Tender-Offer Solicitation/Recommendation Statement — Schedule 14D-9
Filing Table of Contents
Document/Exhibit Description Pages Size
1: SC 14D9 Tender-Offer Solicitation/Recommendation Statement 26 131K
2: EX-99.1 Agree & Plan of Merge 37 145K
11: EX-99.10 News Release 2± 9K
3: EX-99.2 Agree & Allen & Co. 5 22K
4: EX-99.3 Agree Paul Gould 5 23K
5: EX-99.4 Agree Andrew Dwyer 6 23K
6: EX-99.5 Employment Agreement 4 17K
7: EX-99.6 Press Release 2± 9K
8: EX-99.7 Letter to Stockholders 1 7K
9: EX-99.8 Opinion of Allen & Co. 4 15K
10: EX-99.9 Opinion of Gilford SEC. 3 14K
SC 14D9 — Tender-Offer Solicitation/Recommendation Statement
Document Table of Contents
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
_________________
SCHEDULE 14D-9
SOLICITATION/RECOMMENDATION STATEMENT
PURSUANT TO SECTION 14(D)(4)
OF THE SECURITIES EXCHANGE ACT OF 1934
_________________
RESOURCE RECYCLING TECHNOLOGIES, INC.
(NAME OF SUBJECT COMPANY)
RESOURCE RECYCLING TECHNOLOGIES, INC.
(NAME OF PERSON(S) FILING STATEMENT)
COMMON STOCK, PAR VALUE $1.00 PER SHARE
(TITLE OF CLASS OF SECURITIES)
760930 10 7
(CUSIP NUMBER OF CLASS OF SECURITIES)
LAWRENCE J. SCHORR
PRESIDENT AND CHIEF EXECUTIVE OFFICER
300 PLAZA DRIVE
VESTAL, NEW YORK 13850
(607) 798-7137
(NAME, ADDRESS AND TELEPHONE NUMBER OF PERSON AUTHORIZED TO RECEIVE
NOTICE AND COMMUNICATIONS ON BEHALF OF THE PERSON(S) FILING STATEMENT).
WITH A COPY TO:
DEAN H. CANNON, ESQUIRE
BEVERIDGE & DIAMOND, P.C.
1350 I STREET, N.W.
SUITE 700
WASHINGTON, D.C. 20005
(202) 789-6000
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ITEM 1. SECURITY AND SUBJECT COMPANY.
The name of the subject company is Resource Recycling Technologies,
Inc., a Delaware corporation (the "Company"), and the address of the Company is
300 Plaza Drive, Vestal, New York 13850. The title of the class of equity
securities to which this statement relates is the Common Stock, $1.00 par value
(the "Shares").
ITEM 2. TENDER OFFER OF BIDDER.
This Statement relates to a tender offer from WMI Acquisition Sub,
Inc., a Delaware corporation ("Purchaser"), and a wholly owned subsidiary of
Waste Management, Inc. ("Parent"), disclosed in a Tender Offer Statement on
Schedule 14D-1, dated March 23, 1995 (the "Schedule 14D-1") to purchase all the
outstanding Shares, at a price of $11.50 per Share, net to the seller in cash,
upon the terms and subject to the conditions set forth in the Offer to Purchase,
dated March 23, 1995 (the "Offer to Purchase") and the related Letter of
Transmittal (which together constitute the "Offer" and are contained within the
Schedule 14D-1). Parent is controlled by WMX Technologies, Inc. ("WMX").
The Offer is being made pursuant to an Agreement and Plan of Merger,
dated March 17, 1995 (the "Merger Agreement"), among Parent, Purchaser and the
Company. The Merger Agreement provides, among other things, that as soon as
practicable after the consummation of the Offer and verification or waiver of
all remaining conditions, Purchaser will be merged with and into the Company
(the "Merger") and the Company will continue as the surviving corporation (the
"Surviving Corporation"). A copy of the Merger Agreement has been filed as
Exhibit 1 and is incorporated herein by reference.
Based on information in the Schedule 14D-1, the principal executive
offices of Purchaser and Parent are located at 3003 Butterfield Road, Oak Brook,
Illinois 60521.
ITEM 3. IDENTITY AND BACKGROUND.
(a) The name and address of the Company, which is the person filing
this statement, are set forth in Item 1 above.
(b) Each material contract, agreement, arrangement and understanding
and actual or potential conflict of interest between the Company or its
affiliates and (i) the Company, its executive officers, directors or affiliates
or (ii) Purchaser, its executive officers, directors or affiliates, is described
in the attached Schedule I or set forth below.
THE MERGER AGREEMENT
The summary of the Merger Agreement contained in the Offer to Purchase
which has been filed with the Securities and Exchange Commission (the
"Commission") as an exhibit to the Schedule 14D-1, a copy of which is enclosed
with this Schedule 14D-9, is incorporated herein by reference. Such summary
should be read in its entirety for a more complete description of the terms and
provisions of the Merger Agreement. The following is a summary of certain
portions of the Merger Agreement which relate to arrangements among the Company,
Parent and the Company's executive officers and directors.
BOARD REPRESENTATION. The Merger Agreement provides that promptly
upon the purchase by Parent or Purchaser of at least a majority of the
outstanding Shares, Purchaser and Parent shall be entitled to designate such
number of directors (but in no event more than one less than the total number of
directors) on the Board of Directors (the "Board") of the Company, rounded up to
the next whole number (the "Purchaser Designees") such that Purchaser and
Parent, subject to compliance with Section 14(f) of the Securities Exchange Act
of 1934, as amended (the "Exchange Act"), will have representation on the Board
equal to the product of (i) the number of directors on the Board and (ii) the
percentage that the number of Shares so purchased bears to the total number of
Shares outstanding, and the Company and its Board shall, at such time, take any
and all such action as Purchaser may
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reasonably request (including increasing the size of the Board) to cause the
Purchaser's Designees to be elected to the Company's Board.
AGREEMENT WITH RESPECT TO DIRECTOR AND OFFICER INDEMNIFICATION AND
INSURANCE. The Merger Agreement provides that Parent acknowledges that all
rights to indemnification or limitations on liability currently existing in
favor of the present or former employees, agents, directors or officers of the
Company as provided in its certificate of incorporation, by-laws, agreements or
pursuant to applicable law in effect on the date of the Merger Agreement shall
survive the Merger and shall continue in full force and effect for a period of
not less than the applicable statutes of limitations; however, in the event any
claim or claims are asserted or made within such applicable period, all rights
to indemnification in respect of such claim or claims shall continue until
disposition of any and all such claims. If any action, suit, proceeding or
other investigation relating to the Merger Agreement or to the transactions
contemplated thereby is commenced, whether before or after the Merger becomes
effective, the parties shall cooperate with each other and use all reasonable
efforts to defend against and respond to any such action, suit, proceeding or
investigation.
The Merger Agreement also provides that Purchaser and Parent will
maintain in effect the Company's current directors' and officers' insurance
policy for the remainder of its term and purchase a policy providing continued
coverage relating to actions, alleged actions, omissions and alleged omissions
occurring at or prior to the time of the Merger (the "Effective Time") for a
period of at least three years from and after the Effective Time, provided that
the total amount Parent and Purchaser are required to expend for such coverage
shall not exceed 250% of the 1994 premium for such current policy.
STOCK TENDER AGREEMENTS
Upon the execution of the Merger Agreement, three stockholders of the
Company entered into Stock Tender Agreements (the "Stock Tender Agreements")
with Parent and Purchaser. The three stockholders are Allen & Company
Incorporated ("Allen & Co."), Paul A. Gould and Andrew T. Dwyer. Allen & Co. is
the Company's largest stockholder, Paul A. Gould is a director of the Company
and a Managing Director of Allen & Co., and Andrew Dwyer is Chairman of the
Company's Board of Directors. Pursuant to the Stock Tender Agreements, so long
as the Board of Directors of the Company has not withdrawn its recommendation of
the Offer in accordance with the Merger Agreement, those stockholders will
validly tender (and not thereafter withdraw) the Shares beneficially owned by
each of them pursuant to and in accordance with the terms of the Offer. As of
March 20, 1995, these stockholders (with members of their families) beneficially
owned a total of 1,082,506 Shares, representing approximately 33% of the then
outstanding Shares, on a fully diluted basis. See "Security Ownership" in
Schedule I hereto.
These stockholders may decline to tender, or withdraw, their Shares
only if: (1) the amount or form of consideration to be paid for their Shares is
less than cash in the amount of $11.50 per Share, net to the stockholder in
cash, (ii) the Merger Agreement is terminated, or (iii) the Board of Directors
of the Company withdraws its recommendation of the Offer in accordance with the
Merger Agreement, provided, that if the Company's Board subsequently recommends
an offer by Purchaser or an affiliate of Purchaser for a consideration per Share
greater than $11.50 per Share, the stockholders have agreed to re-tender any
Shares that were withdrawn.
In connection with the Stock Tender Agreements, the parties thereto
have made certain customary representations, warranties and covenants, including
with respect to (i) ownership of the Shares, (ii) their authority to enter into
and perform their obligations under the Stock Tender Agreements, (iii) the
ability of the parties to enter into the Stock Tender Agreements without
violating other agreements to which they are party, (iv) the absence of liens
and encumbrances on and in respect of the stockholder parties' Shares and (v)
restrictions on the transfer of the stockholder parties' Shares.
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CERTAIN CONFLICTS
STOCK OPTIONS. As of the date of filing of this Schedule 14D-9, the
current directors and executive officers of the Company as a group hold stock
options granted under the Company's Incentive Stock Option Plan As Amended and
Restated June 8, 1990 and under the Company's Non-Qualified Stock Option Plan
(collectively, the "Option Plans") to purchase an aggregate of 406,500 Shares at
exercise prices ranging from $3.42 to $8.50 per Share. In accordance with the
terms of the Merger Agreement, prior to consummation of the Merger, the Company
will have made arrangements with each holder of a stock option the effect of
which shall be that a stock option granted under the Option Plans which is
outstanding immediately prior to the consummation of the Offer will be cancelled
and the holder thereof will receive an amount in cash equal to the excess, if
any, of the price paid for each Share pursuant to the Merger over the per share
exercise price of such option multiplied by the number of Shares issuable
pursuant to any such option, net of any income tax withholding and payroll taxes
applicable to such payment.
