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 7 40K
2: EX-99.A.1 Offer to Purchase, Dated December 22, 1997 29 181K
3: EX-99.A.2 Letter of Transmittal 13 66K
4: EX-99.A.3 Letter From Gerard, Klauer & Mattison Co., Inc., 3 18K
5: EX-99.A.4 Letter From Brokers, Dealers, Comm. Banks, Etc. 3 20K
6: EX-99.A.5 Notice of Guaranteed Delivery 3 15K
7: EX-99.A.6 Guidelines for Certification of Taxpayer Id No. 4± 19K
8: EX-99.A.7 Summary Newspaper Advertisement, Dated Dec. 22, 97 4± 24K
9: EX-99.C.1 Agreement and Plan of Merger 41 129K
10: EX-99.C.2 Form of Tender and Option Agreement 6 30K
11: EX-99.C.3 Stock Option Agreement 5 26K
12: EX-99.C.4 Letter Agreement, Dated December 18, 1997 4 17K
EX-99.A.1 · Offer to Purchase, Dated December 22, 1997
Exhibit Table of Contents
EXHIBIT (a)(1)
OFFER TO PURCHASE FOR CASH
ALL OUTSTANDING SHARES OF COMMON STOCK
AT A PRICE OF $15.00 NET PER SHARE
OF
SYMETRICS INDUSTRIES, INC.
BY
TSHCo, INC.
A WHOLLY OWNED SUBSIDIARY
OF
TEL-SAVE HOLDINGS, INC.
------------------------
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT,
NEW YORK CITY TIME, ON JANUARY 21, 1998, UNLESS THE OFFER IS EXTENDED.
------------------------
THE OFFER IS CONDITIONED UPON, AMONG OTHER THINGS, (1) THERE HAVING
BEEN VALIDLY TENDERED PRIOR TO THE EXPIRATION DATE AND NOT WITHDRAWN THAT NUMBER
OF SHARES (AS HEREIN DEFINED) REPRESENTING, TOGETHER WITH SHARES OF SYMETRICS
INDUSTRIES, INC. ALREADY OWNED BY TEL-SAVE HOLDINGS, INC., AT LEAST A MAJORITY
OF ALL OUTSTANDING COMMON SHARES OF SYMETRICS INDUSTRIES, INC. ON A FULLY
DILUTED BASIS ON THE DATE OF PURCHASE AND (2) SATISFACTION OF CERTAIN OTHER
TERMS AND CONDITIONS. SEE SECTION 15.
------------------------
THE OFFER IS BEING MADE PURSUANT TO THE AGREEMENT AND PLAN OF MERGER, DATED
AS OF DECEMBER 18, 1997, BY AND AMONG TSHCo, INC., TEL-SAVE HOLDINGS INC. AND
SYMETRICS INDUSTRIES, INC. THE BOARD OF DIRECTORS OF SYMETRICS INDUSTRIES, INC.
HAS UNANIMOUSLY APPROVED THE MERGER AGREEMENT, THE OFFER AND THE MERGER, HAS
DETERMINED THAT THE TERMS OF THE OFFER AND THE MERGER ARE FAIR TO AND IN THE
BEST INTERESTS OF THE COMPANY'S STOCKHOLDERS, AND RECOMMENDS THAT THE COMPANY'S
STOCKHOLDERS ACCEPT THE OFFER AND TENDER ALL OF THEIR SHARES PURSUANT TO THE
OFFER.
------------------------
IMPORTANT
Any stockholder wishing to tender all or any portion of such stockholders'
Shares in the Offer must either (i) complete and sign the Letter of Transmittal
or a facsimile thereof in accordance with the instructions in the Letter of
Transmittal and mail or deliver the Letter of Transmittal and all other required
documents to the Depositary together with certificates representing the Shares
tendered or follow the procedure for book-entry transfer set forth in Section 3
or (ii) request such stockholder's broker, dealer, commercial bank, trust
company or other nominee to effect the transaction. A stockholder having Shares
registered in the name of a broker, dealer, commercial bank, trust company or
other nominee must contact such person if such stockholder wishes to tender such
Shares.
Any stockholder who wishes to tender Shares and cannot deliver such Shares
and all other required documents to the Depositary on or prior to the Expiration
Date or who cannot comply with the procedures for book-entry transfer on a
timely basis may tender such Shares pursuant to the guaranteed delivery
procedure set forth in Section 3.
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. Additional copies of this
Offer to Purchase, the Letter of Transmittal, the Notice of Guaranteed Delivery
and other related materials may be obtained from the Information Agent.
Stockholders may also contact their broker, dealer, commercial bank, trust
company or other nominee for assistance concerning the Offer.
------------------------
The Dealer Manager for the Offer is:
GERARD KLAUER MATTISON & CO., INC.
December 22, 1997
TABLE OF CONTENTS
· Download Table
PAGE
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Introduction.............................................................. 1
1. Terms of the Offer.................................................. 3
2. Acceptance for Payment and Payment for Shares....................... 4
3. Procedure for Tendering Shares...................................... 5
4. Withdrawal Rights................................................... 7
5. Certain Federal Income Tax Consequences............................. 8
6. Price Range of Shares; Dividends.................................... 9
7. Effect of the Offer on the Market for Shares, NASDAQ Listing, Stock
Quotation and Registration Under the Exchange Act................. 10
8. Certain Information Concerning the Company.......................... 10
9. Certain Information Concerning Purchaser and Parent................. 12
10. Source and Amount of Funds.......................................... 13
11. Background of the Offer; Past Contacts, Transactions or Negotiations
with the Company.................................................. 13
12. Purpose of the Offer and the Merger; Appraisal Rights; Plans for the
Company........................................................... 15
13. The Merger Agreement................................................ 17
14. Dividends and Distributions......................................... 20
15. Certain Conditions to Purchaser's Obligations....................... 20
16. Certain Regulatory and Legal Matters................................ 21
17. Fees and Expenses................................................... 23
18. Miscellaneous....................................................... 24
ANNEX I -- Certain Information Concerning the Directors and Executive
Officers of Purchaser and Parent........................... I-1
TO: ALL HOLDERS OF COMMON STOCK OF SYMETRICS INDUSTRIES, INC.
INTRODUCTION
TSHCo, Inc., a Delaware corporation ("Purchaser") and a wholly owned
subsidiary of Tel-Save Holdings Inc., a Delaware corporation ("Parent"), hereby
offers to purchase all outstanding shares of common stock, par value $0.25 per
share (the "Shares"), of Symetrics Industries Inc., a Florida corporation (the
"Company"), at a price of $15.00 per Share net to the seller in cash, all upon
the terms and subject to the conditions set forth in this Offer to Purchase and
in the related Letter of Transmittal (which together constitute the "Offer").
Tendering holders of Shares will not be obligated to pay brokerage fees or
commissions or, except as set forth in Instruction 6 to the Letter of
Transmittal, transfer taxes on the purchase of Shares by Purchaser pursuant to
the Offer. Purchaser will pay all charges and expenses of Gerard Klauer Mattison
& Co., Inc., which is acting as Dealer Manager for the Offer, (in such capacity,
the "Dealer Manager"), First Union National Bank (the "Depositary") and Morrow &
Co., Inc. (the "Information Agent") incurred in connection with the Offer.
THE OFFER IS CONDITIONED UPON, AMONG OTHER THINGS, THERE HAVING BEEN
VALIDLY TENDERED PRIOR TO THE EXPIRATION DATE (AS HEREIN DEFINED) AND NOT
WITHDRAWN THAT NUMBER OF SHARES REPRESENTING, TOGETHER WITH SHARES CURRENTLY
OWNED BY PARENT, AT LEAST A MAJORITY OF ALL OUTSTANDING SHARES OF COMMON STOCK
OF THE COMPANY ON A FULLY DILUTED BASIS ON THE DATE OF PURCHASE ASSUMING
CONVERSION OF ALL OUTSTANDING OPTIONS OR OTHER SECURITIES CONVERTIBLE INTO
SHARES OF COMMON STOCK (THE "MINIMUM CONDITION"). THE OFFER IS ALSO SUBJECT TO
CERTAIN OTHER TERMS AND CONDITIONS. SEE SECTION 15.
THE BOARD OF DIRECTORS OF THE COMPANY HAS UNANIMOUSLY APPROVED THE MERGER
AGREEMENT (AS HEREIN DEFINED), THE OFFER AND THE MERGER (AS HEREIN DEFINED)AND
THE TRANSACTIONS CONTEMPLATED THEREBY, HAS DETERMINED THAT THE TERMS OF THE
OFFER AND THE MERGER ARE FAIR TO AND IN THE BEST INTEREST OF THE COMPANY'S
STOCKHOLDERS, AND RECOMMENDS THAT THE COMPANY'S STOCKHOLDERS ACCEPT THE OFFER
AND TENDER ALL THEIR SHARES TO THE PURCHASER.
The Offer is being made pursuant to the Agreement and Plan of Merger, dated
as of December 18, 1997 (the "Merger Agreement"), by and among Purchaser, Parent
and the Company. The Merger Agreement provides, among other things, that as soon
as practicable after the purchase of Shares pursuant to the Offer and the
satisfaction of the other conditions set forth in the Merger Agreement and in
accordance with the relevant provisions of the General Corporation Law of the
State of Delaware (the "DGCL") and the Florida Business Corporation Act (the
"FBCA"), Purchaser will be merged with and into the Company (the "Merger"). See
Section 12. Following consummation of the Merger, the Company will continue as
the surviving corporation (the "Surviving Corporation") and as a wholly owned
subsidiary of Parent. At the effective time of the Merger (the "Effective
Time"), each issued and outstanding Share (other than Shares owned by the
Company as treasury stock, Shares owned by Purchaser and Shares with respect to
which appraisal rights, if applicable, are properly exercised under the FBCA
("Dissenting Shares")), will be converted into and represent solely a right to
receive $15.00 in cash (adjusted for stock splits and other similar events),
without interest thereon. See Section 5 for a description of certain federal
income tax consequences of the Offer and the Merger. All Shares held as treasury
shares and Shares held by the Purchaser or any of its affiliates immediately
prior to the Merger will be cancelled at the Effective Time. All shares of
capital stock of Purchaser issued and outstanding immediately prior to the
Effective Time will be changed into an equal number of shares of capital stock
of the Surviving Corporation. The cash considerations described in this
paragraph is referred to in this Offer to Purchase as the "Merger
Consideration."
The Merger Agreement provides that, promptly upon the purchase of Shares
pursuant to the Offer, Purchaser will be entitled to designate for election to
the Board of Directors of the Company such number of
directors (rounded up to the next whole number) as will give Purchaser, subject
to compliance with Section 14(f) of the Exchange Act of 1934, as amended (the
"Exchange Act"), representation on such Board of Directors equal to the product
of (i) the total number of directors on such Board of Directors (after giving
effect to the appointment of such directors) and (ii) the percentage that the
number of Shares purchased by Purchaser bears to the number of Shares
outstanding, and requires the Company to take such action (including increasing
the size of its Board of Directors and/or securing the resignations of existing
directors of the Company), as may be necessary to enable Purchaser's nominees to
be so elected. See Section 12 "-- Board Representation."
The Company has represented to Parent and Purchaser that, as of December
17, 1997, there were (a) 1,627,713 Shares issued and outstanding, and (b)
outstanding warrants and outstanding employee and director stock options to
purchase an aggregate of 178,768 Shares. As of the date hereof, Parent
beneficially owns 145,000 Shares, representing 8.9% of the outstanding Shares.
See Section 11. Based upon such information, and assuming exercise of all
outstanding warrants and stock options, if Shares representing at least 758,241
Shares in the aggregate are validly tendered and not withdrawn prior to the
expiration of the Offer, the Minimum Condition would be satisfied. Following the
purchase of such number of Shares, under the Company's Articles of Incorporation
and the FBCA, Parent and Purchaser would have sufficient voting power to approve
the Merger without the affirmative vote of any other stockholder. If Parent and
Purchaser acquire 80% or more of the outstanding Shares in the Offer or
otherwise, Parent and Purchaser would be able to effect the Merger pursuant to
the short-form merger provisions of Section 607.1104 of the FBCA, without prior
notice to, or any action by, any other stockholder of the Company.
In connection with the transactions contemplated by the Merger Agreement,
Parent has entered into Tender and Option Agreements, dated as of December 18,
1997 (the "Tender and Option Agreements"), with certain of the directors and
executive officers of the Company (the "Management"), pursuant to which, among
other things, the Management has agreed to tender validly in the Offer, and not
withdraw, all of the Shares that they now own or subsequently may acquire (the
"Management Shares") (which, based on representations from the Company, amounted
to 329,699 Shares beneficially owned (including options currently exercisable
for Shares) as of December 18, 1997, and which constitute approximately 18.25%
of the Shares on a fully diluted basis). In addition, the Management agreed in
the Tender and Option Agreements that, at any meeting of the Company's
stockholders (however called), it would (i) vote the Management Shares in favor
of the Merger, (ii) vote the Management Shares against any action or agreement
that would result in a breach in any material respect of any covenant,
representation or warranty or any other obligation of the Company under the
Merger Agreement, and (iii) vote the Management Shares against any action or
agreement that would impede, interfere with, delay, postpone or attempt to
discourage the Merger or the Offer. The Tender and Option Agreements provide
that for a period of six months from the date thereof Parent shall have (i) the
Option to purchase the Management Shares if a third party makes an Acquisition
Proposal (as defined in the Merger Agreement) and (ii) a right of first refusal
if any Management holder intends to sell his or her Shares to a third party. The
Tender and Option Agreements shall terminate on the first to occur of (a) the
Effective Time and (b) the termination of the Merger Agreement. See Section 11.
