SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
------------------------------------------------------------------------
SCHEDULE 13E-3
(RULE 13e-100)
TRANSACTION STATEMENT UNDER SECTION 13(e) OF THE SECURITIES EXCHANGE ACT OF
1934 AND RULE 13-E THEREUNDER
RULE 13e-3 TRANSACTION STATEMENT UNDER
SECTION 13(e) OF THE SECURITIES EXCHANGE ACT OF 1934
THE SOLOMON-PAGE GROUP LTD.
(Name of Issuer)
THE SOLOMON-PAGE GROUP LTD.
TSPGL MERGER CORP.
LLOYD SOLOMON
SCOTT PAGE
HERBERT SOLOMON
(Name of Persons Filing Statement)
COMMON STOCK, PAR VALUE $.001 PER SHARE
(Title of Class of Securities)
83427A 10 8
(Cusip Number of Class of Securities)
------------------------------------------------------------------------
Lloyd Solomon
The Solomon-Page Group Ltd.
1140 Avenue of the Americas
New York, New York 10036
Telephone Number (212) 403-6100
------------------------------------------------------------------------
(Name, Address and Telephone Number of Person Authorized to Receive
Notices and Communications on Behalf of Persons Filing Statement)
------------------------------------------------------------------------
Copies To:
David J. Adler, Esq. Simeon Gold, Esq.
Olshan Grundman Frome Rosenzweig & Weil, Gotshal & Manges LLP
Wolosky LLP 767 Fifth Avenue
505 Park Avenue New York, New York 10022
New York, New York 10022 (212) 310-8000
(212) 753-7200
This statement is filed in connection with (check the appropriate box):
a. [X] The filing of solicitation materials or an information statement
subject to Regulation 14A, Regulation 14C, or Rule 13e-3(c) under the
Securities Exchange Act of 1934.
b. [ ] The filing of a registration statement under the Securities Act of
1933.
c. [ ] A tender offer.
d. [ ] None of the above.
Check the following box if the soliciting materials or information statement
referred to in checking box (a) are preliminary copies. [X]
<PAGE>
Check the following box if the filing fee is a final amendment reporting the
results of the transaction: [ ]
CALCULATION OF FILING FEE
================================================================================
TRANSACTION VALUATION* AMOUNT OF FILING FEE**
--------------------------------------------------------------------------------
$15,756,580.00 $3,151.32
================================================================================
* Determined by (1) multiplying 2,259,448 (the number of outstanding shares of
Common Stock of The Solomon-Page Group Ltd. not owned by the members of the
Management Group) by $5.25 per share and (ii) adding the $3,894,478 to be
paid upon cancellation of outstanding options.
** Determined pursuant to Rule 0-11(b)(1) by multiplying $15,756,580.00 by 1/50
of 1%.
[X] Check Box if any part of the fee is offset as provided by Rule
0-11(a)(2) and identify the filing with which the offsetting fee was
previously paid. Identify the previous filing by registration
statement number, or the Form or Schedule and the date of its
filing.
Amount previously paid $3,151.32 Filing The Solomon-Page Group
--------- Party: ----------------------
Ltd.
----
Form or Registration Preliminary Date Filed: July 14, 2000
No.: Schedule 14A -------------
------------
-2-
<PAGE>
INTRODUCTION
This Rule 13e-3 Transaction Statement on Schedule 13E-3 (this
"Schedule 13E-3") is being filed jointly by The Solomon-Page Group Ltd., a
Delaware corporation (the "Company"), TSPGL Merger Corp., a Delaware corporation
("Mergeco"), Lloyd Solomon, Scott Page and Herbert Solomon pursuant to Section
13(e) of the Securities Exchange Act of 1934, as amended, and Rule 13e-3
thereunder, in connection with the proposed acquisition by Mergeco of all
outstanding shares of common stock, par value $0.001 per share (the "Common
Stock"), of the Company. Mergeco was formed in connection with the proposed
merger and is owned by Lloyd Solomon, Scott Page and Herbert Solomon, the
Company's principal executive officers (who are also directors of the
Company)(the "Management Group"). The Company and Mergeco have entered into an
Amended and Restated Agreement and Plan of Merger, dated June 28, 2000 (the
"Merger Agreement"), whereby the Company would be merged (the "Merger") with and
into Mergeco with Mergeco as the surviving corporation in the Merger (the
"Surviving Corporation"). Pursuant to the terms and conditions set forth in the
Merger Agreement, if the Merger is consummated, each outstanding share of Common
Stock (other than Common Stock held (i) in the treasury of the Company or by any
of its wholly-owned subsidiaries, (ii) by the members of the Management Group,
or (iii) by stockholders who perfect their rights under Delaware law to dissent
from the Merger and seek an appraisal of the fair market value of their shares)
will be converted into the right to receive $5.25 per share in cash, without
interest. As a result of the Merger, the Management Group will own 100% of the
capital stock of the Surviving Corporation. The Merger Agreement and the Merger
have already been approved by a special committee of the Company's Board of
Directors and the Company's Board of Directors. The Company's stockholders will
be asked to vote upon the approval of the Merger Agreement at a special meeting
of the stockholders of the Company (the "Special Meeting").
This Schedule 13E-3 is intended to satisfy the reporting
requirements of Section 13(e) of the Securities Exchange Act of 1934, as amended
(the "Exchange Act"). Concurrently with the filing of this Schedule 13E-3, the
Company is filing a preliminary proxy statement (the "Proxy Statement") pursuant
to which the stockholders of the Company will be given notice of, and an
opportunity to vote on, the Merger at the Special Meeting. The Merger Agreement
has been filed by the Company as Annex A to the Proxy Statement. The information
in the Proxy Statement, including all annexes thereto, is hereby expressly
incorporated herein by reference, and capitalized terms used but not defined
herein shall have the meanings ascribed thereto in the Proxy Statement.
-3-
<PAGE>
ITEM 1. SUMMARY TERM SHEET.
Reg. M-A 1001
-------------
The information set forth in the Proxy Statement under the
caption "SUMMARY TERM SHEET" is hereby incorporated herein by reference.
ITEM 2. SUBJECT COMPANY INFORMATION.
(a) The information set forth in the Proxy Statement under the
caption "THE PARTIES - The Company" is hereby incorporated
herein by reference.
Reg. M-A 1002
(b) The information set forth in the Proxy Statement under the
captions "SUMMARY" and "INFORMATION CONCERNING THE SPECIAL
MEETING - Record Date; Voting at the Meeting; Quorum" is
hereby incorporated herein by reference.
(c) The information set forth in the Proxy Statement under the
captions "MARKET FOR THE COMMON STOCK - Common Stock Market
Price Information" and " - Market Price of Common Stock" is
hereby incorporated herein by reference.
(d) The information set forth in the Proxy Statement under the
caption "MARKET FOR THE COMMON STOCK - Dividend Information"
is hereby incorporated herein by reference.
(e) Not applicable.
(f) The information set forth in the Proxy Statement under the
caption "MARKET FOR THE COMMON STOCK - Common Stock Purchase
Information" is hereby incorporated herein by reference.
ITEM 3. IDENTITY AND BACKGROUND OF FILING PERSON.
Reg. M-A 1003(a) through (c)
----------------------------
(a) The information set forth in the Proxy Statement under the
captions "THE PARTIES - The Company;" " - Mergeco;" and
"MANAGEMENT - Directors and Executive Officers of the Company"
is hereby incorporated herein by reference.
(b) The information set forth in the Proxy Statement under the
caption "THE PARTIES - Mergeco" is hereby incorporated herein
by reference.
During the last five years, none of Mergeco nor to the best of
its knowledge, any of its directors, executive officers of
controlling persons,(a) have been convicted in a criminal
proceeding (excluding traffic violations or similar
misdemeanors) nor (b) were a party to a civil proceeding of a
judicial or administrative body of competent
-4-
<PAGE>
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.
(c) The information set forth in the Proxy Statement under the
caption "MANAGEMENT - Directors and Executive Officers of the
Company" is hereby incorporated herein by reference.
During the last five years, none of the Company, nor, to the
best of its knowledge, any of its directors, executive
officers or controlling persons, nor Lloyd Solomon, Scott Page
and Herbert Solomon, (a) have been convicted in a criminal
proceeding (excluding traffic violations or similar
misdemeanors) or (b) were 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 4. TERMS OF THE TRANSACTION.
