OFFER TO PURCHASE FOR CASH
ALL OUTSTANDING SHARES OF COMMON STOCK
OF
DETECTION SYSTEMS, INC.
AT
$18.00 NET PER SHARE
BY
BOSCH SECURITY SYSTEMS CORPORATION
A WHOLLY OWNED SUBSIDIARY OF
XXXXXX XXXXX XXXX
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY
TIME, ON FRIDAY, JANUARY 19, 2001, UNLESS THE OFFER IS EXTENDED.
THE OFFER IS BEING MADE IN CONNECTION WITH AN AGREEMENT AND PLAN OF
MERGER, DATED AS OF DECEMBER 10, 2000, AS AMENDED, BY AND BETWEEN XXXXXX
XXXXX XXXX ("PARENT") AND DETECTION SYSTEMS, INC. (THE "COMPANY"), TO WHICH
BOSCH SECURITY SYSTEMS CORPORATION (THE "PURCHASER") SUBSEQUENTLY BECAME A
PARTY. THE OFFER IS CONDITIONED UPON, AMONG OTHER THINGS, (1) THERE BEING
VALIDLY TENDERED AND NOT PROPERLY WITHDRAWN PRIOR TO THE EXPIRATION OF THE
OFFER SUCH NUMBER OF SHARES OF COMMON STOCK, PAR VALUE $.05 PER SHARE, OF THE
COMPANY (THE "SHARES"), WHICH, TOGETHER WITH THE SHARES OWNED BY PARENT AND
THE PURCHASER, CONSTITUTES AT LEAST TWO-THIRDS OF THE THEN OUTSTANDING SHARES
ON A FULLY DILUTED BASIS, AND (2) THE EXPIRATION OR TERMINATION OF THE
WAITING PERIOD UNDER THE XXXX-XXXXX-XXXXXX ANTITRUST IMPROVEMENTS ACT OF
1976, AS AMENDED, AND THE REGULATIONS THEREUNDER. THE OFFER IS ALSO SUBJECT
TO OTHER CONDITIONS SET FORTH IN THIS OFFER TO PURCHASE. SEE THE INTRODUCTION
AND SECTIONS 1, 15 AND 16. THE OFFER IS NOT CONDITIONED UPON PARENT OR THE
PURCHASER OBTAINING FINANCING.
THE BOARD OF DIRECTORS OF THE COMPANY (1) HAS UNANIMOUSLY DETERMINED THAT
EACH OF THE MERGER AGREEMENT, THE OFFER AND THE MERGER ARE ADVISABLE, FAIR TO
AND IN THE BEST INTERESTS OF THE SHAREHOLDERS OF THE COMPANY, (2) HAS
UNANIMOUSLY APPROVED THE MERGER AGREEMENT AND THE TRANSACTIONS CONTEMPLATED
THEREBY, INCLUDING THE OFFER AND THE MERGER, AND (3) UNANIMOUSLY RECOMMENDS
THAT THE SHAREHOLDERS OF THE COMPANY ACCEPT THE OFFER, TENDER THEIR SHARES TO
THE PURCHASER PURSUANT TO THE OFFER AND, IF REQUIRED UNDER APPLICABLE LAW,
APPROVE AND ADOPT THE MERGER AGREEMENT AND THE MERGER.
PARENT AND THE COMPANY HAVE ENTERED INTO A STOCK OPTION AGREEMENT, DATED
AS OF DECEMBER 10, 2000, PURSUANT TO WHICH, AMONG OTHER THINGS, THE COMPANY
HAS GRANTED PARENT AN IRREVOCABLE OPTION TO PURCHASE, SUBJECT TO CERTAIN
CONDITIONS, UP TO 1,138,596 NEWLY ISSUED SHARES (THE "OPTION SHARES") OR
APPROXIMATELY 13.6% OF THE SHARES ON A FULLY DILUTED BASIS (INCLUDING THE
OPTION SHARES ISSUABLE UPON EXERCISE OF SUCH OPTION AND SHARES ISSUABLE UPON
EXERCISE OF OPTIONS OUTSTANDING UNDER THE COMPANY'S STOCK OPTION PLANS) AT A
PRICE OF $18.00 PER SHARE IN CASH.
PARENT HAS ALSO ENTERED INTO A VOTING AND OPTION AGREEMENT, DATED AS OF
DECEMBER 10, 2000, WITH CERTAIN SHAREHOLDERS OF THE COMPANY AS TO AN
AGGREGATE OF APPROXIMATELY 8% OF THE SHARES ON A FULLY DILUTED BASIS
(EXCLUDING THE OPTION SHARES ISSUABLE PURSUANT TO THE STOCK OPTION AGREEMENT
REFERRED TO ABOVE BUT INCLUDING SHARES ISSUABLE UPON EXERCISE OF OPTIONS
OUTSTANDING UNDER THE COMPANY'S STOCK OPTION PLANS), PURSUANT TO WHICH, AMONG
OTHER THINGS, SUCH SHAREHOLDERS HAVE AGREED TO VALIDLY TENDER (AND NOT
WITHDRAW) ALL SUCH SHARES PURSUANT TO THE OFFER AND HAVE GRANTED PARENT AN
OPTION TO PURCHASE, SUBJECT TO CERTAIN CONDITIONS, ALL SUCH SHARES AT A PRICE
OF $18.00 PER SHARE IN CASH.
THE DEALER MANAGER FOR THE OFFER IS:
Xxxxxxx and X. Xxxxxxxxxxxx, Inc.
December 20, 2000
IMPORTANT
Any shareholder wishing to tender Shares in the Offer must either: (i)
complete and sign the Letter of Transmittal (or a facsimile thereof) in
accordance with the instructions in the Letter of Transmittal and mail or
deliver the Letter of Transmittal and all other required documents to the
United States Trust Company of New York (the "Depositary") together with
certificates representing the Shares tendered or follow the procedure for
book-entry transfer set forth in Section 3 of this Offer to Purchase, or (ii)
request such shareholder's broker, dealer, commercial bank, trust company or
other nominee to effect the transaction for such shareholder.
Any shareholder whose Shares are registered in the name of a broker,
dealer, commercial bank, trust company or other nominee must contact such
person if such shareholder wishes to tender such Shares. Any shareholder who
wishes to tender Shares and cannot deliver certificates representing such
Shares and all other required documents to the Depositary or who cannot
comply with the procedures for book-entry transfer on a timely basis may
tender such Shares by following the procedures for guaranteed delivery set
forth in Section 3.
Questions and requests for assistance may be directed to X.X. Xxxx & Co.,
Inc. (the "Information Agent") or Xxxxxxx and X. Xxxxxxxxxxxx, Inc. (the
"Dealer Manager") at their respective addresses and telephone numbers 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 or the Dealer Manager. Shareholders may also contact their broker,
dealer, commercial bank, trust company or other nominee for copies of these
documents.
TABLE OF CONTENTS
PAGE
--------
SUMMARY TERM SHEET............................................................. 1
INTRODUCTION................................................................... 6
THE OFFER...................................................................... 8
1. Terms of the Offer........................................................ 8
2. Acceptance for Payment and Payment for Shares............................. 10
3. Procedures for Accepting the Offer and Tendering Shares................... 11
4. Withdrawal Rights......................................................... 14
5. Certain United States Federal Income Tax Consequences..................... 15
6. Price Range of Shares; Dividends.......................................... 15
7. Certain Information Concerning the Company................................ 16
8. Certain Information Concerning Parent and the Purchaser................... 19
9. Source and Amount of Funds................................................ 19
10. Background of the Offer; Past Contacts or Negotiations with the Company . 19
11. The Merger Agreement; Other Arrangements................................. 22
12. Purpose of the Offer; Plans for the Company.............................. 33
13. Certain Effects of the Offer............................................. 34
14. Dividends and Distributions.............................................. 35
15. Certain Conditions of the Offer.......................................... 35
16. Certain Legal Matters; Regulatory Approvals.............................. 37
17. Appraisal Rights......................................................... 38
18. Fees and Expenses........................................................ 39
19. Miscellaneous............................................................ 39
SCHEDULE I..................................................................... S-1
1
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SUMMARY TERM SHEET
We are offering to purchase all of the outstanding common stock of
Detection Systems, Inc. for $18.00 per share in cash. This summary term sheet
asks some of the questions which you, as a shareholder of Detection Systems,
may have and sets forth our answers to those questions. The information in
this summary term sheet is not complete. We urge you to read carefully the
remainder of this Offer to Purchase and the Letter of Transmittal because
they contain additional important information.
WHO IS OFFERING TO BUY MY SECURITIES?
Our name is Bosch Security Systems Corporation. We are a New York
corporation formed for the purpose of making a tender offer for all of the
common stock of Detection Systems. We have carried on no activities other
than in connection with the acquisition of Detection Systems. Our parent
company, Xxxxxx Xxxxx XxxX, a limited liability company organized under the
laws of Germany, owns all of our stock. See the "Introduction" to this Offer
to Purchase and Section 8 -- "Certain Information Concerning Parent and the
Purchaser".
WHAT ARE THE CLASSES AND AMOUNTS OF SECURITIES SOUGHT IN THE OFFER?
We seek to purchase all of the outstanding common stock of Detection
Systems. See the "Introduction" to this Offer to Purchase and Section 1 --
"Terms of the Offer".
HOW MUCH ARE YOU OFFERING TO PAY? WHAT IS THE FORM OF PAYMENT? WILL I HAVE TO
PAY ANY FEES OR COMMISSIONS?
We offer to pay $18.00 per share, net to you, in cash. If you are the
record owner of your shares and you tender your shares to us in the Offer,
you will not have to pay brokerage fees or similar expenses. 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" to this Offer to Purchase.
DO YOU HAVE THE FINANCIAL RESOURCES TO MAKE PAYMENT?
Our Offer is not conditioned upon any financing arrangements. Xxxxxx Xxxxx
XxxX will provide us with sufficient funds to purchase all shares validly
tendered and not withdrawn in the Offer and for the merger which is expected
to follow the successful completion of the Offer. Xxxxxx Xxxxx XxxX will
obtain the funds required for these transactions from cash on hand. See
Section 9 -- "Source and Amount of Funds".
IS YOUR FINANCIAL CONDITION RELEVANT TO MY DECISION TO TENDER IN THE OFFER?
We do not think our financial condition is relevant to your decision
whether to tender in the Offer because
o the form of payment consists solely of cash,
o the Offer is not subject to any financing condition,
o our Offer applies to all the outstanding shares of Detection
Systems, and
o if we are successful with our Offer, we will acquire all remaining
shares for the same cash price when we are merged with and into
Detection Systems.
HOW LONG DO I HAVE TO DECIDE WHETHER TO TENDER IN THE OFFER?
You will have until 12:00 midnight, New York City time, on Friday, January
19, 2001, to tender your shares in the Offer, unless the Offer is extended.
Further, if you cannot deliver everything that is required
1
in order to make a valid tender by that time, you may be able to use a
guaranteed delivery procedure, which we describe later in this Offer to
Purchase. See Section 1 -- "Terms of the Offer" and Section 3 -- "Procedures
for Accepting the Offer and Tendering Shares".
CAN THE OFFER BE EXTENDED AND UNDER WHAT CIRCUMSTANCES?
We have agreed in the merger agreement that:
o we may extend the Offer beyond the scheduled expiration date from
time to time, with or without Detection Systems' consent, if at
that date any of the conditions to our obligation to accept for
payment and to pay for the shares are not satisfied or, to the
extent permitted by the merger agreement, waived, and
o we may generally extend the Offer for any period required by any
rule, regulation or interpretation of the Securities and Exchange
Commission (the "SEC") applicable to the Offer, with or without
Detection Systems' consent.
If all conditions to the Offer have been satisfied or waived:
o we will accept for payment and pay for all shares validly tendered
and not properly withdrawn at such time (which shares you may not
thereafter withdraw), and
o if the number of shares tendered in the Offer and not withdrawn,
which together with the shares owned by us and Xxxxxx Xxxxx XxxX,
is less than 90% of Detection Systems' outstanding shares, we may
extend the Offer to provide a "subsequent offering period" of at
least three business days, during which time shareholders whose
shares have not been accepted for payment may tender, but not
withdraw, their shares and receive the Offer consideration. Under
the federal securities laws we may not provide a subsequent
offering period of more than 20 business days (for all such
extensions).
See Section 1 -- "Terms of the Offer" for more details on our ability to
extend the Offer.
HOW WILL YOU NOTIFY ME IF YOU EXTEND THE OFFER?
If we extend the Offer, we will inform the United States Trust Company of
New York (the depositary for the Offer) of that fact. We will also make a
public announcement of the extension not later than 9:00 a.m., New York City
time, on the next business day after the day on which the Offer was scheduled
to expire. See Section 1 -- "Terms of the Offer".
WHAT ARE THE MOST SIGNIFICANT CONDITIONS TO THE OFFER?
o we are not obligated to purchase any shares that are validly
tendered unless the number of shares validly tendered and not
withdrawn before the expiration date of the Offer, which together
with the shares owned by us and Xxxxxx Xxxxx XxxX, represents at
least two-thirds of the then outstanding shares on a fully diluted
basis. We call this condition the "minimum condition".
o we are not obligated to purchase shares that are validly tendered
if, among other things, there is a material adverse change in
Detection Systems or its business.
o we are not obligated to purchase shares that are validly tendered
if the applicable waiting period under the Xxxx-Xxxxx-Xxxxxx
Antitrust Improvements Act has not expired or been terminated.
A number of other conditions also apply to the Offer. We can waive any and
all of the conditions to the Offer without Detection Systems' consent. See
Section 15 -- "Certain Conditions of the Offer".
HOW DO I TENDER MY SHARES?
If you wish to accept our Offer, this is what you must do:
2
o if you are a record holder and have your stock certificates, you
must complete and sign the enclosed letter of transmittal and send
it and the certificates representing your shares and any other
documents required by the letter of transmittal to the United
States Trust Company of New York, the depositary for the Offer, not
later than the time the Offer expires.
o if your shares are held in the name of your broker, bank or other
nominee, the shares can be tendered by your nominee by complying
with such nominee's instructions.
o if you are unable to deliver any required document or instrument to
the depositary by the expiration of the Offer, you may gain some
extra time by having a broker, a bank or other fiduciary that is an
eligible institution guarantee that the missing items will be
received by the depositary within three New York Stock Exchange
trading days. For the tender to be valid, however, the depositary
must receive the missing items within that three trading day
period.
See Section 3 -- "Procedures for Accepting the Offer and Tendering
Shares".
UNTIL WHAT TIME MAY I WITHDRAW PREVIOUSLY TENDERED SHARES?
You may withdraw shares at any time until the Offer has expired. This
right to withdraw will not apply during any subsequent offering period. See
Section 1 -- "Terms of the Offer" and Section 4 -- "Withdrawal Rights".
HOW DO I WITHDRAW PREVIOUSLY TENDERED SHARES?
To withdraw shares, you must deliver a written notice of withdrawal, or a
facsimile of one, with the required information to the depositary while you
still have the right to withdraw such shares. See Section 4 -- "Withdrawal
Rights".
WHAT DOES THE DETECTION SYSTEMS BOARD OF DIRECTORS THINK OF THE OFFER?
The Detection Systems board of directors
o has unanimously determined that each of the merger agreement, the
Offer and the merger are advisable, fair to and in the best
interests of the shareholders of Detection Systems,
o has unanimously approved the merger agreement and the related
transactions, including the Offer and the merger, and
o unanimously recommends that the shareholders of Detection Systems
accept the Offer, tender their shares to us pursuant to the Offer
and, if required under applicable law, approve and adopt the merger
agreement and the merger.
See the "Introduction" to this Offer to Purchase.
HAVE ANY SHAREHOLDERS AGREED TO TENDER THEIR SHARES?
Yes. Messrs. Xxxx X. Xxxxxxxxx and Xxxxx X. Xxxxxxx, Chairman and Chief
Executive Officer and Executive Vice President, respectively, of Detection
Systems and who own shares representing approximately 8% of the outstanding
common stock, have agreed, among other things, to tender their shares in the
Offer. See Section 11 -- "The Merger Agreement; Other Arrangements".
IF THE REQUIRED MINIMUM NUMBER OF SHARES IS TENDERED AND ACCEPTED FOR
PAYMENT, WILL DETECTION SYSTEMS CONTINUE AS A PUBLIC COMPANY?
No. Following the purchase of shares in the Offer we expect to consummate
the merger. If the merger takes place, Detection Systems no longer will be
publicly owned. Even if for some reason the merger does not take place, if we
purchase all of the tendered shares, there may be so few remaining
shareholders and publicly held shares that
o Detection Systems common stock will no longer be eligible to be
traded through the National Association of Securities Dealers
Automated Quotation System ("NASDAQ"),
3
o there may not be a public trading market for Detection Systems
common stock, and
o Detection Systems may stop making filings with the SEC or otherwise
stop being required to comply with the SEC rules relating to
publicly held companies.
See Section 13 -- "Certain Effects of the Offer".
WILL THE TENDER OFFER BE FOLLOWED BY A MERGER IF ALL OF THE DETECTION
SYSTEMS' SHARES ARE NOT TENDERED IN THE OFFER?
Yes. If we accept and pay for a number of shares, which together with the
shares owned by us and Xxxxxx Xxxxx XxxX, is at least two-thirds of the
shares of Detection Systems on a fully diluted basis, we will be merged with
and into Detection Systems, subject to shareholder approval if required. If
that merger takes place, Xxxxxx Xxxxx XxxX will own all of the shares of
Detection Systems and all remaining shareholders of Detection Systems (other
than Xxxxxx Xxxxx XxxX and shareholders properly exercising any applicable
appraisal rights) will receive $18.00 per share in cash. See the
"Introduction" to this Offer to Purchase.
IF I DECIDE NOT TO TENDER, HOW WILL THE OFFER AFFECT MY SHARES?
If the merger described above takes place, shareholders not tendering in
the Offer will have no rights with respect to their shares except to receive
$18.00 per share in cash, subject to any applicable appraisal rights properly
exercised under New York law. Therefore, if the merger takes place, and you
do not exercise your appraisal rights, the only difference between what you
will receive tendering your shares and not tendering your shares in the Offer
is that you will receive $18.00 per share in cash earlier if you tender your
shares in the Offer. If you exercise your appraisal rights in connection with
the merger, you will be entitled to receive a judicial determination of the
fair value of your shares and to receive payment of the fair value in cash.
Any judicial determination of fair value could be based on considerations
other than or in addition to the $18.00 per share price paid in the merger
and the fair value of the shares could be higher or lower than $18.00 per
share. If the merger does not take place, however, the number of shareholders
and the number of shares of Detection Systems that are still in the hands of
the public may be so small that there no longer will be an active public
trading market (or, possibly, there may not be any public trading market) for
Detection Systems common stock. Also, as described above, Detection Systems
may stop making filings with the SEC or otherwise may not be required to
comply with the SEC rules relating to publicly held companies. See the
"Introduction" to this Offer to Purchase and Section 13 -- "Certain Effects
of the Offer".
WHAT IS THE MARKET VALUE OF MY SHARES AS OF A RECENT DATE?