The Company, Parent and Purchaser have entered into a Stock Option
Agreement, dated as of December 18, 1997 (the "Stock Option Agreement"),
pursuant to which, in the event the Merger Agreement is terminated under certain
circumstances, including the acquisition by a person other than Parent or
Purchaser of 20% or more of the Shares, the Company shall grant to Purchaser an
option to purchase at a price of $15.00 per Share that number of Shares which
would equal 19.9% of the aggregate number of Shares outstanding after giving
effect to the exercise of such option.
THIS OFFER TO PURCHASE AND THE RELATED LETTER OF TRANSMITTAL CONTAIN
IMPORTANT INFORMATION WHICH SHOULD BE READ BEFORE ANY DECISION IS MADE WITH
RESPECT TO THE OFFER.
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1. TERMS OF THE OFFER.
Upon the terms and subject to the conditions of the Offer (including, if
the Offer is extended or amended, the terms and conditions of any extension or
amendment), Purchaser will accept for payment and pay for all Shares validly
tendered prior to the Expiration Date and not theretofore withdrawn in
accordance with Section 4. The term "Expiration Date" means 12:00 midnight, New
York City time, on January 21, 1998, unless Purchaser shall have extended the
period of time for which the Offer is open as may be required by the terms of
the Merger Agreement, or applicable law, 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. See Sections 13 and 15.
If Purchaser shall decide, in its sole discretion (exercised in accordance
with the terms of the Merger Agreement), to increase the consideration offered
in the Offer to holders of Shares and if, at the time that notice of such
increase is first published, sent or given to holders of Shares in the manner
specified below, the Offer is scheduled to expire at any time earlier than the
expiration of a period ending on the tenth business day from, and including, the
date that such notice is first so published, sent or given, then the Offer will
be extended until the expiration of such period of ten business days. For
purposes of the Offer, a "business day" shall have the meaning set forth in Rule
14d-1 under the Exchange Act (means any day other than a Saturday, Sunday or a
federal holiday, and consists of the time period from 12:01 a.m. through 12:00
midnight, New York City time.)
THE OFFER IS CONDITIONED UPON, AMONG OTHER THINGS, SATISFACTION OF THE
MINIMUM CONDITION. THE OFFER IS ALSO SUBJECT TO SATISFACTION OR WAIVER OF OTHER
TERMS AND CONDITIONS. SEE SECTION 15. Purchaser reserves the right (but shall
not be obligated), in accordance with applicable rules and regulations of the
Securities and Exchange Commission (the "Commission"), in its sole discretion,
to waive any of the conditions to the Offer. If the Minimum Condition or any of
the other conditions set forth in Section 15 have not been satisfied by 12:00
midnight, New York City time, on January 21, 1998 (or any other time then set as
the Expiration Date), Purchaser may, subject to the terms of the Merger
Agreement as described below, elect to (1) extend the Offer and, subject to
applicable withdrawal rights, retain all tendered Shares until the Expiration
Date, as extended, (2) not extend the Offer and, subject to complying with
applicable rules and regulations of the Commission, accept for payment all
Shares so tendered, or (3) terminate the Offer and not accept for payment any
Shares and return all tendered Shares to tendering stockholders. Under the terms
of the Merger Agreement, Purchaser may not, without the consent of the Company's
Board of Directors, decrease or change the amount or form of consideration
payable in the Offer. If all the conditions to consummation of the Offer are
satisfied, Parent and Purchaser shall consummate the Offer as promptly as
possible. Notwithstanding the foregoing and subject to the immediately preceding
sentence, Purchaser may at any time, in its sole discretion, extend the Offer.
See Section 15. Subject to the terms of the Merger Agreement described above,
Purchaser reserves the right (but will not be obligated), at any time and from
time to time in its sole discretion, to extend the period during which the Offer
is open by giving oral or written notice of such extension to the Depositary and
by making a public announcement of such extension promptly thereafter. During
any such extension, all Shares previously tendered and not withdrawn will remain
subject to the Offer, subject to the rights of a tendering stockholder to
withdraw its Shares. There can be no assurance that Purchaser will exercise its
right to extend the Offer.
Subject to the applicable rules and regulations of the Commission and
subject to the terms of the Merger Agreement described above, Purchaser also
expressly reserves the right, in its sole discretion at any time and from time
to time, upon the occurrence of any of the Events set forth in Section 15, to
delay payment for any Shares regardless of whether such Shares were theretofore
accepted for payment, or to terminate the Offer and not to accept for payment or
pay for any Shares not theretofore accepted for payment or paid for, by giving
oral or written notice of such delay, termination or amendment to the Depositary
and by making a public announcement thereof. Purchaser's right to delay payment
for any Shares or not to pay for any Shares theretofore accepted for payment is
subject to the applicable rules and regulations of the Commission, including
Rule 14e-1(c) under the Exchange Act, relating to Purchaser's obligation to pay
for or return tendered Shares promptly after the termination or withdrawal of
the Offer.
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Any extension of the period during which the Offer is open, delay in
acceptance for payment or payment, termination or amendment of the Offer will be
followed, as promptly as practicable, by public announcement thereof, such
announcement in the case of an extension to be issued not later than 9:00 a.m.,
New York City time, on the next business day after the previously scheduled
Expiration Date in accordance with the requirements of 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 and making any appropriate
filing with the Commission.
If Purchaser makes a material change in the terms of the Offer or the
information concerning the Offer, or if it waives a material condition of the
Offer, Purchaser will disseminate additional tender offer materials and extend
the Offer if and to the extent required by Rules 14d-4(c), 14d-6(d) and 14e-1
under the Exchange Act. The minimum period during which a tender offer must
remain open following material changes in the terms of the Offer or the
information concerning the Offer, other than a change in price or a change in
percentage of securities sought, will depend upon the relevant facts and
circumstances, including the relative materiality of the changes to such terms
or information. With respect to a change in price or a change in percentage of
securities sought, a minimum ten business day period is generally required to
allow for adequate dissemination to stockholders and investor response.
The Company has provided Purchaser with the Company's list of stockholders
and security position listings for the purpose of disseminating the Offer to
holders of Shares. This Offer to Purchase and the Letter of Transmittal will be
mailed to record holders of the Shares and will be furnished to brokers,
dealers, commercial banks, trust companies and similar persons whose names, or
the names of whose nominees, appear on the list of stockholders or, if
applicable, who are listed as participants in a clearing agency's security
position listing for subsequent transmittal to beneficial owners of Shares.
2. ACCEPTANCE FOR PAYMENT AND PAYMENT FOR SHARES
Upon the terms and subject to the conditions of the Offer (including, if
the Offer is extended or amended, the terms and conditions of any such extension
or amendment), Purchaser will accept for payment and will pay for all Shares
validly tendered prior to the Expiration Date and not theretofore withdrawn in
accordance with Section 4 promptly after the later to occur of (a) the
Expiration Date and (b) subject to compliance with Rule 14e-1(c) under the
Exchange Act, the satisfaction or waiver of the conditions set forth in Section
15. Subject to compliance with Rule 14e-1(c) under the Exchange Act, Purchaser
expressly reserves the right to delay payment for Shares in order to comply in
whole or in part with any applicable law. See Sections 1 and 16. 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
timely confirmation (a "Book-Entry Confirmation") of a book-entry transfer of
such Shares into the Depositary's account at The Depository Trust Company, the
Midwest Securities Trust Company, the Pacific Securities Depository Trust
Company or the Philadelphia Depository Trust Company (collectively, the
"Book-Entry Transfer Facilities"), pursuant to the procedures set forth in
Section 3, (ii) a properly completed and duly executed Letter of Transmittal (or
a manually signed facsimile thereof) with all required signature guarantees or,
in the case of a book-entry transfer, an Agent's Message (as defined below) and
(iii) all other documents required by the Letter of Transmittal.
The term "Agent's Message" means a message transmitted by a 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 the participant.
For purposes of the Offer, Purchaser will be deemed to have accepted for
payment, and thereby purchased, Shares validly tendered on or prior to the
Expiration Date and not properly withdrawn if, as and when Purchaser gives oral
or written notice to the Depositary of Purchaser's acceptance of such Shares for
payment pursuant to the Offer. In all cases, payment for Shares purchased
pursuant to the Offer will be made
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by deposit of the purchase price with the Depositary, which will act as agent
for tendering stockholders for the purpose of receiving payment from Purchaser
and transmitting such payment to tendering stockholders. If, for any reason
whatsoever, acceptance for payment of any Shares tendered pursuant to the Offer
is delayed, or Purchaser is unable to accept for payment Shares tendered
pursuant to the Offer, then, without prejudice to Purchaser's rights under
Section 1, the Depositary may, nevertheless, on behalf of Purchaser, retain
tendered Shares and such Shares may not be withdrawn, except to the extent that
the tendering stockholders are entitled to withdrawal rights as described in
Section 4 and as otherwise required by Rule 14e-1(c) under the Exchange Act.
Under no circumstances will interest be paid by Purchaser because of any delay
in making such payment.
If any tendered Shares are not accepted for payment pursuant to the terms
and conditions of the Offer for any reason, or if certificates are submitted for
more Shares than are tendered, certificates for such unpurchased or untendered
Shares will be returned, without expense to the tendering stockholder (or, in
the case of Shares delivered by book-entry transfer to a Book-Entry Transfer
Facility, such Shares will be credited to an account maintained within such
Book-Entry Transfer Facility), as promptly as practicable after the expiration,
termination or withdrawal of the Offer.
If, prior to the Expiration Date, Purchaser increases the price being paid
for Shares accepted for payment pursuant to the Offer, such increased
consideration will be paid to all stockholders whose Shares are purchased
pursuant to the Offer.
The Purchaser reserves the right to transfer or assign, in whole or from
time to time in part, to one or more direct or indirect subsidiaries of Parent
the right to purchase all or any portion of the Shares tendered pursuant to the
Offer, but no such transfer or assignment shall relieve Purchaser of its
obligations under the Offer or prejudice any rights of tendering stockholders to
receive payment for Shares validly tendered and accepted for payment pursuant to
the Offer.
3. PROCEDURE FOR TENDERING SHARES
VALID TENDERS. For Shares to be validly tendered pursuant to the Offer, a
properly completed and duly executed Letter of Transmittal (or a manually signed
facsimile thereof), with all required signature guarantees, or, in the case of a
book-entry transfer, an Agent's Message, and all 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 on or prior to the Expiration Date, and either
(i) certificates representing such Shares must be received by the Depositary or
such Shares must be tendered pursuant to the procedure for book-entry transfer
set forth below, and a Book-Entry Confirmation must be received by the
Depositary, in each case on or prior to the Expiration Date, or (ii) the
guaranteed delivery procedure set forth below must be complied with. No
alternative, conditional or contingent tenders will be accepted. DELIVERY OF
DOCUMENTS TO A BOOK-ENTRY TRANSFER FACILITY IN ACCORDANCE WITH SUCH BOOK-ENTRY
TRANSFER FACILITY'S PROCEDURES DOES NOT CONSTITUTE DELIVERY TO THE DEPOSITARY.
BOOK-ENTRY TRANSFER. The Depositary will make a request to establish an
account with respect to the Shares at each Book-Entry Transfer Facility for
purposes of the Offer within two business days after the date of this Offer to
Purchase. Any financial institution that is a participant in a Book-Entry
Transfer Facility's system may make book-entry delivery of Shares by causing a
Book-Entry Transfer Facility to transfer such Shares into the Depositary's
account at such Book-Entry Transfer Facility in accordance with such Book-Entry
Transfer Facility's procedures for transfer. Although delivery of Shares may be
effected through book-entry at a Book-Entry Transfer Facility prior to the
Expiration Date, for Shares to be validly tendered (i) the Letter of Transmittal
(or a manually signed facsimile thereof), properly completed and duly executed,
with all required signature guarantees, or an Agent's Message in connection with
a book-entry transfer, and all 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 on or prior to the Expiration Date
or (ii) the tendering stockholder (or his or her nominee) must comply with the
guaranteed delivery procedures described below.
