OFFER TO PURCHASE FOR CASH
ALL OUTSTANDING SHARES OF VOTING COMMON STOCK
OF
ABR INFORMATION SERVICES, INC.
AT
$25.50 NET PER SHARE
BY
SPRING ACQUISITION CORP.
A WHOLLY OWNED SUBSIDIARY OF
CERIDIAN CORPORATION
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY
TIME, ON FRIDAY, JUNE 4, 1999, UNLESS THE OFFER IS EXTENDED.
THE BOARD OF DIRECTORS OF ABR INFORMATION SERVICES, INC. HAS UNANIMOUSLY
APPROVED THE OFFER AND THE MERGER AGREEMENT (AS HEREINAFTER DEFINED), HAS
DETERMINED THAT THE TERMS OF THE OFFER AND THE MERGER ARE FAIR TO AND IN THE
BEST INTERESTS OF THE STOCKHOLDERS OF ABR INFORMATION SERVICES, INC. AND
RECOMMENDS THAT STOCKHOLDERS ACCEPT THE OFFER AND TENDER THEIR SHARES (AS
HEREINAFTER DEFINED) PURSUANT TO THE OFFER.
THE OFFER IS CONDITIONED UPON, AMONG OTHER THINGS, THERE BEING VALIDLY
TENDERED AND NOT WITHDRAWN BY THE EXPIRATION DATE A NUMBER OF SHARES OF ABR
INFORMATION SERVICES, INC. WHICH, TOGETHER WITH ANY SHARES OWNED BY CERIDIAN
CORPORATION, SPRING ACQUISITION CORP. AND/OR OTHER SUBSIDIARIES OF CERIDIAN
CORPORATION, REPRESENTS MORE THAN 50% OF THE TOTAL NUMBER OF SHARES THEN
OUTSTANDING ON A FULLY DILUTED BASIS. THE PURCHASER ESTIMATES THAT APPROXIMATELY
15,399,404 SHARES WILL NEED TO BE VALIDLY TENDERED (AND NOT WITHDRAWN) TO
SATISFY THIS MINIMUM CONDITION (AS HEREINAFTER DEFINED). THE OFFER IS SUBJECT TO
CERTAIN OTHER CONDITIONS. SEE SECTIONS 1, 13 AND 16.
------------------------
IMPORTANT
ANY STOCKHOLDER DESIRING TO TENDER ALL OR A PORTION OF SUCH STOCKHOLDER'S
SHARES (AS HEREINAFTER DEFINED) SHOULD EITHER (1) COMPLETE AND SIGN THE LETTER
OF TRANSMITTAL (OR A FACSIMILE THEREOF) IN ACCORDANCE WITH THE INSTRUCTIONS IN
THE LETTER OF TRANSMITTAL AND MAIL OR DELIVER THE LETTER OF TRANSMITTAL TOGETHER
WITH THE CERTIFICATE(S) EVIDENCING SUCH SHARES, AND ANY OTHER REQUIRED
DOCUMENTS, TO THE DEPOSITARY (AS HEREINAFTER DEFINED) AT ONE OF THE ADDRESSES
SET FORTH ON THE BACK COVER OF THIS OFFER TO PURCHASE OR TENDER SUCH SHARES
PURSUANT TO THE PROCEDURE FOR BOOK-ENTRY TRANSFER SET FORTH IN SECTION 4, OR (2)
REQUEST HIS OR HER BROKER, DEALER, COMMERCIAL BANK, TRUST COMPANY OR OTHER
NOMINEE TO EFFECT THE TRANSACTION FOR SUCH STOCKHOLDER. A STOCKHOLDER WHOSE
SHARES ARE REGISTERED IN THE NAME OF A BROKER, DEALER, COMMERCIAL BANK, TRUST
COMPANY OR OTHER NOMINEE MUST CONTACT SUCH BROKER, DEALER, COMMERCIAL BANK,
TRUST COMPANY OR OTHER NOMINEE IF SUCH STOCKHOLDER DESIRES TO TENDER SUCH
SHARES.
A STOCKHOLDER WHO DESIRES TO TENDER SHARES AND WHOSE CERTIFICATES
REPRESENTING SUCH SHARES ARE NOT IMMEDIATELY AVAILABLE, OR WHO CANNOT COMPLY
WITH THE PROCEDURES FOR BOOK-ENTRY TRANSFER ON A TIMELY BASIS, MAY TENDER SUCH
SHARES BY FOLLOWING THE PROCEDURE FOR GUARANTEED DELIVERY SET FORTH IN SECTION
4.
QUESTIONS OR REQUESTS FOR ASSISTANCE MAY BE DIRECTED TO THE INFORMATION
AGENT OR TO THE DEALER MANAGER AT THEIR RESPECTIVE ADDRESSES AND TELEPHONE
NUMBERS SET FORTH ON THE BACK COVER OF THIS OFFER TO PURCHASE. ADDITIONAL COPIES
OF THIS OFFER TO PURCHASE, THE LETTER OF TRANSMITTAL, THE NOTICE OF GUARANTEED
DELIVERY AND OTHER RELATED MATERIALS MAY BE DIRECTED TO THE INFORMATION AGENT OR
THE DEALER MANAGER.
------------------------
The Dealer Manager for the Offer is:
[LOGO OF BEAR, ▇▇▇▇▇▇▇ & CO. INC.]
May 7, 1999
TABLE OF CONTENTS
SECTION PAGE
----------------------------------------------------------------------------------------------------------- -----
INTRODUCTION............................................................................................... 1
THE TENDER OFFER........................................................................................... 3
1. Terms of the Offer; Expiration Date..................................................................... 3
2. Acceptance of and Payment for Shares.................................................................... 3
3. Withdrawal Rights....................................................................................... 4
4. Procedures for Accepting the Offer and Tendering Shares................................................. 5
5. Certain Income Tax Consequences......................................................................... 7
6. Market Prices of Shares; Dividends...................................................................... 7
7. Certain Effects of the Offer............................................................................ 8
8. Certain Information Concerning the Company.............................................................. 9
9. Certain Information Concerning the Purchaser and Parent................................................. 12
10. Background of the Offer................................................................................ 15
11. Purpose of the Offer and the Merger; Plans for the Company; the Merger Agreement....................... 18
12. Source and Amount of Funds............................................................................. 23
13. Certain Conditions of the Offer........................................................................ 26
14. Dividends and Distributions............................................................................ 27
15. Certain Legal Matters.................................................................................. 28
16. Extension of Tender Period, Termination and Amendments................................................. 31
17. Certain Fees and Expenses.............................................................................. 33
18. Miscellaneous.......................................................................................... 33
Schedule A--Directors and Executive Officers of Parent and the Purchaser................................... A-1
i
TO THE HOLDERS OF VOTING COMMON STOCK OF ABR INFORMATION SERVICES, INC.:
INTRODUCTION
Spring Acquisition Corp., a Florida corporation (the "Purchaser") and a
wholly owned subsidiary of Ceridian Corporation, a Delaware corporation
("Parent"), hereby offers to purchase all outstanding shares of the voting
common stock, par value $0.01 per share (the "Shares"), of ABR Information
Services, Inc., a Florida corporation (the "Company"), at $25.50 per Share, net
to the seller in cash, without any interest, upon the terms and subject to the
conditions set forth in this Offer to Purchase and in the related Letter of
Transmittal (which together constitute the "Offer"). Tendering stockholders will
not be obligated to pay brokerage fees or commissions or, except as set forth in
Instruction 6 of the Letter of Transmittal, stock transfer taxes with respect to
the purchase of Shares pursuant to the Offer. The Purchaser will pay all
relevant charges and expenses incurred in connection with the Offer by Bear,
▇▇▇▇▇▇▇ & Co. Inc. ("Bear ▇▇▇▇▇▇▇"), which is acting as the Dealer Manager for
the Offer (in such capacity, the "Dealer Manager"), The Bank of New York, which
is acting as the Depositary (the "Depositary"), and ▇▇▇▇▇▇▇▇▇ & Company Inc.,
which is acting as the Information Agent (the "Information Agent"). See Section
17.
THE OFFER IS CONDITIONED UPON, AMONG OTHER THINGS, THERE BEING VALIDLY
TENDERED AND NOT WITHDRAWN A NUMBER OF SHARES WHICH TOGETHER WITH ANY SHARES
OWNED BY PARENT, PURCHASER OR ANY OF THE PARENT COMPANIES (AS DEFINED IN THE
MERGER AGREEMENT) REPRESENTS MORE THAN 50% OF THE OUTSTANDING SHARES ON A FULLY
DILUTED BASIS AT THE EXPIRATION OF THE OFFER (THE "MINIMUM CONDITION"). SEE
SECTION 13.