On December 8, 2000, the last trading day before we announced the Offer,
the closing sale price of Detection Systems common stock reported on NASDAQ
was $13.00 per share. On December 19, 2000, the last trading day before we
commenced the Offer, the closing sale price of Detection Systems common stock
reported on NASDAQ was $17.813. We encourage you to obtain a recent quotation
for shares of Detection Systems common stock in deciding whether to tender
your shares. See Section 6 -- "Price Range of Shares; Dividends".
WHAT ARE THE UNITED STATES FEDERAL INCOME TAX CONSEQUENCES OF TENDERING
SHARES?
Your receipt of cash for shares that you tender pursuant to the Offer or
exchange pursuant to the merger will be a taxable transaction for United
States federal income tax purposes and likely will be for state, local and
foreign income tax purposes as well. In general, a shareholder who sells
shares pursuant to the Offer or receives cash in exchange for shares pursuant
to the merger will recognize gain or loss for United States federal income
tax purposes equal to the difference, if any, between the amount of cash
received and the shareholder's adjusted tax basis in the shares sold pursuant
to the Offer or exchanged for cash pursuant to the merger. If the shares sold
or exchanged constitute capital assets in the hands of the shareholder, such
gain or loss will be a capital gain or loss. In general, capital gains
recognized by an
4
individual will be subject to a maximum United States federal income tax rate
of 20% if the shares were held for more than one year, and if held for one
year or less they will be subject to tax at ordinary income tax rates. See
Section 5 -- "Certain United States Federal Income Tax Consequences".
WHO CAN I TALK TO IF I HAVE QUESTIONS ABOUT THE TENDER OFFER?
You may call either of the following:
o X.X. Xxxx & Co., Inc., the information agent for our Offer, at
(000) 000-0000 (toll free); or
x Xxxxxxx and X. Xxxxxxxxxxxx, Inc., the dealer manager for our
Offer, at (000) 000-0000.
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TO THE HOLDERS OF SHARES OF COMMON STOCK
OF DETECTION SYSTEMS, INC.
INTRODUCTION
Bosch Security Systems Corporation, a New York corporation (the
"Purchaser") and a wholly owned subsidiary of Xxxxxx Xxxxx XxxX, a limited
liability company organized under the laws of Germany ("Parent"), hereby
offers to purchase all outstanding shares of common stock, par value $.05 per
share (the "Shares"), of Detection Systems, Inc., a New York corporation (the
"Company"), at a price of $18.00 per Share, net to the seller in cash (the
"Offer Price"), upon the terms and subject to the conditions set forth in
this Offer to Purchase and in the related Letter of Transmittal (which,
together with any amendments or supplements hereto or thereto, collectively
constitute the "Offer").
The Offer is being made pursuant to an Agreement and Plan of Merger, dated
as of December 10, 2000, as amended (the "Merger Agreement"), between Parent
and the Company, to which the Purchaser subsequently became a party. The
Merger Agreement provides that the Purchaser will be merged with and into the
Company (the "Merger"), with the Company continuing as the surviving
corporation (the "Surviving Corporation"), wholly owned by Parent. Pursuant
to the Merger, at the effective time of the Merger (the "Effective Time")
each Share outstanding immediately prior to the Effective Time (other than
Shares owned by Parent, the Purchaser or any subsidiary of Parent or the
Purchaser or by the Company or any subsidiary of the Company, all of which
will be canceled, and other than Shares that are held by shareholders, if
any, who properly exercise any applicable appraisal rights under the New York
Business Corporation Law ("NYBCL")), will be converted into the right to
receive $18.00 per Share in cash or any greater per Share price paid in the
Offer in cash, without interest (the "Merger Consideration"). The Merger
Agreement is more fully described in Section 11 -- "The Merger Agreement;
Other Arrangements", which also contains a discussion of the treatment of
stock options.
Tendering shareholders who are record owners of their Shares and tender
directly to the Depositary (as defined below) will not be obligated to pay
brokerage fees or commissions or, except as otherwise provided in Instruction
6 of the Letter of Transmittal, stock transfer taxes with respect to the
purchase of Shares by the Purchaser pursuant to the Offer. Shareholders who
hold their Shares through a broker or bank should consult such institution as
to whether it charges any service fees. Parent or the Purchaser will pay all
charges and expenses of Xxxxxxx and X. Xxxxxxxxxxxx, Inc., as dealer manager
(the "Dealer Manager"), the United States Trust Company of New York, as
depositary (the "Depositary"), and X.X. Xxxx & Co., Inc., as information
agent (the "Information Agent"), incurred in connection with the Offer. See
Section 18 -- "Fees and Expenses".
THE COMPANY'S BOARD OF DIRECTORS (THE "COMPANY BOARD")
o has unanimously determined that each of the Merger Agreement, the
Offer and the Merger are advisable, fair to and in the best
interests of the shareholders of the Company,
o has unanimously approved the Merger Agreement and the transactions
contemplated thereby, including the Offer and the Merger, and
o unanimously recommends that the shareholders of the Company accept
the Offer, tender their Shares to the Purchaser pursuant to the
Offer and, if required under applicable law, approve and adopt the
Merger Agreement and the Merger.
Fleet Securities, Inc. ("Fleet Securities") has delivered to the Company
Board a written opinion dated December 10, 2000, to the effect that, as of
such date and based on and subject to the matters stated in such opinion, the
$18.00 per Share cash consideration to be paid in the Offer and the Merger to
holders of Shares was fair, from a financial point of view, to such holders
(other than Parent, the Purchaser or their affiliates). The full text of
Fleet Securities' written opinion dated December 10, 2000, which describes
the assumptions made, procedures followed, matters considered and limitations
on the review undertaken, is included as an annex to the Company's
Solicitation/Recommendation Statement on Schedule 14D-9 (the "Schedule
14D-9") under the Securities Exchange Act of 1934, as amended (the "Exchange
Act"), which is being mailed by the Company to shareholders concurrently with
this Offer to Purchase. Holders of
6
Shares are urged to read the full text of that opinion carefully in its
entirety. The opinion is not a recommendation to shareholders of the Company
as to whether they should tender their Shares in the Offer or as to how they
should vote on, or take any action with respect to, the Merger.
THE OFFER IS CONDITIONED UPON, AMONG OTHER THINGS,
o THERE BEING VALIDLY TENDERED AND NOT PROPERLY WITHDRAWN PRIOR TO
THE EXPIRATION OF THE OFFER SUCH NUMBER OF SHARES, WHICH, TOGETHER
WITH THE SHARES OWNED BY PARENT AND THE PURCHASER, CONSTITUTES AT
LEAST TWO-THIRDS OF THE THEN OUTSTANDING SHARES ON A FULLY DILUTED
BASIS (THE "MINIMUM CONDITION"), AND
o THE EXPIRATION OR TERMINATION OF THE WAITING PERIOD UNDER THE
XXXX-XXXXX-XXXXXX ANTITRUST IMPROVEMENTS ACT OF 1976, AS AMENDED,
AND THE REGULATIONS THEREUNDER (THE "HSR ACT").
THE OFFER IS ALSO SUBJECT TO THE SATISFACTION OF CERTAIN OTHER CONDITIONS.
SEE SECTION 1 -- "TERMS OF THE OFFER", SECTION 15 -- "CERTAIN CONDITIONS OF
THE OFFER" AND SECTION 16 -- "CERTAIN LEGAL MATTERS; REGULATORY APPROVALS."
The Company has advised Parent that, on December 18, 2000, 6,729,015
Shares were issued and outstanding and 500,285 Shares were subject to stock
options outstanding under the Company's stock option plans. Parent directly
owns 197,900 Shares. In addition to the 197,900 Shares directly owned by
Parent, Parent and the Company have entered into a Stock Option Agreement,
dated as of December 10, 2000 (the "Stock Option Agreement"), pursuant to
which, among other things, the Company has granted Parent an irrevocable
option to purchase from the Company, subject to certain conditions, up to
1,138,596 newly issued Shares at an exercise price of $18.00 per Share in
cash. Parent has also entered into a Voting and Option Agreement, dated as of
December 10, 2000 (the "Voting and Option Agreement"), with certain
shareholders of the Company as to an aggregate of 586,758 Shares owned by
them, pursuant to which those shareholders have, among other things, agreed
to tender their Shares pursuant to the Offer and have granted Parent an
option to purchase, subject to certain conditions, all such Shares at a price
of $18.00 per Share in cash. Parent has assigned its rights under the Stock
Option Agreement and the Voting and Option Agreement to the Purchaser. If the
Purchaser were to exercise the options to purchase the Shares subject to the
Stock Option Agreement and the Voting and Option Agreement, the Purchaser
believes the Minimum Condition would be satisfied if 3,655,352 Shares were
validly tendered and not properly withdrawn prior to the expiration of the
Offer.
The Merger Agreement provides that promptly following the purchase of and
payment for a number of Shares that satisfies the Minimum Condition, Parent
will be entitled to designate such number of directors, rounded up to the
next whole number, on the Company Board as is equal to the product of
o the total number of directors on the Company Board (giving effect to
the increase in the size of such Board pursuant to the Merger
Agreement), and
o the percentage that the number of Shares beneficially owned by the
Purchaser (including Shares so accepted for payment) bears to the
total number of Shares then outstanding.
The Company has agreed, upon a request of Parent, promptly either (at the
election of the Company) to increase the size of the Company Board or use its
best efforts to secure the resignations of such number of incumbent
directors, or both, as is necessary to enable such designees of Parent to be
so elected or appointed to the Company Board and, subject to Section 14(f) of
the Exchange Act and Rule 14f-1 promulgated thereunder, to cause Parent's
designees to be so elected or appointed; and at such time, the Company shall
also take all action necessary to cause persons designated by Parent to
constitute at least the same percentage (rounded up to the next whole number)
as is on the Company Board of (i) each committee of the Company Board, (ii)
each board of directors (or similar body) of each subsidiary of the Company
and (iii) each committee (or similar body) of each such board; provided,
however, that until the Effective Time, neither Parent nor the Purchaser will
take any action that would cause the Company Board to include fewer than two
members who are "Continuing Directors". "Continuing Directors" are defined in
the Merger Agreement as (i) any member of the Company Board who was a
director as of the date of the Merger Agreement; (ii) from and after his
election to the Company Board, Xxxxxx X. Xxxxxxx;
7
or (iii) any successor of a Continuing Director who is (a) unaffiliated with,
and not a designee or nominee of, Parent or the Purchaser, and (b)
recommended to succeed a Continuing Director by a majority of the Continuing
Directors then on the Company Board. See Section 11 -- "The Merger Agreement;
Other Arrangements".
The Merger is subject to the satisfaction or waiver of certain conditions,
including, if required under applicable law, the approval and adoption of the
Merger Agreement by the affirmative vote of the holders of at least
two-thirds of the outstanding Shares. If the Purchaser obtains a number of
Shares in the Offer, which together with the Shares owned by Parent and the
Purchaser, constitutes 90% or more of the outstanding Shares on a fully
diluted basis, the Purchaser will effect the Merger pursuant to the
short-form merger provisions of the NYBCL without obtaining the approval of
any other shareholder of the Company. See Section 16 -- "Certain Legal
Matters; Regulatory Approvals". If the Minimum Condition is satisfied, the
Purchaser would have sufficient voting power to approve the Merger without
the affirmative vote of any other shareholder of the Company. The Company has
agreed, if required, to cause a meeting of its shareholders to be held
following consummation of the Offer for the purposes of considering and
taking action upon the approval and adoption of the Merger Agreement. Parent
and the Purchaser have agreed to vote the Shares purchased in the Offer in
favor of the approval and adoption of the Merger Agreement. See Section 11 --
"The Merger Agreement; Other Arrangements".
THIS OFFER TO PURCHASE AND THE RELATED LETTER OF TRANSMITTAL CONTAIN
IMPORTANT INFORMATION THAT YOU SHOULD READ CAREFULLY BEFORE YOU MAKE ANY
DECISION WITH RESPECT TO THE OFFER.
THE OFFER
1. TERMS OF THE OFFER.
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 properly withdrawn on or prior to the
Expiration Date. The term "Expiration Date" means 12:00 midnight, New York
City time, on Friday, January 19, 2001, unless the Purchaser, in accordance
with the Merger Agreement, extends the period during which the Offer is open.
In that event, the term "Expiration Date" means the latest time and date on
which the Offer, as so extended (other than any extension with respect to the
Subsequent Offering Period described below), expires.
The Offer is conditioned upon the satisfaction of the Minimum Condition,
the expiration or termination of any applicable waiting period under the HSR
Act, and the other conditions set forth in Section 15 of this Offer to
Purchase. Subject to the provisions of the Merger Agreement, the Purchaser
may waive any or all of the conditions to its obligation to purchase Shares
pursuant to the Offer. If on the date of the expiration of the initial
offering period or any subsequent offering period any or all of the
conditions to the Offer have not been satisfied or waived, subject to the
provisions of the Merger Agreement, the Purchaser may elect to
o terminate the Offer and return all tendered Shares to tendering
shareholders,
o waive all of the unsatisfied conditions and, subject to any required
extension, purchase all Shares validly tendered by the date of the
expiration of the initial offering period and not properly
withdrawn, or
o extend the Offer and, subject to the rights of shareholders to
withdraw Shares until the new Expiration Date, retain the Shares
that have been tendered until the expiration of the Offer as
extended.
The Purchaser will not make any change to the Offer without the prior
written consent of the Company that
o decreases the Offer Price,
8
o reduces the number of Shares to be purchased in the Offer,
o changes the form of consideration to be paid in the Offer,
o modifies or amends any of the conditions to the Offer set forth in
Section 15 of this Offer to Purchase in any manner adverse to the
holders of the Shares,
o imposes conditions to the Offer in addition to the conditions set
forth in Section 15 of this Offer to Purchase, or
o except as provided in the Merger Agreement, extends the Offer.
The Purchaser
o may extend the Offer beyond the scheduled expiration of the initial
offering period from time to time, with or without the Company's
consent, if at that date any of the conditions to the Purchaser's
obligation to accept for payment and to pay for the Shares are not
satisfied or waived, or
o may extend the Offer for any period required by any rule, regulation
or interpretation of the Securities and Exchange Commission (the
"SEC") or its staff applicable to the Offer, other than Rule 14e-5
under the Exchange Act, with or without the Company's consent.
Pursuant to Rule 14d-11 under the Exchange Act, the Purchaser may, subject
to certain conditions, provide a subsequent offering period following the
expiration of the Offer on the Expiration Date (a "Subsequent Offering
Period"). A Subsequent Offering Period is an additional period of time from
three business days to 20 business days in length, beginning after the
Purchaser purchases Shares tendered in the Offer, during which shareholders
may tender, but not withdraw, their Shares and receive the Offer Price.
The Purchaser may or may not provide a Subsequent Offering Period
following the Purchaser's acceptance for payment of Shares in the Offer. If
at the end of the initial offering period, the number of Shares tendered in
the Offer and not properly withdrawn, which together with the Shares owned by
Parent and the Purchaser, constitutes less than 90% of the Company's
outstanding Shares on a fully diluted basis, the Purchaser may provide for a
Subsequent Offering Period. Pursuant to Rule 14d-7 under the Exchange Act, no
withdrawal rights apply to Shares tendered during a Subsequent Offering
Period and no withdrawal rights apply during a Subsequent Offering Period
with respect to Shares tendered in the Offer and accepted for payment. During
a Subsequent Offering Period, the Purchaser will promptly purchase and pay
for all Shares tendered at the same price paid in the Offer.
Subject to the applicable rules and regulations of the SEC and the
provisions of the Merger Agreement, the Purchaser also expressly reserves the
right, in its sole discretion, at any time or from time to time,
o to terminate the Offer if any of the conditions set forth in Section
15 of this Offer to Purchase have not been satisfied, and
o to waive any condition to the Offer or otherwise amend the Offer in
any respect, in each case by giving oral or written notice of such
extension, termination, waiver or amendment to the Depositary and by
making a public announcement thereof.
If the Purchaser accepts for payment any Shares pursuant to the Offer, it
will accept for payment all Shares validly tendered prior to the date of the
expiration of the initial offering period or any Subsequent Offering Period
and not properly withdrawn, and will promptly pay for all Shares so accepted
for payment.
The Purchaser will publicly announce any extension, delay, termination,
waiver or amendment as promptly as practicable. The Purchaser will announce
any extension no later than 9:00 a.m., New York City time, on the next
business day after the date of the expiration of the initial offering period
or any Subsequent Offering Period in accordance with the public announcement
requirements of Rule 14e-1(d) under the Exchange Act. Subject to applicable
law (including, without limitation, Rules 14d-4(d) and 14d-6(c) under the
Exchange Act which require that material changes be promptly disseminated to
9
shareholders in a manner reasonably designed to inform them of such changes)
and without limiting the manner in which the Purchaser may choose to make any
public announcement, the Purchaser shall have no obligation to publish,
advertise or otherwise communicate any such public announcement other than by
issuing a press release to the Dow Xxxxx News Service.
If the Purchaser extends the Offer or if the Purchaser is delayed in its
acceptance for payment of or payment 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 these Shares may not be withdrawn except to
the extent that tendering shareholders are entitled to withdrawal rights as
described under Section 4 -- "Withdrawal Rights". However, the ability of the
Purchaser to delay the payment for Shares that the Purchaser has accepted for
payment is limited by (i) 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 shareholders promptly after the termination or
withdrawal of such bidder's offer, unless such bidder elects to offer a
Subsequent Offering Period and pay for Shares tendered during the Subsequent
Offering Period in accordance with Rule 14d-11 under the Exchange Act and
(ii) the terms of the Merger Agreement, which require that the Purchaser pay
for Shares that are tendered pursuant to the Offer as soon as practicable
after the Offer.
If the Purchaser makes a material change in the terms of the Offer or the
information concerning the Offer, or if it waives a material condition of the
Offer, the Purchaser will disseminate additional tender offer materials and
extend the Offer to the extent required by Rules 14d-4(d), 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, percentage of securities sought, or inclusion of or changes
to a dealer's soliciting fee, will depend upon the facts and circumstances,
including the materiality, of the changes. In the SEC's view, an offer should
remain open for a minimum of five business days from the date on which the
material change is first published, sent or given to shareholders and, if
material changes are made with respect to information that approaches the
significance of price and share levels, a minimum of 10 business days may be
required to allow for adequate dissemination and investor response.
Accordingly, if, prior to the date of the expiration of the initial offering
period or any Subsequent Offering Period, the Purchaser decreases the number
of Shares being sought (which the Purchaser is not permitted to do without
the Company's consent under the Merger Agreement) or increases the
consideration offered pursuant to the Offer, and if the Offer is scheduled to
expire at any time earlier than the tenth business day from the date that
notice of such increase or decrease is first published, sent or given to
shareholders, the Offer will be extended at least until the expiration of
such tenth business day. 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,
of such day.
The Company has provided the Purchaser with the Company's shareholder list
and security position listings for the purpose of disseminating the Offer to
holders of Shares. This Offer to Purchase and the related Letter of
Transmittal will be mailed to record holders of Shares and will be furnished,
for subsequent transmittal to beneficial owners of Shares, to brokers,
dealers, commercial banks, trust companies and similar persons whose names,
or the names of whose nominees, appear on the shareholder list or, if
applicable, who are listed as participants in a clearing agency's security
position listing, for subsequent transmittal to beneficial owners of Shares.