SIGNATURE GUARANTEE. Signatures on the Letter of Transmittal must be
guaranteed by a member in good standing of the Securities Transfer Agents
Medallion Program, the Stock Exchange Medallion Program or the
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New York Stock Exchange, Inc. Medallion Signature Program (each of the foregoing
being referred to as an "Eligible Institution" and, collectively, as "Eligible
Institutions"), unless the Shares tendered thereby are tendered (i) by a
registered holder of Shares who has not completed either the box labeled
"Special Delivery Instructions" or the box labeled "Special Payment
Instructions" on the Letter of Transmittal or (ii) for the account of any
Eligible Institution. If the certificates evidencing tendered Shares are
registered in the name of a person or persons other than the signer of the
Letter of Transmittal, or if payment is to be made, or delivered to, or
certificates for unpurchased Shares are to be issued or returned to, a person
other than the registered owner or owners, then the tendered certificates must
be endorsed or accompanied by duly executed stock powers, in either case signed
exactly as the name or names of the registered owner or owners appear on the
certificates, with the signatures on the certificates or stock powers guaranteed
by an Eligible Institution as provided in the Letter of Transmittal. See
Instructions 1 and 5 to the Letter of Transmittal.
GUARANTEED DELIVERY. If a stockholder wishes to tender Shares pursuant to
the Offer and such stockholder's certificates for Shares are not immediately
available or time will not permit certificates and all required documents to
reach the Depositary on or prior to the Expiration Date or the procedure for
book-entry transfer cannot be completed on a timely basis, such Shares may
nevertheless be tendered validly upon compliance with all of the following
guaranteed delivery procedures:
(i) the 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 herewith, is
received by the Depositary, as provided below, on or prior to the
Expiration Date; and
(iii) the certificates for all physically tendered Shares in proper
form for transfer (and/or a Book-Entry Confirmation for all such Shares),
together with a properly completed and duly executed Letter of Transmittal
(or a manually signed facsimile thereof), and all required signature
guarantees, or, in the case of a book-entry transfer, an Agent's Message,
and all other documents required by the Letter of Transmittal are received
by the Depositary within three Nasdaq Stock Market, Inc. trading days after
the date of such Notice of Guaranteed Delivery.
The Notice of Guaranteed Delivery may be delivered by hand or transmitted
by telegram, mail or facsimile transmission to the Depositary and must include a
guarantee by an Eligible Institution in the form set forth in the Notice of
Guaranteed Delivery.
THE METHOD OF DELIVERY OF SHARES, THE LETTER OF TRANSMITTAL AND ALL OTHER
REQUIRED DOCUMENTS, INCLUDING DELIVERY THROUGH ANY BOOK-ENTRY TRANSFER FACILITY,
IS AT THE OPTION AND SOLE RISK OF THE TENDERING STOCKHOLDER AND, EXCEPT AS
OTHERWISE PROVIDED IN THE LETTER OF TRANSMITTAL, DELIVERY WILL BE DEEMED MADE
ONLY WHEN ACTUALLY RECEIVED BY THE DEPOSITARY. 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.
Notwithstanding any other provision hereof, payment for Shares accepted for
payment pursuant to the Offer will in all cases be made only after timely
receipt by the Depositary of (i) certificates for such Shares or a Book-Entry
Confirmation, (ii) a properly completed and duly executed Letter of Transmittal
(or a manually signed facsimile thereof), with all required signature
guarantees, or, in the case of a book-entry transfer, an Agent's Message, and
(iii) all other documents required by the Letter of Transmittal.
BACK-UP FEDERAL INCOME TAX WITHHOLDING. TO PREVENT BACK-UP FEDERAL INCOME
TAX WITHHOLDING WITH RESPECT TO PAYMENT OF THE PURCHASE PRICE OF SHARES
PURCHASED PURSUANT TO THE OFFER, EACH STOCKHOLDER MUST PROVIDE THE DEPOSITARY
WITH HIS OR HER CORRECT TAXPAYER IDENTIFICATION NUMBER ("TIN") AND CERTIFY THAT
HE OR SHE IS NOT SUBJECT TO BACKUP FEDERAL INCOME TAX WITHHOLDING BY COMPLETING
THE SUBSTITUTE FORM W-9 INCLUDED IN THE
6
LETTER OF TRANSMITTAL. SEE INSTRUCTION 9 SET FORTH IN THE LETTER OF TRANSMITTAL.
DETERMINATION OF VALIDITY. All questions as to the form of documents and
the validity, eligibility (including time of receipt) and acceptance for payment
of any tender of Shares will be determined by Purchaser in its sole discretion,
and its determination will be final and binding on all parties. Purchaser
reserves the absolute right to reject any or all tenders of any Shares that are
determined by it not to be in proper form or the acceptance of or payment for
which may, in the opinion of Purchaser, be unlawful. Purchaser also reserves the
absolute right to waive any of the conditions of the Offer, subject to the
limitations set forth in the Merger Agreement, or any defect or irregularity in
the tender of any Shares. In all cases, Purchaser's interpretation of the
Instructions to the Letter of Transmittal will be final and binding on all
parties. No tender of Shares will be deemed to have been validly made until all
defects and irregularities have been cured or waived. None of Purchaser, Parent,
any of their affiliates, 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 to any tendering
stockholder for failure to give any such notification.
OTHER REQUIREMENTS. By executing the Letter of Transmittal as set forth
above, a tendering stockholder irrevocably appoints designees of Purchaser as
such stockholder's attorneys-in-fact and proxies, each with full power of
substitution, in the manner set forth in the Letter of Transmittal, to the full
extent of such stockholder's rights with respect to (i) the Shares tendered by
such stockholder and accepted for payment by Purchaser and (ii) all dividends,
distributions (including, without limitation, distributions of additional
Shares) and rights declared, issued, paid or distributed in respect of any such
Shares on or after December 18, 1997 and payable or distributable to such
stockholder on a date prior to the transfer to the name of Purchaser (or a
nominee or transferee of Purchaser) on the Company's stock transfer record of
such Shares (collectively, "Distributions"). All such powers of attorney and
proxies are irrevocable and shall be considered coupled with an interest in the
tendered Shares. This appointment is effective when, and only to the extent
that, Purchaser accepts for payment the Shares deposited with the Depositary.
Upon acceptance for payment, all prior powers of attorney and proxies given by
the stockholder with respect to the Shares and all Distributions will, without
further action, be revoked and no subsequent powers of attorney and proxies may
be given or written consent executed (and, if given or executed, will not be
deemed effective). The designees of Purchaser will, with respect to the Shares
and all Distributions, be empowered to exercise all voting and other rights of
such stockholder as they in their sole discretion deem proper in respect of any
annual or special meeting of the Company's stockholders, or any adjournment or
postponement thereof or in connection with any action that may be taken by
consent in lieu of any meeting or otherwise. Purchaser reserves the right to
require that, in order for Shares to be deemed validly tendered, immediately
upon Purchaser's payment for such Shares, Purchaser must be able to exercise
full voting and other rights of record or beneficial holder with respect to such
Shares and all Distributions, including voting at any meeting of stockholders
(whether annual or special or whether or not adjourned) or acting by written
consent.
A tender of Shares pursuant to any one of the procedures described above
will constitute the tendering stockholder's acceptance of the terms and
conditions of the Offer. Purchaser's acceptance of payment of Shares tendered
pursuant to the Offer will constitute the tendering stockholder's acceptance of
the terms and conditions of the Offer.
4. WITHDRAWAL RIGHTS
Except as otherwise provided in this Section 4, tenders of Shares made
pursuant to the Offer are irrevocable. Shares tendered pursuant to the Offer may
be withdrawn at any time prior to the Expiration Date (other than the Management
Shares, which may only be withdrawn as provided in the Tender and Option
Agreements) and, unless theretofore accepted for payment pursuant to the Offer,
may also be withdrawn at any time after February 19, 1998 (or such later date as
may apply if the Offer is extended). If purchase of or payment for Shares is
delayed for any reason or if Purchaser is unable to purchase or pay for Shares
for any reason, then, without prejudice to Purchaser's rights under the Offer,
tendered Shares may be retained by the Depositary on behalf of Purchaser and may
not be withdrawn except to the extent that tendering stockholders
7
are entitled to withdrawal rights as set forth in this Section 4, subject to
Rule 14e-1(c) under the Exchange Act, which provides that no person who makes a
tender offer shall fail to pay the consideration offered or return the
securities deposited by or on behalf of security holders promptly after the
termination or withdrawal of the tender offer.
For a withdrawal to be effective, a written, telegraphic or facsimile
transmission notice of withdrawal must be timely received by the Depositary at
one of its addresses set forth on the back cover of this Offer to Purchase. Any
notice of withdrawal must, to be valid, specify the name of the person who
tendered the Shares to be withdrawn, the class and number of Shares to be
withdrawn and the name in which the certificates representing such Shares are
registered, if different from that of the person who tendered the Shares. If
certificates for 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 tendered pursuant to the procedure for
book-entry transfer set forth in Section 3, any notice of withdrawal must, to be
valid, also specify the name and number of the account at the applicable
Book-Entry Transfer Facility to be credited with the withdrawn Shares. 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, and its
determination will be final and binding on all parties. None of Purchaser,
Parent, any of their affiliates or assigns, the Dealer Manager, the Depositary,
the Information Agent nor 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 to any tendering stockholder for failure to give any such
notification.
A withdrawal of tenders of Shares may not be rescinded and any Shares
properly withdrawn will be deemed not validly tendered for purposes of the
Offer. However, withdrawn Shares may be retendered at any subsequent time prior
to the Expiration Date by following any of the procedures described in Section
3.
5. CERTAIN FEDERAL INCOME TAX CONSEQUENCES
The following is a summary of the anticipated material federal income tax
consequences to holders whose Shares are purchased pursuant to the Offer or
whose Shares are converted to cash in the Merger (including Dissenting Shares).
This discussion is based on laws, regulations, rulings and judicial decisions as
they exist on the date of this Offer to Purchase. These authorities are all
subject to change and such change may be made with retroactive effect. This
discussion applies only to a holder of Shares who is holding the shares as a
capital asset and who is a U.S. person (as defined in Section 7701(a)(30) of the
Internal Revenue Code of 1986, as amended (the "Code")). This discussion is not
a complete description of the federal income tax consequences of the Offer and
the Merger and may not apply to a holder of Shares subject to special treatment
under the Code, such as a holder that is a non-U.S. Person, a financial
institution, an insurance company, a tax-exempt organization or a person who
acquired the Shares pursuant to the exercise of an employee stock option or
otherwise as compensation. In addition, this discussion does not address the
state, local or foreign tax consequences of the Offer and the Merger.
BECAUSE OF THE COMPLEXITIES OF THE TAX LAWS AND BECAUSE INDIVIDUAL
CIRCUMSTANCES MAY DIFFER, EACH HOLDER OF SHARES SHOULD CONSULT SUCH HOLDER'S OWN
TAX ADVISOR TO DETERMINE THE APPLICABILITY OF THE RULES DISCUSSED BELOW TO SUCH
STOCKHOLDER AND THE PARTICULAR TAX EFFECTS OF THE OFFER AND THE MERGER TO SUCH
STOCKHOLDER, INCLUDING THE APPLICATION AND EFFECT OF FEDERAL, STATE, LOCAL AND
FOREIGN TAX LAWS.
The receipt of cash for Shares pursuant to the Offer or the Merger
(including Dissenting Shares) will be a taxable transaction for federal income
tax purposes. In general, for federal income tax purposes, a holder of Shares
will recognize gain or loss equal to the difference between (a) such holder's
adjusted tax basis for the Shares sold pursuant to the Offer or converted to
cash in the Merger (including conversion pursuant to the exercise of dissenters
rights), and (b) the amount of cash received therefor (which amount does not
include any interest paid to a holder of Dissenting Shares). Gain or loss must
be determined separately for each block
8
of Shares (e.g., Shares acquired at the same cost in a single transaction) sold
pursuant to the Offer or converted to cash in the Merger. Such gain or loss
generally will be capital gain or loss and will be long-term capital gain or
loss if, on the date of sale (or, if applicable, the date of the Merger), the
Shares were held for more than one year. The amount of any interest paid to a
holder of Dissenting Shares will be treated for federal income tax purposes as
ordinary interest income.
Federal income tax rates on long-term capital gain received by an
individual vary based on the individual's income and the holding period for the
asset. In particular, different maximum federal income tax rates will apply to
gains recognized by an individual from the sale of or exchange of Shares (i)
held for more than one year but not more than 18 months (presently 28 percent)
and (ii) held for more than 18 months (presently 20 percent). In addition, net
long-term capital losses may be subject to limits on deductibility.
Payments in connection with the Offer or the Merger may be subject to
"backup withholding" at a rate of 31% unless the holder complies with certain
identification or exemption requirements. Any amounts so withheld will be
allowed as a credit against the holder's income tax liability, or refunded,
provided certain information is provided to the IRS. A tendering stockholder may
be able to prevent backup withholding by completing the Substitute Form W-9
included in the Letter of Transmittal. See Section 3. Similarly, a stockholder
who receives cash in exchange for Shares pursuant to the Merger or upon exercise
of dissenters rights should be able to prevent backup withholding by completing
a Form W-9 or an acceptable substitute therefor. Each stockholder should consult
with such stockholder's own tax advisor as to such stockholder's qualification
for exemption from backup withholding and the procedure for obtaining such
exemption.