Reg. M-A 1004(a) and (c) through (f)
------------------------------------
(a) The information set forth in the Proxy Statement under the
captions "SUMMARY TERM SHEET;" "CERTAIN QUESTIONS AND ANSWERS
ABOUT THE MERGER;" "SUMMARY;" "INFORMATION CONCERNING THE
SPECIAL MEETING - Purpose of the Special Meeting"; " -
Required Vote"; "SPECIAL FACTORS - Background of the
Transaction;" " - Recommendation of the Special Committee and
Board of Directors; Fairness of the Merger;" " - The
Management Group's Purpose and Reason for the Merger;" " -
Certain Effects of the Merger;"
" - Interests of Certain Persons in the Merger;" Certain
Relationships;" " - Accounting Treatment;" " - Material
Federal Income Tax Consequences of the Merger;" "THE MERGER
AGREEMENT;" and "DISSENTERS' RIGHTS OF APPRAISAL" is hereby
incorporated herein by reference.
(c) The information set forth in the Proxy Statement under the
captions "SPECIAL FACTORS - Interests of Certain Persons in
the Merger; Certain Relationships" and " - Employment
Agreements" is hereby incorporated herein by reference.
(d) The information set forth in the Proxy Statement under the
caption "DISSENTERS' RIGHTS OF APPRAISAL" is hereby
incorporated herein by reference.
(e) The information set forth in the Proxy Statement under the
caption "PROVISION FOR UNAFFILIATED SECURITY HOLDERS" is
hereby incorporated herein by reference.
-5-
<PAGE>
(f) Not applicable.
ITEM 5. PAST CONTACTS, TRANSACTIONS, NEGOTIATIONS AND AGREEMENTS.
Reg. M-A 1005(a) through (c) and (e)
------------------------------------
(a) The information set forth in the Proxy Statement under the
caption "SPECIAL FACTORS - Interests of Certain Persons in the
Manager; Certain Relationships" is hereby incorporated herein
by reference.
(b)-(c) The information set forth in the Proxy Statement under
the captions "SUMMARY - Special Factors;" and "SPECIAL FACTORS
- Background of the Transaction" is hereby incorporated herein
by reference.
(e) The information set forth in the Proxy Statement under the
captions "INFORMATION CONCERNING THE SPECIAL MEETING - Action
to be Taken at the Meeting; Voting Procedures" and "SPECIAL
FACTORS - Shareholder Lawsuit challenging the Merger" is
hereby incorporated herein by reference.
ITEM 6. PURPOSES OF THE TRANSACTION AND PLANS OR PROPOSALS.
Reg. M-A 1006(b) and (c)(1)-(8)
------------------------------
(b) The information set forth in the Proxy Statement under the
caption "SUMMARY TERM SHEET;" "SPECIAL FACTORS - Certain
Effects of the Merger" is hereby incorporated herein by
reference.
(c) The information set forth in the Proxy Statement under the
captions "SPECIAL FACTORS - Certain Effects of the Merger" and
" - Plans for the Company after the Merger" is hereby
incorporated herein by reference.
ITEM 7. PURPOSE(S), ALTERNATIVES, REASONS AND EFFECTS.
Reg. M-A 1013
-------------
(a) The information set forth in the Proxy Statement under the
captions "SUMMARY - Special Factors - Purpose and Effects of
the Merger;" "INFORMATION CONCERNING THE SPECIAL MEETING -
Purpose of the Special Meeting;" "SPECIAL FACTORS - Background
of the Transaction;" "- Recommendation of the Special
Committee and Board of Directors; Fairness of the Merger" " -
The Management Group's Purpose and Reason for the Merger" is
hereby incorporated herein by reference.
(b) and (c) The information set forth in the Proxy Statement
under the captions "SUMMARY - Special Factors - Purpose and
Effects of the Merger" "SPECIAL FACTORS - Background of the
Transaction;" " - Recommendation of the Special Committee and
Board of Directors; Fairness of the Merger" and " - The
Management Group's Purpose and Reason for the Merger" is
hereby incorporated herein by reference.
-6-
<PAGE>
(d) The information set forth in the Proxy Statement under the
captions "CERTAIN QUESTIONS AND ANSWERS ABOUT THE MERGER;"
"SUMMARY - Special Factors - Purpose and Effects of the
Merger;" " - Material Federal Income Tax Consequences;" " -
The Merger Agreement - The Merger Consideration;" "INFORMATION
CONCERNING THE SPECIAL MEETING - Purpose of the Special
Meeting;" "SPECIAL FACTORS - Certain Effects of the Merger;" "
- Plans for the Company After the Merger;" " - Accounting
Treatment;" " - Material Federal Income Tax Consequences of
the Merger;" "THE MERGER AGREEMENT - The Merger;" " - Merger
Consideration" and " - The Exchange Fund; Payment for Shares
of Common Stock" is hereby incorporated herein by reference.
ITEM 8. FAIRNESS OF THE TRANSACTION.
Reg. M-A 1014
-------------
(a) The information set forth in the Proxy Statement under the
captions "CERTAIN QUESTIONS AND ANSWERS ABOUT THE MERGER;"
"SUMMARY - Special Factors;" " - Recommendation of the
Company's Board of Directors;" " - Fairness Opinion of Legg
Mason Walker Wood, Incorporated;" "INFORMATION CONCERNING THE
SPECIAL MEETING - Purpose of the Special Meeting;" "SPECIAL
FACTORS - Background of the Transaction;" " - Recommendation
of the Special Committee and Board of Directors; Fairness of
the Merger;" " - The Management Group's Purpose and Reason for
the Merger" and " - Opinion of Financial Advisor to the
Special Committee" is hereby incorporated herein by reference.
(b) The information set forth in the Proxy Statement under the
captions "SUMMARY - Special Factors - Factors Considered by
the Special Committee and Board of Directors;" " - Fairness
Opinion of Legg Mason Wood Walker, Incorporated;" "SPECIAL
FACTORS - Background of the Transaction;" " - Recommendation
of the Special Committee and Board of Directors; Fairness of
the Merger;" " - The Management Group's Purpose and Reason for
the Merger" and " -Opinion of Financial Advisor to the Special
Committee" is hereby incorporated herein by reference.
(c) The information set forth in the Proxy Statement under the
captions "CERTAIN QUESTIONS AND ANSWERS ABOUT THE MERGER;"
"SUMMARY - The Special Meeting - Voting;" " - The Merger
Agreement - Conditions to the Merger;" "INFORMATION CONCERNING
THE SPECIAL MEETING - Required Vote;" "THE MERGER AGREEMENT -
The Merger; Merger Consideration" and " - Conditions" is
hereby incorporated herein by reference.
(d) The information set forth in the Proxy Statement under the
caption "CERTAIN QUESTIONS AND ANSWERS ABOUT THE MERGER;"
"SUMMARY - Special Factors - Recommendation of the Company's
Board of Directors;" "INFORMATION CONCERNING THE SPECIAL
MEETING - Purpose of the Special Meeting;" "SPECIAL FACTORS -
Background of the Transaction;" " - Recommendation of the
Special Committee and Board of Directors;
-7-
<PAGE>
Fairness of the Merger" and " - Opinion of Financial Advisor
to the Special Committee" is hereby incorporated herein by
reference.
(e) The information set forth in the Proxy Statement under the
captions "SUMMARY - Special Factors - Recommendation of the
Company's Board of Directors;" "SPECIAL FACTORS - Background
of the Transaction" and " - Recommendation of the Special
Committee and Board of Directors; Fairness of the Merger" is
hereby incorporated herein by reference.
(f) Not Applicable.
ITEM 9. REPORTS, OPINIONS, APPRAISALS AND NEGOTIATIONS.
Reg. M-A 1015
-------------
(a) and (b) The information set forth in the Proxy Statement
under the captions "SUMMARY - Special Factors - Factors
Considered by the Special Committee and Board of Directors;" "
- Fairness Opinion of Legg Mason Wood Walker, Incorporated;"
"SPECIAL FACTORS - Background of the Transaction;" " -
Recommendation of the Special Committee and Board of
Directors; Fairness of the Merger" and " - Opinion of
Financial Advisor to the Special Committee" is hereby
incorporated herein by reference.
(c) The information set forth in the Proxy Statement under the
captions "WHERE YOU CAN FIND MORE INFORMATION" and "AVAILABLE
INFORMATION" is hereby incorporated herein by reference.
ITEM 10. SOURCE AND AMOUNTS OF FUNDS OR OTHER CONSIDERATION.
Reg. M-A 1007
-------------
(a) The information set forth in the Proxy Statement under the
captions "SUMMARY - Special Factors - Financing of the Merger"
and "SPECIAL FACTORS - Financing of the Merger" is hereby
incorporated herein by reference.
(b) The information set forth in the Proxy Statement under the
captions "SPECIAL FACTORS - Financing of the Merger" is hereby
incorporated herein by reference.
(c) The information set forth in the Proxy Statement under the
captions "SPECIAL FACTORS - Fees and Expenses" and "THE MERGER
AGREEMENT - Fees and Expenses" is hereby incorporated herein
by reference.
(d) The information set forth in the Proxy Statement under the
caption "SPECIAL FACTORS - Financing of the Merger" is hereby
incorporated herein by reference.
