' receiving consideration which is greater than the Offer Price and
would be more favorable to the stockholders than the Offer.
Board of Directors. The members of the Board of Directors of the Purchaser
immediately before the Effective Time will be the members of the Board of
Directors of the Surviving Corporation after the Effective Time and will hold
office in accordance with the by-laws of the Surviving Corporation.
Representations and Warranties. The Merger Agreement contains various
customary representations and warranties.
Other provisions. The Merger Agreement also contains provisions (i)
requiring the Company to operate its business in the ordinary course, including
maintaining the goodwill of its business and maintaining its assets in good
condition, limiting the Company's borrowings and commitments for capital
expenditures, precluding the Company from amending or entering into employment
or severance agreements, and precluding the Company from paying dividends (other
than payments by subsidiaries of the Company to the Company or to other wholly
owned subsidiaries of the Company) or taking other steps regarding its stock,
until the Effective Time and (ii) requiring the Purchaser (and the Surviving
Corporation) to indemnify present and former directors, officers or employees of
the Company and its subsidiaries against liability rising out of their service
as directors, officers or employees of the Company or its subsidiaries.
Appraisal Rights. If the Merger is consummated, holders of Shares at the
Effective Time of the Merger will have rights pursuant to Section 262 of the
DGCL to dissent and demand appraisal of their Shares. Under Section 262,
dissenting stockholders who comply with the applicable statutory procedures will
be entitled to receive a judicial determination of the fair value of their
Shares (exclusive of any element of value arising from the Merger) and to
receive payment of that fair value in cash, together with a fair rate of
interest, if any. The statutory procedures include notifying the Company prior
to the meeting at which the Company's stockholders vote on the Merger that the
particular stockholder intends to exercise dissenter's rights and giving that
stockholder's name and address. Any judicial determination of the fair value of
Shares could be more or less than the price per Share to be paid in the Merger.
The summary of Section 262 in the preceding paragraph is not complete. A
copy of Section 262 is reprinted as Exhibit II to this Offer to Purchase. You
should read Section 262 in its entirety if you are considering the possibility
of seeking appraisal of your Shares.
17. DIVIDENDS AND DISTRIBUTIONS. The Merger Agreement prohibits the
Company from paying any dividends or making other distributions with regard to
its stock or from issuing any Common Shares, until the Effective Time of the
Merger.
18. CERTAIN LEGAL MATTERS; REGULATORY APPROVALS.
General. Except as otherwise disclosed in this Offer to Purchase, based on
the Company's representations and warranties in the Merger Agreement and a
review of publicly available filings by the Company with the Commission, the
Purchaser is not aware of (i) any license or regulatory permit that appears to
be material to the business of the Company and its subsidiaries, taken as a
whole, that might be adversely affected by the acquisition of Shares by the
Purchaser pursuant to the Offer or by the Merger or (ii) any approval or other
action by any governmental, administrative or regulatory agency or authority,
domestic or foreign, that would be required for the Purchaser to acquire and own
Shares.
Going Private Transactions. The Commission has adopted Rule 13e-3 under
the Exchange Act, which is applicable to certain "going private" transactions.
This Offer to Purchase contains information required by Rule 13e-3. Also, the
Purchaser, GRDG Holdings and the Three Cities Funds have filed with the
Commission a Transaction Statement on Schedule 13E-3. The Schedule 13E-3 and any
exhibits or
23
<PAGE> 26
amendments to it may be inspected at, and copies obtained from, the places
described in Section 13 (except that they will not be available at the regional
offices of the Commission).
Antitrust Compliance. The Company and the Purchaser (or GRDG Holdings) are
not required to make a filing under the Hart-Scott-Rodino Antitrust Improvements
Act of 1976 (the "HSR Act") with regard to the Offer or the Merger. The HSR Act
requires that, before an acquisition involving companies which exceed specified
sizes can take place, information must be provided to the FTC and to the
Antitrust Division of the United States Department of Justice, and specified
waiting periods must expire or be terminated by the FTC or the Antitrust
Division. Because the Purchaser and GRDG Holdings are newly formed for the
purpose of acquiring the Company, and because nobody owns 50% or more of GRDG
Holdings, no filing under the HSR Act will be required with regard to the Offer
or to the Merger.
State Takeover Statutes. The Company is incorporated under the laws of
Delaware. Section 203 of the DGCL limits the ability of a Delaware corporation
to engage in business combinations with "interested stockholders" (defined
generally as any beneficial owner of 15% or more of the outstanding voting stock
of the corporation) unless, among other things, the corporation's board of
directors has given its prior approval to either the business combination or the
transaction which resulted in the stockholder becoming an "interested
stockholder." Before GRDG Holdings acquired any Common Shares, the Board
approved the acquisition by GRDG Holdings and by the Purchaser of up to 40% of
the outstanding Common Shares. Further, the board has approved the Purchaser's
acquiring Shares through the Offer without limitation as to amount and,
therefore, Section 203 of the DGCL is inapplicable to the purchase of Shares
from the Funds, the Offer and the Merger.
A number of other states have adopted laws and regulations applicable to
attempts to acquire securities of corporations which are incorporated, or have
substantial assets, stockholders, principal executive offices or principal
places of business, or whose business operations otherwise have substantial
economic effects, in such states. In 1982, in Edgar v. MITE Corp., the Supreme
Court of the United States invalidated on constitutional grounds the Illinois
Business Takeover Statute, which, as a matter of state securities law, made
takeovers of corporations meeting certain requirements more difficult. However,
in 1987, in CTS Corp. v. Dynamics Corp. of America, the Supreme Court held that
the State of Indiana may, as a matter of corporate law, and, in particular, with
respect to those aspects of corporate law concerning corporate governance,
constitutionally disqualify a potential acquiror from voting on the affairs of a
target corporation without the prior approval of the remaining stockholders. The
state law before the Supreme Court was by its terms applicable only to
corporations that had a substantial number of stockholders in the state and were
incorporated there.
19. FEES AND EXPENSES. Except as set forth below, none of the Purchaser,
GRDG Holdings or the Three Cities Funds will pay any fees or commissions to any
broker, dealer or other person for soliciting tenders of Shares pursuant to the
Offer.
The Purchaser has retained D.F. King & Co., Inc. to act as the Information
Agent in connection with the Offer. The Information Agent may contact holders of
Shares by mail, telephone, facsimile, telegraph and personal interviews and may
request brokers, dealers and other nominee stockholders to forward materials
relating to the Offer to beneficial owners of Shares. The Information Agent will
receive reasonable and customary compensation together with reimbursement for
its reasonable out-of-pocket expenses and will be indemnified against certain
liabilities and expenses, including certain liabilities under the federal
securities laws.
In addition, the Purchaser has retained ChaseMellon Shareholder Services,
L.L.C. as the Depositary. The Depositary has not been retained to make
solicitations or recommendations in its role as Depositary. The Depositary will
receive reasonable and customary compensation for its services, will be
reimbursed for certain reasonable out-of-pocket expenses and will be indemnified
against certain liabilities and expenses. Brokers, dealers, commercial banks and
trust companies will be reimbursed by the Purchaser for customary mailing and
handling expenses incurred by them in forwarding offering material to their
customers.
20. MISCELLANEOUS. The Purchaser is not aware of any jurisdiction where
the making of the Offer is prohibited by any administrative or judicial action
or pursuant to any state statute. If the Purchaser becomes
24
<PAGE> 27
aware of any state statute prohibiting the making of the Offer or the acceptance
of the Shares which are tendered in response to the Offer, the Purchaser will
make a good faith effort to comply with that state statute. If, after a good
faith effort the Purchaser cannot comply with any such state statute, the Offer
will not be made to (nor will tenders be accepted from or on behalf of) the
holders of Shares in such state.
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR MAKE ANY
REPRESENTATION ON BEHALF OF THE PURCHASER WHICH IS NOT CONTAINED IN THIS OFFER
TO PURCHASE OR IN THE LETTER OF TRANSMITTAL, AND IF GIVEN OR MADE, THAT
INFORMATION OR REPRESENTATION MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED.
The Purchaser, GRDG Holdings and the Three Cities Funds have filed with the
Commission a Tender Offer Statement on Schedule 14D-1 (the "Schedule 14D-1"),
together with exhibits, pursuant to Rule 14d-3 of the General Rules and
Regulations under the Exchange Act, containing additional information with
respect to the Offer, and the Funds or the Purchaser may file amendments to the
Schedule 14D-1. The Schedule 14D-1 and any amendments to it, including exhibits,
may be inspected at, and copies may be obtained from, the places described in
Section 13 (except that they will not be available at the regional offices of
the Commission).
GR ACQUISITION CORPORATION
November 23, 1999
25
<PAGE> 28
SCHEDULE I
CERTAIN INFORMATION CONCERNING THE DIRECTORS AND EXECUTIVE
OFFICERS OF THE THREE CITIES FUNDS, GRDG HOLDINGS AND THE PURCHASER
1. Directors and Executive Officers of the Three Cities Funds. Set forth
below is the name, current business address, citizenship and the present
principal occupation or employment and material occupations, positions, offices
or employments for the past five years of each managing director of Three Cities
Research, Inc., the advisor to the Three Cities Funds. The principal address of
each of the Three Cities Funds and, unless otherwise indicated below, the
current business address for each individual listed below is c/o Three Cities
Research, Inc., 650 Madison Avenue, New York, New York 10022. Unless otherwise
indicated, each such person is a citizen of the United States.
<TABLE>
<CAPTION>
PRINCIPAL OCCUPATION OR EMPLOYMENT WITH THREE CITIES RESEARCH, INC.
NAME DURING PAST FIVE YEARS, POSITIONS WITH THE THREE CITIES FUND AND CERTAIN DIRECTORSHIPS
- ---- --------------------------------------------------------------------------------------
<S> <C>
J. William Uhrig....... Mr. Uhrig is a Director and is the Secretary of Three Cities Research, Inc. Mr. Uhrig
has been Director of Three Cities Research, Inc. since 1991. Mr. Uhrig joined Three
Cities Research, Inc. in 1984. From January 1993 to January 1998, Mr. Uhrig served on
the Board of Directors of MLX Corp., a holding company which was a predecessor of
Morton Industrial Group. From January 1997 to October 1998, Mr. Uhrig served on the
Board of Directors of Family Bargain Corporation.
Willem F.P. de Vogel... Mr. de Vogel is a Director and is the President of Three Cities Research, Inc. Mr. de
Vogel has been the President of Three Cities Research, Inc. since 1982. Mr. de Vogel
is a Director of Computer Associates International and Morton Industrial Group. Mr. de
Vogel is a citizen of The Netherlands.
Thomas G. Weld......... Mr. Weld is a Director and is the Treasurer of Three Cities Research, Inc. which he
joined in 1993. From 1988 until 1993, Mr. Weld was an associate with McKinsey and
Company, a management consulting firm. Mr. Weld was a director of Family Bargain
Corporation from January 1997 to December 1998.
</TABLE>
I-1
<PAGE> 29
2. Directors and Executive Officers of GRDG Holdings. Set forth below is
the name, current business address, citizenship and the present principal
occupation or employment and material occupations, positions, offices or
employments for the past five years of each director and executive officer of
GRDG Holdings. The principal address of GRDG Holdings and, unless otherwise
indicated below, the current business address for each individual listed below
is c/o Three Cities Research, Inc., 650 Madison Avenue, New York, New York
10022. Unless otherwise indicated, each such person is a citizen of the United
States.
<TABLE>
<CAPTION>
PRINCIPAL OCCUPATION OR EMPLOYMENT DURING PAST
NAME FIVE YEARS, POSITIONS WITH THE PURCHASER AND CERTAIN DIRECTORSHIPS
- ---- ------------------------------------------------------------------
<S> <C>
J. William Uhrig....... Mr. Uhrig is a Director and is the President and Treasurer of GRDG
Holdings. Mr. Uhrig's biographical information is set forth above.
Armand Shapiro......... Mr. Shapiro is a Director of GRDG Holdings. Mr. Shapiro's address
is 600 Travis Street, Houston, Texas 77002. From June 1990 until
June 1, 1999, Mr. Shapiro was the chief executive officer of the
Company. Since June 1, 1999, he has been the Chairman of the
Company, but not its chief executive officer. He also is a Senior
Advisor to Summit Capital Group, LLC. He continues to be a
director of the Company and is also a director of SSP Partners,
Inc., which owns and operates convenience stores.
Jeanette Welsh......... Ms. Welsh is a Director and is the Secretary of GRDG Holdings. Ms.
Welsh has been employed by Three Cities Research, Inc. since
October 1999. From April 1998 to October 1999, Ms. Welsh practiced
law at the law firm of Epstein, Becker & Green, P.C. Ms. Welsh was
the Administrative Officer at Societe Generale Securities
Corporation from November 1992 to March 1998.
</TABLE>
3. Directors and Executive Officers of Purchaser. Set forth below is the
name, current business address, citizenship and the present principal occupation
or employment and material occupations, positions, offices or employments for
the past five years of each director and executive officer of Purchaser. The
principal address of Purchaser and, unless otherwise indicated below, the
current business address for each individual listed below is c/o Three Cities
Research, Inc., 650 Madison Avenue, New York, New York 10022. Unless otherwise
indicated, each such person is a citizen of the United States.
<TABLE>
<CAPTION>
PRINCIPAL OCCUPATION OR EMPLOYMENT DURING PAST
NAME FIVE YEARS, POSITIONS WITH THE PURCHASER AND CERTAIN DIRECTORSHIPS
- ---- ------------------------------------------------------------------
<S> <C>
J. William Uhrig....... Mr. Uhrig is a Director and is the President and Treasurer of the
Purchaser. Mr. Uhrig's biographical information is set forth
above.
Jeanette Welsh......... Ms. Welsh is a Director and is the Secretary of the Purchaser. Ms.
Welsh's biographical information is set forth above.
</TABLE>
I-2
<PAGE> 30
SCHEDULE II
SECTION 262 OF THE DELAWARE GENERAL CORPORATION LAW
262 APPRAISAL RIGHTS. -- (a) Any stockholder of a corporation of this State
who holds shares of stock on the date of the making of a demand pursuant to
subsection (d) of this section with respect to such shares, who continuously
holds such shares through the effective date of the merger or consolidation, who
has otherwise complied with subsection (d) of this section and who has neither
voted in favor of the merger or consolidation nor consented thereto in writing
pursuant to sec.228 of this title shall be entitled to an appraisal by the Court
of Chancery of the fair value of the stockholders' shares of stock under the
circumstances described in subsections (b) and (c) of this section. As used in
this section, the word "stockholder" means a holder of record of stock in a
stock corporation and also a member of record of a nonstock corporation; the
words "stock" and "share" mean and include what is ordinarily meant by those
words and also membership or membership interest of a member of a nonstock
corporation; and the words "depository receipt" mean a receipt or other
instrument issued by a depository representing an interest in one or more
shares, or fractions thereof, solely of stock of a corporation, which stock is
deposited with the depository.
(b) Appraisal rights shall be available for the shares of any class or
series of stock of a constituent corporation in a merger or consolidation to be
effected pursuant to sec.251 (other than a merger effected pursuant to
sec.251(g) of this title), sec.252, sec.254, sec.257, sec.258, sec.263 or
sec.264 of this title:
(1) Provided, however, that no appraisal rights under this section
shall be available for the shares of any class or series of stock, which
stock, or depository receipts in respect thereof, at the record date fixed
to determine the stockholders entitled to receive notice of and to vote at
the meeting of stockholders to act upon the agreement of merger or
consolidation, were either (i) listed on a national securities exchange or
designated as a national market system security on an interdealer quotation
system by the National Association of Securities Dealers, Inc. or (ii) held
of record by more than 2,000 holders; and further provided that no
appraisal rights shall be available for any shares of stock of the
constituent corporation surviving a merger if the merger did not require
for its approval the vote of the stockholders of the surviving corporation
as provided in subsection (f) of sec.251 of this title.
(2) Notwithstanding paragraph (1) of this subsection, appraisal rights
under this section shall be available for the shares of any class or series
of stock of a constituent corporation if the holders thereof are required
by the terms of an agreement of merger or consolidation pursuant to
sec.sec.251, 252, 254, 257, 258, 263 and 264 of this title to accept for
such stock anything except:
a. Shares of stock of the corporation surviving or resulting from
such merger or consolidation, or depository receipts in respect thereof;
b. Shares of stock of any other corporation, or depository receipts
in respect thereof, which shares of stock (or depository receipts in
respect thereof) or depository receipts at the effective date of the
merger or consolidation will be either listed on a national securities
exchange or designated as a national market system security on an
interdealer quotation system by the National Association of Securities
Dealers, Inc. or held of record by more than 2,000 holders;
c. Cash in lieu of fractional shares or fractional depository
receipts described in the foregoing subparagraphs a. and b. of this
paragraph; or
d. Any combination of the shares of stock, depository receipts and
cash in lieu of fractional shares or fractional depository receipts
described in the foregoing subparagraphs a., b. and c. of this
paragraph.
(3) In the event all of the stock of a subsidiary Delaware corporation
party to a merger effected under sec.253 of this title is not owned by the
parent corporation immediately prior to the merger, appraisal rights shall
be available for the shares of the subsidiary Delaware corporation.
(c) Any corporation may provide in its certificate of incorporation that
appraisal rights under this section shall be available for the shares of any
class or series of its stock as a result of an amendment to its certificate
II-1
<PAGE> 31
of incorporation, any merger or consolidation in which the corporation is a
constituent corporation or the sale of all or substantially all of the assets of
the corporation. If the certificate of incorporation contains such a provision,
the procedures of this section, including those set forth in subsections (d) and
(e) of this section, shall apply as nearly as is practicable.
(d) Appraisal rights shall be perfected as follows:
(1) If a proposed merger or consolidation for which appraisal rights
are provided under this section is to be submitted for approval at a
meeting of stockholders, the corporation, not less than 20 days prior to
the meeting, shall notify each of its stockholders who was such on the
record date for such meeting with respect to shares for which appraisal
rights are available pursuant to subsections (b) or (c) hereof that
appraisal rights are available for any or all of the shares of the
constituent corporations, and shall include in such notice a copy of this
section. Each stockholder electing to demand the appraisal of such
stockholder's shares shall deliver to the corporation, before the taking of
the vote on the merger or consolidation, a written demand for appraisal of
such stockholder's shares. Such demand will be sufficient if it reasonably
informs the corporation of the identity of the stockholder and that the
stockholder intends thereby to demand the appraisal of such stockholder's
shares. A proxy or vote against the merger or consolidation shall not
constitute such a demand. A stockholder electing to take such action must
do so by a separate written demand as herein provided. Within 10 days after
the effective date of such merger or consolidation, the surviving or
resulting corporation shall notify each stockholder of each constituent
corporation who has complied with this subsection and has not voted in
favor of or consented to the merger or consolidation of the date that the
merger or consolidation has become effective; or
(2) If the merger or consolidation was approved pursuant to sec.228 or
sec.253 of this title, each constituent corporation, either before the
effective date of the merger or consolidation or within ten days
thereafter, shall notify each of the holders of any class or series of
stock of such constituent corporation who are entitled to appraisal rights
of the approval of the merger or consolidation and that appraisal rights
are available for any or all shares of such class or series of stock of
such constituent corporation, and shall include in such notice a copy of
this section; provided that, if the notice is given on or after the
effective date of the merger or consolidation, such notice shall be given
by the surviving or resulting corporation to all such holders of any class
or series of stock of a constituent corporation that are entitled to
appraisal rights. Such notice may, and, if given on or after the effective
date of the merger or consolidation, shall, also notify such stockholders
of the effective date of the merger or consolidation. Any stockholder
entitled to appraisal rights may, within 20 days after the date of mailing
of such notice, demand in writing from the surviving or resulting
corporation the appraisal of such holder's shares. Such demand will be
sufficient if it reasonably informs the corporation of the identity of the
stockholder and that the stockholder intends thereby to demand the
appraisal of such holder's shares. If such notice did not notify
stockholders of the effective date of the merger or consolidation, either
(i) each such constituent corporation shall send a second notice before the
effective date of the merger or consolidation notifying each of the holders
of any class or series of stock of such constituent corporation that are
entitled to appraisal rights of the effective date of the merger or
consolidation or (ii) the surviving or resulting corporation shall send
such a second notice to all such holders on or within 10 days after such
effective date; provided, however, that if such second notice is sent more
than 20 days following the sending of the first notice, such second notice
need only be sent to each stockholder who is entitled to appraisal rights
and who has demanded appraisal of such holder's shares in accordance with
this subsection. An affidavit of the secretary or assistant secretary or of
the transfer agent of the corporation that is required to give either
notice that such notice has been given shall, in the absence of fraud, be
prima facie evidence of the facts stated therein. For purposes of
determining the stockholders entitled to receive either notice, each
constituent corporation may fix, in advance, a record date that shall be
not more than 10 days prior to the date the notice is given, provided, that
if the notice is given on or after the effective date of the merger or
consolidation, the record date shall be such effective date. If no record
date is fixed and the notice is given prior to the effective date, the
record date shall be the close of business on the day next preceding the
day on which the notice is given.