EMPLOYMENT AND CONSULTING AGREEMENTS. The Company maintains an
employment agreement (the "Schorr Agreement") with Lawrence Schorr, its
President and Chief Executive Officer, described under the section captioned
"Compensation of Executive Officers and Directors" in Schedule I hereto. The
Schorr Agreement contains provisions allowing Mr. Schorr to terminate the
agreement in exchange for a lump sum payment equal to all salary payments owed
to him for the balance of the agreement term, in the event of a change of
control (as defined therein), unless the new controlling entity (i) has a net
worth equal to or greater than the net worth of the Company immediately prior to
the change of control and (ii) guarantees the Company's obligations under the
agreement. The acquisition of Shares pursuant to the Offer and Merger will
constitute a change of control for purpose of the Schorr Agreement. The lump
sum amount that would be payable to Mr. Schorr if the Schorr Agreement were
terminated in accordance with this provision at March 31, 1995 is approximately
$384,000.
Mr. Schorr and Purchaser have agreed to new employment arrangements
(the "New Schorr Agreement") between Mr. Schorr and the Company that will be
effective upon consummation of the Merger to replace the existing Schorr
Agreement. The New Schorr Agreement provides that Mr. Schorr will be employed
by the Company for a period of two years after the Effective Time, and
thereafter on an at-will basis, for an annual base salary of $280,000. The New
Schorr Agreement also provides that Mr. Schorr will be granted options to
purchase WMX common stock during 1995 and 1996 with a value equal to 100% of his
base salary, prorated for 1995. If the Merger is not consummated, the New
Schorr Agreement will not become effective.
The Company also maintains employment agreements (the "Koffman
Agreements") with Burton Koffman, a director of the Company, and Richard
Koffman, a former director and the brother of Burton Koffman, described under
the section captioned "Compensation of Executive Officers and Directors" in
Schedule I hereto. The Koffman Agreements contain provisions identical to the
provisions in the Schorr Agreement regarding a change of control of the Company.
The lump sum amounts that would be payable to Burton Koffman and Richard Koffman
if the Koffman Agreements were terminated in accordance with these provisions at
March 31, 1995 are approximately $413,000 and $78,000, respectively.
The Company has entered into a Consulting Agreement with Andrew Dwyer,
Chairman of the Board of Directors, that is described under the section
captioned "Compensation of Executive Officers and Directors" in Schedule I
hereto. Purchaser has informed the Company that it expects to propose an
extension by the Company of this Consulting Agreement, for a period of one year
after the Merger, at its current rate of $100,000 per annum.
Parent has indicated that it may wish to seek employment agreements
with other Company employees.
LADENBURG WARRANT. There is presently outstanding a warrant (the
"Warrant") to purchase an aggregate of 113,363 Shares for $9.13 per share,
issued to Ladenburg, Thalmann & Co. Inc. ("Ladenburg"), exercisable through 5:00
P.M., New York City time, on April 10, 1995. Jay Petschek, a director of the
Company, is a Managing Director of Ladenburg. The Company and Ladenburg, with
the consent of Purchaser, have agreed that (i) in full
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settlement of the Warrant, Ladenburg will be entitled to receive immediately
after the Effective Time a cash payment from the Company in an amount equal to
the excess of the price paid for each Share pursuant to the Merger over the per
share exercise price of the Warrant, multiplied by 113,363 (the number of Shares
issuable upon exercise of the Warrant), and (ii) if the Merger is not
consummated, the Warrant will be extended for sixty days beyond the date on
which a registration statement filed by the Company covering the Shares issuable
upon exercise of the Warrant becomes effective. Assuming the consideration paid
for each Share pursuant to the Offer and Merger is $11.50 per Share, net to the
seller in cash, the cash payment to be paid to Ladenburg for settlement of the
Warrant pursuant to the Merger would be $268,670.
FINANCIAL ADVISOR. The Company retained Allen & Co. to act as one of
its financial advisors in connection with the Offer and Merger, and to evaluate
and render an opinion regarding the fairness, from a financial point of view, of
the consideration to be paid pursuant to the Offer and Merger to the Company's
stockholders.
As indicated previously, Paul A. Gould, a director of the Company, is
a Managing Director of Allen & Co., and Allen & Co. is the Company's largest
stockholder. See "Information Concerning Members of the Board of Directors,"
"Security Ownership" and "1994 Change of Control of the Company" in Schedule I
hereto. Allen & Co. will be paid a fee of $300,000 for its services to the
Company in connection with the Offer and Merger, such fee to be paid by the
Company upon the acquisition by Purchaser of a majority of the Shares. In the
event of the consummation of any alternative transaction which would entail
financial advisory services for the Company other than those contemplated in
connection with the Offer and Merger, Allen & Co. will be paid such
consideration as may be agreed by Allen & Co. and the Company. The Company has
also agreed to reimburse Allen & Co. for certain out-of-pocket expenses, and to
indemnify Allen & Co. for certain liabilities that may arise as a result of the
engagement. See "Item 5. Persons Retained, Employed or to be Compensated."
The Company has been informed that Allen & Co. has not been previously
retained by and does not have any other contract, agreement, arrangement,
understanding or actual or potential conflict of interest, with the Company,
Purchaser, Parent, or any of their respective directors, executive officers or
affiliates.
LEGAL COUNSEL. Beveridge & Diamond, P.C. ("B&D") has served as
corporate legal counsel to the Company for various matters since 1983, and was
retained by the Company to provide legal services on behalf of the Company in
connection with the Offer and Merger. Dean H. Cannon, a principal of B&D, is a
director of the Company. B&D also provides legal services to Parent and to
other subsidiaries of WMX in connection with various environmental matters
unrelated to the Offer and Merger.
The Board of Directors of the Company also retained Skadden, Arps,
Slate, Meagher & Flom ("Skadden, Arps") to advise it regarding certain legal
matters relating to the Offer and Merger. Skadden, Arps has represented from
time to time subsidiaries of WMX in matters unrelated to the Offer and Merger.
OTHER MATTERS. Certain other transactions have occurred, or
relationships exist, between the Company and its directors, executive officers
or affiliates. See "Transactions with Executive Officers and Directors" in
Schedule I hereto.
ITEM 4. SOLICITATION OR RECOMMENDATION.
(A) RECOMMENDATION OF THE BOARD OF DIRECTORS.
The Board of Directors has unanimously approved the Merger Agreement
and the transactions contemplated thereby and unanimously recommends that all
holders of Shares tender such Shares pursuant to the Offer.
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(B) BACKGROUND; REASONS FOR THE RECOMMENDATION.
In late spring 1994, Andrew T. Dwyer, Chairman of the Company,
contacted Phillip B. Rooney, President of Parent, to discuss jointly pursuing
certain project opportunities using the Company's technology and experience in
designing, constructing and operating material recycling facilities and Parent's
operating and capital resources. This discussion led to a meeting on June 1,
1994 among Mr. Dwyer, Mr. Rooney and Joseph M. Holsten, Chief Financial Officer
of Parent, at which these possible cooperative efforts were further explored.
At this meeting, Mr. Rooney also expressed an interest in having Parent acquire
the Company, indicating that on the basis of a preliminary valuation analysis of
publicly available information regarding the Company which Parent had performed,
Parent might be willing to consider paying a price of $7.50 per Share in such an
acquisition. Noting the recent improvement in the Company's financial
performance, Mr. Dwyer declined to discuss a possible acquisition of the Company
at that price. He did, however, suggest that a price of at least $10.00 per
Share might be of interest to him personally. Parent's representatives
indicated their view that such a higher price was not warranted and the
discussion of a possible acquisition terminated. Although Messrs. Dwyer and
Rooney had continuing dialogue from time to time regarding possible project
opportunities or joint ventures, there were no further discussions between
Messrs. Dwyer and Rooney regarding Parent's possible acquisition of the Company
until the discussions in March 1995 described below.
In October 1994, the Company and Parent entered into a confidentiality
agreement pursuant to which Parent would have access to technical information to
determine whether there was interest in Parent retaining the Company to render
technical advisory services in connection with Parent's material recovery
facility operations. On October 27, 1994, William A. Rodgers, Jr., then Vice
President-Business Development of Parent's Mid-Atlantic Group and two other
representatives of Parent, toured the Company's Ocean County, New Jersey
material recycling facility. Accompanying these officials at various times were
Mr. Dwyer, Lawrence J. Schorr, the Company's President and Chief Executive
Officer, and the Ocean County facility manager. During this tour, Mr. Rodgers
again broached the subject of a possible acquisition of the Company by Parent,
but Mr. Dwyer indicated that there was no interest from his standpoint in
discussing such a transaction at that time.
On January 24, 1995, the Company publicly released its financial results
for the year ended December 31, 1994. Subsequently, Mr. Rooney contacted Mr.
Dwyer's office and Paul A. Gould, a director of the Company and a Managing
Director of Allen & Co., the Company's largest stockholder, and arranged for a
meeting on March 2, 1995, for the principal purpose of discussing a possible
acquisition of the Company by the Parent or considering another form of business
combination between them. After it was scheduled but prior to this meeting, Mr.
Dwyer furnished Parent's representatives with certain information regarding the
Company's results of operations and financial position, cash position and a
summary of the Company's "best case" operating budget for 1995. See "Certain
1995 Financial and Budget Information" in Section 8 of the Offer to Purchase
that is enclosed with this Schedule 14D-9. This meeting was attended by Messrs.