ITEM 11. INTERESTS IN SECURITIES OF THE SUBJECT COMPANY.
-8-
<PAGE>
Reg. M-A 1008
-------------
(a) The information set forth in the Proxy Statement under the
captions "SUMMARY - Special Factors - Interests of the
Management Group in the Merger;" "INFORMATION CONCERNING THE
SPECIAL MEETING - Record Date; Voting at the Meeting; Quorum;"
"SPECIAL FACTORS -Interests of Certain Persons in the Merger;
Certain Relationships" and "SECURITIES OWNERSHIP - Beneficial
Ownership of Common Stock" is hereby incorporated herein by
reference.
(b) The information set forth in the Proxy Statement under the
captions "MARKET FOR THE COMMON STOCK - Common Stock Purchase
Information" is hereby incorporated herein by reference.
ITEM 12. THE SOLICITATION OR RECOMMENDATION.
Reg. M-A 1012(d) and (e)
------------------------
(d) The information set forth in the Proxy Statement under the
captions "SUMMARY - The Special Meeting - Voting;"
"INFORMATION CONCERNING THE SPECIAL MEETING - Required Vote"
and "SECURITIES OWNERSHIP - Beneficial Ownership of Common
Stock" is hereby incorporated herein by reference.
(e) The information set forth in the Proxy Statement under the
captions "SUMMARY - Special Factors - Recommendation of the
Company's Board of Directors;" "SPECIAL FACTORS - Background
of the Transaction" and " - Recommendation of the Special
Committee and Board of Directors; Fairness of the Merger" is
hereby incorporated herein by reference.
ITEM 13. FINANCIAL STATEMENTS.
Reg. M-A 1010(a) and (b)
------------------------
(a) The information set forth in the Proxy Statement under the
captions "SUMMARY - Selected Historical Consolidated Financial
Data of the Company;" "WHERE YOU CAN FIND MORE INFORMATION"
and "Annex E" is hereby incorporated herein by reference.
(b) Not applicable.
(c) The information set forth in the Proxy Statement under the
caption "SUMMARY - Selected Historical Consolidated Financial
Data of the Company" is hereby incorporated herein by
reference.
-9-
<PAGE>
ITEM 14. PERSONS/ASSETS, RETAINED, EMPLOYED, COMPENSATED OR USED.
Reg. M-A 1009
-------------
(a) The information set forth in the Proxy Statement under the
captions "INFORMATION CONCERNING THE SPECIAL MEETING - Proxy
Solicitation" and "SPECIAL FACTORS - Fees and Expenses" is
hereby incorporated herein by reference.
(b) The information set forth in the Proxy Statement under the
caption "INFORMATION CONCERNING THE SPECIAL MEETING - Proxy
Solicitation" is hereby incorporated herein by reference.
ITEM 15. ADDITIONAL INFORMATION.
Reg. M-A 1011(b)
----------------
The information set forth in the Proxy Statement, together
with the proxy card, is hereby incorporated herein by
reference.
ITEM 16. MATERIAL TO BE FILED AS EXHIBITS.
Reg. M-A 1016(a) through (d), (f) and (g)
-----------------------------------------
(a) Proxy Statement, together with the proxy card.
(b) Financing Commitment Letter, dated June 27, 2000 and
Summary of Terms and Conditions, incorporated by reference to
Amendment No. 4 to the Schedule 13D filed by Lloyd Solomon,
Scott Page, Herbert Solomon and TSPGL Merger Corp. on July 11,
2000.
(c)(1) Opinion of Legg Mason Wood Walker, Incorporated, dated
June 27, 2000 (set forth as Annex B to the Proxy Statement).*
(c)(2) Report of Legg Mason Wood Walker, Incorporated dated
June 27, 2000.
(d)(1) Amended and Restated Agreement and Plan of Merger
between The Solomon-Page Group Ltd., and TSPGL Merger Corp.,
dated June 28, 2000 (set forth as Annex A to the Proxy
Statement).*
(d)(2) Letter from Lloyd Solomon, Scott Page and Herbert
Solomon dated June 28, 2000 to The Solomon-Page Group Ltd. in
respect of indemnification.
(d)(3) Memorandum of Understanding dated as of June 14, 2000,
by and among William Straub, The Solomon-Page Group Ltd. and
the directors of the Solomon-Page Group as individual
defendants in the action captioned
-10-
<PAGE>
William Straub vs. The Solomon-Page Group Ltd. and Scott Page,
et al., C.A. 17977-NC, pending before the Court of Chancery of
the State of Delaware in and by New Castle County.
(f) Section 262 of the Delaware General Corporation Law (set
forth as Annex C to the Proxy Statement).*
----------
* Incorporated by reference to the Proxy Statement
-11-
<PAGE>
SIGNATURES
After due inquiry and to the best of my knowledge and belief,
the undersigned certify that the information set forth in this statement is
true, complete and correct.
THE SOLOMON-PAGE GROUP LTD.
By: /s/ Lloyd B. Solomon
--------------------------------
Name: Lloyd B. Solomon
Title: Chief Executive Officer
TSPGL MERGER CORP.
By: /s/ Lloyd B. Solomon
--------------------------------
Name: Lloyd B. Solomon
Title: Chief Executive Officer
/s/ Lloyd B. Solomon
-----------------------------------
Lloyd B. Solomon
/s/ Scott Page
-----------------------------------
Scott Page
/s/ Herbert Solomon
-----------------------------------
Herbert Solomon
Dated: July 14, 2000
-12-
<PAGE>
EXHIBIT INDEX
EXHIBIT DESCRIPTION
------- -----------
(a) Proxy Statement, together with the proxy card.
(b) Financing Commitment Letter, dated June 27, 2000 and Summary of
Terms and Conditions, incorporated by reference to Amendment No. 4
to the Schedule 13D filed by Lloyd Solomon, Scott Page, Herbert
Solomon and TSPGL Merger Corp. on July 11 2000.
(c)(1) Opinion of Legg Mason Wood Walker, Incorporated, dated June 27,
2000 (set forth as Annex B the Proxy Statement).*
(c)(2) Report of Legg Mason Wood Walker, Incorporated dated June 27,
2000.
(d)(1) Amended and Restated Agreement and Plan of Merger between The
Solomon-Page Group Ltd., and TSPGL Merger Corp., dated June 28,
2000 (set forth as Annex A to the Proxy Statement).*
(d)(2) Letter from Lloyd Solomon, Scott Page and Herbert Solomon dated
June 28, 2000 to The Solomon-Page Group Ltd. in respect of
indemnification.
(d)(3) Memorandum of Understanding dated as of June 14, 2000, by and
among William Straub, The Solomon-Page Group Ltd. and the
directors of the Solomon-Page Group as individual defendants in
the action captioned William Straub vs. The Solomon-Page Group
Ltd. and Scott Page, et al., C.A. 17977-NC, pending before the
Court of Chancery of the State of Delaware in and by New Castle
County.
(f) Section 262 of the Delaware General Corporation Law (set forth as
Annex C to the Proxy Statement).*
----------
* Incorporated by reference to the Proxy Statement
-13-
<PAGE>
Herbert Solomon
Lloyd B. Solomon
Scott R. Page
c/o The Solomon-Page Group Ltd.
1140 Avenue of the Americas
New York, New York 10036
June 27, 2000
The Solomon-Page Group Ltd.
1140 Avenue of the Americas
New York, New York 10036
Gentlemen:
Reference is made to (i) that certain Commitment Letter dated June 23,
2000 (the "Commitment Letter") from The Bank of New York (the "Bank") to The
Solomon Page Group Ltd. (the "Company") pursuant to which the Bank has confirmed
its willingness to extend certain credit facilities to the Company, and (ii)
that certain Engagement Letter dated September 23, 1999 (the "Engagement
Letter") between Peter J. Solomon Company Limited ("PJSC") and the Company,
pursuant to which the Company has engaged PJSC as its financial advisor. The
Commitment Letter and the Engagement Letter provide that the Company shall be
obligated to pay certain fees and expenses to the Bank and PJSC, respectively.
Concurrently herewith, the undersigned are offering to purchase by
means of a statutory merger (the "Transaction") (i) all of the outstanding
shares of common stock of the Company held by persons and entities other than
the undersigned, and (ii) all outstanding options to purchase common stock of
the Company held by persons other than the undersigned. In the event that the
Transaction is not consummated for any reason other than the breach by the
Company of the definitive agreement pursuant to which the Transaction is to be
consummated, but not such a breach that is the result of any act or omission to
act by the undersigned or any of us, the undersigned shall jointly and severally
indemnify and hold harmless the Company from and against any fees and expenses
under
<PAGE>
the Commitment Letter and the Engagement Letter heretofore paid by the Company
or for which the Company may hereafter become liable. By signing below, the
Company hereby agrees to give prompt notice to each of the undersigned of the
assertion of any claim for any such fees or expenses hereafter made.
