<PAGE>
Exhibit (a)(1)(A)
OFFER TO PURCHASE FOR CASH
UP TO AN AGGREGATE OF 2,300,000 OUTSTANDING SHARES OF COMMON STOCK
(Including the Related Preferred Stock Purchase Rights)
of
CHASE INDUSTRIES INC.
at
$10.50 NET PER SHARE
by
CHASE ACQUISITION CORPORATION
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 5:00 P.M., NEW YORK CITY TIME,
ON WEDNESDAY, JANUARY 31, 2001, UNLESS THE OFFER IS EXTENDED.
THE OFFER IS CONDITIONED UPON, AMONG OTHER THINGS, (1) CHASE INDUSTRIES'
BOARD OF DIRECTORS REDEEMING THE RELATED PREFERRED STOCK PURCHASE RIGHTS OR
CHASE ACQUISITION CORPORATION ("THE PURCHASER") BEING SATISFIED, IN ITS SOLE
DISCRETION, THAT THE RIGHTS HAVE BEEN INVALIDATED OR ARE OTHERWISE
INAPPLICABLE TO THE OFFER AND THE PROPOSED SECOND-STEP MERGER DESCRIBED
HEREIN, (2) THE PURCHASER HAVING RECEIVED SUFFICIENT FUNDING, ON TERMS AT
LEAST AS FAVORABLE TO THE PURCHASER AS ARE CONTAINED IN THE COMMITMENT LETTERS
RECEIVED FROM PNC BANK, TO PAY FOR ALL SHARES TENDERED PURSUANT TO THE OFFER
AND NOT VALIDLY WITHDRAWN AND TO PAY ALL FEES AND EXPENSES RELATED TO THE
OFFER AND BEING SATISFIED THAT IT WILL HAVE FUNDING AVAILABLE FOLLOWING THE
OFFER SUFFICIENT TO FUND THE PROPOSED SECOND-STEP MERGER AND THE ONGOING
WORKING CAPITAL NEEDS OF CHASE INDUSTRIES, (3) THE PURCHASER BEING SATISFIED,
IN ITS SOLE DISCRETION, THAT, AFTER CONSUMMATION OF THE OFFER, SECTION 203 OF
THE DELAWARE GENERAL CORPORATION LAW WILL NOT PROHIBIT FOR ANY PERIOD OF TIME,
OR IMPOSE ANY VOTING REQUIREMENTS IN EXCESS OF MAJORITY STOCKHOLDER APPROVAL
WITH RESPECT TO, THE PROPOSED SECOND-STEP MERGER OR ANY OTHER BUSINESS
COMBINATION INVOLVING CHASE INDUSTRIES AND THE PURCHASER OR ANY OTHER
SUBSIDIARY OF COURT SQUARE CAPITAL LIMITED ("COURT SQUARE") AND (4) THE
EXPIRATION OR TERMINATION OF ALL WAITING PERIODS IMPOSED BY THE HART-SCOTT-
RODINO ANTITRUST IMPROVEMENTS ACT OF 1976, AS AMENDED, AND THE REGULATIONS
THEREUNDER WITH RESPECT TO THE OFFER, THE CONTRIBUTION OF SHARES TO THE
PURCHASER BY COURT SQUARE AND THE CONVERSION OF NON-VOTING SHARES HELD BY
COURT SQUARE TO VOTING SHARES.
----------------
THIS TRANSACTION HAS NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION NOR HAS THE COMMISSION PASSED UPON THE FAIRNESS OR MERITS
OF SUCH TRANSACTION OR UPON THE ACCURACY OR ADEQUACY OF THE INFORMATION
CONTAINED IN THIS DOCUMENT. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL
OFFENSE.
----------------
COURT SQUARE AND THE PURCHASER ARE SEEKING TO NEGOTIATE WITH CHASE
INDUSTRIES WITH RESPECT TO THE COMBINATION OF CHASE INDUSTRIES WITH THE
PURCHASER. THE PURCHASER RESERVES THE RIGHT TO AMEND THE OFFER (INCLUDING
AMENDING THE NUMBER OF SHARES TO BE PURCHASED, THE PURCHASE PRICE AND THE
PROPOSED SECOND-STEP MERGER CONSIDERATION) UPON ENTERING INTO A MERGER
AGREEMENT WITH CHASE INDUSTRIES, OR TO NEGOTIATE A MERGER AGREEMENT WITH CHASE
INDUSTRIES NOT INVOLVING A TENDER OFFER PURSUANT TO WHICH THE PURCHASER
<PAGE>
WOULD TERMINATE THE OFFER AND THE CHASE INDUSTRIES SHARES WOULD, UPON
CONSUMMATION OF SUCH MERGER, BE CONVERTED INTO CASH, COMMON STOCK OF THE
PURCHASER AND/OR OTHER SECURITIES IN SUCH AMOUNTS AS ARE NEGOTIATED BY COURT
SQUARE, THE PURCHASER AND CHASE INDUSTRIES.
----------------
IMPORTANT
ANY STOCKHOLDER DESIRING TO TENDER ALL OR ANY PORTION OF SUCH STOCKHOLDER'S
SHARES OF COMMON STOCK OF CHASE INDUSTRIES AND THE RELATED PREFERRED STOCK
PURCHASE RIGHTS SHOULD EITHER (1) COMPLETE AND SIGN THE LETTER OF TRANSMITTAL
(OR A FACSIMILE THEREOF) IN ACCORDANCE WITH THE INSTRUCTIONS IN THE LETTER OF
TRANSMITTAL, HAVE SUCH STOCKHOLDER'S SIGNATURE THEREON GUARANTEED IF REQUIRED
BY INSTRUCTION 1 TO THE LETTER OF TRANSMITTAL, MAIL OR DELIVER THE LETTER OF
TRANSMITTAL (OR SUCH FACSIMILE), OR, IN THE CASE OF A TRANSFER EFFECTED
PURSUANT TO THE BOOK-ENTRY TRANSFER PROCEDURES SET FORTH IN "THE TENDER
OFFER--PROCEDURES FOR ACCEPTING THE OFFER AND TENDERING SHARES AND RIGHTS,"
TRANSMIT AN AGENT'S MESSAGE (AS DEFINED HEREIN), AND ANY OTHER REQUIRED
DOCUMENTS TO THE DEPOSITARY AND EITHER DELIVER THE CERTIFICATES FOR SUCH
SHARES AND, IF SEPARATE, THE CERTIFICATE(S) REPRESENTING THE RELATED PREFERRED
STOCK PURCHASE RIGHTS TO THE DEPOSITARY ALONG WITH THE LETTER OF TRANSMITTAL
(OR SUCH FACSIMILE) OR DELIVER SUCH SHARES (AND RIGHTS, IF APPLICABLE)
PURSUANT TO THE BOOK-ENTRY TRANSFER PROCEDURES SET FORTH IN "THE TENDER
OFFER--PROCEDURES FOR ACCEPTING THE OFFER AND TENDERING SHARES AND RIGHTS," OR
(2) REQUEST SUCH STOCKHOLDER'S BROKER, DEALER, COMMERCIAL BANK, TRUST COMPANY
OR OTHER NOMINEE TO EFFECT THE TRANSACTION FOR SUCH STOCKHOLDER. A STOCKHOLDER
WHOSE SHARES OF COMMON STOCK OF CHASE INDUSTRIES AND, IF APPLICABLE, PREFERRED
STOCK PURCHASE RIGHTS ARE REGISTERED IN THE NAME OF A BROKER, DEALER,
COMMERCIAL BANK, TRUST COMPANY OR OTHER NOMINEE MUST CONTACT SUCH BROKER,
DEALER, COMMERCIAL BANK, TRUST COMPANY OR OTHER NOMINEE IF SUCH STOCKHOLDER
DESIRES TO TENDER SUCH SHARES AND, IF APPLICABLE, PREFERRED STOCK PURCHASE
RIGHTS.
A STOCKHOLDER WHO DESIRES TO TENDER SUCH STOCKHOLDER'S SHARES OF COMMON
STOCK OF CHASE INDUSTRIES (AND PREFERRED STOCK PURCHASE RIGHTS, IF APPLICABLE)
AND WHOSE CERTIFICATES REPRESENTING SUCH SHARES (AND PREFERRED STOCK PURCHASE
RIGHTS, IF APPLICABLE) ARE NOT IMMEDIATELY AVAILABLE OR WHO CANNOT COMPLY WITH
THE PROCEDURES FOR BOOK-ENTRY TRANSFER ON A TIMELY BASIS MAY TENDER SUCH
SHARES (AND PREFERRED STOCK PURCHASE RIGHTS, IF APPLICABLE) BY FOLLOWING THE
PROCEDURES FOR GUARANTEED DELIVERY SET FORTH IN "THE TENDER OFFER--PROCEDURES
FOR ACCEPTING THE OFFER AND TENDERING SHARES AND RIGHTS."
IF A DISTRIBUTION DATE (AS DEFINED IN THE "INTRODUCTION--THE RIGHTS
CONDITION") OCCURS, STOCKHOLDERS WILL BE REQUIRED TO TENDER ONE PREFERRED
STOCK PURCHASE RIGHT FOR EACH SHARE TENDERED IN ORDER TO EFFECT A VALID TENDER
OF SUCH SHARE.
QUESTIONS AND REQUESTS FOR ASSISTANCE MAY BE DIRECTED TO THE INFORMATION
AGENT AT ITS ADDRESS AND TELEPHONE NUMBER SET FORTH ON THE BACK COVER OF THIS
OFFER TO PURCHASE. ADDITIONAL COPIES OF THIS OFFER TO PURCHASE, THE LETTER OF
TRANSMITTAL, THE NOTICE OF GUARANTEED DELIVERY AND OTHER RELATED MATERIALS MAY
BE OBTAINED FROM THE INFORMATION AGENT.
----------------
The Information Agent for the Offer is:
D.F. King & Co., Inc.
<PAGE>
TABLE OF CONTENTS
<TABLE>
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Page
----
<S> <C>
SUMMARY TERM SHEET........................................................ i
INTRODUCTION.............................................................. 1
SPECIAL FACTORS........................................................... 4
1. BACKGROUND OF THE OFFER AND THE PROPOSED MERGER; CONTACTS WITH THE
COMPANY............................................................. 4
2. FAIRNESS OF THE OFFER AND THE PROPOSED MERGER....................... 9
3. FINANCIAL PROJECTIONS............................................... 11
4. FORWARD LOOKING STATEMENTS.......................................... 13
5. PURPOSE AND STRUCTURE OF THE OFFER AND THE PROPOSED MERGER; PLANS
FOR THE COMPANY..................................................... 13
6. RIGHTS OF STOCKHOLDERS IN THE OFFER AND THE PROPOSED MERGER......... 16
7. TRANSACTIONS, NEGOTIATIONS AND AGREEMENTS........................... 18
8. INTEREST IN SECURITIES OF THE COMPANY............................... 18
9. CERTAIN UNITED STATES FEDERAL INCOME TAX CONSEQUENCES............... 20
THE TENDER OFFER.......................................................... 21
1. TERMS OF THE OFFER; EXPIRATION DATE................................. 21
2. ACCEPTANCE FOR PAYMENT AND PAYMENT.................................. 23
3. PROCEDURES FOR ACCEPTING THE OFFER AND TENDERING SHARES AND RIGHTS.. 25
4. WITHDRAWAL RIGHTS................................................... 28
5. CERTAIN INFORMATION CONCERNING THE COMPANY.......................... 28
6. PRICE RANGE OF THE SHARES........................................... 29
7. CERTAIN INFORMATION CONCERNING COURT SQUARE AND THE PURCHASER....... 30
8. SOURCE AND AMOUNT OF FUNDS.......................................... 30
9. EFFECT OF THE OFFER ON THE MARKET FOR THE SHARES; NEW YORK STOCK
EXCHANGE LISTING; EXCHANGE ACT REGISTRATION; MARGIN REGULATIONS..... 31
10. DIVIDENDS AND DISTRIBUTIONS......................................... 32
11. CERTAIN CONDITIONS TO THE OFFER..................................... 33
12. CERTAIN LEGAL MATTERS; REQUIRED REGULATORY APPROVALS................ 40
13. CERTAIN FEES AND EXPENSES........................................... 41
14. MISCELLANEOUS....................................................... 42
SCHEDULE I INFORMATION CONCERNING THE DIRECTORS AND EXECUTIVE OFFICERS OF
COURT SQUARE, THE PURCHASER AND CITIGROUP..................... I-1
SCHEDULE II SECTION 262 OF THE GENERAL CORPORATION LAW OF THE STATE OF
DELAWARE...................................................... II-1
</TABLE>
<PAGE>
SUMMARY TERM SHEET
CHASE ACQUISITION CORPORATION IS OFFERING TO ACQUIRE UP TO AN AGGREGATE OF
2,300,000 OF THE OUTSTANDING SHARES OF CHASE INDUSTRIES INC. COMMON STOCK
(INCLUDING THE RELATED PREFERRED STOCK PURCHASE RIGHTS) FOR $10.50 PER SHARE,
NET TO THE SELLER IN CASH, WITHOUT INTEREST. THE FOLLOWING ARE SOME OF THE
QUESTIONS YOU, AS A STOCKHOLDER OF CHASE INDUSTRIES, MAY HAVE AND ANSWERS TO
THOSE QUESTIONS. THIS SUMMARY TERM SHEET IS NOT MEANT TO BE A SUBSTITUTE FOR
THE INFORMATION CONTAINED IN THE REMAINDER OF THIS OFFER TO PURCHASE AND THE
RELATED LETTER OF TRANSMITTAL, AND THE INFORMATION CONTAINED IN THIS SUMMARY
TERM SHEET IS QUALIFIED IN ITS ENTIRETY BY THE MORE DETAILED DESCRIPTIONS AND
EXPLANATIONS CONTAINED IN THIS OFFER TO PURCHASE AND THE RELATED LETTER OF
TRANSMITTAL. WE URGE YOU TO CAREFULLY READ THE ENTIRE OFFER TO PURCHASE AND
RELATED LETTER OF TRANSMITTAL PRIOR TO MAKING ANY DECISION REGARDING WHETHER TO
TENDER YOUR SHARES.
WHO IS OFFERING TO PURCHASE MY SHARES OF COMMON STOCK OF CHASE INDUSTRIES?
. Chase Acquisition Corporation, a corporation formed solely to make the
offer, is offering to purchase your Chase Industries shares. Chase
Acquisition is a majority-owned subsidiary of Court Square Capital
Limited, which is principally engaged in the business of investing in
leveraged acquisitions. See the "INTRODUCTION" and "THE TENDER OFFER--
Certain Information Concerning Court Square and the Purchaser."
HOW MANY SHARES IS CHASE ACQUISITION SEEKING TO PURCHASE, AT WHAT PRICE, AND DO
I HAVE TO PAY ANY BROKERAGE OR SIMILAR FEES TO TENDER?
. Chase Acquisition is offering to purchase up to an aggregate of
2,300,000 of the outstanding shares of Chase Industries common stock
(and the related preferred stock purchase rights) at a price of $10.50
per share, net to the seller, in cash, without interest. As of December
15, 2000, the last trading day prior to the announcement of the
intention to commence the offer, the closing price of a Chase Industries
share on the New York Stock Exchange was $7.125. If you are the record
owner of your shares and you tender shares in the offer, you will not
have to pay any brokerage or similar fees. However, if you own your
shares through a broker or other nominee, and your broker tenders your
shares on your behalf, your broker or nominee may charge you a fee for
doing so. You should consult your broker or nominee to determine whether
any charges will apply. See the "INTRODUCTION" and "THE TENDER OFFER--
Price Range of the Shares."
WHAT WILL HAPPEN IF MORE THAN 2,300,000 OF THE OUTSTANDING SHARES (INCLUDING
THE RELATED PREFERRED STOCK PURCHASE RIGHTS) ARE VALIDLY TENDERED AND NOT
WITHDRAWN PRIOR TO THE EXPIRATION DATE OF THE OFFER?
. If more than 2,300,000 of the outstanding shares (including the related
preferred stock purchase rights) are validly tendered and not withdrawn
prior to the expiration date of the offer, we will accept for payment
and pay for only 2,300,000 shares (including the related preferred stock
purchase rights) on a pro rata basis (with appropriate adjustments to
avoid purchase of fractional shares) based on the number of shares
properly tendered by each stockholder prior to or on the expiration date
of the offer. Preliminary results of proration will be announced by
press release as promptly as practicable after the expiration date of
the offer. Stockholders may obtain such preliminary information from
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<PAGE>
D. F. King & Co., Inc., the information agent for the offer, and may be
able to obtain such information from their broker. See the
"INTRODUCTION" and "THE TENDER OFFER--Acceptance for Payment and
Payment."
WHAT ARE THE "RELATED PREFERRED STOCK PURCHASE RIGHTS?"
. The related preferred stock purchase rights were issued to all Chase
Industries stockholders, but currently are not represented by separate
certificates. Instead, they are represented by the certificates for your
shares. Unless the rights are distributed to stockholders, a tender of
shares will include a tender of the related rights. If the rights are
distributed, a holder will need to tender one right with each share
tendered. See "THE TENDER OFFER--Procedures for Accepting the Offer and
Tendering Shares and Rights" and "THE TENDER OFFER--Certain Conditions
to the Offer."
WHY IS CHASE ACQUISITION MAKING THIS OFFER?
. Chase Acquisition is making this offer because Court Square wants to
acquire a substantial equity interest in Chase Industries through a
leveraged transaction. If the offer is consummated, Chase Acquisition
intends to consummate a second-step merger with Chase Industries in
which Chase Industries will become a subsidiary of Court Square and all
shares of Chase Industries that are not purchased in the offer will be
exchanged for an amount in cash per Chase Industries share equal to the
highest price per share paid pursuant to the offer. See the
"INTRODUCTION" and "SPECIAL FACTORS--Purposes of the Offer and the
Proposed Merger; Plans for the Company."
IS THIS A FIRST STEP IN A GOING-PRIVATE TRANSACTION?
. Yes. Upon the consummation the proposed second-step merger, Chase
Industries will be a privately held company. Upon the consummation the
proposed second-step merger, the Chase Industries common stock will no
longer be quoted on the New York Stock Exchange and Court Square intends
to terminate the registration of the Chase Industries common stock under
the Securities Exchange Act of 1934, as amended. See the "INTRODUCTION"
and "SPECIAL FACTORS--Purposes of the Offer and the Proposed Merger;
Plans for the Company."
IS CHASE ACQUISITION'S FINANCIAL CONDITION RELEVANT TO MY DECISION ON WHETHER
TO TENDER INTO THE OFFER?
. Yes. Chase Acquisition is a newly formed corporation whose sole material
assets will consist of the 7,289,946 shares of Chase Industries common
stock to be contributed to it by Court Square upon consummation of the
offer. Chase Acquisition has no material obligations except pursuant to
the commitment with PNC Bank. See the "INTRODUCTION," "THE TENDER
OFFER--Certain Information Concerning Court Square and the Purchaser,"
"THE TENDER OFFER--Source and Amount of Funds" and "THE TENDER OFFER--
Certain Conditions to the Offer."
WHAT ARE THE MOST IMPORTANT CONDITIONS TO THE OFFER?
The most important conditions to the offer are the following:
. Chase Industries' board of directors must redeem the preferred stock
purchase rights or Chase Acquisition, in its sole discretion, must be
satisfied that the rights have been invalidated or are otherwise
inapplicable to the offer and proposed second-step merger.
. Chase Acquisition must have received sufficient funding, on terms at
least as favorable to Chase Acquisition as are contained in the
commitment letters received from PNC Bank, to pay for all shares
ii
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tendered pursuant to the offer and not validly withdrawn and to pay all
fees and expenses related to the offer and must be satisfied that it
will have funding available following the offer sufficient to fund the
proposed second-step merger and the ongoing working capital needs of
Chase Industries.
. Chase Acquisition, in its sole discretion, must be satisfied that, after
consummation of the offer, Section 203 of the Delaware General
Corporation Law will not prohibit for any period of time, or impose any
voting requirements in excess of majority stockholder approval with
respect to, the consummation of the proposed second-step merger or any
other business combination involving Chase Industries and Chase
Acquisition or any other subsidiary of Court Square or that the
provisions of such statute are invalid or otherwise inapplicable to the
proposed second-step merger.
. All waiting periods imposed by the Hart-Scott-Rodino Antitrust
Improvements Act of 1976, as amended, in connection with the offer, the
contribution of shares to Chase Acquisition by Court Square and the
conversion of non-voting Chase Industries shares held by Court Square to
voting shares must have expired or terminated.
A more detailed discussion of the conditions to consummation of the offer may
be found in the "INTRODUCTION" and "THE TENDER OFFER--Certain Conditions to the
Offer."
DOES CHASE ACQUISITION HAVE THE FINANCIAL RESOURCES TO PAY FOR THE SHARES?
. Yes. Chase Acquisition has obtained a commitment from PNC Bank to
provide senior bank financing to Chase Acquisition in the aggregate
amount of $120 million. The offer is conditioned on Chase Acquisition
obtaining financing. See the "INTRODUCTION," "THE TENDER OFFER--Source
and Amount of Funds" and "THE TENDER OFFER--Certain Conditions to the
Offer."
HOW LONG DO I HAVE TO DECIDE WHETHER TO TENDER INTO THE OFFER?
. You have until the expiration date of the offer to tender. The offer
currently is scheduled to expire at 5:00 p.m., New York City time, on
Wednesday, January 31, 2001. Chase Acquisition currently expects that
the offer will be extended until the principal conditions to the offer,
which are described above, are satisfied. If the offer is extended,
Chase Acquisition will issue a press release announcing the extension on
or before 9:00 a.m. New York City time on the first business day
following the date the offer was scheduled to expire. See "THE TENDER
OFFER--Terms Of The Offer; Expiration Date."
. Chase Acquisition may elect to provide a "subsequent offering period"
for the offer. A subsequent offering period, if one is included, will be
an additional period of time beginning after Chase Acquisition has
purchased shares tendered during the offer, during which stockholders
may tender, but not withdraw, their shares and receive the offer
consideration. Chase Acquisition does not currently intend to include a
subsequent offering period, although Chase Acquisition reserves the
right to do so. See "THE TENDER OFFER--Terms Of The Offer; Expiration
Date."
HOW DO I ACCEPT THE OFFER AND TENDER MY SHARES?
. To tender your shares, you must completely fill out the enclosed Letter
of Transmittal and deliver it, along with your share certificates and
any other documents required by the Letter of Transmittal, to Mellon
Investor Services, L.L.C., the depositary, prior to the expiration of
the offer. If your shares are held in street name (i.e., through a
broker, dealer or other nominee), they can be tendered by your nominee
through The Depository Trust Company. If you cannot deliver all
necessary documents to the depositary in time, you may be able to
complete and deliver to the depositary, in lieu of the missing
documents, the enclosed Notice of Guaranteed Delivery, provided you are
able to comply fully with its terms. See "THE TENDER OFFER--Procedures
for Accepting the Offer and Tendering Shares and Rights."
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IF I ACCEPT THE OFFER, WHEN WILL I GET PAID?
. If the conditions to the offer are satisfied and Chase Acquisition
consummates the offer and accepts your shares for payment, you will
receive payment for the shares you tendered as promptly as practicable
following the expiration of the offer. See "THE TENDER OFFER--Acceptance
for Payment and Payment."
CAN I WITHDRAW MY PREVIOUSLY TENDERED SHARES?
. You may withdraw a portion of or all your tendered shares by delivering
written, telegraphic or facsimile notice to the depositary prior to the
expiration of the offer. Further, if Chase Acquisition has not agreed to
accept your shares for payment within 60 days of the commencement of the
offer, you can withdraw them at any time after that 60-day period until
Chase Acquisition does accept your shares for payment. Once shares are
accepted for payment, they cannot be withdrawn. The right to withdraw
tendered shares will not apply to any subsequent offering period, if one
is included. See "THE TENDER OFFER--Withdrawal Rights."
WHAT DOES THE BOARD OF DIRECTORS OF CHASE INDUSTRIES THINK OF THIS OFFER?
. Chase Industries' board of directors has not approved this offer or
otherwise commented on it as of the date of this Offer to Purchase.
Within 10 business days after the date of this Offer to Purchase, Chase
Industries is required by law to publish, send or give to you (and file
with the Securities and Exchange Commission) a statement as to whether
it recommends acceptance or rejection of the offer, that it has no
opinion with respect to the offer or that it is unable to take a
position with respect to the offer. See "SPECIAL FACTORS--Fairness of
the Offer and the Proposed Merger."
IF I DO NOT TENDER BUT THE OFFER IS SUCCESSFUL, WHAT WILL HAPPEN TO MY SHARES?
. As indicated above, if the offer is successful, Chase Acquisition
expects to conclude a merger transaction in which all shares of Chase
Industries that were not purchased in this offer will be exchanged for
an amount in cash per share equal to the highest price per share paid
pursuant to the offer. If the proposed second-step merger takes place,
stockholders who do not tender in the offer will receive the same amount
of cash per share that they would have received had they tendered their
shares in the offer, subject to their right to pursue dissenters'
rights, if available, under Delaware law. Therefore, if the proposed
second-step merger takes place and you do not perfect your appraisal
rights (if available), 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. However, if the proposed second-step merger does
not take place, the number of stockholders and the number of shares of
Chase Industries that are still in the hands of the public may be so
small that there may no longer be an active public trading market (or,
possibly, any public trading market) for the shares. Also, the shares
may no longer be eligible to be traded on the New York Stock Exchange or
any other securities exchange, and Chase Industries may cease making
filings with the SEC or otherwise cease being required to comply with
the SEC's rules relating to publicly held companies. See "SPECIAL
FACTORS--Purposes of the Offer and the Proposed Merger; Plans for the
Company."
ARE APPRAISAL RIGHTS AVAILABLE IN EITHER THE OFFER OR THE PROPOSED SECOND-STEP
MERGER?