Rooney, Holsten and Rodgers, from Parent, and by Messrs. Dwyer and Gould.
At the March 2 meeting, the Company's management and its ongoing
projects were discussed and the budget and underlying assumptions were reviewed.
Parent's representatives proposed an acquisition of the Company by the Parent on
the basis of a cash price of $10.00 per Share. Mr. Dwyer initially indicated an
interest in a cash price of $14.00 per share, but after negotiations among the
Parent representatives, Mr. Dwyer and Mr. Gould, it was generally agreed that a
per share price of $11.50 would be mutually acceptable to the meeting
participants. The participants further generally agreed that the Parent would
offer to acquire all of the Company's outstanding shares for a cash price of
$11.50 per share, and Messrs. Dwyer and Gould, and Allen & Co., would tender
their Shares to Parent upon such offer, subject to negotiation and execution of
a definitive acquisition agreement containing typical terms and conditions, and
in the case of Messrs. Dwyer and Gould, and Allen, to the approval of the
Company's Board, and in the case of Parent, to its completion of due diligence.
A break-up fee was also discussed and Messrs. Dwyer and Gould indicated that
they were amenable to such a fee if a definitive agreement could be reached and
approved by the Company's Board.
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On March 3, 1995, Mr. Dwyer informed Mr. Schorr of the proposed Parent
offer, and between March 3 and March 8, Mr. Schorr informed Company Board
members and retained legal counsel. On March 9, 1995, the Company retained Allen
& Co. and Gilford Securities Incorporated ("Gilford") to act as financial
advisors (the "Financial Advisors"), and the Financial Advisors began conducting
their reviews of the Company. During the two weeks beginning March 6, as
representatives of Parent conducted various due diligence activities,
representatives of Parent and the Company (including outside counsel for all
parties) negotiated the terms of the Merger Agreement and the Stock Tender
Agreements.
On March 14, 1995, the Company's Board of Directors held an
informational meeting with the Financial Advisors and the Company's legal
counsel in New York City. At this meeting, the Board was informed of the
background leading up to the Parent's proposed offer and current status of the
negotiations and due diligence. The Company's legal counsel summarized the
terms and conditions of the proposed Merger Agreement and the Stock Tender
Agreements, and provided advice to the Board members with respect to certain
legal matters, including their fiduciary obligations in connection with a sale
of the Company. Representatives of the Financial Advisors provided a
preliminary report to the Board based on their review of the Company,
summarizing the items reviewed and analyzed. The Financial Advisors indicated
at that time that their preliminary views were that the consideration for the
Shares to be paid pursuant to the Offer and Merger was fair, from a financial
point of view, to the Company's stockholders. During this meeting, the Board
discussed the Offer and Merger in detail. The Company's management and counsel
generally were authorized to continue their negotiations with Parent and a
second Board meeting was scheduled for March 17.
On March 17, 1995, the Company's Board of Directors met by telephone
conference call to consider the final terms of the proposed transaction and
receive the final report of the Financial Advisors. The written analysis
prepared by Allen & Co. had been provided to the Board members on March 16, and
drafts of the various agreements were provided as well. The Company's legal
counsel summarized the changes to the Merger Agreement that had been agreed to
since the previous meeting, and reviewed the terms of the Stock Tender
Agreements and the New Schorr Agreement. Counsel also described certain
modifications to outstanding options, the Ladenburg Warrant and the Company's
convertible preferred stock that needed to be made in connection with the Offer
and Merger.
Representatives of the Financial Advisors then made a presentation to
the Board of Directors and delivered the oral opinions of Allen & Co. and
Gilford that, as of March 17, 1995 and based upon and subject to the matters
reviewed with the Board, the $11.50 per Share cash consideration to be received
by the holders of the Shares in the Offer and the Merger was fair to such
holders from a financial point of view.
The Board then analyzed and discussed the Offer, the Merger Agreement,
the Stock Tender Agreements, the New Schorr Agreement, and the modifications to
be made to the options, the Ladenburg Warrant and the preferred stock. The
Board of Directors unanimously approved the Merger Agreement, the Stock Tender
Agreements, and the transactions contemplated thereby, as well as the New Schorr
Agreement, and the modifications to the options, the Ladenburg Warrant, and the
preferred stock. The Board also unanimously resolved to recommend acceptance of
the Offer and approval and adoption of the Merger and the Merger Agreement by
the Company's stockholders.
In approving the Merger Agreement and the transactions contemplated
thereby and recommending that all holders of Shares tender such Shares pursuant
to the Offer, the Board of Directors considered a number of factors, including:
(i) the terms of the Merger;
(ii) presentations by management and the Financial Advisors regarding,
among other things, the financial condition, results of operations,
business and prospects of the Company, including consideration of
commodity price fluctuations, the declining number of municipal
projects, the
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amount of capital that may be needed to expand the Company's
operations in the future, particularly for privately financed
projects, the potential negative effects on recycling because of the
inability of municipal governments to enforce flow control, and the
increase in competition arising from high commodity pricing;
(iii) that the $11.50 per Share price in the Offer represented (a) a
premium of approximately 51% over the closing price of the Shares on
March 13, 1995 (three days prior to the meeting), (b) a premium of
approximately 156% over the closing price of the shares on December
30, 1994, and (c) a price higher than the Shares have traded in the
last five years;
(iv) the oral opinions of Allen & Co. and Gilford delivered at the meeting
on March 17, and subsequently confirmed in writing and attached
hereto as Exhibits 8 and 9, respectively, to the effect that, as of
such date and based upon and subject to the matters reviewed with the
Board, the $11.50 per Share cash consideration to be received by the
holders of the Shares pursuant to the Offer and the Merger was fair
to such holders from a financial point of view;
(v) that the Merger Agreement permits the Company to furnish information
to (pursuant to appropriate confidentiality agreements), and
negotiate or participate in discussions with, any third party if
required by the fiduciary duties of its directors after consulting
with outside counsel to the Company;
(vi) the fact that the Company and its representatives did not solicit
possible acquisition interest from third parties, including the
following considerations (among other things) that led to the Board
decision that a "public" auction of the Company was not the
appropriate course: (1) the uncertainties and potential adverse
effect that a "public" auction of the Company could have on the
business, employees and prospects of the Company, including its
relationships with third parties, (2) the Board's belief, after
considering the preliminary presentations of the Financial Advisors,
that the price per Share in the Offer and Merger was sufficiently
attractive that it did not need to solicit other offers, (3) the
terms of the Merger Agreement, described above, that permit the
Company, if required by the fiduciary duties of its directors, to
negotiate or participate in discussions with third parties, (4) the
size of the break-up fee (referred to below) and the Board's belief
that it would not deter alternative bidders, and (5) the limited
number of possible alternative third party bidders that would be
willing and able to pay a higher price for the Shares than the
consideration offered in the Offer and Merger, without additional
conditions to consummation, in light of current recycling industry
conditions and activities;
(vii) the termination provisions of the Merger Agreement, which were a
condition to the Offer, providing that Parent would be entitled to a
fee of $1,000,000 if (a) any person, corporation, partnership or
other entity (other than Parent, Purchaser or any of their
affiliates) ("Third Person") acquires more than 33% of the
outstanding Shares, (b) a Third Person acquires more than 50% of the
Company's total assets, (c) the Company consummates a plan of
liquidation relating to more than 50% of its total assets, (d) the
Company repurchases more than 50% of the outstanding Shares, (e) the
Company consummates a merger of the Company with, the sale of all or
substantially all of the assets of the Company to, or any other
business combination involving the Company with, a Third Person, or
(f) Parent and Purchaser terminate the Merger Agreement because more
than 50.1% of the shares (assuming exercise and conversion of all
outstanding options and convertible securities) have not been validly
tendered and not withdrawn, and within one year from the date of such
termination a transaction contemplated by (a), (b) or (e) is
consummated with a Third Person, so long as such transaction is
accomplished so as to provide a yield to holders of Company Common
Stock of at least the equivalent of $11.50 per share, and there was a
public announcement or written proposal to effect such transaction by
or with such Third Person while the Merger Agreement was in effect,
or (g) the Board withdraws or amends in
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any material respect adverse to consummation of the Offer its
recommendation that the Offer be accepted by the Company's
stockholders and that stockholders tender their Shares in the Offer,
unless such withdrawal or amendment results from a material breach
by Parent or Purchaser of any representations or warranties in the
Merger Agreement or a failure by Parent or Purchaser to fulfill any
material covenant in the Merger Agreement;
(viii) the limited number of conditions to the obligations of Parent and
Purchaser to consummate the Offer and the Merger, including the fact
that the Offer is not conditioned on financing;
(ix) the request by Purchaser and Parent for the Stock Tender Agreements,
which were executed upon the execution of the Merger Agreement, and
the fact that the Shares owned by the selling stockholders
thereunder could only be purchased by Purchaser pursuant to the
terms of the Offer whereby all stockholders of the Company have the
same right to participate, it being recognized by the Board of
Directors that the Stock Tender Agreements did not preclude an
alternative offer for the Company or its outstanding Shares; and
(x) the anticipated benefits of the Merger to the employees and
management of the Company.
The Board of Directors did not assign relative weights to the foregoing
factors or determine that any factor was of particular importance. Rather, the
Board of Directors viewed its position and recommendations as being based on the
totality of the information presented to and considered by it.
Copies of the written opinions of Allen & Co. and Gilford are attached
hereto as Exhibits 8 and 9, respectively, and incorporated herein by reference.
STOCKHOLDERS ARE URGED TO READ THE OPINIONS OF ALLEN & CO. AND GILFORD IN THEIR
ENTIRETY.
ITEM 5. PERSONS RETAINED, EMPLOYED OR TO BE COMPENSATED.
