THE SOLICITATION OR RECOMMENDATION. (a) RECOMMENDATION OF THE BOARD OF DIRECTORS. On September 13, 2000, the Board of Directors of the Company (the "Board"), by the unanimous vote of all directors present, acting on the unanimous recommendation of a Special Committee of directors consisting of the four independent directors of the Company, (i) determined that the Merger Agreement and the transactions contemplated thereby, including the Offer, are fair to, and in the best interests of, the Company and the public stockholders of the Company and (ii) approved and adopted the Merger Agreement and the transactions contemplated thereby, including the Offer. The Board recommends to the Company's public stockholders that they accept the Offer and tender their Shares pursuant to the Offer. A letter to the Company's stockholders communicating the recommendation of the Board, press releases by Parent and the Company announcing the execution of the Merger Agreement, and a joint press release by Parent and the Company announcing the commencement of the Offer are filed herewith as Exhibits (a)(7), (a)(4), (a)(3) and (a)(5) hereto, respectively, and are incorporated herein by reference in their entirety. (b) BACKGROUND OF THE OFFER; CONTACTS WITH PARENT; REASONS FOR RECOMMENDATION. BACKGROUND OF THE OFFER In the Fall of 1998, Parent retained Takenaka & Company LLC ("Takenaka") to conduct a strategic review of its position in the image information systems market. As a result of such review, Parent began considering a strategic partnership with or acquisition of a U.S. company in that market. In November 1998, the Company engaged ▇▇▇▇▇▇▇▇-▇▇▇▇▇▇▇▇ to render financial advisory services to the Company concerning proposed acquisitions by the Company of QMS Europe B.V. and QMS Australia Pty. Ltd. (collectively, the "Foreign Subsidiaries"), which acquisitions were being considered by the Company with a view to enhancing the Company's strategic and financial positions. In December 1998, two members of the Company's Board of Directors (the "Board") were contacted by a representative of a corporation (the "Other Bidder") regarding a possible transaction in which the Other Bidder would acquire the Company. On February 17, 1999, the Board met and, following substantial discussion, approved the proposed transactions pursuant to which the Company would acquire the Foreign Subsidiaries. It was determined by the Board that it would be in the best interests of the Company to consider various methods of financing the Foreign Subsidiaries acquisitions and achieving efficient structures for replacing existing indebtedness of the Company. During February and early March, 1999, the Company engaged in a number of discussions and exchanges with the Other Bidder with respect to the potential acquisition of the Company by the Other Bidder. In February 1999, Parent decided to focus its efforts on the Company. In early March, Parent requested Takenaka to contact the Company to ascertain its interest in pursuing an alliance with Parent. On March 18, 1999, the Company and Parent executed a confidentiality agreement. On the same day, representatives of Takenaka met with ▇▇. ▇▇▇▇▇▇ ▇▇▇▇▇▇▇, President and Chief Executive Officer of the Company, and other senior executives of the Company in Mobile, Alabama to discuss a potential strategic partnership or other business combination between Parent and the Company. On March 19, 1999, representatives of Parent initiated a preliminary due diligence review of the Company. In early April 1999, ▇▇. ▇▇▇▇▇▇▇ and another executive of the Company met with representatives of Parent and Takenaka in Tokyo and Osaka, Japan, to provide information on the Company's plans to reacquire the Foreign Subsidiaries and engage in further discussion of a potential transaction. As a result of the meeting, Parent and the Company agreed to continue discussions and the due diligence review by Parent. On April 13, 1999, Parent sent the Company a letter confirming