Tender-Offer Statement — Third-Party Tender Offer — Schedule TO
Filing Table of Contents
Document/Exhibit Description Pages Size
1: SC TO-T Tender-Offer Statement -- Third-Party Tender Offer 6 27K
2: EX-99.1(A)(1) Miscellaneous Exhibit 56 265K
10: EX-99.10(D)(2) Miscellaneous Exhibit 46 203K
11: EX-99.11(D)(3) Miscellaneous Exhibit 12 42K
12: EX-99.12(D)(4) Miscellaneous Exhibit 9 35K
3: EX-99.2(A)(2) Miscellaneous Exhibit 12 58K
4: EX-99.3(A)(3) Miscellaneous Exhibit 3 15K
5: EX-99.4(A)(4) Miscellaneous Exhibit 2 14K
6: EX-99.5(A)(5) Miscellaneous Exhibit 4 18K
7: EX-99.6(A)(6) Miscellaneous Exhibit 5± 17K
8: EX-99.8(A)(8) Miscellaneous Exhibit 5 28K
9: EX-99.9(D)(1) Miscellaneous Exhibit 4 19K
OFFER TO PURCHASE FOR CASH
ALL OUTSTANDING SHARES OF COMMON STOCK
OF
SUNGLASS HUT INTERNATIONAL, INC.
AT
$11.50 NET PER SHARE
BY
SHADE ACQUISITION CORP.,
A WHOLLY-OWNED SUBSIDIARY OF
LUXOTTICA GROUP S.P.A.
[Download Table]
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00
MIDNIGHT,
NEW YORK CITY TIME, ON FRIDAY, MARCH 30, 2001, UNLESS THE
OFFER IS EXTENDED.
THIS OFFER IS BEING MADE PURSUANT TO AN AGREEMENT AND PLAN OF MERGER (THE
"MERGER AGREEMENT"), DATED AS OF FEBRUARY 22, 2001, BY AND AMONG LUXOTTICA GROUP
S.p.A. ("PARENT"), SHADE ACQUISITION CORP. ("PURCHASER") AND SUNGLASS HUT
INTERNATIONAL, INC. (THE "COMPANY").
The Board of Directors of the Company has unanimously determined that the
Offer and the Merger (each as defined herein) are fair to, advisable and in the
best interests of the Company and its shareholders, has unanimously approved the
Merger Agreement and the transactions contemplated thereby, including the Offer
and the Merger, and unanimously recommends that the Company's shareholders
accept the Offer and tender all of their shares pursuant thereto.
A summary of the principal terms of the Offer appears on pages (ii) through
(vi). You should read this entire document carefully before deciding whether to
tender your shares.
The Offer is conditioned upon, among other things, there being validly
tendered, and not withdrawn prior to the Expiration Date (as defined herein),
that number of shares of common stock, par value $0.01 per share (the "Shares"),
of the Company that represents at least a majority of the outstanding Shares, on
a fully diluted basis, on the date that the Shares are accepted for payment
pursuant to the Offer (the "Minimum Condition"). The Offer is also subject to
other terms and conditions set forth in this Offer to Purchase. The Offer is not
subject to any financing condition.
If you have questions about the Offer, you may call MacKenzie
Partners, Inc., the Information Agent for the Offer, or Rothschild Inc., the
Dealer Manager for the Offer, at their respective addresses and telephone
numbers set forth on the back cover of this Offer to Purchase. You may also
obtain additional copies of this Offer to Purchase, the related Letter of
Transmittal and the Notice of Guaranteed Delivery from the Information Agent or
your broker, dealer, commercial bank, trust company or other nominee.
THIS TRANSACTION HAS NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION NOR HAS THE COMMISSION PASSED UPON THE FAIRNESS OR MERITS OF
SUCH TRANSACTION OR UPON THE ACCURACY OF THE INFORMATION CONTAINED IN THIS
DOCUMENT. ANY REPRESENTATION TO THE CONTRARY IS UNLAWFUL.
------------------------
THE DEALER MANAGER FOR THE OFFER IS:
[LOGO]
ROTHSCHILD INC.
March 5, 2001
TABLE OF CONTENTS
[Download Table]
SUMMARY TERM SHEET.......................................... ii
IMPORTANT................................................... vii
INTRODUCTION................................................ 1
THE TENDER OFFER............................................ 4
1. Terms of the Offer....................................... 4
2. Acceptance for Payment and Payment for Shares............ 6
3. Procedures for Accepting the Offer and Tendering
Shares.................................................... 7
4. Withdrawal Rights........................................ 10
5. Certain United States Federal Income Tax Consequences.... 11
6. Price Range of Shares; Dividends......................... 12
7. Certain Information Concerning the Company............... 12
8. Certain Information Concerning Parent, Luxottica S.p.A.
and Purchaser............................................. 17
9. Source and Amount of Funds............................... 18
10. Background of the Offer; Past Contacts or Negotiations
with the Company.......................................... 19
11. The Merger Agreement; Other Arrangements................ 20
12. Purpose of the Offer; Plans for the Company............. 32
13. Certain Effects of the Offer............................ 33
14. Dividends and Distributions............................. 35
15. Certain Conditions of the Offer......................... 35
16. Certain Legal Matters; Regulatory Approvals............. 37
17. Dissenters' Rights...................................... 39
18. Fees and Expenses....................................... 39
19. Miscellaneous........................................... 40
SCHEDULE I.................................................. S-1
Directors and Executive Officers of Parent, Luxottica
S.p.A. and Purchaser
i
SUMMARY TERM SHEET
Shade Acquisition Corp. ("Purchaser" or "we" or "us") is offering to
purchase all of the outstanding shares of common stock of Sunglass Hut
International, Inc. (the "Company") for $11.50 net per share, in cash. This
summary term sheet answers some of the questions that you may have as a
shareholder of the Company. The information in this summary term sheet is not
complete. Therefore, we urge you to read carefully the remainder of this Offer
to Purchase and the Letter of Transmittal as well as the Company's
Solicitation/Recommendation Statement on Schedule 14D-9, which is being mailed
to shareholders of the Company with these materials, because they contain
important additional information.
WHO IS OFFERING TO BUY YOUR SECURITIES?
Our name is Shade Acquisition Corp. We are a Florida corporation formed
solely for the purpose of making an offer for all of the outstanding shares of
common stock of the Company. We are an indirect wholly-owned subsidiary of
Luxottica Group S.p.A., an Italian corporation ("Parent"). See the
"Introduction" to this Offer to Purchase and Section 8--"Certain Information
Concerning Parent, Luxottica S.p.A. and Purchaser."
WHAT ARE THE CLASSES AND AMOUNTS OF SECURITIES SOUGHT IN THE OFFER?
We seek to purchase all of the outstanding shares of common stock of the
Company for $11.50 net per share in cash, without interest. See the
"Introduction" to this Offer to Purchase and Section 1--"Terms of the Offer."
HOW MUCH ARE WE OFFERING TO PAY AND WHAT IS THE FORM OF PAYMENT?
We are offering to pay you $11.50 net per share, in cash.
WILL YOU HAVE TO PAY ANY FEES OR COMMISSIONS?
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 WE HAVE THE FINANCIAL RESOURCES TO MAKE PAYMENT?
Parent will provide us with sufficient funds to purchase all shares validly
tendered and not withdrawn in the offer. We anticipate that Parent will obtain
the funds required for these transactions primarily from a new credit facility.
See Section 9--"Source and Amount of Funds."
IS OUR FINANCIAL CONDITION RELEVANT TO YOUR DECISION TO TENDER YOUR SHARES IN
THE OFFER?
We do not think our financial condition is relevant to your decision whether
to tender your shares in the offer because:
- the form of payment consists solely of cash, which Parent will make
available to us,
- the offer is not subject to any financing condition,
- our offer applies to all the outstanding shares of the Company, and
- upon the consummation of the offer, we will acquire in the merger all
shares that are not tendered in the offer for the same price as in the
offer.
ii
HOW LONG DO YOU HAVE TO DECIDE WHETHER TO TENDER YOUR SHARES IN THE OFFER?
You will have at least until 12:00 midnight, New York City time, on Friday,
March 30, 2001, to tender your shares in the offer, unless we extend the offer.
If you cannot deliver everything that is required 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?
Yes. We have agreed with the Company that we may extend the offer beyond the
scheduled expiration date with or without the Company's consent in the following
events:
- from time to time, if at any scheduled expiration date any of the
conditions to our offer are not satisfied or waived,
- for any period required by any rule, regulation, interpretation or
position of the Securities and Exchange Commission (the "SEC") or the
staff thereof applicable to the offer or any period required by applicable
law,
- for an aggregate period not to exceed 10 business days (for all such
extensions), if all of the conditions to the offer are satisfied or waived
but the number of shares validly tendered and not withdrawn is
insufficient to result in Purchaser owning at least 80% of the then
outstanding number of shares and we have agreed to irrevocably and
expressly waive all conditions to the offer that may subsequently fail to
be satisfied during such an extension of the offer, or
- pursuant to an amendment providing for a "subsequent offering period" not
to exceed 20 business days to the extent permitted under and in compliance
with the Securities Exchange Act of 1934, as amended.
We may not, in any case, extend the offer beyond June 27, 2001 without the
Company's consent; PROVIDED, HOWEVER, we may extend the offer until August 27,
2001 without the Company's consent if the sole reason the Offer shall not have
been consummated by June 27, 2000 is that the applicable waiting period under
the Hart-Scott-Rodino Antitrust Improvement Act has not expired or been
terminated.
If any of the conditions to this offer are not satisfied or waived on any
scheduled expiration date of the offer, then, if requested to by the Company, we
shall extend the offer for a period of not more than 10 business days.
If all conditions to the offer have been satisfied or waived, we will accept
for payment and pay for all shares validly tendered and not withdrawn at such
time, which shares you may not thereafter withdraw, promptly after the
expiration date. See Section 1--"Terms of the Offer" for more details on our
ability to extend the offer.
HOW WILL WE NOTIFY YOU IF WE EXTEND THE OFFER?
If we extend the offer, we will inform American Stock Transfer & Trust
Company, 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 otherwise scheduled
to expire. See Section 1--"Terms of the Offer."
iii
WHAT ARE THE MOST SIGNIFICANT CONDITIONS TO THE OFFER?
We are not required to accept for payment or pay for any tendered shares
and, subject to the terms of the merger agreement, may delay the acceptance for
payment of any tendered shares unless:
- there have been validly tendered and not withdrawn before the expiration
date of the offer that number of shares which represents at least a
majority of the outstanding shares on a fully diluted basis, after giving
effect to the exercise or conversion of all options, warrants, rights and
securities outstanding exercisable or convertible into voting securities,
on the date of purchase. We call this condition the "minimum condition,"
- there has not been a material adverse change in the Company or its
business, or
- any applicable waiting periods under the Hart-Scott-Rodino Antitrust
Improvements Act have expired or been terminated.
A number of other conditions also apply. We may waive some of the conditions
to the offer without the Company's consent; however, we cannot waive the minimum
condition. See Section 15--"Certain Conditions of the Offer." Our offer is not
conditioned upon any financing arrangements.
HOW DO YOU TENDER YOUR SHARES IN THE OFFER?
If you wish to accept our offer, this is what you must do:
- if you are a record holder of shares and have your stock certificates, you
must deliver a completed and executed Letter of Transmittal and all other
documents required by the Letter of Transmittal with the certificates
representing your shares to American Stock Transfer & Trust Company, the
depositary for the offer, not later than the time the offer expires,
- if your shares are held in street name, the shares can be tendered by your
nominee through The Depository Trust Company, and
- if you are unable to deliver any required document or instrument to the
depositary by the scheduled expiration date of the offer, you may gain
some additional 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 Nasdaq National Market 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 YOU WITHDRAW PREVIOUSLY TENDERED SHARES?
You may withdraw previously tendered shares at any time until the offer has
expired and, unless theretofore accepted for payment by us pursuant to the
offer, may also be withdrawn at any time after May 3, 2001. This right to
withdraw previously tendered shares will not apply to the subsequent offering
period discussed in Section 1 of this Offer to Purchase. See
Section 4--"Withdrawal Rights."
HOW DO YOU WITHDRAW PREVIOUSLY TENDERED SHARES?
To withdraw previously tendered shares, you must deliver a written notice of
withdrawal, or a facsimile of one, with the required information to American
Stock Transfer & Trust Company, the depositary for the offer, while you still
have the right to withdraw the shares. See Section 4--"Withdrawal Rights."
iv
WHAT DOES THE COMPANY'S BOARD OF DIRECTORS THINK OF THE OFFER?
The Company's board of directors has unanimously:
- determined that the merger agreement, the offer, the merger and the other
transactions contemplated by the merger agreement are fair to, advisable
and in the best interests of the Company and the Company's shareholders,
- approved the merger agreement, the offer and the merger, and
- resolved to recommend that the Company's shareholders accept the offer and
approve and adopt the merger agreement and the merger; PROVIDED, HOWEVER,
that such recommendation and approval may be withdrawn, modified or
amended to the extent that the Company's board of directors determines in
good faith (after having consulted with outside legal counsel) that such
action is necessary in order for its directors to comply with their
fiduciary duties to the Company's shareholders under applicable law.
HAVE ANY SHAREHOLDERS ALREADY AGREED TO TENDER THEIR SHARES?
No. Currently, no shareholders have agreed to tender their shares in the
offer.
IF A MAJORITY OF THE SHARES ARE TENDERED AND ACCEPTED FOR PAYMENT, WILL THE
COMPANY 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, the Company 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:
- the Company's common stock will no longer be eligible to be traded through
the Nasdaq National Market,
- there may not be a public trading market for the Company's common stock,
and
- the Company may cease making filings with the SEC or otherwise cease being
required to comply with the SEC rules relating to publicly held companies.
See Section 13--"Certain Effects of the Offer."
WILL THE OFFER BE FOLLOWED BY A MERGER IF ALL OF THE COMPANY'S SHARES ARE NOT
TENDERED IN THE OFFER?
Yes. If we accept and pay for at least a majority of the shares of the
Company, we will be merged with and into the Company. If that merger takes
place, Parent or another wholly-owned subsidiary of Parent will own all of the
shares of the Company and all shareholders of the Company (other than Parent or
such other subsidiary) whose shares were not purchased in the offer will receive
$11.50 net per share in cash. See the "Introduction" to this Offer to Purchase.
IF YOU DECIDE NOT TO TENDER YOUR SHARES, HOW WILL THE OFFER AFFECT YOUR SHARES?
If the merger described above takes place, shareholders not tendering their
shares in the offer will have no rights with respect to their shares except to
receive $11.50 net per share, in cash. Therefore, if the merger takes place, the
only difference between tendering your shares and not tendering your shares is
that you will receive $11.50 net per share, in cash, earlier if you tender your
shares. If the merger does not take place, however, the number of shareholders
and the number of shares of the Company 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 the
Company's common stock. Also, as described above, the Company may cease making
filings with the SEC or
v
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 YOUR SHARES AS OF A RECENT DATE?
On February 21, 2001, the last trading day before we announced the offer,
the last sale price of the Company's common stock reported on the Nasdaq
National Market was $8.313 per share. On March 2, 2001, the last trading day
before we commenced the offer, the closing price of the Company's common stock
reported on the Nasdaq National Market was $11.313. We encourage you to obtain a
recent quotation for shares of the Company's 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 YOUR
SHARES?
The receipt of cash by you in exchange for your shares pursuant to the offer
or the subsequent proposed merger is a taxable transaction for federal income
tax purposes and may also be a taxable transaction under applicable state, local
or foreign tax laws. In general, assuming you hold your shares as a capital
asset, you will recognize capital gain or loss equal to the difference between
the amount of cash you receive for the shares you tender and your adjusted tax
basis in those shares. You should consult your tax advisor about the particular
tax consequences of tendering your shares.
WHO CAN YOU TALK TO IF YOU HAVE QUESTIONS ABOUT THE OFFER?
You may call either of the following:
- MacKenzie Partners, Inc., the information agent for our offer, toll free
at (800) 322-2885, or
- Rothschild Inc., the dealer manager for our offer, at (212) 403-3611
(collect) or (800) 753-5151 (Ext. 3611) (toll free).
vi
IMPORTANT
Any shareholder wishing to tender Shares (as defined herein) in the Offer
must either:
(1) 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 American
Stock Transfer & Trust Company (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
(2) request such shareholder's broker, dealer, commercial bank, trust
company or other nominee to effect the transaction for the shareholder. A
shareholder whose Shares are registered in the name of a broker, dealer,
commercial bank, trust company or other nominee must contact such person if that
shareholder wishes to tender those Shares.
