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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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SCHEDULE 14D-9
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SOLICITATION/RECOMMENDATION STATEMENT
PURSUANT TO SECTION 14(D)(4) OF THE
SECURITIES EXCHANGE ACT OF 1934
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HELLO DIRECT, INC.
(Name of Subject Company)
HELLO DIRECT, INC.
(Name of Person Filing Statement)
COMMON STOCK, PAR VALUE $.001 PER SHARE
(Title of Class of Securities)
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423402106
(CUSIP Number of Class of Securities)
E. Alexander Glover
President And Chief Executive Officer
Hello Direct, Inc.
5893 Rue Ferrari
San Jose, California 95138
(408) 972-1990
(Name, Address, and Telephone Number of Person
Authorized to Receive Notices and Communications
on Behalf of the Person Filing Statement)
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With Copies To:
Dean Witter III Gregory C. Smith, Esq.
Chief Financial Officer & Secretary Skadden, Arps, Slate, Meagher & Flom
Hello Direct, Inc. LLP
5893 Rue Ferrari 525 University Avenue,
San Jose, California 95138 Suite 220
(408) 363-6158 Palo Alto, California 94301
(650) 470-4500
[_]Check the box if the filing relates solely to preliminary communications
made before the commencement of a tender offer.
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ITEM 1. Security And Subject Company Information.
(a), (b) Name and Address; Securities. The name of the subject company is
Hello Direct, Inc. ("Hello Direct" or the "Company"). The address of the
principal executive offices of the Company is 5893 Rue Ferrari, San Jose,
California 95138. The telephone number of the principal executive offices of
the company is (408) 972-1990. The title of the class of equity securities to
which this statement relates is the common stock, par value $.001 per share,
of the Company (the "Common Stock").
ITEM 2. Identity And Background Of Filing Person.
(a) Name and Address. The name, business address and business telephone
number of the Company are set forth in Item 1 above.
(b) Tender Offer. This Statement relates to the tender offer by GN
Acquisition Corporation, a corporation formed under the laws of the State of
Delaware (the "Purchaser") and an indirect, wholly owned subsidiary of GN
Great Nordic Ltd., a corporation formed under the laws of Denmark ("Great
Nordic" or "Parent"), disclosed in a Tender Offer Statement on Schedule TO
filed by the Purchaser and Great Nordic (the "Schedule TO"), dated October 11,
2000, to purchase all outstanding shares of the Common Stock at a purchase
price of $16.40 per share, net to the seller in cash, without interest (the
"Offer Price"), upon the terms and subject to the conditions set forth in the
Offer to Purchase, dated October 11, 2000 and filed as Exhibit (a)(1) to the
Schedule TO (the "Offer to Purchase"), and the related Letter of Transmittal
(which, as may be amended or supplemented from time to time, together
constitute the "Offer").
The Offer is being made pursuant to the Agreement and Plan of Merger, dated
as of October 4, 2000, by and among Great Nordic, the Purchaser and the
Company (as such agreement may be amended or supplemented from time to time,
the "Merger Agreement"). The Merger Agreement provides, among other things,
that as soon as practicable after the satisfaction or waiver of the conditions
set forth in the Merger Agreement, in accordance with the relevant provisions
of the Delaware General Corporation Law (the "DGCL"), the Purchaser will be
merged with and into the Company (the "Merger"). Following the effective time
(the "Effective Time") of the Merger, the Company will continue as the
surviving corporation (the "Surviving Corporation") and a wholly owned
subsidiary of Great Nordic.
A copy of the Merger Agreement is filed herewith as Exhibit 3, and is
incorporated herein by reference.
According to the Schedule TO, the principal executive offices of Great
Nordic and the Purchaser are located at Kongens Nytorv 26, 1016, Copenhagen K,
Denmark.
ITEM 3. Past Contacts, Transactions, Negotiations And Agreements.
Conflicts Of Interest
Certain contracts, agreements, arrangements or understandings between the
Company or its affiliates and certain of its directors and executive officers
are, except as noted below, described in the Information Statement pursuant to
Section 14(f) of the Securities Exchange Act of 1934, as amended, and Rule
14f-1 thereunder (the "Information Statement") that is attached as Annex B to
this Statement and is incorporated herein by reference. Except as set forth in
the response to this Item 3, Item 4 below or in Annex B attached hereto or as
incorporated by reference herein, to the knowledge of the Company, there are
no material agreements, arrangements or understandings and no actual or
potential conflicts of interest between the Company or its affiliates and (i)
the Company's executive officers, directors or affiliates or (ii) Great Nordic
or the Purchaser or their respective executive officers, directors or
affiliates.
Transaction Documents
The summaries of the Merger Agreement and the description of the conditions
of the Offer contained in Sections 11 and 14 of the Offer to Purchase, which
is being mailed to stockholders together with this Statement, are incorporated
herein by reference. Such summaries and description are qualified in their
entirety by reference to such documents, which are incorporated herein by
reference.
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Stock Options and Warrants
The Merger Agreement provides that Great Nordic and the Company shall take
all actions necessary to provide that, as of the Effective Time, each
outstanding stock option, stock equivalent right or right to acquire Common
Stock granted under the Company's 1992 Stock Option Plan, the 1995 Director
Option Plan, the Company's 1995 Stock Plan or the 1995 Employee Stock Purchase
Plan, and each outstanding warrant to purchase Common Stock, whether or not
such option or warrant is then exercisable or vested (collectively,
"Options"), shall be canceled. In consideration of the cancellation of such
Options, Great Nordic shall, or shall cause the Surviving Corporation to, pay
to holders of such Options, whether or not then exercisable or vested, an
amount in respect thereof equal to (A) the excess, if any, of the Offer Price
over the exercise price of each Option (which, in the case of any stock
equivalent right, shall be zero) multiplied by (B) the number of shares of
Common Stock subject to such Options (such payments, if any, net of applicable
withholding and excise taxes). As of the Effective Time, the Company's option
plans will terminate and the Company will take all action necessary to ensure
that, after the Effective Time, no person will have any right under such
option plans with respect to acquiring securities of the Surviving
Corporation.
Benefit Plans
The Merger Agreement provides that, for two years following the Effective
Time, the Surviving Corporation will not reduce the compensation paid to
employees of the Surviving Corporation who were employees of the Company
immediately before the Effective Time ("Affected Employees") and will provide
benefits that in the aggregate are substantially comparable to benefits
provided by the Company before the Effective Time. For purposes of determining
Affected Employees' eligibility to participate, vesting and accrual or
entitlement to benefits under any employee benefit plan, program, or
arrangement of the Surviving Corporation, Great Nordic shall cause each
Affected Employee to be credited, as of the Effective Time, with the service
credited to each Affected Employee for such respective purposes immediately
before the Effective Time under the Company's employee benefit plans, programs
or arrangements (subject, in the case of defined benefit arrangements, to
offsets for previously accrued benefits and to there being no duplication of
benefits). For the year in which the Effective Time occurs, Great Nordic shall
cause each Affected Employee to be credited under the employee welfare benefit
plans maintained by the Surviving Corporation with all deductible payments and
copayments and payments toward out-of-pocket maximums credited to the Affected
Employee under the employee welfare benefit plans of the Company immediately
before the Effective Time.
Employment/Severance Agreements
Reference is made to the information contained under the caption "Employment
Contracts and Change of Control Arrangements" in Hello Direct's Proxy
Statement dated April 6, 2000, which is incorporated herein by reference. The
purchase of shares of Common Stock pursuant to the Offer will constitute a
"change of control" for purposes of the employment and severance agreements
the Company has entered into with E. Alexander Glover, the Company's president
and chief executive officer, and the severance agreements the Company has
entered into with all of the other officers of the Company. According to Mr.
Glover's employment agreement with the Company, as amended, if termination
occurs after a change of control, Mr. Glover shall receive, in addition to any
other benefits to which he may be entitled, his base salary for a period of
twelve months after his termination. The agreement also provides that upon
termination following a change of control (other than a termination for
"cause") the Company will continue to pay the premiums and other expenses for
benefits offered to Mr. Glover at the time of termination. Under the
agreements with other officers of the Company, if such employee or officer is
terminated (other than for "cause") within one year of a change of control, he
or she will receive base salary for a period of nine months following
termination, as well as Company-paid premiums and benefits similar to those
offered to Mr. Glover.
Indemnification And Insurance
Pursuant to the Merger Agreement, Great Nordic and the Purchaser have agreed
that the certificate of incorporation and bylaws of the Surviving Corporation
shall contain certain indemnification provisions, with respect to directors
and officers of the Company prior to Effective Time, that are substantially
similar to such
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provisions currently contained in the Company's certificate of incorporation
and by-laws. The indemnification provisions specified in the Merger Agreement
may not be amended, repealed or otherwise modified for a period of six years
after the Effective Time in any manner that would adversely affect the rights
of individuals who at any time prior to the Effective Time were directors or
officers of the Company with respect to actions or omissions occurring at or
prior to the Effective Time, unless such modification is required by law.
For six years after the Effective Time, the Surviving Corporation will
indemnify, defend and hold harmless, to the fullest extent permitted under the
DGCL, the present and former officers and directors of the Company against all
losses, claims, damages, liabilities, fees and expenses in connection with any
claim, suit, action, proceeding or investigation that is based on or arising
out of the fact that such person is or was a director or officer of the
Company and relates to actions or omissions occurring at or prior to the
Effective Time. The Surviving Corporation is obligated to pay expenses to any
such indemnified person in advance of the final disposition of any indemnified
action or proceeding to the fullest extent permitted under the DGCL, subject
to the agreement of the indemnified person to repay such advances as
contemplated by the DGCL.