its interest in a potential transaction and requesting that the Company allow Parent to conduct certain additional due diligence. Throughout this period, the Company was also in discussions with the Other Bidder to ascertain its interest in pursuing a transaction with the Company. However, the Other Bidder was unwilling to proceed with a transaction with the Company other than at price levels of $4 to $5 per Share, which was significantly lower than the price levels discussed with Parent. On April 21, 1999, representatives of Parent met with representatives of the Company in Mobile, Alabama to conduct further due diligence. On April 28, 1999 the Company sent a letter to Parent to ascertain Parent's interest in a transaction whereby Parent would invest in and loan money to the Company to help the Company finance its acquisition of the Foreign Subsidiaries. Subsequently, Parent indicated it would be interested in such a transaction with certain modifications. Intensive discussions took place between Parent, the Company and their respective financial and legal representatives during the following weeks. The parties met in Osaka, Japan on May 11, 1999 and continued to negotiate throughout the week. On May 17, 1999, Parent and the Company entered into a letter agreement whereby (i) Parent agreed to advance the Company $5 million in respect of certain payments and (ii) the Company agreed to negotiate exclusively with Parent for a period of 30 days concerning the potential transaction between the Company and Parent. During the period from May 24 through June 7, 1999, Parent continued its due diligence review of the Company and, along with its legal representatives, and Takenaka, negotiated the specific terms of a stock purchase agreement and a loan agreement whereby Parent would (i) acquire a majority equity interest in the Company through the purchase of newly issued Shares and a tender offer for a certain number of currently outstanding Shares and (ii) loan the Company money to help finance the acquisition of the Foreign Subsidiaries.
Appears in 1 contract
THE SOLICITATION OR RECOMMENDATION. (a) RECOMMENDATION OF THE BOARD OF DIRECTORS. On September 13, 2000, the Board of Directors of the Company (the "Board"), by the unanimous vote of all directors present, acting on the unanimous recommendation of a Recommendation The Special Committee of directors consisting of the four independent directors of the Company, unanimously (i) determined that the Offer, the Merger and the Merger Agreement and the transactions contemplated thereby, including the Offer, are fair from a financial point of view to, and in the best interests of, the Company and the public stockholders unaffiliated shareholders of the Company and Company, (ii) approved and adopted the Offer, the Merger, the Merger Agreement and the transactions contemplated thereby, including Support and Exchange Agreement and (iii) recommended that the Offer. The Board recommends to shareholders of the Company's public stockholders that they Company accept the Offer and tender their Shares shares pursuant to the Offerthereto. A letter to the Company's stockholders communicating The Board of Directors, acting in part upon the recommendation of the BoardSpecial Committee, press releases by Parent has unanimously (i) determined that the Offer, the Merger and the Company announcing Merger Agreement are fair from a financial point of view to, and in the execution best interests of, the shareholders of the Company, (ii) approved the Offer, the Merger, the Merger Agreement, and a joint press release by Parent Agreement and the Company announcing Support and Exchange Agreement and (iii) recommended that the commencement shareholders of the Company accept the Offer are filed herewith as Exhibits (a)(7)and tender their shares pursuant thereto. THE SPECIAL COMMITTEE AND THE BOARD OF DIRECTORS, (a)(4), (a)(3) and (a)(5) hereto, respectively, and are incorporated herein by reference in their entirety.