Any shareholder who wishes to tender Shares and cannot deliver certificates
representing those 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 those Shares by following the procedure for guaranteed delivery set
forth in Section 3 of this Offer to Purchase.
Questions and requests for assistance may be directed to MacKenzie
Partners, Inc. (the "Information Agent") or Rothschild 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 at no cost from the Information Agent.
Shareholders may also contact their broker, dealer, commercial bank, trust
company or other nominee for copies of these documents.
vii
TO: THE HOLDERS OF COMMON STOCK
OF SUNGLASS HUT INTERNATIONAL, INC.
INTRODUCTION
Shade Acquisition Corp., a Florida corporation ("Purchaser") and an indirect
wholly-owned subsidiary of Luxottica Group S.p.A., an Italian corporation
("Parent"), hereby offers to purchase all outstanding shares of common stock,
par value $.01 per share (the "Shares"), of Sunglass Hut International, Inc., a
Florida corporation (the "Company"), at a price of $11.50 per Share, net to the
seller in cash (such price, as it may be increased, the "Share 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 the Agreement and Plan of Merger, dated
as of February 22, 2001 (as the same may be amended, the "Merger Agreement"), by
and among Parent, Purchaser and the Company. The Merger Agreement provides that
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. At the option of Parent, the Merger may be structured so
that the Company will be merged with and into Purchaser or another direct or
indirect wholly-owned subsidiary of Parent, with Purchaser or such other
subsidiary of Parent continuing as the Surviving Corporation. Pursuant to the
Merger, at the effective time of the Merger (the "Effective Time"), each Share
issued and outstanding immediately prior to the Effective Time (other than
Shares held by Parent, Purchaser, any wholly-owned subsidiary of Parent or
Purchaser, in the treasury of the Company or by any wholly-owned subsidiary of
the Company, all of which will be cancelled) will be converted into the right to
receive the Share Offer Price in cash, without interest (the "Merger Price").
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 and warrants.
Tendering shareholders who have Shares registered in their names and who
tender directly to the Depositary will not be charged brokerage fees or
commissions or, except as otherwise provided in Instruction 6 of the Letter of
Transmittal, stock transfer taxes on the purchase of Shares by 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 Purchaser will pay all charges and expenses of Rothschild Inc., as
dealer manager ("Rothschild" or the "Dealer Manager"), American Stock
Transfer & Trust Company, as depositary (the "Depositary"), and MacKenzie
Partners, 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") HAS UNANIMOUSLY:
- determined that the Merger Agreement, the Offer, the Merger, and the other
transactions contemplated by the Merger Agreement are fair to, advisable
and in the best interests of the Company and the Company's shareholders,
- approved the Merger Agreement, the Offer and the Merger, and
- resolved to recommend that the Company's shareholders accept the Offer and
approve and adopt the Merger Agreement and the Merger; PROVIDED, HOWEVER,
that such recommendation and approval may be withdrawn, modified or
amended to the extent that the Company Board determines in good faith
(after having consulted with outside legal counsel) that such action is
necessary in order for its directors to comply with their fiduciary duties
to the Company's shareholders under applicable law.
1
Morgan Stanley & Co. Incorporated ("Morgan Stanley"), the Company's
financial advisor, has delivered to the Company Board a written opinion dated
February 22, 2001, to the effect that, as of such date and based on and subject
to the matters stated in the opinion, the $11.50 per Share cash consideration to
be received in the Offer and the Merger by holders of Shares is fair, from a
financial point of view, to such holders. The full text of Morgan Stanley's
written opinion dated February 22, 2001, 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 to
shareholders concurrently with this Offer to Purchase. Holders of Shares are
urged to read the text of that opinion carefully in its entirety.
The Offer is conditioned upon, among other things:
- there having been validly tendered and not withdrawn before the Expiration
Date of the Offer, that number of Shares which represents at least a
majority of the outstanding Shares on a fully diluted basis (the "Minimum
Condition"),
- there not having occurred a material adverse change in the Company or its
business, and
- the expiration or termination of the applicable waiting periods under the
Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (the "HSR
Act").
The Offer is also subject to the satisfaction of certain other conditions
set forth in this Offer to Purchase. 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 February 3, 2001, 40,136,132 Shares
were issued and outstanding, 4,943,599 Shares were reserved for issuance upon
exercise of outstanding options and warrants and 3,801,652 Shares were reserved
for issuance upon conversion of the Company's outstanding 5 1/4% Convertible
Subordinated Notes. Accordingly, Purchaser believes that the Minimum Condition
would be satisfied if 24,440,693 Shares were validly tendered and not withdrawn
prior to the expiration of the Offer. Except as set forth in the next sentence,
neither Parent, Luxottica S.p.A., a direct wholly-owned subsidiary of Parent,
Purchaser nor any person listed on Schedule I to this Offer to Purchase
beneficially owns any Shares. La Leonardo Finanziaria S.r.l. ("LLF"), an entity
established and controlled by Leonardo Del Vecchio, the Chairman of the Board of
Directors of Parent, holds 2,259,600 Shares, as of the date of this Offer to
Purchase, or approximately 5.6% of the currently outstanding Shares. As more
fully described in the Schedule 13D dated as of April 19, 2000 of Mr. Del
Vecchio and LLF filed with the SEC on the date hereof, Mr. Del Vecchio has
voting and investment power over such Shares. Such shares were purchased by LLF
in a series of transactions during the period from March 17, 2000 through
April 19, 2000. Mr. Del Vecchio is the beneficial owner of approximately 69.1%
of Parent's outstanding ordinary shares.
The Merger Agreement provides that immediately following the acceptance for
payment of, and payment by Purchaser for, not less than a majority of the
outstanding Shares pursuant to this Offer, Parent will be entitled to designate
such number of directors, rounded up to the next whole number, on the Company
Board that equals the product of (i) the total number of directors on the
Company Board (giving effect to the directors designated by Parent pursuant to
the Merger Agreement), and (ii) the percentage that the aggregate number of
Shares beneficially owned by Parent or its affiliates (including Shares accepted
for payment) bears to the total number of Shares then outstanding.
The Company has agreed, if necessary, to increase the size of the Company
Board or exercise its reasonable best efforts to secure the resignations of such
number of directors, or both, as is necessary to enable Parent's designees 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; PROVIDED, HOWEVER, that prior to the
Effective Time, the Company Board
2
shall always have at least two members who are neither officers, directors,
shareholders nor designees of Purchaser or any of its affiliates and the Company
shall continue to comply with The Nasdaq Stock Market requirements with respect
to independent directors. See Section 11--"The Merger Agreement; Other
Arrangements."
The Merger is subject to the satisfaction or waiver of certain conditions,
including, if required, the approval and adoption of the Merger Agreement by the
affirmative vote of the holders of a majority of the outstanding Shares. If
Parent, Purchaser or any other of Parent's other direct or indirect subsidiaries
shall acquire, in the aggregate, 80% or more of the outstanding Shares in the
Offer, Purchaser will effect the Merger pursuant to the short-form merger
provisions of the Florida Business Corporation Act (the "FBCA") 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, 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 has
agreed that it will vote, or cause to be voted, all of the Shares then owned by
it, Purchaser or any of its other affiliates that it controls in favor of the
approval of the Merger 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.
3
THE TENDER 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 such extension or
amendment), 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,
March 30, 2001, unless 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, Purchaser may waive any or
all of the conditions to its obligation to purchase Shares pursuant to the Offer
(except the Minimum Condition, which can only be waived with the prior written
consent of the Company). Except as set forth below, if on the initial Expiration
Date or any subsequent Expiration Date any or all of the conditions to the Offer
have not been satisfied or waived, subject to the provisions of the Merger
Agreement, Purchaser may elect to:
- terminate the Offer and return all tendered Shares to tendering
shareholders,
- waive all of the unsatisfied conditions (other than the Minimum Condition)
and, subject to any required extension, purchase all Shares validly
tendered by the Expiration Date and not properly withdrawn, or
- extend the Offer (except that in no event may Purchaser extend the Offer
beyond June 27, 2001 without the Company's consent; PROVIDED, HOWEVER,
Purchaser may extend the Offer until August 27, 2001 without the Company's
consent if the sole reason the Offer shall not have been consummated by
June 27, 2001 is that the applicable waiting period under the HSR Act has
not expired or been terminated), and, subject to the right of shareholders
to withdraw previously tendered Shares until the new Expiration Date,
retain the Shares that have been tendered until the expiration of the
Offer as extended.
Purchaser will not, and Parent will cause Purchaser not to, make any change
without the prior written consent of the Company that:
- waives the Minimum Condition,
- decreases the Share Offer Price,
- decreases the number of Shares sought to be purchased in the Offer,
- changes the form of consideration to be paid in the Offer,
- imposes conditions to the Offer in addition to the conditions set forth in
Section 15 of this Offer to Purchase or amends any other term of the Offer
(including the conditions to the Offer) in any manner adverse to the
holders of any Shares, or
- except as provided in the Merger Agreement, extends the Offer.
Except as set forth below, Purchaser may extend the Offer beyond the
scheduled Expiration Date from time to time, with or without the Company's
consent, in the following events:
- from time to time, if at any scheduled Expiration Date any of the
conditions to the Offer are not satisfied or waived,
4
- for any period required by any rule, regulation, interpretation or
position of the SEC or the staff thereof applicable to the Offer or any
period required by applicable law,
- for an aggregate period not to exceed 10 business days (for all such
extensions), if all of the conditions to the Offer are satisfied or waived
but the number of Shares validly tendered and not withdrawn is
insufficient to result in Purchaser owning at least 80% of the then
outstanding number of Shares and Purchaser has agreed to irrevocably and
expressly waive all conditions to the Offer that may subsequently fail to
be satisfied during such an extension of the Offer, or
- pursuant to an amendment to the Offer providing for a "subsequent offering
period" not to exceed 20 business days to the extent permitted under the
Exchange Act.
In addition, if any of the conditions to the Offer are not satisfied or
waived on any scheduled Expiration Date of the Offer, then, if requested by the
Company, Parent will, and will cause Purchaser to, extend the Offer for a period
of not more than 10 business days.
If all conditions to the Offer have been satisfied or waived, Purchaser will
accept for payment and pay for all Shares validly tendered and not withdrawn
promptly after the Expiration Date (which Shares may not thereafter be
withdrawn).
A Subsequent Offering Period is an additional period of time from three
business days to 20 business days in length, beginning after Purchaser purchases
Shares tendered in the Offer, during which shareholders may tender, but not
withdraw, their Shares and receive the Share Offer Price.
If Purchaser provides for a Subsequent Offering Period following Purchaser's
acceptance for payment of Shares in the Offer, then, 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 the Subsequent
Offering Period with respect to Shares tendered in the Offer and accepted for
payment. During a Subsequent Offering Period, 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, Purchaser also expressly reserves the right,
in its sole discretion, at any time or from time to time:
- to terminate the Offer if an event or circumstance has occurred that would
result in any of the conditions set forth in Section 15 of this Offer to
Purchase failing to be satisfied or no Shares have been purchased pursuant
to the Offer on or before June 27, 2001, and
- to waive any of the conditions to the Offer (other than the Minimum
Condition) and to make any change in the terms or conditions of the Offer,
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 Purchaser accepts for payment any Shares pursuant to the Offer, it
will accept for payment and pay for all Shares validly tendered prior to the
Expiration Date and not properly withdrawn pursuant to the Offer promptly after
the Expiration Date.
Purchaser will publicly announce any extension, delay, termination, waiver
or amendment as promptly as practicable. Purchaser will announce any extension
no later than 9:00 a.m., New York City time, on the next business day after the
previously scheduled Expiration Date 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 shareholders
in a manner reasonably designed to inform them of such changes) and without
limiting the manner in which Purchaser may choose to make any public
announcement, Purchaser shall have no obligation to publish, advertise or
otherwise
5
communicate any such public announcement other than by issuing a press release
to the Dow Jones News Service.
If Purchaser extends the Offer or if 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 Purchaser's rights under
the Offer, the Depositary may retain tendered Shares on behalf of 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 Purchaser to delay the
payment for Shares that 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 Purchaser pay for Shares that are tendered pursuant to the
Offer promptly after the expiration of the Offer.
If 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, Purchaser will disseminate additional 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 Expiration
Date, Purchaser decreases the number of Shares being sought 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 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.
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 extension or
amendment), 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 promptly after the Expiration Date.
Subject to the Merger Agreement and compliance with Rule 14e-1(c) under the
Exchange Act, Purchaser expressly reserves the right to delay payment for Shares
in order to comply in whole or in part with any applicable law. For information
with respect to any regulatory approvals we are required
6
to obtain prior to the completion of the Offer, see Section 16--"Certain Legal
Matters; Regulatory Approvals."
In all cases, payment for Shares accepted for payment pursuant to the Offer
will be made only after timely receipt by the Depositary of:
- the certificates evidencing such Shares (the "Share Certificates") or
confirmation of a book-entry transfer (a "Book-Entry Confirmation") 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,
- 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
Section 3 of this Offer to Purchase) in lieu of the Letter of Transmittal,
and
- any other documents required by the Letter of Transmittal.
For purposes of the Offer, Purchaser will be deemed to have accepted for
payment, and thereby purchased, Shares validly tendered and not properly
withdrawn as, if and when Purchaser gives oral or written notice to the
Depositary of Purchaser's acceptance of such Shares for payment pursuant to the
Offer. Payment for Shares so accepted will be made by the deposit of the Share
Offer Price for those Shares with the Depositary, which will act as paying agent
for tendering shareholders for the purpose of receiving payment from Purchaser
and transmitting such payment to tendering shareholders. If, for any reason
whatsoever, acceptance for payment of any Shares tendered pursuant to the Offer
is delayed, or Purchaser is unable to accept for payment Shares tendered
pursuant to the Offer, then, without prejudice to Purchaser's rights under
Section 1 of this Offer to Purchase, the Depositary may, nevertheless, on behalf
of 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 SHARE 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 of this Offer to Purchase, such
Shares will be credited to an account maintained at the Book-Entry Transfer
Facility), as promptly as practicable following the expiration, termination or
withdrawal of the Offer.
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 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 of the Letter of Transmittal),
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
7
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 guaranteed delivery procedures described below must be complied with.
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 Book-Entry Transfer Facility has
received an express acknowledgment from the participant in the system of 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 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,
(i) 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 its addresses set forth on the back
cover of this Offer to Purchase prior to the Expiration Date, or (ii) 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 (i) 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 (ii) 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
8
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:
(a) the tender is made by or through an Eligible Institution,
(b) 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 Purchaser, and
(c) 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), and any other documents
required by the Letter of Transmittal are received by the Depositary
within three trading days after the date of execution of such Notice of
Guaranteed Delivery. A "trading day" is any day on which the Nasdaq
National Market 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. 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. 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. 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 Purchaser. None of 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. 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 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 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, 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
9
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 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. Purchaser reserves the
right to require that, in order for Shares to be deemed validly tendered,
Purchaser must be able to exercise full voting rights with respect to such
Shares immediately upon 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. Purchaser's acceptance for payment of
Shares tendered pursuant to the Offer will constitute a binding agreement
between the tendering shareholder and Purchaser upon the terms and subject to
the conditions of the Offer.
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 Share 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 as
otherwise provided in this Section 4. Shares tendered pursuant to the Offer may
be withdrawn at any time prior to the Expiration Date and, unless theretofore
accepted for payment by Purchaser pursuant to the Offer, may also be withdrawn
at any time after May 3, 2001. No withdrawal rights will apply to Shares
tendered during a Subsequent Offering Period and no withdrawal rights apply
during the Subsequent Offering Period with respect to Shares tendered in the
Offer and accepted for payment. 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.
10
Any notice of withdrawal must specify the name, address and TIN 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 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 Purchaser's rights under the Offer, the
Depositary may, nevertheless, on behalf of 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 Purchaser, in its sole discretion.
That determination will be final and binding. None of 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.
5. CERTAIN UNITED STATES FEDERAL INCOME TAX CONSEQUENCES.
The following is a summary of certain United States federal income tax
consequences of the Offer. This discussion is for general information only and
does not address all aspects of United States federal income taxation that may
be relevant to shareholders who tender Shares pursuant to the Offer. The
discussion is based on current provisions of the Internal Revenue Code of 1986,
as amended (the "Code"), treasury regulations issued thereunder, and
administrative and judicial interpretations thereof, all of which are subject to
change, possibly with retroactive effect. The discussion applies only to
shareholders in whose hands the Shares are capital assets--generally property
held for investment--and may not apply to shareholders who received their Shares
pursuant to the exercise of employee stock options or otherwise as compensation,
or to certain types of shareholders (including, but not limited to, insurance
companies, tax-exempt organizations, financial institutions or broker-dealers)
who may be subject to special rules under the United States federal income tax
laws. This discussion does not discuss the United States federal income tax
consequences to a shareholder who, for the 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
state, local or foreign income or other tax laws.