(e) Within 120 days after the effective date of the merger or
consolidation, the surviving or resulting corporation or any stockholder who has
complied with subsections (a) and (d) hereof and who is otherwise
II-2
<PAGE> 32
entitled to appraisal rights, may file a petition in the Court of Chancery
demanding a determination of the value of the stock of all such stockholders.
Notwithstanding the foregoing, at any time within 60 days after the effective
date of the merger or consolidation, any stockholder shall have the right to
withdraw such stockholder's demand for appraisal and to accept the terms offered
upon the merger or consolidation. Within 120 days after the effective date of
the merger or consolidation, any stockholder who has complied with the
requirements of subsections (a) and (d) hereof, upon written request, shall be
entitled to receive from the corporation surviving the merger or resulting from
the consolidation a statement setting forth the aggregate number of shares not
voted in favor of the merger or consolidation and with respect to which demands
for appraisal have been received and the aggregate number of holders of such
shares. Such written statement shall be mailed to the stockholder within 10 days
after such stockholder's written request for such a statement is received by the
surviving or resulting corporation or within 10 days after expiration of the
period for delivery of demands for appraisal under subsection (d) hereof,
whichever is later.
(f) Upon the filing of any such petition by a stockholder, service of a
copy thereof shall be made upon the surviving or resulting corporation, which
shall within 20 days after such service file in the office of the Register in
Chancery in which the petition was filed a duly verified list containing the
names and addresses of all stockholders who have demanded payment for their
shares and with whom agreements as to the value of their shares have not been
reached by the surviving or resulting corporation. If the petition shall be
filed by the surviving or resulting corporation, the petition shall be
accompanied by such a duly verified list. The Register in Chancery, if so
ordered by the Court, shall give notice of the time and place fixed for the
hearing of such petition by registered or certified mail to the surviving or
resulting corporation and to the stockholders shown on the list at the addresses
therein stated. Such notice shall also be given by 1 or more publications at
least 1 week before the day of the hearing, in a newspaper of general
circulation published in the City of Wilmington, Delaware or such publication as
the Court deems advisable. The forms of the notices by mail and by publication
shall be approved by the Court, and the costs thereof shall be borne by the
surviving or resulting corporation.
(g) At the hearing on such petition, the Court shall determine the
stockholders who have complied with this section and who have become entitle to
appraisal rights. The Court may require the stockholders who have demanded an
appraisal for their shares and who hold stock represented by certificates to
submit their certificates of stock to the Register in Chancery for notation
thereon of the pendency of the appraisal proceedings; and if any stockholder
fails to comply with such direction, the Court may dismiss the proceedings as to
such stockholder.
(h) After determining the stockholders entitled to an appraisal, the Court
shall appraise the shares, determining their fair value exclusive of any element
of value arising from the accomplishment or expectation of the merger or
consolidation, together with a fair rate of interest, if any, to be paid upon
the amount determined to be the fair value. In determining such fair value, the
Court shall take into account all relevant factors. In determining the fair rate
of interest, the Court may consider all relevant factors, including the rate of
interest which the surviving or resulting corporation would have had to pay to
borrow money during the pendency of the proceeding. Upon application by the
surviving or resulting corporation or by any stockholder entitled to participate
in the appraisal proceeding, the Court may, in its discretion, permit discovery
or other pretrial proceedings and may proceed to trial upon the appraisal prior
to the final determination of the stockholder entitled to an appraisal. Any
stockholder whose name appears on the list filed by the surviving or resulting
corporation pursuant to subsection (f) of this section and who has submitted
such stockholder's certificates of stock to the Register in Chancery, if such is
required, may participate fully in all proceedings until it is finally
determined that such stockholder is not entitled to appraisal rights under this
section.
(i) The Court shall direct the payment of the fair value of the shares,
together with interest, if any, by the surviving or resulting corporation to the
stockholders entitled thereto. Interest may be simple or compound, as the Court
may direct. Payment shall be so made to each such stockholder, in the case of
holders of uncertificated stock forthwith, and the case of holders of shares
represented by certificates upon the surrender to the corporation of the
certificates representing such stock. The Court's decree may be enforced as
other decrees in the Court of Chancery may be enforced, whether such surviving
or resulting corporation be a corporation of this State or of any state.
II-3
<PAGE> 33
(j) The costs of the proceeding may be determined by the Court and taxed
upon the parties as the Court deems equitable in the circumstances. Upon
application of a stockholder, the Court may order all or a portion of the
expenses incurred by any stockholder in connection with the appraisal
proceeding, including, without limitation, reasonable attorney's fees and the
fees and expenses of experts, to be charged pro rata against the value of all
the shares entitled to an appraisal.
(k) From and after the effective date of the merger or consolidation, no
stockholder who has demanded appraisal rights as provided in subsection (d) of
this section shall be entitled to vote such stock for any purpose or to receive
payment of dividends or other distributions on the stock (except dividends or
other distributions payable to stockholders of record at a date which is prior
to the effective date of the merger or consolidation); provided, however, that
if no petition for an appraisal shall be filed within the time provided in
subsection (e) of this section, or if such stockholder shall deliver to the
surviving or resulting corporation a written withdrawal of such stockholder's
demand for an appraisal and an acceptance of the merger or consolidation, either
within 60 days after the effective date of the merger or consolidation as
provided in subsection (e) of this section or thereafter with the written
approval of the corporation, then the right of such stockholder to an appraisal
shall cease. Notwithstanding the foregoing, no appraisal proceeding in the Court
of Chancery shall be dismissed as to any stockholder without the approval of the
Court, and such approval may be conditioned upon such terms as the Court deems
just.
(l) The shares of the surviving or resulting corporation to which the
shares of such objecting stockholders would have been converted had they
assented to the merger or consolidation shall have the status of authorized and
unissued shares of the surviving or resulting corporation.
II-4
<PAGE> 34
Facsimile copies of the Letter of Transmittal, properly completed and duly
signed, will be accepted. The Letter of Transmittal, certificates for Shares and
any other required documents should be sent by each stockholder of the Company
or the stockholder's broker, dealer, commercial bank, trust company or other
nominee to the Depositary as follows:
The Depositary for the Offer is:
CHASEMELLON SHAREHOLDER SERVICES, L.L.C.
<TABLE>
<S> <C> <C>
By Registered or By Hand: By Overnight Courier:
Certified Mail:
ChaseMellon Shareholder ChaseMellon Shareholder
ChaseMellon Shareholder Services, L.L.C. Services, L.L.C.
Services, L.L.C. Reorganization Department Reorganization Department
Reorganization Department 120 Broadway, 13th Floor 85 Challenger Road
P.O. Box 3301 New York, NY 10271 Mail Stop -- Reorg
South Hackensack, NJ 07606 Ridgefield Park, NJ 07660
</TABLE>
Facsimile Transmission:
(for Eligible Institutions Only)
(201) 296-4293
For Confirmation Telephone:
(201) 296-4860
Any questions or requests for assistance or additional copies of the Offer
to Purchase, the Letter of Transmittal or the Notice of Guaranteed Delivery may
be directed to the Information Agent at the telephone numbers and location
listed below. You may also contact your broker, dealer, commercial bank or trust
company or other nominee for assistance concerning the Offer.
The Information Agent for the Offer is:
D.F. KING & CO., INC.
77 Water Street
New York, New York 10005-4495
Banks and Brokerage Firms Call Collect: (212) 269-5550
All Others Call Toll Free: (800) 758-5378
<PAGE> 1
LETTER OF TRANSMITTAL
TO TENDER SHARES OF COMMON STOCK
OF
(INCLUDING THE ASSOCIATED PREFERRED STOCK PURCHASE RIGHTS)
GARDEN RIDGE CORPORATION
AT
$11.50 NET PER SHARE
IN RESPONSE TO THE OFFER TO PURCHASE DATED NOVEMBER 23, 1999
OF
GR ACQUISITION CORPORATION
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT,
NEW YORK CITY TIME, ON WEDNESDAY, DECEMBER 22, 1999
UNLESS THE OFFER IS EXTENDED.
The Depositary:
CHASEMELLON SHAREHOLDER SERVICES, L.L.C.
By Facsimile Transaction:
(For Eligible Institutions Only)
(201) 296-4293
For Confirmation Telephone
(201) 296-4860
<TABLE>
<S> <C> <C>
By Mail: By Overnight: By Hand:
Reorganization Department Reorganization Department Reorganization Department
PO Box 3301 85 Challenger Road 120 Broadway
South Hackensack, NJ 07606 Mail Stop - Reorg. 13th Floor
Ridgefield Park, NJ 07660 New York, NY 10271
</TABLE>
DELIVERY OF THIS INSTRUMENT TO AN ADDRESS OTHER THAN AS SET FORTH ABOVE OR
TRANSMISSION OF INSTRUCTIONS VIA A TELEX OR FACSIMILE NUMBER OTHER THAN THE ONES
LISTED ABOVE WILL NOT CONSTITUTE A VALID DELIVERY.
This Letter of Transmittal is to be used to tender shares of common stock
("Shares") of Garden Ridge Corporation (the "Company") in response to a
solicitation of tenders by GR Acquisition Corporation (the "Purchaser"). It must
be used whether certificates evidencing Shares are to be forwarded with this
Letter of Transmittal or whether delivery of Shares is to be made by book-entry
transfer to the account maintained by the Depositary at The Depositary Trust
Company (the "Book-Entry Facility") as described in Section 9 of the Offer to
Purchase. Stockholders whose certificates are not immediately available or who
cannot deliver their confirmation of the book-entry transfer of their Shares
into the Depositary's account at the Book-Entry Facility ("Book-Entry
Confirmation") on or before the Expiration Time may use the guaranteed delivery
procedure described in Section 9 of the Offer to Purchase to tender their
shares. See Instruction 2. DELIVERY OF DOCUMENTS TO THE BOOK-ENTRY FACILITY DOES
NOT CONSTITUTE DELIVERY TO THE DEPOSITARY.
[ ] CHECK HERE IF TENDERED SHARES ARE BEING DELIVERED BY BOOK-ENTRY TRANSFER TO
THE ACCOUNT MAINTAINED BY THE DEPOSITARY AT THE BOOK-ENTRY FACILITY AND
COMPLETE THE FOLLOWING:
Name of Tendering Institution:
----------------------------------------------------------------------------
Account Number
----------------------------------------------------------------------------
Transaction Code Number
----------------------------------------------------------------------------
<PAGE> 2
[ ] 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 Owner(s):
----------------------------------------------------------------------------
Date of Execution of Notice of Guaranteed Delivery:
--------------------------------------------------------------------
Name of Institution which Guaranteed Delivery:
------------------------------------------------------------------------
If delivery is by book-entry transfer, give the following:
Account Number
----------------------------------------------------------------------------
Transaction Code No.
----------------------------------------------------------------------------
- --------------------------------------------------------------------------------
DESCRIPTION OF SHARES TENDERED
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------------------
NAME(S) AND ADDRESS(ES) OF REGISTERED HOLDER(S) CERTIFICATE(S) TENDERED
(PLEASE FILL IN, IF BLANK) (ATTACH ADDITIONAL LIST IF NECESSARY)
- ---------------------------------------------------------------------------------------------------------------------------------
TOTAL NUMBER
OF SHARES NUMBER
CERTIFICATE REPRESENTED BY OF SHARES
NUMBER(S)* CERTIFICATE(S)* TENDERED**
<C> <S> <C> <C>
---------------------------------------------------------------
---------------------------------------------------------------
---------------------------------------------------------------
---------------------------------------------------------------
---------------------------------------------------------------
Total Shares.................................
- ---------------------------------------------------------------------------------------------------------------------------------
</TABLE>
* Need not be completed by stockholders tendering by book-entry transfer.
** Unless otherwise indicated it will be assumed that all Shares described
above are being tendered. See Instruction 4.
- --------------------------------------------------------------------------------
NOTE: SIGNATURES MUST BE PROVIDED BELOW.
PLEASE READ THE ACCOMPANYING INSTRUCTIONS CAREFULLY.
Ladies and Gentlemen:
The undersigned hereby tenders to GR Acquisition Corporation (the
"Purchaser"), a Delaware corporation, shares of common stock (the "Shares"), of
Garden Ridge Corporation (the "Company"), a Delaware corporation, listed above,
in response to the Purchaser's offer to purchase all outstanding Shares at a
price of $11.50 per Share, net to the sellers in cash, upon the terms and
subject to the conditions set forth in the Offer to Purchase dated November 23
(the "Offer to Purchase"), receipt of which is hereby acknowledged, and in this
Letter of Transmittal (which, together with the Offer to Purchase, constitutes
the "Offer").
Subject to, and effective upon, acceptance of the Shares tendered with this
Letter of Transmittal for payment in accordance with the Offer, the undersigned
hereby sells, assigns, and transfers to, or upon the order of, the Purchaser all
right, title and interest in and to all the Shares that are being tendered with
this Letter of Transmittal (and any other Shares or other securities issued or
issuable in respect of those Shares after November 22, 1999 and irrevocably
constitutes and appoints the Depositary the true and lawful agent and
attorney-in-fact of the undersigned with respect to those Shares (and any such
other Shares or securities) with full power of substitution, (that power of
attorney being an irrevocable power coupled with an interest) to (a) deliver
certificates for the Shares (and any such other Shares or securities) or
transfer ownership of the Shares (and any such other Shares or securities) on
the account books maintained by the Book-Entry Facility, together in either case
with all accompanying evidences of transfer and authenticity, to or upon the
order of the Purchaser upon receipt by the Depositary, as the undersigned's
agent, of the purchase price (adjusted, if appropriate, as provided in the Offer
to Purchase), (b) present those Shares (and any such other Shares or securities)
for transfer on the books of the Company and (c) otherwise exercise all rights
of beneficial ownership of the Shares (and any such other Shares or securities),
all in accordance with the terms of the Offer.
<PAGE> 3
The undersigned irrevocably appoints the Purchaser, its officers and its
designees, and each of them, the attorneys-in-fact and proxies of the
undersigned, each with full power of substitution, to vote in such manner as
each such attorney-in-fact and proxy or his or its substitute, in his or its
sole discretion, deems proper, and otherwise act (including acting by written
consent without a meeting) with respect to, all the Shares tendered by this
Letter of Transmittal which have been accepted for payment by the Purchaser
prior to the time of the vote or action (and any other Shares or securities
issued in respect of those Shares after November 22, 1999). This proxy is
irrevocable and is granted in consideration of, and is effective upon, the
deposit by the Purchaser with the Depositary of the purchase price for the
Shares to which it relates, and acceptance of those Shares for payment, in
accordance with the Offer. That acceptance for payment will revoke all prior
proxies granted by the undersigned with regard to those Shares (and any such
other Shares or other securities) and the undersigned will not give any
subsequent proxies with respect to those Shares.
The undersigned represents and warrants that the undersigned has full power
and authority to tender, sell, assign and transfer the Shares tendered by this
Letter of Transmittal (and any other Shares or other securities issued in
respect of those Shares after November 22, 1999) and that, when those Shares are
accepted for payment by the Purchaser, the Purchaser will acquire good and
unencumbered titled to the Shares (and any such other Shares or securities),
free and clear of all liens, restrictions, charges, encumbrances or adverse
claims. The undersigned, upon request, will execute and deliver any additional
documents deemed by the Depositary or the Purchaser to be necessary or desirable
to complete the sale, assignment and transfer of the Shares tendered by this
Letter of Transmittal (and any such other Shares or other securities) to the
Purchaser.
The authority conferred in this Letter of Transmittal will not be affected
by, and will survive, the death or incapacity of the undersigned, and any
obligation of the undersigned under this Letter of Transmittal or otherwise
resulting from the tender of the Shares to which this Letter of Transmittal
relates will be binding upon the successors, assigns, heirs, executors,
administrators and legal representatives of the undersigned. Except as stated in
the Offer to Purchase, the tender made by this Letter of Transmittal is
irrevocable.
The undersigned understands that tenders of Shares pursuant to any one of
the procedures described in Section 9 of the Offer to Purchase and in the
instructions to this Letter of Transmittal will constitute a binding agreement
between the undersigned and the Purchaser upon the terms and subject to the
conditions of the Offer.
Unless otherwise indicated in the box below captioned "Special Payment
Instructions," please issue the check for the purchase price of the Shares
tendered by this Letter of Transmittal, and cause any Shares represented by
certificates accompanying this Letter of Transmittal which are not being
tendered, or are not accepted for payment, in the name(s) of the undersigned.
Similarly, unless otherwise indicated in the box below captioned "Special
Delivery Instructions," please mail the check for the purchase price and deliver
certificates representing any Shares which are not being tendered or are not
accepted for payment (and accompanying documents, as appropriate) to the
undersigned at the address shown below the undersigned's signature. If both the
Special Delivery Instructions and the Special Payment Instructions are
completed, please issue the check for the purchase price and certificates for
any Shares which are not being tendered, or are not accepted for payment, in the
name of, and deliver the check and certificates, or confirmation of transfer of
the Shares at the Book-Entry Facility, to the person or persons indicated. If
the Shares are being delivered by book-entry transfer and the appropriate entry
is made under "Special Payment Instructions," please return any Shares which are
not accepted for payment by crediting the indicated account at the Book-Entry
Facility. The undersigned recognizes that the Purchaser has no obligation
pursuant to the Special Payment Instructions or otherwise to transfer any
tendered Shares which are not accepted for payment from the name of the
registered holder of the Shares to the name of another person.
<PAGE> 4
- ------------------------------------------------------------
SPECIAL PAYMENT INSTRUCTIONS
(SEE INSTRUCTIONS 5, 6 AND 7)
To be completed ONLY if certificates for Shares which are not
tendered or are not purchased and the check for the purchase price of
Shares which are purchased are to be issued in the name of someone other
than the undersigned, or if Shares delivered by book-entry which are not
purchased are to be returned by credit to an account maintained at the
Book-Entry Facility other than that designated above.
Issue [ ] Check [ ] Certificates to:
Name
----------------------------------------------------
(PLEASE PRINT)
Address
--------------------------------------------------
------------------------------------------------------------
(INCLUDE ZIP CODE)
------------------------------------------------------------
(TAX IDENTIFICATION OR SOCIAL SECURITY NUMBER)
[ ] Credit unpurchased Shares delivered by book-entry transfer to the
Book-Entry Facility account set forth below:
------------------------------------------------------------
(ACCOUNT NUMBER)
- ------------------------------------------------------------
- ------------------------------------------------------------
SPECIAL DELIVERY INSTRUCTIONS
(SEE INSTRUCTIONS 5, 6 AND 7)
To be completed ONLY if certificates for Shares which are not
tendered or are not purchased and the check for the purchase price of
Shares which are purchased are to be sent to someone other than the
undersigned, or to the undersigned at an address other than that shown
after the undersigned's signature below.
Mail [ ] Check [ ] Certificates to:
Name
----------------------------------------------------
(PLEASE PRINT)
Address
--------------------------------------------------
------------------------------------------------------------
(INCLUDE ZIP CODE)
------------------------------------------------------------
(TAX IDENTIFICATION OR SOCIAL SECURITY NO.)
------------------------------------------------------------
<PAGE> 5
SIGN HERE
(COMPLETE SUBSTITUTE FORM W-9 ON REVERSE)
- --------------------------------------------------------------------------------
SIGNATURE(S) OF OWNER(S)
Dated: , 199
- -------------------------------------------------------------------------
(Must be signed by registered holder(s) exactly as name(s) appear(s) on stock
certificate(s) or on a security position listing or by person(s) authorized to
become registered holder(s) by certificates and documents transmitted with this
Letter of Transmittal. If signature is by trustees, executors, administrators,
guardians, attorneys-at-fact, agents, officers of corporations or others acting
in a fiduciary or representative capacity, please provide the information
described in Instruction 5.)