. Appraisal rights are not available in the offer. If you do not vote in
favor of the proposed second-step merger and you comply with applicable
procedures under Delaware law, subject to the exception described below,
you will be entitled to appraisal rights in connection with the proposed
second-step
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merger. Appraisal rights will not be available to stockholders in
connection with the proposed second-step merger, however, if, on the
applicable determination date for the proposed second-step merger, the
Chase Industries common stock is registered on a national securities
exchange or traded on the Nasdaq National Market System. The
determination date for the proposed second-step merger will be the date
fixed to determine the stockholders entitled to notice of and to vote on
the proposed second-step merger. See "SPECIAL FACTORS--Rights of
Stockholders in the Offer and the Proposed Merger."
WHAT ARE THE FEDERAL INCOME TAX CONSEQUENCES OF THE PROPOSED TRANSACTIONS?
. The receipt of cash in the offer or the proposed second-step merger in
exchange for Chase Industries shares will be a taxable transaction for
U.S. federal income tax purposes and may also be a taxable transaction
under applicable state, local or foreign income or other tax laws. You
should consult your tax advisor about the particular effect the proposed
transactions will have on your shares. See the "INTRODUCTION" and
"SPECIAL FACTORS--Certain United States Federal Income Tax
Consequences."
WHAT IS THE MARKET VALUE OF MY SHARES AS OF A RECENT DATE?
. On December 15, 2000, the last trading day before the announcement of
the intention to commence the offer, the shares of Chase Industries
closed on the New York Stock Exchange at $7.125 per share. Please obtain
a recent quotation for your shares prior to deciding whether or not to
tender. See "THE TENDER OFFER--Price Range of the Shares."
WHOM CAN I CALL WITH QUESTIONS?
. You can call D. F. King & Co., Inc., (800) 431-9629 (toll-free) or (212)
269-5550 (collect) with any questions you may have. D. F. King & Co.,
Inc. is acting as the information agent for the offer. See the back
cover of this Offer to Purchase.
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To: All Holders of Shares of Common Stock
of Chase Industries Inc.
INTRODUCTION
Chase Acquisition Corporation (the "Purchaser"), a Delaware corporation and
a majority-owned subsidiary of Court Square Capital Limited ("Court Square"),
a Delaware corporation, hereby offers to purchase (1) up to an aggregate of
2,300,000 shares of common stock, par value $0.01 per share (all issued and
outstanding shares of such common stock, being referred to herein as, the
"Shares"), of Chase Industries Inc., a Delaware corporation (the "Company"),
and (2) unless and until validly redeemed by the Board of Directors of the
Company (the "Company Board"), the related rights to purchase shares of Junior
Participating Preferred Stock of the Company (the "Rights") issued pursuant to
the Rights Agreement for such Rights (as amended from time to time, the
"Rights Agreement"), by and between the Company and Mellon Investor Services
LLC, as Rights Agent (the "Rights Agent"), at a price of $10.50 per Share, net
to the seller in cash, without interest (the "Offer Price"), upon the terms
and subject to the conditions set forth in this Offer to Purchase and in the
related Letter of Transmittal (which, together with any amendments or
supplements thereto, constitute the "Offer"). Unless the context otherwise
requires, all references to the Shares shall be deemed to include the
associated Rights, and all references to the Rights shall be deemed to include
the benefits that may inure to holders of Rights pursuant to the Rights
Agreement.
Tendering stockholders whose Shares are registered in their own name who
tender directly to the Depositary (as defined) will not be obligated to pay
brokerage fees or commissions or, except as set forth in Instruction 6 of the
Letter of Transmittal, transfer taxes on the purchase of Shares by the
Purchaser pursuant to the Offer. Stockholders who hold their Shares through a
bank or broker should check with such institution as to whether it will charge
any service fees. However, any tendering stockholder or other payee 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 such stockholder or other payee
pursuant to the Offer. The Purchaser will pay all fees and expenses of Mellon
Investor 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 "THE TENDER OFFER--Certain Fees and Expenses."
The purpose of the Offer is for Court Square to acquire control of, and
ultimately the entire equity interest in, the Company. The Offer, as the first
step in the acquisition of the Company, is intended to facilitate the
acquisition by the Purchaser of up to an aggregate of 2,300,000 Shares. Court
Square currently intends, promptly following consummation of the Offer, to
seek to have the Company consummate a second-step merger or similar business
combination with the Purchaser (the "Proposed Merger"), pursuant to which each
then outstanding Share (other than Shares held by the Purchaser) will be
converted into the right to receive an amount in cash equal to the highest
price per Share paid in the Offer. Upon the consummation of the Proposed
Merger, the Company will be a privately held company and the Shares will no
longer be quoted on the New York Stock Exchange (the "NYSE"). Upon the
consummation the Proposed Merger, Court Square intends to terminate the
registration of the Shares under the Securities Exchange Act of 1934, as
amended (the "Exchange Act").
Although the Purchaser will seek to have the Company consummate the Proposed
Merger promptly after consummation of the Offer, if the Company Board opposes
the Offer and the Proposed Merger, certain terms of the Rights and certain
provisions of the Delaware General Corporation Law (the "DGCL") may affect the
ability of the Purchaser to obtain control of the Company and to effect the
Proposed Merger. For these reasons, the timing and details of the Proposed
Merger will depend on a variety of factors and legal requirements, actions of
the Company Board, the number of Shares (if any) acquired by the Purchaser
pursuant to the Offer, and whether the Rights Condition, the Financing
Condition, the Business Combination Condition and the HSR Condition (each as
defined below), and all other conditions set forth in "THE TENDER OFFER--
Certain Conditions to the Offer" are satisfied or waived. There can be no
assurance that if the Offer is consummated, the Purchaser and Court Square
will be able to effectuate the Proposed Merger. See below and "THE TENDER
OFFER--Certain Conditions to the Offer."
<PAGE>
COURT SQUARE AND THE PURCHASER ARE SEEKING TO NEGOTIATE WITH THE COMPANY
WITH RESPECT TO THE COMBINATION OF THE COMPANY WITH THE PURCHASER. THE
PURCHASER RESERVES THE RIGHT TO AMEND THE OFFER (INCLUDING AMENDING THE NUMBER
OF SHARES TO BE PURCHASED, THE OFFER PRICE AND THE PROPOSED MERGER
CONSIDERATION) UPON ENTERING INTO A MERGER AGREEMENT WITH THE COMPANY, OR TO
NEGOTIATE A MERGER AGREEMENT WITH THE COMPANY NOT INVOLVING A TENDER OFFER
PURSUANT TO WHICH THE PURCHASER WOULD TERMINATE THE OFFER AND THE SHARES
WOULD, UPON CONSUMMATION OF SUCH MERGER, BE CONVERTED INTO CASH, COMMON STOCK
OF THE PURCHASER, AND/OR OTHER SECURITIES IN SUCH AMOUNTS AS ARE NEGOTIATED BY
COURT SQUARE, THE PURCHASER AND THE COMPANY.
The Offer is subject to the fulfillment of certain conditions, including the
following:
The Rights Condition. Consummation of the Offer is conditioned upon the
Rights having been redeemed by the Company Board, or the Purchaser being
satisfied, in its sole discretion, that the Rights have been invalidated or
are otherwise inapplicable to the Offer and the Proposed Merger (the "Rights
Condition"). The Purchaser expects that the Rights will be described in the
Company's Registration Statement to be filed on Form 8-A. The terms of the
Rights are set forth in the Rights Agreement. To the knowledge of the
Purchaser, the Rights Agreement has not yet been executed by the Company and
the Rights Agent, and the description included in this Offer to Purchase has
been derived from a draft of the Rights Agreement provided to the Purchaser by
counsel to the Company. Therefore, the description included herein and the
Rights Condition may be modified based upon the Purchaser's review of the
executed Rights Agreement. See "THE TENDER OFFER--Certain Conditions to the
Offer" for a more detailed discussion of the Rights and the Rights Agreement.
According to the Company's press release on December 27, 2000, the Company
Board adopted the Rights Agreement and declared a dividend of one Right for
each outstanding Share. Each Right entitles the registered holder to purchase
from the Company one one-thousandth of a share of the Company's Junior
Participating Preferred Stock at a price of $30, subject to adjustment. The
Rights are transferable only with the Shares until they become exercisable.
The Rights will not be exercisable until the Distribution Date (as defined
herein) and will expire on December 26, 2010 (the "Rights Expiration Date"),
unless earlier redeemed by the Company as described in "THE TENDER OFFER--
Certain Conditions to the Offer."
Under the Rights Agreement, the "Distribution Date" is the earlier to occur
of (1) 10 business days following a public announcement that a person or group
of affiliated or associated persons (other than the Company, any Company
subsidiary, any Company or Company subsidiary employee benefit plan or certain
existing holders (including CVC) and their affiliates who do not increase
their existing group ownership above the levels existing on the adoption date
of the Rights Agreement), acquired, or obtained the right to acquire,
beneficial ownership of 20% or more of the outstanding voting Shares and (2)
10 business days (or such later date as may be determined by action of the
Company Board) following the commencement of, or the announcement (after the
adoption date of the Rights Agreement) of an intention to commence, a tender
offer or exchange offer the consummation of which would result in the
beneficial ownership by a person or group of affiliated or associated persons
(other than the Company, any Company subsidiary or any Company or Company
subsidiary employee benefit plan) of 20% or more of the outstanding Voting
Shares. From and after the Distribution Date, the Rights will separate from
the Shares and the certificates representing the Shares (the "Share
Certificates").
Based on publicly available information, the Purchaser believes that, as of
January 2, 2001, the Rights were not exercisable, certificates representing
the Rights ("Rights Certificates") have not been issued and the Rights are
evidenced by the Share Certificates. The Purchaser believes that, as a result
of the commencement of the Offer, the Distribution Date may occur as early as
10 business days from the date of this Offer to Purchase, unless the Company
Board determines to postpone the Distribution Date. See "THE TENDER OFFER--
Certain Conditions to the Offer."
UNLESS THE RIGHTS CONDITION IS SATISFIED, STOCKHOLDERS WILL BE REQUIRED TO
TENDER ONE RIGHT FOR EACH SHARE TENDERED IN ORDER TO EFFECT A VALID TENDER OF
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SHARES IN ACCORDANCE WITH THE PROCEDURES SET FORTH IN "THE TENDER OFFER--
PROCEDURES FOR ACCEPTING THE OFFER AND TENDERING SHARES AND RIGHTS." UNLESS
THE DISTRIBUTION DATE OCCURS, A TENDER OF SHARES WILL ALSO CONSTITUTE A TENDER
OF THE RELATED RIGHTS.
The Financing Condition. Consummation of the Offer is conditioned upon the
Purchaser receiving sufficient funding, on terms at least as favorable to the
Purchaser as are contained in the commitment letters received from PNC Bank,
National Association ("PNC Bank"), to pay for all Shares tendered pursuant to
the Offer and not validly withdrawn and to pay all fees and expenses related
to the Offer and being satisfied that it will have funding available following
the Offer sufficient to fund the Proposed Merger and the ongoing working
capital needs of the Company (the "Financing Condition"). See "THE TENDER
OFFER--Source and Amount of Funds" and "THE TENDER OFFER--Certain Conditions
to the Offer."
The Business Combination Condition. Consummation of the Offer is conditioned
upon the Purchaser being satisfied, in its sole discretion, that Section 203
of the DGCL (the "Delaware Antitakeover Statute") will not prohibit for any
period of time, or impose any voting requirements in excess of majority
stockholder approval with respect to, the Proposed Merger or any other
"Business Combination" (as defined for purposes of the Delaware Antitakeover
Statute) involving the Company and the Purchaser or any other subsidiary of
Court Square (the "Business Combination Condition").
In general, the Delaware Antitakeover Statute prohibits public Delaware
corporations from engaging in a "Business Combination" (which is defined to
include a variety of transactions, including mergers) with an "Interested
Stockholder" (which is defined generally as a person owning at least 15% of
the voting stock of a corporation) for a period of three years following the
date the person became an Interested Stockholder, unless:
(1) before the person became an Interested Stockholder, the board of
directors of the corporation approved either the Business Combination or
the transaction in which the Interested Stockholder became an Interested
Stockholder;
(2) upon consummation of the acquisition that caused such person to
become an Interested Stockholder, the Interested Stockholder owned at least
85% of the voting stock of the corporation outstanding at the time the
transaction commenced not owned by (a) persons who are directors and also
officers or (b) employee stock plans in which employee participants do not
have the right to determine confidentially whether the shares held subject
to the plan will be tendered in a tender or exchange offer; or
(3) at the time of or after the acquisition that caused such person to
become an Interested Stockholder, the Business Combination is approved by
the board of directors and 66 2/3% of the outstanding voting stock of the
corporation not owned by the Interested Stockholder at an annual or special
meeting and not by written consent.
See "THE TENDER OFFER--Certain Conditions to the Offer" for a more detailed
description of the Delaware Antitakeover Statute. The Purchaser believes that
it and Court Square collectively may be deemed to be an Interested Stockholder
for purposes of the Delaware Antitakeover Statute upon consummation of the
Offer and that, accordingly, the Delaware Antitakeover Statute may prohibit
consummation of the Proposed Merger for a period of three years absent
compliance with the Delaware Antitakeover Statute's board of directors and
supermajority stockholder approval requirements.
The Business Combination Condition would be satisfied if (1) the Company
Board adopted a resolution approving the Offer and the Proposed Merger prior
to (a) the consummation of the Offer or (b) Court Square and the Purchaser
otherwise becoming Interested Stockholders or (2) the Purchaser were
satisfied, in its sole discretion, that the Delaware Antitakeover Statute is
invalid or otherwise inapplicable to the Offer and the Proposed Merger for any
reason.
The HSR Condition. Under the Hart-Scott-Rodino Antitrust Improvements Act of
1976, as amended (the "HSR Act"), certain acquisition transactions may not be
consummated until certain information and
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documentary material have been furnished for review by the Antitrust Division
of the Department of Justice (the "Antitrust Division") and the Federal Trade
Commission (the "FTC") and certain waiting period requirements have been
satisfied. The consummation of the Offer is conditioned upon the expiration or
termination of such waiting periods (the "HSR Condition").
Subject to certain conditions, Court Square intends to make a capital
contribution of all of the Shares owned by it to the Purchaser. See "SPECIAL
FACTORS--Transactions, Negotiations and Agreements." In addition, some of the
Shares to be contributed by Court Square to the Purchaser are shares of
nonvoting common stock, par value $.01, of the Company (the "Non-Voting
Shares"). Pursuant to the Company's Restated Certificate of Incorporation, the
Non-Voting Shares are convertible into shares of common stock, par value $.01,
of the Company (the "Voting Shares"). Court Square intends to convert the Non-
Voting Shares to Voting Shares.
The Offer and the conversion of the Non-Voting Shares will, and the
contribution of Shares by Court Square to the Purchaser may, trigger a filing
obligation on the part of Court Square and the Purchaser under the HSR Act.
The HSR Condition will be satisfied when all applicable waiting periods with
respect to these transactions have expired or been terminated.
CERTAIN OTHER CONDITIONS TO THE CONSUMMATION OF THE OFFER ARE DESCRIBED IN
"THE TENDER OFFER--CERTAIN CONDITIONS TO THE OFFER." THE PURCHASER RESERVES
THE RIGHT (SUBJECT TO THE APPLICABLE RULES AND REGULATIONS OF THE SECURITIES
AND EXCHANGE COMMISSION (THE "COMMISSION")) TO AMEND OR WAIVE ANY ONE OR MORE
OF THE TERMS AND CONDITIONS OF THE OFFER, INCLUDING, WITHOUT LIMITATION, THE
RIGHTS CONDITION, THE FINANCING CONDITION, THE BUSINESS COMBINATION CONDITION
AND THE HSR CONDITION. SEE "THE TENDER OFFER--TERMS OF THE OFFER; EXPIRATION
DATE" AND "THE TENDER OFFER--CERTAIN CONDITIONS TO THE OFFER."
CERTAIN U.S. FEDERAL INCOME TAX CONSEQUENCES OF THE SALE OF SHARES PURSUANT
TO THE OFFER AND THE CONVERSION OF SHARES PURSUANT TO THE PROPOSED MERGER ARE
DESCRIBED IN "SPECIAL FACTORS--CERTAIN UNITED STATES FEDERAL INCOME TAX
CONSEQUENCES."
THIS OFFER TO PURCHASE AND THE RELATED LETTER OF TRANSMITTAL CONTAIN
IMPORTANT INFORMATION, WHICH SHOULD BE READ CAREFULLY BEFORE ANY DECISION IS
MADE WITH RESPECT TO THE OFFER.
SPECIAL FACTORS
1. BACKGROUND OF THE OFFER AND THE PROPOSED MERGER; CONTACTS WITH THE
COMPANY.
In the ordinary course of Court Square's and its affiliates' (the "Court
Square Group") leveraged buy-out business, the Court Square Group is
continuously involved in discussions relating to acquisitions of varying sizes
and due diligence investigations of several acquisition candidates. The Court
Square Group initially acquired an interest in the Company through a leveraged
buy-out in 1990. Since that date, the Court Square Group has beneficially
owned at least 45 percent of the outstanding Shares and representatives of the
Court Square Group have served on the Company Board. The current
representatives of the Court Square Group serving on the Company Board are
Thomas F. McWilliams ("Mr. McWilliams") and Charles E. Corpening ("Mr.
Corpening").
For a number of years, the Court Square Group has periodically reviewed the
nature of its investments in the Company and has had numerous discussions with
senior management and members of the Company Board. Over the last several
years, Mr. McWilliams has repeatedly expressed his disappointment with the
Company's return on capital employed and his view that the Company Board has
not been sufficiently attentive to the creation of value for all stockholders.
To create stockholder value, Mr. McWilliams has suggested or discussed, from
time to time, a variety of potential transactions.
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In January 1999, Mr. McWilliams met with Martin V. Alonzo, President and
Chief Executive Officer of the Company ("Mr. Alonzo") to discuss a
contemplated leveraged buy-out of a publicly-traded metals processing company
("Metals Processor"). During the meeting, Mr. McWilliams proposed that the
Court Square Group exchange $50 million of the Company's common stock (valued
at the then-current market value) for a new class of convertible preferred
stock of the Company, which would be convertible for the Company's common
stock at a substantial premium to the then-current market value. In the
proposed transaction, the Company would provide a portion of the financing for
the leveraged buy-out of Metals Processor by acquiring $50 million of Metals
Processor preferred stock, which would include an option to acquire Metals
Processor at a fair market value price. The exercise of the option would be
conditioned upon the President and Chief Executive Officer of Metals Processor
(the "Metals Processor CEO"), being chief executive officer of the combined
enterprise. During the course of the meeting, Mr. Alonzo instructed Mr.
McWilliams that he would not support the proposal. Subsequent to the meeting,
Mr. Alonzo accompanied Mr. McWilliams to Metals Processor's offices to assist
in the evaluation of a Metals Processor leveraged buy-out.
In March 1999, Mr. McWilliams and Mr. Alonzo discussed the desirability of
pursuing alternatives for the Company to increase stockholder value. Among the
factors that Messrs. McWilliams and Alonzo discussed in this context were:
. that the Company's subsidiary Leavitt Tube Company, Inc. ("Leavitt
Tube") was significantly under-performing, due in part to its failure to
become a consolidator of the metal forming industry and the failure to
efficiently integrate the Leavitt Tube acquisition;
. that the trading value for the Company's common stock had remained
relatively depressed; and
. that the conditions in the mergers and acquisitions market generally
were favorable, and that "going-private" transactions were successful
methods of providing increased value to stockholders.
During this meeting, Mr. McWilliams asked Mr. Alonzo to consider pursuing a
"going-private" alternative to increase stockholder value.
In early April 1999, Mr. Alonzo responded to Mr. McWilliams suggestion. Mr.
Alonzo expressed concern to Mr. McWilliams that "going-private" transactions
sometimes result in stockholder litigation, and that an auction process would
be important to any contemplated transaction. Mr. McWilliams responded that
regardless of the type of alternative selected to maximize stockholder value,
the Company Board would make its decision consistent with its fiduciary
duties, and that if an auction was required for the Company Board to meet its
obligations, an auction should be used. Mr. Alonzo also expressed concern that
the timing was not right for an auction as the Company's earnings were down,
he expected increased earnings starting in 2000, and that existing material
litigation would likely depress the value of the Company in an auction. Mr.
Alonzo told Mr. McWilliams that he was not willing to participate in a "going-
private" transaction as an investor, but was willing to discuss a management
role with the Company after such a transaction. After considering Mr. Alonzo's
expressed lack of support for a "going-private" transaction, Mr. McWilliams
decided at that time not to pursue such an alternative.
In October 1999, Mr. McWilliams requested that Mr. Alonzo meet with the
Metals Processor CEO to discuss a possible acquisition of the Company by
Metals Processor. Messrs. Alonzo and McWilliams and the Metals Processor CEO
met on October 8, 1999. The Metals Processor CEO proposed a negotiated
acquisition of the Company by Metals Processor. At the conclusion of the one
hour meeting, Mr. Alonzo rejected the proposal on the basis that he believed
Metals Processor had poor long-term business prospects and that the proposed
value for the Company was insufficient.
On October 14, 1999, the Metals Processor CEO made a written proposal to the
Company Board. The terms of the written offer were consistent with the terms
expressed at the October 8 meeting with Messrs. McWilliams and Alonzo. As a
result of receiving the Metals Processor CEO's letter on October 14, Mr.
Alonzo hired Vinson & Elkins, a Texas law firm, to provide legal advice in
connection with the offer and Donaldson Lufkin and Jenrette ("DLJ") to advice
the Company Board. On March 28, 2000, DLJ reported to the Company Board its
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evaluation of the Company's various strategic alternatives. Based upon the
advice of DLJ, the Company Board concluded, on an informal basis, that the
Company should pursue a long-term strategy of the sale of the Company after
the disposal of the Leavitt Tube business and after certain material
litigation was resolved. Subsequently, at the December 18, 2000 meeting of the
Company Board discussed below, Mr. Alonzo expressed the view that the pursuit
of such a strategy had also been conditioned on the completion of the
Company's current capital expenditure program.
During Board of Directors meetings during 1999 and 2000, including the Board
of Directors meeting on October 19, 2000, Mr. McWilliams continued to express
concern that the Company was not aggressively considering alternatives to
maximize stockholder value, including alternatives regarding Leavitt Tube.
During the October 19 meeting, the Company Board voted to engage an investment
bank to consider strategic alternatives for Leavitt Tube. Thereafter, the
Company engaged Robinson-Humphrey, a subsidiary of Salomon Smith Barney and
Citigroup, to review all strategic alternatives for Leavitt Tube, including
the sale of Leavitt Tube.
On December 14 and 15, Mr. McWilliams telephoned each of the members of the
Company Board to inform them that Court Square's majority-owned subsidiary,
Chase Acquisition Corporation, planned to announce its intention to commence a
tender offer for 2.3 million Shares and to complete the Proposed Merger. One
director of the Company asked Mr. McWilliams if Court Square would postpone
the announcement for at least three to four months until the Company Board had
an opportunity to consider alternatives to the Offer. Mr. McWilliams stated
that after a year of trying to focus the Company Board on stockholder value,
he did not want to wait. He did, however, offer to postpone a public
announcement if the Company entered into a merger agreement, (i) at a price of
$10.50 a Share, and (ii) that allowed the Company to actively solicit and
accept higher offers. Mr. McWilliams did not receive a response to this
proposal.
During the morning of December 18, the Company Board met to consider Court
Square's intended transactions. During this meeting, Mr. McWilliams explained
that a tender offer and merger were contemplated given the Company Board's
unwillingness to act on Mr. McWilliams' frequent requests to consider and
adopt value enhancing alternatives. Mr. McWilliams also assured the Company
Board that it was Court Square's intention to provide adequate time for the
Company to evaluate and pursue other alternatives. In this regard, Mr.
McWilliams stated that he expected the tender offer to remain open until
January 31, 2001 which would be longer than the customary 20 business days.
Mr. McWilliams also stated that the Purchaser would not immediately commence
the offer so as to allow the Company Board a further opportunity over the
holidays to prepare a thoughtful recommendation.
On December 18, 2000, the Purchaser announced its intention to commence the
Offer and delivered the following letter to the Company Board:
Chase Acquisition Corporation
December 18, 2000
Chase Industries Inc.
14212 County Road M-50
Montpelier, OH 43543
Attention: Board of Directors
c/o Michael T. Segraves, Secretary
Gentlemen:
This letter will confirm the information conveyed to many of you
earlier today by Tom McWilliams. On behalf of an investor group headed
by me, that will include Court Square Capital Limited, we are proposing
a transaction in which our newly formed company, Chase Acquisition
Corporation, will acquire all of Chase Industries' issued and
outstanding shares for $10.50 cash per share.
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To effect the transaction, we expect to commence a tender offer for up
to 2,300,000 shares of Chase Industries' stock. The tender offer price
will be $10.50 per share in cash. Any shares not acquired in the tender
offer will be acquired in a subsequent cash merger at the same price. We
expect that the tender offer will expire on January 31, 2001, and that
the merger will close after a stockholder meeting approving the merger.
We have the financing in place to complete this transaction. Court
Square Capital Limited has agreed to contribute its 7,289,946 shares to
Chase Acquisition in exchange for ownership in Chase Acquisition. PNC
Bank has extended to Chase Acquisition a commitment letter for financing
facilities sufficient to fund the tender offer and subsequent merger.
The tender offer and merger will be subject to customary conditions,
including regulatory approvals and receipt of the financing on the terms
outlined in the commitment letter, and approval of Chase Industries'
board of directors.
I have attached to this letter a copy of the press release that we
intend to issue today announcing the offer.
We believe that this proposed transaction represents fair value for
Chase Industries' shareholders and would like the opportunity to discuss
it with you as soon as possible. We believe the value in Chase
Industries is not reflected in its current stock price; and given the
current outlook for small capitalization companies in today's markets,
we do not think the full value will be appreciated by the markets in the
near future. We are excited by this opportunity and look forward to
working with you on this transaction.
