OFFER TO PURCHASE FOR CASH
ALL OUTSTANDING SHARES OF COMMON STOCK
OF
THE JUDGE GROUP, INC.
NOT OWNED BY JUDGE GROUP ACQUISITION CORPORATION
AT
$1.05 PER SHARE
BY
JUDGE GROUP ACQUISITION CORPORATION
--------------------------------------------------------------------------------
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, EASTERN STANDARD
TIME, ON JUNE 16, 2003, UNLESS THE OFFER IS EXTENDED.
--------------------------------------------------------------------------------
Judge Group Acquisition Corporation, a newly formed
Pennsylvania corporation (the "Purchaser") currently owned by ▇▇▇▇▇▇ ▇. ▇▇▇▇▇,
▇▇. ("Mr. ▇▇▇▇▇"), Chairman of the Board and Chief Executive Officer of The
Judge Group, Inc. ("Judge Group") and ▇▇▇▇▇▇▇ ▇. ▇▇▇▇ ("▇▇. ▇▇▇▇"), President
and a Director of Judge Group, is offering to purchase ("the Offer" or "Offer to
Purchase") at a price of $1.05 per share (the "Offer Price") all outstanding
shares of common stock of Judge Group (the "Shares") not currently owned by the
Continuing Shareholders (as defined below), on the terms and subject to the
conditions specified in this Offer to Purchase and related letter of
transmittal. Immediately preceding the closing of the Offer, Purchaser will be
owned by Mr. ▇▇▇▇▇, ▇▇. ▇▇▇▇ and certain employees, including officers and
directors of Judge Group, certain of their respective family members and
affiliates and other non-employees and non-family members (collectively referred
to herein as "Continuing Shareholders") (See Section 8 "Certain Information
Concerning Continuing Shareholders and Purchaser" beginning on page 59 and
Schedule B).
The Offer is conditioned on, among other things, (i) the
tender in this offer of at least a majority of the outstanding Shares, excluding
shares beneficially owned by Continuing Shareholders and the executive officers
of Judge Group (the "Majority of the Minority Condition"), (ii) the tender in
this offer of a sufficient number of Shares such that, after the Shares are
purchased pursuant to the Offer, Purchaser would own at least 80% of the
outstanding Judge Group common stock (the "Minimum Tender Condition"), and (iii)
a special committee of independent directors of Judge Group (the "Special
Committee") not having modified or withdrawn its recommendation to shareholders
of Judge Group. In no event may the Majority of the Minority Condition or the
Minimum Tender Condition be waived. Together, Continuing Shareholders and their
affiliates currently own approximately 62.58% of the outstanding common stock of
Judge Group. This Offer is also subject to certain other conditions described in
Section 11, "The Offer-Certain Conditions of the Offer" beginning on page 67.
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED OF THIS TRANSACTION OR PASSED UPON THE
MERITS OR FAIRNESS OF SUCH TRANSACTION OR PASSED UPON THE ADEQUACY OR ACCURACY
OF THE INFORMATION CONTAINED IN THIS DOCUMENT. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.
IMPORTANT
Any Judge Group shareholder desiring to tender all or any
portion of such shareholder's Shares should, as applicable, (1) complete and
sign the letter of transmittal which is filed as an exhibit to the Schedule TO
(the "Letter of Transmittal") or a facsimile thereof in accordance with the
instructions in the Letter of Transmittal, including any required signature
guarantees, and mail or deliver to the Depositary (as defined herein) the Letter
of Transmittal or such facsimile with such shareholder's certificate(s) for the
tendered Shares and any other required documents, (2) follow the procedure for
book-entry transfer of Shares set forth in Section 3, "The Offer-Procedures for
Tendering Shares," or (3) request their broker, dealer, commercial bank, trust
company or other nominee to tender their Judge Group Shares for them. A
shareholder whose Shares are registered in the name of a broker, dealer,
commercial bank, trust company or other nominee must ask such broker, dealer,
commercial bank, trust company or other nominee to tender Shares as the
registered shareholder if they desire to tender those Shares.
A shareholder who desires to tender Shares and whose
certificates for such Shares are not immediately available, or who cannot comply
with the procedure for book-entry transfer on a timely basis, may tender such
Shares by following the procedure for guaranteed delivery set forth in Section
3, "The Offer-Procedures for Tendering Shares."
Questions and requests for assistance may be directed to
StockTrans, Inc., as Information Agent (the "Information Agent") for this Offer,
at its address and telephone number set forth on the back cover of this Offer to
Purchase. Requests for additional copies of this Offer to Purchase and the
Letter of Transmittal may be directed to the Information Agent or to the
brokers, dealers, commercial banks or trust companies holding your Shares.
THE DATE OF THIS OFFER TO PURCHASE IS MAY 19, 2003.
SUMMARY TERM SHEET
This summary highlights important and material information
from this Offer to Purchase but is intended to be an overview only. Purchaser
urges you to read carefully the remainder of this Offer to Purchase and the
related Letter of Transmittal. Purchaser has included section references to
direct you to a more complete description of the topics contained in this
summary.
o Purchaser is offering to buy all of the outstanding
Shares of common stock of Judge Group not owned by the
Continuing Shareholders (the "Shares"). See Section 8
"The Offer-Certain Information Concerning Continuing
Shareholders and Purchaser" beginning on page 59. The
tender price is $1.05 per Share (the "Offer Price") in
cash, without interest, less any required withholding
taxes. See Section 1, "The Offer-Terms of the Offer,"
beginning on page 46 for a description of the terms of
the Offer.
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o Currently, the Continuing Shareholders own approximately
62.58% of the outstanding Shares of Judge Group. All of
these Shares will be contributed to Purchaser
immediately prior to the consummation of the Offer. See
Section 8, "The Offer-Certain Information Concerning
Continuing Shareholders and Purchaser", beginning on
page 59 and Schedule B for more information on the
security holdings of the Continuing Shareholders.
o The Offer is conditioned on, among other things:
o At least a majority of the Shares outstanding as
of May 19, excluding Shares beneficially owned by
Continuing Shareholders and the executive officers
of Judge Group, are tendered in the Offer (the
"Majority of the Minority Condition"). According
to information provided by Judge Group to
Purchaser, as of May 19, 2003, there were
approximately 13,462,382 Shares outstanding. Based
on the foregoing information provided by Judge
Group to Purchaser, the tender of approximately
2,504,030 Shares held by shareholders other than
Continuing Shareholders and Judge Group's
executive officers will satisfy the Majority of
the Minority Condition;
o After Shares are purchased pursuant to the Offer,
Purchaser would own at least 80% of the
outstanding Shares (the "Minimum Tender
Condition"). Based on the information provided by
Judge Group, if Purchaser was to purchase
approximately 2,345,081 Shares pursuant to the
Offer, the Minimum Tender Condition would be met.
If the Majority of the Minority Condition is
satisfied, the Minimum Tender Condition will also
be satisfied.
o The special committee of independent directors of
Judge Group ("Special Committee") not having
modified or withdrawn its recommendation to
shareholders that they tender their Shares in the
Offer; and
See Section 11, "The Offer-Certain Conditions of the
Offer," beginning on page 64 for a complete description
of all of the conditions to which the Offer is subject.
o This is a "going private" transaction. If the tender
offer is successful Purchaser will immediately cause
Judge Group to merge with Purchaser (the "Merger") and,
as a result:
o Continuing Shareholders, through Purchaser, will
own all of the equity interests in Judge Group;
-3-
o You will no longer have any interest in Judge
Group's future earnings or growth;
o Judge Group will no longer be a public company and
its financial statements will no longer be
publicly available;
o Judge Group common stock would no longer trade on
The Nasdaq Small Cap Market. See Section 14, "The
Offer-Certain Effects of the Offer," beginning on
page 69; and
o Judge Group will be highly leveraged with debt
incurred to finance the transaction.
o Purchaser will pay to those shareholders who do not
tender their shares and do not exercise their
dissenters' rights the same consideration in the Merger
as Purchaser pays in the Offer. See Section 9, "The
Offer-Merger, Dissenters' Rights; Rule 13e-3," beginning
on page 60.
o Shareholders who sell their Shares in the Offer will
receive cash for their Shares sooner than shareholders
who wait for the Merger to occur. But shareholders who
sell their Shares in the Offer will not be entitled to
assert dissenters' rights and seek to obtain payment of
the fair value of their Shares under Pennsylvania law.
Any shareholders who do not tender their Shares and
dissent from the Merger may exercise dissenters' rights
in accordance with Subchapter D of the Pennsylvania
Business Corporation Law ("PBCL"). See Section 9, "The
Offer-Merger; Dissenters' Rights; Rule 13e-3," beginning
on page 60 and Schedule A for more information on
dissenters' rights.
o The Special Committee has recommended that the
shareholders tender their Shares in the Offer and it is
a waivable condition to the Offer that the Special
Committee not modify or withdraw its recommendation to
shareholders. See Section 11, "The Offer-Certain
Conditions of the Offer," beginning on page 64.
o Purchaser has been advised that all of the executive
officers and directors of Judge Group who are not also
Continuing Shareholders, as well as Investec (financial
adviser to Purchaser) and certain of its principals who
are each Judge Group shareholders, each intend to tender
their Shares in the Offer. See Section 7, "The
Offer-Certain Information Concerning Judge Group,"
beginning on page 56.
o Continuing Shareholders and Purchaser believe that the
Offer and the Merger are both substantively and
procedurally fair to Judge Group's shareholders who are
not affiliated with the Continuing Shareholders.
Continuing Shareholders and Purchaser base their belief
on the following factors:
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o The Offer represents a 16.67% premium over the
closing price on May 16, 2003 of Judge Group
common stock, the last full trading day before
public announcement of the Offer, a 34.62% premium
over the closing price of Judge Group's common
stock on April 10, 2003, the last full trading day
before the public announcement that the Purchaser
intended to make an offer at $0.95 a share and a
50% premium over the closing price on March 21,
2003 of Judge Group common stock, the last full
trading day before the public announcement of the
Purchaser's proposal to take Judge Group private,
a 52.78% premium over the average closing price
since January 1, 2003 of Judge Group common stock,
a 51.49% premium over the average closing price
since November 1, 2002 of Judge Group common
stock, and a 36.59% premium over the average
closing price for the twelve-month period ended
March 21, 2003 of Judge Group common stock;
o The ability of each shareholder to evaluate the
Offer and individually determine whether to tender
Shares in the Offer;
o The recent limited trading volume in the Shares
and the ability of each shareholder to obtain
liquidity for his, her or its Shares prior to the
Shares of Judge Group potentially being delisted
from The Nasdaq Small Cap Market;
o The significant increased costs and burdens of
operating as a public company after the passage of
the Sarbanes Oxley Act of 2002 (and various rules
promulgated by the Securities and Exchange
Commission (the "SEC") thereunder)
o The shifting of the risk of the future financial
performance of Judge Group and future economic
conditions entirely to the Continuing Shareholders
and Purchaser;
o The Majority of the Minority Condition;
o The Minimum Tender Condition;
o The ability of shareholders to exercise
dissenters' rights in the Merger if they choose;
o The recommendation by the Special Committee of
Judge Group that shareholders accept the Offer;
and
o The receipt by the Special Committee of a fairness
opinion from ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, Incorporated,
("▇▇▇▇ ▇▇▇▇▇") that the Offer Price is fair to
shareholders other than Continuing Shareholders
from a financial point of view.
See "SPECIAL FACTORS-Purchaser's Position Concerning the
Fairness of the Offer and Merger."
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QUESTIONS AND ANSWERS ABOUT THE TENDER OFFER
o WHO IS OFFERING TO BUY MY SECURITIES?
Judge Group Acquisition Corporation, a Pennsylvania
corporation which will be wholly owned by Continuing
Shareholders and was formed for the purpose of making
the Offer, is offering to buy your Shares as described
in this document. The Continuing Shareholders own
8,424,825 Shares, which represents approximately 62.58%
of outstanding Judge Group common stock. All of these
Shares will be contributed to Judge Group Acquisition
Corporation immediately prior to consummation of the
Offer and prior to the Merger. See Section 8, "The
Offer--Certain Information Concerning Continuing
Shareholders and Purchaser," and Schedule B for further
information about Purchaser and Continuing Shareholders.
o WHAT ARE THE CLASSES AND AMOUNTS OF SECURITIES SOUGHT IN
THE OFFER?
Purchaser is offering to buy all of the Shares of common
stock of Judge Group not currently owned by Purchaser or
the Continuing Shareholders. For information about the
conditions to the Offer, see Section 11, "The
Offer--Certain Conditions of the Offer."
o HOW MUCH IS PURCHASER OFFERING TO PAY AND WHAT IS THE
FORM OF PAYMENT?
Purchaser is offering to pay $1.05 in cash for each
Judge Group Share not owned by Continuing Shareholders.
See Section 1, "The Offer--Terms of the Offer," for
information about the terms of the Offer.
o DOES PURCHASER HAVE THE FINANCIAL RESOURCES TO MAKE
PAYMENT?
Purchaser has obtained a financing commitment from PNC
Bank, National Association ("PNC Bank") to provide funds
for the Offer. The financing will be secured by assets
of Judge Group upon completion of the Offer and the
Merger. There is a possibility that Purchaser will not
obtain such funds due to various conditions in the
commitment letter not being met. See Section 10, "The
Offer--Source and Amount of Funds."
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o WHAT ARE THE MOST SIGNIFICANT CONDITIONS TO THE OFFER?
The Offer is conditioned on, among other things, (i)
satisfaction of the Majority of the Minority Condition
which requires the tender of at least a majority of the
outstanding Shares, excluding Shares beneficially owned
by Continuing Shareholders and the executive officers of
Judge Group; (ii) the satisfaction of the Minimum Tender
Condition, which requires the tender of sufficient
number of Shares such that, after the Shares are
purchased pursuant to the Offer, Purchaser would own at
least 80% of the outstanding Judge Group common stock,
and (iii) the Special Committee not having modified or
withdrawn its recommendation that shareholders tender
their Shares in this Offer. In no event may the Majority
of the Minority Condition or the Minimum Tender
Condition be waived. See "Introduction" and Section 11,
"The Offer--Certain Conditions of the Offer," for a
complete description of all of the conditions to which
the Offer is subject.
o WHY IS PURCHASER MAKING THIS OFFER?
The purpose of the Offer and the Merger is to enable the
Continuing Shareholders, through Purchaser, to acquire
the entire equity interest in Judge Group. The
Continuing Shareholders believe that it is in the best
long-term interest of Judge Group and its shareholders,
employees, customers, suppliers and creditors to
consummate the Offer since, among other reasons, being a
private company will allow Judge Group's management to
focus on long-term business goals and eliminate
disclosure burdens and costs associated with being a
public company subject to applicable federal securities
laws and regulations. See "SPECIAL FACTORS--Reasons for
and Purpose of the Offer and the Merger", and "SPECIAL
FACTORS--Purchaser's Plans for Judge Group."
o IS THIS OFFER SUPPORTED BY THE JUDGE GROUP BOARD OF
DIRECTORS?
The Special Committee has recommended that shareholders
tender their Shares in the Offer. Judge Group has
prepared a Solicitation/Recommendation Statement
containing additional information regarding the
determination and recommendation of Judge Group's board
of directors, including a discussion of the opinion of
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, Incorporated, delivered to the
Special Committee that, as of May 16, 2003, based upon
and subject to the assumptions, limitations and
qualifications set forth therein, the Offer Price to be
received in the Offer and the Merger, considered as a
single transaction, was fair, from a financial point of
view, to the Judge Group shareholders being asked to
tender their Shares. The Solicitation/Recommendation
Statement is being sent to shareholders concurrently
with this document. A discussion of the recommendation
is also included in this Offer. See "SPECIAL
FACTORS--Background of the Offer" and "SPECIAL
FACTORS--Recommendation of the Board of Directors;
Fairness of the Offer and the Merger" for more detailed
information.
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o IF I DECIDE NOT TO TENDER, HOW WILL THE OFFER AFFECT MY
SHARES?
If you do not tender your Shares, the Offer might not be
consummated because Purchaser may not be able to satisfy
either the Majority of the Minority Condition or the
Minimum Tender Condition. If either of these conditions
is not satisfied, Purchaser will not acquire any Shares
through this Offer. If the Offer is not consummated, you
will remain a shareholder of Judge Group. If you do not
tender your Shares and Purchaser consummates the Offer,
Purchaser will effect the Merger without the vote or
approval of Judge Group's shareholders, and your shares
will be subject to the Merger, as a result of which, you
will be entitled to receive $1.05 in cash or have the
option of seeking dissenters' rights. See "Questions and
Answers About the Tender Offer--If Purchaser Consummates
the Tender Offer, What Are Its Plans with Respect to All
of the Shares that Are Not Tendered in the Offer?" on
page 10.
o HOW LONG DO I HAVE TO DECIDE WHETHER TO TENDER MY SHARES
IN THE INITIAL OFFERING PERIOD?
You may tender your Shares under the Offer until 12:00
midnight, Eastern Standard Time, on June 16, 2003, which
is the scheduled expiration date of the Offer, unless
▇▇▇▇▇▇▇▇▇ decides to extend the Offer. See Section 3,
"The Offer--Procedure for Tendering Shares," for
information about tendering your shares.
o CAN THE OFFER BE EXTENDED AND HOW WILL I BE NOTIFIED IF
THE OFFER IS EXTENDED?
Yes, Purchaser may elect to extend the Offer. Purchaser
can do so by issuing a press release no later than 9:00
a.m., Eastern Standard Time, on the next business day
following the scheduled expiration date of the Offer.
The press release would state the approximate number of
shares tendered as of that time and would announce the
extended expiration date. See Section 1, "The
Offer--Terms of the Offer," for information about
extension of the Offer.
o WILL I HAVE TO PAY ANY FEES OR COMMISSIONS?
If you are the record owner of your Shares and you
tender your Shares to Purchaser in the Offer, you will
not have to pay brokerage fees or similar expenses. If
you own your Shares through a broker or other nominee,
and your broker or nominee tenders your Shares on your
behalf, it may charge you a fee for doing so. You should
consult your broker or nominee to determine whether any
charges will apply. See Section 3, "The
Offer--Procedures for Tendering Shares."
o HOW WILL U.S. TAXPAYERS BE TAXED FOR U.S. FEDERAL INCOME
TAX PURPOSES?
If you are a U.S. taxpayer, your receipt of cash for
Shares in the Offer will be a taxable transaction for
U.S. federal income tax purposes. You will generally
recognize gain or loss in an amount equal to the
difference between (i) the cash you receive in the Offer
and (ii) your adjusted tax basis in the Shares you sell
in the Offer. That gain or loss will be a capital gain
or loss if the Shares are a capital asset in your hands,
and will be long-term capital gain or loss if the shares
have been held for more than one year at the time the
Offer is completed. You are urged to consult your own
tax advisor as to the particular tax consequences of the
Offer to you. See Section 5, "The Offer--Certain Federal
Income Tax Consequences of the Offer."
-8-
o HOW DO I TENDER MY SHARES?
If you hold the certificates for your Shares, you should
complete the enclosed Letter of Transmittal and enclose
all the documents required by it, including your stock
certificates, and send them to the Depositary at the
address listed on the back cover of this document. If
your broker holds your Shares for you in "street name"
you must instruct your broker to tender your Shares on
your behalf. In any case, the Depositary must receive
all required documents before the expiration date of the
Offer, which is June 16, 2003, unless extended. If you
cannot comply with any of these procedures, you still
may be able to tender your Shares by using the
guaranteed delivery procedures described in this
document. See Section 3, "The Offer--Procedures for
Tendering Shares," for more information on the
procedures for tendering your shares.
o UNTIL WHAT TIME CAN I WITHDRAW PREVIOUSLY TENDERED
SHARES?
The tender of your shares may be withdrawn at any time
before the expiration date of the Offer. See Section 4,
"The Offer--Rights of Withdrawal," for more information.
o HOW DO I WITHDRAW PREVIOUSLY TENDERED SHARES?
You (or your broker if your shares are held in "street
name") must notify the Depositary at the address and
telephone number listed on the back cover of this
document, and the notice must include the name of the
shareholder that tendered the Shares, the number of
Shares to be withdrawn and the name in which the
tendered Shares are registered. For complete information
about the procedures for withdrawing your previously
tendered shares, see Section 4, "The Offer--Rights of
Withdrawal."
o WHAT ARE PURCHASER'S PLANS WITH RESPECT TO JUDGE GROUP'S
EMPLOYEES?
▇▇▇▇▇▇▇▇▇ believes that Judge Group's key employees are
important to the success of Judge Group's business and
operations and the interests of employees and improving
the ability to attract, retain and incentivize employees
is one of the reasons Purchaser is making the Offer.
Purchaser plans to provide a new incentive plan to key
Judge Group employees following completion of the Offer
and the Merger. At this time, Purchaser has not
finalized any particular incentive plans, but Purchaser
intends to minimize disruption to Judge Group team as a
result of the Offer and the Merger.
-9-
o WHAT EFFECT DOES THE OFFER HAVE ON OUTSTANDING OPTIONS
TO PURCHASE SHARES OF JUDGE GROUP STOCK?
Any options to purchase Shares of Judge Group which
remain unexercised will be cancelled immediately prior
to the consummation of the Offer. The vesting schedules
of any options which are not currently vested will not
be adjusted in connection with the Offer. Holders of
vested options who exercise such options may tender the
Shares underlying such options in the Offer and receive
the Offer Price for such Shares.
Continuing Shareholders hold vested options to purchase
an aggregate of 30,000 Shares of common stock of Judge
Group with exercise prices less than the Offer Price. If
these options are exercised prior to the consummation of
the Offer, such Continuing Shareholders would receive an
aggregate amount of $8,950.
o IF PURCHASER CONSUMMATES THE TENDER OFFER, WHAT ARE ITS
PLANS WITH RESPECT TO ALL OF THE SHARES THAT ARE NOT
TENDERED IN THE OFFER?
If the Offer is successful, Purchaser will cause
Purchaser to merge with and into Judge Group and pay to
Judge Group shareholders who have not tendered their
Shares the same consideration Purchaser paid for Shares
in the Offer. Judge Group shareholders who do not tender
their Shares in the Offer will have a right to dissent
and demand payment of the fair value of their Shares
under Pennsylvania law. In no event will Purchaser
complete the tender offer if either of the Majority of
the Minority Condition or the Minimum Tender Condition
is not satisfied. See Section 9, "The Offer--Merger;
Dissenters' Rights; Rule 13e-3" for more information
concerning the Merger and exercising dissenters' rights
and Section 11, "The Offer--Certain Conditions of the
Offer," for a complete description of all of the
conditions to which the Offer is subject.
o WHEN DOES PURCHASER EXPECT TO COMPLETE THE OFFER AND THE
MERGER?
Purchaser hopes to complete the Offer on June 16, 2003,
the initial scheduled expiration date. However,
Purchaser may extend the Offer if the conditions to the
Offer have not been satisfied at the scheduled
expiration date or if Purchaser is required to extend
the Offer by the rules of the SEC. Purchaser expects to
complete the Merger on the same day as, or as soon as
practicable following the completion of the Offer. See
Section 1, "The Offer--Terms of the Offer," and Section
9, "The Offer--Merger; Dissenters' Rights; Rule 13e-3."
o WILL I HAVE THE RIGHT TO ASSERT DISSENTERS' RIGHTS FOR
MY JUDGE GROUP SHARES?
If you do not tender your Shares in the Offer and the
Merger is consummated, you will have a statutory right
to dissent and demand payment of the fair value of your
Shares plus accrued interest, if any, from the date of
the Merger in accordance with Pennsylvania law. If you
tender your Shares in the Offer, you will not be
entitled to exercise statutory dissenters' rights under
Pennsylvania law and will not have the right to demand
payment of fair value for your Shares under Pennsylvania
law. The value received upon exercise of dissenters'
rights may be more than, less than or the same as the
cash consideration Purchaser pays in the Offer and the
Merger. See Section 9, "The Offer--Merger; Dissenters'
Rights; Rule 13e-3" and Schedule A.
-10-
o WHAT IS THE MARKET VALUE OF MY SHARES AS OF A RECENT
DATE?
On March 21, 2003, the last full trading day prior to
the public announcement of Purchaser's intention to take
Judge Group private at a price of $0.82 per share, the
last reported closing price on The Nasdaq Small Cap
Market was $0.70 per share of Judge Group common stock.
On April 10, 2003, the last full trading day prior to
the public announcement of Purchaser's intent to make an
offer of $0.95, the last reported closing price on The
Nasdaq Small Cap Market was $0.78 per share of Judge
Group common stock. On May 16, 2003, the last full
trading day before commencement of the Offer, the last
reported closing price was $0.90 per share of Judge
Group common stock. The average closing price since
January 1, 2003, has been $0.69 per share of Judge Group
common stock. The average closing price since November
1, 2002, has been $0.69 per share of Judge Group common
stock. The average closing price since March 21, 2002
has been $0.77 per share of Judge Group common stock.
You should obtain a recent market quotation for Shares
of the common stock of Judge Group in deciding whether
to tender your Shares. See Section 6, "The Offer--Price
Range of Shares; Dividends; Ownership of and
Transactions in Shares," for recent high and low sales
prices for the Shares.
o WHO CAN I TALK TO IF I HAVE QUESTIONS ABOUT THE TENDER
OFFER?
If you have questions or you need assistance you should
contact StockTrans, Inc., the Information Agent for the
Offer, at the following address and telephone number:
StockTrans, Inc, Attn: Judge Tender Offer, ▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ (610) 649-7300 or
(▇▇▇) ▇▇▇-▇▇▇▇.
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TABLE OF CONTENTS
IMPORTANT.........................................................................................................2
SUMMARY TERM SHEET................................................................................................2
SPECIAL FACTORS..................................................................................................16
THE OFFER........................................................................................................46
1. TERMS OF THE OFFER......................................................................................46
2. ACCEPTANCE FOR PAYMENT AND PAYMENT FOR SHARES...........................................................48
3. PROCEDURES FOR TENDERING SHARES.........................................................................49
4. RIGHTS OF WITHDRAWAL....................................................................................53
5. CERTAIN FEDERAL INCOME TAX CONSEQUENCES OF THE OFFER....................................................54
6. PRICE RANGE OF SHARES; DIVIDENDS; OWNERSHIP OF AND TRANSACTIONS IN SHARES...............................55
7. CERTAIN INFORMATION CONCERNING JUDGE GROUP..............................................................56
8. CERTAIN INFORMATION CONCERNING CONTINUING SHAREHOLDERS AND PURCHASER....................................59
9. MERGER; DISSENTERS' RIGHTS; RULE 13e-3..................................................................60
10. SOURCE AND AMOUNT OF FUNDS..............................................................................62
11. CERTAIN CONDITIONS OF THE OFFER.........................................................................64
12. DIVIDENDS AND DISTRIBUTIONS.............................................................................67
13. CERTAIN LEGAL MATTERS...................................................................................67
14. CERTAIN EFFECTS OF THE OFFER............................................................................69
15. FEES AND EXPENSES.......................................................................................71
16. MISCELLANEOUS...........................................................................................71
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TO THE HOLDERS OF COMMON STOCK OF THE JUDGE GROUP, INC.:
INTRODUCTION
Judge Group Acquisition Corporation, a newly formed
Pennsylvania corporation (the "Purchaser") currently owned by ▇▇▇▇▇▇ ▇. ▇▇▇▇▇,
▇▇. ("Mr. ▇▇▇▇▇"), Chairman of the Board and Chief Executive Officer of The
Judge Group, Inc. ("Judge Group") and ▇▇▇▇▇▇▇ ▇. ▇▇▇▇ ("▇▇. ▇▇▇▇"), President
and a Director of Judge Group, is offering to purchase (the "Offer") at a price
of $1.05 per share (the "Offer Price") all outstanding shares of common stock of
Judge Group (the "Shares") not currently owned by the Continuing Shareholders
(as defined below), on the terms and subject to the conditions specified in this
Offer to Purchase and related letter of transmittal which is filed as an exhibit
to the Schedule TO (the "Letter of Transmittal"). Immediately preceding the
closing of the Offer, Purchaser will be owned by Mr. ▇▇▇▇▇, ▇▇. ▇▇▇▇ and certain
employees, including officers and directors of Judge Group, certain of their
family members and affiliates and other non-employees and non-family members
(collectively referred to herein as "Continuing Shareholders") (See Section 8
"Certain Information Concerning Continuing Shareholders" beginning on page 59
and Schedule B).
The Offer represents a 16.67% premium over the closing price
on May 16, 2003 of Judge Group common stock, the last full trading day before
public announcement of the Offer, a 34.62% premium over the closing price of
Judge Group's common stock on April 10, 2003, the last full trading day before
the public announcement that the Purchaser intended to make an offer at $0.95 a
Share and a 50% premium over the closing price on March 21, 2003 of Judge Group
common stock, the last full trading day before the public announcement of
Purchaser's proposal to take Judge Group private, a 52.78% premium over the
average closing price since January 1, 2003 of Judge Group common stock, a
51.49% premium over the average closing price since November 1, 2002 of Judge
Group common stock, and a 36.59% premium over the average closing price for the
twelve-month period ended March 21, 2003 of Judge Group common stock.
If you are a record owner of Shares, you will not be required
to pay brokerage fees or commissions or, except as described in Instruction 6 of
the Letter of Transmittal, stock transfer taxes on the transfer and sale of
Shares in the Offer. Shareholders who hold their Shares through bankers or
brokers should check with such institutions as to whether they charge any
service fee. However, if you do not complete and sign the Substitute Form W-9
that is included in the Letter of Transmittal, you may be subject to a required
backup U.S. federal income tax withholding of 30% of the gross proceeds payable
to you. Purchaser will pay all charges and expenses of StockTrans, Inc., as
Depositary (the "Depositary"), and StockTrans, Inc., as Information Agent (the
"Information Agent"), incurred in connection with the Offer.