The Offer is being made pursuant to the Agreement and Plan of Merger, dated
as of April 30, 1999, by and among the Company, Parent and the Purchaser (the
"Merger Agreement"). The Merger Agreement provides that, subject to the terms
and conditions of the Merger Agreement at the effective time (the "Effective
Time") of the Merger (as hereinafter defined), the Purchaser will be merged with
and into the Company (the "Merger"), and the Company will survive and become a
wholly owned subsidiary of Parent (the "Surviving Corporation"). At the
Effective Time, each Share issued and outstanding immediately prior to the
Effective Time (other than Shares owned by Parent, the Purchaser or any other
direct or indirect subsidiary of Parent or Shares that are owned by the Company
or any of its direct or indirect subsidiaries and in each case not held on
behalf of third parties, or Shares ("Dissenting Shares") held by stockholders
who properly exercise and perfect dissenters' rights, if any, under the Florida
Business Corporation Act (the "FBCA")) will be canceled, extinguished and
converted into the right to receive, without interest, an amount in cash equal
to $25.50 per Share or such higher price per Share as shall have been paid in
the Offer (the "Merger Consideration"). The Merger Agreement is more fully
described in Section 11.
Stockholders of the Company do not have dissenters' rights as a result of
the Offer. In addition, stockholders of the Company will not have dissenters'
rights in connection with the Merger if on the record date fixed to determine
the stockholders entitled to vote on or consent to the Merger, the Shares are
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. ("NASD") or are held of record by 2,000 or more
stockholders. If, however, the Shares are not so listed or designated and are
not held of record by at least 2,000 stockholders, then holders of Shares who do
not vote or consent in favor of the Merger will have dissenters' rights. See
Section 15.
THE BOARD OF DIRECTORS OF THE COMPANY HAS UNANIMOUSLY APPROVED THE OFFER AND
THE MERGER AGREEMENT, HAS DETERMINED THAT THE TERMS OF THE OFFER AND THE MERGER
ARE FAIR TO AND IN THE BEST INTERESTS OF THE STOCKHOLDERS OF THE COMPANY AND
RECOMMENDS THAT STOCKHOLDERS ACCEPT THE OFFER AND TENDER THEIR SHARES PURSUANT
TO THE OFFER.
The consummation of the Merger is subject to the satisfaction or waiver of a
number of conditions, including, if required by applicable law, the approval of
the Merger Agreement by the stockholders of the Company. If the Minimum
Condition is satisfied, the Purchaser will have sufficient voting power to
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approve the Merger without the vote of any other stockholder of the Company.
Under the Merger Agreement, Parent and the Purchaser have agreed to vote all
Shares acquired in the Offer in favor of the Merger. If at least 80% of the
outstanding Shares are purchased in the Offer, the Purchaser will be able to
effect a "short-form merger" under the FBCA without the approval of any
stockholder of the Company. See Section 11.
Based on information provided by the Company, as of April 29, 1999, there
were 28,762,983 Shares issued and outstanding and 2,035,823 Shares subject to
issuance upon the exercise of outstanding options to purchase Shares of voting
common stock (the "Options") granted under the Company's 1987 Amended and
Restated Stock Option Plan, 1993 Amended and Restated Stock Option Plan, 1995
Non-Employee Director Stock Option Plan, 1996 Non-Employee Director Stock Option
Plan and 1997 Stock Option Plan (together, the "Option Plans").
Based on the foregoing, and assuming the number of Shares on a fully diluted
basis at expiration of the Offer would be 30,798,806, the Purchaser would need
to purchase 15,399,404 Shares for the Minimum Condition to be satisfied. Subject
to the consent of the Company and the rules and regulations of the Securities
and Exchange Commission (the "Commission"), the Purchaser reserves the right
(but is not obligated) to waive or amend the Minimum Condition and to purchase
pursuant to the Offer fewer than the number of Shares necessary to satisfy the
Minimum Condition. See Section 1.
The Merger Agreement is more fully described in Section 11 of this Offer to
Purchase. Stockholders are encouraged to read that Section carefully, together
with all other terms and conditions of the Offer, before deciding whether to
tender their Shares.
THE OFFER WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY TIME, ON FRIDAY, JUNE
4, 1999, UNLESS THE OFFER IS EXTENDED.
THIS OFFER TO PURCHASE AND THE RELATED LETTER OF TRANSMITTAL CONTAIN
IMPORTANT INFORMATION WHICH SHOULD BE READ CAREFULLY BEFORE ANY DECISION IS MADE
WITH RESPECT TO THE OFFER.
2
THE TENDER OFFER
1. TERMS OF THE OFFER; EXPIRATION DATE. Upon the terms and subject to the
conditions set forth in the Offer (including, if the Offer is extended or
amended, the terms and conditions of any extension or amendment), the Purchaser
will accept for payment and will pay for all Shares validly tendered on or prior
to the Expiration Date and not withdrawn in accordance with Section 3 of this
Offer to Purchase. The term "Expiration Date" means 12:00 midnight, New York
City time, on Friday, June 4, 1999, unless the Purchaser shall have extended the
period of time for which the Offer is open, in which event the term "Expiration
Date" shall mean the latest time and date at which the Offer, as so extended by
the Purchaser, shall expire. Pursuant to the terms of the Merger Agreement, the
Purchaser may extend the Offer as described in Section 16.
The Offer is subject to certain conditions set forth in Section 13,
including satisfaction of the Minimum Condition and the expiration or
termination of the waiting period applicable to the Purchaser's acquisition of
Shares pursuant to the Offer under the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Antitrust Improvements
Act of 1976, as amended (the "HSR Act"). Subject to the terms of the Merger
Agreement, if any condition to the Purchaser's obligation to purchase Shares is
not satisfied prior to the acceptance for payment for any such Shares, the
Purchaser may (i) at a scheduled expiration date of the Offer terminate the
Offer, (ii) extend the Offer and, subject to withdrawal rights as set forth in
Section 3, retain all such Shares until the expiration of the Offer as so
extended, (iii) waive such condition (other than the Minimum Condition) and,
subject to any requirement to extend the period of time during which the Offer
is open, purchase all Shares validly tendered by the Expiration Date and not
withdrawn, or (iv) delay acceptance for payment of Shares until satisfaction or
waiver of the conditions of the Offer. Subject to the consent of the Company and
the rules and regulations of the Commission, the Purchaser reserves the right
(but is not obligated) to waive or amend the Minimum Condition and to purchase
pursuant to the Offer fewer than the number of Shares necessary to satisfy the
Minimum Condition.
The Merger Agreement provides that, unless previously approved in writing by
the Company, and subject to certain rights of the Purchaser to extend the Offer,
the Purchaser will not decrease the price per Share offered in the Offer, change
the form of consideration offered or payable in the Offer, decrease the number
of Shares sought in the Offer, change the conditions to the Offer, impose
additional conditions to the Offer, amend any term of the Offer in a manner
adverse to the holders of Shares, or waive the Minimum Condition. For a
description of the Purchaser's right and obligation to extend the period of time
during which the Offer is open, and to amend, delay or terminate the Offer, see
Section 16.
The Company has provided the Purchaser with the Company's stockholder list
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, dealers, banks and similar persons
whose names, or the names of whose nominees, appear on the stockholder 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.
2. ACCEPTANCE OF AND PAYMENT FOR SHARES. Upon the terms and subject to the
conditions of the Offer (including, if the Offer is extended or amended, the
terms and conditions of any such extension or amendment), the Purchaser will
purchase, by accepting for payment, and will pay for, any and all Shares validly
tendered and not withdrawn following the later of (i) the expiration or
termination of all waiting periods under the HSR Act that are applicable to the
purchase of Shares pursuant to the Offer, and (ii) the Expiration Date. See
Section 15. In all cases, payment for Shares purchased pursuant to the Offer
will be made only after timely receipt by the Depositary of certificates for
such Shares or timely confirmation of book-entry transfer (a "Book-Entry
Confirmation") of such Shares into the Depositary's account at The Depository
Trust Company (the "Book-Entry Transfer Facility") pursuant to the procedures
set forth in Section 4, a properly completed and duly executed Letter of
Transmittal (or a manually signed facsimile thereof) and any other documents
required by the Letter of Transmittal.