Sincerely,
CHASE ACQUISITION CORPORATION
/s/ Robert F. B. Logan
By: _________________________________
Robert F. B. Logan
President
On December 18, 2000, in preparation for the commencement of the Offer, the
Purchaser and Court Square sent letters to the Company demanding access to,
among other things, the Company's stockholders list and security listing
position.
On December 26, 2000, the Company Board held a meeting purportedly to
discuss the Offer. Neither Mr. McWilliams nor Mr. Corpening received any
materials in advance of the meeting. After being assured that the only topics
to be discussed at the meeting were the Offer and the Company's possible
responses to the Offer, Mr. McWilliams and Mr. Corpening recused themselves
from the meeting.
On December 27, 2000, the Company announced that the Company Board had
adopted the Rights Plan and certain bylaw amendments. Mr. McWilliams and Mr.
Corpening had not received any materials regarding these actions purported to
be taken by the Company Board, nor did either participate in any discussions
with anyone concerning these purported actions. In its press release, the
Company stated "[t]his plan is designed to protect against abusive takeover
tactics and ensure that all stockholders receive fair and equal treatment in
the event of an unsolicited attempt to acquire Chase Industries. It includes
safeguards against partial or two-tiered tender offers, squeeze-out mergers
and other abusive takeover tactics."
On December 28, 2000, the Purchaser and Court Square requested copies of the
Rights Plan and the bylaw amendments purported to have been adopted by the
Company Board.
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In response to the Company's announcement of the purported adoption of the
Rights Plan and bylaw amendments, Mr. McWilliams, in his capacity as a
director of the Company Board, wrote the following letter to the Company:
December 29, 2000
Chase Industries Inc.
14212 County Road M-50
Montpelier, OH 43543
Attention: Board of Directors
c/o Michael T. Segraves, Secretary
Gentlemen:
I am writing in my capacity as a director of Chase Industries, Inc. I
was amazed and disappointed to see the press release issued by the
Company on December 27, 2000 announcing amendments to the Company's
bylaws and adoption of a stockholders rights plan.
I understand, as a director of a company that has made an offer to
purchase Chase Industries, that there are conflicts of interest that I
and the Board of Chase must address. I have recused myself from the two
Board discussions where the pending offer was discussed. I have been
very sensitive to this conflict.
On the afternoon of December 26, 2000 Charles Corpening and I
participated in a telephone conference call with the Board. When we were
told the only topic to be discussed was the pending offer and the
Board's alternatives in responding to the offer, we agreed to recuse
ourselves from further participation in that specific Board meeting. We
did not receive any materials prior to the Board meeting and I was
assured no other topics were being discussed.
I find the statements made to me, in light of the press release on
December 27, 2000, to be disingenuous at best. The bylaw amendments and
stockholder rights plan have nothing to do with the pending offer. As
stated in the letter to the Board and in the press release issued, the
offer was subject to "approval of Chase Industries' Board of directors."
We could not have been clearer that the Chase Board had a veto power on
the transaction. Given that, the stockholders right plan and bylaw
amendments have nothing to do with the offer, they are merely intended
to place restrictions on the exercise of stockholder rights by existing
stockholders of the Company. I find it outrageous that the Board would
try to take these steps in the manner effected this week.
I also question whether the members of the Board who stayed on the
call exercised their duties of due care in purporting to approve the
stockholder rights plan and the bylaw amendments. As noted above,
neither Mr. Corpening nor myself received any materials relating to
these actions. As of today, four days after the Board meeting, the
stockholders rights plan is still being finalized. Our attorney only
received the bylaw amendments yesterday evening, three full days after
the Board meeting. We cannot understand how the Board could approve
documents, in such a sensitive situation, that are in such poor shape
that it takes days to finalize them.
We seriously question whether the stockholder rights plan or the bylaw
amendments were validly adopted. As a director of the Company with
fiduciary duties to all stockholders, and as a representative of the
largest single shareholder of the Company, I insist that the Board
adhere to the most scrupulous standards of corporate governance. The
Board did not meet this standard in this past week.
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For several years, I have expressed my concerns that the Board has not
been sufficiently attentive to the creation of value for all
shareholders. The actions of the Board over the last week, in my
opinion, reinforce that point.
Very truly yours,
/s/ Thomas F. McWilliams
During the period from December 14, 2000, when Mr. McWilliams started to
inform members of the Company Board of the contemplated offer, through the
date of this Offer to Purchase, none of Mr. Logan, Mr. McWilliams, Mr.
Corpening, Court Square or the Purchaser was contacted by the Company to
discuss the terms of the Purchaser's contemplated offer or to negotiate the
terms of a transaction.
On January 2, 2001, the Purchaser commenced the Offer.
2. FAIRNESS OF THE OFFER AND THE PROPOSED MERGER.
Because the Shares owned (or to be owned in the case of the Purchaser) by
Court Square and the Purchaser represent over 45% of the Shares of the
Company, including over 12% of the Voting Shares and each has two
representatives on the Company Board, Court Square and the Purchaser may be
deemed "affiliates" of the Company for purposes of Rule 13e-3 under the
Exchange Act. Accordingly, in compliance with Rule 13e-3 under the Exchange
Act, Court Square and the Purchaser considered the fairness of the Offer and
the Proposed Merger to the stockholders who may tender into the Offer and the
stockholders to be cashed out in the Proposed Merger (collectively, the
"Public Stockholders") of the Company.
Court Square and the Purchaser believe that the Offer and the Proposed
Merger are fair to the Public Stockholders of the Company. In reaching their
determination that the Offer and the Proposed Merger are fair to the Public
Stockholders of the Company, Court Square and the Purchaser considered the
following factors:
. The premium reflected in the Offer price of $10.50 per Share. Court
Square and the Purchaser considered the current and historical trading
prices of the Shares prior to the Offer. The Offer price represents a
premium of over 47% over the closing price on December 15, 2000, the
last trading day prior to the public announcement of the contemplated
offer.
. The purchase of the Shares by the Purchaser would eliminate the exposure
of the Public Stockholders of the Company to any future decline in the
price of the Shares.
. The relative lack of liquidity for the Shares and the liquidity that
would be realized by the Public Stockholders of the Company from the
all-cash Offer and Proposed Merger. Court Square and the Purchaser
believe that the liquidity that would result from the Offer and the
Proposed Merger would be beneficial to the Public Stockholders because
Court Square's significant ownership of Shares, and the significant
ownership by Mr. Alonzo, (1) results in a relatively small public float
that necessarily limits the amount of trading in the Shares and (2)
decreases the likelihood that a proposal to acquire the Shares would be
made by an independent entity without the consent of Court Square.
. Court Square and the Purchaser believe the Offer and Proposed Merger to
be attractive in light of the Company's current financial performance,
profitability and growth prospects. The Company has had significant
operating issues with Leavitt Tube, has been involved in an
environmental indemnification dispute with millions of dollars at stake
for a period of years and has embarked upon a substantial capital
expenditure program that will not start generating future returns until
the end of 2002, if at all. The Offer and Proposed Merger would shift
the risk of the future financial performance of the Company from the
Public Stockholders of the Company to the Purchaser and Court Square.
. Court Square and the Purchaser considered the terms of the Offer and the
Proposed Merger including (1) the amount of the consideration and that
it will be in the form of cash and (2) the tender offer
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structure, which would provide an expeditious means for the stockholders
of the Company to receive cash for a portion of their Shares, especially
in light of the relatively low trading volume in the Shares.
Parent and Purchaser also believe that the Offer and Proposed Merger are
procedurally fair to the stockholders of the Company in light of the following
factors:
. A majority of the members of the Company Board are independent of Court
Square and the Purchaser. The Company Board has retained independent
counsel and independent financial advisors to represent the Company
Board in this process. The two directors of the Purchaser and officers
of Court Square who are members of the Company Board have recused
themselves from discussions of the Company Board concerning the Offer
and Proposed Merger.
. By publicly announcing the Offer and Proposed Merger without any binding
commitment by the Company to Court Square or the Purchaser, the Company
Board is free to investigate alternatives without any restrictions
imposed by Court Square or the Purchaser regarding the solicitation or
negotiation of alternative transactions. Mr. McWilliams started
notifying directors of the proposed Offer and Proposed Merger on
December 14, 2000. In these phone calls, Mr. McWilliams noted that he
expected the Company Board to review alternatives to the Offer and
Proposed Merger. In the press release by the Purchaser on December 18,
2000, announcing the Offer, Mr. Logan stated that the Purchaser fully
expected the Company Board to investigate alternatives.
. Mr. McWilliams began calling members of the Company Board on December
14, 2000 notifying them of the intent of the Purchaser to commence an
Offer, and stated in these communications that the Offer would not
expire until January 31, 2001. This 47 day period is far in excess of
any statutory requirement for keeping an Offer open. Mr. McWilliams also
noted that in these conversations that Court Square and the Purchaser
would not immediately commence the Offer so that the Company Board would
have additional time prior to being required to make a recommendation to
the Public Stockholders.
. Each Public Stockholder of the Company can individually determine
whether to tender Shares in the Offer.
. The Offer provides the opportunity for the Public Stockholders of the
Company to sell their Shares without incurring brokerage and other costs
typically associated with market sales.
. The Public Stockholders of the Company who believe that the terms of the
Offer and the Merger Agreement are not fair can pursue appraisal rights
in respect of the Proposed Merger under the DGCL.
Court Square and the Purchaser did not consider the book value or the
liquidation value of the Company to be a meaningful indicator of the fair value
of the Shares. In addition, Court Square and the Purchaser are aware of studies
done by an independent financial advisor to the Company Board that were
presented to the Company Board in March 2000 and included various analyses of
the trading prices of comparable public companies, the transaction prices paid
in sales of comparable public companies and analyses based on various financial
models. Court Square and the Purchaser do not view comparable company analysis,
whether based on an analysis of trading price or an analysis of sale
transactions, as particularly relevant since the Company has no directly
comparable public competitor. Court Square and the Purchaser have not been able
to identify any companies that are comparable in any meaningful sense to the
businesses actually operated by the Company. The financial analysis performed
by the independent banker was also not considered particularly relevant since
it was based on projections developed by the Company's management that are over
nine months old and are based on stronger economic conditions than the
Purchaser believes are warranted based on the current state of the economy.
While the price in the Offer and the Proposed Merger are clearly within the
range of values generated by the foregoing analysis, Court Square and the
Purchaser did not rely on this analysis in determining the price in the Offer
and Proposed Merger.
10
<PAGE>
Court Square and the Purchaser also considered the following factor, which
it considered to be negative from the perspective of the Public Stockholders
of the Company, in its deliberations concerning the fairness of the terms of
the Offer and Proposed Merger:
. Following the successful completion of the Offer and Proposed Merger,
the Public Stockholders of the Company would cease to participate in the
future earnings or growth, if any, of the Company or benefit from
increases, if any, in the value of their holdings in the Company.
In determining that the Offer and the Proposed Merger are fair to the Public
Stockholders of the Company, Court Square and the Purchaser considered the
above factors as a whole and did not assign specific or relative weights to
them.
3. FINANCIAL PROJECTIONS.
The Company's Projections. To the knowledge of Court Square and the
Purchaser, the Company does not, as a matter of course, make public forecasts
or projections as to future sales, earnings or other income statement data.
However, management of the Company does prepare internal financial
projections. To the knowledge of Court Square and the Purchaser, such
projections represent what management of the Company believes to be a
reasonable estimate of the Company's future financial performance and reflect
significant assumptions and subjective judgments by the Company's management
regarding industry performance and general business and economic conditions,
including assumptions regarding the Company's future development projects. The
projections set forth below (the "Company Projections") were not prepared with
a view to public disclosure and are included herein for the limited purpose of
giving the Company's stockholders access to financial projections of the
Company (excluding Leavitt Tube) prepared by the Company's management in the
first quarter of 2000 that were made available to Court Square. Court Square
has not seen or been furnished any new or updated projections prepared by the
Company since March 2000. The Company Projections may or may not reflect the
Company's current estimate of the Company's future financial performance.
<TABLE>
<CAPTION>
Operating Data 2000 2001 2002 2003 2004
-------------- ------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C>
Base Case
Revenues...................... $292.3 $293.7 $312.2 $326.4 $349.5
EBITDA........................ $ 40.2 $ 48.9 $ 50.2 $ 53.9 $ 60.1
EBITDA Margin................. 13.8% 16.6% 16.1% 16.5% 17.2%
Total Capital Expenditures.... $ 30.0 $ 25.0 $ 5.5 $ 6.0 $ 6.5
Expansion Capital
Expenditures................. $ 25.0 $ 20.0 $ 0.0 $ 0.0 $ 0.0
Recession Case
Revenues...................... $292.3 $229.5 $261.3 $322.5 $349.5
EBITDA........................ $ 40.2 $ 40.2 $ 33.1 $ 50.6 $ 60.2
EBITDA Margin................. 13.8% 17.5% 12.7% 15.7% 17.2%
Total Capital Expenditures.... $ 30.0 $ 25.0 $ 5.5 $ 6.0 $ 6.5
Expansion Capital
Expenditures................. $ 25.0 $ 20.0 $ 0.0 $ 0.0 $ 0.0
</TABLE>
The Purchaser and Court Square are not aware how the Company defined EBITDA
for purposes of the Company's Projections. Generally, EBITDA is calculated as
the sum of operating income plus depreciation and amortization of goodwill.
EBITDA is considered to be a widely accepted financial indicator of a
company's ability to service debt, fund capital expenditures and expand its
business; however, EBITDA is not calculated in the same way by all companies
and neither is a measurement required, nor represents cash flow from
operations as defined by generally accepted accounting principles. EBITDA
should not be considered in isolation or as an alternative to net income, cash
flows from continuing operations, or other consolidated income or cash flow
data prepared in accordance with generally accepted accounting principles as
measures of the Company's profitability or liquidity.
11
<PAGE>
TO THE KNOWLEDGE OF COURT SQUARE AND THE PURCHASER, THE COMPANY DOES NOT, AS
A MATTER OF COURSE, DISCLOSE PROJECTIONS AS TO FUTURE REVENUES, EARNINGS OR
OTHER INCOME STATEMENT DATA AND THE COMPANY PROJECTIONS WERE NOT PREPARED WITH
A VIEW TO PUBLIC DISCLOSURE. IN ADDITION, THE COMPANY PROJECTIONS WERE NOT
PREPARED IN ACCORDANCE WITH GENERALLY ACCEPTED ACCOUNTING PRINCIPLES, OR WITH
A VIEW TO COMPLIANCE WITH THE PUBLISHED GUIDELINES OF THE COMMISSION OR THE
AMERICAN INSTITUTE OF CERTIFIED PUBLIC ACCOUNTANTS REGARDING PROJECTIONS,
WHICH WOULD REQUIRE A MORE COMPLETE PRESENTATION OF THE DATA THAN AS SHOWN
ABOVE. TO COURT SQUARE'S KNOWLEDGE, THE COMPANY PROJECTIONS HAVE NOT BEEN
EXAMINED, REVIEWED OR COMPILED BY THE COMPANY'S INDEPENDENT AUDITORS, AND
ACCORDINGLY THEY HAVE NOT EXPRESSED AN OPINION OR ANY OTHER ASSURANCE ON SUCH
COMPANY PROJECTIONS. THE FORECASTED INFORMATION IS INCLUDED HEREIN SOLELY
BECAUSE SUCH INFORMATION WAS FURNISHED TO COURT SQUARE PRIOR TO THE OFFER.
ACCORDINGLY, NONE OF COURT SQUARE, THE PURCHASER OR THE COMPANY OR ANY OTHER
PERSON IS MAKING ANY REPRESENTATION AS TO THE COMPANY PROJECTIONS INCLUDED IN
THIS OFFER TO PURCHASE, AND NONE OF COURT SQUARE, THE PURCHASER, THE COMPANY
OR ANY OTHER PERSON ASSUMES ANY RESPONSIBILITY AS TO THE ACCURACY THEREOF. IN
ADDITION, BECAUSE THE ESTIMATES AND ASSUMPTIONS UNDERLYING THE COMPANY
PROJECTIONS ARE INHERENTLY SUBJECT TO SIGNIFICANT ECONOMIC AND COMPETITIVE
UNCERTAINTIES AND CONTINGENCIES, WHICH ARE DIFFICULT OR IMPOSSIBLE TO PREDICT
ACCURATELY AND ARE BEYOND THE CONTROL OF COURT SQUARE, THE PURCHASER AND THE
COMPANY, THERE CAN BE NO ASSURANCE THAT RESULTS SET FORTH IN THE ABOVE COMPANY
PROJECTIONS WILL BE REALIZED AND IT IS EXPECTED THAT THERE WILL BE DIFFERENCES
BETWEEN ACTUAL AND PROJECTED RESULTS, AND ACTUAL RESULTS MAY BE MATERIALLY
HIGHER OR LOWER THAN THOSE SET FORTH ABOVE.
Court Square's Projections. The projections set forth below (the "Court
Square Projections") of the Company (excluding Leavitt Tube) were prepared by
Court Square based upon public reports in respect of the Company and its
capital stock, and Court Square's evaluation of publicly available financial
information of the Company. In preparing these projections, Court Square
assumed a recession in 2001 and 2002. The Court Square Projections were not
prepared with a view to public disclosure and are included herein for the
limited purpose of giving the Company's stockholders access to financial
projections developed by Court Square in November 2000.
<TABLE>
<CAPTION>
2000 2001 2002 2003 2004
------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C>
Revenues.......................... $299.0 $240.0 $240.0 $305.0 $330.0
EBITDA............................ $ 40.5 $ 31.5 $ 31.5 $ 50.0 $ 54.5
EBITDA Margin..................... 13.5% 13.1% 13.1% 16.4% 16.5%
Total Capital Expenditures........ $ 20.0 $ 20.0 $ 5.5 $ 5.0 $ 5.0
</TABLE>
EBITDA is calculated for purposes of the Court Square Projections as the sum
of operating income plus depreciation and amortization of goodwill. EBITDA is
considered to be a widely accepted financial indicator of a company's ability
to service debt, fund capital expenditures and expand its business; however,
EBITDA is not calculated in the same way by all companies and neither is a
measurement required, nor represents cash flow from operations as defined by
generally accepted accounting principles. EBITDA should not be considered in
isolation or as an alternative to net income, cash flows from continuing
operations, or other consolidated income or cash flow data prepared in
accordance with generally accepted accounting principles as measures of the
Company's profitability or liquidity.
THE FOREGOING PROJECTIONS BY COURT SQUARE WERE NOT PREPARED WITH A VIEW TO
PUBLIC DISCLOSURE. IN ADDITION, THE COURT SQUARE PROJECTIONS WERE NOT PREPARED
IN ACCORDANCE WITH GENERALLY ACCEPTED ACCOUNTING PRINCIPLES, OR WITH A VIEW TO
COMPLIANCE WITH THE PUBLISHED GUIDELINES OF THE COMMISSION OR THE AMERICAN
INSTITUTE OF CERTIFIED PUBLIC ACCOUNTANTS REGARDING PROJECTIONS, WHICH WOULD
12
<PAGE>
REQUIRE A MORE COMPLETE PRESENTATION OF THE DATA THAN AS SHOWN ABOVE. THE
COURT SQUARE PROJECTIONS HAVE NOT BEEN EXAMINED, REVIEWED OR COMPILED BY
INDEPENDENT AUDITORS, AND ACCORDINGLY NO AUDIT FIRM HAS EXPRESSED AN OPINION
OR ANY OTHER ASSURANCE ON SUCH PROJECTIONS. THE FORECASTED INFORMATION IS
INCLUDED HEREIN SOLELY BECAUSE SUCH INFORMATION WAS DEVELOPED BY COURT SQUARE
AND THEREAFTER PROVIDED TO FINANCIAL SOURCES IN CONNECTION WITH A CONTEMPLATED
OFFER. ACCORDINGLY, NONE OF COURT SQUARE OR THE PURCHASER OR ANY OTHER PERSON
IS MAKING ANY REPRESENTATION AS TO THE FOREGOING COURT SQUARE PROJECTIONS, AND
NONE OF COURT SQUARE, THE PURCHASER OR ANY OTHER PERSON ASSUMES ANY
RESPONSIBILITY AS TO THE ACCURACY THEREOF. IN ADDITION, BECAUSE THE ESTIMATES
AND ASSUMPTIONS UNDERLYING THE COURT SQUARE PROJECTIONS ARE INHERENTLY SUBJECT
TO SIGNIFICANT ECONOMIC AND COMPETITIVE UNCERTAINTIES AND CONTINGENCIES, WHICH
ARE DIFFICULT OR IMPOSSIBLE TO PREDICT ACCURATELY AND ARE BEYOND THE CONTROL
OF COURT SQUARE AND THE PURCHASER, THERE CAN BE NO ASSURANCE THAT RESULTS SET
FORTH IN THE ABOVE COURT SQUARE PROJECTIONS WILL BE REALIZED AND IT IS
EXPECTED THAT THERE WILL BE DIFFERENCES BETWEEN ACTUAL AND PROJECTED RESULTS,
AND ACTUAL RESULTS MAY BE MATERIALLY HIGHER OR LOWER THAN THOSE SET FORTH
ABOVE.
4. FORWARD LOOKING STATEMENTS.
THE MATTERS DISCUSSED UNDER THE HEADINGS "--BACKGROUND OF THE OFFER AND THE
PROPOSED MERGER; CONTACTS WITH THE COMPANY," "--FAIRNESS OF THE OFFER AND THE
PROPOSED MERGER," "--FINANCIAL PROJECTIONS" AND "THE TENDER OFFER--CERTAIN
INFORMATION CONCERNING THE COMPANY" CONTAIN FORWARD-LOOKING STATEMENTS THAT
INVOLVE RISKS AND UNCERTAINTIES. STOCKHOLDERS ARE CAUTIONED THAT, IN ADDITION
TO THE OTHER FACTORS SET FORTH UNDER THE HEADINGS "--BACKGROUND OF THE OFFER
AND THE PROPOSED MERGER; CONTACTS WITH THE COMPANY," "--FAIRNESS OF THE OFFER
AND THE PROPOSED MERGER," "--FINANCIAL PROJECTIONS" AND "THE TENDER OFFER--
CERTAIN INFORMATION CONCERNING THE COMPANY," THE FOLLOWING FACTORS MAY CAUSE
THE COMPANY'S ACTUAL FINANCIAL PERFORMANCE TO DIFFER MATERIALLY FROM THOSE
EXPRESSED IN SUCH FORWARD-LOOKING STATEMENTS:
. supply and demand for the Company's products;
. competitive product and pricing pressures;
. failure to maintain current levels of manufacturing operations;
. changes in industry laws and regulations;
. general economic and industry conditions in the end-use markets for the
Company's products;
. effect of fluctuations in foreign currency rates; and
. failure to successfully implement capacity expansion programs.
5. PURPOSE AND STRUCTURE OF THE OFFER AND THE PROPOSED MERGER; PLANS FOR THE
COMPANY.
General. The purpose of the Offer is to acquire control of, and ultimately
the entire equity interest in, the Company. The Purchaser presently intends,
as soon as practicable after consummation of the Offer to seek to have the
Company consummate the Proposed Merger. At the effective time of the Proposed
Merger, each Share that is issued and outstanding immediately prior to the
effective time of the Proposed Merger (other than Shares owned by the
Purchaser) would be converted into an amount in cash equal to the highest
price per Share paid in the Offer.
13
<PAGE>
Court Square and the Purchaser currently intend to pursue the Proposed
Merger following consummation of the Offer. However, as Court Square and the
Purchaser are seeking to negotiate with respect to the acquisition of the
Company, Court Square and the Purchaser reserve the right to amend the terms
of the Proposed Merger or to pursue an alternative second-step business
combination transaction involving the Company in which the Shares not owned by
the Purchaser would be converted into or exchanged for cash, shares of the
Purchaser's common stock and/or other securities or consideration.
The timing of consummation of the Offer and the Proposed Merger will depend
on a variety of factors and legal requirements, the actions of the Company
Board, the number of Shares (if any) acquired by the Purchaser pursuant to the
Offer, and whether the conditions to the Offer have been satisfied or waived.
Certain terms of the Rights and certain provisions of the DGCL may affect
the ability of the Purchaser to obtain control of the Company and to cause the
Purchaser to consummate the Proposed Merger. The Purchaser believes that if
the Rights Condition, the Financing Condition, the Business Combination
Condition and the HSR Condition are satisfied, it should be able to implement
the Proposed Merger. Nevertheless, the Purchaser can give no assurance that
the Proposed Merger will be consummated or as to the timing of the Proposed
Merger if it is consummated.
Alternative Structures Considered by the Purchaser. Court Square and the
Purchaser also considered whether to structure the transaction as a merger,
without a tender offer. In determining to proceed with the tender offer for a
specified number of shares, Court Square and the Purchaser noted that a
partial tender offer would allow the Public Stockholders to sell a portion of
their shares on a expeditious basis at the price offered in the Offer. In
addition, in the Offer each Public Stockholder would individually determine
whether to accept the Offer Price or alternatively not to tender their shares
and preserve their appraisal rights in the Proposed Merger under applicable
law.
Other Possible Purchases of Shares. Whether or not the Offer is successfully
completed, the Purchaser may acquire additional Shares in the open market or
in privately negotiated transactions. Such open market or privately negotiated
purchases would be made at market prices or privately negotiated prices at the
time of purchase, which may be higher or lower than the Offer Price.