Name(s)
- --------------------------------------------------------------------------------
(PLEASE PRINT)
Capacity (full title)
- --------------------------------------------------------------------------------
Address
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
(INCLUDE ZIP CODE)
Area Code and Telephone Number
- --------------------------------------------------------------------------------
Tax Identification or Social Security No.
- ---------------------------------------------------------------------------
(COMPLETE SUBSTITUTE FORM W-9 ON REVERSE)
GUARANTEE OF SIGNATURE(S)
(SEE INSTRUCTIONS 1 AND 5)
Authorized Signature
- --------------------------------------------------------------------------------
Name
- --------------------------------------------------------------------------------
Title
- --------------------------------------------------------------------------------
Name of Firm
- --------------------------------------------------------------------------------
Address
- --------------------------------------------------------------------------------
Area Code and Telephone Number
- --------------------------------------------------------------------------------
Dated: , 199
- -------------------------------------------------------------------------
<PAGE> 6
INSTRUCTIONS
FORMING PART OF THE TERMS AND CONDITIONS OF THE OFFER
1. GUARANTEE OF SIGNATURES. No signature guarantee is required on this
Letter of Transmittal (i) if this Letter of Transmittal is signed by the
registered holder of the Shares tendered by it (which, for purposes of this
document, includes any participant in the Book-Entry Facility whose name appears
on a security position listing as the owner of Shares) unless the holder has
completed either the box entitled "Special Delivery Instructions" or the box
entitled "Special Payment Instructions" on the reverse of this Letter of
Transmittal or (ii) if those Shares are tendered for the account of a firm which
is a bank, broker, dealer, credit union, savings association or other entity
that is a member in good standing of the Securities Transfer Agents Medallion
Program (collectively, "Eligible Institutions"). In all other cases, all
signatures on this Letter of Transmittal must be guaranteed by an Eligible
Institution. See Instruction 5.
2. DELIVERY OF LETTER OF TRANSMITTAL AND CERTIFICATES. This Letter of
Transmittal is to be completed by stockholders either if certificates are being
forwarded with it or if tenders of Shares are to be made in accordance with the
procedures for delivery by book-entry transfer set forth in Section 9 of the
Offer to Purchase. Certificates for all physically tendered Shares, or a
Book-Entry Confirmation confirming book-entry transfer of Shares to an account
of the Depositary, as the case may be, together with a properly completed and
duly executed Letter of Transmittal (or facsimile of one) and any other
documents required by this Letter of Transmittal, must be received by the
Depositary at one of its addresses set forth above on or prior to the Expiration
Time (as defined in Section 7 of the Offer to Purchase). Stockholders whose
certificates for Shares are not immediately available, or who cannot deliver
Book-Entry Confirmation of book entry transfer of the Shares to the Depositary
on or prior to the Expiration Date may tender their Shares by properly
completing and executing a Notice of Guaranteed Delivery in accordance with the
guaranteed delivery procedure described in Section 9 of the Offer to Purchase.
Pursuant to that procedure, (i) the 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 with the Offer to
Purchase, must be received by the Depositary prior to the Expiration Time and
(iii) the certificates for all physically tendered Shares, or Book-Entry
Confirmation of Shares tendered by book-entry transfer, as the case may be,
together with a properly completed and duly executed Letter of Transmittal (or
facsimile of one) and any other documents required by this Letter of
Transmittal, must be received by the Depositary within three Nasdaq National
Market trading days after the date of execution of the Notice of Guaranteed
Delivery, all as provided in Section 9 of the Offer to Purchase.
The method of delivery of this Letter of Transmittal, the certificates for
Shares and all other required documents, including delivery through the
Book-Entry Facility, is at the option and risk of the tendering stockholder and,
except as otherwise provided in this Instruction 2, 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.
No alternative, conditional or contingent tenders will be accepted and no
fractional Shares will be purchased. All tendering stockholders, by execution of
this Letter of Transmittal (or a facsimile of it), waive any right to receive
any notice of the acceptance of their Shares for payment.
3. INADEQUATE SPACE. If the space provided in this Letter of Transmittal
is inadequate, the certificate numbers and numbers of Shares being tendered
should be listed on a separate signed schedule which should be 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 evidenced by a certificate
are to be tendered, fill in the number of Shares which are to be tendered in the
box entitled "Number of Shares Tendered." In such case, new certificate(s) for
the remainder of the Shares that were evidenced by your old certificate(s) will
be sent to you, unless otherwise provided in the appropriate box on this Letter
of Transmittal, as soon as practicable after the Expiration Time. All Shares
represented by certificates delivered to the Depositary will be deemed to have
been tendered unless otherwise indicated.
5. SIGNATURES ON LETTER OF TRANSMITTAL, STOCK POWERS AND ENDORSEMENTS. If
this Letter of Transmittal is signed by the registered holder(s) of the Shares
being tendered, the signature(s) must correspond exactly with the name(s) as
written on the face of the certificate(s), without any alteration, enlargement
or change.
<PAGE> 7
If any of the tendered Shares are owned of record by two or more joint
owners, all the owners must sign this Letter of Transmittal.
IF TENDERED SHARES ARE REGISTERED IN DIFFERENT NAMES ON DIFFERENT
CERTIFICATES, IT WILL BE NECESSARY TO COMPLETE, SIGN AND SUBMIT AS MANY SEPARATE
LETTERS OF TRANSMITTAL AS THERE ARE DIFFERENT REGISTRATIONS ON CERTIFICATES.
If this Letter of Transmittal or any certificates or stock powers are
signed by a trustee, executor, administrator, guardian, attorney-in-fact,
officer of a corporation or other person acting in a fiduciary or representative
capacity, that person should so indicate when signing, and submit evidence
satisfactory to the Purchaser of the person's authority so to act.
When this Letter of Transmittal is signed by the registered owner(s) of the
Shares being tendered, no endorsements of certificates or separate stock powers
are required, unless payment or certificates for Shares which are not tendered
or purchased are to be issued to a person other than the registered owner(s), in
which case, endorsements of certificates or separate stock powers are required
and signatures on those certificates or stock powers must be guaranteed by an
Eligible Institution.
If this Letter of Transmittal is signed by a person other than the
registered owner(s) of the Shares being tendered, the certificates must be
endorsed or accompanied by appropriate stock powers, in either case signed
exactly as the name(s) of the registered owner(s) appear on the certificates.
Signatures on the certificates or stock powers must be guaranteed by an Eligible
Institution.
6. STOCK TRANSFER TAXES. Except as set forth in this Instruction 6, the
Purchaser will pay or cause to be paid any stock transfer taxes with respect to
the transfer and sale to it of Shares it purchases pursuant to the Offer. If
payment of the purchase price is to be made to, or if certificates for Shares
which are not tendered or are not purchased 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 anyone other than the person(s) signing this Letter of
Transmittal, the amount of any stock transfer taxes payable on account of the
transfer to another person (whether imposed on the registered holder or on the
other person) will be deducted from the purchase price unless satisfactory
evidence of the payment of, or an exemption from the need to pay, stock transfer
taxes is submitted.
Except as provided in this Instruction 6, it will not be necessary for
transfer tax stamps to be affixed to the certificates submitted with this Letter
of Transmittal.
7. SPECIAL PAYMENT AND DELIVERY INSTRUCTIONS. If a check or certificates
for unpurchased Shares are to be issued in the name of a person other than the
signer of this Letter of Transmittal, or if a check is to be sent or
certificates are to be returned to someone other than the signer of this Letter
of Transmittal or to an address other than the signer's address shown above, the
appropriate boxes on this Letter of Transmittal must be completed. Stockholders
tendering Shares by book-entry transfer may request that any Shares which are
not purchased be credited to an account maintained at the Book-Entry Facility
which the stockholder designates. If no instructions are given, Shares tendered
by book-entry transfer which are not purchased will be returned by crediting the
account at the Book-Entry Facility designated above.
8. REQUESTS FOR ASSISTANCE OR ADDITIONAL COPIES. Requests for assistance
may be directed to, or additional copies of the Offer to Purchase and this
Letter of Transmittal may be obtained from, the Information Agent or the Dealer
Managers at their respective addresses set forth below or from your broker,
dealer, commercial bank or trust company.
9. WAIVER OF CONDITIONS. The conditions to the Offer may be waived by the
Purchaser, in whole or in part, at any time and from time to time in the
Purchaser's sole discretion, as to any Shares which are tendered.
10. SUBSTITUTE FORM W-9. The tendering stockholder is required to provide
the Depositary with a correct Taxpayer Identification Number ("TIN") on the
Substitute Form W-9 which is provided under "Important Tax Information" below,
and to indicate that the stockholder is not subject to backup withholding by
checking the box in Part 2 of the Substitute Form W-9. Failure to provide the
information on the Substitute Form W-9 may subject the tendering stockholder to
31% Federal income tax withholding from the payment of the purchase price. The
box in Part 3 of the Substitute Form W-9 may be checked if the tendering
stockholder has not been issued a TIN and has applied for a number or intends to
apply for a number in the near future. If the box in Part 3 is checked and the
Depositary is not provided with a TIN within 60 days, the Depositary will
withhold 31% from all payments of the purchase price to be made after expiration
of that 60 day period until a TIN is provided to the Depositary.
<PAGE> 8
Important: This Letter of Transmittal (or a facsimile of it), together with
certificates or confirmation of book-entry transfer and all other required
documents, or a Notice of Guaranteed Delivery, must be received by the
Depositary on or prior to the Expiration Time.
(DO NOT WRITE IN THE SPACES BELOW)
<TABLE>
<S> <C> <C>
Date Received --------- Accepted by --------- Checked by ---------
</TABLE>
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------
CERTIFICATES SHARES SHARES CHECK AMOUNT SHARES CERTIFICATE
SURRENDERED TENDERED ACCEPTED NO. OF CHECK RETURNED NO.
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
- ----------------------------------------------------------------------------------------------------------------------
<CAPTION>
- ---------------- ----------------
CERTIFICATES BLOCK
SURRENDERED NO.
- ---------------- ----------------
<S> <C>
- ---------------------------------------------------
</TABLE>
<TABLE>
<S> <C> <C>
Delivery Prepared by --------- Checked by --------- Date ---------
</TABLE>
IMPORTANT TAX INFORMATION
Under Federal income tax law, a stockholder whose tendered Shares are
accepted for payment is required to provide the Depositary with the
stockholder's correct TIN on Substitute Form W-9 below. If the stockholder is an
individual, the TIN is his or her social security number. If the Depositary is
not provided with the correct TIN, the stockholder may be subject, among other
things, to penalties imposed by the Internal Revenue Service. In addition,
payments that are made to the stockholder with respect to Shares purchased
pursuant to the Offer may be subject to backup withholding.
Certain stockholders (including, among others, all corporations and certain
foreign individuals) are not subject to these backup withholding and reporting
requirements. In order for a foreign individual to qualify as an exempt
recipient, that individual must submit a statement, signed under penalties of
perjury, attesting to the individual's exempt status. A form of statement may be
obtained from the Depositary. See the enclosed Guidelines for Certification of
Taxpayer Identification Number on Substitute Form W-9 for additional
instructions.
If backup withholding applies, the Depositary is required to withhold 31%
of any payments made to the stockholder. Backup withholding is not an additional
tax. Rather, the tax liability of persons subject to backup withholding will be
reduced by the amount of tax withheld. If withholding results in an overpayment
of taxes, a refund may be obtained.
PURPOSE OF SUBSTITUTE FORM W-9
To prevent backup withholding on payments that are made to a stockholder
with respect to Shares purchased pursuant to the Offer, the stockholder is
required to notify the Depositary of the stockholder's correct TIN by completing
the form below certifying that the TIN provided on the Substitute Form W-9 is
correct (or that the stockholder is awaiting a TIN).
WHAT NUMBER TO GIVE THE DEPOSITARY
The stockholder is required to give the Depositary the social security
number or employer identification number of the record owner of the Shares. If
the Shares being tendered are in more than one name or are not in the name of
the actual owner, consult the enclosed Guidelines for Certification of Taxpayer
Identification Number on Substitute Form W-9 for additional guidelines on which
number to report.
<PAGE> 9
<TABLE>
<S> <C> <C>
- ---------------------------------------------------------------------------------------------------------------------------------
PAYER'S NAME: THE BANK OF NEW YORK
- ---------------------------------------------------------------------------------------------------------------------------------
SUBSTITUTE PART 1 -- PLEASE PROVIDE YOUR TIN IN THE BOX AT
FORM W-9 RIGHT AND CERTIFY BY SIGNING AND DATING BELOW ---------------------------------
DEPARTMENT OF THE TREASURY, Social Security Number
INTERNAL REVENUE SERVICE OR
---------------------------------
Employer Identification Number
------------------------------------------------------------------------------------------
PAYER'S REQUEST FOR PART 2 -- Check the box if you are NOT subject to backup withholding under the provisions
TAXPAYER IDENTIFICATION of Section 3406(a)(1)(C) of the Internal Revenue Code because (1) you are exempt from
NUMBER (TIN) backup withholding, or (2) you have not been notified that you are subject to backup
withholding as a result of failure to report all interest or dividends or (3) the Internal
Revenue Service has notified you that you are no longer subject to backup withholding. [ ]
------------------------------------------------------------------------------------------
CERTIFICATION -- UNDER THE PENALTIES OF PERJURY, I PART 3 --
CERTIFY THAT THE INFORMATION PROVIDED ON THIS FORM Awaiting TIN [ ]
IS TRUE, CORRECT AND COMPLETE.
- ---------------------------------------------------------------------------------------------------------------------------------
Signature ----------------------------------------------------------------------------- Date ----------------------------
- ---------------------------------------------------------------------------------------------------------------------------------
</TABLE>
NOTE: FAILURE TO COMPLETE AND RETURN THIS FORM MAY RESULT IN BACKUP WITHHOLDING
OF 31% OF ANY PAYMENTS MADE TO YOU PURSUANT TO THE OFFER. PLEASE REVIEW
THE ENCLOSED GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION
NUMBER ON SUBSTITUTE FORM W-9 FOR ADDITIONAL DETAILS.
The Information Agent for the Offer is:
D.F. KING & CO., INC.
77 Water Street
New York, New York 10005-4495
Banks and Brokerage Firms call collect: (212) 269-5550
All Others Call Toll Free: (800) 758-5378
<PAGE> 1
THIS DOCUMENT IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION. If you
are in any doubt as to the action to be taken, you should seek your own
financial advice immediately from your own appropriately authorized independent
financial advisor.
If you have sold or transferred all of your registered holdings of Common
Stock of Garden Ridge Corporation, please forward this document and all
accompanying documents to the stockbroker, bank or other agent through whom the
sale or transfer was effected, for submission to the purchaser or transferee.
NOTICE OF GUARANTEED DELIVERY
FOR
TENDER OF SHARES OF COMMON STOCK
OF
GARDEN RIDGE CORPORATION
PURSUANT TO THE OFFER TO PURCHASE DATED NOVEMBER 23, 1999
BY
GR ACQUISITION CORPORATION
WHICH IS OWNED BY
GRDG HOLDINGS LLC
A SUBSIDIARY OF
THREE CITIES FUND II, L.P. AND
THREE CITIES OFFSHORE II C.V.
(NOT TO BE USED FOR SIGNATURE GUARANTEES)
This Notice of Guaranteed Delivery, or one substantially in the form
hereof, must be used to accept the Offer (as defined below) (i) if certificates
("Share Certificates") evidencing shares of common stock, par value $0.01 per
share (the "Shares"), of Garden Ridge Corporation a Delaware corporation (the
"Company"), are not immediately available, (ii) if Share Certificates and all
other required documents cannot be delivered to ChaseMellon Shareholder
Services, L.L.C., as Depositary (the "Depositary"), prior to the Expiration Time
(as defined in Section 7 of the Offer to Purchase (as defined below)) or (iii)
if the procedure for delivery by book-entry transfer cannot be completed on a
timely basis. This Notice of Guaranteed Delivery may be delivered by hand or
mail or transmitted by telegram or facsimile transmission to the Depositary. See
Section 9 of the Offer to Purchase.
The Depositary for the Offer is:
CHASEMELLON SHAREHOLDER SERVICES, L.L.C.
By Facsimile Transmission:
(for Eligible Institutions Only)
(201) 296-4293
<TABLE>
<S> <C> <C>
By Mail: By Overnight: By Hand:
Reorganization Department Reorganization Department Reorganization Department
PO Box 3301 85 Challenger Road 120 Broadway
South Hackensack, NJ 07606 Mail Stop - Reorg. 13th Floor
Ridgefield Park, NJ 07660 New York, NY 10271
For Confirmation Telephone:
(201) 296-4860
</TABLE>
DELIVERY OF THIS NOTICE OF GUARANTEED DELIVERY TO AN ADDRESS OTHER THAN AS
SET FORTH ABOVE, OR TRANSMISSION OF INSTRUCTIONS VIA FACSIMILE TRANSMISSION
OTHER THAN AS SET FORTH ABOVE, WILL NOT CONSTITUTE A VALID DELIVERY.
<PAGE> 2
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.
SHARES MAY NOT BE TENDERED PURSUANT TO THE GUARANTEED DELIVERY PROCEDURES.
LADIES AND GENTLEMEN:
The undersigned hereby tenders to GR Acquisition Corporation, a Delaware
corporation, which is owned by GRDG Holdings LLC, a Delaware limited liability
company, a subsidiary of Three Cities Fund II, L.P., a Delaware limited
partnership and Three Cities Offshore II C.V., a Netherlands Antilles
partnership, upon the terms and subject to the conditions set forth in the Offer
to Purchase, dated November 23, 1999 (the "Offer to Purchase"), and the related
Letter of Transmittal (the terms and conditions of which, as amended or
supplemented from time to time, together constitute the "Offer"), receipt of
each of which is hereby acknowledged, the number of Shares specified below
pursuant to the guarantee delivery procedures described in Section 9 of the
Offer to Purchase.
Number of Shares:
- --------------------------------------------------------------------------------
Name(s) of Record Holder(s):
- -------------------------------------------------------------------------
(PLEASE PRINT)
Address(es):
- --------------------------------------------------------------------------------
(ZIP CODE)
Area Code and Tel. No:
- --------------------------------------------------------------------------------
Certificate Nos. (if available):
- ---------------------------------------------------------------------------
[ ] Check here if Shares will be tendered by book-entry transfer:
Signature(s):
- --------------------------------------------------------------------------------
Account Number:
- --------------------------------------------------------------------------------
Dated: -----, 1999
THE GUARANTEE ON THE REVERSE SIDE MUST BE COMPLETED
2
<PAGE> 3
GUARANTEE
(NOT TO BE USED FOR SIGNATURE GUARANTEE)
The undersigned, a participant in the Security Transfer Agents Medallion
Program, hereby guarantees to deliver to the Depositary, at one of its addresses
set forth above, either the certificates representing the Shares tendered
hereby, in proper form for transfer, or a Book-Entry Confirmation (as defined in
Section 9 of the Offer to Purchase) of a transfer of such Shares into the
Depositary's account at The Depository Trust Company, in any such case together
with a properly completed and duly executed Letter of Transmittal, or a manually
signed facsimile thereof, with any required signature guarantees, or, in the
case of a book-entry transfer, an Agent's Message (as defined in Section 8 of
the Offer to Purchase), and any other documents required by the Letter of
Transmittal within three Nasdaq trading days after the date of execution of this
Notice of Guaranteed Delivery.
The Eligible Institution that completes this form must communicate the
guarantee to the Depositary and must deliver the Letter of Transmittal and
certificates for Shares to the Depositary within the time period shown herein.
Failure to do so could result in financial loss to such Eligible Institution.
Name of Firm:
- --------------------------------------------------------------------------------
(AUTHORIZED SIGNATURE)
Address:
- --------------------------------------------------------------------------------
(ZIP CODE)
Area Code and Tel. No.:
- --------------------------------------------------------------------------------
Name:
- --------------------------------------------------------------------------------
Title:
- --------------------------------------------------------------------------------
Date:
- ---------------------, 1999
NOTE: DO NOT SEND CERTIFICATES FOR SHARES WITH THIS NOTICE.
SHARE CERTIFICATES SHOULD BE SENT WITH YOUR LETTER OF TRANSMITTAL
3
<PAGE> 1
OFFER TO PURCHASE FOR CASH
ALL OUTSTANDING SHARES OF COMMON STOCK
(INCLUDING THE ASSOCIATED PREFERRED STOCK PURCHASE RIGHTS)
OF
GARDEN RIDGE CORPORATION
AT
$11.50 NET PER SHARE
BY
GR ACQUISITION CORPORATION
WHICH IS OWNED BY
GRDG HOLDINGS LLC
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT,
NEW YORK CITY TIME, ON WEDNESDAY, DECEMBER 22, 1999,
UNLESS THE OFFER IS EXTENDED.
