OFFER TO PURCHASE FOR CASH
ALL OUTSTANDING SHARES OF COMMON STOCK
OF
FIRST OF MICHIGAN CAPITAL CORPORATION
AT
$15.00 NET PER SHARE
BY
FMCC ACQUISITION CORP.
AN INDIRECT WHOLLY OWNED SUBSIDIARY OF
▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ HOLDINGS INC.
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THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT,
NEW YORK CITY TIME, ON WEDNESDAY, JULY 16, 1997, UNLESS THE OFFER IS EXTENDED.
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THE BOARD OF DIRECTORS OF FIRST OF MICHIGAN CAPITAL CORPORATION HAS
UNANIMOUSLY APPROVED THE OFFER, SUBJECT TO RECEIPT OF A FAIRNESS OPINION. THE
BOARD OF DIRECTORS OF THE COMPANY HAS INDICATED ITS INTENTION TO ISSUE ITS
RECOMMENDATION WITH RESPECT TO THE OFFER UPON RECEIPT OF SUCH FAIRNESS OPINION.
THE OFFER IS CONDITIONED UPON, AMONG OTHER THINGS, (1) ANY WAITING PERIOD
UNDER THE HSR ACT (AS HEREINAFTER DEFINED) APPLICABLE TO THE PURCHASE OF SHARES
PURSUANT TO THE OFFER HAVING EXPIRED OR HAVING TERMINATED PRIOR TO THE
EXPIRATION OF THE OFFER, AND (2) THE SATISFACTION OF CERTAIN OTHER TERMS AND
CONDITIONS. SEE 'TENDER OFFER -- CERTAIN CONDITIONS TO THE OFFER.'
THE OFFER IS PART OF A PLAN OF ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ HOLDINGS INC. AND ITS
INDIRECT WHOLLY OWNED SUBSIDIARY, FMCC ACQUISITION CORP., TO ACQUIRE ALL THE
SHARES (AS HEREINAFTER DEFINED).
------------------------
IMPORTANT
Any stockholder desiring to tender all or any portion of such stockholder's
Shares should either (i) complete and sign the Letter of Transmittal (or a
facsimile copy thereof) in accordance with the instructions in the Letter of
Transmittal, mail or deliver the Letter of Transmittal or such facsimile and all
other required documents to the Depositary and either deliver the certificates
for such Shares to the Depositary along with the Letter of Transmittal or tender
such Shares pursuant to the procedure for book-entry transfer set forth in
'TENDER OFFER -- Procedure for Tendering Shares', or (ii) request such
stockholder's broker, dealer, bank, trust company or other nominee to effect the
transaction for such stockholder. A stockholder whose Shares are registered in
the name of a broker, dealer, bank, trust company or other nominee must contact
such person if he or she desires to tender such Shares.
A stockholder who desires to tender Shares and whose certificates for such
Shares are not immediately available and who cannot comply with the procedures
for book-entry transfer prior to the expiration of the Offer, may tender such
Shares by following the procedure for guaranteed delivery set forth in 'TENDER
OFFER -- Procedure for Tendering Shares.'
Questions and requests for assistance may be directed to the Information
Agent or to the Dealer Manager at their respective addresses and telephone
numbers set forth on the back cover of this Offer to Purchase. Additional copies
of this Offer to Purchase, the Letter of Transmittal, the Notice of Guaranteed
Delivery and other related materials may be obtained from the Information Agent
or from brokers, dealers, commercial banks and trust companies.
------------------------
The Dealer Manager for the Offer is:
▇▇▇▇▇▇▇▇▇▇ & CO. INC.
June 18, 1997
TABLE OF CONTENTS
PAGE
----
INTRODUCTION............................................................................................... 1
TENDER OFFER............................................................................................... 3
Terms of the Offer.................................................................................... 3
Acceptance for Payment and Payment for Shares......................................................... 3
Procedure for Tendering Shares........................................................................ 4
Withdrawal Rights..................................................................................... 6
Certain Federal Income Tax Consequences............................................................... 7
Price Range of the Shares; Dividends on the Shares.................................................... 8
Certain Effects of the Offer.......................................................................... 8
Certain Information Concerning the Company............................................................ 9
Certain Information Concerning Purchaser, ▇▇▇▇▇▇▇▇▇▇ and Holdings..................................... 10
Source and Amount of Funds............................................................................ 12
Background of the Offer............................................................................... 13
Purpose of the Offer.................................................................................. 14
Plans for the Company................................................................................. 14
Certain Agreements.................................................................................... 15
The Merger............................................................................................ 19
Board Representation.................................................................................. 20
Appraisal Rights...................................................................................... 20
Approval by the Board of Directors of the Company..................................................... 22
Certain Conditions to the Offer....................................................................... 22
Certain Legal and Regulatory Matters.................................................................. 23
Fees and Expenses..................................................................................... 25
Miscellaneous......................................................................................... 25
Schedule I -- Directors and Executive Officers of Holdings
Schedule II -- Directors and Executive Officers of ▇▇▇▇▇▇▇▇▇▇
Schedule III -- Directors and Executive Officers of Purchaser
i
TO THE STOCKHOLDERS OF
FIRST OF MICHIGAN CAPITAL CORPORATION:
INTRODUCTION
FMCC Acquisition Corp., a Delaware corporation ('Purchaser'), and the
indirect wholly owned subsidiary of ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ Holdings Inc., an Ontario
corporation ('Holdings'), hereby offers to purchase all outstanding shares of
Common Stock, $.10 par value per share ('Common Stock'), of First of Michigan
Capital Corporation, a Delaware corporation (the 'Company'), at a purchase price
of $15.00 per share, net to the seller in cash, without interest (the 'Offer
Price'), upon the terms and subject to the conditions set forth in this Offer to
Purchase and in the related Letter of Transmittal (which, together with any
amendments or supplements hereto or thereto, collectively constitute the
'Offer').
Purchaser is a wholly owned subsidiary of ▇▇▇▇▇▇▇▇▇▇ & Co. Inc.
('▇▇▇▇▇▇▇▇▇▇'), a brokerage firm that is wholly owned by Holdings. Holdings
formed Purchaser in connection with the Offer and the transactions contemplated
hereby.
THE BOARD OF DIRECTORS OF THE COMPANY HAS UNANIMOUSLY APPROVED THE OFFER,
SUBJECT TO RECEIPT OF A FAIRNESS OPINION. THE COMPANY HAS INFORMED PURCHASER
THAT THE COMPANY INTENDS TO FILE WITH THE SECURITIES AND EXCHANGE COMMISSION
(THE 'COMMISSION') AND TO DISSEMINATE TO ITS STOCKHOLDERS A SCHEDULE 14D-9
SOLICITATION/RECOMMENDATION STATEMENT WITH RESPECT TO SUCH APPROVAL, PROMPTLY
UPON RECEIPT OF SUCH FAIRNESS OPINION.
THE OFFER IS CONDITIONED UPON, AMONG OTHER THINGS, (i) ANY WAITING PERIOD
UNDER THE HSR ACT APPLICABLE TO THE PURCHASE OF SHARES PURSUANT TO THE OFFER
HAVING EXPIRED OR HAVING TERMINATED PRIOR TO THE EXPIRATION OF THE OFFER, AND
(ii) THE SATISFACTION OF CERTAIN OTHER TERMS AND CONDITIONS. SEE 'TENDER
OFFER -- CERTAIN CONDITIONS TO THE OFFER.'
Tendering stockholders will not be obligated to pay brokerage commissions
or, except as set forth in Instruction 6 of the Letter of Transmittal, transfer
taxes on the purchase of Shares by Purchaser. Purchaser will reimburse
▇▇▇▇▇▇▇▇▇▇, its affiliate, which is acting as Dealer Manager (the 'Dealer
Manager'), for all its out-of-pocket expenses in connection with the Offer.
Purchaser will pay all fees and expenses of The Bank of New York, which is
acting as the Depositary (the 'Depositary'), and of Beacon Hill Partners, Inc.,
which is acting as Information Agent (the 'Information Agent'), in connection
with the Offer. See 'TENDER OFFER -- Fees and Expenses.' The Offer Price will be
paid for Shares validly tendered and accepted as described in 'TENDER
OFFER -- Acceptance for Payment and Payment for Shares' hereof as soon as
practicable after acceptance by Purchaser.
The Offer is being made as part of Holdings' plan to acquire all the
outstanding shares of Common Stock (the 'Shares'). Pursuant to the Securities
Purchase Agreement dated as of June 11, 1997 (the 'Purchase Agreement'), between
Purchaser and DST Systems, Inc. ('DST') and 1888 Limited Partnership ('1888')
(together with DST, the 'Sellers'), Purchaser agreed to purchase from Sellers an
aggregate of 1,418,351 Shares (the 'Sellers Shares') (representing approximately
53% of the outstanding Shares on a fully diluted basis) for a purchase price of
$15.00 per share, net to the Sellers in cash (the 'Sellers Shares Purchase
Price'), subject to expiration or termination of the waiting period under the
▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Antitrust Improvements Act of 1976 (the 'HSR Act'), the
receipt of necessary regulatory approvals and certain other conditions,
including expiration of the Offer. Pursuant to the Tender Offer Agreement dated
as of June 11, 1997, as amended (the 'Tender Offer Agreement'), among Purchaser,
the Company and the Sellers, Purchaser agreed to commence the Offer on the terms
and subject to the conditions described herein. See 'TENDER OFFER -- Certain
Agreements.'
Under the terms of the Purchase Agreement, the Sellers agreed to place the
Sellers Shares, and Purchaser agreed to place $21,275,265 (i.e., the Sellers
Shares Purchase Price), in escrow pending the consummation or termination of the
purchase of the Sellers Shares. In addition, ▇▇▇▇▇▇▇ agreed to use their
respective best efforts to cause certain stockholders who beneficially own
approximately 120,000 Shares to tender their Shares pursuant to the Offer. Under
the terms of the Tender Offer Agreement,
Purchaser agreed to deposit cash in the amount of $16,724,735 (the 'Tender Offer
Deposit') in escrow pending the consummation or termination of the Offer.
It is the intention of Holdings and Purchaser that Shares not acquired in
the Offer or pursuant to the Purchase Agreement will be subsequently acquired in
a back-end merger (the 'Merger') for consideration per Share equivalent to the
Offer Price. However, Purchaser and the Company have not entered into an
agreement that sets forth the specific terms and conditions of the Merger. The
approval by the Board of Directors of the Company in the Memorandum of
Understanding, dated June 11, 1997 (the 'MOU'), with Purchaser effected the
waiver of the applicability of a provision of the Company's certificate of
incorporation (the 'Charter') which would require the affirmative vote of 80% of
the outstanding Shares to approve a Business Combination with a Related Party
(as such terms are defined in the Charter). Accordingly, under the Charter and
the General Corporation Law of the State of Delaware (the 'DGCL'), Purchaser
will have sufficient voting power to approve the Merger if it consummates the
purchase of the Sellers Shares, whether or not it consummates the Offer and
whether or not any other stockholders of the Company vote to approve the Merger.
If Purchaser acquires 90% or more of the outstanding Shares pursuant to the
Offer and the purchase of the Sellers Shares, the 'short form' merger provisions
of the DGCL would permit the Merger to occur without a vote of the stockholders
of the Company. If a 'short form' merger is available under the DGCL, Purchaser
expects to consummate a 'short form' merger of Purchaser with and into the
Company. See 'TENDER OFFER -- Purpose of the Offer.'
Certain restrictions on business combinations are set forth in Section 203
of the DGCL and Section 780 of the Business Corporations Act of the State of
Michigan (the 'MBCA'). In the Tender Offer Agreement, the Company has
represented that (i) neither Section 203 of the DGCL nor Section 780 of the MBCA
is applicable to the Offer, and (ii) there are no provisions of the DGCL or the
MBCA that would prevent the consummation of the transactions contemplated by the
Offer. See 'TENDER OFFER -- Certain Legal and Regulatory Matters.'
THIS OFFER TO PURCHASE AND THE RELATED LETTER OF TRANSMITTAL CONTAIN
IMPORTANT INFORMATION AND SHOULD BE READ IN THEIR ENTIRETY BEFORE ANY DECISION
IS MADE WITH RESPECT TO THE OFFER.
2
TENDER OFFER
TERMS OF THE OFFER
Upon the terms and subject to the conditions of the Offer (including, if
the Offer is extended or amended, the terms of any such extension or amendment),
Purchaser will accept for payment and purchase at the price set forth above all
Shares properly tendered by, and not properly withdrawn prior to, the Expiration
Date. The term 'Expiration Date' means 12:00 Midnight, New York City time, on
Wednesday, July 16, 1997, unless Purchaser shall, in its sole discretion, have
extended the Offer, in which event the term 'Expiration Date' shall mean the
latest time and date on which the Offer, as so extended by Purchaser, shall
expire.
Consummation of the Offer is conditioned upon satisfaction of certain
conditions. See 'TENDER OFFER -- Certain Conditions to the Offer.' If any such
condition, whether individually or in combination, is not satisfied prior to the
Expiration Date, Purchaser reserves the right (but shall not be obligated) to
(i) decline to purchase any of the Shares tendered and terminate the Offer, or
(ii) waive any condition and, subject to complying with applicable rules and
regulations of the Commission, the New York Stock Exchange, Inc. ('NYSE') or
other applicable regulatory authority, purchase all Shares validly tendered.
The Company has provided to Purchaser its list of stockholders and security
position listings for the purpose of disseminating the Offer to holders of
Shares. This Offer to Purchase and the related Letter of Transmittal and other
relevant materials will be mailed to record holders of Shares and furnished to
brokers, dealers, commercial banks, trust companies and similar persons whose
names, or the names of whose nominees, appear on the Company's stockholder lists
or, if applicable, who are listed as participants in a clearing agency's
security position listing, for subsequent transmittal to beneficial owners of
Shares.
ACCEPTANCE FOR PAYMENT AND PAYMENT FOR SHARES
Upon the terms and subject to the conditions of the Offer (including, if
the Offer is extended or amended, the terms and conditions of any such extension
or amendment), Purchaser will accept for payment and will pay for all Shares
validly tendered prior to the Expiration Date, and not properly withdrawn in
accordance with the provisions set forth under 'TENDER OFFER -- Withdrawal
Rights' promptly after the Expiration Date. Any determination concerning the
satisfaction or waiver of such terms or conditions will be within the sole
discretion of Purchaser, and such determination will be final and binding on all
tendering stockholders. See 'TENDER OFFER -- Terms of the Offer' and
' -- Certain Conditions to the Offer.'