The Company has retained Allen & Co. by letter agreement dated March 9,
1995 to act as financial advisor to assist it in evaluating the fairness to the
stockholders of the Company from a financial point of view of the Proposed
Transaction (as defined in the letter agreement), including a potential business
combination pursuant to which the Company would be acquired by Purchaser, and to
assist it in negotiations between the Company and any potential acquirors,
investors, or other interested parties. The engagement will last for the
shorter of one year from its inception unless extended for certain specified
reasons, consummation of the Proposed Transaction, or abandonment thereof.
The Company has agreed to pay Allen & Co. $300,000 upon acquisition by
Purchaser of a majority of the Shares. In the event of the consummation of an
alternative transaction that would entail financial advisory services for the
Company, Allen & Co. will receive such compensation as may be agreed between the
parties. The Company has also agreed to pay out-of-pocket expenses, including
the expenses of counsel for Allen & Co., and to indemnify Allen & Co. for
certain liabilities arising out of the Proposed Transaction or the retention of
Allen & Co. pursuant to, or its performance under, the letter agreement,
including liabilities arising under the federal securities laws.
Allen & Co. owns 664,806 shares of the Company and Paul A. Gould, a
director of the Company and a Managing Director of Allen & Co. owns an
additional 150,000 shares. Allen & Co. and Mr. Gould agreed on March 17, 1995
to tender their Shares to the Purchaser and not to withdraw the Shares except as
set forth in their respective Stock Tender Agreements. See "Item 3. Identity
and Background."
In the ordinary course of its business, Allen & Co. may actively trade the
securities of the Company and WMX for the accounts of its customers and,
accordingly, may at any time hold a long or short position in such securities.
-9-
By letter agreement dated March 9, 1995, the Company engaged Gilford to
provide it with an opinion whether or not the proposed consideration to be
received in connection with the Offer and Merger is fair to the Company's
stockholders from a financial point of view. The Company has agreed to pay
Gilford $62,500, one-half of which was paid by the Company upon delivery of the
opinion and the balance of which is payable upon consummation of the Merger. In
addition, the Company has agreed to pay Gilford's reasonable out-of-pocket
expenses, including the reasonable fees and expenses of its counsel, and to
indemnify Gilford for certain liabilities arising out of Gilford's engagement
pursuant to the letter agreement, including liabilities arising under the
federal securities laws.
In the ordinary course of its business, Gilford may actively trade the
securities of the Company and WMX for its own account and for the accounts of
its customers and, accordingly, may at any time hold a long or short position in
such securities. The Company has been informed that Gilford has not been
previously retained by and does not have any other contract, agreement,
arrangement, understanding or actual or potential conflict of interest, with the
Company, Purchaser, Parent, or any of their respective directors, executives
officers or affiliates.
ITEM 6. RECENT TRANSACTIONS AND INTENT WITH RESPECT TO SECURITIES.
(a) Except as set forth in Schedule II hereto, no transactions in the
Shares have been effected during the past 60 days by the Company or, to the best
of the Company's knowledge, by any executive officer, director, affiliate or
subsidiary of the Company.
(b) To the best of the Company's knowledge, to the extent permitted by
applicable securities laws, rules or regulations, each executive officer,
director, affiliate and subsidiary of the Company currently intends to tender
all Shares to the Purchaser which are held of record or beneficially by such
person or over which he, she or it has sole dispositive power.
ITEM 7. CERTAIN NEGOTIATIONS AND TRANSACTIONS BY THE SUBJECT COMPANY.
(a) Except as set forth in this Schedule 14D-9, no negotiation is being
undertaken or is underway by the Company in response to the Offer which relates
to or would result in (i) an extraordinary transaction, such as a merger or
reorganization, involving the Company or any subsidiary of the Company; (ii) a
purchase, sale or transfer of a material amount of assets by the Company or any
subsidiary of the Company; (iii) a tender offer for or other acquisition of
securities by or of the Company; or (iv) any material change in the present
capitalization or dividend policy of the Company.
(b) None.
ITEM 8. ADDITIONAL INFORMATION TO BE FURNISHED.
(A) DGCL 203.
Section 203 of the General Corporation Law of Delaware ("DGCL") purports to
regulate certain business combinations of a corporation organized under Delaware
law, such as the Company, with a stockholder beneficially owning 15% or more of
the voting stock of such corporation after the date the relevant person or
entity first becomes a 15% stockholder. Section 203 provides that the
corporation shall not engage for a period of three years in any business
combination with such a stockholder without approval of the holders of two-
thirds of the outstanding shares (other than the shares owned by the 15%
stockholder), with certain exceptions, including (i) prior approval by the board
of directors of the corporation, either of the business combination or the
transaction which results in a stockholder becoming a 15% stockholder, or (ii)
the ownership by the 15% stockholder of at least 85% of the outstanding voting
shares of the corporation, exclusive of shares acquired in a transaction not
approved by the board of directors. The Company's Board of Directors has
approved the Merger Agreement and the transactions
-10-
contemplated thereby, including the Offer, the Stock Tender Agreements, and the
Merger, and, therefore, Section 203 of the DGCL is inapplicable to the Offer and
the Merger.
(B) INFORMATION STATEMENT.
The Information Statement attached as Schedule I hereto is being furnished
in connection with the possible designation by Purchaser, pursuant to the Merger
Agreement, of certain persons to be appointed to the Board of Directors of the
Company other than at a meeting of the Company's stockholders.
ITEM 9. MATERIAL TO BE FILED AS EXHIBITS.
Exhibit No.
-----------
Exhibit 1 Agreement and Plan of Merger dated March 17, 1995 among Waste
Management, Inc., WMI Acquisition Sub, Inc. and Resource Recycling
Technologies, Inc.
Exhibit 2 Stock Tender Agreement dated March 17, 1995 among Allen & Company
Incorporated, Waste Management, Inc. and WMI Acquisition Sub, Inc.
Exhibit 3 Stock Tender Agreement dated March 17, 1995 among Paul A. Gould,
Waste Management, Inc. and WMI Acquisition Sub, Inc.
Exhibit 4 Stock Tender Agreement dated March 17, 1995 among Andrew T. Dwyer,
Waste Management, Inc. and WMI Acquisition Sub, Inc.
Exhibit 5 Employment Agreement dated March 17, 1995 between Resource
Recycling Technologies, Inc. and Lawrence J. Schorr.
Exhibit 6 Press Release issued jointly by Waste Management, Inc. and Resource
Recycling Technologies, Inc. dated March 17, 1995.
Exhibit 7 Letter to Stockholders of Andrew T. Dwyer and Lawrence J. Schorr
dated March 23, 1995.*
Exhibit 8 Opinion of Allen & Company Incorporated dated March 17, 1995.*
Exhibit 9 Opinion of Gilford Securities Incorporated dated March 17, 1995.*
Exhibit 10 Press Release issued jointly by Waste Management, Inc. and Resource
Recycling Technologies, Inc. dated March 23, 1995.
-----------------
* Included in copies mailed to stockholders.
SIGNATURE
After reasonable inquiry and to the best of my knowledge and belief, I
certify that the information set forth in this statement is true, complete and
correct.
Dated: March 23, 1995 RESOURCE RECYCLING TECHNOLOGIES, INC.
By: /s/ LAWRENCE J. SCHORR
---------------------------------
Name: Lawrence J. Schorr
Title: President and Chief Executive Officer
-11-
SCHEDULE I
RESOURCE RECYCLING TECHNOLOGIES, INC.
300 PLAZA DRIVE
VESTAL, NEW YORK 13850
INFORMATION STATEMENT PURSUANT TO
SECTION 14(F) OF THE SECURITIES
EXCHANGE ACT OF 1934 AND RULE 14F-1 THEREUNDER
This Information Statement is being mailed on or about March 23, 1995 as
part of the Solicitation/Recommendation Statement on Schedule 14D-9 (the
"Schedule 14D-9") of Resource Recycling Technologies, Inc. (the "Company") to
the holders of record of shares of Common Stock, par value $1.00 per share, of
the Company (the "Shares"). You are receiving this Information Statement in
connection with the possible election of persons designated by the Purchaser (as
defined below) to a majority of the seats on the Board of Directors of the
Company.
On March 17, 1995, the Company, WMI Acquisition Sub, Inc., a Delaware
corporation ("Purchaser"), and Waste Management, Inc., an Illinois corporation
("Parent"), entered into an Agreement and Plan of Merger (the "Merger
Agreement") in accordance with the terms and subject to the conditions of which
(i) Parent will cause the Purchaser to commence a tender offer (the "Offer") for
all outstanding Shares, at a price of $11.50 per Share net to the seller in
cash, and (ii) Purchaser will be merged with and into the Company (the
"Merger"). As a result of the Offer and the Merger, the Company will become a
wholly owned subsidiary of Parent. Parent is controlled by WMX Technologies,
Inc.
The Merger Agreement requires the Company to take such action as Purchaser
may reasonably request to cause Purchaser's designees to be elected to the Board
of Directors under the circumstances described therein. See "Board of Directors
and Executive Officers--Right to Designate Directors; Purchaser Designees."
You are urged to read this Information Statement carefully. You are not,
however, required to take any action. Capitalized terms used herein and not
otherwise defined herein shall have the meanings set forth in the Schedule
14D-9.
Pursuant to the Merger Agreement, Purchaser commenced the Offer on March
23, 1995. The Offer is scheduled to expire at 12:00 midnight, New York City
Time, on Wednesday, April 19, 1995, unless the Offer is extended.
The information contained in this Information Statement concerning
Purchaser and Parent has been furnished to the Company by Purchaser and Parent,
and the Company assumes no responsibility for the accuracy or completeness of
such information.
I-1
BOARD OF DIRECTORS AND EXECUTIVE OFFICERS
GENERAL
The Shares are the only class of voting securities of the Company
outstanding. Each Share has one vote. As of March 20, 1995, there were
2,675,773 Shares outstanding. The Board of Directors currently consists of six
members. At each annual meeting of stockholders, directors are elected to hold
office for one year terms, until the next annual meeting of stockholders.
