Tender-Offer Statement — Third-Party Tender Offer — Schedule 14D-1
Filing Table of Contents
Document/Exhibit Description Pages Size
1: SC 14D1 Tender-Offer Statement -- Third-Party Tender Offer 8 37K
2: EX-99.A.1 Offer to Purchase, Dated August 14, 1998 41 232K
3: EX-99.A.2 Letter of Transmittal 11 63K
4: EX-99.A.3 Notice of Guaranteed Delivery 2 16K
5: EX-99.A.4 Letter to Brokers, Dealers, Etc. 2 15K
6: EX-99.A.5 Letter to Clients 2 15K
7: EX-99.A.6 Guidelines for Certification 4± 17K
8: EX-99.A.7 Press Release of Parent Dated August 12, 1998 4 16K
9: EX-99.A.8 Press Release of Parent Dated August 14, 1998 1 10K
10: EX-99.A.9 Summary Advertisement 4 21K
11: EX-99.C.1 Agreement and Plan of Merger 74 231K
12: EX-99.C.2 Stock Option Agreement 13 43K
13: EX-99.C.3 Software Distribution Agreement 97 242K
14: EX-99.C.4 Confidentiality Agreement 5 23K
EX-99.A.1 — Offer to Purchase, Dated August 14, 1998
Exhibit Table of Contents
OFFER TO PURCHASE FOR CASH
ALL OUTSTANDING SHARES OF COMMON STOCK
(INCLUDING THE ASSOCIATED PREFERRED STOCK PURCHASE RIGHTS)
OF
MICROPROSE, INC.
AT
$6.00 NET PER SHARE
BY
NEW HIAC CORP.,
A WHOLLY OWNED SUBSIDIARY OF
HASBRO, INC.
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK
CITY TIME, ON FRIDAY, SEPTEMBER 11, 1998, UNLESS THE OFFER IS EXTENDED.
THE OFFER IS BEING MADE PURSUANT TO AN AGREEMENT AND PLAN OF MERGER, DATED
AS OF AUGUST 11, 1998, BY AND AMONG HASBRO, INC. ("PARENT"), NEW HIAC CORP.
("PURCHASER") AND MICROPROSE, INC. (THE "COMPANY"). THE BOARD OF DIRECTORS OF
THE COMPANY HAS UNANIMOUSLY APPROVED THE MERGER AGREEMENT AND THE TRANSACTIONS
CONTEMPLATED THEREBY, INCLUDING THE OFFER AND THE MERGER (EACH AS DEFINED
HEREIN), AND HAS UNANIMOUSLY DETERMINED THAT THE OFFER AND THE MERGER ARE FAIR
TO, AND IN THE BEST INTERESTS OF, THE COMPANY'S STOCKHOLDERS AND UNANIMOUSLY
RECOMMENDS THAT STOCKHOLDERS ACCEPT THE OFFER AND TENDER THEIR SHARES PURSUANT
TO THE OFFER.
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TENDERED AND NOT WITHDRAWN PRIOR TO THE EXPIRATION DATE (AS DEFINED HEREIN) THAT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 WHICH, WHEN ADDED TO THE SHARES BENEFICIALLY OWNED BY PARENT OR
PURCHASER (IF ANY), REPRESENTS AT LEAST 50.1% OF THE SHARES OUTSTANDING (ON A
FULLY DILUTED BASIS) ON THE DATE SHARES ARE ACCEPTED FOR PAYMENT. THE OFFER IS
ALSO SUBJECT TO THE OTHER CONDITIONS SET FORTH IN THIS OFFER TO PURCHASE. SEE
SECTION 14.
------------------------
IMPORTANT
Any stockholder desiring to tender all or any portion of such stockholder's
Shares (as defined herein) should either (i) complete and sign the enclosed
Letter of Transmittal (or facsimile thereof) in accordance with the Instructions
in the Letter of Transmittal, have such stockholder's signature thereon
guaranteed (if required by Instruction 1 to the Letter of Transmittal), mail or
deliver the Letter of Transmittal (or a facsimile thereof) and any other
required documents to the Depositary (as defined herein) and either deliver the
certificates for such Shares to the Depositary or tender such Shares pursuant to
the procedure for book-entry transfer set forth in Section 3 of this Offer to
Purchase or (ii) request such stockholder's broker, dealer, commercial bank,
trust company or other nominee to effect the transaction for such stockholder.
Any stockholder whose Shares are registered in the name of a broker, dealer,
commercial bank, trust company or other nominee must contact such broker,
dealer, commercial bank, trust company or other nominee to tender such Shares.
Any stockholder who desires to tender Shares and whose certificates
evidencing such Shares are not immediately available, or who cannot comply with
the procedures for book-entry transfer on a timely basis, or who cannot deliver
all required documents to the Depositary prior to the expiration of the Offer,
may tender such Shares by following the procedures for guaranteed delivery set
forth in Section 3 of this Offer to Purchase.
Questions and requests for assistance may be directed to the Information
Agent or the Dealer Manager at their respective addresses and telephone numbers
set forth on the back cover of this Offer to Purchase. Requests for additional
copies of this Offer to Purchase, the Letter of Transmittal, the Notice of
Guaranteed Delivery and other tender offer materials may be directed to the
Dealer Manager, the Information Agent or brokers, dealers, commercial banks or
trust companies.
------------------------
The Dealer Manager for the Offer is:
BEAR, STEARNS & CO. INC.
August 14, 1998
TABLE OF CONTENTS
[Download Table]
INTRODUCTION................................................ 1
THE OFFER................................................... 4
1. Terms of the Offer..................................... 4
2. Acceptance for Payment and Payment..................... 5
3. Procedures for Tendering Shares........................ 6
4. Withdrawal Rights...................................... 9
5. Certain U.S. Federal Income Tax Consequences........... 9
6. Price Range of the Shares; Dividends................... 10
7. Effect of the Offer on the Market for the Shares; Stock
Listing; Exchange Act Registration; Margin
Regulations............................................ 10
8. Certain Information Concerning the Company............. 12
9. Certain Information Concerning Parent and Purchaser.... 14
10. Sources and Amount of Funds............................ 15
11. Background of the Offer; Purpose of the Offer and the
Merger; the Merger Agreement and Certain Other
Agreements............................................. 15
12. Plans for the Company; Other Matters................... 27
13. Dividends and Distributions............................ 29
14. Conditions to the Offer................................ 30
15. Certain Legal Matters.................................. 31
16. Fees and Expenses...................................... 34
17. Miscellaneous.......................................... 34
SCHEDULE I
INFORMATION CONCERNING DIRECTORS AND EXECUTIVE OFFICERS
OF PARENT AND PURCHASER................................. I-1
To the Holders of Common Stock of
MICROPROSE, INC.:
INTRODUCTION
New HIAC Corp., a Delaware corporation ("Purchaser") and a wholly owned
subsidiary of Hasbro, Inc., a Rhode Island corporation ("Parent"), hereby offers
to purchase all outstanding shares of common stock, par value $.001 per share
(the "Common Stock"), including the associated preferred stock purchase rights
issued pursuant to the Rights Agreement (as defined below) (the "Rights" and,
together with the Common Stock, the "Shares"), of MicroProse, Inc., a Delaware
corporation (the "Company"), at a price of $6.00 per Share, net to the seller in
cash, without interest (the "Offer Price"), upon the terms and subject to the
conditions set forth in this Offer to Purchase and in the related Letter of
Transmittal (which, as amended or supplemented from time to time, collectively
constitute the "Offer").
Tendering stockholders of record who tender Shares directly will not be
obligated to pay brokerage fees or commissions or, except as set forth in
Instruction 6 of the Letter of Transmittal, stock transfer taxes on the purchase
of Shares by Purchaser pursuant to the Offer. Stockholders who hold their Shares
through a bank or broker should check with such institution as to whether they
charge any service fees. Purchaser will pay all fees and expenses of Bear,
Stearns & Co. Inc. ("Bear Stearns"), which is acting as the Dealer Manager (in
such capacity, the "Dealer Manager"), BankBoston, N.A., which is acting as the
Depositary (in such capacity, the "Depositary") and D.F. King & Co., Inc., which
is acting as Information Agent (in such capacity, the "Information Agent"),
incurred in connection with the Offer and in accordance with the terms of the
agreements entered into between Purchaser and/or Parent and each such person.
See Section 16.
THE BOARD OF DIRECTORS OF THE COMPANY (THE "COMPANY BOARD") HAS UNANIMOUSLY
APPROVED THE MERGER AGREEMENT AND THE TRANSACTIONS CONTEMPLATED THEREBY,
INCLUDING THE OFFER AND THE MERGER, AND HAS UNANIMOUSLY DETERMINED THAT THE
TERMS OF THE OFFER AND THE MERGER ARE FAIR TO, AND IN THE BEST INTERESTS OF, THE
COMPANY'S STOCKHOLDERS AND UNANIMOUSLY RECOMMENDS THAT THE STOCKHOLDERS ACCEPT
THE OFFER AND TENDER THEIR SHARES PURSUANT TO THE OFFER.
Piper Jaffray Inc. ("Piper Jaffray"), financial advisor to the Company, has
delivered to the Company Board its opinion, dated as of August 11, 1998 (the
"Financial Advisor Opinion"), to the effect that, as of such date and based upon
and subject to certain matters stated therein, the cash consideration to be
received by the public holders of Shares (other than Parent and its affiliates)
pursuant to the Offer and the Merger is fair to such holders from a financial
point of view. A copy of the Financial Advisor Opinion is attached as an exhibit
to the Company's Solicitation/Recommendation Statement on Schedule 14D-9 (the
"Schedule 14D-9"), which has been filed by the Company with the Securities and
Exchange Commission (the "Commission") in connection with the Offer and which is
being mailed to holders of Shares herewith. Holders of Shares are urged to, and
should, read the Financial Advisor Opinion carefully.
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 WHICH, WHEN ADDED TO THE SHARES BENEFICIALLY OWNED BY PARENT OR
PURCHASER (IF ANY), REPRESENTS AT LEAST 50.1% OF THE SHARES OUTSTANDING (ON A
FULLY DILUTED BASIS) ON THE DATE SHARES ARE ACCEPTED FOR PAYMENT (THE "MINIMUM
CONDITION"). THE OFFER IS ALSO SUBJECT TO THE OTHER CONDITIONS SET FORTH IN THIS
OFFER TO PURCHASE. SEE SECTION 14. As used in this Offer to Purchase, "fully
diluted basis" takes into account the conversion or exercise of all outstanding
options, warrants and other rights and securities exercisable or convertible
into shares of Common Stock. The Company has represented and warranted to Parent
and Purchaser that, as of August 11, 1998, there were 5,753,598 Shares issued
and outstanding, 754,677 Shares were issuable pursuant to the exercise of
options ("Options"), 20,591 Shares were issuable pursuant to the Company's
employee stock purchase plan (the "ESPP"), 4,080 Shares were issuable pursuant
to the exercise of warrants (the "Warrants"),
19,608 Shares were issuable upon conversion of the Company's Series A
Convertible Preferred Stock (the "Series A Preferred") and 393,245 Shares were
issuable upon conversion of the Company's 6.5% Convertible Subordinated Notes
due 2002 (the "Convertible Notes"). The Merger Agreement provides, among other
things, that the Company will not, without the prior written consent of Parent,
issue any additional Shares (except upon the exercise or conversion of
outstanding Options, Warrants, Series A Preferred and Convertible Notes). Based
on the foregoing and assuming the issuance of Shares issuable pursuant to the
ESPP and upon the exercise or conversion of outstanding Options, Warrants,
Series A Preferred and Convertible Notes, Purchaser believes that the Minimum
Condition will be satisfied if 3,479,845 Shares are validly tendered and not
withdrawn prior to the Expiration Date (as hereinafter defined).
The Offer is being made pursuant to an Agreement and Plan of Merger, dated
as of August 11, 1998 (the "Merger Agreement"), by and among Parent, Purchaser
and the Company. Pursuant to the Merger Agreement and the Delaware General
Corporation Law, as amended (the "DGCL"), as soon as practicable after the
completion of the Offer and satisfaction or waiver, if permissible, of all
conditions, including the purchase of Shares pursuant to the Offer (sometimes
referred to herein as the "consummation" of the Offer) and the approval and
adoption of the Merger Agreement by the stockholders of the Company (if required
by applicable law), Purchaser shall be merged with and into the Company (the
"Merger") and the Company will be the surviving corporation in the Merger (the
"Surviving Corporation"). At the effective time of the Merger (the "Effective
Time"), each Share then outstanding (other than Shares held by (i) the Company
or any of its subsidiaries, (ii) Parent or any of its subsidiaries including
Purchaser and (iii) stockholders who properly perfect their dissenters' rights
under the DGCL, will be converted into the right to receive $6.00 in cash or any
higher price per Share paid in the Offer (the "Merger Consideration"), without
interest. The Merger Agreement is more fully described in Section 11.
The Company has entered into a Stock Option Agreement, dated as of August
11, 1998 (the "Stock Option Agreement"), with Parent pursuant to which the
Company has granted to Parent an irrevocable option (the "Stock Option") to
purchase up to the number of fully paid and nonassessable Shares as equals 19.9%
of the Shares issued and outstanding immediately prior to the grant of the Stock
Option, at a purchase price of $6.00 per Share, exercisable upon the occurrence
of certain events. The Stock Option Agreement is described more fully in Section
11.
The Merger Agreement provides that, upon the purchase by Purchaser of a
majority of the Shares pursuant to the Offer and from time to time thereafter,
Parent shall be entitled to designate such number of directors, rounded up to
the next whole number, on the Company Board so that the percentage of Parent's
nominees on the Company Board equals the percentage of outstanding Shares
beneficially owned by Parent and its affiliates. The Company shall, at such
time, upon the request of Purchaser promptly use its best efforts to take all
action necessary to cause such persons designated by Parent to be elected to the
Company Board, if necessary, by increasing the size of the Company Board or
securing resignations of incumbent directors or both.
Consummation of the Merger is conditioned upon, among other things, the
approval and adoption by the requisite vote of stockholders of the Company of
the Merger Agreement, if required by applicable law and the Company's Amended
and Restated Certificate of Incorporation (the "Certificate of Incorporation").
See Section 14. Under the DGCL and pursuant to the Certificate of Incorporation,
the affirmative vote of the holders of a majority of the outstanding Shares is
the only vote of any class or series of the Company's capital stock that would
be necessary to approve the Merger Agreement and the Merger at a meeting of the
Company's stockholders. If the Minimum Condition is satisfied and Purchaser
purchases at least a majority of the outstanding Shares in the Offer, Purchaser
will be able to effect the Merger without the affirmative vote of any other
stockholder. Pursuant to the Merger Agreement, Parent and Purchaser have agreed
to vote the Shares acquired by them pursuant to the Offer in favor of the
Merger. See Section 12. The Merger Agreement is more fully described in Section
11.
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Under Section 253 of the DGCL, if a corporation owns at least 90% of the
outstanding shares of each class of a subsidiary corporation, the corporation
holding such stock may merge such subsidiary into itself, or itself into such
subsidiary, without any action or vote on the part of the board of directors or
the stockholders of such other corporation (a "short-form merger"). In the event
that Purchaser acquires in the aggregate at least 90% of the outstanding Shares
pursuant to the Offer or otherwise, then, at the election of Parent, a short-
form merger could be effected without any further approval of the Company Board
or the stockholders of the Company. In the Merger Agreement, Parent, Purchaser
and the Company have agreed that, notwithstanding that all conditions to the
Offer are satisfied or waived as of the scheduled Expiration Date, Purchaser may
extend the Offer for a period not to exceed twenty (20) business days, subject
to certain conditions, if the Shares tendered pursuant to the Offer are less
than 90% of the outstanding Shares. Even if Purchaser does not own 90% of the
outstanding Shares following consummation of the Offer, Parent or Purchaser
could seek to purchase additional shares in the open market or otherwise in
order to reach the 90% threshold and employ a short-form merger. The per share
consideration paid for any Shares so acquired may be greater or less than the
Offer Price. Parent presently intends to effect a short-form merger, if
permitted to do so under the DGCL, pursuant to which Purchaser will be merged
with and into the Company. See Section 12.
The Company has distributed one Right for each outstanding Share pursuant
to the Rights Agreement, dated as of February 6, 1996, between the Company and
Chemical Mellon Shareholder Services, L.L.C., as Rights Agent, as amended (the
"Rights Agreement"). The Company has represented in the Merger Agreement that it
has taken all action which may be necessary under the Company Rights Agreement
so that (i) the Offer is deemed to be a Permitted Offer (as defined in the
Rights Agreement), (ii) the execution and delivery of the Merger Agreement and
the Stock Option Agreement (and any amendments thereto) and the consummation of
the Merger and the Transactions contemplated thereby will not cause (x) Parent
and/or Purchaser to constitute an Acquiring Person (as defined in the Rights
Agreement), (y) the Rights (as defined in the Rights Agreement) to become
exercisable or (z) a Distribution Date, Section 13 Event, Triggering Event or a
Share Acquisition Date (as each such term is defined in the Rights Agreement) to
occur, and (iii) that the Final Expiration Date (as such term is defined in the
Rights Agreement) and the expiration of the Rights shall occur upon the
acceptance for payment of Shares pursuant to the Offer.
THIS OFFER TO PURCHASE AND THE RELATED LETTER OF TRANSMITTAL CONTAIN
IMPORTANT INFORMATION AND SHOULD BE READ CAREFULLY BEFORE ANY DECISION IS MADE
WITH RESPECT TO THE OFFER.
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THE OFFER
1. TERMS OF THE OFFER.
Upon the terms and subject to the conditions of the Offer (including, if
the Offer is extended or amended, the terms and conditions of such extension or
amendment), Purchaser will accept for payment and pay for all Shares validly
tendered prior to the Expiration Date, and not withdrawn in accordance with
Section 4. The term "Expiration Date" shall mean 12:00 Midnight, New York City
time, on Friday, September 11, 1998, unless and until Purchaser, in accordance
with the terms of the Merger Agreement, shall have extended the period of time
during which the Offer is open, in which event the term "Expiration Date" shall
mean the latest time and date at which the Offer, as so extended by Purchaser,
shall expire. In the Merger Agreement, Parent and Purchaser have agreed that if
all conditions to Purchaser's obligation to accept for payment and pay for
Shares pursuant to the Offer are not satisfied on the scheduled Expiration Date,
Purchaser may, in its sole discretion, extend the Offer for additional periods;
provided, however, that Purchaser may not extend the Offer beyond November 30,
1998 without the consent of the Company.