THE OFFER IS CONDITIONED ON, AMONG OTHER THINGS, (1) THE
TENDER OF AT LEAST A MAJORITY OF THE OUTSTANDING SHARES OF JUDGE GROUP;
EXCLUDING SHARES BENEFICIALLY OWNED BY CONTINUING SHAREHOLDERS AND THE EXECUTIVE
OFFICERS OF JUDGE GROUP (THE "MAJORITY OF THE MINORITY CONDITION"); (2) THE
TENDER OF A SUFFICIENT NUMBER OF SHARES PURSUANT TO THIS OFFER SUCH THAT, AFTER
THE SHARES ARE PURCHASED PURSUANT TO THE OFFER, PURCHASER WOULD OWN AT LEAST 80%
OF THE THEN OUTSTANDING JUDGE GROUP COMMON STOCK (THE "MINIMUM TENDER
CONDITION") AND (3) THE SPECIAL COMMITTEE OF THE BOARD OF DIRECTORS OF JUDGE
GROUP NOT HAVING MODIFIED OR WITHDRAWING ITS RECOMMENDATION TO SHAREHOLDERS OF
JUDGE GROUP. IN NO EVENT MAY THE MAJORITY OF THE MINORITY CONDITION OR THE
MINIMUM TENDER CONDITION BE WAIVED.
-13-
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.
Together, Continuing Shareholders and their affiliates
currently own approximately 62.58% of the outstanding common stock of Judge
Group. This Offer is also subject to certain other conditions described in
Section 11, "The Offer--Certain Conditions of the Offer." According to
information provided by Judge Group to Purchaser, as of May 19, 2003, there were
approximately 13,462,382 Shares of Judge Group common stock outstanding. Based
on the foregoing, if Purchaser was to purchase approximately 2,504,030 Shares
pursuant to the Offer, both the Majority of the Minority and the Minimum Tender
Condition would be met. Based on information provided by Judge Group to
Purchaser, as of April 1, 2003, the executive officers and directors of Judge
Group (other than Continuing Shareholders), as a group, held, approximately
118,088 Shares. As of the date hereof, ▇▇▇▇▇▇▇▇▇ has been advised that all
executive officers and directors who are not also Continuing Shareholders intend
to tender their Shares in the offer.
The purpose of the Offer is to acquire as many outstanding
Shares as possible as a first step in acquiring the entire equity interest in
Judge Group. If the Offer is successful, Purchaser will cause Purchaser to merge
Judge Group into Purchaser in a short-form merger (the "Merger"). In the Merger,
each outstanding Share (other than Shares held by Judge Group shareholders who
dissent from the Merger and perfect their dissenters' rights under the
Pennsylvania Business Corporation Law (the "PBCL")) will be converted into the
right to receive in cash an amount equal to the Offer Price, without interest,
less any required withholding tax upon the surrender of the certificate(s)
representing such Shares. Under the PBCL, if Purchaser owns at least 80% of the
outstanding Shares, Purchaser can consummate the Merger without a vote of Judge
Group shareholders. See Section 8, "The Offer--Merger; Dissenters' Rights; Rule
13e-3." As a result of the Offer and the Merger, Judge Group would be wholly
owned by Purchaser and Purchaser would request that the common stock of Judge
Group be delisted from The Nasdaq Small Cap Market.
The Judge Group board of directors appointed a special
committee of independent directors (the "Special Committee") authorized, as
appropriate, to consider and to make recommendations with respect to the Offer,
including making a recommendation with respect to the position that the full
Judge Group board of directors should take in connection with the
"Solicitation/Recommendation Statement on Schedule 14D-9" (the "Schedule 14D-9")
that must be filed with the SEC and that must be provided to Judge Group
shareholders. The Special Committee has recommended that shareholders tender
their Shares in the Offer. The Schedule 14D-9 is being filed contemporaneously
with this Offer to Purchase. Purchaser encourages you to review carefully the
Schedule 14D-9 when it becomes available.
-14-
This Offer to Purchase and the documents incorporated by
reference in this Offer to Purchase include certain forward-looking statements.
These statements appear throughout this Offer to Purchase and include statements
regarding Purchaser's intent, belief or current expectations of, including
statements concerning Purchaser's plans with respect to, the acquisition of all
of the Shares. Examples of forward-looking statements include: pro forma
financial statements and projections relating to revenues, operating expenses,
income from operations, net income or loss, cash flows from operations, total
assets, earnings or loss per share, financial condition, future share price or
value, and other financial items, including the information under the caption
"Financial Projections." Such forward-looking statements are not guarantees of
future performance or events and involve risks and uncertainties. Actual results
may differ materially from those described in such forward-looking statements as
a result of various factors. Factors that might affect such forward-looking
statements include, among other things:
o Competitive factors in the industries in which Judge
Group operates;
o The ability to execute fully Purchaser's business
strategy after taking Judge Group private;
o The ability to attain estimated expense savings;
o The ability to attract and place qualified technical
consultants;
o The ability to implement the controls necessary to
reduce costs and improve revenues;
o General economic, capital market and business
conditions;
o Terrorist attacks on the United States or international
targets;
o Changes in government regulation;
o Changes in The Nasdaq Stock Market, Inc. listing
requirements;
o Changes in tax law requirements, including tax rate
changes, new tax laws and revised tax law
interpretations;
o The ability to repay the debt financing incurred to
complete the Offer and the Merger and to operate the
business in compliance with the operating covenants of
the bank loan agreements;
o Whether the Majority of the Majority Condition and the
Minimum Tender Condition will be met;
o Ability to meet the financial projections which were
furnished to ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, Incorporated; and
o The risks and uncertainties described in Judge Group's
SEC filings.
There may also be other factors that are currently not
identifiable or quantifiable, but may arise or become known in the future.
Forward-looking statements speak only as of the date the statement was made.
Purchaser is not obligated to publicly update or revise any forward-looking
statement, whether as a result of new information, future results, or for any
other reason.
-15-
The information contained in this Offer to Purchase concerning
Judge Group was obtained from publicly available sources or made available by
Judge Group to Purchaser. Purchaser does not take any responsibility for the
accuracy of such information.
THE OFFER IS CONDITIONED UPON THE SATISFACTION OR WAIVER OF
THE CONDITIONS DESCRIBED IN SECTION 11, "THE OFFER--CERTAIN CONDITIONS OF THE
OFFER." THE OFFER WILL EXPIRE AT 12:00 MIDNIGHT, EASTERN STANDARD TIME, ON JUNE
16, 2003, UNLESS PURCHASER EXTENDS IT.
THIS OFFER TO PURCHASE AND THE RELATED LETTER OF TRANSMITTAL
CONTAIN IMPORTANT INFORMATION THAT YOU SHOULD READ CAREFULLY BEFORE YOU MAKE ANY
DECISION WITH RESPECT TO THE OFFER.
SPECIAL FACTORS
BACKGROUND OF THE OFFER
In February 1997, ▇▇▇▇▇ completed an initial public offering
of 3,650,000 Shares of common stock (650,000 shares sold by certain selling
shareholders, including 270,000 Shares sold by Mr. ▇▇▇▇▇) at $7.50 per Share.
After the initial public offering, including exercise by the underwriters of
their overallotment option and the conversion of Shares of Judge Imaging
Systems, Inc. ("JIS") into common Shares of Judge Group pursuant to merger of
JIS into a wholly-owned subsidiary of Judge Group, Mr. ▇▇▇▇▇ owned 6,112,599
Shares of common stock of Judge Group (approximately 45.8% of the then
outstanding Shares of Judge Group), of which 5,608,050 Shares were held directly
and 504,569 Shares were held by Takema Ltd, L.P., a Delaware limited partnership
of which Mr. Judge is the general partner. In addition, at that time, ▇▇. ▇▇▇▇
directly owned 1,757,800 Shares of Judge Group common stock and had sole
dispositive powers over 202,247 held by The ▇▇▇▇▇▇▇ ▇. ▇▇▇▇ Descendants' Trust
(approximately 11.0% of the then outstanding Shares of Judge Group). As of the
date of this Offer, Messrs. ▇▇▇▇▇ and ▇▇▇▇ and the other Continuing Shareholders
own in the aggregate approximately 62.58% of the outstanding common stock of
Judge Group. Shortly after the initial public offering, Judge Group's stock
declined by almost one-half to a price of $3.12. The price climbed back slowly,
but never regained its $7.50 offering price.
One of the factors believed by the management of Judge Group
to have led to the depressed stock price was the failure to achieve
profitability in Judge Group's Information Systems division, which sold hardware
and software and installed networks. While the Information Systems division
historically accounted for only approximately 20% of Judge Group's revenue, its
costs exceeded its revenues every quarter following Judge Group's initial public
offering. By June of 1999, the division's losses exceeded the gains in other
divisions of Judge Group. Judge Group therefore sold this division in a series
of four sales from May 1999 through August 1999, believing that the sale of the
division was in the best interests of Judge Group and would increase shareholder
value. Subsequent to the sale of the division, the stock price did not improve
despite increased profits from the time of the sale of the division through the
first quarter of 2001, when the general economy's negative effect on the job
market began to affect demand for staffing services.
-16-
On February 12, 2001, Judge Group engaged Investec, Inc., an
investment banking firm familiar with the IT staffing industry ("Investec"), to
assist the management of Judge Group in building the financial fundamentals of
Judge Group as well as gaining market recognition for these initiatives. Over
the subsequent 18 months, Investec advised the management on a number of issues
including: strategic planning; focusing on core business units; eliminating
unnecessary costs; improving gross and operating margins; and analyzing
acquisition and merger opportunities. Certain principals of Investec own Shares
of Judge Group and have indicated that they intend to tender their shares in the
Offer. In addition, Investec, affiliates of Investec and three employees of
Investec hold warrants to purchase an aggregate 100,000 Shares at an exercise
price of $0.75 per Share. Investec, affiliates of Investec, and such employees
have indicated they intend to exercise the warrants and tender the Shares in the
Offer.
Since the first quarter of 2001, Judge Group's quarterly
revenues have declined from approximately $30 million for the three months ended
March 31, 2001 to approximately $20 million for the three months ended March 31,
2002 and were approximately $20.7 million for the three months ended March 31,
2003. Similarly, Judge Group's profits have been declining over this period and
Judge Group has not been profitable for four of the seven quarters after June
30, 2001. Further, no quarterly profit was over $93,000 during this period. The
reason for the drop in revenues and profitability is primarily attributed to a
recession in the general economy over this period, an increase in unemployment
and a resulting drop in demand for staffing services. During this period the
management of Judge Group carried out a number of measures aimed at cutting
costs within the organization, including making significant staff reductions,
reducing capital expenditures, and reducing the amount of office space leased by
Judge Group.
Despite these efforts, from January 2001 through December
2002, the Share price of Judge Group declined from a peak of $1.70 on July 20,
2001 to a low of $0.51 on December 21, 2002.
In February 2002, Judge Group received notification from The
Nasdaq Stock Market, Inc., that Judge Group's common stock would be delisted
from The Nasdaq National Market unless the stock closed above $1.00 per Share
for at least 10 consecutive days. On November 21, 2002, Judge Group's common
stock ceased trading on The Nasdaq National Market and began trading on The
Nasdaq Small Cap Market. Until the announcement of the Offer, Judge Group's
stock price had not traded above $1.00 since June 7, 2002.
-17-
Following this notification from the Nasdaq Stock Market,
Inc. the management of Judge Group began considering additional strategic
alternatives for the company. The board of directors did not at any time prior
to November 2002 believe that it was necessary to actively seek out strategic
alternatives to Judge Group remaining an independent public company, and prior
to November 2002, Judge Group had no plans or proposals relating to an
extraordinary transaction.
On November 19, 2002 Mr. ▇▇▇▇▇ met with Investec to discuss
strategic alternatives for Judge Group. At that meeting the parties discussed
whether remaining as an independent public company was the best course of action
for Judge Group and its shareholders and whether it was appropriate to
investigate alternatives to attempt to maximize shareholder value.
At a special meeting of the board of directors called by Mr.
▇▇▇▇▇ and held on December 18, 2002, Investec informed the members of the board
that a possible strategic alternative designed to enhance shareholder value
which they should consider was a going private transaction led by Messrs. ▇▇▇▇▇
and ▇▇▇▇, and Messrs. Judge and ▇▇▇▇ requested that Investec be authorized to
explore on behalf of the Continuing Shareholders the feasibility of such a going
private transaction. Messrs. ▇▇▇▇▇ and ▇▇▇▇ also indicated that they had no
interest in selling their respective ownership interests in Judge Group and
presented to the board resolutions to authorize the proposed work by Investec
and also to authorize Judge Group to pay for legal counsel to represent the
Continuing Shareholders in connection with a potential going private
transaction.
Messrs. Judge and ▇▇▇▇ based their request that Investec be
authorized to explore the feasibility of a going private transaction upon, among
other things:
o The fact that Messrs. ▇▇▇▇▇ and ▇▇▇▇, who own the
majority of Judge Group's outstanding Shares, had no
interest or intention of selling their ownership
interests in Judge Group;
o The small public float and limited institutional
following of Judge Group common stock;
o Low trading volume of Judge Group common stock;
o The lack of liquidity and the likelihood that the
liquidity of Judge Group common stock would not improve
in the future;
o The substantial insider holdings of Judge Group common
stock;
o The small market capitalization of Judge Group;
o The diminishing research attention from market analysts
being given to Judge Group;
-18-
o The performance of Judge Group stock price since 2000;
o Judge Group stock's recent delisting from The Nasdaq
National Market;
o The potential further delisting of Judge Group stock
from The Nasdaq Small Cap Market;
o The challenging operating environment for IT staffing
companies;
o The general economic uncertainty and the potential
impact of war on the economy and Judge Group;
o The additional expenses associated with being a publicly
traded company as a result of the ▇▇▇▇▇▇▇▇-▇▇▇▇▇ Act of
2002 (and various rules promulgated by the SEC
thereunder);
o The additional burdens imposed on the management and
board of directors as a result of the ▇▇▇▇▇▇▇▇-▇▇▇▇▇ Act
of 2002 (and various rules promulgated by the SEC
thereunder); and
o The expected financial results for the fourth quarter of
2002.
Because the proposed resolution and the potential for a going
private transaction led by management raised conflict of interest issues,
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇ and ▇▇▇▇▇▇ ▇▇▇▇▇▇▇, the independent directors of
the board, requested that they be given the opportunity to consider these issues
further at a separate meeting and that they be authorized to retain independent
counsel. The law firm of ▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇▇, LLP ("▇▇▇▇▇▇▇
▇▇▇▇▇") was subsequently contacted to discuss the possibility of representing
the independent directors should the Continuing Shareholders make a formal offer
to take Judge Group private. After confirming that ▇▇▇▇▇▇▇ ▇▇▇▇▇ could undertake
the representation, a meeting of the independent directors was scheduled and, on
December 27, 2002, the independent directors of the board met with
representatives from ▇▇▇▇▇▇▇ ▇▇▇▇▇ to discuss the possibility of an offer from
the Continuing Shareholders to take Judge Group private and to review the
resolutions that Messrs. Judge and ▇▇▇▇ had proposed concerning the retention of
legal counsel and a financial advisor for the Continuing Shareholders. Also
present were directors ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇, a Continuing Shareholder, and ▇▇▇▇
▇. ▇▇▇▇▇▇▇ and ▇▇▇ ▇. ▇▇▇▇▇▇▇, general counsel to Judge Group and a Continuing
Shareholder.
At the December 27, 2002 meeting, following an active
discussion as to whether it would be appropriate for the board to approve the
resolutions that had been proposed by the Continuing Shareholders, the
independent directors concluded that it would be appropriate for Judge Group to
authorize Investec to evaluate the feasibility of a going private transaction
and other strategic alternatives available to Judge Group on behalf of Judge
Group for an additional period of thirty days and that, after such evaluation,
the Continuing Shareholders should bear the fees and expenses of retaining
Investec as their advisor, if they wished to. It was further determined that
Judge Group would not pay the fees of legal counsel to the Continuing
Shareholders.
The December 27, 2002 meeting ended with the unanimous
agreement of the independent directors that Judge Group should form a special
committee comprised solely of independent directors to consider any offer that
might be submitted from the Continuing Shareholders and that, if such an offer
were to be submitted, the special committee would retain a financial advisor and
its own legal counsel.
-19-
Subsequently, on January 8, 2003, the board, having determined
that Messrs. ▇▇▇▇▇▇▇▇▇, ▇▇▇▇ and ▇▇▇▇▇▇▇ qualify as independent directors under
Rule 4200 of the Marketplace Rules of the National Association of Securities
Dealers, Inc., appointed Messrs. ▇▇▇▇▇▇▇▇▇, ▇▇▇▇ and ▇▇▇▇▇▇▇ as members of a
special committee of the board (the "Special Committee") empowered to, among
other things:
1. Explore the possibility of Judge Group becoming a
privately-held company, including, but not limited to,
management buy-out transactions;
2. Evaluate alternatives to Judge Group becoming a
privately held company;
3. Choose among the options considered by the Special
Committee and negotiate on behalf of Judge Group the
terms and conditions of any resulting transaction;
4. Present to the board of directors the results of the
Special Committee's examinations and its recommendations
with respect thereto;
5. Assist in the preparation of forms required by the rules
of the SEC or any other applicable regulatory authority
to be filed in connection with any resulting
transaction;
6. Perform such other functions as requested by the board
of directors; and
7. At Judge Group's expense and not at the expense of the
members of the Special Committee, to retain counsel and
other advisors, including, but not limited to, financial
advisors, to assist the Special Committee in connection
with the duties and responsibilities set forth in
paragraphs 1 through 6 above.
On that same date, the board also authorized Investec to
explore for a term of thirty days the feasibility of a going private transaction
and agreed to pay Investec one month's fee ($8,000) under the terms of the
existing engagement letter between Judge Group and Investec for such services.
On January 22, 2003, Judge Group received a further
notification from The Nasdaq Stock Market, Inc. that the common stock would be
delisted from The Nasdaq Small Cap Market unless the stock closed at or above
$1.00 per share for at least 10 consecutive days by July 18, 2003. The stock has
not since traded above $1.00 for ten (10) straight days since the period between
May 24, 2002 and June 7, 2002.
During the next several weeks, representatives of Investec and
the Continuing Shareholders met with potential investors that might be
interested in providing financing for a going private transaction. Prior to
these meetings with potential investors, Investec met with Mr. ▇▇▇▇▇ and
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇, the Chief Financial Officer of Judge Group to discuss Judge
Group's financial performance. Investec, however did not independently verify
any information, whether publicly available or furnished to it, concerning Judge
Group, including financial information, and did not inspect or prepare any
appraisal or valuation of any of the assets or liabilities of Judge Group.
In February 2003, the Continuing Shareholders engaged ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇ LLP to act as legal advisors to the Continuing Shareholders.
-20-
The board of directors next met on February 21, 2003, to
receive a report from Investec on the status of the feasibility study and a
report from Investec on discussions that had taken place over the past year with
a number of third parties that may have had an interest in merging with or
acquiring Judge Group. At this meeting Messrs. ▇▇▇▇▇ and ▇▇▇▇ reaffirmed their
position that they had no interest in selling their respective ownership
interests in Judge Group.
Following the meeting, ▇▇▇▇▇▇▇▇ was engaged as financial
advisor to the Continuing Shareholders and Judge Group would bear no
responsibility for Investec's fees incurred in such engagement. The terms of
Investec's engagement by the Continuing Shareholders provide for the payment of
a success fee upon the completion of Offer in an amount of 5% of the first $5
million of purchase price plus 3% of the next $5 million of purchase price plus
1% of purchase price above $10 million.
Shortly after the February 21, 2003 meeting, the Special
Committee engaged ▇▇▇▇▇▇▇ ▇▇▇▇▇ to serve as a special independent legal advisor
to assist the Special Committee in the performance of its duties. The Special
Committee was informed that a group of attorneys at ▇▇▇▇▇▇▇ ▇▇▇▇▇ separate from
those proposed to represent the Special Committee represents PNC Bank in
connection with a loan to Judge Group and a loan to the Purchaser for the Offer,
and that, approximately three years ago, ▇▇▇▇▇▇▇ ▇▇▇▇▇ represented Judge Group
in connection with a proposed joint venture transaction that did not close. The
Special Committee concluded that so long as ▇▇▇▇▇▇▇ ▇▇▇▇▇ maintained a Chinese
Wall between the lawyers working on the loans and those representing the Special
Committee, then ▇▇▇▇▇▇▇ ▇▇▇▇▇ could represent its interests in a potential
transaction involving Judge Group, Purchaser and the Continuing Shareholders.
Subsequently, on March 21, 2003, certain of the Continuing
Shareholders sent a non-binding proposal to the Special Committee indicating
their interest in pursuing a going private transaction at a price of $0.82 per
Share. On March 24, 2003, Messrs. ▇▇▇▇▇ and ▇▇▇▇ presented Judge Group with a
formal proposal for a going private transaction that contemplated the
acquisition of all outstanding Shares of common stock not already beneficially
owned by the Continuing Shareholders at a price of $0.82 per Share, subject to a
number of conditions, including a financing contingency. Following the
announcement of the proposal, ▇▇. ▇▇▇▇▇▇▇, a member of the Special Committee,
had separate discussions with two institutional Judge Group shareholders
regarding their views with respect to the proposal. ▇▇. ▇▇▇▇▇▇▇ also requested
that ▇▇▇▇▇▇▇ ▇▇▇▇▇ assist the Special Committee in its search for an independent
financial advisor.
From March 27, 2003 until May 16, 2003, the Special Committee
held a total of ten meetings, both in person and by telephone conference.
On March 27, 2003, the Special Committee met with its legal
counsel to discuss the Continuing Shareholders' proposal and to interview four
prospective financial advisors to the Special Committee. Following a
presentation from legal counsel to the Special Committee with respect to the
members' legal duties as directors serving on the committee, each proposed
financial advisor made a presentation to the Special Committee in which it
presented its qualifications and relevant experience with respect to going
private transactions and the staffing industry, proposed fees and addressed any
relationships that the prospective financial advisor had with Judge Group and/or
Purchaser and the Continuing Shareholders. At the conclusion of the live
presentations, counsel to the Special Committee also described certain marketing
information and proposals that it had received from two additional prospective
financial advisors to the Special Committee.
After active discussion and consideration of the information
presented, the members of the Special Committee unanimously decided that,
pending the agreement of Judge Group to bear financial responsibility for its
fees and expenses, to engage ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, Incorporated ("▇▇▇▇ ▇▇▇▇▇")
as the independent financial advisor to the Special Committee in light of ▇▇▇▇
▇▇▇▇▇'▇ experience with respect to going private transactions and matters
involving the information technology staffing industry, the understanding that
▇▇▇▇ ▇▇▇▇▇ demonstrated with respect to the duties of the Special Committee and
the reasonableness of ▇▇▇▇ ▇▇▇▇▇'▇ fee. The Special Committee agreed in
conclusion to present ▇▇▇▇ ▇▇▇▇▇'▇ fee proposal to the board to request
authorization that Judge Group bear this expense on behalf of the Special
Committee.
On March 28, 2003, the Special Committee received a letter
from Hummingbird Management, LLC ("Hummingbird"), the beneficial owner of
approximately 7.4% of the common stock, in which Hummingbird expressed, among
other things, its view that the announced offer of $0.82 per share was "too low
and ... fundamentally unfair." Hummingbird filed this letter as an exhibit to a
filing on Schedule 13D that it made on March 27, 2003.
Over the course of the next few days, legal counsel to the
Special Committee spoke with counsel to Purchaser concerning the structure of
any proposed going private transaction. In particular, counsel to the Special
Committee noted that the committee would insist that any transaction be
structured so as to require as a condition to closing that a majority of the
Shares that are not owned by Purchaser or its affiliates approve the transaction
or tender their Shares if the transaction is structured as a tender offer.
Subsequently, on April 1, 2003, the Special Committee received
a letter from RCM Technologies, Inc. ("RCM") dated March 31, 2003 in which RCM
expressed its belief that, upon the completion of due diligence, RCM would be in
a position to offer to purchase all of Judge Group's outstanding Shares of
common stock for at least $0.90 per Share and requesting a meeting with the
members of the Special Committee to discuss this further. RCM issued a press
release to this effect on the same day although, the press release did not state
the price per Share that RCM stated it might be able to offer. The letter and
the press release were communicated to Judge Group, and Purchaser subsequently
issued a press release on April 2, 2003 confirming its intention not to sell its
interest in Judge Group.
-21-
On April 1, 2003, Messrs. ▇▇▇▇▇ and ▇▇▇▇ sent a letter to the
Special Committee confirming their belief that it was in the best interest of
Judge Group, its shareholders, employees, customers, suppliers and creditors to
become a privately held company and that they had no interest or intention to
sell their respective ownership positions. A press release was also issued by
the Continuing Shareholders confirming their intent not to sell their interest
in Judge Group.
On April 2, 2003, the Special Committee met to discuss RCM's
March 31, 2003 letter, the proposed structure of Purchaser's offer and the
retention by the Special Committee of an independent financial advisor. It was
agreed that the Special Committee would insist upon the retention of an
independent financial advisor to act on its behalf and that ▇▇▇▇▇▇▇ ▇▇▇▇▇ would
send a response letter to RCM explaining the capital structure (i.e. the
Continuing Shareholders owned or controlled over 60% of the outstanding common
stock) of Judge Group and, if notwithstanding that fact, RCM still wanted to
speak with the Special Committee, agreeing to arrange for a meeting.
On April 4, 2003, legal counsel to the Special Committee sent
RCM a letter enclosing a copy of the Continuing Shareholders' April 2, 2003
press release and noting that, if RCM were still interested in a meeting with
the Special Committee notwithstanding the position of the Continuing
Shareholders that they would not sell their interest in Judge Group, RCM should
have its legal counsel contact ▇▇▇▇▇▇▇ ▇▇▇▇▇ to arrange for a meeting.
Over the course of the next several days, members of the
Special Committee had conversations with members of the Continuing Shareholders
regarding their initial offer of $0.82 per share and structure of the proposed
transaction. On April 10, 2003, the Continuing Shareholders announced that they
intended to make a tender offer for the common stock at an increased price of
$0.95 per Share and also reaffirmed that they had no interest or intention in
selling their ownership interest in Judge Group. On that same date, the Special
Committee formally engaged ▇▇▇▇ ▇▇▇▇▇ to serve as the independent financial
advisor to the Special Committee.
The Special Committee next met on April 15, 2003 to hear a
presentation from ▇▇▇▇ ▇▇▇▇▇ concerning its proposed activities on behalf of the
Special Committee and the process that ▇▇▇▇ ▇▇▇▇▇ intended to use in analyzing
the Offer, including, but not limited to, endeavoring to refine the universe of
companies to which Judge Group would be compared to those with similar
circumstances.
Between April 22, 2003 and May 5, 2003, Purchaser discussed
the financing of the Offer with PNC Bank. On May 6, 2003, ▇▇▇▇▇▇▇▇▇ received a
commitment from PNC Bank regarding the financing of the Offer.
-22-
On April 24, 2003, prior to a scheduled meeting of the Special
Committee, legal counsel to the Special Committee received a letter from RCM in
response to counsel's earlier letter of April 4, 2003 in which RCM stated that,
based on then currently available public information and subject to the
completion of due diligence, RCM expected to be in a position to offer to
purchase all of Judge Group's outstanding Shares of common stock for a price
ranging from $1.10 to $1.25 per Share and again requested a meeting with the
members of the Special Committee.
The April 24, 2003 meeting of the Special Committee began with
a presentation from ▇▇▇▇ ▇▇▇▇▇ as to the initial results of its financial
analyses. ▇▇▇▇ ▇▇▇▇▇ explained the nature of the information that it had
reviewed as well as the nature of the analyses that it had performed and noted
the initial conclusions that ▇▇▇▇ ▇▇▇▇▇ had reached concerning the current offer
of $0.95. A discussion was then held among the group, and it was agreed that the
members of the Special Committee would meet with Mr. ▇▇▇▇▇ to attempt to
negotiate a higher price.
The discussion turned next to the recently received letter
from RCM, and it was agreed that ▇▇▇▇▇▇▇ ▇▇▇▇▇ would contact counsel for RCM to
arrange for a meeting. Efforts were made by the Special Committee to arrange for
a meeting on April 25, 26 or 27. However, RCM officials were unavailable until
April 28, 2003, when a meeting between RCM and the Special Committee took place.
In the meantime, on April 27, 2003, the Special Committee met
with Mr. ▇▇▇▇▇, the General Counsel to Judge Group and two representatives from
Investec to inform Mr. ▇▇▇▇▇ that the Special Committee believed the offer of
$0.95 per Share to be inadequate and to inform those present of the recent
letter from RCM. The Special Committee informed Mr. ▇▇▇▇▇ that it wanted the
Continuing Shareholders to increase their offer substantially, and it was
subsequently agreed after some additional discussion that the Special Committee
would await Continuing Shareholders' response.
The next day, April 28, 2003, the Special Committee and
representatives from ▇▇▇▇▇▇▇ ▇▇▇▇▇ met with ▇▇▇▇ ▇▇▇▇▇, Chairman, President and
Chief Executive Officer of RCM, ▇▇▇▇▇▇▇ ▇▇▇▇▇, Chief Financial Officer of RCM,
▇▇▇▇▇ ▇▇▇▇▇▇, Senior Vice President of RCM and RCM's outside legal counsel. ▇▇.
▇▇▇▇▇ commenced the meeting with a summary of RCM's proposal and confirmed in
response to a question from the Special Committee that RCM was not interested in
acquiring less than a controlling interest in Judge Group. In response to this
information, the Special Committee noted that, because the Continuing
Shareholders control over 60% of the outstanding Shares of common stock, RCM
would have to speak directly with the Continuing Shareholders if it wished to
pursue a potential transaction, as the Special Committee had no authority to
speak or negotiate on behalf of the Continuing Shareholders.