Very truly yours,
-------------------------------
HERBERT SOLOMON
-------------------------------
LLOYD B. SOLOMON
-------------------------------
SCOTT R. PAGE
AGREED TO AND ACKNOWLEDGED:
THE SOLOMON-PAGE GROUP LTD.
By:
----------------------------------
Name: Joel Klarreich
Title: Member of the Special Committee
of the Board of Directors
<PAGE>
SUMMARY OF MATERIALS PREPARED FOR:
Project Sage
JUNE 27, 2000
<PAGE>
TABLE OF CONTENTS
I. Introduction
II. Project Sage Statistical Data
A. Selected Operating Data
B. Purchase Price Ratio Analysis
C. Share Price Charts
III. Valuation Analyses
A. Comparable Company Analysis
B. Comparable "Going Private" Transaction Analysis
- Comparable "Going Private" Transaction Multiples Implied Valuation
- Comparable "Going Private" Transaction Premia Paid Implied Valuation
C. Summary Historical Stock Price Performance
<PAGE>
I. INTRODUCTION
<PAGE>
INTRODUCTION
The Special Committee of the Board of Directors of The Solomon-Page Group Ltd.
(the "Company") has requested that Legg Mason Wood Walker, Incorporated ("Legg
Mason") provide a written opinion (the "Opinion") as to the fairness, from a
financial point of view, of the per share purchase price to be received by
holders of the Company's common stock (other than TSPGL Merger Corp.
("Mergeco"), the Management Group and the other holders of Retained Shares) in
the merger of Mergeco and the Company (the "Merger").
It is recognized that Legg Mason has been retained to render financial advice
solely to the Special Committee of the Board of Directors of the Company (the
"Committee"). No one other than the Committee is authorized to rely upon this
engagement of Legg Mason or any statements, conduct or advice of Legg Mason
(including our Opinion), and no one other than the Company is intended to be a
beneficiary of this engagement. This presentation is not to be quoted or
referred to, in whole or in part, in any registration statement, prospectus or
proxy statement, or in any other document used in connection with any offering
or sale of securities, nor shall this presentation be used for any other
purposes, without the prior written consent of Legg Mason.
In connection with our review, we have relied upon and assumed, without
independent verification, the accuracy and completeness of the financial and
other information provided to us by the management of the Company, and other
publicly available information. We have further relied upon the assurances of
management that they are unaware of any facts that would make the information
provided to us incomplete or misleading. With respect to the financial forecasts
and other information provided to us or otherwise discussed with us, we have
also relied upon the management of the Company as to the reasonableness and
achievability of such financial forecasts and other information (and the
assumptions and bases therein) provided to us. We assumed that such forecasts
and other information were reasonably prepared on bases reflecting the best
currently available estimates and judgments of the management of the Company as
to the expected future financial performance of the Company. In arriving at our
Opinion, we have not been requested to make, nor have we made or obtained, any
independent appraisal of the assets or liabilities (contingent or otherwise) of
the Company. We have not been involved in discussions regarding, and our
analyses do not address issues involving, other strategic or transactional
alternatives or other issues regarding the Company other than the Merger.
This summary of information does not constitute our Opinion and is provided for
informational purposes only. Our Opinion is limited to the terms of our Opinion
letter to you with regard to the Merger. We believe that our analysis should be
considered as a whole, and that selecting portions of our analysis and the
factors we considered, without considering all analyses and factors, could be
misleading. The preparation of an opinion is a complex process and is not
necessarily susceptible to partial analysis or summary description. In our
analysis, we made numerous assumptions where necessary with respect to industry
performance, general business and economic conditions, and other matters, many
of which are beyond the control of the Company.
1
<PAGE>
Project Sage - Selected Operating Data
--------------------------------------
(Dollars in thousands)
<TABLE>
<CAPTION>
Fiscal Year Twelve Months
Ended Six Months Ended Ended Projected
9/30/99 3/31/99 3/31/00(a) 3/31/00 9/30/00(a)
------- ------- ---------- ------- ----------
<S> <C> <C> <C> <C> <C>
Revenues $56,329 $24,295 $37,608 $69,642 $72,548
Cost of Sales 44,139 19,561 28,788 53,366 56,372
------- ------- ------- ------- -------
Gross Profit 12,190 4,734 8,820 16,276 16,176
% of revenues 21.6% 19.5% 23.5% 23.4% 22.3%
SG&A 7,771 3,322 4,734 9,183 9,439
------- ------- ------- ------- -------
EBITDA 4,419 1,412 4,086 7,093 6,737
% of revenues 7.8% 5.8% 10.9% 10.2% 9.3%
Depreciation & Amort. 660 337 417 740 847
------- ------- ------- ------- -------
EBIT 3,759 1,075 3,669 6,353 5,890
% of revenues 6.7% 4.4% 9.8% 9.1% 8.1%
Net Income $1,999 $537 $1,973 $3,435 $3,271
======= ======= ======= ======= ========
% of revenues 3.5% 2.2% 5.2% 4.9% 4.5%
</TABLE>
(a) SG&A, EBITDA, EBIT and NI exclude one-time charges of $630,000 relating to
the MBO, net of taxes, (assumed to be 40%).
2
<PAGE>
Project Sage - Purchase Price Ratio Analysis
--------------------------------------------
(Dollars in millions, except per share data)
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
Share Price $3.25 $3.50 $3.75 $4.00 $4.25
Implied Premium (a) 13.0% 21.7% 30.4% 39.1% 47.8%
Implied Premium (b) (5.5%) 1.8% 9.1% 16.4% 23.6%
Multiplied by: Shares Outstanding (in millions) (c) 4.647 4.648 4.647 4.647 4.647
------ ------ ------ ------ ------
Market Value $15.10 $16.27 $17.43 $18.59 $19.75
Plus: Net Debt 0.45 0.45 0.45 0.45 0.45
Enterprise Value $15.55 $16.71 $17.87 $19.03 $20.20
Enterprise Value as a Multiple of:
Revenues
2000P $72.55 0.21 x 0.23 x 0.25 x 0.26 x 0.28 x
LTM (d) 69.64 0.22 0.24 0.26 0.27 0.29
1999A 56.33 0.28 0.30 0.32 0.34 0.36
EBITDA
2000P $6.74 2.3 x 2.5 x 2.7 x 2.8 x 3.0 x
LTM (d) 7.09 2.2 2.4 2.5 2.7 2.8
1999A 4.42 3.5 3.8 4.0 4.3 4.6
EBIT
2000P $5.89 2.6 x 2.8 x 3.0 x 3.2 x 3.4 x
LTM (d) 6.35 2.4 2.6 2.8 3.0 3.2
1999A 3.76 4.1 4.4 4.8 5.1 5.4
Market Value as a Multiple of:
Net Income
2000P $3.27 4.6 x 5.0 x 5.3 x 5.7 x 6.0 x
LTM (d) 3.44 4.4 4.7 5.1 5.4 5.7
1999A 2.00 7.6 8.1 8.7 9.3 9.9
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
Share Price $4.50 $4.75 $5.00 $5.25 $5.50 $5.75 $6.00
Implied Premium (a) 56.5% 65.2% 73.9% 82.6% 91.3% 100.0% 108.7%
Implied Premium (b) 30.9% 38.2% 45.5% 52.7% 60.0% 67.3% 74.5%
Multiplied by: Shares Outstanding (in millions)(c) 4.647 4.647 4.647 4.647 4.647 4.647 4.647
------ ------ ------ ------ ------ ------ -----
Market Value $20.91 $22.07 $23.24 $24.40 $25.56 $26.72 27.88
Plus: Net Debt 0.45 0.45 0.45 0.45 0.45 0.45 0.45
Enterprise Value $21.36 $22.52 $23.68 $24.84 $26.00 $27.17 28.33
Enterprise Value as a Multiple of:
Revenues
2000P 0.29 x 0.31 x 0.33 x 0.34 x 0.36 x 0.37 x 0.39 x
LTM (d) 0.31 0.32 0.34 0.36 0.37 0.39 0.41
1999A 0.38 0.40 0.42 0.44 0.46 0.48 0.50
EBITDA
2000P 3.2 x 3.3 x 3.5 x 3.7 x 3.9 x 4.0 x 4.2 x
LTM (d) 3.0 3.2 3.3 3.5 3.7 3.8 4.0
1999A 4.8 5.1 5.4 5.6 5.9 6.1 6.4
EBIT
2000P 3.6 x 3.8 x 4.0 x 4.2 x 4.4 x 4.6 x 4.8 x
LTM (d) 3.4 3.5 3.7 3.9 4.1 4.3 4.5
1999A 5.7 6.0 6.3 6.6 6.9 7.2 7.5
Market Value as a Multiple of:
Net Income
2000P 6.4 x 6.7 x 7.1 x 7.5 x 7.8 x 8.2 x 8.5 x
LTM (d) 6.1 6.4 6.8 7.1 7.4 7.8 8.1
1999A 10.5 11.0 11.6 12.2 12.8 13.4 13.9
</TABLE>
(a) Assumes a share price of $2.88, the closing price on March 30, 2000 one
day before the announcement.