Effects of the Offer and the Proposed Merger. If the Offer and the Proposed
Merger are consummated, immediately following the Proposed Merger, (1) Court
Square, (2) Robert F. B. Logan, who is currently a minority stockholder in the
Purchaser ("Mr. Logan"), and (3) certain management investors who may decide
to invest directly in the Purchaser will collectively own all the equity
interests of the Company (provided that following the Proposed Merger if PNC
Bank elects to exercise its right to invest in the Company pursuant to the
financing terms, then PNC Bank may own an equity interest in the Company) and
will be entitled to all benefits resulting from such interests, including all
income generated by the Company's operations and any future increase in the
Company's value. Similarly, such parties will bear the risk of losses
generated by the Company's operations and any future decrease in the value of
the Company after the Proposed Merger. Subsequent to the Proposed Merger, the
Public Stockholders will cease to have an equity interest in the Company, will
not have the opportunity to participate in the earnings and growth of the
Company after the Proposed Merger and will not face the risk of losses
generated by the Company's operations or decline in the value of the Company
after the Proposed Merger.
Possible Effect of the Offer and Open Market Purchases on the Market for
Shares. Following the completion of the Offer and prior to the effective date
of the Proposed Merger, the purchase of Shares by the Purchaser pursuant to
the Offer or any subsequent open market or privately negotiated purchases
would reduce the number of Shares that might otherwise trade publicly and may
reduce the number of holders of Shares. This could adversely affect the
liquidity and market value of the remaining Shares held by the public.
Plans for the Company After the Offer and the Proposed Merger. Upon
consummation of the Proposed Merger, the Company will become a privately held
corporation. Accordingly, the Public Stockholders will not have the
opportunity to participate in the earnings and growth of the Company after the
consummation of the Proposed Merger and will not have any right to vote on
corporate matters. In addition, the Public Stockholders
14
<PAGE>
will not be entitled to share in any premium which might be payable by an
unrelated third-party acquiror of all of the Shares in a sale transaction, if
any, occurring after the consummation of the Proposed Merger. No such
transactions are contemplated at this time. However, such Public Stockholders
will not face the risk of losses generated by the Company's operations or any
decrease in the value of the Company after the consummation of the Proposed
Merger.
The Voting Shares are currently listed for quotation on the NYSE. Following
the closing of the Offer and prior to the effective date of the Proposed
Merger, depending upon the aggregate market value and the number of Shares not
purchased pursuant to the Offer or any subsequent open market or privately
negotiated purchases, as well as the number of Public Stockholders who are not
affiliated with the Purchaser or Court Square, the Voting Shares may no longer
meet the quantitative requirements for continued listing on the NYSE. As a
result of the Proposed Merger and following consummation of the Proposed
Merger, the Company will be entirely owned by Court Square, Mr. Logan and
certain management investors who may decide to invest directly in the
Purchaser (provided that following the Proposed Merger if PNC Bank elects to
exercise its right to invest in the Company pursuant to the financing terms,
then PNC Bank may also own an equity interest in the Company), and there will
be no public market for the Shares. Following the consummation of the Proposed
Merger, the Voting Shares will no longer be quoted on the NYSE and the
Purchaser intends to terminate the registration of the Shares under the
Exchange Act. Accordingly, after the Proposed Merger there will be no publicly
traded equity securities of the Company. Prior to the effective date of the
Proposed Merger, the purchase of Shares pursuant to the Offer or open market
or privately negotiated purchases following consummation of the Offer may
result in the Voting Shares becoming eligible for deregistration under the
Exchange Act. Moreover, after the Proposed Merger, the Company may deregister
the Voting Shares in which event the Company will no longer be legally
required to file periodic reports with the Commission, under the Exchange Act
(although it may continue to do so if contractually required under any
agreements governing its indebtedness or indebtedness of its subsidiaries),
and will no longer be required to comply with the proxy rules of Regulation
14A under Section 14 under the Exchange Act. In addition, the Company's
officers, directors and stockholders who beneficially own 10% or more of the
Shares will be relieved of the reporting requirements and restrictions on
"short-swing" trading contained in Section 16 of the Exchange Act with respect
to the Shares. It is expected that, if Shares are not accepted for payment by
the Purchaser pursuant to the Offer and the Proposed Merger is not
consummated, the Company's current management, under the general direction of
the Company Board, will continue to manage the Company as an ongoing business.
Upon consummation of the Proposed Merger, the Purchaser and Court Square
intend to have the Company Board consist of Mr. Logan, Mr. McWilliams and Mr.
Corpening. The Purchaser and Court Square also intend to designate Mr. Logan
as the President and Chief Executive Officer of the Company. The Purchaser
does not anticipate making any other changes in management.
The Company and Mr. Alonzo are parties to an Employment Agreement dated as
of November 10, 1994 (the "Employment Agreement"). Pursuant to the Employment
Agreement, the Company agreed to employ Mr. Alonzo as its Chairman of the
Company Board, President and Chief Executive Officer. Upon the consummation of
the Proposed Merger, the Purchaser and Court Square intend to terminate the
Employment Agreement. If the Employment Agreement is terminated, the Company
may be required to pay severance to Mr. Alonzo in the amounts and in the
manner specified by the Employment Agreement.
The Company also recently announced that it has engaged Robinson-Humphrey, a
subsidiary of Salomon Smith Barney/Citigroup, to review all strategic
alternatives for Leavitt Tube, including the sale of Leavitt Tube. After the
consummation of the Offer and the Proposed Merger, the Purchaser and Court
Square intend to continue to pursue the evaluation of strategic alternatives
for Leavitt Tube, including the sale of such subsidiary or its assets.
In connection with the Offer and the Proposed Merger, Court Square and the
Purchaser have reviewed, and will continue to review, various possible
business strategies that they might consider in the event that the Purchaser
acquires control of the Company. In addition, if and to the extent that the
Purchaser acquires control of the Company, Court Square and the Purchaser
intend to conduct a detailed review of the Company and its
15
<PAGE>
assets, financial projections, corporate structure, dividend policy,
capitalization, operations, properties, policies, management and personnel and
consider and determine what, if any, changes would be desirable in light of
the circumstances which then exist. Such strategies could include, among other
things, changes in the Company's business, facility locations, corporate
structure, marketing strategies, capitalization or management.
6. RIGHTS OF STOCKHOLDERS IN THE OFFER AND THE PROPOSED MERGER.
No appraisal rights are available to stockholders who tender their Shares in
the Offer. If the Proposed Merger is consummated, however, record stockholders
who have not validly tendered their Shares or voted in favor of the Proposed
Merger will have certain rights under the DGCL to an appraisal of, and to
receive payment in cash of the fair value of, their Shares (the "Appraisal
Shares"). Stockholders who perfect appraisal rights by complying with the
procedures set forth in Section 262 of the DGCL ("Section 262"), a copy of
which is attached as Schedule II to this Offer to Purchase, will have the fair
value of their Appraisal Shares (exclusive of any element of value arising
from the accomplishment or expectation of the Proposed Merger) determined by
the Delaware Court of Chancery and will be entitled to receive a cash payment
equal to such fair value from the Company, as the surviving corporation in the
Proposed Merger (the "Surviving Corporation"). A judicial determination of the
fair value of Appraisal Shares could be based upon any valuation method or
combination of methods the court deems appropriate. The value so determined
could be more than, equal to, or less than the price per Share offered
pursuant to the Offer or proposed to be paid in the Proposed Merger. In
addition, such stockholders may be entitled to receive payment of a fair rate
of interest on the amount determined to be the fair value of their Appraisal
Shares from the effective time of the Proposed Merger until the date of
payment.
Under Section 262, if the Proposed Merger is submitted to a vote of the
stockholders at a meeting thereof, the Company must, not less than 20 days
prior to the meeting held for the purpose of obtaining stockholder approval of
the Proposed Merger, notify each of the stockholders entitled to appraisal
rights that such rights are available. A holder of Appraisal Shares wishing to
exercise appraisal rights will be required to deliver to the Company before
the taking of the vote on the Proposed Merger, a written demand for appraisal
of such holder's Appraisal Shares. A holder of Appraisal Shares wishing to
exercise such holder's appraisal rights must be the record holder of such
Appraisal Shares on the date the written demand for appraisal is made and must
continue to hold of record such Appraisal Shares through the effective time of
the Proposed Merger. Accordingly, a holder of Appraisal Shares who is the
record holder of Appraisal Shares on the date the written demand for appraisal
is made, but who thereafter transfers such Appraisal Shares prior to the
effective time of the Proposed Merger, will lose any right to appraisal in
respect of such Appraisal Shares.
A demand for appraisal must be executed by or on behalf of the stockholder
of record and must reasonably inform the Company of the identity of the
stockholder of record and that such stockholder intends thereby to demand an
appraisal of such Appraisal Shares.
A person having a beneficial interest in Appraisal Shares that are held of
record in the name of another person, such as a broker, fiduciary, depository
or other nominee, will have to act to cause the execution of the demand for
appraisal to be made by or for the record holder and to follow the requisite
steps properly and in a timely manner to perfect appraisal rights. If
Appraisal Shares are owned of record by more than one person, as in joint
tenancy or tenancy in common, the demand will have to be executed by or for
all joint owners. An authorized agent, including an agent for two or more
joint owners, may execute a demand for appraisal for a stockholder of record,
provided that the agent identifies the record owner and expressly discloses,
when the demand is made, that the agent is acting as agent for the record
owner. If a stockholder owns Appraisal Shares through a broker who in turn
holds the Appraisal Shares through a central securities depository nominee
such as CEDE & Co., a demand for appraisal of such Appraisal Shares will have
to be made by or on behalf of the depository nominee and must identify the
depository nominee as the record holder of Appraisal Shares.
A record holder, such as a broker, fiduciary, depository or other nominee,
who holds Appraisal Shares as a nominee for others, will be able to exercise
appraisal rights with respect to the Appraisal Shares held for all or
16
<PAGE>
less than all of the beneficial owners of those Appraisal Shares as to which
such person is the record owner. In such case, the written demand must set
forth the number of Shares covered by the demand. Where the number of Shares
is not expressly stated, the demand will be presumed to cover all Appraisal
Shares standing in the name of such record owner.
Within 120 days after the effective time of the Proposed Merger, but not
thereafter, the Company or any stockholder who has complied with the statutory
requirements of Section 262 summarized above and who is otherwise entitled to
appraisal rights may file a petition in the Delaware Court of Chancery
demanding a determination of the fair value of such holder's Appraisal Shares.
There is no present intention on the part of the Purchaser to file an
appraisal petition on behalf of the Company, and stockholders who seek to
exercise appraisal rights should not assume that the Company will file such a
petition or that the Company will initiate any negotiations with respect to
the fair value of Appraisal Shares. Accordingly, it will be the obligation of
any stockholder seeking appraisal rights to initiate all necessary action to
perfect any appraisal rights within the time prescribed in Section 262. Within
120 days after the effective time of the Proposed Merger, any stockholder who
has theretofore complied with the provisions of Section 262 will be entitled,
upon written request, to receive from the Company a statement setting forth
the aggregate number of Shares not voting in favor of the Proposed Merger (if
applicable) and with respect to which demands for appraisal were received as
well as the number of holders of such Shares. Such statement must be mailed
within ten days after the written request therefor has been received by the
Company.
If a petition for appraisal is timely filed, and after a hearing on such
petition, the Delaware Court of Chancery will determine the stockholders
entitled to appraisal rights and will appraise the fair value of their
Appraisal Shares, exclusive of any element of value arising from the
accomplishment or expectation of the Merger, together with a fair rate of
interest, if any, to be paid upon the amount determined to be the fair value
of the Appraisal Shares from the effective time of the Proposed Merger.
The costs of the proceeding may be determined by the Delaware Court of
Chancery and taxed upon the parties as the Delaware Court of Chancery deems
equitable under the circumstances. However, costs do not include attorneys'
fees or expert witness fees. Upon application of a stockholder, the Delaware
Court of Chancery may also order all or a portion of the expenses incurred by
any stockholder, including reasonable attorneys' fees and the fees and
expenses of experts, to be charged pro rata against the value of all of the
Appraisal Shares entitled to appraisal.
At any time within 60 days after the effective time of the Proposed Merger,
any stockholder shall have the right to withdraw its demand for appraisal and
to accept the proposed merger consideration. After this period, the
stockholder may withdraw such holder's demand for appraisal only with the
consent of the Company. If any stockholder who properly demands appraisal of
such holder's Appraisal Shares under Section 262 fails to perfect, or
effectively withdraws or loses such holder's right to appraisal as provided in
the DGCL, the Appraisal Shares of such stockholder will be converted into the
right to receive the proposed merger consideration. A stockholder will fail to
perfect, or effectively lose or withdraw, such stockholder's right to
appraisal if, among other things, no petition for appraisal is filed within
120 days after the effective time or if the stockholder delivers to the
Company a written withdrawal of such stockholder's demand for appraisal within
the time period specified above.
Except as otherwise disclosed in the Offer to Purchase, neither the
Purchaser nor Court Square has made any provision in connection with the Offer
or the Proposed Merger to obtain counsel or appraisal services for
unaffiliated security holders at the expense of the Purchaser or Court Square.
THE FOREGOING SUMMARY OF THE RIGHTS OF DISSENTING STOCKHOLDERS DOES NOT
PURPORT TO BE A COMPLETE STATEMENT OF THE PROCEDURES TO BE FOLLOWED BY
STOCKHOLDERS DESIRING TO EXERCISE THEIR APPRAISAL RIGHTS, IF ANY. THE
PRESERVATION AND EXERCISE OF APPRAISAL RIGHTS ARE CONDITIONED ON STRICT
ADHERENCE TO THE APPLICABLE PROVISIONS OF THE DGCL.
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<PAGE>
7. TRANSACTIONS, NEGOTIATIONS AND AGREEMENTS.
Transactions with the Company or Its Affiliates. On December 12, 2000, Court
Square paid Citicorp Venture Capital Ltd., an affiliate of the Purchaser and
Court Square ("CVC"), for all 7,289,946 Shares owned by CVC (the "CVC Shares")
to Court Square (the "CVC Transfer") for $10.50 per share, subject to
adjustment. Court Square expects the certificates for the CVC Shares to be
made in Court Square's name shortly.
Agreements Involving the Securities of the Company. CVC is a party to a
Voting Agreement, dated as of November 10, 1994 (the "Voting Agreement"), by
and between CVC, the Company and Mr. Alonzo. Pursuant to the Voting Agreement,
the Company has agreed to use its best efforts to cause up to two designees of
CVC and one designee of Mr. Alonzo to be nominated for election as directors
of the Company, and each of CVC and Mr. Alonzo have agreed to vote their
respective Shares in favor of such designees. By virtue of the CVC Transfer,
Court Square must vote the CVC Shares in favor of Mr. Alonzo as a director of
the Company, in compliance with the Voting Agreement. By its terms, the Voting
Agreement terminates when Mr. Alonzo no longer owns 1% or more of the Shares
outstanding. Upon consummation of the Proposed Merger, all of the Shares owned
by Mr. Alonzo will be converted into the right to receive an amount in cash
equal to the highest price paid per Share in the Offer, and consequently, the
Voting Agreement will terminate.
CVC is also a party to an Exchange Agreement, dated as of November 4, 1994
(the "Exchange Agreement"), by and between CVC and the Company. Pursuant to
the Exchange Agreement, the Company has granted CVC the right to exchange all
or a portion of its Voting Shares for Non-Voting Shares, subject to the
availability of authorized Non-Voting Shares. At the request of the Company,
Court Square has executed a joinder to the Exchange Agreement as a condition
to its acquisition of the CVC Shares.
CVC is also a party to a Registration Rights Agreement, dated as of November
10, 1994 (the "Registration Rights Agreement"), by and between CVC, the
Company and Mr. Alonzo. Pursuant to the Registration Rights Agreement, the
Company has granted CVC and Mr. Alonzo certain registration rights relating to
the Shares owned by them. Court Square has obtained CVC's registration rights
by virtue of its acquisition of the CVC Shares. Upon consummation of the
Proposed Merger, all of the Shares owned by Mr. Alonzo will be converted into
the right to receive an amount in cash equal to the highest price paid per
Share in the Offer, and consequently, he will have no Shares subject to the
registration rights.
The Purchaser and Court Square have entered into a Contribution Agreement,
dated as of December 18, 2000 (the "Contribution Agreement"), whereby Court
Square has agreed to contribute all 7,289,946 Shares owned by it (the
"Contributed Shares") to the Purchaser. Court Square's obligation to
contribute the Contributed Shares is conditioned upon the completion of the
Offer and the expiration of the applicable waiting period under the HSR Act.
Other Material Agreements and Relationships. Mr. McWilliams, an officer of
Court Square and an officer and director of the Purchaser, is a director of
the Company. Mr. Corpening, an officer of Court Square and a director of the
Purchaser, is also a director of the Company.
8. INTEREST IN SECURITIES OF THE COMPANY.
Securities Ownership. The following table sets forth certain information, as
of December 29, 2000, regarding the ownership of Shares by the Purchaser,
Court Square and the persons named in Schedule I to this Offer to Purchase.
The Purchaser and Court Square believe that all such directors and executive
officers and all directors of the Company who are representatives of Court
Square currently intend to tender their Shares into the Offer, except to the
extent that the tendering would subject that person to the "short-swing
profit" rules of Section 16(b) of the Exchange Act. Mr. McWilliams has an
indirect pecuniary interest in 223,045 Shares held by a family partnership in
which Shares Mr. McWilliams may be deemed to have a beneficial ownership
interest
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<PAGE>
under Rule 13d-3 of the Securities Act of 1933, as amended, and while the
Purchaser believes that such family partnership will tender its shares, the
Purchaser has no commitment such family partnership will do so. Except as
indicated below, the executive officers and directors of Citigroup Inc.
("Citigroup"), Court Square and the Purchaser do not own any Shares.
<TABLE>
<CAPTION>
Amount and Nature of
Percent of Beneficial Percent of Total
Beneficial Owner Ownership Common Stock(1)
----------------------------------- --------------------- ----------------
<S> <C> <C>
Citigroup Inc...................... 7,292,946(2) 47.7%
Court Square....................... 7,289,946(3) 47.7%
Purchaser.......................... 7,289,946(4) 47.7%
Thomas F. McWilliams............... 17,938(5) *
Charles E. Corpening............... 16,852(6) *
William T. Comfort................. 200,000 *
James A. Urry...................... 100,000 *
</TABLE>
--------
*Less than 1% of the Shares.
(1) Percentages are based on the number of Voting Shares and Non-Voting Shares
issued and outstanding as of November 6, 2000 as reported in the Company's
Form 10-Q for the quarterly period ended September 30, 2000 (the "Company
10-Q"). Percentages give effect to the 6,150,118 Non-Voting Shares
outstanding as of the date of this Offer to Purchase.
(2) Citigroup owns 7,289,946 Shares indirectly through its direct wholly owned
subsidiary, Citigroup Holdings Company ("Citigroup Holdings"). Citigroup
Holdings owns 7,289,946 Shares indirectly through its direct wholly owned
subsidiary, Citicorp. Citicorp owns 7,289,946 Shares indirectly through
its direct wholly owned subsidiary, Citicorp Banking Corporation ("CBC").
CBC owns 7,289,946 Shares indirectly through its direct wholly owned
subsidiary, Court Square. Certain subsidiaries of Citigroup directly
beneficially own 3,000 Voting Shares which represent less than 1% of all
of the Voting Shares outstanding. The address of the principal business
and principal office of Citicorp and Citigroup is 399 Park Avenue, New
York, New York 10043. The address of the principal business and principal
office of CBC is One Penn's Way, New Castle, Delaware 19720. The address
of the principal business and principal office of Citigroup Holdings is
One Rodney Square, Wilmington, Delaware 19899.
(3) Amount reported includes 1,139,827 Voting Shares (12.5% of all of the
Voting Shares outstanding) and 6,150,118 Non-Voting Shares.
(4) Includes the 7,289,946 Shares held of record by Court Square and subject
to the Contribution Agreement.
(5) Includes 10,438 Shares subject to stock options granted under the
Company's 1997 Non-Employee Director Stock Option Plan (the "Director
Stock Option Plan") and 7,500 Shares subject to stock options granted
under the 1994 Long Term Incentive Plan (the "1994 Incentive Plan"), all
of which currently are exercisable. Excludes 223,045 Shares held by a
family partnership in which Shares Mr. McWilliams has an indirect
pecuniary interest and may be deemed to have a beneficial ownership
interest under Rule 13d-3 of the Securities Act of 1933. Excludes any
Shares subject to stock options granted since April 2000 under the
Director Stock Option Plan to Mr. McWilliams.
(6) Consists solely of 9,352 Shares subject to stock options granted under the
Director Stock Option Plan that currently are exercisable and 7,500 Shares
subject to stock options granted under the 1994 Incentive Plan that are
exercisable within 60 days of this Offer to Purchase. Excludes any Shares
subject to stock options granted since April 2000 under the Director Stock
Option Plan to Mr. Corpening.
Securities Transactions. Except for the transactions contemplated by the
Contribution Agreement and the purchase by Court Square of 7,289,946 Shares
from CVC as described in "--Transactions, Negotiations and Agreements,"
neither the Purchaser nor Court Square nor, to the best knowledge of the
Purchaser and Court Square, any of the persons named in Schedule I to this
Offer to Purchase, has effected a transaction in Shares during the past 60
days.
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<PAGE>
9. CERTAIN UNITED STATES FEDERAL INCOME TAX CONSEQUENCES.
The receipt of cash pursuant to the Offer or the Proposed Merger will be a
taxable transaction for U.S. federal income tax purposes under the Internal
Revenue Code of 1986, as amended (the "Code"), and may also be a taxable
transaction under applicable state, local or foreign income tax laws.
Generally, for U.S. federal income tax purposes, a tendering stockholder
will recognize gain or loss equal to the difference between the amount of cash
received by the stockholder pursuant to the Offer or the Proposed Merger and
the aggregate adjusted tax basis in the Shares and Rights tendered by the
stockholder and purchased pursuant to the Offer or converted into cash in the
Proposed Merger, as the case may be. Gain or loss will be calculated
separately for each block of Shares and Rights tendered and purchased pursuant
to the Offer or converted into cash in the Proposed Merger, as the case may
be. If tendered Shares and Rights are held by a tendering stockholder as
capital assets, gain or loss recognized by such stockholder will be capital
gain or loss, which will be long-term capital gain or loss if such
stockholder's holding period for the Shares and Rights exceeds one year. In
the case of a tendering non-corporate stockholder, any long-term capital gain
will generally be subject to U.S. federal income tax at a maximum rate of 20%.
For both corporate and non-corporate taxpayers, the deductibility of capital
losses is subject to limitations.
The foregoing discussion may not be applicable with respect to Shares and
Rights received pursuant to the exercise of employee stock options or
otherwise as compensation or with respect to holders of Shares and Rights who
are subject to special tax treatment under the Code such as non-U.S. persons,
life insurance companies, tax-exempt organizations and financial institutions
and may not apply to a holder of Shares and Rights in light of individual
circumstances, such as holding Shares as a hedge or as part of a straddle or a
hedging, constructive sale, integrated or other risk-reduction transaction.
STOCKHOLDERS OF THE COMPANY SHOULD CONSULT THEIR OWN TAX ADVISORS REGARDING
THE SPECIFIC TAX CONSEQUENCES TO THEM OF THE OFFER AND THE PROPOSED MERGER,
INCLUDING THE APPLICABILITY AND EFFECT OF U.S. FEDERAL, STATE, LOCAL AND
FOREIGN INCOME AND OTHER TAX LAWS IN THEIR PARTICULAR CIRCUMSTANCES.
Appraisal Rights. A stockholder that exchanges all of its Shares and Rights
for cash in connection with appraisal rights under the DGCL will generally
recognize capital gain or loss in an amount equal to the difference between
(a) the amount of cash received and (b) such stockholder's adjusted tax basis
in the Shares and Rights surrendered. The capital gain or loss will be long-
term capital gain or loss if the stockholder's holding period for such Shares
and Rights is more than one year. Any long-term capital gain recognized by a
non-corporate stockholder generally will be subject to U.S. federal income tax
at a maximum rate of 20%. For both corporate and non-corporate taxpayers, the
deductibility of capital losses is subject to limitations.
Backup Withholding. Certain non-corporate stockholders of the Company may be
subject to backup withholding at a 31% rate on cash payments received in
connection with the Offer and the Proposed Merger (including cash paid in
respect of the exercise of appraisal rights). Backup withholding will not
apply, however, to a stockholder who (1) furnishes a correct taxpayer
identification number and certifies that such stockholder is not subject to
backup withholding on the Substitute Internal Revenue Service Form W-9 or
successor form included in the Letter of Transmittal, (2) provides a
certification of foreign status on Internal Revenue Service Form W-8 or
successor form or (3) is otherwise exempt from backup withholding.
If a stockholder does not provide a correct taxpayer identification number,
such stockholder may be subject to penalties imposed by the Internal Revenue
Service. Any amount paid as backup withholding does not constitute an
additional tax and will be creditable against a stockholder's U.S. federal
income tax liability provided the required information is given to the
Internal Revenue Service. If backup withholding results in an overpayment of
tax, a refund can be obtained by the stockholder by filing a U.S. federal
income tax return. Stockholders of the Company should consult their own tax
advisors as to their qualification for exemption from withholding and the
procedure for obtaining the exemption.
20
<PAGE>
THE TENDER OFFER
1. TERMS OF THE OFFER; EXPIRATION DATE.
Upon the terms and subject to the conditions of the Offer (including, if the
Offer is extended or amended, the terms and conditions of any such extension
or amendment), the Purchaser will accept for payment and pay for all Shares
validly tendered and not withdrawn in accordance with the procedures set forth
in "--Withdrawal Rights" on or prior to the Expiration Date. The term
"Expiration Date" means 5:00 p.m., New York City time, on Wednesday, January
31, 2001, unless and until the Purchaser, in its sole discretion, extends the
period of time for which the Offer is open, in which event the term
"Expiration Date" means the time and date at which the Offer, as so extended
by the Purchaser, will expire.
To the extent more than 2,300,000 of the outstanding Shares are tendered in
the Offer, the Purchaser will purchase 2,300,000 of the outstanding Shares on
a pro rata basis (with appropriate adjustment to avoid purchase of fractional
Shares) based on the number of Shares properly tendered by each stockholder
prior to the Expiration Date and not withdrawn. See "--Acceptance for Payment
and Payment."