In all cases, payment for Shares accepted for payment pursuant to the Offer
will be made only after timely receipt by the Depositary of (i) certificates for
such Shares (or timely Book-Entry Confirmation of a transfer of such Shares as
described in 'TENDER OFFER -- Procedure for Tendering Shares'), (ii) a properly
completed and duly executed Letter of Transmittal (or facsimile thereof), with
any required signature guarantees, or an Agent's Message (as hereinafter
defined) in connection with a book-entry transfer, and (iii) any other documents
required by the Letter of Transmittal.
The per Share consideration paid to any stockholder pursuant to the Offer
will be the highest per Share consideration paid to any other stockholder
pursuant to the Offer.
The term 'Agent's Message' means a message, transmitted by a Book-Entry
Transfer Facility to, and received by, the Depositary and forming a part of a
Book-Entry Confirmation (as hereinafter defined), which states that such
Book-Entry Transfer Facility has received an express acknowledgment from the
participant in such Book-Entry Transfer Facility tendering the Shares which are
the subject of such Book-Entry Confirmation, that such participant has received
and agrees to be bound by the terms of the Letter of Transmittal and that
Purchaser may enforce such agreement against such participant.
For purposes of the Offer, Purchaser will be deemed to have accepted for
payment, and thereby purchased, Shares properly tendered to Purchaser and not
withdrawn as, if and when Purchaser gives oral or written notice to the
Depositary of Purchaser's acceptance for payment of such Shares. Payment for
Shares accepted for payment pursuant to the Offer will be made by deposit of the
Offer Price
3
therefor with the Depositary, which will act as agent for tendering stockholders
for the purpose of receiving payment from (or on behalf of) Purchaser and
transmitting payment to tendering stockholders. The Tender Offer Deposit has
been placed in escrow in accordance with the terms of the Tender Offer Escrow
Agreement dated as of June 11, 1997 (the 'Tender Escrow Agreement'), among the
Company, the Sellers, The Bank of New York (the 'Escrow Agent') and Purchaser,
and will be used to pay (in whole or in part) for Shares properly tendered and
not withdrawn.
If any certificates are submitted for Shares which are not properly
tendered pursuant to the terms and conditions of the Offer, or if certificates
are submitted for more Shares than are tendered, certificates for such
unpurchased Shares will be returned, without expense to the tendering
stockholder (or, in the case of Shares delivered by book-entry transfer of such
Shares into the Depositary's account at a Book-Entry Transfer Facility pursuant
to the procedure set forth under 'TENDER OFFER -- Procedure for Tendering
Shares', such Shares will be credited to an account maintained at the
appropriate Book-Entry Transfer Facility by the participant therein which so
delivered such Shares), as soon as practicable after the expiration or
termination of the Offer.
If Purchaser is delayed in its acceptance for payment of, or payment for,
Shares or is unable to accept for payment or pay for Shares pursuant to the
Offer for any reason, then, without prejudice to Purchaser's rights under the
Offer (but subject to compliance with Rule 14e-1(c) under the Exchange Act,
which requires that a tender offeror pay the consideration offered or return the
tendered securities promptly after the termination or withdrawal of a tender
offer), the Depositary may, nevertheless, on behalf of Purchaser, retain
tendered Shares, and any such Shares may not be withdrawn except to the extent
tendering stockholders are entitled to exercise, and duly exercise, withdrawal
rights as described in 'TENDER OFFER -- Withdrawal Rights.'
Purchaser reserves the right to transfer or assign, in whole or from time
to time in part, to any of its affiliates, the right to purchase Shares tendered
pursuant to the Offer, but any such transfer or assignment will not relieve
Purchaser of its obligations under the Offer and will in no way prejudice the
rights of tendering stockholders to receive payment pursuant to the Offer.
PROCEDURE FOR TENDERING SHARES
Valid Tender. For a stockholder validly to tender Shares pursuant to the
Offer, either (1) a properly completed and duly executed Letter of Transmittal
(or a manually signed facsimile thereof), together with any required signature
guarantees, or an Agent's Message in connection with a book-entry transfer of
Shares, and any other required documents, must be received by the Depositary at
one of its addresses set forth on the back cover of this Offer to Purchase and
either certificates for tendered Shares must be received by the Depositary at
one of such addresses or such Shares must be delivered pursuant to the procedure
for book-entry transfer set forth below (and a confirmation of such transfer
received by the Depositary), in each case prior to the Expiration Date, or (2)
the tendering stockholder must comply with the guaranteed delivery procedure set
forth below.
THE METHOD OF DELIVERY OF SHARE CERTIFICATES, THE LETTER OF TRANSMITTAL AND
ALL OTHER REQUIRED DOCUMENTS, INCLUDING DELIVERY THROUGH ANY BOOK-ENTRY TRANSFER
FACILITY, IS AT THE ELECTION AND RISK OF THE TENDERING STOCKHOLDER. SHARES WILL
BE DEEMED DELIVERED ONLY WHEN ACTUALLY RECEIVED BY THE DEPOSITARY. IF DELIVERY
IS BY MAIL, REGISTERED MAIL WITH RETURN RECEIPT REQUESTED, PROPERLY INSURED, IS
RECOMMENDED. IN ALL CASES, SUFFICIENT TIME SHOULD BE ALLOWED TO ENSURE TIMELY
DELIVERY.
Book-Entry Transfer. The Depositary will establish an account with respect
to the Shares at The Depository Trust Company and the Philadelphia Depository
Trust Company (each a 'Book-Entry Transfer Facility' and together, the
'Book-Entry Transfer Facilities') for purposes of the Offer within two business
days after the date of this Offer to Purchase. Any financial institution that is
a participant in any of the Book-Entry Transfer Facilities' systems may make
book-entry delivery of Shares by causing a Book-Entry Transfer Facility to
transfer such Shares into the Depositary's account in accordance with such
Book-Entry Transfer Facility's procedures for such transfer. However, although
4
delivery of Shares may be effected through book-entry transfer into the
Depositary's account at a Book-Entry Transfer Facility, the Letter of
Transmittal (or a manually signed facsimile thereof), properly completed and
duly executed, with any required signature guarantees or an Agent's Message in
connection with a book-entry delivery of Shares, and any other required
documents, must, in any case, be transmitted to, and received by, the Depositary
at one of its addresses set forth on the back cover of this Offer to Purchase
prior to the Expiration Date, or the tendering stockholder must comply with the
guaranteed delivery procedure described below. The confirmation of a book-entry
transfer of Shares into the Depositary's account at a Book-Entry Transfer
Facility as described above is referred to herein as a 'Book-Entry
Confirmation.' DELIVERY OF DOCUMENTS TO A BOOK-ENTRY TRANSFER FACILITY IN
ACCORDANCE WITH SUCH BOOK-ENTRY TRANSFER FACILITY'S PROCEDURES DOES NOT
CONSTITUTE DELIVERY TO THE DEPOSITARY.
Signature Guarantees. No signature guarantee is required on the Letter of
Transmittal if (1) the Letter of Transmittal is signed by the registered holder
of Shares (which term, for purposes of this Section, includes any participant in
any Book-Entry Transfer Facility whose name appears on a security position
listing as the owner of the Shares) tendered therewith and such registered
holder has not completed either the box entitled 'Special Delivery Instructions'
or the box entitled 'Special Payment Instructions' on the Letter of Transmittal,
or (2) such Shares are tendered for the account of a firm that is a member firm
of a registered national securities exchange or a member of the National
Association of Securities Dealers, Inc. or a bank, broker, dealer, credit union,
savings association or other entity that is a member in good standing of a
recognized Medallion Program approved by The Securities Transfer Association,
Inc. (an 'Eligible Institution'). In all other cases, all signatures on the
Letters of Transmittal must be guaranteed by an Eligible Institution. See
Instructions 1 and 5 to the Letter of Transmittal. If the certificates for
Shares are registered in the name of a person other than the signer of the
Letter of Transmittal, or if payment is to be made or certificates for Shares
not tendered or not accepted for payment are to be issued to a person other than
the registered holder of the certificates surrendered, the tendered certificates
must be endorsed or accompanied by appropriate stock powers, in either case
signed exactly as the name or names of the registered holders or owners appear
on the certificates, with the signatures on the certificates or stock powers
guaranteed as aforesaid. See Instruction 5 to the Letter of Transmittal.
Guaranteed Delivery. If a stockholder desires to tender Shares pursuant to
the Offer and such stockholder's certificates for Shares are not immediately
available, or the procedure for book-entry transfer cannot be completed on a
timely basis, or time will not permit all required documents to reach the
Depositary prior to the Expiration Date, such stockholder's tender may be
effected if all the following conditions are met:
A. such tender is made by or through an Eligible Institution;
B. a properly completed and duly executed Notice of Guaranteed
Delivery, substantially in the form provided by Purchaser is received by
the Depositary as provided below prior to the Expiration Date; and
C. the certificates for all tendered Shares, in proper form for
transfer (or a Book-Entry Confirmation with respect to such Shares),
together with a properly completed and duly executed Letter of Transmittal
(or facsimile thereof), with any required signature guarantees and any
other documents required by the Letter of Transmittal, are received by the
Depositary within three NYSE trading days after the date of execution of
such Notice of Guaranteed Delivery.
The Notice of Guaranteed Delivery may be delivered by hand to the
Depositary or transmitted by telegram, facsimile transmission or mail to the
Depositary and must include a guarantee by an Eligible Institution in the form
set forth in such Notice of Guaranteed Delivery.
Notwithstanding any other provision hereof, payment for Shares accepted for
payment pursuant to the Offer will in all cases be made only after timely
receipt by the Depositary of (i) certificates for (or a timely Book-Entry
Confirmation with respect to) such Shares, (ii) a properly completed and duly
executed Letter of Transmittal (or facsimile thereof) with any required
signature guarantees or an Agent's Message in connection with a book-entry
delivery of Shares, and (iii) any other documents required by the Letter of
Transmittal. Accordingly, tendering stockholders may be paid at different
5
times depending upon when certificates for Shares or Book-Entry Confirmations
are actually received by the Depositary. UNDER NO CIRCUMSTANCES WILL INTEREST BE
PAID ON THE OFFER PRICE OF SHARES TO BE PURCHASED BY PURCHASER, REGARDLESS OF
THE EXTENSION OF THE OFFER OR ANY DELAY IN MAKING PAYMENT.
A valid tender of Shares will constitute a binding agreement between the
tendering stockholder and Purchaser in accordance with the terms and subject to
the conditions set forth in the Offer.
BACKUP WITHHOLDING. UNLESS AN EXEMPTION APPLIES UNDER THE APPLICABLE LAW
AND REGULATIONS CONCERNING 'BACKUP WITHHOLDING' OF FEDERAL INCOME TAX, THE
DEPOSITARY WILL BE REQUIRED TO WITHHOLD, AND WILL WITHHOLD, 31% OF THE GROSS
PROCEEDS OTHERWISE PAYABLE TO A STOCKHOLDER OR OTHER PAYEE PURSUANT TO THE OFFER
UNLESS THE STOCKHOLDER OR OTHER PAYEE PROVIDES HIS OR HER TAXPAYER
IDENTIFICATION NUMBER (SOCIAL SECURITY NUMBER OR EMPLOYER IDENTIFICATION NUMBER)
AND CERTIFIES THAT SUCH NUMBER IS CORRECT. EACH TENDERING STOCKHOLDER (AND, IF
APPLICABLE, EACH OTHER PAYEE) SHOULD COMPLETE AND SIGN THE MAIN SIGNATURE FORM
AND THE SUBSTITUTE FORM W-9 INCLUDED AS PART OF THE LETTER OF TRANSMITTAL, SO AS
TO PROVIDE THE INFORMATION AND CERTIFICATION NECESSARY TO AVOID BACKUP
WITHHOLDING, (UNLESS AN APPLICABLE EXEMPTION EXISTS AND IS PROVED IN A MANNER
SATISFACTORY TO PURCHASER AND THE DEPOSITARY).
Appointment. By executing the Letter of Transmittal, the tendering
stockholder will irrevocably appoint designees of Purchaser as such
stockholder's attorneys-in-fact and proxies in the manner set forth in the
Letter of Transmittal, with full power of substitution, to the full extent of
such stockholder's rights with respect to the Shares tendered by such
stockholder and accepted for payment by Purchaser and with respect to any and
all other Shares or other securities or rights issued or issuable in respect of
such Shares on or after June 18, 1997. All such proxies shall be considered
coupled with an interest in the tendered Shares. Such appointment will be
effective when, and only to the extent that, Purchaser accepts for payment
Shares tendered by such stockholder as provided herein. Upon such acceptance for
payment, all prior powers of attorney and proxies given by such stockholder with
respect to such Shares or other securities or rights will, without further
action, be revoked and no subsequent powers of attorney and proxies may be given
(and, if given, will not be deemed effective). The designees of Purchaser will
thereby be empowered to exercise all voting and other rights with respect to any
annual, special or adjourned meeting of the Company's stockholders, or
otherwise, as they in their sole discretion deem proper. Purchaser reserves the
right to require that, in order for Shares to be deemed validly tendered,
immediately upon Purchaser's acceptance for payment of such Shares, Purchaser
must be able to exercise full voting and other rights with respect to such
Shares and other securities or rights, including voting at any meeting of
stockholders then scheduled.
Determination of Validity. All questions as to the form of all documents
and the validity, eligibility (including time of receipt) and acceptance of
tendered Shares will be determined by Purchaser, in its sole discretion, which
determination will be final and binding. Purchaser reserves the absolute right
to reject any or all tenders of any particular Shares either not in appropriate
form or the acceptance of which would, in the opinion of Purchaser's counsel, be
unlawful. Purchaser also reserves the absolute right to waive any of the
conditions of the Offer or any defect or irregularity in the tender of any
particular Shares whether or not similar defects or irregularities are waived in
the case of other Shares. Purchaser's interpretation of the terms and conditions
of the Offer will be final (including the Letter of Transmittal and the
instructions thereto). No tender of Shares will be deemed to have been properly
made until all defects and irregularities with respect to Shares so tendered
have been cured or waived. Purchaser shall not be under any duty to give notice
of any defects or irregularities of tenders and shall not incur any liability
for failure to give any such notification.