6. PRICE RANGE OF SHARES; DIVIDENDS
The Shares are listed and traded on the NASDAQ National Market ("NASDAQ")
under the trading symbol "SYMT." The following tables set forth for the periods
indicated the high and low prices per Share. Share prices are as reported in the
Company's Annual Report on Form 10-K for the year ended March 31, 1997 (the
"Company Form 10-K") and, in the case of the period from April 1, 1997 and
later, as reported on the NASDAQ based on published financial sources. The
following quotations reflect inter-dealer prices, without retail mark-up,
mark-down or commission and may not necessarily represent actual transactions.
· Download Table
FISCAL YEAR FISCAL YEAR FISCAL YEAR
1996 1997 1998(a)
--------------- --------------- --------------
LOW HIGH LOW HIGH LOW HIGH
---- ----- ---- ----- ---- ----
QUARTER ENDED
June 30........................ 8 1/4 13 1/2 7 5/8 16 5/8 7 3/4 9 7/
September 30................... 7 7/8 11 1/4 7 3/4 12 5 7/8 9 5/
December 31.................... 6 3/4 10 1/4 7 8 3/4 5 1/4 12
March 31....................... 6 1/2 8 1/4 7 10 1/4
---------------
Note (a): Fiscal year 1998 3rd Quarter date reflects prices up to December 18,
1997.
On December 18, 1997, the last full day of trading prior to the date of the
public announcement of the execution of the Merger Agreement and the
announcement that Parent had submitted to the Company a proposal to acquire all
outstanding Shares for $15.00 cash per share (see Section 11), the closing price
per share for the Shares as reported on the NASDAQ was $10.00.
On December 19, 1997, the last full day of trading prior to the
commencement of the Offer, the closing price per share for the Shares as
reported on the NASDAQ was $14.56. STOCKHOLDERS ARE URGED TO OBTAIN CURRENT
MARKET QUOTATIONS FOR THE SHARES.
The Company has not declared or paid any dividends on the Shares during its
last three fiscal years.
The Offer will expire at 12:00 midnight, New York City time, on January 21,
1998 unless extended as described elsewhere in this Offer to Purchase.
9
7. EFFECT OF THE OFFER ON THE MARKET FOR SHARES,
NASDAQ LISTING, STOCK QUOTATION, AND
REGISTRATION UNDER THE EXCHANGE ACT
The purchase of the 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 could adversely affect the liquidity and
market value of the remaining Shares held by the public. The purchase of Shares
pursuant to the Offer also can be expected to reduce the numbers of holders
thereof.
NASDAQ LISTING. Depending on the number of Shares acquired pursuant to the
Offer, the Shares may no longer meet the requirements for continued listing on
NASDAQ. According to NASDAQ's published guidelines, NASDAQ would consider
delisting Shares if, as a result of the Offer, the number of round lot holders
of Shares were reduced to less than 400, the number of Shares publicly held
(excluding those held by officers and directors of the Company, members of their
immediate families and persons owning 10% or more of the Shares outstanding)
were reduced to less than 750,000, or the aggregate market value of the
publicly-held shares of any such class of Shares were reduced to less than
$5,000,000. In addition, if registration of the Shares under the Exchange Act
were terminated, the Shares would no longer be eligible for listing on NASDAQ.
If, as a result of the purchase of Shares pursuant to the Offer, the Shares no
longer meet the requirements of NASDAQ for continued listing, the market for
Shares could be adversely affected.
REGISTRATION UNDER THE EXCHANGE ACT. The Shares currently are registered
under the Exchange Act. Such registrations may be terminated upon application by
the Company to the Commission if there are fewer than 300 record holders of
Shares. It is the intention of Purchaser to seek to cause application for such
termination to be made as soon after consummation of the Offer as the
requirements for termination of registration of the Shares are met. Termination
of registration of the Shares under the Exchange Act would make certain
provisions of the Exchange Act no longer applicable to the Company, such as the
short-swing profit recovery provisions of Section 16(b) of the Exchange Act, the
requirement of furnishing a proxy statement or information statement pursuant to
Sections 14(a)or 14(c) of the Exchange Act in connection with stockholders'
meetings or action by written consent 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
144A promulgated under the Securities Act of 1933, as amended (the "Securities
Act"), may be impaired or eliminated.
The Shares currently are "margin securities" under the regulations of the
Board of Governors of the Federal Reserve System (the "Federal Reserve Board"),
which has the effect, among other things, of allowing brokers to extend credit
on the collateral of the Shares. Depending upon factors similar to those
described above regarding 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. If
registration of Shares under the Exchange Act were terminated, the Shares would
no longer be "margin securities."
8. CERTAIN INFORMATION CONCERNING THE COMPANY
The Company is a Florida corporation with its principal executive offices
located at 1615 W. NASA Boulevard, Melbourne, Florida 32901. Except as otherwise
set forth herein, the information concerning the Company contained in this Offer
to Purchase, including 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. Although neither Purchaser
nor Parent has any knowledge that would indicate that statements contained
herein based upon such documents are untrue, none of Purchaser, Parent, any of
their affiliates, or the Dealer Manager assumes any responsibility for the
accuracy or completeness of the information concerning the Company, furnished by
the Company, or 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
Purchaser and Parent.
10
According to the Company's filings with the Commission, the Company
designs, develops and manufactures electronic systems and system components and
related computer software for defense-related products and for
telecommunications applications.
Set forth below is certain selected historical consolidated financial
information with respect to the Company excerpted or derived from financial
information contained in the audited financial statements contained in the
Company Form 10-K, and certain unaudited consolidated summary information with
respect to the six months ended September 30, 1997 and September 30, 1996 which
is excerpted or derived from the Company's Quarterly Report on Form 10-Q for the
quarter ended September 30, 1997 filed November 6, 1997. More comprehensive
financial information is included in (i) the Company Form 10-K for the fiscal
year ended March 31, 1997, and (ii) other reports and documents filed by the
Company with the Commission, and the following summary is qualified in its
entirety by reference to such reports and such other documents and all the
financial information (including any related notes) contained therein. The
reports and other documents filed with the Commission should be available for
inspection and copies thereof should be obtainable in the manner set forth
below.
SYMETRICS INDUSTRIES, INC. AND SUBSIDIARY
SELECTED CONSOLIDATED FINANCIAL INFORMATION
· Enlarge/Download Table
FOR THE SIX MONTHS
ENDED SEPTEMBER 30,
(UNAUDITED) FOR THE YEAR ENDED MARCH 31,
--------------------------- -------------------------------------------
1997 1996 1997 1996 1995
----------- ----------- ----------- ----------- -----------
INCOME STATEMENT DATA
Contract revenues....... $13,063,293 $12,733,986 $23,174,328 $22,096,589 $26,698,111
Net income.............. 206,836 768,161 1,756,469 1,051,385 2,545,364(1)
Earnings per share...... $ 0.13 $ 0.48 $ 1.09 $ 0.66 $ 1.78
· Enlarge/Download Table
AS OF
AS OF MARCH 31,
SEPTEMBER 30, ---------------------------
1997 1997 1996
------------- ----------- -----------
(UNAUDITED)
-------------
BALANCE SHEET DATA
Current assets...................................... $ 11,755,710 $ 9,644,746 $ 7,322,193
Total assets........................................ 20,634,679 16,854,250 10,086,498
Long-term debt less current maturities.............. 4,233,894 1,838,446 568,363
Shareholders' equity................................ 8,516,356 8,306,708 6,418,364
---------------
(1) Includes loss on a discontinued business of $49,138.
The Company is subject to the information and reporting requirements of the
Exchange Act and in accordance therewith files periodic reports, proxy
statements and other information with the Commission relating to its business,
financial condition and other matters. The Company is required to disclose in
such proxy statements certain information, as of particular dates, concerning
the Company's directors and officers, their remuneration, stock options granted
to them, the principal holders of the Company's securities and any material
interests of such persons in transactions with the Company. Such reports, proxy
statements and other information may be inspected at the public reference
facilities maintained by the Commission at Room 1024, 450 Fifth Street, N.W.,
Washington, D.C. 20549, and may be inspected and copied at prescribed rates at
the regional offices of the Commission located at Seven World Trade Center, 13th
Floor, New York, New York 10048 and Citicorp Center, 500 West Madison Street
(Suite 1400), Chicago, Illinois 60661. Copies of this material may also be
obtained by mail, upon payment of the Commission's customary fees, from the
Commission's principal office at 450 Fifth Street, N.W., Washington, D.C. 20549.
Such materials should also be available on-line through EDGAR at a Web site
(http://www.sec.gov) maintained by the Commission. In
11
addition, material filed by the Company can be inspected at the offices of the
National Association of Securities Dealers, Inc., Market Listing Section, 1735 K
Street, N.W., Washington, D.C. 20006.
9. CERTAIN INFORMATION CONCERNING PURCHASER AND PARENT
Parent's predecessor and principal operating subsidiary, Tel-Save, Inc., a
Pennsylvania corporation, was incorporated in 1989. Parent, a Delaware
corporation, was incorporated in 1995. Purchaser, a Delaware corporation, was
incorporated in 1997. The name, business address, citizenship and principal
occupation or employment of each of the executive officers of Parent and
Purchaser are set forth in Annex I hereto. The principal executive office of
Parent and Purchaser is located at 6805 Route 202, New Hope, PA 18938.
Parent (which term includes Parent's operating subsidiaries where
appropriate) is a provider of long distance telecommunications services
primarily to small and medium-sized businesses located throughout the United
States. Parent's long distance service offerings include outbound service,
inbound toll-free 800 service and dedicated private line services for data.
Until 1997, Parent operated solely as a switchless, non-facilities-based
reseller of AT&T long distance services, purchasing large usage volumes from
AT&T pursuant to contract tariffs.
In early 1997, Parent deployed its own nationwide telecommunications
network, One Better Net, or OBN, consisting of five Parent-owned, AT&T (now
Lucent) manufactured 5ESS-2000 switches connected with AT&T digital transmission
facilities. Of the over 500,000 current users of Parent's services, OBN
currently provides services to approximately 150,000 end users and most of
Parent's new outbound end users are now being provisioned to OBN.
In February 1997, as part of its efforts to expand its business into the
residential market, Parent and America Online, Inc. ("AOL") entered into an
agreement (the "AOL Agreement"), under which Parent will provide long-distance
telecommunications services to be marketed by AOL under a distinctive brand name
to be used exclusively for Parent's services. The services will include
provision for online sign-up, call detail and reports and credit card payment.
AOL subscribers who sign up for the telecommunications services will be
customers of Parent, as the carrier providing such services. Parent's services
under this AOL Agreement were launched on the AOL online network on October 9,
1997. The AOL Agreement has an initial term of three years and can be extended
by AOL on an annual basis thereafter.
Historically, Parent has marketed its services primarily through
independent carriers and marketing companies ("partitions"). While Parent
explored the use of direct telemarketing in 1997, it has determined to continued
to market its services primarily through partitions and such opportunities as
the AOL arrangement.
Purchaser is a subsidiary which was formed as a vehicle for possible
acquisitions to be made by Parent. Purchaser is not expected to conduct any
business other than incident to the formation, execution and delivery of the
Merger Agreement and the commencement of the Offer and Merger. Accordingly, no
meaningful financial information with respect to Purchaser is available.
Parent files periodic reports and other information with the Commission
relating to its business, financial condition and other matters. Such reports
and other information may be inspected, and copies may be obtained, at the
offices of the Commission and of the National Association of Securities Dealers,
Inc. in the same manner as set forth with respect to the Company in Section 8.
Set forth below is certain selected historical consolidated financial
information with respect to Parent excerpted or derived from financial
information contained at pages 30 to 46 of Parent's Annual Report on Form 10-K
for the year ended December 31, 1996, and pages 2 through 12 of Parent's
Quarterly Report on Form 10-Q for the quarter ended September 30, 1997 (which
pages are hereby incorporated by reference herein). More comprehensive financial
information is included in such report and other documents filed by Parent with
the Commission, and the following summary is qualified in its entirety by
reference to such reports and such other documents and all the financial
information (including any related notes) contained therein. Such reports and
other documents should be available for inspection and copies thereof should be
obtainable from the Commission in the manner set forth in Section 8.
12
TEL-SAVE HOLDINGS, INC.