The Offer is conditioned upon the satisfaction of the Minimum Condition,
the expiration or termination of all waiting periods imposed by the
Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (the "HSR
Act"), and the other conditions set forth in Section 14. If such conditions are
not satisfied prior to the Expiration Date, Purchaser reserves the right,
subject to the terms of the Merger Agreement and subject to complying with
applicable rules and regulations of the Commission, to (i) decline to purchase
any Shares tendered in the Offer and terminate the Offer and return all tendered
Shares to the tendering stockholders, (ii) waive any or all conditions to the
Offer (except the Minimum Condition) and, to the extent permitted by applicable
law, purchase all Shares validly tendered, (iii) extend the Offer and, subject
to the right of stockholders to withdraw Shares until the Expiration Date,
retain all Shares which have been tendered during the period or periods for
which the Offer is extended or (iv) subject to the next sentence, amend the
Offer. The Merger Agreement provides that Purchaser will not decrease the Offer
Price, change the form of consideration to be paid in the Offer, decrease the
number of Shares sought in the Offer, amend any other condition to the Offer in
any manner adverse to the holders of the Shares or impose additional conditions
to the Offer without the written consent of the Company. Purchaser has agreed
that if all of the conditions set forth in Section 14 have not been satisfied on
any scheduled Expiration Date then, provided that all such conditions are
reasonably capable of being satisfied, Purchaser shall extend the Offer from
time to time until such conditions are satisfied or waived, provided that
Purchaser shall not be required to extend the Offer beyond October 15, 1998.
The Merger Agreement requires Purchaser to accept for payment and pay for
all Shares validly tendered and not withdrawn pursuant to the Offer if all
conditions to the Offer are satisfied on the Expiration Date. However, if,
immediately prior to the scheduled Expiration Date, all conditions to the Offer
are satisfied but the number of Shares tendered and not withdrawn pursuant to
the Offer constitutes less than 90% of the Shares outstanding, Purchaser may
extend the Offer for a period not to exceed twenty (20) business days. As used
in this Offer to Purchase, "business day" has the meaning set forth in Rule
14d-1 under the Securities Exchange Act of 1934, as amended (the "Exchange
Act").
Any extension, amendment or termination of the Offer will be followed as
promptly as practicable by public announcement thereof, the announcement in the
case of an extension to be issued 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 Rules 14d-4(c), 14d-6(d) and 14e-1(d) under the Exchange Act.
Without limiting the obligation of Purchaser under such Rule or the manner in
which Purchaser may choose to make any public announcement, Purchaser currently
intends to make announcements by issuing a press release to the Dow Jones News
Service.
If Purchaser extends the Offer, or if Purchaser (whether before or after
its acceptance for payment of Shares) is delayed in its purchase of, or payment
for, Shares or 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 such Shares may not be
withdrawn except to the extent tendering
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stockholders are entitled to withdrawal rights as described in Section 4.
However, the ability of Purchaser to delay the payment for Shares which
Purchaser has accepted for payment is limited by Rule 14e-1(c) under the
Exchange Act, which requires that a bidder pay the consideration offered or
return the securities deposited by, or on behalf of, holders of securities
promptly after the termination or withdrawal of the Offer.
If Purchaser makes a material change in the terms of the Offer or the
information concerning the Offer or waives a material condition of the Offer,
Purchaser will disseminate additional tender offer materials and extend the
Offer to the extent required by Rules 14d-4(c), 14d-6(d) and 14e-1 under the
Exchange Act. The minimum period during which the Offer must remain open
following material changes in the terms of the Offer or information concerning
the Offer, other than a change in price or a change in percentage of securities
sought, will depend upon the facts and circumstances then existing, including
the relative materiality of the changed terms or information. In a public
release, the Commission has stated its view that an offer must remain open for a
minimum period of time following a material change in the terms of the Offer and
that waiver of a material condition, such as the Minimum Condition, is a
material change in the terms of the Offer. The release states that an offer
should remain open for a minimum of five (5) business days from the date a
material change is first published, or sent or given to security holders and
that, if material changes are made with respect to information not materially
less significant than the offer price and the number of shares being sought, a
minimum of ten (10) business days may be required to allow adequate
dissemination and investor response. The requirement to extend the Offer will
not apply to the extent that the number of business days remaining between the
occurrence of the change and the then-scheduled Expiration Date equals or
exceeds the minimum extension period that would be required because of such
amendment. If, prior to the Expiration Date, Purchaser increases the
consideration offered to holders of Shares pursuant to the Offer, such increased
consideration will be paid to all holders whose Shares are purchased in the
Offer whether or not such Shares were tendered prior to such increase.
The Company has provided Purchaser with the Company's stockholder lists 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 to brokers, dealers,
banks and similar persons whose names, or the names of whose nominees, appear on
the stockholder lists or, if applicable, who are listed as participants in a
clearing agency's security position listing, for subsequent transmittal to
beneficial owners of Shares.
2. ACCEPTANCE FOR PAYMENT AND PAYMENT.
Upon the terms and subject to the conditions to the Offer (including, if
the Offer is extended or amended, the terms and conditions of any such extension
or amendment), Purchaser will accept for payment and will pay for, as soon as
practicable after the Expiration Date, all Shares validly tendered prior to the
Expiration Date and not properly withdrawn in accordance with Section 4.
For purposes of the Offer, Purchaser will be deemed to have accepted for
payment, and thereby purchased, Shares properly tendered to Purchaser and not
withdrawn, if, as and when Purchaser gives oral or written notice to the
Depositary of Purchaser's acceptance for payment of such Shares. Payment for
Shares accepted for payment pursuant to the Offer will be made by deposit of the
purchase price therefor with the Depositary, which will act as agent for
tendering stockholders for the purpose of receiving payment from Purchaser and
transmitting payment to tendering stockholders. In all cases, payment for Shares
accepted for payment pursuant to the Offer will be made only after timely
receipt by the Depositary of (i) certificates for such Shares (or a timely Book
Entry Confirmation (as defined below) with respect thereto), (ii) a Letter of
Transmittal (or facsimile thereof), properly completed and duly executed, with
any required signature guarantees, or, in the case of a book-entry transfer, an
Agent's Message (as defined below), and (iii) any other documents required by
the Letter of Transmittal. Accordingly, payment may be made to tendering
stockholders at different times if delivery of the Shares and other required
documents occur at different times. The per share consideration paid to any
holder of Shares pursuant to the Offer will be the highest per share
consideration paid to any other holder of such Shares pursuant to the Offer.
UNDER NO CIRCUMSTANCES WILL INTEREST BE PAID ON THE PURCHASE PRICE TO BE PAID BY
PURCHASER
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FOR THE SHARES, REGARDLESS OF ANY EXTENSION OF THE OFFER OR ANY DELAY IN MAKING
SUCH PAYMENT.
The Purchaser expressly reserves the right, in its sole discretion, to
delay acceptance for payment of, or payment for, Shares in order to comply in
whole or in part with any applicable law. If Purchaser is delayed in its
acceptance for payment of, or payment for, Shares or is unable to accept for
payment or pay for Shares pursuant to the Offer for any reason, then, without
prejudice to Purchaser's rights under the Offer (including such rights as are
set forth in Sections 1 and 14) (but subject to compliance with Rule 14e-1(c)
under the Exchange Act), the Depositary may, nevertheless, on behalf of
Purchaser, retain tendered Shares, and such Shares may not be withdrawn except
to the extent tendering stockholders are entitled to exercise, and duly
exercise, withdrawal rights as described in Section 4.
If any tendered Shares are not purchased pursuant to the Offer for any
reason, or if certificates are submitted representing more Shares than are
tendered, certificates evidencing Shares not tendered or not accepted for
purchase will be returned to the tendering stockholder, or such other person as
the tendering stockholder shall specify in the Letter of Transmittal, as
promptly as practicable following the expiration, termination or withdrawal of
the Offer. In the case of Shares delivered by book-entry transfer into the
Depositary's account at the Book-Entry Transfer Facility pursuant to the
procedures set forth in Section 3, such Shares will be credited to such account
maintained at the Book-Entry Transfer Facility as the tendering stockholder
shall specify in the Letter of Transmittal, as promptly as practicable following
the expiration, termination or withdrawal of the Offer. If no such instructions
are given with respect to Shares delivered by book-entry transfer, any such
Shares not tendered or not purchased will be returned by crediting the account
at the Book-Entry Transfer Facility designated in the Letter of Transmittal as
the account from which such Shares were delivered.
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 Shares
tendered pursuant to the Offer, but any such transfer or assignment will not
relieve Purchaser of its obligations under the Offer and will in no way
prejudice the rights of tendering stockholders to receive payment for Shares
validly tendered and accepted for payment pursuant to the Offer.
3. PROCEDURES FOR TENDERING SHARES.
Valid Tender. For Shares to be validly tendered pursuant to the Offer,
either (i) a properly completed and duly executed Letter of Transmittal (or
facsimile thereof), together with any required signature guarantees, or in the
case of a book-entry transfer, an Agent's Message (as defined below), and any
other required documents, must be received by the Depositary at one of its
addresses set forth on the back cover of this Offer to Purchase prior to the
Expiration Date and either certificates evidencing tendered Shares must be
received by the Depositary at one of such addresses or such Shares must be
delivered to the Depositary pursuant to the procedures for book-entry transfer
set forth below and a Book-Entry Confirmation (as defined below) must be
received by the Depositary, in each case prior to the Expiration Date, or (ii)
the tendering stockholder must comply with the guaranteed delivery procedures
described below.
Book-Entry Transfer. The Depositary will establish an account with respect
to the Shares at The Depository Trust Company (the "Book-Entry Transfer
Facility") for purposes of the Offer within two (2) business days after the date
of this Offer to Purchase. Any financial institution that is a participant in
the Book-Entry Transfer Facility's system may make book-entry delivery of Shares
by causing the Book-Entry Transfer Facility to transfer such Shares into the
Depositary's account in accordance with such Book-Entry Transfer Facility's
procedures for such transfer. However, although delivery of Shares may be
effected through book-entry transfer into the Depositary's account at the
Book-Entry Transfer Facility, the Letter of Transmittal (or facsimile thereof),
properly completed and duly executed, with any required signature guarantees, or
an Agent's Message (as defined below), and any other required documents must, in
any case, be transmitted to, and received by, the Depositary at one of its
addresses set forth on the back cover of this Offer to Purchase prior to the
Expiration Date, or the tendering stockholder must comply with the guaranteed
delivery procedures described below. The confirmation of a book-entry transfer
of Shares into the Depositary's account at the Book-Entry Transfer Facility as
described above is referred to herein as a "Book-Entry Confirmation."
6
DELIVERY OF THE LETTER OF TRANSMITTAL AND ANY OTHER REQUIRED DOCUMENTS TO THE
BOOK-ENTRY TRANSFER FACILITY WILL NOT CONSTITUTE DELIVERY TO THE DEPOSITARY.
The term "Agent's Message" means a message transmitted by the Book-Entry
Transfer Facility to, and received by, the Depositary and forming a part of a
Book-Entry Confirmation, which states that such Book-Entry Transfer Facility has
received an express acknowledgment from the participant in such Book-Entry
Transfer Facility tendering the Shares 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.
THE METHOD OF DELIVERY OF SHARES, THE LETTER OF TRANSMITTAL AND ALL OTHER
REQUIRED DOCUMENTS, INCLUDING DELIVERY THROUGH THE BOOK-ENTRY TRANSFER FACILITY,
IS AT THE ELECTION AND RISK OF THE TENDERING STOCKHOLDER. SHARES WILL BE DEEMED
DELIVERED ONLY WHEN ACTUALLY RECEIVED BY THE DEPOSITARY (INCLUDING, IN THE CASE
OF A BOOK-ENTRY TRANSFER, BY 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.
Signature Guarantees. No signature guarantee is required on the Letter of
Transmittal (i) if the Letter of Transmittal is signed by the registered
holder(s) (which term, for purposes of this Section, includes any participant in
the Book Entry Transfer Facility's systems whose name appears on a security
position listing as the owner of the Shares) of Shares tendered therewith and
such registered holder has not completed either the box entitled "Special
Delivery Instructions" or the box entitled "Special Payment Instructions" on the
Letter of Transmittal or (ii) if such Shares are tendered for the account of a
financial institution (including most commercial banks, savings and loan
associations and brokerage houses) that is a participant in the Security
Transfer Agents Medallion Program, the New York Stock Exchange Medallion
Signature Guarantee Program or the Stock Exchange Medallion Program (each, an
"Eligible Institution" and, collectively, "Eligible Institutions"). In all other
cases, all signatures on Letters of Transmittal must be guaranteed by an
Eligible Institution. See Instructions 1 and 5 to the Letter of Transmittal. If
the certificates for Shares are registered in the name of a person other than
the signer of the Letter of Transmittal, or if payment is to be made, or
certificates for Shares not tendered or not accepted for payment are to be
returned, to a person other than the registered holder of the certificates
surrendered, then the tendered certificates for such Shares must be endorsed or
accompanied by appropriate stock powers, in either case, signed exactly as the
name or names of the registered holders or owners appear on the certificates,
with the signatures on the certificates or stock powers guaranteed as aforesaid.
See Instruction 5 to the Letter of Transmittal.
Guaranteed Delivery. If a stockholder desires to tender Shares pursuant to
the Offer and such stockholder's certificates for Shares are not immediately
available or the procedures for book-entry transfer cannot be completed on a
timely basis or time will not permit all required documents to reach the
Depositary prior to the Expiration Date, such stockholder's tender may be
effected if all the following conditions are met:
(i) such tender is made by or through an Eligible Institution;
(ii) a properly completed and duly executed Notice of Guaranteed
Delivery, substantially in the form provided by Purchaser, is received by
the Depositary, as provided below, prior to the Expiration Date; and
(iii) the certificates for (or a Book-Entry Confirmation with respect
to) such Shares, together with a properly completed and duly executed
Letter of Transmittal (or facsimile thereof), with any required signature
guarantees, or, in the case of a book-entry transfer, an Agent's Message,
and any other required documents, are received by the Depositary within
three (3) 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 (the "Nasdaq National Market"), operated by the National
Association of Securities Dealers, Inc. (the "NASD"), is open for business.
7
The Notice of Guaranteed Delivery may be delivered by hand to the
Depositary or transmitted by telegram, facsimile transmission or mailed to the
Depositary and must include a guarantee by an Eligible Institution in the form
set forth in such Notice of Guaranteed Delivery.
The valid tender of Shares pursuant to one of the procedures described
above will constitute a binding agreement between the tendering stockholder and
Purchaser upon the terms and subject to the conditions of the Offer.
Appointment. By executing the Letter of Transmittal as set forth above
(including delivery through an Agent's Message), the tendering stockholder will
irrevocably appoint designees of Parent as such stockholder's attorneys-in-fact
and proxies in the manner set forth in the Letter of Transmittal, each with full
power of substitution, to the full extent of such stockholder's rights with
respect to the Shares tendered by such stockholder and accepted for payment by
Purchaser and with respect to any and all non-cash dividends, distributions,
rights, other Shares or other securities issued or issuable in respect of such
Shares on or after August 11, 1998 (collectively, "Distributions"). All such
proxies will be considered coupled with an interest in the tendered Shares. Such
appointment will be effective if, as and when, and only to the extent that,
Purchaser accepts for payment Shares tendered by such stockholder as provided
herein. All such powers of attorney and proxies will be irrevocable and will be
deemed granted in consideration of the acceptance for payment by Purchaser of
Shares tendered in accordance with the terms of the Offer. Upon such
appointment, all prior powers of attorney, proxies and consents given by such
stockholder with respect to such Shares (and any and all Distributions) will,
without further action, be revoked and no subsequent powers of attorney,
proxies, consents or revocations may be given by such stockholder (and, if
given, will not be deemed effective). The designees of Parent will thereby be
empowered to exercise all voting and other rights with respect to such Shares
(and any and all Distributions), including, without limitation, in respect of
any annual or special meeting of the Company's stockholders (and any adjournment
or postponement thereof), actions by written consent in lieu of any such meeting
or otherwise, as each such attorney-in-fact and proxy or his substitute shall in
his sole discretion deem proper. Purchaser reserves the right to require that,
in order for Shares to be deemed validly tendered, immediately upon Purchaser's
acceptance for payment of such Shares, Purchaser must be able to exercise full
voting, consent and other rights with respect to such Shares (and any and all
Distributions), including voting at any meeting of stockholders.
Determination of Validity. All questions as to the validity, form,
eligibility (including time of receipt) and acceptance for payment of any tender
of Shares will be determined by Purchaser, in its sole discretion, which
determination will be final and binding. Purchaser reserves the absolute right
to reject any or all tenders of any Shares determined by it not to be in proper
form or the acceptance for payment of which, or payment for which, may, in the
opinion of Purchaser's counsel, be unlawful. Purchaser also reserves the
absolute right, in its sole discretion, subject to the provisions of the Merger
Agreement, to waive any defect or irregularity in any tender of Shares of any
particular stockholder, whether or not similar defects or irregularities are
waived in the case of other stockholders. No tender of Shares will be deemed to
have been validly made until all defects or irregularities relating thereto have
been cured or waived. None of Purchaser, Parent, 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. Subject to the terms of the
Merger Agreement, Purchaser's interpretation of the terms and conditions of the
Offer in this regard (including the Letter of Transmittal and the instructions
thereto) will be final and binding.
Backup Withholding. Under the "backup withholding" provisions of federal
income tax law, unless a tendering registered holder, or its assignee (in either
case, the "Payee"), satisfies the conditions described in Instruction 10 of the
Letter of Transmittal or is otherwise exempt, the cash payable as a result of
the Offer may be subject to backup withholding tax at a rate of 31% of the gross
proceeds. To prevent backup withholding, each Payee should complete and sign the
Substitute Form W-9 provided in the Letter of Transmittal. See Instruction 10 to
the Letter of Transmittal.