BECAUSE INDIVIDUAL CIRCUMSTANCES MAY DIFFER, EACH SHAREHOLDER TENDERING
SHARES PURSUANT TO THE OFFER SHOULD CONSULT HIS OR HER OWN TAX ADVISOR TO
DETERMINE THE PARTICULAR TAX EFFECTS OF THE OFFER TO SUCH SHAREHOLDER, INCLUDING
THE APPLICATION AND EFFECT OF STATE, LOCAL OR
11
FOREIGN INCOME OR OTHER TAX LAWS, CHANGES IN APPLICABLE TAX LAWS AND ANY PENDING
OR PROPOSED LEGISLATION.
The receipt of cash for Shares pursuant to the Offer will be a taxable
transaction for United States federal income tax purposes. In general, a
shareholder will recognize gain or loss equal to the difference between (i) the
amount of cash received and (ii) the shareholder's adjusted tax basis in the
Shares sold pursuant to the Offer. Gain or loss must be determined separately
for each block of Shares (i.e. Shares acquired at the same cost in a single
transaction) sold pursuant to the Offer. Such gain or loss will be long-term
capital gain or loss if the holding period for the Shares exceeds one year at
the time of the sale. Long-term capital gains derived by individuals are
eligible for reduced rates of taxation (generally, 20% under current law), while
short-term capital gains are taxed at the same rate as ordinary income
(currently, a 39.6% maximum rate). The deductibility of capital losses is
restricted and, in general, may only be used to reduce capital gains to the
extent thereof. However, taxpayers who are individuals may generally deduct
annually $3,000 of capital losses in excess of their capital gains.
6. PRICE RANGE OF SHARES; DIVIDENDS.
The Shares are traded on the Nasdaq National Market under the symbol "RAYS."
The following table sets forth, for the periods indicated, the high and low sale
prices per Share. No dividends were paid to shareholders for the periods
indicated. Share prices are as reported on the Nasdaq National Market based on
published financial sources.
[Download Table]
COMMON STOCK
-------------------
HIGH LOW
-------- --------
FISCAL YEAR 1998:
First Quarter (February 1 to May 2)....................... $10.625 $ 6.938
Second Quarter (May 3 to August 1)........................ 12.750 8.000
Third Quarter (August 2 to October 31).................... 8.750 3.750
Fourth Quarter (November 1 to January 30)................. 10.125 4.406
FISCAL YEAR 1999:
First Quarter (January 31 to May 1)....................... 12.625 9.219
Second Quarter (May 2 to July 31)......................... 17.188 13.000
Third Quarter (August 1 to October 30).................... 13.000 9.563
Fourth Quarter (October 31 to January 29)................. 14.000 8.188
FISCAL YEAR 2000:
First Quarter (January 30 to April 29).................... 10.063 6.656
Second Quarter (April 30 to July 29)...................... 8.750 6.000
Third Quarter (July 30 to October 28)..................... 7.750 6.063
Fourth Quarter (October 29 to February 3)................. 9.125 4.750
On February 21, 2001, the last full day of trading before the public
announcement of the execution of the Merger Agreement, the closing price of the
Shares on the Nasdaq National Market was $8.313 per Share. On March 2, 2001, the
last full day of trading before the commencement of the Offer, the closing price
of the Shares on the Nasdaq National Market was $11.313 per Share. Shareholders
are urged to obtain a current market quotation for the Shares.
7. CERTAIN INFORMATION CONCERNING THE COMPANY.
According to the Company Form 10-K referred to below, the Company is a
Florida corporation with its principal offices located at 255 Alhambra Circle,
Coral Gables, Florida 33134. The Company's telephone number is (305) 461-6100.
The Company is the world's largest specialty retailer of sunglasses and one of
the world's largest specialty retailer of popular price ($50 to $500) watches,
with approximately 1,900 locations worldwide. The Company's stores operate under
the Sunglass Hut International and Watch Station tradenames. Some of the
Company's stores combine sunglasses and
12
watches in a unified format. As of the end of the 1999 fiscal year, the Company
employed 9,174 persons, of whom 3,689 were full-time employees and 5,485 were
part-time employees.
SELECTED CONSOLIDATED FINANCIAL INFORMATION
Set forth below is a summary of certain consolidated financial information
with respect to the Company and its consolidated subsidiaries, excerpted or
derived from the information contained in its Form 10-K for the year ended
January 29, 2000 (the "Company Form 10-K") and its Quarterly Report on
Form 10-Q for the quarter ended October 28, 2000. More comprehensive financial
information is included in such reports and other documents filed by the Company
with the SEC. The financial information summary set forth below is qualified in
its entirety by reference to such reports and other documents filed with the SEC
and all of the financial information and related notes contained therein. Such
reports and other documents may be inspected and copies may be obtained from the
offices of the SEC in the manner set forth below.
13
SUNGLASS HUT INTERNATIONAL, INC.
SELECTED CONSOLIDATED FINANCIAL INFORMATION
(IN THOUSANDS, EXCEPT PER SHARE DATA)
[Enlarge/Download Table]
THIRTY-NINE WEEKS ENDED YEAR ENDED
------------------------- -------------------------
OCTOBER 28, OCTOBER 30, JANUARY 29, JANUARY 30,
2000 1999 2000 1999
----------- ----------- ----------- -----------
INCOME STATEMENT DATA:
Net sales........................................ $502,754 $484,487 $635,603 $601,954
Costs of goods sold, occupancy and buying
expenses....................................... 293,675 279,816 368,860 356,523
-------- -------- -------- --------
Gross profit................................... 209,079 204,671 266,743 245,431
-------- -------- -------- --------
Selling, general and administrative expenses:....
Operating expenses............................. 142,234 136,995 186,609 179,633
Depreciation and leasehold amortization........ 22,107 19,331 25,698 23,652
Amortization of cost in excess of net assets of
acquired businesses.......................... 1,871 1,517 2,017 1,752
Restructuring expenses (reversals) and asset
impairment charges........................... -- -- (399) (371)
-------- -------- -------- --------
Expenses related to acquisitions............... -- -- -- --
-------- -------- -------- --------
166,212 157,843 213,925 204,666
Earnings (loss) from continuing operations
before interest, income taxes, and
cumulative effect of change in accounting
principle.................................. 42,867 46,828 52,818 40,765
Interest expense................................. 9,908 5,970 8,122 7,319
-------- -------- -------- --------
Earnings (loss) from continuing operations
before income taxes, and cumulative effect
of change in accounting principle.......... 32,959 40,858 44,696 33,446
Provision (benefit) for income taxes............. 12,793 15,833 17,208 13,625
-------- -------- -------- --------
Earnings (loss) from continuing operations
before cumulative effect of change in
accounting principle....................... 20,166 25,025 27,488 19,821
Discontinued operations:.........................
Loss from discontinued operations net of tax
benefits of $1,400 in 1997, $824 in 1996 and
$11 in 1995.................................. -- -- -- --
Estimated loss from disposal of discontinued
operations, net of income tax benefit of $462
in 1999 and $5,200 in 1997................... -- -- (738) --
-------- -------- -------- --------
Earnings (loss) before cumulative effect of
change in accounting principle............... 20,166 25,025 26,750 19,821
Cumulative effect of change in accounting
principle, net of income tax benefit of $851... -- -- -- --
-------- -------- -------- --------
Net income (loss)............................ $ 20,166 $ 25,025 $ 26,750 $ 19,821
======== ======== ======== ========
Pro forma net income (loss) per share
Basic--
From continuing operations................... $ 0.48 $ 0.54 $ 0.60 $ 0.38
From discontinued operations................. -- -- (0.02) --
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SUNGLASS HUT INTERNATIONAL, INC.
SELECTED CONSOLIDATED FINANCIAL INFORMATION (CONTINUED)
(IN THOUSANDS, EXCEPT PER SHARE DATA)
[Enlarge/Download Table]
THIRTY-NINE WEEKS ENDED YEAR ENDED
------------------------- -------------------------
OCTOBER 28, OCTOBER 30, JANUARY 29, JANUARY 30,
2000 1999 2000 1999
----------- ----------- ----------- -----------
Cumulative effect of change in accounting
principle.................................. -- -- -- --
Pro forma adjustment for income taxes........ -- -- -- --
-------- -------- -------- --------
Net income (loss).......................... $ 0.48 $ 0.54 $ 0.58 $ 0.38
======== ======== ======== ========
Diluted--
From continuing operations................... $ 0.48 $ 0.52 $ 0.58 $ 0.38
From discontinued operations................. -- -- (0.01) --
Cumulative effect of change in accounting
principle.................................. -- -- -- --
Pro forma adjustment for income taxes........ -- -- -- --
-------- -------- -------- --------
Net income (loss).......................... $ 0.48 $ 0.52 $ 0.57 $ 0.38
======== ======== ======== ========
Weighted average shares outstanding:
Basic.......................................... 41,688 46,289 45,838 51,524
======== ======== ======== ========
Diluted........................................ 42,148 47,752 47,218 52,226
======== ======== ======== ========
[Enlarge/Download Table]
OCTOBER 28, JANUARY 29, JANUARY 30,
2000 2000 1999
------------------- ----------- -----------
BALANCE SHEET DATA:
Working capital................................... $ 59,139 $ 59,343 $ 57,367
Total assets...................................... 326,882 283,503 258,354
Long-term debt.................................... 202,023 166,196 133,121
Stockholders' equity.............................. 40,279 44,147 55,189
CERTAIN PROJECTED FINANCIAL DATA FOR THE COMPANY
To the knowledge of Parent and Purchaser, the Company does not as a matter
of course make public forecasts as to its future financial performance. However,
in connection with the preliminary discussions concerning the feasibility of the
Offer and the Merger, the Company prepared and furnished to Parent certain
estimates regarding its 2000 fiscal year financial performance and financial
projections regarding its 2001 fiscal year.
The estimates and projections presented in the table below (the
"Projections") are derived or excerpted from information provided by the Company
and are based on numerous assumptions concerning future events. The Projections
have not been adjusted to reflect the effects of the Offer or the Merger or the
incurrence of indebtedness in connection therewith.
15
SUNGLASS HUT INTERNATIONAL, INC.
CERTAIN PROJECTIONS OF FUTURE OPERATING RESULTS
(DOLLARS IN MILLIONS)
[Download Table]
FISCAL YEAR 2000 FISCAL YEAR 2001
(ESTIMATED) (PROJECTED)
---------------- ----------------
Revenues........................................ $679.5 $740.1
Gross Profit.................................... 279.7 310.4
EBITDA.......................................... 85.1 102.1(1)
EBIT............................................ 50.6 64.8
Net Income...................................... 22.4(2) 30.6
------------------------
(1) The Company specifically noted that the fiscal 2001 EBITDA figures were
presented on a basis that excluded any operating contingency reserves that
would normally be included in a budget submission and that normal operating
contingency reserves would approximate $2 million in EBITDA. The Company
also noted that the 2001 EBITDA projection could be subject to slight
refinements reflecting the Company's recent changes in senior management.
(2) Parent has been advised that the Company intends to finalize an asset review
of its internet/watch specialty operations (including store closing
decisions) as of the end of the Company's 2000 fiscal year, and to record
appropriate charges resulting from such review. Parent has also been advised
that the Company intends to recognize approximately $1.1 million of
severance charges in the fourth quarter of fiscal 2000. The fiscal 2000
estimate was prepared on an operating basis and does not reflect these
expected non-operating charges; however, the 2001 projection reflects the
benefit of lower depreciation and amortization resulting from such expected
fourth quarter write-offs.
THE PROJECTIONS WERE NOT PREPARED WITH A VIEW TO COMPLIANCE WITH THE
GUIDELINES ESTABLISHED BY THE SEC OR THE AMERICAN INSTITUTE OF CERTIFIED PUBLIC
ACCOUNTANTS REGARDING PROJECTIONS AND FORECASTS AND ARE INCLUDED HEREIN ONLY
BECAUSE SUCH INFORMATION WAS PROVIDED TO PARENT. THE PROJECTIONS REFLECT
NUMEROUS ASSUMPTIONS, ALL MADE BY THE COMPANY AND/OR ITS FINANCIAL ADVISORS,
WITH RESPECT TO INDUSTRY PERFORMANCE, GENERAL BUSINESS, ECONOMIC, MARKET AND
FINANCIAL CONDITIONS AND OTHER MATTERS, ALL OF WHICH ARE DIFFICULT TO PREDICT,
MANY OF WHICH ARE BEYOND THE COMPANY'S CONTROL AND NONE OF WHICH WERE SUBJECT TO
APPROVAL BY PARENT OR PURCHASER. ACCORDINGLY, THERE CAN BE NO ASSURANCE THAT THE
ASSUMPTIONS MADE IN PREPARING THE PROJECTIONS WILL PROVE ACCURATE, 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, PURCHASER, THE COMPANY, OR ANY OF THEIR
RESPECTIVE FINANCIAL ADVISORS, ASSUME ANY RESPONSIBILITY FOR THE VALIDITY,
REASONABLENESS, ACCURACY OR COMPLETENESS OF THE PROJECTIONS. NEITHER PARENT,
PURCHASER, THE COMPANY, NOR ANY OF THEIR FINANCIAL ADVISORS HAS MADE, OR MAKES,
ANY REPRESENTATION TO ANY PERSON REGARDING 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 UNDERLYING THE PROJECTIONS ARE SHOWN TO BE IN ERROR.
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
450 Fifth Street, N.W., Room 1024, Washington, D.C. 20549, and at the SEC's
regional offices located at Seven World Trade Center, Suite 1300, New York, New
York 10048 and Citicorp Center, 500 West Madison Street, Suite 1400, Chicago,
Illinois 60661. Information regarding the public reference facilities may be
obtained from the SEC by telephoning 1-800-SEC-0330. The Company's filings are
also available to the public on the SEC's Internet site (http://www.sec.gov).
Copies of such materials may also be obtained by mail from the Public Reference
Section of the SEC at 450 Fifth Street, N.W., Washington, D.C. 20549 at
prescribed rates.
16
Although Purchaser has no knowledge that any such information is untrue,
Purchaser takes no responsibility for the accuracy or completeness of
information contained in this Offer to Purchase with respect to the Company or
any of its subsidiaries or affiliates or for any failure by the Company to
disclose events which may occur or may have occurred or may affect the
significance or accuracy of any such information.
8. CERTAIN INFORMATION CONCERNING PARENT, LUXOTTICA S.P.A. AND PURCHASER.
Parent and Luxottica S.p.A. are Italian corporations with their principal
offices located at Piazzale Lotto, 2, Milan, Italy. Their telephone number at
that address is (39) 02-499-841. Luxottica S.p.A. is a direct, wholly-owned
subsidiary of Parent and is an operating company through which Parent conducts
operations in Italy. Parent is the world leader in the design, manufacture,
marketing and distribution of high quality prescription frames and sunglasses in
the mid- and premium- priced categories. Parent's products are primarily
manufactured in Italy and include approximately 2,650 models available in a wide
array of colors and sizes, which are marketed under a variety of well-known
brand names. Parent's house brand names include RAY-BAN, REVO, ARNETTE, KILLER
LOOP, PERSOL, VOGUE, LUXOTTICA and SFEROFLEX. Its designer lines include GIORGIO
ARMANI, EMPORIO ARMANI, BULGARI, BROOKS BROTHERS, CHANEL, BYBLOS, SERGIO
TACCHINI, MOSCHINO, SALVATORE FERRAGAMO, EMANUEL UNGARO, WEB, ANNE KLEIN and
GENNY. Parent operates six integrated design and production facilities in Italy,
five of which are located in northeastern Italy. In addition, Parent operates a
facility for the production of sunglass crystal lenses in Hong Kong and, through
its 50%-owned joint venture with a Japanese partner, a facility in China for the
production of prescription frames. As of December 31, 2000, Parent and its
subsidiaries employed approximately 24,500 employees worldwide, of whom
approximately 17,500 were employed in the United States and approximately 4,950
were employed in Italy.
Parent also operates the largest optical retailer in North America through
its LensCrafters subsidiary, which Parent acquired in 1995. LensCrafters
operates over 860 stores, encompassing 3.8 million square feet of space, in the
United States, Canada and Puerto Rico. LensCrafters offers a wide selection of
prescription frames and sunglasses, most of which are manufactured by Parent, as
well as a variety of prescription frames and sunglasses manufactured by third
parties. In addition, each store has a licensed optometrist on site and a lens
grinding laboratory, which provides efficient service to customers in one hour.