SUMMARY HISTORICAL CONSOLIDATED FINANCIAL DATA
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
· Enlarge/Download Table
FOR THE NINE MONTHS
ENDED SEPTEMBER 30, YEAR ENDED DECEMBER
(UNAUDITED) 31,
--------------------- ---------------------
1997 1996 1996 1995
-------- -------- -------- --------
INCOME STATEMENT DATA
Sales........................................... $226,506 $168,159 $232.424 $180,102
Net income...................................... 286 14,467 20,160 9,035
Net income per share -- Fully Diluted........... $ -- $ .26 $ .35 $ .32
· Enlarge/Download Table
AS OF SEPTEMBER 30, AS OF DECEMBER 31,
1997 ---------------------
(UNAUDITED) 1996 1995
------------------- -------- -------
BALANCE SHEET DATA
Total assets.......................................... $ 606,817 $257,008 $71,388
Total liabilities..................................... 338,405 26,288 30,074
Total stockholders' equity............................ 268,412 230,720 41,314
Except as set forth in the Merger Agreement or as otherwise described in
this Offer to Purchase, to the best knowledge of Purchaser and Parent, none of
the persons listed in Annex I to this Offer to Purchase, owns any Shares and
none of them has effected any transaction in the Shares during the past 60 days.
Except as set forth in the Merger Agreement or as otherwise described in
this Offer to Purchase, none of Purchaser or Parent, or, to the best knowledge
of Purchaser or Parent, any of the persons listed in Annex I to this Offer to
Purchase, has any contract, arrangement, understanding or relationship with any
other person with respect to any securities of the Company, including, without
limitation, 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, guaranties of loans, guaranties
against loss or the giving or withholding of proxies. None of Purchaser or
Parent, or, to the best knowledge of Purchaser or Parent, any of the persons
listed in Annex I to this Offer to Purchase has had any transactions with the
Company, or any of its executive officers, directors or affiliates that would
require reporting, under the rules of the Commission.
Except as set forth in this Offer to Purchase, there have been no contacts,
negotiations or transactions between Purchaser or Parent, nor their respective
subsidiaries, or, to the best knowledge of Purchaser or Parent, any of the
persons listed in Annex I to this Offer to Purchase, on the one hand, and the
Company or its executive officers, directors or affiliates, on the other hand,
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 that would require reporting under the rules of the
Commission.
10. SOURCE AND AMOUNT OF FUNDS
If all outstanding Shares not already owned by Parent are tendered to and
purchased by Purchaser, the aggregate purchase price for such Shares and all
estimated commissions, fees and expenses relating to the Offer will be
approximately $25.5 million. The Offer is not subject to a financing
contingency. Parent has sufficient cash to pay all such amounts.
11. BACKGROUND OF THE OFFER; PAST CONTACTS, TRANSACTIONS OR NEGOTIATIONS WITH
THE COMPANY
In mid-November 1997, certain operations personnel of Parent were contacted
by sales representatives of the Company, in the ordinary course of business,
seeking to market certain services and products offered by the Company to its
customers. Parent was particularly interested in the Company's switching
products and began a review of publicly available information about the products
offered by the Company. On the basis of publicly available information about the
Company, members of management of Parent had concluded, by late
13
November 1997, that acquisition of all or a part of the business of the Company
would provide an important opportunity for strategic expansion of Parent's
telecommunication business into new markets. On December 2, 1997, Mr. Edward B.
Meyercord, III, Executive Vice President, Marketing and Corporate Development of
Parent, first contacted Mr. Dudley E. Garner, Jr., the Chairman of the Board and
President of the Company, to discuss Parent's interest in a possible transaction
with the Company. Mr. Garner referred Mr. Meyercord to Vista Quest, Inc., an
investor relations firm which represents the Company. On such date, Parent
purchased 21,500 Shares at $5.60 per Share in brokerage transactions.
On December 3 and 4, 1997, Mr. Meyercord and Mr. Garner had further
telephonic discussions, including the possibility of a transaction involving the
Company's subsidiary, American Digital Switching, Inc., a manufacturer of
telephone switching equipment. On December 3, 1997, Parent purchased an
additional 23,200 Shares at $6.95 per Share in brokerage transactions.
On December 5, 1997, Mr. Daniel Borislow, the Chairman of the Board of
Parent, contacted Mr. Garner by telephone. Mr. Garner and Mr. Borislow discussed
possible valuations of the Company and possible forms a transaction might take.
No understanding was reached and no commitments were made by either party. On
that date, Parent purchased an additional 26,900 Shares at $8.21 per Share in
brokerage transactions. Later that evening Mr. Garner contacted Mr. Borislow at
home to confirm that Mr. Garner would inform the members of the Board of
Directors of the Company of Parent's interest in a possible transaction with the
Company.
On December 8 and 9, Mr. Meyercord and Mr. Garner discussed the progress of
the Company's internal discussions concerning a potential transaction with
Parent. Mr. Garner informed Mr. Meyercord of the Company's intention to hire
financial advisors. Parent purchased an additional 73,400 Shares at $10.37 per
Share on December 8, which, together with previous purchases by Parent, resulted
in Parent's aggregate ownership of 145,000 Shares, representing 8.9% of the
outstanding Shares.
On December 10, 1997, Mr. Garner confirmed to Mr. Meyercord that a
financial advisor had been hired by the Company to assist the Company's Board of
Directors in evaluating any potential transactions. On December 11, 1997, to
assist the Company in evaluating the structure of a possible transaction with
Parent, Mr. Meyercord instructed Parent's legal counsel to circulate a
preliminary form of the Merger Agreement to the Company's counsel.
Between December 12 and December 14, 1997, Mr. Borislow continued
discussions with the Company through the Company's financial advisor, Raymond
James & Associates, Inc. ("Raymond James"). On December 15, 1997, Mr. Borislow,
Mr. Garner and a representative of Raymond James had various conversations
relating to the possible structures and the range of prices at which Parent
would be interested in acquiring the Company.
On December 16, 17 and 18, 1997, the Company's counsel and Parent's counsel
negotiated terms of the Merger Agreement.
On December 17, 1997, the Board of Directors of the Company met to consider
the proposed Merger Agreement and the transactions contemplated thereby. The
Board agreed in principle with the proposal, subject to negotiation of final
terms of the Merger Agreement, the Stock Option Agreement and related agreements
by the directors and officers authorized by the Board of Directors to do so.
On the evening of December 18, 1997, Mr. Garner, pursuant to the authority
delegated to him by the Board of Directors, finalized all aspects of the
agreements between the Company and Parent, and the parties executed the Merger
Agreement and the Stock Option Agreement.
On December 19, 1997, Parent and the Company each issued press releases
announcing the Offer and related transactions.
14
12. PURPOSE OF THE OFFER AND THE MERGER; APPRAISAL RIGHTS; PLANS FOR THE
COMPANY
The purpose of the Offer, the Merger and the Merger Agreement is to enable
Parent to acquire control of, and the entire equity interest in, the Company.
Upon consummation of the Merger, Purchaser will become a wholly owned subsidiary
of the Company. The Offer is being made pursuant to the Merger Agreement.
Under the FBCA and the Company's Articles of Incorporation, the approval of
the Board of Directors of the Company and the affirmative vote of the holders of
a majority of the outstanding voting stock of the Company are required to
approve and adopt the Merger Agreement and the Merger. The Company's Board of
Directors unanimously has approved the Offer, the Merger and the Merger
Agreement and the transactions contemplated thereby, and, unless the Merger is
consummated pursuant to the short-form merger provisions under Section 607.1104
of the FBCA described below, the only remaining required corporate action of the
Company is the approval and adoption of the Merger Agreement and the Merger by
the affirmative vote of the holders of a majority of the outstanding voting
stock. If the Minimum Condition is satisfied, Purchaser will have sufficient
voting power to cause the approval and adoption of the Merger Agreement and the
Merger without the affirmative vote of any other stockholder.
The Merger Agreement provides that, if approval or action in respect of the
Merger by the stockholders of the Company is required by the FBCA or its
Articles of Incorporation, the Company will (i) take all action necessary to
convene a meeting of its stockholders (the "Stockholder Meeting") promptly after
the Expiration Date for the purpose of voting upon the Merger, (ii) use all
reasonable efforts to solicit from stockholders of the Company proxies in favor
of the adoption of the Merger Agreement and (iii) if the Stockholder Meeting is
to be called, and if requested by Purchaser, take all other action reasonably
necessary to secure the vote of stockholders in favor of adoption of the Merger
Agreement, subject to the fiduciary duties of its Board of Directors.
SHORT FORM MERGER. Under the FBCA, if Purchaser acquires at least 80% of
the outstanding shares of each class of stock of the Company, Purchaser will be
able to approve the Merger without a vote of the Company's other stockholders.
The only class of stock of the Company outstanding is the Shares. The Merger
Agreement provides that if Purchaser acquires at least 80% of the outstanding
Shares, Purchaser, Parent and the Company will take all necessary and
appropriate action to cause the Merger to become effective as soon as
practicable after the expiration of the Offer without a meeting of stockholders
of the Company in accordance with Section 607.1104 of the FBCA. If Purchaser
does not acquire at least 80% of the outstanding Shares, a significantly longer
period of time may be required to effect the Merger than would be the case if
the Purchaser were to acquire at least 80% of the outstanding Shares, because a
vote of the Company's stockholders would be required under the FBCA.
APPRAISAL RIGHTS. Holders of Shares do not have dissenters' rights as a
result of the Offer. If the Merger is effected with a vote of the Company's
stockholders and if on the record date fixed to determine the stockholders
entitled to vote, the Shares are listed on NASDAQ or on a national securities
exchange or are held of record by 2,000 or more of such stockholders, then
holders of Shares will not have dissenters' rights under the FBCA. If, however,
the Merger is consummated with or without the vote of the Company's shareholders
but the Shares are not so listed or designated or are not held of record by at
least 2,000 shareholders, holders of Shares will have certain rights pursuant to
the provisions of Sections 607.1301, 607.1302 and 607.1320 of the FBCA to
dissent and demand determination of, and to receive payment in cash of the fair
value of, their Shares. If the statutory procedures were complied with, such
rights could lead to a judicial determination of the fair value required to be
paid in cash to such dissenting holders for their Shares. Any such judicial
determination of the fair value of Shares or the market value of the Shares
could be more or less than the Offer Price or the price provided for in the
Merger Agreement. Section 607.1301(2) of FBCA defines "fair value" as the value
of the shares excluding any appreciation or depreciation in anticipation of the
transaction unless such exclusion would be inequitable.
If any holder of Shares who asserts dissenters' rights under the FBCA fails
to perfect, or effectively withdraws or loses his dissenters' rights, as
provided in the FBCA, the Shares of such stockholder will be converted into the
right to receive the price provided for in the Merger Agreement in accordance
with the
15
Merger Agreement. A stockholder may withdraw his notice of election to dissent
by delivery to Parent of a written withdrawal of his notice of election to
dissent and acceptance of the Merger.
THE FOREGOING SUMMARY OF THE RIGHTS OF OBJECTING STOCKHOLDERS DOES NOT
PURPORT TO BE A COMPLETE STATEMENT OF THE PROCEDURES TO BE FOLLOWED BY
STOCKHOLDERS DESIRING TO EXERCISE ANY AVAILABLE DISSENTERS' RIGHTS. THE
PRESERVATION AND EXERCISE OF DISSENTERS' RIGHTS REQUIRES STRICT ADHERENCE TO THE
APPLICABLE PROVISIONS OF SECTION 607.1302 OF THE FBCA, AND WILL ONLY BE
AVAILABLE IN CONNECTION WITH THE CONSUMMATION OF THE MERGER.
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 or otherwise
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 if the Merger is consummated within one year after the termination of the
Offer at the same per share price as paid in the Offer. If applicable,
Rule 13e-3 requires, 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 transaction, be filed with the Commission and disclosed to stockholders
prior to consummation of the transaction.
BOARD REPRESENTATION. The Merger Agreement provides that, promptly upon
the purchase of such number of Shares as satisfies the Minimum Condition and
from time to time thereafter, Purchaser will be entitled to designate such
number of directors, rounded up to the next whole number, on the Board of
Directors of the Company as will give Purchaser, subject to compliance with
Section 14(f) of the Exchange Act, representation on the Board of Directors of
the Company equal to the product of (a) the number of directors on the Board of
Directors of the Company (after giving effect to the appointment of such
directors) and (b) the percentage that the number of Shares purchased by
Purchaser bears to the number of Common Shares outstanding. The Company has
agreed that, upon request of Purchaser, it will promptly (i) increase the size
of the Company's Board of Directors to the extent permitted by its Articles of
Incorporation and By-Laws (and amend the Articles of Incorporation and By-Laws,
if so required, to increase the size of the Board of Directors to allow for such
additional directors) and/or (ii) take all steps necessary and appropriate to
secure the resignations of such number of directors as is necessary to enable
Purchaser's designees to be elected to the Board of Directors (and hold a
meeting for such purpose); and (iii) cause Purchaser's designees to be so
elected. At the request of Purchaser, the Company has agreed to promptly take,
at its expense, all action required by Section 14(f) of the Exchange Act and
Rule 14f-1 promulgated thereunder and necessary to effect any such election,
including the mailing to its stockholders of the information required to be
disclosed pursuant thereto. Purchaser and Parent will supply to the Company in
writing and be solely responsible for any information with respect to themselves
and their nominees, officers, directors and affiliates required by Section 14(f)
and Rule 14f-1.