RIGHT TO DESIGNATE DIRECTORS; PURCHASER DESIGNEES
The Merger Agreement provides that promptly upon the purchase by Parent or
Purchaser of at least a majority of the outstanding Shares, Purchaser and Parent
shall be entitled to designate such number of directors (but in no event more
than one less than the total number of directors) on the Board of Directors (the
"Board") of the Company, rounded up to the next whole number (the "Purchaser
Designees") such that Purchaser and Parent, subject to compliance with Section
14(f) of the Securities Exchange Act of 1934, as amended (the "Exchange Act"),
will have representation on the Board equal to the product of (i) the number of
directors on the Board and (ii) the percentage that the number of Shares so
purchased bears to the total number of Shares outstanding, and the Company and
its Board shall, at such time, take any and all such action as Purchaser may
reasonably request (including increasing the size of the Board) to cause the
Purchaser Designees to be elected to the Company's Board.
Purchaser has informed the Company that it will choose the Purchaser
Designees from the executive officers listed on Schedule I to the Offer to
Purchase, a copy of which is being mailed to the Company's stockholders together
with this Information Statement. The information on such Schedule I is
incorporated herein by reference. No determination has yet been made as to
which of the current directors of the Company who are not officers of the
Company will continue as directors following the purchase of Shares pursuant to
the Offer.
None of the Purchaser Designees (i) is currently a director of, or holds
any position with, the Company, (ii) has a familial relationship with any
directors or executive officers of the Company, or (iii) to the best knowledge
of the Purchaser, beneficially owns any securities (or rights to acquire such
securities) of the Company. The Company has been advised by Purchaser that, to
the best of Purchaser's knowledge, none of the Purchaser Designees has been
involved in any transactions with the Company or any of its directors, executive
officers or affiliates which are required to be disclosed pursuant to the rules
and regulations of the Commission, except as may be disclosed herein or in the
Schedule 14D-9.
It is expected that the Purchaser Designees may assume office at any time
following the acceptance for payment of, and payment for, any Shares pursuant to
the Offer, and that, upon assuming office, the Purchaser Designees will
thereafter constitute at least a majority of the Board of Directors.
Biographical information concerning each of the Company's current directors
and executive officers is presented on the following pages.
I-2
INFORMATION CONCERNING MEMBERS
OF THE BOARD OF DIRECTORS
CERTAIN BACKGROUND AND OTHER INFORMATION CONCERNING DIRECTORS AND NOMINEES
Unless otherwise indicated, each person listed below has been employed at
his or her present principal occupation for the past five years or prior
thereto. Each individual listed below is a citizen of the United States. There
are no family relationships among directors, nominees for election as directors
or executive officers of the Company.
Andrew T. Dwyer, 46, has been a director of the Company since October 1991
and has been Chairman of the Board of Directors since May 1993. Mr. Dwyer is a
consultant, and has entered into a Consulting Agreement with the Company. See
"Executive Compensation." Mr. Dwyer was Chairman of the Board of Directors of
JWP INC. (now known as EMCOR Group, Inc., referred to herein as "JWP") from
April 1987 until July 1993. Mr. Dwyer also served as Chief Executive Officer of
JWP from 1987 until April 1993 and as President of JWP from 1985 until January
1992. On December 21, 1993, an involuntary petition under Chapter 11 of the
U.S. Bankruptcy Code was filed against JWP. This proceeding was converted to a
voluntary action on February 14, 1994, when JWP consented to the entry of an
order for relief under Chapter 11. JWP was discharged from bankruptcy in
approximately December 1994 and its name was changed to EMCOR Group, Inc. Mr.
Dwyer was a director of JWP at the time of the filings. Mr. Dwyer has also
received a letter from the staff of the Securities and Exchange Commission (the
"SEC") indicating that an enforcement action is being recommended against him in
connection with certain alleged financial irregularities involving JWP occurring
prior to the bankruptcy. The Company has been informed that enforcement actions
are being recommended against JWP, Mr. Dwyer and other individuals who are or
were officers or directors of JWP. JWP, Mr. Dwyer and other officers and
directors of JWP are also defendants in lawsuits brought by JWP shareholders and
bondholders alleging violations of the federal securities laws, breaches of
fiduciary duty under state law and related matters. None of the alleged
financial irregularities, shareholder or bondholder litigation, or potential SEC
enforcement actions involve the Company. However, the SEC indicated in its
letter to Mr. Dwyer that an order barring Mr. Dwyer from serving as an officer
or director of any publicly held company may be sought. Mr. Dwyer has denied
any wrongdoing in connection with the matters involving JWP.
Lawrence J. Schorr, 40, is President and Chief Executive Officer of the
Company. Mr. Schorr was elected Chief Executive Officer effective May 4, 1993
and has served as President and Chief Operating Officer since October 1988. He
has been a director of the Company since November 1988. He also serves as an
officer and/or director of various subsidiaries of the Company.
Paul A. Gould, 49, has been a director of the Company since June 16, 1994.
Mr. Gould is a Managing Director of Allen & Company Incorporated ("Allen &
Co."), an investment banking firm that is the largest stockholder of the
Company. He also serves as a member of the Board of Directors of National
Patent Development Corp.
Burton I. Koffman, 68, has been a director of the Company since May 1986.
Between May 1986 and October 1991, Mr. Koffman served as Chief Executive Officer
and Chairman of the Board of Directors of the Company. He is also Chairman and
President of PLC Enterprises, Inc. ("PLC") and Great American Industries, Inc.
("Great American"), companies headquartered in Vestal, New York, that engage,
through subsidiaries, in the manufacture and distribution of foam and related
products and building materials. PLC and Great American are owned and
controlled by members of the Koffman family. Mr. Koffman also serves as
Chairman of Apparel America, Inc. ("Apparel"), Senior Vice President and a
director of Poloron Products, Inc. ("Poloron") and Centuri, Inc. ("Centuri"),
the principal stockholder of Poloron. Apparel, Poloron and Centuri are publicly
held companies in which members of the Koffman family and affiliated companies
hold substantial ownership interests. During 1991, Centuri, its then wholly
owned subsidiary, Outdoor Sports Headquarters, Inc. ("OSHI"), and Poloron Homes
of Pennsylvania, Inc. ("Poloron Homes"), a wholly owned subsidiary of Poloron,
filed voluntary petitions for
I-3
reorganization under Chapter 11 of the U.S. Bankruptcy Code. Mr. Koffman was an
officer and/or director of such companies at the time of such filings. The
Chapter 11 case of Poloron Homes is pending at the present time. Plans of
reorganization for OSHI and Centuri were approved by the bankruptcy court in
June 1992 and November 1993, respectively.
Jay R. Petschek, 36, has been a director of the Company since 1990. Mr.
Petschek is a Managing Director, Corporate Finance of Ladenburg, Thalmann & Co.
Inc. ("Ladenburg"), an investment banking firm.
Dean H. Cannon, 37, has been a director of the Company since February 1994.
Ms. Cannon is a principal of the law firm of Beveridge & Diamond, P.C.,
Washington, D.C. Beveridge & Diamond, P.C. serves as corporate counsel to the
Company.
Jeffrey M. Young, 44, is Senior Vice President-Operations of the Company
and has served as a Vice President of the Company since June 1991. He has
served as an officer and director of RRT Empire Returns Corporation ("RRT
Empire," a subsidiary of the Company) for more than five years and also serves
as an officer and/or director of other subsidiaries of the Company.
David H. Weitzman, 44, is Senior Vice President-Marketing and has been a
Vice President of the Company since June 1991. He has served as an officer of
RRT Empire for more than five years and also serves as an officer of other
subsidiaries of the Company.
Nathiel G. Egosi, 36, is Vice President-Engineering of the Company and has
served in such capacity since June 1991. He has been President of RRT Design &
Construction Corp. ("RRT Design," a subsidiary of the Company) since 1989.
Robert C. Nolt, 47, has been Vice President-Finance since June 1994,
Secretary since January 1995 and Treasurer and Controller of the Company since
March 1993. Mr. Nolt was Controller of U.S. Commstruct Inc., Vestal, New York,
for approximately one year prior to March 1993, and Vice President-Finance of
Ozalid Corporation, Vestal, New York, for more than two years prior to such
time. Mr. Nolt also serves as an officer and director of certain of the
Company's subsidiaries.
Jake Vigoda, 31, has been Vice President-Business Development since January
1995 and was the Company's Director of Business Development from January 1994
until January 1995. Mr. Vigoda was a Director of NK Intercon and its affiliates
for more than four years prior to December 1993.
COMMITTEES AND MEETINGS
The Board of Directors has established three standing committees to assist
in the discharge of its responsibilities. These are the Executive, Audit, and
Compensation and Incentive Stock Option Committees. The Board as a whole
nominates directors for election.
During the year ended December 31, 1994, the Board of Directors held four
meetings. The Audit Committee held one meeting (by telephone conference call),
and the Incentive Stock Option Committee (which became the Compensation and
Incentive Stock Option Committee on June 16, 1994) held two meetings. All
incumbent directors attended seventy-five percent (75%) or more of the Board and
Committee meetings held during the period during which they were directors or
Committee members.
Jay Petschek and Alan Jablon served as the Audit Committee from January 1,
1994 until Mr. Jablon's resignation from the Board effective March 7, 1994. Jay
Petschek and Dean H. Cannon served as the Audit Committee from March 15, 1994
through June 16, 1994, at which time Burton Koffman was added to the Committee
for the balance of the year. The Audit Committee meets with the Company's
independent accountants and reviews the results of their audit and management's
response thereto, inquires into various financial accounting
I-4
matters affecting the Company and reviews the non-audit services performed by
the independent auditors, considering the effect, if any, on their independence.
