EXHIBIT (a)(1)(A)
▇▇▇▇▇▇▇ HOMES, INC.
OFFER TO PURCHASE OPTIONS
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THE OFFER AND WITHDRAWAL RIGHTS EXPIRE AT
5:00 P.M., EASTERN DAYLIGHT TIME, ON ____________, 2003
UNLESS THE OFFER IS EXTENDED
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In connection with the Agreement and Plan of Merger, dated as of April
1, 2003, by and among ▇▇▇▇▇▇▇ Homes, Inc., Berkshire Hathaway Inc. and B Merger
Sub Inc., a wholly owned subsidiary of Berkshire ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ Homes is
offering to purchase for cancellation certain outstanding options to purchase
shares of our common stock, $.10 par value per share, in exchange for a cash
payment, as described below. The offer is limited to outstanding vested and
unvested options granted under our 1991 Employee Stock Incentive Plan, 1994
Directors' Equity Plan and 1997 Employee Stock Incentive Plan and outstanding
vested options granted under our 1996 Outside Directors Equity Plan ("eligible
options").
We are making this offer to purchase eligible options upon the terms
and subject to the conditions set forth in this Offer to Purchase and in the
related Election to Tender Eligible Options form, which together, as they may
be amended or supplemented from time to time, constitute the "offer." The offer
is voluntary, and you may choose to keep your eligible options on their current
terms. IF YOU CHOOSE TO PARTICIPATE IN THE OFFER, HOWEVER, YOU MUST TENDER ALL
OF YOUR ELIGIBLE OPTIONS. WE WILL NOT ACCEPT A PARTIAL TENDER OF YOUR ELIGIBLE
OPTIONS.
All eligible options tendered and accepted by us pursuant to the offer
will be purchased and cancelled. The amount of the cash payment you will
receive in exchange for the eligible options that you elect to tender that are
purchased and cancelled by us will be determined as set forth in the table
below (which will be reduced by tax withholding) on a per option basis:
NUMBER OF CASH PAYMENT
GRANT DATE EXERCISE PRICE ELIGIBLE OPTIONS PER ELIGIBLE OPTION(1) TOTAL
------------ ================= ================= ======================== ============
11/10/93 (vested) $ 7.22 108,000 $ 5.28 $ 570,240.00
11/10/93 (unvested) 7.22 3,050 3.70263 11,293.02
1/03/94 7.22 20,366 5.28 107,532.48
2/09/94 7.22 17,471 5.28 92,246.88
11/09/94 (vested) 7.22 245,072 5.28 1,293,980.16
11/09/94 (unvested) 7.22 8,540 4.20870 35,942.30
7/01/94 7.53 12,200 3.72318 45,422.80
7/01/93 7.54 12,200 4.96 60,512.00
7/02/97 8.19 170,283 4.77769 813,559.39
12/08/93 8.27 5,953 4.23 25,181.19
5/11/94 8.29 5,490 4.21 23,112.90
7/03/00 8.38 87,700 5.36541 470,546.46
7/03/95 8.51 139,568 3.82586 533,967.63
11/01/00 9.31 566,675 4.14480 2,348,754.54
10/27/99 9.38 456,100 3.63089 1,656,048.93
11/14/96 (vested) 10.32 243,103 2.18 529,964.54
11/14/96 (unvested) 10.32 14,058 1.76681 24,837.81
10/30/02 11.19 778,750 4.20703 3,276,244.61
7/01/97 11.50 31,250 3.6677l 114,615.94
7/01/99 11.88 68,300 4.15245 283,612.34
11/12/98 11.90 738,055 2.10245 1,551,723.73
11/12/97 12.60 382,501 0.83540 319,541.34
7/01/96 12.80 22,649 2.86583 64,908.18
10/30/01 13.55 923,050 3.30030 3,046,341.91
11/08/95 13.70 295,334 2.28863 675,910.26
1/01/99 13.81 280,000 1.64012 459,233.60
7/01/02 15.28 134,500 4.03075 542,135.88
7/02/01 15.65 90,500 3.49858 316,621.49
7/01/98 15.75 67,750 3.03030 205,302.83
TOTAL 5,928,468 $19,499,315.14
-------------------
(1) We will round to the nearest whole cent when making the cash payments.
Subject to the terms and conditions of the offer, we will pay you the
cash payment for tendered eligible options promptly upon the closing of the
offer, when we purchase and cancel eligible options accepted in the offer. The
aggregate cash payment that you receive will represent taxable income to you,
subject to tax withholdings as explained in this Offer to Purchase.
THE OFFER IS CONDITIONED UPON, AMONG OTHER THINGS, (1) AT LEAST 949
OPTION HOLDERS HAVING EXERCISED OR VALIDLY TENDERED AND NOT WITHDRAWN BEFORE
5:00 P.M., EASTERN DAYLIGHT TIME, ON _____________, 2003, ALL OF THEIR ELIGIBLE
OPTIONS AND (2) THE SUM OF (A) VALIDLY TENDERED AND NOT WITHDRAWN ELIGIBLE
OPTIONS PLUS (B) EXERCISED ELIGIBLE OPTIONS, IN EACH CASE BEFORE 5:00 P.M.,
EASTERN DAYLIGHT TIME, ON ______________, 2003, BEING NOT LESS THAN 5,678,468
ELIGIBLE OPTIONS. IN ADDITION, THE OFFER IS CONDITIONED UPON THE MERGER
AGREEMENT NOT HAVING BEEN TERMINATED BEFORE 5:00 P.M., EASTERN DAYLIGHT TIME,
ON _______________, 2003. IN EACH CASE, WE MAY EXTEND THIS DATE AS DESCRIBED IN
THIS OFFER TO PURCHASE. THE OFFER IS SUBJECT TO A NUMBER OF OTHER CONDITIONS
THAT WE DESCRIBE IN SECTION 8 OF THIS OFFER TO PURCHASE.
ALTHOUGH OUR BOARD OF DIRECTORS HAS UNANIMOUSLY APPROVED THE MAKING OF
THE OFFER, NEITHER WE NOR OUR BOARD OF DIRECTORS MAKES ANY RECOMMENDATION AS TO
WHETHER YOU SHOULD TENDER OR REFRAIN FROM TENDERING YOUR ELIGIBLE OPTIONS. YOU
MUST MAKE YOUR OWN DECISION WHETHER TO TENDER YOUR ELIGIBLE OPTIONS. OUR BOARD
OF DIRECTORS AND OUR EXECUTIVE OFFICERS ARE ELIGIBLE TO PARTICIPATE IN THE
OFFER ON THE SAME BASIS AS ALL OTHER HOLDERS OF ELIGIBLE OPTIONS AND THEY HAVE
INDICATED THAT THEY WILL TENDER ALL OF THEIR ELIGIBLE OPTIONS IN THE OFFER.
You should direct questions about the offer, or requests for
assistance or for additional copies of this Offer to Purchase or the election
form, to ▇▇▇▇▇▇▇ Homes, by e-mail at ▇▇▇▇▇▇▇▇▇▇▇▇@▇▇▇▇▇▇▇.▇▇▇, by telephone at
(▇▇▇) ▇▇▇-▇▇▇▇ or by mail to ▇▇▇▇▇▇▇ Homes, Inc., ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Secretary.
___________________, 2003
IMPORTANT
If you elect to tender your eligible options, you must complete and
sign the election form accompanying this Offer to Purchase in accordance with
its instructions, and deliver it (or a facsimile thereof), together with all
other documents required by the election form, to:
▇▇▇▇▇▇▇ Homes, Inc.
▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Secretary
▇▇▇▇▇▇▇▇▇: (▇▇▇) ▇▇▇-▇▇▇▇
WE HAVE NOT AUTHORIZED ANY PERSON TO MAKE ANY RECOMMENDATION ON OUR
BEHALF AS TO WHETHER YOU SHOULD TENDER OR REFRAIN FROM TENDERING YOUR ELIGIBLE
OPTIONS PURSUANT TO THE OFFER. YOU SHOULD CONSIDER ONLY THE INFORMATION
CONTAINED IN THE OFFER OR TO WHICH WE HAVE REFERRED YOU. WE HAVE NOT AUTHORIZED
ANYONE TO GIVE YOU ANY INFORMATION OR TO MAKE ANY REPRESENTATION IN CONNECTION
WITH THE OFFER OTHER THAN THE INFORMATION AND REPRESENTATIONS CONTAINED IN THE
OFFER. IF ANYONE MAKES ANY RECOMMENDATION OR REPRESENTATION TO YOU OR GIVES YOU
ANY INFORMATION, YOU MUST NOT RELY UPON THAT RECOMMENDATION, REPRESENTATION OR
INFORMATION AS HAVING BEEN AUTHORIZED BY US.