The representatives from RCM and their legal counsel then left
the meeting, and the Special Committee met with a representative from ▇▇▇▇ ▇▇▇▇▇
to review further the financial analyses being performed by ▇▇▇▇ ▇▇▇▇▇. The
representative related a conversation that he had had with a representative of
Investec and explained that Investec had raised a number of issues about ▇▇▇▇
▇▇▇▇▇'▇ financial analysis. Following discussion of this issue, the Special
Committee agreed that, to the extent the factors raised by Investec were
considered relevant and had not already been considered by ▇▇▇▇ ▇▇▇▇▇, they
should be reviewed. ▇▇▇▇ ▇▇▇▇▇ agreed to do so and to report back to the Special
Committee at a later date.
On April 30, 2003, Mr. ▇▇▇▇▇ telephoned ▇▇. ▇▇▇▇▇▇▇ to inquire
as to the range of offers that the Special Committee would consider. ▇▇. ▇▇▇▇▇▇▇
subsequently inquired as to whether Purchaser would agree to a price of $1.05
per Share, and Mr. ▇▇▇▇▇ responded that he would have to consult with the other
Continuing Shareholders and their advisors, but would consider raising the
Continuing Shareholders' offer from $0.95 per Share.
Subsequently, on May 1, 2003, the Special Committee met with
legal counsel and representatives from ▇▇▇▇ ▇▇▇▇▇ to discuss Continuing
Shareholders' response to the request that its offer be substantially increased.
Following discussions with ▇▇▇▇ ▇▇▇▇▇, it was subsequently agreed that the
Special Committee would negotiate with Continuing Shareholders' for an offer
price of $1.05 per Share. The meeting concluded with a presentation from ▇▇▇▇
▇▇▇▇▇ in which it was noted that, upon consideration of the additional factors
that Investec had earlier suggested and the Special Committee had recommended
that ▇▇▇▇ ▇▇▇▇▇ consider, ▇▇▇▇ ▇▇▇▇▇'▇ conclusions had not significantly
changed.
On that same date, legal counsel to the Special Committee
affirmed in a letter to counsel to RCM that RCM should contact Continuing
Shareholders or their legal and financial advisors directly if RCM desired to
pursue further discussions regarding the possible acquisition of Judge Group. As
of the date of this filing, RCM has not responded to this letter and, to the
knowledge of Judge Group, has not pursued further discussions with Continuing
Shareholders or their legal and financial advisors.
Over the course of the next few days, during subsequent
negotiations conducted between the Special Committee and representatives of
Continuing Shareholders, Continuing Shareholders agreed to increase their offer
price to $1.05 per Share, and this information was communicated to ▇▇▇▇ ▇▇▇▇▇
and ▇▇▇▇▇▇▇ ▇▇▇▇▇. It was also communicated that the Continuing Shareholders had
indicated that the $1.05 price was their highest and best offer for the Shares.
In a letter to counsel to RCM dated May 6, 2003, counsel to
Judge Group invited RCM to contact Mr. ▇▇▇▇▇ or his legal advisors if RCM
desired to pursue further discussions regarding the possible acquisition of
Judge Group as the Continuing Shareholders had indicated that they did not
intend to sell their interests in Judge Group, or alternatively to contact
counsel to Judge Group if RCM had an interest in acquiring less than a
controlling interest in Judge Group.
Subsequently on May 7, 2003, a lawsuit purporting to be a
class action was filed in the Court of Common Pleas of Philadelphia County,
Pennsylvania against Judge Group and certain of Judge Group's directors,
alleging breaches by the defendants of certain fiduciary duties in connection
with the proposal by the Continuing Shareholders to take Judge Group private.
Purchaser and Judge Group each believe that this lawsuit is without merit and
Judge Group intends to defend against it vigorously. The Special Committee met
on May 12 with ▇▇▇▇ ▇▇▇▇▇ and ▇▇▇▇▇▇▇ ▇▇▇▇▇ to discuss the lawsuit, and, after
some discussion, it was agreed that ▇▇▇▇ ▇▇▇▇▇ would perform additional analysis
for the Special Committee.
On May 14, 2003, a lawsuit purporting to be a class action was
filed in the Court of Common Pleas of ▇▇▇▇▇▇▇▇▇▇ County, Pennsylvania against
Judge Group, the directors of Judge Group, and a former director of Judge Group,
alleging breaches by the defendants of certain fiduciary duties in connection
with the proposal by the Continuing Shareholders to take Judge Group private.
Purchaser and Judge Group each believe that this lawsuit is without merit and
the Company intends to defend against it vigorously. The Special Committee met
with ▇▇▇▇▇▇▇ ▇▇▇▇▇ and ▇▇▇▇ ▇▇▇▇▇ on May 15, 2003 to discuss the results of
additional work and financial analysis that ▇▇▇▇ ▇▇▇▇▇ had performed and a new
law suit that had been filed. In addition, the Special Committee asked ▇▇▇▇
▇▇▇▇▇ about the relationship between the book value per share of Judge Group to
the Offer Price. ▇▇▇▇ ▇▇▇▇▇ noted that, pursuant to a review of publicly
available information, Judge Group's book value per share could be calculated in
a number of different ways. ▇▇▇▇ ▇▇▇▇▇ stated, however, that it did not consider
a comparison of book value per share data to the Offer Price to be appropriate
in determining the fairness, from a financial point of view, of the Offer Price
to the holders of Judge Group's common stock other than the Continuing
Shareholders and that ▇▇▇▇ ▇▇▇▇▇ conducted financial studies, analyses and
investigations and considered such other information as it deemed necessary or
appropriate for purposes of its opinion.
On May 16, 2003, the Special Committee met with ▇▇▇▇ ▇▇▇▇▇ and
▇▇▇▇▇▇▇ ▇▇▇▇▇ to discuss the additional work that ▇▇▇▇ ▇▇▇▇▇ had performed at
the request of the Special Committee and to discuss the Offer. ▇▇▇▇▇▇▇ ▇▇▇▇▇
also reviewed with the Special Committee the terms and conditions of the Offer.
▇▇▇▇ ▇▇▇▇▇ then made a presentation of its analyses and conclusions and provided
an opinion, confirmed by a written opinion dated May 16, 2003 (the "Fairness
Opinion"), that, as of such date, and based on and subject to the assumptions,
limitations and qualifications set forth in such Fairness Opinion, the $1.05
price per share to be received in the Offer and the Merger, considered as a
single transaction, is fair from a financial point of view, to the Judge Group
shareholders being asked to tender their shares. A copy of the Fairness Opinion
is attached as Exhibit 99(c) to this Schedule TO and a discussion of the
analyses performed by ▇▇▇▇ ▇▇▇▇▇ in arriving at its opinions is set forth below
herein.
Based upon ▇▇▇▇ ▇▇▇▇▇'▇ opinion and other factors considered
by the Special Committee, as highlighted below under "Reasons for Determination
of Fairness and Recommendation," the Special Committee unanimously determined
that the Offer and the Merger were fair to the Judge Group shareholders being
asked to tender their shares and recommended that the shareholders accept the
Offer and tender their shares in the Offer.
On May 16, 2003, the board of directors met and accepted the
recommendation of the Special Committee and unanimously determined that the
Offer and the Merger were fair to the Judge Group shareholders being asked to
tender their shares and recommended that the shareholders accept the Offer and
tender their shares in the Offer.
On May 19, 2003, Purchaser commenced the Offer, and Judge
Group distributed the Schedule 14D-9.
REASONS FOR AND PURPOSE OF THE OFFER AND THE MERGER
In arriving at its decision to propose such a transaction,
Purchaser considered the factors set forth below.
Benefits and Detriments to Judge Group of the Offer and the Merger.
In determining whether to make the Offer and thereafter effect
the Merger, Purchaser considered the general economic environment, the potential
impact of war in Iraq on the economy and the IT staffing industry and the
current and potential financial performance and profitability of Judge Group.
Purchaser also considered the following factors:
-23-
o The elimination of the additional burdens on management
associated with public reporting and other tasks
resulting from Judge Group's public company status,
including, for example, the dedication of time and
resources by Judge Group's management and board of
directors necessary to respond to shareholder and
analyst inquiries and maintain investor and public
relations;
o The elimination of costs associated with being a public
company (such as independent accounting firm fees for
audit services and legal fees associated with filing
quarterly, annual or other periodic reports with the
SEC, the expense of publishing and distributing annual
reports and proxy statements to shareholders, and the
increased costs anticipated as a result of enactment of
the ▇▇▇▇▇▇▇▇-▇▇▇▇▇ Act of 2002 and SEC rules promulgated
thereunder);
o The greater ability of Judge Group's management and
employees to focus on long-term business goals as a
private company, as opposed to short-term quarterly
earnings;
o Public capital market trends adversely affecting
small-cap companies, including perceived lack of
interest by institutional investors in companies with a
limited public float;
o The adverse effect on Judge Group stock price and
trading volume as a result of being delisted from The
Nasdaq National Market System, and the prospect of
future adverse impacts of potentially being delisted
from The Nasdaq Small Cap Market;
o The relatively low volume of trading in the Shares and
determined that the consummation of the Offer and the
Merger would result in immediate liquidity at a premium
to recent trading prices for Judge Group shareholders
that are unaffiliated with the Continuing Shareholders.
Purchaser also considered recent trends in the price of
the Shares over the past 3, 6 and 12 months;
o The reduction in the amount of public information
available to competitors about Judge Group's businesses
that would result from the termination of Judge Group's
obligations under the SEC's periodic reporting
requirements pursuant to the Securities Exchange Act of
1934;
o The IT staffing industry is undergoing difficult times
in general and is and for some time has been out of
favor with the public securities markets resulting in
low valuations throughout the sector (even for
competitors which are much larger, more profitable and
have greater resources than Judge Group);
o The ineffectiveness of stock options as an effective
incentive to obtain and retain employees of Judge Group;
o The perception among customers of Judge Group that it is
a troubled company as a result of Judge Group's
delisting from The Nasdaq National Market and the low
trading price for its common stock;
o The ineffectiveness of Judge Group's common stock as a
form of currency for acquisitions.
Purchaser and the Continuing Shareholders also considered the
following factors, each of which they considered to be negative, in their
deliberations concerning the fairness of the terms of the Offer and the Merger:
o Following the successful completion of the Offer and the
Merger, Judge Group shareholders would cease to have the
opportunity to participate in the future earnings or
growth, if any, of Judge Group or benefit from
increases, if any, in the value of their holdings of
Judge Group.
o The financial interests of the Continuing Shareholders
with regard to the Offer Price are adverse to the
financial interest of the shareholders being asked to
tender their Shares. In addition, officers and directors
of Judge Group may have conflicts of interest in
connection with the Offer and the Merger. See the
Schedule 14D-9.
o The financing for the Offer and the Merger will be
secured by the assets of Judge Group.
o Although ▇▇▇▇▇▇▇▇▇ believes the offer is fair and the
Special Committee has received a fairness opinion from
▇▇▇▇ ▇▇▇▇▇, the Offer Price may be less than what might
be obtained if the entire company was sold to an
independent third party.
o The receipt of an indication of interest from RCM to
acquire 100% of Judge Group at a range of $1.10 to
$1.25; however, Purchaser noted that the indication of
interest was for control of the entire company and that
RCM advised the Special Committee that RCM was not
interested in the approximately 40% of Judge Group not
owned by Continuing Shareholders.
-24-
Alternative Structure Considered.
The Continuing Shareholders and Purchaser considered
alternatives to the proposed structure of the transaction as a tender offer
followed by a short-form merger. In determining to structure the transaction as
a tender offer followed by a short-form merger, as opposed to a long-form
merger, the Continuing Shareholders and Purchaser considered the following:
o In the Offer, each unaffiliated shareholder would
individually determine whether to accept cash in
exchange for their Shares.
o Unless 80% of the Shares are validly tendered and not
withdrawn, Purchaser would not purchase any shares in
the Offer.
o As a result of the Majority of the Minority Condition,
unless a majority of the outstanding Shares, excluding
the Shares beneficially owned by the Continuing
Shareholders and the executive officers of Judge Group,
are validly tendered and not withdrawn, Purchaser would
not purchase any Shares in the Offer.
o A tender offer followed by a short-form merger would
permit Purchaser to acquire the minority interest in
Judge Group on an expeditious basis and provide the
shareholders that are unaffiliated with the Continuing
Shareholders with a prompt opportunity to receive cash
in exchange for their Shares.
o Unaffiliated shareholders who do not tender their Shares
in the Offer could preserve their dissenters' rights in
the Merger under Chapter 15, Subchapter D of the PBCL.
After reviewing the various structures for acquiring the
minority shareholder interest in Judge Group and discussions of such review with
the Special Committee, including the alternative method of acquiring such
interests through a long-form merger, the Continuing Shareholders decided to
structure the transaction as a tender offer for all of the Shares of Judge Group
not already owned by the Continuing Shareholders or their affiliates, to be
followed by a short-form merger, subject to the Majority of the Minority
Condition and the Minimum Tender Condition.
RECOMMENDATION OF THE BOARD OF DIRECTORS; FAIRNESS OF THE OFFER AND THE MERGER
In determining that the Offer is fair to the Judge Group
shareholders being asked to tender their Shares of common stock and recommending
to the shareholders that they tender their Shares pursuant to the Offer, the
Special Committee considered a number of factors, including:
Market Price and Premium. The Special Committee considered the
recent and historical price and trading activity of the Common Stock. In
particular, the Special Committee considered that the $1.05 per Share Offer
Price represents (1) a premium of 50% over the closing price on March 21, 2003,
the last full trading day before the public announcement of the Continuing
Shareholders' proposal to take Judge Group private, and (2) a 36.59% premium
over the average closing price for the twelve-month period ended March 21, 2003.
Fairness Opinion and Analyses. The Special Committee
considered the Fairness Opinion that based upon and subject to the assumptions
and limitations described in the Fairness Opinion, the consideration to be
received by the public shareholders of Judge Group (other than the Continuing
Shareholders) in connection with the Offer and the Merger, considered as a
single transaction, was fair to them from a financial point of view. The Special
Committee also considered ▇▇▇▇ ▇▇▇▇▇'▇ financial analyses and summary
conclusions presented at meetings of the Special Committee on April 15, 2003,
April 24, 2003, April 28, 2003, May 1, 2003, May 12, 2003, May 15, 2003 and May
16, 2003. A summary of the Fairness Opinion and the factors considered in giving
the Fairness Opinion is set forth in the section entitled "Opinion of Financial
Advisor" (the "Fairness Opinion Summary"). A copy of the Fairness Opinion
setting forth the assumptions made, matters considered and limitations on the
review undertaken by ▇▇▇▇ ▇▇▇▇▇ is attached as Exhibit 99(c) to the Schedule TO.
Shareholders are urged to read the Fairness Opinion Summary and the Fairness
Opinion carefully and in their entirety.
Offer Price. The Special Committee considered that Purchaser
raised the Offer price to $1.05 per Share from its initial proposal of $0.82 per
Share and indicated that the $1.05 price was Purchaser's highest and best offer
for the common stock.
Transaction Structure. The Special Committee evaluated the
benefits of the transaction being structured as an immediate cash tender offer
for all of the outstanding Shares of common stock, followed by a merger, without
a merger agreement. The Special Committee considered that the cash tender offer
enabled the shareholders of Judge Group the opportunity to obtain cash for all
of their Shares at the earliest possible time, while Purchaser still was
obligated by the terms of the Offer to complete the Merger and pay the same
consideration for Shares received in the Merger as paid for Shares tendered in
the Offer.
Majority of the Minority Condition. The Special Committee
considered that the Majority of the Minority Condition is not waivable by
Purchaser. The Offer, therefore, will in all events be conditioned upon there
being validly tendered and not withdrawn at least that number of Shares of
common stock that represent a majority of the total outstanding Shares that are
not owned by Purchaser or its affiliates and who probably would not be deemed
independent of Purchaser.
No Financing Condition. The Special Committee considered that
while the initial offer was subject to a financing contingency neither the Offer
nor the Merger is subject to any financing condition.
Special Committee Formation and Negotiation. The Special
Committee considered the fact that certain terms of the Offer and the
transactions contemplated thereby were the product of the Special Committee's
negotiations with Purchaser. The Special Committee also considered the fact that
none of its members was employed by or affiliated with Judge Group or Purchaser
or their respective affiliates (except in their capacities as non-employee
directors of Judge Group), and none of the Special Committee's members had any
material agreement or promise of a future benefit from Judge Group or Purchaser
or any of their respective affiliates (other than benefits received as
directors, including director compensation and indemnification described in the
Schedule 14D-9 - Item 3).
Individual Determination. Although the Offer and the Merger
are not structured to require approval by a formal shareholder vote of the
majority of Judge Group shareholders that are not affiliated with Purchaser,
Judge Group's shareholders can determine independently and without influence
whether to tender their Shares in the Offer and the Offer is subject to the
Minimum Tender Condition and the Majority of the Minority Condition.
Availability of Dissenters' Rights. The Special Committee
considered that dissenters' rights of appraisal will be available to the Judge
Group's shareholders under the Pennsylvania Business Corporation Law in
connection with the Merger.
Independent Financial and Legal Advisors. The Special
Committee had the benefit of advice from an independent and experienced
financial advisor which reviewed and evaluated the Offer and the Offer Price. In
addition, the Special Committee retained independent and experienced legal
counsel to assist it in performing its duties.
Potential Delisting. The Special Committee considered that
during February 2002, Judge Group received notification from The Nasdaq Stock
Market, Inc., that the common stock would be delisted from The Nasdaq National
Market unless the stock closed above $1.00 per Share for at least ten
consecutive days. Subsequently, on November 21, 2002, the common stock ceased
trading on The Nasdaq National Market and began trading on The Nasdaq Small Cap
Market. On January 22, 2003 Judge Group received a further notification from The
Nasdaq Stock Market, Inc. that the common stock would be delisted from The
Nasdaq Small Cap Market unless the stock closed at or above $1.00 per Share for
at least ten consecutive days by July 18, 2003. Until the announcement of the
Offer, Judge Group's stock price has not traded above $1.00 since June 7, 2002.
The Special Committee considered that in the event of a delisting from The
Nasdaq Small Cap Stock Market there would likely not be an efficient market for
the common stock and opportunities to sell the common stock by Judge Group's
minority shareholders would be more difficult.
Business Prospects. In addition to other factors discussed
herein, the Special Committee considered Judge Group's business, prospects,
financial condition, results of operations and current business strategy and the
challenges Judge Group would face if it did not proceed with the proposed
transaction contemplated by the Offer, including: (1) the lack of trading volume
and analyst coverage for Judge Group's Shares; (2) Judge Group's historical
performance; (3) Judge Group's lack of access to equity capital to grow; and (4)
the increasing costs associated with being a public company in light of the
passage of the ▇▇▇▇▇▇▇▇-▇▇▇▇▇ Act of 2002 and recent corporate governance
regulations and other factors.
Unwillingness of ▇▇▇▇▇▇ ▇. ▇▇▇▇▇, ▇▇. and ▇▇▇▇▇▇▇ ▇. ▇▇▇▇ to
Sell Their Interests. The Special Committee considered the fact that Messrs.
▇▇▇▇▇ and ▇▇▇▇ have stated that each is not interested in selling all or any
portion of his ownership interest in Judge Group to a third party and reaffirmed
this on at least two occasions in response to RCM's indication of interest in
acquiring Judge Group.
In addition to the above, the Special Committee considered the
following factors that make the transaction less attractive to the shareholders
of Judge Group:
Conditions to Transaction. The Special Committee considered
that Purchaser's obligation to consummate the Offer and the Merger is subject to
a number of broad conditions that must be waived or deemed satisfied prior to
the expiration of the Offer at the discretion of Purchaser (as set forth in the
Offer to Purchase and the "Schedule 14D-9-Item 2. Identity and Background of
Filing Person"). If these conditions are not met or waived, then Purchaser will
not be obligated to complete the Offer.
Potential Conflicts of Interest. The Special Committee
considered the interest of certain executive officers and directors of Judge
Group in the Offer. See the "Schedule 14D-9-Item 3. Past Contacts, Transactions,
Negotiations and Agreements."
Taxable Transaction. The Special Committee considered that the
Offer could result in a taxable gain to Judge Group's shareholders, including
those who may otherwise have preferred to retain their shares to defer the
occurrence of a taxable event.
Future Prospects of Judge Group. The Special Committee also
considered the fact that, assuming the Merger is completed, all holders of
common stock (other than Purchaser and the Continuing Shareholders) will not
participate in the future growth of Judge Group. Because of the risks and
uncertainties associated with Judge Group's future prospects, the Special
Committee concluded that this potential benefit or detriment was not
quantifiable. The Special Committee concluded that obtaining a cash premium for
the common stock upon completion of the Offer could be preferable to enabling
the holders to have a speculative potential future return in a company whose
shares are likely to no longer be listed on a recognized securities exchange.
Indication of Interest from RCM. The Special Committee
considered that it had received an indication of interest from RCM at a range of
$1.10 to $1.25 per Share but only for all outstanding Shares of common stock;
however, the Special Committee also noted that Messrs. Judge and ▇▇▇▇ have
stated that each is not interested in selling all or any portion of his
ownership interest in Judge Group to a third party and reaffirmed this on at
least two occasions in response to RCM's indication of interest in acquiring
Judge Group. The Special Committee further noted that RCM's representatives
stated that RCM is not interested in purchasing a minority interest in Judge
Group.
The description set forth above is not intended to be
exhaustive but summarizes the primary factors considered by the Special
Committee. In view of its many considerations, the Special Committee did not
find it practical to, and did not, quantify or otherwise assign relative weights
to the specific factors considered by the Special Committee. In addition,
individual members of the Special Committee may have given different weights to
the various factors considered. After weighing all of these considerations, the
Special Committee unanimously determined that the Offer and the Merger are fair
to the Judge Group shareholders being asked to tender their Shares and
recommends that the Judge Group shareholders tender their Shares of common stock
in the Offer.
-25-
OPINION OF FINANCIAL ADVISOR
Under a letter agreement, dated April 10, 2003, the Special Committee appointed
by Judge Group's board of directors retained ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇,
Incorporated ("▇▇▇▇ ▇▇▇▇▇"), to serve as the financial advisor to the Special
Committee. ▇▇▇▇ ▇▇▇▇▇ has delivered the Fairness opinion to the Special
Committee that, as of May 16, 2003, the $1.05 price per share to be received in
the Offer and Merger ("the $1.05 Offer Price") was fair, from a financial point
of view, to Judge Group's public shareholders (other than the Continuing
Shareholders. The full text of the opinion, which explains the assumptions made,
procedures followed, matters considered and limitations on the scope of the
review undertaken by ▇▇▇▇ ▇▇▇▇▇ in rendering its opinion, is attached as Exhibit
99(c) this Schedule TO. You should read this opinion in its entirety, as well as
the other information described under "Fairness Opinion."
▇▇▇▇ ▇▇▇▇▇'▇ written opinion is directed to the Special Committee and only
addresses the fairness of the $1.05 Offer Price from a financial point of view
as of the date of the opinion. ▇▇▇▇ ▇▇▇▇▇'▇ written opinion does not address any
other aspect of the Offer and does not constitute a recommendation to any Judge
Group shareholder to accept the Offer and tender his or her shares pursuant to
the Offer. The following is only a summary of the ▇▇▇▇ ▇▇▇▇▇ opinion.
Shareholders are urged to read the entire opinion.
In arriving at its opinion, ▇▇▇▇ ▇▇▇▇▇, among other things:
(i) reviewed and analyzed the financial terms and conditions of the
letters to the Special Committee from the Management Group (or
representatives thereof) dated March 21, 2003 and April 10, 2003;
(ii) reviewed and analyzed certain publicly available audited and
unaudited financial statements of Judge Group and certain other
publicly available information of Judge Group;
(iii) reviewed and discussed with representatives of the senior
management of Judge Group certain information of a business and
financial nature furnished to ▇▇▇▇ ▇▇▇▇▇ by them, including
financial forecasts and related assumptions of Judge Group;
(iv) reviewed public information with respect to certain other
companies in lines of business that ▇▇▇▇ ▇▇▇▇▇ believed to be
generally comparable to the business of Judge Group;
(v) reviewed the financial terms, to the extent publicly available, of
certain business combinations that ▇▇▇▇ ▇▇▇▇▇ believed to be
generally comparable to the Offer;
-26-
(vi) reviewed certain publicly available information concerning the
historical stock price of Judge Group common stock;
(vii) reviewed a draft of the Offer to Purchase dated May 9, 2003 and a
draft of Judge Groups's Solicitation and Recommendation Statement
on Schedule 14D-9 dated May 13, 2003 with respect to the Offer;
and
(viii) conducted such other financial studies, analyses and
investigations and considered such other information as ▇▇▇▇ ▇▇▇▇▇
deemed necessary or appropriate for purposes of its opinion.
In connection with its review, ▇▇▇▇ ▇▇▇▇▇ assumed and relied upon, without any
responsibility for independent verification or liability therefor, the accuracy
and completeness of all financial and other information supplied to ▇▇▇▇ ▇▇▇▇▇
by Judge Group, and all publicly available information. ▇▇▇▇ ▇▇▇▇▇ further
relied upon the assurances of management of Judge Group that they were unaware
of any facts that would make the information provided to ▇▇▇▇ ▇▇▇▇▇ incomplete
or misleading. ▇▇▇▇ ▇▇▇▇▇ assumed that there had been no material change in the
assets, financial condition, business or prospects of Judge Group since the date
that the most recent financial statements were made available to ▇▇▇▇ ▇▇▇▇▇.
▇▇▇▇ ▇▇▇▇▇ did not perform any independent valuation or appraisal of the assets
or liabilities of Judge Group. In addition, ▇▇▇▇ ▇▇▇▇▇ did not undertake an
independent analysis of the application or expiration of Judge Group's net
operating loss carryforwards and its opinion makes no assumption concerning, and
therefore does not consider, the application or utilization of Judge Group's net
operating loss carryforwards.
With respect to financial forecasts, ▇▇▇▇ ▇▇▇▇▇ assumed that they were
reasonably prepared on bases reflecting the best currently available estimates
and judgments of management of Judge Group as to the future financial
performance of Judge Group. ▇▇▇▇ ▇▇▇▇▇ assumed no responsibility for and
expressed no view as to such forecasts or the assumptions on which they were
based. The forecasts and projections were based on numerous variables and
assumptions that were inherently uncertain, including, without limitation, facts
related to general economic and market conditions. Accordingly, ▇▇▇▇ ▇▇▇▇▇ noted
that actual results could vary significantly from those set forth in such
forecasts and projections. ▇▇▇▇ ▇▇▇▇▇'▇ opinion was necessarily based on share
prices, economic, monetary, market and other conditions and circumstances as in
effect on, and the information made available to ▇▇▇▇ ▇▇▇▇▇ up to and including,
the date of the opinion. In rendering its opinion, ▇▇▇▇ ▇▇▇▇▇ did not address
the relative merits of the Offer, the Merger or any alternative potential
transaction. ▇▇▇▇ ▇▇▇▇▇ also assumed that the Merger would be consummated
immediately after the consummation of the Offer in the manner contemplated by
the Offer to Purchase.
The following is a brief summary of the material financial analyses performed by
▇▇▇▇ ▇▇▇▇▇ in preparing its opinion:
-27-
Comparable Company Analysis
▇▇▇▇ ▇▇▇▇▇ reviewed and compared the actual financial, operating and stock
market information of certain companies in lines of business believed to be
generally comparable to those of Judge Group in the information technology
("IT") staffing industry (the "Comparable Company Analysis"). These companies
included Alternative Resources Corporation, Analysts International Corporation,
▇▇▇▇▇▇ International, Inc., CDI Corporation, CIBER, Inc., Computer Task Group,
Covansys Corporation, Diversified Corporate Resources, Inc., ▇▇▇▇ ▇▇▇▇▇▇ &
Associates, Inc., ▇▇▇▇▇, Inc., Kforce, Inc., MPS Group, Inc., National Technical
Systems, Inc., Personnel Group of America, Inc., RCM Technologies, Inc., SCB
Computer Technology, Inc., TechTeam Global, Inc. and TSR, Inc.
Specifically, ▇▇▇▇ ▇▇▇▇▇ analyzed the respective multiples of the market value
of these companies to their last twelve months' net income and projected 2003
net income and the enterprise value of these companies to their last twelve
months' revenues, earnings before interest, taxes, depreciation and amortization
("EBITDA") and earnings before interest and taxes ("EBIT"). ▇▇▇▇ ▇▇▇▇▇'▇
analysis indicated the following:
Market Value as a Multiple of: Enterprise Value as a Multiple of:
------------------------------- ---------------------------------
LTM Net FY 2003E Net LTM LTM LTM
Income Income Revenues EBITDA EBIT
------------- ---------------- --------- --------- --------
Low 6.0x 17.0x 0.11x 2.5x 2.6x
High 81.4x 51.3x 0.84x 17.0x 100.5x
Mean 32.7x 28.0x 0.34x 9.2x 22.3x
Median 31.1x 24.4x 0.26x 8.7x 18.5x
▇▇▇▇ ▇▇▇▇▇ then derived a range of implied per share equity values for Judge
Group by applying the multiples of the comparable companies listed above to
corresponding data for Judge Group. This analysis indicated the following:
Market Value as a Multiple of: Enterprise Value as a Multiple of:
------------------------------- ---------------------------------
LTM Net FY 2003E LTM LTM LTM
Income Net Income Revenues EBITDA EBIT
------------- ---------------- --------- -------- --------
Low $0.15 $1.72 $0.58 $0.28 $0.06
High 2.06 $5.18 4.94 2.30 5.16
Mean $0.83 $2.83 $1.96 $1.20 $1.08
Median 0.79 2.46 1.46 1.14 0.88
However, ▇▇▇▇ ▇▇▇▇▇ noted that trading multiples of publicly-traded companies
are impacted by the relative size of these companies. As a result, ▇▇▇▇ ▇▇▇▇▇
reviewed and compared the actual financial, operating and stock market
information of those companies in the initial Comparable Company Analysis with
last twelve months' revenues of less than $250 million. These companies included
Alternative Resources Corporation, Diversified Corporate Resources, Inc., ▇▇▇▇
▇▇▇▇▇▇ & Associates, Inc., National Technical Systems, Inc., RCM Technologies,
Inc., SCB Computer Technology, Inc., TechTeam Global, Inc. and TSR, Inc.