WITHDRAWAL RIGHTS
Tenders of Shares made pursuant to the Offer are irrevocable, except that
Shares tendered pursuant to the Offer may be withdrawn at any time prior to the
Expiration Date and, unless theretofore accepted for payment by Purchaser
pursuant to the Offer, may also be withdrawn at any time on or after August 18,
1997.
To be effective, a written, telegraphic, telex, or facsimile transmission
notice of withdrawal must be timely received by the Depositary at one of its
addresses set forth on the back cover of this Offer to
6
Purchase. Any notice of withdrawal must specify the name of the person having
deposited Shares to be withdrawn, the number or amount of Shares to be withdrawn
and the names in which such Shares are registered, if different from that of the
tendering stockholder. If the certificates have been delivered or otherwise
identified to the Depositary, then prior to the release of such certificates,
the tendering stockholder also must submit the serial numbers shown on the
particular certificates and, unless such Shares have been tendered by an
Eligible Institution, the signature on such stockholder's notice of withdrawal
must be guaranteed by an Eligible Institution. If Shares have been delivered
pursuant to the procedure for book-entry transfer as set forth under 'TENDER
OFFER -- Procedure for Tendering Shares', any notice of withdrawal also must
specify the name and number of the account at the appropriate Book-Entry
Transfer Facility to be credited with the withdrawn Shares and otherwise comply
with such Book-Entry Transfer Facility's procedures.
All questions as to the form and validity (including time of receipt) of
notices of withdrawal will be determined by Purchaser, in its sole discretion,
which determination shall be final and binding.
Any Shares withdrawn will thereafter be deemed not properly tendered for
purposes of the Offer, unless and until such withdrawn Shares are re-tendered
prior to the Expiration Date by following one of the procedures described under
'TENDER OFFER -- Procedure for Tendering Shares.'
CERTAIN FEDERAL INCOME TAX CONSEQUENCES
THE FOLLOWING IS A SUMMARY OF THE PRINCIPAL FEDERAL INCOME TAX CONSEQUENCES
OF THE OFFER AND THE MERGER TO HOLDERS WHOSE SHARES ARE PURCHASED PURSUANT TO
THE OFFER OR WHOSE SHARES ARE CONVERTED INTO THE RIGHT TO RECEIVE CASH IN THE
MERGER (INCLUDING PURSUANT TO APPRAISAL RIGHTS). THE DISCUSSION APPLIES ONLY TO
HOLDERS OF SHARES IN WHOSE HANDS SHARES ARE CAPITAL ASSETS, AND MAY NOT APPLY TO
SHARES RECEIVED UPON CONVERSION OF SECURITIES OR EXERCISE OF WARRANTS OR OTHER
RIGHTS TO ACQUIRE SHARES OR PURSUANT TO THE EXERCISE OF EMPLOYEE STOCK OPTIONS
OR OTHERWISE AS COMPENSATION, OR TO HOLDERS OF SHARES WHO ARE IN SPECIAL TAX
SITUATIONS (SUCH AS INSURANCE COMPANIES, TAX-EXEMPT ORGANIZATIONS OR NON-U.S.
PERSONS).
THE FEDERAL INCOME TAX CONSEQUENCES SET FORTH BELOW ARE INCLUDED FOR
GENERAL INFORMATIONAL PURPOSES ONLY AND ARE BASED UPON CURRENT LAW. BECAUSE
INDIVIDUAL CIRCUMSTANCES MAY DIFFER, EACH HOLDER OF SHARES SHOULD CONSULT SUCH
HOLDER'S OWN TAX ADVISOR TO DETERMINE THE APPLICABILITY OF THE RULES DISCUSSED
BELOW TO SUCH STOCKHOLDER AND THE PARTICULAR TAX EFFECTS OF THE OFFER AND THE
MERGER, INCLUDING THE APPLICATION OF STATE, LOCAL AND OTHER INCOME TAX LAWS.
Sales of Shares by stockholders of the Company pursuant to the Offer and
the conversion of Shares into the right to receive cash in the Merger (including
pursuant to the exercise of appraisal rights) will be taxable transactions for
federal income tax purposes and also may be taxable transactions under
applicable state, local and other tax laws.
In general, for federal income tax purposes, a stockholder who sells his
Shares pursuant to the Offer or receives cash in the Merger will recognize gain
or loss equal to the difference between the cash received and his tax adjusted
basis for such Shares sold pursuant to the Offer or converted into the right to
receive cash in the Merger. Gain or loss must be determined separately for each
block of Shares (i.e., Shares acquired at the same cost in a single transaction)
sold pursuant to the Offer or converted into the right to receive cash in the
Merger. Provided that Shares sold were held by the stockholder as capital
assets, such gain or loss will be capital gain or loss (other than, with respect
to the exercise of appraisal rights, amounts, if any, which are or are deemed to
be interest for federal income tax purposes, which amounts will be taxed as
ordinary income). Any such capital gain or loss will be long-term if, as of the
date of sale (or, if applicable, the date of the Merger), such Shares were held
for more than one year.
In the case of an individual, net long-term capital gain may be subject to
a reduced rate of tax and net capital losses may be subject to limits on
deductibility.
Payments in connection with the Offer or the Merger may be subject to
'backup withholding' as discussed in 'TENDER OFFER -- Procedure for Tendering
Shares.'
7
PRICE RANGE OF THE SHARES; DIVIDENDS ON THE SHARES
According to the Company's Annual Report on Form 10-K for the fiscal year
ended September 27, 1996 (the 'Company Form 10-K') and information supplied to
Purchaser by the Company, the Shares have traded on the Chicago Stock Exchange
('CSE') under the trading symbol 'FMG' since September 19, 1974. The following
table sets forth, for the calendar quarters indicated, the high and low sales
prices per Share as reported in publicly available resources.
SALE PRICE
----------------
HIGH LOW
------ ------
1995
First Calendar Quarter......................................................... $12.50 $10.50
Second Calendar Quarter........................................................ 11.13 9.25
Third Calendar Quarter......................................................... 10.13 8.88
Fourth Calendar Quarter........................................................ 9.50 7.88
1996
First Calendar Quarter......................................................... $ 8.75 $ 7.88
Second Calendar Quarter........................................................ 8.25 7.13
Third Calendar Quarter......................................................... 8.00 7.50
Fourth Calendar Quarter........................................................ 9.75 7.63
1997
First Calendar Quarter......................................................... $ 9.00 $ 7.75
Second Calendar Quarter (through June 11)...................................... 10.06 8.00
On June 11, 1997, the last full day of trading prior to the public
announcement of the execution of the Purchase Agreement and the Tender Offer
Agreement, the closing sale price per Share as reported on the CSE was $8.75. On
June 17, 1997, the last full day of trading before the commencement of the
Offer, the closing sales price per Share as reported on the CSE was $14.25.
STOCKHOLDERS ARE URGED TO OBTAIN CURRENT MARKET QUOTATIONS FOR THE SHARES.
Cash dividends were last paid during fiscal 1995. No cash dividend was paid
in fiscal 1996 or in fiscal 1997 (through June 17, 1997). The Tender Offer
Agreement prohibits the Company from declaring or paying any dividend or
distribution.
CERTAIN EFFECTS OF THE OFFER
The purchase of Shares pursuant to the Offer will reduce the number of
holders of Shares and the number of Shares that might otherwise trade publicly
and could adversely affect the liquidity and market value of the remaining
Shares held by the public.
Stock Exchange Listing. Depending upon the number of Shares purchased in
the Offer, the Shares may no longer meet the requirements of the CSE for
continued listing. According to the CSE's published guidelines, the CSE would
consider delisting the Shares if, among other things, (i) the number of public
beneficial owners, i.e., owners who are not officers, directors, members of
their immediate families, or owners of 5% or more of the outstanding Shares
('CSE Excluded Owners'), should fall below 400 and the number of public
beneficial owners of at least 100 Shares is less than 300; (ii) the number of
publicly held Shares, i.e., Shares held by persons other than CSE Excluded
Owners, should fall below 200,000 (or below 100,000 if there are then 500 or
more public beneficial owners of Shares); or (iii) the aggregate market value of
publicly held Shares should fall below $1,000,000 and there are then less than
500 public beneficial owners of Shares. According to the Company Form 10-K, as
of December 11, 1996, there were 598 holders of record of Shares and 2,672,477
Shares outstanding.
If the CSE were to delist the Shares, it is possible that the Shares would
continue to trade on another securities exchange or in the over-the-counter
market and that price quotations would be reported by such exchange, by the
Nasdaq Stock Market, Inc. or other sources. The extent of the public market for
the Shares and availability of such quotations would depend, however, upon such
factors as the number of holders, the aggregate market value of the publicly
held Shares at such time, the interest remaining in the market in the Shares on
the part of securities firms, the possible termination of
8
registration of the Shares under the Securities Exchange Act of 1934, as amended
(the 'Exchange Act') and other factors.
Exchange Act Registration. The Shares are currently registered under the
Exchange Act. Registration of the Shares under the Exchange Act may be
terminated upon application of the Company to the Commission if the Shares are
neither listed on a national securities exchange nor held by 300 or more holders
of record. Termination of registration of the Shares under the Exchange Act
would substantially reduce the information required to be furnished by the
Company to its stockholders and to the Commission and would make certain
provisions of the Exchange Act no longer applicable to the Company, such as the
short-swing profit recovery provisions of Section 16(b) of the Exchange Act, the
requirement of furnishing a proxy statement pursuant to Section 14(a) of the
Exchange Act in connection with stockholders' meetings and the related
requirement of furnishing an annual report to stockholders and the requirements
of Rule 13e-3 under the Exchange Act with respect to 'going private'
transactions. Furthermore, the ability of 'affiliates' of the Company and
persons holding 'restricted securities' of the Company to dispose of such
securities pursuant to Rule 144 or 144A under the Securities Act may be impaired
or eliminated.
Purchaser intends to seek to cause the Company to apply for termination of
registration of the Shares under the Exchange Act as soon after the completion
of the Offer as the requirements for such termination are met. If registration
of the Shares is not terminated prior to the Merger, then the Shares will be
delisted from all stock exchanges and the registration of the Shares will be
terminated following the consummation of the Merger.
Margin Regulations. The Shares are currently 'margin securities' under the
regulations of the Board of Governors of the Federal Reserve System (the
'Federal Reserve Board'), which has the effect, among other things, of allowing
brokers to extend credit on the collateral of the Shares. Depending on factors
similar to those described above regarding listing and market quotations, it is
possible that following the Offer the Shares would no longer constitute 'margin
securities' for the purposes of the margin regulations of the Federal Reserve
Board and therefore could no longer be used as collateral for loans made by
brokers.
CERTAIN INFORMATION CONCERNING THE COMPANY
General. The historical information concerning the Company contained in
this Offer to Purchase, including financial information, has been taken from or
based upon publicly available documents and records on file with the Commission
and other public sources. None of Holdings, Purchaser and ▇▇▇▇▇▇▇▇▇▇ assumes any
responsibility for the accuracy or completeness of the information concerning
the Company contained in such documents and records or for any failure by the
Company to disclose events which may have occurred or may affect the
significance or accuracy of any such information to Holdings or Purchaser.
The Company is a Delaware corporation with its principal executive offices
at ▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇. According to the
Company Form 10-K, the Company's principal subsidiary is First of Michigan
Corporation ('FOM'), founded in 1933. FOM is a securities broker-dealer and
investment banker, and engages in brokerage of listed securities. Securities
dealt include equity and debt securities of industrial and financial companies
and institutions, mutual funds, and securities of states, municipalities and
other governmental entities, including hospital, industrial development and
pollution control bonds. FOM is a member of the NYSE, other stock and option
exchanges, and the National Asssociation of Securities Dealers, Inc.
FOM is registered as a broker-dealer in all 50 states, except Nebraska. It
maintains offices in 34 locations in two states, 33 of which offices are in
Michigan. At September 27, 1996, FOM maintained current accounts for
approximately 175,000 customers (such 'customers' being defined as persons for
whom at least one transaction had been effected or for whom securities or money
were being held during the previous 24 months). Also, as of September 26, 1996,
money or securities were being held, or a transaction had been effected since
August 30, 1996, for approximately 84,000 customers.
Available Information. The Company is subject to the reporting requirements
of the Exchange Act and, in accordance therewith, is obligated to file reports
and other information with the Commission
9
relating to its business, financial condition and other matters. Information as
of particular dates concerning the Company's directors and officers, their
remuneration, options granted to them, the principal holders of the Company's
securities and any material interests of such persons in transactions with the
Company is required to be disclosed in proxy statements distributed to the
Company's stockholders and filed with the Commission. Such reports, proxy
statements and other information should be available for inspection at the
public reference facilities of the Commission located at ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇.▇.,
▇▇▇▇▇▇▇▇▇▇, ▇.▇. ▇▇▇▇▇ and at the regional offices of the Commission located in
the Northwestern Atrium Center, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇ ▇▇▇▇▇, and Seven World Trade Center, 13th Floor, New York, New York
10048. Copies should be obtainable, by mail, upon payment of the Commission's
customary charges, by writing to the Commission's principal office at ▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇, ▇.▇., ▇▇▇▇▇▇▇▇▇▇, ▇.▇. ▇▇▇▇▇. The Commission also maintains an Internet
site on the World Wide Web at ▇▇▇▇://▇▇▇.▇▇▇.▇▇▇ that contains reports, proxy
statements and other information.
Certain Selected Financial Data. Set forth below is a summary of certain
selected historical consolidated financial data with respect to the Company and
its subsidiaries excerpted or derived from the financial information included in
the Company Form 10-K, and certain of the Company's Quarterly Reports on Form
10-Q filed with the Commission. More comprehensive financial information is
included in such reports and other documents filed by the Company with the
Commission. The following summary is qualified in its entirety by reference to
such reports and such other documents, including the financial statements and
related notes contained therein. The reports and other documents filed with the
Commission should be available for inspection and copies thereof should be
obtainable in the manner set forth below under 'Available Information' above.