(b) BACKGROUND BASED IN PART UPON THE RECOMMENDATION OF THE OFFER; CONTACTS WITH PARENT; REASONS FOR RECOMMENDATION. BACKGROUND SPECIAL COMMITTEE, UNANIMOUSLY RECOMMEND THAT ALL HOLDERS OF THE SHARES ACCEPT THE OFFER In AND TENDER THEIR SHARES PURSUANT TO THE OFFER. The recommendation of the Fall Special Committee and the Board of 1998Directors is based in part on the oral opinion (which was subsequently confirmed in writing) delivered by Houlihan, Parent retained Takenaka & Company LLC ("Takenaka") to conduct a strategic review of its position in the image information systems market. As a result of such reviewLokey, Parent began considering a strategic partnership with or acquisition of a U.S. company in that market. In November 1998, the Company engaged ▇▇▇▇▇▇▇▇-▇▇▇▇▇▇▇▇ to render financial advisory services to the Company concerning proposed acquisitions by the Company of QMS Europe B.V. and QMS Australia Pty. Ltd. & Zukin Financial Advisors, Inc. (collectively, the "Foreign Subsidiaries"), which acquisitions were being considered by the Company with a view to enhancing the Company's strategic and financial positions. In December 1998, two members of the Company's Board of Directors (the "Board") were contacted by a representative of a corporation (the "Other Bidder") regarding a possible transaction in which the Other Bidder would acquire the Company. On February 17, 1999, the Board met and, following substantial discussion, approved the proposed transactions pursuant to which the Company would acquire the Foreign Subsidiaries. It was determined by the Board that it would be in the best interests of the Company to consider various methods of financing the Foreign Subsidiaries acquisitions and achieving efficient structures for replacing existing indebtedness of the Company. During February and early March, 1999, the Company engaged in a number of discussions and exchanges with the Other Bidder with respect to the potential acquisition of the Company by the Other Bidder. In February 1999, Parent decided to focus its efforts on the Company. In early March, Parent requested Takenaka to contact the Company to ascertain its interest in pursuing an alliance with Parent. On March 18, 1999, the Company and Parent executed a confidentiality agreement. On the same day, representatives of Takenaka met with ▇▇. ▇▇▇▇▇▇ ▇▇▇▇▇") to the Special Committee of the Board of Directors on May 30, 2002, to the effect that, as of such date, and based on and subject to the matters described in the opinion, the price per Share of $12.00 to be received by the unaffiliated holders of the Shares in the Offer and the Merger was fair to such holders, from a financial point of view. The full text of the written opinion, which sets forth the assumptions made, procedures followed, matters considered and limitations on the review undertaken by ▇▇▇▇▇▇▇▇ ▇▇▇▇▇ in rendering its opinion, President is attached as Annex A to this Statement.
(i) Background of the Offer and Chief Executive Officer the Merger In the fall of 1999, following a significant decline in the Company's stock price, the Board of Directors requested advice from a national investment banking firm on strategic alternatives available to the Company to improve shareholder value. At a meeting of the Board of Directors in December 1999, the investment banking firm presented its analysis of and recommendations with respect to various strategic alternatives, including the possibility of an acquisition of the Company. At the same meeting, ▇▇. ▇▇▇▇▇▇▇▇▇ advised the Board that, following the steep decline in the Company's stock price, the Company had received several unsolicited inquiries from financial buyers concerning a possible acquisition of the Company, and other senior executives also exploring management's interest in participating in any such transaction. The Board of Directors determined, based on the advice of the Company's outside corporate counsel, that it would be appropriate under the circumstances to appoint a special committee of independent directors to evaluate and negotiate on behalf of the Company in Mobileany such acquisition proposals that may be received from one or more prospective buyers. Accordingly, Alabama the Board of Directors appointed ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇, ▇▇▇▇