3
For purposes of the Offer, the Purchaser shall be deemed to have accepted
for payment (and thereby purchased) tendered Shares as, if and when the
Purchaser gives oral or written notice to the Depositary of the Purchaser's
acceptance of such Shares for payment pursuant to the Offer. Payment for Shares
purchased pursuant to the Offer will be made by deposit of the purchase price
with the Depositary which will act as agent for tendering stockholders for the
purpose of receiving payment from the Purchaser and transmitting payments to
tendering stockholders. The Purchaser will not, under any circumstances, pay any
interest on the purchase price, regardless of any delay in making such payment.
If any tendered Shares are not purchased pursuant to the Offer, or if
certificates are submitted for more Shares than are tendered, certificates for
such unpurchased Shares will be returned, without expense to the tendering
stockholder (or, in the case of book-entry transfer within the Book-Entry
Transfer Facility, such Shares will be credited to an account maintained within
the Book-Entry Transfer Facility), as promptly as practicable after the
expiration or termination of the Offer.
The Purchaser will pay all stock transfer taxes, if any, payable with
respect to the transfer to it of Shares purchased pursuant to the Offer.
If, prior to the Expiration Date, the Purchaser shall decide, in its sole
discretion and subject to the terms of the Merger Agreement, to increase the
consideration offered to stockholders pursuant to the Offer, such increased
consideration shall be paid to all holders of Shares accepted for payment and
paid for pursuant to the Offer.
3. WITHDRAWAL RIGHTS. Tenders of Shares made pursuant to the Offer will be
irrevocable, except that Shares tendered may be withdrawn at any time prior to
the Expiration Date and, unless previously paid for, may also be withdrawn after
July 5, 1999. If the Purchaser is delayed in its acceptance or purchase of or
payment for Shares or is unable to purchase or pay for Shares for any reason,
then, without prejudice to the Purchaser's rights under Sections 1, 13 and 16,
tendered Shares may be retained by the Depositary on behalf of the Purchaser and
may not be withdrawn except as permitted by this Section 3 and subject to Rule
14e-1(c) under the Securities Exchange Act of 1934, as amended (the "Exchange
Act"). See Section 16.
For a withdrawal to be effective, a written or facsimile transmission notice
of withdrawal must be timely received by the Depositary at one of its addresses
specified on the back cover of this Offer to Purchase. Any such notice of
withdrawal must specify the name of the person who tendered the Shares to be
withdrawn, the number of Shares to be withdrawn and, if certificates
representing such Shares have been delivered or otherwise identified to the
Depositary, the name(s) in which such certificate(s) is (are) registered, if
different from the name of the person tendering such Shares. If certificates
have been delivered or otherwise identified to the Depositary, then prior to the
physical release of such certificates, the tendering stockholder must also
submit the serial numbers shown on the particular certificates evidencing such
Shares and the signature on the notice of withdrawal must be guaranteed by a
member firm of a registered national securities exchange, a member of the NASD,
a commercial bank or trust company having an office, branch or agency in the
United States or any other institution that is a member of the Medallion
Signature Guaranty Program (each being referred to herein as an "Eligible
Institution"). If Shares have been tendered pursuant to the procedure for
book-entry tender as set forth in Section 4, the notice of withdrawal must
specify the name and account number(s) of the account(s) at the Book-Entry
Transfer Facility to be credited with the withdrawn Shares, in which case a
notice of withdrawal will be effective if delivered to the Depositary by any
method of delivery described in the first sentence of this paragraph. None of
Parent, the Purchaser, the Dealer Manager, the Depositary or the Information
Agent will be obligated to give notice of any defects or irregularities in any
notice of withdrawal, nor shall any of them incur any liability for failure to
give any such notice. All questions as to the form and validity (including time
of receipt) of notices of withdrawal will be determined by the Purchaser, in its
sole discretion, whose determination shall be final and binding.
Withdrawals of Shares tendered may not be rescinded, and any Shares properly
withdrawn will thereafter be deemed not validly tendered for purposes of the
Offer. Withdrawn Shares, however, may be
4
retendered by following one of the procedures described in Section 4 at any time
prior to the Expiration Date.
4. PROCEDURES FOR ACCEPTING THE OFFER AND TENDERING SHARES.
VALID TENDER. In order for a holder of Shares to validly tender Shares
pursuant to the Offer, a properly completed and duly executed Letter of
Transmittal (or a manually signed facsimile thereof), together with any required
signature guarantees and any other documents required by the Letter of
Transmittal, must be received by the Depositary at one of its addresses set
forth on the back cover of this Offer to Purchase, on or prior to the Expiration
Date. Either (i) the certificates for such Shares must be delivered to the
Depositary or (ii) such Shares must be tendered pursuant to the procedure for
book-entry transfer set forth below and a Book-Entry Confirmation must be
received by the Depositary (including an Agent's Message (as defined below), if
the tendering stockholder has not delivered a Letter of Transmittal), in each
case on or prior to the Expiration Date. Delivery of documents to the Book-Entry
Transfer Facility does not constitute delivery to the Depositary. Alternatively,
the tendering stockholder may comply with the guaranteed delivery procedure set
forth below. The term "Agent's Message" means a message transmitted 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 a participant in the system
established by 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 the
Purchaser may enforce such Letter of Transmittal against such participant.
BOOK-ENTRY TRANSFER. The Depositary will establish an account 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, and any
financial institution that is a participant in the Book-Entry Transfer
Facility's system may make book-entry transfer of the 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 procedure for such
transfer. Even if delivery of Shares is to be effected through book-entry
transfer at the Book-Entry Transfer Facility, the Letter of Transmittal (or a
manually signed facsimile thereof) along with any required signature guarantees
and any other required documents, or an Agent's Message, must be transmitted to
and received by the Depositary at one of its addresses set forth on the back
cover page of this Offer to Purchase on or prior to the Expiration Date, or the
stockholder must comply with the guaranteed delivery procedure set forth below.
SIGNATURE GUARANTEES. If the Letter of Transmittal is signed by the
registered holder of the Shares tendered therewith and payment is to be made
directly to such registered holder, or if Shares are tendered for the account of
an Eligible Institution, no signature guarantee is required. In all other cases,
signatures on the Letter of Transmittal must be guaranteed by an Eligible
Institution. If certificates 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 accepted for payment or not tendered are to be
returned to a person other than the registered holder, then certificates must be
endorsed or accompanied by appropriate stock powers, in either case signed
exactly as the name or the names of the registered owner or owners appear on
certificates, with the signature(s) on the certificates or stock powers
guaranteed as aforesaid. See Instructions 1 and 5 of the Letter of Transmittal.
GUARANTEED DELIVERY. If a stockholder desires to tender Shares pursuant to
the Offer and such holder's certificates are not immediately available, or time
will not permit all required documents to reach the Depositary on or prior to
the Expiration Date, or the procedure for book-entry transfer cannot be
completed on a timely basis, such Shares may nevertheless be tendered if all of
the following conditions are met:
(i) such tenders are made by or through an Eligible Institution;
5
(ii) a properly completed and duly executed Notice of Guaranteed Delivery
substantially in the form provided by the Purchaser is received by the
Depositary as provided below on or prior to the Expiration Date; and
(iii) the certificates for all tendered Shares in proper form for transfer
(or a Book-Entry Confirmation), together with a properly completed and
duly executed Letter of Transmittal (or a manually signed facsimile
thereof) with any required signature guarantee and any other documents
required by the Letter of Transmittal, or an Agent's Message, are
received by the Depositary within three Nasdaq Stock Market ("Nasdaq")
trading days after the date of execution of such Notice of Guaranteed
Delivery.
The Notice of Guaranteed Delivery may be delivered by hand, or may be
transmitted by facsimile transmission, or by mail, to the Depositary and must
include a guarantee by an Eligible Institution in the form set forth in the
Notice of Guaranteed Delivery.
In all cases, payment for Shares tendered and purchased pursuant to the
Offer will be made only after timely receipt by the Depositary of certificates
for such Shares (or a timely Book-Entry Confirmation), a properly completed and
duly executed Letter of Transmittal (or a manually signed facsimile thereof), or
an Agent's Message, and any other documents required by the Letter of
Transmittal.
OTHER REQUIREMENTS. By executing a Letter of Transmittal as set forth
above, a tendering stockholder irrevocably appoints designees of the Purchaser
as such stockholder's proxies, in the manner set forth in the Letter of
Transmittal, to the full extent of such stockholder's rights with respect to the
Shares tendered by such stockholder and purchased by the Purchaser (and any and
all other Shares and other securities issued or issuable in respect thereof on
or after May 7, 1999) prior to the time of any stockholder vote or other action.