FIRST OF MICHIGAN CAPITAL CORPORATION
SELECTED CONSOLIDATED FINANCIAL DATA
SIX MONTHS ENDED FISCAL YEAR ENDED
---------------------------- -----------------------------------------------
MARCH 27, MARCH 29, SEPTEMBER 27, SEPTEMBER 29, SEPTEMBER 30,
1997 1996 1996 1995 1994
------------ ------------ ------------- ------------- -------------
Revenue........................ $ 35,733,802 $ 35,471,727 $ 71,707,443 $ 62,864,914 $ 61,196,518
Net income..................... 1,586,033 32,280 1,763,716 108,067 1,042,893
Net income per common and
common equivalent share...... $.61 $.01 $.66 $.04 $.35
Cash dividends per common
share........................ .00 .00 .00 .18 .16
Average number of common and
common equivalent shares
outstanding.................. 2,600,174 2,708,427 2,672,477 2,855,460 2,952,969
Total assets (at end of
period)...................... $106,286,512 $111,403,029 $ 101,553,351 $ 110,457,474 $ 103,767,953
Stockholders' equity per common
share (at end of period)..... $12.13 $10.79 $11.34 $10.59 $10.80
CERTAIN INFORMATION CONCERNING PURCHASER, ▇▇▇▇▇▇▇▇▇▇ AND HOLDINGS
General. Holdings is a publicly traded Canadian company, incorporated in
Ontario on November 16, 1933. Class A non-voting shares of Holdings are listed
on the NYSE and The Toronto Stock Exchange and are held of record by
approximately 400 persons. As of December 31, 1996, 12,265,760 Class A
non-voting shares and 99,680 Class B voting shares of Holdings were issued and
outstanding. The principal businesses of Holdings and it subsidiaries and
associated companies are securities brokerage and trading, and investment
advisory and related financial services. On December 31, 1996, Holdings and its
subsidiaries and associated companies employed 567 full-time registered
representatives and 384 employees in trading, research, investment banking,
investment advisory services, public
10
finance and support positions in 47 offices in the United States and in two
associated offices in Venezuela and Argentina. Client assets entrusted to
subsidiaries of Holdings as of December 31, 1996 totalled approximately $9
billion. The principal executive offices of Holdings are located at P.O. Box
2015, Suite ▇▇▇▇, ▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇ ▇▇▇.
Purchaser, a Delaware corporation, was incorporated on June 10, 1997, for
the purpose of acquiring the Company and to date has engaged in no activities
other than those incident to its formation, the execution of the Purchase
Agreement, the Tender Offer Agreement and other related agreements, and the
commencement of the Offer. The principal executive offices of Purchaser are
located at ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇. All the
outstanding stock of Purchaser is owned by ▇▇▇▇▇▇▇▇▇▇.
▇▇▇▇▇▇▇▇▇▇, a New York corporation, was incorporated on December 23, 1954.
The principal executive offices of ▇▇▇▇▇▇▇▇▇▇ are located at ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇,
▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇. ▇▇▇▇▇▇▇▇▇▇ is engaged in the securities
brokerage business. All the outstanding stock of ▇▇▇▇▇▇▇▇▇▇ is owned by
Holdings.
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇, the indirect owner of 50.2% of the outstanding Class B
voting shares, which is the only class of voting stock of Holdings, is Chairman
of the Board and the Chief Executive Officer of each of Holdings, ▇▇▇▇▇▇▇▇▇▇ and
Purchaser.
The name, business address, present principal occupation or employment and
citizenship of each of the directors and executive officers of Holdings,
▇▇▇▇▇▇▇▇▇▇ and Purchaser are set forth in Schedules I, II and III, respectively.
None of Holdings, ▇▇▇▇▇▇▇▇▇▇, Purchaser or, to the best knowledge of
Purchaser, any of the persons listed in Schedules I, II and III, or any
associate or majority-owned subsidiary of Holdings, ▇▇▇▇▇▇▇▇▇▇, Purchaser or any
of the persons so listed, beneficially owns any equity security of the Company,
and none of Holdings, ▇▇▇▇▇▇▇▇▇▇, Purchaser or, to the best knowledge of
Purchaser, any of the other persons referred to above, or any of the respective
directors, executive officers or subsidiaries of any of the foregoing, has
effected any transaction in any equity security of the Company during the past
60 days.
Except as otherwise stated in this Offer to Purchase, (i) there have not
been any contacts, transactions or negotiations between Holdings, ▇▇▇▇▇▇▇▇▇▇,
Purchaser, any of their respective subsidiaries or, to the best knowledge of
Purchaser, any of the persons listed in Schedules I, II or III, on the one hand,
and the Company or any of its directors, officers or affiliates, on the other
hand, that are required to be disclosed pursuant to the rules and regulations of
the Commission, (ii) there are no present or proposed material contracts,
arrangements, understandings or relationships between Holdings, ▇▇▇▇▇▇▇▇▇▇,
Purchaser, their respective controlling persons or subsidiaries or, to the best
knowledge of Purchaser, any of the persons listed in Schedule I, II or III, on
the one hand, and the Company or any of its controlling persons, subsidiaries,
executive officers or directors, on the other hand, and (iii) none of Holdings,
▇▇▇▇▇▇▇▇▇▇, Purchaser, or, to the best knowledge of Purchaser, any of the
persons listed in Schedule I, II or III has any contract, arrangement,
understanding or relationship with any person with respect to any securities of
the Company.
Available Information. Holdings is subject to the reporting requirements of
the Exchange Act and, in accordance therewith, is obligated to file reports and
other information with the Commission relating to its business, financial
condition and other matters. Information as of particular dates concerning
Holdings' directors and officers, their remuneration, options granted to them,
the principal holders of Holdings' securities and any material interests of such
persons in transactions with Holdings is required to be disclosed in the Annual
Report on Form 10-K filed by Holdings with the Commission. Such reports and
other information should be available for inspection at the public reference
facilities of the Commission located at ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇.▇., ▇▇▇▇▇▇▇▇▇▇, ▇.▇.
▇▇▇▇▇ and at the regional offices of the Commission located in the Northwestern
Atrium Center, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, and
Seven World Trade Center, 13th Floor, New York, New York 10048. Copies should be
obtainable, by mail, upon payment of the Commission's customary charges, by
writing to the Commission's principal office at ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇.▇.,
▇▇▇▇▇▇▇▇▇▇, ▇.▇. ▇▇▇▇▇. The Commission also maintains an Internet site on the
World Wide Web at ▇▇▇▇://▇▇▇.▇▇▇.▇▇▇ that contains reports and other
11
information. Such material should also be available for inspection at the
library of the NYSE, ▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇.
Certain Selected Financial Data. Set forth below is a summary of certain
selected historical consolidated financial data with respect to Holdings and its
subsidiaries excerpted or derived from the financial information included in
Holdings' Annual Report on Form 10-K for the year ended December 31, 1996, and
certain of Holdings' Quarterly Reports on Form 10-Q filed with the Commission.
More comprehensive financial information is included in such reports and other
documents filed by Holdings with the Commission. The following summary is
qualified in its entirety by reference to such reports and such other documents,
including the financial statements and related notes contained therein. The
reports and other documents filed with the Commission should be available for
inspection and copies thereof should be obtainable in the manner set forth under
'Available Information' above.
▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ HOLDINGS INC.
SELECTED CONSOLIDATED FINANCIAL DATA
THREE MONTHS ENDED
MARCH 31, YEAR ENDED DECEMBER 31,
---------------------- ------------------------------------
1997 1996 1996 1995 1994
-------- -------- -------- -------- --------
(U.S. DOLLARS IN THOUSANDS EXCEPT SHARE AMOUNTS)
Revenue.................................. $ 50,488 $ 55,750 $213,988 $184,433 $157,253
Profit before extraordinary item......... $ 7,069 $ 7,891 $ 30,279 $ 20,899 $ 11,780
Net profit............................... $ 7,069 $ 7,891 $ 30,279 $ 20,899 $ 11,780
Profit before extraordinary item per
share *................................ $ 0.55 $ 0.63 $ 2.42 $ 1.70 $ 0.96
Net profit per share *
-- basic........................... $ 0.55 $ 0.63 $ 2.42 $ 1.70 $ 0.96
-- fully diluted................... $ 0.53 $ 0.61 $ 2.30 $ 1.64 $ 0.93
Total assets (at end of period).......... $535,924 $550,671 $519,916 $623,466 $510,636
Total current liabilities (at end of
period)................................ $392,688 $436,513 $384,048 $516,031 $421,818
Subordinated indebtedness, including
current portion (at end of period)..... $ 30 $ 30 $ 30 $ 30 $ 30
Cash dividends per Class A Share and
Class B Share.......................... $ 0.06 $ 0.20 $ 0.35 $ 0.15 $ 0.15
Shareholders' equity (at end of
period)................................ $143,206 $114,128 $135,877 $107,405 $ 88,788
Book value per share *................... $ 11.52 $ 9.32 $ 10.99 $ 8.92 $ 7.34
Number of shares of capital stock
outstanding............................ 12,435,440 12,244,215 12,365,440 12,040,090 12,094,680
------------
* The Class A Shares and Class B Shares are combined because they are of equal
rank for purposes of dividends and in the event of a distribution of assets
upon liquidation, dissolution or winding up.
SOURCE AND AMOUNT OF FUNDS
The Company has informed Purchaser that, as of May 14, 1997, there were
2,497,764 Shares and options to purchase 177,490 Shares outstanding. If all the
Shares outstanding at such date are purchased pursuant to the Offer and the
Purchase Agreement (assuming no exercise of any of such options), the maximum
aggregate amount required by Purchaser to purchase such Shares and to pay
related fees and expenses is estimated to be approximately $38,000,000. The
funds for such purpose have been obtained by Purchaser from a capital
contribution to Purchaser from ▇▇▇▇▇▇▇▇▇▇ in such amount. Funds in the amount of
$21,275,265 for the purchase of the Sellers Shares have been deposited into
escrow with The Bank of New York, as Escrow Agent, together with the Sellers
Shares pursuant to the Purchase Agreement and the Sellers Escrow Agreement. Such
funds and the Sellers Shares will be released by
12
the Escrow Agent at the closing under the Purchase Agreement. See 'TENDER
OFFER -- Certain Agreements.' The Tender Offer Deposit is sufficient for the
purchase of all Shares outstanding as of May 14, 1997 (other than the Sellers
Shares) and has been deposited into escrow with The Bank of New York, as Escrow
Agent, pursuant to the Tender Offer Agreement and the Tender Escrow Agreement.
The Tender Offer Deposit will be released by the Escrow Agent in connection with
the expiration of the Offer. See 'TENDER OFFER -- Certain Agreements.'
▇▇▇▇▇▇▇▇▇▇ obtained the amount necessary to capitalize Purchaser from its
general corporate funds.
Typically, ▇▇▇▇▇▇▇▇▇▇ will utilize excess corporate funds to finance client
debit balances. (The purchase of client securities on margin requires the
advance of part of the purchase price by ▇▇▇▇▇▇▇▇▇▇ or commercial banks. The
amount borrowed for this purpose is called a 'client debit balance'.) ▇▇▇▇▇▇▇▇▇▇
has bank lines that are available through commercial banks in the ordinary
course of business for financing client debit balances. Client debit balances
are financed through commercial bank lines utilizing clients' securities as
collateral.
BACKGROUND OF THE OFFER
In the past, Holdings has sought opportunities to expand its broker-dealer
business by acquiring regional securities firms. Among others, Holdings has
considered the Company as a possible acquisition candidate.
In August 1995, ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇, the Chairman of Holdings
('▇▇▇▇▇▇▇▇▇'), spoke with representatives of the Company to propose the
acquisition of the Company by Holdings as an alternative to an attempted
recapitalization of the Company that would have resulted in the repurchase by
the Company of its publicly held Shares. Management of the Company rejected
Holdings' overtures. However, the attempted recapitalization was abandoned.
Subsequently, the Company's two controlling stockholders, DST and 1888,
increased their respective ownership interests in the Company so that in
aggregate they controlled in excess of 50% of the outstanding Shares. In recent
years, the Company experienced some turnover in senior management.
In May 1997, ▇▇▇▇▇▇▇▇▇ met with ▇▇▇▇▇▇ ▇▇▇▇▇ ('▇▇▇▇▇'), Chairman of the
Company, at the suggestion of ▇▇▇▇▇▇ ▇▇▇▇▇ ('▇▇▇▇▇'), a director of the Company
with whom ▇▇▇▇▇▇▇▇▇ had maintained casual contact since the initial discussions
had broken down about a possible business combination in 1995. At the meeting,
▇▇▇▇▇ advised ▇▇▇▇▇▇▇▇▇ that the Company was disinterested in a business
combination with Holdings and that the Board of Directors of the Company was
determined to keep the Company independent.
However, a vacancy occurred unexpectedly in the Presidency of the Company
in early June 1997. This development caused the Board of Directors of the
Company to reconsider its intentions. ▇▇▇▇▇ contacted ▇▇▇▇▇▇▇▇▇ on Wednesday,
June 4, 1997, and they agreed to meet in St. Louis on Friday, June 6, 1997.
▇▇▇▇▇ advised ▇▇▇▇▇▇▇▇▇ that DST and 1888, as well as the Board of Directors of
the Company, were prepared to entertain a transaction, provided that it was for
adequate consideration and that it occur quickly, in order to resolve the
considerable uncertainty in the Company.
At the meeting with ▇▇▇▇▇ on June 6, 1997, price discussions reached $15
per Share, which represented a substantial premium over the then current market
value of the Shares. ▇▇▇▇▇ agreed to discuss this with the controlling
stockholders and both companies agreed to convene their respective Boards of
Directors on Sunday, June 8, 1997 to consider the acquisition transaction.
The acquisition transaction was authorized by the Board of Directors of
Holdings and accepted by the Board of Directors of the Company, subject to the
preparation of definitive agreements between the Sellers and Purchaser and
between the Company and Purchaser. The Board of Directors of the Company also
reserved their recommendation to the Company's stockholders in respect of the
acquisition transaction to the receipt of a 'fairness opinion' from a financial
advisor.