▇. ▇▇▇▇ (Chairman), ▇▇▇▇▇ ▇. ▇▇▇▇▇▇ and ▇▇▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ to discuss serve on the Special Committee, and authorized the Special Committee to retain its own legal counsel and financial advisors. During the period from January to September 2000, the Company continued to receive unsolicited inquiries from various strategic and financial buyers concerning a potential strategic partnership possible acquisition or other business combination between Parent and involving the Company. The Company had informal discussions with each of these prospective buyers to determine their level of interest, their ability (financially and otherwise) to complete a transaction, and their business plan for the Company. After signing confidentiality agreements, the Company allowed those prospective buyers who appeared to be credible to conduct due diligence on the Company and to explore financing alternatives for a possible transaction. Each of these prospective buyers, however, ultimately declined to make a formal acquisition proposal to the Company. In September 2000, all discussions with prospective purchasers had ceased, and the Board of Directors determined to disband the Special Committee. In November 2000, the Company received an unsolicited inquiry from another prospective buyer, who expressed interest in exploring a possible acquisition transaction that would involve the Company's management. In December 2000, the Board of Directors reconstituted the Special Committee with the same members (Messrs. Levy (Chairman), ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇ and ▇▇▇▇▇▇▇), in anticipation of receiving a formal proposal from this prospective buyer. The prospective buyer conducted due diligence on the Company and explored financing alternatives for several months. The Company and the Special Committee continued discussions with the prospective buyer over the same period, but were unable to reach an agreement in principle with the prospective buyer on price and certain other material terms. These discussions ceased in September 2001, due in part to the terrorist attacks that occurred on September 11th and the prospective buyer's perception of the potential impact of such events on the Company's business and U.S. financial markets generally. In November 2001, the Company received an unsolicited inquiry from another prospective financial buyer, who expressed interest in exploring a possible acquisition transaction. In December 2001, the Company entered into a confidentiality agreement with this prospective buyer. During January and February 2002, this prospective buyer conducted its preliminary due diligence examination of the Company, and explored various financing alternatives for a possible transaction. On March 19February 22, 19992002, representatives of Parent initiated the prospective buyer met with the Special Committee and its financial advisors and legal counsel, at which meeting the participants discussed in general terms (excluding price) a preliminary possible transaction in which the prospective buyer would join with certain members of the Company's management to acquire all of the outstanding Shares of the Company. Shortly after this meeting, the prospective buyer indicated to ▇▇. ▇▇▇▇, Chairman of the Special Committee, that the prospective buyer would be interested in making a formal proposal to the Special Committee after completing some additional financial due diligence on the Company, and conditioned upon (among other things) the Company agreeing to negotiate exclusively with the buyer for a designated period of time and to reimburse certain of the buyer's expenses relating to a possible transaction. In anticipation of receiving a proposal from this prospective buyer, the Special Committee retained ▇▇▇▇▇▇▇▇ ▇▇▇▇▇ to render advice regarding the value of the Company and, if requested, to render an opinion to the Special Committee and the Board of Directors as to the fairness of any such proposal to the shareholders of the Company from a financial point of view. Between February 22 and March 7, 2002, ▇▇. ▇▇▇▇ and the Special Committee's legal counsel had numerous discussions with the prospective buyer and its legal counsel concerning the conditions under which the prospective buyer would be willing to submit a formal proposal to the Special Committee. During this period, ▇▇. ▇▇▇▇ provided the other members of the Special Committee with frequent updates on the status of these discussions and the prospects for receiving a formal acquisition proposal from the prospective buyer. On March 8, 2002, the prospective buyer submitted a proposal to the Special Committee (the "March Proposal") to acquire all of the outstanding Shares of the Company for an aggregate purchase price in the range of $224 million to $231 million (or between approximately $10.00 and $10.50 per share) on a debt-free, cash free basis. The proposed transaction would be structured as a tender offer, to be followed (if necessary) by a merger of the Company with the buyer, and would provide an opportunity for certain members of the Company's senior management to participate by exchanging their equity in the Company for up to approximately 40% of the equity in a new entity to be formed by the buyer to consummate the transaction. The proposal was accompanied by the buyer's proposed form of merger agreement, which included (among other provisions) a financing condition and a provision for a termination fee in the event that the Company was to terminate the agreement to accept another proposal. The proposal was also accompanied by a commitment letter to evidence