2. ACCEPTANCE FOR PAYMENT AND PAYMENT FOR SHARES.
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 will pay
for all Shares validly tendered prior to the Expiration Date and not properly
withdrawn pursuant to the Offer as soon as it is permitted to do so under
applicable law. Subject to the Merger Agreement and compliance with Rule
14e-1(c) under the Exchange Act, the Purchaser expressly reserves the right
to delay payment for Shares in order to comply in whole or in part with any
applicable law. See Section 16 -- "Certain Legal Matters; Regulatory
Approvals".
10
In all cases, payment for Shares accepted for payment pursuant to the
Offer will be made only after timely receipt by the Depositary of
o the certificates evidencing such Shares (the "Share Certificates")
or confirmation (a "Book-Entry Confirmation") of a book-entry
transfer of such Shares into the Depositary's account at The
Depository Trust Company (the "Book-Entry Transfer Facility")
pursuant to the procedures set forth in Section 3 of this Offer to
Purchase,
o a properly completed and duly executed Letter of Transmittal (or a
facsimile thereof), with any required signature guarantees or, in
the case of a book-entry transfer, an Agent's Message (as defined
below) in lieu of the Letter of Transmittal, and
o any other documents required by the Letter of Transmittal.
For purposes of the Offer, the Purchaser will be deemed to have accepted
for payment, and thereby purchased, Shares validly tendered and not properly
withdrawn as, if and when the Purchaser gives oral or written notice to the
Depositary of the Purchaser's acceptance for payment of such Shares. Payment
for Shares so accepted will be made by the deposit of the Offer Price for
those Shares with the Depositary, which will act as agent for tendering
shareholders for the purpose of receiving payments from the Purchaser and
transmitting such payments to tendering shareholders. If, for any reason
whatsoever, acceptance for payment of any Shares tendered pursuant to the
Offer is delayed, or the Purchaser is unable to accept for payment Shares
tendered pursuant to the Offer, then, without prejudice to the Purchaser's
rights under Section 1 of this Offer to Purchase, the Depositary may,
nevertheless, on behalf of the Purchaser, retain tendered Shares, and such
Shares may not be withdrawn, except to the extent that the tendering
shareholders are entitled to withdrawal rights as described in Section 4 of
this Offer to Purchase, and as otherwise required by Rule 14e-1(c) under the
Exchange Act. Under no circumstances will interest be paid on the Offer
Price, regardless of any delay in making such payment.
If any tendered Shares are not accepted for payment for any reason or if
Share Certificates are submitted evidencing more Shares than are tendered,
Share Certificates evidencing unpurchased Shares will be returned, without
expense to the tendering shareholder (or, in the case of Shares tendered by
book-entry transfer into the Depositary's account at the Book-Entry Transfer
Facility pursuant to the procedure set forth in Section 3, such Shares will
be credited to an account maintained at the Book-Entry Transfer Facility), as
promptly as practicable following the expiration or termination of the Offer.
The Purchaser reserves the right to transfer or assign, in whole or from
time to time in part, to one or more of its affiliates, the right to purchase
all or any portion of the Shares tendered pursuant to the Offer. Any such
transaction or assignment will not relieve the Purchaser of its obligations
under the Offer and will in no way prejudice the rights of tendering
shareholders to receive payment for Shares validly tendered and accepted for
payment pursuant to the Offer.
3. PROCEDURES FOR ACCEPTING THE OFFER AND TENDERING SHARES.
VALID TENDERS. In order for Shares to be validly tendered pursuant to the
Offer, the Letter of Transmittal (or a facsimile thereof), properly completed
and duly executed, together with any required signature guarantees (or, in
the case of a book-entry transfer, an Agent's Message in lieu of the Letter
of Transmittal) and any other documents required by the Letter of Transmittal
must be received by the Depositary at one of its addresses set forth on the
back cover of this Offer to Purchase and either
(1) the Share Certificates representing tendered Shares must be
received by the Depositary or such Shares must be tendered
pursuant to the procedure for book-entry transfer described below
and a Book-Entry Confirmation must be received by the Depositary,
in each case prior to the Expiration Date, or
(2) the tendering shareholder must comply with the guaranteed delivery
procedures described below.
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, that states that the
11
Book-Entry Transfer Facility has received an express acknowledgment from the
participant in the Book-Entry Transfer Facility tendering the Shares that 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.
BOOK ENTRY TRANSFER. The Depositary will establish an account 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 a 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 at the Book-Entry
Transfer Facility,
(1) a properly completed and duly executed Letter of Transmittal (or a
facsimile thereof), together with any required signature
guarantees, or an Agent's Message in lieu of the Letter of
Transmittal, and any other required documents, must, in any case,
be received by the Depositary at one of its addresses set forth on
the back cover of this Offer to Purchase prior to the Expiration
Date, or
(2) the tendering shareholder must comply with the guaranteed delivery
procedures described below.
DELIVERY OF DOCUMENTS TO THE BOOK-ENTRY TRANSFER FACILITY 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 of the Shares tendered therewith, unless that holder has completed
either the box entitled "Special Delivery Instructions" or the box entitled
"Special Payment Instructions" on the Letter of Transmittal, or (2) if the
Shares are tendered for the account of a firm that is participating 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 a Letter of Transmittal must be guaranteed
by an Eligible Institution. See Instruction 1 of the Letter of Transmittal.
If a Share Certificate is registered in the name of a person or persons
other than the signer of the Letter of Transmittal, or if payment is to be
made or delivered to, or a Share Certificate not accepted for payment or not
tendered is to be issued in the name of, a person other than the registered
holder(s), then the Share Certificate must be endorsed or accompanied by
appropriate duly executed stock powers, in either case signed exactly as the
name(s) of the registered holder(s) appear on the Share Certificate, with the
signature(s) on the Share Certificate or stock powers guaranteed by an
Eligible Institution. See Instructions 1 and 5 of the Letter of Transmittal.
GUARANTEED DELIVERY. If a shareholder desires to tender Shares pursuant to
the Offer and the Share Certificates evidencing such shareholder's Shares are
not immediately available, or such shareholder cannot deliver the Share
Certificates and all other required documents to the Depositary prior to the
Expiration Date, or such shareholder cannot complete the procedure for
delivery by book-entry transfer on a timely basis, such Shares may
nevertheless be tendered, provided that all of the following conditions are
satisfied:
(1) the tender is made by or through an Eligible Institution,
(2) the Depositary receives, prior to the Expiration Date, a properly
completed and duly executed Notice of Guaranteed Delivery,
substantially in the form made available by the Purchaser, and
(3) the Share Certificates (or a Book-Entry Confirmation) representing
all tendered Shares, in proper form for transfer, together with
the properly completed and duly executed Letter of Transmittal (or
a facsimile thereof) with any required signature guarantees (or,
in the case of a book-entry transfer, an Agent's Message in lieu
of the Letter of Transmittal), and any other
12
documents required by the Letter of Transmittal are received by
the Depositary within three New York Stock Exchange trading days
after the date of execution of such Notice of Guaranteed Delivery.
A "trading day" is any day on which the New York Stock Exchange is
open for business.
The Notice of Guaranteed Delivery may be delivered by hand or transmitted
by facsimile transmission or mailed to the Depositary and must include a
guarantee by an Eligible Institution in the form set forth in the Notice of
Guaranteed Delivery.
In all cases, Shares will not be deemed validly tendered unless the
Depositary receives a properly completed and duly executed Letter of
Transmittal (or a facsimile thereof), or, in the case of a book-entry
transfer, an Agent's Message in lieu of the Letter of Transmittal.
The method of delivery of Share Certificates, the Letter of Transmittal
and all other required documents, including delivery through the Book-Entry
Transfer Facility, is at the option and risk of the tendering shareholder.
The delivery will be deemed made only when the documents are actually
received by the Depositary (including in the case of a book-entry transfer,
receipt of a Book-Entry Confirmation). 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.
DETERMINATION OF VALIDITY. The Purchaser will determine, in its sole
discretion, all questions as to the validity, form, eligibility (including
time of receipt) and acceptance for payment of any tendered Shares and its
determination shall be final and binding on all parties. The Purchaser
reserves the absolute right to reject any and all tenders that it determines
are not in proper form or the acceptance for payment of which may, in the
opinion of its counsel, be unlawful. The Purchaser also reserves the absolute
right to waive any defect or irregularity in the tender of any Shares of any
particular shareholder, whether or not similar defects or irregularities are
waived in the case of other shareholders. No tender of Shares will be deemed
to have been validly made until all defects and irregularities have been
cured or waived to the satisfaction of the Purchaser. None of the Purchaser,
the Dealer Manager, the Depositary, the Information Agent or any other person
will be under any duty to give notification of any defects or irregularities
in tenders or incur any liability for failure to give any such notification.
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.
OTHER REQUIREMENTS. By executing the Letter of Transmittal as set forth
above, a tendering shareholder irrevocably appoints designees of the
Purchaser as such shareholder's proxies, each with full power of
substitution, in the manner set forth in the Letter of Transmittal, to the
full extent of such shareholder's rights with respect to the Shares tendered
by such shareholder and accepted for payment by the Purchaser (including with
respect to any and all other Shares or other securities issued or issuable in
respect of such Shares on or after the date of this Offer to Purchase). All
such proxies shall be considered coupled with an interest in the tendered
Shares. Such appointment will be effective when, and only to the extent that,
the Purchaser accepts such Shares for payment. Upon such acceptance for
payment, all prior proxies given by such shareholder with respect to such
Shares (and such other Shares and securities) will be revoked without further
action, and no subsequent proxies may be given nor any subsequent written
consent be executed by such shareholder (and, if given or executed, will not
be deemed to be effective). The designees of the Purchaser will, with respect
to the Shares for which the appointment is effective, be empowered to
exercise all voting and other rights of such shareholder as they in their
sole discretion may deem proper at any annual, special or adjourned meeting
of the Company's shareholders, action by written consent in lieu of any such
meeting or otherwise. The Purchaser reserves the right to require that, in
order for Shares to be deemed validly tendered, the Purchaser must be able to
exercise full voting rights with respect to such Shares immediately upon the
Purchaser's payment for such Shares.
The tender of Shares pursuant to any one of the procedures described above
will constitute the tendering shareholder's acceptance of the Offer, as well
as the tendering shareholder's representation and warranty that such
shareholder has the full power and authority to tender and assign the Shares
tendered, as specified in the Letter of Transmittal. The Purchaser's
acceptance for payment of Shares tendered pursuant to the Offer will
constitute a binding agreement between the tendering shareholder and the
Purchaser upon the terms and subject to the conditions of the Offer.
13
BACKUP WITHHOLDING. Under the "backup withholding" provisions of United
States federal income tax law, the Depositary may be required to withhold 31%
of the amount of any payments pursuant to the Offer. In order to prevent
backup federal income tax withholding with respect to payments of the Offer
Price to certain shareholders for Shares purchased pursuant to the Offer,
each such shareholder must provide the Depositary with such shareholder's
correct taxpayer identification number ("TIN") and certify that such
shareholder is not subject to backup withholding by completing the Substitute
Form W-9 in the Letter of Transmittal. Certain shareholders (including, among
others, all corporations and certain foreign individuals and entities) are
not subject to backup withholding. If a shareholder does not provide its
correct TIN or fails to provide the certifications described above, the
Internal Revenue Service may impose a penalty on the shareholder and payment
of cash to the shareholder pursuant to the Offer may be subject to backup
withholding. All shareholders surrendering Shares should complete and sign
the Substitute Form W-9 included in the Letter of Transmittal to provide the
information necessary to avoid backup withholding. Non-corporate foreign
shareholders should complete and sign a 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 8 of the Letter of Transmittal.
4. WITHDRAWAL RIGHTS.
Tenders of Shares made pursuant to the Offer are irrevocable, except that
such Shares may be withdrawn at any time prior to the Expiration Date. No
withdrawal rights will apply to Shares tendered during a Subsequent Offering
Period and no withdrawal rights apply during a Subsequent Offering Period
with respect to Shares tendered in the Offer and accepted for payment. See
Section 1 -- "Terms of the Offer".
For a withdrawal to be effective, a written, telegraphic or facsimile
transmission notice of withdrawal must be timely received by the Depositary
at one of its addresses set forth on the back cover page of this Offer to
Purchase. Any notice of withdrawal must specify the name, address and
taxpayer identification number of the person who tendered the Shares to be
withdrawn, the number of Shares to be withdrawn and the name of the
registered holder of such Shares, if different from that of the person who
tendered such Shares. If Share Certificates representing Shares to be
withdrawn have been delivered or otherwise identified to the Depositary,
then, prior to the physical release of such Share Certificates, the serial
numbers shown on such Share Certificates must be submitted to the Depositary.
The signature(s) on the notice of withdrawal must be guaranteed by an
Eligible Institution, unless such Shares have been tendered for the account
of an Eligible Institution. If Shares have been tendered pursuant to the
procedure for book-entry transfer as set forth in Section 3 -- "Procedures
for Accepting the Offer and Tendering Shares", 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.
If the Purchaser extends the Offer, is delayed in its acceptance for
payment of Shares, or is unable to accept Shares for payment pursuant to the
Offer for any reason, then, without prejudice to the Purchaser's rights under
the Offer, the Depositary may, nevertheless, on behalf of the Purchaser,
retain tendered Shares, and those Shares may not be withdrawn except to the
extent that tendering shareholders are entitled to withdrawal rights as
described in this Section.
Withdrawals of Shares may not be rescinded. Any Shares properly withdrawn
will thereafter be deemed not to have been validly tendered for purposes of
the Offer. However, withdrawn Shares may be re-tendered at any time prior to
the Expiration Date or during any Subsequent Offering Period by following one
of the procedures described in Section 3 -- "Procedures for Accepting the
Offer and Tendering Shares".
All questions as to the form and validity (including time of receipt) of
any notice of withdrawal will be determined by the Purchaser, in its sole
discretion. That determination will be final and binding. None of the
Purchaser, the Dealer Manager, the Depositary, the Information Agent or any
other person will be under any duty to give notification of any defects or
irregularities in any notice of withdrawal or incur any liability for failure
to give any such notification.
14
5. CERTAIN UNITED STATES FEDERAL INCOME TAX CONSEQUENCES.
The following is a summary of certain United States federal income tax
consequences of the Offer and the Merger to the Company's shareholders whose
Shares are tendered and accepted for payment pursuant to the Offer or whose
Shares are converted into the right to receive cash in the Merger. The
discussion is for general information only and does not purport to consider
all aspects of United States federal income taxation that might be relevant
to the Company's shareholders. The discussion is based on current provisions
of the Internal Revenue Code of 1986, as amended (the "Code"), existing,
proposed and temporary regulations promulgated under the Code and
administrative and judicial interpretations of the Code, all of which are
subject to change, possibly with a retroactive effect. The discussion applies
only to the Company's shareholders in whose hands Shares are capital assets
within the meaning of Section 1221 of the Code and who do not own directly or
through attribution 50% or more of the stock of Parent. This discussion does
not apply to Shares received pursuant to the exercise of employee stock
options or otherwise as compensation, or to certain types of shareholders
(such as insurance companies, tax-exempt organizations, financial
institutions and broker-dealers) who may be subject to special rules. This
discussion does not discuss the United States federal income tax consequences
to any Company shareholder who, for United States federal income tax
purposes, is a non-resident alien individual, a foreign corporation, a
foreign partnership or a foreign estate or trust, nor does it consider the
effect of any foreign, state or local tax laws.
Because individual circumstances may differ, each shareholder should
consult his or her own tax advisor to determine the applicability of the
rules discussed below and the particular tax effects of the Offer and the
Merger on a beneficial holder of Shares, including the application and effect
of the alternative minimum tax, and any state, local and foreign tax laws and
of changes in such laws.
The payment for Shares tendered in the Offer or the exchange of Shares for
cash pursuant to the Merger will be a taxable transaction for United States
federal income tax purposes and likely will be for state, local and foreign
income tax purposes as well. In general, a shareholder who sells Shares
pursuant to the Offer or receives cash in exchange for Shares pursuant to the
Merger will recognize gain or loss for United States federal income tax
purposes equal to the difference, if any, between the amount of cash received
and the shareholder's adjusted tax basis in the Shares sold pursuant to the
Offer or exchanged for cash pursuant to the Merger. Gain or loss will be
determined separately for each block of Shares (i.e., Shares acquired at the
same cost in a single transaction) tendered pursuant to the Offer or
exchanged for cash pursuant to the Merger. Such gain or loss will be
long-term capital gain or loss provided that a shareholder's holding period
for such Shares is more than one year at the time of consummation of the
Offer or the Merger, as the case may be. Capital gains recognized by an
individual upon a disposition of Shares that have been held for more than one
year generally will be subject to a maximum United States federal income tax
rate of 20% or, in the case of Shares that have been held for one year or
less, will be subject to tax at ordinary income tax rates. If an individual
is subject to the "alternative minimum tax," long-term capital gain can be
subjected to a 28% maximum United States federal income tax rate. Certain
limitations apply to the use of a shareholder's capital losses.
A shareholder whose Shares are purchased in the Offer or exchanged
pursuant to the Merger may be subject to 31% backup withholding unless
certain information is provided to the Depositary or an exemption applies.
See Section 3 -- "Procedures for Accepting the Offer and Tendering Shares".
6. PRICE RANGE OF SHARES; DIVIDENDS.
The Shares have traded on NASDAQ under the symbol "DETC". The following
table sets forth, for the periods indicated, the high and low closing sale
prices per Share. No dividends were paid to shareholders for the periods
indicated. Share prices are as reported on NASDAQ based on published
financial sources.
15
HIGH LOW
--------- ---------
Fiscal Year 2001:
First Quarter................................. $10.750 $8.750
Second Quarter ............................... $10.563 $8.625
Third Quarter (through December 19, 2000)..... $17.813 $8.563
Fiscal Year 2000:
First Quarter ................................ $ 9.125 $7.125
Second Quarter ............................... $10.500 $7.813
Third Quarter ................................ $10.438 $8.750
Fourth Quarter ............................... $13.000 $9.438
Fiscal Year 1999:
First Quarter ................................ $12.125 $8.813
Second Quarter ............................... $10.500 $8.125
Third Quarter................................. $11.875 $8.625
Fourth Quarter................................ $10.500 $8.000
On December 8, 2000, the last full day of trading before the public
announcement of the execution of the Merger Agreement, the closing sale price
of the Shares on NASDAQ was $13.00 per Share. On December 19, 2000, the last
full day of trading before the commencement of the Offer, the closing sale
price of the Shares on NASDAQ was $17.813 per Share. Shareholders are urged
to obtain a current market quotation for the Shares.
7. CERTAIN INFORMATION CONCERNING THE COMPANY.
GENERAL. The Company is a New York corporation with its principal offices
located at 000 Xxxxxxxx Xxxxxxx, Xxxxxxxx, Xxx Xxxx 00000. The Company's
telephone number is (000) 000-0000. The Company is a leading supplier of
equipment to the electronic protection industry. The Company designs,
manufactures and markets electronic detection, control and communication
equipment for security, fire protection, access control and closed circuit
television (CCTV) applications, offering products primarily for the
commercial and mid-to high-end residential portions of the market. The
Company operates 36 offices in 14 countries. As of the end of the 2000 fiscal
year, the Company directly or indirectly employed approximately 1,200 persons
worldwide.