All such proxies shall be irrevocable and coupled with an interest in the
tendered Shares. Such appointment will be effective when, and only to the extent
that, the Purchaser accepts such Shares for payment. Upon such appointment, all
prior proxies given by such stockholder with respect to such purchased Shares or
other securities will be revoked and no subsequent proxies may be given. The
designees of the Purchaser will, with respect to such Shares and other
securities, be empowered to exercise all voting and other rights of such
stockholder as they, in their sole discretion, may deem proper at any annual,
special or adjourned meeting of the Company's stockholders, by written consent
or otherwise. The Purchaser reserves the right to require that, in order for
Shares to be validly tendered, immediately upon the acceptance for payment of
such Shares, the Purchaser be able to exercise full voting and other rights of a
record and beneficial holder, including rights in respect of acting by written
consent, with respect to such Shares (and any and all other securities as set
forth above).
THE METHOD OF DELIVERY OF ALL DOCUMENTS, INCLUDING DELIVERY THROUGH THE
BOOK-ENTRY TRANSFER FACILITY, IS AT THE ELECTION AND RISK OF THE TENDERING
STOCKHOLDER. IF DELIVERY IS TO BE BY MAIL, INSURED REGISTERED MAIL, RETURN
RECEIPT REQUESTED IS RECOMMENDED. AMPLE TIME SHOULD BE ALLOWED FOR SUCH
DOCUMENTS TO REACH THE DEPOSITARY. EXCEPT AS OTHERWISE PROVIDED IN THIS SECTION
4, DELIVERY WILL BE DEEMED MADE ONLY WHEN ACTUALLY RECEIVED BY THE DEPOSITARY.
BACKUP FEDERAL INCOME TAX WITHHOLDING. Under the federal income tax laws,
the Depositary will be required to withhold 31% of the amount of any payments
made to certain stockholders pursuant to the Offer. To prevent such backup
federal income tax withholding, each such stockholder must provide the
Depositary with his or her correct taxpayer identification number and certify
that such stockholder is not subject to such backup withholding by completing
the Substitute Form W-9 included in the Letter of Transmittal.
DETERMINATION OF VALIDITY. All questions as to the validity, form,
eligibility (including time of receipt) and acceptance for payment of any tender
of Shares will be determined by the Purchaser and Parent, in their sole
discretion, whose determination will be final and binding. The Purchaser and
Parent reserve the absolute right to reject any or all tenders determined by
them not to be in proper form or the acceptance of or payment for which may, in
the opinion of the Purchaser's counsel, be unlawful. The Purchaser and
6
Parent also reserve the absolute right to waive any of the conditions of the
Offer or any defect in any tender with respect to any particular Shares or any
particular stockholder. No tender of Shares will be deemed to have been validly
made until all defects and irregularities relating thereto have been cured or
waived. None of Parent, the Purchaser, the Dealer Manager, the Depositary or the
Information Agent will be obligated to give notice of any defects or
irregularities in tenders, nor shall any of them incur any liability for failure
to give any such notice. The Purchaser's and ▇▇▇▇▇▇'s interpretation of the
terms and conditions of the Offer (including the Letter of Transmittal and
instructions thereto) will be final and binding.
5. CERTAIN INCOME TAX CONSEQUENCES. The receipt of cash for Shares
pursuant to the Offer or for Shares pursuant to the Merger will be taxable for
federal income tax purposes and may be taxable under applicable state, local,
foreign and other tax laws. The tax consequences of such receipt may vary
depending upon, among other things, the particular circumstances of the
stockholder. In general, a stockholder will recognize gain or loss equal to the
difference between the amount of cash received and his or her tax basis in his
or her Shares. Such gain or loss will generally be capital gain or loss provided
that such stockholder held his or her Shares as a capital asset, and will be
long-term capital gain or loss if, on the date of sale, such Shares were held
for more than one year. Long-term capital gain of a non-corporate stockholder is
generally taxed at a maximum rate of 20%.
The foregoing may not be applicable to stockholders who acquired their
Shares pursuant to the exercise of employee stock options or otherwise as
compensation, who are not citizens or residents of the United States or who are
otherwise subject to special tax treatment under the Internal Revenue Code of
1986, as amended (the "Code") (such as life insurance companies, tax exempt
entities and regulated investment companies).
THE FEDERAL INCOME TAX DISCUSSION SET FORTH ABOVE IS INCLUDED FOR GENERAL
INFORMATION ONLY. EACH STOCKHOLDER IS URGED TO CONSULT HIS OR HER OWN TAX
ADVISORS TO DETERMINE PARTICULAR TAX CONSEQUENCES OF THE OFFER AND THE MERGER TO
SUCH STOCKHOLDER, INCLUDING THE EFFECT AND APPLICABILITY OF STATE, LOCAL,
FOREIGN AND OTHER TAX LAWS.
6. MARKET PRICES OF SHARES; DIVIDENDS. The Shares are traded in the
over-the-counter market and are quoted on the Nasdaq National Market System
under the symbol "ABRX". The following table sets forth, for the periods
indicated, the range of high and low sales prices per Share as reported on the
Nasdaq National Market System for such periods, in each case as reported by
published financial sources and restated for the two-for-one stock split
completed on February 19, 1997. The Company has not declared or paid any cash
dividends on the Shares for the periods presented below.
HIGH LOW
--------- ---------
FISCAL YEAR ENDED JULY 31, 1997
First Fiscal Quarter................................................... $37 3/4 $25 1/2
Second Fiscal Quarter.................................................. $33 1/2 $19 11/16
Third Fiscal Quarter................................................... $24 3/8 $16 11/16
Fourth Fiscal Quarter.................................................. $32 3/4 $20 5/8
FISCAL YEAR ENDED JULY 31, 1998
First Fiscal Quarter................................................... $29 5/8 $22
Second Fiscal Quarter.................................................. $26 5/16 $21 11/32
Third Fiscal Quarter................................................... $31 5/8 $24 1/4
Fourth Fiscal Quarter.................................................. $27 3/4 $17 1/2
FISCAL YEAR ENDED JULY 31, 1999..........................................
First Fiscal Quarter................................................... $20 5/8 $ 8 1/2
Second Fiscal Quarter.................................................. $23 5/8 $13 3/4
Third Fiscal Quarter................................................... $24 1/2 $13
Fourth Fiscal Quarter (through May 6, 1999)............................ $25 15/32 $24 13/16
7
On April 30, 1999, the last full day of trading prior to the public
announcement of the Merger Agreement, the last reported sale price for the
Shares, as reported by the Nasdaq National Market System, was $17.50 per Share,
according to published sources. STOCKHOLDERS ARE URGED TO OBTAIN CURRENT MARKET
PRICES FOR THE SHARES.
7. CERTAIN EFFECTS OF THE OFFER. The purchase of Shares pursuant to the
Offer will reduce the number of Shares that might otherwise trade publicly and
may also be expected to reduce the number of holders of Shares. Such reductions
could adversely affect the liquidity and market value of the remaining Shares
held by the public, if any.
STOCK QUOTATION. Depending upon the number of Shares purchased pursuant to
the Offer, the Shares may no longer meet the standards for continued inclusion
in the Nasdaq National Market System. According to Nasdaq's published
guidelines, the Shares would not be eligible to be included for continued
listing if, among other things (i) the number of publicly held Shares falls
below 750,000, (ii) the number of holders of at least 100 Shares ("round lot
holders") falls below 400, (iii) the aggregate market value of publicly held
Shares falls below $5.0 million, or (iv) there are not at least two registered
and active market makers. If the foregoing standards are not met, the Shares
might continue to be listed on The Nasdaq SmallCap Market, Inc., but if (i) the
number of round lot holders falls below 300, (ii) the number of publicly held
Shares falls below 500,000, (iii) the aggregate market value of such publicly
held Shares falls below $1.0 million, or (iv) there are not at least two
registered and active market makers, Nasdaq rules provide that the Shares would
no longer qualify for inclusion in Nasdaq, and Nasdaq would cease to provide any
quotations. ▇▇▇▇▇▇ held directly or indirectly by an officer or director of the
Company or by a beneficial owner of more than 10% of the Shares will ordinarily
not be considered as being publicly held for purposes of these standards. If, as
a result of the purchase of Shares pursuant to the Offer or otherwise, the
Shares no longer meet the requirements of Nasdaq for continued inclusion and the
Shares are no longer eligible for Nasdaq quotation, the market for the Shares
could be adversely affected.
If the Shares are no longer eligible for Nasdaq quotation, quotations might
still be available from other sources. The extent of the public market for the
Shares and the availability of such quotations would, however, depend upon the
number of holders of Shares remaining at such time, the interests in maintaining
a market in the Shares on the part of securities firms, the possible termination
of registration of the Shares under the Exchange Act, as described below, and
other factors.