8
4. WITHDRAWAL RIGHTS.
Except as otherwise provided in this Section 4 or as provided by applicable
law, tenders of Shares are irrevocable. Shares tendered pursuant to the Offer
may be withdrawn pursuant to the procedures set forth below at any time prior to
the Expiration Date and, unless theretofore accepted for payment and paid for by
Purchaser pursuant to the Offer, may also be withdrawn at any time after October
12, 1998.
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 of this Offer to Purchase. Any such notice of withdrawal
must specify the name 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 the
Shares to be withdrawn, if different from the name of the person who tendered
the Shares. If certificates evidencing Shares to be withdrawn have been
delivered or otherwise identified to the Depositary, then, prior to the physical
release of such certificates, the serial numbers shown on such certificates must
be submitted to the Depositary and, unless such Shares have been tendered by an
Eligible Institution, the signatures on the notice of withdrawal must be
guaranteed by an Eligible Institution. If Shares have been delivered pursuant to
the procedures for book-entry transfer as set forth in Section 3, 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 and
otherwise comply with such Book-Entry Transfer Facility's procedures.
Withdrawals of tendered Shares may not be rescinded, and any Shares
withdrawn will thereafter be deemed not validly tendered for purposes of the
Offer. However, withdrawn Shares may be retendered by again following one of the
procedures described in Section 3 at any time prior to the Expiration Date.
All questions as to the form and validity (including time of receipt) of
notices of withdrawal will be determined by Purchaser, in its sole discretion,
which determination will be final and binding. None of Purchaser, Parent, 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 U.S. FEDERAL INCOME TAX CONSEQUENCES.
The following is a general summary of certain U.S. federal income tax
consequences of the Offer and the Merger relevant to a beneficial holder of
Shares whose Shares are tendered and accepted for payment pursuant to the Offer
or whose Shares are converted to cash in the Merger (a "Holder"). The discussion
is based on the Internal Revenue Code of 1986, as amended (the "Code"),
regulations issued thereunder, judicial decisions and administrative rulings,
all of which are subject to change, possibly with retroactive effect. The
following does not address the U.S. federal income tax consequences to all
categories of Holders that may be subject to special rules (e.g., holders who
acquired their Shares pursuant to the exercise of employee stock options or
other compensation arrangements with the Company, holders who perfect their
appraisal rights under the DGCL, foreign holders, insurance companies and
tax-exempt organizations), nor does it address the federal income tax
consequences to persons who do not hold the Shares as "capital assets" within
the meaning of Section 1221 of the Code (generally, property held for
investment). Holders should consult their own tax advisors regarding the U.S.
federal, state, local and foreign income and other tax consequences of the Offer
and the Merger.
The receipt of cash for Shares pursuant to the Offer or the Merger will be
a taxable transaction for U.S. federal income tax purposes and may also be a
taxable transaction under applicable state, local and foreign income and other
tax laws. In general, a Holder who sells Shares pursuant to the Offer or
receives cash in exchange for Shares pursuant to the Merger will recognize gain
or loss for federal income tax purposes equal to the difference, if any, between
the amount of cash received and the Holder's adjusted tax basis in the Shares
sold pursuant to the Offer or surrendered for cash pursuant to the Merger. Gain
or loss will be determined separately for each block of Shares (i.e., Shares
acquired at the same cost in a single transaction) tendered pursuant to the
Offer or surrendered for cash pursuant to the Merger. Such gain or loss will be
long-term capital gain or loss if the Holder has held the Shares for more than
one year at the time of the consummation of the Offer or the Merger. Under
recently adopted amendments to the Code, capital gains recognized by an
9
individual investor (or an estate or certain trusts) upon a disposition of a
Share that has been held for more than one year generally will be subject to a
maximum tax rate of 20% or, in the case of a Share that has been held for one
year or less, will be subject to tax at ordinary income rates. Certain
limitations apply to the use of capital losses.
6. PRICE RANGE OF THE SHARES; DIVIDENDS.
The Shares are traded through the Nasdaq National Market under the symbol
"MPRS". The following table sets forth, for each of the fiscal quarters
indicated, the high and low reported closing sales price per Share on the Nasdaq
National Market as restated to reflect the 5 to 1 reverse stock split effected
by the Company on May 11, 1998.
[Download Table]
COMMON STOCK
-----------------
HIGH LOW
------- ------
Fiscal Year Ended March 31, 1997
First Quarter ended June 30, 1996......................... $ 43.10 $26.85
Second Quarter ended September 30, 1996................... 36.25 19.35
Third Quarter ended December 31, 1996..................... 38.75 24.35
Fourth Quarter ended March 31, 1997....................... 47.50 33.10
Fiscal Year Ended March 31, 1998
First Quarter ended June 30, 1997......................... $ 34.70 $22.20
Second Quarter ended September 30, 1997................... 27.80 20.00
Third Quarter ended December 31, 1997..................... 35.55 9.40
Fourth Quarter ended March 31, 1998....................... 13.75 7.50
Fiscal Year Ending March 31, 1999
First Quarter ended June 30, 1998......................... $ 10.78 $ 4.06
Second Quarter through August 13, 1998.................... 5.72 2.94
On August 11, 1998, the last full trading day prior to the public
announcement of the execution of the Merger Agreement by the Company, Parent and
Purchaser, the last reported sales price of the Shares on the Nasdaq National
Market was $4.56 per Share. On August 13, 1998, the last full trading day prior
to the commencement of the Offer, the last reported sales price of the Shares on
the Nasdaq National Market was $5.72 per Share. Stockholders are urged to obtain
a current market quotation for the shares.
The Company did not declare or pay any cash dividends during any of the
periods indicated in the above table. The agreements governing the Company's
indebtedness contain provisions which currently prohibit the Company from
declaring or paying dividends with respect to the Shares. In addition, under the
terms of the Merger Agreement, the Company is not permitted to declare or pay
dividends with respect to the Shares without the prior written consent of Parent
and Parent does not intend to consent to any such declaration or payment.
7. EFFECT OF THE OFFER ON THE MARKET FOR THE SHARES; STOCK LISTING; EXCHANGE
ACT REGISTRATION; MARGIN REGULATIONS.
Market for the Shares. The purchase of Shares by Purchaser pursuant to the
Offer will reduce the number of Shares that might otherwise trade publicly and
will reduce the number of holders of Shares, which, depending upon the number of
Shares so purchased, could adversely affect the liquidity and market value of
the remaining Shares held by stockholders. Purchaser cannot predict whether the
reduction in the number of Shares that might otherwise trade publicly would have
an adverse or beneficial effect on the market price for, or marketability of,
the Shares or whether it would cause future market prices to be greater or less
than the Offer Price.
Nasdaq Quotation. Depending upon the number of Shares purchased pursuant
to the Offer, the Shares may no longer meet the requirements of the NASD for
continued inclusion on the Nasdaq National Market, which requires that an issuer
either (i) have at least 750,000 publicly held shares, held by at least 400
round lot shareholders, with a market value of at least $5,000,000, have at
least 2 market makers, have net tangible assets of at least $4 million, and have
a minimum bid price of $1 or (ii) have at least 1,100,000 publicly held shares,
held by at least 400 round lot shareholders, with a market value of at least
$15,000,000, have a minimum bid price of $5, have at least 4 market makers and
have either (A) a market capitalization of at least $50,000,000 or (B) total
assets and revenues each of at least $50,000,000. If the Nasdaq National
10
Market was to cease to publish quotations for the Shares, it is possible that
the Shares would continue to trade in the over-the-counter market and that price
or other quotations would be reported by 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 stockholders and/or the aggregate
market value of such securities remaining at such time, the interest in
maintaining a market in the Shares on the part of securities firms, the possible
termination of registration under the Exchange Act as described below, and other
factors. 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 lesser than the Offer Price.
The Company was notified in February 1998 by the Nasdaq Stock Market that
the Company was no longer in compliance with the net tangible assets requirement
or the alternative minimum bid price requirement for continued listing on the
Nasdaq National Market. Pursuant to National Association of Securities Dealers
Marketplace Rules, the Company was given a period of 90 days to regain
compliance with the minimum bid price requirement, which calls for a minimum
common stock bid price of $5.00 per share. On May 11, 1998, the Company's
stockholders approved a one for five reverse stock split whereby each five
shares of the Company's outstanding common stock were automatically converted
into one share (the "Reverse Stock Split"). During the fourth quarter of fiscal
1998, prior to the Reverse Stock Split, the Company's common stock traded
between $2.75 and $1.50 per share. On May 12, 1998, following the Reverse Stock
Split, the Company's common stock opened at a bid price of $9.38 per share.
Subsequently, the Company's common stock price continued to trade at a price
above the $5.00 minimum bid price for a period of 18 days. On May 19, 1998, and
June 3, 1998, the Company received notice from Nasdaq that the Company was not
in compliance with either the market capitalization requirement or the minimum
bid price requirement for continued listing on the Nasdaq National Market. The
delisting of the Shares from the Nasdaq National Market would give the holders
of the Company's approximately $32,000,000 of outstanding Convertible Notes the
right to require the Company to repurchase such notes at 100% of the principal
amount.
Exchange Act Registration. The Shares are currently registered under the
Exchange Act. Registration of the Shares under the Exchange Act may be
terminated upon application of the Company to the Commission if the Shares are
neither listed on a national securities exchange nor 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 stockholders and to the Commission 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), the requirement of
furnishing a proxy statement pursuant to Section 14(a) in connection with
stockholders' meetings and the related requirement of furnishing an annual
report to stockholders 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 or Rule 144A
promulgated under the Securities Act of 1933, as amended (the "Securities Act"),
may be impaired or eliminated.
Margin Regulations. The Shares are presently "margin securities" under the
regulations of the Board of Governors of the Federal Reserve System (the
"Federal Reserve Board"), which status 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 stock exchange listing
and market 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. In addition, if registration of the
Shares under the Exchange Act were terminated, the Shares would no longer
constitute "margin securities."
Purchaser currently intends to seek delisting of the Shares from the Nasdaq
National Market and the termination of the registration of the Shares under the
Exchange Act as soon after the completion of the Offer as the requirements for
such delisting and termination are met. If the Nasdaq National Market listing
and the Exchange Act registration of the Shares are not terminated prior to the
Merger, then the Shares will be delisted from the Nasdaq National Market and the
registration of the Shares under the Exchange Act will be terminated following
the consummation of the Merger.
11
8. CERTAIN INFORMATION CONCERNING THE COMPANY.
General. The information concerning the Company contained in this Offer to
Purchase, including that set forth below under the caption "Selected Financial
Information," has been furnished by the Company or has been taken from or based
upon publicly available documents and records on file with the Commission and
other public sources. Neither Parent, Purchaser nor the Dealer Manager assumes
responsibility for the accuracy or completeness of the information concerning
the Company contained in such documents and records or for any failure by the
Company to disclose events which may have occurred or may affect the
significance or accuracy of any such information but which are unknown to
Parent, Purchaser or the Dealer Manager.
The Company is a developer, producer and publisher of entertainment
software for personal computers ("PC's") and certain console platforms. The
Company creates, acquires or licenses properties with mass-market appeal and
develops branded products based on these properties. A range of advanced
technologies is incorporated into these products, such as multiplayer
networking, simulation, real-time response and three dimension ("3D")
texture-mapped graphics to enhance each product's distinctive characteristics.
The Company also distributes entertainment software and related products
published by third parties. The Company primarily develops products in the
categories of Simulation, Strategy, and 3D Action. The Company's most popular
products to date include the FALCON(R) series, GRAND PRIX series, MAGIC: THE
GATHERING(R), MASTER OF ORION(TM) II, the CIVILIZATION(TM) Series, the STAR
TREK(TM) series, TOP GUN(TM): FIRE AT WILL!(TM), WORMS II(R) and THE X-COM(R)
series. The Company is a Delaware corporation with its principal executive
offices at 2490 Mariner Square Loop, Suite 100, Alameda, California 94501.
Selected Financial Information. Set forth below is certain selected
consolidated financial information with respect to the Company, excerpted or
derived from the Company's Annual Report on Form 10-K for the fiscal year ended
March 31, 1998 and its Quarterly Report on Form 10-Q for the quarter ended June
30, 1998 filed with the Commission pursuant to the Exchange Act.
More comprehensive financial information is included in such reports and in
other documents filed by the Company with the Commission. The following summary
is qualified in its entirety by reference to such reports and other documents
and all of the financial information (including any related notes) contained
therein. Such reports and other documents may be inspected and copies may be
obtained from the Commission in the manner set forth below.
12
MICROPROSE, INC.
SELECTED CONSOLIDATED FINANCIAL INFORMATION
[Enlarge/Download Table]
THREE MONTHS ENDED
(UNAUDITED) FISCAL YEARS ENDED
-------------------- -----------------------------------
JUNE 30, JUNE 30, MARCH 31, MARCH 31, MARCH 31,
1998 1997 1998 1997 1996
-------- -------- --------- --------- ---------
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
INCOME STATEMENT DATA:
Net Revenues....................... $ 12,195 $13,580 $ 60,009 $100,253 $ 59,694
Income (Loss) from Operations...... (7,047) (5,415) (29,583) 4,380 (35,524)
Net Income (Loss).................. (7,815) (8,312) (33,141) 7,988 (39,841)
Basic Income (Loss) per Share...... (1.36) (1.48) (5.86) 1.45 (8.49)
Diluted Income (Loss) per Share.... (1.36) (1.48) (5.86) 1.39 (8.49)
BALANCE SHEET DATA:
Total Assets....................... $ 35,327 $69,321 $ 43,829 $ 80,305 $ 65,922
Total Liabilities.................. 52,793 55,762 53,371 58,707 74,837
Stockholders' Equity (Deficit)..... (17,466) 13,559 (9,542) 21,598 (8,915)
Other Financial Information. During the course of the discussions between
Parent and the Company that led to the execution of the Merger Agreement, the
Company provided Parent with certain information about the Company and its
financial performance which is not publicly available. The information provided
included financial projections for the Company as an independent company (i.e.,
without regard to the impact to the Company of a transaction with Parent), which
included the following: projections of revenue, earnings before income and taxes
("EBIT") and net income of approximately $98.1 million, $3.3 million and $1.0
million, respectively, for fiscal 1999. The foregoing information was prepared
by the Company solely for internal use and not for publication or with a view to
complying with the published guidelines of the SEC regarding projections or with
the guidelines established by the American Institute of Certified Public
Accountants and are included in this Offer to Purchase only because they were
furnished to Parent. The foregoing information is "forward-looking" and
inherently subject to significant uncertainties and contingencies, many of which
are beyond the control of the Company, including industry performance, general
business and economic conditions, changing competition, adverse changes in
applicable laws, regulations or rules governing environmental, tax or accounting
matters and other matters. One cannot predict whether the assumptions made in
preparing the foregoing information will be accurate, and actual results may be
materially higher or lower than those contained described above. The inclusion
of this information should not be regarded as an indication that Parent,
Purchaser, the Company or anyone who received this information considered it a
reliable predictor of future events, and this information should not be relied
on as such. None of Parent, Purchaser or the Company assumes any responsibility
for the validity, reasonableness, accuracy or completeness of the projections
and the Company has made no representation to Parent or Purchaser regarding the
financial information described above.
Available Information. The Company is subject to the informational filing
requirements of the Exchange Act and, in accordance therewith, is obligated to
file reports, proxy statements and other information with the Commission
relating to its business, financial condition and other matters. Information as
of particular dates concerning the Company's directors and officers, their
remuneration, options granted to them, the principal holders of the Company's
securities and any material interests of such persons in transactions with the
Company is required to be disclosed in proxy statements distributed to the
Company's stockholders and filed with the Commission. Such reports, proxy
statements and other information should be available for inspection at the
public reference facilities of the Commission at 450 Fifth Street, N.W.,
Washington, D.C. 20549, and at the regional offices of the Commission located at
Seven World Trade Center, Suite 1300, New York, NY 10048 and Citicorp Center,
500 West Madison Street, Suite 1400, Chicago, IL 60661. Copies of such
information should be obtainable by mail, upon payment of the Commission's
customary charges, by writing to the Commission's principal office at 450 Fifth
Street, N.W., Washington,
13
D.C. 20549. The Commission also maintains a website on the internet at
http://www.sec.gov that contains reports, proxy statements and other information
relating to the Company which have been filed via the Commission's EDGAR System.
9. CERTAIN INFORMATION CONCERNING PARENT AND PURCHASER.
Parent and Purchaser. Parent is a Rhode Island corporation and (with its
subsidiaries) is a leading global designer, manufacturer and marketer of a
diverse line of toy products and related items. Included in its offerings are
games, including traditional board and card, hand-held electronic and
interactive CD-ROM, and puzzles, preschool, boys' action and girls' toys, dolls,
plush products and infant products. The Company also licenses various
tradenames, characters and other property rights for use in connection with the
sale by others of noncompeting toys and non-toy products.
Purchaser is a newly incorporated Delaware corporation organized in
connection with the Offer and the Merger and has not carried on any activities
other than in connection with the Offer and the Merger. All of the outstanding
capital stock of Purchaser is owned directly by Parent. Until immediately prior
to the time Purchaser purchases Shares pursuant to the Offer, it is not
anticipated that Purchaser will have any significant assets or liabilities or
engage in activities other than those incident to its formation and
capitalization and the transactions contemplated by the Offer and the Merger.
The principal offices of Purchaser and Parent are located at 1027 Newport
Avenue, Pawtucket, Rhode Island 02861. The telephone number of Parent and
Purchaser at such location is (401) 431-8697.
For certain information concerning the executive officers and directors of
Parent and Purchaser, see Schedule I.
Except as set forth in this Offer to Purchase, neither Purchaser nor
Parent, nor, to the best knowledge of Purchaser or Parent, any of the persons
listed on Schedule I, nor any associate or majority owned subsidiary of any of
the foregoing, beneficially owns or has a right to acquire any Shares, and
neither Purchaser nor Parent nor, to the best of knowledge of Purchaser or
Parent, any of the persons or entities referred to above, nor any of the
respective executive officers, directors or subsidiaries of any of the
foregoing, has effected any transaction in the Shares during the past 60 days.
Except as set forth in this Offer to Purchase, neither Purchaser nor Parent
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 the voting of any securities of the Company, joint ventures, loan or
option arrangements, puts or calls, guarantees of loans, guarantees against loss
or the giving or withholding of proxies.