AVAILABLE INFORMATION. The Shares are registered under the Exchange Act.
Accordingly, the Company is subject to the informational reporting
requirements of the Exchange Act and, in accordance therewith, is required to
file periodic reports, proxy statements and other information with the SEC
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 SEC at 000 Xxxxx Xxxxxx,
X.X., Xxxx 0000, Xxxxxxxxxx, X.X. 00000, and at the SEC's regional offices
located at Seven World Trade Center, Suite 1300, New York, New York 10048 and
Citicorp Center, 000 Xxxx Xxxxxxx Xxxxxx, Xxxxx 0000, Xxxxxxx, Xxxxxxxx
00000. Information regarding the public reference facilities may be obtained
from the SEC by telephoning 1-800-SEC-0330. The Company's filings are also
available to the public on the SEC's Internet site (xxxx://xxx.xxx.xxx).
Copies of such materials may also be obtained by mail from the Public
Reference Section of the SEC at 000 Xxxxx Xxxxxx, X.X., Xxxxxxxxxx, X.X.
00000 at prescribed rates.
SUMMARY FINANCIAL INFORMATION. Set forth below is selected consolidated
financial information with respect to the Company, excerpted or derived from
the Company's annual report on Form 10-K for the fiscal year ended March 31,
2000 (the "Company 10-K") and the Company's quarterly report on Form 10-Q for
the fiscal quarter ended September 30, 2000 (the "Company 10-Q"), each as
filed with the SEC pursuant to the Exchange Act. Parent and the Purchaser
make no representation as to the accuracy of such financial information. More
comprehensive financial information is included in the Company 10-K, the
Company 10-Q, and other documents filed by the Company with the SEC,
including the financial information and related notes contained therein. Such
reports and other documents may be examined and copies may be obtained from
the SEC in the manner set forth above.
16
DETECTION SYSTEMS, INC.
CONSOLIDATED BALANCE SHEET
(IN THOUSANDS, EXCEPT PER SHARE DATA)
FOR FISCAL YEAR ENDED FOR SIX MONTHS ENDED
------------------------------ --------------------------------------
ASSETS MARCH 31, 2000 MARCH 31, 1999 SEPTEMBER 30, 2000 SEPTEMBER 30, 1999
-------------- -------------- ------------------ ------------------
Current Assets:
Cash and cash equivalents .... $ 7,799 $ 4,414 $ 1,966 $10,980
Accounts receivable (less
allowance for doubtful
accounts)($1,020, $1,006,
$959 and $1,052,
respectively)................. $22,505 $20,916 $ 24,507 $24,069
Inventories, net .............. $32,594 $37,762 $ 41,429 $30,034
Other current assets .......... $ 5,822 $ 3,249 $ 5,866 $ 3,673
Total current assets ......... $68,720 $66,341 $ 73,768 $68,756
Fixed assets, net .............. $12,565 $12,420 $ 12,781 $12,749
Goodwill, net .................. $ 9,169 $ 9,381 $ 8,822 $ 9,540
Other assets ................... $ 5,164 $ 4,670 $ 5,406 $ 5,387
Total Assets ................. $95,618 $92,812 $100,777 $96,432
LIABILITIES
Current Liabilities:
Short term borrowings ......... $ 336 $ 1,416 $ 20 $ 1,546
Current portion of long term
debt ......................... $ 657 $ 647 $ 346 $ 1,919
Accounts payable .............. $ 9,515 $ 7,076 $ 13,186 $ 8,667
Accrued payroll and benefits . $ 1,933 $ 1,863 $ 1,860 $ 1,990
Income taxes payable .......... $ 1,703 $ 2,108 $ 723 $ 1,950
Other current liabilities .... $ 3,447 $ 4,134 $ 3,699 $ 3,294
Total current liabilities ... $17,591 $17,244 $ 19,834 $19,366
Other liabilities............... $ 2,968 $ 2,645 $ 3,008 $ 2,689
Long term debt ................. $16,595 $17,179 $ 19,565 $15,733
Total Liabilities ............ $37,154 $37,068 $ 42,407 $37,788
SHAREHOLDERS' EQUITY
Common Stock, par value
$.05 per share
Authorized -24,000,000
Issued -6,579,341, 6,562,499,
6,579,341 and 6,578,000,
respectively.................. $ 329 $ 328 $ 329 $ 329
Capital in excess of par value . $43,601 $45,073 $ 43,568 $45,081
Other accumulated
comprehensive loss ............ $ (695) $ (310) $ (1,660) $ (305)
Retained earnings .............. $17,915 $14,447 $ 19,471 $17,369
Less Treasury stock at
cost-- 177,400, 227,404,
251,174 and 223,657,
respectively .................. $(2,561) $(3,780) $ (3,227) $(3,786)
Notes receivable for stock
purchases ..................... $ (125) $ (14) $ (111) $ (44)
Total Shareholders' Equity ... $58,464 $55,744 $ 58,370 $58,644
Total Liabilities and
Shareholders' Equity ......... $95,168 $92,812 $100,777 $96,432
17
Except as otherwise stated in this Offer to Purchase, the information
concerning the Company contained herein has been taken from or is based upon
reports and other documents on file with the SEC or otherwise publicly
available. Although neither the Purchaser nor Parent has any knowledge that
would indicate that any statements contained herein based upon such reports
and documents are untrue, neither the Purchaser nor Parent takes any
responsibility for the accuracy or completeness of the information contained
in such reports and other documents or for any failure by the Company to
disclose events that may have occurred and may affect the significance or
accuracy of any such information but that are unknown to the Purchaser or
Parent.
CERTAIN PROJECTIONS. The Company does not, as a matter of course, make
public any forecasts as to its future financial performance. However, in
connection with Parent's evaluation of the transactions contemplated by the
Merger Agreement, the Company provided Parent with certain projected
financial information concerning the Company. Such information included,
among other things, the Company's projections of gross sales, net income and
earnings per Share for the Company for the fiscal years 2001 through 2005.
Set forth below is a summary of such projections. These projections should be
read together with the financial statements of the Company that can be
obtained from the SEC as described above.
YEAR ENDED MARCH 31,
(IN THOUSANDS, EXCEPT PER SHARE DATA)
2001 2002 2003 2004 2005
---------- ---------- ---------- ---------- ----------
Revenue............ $142,003 $163,323 $192,711 $226,524 $265,029
Net Income......... $ 4,931 $ 9,742 $ 13,198 $ 15,993 $ 19,311
Earnings Per Share. $ 0.72 $ 1.41 $ 1.90 $ 2.28 $ 2.74
It is the understanding of Parent and the Purchaser that the above
projections were not prepared with a view to public disclosure or compliance
with published guidelines of the SEC or the guidelines established by the
American Institute of Certified Public Accountants regarding projections or
forecasts and are included herein only because such information was provided
to Parent and the Purchaser in connection with its evaluation of a business
combination transaction. The projections do not purport to present operations
in accordance with generally accepted accounting principles, and the
Company's independent auditors have not examined or compiled the projections
presented herein and accordingly assume no responsibility for them. These
forward-looking statements (as that term is defined in the Private Securities
Litigation Reform Act of 1995) are subject to certain risks and uncertainties
that could cause actual results to differ materially from the projections.
The Company has advised Parent and the Purchaser that its internal financial
forecasts (upon which the projections provided to Parent were based in part)
are, in general, prepared solely for internal use and capital budgeting and
other management decisions and are subjective in many respects and thus
susceptible to interpretations and periodic revision based on actual
experience and business developments. The projections also reflect numerous
assumptions (not all of which were provided to Parent and the Purchaser), all
made by management of the Company, with respect to industry performance,
general business, economic, market and financial conditions and other
matters, including effective tax rates consistent with historical levels for
the Company, all of which are difficult to predict, many of which are beyond
the Company's control, and none of which is subject to approval by Parent or
the Purchaser. Accordingly, there can be no assurance that the assumptions
made in preparing the projections will prove accurate. It is expected that
there will be differences between actual and projected results, and actual
results may be materially greater or less than those contained in the
projections. The inclusion of the projections herein should not be regarded
as an indication that any of Parent, the Purchaser, the Company or their
respective affiliates or representatives considered or consider the
projections to be a reliable prediction of future events, and the projections
should not be relied upon as such. None of Parent, the Purchaser, the Company
or any of their respective affiliates or representatives has made or makes
any representation to any person regarding the ultimate performance of the
Company compared to the information contained in the projections, and none of
them intends to update or otherwise revise the projections to reflect
circumstances existing after the date when made or to reflect the occurrence
of future events, even in the event that any or all of the assumptions
18
underlying the projections are shown to be in error. The safe harbor for
forward-looking statements provided for under the Private Securities
Litigation Reform Act of 1995 does not apply to forward-looking statements
that are made in connection with a tender offer, including the Offer.
8. CERTAIN INFORMATION CONCERNING PARENT AND THE PURCHASER.
Parent is a limited liability company organized under the laws of Germany,
with principal offices located at Xxxxxx Xxxxx Xxxxx 0, 00000 Xxxxxxxxx
Xxxxxxxxxxxxx, Xxxxxxx. The telephone number of Parent is 011 49 711-811-0.
Parent is a diversified company with global operations in the automotive
equipment, consumer products, communications equipment and capital goods
sectors. Parent and its affiliates had approximately 190,000 employees
worldwide as of December 31, 1999.
The Purchaser is a New York corporation with its principal offices located
at c/o Coudert Brothers, 0000 Xxxxxx xx xxx Xxxxxxxx, Xxx Xxxx, Xxx Xxxx
00000. The Purchaser's telephone number is (000) 000-0000. The Purchaser is a
wholly owned subsidiary of Parent. The Purchaser has not carried on any
activities other than in connection with the Merger Agreement.
The name, citizenship, business address, business phone number, principal
occupation or employment and five-year employment history for each of the
directors and executive officers of Parent and the Purchaser and certain
other information are set forth in Schedule I to this Offer to Purchase.
Except as described in this Offer to Purchase or in Schedule I to this
Offer to Purchase, none of Parent, the Purchaser nor, to the best knowledge
of Parent and the Purchaser, any of the persons listed in Schedule I to this
Offer to Purchase or any associate or majority-owned subsidiary of Parent or
the Purchaser or any of the persons so listed,
o beneficially owns or has any right to acquire, directly or indirectly,
any Shares, or
o has effected any transaction in the Shares during the past 60 days.
Except as provided in the Merger Agreement, the Stock Option Agreement and
the Voting and Option Agreement, or as otherwise described in this Offer to
Purchase, none of Parent, the Purchaser nor, to the best knowledge of Parent
and the Purchaser, any of the persons listed in Schedule I to this Offer to
Purchase, has any contract, arrangement, understanding or relationship with
any other person with respect to any securities of the Company, including,
but not limited to, any contract, arrangement, understanding or relationship
concerning the transfer or voting of such securities, finder's fees, joint
ventures, loan or option arrangements, puts or calls, guarantees of loans,
guarantees against loss, guarantees of profits, division of profits or loss
or the giving or withholding of proxies.
Except as set forth in this Offer to Purchase, none of Parent, the
Purchaser nor, to the best knowledge of Parent and the Purchaser, any of the
persons listed on Schedule I hereto, has had any business relationship or
transaction with the Company or any of its executive officers, directors or
affiliates that is required to be reported under the rules and regulations of
the SEC applicable to the Offer. Except as set forth in this Offer to
Purchase, there have been no contacts, negotiations or transactions between
Parent or any of its subsidiaries or, to the best knowledge of Parent, any of
the persons listed in Schedule I to this Offer to Purchase, on the one hand,
and the Company or its affiliates, on the other hand, concerning a merger,
consolidation or acquisition, tender offer or other acquisition of
securities, an election of directors or a sale or other transfer of a
material amount of assets.
9. SOURCE AND AMOUNT OF FUNDS.
The total amount of funds required by the Purchaser to purchase Shares
pursuant to the Offer and the Merger is estimated to be approximately $125
million plus any transaction related fees and expenses. The Purchaser will
obtain such funds from Parent. Parent will obtain the funds required for
these transactions from available cash on hand.
10. BACKGROUND OF THE OFFER; PAST CONTACTS OR NEGOTIATIONS WITH THE COMPANY.
Parent believes that the rapid consolidation in the security products
industry in recent years, both within the United States and overseas, has
made it more difficult for suppliers that are not truly global to
19
compete effectively. Parent's objective has been to expand its activities in
this industry and to become a global supplier of security products.
Accordingly, over the past several years, Parent has had discussions with
several manufacturers of security products regarding various possible
business combination transactions. These discussions included intermittent
contacts with senior management of the Company starting as early as 1997. No
proposals for any specific transaction with the Company resulted from these
contacts.
In the first four months of 1999, Xxxxxx had extensive discussions with a
U.S. manufacturer of security products concerning a possible acquisition and
submitted a formal offer to the company's financial advisors. Xxxxxx's offer
was not accepted and the company was acquired by another bidder.
On May 21, 1999, Xxxxxx Xxxxxx, Chairman and Chief Executive Officer of
Ultrak, Inc. ("Ultrak"), a substantial shareholder of the Company, contacted
Xx. Xxx Xxxxx, President of the Security Systems Division of Bosch Telecom
GmbH, a wholly owned subsidiary of Parent, to discuss Parent's interest in
acquiring either the Company itself or the Company shares held by Ultrak. Xx.
Xxxxx expressed an interest in investigating the Company's business in more
detail.
On June 22, 1999, Xx. Xxxxx, together with Xxxxx Xxxxxxxx, Director of
Engineering and Manufacturing of the Security Systems Division of Bosch
Telecom, and Xx. Xxxxxx, visited the headquarters of the Company in Fairport,
New York and attended a presentation by the Company's executives on the
Company's product portfolio, worldwide distribution arrangements and the
Fairport facility operations. Xxxxx Xxxxxxx, Executive Vice President of the
Company, and Xxxxxxx Xxxx, Vice President-Engineering of the Company, visited
Bosch Telecom's Security Systems Division facility in Ottobrunn, Germany on
July 19, 1999 and attended a presentation regarding Bosch's security product
portfolio. Messrs. Glock and Xxxxxxxx, together with Xxxxxxxx Xxxxxxxxx,
Senior Vice President of the Security Systems Division of Bosch Telecom, made
another visit to the Company's headquarters on August 4 and 5, 1999, for a
presentation by the Company's executives generally similar in scope to the
June 22 presentation. On August 9 through 11, 1999 Xx. Xxxxxxxx visited the
Company's subcontract manufacturing facility in Zhuhai, China.
Following the August meetings, together with representatives of its
financial advisor, Xxxxxxx and X. Xxxxxxxxxxxx, Inc. ("ASB"), and
representatives of its U.S. legal counsel, Coudert Brothers ("Coudert"),
Parent engaged in additional investigation of the Company and its business
based on publicly available materials. As a result of that investigation,
Xxxxxx determined that the possibility of acquiring the Company should be
pursued further.
On November 5, 1999, Messrs. Xxxxx and Xxxxxxxxx, together with Xxxxx
Xxxxxx of ASB and Xxxxxx Xxxx, General Counsel of Parent, met with Xxxx
Xxxxxxxxx, Chairman and Chief Executive Officer of the Company, at ASB's
offices in New York. At the meeting, Messrs. Xxxxx and Xxxxxxxxx informed Xx.
Xxxxxxxxx of Parent's interest in acquiring the Company. Xx. Xxxxxx contacted
Xx. Xxxxxxxxx by telephone on November 9, 1999 and again expressed Xxxxxx's
interest in acquiring the Company. On November 12, 1999 Messrs. Xxxxxxxxx and
Basner had another telephone conversation on the same subject.
Since Xxxxxx remained interested in pursuing a transaction with the
Company, Xx. Xxxxxx telephoned Xx. Xxxxxxxxx on December 1, 1999 and advised
him of Parent's continuing interest. At the request of Xx. Xxxxxxxxx, Xxxxxx
Xxxxx, a member of the Company Board, joined the telephone call. On December
2, 1999 Xx. Xxxxxxxxx telephoned Xx. Xxxxxx. In that telephone call, Xx.
Xxxxxxxxx said he had discussed Xxxxxx's interest with the Company Board
members, and that the Board's view was that the Company was not for sale. Mr.
Xxxxxxxx suggested to Xx. Xxxxxx that Parent consider acquiring the Company
shares held by Ultrak.
Parent then considered and rejected various possible courses of action,
including the acquisition of a minority stake in the Company through purchase
of the shares held by Ultrak, public announcement of its interest in
acquiring the Company, or commencement of a tender offer without the approval
of the Company Board.
20
By letter dated February 7, 2000 Messrs. Xxxxx and Xxxxxxxxx informed Xx.
Xxxxxxxxx that Xxxxxx remained interested in acquiring the Company on a
friendly, negotiated basis and that, based only upon publicly available
information and subject to further due diligence investigation, Parent valued
the Company at $14.00 per share. In response to the letter, Xx. Xxxxxxxxx
advised Xx. Xxxxxx by telephone on February 21, 2000 that the Company was not
interested in discussing a 100% acquisition.
On February 25, 2000, Messrs. Glock, Basner and Xxxx, together with Xxxxxx
Xxxxxxxx of the Controlling and Planning Department of Parent, met with Xx.
Xxxxxxxxx at ASB's offices in New York to discuss the feasibility of
combining the manufacturing business of the Security Systems Division of
Bosch Telecom with the Company's business in a transaction in which Bosch
Telecom would obtain control of the Company. After internal review Parent
determined that this transaction structure was not feasible.
Xx. Xxxxx renewed his telephone contacts with Xx. Xxxxxxxxx in April 2000
and, in several telephone calls, they discussed possible transaction
structures other than a 100% acquisition. Parent gave further consideration
to alternative structures.
On May 2 and 3, 2000 Messrs. Xxxxx and Basner met with Xx. Xxxxxxxxx at
the Company's headquarters in Fairport and attended an updated presentation
regarding the Company's product portfolio. During this visit, Messrs. Glock,
Basner and Xxxxxxxxx discussed the possibility of Xxxxxx's acquiring an
interest in the Company of approximately 55 to 60%, with the Company
remaining a publicly traded corporation. Following this meeting, Xxxxxx gave
further consideration to a majority acquisition, but decided not to pursue
this approach since Xxxxxx believed majority ownership of a publicly traded
affiliate would be a cumbersome and undesirable structure.
Xxxxxx remained interested in pursuing a 100% acquisition of the Company
on a negotiated basis. By letter dated September 23, 2000 (transmitted on
September 25, 2000) to the Company Board, Messrs. Xxxxxxxxx and Glock advised
the Company Board that Parent was prepared to pay $14.00 in cash per share,
based on publicly available information, and that the price might be adjusted
as a result of further due diligence investigation. The proposal by its terms
remained open until October 6, 2000.
On October 4, 2000 Xxxxxx Xxxxxx and Xxxxxxx Xxxxxx of Fleet Securities,
financial advisors to the Company, telephoned Xx. Xxxxxx to discuss Xxxxxx's
proposal. The Company advised Parent on October 13, 2000 that Xxxxxx's
proposal had been rejected by the Company Board on the grounds that the price
did not represent fair value for the Company and that the proposal was not in
the best interests of the Company's shareholders. Parent then considered the
merits of various alternative courses of action, including submission of a
new proposal at a higher price per share, commencement of a hostile tender
offer, deferring any further action until the outcome of the proxy contest
which had been commenced by Ultrak was known, and/or acquiring Company shares
in the open market. Parent elected to begin acquiring shares in the open
market, and began doing so on October 25, 2000. Between October 25 and
November 10, 2000 Parent acquired 197,900 Company shares.