EXCHANGE ACT REGISTRATION. The Shares are currently registered under the
Exchange Act. Such registration may be terminated upon application of the
Company to the Commission if the Shares are not listed on a national securities
exchange and there are fewer than 300 record holders of Shares. Termination of
registration of the Shares under the Exchange Act would substantially reduce the
information required to be furnished by the Company to its stockholders and the
Commission, and would make certain provisions of the Exchange Act (such as the
short-swing profit recovery provisions of Section 16(b) and the requirement of
furnishing a proxy or information statement in connection with stockholders'
meetings pursuant to Section 14(a) or (c) and the related requirement of an
annual report) no longer applicable to the Company. Furthermore, the ability of
"affiliates" of the Company and persons holding "restricted securities" of the
Company to dispose of such securities pursuant to Rule 144 or Rule 144A
promulgated under the Securities Act of 1933, as amended (the "Securities Act"),
may be impaired or, with respect to certain persons, eliminated. If, as a result
of purchases pursuant to the Offer or otherwise, the Company is no longer
required to maintain registration of the Shares under the Exchange Act, the
Purchaser intends to cause the Company to apply for termination of such
registration.
MARGIN REGULATIONS. The Shares are presently "margin securities" under the
rules of the Board of Governors of the Federal Reserve System (the "Federal
Reserve Board"), which has the effect, among other things, of allowing brokers
to extend credit on the collateral of such securities for the purpose of buying,
carrying or trading in securities ("Purpose Loans"). In the event that the
Shares were no longer quoted on Nasdaq (which depends on factors such as the
number of holders of the Shares and the number
8
and market value of publicly held Shares (see "Stock Quotation" above)), it is
possible the Shares may no longer constitute "margin securities" for purposes of
the Federal Reserve Board's margin regulations and, therefore, could no longer
be used as collateral for Purpose Loans made by brokers. In addition, if the
Shares were deregistered under the Exchange Act, the Shares would no longer
constitute "margin securities."
RULE 13E-3. The Commission has adopted Rule 13e-3 under the Exchange Act,
which is applicable to certain "going private" transactions and which may under
certain circumstances be applicable to the Merger or other transactions
following the purchase of Shares pursuant to the Offer in which the Purchaser
seeks to acquire the remaining Shares not held by it. However, Rule 13e-3 would
be inapplicable if (i) the Shares are deregistered under the Exchange Act prior
to the Merger or other transactions or (ii) the Merger or another business
combination is consummated within one year after the purchase of the Shares
pursuant to the Offer and the amount paid per Share for each class of Shares in
the Merger or other business combination is at least equal to the amount paid
per Share for such class of Shares in the Offer. If applicable, Rule 13e-3
requires, among other things, that certain financial information concerning the
fairness of the proposed transaction and the consideration offered to minority
stockholders in such transaction be filed with the Commission and disclosed to
stockholders prior to the consummation of the transaction.
8. CERTAIN INFORMATION CONCERNING THE COMPANY. The Company is a Florida
corporation with its principal executive offices located at ▇▇▇▇▇ ▇.▇. ▇▇▇▇▇▇▇
▇▇ ▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇, telephone (▇▇▇) ▇▇▇-▇▇▇▇. According
to information filed by the Company with the Commission, the Company is
primarily engaged in comprehensive benefits administration, payroll and human
resource services to employers seeking to outsource these functions.
9
Set forth below is a summary of certain selected financial information with
respect to the Company and its subsidiaries for the fiscal years ended July 31,
1998, 1997 and 1996 and for the six-month periods ended January 31, 1999 and
1998, which has been excerpted or derived from the audited consolidated
financial statements contained in the Company's Annual Reports on Form 10-K for
the fiscal years ended July 31, 1998, 1997 and 1996, and from unaudited
consolidated financial statements contained in the Company's Quarterly Report on
Form 10-Q for the quarterly period ended January 31, 1999. More comprehensive
financial information is included in such reports and other documents filed by
the Company with the Commission, and the following summary is qualified in its
entirety by reference to such documents and all of the financial statements and
related notes contained therein.
ABR INFORMATION SERVICES, INC.
SELECTED CONSOLIDATED FINANCIAL INFORMATION
(IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)
SIX MONTHS ENDED
JANUARY 31, FISCAL YEAR ENDED JULY 31,
-------------------- -------------------------------
1999 1998 1998 1997 1996
--------- --------- --------- --------- ---------
(UNAUDITED)
INCOME STATEMENT DATA:
Revenue.................................................. $ 54,148 $ 31,946 $ 74,592 $ 50,079 $ 31,162
Cost of services......................................... 29,855 18,177 42,387 28,179 17,864
Operating income(1)(2)................................... 64 7,780 7,346 12,135 6,362
Lease revenue, net....................................... 187 1,140 2,817 -- --
Income before provision for income taxes................. 2,581 11,724 15,527 19,216 9,234
Income tax provision..................................... 980 4,072 8,800 6,987 3,560
Net income............................................... 1,601 7,652 6,727 12,229 5,674
Per share data (diluted):
Net income per share................................... .06 .28 .24 .44 .25
Adjusted weighted average shares outstanding
(diluted)............................................ 29,096 27,880 28,194 27,892 23,031
AS OF JANUARY 31, AS OF JULY 31,
--------------------- ----------------------------------
1999 1998 1998 1997 1996
--------- ---------- ---------- ---------- ----------
(UNAUDITED)
BALANCE SHEET DATA:
Working capital..................................... $ 84,026 $ 125,823 $ 122,170 $ 127,839 $ 145,825
Total assets........................................ 271,939 237,506 273,191 222,017 202,574
Total long-term debt................................ -- -- -- -- --
Total shareholders' equity.......................... 232,375 201,838 230,615 194,096 181,150
------------------------
(1) Includes approximately $11 million of acquired research and development that
was expensed in the third quarter of fiscal 1998. See Note N to the Notes to
Consolidated Financial Statements in the Company's Annual Report on Form
10-K for the fiscal year ended July 31, 1998.
(2) During fiscal 1999, the Company recorded a non-cash pre-tax software
write-off of approximately $13.8 million. See Note C to Notes to
Consolidated Financial Statements in the Company's Quarterly Report on Form
10-Q for the quarterly period ended January 31, 1999.
The information concerning the Company contained in this Offer to Purchase
or incorporated herein by reference has been taken from or based upon
publicly-available documents and records on file with the Commission and other
public sources or was provided by the Company. Although the Purchaser has no
knowledge that would indicate that any statements contained herein based on such
documents and records are untrue, neither Parent nor the Purchaser can take
responsibility for the accuracy or completeness of
10
the information contained in such documents and records, or for any failure by
the Company to disclose events which may have occurred or may affect the
significance or accuracy of any such information which are unknown to Parent or
the Purchaser.
In the course of discussions giving rise to the Merger Agreement,
representatives of the Company furnished representatives of Parent with certain
business and financial information that was not publicly available, including
certain financial projections for its fiscal years ending July 31, 1999, 2000
and 2001 set forth below (the "Company Projections"). The Company Projections
were prepared solely for the Company's internal purposes and were not prepared
for publication or with a view to complying with the published guidelines of the
Commission regarding projections or with the American Institute of Certified
Public Accountants Guide for Prospective Financial Statements, and such
information is being included in this Offer to Purchase solely because it was
furnished to Parent in connection with the discussions giving rise to the Merger
Agreement.
The Company Projections set forth below reflect numerous assumptions with
respect to general business and economic conditions and other matters, many of
which are inherently uncertain or beyond the Company's or Parent's control.
There can be no assurance that the actual results will not be materially higher
or lower than those contained in the Company Projections. The inclusion of the
Company Projections should not be regarded as an indication that the Company,
Parent or anyone else who received this information considered it an accurate
predictor of future events, and the Company Projections should not be relied on
as such. None of Parent, the Purchaser, the Company or any of their respective
representatives assumes any responsibility for the accuracy of the Company
Projections, and the Company has made no representation to Parent or the
Purchaser regarding such information.
FISCAL YEAR ENDING JULY 31,
-------------------------------
1999 2000 2001
--------- --------- ---------
(IN MILLIONS)
Revenue.............................................................................. $ 120.1 $ 168.2 $ 220.4
Earnings Before Interest and Taxes................................................... 30.7 43.9 55.6
Net Income(1)........................................................................ 22.1 29.2 36.5
------------------------
(1) Excludes a 1999 pre-tax software write-off of approximately $13.8 million.