Except as set forth in this Offer to Purchase, none of Purchaser, Parent,
any of their respective affiliates, nor, to the best knowledge of Purchaser or
Parent, any of the persons listed on Schedule I, has had, since March 31, 1995,
any business relationships or transactions with the Company or any of its
executive officers, directors or affiliates that would require to be reported
under the rules of the Commission. Except as set forth in this Offer to
Purchase, since March 31, 1995 there have been no contacts, negotiations or
transactions between Purchaser, Parent, any of their respective affiliates or,
to the best knowledge of Purchaser, Parent, any of the persons listed on
Schedule I, and the Company or its affiliates concerning a merger, consolidation
or acquisition, tender offer or other acquisition of securities, election of
directors or a sale or other transfer of a material amount of assets.
Available Information. Parent is subject to the informational filing
requirements of the Exchange Act and, in accordance therewith, is obligated to
file reports, proxy statements and other information with the Commission
relating to its business, financial condition and other matters. Information as
of particular dates concerning Parent's directors and officers, their
remuneration, options granted to them, the principal holders of Parent's
securities and any material interests of such persons in transactions with
Parent is required to be disclosed in proxy statements distributed to Parent's
stockholders and filed with the Commission. Such reports, proxy statements and
other information should be available for inspection at the public reference
facilities of the Commission at 450 Fifth Street, N.W., Washington, D.C. 20549,
and at the regional offices of
14
the Commission located at Seven World Trade Center, Suite 1300, New York, NY
10048 and Citicorp Center, 500 West Madison Street, Suite 1400, Chicago, IL
60661. Copies of such information should be obtainable by mail, upon payment of
the Commission's customary charges, by writing to the Commission's principal
office at 450 Fifth Street, N.W., Washington, D.C. 20549. The Commission also
maintains a website at http://www.sec.gov that contains reports, proxy
statements and other information relating to Parent which have been filed via
the EDGAR System. Such materials should also be available at the offices of the
American Stock Exchange ("Amex"), 86 Trinity Place, New York, NY 10006.
10. SOURCES AND AMOUNT OF FUNDS.
The Offer is not conditioned upon any financing arrangements. The total
amount of funds required by Purchaser to consummate the Offer and the Merger,
including the redemption, refinancing, or payment of approximately $35.3 million
of debt and redeemable preferred stock of by the Company and the fees and
expenses of the Offer and the Merger, is estimated to be approximately $72.0
million. Purchaser will obtain all such funds from Parent in the form of capital
contributions and/or loans. Parent will provide such funds through a combination
of its cash on hand and short term borrowings, including but not limited to,
commercial paper.
11. BACKGROUND OF THE OFFER; PURPOSE OF THE OFFER AND THE MERGER; THE MERGER
AGREEMENT AND CERTAIN OTHER AGREEMENTS.
Background of the Offer.
On May 19, 1998, the Company released fourth quarter and fiscal 1998
results. In that press release the Company's management indicated that the
Company can best prosper and leverage its assets in combination with another
company or through a strategic investment from a partner. As a result, the
Company Board authorized management to investigate strategic alternatives for
the Company.
On or about June 14, 1998, Ron Parkinson, Vice President of Finance of
Hasbro Interactive, was contacted by a representative of Piper Jaffray. After
signing a confidentiality agreement on June 16, 1998, Hasbro Interactive, a
wholly-owned subsidiary of Parent, was offered the opportunity to evaluate
materials supplied by the Company regarding a potential business transaction.
On June 29, 1998, Tom Dusenberry, President of Hasbro Interactive, Mr.
Parkinson, Tony Parks, Vice President of Research and Development and John
Sutyak, Director of New Business Development for Hasbro Interactive met with
Gilman Louie, Chairman of the Board, Stephen Race, Chief Executive Officer, M.
Kip Welch, Vice President and General Counsel, John Belchers, Chief Financial
Officer and other representatives of the Company. The parties observed the
product line in development and discussed the possibility of a transaction
between the companies and the possible synergy between Hasbro Interactive and
the Company.
On July 2, 1998, Phillip H. Waldoks, Senior Vice President -- Corporate
Legal Affairs and Secretary of Parent, and Mr. Welch discussed arrangements for
access by representatives of Parent and Hasbro Interactive to a data room
prepared by representatives of the Company in Palo Alto.
On July 7, 1998, representatives of Piper Jaffray contacted representatives
of Bear Stearns to discuss, among other things, the negotiations between the
parties and to determine the timing of the process going forward.
On July 10, 1998, Mr. Dusenberry and Mr. Harold P. Gordon, Vice Chairman of
Parent, met with Mr. Race, Mr. Louie, Mr. Belchers and Mr. Timothy Christian,
Managing Director, Europe/Asia Pacific of the Company. They discussed the common
strategic goals and expressed interest to move forward with a possible
acquisition.
From July 13, 1998 through July 15, 1998, Mr. Parks visited the studios of
the Company in the United States to review the technology of the two businesses
and discuss the status of products under development.
15
On July 16, 1998, Mr. Dusenberry and Mr. Barry Jafrato, Managing Director
of International Operations for Hasbro Interactive, met with Mr. Christian and
the senior team of the Company in Europe to view the operations in Europe and
discuss the potential synergies.
On July 27, 1998, Mr. Race and Mr. Louie traveled to Beverly, Massachusetts
to meet with Messrs. Dusenberry, Parkinson, Sutyak, John Hurlbut, Vice President
of Marketing, Bob Sadacca, Vice President Administration and Jim Adams, Vice
President of Sales of Hasbro Interactive to answer questions on the Company's
operations and current performance. Mr. Dusenberry then accompanied Mr. Race and
Mr. Louie to the corporate offices of Parent for a meeting with Mr. Alan
Hassenfeld, Chairman of the Board and Chief Executive Officer, John T. O'Neill,
Executive Vice President and Chief Financial Officer, and Mr. Gordon for a
strategic discussion of the potential transaction. Both parties agreed, on July
27, 1998 to amend the confidentiality agreement.
On August 4, 1998 and August 5, 1998 Mr. Jafrato visited the Company
operations in the United Kingdom and Germany for to assess strategies for
integrating these operations into Hasbro Interactive.
From July 8, 1998 to August 11, 1998, Parent's and Hasbro Interactive's
representatives conducted due diligence in a data room prepared by
representatives of the Company in Palo Alto, remotely on data supplied by the
Company, public information and using industry data, and on site at the
Company's executive offices in California, the United Kingdom and Germany.
Negotiations for a potential merger and the related agreements took place
between members of senior management of the Parent, Hasbro Interactive, their
legal advisors, senior management and representatives of the Company and its
legal advisors between July 29, 1998 and August 11, 1998. Such negotiations were
completed on August 11, 1998 when Parent and the Company executed and delivered
the Merger Agreement.
On or about August 11, 1998, Hasbro Interactive offered senior positions at
Hasbro Interactive to Mr. Louie and Mr. Christian, contingent on the closing of
the acquisition of the Company. Mr. Christian also agreed to terminate his
Service Agreement with the Company in exchange for the sum of approximately
L275,000 which would have been due thereunder, contingent upon the closing of
the acquisition of the Company.
On August 12, 1998 Parent announced the signing of the Merger Agreement. On
August 14, 1998 pursuant to the terms of the Merger Agreement, Parent and
Purchaser commenced the Offer.
Purpose of the Offer and the Merger. The purpose of the Offer and the
Merger is to enable Parent to acquire control of, and the entire equity interest
in, the Company. The Offer is being made pursuant to the Merger Agreement and is
intended to increase the likelihood that the Merger will be effected. The
purpose of the Merger is to acquire all of the outstanding Shares not purchased
pursuant to the Offer.
Stockholders of the Company who sell their Shares in the Offer will cease
to have any equity interest in the Company and any right to participate in its
earnings and future growth. If the Merger is consummated, non-tendering
stockholders will no longer have an equity interest in the Company and instead
will have only the right to receive cash consideration pursuant to the Merger
Agreement or to exercise statutory appraisal rights under Section 262 of the
DGCL. See Section 12. Similarly, after selling their Shares in the Offer or the
subsequent Merger, stockholders of the Company will not bear the risk of any
decrease in the value of the Company.
The primary benefits of the Offer and the Merger to the stockholders of the
Company are that such stockholders are being afforded an opportunity to sell all
of their Shares for cash at a price which represents a premium of approximately
32% over the closing market price of the Shares on August 11, 1998, the last
full trading day prior to the initial public announcement that the Company,
Purchaser and Parent had executed the Merger Agreement and a more substantial
premium over recent historical trading prices.
16
Merger Agreement
The following is a summary of certain provisions of the Merger Agreement.
This summary is not a complete description of the terms and conditions of the
Merger Agreement and is qualified in its entirety by reference to the full text
of the Merger Agreement filed with the Commission as an exhibit to the Schedule
14D-1 and is incorporated herein by reference. Capitalized terms not otherwise
defined below shall have the meanings set forth in the Merger Agreement. The
Merger Agreement may be examined, and copies obtained, as set forth in Section 9
of this Offer to Purchase.
Representations and Warranties. In the Merger Agreement, the Company has
made customary representations and warranties to Parent and Purchaser with
respect to, among other things, corporate organization, subsidiaries, capital
stock, options or other rights to acquire Shares, authority to enter into the
Merger Agreement, required consents, no conflicts between the Merger Agreement
and applicable laws and certain agreements to which the Company or its assets
may be subject, financial statements, filings with the Commission, disclosures
in proxy statement and tender offer documents, absence of certain changes or
events, litigation, absence of changes in benefit plans, employee benefit plans,
tax matters, no excess non-deductible payments, compliance with applicable laws,
environmental matters, intellectual property, owned and leased real property,
material contracts, labor and employment matters, product liability,
applicability of state takeover statutes, brokers' and finders' fees, votes
required to approve the Merger Agreement, undisclosed liabilities, receipt of
the Financial Advisor Opinion, Year 2000, Company Rights Agreement, absence of
questionable payments and full disclosure.
In the Merger Agreement, each of Parent and Purchaser has made customary
representations and warranties to the Company with respect to, among other
things, corporate organization, authority to enter into the Merger Agreement,
required consents, no conflicts between the Merger Agreement and the certificate
of incorporation and by-laws of Parent and Purchaser or laws applicable to
Parent or Purchaser, disclosures in proxy statement and tender offer documents,
prior activities by Purchaser and brokers' and finders' fees.
Conditions to the Merger. The respective obligations of Parent and
Purchaser, on the one hand, and the Company, on the other hand, to effect the
Merger are subject to the satisfaction of each of the following conditions, any
and all of which may be waived in whole or in part by the Company, Parent or
Purchaser, as the case may be, to the extent permitted by applicable law: (i)
the Merger Agreement shall have been approved and adopted by the requisite vote
of the holders of Shares, if required by applicable law and the Certificate of
Incorporation, in order to consummate the Merger; (ii) any waiting period
applicable to the Merger under the HSR Act shall have expired or been earlier
terminated; (iii) no statute, rule, regulation, order, decree or injunction
shall have been enacted, promulgated or issued by any governmental entity
precluding, restraining, enjoining or prohibiting consummation of the Merger;
and (iv) Parent, Purchaser or their affiliates shall have purchased Shares
pursuant to the Offer; provided, that the condition contained in the preceding
clause (iv) shall be deemed to have been satisfied with respect to the
obligation of Parent and Purchaser to effect the Merger if Purchaser fails to
accept for payment or pay for Shares pursuant to the Offer in violation of the
terms of the Offer or of the Merger Agreement.
The Company Board. Promptly after (i) the purchase of and payment for any
Shares by Purchaser or any of its affiliates as a result of which Purchaser and
its affiliates own beneficially at least a majority of the then outstanding
Shares and (ii) compliance with Section 14(f) of the Exchange Act and Rule 14f-1
promulgated thereunder, whichever shall occur later, Parent shall be entitled to
designate such number of directors, rounded up to the next whole number, on the
Company's Board of Directors as is equal to the product of the total number of
directors on such Board (giving effect to any increase in the size of such
Board) multiplied by the percentage that the number of Shares beneficially owned
by Purchaser (including Shares so accepted for payment) bears to the total
number of Shares then outstanding. In furtherance thereof, the Company shall,
upon request of Parent, use its best efforts promptly either to increase the
size of its Board of Directors or to secure the resignations of such number of
its incumbent directors, or both, as is necessary to enable such designees of
Parent to be so elected or appointed to the Company's Board of Directors, and
the Company shall take all actions available to the Company to cause such
designees of Parent to be so elected or appointed. At such time, the Company
shall, if requested by Parent, also take all action necessary to cause Persons
designated by Parent to constitute at least the same percentage (rounded up to
the next whole
17
number) as is on the Company's Board of Directors of (i) each committee of the
Company's Board of Directors, (ii) each board of directors (or similar body) of
each Subsidiary of the Company and (iii) each committee (or similar body) of
each such board.
The Company shall promptly take all actions required pursuant to Section
14(f) of the Exchange Act and Rule 14f-1 promulgated thereunder in order to
fulfill its obligations under this Section, including mailing to stockholders
the information required by such Section 14(f) and Rule 14f-1 (or, at Parent's
request, furnishing such information to Parent for inclusion in the Offer
Documents initially filed with the SEC and distributed to the stockholders of
the Company) as is necessary to enable Parent's designees to be elected to the
Company's Board of Directors. Parent or Purchaser will supply the Company any
information with respect to either of them and their nominees, officers,
directors and affiliates required by such Section 14(f) and Rule 14f-1. The
provisions of this Section are in addition to and shall not limit any rights
which Purchaser, Parent or any of their affiliates may have as a holder or
beneficial owner of Shares as a matter of applicable Law with respect to the
election of directors or otherwise.
Notwithstanding the foregoing, the parties to the Merger Agreement shall
use their respective reasonable best efforts to ensure that at least two of the
members of the Board shall, at all times prior to the Effective Time be,
Continuing Directors. From and after the time, if any, that Parent's designees
constitute a majority of the Company's Board of Directors, any amendment or
modification of this Agreement, any amendment to the Company's Certificate of
Incorporation or By-Laws inconsistent with the Merger Agreement, any termination
of the Merger Agreement by the Company, any extension of time for performance of
any of the obligations of Parent or Purchaser under the Merger Agreement, any
waiver of any condition to the Company's obligations under the Merger Agreement
or any of the Company's rights under the Merger Agreement or other action by the
Company under the Merger Agreement may be effected only by the action of a
majority of the Continuing Directors of the Company, which action shall be
deemed to constitute the action of any committee specifically designated by the
Board of Directors of the Company to approve the actions contemplated by the
Merger Agreement and the Transactions and the full Board of Directors of the
Company; provided, that, if there shall be no Continuing Directors, such actions
may be effected by majority vote of the entire Board of Directors of the
Company.
Stockholders' Meeting. If required by applicable Law in order to
consummate the Merger, the Company, acting through the Company Board, shall, in
accordance with applicable Law, its Certificate of Incorporation and By-laws:
(i) as promptly as practicable following the acceptance for payment and purchase
of Shares by Purchaser pursuant to the Offer, duly call, give notice of, convene
and hold a special meeting of its stockholders (the "Special Meeting") for the
purposes of considering and taking action upon the approval of the Merger and
the approval and adoption of the Merger Agreement; (ii) prepare and file with
the Commission a preliminary proxy or information statement relating to the
Merger and the Merger Agreement and (x) obtain and furnish the information
required to be included in the Proxy Statement (as defined below) and, after
consultation with Parent, respond promptly to any comments made by the
Commission with respect to the preliminary proxy or information statement and
cause a definitive proxy or information statement, including any amendment or
supplement thereto (the "Proxy Statement") to be mailed to its stockholders at
the earliest practicable date; provided that no amendment or supplement to the
Proxy Statement will be made by the Company without consultation with Parent and
its counsel and (y) use its reasonable best efforts to obtain the necessary
approvals of the Merger and the Merger Agreement by its stockholders; and (iii)
unless the Merger Agreement has been terminated in accordance with the
provisions of the section titled "Termination" below, subject to its rights
pursuant to the section titled "No Solicitation" below, include in the Proxy
Statement the recommendation of the Company Board that stockholders of the
Company vote in favor of the approval of the Merger and the approval and
adoption of the Merger Agreement. Parent has agreed to vote, or cause to be
voted, all of the Shares then owned by it, Purchaser or any of its other
subsidiaries in favor of the approval of the Merger and the approval and
adoption of the Merger Agreement.
Options. The Merger Agreement provides that immediately prior to the
Effective Time, each then outstanding option to purchase any shares of capital
stock of the Company (in each case, an "Option"), whether or not then
exercisable, shall be cancelled by the Company and in consideration of such
cancellation and except to the extent that Parent or the Purchaser and the
holder of any such Option otherwise agree, the Company (or, at Parent's option,
the Purchaser) shall pay to such holders of Options an amount in respect
18
thereof equal to the product of (A) the excess, if any, of the Offer Price over
the exercise price of each such Option and (B) the number of Shares previously
subject to the Option immediately prior to its cancellation (such payment to be
net of withholding taxes and without interest). The Company shall use
commercially reasonable efforts to obtain the consent of each holder of an
Option as to whom Parent reasonably requests a consent be obtained to the
transactions above no later than the Effective Time in a form acceptable to
Parent. The Company shall provide to each holder of Options any required notice
(in a form acceptable to Parent) under the applicable Option Plan.
The Company shall take all actions necessary and appropriate so that (i) no
purchase rights are acquired after the date hereof under the Company's Employee
Stock Purchase Plan and (ii) all stock option or other equity based plans
maintained with respect to the Shares, including, without limitation, the
Company's Employee Stock Purchase Plan and those plans listed in the Merger
Agreement hereof ("Option Plans"), shall terminate as of the Effective Time and
the provisions in any other Benefit Plan providing for the issuance, transfer or
grant of any capital stock of the Company or any interest in respect of any
capital stock of the Company shall be deleted as of the Effective Time, and the
Company shall use its best efforts to ensure that following the Effective Time
no holder of an Option or any participant in any Option Plan shall have any
right thereunder to acquire any capital stock of the Company, Parent, Purchaser
or the Surviving Corporation.