THE OFFER HAS NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION, WHICH WE REFER TO AS THE "SEC" IN THIS OFFER TO PURCHASE,
OR ANY STATE SECURITIES COMMISSION, NOR HAS THE SEC OR ANY STATE SECURITIES
COMMISSION PASSED UPON THE MERITS OR FAIRNESS OF THE OFFER OR THE ACCURACY OR
ADEQUACY OF THE INFORMATION CONTAINED IN THIS OFFER TO PURCHASE. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
TABLE OF CONTENTS
PAGE
SUMMARY TERM SHEET..................................................................................................Q-1
1. GENERAL QUESTIONS ABOUT THE OFFER...................................................................Q-1
2. SPECIFIC QUESTIONS ABOUT ELIGIBILITY TO PARTICIPATE.................................................Q-2
3. SPECIFIC QUESTIONS ABOUT TENDERING ELIGIBLE OPTIONS.................................................Q-2
4. SPECIFIC QUESTIONS ABOUT THE CASH PAYMENT...........................................................Q-3
5. SPECIFIC QUESTIONS ABOUT THE PROCEDURES FOR TENDERING ELIGIBLE OPTIONS..............................Q-4
THE OFFER............................................................................................................1
1. THE OFFER; ELIGIBLE OPTIONS; CASH PAYMENT.............................................................1
2. EXPIRATION DATE.......................................................................................2
3. MATERIAL UNITED STATES FEDERAL INCOME TAX CONSEQUENCES................................................2
4. SPECIAL FACTORS.......................................................................................2
5. PROCEDURES FOR ELECTING TO TENDER ELIGIBLE OPTIONS....................................................6
6. WITHDRAWAL RIGHTS.....................................................................................7
7. ACCEPTANCE OF TENDERED ELIGIBLE OPTIONS...............................................................8
8. CONDITIONS TO THE OFFER...............................................................................8
9. EXTENSION OF THE OFFER; TERMINATION; AMENDMENT........................................................9
10. PRICE RANGE OF COMMON STOCK UNDERLYING ELIGIBLE OPTIONS; MERGER
AGREEMENT; STOCKHOLDERS AGREEMENT....................................................................10
11. FEES AND EXPENSES; SOURCE AND AMOUNT OF FUNDS........................................................12
12. INTERESTS OF DIRECTORS AND EXECUTIVE OFFICERS; TRANSACTIONS
CONCERNING OPTIONS AND COMMON STOCK..................................................................13
13. ACCOUNTING CONSEQUENCES OF THE OFFER.................................................................14
14. LEGAL MATTERS; REGULATORY APPROVALS..................................................................14
15. INFORMATION ABOUT US.................................................................................15
16. FORWARD-LOOKING STATEMENTS...........................................................................16
i
SUMMARY TERM SHEET
The following are answers to some of the questions that you may have
about the offer. We urge you to read carefully the remainder of this Offer to
Purchase and the accompanying election form because the information in this
summary and in the introduction preceding this summary is not complete and does
not contain all of the information that is important to you. Additional
important information is contained in the remainder of this Offer to Purchase
and the election form. We have included references to the relevant sections of
this Offer to Purchase where you can find a more complete description of the
topics in this summary.
1. GENERAL QUESTIONS ABOUT THE OFFER
Q: WHICH OPTIONS ARE ELIGIBLE TO BE TENDERED FOR A CASH PAYMENT?
A: We are offering to purchase for a cash payment all outstanding
vested and unvested options to purchase shares of our common stock granted
under our 1991 Employee Stock Incentive Plan (the "1991 Incentive Plan"), 1994
Directors' Equity Plan (the "1994 Directors' Plan") and 1997 Employee Stock
Incentive Plan (the "1997 Incentive Plan") and all outstanding vested options
to purchase shares of our common stock granted under our 1996 Outside Directors
Equity Plan (the "1996 Directors Plan"). The 1991 Incentive Plan, 1994
Directors' Plan, 1997 Incentive Plan and 1996 Directors Plan are collectively
referred to as the "Plans."
We refer to these stock options in this Offer to Purchase as the
"eligible options." As of April 1, 2003, 5,944,718 options were issued and
outstanding under the Plans. Of these options, 5,928,468 were eligible options
and were held by 1,049 option holders. This offer does not apply to shares of
common stock purchased upon the exercise of such options. (Section 1)
Q: WHY IS ▇▇▇▇▇▇▇ HOMES OFFERING TO PURCHASE THE ELIGIBLE OPTIONS?
A: On April 1, 2003, we entered into an Agreement and Plan of
Merger with Berkshire Hathaway Inc. and B Merger Sub Inc., a wholly owned
subsidiary of Berkshire Hathaway, pursuant to which B Merger Sub will merge
with and into ▇▇▇▇▇▇▇ Homes. In the merger, each issued and outstanding share
of our common stock will be cancelled and converted into the right to receive
$12.50 in cash.
Generally, the stock options granted under the Plans do not terminate
in the event of a change in control transaction, such as the merger. As a
result, the merger agreement requires that we offer to purchase all eligible
options in exchange for cash upon the terms and conditions of the offer.
It is a condition to the closing of the merger that there not be more
than (1) 100 holders of eligible options and (2) 250,000 shares of our common
stock issuable upon the exercise of outstanding eligible options. We may not be
able to complete the merger if this condition is not satisfied. (Section 4)
Q: HOW WAS THE AMOUNT OF THE CASH PAYMENT DETERMINED?
A: The merger agreement permits us to pay up to $19.5 million for
eligible options outstanding as of April 1, 2003 (the date on which we signed
the merger agreement). We have allocated that amount among the 5,928,468
eligible options included in the offer using an objective formula that takes
into account the option exercise price and the remaining estimated life of the
option.
o For any unvested eligible option, the option holder will
receive the value derived by the formula.
o For any vested eligible option for which the spread (the
merger consideration of $12.50 per share minus the exercise
price of the eligible option) is less than or equal to the
value derived by the formula, the option holder will receive
the value derived by the formula.
Q-1
o For any vested eligible option for which the spread (the
merger consideration of $12.50 per share minus the exercise
price of the eligible option) is greater than the value
derived by the formula, the option holder will receive the
greater amount. (Section 4)
Q: HOW WILL THE OFFER WORK?
A: In order to accept our offer, you must make a voluntary
election to tender all of your eligible options for the cash payment set forth
on a per option basis on page 1. Following our acceptance of your tender of
options, we will purchase and cancel the options, and you will have no further
rights in the options or under the Plans. (Section 5)
Q: ARE THERE ANY CONDITIONS TO THE OFFER?
A: Yes. The offer is conditioned upon, among other things, (1) at
least 949 option holders having exercised or validly tendered and not withdrawn
before 5:00 p.m., Eastern Daylight Time, on _____________, 2003, all of their
eligible options and (2) the sum of (a) validly tendered and not withdrawn
eligible options plus (b) exercised eligible options, in each case before 5:00
p.m., Eastern Daylight Time, on ______________, 2003, being not less than
5,678,468 eligible options. We refer to this condition as the "minimum
condition" in this Offer to Purchase. In addition, the offer is conditioned
upon the merger agreement not having been terminated before 5:00 p.m., Eastern
Daylight Time, on ______________, 2003. In each case, we may extend this date
as described in this Offer to Purchase. The offer is also subject to a number
of other conditions, including the conditions described in Section 8.
2. SPECIFIC QUESTIONS ABOUT ELIGIBILITY TO PARTICIPATE
Q: WHO IS ELIGIBLE TO PARTICIPATE IN THE OFFER?
A: The offer is open to all option holders who hold eligible
options as of the date of the offer, ___________, 2003, including our board of
directors and our executive officers.
3. SPECIFIC QUESTIONS ABOUT TENDERING ELIGIBLE OPTIONS
Q: CAN I TENDER ONLY A PORTION OF MY ELIGIBLE OPTIONS?
A: No. You must tender all of your unexercised eligible options to
participate in the offer. We will not accept a partial tender of eligible
options. (Section 5)
Q: IF I HAVE RECEIVED MORE THAN ONE OPTION GRANT, AM I REQUIRED TO
TENDER THE ELIGIBLE OPTIONS SUBJECT TO ALL OF MY GRANTS?
A: Yes. If you have unexercised eligible options under more than
one option grant, you are required to tender all of the eligible options
subject to all of your option grants to participate in the offer. You may not
tender the eligible options subject to certain option grants and retain others.
(Section 5)
Q: MAY I TENDER UNVESTED OPTIONS?
A: You may tender options granted under the 1991 Incentive Plan,
1994 Directors' Plan and 1997 Incentive Plan whether or not they have vested.
Only options granted under the 1996 Directors Plan that have vested are
eligible to be tendered in the offer. Unvested options granted under the 1996
Directors Plan will terminate, in accordance with their terms, at the effective
time of the merger. (Section 1)
Q: MAY I TENDER OPTIONS THAT I HAVE ALREADY EXERCISED?
A: No. This offer only pertains to unexercised eligible options,
and does not apply in any way to shares purchased upon the exercise of options.
If you have exercised an eligible option in its entirety, that option is
Q-2
no longer outstanding and is therefore not subject to the offer. If you have
exercised an eligible option in part, you must tender the remaining portion of
the option, as well as any other eligible options you hold, to participate in
the offer.
Q: WHAT HAPPENS IF I DO NOT TENDER MY ELIGIBLE OPTIONS?
A: If you do not tender your eligible options in the offer, you
will continue to hold your options on the same terms set forth in the option
agreements that currently govern your options. For example, any unvested
options you hold will continue to be subject to their current vesting schedule
if you do not tender them in the offer. If we complete the merger, ▇▇▇▇▇▇▇
Homes will become a wholly owned subsidiary of Berkshire Hathaway. As a result,
our common stock will be delisted from the New York Stock Exchange, which we
refer to as the "NYSE" in this Offer to Purchase, and deregistered under the
Securities Exchange Act of 1934, as amended, which we refer to as the "Exchange
Act" in this Offer to Purchase. Option holders and shareholders will cease to
have access to financial and other information about ▇▇▇▇▇▇▇ Homes. As a
private company, our common stock will be subject to transfer restrictions that
will require a stockholder to offer ▇▇▇▇▇▇▇ Homes and Berkshire Hathaway the
right to buy his or her shares of ▇▇▇▇▇▇▇ Homes common stock before such shares
can be transferred to any third party (other than the estate or heirs of a
stockholder). Neither Berkshire Hathaway nor ▇▇▇▇▇▇▇ Homes will have any
obligation, however, to purchase any unexercised options, or any shares of
▇▇▇▇▇▇▇ Homes common stock acquired upon the exercise of any options, from any
holders thereof. (Section 4)
Q: DOES THE OFFER PREVENT ME FROM EXERCISING MY ELIGIBLE OPTIONS?
A: No. You may continue to exercise your eligible options
according to the terms of your existing option agreements, even if you intend
to tender eligible options in the offer. To participate in the offer, however,
you must tender all of the eligible options that you hold at the time you
tender.
Q: IF I DO NOT WANT TO TENDER ANY ELIGIBLE OPTIONS, DO I HAVE TO
RETURN THE ELECTION FORM?
A: No.
Q: IF I PARTICIPATE IN THE OFFER, WHAT HAPPENS TO THE TENDERED
OPTIONS?
A: If you choose to participate in the offer and we accept your
eligible options for purchase, we will cancel the eligible options that you
have tendered.
Q: WILL I HAVE TO PAY TAXES IF I TENDER MY ELIGIBLE OPTIONS IN THE
OFFER?