The Company 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 Commission relating to its business, financial condition
and other matters. Information, as of particular dates, concerning the Company's
business, principal physical properties, capital structure, material pending
legal proceedings, operating results, financial condition, the Company's
directors and officers, their remuneration, stock options granted to them, the
principal holders of the Company's securities, any material interests of such
persons in transactions with the Company and other matters, is required to be
disclosed in proxy statements and annual reports distributed to the Company's
stockholders and filed with the Commission. Such reports, proxy statements and
other information may be inspected at the Commission's public reference
facilities at ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇.▇., ▇▇▇▇▇▇▇▇▇▇, ▇.▇. ▇▇▇▇▇, and should also be
available for inspection at the following regional offices of the Commission: ▇
▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇; and ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇; and copies may be obtained, by
mail, for prescribed rates from the principal office of the Commission at ▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇, ▇.▇., ▇▇▇▇▇▇▇▇▇▇, ▇.▇. ▇▇▇▇▇. The Commission also maintains an
Internet site on the World Wide Web at ▇▇▇▇://▇▇▇.▇▇▇.▇▇▇ that contains reports,
proxy statements and other information. Such information should also be
available for inspection at the offices of the Nasdaq Stock Market, Inc., ▇▇▇▇ ▇
▇▇▇▇▇▇, ▇.▇., ▇▇▇▇▇▇▇▇▇▇, ▇.▇. ▇▇▇▇▇.
11
9. CERTAIN INFORMATION CONCERNING THE PURCHASER AND PARENT. The Purchaser
is a newly incorporated Florida corporation and a wholly owned subsidiary of
Parent. To date, the Purchaser has engaged in no activities other than those in
connection with the Offer. The principal executive offices of the Purchaser are
located at ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, telephone (612)
▇▇▇-▇▇▇▇. The principal executive offices of Parent are located at ▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, telephone (▇▇▇) ▇▇▇-▇▇▇▇.
The name, business address, citizenship, present principal employment or
occupation and employment history for the past five years of each of the
directors and executive officers of the Purchaser and Parent are set forth in
Schedule A to this Offer to Purchase.
Parent, a Delaware corporation, was founded in 1957. Parent's information
services businesses, which consist of its Human Resource Services businesses,
its Comdata subsidiary and its Arbitron division, provide products and services
to customers in the human resources, transportation and media information
markets.
Except as set forth in this paragraph or elsewhere in this Offer to
Purchase, neither the Purchaser nor Parent nor, to the best of their knowledge,
any of the persons listed in Schedule A hereto nor any associate or majority
owned subsidiary of any of the foregoing, beneficially owns or has a right to
acquire any equity securities of the Company, and neither the Purchaser nor
Parent nor, to the best of their knowledge, any of the persons or entities
referred to above, nor any director, executive officer or subsidiary of any of
the foregoing, has effected any transaction in such equity securities during the
past 60 days. ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, Chairman and Chief Executive Officer of Parent,
and ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, Executive Vice President and Chief Financial Officer of
Parent, own 2,000 and 500 Shares of the Company, respectively (together
constituting less than one percent of the Shares).
Except as set forth in this Offer to Purchase, neither the Purchaser nor
Parent nor, to the best of their knowledge, any of the persons listed in
Schedule A hereto, has any contract, arrangement, understanding or relationship
(whether or not legally enforceable) with any other person with respect to any
securities of the Company, including, but not limited to, any contract,
arrangement, understanding or relationship concerning the transfer or the voting
of any of such securities, joint ventures, loan or option arrangements, puts or
calls, guarantees of loans, guarantees against loss, or the giving or
withholding of proxies. Except as set forth in this Offer to Purchase, there
have been no contacts, negotiations or transactions which have occurred since
August 1, 1995, between Parent, the Purchaser, or any of Parent's other
subsidiaries or, to the best of the knowledge of Parent and the Purchaser, any
of the persons listed in Schedule A hereto, on the one hand, and the Company or
its affiliates, on the other hand, concerning: a merger, consolidation or
acquisition; a tender offer or other acquisition of securities; an election of
directors; or a sale or other transfer of a material amount of assets. Except as
described in this Offer to Purchase, neither the Purchaser nor Parent nor, to
the best of their knowledge, any of the persons listed in Schedule A hereto, has
since August 1, 1995, had any transaction with the Company or any of its
executive officers, directors or affiliates which would require disclosure under
the rules and regulations of the Commission applicable to the Offer.
Except as set forth in this Offer to Purchase, during the last five years,
neither the Purchaser nor Parent nor, to their best knowledge, have any of the
persons listed on Schedule A (i) been convicted in a criminal proceeding
(excluding traffic violations and similar misdemeanors) or (ii) been a party to
a civil proceeding of a judicial or administrative body of competent
jurisdiction and as a result of such proceeding been or become subject to a
judgment, decree or final order enjoining future violations of, or prohibiting
activities subject to, federal or state securities laws or finding any violation
of such laws.
Until immediately prior to the time the Purchaser purchases the Shares
pursuant to the Offer, it is not anticipated that the Purchaser will have any
significant assets or liabilities or engage in activities other than those
incident to its formation and capitalization and the transactions contemplated
by the Offer. Because
12
the Purchaser is a newly formed corporation and has minimal assets and
capitalization, no meaningful financial information regarding the Purchaser is
available.
Parent is subject to the information and reporting requirements of the
Exchange Act and in accordance therewith is obligated to file reports, proxy
statements and other information with the Commission relating to its business,
financial condition and other matters. Information, as of particular dates,
concerning Parent's business, principal physical properties, capital structure,
material pending legal proceedings, operating results, financial condition,
directors and executive officers, their remuneration, stock options and
restricted stock granted to them, the principal holders of Parent's securities
and any material interest of such persons in transactions with Parent and other
matters is required to be disclosed in proxy statements and annual reports
distributed to Parent's stockholders and filed with the Commission. Such
reports, proxy statements and other information may be examined, and copies may
be obtained from the Commission in the same manner set forth in Section 8 with
respect to information concerning the Company. Certain reports and other
information concerning Parent may also be inspected at the offices of the New
York Stock Exchange, Inc., ▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇.
13
Set forth below is a summary of certain selected financial information of
Parent and its subsidiaries for the fiscal years ended December 31, 1998, 1997
and 1996 and for the three-month periods ended March 31, 1999 and 1998, which
has been excerpted or derived from the audited consolidated financial statements
contained in Parent's Annual Reports on Form 10-K for the fiscal years ended
December 31, 1998, 1997 and 1996. Amounts as of, and for the period ended, March
31, 1999 will be reflected in Parent's Quarterly Report on Form 10-Q for the
quarterly period ended March 31, 1999, which is expected to be filed no later
than May 17, 1999. More comprehensive financial information is included in such
reports and other documents filed by Parent with the Commission, and the
following summary is qualified in its entirety by reference to such documents
and all of the financial statements and related notes contained therein.
CERIDIAN CORPORATION
SELECTED CONSOLIDATED FINANCIAL INFORMATION
(IN MILLIONS, EXCEPT SHARE AND PER SHARE DATA)
THREE MONTHS ENDED
MARCH 31, FISCAL YEAR ENDED DECEMBER 31,
-------------------- -------------------------------
1999 1998 1998 1997 1996
--------- --------- --------- --------- ---------
(UNAUDITED)
INCOME STATEMENT DATA:
Revenue................................................. $ 321.4 $ 282.3 $ 1,162.1 $ 1,078.8 $ 942.6
Earnings from continuing operations(1).................. 164.4 35.4 135.5 59.2 64.6
Gain and earnings from discontinued operations(2)....... 25.4 437.0 46.4 38.3 33.1
Net earnings............................................ 41.8 35.8 189.8 472.4 181.9
Basic earnings per common share:
Continuing operations................................. 0.29 0.25 1.14 0.23 0.90
Net earnings.......................................... 0.29 0.25 1.32 3.01 1.24
Diluted earnings per common share:
Continuing operations................................. 0.28 0.24 1.11 0.22 0.84
Net earnings.......................................... 0.28 0.24 1.29 2.96 1.12
Shares used in calculations (in thousands)
Basic................................................. 144,086 144,110 144,070 156,835 135,841
Diluted............................................... 149,111 147,195 147,597 159,481 161,938
AS OF MARCH 31, AS OF DECEMBER 31,
-------------------- -------------------------------
1999 1998 1998 1997 1996
--------- --------- --------- --------- ---------
(UNAUDITED)
BALANCE SHEET DATA:
Total assets.......................................... $ 1,314.6 $ 1,289.7 $ 1,289.7 $ 1,243.3 $ 1,016.6
Debt obligations...................................... 51.9 54.5 54.5 3.0 138.2
Stockholders' equity.................................. 1,314.6 1,289.7 650.6 588.3 346.3
------------------------
(1) Includes 1998 unusual gains of $24.3 million, 1997 FAS 109 income tax
benefit of $175.0 million and 1997 unusual losses of $307.6 million. See
Notes B and D to Notes to Consolidated Financial Statements in Parent's
Annual Report on Form 10-K for the fiscal year ended December 31, 1998.