Purchaser is a Florida corporation with its principal offices located at 44
Harbor Park Drive, Port Washington, New York 11050. Purchaser's telephone number
is (516) 484-3800. Purchaser is a direct wholly-owned subsidiary of Luxottica
S.p.A. 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, Luxottica S.p.A. and Purchaser and
certain other information are set forth in Schedule I to this Offer to Purchase.
Except as described in the Introduction of this Offer to Purchase, none of
Parent, Luxottica S.p.A., Purchaser nor, to the best knowledge of Parent,
Luxottica S.p.A. and Purchaser, any of the persons listed in Schedule I to this
Offer to Purchase or any associate or majority-owned subsidiary of Parent,
Luxottica S.p.A. or Purchaser or any of the persons so listed:
- beneficially owns or has any right to acquire, directly or indirectly, any
Shares, or
- has effected any transaction in the Shares during the past 60 days.
Except as provided in the Merger Agreement or as otherwise described in this
Offer to Purchase, none of Parent, Luxottica S.p.A., Purchaser nor, to the best
knowledge of Parent, Luxottica S.p.A. and 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
17
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, Luxottica
S.p.A., Purchaser nor, to the best knowledge of Parent, Luxottica S.p.A. and
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, offer or other acquisition of securities, an
election of directors or a sale or other transfer of a material amount of
assets. None of the persons listed in Schedule I has, during the past five
years, been convicted in a criminal proceeding (excluding traffic violations or
similar misdemeanors). None of the persons listed in Schedule I has, during the
past five years, been a party to any judicial or administrative proceeding
(except for matters that were dismissed without sanction or settlement) that
resulted in a judgment, decree or final order enjoining the person from future
violations of, or prohibiting activities subject to, federal or state securities
laws, or a finding of any violation of federal or state securities laws.
9. SOURCE AND AMOUNT OF FUNDS.
The Offer is not subject to any financing condition. Parent and Purchaser
estimate that the total amount of funds required to purchase all of the
outstanding Shares pursuant to the Offer will be approximately $462 million
(which amount excludes related fees and expenses). In addition, Parent and
Purchaser estimate that, assuming that all of the Company's outstanding options
and warrants are exercised, the additional amount of funds necessary to purchase
the Shares issuable upon such exercise of options and warrants, net of the
applicable exercise prices, would be approximately $19.7 million. See
Section 18--"Fees and Expenses." Purchaser expects to obtain all funds necessary
for the Offer and the Merger through capital contributions or advances to be
made to it by Parent. Although the Offer and the Merger are not subject to any
financing condition, Parent intends to obtain a portion of the funds for such
capital contributions or advances from a new credit facility, as described
below, and expects to obtain the balance of such funds from cash on hand and
from existing lines of credit. These existing lines of credit had an aggregate
borrowing availability of approximately Lit. 3,100 billion (or approximately
$1.47 billion) as of December 31, 2000, of which approximately Lit. 1,340
billion (or approximately $636 million) was unused and available as of such
date.
Parent expects to enter into a new E500 million (or approximately
$460 million) credit facility with Banca Intesa S.p.A., Milan, Italy, comprised
of a E300 million (or approximately $276 million) revolving facility (the
"Revolving Facility") and a E200 million (or approximately $184 million) term
loan (the "Term Loan"). Parent's obligations under the credit facility will not
be guaranteed by any of its direct or indirect subsidiaries and will be
unsecured. The proceeds from the credit facility are expected to be used to
purchase the Shares in the Offer and to fund the Merger Price to be paid in the
Merger. The credit facility is expected to have a maturity date of eighteen (18)
months from the completion of the Offer.
The interest rate under the Term Loan is expected to be three-month EURIBOR
plus 32.5 basis points. The interest rate under the Revolving Facility is
expected to be one-, two- or three-month EURIBOR, at Parent's option, plus 32.5
basis points.
Parent is currently negotiating the terms of the definitive documentation
governing the new credit facility, and expects that such documentation will
contain conditions precedent to advancing funds, representations and warranties,
covenants, events of default and other provisions customary for such financings.
Parent expects the financing pursuant to the new credit facility to close
immediately prior to the purchase of Shares pursuant to the Offer.
18
Parent anticipates that any indebtedness incurred through borrowings under
the new credit facility will be repaid from a variety of sources, which may
include, but may not be limited to, funds generated internally by Parent and its
affiliates (including, following the Merger, funds generated by the Company). No
decision has been made concerning the method to be employed to repay
such indebtedness. Such decision will be made based on review by Parent from
time to time of the advisability of particular actions, as well as on prevailing
interest rates and financial and other economic conditions and such other
factors as Parent may deem appropriate.
While the foregoing represents the present intention of Parent and Purchaser
with respect to the source of funds to complete the Offer and the Merger, the
actual financing arrangements reached may change depending on such factors as
Parent may deem appropriate. In addition, in the event the new credit facility
is not consummated, Parent will still have sufficient borrowing capacity under
its existing lines of credit to consummate both the Offer and the Merger and to
pay all fees and expenses in connection therewith.
10. BACKGROUND OF THE OFFER; PAST CONTACTS OR NEGOTIATIONS WITH THE COMPANY.
PAST TRANSACTIONS BETWEEN PARENT AND THE COMPANY
Parent and the Company have maintained an ongoing business relationship in
which certain subsidiaries of Parent sell sunglasses to the Company and/or its
subsidiaries for retail sale in the Company's stores world-wide. Such sales have
accounted for gross consolidated revenues to Parent of approximately
$15.6 million in 1999 and approximately $38.6 million in 2000.
In addition, simultaneously with the execution and delivery of the Merger
Agreement, Parent, the Company and Mr. Hauslein entered into the Consulting
Agreement (as defined below). See Section 11--"The Merger Agreement; Other
Arrangements--Consulting Agreement."
BACKGROUND OF THE OFFER
The decision of Parent, Purchaser and the Company to enter into the Merger
Agreement providing for the Offer and Merger in February 2001 followed a series
of meetings and discussions between representatives of Parent and its financial
advisor, Rothschild Inc. ("Rothschild"), on the one hand, and representatives of
the Company and its financial advisor, Morgan Stanley, on the other hand. These
meetings and discussions occurred in two separate periods; the first from late
April through June 2000, and the second from early January through February
2001.
On April 27, 2000, at the request of Parent, representatives from Rothschild
met with James N. Hauslein, the Chairman of the Company Board, to indicate that
Parent would be interested in discussing with the Company a potential business
combination. Mr. Hauslein indicated that he and the Company Board would be
willing to discuss such a transaction. Thereafter, beginning in mid-May 2000,
representatives of Parent and the Company discussed a possible acquisition of
the Company by Parent, including the nature and amount of the consideration to
be received by the Company's shareholders, the structure of a possible
transaction and other material terms. At that time, Parent submitted to the
Company a written proposal for a stock-for-stock merger pursuant to which the
Company's shareholders would receive ordinary shares of Parent based on the
companies' respective trading prices. The proposal included certain price
enhancement mechanisms for the ordinary shares of Parent to be issued as merger
consideration. Representatives of the Company informed Parent that such proposal
was not satisfactory. In early June 2000, Parent's financial advisor submitted a
revised proposal to the Company pursuant to which each Share would be acquired
for $8.50 in cash plus a warrant to purchase 1/10th of an ordinary share of
Parent. Following a June 7, 2000 meeting of the Company Board, Parent was
informed that its revised proposal had been rejected.
Having failed to reach agreement on the material terms of a possible
transaction, the parties' discussions terminated in late June 2000.
19
No further substantive discussions relating to the proposed transaction
occurred until early January 2001, when, at the request of Parent, the parties
and their respective financial advisors resumed discussions regarding a possible
transaction. The Company offered to Parent the opportunity to conduct limited
financial due diligence with respect to the Company. In mid-January, Parent
proposed that the Company consider an acquisition by Parent at a price of $9.10
per Share in cash. Morgan Stanley subsequently advised Parent that, following a
meeting of the Company Board, the Company had determined that the proposed offer
was inadequate.
The parties' financial advisors continued to discuss the possibility of the
two companies entering into a confidentiality, standstill and exclusivity
agreement and exchanging financial data, as well as continuing negotiations. In
early February 2001, Parent and the Company executed a confidentiality
agreement, after which Morgan Stanley delivered to Rothschild certain due
diligence information relating to the Company, which the parties subsequently
discussed.
In mid-February 2001, Parent proposed to increase its offer to $10.50 per
Share in cash, and the parties continued their discussions.
Parent was advised by the Company that during the weekend of February 17 and
18, 2001, members of the Company Board discussed Parent's revised proposal. On
February 19, 2001, Parent revised its proposal to $11.25 per Share and also
indicated a willingness to further increase the offer price if its other
proposed terms were agreed to and if Mr. Hauslein entered into a non-competition
and consulting agreement (the "Consulting Agreement") to be effective upon the
closing of the transaction. On February 20, 2001, Parent provided a draft
acquisition agreement to the Company and, on February 21, 2001, indicated to the
Company that it was prepared to increase its offer to $11.50 per Share if the
Company Board would approve the transaction promptly. The parties and their
advisors thereafter proceeded to negotiate the terms of the Merger Agreement.
At a meeting of the Company Board on the evening of February 21,
Mr. Hauslein updated the Company Board on the discussions with Parent, including
Parent's proposal to increase the offer consideration made earlier that day.
After discussions among the directors, members of the Company's management
present at the meeting and the Company's legal and financial advisors, the
Company Board, by a unanimous vote, approved the Offer, the Merger Agreement and
the Merger, and recommended that the Company's shareholders accept the Offer.
Thereafter, the parties finalized the Merger Agreement and related documents,
including the Consulting Agreement with Mr. Hauslein.
At a meeting of Parent's Board of Directors in Milan on February 22,
Parent's Board reviewed the terms of the transaction with Parent's management
and Parent's legal advisors, and approved the transaction agreements.
Immediately thereafter, representatives of Parent, the Company and Purchaser
executed the agreements, and the parties issued a joint press release announcing
the transaction at approximately 8:45 a.m., New York City time on February 22.
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 (the "Schedule TO") filed by Parent and Purchaser with the SEC in
connection with the Offer pursuant to Rule 14d-3 of the General Rules and
Regulations under the Exchange Act. 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 shall 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 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
20
under the HSR Act, and certain other conditions that are described in
Section 15 of this Offer to Purchase.
DIRECTORS. The Merger Agreement provides that promptly upon the purchase of
and payment for a number of Shares that satisfies the Minimum Condition pursuant
to the Offer, Parent shall be entitled to designate such number of directors,
rounded up to the next whole number, on the Company Board that equals the
product of:
- the total number of directors on the Company Board (giving effect to the
directors designated by Parent pursuant to the Merger Agreement), and
- the percentage that the number of Shares beneficially owned by Parent or
its affiliates, including Shares accepted for payment, bears to the total
number of Shares then outstanding.
The Company has agreed promptly to take all actions necessary to cause
Parent's designees ("Purchaser Insiders") to be so elected, including, if
necessary, by increasing the number of directors or seeking the resignations of
one or more existing directors; PROVIDED, HOWEVER, that prior to the effective
time of the Merger (the "Effective Time"), the Company Board shall always have
at least two members who are neither officers, directors, shareholders or
designees of Purchaser or any of its affiliates and the Company shall continue
to comply with The Nasdaq Stock Market requirements with respect to independent
directors.
From and after the election or appointment of Parent's designees and prior
to the Effective Time, any amendment or termination of the Merger Agreement by
the Company, any extension by the Company of the time for the performance, or
waiver, of any of the obligations or other acts of Parent or Purchaser or waiver
of any of the Company's rights thereunder, will require the concurrence of a
majority of the directors of the Company then in office who are not Purchaser
Insiders.
THE MERGER. The Merger Agreement provides that upon the terms and subject
to the satisfaction or waiver of the conditions hereof, and in accordance with
the applicable provisions of the Merger Agreement and the FBCA, at the Effective
Time Purchaser shall be merged with and into the Company. Following the Merger,
the separate corporate existence of Purchaser shall cease and the Company shall
continue as the surviving corporation (the "Surviving Corporation").
If required by the Company's articles of incorporation and/or applicable
laws in order to consummate the Merger, the Company, acting through the Company
Board, shall, in accordance with applicable law and upon Parent's request, duly
call, give notice of, convene and hold a special meeting of its shareholders
(the "Special Meeting") as soon as practicable following the acceptance for
payment of and payment for Shares by Purchaser pursuant to the Offer for the
purpose of considering and taking action upon the Merger Agreement. However, in
the event that Parent, Purchaser or any of Parent's other direct or indirect
subsidiaries shall acquire, in the aggregate, at least 80% of the outstanding
Shares, pursuant to the Offer or otherwise, Parent, Purchaser and the Company
will take all necessary and appropriate action to cause the Merger to become
effective as soon as practicable after the acceptance for payment of and payment
for Shares by Purchaser pursuant to the Offer without a meeting of shareholders
of the Company.
At the Effective Time, each Share issued and outstanding immediately prior
to the Effective Time (other than any Shares held by Parent, Purchaser, any
wholly-owned subsidiary of Parent or Purchaser, in the treasury of the Company
or by any wholly-owned subsidiary of the Company, which Shares shall be
cancelled and retired and shall cease to exist with no payment being made with
respect thereto) will be converted into the right to receive in cash the Share
Offer Price (the "Merger Price"). At the Effective Time, each share of common
stock of Purchaser issued and outstanding immediately prior to the Effective
Time shall, by virtue of the Merger, be converted into and become one validly
issued, fully paid and nonassessable share of common stock of the Surviving
Corporation and shall constitute the only outstanding shares of capital stock of
the Surviving Corporation.
21
COMPANY OPTION PLANS. The Merger Agreement provides that, at the Effective
Time, all outstanding and unexpired options (regardless of whether or not such
options have vested) (the "Options"), including all options granted pursuant to
the Company's 1993 Amended and Restated Stock Option Plan and 1996 Executive
Incentive Compensation Plan (collectively, the "Option Plans"), shall be
cancelled and each holder of a cancelled Option shall be entitled to receive, in
consideration for the cancellation of such Option, an amount in cash equal to
the product of (x) the number of Shares previously subject to such Option and
(y) the excess, if any, of the Merger Price over the exercise price per Share
previously subject to such Option (such payment to be net of taxes and other
amounts required by law to be withheld with respect thereto), payable to such
holder, without interest thereon, upon surrender of the certificate or other
document evidencing such Option to the Surviving Corporation. Delivery of any
cash payment to a holder of Options shall be conditioned upon receipt by Parent
or the Surviving Corporation of a waiver of all of that holder's right, title
and interest in and to his or her Options. Effective as of the Effective Time,
the Company shall take all action as is necessary prior to the Effective Time to
terminate all Option Plans so that on and after the Effective Time no current or
former employee, director, consultant or other person shall have any option to
purchase Shares or any other equity interests in the Company under any Option
Plan.
WARRANTS. The Merger Agreement provides that, at the Effective Time, all
outstanding and unexpired warrants to purchase Shares (the "Warrants") shall be
cancelled and each holder of a cancelled Warrant shall be entitled to receive,
in consideration for the cancellation of such Warrant, an amount in cash equal
to the product of (x) the number of Shares previously subject to such Warrant
and (y) the excess, if any, of the Merger Price over the exercise price per
Share previously subject to such Warrant (such payment to be net of taxes and
other amounts required by law to be withheld with respect thereto), payable to
such holder, without interest thereon, upon surrender of the certificate or
other document evidencing such Warrant to the Surviving Corporation. Delivery of
any cash payment to a holder of Warrants shall be conditioned upon receipt by
Parent or the Surviving Corporation of a waiver of all of that holder's right,
title and interest in and to his or her Warrants.
REPRESENTATIONS AND WARRANTIES. Pursuant to the Merger Agreement, the
Company has made customary representations and warranties to Parent and
Purchaser, including but not limited to representations relating to organization
and qualification; subsidiaries; corporate existence and power; capitalization;
authority; government authorizations; compliance with agreements; SEC reports
and financial statements; SEC filing information; litigation; compliance with
applicable laws; employee benefit plans and arrangements; intellectual property;
environmental matters; taxes; absence of certain material adverse changes;
affiliate transactions; insurance; real property; labor matters; material
contracts; 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
on the Company." For purposes of the Merger Agreement and this Offer to
Purchase, the term "Material Adverse Effect on the Company" generally means any
change or effect that, either individually or in the aggregate with all other
changes or effects, is or could reasonably be expected to be materially adverse
to the business, results of operations or financial condition of the Company and
its subsidiaries taken as a whole. The term "Material Adverse Effect on the
Company" does not include any adverse effect resulting from a change in general
economic conditions or any change in vendor relationships resulting primarily
from the announcement of the Offer and the Merger.