(b) Assumes a share price of $3.44, the closing price on June 26, 2000.
(c) Assumes Sage's shares outstanding as of May 12, 2000 (from 10-Q) and
adding to it all options, excluding those held by H. Solomon, L. Solomon and S.
Page (using the Treasury Method).
(d) LTM date is March 31, 2000.
3
<PAGE>
Project Sage Two - Year Share Price Chart
-----------------------------------------
(June 26, 1998 - June 26, 2000)
[GRAPHIC OMITTED]
[GRAPHIC OMITTED]
4
<PAGE>
Project Sage Fove - Year Share Price Chart
------------------------------------------
(June 26, 1995 - June 26, 2000)
[GRAPHIC OMITTED]
[GRAPHIC OMITTED]
5
<PAGE>
III. VALUATION ANALYSES
<PAGE>
A. COMPARABLE COMPANY ANALYSIS
<TABLE>
<CAPTION>
LTM LFY Market Enterprise
Date Date Share Price Cap. Value
---- ---- ----------- ------ ----------
(6/26/00) (millions) (millions)
<S> <C> <C> <C> <C> <C> <C> <C>
Sage 3/31/00 9/30/99 $3.44 $14.3 $14.7
ACSYA, Inc. (AYS) 3/31/00 12/31/99 $4.88 $70.7 $111.2
Ablest Inc. (ABI) 4/2/00 12/26/99 5.63 16.3 15.0
Diversified Corporate Resources, Inc. (HIR) 3/31/00 12/31/99 3.00 8.4 15.2
General Employment Enterprises, Inc. (JOB) 3/31/00 9/30/99 3.50 17.8 7.2
Headway Corporate Resources, Inc. (HDWY) 3/31/00 12/31/99 3.13 35.5 138.2
Joule Inc. (JOL) 3/31/00 9/30/99 1.38 5.1 11.8
</TABLE>
<TABLE>
<CAPTION>
Market Value
as a Multiple of Enterprise Value as a Multiple of:
---------------- ----------------------------------
LTM Book LTM LTM LTM
EPS Value Revenues EBITDA EBIT
--- ----- -------- ------ ----
<S> <C> <C> <C> <C> <C>
Sage 5.3x 1.51x 0.21x 2.3x 2.6x
ACSYA, Inc. (AYS) 20.4x 2.15x 0.68x 7.9x 10.6x
Ablest Inc. (ABI) 20.4 0.86 0.15 4.9 9.4
Diversified Corporate Resources, Inc. (HIR) 6.1 0.62 0.25 2.8 3.8
General Employment Enterprises, Inc. (JOB) 6.0 1.27 0.18 1.4 1.6
Headway Corporate Resources, Inc. (HDWY) 6.1 1.20 0.38 5.3 6.6
Joule Inc. (JOL) 6.6 0.63 0.15 4.9 7.4
Mean 10.9x 1.12x 0.30x 4.5x 6.6x
Median 6.4 1.03 0.22 4.9 7.0
High 20.4x 2.15x 0.68x 7.9x 10.6x
Low 6.0 0.62 0.15 1.4 1.6
*Excluded from mean, median, high and low calculations.
</TABLE>
--------------------------
Enterprise Value is equal to Market Value plus Total Debt less Cash &
Equivalents
AYS- EBITDA, EBIT, NI and EPS for 1999 exclude severance and office closing
costs of $5.5 MM, net of taxes.
ABI- Name changed from C.H. Heist Corp. in March of 2000 after the sale of its
industrial maintenance business.
ABI- EBITDA, EBIT, NI and EPS for 1999 exclude one-time intangible asset
impairment of $5.1 MM, net of taxes.
HDWY - EBITDA, EBIT, NI and EPS for 1999 exclude one-time termination of
employment contract expenses of $2.3 MM, net of taxes.
JOL- EBITDA, NI and EPS for 1999 exclude one-time expenses of $0.5 MM, net of
taxes.
6
<PAGE>
Comparable Company Implied Valuation
------------------------------------
(Dollars in millions, except per share data)
<TABLE>
<CAPTION>
Market Value Enterprise Value
as a Multiple of: as a Multiple of:
LTM Book LTM LTM LTM
Net Income (a) Value (b) Revenues (a) EBITDA (a) EBIT (a)
-------------- --------- ------------ ---------- --------
<S> <C> <C> <C> <C> <C>
Mean 10.9 X 1.12 X 0.30 X 4.5 X 6.6 X
Median 6.4 1.03 0.22 4.9 7.0
High 20.4 2.15 0.68 7.9 10.6
Low 6.0 0.62 0.15 1.4 1.6
Sage $3.4 $9.4 $69.6 $7.1 $6.4
Implied Enterprise Value
Mean $38.0 $11.0 $20.8 $32.2 $41.7
Median 22.3 10.2 15.1 34.8 44.4
High $70.4 $20.7 $47.2 $55.7 $67.4
Low 21.2 6.3 10.2 10.2 10.3
<S> <C> <C> <C> <C> <C>
Less Net Debt (b) $0.4 $0.4 $0.4 $0.4 $0.4
----- ----- ----- ----- -----
Implied Equity Value
Mean $37.5 $10.6 $20.3 $31.7 $41.3
Median 21.9 9.7 14.6 34.4 44.0
High $69.9 $20.3 $46.7 $55.3 $66.9
Low 20.7 5.8 9.8 9.7 9.9
Implied Per Share Value (c)
Mean $8.06 $2.27 $4.36 $6.82 $8.87
Median 4.70 2.09 3.14 7.38 9.44
High $15.01 $4.35 $10.03 $11.87 $14.37
Low 4.45 1.25 2.10 2.09 2.12
</TABLE>
(a) LTM date is March 31, 2000.
(b) Sage net debt and book value as of March 31, 2000.
(c) Assumes Sage's shares outstanding as of May 12, 2000 (from 10-Q) and adding
to it all options, excluding those held by H. Solomon, L. Solomon and S. Page
(using the Treasury Method).
7
<PAGE>
B. Comparable "Going Private" Transaction Analysis
Comparable "Going Private" Transaction Multiples and Premia Paid
----------------------------------------------------------------
(Includes "going private" transactions $100 million, January 1, 1998 - Current)
<TABLE>
<CAPTION>
Date Enterprise
Effective Acquiror Name Target Name Value
--------- ------------- ----------- ----------
($ in Millions)
<S> <C> <C> <C>
10/28/99 Management Kentek Information Systems, Inc. $10.8
Supplies printers and related accessories.
9/3/99 Management Winston Resources Inc. 12.5
Provides temporary and full-time employment
staffing.
8/6/99 Cornerstone Equitrac Corp. 65.0
Equity Investors LLC Designs and manufactures computer integrated
systems.
4/20/99 Tinicum Capital Haskel International, Inc. 52.4
Partners, L.P. Manuractures pumps and air pressure
amplifiers.
4/5/99 SRC Holdings Inc. Back Bay Restaurant Group 42.2
(Management) Ownes and operated full service restaurants.
3/26/99 Science Applications Oacis Healthcare Holdings 47.4
Int'l. Corp. Provides flexible, open architecture clinical
information systems.
2/24/99 News & Media PLC / UIG Audits & Surveys Worldwide, Inc. 42.5
Manufactures and distributes chemicals,
cleaning equipment and testing equipment.
</TABLE>
<TABLE>
<CAPTION>
Enterprise Value as a Multiple of:
Date LTM LTM LTM
Effective Acquiror Name Target Name Revenues EBITDA EBIT
--------- ------------- ----------- -------- ------ ----
<S> <C> <C> <C> <C> <C>
10/28/99 Management Kentek Information Systems, Inc. 0.28x 2.5x 3.6x
Supplies printers and related accessories.
9/3/99 Management Winston Resources Inc. 0.20 3.6 3.9
Provides temporary and full-time employment
staffing.
8/6/99 Cornerstone Equitrac Corp. 1.16 6.9 10.9
Equity Investors LLC Designs and manufactures computer integrated
systems.
4/20/99 Tinicum Capital Haskel International, Inc. 1.03 7.4 9.1
Partners, L.P. Manuractures pumps and air pressure
amplifiers.
4/5/99 SRC Holdings Inc. Back Bay Restaurant Group 0.44 5.5 12.0
(Management) Ownes and operated full service restaurants.
3/26/99 Science Applications Oacis Healthcare Holdings NA NA NA
Int'l. Corp. Provides flexible, open architecture clinical
information systems.