(2) Includes gain from the December 1997 sale of Computing Devices International
and earnings from its operations prior to the sale. See Note B to Notes to
Consolidated Financial Statements in Parent's Annual Report on Form 10-K for
the fiscal year ended December 31, 1998.
14
10. BACKGROUND OF THE OFFER. During the fourth quarter of 1998, members of
senior management of Parent and the Company had several discussions concerning a
possible business relationship.
On October 8, 1998, ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, President and Chief Operating Officer
of Parent, and ▇▇▇▇ ▇▇▇▇, Vice President of Parent and President of Ceridian
Employer Services, met with ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇, Chairman, Chief Executive Officer
and President of the Company, to discuss possible business relationships between
the two companies, including possible alliances or joint ventures.
On October 22, 1998, ▇▇. ▇▇▇▇▇▇ discussed with ▇▇▇▇▇▇'s Board of Directors
at a regularly scheduled board meeting his meeting with ▇▇. ▇▇▇▇▇▇▇▇▇▇ on
October 8, 1998 and the possibility of a business relationship between the two
parties.
On November 19, 1998, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, Chairman and Chief Executive Officer
of Parent, and ▇▇. ▇▇▇▇▇▇ met with ▇▇. ▇▇▇▇▇▇▇▇▇▇ to further explore possible
business relationships. At such time, Messrs. ▇▇▇▇▇▇▇ and ▇▇▇▇▇▇ asked whether
the Company had any interest in being acquired by Parent, and were advised that
the Company was not interested in entering into a transaction with Parent at
that time. Messrs. ▇▇▇▇▇▇ and ▇▇▇▇▇▇▇▇▇▇ had several follow-up telephone
conversations in December 1998, during which they discussed mutual cross selling
opportunities, including the possibility that Parent provide payroll services to
some of the Company's larger customers. No business relationship was explored at
that time.
In early February 1999, ▇▇. ▇▇▇▇▇▇▇ was telephoned by representatives of
▇▇▇▇▇▇▇, ▇▇▇▇▇ & Co. ("▇▇▇▇▇▇▇ ▇▇▇▇▇") and advised that ▇▇▇▇▇▇▇ ▇▇▇▇▇ was
representing the Company in connection with a possible transaction involving the
Company. ▇▇. ▇▇▇▇▇▇▇ was asked if ▇▇▇▇▇▇ would be interested in reviewing due
diligence materials relating to the Company and possibly submitting an initial
indication of interest relating to a potential acquisition of the Company. ▇▇.
▇▇▇▇▇▇▇ advised ▇▇▇▇▇▇▇ ▇▇▇▇▇ that Parent would be interested in reviewing the
due diligence materials relating to the Company. On February 3, 1999, ▇▇. ▇▇▇▇▇▇
telephoned ▇▇. ▇▇▇▇▇▇▇▇▇▇ and confirmed ▇▇▇▇▇▇'s interest in exploring a
possible transaction.
On February 3, 1999, at a regularly scheduled meeting, ▇▇▇▇▇▇'s Board of
Directors was advised by ▇▇▇▇▇▇'s senior management of the opportunity to engage
in a transaction with the Company. Management of Parent and Parent's Board of
Directors had a detailed discussion of the Company and the strategic rationale
for a transaction with the Company at this meeting.
On February 4, 1999, ▇▇▇▇▇▇ and ▇▇▇▇▇▇▇ ▇▇▇▇▇, on behalf of the Company,
executed a confidentiality agreement. Parent contacted Bear ▇▇▇▇▇▇▇ to advise
Parent in connection with a possible transaction with the Company. On February
5, 1999, ▇▇▇▇▇▇ received a confidential memorandum from ▇▇▇▇▇▇▇ ▇▇▇▇▇ with
respect to the Company and began reviewing the information contained therein.
On February 19, 1999, ▇▇▇▇▇▇ received a letter from ▇▇▇▇▇▇▇ ▇▇▇▇▇ requesting
a written, preliminary and non-binding indication of interest for a transaction
with the Company. ▇▇▇▇▇▇▇ ▇▇▇▇▇ requested that the indication of interest be
submitted no later than February 26, 1999.
On February 26, 1999, ▇▇▇▇▇▇ provided ▇▇▇▇▇▇▇ ▇▇▇▇▇ and the Company with a
preliminary indication of interest, based on the confidential memorandum
previously provided, to acquire the Company in a potential stock for stock
transaction at a price of $26.00 to $30.00 per Share, assuming pooling of
interests accounting treatment. ▇▇▇▇▇▇▇ ▇▇▇▇▇ thereafter advised Parent that,
based on its preliminary indication of interest, Parent would be permitted to
conduct additional due diligence concerning the Company.
On the evening of March 16, 1999, Messrs. ▇▇▇▇▇▇, ▇▇▇▇ and ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇,
Executive Vice President and Chief Financial Officer of Parent, met various
members of the Company's management and a representative of ▇▇▇▇▇▇▇ ▇▇▇▇▇ for
dinner and discussed various due diligence items.
15
On March 17, 1999, various representatives of Parent and ▇▇▇▇ ▇▇▇▇▇▇▇
participated in management presentations given by members of the Company's
management. Representatives of Parent also conducted a review of various due
diligence documents and materials relating to the Company on March 17 and 18,
1999, and visited the Company's operations in Palm Harbor and St. Petersburg,
Florida. From this time, through and including April 30, 1999, Parent and Bear
▇▇▇▇▇▇▇ had conversations with the Company's management and ▇▇▇▇▇▇▇ ▇▇▇▇▇,
relating to a potential transaction with the Company.
On March 26, 1999, Messrs. ▇▇▇▇▇▇▇ and ▇▇▇▇▇▇ met, at ▇▇. ▇▇▇▇▇▇'▇ request,
with ▇▇. ▇▇▇▇▇▇▇▇▇▇ in Palm Harbor, Florida to discuss the results of Parent's
due diligence investigation and ▇▇▇▇▇▇'s continued interest in acquiring the
Company. During these discussions, the parties discussed the potential pricing
uncertainty of a bid by Parent for the Company in a stock for stock transaction,
as a pooling of interests, due to Parent's repurchase of its own securities
during the previous two years and the need for Parent to sell a large quantity
of its common stock to become eligible for pooling of interests accounting
treatment. ▇▇. ▇▇▇▇▇▇▇ suggested to ▇▇. ▇▇▇▇▇▇▇▇▇▇ that the parties might
consider a business alliance in lieu of an acquisition.
In a letter dated March 31, 1999, ▇▇▇▇▇▇ received a request from ▇▇▇▇▇▇▇
▇▇▇▇▇ for a definitive proposal by April 16, 1999 in connection with a
transaction with the Company. Enclosed with the letter was a draft agreement for
▇▇▇▇▇▇'s consideration.
On April 5, 1999, Messrs. ▇▇▇▇▇▇▇ and ▇▇▇▇▇▇ met with ▇▇. ▇▇▇▇▇▇▇▇▇▇ to
discuss ▇▇▇▇▇▇'s continued interest in acquiring the Company. Messrs. ▇▇▇▇▇▇▇
and ▇▇▇▇▇▇ again raised the possibility of a business alliance between the
Company and Parent.
On April 15, 1999, at its regularly scheduled board meeting, ▇▇▇▇▇▇'s Board
of Directors discussed the Company and the acquisition opportunity. Management
of Parent advised the Board of Directors of Parent that at that time it did not
recommend a stock for stock acquisition of the Company, but instead recommended
the submission of an alternative proposal that would contemplate a business
alliance and joint venture relationship in lieu of an acquisition. Parent's
Board of Directors agreed to this recommendation.
On April 16, 1999, ▇▇▇▇▇▇ advised the Company and ▇▇▇▇▇▇▇ ▇▇▇▇▇ that it
would not be submitting an acquisition bid, but instead proposed a business
alliance and a joint venture relationship as a means for the two companies to
conduct joint marketing and development efforts.