On November 6, 2000, Xx. Xxxxxxxxx advised Xx. Xxxxx that the Company
would be willing to consider acquisition proposals pursuant to a process to
be supervised by Fleet Securities. On November 11, 2000 Parent and the
Company entered into a Confidentiality Agreement, which included an agreement
that Parent would not acquire any additional shares of the Company prior to
the close of business on December 19, 2000 (or any later date to which the
Company's annual shareholders' meeting was properly adjourned).
On November 14 and 15, 2000 representatives of Parent, ASB, Coudert and
Xxxxxx's accounting advisor, Xxxxxx Xxxxxxxx LLP, conducted customary
business, financial and legal due diligence investigations at the Company's
headquarters in Fairport, NY. This investigation included meetings with
Messrs. Xxxxxxxxx, Xxxxxxx and Swan, and with Xxxxx Xxxx, Vice President,
Secretary and Treasurer of the Company, and Xxxxxxxxxxx Xxxxxx, Vice
President Chief Accounting Officer of the Company, as well as telephone
conferences with Xxxxxx Xxxxxx, Vice President and General Manager-Asia of
the Company. Parent's due diligence investigation continued in the following
weeks, with a visit by Xx. Xxxxx to the Company's facility in the United
Kingdom on November 24, and visits by Messrs. Xxxxxxxxx and Xxxxxxxx and
Xxxxxxxxx Xxxx, a member of the Board of Management of Parent, to the Zhuhai
factory and the Company's headquarters during the period December 1-4, 2000.
21
In accordance with the process established by Fleet Securities to review
various interested parties' proposals, Parent submitted an offer letter on
December 6, 2000 for acquisition of 100% of the shares of the Company at a
price of $17.00 per share in cash, together with a proposed mark-up of the
draft Merger Agreement prepared by counsel for the Company. On December 8,
2000, in response to a request from Fleet Securities to all bidders for their
last and best offers, Parent revised its offer to $18.00 per share in cash.
On December 9, Fleet Securities advised ASB that the Company Board had
selected Parent as the bidder with whom the Company would be willing to enter
into final negotiations. The negotiations commenced on the morning of
December 10 and were substantially completed by that evening. On the evening
of December 10, the Company Board met by telephone and, after the delivery by
Fleet Securities of its written opinion that the cash consideration to be
paid in the Offer and the Merger was fair to the shareholders of the Company
(other than Parent, the Purchaser or their affiliates) from a financial point
of view, the Company Board unanimously approved the transactions contemplated
by the Merger Agreement. The Merger Agreement was executed shortly
thereafter. The Purchaser was incorporated in New York on December 11 and
became a party to the Merger Agreement on December 13.
11. THE MERGER AGREEMENT; OTHER ARRANGEMENTS.
THE MERGER AGREEMENT
The following is a summary of the material provisions of the Merger
Agreement, a copy of which is filed as an exhibit to the Tender Offer
Statement on Schedule TO filed by Parent and the Purchaser pursuant to Rule
14d-3 of the General Rules and Regulations under the Exchange Act with the
SEC in connection with the Offer (the "Schedule TO"). The summary is
qualified in its entirety by reference to the Merger Agreement, which is
deemed to be incorporated by reference in this Offer to Purchase. Capitalized
terms used in this Offer to Purchase and not otherwise defined have the
meanings ascribed to them in the Merger Agreement.
THE OFFER. The Merger Agreement provides for the making of the Offer. The
obligation of the Purchaser to accept for payment and pay for Shares tendered
pursuant to the Offer is subject to the satisfaction of the Minimum
Condition, the expiration or termination of any applicable waiting period
under the HSR Act, and certain other conditions that are described in Section
15.
DIRECTORS. The Merger Agreement provides that promptly following the
purchase of and payment for a number of Shares that satisfies the Minimum
Condition, Parent will be entitled to designate such number of directors,
rounded up to the next whole number, on the Company Board is equal to the
product of
o the total number of directors on the Company Board (giving effect to
the increase in the size of such Board pursuant to the Merger
Agreement), and
o the percentage that the number of Shares beneficially owned by
Purchaser (including Shares so accepted for payment) bears to the total
number of Shares then outstanding.
The Company has agreed, upon a request of the Parent, promptly either (at the
election of the Company) to increase the size of the Company Board or use its
best efforts to secure the resignations of such number of incumbent
directors, or both, as is necessary to enable such designees of Parent to be
so elected or appointed to the Company Board and, subject to Section 14(f) of
the Exchange Act and Rule 14f-1 promulgated thereunder, to cause Parent's
designees to be so elected or appointed; and at such time, the Company shall
also take all action necessary to cause persons designated by Parent to
constitute at least the same percentage (rounded up to the next whole number)
as is on the Company Board of (i) each committee of the Company Board, (ii)
each board of directors (or similar body) of each subsidiary of the Company
and (iii) each committee (or similar body) of each such board; provided,
however, that until the Effective Time, neither Parent nor Purchaser will
take any action that would cause the Company Board to include fewer than two
members who are Continuing Directors.
Following the election of Xxxxxx's designees to the Company Board (a) any
amendment or modification of the Merger Agreement by the Company, (b) any
amendment to the Company's Certificate
22
of Incorporation or Bylaws inconsistent with the Merger Agreement, (c) any
termination of the Merger Agreement by the Company, (d) any extension or
waiver by the Company of the time for the performance of any of the
obligations of Parent or the Purchaser under the Merger Agreement or (e) any
waiver of any of the Company's rights under the Merger Agreement, may be
effected only by the action of a majority of the Continuing Directors of the
Company.
THE MERGER. The Merger Agreement provides that no later than two business
days after the satisfaction or waiver of each of the conditions to the Merger
set forth in the Merger Agreement, the Purchaser will be merged with and into
the Company. Following the Merger, the separate existence of the Purchaser
will cease, and the Company will continue as the Surviving Corporation,
wholly owned by Parent.
If required by the NYBCL, the Company will call and hold a meeting of its
shareholders following consummation of the Offer for the purpose of voting
upon the approval of the Merger Agreement. At any such meeting all Shares
then owned by Parent or the Purchaser or any other subsidiary of Parent will
be voted in favor of approval of the Merger Agreement. Under the NYBCL,
Parent may cause the Purchaser to merge with and into the Company without a
vote of the Company's remaining shareholders if the Purchaser owns at least
90% of the outstanding Shares. Consequently, if the number of Shares tendered
in the Offer and not properly withdrawn, which, together with the Shares
owned by Parent and the Purchaser, constitutes 90% or more of the outstanding
Shares on a fully diluted basis, Parent intends to immediately effect the
Merger. Pursuant to the Merger Agreement, each Share outstanding at the
Effective Time (other than Shares owned by Parent or any of its subsidiaries
or by the Company or any of its subsidiaries, all of which will be cancelled
and other than Shares that are held by shareholders, if any, who properly
exercise their appraisal rights under the NYBCL) will be converted into the
right to receive the Merger Consideration. Shareholders who perfect their
appraisal rights under the NYBCL will be entitled to the amounts determined
pursuant to judicial determination. See Section 17--"Appraisal Rights".
REPRESENTATIONS AND WARRANTIES. Pursuant to the Merger Agreement, the
Company has made customary representations and warranties to Parent and the
Purchaser, including but not limited to representations relating to corporate
existence and power; capital structure; corporate authorizations;
subsidiaries; SEC filings; financial statements; absence of certain changes
(including any material adverse effect on the business, results of
operations, or financial condition of the Company); employee benefit plans;
ERISA; government authorizations; litigation; compliance with laws; labor
matters; environmental matters; taxes; intellectual property; accuracy of
certain disclosures to be made in connection with preparation of the Offer
documents; the opinion of the Company's financial advisor; and brokers.
Certain representations and warranties in the Merger Agreement made by the
Company and Parent are qualified as to "materiality" or "Material Adverse
Effect". For purposes of the Merger Agreement and this Offer to Purchase, the
term "Material Adverse Effect" generally means any change or effect (or any
development that, in so far as can be reasonably foreseen, is likely to
result in any change or effect) that is materially adverse to the business,
properties, assets, prospects, financial condition or results of operations
of such party and its subsidiaries taken as a whole.
Pursuant to the Merger Agreement, Parent and the Purchaser have made
customary representations and warranties to the Company, including
representations relating to their corporate existence and power; good
standing; corporate authority; corporate authorizations; the accuracy of
certain disclosures to be made in connection with preparation of the Offer
documents; their ability to finance the Offer and the Merger; and brokers.
COVENANTS. The Merger Agreement contains various covenants of the parties
thereto. A description of certain of these covenants is set forth below.
The Merger Agreement provides that, prior to the time the designees of
Parent have been elected or appointed to, and shall constitute a majority of,
the Company Board, or the Merger Agreement is terminated, the Company:
23
o will, and will cause each of its Subsidiaries to, (A) carry on their
respective businesses in the ordinary course; (B) confer at such times
as Parent may reasonably request with one or more representatives of
Parent to report material operational matters and the general status of
ongoing operations;
o will not, and will not permit any of its Subsidiaries to, directly or
indirectly, amend its certificate of incorporation or by-laws or
similar organizational documents;
o will not, and will not permit any of its subsidiaries to, (A)(i)
declare, set aside or pay any dividend or other distribution payable in
cash, stock or property with respect to the Company's capital stock or
that of its Subsidiaries, except that a wholly-owned Subsidiary of the
Company may declare and pay a dividend or make advances to its parent
or the Company or (ii) redeem, purchase or otherwise acquire directly
or indirectly any of the Company's capital stock or that of its
Subsidiaries; (B) issue, sell, pledge, dispose of or encumber any
additional shares of, or securities convertible into or exchangeable
for, or options, warrants, calls, commitments or rights of any kind to
acquire, any shares of capital stock of any class of the Company or its
Subsidiaries, other than Shares issued upon the exercise of Options
outstanding on the date of the Merger Agreement in accordance with the
Option Plans as in effect on the date of the Merger Agreement; or (C)
split, combine or reclassify the outstanding capital stock of the
Company or of any of the Subsidiaries of the Company;
o will not, and will not permit it subsidiaries to, except as permitted
by the Merger Agreement, to acquire or agree to acquire (A) by merging
or consolidating with, or by purchasing a substantial portion of the
assets of, or by any other manner, any business or any corporation,
partnership, joint venture, association or other business organization
or division thereof (including entities which are Subsidiaries of the
Company or any of the Company's Subsidiaries) or (B) any assets,
including real estate, except purchases in the ordinary course of
business consistent with past practice;
o will not, and will not permit its Subsidiaries to, except in the
ordinary course of business and except as otherwise permitted by the
Merger Agreement, to amend or to terminate any Company Material
Contract where such amendment or termination would have a Material
Adverse Effect on the Company, or waive, release or assign any material
rights or claims;
o will not, and will not permit its subsidiaries to, transfer, lease,
license, sell, mortgage, pledge, dispose of or encumber any property or
assets other than in the ordinary course of business and consistent
with past practice;
o will not, and will not permit its Subsidiaries to, (A) enter into any
employment or severance agreement with or grant any severance or
termination pay to any officer, director or key employee of the Company
or any its Subsidiaries; or (B) hire or agree to hire any new or
additional executives or senior officers;
o will not, and will not permit its Subsidiaries to, except in the
ordinary course of business and except as required to comply with
applicable Law or contracts disclosed in the Company's SEC Documents or
otherwise disclosed to Parent or expressly provided in the Merger
Agreement, to (A) adopt, enter into, terminate, amend or increase the
amount or accelerate the payment or vesting of any benefit or award or
amount payable under any Benefit Plan or other arrangement for the
current or future benefit or welfare of any director, officer or
current or former employee, except to the extent necessary to
coordinate any such Benefit Plans with the terms of the Merger
Agreement, (B) increase in any manner the compensation or fringe
benefits of, or pay any bonus to, any director, officer or employee,
(C) pay any benefit not provided for under any Benefit Plan, (D) grant
any awards under any bonus, incentive, performance or other
compensation plan or arrangement or Benefit Plan (including the grant
of stock options, stock appreciation rights, stock based or stock
related awards, performance units or restricted stock, or the removal
of existing restrictions in any Benefit Plans or agreements or awards
made thereunder);
24
o will not, and will not permit any of its Subsidiaries to, (A) incur or
assume any long-term debt, or except in the ordinary course of
business, incur or assume any short-term indebtedness in amounts not
consistent with past practice; (B) materially increase its bank debt;
(C) assume, guarantee, endorse or otherwise become liable or
responsible (whether directly, contingently or otherwise) for the
obligations of any other Person, except in the ordinary course of
business and consistent with past practice; (D) make any loans,
advances or capital contributions to, or investments in, any other
Person (other than to wholly owned Subsidiaries of the Company or
customary loans or advances to employees in the ordinary course of
business and consistent with past practice); or (E) enter into any
material commitment or transaction except in the ordinary course of
business consistent with past practice;
o will not, and will not permit any of its Subsidiaries to, change any of
the accounting methods used by it unless required by GAAP;
o will not, and will not permit its Subsidiaries to, pay, discharge or
satisfy any claims, liabilities or obligations (absolute, accrued,
asserted or unasserted, contingent or otherwise), other than the
payment, discharge or satisfaction of any such claims, liabilities or
obligations, in the ordinary course of business and consistent with
past practice, of claims, liabilities or obligations reflected or
reserved against in, or contemplated by, the consolidated financial
statements (or the notes thereto) of the Company and its consolidated
Subsidiaries; or, except in the ordinary course of business consistent
with past practice, waive the benefits of, or agree to modify in any
manner, any confidentiality, standstill or similar agreement to which
the Company or any of its Subsidiaries is a party;
o will not, and will not permit its Subsidiaries to, enter into an
agreement, contract, commitment or arrangement to do any of the
foregoing, or to authorize, recommend, propose or announce an intention
to do any of the foregoing; and
o will not, and will not permit its Subsidiaries to, take any action that
would result in (i) any of its representations and warranties set forth
in the Merger Agreement that are qualified as to materiality to become
untrue, (ii) any of such representations and warranties that are not so
qualified becoming untrue in any material respect or (iii) any of the
conditions to the Offer not being satisfied (subject to the Company's
right to take action specifically permitted under the terms of the
Merger Agreement).
ACCESS; CONFIDENTIALITY. The Merger Agreement provides that, prior to the
time the designees of Parent have been elected or appointed to, and shall
constitute a majority of, the Company Board or the Merger Agreement is
terminated, the Company:
o shall, and shall cause each of its Subsidiaries to, afford to the
representatives of Parent reasonable access on reasonable prior notice
during normal business hours, throughout the period prior to the
earlier of the Effective Time or the termination of the Merger
Agreement, to all of its properties, offices, employees, contracts,
commitments, books and records (including but not limited to Tax
Returns) and any report, schedule or other document filed or received
by it pursuant to the requirements of federal or state securities laws.
o shall, and shall cause each of its Subsidiaries to, furnish promptly to
Parent such additional financial and operating data and other
information as to its and its Subsidiaries' respective businesses and
properties as Parent may from time to time reasonably request. Parent
and the Purchaser will make all reasonable efforts to minimize any
disruption to the businesses of the Company and its Subsidiaries which
may result from the requests for data and information hereunder and
pursuant to the terms of the Merger Agreement.
The Merger Agreement further provides that Parent and the Company will be
bound by the terms of a letter agreement dated November 11, 2000, between
Parent and the Company.
25
FURTHER ACTION; REASONABLE BEST EFFORTS. The Merger Agreement provides
that:
(1) Upon the terms and subject to the conditions provided in the Merger
Agreement, each of Parent, the Purchaser and the Company agrees to use its
reasonable best efforts to take, or cause to be taken, all action and to
do, or cause to be done, all things necessary under applicable laws and
regulations to consummate and make effective in the most expeditious
manner practicable, the Offer and the other transactions, including, (A)
the preparation and filing with the SEC of the Offer Documents, the
Schedule 14D-9, the information required to be distributed to the
shareholders of the Company pursuant to Section 14(f) of the Exchange Act
and Rule 14f-1 promulgated thereunder as is necessary so as to enable
Parent's designees to be elected to the Company's Board or Directors
pursuant to the terms of the Merger Agreement, the preliminary Proxy
Statement and the Proxy Statement and all necessary amendments or
supplements thereto; (B) the obtaining of all necessary actions or
nonactions, waivers, consents and approvals from any Governmental Entity
and the making of all necessary registrations and filings (including
filings with any Governmental Entity, if any) and the taking of all
reasonable steps as may be necessary to obtain an approval or waiver from,
or to avoid an action or proceeding by, any Governmental Entity, (C) the
obtaining of all necessary consents, approvals or waivers from third
parties, (D) the defending of any lawsuits or other legal proceedings,
whether judicial or administrative, challenging the Merger Agreement or
the consummation of any of the Transactions, including seeking to have any
stay or temporary restraining order entered by any court or other
Governmental Entity vacated or reversed, and (E) the execution and
delivery of any additional instruments necessary to consummate the
Transactions and to fully carry out the purposes of the Merger Agreement.
(2) Each of the Company, Parent and the Purchaser shall give prompt notice
to the other of (i) any of their representations or warranties contained
in the Merger Agreement becoming untrue or inaccurate in any respect
(including receiving Knowledge of any fact, event or circumstance which
may cause any representation qualified as to Knowledge to be or become
untrue or inaccurate in any respect) or (ii) the failure by them to comply
with or satisfy in any material respect any covenant, condition or
agreement to be complied with or satisfied by them under the Merger
Agreement; provided, however, that no such notification shall affect the
representations, warranties, covenants or agreements of the parties or the
conditions to the obligations of the parties under the Merger Agreement.
EMPLOYEE BENEFITS
CURRENT OBLIGATIONS. The Merger Agreement provides that the Parent will,
or will cause the Surviving Corporation to, give all Persons who are employed
by the Company immediately prior to the Effective Time full credit for
purposes of eligibility and vesting, under any tax-qualified employee benefit
plans or arrangements maintained by Parent or the Surviving Corporation for
such employees' service with Parent or the Surviving Corporation to the same
extent recognized by the Company immediately prior to the Effective Time. The
Merger Agreement also provides that the Parent and the Purchaser will cause
the Surviving Corporation to honor obligations reflecting certain of the
Company's employment, severance and retirement contracts.