Andrew Dwyer, Alan Jablon, and Jay Petschek served as the members of the
Compensation Committee and as the members of the Incentive Stock Option
Committee for 1994 until Mr. Jablon's resignation from the Board effective March
7, 1994 (after which the membership of these Committees was Andrew Dwyer and Jay
Petschek). On June 16, 1994, these two committees were merged and Andrew Dwyer,
Paul Gould and Jay Petschek were elected as the members of the Compensation and
Incentive Stock Option Committee. The Compensation and Incentive Stock Option
Committee periodically reviews the compensation, including fringe benefits, of
officers and management personnel of the Company. This Committee also
administers the Incentive Stock Option Plan and, subject to the provisions of
the Plan and applicable law, has full authority to interpret the Plan, determine
the terms and provisions of the respective option agreements and make all other
determinations necessary or advisable for the administration of the Plan.
The Company did not have an Executive Committee until September 27, 1994,
when Andrew Dwyer, Paul Gould and Lawrence Schorr were elected as the members of
the Executive Committee. The Executive Committee generally has the authority to
exercise all powers of the Board, to the extent permitted by law, in the
management of the Company between Board meetings. Although the Executive
Committee held no formal meetings during the balance of 1994, it consulted
informally on several occasions.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
No member of the 1994 Compensation and Incentive Stock Option Committee (or
of the previous Compensation Committee) was, during 1994 or previously, an
officer or employee of the Company or any of its subsidiaries, and no member had
any relationship with the Company other than as a director, except that Andrew
Dwyer, who is the Chairman of the Board, has a Consulting Agreement with the
Company. See "Compensation of Executive Officers and Directors." No executive
officer of the Company served as a member of the compensation committee (or
other board committee performing equivalent functions) of any other entity
during 1994.
I-5
SECURITY OWNERSHIP
The following table sets forth, as of March 20, 1995 (except as set forth
in Notes 6 and 7), certain information with respect to each stockholder known by
the Company to be the beneficial owner of more than 5% of its Common Stock, each
director, each executive officer and all executive officers and directors as a
group. Unless otherwise indicated, the stockholders have sole voting and
investment power with respect to Shares beneficially owned by them.
[Download Table]
NAME OF PERSON OR ENTITY COMMON
AND ADDRESS OF 5% OR MORE STOCK PERCENT OF
BENEFICIAL OWNER OWNED OUTSTANDING (1)
-------------------------------------- ------- ---------------
Allen & Company Incorporated 664,806 24.8 %
711 Fifth Avenue
New York, New York 10022
Paul A. Gould (2) 150,000 5.6 %
c/o Allen & Company Incorporated
711 Fifth Avenue
New York, New York 10022
Andrew T. Dwyer (3)(4)(5) 267,700 9.7 %
c/o Airlie Group
115 E. Putnam Street
Greenwich, Connecticut 06830
Kennedy Capital Management, Inc. (6) 233,400 8.7 %
425 N. New Ballas Road., #181
St. Louis, Missouri 63141
Dimensional Fund Advisors Inc. (7) 135,623 5.1 %
1299 Ocean Avenue, 11th Floor
Santa Monica, California 90401
Lawrence J. Schorr (4)(5)(8) 182,218 6.3 %
Burton I. Koffman (4) 5,000 (9)
Jay R. Petschek (4)(10) 16,000 (9)
Dean H. Cannon (4) 2,500 (9)
Nathiel G. Egosi (4)(5) 36,000 1.3 %
Jeffrey M. Young (4)(5) 40,675 1.3 %
David H. Weitzman (4)(5) 44,583 1.3 %
All Directors and Executive
Officers as a Group
(11 persons)
(2)(3)(4)(5)(8)(10) 1,429,482 43.4 %
__________________________
I-6
(1) Percent of outstanding Shares is computed on the basis of 2,675,773 Shares
of Common Stock outstanding as of March 20, 1995.
(2) The Shares listed do not include 664,806 Shares owned by Allen & Co. Mr.
Gould is a Managing Director of Allen & Co. Mr. Gould disclaims beneficial
ownership of the Shares owned by Allen & Co.
(3) The Shares listed include (1) 13,600 Shares owned by Mr. Dwyer's wife, (2)
18,000 Shares owned by each of Mr. Dwyer's three minor children (for a
total of 54,000 Shares), and (3) 3,300 Shares owned by a family trust of
which Mr. Dwyer is a trustee and beneficiary. Mr. Dwyer disclaims
beneficial ownership of the Shares owned by his wife and minor children.
(4) The number of Shares listed as beneficially owned by the directors,
executive officers and All Directors and Executive Officers as a Group
includes the following number of Shares not presently owned but as to which
such listed beneficial owner has the right to acquire beneficial ownership
by exercise of stock options that are exercisable on March 20, 1995 (or
within 60 days of such date): Andrew T. Dwyer--40,000 Shares; Lawrence J.
Schorr--125,920 Shares; Burton I. Koffman--5,000 Shares; Jay R. Petschek--
15,000 Shares; Dean H. Cannon--2,500 Shares; Nathiel G. Egosi--27,740
Shares; Jeffrey M. Young--27,830 Shares; David Weitzman--26,920 Shares; and
All Directors and Executive Officers as a Group (11 persons)--284,110
Shares.
(5) The number of Shares listed as beneficially owned by the directors,
executive officers and All Directors and Executive Officers as a Group
includes the following number of Shares not presently owned but as to which
such listed beneficial owner has the right to acquire beneficial ownership
by exercise of stock options that are not exercisable on March 20, 1995 (or
within 60 days of such date), but which become exercisable upon
consummation of the Offer: Andrew T. Dwyer--40,000 Shares; Lawrence J.
Schorr--52,580 Shares; Nathiel G. Egosi--8,260 Shares; Jeffrey M. Young--
7,670 Shares; David Weitzman--7,080 Shares; and All Directors and Executive
Officers as a Group (11 persons)--122,390 Shares.
(6) Kennedy Asset Management, Inc., a registered investment advisor, is deemed
to have beneficial ownership of 233,400 Shares as of December 31, 1994, all
of which Shares are held in discretionary accounts for investment purposes.
(7) Dimensional Fund Advisors Inc. ("Dimensional"), a registered investment
advisor, is deemed to have beneficial ownership of 135,623 Shares as of
December 31, 1994, all of which Shares are held in portfolios of DFA
Investment Dimensions Group Inc., a registered open-end investment company,
or in series of the DFA Investment Trust Company, a Delaware business
trust, or the DFA Group Trust and DFA Participation Group Trust, investment
vehicles for qualified employee benefit plans, for all of which Dimensional
Fund Advisors Inc. serves as investment manager. Dimensional disclaims
beneficial ownership of all such Shares.
(8) The Shares listed include 3,718 Shares owned by the Levene, Gouldin &
Thompson Retirement Plan for the benefit of Lawrence J. Schorr.
(9) The percentage constitutes less than one percent of the total outstanding
Shares.
(10) The Shares listed include 1,000 Shares owned by the wife of Jay R.
Petschek. The Shares listed do not include 113,363 Shares that may be
issued upon the exercise of a stock warrant granted to Ladenburg. Mr.
Petschek is a Managing Director, Corporate Finance of Ladenburg.
I-7
COMPENSATION OF EXECUTIVE OFFICERS AND DIRECTORS
COMPENSATION OF EXECUTIVE OFFICERS
The following table sets forth the compensation of the Company's President
and Chief Executive Officer and the Company's four most highly compensated
executive officers other than the President and Chief Executive Officer who were
serving as executive officers as of December 31, 1994. In each case,
compensation for services rendered in all capacities to the Company and its
subsidiaries is included for the specified time periods.
SUMMARY COMPENSATION TABLE
[Enlarge/Download Table]
LONG-TERM
ANNUAL COMPENSATION (1) COMPENSATION
------------------------- --------------
Awards of All Other
Salary Options Compensation
Name and Principal Position Year ($) (2) Bonus($) (Shares) (3) ($) (4)
--------------------------- ----- ------- ------- ------------ ------------
Lawrence J. Schorr, 1994 266,405 109,646 137,000 3,642
President and Chief Executive Officer (5) 1993 225,000 0 0 3,374
1992 229,326 6,000 0 3,323
David C. Jones, 1994 146,875 20,000 22,500 2,838
Executive Vice President & Secretary (6) 1993 163,578 0 0 3,066
1992 170,723 5,000 0 3,032
Nathiel G. Egosi, 1994 146,909 27,000 21,000 2,288
Vice President--Engineering (7) 1993 140,000 22,803 0 2,565
1992 136,346 46,232 0 2,381
Jeffrey M. Young, 1994 125,481 30,108 19,500 2,309
Vice President--Operations (8) 1993 100,000 0 0 2,000
1992 101,923 0 0 1,957
David H. Weitzman, 1994 108,847 23,000 18,000 2,077
Vice President--Marketing (8) 1993 100,000 0 0 2,000
1992 101,923 0 0 2,035
--------------------
(1) Does not include the value of certain non-cash compensation to the named
individuals which did not exceed the lesser of $50,000 or 10% of such
individuals' total annual salary and bonus shown in the Table. The Company
provides an automobile to each of the named executives for use in
connection with Company business but does not believe the value of such
automobiles and other non-cash compensation (if any) exceeds the lesser of
$50,000 or 10% of the executive's total annual salary and bonus.
(2) Includes salary and/or bonus deferred pursuant to Section 401(k) of the
Internal Revenue Code.
(3) The numbers shown in the table represent options for the purchase of Shares
granted to the named persons under the Company's Incentive Stock Option
Plan As Amended and Restated June 8, 1990 (the "Incentive Plan") and under
the Non-Qualified Stock Option Plan (the "Non-Qualified Plan"). There were
no long-term incentive payouts during any of the three years covered in the
table.
I-8
(4) Reflects nondiscretionary contributions made on behalf of the named
executive officer pursuant to the provisions of the Company's 401(k) Plan.