The Board of Directors of Holdings authorized ▇▇▇▇▇▇▇▇▇ to proceed with the
negotiation of the terms of definitive agreements with the Sellers and the
Company for the purchase of the Sellers Shares
13
and the purchase of Shares pursuant to the Offer. Counsel for Holdings thereupon
prepared drafts of the Tender Offer Agreement and the Purchase Agreement, as
well as the Tender Escrow Agreement and the Sellers Escrow Agreement. These
drafts, together with the MOU, were negotiated by the parties and their
respective counsel on Tuesday and Wednesday, June 10 and 11, 1997, and late on
Wednesday, June 11, 1997, the agreements were finalized. The respective Boards
of Directors of the Company and Holdings were convened to consider the
acquisition transaction and to approve the agreements. The agreements were
thereupon executed and delivered by the parties. On Thursday, June 12, 1997, the
Company and Holdings publicly announced the execution and delivery of the
acquisition agreements and that the Company's Board of Directors had approved
the Offer, subject to receipt of a fairness opinion from its financial advisor.
PURPOSE OF THE OFFER
The purpose of the Offer, together with the purchase of the Sellers Shares,
is to enable Purchaser to acquire control of the Company. Pursuant to the
Purchase Agreement, Purchaser will acquire Sellers Shares representing
approximately 53% of the outstanding Shares on a fully diluted basis, subject to
expiration or early termination of the waiting period under HSR Act, receipt of
necessary regulatory approvals and certain other conditions, including
expiration of the Offer. See 'TENDER OFFER -- Certain Agreements -- The Purchase
Agreement.'
In connection with the purchase of the Sellers Shares, Sellers desired to
ensure that all stockholders of the Company received consideration equivalent to
the consideration to be paid to Sellers for the Sellers Shares and determined
that the Offer was the most appropriate means to that end.
Holdings determined that the purchase of the Sellers Shares pursuant to the
Purchase Agreement and a cash tender offer for a price equivalent to the Sellers
Shares Purchase Price, representing a substantial premium to the market price
for the Shares, would likely result in the acquisition by Purchaser of
substantially all the Shares on a basis more efficient in terms of time and
transactional costs than would be required to effect an acquisition through a
one-step merger with the Company, particularly if Purchaser acquires Shares in
the Offer that together with the Sellers Shares total more than 90% of the
outstanding Shares. Such an acquisition would permit Purchaser to consummate the
Merger without convening a meeting of the stockholders of the Company. See
'TENDER OFFER -- The Merger.'
The intention of Holdings and Purchaser to purchase Sellers Shares and
thereafter to effect the Merger is not conditioned upon any minimum number of
Shares being validly tendered and accepted in the Offer.
PLANS FOR THE COMPANY
If and to the extent that Purchaser acquires control of the Company,
Holdings intends to conduct a detailed review of the Company and its business.
It is anticipated that ▇▇▇▇▇▇▇▇▇ will be appointed Chief Executive Officer
of the Company following expiration of the Offer and consummation of the
purchase of Sellers Shares.
Following the consummation of the Offer or the Merger, Purchaser currently
intends, to the extent possible, to seek to have the Common Stock delisted from
the CSE and to terminate the registration of the Common Stock under the Exchange
Act. Delisting of the Common Stock may occur, in any event, at the instigation
of the CSE following the consummation of the Offer due to the reduced number of
Shares or holders thereof then outstanding.
If the Common Stock ceases to be registered under the Exchange Act, the
Company, among other things, would no longer be required to comply with the
Exchange Act's proxy or reporting rules. See 'TENDER OFFER -- Certain Effects of
the Offer.'
Except as noted in this Offer to Purchase, Purchaser and Holdings have no
present plans or proposals that would result in an extraordinary corporate
transaction, such as a merger, reorganization, liquidation, or sale or transfer
of a material amount of the assets, involving the Company or any
14
subsidiary of the Company, or any material changes in the Company's
capitalization, dividend policy, corporate structure, business, composition of
its management or Board of Directors or policies.
CERTAIN AGREEMENTS
THE PURCHASE AGREEMENT
The following is a summary of the material terms of the Purchase Agreement.
This summary is not a complete description of the terms and conditions thereof
and is qualified in its entirety by reference to the full text thereof, which is
incorporated herein by reference and a copy of which has been filed with the
Commission as an exhibit to the Tender Offer Statement filed on Schedule 14D-1
pursuant to the Exchange Act (the 'Schedule 14D-1'). Capitalized terms used
herein not otherwise defined in this Offer to Purchase shall have the same
meanings as ascribed to them in the Purchase Agreement. The Purchase Agreement
may be examined, and copies thereof may be obtained, as set forth under 'TENDER
OFFER -- Certain Information Concerning the Company.'
Purchase of Sellers Shares. Under the terms of the Purchase Agreement,
Purchaser agreed to purchase the Sellers Shares from the Sellers (representing
approximately 53% of the outstanding Shares on a fully diluted basis) for a
purchase price of $15.00 per share, net to the Sellers in cash.
Conditions. The obligations of Sellers to sell and Purchaser to purchase
the Sellers Shares are subject to the fulfillment of certain conditions relating
to (i) expiration or termination of the waiting period under the HSR Act and
compliance with the requirements of the Exchange Act, (ii) receipt of all
material regulatory approvals required in connection with the execution,
delivery and performance of the Purchase Agreement, (iii) performance in all
material respects by Sellers and Purchaser of their respective obligations under
the Purchase Agreement and the accuracy in all material respects of the
respective representations and warranties of Sellers and Purchaser in the
Purchase Agreement, (iv) the absence of any order or injunction prohibiting the
consummation of the transactions contemplated by the Purchase Agreement, and (v)
the absence of any pending action, suit or proceeding involving the parties to
the Purchase Agreement or the Company that would or reasonably would be expected
to prevent or materially delay the consummation of the transactions contemplated
by the Purchase Agreement or result in material damages in connection therewith.
The obligations of Sellers are subject to the additional condition that
Purchaser shall have commenced the Offer. The obligation of Purchaser is subject
to the additional condition that the entire Board of Directors of the Company
shall be composed of designees of Purchaser at the Closing Time, provided,
however, that Purchaser shall have used its best efforts to make such
designations prior to the Closing Time.
Representations and Warranties. The Purchase Agreement contains various
representations and warranties of the parties thereto. These include
representations and warranties made by Sellers with respect to (i) the due
organization, existence and good standing of Sellers, (ii) the requisite power
and authority of Sellers to execute and deliver the Purchase Agreement, the
Tender Offer Agreement and certain ancillary agreements executed in connection
therewith and the consummation of the transactions contemplated thereby and the
validity and enforceability thereof, (iii) the absence of any violation or
resulting breach of any operative document of Sellers, or any license,
authorization, agreement, instrument, commitment or obligation of Sellers or
need to obtain any consent, approval authorization or make a filing or
registration, other than under the HSR Act, the Exchange Act and certain
regulatory filings under applicable securities laws in connection with the
execution, delivery and performance of the Purchase Agreement by Sellers, (iv)
the absence of any agreements or commitments to pay fees to any brokers in
connection with the transactions contemplated thereby, (v) ownership of the
Sellers Shares, and (vi) capitalization of the Company.
Purchaser also has made certain representations and warranties, including
(i) the due organization, existence and good standing of Purchaser, (ii) the
requisite power and authority of Purchaser to execute and deliver the Purchase
Agreement, the Tender Offer Agreement and certain ancillary agreements executed
in connection therewith and the consummation of the transactions contemplated
thereby and the validity and enforceability thereof, (iii) the absence of any
violation or resulting breach of any operative document of Purchaser, or any
license, authorization, agreement, instrument, commitment or obligation of
Purchaser or need to obtain any consent, approval authorization or make a filing
or
15
registration, other than under the HSR Act, the Exchange Act and certain
regulatory filings under applicable securities laws in connection with the
execution, delivery and performance of the Purchase Agreement by Purchaser, (iv)
the absence of any agreements or commitments to pay fees to any brokers in
connection with the transactions contemplated thereby, (v) availability of funds
sufficient to purchase the Sellers Shares, (vi) accredited investor status,
investment intent and agreement not to transfer without registration the Sellers
Shares unless pursuant to an available exemption, and (vii) the direct or
indirect ownership of Purchaser by Holdings.
Covenants. Sellers have made certain covenants, including covenants: (i)
not to sell or cause a Lien to be created against the Sellers Shares, (ii) to
assign any non-cash distributions to Purchaser and not to solicit any person to
acquire the Sellers Shares or engage in any business combination or similar
transaction with the Company, (iii) to vote the Sellers Shares (A) in favor of
any business combination or similar transaction proposed by Purchaser, (B)
against any business combination or similar transaction proposed by any other
person, and (C) subject to regulatory approvals, in favor of any individuals
proposed by Purchaser for election to the Board of Directors of the Company and
against anyone else, (iv) to make their respective filings and required
submissions under the HSR Act and the Exchange Act, (v) to assign any rights
that Sellers may have to cause the Company to register or qualify any of the
Sellers Shares under the Securities Act, or any state law and to deliver to
Purchaser any agreements between such Seller and the Company, and (vi) to use
their respective best efforts to cause certain related parties to tender
approximately 120,000 Shares pursuant to the Offer.
In addition, Sellers and Purchaser have made certain covenants, including
covenants: (i) to cooperate with respect to any necessary regulatory filings and
otherwise in connection with the Purchase Agreement and the consummation of the
transactions contemplated thereby and to use their respective reasonable efforts
to cause each of the conditions precedent to the consummation of the
transactions contemplated by the Purchase Agreement to be met as promptly as
practicable, (ii) to consult with each other with respect to the text of any
press release with respect to the transactions contemplated by the Purchase
Agreement, subject to the requirements of law, and (iii) to perform their
respective obligations under the Tender Offer Agreement.
Termination. The Purchase Agreement may be terminated and the purchase and
the sale of the Sellers Shares may be abandoned at any time prior to the Closing
Time by the mutual consent of the Sellers and Purchaser or if the Closing Time
shall not have occurred by October 11, 1997 or if a tribunal having jurisdiction
shall have issued a final non-appealable order, judgment or decree permanently
restraining, enjoining or restricting the transactions contemplated by the
Purchase Agreement.
Costs. All reasonable out-of-pocket costs and expenses incurred in
connection with the transactions contemplated by the Purchase Agreement, other
than the legal fees and expenses of any legal counsel retained by any Seller,
will be borne by Purchaser. Sellers have agreed to reimburse the Company for all
legal fees payable to ▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇ & ▇▇▇▇▇▇▇▇▇ for legal services rendered
in connection with the Purchase Agreement and the transactions contemplated
thereby (including the Tender Offer Agreement), to the extent such legal fees
exceed $25,000.
Escrow Agreement. Sellers have deposited the Sellers Shares and Purchaser
has deposited $21,275,265 into escrow pursuant to a 'Sellers' Escrow Agreement
dated as of June 11, 1997 (the 'Sellers Escrow Agreement'), among Sellers,
Purchaser and the Escrow Agent. See 'TENDER OFFER -- Certain
Agreements -- Sellers Escrow Agreement.'
THE TENDER OFFER AGREEMENT
The following is a summary of the material terms of the Tender Offer
Agreement. This summary is not a complete description of the terms and
conditions thereof and is qualified in its entirety by reference to the full
text thereof, which is incorporated herein by reference and a copy of which has
been filed with the Commission as an exhibit to the Schedule 14D-1. Capitalized
terms used herein not otherwise defined in this Offer to Purchase shall have the
same meanings as ascribed to them in the Tender Offer Agreement. The Tender
Offer Agreement may be examined, and copies thereof may be obtained, as set
forth under 'TENDER OFFER -- Certain Information Concerning the Company.'
16
Actions by Purchaser. Purchaser agreed to file the Schedule 14D-1 with the
Commission, containing the Offer to Purchase and a related Letter of Transmittal
and any other ancillary documents pursuant to which the Offer is being made (the
'Offer Documents') as promptly as possible following the execution of the Tender
Offer Agreement. Purchaser also agreed to comply with the requirements of the
Exchange Act and to disseminate to holders of the Shares such of the Offer
Documents required by applicable federal securities laws. Purchaser agreed to
afford the Company and its counsel a reasonable opportunity to review and
comment on the Offer Documents.
Actions by the Company. The Company approved and consented to the
transactions contemplated by the Purchase Agreement and represented and
warranted that the Board of Directors has duly adopted resolutions approving the
Tender Offer Agreement and the Offer, subject to receipt of a written opinion
from its financial advisor that the per share Offer Price is fair from a
financial point of view (the 'Fairness Opinion'), and has taken all action
required under or pursuant to the Charter so as to make the provisions of
Article Tenth of the Charter to any Business Combination (as defined in the
Charter) involving Purchaser and its affiliates. Duff & ▇▇▇▇▇▇, LLC has been
engaged by the Company to issue the Fairness Opinion.
The Company agreed to file with the Commission and disseminate copies to
its stockholders a Solicitation/Recommendation Statement on Schedule 14D-9 (the
'Schedule 14D-9') with respect to the Offer. In addition, the Company will file
with the Commission any necessary amendments to the Schedule 14D-9. The Company
undertook to afford Purchaser and its counsel a reasonable opportunity to review
and comment on the Schedule 14D-9.
The Company agreed to cause its transfer agent to furnish Purchaser with
mailing labels containing the names and addresses of the record holders of
Shares as of a recent date and of those persons who became record holders
subsequently and to provide such other assistance as Purchaser shall reasonably
request in communicating the Offer to the stockholders of the Company.
Representations and Warranties. The Tender Offer Agreement contains various
representations and warranties of the parties thereto. These include
representations and warranties made by the Company with respect to (i) the due
organization, existence and good standing of the Company, (ii) the requisite
power and authority of the Company to execute and deliver the Tender Offer
Agreement, certain ancillary agreements executed in connection therewith and the
consummation of the transactions contemplated thereby and the validity and
enforceability thereof, (iii) the absence of any violation or resulting breach
of any operative document of the Company, or any license, authorization,
agreement, instrument, commitment or obligation of the Company or need to obtain
any consent, approval authorization or make a filing or registration, other than
under the HSR Act, the Exchange Act and certain regulatory filings under
applicable securities laws in connection with the execution, delivery and
performance of the Tender Offer Agreement by the Company, (iv) the absence of
agreements or commitments to pay fees to any brokers in connection with the
transactions contemplated thereby, (v) capitalization of the Company, (vi) the
truth and completeness of documents filed with the Commission, (vii) the
inapplicability of the MBCA to the Offer and related transactions, and (viii)
the accuracy of the Schedule 14D-9 and statements provided by them for inclusion
in other Offer Documents filed with the Commission.