Pursuant to the Merger Agreement, Parent and Purchaser have made customary
representations and warranties to the Company, including representations
relating to their corporate existence and power; good standing; organization and
qualification; corporate authority; no conflict; required filings and consents;
the accuracy of certain disclosures to be made in connection with preparation of
the documents related to the Offer; brokers; and financial capability.
COVENANTS. The Merger Agreement contains various covenants of the parties
thereto. A description of certain of these covenants follows.
22
The Merger Agreement provides that, except as contemplated by the Merger
Agreement or with the prior written consent of Parent, during the period from
the date of the Merger Agreement to the earlier of (i) such time as Purchaser
Insiders shall constitute a majority of the Company's Board, (ii) such time as
the Merger Agreement is terminated in accordance with its terms, and (iii) the
Effective Time, the Company will, and will cause each of its subsidiaries to,
(i) conduct its operations only in the ordinary course of business consistent
with past practice, (ii) use its reasonable efforts to preserve intact the
business or organization of the Company and each of its subsidiaries and to keep
available the services of its and their present officers, consultants and key
employees, (iii) use its reasonable best efforts to preserve the goodwill of
those having business relationships with it, as well as with officials and
employees of government agencies and other entities which regulate the Company,
its subsidiaries and their respective businesses, and (iv) not take any action
which could reasonably be expected to materially and adversely affect the
ability of the parties to consummate the transactions contemplated by the Merger
Agreement. Except as otherwise contemplated by the Merger Agreement, the Company
will not, and will not permit any of its subsidiaries to, prior to the Effective
Time, without the prior written consent of Parent, which consent will not be
unreasonably withheld or delayed, at any time following sixty (60) days after
the date of this Agreement:
- adopt any amendment to its articles of incorporation or bylaws or
comparable organizational documents,
- sell, pledge or encumber any stock owned by it in any of its subsidiaries,
- except for issuances of capital stock of the Company's subsidiaries to the
Company or a wholly-owned subsidiary of the Company, (i) issue, reissue,
sell, or convey, or authorize the issuance, reissuance, sale or conveyance
of (A) shares of capital stock (or other ownership interests) of any class
(including shares held in treasury), or securities convertible or
exchangeable into capital stock (or other ownership interests) of any
class, or any rights, warrants or options to acquire any such convertible
or exchangeable securities or capital stock (or other ownership
interests), or any indebtedness with voting rights, other than the
issuance of Shares, in accordance with the terms of the instruments
governing such issuance on the date thereof, pursuant to the exercise of
Options or Warrants outstanding on the date thereof and the conversion of
the Company's outstanding 5 1/4% Convertible Subordinated Notes due 2003,
or (B) any other securities in respect of, in lieu of, or in substitution
for, Shares outstanding on the date thereof; or (ii) make any other
changes in the capital structure of the Company, or in the case of clauses
(i) and (ii) propose or agree to do any of the foregoing,
- declare, set aside or pay any dividend or other actual, constructive or
deemed distribution (whether in cash, securities or property or any
combination thereof) in respect of any class or series of its capital
stock or otherwise make any payments to shareholders in their capacity as
shareholders, other than any distribution by a subsidiary of the Company
to the Company or a wholly-owned subsidiary of the Company,
- split, combine, subdivide, reclassify or redeem, purchase or otherwise
acquire, or propose to redeem or purchase or otherwise acquire, directly
or indirectly, any shares of its capital stock, or any of its other
securities,
- increase the compensation or fringe benefits payable or to become payable
to its present or former directors, officers, consultants or employees
(whether from the Company or any of its subsidiaries), or pay or award any
benefit not required by any existing plan or arrangement (including,
without limitation, the granting of stock options, stock appreciation
rights, shares of restricted stock or performance units pursuant to the
Option Plans or otherwise) or grant any severance or termination pay to,
or enter into any employment, severance or other compensation agreement
with, any director, officer, consultant or employee of the Company or any
of its subsidiaries or establish, adopt, enter into, amend or waive in any
material respect any
23
performance or vesting criteria or accelerate vesting or exercisability
under any collective bargaining, bonus profit sharing, thrift,
compensation, stock option, restricted stock, pension, retirement,
savings, welfare, deferred compensation, employment, termination,
severance or other employee benefit plan, agreement, trust, fund, policy
or arrangement for the benefit or welfare of any present or former
director, officer, consultant or employee (any of the foregoing being an
"Employee Benefit Arrangement"), except in each case (i) to the extent
required by applicable law or regulation, (ii) to the extent required
under existing Employee Benefit Arrangements and (iii) for normal
increases in salary, wages and benefits of non-executive employees in the
ordinary course of business consistent with past practice that do not
result in a material increase in benefits or compensation expense to the
Company or any of its subsidiaries,
- acquire, mortgage, encumber, license, sell, lease or dispose of any assets
(other than inventory) or securities which are material to the Company and
its subsidiaries, taken as a whole, or enter into any commitment to do any
of the foregoing or enter into any material commitment or transaction
outside the ordinary course of business,
- (i) incur, assume, guarantee or pre-pay any indebtedness, except that the
Company and its subsidiaries may incur, assume or pre-pay indebtedness in
the ordinary course of business consistent with past practice under
existing lines of credit, (ii) assume, guarantee, endorse or otherwise
becomes liable or responsible (whether directly, contingently or
otherwise) for significant obligations of any other person except in the
ordinary course of business consistent with past practice, (iii) pay,
discharge or satisfy any significant claims, liabilities or obligations
(absolute, accrued, contingent or otherwise), other than the payment,
discharge or satisfaction of liabilities in the ordinary course of
business and consistent with past practice, (iv) make any loans, advances
or capital contributions to, or investments in, any other person, except
in the ordinary course of business consistent with past practice and
except for loans, advances, capital contributions or investments between
any wholly-owned subsidiary of the Company and the Company or another
wholly-owned subsidiary of the Company, (v) authorize or make any
significant capital expenditures other than in the ordinary course of
business consistent with past practice or (vi) vary the Company's business
practices (including, without limitation, its inventory practices) in any
material respect from the Company's past practices,
- settle or compromise any suit or claim or threatened suit or claim where
the uninsured amount to be paid is greater than $100,000 or where the
settlement or compromise would include an admission by the Company or any
subsidiary of its non-compliance with any securities or other applicable
law,
- authorize, recommend, propose or announce an intention to adopt a plan of
complete or partial liquidation or dissolution of the Company or any of
its subsidiaries,
- make any tax election not required by law or settle or compromise any
material tax liability,
- other than in the ordinary course of business consistent with past
practice, (i) waive any rights of substantial value, (ii) cancel or
forgive any indebtedness owed to the Company or any of its subsidiaries or
(iii) make any payment, direct or indirect, of any material liability of
the Company or any of its subsidiaries before the same comes due in
accordance with its terms,
- voluntarily permit any material insurance policy naming the Company or any
of its subsidiaries as a beneficiary or a loss payee to be canceled or
terminated, except in the ordinary course of business consistent with past
practice,
- enter into or amend any material contract or agreement other than in the
ordinary course of business consistent with past practice; PROVIDED,
HOWEVER, that the Company may not under any circumstance waive or release
any of its rights under any confidentiality or standstill agreement to
which it is a party,
24
- except as may be required as a result of a change in law or under GAAP,
make any change in its methods, principles and practices of accounting,
including tax accounting policies and procedures,
- acquire (by merger, consolidation or acquisition of stock or assets) any
corporation, partnership or other business organization or division
thereof or, except in the ordinary course of business consistent with past
practice, any material assets,
- enter into any joint venture, partnership or similar agreement,
- make any application or filing with any governmental entity outside the
ordinary course of business consistent with past practice, or
- agree in writing or otherwise to take any of the foregoing actions or
voluntarily take any action which could reasonably be expected to cause
any representation or warranty in the Merger Agreement to be or become
untrue or incorrect in any material respect or could reasonably be
expected to cause any condition to the consummation of the transactions
contemplated thereby not to be satisfied.
CONFIDENTIALITY. The Merger Agreement further provides that until the
Effective Time, Parent and Purchaser will, with respect to information furnished
to Parent by or on behalf of the Company, and the Company will, with respect to
the information furnished to the Company by or on behalf of Parent or Purchaser,
have the same confidentiality obligations as set forth in the Confidentiality
Agreement, dated January 31, 2001 (the "Confidentiality Agreement"), between
Parent and the Company, a copy of which is filed as an Exhibit to the Schedule
TO.
FURTHER ASSURANCES; REASONABLE BEST EFFORTS. The Merger Agreement provides
that each of the Company, Parent and Purchaser shall, and shall cause their
respective subsidiaries to, cooperate and use its reasonable best efforts to
take, or cause to be taken, all action, and to do, or cause to be done, in the
case of the Company, consistent with the fiduciary duties of the Company Board,
and to assist and cooperate with the other parties hereto in doing, as promptly
as practicable, all things necessary, proper or advisable under applicable laws
and regulations to consummate and make effective the transactions contemplated
by the Offer and the Merger Agreement.
Each of the parties further agrees under the Merger Agreement:
- that if at any time prior to the Effective Time any event or circumstance
relating to either the Company or Parent or Purchaser or any of their
respective subsidiaries should be discovered by the Company or Parent, as
the case may be, and which should be set forth in an amendment to the
documents relating to this Offer or the Schedule 14D-9, the discovering
party will promptly inform the other party of such event or circumstance.
If at any time after the Effective Time any further action is necessary or
desirable to carry out the purposes of the Merger Agreement, including the
execution of additional instruments, the proper officers and directors of
each party to the Merger Agreement shall take all such necessary or
desirable action, and
- to cooperate with each other in taking, or causing to take, at the
direction of Parent, all actions necessary to delist the Shares from the
Nasdaq National Market, provided that such delisting shall not be
effective until after the Effective Time.
FILINGS; CONSENTS. Pursuant to the Merger Agreement, each of the parties
will use its reasonable best efforts to obtain as promptly as practicable all
consents of any governmental entity or, upon Parent's reasonable request, any
other person required in connection with, and waivers of any breaches or
violations of any contracts, permits, licenses or other agreements that may be
caused by, the consummation of the transactions contemplated by the Offer and
the Merger Agreement, PROVIDED, HOWEVER, that the Company (y) need not use any
effort to obtain the consent of the Company's senior lenders or the holders of
the Company's 5 1/4% Convertible Notes and (z) need not expend funds to
25
obtain consents from persons other than governmental entities unless Parent has
agreed to reimburse the Company therefor.
In addition, the Company and Parent shall (i) promptly make their respective
filings and thereafter make any other required submissions under the HSR Act,
(ii) use reasonable efforts to cooperate with one another in (A) determining
whether any filings are required to be made with, or consents, permits,
authorizations or approvals are required to be obtained from, the United States
government or any agencies, departments or instrumentalities thereof or other
governmental or regulatory bodies or authorities of federal, state, local and
foreign jurisdictions in connection with the execution and delivery of the
Merger Agreement and the consummation of the transactions contemplated hereby
and thereby, (B) timely making all such filings and timely seeking all such
consents, permits, authorizations or approvals, and (C) taking or undertaking
all such further action as may be necessary to resolve such objections, if any,
as the Federal Trade Commission, the Antitrust Division of the Department of
Justice, state antitrust enforcement authorities or competition authorities of
any other nation or other jurisdiction or any other person may assert under
relevant antitrust or competition laws with respect to the transactions
contemplated hereby, (iii) shall provide promptly to the governmental entities
with regulatory jurisdiction over enforcement of any applicable antitrust laws
(each a, "Government Antitrust Entity") information and documents requested by
such Government Antitrust Entity or necessary, or reasonably requested to permit
consummation of the transactions contemplated by the Merger Agreement,
(iv) file any Notification and Report Form and related material required under
the HSR Act as soon as reasonably practicable after the date of the Merger
Agreement, and thereafter use commercially reasonable efforts to certify as soon
as reasonably practicable substantial compliance with any requests for
additional information or documentary material that are required to be made
under the HSR Act, (v) keep each other informed of any material communication,
and provide to the other copies of all correspondence, between either of the
parties and any Government Antitrust Entity relating to the Merger Agreement or
any of the matters described in this paragraph, and (vi) permit each other to
review any material communication to be given by it to, and shall consult with
each other in advance of any telephonic calls, meeting or conference with, any
Government Antitrust Entity and, to the extent permitted, give the other party
the opportunity to attend and participate in such telephonic calls, meetings and
conferences.
EMPLOYEE STOCK AND OTHER EMPLOYEE BENEFITS.
CURRENT OBLIGATIONS. The Merger Agreement provides that for a period of two
years following the Effective Time, Parent will cause the Surviving Corporation
to provide employees of the Company as of the Effective Time ("Employees") with
benefits comparable (except for such changes as may be required by law) in the
aggregate to those provided under the Company's benefit plans, programs and
arrangements and compensation policies and practices in effect at the Effective
Time (excluding any incentive compensation arrangements). Nothing in the Merger
Agreement, however, shall preclude the Surviving Corporation from terminating
any employee for any reason for which the Company could have terminated such
person prior to the Effective Time.
NOTIFICATION OF CERTAIN MATTERS. The Merger Agreement provides that Parent
and the Company shall promptly notify each other of (a) any notice or other
communication from any person alleging that the consent of such person is or may
be required in connection with the transactions contemplated by the Merger
Agreement; (b) any notice or other communication from any governmental or
regulatory agency or authority in connection with the transactions contemplated
by the Merger Agreement or regarding any violation, or alleged violation of law;
(c) any material actions, suits, claims, investigations or proceedings commenced
or, to the best of its knowledge, threatened against, relating to or involving
or otherwise affecting the Company or any of its subsidiaries; (d) the
occurrence or non-occurrence of any fact or event which would be reasonably
likely (i) to cause any representation or warranty contained in the Merger
Agreement to be untrue or inaccurate in any material respect at any time prior
to the Effective Time or (ii) to cause any material covenant, condition or
agreement thereunder
26
not to be complied with or satisfied in all material respects and (e) any
failure of the Company, Parent or Purchaser, as the case may be, to comply with
or satisfy any covenant, condition or agreement to be complied with or satisfied
by it thereunder in any material respect; PROVIDED, HOWEVER, that no such
notification shall affect the representations or warranties of any party or the
conditions to the obligations of any party thereunder.
NO SOLICITATION. The Merger Agreement provides that the Company shall not,
and shall not permit or cause any of its subsidiaries to, nor shall it authorize
or permit any officer, director, employee or agent of, or any investment banker,
attorney, accountant or other advisor or representative of, the Company or any
of its subsidiaries or affiliates (collectively, the "Company Representatives")
to, directly or indirectly, initiate, solicit, encourage (including by way of
furnishing non-public information or assistance), induce or take any other
action to facilitate any inquiries or the making of any proposal or offer with
respect to an Acquisition Proposal (as defined below), or engage in any
negotiations concerning, or provide any confidential information or data to, or
have any discussions with, any person relating to an Acquisition Proposal,
whether made before or after the date of the Merger Agreement, or otherwise
facilitate any effort or attempt to make or implement an Acquisition Proposal;
PROVIDED, HOWEVER, that prior to the acceptance for payment of the Shares
pursuant to the Offer, the Company may, and may authorize and permit the Company
Representatives to, furnish or cause to be furnished confidential information
and may participate in such negotiations and discussions or take any other
action otherwise prohibited by Section 6.07 of the Merger Agreement with any
person (unless such other action is subject to various specific restrictions set
forth in the Merger Agreement, in which case such other action shall only be
permitted in accordance with such restrictions) that, after the date of the
Merger Agreement, makes a bona fide unsolicited proposal to enter into a
business combination with the Company pursuant to an Acquisition Proposal that
the Company Board in good faith reasonably determines is likely to be more
favorable to the Company's shareholders than the transactions contemplated by
the Merger Agreement, but only if and to the extent that (A) the Company Board
determines in good faith (after having consulted with outside legal counsel)
that such action is necessary in order for its directors to comply with their
fiduciary duties under applicable law, (B) prior to taking such action, the
Company (x) provides advance written notice to Parent that it intends to take
such action and (y) receives from such person an executed confidentiality
agreement in reasonably customary form and in any event containing terms at
least as stringent as those contained in the Confidentiality Agreement,
(C) prior to furnishing any nonpublic information to any such person, the
Company furnishes such nonpublic information to Parent (to the extent that such
nonpublic information has not been previously furnished by the Company to
Parent), (D) neither the Company nor any of its subsidiaries nor any of the
Company Representatives shall have violated any of the provisions of the Merger
Agreement relating to solicitation of proposals, and (E) unless the Board
determines in good faith after consulting the Company's outside counsel that
doing so would result in a violation of the Board's fiduciary duties under
applicable law, the Company promptly advises Parent of the identity of such
person and the terms, conditions and status of any such Acquisition Proposal and
provides Parent with copies of any written proposals and any amendments or
revisions thereto and all correspondence related thereto. The Merger Agreement
further provides that the Company immediately cease and cause to be terminated
any existing activities, discussions or negotiations with any parties with
respect to any of the foregoing and, if not previously requested, will promptly
request each person that had previously executed a confidentiality agreement in
connection with its consideration of an Acquisition Proposal return or destroy
all confidential information theretofore furnished to such person by the Company
or on the Company's behalf. Neither the Company nor any of its subsidiaries
shall terminate, amend, modify or waive any provision of any confidentiality or
standstill agreement to which it is a party and shall use its best efforts to
enforce, to the fullest extent permitted under applicable law, the provisions of
any such agreement, including, but not limited to, by obtaining injunctions to
prevent any breaches of such agreements and to enforce specifically the terms
and provisions thereof in any court having jurisdiction. Notwithstanding the
foregoing, nothing
27
contained in the Merger Agreement, prevents the Company from complying with
Rule 14e-2 and Rule 14d-9 promulgated under the Exchange Act with regard to an
Acquisition Proposal.