-28-
▇▇▇▇ ▇▇▇▇▇ analyzed the respective multiples of the market value of these
companies to their last twelve months' net income and projected 2003 net income
and the enterprise value of these companies to their last twelve months'
revenues, EBITDA and EBIT. ▇▇▇▇ ▇▇▇▇▇'▇ analysis indicated the following:
Market Value as a Multiple of: Enterprise Value as a Multiple of:
------------------------------ ---------------------------------
LTM FY 2003E LTM LTM LTM
Net Income Net Income Revenues EBITDA EBIT
------------- ---------- --------- ------ --------
Low 6.0x NMF* 0.14x 2.5x 2.6x
High 39.8x NMF 0.61x 16.2x 18.9x
Mean 23.9x NMF 0.29x 6.4x 10.3x
Median 24.9x NMF 0.22x 4.8x 8.9x
* NMF: Not meaningful.
▇▇▇▇ ▇▇▇▇▇ then derived a range of implied per share equity values for Judge
Group by applying the multiples of the comparable companies listed above to
corresponding data for Judge Group. This analysis indicated the following:
Market Value as a Multiple of: Enterprise Value as a Multiple of:
----------------------------- ---------------------------------
LTM FY 2003E LTM LTM LTM
Net Income Net Income Revenues EBITDA EBIT
------------- ---------- -------- ------ --------
Low $0.15 NMF $0.77 $0.28 $0.06
High 1.01 NMF 3.59 2.19 0.91
Mean $0.60 NMF $1.64 $0.82 $0.46
Median 0.63 NMF 1.23 0.60 0.38
Comparable Industry Transactions Analysis
▇▇▇▇ ▇▇▇▇▇ reviewed and compared nine comparable transactions that were
completed between January 1, 2001 and May 15, 2003 involving companies in lines
of business believed to be generally comparable to those of Judge Group in the
IT staffing industry (the "Comparable Industry Transactions Analysis").
Specifically, ▇▇▇▇ ▇▇▇▇▇ analyzed the respective multiples of the market value
of these companies to their last twelve months' net income and the enterprise
value of these companies to their last twelve months' revenues, EBITDA and EBIT.
▇▇▇▇ ▇▇▇▇▇'▇ analysis indicated the following:
-29-
Market Value as a
Multiple of: Enterprise Value as a Multiple of:
------------------ -----------------------------------
LTM Net LTM LTM LTM
Income Revenues EBITDA EBIT
------- -------- ------ -----
Low 8.8x 0.11x 5.0x 5.1x
High 104.8x 1.62x 15.6x 41.0x
Mean 59.5x 0.54x 10.3x 21.7x
Median 62.2x 0.40x 10.2x 20.4x
▇▇▇▇ ▇▇▇▇▇ then derived a range of implied per share equity values for Judge
Group by applying the multiples of the comparable companies listed above to
corresponding data for Judge Group. This analysis indicated the following:
Market Value as a
Multiple of: Enterprise Value as a Multiple of:
----------------- ---------------------------------
LTM Net LTM LTM
Income Revenues EBITDA LTM EBIT
------- -------- ------ --------
Low $0.22 $0.55 $0.62 $0.19
High 2.65 9.58 2.11 2.06
Mean $1.50 $3.14 $1.36 $1.05
Median 1.57 2.32 1.36 0.99
▇▇▇▇ ▇▇▇▇▇ noted that transaction multiples are impacted by the relative size of
the companies being acquired in the transaction. As a result, ▇▇▇▇ ▇▇▇▇▇
reviewed and compared those six comparable transactions from the initial
Comparable Industry Transactions Analysis in which the company being acquired
generated revenues of less than $250 million.
▇▇▇▇ ▇▇▇▇▇ analyzed the respective multiples of the market value of these
companies to their last twelve months' net income and the enterprise value of
these companies to their last twelve months' revenues, EBITDA and EBIT. ▇▇▇▇
▇▇▇▇▇'▇ analysis indicated the following:
Market Value as a
Multiple of: Enterprise Value as a Multiple of:
----------------- ---------------------------------
LTM Net LTM LTM
Income Revenues EBITDA LTM EBIT
------- -------- ------ --------
Low 8.8x 0.11x 5.0x 5.1x
High 71.1x 0.86x 8.8x 18.5x
Mean 39.9x 0.39x 6.9x 11.8x
Median 39.9x 0.38x 6.9x 11.8x
-30-
▇▇▇▇ ▇▇▇▇▇ then derived a range of implied per share equity values for Judge
Group by applying the multiples of the comparable companies listed above to
corresponding data for Judge Group. This analysis indicated the following:
Market Value as a
Multiple of: Enterprise Value as a Multiple of:
----------------- ---------------------------------
LTM Net LTM LTM
Income Revenues EBITDA LTM EBIT
------- -------- ------ --------
Low $0.22 $0.55 $0.62 $0.19
High 1.80 5.06 1.16 0.89
Mean $1.01 $2.27 $0.89 $0.54
Median 1.01 2.22 0.89 0.54
Premiums Paid Analysis
▇▇▇▇ ▇▇▇▇▇ reviewed selected publicly-available financial and stock market
information of 62 "Going Private" transactions that were completed between
January 1, 2001 and May 15, 2003. ▇▇▇▇ ▇▇▇▇▇ analyzed the information on these
transactions using three criteria: the purchase price as a percentage premium to
the share price one day prior to the announcement of the transaction, the
purchase price as a percentage premium to the share price one week prior to the
announcement of the transaction and the purchase price as a percentage premium
to the share price one month prior to the announcement of the transaction. This
analysis indicated the following:
Percentage Premium Over:
-----------------------------------------------------------
One-day-prior One-week-prior One-month-prior
Share Price Share Price Share Price
------------- -------------- --------------
Low -8.3% -8.3% -37.0%
High 150.0% 177.8% 150.0%
Mean 37.0% 41.3% 42.8%
Median 31.8% 33.2% 37.4%
▇▇▇▇ ▇▇▇▇▇ then derived a range of implied per share equity values for Judge
Group by applying the percentage premiums from the comparable transactions to
corresponding data for Judge Group as of March 21, 2003 (the business day prior
to the announcement that the initial non-binding proposal had been sent to the
Special Committee by the Management Group.) This analysis indicated the
following:
-31-
Percentage Premium Over:
-------------------------------------------------------------------
One-day-prior One-month-prior
Share Price Share Price One-week-prior Share Price
----------------------- ------------------------ ---------------
Low $0.64 $0.68 $0.44
High 1.75 2.06 1.75
Mean $0.96 $1.05 $1.00
Median 0.92 0.99 0.96
▇▇▇▇ ▇▇▇▇▇ reviewed selected publicly available financial and stock market
information of 41 "Going Private" transactions that were completed between
January 1, 2001 and May 15, 2003 in which the acquired company generated
revenues of less than $250 million. ▇▇▇▇ ▇▇▇▇▇ analyzed the information on these
transactions using three criteria: the purchase price as a percentage premium to
the share price one day prior to the announcement of the transaction, the
purchase price as a percentage premium to the share price one week prior to the
announcement of the transaction and the purchase price as a percentage premium
to the share price one month prior to the announcement of the transaction. This
analysis indicated the following:
Percentage Premium Over:
-------------------------------------------------------------------
One-day-prior One-month-prior
Share Price Share Price One-week-prior Share Price
----------------------- ------------------------ ---------------
Low -8.3% -8.3% -17.5%
High 150.0% 177.8% 150.0%
Mean 43.7% 49.8% 49.9%
Median 36.0% 45.5% 43.1%
▇▇▇▇ ▇▇▇▇▇ then derived a range of implied per share equity values for Judge
Group by applying the percentage premiums from the comparable transactions to
corresponding data for Judge Group as of March 21, 2003 (the business day prior
to the announcement that the initial non-binding proposal had been sent to the
Special Committee by the Management Group.) This analysis indicated the
following:
Percentage Premium Over:
------------------------------------------------------------
One-day-prior One-week-prior One-month-prior
Share Price Share Price Share Price
------------- ------------------------ ---------------
Low $0.64 $0.68 $0.58
High 1.75 2.06 1.75
Mean $1.01 $1.11 $1.05
Median 0.95 1.08 1.00
-32-
▇▇▇▇ ▇▇▇▇▇ reviewed selected publicly available financial and stock market
information of 52 "Going Private" transactions that were completed between
January 1, 2001 and May 15, 2003 in which the premium paid was greater than 0%
and less than 100%. ▇▇▇▇ ▇▇▇▇▇ analyzed the information on these transactions
using three criteria: the purchase price as a percentage premium to the share
price one day prior to the announcement of the transaction, the purchase price
as a percentage premium to the share price one week prior to the announcement of
the transaction and the purchase price as a percentage premium to the share
price one month prior to the announcement of the transaction. This analysis
indicated the following:
Percentage Premium Over:
------------------------------------------------------------
One-day-prior One-week-prior One-month-prior
Share Price Share Price Share Price
-------------- ----------------------- ---------------
Low 2.4% 0.4% 7.1%
High 93.3% 90.5% 94.8%
Mean 36.1% 37.0% 40.0%
Median 32.2% 33.2% 37.4%
▇▇▇▇ ▇▇▇▇▇ then derived a range of implied per share equity values for Judge
Group by applying the percentage premiums from the comparable transactions to
corresponding data for Judge Group as of March 21, 2003 (the business day prior
to the announcement that the initial non-binding proposal had been sent to the
Special Committee by the Management Group.) This analysis indicated the
following:
Percentage Premium Over:
---------------------------------------------------------
One-day-prior One-week-prior One-month-prior
Share Price Share Price Share Price
------------- ------------------------ ---------------
Low $0.72 $0.74 $0.75
High 1.35 1.41 1.36
Mean $0.95 $1.01 $0.98
Median 0.93 0.99 0.96
▇▇▇▇ ▇▇▇▇▇ reviewed selected publicly available financial and stock market
information of 14 "Going Private" transactions that were completed between
January 1, 2001 and May 15, 2003 in which a minority interest was acquired. ▇▇▇▇
▇▇▇▇▇ analyzed the information on these transactions using three criteria: the
purchase price as a percentage premium to the share price one day prior to the
announcement of the transaction, the purchase price as a percentage premium to
the share price one week prior to the announcement of the transaction and the
purchase price as a percentage premium to the share price one month prior to the
announcement of the transaction. This analysis indicated the following:
-33-
Percentage Premium Over:
-------------------------------------------------------------
One-day-prior One-week-prior One-month-prior
Share Price Share Price Share Price
------------- ------------------------- ----------------
Low 4.3% 1.7% -17.5%
High 150.0% 177.8% 150.0%
Mean 46.8% 58.1% 51.9%
Median 37.2% 43.6% 39.4%
▇▇▇▇ ▇▇▇▇▇ then derived a range of implied per share equity values for Judge
Group by applying the percentage premiums from the comparable transactions to
corresponding data for Judge Group as of March 21, 2003 (the business day prior
to the announcement that the initial non-binding proposal had been sent to the
Special Committee by the Management Group.) This analysis indicated the
following:
Percentage Premium Over:
------------------------------------------------------------
One-day-prior One-week-prior One-month-prior
Share Price Share Price Share Price
------------- ------------------------- ----------------
Low $0.73 $0.75 $0.58
High 1.75 2.06 1.75
Mean $1.03 $1.17 $1.06
Median 0.96 1.06 0.98
▇▇▇▇ ▇▇▇▇▇ reviewed selected publicly available financial and stock market
information of 10 "Going Private" transactions that were completed between
January 1, 2001 and May 15, 2003 in which a minority interest was acquired and
in which the acquired company generated revenues of less than $250 million. ▇▇▇▇
▇▇▇▇▇ analyzed the information on these transactions using three criteria: the
purchase price as a percentage premium to the share price one day prior to the
announcement of the transaction, the purchase price as a percentage premium to
the share price one week prior to the announcement of the transaction and the
purchase price as a percentage premium to the share price one month prior to the
announcement of the transaction. This analysis indicated the following:
Percentage Premium Over:
-----------------------------------------------------------------
One-day-prior One-week-prior One-month-prior
Share Price Share Price Share Price
------------- ------------------------- -----------------
Low 13.8% 17.9% -17.5%
High 150.0% 177.8% 150.0%
Mean 55.1% 69.5% 59.5%
Median 46.2% 47.3% 51.3%
▇▇▇▇ ▇▇▇▇▇ then derived a range of implied per share equity values for Judge
Group by applying the percentage premiums from the comparable transactions to
corresponding data for Judge Group as of March 21, 2003 (the business day prior
to the announcement that the initial non-binding proposal had been sent to the
Special Committee by the Management Group.) This analysis indicated the
following:
-34-
Percentage Premium Over:
-----------------------------------------------------------
One-day-prior One-week-prior One-month-prior
Share Price Share Price Share Price
------------- ------------------------- ----------------
Low $0.80 $0.87 $0.58
High 1.75 2.06 1.75
Mean $1.09 $1.25 $1.12
Median 1.02 1.09 1.05
▇▇▇▇ ▇▇▇▇▇ reviewed selected publicly available financial and stock market
information of 11 "Going Private" transactions that were completed between
January 1, 2001 and May 15, 2003 in which a minority interest was acquired and
in which the premium paid was greater than 0% and less than 100%. ▇▇▇▇ ▇▇▇▇▇
analyzed the information on these transactions using three criteria: the
purchase price as a percentage premium to the share price one day prior to the
announcement of the transaction, the purchase price as a percentage premium to
the share price one week prior to the announcement of the transaction and the
purchase price as a percentage premium to the share price one month prior to the
announcement of the transaction. This analysis indicated the following:
Percentage Premium Over:
---------------------------------------------------------------
One-day-prior One-week-prior One-month-prior
Share Price Share Price Share Price
------------- ------------------------- ----------------
Low 4.3% 1.7% 18.8%
High 85.7% 85.7% 71.4%
Mean 39.8% 41.7% 40.4%
Median 36.0% 42.9% 38.4%
▇▇▇▇ ▇▇▇▇▇ then derived a range of implied per share equity values for Judge
Group by applying the percentage premiums from the comparable transactions to
corresponding data for Judge Group as of March 21, 2003 (the business day prior
to the announcement that the initial non-binding proposal had been sent to the
Special Committee by the Management Group.) This analysis indicated the
following:
-35-
Percentage Premium Over:
-----------------------------------------------------------
One-day-prior One-week-prior One-month-prior
Share Price Share Price Share Price
------------- ------------------------ ---------------
Low $0.73 $0.75 $0.83
High 1.30 1.37 1.20
Mean $0.98 $1.05 $0.98
Median 0.95 1.06 0.97
Discounted Cash Flow Analysis
Judge Group provided ▇▇▇▇ ▇▇▇▇▇ with projections and other financial information
relating to the expected future performance of Judge Group. Judge Group also
provided ▇▇▇▇ ▇▇▇▇▇ with information relating to the achievement of strategic
goals, objectives and targets over the applicable periods for Judge Group's
projections. ▇▇▇▇ ▇▇▇▇▇ performed a Discounted Cash Flow Analysis based on
projections and other financial information provided by Judge Group and
projections and other financial information developed by ▇▇▇▇ ▇▇▇▇▇, based on
discussions with Judge Group management. ▇▇▇▇ ▇▇▇▇▇ made a variety of
assumptions in the Discounted Cash Flow Analysis, including utilizing a range of
discount rates from 11.5% to 13.5% and a range of terminal values for Judge
Group from 4.0x EBITDA to 6.0x EBITDA. ▇▇▇▇ ▇▇▇▇▇'▇ Discounted Cash Flow
Analysis indicated a range of per share equity values for Judge Group of $0.98
to $2.99.
Leveraged Buyout Analysis
▇▇▇▇ ▇▇▇▇▇ performed a Leveraged Buyout Analysis based on projections and other
financial information provided by Judge Group and projections and other
financial information developed by ▇▇▇▇ ▇▇▇▇▇, based on discussions with Judge
Group management. ▇▇▇▇ ▇▇▇▇▇ made a variety of assumptions in the Leveraged
Buyout Analysis including utilizing required return rates of between 35% and 40%
for equity investors and between 18% and 20% for subordinated debt lenders. ▇▇▇▇
▇▇▇▇▇ also utilized a range of exit multiples for Judge Group from 4.0x EBITDA
to 6.0x EBITDA. ▇▇▇▇ ▇▇▇▇▇'▇ Leveraged Buyout Analysis indicated a range of per
share equity values for Judge Group of $0.53 to $1.16.
Conclusion
The summary set forth above describes the principal elements of the overview
provided by ▇▇▇▇ ▇▇▇▇▇ to the Special Committee on May 16, 2003. The preparation
of a fairness opinion involves various determinations as to the most appropriate
and relevant methods of financial analysis and the application of these methods
to the particular circumstances and, therefore, an opinion is not readily
susceptible to summary description. ▇▇▇▇ ▇▇▇▇▇ did not form a conclusion as to
whether any individual analysis, considered in isolation, supported or failed to
support its opinion as to fairness from a financial point of view. Rather, in
reaching its conclusion, ▇▇▇▇ ▇▇▇▇▇ considered the results of the analyses in
light of each other and ultimately reached its opinion based upon the results of
all analyses taken as a whole. ▇▇▇▇ ▇▇▇▇▇ did not place particular reliance or
weight on any individual analysis, but instead concluded that its analyses,
taken as a whole, support its determination. Accordingly, notwithstanding the
separate factors summarized above, ▇▇▇▇ ▇▇▇▇▇ believes that its analyses must be
considered as a whole and that selecting portions of its analysis and the
factors considered by it, without considering all analyses and factors, could
create an incomplete or misleading view of the evaluation process underlying its
opinion. In performing its analyses, ▇▇▇▇ ▇▇▇▇▇ made numerous assumptions with
respect to industry performance, business and economic conditions and other
matters. The analyses performed by ▇▇▇▇ ▇▇▇▇▇ are not necessarily indicative of
actual value or future results, which may be significantly more or less
favorable than suggested by the analyses.
-36-
Under the terms of ▇▇▇▇ ▇▇▇▇▇'▇ engagement, Judge Group has paid ▇▇▇▇ ▇▇▇▇▇ an
advisory fee of $115,000, which the Special Committee believes is reasonable for
the services provided by ▇▇▇▇ ▇▇▇▇▇ to the Special Committee. Judge Group has
agreed to reimburse ▇▇▇▇ ▇▇▇▇▇ for out-of-pocket expenses incurred in performing
its services, including the fees and expenses of its legal counsel, and to
indemnify ▇▇▇▇ ▇▇▇▇▇ and related persons against liabilities, including
liabilities under the federal securities laws, arising out of ▇▇▇▇ ▇▇▇▇▇'▇
engagement.
▇▇▇▇ ▇▇▇▇▇ is an internationally-recognized investment banking firm and is
continually engaged in the valuation of businesses and their securities in
connection with mergers and acquisitions, negotiated underwritings, secondary
distributions of listed and unlisted securities, private placements, leveraged
buyouts and valuations for real estate, corporate and other purposes. ▇▇▇▇ ▇▇▇▇▇
was selected to act as investment banker to the Special Committee based upon the
presentations and materials it had provided to the Special Committee, its
experience with respect to going private transactions and its experience,
expertise and familiarity with Judge Group's business.
The Fairness Opinion rendered by ▇▇▇▇ ▇▇▇▇▇ will be made available for
inspection and copying at the principal executive offices of Judge Group during
its regular business hours by any interested equity security holder of Judge
Group or representative who has been so designated in writing. A copy of the
Opinion will be transmitted by Judge Group to any interested equity security
holder of Judge Group or representative who has been so designated in writing
upon written request and at an expense of the requesting security holder.
-37-
PURCHASER'S POSITION REGARDING THE FAIRNESS OF THE OFFER AND THE MERGER
The requirements of Rule 13e-3 and related rules under the
Securities Exchange Act of 1934, as amended, require Purchaser, as an affiliate
of Judge Group, to express its belief as to the fairness of the Offer to Judge
Group's shareholders who are not affiliated with Purchaser.
▇▇▇▇▇▇▇▇▇ believes that the Offer and the Merger are both
financially and procedurally fair to Judge Group's shareholders who are not
affiliated with Purchaser. Purchaser bases its belief on its observations of the
following factors, each of which, in Purchaser's judgment, supports its views as
to the fairness of the Offer and the Merger.
o Each Judge Group shareholder can individually determine
whether to tender Shares in the Offer, and ▇▇▇▇▇▇▇▇▇
believes that the shareholders are capable of evaluating
the fairness of the Offer.
o The Offer represents a 16.67% premium over the closing
price of Judge Group common stock on May 16, 2003, the
last full trading day before public announcement of the
offer, a 34.62% premium over the closing price of Judge
Group common stock on April 10, 2003, the last full
trading day before the public announcement that the
Purchaser intended to make an offer at $0.95 a Share and
a 50% premium over the closing price of Judge Group
common stock on March 21, 2003, the last full trading
day before the public announcement of Purchaser's
proposal to take Judge Group private, a 52.78% premium
over the average closing price of Judge Group common
stock since January 1, 2003, a 51.49% premium over the
average closing price of Judge Group common stock since
November 1, 2002, and a 36.59% premium over the average
closing price of Judge Group common stock for the
twelve-month period ended March 21, 2003;
o Purchaser's belief that the general economic environment
and the market for IT staffing companies is unlikely to
improve over the next six months and combined with the
resultant pressure of Judge Group's financial
performance, it is unlikely that Judge Group's Share
price will trade above $1.00 for 10 consecutive days by
July 18, 2003. Judge Group has been advised that this
would result in Judge Group being delisted from The
Nasdaq Small Cap Market which would put additional
pressure on the stock price and trading volumes, further
reducing liquidity to shareholders.
o The Offer is conditioned on the tender of at least a
sufficient number of Shares such that, after the Shares
are purchased pursuant to the Offer, Purchaser would own
at least 80% of the then outstanding Judge Group common
stock. In addition, in no event will Purchaser purchase
Shares in the Offer if less than a majority of the
outstanding Shares, excluding the Shares beneficially
owned by the Continuing Shareholders and the executive
officers of Judge Group, are validly tendered and not
withdrawn. Accordingly, approximately 2,504,030 of the
Shares not owned by the Continuing Shareholders would
need to be validly tendered and not withdrawn to satisfy
these conditions. Acceptance of the Offer by this many
unaffiliated Judge Group shareholders would provide
meaningful procedural protection for Judge Group
shareholders.
-38-
o Judge Group shareholders who elect not to tender their
Shares in the Offer will receive the same consideration
in the Merger that Purchaser pays in the Offer, subject
to their right to dissent from the Merger and demand
payment of the fair value of their Shares under Chapter
15, Subchapter D of the PBCL.
o Purchaser believes the Offer Price to be fair
considering Judge Group's current financial performance,
profitability and growth prospects. In addition, the
Offer and the Merger would shift the risk of the future
financial performance of Judge Group from the public
shareholders, who do not have the power to control
decisions made as to Judge Group's business, entirely to
Purchaser, which would have the power to control Judge
Group's business and which has the resources to manage
and bear the risks inherent in the business over the
long term.
o Purchaser considered the terms of the Offer and the
Merger, including (1) the amount and form of the
consideration, (2) the tender offer structure, which
would provide an expeditious means for Judge Group
unaffiliated shareholders to receive the Offer Price,
(3) the Majority of the Minority Condition and (4) the
Minimum Tender Condition.
o The Offer provides the opportunity for Judge Group
unaffiliated shareholders to sell all of their Shares
without the risk of fluctuation in the sale price that
may otherwise be associated with such a sale and without
incurring brokerage and other costs typically associated
with market sales.
o The recommendation of the Special Committee that Judge
Group unaffiliated shareholders tender their Shares in
the Offer.
o The receipt by the Special Committee of an opinion from
▇▇▇▇ ▇▇▇▇▇ as to the fairness of the Offer Price from a
financial point of view to the shareholders of Judge
Group, other than the Continuing Shareholders.
o Members of senior management and the board who are not
among the Continuing Shareholders, as well as Investec
and certain individual principals of Investec, who are
each Judge Group shareholders, have advised Purchaser
that they intend to tender their Shares in the Offer.
o Purchaser believes that each of the foregoing
observations is relevant to all of Judge Group
shareholders who are not affiliated with Purchaser.
-39-
The net book value of Judge Group was $18,142,833, or
approximately $1.35 per Share, as of March 31, 2003.
Purchaser believes the net book value per share is not a
reliable indicator of Judge Group's value because of the signficant amount of
goodwill. The tangible net worth of Judge Group, which ▇▇▇▇▇▇▇▇ believes would
be a more relevant indicator of book value, was $11,594,088 as of March 31,
2003, or approximately $0.86 per Share. Tangible net worth is defined as net
book value less goodwill of $6,423,781 and other intangibles of $124,964 at
March 31, 2003. During April 2003, Judge Group received settlement proceeds from
a suit against Alliance Consulting. The net increase to each of net book value
and tangible net worth as a result of the settlement is approximately $1,200,000
or approximately $0.09 per Share (assuming a marginal income tax rate of 40%).
As adjusted for this settlement, the net book value and tangible net worth at
March 31, 2003 would be $1.44 per Share and $.95 per Share, respectively.
Purchaser did not complete an appraisal of the liquidation
value of Judge Group. Purchaser does not believe that the liquidation value was
materially relevant to the market value of Judge Group's business based upon
Purchaser's understanding of the staffing industry and Purchaser's general
business knowledge that liquidation sales generally result in proceeds
substantially less than the sale of a going concern business. In light of the
Continuing Shareholders' stated lack of interest in selling their shares, a
"going concern" analysis was not deemed relevant by Purchasers and was not
performed.
Purchaser also considered the following factors, each of
which they considered negative, in their deliberations concerning the fairness
of the terms of the Offer and the Merger:
o Following the successful completion of the Offer and the
Merger, Judge Group shareholders would cease to have the
opportunity to participate in the future earnings or
growth, if any, of Judge Group or benefit from
increases, if any, in the value of their holdings of
Judge Group.
o The financial interests of the Continuing Shareholders
with regard to the Offer Price are adverse to the
financial interest of the Shareholders being asked to
tender their Shares. In addition, officers and directors
of Judge Group may have conflicts of interest in
connection with the Offer and the Merger. See the
Schedule 14D-9.
o The financing for the Offer and the Merger will be
secured by the assets of Judge Group.
o Although Purchaser believes the offer is fair and the
Special Committee has received a fairness opinion from
▇▇▇▇ ▇▇▇▇▇, the Offer Price may be less than what would
be obtained if the entire company was sold to an
independent third party.
o The receipt of an indication of interest from RCM at a
range of $1.10 to $1.25; however, Purchaser noted that
the indication of interest was for control of the entire
company and therefore included a control premium while
the Offer does not include a control premium, as
Purchaser controls Judge Group.
The foregoing discussion of the information and factors
considered by Purchaser is not intended to be exhaustive but includes all
material factors Purchaser considered. In view of the variety of factors
considered in connection with their evaluation of the Offer and the Merger,
Purchaser did not find it practicable to, and did not, quantify or otherwise
assign relative weights to the specific factors considered in reaching their
determination and recommendation.
Purchaser has not requested or sought to obtain any report,
opinion or appraisal from an outside party relating to the consideration or
fairness of the consideration offered to the shareholders of Judge Group.
However, the Special Committee was advised by ▇▇▇▇ ▇▇▇▇▇, an independent
financial advisor which rendered an opinion dated May 16, 2003, that based upon
and subject to the assumptions, limitations and qualifications described in the
opinion, the cash consideration to be received by the holders of Shares, other
than the Continuing Shareholders, pursuant to the Offer was fair, from a
financial point of view, to such holders. A summary of ▇▇▇▇ ▇▇▇▇▇'▇ opinion is
included herein under the heading "Opinion of Financial Advisor" and also
contained in the Schedule 14D-9 which is being filed contemporaneously with this
Offer to Purchase. The full text of the ▇▇▇▇ ▇▇▇▇▇ opinion, which sets forth the
assumptions made, matters considered and limitations on the scope of review
undertaken is attached as Exhibit 99(c) to the Schedule TO and as Annex A to the
Schedule 14D-9.
-40-
Purchaser's view as to the fairness of the Offer and the
Merger should not be construed as a recommendation as to whether or not you
should tender your Shares.
PURCHASER'S PLANS FOR JUDGE GROUP
If the Offer is successful, the Continuing Shareholders will
effect the Merger. As a result of the consummation of the Offer and the Merger,
Judge Group will be wholly owned by Purchaser.
Following completion of the Offer and consummation of the
Merger, Purchaser expects that Judge Group will promptly cause the Shares to be
delisted from The Nasdaq Small Cap Market and Judge Group will be a
privately-held corporation and terminate options to purchase common stock.
Accordingly, shareholders who are not affiliated with the Continuing
Shareholders will not have the opportunity to participate in the earnings and
growth of Judge Group and will not have any right to vote on corporate matters.
In addition, current shareholders who are not affiliated with Continuing
Shareholders will not be entitled to share in any premium that might be payable
by an unrelated acquiror for all of the issued and outstanding Shares in a sale
transaction, if any, occurring after the consummation of the Merger. No such
transactions are pending or contemplated at this time. Similarly, after
completion of the Merger, former shareholders will not face the risk of losses
resulting from Judge Group's operations, increased debt leverage or from any
decline in the value of Judge Group.