For a period of six years after the Effective Time, Great Nordic shall, or
shall cause the Surviving Corporation to, maintain in effect, if available,
directors' and officers' liability insurance covering those persons who are
currently covered by the Company's directors' and officers' liability
insurance policy for events occurring on or prior to the Effective Time. Such
coverage shall be on terms that are no less favorable to such persons than the
terms now applicable under the Company's current policies. Parent will not be
obligated to pay premiums in excess of 150% of the amount per annum paid by
the Company as of the date of the Merger Agreement.
The Surviving Corporation's Board Of Directors
Promptly upon the Purchaser's purchase of at least a majority of the
outstanding shares of Common Stock (on a fully diluted basis), Great Nordic
shall be entitled to designate such number of directors of the Company,
rounded up to the next whole number, as is equal to the product of (A) the
total number of directors on the Company's Board of Directors (the "Board")
(giving effect to the directors designated by Great Nordic pursuant to this
sentence) multiplied by (B) the percentage that the aggregate number of shares
of Common Stock beneficially owned by the Purchaser, Great Nordic and any of
their affiliates bears to the total number of shares of Common Stock then
outstanding. The Company shall, upon request of Great Nordic, use its
reasonable best efforts promptly either to increase the size of its Board, or
secure the resignations of such number of its incumbent directors, or both, as
is necessary to enable Great Nordic's designees to be so elected or appointed
to the Board, and shall use its reasonable best efforts to cause Great
Nordic's designees to be so elected or appointed. The Company shall, upon the
request of Great Nordic, also cause persons designated by Great Nordic to
constitute the same percentage (rounded up to the next whole number) as is on
the Board of (i) each committee of the Board, (ii) each board (or similar
body) of each subsidiary of the Company and (iii) each committee (or similar
body) of each such board, in each case only to the extent permitted by
applicable law or the rules of any stock exchange on which the Common Stock is
listed.
In the event that Great Nordic's designees are elected to the Board, until
the Effective Time, the Company shall cause its Board to have at least three
directors who are directors on the date of the Merger Agreement (the
"Independent Directors"). In the event of any vacancy caused by the death or
disability of an Independent Director, the remaining Independent Directors
shall fill such vacancy; provided, that if no Independent Director then
remains, the other directors shall appoint new directors to fill such
vacancies and each such appointee shall be deemed to be an Independent
Director. If prior to the Effective Time Great Nordic's designees constitute a
majority of the Board, then the affirmative vote of a majority of the
Independent Directors shall be required to (i) amend or terminate the Merger
Agreement by the Company, (ii) exercise or waive any of the Company's rights,
benefits or remedies under the Merger Agreement, (iii) amend the certificate
of incorporation or by-laws of the Company or (iv) take any other action of
the Board under or in connection with the Merger Agreement.
As of the date of this Statement, no determination has been made as to which
directors of the Company will continue to serve on the Surviving Corporation's
board of directors. It is expected that the board of directors of the
Surviving Corporation will continue to compensate directors at levels
consistent with the compensation paid to the Board.
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Third-Party Beneficiaries
The provisions of the Merger Agreement are not intended to confer upon any
person other than the parties to the Merger Agreement any rights or remedies,
provided that certain provisions discussed under the heading "Indemnification"
are enforceable by the beneficiaries thereof.
Stock Option Agreement
The Merger Agreement provides that, if following a subsequent offering
period, the Purchaser has acquired less than 90% of the Common Stock but not
less than 75% of the Common Stock, then the Purchaser and the Company will
enter into a stock option agreement, on customary terms, pursuant to which the
Company will grant to the Purchaser an option to purchase that number of
shares of Common Stock equal to the number of shares of Common Stock that,
when added to the number of such shares owned by the Purchaser and its
affiliates immediately following expiration of a subsequent offering period
following the Offer, results in Purchasers beneficially owning 90% of the
shares of Common Stock then outstanding on a fully diluted basis.
Non-Disclosure Agreement
On October 18, 1999, Great Nordic and the Company entered into a Non-
Disclosure Agreement which was amended on August 10, 2000, to extend its term.
(as amended, the "Non-Disclosure Agreement"). The Non-Disclosure Agreement
provides that for two years following the date of the Non-Disclosure
Agreement, Great Nordic will keep confidential all information concerning the
Company, subject to certain exceptions, and will use the confidential
information for no purpose other than evaluating a possible transaction with
the Company. Pursuant to the Non-Disclosure Agreement, Great Nordic also
agreed to certain standstill provisions that were effective for a period of
eighteen months from the date of the Non-Disclosure Agreement. Great Nordic
further agreed not to hire management or employees of the Company for a period
of two years except in certain specified circumstances.
ITEM 4. The Solicitation Or Recommendation.
(a) Recommendation of the Board. At a meeting held on October 3, 2000, the
Board unanimously (i) determined that the Offer, the Merger and the Merger
Agreement are advisable, fair to, and in the best interests of, the Company's
stockholders, (ii) approved the Merger Agreement and the transactions
contemplated thereby, including the Merger and the Offer and (iii) resolved to
recommend that the Company's stockholders accept the Offer and tender their
Common Stock pursuant thereto and, if necessary under the DGCL, approve and
adopt the Merger Agreement.
(b) Background; Reasons for the Recommendations of the Board
From time to time, the Company had been approached by a small number of
companies that expressed some interest in a strategic business arrangement.
Some of these companies indicated a possible desire to acquire the Company,
but none of those discussions proceeded beyond the preliminary stage.
Great Nordic, together with GN Netcom A/S and GN Netcom, Inc. (each, a
direct or indirect wholly owned subsidiary of Great Nordic, and collectively,
"GN Netcom"), and the Company have had business contacts for several years.
In October, 1998, P. Michael Fairweather, President and Chief Executive
Officer of GN Netcom, Inc., met with E. Alexander Glover, President, Chief
Executive Officer and Director of the Company and Raymond E. Nystrom, Vice
President of Operations, Chief Financial Officer and Secretary of the Company
to discuss business opportunities. The parties discussed various alternatives,
but no actions were pursued at that time.
On February 18, 1999, Michael Fairweather and Christian F. Tillisch, then
Chief Executive Officer of GN Netcom A/S, met with Alexander Glover and other
members of the Company's management team at the Company's San Jose, California
headquarters to explore the possibilities of a collaboration or a strategic
transaction. The parties discussed various alternatives, but no actions were
pursued at that time.
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At its meeting on July 16, 1999, the Company's Board of Directors reviewed
and discussed the Company's strategic plan. The Board discussed the current
and future state of the Company's business, the Company's strategic position,
near and long-term prospects and the possibility that the Company should
conduct a systematic review of its strategic alternatives, including
alternatives to proceeding as an independent company, to increase stockholder
value.
In August, 1999, senior management of the Company met with representatives
of several financial advisors. At its meeting on September 7, 1999, the Board
of Directors of the Company selected a financial advisor to render assistance
with respect to the consideration and implementation of strategic alternatives
for the Company.
At the Board's direction, Company management reviewed a list that had been
developed to identify leading candidates to enter into a strategic transaction
with the Company. The Company's financial advisor contacted, on a confidential
basis, 23 parties who were considered to be the most eligible candidates. Of
these initial contacts, nine, including Great Nordic, entered into non-
disclosure agreements with the Company.
At the Board's direction, the Company, with the assistance of its financial
advisor, provided to each of these nine parties certain financial and other
information regarding the Company. By November 30, 1999, four of these
parties, including Great Nordic, had submitted initial, non-binding
indications of interest in a potential business combination with the Company.
Great Nordic submitted a preliminary, non-binding indication of interest
regarding a possible acquisition of the Company, subject, among other things,
to completion of due diligence and the negotiation of definitive agreements.
During the period from November 30, 1999 to January 20, 2000, various
representatives of these four parties met with representatives of the Company
and conducted due diligence. On December 17, 1999, Great Nordic submitted a
revised, non-binding indication of interest proposing a transaction under
which Great Nordic would acquire only certain lines of the Company's business,
while certain rights to remaining lines of business and technology would be
retained for the benefit of the Company's stockholders or sold to a third
party.
During this time, the Board of Directors of the Company reviewed progress at
its meetings on October 13, 1999, December 9, 1999 and January 12, 2000. On
January 20, 2000, the Board held a meeting attended by senior management of
the Company and representatives from the Company's financial advisor. At this
meeting, the Board discussed the revised indications of interest from Great
Nordic and from two of the other three parties who had previously indicated
interest. One party declined to submit a revised indication of interest. The
Board determined to reject each of these proposals, but instructed management
to continue to negotiate with each of the parties.
On January 24, 2000, the Company informed representatives of Great Nordic
that it did not intend to pursue Great Nordic's proposals at that time.
Following this Board meeting, the party who had previously declined to submit
a revised indication of interest delivered such a revised proposal to the
Company and engaged in further due diligence review. This party subsequently
withdrew its proposal, as did one of the other parties.
Because representatives of the Company were unable to resolve issues in
respect of the one remaining indication of interest and in the absence of a
competing offer, the Board agreed to discontinue discussions with third
parties regarding a possible transaction. On March 14, 2000, the Company's
engagement agreement with its financial advisor expired in accordance with its
terms.
At the direction of the Board of Directors, the Company's management
retained a new financial advisor, William Blair & Company, L.L.C. ("Blair"),
on April 12, 2000 and authorized Blair to make initial contact, on a
confidential basis, with certain parties viewed by Blair as potential
candidates for a possible transaction with the Company. During the next three
months, Blair contacted 77 parties. The Company, with Blair's assistance,
prepared confidential financial and other information for distribution to
those who had indicated interest in a possible transaction. Between May 23,
2000 and June 14, 2000, members of senior management and representatives of
Blair met with three parties who indicated such an interest. In addition,
Blair met independently with two other parties.