The term "Acquisition Proposal," as used in the Merger Agreement, means any
offer or proposal (whether or not in writing and whether or not delivered to the
Company's shareholders generally), from any person relating to any (i) direct or
indirect acquisition or purchase of a business that constitutes 15% or more of
the net revenues, net income or assets of the Company and its subsidiaries,
taken as a whole, (ii) direct or indirect acquisition or purchase of 15% or more
of any class of equity securities of the Company or any of its subsidiaries
whose business constitutes 15% or more of the net revenues, net income or assets
of the Company and its subsidiaries, taken as a whole, (iii) offer or exchange
offer that if consummated would result in any person beneficially owning 15%
more of any class of equity securities of the Company or any of its subsidiaries
whose business constitutes 15% or more of the net revenues, net income or assets
of the Company and its subsidiaries, taken as a whole, or (iv) merger,
consolidation, business combination, recapitalization, liquidation, dissolution
or similar transaction involving the Company or any of its subsidiaries whose
business constitutes 15% or more of the net revenues, net income or assets of
the Company and its subsidiaries, taken as a whole, other than the transactions
contemplated by the Merger Agreement.
The Merger Agreement provides that except as expressly permitted by its
terms, the Company Board (or any committee thereof) shall not approve any letter
of intent, agreement in principle, acquisition agreement or similar agreement
relating to any Acquisition Proposal (an "Acquisition Agreement"). The Company
may, however, terminate the Merger Agreement pursuant to
Section 8.01(e)(ii) thereof (relating to a third party Superior Acquisition
Proposal (as defined below)) if (i) the Company Board has received a Superior
Acquisition Proposal, (ii) in light of such Superior Acquisition Proposal, the
Board has determined in good faith (after having consulted with outside legal
counsel) that it would be necessary for the Company Board to terminate the
Merger Agreement in order to comply with its fiduciary obligations under
applicable law, (iii) the Company has notified Parent in writing of the terms of
the Superior Acquisition Proposal and the determinations described in
clause (ii) above, (iv) at least five (5) business days following receipt by
Parent of the notice referred to in clause (iii) above, and taking into account
any revised proposal made by Parent in writing since receipt of the notice
referred to in clause (iii) above, such Superior Acquisition Proposal (as the
same may have been modified or amended, but provided that Parent shall have
received the requisite notice of any such modification or amendment) remains a
Superior Acquisition Proposal and the Company Board has again made the
determinations referred to in clause (ii) above, (v) during the five
(5) business day period referred to in the preceding clause (iv), the Company
and its advisors shall have negotiated in good faith with Parent to make such
adjustments in the terms and conditions of the Merger Agreement as would enable
Parent to proceed with the transactions contemplated by the Merger Agreement,
(vi) the Company shall not be in breach of the provisions of Section 6.07(a) or
6.07(b) thereof (relating to solicitation), (vii) the Company Board concurrently
or previously approves, and the Company concurrently or previously enters into,
a definitive Acquisition Agreement providing for the implementation of such
Superior Acquisition Proposal, and (viii) the Company shall have paid the
Termination Fee and Parent Expenses (as such terms are defined below) in the
manner contemplated by the Merger Agreement.
The term "Superior Acquisition Proposal," as used in the Merger Agreement,
means any bona fide unsolicited written Acquisition Proposal to acquire all or
substantially all of the Shares or assets of the Company which the Company Board
determines in its good faith judgment (after consultation with the Company's
independent financial advisor) to be (x) on terms superior in value from a
financial point of view to the holders of Shares than the transactions
contemplated by the Merger Agreement, taking into account all the terms and
conditions of such proposal and the Merger Agreement (including any offer by
Parent to amend the terms of the transactions contemplated by the Merger
Agreement) and (y) reasonably capable of being completed, taking into account
all financial, regulatory, legal and other aspects of such proposal
28
DIRECTORS' AND OFFICERS' INSURANCE AND INDEMNIFICATION. The Merger
Agreement provides that:
- Parent agrees that all rights to indemnification existing at the time of
the Merger Agreement in favor of any individual who at or prior to the
Effective Time was a director, officer, employee or agent of the Company
or any of its subsidiaries (the "Indemnified Parties") as provided in
their respective charters, by-laws or indemnification agreements, as in
effect on the date thereof, shall survive the Merger and shall continue in
full force and effect for a period of not less than six years from the
Effective Time unless otherwise required by law, provided that in the
event any claim or claims are asserted or made within such six-year
period, all rights to indemnification in respect of any such claim or
claims shall continue until final disposition of any and all such claims.
- The Company agrees that, commencing on the date of the Merger Agreement
and until the Effective Time, it will engage (at no cost to the Company) a
consultant designated by Parent. Such consultant, who may be an officer or
employee of Parent or one of its affiliates, shall also be an advisor to
Purchaser and accordingly be provided certain access to certain
information provided for in the Merger Agreement. Such consultant shall,
in consultation with Parent, provide the Company from time to time with
recommendations pertaining to the operations of the Company and its
subsidiaries. The Company, consistent with the fiduciary duties of the
Company's Board of Directors, shall review such recommendations and, to
the extent the Company deems advisable, adopt such recommendations and
utilize its best efforts to implement those recommendations it deems
advisable.
- Parent agrees that the Company and, from and after the Effective Time, the
Surviving Corporation shall cause to be maintained in effect for not less
than six years (except as provided by in the Merger Agreement) from the
Effective Time the current policies of the directors' and officers'
liability insurance maintained by the Company; PROVIDED that the Surviving
Corporation may substitute therefore policies of at least the same
coverage containing terms and conditions which are not significantly less
advantageous to the beneficiaries of the current policies and with
carriers comparable in terms of creditworthiness to those which have
written the policies maintained by the Company at the date of the Merger
Agreement; and PROVIDED, HOWEVER, that such substitution shall not result
in any gaps or lapses in coverage with respect to matters occurring prior
to the Effective Time; and PROVIDED, FURTHER, that the Surviving
Corporation shall not be required to pay an annual premium in excess of
300% of the last annual premium paid by the Company prior to the date of
the Merger Agreement and if the Surviving Corporation is unable to obtain
the insurance required by the Merger Agreement, it shall obtain as much
comparable insurance as possible for an annual premium equal to such
maximum amount.
FINANCING COVENANT OF PARENT. The Merger Agreement provides that Parent
will use its good faith and reasonable commercial efforts to obtain all
financing reasonably expected to be required to accomplish the Offer, the Merger
and payment for the Shares and the Option and Warrant payments contemplated by
the Merger Agreement and to pay all fees and expenses arising in connection with
the transactions contemplated thereby.
STATE TAKEOVER LAWS. The Merger Agreement provides that if any "fair
price," "moratorium," "control share acquisition" or other form of anti-takeover
statute or regulation becomes applicable to the transactions contemplated by the
Merger Agreement, each of Parent, Purchaser and the Company, and the members of
their respective boards of directors, shall grant such approvals and take such
actions as are reasonably necessary so that the transactions contemplated by the
Merger Agreement may be consummated as promptly as practicable on the terms
contemplated by the Merger Agreement, and otherwise act to eliminate or minimize
the effects of such Takeover Statutes (as defined below). The Company covenants
and agrees under the Merger Agreement that it will not take any action that
would make the Affiliate Transaction Statute (as defined below), the Control
Share Statute (as defined
29
below) or any other Takeover Statute inapplicable to an Acquisition Proposal
(other than the Offer and the Merger).
CONDITIONS TO THE MERGER. The Merger Agreement provides that the
obligations of Parent, Purchaser and the Company to consummate the Merger are
subject to the satisfaction, at or before the Effective Time, of each of the
following conditions:
- the shareholders of the Company shall have duly approved the transactions
contemplated by the Merger Agreement (if required by the FBCA), pursuant
to the requirements of the Company's articles of incorporation and
by-laws, and applicable law,
- Purchaser shall have accepted for payment and paid for Shares pursuant to
the Offer in accordance with the terms of the Merger Agreement; provided,
that this condition shall be deemed to have been satisfied with respect to
Parent and Purchaser if Purchaser fails to accept for payment or pay for
Shares pursuant to the Offer in violation of the terms of the Offer,
- the consummation of the Merger shall not be restrained, enjoined,
prohibited or materially restricted by any order, judgment, decree,
injunction or ruling of a court of competent jurisdiction or any
governmental entity and there shall not have been any statute, rule or
regulation enacted, promulgated or deemed applicable to the Merger by any
governmental entity which prevents or materially restricts the
consummation of the Merger or has the effect of making the Merger illegal;
PROVIDED, HOWEVER, that each of the parties shall have used its
commercially reasonable efforts (subject to the other terms and conditions
of the Merger Agreement) to prevent the entry of any such injunction or
other order and to appeal as promptly as practicable any injunction or
other order that may be entered prior to it having become final and
nonappropriate, and
- any applicable waiting period (or any extension thereof) under the HSR Act
or under any other applicable statutes or regulations relating to the
Merger shall have expired or been terminated.
TERMINATION. The Merger Agreement may be terminated and the Merger and the
Offer may be abandoned at any time prior to the Effective Time:
(1) by the mutual consent of Parent and the Company,
(2) by the Company if (i) Purchaser fails to commence the Offer within the time
period by the Merger Agreement, or (ii) Purchaser fails to purchase validly
tendered Shares in violation of the terms of the Offer or the Merger
Agreement; PROVIDED, HOWEVER, that the Company may not terminate the Merger
Agreement pursuant to this paragraph if it shall have materially breached
the Merger Agreement,
(3) by Parent or the Company if (i) the Offer is terminated or withdrawn
pursuant to its terms without any Shares being purchased thereunder or
(ii) Purchaser shall not have accepted for payment Shares pursuant to the
Offer in accordance with the terms of the Merger Agreement on or before
June 27, 2001 (the "Outside Date"); PROVIDED, HOWEVER, that neither Parent
nor the Company may terminate the Merger Agreement pursuant to this
paragraph if such party shall have materially breached the Merger Agreement;
and provided further, that if the sole reason the Offer shall not have been
consummated by the Outside Date is that the HSR Condition (as defined in
Section 15 of this Offer to Purchase) has not been satisfied, the Outside
Date shall be extended until August 27, 2001,
(4) by Parent or the Company if any court or other governmental entity shall
have issued, enacted, entered, promulgated or enforced any law, order,
judgment, decree, injunction or ruling or taken any other action (that has
not been vacated, withdrawn or overturned) restraining, enjoining or
otherwise prohibiting the Merger and such law, order, judgment, decree,
injunction, ruling or other action shall have become final and
nonappealable,
30
(5) by the Company if, prior to the acceptance for payment of Shares pursuant to
the Offer in accordance with the terms of the Merger Agreement, (i) there
shall have occurred, on the part of Parent or Purchaser, a material breach
of any representation, warranty, covenant or agreement contained in the
Merger Agreement that would reasonably be expected to have a material
adverse effect on Parent which is not curable or, if curable, is not cured
within ten (10) calendar days after written notice of such breach is given
by the Company to the party committing the breach, or (ii) a third party,
including any group, shall have made a Superior Acquisition Proposal and the
requirements of Section 6.07(b) of the Merger Agreement (relating to
solicitation) have been satisfied in all respects, or
(6) by Parent if, prior to the purchase of Shares pursuant to the Offer in
accordance with the terms of the Merger Agreement, (i) there shall have
occurred, on the part of the Company, (x) a material breach of any
representation or warranty in Section 4.01 (organization and qualification),
Section 4.03 (capitalization) or Section 4.04 (authority relative to
agreement) thereof or (y) a breach of any other representation, warranty,
covenant or agreement contained in the Merger Agreement (determined without
giving effect to any materiality or similar qualifications), other than
those breaches that would not, individually or in the aggregate, reasonably
be expected to have a Material Adverse Effect on the Company, which breach
is not curable or, if curable, is not cured on or prior to the earlier of
(A) ten (10) calendar days after written notice of such breach is given by
Parent to the Company and (B) the date on which all conditions to the Offer
not related to such breach have been satisfied, (ii) the Company fails to
perform any of its obligations under, or otherwise breaches, Section 6.07
(relating to solicitation of proposals) of the Merger Agreement, (iii) the
Company Board shall have withdrawn or modified (including by amendment of
the Schedule 14D-9) in a manner adverse to Parent and Purchaser its approval
or recommendation of the Offer, the Merger Agreement or the Merger, shall
have approved or recommended an Acquisition Proposal, or shall have resolved
to effect any of the foregoing, (iv) the Company or any of its subsidiaries
shall have entered into an Acquisition Agreement obligating the Company or
any of its subsidiaries to engage in a transaction with a person other than
Parent, Purchaser or an affiliate of either (an "Acquisition Transaction"),
or shall have consummated an Acquisition Transaction, or (v) the Company
Board fails to publicly reaffirm its approval or recommendation of the
Offer, the Merger Agreement or the Merger, or fails to reaffirm its
determination that the Offer, the Merger Agreement and the Merger are in the
best interests of the Company's shareholders, within ten (10) business days
after Parent requests in writing that such recommendation or determination
be reaffirmed.
FEES AND EXPENSES. The Merger Agreement provides that whether or not the
Merger is consummated, except as otherwise provided therein, all costs and
expenses incurred in connection with the Offer, the Merger Agreement and the
transactions contemplated by the Merger Agreement shall be paid by the party
incurring such expenses. In the event that the Merger Agreement is terminated
pursuant to Section 8.01(e)(ii) (paragraph 5(ii) under "--Termination" above) or
Section 8.01(f) thereof (paragraph 6 under "--Termination" above), then the
Company shall pay Parent in cash a termination fee of $14 million (the
"Termination Fee") and reimburse Parent for the fees and expenses of Parent and
Purchaser related to the Merger Agreement, the transactions contemplated thereby
and any related financing (subject to a maximum of $1.0 million) (the "Parent
Expenses"). The Termination Fee and Parent Expenses shall be payable by wire
transfer of immediately available funds upon such termination.
AMENDMENT; WAIVER. The Merger Agreement provides that, subject to
Section 1.03(c) thereof (requirements for amendment), it may be amended by the
Company, Parent and Purchaser at any time before or after any approval thereof
by the shareholders of the Company but, after any such approval, no amendment
shall be made which decreases the Merger Price or which adversely affects the
rights of the Company's shareholders thereunder without the approval of such
shareholders. The Merger Agreement may not be amended except by an instrument in
writing signed on behalf of all the parties.
31
CONSULTING AGREEMENT
In connection with the transactions contemplated by the Merger Agreement,
Parent and the Company entered into the Consulting Agreement with James N.
Hauslein, effective as of the closing date of the Merger. A copy of the
Consulting Agreement is filed as an exhibit to the Schedule TO and is
incorporated herein by reference. The following summary is qualified in its
entirety by reference to such agreement.
The five-year Consulting Agreement provides for a fee of $250,000 monthly
commencing at the Effective Time. The Consulting Agreement also provides that
Mr. Hauslein may not disclose any Confidential Information (as defined in the
Consulting Agreement) relating to the Company that he acquired before or after
the date of the Consulting Agreement. In addition, Mr. Hauslein has agreed that
for the five (5) year period commencing on the closing date of the Merger, he
will not engage in any business activities that compete with Parent or the
Company.
12. PURPOSE OF THE OFFER; PLANS FOR THE COMPANY.
PURPOSE OF THE OFFER. The purpose of the Offer is for Parent, through
Purchaser, 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, 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 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 shareholder's meeting convened for that
purpose in accordance with the FBCA. If shareholder approval is required, the
Merger Agreement must be approved by a majority of all votes entitled to be cast
at such meeting.