PLANS FOR THE COMPANY. Except as otherwise set forth in this Offer to
Purchase, it is expected that, initially following the Merger, the business and
operations of the Company will be continued by the Surviving Corporation
substantially as they are currently being conducted. Certain contracts between
the Company and the United States government may require certain notices,
approvals, consents or security clearances in connection with the Offer and the
Merger. Parent expects to take such action as may be required in accordance with
applicable law and the terms of such government contracts. There can be no
assurance that the Company will be able to retain the benefits of any government
contracts with respect to which such notices, approvals, consents or security
clearances may be required.
Parent intends to operate the Company as a subsidiary of Parent. The
directors of Purchaser will be the initial directors of the Surviving
Corporation and the then officers of the Company, other than the Chairman of the
Board and such other persons as are designated by Parent, shall be the initial
officers of the Surviving Corporation. After the purchase of Shares pursuant to
the Offer and prior to the Effective Time, it is anticipated that the Company
will not declare any dividends on the Shares. See Section 14.
16
Parent will evaluate the business, operations, capitalization and
management of the Company during the pendency of, and after the consummation of,
the Offer, and will take such actions as it deems appropriate under the
circumstances then existing with a view to optimizing the Company's potential in
conjunction with Parent's business.
Except as indicated in this Offer to Purchase, Parent does not have any
present plans or proposals which relate to or would result in an extraordinary
corporate transaction, such as a merger, reorganization or liquidation,
involving the Company or any of its subsidiaries, a sale or transfer of a
material amount of assets of the Company or any of its subsidiaries or any
material change in the Company's capitalization or dividend policy or any other
material changes in the Company's corporate structure or business, or the
composition of the Company's management.
13. THE MERGER AGREEMENT
The following summary of certain provisions of the Merger Agreement, a copy
of which is filed as an exhibit to the Schedule 14D-1, is qualified in its
entirety by reference to the text of the Merger Agreement.
THE OFFER. Purchaser commenced the Offer in accordance with the terms of
the Merger Agreement.
THE MERGER. The Merger Agreement provides that, upon the terms and subject
to the conditions of the Merger Agreement, and in accordance with the DGCL and
the FBCA, Purchaser shall be merged with and into the Company. Following the
Effective Time, the separate corporate existence of Purchaser will cease and the
Company will continue as the Surviving Corporation and will succeed to and
assume all the rights and obligations of the Company in accordance with the
FBCA. The Articles of Incorporation of the Company shall become the Articles of
Incorporation of the Surviving Corporation and the By-Laws of Purchaser shall
become the By-Laws of the Surviving Corporation.
CONVERSION OF SHARES. At the Effective Time, each Share issued and
outstanding immediately prior thereto will be canceled and extinguished and each
Share (other than Shares held by the Company as treasury Shares and Shares owned
by Purchaser or Parent) will be converted into and become solely the right to
receive $15.00 net in cash (adjusted for stock splits or other similar events)
per share without interest upon the surrender of the certificate formerly
representing such Share. All Shares held as treasury shares and shares held by
the Purchaser or any of its affiliates will be cancelled at the Effective Time.
All shares of capital stock of Purchaser issued and outstanding immediately
prior to the Effective Time shall be converted and changed into an equal number
of shares of capital stock of the Surviving Corporation.
COMPANY STOCK OPTIONS. Pursuant to the Merger Agreement, at the Effective
Time, each option to purchase Shares issued by the Company (the "Company Stock
Options") which is outstanding at the Effective Time shall be cancelled by
virtue of the Merger. Purchaser has agreed to pay to each holder thereof cash in
an amount per Share subject to such cancelled Company Stock Option equal to the
excess of $15.00 over the exercise price per Share of such Company Stock Option.
REPRESENTATIONS AND WARRANTIES. Pursuant to the Merger Agreement, the
Company has made customary representations and warranties to Purchaser and
Parent, including, but not limited to, representations and warranties relating
to the Company's organization and qualification, its subsidiaries, its
capitalization, its authority to enter into the Merger Agreement and carry out
the transactions contemplated thereby, filings made by the Company with the
Commission under the Securities Act and the Exchange Act (including financial
statements included in the documents filed by the Company under these acts for
the fiscal year ended March 31, 1997), its litigation, and compliance with the
Company's government contracts.
Purchaser and Parent have also made customary representations and
warranties to the Company, including, but not limited to, representations and
warranties relating to Purchaser's and Parent's organization and authority to
enter into the Merger Agreement, that Purchaser will have sufficient funds
available to it to purchase the Shares and that none of Purchaser or Parent owns
(other than possibly through their employee benefit plans) any Shares, other
than as disclosed in filings with the Commission.
17
COVENANTS RELATING TO THE CONDUCT OF BUSINESS. Pursuant to the Merger
Agreement, the Company has agreed that it will, and will cause its subsidiaries
to, carry on in all material respects, their respective businesses in the
ordinary course, not issue any capital stock, except as specified in the Merger
Agreement, or take any other action with respect to its capital stock, not take
any action to sell or encumber in any manner their capital stock or material
assets other than in the ordinary course of business, not amend or propose to
amend their certificates of incorporation or by-laws or similar governing
instruments, not incur any indebtedness other than in the ordinary course of
business, not enter into any agreement to change any of their existing
contracts, not enter into or change any employment agreements, not amend or
adopt any employee benefit plans and, to the extent consistent therewith, use
their reasonable best efforts to keep intact their insurance policies, preserve
intact their current business organizations, keep available the services of
their current officers and employees and preserve their relationships with
customers, suppliers and others having business dealings with them.
ACQUISITION PROPOSALS. The Company has agreed in the Merger Agreement that
from the date of the Merger Agreement until the termination of the Merger
Agreement, (a) it and its subsidiaries will not directly or indirectly make,
solicit, initiate or encourage submission of proposals or offers from any
persons (including any of its officers or employees) with respect to an
Acquisition Proposal, and (b) subject to the fiduciary duties of the Company's
Board of Directors, it will immediately cease and cause to be terminated all
discussions or negotiations with third parties with respect to any Acquisition
Proposal and promptly notify Purchaser after receipt of any bona fide
Acquisition Proposal or any inquiry from any person relating thereto and
promptly provide Purchaser with a reasonable summary of the financial and other
material terms of such Acquisition Proposal. An "Acquisition Proposal" is
defined in the Merger Agreement as any proposal or offer involving liquidation,
dissolution, recapitalization, merger, consolidation or acquisition or purchase
of all or substantially all of the assets of, or equity interest in, the Company
or other similar transaction or business combination involving the Company or
its subsidiaries. The Merger Agreement also provides that to the extent that the
Company's Board of Directors, acting in good faith, after receiving advice from
outside legal counsel or its financial advisors that the following action is
necessary or appropriate in order to act in a manner which is consistent with
its fiduciary duties under applicable law, may furnish or cause to be furnished
information to third parties concerning itself and its businesses, properties or
assets, engage in discussions or negotiations with a third party regarding an
Acquisition Proposal initiated by a third party, or, following receipt of an
Acquisition Proposal, take or disclose to its stockholders a position
contemplated by Rule 14e-2(a) under the Exchange Act or otherwise make
disclosure to the Company's stockholders or withdraw, modify or amend its
recommendation of the transactions contemplated by the Merger Agreement and/or
enter into an agreement providing for the consummation of such Acquisition
Proposal.
INDEMNIFICATION. The Merger Agreement provides that, from and after the
Effective Time, Purchaser will indemnify, defend and hold harmless all officers,
directors and employees of the Company or any of its subsidiaries against all
losses, expenses, claims, damages or liabilities arising out of claims brought
or made by third parties including, without limitation, derivative claims in
connection with the transactions contemplated by the Merger Agreement to the
fullest extent permitted or required under applicable law and shall advance
expenses prior to the final disposition of these claims and liabilities.
Purchaser has also agreed to continue to keep in effect all rights to
indemnification now existing in favor of the directors, officers or employees of
the Company or any of its subsidiaries (including, without limitation, any
person who was or becomes a director, officer or employee prior to the Effective
Time (the "Indemnified Parties")) under the FBCA or as provided in the Company's
Articles of Incorporation or By-Laws with respect to matters occurring on or
prior to the Effective Time and for a period of not less than six years after
the Effective Time (or, in the case of claims or other matters occurring on or
prior to the expiration of such six year period, which have not been resolved
prior to the expiration of such six year period, until such matters are finally
resolved) and Purchaser shall honor, and shall cause the Surviving Corporation
to honor, all such rights. Purchaser shall cause to be maintained in effect for
not less than six years from the Effective Time, an insurance and
indemnification policy for the Company's current directors, officers and
employees that covers events occurring at or prior to the Effective Time (the
"D&O Insurance") that is no less favorable than the existing policy of the
Company or, if substantially equivalent insurance coverage is unavailable, the
best available coverage. Purchaser and the Surviving Corporation will not be
required, however, to pay an annual premium for the D&O Insurance in
18
excess of 150% of the amount that the Company spent for these purposes in the
last fiscal year. Parent may also substitute therefor policies of at least the
same coverage containing terms and conditions which are no less advantageous.
EMPLOYEE MATTERS. Purchaser has agreed in the Merger Agreement that the
employer-provided benefits and compensation for nonunion employees under the
Company's employee benefit plans and payroll which are in effect as of the
Effective Time (other than any feature of any such plan that relates to the
Shares) will not be reduced after the Effective Time (except to the extent
consistent with the terms of the Merger Agreement and except to the extent
necessary to comply with applicable law) at least until the second anniversary
of the Effective Time. In addition, in connection with the Merger Agreement
Parent has agreed in a letter agreement with the Company to permit certain key
employees of the Company to remain in their current (or comparable) positions
for a period of two years from the Effective Time at compensation levels at
least comparable to their current levels.
ADDITIONAL EFFORTS. Upon the terms and subject to the conditions set forth
in the Merger Agreement, the Company, Purchaser and Parent agree to use all
reasonable efforts to take all actions and to do all things necessary, proper or
advisable to consummate and make effective, as promptly as practicable, the
transactions contemplated by the Offer and the Merger Agreement.
CONDITIONS PRECEDENT TO MERGER. The respective obligations of the Company,
Purchaser and Parent to effect the Merger are subject to the fulfillment at or
prior to the Effective Time of the following conditions: (a) the Offer shall
have been consummated in accordance with its terms; provided, however, that this
condition shall be considered satisfied if Purchaser fails to accept for payment
and pay for Shares pursuant to the Offer other than as a result of a failure of
the conditions to the Offer set forth in Section 15; (b) the waiting period
applicable to the consummation of the Merger under the Hart-Scott-Rodino
Antitrust Improvements Act of 1976, as amended (the "HSR Act") shall have
expired or been terminated; (c) no law, statute, rule or regulation, domestic or
foreign, shall have been enacted or promulgated or is in effect which has the
effect of making the acquisition of Shares illegal or otherwise prohibits
consummation of the Merger; and (d) no preliminary or final injunction or
temporary restraining order or other order or decree has been issued by any
foreign or United States federal or state court or foreign or United States
federal or administrative agency enjoining, restraining or otherwise prohibiting
the Offer, the Merger or the acquisition by Purchaser of Shares.
TERMINATION. The Merger Agreement may be terminated at any time prior to
the Effective Time, whether prior to or after approval by the stockholders of
the Company: (a) by mutual written consent of Purchaser and the Company; (b) by
either Purchaser or the Company if: (i) the Offer shall not have been
consummated by March 1, 1998; or (ii) at any time after June 30, 1998, if any of
the conditions set forth in the immediately preceding paragraph "Conditions
Precedent to Merger" have not been satisfied or waived; (c) by Purchaser: (i) if
the Board of Directors of the Company shall have failed to recommend, or shall
have withdrawn, its approval or recommendation of the Offer or the Merger or
shall have resolved to do any of the foregoing or if the Company shall have
entered into a definitive agreement to accept an Acquisition Proposal (as the
term is defined in Section 13 "--Acquisition Proposals"); (ii) if the Company's
Board of Directors modifies its approval of the Offer or the Merger in a manner
adverse to Purchaser and the Minimum Condition shall not have been met on the
Expiration Date; (iii) if as a result of the failure of any conditions set forth
in Section 15, the Offer shall have terminated or expired without Purchaser or a
subsidiary of Parent having purchased any Shares in the Offer; or (d) by the
Company, if the Company's Board of Directors, acting in good faith, after
receiving advice from outside counsel or its financial advisors that the
following action is necessary or appropriate in order for it to act in a manner
which is consistent with its fiduciary duties under applicable law,
(1) following receipt of an Acquisition Proposal from a third party, withdraws,
modifies or amends its recommendations of the Offer or the Merger or (2) enters
into an agreement providing for the consummation of an Acquisition Proposal
following receipt of an Acquisition Proposal from a third party. Notwithstanding
the foregoing, the Merger Agreement provides that the right to terminate the
Merger Agreement pursuant to any of the events set forth above will not be
available to any party if the event which gave rise to such termination right is
a result of or arose in connection with any action or inaction of the party
seeking to terminate taken or not taken in breach of the terms of the Merger
Agreement.