STOCK OPTIONS. The Merger Agreement provides that at or immediately prior
to the Effective Time, each then outstanding option and warrant to purchase
any shares of capital stock of the Company (in each case, an "Option") shall
be cancelled by the Company. In consideration of such cancellation of Options
with an exercise price of less than the Offer Price, the Company (or, at
Parent's option, the Purchaser) shall pay to such holders of Options an
amount in respect thereof equal to the product of (A) the excess, if any, of
the Offer Price over the exercise price of each such Option and (B) the
number of Shares previously subject to the Option immediately prior to its
cancellation (such payment to be net of withholding taxes and without
interest). In connection with such cancellation, the Company shall use its
best efforts to obtain such consents from holders of Company Options as are
required pursuant to the plans (the "Option Plans"). The Company shall take
all other actions necessary and appropriate so that all stock option, other
equity based plans or deferred compensation plans maintained with respect to
the Shares, including, without limitation, the Option Plans, shall terminate
as of the Effective Time (except
26
for the payments to be made out of the cash assets remaining in the deferred
compensation plans (including interest thereon) to be paid to the
participants, at the option of the Company, either (i) in a lump sum upon
termination of the plans or (ii) one-third in each of January 2002, January
2003 and January 2004) and the provisions in any other Benefit Plan providing
for the issuance, transfer or grant of any capital stock of the Company or
any interest in respect of any capital stock of the Company shall be deleted
as of the Effective Time, and the Company shall use its best efforts to
ensure that following the Effective Time no holder of an Option or any
participant in any Option Plan or other Benefit Plan shall have any right
thereunder to acquire any capital stock of the Company, Parent, the Purchaser
or the Surviving Corporation.
NOTIFICATION OF CERTAIN MATTERS. The Merger Agreement provides that each
of the Company, Parent and the Purchaser shall give prompt notice to the
other of (i) any of their representations or warranties contained in this
Agreement becoming untrue or inaccurate in any respect (including receiving
Knowledge of any fact, event or circumstance which may cause any
representation qualified as to Knowledge to be or become untrue or inaccurate
in any respect) or (ii) the failure by them to comply with or satisfy in any
material respect any covenant, condition or agreement to be complied with or
satisfied by them under the Merger Agreement; provided, however, that no such
notification shall affect the representations, warranties, covenants or
agreements of the parties or the conditions to the obligations of the parties
under the Merger Agreement.
NO SOLICITATION. The Merger Agreement provides that
(a) The Company shall not, nor shall it permit any of its Subsidiaries to,
nor shall it authorize (and shall use its best efforts not to permit) any
officer, director or employee of, or any investment banker, attorney or other
advisor or representative of, the Company or any of its Subsidiaries to, (i)
solicit or initiate, or encourage, directly or indirectly, any inquiries or
the submission of, any Takeover Proposal (as defined below), (ii) participate
in any discussions or negotiations regarding, or furnish to any Person any
information or data with respect to or access to the properties of, or take
any other action to knowingly facilitate the making of any proposal that
constitutes, or may reasonably be expected to lead to, any Takeover Proposal
or (iii) enter into any agreement with respect to any Takeover Proposal or
approve or resolve to approve any Takeover Proposal; provided, that nothing
contained in the Merger Agreement prohibits the Company or the Company Board,
from (i) taking and disclosing to the Company's shareholders a position with
respect to a tender or exchange offer by a third party pursuant to Rules
14d-9 and 14e-2 under the Exchange Act, or (ii) making such disclosure to the
Company's shareholders as, in the good faith judgment of the Company's Board
of Directors, after receiving advice from outside counsel, is required under
applicable Law, provided that the Company may not, except as permitted under
the Merger Agreement, withdraw or modify, or propose to withdraw or modify,
its position with respect to the Offer or the Merger or approve or recommend,
or propose to approve or recommend any Takeover Proposal, or enter into any
agreement with respect to any Takeover Proposal. Upon execution of the Merger
Agreement, the Company was required to immediately cease any existing
activities, discussions or negotiations with any parties conducted heretofore
with respect to any of the foregoing. Notwithstanding the foregoing, prior to
the time of acceptance of Shares for payment pursuant to the Offer, the
Company may furnish information concerning its business, properties or assets
to any Person or group and may negotiate and participate in discussions and
negotiations with such Person or group concerning a Takeover Proposal (as
defined below) if:
(x) such Person or group has submitted a Superior Proposal (as defined
below); and
(y) the Company Board determines in good faith based on advice of outside
legal counsel that such action is necessary for the Company Board to
comply with its fiduciary duty under applicable Law.
The Company is then required to promptly (but in no case later than 24 hours)
notify Parent of the existence of any proposal, discussion, negotiation or
inquiry received by the Company regarding any Takeover Proposal, and the
Company must immediately communicate to Parent the terms of any proposal,
discussion, negotiation or inquiry which it may receive regarding any
Takeover Proposal and the identity of the party making such proposal or
inquiry or engaging in such discussion or negotiation, and
27
must provide Parent with a copy of such proposal or inquiry, if available.
The Company must promptly provide to Parent any non-public information
concerning the Company provided to any other Person in connection with any
Takeover Proposal which was not previously provided to Parent. The Company
must keep Parent informed of the status and details of any such Takeover
Proposal and of any amendments or proposed amendments to any Takeover
Proposal and must promptly (but in no case later than 24 hours) notify Parent
of any determination by the Company's Board of Directors that a Superior
Proposal has been made.
(b) Except as set forth in the Merger Agreement, neither the Company Board
nor any committee thereof shall (i) withdraw or modify, or propose to
withdraw or modify, in a manner adverse to Parent or the Purchaser, the
approval or recommendation by the Company Board or any such committee of the
Offer, the Merger Agreement or the Merger, (ii) approve or recommend, or
propose to approve or recommend, any Takeover Proposal or (iii) enter into
any agreement with respect to any Takeover Proposal. Notwithstanding the
foregoing, subject to compliance with the provisions of the Merger Agreement,
if, prior to the time of acceptance for payment of Shares pursuant to the
Offer, the Company Board determines in good faith, based upon the advice of
outside legal counsel, that its failure to do so would constitute a breach of
its fiduciary duties under applicable Law, the Company Board may withdraw or
modify its approval or recommendation of the Offer, the Merger Agreement or
the Merger, approve or recommend a Superior Proposal, or enter into an
agreement with respect to a Superior Proposal, in each case at any time after
the fifth business day following Parent's receipt of written notice
(including by facsimile) from the Company advising Parent that the Company
Board has received a Superior Proposal which it intends to accept, specifying
the material terms and conditions of such Superior Proposal and identifying
the Person making such Superior Proposal, but only if Parent has not, within
such five business days, made such adjustments to the terms and conditions of
the Merger Agreement as would cause the Superior Proposal to no longer
qualify as such. The Company shall promptly deliver to Parent a copy of the
minutes of any meeting of the Company Board at which it determines that a
Takeover Proposal is a Superior Proposal.
"Takeover Proposal", as defined in the Merger Agreement, means any bona
fide proposal or offer, whether in writing or otherwise, from any Person
other than Parent, the Purchaser or any affiliates thereof (a "Third Party")
to acquire beneficial ownership (as determined pursuant to Rule 13d-3 under
the Exchange Act) of all or a material portion of the assets of the Company
or any of its Subsidiaries or 20% or more of any class of equity securities
of the Company or any of its Subsidiaries pursuant to a merger, consolidation
or other business combination, sale of shares of capital stock, sale of
assets, tender offer, exchange offer or similar transaction with respect to
either the Company or any of its Subsidiaries, including any single or
multi-step transaction or series of related transactions, which is structured
to permit such Third Party to acquire beneficial ownership of any material
portion of the assets of or 20% or more of the equity interest in either the
Company or any of its Subsidiaries.
"Superior Proposal", as defined in the Merger Agreement, means an
unsolicited bona fide written proposal by a Third Party to acquire, directly
or indirectly, for consideration consisting of cash and/or securities, more
than a majority of the Shares then outstanding or all or substantially all of
the assets of the Company or to acquire, directly or indirectly, the Company
by merger or consolidation, and otherwise on terms which the Company Board
determines in good faith to be more favorable to the Company's shareholders
(taking into account the time period reasonably believed necessary to
consummate such transaction) than the Offer and the Merger (after receipt of
opinion of a nationally recognized independent financial advisor that the
value of the consideration provided for in such proposal is superior to the
value of the consideration provided for in the Offer and the Merger, and
after taking into account all legal, financial and regulatory aspects of such
proposal, the identity of the Third Party making such proposal, and the
benefits to be derived by the Company from the Transactions), for which
financing, to the extent required, is then committed and which, in the good
faith reasonable judgment of the Company Board, is reasonably likely to be
consummated.
Directors' and Officers' Insurance and Indemnification. The Merger
Agreement provides that:
(a) The Company shall, to the fullest extent permitted under applicable
New York Law, the terms of the Company's Certificate of Incorporation or
By-Laws and regardless of whether the Merger becomes
28
effective, indemnify and hold harmless, and, after the Effective Time, the
Surviving Corporation shall, to the fullest extent permitted under applicable
New York Law, the terms of the Surviving Corporation's Certificate of
Incorporation or By-laws, indemnify and hold harmless, each present and
former director or officer of the Company and each other person to whom
indemnification is provided under the Company's By-Laws as in effect on the
date of the Merger Agreement (collectively, the "Indemnified Parties")
against any costs or expenses (including reasonable attorneys' fees),
judgments, losses, claims, damages and liabilities incurred in connection
with, and amounts paid in settlement of, any claim, action, suit, proceeding
or investigation, whether civil, criminal, administrative or investigative
and wherever asserted, brought or filed, (x) arising out of or pertaining to
the Transactions or (y) otherwise with respect to any acts or omissions or
alleged acts or omissions occurring at or prior to the Effective Time, in
each case for a period of six years after the date of the Merger Agreement;
provided, further, that the Surviving Corporation may not amend the terms of
its Certificate of Incorporation or By-laws to be less favorable with respect
to such indemnification than the Company's Certificate of Incorporation or
By-Laws on the date of the Merger Agreement. In the event of any such claim,
action, suit, proceeding or investigation (whether arising before or after
the Effective Time), (i) any counsel retained by the Indemnified Parties for
any period after the Effective Time must be reasonably satisfactory to the
Surviving Corporation, (ii) after the Effective Time, the Surviving
Corporation shall pay the reasonable fees and expenses of such counsel,
promptly after statements therefor are received, and (iii) the Surviving
Corporation will cooperate in the defense of any such matter; provided,
however, that the Surviving Corporation shall not be liable for any
settlement effected without its written consent (which consent shall not be
unreasonably withheld or delayed); and provided, further, that, in the event
that any claim or claims for indemnification are asserted or made within such
six year period, all rights to indemnification in respect of any such claim
or claims shall continue until the disposition of any and all such claims.
The Indemnified Parties as a group may retain only one law firm to represent
them with respect to any single action unless there is, under applicable
standards of professional conduct, a conflict on any significant issue
between the positions of any two or more Indemnified Parties. The indemnity
agreements of the Surviving Corporation in the Merger Agreement extend, on
the same terms to, and shall inure to the benefit of and shall be enforceable
by, each Person or entity who controls, or in the past controlled, any
present or former director, officer or employee of the Company or any of its
Subsidiaries.
(b) For a period of three years after the Effective Time, Parent must
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 (a copy of which has been made available to Parent) on terms
(including the amounts of coverage and the amounts of deductibles, if any)
that are no less favorable to the terms now applicable to them under the
Company's current policies; provided, however, that in no event shall Parent
or the Surviving Corporation be required to expend in excess of 125% of the
annual premium currently paid by the Company for such coverage; and provided
further, that, if the premium for such coverage exceeds such amount, Parent
or the Surviving Corporation shall purchase a policy with the greatest
coverage available for such 125% of the annual premium.
PARENT UNDERTAKING. The Merger Agreement provides that Parent shall be
responsible for and shall cause the Purchaser to perform all of its
obligations under the Merger Agreement in a timely manner.
TAKEOVER STATUTE. The Merger Agreement provides that in no event shall
the Company's approval of the Merger Agreement, the Offer, the acquisition of
the Shares pursuant to the Offer and the Merger for purposes of Section 912
of the NYBCL be withdrawn, revoked or modified by the Company Board. If any
state takeover statute other than Section 912 of the NYBCL becomes or is
deemed to become applicable to the Offer or the acquisition of Shares
pursuant to the Offer or the Merger, the Company shall take all action
necessary to render such statute inapplicable to all of the foregoing.
CONDITIONS TO THE MERGER. The Merger Agreement provides that the
obligations of Parent, the Purchaser and the Company to effect the Merger are
subject to the satisfaction on or prior to the Effective Time of each of the
following conditions any and all of which may be waived in whole or in part
by the Company, Parent or the Purchaser as the case may be, to the extent
permitted by applicable law:
29
(a) the Merger Agreement shall have been approved and adopted by the
requisite vote of the holders of Shares, if required by applicable law and
the Company's Certificate of Incorporation;
(b) any waiting period applicable to the consummation of the Merger under
the HSR Act shall have expired or been terminated, and no statute, rule,
regulation, order, decree or injunction shall have been enacted,
promulgated or issued by any Governmental Entity precluding, restraining,
enjoining or prohibiting consummation of the Merger; and
(c) Parent, the Purchaser or their affiliates shall have purchased Shares
pursuant to the Offer.
TERMINATION. The Merger Agreement may be terminated at any time prior to
the Effective Time:
(a) By the mutual written consent of Parent and the Company; provided,
however, that if Parent shall have a majority of the Company Board
pursuant to the terms of the Merger Agreement, such consent of the Company
may only be given if approved by the Continuing Directors.
(b) By either of Parent or the Company if (i) a statute, rule or
executive order shall have been enacted, entered or promulgated
prohibiting the Transactions on the terms contemplated by the Merger
Agreement or (ii) any Governmental Entity shall have issued an order,
decree or ruling or taken any other action (which order, decree, ruling or
other action the parties hereto shall use their reasonable efforts to
lift), in each case permanently restraining, enjoining or otherwise
prohibiting the Transactions and such order, decree, ruling or other
action shall have become final and non-appealable.
(c) By either of Parent or the Company if the Effective Time shall not
have occurred on or before June 30, 2001; provided, that the party seeking
to terminate the Merger Agreement for such reason shall not have breached
in any material respect its obligations under the Merger Agreement in any
manner that shall have proximately contributed to the failure to
consummate the Merger on or before such date.
(d) By the Company:
(i) if the Company has entered into an agreement with respect to a
Superior Proposal in accordance with the terms of the Merger
Agreement, provided the Company has complied with all provisions
thereof, including the notice provisions therein, and that it
simultaneously terminates the Merger Agreement and makes simultaneous
payment to the Parent of the Expenses (as defined below) and the
Termination Fee; or
(ii) if Parent or the Purchaser shall have terminated the Offer or
the Offer expires without Parent or the Purchaser, as the case may be,
purchasing any Shares pursuant thereto; provided that the Company may
not terminate the Merger Agreement pursuant to this provision of the
Merger Agreement if the Company is in material breach of the Merger
Agreement;
(iii) if Parent, the Purchaser or any of their affiliates shall have
failed to commence the Offer on or prior to ten business days
following the date of the initial public announcement of the Offer;
provided, that the Company may not terminate the Merger Agreement
pursuant to this provision of the Merger Agreement if the Company is
in material breach of the Merger Agreement; or
(iv) if there shall be a material breach by Parent or the Purchaser
of any of their representations, warranties, covenants or agreements
contained in the Merger Agreement.
(e) By Parent or the Purchaser:
(i) (A) if prior to the purchase of the Shares pursuant to the Offer,
the Company Board shall have withdrawn, or modified or changed in a
manner adverse to Parent or the Purchaser, its approval or
recommendation of the Offer, the Merger Agreement or the Merger or
shall have recommended or approved a Takeover Proposal; or
(B) there shall have been a material breach of any provision of the
non-solicitation provisions of the Merger Agreement; or
30
(ii) if Parent or the Purchaser shall have terminated the Offer
without Parent or the Purchaser purchasing any Shares thereunder,
provided that Parent or the Purchaser may not terminate the Merger
Agreement pursuant to this provision if Parent or the Purchaser is in
material breach of the Merger Agreement; or
(iii) if, due to an occurrence that if occurring after the
commencement of the Offer would result in a failure to satisfy any of
the conditions set forth in Annex A to the Merger Agreement, Parent,
the Purchaser or any of their affiliates shall have failed to commence
the Offer on or prior to ten business days following the date of the
initial public announcement of the Offer; or
(iv) if there shall be a material breach by the Company of any of its
representations, warranties, covenants or agreements contained in the
Merger Agreement.
FEES AND EXPENSES. The Merger Agreement provides that, except as otherwise
specified below, all costs and expenses incurred in connection with the
Merger Agreement and the consummation of the transactions contemplated by the
Merger Agreement shall be paid by the party incurring such expenses, whether
or not the Offer or the Merger is consummated.
(a) If Parent or the Purchaser terminates the Merger Agreement because the
Company has withdrawn, or modified or changed in a manner adverse to Parent
or the Purchaser, its approval or recommendation of the Offer, the Merger
Agreement or the Merger or shall have recommended or approved a Takeover
Proposal, or the Company terminates the Merger Agreement because of a
Superior Proposal, then in each case, the Company shall pay, or cause to be
paid to Parent, at the time of termination, an amount equal to $3,000,000
(the "Termination Fee").
(b) If the Termination Fee becomes payable or Parent or the Purchaser
terminates the Merger Agreement due to a material breach by the Company of
any of its representations, warranties, covenants or Agreement contained in
the Merger Agreement, then in each case, the Company shall pay, or cause to
be paid to Parent, at the time of termination an amount equal to Parent's and
the Purchaser's actual and reasonably documented out-of-pocket expenses
incurred by Parent or the Purchaser in connection with the Offer, the Merger,
the Merger Agreement and the consummation of the Transactions, including,
without limitation, the fees and expenses payable to all banks, investment
banking firms, and other financial institutions and Persons and their
respective agents and counsel incurred in connection with acting as Parent's
or the Purchaser's financial advisor with respect to, or arranging or
committing to provide or providing any financing for, the Transactions (the
"Expenses") up to $1,000,000.
Parent shall be solely responsible for any and all filing fees that are
payable in connection with or on account of any filing by Parent or any other
party concerning the transactions contemplated by the Merger Agreement under
or pursuant to the HSR Act.
AMENDMENT AND WAIVER. The Merger Agreement provides that subject to
applicable Law, the Merger Agreement may be amended, modified and
supplemented in any and all respects, whether before or after any vote of the
shareholders of the Company contemplated by the Merger Agreement, by written
agreement of the parties to the Merger Agreement (which in the case of the
Company shall include approvals as contemplated in Section 1.4(c) of the
Merger Agreement), at any time prior to the Closing Date with respect to any
of the terms contained in the Merger Agreement; provided, however, that after
the approval of the Merger Agreement by the shareholders of the Company, no
such amendment, modification or supplement shall reduce the amount or change
the form of the Merger Consideration or otherwise adversely affect the rights
of shareholders.
STOCK OPTION AGREEMENT
As an inducement to Parent to enter into the Merger Agreement with the
Company, Parent and the Company have entered into the Stock Option Agreement.
The following summary of certain provisions of the Stock Option Agreement
is qualified in its entirety by reference to the complete text of the Stock
Option Agreement, a copy of the form of which is filed as an exhibit to the
Schedule TO and is incorporated by reference in this Offer to Purchase. The
Stock Option Agreement may be examined, and copies obtained, as set forth in
Section 7 of this Offer to Purchase. Capitalized terms used in the following
summary and not otherwise defined below shall have the meanings set forth in
the Stock Option Agreement.