If the Minimum Condition is satisfied, Purchaser will have sufficient voting
power to approve the Merger Agreement without the affirmative vote of any other
shareholder. If Purchaser acquires at least 80% of the then outstanding Shares
pursuant to the Offer, Purchaser will be able to approve 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 Purchaser will be merged into the Company and
that the articles of incorporation and bylaws of Purchaser will be the articles
of incorporation and bylaws of the Surviving Corporation following the Merger.
Under the FBCA, holders of Shares do not have dissenters' rights as a result
of the Offer. In connection with the Merger, assuming that the Shares remain
designated as a national market system security on an interdealer quotation
system by the NASD prior to the Merger, shareholders of the Company will not
have the right to dissent and demand appraisal of their Shares pursuant to the
Merger Agreement and/or under the FBCA.
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, prior to the Effective Time the Company Board will always
have at least two members who are neither officers, directors, shareholders nor
designees of Purchaser of any of its affiliates, and the Company will continue
to comply with the Nasdaq National Market requirements with respect to
independent directors. Purchaser currently intends, as soon as practicable after
consummation of the Offer, to consummate the Merger.
Except as otherwise provided herein, it is expected that, initially
following the consummation of the Offer, the business and operations of the
Company will, except as set forth in this Offer to
32
Purchase, 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.
As a result of the completion of the Offer, the interest of Parent in the
Company's net book value and net earnings will be in proportion to the number of
Shares acquired in the Offer. If the Merger is consummated, Parent's interest in
such items and in the Company's equity generally will equal 100% and Parent and
its subsidiaries will be entitled to all benefits resulting from such interest,
including all income generated by the Company's operations and any future
increase in the Company's value. Similarly, Parent will also bear the risk of
losses generated by the Company's operations and any future decrease in the
value of the Company after the Merger. Subsequent to the Merger, current
shareholders of the Company will cease to have any equity interest in the
Company, will not have the opportunity to participate in the earnings and growth
of the Company after the Merger and will not have any right to vote on corporate
matters. Similarly, shareholders will not face the risk of losses generated by
the Company's operations or decline in the value of the Company after the
Merger.
The Shares are currently traded on the Nasdaq National Market. Following the
consummation of the Merger, the Shares will no longer be listed on the Nasdaq
National Market and the registration of the Shares under the Exchange Act will
be terminated. Accordingly, after the Merger there will be no publicly-traded
equity securities of the Company outstanding and the Company may no longer be
required to file periodic reports with the Commission. See Section 13--"Certain
Effects of the Offer." It is expected that, if Shares are not accepted for
payment by Purchaser pursuant to the Offer and the Merger is not consummated,
the Company's current management, under the general direction of the current
Company Board, will continue to manage the Company as an ongoing business.
Except as described above or elsewhere in this Offer to Purchase, 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. 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 Share Offer Price.
33
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
the Nasdaq National Market, which among other things require that an issuer have
either:
- 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
- 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.
If neither of the foregoing standards is met, the Shares would no longer be
listed on the Nasdaq National Market. 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 Nasdaq National Market were to delist the Shares, 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
promulgated 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 the Nasdaq National Market. Parent and 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.
34
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, without the
prior written consent of Parent, declare, set aside or pay any dividends or
other actual, constructive or deemed distribution (whether in cash, securities
or property) in respect of a class or series of its capital stock or otherwise
make any payments to shareholders in their capacity as shareholders, other than
any distribution by a subsidiary of the Company to the Company or a wholly-owned
subsidiary of the Company.
15. CERTAIN CONDITIONS OF THE OFFER.
Notwithstanding any other provisions of the Offer, the Merger Agreement
provides that Purchaser shall not be required to accept for payment or pay for
any tendered Shares and, subject to the terms of the Merger Agreement, may delay
the acceptance for payment of any tendered Shares, (A) unless (i) there shall
have been validly tendered and not withdrawn prior to the expiration date for
the Offer that number of Shares which represent at least a majority of the
outstanding Shares on a fully diluted basis, after giving effect to the exercise
or conversion of all options, warrants, rights and securities outstanding
exercisable or convertible into voting securities, on the date of purchase (the
"Minimum Condition"), (ii) any applicable waiting periods under the HSR Act
shall have expired or been terminated (the "HSR Condition"), (iii) all consents
of, or notices to, governmental entities necessary for the consummation of the
Offer and the other transactions contemplated by the Merger Agreement shall have
been obtained or made, other than those which, if not obtained or made, would
not in the aggregate reasonably be expected to have a Material Adverse Effect on
the Company or (B) if at any time on or after February 22, 2001 and prior to the
time of acceptance for payment or payment for any tendered Shares, any of the
following events (each, an "Event") shall have occurred and be continuing:
(a) any statute, rule, regulation, legislation, interpretation, order,
judgment or injunction shall be enacted, entered, enforced, promulgated, amended
or issued by any legislative body, court, government or governmental,
administrative or regulatory authority or agency, domestic or foreign (other
than the waiting period provisions of the HSR Act), which shall remain in effect
and which shall have the effect of (i) making illegal or restraining or
prohibiting the making of the Offer, the acceptance for payment of, or payment
for, the Shares by Parent or Purchaser, or the consummation of the Offer or the
Merger, (ii) prohibiting or materially limiting the ownership or operation by
Parent or Purchaser of all or a material portion of the business or assets of
the Company or any of its subsidiaries, taken as a whole, or compelling Parent
or Purchaser to dispose of or hold separately all or a material portion of the
business or assets of Parent or Purchaser or the Company or any of its
subsidiaries, or seeking to impose any material limitation on the ability of
Parent or Purchaser to conduct its business or own such assets, (iii) imposing
material limitations on the ability of Parent or Purchaser to effectively
acquire, hold or exercise full rights of ownership of the Shares, including,
without limitation, the right to vote any Shares acquired or owned by Purchaser
or Parent on all matters properly presented to the Company's shareholders or
effectively to control in any material respect the business, assets or
operations of the Company or any of its subsidiaries, or (iv) not permitting or
allowing Parent to own all of the Company's issued and outstanding Shares,
(b) there shall be instituted, pending or threatened any action or
proceeding by any governmental entity seeking, or that could reasonably be
expected to result in, any of the consequences referred to in clauses
(i) through (iv) of paragraph (a) above, or
(c) any change shall have occurred (or any development shall have occurred
involving prospective changes) in the business, results of operations or
financial condition of the Company or any of its subsidiaries that has, or could
reasonably be expected to have, a Material Adverse Effect on the Company, or
35
(d) (i) the Company Board or any committee thereof shall have withdrawn or
modified (including by amendment of the Schedule 14D-9) in a manner adverse to
Parent or Purchaser its approval or recommendation of the Offer, the Merger
Agreement or the Merger, shall have approved or recommended an Acquisition
Proposal, or shall have resolved to effect any of the foregoing; (ii) the
Company or any of its subsidiaries shall have entered into an Acquisition
Agreement obligating the Company or any of its subsidiaries to engage in a
transaction with a person other than Parent, Purchaser or an affiliate of
either, or the Company shall have consummated such a transaction; or (iii) the
Company Board shall have failed to publicly reaffirm its approval or
recommendation of the Offer, the Merger Agreement or the Merger, or shall have
failed to reaffirm its determination that the Offer, the Merger Agreement and
the Merger are in the best interests of the Company's shareholders, within ten
(10) business days after Parent requests in writing that such recommendation or
determination be reaffirmed, or
(e) the Company and Purchaser and Parent shall have reached an agreement
that the Offer or the Merger Agreement be terminated, or the Merger Agreement
shall have been terminated in accordance with its terms, or
(f) (i) any of the representations and warranties of the Company set forth
in Section 4.01 (organization and qualification), Section 4.03 (capitalization)
or Section 4.04 (authority relative to agreement) of the Merger Agreement shall
not be true and correct in all material respects on and as of the Expiration
Date, or (ii) the other representations and warranties of the Company set forth
in the Merger Agreement shall not be true and correct, except in the case of
this clause (ii) where the failure to be true and correct (without giving effect
to any materiality or similar qualifications) would not, individually or in the
aggregate, reasonably be expected to have a Material Adverse Effect on the
Company, on and as of the Expiration Date, as if any such representation and
warranty were made on and as of the Expiration Date (except as to any such
representation or warranty which speaks only as of a specific date, which must
be untrue or incorrect as of such specific date), or
(g) the Company shall have failed to perform or to comply in all material
respects with its obligations, covenants or agreements required to be performed
by it under the Merger Agreement at or prior to the Expiration Date, or
(h) there shall have occurred (i) any general suspension of, or limitation
on prices for, trading in securities on the New York Stock Exchange, (ii) a
declaration of a banking moratorium or any suspension of payments in respect of
banks in the United States, (iii) a commencement of a war, armed hostilities or
other national or international crisis directly involving the United States
(other than an action involving United Nations' personnel or support of United
Nations' personnel), (iv) a material limitation by any Governmental Entity on
the extension of credit by banks or other lending institutions or (v) in the
case of any of the foregoing clauses (i) through (iv) existing at the time of
the commencement of the Offer, a material acceleration or worsening thereof.
The foregoing Tender Offer Conditions are for the sole benefit of Parent and
Purchaser, Parent or Purchaser may assert the failure of any of the Tender Offer
Conditions regardless of the circumstances (other than any circumstances arising
solely by any action or inaction by Parent or Purchaser) giving rise to any such
failure, the Company shall not assert the failure of, or waive, any such
condition without the prior written consent of Parent and Purchaser, and if
Parent or Purchaser elects to waive any such condition to the Offer (which
Parent or Purchaser may do in whole or in part at any time and from time to
time), the Company shall cooperate and comply with such election. The failure by
Parent or Purchaser at any time to exercise any of the foregoing rights shall
not be deemed a waiver of any such right and each such right shall be deemed an
ongoing right which may be asserted at any time and from time to time.
36
16. CERTAIN LEGAL MATTERS; REGULATORY APPROVALS.
GENERAL. 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, 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 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
Purchaser or Parent pursuant to the Offer. Should any such approval or other
action be required, Purchaser currently contemplates that, except as described
below under "State Takeover Statutes", such approval or other action will be
sought. While 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 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.
AFFILIATED TRANSACTIONS STATUTE AND CONTROL-SHARE ACQUISITION
STATUTE. Because the Company is incorporated under the laws of the State of
Florida, it is subject to Section 607.0901 (the "Affiliated Transactions
Statute") of the FBCA. The Affiliated Transactions Statute generally operates to
prohibit a Florida corporation from engaging in an "affiliated transaction" with
an "interested shareholder," unless the affiliated transaction is approved by a
majority of the disinterested directors or by the affirmative vote of the
holders of two-thirds of the voting shares other than the shares beneficially
owned by the interested shareholder, the corporation has not had more than 300
shareholders of record at any time for three years prior to the public
announcement relating to the affiliated transaction, or the corporation complies
with certain statutory fair price provisions.
Subject to certain exceptions, under the FBCA an "interested shareholder" is
a person who beneficially owns more than 10% of the corporation's outstanding
voting shares. In general terms, an "affiliated transaction" includes: (i) any
merger or consolidation with an interested shareholder; (ii) the transfer to any
interested shareholder of corporate assets with a fair market value equal to 5%
or more of the corporation's consolidated assets or outstanding shares or
representing 5% or more of the corporation's earning power or net income;
(iii) the issuance to any interested shareholder of shares with a fair market
value equal to 5% or more of the aggregate fair market value of all outstanding
shares of the corporation; (iv) any reclassification of securities or corporate
reorganization that will have the effect of increasing by more than 5% the
percentage of the corporation's outstanding voting shares beneficially owned by
any interested shareholder; (v) the adoption of a plan of liquidation or
dissolution of the corporation if proposed by or with any interested
shareholder; and (vi) any receipt by the interested shareholder of the benefit
of any loans, advances, guaranties, pledges or other financial assistance or any
tax credits or other tax advantages provided by or through the corporation.
The Company also may be subject to Section 607.0902 of the FBCA (the
"Control-Share Acquisition Statute"). The Control-Share Acquisition Statute
provides that shares of publicly held Florida corporations that are acquired in
a "control-share acquisition" generally will have no voting
37
rights unless such rights are conferred on those shares by the vote of the
holders of a majority of all the outstanding shares other than interested
shares. A control-share acquisition is defined, with certain exceptions, as the
acquisition of the ownership of voting shares which would cause the acquirer to
have voting power within the following ranges or to move upward from one range
into another: (i) 20%, but less than 33 1/3%; (ii) 33 1/3%, but less than or
equal to 50%; or (iii) more than 50% of such votes.
The Control-Share Acquisition Statute does not apply to an acquisition of
shares of a publicly held Florida corporation (i) pursuant to a merger or share
exchange effected in compliance with the FBCA if the publicly held Florida
corporation is a party to the merger or share exchange agreement, or (ii) if
such acquisition has been approved by the board of directors of that corporation
before the acquisition.
Because the Control-Share Acquisition Statute specifically exempts a merger
effected in compliance with the FBCA if the publicly held Florida corporation is
a party to the merger agreement and the acquisition has been approved by the
board of directors of the corporation before the acquisition, the provisions of
the Control-Share Acquisition Statute are not applicable to the Offer or the
Merger. The Company Board has represented in the Merger Agreement that (i) the
Company Board has approved the Merger Agreement, the Merger and the Offer and
that such approval constitutes valid approval for purposes of the Affiliated
Transactions Statute and the Control-Share Acquisition Statute, and (ii) that
the Company Board has taken all other action necessary to render the Affiliate
Transaction Statute and the Control-Share Acquisition Statute inapplicable to
the Offer, the Merger and all transactions contemplated by the Merger Agreement.
If any government official or third party should seek to apply any state
takeover law to the Offer or the Merger or other business combination between
Purchaser or any of its affiliates and the Company, Purchaser will take such
action as then appears desirable, which action may include challenging the
applicability or validity of such statute in appropriate court proceedings. In
the event that it is asserted that one or more state takeover statutes 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 or the
Merger, Purchaser might be required to file certain information with, or to
receive approvals from, the relevant state authorities or holders of Shares, and
Purchaser might be unable to accept for payment or pay for Shares tendered
pursuant to the Offer, or be delayed in continuing or consummating the Offer or
the Merger. In such case, Purchaser may not be obligated to accept for payment
or pay for any tendered Shares. See Section 15-- "Certain Conditions of the
Offer."
SHORT-FORM MERGER. Section 607.1104 of the FBCA provides that, if a parent
corporation owns at least 80% of the outstanding shares of each class of a
subsidiary corporation, it may, without the approval of the shareholders of the
subsidiary corporation, (i) merge the subsidiary into itself, (ii) merge itself
into the subsidiary, or (iii) merge the subsidiary into and with another
subsidiary in which the parent corporation owns at least 80 percent of the
outstanding shares of each class of the subsidiary, by effecting a plan of
merger adopted by the board of directors of parent corporation and the
appropriate filings with the Florida Department of State (a "short-form
merger"). Under the FBCA, if Purchaser acquires at least 80% of the outstanding
Shares, Purchaser will be able to effect the Merger without a vote of the other
shareholders of the Company. In such event, the Company has agreed in the Merger
Agreement to take, at the request of Purchaser, all necessary and appropriate
action to cause the Merger to become effective after such acquisition without a
meeting of the Company's shareholders.
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 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.
38
Promptly after commencing the Offer and pursuant to the requirements of the
HSR Act, Purchaser will file a Notification and Report Form with respect to the
Offer and Merger with the Antitrust Division and the FTC. 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 calendar 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 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 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 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. 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 of this Offer to Purchase for certain termination rights.
FOREIGN ANTITRUST COMPLIANCE. According to the Company Form 10-K, the
Company owns property and conducts business in a number of foreign countries and
jurisdictions. In connection with the acquisition of the Shares pursuant to the
Offer, the laws of certain of those foreign countries and jurisdictions may
require the filing of information with, or the obtaining of the approval of,
governmental authorities in such countries and jurisdictions. The governments in
such countries and jurisdictions might approve or reject or attempt to impose
additional conditions on the Company's operations conducted in such countries
and jurisdictions as a result of the acquisition of the Shares pursuant to the
Offer. There can be no assurance that Purchaser will be able to cause the
Company or its subsidiaries to satisfy or comply with such additional conditions
or that compliance or noncompliance will not have adverse consequences for the
Company or any subsidiary after purchase of the Shares pursuant to the Offer.
17. DISSENTERS' RIGHTS.
Under the FBCA, holders of Shares do not have dissenters' rights as a result
of the Offer. In connection with the Merger, assuming that the Shares remain
designated as a national market system security on an interdealer quotation
system by the NASD prior to the Merger, shareholders of the Company will not
have the right to dissent and demand appraisal of their Shares pursuant to the
Merger Agreement and/or under the FBCA.