November 23, 1999
To Brokers, Dealers, Commercial Banks,
Trust Companies and Other Nominees:
We have been appointed by GR Acquisition Corporation, a Delaware
corporation (the "Purchaser"), which is owned by GRDG Holdings LLC ("GRDG
Holdings"), to act as Information Agent in connection with the Purchaser's offer
to purchase all outstanding shares of common stock, par value $0.01 per share
(together with the associated preferred stock purchase rights, the "Shares"), of
Garden Ridge Corporation, a Delaware corporation (the "Company"), which are not
already owned by the Purchaser or GRDG Holdings, at a price of $11.50 per Share,
net to the seller in cash, upon the terms and subject to the conditions set
forth in the Offer to Purchase dated November 23, 1999 (the "Offer to
Purchase"), the related Letter of Transmittal (which terms and conditions, as
they may be amended or supplemented constitute the "Offer") enclosed herewith.
Please furnish copies of the enclosed materials to those of your clients for
whose accounts you hold Shares registered in your name or in the name of your
nominee.
The Offer is conditioned on, among other things, at least 51% of the Shares
neither the Purchaser nor GRDG Holdings LLC owns being properly tendered and not
withdrawn, and the absence of a material adverse change since August 1, 1999.
This offer is not conditioned on the ability of the Purchaser to obtain
financing. The Purchaser can waive the conditions to the Offer.
Enclosed for your information and use are copies of the following
documents:
1. Offer to Purchase dated November 23, 1999;
2. Letter of Transmittal to be used by holders of Shares in accepting
the Offer and tendering Shares. Facsimile copies of the Letter of
Transmittal may be used to tender Shares;
3. A letter which 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 provided for obtaining such clients' instructions with regard to the
Offer;
4. Guidelines for Certification of Taxpayer Identification Number on
Substitute Form W-9; and
5. Notice of Guaranteed Delivery dated November 23, 1999;
<PAGE> 2
6. Letter to Shareholders together with Schedule 14D-9;
7. Return envelope addressed to the Depositary.
WE URGE YOU TO CONTACT YOUR CLIENTS AS PROMPTLY AS POSSIBLE. PLEASE NOTE
THAT THE OFFER AND WITHDRAWAL RIGHTS EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY
TIME, ON WEDNESDAY, DECEMBER 22, 1999, UNLESS THE OFFER IS EXTENDED.
As soon as practicable after the consummation of the Offer, the Purchaser
and its stockholders will take all steps in their power to cause the Purchaser
to be merged with the Company (the "Merger") in a transaction in which the
stockholders of the Purchaser will own all the stock of the corporation which
results from the Merger (essentially, the Company), and the other stockholders
of the Company will receive the same amount of cash per Share as is paid for
Shares tendered in response to the Offer (unless particular stockholders elect
to exercise statutory rights to demand appraisal of their Common Shares under
Delaware law).
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 the
certificates evidencing such Shares or timely confirmation of a book-entry
transfer of such Shares into the Depositary's account at the Book-Entry Transfer
Facility (as defined in the Offer to Purchase) in connection with the book-entry
transfer, and any other documents required by the Letter of Transmittal.
If a holder of Shares wishes to tender Shares but cannot deliver such
holder's certificate or other required documents, or cannot comply with the
procedure for book-entry transfer, prior to the expiration of the Offer, a
tender of Shares may be effected by following the guaranteed delivery procedure
described in Section 9 of the Offer to Purchase.
The Purchaser will not pay any fees or commissions to any broker, dealer or
other person (other than the Information Agent as described in the Offer to
Purchase) in connection with the solicitation of tenders of Shares pursuant to
the Offer. However, the Purchaser will reimburse you for customary mailing and
handing expenses incurred by you in forwarding any of the enclosed materials to
your clients. The Purchaser will pay or cause to be paid any stock transfer
taxes payable with respect to the transfer of Shares to it, except as otherwise
provided in Instruction 6 of the Letter of Transmittal.
Any questions or requests for assistance may be directed to the Information
Agent at its telephone numbers and addresses set forth on the back cover of the
Offer to Purchase. Additional copies of the enclosed material may be obtained
from the Information Agent at its address and telephone numbers set forth on the
back cover of the Offer to Purchase.
Very truly yours,
D. F. King & Co., Inc.
NOTHING CONTAINED HEREIN OR IN THE ENCLOSED DOCUMENTS SHALL CONSTITUTE YOU OR
ANY OTHER PERSON THE AGENT OF THE THREE CITIES FUNDS, THE PURCHASER, THE
COMPANY, THE INFORMATION AGENT OR THE DEPOSITARY, OR OF ANY AFFILIATE OF ANY OF
THEM, OR AUTHORIZE YOU OR ANY OTHER PERSON TO USE ANY DOCUMENT OR TO MAKE ANY
STATEMENT ON BEHALF OF ANY OF THEM IN CONNECTION WITH THE OFFER OTHER THAN THE
ENCLOSED DOCUMENTS AND THE STATEMENTS CONTAINED THEREIN.
2
<PAGE> 1
OFFER TO PURCHASE FOR CASH
ALL OUTSTANDING SHARES OF COMMON STOCK
(INCLUDING THE ASSOCIATED PREFERRED STOCK PURCHASE RIGHTS)
OF
GARDEN RIDGE CORPORATION
AT
$11.50 NET PER SHARE
BY
GR ACQUISITION CORPORATION
WHICH IS OWNED BY
GRDG HOLDINGS LLC
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT,
NEW YORK CITY TIME, ON WEDNESDAY, DECEMBER 22, 1999,
UNLESS THE OFFER IS EXTENDED.
November 23, 1999
To Our Clients:
Enclosed for your consideration is an Offer to Purchase, dated November 23,
1999 (the "Offer to Purchase"), and a related Letter of Transmittal (which terms
and conditions, as they may be amended or supplemented, constitute the "Offer")
relating to the offer by GR Acquisition Corporation, a Delaware corporation (the
"Purchaser") which is owned by GRDG Holdings LLC ("GRDG Holdings"), to purchase
all outstanding shares of common stock, par value $.01 per share (together with
the associated preferred stock purchase rights, the "Shares"), of Garden Ridge
Corporation, a Delaware corporation (the "Company"), which are not already owned
by the Purchaser or GRDG Holdings, at a price of $11.50 per Share net to the
seller in cash, upon the terms and subject to the conditions set forth in the
Offer to Purchase and in the related Letter of Transmittal.
WE ARE THE HOLDER OF RECORD OF SHARES HELD BY US FOR YOUR ACCOUNT. A TENDER
OF THOSE SHARES CAN BE MADE ONLY BY US AS THE HOLDER OF RECORD AND PURSUANT TO
YOUR INSTRUCTIONS. THE LETTER OF TRANSMITTAL IS FURNISHED TO YOU FOR YOUR
INFORMATION ONLY AND CANNOT BE USED BY YOU TO TENDER SHARES HELD BY US FOR YOUR
ACCOUNT.
Accordingly, we request instructions as to whether you wish to have us
tender, on your behalf, any or all other Shares held by us for your account
pursuant to the terms and conditions set forth in the Offer.
Please note the following:
1. The Offer Price is $11.50 per Share, net to you in cash, upon the terms
and subject to the conditions set forth in the Offer.
2. The Board of Directors of the Company has unanimously approved the Offer
and the Merger (as defined below) and determined that the terms of the
Offer and the Merger are fair to, and in the best interests of, the
stockholders of the Company and unanimously recommends that the
stockholders of the Company accept the Offer and tender their Shares.
3. The Offer is being made for all outstanding Shares.
4. If at least 51% of the outstanding Common Shares that neither the
Purchaser nor GRDG Holdings owned on November 22, 1999 are properly
tendered and not withdrawn, and the Purchaser purchases the tendered
Shares, the Purchaser and its stockholder will take all steps in their
power (including
<PAGE> 2
voting their Common Shares) to cause the Purchaser to be merged with the
Company (the "Merger") in a transaction in which the stockholder of the
Purchaser will own all the stock of the corporation which results from
the Merger (essentially, the Company), and the other stockholders of the
Company will receive the same amount of cash per Share as is paid for
Shares tendered in response to the Offer (unless particular stockholders
elect to exercise statutory rights to demand appraisal of their Common
Shares). If the Shares which are properly tendered and not withdrawn are
less than 51% of the outstanding Shares that the Purchaser and GRDG
Holdings did not own on November 22, 1999, the Merger will not take
place (although the Purchaser will have the option to purchase the
Shares which are properly tendered and not withdrawn).
5. The Offer is conditioned upon, among other things, (1) the expiration or
termination of all waiting periods imposed by the Hart-Scott-Rodino
Antitrust Improvements Act of 1976, as amended, if it is applicable
(which it is not) and (2) the satisfaction or waiver of certain
conditions to the obligations of the Purchaser and the Company to
consummate the Offer and the transactions contemplated by the Merger
Agreement. The Offer is conditioned on, among other things, at least 51%
of the Shares which neither the Purchaser nor GRDG Holdings owned on
November 22, 1999, being properly tendered and not withdrawn, and the
absence of a material adverse chance since August 1, 1999. The Offer is
not conditioned on the Purchaser's obtaining financing.
6. Tendering stockholders will not be obligated to pay brokerage fees or
commissions or, except as otherwise provided in Instruction 6 of the
Letter of Transmittal, stock transfer taxes on the purchase of Shares by
the Purchaser pursuant to the Offer.
7. The Offer and withdrawal rights will expire at 12:00 midnight, New York
City time, on December 22, 1999, unless the Offer is extended in
accordance with the terms of the Merger Agreement. The Merger Agreement
permits the Purchaser to extend the Offer until up to 60 days after the
date of the Offer to Purchase, and after that with the consent of the
Company.
If you wish to have us tender any or all of the Shares held by us for your
account, please so instruct us by completing, executing, detaching and returning
to us the instruction form set forth below. If you authorize the tender of such
Shares which we hold, all your Shares which we hold will be tendered unless
otherwise specified below. An envelope to return your instructions to us is
enclosed. Your instructions should be forwarded to us in ample time to permit us
to submit a tender on your behalf prior to the expiration of the Offer.
For purposes of the Offer, the Purchaser will be deemed to have accepted
for payment, and thereby purchased, tendered Shares, if and when the Purchaser
gives oral or written notice to the Depositary of the Purchaser's acceptance of
the tendered Shares for payment. Payment for Shares purchased pursuant to the
Offer will not be made until ChaseMellon Shareholder Services, L.L.C. (the
"Depositary") receives (a) Share Certificates (or a timely Book-Entry
Confirmation (as defined in the Offer to Purchase) after transfer of the Shares
into the account maintained by the Depositary at the Depository Trust Company),
pursuant to the procedures set forth in Section 9 of the Offer to Purchase, (b)
the Letter of Transmittal (or a facsimile thereof), properly completed and duly
executed, with any required signature guarantees or an Agent's Message (as
defined in the Offer to Purchase), in connection with a book-entry delivery, and
(c) any other documents required by the Letter of Transmittal. Accordingly,
payment may not be made to all tendering stockholders at the same time,
depending upon when certificates for or Book-Entry Confirmations of transfers
into the Depositary's account at the Depositary Trust Company are actually
received by the Depositary. UNDER NO CIRCUMSTANCES WILL INTEREST BE PAID ON THE
PURCHASE PRICE OF THE SHARES, REGARDLESS OF ANY EXTENSION OF THE OFFER OR ANY
DELAY IN MAKING SUCH PAYMENT.
The Offer is not being made to (nor will tenders be accepted from or on
behalf of) holders of Shares residing in any jurisdiction in which the making of
the Offer or the acceptance of tendered shares would not be in compliance with
the laws of that jurisdiction. In any jurisdiction where securities, blue-sky or
other laws require the Offer to be made by a licensed broker or dealer, the
Offer will be deemed to be made on behalf of the Purchaser by one or more
registered brokers or dealers that are licensed under the laws of such
jurisdiction.
2
<PAGE> 3
INSTRUCTIONS WITH RESPECT TO THE OFFER TO PURCHASE
FOR CASH ALL OUTSTANDING SHARES OF COMMON STOCK
OF
GARDEN RIDGE CORPORATION
The undersigned acknowledge(s) receipt of your letter and the enclosed
Offer to Purchase, dated November 23, 1999, and the related Letter of
Transmittal, in connection with the offer by GR Acquisition Corporation, a
Delaware corporation (the "Purchaser") which is owned by GRDG Holdings LLC, a
Delaware limited liability company, to purchase all outstanding shares of common
stock, par value $.01 per share (the "Shares"), of Garden Ridge Corporation, a
Delaware corporation, which are not already owned by the Purchaser or GRDG
Holdings.
This will instruct you to tender to the Purchaser the number of Shares
indicated below (or if no number is indicated below, all the Shares) which you
are holding for the account of the undersigned, upon the terms and subject to
the conditions set forth in the Offer.
Number of Shares to Be Tendered:
- --------- Date:
- -------------------------------------------------
SIGN HERE
Signature(s)
- --------------------------------------------------------------------------------
Print Name(s)
- --------------------------------------------------------------------------------
Print Address(es)
- --------------------------------------------------------------------------------
Area Code and Telephone Numbers
- --------------------------------------------------------------------
Telephone Numbers(s)
- --------------------------------------------------------------------------------
Taxpayer Identification
or Social Security Numbers(s)
- --------------------------------------------------------------------------
3
<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, e.g.,
000-00-0000. Employer identification numbers have nine digits separated by only
one hyphen, e.g., 00-0000000. The table below will help determine the number to
give the payer.
<TABLE>
<C> <S> <C>
- ------------------------------------------------------------
FOR THIS TYPE OF ACCOUNT: GIVE THE
SOCIAL SECURITY
NUMBER OF--
- ------------------------------------------------------------
1. An individual's account The individual
2. Two or more individuals (joint The actual owner of
account) the account or, if
combined funds, the
first individual on
the account(1)
3. Husband and wife (joint account) The actual owner of
the account or, if
joint funds, either
person(1)
4. Custodian account of a minor The minor(2)
(Uniform Gift to Minors Act)
5. Adult and minor (joint account) The adult or, if
the minor is the
only contributor,
the minor(1)
6. Account in the name of guardian or The ward, minor, or
committee for a designated ward, incompetent
minor, or incompetent person person(3)
7. a. A revocable savings trust The actual owner(1)
account (in which grantor is
also trustee)
b. Any "trust" account that is not The actual owner(1)
a legal or valid trust under
State law
- ------------------------------------------------------------
- ------------------------------------------------------------
FOR THIS TYPE OF ACCOUNT: GIVE THE EMPLOYER
IDENTIFICATION
NUMBER OF--
- ------------------------------------------------------------
8. Sole proprietorship account The owner(4)
9. A valid trust, estate, or pension The legal entity
trust (do not furnish the
identifying number
of the personal
representative or
trustee unless the
legal entity itself
is not designated
in the account
title)(5)
10. Corporate account The corporation
11. Religious, charitable, or The organization
educational organization account
12. Partnership account held in the The partnership
name of the business
13. Association, club, or other tax- The organization
exempt organization
14. A broker or registered nominee The broker or
nominee
15. Account with the Department of The public entity
Agriculture in the name of a
public entity (such as a State or
local government, school district
or prison) that receives
agricultural program payments
- ------------------------------------------------------------
</TABLE>
(1) List first and circle the name of the person whose number you furnish.
(2) Circle the minor's name and furnish the minor's social security number.
(3) Circle the ward's, minor's or incompetent person's name and furnish such
person's social security number.
(4) Show the name of the owner. If the owner does not have an employer
identification number, furnish the owner's social security number.
(5) List first and circle the name of the legal trust, estate or pension trust.
NOTE: IF NO NAME IS CIRCLED WHEN THERE IS MORE THAN ONE NAME, THE NUMBER WILL BE
CONSIDERED TO BE THAT OF THE FIRST NAME LISTED.
<PAGE> 2
GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION
NUMBER ON SUBSTITUTE FORM W-9
PAGE 2
OBTAINING A NUMBER
If you do not have a taxpayer identification number or you do not know your
number, obtain Form SS-5, Application for a Social Security Number Card (for
resident individuals), Form SS-4, Application for Employer Identification Number
(for businesses and all other entities), or Form W-7 for International Taxpayer
Identification Number (for alien individuals required to file U.S. tax returns),
at an office of the Social Security Administration or the Internal Revenue
Service.
To complete Substitute Form W-9, if you do not have a taxpayer identification
number, write "Applied For" in the space for the taxpayer identification number
in Part I, sign and date the Form, and give it to the requester. Generally, you
will then have 60 days to obtain a taxpayer identification number and furnish it
to the requester. If the requester does not receive your taxpayer identification
number within 60 days, backup withholding, if applicable, will begin and will
continue until you furnish your taxpayer identification number to the requester.
PAYEES EXEMPT FROM BACKUP WITHHOLDING PENALTIES
Payees specifically exempted from backup withholding on ALL payments include the
following:*
- A corporation.
- A financial institution.
- An organization exempt from tax under section 501(a), or an individual
retirement plan, or a custodial account under section 403(b)(7).
- The United States or any agency or instrumentality thereof.
- A state, the District of Columbia, a possession of the United States, or
any political subdivision or instrumentality thereof.
- A foreign government or a political subdivision, 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).
- An exempt charitable remainder trust, or a non-exempt trust described in
section 4947(a)(1).
- An entity registered at all times during the tax year under the Investment
Company Act of 1940.
- A foreign central bank of issue.
* Unless otherwise noted herein, all references below to section numbers or to
regulations are references to the Internal Revenue Code and the regulations
promulgated thereunder.
EXEMPT PAYEES DESCRIBED ABOVE SHOULD FILE A SUBSTITUTE FORM W-9 TO AVOID
POSSIBLE ERRONEOUS BACKUP WITHHOLDING. FILE THIS FORM WITH THE PAYER, FURNISH
YOUR TAXPAYER IDENTIFICATION NUMBER, WRITE "EXEMPT" ON THE FACE OF THE FORM,
SIGN AND DATE THE FORM AND RETURN IT TO THE PAYER.
Certain payments other than interest, dividends and patronage dividends that are
not subject to information reporting are also not subject to backup withholding.
For details, see the regulations under sections 6041, 6041A(a), 6045, and 6050A.
PRIVACY ACT NOTICES.--Section 6109 requires most recipients of dividends,
interest or other payments to give taxpayer identification numbers to payers who
must report the payments to the IRS. The IRS uses the numbers for identification
purposes and to help verify the accuracy of your tax return. Payers must be
given the numbers whether or not recipients are required to file tax returns.
Payers must generally withhold 31% of taxable interest, dividends, and certain
other payments to a payee who does not furnish a taxpayer identification number
to a payer. Certain penalties may also apply.
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.
- Payments to partnerships not engaged in a trade or business in the United
States and which have at least one nonresident 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 (i) this interest is $600 or more, and
(ii) the interest is paid in the course of the payer's trade or business
and (iii) you have not provided your correct taxpayer identification
number to the payer.
- Payments of tax-exempt interest (including exempt-interest dividends under
section 852).
- Payments described in section 6049(b)(5) to non-resident aliens.
- Payments on tax-free covenant bonds under section 1451.
- Payments made by certain foreign organizations.
- Payments made to a nominee.
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) CIVIL PENALTY FOR FALSE STATEMENTS WITH RESPECT TO WITHHOLDING.--If you make
a false statement with no reasonable basis which results in no imposition of
backup withholding, you are subject to a penalty of $500.
(3) CRIMINAL PENALTY FOR FALSIFYING INFORMATION.--If you falsify certifications
or affirmations, you are subject to criminal penalties including fines and/or
imprisonment.
(4) FAILURE TO REPORT CERTAIN DIVIDEND AND INTEREST PAYMENTS.--If you fail to
include any portion of an includible payment for interest, dividends or
patronage dividends in gross income and such failure is due to negligence, a
penalty of 20% is imposed on any portion of any underpayment attributable to the
failure.
FOR ADDITIONAL INFORMATION CONTACT YOUR TAX CONSULTANT OR THE INTERNAL REVENUE
SERVICE.
<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 dated November
23, 1999, and the related Letter of Transmittal and is not being made to (nor
will tenders be accepted from or on behalf of) holders of Shares in any
jurisdiction in which the making or acceptance of the Offer would not be in
compliance with the laws of such jurisdiction.