The Offer is conditioned upon satisfaction of the Rights Condition, the
Financing Condition, the Business Combination Condition, the HSR Condition and
all the other conditions set forth in "--Certain Conditions to the Tender
Offer." The Purchaser reserves the right (but will not be obligated), subject
to the applicable rules and regulations of the Commission, to amend or waive
the Rights Condition, the Financing Condition, the Business Combination
Condition, the HSR Condition or any other condition of the Offer. If the
Rights Condition, the Financing Condition, the Business Combination Condition,
the HSR Condition or any of the other conditions set forth in "--Certain
Conditions to the Tender Offer" has not been satisfied by 5:00 p.m., New York
City time, on Wednesday, January 31, 2001 (or any other time then set as the
Expiration Date), the Purchaser may elect to:
(1) extend the Offer and, subject to applicable withdrawal rights, retain
all tendered Shares until the expiration of the Offer, as extended;
(2) subject to complying with applicable rules and regulations of the
Commission, waive all of the unsatisfied conditions and accept for payment
and pay for all Shares tendered and not withdrawn prior to the Expiration
Date; or
(3) terminate the Offer and not accept for payment or pay for any Shares
and return all tendered Shares to tendering stockholders.
The Purchaser expressly reserves the right (but will not be obligated), in
its sole discretion, at any time and from time to time, to extend the period
during which the Offer is open for any reason by giving oral or written notice
of the extension to the Depositary and by making a public announcement of the
extension. During any extension, all Shares previously tendered and not
withdrawn will remain subject to the Offer and subject to the right of a
tendering stockholder to withdraw Shares.
Subject to any applicable rules and regulations of the Commission, including
Rule 14e-1(c) under the Exchange Act, the Purchaser expressly reserves the
right to:
(1) terminate or amend the Offer if any of the conditions referred to in
"--Certain Conditions to the Tender Offer" has not been satisfied; or
(2) waive any condition or otherwise amend the Offer in any respect,
in each case, by giving oral or written notice of such termination, waiver or
amendment to the Depositary and by making a public announcement thereof, as
described below.
The Purchaser acknowledges that Rule 14e-1(c) under the Exchange Act
requires the Purchaser to pay the consideration offered or return the Shares
tendered promptly after the termination or withdrawal of the Offer.
21
<PAGE>
If the Purchaser extends the Offer or if the Purchaser is delayed in its
acceptance for payment of or payment (whether before or after its acceptance
for payment of Shares) for Shares or it is unable to pay for Shares pursuant
to the Offer for any reason, then, without prejudice to the Purchaser's rights
under the Offer, the Depositary may retain tendered Shares on behalf of the
Purchaser, and such Shares may not be withdrawn except to the extent tendering
stockholders are entitled to withdrawal rights as described herein under "--
Withdrawal Rights." However, the ability of the Purchaser to delay the payment
for Shares that the Purchaser has accepted for payment is limited by Rule 14e-
1(c) under the Exchange Act, which requires that a bidder pay the
consideration offered or return the securities deposited by or on behalf of
stockholders promptly after the termination or withdrawal of such bidder's
offer.
Any extension, delay, termination, waiver or amendment of the Offer will be
followed as promptly as practicable by public announcement thereof, and such
announcement in the case of an extension will be made no later than 9:00 a.m.,
New York City time, on the next business day after the previously scheduled
Expiration Date. Without limiting the manner in which the Purchaser may choose
to make any public announcement, subject to applicable law (including Rules
14d-4(d) and 14e-1(d) under the Exchange Act, which require that material
changes be promptly disseminated to holders of Shares in a manner reasonably
designed to inform such holders of such change), the Purchaser currently
intends to make announcements regarding the Offer by issuing a press release
to the PR Newswire.
If the Purchaser makes a material change in the terms of the Offer, or if it
waives a material condition to the Offer, the Purchaser will extend the Offer
and disseminate additional tender offer materials to the extent required by
Rules 14d-4(d)(1), 14d-6(c) and 14e-1 under the Exchange Act. The minimum
period during which an Offer must remain open following material changes in
the terms of the Offer, other than a change in price or a change in the
percentage of securities sought or a change in any dealer's soliciting fee,
will depend upon the facts and circumstances, including the materiality, of
the changes. With respect to a change in price or, subject to certain
limitations, a change in the percentage of securities sought or a change in
any dealer's soliciting fee, a minimum 10-business day period from the date of
such change is generally required to allow for adequate dissemination to
stockholders. For purposes of the Offer, a "business day" means any day other
than a Saturday, Sunday or a federal holiday, and consists of the time period
from 12:01 a.m. through 12:00 midnight, New York City time.
If the Purchaser decides, in its sole discretion, to increase the
consideration offered in the Offer to holders of Shares and if, at the time
that notice of the increase is first published, sent or given to holders of
Shares, the Offer is scheduled to expire at any time earlier than the
expiration of a period ending on the tenth business day from, and including,
the date that such notice is first so published, sent or given, then the Offer
will be extended until at least the expiration of 10 business days from the
date the notice of the increase is first published, sent or given to holders
of Shares. IF, PRIOR TO THE EXPIRATION DATE, THE PURCHASER INCREASES THE
CONSIDERATION BEING PAID FOR SHARES ACCEPTED FOR PAYMENT PURSUANT TO THE
OFFER, SUCH INCREASED CONSIDERATION WILL BE PAID TO ALL STOCKHOLDERS WHOSE
SHARES ARE PURCHASED PURSUANT TO THE OFFER, WHETHER OR NOT SUCH SHARES WERE
TENDERED PRIOR TO THE ANNOUNCEMENT OF THE INCREASE IN CONSIDERATION.
Pursuant to Rule 14d-11 under the Exchange Act, although the Purchaser does
not currently intend to do so, the Purchaser may, subject to certain
conditions, elect to provide a subsequent offering period of from three
business days to 20 business days in length following the expiration of the
Offer on the Expiration Date and acceptance for payment of the Shares tendered
in the Offer (a "Subsequent Offering Period"). A Subsequent Offering Period
would be an additional period of time, following the first purchase of Shares
in the Offer, during which stockholders may tender Shares not tendered in the
Offer.
During a Subsequent Offering Period, tendering stockholders will not have
withdrawal rights and the Purchaser will promptly purchase and pay for any
Shares tendered at the same price paid in the Offer. Rule 14d-11 provides that
the Purchaser may provide a Subsequent Offering Period so long as, among other
things, (1) the initial 20-business day period of the Offer has expired, (2)
the Purchaser offers the same form and
22
<PAGE>
amount of consideration for Shares in the Subsequent Offering Period as in the
initial Offer, (3) the Purchaser immediately accepts and promptly pays for all
Shares tendered during the Offer prior to its expiration, (4) the Purchaser
announces the results of the Offer, including the approximate number and
percentage of Shares deposited in the Offer, no later than 9:00 a.m., New York
City time, on the next business day after the Expiration Date and immediately
begins the Subsequent Offering Period and (5) the Purchaser immediately
accepts and promptly pays for Shares as they are tendered during the
Subsequent Offering Period. If the Purchaser elects to include a Subsequent
Offering Period, it will notify stockholders of the Company consistent with
the requirements of the Commission.
THE PURCHASER CURRENTLY DOES NOT INTEND TO INCLUDE A SUBSEQUENT OFFERING
PERIOD IN THE OFFER, ALTHOUGH IT RESERVES THE RIGHT TO DO SO IN ITS SOLE
DISCRETION. PURSUANT TO RULE 14D-7(A)(2) UNDER THE EXCHANGE ACT, NO WITHDRAWAL
RIGHTS APPLY TO SHARES TENDERED DURING A SUBSEQUENT OFFERING PERIOD AND NO
WITHDRAWAL RIGHTS APPLY DURING THE SUBSEQUENT OFFERING PERIOD WITH RESPECT TO
SHARES TENDERED IN THE OFFER AND ACCEPTED FOR PAYMENT. THE SAME CONSIDERATION
WILL BE PAID TO STOCKHOLDERS TENDERING SHARES IN THE OFFER OR IN A SUBSEQUENT
OFFERING PERIOD, IF ONE IS INCLUDED.
A request has been made to the Company pursuant to Rule 14d-5 of the
Exchange Act and under the DGCL for the use of the Company's stockholder lists
and security position listings for the purpose of disseminating the Offer to
stockholders. The Company has elected to comply with Rule 14d-5(b) which
permits the target company to conduct the distribution of tender offer
materials. Upon compliance by the Company with this request and receipt of
these lists or listings from the Company, this Offer to Purchase, the Letter
of Transmittal and all other relevant materials will be mailed to record
holders of Shares and will be furnished to brokers, dealers, banks, trust
companies and similar persons whose names, or the names of whose nominees,
appear on the Company's stockholders lists, or, if applicable, who are listed
as participants in a clearing agency's security position listing for
subsequent transmittal to beneficial owners of Shares by the Purchaser or, if
it so elects, the materials will be mailed by the Company.
If any tendered Shares are not purchased pursuant to the Offer for any
reason, or if Share Certificates are submitted representing more Shares than
are tendered, certificates representing unpurchased or untendered Shares will
be returned, without expense to the tendering stockholder (or, in the case of
Shares delivered pursuant to the book-entry transfer procedures set forth in
"--Procedures for Accepting the Offer and Tendering Shares and Rights," such
Shares will be credited to an account maintained within the Book-Entry
Transfer Facility), as promptly as practicable following the expiration,
termination or withdrawal of the Offer. In the event separate Rights
Certificates are issued, similar action will be taken with respect to
unpurchased and untendered Rights.
The Purchaser reserves the right to transfer or assign to one or more of the
Purchaser's affiliates, in whole or from time to time in part, the right to
purchase all or any portion of the Shares tendered pursuant to the Offer, but
any such transfer or assignment will not relieve the Purchaser of its
obligations under the Offer or prejudice the rights of tendering stockholders
to receive payment for Shares validly tendered and accepted for payment
pursuant to the Offer.
2. ACCEPTANCE FOR PAYMENT AND PAYMENT.
Upon the terms and subject to the conditions of the Offer (including, if the
Offer is extended or amended, the terms and conditions of the Offer as so
extended or amended), the Purchaser will purchase, by accepting for payment,
and will pay for all Shares validly tendered and not withdrawn prior to the
Expiration Date as soon as practicable after the Expiration Date. Any
determination concerning the satisfaction of the terms and conditions of the
Offer shall be within the sole discretion of the Purchaser. See "--Certain
Conditions to the Offer." The Purchaser expressly reserves the right, in its
sole discretion but subject to the applicable rules of the Commission, to
delay acceptance for payment of, and thereby delay payment for, Shares if any
of the conditions referred to in
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<PAGE>
"--Certain Conditions to the Offer" has not been satisfied or upon the
occurrence of any of the events specified in "--Certain Conditions to the
Offer."
In all cases, payment for Shares purchased pursuant to the Offer will be
made only after timely receipt by the Depositary of:
(1) the Share Certificates representing such Shares and, if applicable,
the Rights Certificates, or timely confirmation (a "Book-Entry
Confirmation") of the book-entry transfer of such Shares and, if
applicable, Rights (if such procedure is available) into the Depositary's
account at The Depository Trust Company (the "Book-Entry Transfer
Facility"), pursuant to the procedures set forth in "--Procedures for
Accepting the Offer and Tendering Shares and Rights";
(2) 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 below) in connection with a book-entry
transfer; and
(3) any other documents required by the Letter of Transmittal.
The term "Agent's Message" means a message, transmitted by the Book-Entry
Transfer Facility to, and received by, the Depositary and forming a part of a
Book-Entry Confirmation, which states that the Book-Entry Transfer Facility
has received an express acknowledgment from the participant in the Book-Entry
Transfer Facility tendering the Shares and, if applicable, the Rights, which
are the subject of such Book-Entry Confirmation, that such participant has
received and agrees to be bound by the terms of the Letter of Transmittal and
that the Purchaser may enforce such agreement against such participant.
If Rights Certificates have been distributed to holders of Shares, such
holders are required to tender Rights Certificates representing a number of
Rights equal to the number of Shares being tendered in order to effect a valid
tender of such Shares.
For purposes of the Offer, the Purchaser will be deemed to have accepted for
payment, and thereby purchased, Shares validly tendered and not withdrawn as,
if and when the Purchaser gives oral or written notice to the Depositary of
the Purchaser's acceptance of such Shares for payment pursuant to the Offer.
In all cases, upon the terms and subject to the conditions of the Offer,
payment for Shares purchased pursuant to the Offer will be made by deposit of
the purchase price therefor with the Depositary, which will act as agent for
tendering stockholders for the purpose of receiving payment from the Purchaser
and transmitting payment to validly tendering stockholders. Upon the deposit
of funds with the Depositary for the purpose of making payments to tendering
stockholders, the Purchaser's obligation to make such payment shall be
satisfied and tendering stockholders must thereafter look solely to the
Depositary for payment of amounts owed to them by reason of the acceptance for
payment of Shares pursuant to the Offer. UNDER NO CIRCUMSTANCES WILL INTEREST
ON THE PURCHASE PRICE FOR SHARES BE PAID BY THE PURCHASER REGARDLESS OF ANY
EXTENSION OF THE OFFER OR BY REASON OF ANY DELAY IN MAKING SUCH PAYMENT. 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 any charges and expenses of the Depositary
and the Information Agent.
If more than 2,300,000 of the outstanding Shares are validly tendered and
not withdrawn prior to the Expiration Date, the Purchaser will accept for
payment and pay for only 2,300,000 of the outstanding Shares on a pro rata
basis (with appropriate adjustments to avoid purchase of fractional Shares)
based on the number of Shares properly tendered by each stockholder prior to
or on the Expiration Date and not withdrawn. Preliminary results of proration
will be announced by press release as promptly as practicable after the
Expiration Date. Stockholders may obtain such preliminary information from the
Information Agent and may be able to obtain such information from their
broker.
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<PAGE>
3. PROCEDURES FOR ACCEPTING THE OFFER AND TENDERING SHARES AND RIGHTS.
Valid Tender of Shares and Rights. Except as set forth below, in order for
Shares to be validly tendered pursuant to the Offer, either (1) on or prior to
the Expiration Date, (a) Share Certificates representing tendered Shares and,
prior to the Distribution Date, Rights, must be received by the Depositary at
one of its addresses set forth on the back cover of this Offer to Purchase, or
such Shares and Rights must be tendered pursuant to the book-entry transfer
procedures set forth below and a Book-Entry Confirmation must be received by
the Depositary, (b) the Letter of Transmittal (or a facsimile thereof),
properly completed and duly executed, together with any required signature
guarantees, or an Agent's Message in connection with a book-entry transfer of
Shares, must be received by the Depositary at one of such addresses and (c)
any other documents required by the Letter of Transmittal must be received by
the Depositary at one of such addresses or (2) the guaranteed delivery
procedures set forth below must be followed.
UNLESS THE RIGHTS ARE REDEEMED PRIOR TO THE EXPIRATION DATE, HOLDERS OF
SHARES WILL BE REQUIRED TO TENDER ONE RIGHT FOR EACH SHARE TENDERED IN ORDER
TO EFFECT A VALID TENDER OF SUCH SHARE. ACCORDINGLY, STOCKHOLDERS WHO SELL
THEIR RIGHTS SEPARATELY FROM THEIR SHARES AND DO NOT OTHERWISE ACQUIRE RIGHTS
MAY NOT BE ABLE TO SATISFY THE REQUIREMENTS OF THE OFFER FOR THE TENDER OF
SHARES.
Separate Delivery Of Rights Certificates. If the Distribution Date has not
occurred prior to the Expiration Date, a tender of Shares will also constitute
a tender of the related Rights. If the Distribution Date has occurred and
Rights Certificates have been distributed to holders of Shares prior to the
time a holder's Shares are purchased pursuant to the Offer, in order for
Rights (and the corresponding Shares) to be validly tendered, Rights
Certificates representing a number of Rights equal to the number of Shares
tendered must be delivered to the Depositary or, if available, a Book-Entry
Confirmation must be received by the Depositary with respect thereto. If the
Distribution Date has occurred and Rights Certificates have not been
distributed prior to the time Shares are purchased pursuant to the Offer,
Rights may be tendered prior to a stockholder receiving Rights Certificates by
use of the guaranteed delivery procedures described below. In any case, a
tender of Shares constitutes an agreement by the tendering stockholder to
deliver Rights Certificates representing a number of Rights equal to the
number of Shares tendered pursuant to the Offer to the Depositary within a
period ending on the later of (1) three NYSE trading days after the date of
execution of the Notice of Guaranteed Delivery and (2) three business days
after the date that Rights Certificates are distributed. An "NYSE trading day"
is a day on which the NYSE is open for business. The Purchaser reserves the
right to require that the Depositary receive Rights Certificates, or a Book-
Entry Confirmation, if available, with respect to such Rights prior to
accepting the related Shares for payment pursuant to the Offer if the
Distribution Date has occurred prior to the Expiration Date.
THE METHOD OF DELIVERY OF SHARES, RIGHTS (IF APPLICABLE), THE LETTER OF
TRANSMITTAL AND ALL OTHER REQUIRED DOCUMENTS, INCLUDING DELIVERY THROUGH THE
BOOK-ENTRY TRANSFER FACILITY, IS AT THE ELECTION AND SOLE RISK OF THE
TENDERING STOCKHOLDER, AND THE DELIVERY WILL BE DEEMED MADE ONLY WHEN ACTUALLY
RECEIVED BY THE DEPOSITARY. IF DELIVERY IS BY MAIL, REGISTERED MAIL WITH
RETURN RECEIPT REQUESTED, PROPERLY INSURED, IS RECOMMENDED. IN ALL CASES,
SUFFICIENT TIME SHOULD BE ALLOWED TO ENSURE TIMELY DELIVERY.
Book-Entry Transfer. The Depositary will make a request to establish
accounts with respect to the Shares at the Book-Entry Transfer Facility for
purposes of the Offer within two business days after the date of this Offer to
Purchase. Any financial institution that is a participant in the system of the
Book-Entry Transfer Facility may make book-entry delivery of Shares by causing
the Book-Entry Transfer Facility to transfer such Shares into the Depositary's
account at the Book-Entry Transfer Facility in accordance with the Book-Entry
Transfer Facility's procedures for such transfer. However, although delivery
of Shares may be effected through book-entry transfer into the Depositary's
account at the Book-Entry Transfer Facility, the Letter of Transmittal (or a
facsimile thereof), properly completed and duly executed, with any required
signature guarantees, or an Agent's Message,
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<PAGE>
and any other required documents must, in any case, be transmitted to and
received by the Depositary at one of its addresses set forth on the back cover
of this Offer to Purchase on or prior to the Expiration Date, or the
guaranteed delivery procedures set forth below must be complied with.
If the Distribution Date occurs, to the extent that the Rights become
eligible for book-entry transfer under procedures established by the Book-
Entry Transfer Facility, the Depositary also will make a request to establish
an account with respect to the Rights at such Book-Entry Transfer Facility,
but no assurance can be given that book-entry delivery of Rights will be
available. If book-entry delivery of Rights is available, the foregoing book-
entry transfer procedures will also apply to Rights. Otherwise, if Rights
Certificates have been issued, a tendering shareholder will be required to
tender Rights by means of physical delivery to the Depositary of Rights
Certificates (in which event references in this Offer to Purchase to Book-
Entry Confirmations with respect to Rights will be inapplicable) or pursuant
to the guaranteed delivery procedure set forth below.
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 IN
ACCORDANCE WITH THE BOOK-ENTRY TRANSFER FACILITY'S PROCEDURES DOES NOT
CONSTITUTE DELIVERY TO THE DEPOSITARY.
Signature Guarantees. No signature guarantee is required on the Letter of
Transmittal (1) if the Letter of Transmittal is signed by the registered
holder(s) (which term, for purposes of this section, includes any participant
in the Book-Entry Transfer Facility's system whose name appears on a security
position listing as the owner of the Shares) of Shares tendered therewith and
such registered holder has not completed either the box entitled "Special
Delivery Instructions" or the box entitled "Special Payment Instructions" on
the Letter of Transmittal or (2) if such Shares are tendered for the account
of a financial institution (including most commercial banks, savings and loan
associations and brokerage houses) that is a participant in the Security
Transfer Agents Medallion Program, the New York Stock Exchange Medallion
Signature Guarantee Program or the Stock Exchange Medallion Program (each, an
"Eligible Institution" and, collectively, "Eligible Institutions"). In all
other cases, all signatures on Letters of Transmittal must be guaranteed by an
Eligible Institution. See Instructions 1 and 5 to the Letter of Transmittal.
If the Share Certificates or Rights Certificates are registered in the name of
a person other than the signer of the Letter of Transmittal, or if payment is
to be made, or Share Certificates not tendered or not accepted for payment are
to be returned, to a person other than the registered holder of the
certificates surrendered, then the tendered Share Certificates or Rights
Certificates must be endorsed or accompanied by appropriate stock powers, in
either case signed exactly as the name or names of the registered holders or
owners appear on the certificates, with the signatures on the certificates or
stock powers guaranteed as aforesaid. See Instructions 1 and 5 to the Letter
of Transmittal.
If the Share Certificates are forwarded separately to the Depositary, a
Letter of Transmittal (or a facsimile thereof), properly completed and duly
executed, together with any required signature guarantees, must accompany each
such delivery.
Guaranteed Delivery. If a stockholder desires to tender Shares and Rights
pursuant to the Offer and such stockholder's Share Certificates or, if
applicable, Rights Certificates, are not immediately available (including if
the Distribution Date has occurred but Rights Certificates have not yet been
distributed) or the procedures for book-entry transfer cannot be completed on
a timely basis or time will not permit all required documents to reach the
Depositary prior to the Expiration Date, such stockholder's tender may be
effected if all the following conditions are met:
(1) such tender is made by or through an Eligible Institution;
(2) a properly completed and duly executed Notice of Guarantee Delivery,
substantially in the form provided by the Purchaser, is received by the
Depositary, as provided below, prior to the Expiration Date; and
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(3) within (a) in the case of Shares, three NYSE trading days after the
date of execution of such Notice of Guaranteed Delivery or (b) in the case
of Rights, a period ending on the later of (x) three NYSE trading days
after the date of execution of such Notice of Guaranteed Delivery and (y)
three business days after the date Rights Certificates are distributed to
shareholders, (i) Share Certificates representing tendered Shares and,
prior to the Distribution Date, Rights, are received by the Depositary at
one of its addresses set forth on the back cover of this Offer to Purchase,
or such Shares and Rights are tendered pursuant to the book-entry transfer
procedures and a Book-Entry Confirmation is received by the Depositary,
(ii) the Letter of Transmittal (or a facsimile thereof), properly completed
and duly executed, together with any required signature guarantees, or an
Agent's Message in connection with a book-entry transfer of Shares, is
received by the Depositary at one of such addresses and (iii) any other
documents required by the Letter of Transmittal are received by the
Depositary at one of such addresses.
The Notice of Guaranteed Delivery may be delivered by hand to the Depositary
or transmitted by telegram, facsimile transmission or mailed to the Depositary
and must include a guarantee by an Eligible Institution in the form set forth
in such Notice of Guaranteed Delivery.
Notwithstanding any other provision hereof, payment for Shares accepted for
payment pursuant to the Offer will in all cases be made only after timely
receipt by the Depositary of (1) Share Certificates representing tendered
Shares and, prior to the Distribution Date, Rights, or a Book-Entry
Confirmation (unless the Purchaser elects, in its sole discretion, to make
payment for such Shares pending receipt of the Rights Certificates, or a Book-
Entry Confirmation, if available, with respect to such Rights), (2) a Letter
of Transmittal (or a facsimile thereof), properly completed and duly executed,
together with any required signature guarantees, or an Agent's Message in
connection with a book entry transfer of Shares and any other documents
required by the Letter of Transmittal. Accordingly, payment might not be made
to all tendering stockholders at the same time, and will depend upon when
Share Certificates (or Rights Certificates) representing, or Book-Entry
Confirmations of, such Shares (or Rights, if available) are received into the
Depositary's account at the Book-Entry Transfer Facility.
Backup U.S. Federal Income Tax Withholding. Under the U.S. federal income
tax laws, payments in connection with the Offer and the Proposed Merger may be
subject to "backup withholding" at a rate of 31% unless a stockholder that
holds Shares (1) provides a correct taxpayer identification number (which, for
an individual stockholder, is the stockholder's social security number) and
any other required information, or (2) is a corporation or comes within
certain other exempt categories and, when required, demonstrates this fact,
and otherwise complies with applicable requirements of the backup withholding
rules. A stockholder that does not provide a correct taxpayer identification
number may also be subject to penalties imposed by the Internal Revenue
Service. To prevent backup U.S. federal income tax withholding on payments
with respect to the purchase price of Shares purchased pursuant to the Offer
or converted into cash in the Proposed Merger, as the case may be, each
stockholder should provide the Depositary with his or her correct taxpayer
identification number by completing the Substitute Internal Revenue Service
Form W-9 included in the Letter of Transmittal. Non-corporate foreign
stockholders should complete and sign an Internal Revenue Service Form W-8,
Certificate of Foreign Status, a copy of which may be obtained from the
Depositary, in order to avoid backup withholding. See Instruction 9 of the
Letter of Transmittal.
Determination of Validity. All questions as to the form of documents and
validity, eligibility (including time of receipt) and acceptance for payment
of any tender of Shares will be determined by the Purchaser, in its sole
discretion, whose determination will be final and binding on all parties. The
Purchaser reserves the absolute right to reject any or all tenders determined
by it not to be in proper form or the acceptance of or payment for which may,
in the opinion of the Purchaser's counsel, be unlawful. The Purchaser also
reserves the absolute right to waive any defect or irregularity in any tender
of Shares of any particular stockholder whether or not similar defects or
irregularities are waived in the case of other stockholders without any effect
on the rights of such other stockholders.