2/24/99 News & Media PLC / UIG Audits & Surveys Worldwide, Inc. NA NA NA
Manufactures and distributes chemicals,
cleaning equipment and testing equipment.
</TABLE>
<TABLE>
<CAPTION>
Date Premium Paid
Effective Acquiror Name Target Name 1 Day 1 Week 4 Weeks
--------- ------------- ----------- ----- ------ -------
<S> <C> <C> <C> <C> <C>
10/28/99 Management Kentek Information Systems, Inc. 22.8% 27.5% 27.5%
Supplies printers and related accessories.
9/3/99 Management Winston Resources Inc. 60.9% 42.3% 42.3%
Provides temporary and full-time employment
staffing.
8/6/99 Cornerstone Equitrac Corp. 4.3% 5.7% 12.0%
Equity Investors LLC Designs and manufactures computer integrated
systems.
4/20/99 Tinicum Capital Haskel International, Inc. 42.3% 49.6% 51.8%
Partners, L.P. Manuractures pumps and air pressure
amplifiers.
4/5/99 SRC Holdings Inc. Back Bay Restaurant Group 12.3% 13.9% 28.1%
(Management) Ownes and operated full service restaurants.
3/26/99 Science Applications Oacis Healthcare Holdings 36.9% 42.4% 42.4%
Int'l. Corp. Provides flexible, open architecture clinical
information systems.
2/24/99 News & Media PLC / UIG Audits & Surveys Worldwide, Inc. 32.9% 36.4% 44.0%
Manufactures and distributes chemicals,
cleaning equipment and testing equipment.
</TABLE>
<PAGE>
B. COMPARABLE "GOING PRIVATE" TRANSACTION ANALYSIS (CONT.)
Comparable "Going Private" Transaction Multiples and Premia Paid (cont.)
------------------------------------------------------------------------
(Includes "going private" transactions $100 million, January 1, 1998 - Current)
8
<TABLE>
<CAPTION>
Enterprise Value as a Multiple of:
Date Enterprise LTM LTM LTM
Effective Acquiror Name Target Name Value Revenues EBITDA EBIT
--------- ------------- ----------- ----- -------- ------ ----
($ in million)
<S> <C> <C> <C> <C> <C> <C>
1/12/99 Management Lion Brewery, Inc. 14.3 0.52 3.2 4.3
Produces and bottles brewed beverages
8/31/98 Linsalata Capital Partners Fund II Personnel Management Inc. 42.3 0.51 11.2 14.9
Provides Temporary and Long-Term Staffing
Services
7/29/98 Green I Acquisition Corp. GNI Group, Inc. $84.9 2.04x 8.0x 22.2x
Provides hazardous waste handling services.
6/4/98 MHD Acquisition Corp. Portec, Inc. 26.8 1.05 8.4 10.8
Manufacturers railroad, construction and
materials handling equipment.
2/2/98 Investor Group Plasti-Line, Inc. 59.8 0.46 6.5 8.7
Manufactures signs and related products.
1/22/98 Cracken, Harkey & Co. LLC El Chico Restaurants Inc. 55.7 0.54 5.2 13.8
Operates and franchises full-service,
family-style mexican restaurants.
Mean 0.75x 6.2x 10.4x
Median 0.52 6.5 10.8
High 2.04x 11.2x 22.2x
Low 0.20 2.5 3.6
</TABLE>
<TABLE>
<CAPTION>
Enterprise Value as a Multiple of:
Date Premium Paid
Effective Acquiror Name Target Name 1 Day 1 Week 4 Weeks
--------- ------------- ----------- ----- -------- ------
<S> <C> <C> <C> <C> <C>
1/12/99 Management Lion Brewery, Inc. 9.0% 13.9% 27.5%
Produces and bottles brewed beverages
8/31/98 Linsalata Capital Partners Fund II Personnel Management Inc. 25.5% 23.1% 23.1%
Provides Temporary and Long-Term Staffing
Services
7/29/98 Green I Acquisition Corp. GNI Group, Inc. 17.9% 17.9% 40.0%
Provides hazardous waste handling services.
6/4/98 MHD Acquisition Corp. Portec, Inc. 8.9% 14.3% 11.3%
Manufacturers railroad, construction and
materials handling equipment.
2/2/98 Investor Group Plasti-Line, Inc. 36.5% 36.5% 30.3%
Manufactures signs and related products.
1/22/98 Cracken, Harkey & Co. LLC El Chico Restaurants Inc. 21.4% 17.2% 22.9%
Operates and franchises full-service,
family-style mexican restaurants.
Mean 25.5% 26.2% 31.0%
Median 22.8% 23.1% 28.1%
High 60.9% 49.6% 51.8%
Low 4.3% 5.7% 11.3%
</TABLE>
9
<PAGE>
Comparable "Going Private" Transaction Implied Valuation
--------------------------------------------------------
(Dollars in millions, except per share data)
<TABLE>
<CAPTION>
Market Value Plus Net Debt
as a Multiple of:
LTM LTM LTM
Revenues (a) EBITDA (a) EBIT (a)
<S> <C> <C> <C>
Mean 0.75 X 6.2 X 10.4 X
Median 0.52 6.5 10.8
High 2.04 11.2 22.2
Low 0.20 2.5 3.6
Sage $69.6 $7.1 $6.4
Implied Enterprise Value
Mean $52.1 $44.1 $65.8
Median 36.2 45.8 68.4
High $141.7 $79.7 $141.1
Low 14.2 17.6 22.6
Less Net Debt (b) $0.4 $0.4 $0.4
------ ----- ------
Implied Equity Value
Mean $51.7 $43.7 $65.4
Median 35.7 45.3 67.9
High $141.3 $79.3 $140.6
Low 13.7 17.1 22.1
Implied Per Share Value (c)
Mean $11.10 $9.37 $14.03
Median 7.67 9.73 14.59
High $30.33 $17.01 $30.19
Low 2.95 3.67 4.75
</TABLE>
(a) LTM date is March 31, 2000.
(b) Sage net debt as of March 31, 2000.
(c) Assumes Sage's shares outstanding as of May 12, 2000 (from 10-Q) and adding
to it all options excluding those held by H. Solomon, L. Solomon and S.
Page (using the Treasury Method).
10
<PAGE>
Comparable "Going Private" Premia Paid Implied Valuation
--------------------------------------------------------
(Dollars in millions, except per share data)
<TABLE>
<CAPTION>
Stock Price Prior to Announcement (a)
-------------------------------------
1 Day 1 Week 1 Month
----- ------ -------
<S> <C> <C> <C>
Mean 25.5% 26.2% 31.0%
Median 22.8% 23.1% 28.1%
High 60.9% 49.6% 51.8%
Low 4.3% 5.7% 11.3%
Sage $2.88 $2.88 $2.69
Sage Implied Price
Mean $3.61 $3.63 $3.52
Median 3.53 3.54 3.44
High $4.63 $4.30 $4.08
Low 3.00 3.04 2.99
</TABLE>
(a) Assumes stock price as of March 30, 2000. Announcement occurred on March 31,
2000.
11
<PAGE>
Comparable "Going Private" Premia Paid Implied Valuation
--------------------------------------------------------
(Dollars in millions, except per share data)
<TABLE>
<CAPTION>
Stock Price Prior to Announcement (a)
-------------------------------------
1 Day 1 Week 1 Month
----- ------ -------
<S> <C> <C> <C>
Mean 25.5% 26.2% 31.0%
Median 22.8% 23.1% 28.1%
High 60.9% 49.6% 51.8%
Low 4.3% 5.7% 11.3%
Sage $3.56 $3.44 $3.63
Sage Implied Price
Mean $4.47 $4.34 $4.75
Median 4.38 4.23 4.64
High $5.73 $5.14 $5.50
Low 3.72 3.63 4.03
</TABLE>
(a) Assumes stock price as of June 26, 2000.
12
<PAGE>
C. SUMMARY HISTORICAL STOCK PRICE PERFORMANCE
Project Sage Historical Stock Performance
-----------------------------------------
<TABLE>
<CAPTION>
Daily for the Sage Closing Stock Prices Implied Premia Based
Following Periods: Time Period High Low Mean on a $5.25 Stock Price(a)
------------------ ----------- ---- --- ---- -------------------------
<S> <C> <C> <C> <C> <C> <C>
03/30/00 Current Price $2.88 $2.88 $2.88 82.6%
03/24/00 - 03/30/00 Last Week $3.00 $2.56 $2.84 85.2%
03/17/00 - 03/30/00 Last 14 days $3.00 $2.56 $2.78 89.1%
03/01/00 - 03/30/00 Last 30 days $3.06 $2.56 $2.80 87.8%
01/31/00 - 03/30/00 Last 60 Days $3.06 $2.41 $2.73 92.5%
01/01/00 - 03/30/00 Last 90 Days $3.06 $1.91 $2.61 101.4%
10/03/99 - 03/30/00 Last 180 Days $3.25 $1.88 $2.59 102.8%
03/30/99 - 03/30/00 Last 1 Year $3.25 $1.59 $2.46 113.1%
03/30/98 - 03/30/00 Last 2 Years $4.88 $1.34 $2.48 111.3%
03/30/97 - 03/30/00 Last 3 Years $4.88 $1.34 $2.66 97.0%
</TABLE>
(a) Premia calculated based on mean Sage closing stock price.