Notice of Offer to Purchase for Cash
All Outstanding Shares of Common Stock
(including the associated Preferred Stock Purchase Rights)
of
GARDEN RIDGE CORPORATION
at
$11.50 Net Per Share
by
GR Acquisition Corporation
which is owned by
GRDG Holdings LLC
GR Acquisition Corporation, a Delaware corporation (the "Purchaser"), which is
owned by GRDG Holdings LLC, a Delaware limited liability company, is offering to
purchase for cash all outstanding shares of common stock, par value $0.01 per
share (together with associated stock purchase rights, the "Shares"), of Garden
Ridge Corporation, a Delaware corporation (the "Company"), at a price (the
"Offer Price") of $11.50 per Share, net to the seller in cash without interest,
on the terms and subject to the conditions set forth in an Offer to Purchase,
dated November 23, 1999 (the "Offer to Purchase") and in the related Letter of
Transmittal (which terms and conditions constitute the "Offer Documents").
- --------------------------------------------------------------------------------
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00
MIDNIGHT, NEW YORK CITY TIME, ON WEDNESDAY, DECEMBER
22, 1999, UNLESS THE OFFER IS EXTENDED.
- --------------------------------------------------------------------------------
The Offer is conditioned on, among other things, at least 51% of the Shares not
owned by the Purchaser or GRDG Holdings LLC on November 22, 1999 being properly
tendered and not withdrawn, and the absence of a material adverse change since
August 1, 1999. The Offer is not conditioned on the ability of the Purchaser to
obtain financing. The Purchaser can waive the conditions to the Offer.
The Offer is being made pursuant to an Agreement and Plan of Merger, dated as of
November 22, 1999 (the "Merger Agreement"), pursuant to which, if at least 51%
of the Company's outstanding Common Shares which neither the Purchaser nor GRDG
Holdings owned on November 22, 1999, are properly tendered and not withdrawn and
the Purchaser purchases the tendered shares, the Purchaser will be merged into
the Company in a transaction in which the Company will become wholly owned by
the Purchaser's stockholders, and the Shares not owned by the Purchaser will be
converted into the right to receive cash equal to the per share amount which is
paid for Shares tendered in response to the Offer (which will be at least $11.50
per share).
THE BOARD OF DIRECTORS OF THE COMPANY (THE "BOARD") HAS UNANIMOUSLY APPROVED THE
OFFER AND THE MERGER AND DETERMINED THAT THE TERMS OF THE OFFER AND THE MERGER
ARE FAIR TO, AND IN THE BEST INTERESTS OF, THE STOCKHOLDERS OF THE COMPANY. THE
BOARD UNANIMOUSLY RECOMMENDS THAT STOCKHOLDERS OF THE COMPANY ACCEPT THE OFFER
AND TENDER THEIR SHARES.
The Offer will expire at 12:00 midnight on December 22, 1999, unless it is
extended. The Purchaser has the right to extend the Offer to not later than
January 22, 1999. It will require the Company's consent to extend the Offer
beyond that date. During any extension, all Shares which had previously been
tendered and not withdrawn will remain tendered, subject to the right of a
tendering stockholder to withdraw tendered Shares.
For purposes of the Offer, the Purchaser will be deemed to accept for payment,
and thereby purchase, all the Shares which are properly tendered and not
withdrawn when and if the Purchaser gives oral or written notice to Chase Mellon
Shareholder Services L.L.C. (the "Depositary") that the Purchaser is accepting
those Shares for payment. Payment for Shares purchased pursuant to the Offer
will be made by deposit of the purchase price with the Depositary, which will
act as agent for tendering stockholders for the purpose of receiving the payment
from the Purchaser and transmitting payment to tendering stockholders whose
Shares have been accepted for payment. In all cases, payment for Shares
purchased pursuant to the Offer will be made only after timely receipt by the
Depositary of (a) certificates representing shares (or a timely Book-Entry
Confirmation of transfer of Shares into an account maintained by the Depositary
at The Depository Trust Company, pursuant to the procedures set forth in Section
9 of the Offer to Purchase, (b) a Letter of Transmittal (or a facsimile of one),
properly completed and duly executed, with any required signature guarantees or
an Agent's Message (as defined in the Offer to Purchase), in connection with a
book-entry delivery, and (c) any other documents required by the Letter of
Transmittal. Accordingly, payment may not be made to all tendering stockholders
at the same time, depending upon when certificates or Book-Entry Confirmations
are actually received by the Depositary. UNDER NO CIRCUMSTANCES WILL INTEREST BE
PAID ON THE PURCHASE PRICE OF THE SHARES, REGARDLESS OF ANY EXTENSION OF THE
OFFER OR ANY DELAY IN PAYING FOR SHARES.
Questions and requests for assistance may be directed to the
Information Agent as named below. Requests for copies of the Offer to Purchase
and the related Letter of Transmittal and all other tender offer materials may
be directed to the Information Agent, and copies will be furnished promptly at
the Purchaser's expense. The Purchaser will not pay any fees or commissions to
any broker or dealer or any other person (other than the Information Agent) for
soliciting tenders of Shares pursuant to the Offer.
The Information Agent for the Offer is:
D.F. KING & CO., INC.
77 Water Street
New York, New York 10005-4495
Banks and Brokers Call Collect: (212) 269-5550
ALL OTHERS CALL TOLL FREE: (800) 758-5378
November 23, 1999
<PAGE> 1
SUMMARY TERM SHEET
OFFER OF GR ACQUISITION CORPORATION
TO PURCHASE ALL THE OUTSTANDING COMMON STOCK
OF
GARDEN RIDGE CORPORATION
We (GR Acquisition Corporation) are offering to purchase all the
outstanding common stock of Garden Ridge Corporation which we or our parent do
not already own for $11.50 per share in cash. The following are some questions
you, as a stockholder of Garden Ridge, may have, and answers to those questions.
WHO IS OFFERING TO BUY MY SECURITIES?
Our name is GR Acquisition Corporation. We were formed for the purpose of
making a tender offer for Garden Ridge common shares. We are wholly owned by
GRDG Holdings, LLC. It is a limited liability company which was formed by Three
Cities Fund II, L.P. and Three Cities Offshore II C.V., two private investment
funds advised by Three Cities Research Inc. The Three Cities Funds own a
majority of the interests in GRDG Holdings, but there are other owners of
approximately 48.9% of GRDG Holdings. The two Three Cities Funds expect to
transfer two-thirds of their interests in GRDG Holdings to Three Cities Fund
III, L.P., a newly formed investment fund, which also is advised by Three Cities
Research, Inc.
WHAT ARE THE CLASSES AND AMOUNTS OF SECURITIES SOUGHT IN THE OFFER?
We are seeking all the common stock of the Company which we or our parent
does not already own.
HOW MUCH ARE YOU OFFERING TO PAY AND WHAT IS THE FORM OF PAYMENT?
We are offering to pay $11.50 per share, net to you, in cash. If you tender
your shares to us, you will not have to pay brokerage fees or similar expenses.
DO YOU HAVE THE FINANCIAL RESOURCES TO MAKE PAYMENT?
GRDG Holdings (our sole stockholder) already owns approximately 30.9% of
Garden Ridge's common stock. The Three Cities Funds and two affiliated funds
will provide $60 million to us, through GRDG Holdings, which we can use in
connection with the tender offer and the merger which we expect will follow it
(as discussed below). GRDG Holdings has arranged financing from banks and
another institutional lender for the rest of what we will need to purchase all
the shares which are tendered to us and not withdrawn, and to provide funding
for the merger.
IS YOUR FINANCIAL CONDITION RELEVANT TO MY DECISION WHETHER TO TENDER IN
RESPONSE TO THE OFFER?
Because all the funding which will be needed will come from the Three
Cities Funds or from financing which has already been arranged, we do not think
our financial condition is relevant to your decision whether to tender in
response to the offer.
HOW LONG DO I HAVE TO DECIDE WHETHER TO TENDER IN RESPONSE TO THE OFFER?
You will have at least until 12:00 midnight, New York City time, on
December 22, 1999, to decide whether to tender your shares in response to the
tender offer. Further, if you can't deliver everything that is required by that
time, you may be able to use a guaranteed delivery procedure, which is described
in the Offer to Purchase booklet relating to our tender offer.
CAN THE OFFER BE EXTENDED AND UNDER WHAT CIRCUMSTANCES?
We can extend the tender offer until January 22, 2000. We cannot extend it
beyond that date unless Garden Ridge consents to our doing so.
<PAGE> 2
HOW WILL I BE NOTIFIED IF THE OFFER IS EXTENDED?
If we extend the offer, we will inform ChaseMellon Shareholder Services,
L.L.C. (which is the Depositary with regard to the tender offer) of that fact,
and will make a public announcement of the extension, not later than 9:00 a.m.,
New York City time, on the day after the day on which the Offer was scheduled to
expire.
WHAT ARE THE MOST SIGNIFICANT CONDITIONS TO THE OFFER?
We will not have to purchase the shares which are tendered unless at least
51% of the shares which neither we nor our parent (GRDG Holdings) owned on
November 22, 1999 are properly tendered and not withdrawn. However, we may, if
we wish, purchase the shares which are properly tendered and not withdrawn, even
if they are less than 51% of the shares which our parent did not own on November
22. We can also decide not to purchase the shares which are tendered if, among
other things, there is a material adverse change in Garden Ridge or its business
before we accept the shares which have been tendered.
HOW DO I TENDER MY SHARES?
To tender shares, you must deliver the certificates representing the
shares, together with a completed Letter of Transmittal, to ChaseMellon
Shareholder Services, L.L.C., as Depositary, not later than the time the tender
offer expires. If your shares are held in street name, the shares can be
tendered through The Depositary Trust Company, but you still will have to
deliver a completed Letter of Transmittal to the Depositary. If you cannot get
something that it is required to the Depositary by the Expiration Time of the
tender offer, you can get a little extra time to do that by getting a broker, a
bank or another fiduciary which is a member of the Securities Transfer Agents
Medallion Program to guarantee that the missing items will be received by the
Depositary within three Nasdaq National Market trading days. However, the
Depositary must receive the missing items within that three trading day period.
UNTIL WHAT TIME CAN I WITHDRAW PREVIOUSLY TENDERED SHARES?
You can withdraw shares until the Expiration Time of the Offer and, if we
have not by January 22, 2000, agreed to accept your shares for payment, you can
withdraw them at any time after that date until we do accept them for payment.
HOW DO I WITHDRAW PREVIOUSLY TENDERED SHARES?
To withdraw shares, you must deliver a written notice of withdrawal, or a
facsimile of one, to the Depositary while you still have the right to withdraw
the shares.
WHAT DOES THE GARDEN RIDGE BOARD OF DIRECTORS THINK OF THE OFFER?
We are making the offer in accordance with a Plan and Agreement of Merger
which has been approved by the Garden Ridge Board of Directors, on the
recommendation of a Special Committee of directors which does not include anyone
affiliated with us. The Board approved the Merger Agreement, the tender offer
and the proposed merger of us into Garden Ridge in which our parent would become
the sole stockholder of the merged company, and any Garden Ridge stockholders
who do not tender their shares would receive the same amount of cash as is paid
to stockholders who do tender their shares.
IS THIS THE FIRST STEP IN A GOING-PRIVATE TRANSACTION?
Yes. If the merger takes place, Garden Ridge no longer will be publicly
owned. Even if the merger does not take place, if we purchase all the tendered
shares, there may be so few remaining stockholders and publicly held shares that
the Garden Ridge common stock will no longer be eligible to be traded through a
Nasdaq market or on a securities exchange, there may not be a public trading
market for Garden Ridge stock, and Garden Ridge may cease making filings with
the SEC or otherwise being required to comply with the SEC rules relating to
publicly held companies.
<PAGE> 3
WILL THE TENDER OFFER BE FOLLOWED BY A MERGER IF ALL THE GARDEN RIDGE SHARES ARE
NOT TENDERED IN RESPONSE TO THE OFFER?
If at least 51% of the shares which neither we nor our parent (GRDG
Holdings) owned on November 22, 1999 are properly tendered and not withdrawn, we
will be merged into Garden Ridge. If that merger takes place, GRDG Holdings will
own all the shares of Garden Ridge, and the other Garden Ridge stockholders will
receive $11.50 per share in cash (or any higher amount which is paid in the
tender offer, if the tender offer price is changed).
IF I DECIDE NOT TO TENDER, HOW WILL THE OFFER AFFECT MY SHARES?
If the merger described above takes place, you will receive as a result of
the merger the same cash per share which you would have received if you had
tendered your shares. Therefore, if the merger takes place, the only difference
to you between tendering your shares and not tendering your shares is that you
will be paid earlier if you tender your shares. If the merger does not take
place because less than 51% of the shares that neither we nor our parent already
owns are tendered, but we decide to purchase the tendered shares anyway, the
number of stockholders and of shares of Garden Ridge stock which are still in
the hands of the public may be so small that there no longer will be an active
public trading market (or, possibly, any public trading market) for the Garden
Ridge common stock. Also, as is described above, Garden Ridge may cease making
filings with the SEC or otherwise being required to comply with the SEC Rules
relating to publicly held companies.
WHAT IS THE MARKET VALUE OF MY SHARES AS OF A RECENT DATE?
On November 19, 1999, the last trading day before Garden Ridge announced
the tender offer and the possible subsequent merger, the last sale price of
Garden Ridge common stock reported on the Nasdaq National Market was $7.25 per
share. Between October 1, 1999 and November 22, 1999, the price of Garden Ridge
common stock ranged between $6.4375 and $7.25 per share (before October 1, the
price of Garden Ridge stock may have been affected by a tender offer Garden
Ridge made for its own shares at $7 per share).
WHO CAN I TALK TO IF I HAVE QUESTIONS ABOUT THE TENDER OFFER?
You can call D.F. King & Co., Inc. (Telephone No. 212-269-5550). D.F. King
is acting as the Information Agent with regard to our tender offer.
<PAGE> 1
PLAN AND AGREEMENT OF MERGER
DATED
NOVEMBER 22, 1999
BETWEEN
GARDEN RIDGE CORPORATION
AND
GR ACQUISITION CORPORATION
PLAN AND AGREEMENT OF MERGER
<PAGE> 2
PLAN AND AGREEMENT OF MERGER
This is a Plan and Agreement of Merger (the "Agreement") dated
as of November 22, 1999, between Garden Ridge Corporation (the "Company"), a
Delaware corporation, and GR Acquisition Corporation ("Acquisition"), a Delaware
corporation.
ARTICLE 1
THE TENDER OFFER
1.1 The Tender Offer. (a) On the date of this Agreement, Acquisition is
acquiring approximately 4,998,200 shares of common stock of the Company ("Common
Stock"). Not later than the first business day after the date of this Agreement,
Acquisition will make a public announcement of an offer (the "Tender Offer") to
purchase any and all of the outstanding Common Stock which Acquisition or its
parent, GR Holdings, LLC ("Holdings"), does not then own at a price (the "Tender
Offer Price") of $11.50 per share, net to the seller, in cash.
(b) Within five business days after the public announcement of
the Tender Offer, Acquisition will file with the Securities and Exchange
Commission ("SEC") a Tender Offer Statement on Schedule 14D-1 with respect to
the Tender Offer (together with any amendments or supplements, the "Schedule
14D-1"), including forms of an offer to purchase, a letter of transmittal and a
summary advertisement (the Schedule 14D-1 and the documents included in it by
which the Tender Offer will be made, as they may be supplemented or amended,
being the "Offer Documents"). Promptly after the Offer Documents are filed with
the SEC, Acquisition will communicate the Tender Offer to the record holders and
beneficial owners of the Common Stock. Each of Acquisition and the Company will
promptly correct any information provided by it for use in the Offer Documents
if and to the extent that information is or becomes incomplete or inaccurate in
any material respect, and Acquisition will supplement or amend the Offer
Documents to the extent required by the Securities Exchange Act of 1934, as
amended (the
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<PAGE> 3
"Exchange Act") and the rules under it, file the amended or supplemented
Offer Documents with the SEC and, if required, disseminate the amended Offer
Documents to the Company's stockholders. The Company and its counsel will be
given a reasonable opportunity to review the Offer Documents and any amendments
or supplements to them before they are filed with the SEC or disseminated to the
Company's stockholders.
(c) The day on which the Tender Offer expires (the "Expiration
Date") will not be earlier than 20 business days, and will not be later than 60
days, after the day on which the Schedule 14D-1 is filed with the SEC.
(d) Subject to the conditions to the Tender Offer set forth on
Exhibit 1.1-E and the other conditions set forth in this Agreement, Acquisition
will, not later than five days after the Expiration Date, accept for payment and
pay for all the shares of Common Stock which are properly tendered in response
to the Tender Offer and not withdrawn. The obligation of Acquisition to accept
for payment and pay for shares which are properly tendered and not withdrawn
will not be subject to any conditions other than those set forth on Exhibit
1.1-E. Acquisition will not, without the prior consent of the Company, (i)
decrease the Tender Offer Price below that described in subparagraph (a), (ii)
decrease the number of shares being solicited in the Tender Offer, (iii) change
the form of consideration payable in the Tender Offer, (iv) modify or add to the
conditions set forth on Exhibit 1.1-E or (v) extend the Expiration Date to a day
which is more than 60 days after the day on which the Schedule 14D-1 is filed
with the SEC, except that (A) if the waiting periods under the Hart-Scott-Rodino
Antitrust Improvements Act of 1976, as amended (the "HSR Act") have not expired
or been terminated at least three days before the Expiration Date, the
Expiration Date may be extended until 10 business days after the day on which
the waiting periods under the HSR Act expire or are terminated, (B) if the
Tender Offer is modified to increase the Tender Offer Price or in any other
manner permitted by this Agreement, the Expiration Date may be extended until 10
business days after the day on
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<PAGE> 4
which Acquisition makes a public announcement of the modification, (C) if anyone
other than Acquisition makes a tender offer for Common Stock before the Tender
Offer expires, Acquisition may extend the Expiration Date until not more than 10
business days after the other tender offer expires, and (D) if Acquisition is
prevented by an order of a court or other governmental agency from accepting
shares which are tendered in response to the Tender Offer, Acquisition may
extend the Expiration Date until 10 business days after Acquisition is able to
accept shares without violating any order of any court or other governmental
agency.
1.2 Company Action. (a) The Company approves of and consents to the
Tender Offer and represents and warrants that its Board of Directors (the
"Board"), acting on the recommendation of a Special Committee (the "Special
Committee") none of the members of which are partners in, employees of or
otherwise affiliated with Three Cities Research, Inc. or any investment fund
managed by it, has (i) determined that this Agreement and the transactions
contemplated by it are fair to and in the best interests of the Company and its
stockholders, (ii) approved this Agreement and the transactions contemplated by
it, including Acquisition's acquiring Common Stock on the date of this Agreement
as described in Paragraph 1.1(a), the Tender Offer and the Merger (described in
Article 2), and (iii) resolved to recommend that the Company's stockholders
accept the Tender Offer, tender their shares in response to the Tender Offer,
and adopt and approve this Agreement and the Merger.
Notwithstanding anything contained in this subparagraph (a) or elsewhere in this
Agreement, if the Board, based upon written advice from its counsel, determines
in good faith to withdraw, modify or amend the
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<PAGE> 5
recommendation, because the failure to do so could reasonably be expected to be
a breach of the directors' fiduciary duties under applicable law, that
withdrawal, modification or amendment will not constitute a breach of this
Agreement.
(b) The Company will file with the SEC, promptly after
Acquisition files the Schedule 14D-1, a Solicitation/Recommendation Statement on
Schedule 14D-9 (together with any amendments or supplements, the "Schedule
14D-9") containing the recommendations described in subparagraph (a) and will
disseminate the Schedule 14D-9 as required by Rule 14d-9 under the Exchange Act.
The Company and Acquisition each agrees to correct promptly any information
provided by it for use in the Schedule 14D-9 if and to the extent that
information is or becomes incomplete or inaccurate in any material respect and
the Company will file any corrected Schedule 14D-9 with the SEC and disseminate
the corrected Schedule 14D-9 to the Company's stockholders to the extent
required by the Exchange Act or the rules under it.
(c) In connection with the Tender Offer, the Company will
promptly furnish Acquisition with mailing labels, security position listings and
any other available listing or computer files containing the names and addresses
of the record holders or beneficial owners of shares of Common Stock as of a
recent date and the Company will furnish Acquisition with such additional
information and assistance (including, without limitation, updated lists of
stockholders, mailing labels and lists of securities positions) as Acquisition
or its representatives may reasonably request in order to communicate the Tender
Offer to the record holders and beneficial owners of the Common Stock. Subject
to the requirements of applicable law, Acquisition will hold in confidence the
information contained in any such labels, listings or files, and will use that
information only in connection with the Tender Offer and the Merger. If this
Agreement is terminated, Acquisition will return to the Company the originals
and all copies of that information which are in Acquisition's possession.