Interim Operations. The Merger Agreement provides that after the date of
the Merger Agreement and prior to the time the designees of Parent have been
elected to or appointed to, and shall constitute a majority of, the Company
Board pursuant to the applicable provisions of the Merger Agreement (the
"Appointment Date"), and except (i) as expressly contemplated by the Merger
Agreement, (ii) as set forth in the applicable section of the disclosure
schedule thereto or (iii) as agreed in writing by Parent:
(a) the Company shall and shall cause its Subsidiaries to carry on
their respective businesses in the ordinary course;
(b) the Company shall and shall cause its Subsidiaries to use all
commercially reasonable efforts consistent with good business judgment to
preserve intact their current business organizations, keep available the
services of their current officers and key employees and preserve their
relationships consistent with past practice with desirable customers,
suppliers, licensors, licensees, distributors and others having business
dealings with them to the end that their goodwill and ongoing businesses
shall be unimpaired in all material respects at the Effective Time;
(c) neither the Company nor any of its Subsidiaries shall, directly or
indirectly, amend its Certificate of Incorporation or By-laws or similar
organizational documents;
(d) officers of the Company and its Subsidiaries shall confer at such
times as Parent may reasonably request with one or more representatives of
Parent to report material operational matters and the general status of
ongoing operations;
(e) neither the Company nor any of its Subsidiaries shall: (i)(A)
declare, set aside or pay any dividend or other distribution payable in
cash, stock or property with respect to the Company's capital stock or that
of its Subsidiaries, except that a wholly-owned Subsidiary of the Company
may declare and pay a dividend or make advances to its parent or the
Company or (B) redeem, purchase or otherwise acquire directly or indirectly
any of the Company's capital stock or that of its Subsidiaries; (ii) issue,
sell, pledge, dispose of or encumber any additional shares of, or
securities convertible into or exchangeable for, or options, warrants,
calls, commitments or rights of any kind to acquire, any shares of capital
stock of any class of the Company or its Subsidiaries, other than Shares
issued upon the exercise of Options outstanding on the date of the Merger
Agreement in accordance with the Option Plans as in effect on the date of
the Merger Agreement; or (iii) split, combine or reclassify the outstanding
capital stock of the Company or of any of the Subsidiaries of the Company;
(f) except as permitted by the Merger Agreement, neither the Company
nor any of its Subsidiaries shall acquire or agree to acquire (A) by
merging or consolidating with, or by purchasing a substantial portion of
the assets of, or by any other manner, any business or any corporation,
partnership, joint venture, association or other business organization or
division thereof (including entities which are
19
subsidiaries of the Company) or (B) any assets, including real estate,
except purchases in the ordinary course of business consistent with past
practice;
(g) neither the Company nor any of its Subsidiaries shall make any new
capital expenditure or expenditures, which individually exceed $50,000 and
in the aggregate exceed $150,000;
(h) neither the Company nor any of its Subsidiaries shall, except in
the ordinary course of business and except as otherwise permitted by the
Merger Agreement, amend or terminate any Company material contract where
such amendment or termination would have a Material Adverse Effect on the
Company, or waive, release or assign any material rights or claims;
(i) neither the Company nor any of its Subsidiaries shall transfer,
lease, license, sell, mortgage, pledge, dispose of, or encumber any
property or assets other than in the ordinary course of business and
consistent with past practice;
(j) neither the Company nor any of its Subsidiaries shall: (i) enter
into any employment or severance agreement with or grant any severance or
termination pay to any officer, director or key employee of the Company or
any its Subsidiaries; or (ii) hire or agree to hire any new or additional
key employees or officers;
(k) neither the Company nor any of its Subsidiaries shall, except as
required to comply with applicable Law or expressly provided in the Merger
Agreement, (A) adopt, enter into, terminate, amend or increase the amount
or accelerate the payment or vesting of any benefit or award or amount
payable under any Benefit Plan or other arrangement for the current or
future benefit or welfare of any director, officer or current or former
employee, except to the extent necessary to coordinate any such Benefit
Plans with the terms of the Merger Agreement, (B) increase in any manner
the compensation or fringe benefits of, or pay any bonus to, any director,
officer or employee, (C) pay any benefit not provided for under any Benefit
Plan, (D) grant any awards under any bonus, incentive, performance or other
compensation plan or arrangement or Benefit Plan (including the grant of
stock options, stock appreciation rights, stock-based or stock-related
awards, performance units or restricted stock, or the removal of existing
restrictions in any Benefit Plans or agreements or awards made thereunder)
or (E) take any action to fund or in any other way secure the payment of
compensation or benefits under any employee plan, agreement, contract or
arrangement or Benefit Plan;
(l) neither the Company nor any of its Subsidiaries shall: (i) incur
or assume any long-term debt or, except in the ordinary course of business,
incur or assume any short-term indebtedness in amounts not consistent with
past practice; (ii) incur or modify any material indebtedness or other
liability except as set forth on the applicable section of the disclosure
schedule to the Merger Agreement; (iii) assume, guarantee, endorse or
otherwise become liable or responsible (whether directly, contingently or
otherwise) for the obligations of any other person, except in the ordinary
course of business and consistent with past practice; (iv) make any loans,
advances or capital contributions to, or investments in, any other person
(other than to wholly owned Subsidiaries of the Company or customary loans
or advances to employees in the ordinary course of business in accordance
with past practice); (v) settle any claims other than in the ordinary
course of business, in accordance with past practice and without admission
of liability; or (vi) enter into any material commitment or transaction;
(m) neither the Company nor any of its Subsidiaries shall change any
of the accounting principles used by it unless required by generally
accepted accounting principles;
(n) neither the Company nor any of its Subsidiaries shall make any tax
election, amend any tax return, make a claim for any tax refund or settle
or compromise any tax liability (whether with respect to amount or timing);
(o) neither the Company nor any of its Subsidiaries shall pay,
discharge or satisfy any claims, liabilities or obligations (absolute,
accrued, asserted or unasserted, contingent or otherwise), other than the
payment, discharge or satisfaction of any such claims, liabilities or
obligations in the ordinary course of business and consistent with past
practice, of any such claims, liabilities or obligations which are
20
reflected or reserved against in, or contemplated by, the consolidated
financial statements (or the notes thereto) of the Company and its
consolidated Subsidiaries; or except in the ordinary course of business
consistent with past practice, waive the benefits of, or agree to modify in
any manner, any confidentiality, standstill or similar agreement to which
the Company or any of its Subsidiaries is a party;
(p) neither the Company nor any of its Subsidiaries shall (by action
or inaction) amend, renew, terminate or cause to be extended any lease,
agreement or arrangement relating to any of the leased properties or enter
into any lease, agreement or arrangement with respect to real property;
(q) neither the Company nor any of its Subsidiaries will enter into an
agreement, contract, commitment or arrangement to do any of the foregoing,
or to authorize, recommend, propose or announce an intention to do any of
the foregoing; and
(r) neither the Company nor any of its Subsidiaries shall take any
action that the Company knows at the time of taking such action would
result in any of the conditions to the Offer, as set forth in the Merger
Agreement, not being satisfied (subject to the Company's right to take
action specifically permitted by the Merger Agreement).
No Solicitation. Pursuant to the Merger Agreement, the Company has agreed
that it shall not, nor shall it permit any of its Subsidiaries to, nor shall it
authorize (and shall use its best efforts not to permit) any officer, director
or employee of, or any investment banker, attorney or other advisor or
representative of, the Company or any of its subsidiaries to, (i) solicit or
initiate, or encourage, directly or indirectly, any inquires or the submission
of, any Takeover Proposal (as defined below), (ii) participate in any
discussions or negotiations regarding, or furnish to any Person any information
or data with respect to or access to the properties of, or take any other action
to knowingly facilitate the making of any proposal that constitutes, or may
reasonably be expected to lead to, any Takeover Proposal or (iii) enter into any
agreement with respect to any Takeover Proposal or approve or resolve to approve
any Takeover Proposal; provided that nothing contained in the applicable
provisions of the Merger Agreement shall prohibit the Company or the Company
Board from (A) taking and disclosing to the Company's stockholders a position
with respect to a tender or exchange offer by a third party pursuant to Rules
14d-9 and 14e-2 promulgated under the Exchange Act, or (B) making such
disclosure to the Company's stockholders as, in the good faith judgment of the
Company Board, after receiving written advice from outside counsel, is required
under applicable Law, provided that the Company may not, except as permitted by
the following paragraph, withdraw or modify, or propose to withdraw or modify,
its position with respect to the Offer or the Merger or approve or recommend, or
propose to approve or recommend any Takeover Proposal, or enter into any
agreement with respect to any Takeover Proposal. Upon execution of the Merger
Agreement, the Company will immediately cease any existing activities,
discussions or negotiations with any parties conducted prior to the date of the
Merger Agreement with respect to any of the foregoing. Notwithstanding the
foregoing, prior to the time of acceptance of Shares for payment pursuant to the
Offer, the Company may furnish information concerning its business, properties
or assets to any Person or group and may negotiate and participate in
discussions and negotiations with such Person or group concerning a Takeover
Proposal if: (x) such Person or group has submitted a Superior Proposal; and (y)
the Company Board determines, based upon the written opinion of its independent
legal counsel, that the failure to participate in such discussions or
negotiations or to furnish such information would cause a breach of such Board's
fiduciary duties under applicable Law. The Company will promptly (but in no case
later than 24 hours) notify Parent of the existence of any proposal, discussion,
negotiation or inquiry received by the Company regarding any Takeover Proposal,
and the Company will promptly communicate to Parent the terms of any proposal,
discussion, negotiation or inquiry which it may receive regarding any Takeover
Proposal (and will promptly provide to Parent copies of any written materials
received by the Company in connection with such proposal, discussion,
negotiation or inquiry) and the identity of the party making such proposal or
inquiry or engaging in such discussion or negotiation. The Company will promptly
provide to Parent any non-public information concerning the Company provided to
any other Person which was not previously provided to Parent. The Company will
keep Parent fully informed of the status and details of any such Takeover
Proposal and of any amendments or proposed amendments to any Takeover Proposal
and will promptly notify Parent (but in no case later than 24 hours) of any
determination by the Company Board that a Superior Proposal has been made.
21
Pursuant to the Merger Agreement, except as set forth in this paragraph,
neither the Company Board nor any committee thereof shall (i) withdraw or
modify, or propose to withdraw or modify, in a manner adverse to Parent or
Purchaser, the approval or recommendation by the Company Board or any such
committee of the Offer, the Merger Agreement or the Merger, (ii) approve or
recommend, or propose to approve or recommend, any Takeover Proposal or (iii)
enter into any agreement with respect to any Takeover Proposal. Notwithstanding
the foregoing, subject to compliance with this paragraph prior to the time of
acceptance for payment of Shares pursuant to the Offer, the Company Board may
withdraw or modify its approval or recommendation of the Offer, the Merger
Agreement or the Merger, approve or recommend a Superior Proposal (as defined
below), or enter into an agreement with respect to a Superior Proposal, in each
case at any time after the third business day following Parent's receipt of
written notice from the Company advising Parent that the Company Board has
received a Superior Proposal which it intends to accept, specifying the material
terms and conditions of such Superior Proposal, identifying the person making
such Superior Proposal, but only if the Company shall have caused its financial
and legal advisors to negotiate with Parent promptly following delivery of such
notice and through such three business day period to make such adjustments to
the terms and conditions of the Merger Agreement as would enable the Company to
proceed with the Transactions on such adjusted terms. The term "Takeover
Proposal" means any bona fide proposal or offer, whether in writing or
otherwise, from any Person other than Parent, Purchaser or any affiliates
thereof (a "Third Party") to acquire beneficial ownership (as defined under Rule
13(d) of the Exchange Act) of all or a material portion of the assets of the
Company and its subsidiaries, taken as whole, or 50% or more of any class of
equity securities of the Company pursuant to a merger, consolidation or other
business combination, sale of shares of capital stock, sale of assets, tender
offer, exchange offer or similar transaction with respect to the Company,
including any single or multi-step transaction or series of related
transactions, which is structured to permit such Third Party to acquire
beneficial ownership of any material portion of the assets of the Company and
its subsidiaries, taken as a whole, or 50% or more of the equity interest in the
Company. The term "Superior Proposal" means an unsolicited bona fide proposal by
a Third Party to acquire, directly or indirectly, for consideration consisting
of cash and/or securities, more than a majority of the Shares then outstanding
or all or substantially all of the assets of the Company, and otherwise on terms
which the Company Board determines in good faith to be more favorable to the
Company's stockholders than the Offer and the Merger, based on advice of the
Company's independent financial advisor, for which financing, to the extent
required, is then committed or which, in the good faith reasonable judgment of
the Company Board (based on advice from the Company's independent financial
advisor that the value of the Consideration provided for in such proposal is
superior to the value of the consideration provided for in the Offer and the
Merger), for which financing, to the extent required, is then committed or
which, in the good faith reasonable judgment of the Company Board, based on
advice from the Company's independent financial advisor, is reasonably capable
of being financed by such party.
Termination. The Merger Agreement may be terminated and the Merger
contemplated therein may be abandoned at any time prior to the Effective Time,
whether before or after approval of matters presented in connection with the
Merger by the stockholders of the Company (provided, however, that if Shares are
purchased pursuant to the Offer, neither Parent nor Purchaser may in any event
terminate the Merger Agreement):
(a) By the mutual written consent of Parent and the Company; provided,
however, that if Parent shall have a majority of the directors pursuant to
the applicable provisions of the Merger Agreement, such consent of the
Company may only be given if approved by the Continuing Directors.
(b) By either of Parent or the Company if (i) a statute, rule or
executive order shall have been enacted, entered or promulgated prohibiting
the Transactions on the terms contemplated by the Merger Agreement or (ii)
any governmental entity shall have issued an order, decree or ruling or
taken any other action (which order, decree, ruling or other action the
parties to the Merger Agreement shall use their reasonable efforts to
lift), in each case permanently restraining, enjoining or otherwise
prohibiting the Transactions contemplated by the Merger Agreement and such
order, decree, ruling or other action shall have become final and
non-appealable.
22
(c) By either of Parent or the Company if at least that number of
Shares required by the Minimum Condition to be tendered shall not have been
purchased in the Offer on or before November 30, 1998; provided, that the
party seeking to terminate the Merger Agreement pursuant to the applicable
section shall not have breached in any material respect its obligations
under the Merger Agreement in any manner that shall have proximately
contributed to the failure to consummate the Offer on or before such date;
(d) By the Company: (i) if the Company has entered into an agreement
with respect to a Superior Proposal or has approved or recommended a
Superior Proposal in accordance with the Merger Agreement, provided the
Company has complied with all provisions thereof, including the notice
provisions therein, and that it simultaneously terminates the Merger
Agreement and makes simultaneous payment to the Parent of the Expenses and
the Termination Fee; or (ii) if Parent or Purchaser shall have terminated
the Offer or the Offer expires without Parent or Purchaser, as the case may
be, purchasing any Shares pursuant thereto; provided that the Company may
not terminate the Merger Agreement pursuant to this clause (d)(ii) if the
Company is in material breach of the Merger Agreement or the Stock Option
Agreement; or (iii) if Parent, Purchaser or any of their affiliates shall
have failed to commence the Offer on or prior to five business days
following the date of the initial public announcement of the Offer,
provided, that the Company may not terminate the Merger Agreement pursuant
to this clause (d) (iii) if the Company is in material breach of the Merger
Agreement or the Stock Option Agreement; or (iv) if there shall be a breach
by Parent or Purchaser of any of its representations, warranties, covenants
or agreements contained in the Merger Agreement which breach is incapable
of being cured or is not cured within 10 days of notice from the Company to
Parent, except, in each case, where such breach does not have a material
adverse effect on the ability of Parent or Purchaser to consummate the
Offer or the Merger.
(e) By Parent or Purchaser: (i) (A) if prior to the purchase of the
Shares pursuant to the Offer, the Company Board shall have withdrawn, or
modified or changed in a manner adverse to Parent or Purchaser its approval
or recommendation of the Offer, the Merger Agreement or the Merger or shall
have recommended or approved a Takeover Proposal (provided that the Company
merely providing notice to Parent pursuant to the Merger Agreement shall
not in itself constitute a recommendation or approval of a Takeover
Proposal); or (B) there shall have been a material breach of any provision
of the section of the Merger Agreement regarding No Solicitation; or (ii)
if Parent or Purchaser shall have terminated the Offer without Parent or
Purchaser purchasing any Shares thereunder, provided that Parent or
Purchaser may not terminate the Merger Agreement pursuant to this clause
(e) (ii) if Parent or Purchaser is in material breach of the Merger
Agreement; or (iii) if, due to an occurrence that if occurring after the
commencement of the Offer would result in a failure to satisfy any of the
conditions set forth in the Section 14 below, Parent, Purchaser or any of
their affiliates shall have failed to commence the Offer on or prior to
five business days following the date of the initial public announcement of
the Offer; or (iv) if the Company receives a Takeover Proposal from any
Person (other than Parent or Purchaser), and the Company Board takes a
neutral position or makes no recommendation with respect to such Takeover
Proposal after a reasonable amount of time (and in no event more than ten
business days following such receipt) has elapsed for the Company's Board
of Directors to review and make a recommendation with respect to such
Takeover Proposal; or (v) if there shall be a breach by the Company of any
of its representations, warranties, covenants or agreements contained in
the Merger Agreement or the Stock Option Agreement which breach is
incapable of being cured or is not cured within 10 days of notice from
Parent to the Company, except, in each case, where such breach (without
giving effect to any limitation as to "materiality" or "material adverse
effect" set forth therein) does not have a Material Adverse Effect on the
Company or a materially adverse effect on the ability of the Company to
consummate the Offer or the Merger.