The Purchaser's interpretation of the terms and conditions of the Offer
(including the Letter of Transmittal and the instructions thereto) will be
final and binding. No tender of Shares will be deemed to have been validly
27
<PAGE>
made until all defects and irregularities with respect to such tender have
been cured or waived. None of the Purchaser, Court Square or any of their
affiliates or assigns, if any, the Depositary, the Information Agent or any
other person will be under any duty to give any notification of any defects or
irregularities in tenders or incur any liability for failure to give any such
notification.
Other Requirements. The Purchaser's acceptance for payment of Shares
tendered pursuant to any of the procedures described above will constitute a
binding agreement between the tendering stockholder and the Purchaser upon the
terms and subject to the conditions of the Offer.
4. WITHDRAWAL RIGHTS.
Except as otherwise provided in this section, tenders of Shares and, if
applicable, Rights, made pursuant to the Offer are irrevocable. Shares and
Rights tendered pursuant to the Offer may be withdrawn at any time on or prior
to the Expiration Date and, unless theretofore accepted for payment as
provided herein, may also be withdrawn at any time after March 3, 2001 (or
such later date as may apply in case the Offer is extended). A withdrawal of a
Share will also constitute a withdrawal of the related Right. Rights may not
be withdrawn unless the related Shares are also withdrawn.
To be effective, 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. Any such notice of withdrawal must specify the name of the person
who tendered the Shares or Rights to be withdrawn, the number of Shares or
Rights to be withdrawn and the name of the registered holder of the Shares or
Rights to be withdrawn, if different from the name of the person who tendered
the Shares or Rights. If Share Certificates or Rights Certificates evidencing
Shares or Rights to be withdrawn have been delivered or otherwise identified
to the Depositary, then, prior to the physical release of such certificates,
the serial numbers shown on such certificates must be submitted to the
Depositary and, unless such Shares have been tendered by an Eligible
Institution, the signatures on the notice of withdrawal must be guaranteed by
an Eligible Institution. If Shares or Rights have been delivered pursuant to
the book-entry transfer procedures as set forth in "--Procedures for Accepting
the Offer and Tendering Shares and Rights," 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 or Rights and otherwise comply with
the Book-Entry Transfer Facility's procedures.
Withdrawals of Shares or Rights may not be rescinded. Any Shares or Rights
properly withdrawn will be deemed not validly tendered for purposes of the
Offer, but may be retendered at any subsequent time prior to the Expiration
Date by following any of the procedures described in "--Procedures for
Accepting the Offer and Tendering Shares and Rights."
All questions as to the form and validity (including time of receipt) of
notices of withdrawal will be determined by the Purchaser, in its sole
discretion, whose determination will be final and binding. None of the
Purchaser, Court Square or any of their affiliates or assigns, if any, the
Depositary, the Information Agent or any other person will be under any duty
to give any notification of any defects or irregularities in any notice of
withdrawal or incur any liability for failure to give any such notification.
If the Purchaser provides a Subsequent Offering Period following the Offer,
no withdrawal rights will apply to Shares tendered during such Subsequent
Offering Period or to Shares tendered in the Offer and accepted for payment.
5. CERTAIN INFORMATION CONCERNING THE COMPANY.
The information concerning the Company contained in this Offer to Purchase
has been taken from or based upon publicly available documents and records on
file with the Commission and other public sources and is qualified in its
entirety by reference thereto. None of Court Square, the Purchaser, the
Information Agent or the Depositary can take responsibility for the accuracy
or completeness of the information contained in such
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<PAGE>
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 any such
information but which are unknown to Court Square, the Purchaser, the
Information Agent or the Depositary.
According to its Annual Report of Form 10-K for the year ended December 31,
1999 (the "Company 10-K"), the Company was incorporated in the State of
Delaware in 1990. The Company became publicly held in 1994. The principal
executive offices of the Company are located at 14212 County Road M-50,
Montpelier, Ohio 43543 and its telephone number is (419) 485-3193. According
to the Company 10-K, the Company, through its wholly owned subsidiaries Chase
Brass & Copper Company, Inc., and Leavitt Tube Company, Inc., is a
manufacturer of free-machining and forging brass rod and structural and
mechanical steel tubing and structural pipe with four manufacturing facilities
in three states.
The Company is subject to the informational filing requirements of the
Exchange Act and, in accordance therewith, is required to file periodic
reports, proxy statements and other information with the Commission relating
to its business, financial condition and other matters. Such reports, proxy
statements and other information can be inspected and copied at the public
reference facilities maintained by the Commission at 450 Fifth Street, N.W.,
Room 1024, Washington, D.C. 20549, and at the Commission's regional offices
located at Seven World Trade Center, Suite 1300, New York, New York 10048 and
Citicorp Center, 500 West Madison Street, Suite 1400, Chicago, Illinois 60661.
Information regarding the public reference facilities may be obtained from the
Commission by telephoning 1-800-SEC-0330. The Company's filings are also
available to the public on the Commission's Internet site
(http://www.sec.gov). Copies of such materials also may be obtained by mail
from the Public Reference Section of the Commission at 450 Fifth Street, N.W.,
Washington, D.C. 20549 at prescribed rates. Copies of many of the items filed
with the Commission and other information concerning the Company are available
for inspection at the offices of the New York Stock Exchange, Inc. located at
20 Broad Street, New York, New York 10005.
6. PRICE RANGE OF THE SHARES.
According to the Company 10-K, the Voting Shares are listed and traded
principally on the NYSE under the symbol "CSI." The following table sets
forth, for the periods indicated, the reported high and low sales prices for
the Voting Shares on the NYSE, as reported in the Company 10-K for the years
ending December 31, 1998 and December 31, 1999 and as reported by Yahoo!
Finance web page for the year ending December 31, 2000. All per Share figures
are adjusted to give effect to a three-for-two stock split effective June 6,
1998.
<TABLE>
<CAPTION>
High Low
-------- --------
<S> <C> <C>
Year Ending December 31, 1998
First Quarter........................................ $ 21.875 $14.5625
Second Quarter....................................... 21.875 19.6875
Third Quarter........................................ 19.875 11.50
Fourth Quarter....................................... 13.875 10.25
Year Ending December 31, 1999
First Quarter........................................ 11.0625 7.625
Second Quarter....................................... 9.5625 7.375
Third Quarter........................................ 9.25 8.25
Fourth Quarter....................................... 9.125 7.875
Year Ending December 31, 2000
First Quarter........................................ 10.3125 7.75
Second Quarter....................................... 9.75 8.25
Third Quarter........................................ 10.8125 8.125
Fourth Quarter (through December 15, 2000)........... 8.50 6.375
</TABLE>
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<PAGE>
On December 15, 2000, the last full trading day prior to the announcement of
the intention to commence the Offer, the reported 4:00 p.m. closing price on
the NYSE for the Voting Shares was $7.125 per Share. Stockholders are urged to
obtain a current market quotation for the Voting Shares.
The Purchaser believes, based upon publicly available information, that as
of the date of this Offer to Purchase, the Rights are listed on the NYSE, are
attached to the Voting Shares and are not traded separately. As a result, the
sale prices per Share set forth above are also the high and low sale prices
per Share and related Right during such periods. Upon the occurrence of the
Distribution Date, the Rights are to detach and may trade separately from the
Shares. See "--Certain Conditions to the Offer." If the Distribution Date
occurs and the Rights begin to trade separately from the Shares, shareholders
are also urged to obtain a current market quotation for the Rights.
7. CERTAIN INFORMATION CONCERNING COURT SQUARE AND THE PURCHASER.
The Purchaser was organized in December 2000 under the laws of the State of
Delaware for the purpose of engaging in a business combination with the
Company. The Purchaser is a subsidiary of Court Square. The Purchaser has not,
and is not expected to, engage in any business other than in connection with
its organization, the Offer and the Proposed Merger. Its principal executive
offices are located at 1209 Orange Street, Wilmington, Delaware 19801 and its
telephone number is (561) 231-7490.
Court Square was organized in 1972 under the laws of the State of Delaware.
Court Square is an indirect wholly-owned subsidiary of Citigroup that is
principally engaged in the business of investing in leveraged acquisitions.
Its principal executive offices are located at 399 Park Avenue, 14th Floor,
New York, New York 10043 and its telephone number is (212) 559-1127.
Neither the Purchaser nor Court Square is subject to the informational
filing requirements of the Exchange Act and, consequently, neither is required
to file periodic reports, proxy statements and other information with the
Commission relating to its business, financial condition and other matters.
The name, business address and telephone number, citizenship, present
principal occupation and employment history of each of the directors and
executive officers of Court Square, the Purchaser and Citigroup are set forth
in Schedule I of this Offer to Purchase. During the last five years, to the
best knowledge of the Purchaser and Court Square, none of the persons listed
on 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 any judicial or administrative proceeding (except for matters that
were dismissed without sanction or settlement) that resulted in a judgment,
decree or final order enjoining the person from future violations of, or
prohibiting activities subject to, federal or state securities laws, or a
finding of violations of such laws.
8. SOURCE AND AMOUNT OF FUNDS.
The total amount of funds required for the Purchaser to purchase up to an
aggregate of 2,300,000 Shares, to purchase the remaining outstanding Shares
(other than the Shares owned by the Purchaser) through the Proposed Merger,
and to pay fees and expenses related thereto is estimated to be approximately
$105,000,000. The Purchaser plans to obtain all funds needed for the Offer and
Proposed Merger through borrowings under two credit facilities with one or
more commercial banks in respect of which Chase has obtained two commitment
letters from PNC Bank, National Association (the "PNC Commitment Letters")
providing for a $30,000,000 senior secured tender offer credit facility (the
"Tender Facility") and a $120,000,000 aggregate senior secured credit facility
comprised of two revolving credit facilities, two term loans and an equipment
line (the "Merger Facilities" and, together with the Tender Facility, the
"Credit Facilities"). The PNC Commitment Letters indicate the bank's
willingness to provide funding on customary terms and conditions. The Offer
will be financed in part pursuant to the Tender Facility, with the Proposed
Merger being financed in part pursuant to the Merger Facilities, under which
the Surviving Corporation will be the Borrower. As used herein, "Borrower"
refers to the Purchaser under the Tender Facility and the Company, as the
Surviving Corporation in the Proposed Merger,
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<PAGE>
under the Merger Facilities. Proceeds of the Tender Facility may be used to
finance the purchase of up to an aggregate of 2,300,000 Shares, to pay up to
six months interest on the Tender Facility and to pay fees and expenses of the
Offer. Proceeds of the Merger Facilities may be used (i) to refinance the
borrowings of the Purchaser under the Tender Facility, (ii) to finance the
payment of the consideration payable in the Proposed Merger to holders of the
capital stock of the Company, (iii) to refinance existing indebtedness of the
Company, and (iv) to pay the fees and expenses of the Offer and the Proposed
Merger. In addition, the proceeds under the revolving credit portion of the
Merger Facilities may be used for working capital and general corporate
purposes. Any debt incurred to fund the purchase of the Shares in the Offer is
expected to be repaid upon the earlier of (i) nine months from the date on
which the Offer was made, (ii) six months after the first draw under the
Tender Facility, or (iii) the date on which the Proposed Merger is effective.
Based upon the commitment letters and related term sheets, the Credit
Facilities will contain restrictive covenants that limit the Borrower with
respect to, among other things, creating liens upon its assets and disposing
of material amounts of assets other than in the ordinary course of business.
The Borrower will also be required to meet certain financial tests under the
Credit Facilities. Obligations under the Tender Facility will be secured by a
perfected first priority security interest in all securities of the Company
owned by the Purchaser, whether acquired in the Offer or otherwise. The Merger
Facilities will be guaranteed by each existing and subsequently acquired or
organized domestic subsidiary and 65% of each foreign subsidiary of the
Borrower (the "Guarantors") and secured by substantially all present and
future assets of the Borrower and the Guarantors, other than the assets of the
foreign subsidiaries of the Borrower.
The Purchaser may terminate or amend the Offer and may postpone the
acceptance for payment of and payment for the Shares or the shares to be
purchased pursuant to the Proposed Merger if the Purchaser does not receive
sufficient financing, on terms at least as favorable to the Purchaser as are
contained in the PNC Commitment Letters, to pay the aggregate consideration
payable in connection with the Offer, and not satisfied that it will have
funding available following the Offer sufficient to fund the Proposed Merger
and the ongoing working capital needs of the Borrower (it being agreed that
the Purchaser will use reasonable commercial efforts to consummate the
financing pursuant to the PNC Commitment Letters, subject to satisfactory
documentation in the Purchaser's reasonable discretion).
9. EFFECT OF THE OFFER ON THE MARKET FOR THE SHARES; NEW YORK STOCK EXCHANGE
LISTING; EXCHANGE ACT REGISTRATION; MARGIN REGULATIONS.
NYSE Listing. The purchase of Shares pursuant to the Offer will reduce the
number of Shares that might otherwise trade publicly and could reduce the
number of holders of Shares, which could adversely affect the liquidity and
market value of the remaining Shares held by the public. According to the
NYSE's published guidelines, the NYSE would consider delisting the Voting
Shares if, among other things, (1) the total number of holders of Voting
Shares fell below 400, (2) the total number of holders of Voting Shares fell
below 1,200 and the average monthly trading volume over the most recent 12
months was less than 100,000 Shares, (3) the number of publicly held Voting
Shares (exclusive of holdings of officers, directors and their families and
other concentrated holdings of 10% or more ("NYSE Excluded Holdings")) fell
below 600,000, (4) the Company's total global market capitalization is less
than $50.0 million and total stockholders' equity were less than $50.0
million, (5) the Company's average global market capitalization over a
consecutive 30-trading-day period were less than $15.0 million or (6) the
average closing price per Share were less than $1.00 over a consecutive 30-
trading-day period. If, as a result of the purchase of Shares pursuant to the
Offer or otherwise, the Voting Shares no longer meet the requirements of the
NYSE for continued listing and the listing of the Voting Shares is
discontinued, the market for the Shares could be adversely affected. If the
NYSE were to delist the Voting Shares, it is possible that the Voting Shares
would continue to trade on another securities exchange or in the over-the-
counter market and that price or other quotations would be reported by such
exchange or through the Nasdaq Stock Market or other sources. The extent of
the public market therefor and the availability of such quotations would
depend, however, upon such factors as the number of stockholders and/or the
aggregate market value of such securities remaining at such time, the interest
in maintaining a market in the Shares on the part of securities
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<PAGE>
firms, the possible termination of registration under the Exchange Act as
described below and other factors. The Purchaser cannot predict whether the
reduction in the number of Shares that might otherwise trade publicly would
have an adverse or beneficial effect on the market price for or marketability
of the Shares or whether it would cause future market prices to be greater or
less than the Offer Price.
Margin Regulations. The Shares are currently "margin securities" under the
regulations of the Board of Governors of the Federal Reserve System (the
"Federal Reserve Board"), which has the effect, among other things, of
allowing brokers to extend credit on the collateral of the Shares. Depending
upon factors similar to those described above regarding listing and market
quotations, following the Offer, it is possible that the Shares might no
longer constitute "margin securities" for purposes of the margin regulations
of the Federal Reserve Board, in which event the Shares could no longer be
used as collateral for loans made by brokers.
Exchange Act Registration. The Voting Shares are currently registered under
the Exchange Act. Such registration may be terminated upon application of the
Company to the Commission if the Voting 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 Shares. The termination of registration of the
Voting Shares under the Exchange Act would substantially reduce the
information required to be furnished by the Company to holders of Voting
Shares and to the Commission 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 to furnish a proxy statement in connection
with stockholders' meetings pursuant to Section 14(a) 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 "SPECIAL
FACTORS--Purposes of the Offer and the Proposed Merger; Plans for the
Company." In addition, "affiliates" of the Company and persons holding
"restricted securities" of the Company may be deprived of the ability to
dispose of such securities pursuant to Rule 144 promulgated under the
Securities Act of 1933, as amended. If registration of the Voting Shares under
the Exchange Act were terminated, the Shares would no longer be "margin
securities" or be eligible for listing on the NYSE.
Rights. As soon as practicable after the Distribution Date has been
designated, Rights Certificates are to be sent to all holders of Rights. If
the Distribution Date has occurred and the Rights separate from the Shares,
the foregoing discussion with respect to the effect of the Offer on the market
for the Shares, NYSE listing and Exchange Act registration would apply to the
Rights in a similar manner.
Other Possible Purchases of Shares. Whether or not the Offer is successfully
completed, the Purchaser may acquire additional Shares in the open market or
in privately negotiated transactions. Such open market or privately negotiated
purchases would be made at market prices or privately negotiated prices at the
time of purchase, which may be higher or lower than the Offer Price. The
purchase of Shares by the Purchaser pursuant to any open market or privately
negotiated purchases would reduce the number of Shares that might otherwise
trade publicly and may reduce the number of holders of Shares. This could
adversely affect the liquidity and market value of the remaining Shares held
by the public. Depending upon the aggregate market value and the number of
Shares not purchased pursuant to the Offer or any subsequent open market or
privately negotiated purchases, as well as the number of Public Stockholders
who are not affiliated with the Purchaser or Court Square, the Voting Shares
may no longer meet the quantitative requirements for continued listing on the
NYSE. Moreover, the purchase of Shares pursuant to open market or privately
negotiated purchases following consummation of the Offer may result in the
Voting Shares becoming eligible for deregistration under the Exchange Act.
10. DIVIDENDS AND DISTRIBUTIONS.
If, on or after December 15, 2000, the Company (1) splits, combines or
otherwise changes the Shares or its capitalization, (2) acquires Shares or
otherwise causes a reduction in the number of Shares, (3) issues or sells
additional Shares, or any shares of any other class of capital stock, other
voting securities or any securities convertible into or exchangeable for, or
rights, warrants or options, conditional or otherwise, to acquire, any of the
foregoing, or (4) discloses that it has taken such action, then, without
prejudice to the Purchaser's rights
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described in "--Certain Conditions to the Offer," the Purchaser, in its sole
discretion, may make such adjustments in the Offer Price and other terms of
the Offer and the Proposed Merger as it deems appropriate to reflect such
split, combination or other change including, without limitation, the number
or type of securities offered to be purchased.
If, on or after December 15, 2000, the Company declares or pays any cash
dividend on the Shares or other distribution on the Shares, or issues with
respect to the Shares any additional Shares, shares of any other class of
capital stock, other than voting securities or any securities convertible
into, or rights, warrants or options, conditional or otherwise, to acquire,
any of the foregoing, payable or distributable to stockholders of record on a
date prior to the transfer of the Shares purchased pursuant to the Offer to
the Purchaser or its nominee or transferee on the Company's stock transfer
records, then, subject to the provisions contained in "--Certain Conditions to
the Offer," (1) the Offer Price may, in the sole discretion of the Purchaser,
be reduced by the amount of any such cash dividends or cash distributions and
(2) the whole of any such noncash dividend, distribution or issuance to be
received by the tendering stockholders will (a) be received and held by the
tendering stockholders for the account of the Purchaser and will be required
to be promptly remitted and transferred by each tendering stockholder to the
Depositary for the account of the Purchaser, accompanied by appropriate
documentation of transfer, or (b) at the direction of the Purchaser, be
exercised for the benefit of the Purchaser, in which case the proceeds of such
exercise will promptly be remitted to the Purchaser. Pending such remittance
and subject to applicable law, the Purchaser will be entitled to all rights
and privileges as owner of any such noncash dividend, distribution, issuance
or proceeds and may withhold the entire Offer Price or deduct from the Offer
Price the amount or value thereof, as determined by the Purchaser in its sole
discretion.
11. CERTAIN CONDITIONS TO THE OFFER.
Rights Condition. Consummation of the Offer is conditioned upon the Rights
having been redeemed by the Company Board, or the Purchaser being satisfied,
in its sole discretion, that the Rights have been invalidated or are otherwise
inapplicable to the Offer and the Proposed Merger.
The following is a summary of the material terms of the Rights Agreement. To
the knowledge of the Purchaser, the Rights Agreement has yet to be executed by
the Company and the Rights Agent. This summary was derived from the Company's
press release issued on December 27, 2000 and a draft of the Rights Agreement
provided to the Purchaser by counsel to the Company. Therefore, the
description included herein and the Rights Condition may be modified based
upon the Purchaser's review of the executed Rights Agreement. The Company's
press release and draft Rights Agreement describe the Rights substantially as
follows:
On December 26, 1999, the Company Board declared a dividend distribution of
one Right for each outstanding Share to stockholders of record at the close of
business on January 5, 2001 (the "Record Date"). The Rights are not
exercisable until the Distribution Date. The Rights will expire at the
earliest of (1) the close of business on December 26, 2010, and (2) redemption
or exchange by the Company as described below. Each Right, when it becomes
exercisable, will entitle the registered holder to purchase from the Company
one one-thousandth of a share of Series A Junior Participating Preferred
Stock, $0.01 par value (the "Preferred Shares"), at a price of $30 (the
"Purchase Price"), subject to adjustment.
Initially, the Rights will be attached to all Share Certificates then
outstanding, and no separate Rights Certificates will be distributed. Until
the earlier to occur of (1) 10 business days following a public announcement
that a person or group of affiliated or associated persons (other than the
Company, any Company subsidiary, any Company or Company subsidiary employee
benefit plan, or certain existing holders (including CVC) and their affiliates
who do not increase their existing group ownership above the level on the
adoption date of the Rights Agreement) (an "Acquiring Person"), acquired, or
obtained the right to acquire, beneficial ownership of 20% or more of the
outstanding Voting Shares and (2) 10 business days (or such later date as may
be determined by action of the Company Board) following the commencement of,
or the announcement (after the adoption date of the Rights Agreement) of an
intention to commence, a tender offer or exchange offer the consummation of
which would result in the beneficial ownership by a person or group of
affiliated or associated persons (other
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than the Company, any Company subsidiary or any Company or Company subsidiary
employer benefit plan) of 20% or more of the outstanding Voting Shares, the
Rights will be evidenced, with respect to any of the Share Certificates
outstanding as of the Record Date, by such Share Certificate. The earlier of
the dates described in clauses (1) and (2) above is referred to as the
"Distribution Date."
The Rights Agreement provides that, until the Distribution Date, the Rights
will be transferred with and only with the Shares. As soon as practicable
following the Distribution Date, Rights Certificates will be mailed to holders
of record of the Shares as of the close of business on the Distribution Date
and such separate Rights Certificates alone will evidence the Rights. Until a
Right is exercised, the holder thereof, as such, will have no rights as a
stockholder of the Company, including, without limitation, the right to vote
or to receive dividends.
In the event that any person becomes an Acquiring Person, each holder of a
Right (except as provided below) will thereafter have the right to receive
upon exercise that number of Shares having a market value of two times the
exercise price of the Right. In the event that, at any time following the
Distribution Date, the Company is acquired in a merger or other business
combination transaction, or more than 50% of its assets or earning power is
sold, each holder of a Right (except as provided below) will thereafter have
the right to receive, upon the exercise at the then-current exercise price of
the Right, that number of shares of common stock of the acquiring or surviving
company having a market value of two times the exercise price of the Right.
Following the occurrence of any of the events described in the preceding
paragraph, any Rights that are or (under certain circumstances specified in
the Rights Agreement) were beneficially owned by any Acquiring Person shall
immediately become null and void.
The Purchase Price payable, and the number of Preferred Shares or other
securities or property issuable, upon exercise of the Rights are subject to
adjustment from time to time to prevent dilution.
At any time prior to the existence of an Acquiring Person, the Company may
redeem the Rights in whole, but not in part, at a price of $0.0001 per Right.
Immediately upon the action of the Company Board ordering the redemption of
the Rights (or at such time and date thereafter as the Company Board may
specify), the right to exercise the Rights will terminate and the only right
of the holders of Rights will be to receive the redemption price.
At any time after a person becomes an Acquiring Person and prior to the
acquisition by such Acquiring Person of beneficial ownership of 50% or more of
the outstanding Voting Shares, the Company may exchange the Rights (other than
Rights beneficially owned by such Acquiring Person that became null and void),
in whole or in part, for Company Common Stock at the rate of one Share per
Right, subject to adjustment.
The provisions of the Rights Agreement may be amended without the approval
of any holders of Shares or holders of Rights in order to cure any ambiguity,
defect or inconsistency, to make changes which the Company may deem necessary
or desirable, including without limitation extending the expiration date;
provided, however, that no amendment to adjust the time period governing
redemption may be made at such time as the Rights are not redeemable. After
the first announcement of the existence of an Acquiring Person, any amendment
shall not materially and adversely effect the interests of Rights holders.
The Purchaser believes that if the Rights Condition is satisfied, the Rights
Agreement will not be an impediment to consummating either the Offer or the
Proposed Merger.
Financing Condition. Consummation of the Offer is conditioned upon (1) the
Purchaser having received funding for the Offer sufficient to pay for all
Shares tendered pursuant to the Offer and not validly withdrawn, for an
interest reserve of six months on the amount borrowed to fund the Offer, and
to pay all fees and expenses related to the Offer and otherwise on the terms
and subject to the conditions set forth in the PNC Commitment
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Letters and (2) loan documents relating to the funding facilities being fully
executed and delivered and being in full force and effect and all conditions
to funding under the PNC Commitment Letters or the loan documents that are
required to be, or are capable of being, satisfied prior to the purchase of
shares pursuant to the Offer having been satisfied and there being no reason
to believe that any of the other conditions to funding under the Merger
Facilities for the Proposed Merger will not be satisfied prior to the
termination of the Merger Facilities. See "--Source and Amount of Funds."
The Purchaser may terminate or amend the Offer and may postpone the
acceptance for payment of and payment for the Shares or the Shares to be
purchased pursuant to the Proposed Merger if the Purchaser does not receive
sufficient financing, on terms at least as favorable to the Purchaser as are
contained in the PNC Commitment Letters, to pay the aggregate consideration
payable in connection with the Offer, and is not satisfied that it will have
funding available following the Offer sufficient to fund the Proposed Merger
and the ongoing working capital needs of the Borrower (it being agreed that
the Purchaser will use reasonable commercial efforts to consummate the
financing pursuant to the PNC Commitment Letters, subject to satisfactory
documentation in the Purchaser's reasonable discretion).