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<PAGE> 6
ARTICLE 2
THE MERGER
2.1 Agreement to Effect Merger. If (a) at least 51% of the outstanding
shares of Common Stock which neither Acquisition nor Holdings owns when
Acquisition makes a public announcement of the Tender Offer are properly
tendered in response to the Tender Offer and not withdrawn, (b) Acquisition
purchases the shares of Common Stock which are properly tendered in response to
the Tender Offer and not withdrawn, and (c) the conditions to the Merger set
forth in Paragraph 6.2 are satisfied or waived, Acquisition will take all steps
in its power, including voting, and causing its affiliates to vote, all the
Common Stock beneficially owned by any of them in favor of adoption of this
Agreement and approval of the Merger, to cause Acquisition to be merged into the
Company (the "Merger") on the terms and with the effects set forth in Paragraphs
2.2 through 2.8.
2.2 The Merger. In the Merger, Acquisition will be merged into the
Company, which will be the surviving corporation of the Merger (the "Surviving
Corporation"). Except as specifically provided in this Agreement, when the
Merger becomes effective, (i) the real and personal property, other assets,
rights, privileges, immunities, powers, purposes and franchises of the Company
will continue unaffected and unimpaired by the Merger, (ii) the separate
existence of Acquisition will terminate, and Acquisition's real and personal
property, other assets, rights, privileges, immunities, powers, purposes and
franchises will be merged into the Surviving Corporation, and (iii) the Merger
will have the other effects specified in Section 259 of the Delaware General
Corporation Law (the "DGCL").
2.3 Certificate of Incorporation. From the Effective Time (described in
Paragraph 3.3) until subsequently amended, the Certificate of Incorporation of
Acquisition immediately before the Effective Time will be the Certificate of
Incorporation of the Surviving Corporation, except that it will provide that (i)
the name of the Surviving Corporation will be "Garden Ridge
5
<PAGE> 7
Corporation," and (ii) the number of shares which the Surviving Corporation will
be authorized to issue will be 400,000 shares of common stock, par value $.01
per share, and that Certificate of Incorporation, separate and apart from this
Agreement, may be certified as the Certificate of Incorporation of the Surviving
Corporation.
2.4 By-Laws. At the Effective Time, the By-Laws of Acquisition
immediately before the Effective Time will be the By-Laws of the Surviving
Corporation, and will remain so until they are altered, amended or repealed.
2.5 Directors. The directors of Acquisition immediately before the
Effective Time will be the directors of the Surviving Corporation after the
Effective Time and will hold office in accordance with the By-Laws of the
Surviving Corporation.
2.6 Officers. The officers of the Company immediately before the
Effective Time will be the officers of the Surviving Corporation after the
Effective Time and will hold office at the pleasure of the Board of Directors,
and in accordance with the By-Laws, of the Surviving Corporation.
2.7 Stock of the Company. (a) Except as provided in subparagraph (b),
at the Effective Time each share of Common Stock which is outstanding
immediately before the Effective Time will be converted into and become the
right to receive a sum in cash equal to the Tender Offer Price (the "Merger
Price").
(b) Each share of Common Stock held in the treasury of the
Company, and each share of Common Stock held by Acquisition or by any direct or
indirect subsidiary of the Company, immediately before the Effective Time will,
at the Effective Time, be cancelled and cease to exist and no payment will be
made with respect to any of those shares.
6
<PAGE> 8
2.8 Stock of Acquisition. At the Effective Time, each share of stock of
Acquisition ("Acquisition stock") which is outstanding immediately before the
Effective Time will be converted into and become one share of the same class of
stock of the Surviving Corporation. At the Effective Time, a certificate which
represented Acquisition stock will automatically become and be a certificate
representing the number of shares of the class of Surviving Corporation stock
into which the Acquisition stock represented by the certificate was converted.
2.9 Stockholders Meeting. (a) If the conditions described in Paragraph
2.1 are satisfied, and if approval by the Company's stockholders is required by
applicable law or by the rules of the Nasdaq National Market (if they are
applicable) in order to enable the Company to consummate the Merger, the Company
will:
(i) hold a special meeting of its stockholders as
soon as practicable following the Expiration Date for the purpose of adopting
this Agreement and approving the Merger (the "Stockholders Meeting");
(ii) as promptly as practicable after the Expiration
Date, (v) file with the SEC (if the Company is required to file proxy materials
with the SEC) a proxy statement (the "Proxy Statement") and other proxy
soliciting materials relating to the Stockholders Meeting, (w) respond promptly
to any comments made by the staff of the SEC with respect to the Proxy Statement
or other proxy soliciting materials and in all other ways use its best efforts
to cause review of the Proxy Statement to be completed as promptly as
practicable, (x) as promptly as practicable, and in any event within 5 days
after the Company is informed that the SEC staff has no further contents about
the Proxy Statement, cause the Proxy Statement to be mailed to its stockholders,
(y) cause the Stockholders Meeting to be held not later than the 30th day after
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<PAGE> 9
the day on which the Proxy Statement is mailed, and (z) in all other respects,
use its best efforts to cause its stockholders to adopt this Agreement and
approve the Merger; and
(iii) include in the Proxy Statement the
recommendation of the Board that the stockholders of the Company vote in favor
of the adoption of this Agreement and approve the Merger, unless the Board,
based upon written advice from its counsel, determines in good faith that the
failure to amend or withdraw that recommendation could reasonably be expected to
be a breach of the directors' fiduciary duties under applicable law.
(b) Acquisition will (i) supply to the Company all information
in Acquisition's possession, including any required financial statements of
Acquisition, which the Company is required to include in the Proxy Statement and
(ii) in all other respects cooperate with the Company in its efforts to file the
Proxy Statement with the SEC and cause review of the Proxy Statement to be
completed as promptly as practicable after it is filed with the SEC.
2.10 Dissenting Shares. (a) Notwithstanding any provision of this
Agreement to the contrary, Common Stock that is outstanding immediately prior to
the Effective Time which is held by stockholders who have complied with Section
262 of the DGCL (including making a timely demand for appraisal and not voting
in favor of or consenting to the Merger) will not be converted into the right to
receive the Merger Price. Instead, if the Merger takes place, the Surviving
Corporation will pay the holders of those shares the fair value of the shares
determined as provided in Section 262 of the DGCL. Shares held by stockholders
who fail to perfect, or who otherwise properly withdraw or lose, their rights to
receive the fair value of their shares determined under Section 262 of the DGCL
will be deemed to have been converted, at the later of the Effective Time or the
time they withdraw or lose their rights to receive the fair value of their
shares, into the right to receive the Merger Price, without any interest.
8
<PAGE> 10
(b) The Company will promptly give Acquisition (i) notice of
any demands for appraisal received by the Company, any withdrawals of any such
demands, and any other communications required by, or relating to, Section 262
of the DGCL which the Company receives and (ii) the opportunity to direct all
negotiations and proceedings with respect to demands for appraisal under the
DGCL. The Company will not, except with the prior written consent of
Acquisition, make any payment with respect to any demand for payment of the fair
value of shares or offer to settle or settle any such demand.
2.11 Payment for Shares. (a) Prior to the Effective Time, Acquisition
will designate a bank or trust company to act as Paying Agent in connection with
the Merger (the "Paying Agent"). At, or immediately before, the Effective Time,
Acquisition or the Surviving Corporation will provide the Paying Agent with the
funds necessary to make the payments contemplated by Paragraph 2.7. Until used
for that purpose, the funds will be invested by the Paying Agent, as directed by
Acquisition, in obligations of or guaranteed by the United States of America or
obligations of an agency of the United States of America which are backed by the
full faith and credit of the United States of America, in commercial paper
obligations rated A-1 or P-1 or better by Moody's Investors Services Inc. or
Standard & Poors' Corporation, or in deposit accounts, certificates of deposit
or banker's acceptances of, repurchase or reverse repurchase agreements with, or
Eurodollar time deposits purchased from, commercial banks with capital, surplus
and undivided profits aggregating more than $200 million (based on the most
recent financial statements of the banks which are then publicly available at
the SEC or otherwise).
(b) Promptly after the Effective Time, the Surviving
Corporation will cause the Paying Agent to mail to each person who was a record
holder of Common Stock at the Effective Time, a form of letter of transmittal
for use in effecting the surrender of stock certificates representing Common
Stock ("Certificates") in order to receive payment of the Merger Price. When the
Paying Agent receives a Certificate, together with a properly completed and
executed
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<PAGE> 11
letter of transmittal and any other required documents, the Paying Agent will
pay to the holder of the Certificate, or as otherwise directed in the letter of
transmittal, the Merger Price with regard to the shares represented by the
Certificate, and the Certificate will be cancelled. No interest will be paid or
accrued on the cash payable upon the surrender of Certificates. If payment is to
be made to a person other than the person in whose name a surrendered
Certificate is registered, the surrendered Certificate must be properly endorsed
or otherwise be in proper form for transfer, and the person who surrenders the
Certificate must provide funds for payment of any transfer or other taxes
required by reason of the payment to a person other than the registered holder
of the surrendered Certificate or establish to the satisfaction of the Surviving
Corporation that the tax has been paid. After the Effective Time, a Certificate
which has not been surrendered will represent only the right to receive the
Merger Price, without any interest.
(c) If a Certificate has been lost, stolen or destroyed, the
Surviving Corporation will accept an affidavit and indemnification reasonably
satisfactory to it instead of the Certificate.
(d) At any time which is more than six months after the
Effective Time, the Surviving Corporation may require the Paying Agent to
deliver to it any funds which had been made available to the Paying Agent and
have not been disbursed to holders of shares of Common Stock (including, without
limitation, interest and other income received by the Paying Agent in respect of
the funds made available to it), and after the funds have been delivered to the
Surviving Corporation, former stockholders of the Company must look to the
Surviving Corporation for payment of the Merger Price upon surrender of the
Certificates held by them. Neither the Surviving Corporation nor the Paying
Agent will be liable to any former stockholder of the Company for any Merger
consideration which is delivered to a public official pursuant to any abandoned
property, escheat or similar law.
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<PAGE> 12
(e) After the Effective Time, the Surviving Corporation will
not record any transfers of shares of Common Stock on the stock transfer books
of the Company or the Surviving Corporation, and the stock ledger of the Company
will be closed. If, after the Effective Time, Certificates are presented for
transfer, they will be cancelled and treated as having been surrendered for the
Merger Price.
2.12 Options and Warrants. At the Effective Time, each option or
warrant issued by the Company which is outstanding at that time (a) will become
the right to receive a sum in cash equal to (i) the amount, if any, by which the
Merger Price exceeds the per share exercise price of the option or warrant,
times (ii) the number of shares of Common Stock issuable upon exercise of the
option or warrant in full (irrespective of vesting provisions), and (b) except
as described in clause (a), will be cancelled. In order to receive the amount to
which a holder of an option or warrant is entitled under this Paragraph, the
holder must deliver to the Company (i) any certificate or option agreement
relating to the option or warrant and (ii) a document in which the holder
acknowledges that the payment the holder is receiving is in full satisfaction of
any rights the holder may have under or with regard to the option or warrant.
2.13 Stock Purchase Plan. At the Effective Time, (i) all funds held in
participants' accounts under the Company's Stock Purchase Plan which were
contributed in accordance with elections made prior to the date of this
Agreement and which have not yet been used to purchase Common Stock will be paid
over to the Company and (ii) each participant will receive from the Company
$11.50 for each $9.775 paid over to the Company from the participant's account.
ARTICLE 3
EFFECTIVE TIME OF MERGER
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<PAGE> 13
3.1 Date of the Merger. The day on which the Merger is to take place
(the "Merger Date") will be (a) the day on which the Merger is approved by the
holders of a majority of the outstanding shares of Common Stock or (b) if
stockholder approval of the Merger is not required by applicable law or by the
rules of the Nasdaq National Market (if they are applicable), a day designated
by Acquisition which will be not later than 10 days after the Expiration Date.
The Merger Date may be changed with the consent of the Company and Acquisition.
3.2 Execution of Certificate of Merger. Not later than 3:00 P.M. on the
day before the Merger Date, (a) Acquisition and the Company will each execute a
certificate of merger (the "Certificate of Merger") substantially in the form of
Exhibit 3.2 and deliver it to Rogers & Wells LLP for filing with the Secretary
of State of Delaware. Rogers & Wells LLP will be instructed that, if it is
notified on the Merger Date that all the conditions in Article VI have been
fulfilled or waived, it is to cause the Certificate of Merger to be filed with
the Secretary of State of Delaware on the Merger Date or as soon after that date
as is practicable.
3.3 Effective Time of the Merger. The Merger will become effective at
11:59 P.M. on the day when the Certificate of Merger is filed with the Secretary
of State of Delaware (that being the "Effective Time").
ARTICLE 4
REPRESENTATIONS AND WARRANTIES
4.1 Representations and Warranties of Acquisition. Acquisition
represents and warrants to the Company as follows:
(a) Acquisition is a corporation duly organized, validly
existing and in good standing under the laws of the State of Delaware.
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<PAGE> 14
(b) Acquisition has all corporate power and authority
necessary to enable it to enter into this Agreement and carry out the
transactions contemplated by this Agreement. All corporate actions necessary to
authorize Acquisition to enter into this Agreement and carry out the
transactions contemplated by it have been taken. This Agreement has been duly
executed by Acquisition and is a valid and binding agreement of Acquisition,
enforceable against Acquisition in accordance with its terms.
(c) Neither the execution or delivery of this Agreement or of
any document to be delivered in accordance with this Agreement nor the
consummation of the transactions contemplated by this Agreement or by any
document to be delivered in accordance with this Agreement will violate, result
in a breach of, or constitute a default (or an event which, with notice or lapse
of time or both would constitute a default) under, the Certificate of
Incorporation or by-laws of Acquisition, any agreement or instrument to which
Acquisition or any subsidiary of Acquisition is a party or by which any of them
is bound, any law, or any order, rule or regulation of any court or governmental
agency or other regulatory organization having jurisdiction over Acquisition or
any of its subsidiaries, except violations or breaches of, or defaults under,
agreements or instruments which would not have a Material Adverse Effect on the
Company (as defined below).
(d) No governmental filings, authorizations, approvals or
consents, or other governmental action, other than the termination or expiration
of waiting periods under the HSR Act, if any, are required to permit Acquisition
to fulfill all its obligations under this Agreement.
(e) Acquisition was formed solely for the purpose of engaging
in the transaction contemplated by this Agreement. Acquisition has not, and on
the Effective Date will not have, engaged in any activities or incurred,
directly or indirectly, any obligations or liabilities, except
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<PAGE> 15
the activities relating to or contemplated by this Agreement and obligations or
liabilities incurred in connection with those activities and with the
transactions contemplated by this Agreement.
(f) Neither the Offer Documents nor any information supplied
by Acquisition for inclusion in the Schedule 14D-9 will, at the respective times
the Schedule 14D-1 and the Schedule 14D-9 are filed with the SEC and first
published, sent or given to the Company's stockholders, contain a false or
misleading statement with respect to any material fact or omit to state any
material fact required to be stated therein or necessary in order to make the
statements therein, in light of the circumstances under which they are made, not
misleading. On the date the Proxy Statement is mailed to the Company's
stockholders and on the date of the Stockholders Meeting, none of the
information supplied by Acquisition for inclusion in the Proxy Statement will be
false or misleading with respect to any material fact or will omit to state any
material fact required to be stated therein or necessary in order to make the
statements therein, in light of the circumstances under which they are made, not
misleading or necessary to correct any statement in any earlier communication
with respect to the Stockholders Meeting or the solicitation of proxies to be
used at the Stockholders Meeting. However, Acquisition does not make any
representations or warranties with respect to information supplied by the
Company or any of its affiliates or representatives for inclusion in the
Offering Documents, or with respect to the Schedule 14D-9 or the Proxy Statement
(except to the extent of information supplied by Acquisition for inclusion in
the Schedule 14D-9 or the Proxy Statement). The Offering Documents will comply
as to form in all material respects with the requirements of the Exchange Act
and the rules under it.
(g) Acquisition is wholly owned by GR Holdings, LLC
("Holdings"), which in turn, until the date of this Agreement, has been wholly
owned by Three Cities Fund III, L.P. ("Three Cities"). Three Cities has, or has
arranged equity investments or loans which will provide, sufficient funds to
enable Acquisition to purchase and pay for in a timely manner all the
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Common Stock which is tendered in response to the Tender Offer and enable
Acquisition to fulfill in a timely manner all of its other obligations under
this Agreement.
(h) None of Acquisition, Holdings or Three Cities is the
subject of any suit or governmental proceeding which seeks to prevent
Acquisition from completing the transactions which are the subject of this
Agreement, nor, to the best of Acquisition's knowledge, has any such suit or
proceeding been threatened.
4.2 Representations and Warranties of the Company. The Company
represents and warrants to Acquisition as follows:
(a) The Company is a corporation duly organized, validly
existing and in good standing under the laws of the State of Delaware.
(b) The Company has all corporate power and authority
necessary to enable it to enter into this Agreement and carry out the
transactions contemplated by this Agreement. All corporate actions necessary to
authorize the Company to enter into this Agreement and carry out the
transactions contemplated by it, other than adoption of this Agreement by the
stockholders of the Company, have been taken. This Agreement has been duly
executed by the Company and is a valid and binding agreement of the Company,
enforceable against the Company in accordance with its terms.
(c) Neither the execution and delivery of this Agreement or of
any document to be delivered in accordance with this Agreement nor the
consummation of the transactions contemplated by this Agreement or by any
document to be delivered in accordance with this Agreement will violate, result
in a breach of, or constitute a default (or an event which, with notice or lapse
of time or both, would constitute a default) under, the Certificate of
Incorporation or By-Laws of the Company, any agreement or instrument to which
the Company or any
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subsidiary of the Company is a party or by which any of them is bound, any law,
or any order, rule or regulation of any court or governmental agency or other
regulatory organization having jurisdiction over the Company or any of its
subsidiaries, except violations or breaches of, or defaults under, agreements or
instruments which would not have a Material Adverse Effect on the Company,
Acquisition, Holdings or any stockholder of Holdings.
(d) Except as shown on Exhibit 4.2-D, no governmental filings,
authorizations, approvals, or consents, or other governmental action, other than
the expiration or termination of waiting periods under the HSR Act, if any, are
required to permit the Company to fulfill all its obligations under this
Agreement.
(e) The Company and each of its subsidiaries is qualified to
do business as a foreign corporation in each state in which it is required to be
qualified, except states in which the failure to qualify, in the aggregate,
would not have a Material Adverse Effect upon the Company. As used in this
Agreement, the term "Material Adverse Effect" upon a company means a material
adverse effect upon (i) the consolidated financial position of that company and
its subsidiaries taken as a whole, or (ii) the consolidated results of
operations of that company and its subsidiaries taken as a whole compared with
the consolidated results of their operations during the same period of the prior
year. For the purposes of the definition of Material Adverse Effect, (x) an
adverse change in financial condition will be material if it is a reduction of
5% or more in working capital, tangible net worth or net asset value, and (y) an
adverse change in results of operations will be material if it is a reduction of
5% or more in total revenues, net income before income taxes, net income, or
earnings before interest, taxes, depreciation and amortization.
(f) The only authorized stock of the Company is 40,000,000
shares of Common Stock, par value $.01 per share. At the date of this Agreement,
the only
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outstanding stock of the Company is 16,176,800 shares of Common Stock. All the
outstanding shares have been duly authorized and issued and are fully paid and
non-assessable. Except as shown on Exhibit 4.2-F, the Company has not issued any
options, warrants or convertible or exchangeable securities, and is not a party
to any other agreements, which require, or upon the passage of time, the payment
of money or the occurrence of any other event may require, the Company to issue
or sell any of its stock. On November 8, 1999, the Board, acting on the
recommendations of the Special Committee, approved for the purposes of the
transaction which are the subject of this Agreement, the acquisition by Holdings
of more than 15% of the outstanding Common Stock and the acquisition by
Acquisition of any or all the Common Stock which Holdings at any time owns. By
reason of that approval neither the acquisition of Common Stock by Acquisition
described in Paragraph 1.1(a) nor the prior acquisition of that Common Stock by
Holdings will cause acquisition or Holdings to be subject to the restrictions
upon business combinations contained in Section 203 of the DGCL. In addition,
the Company, with the approval of the Board, has amended the Amended and
Restated Rights Agreement (the "Rights Agreement") dated as of July 14, 1999
between the Company and Chase Mellon Shareholder Services, L.L.C., to exclude
Acquisition, Holdings and Three Cities from the definition of "Acquiring Person"
in the Rights Agreement. As a result of that amendment, none of the acquisition
of Common Stock by Acquisition on the date of this Agreement described in
Paragraph 1.1(a), the acquisition of Common Stock by Holdings on the date of
this Agreement or any of the transactions contemplated by this Agreement will
result in there being a Distribution Date under the Rights Agreement or
otherwise entitle anyone to exercise Rights under the Rights Agreement.