31
Under the Stock Option Agreement, the Company has granted Parent an
irrevocable option (the "Company Option") to purchase from the Company up to
1,138,596 newly issued Shares (the "Option Shares"), at an exercise price of
$18.00 per Share in cash. Parent has assigned its rights under the Stock
Option Agreement to the Purchaser.
The Company Option is not presently exercisable and will not become
exercisable until January 2, 2001. The Company Option may be exercised by the
Purchaser, in whole or in part.
The Company has made certain representations and warranties in the Stock
Option Agreement, including with respect to (i) the Company's authority to
enter into and perform its obligations under such Stock Option Agreement and
the absence of required consents and statutory or contractual conflicts or
violations, and (ii) the absence of liens or any other encumbrances on or in
respect of the Option Shares.
The Stock Option Agreement provides that the Company Option will
terminate, without any action by Parent or the Company, in the event that (i)
the Purchaser fails to commence the Offer within 10 business days of the
execution of the Stock Option Agreement, (ii) the Purchaser fails to purchase
Shares pursuant to the Offer by reason of the conditions set forth in
paragraph (e) of Annex A to the Merger Agreement (see paragraph (e) in
Section 15--"Certain Conditions of the Offer"), (iii) Parent terminates the
Merger Agreement pursuant to Sections 7.1(a), (b), (c) or (e)(ii), (iii), or
(iv) of the Merger Agreement (see paragraphs (a), (b), (c), (e)(ii), (iii)
and (iv) in Section 15--"Certain Conditions of the Offer"), or (iv) the
Company terminates the Merger Agreement pursuant to Section 7.1(d)(ii) or
(iii) of the Merger Agreement (see paragraphs (d)(ii) and (iii) in Section
15--"Certain Conditions of the Offer", but only if the failure of the
Purchaser to commence the Offer to Purchase Shares is not due to the failure
of the condition set forth in paragraph (e) of Annex A to the Merger
Agreement (see paragraph (e) in Section 15--"Certain Conditions of the
Offer".
VOTING AND OPTION AGREEMENT
As an inducement to Parent to enter into the Merger Agreement with the
Company, Messrs. Xxxxxxxxx and Xxxxxxx, Chairman and Chief Executive Officer
and Executive Vice President, respectively, of the Company (collectively, the
"Agreement Shareholders"), have each entered into the Voting and Option
Agreement with Parent as to 586,758 Shares in the aggregate (or approximately
8% of the outstanding Shares on a fully diluted basis) owned by the Agreement
Shareholders. Parent has assigned its rights under the Voting and Option
Agreement to the Purchaser.
The following summary of certain provisions of the Voting and Option
Agreement is qualified in its entirety by reference to the complete text of
the Voting and Option Agreement, a copy of the form of which is filed as an
exhibit to the Schedule TO and is incorporated by reference in this Offer to
Purchase. The Voting and Option Agreement may be examined, and copies
obtained, as set forth in Section 7 of this Offer to Purchase. Capitalized
terms used in the following summary and not otherwise defined below shall
have the meanings set forth in the Voting and Option Agreement.
Each Agreement Shareholder has agreed to tender (and not withdraw) his
Shares subject to the Voting and Option Agreement (the "Agreement Shares")
pursuant to the Offer. In addition, each Agreement Shareholder has agreed not
to transfer, sell, offer, pledge or otherwise dispose of or encumber, or
grant any proxies for or enter into any voting agreements or arrangements
respecting, any of the Agreement Shares until the consummation of the Merger,
the expiration of the Option Period (as such term is defined in the Voting
and Option Agreement), the purchase of the Agreement Shares by Parent or the
date the Voting and Option Agreement is terminated.
Each Agreement Shareholder has also agreed to irrevocably appoint the
officers of Parent the lawful agent, attorney, and proxy of the Agreement
Shareholder, to (a) vote the Agreement Shares in favor of the Merger, (b)
vote the Agreement Shares against any action or agreement that would result
in a breach in any material aspect of any covenant, representation, or
warranty or any other obligation of the Company under the Merger Agreement;
and (c) vote the Agreement Shares against any action or agreement that would
impede, interfere with, delay, postpone, or attempt to discourage the Merger,
including, but not limited to: (i) any extraordinary corporate transaction,
such as a merger, rights offering, consolidation or other business
combination involving the Company, (ii) a sale or transfer of a material
32
amount of the assets of the Company or a reorganization, recapitalization, or
liquidation of the Company, (iii) any change in the management or Company
Board, except as otherwise agreed to in writing by Parent, or (iv) any other
change in the Company's corporate structure
Each Agreement Shareholder also irrevocably granted to Parent an option to
purchase, subject to certain conditions, his Agreement Shares at the same
purchase price per Share provided for in the Merger Agreement. Parent can
exercise this option, in whole and not in part, at any time after January 2,
2001.
In the event that (i) the option under the Voting and Option Agreement is
exercised, (ii) the Merger is not consummated and (iii) any party other than
Parent and its subsidiaries acquires, though merger or otherwise, all or
substantially all of the business or assets of the Company pursuant to a
transaction or series of transactions providing aggregate consideration to
shareholders of the Company greater than $18.00 per Share (the "Alternative
Consideration"), then within five days following receipt of such
consideration by Parent or its affiliates, Parent shall pay to each of the
Agreement Shareholders the product of (x) the amount by which the Alternative
Consideration exceeds $18.00 and (y) the number of Shares sold by such
Shareholder to Parent pursuant to the option.
Each Agreement Shareholder has made certain representations and warranties
in the Voting and Option Agreement, including with respect to (i) ownership
of his Agreement Shares, (ii) the authority to enter into and perform his
obligations under such Voting and Option Agreement and the absence of
required consents and statutory or contractual conflicts or violations, and
(iii) the absence of liens or any other encumbrances on or in respect of his
Agreement Shares. The Voting and Option Agreement, and all rights and
obligations under the Voting and Option Agreement, terminates upon the
earlier of (a) the expiration of the Option Period, (b) the purchase of the
Agreement Shares, (c) the agreement of the parties to terminate the Voting
and Option Agreement, or (d) the consummation of the Merger.
12. PURPOSE OF THE OFFER; PLANS FOR THE COMPANY.
PURPOSE OF THE OFFER. The purpose of the Offer is for Parent to acquire
control of, and the entire equity interest in, the Company. The purpose of
the Merger is for Parent to acquire all outstanding Shares not tendered and
purchased pursuant to the Offer. If the Offer is successful, the Purchaser
intends to consummate the Merger as promptly as practicable. The Company
Board has approved the Merger and the Merger Agreement. Depending upon the
number of Shares purchased by the Purchaser pursuant to the Offer, the
Company Board may be required to submit the Merger Agreement to the Company's
shareholders for approval at a shareholders' meeting convened for that
purpose in accordance with the NYBCL. If shareholder approval is required,
the Merger Agreement must be approved by two-thirds of all votes entitled to
be cast at such meeting.
If the Minimum Condition is satisfied, the Purchaser will have sufficient
voting power to approve the Merger Agreement without the affirmative vote of
any other shareholder. If the Purchaser acquires such number of shares
pursuant to the Offer which, together with the Shares owned by Parent and the
Purchaser, constitutes 90% or more of the outstanding Shares on a fully
diluted basis, the Purchaser will be able to adopt the Merger Agreement
without a shareholder meeting and without the approval of the Company's
shareholders. See Section 16--"Certain Legal Matters; Regulatory Approvals".
The Merger Agreement provides that the Purchaser will be merged into the
Company and that the Certificate of Incorporation and Bylaws of the Purchaser
will be the Certificate of Incorporation and Bylaws of the surviving
corporation following the Merger, except that the name shall be changed to
"Detection Systems, Inc."
Under the NYBCL, holders of Shares do not have appraisal rights as a
result of the Offer. In connection with the Merger, however, shareholders of
the Company may have the right to dissent and demand appraisal of their
Shares pursuant to the NYBCL. Dissenting shareholders who comply with the
applicable statutory procedures under the NYBCL 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 the
Merger) and to receive payment of such fair value in cash. Any such judicial
determination of the fair value of the Shares could be based upon
considerations other than or in addition to the price per Share paid in the
Merger and the market value of the Shares. Shareholders should
33
recognize that the value so determined could be higher or lower than the
price per Share paid pursuant to the Offer or the consideration per Share to
be paid in the Merger. Moreover, the Purchaser 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 or the Merger.
PLANS FOR THE COMPANY. Pursuant to the terms of the Merger Agreement,
promptly upon the purchase of and payment for any Shares pursuant to the
Offer, Parent currently intends to seek maximum representation on the Company
Board, subject to the requirement in the Merger Agreement that if Shares are
purchased pursuant to the Offer, until the Effective Time neither Parent nor
the Purchaser will take any action that would cause the Company Board to
include fewer than two members who are Continuing Directors as of the date of
the Merger Agreement. The Purchaser currently intends, as soon as practicable
after consummation of the Offer, to consummate the Merger.
Except as otherwise provided herein, it is currently expected that,
initially following the Merger, the business and operations of the Company
will be continued substantially as they are currently being conducted. Parent
will continue to evaluate the business and operations of the Company during
the pendency of the Offer and, after the consummation of the Offer and the
Merger, will take such actions as it deems appropriate under the
circumstances then existing. Parent intends to seek additional information
about the Company during this period. Thereafter, Parent intends to review
such information as part of a comprehensive review of the Company's business,
operations, capitalization and management with a view to optimizing
development of the Company's potential in conjunction with Parent's business.
Except as described above or elsewhere in this Offer to Purchase, the
Purchaser and Parent have no present plans or proposals that would relate to
or result in (i) any extraordinary corporate transaction involving the
Company or any of its subsidiaries (such as a merger, reorganization,
liquidation, relocation of any operations or sale or other transfer of a
material amount of assets), (ii) any sale or transfer of a material amount of
assets of the Company or any of its subsidiaries, (iii) any change in the
Company Board or management of the Company, (iv) any material change in the
Company's capitalization or dividend policy, (v) any other material change in
the Company's corporate structure or business, (vi) a class of securities of
the Company being delisted from a national securities exchange or ceasing to
be authorized to be quoted in an inter-dealer quotation system of a
registered national securities association or (vii) a class of equity
securities of the Company being eligible for termination of registration
pursuant to Section 12(g) of the Exchange Act.
13. CERTAIN EFFECTS OF THE OFFER.
MARKET FOR THE SHARES. The purchase of Shares pursuant to the Offer will
reduce the number of holders of Shares and the number of Shares that might
otherwise trade publicly. This could adversely affect the liquidity and
market value of the remaining Shares held by the public. 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.
STOCK QUOTATION. Depending upon the number of Shares purchased pursuant to
the Offer, the Shares may no longer meet the standards for continued listing
on NASDAQ, which among other things require that an issuer have either
o at least 750,000 publicly held shares, held by at least 400
shareholders of round lots, with an aggregate market value of at least
$5,000,000, net tangible assets of at least $4,000,000, a minimum bid
price of at least $1 per Share, and at least two registered and active
market makers providing quotations for the shares, or
o at least 1,100,000 publicly held shares, held by at least 400
shareholders of round lots, with an aggregate market value of at least
$15,000,000, a minimum bid price of at least $5 per share and either
(x) a market capitalization of at least $50,000,000 or (y) total
assets and total revenue of at least $50,000,000 each for the most
recently completed fiscal year or two of the last three most recently
completed fiscal years and at least four registered and active market
markers providing quotations for the shares.
34
If neither of the foregoing standards is met, the Shares would no longer be
listed on NASDAQ. Shares held directly or indirectly by directors, officers
or beneficial owners of more than 10% of the Shares are not considered as
being publicly held for this purpose.
If the Shares were no longer listed on NASDAQ, it is possible that the
Shares would continue to trade on another securities exchange or otherwise in
the over-the-counter market and that price or other quotations would be
reported by such exchange or through other sources. The extent of the public
market for such Shares and the availability of such quotations would depend,
however, upon such factors as the number of shareholders 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
firms, the possible termination of registration under the Exchange Act as
described below and other factors.
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 the market for the
Shares and stock quotations, it is possible that, following the Offer, the
Shares would no longer constitute "margin securities" for the purposes of the
margin regulations of the Federal Reserve Board and therefore could no longer
be used as collateral for loans made by brokers.
EXCHANGE ACT REGISTRATION. The Shares are currently registered under the
Exchange Act. Such registration may be terminated upon application of the
Company to the SEC if the Shares are not held by 300 or more holders of
record. Termination of registration of the Shares under the Exchange Act
would substantially reduce the information required to be furnished by the
Company to its shareholders and to the SEC and would make certain provisions
of the Exchange Act no longer applicable to the Company, such as the
short-swing profit recovery provisions of Section 16(b) of the Exchange Act,
the requirement of furnishing a proxy statement pursuant to Section 14(a) of
the Exchange Act in connection with shareholders' meetings and the related
requirement of furnishing an annual report to shareholders and the
requirements of Rule 13e-3 under the Exchange Act with respect to "going
private" transactions. Furthermore, the ability of "affiliates" of the
Company and persons holding "restricted securities" of the Company to dispose
of such securities pursuant to Rule 144 under the Securities Act of 1933, as
amended, may be impaired or eliminated. If registration of the Shares under
the Exchange Act were terminated, the Shares would no longer be "margin
securities" or be eligible for trading on NASDAQ. Parent and the Purchaser
currently intend to seek to cause the Company to terminate the registration
of the Shares under the Exchange Act as soon after consummation of the Offer
as the requirements for termination of registration are met.
14. DIVIDENDS AND DISTRIBUTIONS.
As discussed in Section 11 of this Offer to Purchase, the Merger Agreement
provides that from the date of the Merger Agreement to the Effective Time,
the Company will not and will not permit any of its subsidiaries to declare,
set aside or pay any dividends or other distribution payable in cash, stock
or property with respect to its capital stock (other than issuances pursuant
to exercises of employee stock options and Company benefit plan obligations
which are outstanding on the date of the Merger Agreement).
15. CERTAIN CONDITIONS OF THE OFFER.
Notwithstanding any other provision of the Offer, the Purchaser shall not
be required to accept for payment or, subject to any applicable rules and
regulations of the SEC, 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 or, subject to the restriction referred
to above, the payment for, any tendered Shares, and may amend the Offer
consistent with the terms of the Merger Agreement or terminate the Offer and
not accept for payment any tendered Shares, if (i) there shall not have been
validly tendered and not withdrawn prior to the expiration of the Offer such
number of Shares which, when added to the Shares, if any, owned by Parent
35
or the Purchaser, would constitute at least two-thirds of the Shares
outstanding on a fully diluted basis (the "Minimum Condition"), (ii) any
applicable waiting period under the HSR Act has not expired or been
terminated, or (iii) at any time on or after the date of the Merger Agreement
and prior to the expiration of the Offer, any of the following events shall
occur:
(a) there shall be threatened by a Governmental Entity (as defined in the
Merger Agreement) or pending any suit, action or proceeding (i) seeking to
prohibit or impose any material limitations on Parent's or the Purchaser's
ownership or operation (or that of any of their respective Subsidiaries or
Affiliates (as such terms are defined in the Merger Agreement)) of all or a
material portion of their or the Company's businesses or assets, (ii) seeking
to compel Parent or the Purchaser or their respective Subsidiaries and
Affiliates to dispose of or hold separate any material portion of the
business or assets of the Company or Parent and their respective
Subsidiaries, in each case taken as a whole, (iii) challenging the
acquisition by Parent or the Purchaser of any Shares pursuant to the Offer,
(iv) seeking to restrain or prohibit the making or consummation of the Offer
or the Merger or the performance of any of the other Transactions (as defined
in the Merger Agreement), (v) seeking to impose material limitations on the
ability of the Purchaser, or rendering the Purchaser unable, to accept for
payment, pay for or purchase some or all of the Shares pursuant to the Offer
and the Merger, or (vi) seeking to impose material limitations on the ability
of the Purchaser or Parent effectively to exercise full rights of ownership
of the Shares, including, without limitation, the right to vote the Shares
purchased by it on all matters properly presented to the Company's
shareholders; or
(b) there shall be any statute, rule, regulation, judgment, order or
injunction enacted, entered, enforced, promulgated or deemed applicable to
the Offer or the Merger, or any other action shall be taken by any
Governmental Entity, other than the application to the Offer or the Merger of
applicable waiting periods under the HSR Act, that is reasonably likely to
result, directly or indirectly, in any of the consequences referred to in
clauses (i) through (vi) of paragraph (a) above; or
(c) there shall have occurred and be continuing (1) any general suspension
of trading in, or limitation on prices for, securities on the NASDAQ National
Market System, for a period in excess of three hours (excluding suspensions
or limitations resulting solely from physical damage or interference with
such exchanges not related to market conditions), (2) a declaration of a
banking moratorium or any suspension of payments in respect of banks in the
United States (whether or not mandatory), (3) the commencement of a war,
armed hostilities or other international or national calamity directly or
indirectly involving the United States, (4) any limitation or proposed
limitation (whether or not mandatory) by any United States governmental
authority or agency that has a material adverse effect generally on the
extension of credit by banks or other financial institutions, (5) any decline
in the Dow Xxxxx Industrial Average, the Standard & Poor's Index of 500
Industrial Companies or the Nasdaq Composite Index by an amount in excess of
20% measured from the close of business on the date of the Merger Agreement
or (6) in the case of any of the situations in clauses (1) through (5)
inclusive, existing at the time of the commencement of the Offer, a material
acceleration or worsening thereof; or
(d) the representations and warranties of the Company set forth in the
Merger Agreement shall not be true and accurate as of the date of
consummation of the Offer as though made on or as of such date (except for
those representations and warranties that address matters only as of a
particular date or only with respect to a specific period of time which need
only be true and accurate as of such date or with respect to such period) or
the Company shall have breached or failed to perform or comply with any
obligation, agreement or covenant required by the Merger Agreement to be
performed or complied with by it except, in each case where the failure of
such representations and warranties to be true and accurate (without giving
effect to any limitation as to "knowledge," "materiality" or "material
adverse effect" set forth therein), or the failure to perform or comply with
such obligations, agreements or covenants, do not, individually or in the
aggregate, have a Material Adverse Effect on the Company or a materially
adverse effect on the ability to consummate the Offer or the Merger; or
(e) the Company Board (i) shall have withdrawn, or modified or changed in
a manner adverse to Parent or Purchaser (including by amendment of the
Schedule 14D-9) its recommendation of the Offer, the Merger Agreement, or the
Merger, (ii) shall have recommended a Takeover Proposal, or (iii) shall have
adopted any resolution to effect any of the foregoing;
36
(f) the Merger Agreement shall have been terminated in accordance with its
terms; or
(g) there shall have occurred any event or any development of a state of
facts or circumstances that constitutes a Material Adverse Change or has a
Material Adverse Effect (as such terms are defined in the Merger Agreement)
on the Company,
which, in the sole judgment of Parent or the Purchaser, in any such case, and
regardless of the circumstances (including any action or inaction by Parent
or the Purchaser) giving rise to such condition, makes it inadvisable to
proceed with the Offer and/or with such acceptance for payment of or payments
for Shares.
The foregoing conditions are for the sole benefit of Parent and the
Purchaser and may be waived by Parent or the Purchaser, in whole or in part,
at any time and from time to time, in the sole discretion of Parent or the
Purchaser. The failure by Parent or the Purchaser at any time to exercise any
of the foregoing rights shall not be deemed a waiver of any right and each
such right shall be deemed an ongoing right which may be asserted at any time
and from time to time.