the buyer's ability to obtain debt financing to fund a portion of the offer. Finally, to induce the prospective buyer to enter into negotiations for a definitive agreement and to continue its due diligence investigation, the prospective buyer sought an agreement from the Company to (among other things) maintain the confidentiality of the proposal, negotiate exclusively with the buyer for a designated period of time, and reimburse certain of the buyer's expenses relating to a possible transaction. On March 12, 2002, the Special Committee met with its financial advisors and legal counsel for the purpose of evaluating the March Proposal. At this meeting, the Special Committee received a presentation from ▇▇▇▇▇▇▇▇ ▇▇▇▇▇ regarding the value of the March Proposal to the Company's shareholders. The Special Committee also received a presentation from its legal counsel as to the provisions of the proposed merger agreement and the other terms and conditions of the March Proposal. After discussion among the members of the Special Committee and with its financial and legal advisors, the Special Committee determined that the price range reflected in the March Proposal was inadequate, and that the terms and conditions of the proposal generally were not in the best interests of the Company's shareholders. Accordingly, the Special Committee unanimously voted to reject the March Proposal. ▇▇. ▇▇▇▇ communicated the Special Committee's decision to a representative of the prospective buyer following the meeting, and indicated that the Special Committee would be willing to consider a revised proposal at a higher price should the prospective buyer wish to submit one. In the weeks following the March 12 meeting, representatives of the Special Committee and the Company had informal discussions with the prospective buyer about possible alternative transactions or investments in the Company. However, these discussions terminated in late March 2002, without a revised acquisition or investment proposal being formally submitted by the prospective buyer. In late March 2002, certain members of the Company's senior management and representatives of Investcorp began to discuss various alternative transactions involving the Company. Representatives of Investcorp had initially contacted the Company in February 2002, but due to ongoing discussions with other potentially interested purchasers, the Company indicated that it was not interested in pursuing a transaction with Investcorp at that time. On March 26, 2002, the Company and Investcorp International Inc., an affiliate of Investcorp, entered into a confidentiality agreement. Commencing in early April ▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ conducted its due diligence review of the CompanyCompany to determine whether Investcorp would proceed with further discussions toward a possible going-private transaction and if so, to determine possible transaction structures. In early On April 199925, 2002, ▇▇. ▇▇▇▇▇▇▇▇▇ resigned from the Special Committee, citing the need for him to devote more of his attention to the sale of ▇▇▇▇▇▇'▇ Restaurant Group, Inc., of which he is currently the Chairman and Chief Executive Officer. On May 1, 2002, representatives of Investcorp met with ▇▇. ▇▇▇▇ and ▇▇. ▇▇▇▇▇▇▇ and another executive of the Company met with representatives of Parent and Takenaka in Tokyo and Osaka, Japan, to provide information on the Company's plans to reacquire the Foreign Subsidiaries and engage in further discussion of a potential transaction. As a result of the meeting, Parent and the Company agreed to continue discussions and the due diligence review by Parent. On April 13, 1999, Parent sent the Company delivered a letter confirming its interest in a potential transaction and requesting that the Company allow Parent to conduct certain additional due diligence. Throughout this period, the Company was also in discussions with the Other Bidder to ascertain its expressing interest in pursuing a transaction in the range of $11.00 to $12.00 per share in cash, subject to (among other conditions) completion of further due diligence on the Company and obtaining financing commitments for such a transaction. From May 6, 2002 until May 23, 2002, Investcorp, together with its legal and financial advisors, continued its diligence review of the Company's business and operations. However, the Other Bidder was unwilling Representatives of Investcorp also continued to proceed meet during this time period with a transaction with members of the Company other than at price levels senior management to discuss the forms of $4 to $5 per Share, which was significantly lower than the price levels discussed with Parenttransaction agreements and management compensation arrangements. On April 21May 23, 19992002, Investcorp's legal advisors delivered a proposed form of Merger Agreement and a proposed form of Support and Exchange Agreement to the Company's counsel and to counsel to the Special Committee. On