(g) Except as shown on Exhibit 4.2-G, (i) each of the
corporations and other entities of which the Company owns directly or indirectly
50% or more of the equity (each corporation or other entity of which a company
owns directly or indirectly 50% or more of the
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equity being a "subsidiary" of that company) has been duly organized, and is
validly existing and in good standing under the laws of its state of
incorporation, (ii) all the shares of stock of each of the Company's
subsidiaries which are owned by the Company or any of its subsidiaries are duly
authorized, validly issued, fully paid and non-assessable and are not subject to
any preemptive rights, and (iii) neither the Company nor any of its subsidiaries
has issued any options, warrants or convertible or exchangeable securities, or
is a party to any other agreements, which require, or upon the passage of time,
the payment of money or the occurrence of any other event may require, the
Company or any subsidiary to issue or sell any stock or other equity interests
in any of the Company's subsidiaries and, there are no registration covenants or
transfer or voting restrictions with respect to outstanding securities of any of
the Company's subsidiaries.
(h) Since February 1, 1996, the Company has filed with the SEC
all forms, statements, reports and documents it has been required to file under
the Securities Act of 1993, as amended, the Exchange Act or the rules under
them.
(i) The Company's Annual Report on Form 10-K for the year
ended January 31, 1999 (the "1999 10-K") and its Report on Form 10-Q for the
period ended August 1, 1999 (the "August 10-Q") which were filed with the SEC,
including the documents incorporated by reference in each of them, each
contained all the information required to be included in it and, when it was
filed, did not contain an untrue statement of a material fact or omit to state a
material fact necessary in order to make the statements made in it, in light of
the circumstances under which they were made, not misleading. Without limiting
what is said in the preceding sentence, the financial statements included in the
1999 10-K all were prepared, and the financial information included in the
August 10-Q was derived from financial statements which were prepared, in
accordance with United States generally accepted accounting principles ("GAAP")
applied on a consistent basis (except that financial information included in the
August 10-Q does not contain notes and is subject to normal year end
adjustments) and present fairly
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the consolidated financial condition and the consolidated results of operations
of the Company and its subsidiaries at the dates, and for the periods, to which
they relate. The Company has not filed any reports with the Securities and
Exchange Commission with regard to any period which ended, or any event which
occurred, after August 1, 1999, except a Schedule 13E-4 which the Company filed
on August 26, 1999, and amended on October 7, 1999.
(j) Since August 1, 1999, (i) the Company and its subsidiaries
have conducted their respective businesses in the ordinary course and in the
same manner in which they were conducted prior to August 1, 1999, and (ii)
nothing has occurred which, individually or in aggregate, has had a Material
Adverse Effect on the Company, except purchases by the Company of its Common
Stock, (including purchases through a tender offer which expired on September
23, 1999), which reduced the Company's working capital, tangible net worth and
net assets.
(k) The assets of the Company and its subsidiaries constitute,
in the aggregate, all the assets (including, but not limited to, intellectual
property rights) used in or necessary to the conduct of their businesses as they
currently are being conducted.
(l) The Company and it subsidiaries have at all times
complied, and currently are complying, with all applicable Federal, state, local
and foreign laws and regulations, except failures to comply which would not
reasonably be expected, in the aggregate, to have a Material Averse Effect on
the Company.
(m) The Company and its subsidiaries have all licenses and
permits which are required at the date of this Agreement to enable them to
conduct their businesses as they currently are being conducted, except licenses
or permits the lack of which would not reasonably be expected, in the aggregate,
to have a Material Adverse Effect on the Company.
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(n) The Company and each of its subsidiaries has filed when due (taking
account of extensions) all Tax Returns (as defined below) which it has been
required to file and has paid all Taxes shown on those returns to be due. Those
Tax Returns accurately reflect all Taxes required to have been paid, except to
the extent of items which may be disputed by applicable taxing authorities but
for which there is substantial authority to support the position taken by the
Company or the subsidiary and which have been adequately reserved against in
accordance with GAAP on the balance sheet at August 1, 1999 included in the
August 10-Q. Except as shown on Exhibit 4.2-N, (i) no extension of time given by
the Company or any of its subsidiaries for completion of the audit of any of its
Tax Returns is in effect, (ii) no tax lien has been filed by any taxing
authority against the Company or any of its subsidiaries or any of their assets,
(iii) no Federal, state or local audits or other administrative proceedings or
court proceedings with regard to Taxes are presently pending with regard to the
Company or any of its subsidiaries, (iv) neither the Company nor any subsidiary
is a party to any agreement providing for the allocation or sharing of Taxes,
(v) neither the Company nor any subsidiary has participated in or cooperated
with an international boycott as that term is used in Section 999 of the
Internal Revenue Code of 1986, as amended (the "Code") and (vi) neither the
Company nor any subsidiary has filed a consent pursuant to Section 341(f) of the
Code or agreed to have Section 341(f)(2) of the Code apply to any disposition of
a Subsection (f) asset (as that term is defined in Section 341(f)(4) of the
Code) owned by the Company or any subsidiary. For the purposes of this
Agreement, the term "Taxes" means all taxes (including, but not limited to,
withholding taxes), assessments, fees, levies and other governmental charges,
and any related interest or penalties. For the purposes of this Agreement, the
term "Tax Return" means any report, return or other information required to be
supplied to a taxing authority in connection with Taxes.
(o) (i) The Company and its subsidiaries have all material
environmental permits which are necessary to enable them to conduct their
businesses as they currently are being
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conducted without violating any Environmental Laws, (ii) the Company has not
received any notice of material noncompliance or material liability under any
Environmental Law, (iii) neither the Company nor any subsidiary has performed
any acts, including but not limited to releasing, storing or disposing of
hazardous materials, there is no condition on any property owned or leased by
the Company or a subsidiary, and there was no condition on any property formerly
owned or leased by the Company or a subsidiary while the Company or a subsidiary
owned or leased that property, that could result in material liability by the
Company or a subsidiary under any Environmental Law and (iv) neither the Company
nor any subsidiary is subject to any order of court or governmental agency
requiring the Company or any subsidiary to take, or refrain from taking, any
actions in order to comply with any Environmental Law and no action or
proceeding seeking such an order is pending or, insofar as any officer of the
Company is aware, threatened against the Company. As used in this Agreement, the
term "Environmental Law" means any Federal, state or local law, rule,
regulation, guideline or other legally enforceable requirement of a governmental
authority relating to protection of the environment or to environmental
conditions which affect human health or safety.
(p) The Company has conducted tests to determine the extent to
which computer software and hardware and other equipment which it uses are Y2K
Compliant. All computer software and hardware and other equipment which the
Company or a subsidiary uses either is Y2K Compliant or can be made Y2K
Compliant before December 31, 1999 at a total cost to the Company and its
subsidiaries of not more than $100,000. Failures of items sold by the Company to
be Y2K Compliant will not result in liabilities or costs to the Company which,
in aggregate, will have a Material Adverse Effect on the Company. The Company
has conducted a survey of its suppliers seeking to determine the extent to which
their activities may be affected by failures of computer software or hardware or
other equipment to be Y2K Compliant. Based upon the results of that survey, the
Company has no reasonable basis to believe that failures of
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<PAGE> 23
computer software or hardware or other equipment used by suppliers of the
Company and its subsidiaries will have a Material Adverse Effect on the Company.
As used in this Agreement, systems and equipment will be Y2K compliant if they
are capable of recognizing that dates in the year 2000 are subsequent to
December 31, 1999 and are otherwise able to operate without being adversely
affected by the change from the twentieth to the twenty-first century.
(q) Except as shown on Exhibit 4.2-Q, there are no contracts,
agreements or other arrangements which could result in the payment by the
Company or by any subsidiary of an "Excess Parachute Payment" as that term is
used in Section 280G of the Code.
(r) Neither the Schedule 14D-9 nor any information supplied by
the Company for inclusion in the Offering Documents will, at the respective
times the Schedule 14D-9 and the Schedule 14D-1 are filed with the SEC and first
published, sent or given to the Company's stockholders, contain a false or
misleading statement with respect to any material fact or omit to state any
material fact required to be stated therein or necessary in order to make the
statements therein, in light of the circumstances under which they are made, not
misleading. On the day the Proxy Statement is mailed to the Company's
stockholders and on the day of the Stockholders Meeting, the Proxy Statement
will not contain a false or misleading statement with respect to any material
fact or omit to state any material fact required to be stated therein or
necessary in order to make the statements therein, in light of the circumstances
under which they are made, not misleading or necessary to correct any statement
in any earlier communication with respect to the Stockholders Meeting or the
solicitation of proxies to be used at the Stockholders Meeting. However, the
Company does not make any representations or warranties with respect to
information supplied by Acquisition or any of its affiliates or representatives
for inclusion in the Schedule 14D-9 or the Proxy Statement, or with respect to
the Offering Documents (except to the extent of information supplied by the
Company for inclusion in the Offering Documents). The Schedule 14D-9 and the
Proxy Statement each will
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comply as to form in all material respects with the requirements of the Exchange
Act and the rules under it.
4.3 Termination of Representations and Warranties. The representations
and warranties in Paragraphs 4.1, 4.2 and 8.1 will terminate at the Expiration
Date, and neither the Company nor Acquisition, nor any of their respective
stockholders, will have any rights or claims as a result of any of those
representations or warranties after the Expiration Date.
ARTICLE 5
ACTIONS PRIOR TO THE MERGER
5.1 Activities Until Effective Time. From the date of this Agreement to
the Effective Time, except as described on Exhibit 5.1, the Company will, and
will cause each of its subsidiaries to, except with the written consent of
Acquisition:
(a) Operate its business in the ordinary course and in a
manner consistent with the manner in which it is being operated at the date of
this Agreement.
(b) Take all reasonable steps available to it to maintain the
goodwill of its business and, except as otherwise requested by Acquisition, the
continued employment of its executives and other employees.
(c) At its expense, maintain all its assets in good repair and
condition, except to the extent of reasonable wear and use and damage by fire or
other unavoidable casualty.
(d) Not make any borrowings other than borrowings in the
ordinary course of business under working capital lines which are disclosed in
the notes to the consolidated balance sheet at January 31, 1999 included in the
1999 10-K or the consolidated balance sheet at August 1, 1999 included in the
August 10-Q.
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(e) Not enter into any contractual commitments involving
capital expenditures, loans or advances, and not voluntarily incur any
contingent liabilities, except in each case in the ordinary course of business.
(f) Not redeem or purchase any of its stock and not declare or
pay any dividends, or make any other distributions or repayments of debt to its
stockholders (other than payments by subsidiaries of the Company to the Company
or to other wholly owned subsidiaries of the Company).
(g) Not make any loans or advances (other than advances for
travel and other normal business expenses) to stockholders, directors, officers
or employees.
(h) Maintain its books of account and records in the usual
manner, in accordance with GAAP applied on a consistent basis, subject to normal
year-end adjustments and accruals.
(i) Comply in all material respects with all applicable laws
and regulations of governmental agencies.
(j) Not sell, dispose of or encumber any property or assets,
or engage in any activities or transactions, except in each case in the ordinary
course of business.
(k) Not enter into or amend any employment, severance or
similar agreements or arrangements, or increase the salaries of any employees,
other than through normal annual merit increases averaging not more than 5%.
(l) Not adopt, become an employer with regard to, or amend any
employee compensation, employee benefit or post-employment benefit plan.
(m) Not amend its certificate of incorporation or by-laws.
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(n) Not (i) issue or sell any of its stock (except upon
exercise of options which are outstanding on the date of this Agreement or in
accordance with the Company's Stock Purchase Plan as in effect on the date of
Agreement) or any options, warrants or convertible or exchangeable securities or
(ii) split, combine, or reclassify its outstanding stock.
(o) Not authorize or enter into any agreement to take any of
the actions referred to in subparagraphs (a) through (n) above.
5.2 HSR Act Filings. The Company and Acquisition will each make as
promptly as practicable the filing it is required to make under the HSR Act with
regard to the transactions which are the subject of this Agreement and each of
them will take all reasonable steps within its control (including providing
information to the Federal Trade Commission and the Department of Justice) to
cause the waiting periods required by the HSR Act to be terminated or to expire
as promptly as practicable. The Company and Acquisition will each provide
information and cooperate in all other respects to assist the other of them in
making its filing under the HSR Act.
5.3 No Solicitation of Offers; Notice of Proposals from Others. (a) The
Company will not, and will not authorize or permit its, or any of its
subsidiaries', officers, directors, employees, agents or representatives
(including any investment banker, attorney or accountant retained by it or by
any of its subsidiaries) directly or indirectly to initiate, solicit, encourage
or otherwise facilitate any inquiry or the making of any proposal or offer with
respect to a merger, reorganization, share exchange, consolidation or similar
transaction involving the Company, or any purchase of or tender offer for, all
or any significant portion of the Company's equity securities or any significant
portion of the assets of the Company and its subsidiaries on a consolidated
basis (each of these being an "Acquisition Proposal").
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(b) Subparagraph (a) will not prevent the Company from, in
response to an Acquisition Proposal which the Company receives despite complying
with subparagraph (a) and which the Special Committee of the Company's Board
determines, in good faith after consultation with its independent financial
advisor, would result (if consummated in accordance with its terms) in a
transaction which (i) would result in the Company's stockholders' receiving
consideration which is greater than the Tender Offer Price and (ii) would be
more favorable to the Company's stockholders than the Tender Offer and the
Merger, furnishing non-public information (after receipt of an appropriate
Confidentiality Agreement) to the person, entity or group (the "Potential
Acquiror") which makes the Acquisition Proposal and entering into discussions
and negotiations with that Potential Acquiror.
(c) If the Company receives an Acquisition Proposal, or the
Company learns that someone other than Acquisition is contemplating soliciting
tenders of Common Stock or otherwise proposes to acquire the Company or its
Common Stock if the Company's stockholders do not tender their Common Stock to
Acquisition or do not approve the Merger, the Company will promptly notify
Acquisition of that fact and provide Acquisition with all information in the
Company's possession which Acquisition reasonably requests regarding the
Acquisition Proposal, solicitation of tenders or other proposed transaction, and
the Company will promptly, from time to time, provide Acquisition with any
additional information the Company obtains regarding the Acquisition Proposal,
the solicitation of tenders or the other proposed transaction.
5.4 Acquisition's Efforts to Fulfill Conditions. Acquisition will use
its best efforts to cause all the conditions set forth in Paragraph 6.1 to be
fulfilled on or before the Merger Date.
5.5 Company's Efforts to Fulfill Conditions. The Company will use its
best efforts to cause all the conditions set forth in Paragraph 6.2 to be
fulfilled on or before the Merger Date.
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ARTICLE 6
CONDITIONS PRECEDENT TO MERGER
6.1 Conditions to the Company's Obligations. The obligations of the
Company to complete the Merger are subject to satisfaction of the following
conditions (any or all of which may be waived by the Company):
(a) The representations and warranties of Acquisition
contained in this Agreement will, except as contemplated by this Agreement, be
true and correct in all material respects on the Merger Date with the same
effect as though made on that date (except that representations or warranties
which related expressly to a specified date or a specified period need only to
have been true and correct with regard to the specified date or period), and
Acquisition will have delivered to the Company a certificate dated that date and
signed by the President or a Vice President of Acquisition to that effect.
(b) Acquisition will have fulfilled in all material respects
all its obligations under this Agreement required to have been fulfilled on or
before the Merger Date.
(c) No order will have been entered by any court or
governmental authority and be in force which invalidates this Agreement or
restrains the Company from completing the transactions which are the subject of
this Agreement
(d) If stockholder approval of the Merger is required by
applicable law or by the rules of the Nasdaq National Market (if they are
applicable), the Merger will have been approved by the holders of a majority of
the outstanding shares of Common Stock.
6.2 Conditions to Acquisition's Obligations. The obligations of
Acquisition to complete the Merger are subject to the following conditions (any
or all of which may be waived by Acquisition):
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(a) The representations and warranties of the Company
contained in this Agreement will, except as contemplated by this Agreement, be
true and correct in all material respects on the Merger Date with the same
effect as though made on that date (except that representations or warranties
which related expressly as to specified date or a specified period need only to
have been true and correct with regard to the specified date or period), and the
Company will have delivered to Acquisition a certificate dated that date and
signed by the President or a Vice President of the Company to that effect.
(b) The Company will have fulfilled in all material respects
all its obligations under this Agreement required to have been fulfilled on or
before the Merger Date.
(c) No order will have been entered by any court or
governmental authority and be in force which invalidates this Agreement or
restrains Acquisition from completing the transactions which are the subject of
this Agreement and no action will be pending against the Company, Acquisition,
Holdings or any of Holdings' members relating to the transactions which are the
subject of this Agreement which presents a reasonable likelihood of resulting in
an award of damages against the Company or Acquisition which would be material
after the Merger to the Surviving Corporation and its subsidiaries taken as a
whole or an award of damages against Holdings or a member of Holdings which
would be material to Holdings or any of Holdings' members.
(d) If stockholder approval of the Merger is required by
applicable law or by the rules of the Nasdaq National Market (if they are
applicable), the Merger will have been approved by the holders of at least a
majority of the outstanding shares of Common Stock.
(e) If stockholder approval of the Merger is required by
applicable law or by the rules of the Nasdaq National Market (if they are
applicable), the Effective Time will occur not later than 120 days after the
Expiration Time, unless the Effective Time is delayed until after
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<PAGE> 30
then because of actions of Acquisition or its affiliates (other than the Company
and its subsidiaries) or because of Acquisition's failure to fulfill obligations
under this Agreement.
29
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ARTICLE 7
TERMINATION
7.1 Right to Terminate. This Agreement may be terminated at any time
prior to the Effective Time (whether or not the Company's stockholders have
approved the Merger):
(a) By mutual consent of the Company and Acquisition.
(b) By Acquisition if the condition in Paragraph 6.2(e) is not
fulfilled.
(c) By the Company if (i) it is determined that any of the
representations or warranties of Acquisition contained in this Agreement was not
complete and accurate in all material respects on the date of this Agreement or
(ii) any of the conditions in Paragraph 6.1 is not satisfied or waived by the
Company on or before the Merger Date.
(d) By Acquisition if (i) it is determined that any of the
representations or warranties of the Company contained in this Agreement was not
complete and accurate in all material respects on the date of this Agreement or
(ii) any of the conditions in Paragraph 6.2 is not satisfied or waived by
Acquisition on or before the Merger Date.