Termination Fee. Pursuant to the Merger Agreement, if (x) Parent or
Purchaser terminates the Merger Agreement pursuant to clauses (e)(i) or (e)(iv)
under the heading "Termination" above or (y) the Company terminates this
Agreement pursuant to clause (d)(i) under the heading "Termination" above, then
in each case, the Company shall pay, or cause to be paid to Parent, at the time
of termination, an amount
23
equal to $2,500,000 (the "Termination Fee") and an amount equal to Parent's and
Purchaser's actual and documented reasonable out-of-pocket expenses incurred by
Parent or Purchaser in connection with the Offer, the Merger, the Merger
Agreement and the consummation of the Transactions, including, without
limitation, the reasonable fees and expenses payable to all attorneys,
accountants, banks, investment banking firms, and other financial institutions
and Persons and their respective agents and counsel incurred in connection with
the Transactions or arranging or committing to provide or providing any
financing for, the Transactions (the "Expenses"). In addition, if the Merger
Agreement is terminated by either Parent or the Company pursuant to clause (c)
under the heading "Termination" above, by Parent pursuant to clause (e)(ii)
under the heading "Termination" above (other than if such termination is a
result of the failure to satisfy the conditions set forth in paragraphs (a)(i),
(a)(ii), (a)(v), (a)(vii), (a)(viii), (b) or (c) of the conditions to the Offer
contained in Section 14 below) or clause (e)(v) under the heading "Termination"
above (other than by reason of a breach of the section in the Merger Agreement
regarding No Solicitation) or by the Company pursuant to clause (d)(ii) under
the heading "Termination" above (other than if such termination is a result of
the failure to satisfy the conditions set forth in paragraphs (a)(i), (a)(ii),
(a)(v), (a)(vii), (a)(viii), (b) or (c) of the conditions to the Offer contained
in Section 14 below) and at the time of such termination, Parent is not in
material breach of the Merger Agreement, then the Company shall pay to Parent,
at the time of termination, the Expenses, and, if the Company shall thereafter,
within 12 months after such termination, enter into an agreement with respect to
a Takeover Proposal, then the Company shall pay the Termination Fee concurrently
with entering into any such agreement. Any payments required to be made pursuant
to this Section shall be made by wire transfer of same day funds to an account
designated by Parent. Pursuant to the Merger Agreement and security agreements
entered into by Parent and Hasbro Interactive with the Company and certain of
its subsidiaries, the Termination Fee payable under the Merger Agreement if (x)
Parent or Purchaser terminates the Merger Agreement pursuant to paragraphs
(e)(i) or (e)(iv) under the heading "Termination" above or (y) the Company
terminates the Merger Agreement pursuant to paragraph (d)(i) under the heading
"Termination" above (the "Immediately Payable Termination Fee"), shall be
secured by the Company's assets.
Indemnification. The Merger Agreement provides that the Company shall, to
the fullest extent permitted under applicable Delaware law or under the
Certificate of Incorporation or By-Laws and regardless of whether the Merger
becomes effective, indemnify and hold harmless, and, after the Effective Time,
the Surviving Corporation shall, to the fullest extent permitted under
applicable Delaware law, indemnify and hold harmless, each present and former
director, officer or employee of the Company or any of its Subsidiaries
(collectively, the "Indemnified Parties") against any costs or expenses
(including reasonable attorneys' fees), judgments, losses, claims, damages and
liabilities incurred in connection with, and amounts paid in settlement of, any
claim, action, suit, proceeding or investigation, whether civil, criminal,
administrative or investigative and wherever asserted, brought or filed, (x)
arising out of or pertaining to the Transactions contemplated by the Merger
Agreement or (y) otherwise with respect to any acts or omissions or alleged acts
or omissions occurring at or prior to the Effective Time, in each case for a
period of six years after the date of the Merger Agreement. In the event of any
such claim, action, suit, proceeding or investigation (whether arising before or
after the Effective Time), (i) any counsel retained by the Indemnified Parties
for any period after the Effective Time must be reasonably satisfactory to the
Surviving Corporation, (ii) after the Effective Time, the Surviving Corporation
shall pay the reasonable fees and expenses of such counsel, promptly after
statements therefor are received, and (iii) the Surviving Corporation will
cooperate in the defense of any such matter; provided, however, that the
Surviving Corporation shall not be liable for any settlement effected without
its written consent (which consent shall not be unreasonably withheld or
delayed); and provided, further, that, in the event any claims for
indemnification are asserted or made within such six year period, all rights to
indemnification in respect of any such claim or claims shall continue until the
disposition of any and all such claims. The Indemnified Parties as a group shall
be reimbursed for the costs of only one law firm to represent them with respect
to any single action unless there is, under applicable standards of professional
conduct, a conflict on any significant issue between the positions of any two or
more Indemnified Parties. The indemnity agreements of the Surviving Corporation
in this paragraph shall extend, on the same terms to, and shall inure to the
benefit of and shall be enforceable by, each person or entity who controls, or
in the past controlled, any present or former director, officer or employee of
the Company or any of its subsidiaries.
24
The Merger Agreement provides that for a period of three years after the
Effective Time, Parent shall cause the Surviving Corporation to maintain in
effect, if available, directors' and officers' liability insurance covering
those persons who are currently covered by the Company's directors' and
officers' liability insurance policy (a copy of which has been made available to
Parent) on terms (including the amounts of coverage and the amounts of
deductibles, if any) that are no less favorable to the terms now applicable to
them under the Company's current policies; provided, however, that in no event
shall Parent or the Surviving Corporation be required to expend in excess of
150% of the annual premium currently paid by the Company for such coverage; and
provided further, that if the premium for such coverage exceeds such amount,
Parent or the Surviving Corporation shall purchase a policy with the greatest
coverage available for such 150% of the annual premium. The Merger Agreement
further provides that the foregoing indemnification provisions shall survive the
consummation of the Merger at the Effective Time, is intended to benefit the
Company, the Surviving Corporation and the Indemnified Parties, shall be binding
on all successors and assigns the Surviving Corporation and shall be enforceable
by the Indemnified Parties.
Stock Option Agreement
The following is a summary of certain provisions of the Stock Option
Agreement. This summary is not a complete description of the terms and
conditions of the Stock Option Agreement and is qualified in its entirety by
reference to the full text of the Stock Option Agreement filed with the
Commission as an exhibit to the Schedule 14D-1 and is incorporated herein by
reference. Capitalized terms not otherwise defined below shall have the meanings
set forth in the Stock Option Agreement. The Stock Option Agreement may be
examined, and copies obtained, as set forth in Section 9 of this Offer to
Purchase.
Grant of Option. The Stock Option Agreement provides for the grant by the
Company to Parent of an irrevocable option (the "Stock Option") to purchase up
to 19.9% of the number of Shares (the "Option Shares") issued at the time of the
grant of the Stock Option, at a price of $6.00 per Share (the "Exercise Price"),
payable in cash in accordance with the terms of the Stock Option Agreement. The
payment obligations of the Issuer, including the Cash-Out Right shall be secured
by the Issuer's assets pursuant to the Security Agreement between Grantee,
Hasbro Interactive Inc. and Issuer.
Exercise of Option. The Stock Option Agreement provides that the Stock
Option may be exercised by Parent, in whole or in part, at any time or from time
to time after the Merger Agreement is terminated pursuant to a Triggering Event
(as defined below). For the purposes of the Stock Option Agreement, "Triggering
Event" means any termination of the Merger Agreement which could entitle Parent
to the Termination Fee under the Merger Agreement.
Cash Payment. If, at any time during the period commencing on the
occurrence of a Triggering Event and ending on the termination of the Option in
accordance with Section 2, Parent sends to the Company a notice indicating
Parent's election to exercise its right (the "Cash-Out Right") pursuant to this
Section, then the Company shall pay to Parent, in exchange for the cancellation
of the Option with respect to such number of Option Shares as Parent specifies
an amount in cash equal to such number of Option Shares multiplied by the
difference between (i) the average closing price for the 5 trading days
commencing on the 12th Nasdaq trading day immediately preceding the date of
notice, per share of Issuer Common Stock as reported on the Nasdaq National
Market (or, if not listed on the Nasdaq, as reported on any other national
securities exchange or national securities quotation system on which the Shares
are listed or quoted, as reported in The Wall Street Journal (Northeast
edition), or, if not reported thereby, any other authoritative source) (the
"Closing Price") and (ii) the Exercise Price. Notwithstanding the termination of
the Option, Parent will be entitled to exercise its rights under this Section if
it has exercised such rights in accordance with the terms hereof prior to the
termination of the Option. Pursuant to the Stock Option Agreement and security
agreements entered into by Parent and Hasbro Interactive with the Company and
certain of its subsidiaries, the Cash-Out Right, when payable in connection with
the Immediately Payable Termination Fee (the "Immediately Payable Cash-Out
Right"), is secured by the Company's assets. If Parent receives in aggregate (i)
the Termination Fee pursuant to the Merger Agreement, (ii) amounts from the sale
or other disposition of the Option Shares, and (iii) the Cash Out Right in
excess of the sum of (A) $3,500,000 plus (B) the amounts paid by Parent to
purchase any Option Shares, then all such excess amounts shall be remitted by
Parent to the Company. If any payment by the Company pursuant to the Cash Out
25
Right or payment of the Termination Fee pursuant to the Merger Agreement would
cause Parent to become obligated to remit amounts pursuant to this Section, then
the Company shall have the right to reduce such payments such that no such
obligation would arise.
Termination of Option. The Stock Option Agreement provides that the Stock
Option will terminate upon the earlier of: (i) the consummation of the Offer;
(ii) six months after the date on which a Triggering Event occurs; or (iii)
termination of the Merger Agreement in accordance with its terms prior to the
occurrence of a Triggering Event, unless, in the case of clauses (ii) and (iii),
the Grantee could be entitled to receive termination fees following such time or
termination upon the occurrence of certain events, in which case the Option will
not terminate until the later of (x) six months following the time such
termination fees become payable and (y) the expiration of the period in which
the Grantee has such right to receive termination fees.
Registration Rights. The Stock Option Agreement provides that Grantee,
within three years, may, by written notice (the "Registration Notice") to the
Issuer, request the Issuer to register under the Securities Act all or any part
of the Shares beneficially owned by Grantee (the Registrable Securities) in
order to permit the sale or other disposition of such securities pursuant to (a)
a shelf registration or (b) a bona fide firm commitment underwritten public
offering in which Grantee shall have the right to select the managing
underwriter and shall effect as wide a distribution of such Registrable
Securities as is reasonably practicable and shall use reasonable best efforts to
prevent any person or group from purchasing through such offering shares
representing more than 3% of the outstanding Shares on a fully diluted basis.
The Stock Option Agreement provides that if the Issuer effects a registration
under the Securities Act of Shares for its own account or for any other
stockholders of the Issuer (other than on Form S-4 or Form S-8, or any successor
form), it will allow Grantee the right to participate in such registration, and
such participation will not affect the obligation of the Issuer to effect demand
registration statements for Grantee under the Stock Option Agreement, except
that, if the managing underwriters of such offering advise the Issuer in writing
that in their opinion the number of Shares requested to be included in such
registration exceeds the number which can be sold in such offering, the Issuer
will include that portion of the Shares requested to be included therein equal
to the product obtained by multiplying (i) the number of shares which the
underwriter has informed the Issuer can be included in the offering and (ii) the
percentage obtained by dividing (x) the total number of Shares of Issuer Common
Stock held by Parent and (y) the total number of Shares of the Company
outstanding.
Adjustment upon Changes in Capitalization. The Stock Option Agreement
provides that in the event of any change in Shares by reason of stock dividends,
stock splits, mergers (other than the Merger), recapitalizations, combinations,
exchange of shares or the like, the type and number of shares or securities
subject to the Stock Option, and the Exercise Price per share, will be adjusted
appropriately and proper provision will be made so that Grantee will receive
upon exercise of the option the number and class of shares or other securities
or property that Grantee would have received with respect to Issuer Common Stock
if the Option has been exercised immediately prior to such event or the record
date therefor, as applicable.
Software Distribution and Loan Agreement
The following is a summary of certain provisions of the Software
Distribution and Loan Agreement (the "Software Distribution and Loan
Agreement"), dated as of August 11, 1998, by and between Hasbro Interactive,
Inc., a Delaware corporation and a wholly owned subsidiary of Parent, and the
Company. This summary is not a complete description of the terms and conditions
of the Software Distribution and Loan Agreement and is qualified in its entirety
by reference to the full text of the Software Distribution and Loan Agreement
filed with the Commission as an exhibit to the Schedule 14D-1 and is
incorporated herein by reference. Capitalized terms not otherwise defined below
shall have the meanings set forth in the Software Distribution and Loan
Agreement. The Software Distribution and Loan Agreement may be examined, and
copies obtained, as set forth in Section 9 of this Offer to Purchase.
Pursuant to the Software Distribution and Loan Agreement, the Company and
Hasbro Interactive have agreed that Hasbro Interactive will be the exclusive
distributor of the Company's computer software products in the United States and
Canada through March 2001 and that the Company will provide manufacturing and
26
marketing services and promotion for such computer software products. In
consideration of its distribution of the Company's computer software products,
the agreement provides that Hasbro Interactive is entitled to retain a monthly
service fee (the "Service Fee") equal to 17.5% of "Net Receipts," which is
defined as, for any period, monies received by Hasbro Interactive from its
customers in respect of sales of the Company's computer software products, less
customary trade discounts, price protection and monies credited to customers'
accounts for sales returns, in each case during such period.
In addition, pursuant to the Software Distribution and Loan Agreement, as a
financial accommodation to the Company, Hasbro Interactive has agreed to make
available up to $5,500,000 in loans to the Company, subject to the terms and
conditions set forth therein. Such loans are secured by a lien on the Company's
assets, mature on the six month anniversary of the agreement, bear interest at
12% per annum and have a mandatory monthly principal prepayment obligation equal
to 32.5% of Net Receipts in each month. The agreement provides that each
mandatory prepayment of principal shall be deducted from the consideration due
to the Company each month under the agreement, following deduction of the
Service Fee and accrued interest then payable.
In connection with securing such loans and the Immediately Payable
Termination Fee payable under the Merger Agreement and the Immediately Payable
Cash-Out Right payable under the Stock Option Agreement, the Company and certain
of its subsidiaries have entered into security agreements with Parent and Hasbro
Interactive granting a security interest in the securable assets of the Company
and such subsidiaries.
Confidentiality Agreement
The following is a summary of certain provisions of the Confidentiality
Agreement entered into on June 16, 1998 by Hasbro Interactive and the Company,
as amended on July 27, 1998 (the "Confidentiality Agreement"). This summary is
not a complete description of the terms and conditions of the Confidentiality
Agreement and is qualified in its entirety by reference to the full text of the
Confidentiality Agreement filed with the Commission as an exhibit to the
Schedule 14D-1 and is incorporated herein by reference. Capitalized terms not
otherwise defined below shall have the meanings set forth in the Confidentiality
Agreement. The Confidentiality Agreement may be examined, and copies obtained,
as set forth in Section 9 of this Offer to Purchase.
Pursuant to the terms of the Confidentiality Agreement, the Company and
Hasbro Interactive agreed to provide, among other things, for the confidential
treatment of their discussions regarding the Offer and the Merger and the
exchange of certain confidential information concerning the Company. The
Confidentiality Agreement is incorporated herein by reference and a copy of it
has been filed with the Commission as an exhibit to the Schedule 14D-1. Parent
further agreed that, for a period of six (6) months from the date the
Confidentiality Agreement was amended, Hasbro Interactive would not entice away
or in any matter encourage or solicit any officer, employee, agent,
representative, customer or supplier of the Company with whom Hasbro Interactive
comes into contact in connection with its consideration of a transaction to
discontinue such person's relationship with the Company, subject to certain
exceptions.
12. PLANS FOR THE COMPANY; OTHER MATTERS.
PLANS FOR THE COMPANY
Parent is conducting a detailed review of the Company and its business and
operations with a view towards determining how to optimally realize any
potential synergies which exist between the operations of the Company and those
of Parent. Such review is not expected to be completed until after the
consummation of the Merger, and, following such review, Parent will consider
what, if any, changes would be desirable in light of the circumstances then
existing.
If, as and to the extent that Purchaser acquires control of the Company,
Parent and Purchaser intend to conduct a detailed review of the Company and its
assets, corporate structure, capitalization, operations, properties, policies,
management and personnel and to consider and determine what, if any, changes
would be desirable in light of the circumstances which then exist. Such changes
could include, among other things, changes in the Company's business, corporate
structure, certificate of incorporation, by-laws, capitalization, management or
dividend policy.
27
Assuming the Minimum Condition is satisfied and Purchaser purchases Shares
pursuant to the Offer, Parent intends to promptly exercise its rights under the
Merger Agreement to obtain majority representation on, and control of, the
Company Board. See "Merger Agreement-Company Board" above. Parent will exercise
such rights by causing the Company to elect to the Company Board one or more of
Messrs. Gordon, Dusenberry and Waldoks. Information with respect to such
directors is contained in Schedule I hereto and in the Schedule 14D-9. The
Merger Agreement provides that, upon the purchase of and payment for any Shares
by Parent or any of its subsidiaries 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 such that the percentage of its designees on the
Company Board shall equal the percentage of the outstanding Shares beneficially
owned by Parent and its affiliates. See Section 11. The Merger Agreement
provides that the directors of Purchaser and the officers of the Company at the
Effective Time of the Merger will, from and after the Effective Time, be the
initial directors and officers, respectively, of the Surviving Corporation.
Purchaser or an affiliate of Purchaser may, following the consummation or
termination of the Offer, seek to acquire additional Shares through open market
purchases, privately negotiated transactions, a tender offer or exchange offer
or otherwise, upon such terms and at such prices as it shall determine, which
may be more or less than the price to be paid pursuant to the Offer. Purchaser
and its affiliates also reserve the right to dispose of any or all Shares
acquired by them, subject to the terms of the Merger Agreement.
Except as disclosed in this Offer to Purchase, and except as may be
effected in connection with the integration of operations referred to above,
neither Parent nor Purchaser has any present plans or proposals that would
result in an extraordinary corporate transaction, such as a merger,
reorganization, liquidation, relocation of operations, or sale or transfer of a
material amount of assets, involving the Company or any of its subsidiaries, or
any material changes in the Company's capitalization, corporate structure,
business or composition of its management or the Company Board.