Purchaser has also made certain representations and warranties, including
(i) the due organization, existence and good standing of Purchaser, (ii) the
requisite power and authority of Purchaser to execute and deliver the Purchase
Agreement, the Tender Offer Agreement and certain ancillary agreements executed
in connection therewith and the consummation of the transactions contemplated
thereby and the validity and enforceability thereof, (iii) the absence of any
violation or resulting breach of any operative document of Purchaser, or any
license, authorization, agreement, instrument, commitment or obligation of
Purchaser or need to obtain any consent, approval authorization or make a filing
or registration, other than under the HSR Act, the Exchange Act and certain
regulatory filings under applicable securities laws in connection with the
execution, delivery and performance of the Tender Offer Agreement by Purchaser,
(iv) the absence of agreements or commitments to pay fees to any brokers in
connection with the transactions contemplated thereby, (v) the accuracy of the
Offer Documents filed with the Commission and statements supplied by it for
inclusion in the Schedule 14D-9, and (vi) the deposit into escrow of
$16,724,735.
17
Sellers also made certain representations with respect to the accuracy of
certain statements supplied by them for inclusion in the Offer Documents and the
Schedule 14D-9.
Covenants. The Company has made certain covenants in the Tender Offer
Agreement, including covenants: (i) to take such actions as needed to effect
Sellers' and Buyer's filings and submissions under the HSR Act and the Exchange
Act, (ii) not to solicit, directly or indirectly, or initiate or encourage any
discussion or negotiations with or provide information to or afford access to
the properties, books or records of the Company or otherwise facilitate an
Alternative Proposal (as hereinafter defined), (iii) not to (A) declare, set
aside or pay any dividends on, or make any distributions with respect to its
capital stock or (B) split, combine or reclassify any of its capital stock or
issue or authorize the issuance of any other securities in lieu of or
substitution for its capital stock or (C) purchase, redeem, retire or otherwise
acquire any Shares, (iv) not to issue, sell, deliver, pledge or otherwise
encumber any shares of its capital stock, and (v) to maintain in effect for two
years from the date of acceptance for payment of the Shares pursuant to the
Offer, directors' and officers' liability insurance coverage, subject to certain
limitations regarding cost and availability. 'Alternative Proposal' means any
tender offer, merger, consolidation, business combination, liquidation,
reorganization, sale of significant assets, sale of shares of capital stock or
similar transactions involving the Company or any part thereof.
The Company and the Sellers also agreed to execute and deliver such other
agreements, instruments and other documents and to file such other schedules and
reports and other documents and to take such other actions as Purchaser may
reasonably request in order to effect the intent and purposes of the Tender
Offer Agreement. Purchaser agreed to enter into the Tender Offer Escrow
Agreement and pursuant thereto deposit $16,724,735.
Without the prior written consent of the Board of Directors of the Company,
Purchaser agreed not to (i) reduce the number of shares of Common Stock subject
to the Offer, (ii) reduce the price per share of Common Stock to be paid
pursuant to the Offer, (iii) change the form of consideration payable in the
Offer, (iv) amend or modify any term or condition of the Offer in any manner
materially adverse to the holders of Common Stock, or (v) impose additional
conditions to the Offer, other than such conditions required by applicable law.
Notwithstanding anything in the Tender Offer Agreement to the contrary,
Purchaser may, in its sole discretion without the consent of the Company, extend
the Offer at any time and from time to time (A) if at the then scheduled
expiration date of the Offer any of the conditions to Purchaser's obligation to
accept for payment and pay for shares of Common Stock shall not have been
satisfied or waived, (B) for any period required by any rule, regulation,
interpretation or position of the Commission or its staff applicable to the
Offer, and (C) for any period required by applicable law, rule, regulation,
administrative or judicial determination or order. So long as the Tender Offer
Agreement is in effect and the conditions to the Offer have not been satisfied
or waived, at the request of the Company, Purchaser has agreed to extend the
Offer for an aggregate period of not more than five business days (for all such
extensions) beyond the originally scheduled expiration date of the Offer. Such
period of five business days shall include any contemplated grace period that
extends beyond the otherwise scheduled Expiration Date of the Offer.
Termination. The Tender Offer Agreement may be terminated and the purchase
and the Offer may be abandoned at any time prior to acceptance of the Shares by
the mutual consent of the Company and Purchaser or if the conditions to the
Offer shall have not been satisfied by October 11, 1997 or if a tribunal having
jurisdiction shall have issued a final non-appealable order, judgment or decree
permanently restraining, enjoining or restricting the transactions contemplated
by the Offer.
Conditions. The conditions to the Tender Offer Agreement are the conditions
to the Offer described under 'TENDER OFFER -- Certain Conditions to the Offer.'
SELLERS ESCROW AGREEMENT
The following is a summary of the material terms of the Sellers Escrow
Agreement. This summary is not a complete description of the terms and
conditions thereof and is qualified in its entirety by reference to the full
text thereof, which is incorporated herein by reference and a copy of which has
been filed with the Commission as an exhibit to the Schedule 14D-1. The Sellers
Escrow Agreement
18
may be examined, and copies thereof may be obtained, as set forth under 'TENDER
OFFER -- Certain Information Concerning the Company.'
Pursuant to the Sellers Escrow Agreement, Sellers deposited the Sellers
Shares and Purchaser deposited $21,275,265 in cash (i.e., an amount equal to the
Sellers Shares Purchase Price) into escrow with the Escrow Agent in connection
with the sale of the Sellers Shares to Purchaser for the Sellers Shares Purchase
Price pursuant to the Purchase Agreement.
Under the Sellers Escrow Agreement, at the Closing Time (as defined in the
Purchase Agreement) upon the receipt of a certificate in appropriate form, from
Sellers and Purchaser, the Escrow Agent will deliver the Sellers Shares Purchase
Price to Sellers and the Sellers Shares to Purchaser. During the term of the
escrow, the cash held in escrow will be invested in accordance with the
directions of Purchaser, but only in Permitted Investments (as defined in the
Sellers Escrow Agreement).
TENDER ESCROW AGREEMENT
The following is a summary of the material terms of the Tender Escrow
Agreement. This summary is not a complete description of the terms and
conditions thereof and is qualified in its entirety by reference to the full
text thereof, which is incorporated herein by reference and a copy of which has
been filed with the Commission as an exhibit to the Schedule 14D-1. The Tender
Escrow Agreement may be examined, and copies thereof may be obtained, as set
forth under 'TENDER OFFER -- Certain Information Concerning the Company.'
Pursuant to the Tender Escrow Agreement, Purchaser has deposited into
escrow $16,724,735 in cash (i.e., the Tender Offer Deposit) with the Escrow
Agent in connection with the Offer.
Under the Tender Escrow Agreement, upon the receipt of a certificate in
appropriate form from Sellers and Purchasers, the Escrow Agent shall deliver the
Tender Offer Deposit to the Depositary up to the amount of the aggregate Offer
Price. In the case of any balance in excess of the amount necessary to purchase
all Shares validly tendered and accepted in the Offer, the Escrow Agent shall
return such excess funds to Purchaser.
MEMORANDUM OF UNDERSTANDING
The following is a summary of the material terms of the MOU. This summary
is not a complete description of the terms and conditions thereof and is
qualified in its entirety by reference to the full text thereof, which is
incorporated herein by reference and a copy of which has been filed with the
Commission as an exhibit to the Schedule 14D-1. The MOU may be examined, and
copies thereof may be obtained, as set forth under 'TENDER OFFER -- Certain
Information Concerning the Company.'
In the MOU, the Board of Directors of the Company confirmed its
understanding with respect to the terms of the transaction (the 'Transaction')
involving the acquisition of all the issued and outstanding Shares by Purchaser
through the purchase of the Sellers Shares, the Offer and/or the Merger. The MOU
evidenced approval by the Board of Directors of the Transaction and authorized
the Company's officers to take action necessary to consummate the Transaction
and for any and all purposes, for which approval might be required or permitted
under applicable law, the Charter or the by-laws of the Company, including the
provisions of Article Tenth, Section 2(b) of the Charter relating to certain
voting requirements applicable to certain business combinations.
THE MERGER
Holdings and Purchaser intend, as a further step in their plan to acquire
all the Shares, to merge Purchaser with and into the Company on terms that would
provide that any Shares remaining outstanding following the consummation of the
Offer and the purchase of the Sellers Shares would be converted into the right
to receive an amount equivalent to the Offer Price.
If Purchaser accepts and purchases sufficient Shares pursuant to the Offer
so that, when combined with the purchase of the Sellers Shares, Purchaser owns
at least 90% of the outstanding Shares, Purchaser will, under the DGCL and the
Charter, have sufficient voting power to approve the Merger by action of the
Board of Directors without the vote of the stockholders of the Company pursuant
to a
19
'short form' merger. However, beneficial ownership of 90% of the Shares is not a
condition to the intention of Purchaser to effect the Merger.
If required by applicable law, following the acquisition of the Sellers
Shares and any Shares acquired pursuant to the Offer, Purchaser shall cause the
Company acting through the Board of Directors to call a meeting of its
stockholders for the purpose of voting on the Merger. To the extent required
under applicable federal securities law or the DGCL, Purchaser shall cause the
Company to provide any proxy or information statement disclosure required in
connection with the Merger.
BOARD REPRESENTATION
The Purchase Agreement provides as a condition to the consummation of the
purchase of the Sellers Shares, which may be waived by Purchaser in its sole
discretion, that, at the Closing Time (as defined in the Purchase Agreement),
the Board of Directors of the Company shall consist solely of designees of
Purchaser. The appointment or election of ▇▇▇▇▇▇▇▇▇'s designees as directors of
the Company is subject to compliance by the Company with Section 14(f) of the
Exchange Act and the rules promulgated thereunder of the Commission.
APPRAISAL RIGHTS
UNDER THE DGCL, HOLDERS OF SHARES NOT PURCHASED BY PURCHASER ARE NOT
ENTITLED TO APPRAISAL RIGHTS IN CONNECTION WITH THE OFFER. However, if following
consummation of the Offer, Purchaser consummates the Merger, holders of Shares
not purchased by Purchaser in the Offer will be entitled to seek appraisal
rights under the DGCL in connection with the Merger as follows.
The following discussion is not a complete statement of the law pertaining
to appraisal rights under the DGCL and does not purport to be a complete
statement of the procedure to be followed by stockholders desiring to exercise
appraisal rights under the DGCL. All references in this summary to a
'stockholder' or 'holders' are to the record holder of the Shares as to which
appraisal rights are asserted.
Under the DGCL, holders of Shares ('Appraisal Shares') who follow the
procedures set forth in Section 262 of the DGCL ('Section 262'), and who have
neither voted in favor of the Merger nor consented thereto in writing, will be
entitled to have their Appraisal Shares appraised by the Delaware Chancery Court
and to receive payment in cash of the 'fair value' of such Appraisal Shares,
exclusive of any element of value arising from the accomplishment or expectation
of the Merger, together with a fair rate of interest, if any, as determined by
such court.
Under Section 262, if the Merger must be submitted to the stockholders of
the Company because Purchaser does not own 90% of the outstanding Shares or
otherwise, the Company must, not less than 20 days prior to the meeting held for
the purpose of obtaining stockholder approval of the Merger, notify each of the
Company's stockholders entitled to appraisal rights that such rights are
available, and must include in such notice a copy of Section 262. If no
stockholder vote is required or if stockholder approval is obtained by written
consent in lieu of a meeting, the Company, either before the effective date of
the Merger or within ten days thereafter, must notify each of the stockholders
entitled to appraisal rights of the effective date of the Merger and that
appraisal rights are available, and must include in such notice a copy of
Section 262.
A holder of Appraisal Shares wishing to exercise such holder's appraisal
rights will be required to deliver to Purchaser within 20 days after the date of
mailing of the notice described in the preceding paragraph a written demand for
appraisal of such holder's Appraisal Shares. A holder of Appraisal Shares
wishing to exercise such holder's appraisal rights must be the record holder of
such Appraisal Shares on the date the written demand for appraisal (as described
below) is made and must continue to hold such Appraisal Shares of record through
the effective date of the Merger. Accordingly, a holder of Appraisal Shares who
is the record holder of Appraisal Shares on the date the written demand for
appraisal is made (if such demand is made prior to the effectiveness of the
Merger), but who thereafter transfers such Appraisal Shares prior to the
consummation of the Merger, will lose any right to appraisal in respect of such
Appraisal Shares.
20
Within 120 days after the effective date of the Merger, but not thereafter,
Purchaser or any stockholder who has complied with the statutory requirements
summarized above and who is otherwise entitled to appraisal rights may file a
petition in the Delaware Chancery Court demanding a determination of the fair
value of the Appraisal Shares. Purchaser is under no obligation to file a
petition with respect to the appraisal of the fair value of the Appraisal Shares
and does not intend to do so. Accordingly, it will be the obligation of the
stockholders seeking appraisal rights to initiate all necessary action to
perfect any appraisal rights within the time prescribed in Section 262.
Within 120 days after the effective date of the Merger, any stockholder who
has complied with the statutory requirements summarized above will be entitled,
upon written request, to receive from Purchaser a statement setting forth the
aggregate number of Appraisal Shares with respect to which demands for appraisal
have been received and the aggregate number of holders of such Appraisal Shares.
Such statements must be mailed within ten days after a written request therefor
has been received by Purchaser or within ten days after expiration of the period
for delivery of demands for appraisal, whichever is later.
If a petition for an appraisal is timely filed, after a hearing on such
petition, the Delaware Chancery Court will determine the stockholders entitled
to appraisal rights and will appraise the 'fair value' of their Appraisal
Shares, exclusive of any element of value arising from the accomplishment or
expectation of the Merger, together with a fair rate of interest, if any, to be
paid upon the amount determined to be the fair value.