(e) By the Company if (i) the Company receives an Acquisition
Proposal in which a Potential Acquirer makes a specific proposal to acquire the
Company or substantially all its assets on specific terms (a "Firm Proposal"),
or a Potential Acquiror commences a cash tender offer for all the Company's
outstanding stock (other than any already owned by the Potential Acquiror), (ii)
within 10 business days after the Company receives the Firm Proposal or the
tender offer is commenced, the Special Committee determines the Firm Proposal or
the tender offer is a Superior Proposal and resolves to accept the Superior
Proposal, or to recommend that stockholders tender their shares in response to
the Superior Proposal, unless Acquisition will increase the Tender Offer price
to an amount per share at least as great as the consideration per share the
Company's stockholders would receive as a result of the Superior Proposal or the
tender offer, (iii) the Company has given Acquisition at least 5 business days'
prior notice (A) of the terms of the Superior Proposal (including the
consideration per share, valuing non-cash consideration as described below,
which the Company's stockholders would receive as a result of the Superior
Proposal), and (B) that unless Acquisition increases the Tender Offer Price to
an amount per share at least as great as the consideration
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per share the Company's stockholders would receive as a result of the Superior
Proposal, as set forth in the notice this Agreement will terminate, and (iv) the
Company has (x) paid Acquisition $3,850,000, (y) reimbursed Acquisition for all
the expenses related to the transactions which are the subject of this Agreement
which Acquisition or its affiliates (including Holdings, Three Cities and Three
Cities Research, Inc.) incurred in connection with this Agreement and the
transactions contemplated by it (including reasonable fees and expenses of
professionals and other consultants, commitment fees and other financing costs,
and out of pocket costs incurred by employees in investigating the business and
financial condition of the Company and in connection with the negotiation of
this Agreement and efforts to carry out the transactions which are the subject
of this Agreement) regarding which Acquisition has presented reasonable
documentation to the Company, and (z) agreed in writing to reimburse Acquisition
for all expenses of the type described in clause (y) for which Acquisition
subsequently presents reasonable documentation to the Company (up to a total
reimbursement of expenses under clauses (y) and (z) not exceeding $1,285,000). A
"Superior Proposal" is an Acquisition Proposal which (A) would result in the
Company's stockholders' receiving consideration which is greater than the Tender
Offer Price (valuing non-cash consideration at its fair market value as
determined in good faith by the Board after consultation with its independent
financial advisor), (B) is not subject to the outcome of due diligence or any
other form of investigation, (C) is not subject to a financing contingency and
is from a Proposed Acquiror which the Board reasonably determines in good faith
after consultation with its independent financial advisor has the financial
resources necessary to carry
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out the transaction and (D) the Board determines in good faith after
consultation with its independent financial advisor to be more favorable to the
Company's stockholders than the Tender Offer and the Merger. A notice that this
Agreement will terminate given pursuant to clause (iii) of the first sentence of
this subparagraph will be irrevocable (unless Acquisition consents in writing to
its being withdrawn by the Company) and will result in this Agreement's
terminating on the later of the date specified in the notice or the date the
Company makes the payments and provides the agreement described in clause (iv)
of the first sentence of this subparagraph. When the Company delivers a notice
pursuant to clause (iii) of the first sentence of this subparagraph,
Acquisition's obligations under Paragraphs 5.2, and 5.5 will terminate.
(f) By either the Company or Acquisition, but only with regard
to the Merger, if less than 51% of the outstanding shares of Common Stock which
neither Acquisition nor Holdings owns when Acquisition makes a public
announcement of the Tender Offer are properly tendered in response to the Tender
Offer and not withdrawn.
7.2 Manner of Terminating Agreement If at any time the Company or
Acquisition has the right under Paragraph 7.1 to terminate this Agreement, it
can terminate this Agreement by a written notice to the other of them that it is
terminating this Agreement.
7.3 Effect of Termination. If this Agreement is terminated pursuant to
Paragraph 7.1, after this Agreement is terminated, neither party will have any
further rights or obligations under this Agreement other than the Company's
obligations under the agreement to reimburse expenses described in Paragraph
7.1(e). Nothing contained in this Paragraph will, however, relieve either party
of liability for any breach of this Agreement which occurs before this Agreement
is terminated.
ARTICLE 8
ABSENCE OF BROKERS
32
<PAGE> 34
8.1 Representations and Warranties Regarding Brokers and Others. The
Company and Acquisition each represents and warrants to the other of them that
nobody acted as a broker, a finder or in any similar capacity in connection with
the transactions which are the subject of this Agreement. The Company and
Acquisition each indemnifies the other of them against, and agrees to hold the
other of them harmless from, all losses, liabilities and expenses (including,
but not limited to, reasonable fees and expenses of counsel and costs of
investigation) incurred because of any claim by anyone for compensation as a
broker, a finder or in any similar capacity by reason of services allegedly
rendered to the indemnifying party in connection with the transactions which are
the subject of this Agreement.
ARTICLE 9
OTHER AGREEMENT
9.1 Indemnification for Prior Acts.
(a) The Surviving Corporation will honor, and will not amend
or modify for a period of not less than six years after the date of this
Agreement, any and all obligations of the Company and its subsidiaries to
indemnify present and former directors, officers or employees of the Company or
its subsidiaries (each an "Indemnified Party") with respect to matters which
occur on or prior to the Effective Time, whether provided in the certificate of
incorporation or by-laws of the Company or any of its subsidiaries, in any of
the agreements listed on Exhibit 9.1-A(1) or under the DGCL. The Surviving
Corporation will maintain in effect for not less than six years after Effective
Time with respect to occurrences prior to the Effective Time the Company's
policies of directors and officers' liability insurance which are in effect on
the date of this Agreement and are listed on Exhibit 9.1-A(2) (notwithstanding
any provisions of those policies that they will terminate as a result of Merger)
to the extent that such insurance (or substantially similar insurance) is
available at a cost not exceeding $75,000.
33
<PAGE> 35
(b) The provisions of this Paragraph 9.1 are intended to be
for the benefit of, and will be enforceable by, the respective directors,
officers and employees of the Company or its subsidiaries to which it relates
and their heirs and representatives and will be binding upon the Surviving
Corporation.
ARTICLE 10
GENERAL
10.1 Expenses. The Company and Acquisition will each pay its own
expenses in connection with the transactions which are the subject of this
Agreement, including legal fees.
10.2 Access to Properties, Books and Records. From the date of this
Agreement until the Effective Time, the Company will, and will cause each of its
subsidiaries to, give representatives of Acquisition full access during normal
business hours to all of their respective properties, books and records.
Acquisition will, and will cause its representatives to, hold all information it
receives as a result of its access to the properties, books and records of the
Company or its subsidiaries in confidence, except to the extent that information
(i) is or becomes available to the public (other than through a breach of this
Agreement), (ii) becomes available to Acquisition from a third party which,
insofar as Acquisition is aware, is not under an obligation to the Company, or
to a subsidiary of the Company, to keep the information confidential, (iii) was
known to Acquisition or its affiliates (which include Holdings, Three Cities and
Three Cities Research, Inc.) before it was made available to Acquisition or its
representative by the Company or a subsidiary, (iv) otherwise is independently
developed by Acquisition or its affiliates, or (v) Acquisition reasonably
believes is required to be included in the Offering Documents, the Schedule
14D-9 or the Proxy Statement. If this Agreement is terminated prior to the
Effective Time, Acquisition will, at the request of the Company, deliver to the
Company all documents and other material obtained by Acquisition from the
Company or a
34
<PAGE> 36
subsidiary in connection with the transactions which are the subject of this
Agreement or evidence that that material has been destroyed by Acquisition.
10.3 Press Releases. The Company and Acquisition will consult with each
other before issuing any press releases or otherwise making any public
statements with respect to this Agreement, except that nothing in this Paragraph
will prevent either party from making any statement when and as required by law
or by the rules of any securities exchange or securities quotation or trading
system on which securities of that party or an affiliate are listed, quoted or
traded.
10.4 Entire Agreement. This Agreement and the documents to be delivered
in accordance with this Agreement contain the entire agreement between the
Company and Acquisition relating to the transactions which are the subject of
this Agreement and those other documents, all prior negotiations, understandings
and agreements between the Company and Acquisition are superseded by this
Agreement and those other documents, and there are no representations,
warranties, understandings or agreements concerning the transactions which are
the subject of this Agreement or those other documents other than those
expressly set forth in this Agreement or those other documents.
10.5 Effect of Disclosures. Any information disclosed by a party in any
representation or warranty contained in this Agreement (including exhibits to
this Agreement) will be treated as having been disclosed in connection with each
representation and warranty made by that party in this Agreement.
10.6 Captions. The captions of the articles and paragraphs of this
Agreement are for reference only, and do not affect the meaning or
interpretation of this Agreement.
35
<PAGE> 37
10.7 Prohibition Against Assignment. Neither this Agreement nor any
right of any party under it may be assigned, except that Acquisition may assign
its rights under this Agreement to a corporation or other entity a majority of
the equity of which is owned by persons who, at the time of the assignment, own
a majority of the equity of Acquisition.
10.8 Notices and Other Communications. Any notice or other
communication under this Agreement must be in writing and will be deemed given
when it is delivered in person or sent by facsimile (with proof of receipt at
the number to which it is required to be sent), on the business day after the
day on which it is sent by a major nationwide overnight delivery service, or on
the third business day after the day on which it is mailed by first class mail
from within the United States of America, to the following addresses (or such
other address as may be specified after the date of this Agreement by the party
to which the notice or communication is sent):
If to Acquisition:
GR Acquisition Corporation
c/o Three Cities Research, Inc.
650 Madison Avenue
New York, New York
Attention: J. William Uhrig
Facsimile: 212-980-1142
with a copy to:
David W. Bernstein
Rogers & Wells LLP
200 Park Avenue
New York, New York 10166
Facsimile: 212-878-8375
If to the Company.:
Garden Ridge Corporation
Suite 170
19411 Atrium Place
Houston, Texas 77084
Attention: President
Facsimile:
36
<PAGE> 38
with a copy to:
Bruce LaBoon
Locke Liddell & Sapp LLP
600 Travis Street
35th Floor
Houston, Texas 77002
Facsimile: 713-223-3717
10.9 Governing Law. This Agreement will be governed by, and construed
under, the substantive laws of the State of Delaware.
10.10 Amendments. This Agreement may be amended only by a document in
writing signed by both the Company and Acquisition.
10.11 Counterparts. This Agreement may be executed in two or more
counterparts, some of which may be signed by fewer than all the parties or may
contain facsimile copies of pages signed by some of the parties. Each of those
counterparts will be deemed to be an original copy of this Agreement, but all of
them together will constitute one and the same agreement.
IN WITNESS WHEREOF, the Company and Acquisition have executed this
Agreement, intending to be legally bound by it, on the day shown on the first
page of this Agreement.
GARDEN RIDGE CORPORATION
By:
----------------------------------
Title:
GR ACQUISITION CORPORATION
By:
----------------------------------
Title: President
37
<PAGE> 39
<TABLE>
<S> <C>
Article 1 THE TENDER OFFER...........................................................................1
1.1 The Tender Offer...............................................................................1
1.2 Company Action.................................................................................4
Article 2 THE MERGER.................................................................................6
2.1 Agreement to Effect Merger.....................................................................6
2.2 The Merger.....................................................................................6
2.3 Certificate of Incorporation...................................................................7
2.4 By-Laws........................................................................................7
2.5 Directors......................................................................................7
2.6 Officers.......................................................................................7
2.7 Stock of the Company...........................................................................7
2.8 Stock of Acquisition...........................................................................8
2.9 Stockholders Meeting...........................................................................8
2.10 Voting by Acquisition..........................................................................9
2.11 Dissenting Shares..............................................................................9
2.12 Payment for Shares............................................................................10
2.13 Options and Warrants..........................................................................12
Article 3 EFFECTIVE TIME OF MERGER..................................................................12
3.1 Date of the Merger............................................................................12
3.2 Execution of Certificate of Merger............................................................12
3.3 Effective Time of the Merger..................................................................13
Article 4 REPRESENTATIONS AND WARRANTIES............................................................13
4.1 Representations and Warranties of Acquisition.................................................13
4.2 Representations and Warranties of the Company.................................................16
4.3 Termination of Representations and Warranties.................................................23
Article 5 ACTIONS PRIOR TO THE MERGER...............................................................23
5.1 Activities Until Effective Time...............................................................23
5.2 HSR Act Filings...............................................................................25
5.3 Proxy Statements and Stockholders' Meetings...................................................25
5.4 No Solicitation of Offers; Notice of Proposals from Others....................................26
5.5 Acquisition's Efforts to Fulfill Conditions...................................................27
5.6 Company's Efforts to Fulfill Conditions.......................................................27
Article 6 CONDITIONS PRECEDENT TO MERGER............................................................27
6.1 Conditions to the Company's Obligations.......................................................27
6.2 Conditions to Acquisition's Obligations.......................................................28
</TABLE>
<PAGE> 40
<TABLE>
<S> <C>
Article 7 TERMINATION...............................................................................29
7.1 Right to Terminate............................................................................29
7.2 Manner of Terminating Agreement...............................................................33
7.3 Effect of Termination.........................................................................33
Article 8 ABSENCE OF BROKERS........................................................................33
8.1 Representations and Warranties Regarding Brokers and Others...................................33
Article 9 OTHER AGREEMENTS..........................................................................34
9.1 Indemnification for Prior Acts................................................................34
9.2 Agreement Not To Merge Under Certain Conditions...............................................35
9.3 Agreement Regarding Directors.................................................................36
9.4 Agreement to Vote or Sell Shares..............................................................36
9.5 Control of Stockholder Suits..................................................................37
Article 10 GENERAL...................................................................................37
10.1 Expenses......................................................................................37
10.2 Access to Properties, Books and Records.......................................................37
10.3 Press Releases................................................................................38
10.4 Entire Agreement..............................................................................38
10.5 Effect of Disclosures.........................................................................38
10.6 Captions......................................................................................38
10.7 Prohibition Against Assignment................................................................39
10.8 Notices and Other Communications..............................................................39
10.9 Governing Law.................................................................................41
10.10 Amendments....................................................................................41
10.11 Counterparts..................................................................................41
</TABLE>
2
<PAGE> 41
Exhibit 1.1-E
Acquisition will not be required to accept for payment or pay for any
Common Stock tendered in response to the Tender Offer if:
(a) Any statute, rule, regulation, order or injunction has been
enacted, promulgated, entered or enforced by any national or state government or
governmental authority or by any United States court of competent jurisdiction,
that would make the acquisition of the tendered Common Stock by Acquisition
illegal or otherwise prohibit consummation of the Tender Offer or the Merger; or
(b) There has been (i) a general suspension of trading in, or
limitation on prices for, securities on the New York Stock Exchange or the
Nasdaq National Market System which continued for at least three business days,
(ii) the declaration of a banking moratorium or any suspension of payments in
respect of banks in the United States (whether or not mandatory) which continued
for at least three business days, (iii) the commencement of a war or armed
hostilities or any other international or national calamity directly or
indirectly involving the United States, which has a significant adverse effect
on the functioning of financial markets in the United States, (iv) any
limitation (whether or not mandatory) by any United States governmental
authority or agency on the extension of credit by banks or other financial
institutions which would have a material adverse effect on Acquisition's ability
to purchase and pay for all the Common Stock which is tendered in response to
the Tender Offer and to carry out the Merger on the terms contemplated by the
Agreement or (v) there is a material acceleration or worsening of any of the
conditions described in clauses (i) through (iv) which exists at the date of the
commencement of the Tender Offer.
(c) Any of the representations or warranties of the Company in the
Agreement is not true and correct as of the date of the Agreement, except
failures to be true and correct which would not, in the aggregate, have a
Material Adverse Effect upon the Company or adversely affect Acquisition's legal
ownership of the tendered Common Stock, Acquisition's legal ability to
consummate the Merger as contemplated by the Agreement, or the ownership of the
Surviving Corporation after the Merger by the persons which own the stock of
Acquisition immediately before the Merger;
(d) Without limiting the condition in subparagraph (c),
Acquisition learns that the 1999 10-K or the August 10-Q contained a false or
misleading statement with respect to a material fact or omitted to state a
material fact required to be stated therein or which may be necessary to make
the statements therein, in the light of the circumstances under which they were
made, not misleading (other than with regard to matters which are the subject of
the Stockholder Suits);
(e) Since August 1, 1999, there has been a material adverse change
in the business or financial condition of the Company and its subsidiaries taken
as a whole (other than a reduction of assets and net worth due to purchases by
the Company of its own Common Stock, including purchases through a tender offer
which expired on September 23, 1999) or in the consolidated results of
operations of the company and its subsidiaries compared with the consolidated
results of their operations for the same period of the prior year.
(f) The Company has not performed all the obligations it is
required to have performed under the Agreement by the Expiration Date, except
failures which (i) would not, in the aggregate, materially impair or delay the
ability of Acquisition to consummate the purchase of the Common Stock which is
tendered in response to the Tender Offer or the ability of
3
<PAGE> 42
Acquisition and the Company to effect the Merger, and (ii) are not reasonably
expected to, have a Material Adverse Effect on the Company, or (iii) have been
caused by, or result from, a breach of the Agreement by Acquisition.
(g) The Agreement has been terminated in accordance with its terms;
(h) The Board withdraws or modifies in a manner adverse to Acquisition
the Board's approval or recommendation of the Tender Offer or the Merger; or
(i) the shares of Common Stock tendered in response to the Tender
Offer are not at least 51% of the outstanding shares of Common Stock which
Acquisition does not own when it makes a public announcement of the Tender
Offer.
The conditions set forth above are for the sole benefit of Acquisition,
and may be waived by Acquisition, in whole or in part. Any delay by Acquisition
in exercising the right to terminate the Tender Offer because any of the
conditions are not fulfilled will not be deemed a waiver of its right to do so.
4
<PAGE> 1
SHARE EXCHANGE AGREEMENT
GRDG Holdings LLC
c/o Three Cities Research, Inc.
650 Madison Avenue
New York, N.Y. 10022
Dear Sirs:
This is to confirm that I agree to exchange shares of Garden
Ridge Corporation common stock for interests (referred to as "Units") in GRDG
Holdings LLC, at the rate of one Class A Unit for each 100 shares of Garden
Ridge common stock.
I am aware that, after GRDG Holdings acquires shares of Garden Ridge
common stock from me and others in exchange for Units, GRDG Holdings expects to
make a tender offer, through a wholly owned subsidiary, for the Garden Ridge
common stock it does not own, and if that tender offer is successful, to cause
the subsidiary to engage in a merger which will result in GRDG Holdings'
becoming the sole shareholder of Garden Ridge. I am also aware that the exchange
of my Garden Ridge common stock for GRDG Holdings Units will not take place
unless, and until shortly before, GRDG Holdings is ready to begin the tender
offer. I will deliver the certificates representing my Garden Ridge common stock
in proper form for transfer, and will sign a copy of the GRDG Holdings Limited
Liability Company Agreement (of which I have received a copy), whenever I am
requested to do so, but only if that is not more than five days before GRDG
Holdings begins its tender offer or otherwise signs an agreement to acquire
Garden Ridge. If, after my Garden Ridge common stock is exchanged for GRDG
Holdings Units, GRDG Holdings decides not to make a tender offer for Garden
Ridge common stock (or otherwise acquire Garden Ridge) or GRDG Holdings does not
accept the shares which are tendered in response to the tender offer, GRDG
Holdings will return to me the Garden Ridge shares which I have exchanged for
GRDG Holdings Units.
I represent and warrant to GRDG Holdings that (a) I own the Garden
Ridge common stock which I will be exchanging for Units as described above, and
I have the right to exchange that Garden Ridge common stock for Units without
needing further authorization from anybody or any governmental entity, and (b)
neither my executing this Agreement nor my completing the transactions which are
the subject of this Agreement will violate any agreement to which I am a party,
any law, any rule or regulation of a governmental agency, or any order of a
court or governmental agency which is applicable to me.
By signing this Agreement, GRDG Holdings will be representing and
warranting to me that (a) GRDG Holdings has been properly formed as a limited
liability company under Delaware law, (b) the only ownership interests in GRDG
Holdings are Units of the type I will be receiving, (c) GRDG Holdings has the
power, and has been authorized, to issue Units to me in exchange for Garden
Ridge common stock as contemplated by this Agreement, and (d) neither GRDG
Holdings' executing this Agreement nor its completing the transactions which are
the subject of this Agreement will violate any agreement to which GRDG Holdings
is a party, any law, any rule or regulation of a governmental agency, or any
order of a court or governmental agency which is applicable to GRDG Holdings.
I am aware that the Units which will be issued to me will not be
registered under the Securities Act of 1933, as amended. In order to enable GRDG
Holdings to issue those Units to me without registration under the Securities
Act, I represent that I will be acquiring those Units for investment and not
represent with a view to distributing them. I am aware that the certificates
representing the Units will bear a legend regarding the fact that the Units were
not registered under the Securities Act and the resulting restrictions on
transfers of those Units. I am also aware that (a) because the Units which will
be issued to
- -----
* The words "I", "my" and similar words refer to the person who signs this
Agreement, even if that person is not an individual.
<PAGE> 2
me will not be registered under the Securities Act, there are very significant
limitations on my ability to re-sell them and (b) GRDG Holdings' Limited
Liability Company Agreement imposes restrictions on my sale or transfer of Units
and has other provisions which will affect my ownership of Units.
I understand that, when this Agreement is signed by GRDG Holdings, I will be
legally bound by it.
Date: November , 1999
Very truly yours,
--------------------------------------
Signature
--------------------------------------
Name (Print)
--------------------------------------
Social Security No.
--------------------------------------
Address
--------------------------------------
Accepted and Agreed To:
GRDG HOLDINGS LLC
By:
--------------------------------