(5) Mr. Schorr was elected Chief Executive Officer on May 4, 1993. Between
October 1988 and May 4, 1993, Mr. Schorr served as the Company's President
and Chief Operating Officer and, as Chief Operating Officer, acted in a
capacity similar to that of a Chief Executive Officer.
The Company entered into an Employment Agreement with Lawrence J. Schorr
effective October 3, 1988. The agreement was amended effective May 6, 1991
and expires on October 1, 1996. The agreement, as amended, provides for an
annual base salary of $225,000 for the twelve months ended September 30,
1992, with annual five percent (5%) increases thereafter, and for
additional cash bonuses in the discretion of the Board of Directors. The
agreement also provides that in the event of a change of control of the
Company during the term of the agreement, Mr. Schorr has the right to
terminate the agreement in exchange for a lump sum payment by the Company
of an amount equal to the balance of all salary payments due to him until
the regular termination date, unless the new controlling entity has a net
worth equal to or greater than the net worth of the Company immediately
prior to the change of control and guarantees the Company's performance of
its obligations under the employment agreement. The acquisition by JWP on
October 1, 1991 of 34% of the outstanding Shares, as well as the
acquisition by Allen & Co. on January 6, 1994 of 29% of the outstanding
Shares, triggered these change of control provisions; however, no JWP or
Allen & Co. guarantee was provided.
(6) The Company entered into an Employment Agreement with David C. Jones
effective November 28, 1988. The agreement was amended effective November
15, 1993 with an expiration date of October 31, 1995. The agreement, as
amended, provided for an annual base salary at the rate of $133,500 per
annum for the period November 15, 1993 through October 31, 1994, and an
annual base salary at the rate of $125,000 per annum for the period
November 1, 1994 through October 31, 1995. The agreement also provided for
additional cash bonuses in the discretion of the Board of Directors. In
1994, the Company also made a lump sum payment of $8,500 to Mr. Jones for
compensation earned during the period November 1, 1992 through December 31,
1993 that had previously been deferred. Mr. Jones' employment agreement
could be terminated voluntarily by the Company or Mr. Jones upon 30 days'
notice and, if so terminated, Mr. Jones was entitled to payment of six
months salary or the balance due under the employment agreement, whichever
was less. In the event the agreement was terminated by the Company with an
effective termination date that was prior to November 1, 1994, termination
payments were to be paid at the rate of $181,912.50 per annum for any
months remaining under the agreement prior to November 1, 1994 (up to 6
months), with the balance (if any) of the termination payments at the rate
payable under the agreement. The agreement was terminated effective January
2, 1995, when Mr. Jones resigned as an officer, director and employee of
the Company. The agreement also contained change of control provisions
identical to those contained in Mr. Schorr's employment agreement
(described in note 5, above). Neither JWP nor Allen & Co. guaranteed Mr.
Jones' agreement.
(7) RRT Design, a subsidiary of the Company, entered into an Employment
Agreement with Nathiel G. Egosi effective June 1, 1989. Upon termination
of that agreement, RRT Design entered into a new agreement with Mr. Egosi
effective June 1, 1992 and expiring on May 31, 1995. The agreement
provides for an annual base salary of $140,000, for an incentive bonus
annually equal to five percent (5%) of RRT Design's net income before taxes
and bonuses or pursuant to a new bonus program to be adopted by the
Company, and for additional compensation in the discretion of RRT Design's
Board of Directors. (The bonus amounts shown in the Table reflect amounts
actually paid each year as a result of RRT Design's net income for the
prior year.)
(8) Effective July 31, 1991, the Company entered into Employment Agreements
that expired on July 1, 1994 with Jeffrey M. Young and David H. Weitzman.
Messrs. Young and Weitzman previously had been employees of RRT Empire
pursuant to agreements effective August 1, 1988. The agreements with the
I-9
Company provided for annual base salaries of $100,000 each and for
additional compensation in the discretion of the Board of Directors.
Messrs. Young and Weitzman have remained officers and employees although
their employment agreements have terminated.
The Company has also entered into Employment Agreements with Burton I.
Koffman and Richard E. Koffman expiring on January 1, 2001 and January 1, 1996,
respectively. Each agreement provides for a base annual salary of $50,000 for
the 12 months ended January 1, 1992, with annual five percent increases
thereafter, and each agreement contains change of control provisions identical
to those in Mr. Schorr's employment agreement (described in note 5, above).
Neither JWP nor Allen & Co. guaranteed the agreements with Messrs. Koffman. In
connection with the sale of stock to JWP in October 1991, the Company's interest
in a certain promissory note was sold to a company affiliated with the Koffman
family. Payments due to the Company in connection with that transaction were
delinquent and were offset against payments owed Messrs. Koffman under the
employment agreements during 1992, 1993 and 1994. See "Transactions With
Executive Officers and Directors."
Effective March 1, 1994, the Company entered into a Consulting Agreement with
Andrew T. Dwyer, Chairman of the Board, pursuant to which Mr. Dwyer will provide
specified consulting services to the Company. The Consulting Agreement is for
an initial term of six months, and is automatically renewed on a month-to-month
basis at the end of the term. The Consulting Agreement can be terminated by the
Company or Mr. Dwyer on 30 days' written notice. Compensation under the
Consulting Agreement is paid to Mr. Dwyer on a monthly basis at the rate of
$100,000 per annum.
DIRECTOR COMPENSATION
Cash directors' fees were not paid for service in 1994, but stock options
under the Non-Qualified Plan were granted to the non-employee directors in early
1994. Non-qualified stock options to purchase 5,000 Shares were granted to Alan
Jablon, Innis O'Rourke, Jay Petschek and Burton Koffman, and non-qualified stock
options to purchase 2,500 Shares were granted to Dean H. Cannon. Messrs. Jablon
and O'Rourke served as members of the Board of Directors during 1993 but
resigned in 1994. The exercise price for all such options is $3.42 per share,
which was in excess of the market price of $2.75 of the Company's Common Stock
on the date of the grants. All of such options vested in full on August 23,
1994.
Officers and employees who serve as directors are not compensated for their
service as directors. All directors are reimbursed for expenses incurred in
attending Board and committee meetings.
I-10
OPTION GRANTS IN 1994
The following table sets forth certain information concerning individual
grants of stock options during the year ended December 31, 1994 under the
Incentive Plan and under the Non-Qualified Plan to the executive officers named
in the table under the caption "Summary Compensation Table." There were no
grants of free standing stock appreciation rights during the year ended
December 31, 1994.
[Enlarge/Download Table]
POTENTIAL REALIZABLE VALUE
AT ASSUMED ANNUAL RATES OF
STOCK PRICE APPRECIATION FOR
INDIVIDUAL GRANTS OPTION TERM (3)
----------------------------------------------------------------------- --------------------------------
% OF TOTAL OPTIONS
NUMBER OF SHARES GRANTED TO EMPLOYEES EXERCISE
UNDERLYING IN YEAR ENDED PRICE EXPIRATION
NAME OPTIONS GRANTED (1) DECEMBER 31, 1994 ($/SHARE) DATE (2) 0% ($) 5% ($) 10% ($)
---- ------------------- -------------------- --------- ----------- ------ ---------- --------
Lawrence J. Schorr 37,000 (4) 15.2% $3.42 2/23/04 0 $ 39,200 $137,373
35,000 (5) 14.4% $3.45 3/15/04 0 $ 43,157 $140,245
25,000 (5) 10.3% $4.00 3/15/04 0 $ 17,090 $ 86,425
20,000 (5) 8.2% $4.60 3/15/04 0 $ 1,661 $ 57,140
20,000 (5) 8.2% $5.25 3/15/04 0 $ (11,339) $ 44,140
David C. Jones 15,000 (4) 6.2% $3.42 2/23/04 (6) 0 $ 15,892 $ 55,692
7,500 (5) 3.1% $3.45 3/15/04 (6) 0 $ 9,248 $ 30,052
Nathiel G. Egosi 14,000 (4) 5.8% $3.42 2/23/04 0 $ 14,832 $ 51,979
7,000 (5) 2.9% $3.45 3/15/04 0 $ 8,631 $ 28,049
Jeffrey M. Young 13,000 (4) 5.3% $3.42 2/23/04 0 $ 13,773 $ 48,266
6,500 (5) 2.7% $3.45 3/15/04 0 $ 8,015 $ 26,046
David H. Weitzman 12,000 (4) 4.9% $3.42 2/23/04 0 $ 12,713 $ 44,553
6,000 (5) 2.5% $3.45 3/15/04 0 $ 7,398 $ 24,042
(1) Options granted during 1994 become exercisable upon a change of control
of the Company, as defined in the option plans and option agreements.
Options are non-transferrable other than by will or the laws of descent
and distribution.
(2) Options were granted for a term of ten years, subject to earlier
termination in certain events related to termination of employment.
(3) The amounts under the columns labeled "5%" and "10%" are included by the
Company pursuant to certain rules promulgated by the Securities and
Exchange Commission and are not intended to forecast future appreciation,
if any, in the price of the Company's stock. Such amounts are based on
the assumption that the named persons hold the options granted for their
full ten year term. The actual value of the options will vary in accordance
with the market price of the Shares. The column headed "0%" is included to
demonstrate that the options were granted at prices in excess of the fair
market value at the time of the grants and optionees will not recognize any
gain without an increase in the stock price, which increase benefits all
stockholders commensurately. The Company did not use an alternative formula
to attempt to
I-11
value options at the date of grant, as management is not aware of any
formula that determines with reasonable accuracy a present value of options
of the type granted to the optionees.
(4) Options became exercisable as to 33% of the Shares covered thereby on and
after August 23, 1994 (six months from the date of the grant), as to an
additional 33% of the Shares covered thereby on and after January 1, 1995,
and become exercisable as to the full amount of the Shares on and after
January 1, 1996.