13
<PAGE>
C. SUMMARY HISTORICAL STOCK PRICE PERFORMANCE (CONT.)
Project Sage Historical Stock Price Performance
-----------------------------------------------
<TABLE>
<CAPTION>
Daily for the Sage Closing Stock Prices Implied Premia Based
Following Periods: Time Period High Low Mean on a $5.25 Stock Price(a)
------------------ ----------- ---- --- ---- -------------------------
<S> <C> <C> <C> <C> <C> <C>
06/26/00 Current Price $3.44 $3.44 $3.44 52.7%
06/20/00 - 06/26/00 Last Week $3.56 $3.44 $3.48 50.7%
06/11/00 - 06/26/00 Last 14 days $3.63 $3.44 $3.54 48.2%
05/26/00 - 06/26/00 Last 30 days $3.69 $3.44 $3.58 46.5%
04/26/00 - 06/26/00 Last 60 Days $3.88 $3.44 $3.65 43.6%
03/27/00 - 06/26/00 Last 90 Days $3.88 $2.56 $3.62 45.2%
12/28/99 - 06/26/00 Last 180 Days $3.88 $2.41 $3.17 65.7%
06/28/99 - 06/26/00 Last 1 Year $3.88 $1.88 $2.85 84.3%
06/26/98 - 06/26/00 Last 2 Years $3.91 $1.34 $2.47 112.8%
06/26/97 - 06/26/00 Last 3 Years $4.88 $1.34 $2.77 89.4%
</TABLE>
14
<PAGE>
MEMORANDUM OF UNDERSTANDING
---------------------------
This Memorandum of Understanding ("Memorandum") is entered
into as of June 14, 2000, by and among (i) William Straub ("Plaintiff"); and
(ii) The Solomon-Page Group Ltd. ("SPG" or the "Company") and the SPG directors
named as individual defendants (the "Individual Defendants") (collectively, the
"Defendants") in the action captioned William Straub v. The Solomon-Page Group
Ltd. and Scott Page, et al., C.A. No. 17977-NC, pending before the Court of
Chancery of the State of Delaware in and for New Castle County (respectively,
the "Action" and the "Court").
WHEREAS:
A. Plaintiff is and has been the beneficial owner of shares of
common stock of the Company ("Common Stock") at all times as of and since the
date of the filing of the complaint in the Action.
B. On March 31, 2000, SPG announced that it had entered into a
definitive merger agreement (the "Original Merger Agreement") pursuant to which
a management group comprised of Lloyd Solomon, Scott Page and Herbert Solomon
(the "Buyout Group") was to acquire all of the outstanding publicly held shares
of the Common Stock at a price of $4.25 per share (the "Merger").
C. On April 7, 2000, the Action was filed (the "Complaint") on
behalf of a putative class consisting of all stockholders of the Company, other
than Defendants and any persons, firm, trust, corporation, or other entity
related to or affiliated with them and their successors in interest. The
Complaint generally alleges that, in connection with the Original Merger
Agreement, the Buyout Group and the Individual Defendants breached their
fiduciary duties to the Company's public stockholders. The Action seeks to
enjoin the consummation of the Merger.
D. On June 28, 2000, counsel for Plaintiff and Defendants
reached an agreement-in- principle concerning the proposed settlement of the
Action which would result in the public stockholders of the Company receiving a
more favorable transaction than proposed under the Original Merger Agreement.
E. The Buyout Group took into account the desirability of
satisfactorily addressing the claims in the Action in formulating and approving
the amendments to the Original Merger Agreement set forth in paragraph 2 of this
Memorandum.
F. Because counsel for Plaintiff and Defendants in the Action
have concluded that the terms contained in this Memorandum are fair and adequate
to both the Company and its stockholders and that it is reasonable to pursue a
settlement of the Action based upon the procedures outlined herein and the
substantial benefits and protections offered herein, the parties wish to
document their agreement-in-principle in this Memorandum.
NOW, THEREFORE, the parties to the Action have reached an
agreement providing for the settlement of the Action on the terms and subject to
the conditions set forth below (the "Settlement"):
<PAGE>
1. The purpose of this Memorandum is to set forth the
agreement-in-principle of the parties to the Action with respect to the matters
addressed below. However, the obligations of the parties pursuant to this
Memorandum are subject to modifications, if necessary, to ensure that the terms
thereof will not generate any adverse tax, accounting or other consequences to
the parties (including to enable the Company to obtain any necessary third party
consents). Any necessary adjustments will be made on a mutually agreeable basis
so as to preserve the economic, operational and other objectives of the parties
in reaching this agreement-in-principle.
2. Subject to compliance with all applicable securities laws
and other legal requirements, SPG and the Buyout Group will proceed with the
Merger pursuant to the terms of the Revised Merger Agreement (as defined below)
providing for the merger of the Company with and into TSPGL Merger Corporation
(the "Purchaser"). In consideration for the full settlement and release of all
Settled Claims (as defined below), and subject in all respects to all terms and
conditions of the Merger Agreement, the parties to the Action agree as follows:
a. SPG, the Purchaser and the Buyout Group agree to
amend the Original Merger Agreement (the "Revised Merger Agreement") to increase
the Merger Consideration, as defined in Section 3.2(a) of the Original Merger
Agreement, from a right to receive $4.25 per share in cash to a right to receive
$5.25 per share in cash. The revised Section 3.2(a) shall read as follows:
(a) At the Effective Time, by virtue of the Merger
and without any action on the part of the holder thereof, each
share of Company Common Stock outstanding immediately prior to
the Effective Time (other than Treasury Shares, Converted
Shares and Dissenting Shares, if any) shall automatically be
changed into the right to receive, and each certificate which
immediately prior to the Effective Time represented a share of
such Company Common Stock shall evidence solely the right to
receive, $5.25 in cash (the "Merger Consideration") upon
surrender of the certificate formerly representing Company
Common Stock as provided in Section 3.4.
b. The Original Merger Agreement shall be amended to
provide that the Merger shall be conditioned upon the favorable vote by the
holders of a majority of the shares of Common Stock which are not owned,
directly or indirectly, by any member of the Buyout Group (the "Public
Stockholder Voting Requirement").
3. Subject to such reasonable and appropriate confirmatory
discovery as Plaintiff and Defendants agree, Plaintiff agrees to enter into a
settlement stipulation (and such other related documentation as may be
necessary) which will provide for the settlement of the Action (the "Settlement
Agreement"). Among other things, the Settlement Agreement expressly will provide
as follows:
a. for the conditional certification of the Action,
for settlement purposes only, as a class action pursuant to Chancery Court Rules
23(b)(1) and (b)(2) on behalf a class consisting of all record and beneficial
holders of Common Stock of the Company (other than the Defendants
2
<PAGE>
and any person, firm, trust, corporation or other entity related or affiliated
with any of the Defendants) for the period from and including March 31, 2000
through and including the effective date of the Merger, including any and all of
their respective successors in interest, predecessors, representatives,
trustees, executors, administrators, heirs, assigns or transferees, immediate
and remote, and any person or entity acting for or on behalf of, or claiming
under any of them, and each of them (the "Class");
b. for the complete discharge, dismissal with prejudice,
settlement and release of, and an injunction barring, all claims, demands,
rights, actions or causes of action, liabilities, damages, losses, obligations,
judgments, suits, matters and issues of any kind or nature whatsoever, whether
known or unknown, contingent or absolute, suspected or unsuspected, disclosed or
undisclosed, hidden or concealed, matured or unmatured, material or immaterial,
that have been, could have been, or in the future can or might be asserted in
the Action or in any court, tribunal or proceeding (including, but not limited
to, any claims arising under federal or state law relating to alleged fraud,
breach of any duty, negligence, violations of the federal securities laws or
otherwise) by or on behalf of any member of the Class, whether individual,
class, derivative, representative, legal, equitable or any other type or in any
other capacity against Defendants in the Action, or any of their families,
parent entities, associates, affiliates or subsidiaries and each and all of
their respective past, present or future officers, directors, stockholders,
representatives, employees, attorneys, financial or investment advisors,
consultants, accountants, law firms, investment bankers, commercial bankers,
engineers, advisors or agents, heirs, executors, trustees, general or limited
partners or partnerships, personal representatives, estates, administrators,
predecessors, successors and assigns (collectively, the "Released Persons")
which relate in any manner to, the allegations, facts, events, transactions,
acts, occurrences, statements, representations, misrepresentations, omissions or
any other matter, thing or cause whatsoever, or any series thereof, embraced,
involved, set forth or otherwise related, directly or indirectly, to the
Complaint, the Original Merger Agreement, the Revised Merger Agreement, the
Merger, and any proxy material, public filings or statements (including, but not
limited to, public statements) by any of the Defendants in the Action or any
other Released Persons in connection with the Merger (collectively, the "Settled
Claims");
c. that Defendants have denied, and continue to deny, that any
of them have committed or have threatened to commit any wrongdoing, violations
of law or breaches of duty to Plaintiff, the Class or anyone;
d. that Defendants are entering into the Settlement Agreement
solely because the proposed Settlement would eliminate the distraction, burden
and expense of further litigation;
e. that the deadline for Defendants to move, answer or
otherwise respond with respect to the Complaint has been extended without date
pending the parties' joint submission to the Court as soon as practicable of a
stipulation dismissing the Action with prejudice according to the terms set
forth herein; and
f. subject to the Order of the Court, pending final
determination of whether the Settlement provided for in the Settlement Agreement
should be approved, that Plaintiff and all members of the Class, or any of them,
are barred and enjoined from commencing, prosecuting,
3
<PAGE>
instigating or in any way participating in the commencement or prosecution of
any action asserting any Settled Claims against any of the Released Persons.