A: Yes. If you tender your eligible options, you will recognize
ordinary income for United States federal income tax purposes at the time of
the cash payment. If you are an employee or received your eligible options as
an employee, including any director who is an employee, the cash payments will
constitute wage income and will be subject to withholding of income, FICA and
Medicare taxes and other applicable employment taxes. If you are a non-employee
director, the cash payment will be self-employment income. (Section 3)
We recommend that you consult your own tax advisor to determine the
consequences of electing to tender eligible options.
4. SPECIFIC QUESTIONS ABOUT THE CASH PAYMENT
Q: HOW MUCH CASH WILL I RECEIVE FOR TENDERING MY ELIGIBLE OPTIONS?
A: Subject to the terms of the offer, we will pay you on a per
option basis the dollar amount in cash (which will be reduced by tax
withholding), as set forth on a per option basis in the table on page 1 of this
Offer to Purchase. In addition, your election form will list each of your
outstanding eligible option grants and the cash payment amount offered (subject
to withholding) for each option.
Q-3
No interest will accrue and no interest will be paid on any portion of
the cash amount payable, regardless of when paid.
Q: WHEN WILL I RECEIVE MY CASH PAYMENT?
A: Subject to the conditions of the offer, we will purchase and
cancel the eligible options tendered in response to the offer, and make the
cash payment to each participating option holder, promptly after the expiration
of the offer, which is currently scheduled to occur at 5:00 p.m., Eastern
Daylight Time, on __________________, 2003, but may be extended in our
discretion. (Section 7)
Q: HOW ▇▇▇▇ ▇▇▇▇▇▇▇ HOMES OBTAIN THE FUNDS TO MAKE THE CASH
PAYMENT?
A: If all eligible options are tendered in the offer and accepted,
the total amount of the cash payment payable to participating option holders
would be $19.5 million. ▇▇▇▇▇▇▇ Homes intends to fund the cash payment out of
available cash. (Section 11)
Q: IS THE OFFER SUBJECT TO A CONDITION THAT ▇▇▇▇▇▇▇ HOMES OBTAIN
FINANCING?
A: No. (Section 8)
5. SPECIFIC QUESTIONS ABOUT THE PROCEDURES FOR TENDERING ELIGIBLE OPTIONS
Q: WHAT IS THE DEADLINE TO TENDER MY ELIGIBLE OPTIONS AND WILL THE
DEADLINE BE EXTENDED?
A: The offer expires at 5:00 p.m., Eastern Daylight Time, on
________________, 2003, unless we extend it. We intend that the deadline for
the offer will occur shortly before the completion of the merger. To the extent
necessary, we will extend the deadline for the offer so that the offer,
including the purchase and cancellation of all eligible options that have been
properly tendered and not validly withdrawn before the deadline of the offer,
is completed shortly before the completion of the merger. If we obtain
stockholder approval of the merger agreement at a special meeting of our
stockholders, we expect that we will complete the merger shortly thereafter (if
the other conditions to the merger have been satisfied or waived at that time).
Except as explained above, we do not currently intend to extend the
deadline for the offer. However, we may, in our sole discretion, extend the
deadline at any time. If the deadline is extended, we will provide notice of
the extension no later than 9:00 a.m., Eastern Daylight Time, on the next
business day following the previously scheduled deadline. (Section 2)
Q: HOW DO I TENDER MY ELIGIBLE OPTIONS?
A: If you elect to tender your eligible options, you must properly
complete and sign the enclosed Election to Tender Options form and ensure that
we receive the completed Election to Tender Options form (or facsimile
thereof), together with all other documents required by the election form,
before 5:00 p.m., Eastern Daylight Time, on _________, 2003. If we extend the
offer beyond that time, you must deliver these documents before the extended
expiration of the offer. You must return your completed forms to us at the
following address or facsimile number:
▇▇▇▇▇▇▇ Homes, Inc.
▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Secretary
▇▇▇▇▇▇▇▇▇: (▇▇▇) ▇▇▇-▇▇▇▇
We reserve the right to reject any or all tenders of eligible options
that we determine are not in appropriate form or that we determine are unlawful
to accept. Subject to our rights to extend, amend and terminate the offer, we
Q-4
currently expect that we will accept all eligible options that are properly and
timely tendered and that are not validly withdrawn, promptly after the
expiration of the offer. (Section 5)
Q: WHAT WILL HAPPEN IF I DO NOT RETURN MY ELECTION FORM BY THE
DEADLINE?
A: If you do not return your election form by the deadline, then
you will not participate in the offer, and all eligible options you currently
hold will remain outstanding at their original exercise prices, vesting
schedules and other terms. (Section 2)
Q: DURING WHAT PERIOD OF TIME MAY I WITHDRAW PREVIOUSLY TENDERED
ELIGIBLE OPTIONS?
A: You may withdraw previously tendered eligible options at any
time before the deadline of 5:00 p.m., Eastern Daylight Time, on _________,
2003. If we extend the offer beyond that time, you may withdraw your tendered
eligible options at any time until the extended expiration of the offer. You
must withdraw all of the eligible options that you have tendered; you may not
withdraw only a portion of the eligible options that you have tendered.
To withdraw tendered eligible options, you must deliver to us a
written notice of withdrawal with the required information while you still have
the right to withdraw the tendered options. We must receive your written notice
of withdrawal before the deadline. Once you have withdrawn your eligible
options, you may elect to re-tender your eligible options before the deadline
by submitting a new Election to Tender Eligible Options form to ▇▇▇▇▇▇▇ Homes
as described above. (Section 6)
Q: WHO CAN I CONTACT IF I HAVE QUESTIONS ABOUT THE OFFER?
A: If you have questions about the offer, please contact ▇▇▇▇▇▇▇
Homes by e-mail at ▇▇▇▇▇▇▇▇▇▇▇▇@▇▇▇▇▇▇▇.▇▇▇, by telephone at (▇▇▇) ▇▇▇-▇▇▇▇ or
by mail at ▇▇▇▇▇▇▇ Homes, Inc., ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇,
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Secretary.
Q-5
THE OFFER
1. THE OFFER; ELIGIBLE OPTIONS; CASH PAYMENT
We are offering to purchase all outstanding vested and unvested
options to purchase shares of our common stock granted under the 1991 Incentive
Plan, 1994 Directors' Plan and 1997 Incentive Plan and all outstanding vested
options to purchase shares of our common stock granted under the 1996 Directors
Plan. In this document, we refer to these options as "eligible options."
We are making the offer upon the terms and subject to the conditions
set forth in this Offer to Purchase and in the related Election to Tender
Eligible Options form, which together, as they may be amended from time to
time, constitute the "offer."
We will accept for purchase all eligible options validly tendered and
not properly withdrawn on or before the expiration date. All eligible options
tendered and accepted for purchase by us pursuant to the offer will be
cancelled. The amount of cash that you will receive in exchange for the
eligible options that you tender and that are purchased and cancelled by us
will be determined as set forth in the table below (which will be reduced by
tax withholding) on a per option basis:
NUMBER OF CASH PAYMENT
GRANT DATE EXERCISE PRICE ELIGIBLE OPTIONS PER ELIGIBLE OPTION(1) TOTAL
------------- ---------------- ------------------ ------------------------ --------------
11/10/93 (vested) $ 7.22 108,000 $ 5.28 $ 570,240.00
11/10/93 (unvested) 7.22 3,050 3.70263 11,293.02
01/03/94 7.22 20,366 5.28 107,532.48
02/09/94 7.22 17,471 5.28 92,246.88
11/09/94 (vested) 7.22 245,072 5.28 1,293,980.16
11/09/94 (unvested) 7.22 8,540 4.20870 35,942.30
7/01/94 7.53 12,200 3.72318 45,422.80
7/01/93 7.54 12,200 4.96 60,512.00
7/02/97 8.19 170,283 4.77769 813,559.39
12/08/93 8.27 5,953 4.23 25,181.19
5/11/94 8.29 5,490 4.21 23,112.90
7/03/00 8.38 87,700 5.36541 470,546.46
7/03/95 8.51 139,568 3.82586 533,967.63
11/01/00 9.31 566,675 4.14480 2,348,754.54
10/27/99 9.38 456,100 3.63089 1,656,048.93
11/14/96 (vested) 10.32 243,103 2.18 529,964.54
11/14/96 (unvested) 10.32 14,058 1.76681 24,837.81
10/30/02 11.19 778,750 4.20703 3,276,244.61
7/01/97 11.50 31,250 3.6677l 114,615.94
7/01/99 11.88 68,300 4.15245 283,612.34
11/12/98 11.90 738,055 2.10245 1,551,723.73
11/12/97 12.60 382,501 0.83540 319,541.34
7/01/96 12.80 22,649 2.86583 64,908.18
10/30/01 13.55 923,050 3.30030 3,046,341.91
11/08/95 13.70 295,334 2.28863 675,910.26
1/01/99 13.81 280,000 1.64012 459,233.60
7/01/02 15.28 134,500 4.03075 542,135.88
7/02/01 15.65 90,500 3.49858 316,621.49
7/01/98 15.75 67,750 3.03030 205,302.83
TOTAL 5,928,468 $19,499,315.14
----------------------
(1) We will round to the nearest whole cent when making the cash
payments.
THE OFFER IS CONDITIONED UPON, AMONG OTHER THINGS, (1) AT LEAST 949
OPTION HOLDERS HAVING EXERCISED OR VALIDLY TENDERED AND NOT WITHDRAWN BEFORE
5:00 P.M., EASTERN DAYLIGHT TIME, ON _____________, 2003, ALL OF THEIR ELIGIBLE
OPTIONS AND (2) THE SUM OF (A) VALIDLY TENDERED AND NOT WITHDRAWN ELIGIBLE
OPTIONS PLUS (B) EXERCISED ELIGIBLE OPTIONS, IN EACH CASE BEFORE 5:00 P.M.,
EASTERN DAYLIGHT TIME, ON ______________, 2003,
1
BEING NOT LESS THAN 5,678,468 ELIGIBLE OPTIONS. IN ADDITION, THE OFFER IS
CONDITIONED UPON THE MERGER AGREEMENT NOT HAVING BEEN TERMINATED BEFORE 5:00
P.M., EASTERN DAYLIGHT TIME, ON _____________, 2003. IN EACH CASE, WE MAY
EXTEND THIS DATE AS DESCRIBED IN THIS OFFER TO PURCHASE. THE OFFER IS SUBJECT
TO OTHER CONDITIONS THAT WE DESCRIBE IN SECTION 8 OF THIS OFFER TO PURCHASE.