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On July 20, 2000, the Board held a meeting attended by senior management of
the Company and representatives of Blair. Blair reported to the Board that it
had received four initial non-binding indications of interest. Blair indicated
that five additional parties had been slow in responding and that Blair
expected to hear from them by the end of July. As these parties met with
certain members of senior management and engaged in their respective due
diligence reviews, the Board instructed Blair to contact several of the
parties previously engaged in discussions with the Company regarding a
possible transaction to renew their interest in the process, if possible.
During this period, on August 8, 2000, Michael Fairweather contacted
Alexander Glover to discuss the status of the process described above. Mr.
Glover informed Mr. Fairweather that the Company had engaged a new financial
advisor, Blair, and invited Great Nordic to participate in a new round of
discussions concerning a possible transaction with the Company. On August 10,
2000, Great Nordic signed a letter agreement with Blair, extending the term of
the earlier non-disclosure agreement by 10 months. On August 15, 2000, Blair,
on behalf of the Company, furnished financial and other information to Great
Nordic, together with a draft agreement and plan of merger.
By the close of business on September 18, 2000, Blair had been informed that
three of these parties would not be submitting proposals and had received two
non-binding indications of interest, one of which was from Great Nordic.
One third party submitted a non-binding indication of interest to acquire
the stock of the Company in a stock-for-stock exchange, at a stated value of
$17.00 per share, based on the then current value of such third party's stock.
This third party's proposal was subject to a number of conditions, including,
among other things, (i) the satisfactory completion of due diligence, (ii) the
approval of the respective boards of directors, (iii) the negotiation and
execution of a binding merger agreement in late October after third quarter
earnings announcements, and (iv) qualification of the transaction for "pooling
of interests" accounting treatment. Such proposal also was subject to
potential adjustments to the proposed purchase price, based on the trading
range of each company's stock and the Company's aggregate fees and expenses
incurred in connection with the transaction.
On September 18, 2000, Great Nordic submitted a non-binding proposal to
acquire all outstanding common stock of the Company, on a fully diluted basis,
for an aggregate price of $95 million, less net long-term indebtedness. Great
Nordic's September 18, 2000 proposal was subject to various conditions,
including the satisfactory completion of due diligence, the approval of the
respective Boards of Directors of Great Nordic and the Company, and
negotiation and execution of a binding merger agreement.
On September 19 and 20, 2000, representatives of GN Netcom, counsel to Great
Nordic and GN Netcom, and Great Nordic's tax advisors conducted further due
diligence and began discussing the principal terms of a proposed definitive
merger agreement.
On September 20, 2000, the Board of Directors of the Company held a special
meeting, attended by representatives of Blair and outside counsel to the
Company, for the purpose of evaluating the offers received. The Board
considered the proposals and reviewed the proposed terms and conditions set
forth in draft agreements previously submitted to the Company. The Board
instructed management to continue discussions and negotiations with each of
the parties. Blair informed both companies of the Board's decision.
During the period from September 21, 2000 to September 30, 2000,
representatives of Blair, the Company, Great Nordic and GN Netcom spoke
several times regarding Great Nordic's proposal. During this period, such
representatives continued to negotiate and revise draft agreements and the
terms of the transaction, including negotiation of the terms of a proposed
stock option agreement. On September 29, 2000, in response to the Company's
requests to submit a final revised proposal, Great Nordic submitted a revised
offer to purchase all outstanding shares of the Company's capital stock for
$16.40 per share in cash, subject to the same conditions as the September 18,
2000 offer (other than completion of legal and business due diligence). Great
Nordic also submitted a revised draft agreement reflecting the parties'
negotiations.
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On September 29, 2000 also in response to the Company's requests to submit a
revised proposal, the other party again proposed a stock-for-stock transaction
at a stated value of $17.00 per share, subject to the same conditions as its
September 18, 2000 proposal.
At a meeting held on September 30, 2000, the Board of Directors of the
Company, after considering, among other things, the alternative transaction
structures available, and consultation with Blair and outside counsel,
confirmed its preference for an all cash deal. Negotiations between the
Company and Great Nordic continued through October 3, 2000, culminating in the
Company and Great Nordic agreeing upon a form of definitive agreement to be
presented for review by the Company's Board of Directors at a meeting
scheduled for October 3, 2000.
On October 3, 2000, the Company's Board of Directors convened to consider
the terms of the proposed transaction. Blair made a presentation to the Board
of Directors and delivered its oral opinion, as of such date, as to the
fairness of the $16.40 cash consideration to be paid in the Offer and the
Merger to the holders of the shares. The Board of Directors then analyzed and
discussed the Offer, the Merger Agreement and the Merger. The Board of
Directors unanimously (i) determined that each of the Offer, the Merger and
the Merger Agreement is fair to, and in the best interests of, the Company and
its stockholders, (ii) approved the Offer, the Merger and the Merger Agreement
and (iii) resolved to recommend that the Company's stockholders accept the
Offer and tender their Shares pursuant to the Offer and approve and adopt the
Merger Agreement and the Merger. (if such approval is required by applicable
law).
On October 4, 2000, the Board of Directors of Great Nordic met and approved
the Offer, the Merger Agreement and the Merger. Thereafter, representatives of
the Company, Great Nordic and Purchaser executed the Merger Agreement and the
Stock Option Agreement.
Reasons For The Recommendations Of The Company's Board
A copy of the letter to the Company's stockholders communicating the
recommendation of the Board and the press release relating thereto are filed
as Exhibits 6 and 8 hereto and are incorporated by reference herein.
In approving the Merger Agreement and the transactions contemplated thereby,
including the Offer and the Merger, and recommending that all holders of
Common Stock accept the Offer and tender their shares of Common Stock pursuant
to the Offer, and, if necessary under the DGCL, approve and adopt the Merger
Agreement, the Board considered a number of factors including:
. The Board's familiarity with, and management's view of, the Company's
business, financial condition, results of operations, current business
strategy, future business prospects, the nature of the markets in which
the Company operates, including their growth prospects, the Company's
position in such markets and the historical and current market prices
for the Common Stock.
. The number of strategic initiatives that had to be executed, without
significant margin for error or slippage, for the Company to achieve the
financial results contemplated by its strategic plan and expected by
analysts, without near-term dilution of earnings.
. Presentations by the Company's management relating to the Company's
financial performance and future prospects.
. Presentations by Blair concerning the Company and the financial aspects
of the Offer and alternative transaction structures.
. The extensive information-gathering process undertaken before the
signing of the Merger Agreement, as described under "Background".
. The fact that the Company contacted a large number of potential
acquirers, including all of the companies that it reasonably considered
to be potential interested parties, concerning possible business
combinations, and such exposure resulted in only one other party making
a definitive proposal, on terms less favorable than the Offer.
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. The oral and written opinions of Blair that, as of the date of such
opinions, the Offer Price is fair, from a financial point of view, to
the Company's stockholders. A copy of such written opinion setting forth
assumptions made and matters considered and limitations set forth by
Blair is included as Annex A hereto and should be read in its entirety.
. The historical market prices, price-to-earnings ratios, EBITDA and other
multiples, recent trading activity and trading range of the Common
Stock, including the fact that the Offer Price represents (i) a premium
of approximately 41% over the $11.625 closing price of the Common Stock
on the Nasdaq on October 4, 2000, the last full trading day prior to the
announcement of the Offer; (ii) a premium of approximately 57% over the
average closing price of the Common Stock on the Nasdaq for the 30 days
prior to the announcement of the Offer; (iii) a premium of approximately
38% over the average closing price of the Common Stock on the Nasdaq for
the 12 months prior to the announcement of the Offer; (iv) a discount of
less than 1% from the highest closing price of the Common Stock on the
Nasdaq during the 12 months prior to the announcement of the Offer; and
(v) a premium of approximately 108% over the lowest closing price of the
Common Stock on the Nasdaq for the 12 months prior to the announcement
of the Offer.
. The fact that the Offer and the Merger provide for a prompt cash tender
offer for all the shares of Common Stock to be followed by the Merger
for the same consideration, thereby enabling the Company's stockholders,
at the earliest possible time, to obtain the benefits of the transaction
in exchange for their shares of Common Stock.
. The fact that the Company may, subject to the terms of the Merger
Agreement, terminate the Merger Agreement in order to approve an
unsolicited tender offer or exchange offer for all the shares of Common
Stock or other proposed business combination by a third party that the
Board determines in good faith to be fully financed or capable of being
financed and financially superior to the Offer, if the company has
complied with its obligation to give Great Nordic notice and an
opportunity to match such unsolicited offer, upon the payment to Great
Nordic of a $3.5 million termination fee plus expenses, the total not to
exceed $5 million.
. The fact that Great Nordic's and the Purchaser's obligations under the
Offer are not subject to any financing condition.
. The limited ability of Great Nordic or the Purchaser to terminate the
Offer or the Merger Agreement.
. The impact of the Offer and the Merger on existing stock options and
other benefits of Company personnel.
The foregoing discussion of the information and factors considered and given
weight by the Board is not intended to be exhaustive. In view of the variety
of factors considered in connection with its evaluation of the Offer, the
Board did not find it practicable to, and did not, quantify or otherwise
assign relative weights to the specific factors considered in reaching its
determination. In addition, individual members of the Board may have given
different weights to different factors.
(c) Intent to Tender. To the Company's knowledge after reasonable inquiry,
all of the Company's executive officers, directors, and affiliates currently
intend to tender all shares of Common Stock held of record or beneficially by
them pursuant to the Offer. The foregoing does not include any shares over
which, or with respect to which, any such executive officer, director, or
affiliate acts in a fiduciary or representative capacity or is subject to the
instructions of a third party with respect to such tender or vote.