4. The parties to the Action will use their best efforts to
complete the discovery contemplated by this Memorandum and to agree upon,
execute and present to the Court, as soon as practicable, a formal Settlement
Agreement and such other documents as may be necessary and appropriate in order
to obtain the prompt approval by the Court of the Settlement and the dismissal
with prejudice of the Action in the manner contemplated herein and by the
Settlement Agreement. Pending the negotiation and execution of the Settlement
Agreement, all proceedings in the Action, except for Settlement-related
proceedings pursuant to this Memorandum, shall be suspended.
5. Plaintiff will cooperate with Defendants in all reasonable
respects in connection with implementation of the Revised Merger Agreement and
the other understandings set forth herein. The parties to the Action, through
their counsel, (i) agree to use their best efforts to pursue the Settlement in
as expeditious and comprehensive a manner as possible and acknowledge that time
is of the essence; and (ii) agree to cooperate in preparing any and all
necessary papers to define, pursue and effectuate the Settlement.
6. Pending negotiation, execution and Court approval of the
Settlement Agreement and Settlement, the Plaintiff in the Action agrees to stay
any discovery and to stay and not to initiate any and all other proceedings
other than those incident to the Settlement itself. The parties also agree to
use their best efforts to prevent, stay or seek dismissal of or oppose entry of
any interim or final relief in favor of any member of the Class in any other
litigation against any of the parties to this Memorandum which challenges the
Settlement, the Original Merger Agreement, the Revised Merger Agreement or the
Merger or otherwise involves a Settled Claim.
7. The Settlement contemplated by this Memorandum is subject
to:
a. the completion by Plaintiff in the Action of such
documentary discovery and/or oral depositions or interviews as reasonably are
requested by him and agreed to by the respective party from whom discovery is
requested (the scope of such discovery having been discussed by counsel prior to
the execution of this Memorandum);
b. the execution of a formal Settlement Agreement
(and such other documentation as may be required to obtain final approval by the
Court of the Settlement) by counsel for the parties to the Action, which
Settlement Agreement shall include a provision permitting Defendants to
terminate the Settlement if, prior to the Effective Date of the Settlement (as
defined below), any action is pending in any state or federal court which raises
any Settled Claims against any of the Released Persons;
c. the consummation of the Merger;
d. final approval by the Court of the Settlement (and
the exhaustion of possible appeals, if any) and the dismissal of the Action by
the Court with prejudice and without awarding costs to any party (except as
provided herein) having been obtained, and entry by the Court of a final
4
<PAGE>
order and judgment containing such release language as is contained in the
Settlement Agreement; and
e. the determination by Defendants in the Action that
the dismissal of the Action in accordance with the Settlement Agreement will
result in the release with prejudice of the Settled Claims.
8. This Memorandum shall be null and void and of no force and
effect should any of the conditions set forth herein not be met or should
Plaintiff's counsel in the Action determine in good faith that, based upon the
discovery contemplated by this Memorandum, the proposed Settlement is not fair,
reasonable and adequate; in such event, this Memorandum shall not be deemed to
prejudice in any way the positions of the parties with respect to the Action nor
to entitle any party to the recovery of costs and expenses incurred to implement
this Memorandum (except as provided in paragraph 11 hereof for the costs of
notice of the Settlement).
9. Subject to the terms and conditions of this Memorandum and
the terms and conditions of the Settlement Agreement contemplated hereby, the
Company shall pay, on behalf of and for the benefit of the Individual Defendants
in the Action, such fees and expenses as may be awarded by the Court to counsel
for Plaintiff in the Action, who agrees not to apply for an award of fees and
expenses that exceeds $125,000.00, which shall be payable in accordance with the
terms of the Settlement Agreement.
10. The Effective Date of the Settlement shall be the date on
which the order of the Court approving the Settlement becomes final and no
longer subject to further appeal or review, whether by exhaustion of any
possible appeal, lapse of time or otherwise.
11. The Company shall be responsible for providing notice of
the Settlement to the members of the Class. The Company shall pay, on behalf of
and for the benefit of the Individual Defendants in the Action, all reasonable
costs and expenses incurred in providing notice of the Settlement to the members
of the Class and shall cooperate with Plaintiff's counsel in providing such
information as is reasonably available to it and reasonably identifies potential
Class members.
12. Except as provided herein, the Defendants in the Action
shall bear no other expenses, costs, damages or fees alleged or incurred by
Plaintiff, by any member of the Class, or by any of their attorneys, experts,
advisors, agents or representatives.
13. The provisions contained in this Memorandum shall not be
deemed a presumption, concession or an admission by any Defendant in the Action
of any fault, liability or wrongdoing as to any facts or claims alleged or
asserted in the Action, or any other actions or proceedings, and shall not be
interpreted, construed, deemed, invoked, offered, or received in evidence or
otherwise used by any person in the Action, or in any other action or
proceeding, whether civil, criminal or administrative.
5
<PAGE>
14. This Memorandum constitutes the entire agreement among the
parties with respect to the subject matter hereof, and may not be amended nor
any of its provisions waived except by a writing signed by all of the parties
hereto.
15. This Memorandum and the Settlement contemplated by it
shall be governed by, and construed in accordance with, the laws of the State of
Delaware, without regard to conflict of laws principles.
16. This Memorandum will be executed by counsel for the
parties to the Action, each of whom represent and warrant that they have the
authority from their client to enter into this Memorandum. This Memorandum may
be executed in one or more counterparts, each of which shall be deemed to be an
original, but all of which together shall constitute one and the same
instrument.
17. The Plaintiff and his counsel in the Action represent and
warrant that none of Plaintiff's claims or causes of action referred to in any
complaint in the Action or this Memorandum have been assigned, encumbered or in
any manner transferred in whole or in part.
18. This Memorandum shall be binding upon and shall inure to
the benefit of the parties and their respective agents, successors, executors,
heirs and assigns.
IN WITNESS WHEREOF, the parties have executed this
Memorandum effective as of the date set forth below.
-------------------------------------
Of Counsel: Bruce L. Silverstein
Young, Conaway, Stargatt & Taylor
Thomas J. Fleming Rodney Square North
Olshan Grundman Frome Rosenzweig & P.O. Box 391
Wolosky LLP Wilmington, Delaware 19899-0391
505 Park Avenue (302) 571-6600
New York, New York 10022 Attorneys for Defendants Scott Page, Eric
(212) 753-7200 A. Davis, Herbert Solomon and Lloyd
Solomon
6
<PAGE>
-------------------------------------
Of Counsel: Kevin G. Abrams
Raymond J. DiCamillo
Irwin H. Warren Christine M. Morabito
Candice Toll Richards, Layton & Finger
Weil, Gotshal & Manges One Rodney Square
767 Fifth Avenue P.O. Box 551
New York, New York 10153 Wilmington, Delaware 19899
(212) 310-8000 (302) 658-6541
Attorneys for Defendants The Solomon-
Page Group Ltd., Edward Ehrenberg and
Joel A. Klarreich
-------------------------------------
Of Counsel: Norman M. Monhait
Rosenthal, Monhait, Gross & Goddess
Goodkind, Labaton, Rudoff & Sucharow Suite 1401, Mellon Bank Center
100 Park Avenue P.O. Box 1070
New York, New York 10017 Wilmington, Delaware 19899
(212) 907-0700 (302) 656-4433
Attorneys for Plaintiff
Cauley & Geller
7200 West Camino Real
Suite 203
Boca Raton, Florida 33433
(561) 750-3000
Dated: June 28, 2000
7