19
FEES AND EXPENSES. Except as described in the next sentence, pursuant to
the Merger Agreement, each of the Company and Purchaser agreed to pay its own
respective costs and expenses incurred in connection with the Merger Agreement
and the transactions contemplated thereby. The Company also agreed in the Merger
Agreement that, if the Merger Agreement is terminated pursuant to: (1) clause
(b)(ii) (set forth above in "Termination") and at the time of such termination
any person, entity or group (as defined in Section 13(d)(3) of the Exchange Act)
(other than Purchaser or Parent) shall have become the beneficial owner of more
than 20% of the outstanding Shares (with appropriate adjustments for
reclassifications of capital stock, stock dividends, stock splits, reverse stock
splits and similar events) and such person, entity or group (or any subsidiary
of such person, entity or group) thereafter enters into a definitive agreement
with the Company to accept an Acquisition Proposal at any time on or prior to
the date which is six months after the termination of the Merger Agreement and
such transaction is thereafter consummated; (2) clause (c)(ii) (set forth above
in "Termination") and at the time of termination of the Merger Agreement, the
Company shall enter into a definitive agreement to accept an Acquisition
Proposal at any time on or prior to the date which is six months after the
termination of the Merger Agreement; (3) clause (c)(iii) (set forth above in
"Termination") and such failure was the result of any action taken by or on
behalf of the Company giving rise to an Event specified in clause (a), (b), (c),
(d), (f), (g) or (i) of Section 15 and such action was in breach of the
Company's obligations under the Merger Agreement and, with respect to an Event
specified in clause (g), if such action was taken by the Company for the purpose
of causing Purchaser to terminate the Merger Agreement; or (4) clause (d) or
clause (c)(i) (each as set forth above under "Termination"); then the Company
shall grant to Purchaser an option, pursuant to the Stock Option Agreement, to
purchase that number of Shares which would equal 19.9% of the aggregate number
of Shares outstanding after giving effect to the exercise of such option.
14. DIVIDENDS AND DISTRIBUTIONS
The Merger Agreement provides that neither the Company nor any of its
subsidiaries will, among other things, prior to the Effective Time declare, set
aside or pay any dividends, or make other distributions payable in cash, stock,
property or otherwise with respect to the Common Shares except as expressly
permitted therein.
15. CERTAIN CONDITIONS TO PURCHASER'S OBLIGATIONS
Purchaser will not be required to continue the Offer or to accept for
payment or pay for any Shares tendered, may postpone the acceptance for payment,
purchase of and/or payment for Shares, may amend or terminate the Offer, and may
extend the Offer beyond January 21, 1998 (the "Initial Expiration Date," in
which event the expiration date ("Expiration Date") shall mean the latest time
and date which the Offer as so extended by Purchaser shall expire) whether or
not any Shares have theretofore been purchased or paid for, (i) if the Minimum
Condition shall not have been satisfied or (ii) if, at any time on or after
December 22, 1997 and prior to the time of payment for any such Shares any of
following events (each referred to as an "Event") have occurred (each of
paragraphs (a) through (j) providing a separate and independent condition to
Purchaser's obligations pursuant to the Offer); provided, however, that
Purchaser may waive any Event at any time:
(a) there shall be in effect any preliminary or final injunction or
temporary restraining order or other order or decree issued by any foreign
or United States federal or state court or foreign or United States federal
or administrative agency or authority, enjoining, restraining or otherwise
prohibiting the Offer, the Merger or the acquisition by Parent or Purchaser
of Shares;
(b) an action or a proceeding shall have been commenced by any
governmental agency under federal or state antitrust laws or any other
applicable law before any court or any governmental or other administrative
or regulatory authority or agency, domestic or foreign, or there shall be
an imminent threat which would reasonably be expected to result in the
foregoing, or any of the authorizations required to be obtained pursuant to
the provisions of the Merger Agreement shall have been conditioned in such
a manner, that would reasonably be expected to (i) materially restrict or
prohibit consummation of the Offer or the Merger or any other merger or
business combination between the Company, Parent and Purchaser, (ii) impose
material limitations on the ability of Parent or Purchaser effectively to
acquire or
20
hold or to exercise full rights of ownership of the Shares acquired by it,
including, but not limited to, the right to vote the Shares purchased by it
on all matters properly presented to the stockholders of the Company, or
(iii) impose material limitations on the ability of either Purchaser or the
Company to continue effectively to conduct all or any material portion of
its respective business as heretofore conducted or to continue to own or
operate effectively all or any material portion of its respective assets as
heretofore owned or operated;
(c) there shall have been any law, statute, rule or regulation,
domestic or foreign, enacted, promulgated or proposed that, directly or
indirectly, would reasonably be expected to result in any of the
consequences referred to in paragraph (b) above;
(d) a material adverse change in the business, property, financial
condition or results of operations of the Company and its subsidiaries
taken as a whole shall have occurred;
(e) there shall have occurred (i) any general suspension of trading in
securities on the New York Stock Exchange, (ii) a declaration of a banking
moratorium or any suspension of payments by United States authorities on
the extension of credit by lending institutions, or (iii) a commencement of
a war, armed hostilities or other international or national calamity
directly or indirectly involving the United States which would reasonably
be expected to have a material adverse effect on the business, property,
financial condition or results of operations of the Company and its
subsidiaries taken as a whole;
(f) any representation or warranty of the Company in the Merger
Agreement shall at any time prove to have been incorrect in any material
respect at the time made;
(g) the Company shall fail to perform or comply in any material
respect with any covenant or agreement to be performed or complied with by
the Company under the Merger Agreement;
(h) the Company and Purchaser shall have agreed to terminate the Offer
or the Merger Agreement or the Tender and Option Agreements is no longer in
full force and effect;
(i) the Board of Directors of the Company or the Company, as the case
may be, shall have (i) publicly (including by amendment of the Schedule
14D-9) withdrawn its recommendation to stockholders of acceptance of the
Offer and adoption of the Merger Agreement, or shall have resolved to do
so; or (ii) entered into an agreement with a third party providing for the
acquisition or purchase of all or substantially all of the assets of, or
equity interest in, the Company by such third party; and
(j) the Offer shall not have been consummated by March 1, 1998.
The foregoing conditions are for the sole benefit of Parent and Purchaser
and may be asserted by Parent and Purchaser regardless of the circumstances
giving rise to such condition or may be waived by Parent or Purchaser in whole
at any time or in part from time to time in its reasonable discretion. The
failure by Parent or Purchaser at any time to exercise any of the foregoing
rights shall not be deemed a waiver of any such right and each such right shall
be deemed an ongoing right and may be asserted at any time and from time to
time. If the Offer is terminated pursuant to the foregoing provisions, all
tendered Shares not theretofore accepted for payment shall forthwith be returned
by the Depositary to the tendering stockholders.
16. CERTAIN REGULATORY AND LEGAL MATTERS
Except as set forth in this Section 16, neither Parent nor Purchaser is
aware of any approval or other action by any governmental or administrative
agency which would be required for the acquisition or ownership of Shares by
Purchaser as contemplated herein. Should any such approval or other action be
required, it will be sought, but Purchaser has no current intention to delay the
purchase of Shares tendered pursuant to the Offer pending the outcome of any
such matter, subject, however, to Purchaser's right to decline to purchase
Shares if the Minimum Condition has not been satisfied or if any of the Events
specified in Section 15 shall have occurred. There can be no assurance that any
such approval or other action, if needed, would be obtained or would be obtained
without conditions that Purchaser is not required to accept.
ANTITRUST. Under the provisions of the HSR Act applicable to the Offer,
the acquisition of Shares under the Offer may be consummated following the
expiration of a 15 calendar-day waiting period following the filing by Parent of
a Notification and Report Form with respect to the Offer, unless Parent receives
a request for additional information or documentary material from the Department
of Justice, Antitrust Division (the
21
"Antitrust Division") or the Federal Trade Commission ("FTC") or unless early
termination of the waiting period is granted. Purchaser made such a filing on
December 19, 1997. If, within the initial 15-day waiting period, either the
Antitrust Division or the FTC requests additional information or material from
Parent concerning the Offer, the waiting period will be extended to the tenth
calendar day after the date of substantial compliance by Parent with such
request. Complying with a request for additional information or material can
take a significant amount of time.
The Antitrust Division and the FTC frequently scrutinize the legality under
the antitrust laws of transactions such as Purchaser's proposed acquisition of
Shares pursuant to the Offer or the consummation of the Merger or seeking the
divestiture of Shares acquired by Purchaser or the divestiture of substantial
assets of the Company or its subsidiaries or Parent or its subsidiaries. Private
parties may also bring legal action under the antitrust laws under certain
circumstances. There can be no assurance that a challenge to the Offer on
antitrust grounds will not be made, or, if such a challenge is made, of the
result thereof.
If any applicable waiting period under the HSR Act has not expired or been
terminated prior to the Expiration Date, Purchaser will not be obligated to
proceed with the Offer or the purchase of any Shares not theretofore purchased
pursuant to the Offer. See Section 15.
STATE TAKEOVER LAWS. The Company is incorporated under the laws of the
State of Florida. The FBCA contains certain provisions relating to "affiliated
transactions" which purport to regulate, among other things, certain business
combinations, including mergers and consolidations, involving a Florida
corporation with any person who is the beneficial owner of more than 10 percent
of the outstanding voting shares of such corporation (an "Interested
Shareholder"). Under Section 607.0901 of the FBCA (the "Affiliated Transactions
Statute"), with certain exceptions, a Florida corporation shall not engage in
such a transaction with an Interested Shareholder unless the transaction is
approved by the holders of two-thirds of the voting shares other than the shares
owned by the Interested Shareholder. Such exceptions include transactions
approved by a majority of the corporation's directors who are not affiliated or
associated with the Interested Shareholder. At a special meeting held on
December 17, 1997, the Company's Board of Directors, none of whom are affiliated
or associated with the Purchaser or Parent, has unanimously approved the Merger
Agreement and the transactions contemplated thereby, including the Merger, and
determined that each of the Offer and Merger are fair to and in the best
interests of the holders of the Company's Shares. Accordingly, the Affiliated
Transaction Statute has been satisfied and is therefore inapplicable with
respect to the Parent and the Purchaser in connection with the Merger and the
transactions contemplated thereby, including the Offer.
The FBCA also contains provisions relating to acquisitions of "control
shares," which is defined as shares that entitle a person to exercise more than
specified proportions of the voting power of a Florida public corporation
(commencing with the acquisition of 20% or more of the voting shares of such
corporation). Section 607.0902 of the FBCA (the "Control Share Acquisitions
Statute") purports to limit the voting rights of control shares acquired in
certain types of acquisitions (a "control-share acquisition") unless the
acquisition of the control shares has been approved by the board of directors of
such corporation or certain other statutory conditions have been met. At a
special meeting held on December 17, 1997, the Company's Board of Directors has
unanimously approved the acquisition of the Shares pursuant to the Merger
Agreement (including the Offer and the Merger) the Tender and Option Agreements
and the Stock Option Agreement and, accordingly, the Control Share Acquisitions
Statute is inapplicable with respect to any such acquisition by the Parent and
Purchaser.
A number of other states throughout the United States have enacted takeover
statutes that purport, in varying degrees, to be applicable to attempts to
acquire securities of corporations that are incorporated or have assets,
shareholders, executive offices or places of business in such states. In Edgar
v. MITE Corp., the Supreme Court of the United States held that the Illinois
Business Takeover Act, which involved state securities laws that made the
takeover of certain corporations more difficult, imposed a substantial burden on
interstate commerce and therefor was unconstitutional. In CTS Corp. v. Dynamics
Corp. of America, however, the Supreme Court of the United States held that a
state may, as a matter of corporate law and, in particular, those laws
concerning corporate governance, constitutionality disqualify a potential
acquiror from voting on the affairs of a target corporation without prior
approval of the remaining shareholders, provided that such laws were applicable
only under certain conditions.
22
Based on information supplied by the Company and the Company's
representations and warranties contained in the Merger Agreement, the Purchaser
does not believe that, other than as set out above, any state takeover statutes
purport to apply to the offer or the Merger. Neither Purchaser nor Parent has
currently complied with any state takeover statute or regulation. Purchaser
reserves the right to challenge the applicability or validity of any state law
purportedly applicable to the Offer or the Merger and nothing in this Offer to
Purchase or any action taken in connection with the Offer or the Merger is
intended as a waiver of such right. If it is asserted that any state takeover
statute applicable to the Offer or the Merger and an appropriate court does not
determine that it is inapplicable or invalid as applies to the Offer or the
Merger, 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 for pay for Shares tendered pursuant to the Offer,
or be delayed in consummating the Offer or the Merger. In such case, the
Purchaser may not be obliged to accept payment or pay for any Shares tendered
pursuant to the Offer.
GOVERNMENT CONTRACTS. Certain contracts between the Company and the United
States government may require certain notices, approvals, consents or security
clearances in connection with the Offer and the Merger. Parent expects to take
such action as may be required in accordance with applicable law and the terms
of such government contracts. There can be no assurance that the Company will be
able to retain the benefits of any government contracts with respect to which
such notices, approvals, consents or security clearances may be required.