As of April 1, 2003, 5,944,718 options were issued and outstanding
under the Plans. Of these options, 5,928,468 were eligible options and were
held by 1,049 option holders.
2. EXPIRATION DATE
Upon the terms and subject to the conditions of the offer, we will pay
cash for eligible options that are properly tendered and not validly withdrawn
by option holders in accordance with Section 5 before the "expiration date."
The term "expiration date" means 5:00 p.m., Eastern Daylight Time, on
_________, 2003, unless and until we, in our sole discretion, extend the period
of time during which the offer will remain open, in which event the term
"expiration date" refers to the latest time and date at which the offer, as so
extended, expires. See Section 9 for a description of our rights to extend,
amend and terminate the offer.
3. MATERIAL UNITED STATES FEDERAL INCOME TAX CONSEQUENCES
The following is a general summary of the material United States
federal income tax consequences of the purchase and cancellation of eligible
options pursuant to the offer. This discussion is based on current law, which
is subject to change, possibly on a retroactive basis. This summary does not
discuss all of the tax consequences that may be relevant to you in light of
your particular circumstances, nor is it intended to be applicable in all
respects to all categories of eligible holders. This discussion is limited to
option holders who are United States citizens. There may be different tax
consequences under certain circumstances, and there may be foreign, state and
local tax consequences. You should consult your personal tax advisor with
respect to the application of the United States federal income tax laws to your
own personal circumstances, and the possible effect of other taxes.
If you tender your eligible options pursuant to the offer, you will
recognize, as ordinary income for United States federal income tax purposes, at
the time that we make the cash payment to you, the amount of cash payable for
your eligible options. If you are an employee or received your eligible options
as an employee, including a director who is an employee, the cash payments will
constitute wage income and will be subject to withholding of income, FICA and
Medicare taxes and other applicable employment taxes. If you are a non-employee
director, the cash payment will be self-employment income.
Similarly, the exercise of your eligible options generally is a
taxable event that will require you to recognize, as ordinary income for United
States federal income tax purposes, the difference between the shares' fair
market value and the option price. You should note, however, that some of the
eligible options included in the offer are intended to qualify as incentive
stock options. If you hold eligible options that are incentive stock options,
no income will be recognized upon your exercise of the eligible option (except
that the alternative minimum tax may apply). You will recognize income when you
dispose of shares acquired under an incentive stock option. If you dispose of
shares acquired under an incentive stock option within two years after the
incentive stock option was granted, or within one year after the incentive
stock option was exercised (the "statutory holding period"), this is a
"disqualifying disposition" and you generally will recognize ordinary income
equal to the excess of the fair market value of the shares on the option
exercise date (or, if less, the amount realized for the shares) over the option
price. If you exercise an eligible option that is an incentive stock option
before the merger and the merger occurs, you will have a disqualifying
disposition and will recognize ordinary income.
To the extent that holders of eligible options recognize ordinary
income as a result of tendering or exercising their eligible options, ▇▇▇▇▇▇▇
Homes generally will be entitled to a corresponding income tax deduction.
4. SPECIAL FACTORS
Purpose of the Offer. On April 1, 2003, we entered into an Agreement
and Plan of Merger with Berkshire Hathaway Inc. and B Merger Sub Inc., a wholly
owned subsidiary of Berkshire Hathaway, pursuant to which
2
▇▇▇▇▇▇▇ Homes will (subject to the terms and conditions set forth in the merger
agreement) be merged with and into B Merger Sub. In the merger, each issued and
outstanding share of our common stock will be cancelled and converted into the
right to receive $12.50 in cash.
The merger agreement requires that we offer to purchase all eligible
options in exchange for cash upon the terms and conditions of the offer. One of
the conditions to the obligations of Berkshire Hathaway and B Merger Sub to
complete the merger is that, on or prior to the closing date of the merger,
o the number of holders of our stock options must not be more
than 100 and
o the number of shares of our common stock issuable upon the
exercise of our outstanding stock options must not be more than
250,000.
We may not be able to complete the merger if this condition is not
satisfied.
Background of the Offer. Under the Plans, outstanding eligible options
do not automatically terminate (including at any specified price) in the event
of a change in control of ▇▇▇▇▇▇▇ Homes, such as the merger with Berkshire
Hathaway, nor do unvested eligible options automatically become exercisable in
such an event. Moreover, Delaware law does not specifically address the
treatment of options in the event of a change of control transaction. Our board
of directors recognized that it was not desirable for the option holders or for
Berkshire Hathaway that options to acquire shares of our common stock remain
outstanding after the merger. After we and Berkshire Hathaway agreed on the
consideration of $12.50 per share to be received by our stockholders in the
merger, we sought to negotiate with Berkshire Hathaway a means for holders of
eligible options to terminate their eligible options in exchange for a cash
payment. We were advised by Berkshire Hathaway that when Berkshire Hathaway made
its offer to acquire ▇▇▇▇▇▇▇ Homes, it expected that our outstanding options
would automatically terminate at the time of the merger in exchange for a cash
payment equal (on a per option basis) to the amount, if any, by which the merger
consideration of $12.50 per share exceeded the exercise price, or, based on the
number of our options outstanding at that time, approximately $9.3 million in
the aggregate. In light of the terms of the Plans, Berkshire Hathaway agreed to
permit us to offer the cash payments specified (on a per option basis) on page 1
of this Offer to Purchase to purchase and cancel eligible options, which, if all
eligible options that were outstanding as of April 1, 2003 are tendered in the
offer, would result in an aggregate payment by us of approximately $19.5 million
in the offer.
We retained Standard & Poor's Corporate Value Consulting division to
assist us in developing a method for allocating the $19.5 million among the
eligible options fairly and consistently and to perform the calculations for
each option holder. With Corporate Value Consulting's assistance, we have
allocated the $19.5 million among the 5,928,468 eligible options using a formula
based on the Black-Scholes option pricing model that takes into account the
option exercise price and the remaining estimated life of the option, which was
assumed to be six years for options with a five-year vesting schedule and 10
years for options with a 9.5-year cliff vesting schedule.
o For any unvested eligible option, the option holder will
receive the value derived by the formula.
o For any vested eligible option for which the spread (the merger
consideration of $12.50 per share minus the exercise price of
the eligible option) is less than or equal to the value derived
by the formula, the option holder will receive the value
derived by the formula.
o For any vested eligible option for which the spread (the merger
consideration of $12.50 per share minus the exercise price of
the eligible option) is greater than the value derived by the
formula, the option holder will receive the greater amount.
The $19.5 million includes:
o an aggregate of $5.1 million representing the aggregate spread
between the exercise price and $12.50 per share of vested
options with an exercise price of less than $12.50 per share;
and
3
o an aggregate of $4.2 million representing the aggregate spread
between the exercise price and $12.50 per share of unvested
options with an exercise price of less than $12.50 per share.
To the extent that holders of eligible options recognize ordinary
income as a result of tendering or exercising their eligible options, ▇▇▇▇▇▇▇
Homes generally will be entitled to a corresponding income tax deduction.
Fairness of the Offer. Our board of directors believes that the offer
is fair to all holders of eligible options and has unanimously approved the
making of the offer. In making its determination about the fairness of the
offer, our board of directors considered a number of factors, including the
following:
o the fact that the stock options granted under the Plans do not
automatically terminate, nor does their vesting accelerate, in
the merger with Berkshire Hathaway;
o the fact that Berkshire Hathaway would not agree to permit us
to expend more than $19.5 million for outstanding eligible
options without reducing the merger consideration of $12.50 per
share;
o the fact that the Black-Scholes option pricing model, a
frequently used formula for valuing options, was used as the
basis for allocating the $19.5 million among all eligible
options, including unvested options (other than unvested
options granted under the 1996 Directors Plan) and options for
which the value derived by the formula is greater than the
spread (the merger consideration of $12.50 per share minus the
option exercise price);
o the fact that we retained Corporate Value Consulting to assist
us in developing the method for allocating the $19.5 million
among the eligible options and in performing the calculations
for each option holder;
o the fact that, although the formula used by Corporate Value
Consulting indicated a higher aggregate value for the eligible
options than $19.5 million, this formula is an approximation
that does not take account of such factors as the illiquidity
of employee options and the fact that unvested options are in
general subject to termination if the employee's employment is
terminated;
o the fact that the offer is open to all option holders who hold
eligible options as of the date of the offer, ___________,
2003, including our board of directors and executive officers;
o the fact that participation in the offer is voluntary and that
option holders could continue to hold their eligible options
according to the terms of their existing option agreements
following the merger; and
o the fact that, when the merger is completed, option holders who
retained their options would only have the right to acquire
shares that (a) would constitute a small minority interest in a
controlled subsidiary, (b) would not have a trading market and
(c) would be subject to significant restrictions on transfer,
and that such holders would no longer have access to financial
and other information regarding ▇▇▇▇▇▇▇ Homes.
In light of the factors that our board of directors considered in
connection with its evaluation of the fairness of the offer, our board of
directors did not find it practicable to, and did not, quantify or otherwise
assign relative weights to these factors. Rather, our board of directors viewed
its position as being based upon the totality of the information presented to
and considered by it.
The offer does not require the approval of any holders of eligible
options. We have not retained an unaffiliated representative to act solely on
behalf of unaffiliated holders of eligible options, and we have not made any
provisions to grant unaffiliated holders of eligible options access to our
corporate files or the ability to obtain counsel or appraisal services at our
expense. Moreover, we have not retained an unaffiliated representative for the
purpose of preparing a report concerning the fairness of the offer. There are
no appraisal rights available to holders of eligible options in connection with
the offer or the merger.
4
ALTHOUGH OUR BOARD OF DIRECTORS HAS UNANIMOUSLY APPROVED THE MAKING OF
THE OFFER AND BELIEVES THAT IT IS FAIR TO ALL HOLDERS OF ELIGIBLE OPTIONS,
NEITHER WE NOR OUR BOARD OF DIRECTORS MAKES ANY RECOMMENDATION AS TO WHETHER
YOU SHOULD TENDER OR REFRAIN FROM TENDERING YOUR ELIGIBLE OPTIONS, NOR HAVE WE
AUTHORIZED ANY PERSON TO MAKE ANY SUCH RECOMMENDATION. YOU ARE URGED TO
EVALUATE CAREFULLY ALL OF THE INFORMATION IN THIS OFFER TO PURCHASE AND TO
CONSULT YOUR OWN INVESTMENT AND TAX ADVISORS. YOU MUST MAKE YOUR OWN DECISION
WHETHER TO TENDER YOUR OPTIONS.