OTHER MATTERS
Stockholder Approval. Under the DGCL, the approval of the Company Board
and the affirmative vote of the holders of a majority of the outstanding Shares
are required to adopt and approve the Merger Agreement and transactions
contemplated thereby. The Company has represented in the Merger Agreement that
the execution and delivery of the Merger Agreement by the Company and the
consummation by the Company of the transactions contemplated by the Merger
Agreement have been duly authorized by all necessary corporate action on the
part of the Company, subject to the approval of the Merger by the Company's
stockholders in accordance with the DGCL. In addition, the Company has
represented that the affirmative vote of the holders of a majority of the
outstanding Shares is the only vote of the holders of any class or series of the
Company's capital stock which is necessary to approve the Merger Agreement and
the transactions contemplated thereby, including the Merger. Therefore, unless
the Merger is consummated pursuant to the short-form merger provisions under the
DGCL described below (in which case no further corporate action by the
stockholders of the Company will be required to complete the Merger), the only
remaining required corporate action of the Company will be the approval of the
Merger Agreement and the transactions contemplated thereby by the affirmative
vote of the holders of a majority of the Shares. The Merger Agreement provides
that Parent will vote, or cause to be voted, all of the Shares then owned by
Parent, Purchaser or any of Parent's other subsidiaries and affiliates in favor
of the approval of the Merger and the adoption of the Merger Agreement. In the
event that Parent, Purchaser and Parent's other subsidiaries acquire in the
aggregate at least a majority of the Shares entitled to vote on the approval of
the Merger and the Merger Agreement, they would have the ability to effect the
Merger without the affirmative votes of any other stockholders.
Short-Form Merger. Section 253 of the DGCL provides that, if a corporation
owns at least 90% of the outstanding shares of each class of another
corporation, the corporation holding such stock may merge itself into such
corporation without any action or vote on the part of the board of directors or
the stockholders of such other corporation (a "short-form merger"). In the event
that Parent, Purchaser and any other subsidiaries of Parent acquire in the
aggregate at least 90% of the outstanding Shares, pursuant to the Offer or
otherwise, then, at the election of Parent, a short-form merger could be
effected without any approval of the
28
Company Board or the stockholders of the Company, subject to compliance with the
provisions of Section 253 of the DGCL. In the Merger Agreement, Parent,
Purchaser and the Company have agreed that, notwithstanding that all conditions
to the Offer are satisfied or waived as of the scheduled Expiration Date,
Purchaser may extend the Offer for a period not to exceed ten business days,
subject to certain conditions, if the Shares tendered pursuant to the Offer are
less than 90% of the outstanding Shares. Even if Parent and Purchaser do not own
90% of the outstanding Shares following consummation of the Offer, Parent and
Purchaser could seek to purchase additional shares in the open market or
otherwise in order to reach the 90% threshold and employ a short-form merger.
The per share consideration paid for any Shares so acquired may be greater or
less than that paid in the Offer. Parent presently intends to effect a
short-form merger if permitted to do so under the DGCL.
Appraisal Rights. Holders of the Shares do not have appraisal rights in
connection with the Offer. However, if the Merger is consummated, holders of the
Shares at the Effective Time will have certain rights pursuant to the provisions
of Section 262 of the DGCL including the right to dissent and demand appraisal
of, and to receive payment in cash of the fair value of, their Shares. Under
Section 262 of the DGCL, dissenting stockholders of the Company who comply with
the applicable statutory procedures will be entitled to receive a judicial
determination of the fair value of their Shares (exclusive of any element of
value arising from the accomplishment or expectation of the Merger) and to
receive payment of such fair value in cash, together with a fair rate of
interest thereon, if any. Any such judicial determination of the fair value of
the Shares could be based upon factors other than, or in addition to, the price
per Share to be paid in the Merger or the market value of the Shares. The value
so determined could be more or less than the price per Share to be paid in the
Merger.
THE FOREGOING SUMMARY OF THE RIGHTS OF DISSENTING STOCKHOLDERS UNDER THE
DGCL DOES NOT PURPORT TO BE A COMPLETE STATEMENT OF THE PROCEDURES TO BE
FOLLOWED BY STOCKHOLDERS DESIRING TO EXERCISE ANY APPRAISAL RIGHTS AVAILABLE
UNDER THE DGCL. THE PRESERVATION AND EXERCISE OF APPRAISAL RIGHTS REQUIRE STRICT
ADHERENCE TO THE APPLICABLE PROVISIONS OF THE DGCL.
Rule 13e-3. The Commission has adopted Rule 13e-3 under the Exchange Act
which is applicable to certain "going private" transactions and which may under
certain circumstances be applicable to the Merger or another business
combination following the purchase of Shares pursuant to the Offer in which
Purchaser seeks to acquire the remaining Shares not held by it. Purchaser
believes, however, that Rule 13e-3 will not be applicable to the Merger because
it is anticipated that the Merger would be effected within one year following
consummation of the Offer and in the Merger stockholders would receive the same
price per Share as paid in the Offer. If Rule 13e-3 were applicable to the
Merger, it would require, among other things, that certain financial information
concerning the Company, and certain information relating to the fairness of the
proposed transaction and the consideration offered to minority stockholders in
such a transaction, be filed with the Commission and disclosed to minority
stockholders prior to consummation of the transaction.
13. DIVIDENDS AND DISTRIBUTIONS.
As described above, the Merger Agreement provides that from August 11, 1998
until such time as the designees of Parent have been elected to, and shall
constitute a majority of, the Company Board, without the prior written consent
of Parent, neither the Company nor any of its subsidiaries shall: (i)(A)
declare, set aside or pay any dividend or other distribution payable in cash,
stock or property with respect to the Company's capital stock or that of its
subsidiaries, except that a wholly-owned subsidiary of the Company may declare
and pay a dividend or make advances to its parent or the Company or (B) redeem,
purchase or otherwise acquire directly or indirectly any of the Company's
capital stock or that of its subsidiaries; (ii) issue, sell, pledge, dispose of
or encumber any additional shares of, or securities convertible into or
exchangeable for, or options, warrants, calls, commitments or rights of any kind
to acquire, any shares of capital stock of any class of the Company or its
subsidiaries, other than Shares issued upon the exercise of Options outstanding
on August 11, 1998; or (iii) split, combine or reclassify the outstanding
capital stock of the Company or of any of the subsidiaries of the Company.
29
14. CONDITIONS TO THE OFFER.
The Offer is subject to the Minimum Condition being satisfied by 12:00
Midnight on Friday, September 11, 1998 or such later date as the Offer may be
extended in accordance with the terms of the Merger Agreement. Purchaser has
agreed that if all of the conditions set forth herein have not been satisfied on
any scheduled Expiration Date then, provided that all such conditions are
reasonably capable of being satisfied, Purchaser shall extend the Offer from
time to time until such conditions are satisfied or waived, provided that
Purchaser shall not be required to extend the Offer beyond October 15, 1998.
Notwithstanding any other provision of the Offer, subject to the terms of the
Merger Agreement, Purchaser shall not be required to accept for payment any
Shares if (i) any applicable waiting period under the HSR Act has not expired or
been terminated, or (ii) at any time on or after the date of the Merger
Agreement and prior to the Expiration Date, any of the following events shall
occur and shall not result from the material breach by Parent or Purchaser of
any of their obligations under the Merger Agreement:
(a) there shall be threatened in writing or pending any suit, action
or proceeding (i) seeking to prohibit or impose any material limitations on
Parent's or Purchaser's ownership or operation (or that of any of their
respective Subsidiaries or Affiliates) of all or a material portion of
their or the Company's businesses or assets, (ii) seeking to compel Parent
or Purchaser or their respective Subsidiaries and Affiliates to dispose of
or hold separate any material portion of the business or assets of the
Company or Parent and their respective Subsidiaries, in each case taken as
a whole, (iii) challenging the acquisition by Parent or Purchaser of any
Shares pursuant to the Offer or the Stock Option Agreement, (iv) seeking to
restrain or prohibit the making or consummation of the Offer or the Merger
or the performance of any of the other Transactions, (v) seeking to obtain
from the Company any damages that would be reasonably likely to have a
Material Adverse Effect on the Company, (vi) seeking to impose material
limitations on the ability of Purchaser, or rendering Purchaser unable, to
accept for payment, pay for or purchase some or all of the Shares pursuant
to the Offer and the Merger, (vii) seeking to impose material limitations
on the ability of Purchaser or Parent effectively to exercise full rights
of ownership of the Shares, including, without limitation, the right to
vote the Shares purchased by it on all matters properly presented to the
Company's stockholders, or (viii) which otherwise is reasonably likely to
have a Material Adverse Effect on the Company or, as a result of the
Transactions, Parent and its Subsidiaries, which, in the case of any of the
foregoing, is reasonably likely to succeed on the merits; or
(b) there shall be any statute, rule, regulation, judgment, order or
injunction enacted, entered, enforced, promulgated or deemed applicable to
the Offer or the Merger, or any other action shall be taken by any
Governmental Entity, other than the application to the Offer or the Merger
of applicable waiting periods under the HSR Act, that is reasonably likely
to result, directly or indirectly, in any of the consequences referred to
in clauses (i) through (viii) of paragraph (a) above; or
(c) there shall have occurred (1) any general suspension of trading
in, or limitation on prices for, securities on the New York Stock Exchange,
the American Stock Exchange or in the Nasdaq National Market System, for a
period in excess of three hours (excluding suspensions or limitations
resulting solely from physical damage or interference with such exchanges
not related to market conditions), (2) a declaration of a banking
moratorium or any suspension of payments in respect of banks in the United
States (whether or not mandatory), (3) any limitation or proposed
limitation (whether or not mandatory) by any United States governmental
authority or agency that has a material adverse effect generally on the
extension of credit by banks or other financial institutions, (4) any
change in general financial bank or capital market conditions which has a
material adverse effect the ability of financial institutions in the United
States to extend credit or syndicate loans, (5) any decline in either the
Dow Jones Industrial Average or the Standard & Poor's Index of 500
Industrial Companies by an amount in excess of 15% measured from the close
of business on the date of this Agreement or (6) in the case of any of the
situations in clauses (1) through (5) inclusive, existing at the time of
the commencement of the Offer, a material acceleration or worsening
thereof; or
(d) the representations and warranties of the Company set forth in the
Merger Agreement shall not be true and accurate as of the date of
consummation of the Offer as though made on or as of such date
30
(except for those representations and warranties that address matters only
as of a particular date or only with respect to a specific period of time
which need only be true and accurate as of such date or with respect to
such period) or the Company shall have breached or failed to perform or
comply with any obligation, agreement or covenant required by the Merger
Agreement to be performed or complied with by it except, in each case where
the failure of such representations and warranties to be true and accurate
(without giving effect to any limitation as to "materiality" or "material
adverse effect" set forth therein), or the failure to perform or comply
with such obligations, agreements or covenants, do not, individually or in
the aggregate, have a Material Adverse Effect on the Company or a
materially adverse effect on the ability to consummate the Offer or the
Merger; or
(e) there shall have occurred a Material Adverse Effect on the
Company; or
(f) the Company Board (i) shall have withdrawn, or modified or changed
in a manner adverse to Parent or Purchaser (including by amendment of the
Schedule 14D-9) its recommendation of the Offer, the Merger Agreement, or
the Merger, (ii) shall have recommended a Takeover Proposal, (iii) shall
have adopted any resolution to effect any of the foregoing, or (iv) shall
have taken a neutral position or made no recommendation with respect to a
Takeover Proposal received from any Person (other than Parent or Purchaser)
after a reasonable amount of time (and in no event more than ten business
days following such receipt) has elapsed for the Company Board to review
and make a recommendation with respect to such Takeover Proposal; or
(g) any party to the Stock Option Agreement other than Purchaser and
Parent shall have breached or failed to perform any of its agreements under
such agreement or breached any of its representations and warranties in
such agreements or any such agreement shall not be valid, binding and
enforceable, except for such breaches or failures or failures to be valid,
binding and enforceable that do not materially and adversely affect the
benefits expected to be received by Parent and Purchaser under the Merger
Agreement or the Stock Option Agreement;
(h) the Merger Agreement shall have been terminated in accordance with
its terms; or
(i) the Company pursuant to or within the meaning of Title 11, U.S.
Code or any similar Federal or state law for the relief of debtors
("Bankruptcy Law"): (1) commences a voluntary case, (2) consents to the
entry of an order for relief against it in an involuntary case, (3)
consents to the appointment of a receiver, trustee, assignee, liquidator or
similar official under any Bankruptcy Law ( a "Custodian") of it or for all
or substantially all of its property, (4) makes a general assignment for
the benefit of its creditors, or (5) generally is not paying its debts as
they become due; or (6) a court of competent jurisdiction enters an order
or decree under any Bankruptcy Law that: (x) is for relief against the
Company in an involuntary case, (y) appoints a Custodian of the Company or
for all or substantially all of the property of the Company, or (z) orders
the liquidation of the Company, and the order or decree remains unstayed
and in effect for 60 days;
which in the reasonable good faith judgment of Parent or Purchaser, in any such
case, and regardless of the circumstances (including any action or inaction by
Parent or Purchaser) giving rise to such condition makes it inadvisable to
proceed with the Offer and/or with such acceptance for payment of or payments
for Shares.
The foregoing conditions are for the sole benefit of Parent and Purchaser
and may be waived by Parent or Purchaser, in whole or in part, at any time and
from time to time, in the sole discretion of Parent or Purchaser (except for the
Minimum Condition). The failure by Parent or Purchaser at any time to exercise
any of the foregoing rights shall not be deemed a waiver of any right and each
such right shall be deemed an ongoing right which may be asserted at any time
and from time to time.
15. CERTAIN LEGAL MATTERS.
General. Except as described in this Section 15, based on information
provided by the Company, none of the Company, Purchaser or Parent is aware of
any license or regulatory permit that appears to be material to the business of
the Company and its subsidiaries, taken as a whole, that might be adversely
affected by the acquisition of Shares by Parent or Purchaser pursuant to the
Offer, the Merger or otherwise, except as set
31
forth above, of any approval or other action by any governmental, administrative
or regulatory agency or authority, domestic or foreign, that would be required
prior to the acquisition of Shares by Purchaser pursuant to the Offer, the
Merger or otherwise. Should any such approval or other action be required,
Purchaser and Parent presently contemplate that such approval or other action
will be sought, except as described below under "State Antitakeover Statutes."
While, except as otherwise described in this Offer to Purchase, Purchaser does
not presently intend to delay the acceptance for payment of, or payment for,
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
failure to obtain any such approval or other action might not result in
consequences adverse to the Company's business or that certain parts of the
Company's business might not have to be disposed of, or other substantial
conditions complied with, in the event that such approvals were not obtained or
such other actions were not taken or in order to obtain any such approval or
other action. If certain types of adverse action are taken with respect to the
matters discussed below, Purchaser could decline to accept for payment, or pay
for, any Shares tendered. See Section 14 for certain conditions to the Offer,
including conditions with respect to governmental actions.
State Antitakeover Statutes. Section 203 of the DGCL, in general,
prohibits a Delaware corporation, such as the Company, from engaging in a
"Business Combination" (defined as a variety of transactions, including mergers)
with an "Interested Stockholder" (defined generally as a person that is the
beneficial owner of 15% or more of the outstanding voting stock of the subject
corporation) for a period of three years following the date that such person
became an Interested Stockholder unless, prior to the date such person became an
Interested Stockholder, the board of directors of the corporation approved
either the Business Combination or the transaction that resulted in the
stockholder becoming an Interested Stockholder. The provisions of Section 203 of
the DGCL are not applicable to any of the transactions contemplated by the
Merger Agreement or the Stock Option Agreement, since the Merger Agreement, the
Stock Option Agreement and the transactions contemplated thereby were approved
by the Company Board prior to the execution thereof.
A number of states have adopted laws and regulations that purport to apply
to attempts to acquire corporations that are incorporated in such states, or
whose business operations have substantial economic effects in such states, or
which have substantial assets, security holders, employees, principal executive
offices or principal places of business in such states. In Edgar v. MITE Corp.,
the Supreme Court of the United States (the "Supreme Court") invalidated on
constitutional grounds the Illinois Business Takeover statute, which, as a
matter of state securities law, made certain corporate acquisitions more
difficult. However, in 1987, in CTS Corp. v. Dynamics Corp. of America, the
Supreme Court held that the State of Indiana may, as a matter of corporate law
and, in particular, with respect to those aspects of corporate law concerning
corporate governance, constitutionally disqualify a potential acquiror from
voting on the affairs of a target corporation without the prior approval of the
remaining stockholders. The state law before the Supreme Court was by its terms
applicable only to corporations that had a substantial number of stockholders in
the state and were incorporated there.
Parent and Purchaser do not believe that the antitakeover laws and
regulations of any state other than the State of Delaware will by their terms
apply to the Offer, and, except as set forth above with respect to Section 203
of the DGCL, neither Parent nor Purchaser has attempted to comply with any state
antitakeover statute or regulation. Purchaser reserves the right to challenge
the applicability or validity of any state law purportedly applicable to the
Offer and nothing in this Offer to Purchase or any action taken in connection
with the Offer is intended as a waiver of such right. If it is asserted that any
state antitakeover statute is applicable to the Offer and an appropriate court
does not determine that it is inapplicable or invalid as applied to the Offer,
Purchaser might be required to file certain information with, or to receive
approvals from, the relevant state authorities, and Purchaser might be unable to
accept for payment or pay for Shares tendered pursuant to the Offer or may be
delayed in consummating the Offer. In such case, Purchaser may not be obligated
to accept for payment, or pay for, any Shares tendered pursuant to the Offer.
See Section 14.
Antitrust. The Offer and the Merger are subject to the HSR Act, which
provides that certain acquisition transactions may not be consummated unless
certain information has been furnished to the
32
Antitrust Division of the Department of Justice (the "DOJ") and the Federal
Trade Commission (the "FTC") and certain waiting period requirements have been
satisfied.
Parent and the Company expect to file soon their Notification and Report
Forms with respect to the Offer under the HSR Act. The waiting period under the
HSR Act with respect to the Offer will expire at 11:59 p.m., New York City time,
on the fifteenth day after the date Parent's form is filed unless early
termination of the waiting period is granted. However, the DOJ or the FTC may
extend the waiting period by requesting additional information or documentary
material from Parent or the Company. If such a request is made, such waiting
period will expire at 11:59 p.m., New York City time, on the tenth day after
substantial compliance by Parent with such request. Only one extension of the
waiting period pursuant to a request for additional information is authorized by
the HSR Act. Thereafter, such waiting period may be extended only by court order
or with the consent of Parent. In practice, complying with a request for
additional information or material can take a significant amount of time. In
addition, if the DOJ or the FTC raises substantive issues in connection with a
proposed transaction, the parties frequently engage in negotiations with the
relevant governmental agency concerning possible means of addressing those
issues and may agree to delay consummation of the transaction while such
negotiations continue. The Purchaser will not accept for payment Shares tendered
pursuant to the Offer unless and until the waiting period requirements imposed
by the HSR Act with respect to the Offer have been satisfied. See Section 14.