Except as otherwise described in this Offer to Purchase,
Purchaser has no current plans or proposals or negotiations which relate to or
would result in: (i) an extraordinary corporate transaction, such as a merger
(other than the Merger), reorganization or liquidation involving Judge Group or
any of its subsidiaries; (ii) any purchase, sale or transfer of a material
amount of assets of Judge Group or any of its subsidiaries; (iii) any material
change in Judge Group's present dividend policy, indebtedness or capitalization;
(iv) any change in the management of Judge Group (other than Purchaser's
intention to appoint a board of directors comprised solely of Continuing
Shareholders after the Merger) or any change in any material term of the
employment contract of any executive officer; or (v) any other material change
in Judge Group's corporate structure or business. Purchaser expressly reserves
the right to change Purchaser's business plans with respect to Judge Group based
on future developments.
-41-
JUDGE GROUP FINANCIAL PROJECTIONS
Judge Group does not as a matter of course make public
forecasts as to future revenues, earnings or other financial information nor has
Judge Group historically prepared internal budget forecasts beyond the upcoming
fiscal year period. Judge Group did, however, prepare certain projections that
it provided to potential lenders, the Special Committee and ▇▇▇▇ ▇▇▇▇▇, as
financial advisor to the Special Committee, in connection with the proposed
transaction. The projections set forth below are included in this document
solely because such information was requested by and therefore provided to
potential lenders and ▇▇▇▇ ▇▇▇▇▇.
The projections set forth below were not prepared by Judge
Group with a view to public disclosure or compliance with published guidelines
of the SEC or the American Institute of Certified Public Accountants regarding
prospective financial information. In addition, the projections were not
prepared with the assistance of or reviewed, compiled or examined by independent
accountants. While prepared with numerical specificity, the projections were not
prepared in the ordinary course and the projections reflect numerous estimates
and hypothetical assumptions, all made by Judge Group, with respect to industry
performance, general business, economic, market, interest rate and financial
conditions and other matters, which may not be accurate, may not be realized,
and are inherently subject to significant business, economic and competitive
uncertainties and contingencies, all of which are difficult to predict and many
of which are beyond Judge Group's control. Generally, the further out the period
to which forecasts relate, the more unreliable those forecasts become due to the
difficulty in making accurate predictions of future events. Accordingly, there
can be no assurance that the assumptions made in preparing the projections set
forth below will prove to be accurate, and actual results may be materially
different from those contained in the projections set forth below.
In light of the uncertainties inherent in forward-looking
information of any kind, Purchaser cautions against undue reliance on this
information. The inclusion of this information should not be regarded as an
indication that anyone who received this information considered it a reliable
predictor of future events, and this information should not be relied on as
such. In fact, Judge Group provided ▇▇▇▇ ▇▇▇▇▇, the financial advisor to the
Special Committee, with additional information relating to the achievement of
strategic goals, objectives, and targets over the applicable periods upon which
▇▇▇▇ ▇▇▇▇▇ relied in performing discounted cash flow and leveraged buyout
analyses in connection with ▇▇▇▇ ▇▇▇▇▇'▇ opinion. See "SPECIAL
FACTORS--Background to the Offer," "SPECIAL FACTORS--Recommendation of the Board
of Directors; Fairness of the Offer and the Merger," "SPECIAL FACTORS--Opinion
of Financial Advisor, Exhibit 99(c) to the Schedule TO and Annex A to the
Schedule 14D-9 that is being filed contemporaneously herewith. While Judge Group
has prepared these projections with numerical specificity and has provided them
to potential lenders and upon the request of the Special Committee to ▇▇▇▇ ▇▇▇▇▇
in connection with this proposed transaction, Purchaser and Judge Group each has
not made, and does not make, any representation to any person that the
projections will be met. Neither Purchaser nor Judge Group intends to update or
revise such projections to reflect circumstances existing after the date they
were prepared or to reflect the occurrence of future events, unless required by
law.
Set forth below is a summary of these forecasts. These
forecasts should be read together with the historical financial statements of
Judge Group and the cautionary statements concerning forward-looking statements
on page 15.
-42-
The financial forecasts prepared by Judge Group reflected the
following anticipated future operating performance for Judge Group:
FISCAL YEAR ENDING DECEMBER 31,
-------------------------------------------------------------------
(in thousands) 2003 2004 2005 2006 2007
------- ------- ------- -------- --------
Revenue................................. $87,392 $92,960 $98,223 $102,989 $107,969
Operating Expenses...................... 15,146 16,653 17,335 17,809 18,274
Operating Income........................ 2,619 3,999 5,266 6,421 7,276
Net Income.............................. 1,329 2,139 2,879 3,428 4,011
Purchaser has made certain assumptions on which the
projections were based, relating to the achievement of strategic goals,
objectives, and targets over the applicable periods, including assumptions
related to revenue growth and cost control measures.
Judge Group's ability to reach its estimated revenue growth of
8.9% in 2003 and growth rates of 4.8%, 4.9%, 5.0% and 4.9% in 2004, 2005, 2006
and 2007, respectively, which reverses recent historical revenue declines will
be substantially dependent upon the end of the current economic downturn, a
reduction in the unemployment rate and an increase in the demand for staffing
services. Judge Group's ability to meet its estimated net income projections is
also dependent upon its ability to continue to monitor and control costs. Judge
Group has implemented cost controls which it anticipates will continue, subject
to increased spending for increased salaries and capital expenditures if and
when revenues increase. In the event Judge Group is not able to maintain its
cost control measures or revenue growth targets are not achieved, Judge Group's
profitability will be lower than estimated.
Judge Group has not yet achieved these objectives. In the
event that the demand for staffing services does not increase and Judge Group is
unable to maintain its cost control measures, Judge Group's revenue, and
consequently profitability, will be lower than estimated.
TRANSACTIONS BETWEEN PURCHASER, ITS AFFILIATES AND JUDGE GROUP
Judge Group had a split-dollar arrangement with Mr. ▇▇▇▇▇,
under which Judge Group paid split-dollar policy premiums that would be repaid
to Judge Group upon his death. On April 1, 2002, Judge Group and Mr. ▇▇▇▇▇
restructured the policy so that the policy was cancelled and the cash surrender
value of the policy was paid to Mr. ▇▇▇▇▇. Mr. ▇▇▇▇▇ signed a promissory note in
favor of Judge Group for the total of the premiums paid to date under the
arrangement in the amount of $552,761. The promissory note bears interest at
4.9% annually, is secured by a pledge of 850,000 shares of Judge Group stock,
and is payable in April 2012.
Judge Group also had a split-dollar arrangement with ▇▇. ▇▇▇▇,
the President of Judge Group, under which Judge Group paid split-dollar policy
premiums that would be repaid to Judge Group upon his death. The Compensation
Committee of Judge Group determined that beginning on April 1, 2002, premiums
would no longer be paid by Judge Group. As a result, the premiums on this policy
will be paid either by ▇▇. ▇▇▇▇ personally or will be taken from the cash
surrender value of the policy.
Mr. ▇▇▇▇▇ and Judge Group entered into an employment agreement
commencing January 1, 2001 for an initial term of two years and thereafter
automatically renewable each year until terminated by either party pursuant to
its terms. The agreement provides for an initial annual base salary of $520,000
for the first year and possible annual increase at the discretion of the board
of directors, plus an annual performance bonus granted in accordance with Judge
Group's policies as administered by the Compensation Committee of the board of
directors. Mr. ▇▇▇▇▇'s actual 2002 salary of $700,000 was an increase from the
employment agreement approved by the board of directors in 2001 and was a result
of additional divisional responsibilities undertaken in 2001 upon the
resignation of the president of Judge Group's contract division. The agreement
also entitles Mr. ▇▇▇▇▇ to receive annual stock option grants under certain
circumstances, provided such grants are approved by the board. The agreement
further entitles him to, among other things, five weeks paid vacation, a car
allowance and the right to participate in Judge Group's benefit plans and
programs for executives.
-43-
In the event of termination of his employment with Judge
Group, Mr. ▇▇▇▇▇'s entitlement to severance compensation and benefits varies
depending upon the circumstances and timing of such termination. If his
employment is terminated by Judge Group without cause, he would be entitled to
continuation of his salary for eighteen months from the date of his termination
and all stock options granted to him would immediately vest. Should there be a
change in control of Judge Group (as defined in the agreement) and a termination
or constructive termination (as defined in the agreement) of his employment
thereafter, his entitlement to severance compensation and benefits under the
agreement would be (i) a lump sum payment equal to eighteen months of the base
annual cash compensation plus pro rata share of any bonus earned; (ii) immediate
vesting of all stock options; and (iii) continuation of his benefits for the
lesser of eighteen months or such time as he receives benefits from another
employer. If Mr. ▇▇▇▇▇ terminates his employment upon a change in control, he is
entitled only to lump sum payment equal to one year base compensation. If Mr.
▇▇▇▇▇'s employment is terminated by his death or disability or by Judge Group
for cause, Judge Group would not be obligated to make any further payments to
him other than amounts already accrued. The agreement also contains a
confidentiality and an eighteen month non-competition and non-solicitation
provision.
CONFLICTS OF INTEREST
Purchaser. The financial interests of Purchaser and the
Continuing Shareholders, with regard to the Offer Price, are adverse to the
financial interests of the shareholders being asked to tender their Shares.
Control of Judge Group. The Continuing Shareholders have
substantial voting control over Judge Group. Collectively, the Continuing
Shareholders own 8,424,825 Shares, which represent approximately 62.58% of
outstanding Judge Group common stock. As a result of their voting interest, the
Continuing Shareholders have the power to control the vote regarding such
matters as the election of Judge Group directors, amendments to Judge Group's
charter and other fundamental corporate transactions.
Directors, Officers and Employees of Judge Group. The
following Continuing Shareholders hold the described positions with Judge Group:
▇▇▇▇▇▇ ▇. ▇▇▇▇▇, ▇▇., a director of Judge Group, serves as Chief Executive
Officer and Chairman of the board of Judge Group. ▇▇▇▇▇▇▇ ▇. ▇▇▇▇, a director of
Judge Group, serves as President of Judge Group and President of Judge Group's
Permanent Placement Business. ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇, a director of Judge Group,
is President of Judge Incorporated, a subsidiary of Judge Group. ▇▇▇▇ ▇. ▇▇▇▇▇▇▇
is the Senior Budget Analyst for Judge Group. ▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇, serves as
the Vice President for Human Resources of Judge Group. ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ is the
Executive Assistant to the Chief Executive Officer of Judge Group. ▇▇▇▇▇▇ ▇.
▇▇▇▇▇, ▇▇. serves as Vice President for Staffing of Judge Group. ▇▇▇ ▇▇▇▇▇▇▇
serves as General Counsel for Judge Group. ▇▇▇▇▇ ▇. ▇▇▇▇▇▇ serves as President
of Judge Technical Services, a subsidiary of Judge Group. ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ is
the Chief Information Officer of Judge Group. These directors, officers and
employees of Judge Group hold equity interests in Judge Group. See Section 8
"The Offer--Certain Information Concerning Continuing Shareholders" beginning on
page 59 and Schedule B for more information on security holdings of the
Continuing Shareholders. These positions and equity interests present these
individuals with actual or potential conflicts of interest in determining the
fairness of the Offer to the unaffiliated shareholders.
-44-
Following consummation of the Offer and ▇▇▇▇▇▇, all directors
of Judge Group who are not Continuing Shareholders intend to resign and
Purchaser anticipates that the board of directors of Judge Group will be
comprised solely of certain of the Continuing Shareholders. ▇▇▇▇▇▇▇▇▇ has agreed
to maintain Director and Officer insurance following consummation of the Offer
and the Merger for all directors, including members of the Special Committee.
CONDUCT OF JUDGE GROUP'S BUSINESS IF THE OFFER IS NOT COMPLETED
If the Offer is not completed because either the Majority of
the Minority Condition or the Minimum Tender Condition is not satisfied, or
another condition is not satisfied or waived, Continuing Shareholders and
Purchaser expect that Judge Group's current management will continue to operate
the business of Judge Group substantially as presently operated. However, in
that event, Continuing Shareholder or Purchaser may consider:
o Engaging in open market or privately negotiated
purchases of Shares to increase Purchaser's aggregate
ownership of the Shares to at least 80% of the then
outstanding shares of common stock of Judge Group and
then effecting a short-form merger;
o Proposing that Purchaser and Judge Group enter into a
merger agreement, which would require the approval of
the Judge Group board of directors and the vote of
Shares in favor of the merger; or
o Keeping outstanding the public minority interest in
Judge Group.
If Purchaser was to pursue any of these alternatives, there is
no assurance they would be consummated or at what price, and it might take
considerably longer for the shareholders of Judge Group to receive any
consideration for their Shares (other than through sales in the open market)
than if they had tendered their Shares in the Offer. Any such transaction may
result in proceeds per Share to the shareholders of Judge Group that are more or
less than or the same as the Offer Price.
-45-
THE OFFER
1. TERMS OF THE OFFER
Upon the terms and subject to the conditions set forth in the
Offer (including the terms and conditions set forth in Section 11, "The
Offer--Certain Conditions of the Offer," and if the Offer is extended or
amended, the terms and conditions of such extension or amendment (the "Offer
Conditions")), Purchaser will accept for payment, and pay for, Shares validly
tendered on or prior to the Expiration Date (as defined herein) and not
withdrawn as permitted by Section 4, "The Offer--Rights of Withdrawal." The term
"Expiration Date" means 12:00 midnight, Eastern Standard Time, on June 16, 2003,
unless and until Purchaser shall have extended the period for which the Offer is
open, 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. The period
until 12:00 midnight, Eastern Standard Time, on June 16, 2003, as such may be
extended is referred to as the "Offering Period."
Subject to the applicable rules and regulations of the SEC,
Purchaser expressly reserves the right, in its sole discretion, at any time or
from time to time, to extend the Offering Period by giving oral or written
notice of such extension to the Depositary. During any such extension of the
Offering Period, all Shares previously tendered and not withdrawn will remain
subject to the Offer, subject to the right of a tendering shareholder to
withdraw such shareholder's Shares. See Section 4, "The Offer--Rights of
Withdrawal."
Subject to the applicable regulations of the SEC, Purchaser
also expressly reserves the right, in its sole discretion, at any time or from
time to time prior to the Expiration Date:
(i) To delay acceptance for payment of or (regardless
of whether such Shares were theretofore accepted
for payment) payment for, any tendered Shares, or
to terminate or amend the Offer as to any Shares
not then paid for, on the occurrence of any of the
events specified in Section 11, "The
Offer--Certain Conditions of the Offer;" and
(ii) To waive any condition other than the Majority of
the Minority Condition and the Minimum Tender
Condition and to set forth or change any other
term and condition of the Offer except as
otherwise specified in Section 11, "The
Offer--Certain Conditions of the Offer;" in each
case, by giving oral or written notice of such
delay, termination or amendment to the Depositary
and by making a public announcement thereof. If
Purchaser accepts any Shares for payment pursuant
to the terms of the Offer, it will accept for
payment all Shares validly tendered during the
Offering Period and not withdrawn, and, on the
terms and subject to the conditions of the Offer,
including but not limited to the Offer Conditions,
it will promptly pay for all Shares so accepted
for payment and will immediately accept for
payment and promptly pay for all Shares as they
are tendered in any Subsequent Offering Period (as
defined herein). Purchaser confirms that its
reservation of the right to delay payment for
Shares that it has accepted for payment is limited
by 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.
-46-
Any extension, delay, termination or amendment of the Offer
will be followed as promptly as practicable by public announcement thereof, such
announcement in the case of an extension to be issued no later than 9:00 a.m.,
Eastern Standard Time, on the next business day after the previously scheduled
Expiration Date. Subject to applicable law (including Rules 14d-4(d), 14d-6(c)
and 14e-1 under the Securities Exchange Act of 1934, as amended, which require
that any material change in the information published, sent or given to
shareholders in connection with the Offer be promptly disseminated to
shareholders in a manner reasonably designed to inform shareholders of such
change) and without limiting the manner in which Purchaser may choose to make
any public announcement, Purchaser shall have no obligation to publish,
advertise or otherwise communicate any such public announcement other than by
issuing a press release or other announcement.
If, during the Offering Period, Purchaser, in its sole
discretion, shall decrease the percentage of Shares being sought or increase or
decrease the consideration offered to holders of Shares, such increase or
decrease shall be applicable to all holders whose Shares are accepted for
payment pursuant to the Offer and, if at the time notice of any increase or
decrease is first published, sent or given to holders of Shares, the Offer is
scheduled to expire at any time earlier than the tenth business day from and
including the date that such notice is first so published, sent or given, the
Offer will be extended until the expiration of such ten business day period.
Purchaser confirms that if it makes a material change in the terms of the Offer
or the information concerning the Offer, or if it waives a material condition of
the Offer, Purchaser will extend the Offer to the extent required by Rules
14d-4(d), 14d-6(c) and 14e-1 under the Exchange Act. The minimum period during
which the Offer must remain open following material changes in the terms of the
Offer or information concerning the Offer, other than a change in price or
change in percentage of securities sought, will depend upon the relevant facts
and circumstances then existing, including the relative materiality of the
changed terms or information. In a public release, the SEC has stated its views
that an offer must remain open for a minimum period of time following a material
change in the terms of the Offer and that waiver of a material condition is a
material change in the terms of the Offer. The release states that an offer
should remain open for a minimum of five business days from the date a material
change is first published or sent or given to security holders and that, if
material changes are made with respect to information that approaches the
significance of price and percentage of Shares sought, a minimum of ten business
days may be required to allow for adequate dissemination to shareholders and
investor response. For purposes of the Offer, a "business day" means any day
other than a Saturday, Sunday or federal holiday and consists of the time period
from 12:01 a.m. through 12:00 midnight, Eastern Standard Time.
Purchaser and Continuing Shareholders have exercised their
rights as shareholders of Judge Group to request Judge Group's shareholder list
and security position listings for the purpose of disseminating the Offer to
shareholders. Judge Group has provided Purchaser with Judge Group's shareholder
list and security position listings for the purpose of disseminating the Offer
to holders of Shares. This Offer to Purchase and the related Letter of
Transmittal will be mailed to record holders of Shares and will be furnished to
brokers, banks and similar persons whose names, or the names of whose nominees,
appear on the shareholder list or, if applicable, who are listed as participants
in a clearing agency's security position listing for subsequent transmittal to
beneficial owners of Shares.
-47-
2. ACCEPTANCE FOR PAYMENT AND PAYMENT FOR SHARES
Upon the terms and subject to the conditions of the Offer
(including the Offer Conditions and, 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, Shares validly tendered and not withdrawn as
promptly as practicable after the expiration of the Offering Period. If there is
a Subsequent Offering Period, all Shares tendered during the Offering Period
will be immediately accepted for payment and promptly paid for following the
expiration thereof and Shares tendered during a Subsequent Offering Period will
be immediately accepted for payment and paid for as they are tendered. Subject
to applicable rules of the SEC, Purchaser expressly reserves the right to delay
acceptance for payment of or payment for Shares in order to comply, in whole or
in part, with any applicable law. See Section 11, "The Offer--Certain Conditions
of the Offer." In all cases, payment for Shares tendered and accepted for
payment pursuant to the Offer will be made only after timely receipt by the
Depositary of:
(i) Certificates evidencing such Shares (or a
confirmation of a book-entry transfer of such
Shares (a "Book-Entry Confirmation") into the
Depositary's account at The Depository Trust
Company (the "Book-Entry Transfer Facility"));
(ii) A properly completed and duly executed Letter of
Transmittal (or facsimile thereof), with any
required signature guarantees or, in the case of a
book-entry transfer, an Agent's Message (as
defined herein) in lieu of the Letter of
Transmittal; and
(iii) Any other required documents.
For purposes of the Offer, Purchaser will be deemed to have
accepted for payment Shares validly tendered and not withdrawn as, if and when
Purchaser gives oral or written notice to the Depositary of its acceptance for
payment of such Shares pursuant to the Offer. Payment for Shares accepted for
payment pursuant to the Offer will be made by deposit of the purchase price
therefor with the Depositary, which will act as agent for the tendering
shareholders for the purpose of receiving payments from Purchaser and
transmitting such payments to the tendering shareholders. UNDER NO CIRCUMSTANCES
WILL INTEREST ON THE PURCHASE PRICE FOR TENDERED SHARES BE PAID, REGARDLESS OF
ANY DELAY IN MAKING SUCH PAYMENT.
-48-
If any tendered Shares are not accepted for payment pursuant
to the terms and conditions of the Offer for any reason, or if certificates are
submitted for more Shares than are tendered, certificates for such unpurchased
Shares will be returned, without expense to the tendering shareholder (or, in
the case of Shares tendered by book-entry transfer of such Shares into the
Depositary's account at the Book-Entry Transfer Facility pursuant to the
procedures set forth in Section 3, "The Offer--Procedures for Tendering Shares,"
such Shares will be credited to an account maintained with the Book-Entry
Transfer Facility), promptly following expiration or termination of the Offer,
following expiration or termination of the Offer.
Purchaser reserves the right to transfer or assign in whole or
in part from time to time to one or more of its affiliates the right to purchase
all or any portion of the 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 shareholders to
receive payment for Shares validly tendered and accepted for payment pursuant to
the Offer.
3. PROCEDURES FOR TENDERING SHARES
Valid Tender. To tender Shares pursuant to the Offer:
(i) A properly completed and duly executed Letter of
Transmittal (or a facsimile thereof) in accordance
with the instructions of the Letter of
Transmittal, with any required signature
guarantees, certificates for Shares to be tendered
and any other documents required by the Letter of
Transmittal, must be received by the Depositary
prior to the Expiration Date at one of its
addresses set forth on the back cover of this
Offer to Purchase;
(ii) Such Shares must be delivered pursuant to the
procedures for book-entry transfer described below
(and the Book-Entry Confirmation of such delivery
received by the Depositary, including an Agent's
Message (as defined herein) if the tendering
shareholder has not delivered a Letter of
Transmittal), prior to the Expiration Date; or
(iii) The tendering shareholder must comply with the
guaranteed delivery procedures set forth below.
The term "Agent's Message" means a message transmitted
electronically by the Book-Entry Transfer Facility to, and received by, the
Depositary and forming a part of a Book-Entry Confirmation, which states that
the Book-Entry Transfer Facility has received an express acknowledgment from the
participant in the 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 the participant.
Book-Entry Delivery. The Depositary will establish accounts
with respect to the Shares at the Book-Entry Transfer Facility for purposes of
the Offer within two business days after the date of this Offer to Purchase. Any
financial institution that is a participant in the Book-Entry Transfer
Facility's systems may make book-entry transfer of Shares by causing the
Book-Entry Transfer Facility to transfer such Shares into the Depositary's
account in accordance with the Book-Entry Transfer Facility's procedures for
such transfer. However, although delivery of Shares may be effected through
book-entry transfer, either the Letter of Transmittal (or facsimile thereof),
properly completed and duly executed, together with any required signature
guarantees, or an Agent's Message in lieu of the Letter of Transmittal, 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 by the Expiration Date, or the tendering shareholder must comply
with the guaranteed delivery procedures described below. 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.
-49-
Signature Guarantees. Except as otherwise provided below, all
signatures on a Letter of Transmittal must be guaranteed by a financial
institution (including most commercial banks, savings and loan associations and
brokerage houses) that is a participant in the Security Transfer Agents
Medallion Program, the New York Stock Exchange Medallion Signature Guarantee
Program or the Stock Exchange Medallion Program or by any other "Eligible
Guarantor Institution," as such term is defined in Rule 17Ad-15 under the
Exchange Act (each, an "Eligible Institution"). Signatures on a Letter of
Transmittal need not be guaranteed (i) if the Letter of Transmittal is signed by
the registered holders (which term, for purposes of this section, includes any
participant in the Book-Entry Transfer Facility's systems whose name appears on
a security position listing as the owner of the Shares) of Shares tendered
therewith and such registered holder has not completed the box entitled "Special
Payment Instructions" or the box entitled "Special Delivery Instructions" on the
Letter of Transmittal or (ii) if such Shares are tendered for the account of an
Eligible Institution. See Instructions 1 and 5 of the Letter of Transmittal. If
the certificates for Shares are registered in the name of a person other than
the signer of the Letter of Transmittal, or if payment is to be made, or
certificates for Shares not tendered or not accepted for payment are to be
returned, to a person other than the registered holder of the certificates
surrendered, then the tendered certificates 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 described above. If the Letter
of Transmittal or stock powers are signed or any certificate is endorsed by
trustees, executors, administrators, guardians, attorneys-in-fact, officers of
corporations or others acting in a fiduciary or representative capacity, such
persons should so indicate when signing and, unless waived by Purchaser, proper
evidence satisfactory to Purchaser of their authority to so act must be
submitted. See Instructions 1 and 5 of the Letter of Transmittal.
Guaranteed Delivery. A shareholder who desires to tender
Shares pursuant to the Offer and whose certificates for Shares are not
immediately available, or who cannot comply with the procedure for book-entry
transfer on a timely basis, or who cannot deliver all required documents to the
Depositary prior to the Expiration Date, may tender such Shares by following all
of the procedures set forth below:
(i) Such tender is made by or through an Eligible
Institution;
(ii) A properly completed and duly executed Notice of
Guaranteed Delivery, substantially in the form
provided by Purchaser, is received by the
Depositary, as provided below, prior to the
Expiration Date; and
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(iii) The certificates for all tendered Shares, in
proper form for transfer (or a Book-Entry
Confirmation with respect to all such Shares),
together with a properly completed and duly
executed Letter of Transmittal (or facsimile
thereof), with any required signature guarantees
(or, in the case of a book-entry transfer, an
Agent's Message in lieu of the Letter of
Transmittal), and any other required documents,
are received by the Depositary within three
trading days after the date of execution of such
Notice of Guaranteed Delivery. A "trading day" is
any day on which The Nasdaq Small Cap Market is
open for business.
The Notice of Guaranteed Delivery may be delivered by hand or
mail to the Depositary or transmitted by telegram or facsimile transmission to
the Depositary and must include a guarantee by an Eligible Institution in the
form set forth in such Notice of Guaranteed Delivery.
THE METHOD OF DELIVERY OF THE SHARES, THE LETTER OF
TRANSMITTAL AND ALL OTHER REQUIRED DOCUMENTS, INCLUDING DELIVERY THROUGH THE
BOOK-ENTRY TRANSFER FACILITY, IS AT THE ELECTION AND RISK OF THE TENDERING
SHAREHOLDER. SHARES WILL BE DEEMED DELIVERED ONLY WHEN ACTUALLY RECEIVED BY THE
DEPOSITARY (INCLUDING, IN THE CASE OF A BOOK-ENTRY TRANSFER, BY BOOK-ENTRY
CONFIRMATION). IF DELIVERY IS BY MAIL, IT IS RECOMMENDED THAT THE SHAREHOLDER
USE PROPERLY INSURED REGISTERED MAIL WITH RETURN RECEIPT REQUESTED. IN ALL
CASES, SUFFICIENT TIME SHOULD BE ALLOWED TO ENSURE TIMELY DELIVERY.
Other Requirements. Notwithstanding any 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
evidencing such Shares or a timely Book-Entry Confirmation with respect to such
Shares into the Depositary's account at the Book-Entry Transfer Facility, (ii) a
Letter of Transmittal (or facsimile thereof), properly completed and duly
executed, with any required signature guarantees (or, in the case of a
book-entry transfer, an Agent's Message in lieu of the Letter of Transmittal)
and (iii) any other documents required by the Letter of Transmittal.
Accordingly, tendering shareholders may be paid at different times depending
upon when certificates for Shares or Book-Entry Confirmations with respect to
Shares are actually received by the Depositary. UNDER NO CIRCUMSTANCES WILL
INTEREST ON THE PURCHASE PRICE OF THE TENDERED SHARES BE PAID BY PURCHASER,
REGARDLESS OF ANY EXTENSION OF THE OFFER OR ANY DELAY IN MAKING SUCH PAYMENT.
Tender Constitutes An Agreement. The valid tender of Shares
pursuant to one of the procedures described above will constitute a binding
agreement between the tendering shareholder and Purchaser upon the terms and
subject to the conditions of the Offer.
-51-
Appointment Of Proxies. By executing a Letter of Transmittal
as set forth above subject to the right of withdrawal discussed below, the
tendering shareholder irrevocably appoints designees of Purchaser as such
shareholder's attorneys-in-fact and proxies, each with full power of
substitution, to the full extent of such shareholder's rights with respect to
the Shares tendered by such shareholder and accepted for payment by Purchaser
(and with respect to any and all other Shares or other securities issued or
issuable in respect of such Shares on or after the date of this Offer to
Purchase). All such powers of attorney and proxies will be considered coupled
with an interest in the tendered Shares. Such appointment is effective when, and
only to the extent that, Purchaser deposits the payment for such Shares with the
Depositary. Upon the effectiveness of such appointment, all prior powers of
attorney, proxies and consents given by such shareholder will be revoked, and no
subsequent powers of attorney, proxies and consents may be given (and, if given,
will not be deemed effective). Purchaser's designees will, with respect to the
Shares for which the appointment is effective, be empowered to exercise all
voting and other rights of such shareholder as they, in their sole discretion,
may deem proper at any annual, special or adjourned meeting of the shareholders
of Judge Group, by written consent in lieu of any such meeting or otherwise.
Purchaser reserves the right to require that, in order for Shares to be deemed
validly tendered, immediately upon Purchaser's payment for such Shares,
Purchaser must be able to exercise full voting rights with respect to such
Shares.