Certain Effects of the Merger. If the merger is completed, Berkshire
Hathaway will acquire all of the outstanding shares of our common stock and
▇▇▇▇▇▇▇ Homes will become a wholly owned subsidiary of Berkshire Hathaway.
Under the terms of the merger agreement, the directors of B Merger Sub will
become the directors of ▇▇▇▇▇▇▇ Homes, the surviving corporation in the merger,
and the officers of ▇▇▇▇▇▇▇ Homes immediately before the merger is completed
will remain the officers of the surviving corporation after the merger and
continue to manage ▇▇▇▇▇▇▇ Homes' operations.
The certificate of incorporation of ▇▇▇▇▇▇▇ Homes will be amended in
connection with the merger to provide for the transfer restrictions described
below. The bylaws of Merger Sub, as in effect immediately before the merger,
will become the bylaws of the surviving corporation until thereafter amended.
After consummation of the merger, our common stock will no longer meet
the requirements for continued listing on the NYSE or registration under the
Exchange Act, and our common stock will be delisted from the NYSE and
deregistered under the Exchange Act. Termination of registration under the
Exchange Act will result in the provisions of the Exchange Act no longer being
applicable to us. We will not be required to furnish to our stockholders or
otherwise make public any of our financial results or other information about
▇▇▇▇▇▇▇ Homes. We will no longer file any current or periodic reports with the
SEC, including reports on Forms 10-K, 10-Q and 8-K. Moreover, we will no longer
be subject to the requirement of furnishing a proxy statement under Section
14(a) of the Exchange Act in connection with stockholders' meetings and the
related requirement of furnishing an annual report to stockholders.
Certain Effects of the Offer. If you do not tender your eligible
options in the offer, you will continue to hold your options on the same terms
set forth in the option agreements that currently govern your options,
including the current exercise price and vesting schedule that applies to your
options. If we complete the merger, ▇▇▇▇▇▇▇ Homes will become a wholly owned
subsidiary of Berkshire Hathaway. As a result, our common stock will be
delisted from the NYSE, and deregistered under the Exchange Act.
As is typical in many private companies, our certificate of
incorporation will contain transfer restrictions. No stockholder (other than
Berkshire Hathaway) will be permitted to sell, transfer, assign, pledge or
otherwise encumber his or her shares of our common stock, grant any right to
purchase any such shares, or engage in any transaction to reduce the risk of
ownership thereof, except that shares of our common stock may be (a) transferred
to the estate or heirs of such stockholder upon his or her death, or (b) sold
for cash to an unaffiliated third party who has delivered to such stockholder a
bona fide offer to purchase such shares, if ▇▇▇▇▇▇▇ Homes and Berkshire Hathaway
are first given a right to acquire such shares. This right, commonly known as a
"right of first refusal," will operate as follows: A stockholder who has
received a bona fide cash offer from an unaffiliated third party purchaser to
acquire a specified number of shares must notify ▇▇▇▇▇▇▇ Homes and Berkshire
Hathaway of the offer and the number of shares proposed to be acquired by the
third party, and must provide ▇▇▇▇▇▇▇ Homes and Berkshire Hathaway with the
prior opportunity to acquire these shares at the same cash price and otherwise
on the same terms as he or she proposes to sell them to the third party. If
neither ▇▇▇▇▇▇▇ Homes nor Berkshire Hathaway elects to acquire the shares on
these terms within 30 days following any such notice, the notifying stockholder
will have 30 days in which to sell the number of shares specified in his or her
notice to the third party at the price specified in the notice, or at any higher
price. Following the 30-day period, no sales of shares will be permitted unless
a stockholder again complies with the right of first refusal requirements as
they would apply to any new offer. Neither Berkshire Hathaway nor ▇▇▇▇▇▇▇ Homes
will have any obligation, however, to purchase any unexercised options, or any
shares of ▇▇▇▇▇▇▇ Homes common stock acquired upon the exercise of any options,
from the holders thereof.
Berkshire Hathaway may also decide, at one or more points in the
future, to cause ▇▇▇▇▇▇▇ Homes to merge with another subsidiary of Berkshire
Hathaway. Under Delaware law, Berkshire Hathaway would, as the owner of more
than 90% of the outstanding common stock of ▇▇▇▇▇▇▇ Homes, be able to approve
such a merger without the
5
affirmative vote of any other ▇▇▇▇▇▇▇ Homes stockholder. Upon such a merger
being effected, the shares of ▇▇▇▇▇▇▇ Homes common stock that are owned by any
stockholders other than Berkshire Hathaway would be cancelled and such
stockholders would be paid the fair market value of their shares in cash.
Because the stock options granted under the Plans generally do not terminate in
the event of a change in control transaction, such as a merger, any remaining
eligible options would continue to be exercisable following the completion of
any such merger. Berkshire Hathaway may decide to effect such a merger after
all outstanding options have been exercised (or have expired or been
terminated) to eliminate any minority ownership in ▇▇▇▇▇▇▇ Homes.
Other Transactions. Except as described in this Offer to Purchase or
as provided in the merger agreement, we currently have no plans, proposals or
negotiations that relate to or would result in:
o an extraordinary transaction, such as a merger, reorganization
or liquidation, involving us or any of our subsidiaries;
o a purchase, sale or transfer of an amount of our assets or any
of our subsidiaries' assets that would be material to us and
our subsidiaries taken as a whole;
o a material change in our present dividend rate or policy, or in
our indebtedness or capitalization;
o any class of our equity securities being delisted from the NYSE
or ceasing to be authorized to be quoted in an automated
quotations systems operated by a national securities
association;
o any class of our equity securities becoming eligible for
termination of registration under the Exchange Act;
o a suspension of our obligation to file reports under the
Exchange Act;
o a change in our present board of directors or management;
o a material change in our corporate structure or business, an
acquisition or disposition by any person of our securities; or
o a change in our certificate of incorporation, bylaws or other
governing documents or an action that could impede the
acquisition of control of ▇▇▇▇▇▇▇ Homes.
5. PROCEDURES FOR ELECTING TO TENDER ELIGIBLE OPTIONS
Proper Tender of Eligible Options. To tender validly your eligible
options pursuant to the offer, you must properly complete, sign and deliver to
us the enclosed Election to Tender Eligible Options form (or facsimile
thereof), together with all other documents required by the election form. We
must receive all of the required documents before the expiration date at the
following address or facsimile number:
▇▇▇▇▇▇▇ Homes, Inc.
▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Secretary
▇▇▇▇▇▇▇▇▇: (▇▇▇) ▇▇▇-▇▇▇▇
You are not required to participate in the offer. However, you must
tender all of your eligible options to participate in the offer. If you tender
less than all of your eligible options, your tender will be automatically
rejected.
THE METHOD OF DELIVERY OF ALL DOCUMENTS, INCLUDING THE ELECTION FORM,
IS THE CHOICE AND RISK OF THE ELECTING OPTION HOLDER. OPTIONS WILL BE DEEMED
DELIVERED ONLY WHEN ACTUALLY RECEIVED BY US. IF DELIVERY IS BY MAIL, YOU SHOULD
ALLOW SUFFICIENT TIME TO ENSURE TIMELY DELIVERY.
6
No interest will accrue and no interest will be paid on the cash
amount payable to you, regardless of any extension of the offer or any delay in
making payment.
Determination of Validity; Rejection of Tenders; Waiver of Defects; No
Obligation to Give Notice of Defects. We will determine, in our sole
discretion, all questions as to the form of documents and the validity, form,
eligibility (including time of receipt) and acceptance of any election to
tender eligible options. Our determination of these matters will be final and
binding upon all persons.
We reserve the absolute right to reject any or all elections to tender
eligible options that we determine do not comply with the conditions of the
offer, that we determine are not in appropriate form or that we determine are
unlawful to accept. We will reject all elections to tender eligible options
that do not elect to tender all eligible options held by the option holder.
Otherwise, we will accept for purchase and cancellation all eligible options
that have been properly and timely tendered and that are not validly withdrawn.
We also reserve the absolute right to waive any of the conditions to
the offer or any defect or irregularity in any election with respect to any
particular eligible options or any particular option holder. No election to
tender eligible options will be deemed to have been properly made until all
defects or irregularities have been cured by the holder or waived by us.
Neither we nor any other person is obligated to give notice of any defects or
irregularities in elections, nor will anyone incur any liability for failure to
give any such notice.
Our Acceptance Constitutes an Agreement. Your election to tender
eligible options for cash pursuant to the procedures described above
constitutes your acceptance of the terms and conditions of the offer. Our
acceptance of the eligible options that you have elected to tender pursuant to
the offer will constitute a binding agreement between you and ▇▇▇▇▇▇▇ Homes
upon the terms and subject to the conditions of the offer. Subject to our
rights to extend, amend and terminate the offer, we currently expect that we
will accept for purchase and cancellation promptly after the expiration of the
offer all options that have been properly tendered and have not validly
withdrawn.
6. WITHDRAWAL RIGHTS
You may only withdraw the eligible options that you have tendered in
accordance with the provisions of this Section 6.
You may withdraw the eligible options that you have tendered at any
time before 5:00 p.m., Eastern Daylight Time, on _________, 2003. If we extend
the offer beyond that time, you may withdraw your eligible options at any time
until the extended expiration of the offer. In addition, unless we accept the
eligible options that you have tendered before 12:00 midnight, Eastern Daylight
Time, on __________, 2003, you may withdraw your eligible options after that
date until they are accepted.
To withdraw validly the eligible options that you have tendered, you
must deliver to us at the following address or facsimile number a written
notice of withdrawal (or facsimile thereof) with the required information,
while you still have the right to withdraw your eligible options:
▇▇▇▇▇▇▇ Homes, Inc.
▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Secretary
▇▇▇▇▇▇▇▇▇: (▇▇▇) ▇▇▇-▇▇▇▇
The notice of withdrawal must specify your name and your election to
withdraw your tendered eligible options. You must withdraw all of the eligible
options that you have tendered; you may not withdraw only a portion of the
eligible options that you have tendered. Any notice of withdrawal of a portion
of your eligible options will be deemed to be a notice of withdrawal of all of
your eligible options.
You may not rescind any withdrawal. Following our receipt of a valid
notice of withdrawal from you, all of your eligible options will thereafter be
deemed not properly tendered for purposes of the offer, unless you
7
properly elect to re-tender your eligible options before the expiration date by
submitting a new Election to Tender Eligible Options form to ▇▇▇▇▇▇▇ Homes at
the above address or facsimile number.
Neither ▇▇▇▇▇▇▇ Homes nor any other person is obligated to give notice
of any defects or irregularities in any notice of withdrawal or re-tender, nor
will anyone incur any liability for failure to give any such notice. We will
make determinations, in our sole discretion, on all questions as to the form
and validity, including time of receipt, of notices of withdrawal or re-tender.
Our determination of these matters will be final and binding upon all persons.
7. ACCEPTANCE OF TENDERED ELIGIBLE OPTIONS
Upon the terms and subject to the conditions of the offer, and
promptly following the expiration date, we will accept for purchase and
cancellation all eligible options that have been properly tendered and not
validly withdrawn before the expiration date. We will give you a written notice
of our acceptance of your tendered options.
For purposes of the offer, we will be deemed to have accepted eligible
options that are validly tendered and not properly withdrawn as, if and when we
give written notice to option holders of our acceptance of such options.
Subject to our rights to extend, amend and terminate the offer, we currently
expect that we will accept for purchase and cancellation promptly after the
expiration of the offer all eligible options that have been properly tendered
and not validly withdrawn before the expiration date.
8. CONDITIONS TO THE OFFER
Notwithstanding any other provision of the offer, we will not be
required to accept for purchase and cancellation, or make any payment with
respect to, any tendered eligible options, and we may terminate or amend the
offer, or extend our acceptance of any tendered options, in each case subject
to Rule 13e-4(f) under the Exchange Act, if (1) the minimum condition has not
been satisfied by the expiration date or (2) at any time before the expiration
date, any of the following events has occurred, or has been determined by us to
have occurred:
o the merger agreement shall have been terminated in accordance
with its terms (as explained in Section 10);
o there shall have been threatened or instituted or be pending
any action or proceeding by any government or governmental,
regulatory or administrative agency, authority or tribunal or
any other person, domestic or foreign, before any court,
authority, agency or tribunal that directly or indirectly
challenges the making of the offer, the acquisition of some or
all of the eligible options tendered pursuant to the offer, or
otherwise relates in any manner to the offer; or
o there shall have been any action threatened, pending or taken,
or approval withheld, or any statute, rule, regulation,
judgment, order or injunction threatened, proposed, sought,
promulgated, enacted, entered, amended, enforced or deemed to
be applicable to the offer or to us or any of our subsidiaries,
by any court or any authority, agency or tribunal that, in our
and Berkshire Hathaway's reasonable judgment, would or might
directly or indirectly:
(a) make the acceptance of tendered eligible options
illegal or otherwise restrict or prohibit
consummation of the offer or otherwise relate in any
manner to the offer;
(b) delay or restrict our ability, or render us unable,
to accept for payment or make payment for some or
all of the tendered eligible options; or
(c) materially impair the contemplated benefits of the
offer to us and Berkshire Hathaway.
The conditions to the offer are for our benefit and the benefit of
Berkshire Hathaway. We will assert them, unless we determine in our sole
discretion not to and Berkshire Hathaway approves of our determination,
regardless of the circumstances giving rise to them prior to the expiration
date. We may waive them, in whole or in part, at any time and from time to time
prior to the expiration date, if we determine in our sole discretion to do so
and Berkshire
8
▇▇▇▇▇▇▇▇ approves our determination, whether or not we waive any other
condition to the offer. Our failure at any time to exercise any of these rights
will not be deemed a waiver of any such rights. The waiver of any of these
rights with respect to particular facts and circumstances will not be deemed a
waiver with respect to any other facts and circumstances. Any determination we
make concerning the events described in this Section 8 will be final and
binding upon all persons to whom the offer is made. All conditions to the
offer, other than necessary governmental approvals, must be satisfied or waived
before the expiration date.
9. EXTENSION OF THE OFFER; TERMINATION; AMENDMENT
We reserve the right, in our sole discretion, at any time and from
time to time, to extend the period of time during which our offer is open and
to delay acceptance for purchase and cancellation of, and payment for, any
eligible options by giving oral or written notice of such extension to holders
of eligible options. We also reserve the right, in our sole discretion, to
terminate the offer and not accept for purchase and cancellation or pay for any
eligible options not previously accepted for purchase and cancellation or paid
for or, subject to applicable law, to postpone payment for eligible options if
any conditions to the offer fail to be satisfied by giving oral or written
notice of such termination or postponement to holders of eligible options. Our
reservation of the right to delay acceptance for payment, and to delay payment
for, shares that we have accepted for purchase and cancellation, is limited by
Rule 13e-4(f)(5) promulgated under the Exchange Act, which requires that we
must pay the consideration offered or return the eligible options tendered
promptly after termination or withdrawal of the offer.
Subject to compliance with applicable law, we further reserve the
right, if we determine in our sole discretion to do so and Berkshire Hathaway
approves our determination, and regardless of whether or not any of the events
or conditions described in Section 8 have occurred or are deemed by us to have
occurred, to amend the offer in any respect, including, without limitation, by
decreasing or increasing the consideration offered in the offer to holders of
eligible options or by decreasing the number of eligible options being sought
in the offer. Amendments to our offer may be made at any time and from time to
time by public announcement, such announcement, in the case of an extension, to
be issued no later than 9:00 a.m., Eastern Daylight Time, on the next business
day after the last previously scheduled or announced expiration date.
Without limiting the manner in which we may choose to make a public
announcement, except as required by applicable law, we have no obligation to
publish, advertise or otherwise communicate any such public announcement other
than by making a release through Business Wire, Dow ▇▇▇▇▇ News Service or
another comparable news service.
If we materially change the terms of the offer or the information
concerning the offer, we will extend the offer to the extent required by Rules
13e-4(d)(2), 13e-4(e)(3) and 13e-4(f)(1) promulgated under the Exchange Act.
These rules and certain related releases and interpretations of the SEC provide
that the minimum period during which a tender offer must remain open following
material changes in the terms of the tender offer or information concerning the
tender offer (other than a change in price or a change in percentage of
securities sought) will depend on the facts and circumstances, including the
relative materiality of such terms or information. If we undertake to
o increase or decrease prices to be paid for the eligible options
or
o decrease the number of eligible options being sought in the
offer
and 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 of an increase or decrease is first published, sent or given to
security holders in the manner specified in this Section 9, then the offer will
be extended until the expiration of such period of 10 business days.
For purposes of the offer, a "business day" means any day other than a
Saturday, Sunday or United States federal holiday and consists of the time
period from 12:01 a.m. through 12:00 midnight, Eastern Daylight Time.
We do not currently intend to extend the expiration date. However, we
will extend the expiration date to the extent necessary so that the offer,
including the purchase and cancellation of all eligible options that have been
9
properly tendered and not validly withdrawn before the expiration date, is
completed shortly before the completion of the merger. If we obtain stockholder
approval of the merger agreement at a special meeting of our stockholders, we
expect that we will complete the merger shortly thereafter (if the other
conditions to the merger have been satisfied or waived at that time).
10. PRICE RANGE OF COMMON STOCK UNDERLYING ELIGIBLE OPTIONS; MERGER
AGREEMENT; STOCKHOLDERS AGREEMENT.
Our options are not listed on a national securities exchange or an
automated quotations system; however, the common stock issuable upon exercise
of the eligible options is listed and principally traded on the NYSE under the
symbol "CMH." The following table shows, for the periods indicated, the high
and low sale prices per share of our common stock underlying the eligible
options, as reported by the NYSE:
HIGH LOW
---- ---
Fiscal Year Ended June 30, 2001
Quarter ended September 30, 2000........................................... $10.00 $ 8.00
Quarter ended December 31, 2000............................................ 13.06 8.31
Quarter ended March 31, 2001............................................... 14.50 11.69
Quarter ended June 30, 2001................................................ 16.25 11.25
Fiscal Year Ended June 30, 2002
Quarter ended September 30, 2001........................................... $16.55 $10.00
Quarter ended December 31, 2001............................................ 17.62 12.16
Quarter ended March 31, 2002............................................... 17.25 13.85
Quarter ended June 30, 2002................................................ 19.60 14.65
Fiscal Year Ended June 30, 2003
Quarter ended September 30, 2002........................................... $15.80 $10.52
Quarter ended December 31, 2002............................................ 14.00 9.23
Quarter ended March 31, 2003............................................... 13.00 10.01
Quarter ended June 30, 2003 (through _____, 2003)..........................
On ____________, 2003, the last full trading day before the making of
the offer, the closing price of our common stock underlying the eligible
options, as reported by the NYSE, was $______ per share. On April 1, 2003, the
last full trading day before the merger was announced, the closing price of our
common stock underlying the eligible options, as reported by the NYSE, was
$11.13 per share. You are urged to obtain current market prices for our common
stock.
Merger Agreement. On April 1, 2003, we entered into an Agreement and
Plan of Merger with Berkshire Hathaway Inc. and B Merger Sub Inc., a wholly
owned subsidiary of Berkshire Hathaway. Under and subject to the terms and
conditions of the merger agreement, B Merger Sub will merge with and into
▇▇▇▇▇▇▇ Homes with ▇▇▇▇▇▇▇ Homes as the surviving corporation in the merger.
Upon the completion of the merger, each issued and outstanding share of our
common stock will automatically be cancelled and cease to exist and will be
converted into the right to receive $12.50 in cash, without interest, per
share. As explained above, if you do not tender your eligible options, your
eligible options will continue to permit you to purchase shares of our common
stock following the merger on their current terms. As a result of the merger,
we will cease to be an independent, publicly traded company and will become a
wholly owned subsidiary of Berkshire Hathaway.