FOREIGN APPROVALS. Based on information supplied by the Company, Purchaser
does not believe that any foreign takeover statutes or similar regulatory
provisions apply to the Offer or the Merger and, therefore, neither Purchaser
nor Parent currently has complied with any such foreign takeover statute or
regulation. Purchaser reserves the right to challenge the applicability or
validity of any foreign law or regulation purportedly applicable to the Offer or
the Merger and nothing in this Offer to Purchase or any action taken in
connection with the Offer or the Merger is intended as a waiver of such right.
If it is asserted that any foreign takeover statute or regulation is applicable
to the Offer or the Merger and an appropriate court or other body does not
determine that it is inapplicable or invalid as applied to the Offer or the
Merger, Purchaser might be required to file certain information with, or to
receive approvals from, the relevant foreign authorities, and Purchaser might
not be able to accept for payment or pay for Shares tendered in the Offer, or be
delayed in consummating the Offer or the Merger. In such case, Purchaser may not
be obligated to accept for payment or pay for any Shares tendered pursuant to
the Offer.
17. FEES AND EXPENSES
Gerard Klauer Mattison & Co., Inc. is acting as the Dealer Manager in
connection with the Offer and is acting as exclusive financial advisor to Parent
with respect to Parent's proposed acquisition of the Company. Parent and
Purchaser have agreed to pay the Dealer Manager customary fees for such
services. Parent and Purchaser have also agreed to reimburse the Dealer Manager
for its reasonable out-of-pocket expenses, including the fees and expenses of
its counsel, in connection with its engagement, and have agreed to indemnify the
Dealer Manager against certain liabilities and expenses in connection with its
engagement, including liabilities under the federal securities laws.
Purchaser has retained Morrow & Co., Inc. as Information Agent, and First
Union National Bank as Depositary, in connection with the Offer. The Information
Agent and the Depositary each will receive reasonable and customary compensation
for their services hereunder and reimbursement for their reasonable
out-of-pocket expenses. The Information Agent may contact holders of Shares by
mail, telephone, facsimile, telegraph and personal interviews and may request
brokers, dealers, commercial banks, trust companies and other nominees to
forward materials relating to the Offer to beneficial owners of Shares. The
Information Agent and the Depositary will also be indemnified by Purchaser
against certain liabilities in connection with the Offer, including certain
liabilities under the federal securities laws. Neither the Information Agent nor
the Depositary has been retained to make solicitations or recommendations in
connection with the Offer.
Except as described herein, none of Purchaser or Parent or any officer,
director, stockholder, agent or other representative of Purchaser or Parent will
pay any fees or commissions to any broker, dealer or other person for soliciting
tenders of Shares pursuant to the Offer. Brokers, dealers, commercial banks,
trust
23
companies and other nominees will, upon request, be reimbursed by Purchaser for
customary mailing and handling expenses incurred by them in forwarding offering
materials to their customers.
18. MISCELLANEOUS
The Offer is not being made to, nor will tenders be accepted from or on
behalf of, holders of Shares residing in any jurisdiction in which the making or
acceptance thereof would not be in compliance with the securities, blue sky or
other laws of such jurisdiction. Purchaser is not aware of any jurisdiction in
which the making of the Offer is not in compliance with applicable law. If
Purchaser becomes aware of any jurisdiction in which the making of the Offer
would not be in compliance with applicable law, Purchaser will make a good faith
effort to comply with such law. If, after such good faith effort, Purchaser
cannot comply with such law, the Offer will not be made to, nor will tenders be
accepted from or on behalf of, holders of Shares residing in any such
jurisdiction. In any jurisdiction where the securities, blue sky or other laws
require the Offer to be made by a licensed broker or dealer, the Offer shall be
deemed to be made on behalf of Purchaser by the Dealer Manager or one or more
registered brokers or dealers licensed under the laws of such jurisdiction.
No person has been authorized to give any information or make any
representation on behalf of Purchaser or Parent other than as contained in this
offer to purchase or in the letter of transmittal and, if any such information
or representation is given or made, it should not be relied upon as having been
authorized.
Purchaser and Parent have filed with the Commission a Statement on Schedule
14D-1 pursuant to Section 14(d)(1) of the Exchange Act and Rule 14d-3
promulgated thereunder, furnishing certain additional information with respect
to the Offer, and may file amendments thereto. In addition, the Company has
filed with the Commission a Solicitation/Recommendation Statement on Schedule
14D-9 pursuant to Rule 14d-9 under the Exchange Act, setting forth the
recommendation of the Board with respect to the Offer and the reasons for such
recommendation and furnishing certain additional related information. The
Schedule 14D-9 is being mailed to stockholders of the Company herewith. The
Schedule 14D-1 and Schedule 14D-9 and any amendments thereto, including
exhibits, may be examined and copies may be obtained at the same places and in
the same manner as set forth with respect to the Company in Section 8 (except
that they will not be available at the regional offices of the Commission).
TEL-SAVE HOLDINGS, INC.
TSHCo, Inc.
December 22, 1997
24
ANNEX I
DIRECTORS AND EXECUTIVE OFFICERS
1. DIRECTORS AND EXECUTIVE OFFICERS OF PARENT.
The following table sets forth the name, business address 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. Each such person is a citizen of the United States of America and,
unless otherwise indicated below, the business address of each such person is
6805 Route 202, New Hope, Pennsylvania, 18938.
· Enlarge/Download Table
NAME AGE POSITION
----------------------------------- --- --------------------------------------------------
Daniel Borislow.................... 36 Chairman of the Board, Chief Executive Officer and
Director
Gary W. McCulla.................... 38 President and Director of Sales and Marketing and
Director
Emanuel J. DeMaio.................. 38 Chief Operations Officer and Director
George Farley...................... 59 Chief Financial Officer, Treasurer and Director
Edward B. Meyercord, III........... 32 Executive Vice President, Marketing and Corporate
Development
Mary Kennon........................ 38 Director of Customer Care and Human Relations
Aloysius T. Lawn, IV............... 38 General Counsel and Secretary
Kevin R. Kelly..................... 32 Controller
Harold First....................... 61 Director
Ronald R. Thomas................... 61 Director
Daniel Borislow. Mr. Borislow founded Parent's predecessor in 1989 and has
served as a director and as Chief Executive Officer of Parent since its
inception in 1995. Prior to founding Parent's predecessor, Mr. Borislow formed
and managed a cable construction company.
Gary W. McCulla. Mr. McCulla joined Parent's predecessor in March 1994 and
currently serves as Parent's President and Director of Sales and Marketing. In
1991, Mr. McCulla founded GNC and was its President until March 1994. GNC was a
privately-held independent marketing company and a partition of Parent's
predecessor. In March 1994, Parent's predecessor acquired certain assets of GNC.
Emanuel J. DeMaio. Mr. DeMaio joined Parent's predecessor in February 1992
and currently serves as Parent's Chief Operations Officer. From 1981 through
1992, Mr. DeMaio held various technical and managerial positions with AT&T.
George Farley. Mr. Farley became Chief Financial Officer and Treasurer of
Parent effective October 29, 1997. Mr. Farley is formerly Group Vice President
of Finance/Chief Financial Officer of Twin County Grocers, Inc. ("Twin County"),
a food distribution company. Prior to joining Twin County in September 1995, Mr.
Farley was a partner of BDO Seidman, LLP, an accounting firm, where he had
served as a partner since 1974.
Edward B. Meyercord, III. Mr. Meyercord joined Parent in September 1996 and
currently serves as Executive Vice President, Marketing and Corporate
Development. From 1993 until joining Parent, Mr. Meyercord worked in the
corporate finance department of Salomon Brothers, where he held various
positions, the most recent of which was Vice President. Prior to joining Salomon
Brothers, Mr. Meyercord worked in the corporate finance department at Paine
Webber Incorporated.
Mary Kennon. Ms. Kennon joined Parent's predecessor in October 1994 and
currently serves as Parent's Director of Customer Care and Human Resources. From
1984 through 1994, Ms. Kennon held various managerial positions with AT&T.
I-1
Aloysius T. Lawn, IV. Mr. Lawn joined Parent in January 1996 and currently
serves as General Counsel and Secretary. From 1985 through 1995, Mr. Lawn was an
attorney in private practice.
Kevin R. Kelly. Mr. Kelly joined Parent's predecessor in April 1994 and
currently serves as Parent's Controller. From 1987 to 1994, Mr. Kelly held
various managerial positions with a major public accounting firm. Mr. Kelly is a
certified public accountant.
Harold First. Mr. First is a certified public accountant and is currently a
Financial Consultant. Mr. First served as Chief Financial Officer of Icahn
Holdings Corporation and related entities from December 1990 through December
1992. Mr. First currently serves as a director of Cadus Pharmaceutical
Corporation, Marvel Entertainment Group, Inc., Pansaco, Inc. and Toy Biz Inc.
Mr. First has served as a director of Parent since 1995. Mr. First's business
address is 345 Park Avenue, 35th Floor, New York, New York, 10150.
Ronald R. Thomas. Mr. Thomas currently serves as Executive Vice President
of Crown Cork and Seal Company, Inc., a manufacturer of packaging products,
where he has been employed since 1955. Mr. Thomas has served as a director of
Parent since 1995. Mr. Thomas' business address is 9300 Ashton Road,
Philadelphia, Pennsylvania 19136.
2. DIRECTORS AND EXECUTIVE OFFICERS OF PURCHASER.
The following table sets forth the name, business address 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. Each such person is a citizen of the United States of America, and
the business address of each such person is 6805 Route 202, New Hope,
Pennsylvania 18938.
· Enlarge/Download Table
NAME AGE POSITION
----------------------------------- --- --------------------------------------------------
Daniel Borislow.................... 36 Chairman, Chief Executive Officer and Director
Gary W. McCulla.................... 38 President and Director
Emanual J. DeMaio.................. 38 Chief Operations Officer and Director
Edward B. Meyercord, III........... 32 Vice President
Aloysius T. Lawn, IV............... 38 Vice President and Secretary
Daniel Borislow. Mr. Borislow founded Parent's predecessor in 1989 and has
served as a director and as Chief Executive Officer of Parent since its
inception in 1995. Prior to founding Parent's predecessor, Mr. Borislow formed
and managed a cable construction company.
Gary W. McCulla. Mr. McCulla joined Parent's predecessor in March 1994 and
currently serves as Parent's President and Director of Sales and Marketing. In
1991, Mr. McCulla founded GNC and was its President until March 1994. GNC was a
privately-held independent marketing company and a partition of Parent's
predecessor. In March 1994, Parent's predecessor acquired certain assets of GNC.
Emanuel J. DeMaio. Mr. DeMaio joined Parent's predecessor in February 1992
and currently serves as Parent's Chief Operations Officer. From 1981 through
1992, Mr. DeMaio held various technical and managerial positions with AT&T.
Edward B. Meyercord, III. Mr. Meyercord joined Parent in September 1996 and
currently serves as Executive Vice President, Marketing and Corporate
Development. From 1993 until joining Parent, Mr. Meyercord worked in the
corporate finance department of Salomon Brothers, where he held various
positions, the most recent of which was Vice President. Prior to joining Salomon
Brothers, Mr. Meyercord worked in the corporate finance department at
PaineWebber Incorporated.
Aloysius T. Lawn, IV. Mr. Lawn joined Parent in January 1996 and currently
serves as General Counsel and Secretary. From 1985 through 1995 Mr. Lawn was an
attorney in private practice.
I-2
Manually signed facsimile copies of the Letter of Transmittal 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 such stockholder's broker, dealer, bank, trust company or other
nominee to the Depositary at its address set forth below.
The Depositary for the Offer is:
FIRST UNION NATIONAL BANK
· Download Table
By Facsimile:
By Hand, Mail By Overnight Courier 704-590-7628
1525 W.T. Harris Blvd. 1525 W.T. Harris Blvd. To Confirm:
Charlotte, NC 28288-1153 Charlotte, NC 28262 704-590-7408
Attn: Reorg Dept. Attn: Reorg Dept. Toll Free:
3C3-1153 3C3-1152 1-800-829-8432
Questions and requests for assistance or for additional copies of this
Offer to Purchase, the Letter of Transmittal and the Notice of Guaranteed
Delivery may be directed to the Information Agent at its telephone number and
location listed below. You may also contact your broker, dealer, bank, trust
company or other nominee for assistance concerning the Offer.
The Information Agent for the Offer is:
MORROW & CO., INC.
909 THIRD AVENUE
NEW YORK, NEW YORK 10019
TOLL FREE: (800) 566-9061
Banks and Brokerage Firms Please Call:
(800) 662-5200
The Dealer Manager for the Offer is:
GERARD KLAUER MATTISON & CO., INC.
529 Fifth Avenue
New York, New York 10017
(212) 885-4143
Dates Referenced Herein and Documents Incorporated By Reference
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