Determination Of Validity. All questions as to the validity,
form, eligibility (including time of receipt) and acceptance of any tender of
Shares will be determined by Purchaser in its sole discretion, which
determination will be final and binding. Purchaser reserves the absolute right
to reject any and all tenders determined by it not to be in proper form or the
acceptance for payment of or payment for which may, in the opinion of
Purchaser's counsel, be unlawful. Purchaser also reserves the absolute right to
waive any defect or irregularity in the tender of any Shares of any particular
shareholder whether or not similar defects or irregularities are waived in the
case of other shareholders. No tender of Shares will be deemed to have been
validly made until all defects and irregularities relating thereto have been
cured or waived to the satisfaction of Purchaser. None of Purchaser, the
Depositary, the Information Agent or any other person will be under any duty to
give notification of any defects or irregularities in tenders or incur any
liability for failure to give any such notification. Purchaser's interpretation
of the terms and conditions of the Offer (including the Letter of Transmittal
and Instructions thereto) will be final and binding.
Backup Withholding. In order to avoid "backup withholding" of
Federal income tax on payments of cash pursuant to the Offer, a shareholder
surrendering Shares in the Offer must, unless an exemption applies, provide the
Depositary with such shareholder's correct taxpayer identification number
("TIN") on a Substitute Form W-9 and certify under penalties of perjury that
such TIN is correct and that such shareholder is not subject to backup
withholding. If a shareholder does not provide such shareholder's correct TIN or
fails to provide the certifications described above, the Internal Revenue
Service (the "IRS") may impose a penalty on such shareholder and payment of cash
to such shareholder pursuant to the Offer may be subject to backup withholding
of 30%. Backup withholding is not an additional tax. Rather, the tax liability
of persons subject to backup withholding will be reduced by the amount of tax
withheld. If withholding results in an overpayment of taxes, a refund may be
obtained by filing a tax return with the IRS. All shareholders who are United
States persons surrendering Shares pursuant to the Offer should complete and
sign the main signature form and the Substitute Form W-9 included as part of the
Letter of Transmittal 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). Certain shareholders
(including, among others, all corporations and certain foreign individuals and
entities) are not subject to backup withholding. Non-corporate foreign
shareholders should complete and sign the main signature form and a statement,
signed under penalties of perjury, attesting to that shareholder's exempt status
(such forms may be obtained from the Depositary), in order to avoid backup
withholding. See Instruction 8 to the Letter of Transmittal.
-52-
4. RIGHTS OF WITHDRAWAL
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 of the Offering Period and, unless theretofore accepted
for payment by Purchaser pursuant to the Offer, may also be withdrawn at any
time after the Expiration Date.
For a withdrawal 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 Purchase. Any such notice of withdrawal must specify the name of the person
having tendered the Shares to be withdrawn, the number or amount of Shares to be
withdrawn and the names in which the certificate(s) evidencing the Shares to be
withdrawn are registered, if different from that of the person who tendered such
Shares. The signature(s) on the notice of withdrawal must be guaranteed by an
Eligible Institution, unless such Shares have been tendered for the account of
any Eligible Institution. If Shares have been tendered pursuant to the
procedures for book-entry tender as set forth in Section 3, "The
Offer--Procedure for Tendering Shares," any notice of withdrawal must specify
the name and number of the account at the Book-Entry Transfer Facility to be
credited with the withdrawn Shares. If certificates for Shares to be withdrawn
have been delivered or otherwise identified to the Depositary, the name of the
registered holder and the serial numbers of the particular certificates
evidencing the Shares to be withdrawn must also be furnished to the Depositary
as aforesaid prior to the physical release of such certificates. All questions
as to the form and validity (including time of receipt) of any notice of
withdrawal will be determined by Purchaser, in its sole discretion, which
determination shall be final and binding. None of Continuing Shareholders,
Purchaser, the Depositary, the Information Agent or any other person will be
under any duty to give notification of any defects or irregularities in any
notice of withdrawal or incur any liability for failure to give such
notification.
Withdrawals of tenders of Shares may not be rescinded, and any
Shares properly withdrawn will be deemed not to have been validly tendered for
purposes of the Offer. However, withdrawn Shares may be retendered by following
one of the procedures described in Section 3, "The Offer--Procedure for
Tendering Shares," at any time prior to the Expiration Date.
If Purchaser extends the Offer, is delayed in its acceptance
for payment of Shares, or is unable to accept for payment Shares pursuant to the
Offer, for any reason, then, without prejudice to Purchaser's rights under this
Offer, the Depositary may, nevertheless, on behalf of Purchaser, retain tendered
Shares, and such Shares may not be withdrawn except to the extent that tendering
shareholders are entitled to withdrawal rights as set forth in this Section 4.
Any such delay will be accompanied by an extension of the Offer to the extent
required by law.
-53-
5. CERTAIN FEDERAL INCOME TAX CONSEQUENCES OF THE OFFER
The following is a summary of certain United States 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. The summary is based on the provisions of the
Internal Revenue Code of 1986, as amended (the "Code"), applicable current and
proposed United States Treasury Regulations issued thereunder, judicial
authority and administrative rulings and practice, all of which are subject to
change, possibly with retroactive effect, at any time and, therefore, the
following statements and conclusions could be altered or modified. The
discussion does not address holders of Shares in whose hands Shares are not
capital assets, nor does it address holders who hold Shares as part of a
hedging, "straddle," conversion or other integrated transaction, or who received
Shares 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 restricted shares received as
compensation or to holders of Shares who are in special tax situations (such as
insurance companies, tax-exempt organizations, financial institutions, United
States expatriates or non-U.S. persons). Furthermore, the discussion does not
address the tax treatment of holders who exercise dissenters' rights in the
Merger, nor does it address any aspect of state, local or foreign taxation or
estate and gift taxation.
The United States federal income tax consequences set forth
below are included for general informational purposes only and are based upon
current law. The following summary does not purport to consider all aspects of
United States federal income taxation that might be relevant to shareholders of
Judge Group. 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 shareholder and the particular tax effects of
the Offer and the Merger, including the application and effect of state, local
and other tax laws.
The receipt of cash for Shares pursuant to the Offer or the
Merger will be a taxable transaction for United States federal income tax
purposes (and also may be a taxable transaction under applicable state, local,
foreign and other income tax laws). In general, for United States federal income
tax purposes, a holder of Shares will recognize gain or loss equal to the
difference between the holder's adjusted tax basis in the Shares sold pursuant
to the Offer or converted to cash in the Merger and the amount of cash received
therefor. 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 to cash in the Merger. If the Shares exchanged
constitute capital assets in the hands of the shareholder, gain or loss will be
capital gain or loss. In general, capital gains recognized by an individual will
be subject to a maximum United States federal income tax rate of 20% if the
Shares were held for more than one year on the date of sale (or, if applicable,
the date of the Merger), and if held for one year or less they will be subject
to tax at ordinary income tax rates. Certain limitations may apply on the use of
capital losses.
-54-
Payments in connection with the Offer or the Merger may be
subject to "backup withholding" at a 30% rate. Backup withholding generally
applies if a holder (a) fails to furnish its social security number or other
TIN, (b) furnishes an incorrect TIN, (c) fails properly to include a reportable
interest or dividend payment on its United States federal income tax return or
(d) under certain circumstances, fails to provide a certified statement, signed
under penalties of perjury, that the TIN provided is its correct number and that
it is not subject to backup withholding. Backup withholding is not an additional
tax but merely an advance payment, which may be refunded to the extent it
results in an overpayment of tax. Certain persons generally are entitled to
exemption from backup withholding, including corporations, financial
institutions and certain foreign shareholders if such foreign shareholders
submit a statement, signed under penalties of perjury, attesting to their exempt
status. Certain penalties apply for failure to furnish correct information and
for failure to include reportable payments in income. Each shareholder should
consult such shareholder's own tax advisor as to its qualification for exemption
from backup withholding and the procedure for obtaining such exemption.
All shareholders who are United States persons surrendering
Shares pursuant to the Offer should complete and sign the main signature form
and the Substitute Form W-9 included as part of the Letter of Transmittal 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). Non-corporate foreign shareholders should
complete and sign the main signature form and a statement, signed under
penalties of perjury, attesting to that shareholder's exempt status (such forms
can be obtained from the Depositary), in order to avoid backup withholding.
THE INCOME TAX DISCUSSION SET FORTH ABOVE IS INCLUDED FOR
GENERAL INFORMATION ONLY AND MAY NOT BE APPLICABLE TO SHAREHOLDERS IN SPECIAL
SITUATIONS SUCH AS SHAREHOLDERS WHO RECEIVED THEIR SHARES UPON THE EXERCISE OF
EMPLOYEE STOCK OPTIONS OR OTHERWISE AS COMPENSATION AND SHAREHOLDERS WHO ARE NOT
UNITED STATES PERSONS. SHAREHOLDERS SHOULD CONSULT THEIR OWN TAX ADVISORS WITH
RESPECT TO THE SPECIFIC TAX CONSEQUENCES TO THEM OF THE OFFER AND THE MERGER,
INCLUDING THE APPLICATION AND EFFECT OF FEDERAL, STATE, LOCAL, FOREIGN OR OTHER
TAX LAWS.
6. PRICE RANGE OF SHARES; DIVIDENDS; OWNERSHIP OF AND TRANSACTIONS IN SHARES
Price Range of Shares. The Shares are currently listed and
traded on The Nasdaq Small Cap Market under the symbol "JUDG." During the three
most recent fiscal years that Judge Group's common stock were publicly traded,
they were traded on The Nasdaq National Market System until November 21, 2002,
when they began trading on The Nasdaq Small Cap Market. The following table sets
forth, for the calendar quarters indicated, the high and low sales prices for
the Shares based upon public sources:
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CALENDAR QUARTER HIGH AND LOW SALES PRICES
Quarter High Low
------- ---- ---
2000 - First Quarter $3.25 $1.44
2000 - Second Quarter $2.25 $1.00
2000 - Third Quarter $1.88 $1.22
2000 - Fourth Quarter $1.56 $0.81
2001 - First Quarter $1.50 $1.00
2001 - Second Quarter $1.65 $1.05
2001 - Third Quarter $1.75 $0.64
2001 - Fourth Quarter $0.84 $0.47
2002 - First Quarter $0.74 $0.59
2002 - Second Quarter $1.15 $0.54
2002 - Third Quarter $1.05 $0.56
2002 - Fourth Quarter $0.99 $0.58
2003 - First Quarter* $0.93 $0.60
2003 - Second Quarter
through May 16, 2003** $0.92 $0.74
*On March 21, 2003, the last full trading day before the
public announcement of Purchaser's proposal to acquire the Shares, the reported
closing price was $0.70 per share on The Nasdaq Small Cap Market.
**On April 10, 2003, the last full trading day before the
announcement of the proposed offer at a price of $0.95 per share, the reported
closing price of the Shares was $0.78 per share on The Nasdaq Small Cap Market.
On May 16, 2003, the last full trading day before commencement
of the Offer, the reported closing price was $0.90 per share on The Nasdaq Small
Cap Market.
Dividends. To date, Judge Group has never declared or paid
cash dividends on the Shares. Judge Group is subject to certain debt covenants
that prohibit it from paying dividends.
TRANSACTIONS IN SHARES
In the past two years, neither Purchaser nor any of the
Continuing Shareholders has acquired any shares of Judge Group.
7. CERTAIN INFORMATION CONCERNING JUDGE GROUP
The information concerning Judge Group contained in this Offer
to Purchase has been taken from or based upon publicly available documents and
records on file with the SEC and other public sources and is qualified in its
entirety by reference thereto. Although Continuing Shareholders and Purchaser
have no knowledge that would indicate that any statements contained herein based
on such documents and records are untrue, Continuing Shareholders and Purchaser
do not take responsibility for the accuracy or completeness of the information
contained in such documents and records, or for any failure by Judge Group to
disclose events which may have occurred or may affect the significance or
accuracy of any such information but which are unknown to Continuing
Shareholders or Purchaser.
Shareholders are urged to review publicly available
information concerning Judge Group before acting on the Offer.
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General. Judge Group is a Pennsylvania corporation with its
principal corporate offices located at ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇ ▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ (telephone number (▇▇▇) ▇▇▇-▇▇▇▇). Judge Group has described
its business as follows:
Judge Group, through its operating subsidiaries, ties talent
to technology by integrating more than 32 years of Information Technology ("IT")
staffing services experiences with cutting-edge technology to deliver efficient
client services. With locations in twelve cities nationally, Judge Group offers
total Internet and IT staffing solutions through its web-based staffing, IT
skills training and food and pharmaceutical placement divisions. It is the
mission of Judge Group to service the needs of its clients, its contractors and
applicants, with the urgency required by the customer through professionalism,
ethics and state of the art technology.
Intent To Tender; Recommendation; Judge Group Opinion. As of
the date hereof, (i) Purchaser and Continuing Shareholders have been advised
that all executive officers and directors of Judge Group (other than Continuing
Shareholders) intend to tender Shares in the Offer and (ii) the Special
Committee has recommended that shareholders tender their shares in the Offer.
Judge Group has prepared a Solicitation/Recommendation Statement containing
additional information regarding the determination and recommendation of Judge
Group's board of directors, including a discussion of the Fairness Opinion of
▇▇▇▇ ▇▇▇▇▇, delivered to the Special Committee that, as of May 16, 2003, and
based on and subject to the assumptions, limitations and qualifications set
forth in such Fairness Opinion, the $1.05 price per share to be received in the
Offer and the Merger, considered as a single transaction, was fair from a
financial point of view, to the Judge Group shareholders being asked to tender
their Shares. The Solicitation/Recommendation Statement is being sent to
shareholders concurrently with this document. A discussion of the recommendation
is also included in this Offer. See "SPECIAL FACTORS -- Background of the Offer"
and "SPECIAL FACTORS -- Recommendation of the Board of Directors; Fairness of
the Offer and the Merger" for more detailed information.
Available Information. Judge Group is subject to the
information and reporting requirements of the Exchange Act and in accordance
therewith is obligated to file reports and other information with the SEC
relating to its business, financial condition and other matters. Information, as
of particular dates, concerning Judge Group's directors and officers, their
remuneration, stock options granted to them, the principal holders of Judge
Group's securities, any material interests of such persons in transactions with
Judge Group and other matters is required to be disclosed in proxy statements
distributed to Judge Group's shareholders and filed with the SEC. Such reports,
proxy statements and other information should be available for inspection at the
public reference room at the SEC's offices at ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇.▇.,
▇▇▇▇▇▇▇▇▇▇, ▇.▇. ▇▇▇▇▇. Copies may be obtained, by mail, upon payment of the
SEC's customary charges, by writing to its principal office at ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇,
▇.▇., ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇, ▇.▇. ▇▇▇▇▇ and can be obtained electronically
on the SEC's website at ▇▇▇▇://▇▇▇.▇▇▇.▇▇▇.
-57-
SELECTED CONSOLIDATED FINANCIAL INFORMATION
The following table sets forth summary historical consolidated
financial data for Judge Group as of and for each of the years ended December
31, 2002 and 2001.
This data and the comparative per share data set forth below
are extracted from, and should be read in conjunction with, the audited
consolidated financial statements and other financial information contained in
Judge Group's Annual Report on Form 10-K for the years ended December 31, 2002
and December 31, 2001, including the notes thereto. More comprehensive financial
information is included in such reports (including management's discussion and
analysis of financial condition and results of operation) and other documents
filed by Judge Group with the SEC, and the following summary is qualified in its
entirety by reference to such reports and other documents and all of the
financial information and notes contained therein. Copies of such reports and
other documents may be examined at or obtained from the SEC in the manner set
forth above. These documents are incorporated by reference in this Offer to
Purchase. See Section 7, "The Offer--Certain Information Concerning Judge Group,
Available Information" on page 57. Book value per share is not a term defined by
generally accepted accounting principles.
----------------------------------------------------------------------------------------------------------------------
Three Months Ended Year Ended
----------------------------------------------------------------------------------------------------------------------
March 31, 2003 March 31, 2002 December 31, 2002 December 31, 2001
----------------------------------------------------------------------------------------------------------------------
STATEMENTS OF INCOME DATA:
----------------------------------------------------------------------------------------------------------------------
Operating revenue $20,712,421 $20,221,400 $80,279,253 $103,066,972
----------------------------------------------------------------------------------------------------------------------
Total operating costs and expenses 20,530,073 20,241,415 79,776,209 104,051,720
----------------------------------------------------------------------------------------------------------------------
Income (loss) from operations 182,348 (20,015) 503,444 (984,748)
----------------------------------------------------------------------------------------------------------------------
Net income (loss) 107,117 (42,369) 154,642 (1,250,852)
----------------------------------------------------------------------------------------------------------------------
Income (loss) per share - basic 0.01 0.00 0.01 (0.09)
----------------------------------------------------------------------------------------------------------------------
Income (loss) per share - diluted 0.01 0.00 0.01 (0.09)
----------------------------------------------------------------------------------------------------------------------
Cash dividends declared per common share -- -- -- --
----------------------------------------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------------------------------------
BALANCE SHEET DATA (AT END OF PERIOD):
----------------------------------------------------------------------------------------------------------------------
Total current assets $16,490,344 $15,328,177 $14,414,439 $15,996,442
----------------------------------------------------------------------------------------------------------------------
Total noncurrent assets 8,379,499 8,936,250 8,402,019 8,904,584
----------------------------------------------------------------------------------------------------------------------
Net Property and Equipment 1,968,817 2,993,718 2,063,544 3,161,441
----------------------------------------------------------------------------------------------------------------------
Total assets 26,838,660 27,198,145 24,880,002 28,062,467
----------------------------------------------------------------------------------------------------------------------
Total current liabilities 5,667,606 5,972,021 6,345,470 4,823,541
----------------------------------------------------------------------------------------------------------------------
Total noncurrent liabilities 3,028,221 2,562,192 498,816 5,375,556
----------------------------------------------------------------------------------------------------------------------
Shareholders' equity 18,142,833 17,820,989 18,035,716 17,863,370
----------------------------------------------------------------------------------------------------------------------
Judge Group historically has not reported a ratio of earnings
to fixed charges.
-58-
8. CERTAIN INFORMATION CONCERNING CONTINUING SHAREHOLDERS AND PURCHASER
General. Purchaser is a Pennsylvania corporation that
currently does not own any Shares or conduct any business. Purchaser is
currently owned by Mr. ▇▇▇▇▇ and ▇▇. ▇▇▇▇. Immediately preceding the closing of
the Offer, pursuant to the terms of the Exchange Agreement, all of the
Continuing Shareholders will exchange their Shares of Judge Group for shares of
Judge Group Acquisition Corporation (the "Exchange"), after which Purchaser will
be owned by the Continuing Shareholders in the same proportion as their current
ownership in Judge Group. The principal executive offices of Purchaser are
located at ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ (telephone
number (▇▇▇) ▇▇▇-▇▇▇▇). Mr. ▇▇▇▇▇ and ▇▇. ▇▇▇▇ are the sole directors and
executive officers of Purchaser. For more information on Continuing
Shareholders, see Schedule B.
Mr. ▇▇▇▇▇, a United States citizen, is the Founder of Judge
Group and has been Chief Executive Officer and Chairman of the board since 1970.
Mr. ▇▇▇▇▇ is also Chief Executive Officer of each of Judge Group's subsidiaries.
▇▇. ▇▇▇▇, a United States citizen, is President and a Director
of Judge Group and is on each of Judge Group's subsidiaries' boards of
directors. ▇▇. ▇▇▇▇ joined Judge Group in 1973 and served as President of Judge
Group's Permanent Placement business from 1990 to 1998.
During the last five years, neither Purchaser nor Mr. ▇▇▇▇▇ or
▇▇. ▇▇▇▇ have been convicted in a criminal proceeding (excluding traffic
violations or similar misdemeanors), nor have any of them been a party to any
judicial or administrative proceeding that resulted in a judgment, decree or
final order enjoining future violations of, or prohibiting activities subject
to, federal or state securities laws, or a finding of any violation with respect
to such laws.
Except as set forth in this Offer to Purchase, none of (1)
Purchaser, (2) Mr. ▇▇▇▇▇ or ▇▇. ▇▇▇▇ or (3) any associate or majority-owned
subsidiary of Purchaser beneficially owns any equity security of Judge Group.
See Schedule B.
Except as set forth in this Offer to Purchase, neither
Purchaser nor Mr. ▇▇▇▇▇ or ▇▇. ▇▇▇▇ has any agreement, arrangement,
understanding or relationship with any other person with respect to any
securities of Judge Group, including, without limitation, any agreement,
arrangement, understanding or relationship concerning the transfer or the voting
of any securities of Judge Group, joint ventures, loan or option arrangements,
puts or calls, guaranties of loans, guaranties against loss or the giving or
withholding of proxies, consents or authorizations.
Except as set forth in this Offer to Purchase, neither
Purchaser nor Mr. ▇▇▇▇▇ or ▇▇. ▇▇▇▇ has any security of Judge Group that is
pledged or otherwise subject to a contingency that would give another person the
power to direct the voting or disposition of such security.
Except as set forth in this Offer to Purchase, there have been
no transactions during the past two years between Purchaser, Mr. ▇▇▇▇▇ or ▇▇.
▇▇▇▇ and Judge Group or any of Judge Group's affiliates that are not natural
persons where the aggregate value of the transactions was more than 1% of Judge
Group's consolidated revenues for the year ended 2000 for transactions in 2000,
for the year ended 2001 for transactions in 2001 and for the year ended 2002 for
transactions in 2002.
-59-
Except as set forth in this Offer to Purchase, there have been
no transactions during the past two years between Purchaser and Judge Group or
any executive officer, director or affiliate of Judge Group that is a natural
person where the aggregate value of the transaction or series of similar
transactions with that person exceeded $60,000.
Purchaser, Mr. ▇▇▇▇▇ and ▇▇. ▇▇▇▇ have made no arrangements in
connection with the Offer to provide holders of Shares access to Purchaser's
corporate files or to obtain counsel or appraisal services at their expense. For
discussion of dissenters' rights, see Section 9, "The Offer--Merger; Dissenters'
Rights; Rule 13e-3."
Except as set forth in this Offer to Purchase, there have been
no negotiations, transactions or material contacts during the past two years
between Purchaser or Mr. ▇▇▇▇▇ or ▇▇. ▇▇▇▇, on the one hand, and Judge Group or
its affiliates, on the other hand, concerning a merger, consolidation or
acquisition, a tender offer or other acquisition of any class of Judge Group's
securities, an election of Judge Group's directors, or a sale or other transfer
of a material amount of assets of Judge Group, nor, to the best knowledge Mr.
▇▇▇▇▇, ▇▇. ▇▇▇▇ and ▇▇▇▇▇▇▇▇▇, have there been any negotiations or material
contacts between (i) any affiliates of Judge Group or (ii) Judge Group or any of
its affiliates and any person not affiliated with Judge Group who would have a
direct interest in such matters. Except as set forth in this Offer to Purchase,
neither Mr. ▇▇▇▇▇, ▇▇. ▇▇▇▇ nor Purchaser has since the date hereof had any
transaction with Judge Group or any of its executive officers, directors or
affiliates that would require disclosure under the rules and regulations of the
SEC applicable to the Offer.
Intent To Tender. Except as set forth in this Offer to
Purchase, as of the date hereof, Continuing Shareholders do not intend to tender
their Shares in the Offer. Purchaser has been advised that all executive
officers and directors or affiliates of Judge Group (other than Continuing
Shareholders) intend to tender Shares in the Offer.
9. MERGER; DISSENTERS' RIGHTS; RULE 13e-3
Merger. If, pursuant to the Offer, Purchaser acquires Shares
which, together with shares beneficially owned by Purchaser and its affiliates,
constitute at least 80% of the outstanding shares of Judge Group common stock,
Continuing Shareholders currently intend to transfer (and cause any such
affiliates to transfer) the shares owned by Continuing Shareholders and any such
affiliates to Purchaser to permit Purchaser to consummate a "short-form" merger
pursuant to Sections 1924(b)(3) and 2539 of the PBCL. Section 1924(b)(3) of the
PBCL provides that if Purchaser owns at least 80% of the outstanding shares of
Judge Group, Purchaser may merge with and into Judge Group. Under Section
1924(b)(3) of the PBCL, such a merger of Judge Group with and into Purchaser
would not require the approval or any other action on the part of the board of
directors, the Special Committee or the shareholders of Judge Group. However,
Section 2539 of the PBCL provides that, in addition to the provisions for a
short-form merger under Section 1924(b)(3), a plan of merger must be approved by
the board of directors of a registered corporation and be consistent with the
requirements, if applicable, of Subchapter F (Sections 2551-2556) of the PBCL
(relating to business combinations). Judge Group is a registered corporation
under the PBCL. The Continuing Shareholders and Purchaser believe Subchapter F
of the PBCL is not applicable. In order to accomplish the Merger, (i) the board
of directors of Purchaser must adopt a plan of merger, (ii) Purchaser must
deliver articles of merger to the Secretary of State of the Commonwealth of
Pennsylvania; and (iii) the plan of merger must be approved by the board of
directors of Judge Group. Purchaser intends to effect the Merger without a
meeting of the shareholders of Judge Group. The Merger will occur immediately
after completion of the Offer.
-60-
THIS OFFER DOES NOT CONSTITUTE A SOLICITATION OF PROXIES OR
CONSENTS. ANY SUCH SOLICITATION WHICH PURCHASER MIGHT MAKE WILL BE MADE PURSUANT
TO SEPARATE PROXY OR CONSENT SOLICITATION MATERIALS COMPLYING WITH THE
REQUIREMENTS OF SECTION 14(A) OF THE EXCHANGE ACT.
Dissenters' Rights. Shareholders do not have the right to
dissent in connection with the Offer. However, if the Merger is consummated, any
shareholder who (i) did not vote his, her or its Shares in favor of the Merger,
and (ii) has properly demanded from Judge Group, as the surviving corporation of
the Merger, payment for his, her or its Shares and has deposited such Shares
with Judge Group in accordance with Section 1575 of the PBCL shall be entitled
to receive, in lieu of the Merger consideration, the amount estimated by Judge
Group to be the fair value of such Shares, plus accrued interest.
If the dissenting shareholder is dissatisfied with Judge
Group's determination of fair value, such shareholder must notify Judge Group in
writing within 30 days after the mailing of the payment or offer of payment of
his, her or its own estimate of the fair value of the Shares, together with
interest, and demand payment of such amount. In the event such a demand for
payment remains unsettled, Judge Group may within 60 days after the latest of
(i) the effectuation of the merger; (ii) timely receipt of any demands for
payment; or (iii) timely receipt of any estimate of fair value, commence a
proceeding in the Commonwealth of Pennsylvania, Court of Common Pleas for
▇▇▇▇▇▇▇▇▇▇ County, to determine the fair value of the Shares, plus accrued
interest, or pay such dissenting shareholder the amount he, she or it demanded.
The value so determined could be more or less than the consideration to be paid
in the Offer and the Merger.
Since shareholders do not have the right to dissent in
connection with the Offer, no demand for payment should be made at this time.
Following the effective date of the Merger, Judge Group will notify the record
shareholders as of the effective date of the Merger of the consummation of the
Merger and of the availability of and procedure for asserting their dissenter's
rights.
The foregoing discussion is not a complete statement of law
pertaining to dissenters' rights under the PBCL and is qualified in its entirety
by the full text of Chapter 15, Subchapter D of the PBCL which is attached as
Schedule A to this Offer to Purchase.
FAILURE TO FOLLOW THE STEPS REQUIRED BY CHAPTER 15, SUBCHAPTER
D OF THE PBCL FOR PERFECTING DISSENTERS' RIGHTS MAY RESULT IN THE LOSS OF SUCH
RIGHTS.
-61-
Rule 13e-3. Because Purchaser and Continuing Shareholders are
affiliates of Judge Group, the transactions contemplated herein constitute a
"going private" transaction under Rule 13e-3 under the Securities Exchange Act
of 1934. Rule 13e-3 requires, among other things, that certain financial
information concerning Judge Group and certain information relating to the
fairness of the Offer and the Merger and the consideration offered to minority
shareholders be filed with the SEC and disclosed to minority shareholders prior
to consummation of the Merger. Purchaser and Continuing Shareholders have
provided such information in this Offer to Purchase.
10. SOURCE AND AMOUNT OF FUNDS
Purchaser has obtained a financing commitment from PNC Bank, National
Association ("Lender") to provide Purchaser with up to $6.25 million in debt
financing in connection with the Offer (the "Acquisition Loan") to provide the
funds for the Offer and the Merger and the expenses of the Offer and the Merger.
Additionally, ▇▇▇▇▇▇ has agreed that its existing $12 million revolving line of
credit with Judge Group (the "Credit Agreement") will remain in effect upon
closing of the Merger, provided that amounts borrowed under the Acquisition Loan
shall reduce the amount available under the Credit Agreement. Proceeds of the
Acquisition Loan and funds available under the Credit Agreement will be used to
fund payment for any remaining Shares cashed out as a result of the Merger and
for expenses. There is a possibility that Purchaser will not obtain such funds
due to various conditions in the commitment letter not being met. The amount of
funds required to purchase the maximum amount of outstanding Shares that are
being sought in the Offer is approximately $5,289,435 and the estimated expenses
of the Offer and the Merger are approximately $850,000.
Purchaser currently has no other financing arrangements or alternative
financing plans in place in the event that funding pursuant to the commitment
letter from Lender (the "Commitment Letter") is unavailable.
The Acquisition Loan. ▇▇▇▇▇▇ has agreed to make a loan to Purchaser of
up to $6.25 million, to be secured by the assets of Judge Group, and upon such
other terms and conditions described in the Commitment Letter. The funds
advanced in the Acquisition Loan will be based on the number of Shares tendered
in the Offer and acquired in the Merger at a price of $1.05 per Share and the
expenses of the Offer and the Merger. The purpose of the Acquisition Loan is to
provide the funds for Purchaser to acquire Judge Group and pay related expenses.