ITEM 5. Person/Assets, Retained, Employed, Compensated Or Used.
Pursuant to a letter agreement dated April 12, 2000, the Company formally
retained Blair to provide general financial advisory services to, and to
advise the Company concerning, one or more strategic transactions, including a
possible acquisition, sale, merger, joint venture or business combination,
and, if requested, to render an opinion to the Board regarding the fairness,
from a financial point of view, to the holders of the Common Stock of the
consideration to be received in any such strategic transaction. The Board
retained Blair based upon Blair's qualifications, experience and expertise,
particularly with respect to the Company's industries.
8
<PAGE>
Pursuant to the Blair engagement letter, the Company agreed to pay to Blair
(i) a cash retainer, (ii) a fee for delivery of an opinion and (iii) a
sliding-scale fee, payable upon consummation of a strategic transaction, which
is based upon the aggregate value of the strategic transaction. The cash
retainer and opinion fees are creditable against the fee payable upon
consummation of a strategic transaction. Prior to delivery of its fairness
opinion relating to the Offer, Blair received retainer fees aggregating
$50,000. Blair will receive a cash opinion fee of $150,000 and, if the Company
consummates the transaction described in this Statement, Blair will receive a
net additional cash fee of approximately $1,000,000, plus out-of-pocket
expenses. The Company has also agreed to reimburse Blair for certain costs and
expenses. In addition, the Company has also agreed to indemnify Blair against
certain liabilities and expenses, including certain liabilities under the
federal securities laws, arising out of Blair's engagement or, if such
indemnification is unavailable to Blair or insufficient to hold it harmless,
then the Company has agreed to contribute to the amount paid or payable by
Blair as a result of such occurrence.
Except as described above, neither the Company nor any person acting on its
behalf currently intends to employ, retain or compensate any other person to
make solicitations or recommendations to stockholders on its behalf concerning
the Offer or the Merger.
ITEM 6. Recent Transactions And Interest With Respect To Securities.
Except as set forth below, no transactions in shares of Common Stock have
been effected during the past 60 days by the Company or any subsidiary of the
Company or, to the best of the Company's knowledge, by any executive officer,
director or affiliate of the Company.
On August 31, 2000, the Company, on behalf of participants in its Employee
Stock Purchase Plan, issued 22,033 shares, at a price per share of $9.1906,
which was equal to 85% of the closing price, as quoted on the Nasdaq National
Market, per share of Common Stock on that date.
ITEM 7. Purposes Of The Transaction And Plans Or Proposals.
Except as set forth in this Statement, the Company is not currently
undertaking or engaged in any negotiations in response to the Offer that
relate to (i) a tender offer for or other acquisition of the Company's
securities by the Company, any subsidiary of the Company or any other person;
(ii) an extraordinary transaction, such as a merger, reorganization or
liquidation, involving the Company or any subsidiary of the Company; (iii) a
purchase, sale, or transfer of a material amount of assets of the Company or
any subsidiary of the Company; or (iv) any material change in the current
dividend rate or policy or in the indebtedness or capitalization of the
Company.
Except as set forth in this Statement, there are no transactions,
resolutions of the Board, agreements in principle, or signed contracts in
response to the Offer that relate to one or more of the events referred to in
this Item 7.
ITEM 8. Additional Information to Be Furnished.
Appraisal Rights
Stockholders do not have appraisal rights as a result of the Offer. However,
if the Merger is consummated, each holder of Shares who has neither voted in
favor of the Merger nor consented thereto in writing, and who otherwise under
Delaware Law, complies with the applicable statutory procedures will be
entitled to receive a judicial determination of the fair value of their Shares
(exclusive of any element of value arising from the accomplishment or
expectation of such merger or similar business combination) and to receive
payment of such fair value in cash, together with a fair rate of interest, if
any, for Shares held by such holders (the "Dissenting Shares"). Any such
judicial determination of the fair value of the Shares could be based upon
considerations other than or in addition to the price paid in the Offer and
the market value of the Shares. Stockholders should recognize that the value
so determined could be higher or lower than the price per Share paid pursuant
to the Offer. Moreover, the Company may argue in an appraisal proceeding that,
for purposes of such a proceeding, the fair value of the Shares is less than
the price paid in the Offer. The foregoing discussion is not a complete
statement of law pertaining to appraisal rights under Delaware Law and is
qualified in its entirety by reference to Delaware Law.
9
<PAGE>
If any holder of Shares who demands appraisal under Section 262 of the
Delaware Law fails to perfect, or effectively withdraws or loses his rights to
appraisal as provided in the Delaware Law, the Shares of such stockholder will
be converted into the Merger Consideration in accordance with the Merger
Agreement. A stockholder may withdraw his demand for appraisal by delivering
to the Company a written withdrawal of his demand for appraisal and acceptance
of the Merger.
Failure to follow the steps required by Section 262 of the Delaware Law for
perfecting appraisal rights may result in the loss of such rights.
Section 14(F) Information Statement
The Information Statement attached as Annex B hereto is being furnished in
connection with the possible designation by Purchaser, pursuant to the Merger
Agreement, of certain persons to be appointed to the Board other than at a
meeting of the Company's stockholders.
ITEM 9. Material To Be Filed As Exhibits.
The following Exhibits are filed herewith:
<TABLE>
<C> <S>
Exhibit 1. Offer to Purchase (incorporated by reference to Exhibit (a)(1) to
the Schedule TO).*
Exhibit 2. Letter of Transmittal (incorporated by reference to Exhibit (a)(2)
to the Schedule TO).*
Exhibit 3. Agreement and Plan of Merger, dated October 4, 2000, by and among
Great Nordic, Purchaser and the Company (incorporated by reference
to Exhibit (d)(1) to the Schedule TO)
Exhibit 4. Non-Disclosure Agreement, dated as of October 27, 2000, between
the Company and GN Netcom (incorporated by reference to Exhibit
(d)(3) to the Schedule TO).
Exhibit 5. Non-Disclosure Agreement dated as of August 10, 2000, between the
Company and GN Netcom (incorporated by reference to Exhibit d(4)
to the Schedule TO).
Exhibit 6. Letter to Stockholders of the Company, dated October 11, 2000.*
Exhibit 7. Opinion of Blair, dated October 4, 2000 (included as, and
incorporated by reference to, Annex A attached hereto).
Exhibit 8. Press release of Great Nordic, dated October 4, 2000 (incorporated
by reference to the Company's filing of the Joint Press Release
with the Securities and Exchange Commission under cover of
Schedule 14D-9 on October 5, 2000).
Exhibit 9. Certificate of Incorporation of the Company, as amended
(incorporated by reference to the Company's Registration Statement
on Form S-1, filed with the Securities Exchange Commission on
April 6, 1995).
Exhibit 10. Bylaws of the Company, as amended (incorporated by reference to
the Company's annual report on Form 10-K for the year ended March
27, 1998).
Exhibit 11. The Information Statement of the Company, dated October 11, 2000
(included as, and incorporated by reference to, Annex B attached
hereto).
Exhibit 12. Employment Agreement, dated as of March 24, 1995, by and between
the Company and E. Alexander Glover (incorporated by reference to
the exhibit filed with the Company's Form S-1 filed with the
Securities and Exchange Commission on April 6, 1995).
Exhibit 13. Amendment to Employment Agreement, dated as of July 1, 1997, by
and between the Company and E. Alexander Glover (incorporated by
reference to the exhibit filed with the Company's Form 10-K filed
with the Securities and Exchange Commission on March 27, 1998).
Exhibit 14. Amendment to Employment Agreement, dated as of April 27, 2000, by
and between the Company and E. Alexander Glover.
Exhibit 15. Form of Employee Severance Agreement entered into between the
Company and each of its executive officers (incorporated by
reference to the exhibit filed with the Company's Form 10-Q filed
with the Securities Exchange Commission on July 24, 1998).
</TABLE>
--------
* Included in copies mailed to stockholders.
10
<PAGE>
SIGNATURE
After reasonable inquiry and to the best of its knowledge and belief, the
undersigned certifies that the information set forth in this statement is
true, complete and correct.
HELLO DIRECT, INC.
By: _________________________________
Name: E. Alexander Glover
Title: President and Chief
Executive Officer
Dated: October 11, 2000
11
<PAGE>
ANNEX A
OPINION OF FINANCIAL ADVISOR
WILLIAM BLAIR & COMPANY, LLC
William Blair & Company
Limited Liability Company
October 3, 2000
Board of Directors
Hello Direct, Inc.
5893 Rue Ferrari
San Jose, California 95138-1857
Gentlemen:
You have requested our opinion as to the fairness, from a financial point of
view, to the holders (collectively, the "Stockholders") of the outstanding
shares of common stock, par value $0.001 per share) (the "Common Stock") of
Hello Direct, Inc (the "Company") of the $16.40 per share in cash (the "Merger
Consideration") proposed to be paid to the Stockholders pursuant to the
proposed Agreement and Plan of Merger (the "Merger Agreement") by and among GN
Great Nordic ("GN"), GN Acquisition Corporation, an indirect wholly owned
subsidiary of GN ("Merger Sub"), and the Company. Pursuant to the terms of and
subject to the conditions set forth in the proposed Merger Agreement, Merger
Sub will make a cash tender offer (the "Offer") for each outstanding share of
common stock, at a price per share equal to the Merger Consideration and that
thereafter the Company will be merged into Merger Sub (the "Merger") and each
then outstanding share of Common Stock of the Company will be converted into
the right to receive the Merger Consideration upon consummation of the Merger.