(5) Options became exercisable as to 25% of the Shares covered thereby on and
after September 15, 1994 (six months from the date of the grant), and
become exercisable as to an additional 25% on each March 15 thereafter.
(6) Mr. Jones resigned as an officer and employee of the Company effective
January 2, 1995. Options to purchase an aggregate of 10,625 Shares had not
vested on such date and were terminated, and the expiration date for the
remaining options was accelerated to April 2, 1995. Mr. Jones exercised
options to purchase 41,875 Shares and 1,500 Shares on approximately March 3
and 20, 1995, respectively.
UNEXERCISED STOCK OPTIONS AT DECEMBER 31, 1994
The following table sets forth certain information concerning unexercised
options granted prior to December 31, 1994 under the Incentive Stock Option Plan
and the Non-Qualified Stock Option Plan to the executive officers named in the
table under the caption "Summary Compensation Table." There were no employee
stock options or stand alone stock appreciation rights exercised during the year
ended December 31, 1994. There were no stand alone stock appreciation rights
outstanding as of December 31, 1994.
[Download Table]
NUMBER OF SHARES
UNDERLYING UNEXERCISED VALUE OF UNEXERCISED
STOCK OPTIONS AT IN-THE-MONEY OPTIONS AT
DECEMBER 31, 1994 DECEMBER 31, 1994 (1)
---------------------- -----------------------
EXERCISABLE/ EXERCISABLE/
NAME UNEXERCISABLE UNEXERCISABLE
---- ---------------------- -----------------------
Lawrence J. Schorr 88,710/89,790 $49,937/$39,273
David C. Jones 38,375/15,625 $ 7,369/$16,706
Nathiel G. Egosi 21,370/14,630 $ 6,827/$15,643
Jeffrey M. Young 21,915/13,585 $ 6,339/$14,526
David H. Weitzman 21,460/12,540 $ 5,852/$13,408
(1) In-the-money stock options are options for which the exercise price is less
than the market price of the underlying stock on a particular date. These
values are based on a price of $4.50 per Share, the closing price of the
Shares on the American Stock Exchange on December 30, 1994. Such values
were determined by subtracting the applicable exercise price in each case.
TRANSACTIONS WITH EXECUTIVE OFFICERS AND DIRECTORS
Reference is made to Item 3 of the Schedule 14D-9, the foregoing
discussion, the discussion set forth below and Schedule II.
I-12
In October 1991, six stockholders of the Company who owned in the aggregate
914,806 Shares, representing 34.7% of the then-outstanding Shares, sold their
Shares to JWP in a private transaction. Pursuant to the agreement with JWP
covering the sale, Richard Koffman, Milton Koffman and David Koffman, each of
whom was a seller or affiliated with the sellers, resigned from their respective
positions as officers and/or directors of the Company upon the closing of the
transaction. Burton Koffman, upon the closing, resigned as Chairman and Chief
Executive Officer but continued as a director of the Company. Burton and
Richard Koffman also continue to be employed by the Company pursuant to the
terms of the Koffman Agreements. In connection with the sale, the Company
entered into an agreement with JWP that required the Company to elect certain
JWP designees to the Company's Board of Directors upon the resignations of
Messrs. Koffman, to cause the JWP designees to be nominated to be elected to
the Board at annual Company stockholders' meetings, to elect JWP designees to
Board committees and subsidiary boards of directors, and to take related
actions. In January 1994, JWP sold all Shares owned by it to Allen & Co. and
Paul Gould. The Company's obligations to JWP regarding directors and committee
members terminated upon such sale, and there are no similar obligations to Allen
& Co. or Mr. Gould.
In connection with the October 1991 sale of stock to JWP, Milbar
Consultants Corp. ("Milbar"), a company affiliated with the selling
stockholders, agreed to purchase from the Company, the Company's interest in a
promissory note (the "Chase Eastern Note") evidencing a loan made by the Company
to Chase Eastern Co., Inc., for cash of $181,585 and a promissory note payable
by Milbar in the principal amount of $544,755 (the "Milbar Note"), which amounts
aggregated the then unpaid principal balance on the Company's interest in the
Chase Eastern Note, plus accrued and unpaid interest. The Company was entitled
to monthly payments from Milbar on the Milbar Note in an amount equal to the
greater of (a) $30,000, or (b) the aggregate of all sums actually received
during such month by Milbar on the Chase Eastern Note, until the Milbar Note was
paid in full. All obligations of Milbar under the Milbar Note and related
Purchase Agreement were guaranteed by Burton Koffman, Richard Koffman and
affiliated corporations. As of December 31, 1992, the balance due under the
Milbar Note was $310,000, all of which was delinquent. Interest of $23,000
accrued during 1993, and $100,000 was paid in cash on the Milbar Note during
1993. In addition, payments aggregating $233,000 owed by the Company to Burton
and Richard Koffman under their employment agreements were withheld during 1992,
1993, and 1994, as a result of this delinquency. Pursuant to an agreement among
the parties, the amount was offset against the amounts owed under the Milbar
Note and no amounts remained outstanding under the Milbar Note at December 31,
1994.
The Company leases from two members of the Koffman family the facilities
used by the Company as its executive offices in Vestal, New York pursuant to a
Lease Agreement, as amended, expiring December 31, 1998. Effective January 1,
1994, the Lease Agreement was amended to require fixed rental payments of
$28,800 and $36,000 for the years ended December 31, 1994 and 1995,
respectively, and increased fixed payments for future years, and the Company
agreed to pay fifty percent (50%) of the cost of utilities and trash collection
expenses for the building. The Lease Agreement may be terminated by the Company
or the landlords at any time on 30 days' written notice, so long as the date of
termination is on or after January 1, 1996.
In April 1990, the Company sold 1,000,000 Shares in an underwritten public
offering in which Ladenburg acted as managing underwriter, and granted to
Ladenburg a stock Warrant. The Warrant is exercisable through April 10, 1995
for 113,363 shares at an exercise price of $9.13 per share. Jay Petschek, a
director of the Company, is a Managing Director of Ladenburg. If the Merger is
consummated, Ladenburg will receive a cash payment in settlement of the Warrant.
See "Item 3. Identity and Background" in the Schedule 14D-9.
In December 1994, the Company engaged Ladenburg as exclusive placement
agent in connection with the proposed offer and private placement by the Company
of approximately $10,500,000 of debt securities of the Company for the financing
(the "Financing") of a material recycling facility in Lake County, Illinois. If
the Financing is consummated within thirty six months after Ladenburg was
engaged with an investor introduced to the Company by Ladenburg, or contacted by
Ladenburg or the Company within a year after Ladenburg was engaged, the Company
will pay to Ladenburg a fee equal to the greater of (i) 3% of the purchase price
paid by the purchaser of the securities issued in connection with the Financing,
or (ii) $250,000. The Company also agreed to reimburse Ladenburg for reasonable
out-of-pocket expenses incurred in connection with the engagement, and to
indemnify
I-13
Ladenburg for certain liabilities that could arise as a result of the
engagement, including liabilities arising under the federal securities laws. As
of the date of this Statement, no sales of securities under the engagement have
occurred.
1994 CHANGE OF CONTROL OF THE COMPANY
Pursuant to an Agreement dated as of December 30, 1993 (the "Agreement"),
JWP, the then-owner of 914,806 Shares, sold its Shares to Allen & Co. and Paul
A. Gould. The transaction closed on January 6, 1994. The Shares sold to Allen
& Co. and to Mr. Gould constituted in the aggregate 34.7% of the then-
outstanding Shares. Allen & Co. acquired 764,806 Shares (29.0%) and Mr. Gould
acquired 150,000 Shares (5.7%).
The aggregate purchase price paid by Allen & Co. and Mr. Gould for the
Shares that were sold by JWP was $2,391,365.75. This amount was equal to $2.625
per Share, less a $10,000 allowance for costs. Allen & Co. funded the purchase
from working capital and Mr. Gould funded the purchase from personal funds.
In connection with the sale of the Shares, rights previously granted by the
Company to JWP to nominate certain members of the Company's Board of Directors
and committees of the Board, and certain related rights, were terminated. In
consideration of the termination of such rights, and the payment by JWP to the
Company of an expense allowance of $91,481 ($.10 per share), the Company agreed
to register the Shares purchased from JWP on behalf of Allen & Co. and Mr. Gould
in a shelf registration statement.
On February 22, 1994, Andrew Dwyer, the Company's Chairman, and members of
his family purchased an aggregate of 100,000 Shares from Allen & Co. for $2.625
per share. Funds for the purchase came from personal funds of Mr. Dwyer and his
family. The registration rights for those Shares were transferred to Mr. Dwyer
upon the sale.
Andrew Dwyer is the former Chairman and Chief Executive Officer of JWP.
Innis O'Rourke, a director of the Company at the time of the sale by JWP, was
also a director of JWP.
COMPLIANCE WITH SECTION 16(A) OF THE EXCHANGE ACT
Effective May 1, 1991, the Commission promulgated new rules under Section
16 of the Exchange Act. The Company believes that during the year ended
December 31, 1994, its executive officers and directors have complied with all
Section 16 filing requirements.
I-14
SCHEDULE II
CERTAIN TRANSACTIONS IN SHARES OF COMMON STOCK OF
RESOURCE RECYCLING TECHNOLOGIES, INC. DURING THE PAST 60 DAYS
A former director and executive officer of the Company exercised outstanding
stock options previously granted under the Incentive Plan and the Non-Qualified
Plan to purchase an aggregate of 41,875 Shares and an aggregate of 1,500 Shares
on approximately March 3 and 20, 1995, respectively. The Company used Shares
held in its treasury to fund such option exercises. The Shares were purchased
at exercise prices of $3.42 for 10,000 Shares, $3.45 for 1,875 Shares, $5.75 for
30,000 Shares and $8.50 for 1,500 Shares.
II-1
Dates Referenced Herein and Documents Incorporated by Reference
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