In determining the 'fair value' of the Appraisal Shares, a court could
consider factors other than, or in addition to, the market value of the Common
Stock, including, among other things, asset values and earning capacity of the
Company. In ▇▇▇▇▇▇▇▇▇▇ v. UOP, Inc., the Delaware Supreme Court stated, among
other things, that 'proof of value by any techniques or methods which are
generally considered acceptable in the financial community and otherwise
admissible in court' should be considered in the appraisal proceeding.
Therefore, the value so determined in any appraisal proceeding could be
different from the consideration payable in connection with the Merger. Several
decisions by the Delaware courts, which may or may not apply to the Merger, have
held that a controlling stockholder of a company involved in a merger has a
fiduciary duty to other stockholders which requires that the merger be 'entirely
fair' to such other stockholders. In determining whether a merger is fair to
minority shareholders, Delaware courts have considered, among other things, the
type and amount of the consideration to be received by the stockholders and
whether there was fair dealing among the parties. The Delaware Supreme Court
stated in ▇▇▇▇▇▇▇▇▇▇ that, although the remedy ordinarily available in a merger
that is found not to be 'fair' to minority stockholders is the right to
appraisal described above, such appraisal remedy may not be adequate 'in certain
cases, particularly where fraud, misrepresentation, self-dealing, deliberate
waste of corporate assets, or gross and palpable overreaching are involved', and
that in such cases, the Delaware Chancery Court would be free to fashion any
form of appropriate relief.
The costs of the proceeding may be determined by the Delaware Chancery
Court and taxed upon the parties as the Delaware Chancery Court deems equitable
in the circumstances. Upon application of a stockholder, the Delaware Chancery
Court also may order all or a portion of the expenses incurred by any
stockholder in connection with the appraisal proceeding, including, without
limitation, reasonable attorneys' fees and the fees and expenses of experts, to
be charged pro rata against the value of all of the Appraisal Shares entitled to
appraisal.
Any holder of Appraisal Shares who has duly demanded an appraisal in
compliance with Section 262 will not, from and after the effective date of the
Merger, be entitled to vote the Appraisal Shares subject to such demand for any
purpose or to receive payment of dividends or other distributions on those
Appraisal Shares (except dividends or other distributions payable to
stockholders of record at a date which is prior to the effective date of the
Merger).
If any stockholder who properly demands appraisal of his or her Appraisal
Shares under Section 262 fails to perfect, or effectively withdraws or loses,
his or her right to appraisal as provided in the DGCL, the Appraisal Shares of
such stockholder will be converted into the right to receive the consideration
receivable with respect to such Appraisal Shares pursuant to the Merger. A
stockholder will fail to perfect, or effectively withdraw or lose, his or her
right to appraisal if, among other things, no
21
petition for appraisal is filed within 120 days after the consummation of the
Merger, or if the stockholder delivers to Purchaser a written withdrawal of his
or her demand for appraisal. Any such attempt to withdraw an appraisal demand
more than 60 days after the consummation of the Merger will require the written
approval of Purchaser.
APPROVAL BY THE BOARD OF DIRECTORS OF THE COMPANY
The Board of Directors of the Company has approved the Offer and the
execution and delivery of the Tender Offer Agreement, the Purchase Agreement and
the MOU, as well as related ancillary documents, subject to receipt of the
Fairness Opinion from the Company's financial advisor, Duff & ▇▇▇▇▇▇, LLC, or
another financial advisor (the 'Financial Advisor'), which sets forth the
written opinion and basis therefor of the Financial Advisor that the per Share
Offer Price is fair to the Company's stockholders from a financial point of
view. The Company has indicated to Purchaser its intention to file the Schedule
14D-9 with the Commission and disseminate copies to its stockholders setting
forth the recommendation of the Board of Directors of the Company with respect
to the Offer, upon receipt of the Fairness Opinion, but in any event no later
than ten business days after the commencement of the Offer.
The Company will file any necessary amendment to the Schedule 14D-9 which
includes the Fairness Opinion and sets forth the basis for the Board of
Directors' recommendation to its stockholders regarding the Offer.
CERTAIN CONDITIONS TO THE OFFER
Notwithstanding any other term of the Offer, Purchaser shall not be
required to accept for payment or pay for, subject to any applicable rules and
regulations of the Commission, including Rule 14e-1(c) of the Exchange Act, any
Shares not theretofore accepted for payment or paid for, and may terminate or
amend the Offer, unless any waiting period under the HSR Act applicable to the
purchase of Shares pursuant to the Offer shall have expired or been terminated.
Furthermore, notwithstanding any other term of the Offer, Purchaser shall not be
required to accept for payment or, subject to the aforesaid, to pay for any
Shares not theretofore accepted for payment or paid for, and may terminate or
amend the Offer, if at any time prior to the expiration of the Offer, any of the
following conditions exist or shall occur and remain in effect:
1. a court of competent jurisdiction or other governmental,
quasi-governmental, self-regulatory agency or other regulatory, judicial or
arbitral body having jurisdiction over the parties to the transaction shall
have issued an order, judgment, decree or ruling on the merits in
connection with an action, suit or proceeding (i) which challenges or seeks
to restrict the acquisition by Purchaser (or any of its affiliates or
subsidiaries) of Shares pursuant to the Offer or the Purchase Agreement, or
obtain damages in connection therewith; (ii) which seeks to make the
purchase of or payment for some or all of the Shares pursuant to the Offer
or the Purchase Agreement illegal; (iii) which seeks to impose material
limitations on the ability of Purchaser (or any of its affiliates)
effectively to acquire, operate or hold, or to require Purchaser or any of
its affiliates to dispose of or hold separate, any material portion of
their assets or business or the Company's assets or business; or (iv) which
seeks to impose material limitations on the ability of Purchaser (or any of
its affiliates) to exercise full rights of ownership of the Shares
purchased by it, including, without limitation, the right to vote the
shares purchased by it on all matters properly presented to the
stockholders of the Company; or
2. there shall have been promulgated, enacted, entered, enforced or
deemed applicable to the Offer any Law or there shall have been issued any
injunction resulting in any of the consequences referred to in subsection
(a) above; or
3. the Purchase Agreement shall have been terminated in accordance
with its terms; or
4. (i) the representations and warranties made by the Company or
Sellers in the Purchase Agreement shall not be true and correct as of the
date of consummation of the Offer as though made on and as of that date
(other than representations and warranties made as of a specified date)
except for any breach or breaches which, in the aggregate, would not have a
material adverse effect
22
on the Company or its business or (ii) the Company or Sellers shall have
breached or failed to comply in any material respect with any of their
respective obligations under the Purchase Agreement (and, with respect to
any such failure that can be remedied, the failure is not remedied within
five business days after Purchaser has furnished the Company or Sellers, as
the case may be, with written notice of such failure); or
5. any person (other than Purchaser or one or more of its affiliates
or subsidiaries) shall have entered into any agreement in principle or
definitive agreement with the Company with respect to a tender or exchange
offer for any Shares or a merger, consolidation or other business
combination with or involving the Company; or
6. the Board of Directors shall have modified or amended its
recommendation of the Offer in any manner adverse to Purchaser or shall
have withdrawn its recommendation of the Offer or shall have recommended
acceptance of any alternative proposal or shall have resolved to do so; or
7. there shall have occurred (i) any general suspension of, or
limitation on prices for, trading in securities on any national securities
exchange or in the over-the-counter market in the United States for a
period in excess of ten consecutive trading hours, (ii) any declaration of
any banking moratorium by any United States federal or state authorities or
any suspension of payments in respect of banks, or (iii) a commencement of
war, armed hostilities or any other international or national calamity
directly or indirectly involving the United States which is reasonably
expected to have a material adverse effect on the Company or its business
or to materially adversely affect Purchaser's ability to complete the
Offer; or
8. immediately prior to and at the time Shares are accepted for
payment, the entire Board of Directors of the Company shall not be composed
of designees of Purchaser, provided Purchaser shall have used its best
efforts to make such designations prior to the expiration of the Offer.
CERTAIN LEGAL AND REGULATORY MATTERS
Except as described herein, based on a review of publicly available filings
made by the Company with the Commission and other publicly available information
concerning the Company, as well as certain representations made to Purchaser in
the Tender Offer Agreement by the Company, Purchaser is not aware of any license
or regulatory permit that appears to be material to the business of the Company
and its subsidiaries, taken as a whole, that might be adversely affected by
Purchaser's acquisition of Shares as contemplated herein or of any approval or
other action by any governmental entity that would be required for the
acquisition or ownership of Shares by Purchaser as contemplated herein. Should
any such approval or other action be required, Purchaser and Holdings currently
contemplate that such approval or other action will be sought, except as
described below under
' -- State Takeover Laws.' While, except as otherwise expressly described
herein, Purchaser does not presently intend to delay the acceptance for payment
of, or payment for, Shares tendered pursuant to the Offer, pending the outcome
of any such matter, there can be no assurance that any such approval or other
action, if needed, would be obtained or would be obtained without substantial
conditions or that failure to obtain any such approval or other action might not
result in consequences adverse to the Company's business, or that certain parts
of the Company's business might not have to be disposed of if such approvals
were not obtained or such other actions were not taken or in order to obtain any
such approval or other action. If certain types of adverse action are taken with
respect to certain of the matters discussed below, Purchaser could decline to
accept for payment or pay for any Shares tendered. See 'TENDER OFFER -- Certain
Conditions to the Offer.'
State Takeover Laws. A number of states throughout the United States, have
enacted takeover statutes that purport, in varying degrees, to be applicable to
attempts to acquire securities of corporations that are incorporated or have
assets, stockholders, executive offices or places of business in such states. In
▇▇▇▇▇ ▇. MITE Corp., the Supreme Court of the United States held that the
Illinois Business Takeover Act, which involved state securities laws that made
the takeover of certain corporations more difficult, imposed a substantial
burden on interstate commerce and therefore was unconstitutional. In CTS Corp.
v. Dynamics Corp. of America, however, the Supreme Court of the United States
held that a state may, as a matter of corporate law and, in particular, those
laws concerning corporate governance, constitutionally disqualify a potential
acquiror from voting on the
23
affairs of a target corporation without prior approval of the remaining
stockholders, provided that such laws were applicable only under certain
conditions.
The Company is incorporated under the laws of Delaware. Section 203 of the
DGCL ('Section 203') prevents an 'Interested Stockholder' (defined generally as
a person with 15% or more of the corporation's outstanding voting stock) from
engaging in a 'Business Combination' (defined to include a variety of
transactions, including mergers) with a Delaware corporation for three years
following the date such person becomes an Interested Stockholder, unless (i)
before such person became an Interested Stockholder, the board of directors of
the corporation approved the transaction in which the Interested Stockholder
became an Interested Stockholder or approved the Business Combination, or (ii)
upon consummation of the transaction which resulted in the Interested
Stockholder becoming an Interested Stockholder, the Interested Stockholder owned
at least 85% of the voting stock of the corporation outstanding at the time the
transaction commenced (excluding stock held by directors who are also officers
of the corporation and by certain employee stock ownership plans), or (iii)
following the transaction in which such person became an Interested Stockholder,
the Business Combination is approved by the board of directors of the
corporation and authorized at a meeting of stockholders by the affirmative vote
of the holders of two-thirds of the outstanding voting stock of the corporation
not owned by the Interested Stockholder. The Company's by-laws provide that the
Company shall not be governed by Section 203 of the DGCL. If Section 203 were to
apply for any reason, its prohibitions on Business Combinations would be
inapplicable to the Offer, the purchase of the Sellers Shares and the Merger
because the Board of Directors has approved the Tender Offer Agreement and the
transactions contemplated thereby, including the Offer, subject to receipt of
the Fairness Opinion, for purposes of Section 203 of the DGCL and has delivered
the MOU to Purchaser. The restrictions of Section 203 are, accordingly, not
applicable to Holdings, Purchaser or affiliates or associates of Purchaser as a
result of the consummation of the transactions contemplated by this Offer to
Purchase.
The Michigan Control Share Statute provisions of the MBCA purport to apply
to the corporations that have (A) 100 or more shareholders of record, (B) its
principal place of business, principal office or substantial assets within
Michigan, and (C)(i) more than 10% of its shareholders of record resident in
Michigan, (ii) more than 10% of its shares owned of record by Michigan
residents, or (iii) 10,000 shareholders of record in Michigan. On this basis,
the Michigan Control Share Statute applies to the acquisition of the Shares,
absent an exemption. The Michigan Control Share Statute generally requires that
for a company to enter into a business combination with an interested
stockholder it must obtain: (i) an advisory statement from the Board of
Directors; (ii) approval of at least 90% of the votes of each class of voting
stock outstanding; and (iii) two-thirds of the non-interested voting stock to
approve the merger. The Company amended its by-laws to elect not to be governed
by the Michigan Control Share Statute as permitted by Section 794 of the MBCA
and no longer needs to comply with the Michigan Control Share Statute.
Neither Purchaser nor Holdings has currently complied with any state
takeover statute or regulation. Purchaser reserves the right to challenge the
applicability or validity of any state law purportedly applicable to the Offer,
the purchase of the Sellers Shares or the Merger, and nothing in this Offer to
Purchase or any action taken in connection with the Offer, the purchase of the
Sellers Shares or the Merger is intended as a waiver of such right. If it is
asserted that any state takeover statute is applicable to the Offer, the
purchase of the Sellers Shares or the Merger and an appropriate court does not
determine that it is inapplicable or invalid as applied to the Offer, the
purchase of the Sellers Shares or the merger, Purchaser might be required to
file certain information with, or to receive approvals from, the relevant state
authorities, and Purchaser might be unable to accept for payment or pay for
Shares tendered pursuant to the Offer or be delayed in consummating the Offer,
the purchase of the Sellers Shares or the Merger. In such case, Purchaser may
not be obliged to accept for payment or pay for any Shares tendered pursuant to
the Offer.
Antitrust. The provisions of the HSR Act are applicable to the acquisition
of Shares pursuant to the Purchase Agreement and the Offer. Under the provisions
of the HSR Act applicable to the Offer, there is a 15-calendar day waiting
period following the filing by ▇▇▇▇▇▇▇▇▇, as the ultimate parent of the
Purchaser, of a Notification and Report Form before the Offer may be
consummated. A 30-calendar day waiting period applies to the purchase of the
Sellers Shares. Such waiting periods may be extended if ▇▇▇▇▇▇▇▇▇ receives a
request for additional information or documentary material from the Antitrust
24
Division of the Department of Justice (the 'Antitrust Division') or the Federal
Trade Commission (the 'FTC'). The waiting period may also be terminated early.