Lender may terminate its obligations under the commitment letter if:
o the terms of the Exchange, Offer or Merger are changed in any
material respect;
o if any material information submitted to Lender proves to have been
inaccurate or incomplete in any material respect;
o if any material adverse change occurs; or
o any additional information is disclosed to or discovered by ▇▇▇▇▇▇,
whether prior to Purchaser's acceptance of the financing commitment
or during the period of such acceptance until the execution of
definitive documentation, which Lender deems materially adverse in
respect of the condition (financial or otherwise), business,
operations, assets, nature of assets, liabilities or prospects of
Purchaser or to the proposed transactions.
-62-
The Acquisition Loan is conditioned upon
o No material adverse change in the condition, financial or otherwise,
operations, properties, assets or prospects of the Purchaser;
o No material threatened or pending litigation against or regulatory
challenge to any of the Exchange, Offer, Merger or Purchaser;
o Satisfactory documentation and satisfactory legal review of all
documentation; satisfactory legal opinions from the Purchaser's
counsel regarding the contemplated transactions and the Loan;
o Any advance of the Loan to the Purchaser shall be subject to all of
the same conditions which exist under the Credit Agreement as
described below, including sufficient availability under the
borrowing base as if the Loan were an Advance under (and as such
term is defined in) the Credit Agreement, and satisfaction of the
Stock Repurchase Conditions before and after giving effect to the
Loan;
o The Exchange shall have been consummated;
o The Majority of the Minority Condition and the Minimum Tender
Condition shall have been satisfied and the Offer completed; and
o The Merger shall have occurred promptly following and on the same
day as the completion of the Offer.
Following a successful consummation of the Offer and the Merger,
Purchaser shall join in the Credit Agreement as a borrower thereunder. The
amount borrowed under the Acquisition Loan shall be included and become part of
the obligations under the Credit Agreement and shall reduce the amount of funds
available under the Credit Agreement. Borrowings under the Acquisition Loan
shall be secured by all of the collateral under the Credit Agreement.
The interest rate applicable to amounts borrowed under the Acquisition
Loan will be the same as the interest rate applicable under the Credit
Agreement. The Acquisition Loan will mature as set forth in the Credit
Agreement.
Purchaser shall pay all expenses including reasonable legal,
accounting, search and filing and any other expenses incurred in structuring,
documenting, closing, monitoring or the enforcement of agreements, whether or
not the Loan closes. In addition, ▇▇▇▇▇▇▇▇▇ has agreed to indemnify ▇▇▇▇▇▇ and
each director, officer, employee and affiliate thereof from and against any or
all losses, claims, damages, expenses and liabilities relating to the
Acquisition Loan.
This summary of the Acquisition Loan does not purport to be complete
and is qualified in its entirety by reference to the Commitment Letter, which is
filed as an exhibit to Schedule TO and which is incorporated herein by
reference, and any further documents or instruments that Purchaser may enter
into in connection with the Acquisition Loan.
The Credit Agreement. The Credit Agreement is a $12.0 million revolving
advance facility between Judge Group and Lender. The Credit Agreement was
amended during April 2003 to establish the $12.0 million maximum amount
available. This facility allows Judge Group to borrow the lesser of 85% of
eligible accounts receivable or $12.0 million. As of March 31, 2003, Judge Group
had approximately $2.7 million outstanding against the Credit Agreement. The
Credit Agreement expires on April 30, 2006.
-63-
The Credit Agreement is secured by substantially all of Judge Group's
assets and contains customary restrictive covenants. The covenants include
limitations on loans Judge Group may extend to officers and employees, the
incurrence of additional debt and a prohibition of the payment of dividends on
Judge Group common shares. The Credit Agreement bears interest, at Judge Group's
option, at either the Lender's prime rate, which was 4.25% at March 31, 2003, or
a margin, ranging from 175 basis points to 225 basis points, over the London
Inter-Bank Offering Rate, determined by Judge Group achieving certain liquidity
ratios.
The Credit Agreement allows for a repurchase of Judge Group stock only
if the following conditions are satisfied:
o availability remains at least $2 million;
o Judge Group and its subsidiaries on a consolidated basis have a
positive net income (excluding extraordinary gain) for the portion
of the completed fiscal year ending at the fiscal quarter
immediately preceding the proposed repurchase;
o any subordinated indebtedness to be incurred in connection with the
purchase is approved by the Lender;
o Lender shall have received pro forma financial statements giving
effect to the repurchase which are reasonably satisfactory to Lender
in form and substance;
o Judge Group is in compliance with the financial covenants related to
leverage ratio and cash flow coverage after giving effect to the
purchase; and
o No events of default exist.
11. CERTAIN CONDITIONS OF THE OFFER
Notwithstanding any other provision of the Offer, Purchaser shall not
be required to accept for payment or pay for any Shares, may postpone the
acceptance for payment of or pay for tendered Shares, and may, in its sole
discretion, terminate or amend the Offer as to any Shares not then paid for if
(i) at the expiration of the Offering Period, the Majority of the Minority
Condition has not been satisfied; (ii) at the expiration of the Offering Period,
the Minimum Tender Condition has not been satisfied; (iii) unless waived by
Purchaser, the Special Committee of independent members of Judge Group's board
of directors has withdrawn or amended its recommendation that Judge Group's
shareholders accept the Offer and tender their Shares pursuant to the Offer; or
(iv) at or prior to the time of the expiration of the Offer, any of the
following events shall occur:
-64-
a. Any preliminary or permanent judgment, order, decree, ruling,
injunction, action, proceeding or application shall be pending or threatened
before any court, government or governmental authority or other regulatory or
administrative agency or commission, domestic or foreign, which would or might
restrain, prohibit or delay consummation of, or materially alter or otherwise
materially affect, the Offer or the Merger or materially impair the contemplated
benefits of the Offer or the Merger; or that would reasonably be expected to,
directly or indirectly:
(i) Make illegal or otherwise prohibit consummation of the
Offer;
(ii) Prohibit or materially limit the ownership or operation by
Purchaser of all or any material portion of the business or
assets of Judge Group;
(iii) Impose material limitations on the ability of Purchaser to
effect the Merger or to effectively acquire, hold or
exercise full rights of ownership of shares, including the
right to vote any Shares acquired by Purchaser pursuant to
the Offer on all matters properly presented to Judge Group's
shareholders;
(iv) Required divestiture by Continuing Shareholders or Purchaser
of any Shares; or
b. Any statute, including without limitation any state anti-takeover
statute, rule, regulation or order or injunction shall be sought, proposed,
enacted, promulgated, entered, enforced or deemed or become applicable or
asserted to be applicable to the Offer or the Merger, which would or might
restrain, prohibit or delay consummation of, or materially alter or otherwise
materially affect, the Offer or the Merger or materially impair the contemplated
benefits of the Offer or the Merger; or that would reasonably by expected to
result in any of the consequences referred to in paragraph (a) above; or
c. Any change (or any condition, event or development involving a
prospective change) shall have occurred or be threatened that has or might have
a materially adverse effect on the business, properties, assets, liabilities,
capitalization, shareholders' equity, financial condition, operations, results
of operations or prospects of Judge Group or any of its subsidiaries; or
d. There shall have occurred (i) any general suspension of, or
limitation on times or prices for, trading in securities on any national
securities exchange or in the over-the-counter market, (ii) a declaration of a
banking moratorium or any suspension of payments in respect of banks in the
United States, (iii) the outbreak or escalation of a war (whether or not
declared), acts of terrorism, armed hostilities or other international or
national calamity directly or indirectly involving the United States, (iv) any
limitation (whether or not mandatory) by any governmental authority on, or any
other event which might affect the extension of credit by banks or other lending
institutions, (v) a suspension of or limitation (whether or not mandatory) on
the currency exchange markets or the imposition of, or material changes in, any
currency or exchange control laws in the United States or (vi) in the case of
any of the foregoing existing at the time of the commencement of the Offer, a
material acceleration or worsening thereof; or
-65-
e. Any tender or exchange offer with respect to some or all of the
outstanding Shares of common stock of Judge Group (other than the Offer), or a
merger, acquisition or other business combination proposal for Judge Group
(other than the Offer and the Merger), shall have been proposed, announced or
made by any person, entity or group; or
f. There shall have occurred or be in existence any other event,
circumstance or condition, which, in the reasonable judgment of Purchaser, would
prevent Purchaser from effecting the Merger following the completion of the
Offer; or
g. Any event which in the reasonable judgment of Purchaser with respect
to each and every matter referred to above makes it inadvisable to proceed with
the Offer or with the Merger.
The foregoing conditions are for the sole benefit of Purchaser and
Continuing Shareholders and may be asserted by Purchaser regardless of the
circumstances (including any action or inaction by Purchaser or Continuing
Shareholders) giving rise to any such conditions or may be waived by Purchaser
in its reasonable discretion, in whole or in part at any time and from time to
time prior to the expiration of the Offer. Any reasonable determination by
Purchaser with respect to any of the foregoing conditions (including without
limitation, the satisfaction of such conditions) shall be final and binding on
all parties. The failure by Purchaser at any time to exercise any of the
foregoing rights shall not be deemed a waiver of any such right and each such
right shall be deemed an ongoing right which may be asserted at any time and
from time to time. NOTWITHSTANDING THE FOREGOING, PURCHASER SHALL NOT PURCHASE
SHARES IN THE OFFER UNLESS (I) THE MAJORITY OF THE MINORITY CONDITION IS
SATISFIED; (II) THE MINIMUM TENDER CONDITION IS SATISFIED AND (III) THE SPECIAL
COMMITTEE HAS NOT MODIFIED OR WITHDRAWN ITS RECOMMENDATION TO SHAREHOLDERS
TENDER THEIRS SHARES IN THE OFFER. IN NO EVENT SHALL PURCHASER WAIVE THE
MAJORITY OF THE MINORITY CONDITION OR THE MINIMUM TENDER CONDITION.
A public announcement shall be made of a material change in, or waiver
of, such conditions, and the Offer may, in certain circumstances, be extended in
connection with any such change or waiver. All Offer Conditions must be
satisfied or waived prior to the commencement of any Subsequent Offering Period.
-66-
12. DIVIDENDS AND DISTRIBUTIONS
If, on or after the date hereof, Judge Group should (i) split, combine
or otherwise change the Shares of Judge Group common stock or its
capitalization, (ii) acquire currently outstanding Shares or otherwise cause a
reduction in the number of outstanding Shares or (iii) issue or sell additional
Shares of Judge Group common stock, shares of any other class of capital stock,
other voting securities or any securities convertible into, or rights, warrants
or options, to acquire any of the foregoing, other than Shares of Judge Group
common stock issued pursuant to the exercise of stock options outstanding as of
the date hereof, then, subject to the provisions of Section 11, "The
Offer--Certain Conditions of the Offer," Purchaser, in its sole discretion, may
make such adjustments as it deems appropriate in the Offer Price and other terms
of the Offer, including, without limitation, the number or type of securities
offered to be purchased.
If, on or after the date hereof, Judge Group should declare or pay any
cash dividend on the Shares or other distribution on the Shares, or issue with
respect to the Shares any additional Shares, shares of any other class of
capital stock, other voting securities or any securities convertible into, or
rights, warrants or options, conditional or otherwise, to acquire, any of the
foregoing, payable or distributable to shareholders of record on a date prior to
the transfer of the Shares purchased pursuant to the Offer to Purchaser or its
nominee or transferee on Judge Group's stock transfer records, then, subject to
the provisions Section 11, "The Offer--Certain Conditions of the Offer," (i) the
Offer Price and other terms of the Offer may, in the sole discretion of
Purchaser, be reduced by the amount of any such cash dividend or cash
distribution and (ii) the whole of any such noncash dividend, distribution or
issuance to be received by the tendering shareholders will (a) be received and
held by the tendering shareholders for the account of Purchaser and will be
required to be promptly remitted and transferred by each tendering shareholder
to the Depositary for the account of Purchaser, accompanied by appropriate
documentation of transfer, or (b) at the direction of Purchaser, be exercised
for the benefit of Purchaser, in which case the proceeds of such exercise will
promptly be remitted to Purchaser. Pending such remittance and subject to
applicable law, Purchaser will be entitled to all rights and privileges as owner
of any such noncash dividend, distribution, issuance or proceeds and may
withhold the entire Offer Price or deduct from the Offer Price the amount or
value thereof, as determined by Purchaser in its sole discretion.
13. CERTAIN LEGAL MATTERS
General. Except as otherwise disclosed herein, based upon an
examination of publicly available filings with respect to Judge Group, Purchaser
and Continuing Shareholders are not aware of any licenses or other regulatory
permits which appear to be material to the business of Judge Group and which
might be adversely affected by the acquisition of Shares by Purchaser pursuant
to the Offer or of any approval or other action by any governmental,
administrative or regulatory agency or authority which would be required for the
acquisition or ownership of Shares by Purchaser pursuant to the Offer. Should
any such approval or other action be required, it is currently contemplated that
such approval or action would be sought or taken. However, Purchaser does not
intend to delay the purchase of Shares tendered pursuant to the Offer pending
the outcome of any action or the receipt of any such approval. There can be no
assurance that any such approval or action, if needed, would be obtained or, if
obtained, that it will be obtained without substantial conditions or that
adverse consequences might not result to Judge Group's or Purchaser's business
or that certain parts of Judge Group's or Purchaser's business might not have to
be disposed of in the event that such approvals were not obtained or such other
actions were not taken, any of which could cause Purchaser to elect to terminate
the Offer without the purchase of the Shares thereunder. Purchaser's obligation
under the Offer to accept for payment and pay for Shares is subject to certain
conditions. See Section 11, "The Offer--Certain Conditions of the Offer."
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Antitrust Compliance. Under the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Antitrust
Improvements Act of 1976, as amended (the "HSR Act"), certain acquisition
transactions may not be consummated unless certain information has been
furnished to the Antitrust Division of the Department of Justice and the Federal
Trade Commission and certain waiting period requirements have been satisfied. As
explained more fully below, however, the Offer is not a reportable transaction
under the HSR Act.
Under HSR Act reporting regulations, Purchaser is deemed in "control"
of Judge Group. In particular, these regulations provide that the term "control"
means holding 50 percent or more of the outstanding voting securities of an
issuer. Therefore, because Continuing Shareholders and their affiliates hold
approximately 62.58% of Judge Group's voting securities, Continuing Shareholders
believe no HSR Act filing is required in connection with the Offer and the
Merger.
Pennsylvania Business Corporation Law. In general, the PBCL contains an
anti-takeover provisions that prevent an "Interested Shareholder" (defined
generally as a person with 20% or more of a corporation's outstanding voting
stock) of a Pennsylvania corporation from engaging in a "Business Combination"
(defined as a variety of transactions, including mergers) with such corporation
for five years following the date such person became an Interested Shareholder
unless certain conditions, such as approval from the board of directors of the
corporation prior to the Business Combination, are met. The PBCL anti-takeover
provisions do not apply to certain business combinations, including those with
an interested shareholder who was the direct or indirect beneficial owner of 15%
of the voting shares of the corporation on March 23, 1988 and remains so to the
date when such shareholder became an interested shareholder. In addition, when
determining whether a shareholder is an interested shareholder, shares which
have been held continuously by a natural person since January 1, 1983 or those
held by a natural person or trust or other entity which acquired such shares
from a natural person who held such shares continuously since January 1, 1983,
are excluded from the beneficial ownership of the interested shareholder.
Continuing Shareholders and Purchaser believe that the PBCL's restrictions do
not apply to this Offer or the Merger.
The Pennsylvania Takeover Disclosure Law ("PTDL") purports to regulate
certain attempts to acquire a corporation which (1) is organized under the laws
of Pennsylvania or (2) has its principal place of business and substantial
assets located in Pennsylvania. In CRANE CO. ▇. ▇▇▇, the United States District
Court for the Eastern District of Pennsylvania preliminarily enjoined, on
grounds arising under the United States Constitution, enforcement of at least
the portion of the PTDL involving the pre-offer waiting period. In addition,
Section 8(a) of the PTDL provides an exemption for any offer to purchase
securities as to which the board of directors of the target company recommends
acceptance to its shareholders, if at the time such recommendation is first
communicated to shareholders the offeror files with the Pennsylvania Securities
Commission ("PSC") a copy of the Schedule TO and certain other information and
materials, including an undertaking to notify shareholders of the target company
that a notice has been filed with the PSC which contains substantial additional
information about the offering and which is available for inspection at the
PSC's principal office during business hours. The Judge Group has approved the
transactions contemplated by the Offer and the Merger and recommended acceptance
of the Offer and the Merger to the Judge Group's shareholders through the tender
of their shares. In addition, Judge Group has filed a notice with the PSC under
Section 8(a) of the PTDL which contains substantial additional information about
the Offer, including a copy of Purchaser's Schedule TO as filed with the
Commission. This notice is available for inspection during normal business hours
at the PSC's offices at ▇▇▇▇ ▇. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇
▇▇▇▇▇-▇▇▇▇.
Federal Reserve Board Regulations. Regulations T, U and X (the "Margin
Regulations") promulgated by the Federal Reserve Board place restrictions on the
amount of credit that may be extended for the purpose of purchasing margin stock
(including the Shares) if such credit is secured directly or indirectly by
margin stock.
State Takeover Laws. A number of states have adopted laws and
regulations applicable to offers to acquire securities of corporations which are
incorporated in such states and/or which have substantial assets, shareholders,
principal executive offices or principal places of business therein. In ▇▇▇▇▇ ▇.
MITE CORPORATION, the Supreme Court of the United States held in 1982 that the
Illinois Business Takeover Statute, which made the takeover of certain
corporations more difficult, imposed a substantial burden on interstate commerce
and was therefore unconstitutional. In 1987, however, in CTS CORPORATION v.
DYNAMICS CORPORATION OF AMERICA, the Supreme Court held that as a matter of
corporate law, and in particular, those laws concerning corporate governance, a
state may constitutionally disqualify an acquiror of "Control Shares" (ones
representing ownership in excess of certain voting power thresholds, e.g., 20%,
33% or 50%) of a corporation incorporated in its state and meeting certain other
jurisdictional requirements from exercising voting power with respect to those
shares without the approval of a majority of the disinterested shareholders.
Subsequently, in TLX ACQUISITION CORP. v. TELEX CORP., a federal district court
in Oklahoma ruled that the Oklahoma statutes were unconstitutional insofar as
they apply to corporations incorporated outside Oklahoma, because they would
subject those corporations to inconsistent regulations. Similarly, in TYSON
FOODS, INC. ▇. ▇▇▇▇▇▇▇▇▇▇, a federal district court in Pennsylvania ruled that
four Pennsylvania takeover statutes were unconstitutional as applied to
corporations incorporated outside Pennsylvania. This decision was affirmed by
the United State Court of Appeals for the Sixth Circuit. In December 1988, a
federal district court in Florida held, in GRAND METROPOLITAN PLC ▇.
▇▇▇▇▇▇▇▇▇▇▇, that the provisions of the Florida Affiliated Transactions Act and
Florida Control Share Acquisition Act were unconstitutional as applied to
corporations incorporated outside of Florida.
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Judge Group conducts business in a number of states throughout the
United States, some of which have enacted takeover laws. Neither Continuing
Shareholders nor Purchaser has determined whether any of these state takeover
laws and regulations will by their terms apply to the Offer or the Merger, and,
except as set forth above, neither Continuing Shareholders nor Purchaser has
recently attempted to comply with any state takeover statute or regulation.
Purchaser reserves the right to challenge the applicability or validity of any
state law purportedly applicable to the Offer or the Merger and nothing in this
Offer to Purchase or any action taken in connection with the Offer or the Merger
is intended as a waiver of such right. If it is asserted that any state takeover
statute is applicable to the Offer or the Merger and if an appropriate court
does not determine that it is inapplicable or invalid as applied to the Offer or
the Merger, Purchaser might be required to file certain information with, or to
receive approvals from, the relevant 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 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. See Section 11, "The Offer--Certain Conditions of the Offer."
Shareholder Litigation. On May 7, 2003, a lawsuit purporting to be a
class action was filed in the Court of Common Pleas of Philadelphia County,
Pennsylvania against Judge Group and certain of Judge Group's directors,
alleging breaches by the defendants of certain fiduciary duties in connection
with the proposal by the Continuing Shareholders to take Judge Group private.
Purchaser and Judge Group each believe that this lawsuit is without merit and
Judge Group intends to defend against it vigorously.
On May 14, 2003, a lawsuit purporting to be a class action was filed in
the Court of Common Pleas of ▇▇▇▇▇▇▇▇▇▇ County, Pennsylvania against Judge
Group, the directors of Judge Group, and a former director of Judge Group,
alleging breaches by the defendants of certain fiduciary duties in connection
with the proposal by the Continuing Shareholders to take Judge Group private.
Purchaser and Judge Group each believe that this lawsuit is without merit and
Judge Group intends to defend against it vigorously.
14. CERTAIN EFFECTS OF THE OFFER
Participation In Future Growth. If you tender your Shares in the Offer,
you will not have the opportunity to participate in the future earnings, profits
and growth of Judge Group and will not have the right to vote on corporate
matters relating to Judge Group. If the Offer and the Merger are completed,
Purchaser, who will own 100% of the Shares, will own a 100% interest in the net
book value and net earnings of Judge Group and will benefit from any future
increase in the value of Judge Group. Similarly, Purchaser will bear the risk of
any decrease in the value of Judge Group and you will not face the risk of a
decline in the value of Judge Group.
Stock Quotation. The Shares are quoted on The Nasdaq Small Cap Market.
According to published guidelines of the National Association of Securities
Dealers, the Shares might no longer be eligible for quotation on The Nasdaq
Small Cap Market if, among other things,
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o The number of shares publicly held is less than 500,000,
o There are fewer than 300 holders of round lots,
o The market value of publicly held shares is below $1,000,000,
o Shareholder's equity is less than $2,500,000, or
o There are fewer than two registered and active market makers for the
Shares.
Shares held directly or indirectly by directors, officers or beneficial
owners of more than 10% of the Shares are not considered as being publicly held
for this purpose. Based on information received from Judge Group, as of May 19,
2003, there were 13,462,382 Shares outstanding.
If the Shares were to cease to be quoted on The Nasdaq Small Cap
Market, the market for the Shares could be adversely affected. The extent of the
public market for the Shares and the availability of such quotations would,
however, depend upon the number of shareholders and/or the aggregate market
value of the Shares remaining at such time, the interest in maintaining a market
in the Shares on the part of securities firms, the possible termination of
registration of the Shares under the Securities Exchange Act of 1934 and other
factors.
Margin Regulations. The Shares are presently "margin securities" under
the regulations of the Board of Governors of the Federal Reserve Board (the
"Federal Reserve Board"), which has the effect, among other things, of allowing
brokers to extend credit on the collateral of the Shares. Depending upon factors
similar to those described above regarding listing and market quotations, the
Shares might no longer constitute "margin securities" for the purposes of the
Federal Reserve Board's margin regulations in which event the Shares would be
ineligible as collateral for margin loans made by brokers.
Exchange Act Registration. The Shares are currently registered under
the Securities Exchange Act of 1934. Such registration may be terminated by
Judge Group upon application to the SEC if the outstanding shares of Judge Group
common stock are not listed on a national securities exchange and if there are
fewer than 300 holders of record of shares of Judge Group common stock.
Termination of registration of the shares of Judge Group common stock under the
Securities Exchange Act of 1934 would reduce the information required to be
furnished by Judge Group to its shareholders and to the SEC and would make
certain provisions of the Securities Exchange Act of 1934, such as the
short-swing profit recovery provisions of Section 16(b) and the requirement to
furnish a proxy statement in connection with shareholders' meetings pursuant to
Section 14(a) and the related requirement to furnish an annual report to
shareholders, no longer applicable with respect to the shares of Judge Group
common stock. Furthermore, the ability of "affiliates" of Judge Group and
persons holding "restricted securities" of Judge Group to dispose of such
securities pursuant to Rule 144 under the Securities Act of 1933, as amended,
may be impaired or eliminated. If registration of the Shares under the
Securities Exchange Act of 1934 were terminated, the Shares would no longer be
eligible for Nasdaq reporting or for continued inclusion on the Federal Reserve
Board's list of "margin securities." Purchaser intends to seek to cause Judge
Group to apply for termination of registration of the Shares as soon as possible
after completion of the Offer and the Merger, if the requirements for
termination of registration are met.
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15. FEES AND EXPENSES
Except as set forth below, Purchaser will not pay any fees or
commissions to any broker, dealer or other person for soliciting tenders of
Shares pursuant to the Offer.
Purchaser has retained StockTrans, Inc. to act as the Information Agent
in connection with the Offer. The Information Agent may contact holders of
Shares by mail, telephone, telex, telegraph and personal interviews and may
request brokers, dealers and other nominee shareholders to forward materials
relating to the Offer to beneficial owners of Shares. The Information Agent will
receive reasonable and customary compensation for such services, plus
reimbursement of out-of-pocket expenses, and Purchaser will indemnify the
Information Agent against certain liabilities and expenses in connection with
the Offer, including liabilities under the federal securities laws.
Purchaser has retained StockTrans, Inc. to act as the Depositary in
connection with the Offer. Purchaser will pay the Depositary reasonable and
customary compensation for its services in connection with the Offer, plus
reimbursement for out-of-pocket expenses, and will indemnify the Depositary
against certain liabilities and expenses in connection therewith, including
liabilities under the federal securities laws. Brokers, dealers, commercial
banks and trust companies will be reimbursed by Purchaser for customary mailing
and handling expenses incurred by them in forwarding material to their
customers.
In addition, Judge Group will incur its own fees and expenses in
connection with the Offer.
The following is an estimate of the fees and expenses to be incurred by
Purchaser:
TYPE OF FEE AMOUNT
----------- ------
Filing Fees......................................................... $ 1,158
Financial Advisors' Fees and Expenses .............................. $270,000
Depositary and Information Agent Fees .............................. $ 35,000
Legal, Printing and Miscellaneous Fees and Expenses ................ $263,842
TOTAL $570,000
16. 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 making of the
Offer or the acceptance thereof would not be in compliance with the laws of such
jurisdiction. Purchaser may, however, in its sole discretion, take such action
as it may deem necessary to make the Offer in any such jurisdiction and extend
the Offer to holders of Shares in such jurisdiction.
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Neither Purchaser nor Continuing Shareholders is aware of any
jurisdiction in which the making of the Offer or the acceptance of Shares in
connection therewith would not be in compliance with the laws of such
jurisdiction.
Purchaser has filed with the SEC a Tender Offer Statement on Schedule
TO pursuant to Rule 14d-3 of the General Rules and Regulations under the
Securities Exchange Act of 1934, furnishing certain additional information with
respect to the Offer, and may file amendments thereto. Such Tender Offer
Statement includes within it the information required by the SEC's Statement on
Schedule 13e-3 relating to "going private" transactions. Such Tender Offer
Statement and any amendments thereto, including exhibits, may be examined and
copies may be obtained from the principal office of the SEC in Washington, D.C.
in the manner set forth in Section 7, "The Offer--Certain Information Concerning
Judge Group."
No person has been authorized to give any information or make any
representation on behalf of Purchaser or Continuing Shareholders not contained
in this Offer to Purchase or in the Letter of Transmittal and, if given or made,
such information or representation must not be relied upon as having been
authorized.
Dated: May 19, 2003
Judge Group Acquisition Corporation
▇▇▇▇▇▇ ▇. ▇▇▇▇▇, ▇▇.
▇▇▇▇▇▇▇ ▇. ▇▇▇▇
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SCHEDULE A
EXCERPTS FROM THE PENNSYLVANIA BUSINESS CORPORATION LAW RELATING TO THE RIGHTS
OF DISSENTING SHAREHOLDERS PURSUANT TO CHAPTER 15, SUBCHAPTER D
Pennsylvania dissenters rights provisions of the Pbcl
ss.1571 - APPLICATION AND EFFECT OF SUBCHAPTER
General Rule (a). Except as otherwise provided in subsection (b), any
shareholder (as defined in section 1572 (relating to definitions)) of a business
corporation shall have the right to dissent from, and to obtain payment of the
fair value of his shares in the event of, any corporate action, or to otherwise
obtain fair value for his shares, only where this part expressly provides that a
shareholder shall have the rights and remedies provided in this subchapter. See:
Section 1906(c) (relating to dissenters rights upon special treatment).
Section 1930 (relating to dissenters rights).
Section 1931(d) (relating to dissenters rights in share exchanges).
Section 1932(c) (relating to dissenters rights in asset transfers).
Section 1952(d) (relating to dissenters rights in division).
Section 1962(c) (relating to dissenters rights in conversion).
Section 2104(b) (relating to procedure).
Section 2324 (relating to corporation option where a restriction on transfer
of a security is held invalid).
Section 2325(b) (relating to minimum vote requirement).
Section 2704(c) (relating to dissenters rights upon election).
Section 2705(d) (relating to dissenters rights upon renewal of election).
Section 2904(b) (relating to procedure).
Section 2907(a) (relating to proceedings to terminate breach of qualifying
conditions).
Section 7104(b)(3) (relating to procedure).
(b) Exceptions
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1. Except as otherwise provided in paragraph (2), the holders of the shares of
any class or series of shares shall not have the right to dissent and obtain
payment of the fair value of the shares under this subchapter if, on the record
date fixed to determine the shareholders entitled to notice of and to vote at
the meeting at which a plan specified in any of section 1930, 1931(d), 1932(c)
or 1952(d) is to be voted on or on the date of the first public announcement
that such a plan has been approved by the shareholders by consent without a
meeting, the shares are either:
(i) listed on a national securities exchange or designated as a
national market system security on an interdealer quotation system by the
National Association of Securities Dealers, Inc.; or
(ii) held beneficially or of record by more than 2,000 persons.
2. Paragraph (1) shall not apply to and dissenters rights shall be available
without regard to the exception provided in that paragraph in the case of:
(i) (Repealed.)
(ii) Shares of any preferred or special class or series unless the
articles, the plan or the terms of the transaction entitle all shareholders of
the class or series to vote thereon and require for the adoption of the plan or
the effectuation of the transaction the affirmative vote of a majority of the
votes cast by all shareholders of the class or series.