The FTC and the DOJ frequently scrutinize the legality under the Antitrust
Laws of transactions such as Purchaser's acquisition of Shares pursuant to the
Offer and the Merger. At any time before or after Purchaser's acquisition of
Shares, the DOJ or the FTC could take such action under the Antitrust Laws as it
deems necessary or desirable in the public interest, including seeking to enjoin
the acquisition of Shares pursuant to the Offer or otherwise seeking divestiture
of Shares acquired by Purchaser or divestiture of substantial assets of Parent
or its subsidiaries. Private parties, as well as state governments, may also
bring legal action under the Antitrust Laws under certain circumstances. Based
upon an examination of information provided by the Company relating to the
businesses in which Parent and the Company are engaged, Parent and Purchaser
believe that the acquisition of Shares by Purchaser will not violate the
Antitrust Laws. Nevertheless, there can be no assurance that a challenge to the
Offer or other acquisition of Shares by Purchaser on antitrust grounds will not
be made or, if such a challenge is made, of the result. See Section 14 for
certain conditions to the Offer, including conditions with respect to litigation
and certain government actions.
As used in this Offer to Purchase, "Antitrust Laws" shall mean and include
the Sherman Act, as amended, the Clayton Act, as amended, the HSR Act, the
Federal Trade Commission Act, as amended, and all other Federal and state
statutes, rules, regulations, orders, decrees, administrative and judicial
doctrines, and other laws that are designed or intended to prohibit, restrict or
regulate actions having the purpose or effect of monopolization or restraint of
trade.
Federal Reserve Board Regulations. Regulations G, U and X (the "Margin
Regulations") of the Federal Reserve Board restrict the extension or maintenance
of credit for the purpose of buying or carrying margin stock, including the
Shares, if the credit is secured directly or indirectly by margin stock. Such
secured credit may not be extended or maintained in an amount that exceeds the
maximum loan value of all the direct and indirect collateral securing the
credit, including margin stock and other collateral. The financing of the Offer
will not be directly or indirectly secured by the Shares or other securities
which constitute margin stock. Accordingly, all financing for the Offer will be
in full compliance with the Margin Regulations.
33
16. FEES AND EXPENSES.
Parent has engaged Bear Stearns to act as the Dealer Manager in connection
with the Offer. No fee is payable to Bear Stearns for its services as the Dealer
Manager, however, Parent and Bear Stearns are in discussions regarding the
compensation of Bear Stearns with respect to a financial advisory fee or other
fee in connection with other services provided by Bear Stearns in connection
with the Offer. Parent has agreed to reimburse Bear Stearns for all reasonable
out-of-pocket fees, expenses and costs, including reasonable fees and expenses
of legal counsel, and to indemnify Bear Stearns and certain related persons
against certain liabilities and expenses in connection with the Offer, including
certain liabilities under the federal securities laws. Bear Stearns has from
time to time provided investment banking services to Parent. E. John Rosenwald,
Jr., Vice Chairman of The Bear Stearns Companies Inc., is a Director of Parent.
Purchaser and Parent have retained D.F. King & Co. Inc. to serve as the
Information Agent and BankBoston, N.A. to serve as the Depositary in connection
with the Offer. The Information Agent may contact holders of Shares by personal
interview, mail, telephone, telex, telegraph and other methods of electronic
communication and may request brokers, dealers, commercial banks, trust
companies and other nominees to forward the Offer materials to beneficial
holders. The Information Agent and the Depositary will each receive reasonable
and customary compensation for their services, be reimbursed for certain
reasonable out-of-pocket expenses and be indemnified against certain liabilities
in connection with their services, including certain liabilities and expenses
under the federal securities laws.
Except as set forth above, neither Parent nor Purchaser will pay any fees
or commissions to any broker or dealer or other person or entity in connection
with the solicitation of tenders of Shares pursuant to the Offer. Brokers,
dealers, banks and trust companies will be reimbursed by Purchaser for customary
mailing and handling expenses incurred by them in forwarding the Offer materials
to their customers.
17. MISCELLANEOUS.
Purchaser is not aware of any state where the making of the Offer is
prohibited by administrative or judicial action pursuant to any valid state
statute. If Purchaser becomes aware of any valid state statute prohibiting the
making of the Offer or the acceptance of the Shares pursuant thereto, Purchaser
shall make a good faith effort to comply with such statute or seek to have such
statute declared inapplicable to the Offer. If, after such good faith effort,
Purchaser cannot comply with such state statute, the Offer will not be made to
(nor will tenders be accepted from or on behalf of) holders of Shares in such
state.
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATION ON BEHALF OF PARENT OR PURCHASER NOT CONTAINED HEREIN OR IN THE
LETTER OF TRANSMITTAL AND, IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATION
MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED.
Purchaser and Parent have filed with the Commission the Schedule 14D-1
pursuant to Rule 14d-3 under the Exchange Act, together with exhibits,
furnishing certain additional information with respect to the Offer. In
addition, the Company has filed with the Commission the Schedule 14D-9 pursuant
to Rule 14d-9 under the Exchange Act, setting forth its recommendation with
respect to the Offer and the reasons for its recommendation and furnishing
certain additional related information. Such Schedules and any amendments
thereto, including exhibits, should be available for inspection and copies
should be obtainable in the same manner set forth in Section 9 of this Offer to
Purchase (except that such material will not be available at the regional
offices of the Commission).
NEW HIAC CORP.
August 14, 1998
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SCHEDULE I
INFORMATION CONCERNING DIRECTORS AND EXECUTIVE OFFICERS OF
PARENT AND PURCHASER
1. DIRECTORS AND EXECUTIVE OFFICERS OF PARENT. The following table sets
forth the name and 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, each such
person is a citizen of the United States of America and the business address of
each such person is c/o Hasbro, Inc. 1027 Newport Avenue, Pawtucket, RI 02861.
Unless otherwise indicated, each occupation set forth opposite an individual's
name refers to employment with Parent. Unless otherwise indicated, each such
person has held his or her present occupation as set forth below, or has been an
executive officer at Parent for the past five years.
[Enlarge/Download Table]
PRESENT PRINCIPAL OCCUPATION OR EMPLOYMENT;
NAME MATERIAL POSITIONS HELD DURING THE PAST FIVE YEARS
---- --------------------------------------------------
DONAL A. BARKSDALE........................ Mr. Barksdale has been Chief Information Officer since
1997. Prior thereto, he was Senior Director of
Applications Development at Anheuser Busch from 1996 to
1997. Prior thereto, he was Vice President and Director
of Information Systems at General Electric Company.
ALAN R. BATKIN............................ Mr. Batkin is Vice Chairman of Kissinger Associates,
Director since 1992 Inc. (geopolitical strategic consulting firm) and a
director of PEC Israel Economic Corporation. Mr. Batkin
is a member of both the Executive Committee and the
Compensation and Stock Option Committee.
HAROLD P. GORDON.......................... Mr. Gordon has been Vice Chairman since 1995. Prior
Director since 1988 thereto, he was a Partner at Stikeman, Elliott (law
firm). He is a director of Alliance Communications
Corporation, Fonorola Inc. and G.T.C. Transcontinental
Group, Ltd. Mr. Gordon is a citizen of Canada.
ALEX GRASS................................ Mr. Grass has been the Chairman of the Executive
Director since 1981 Committee of Rite Aid Corporation (drug store chain)
since 1995. Prior thereto, he was the Chairman of the
Board and Chief Executive Officer of Rite Aid
Corporation. He is Chairman of the Board of SuperRite
Corporation. Mr. Grass is a member of both the Audit and
the Compensation and Stock Option Committees.
ALAN G. HASSENFELD........................ Mr. Hassenfeld has been Chairman of the Board, President
Director since 1978 and Chief Executive Officer since 1989. Mr. Hassenfeld
is Chairman of the Executive Committee.
SYLVIA K. HASSENFELD...................... Mrs. Hassenfeld is the former Chairman, since 1996 and
Director since 1983 prior thereto, she was the Chairman of the Board of the
American Jewish Joint Distribution Committee, Inc.
("JDC") since 1993. Prior thereto, she was President of
JDC. Mrs. Hassenfeld is Chair of the Nominating and
Governance Committee.
RICHARD B. HOLT........................... Mr. Holt has been Senior Vice President and Controller
since 1992.
VIRGINIA H. KENT.......................... Ms. Kent has been President of Global Brands and Product
Development since 1996. Prior thereto, she was General
Manager, Girls/Boys/Nerf from 1994 to 1996. Prior
thereto, she was Senior Vice President of Marketing for
the Kenner Products Division.
I-1
[Enlarge/Download Table]
PRESENT PRINCIPAL OCCUPATION OR EMPLOYMENT;
NAME MATERIAL POSITIONS HELD DURING THE PAST FIVE YEARS
---- --------------------------------------------------
ADAM KLEIN................................ Mr. Klein has been President of Global Marketing &
Strategy since 1998. Prior thereto, he was Executive
Vice President -- Global Strategy & Development from
1996 to 1998. Prior thereto, he was President, Klein &
Co., a consulting firm specializing in managing
strategic change.
MARIE JOSEE KRAVIS........................ Mrs. Kravis has been a Senior Fellow of the Hudson
Director since 1995 Institute (public policy analysis) since 1994. Prior
thereto, she was Executive Director of the Hudson
Institute of Canada. She is a Visiting Fellow of the
Council on Foreign Relations. She is also a director of
the Canadian Imperial Bank of Commerce, Ford Motor
Company, Hollinger International, Inc., The Seagram
Company, Ltd. and Unimedia Inc. Mrs. Kravis is a member
of the Compensation and Stock Option Committee. Mrs.
Kravis is a citizen of the United States, Canada and
Switzerland.
CLAUDINE B. MALONE........................ Ms. Malone is the President of Financial and Management
Director since 1992 Consulting, Inc., and a director of Dell Computer
Corporation, Hannaford Brothers Co., Houghton Mifflin
Company, Lafarge Corp., The Limited, Inc., Lowe's
Companies, Inc., Mallinckrodt Group, Inc., Science
Applications International Corporation and Union Pacific
Resources Corporation. Ms. Malone is a member of the
Audit Committee.
MORRIS W. OFFIT........................... Mr. Offit is Chairman and Chief Executive Officer of
Director since 1995 Offitbank (investment management) and a director of
Cantel Industries, Inc. and Mercantile Bankshares
Corporation. Mr. Offit is a member of the Audit
Committee.
JOHN T. O'NEILL........................... Mr. O'Neill has been Executive Vice President and Chief
Executive Officer since 1989. Mr. O'Neill is a Trustee
of the Galaxy Funds.
NORMA T. PACE............................. Mrs. Pace has been the President of Paper Analytics
Director since 1984 Associates (economic consulting) since 1995. She is also
the Senior Economic Advisor for the WEFA Group (economic
consulting and planning). She is a director of
Engleghard Corporation. Mrs. Pace is Chair of the Audit
Committee and a member of the Executive Committee.
CYNTHIA S. REED........................... Mrs. Reed has been Senior Vice President and General
Counsel since 1995. Prior thereto, she was Vice
President-Legal.
E. JOHN ROSENWALD, JR..................... Mr. Rosenwald is the Vice Chairman of the Board of The
Director since 1983 Bear Stearns Companies Inc. (investment bankers) and a
director of Cendant Corporation. Mr. Rosenwald is a
member of the Executive Committee.
I-2
[Enlarge/Download Table]
PRESENT PRINCIPAL OCCUPATION OR EMPLOYMENT;
NAME MATERIAL POSITIONS HELD DURING THE PAST FIVE YEARS
---- --------------------------------------------------
CARL SPIELVOGEL........................... Mr. Spielvogel has been the Chairman and Chief Executive
Director since 1992 Officer of Carl Spielvogel Associates, Inc.
(international investments) since 1997. Prior thereto,
he was Chairman of the Board and Chief Executive Officer
of United Auto Group, Inc. (operator of
multiple-franchise auto dealerships) from 1994 to 1997.
Prior thereto, Mr. Spielvogel was Chairman of the Board
and Chairman of the Executive Committee of Backer
Spielvogel Bates Worldwide, Inc. (advertising) during
1994. Prior thereto, he was Chairman and Chief Executive
Officer of Backer Spielvogel Bates Worldwide, Inc. He is
a director of Data Broadcasting Inc. and Culligan Water
Systems, Inc. Mr. Spielvogel is Chairman of the
Compensation and Stock Option Committee.
PRESTON ROBERT TISCH...................... Mr. Tisch has been the Co-Chairman and Co-Chief
Director since 1993 Executive Officer of Loews Corporation since 1994. Prior
thereto, he was President and Co-Chief Executive Officer
of Loews Corporation. He is also a director of Bulova
Watch Company, Inc., CNA Financial Corporation, Loews
Corporation, Rite Aid Corporation and Chairman of the
Board of the N.Y. Football Giants. Mr. Tisch is a member
of the Nominating and Governance Committee.
MARTIN R. TRUEB........................... Mr. Trueb has been Senior Vice President and Treasurer
since 1997. Prior thereto, Mr. Trueb was Assistant
Treasurer of Amway Corporation from 1995 to 1997. Prior
thereto, he was Director of International Treasury at
RJR Nabisco, Inc.
ALFRED J. VERRECCHIA...................... Mr. Verrecchia has been the Executive Vice President and
Director since 1992 President of Global Operations since 1996. Prior
thereto, he was Chief Operating Officer of Domestic Toy
Operations. Mr. Verrecchia is also a director of Old
Stone Corporation.
GEORGE B. VOLANAKIS....................... Mr. Volanakis has been President of European Sales and
Marketing since 1998. Prior thereto, he was President
and CEO of the ERTL Company Inc. (a toy and hobby
manufacturer and marketer). Mr. Volanakis is a director
of Zindart Ltd.
PHILLIP H. WALDOKS........................ Mr. Waldoks has been Senior Vice President -- Corporate
Legal Affairs and Secretary since 1995. Prior thereto,
he was Senior Vice President -- Corporate Legal Affairs.
E. DAVID WILSON........................... Mr. Wilson has been President of Hasbro Americas since
1996. Prior thereto, he was President of the Hasbro
Games Group from 1995 to 1996. Prior thereto, he was
President of Milton Bradley Company.
PAUL WOLFOWITZ............................ Mr. Wolfowitz has been the Dean of Paul H. Nitze School
Director since 1995 of Advanced International Studies at the Johns Hopkins
University since 1994. Prior thereto, he was a
Distinguished Visiting Fellow, at the National Defense
University and the George F. Kennan Professor of
National Security Strategy, at the National War College
during 1993. Prior thereto, Mr. Wolfowitz was
Undersecretary of Defense for Policy, U.S. Department of
Defense. Prior thereto, he was U.S. Ambassador to the
Republic of Indonesia. He is a director of eleven mutual
funds of the Dreyfus Corporation. Mr. Wolfowitz is a
member of the Nominating and Governance Committee.
I-3
2. DIRECTORS AND EXECUTIVE OFFICERS OF PURCHASER. The following table sets
forth the name and 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. Other than Mr. Gordon, who is a
Canadian citizen, each such person is a citizen of the United States of America,
and the business address of each such person is c/o Hasbro, Inc., 1027 Newport
Avenue, Pawtucket, RI 02861. Unless otherwise indicated, each occupation set
forth opposite an individual's name refers to employment with Parent. Unless
otherwise indicated, each such person has held his or her present occupation as
set forth below, or has been an executive officer at Parent, or the organization
indicated, for the past five years.
[Enlarge/Download Table]
PRESENT PRINCIPAL OCCUPATION OR EMPLOYMENT;
NAME MATERIAL POSITIONS HELD DURING THE PAST FIVE YEARS
---- --------------------------------------------------
THOMAS R. DUSENBERRY....... Director of Purchaser. Mr. Dusenberry has been President
of Hasbro Interactive, Inc. since 1995. Prior thereto, he
was Vice President of New Product Acquisitions for the
Hasbro Games Group from 1994 to 1995. Prior thereto, he
was Director of New Product Acquisitions for the Parker
Brothers Division.
HAROLD P. GORDON........... Director and President of Purchaser. See Part 1 of this
Schedule I.
RICHARD B. HOLT............ Controller of the Purchaser. See Part 1 of this Schedule
I.
JOHN T. O'NEILL............ Chief Financial Officer of the Purchaser. See Part 1 of
this Schedule I.
MARTIN R. TRUEB............ Treasurer of the Purchaser. See Part 1 of this Schedule I.
PHILLIP H. WALDOKS......... Director and Secretary of Purchaser. See Part 1 of this
Schedule I.
I-4
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Facsimile copies of the Letter of Transmittal, properly completed and duly
executed, will be accepted. The Letter of Transmittal, certificates for Shares
and any other required documents should be sent or delivered by each stockholder
of the Company or his broker, dealer, commercial bank, trust company or other
nominee to the Depositary, at the applicable address set forth below:
The Depositary for the Offer is:
BANKBOSTON, N.A.
[Download Table]
By Mail: By Hand: By Overnight Delivery:
BankBoston, N.A. Securities Transfer & Reporting BankBoston, N.A.
Attention: Corporate Services, Inc. Attention: Corporate
Reorganization c/o Boston EquiServe L.P. Reorganization
P.O. Box 8029 1 Exchange Plaza 150 Royall Street
Boston, MA 02266-8029 55 Broadway, 3rd Floor Canton, MA 02021
New York, NY 10006
By Facsimile Transmission: (781) 575-2233 or (781) 575-2232
(For Eligible Institutions Only)
Confirm Facsimile by Telephone: (800) 733-5001
Any questions or requests for assistance or additional copies of this Offer
to Purchase, the Letter of Transmittal, the Notice of Guaranteed Delivery and
the other tender offer materials may be directed to the Information Agent or the
Dealer Manager at their respective addresses and telephone numbers set forth
below. Stockholders may also contact their broker, dealer, commercial bank,
trust company or other nominee for assistance concerning the Offer.
The Information Agent for the Offer is:
D.F. KING & CO., INC.
77 Water Street
New York, New York 10005
CALL TOLL FREE: (800) 848-3409
The Dealer Manager for the Offer is:
BEAR, STEARNS & CO. INC.
245 Park Avenue
New York, New York 10167
CALL TOLL FREE: (877) 260-9674
Dates Referenced Herein and Documents Incorporated by Reference
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