18. FEES AND EXPENSES.
Rothschild is acting as the Dealer Manager in connection with the Offer and
has provided certain financial advisory services to Parent in connection with
the acquisition of the Company. Rothschild will receive reasonable and customary
compensation for its services. In addition, Parent will reimburse Rothschild for
certain expenses it incurs in providing its services. Parent has agreed to
indemnify Rothschild and certain related persons against certain liabilities and
expenses in connection with its engagement, including certain liabilities under
the federal securities laws.
Parent and Purchaser have retained MacKenzie Partners, Inc. to be the
Information Agent and American Stock Transfer & Trust Company to be the
Depositary in connection with the Offer. The
39
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 federal securities laws.
Neither Parent nor Purchaser will pay any fees or commissions to any broker
or dealer or to any other person (other than to the Dealer Manager) 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 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, 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 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 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, 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.
SHADE ACQUISITION CORP.
March 5, 2001
40
SCHEDULE I
DIRECTORS AND EXECUTIVE OFFICERS OF
PARENT, LUXOTTICA S.P.A. AND PURCHASER
1. DIRECTORS AND EXECUTIVE OFFICERS OF PARENT
The following table sets forth the name, age as of the date of this Offer to
Purchase, present principal occupation or employment and material occupations,
positions, offices or employments for the past five years of each director and
executive officer of Parent. Unless otherwise indicated, the current business
address of each person is Piazzale Lotto, 2, Milan 20148, Italy. Except for
Messrs. Bartow and Dennis, who are citizens of the United States of America,
each person set forth below is a citizen of Italy and each occupation set forth
opposite an individual's name refers to employment with Parent.
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PRESENT PRINCIPAL OCCUPATION
NAME, BUSINESS ADDRESS OR EMPLOYMENT; MATERIAL
AND POSITION WITH PARENT AGE POSITIONS DURING THE PAST FIVE YEARS
----------------------------------------- -------- -----------------------------------------
Leonardo Del Vecchio--Chairman of the 65 Mr. Del Vecchio founded Parent's
Board of Directors operations in 1961 and has been Chairman
of the Board of Parent since its
formation. He also serves as Chairman of
the Board of several of Parent's
subsidiaries. In 1986 the President of
the Republic of Italy conferred on him
the honor of Cavaliere dell'Ordine al
"Merito del Lavoro" (Knight of the Order
for Labor Merit). In 1994, Mr. Del
Vecchio became a member of the Board of
Directors of UniCredito Italiano S.p.A.
and RAS S.p.A. In May 1995 he received an
honorary degree in Business
Administration from the Venice Ca'
Foscari University. In 1999 he received a
Master "honoris causa" in International
Business from MIB-Management School in
Trieste.
Luigi Francavilla--Deputy Chairman and 63 Mr. Francavilla has been Co-Chief
Co-Chief Executive Officer Executive Officer of Parent since 1981
and a Managing Director of Luxottica
S.p.A., Parent's principal operating
subsidiary, since 1977. He also serves as
a Director of several of Parent's
subsidiaries. From 1972 to 1977, Mr.
Francavilla was General Manager of
Luxottica S.p.A. and, from 1969 to 1971,
he served as Technical General Manager of
Luxottica S.p.A. In April 2000, he
received an honorary degree in Business
Administration from the Constantinian
University.
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PRESENT PRINCIPAL OCCUPATION
NAME, BUSINESS ADDRESS OR EMPLOYMENT; MATERIAL
AND POSITION WITH PARENT AGE POSITIONS DURING THE PAST FIVE YEARS
----------------------------------------- -------- -----------------------------------------
Claudio Del Vecchio--Director 43 Mr. Del Vecchio has been a Director of
Parent since 1981. Since 1982, he has
been serving as the Executive Vice
President of Avant-Garde Optics, LLC,
Parent's United States wholesale
subsidiary. From 1979 to 1982, he managed
Parent's Italian and German distribution
operations. He also serves as a Director
of several of Parent's subsidiaries.
Claudio Del Vecchio is the son of
Leonardo Del Vecchio.
Roberto Chemello--Co-Chief Executive 46 Mr. Chemello has been Co-Chief Executive
Officer Officer since 1985 and serves as Chairman
or as a Director of several of Parent's
subsidiaries. Until 1985, he was Chief
Financial Officer of Parent. Mr. Chemello
graduated with a degree in Business
Administration and Economics from the
Venice Ca' Foscari University.
Lucio Rondelli--Director 76 Mr. Rondelli has been a Director of
Luxottica since 1990. Mr. Rondelli was
the Chairman of UniCredito Italiano
S.p.A., having held various positions
with the bank continuously from 1947. Mr.
Rondelli also serves as a Deputy Chairman
of Rolo Banca 1473 S.p.A., as well as a
director of several other financial
companies (such as RAS) and charitable
organizations. He is also a director of
the Italian Banking Association. In 1976
he received the honor of Cavaliere di
Gran Croce dell'Ordine (Knight of the
Great Cross Order) for merit to the
Republic of Italy and in 1988 the
President of the Republic of Italy
conferred on him the honor of Cavaliere
dell'Ordine al "Merito del Lavoro"
(Knight of the Order for Labor Merit).
S-2
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PRESENT PRINCIPAL OCCUPATION
NAME, BUSINESS ADDRESS OR EMPLOYMENT; MATERIAL
AND POSITION WITH PARENT AGE POSITIONS DURING THE PAST FIVE YEARS
----------------------------------------- -------- -----------------------------------------
Tancredi Bianchi--Director 72 Mr. Bianchi has been director of
Luxottica since 1990 and has been
Professor of Credit and Banking at the
Bocconi University since 1978. In 1959,
he qualified for University teaching and
began teaching Banking Technique at the
Venice University, as well as the Pisa
and Rome Universities. In recent years he
joined the Board of Directors of
Montedison and, until 1989, was a member
of the Board of Directors of Credito
Bergamasco. Until 1998 Mr. Bianchi was
Chairman of the Italian Banking
Association and currently is Chairman of
the National Association of the Central
Institute of Banks and Bankers. He is a
member of the Board of Directors of
Credito Emiliano, Milano Assicurazioni,
Sella Asset Management, Sopaf,
Centrobanca and Rolo Banca 1473.
Giorgio Armani--Director 66 Mr. Armani became a Director of Parent in
2000. Mr. Armani is the Chairman of the
Board and the sole shareholder of Giorgio
Armani S.p.A., founded in Milan in 1975.
In 1979, he founded the Giorgio Armani
Corporation in the United States. The
Giorgio Armani Group is one of the
leading fashion and design houses in the
world today. It designs, manufactures and
sells fashion products under a range of
lifestyle brand names, including: Giorgio
Armani, Armani Collexioni, Emporio Armani
and Armani Jeans. Giorgio Armani's retail
network currently comprises approximately
300 stores throughout the world.
Cliff Bartow--Chief Operating Officer of 48 Mr. Bartow has been Chief Operating
LensCrafters Officer of LensCrafters since December
LensCrafters, Inc. 1998 and is responsible for all
8650 Governors Hill Drive LensCrafters Sales, Marketing and
Cincinnati, Ohio 45249 Operations. Prior to obtaining his
U.S.A. current position, he was Executive Vice
President of Stores. Mr. Bartow has held
various other senior executive roles
since joining LensCrafters in 1987. Mr.
Bartow has a B.A. in Criminal Law from
Indiana University of Pennsylvania.
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PRESENT PRINCIPAL OCCUPATION
NAME, BUSINESS ADDRESS OR EMPLOYMENT; MATERIAL
AND POSITION WITH PARENT AGE POSITIONS DURING THE PAST FIVE YEARS
----------------------------------------- -------- -----------------------------------------
Enrico Cavatorta--Chief Financial Officer 39 Mr. Cavatorta has been Chief Financial
Officer since 1999. Prior to joining
Parent, he was Controller of Procter &
Gamble Italy since 1992, a consultant
with McKinsey & Co. and Group Controller
Director with Piaggio S.p.A. Mr.
Cavatorta graduated with a degree in
Business Administration and Economics
from Rome University.
Enzo Damin--Human Resources Manager 43 Mr. Damin has been Human Resources
Manager since 1997. Prior to joining
Parent, he was Junior Consultant for
Associazione Industriali Bresciana, Human
Resources Manager of various divisions of
La Rinascente Department Stores Group and
BIC Italy. Mr. Damin graduated with a
degree in Law from Parma University.
Jack Dennis--Chief Financial Officer of 55 Mr. Dennis has been Chief Financial
LensCrafters Officer of LensCrafters since 1992 and
Lenscrafters, Inc. Chief Administrative Officer since 1999.
8650 Governors Hill Drive Prior to 1992, he was Controller of
Cincinnati, Ohio 45249 Lens-Crafters, Vice President of Finance
U.S.A. in several divisions of U.S. Shoe, and a
Senior Audit Manager with Arthur Andersen
& Co. Mr. Dennis graduated with a degree
in Accounting from the University of
Kentucky.
Beatrice Niedda--Marketing Manager 39 Mrs. Niedda has been Marketing Manager
since 1999. Prior to joining Parent, she
was Marketing Manager for Unipath and a
member of the marketing department of
Unilever's Elida Faberge and Elizabeth
Arden. Mrs. Niedda has a Masters in
Business Administration from the Bocconi
University of Milan and a bachelors
degree in Engineering.
Andrea Gallina--Manufacturing Manager 45 Mr. Gallina has been with Luxottica since
1998. Before joining Parent, he was the
Manufacturing Director of Aprilia, a
world leader in motorcycle production. He
is currently serving as the Manufacturing
Manager for Parent's Italian production
facilities.
Valerio Giacobbi--Sales Manager 36 Mr. Giacobbi has been Sales Manager of
Parent since 2001. From 1991 until 2001,
he served as General Affairs Manager. Mr.
Giacobbi graduated with a degree in
Business Administration and Economics
from the Venice Ca' Foscari University.
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PRESENT PRINCIPAL OCCUPATION
NAME, BUSINESS ADDRESS OR EMPLOYMENT; MATERIAL
AND POSITION WITH PARENT AGE POSITIONS DURING THE PAST FIVE YEARS
----------------------------------------- -------- -----------------------------------------
Sabina Grossi--Investor Relations Manager 35 Ms. Grossi has been Investor Relations
Manager since 1996. Prior to joining
Parent, she was an equity financial
analyst with Caboto Sim S.p.A. Ms. Grossi
graduated with a degree in Business
Administration and Economics from Rome
University.
Claudio Renon--Product Development 48 Mr. Renon has been Product Development
Manager Manager since 1990. Before that time, Mr.
Renon served in various capacities for
Parent since 1968.
Luciano Santel--Corporate Development 44 Mr. Santel has been with Luxottica since
Manager 1999. Between 1996 and 1999, he was Chief
Operating Officer of Casual Corner Group
Inc., a clothing retailer. He has prior
experience with Arthur Andersen and other
manufacturing companies. Mr. Santel
graduated with a degree in Business
Administration and Economics from Venice
Ca' Foscari University.
Umberto Soccal--Chief Information Officer 50 Mr. Soccal joined Luxottica in 1988 as
Chief Information officer. As Parent
expanded its distribution network, he
became responsible for the computer
systems of all of Parent's European
subsidiaries. Mr. Soccal previously
worked as a software programmer and chief
of the data processing center for the
Provincial Industry Association.
Paolo Mollo--Production and Logistics 39 Mr. Mollo joined Parent in 1990 as a
Manager member of Luxottica's finance department.
Mr. Mollo has been Production Planning
Manager since 1993 and Logistics Manager
since 2000. Mr. Mollo graduated with a
Degree in Business Administration and
Economics from Venice Ca' Foscari
University.
S-5
2. DIRECTORS AND EXECUTIVE OFFICERS OF LUXOTTICA S.P.A.
The following table sets forth the name, age as of the date of this Offer to
Purchase, present principal occupation or employment and material occupations,
positions, offices or employees for the past five years of each director and
executive officer of Luxottica S.p.A. The current business address of each
person is Piazzale Lotto, 2, Milan 20148, Italy. Each person set forth below is
a citizen of Italy, and each occupation set forth opposite an individual's name
refers to employment with Luxottica S.p.A.
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NAME, BUSINESS ADDRESS PRESENT PRINCIPAL OCCUPATION
AND POSITION WITH OR EMPLOYMENT; MATERIAL
LUXOTTICA S.P.A. AGE POSITIONS DURING THE PAST FIVE YEARS
----------------------------------------- -------- -----------------------------------------
Leonardo Del Vecchio--Chairman of the 65 See Part 1 of this Schedule.
Board of Directors
Luigi Francavilla--Co-Chief Executive 63 See Part 1 of this Schedule.
Officer and Director
Roberto Chemello--Co-Chief Executive 46 See Part 1 of this Schedule.
Officer and Director
Valerio Giacobbi--Director 36 See Part 1 of this Schedule.
Andrea Rondelli--Director 51 Mr. Rondelli became a Director of
Luxottica S.p.A. in February, 2000. Until
December, 2000, Mr. Rondelli was a
Manager of Mediobanca since 1975 where
his responsibilities included direct
marketing. He has been a member of the
board of directors of various public
companies. Mr. Rondelli graduated with a
degree in Business Administration and
Economics from Luigi Bocconi of Milan
University. Andrea Rondelli is the son of
Lucio Rondelli, a Director of Parent.
Enzo Damin--Human Resources Manager 43 See Part 1 of this Schedule.
Beatrice Niedda--Marketing Manager 39 See Part 1 of this Schedule.
Andrea Gallina--Manufacturing Manager 45 See Part 1 of this Schedule.
Claudio Renon--Product Development 48 See Part 1 of this Schedule.
Manager
Umberto Soccal--Chief Information Officer 50 See Part 1 of this Schedule.
Paolo Mollo--Production and Logistics 39 See Part 1 of this Schedule.
Manager
S-6
3. DIRECTORS AND EXECUTIVE OFFICERS OF PURCHASER.
The following table sets forth the name, age as of the date of this Offer to
Purchase, present principal occupation or employment and material occupations,
positions, offices or employments for the past five years of each director and
executive officer of Purchaser. Unless otherwise indicated, the current business
address of each person is Piazzale Lotto, 2, Milan 20148, Italy.
Messrs. Chemello and Santel are citizens of Italy and Messrs. Boxer and Giannola
are citizens of the United States of America and each occupation set forth
opposite an individual's name refers to his position with Purchaser.
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PRESENT PRINCIPAL OCCUPATION
NAME, BUSINESS ADDRESS OR EMPLOYMENT; MATERIAL
AND POSITION WITH PURCHASER AGE POSITIONS DURING THE PAST FIVE YEARS
------------------------------------------ -------- ------------------------------------------
Roberto Chemello--Chief Executive Officer 46 See Part 1 of this Schedule.
and Director
Luciano Santel--Executive Vice President 44 See Part 1 of this Schedule.
Michael A. Boxer--Vice President, General 39 Mr. Boxer has been General Counsel and
Counsel and Secretary Director of Business Affairs of Parent's
44 Harbor Park Drive, Port Washington, U.S. operations since 1993. Mr. Boxer
New York 11050 graduated with a law degree from New York
University School of Law and with a B.A.
in political science from Columbia
University.
Vito Giannola--Treasurer 37 Mr. Giannola has been Corporate Controller
44 Harbor Park Drive, Port Washington, of Parent's U.S. operations since 1990.
New York 11050 Mr. Giannola graduated with a degree in
business from Pace University.
S-7
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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:
AMERICAN STOCK TRANSFER & TRUST COMPANY
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BY MAIL: BY HAND: BY OVERNIGHT DELIVERY:
American Stock Transfer American Stock Transfer American Stock Transfer
& Trust Company & Trust Company & Trust Company
59 Maiden Lane 59 Maiden Lane 59 Maiden Lane
New York, New York 10038 New York, New York 10038 New York, New York 10038
BY FACSIMILE TRANSMISSION
(FOR ELIGIBLE INSTITUTIONS ONLY):
(718) 234-5001
CONFIRMATION RECEIPT OF FACSIMILE BY
TELEPHONE ONLY:
(718) 921-8200
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:
[LOGO]
156 Fifth Avenue
New York, New York 10010
(212) 929-5500 (Call Collect)
E-mail: proxy@mackenziepartners.com
or
CALL TOLL FREE: (800) 322-2885
THE DEALER MANAGER FOR THE OFFER IS:
[LOGO]
ROTHSCHILD INC.
1251 Avenue of the Americas
New York, New York 10020
Call Toll-Free: (800) 753-5151 (Ext. 3611)
In New York City call: (212) 403-3611
Dates Referenced Herein and Documents Incorporated by Reference
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