(iii) Shares entitled to dissenters rights under section 1906(c)
(relating to dissenters rights upon special treatment).
3. The shareholders of a corporation that acquires by purchase, lease, exchange
or other disposition all or substantially all of the shares, property or assets
of another corporation by the issuance of shares, obligations or otherwise, with
or without assuming the liabilities of the other corporation and with or without
the intervention of another corporation or other person, shall not be entitled
to the rights and remedies of dissenting shareholders provided in this
subchapter regardless of the fact, if it be the case, that the acquisition was
accomplished by the issuance of voting shares of the corporation to be
outstanding immediately after the acquisition sufficient to elect a majority or
more of the directors of the corporation.
(c) Grant of Optional Dissenters Rights. The bylaws or a resolution of the board
of directors may direct that all or a part of the shareholders shall have
dissenters rights in connection with any corporate action or other transaction
that would otherwise not entitle such shareholders to dissenters rights.
(d) Notice of Dissenters Rights. Unless otherwise provided by statute, if a
proposed corporate action that would give rise to dissenters rights under this
subpart is submitted to a vote at a meeting of shareholders, there shall be
included in or enclosed with the notice of meeting:
(i) a statement of the proposed action and a statement that the
shareholders have a right to dissent and obtain payment of the fair value of
their shares by complying with the terms of this subchapter; and
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(2) a copy of this subchapter.
(c) Other Statutes. The procedures of this subchapter shall also be applicable
to any transaction described in any statute other than this part that makes
reference to this subchapter for the purpose of granting dissenters rights.
(f) Certain Provisions of Articles Ineffective. This subchapter may not be
relaxed by any provision of the articles.
(g) Computation of Beneficial Ownership. For purposes of subsection (b)(1)(ii),
shares that are held beneficially as joint tenants, tenants by the entireties,
tenants in common or in trust by two or more persons, as fiduciaries or
otherwise, shall be deemed to be held beneficially by one person.
(h) Cross References. See sections 1105 (relating to restriction on equitable
relief), 1904 (relating to de facto transaction doctrine abolished), 1763(c)
(relating to determination of shareholders of record) and 2512 (relating to
dissenters rights procedure).
ss.1572. DEFINITIONS
The following words and phrases when used in this subchapter shall have the
meanings given to them in this section unless the context clearly indicates
otherwise:
"Corporation." The issuer of the shares held or owned by the dissenter
before the corporate action or the successor by merger, consolidation, division,
conversion or otherwise of that issuer. A plan of division may designate which
one or more of the resulting corporations is the successor corporation for the
purposes of this subchapter. The designated successor corporation or
corporations in a division shall have sole responsibility for payments to
dissenters and other liabilities under this subchapter except as otherwise
provided in the plan of division.
"Dissenter." A shareholder who is entitled to and does assert
dissenters rights under this subchapter and who has performed every act required
up to the time involved for the assertion of those rights.
"Fair value." The fair value of shares immediately before the
effectuation of the corporate action to which the dissenter objects, taking into
account all relevant factors, but excluding any appreciation or depreciation in
anticipation of the corporate action.
"Interest." Interest from the effective date of the corporate action
until the date of payment at such rate as is fair and equitable under all the
circumstances, taking into account all relevant factors, including the average
rate currently paid by the corporation on its principal bank loans.
"Shareholder." A shareholder as defined in section 1103 (relating to
definitions) or an ultimate beneficial owner of shares, including, without
limitation, a holder of depository receipts, where the beneficial interest owned
includes an interest in the assets of the corporation upon dissolution.
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ss.1573. RECORD AND BENEFICIAL HOLDERS AND OWNERS
(a) Record holders of shares. A record holder of shares of a business
corporation may assert dissenters rights as to fewer than all of the shares
registered in his name only if he dissents with respect to all the shares of the
same class or series beneficially owned by any one person and discloses the name
and address of the person or persons on whose behalf he dissents. in that event,
his rights shall be determined as if the shares as to which he has dissented and
his other shares were registered in the names of different shareholders.
(b) Beneficial owners of shares. A beneficial owner of shares of a business
corporation who is not the record holder may assert dissenters rights with
respect to shares held on his behalf and shall be treated as a dissenting
shareholder under the terms of this subchapter if he submits to the corporation
not later than the time of the assertion of dissenters rights a written consent
of the record holder. a beneficial owner may not dissent with respect to some
but less than all shares of the same class or series owned by the owner, whether
or not the shares so owned by him are registered in his name.
ss.1574. NOTICE OF INTENTION TO DISSENT
If the proposed corporate action is submitted to a vote at a meeting of
shareholders of a business corporation, any person who wishes to dissent and
obtain payment of the fair value of his shares must file with the corporation,
prior to the vote, a written notice of intention to demand that he be paid the
fair value for his shares if the proposed action is effectuated, must effect no
change in the beneficial ownership of his shares from the date of such filing
continuously through the effective date of the proposed action and must refrain
from voting his shares in approval of such action. A dissenter who fails in any
respect shall not acquire any right to payment of the fair value of his shares
under this Subchapter. Neither a proxy nor a vote against the proposed corporate
action shall constitute the written notice required by this section.
ss.1575. NOTICE TO DEMAND PAYMENT
(a) General Rule. If the proposed corporate action is approved by the required
vote at a meeting of shareholders of a business corporation, the corporation
shall mail a further notice to all dissenters who gave due notice of intention
to demand payment of the fair value of their shares and who refrained from
voting in favor of the proposed action. if the proposed corporate action is to
be taken without a vote of shareholders, the corporation shall send to all
shareholders who are entitled to dissent and demand payment of the fair value of
their shares a notice of the adoption of the plan or other corporate action. in
either case, the notice shall:
(1) State where and when a demand for payment must be sent and
certificates for certificated shares must be deposited in order to obtain
payment.
(2) Inform holders of uncertificated shares to what extent transfer of
shares will be restricted from the time that demand for payment is received.
(3) Supply a form for demanding payment that includes a request for
certification of the date on which the shareholder, or the person on whose
behalf the shareholder dissents, acquired beneficial ownership of the shares.
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(4) Be accompanied by a copy of this subchapter.
(b) Time for receipt of demand for payment. The time set for receipt of the
demand and deposit of certificated shares shall be not less than 30 days from
the mailing of the notice.
ss.1576. FAILURE TO COMPLY WITH NOTICE TO DEMAND PAYMENT, ETC.
(a) Effect of failure of shareholder to act. A shareholder who fails to timely
demand payment, or fails (in the case of certificated shares) to timely deposit
certificates, as required by a notice pursuant to section 1575 (relating to
notice to demand payment) shall not have any right under this subchapter to
receive payment of the fair value of his shares.
(b) Restriction on uncertificated shares. If the shares are not represented by
certificates, the business corporation may restrict their transfer from the time
of receipt of demand for payment until effectuation of the proposed corporate
action or the release of restrictions under the terms of section 1577(a)
(relating to failure to effectuate corporate action).
(c) Rights retained by shareholder. The dissenter shall retain all other rights
of a shareholder until those rights are modified by effectuation of the proposed
corporate action.
ss.1577. RELEASE OF RESTRICTIONS OR PAYMENT FOR SHARES
(a) Failure to effectuate corporate action. Within 60 days after the date set
for demanding payment and depositing certificates, if the business corporation
has not effectuated the proposed corporate action, it shall return any
certificates that have been deposited and release uncertificated shares from any
transfer restrictions imposed by reason of the demand for payment.
(b) Renewal of notice to demand payment. When uncertificated shares have been
released from transfer restrictions and deposited certificates have been
returned, the corporation may at any later time send a new notice conforming to
the requirements of section 1575 (relating to notice to demand payment), with
like effect.
(c) Payment of fair value of shares. Promptly after effectuation of the proposed
corporate action, or upon timely receipt of demand for payment if the corporate
action has already been effectuated, the corporation shall either remit to
dissenters who have made demand and (if their shares are certificated) have
deposited their certificates the amount that the corporation estimates to be the
fair value of the shares, or give written notice that no remittance under this
section will be made. the remittance or notice shall be accompanied by:
(1) The closing balance sheet and statement of income of the issuer of the
shares held or owned by the dissenter for a fiscal year ending not more than 16
months before the date of remittance or notice together with the latest
available interim financial statements.
(2) A statement of the corporation's estimate of the fair value of the shares.
(3) A notice of the right of the dissenter to demand payment or supplemental
payment, as the case may be, accompanied by a copy of this subchapter.
A-5
(d) Failure to make payment. If the corporation does not remit the amount of its
estimate of the fair value of the shares as provided by subsection (c), it shall
return any certificates that have been deposited and release uncertificated
shares from any transfer restrictions imposed by reason of the demand for
payment. the corporation may make a notation on any such certificate or on the
records of the corporation relating to any such uncertificated shares that such
demand has been made. if shares with respect to which notation has been so made
shall be transferred, each new certificate issued therefore or the records
relating to any transferred uncertificated shares shall bear a similar notation,
together with the name of the original dissenting holder or owner of such
shares. a transferee of such shares shall not acquire by such transfer any
rights in the corporation other than those that the original dissenter had after
making demand for payment of their fair value.
ss.1578. ESTIMATE BY DISSENTER OF FAIR VALUE OF SHARES
(a) General Rule. If the business corporation gives notice of its estimate of
the fair value of the shares, without remitting such amount, or remits payment
of its estimate of the fair value of a dissenter's shares as permitted by
section 1577(c) (relating to payment of fair value of shares) and the dissenter
believes that the amount stated or remitted is less than the fair value of his
shares, he may send to the corporation his own estimate of the fair value of the
shares, which shall be deemed a demand for payment of the amount or the
deficiency.
(b) Effect of failure to file estimate. Where the dissenter does not file his
own estimate under subsection (a) within 30 days after the mailing by the
corporation of its remittance or notice, the dissenter shall be entitled to no
more than the amount stated in the notice or remitted to him by the corporation.
ss.1579. VALUATION PROCEEDINGS GENERALLY
(a) General Rule. Within 60 days after the latest of:
(1) Effectuation of the proposed corporate action;
(2) Timely receipt of any demands for payment under section 1575 (relating to
notice to demand payment); or
(3) Timely receipt of any estimates pursuant to section 1578 (relating to
estimate by dissenter of fair value of shares);
If any demands for payment remain unsettled, the business corporation may file
in court an application for relief requesting that the fair value of the shares
be determined by the court.
(b) Mandatory joinder of dissenters. All dissenters, wherever residing, whose
demands have not been settled shall be made parties to the proceeding as in an
action against their shares. a copy of the application shall be served on each
such dissenter. if a dissenter is a nonresident, the copy may be served on him
in the manner provided or prescribed by or pursuant to 42 pa.c.s. ch. 53
(relating to bases of jurisdiction and interstate and international procedure).
A-6
(c) Jurisdiction of the court. The jurisdiction of the court shall be plenary
and exclusive. the court may appoint an appraiser to receive evidence and
recommend a decision on the issue of fair value. the appraiser shall have such
power and authority as may be specified in the order of appointment or in any
amendment thereof.
(d) Measure of recovery. Each dissenter who is made a party shall be entitled to
recover the amount by which the fair value of his shares is found to exceed the
amount, if any, previously remitted, plus interest.
(e) Effect of corporation's failure to file application. If the corporation
fails to file an application as provided in subsection (a), any dissenter who
made a demand and who has not already settled his claim against the corporation
may do so in the name of the corporation at any time within 30 days after the
expiration of the 60-day period. if a dissenter does not file an application
within the 30-day period, each dissenter entitled to file an application shall
be paid the corporation's estimate of the fair value of the shares and no more,
and may bring an action to recover any amount not previously remitted.
ss.1580. COSTS AND EXPENSES OF VALUATION PROCEEDINGS
(a) General rule. The costs and expenses of any proceeding under section 1579
(relating to valuation proceedings generally), including the reasonable
compensation and expenses of the appraiser appointed by the court, shall be
determined by the court and assessed against the business corporation except
that any part of the costs and expenses may be apportioned and assessed as the
court deems appropriate against all or some of the dissenters who are parties
and whose action in demanding supplemental payment under section 1578 (relating
to estimate by dissenter of fair value of shares) the court finds to be
dilatory, obdurate, arbitrary, vexatious or in bad faith.
(b) Assessment of counsel fees and expert fees where lack of good faith appears.
Fees and expenses of counsel and of experts for the respective parties may be
assessed as the court deems appropriate against the corporation and in favor of
any or all dissenters if the corporation failed to comply substantially with the
requirements of this subchapter and may be assessed against either the
corporation or a dissenter, in favor of any other party, if the court finds that
the party against whom the fees and expenses are assessed acted in bad faith or
in a dilatory, obdurate, arbitrary or vexatious manner in respect to the rights
provided by this subchapter.
(c) Award of fees for benefits to other dissenters. If the court finds that the
services of counsel for any dissenter were of substantial benefit to other
dissenters similarly situated and should not be assessed against the
corporation, it may award to those counsel reasonable fees to be paid out of the
amounts awarded to the dissenters who were benefited.
A-7
SCHEDULE B
CERTAIN INFORMATION CONCERNING PURCHASER
Set forth below is information concerning the Continuing
Shareholders, including name, present principal occupation, and address each of
each Continuing Shareholder as well as information concerning each of the
Continuing Shareholders' security holdings of Judge Group.
o ▇▇▇▇▇▇ ▇. ▇▇▇▇▇, ▇▇., a United States citizen, serves as
Chief Executive Officer and Chairman of the Board of The
Judge Group, Inc. The Judge Group, Inc. services the
information technology (IT) and engineering needs of
clients by providing staffing services and IT software
training. The business address for Mr. ▇▇▇▇▇ is c/o The
Judge Group, Inc., ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇.
o ▇▇▇▇▇▇▇ ▇. ▇▇▇▇, a United States citizen, serves as
President and a director of The Judge Group, Inc. The
business address for ▇▇. ▇▇▇▇ is c/o The Judge Group,
Inc., ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇ ▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇.
o ▇▇▇▇ ▇. ▇▇▇▇▇▇▇, a United States citizen, is the Senior
Budget Analyst of The Judge Group, Inc. The business
address for ▇▇. ▇▇▇▇▇▇▇ is c/o The Judge Group, Inc.,
▇▇▇ ▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇ ▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇.
o ▇▇▇▇▇ ▇. ▇▇▇▇▇, a United States citizen, is a minor
child of ▇▇▇▇▇▇ ▇. ▇▇▇▇▇, ▇▇. and a student. Ms. ▇▇▇▇▇
resides at ▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇.
o ▇▇▇▇▇▇ ▇. ▇▇▇▇▇ ▇▇▇, a United States citizen, is a minor
child of ▇▇▇▇▇▇ ▇. ▇▇▇▇▇, ▇▇. and a student. Mr. ▇▇▇▇▇
resides at ▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇.
o ▇▇▇ ▇. ▇▇▇▇▇, a United States citizen, is a homemaker.
Ms. ▇▇▇▇▇ resides at ▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇
▇▇▇▇▇.
o ▇▇▇▇ ▇. ▇▇▇▇▇, a United States citizen, is a consultant.
The address for Mr. ▇▇▇▇▇ is ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇,
▇▇ ▇▇▇▇▇.
o ▇▇▇▇▇▇ ▇. ▇▇▇▇▇, ▇▇., a United States citizen, is a tax
accountant with Judge Financial Services. The address
for Mr. ▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇▇▇,
▇▇ ▇▇▇▇▇.
▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ (▇▇▇▇ ▇. ▇▇▇▇▇▇▇ CUST-Unit ▇▇▇▇.
Min. Act-NJ), a United States citizen, is a minor child
and the grandson of ▇▇▇▇▇▇ ▇. ▇▇▇▇▇, ▇▇. ▇▇. ▇▇▇▇▇▇▇
resides at ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇.
B-1
o ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ (▇▇▇▇ ▇. ▇▇▇▇▇▇▇ CUST-Unit ▇▇▇▇.
Min. Act-NJ), a United States citizen, is a minor child
and the granddaughter of ▇▇▇▇▇▇ ▇. ▇▇▇▇▇, ▇▇. ▇▇.
▇▇▇▇▇▇▇ resides at ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇, ▇▇
▇▇▇▇▇.
o ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, a United States citizen, is an
accounting consultant. The address for ▇▇. ▇▇▇▇▇▇▇ is ▇
▇▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇.
o ▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇, a United States citizen, is the
Vice President for Human Resources of The Judge Group,
Inc. The business address for ▇▇. ▇▇▇▇▇▇▇▇▇▇ is c/o The
Judge Group, Inc., ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇.
o ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, a United States citizen, is the
Executive Assistant to the CEO of The Judge Group, Inc.
The business address for ▇▇. ▇▇▇▇▇▇ is c/o The Judge
Group, Inc., ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇ ▇▇▇▇▇▇, ▇▇
▇▇▇▇▇.
o ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇, a United States citizen, is the
President of Judge Incorporated a director of The Judge
Group, Inc. The business address for ▇▇. ▇▇▇▇▇▇▇▇▇ is
c/o The Judge Group, Inc., ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇,
▇▇▇▇ ▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇.
o ▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇, a United States citizen, is a
secretary at Eastern High School. Ms. ▇▇▇▇▇'s address is
▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇.
o ▇▇▇▇▇▇ ▇. ▇▇▇▇▇, ▇▇., a United States citizen, is the
Vice President for Staffing of The Judge Group, Inc. The
business address for Mr. ▇▇▇▇▇ is c/o The Judge Group,
Inc., ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇ ▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇.
o ▇▇▇ ▇▇▇▇▇▇▇, a United States citizen, is the General
Counsel for The Judge Group, Inc. The business address
for ▇▇. ▇▇▇▇▇▇▇ is c/o The Judge Group, Inc., ▇▇▇ ▇▇▇▇
▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇ ▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇.
o ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, a United States citizen, is a Captain
with American Airlines. The address for ▇▇. ▇▇▇▇▇▇▇▇ is
▇▇▇▇ ▇.▇. Anhinga Avenue, Palm City, FL 34990.
o ▇▇▇▇▇ ▇. ▇▇▇▇▇▇, a United States citizen, is President
of Judge Technical Services. The business address for
▇▇. ▇▇▇▇▇▇ is c/o The Judge Group, Inc., ▇▇▇ ▇▇▇▇ ▇▇▇▇▇,
▇▇▇▇▇ ▇▇▇, ▇▇▇▇ ▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇.
o ▇▇▇▇▇▇ ▇. ▇▇▇▇▇, a United States citizen, is a principal
of Trikan Associates and a partner at the law firm of
Kania, Linder, ▇▇▇▇▇ and ▇▇▇▇▇▇. The address for ▇▇.
▇▇▇▇▇ is ▇▇▇▇ ▇▇. Pleasant Road, Bryn Mawr, PA 19010.
B-2
o ▇▇▇▇▇ ▇. ▇▇▇▇▇ TTEE U/A/D 12/31/89 by ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
FBO ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ is a trust. The address for the
trust is ▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇.
o ▇▇▇▇▇ ▇. ▇▇▇▇▇▇ TTEE U/A DTD 12/31/89 by ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
FBO ▇▇▇▇▇ ▇. ▇▇▇▇▇, ▇▇. is a trust. The address for the
trust is ▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇.
o ▇▇▇▇▇ ▇▇▇▇▇ TTEE U/A DTD 12/15/95 by ▇▇▇▇▇▇ ▇. ▇▇▇▇▇ FBO
▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇ is a trust. The address for the
trust is ▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇.
o ▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ TTEE U/A Dated 2/15/96 by ▇▇▇▇▇▇ ▇.
▇▇▇▇▇ FBO ▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇ is a trust. The address for
the trust is ▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇
▇▇▇▇▇.
o ▇▇▇▇▇ ▇. ▇▇▇▇▇▇ TTEE U/A DTD 6/1/91 by ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
FBO ▇▇▇▇▇▇ ▇. ▇▇▇▇▇ ▇▇▇ is a trust. The address for the
trust is ▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇.
o ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, a United States citizen, is the
Chief Information Officer of The Judge Group, Inc. The
business address for ▇▇. ▇▇▇▇▇▇▇ is c/o The Judge Group,
Inc., ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇ ▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇.
The following table sets forth the beneficial ownership of
shares of common stock of The Judge Group, Inc. for each of the Continuing
Shareholders.
----------------------------------------------------------------------------------------------------------------------
Amount Percentage Sole Shared Sole Shared
Beneficially of Voting Voting Dispositive Dispositive
Name of Reporting Person Owned Class Power Power Power Power
----------------------------------------------------------------------------------------------------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇, ▇▇. (1) 5,968,945 43.93% 5,909,307 59,638 5,909,307 59,638
----------------------------------------------------------------------------------------------------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇ (2) 1,869,066 13.86% 1,492,818 0 1,869,066 0
----------------------------------------------------------------------------------------------------------------------
▇▇▇▇ ▇. ▇▇▇▇▇▇▇ (3) 83,417 * 46,769 36,648 46,769 36,648
----------------------------------------------------------------------------------------------------------------------
▇▇▇▇▇ ▇. ▇▇▇▇▇ (4) 29,819 * 0 29,819 0 29,819
----------------------------------------------------------------------------------------------------------------------
▇▇▇▇▇▇ ▇. Judge III (4) 29,819 * 0 29,819 0 29,819
----------------------------------------------------------------------------------------------------------------------
▇▇▇ ▇. ▇▇▇▇▇ 59,838 * 59,838 0 59,838 0
----------------------------------------------------------------------------------------------------------------------
▇▇▇▇ ▇. ▇▇▇▇▇ (5) 23,890 * 23,890 0 23,890 0
----------------------------------------------------------------------------------------------------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇, ▇▇. (6) 71,190 * 10,000 61,190 10,000 61,190
----------------------------------------------------------------------------------------------------------------------
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ (▇▇▇▇ ▇. ▇▇▇▇▇▇▇
CUST-Unit ▇▇▇▇. Min. Act-NJ) (7) 26,648 * 0 26,648 0 26,648
----------------------------------------------------------------------------------------------------------------------
▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ (▇▇▇▇ ▇.
▇▇▇▇▇▇▇ CUST-Unit ▇▇▇▇. Min. Act-NJ)
(7) 10,000 * 0 10,000 0 10,000
----------------------------------------------------------------------------------------------------------------------
▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ (8) 118,700 * 117,600 1,100 117,600 1,100
----------------------------------------------------------------------------------------------------------------------
▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇ (9) 112,044 * 112,044 0 112,044 0
----------------------------------------------------------------------------------------------------------------------
▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ (10) 40,150 * 40,150 0 40,150 0
----------------------------------------------------------------------------------------------------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇ (11) 92,000 * 92,000 0 92,000 0
----------------------------------------------------------------------------------------------------------------------
▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇ 58,690 * 11,500 47,190 11,500 47,190
----------------------------------------------------------------------------------------------------------------------
B-3
----------------------------------------------------------------------------------------------------------------------
Amount Percentage Sole Shared Sole Shared
Beneficially of Voting Voting Dispositive Dispositive
Name of Reporting Person Owned Class Power Power Power Power
----------------------------------------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------------------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇, ▇▇. (12) 136,702 1.01% 136,702 0 136,702 0
----------------------------------------------------------------------------------------------------------------------
▇▇▇ ▇▇▇▇▇▇▇ (13) 65,600 * 65,000 600 65,000 600
----------------------------------------------------------------------------------------------------------------------
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ (14) 37,625 * 0 37,625 37,625
----------------------------------------------------------------------------------------------------------------------
▇▇▇▇▇ ▇. ▇▇▇▇▇▇ (15) 107,500 * 105,000 2,500 107,500 2,500
----------------------------------------------------------------------------------------------------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇ 180,900 1.34% 180,900 0 180,900 0
----------------------------------------------------------------------------------------------------------------------
▇▇▇▇▇ ▇. ▇▇▇▇▇ TTEE U/A/D 12/31/89
by ▇▇▇▇▇▇ ▇. ▇▇▇▇▇ FBO ▇▇▇▇▇▇ ▇. 26,300 26,300 26,000
▇▇▇▇▇▇ * 0 0
----------------------------------------------------------------------------------------------------------------------
▇▇▇▇▇ ▇. ▇▇▇▇▇▇ TTEE U/A DTD
12/31/89 by ▇▇▇▇▇▇ ▇. ▇▇▇▇▇ FBO
▇▇▇▇▇ ▇. ▇▇▇▇▇, ▇▇. 26,300 * 26,300 0 26,300 0
----------------------------------------------------------------------------------------------------------------------
▇▇▇▇▇ ▇▇▇▇▇ TTEE U/A DTD 12/15/95 by
▇▇▇▇▇▇ ▇. ▇▇▇▇▇ FBO ▇▇▇▇▇ ▇▇▇▇▇▇ 25,336 25,336 25,336
▇▇▇▇▇▇ * 0 0
----------------------------------------------------------------------------------------------------------------------
▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ TTEE U/A Dated
2/15/96 by ▇▇▇▇▇▇ ▇. ▇▇▇▇▇ FBO
▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇ 25,336 * 25,336 0 25,336 0
----------------------------------------------------------------------------------------------------------------------
▇▇▇▇▇ ▇. ▇▇▇▇▇▇ ▇▇▇▇ U/A DTD 6/1/91
by ▇▇▇▇▇▇ ▇. ▇▇▇▇▇ FBO ▇▇▇▇▇▇ ▇. 26,300 26,300 26,300
▇▇▇▇▇ III * 0 0
----------------------------------------------------------------------------------------------------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ (16) 37,880 * 37,880 0 37,880 0
----------------------------------------------------------------------------------------------------------------------
(1) Includes: (a) 125,000 shares of common stock issuable upon exercise of
the vested portion of outstanding options; (b) 29,819 shares with
shared voting and dispositive power with each ▇▇▇▇▇ ▇. ▇▇▇▇▇ and ▇▇▇▇▇▇
▇. Judge III;. and (c) 710,840 shares held by ▇▇▇▇▇▇ Ltd., L.P. a
Delaware limited partnership of which ▇▇▇▇▇▇ ▇. ▇▇▇▇▇, ▇▇. is general
partner and which has sole dispositive and voting power.
(2) Includes: (a) 376,248 shares held by the ▇▇▇▇▇▇▇ ▇▇▇▇ Descendants'
Trust of which ▇▇▇▇▇▇▇ ▇. ▇▇▇▇ has sole dispositive power; and (b)
20,000 shares of common stock issuable upon exercise of the vested
portion of outstanding options.
(3) Includes: (a) 15,000 shares of common stock issuable upon exercise of
the vested portion of outstanding options; (b) 26,648 shares with
shared voting and dispositive power as custodian of trust of which ▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ is the beneficiary; and (c) 10,000 shares with shared
voting and dispositive power as custodian of trust of which ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ is the beneficiary
(4) Shared voting and dispositive power with ▇▇▇▇▇▇ ▇. ▇▇▇▇▇, ▇▇.
(5) Includes: 20,000 shares of common stock issuable upon exercise of the
vested portion of the outstanding options.
(6) Includes: (a) 47,190 shares with shared voting and dispositive power
with ▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇, his spouse; and (b) 14,000 shares with shared
voting and dispositive power with ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, his mother.
(7) Shared voting and dispositive power with ▇▇▇▇ ▇. ▇▇▇▇▇▇▇.
(8) Includes: (a) 1,100 shares with shared voting and dispositive power
with her spouse and (b) 65,000 shares of common stock issuable upon the
exercise of the vested portion of the outstanding options.
(9) Includes: 59,444 shares of common stock issuable upon exercise of the
vested portion of the outstanding options.
(10) Includes: 37,250 shares of common stock issuable upon exercise of the
vested portion of the outstanding options.
(11) Includes: 80,000 shares of common stock issuable upon exercise of the
vested portion of outstanding options.
B-4
(12) Includes: 95,000 shares of common stock issuable upon exercise of the
vested portion of the outstanding options.
(13) Includes (a) 600 shares with shared voting and dispositive power with
her spouse; and (b) 65,000 shares of common stock issuable upon
exercise of the vested portion of the outstanding options.
(14) Includes: 37,625 shares with shared voting and dispositive powers with
his spouse.
(15) Includes: (a) 105,000 shares of common stock issuable upon exercise of
the vested portion of the outstanding options; and (b) 600 shares with
shared voting and dispositive power with her mother.
(16) Includes: 35,000 shares of common stock issuable upon exercise of the
vested portion of the outstanding options.
B-5
Facsimile copies of the Letter of Transmittal, properly
completed and duly executed, will be accepted. The Letter of Transmittal,
certificates for the Shares and any other required documents should be sent by
each shareholder of Judge Group or his, her or its broker, dealer, commercial
bank, trust company or other nominee to the Depositary as follows:
THE DEPOSITARY FOR THE OFFER IS:
StockTrans, Inc.
BY MAIL: BY OVERNIGHT DELIVERY: BY HAND:
StockTrans, Inc.
Attn: Judge ▇▇▇▇▇▇ Offer
▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
(▇▇▇) ▇▇▇-▇▇▇▇
(▇▇▇) ▇▇▇-▇▇▇▇
FOR NOTICE OF GUARANTEED DELIVERY
BY FACSIMILE TRANSMISSION:
TO CONFIRM FACSIMILE TRANSMISSION ONLY:
(▇▇▇) ▇▇▇-▇▇▇▇
FOR TELEPHONE ASSISTANCE:
(▇▇▇) ▇▇▇-▇▇▇▇
(▇▇▇) ▇▇▇-▇▇▇▇
Any questions or requests for assistance or additional copies
of the Offer to Purchase and the Letter of Transmittal may be directed to the
Information Agent at its telephone number and location listed below. You may
also contact your broker, dealer, commercial bank or trust company or other
nominee for assistance concerning the Offer.
The Information Agent for the Offer is:
StockTrans, Inc.
Attn: Judge ▇▇▇▇▇▇ Offer
▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
(▇▇▇) ▇▇▇-▇▇▇▇
(▇▇▇) ▇▇▇-▇▇▇▇
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