16. CERTAIN LEGAL MATTERS; REGULATORY APPROVALS.
GENERAL. The Purchaser is not aware of any pending legal proceeding
relating to the Offer. Except as described in this Section 16, based on its
examination of publicly available information filed by the Company with the
SEC and other publicly available information concerning the Company, the
Purchaser is not aware of any governmental license or regulatory permit that
appears to be material to the Company's business that might be adversely
affected by the Purchaser's acquisition of Shares pursuant to the Offer, or
of any approval or other action by any governmental, administrative or
regulatory authority or agency, domestic or foreign, that would be required
for the acquisition or ownership of Shares by the Purchaser or Parent
pursuant to the Offer. Should any such approval or other action be required,
the Purchaser currently contemplates that, except as described below under
"State Takeover Statutes", such approval or other action will be sought.
While the Purchaser does not currently intend to delay acceptance for payment
of Shares tendered pursuant to the Offer pending the outcome of any such
matter, there can be no assurance that any such approval or other action, if
needed, would be obtained or would be obtained without substantial conditions
or that if such approvals were not obtained or such other actions were not
taken, adverse consequences might not result to the Company's business, or
certain parts of the Company's business might not have to be disposed of, any
of which could cause the Purchaser to elect to terminate the Offer without
the purchase of Shares thereunder under certain conditions. See Section 15 --
"Certain Conditions of the Offer".
STATE TAKEOVER STATUTES. A number of states have adopted laws that
purport, to varying degrees, to apply to attempts to acquire corporations
that are incorporated in, or that have substantial assets, shareholders,
principal executive offices or principal places of business or whose business
operations otherwise have substantial economic effects in, such states. The
Company, directly or through subsidiaries, conducts business in a number of
states throughout the United States, some of which have enacted such laws.
In Xxxxx x. 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
could, as a matter of corporate law, constitutionally disqualify a potential
acquirer from voting shares of a target corporation without the prior
approval of the remaining shareholders where, among other things, the
corporation is incorporated in, and has a substantial number of shareholders
in, the State. Subsequently, in TLX Acquisition Corp. v. Telex Corp., a
Federal District Court in Oklahoma ruled that the Oklahoma statutes were
unconstitutional insofar as they apply to corporations incorporated outside
Oklahoma in that they would subject such corporations to inconsistent
regulations. Similarly, in Tyson Foods, Inc. x. XxXxxxxxxx, a Federal
District Court in Tennessee ruled that four Tennessee takeover statutes were
unconstitutional as applied to corporations incorporated outside Tennessee.
This decision was affirmed by the United States Court of Appeals for the
Sixth Circuit.
37
Should any person seek to apply any state takeover law, the Purchaser will
take reasonable efforts to resist such application, 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 Merger, and an appropriate
court does not determine that it is inapplicable or invalid as applied to the
Offer, 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 or pay for any
Shares tendered pursuant to the Offer or be delayed in continuing or
consummating the Offer and the Merger. In such case, the Purchaser may not be
obligated to accept for payment, or pay for, any Shares tendered.
SHORT-FORM MERGER. The NYBCL would permit the Merger to occur without a
vote of the Company's shareholders (a "short-form merger") if the Purchaser
were to acquire such number of Shares which, together with the Shares owned
by Parent and the Purchaser, constitutes at least 90% of the outstanding
Shares on a fully diluted basis. If, however, the Purchaser does not acquire
such number of Shares which, together with the Shares owned by Parent and the
Purchaser, constitutes at least 90% of the then outstanding Shares on a fully
diluted basis, and a vote of the Company's shareholders is required under
NYBCL, a longer period of time will be required to effect the Merger.
UNITED STATES ANTITRUST COMPLIANCE. Under the HSR Act and the rules that
have been promulgated thereunder by the Federal Trade Commission (the "FTC"),
certain acquisition transactions may not be consummated unless certain
information has been furnished to the Antitrust Division of the United States
Department of Justice (the "Antitrust Division") and the FTC and certain
waiting period requirements have been satisfied. The purchase of Shares
pursuant to the Offer is subject to such requirements.
Pursuant to the requirements of the HSR Act, the Purchaser filed a
Notification and Report Form with respect to the Offer and Merger with the
Antitrust Division and the FTC on or about December 20, 2000. As a result,
the waiting period applicable to the purchase of Shares pursuant to the Offer
is scheduled to expire at 11:59 p.m., New York City time, 15 days after such
filing. However, prior to such time, the Antitrust Division or the FTC may
extend the waiting period by requesting additional information or documentary
material relevant to the Offer from the Purchaser. If such a request is made,
the waiting period will be extended until 11:59 p.m., New York City time, on
the tenth day after substantial compliance by the Purchaser with such
request. Thereafter, such waiting period can be extended only by court order.
The Antitrust Division and the FTC both scrutinize the legality under the
antitrust laws of transactions such as the acquisition of Shares by the
Purchaser pursuant to the Offer. At any time before or after the consummation
of any such transactions, the Antitrust Division or the FTC could take such
action under the antitrust laws of the United States as it deems necessary or
desirable in the public interest, including seeking to enjoin the purchase of
Shares pursuant to the Offer or seeking divestiture of the Shares so acquired
or divestiture of substantial assets of Parent or the Company. Private
parties (including individual States) may also bring legal actions under the
antitrust laws of the United States. The Purchaser does not believe that the
consummation of the Offer will result in a violation of any applicable
antitrust laws. However, there can be no assurance that a challenge to the
Offer on antitrust grounds will not be made, or if such a challenge is made,
what the result will be. See Section 15, including conditions with respect to
litigation and certain governmental actions and Section 11 for certain
termination rights.
17. APPRAISAL RIGHTS.
No appraisal rights are available in connection with the Offer. However,
if the Merger is consummated, shareholders of the Company at the time the
Merger is consummated may, under certain circumstances, have certain rights
to dissent and demand appraisal of their Shares under Section 623 of NYBCL.
Dissenting shareholders who comply with the requisite statutory procedures
under NYBCL would be entitled to a judicial determination and payment of the
"fair value" of their Shares as of the close of business on the day prior to
the date of shareholder authorization of the Merger, together with interest
thereon, at such rate as the court finds equitable, from the date the Merger
is consummated until the date of payment. Under NYBCL, in fixing the fair
value of the Shares, a court would consider the nature of the transaction
giving rise to the shareholders' right to receive payment for Shares and its
effects on the Company and its shareholders, the concepts and methods then
customary in the relevant securities
38
and financial markets for determining fair value of Shares of a corporation
engaging in a similar transaction under comparable circumstances, and all
other relevant factors. The foregoing summary of the rights of dissenting
shareholders does not purport to be a complete statement of the procedures to
be followed by shareholders desiring to exercise any available dissenters'
rights. The preservation and exercise of dissenters' rights require strict
adherence to the applicable provisions of NYBCL.
18. FEES AND EXPENSES.
Xxxxxxx and X. Xxxxxxxxxxxx, Inc. is acting as the Dealer Manager in
connection with the Offer and has provided certain financial advisory
services to the Parent in connection with the acquisition of the Company.
Xxxxxxx and X. Xxxxxxxxxxxx, Inc. will receive reasonable and customary
compensation for its services. In addition, Parent will reimburse Xxxxxxx and
X. Xxxxxxxxxxxx, Inc. for certain expenses it incurs in providing its
services. Parent has agreed to indemnify Xxxxxxx and X. Xxxxxxxxxxxx, Inc.
and certain related persons against certain liabilities and expenses in
connection with its engagement, including certain liabilities under the
federal securities laws.
Parent and the Purchaser have retained X.X. Xxxx & Co., Inc. to be the
Information Agent and the United States Trust Company of New York to be the
Depositary in connection with the Offer. The Information Agent may contact
holders of Shares by mail, telephone, telecopy, telegraph and personal
interview and may request banks, brokers, dealers and other nominees to
forward materials relating to the Offer to beneficial owners of Shares. The
Information Agent and the Depositary each will receive reasonable and
customary compensation for their respective services in connection with the
Offer, will be reimbursed for reasonable out-of-pocket expenses and will be
indemnified against certain liabilities and expenses in connection therewith,
including certain liabilities under the federal securities laws.
Neither Parent nor the Purchaser will pay any fees or commissions to any
broker or dealer or to any other person (other than to the Dealer Manager and
the Information Agent) in connection with the solicitation of tenders of
Shares pursuant to the Offer. Brokers, dealers, commercial banks and trust
companies will, upon request, be reimbursed by the Purchaser for customary
mailing and handling expenses incurred by them in forwarding offering
materials to their customers.
19. MISCELLANEOUS.
The Offer is not being made to (nor will tenders be accepted from or on
behalf of) holders of Shares in any jurisdiction in which the making of the
Offer or the acceptance thereof would not be in compliance with the laws of
such jurisdiction. However, the Purchaser may, in its discretion, take such
action as it may deem necessary to enable it to make the Offer in any such
jurisdiction and extend the Offer to holders of Shares in such jurisdiction.
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATION ON BEHALF OF PARENT OR THE PURCHASER NOT CONTAINED IN THIS
OFFER TO PURCHASE OR IN THE RELATED LETTER OF TRANSMITTAL, AND, IF GIVEN OR
MADE, SUCH INFORMATION OR REPRESENTATION MUST NOT BE RELIED UPON AS HAVING
BEEN AUTHORIZED.
Parent and the Purchaser have filed with the SEC a Tender Offer Statement
on Schedule TO pursuant to Rule 14d-3 of the General Rules and Regulations
under the Exchange Act, together with exhibits furnishing certain additional
information with respect to the Offer, and may file amendments thereto. In
addition, on the date hereof, the Company has filed with the SEC a
Solicitation/ Recommendation Statement on Schedule 14D-9, together with
exhibits, pursuant to Rule 14d-9 under the Exchange Act, setting forth the
recommendation of the Company Board with respect to the Offer and the reasons
for such recommendation and furnishing certain additional related
information. A copy of such documents, and any amendments thereto, may be
examined at, and copies may be obtained from, the SEC (but not the regional
offices of the SEC) in the manner set forth under Section 7 above.
Bosch Security Systems Corporation
December 20, 2000
39
SCHEDULE I
DIRECTORS AND EXECUTIVE OFFICERS OF
PARENT AND THE PURCHASER AND TRANSACTIONS
IN THE COMPANY'S SECURITIES DURING THE PAST 60 DAYS
1. DIRECTORS AND EXECUTIVE OFFICERS OF PARENT
The name, business address, title, present principal occupation and
five-year employment history of each member and deputy member of the Board of
Management of Xxxxxx Xxxxx XxxX are set forth below. The Board of Management
of Xxxxxx Xxxxx XxxX is equivalent to the board of directors and executive
officers of a U.S. corporation. The business address of each member of the
Board of Management is c/o Xxxxxx Xxxxx XxxX, Xxxxxx Xxxxx Xxxxx 0, 00000
Xxxxxxxxx Xxxxxxxxxxxxx, Xxxxxxx. All of the persons listed below are
citizens of the Federal Republic of Germany unless otherwise noted.
PRESENT PRINCIPAL OCCUPATION OR
NAME EMPLOYMENT AND FIVE-YEAR EMPLOYMENT HISTORY
--------------------------------- -----------------------------------------------------------------------
Xx. Xxxxxxx Xxxxxx; 65 Chairman of the Board of Management of Xxxxxx Xxxxx XxxX since July
1993.
Xxxxxx Xxxxxx|f-fer; 57 Deputy Chairman of the Board of Management of Xxxxxx Xxxxx XxxX since
July 1999; Member of the Board of Management since January 1993.
Xx. Xxxxx Xxxxxx Xxxxxxxx; 58 Member of the Board of Management of Xxxxxx Xxxxx XxxX since July 1998;
Deputy Member of the Board of Management of Xxxxxx Xxxxx XxxX from July
1996 to July 1998; Executive Vice President, Corporate Purchasing
Department, of Xxxxxx Xxxxx XxxX from January 1994 to June 1996.
Xxxxxxx Xxxxxx; 52 Member of the Board of Management of Xxxxxx Xxxxx XxxX since July 1999;
Deputy Member of the Board of Management of Xxxxxx Xxxxx XxxX from
April 1997 to July 1999; Executive Vice President of Bosch Telecom GmbH
from February 1996 to March 1997; Executive Vice President of
Blaupunkt-Werke GmbH from November 1994 to February 1996. Member of the
Supervisory Board of Tele Atlas NV from July 2000 to present.
Xxxxxxxx Xxxx; 53 Deputy Member of the Board of Management of Xxxxxx Xxxxx XxxX since
July 1999; Chief Executive Officer of Blaupunkt-Werke GmbH from October
1997 to June 1999; Executive Vice President of Xxxxxx Xxxxx XxxX from
January 1996 to September 1997.
Xxxxxx X. Xxxxxx; 59 Member of the Board of Management of Xxxxxx Xxxxx XxxX since July 1998;
Deputy Member of the Board of Management of Xxxxxx Xxxxx XxxX from July
1996 to July 1998; Chief Executive Officer of Xxxxxx Xxxxx Corporation
from January 1994 to present. Xx. Xxxxxx is a U.S. citizen.
Xxxxx Xxxxxxxxxx; 51 Deputy Member of the Board of Management of Xxxxxx Xxxxx XxxX since
July 1999; Executive Vice President of Xxxxxx Xxxxx XxxX from January
1994 to June 1999.
Xx. Xxxxx Xxxx; 44 Deputy Member of the Board of Management of Xxxxxx Xxxxx XxxX since
July 1999; Executive Vice President of Xxxxxx Xxxxx XxxX from July 1996
to June 1999; Chief Financial Officer of Nippon ABS Ltd. from 1993 to
June 1996.
S-1
PRESENT PRINCIPAL OCCUPATION OR
NAME EMPLOYMENT AND FIVE-YEAR EMPLOYMENT HISTORY
--------------------------------- -----------------------------------------------------------------------
Xx. Xxxxxxxxx Xxxx; 52 Member of the Board of Management of Xxxxxx Xxxxx XxxX since July 2000;
Deputy Member of the Board of Management of Xxxxxx Xxxxx XxxX from
January 1998 to July 2000; Executive Vice President of Bosch Telecom
GmbH from July 1994 to December 1997. Chairman of the Supervisory Board
of ZF Lenksysteme GmbH from July 2000 to present.
Xx. Xxxxxx Xxxx; 60 Member of the Board of Management of Xxxxxx Xxxxx XxxX since January
1995.
Xxxxxxxx Xxxxxxx; 57 Member of the Board of Management of Xxxxxx Xxxxx XxxX since July 1999;
Deputy Member of the Board of Management of Xxxxxx Xxxxx XxxX from July
1996 to July 1999; Senior Executive, Xxxxxx Xxxxx XxxX, from May 1995
to June 1996. Member of the Supervisory Board of VB Autobatterie GmbH
from July 1996 to present (Deputy Chairman, March 1998 to present).
2. DIRECTORS AND EXECUTIVE OFFICERS OF THE PURCHASER
The name, business address, title, present principal occupation and five
year employment history of each director and executive officer of the
Purchaser are set forth below. The business address of each director and
executive officer is c/o Coudert Brothers, 0000 Xxxxxx xx xxx Xxxxxxxx, Xxx
Xxxx, XX 00000. All of the persons listed below are citizens of the United
States.
PRESENT PRINCIPAL OCCUPATION OR
NAME EMPLOYMENT AND FIVE-YEAR EMPLOYMENT HISTORY
-------------------------- --------------------------------------------------------------------------
Xxxx Xxxxxxxx; 57 Director, President and Treasurer of the Purchaser since December 2000; Executive
Vice President of Xxxxxx Xxxxx Corporation from 1991 to present.
Xxxx Xxxx; 50 Director, Vice President and Secretary of the Purchaser since December 2000;
Vice President, from 1995 to present, and General Counsel and Secretary, from
1992 to present, of Xxxxxx Xxxxx Corporation.
Xxxxx X. XxXxxxxxx; 53 Assistant Secretary of the Purchaser since December 2000. Partner, Coudert Brothers
(law firm), 1981 to present.
S-2
3. TRANSACTIONS IN THE COMPANY'S SECURITIES DURING THE PAST 60 DAYS
During the past 60 days, Parent made the purchases of Shares listed below.
All such transactions were effected on the NASDAQ National Market. Except as
set forth below, none of Parent, the Purchaser, their subsidiaries and
affiliates, their officers and directors (including, without limitation, the
persons listed in Items 1 and 2 of this Schedule I) have engaged in any
transactions in the Shares in the past 60 days.
TRADE DATE SHARE AMOUNT TOTAL COST AVERAGE PRICE
------------ -------------- ------------ ---------------
25-Oct 9,800 $ 106,505 $10.87
26-Oct 14,200 $ 157,208 $11.07
27-Oct 1,100 $ 12,573 $11.43
31-Oct 29,700 $ 359,150 $12.09
1-Nov 10,000 $ 121,000 $12.10
2-Nov 32,000 $ 383,389 $11.98
3-Nov 20,000 $ 235,750 $11.79
6-Nov 9,000 $ 108,712 $12.08
7-Nov 26,800 $ 322,873 $12.05
8-Nov 16,000 $ 196,219 $12.26
9-Nov 12,800 $ 157,280 $12.29
10-Nov 16,500 $ 203,363 $12.33
-------------- ------------ ---------------
Totals 197,900 $2,364,022 $11.95
============== ============ ===============
S-3
Manually signed facsimile copies of the Letter of Transmittal, properly
completed and duly executed, will be accepted. Letters of Transmittal and
certificates for Shares and any other required documents should be sent or
delivered by each shareholder of the Company or his or her broker, dealer,
commercial bank, trust company or other nominee to the Depositary at one of
its addresses set forth below:
THE DEPOSITARY FOR THE OFFER IS:
UNITED STATES TRUST COMPANY OF NEW YORK
BY OVERNIGHT COURIER AND
BY HAND DELIVER AFTER BY HAND DELIVERY BY REGISTERED OR
4:30 PM ON EXPIRATION DATE TO 4:30 PM CERTIFIED MAIL
00 Xxxxx Xxxxxx, 00xx Xxxxx 00 Xxxxx Xxxxxx, B-Level P.O. Box 084
New York, NY 10004-2304 New York, NY 10004-2304 Bowling Green Station
New York, NY 10274-0084
BY FACSIMILE TRANSMISSION (000) 000-0000
OR (000) 000-0000
Any questions or requests for assistance may be directed to the
Information Agent at its address and telephone numbers set forth below.
Requests for additional copies of this Offer to Purchase, the Letter of
Transmittal, and the Notice of Guaranteed Delivery may be directed to the
Information Agent or the Depositary. Shareholders may also contact their
brokers, dealers, commercial banks, trust companies or other nominees for
assistance concerning the Offer.
The Information Agent for the Offer is:
X.X. XXXX & CO., INC.
00 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000-4495
Banks and Brokers Call Collect: (000) 000-0000
ALL OTHERS CALL TOLL FREE: (000) 000-0000
The Dealer Manager for the Offer is:
XXXXXXX AND X. XXXXXXXXXXXX, INC.
0000 Xxxxxx xx xxx Xxxxxxxx
00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
(000) 000-0000