The completion of the merger depends on the satisfaction or waiver of
a number of conditions, including the following:
o the merger agreement must have been adopted by the affirmative
vote of the holders of a majority of all outstanding shares of
our common stock;
10
o no legal prohibition to the merger may be in effect;
o the number of holders of eligible options must not be more than
100 and the number of shares of our common stock issuable upon
the exercise of outstanding eligible options must not be more
than 250,000 shares, following the completion of the offer;
o all governmental consents, orders and approvals required for
the completion of the merger must be obtained and be in effect,
or applicable waiting periods must have terminated or expired;
o our and Berkshire Hathaway's respective representations and
warranties in the merger agreement must be true and correct in
all material respects; and
o Clayton Homes and Berkshire Hathaway must have performed all
material obligations that each is required to perform under the
merger agreement.
The merger agreement may be terminated at any time before the
completion of the merger, whether before or after our stockholders have adopted
the merger agreement:
o by mutual consent of ▇▇▇▇▇▇▇ Homes and Berkshire Hathaway;
o by either ▇▇▇▇▇▇▇ Homes or Berkshire Hathaway, if:
o any final, non-appealable governmental order, decree,
ruling or other action prohibits the completion of the
merger, except that the party seeking to terminate (with
certain limitations in the case of Berkshire Hathaway)
must have used all reasonable efforts to challenge that
order, decree, ruling or other action; or
o the merger is not completed on or before the outside date
of August 30, 2003, subject to certain exceptions; or
o by Berkshire Hathaway, if:
o our stockholders fail to adopt the merger agreement;
o our board of directors withdraws or modifies, or
proposed to withdraw or modify, in a manner adverse to
Berkshire Hathaway its recommendation for adoption of
the merger agreement, or fails to reconfirm its
recommendation within three business days after a
written request to do so, or recommends, or proposed to
recommend, to our stockholders any takeover proposal by
a third party; or
o we have breached any of our representations or warranties
qualified by materiality in any respect or those not
qualified by materially in any material respect or any
of our material obligations under the merger agreement
where that breach cannot be cured within 15 business
days after Berkshire delivers written notice of the
breach; or
o by ▇▇▇▇▇▇▇ Homes, if:
o our stockholders fail to adopt the merger agreement;
o we concurrently enter into a definitive agreement
providing for a superior acquisition proposal, provided
that we have complied with our obligations under the
merger agreement and provided that we have paid to
Berkshire Hathaway the $35 million termination fee and
the out-of-pocket expenses of Berkshire Hathaway and
Merger Sub not to exceed $1 million; or
11
o Berkshire Hathaway has breached any of its
representations or warranties qualified by materiality
in any respect or those not qualified by materiality in
any material respect or any of its material obligations
under the merger agreement where the breach cannot be
cured within 15 business days after we deliver written
notice of the breach.
In certain circumstances, our board of directors has the right to
terminate the merger agreement in connection with the receipt of a superior
acquisition proposal. In that event, and in certain other specified
circumstances, the merger agreement provides that upon termination we must pay
to Berkshire Hathaway a termination fee of $35 million and the out-of-pocket
expenses of Berkshire Hathaway and Merger Sub not to exceed $1 million.
Before entering into the merger agreement, we had expected, in the
ordinary course of business, to enter into certain financing transactions in
the next 12 months to provide us with an aggregate of approximately $1.875
billion to meet our ongoing capital requirements. Pending the closing of the
merger, Berkshire Hathaway has agreed that, to the extent it will not permit us
to use third-party financing sources, Berkshire Hathaway will, or will cause
one or more of its subsidiaries to, enter into agreements with us or one or
more of our subsidiaries on specified dates that will provide certain financing
needed by us through (1) the acquisition of certain securitizable contracts by
Berkshire Hathaway or one of its subsidiaries, and (2) borrowings by us or one
or more of our subsidiaries. We expect that financing provided by Berkshire
Hathaway would otherwise have been obtained by us on similar terms through
market transactions. A termination of the merger agreement under certain
circumstances, including in connection with another takeover proposal, or a
breach of the merger agreement by ▇▇▇▇▇▇▇ Homes, will generally relieve
Berkshire Hathaway of any obligation to provide any such financing unless an
agreement with respect to such financing is already in place.
The description above does not purport to be a complete description of
the merger agreement and it is qualified in all respects by reference to the
merger agreement, which is filed as an exhibit to the Current Report on Form
8-K, filed with the SEC on April 2, 2003. This Form 8-K, including the exhibits
thereto, is incorporated by reference into this Offer to Purchase.
Stockholders Agreement. In connection with the merger, Berkshire
Hathaway, B Merger Sub and ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, chairman of our board of
directors, and the ▇▇▇▇▇▇▇ Family Foundation have entered into a stockholders
agreement that obligates ▇▇. ▇▇▇▇▇▇▇ and the ▇▇▇▇▇▇▇ Family Foundation to vote
their shares, among other things, in favor of the merger and, if directed by
Berkshire Hathaway, against any competing takeover proposal (as defined in the
merger agreement) or other proposals that could adversely affect the
consummation of the merger. The stockholders that are party to the stockholders
agreement own 37,663,862 shares of our common stock representing approximately
28% of the total votes entitled to be cast at the special meeting. The
stockholders agreement will terminate upon the earlier to occur of (a) the
completion of the merger, (b) the termination of the merger agreement, (c) an
amendment of the merger agreement reducing the merger consideration or changing
the form of merger consideration to other than cash, and (d) December 31, 2003.
However, in the event of a termination of the merger agreement relating to a
takeover proposal received or publicly disseminated after May 9, 2003, these
stockholders will remain subject to the terms of the stockholders agreement for
a twelve-month period following the date of such termination.
The description above does not purport to be a complete description of
the stockholders agreement and it is qualified in all respects by reference to
the stockholders agreement, which is filed as an exhibit to the Current Report
on Form 8-K, filed with the SEC on April 2, 2003.
11. FEES AND EXPENSES; SOURCE AND AMOUNT OF FUNDS
We will not pay any fees or commissions to any broker, dealer or other
person for soliciting tenders of eligible options pursuant to the offer. We
will pay all of the fees and expenses related to the offer, which we estimate
to be approximately as follows:
12
SEC Filing Fees.................................... $ 1,577
Legal Fees and Expenses............................ 35,000
Consulting Fees and Expenses....................... 5,200
Printing and Mailing Costs......................... 10,000
Miscellaneous...................................... 10,000
Total......................................... $ 61,777
Assuming all eligible options are tendered and accepted, we will need
a maximum of $19.5 million to make the cash payment. We anticipate using
available cash to pay these costs.
12. INTERESTS OF DIRECTORS AND EXECUTIVE OFFICERS; TRANSACTIONS CONCERNING
OPTIONS AND COMMON STOCK.
Interests of Directors and Executive Officers. The following table
sets forth information as of March 31, 2003, concerning eligible options
beneficially owned by each of our directors, each of our executive officers and
all of our directors and executive officers as a group.
NUMBER OF
NAME OF ELIGIBLE OPTIONS PERCENT OF
BENEFICIAL OWNER BENEFICIALLY OWNED ELIGIBLE OPTIONS
---------------- ------------------ ----------------
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ 312,302 5.27%
▇. ▇▇▇ ▇▇▇▇▇▇▇ 9,404 *
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ 501,179 8.45%
▇▇▇ ▇. ▇▇▇▇▇ 9,404 *
▇▇▇▇▇▇ ▇. ▇▇▇▇▇ 0 --
▇▇▇▇▇ ▇. ▇▇▇▇▇▇ 31,377 *
▇▇▇▇ ▇. ▇▇▇▇▇ 120,000 2.02%
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ 8,450 *
▇. ▇▇▇▇▇▇ ▇▇▇▇ 39,920 *
▇▇▇▇▇ ▇. ▇▇▇▇▇ 531,694 8.97%
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ 345,938 5.84%
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ 102,500 1.73%
All directors and executive officers as a group (12
persons) 2,012,168 33.94%
--------
*Less than 1%
Our directors and executive officers are eligible to participate in
the offer and they have indicated that they will tender all of their eligible
options in the offer. Excluding eligible options that are vested and for which
the spread (the merger consideration of $12.50 per share minus the exercise
price of the eligible option) is greater than the value derived by the formula,
the value of the offer to purchase and cancel outstanding options for each of
our directors and executive officers is as follows:
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ $ 489,969
▇. ▇▇▇ ▇▇▇▇▇▇▇ $ 12,111
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ $ 1,162,738
▇▇▇▇▇▇ ▇. ▇▇▇▇▇ $ 0
▇▇▇ ▇. ▇▇▇▇▇ $ 12,111
▇▇▇▇▇ ▇. ▇▇▇▇▇▇ $ 12,111
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ $ 11,820
▇. ▇▇▇▇▇▇ ▇▇▇▇ $ 12,111
▇▇▇▇▇ ▇. ▇▇▇▇▇ $ 1,162,738
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ $ 959,274
▇▇▇▇ ▇. ▇▇▇▇▇ $ 432,305
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ $ 359,069
13
For each of our directors and executive officers, the value of
eligible options that are vested and for which the spread (the merger
consideration of $12.50 per share minus the exercise price of the eligible
option) is greater than the value derived by the formula is as follows:
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ $ 214,075
▇. ▇▇▇ ▇▇▇▇▇▇▇ $ 16,290
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ $ 358,194
▇▇▇▇▇▇ ▇. ▇▇▇▇▇ $ 0
▇▇▇ ▇. ▇▇▇▇▇ $ 16,290
▇▇▇▇▇ ▇. ▇▇▇▇▇▇ $ 132,325
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ $ 0
▇. ▇▇▇▇▇▇ ▇▇▇▇ $ 177,439
▇▇▇▇▇ ▇. ▇▇▇▇▇ $ 519,338
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ $ 0
▇▇▇▇ ▇. ▇▇▇▇▇ $ 0
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ $ 0
Transactions and Arrangements Concerning Securities. Except for the
issuance of shares of our common stock on March 31, 2003 under our 401(k) plan,
to the best of our knowledge, there have been no transactions that ▇▇▇▇▇▇▇
Homes, our directors or executive officers or the affiliates of any of our
directors or executive officers engaged in that involved options to purchase
▇▇▇▇▇▇▇ Homes common stock or involved a purchase or sale of ▇▇▇▇▇▇▇ Homes
common stock during the 60 days prior to the date of the offer.