If, within the initial waiting period, either the Antitrust Division or the FTC
requests additional information or material from ▇▇▇▇▇▇▇▇▇ concerning the Offer
or the Purchase of Sellers Shares, the waiting period will be extended. Only one
extension of the waiting period pursuant to a request for additional information
is authorized by the HSR Act. Thereafter, such waiting period may be extended
only by court order or with consent of ▇▇▇▇▇▇▇▇▇. In practice, complying with a
request for additional information or material can take a significant amount of
time.
The Antitrust Division and the FTC frequently scrutinize the legality under
the antitrust laws of transactions such as Purchaser's acquisition of Shares
pursuant to the Offer, the Purchase Agreement and the Merger. At any time before
or after Purchaser's acquisition of Shares, the Antitrust Division or the FTC
could take such action under the antitrust laws as it deems necessary or
desirable in the public interest, including seeking to enjoin the acquisition of
Shares pursuant to the Offer or the Purchase Agreement or otherwise or seeking
divestiture of Shares acquired by Purchaser or divestiture of substantial assets
of Holdings or its subsidiaries. Private parties and state attorneys general may
also bring legal action under the antitrust laws in certain circumstances. Based
upon an examination of publicly available information relating to the business
in which Holdings and the Company are engaged, Holdings and Purchaser believe
that the acquisition of Shares by Purchaser will not violate the antitrust laws.
Nevertheless, there can be no assurance that a challenge to the Offer or other
acquisition of Shares by Purchaser on antitrust grounds will not be made or, if
such challenge is made, of the result. See 'TENDER OFFER -- Certain Conditions
to the Offer' for certain conditions of the Offer, including conditions with
respect to litigation and certain governmental actions.
Rule 13e-3. The Commission has adopted Rule 13e-3 under the Exchange Act
('Rule 13e-3'), which is applicable to certain 'going private' transactions.
Rule 13e-3 requires, among other things, that certain financial information
concerning the Company and certain information relating to the fairness of the
proposed transaction and the consideration offered to minority stockholders in
such transaction be filed with the Commission and disclosed to stockholders
prior to the consummation of the transaction.
Holdings believes that Rule 13e-3 will not be applicable to the Merger or
any other transaction covered by Rule 13e-3 because of the exemption afforded by
Rule 13e-3(g)(1), among other things. However, under certain circumstances, Rule
13e-3 could be applicable to the Merger or other transaction in which Holdings
seeks to acquire the remaining Shares it does not beneficially own following the
purchase of Shares pursuant to the Offer. Holdings intends to comply with Rule
13e-3 with respect to any transaction that is subject to Rule 13e-3.
FEES AND EXPENSES
Purchaser has retained ▇▇▇▇▇▇▇▇▇▇ to act as the Dealer Manager, Beacon Hill
Partners, Inc. to act as Information Agent and The Bank of New York to act as
the Depositary in connection with the Offer. The Information Agent may contact
holders of Shares by mail, telephone, telegraph and personal interview and may
request brokers, dealers, commercial banks, trust companies and other nominees
to forward the Offer material to beneficial owners. The Dealer Manager is an
affiliate of Holdings and Purchaser and will not be compensated for its
services. The Information Agent and the Depositary each will receive reasonable
and customary compensation for their services. Each of the Dealer Manager,
Information Agent and Depositary will be reimbursed for certain reasonable
out-of-pocket expenses and will be indemnified against certain liabilities and
expenses in connection therewith, including certain liabilities under the
federal securities laws.
Except as described herein, Purchaser will not pay any fees or commissions
to any broker or dealer or other person for soliciting tenders of Shares
pursuant to the Offer. Brokers, dealers, commercial banks and trust companies
will be reimbursed by Purchaser for reasonable expenses incurred by them in
forwarding material to their customers.
MISCELLANEOUS
The Offer is not being made to (nor will tenders be accepted from or on
behalf of) holders of Shares in any jurisdiction in which the Offer or the
acceptance thereof would not be in compliance with
25
the securities, 'blue sky' or other laws of such jurisdiction. None of
Purchaser, ▇▇▇▇▇▇▇▇▇▇ and Holdings is aware of any jurisdiction in which the
making of the Offer or the tender of Shares in connection therewith would not be
in compliance with the laws of such jurisdiction. If Purchaser or Holdings
becomes aware of any state law prohibiting the making of the Offer or the
acceptance of Shares pursuant thereto in such state, Purchaser will make a good
faith effort to comply with any such state statute or seek to have such state
statute declared inapplicable to the Offer. If, after such good faith effort,
Purchaser cannot comply with any such state statute, the Offer will not be made
to (nor will tenders be accepted from or on behalf of) the holders of Shares in
such jurisdictions. In any jurisdiction the securities laws or blue sky laws of
which require the Offer to be made by a licensed broker or dealer, the Offer is
being made on behalf of Purchaser by the Dealer Manager or one or more
registered brokers or dealers which are licensed under the laws of such
jurisdiction.
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR MAKE ANY
REPRESENTATION ON BEHALF OF PURCHASER, ▇▇▇▇▇▇▇▇▇▇ OR HOLDINGS NOT CONTAINED IN
THE OFFER, AND IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATION MUST NOT BE
RELIED UPON AS HAVING BEEN AUTHORIZED BY PURCHASER, ▇▇▇▇▇▇▇▇▇▇ OR HOLDINGS.
Purchaser, ▇▇▇▇▇▇▇▇▇▇ and Holdings have filed with the Commission the
Schedule 14D-1, together with exhibits, pursuant to Rule 14d-3 under the
Exchange Act, furnishing certain additional information with respect to the
Offer. In addition, the Company will file with the Commission the Schedule 14D-9
(including exhibits) pursuant to Rule 14d-9 under the Exchange Act. Such
Schedules and any amendments thereto, including exhibits, may be inspected and
copies may be obtained in the manner set forth under 'TENDER OFFER -- Certain
Information Concerning the Company' (except that they will not be available at
the regional offices of the Commission).
FMCC ACQUISITION CORP.
June 18, 1997
26
SCHEDULE I
DIRECTORS AND EXECUTIVE OFFICERS OF HOLDINGS
The following table sets forth the name, business address, present
principal occupation or employment and five-year employment history of the
directors and executive officers of Holdings. Unless otherwise indicated, the
position listed is with Holdings. Each individual listed below is a citizen of
Canada, other than Messrs. ▇▇▇▇▇▇▇▇▇ and ▇▇▇▇▇▇▇ who are citizens of the United
States of America. None of the individuals named in Schedules I, II or III have,
during the last five years, either (i) been convicted in a criminal proceeding
(excluding traffic violations or similar misdemeanors), or (ii) been a party to
a civil proceeding of a judicial or administrative body of competent
jurisdiction and as a result of such proceeding was or is subject to a judgment,
decree or final order enjoining future violations of, or prohibiting or
mandating activities subject to, federal or state securities laws or finding any
violation with respect to such laws.
POSITION WITH HOLDINGS; PRESENT PRINCIPAL
OCCUPATION OR EMPLOYMENT; MATERIAL
NAME AND BUSINESS ADDRESS POSITIONS HELD DURING THE PAST FIVE YEARS
------------------------------------------ ---------------------------------------------------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇ ...................... Chairman of the Board, Chief Executive Officer and Director since
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ 1985; Chairman of the Board and Chief Executive Officer of
9th Floor ▇▇▇▇▇▇▇▇▇▇ since 1985.
New York, New York 10005
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ ........................ President, Treasurer and Director since 1977; Treasurer and Director
▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇ of ▇▇▇▇▇▇▇▇▇▇ since 1983.
Suite 1110
P.O. Box 2015
Toronto, Ontario
Canada M4R 1K8
▇. ▇▇▇▇ Oughtred ......................... Secretary since June 1992 and prior to June 1991 and Director since
▇▇▇▇▇▇ & ▇▇▇▇▇▇ January 1979; Director of ▇▇▇▇▇▇▇▇▇▇ since 1983; Partner, ▇▇▇▇▇▇ &
Scotia Plaza Elliot (Barristers and Solicitors) since 1977; Canadian counsel to
▇▇ ▇▇▇▇ ▇▇▇▇▇▇ West Holdings since 1979.
Canada M5H 3Y4
▇▇▇▇ ▇. ▇▇▇▇▇▇ ........................... Director since February 1980; Chairman and President of The Bitove
The Bitove Corporation Corporation (a holding company for subsidiaries engaged in food and
▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇. ▇▇▇▇ ▇▇▇▇▇▇▇▇ services) since 1987.
Suite 600 -- Member of the Audit and Compensation and Stock Option
Toronto, Ontario Committees.
Canada M5J 1H8
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ........................... Director since 1979; President of Rockport Holdings Limited (a real
Rockport Holdings Limited estate development company) since 1959.
170 The Donway West -- Member of the Audit and Compensation and Stock Option
Suite 307 Committees.
▇▇▇ ▇▇▇▇▇, Ontario
Canada M3C 2G3
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ .......................... Director since 1992; Partner, ▇▇▇▇▇▇▇ Breed ▇▇▇▇▇▇ & ▇▇▇▇▇▇ LLP
▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ & (Attorneys-at-Law) and its predecessor firm since 1986; U.S.
▇▇▇▇▇▇ LLP Counsel to the Company since 1985.
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ ...................... Director of the Company since 1996; President and C.E.O. of Shurway
▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ Capital Corporation (a private corporation), since July 1993;
Toronto, Ontario Senior Vice-President Bank of Montreal Investment Counsel between
Canada M84 4E4 January 1992 and July 1993; Senior Vice-President ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
Inc. between July 1989 and January 1993.
-- Member of the Audit Committee.
I-1
SCHEDULE II
DIRECTORS AND EXECUTIVE OFFICERS OF ▇▇▇▇▇▇▇▇▇▇
The following table sets forth the name and position with ▇▇▇▇▇▇▇▇▇▇ of the
directors and executive officers of ▇▇▇▇▇▇▇▇▇▇. Unless otherwise indicated, the
business address, principal occupation or employment, five-year employment
history and citizenship of each individual listed below is as set forth in
Schedule I. Each individual named below not mentioned in Schedule I is a citizen
of the United States of America.
POSITION WITH ▇▇▇▇▇▇▇▇▇▇; PRESENT
PRINCIPAL OCCUPATION OR EMPLOYMENT;
MATERIAL POSITIONS HELD DURING
NAME AND BUSINESS ADDRESS THE PAST FIVE YEARS
------------------------------------ ---------------------------------------------------------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇................. Chairman of the Board, Chief Executive Officer and Director
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ..................... Executive Vice President and Director since 1988; Assistant Secretary since
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ 1990; Vice President at ▇▇▇▇▇▇▇, ▇▇▇▇▇ & ▇▇▇▇ from 1964 to 1987.
9th Floor
New York, New York 10005
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇................... Treasurer and Director
▇. ▇▇▇▇ ▇▇▇▇▇▇▇▇.................... Director
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ..................... Senior Vice President - Operations since April 1994; Operations Manager
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ from June 1990 to April 1989; Margin Manager from February 1988 to June
9th Floor 1990.
New York, New York 10005
▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ..................... Senior Vice President - Compliance since April 1994; Director of Compliance
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ from August 1990 to present; Compliance Department Manager from October
9th Floor 1988 to August 1990; Internal Auditor from March 1988 to October 1988;
New York, New York 10005 Assistant Margin Manager from February 1988 to March 1988.
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ .................... Senior Vice President - Finance and Controller since April 1994; Controller
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ from January 1989 to present; Assistant Controller from February 1988 to
9th Floor January 1989.
New York, New York 10005
▇▇▇▇ ▇▇▇▇▇▇ ........................ Secretary and Chief Legal Counsel since February 1995; Chief Legal Counsel
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ from January 1995 to present; Attorney, ▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇ &
9th Floor Lerach (NY, NY) from May 1993 to December 1994; student, ▇▇▇▇▇▇▇▇ ▇.
New York, New York 10005 Cardozo School of Law from June 1990 to December 1992.
II-1
SCHEDULE III
DIRECTORS AND EXECUTIVE OFFICERS OF PURCHASER
The following table sets forth the name and position with Purchaser of the
sole director and executive officers of Purchaser. The business address,
principal occupation or employment, five-year employment history and citizenship
of each individual listed below is as set forth in Schedule I.
NAME POSITION WITH PURCHASER
---- -----------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇ ................ Chairman of the Board, Chief Executive Officer and Director
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ .................. President and Treasurer
▇. ▇▇▇▇ ▇▇▇▇▇▇▇▇ ................... Secretary
III-1
Facsimile copies of the Letter of Transmittal, properly completed and duly
signed, will be accepted. The Letter of Transmittal, certificates for the Shares
and any other required documents should be sent or delivered by each stockholder
of the Company or his broker, dealer, commercial bank, trust company or other
nominee to the Depositary at one of the addresses set forth below:
The Depositary for the Offer is:
THE BANK OF NEW YORK
By Mail: By Facsimile Transmission: By Hand:
or
Tender & Exchange (▇▇▇) ▇▇▇-▇▇▇▇ Overnight Courier:
P.O. Box 11248 (For Eligible Institutions Only) Tender & Exchange Department
Church Street Station ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇ Receive and Deliver Window
New York, New York 10286
For Confirmation Telephone:
(▇▇▇) ▇▇▇-▇▇▇▇
Any questions or requests for assistance or additional copies of the Offer
to Purchase, the Letter of Transmittal and Notice of Guaranteed Delivery may be
directed to the Information Agent or the Dealer Manager at their respective
telephone numbers and locations listed below. Stockholders may also contact
their broker, dealer, commercial bank, trust company or other nominee for
assistance concerning the Offer.
The Information Agent for the Offer is:
BEACON HILL PARTNERS, INC.
▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Banks and Brokers please call:
(▇▇▇) ▇▇▇-▇▇▇▇
Toll Free: (▇▇▇) ▇▇▇-▇▇▇▇
The Dealer Manager for the Offer is:
[Logo]
▇▇▇▇▇▇▇▇▇▇ & Co. Inc.
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Call: (▇▇▇) ▇▇▇-▇▇▇▇ (collect)