Business Combination Condition. The Delaware Antitakeover Statute limits for
a period of three years specified business combinations with holders of 15% of
the Shares. The Purchaser believes that, following consummation of the Offer,
it may be subject to the restrictions of the Delaware Antitakeover Statute.
Section 203 of the DGCL generally establish a three-year period beginning on
the date a person becomes an "Interested Stockholder" of a corporation that is
incorporated in Delaware during which certain business transactions involving
the Interested Stockholder are prohibited unless:
(1) prior to the acquisition of the interest that caused such person to
become an Interested Stockholder, the board of directors of the corporation
approves the acquisition of such interest or the proposed business
combination;
(2) upon consummation of the acquisition that caused such person to
become an Interested Stockholder, the Interested Stockholder owned at least
85% of the outstanding voting stock of the corporation not owned by
directors who are also officers or employee share plans that do not allow
individual employees to decide confidentially whether to tender their
shares into tender or exchange offers; or
(3) at the time of or after the acquisition that caused such person to
become an Interested Stockholder, the combination is approved by the board
of directors and two-thirds of the outstanding voting stock of the
corporation not owned by the Interested Stockholder at an annual or special
meeting and not by written consent.
For purposes of the Delaware Antitakeover Statute, the term "Business
Combination" means:
(1) any merger or consolidation of the corporation or any direct or
indirect majority-owned subsidiary of the corporation with (a) the
Interested Stockholder, or (b) with any other corporation, partnership,
unincorporated association or other entity if the merger or consolidation
is caused by the Interested Stockholder and as a result of such merger or
consolidation the Delaware Antitakeover Statute is not applicable to the
surviving entity;
(2) any sale, lease, exchange, mortgage, pledge, transfer or other
disposition (in 1 transaction or a series of transactions), except
proportionately as a stockholder of such corporation, to or with the
Interested Stockholder, whether as part of a dissolution or otherwise, of
assets of the corporation or of any direct or indirect majority-owned
subsidiary of the corporation which assets have an aggregate market value
equal to 10% or more of either the aggregate market value of all the assets
of the corporation determined on a consolidated basis or the aggregate
market value of all the outstanding stock of the corporation;
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(3) any transaction which results in the issuance or transfer by the
corporation or by any direct or indirect majority-owned subsidiary of the
corporation of any stock of the corporation or of such subsidiary to the
Interested Stockholder, except: (a) pursuant to the exercise, exchange or
conversion of securities exercisable for, exchangeable for or convertible
into stock of such corporation or any such subsidiary which securities were
outstanding prior to the time that the Interested Stockholder became such;
(b) pursuant to a merger under Section 251(g) of the DGCL; (c) pursuant to
a dividend or distribution paid or made, or the exercise, exchange or
conversion of securities exercisable for, exchangeable for or convertible
into stock of such corporation or any such subsidiary which security is
distributed, pro rata to all holders of a class or series of stock of such
corporation subsequent to the time the Interested Stockholder became such;
(d) pursuant to an exchange offer by the corporation to purchase stock made
on the same terms to all holders of said stock; or (e) any issuance or
transfer of stock by the corporation; provided however, that in no case
under subparagraphs (c)-(e) shall there be an increase in the Interested
Stockholder's proportionate share of the stock of any class or series of
the corporation or of the voting stock of the corporation;
(4) any transaction involving the corporation or any direct or indirect
majority-owned subsidiary of the corporation which has the effect, directly
or indirectly, of increasing the proportionate share of the stock of any
class or series, or securities convertible into the stock of any class or
series, of the corporation or of any such subsidiary which is owned by the
Interested Stockholder, except as a result of immaterial changes due to
fractional share adjustments or as a result of any purchase or redemption
of any shares of stock not caused, directly or indirectly, by the
Interested Stockholder; or
(5) any receipt by the Interested Stockholder of the benefit, directly or
indirectly (except proportionately as a stockholder of such corporation),
of any loans, advances, guarantees, pledges or other financial benefits
(other than those expressly permitted in paragraphs (1)-(4)) provided by or
through the corporation or any direct or indirect majority-owned
subsidiary.
The term "Interested Stockholder," subject to limited exceptions, means any
person (other than the corporation and any direct or indirect majority-owned
subsidiary of the corporation) that (a) is the owner of 15% or more of the
outstanding voting stock of the corporation or (b) is an affiliate or
associate of the corporation and was the owner of 15% or more of the
outstanding voting stock of the corporation at any time within the 3-year
period immediately prior to the date on which it is sought to be determined
whether such person is an Interested Stockholder; and the affiliates and
associates of such person.
A Delaware corporation may elect not to be covered by the Delaware
Antitakeover Statute in its original certificate of incorporation or through a
charter or by-law amendment approved by a majority of the corporation's
outstanding shares. Such stockholder action does not become effective for 12
months following its adoption and would not serve to exclude Interested
Stockholders at the time of the vote from the prohibitions in the statute. The
Purchaser believes that the Restated Certificate of Incorporation and the By-
Laws of the Company do not exclude the Company from the coverage of the
statute.
The Purchaser believes that, if the Business Combination Condition is
satisfied, the Delaware Antitakeover Statute will not be an impediment to
consummating the Proposed Merger.
HSR Condition. Under the HSR Act and the rules and regulations that have
been promulgated thereunder by the FTC, certain acquisition transactions may
not be consummated until certain information and documentary material have
been furnished for review by the Antitrust Division and the FTC and certain
waiting period requirements have been satisfied. The consummation of the Offer
is conditioned upon the expiration or termination of such waiting periods.
A Notification and Report Form with respect to the Offer, the contribution
of the Contributed Shares to the Purchaser and the conversion of the Non-
Voting Shares is expected to be filed under the HSR Act shortly, and the
waiting period with respect to the Offer, the contribution of the Contributed
Shares to the Purchaser and the
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conversion of the Non-Voting Shares under the HSR Act will expire at 11:59
p.m., New York City time, on the fifteenth calendar day after such filing.
Before such time, however, either the FTC or the Antitrust Division may extend
the waiting period by requesting additional information or material from the
Purchaser. If such request is made, the waiting period will expire at 11:59
p.m., New York City time, on the tenth calendar day after the Purchaser has
substantially complied with such request. Thereafter, the waiting period may
be extended only by court order or with the Purchaser's consent. The waiting
period will not be affected either by the failure of the Company (as opposed
to Court Square and the Purchaser) to file a Notification and Report form or
to comply with any request for additional information or materials issued by
the FTC or the Antitrust Division.
The Antitrust Division and the FTC frequently scrutinize the legality under
the antitrust laws of transactions such as the acquisition of Shares by the
Purchaser pursuant to the Offer and the Proposed Merger, the contribution of
the Contributed Shares to the Purchaser and the conversion of the Non-Voting
Shares. At any time before or after the purchase of Shares pursuant to the
Offer by the Purchaser, the contribution of Contributed Shares to the
Purchaser or the conversion of the Non-Voting Shares, the Antitrust Division
or the FTC could take such action under the antitrust laws as either deems
necessary or desirable in the public interest, including seeking (1) to enjoin
the purchase of Shares pursuant to the Offer, the contribution of the
Contributed Shares or the conversion of the Non-Voting Shares, (2) the
divestiture of the Shares (a) purchased pursuant to the Offer, (b) contributed
pursuant to the Contribution Agreement or (c) received upon conversion of the
Non-Voting Shares or (3) the divestiture of substantial assets of Court
Square, the Purchaser, the Company or their respective subsidiaries. Private
parties as well as state attorneys general may also bring legal actions under
the antitrust laws under certain circumstances. Based upon an examination of
information available to the Purchaser relating to the businesses in which
Court Square, the Purchaser, the Company and their respective subsidiaries are
engaged, the Purchaser believes that the Offer and the Proposed Merger will
not violate the antitrust laws. Nevertheless, there can be no assurance that a
challenge to the Offer or the Proposed Merger on antitrust grounds will not be
made or that, if such a challenge is made, the Purchaser will prevail.
Certain Other Conditions. Notwithstanding any other provisions of the Offer,
and in addition to (and not in limitation of) the Purchaser's rights to extend
and amend the Offer at any time, in its sole discretion, the Purchaser shall
not be required to accept for payment or, subject to any applicable rules and
regulations of the Commission, including Rule 14e-1(c) under the Exchange Act
(relating to the Purchaser's obligation to pay for or return tendered Shares
promptly after termination or withdrawal of the Offer), pay for, and may delay
the acceptance for payment of and accordingly the payment for, any tendered
Shares, and may terminate the Offer, if, in the sole judgment of the
Purchaser, (1) at or prior to the Expiration Date, any of the Rights
Condition, the Financing Condition, the Business Combination Condition or the
HSR Condition has not been satisfied, or (2) at any time on or after December
15, 2000 and before the time of payment for any such Shares (whether or not
any Shares have theretofore been accepted for payment pursuant to the Offer),
any of the following events shall occur or shall be determined by the
Purchaser to have occurred:
(a) any change (or any condition, event or development involving a
prospective change) shall have occurred or been threatened in the business,
properties, assets, liabilities, capitalization, stockholders' equity,
condition (financial or otherwise), operations, licenses, franchises,
permits, permit applications, results of operations or prospects of the
Company or any of its subsidiaries which, in the sole judgment of the
Purchaser, is or may be materially adverse, or the Purchaser shall have
become aware of any fact which, in the sole judgment of the Purchaser, has
or may have material adverse significance with respect to either the value
of the Company or any of its subsidiaries or the value of the Shares to the
Purchaser;
(b) there shall be threatened, instituted or pending any action or
proceeding by any government or governmental authority or agency, domestic
or foreign, or by any other person, domestic or foreign, (1)(A) challenging
or seeking to make illegal, to delay or otherwise directly or indirectly to
restrain or prohibit the making of the Offer, the acceptance for payment
of, or payment for, some or all the Shares by the Purchaser, Court Square
or any other affiliate of Court Square or the consummation by the
Purchaser, Court Square or any other affiliate of Court Square of the
Proposed Merger or other business combination with the Company, (B) seeking
to obtain damages in connection therewith or (C) otherwise directly or
indirectly relating to the
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transactions contemplated by the Offer, the Proposed Merger or any such
business combination, (2) seeking to prohibit the ownership or operation by
the Purchaser, Court Square or any other affiliate of Court Square of all
or any portion of the business or assets of the Company and its
subsidiaries or of the Purchaser, or to compel the Purchaser, Court Square
or any other affiliate of Court Square to dispose of or hold separately all
or any portion of the business or assets of the Purchaser or the Company or
any of its subsidiaries or seeking to impose any limitation on the ability
the Purchaser, Court Square or any other affiliate of Court Square to
conduct their respective businesses or own such assets, (3) seeking to
impose or confirm limitations on the ability of the Purchaser, Court Square
or any other affiliate of Court Square effectively to exercise full rights
of ownership of the Shares or Rights, including, without limitation, the
right to vote any Shares acquired by any such person on all matters
properly presented to the Company's stockholders, (4) seeking to require
divestiture by the Purchaser, Court Square or any other affiliate of Court
Square of any Shares, (5) seeking any material diminution in the benefits
expected to be derived by the Purchaser, Court Square or any other
affiliate of Court Square as a result of the transactions contemplated by
the Offer or the Proposed Merger or any other business combination with the
Company, (6) which otherwise, in the sole judgment of the Purchaser, might
materially adversely affect the Purchaser, Court Square or any other
affiliate of Court Square or the value of the Shares or (7) in the sole
judgment of the Purchaser, materially adversely affecting the business,
properties, assets, liabilities, capitalization, stockholders' equity,
condition (financial or otherwise), operations, licenses or franchises,
results of operations or prospects of the Company or any of its
subsidiaries, joint ventures or partnerships;
(c) there shall be any action taken or any statute, rule, regulation,
interpretation, judgment, order or injunction proposed, enacted, enforced,
promulgated, amended, issued or deemed applicable (1) to the Purchaser,
Court Square or any other affiliate of Court Square or (2) to the Offer or
the Proposed Merger or other business combination by the Purchaser, Court
Square or any other affiliate of Court Square with the Company, by any
court, government or governmental, administrative or regulatory authority
or agency, domestic or foreign, which, in the sole judgment of the
Purchaser, might directly or indirectly result in any of the consequences
referred to in clauses (1) through (7) of paragraph (b) above;
(d) there shall have occurred (1) any general suspension of trading in,
or limitation on prices for, securities on any national securities exchange
or in the over-the-counter market in the United States, for a period in
excess of three hours (excluding suspensions or limitations resulting
solely from physical damage or interference with any such exchange or
market not related to market conditions), (2) a declaration of a banking
moratorium or any suspension of payments in respect of banks by federal or
state authorities in the United States, (3) any limitation (whether or not
mandatory) by any governmental authority or agency on, or other event
which, in the sole judgment of the Purchaser, might materially adversely
affect the extension of credit by banks or other lending institutions, (4)
commencement of a war, armed hostilities or other national or international
calamity directly or indirectly involving the United States, (5) a material
change in United States dollar or any other currency exchange rates or a
suspension of, or limitation on, the markets therefor, (6) any change in
the general political, market, economic or financial conditions in the
United States or other jurisdictions in which the Company does business
that could, in the sole judgment of the Purchaser, have a material adverse
effect on the business, properties, assets, liabilities, capitalization,
stockholders' equity, condition (financial or otherwise), operations,
licenses or franchises, results of operations or prospects of the Company
or any of its subsidiaries, joint ventures or partnerships or the trading
in, or value of, the Shares, (7) any decline in either the Dow Jones
Industrial Average or the Standard & Poor's Index of 500 Industrial
Companies by an amount in excess of 15% measured from the close of business
on December 15, 2000 or (8) in the case of any of the foregoing existing on
December 15, 2000, a material acceleration or worsening thereof;
(e) the Company or any of its subsidiaries, joint ventures or
partnerships or other affiliates shall have (1) split, combined or
otherwise changed, or authorized or proposed the split, combination or
other change, of the Shares or its capitalization, (2) acquired or
otherwise caused a reduction in the number of, or authorized or proposed
the acquisition or other reduction in the number of, any presently
outstanding Shares or other securities or other equity interests, (3)
issued, distributed or sold, or authorized or proposed the
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issuance, distribution or sale of, additional Shares, other than Shares
issued or sold upon the exercise or conversion (in accordance with the
publicly disclosed terms thereof) of employee stock options outstanding on
December 31, 1999 or issued since that date in the ordinary course of
business consistent with past practice, shares of any other class of
capital stock or other equity interests, other voting securities, debt
securities or any securities convertible into, or rights, warrants or
options, conditional or otherwise, to acquire, any of the foregoing, (4)
declared, paid or proposed to declare or pay any cash dividend or other
distribution on any shares of capital stock of the Company, (5) altered or
proposed to alter any material term of any outstanding security or material
contract, permit or license, (6) incurred any debt otherwise than in the
ordinary course of business or any debt containing, in the sole judgment of
the Purchaser, burdensome covenants or security provisions, (7) authorized,
recommended, proposed or entered into an agreement with respect to any
merger, consolidation, recapitalization, liquidation, dissolution, business
combination, acquisition of assets, disposition of assets, release or
relinquishment of any material contractual or other right of the Company or
any of its subsidiaries or any comparable event not in the ordinary course
of business, (8) authorized, recommended, proposed or entered into, or
announced its intention to authorize, recommend, propose or enter into, any
agreement or arrangement with any person or group that, in the Purchaser's
sole opinion, could adversely affect either the value of the Company or any
of its subsidiaries, joint ventures or partnerships or the value of the
Shares to the Purchaser, (9) entered into any new employment, change in
control, severance, executive compensation or similar agreement,
arrangement or plan with or for one or more of its employees, consultants
or directors, or entered into or amended, or made grants or awards pursuant
to, any agreements, arrangements or plans so as to provide for increased
benefits to one or more employees, consultants or directors, whether or not
as a result of or in connection with the transactions contemplated by the
Offer or the Proposed Merger, (10) except as may be required by law, taken
any action to terminate or amend any employee benefit plan (as defined in
Section 3(3) of the Employee Retirement Income Security Act of 1974, as
amended) of the Company or any of its subsidiaries, or the Purchaser shall
have become aware of any such action which was not previously disclosed in
publicly available filings or (11) amended or authorized or proposed any
amendment to their respective certificates of incorporation or bylaws or
similar organizational documents, or the Purchaser shall become aware that
the Company or any of its subsidiaries shall have proposed or adopted any
such amendment which shall not have been previously disclosed;
(f) a tender or exchange offer for any Shares shall be made or publicly
proposed to be made by any other person (including the Company or any of
its subsidiaries or affiliates) or it shall be publicly disclosed or the
Purchaser shall otherwise learn that (1) any person, entity (including the
Company or any of its subsidiaries) or "group" (within the meaning of
Section 13(d)(3) of the Exchange Act) shall have acquired or proposed to
acquire beneficial ownership of more than 5% of any class or series of
capital stock of the Company (including the Shares), through the
acquisition of stock, the formation of a group or otherwise, or shall have
been granted any right, option or warrant, conditional or otherwise, to
acquire beneficial ownership of more than 5% of any class or series of
capital stock of the Company (including the Shares) other than acquisitions
for bona fide arbitrage purposes only and except as disclosed in a Schedule
13D or Schedule 13G on file with the Commission on the date of this Offer
to Purchase, (2) any such person, entity or group, which before the date of
this Offer to Purchase, had filed such a Schedule with the Commission has
acquired or proposes to acquire, through the acquisition of stock, the
formation of a group or otherwise, beneficial ownership of an additional 1%
or more of any class or series of capital stock of the Company (including
the Shares), or shall have been granted any right, option or warrant,
conditional or otherwise, to acquire beneficial ownership of an additional
1% or more of any class or series of capital stock of the Company
(including the Shares), (3) any person or group shall enter into a
definitive agreement or an agreement in principle or make a proposal with
respect to a tender offer or exchange offer or a merger, consolidation or
other business combination with or involving the Company, or (4) any person
shall file a Notification and Report Form under the HSR Act, or make a
public announcement reflecting an intent to acquire the Company or any
assets or securities of the Company;
(g) the Purchaser shall have reached an agreement or understanding with
the Company providing for termination of the Offer, or the Purchaser or any
of its affiliates shall have entered into a definitive
39
<PAGE>
agreement or announced an agreement in principle with the Company providing
for a merger or other business combination with the Company or the purchase
of stock or assets of the Company which does not contemplate the Offer;
(h) (1) any material contractual right of the Company or any of its
subsidiaries or affiliates shall be impaired or otherwise adversely
affected or any material amount of indebtedness of the Company or any of
its subsidiaries, joint ventures or partnerships shall become accelerated
or otherwise become due before its stated due date, in either case, with or
without notice or the lapse of time or both, as a result of the
transactions contemplated by the Offer or the Proposed Merger or (2) any
covenant, term or condition in any of the Company's or any of its
subsidiaries', joint ventures' or partnerships' instruments or agreements,
in the sole judgment of the Purchaser, may have a material adverse effect
on (A) the business, properties, assets, liabilities, capitalization,
stockholders' equity, condition (financial or otherwise), operations,
licenses or franchises, results of operations or prospects of the Company
or any of its subsidiaries, joint ventures or partnerships or (B) the value
of the Shares in the hands of the Purchaser (including, but not limited to,
any event of default that may ensue as a result of the consummation of the
Offer or the Proposed Merger or the acquisition by Court Square of control
of the Company); or
(i) any other approval, permit, authorization, consent or other action or
non-action of any domestic, foreign or supranational governmental,
administrative or regulatory agency, authority, tribunal or third party
which is necessary to consummate the Offer shall not have been obtained on
terms satisfactory to the Purchaser, in its sole discretion;
which, in the sole judgment of the Purchaser in any such case, and regardless
of the circumstances (including any action or inaction by the Purchaser or any
of its affiliates) giving rise to any such condition, makes it inadvisable to
proceed with the Offer and/or with such acceptance for payment or payment.
The foregoing conditions are for the sole benefit of the Purchaser and may
be asserted by the Purchaser, in its sole discretion, regardless of the
circumstances (including any action or omission by the Purchaser) giving rise
to any such conditions or may be waived by the Purchaser, in its sole
discretion, in whole or in part, at any time and from time to time. The
failure by the Purchaser at any time to exercise any of the foregoing rights
shall not be deemed a waiver of any such right and each such right shall be
deemed an ongoing right which may be asserted at any time and from time to
time. Any determination by the Purchaser concerning any condition or event
described in this section shall be final and binding upon all parties.
12. CERTAIN LEGAL MATTERS; REQUIRED REGULATORY APPROVALS.
General. Except as set forth in this Offer to Purchase, based on its review
of publicly available filings by the Company with the Commission and other
publicly available information regarding the Company, the Purchaser is not
aware of any licenses or regulatory permits that would be material to the
business of the Company and its subsidiaries, taken as a whole, and that might
be adversely affected by the Purchaser's acquisition of Shares (and the
indirect acquisition of the stock of the Company's subsidiaries) as
contemplated herein, or, except to the extent required by any foreign
regulatory authorities, any filings, approvals or other actions by or with any
domestic, foreign or supranational governmental authority or administrative or
regulatory agency that would be required prior to the acquisition of Shares
(or the indirect acquisition of the stock of the Company's subsidiaries) by
the Purchaser pursuant to the Offer as contemplated herein. Should any such
approval or other action be required, there can be no assurance that any such
additional approval or action, if needed, would be obtained without
substantial conditions or that adverse consequences might not result to the
Company's business, or that certain parts of the Company's business might not
have to be disposed of or held separate or other substantial conditions
complied with in order to obtain such approval or action or in the event that
such approvals were not obtained or such actions were not taken. The
Purchaser's obligation to purchase and pay for Shares is subject to certain
conditions which may be applicable under such circumstances. See the
"INTRODUCTION" and "--Certain Conditions to the Offer."
40
<PAGE>
Other State Takeover Statutes. In addition to Delaware, a number of other
states have adopted laws and regulations applicable to attempts to acquire
securities of corporations that 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.
The Company, directly or through subsidiaries, conducts business in a number
of states throughout the United States, some of which have enacted takeover
laws. The Purchaser does not know whether any of these laws will, by their
terms, apply to the Offer or the Proposed Merger and generally does not expect
to comply with any such laws. Should any person seek to apply any state
takeover law, the Purchaser will take such action as then appears desirable,
which may include challenging the validity or applicability of any such
statute in appropriate court proceedings. In the event it is asserted that one
or more state takeover laws is applicable to the Offer or the Proposed Merger
and an appropriate court does not determine that it is inapplicable or invalid
as applied to the Offer or the Proposed Merger, the Purchaser might be
required to file certain information with, or receive approvals from, the
relevant state authorities. In addition, if enjoined, the Purchaser might be
unable to accept for payment any Shares tendered pursuant to the Offer or be
delayed in continuing or consummating the Offer or the Proposed Merger. In
such case, the Purchaser may not be obligated to accept for payment any Shares
tendered. See "--Certain Conditions to the Offer."
Other Foreign Approvals. According to Company 10-Q, the Company also owns
property and conducts business in Canada. In connection with the acquisition
of the Shares pursuant to the Offer or the Proposed Merger, the laws of Canada
may require the filing of information with, or the obtaining of the approval
of, governmental authorities in Canada. The Canadian government might attempt
to impose additional conditions on the Company's operations conducted in
Canada as a result of the acquisition of the Shares pursuant to the Offer or
the Proposed Merger. There can be no assurance that the Purchaser will be able
to cause the Company or its subsidiaries to satisfy or comply with such laws
or that compliance or noncompliance will not have adverse consequences for the
Company or any subsidiary after purchase of the Shares pursuant to the Offer
or the Proposed Merger.
13. CERTAIN FEES AND EXPENSES.
D.F. King & Co., Inc. has been retained by the Purchaser as Information
Agent in connection with the Offer. The Information Agent may contact holders
of Shares by mail, telephone, telex, telegraph and personal interview and may
request brokers, dealers and other nominee stockholders to forward material
relating to the Offer to beneficial owners. Customary compensation will be
paid for all such services in addition to reimbursement of reasonable out-of-
pocket expenses. The Purchaser has agreed to indemnify the Information Agent
against certain liabilities and expenses, including liabilities under the
federal securities laws.
In addition, Mellon Investor Services, L.L.C. has been retained by the
Purchaser 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 in
connection with the Offer, will be reimbursed for its reasonable out-of-pocket
expenses, and will be indemnified against certain liabilities and expenses in
connection therewith.
41
<PAGE>
The following table presents the estimated fees and expenses to be incurred
by the Purchaser in connection with the Offer and the Proposed Merger:
<TABLE>
<S> <C>
Legal Fees and Expenses....................... $500,000
Printing and Mailing.......................... $107,150
Filing Fee.................................... $ 4,830
Depositary Fees............................... $ 20,000
Information Agent............................. $ 15,000
Miscellaneous................................. $ 50,000
--------
Total..................................... $696,980
========
</TABLE>
Except as set forth above, the Purchaser will not pay any fees or
commissions to any broker, dealer or other person (other than the Information
Agent) for soliciting tenders of Shares pursuant to the Offer. Brokers,
dealers, commercial banks and trust companies and other nominees will, upon
request, be reimbursed by the Purchaser for customary clerical and mailing
expenses incurred by them in forwarding materials to their customers.
14. MISCELLANEOUS.
The Purchaser is not aware of any jurisdiction where the making of the Offer
is prohibited by any administrative or judicial action pursuant to any valid
state statute. If the Purchaser becomes aware of any valid state statute
prohibiting the making of the Offer or the acceptance of the Shares pursuant
thereto, the Purchaser will make a good faith effort to comply with such state
statute. If, after such 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 and Rights in such state.