Except as otherwise described in this Offer to Purchase, and except
for customary margin accounts maintained at a broker by some of our directors
and executive officers, neither we nor, to the best of our knowledge, any of
our affiliates, directors or executive officers, is a party to any agreement,
arrangement or understanding with any other person relating, directly or
indirectly, to the tender offer or with respect to any of our securities,
including, but not limited to, any agreement, arrangement or understanding
concerning the transfer or the voting of our securities, joint ventures, loan
or option arrangements, puts or calls, guarantees of loans, guarantees against
loss or the giving or withholding of proxies, consents or authorizations.
13. ACCOUNTING CONSEQUENCES OF THE OFFER
We will recognize a compensation expense in the amount of the cash
payments made with respect to eligible options that are purchased and cancelled
pursuant to the offer as of the date of such purchase and cancellation.
14. LEGAL MATTERS; REGULATORY APPROVALS
We are not aware of any license or regulatory permit that we believe
is material to our business that might be adversely affected by our purchase
and cancellation of eligible options as contemplated by the offer. Except for
the expiration or early termination of the waiting period under the
▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Antitrust Improvements Act of 1976, as amended, in connection
with the merger, we are not aware of any approval or other action by any
government or governmental, administrative or regulatory authority or agency,
domestic or foreign, that would be required before the purchase and
cancellation of eligible options as contemplated by the offer, or to enable us
to take these actions. We and Berkshire Hathaway filed notification and report
forms under the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Act with the Federal Trade Commission and the
Antitrust Division of the Department of Justice on April 24, 2003 and each
party received early termination with respect to those filings on May 5, 2003.
Notwithstanding the early termination of the waiting period under the
▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Act, at any time before or after the effective time of the
merger, the Federal Trade Commission or the Antitrust Division could take
action under the antitrust laws with respect to the merger, including seeking
to enjoin the completion of the merger, to rescind the merger or to approve the
merger conditionally upon the divestiture of substantial assets of ▇▇▇▇▇▇▇
Homes or Berkshire Hathaway. Under the terms of the merger agreement, Berkshire
Hathaway is not required to divest, hold separate or otherwise dispose of any
portion of its businesses or assets. In addition, ▇▇▇▇▇▇▇ Homes may not take
any of these actions without obtaining the prior written consent of Berkshire
Hathaway. We cannot assure you that any such action, if needed, would be taken
or that the merger agreement would not be terminated as a result of the failure
to take such action. Our
14
obligation to accept for purchase and cancellation and pay for tendered
eligible options under the offer is subject to the conditions described in
Section 8.
15. INFORMATION ABOUT US
General. ▇▇▇▇▇▇▇ Homes is a vertically integrated manufactured housing
company that produces, sells, finances and insures primarily low to
medium-priced manufactured homes. Our 20 manufacturing plants produce homes
that are marketed in 33 states through 296 company-owned stores, 610
independent retailers and 85 manufactured housing communities. We offer
installment financing and insurance products to our home buyers and those
buying from selected independent retailers. This financing is provided through
our wholly-owned finance subsidiary, Vanderbilt Mortgage and Finance, Inc. We
act as agent, and earn commissions and reinsure risks on physical damage,
family protection and home buyer protection insurance policies issued by a
non-related insurance company in connection with our home sales. We also
develop, own and manage manufactured housing communities.
We are a Delaware corporation whose predecessor was incorporated in
1968 in Tennessee. Our principal executive offices are located at ▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇, ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ and our telephone number is (▇▇▇) ▇▇▇-▇▇▇▇.
Unless the context indicates otherwise, references in this Offer to
Purchase to "we," "us," "our" or "▇▇▇▇▇▇▇ Homes" are to ▇▇▇▇▇▇▇ Homes and its
consolidated subsidiaries.
Additional Information. We are subject to the information and
reporting requirements of the Exchange Act, and, in accordance with such laws,
we file with the SEC periodic reports, proxy statements and other information
relating to our business, financial condition and other matters. We are
required to disclose in these proxy statements filed with the SEC certain
information, as of particular dates, concerning our directors and executive
officers, their compensation, stock options granted to them, the principal
holders of our securities and any material interest of such persons in
transactions with us. We have also filed with the SEC an Issuer Tender Offer
Statement on Schedule TO, which includes additional information with respect to
our offer.
The reports, statements and other information (including any exhibits,
amendments or supplements to such documents) we file may be inspected and
copied at the SEC's Public Reference Room, ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇.▇., ▇▇▇▇▇▇▇▇▇▇,
▇.▇. ▇▇▇▇▇. For more information about the operation of the SEC's Public
Reference Room, contact the SEC at 800-SEC-0330. The SEC also maintains a web
site on the Internet at ▇▇▇▇://▇▇▇.▇▇▇.▇▇▇ that contains reports, proxy and
information statements and other information regarding registrants that file
electronically with the SEC. These reports, statements and other information
concerning us can also be inspected at the offices of the NYSE, ▇▇ ▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇.
Incorporation by Reference. The rules of the SEC allow us to
"incorporate by reference" information into this Offer to Purchase, which means
that we can disclose important information to you by referring you to another
document filed separately with the SEC. These documents contain important
information about us.
SEC FILINGS (FILE NO. 001-08824) PERIOD OR DATE FILED
-------------------------------- --------------------
Annual Report on Form 10-K......................................... Year ended June 30, 2002
Quarterly Reports on Form 10-Q..................................... Quarters ended September 30, 2002, December 31, 2002
and March 31, 2003
Current Reports on Form 8-K........................................ Filed February 14, 2003, February 19, 2003, February 21,
2003, February 24, 2003, March 4, 2003, March 13,
2003, March 14, 2003, April 2, 2003, April 17, 2003
and May 9, 2003
Proxy Statement for 2002 Annual
Stockholders Meeting.......................................... Filed September 25, 2002
We incorporate by reference the documents above.
15
You can obtain any of the documents incorporated by reference in this
Offer to Purchase from us without charge, excluding any exhibits to those
documents, by requesting them in writing or by telephone from us at ▇▇▇▇▇▇▇
Homes, Inc., ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, Attention: ▇▇▇▇▇▇
▇. ▇▇▇▇▇▇, Secretary, telephone: (▇▇▇) ▇▇▇-▇▇▇▇. Please be sure to include your
complete name and address in your request. If you request any incorporated
documents, we will mail them to you by first class mail, or another equally
prompt means, within one business day after we receive your request. In
addition, you can obtain copies of these documents from the SEC's website. Such
documents may also be inspected at the locations described above.
The information about us contained in this Offer to Purchase should be
read together with the information contained in the documents to which we have
referred you.
16. FORWARD-LOOKING STATEMENTS
The SEC encourages companies to disclose forward-looking information
so that investors can better understand a company's future prospects and make
informed investment decisions. These statements may be made directly in this
Offer to Purchase referring to us, and they may also be made a part of this
Offer to Purchase by reference to other documents filed by us with the SEC.
Words such as "anticipate," "estimate," "expect," "project," "intend,"
"plan," "believe," "target," "objective," "strategy," "goal" and words and
terms of similar substance used in connection with any discussion of the offer,
future operating or financial performance, or the acquisition of us by
Berkshire Hathaway, identify forward-looking statements. Our forward-looking
statements are based on the management's current views about future events and
are subject to a number of factors and uncertainties that could cause actual
results to differ materially from those described in the forward-looking
statements. The following risks related to our business, the offer, and the
merger, among others, could cause or contribute to actual results differing
materially from those described in the forward-looking statements:
o potential periodic inventory adjustments by both captive
and independent retailers;
o availability of wholesale and retail financing;
o general or seasonal weather conditions affecting sales and
revenues;
o catastrophic events impacting insurance costs;
o cost of labor;
o cost of raw materials;
o industry consolidation trends creating fewer, but stronger,
competitors capable of sustaining competitive pricing
pressures;
o ability to anticipate and meet consumer preferences,
maintain successful marketing programs, continue
manufacturing output, keep a strong cost management
oversight, and achieve stable results from our
securitization activities;
o prevailing interest rates;
o government monetary policy;
o stable regulation of manufacturing standards;
o consumer confidence;
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o favorable trade policies;
o quality of management;
o general economic, business and financial market conditions;
o the ability to satisfy the conditions to closing set forth
in the merger agreement; and
o other factors described in our filings with the SEC.
We caution you not to place undue reliance on our forward-looking
statements, which speak only as of the date of this Offer to Purchase or the
date of the document incorporated by reference in this Offer to Purchase.
Except as required by law, we are under no obligation, and expressly disclaim
any obligation, to update or alter any forward-looking statements, whether as a
result of new information, future events or otherwise.
For additional information about factors that could cause actual
results to differ materially from those described in the forward-looking
statements, please see the quarterly reports on Form 10-Q and the annual
reports on Form 10-K that we have filed with the SEC as described under
"Information About Us." All forward-looking statements attributable to us or
any person acting on our behalf are expressly qualified in their entirety by
the cautionary statements contained or referred to in this section.
WE HAVE NOT AUTHORIZED ANY PERSON TO MAKE ANY RECOMMENDATION ON OUR
BEHALF AS TO WHETHER YOU SHOULD TENDER OR REFRAIN FROM TENDERING YOUR ELIGIBLE
OPTIONS PURSUANT TO THE OFFER. YOU SHOULD CONSIDER ONLY THE INFORMATION
CONTAINED IN THE OFFER OR TO WHICH WE HAVE REFERRED YOU. WE HAVE NOT AUTHORIZED
ANYONE TO GIVE YOU ANY INFORMATION OR TO MAKE ANY REPRESENTATION IN CONNECTION
WITH THE OFFER OTHER THAN THE INFORMATION AND REPRESENTATIONS CONTAINED IN THE
OFFER. IF ANYONE MAKES ANY RECOMMENDATION OR REPRESENTATION TO YOU OR GIVES YOU
ANY INFORMATION, YOU MUST NOT RELY UPON THAT RECOMMENDATION, REPRESENTATION OR
INFORMATION AS HAVING BEEN AUTHORIZED BY US.
▇▇▇▇▇▇▇ HOMES, INC.
________________________, 2003
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