In connection with the Merger, each then outstanding employee stock option,
whether or not then exercisable or vested, would be cancelled and the holder
thereof would be entitled to an amount in cash equal to the excess of the
Merger Consideration over the exercise price of such option.
In connection with our review of the proposed Offer and Merger and the
preparation of our opinion herein, we have examined: (a) the proposed Merger
Agreement; (b) audited historical financial statements of the Company for the
three years ended December 31, 1999; (c) the unaudited financial statements of
the Company for the eight months ended August 31, 2000 and the eight months
ended August 31, 1999; (d) certain internal business operation and financial
information and forecasts of the Company (the "Forecasts"), prepared by the
senior management of the Company; (e) certain publicly available financial and
stock market data relating to selected public companies that we considered
relevant to our inquiry; (f) information regarding publicly available
financial terms of certain other business combinations that we considered
relevant to our inquiry; (g) current and historical market prices and trading
volumes of the Common Stock; (h) information regarding percentage premiums
paid for public companies over trading market prices prior to the announcement
of an acquisition or merger transaction of relevant size; and (i) certain
other publicly available information on the Company. We have also held
discussions with members of the senior management of the Company to discuss
the foregoing, have considered other matters which we have deemed relevant to
our inquiry and have taken into account such accepted financial and investment
banking procedures and considerations as we have deemed relevant or
appropriate. In connection with our engagement, we were requested to approach,
and held discussions with third parties to solicit indications of interest in
a possible acquisition of the Company.
In rendering our opinion, we have assumed and relied, without assuming any
duty of independent verification, upon the accuracy and completeness of all
the information examined by or otherwise reviewed or discussed with us for
purposes of this opinion including without limitation the Forecasts provided
by senior management. We have not made or obtained an independent valuation or
appraisal of the assets, liabilities or solvency of the Company. We have been
advised by the senior management of the Company that the Forecasts examined by
us have been reasonably prepared on bases reflecting the best currently
available estimates and
A-1
<PAGE>
judgments of the senior management of the Company. In that regard, we have
assumed, with your consent, that (i) all material assets and liabilities
(contingent or otherwise) of the Company are as set forth in the Company's
financial statements or other information made available to us; and (ii) the
Merger will be accounted for under the purchase method. We express no opinion
with respect to the Forecasts or the estimates and judgments on which they are
based. Our opinion herein is based upon economic, market, financial and other
conditions existing on, and other information disclosed to us as of, the date
of this letter. It should be understood that, although subsequent developments
may affect this opinion, we do not have any obligation to update, revise or
reaffirm this opinion. We have assumed that the Offer and the Merger will be
consummated on the terms described in the proposed Merger Agreement, without
any waiver of any material terms or conditions by the Company.
William Blair & Company has been engaged in the investment banking business
since 1935. We continually undertake the valuation of investment securities in
connection with public offerings, private placements, business combinations,
estate and gift tax valuations and similar transactions. In the ordinary
course of our business, we may from time to time trade the securities of the
Company or GN for our own account and for the accounts of customers, and
accordingly may at any time hold a long or short position in such securities.
We have acted as the investment banker to the Company in connection with the
Offer and the Merger and will receive a fee from the Company for our services.
In addition, the Company has agreed to indemnify us against certain
liabilities arising out of our engagement.
Our investment banking services and our opinion were provided for the use
and benefit of the Board of Directors of the Company in connection with its
consideration of the transaction contemplated by the proposed Merger
Agreement. Our opinion is limited to the fairness, from a financial point of
view, to the Stockholders of the Merger Consideration to be received in
connection with the Offer and the Merger, and we do not address the merits of
the underlying decision by the Company to engage in the Offer and the Merger
and this opinion does not constitute a recommendation to any Stockholder as to
how such Stockholder should act with respect to the proposed Offer and the
Merger. It is understood that this letter may not be disclosed or otherwise
referred to without prior written consent, except that the opinion may be
included in its entirety in a tender offer or solicitation recommendation or
proxy statement mailed to the Stockholders with respect to the Offer and the
Merger.
Based upon and subject to the foregoing, it is our opinion as investment
bankers that, as of the date hereof the Merger Consideration to be received by
the Stockholders is fair, from a financial point of view, to such
Stockholders.
Very truly yours,
/s/ WILLIAM BLAIR & COMPANY, LLC
A-2
<PAGE>
ANNEX B
HELLO DIRECT, INC.
5893 RUE FERRARI
SAN JOSE, CALIFORNIA 95138
INFORMATION STATEMENT PURSUANT TO
SECTION 14(F) OF THE SECURITIES EXCHANGE
ACT OF 1934 AND RULE 14F-1 THEREUNDER
This Information Statement is being mailed on or about October 11, 2000 as
part of the Solicitation/ Recommendation Statement on Schedule 14D-9 (the
"Statement") of Hello Direct, Inc. (the "Company"). You are receiving this
Information Statement in connection with the possible election of persons
designated by GN Great Nordic, LTD. ("Great Nordic"), a corporation formed
under the laws of Denmark, to a majority of seats on the Board of Directors
(the "Board of Directors") of the Company. On October 4, 2000, the Company
entered into an Agreement and Plan of Merger (the "Merger Agreement") with
Great Nordic and GN Acquisition Corporation (the "Purchaser"), a corporation
formed under the laws of the State of Delaware and a wholly owned indirect
subsidiary of Great Nordic, pursuant to which the Purchaser is required to
commence a tender offer to purchase all outstanding shares of Common Stock,
par value $.001 per share, of the Company (the "Common Stock") at a price per
share of $16.40 net to the seller in cash (the "Offer Price"), upon the terms
and conditions set forth in the Purchaser's Offer to Purchase, dated October
11, 2000, and in the related Letter of Transmittal (which, together with any
amendments and supplements thereto, collectively constitute the "Offer").
Copies of the Offer to Purchase and the Letter of Transmittal have been mailed
to stockholders of the Company and are filed as Exhibits (a)(1) and (a)(2)
respectively, to the Tender Offer Statement on Schedule TO (as amended from
time to time, the "Schedule TO") filed by the Purchaser and Great Nordic with
the Securities and Exchange Commission (the "Commission") on October 11, 2000.
The Merger Agreement provides that, subject to the satisfaction or waiver of
certain conditions, following completion of the Offer, and in accordance with
the General Corporation Law of the State of Delaware (the "DGCL"), the
Purchaser will be merged with and into the Company (the "Merger"). Following
consummation of the Merger, the Company will continue as the surviving
corporation (the "Surviving Corporation") and will be a wholly owned
subsidiary of Great Nordic. At the effective time of the merger (the
"Effective Time"), each issued and outstanding share of Common Stock (other
than shares that are owned by Great Nordic, the Purchaser, any of their
respective subsidiaries, the Company or any of its subsidiaries, and Shares
held by stockholders of the Company who did not vote in favor of the Merger
Agreement and who comply with all of the relevant provisions of Section 262 of
the DGCL) will be converted into the right to receive $16.40 in cash or any
greater amount per share paid pursuant to the Offer.
The Offer the Merger, and the Merger Agreement are more fully described in
the Schedule 14D-9 to which this Information Statement is attached as Annex B,
which was filed by the Company with the Commission on October 11, 2000 and
which is being mailed to stockholders of the Company along with this
Information Statement.
This Information Statement is being mailed to you in accordance with Section
14(f) of the Securities Exchange Act of 1934, as amended, and Rule 14f-l
promulgated thereunder. The information set forth herein supplements certain
information set forth in the Statement on Schedule 14D-9. Information set
forth herein related to Great Nordic, the Purchaser or the Great Nordic
Designees (as defined herein) has been provided by Great Nordic. You are urged
to read this Information Statement carefully. You are not, however, required
to take any action in connection with the matters set forth herein.
Pursuant to the Merger Agreement, the Purchaser commenced the Offer on
October 11, 2000. The Offer is currently scheduled to expire at 12:00
midnight, New York City time, on Tuesday, November 7, 2000, unless the
Purchaser extends it.
B-1
<PAGE>
General
The Common Stock is the only class of equity securities of the Company
outstanding which are entitled to vote at a meeting of the stockholders of the
Company. As of September 30, 2000, there were 5,327,128 shares of Common Stock
outstanding, of which Great Nordic and the Purchaser own 100 shares as of the
date hereof.
Rights To Designate Directors and Great Nordic Designees
The Merger Agreement provides that, promptly upon the purchase of and
payment for shares of Common Stock by the Purchaser pursuant to the Offer,
Great Nordic will be entitled to designate at least a majority of the members
(the "Great Nordic Designees") of the Board of Directors.
The Merger Agreement provides that the Company will, upon request of the
Purchaser, promptly increase the size of the Board of Directors or exercise
its reasonable best efforts to secure the resignations of such number of
directors, or both, as is necessary to enable the Great Nordic Designees to be
elected to the Board and, subject to Section 14(f) of the Securities Exchange
Act of 1934, as amended, and Rule 14f-l promulgated thereunder, will cause the
Great Nordic Designees to be so elected. At such time, the Company will, if
requested by Great Nordic, also cause directors designated by Great Nordic to
constitute at least the same percentage (rounded up to the next whole number)
of each committee of the Board of Directors as such directors constitute on
the Board of Directors.
Notwithstanding the foregoing, if shares of Common Stock are purchased
pursuant to the Offer, there will be until the Effective Time at least three
members of the Board of Directors who were directors on the date of the Merger
Agreement and who are not employees of the Company.
Great Nordic has informed the Company that the Great Nordic Designees will
be the directors and executive officers of Purchaser listed in Schedule I to
the Offer to Purchase, a copy of which is being mailed to stockholders
together with this Schedule 14D-9. The information on such Schedule I is
incorporated herein by reference. Each such individual has consented to serve
as a director of the Company if appointed or elected. None of the Great Nordic
Designees currently is a director of, or holds any position with, the Company.