In any jurisdiction where the securities, blue sky or other laws require the
Offer to be made by a licensed broker or dealer, the Offer shall be deemed to
be made on behalf of the Purchaser by one or more registered brokers or
dealers which are licensed under the laws of such jurisdiction.
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR MAKE ANY
REPRESENTATION ON BEHALF OF COURT SQUARE OR THE PURCHASER NOT CONTAINED IN
THIS OFFER TO PURCHASE OR IN THE LETTER OF TRANSMITTAL, AND IF GIVEN OR MADE,
SUCH INFORMATION OR REPRESENTATION MUST NOT BE RELIED UPON AS HAVING BEEN
AUTHORIZED.
The Purchaser has filed with the Commission a Tender Offer Statement on
Schedule TO, together with exhibits, pursuant to Rule 14d-3 of the General
Rules and Regulations under the Exchange Act, furnishing certain additional
information with respect to the Offer, and may file amendments thereto. Such
Schedule TO and any amendments thereto, including exhibits, may be examined
and copies may be obtained from the offices of the Commission in the same
manner as described in "--Certain Information Concerning the Company" with
respect to information concerning the Company, except that they will not be
available at the regional offices of the Commission.
Chase Acquisition Corporation
January 2, 2001
42
<PAGE>
SCHEDULE I
INFORMATION CONCERNING THE DIRECTORS AND
EXECUTIVE OFFICERS OF COURT SQUARE, THE PURCHASER AND CITIGROUP
1. DIRECTORS AND EXECUTIVE OFFICERS OF COURT SQUARE.
Set forth in the table below are the name and the present principal
occupations or employment and material occupations, positions, offices or
employment, and the five-year employment history of each of the directors and
executive officers of Court Square. Unless otherwise stated, each executive
officer of Court Square has been employed in such position or in other
executive or management positions with Court Square for at least five years.
Unless otherwise noted, each person identified below is a United States
citizen. The principal place of business address of Court Square and, unless
otherwise indicated, the business address of each person identified below is
c/o Court Square Capital Limited, 399 Park Avenue, New York, New York 10043.
<TABLE>
<CAPTION>
Present Principal Occupation or Employment;
Name Material Positions Held During the Past Five Years
---- --------------------------------------------------
<C> <S>
William T. Comfort.... Director; senior executive officer. He has been a senior executive officer of
Citicorp Venture Capital Ltd. for the past five years.
Anne Goodbody......... Director. She has been employed by Citibank N.A. since 1970, most recently as
Executive Vice President--Credit.
David F. Thomas....... Director; Vice President and Managing Director. He has been Vice President of
Citigroup Inc. and Vice President of Citicorp Venture Capital Ltd. since May
2000. Prior to that time, he was Managing Director of Citigroup Inc. and Managing
Director of Citicorp Venture Capital Ltd. from 1994 to May 2000.
Michael Bradley....... Vice President. He has been Vice President of Citicorp Venture Capital Ltd. since
1996.
Lauren M. Connelly.... Vice President and Secretary. She has been Vice President of Citicorp Venture
Capital Ltd. since 1990.
Charles E. Corpening.. Vice President. He has been employed by Citicorp Venture Capital, Ltd. since
1994, was an Assistant Vice President and is currently Vice President. He has
been Vice President and a director of Chase Acquisition Corporation since
December 2000. He also serves as a director of Chase Industries Inc.
Michael A. Delaney.... Vice President and Managing Director. He has been Managing Director of Citicorp
Venture Capital Ltd. since 1995.
Michael S. Goliner.... Vice President. He was Executive Director at Lehman Brothers from 1994 to 1999.
Ian D. Highet......... Vice President. He has been Vice President of Citicorp Venture Capital Ltd. since
1998. Prior to that, he was Vice President of Development of Primedia from 1994
to 1998.
David Y. Howe......... Vice President. He has been Vice President of Citicorp Venture Capital Ltd. since
1993.
Darryl A. Johnson..... Assistant Vice President and Accountant since June 2000. He was an Auditor at
Price Waterhouse Coopers from December 1997 to May 2000. Prior to that, he was an
Accountant at Lehman Brothers Inc. from January 1995 to November 1997.
Byron L. Knief........ Senior Vice President.
</TABLE>
I-1
<PAGE>
<TABLE>
<CAPTION>
Present Principal Occupation or Employment;
Name Material Positions Held During the Past Five Years
---- ---------------------------------------------------
<C> <S>
Richard E. Mayberry... Vice President. He has been Managing Director of Citigroup Inc. and Managing
Director of Citicorp since 1995.
Thomas F. McWilliams.. Vice President and Managing Director. He has been Managing Director of Citicorp
Venture Capital Ltd. for the past five years. He has been Secretary, Treasurer
and a director of Chase Acquisition Corporation since December 2000. He also
serves as a director of Chase Industries Inc.
Anthony P. Mirra...... Vice President and Assistant Secretary. He has been Financial Controller of
Citigroup, Inc. for the past five years.
M. Saleem Muqaddam.... Vice President. He has been Investment Officer of Citicorp Venture Capital Ltd.
over the past five years.
Paul C. Schorr........ Vice President and Managing Director. He has been Managing Director of Citicorp
Venture Capital Ltd. since January 2000. He served as Vice President of Citicorp
Venture Capital Ltd. from June 1996 to December 1999. Prior to that, he served as
Associate at McKinsey & Company from 1993 to 1994 and Engagement Manager at
McKinsey & Company from 1994 to 1996.
Joseph M. Silvestri... Vice President. He has been Vice President of Citicorp Venture Capital Ltd. since
1990.
James A. Urry......... Vice President. He has been Vice President of Citicorp Venture Capital Ltd. for
the past five years.
John D. Weber......... Vice President. He has been Vice President of Citicorp Venture Capital Ltd. since
1994.
</TABLE>
2. DIRECTORS AND EXECUTIVE OFFICERS OF THE PURCHASER.
Set forth in the table below are the name and the present principal
occupations or employment and material occupations, positions, offices or
employment, and the five-year employment history of each of the directors and
executive officers of the Purchaser. Unless otherwise stated, each executive
officer of the Purchaser has been employed in such position or in other
executive or management positions the Purchaser for at least five years.
Unless otherwise noted, each person identified below is a United States
citizen. The principal place of business address of the Purchaser and, unless
otherwise indicated, the business address of each person identified below is
c/o Chase Acquisition Corporation, 1209 Orange Street, Wilmington, Delaware
19801.
<TABLE>
<CAPTION>
Present Principal Occupation or Employment;
Name Material Positions Held During the Past Five Years
---- ---------------------------------------------------
<C> <S>
Charles E. Corpening.. Director; Vice President since December 2000. He has been employed by Citicorp
Venture Capital, Ltd. since 1994, was an Assistant Vice President and is
currently Vice President. He has been Vice President of Court Square Capital
Limited over the past five years. He also serves as a director of Chase
Industries Inc.
Robert F. B. Logan.... Director; President and Assistant Secretary since December 2000. He has been self
employed as a consultant since 1996. Prior to that time, he served as a director
and was Chairman and Chief Executive Officer of Bank One Arizona. Mr. Logan is a
citizen of the United Kingdom.
</TABLE>
I-2
<PAGE>
<TABLE>
<CAPTION>
Present Principal Occupation or Employment;
Name Material Positions Held During the Past Five Years
---- --------------------------------------------------
<C> <S>
Thomas F. McWilliams.. Director; Secretary and Treasurer since December 2000. He has been Managing
Director of Citicorp Venture Capital Ltd. for the past five years. He has been
Vice President and Managing Director of Court Square Capital Limited over the
past five years. He also serves as a director of Chase Industries Inc.
</TABLE>
3. DIRECTORS AND EXECUTIVE OFFICERS OF CITIGROUP.
Set forth in the table below are the name and the present principal
occupations or employment and material occupations, positions, offices or
employment, and the five-year employment history of each of the directors and
executive officers of Citigroup. Unless otherwise stated, each executive
officer of Citigroup has been employed in such position or in other executive
or management positions with Citigroup for at least five years. Unless
otherwise noted, each person identified below is a United States citizen. The
principal place of business address of Citigroup and, unless otherwise
indicated, the business address of each person identified below is c/o
Citigroup Inc., 399 Park Avenue, New York, New York 10043.
<TABLE>
<CAPTION>
Present Principal Occupation or Employment;
Name Material Positions Held During the Past Five Years
---- --------------------------------------------------
<C> <S>
C. Michael Armstrong.. Director since 1993. Mr. Armstrong has been Chairman and Chief Executive Officer
of AT&T Corp. since 1997. He was Chairman and Chief Executive Officer of Hughes
Electronic Corporation from 1992 to 1997. Prior to 1992 he was an Officer of
International Business Machines Corporation, a Member of the IBM Management
Committee and Chairman of the IBM World Trade Corporation. He is also on the
Supervisory Board of Thyssen-Bornemisza Group. He is also a director of
Excite@Home Corp.
Alain J.P. Belda...... Director since 1997. Mr. Belda has been Chief Executive Officer and a Director of
Alcoa Inc. since 1999 and President since 1997. From 1997 to 1999, he served as
Chief Operating Officer of Alcoa Inc. and Vice Chairman from 1995 to 1997. He is
also a director of Cooper Industries, Inc. and E.I. du Pont de Nemours & Company.
Mr. Belda is a citizen of Brazil.
Kenneth J. Bialkin.... Director since 1986. Mr. Bialkin has been a Partner at Skadden, Arps, Slate,
Meagher & Flom LLP since 1988. He is also a director of The Municipal Assistance
Corporation for the City of New York, Tecnomatix Technologies Ltd. and Sapiens
International Corporation N.V.
Kenneth T. Derr....... Director since 1987. He is Chairman of the Board, Retired of Chevron Corporation
since 1999. He served as Chairman and Chief Executive Officer of Chevron
Corporation from 1989 to 1999. He is also a director of AT&T Corporation and
Potlatch Corporation.
John M. Deutch........ Director since 1996 (and 1987 to 1993). He has been an Institute Professor,
Massachusetts Institute of Technology since 1990. He served as Director of the
Central Intelligence Agency from 1995 to 1996, and Deputy Secretary, U.S.
Department of Defense in 1994 and Under Secretary, U.S. Department of Defense in
1993. He is also a director of Ariad Pharmaceuticals, Inc., CMS Energy, Cummins
Engine Company, Inc., Raytheon Company and Schlumberger, Ltd.
</TABLE>
I-3
<PAGE>
<TABLE>
<CAPTION>
Present Principal Occupation or Employment;
Name Material Positions Held During the Past Five Years
---- --------------------------------------------------
<C> <S>
Keith W. Hughes..... Director since November 2000; Vice Chairman since November 2000. Since 1995, he has
been Chairman of the Board and Chief Executive Officer of Associates First Capital
Corporation.
Ann Dibble Jordan... Director since 1989. She has been a Consultant since 1987. Prior to 1987 she served
as Director of the Department of Social Services for the University of Chicago
Medical Center from 1986 to 1987, Field Work Associate Professor at the School of
Social Service Administration of the University of Chicago from 1970 to 1987 and
Director of Social Services of Chicago Lying-in Hospital from 1970 to 1985. She is
also a director of Johnson & Johnson Corporation and Automatic Data Processing, Inc
Robert I. Lipp...... Director since July 2000; Member of the Office of the Chairman, and Vice Chairman
since July 2000; Chairman and Chief Executive Officer--Global Consumer Business
since 1998. From 1996 to 2000 he was Chairman of the Board, Chief Executive Officer
and President of the Travelers Property Casualty Corp. and from 1991 to 1998 he was
Vice Chairman of the Travelers Property Casualty Corp. He is a Director of Citicorp
and Citibank, N.A. Prior to joining Citigroup Inc., Mr. Lipp spent 23 years with
Chemical New York Corporation. He is President of the New York City Ballet; a
director of the Wadsworth Atheneum; a Trustee of Williams College; and Chairman of
Dance-On Inc.
Reuben Mark......... Director since 1996. Mr. Mark has been Chairman and Chief Executive Officer of
Colgate-Palmolive Company since 1986. He served as Chief Executive Officer of
Colgate-Palmolive Company from 1984 to 1986. He is also a director of Pearson plc
and Time Warner Inc.
Michael T. Masin.... Director since 1997. He has been the Vice Chairman and President of Verizon
Communications since 2000. He was President--International of GTE Corporation from
1995 to 2000 and Vice Chairman from 1993 to 2000. Prior to 1993, he was a Partner
at O'Melveny & Myers. He is also a director of Compania Nacional Telefonos de
Venezuela, BCT Telus Communications, Inc., GTE Corporation and Puerto Rican
Telephone Company.
Dudley C. Mecum..... Director since 1986. He has been a Managing Director of Capricorn Holdings, LLC
since 1997. He was a Partner at G.L. Ohrstrom & Co. from 1989 to 1996 and was the
Managing Partner of KPMG LLP (New York office) from 1979 to 1985. He is also a
director of Dyncorp, Lyondell Companies, Inc., Suburban Propane Partners, MLP, CCC
Information Services, Inc., Lyondell Chemical Co., Vicorp Restaurants, Inc.,
Fingerhut Companies Inc., Roper Industries Inc. and Metris Companies Inc.
Richard D. Parsons.. Director since 1996. He has been the President of Time Warner Inc. since 1995 and
a Director of Time Warner Inc. since 1991. From 1988 to 1995 he held several
positions with Dime Savings Bank of New York including Chairman and Chief
Executive Officer from 1991 to 1995 and President and Chief Operating Officer from
1988 to 1990. He is also a director of Estee Lauder Companies, Inc. and Philip
Morris Companies Inc.
</TABLE>
I-4
<PAGE>
<TABLE>
<CAPTION>
Present Principal Occupation or Employment;
Name Material Positions Held During the Past Five Years
---- --------------------------------------------------
<C> <S>
Andrall E. Pearson.. Director since 1986. He has been Chairman and Chief Executive Officer of TRICON
Global Restaurants, Inc. since 1997. He served as Operating Partner of Clayton,
Dubilier & Rice, Inc. from 1993 to 1997. He has been a Professor at Harvard
Business School since 1985. From 1971 to 1984 he served as President and Chief
Operating Officer of PepsiCo, Inc. He is also a director of DBT-OnLine, Inc. and
an Advisory Board Member of Corpedia.
Robert E. Rubin..... Director since 1999; Member of the Office of the Chairman and Chairman of the
Executive Committee since 1999. He served as Secretary of the Treasury of the
United States from 1995 to 1999 and as Assistant to the President for Economic
Policy from 1993 to 1994. Prior to 1993 he held various titles at Goldman, Sachs
& Co., including Co-Senior Partner and Co-Chairman, Goldman, Sachs & Co. from
1990 to 1992 and Vice-Chairman and Co-Chief Operating Officer from 1987 to 1990.
He is also a director of Ford Motor Company.
Franklin A. Thomas.. Director since 1970. Since 1996, he has worked for The Study Group. He served as
President and Chief Executive Officer of The Ford Foundation from 1979 to 1996.
He is also a director of Alcoa, Inc., Cummins Engine Company, Inc., Lucent
Technologies, Inc., Pepsico, Inc., Conoco Inc., and Avaya Inc.
Sanford I. Weill.... Director since 1986; Chairman and Chief Executive Officer since 2000. He was Co-
Chief Executive Officer of Citigroup Inc. from 1998 to 2000. From 1986 to 1998 he
served as Chairman of the Board and Chief Executive Officer of Travelers Group
Inc. and he served as President from 1986 to 1991. He is also a director of AT&T
Corp., E.I. du Pont de Nemours & Company and United Technologies Corp.
Arthur Zankel....... Director since 1986. Mr. Zankel is General Partner of Zankel Capital Advisors,
LLC and of High Rise Partners, LP since 2000. He served as General Partner of
First Manhattan Co. from 1965 to 1999 and was Co-Managing Partner of First
Manhattan Co. from 1980 to 1997. He is also a director of Vicorp Restaurants,
Inc. and White Mountains Insurance Group Ltd.
Gerald R. Ford...... Honorary Director. He has been a Director or Honorary Director since 1986. He was
President of the United States from August 1974 through January 1977. He was Vice
President of the United States from December 1973 through August 1974. He is also
a director of the National Association of Securities Dealers, Inc., an Advisory
Director of Chase Bank of Texas and an Advisor to the Board of American Express
Company.
Hamid Biglari....... Head of Corporate Strategy since December 2000. Prior to joining Citigroup Inc.,
he was a Partner and Co-Head of Global Investment Banking of McKinsey and
Company.
</TABLE>
I-5
<PAGE>
<TABLE>
<CAPTION>
Present Principal Occupation or Employment;
Name Material Positions Held During the Past Five Years
---- --------------------------------------------------
<C> <S>
Winfried F.W. Bischoff.. Chairman--Citigroup Europe since April 2000. Prior to joining Citigroup Inc.,
he was Chairman, Group Chief Executive of J. Henry Schroder & Co. Ltd. from
1995 to 2000. He is a director of Cable and Wireless PLC, Land Securities
PLC, McGraw Hill Companies, Eli Lilly and IFIL (Italy). He is a citizen of
the United Kingdom and Germany.
Michael A. Carpenter.... Chief Executive Officer--Global Relationship Bank and Chief Executive
Officer--Global Corporate & Investment bank (Japan, Europe and North America)
since July 2000. From November 1998 to July 2000, he was Co-Chief Executive
Officer--Global Corporate and Investment Bank of Citigroup Inc. Since 1998,
he has been Chairman of the Board and Chief Executive Officer and a Director
of each of Salomon Smith Barney Inc. and Salomon Smith Barney Holdings Inc.,
wholly owned subsidiaries of Citigroup Inc. From 1996 to 1998, he was Vice
Chairman of Travelers Group Inc.
Robert Druskin.......... Chief Operating & Technology Officer and Chief Administrative Officer--
Corporate & Investment Bank since August 2000. He was Head of Operations &
Technology--Global Corporate & Investment Bank of Salomon Smith Barney from
1998 to 2000. Prior to that, he was Chief Administrative Officer of Smith
Barney from 1997 to 2000, Head of Asset management & Futures Division from
1996 to 1997, and Vice Chairman from 1993 to 1996.
Ahmed Fahour............ Senior Vice President and Head of Development since December 2000. Prior to
joining Citigroup Inc., he was a Partner of Boston Consulting Group from 1987
to 2000. He is a citizen of Australia.
Jay S. Fishman.......... Chief Operating Officer since December 2000 and Vice Chairman--Global
Consumer Group (Western Europe, Japan) since July 2000. He has been Chairman
of the Board of Travelers Property Casualty Corp. since March 2000 and Chief
Executive Officer and President of Travelers Property Casualty Corp. since
1998. He was Chief Executive Officer and President, Commercial Lines in 1998
and its Chief Operating Officer, Consumer Lines from 1996 to 1998. Since
joining Travelers Group in 1989, he has held various positions including,
Vice Chairman and Chief Administrative Officer of Travelers Property Casualty
Corp. from 1996 to 1998.
Thomas W. Jones......... Chairman and Chief Executive--Global Investment and Private Banking Group and
Co-Chairman and Chief Executive Officer--Salomon Smith Barney Citi Asset
Management Group since 1998. Mr. Jones was Vice Chairman and Director of
Travelers Group Inc. and Chairman and Chief Executive Officer--Salomon Smith
Barney Asset Management from 1997 to 1998. Prior to that time, he was Vice
Chairman and a Director of the Teachers Insurance and Annuity Association--
College Retirement Equities Fund. He is a director of Pepsi Bottling Group.
</TABLE>
I-6
<PAGE>
<TABLE>
<CAPTION>
Present Principal Occupation or Employment;
Name Material Positions Held During the Past Five Years
---- --------------------------------------------------
<C> <S>
Marjorie Magner......... Senior Executive Vice President and Chief Administrative Officer--Global
Consumer since July 2000. She is the Head of Citibanking North America and
Primerica Financial Services since January 2000. She was Chairman of
Citifinancial Credit Company in 1999 and President and Chief Executive
Officer of Citifinancial Credit Company from 1995 to 1999.
Deryck C. Maughan....... Vice Chairman since 1998. He is a Director of Salomon Smith Barney Holdings
Inc. and Salomon Smith Barney Inc.; and a Managing Director of Salomon Smith
Barney Inc. He has been employed in such position or other executive or
management positions with Citigroup Inc. since November 1997. He was, until,
the consummation of the merger with Salomon Inc in November 1997, Chairman
and Chief Executive Officer of Salomon Brothers Inc and an Executive Vice
President of Salomon Inc. He is a member of the Group of Thirty and the
Trilateral Commission, serves on the International Advisory Board of the
British American Business Council and is a Trustee of the Japan Society. Mr.
Maughan is a citizen of the United Kingdom.
Victor J. Menezes....... Head of Consumer and Corporate Business in Emerging Markets since July 2000
and Co-Chief Executive--Global Corporate and Investment Bank since 1998. Mr.
Menezes is Chairman and a Director of Citicorp and Citibank, N.A. He was
President of Citibank, N.A. from 1998 to March 2000 and Executive Vice
President and Chief Financial Officer from 1995 to 1998. He is a Trustee of
the Asia Society and a member of the U.S. Advisory Board of INSEAD.
Charles O. Prince, III.. Chief Operating Officer--Administration and Operations since December 2000
and General Counsel and Corporate Secretary since 1999. In 2000, he was
Chief Administrative Officer of Citigroup Inc. From 1986 to 1996, he was an
Executive Vice President, Senior Vice President, General Counsel and
Secretary of Travelers Group Inc.
William R. Rhodes....... Vice Chairman since 1999. He is also a Vice Chairman of Citicorp and
Citibank, N.A. since 1991 Mr. Rhodes joined Citibank, N.A. in 1957. He is a
Governor and Trustee of The New York and Presbyterian Hospital and a
Director of the New York City Partnership, Chamber of Commerce, Conoco and
Private Export Funding Corporation.
Petros Sabatacakis...... Senior Risk Officer since 1999. Mr. Sabatacakis was Senior Vice President of
American International Group from 1992 to 1999. Previously, he was senior
risk manager and head of Global Treasury and Capital Markets at Chemical
Bank.
Todd S. Thomson......... Chief Financial Officer since March 2000. Mr. Thomson was Chief Executive
Officer--Global Private Bank of Citigroup Inc. from 1999 to March 2000 and
Senior Vice President--Strategy and Business Development from 1998 to 1999.
Prior to that time, he was a Senior Vice President of GE Capital Services.
Previously, he held management positions at Barents Group LLC and Bain &
Company.
</TABLE>
I-7
<PAGE>
<TABLE>
<CAPTION>
Present Principal Occupation or Employment;
Name Material Positions Held During the Past Five Years
---- --------------------------------------------------
<C> <S>
Robert B. Willumstad.. Chairman and Chief Executive Officer--Global Consumer since December 2000 and
Head of Global Consumer Lending since July 2000. He is also Chairman of the
Board of Citifinancial Credit Company. From July 2000 to December 2000, he was
Vice Chairman--Global Consumer of Citigroup Inc. Mr. Willumstad has been
employed in executive or management positions with Citifinancial Credit Company
for more than the past five years. Mr. Willumstad spent 20 years with Chemical
Bank in various positions including the post of President of Chemical
Technologies Corporation.
Barbara A. Yastine.... Chief Financial Officer--Salomon Smith Barney and Citibank's Global Relationship
Bank since September 2000. She was Chief Auditor of Citigroup Inc. from 1999 to
September 2000 and Chief Administrative Officer--Global Consumer from 1998 to
1999. From 1995 to 1999, she was an Executive Vice President--Finance and
Insurance of Citifinancial Credit Company.
</TABLE>
I-8
<PAGE>
SCHEDULE II
SECTION 262 OF THE GENERAL CORPORATION LAW OF
THE STATE OF DELAWARE
SECTION 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 (S) 228 of this title shall be entitled to an appraisal by the Court of
Chancery of the fair value of the stockholder's 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 (S) 251 (other than a merger effected pursuant to (S)
251(g) of this title), (S) 252, (S) 254, (S) 257, (S) 258, (S) 263 or (S) 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 (S) 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 (S)(S)
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 (S) 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.
II-1
<PAGE>
(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 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 subsection (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 (S) 228 or
(S) 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.
II-2
<PAGE>
(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 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 entitled
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 uncertificated stock forthwith, and the case of holders of
shares represented by certificates upon the surrender to the corporation
II-3
<PAGE>
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.
(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. (Last amended by Ch. 339, L.
98, eff. 7-1-98.)
II-4
<PAGE>
Facsimile copies of the Letter of Transmittal, properly completed and duly
executed, will be accepted. The Letter of Transmittal, certificates for Shares
and any other required documents should be sent or delivered by each
stockholder of the Company or his broker, dealer, commercial bank, trust
company or other nominee to the Depositary at one of its addresses set forth
below:
<TABLE>
<CAPTION>
The Depositary for the Offer is:
MELLON INVESTOR SERVICES, L.L.C.
<S> <C> <C>
By Mail: By Hand: By Overnight Delivery:
Mellon Investor Services, L.L.C. Mellon Investor Services, L.L.C. Mellon Investor Services, L.L.C.
Reorganization Department Reorganization Department Reorganization Department
P.O. Box 3301 120 Broadway 85 Challenger Road
South Hackensack, NJ 07606 13th Floor Mail Stop--Reorg
New York, NY 10271 Ridgefield Park, NJ 07660
By Facsimile Transmission:
(For Eligible Institutions Only)
(201) 296-4293
Confirmation Receipt Of Facsimile By Telephone Only:
(201) 296-4860
</TABLE>
Questions and requests for assistance may be directed to the Information
Agent at the address and telephone numbers listed below. Additional copies of
this Offer to Purchase, the Letter of Transmittal and other tender offer
materials may be obtained from the Information Agent, and will be furnished
promptly at the Purchaser's expense. You may also contact your broker, dealer,
commercial bank, 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
Banks and Brokers Call Collect: (212) 269-5550
All Others Call Toll-free: (800) 431-9629