May 24, 2002, representatives of Parent met Investcorp held a telephone conference with representatives members of the Company in MobileSpecial Committee, Alabama to conduct further due diligence. On April 28, 1999 and orally indicated a proposed purchase price for the Company sent a letter to Parent to ascertain ParentCompany's interest in a transaction whereby Parent would invest in and loan money to the Company to help the Company finance its acquisition Shares of the Foreign Subsidiaries. Subsequently, Parent indicated it would be interested in such a transaction with certain modifications. Intensive discussions took place between Parent, the Company and their respective financial and legal representatives during the following weeks$11.50 per share. The parties met in OsakaInvestcorp representatives confirmed that the offer would not be subject to a financing contingency, Japan on May 11, 1999 and continued that they expected to negotiate throughout secure financing commitments prior to signing the week. On May 17, 1999, Parent and the Company entered into a letter agreement whereby (i) Parent agreed to advance the Company $5 million in respect of certain payments and (ii) the Company agreed to negotiate exclusively with Parent for a period of 30 days concerning the potential transaction between the Company and ParentMerger Agreement. During the period from May 24 through June 7May 30, 19992002, Parent continued counsel for the Special Committee and counsel for the Company negotiated the terms of the Merger Agreement and related documents with counsel for Investcorp. Counsel also discussed and confirmed the need for Investcorp to set the Minimum Tender Condition at no less than 80% of the outstanding Shares to qualify for certain tax treatment under United States tax laws. During this period, ▇▇. ▇▇▇▇ frequently apprised the other members of the Special Committee of the status of these negotiations. On May 28, 2002, ▇▇. ▇▇▇▇ contacted Investcorp and indicated that, based in part on preliminary advice from the Special Committee's financial advisor, the proposed price of $11.50 per share was inadequate for the Special Committee to recommend the transaction to the Company's Board of Directors. ▇▇. ▇▇▇▇ also objected to Investcorp's proposal of a 3.5% termination fee in the event the Company opted to terminate the Merger Agreement to accept a superior proposal. Later in the day on May 28, Investcorp contacted ▇▇. ▇▇▇▇ and indicated that it would increase its due diligence review proposal to $11.75 per share. On May 29, 2002, ▇▇. ▇▇▇▇ and ▇▇. ▇▇▇▇▇▇▇ each contacted Investcorp to indicate that the $11.75 price was still inadequate, and that the 3.5% termination fee was also unacceptable. Later on May 29, Investcorp notified ▇▇. ▇▇▇▇ that it would increase the offer price to $12.00 per share, and reduce the termination fee to 3% of the equity value of the proposed transaction. On May 30, 2002, the Special Committee met with its financial and legal advisors to consider the proposed transaction, the Merger Agreement and the related agreements. ▇▇. ▇▇▇▇ and the Special Committee's legal counsel reviewed the history of the negotiations with Investcorp, and counsel summarized for the Special Committee the principal terms of the Merger Agreement and related agreements. Counsel also summarized the terms of the Support and Exchange Agreement, the Stockholder Agreement and other material agreements in which certain of the Company's directors and executive officers had a personal interest. ▇▇▇▇▇▇▇▇ ▇▇▇▇▇ provided the Special Committee with a financial analysis of the proposed transaction and rendered its verbal opinion (subsequently confirmed in writing) to the Special Committee to the effect that, as of the date of such opinion, and on the basis of its analysis and subject to the qualifications, assumptions and limitations set forth in its opinion, the consideration per share to be received by the public shareholders of the Company and, along in the Offer and the Merger was fair to them from a financial point of view. The Special Committee also discussed with its legal representativesadvisors the conditions to the Offer and the financing commitment letters delivered by Parent and Purchaser. Following discussion among the members of the Special Committee, and Takenakabased in part on the opinion of ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, negotiated the specific terms of a stock purchase agreement and a loan agreement whereby Parent would Special Committee unanimously (i) acquire determined that the Offer, the Merger and the Merger Agreement are fair from a majority equity interest financial point of view to, and in the Company through best interests of, the purchase of newly issued Shares and a tender offer for a certain number of currently outstanding Shares and (ii) loan the Company money to help finance the acquisition of the Foreign Subsidiaries.una
Appears in 1 contract
Sources: Schedule 14d 9