Great Nordic has advised the Company that, to the best of Great Nordic's
knowledge, except as set forth below, none of the Great Nordic Designees or
any of their affiliates beneficially owns any equity securities or rights to
acquire any such securities of the Company nor has any such person been
involved in any transaction with the Company or any of its directors,
executive officers or affiliates that is required to be disclosed pursuant to
the rules and regulations of the Commission other than with respect to
transactions between Great Nordic and the Company that have been described in
the Schedule TO or the Statement.
The name, age, present principal occupation or employment and five-year
employment history of each of the individuals who may be selected as Great
Nordic Designees are set forth in Schedule I of the Offer to Purchase. Unless
otherwise indicated, each such individual has held his or her present position
as set forth therein for the past five years. Each such person is a citizen of
the United States, except for Niels B. Chistiansen and Poul Erik Tofte, who
are Danish citizens and the business address of each Great Nordic Designee is
set forth opposite such person's name in Schedule I of the Offer to Purchase.
B-2
<PAGE>
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information regarding the beneficial
ownership of Common Stock of the Company as of September 30, 2000 as to (i)
each person who is known by the Company to own beneficially more than 5% of
the outstanding shares of Common Stock, (ii) each director and each nominee
for director of the Company, (iii) each of the executive officers named in the
Summary Compensation Table in "Compensation of Executive Officers" below and
(iv) all directors and executive officers as a group.
<TABLE>
<CAPTION>
Beneficial
Ownership(1)
--------------------
Number of Percent of
Beneficial Owner Shares Total
---------------- --------- ----------
<S> <C> <C>
Wellington Management Company, LLP (2)................... 503,400 9.5
75 State Street
Boston, MA 02109
Dimensional Fund Advisors, Inc. (3)...................... 379,200 7.1
1299 Ocean Ave., 11th Floor
Santa Monica, CA 90401
E. Alexander Glover (4).................................. 229,669 4.2
John B. Mumford (5)...................................... 214,580 4.0
Charles E. Volwiler (6).................................. 115,425 2.2
Ronald J. Becht, Jr. (7)................................. 98,135 1.8
Dennis P. Waldera (8).................................... 93,423 1.7
William P. Sousa (9)..................................... 58,088 1.1
Michael S. Young (10).................................... 45,603 *
Dean Witter III (11)..................................... 25,103 *
John W. Combs (12)....................................... 21,250 *
Ruth A. Grouell (13)..................................... 17,052 *
Gerald L. Beckwith (14).................................. 5,250 *
Steven J. Gomo (15)...................................... 5,250 *
All executive officers and directors as a group (12
persons) (16)........................................... 928,828 16.1
</TABLE>
--------
* Less than 1%
(1) Beneficial ownership is determined in accordance with Rule 13d-3 of the
Securities Exchange Act of 1934 and generally includes voting or
investment power with respect to securities. Shares of Common Stock
subject to options currently exercisable or exercisable within 60 days of
September 30, 2000 are deemed outstanding for computing the percentage of
the person holding such options, but are not outstanding for computing the
percentage of any other person. Except as indicated by footnote, and
subject to community property laws where applicable, the persons named in
the table above have sole voting and investment power with respect to all
shares of Common Stock shown as beneficially owned by them.
(2) As reported by www.nasdaq-online.com as of September 30, 2000.
(3) As reported by www.nasdaq-online.com as of September 30, 2000.
(4) Includes 174,373 shares issuable upon the exercise of stock options
exercisable within 60 days of September 30, 2000.
(5) Includes 148,469 shares held by the Mumford Family Trust, 19,261 shares
held by the Crosspoint Retirement Plan for the benefit of Mr. Mumford (the
"Retirement Plan"), 29,600 shares held in an individual retirement account
(the "IRA") for the benefit of Mr. Mumford and 17,250 shares issuable upon
exercise of stock options exercisable within 60 days of September 30,
2000. Mr. Mumford is also a trustee of the Mumford Family Trust. Mr.
Mumford retains the right to direct the voting and disposition of the
shares held by the Mumford Family Trust. Accordingly, Mr. Mumford may be
deemed to be a beneficial owner of these shares. Mr. Mumford disclaims
beneficial ownership of such shares except to the extent of his pecuniary
interest therein. This number does not include 66,572 shares held by
various trusts for the benefit of children of Mr. Mumford. Mr. Mumford
disclaims beneficial ownership of such shares.
B-3
<PAGE>
(6) Includes 2,250 shares issuable upon the exercise of stock options
exercisable within 60 days of September 30, 2000.
(7) Includes 75,518 shares issuable upon the exercise of stock options
exercisable within 60 days of September 30, 2000.
(8) Includes 57,831 shares issuable upon the exercise of stock options
exercisable within 60 days of September 30, 2000.
(9) Includes 24,315 shares issuable upon the exercise of stock options
exercisable within 60 days of September 30, 2000.
(10) Includes 24,829 shares issuable upon the exercise of stock options
exercisable within 60 days of September 30, 2000.
(11) Includes 19,000 shares issuable upon the exercise of warrants and 5,103
shares issuable upon the exercise of stock options exercisable within 60
days of September 30, 2000.
(12) Includes 17,250 shares issuable upon the exercise of stock options
exercisable within 60 days of September 30, 2000.
(13) Includes 16,561 shares issuable upon the exercise of stock options
exercisable within 60 days of September 30, 2000.
(14) Consists of 5,250 shares issuable upon the exercise of stock options
exercisable within 60 days of September 30, 2000.
(15) Consists of 5,250 shares issuable upon the exercise of stock options
exercisable within 60 days of September 30, 2000.
(16) Includes 425,780 shares issuable upon the exercise of stock options
exercisable within 60 days of September 30, 2000 and 19,000 shares
issuable upon the exercise of warrants.
B-4
<PAGE>
BOARD OF DIRECTORS
Terms Of Directors
The directors are elected to serve until the next annual meeting.
Directors and Executive Officers
The current executive officers of the Company are as follows:
E. Alexander Glover, age 57, was appointed President in June, 1997 and Chief
Executive Officer of the Company in December, 1997 after joining the Company
in 1995 as Executive Vice President. From 1983 to 1994, Mr. Glover was Senior
Vice President, Marketing and R&D for Kransco Group Companies ("Kransco"), the
largest privately held toy and sporting goods company in the United States.
Mr. Glover was also a member of the Corporate Executive Committee at Kransco.
From 1969 to 1983, Mr. Glover progressed through various senior marketing
management positions with Procter & Gamble Co., in its Paper and Packaged
Soap/Detergent Divisions. Mr. Glover holds a B.A. from Harvard and an M.B.A.
from Stanford University.
Ronald J. Becht, Jr., age 44, joined the Company in 1993. From 1991 to
September 1993, he was President and Chief Executive Officer of Personal
Computing Tools, a direct marketer of data acquisition and control products
which was acquired by Software Developers Corporation, a direct marketer of
engineering, software and hardware products. From 1981 to 1991, he served in
various marketing positions with Inmac Corp., a direct marketer of computer
hardware and software products, most recently as Director of Worldwide
Marketing. Mr. Becht holds a B.S. in Business from the University of San
Diego.
Ruth A. Grouell, age 53, joined the Company in 1998. From 1995 to 1997, she
was Director of Human Resources for Geron Corporation, a biotech company. From
1993 to 1995, she managed the training and development department for Syntex
Pharmaceuticals. From 1988 to 1991, she led efforts to re-engineer business
processes at Ford Aerospace. Earlier, she was an organizational development
consultant for the U.S. Army in Europe. Ms. Grouell holds a B.A. in English
from the University of Iowa and an M.S. in Counseling from San Diego State
University.
Dennis P. Waldera, age 52, joined the Company in 1996. From 1983 through
early 1996, Mr. Waldera held various positions, lastly Executive Vice
President and Managing Director, with Clarion Marketing and Communications,
one of the largest marketing consulting, sales promotion, and direct marketing
services firms in the United States. He was also a member of Clarion's
Management Committee and Board of Directors. From 1978 through 1982, Mr.
Waldera was a Vice President of Glendinning Associates, a marketing,
promotion, and sales consulting company. Mr. Waldera began his career at
Procter & Gamble Co., where from 1972 to 1978 he progressed through various
marketing management positions in the Paper Products Division. Mr. Waldera
holds a B.B.A. from the University of Wisconsin and an M.B.A. from
Northwestern University.
Dean ("Kip") Witter III, age 53, was appointed interim Chief Financial
Officer and Secretary of the Company in February, 1999, and appointed the
permanent Chief Financial Officer on April 1, 2000. Previously, as a senior
consultant in The Brenner Group, Inc., an interim management and financial
advisory services firm, Mr. Witter served as acting CFO for Telcontar, GenOA
Corporation, and BusinessBots, Inc. Prior to that, he was a principal in two
start ups. From 1976 until 1989 Mr. Witter worked at Amdahl Corporation, where
he rose to the position of Vice President and Treasurer. Mr. Witter holds a
B.A. from Harvard and an M.B.A. from Stanford University.
Michael S. Young, age 50, joined the Company in 1998. From 1994 to 1998, he
was Chief Operating Officer for Odwalla, Inc., a leading retailer of fresh
squeezed juices. From 1991 to 1994, he served as Vice President of Strategic
Information Systems at Kransco Group Companies, the largest privately held toy
and sporting goods firm in the U.S. From 1978 to 1991, he held various
information systems positions with Colgate-Palmolive Company.
B-5
<PAGE>
The current directors of the Company are as follows:
Mr. Mumford, age 56, is a co-founder of the Company and has served as
Chairman of the Board since the Company's inception. Mr. Mumford has served as
President of Crosspoint Corporation since 1972 and as Managing General Partner
of Crosspoint Venture Partners since 1982. Mr. Mumford currently serves as a
director of a number of private companies primarily in the information
technology area. Mr. Mumford was a director of Office Depot, a public company,
from 1986 through April 1997. Mr. Mumford was a founding director of Inmac
Corp. and served in such capacity until its merger with Micro Warehouse in
1996. He has served as a director of Ariba, a public company, since its
inception in 1996. Mr. Mumford holds a B.S. from Arizona State University and
an M.B.A. from Stanford University.
Mr. Beckwith, age 51, has been employed by QUALCOMM since 1987 and is
currently a senior vice president and the president of QUALCOMM's Wireless
Systems Division. He previously held managerial and engineering positions with
M/A-COM Linkabit, Mostek Corporation, National Micronetics and General
Dynamics. He holds both Masters and Bachelor degrees in Electrical Engineering
from San Diego State University.
Mr. Combs, age 52, has been employed by Internet Connect, a broadband
networking company, since September 1999 and is currently its Chief Executive
Officer. From 1993 through September 1999, Mr. Combs was President of the
Southwest Area for Nextel Communications. From 1991 to 1993, he served as
Executive Vice President of Sales, Marketing and Customer Care of L.A.
Cellular. Mr. Combs was President of Mitel, Inc. from 1988 to 1991. He was
employed by Fujitsu Business Communications from 1977 to 1988, holding the
title of Executive Vice President and General Manager--Direct Sales Division.
Mr. Combs is a director of Digital Microwave, a public company. Mr. Combs
earned a Bachelor of Science degree from California Polytechnic State
University.
Mr. Gomo, age 48, has been employed by Asera, Inc., an internet software
company, since January 2000, and is currently its Chief Financial Officer.
From 1998 to January 2000, Mr. Gomo served as Senior Vice President and Chief
Financial Officer for Silicon Graphics, Inc. From 1974 to 1998, Mr. Gomo
served in key financial and general management positions at Hewlett-Packard.
Mr. Gomo earned a Bachelor's of Science in Business Administration from Oregon
State University and a Masters in Business Administration from Santa Clara
University.
Mr. Glover. Please see Mr. Glover's biography above.
Mr. Sousa, age 65, currently serves as a consultant to technology companies.
Mr. Sousa served as the President and Chief Executive Officer of Air
Communications, Inc., a high-technology marketing development company
specializing in wireless data and general communications products, from 1993
to 1994. From 1991 to 1993, Mr. Sousa served as President and Chief Executive
Officer of Insite Peripherals, Inc. ("Insite"), a high-technology marketing
and development company specializing in high-capacity floptical disk drives.
Prior to working at Insite, he was Executive Vice President of Inmac Corp., a
direct marketer of computer hardware and software products.
Mr. Volwiler, age 44, co-founded the Company in 1987 and is currently Vice
President of Nickelodeon Theatres, Inc. He served as Vice President of the
Company from 1987 through January 1999. Prior to co-founding Hello Direct, Mr.
Volwiler was Director of Marketing for Devoke Company, Inc. In 1977 Mr.
Volwiler joined Devoke, which was owned by New England Business Service
("NEBS") from 1983 to 1989. Mr. Volwiler remained with NEBS until 1987. Mr.
Volwiler holds a Bachelor of Science degree in Commerce from Santa Clara
University.
Board Meetings and Committees
The Board of Directors of the Company held a total of seven meetings during
fiscal 1999. The Board of Directors has a Compensation Committee and an Audit
Committee. The Board of Directors has no nominating committee or any committee
performing such functions.
B-6
<PAGE>
The Compensation Committee, which consisted of directors John B. Mumford,
Gerald L. Beckwith and William P. Sousa during fiscal year 1999, met eight
times by written consent during the fiscal year. John B. Mumford, Gerald L.
Beckwith, and William P. Sousa have been appointed to the Compensation
Committee for fiscal 2000. This Committee is responsible for determining
salaries, incentives and other forms of compensation for directors and
officers of the Company and administers various incentive compensation and
benefit plans.
The Audit Committee, which consisted of directors John B. Mumford, John W.
Combs and Steven J. Gomo, met two times during fiscal 1999. John B. Mumford,
John W. Combs and Steven J. Gomo have been appointed to the Audit Committee
for fiscal 2000. This Committee is responsible for overseeing actions taken by
the Company's independent auditors and reviews the Company's internal
financial controls.
No director attended fewer than 75% of the aggregate of the meetings of the
Board of Directors and committees thereof, if any, upon which such director
served during the period for which he has been a director or committee member.
Compensation of Directors
In fiscal year 1999, the Company's outside directors received cash
compensation of $500 for each regular Board meeting attended and were
reimbursed for reasonable expenses incurred in connection with attendance at
Board and committee meetings. The Company plans to continue these payments in
fiscal year 2000.
In fiscal year 1999, each of the outside directors, who had served on the
board for each of the six months prior to January 1999 (Messrs. Mumford, Combs
and Sousa), received on January 1, 1999, a nonstatutory option grant for the
purchase of 3,000 shares of the Company's Common Stock having an exercise
price of $9.25 per share and vesting 25% quarterly during the fiscal year. On
January 3, 2000, each of the outside directors received a nonstatutory option
grant for 3,000 shares of Common Stock at an exercise price of $14.375 and
vesting 25% quarterly during the fiscal year.
Compensation Committee Interlocks and Insider Participation
The Compensation Committee consisted of John B. Mumford, Gerald L. Beckwith
and William P. Sousa during fiscal 1999. The Compensation Committee makes
recommendations to the Board of Directors concerning salaries and incentive
compensation for directors and officers of the Company. Mr. Glover, President
and Chief Executive Officer of the Company, although not a voting member of
the Compensation Committee, participates in all discussions and decisions
regarding salaries and incentive compensation for all employees of and
consultants to the Company, except that Mr. Glover is excluded from
discussions and decisions regarding his own salary and incentive compensation.
Section 16(A) Beneficial Ownership Reporting Compliance
To the Company's knowledge based on review of copies of such forms furnished
to the Company and written representations, all Forms 3, 4 and 5 required by
Section 16(a) of the Securities Exchange Act of 1934, as amended, have been
timely filed with respect to the most recently concluded fiscal year.
B-7
<PAGE>
EXECUTIVE COMPENSATION
SUMMARY COMPENSATION TABLE
Compensation of Executive Officers
The following table sets forth the compensation earned by (i) the Company's
Chief Executive Officer, (ii) each of the Company's four other most highly
compensated executive officers in 1998 who were serving as executive officers
at the end of 1999 and whose salary and bonus for 1999 exceeded $100,000
(collectively, the "Named Executive Officers") for services rendered in all
capacities to the Company during the years ended December 31, 1997, 1998 and
1999:
Summary Compensation Table
<TABLE>
<CAPTION>
Long-Term
Compensation
------------
Awards
------------
Annual
Compensation
----------------- Securities All Other
Salary Bonus Underlying Compensation
Name and Principal Position Year ($) ($)(1) Options(#) ($)(2)
--------------------------- ---- -------- -------- ------------ ------------
<S> <C> <C> <C> <C> <C>
E. Alexander Glover.......... 1999 $300,000 $142,500 50,000 9,419
President, Chief Executive
Officer 1998 300,000 150,000 50,000 8,739
and Director 1997 300,000 130,000 30,000 8,180
Ronald J. Becht, Jr. ........ 1999 181,250 86,100 20,000 3,712
Vice President of Product 1998 175,000 87,500 20,000 3,626
Marketing 1997 150,000 66,250 20,000 2,711
Ruth A. Grouell (3).......... 1999 35,000 64,125 10,000 5524
Vice President of
Organizational Development 1998 20,250 10,125 15,000 0
Dennis P. Waldera............ 1999 181,250 86,100 20,000 5,228
Vice President of Direct
Marketing 1998 175,000 87,500 20,000 4,930
1997 162,500 70,938 20,000 4,008
Michael S. Young (4)......... 1999 161,667 76,000 20,000 5,369
Vice President, Chief
Information Officer and
Chief E-Commerce Officer
</TABLE>
--------
(1) The Company establishes each year a Management Bonus Plan for which senior
management is eligible. The amount of a particular employee's bonus varies
depending on salary level, position with the Company and the operating
results of the Company.
(2) Represents premiums for long-term disability benefits.
(3) Ms. Grouell was hired by the Company in October 1998.
(4) Mr. Young was hired by the Company in January 1999. As of December 1,
1999, Mr. Young's salary was increased to $180,000 per annum.
B-8
<PAGE>
Option Grants in Fiscal 1999
The following table provides information with respect to stock option grants
in 1999 to the Named Executive Officers.
<TABLE>
<CAPTION>
Potential
Realizable
Value at Assumed
Individual Grants(1) Annual Rates of
------------------------------------------------- Stock Price
Number of % of Total Appreciation for
Securities Options Option
Underlying Granted to Terms($)(4)
Options Employees in Exercise Expiration -----------------
Name Granted Fiscal Year (1) Price($)(2) Date(3) 5% 10%
---- ---------- --------------- ----------- ---------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
E. Alexander Glover..... 50,000 15.1% $ 8.94 4/27/09 $281,053 $712,244
Ronald J. Becht, Jr..... 15,000 4.5 8.94 4/27/09 84,316 213,673
Ronald J. Becht, Jr..... 5,000 1.5 12.00 1/20/09 37,734 95,625
Ruth A. Grouell......... 10,000 3.0 12.00 1/20/09 75,467 191,249
Dennis P. Waldera....... 20,000 6.0 8.94 4/27/09 112,421 284,897
Michael S. Young........ 20,000 6.0 12.00 1/20/09 150,935 382,498
</TABLE>
--------
(1) The Company granted options to purchase 332,000 shares of Company Stock to
employees during 1999.
(2) The exercise price may be paid in cash, check, promissory note, shares of
the Company's Common Stock (subject to approval of the Board of Directors)
or any combination of such methods.
(3) Options may terminate before their expiration date if the optionee's
status as an employee is terminated or upon the optionee's death or
disability.
(4) The 5% and 10% assumed annual compound rates of stock price appreciation
are mandated by the rules of the Securities and Exchange Commission and do
not represent the Company's estimate or projection of future prices of its
Common Stock.
Aggregated Option Exercises and Fiscal Year-End Option Values
The following table sets forth information concerning options held on
December 31, 1999 with respect to each Named Executive Officer.
<TABLE>
<CAPTION>
Number of Securities Value of Unexercised
Underlying Unexercised in-the-Money Options at
Shares Options at FY-End FY-End ($)(1)
Acquired Value ------------------------- -------------------------
Name on Exercise Realized Exercisable Unexercisable Exercisable Unexercisable
---- ----------- -------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
E. Alexander Glover..... 48,125 54,006 132,291 79,584 $1,024,861 $584,255
Ronald J. Becht, Jr..... 10,367 113,187 55,416 34,584 418,743 243,437
Ruth A. Grouell......... -- -- 4,375 20,625 42,927 133,002
Dennis P. Waldera....... 35,592 60,364 33,307 41,101 274,651 311,987
Michael S. Young........ 11,108 348 7,016 26,876 46,967 111,833
</TABLE>
--------
Calculated by determining the difference between the fair market value of
the securities underlying the option and the exercise price of the option.
B-9
<PAGE>
STOCK PERFORMANCE GRAPH
Set forth below is a line graph comparing the cumulative return to the
stockholders of the Company's Common Stock with the cumulative return of (i)
the Nasdaq U.S. Index and (ii) a peer group consisting of the publicly traded
catalog sales companies identified in Note 1 below for the period commencing
April 7, 1995 (the date of the Company's initial public offering) and ending
on December 31, 1999. The information contained in the performance graph shall
not be deemed to be "soliciting material" or to be "filed" with the Securities
and Exchange Commission, and such information shall not be incorporated by
reference into any future filing under the Securities Act or Exchange Act,
except to the extent that the Company specifically incorporates it by
reference into such filing.
Note (1). The Peer Group consists of the following companies: Blair
Corporation, Concepts Direct, Inc., CDW Computer Centers, Inc.,
Corporate Express, Inc., DM Management Co., Damark International,
Inc., Fingerhut Co., Inc., Geerlings & Wade, Inc., Global
DirectMail, Corp., Sport Supply Group, Inc., Hanover Direct, Inc.,
Initio, Inc., Lands' End, Inc., Lillian Vernon Corporation, Creative
Computers, Inc., Micro Warehouse, Inc., New England Business
Service, Inc., Insight Enterprises, Inc., U.S. Office Products, Co.,
Right Start, Inc., Speigel, Inc. and TrendLines, Inc.
Employment Contracts and Change of Control Arrangements
E. Alexander Glover, the Company's President and Chief Executive Officer,
entered into an employment agreement with the Company on March 24, 1995,
subsequently amended effective July 1, 1997; October 13, 1999; and April 27,
2000. Under the terms of Mr. Glover's employment agreement, Mr. Glover is
employed as the Company's president and chief executive officer, reporting to
the board of directors; his annual base salary is not to be less than
$300,000; he is eligible for a bonus of up to 50% of his base salary provided
the Company meets certain targeted financial criteria; and he is to receive an
annual stock option grant for a minimum of 50,000 shares of Common Stock at
the fair market value on the date of grant, provided however that the exercise
price of the additional options may be limited to $500,000. The agreement
expires on March 24, 2003. In the event Mr. Glover is terminated prior to the
expiration of the agreement, he will be entitled to severance equal to twelve
months' base salary.
B-10
<PAGE>
Mr. Glover, Mr. Becht, Ms. Grouell and Mr. Waldera entered into employee
severance agreements with the Company during 1998. Mr. Young entered into an
employee severance agreement in 1999, and Mr. Witter, in 2000. The severance
agreements provide that, in the event of a Change of Control, all of the
executive officer's rights to purchase stock shall be automatically vested in
their entirety immediately preceding the first of (i) a Change of Control in
which the rights are not assumed by the successor corporation or will be
terminated or canceled, (ii) if the executive officer will not receive
identical securities received by other stockholders upon exercise of such
executive officer's rights or (iii) an involuntary termination of the
executive officer. In the event an executive officer is terminated within one
year following a Change of Control, he or she shall receive continued salary
for up to 12 months, in the case of Mr. Glover, of 9 months in the case of the
others and continued employee benefits, any accrued management bonus and
several other immaterial benefits.
Mr. Waldera, the Company's Vice President of Direct Marketing has an
agreement with the Company providing that in the event he is terminated
without cause, he will be entitled to receive his base salary and benefits for
nine months following the termination, his accrued management bonus, his
outstanding stock options shall become fully vested and exercisable within
three months from the date of termination and he will have the option of
continuing to be covered by the Executive Disability Plan at his own expense.
Indebtedness of Executive Officers
On July 29, 1999, the Company made, to three executive officers, all of whom
are named in the Summary Compensation Table, full recourse loans for the
purchase of Common Stock upon the exercise by such officers of options granted
under the Stock Plan, such loans having a term of five years, bearing interest
at the rate of 5.25% per annum, and secured by a pledge of the Common Stock
purchased therewith. Pursuant to the Stock Plan, Mr. Glover purchased 48,125
shares for $380,625, Mr. Waldera purchased 35,592 shares for $261,079, and Mr.
Young purchased 11,108 shares for $99,972. All of the options exercised were
vested and had been granted with exercise prices equal to the fair market
value on the date of grant. All shares purchased by the executive officers
under the Stock Plan are included in the Security Ownership of Directors and
Executive Officers table on page 3.
The table below shows as to each executive officer who was indebted to the
Company in an amount exceeding $60,000 at any time during the period January
1, 1999 through September 30, 2000, (i) the largest aggregate amount of
indebtedness outstanding during such period, and (ii) the amount of
indebtedness outstanding at September 30, 2000. For each individual listed in
the table below, the indebtedness shown resulted from the loans described in
the preceding paragraph.
<TABLE>
<CAPTION>
Largest Aggregate Principal Principal Amount of Indebtedness at
Name of Officer Amount of Indebtedness September 30, 2000
--------------- --------------------------- -----------------------------------
<S> <C> <C>
E. Alexander Glover..... $380,625.00 $380,625.00
Dennis P. Waldera....... $261,078.50 $261,078.50
Michael S. Young........ $ 99,972.00 $ 99,972.00
</TABLE>
B-11
<PAGE>
EXHIBIT INDEX
The following Exhibits are filed herewith:
<TABLE>
<C> <S>
Exhibit 1. Offer to Purchase (incorporated by reference to Exhibit (a)(1) to
the Schedule TO).*
Exhibit 2. Letter of Transmittal (incorporated by reference to Exhibit (a)(2)
to the Schedule TO).*
Exhibit 3. Agreement and Plan of Merger dated October 4, 2000, by and among
Great Nordic, Purchaser and the Company (incorporated by reference
to Exhibit (d)(1) to the Schedule TO)
Exhibit 4. Non-Disclosure Agreement, dated as of October 27, 1999, between
the Company and GN Netcom (incorporated by reference to Exhibit
(d)(3) to the Schedule TO).
Exhibit 5. Non-Disclosure Agreement dated as of August 10, 2000, between the
Company and GN Netcom (incorporated by reference to Exhibit d(4)
to the Schedule TO).
Exhibit 6. Letter to Stockholders of the Company, dated October 11, 2000.*
Exhibit 7. Opinion of Blair, dated October 4, 2000 (included as, and
incorporated by reference to, Annex A attached hereto).
Exhibit 8. Release of Great Nordic and the Company, dated October 4, 2000
(incorporated by reference to the Company's filing of the Joint
Press Release with the Securities and Exchange Commission under
cover of Schedule 14D-9 on October 5, 2000).
Exhibit 9. Certificate of Incorporation of the Company, as amended
(incorporated by reference to the Company's Registration Statement
on Form S-1, filed with the Securities Exchange Commission on
April 6, 1995).
Exhibit 10. Bylaws of the Company, as amended (incorporated by reference to
the Company's annual report on Form 10-K for the year ended March
27, 1998).
Exhibit 11. The Information Statement of the Company, dated October 11, 2000
(included as, and incorporated by reference to, Annex B attached
hereto).
Exhibit 12. Employment Agreement dated as of March 24, 1995, by and between
the Company and E. Alexander Glover (incorporated by reference to
the exhibit filed with the Company's Form S-1 filed with the
Securities and Exchange Commission on April 6, 1995).
Exhibit 13. Amendment to Employment Agreement dated as of July 1, 1997, by and
between the Company and E. Alexander Glover (incorporated by
reference to the exhibit filed with the Company's Form 10-K filed
with the Securities and Exchange Commission on March 27, 1998).
Exhibit 14. Amendment to Employment Agreement dated as of April 27, 2000, by
and between the Company and E. Alexander Glover.
Exhibit 15. Form of Employee Severance Agreement entered into between the
Company and each of its executive officers (incorporated by
reference to the exhibit filed with the Company's Form 10-Q filed
with the Securities Exchange Commission on July 24, 1998).
</TABLE>
--------
* Included in copies mailed to stockholders.
1