On April 20, 1999, ▇▇▇▇▇▇▇ ▇▇▇▇▇ advised Parent that ▇▇▇▇▇▇'s proposed
business alliance and joint venture relationship proposal had not been accepted
by the Company, and that the Company's Board of Directors intended to continue
to engage in the process in which ▇▇▇▇▇▇ had been invited to participate.
▇▇▇▇▇▇▇ ▇▇▇▇▇ advised Parent that if it wished to submit an acquisition
proposal, it needed to do so by the close of business on April 23, 1999.
On April 23, 1999, ▇▇▇▇▇▇ submitted a proposal to ▇▇▇▇▇▇▇ ▇▇▇▇▇ to acquire
all Shares of the Company at a price of $24.00 per Share in cash, subject to the
approval of Parent's Board of Directors and additional due diligence by Parent
as to certain technology matters, and requested a response by the close of
business on April 27, 1999. Following receipt of the proposal, representatives
of ▇▇▇▇▇▇▇ ▇▇▇▇▇ requested that Parent provide by April 26th any proposed
modifications to the draft acquisition agreement ▇▇▇▇▇▇▇ ▇▇▇▇▇ had previously
provided to Parent.
On April 26, 1999, ▇▇▇▇▇▇ submitted proposed modifications to the draft
acquisition agreement previously provided.
16
On the evening of April 27, 1999, representatives of ▇▇▇▇▇▇▇ ▇▇▇▇▇ advised
▇▇▇▇ ▇▇▇▇▇▇▇ that the Company's Board of Directors had met and requested that
Parent withdraw several of its requested modifications to the draft merger
agreement and also consider increasing its bid price. After discussions between
Bear ▇▇▇▇▇▇▇ and Messrs. ▇▇▇▇▇▇▇ and ▇▇▇▇▇▇, ▇▇▇▇▇▇ agreed to withdraw several
of its requested modifications to the draft merger agreement and to increase its
bid price to $25.00 per Share in cash, subject to approval of Parent's Board of
Directors.
On April 28, 1999, ▇▇. ▇▇▇▇▇▇ and other representatives of Parent flew to
Palm Harbor to conduct additional due diligence on various technology matters.
In the early afternoon of April 29, 1999, and prior to the meeting of the
Board of Directors of Parent on that day, ▇▇. ▇▇▇▇▇▇▇▇▇▇ advised ▇▇. ▇▇▇▇▇▇ by
telephone that he did not believe that ▇▇▇▇▇▇'s proposal would receive the
support of the Board of Directors of the Company unless Parent increased its
offer.
On the afternoon of April 29, 1999, the Board of Directors of Parent met in
a special telephonic meeting to consider whether to approve the offer to acquire
all outstanding Shares of the Company. At this meeting, ▇▇▇▇ ▇▇▇▇▇▇▇ made a
presentation to the Board of Directors of Parent and delivered its oral opinion
(which was subsequently confirmed in writing) that, subject to the matters set
forth in its opinion, a bid price of $25.50 per Share would be fair from a
financial point of view to Parent. After discussion of the strategic rationale
for the acquisition of the Company by Parent, consideration of the financial
analysis of the acquisition, the receipt of the oral opinion of Bear ▇▇▇▇▇▇▇
described above and the likely terms of the debt that Parent would need to
secure to finance the acquisition and the costs and expenses relating thereto,
the members of Parent's Board of Directors in attendance unanimously approved
the offer and authorized ▇▇▇▇▇▇'s senior management to proceed in its
discretion.
Following Parent's Board of Directors meeting on April 29, 1999, ▇▇▇▇▇▇'s
management advised ▇▇▇▇▇▇▇ ▇▇▇▇▇ that it would be submitting further
modifications to the proposed merger agreement and a bid that would be open
until 1:00 a.m., New York City time, on April 30, 1999. Parent thereafter
submitted to the Company its modifications to the proposed merger agreement.
Later that evening, representatives of Parent also reiterated that they would
not increase the per Share price to an amount greater than $25.00 per Share.
Prior to the expiration of Parent's deadline, ▇▇. ▇▇▇▇▇▇▇▇▇▇ advised ▇▇.
▇▇▇▇▇▇ that ▇▇▇▇▇▇'s bid had not been accepted and would not be unless Parent
increased its price per Share. It was suggested, however, that several members
of the Company's senior management would agree to not have their Options
accelerated upon a change of control if Parent increased its Offer. ▇▇. ▇▇▇▇▇▇
advised ▇▇. ▇▇▇▇▇▇▇▇▇▇ that Parent would not increase its bid price at that
time. ▇▇. ▇▇▇▇▇▇ and ▇▇. ▇▇▇▇▇▇▇▇▇▇, however, agreed to discuss the matter the
next morning and each advised their respective legal counsel to continue to
negotiate the terms of the Merger Agreement which they did through the early
morning hours of April 30, 1999.
On the morning of April 30, 1999, ▇▇. ▇▇▇▇▇▇ and ▇▇. ▇▇▇▇▇▇▇▇▇▇ discussed
the matter again. Following this discussion, Parent authorized representatives
of Bear ▇▇▇▇▇▇▇ to advise ▇▇▇▇▇▇▇ ▇▇▇▇▇ that Parent was increasing its offer to
$25.50 per Share in cash. ▇▇. ▇▇▇▇▇▇ also advised ▇▇. ▇▇▇▇▇▇▇▇▇▇ of the
increased bid price. ▇▇. ▇▇▇▇▇▇▇▇▇▇ advised ▇▇. ▇▇▇▇▇▇ that the increased bid
price would be submitted to the Company's Board of Directors. Counsel for Parent
and the Company continued to discuss issues relating to the Merger Agreement.
In the afternoon of April 30, 1999, ▇▇. ▇▇▇▇▇▇▇▇▇▇ advised Messrs. ▇▇▇▇▇▇▇
and ▇▇▇▇▇▇ that the Company's Board of Directors had approved the Merger
Agreement, subject to the Company's senior management, upon the advice of
counsel, being able to resolve all remaining issues relating to the Merger
Agreement. Thereafter, in the early evening of April 30, 1999, the Merger
Agreement was finalized and executed.
17
11. PURPOSE OF THE OFFER AND THE MERGER; PLANS FOR THE COMPANY; THE MERGER
AGREEMENT. The purpose of the Offer and the Merger is for Parent to acquire
control of, and ownership of the entire equity interest in, the Company. The
Offer is intended to permit Parent to acquire control of the Company at the
earliest practicable date. The purpose of the Merger is to acquire all
outstanding Shares not purchased pursuant to the Offer.
Except as indicated in this Offer to Purchase, neither Parent nor the
Purchaser has any present plans or proposals which relate to or would result in
an extraordinary corporate transaction, such as a merger, reorganization,
liquidation, relocation of operations, or sale or transfer of a material amount
of assets, involving the Company or any of its subsidiaries, or any material
changes in the Company's capitalization, dividend policy, corporate structure or
business or the composition of its management or personnel.
THE MERGER AGREEMENT. The Merger Agreement provides for the commencement of
the Offer as soon as reasonably practicable, and in any event within five
business days, after the first public announcement of the Merger Agreement. The
obligations of the Purchaser to consummate the Offer and accept for payment or
pay for any Shares tendered pursuant to the Offer is subject only to the
satisfaction of certain conditions, including the satisfaction of the Minimum
Condition, which are described in Section 13.
The Merger Agreement provides that, subject to the terms and conditions of
the Merger Agreement at the Effective Time, the Purchaser will be merged with
and into the Company, and the Company will survive and become a wholly owned
subsidiary of Parent. At the Effective Time, each Share issued and outstanding
immediately prior to the Effective Time (other than Shares owned by Parent, the
Purchaser or any other direct or indirect subsidiary of Parent or Shares that
are owned by the Company or any of its subsidiaries and in each case not held on
behalf of third parties or Dissenting Shares) will be canceled, extinguished and
converted into the right to receive, without interest, an amount in cash equal
to $25.50 per Share or such higher price per Share as shall have been paid in
the Offer.
The Merger Agreement requires the Company to take all necessary actions to
cause prior to the Effective Time each Option that had not vested immediately
prior to such time to become vested and fully exercisable. Certain executive
officers of the Company, however, have waived all vesting rights that they may
have pursuant to the terms of the Merger Agreement with respect to all Options
beneficially owned by them and issued pursuant to the Option Plans. In addition,
the Company is obligated to use its reasonable best efforts to cause each then
outstanding Option, whether vested or unvested, to be canceled, with the holder
thereof being entitled to receive, following the Effective Time, an amount equal
to the difference, if any, between $25.50 (or such higher price per Share as
shall have been paid in the Offer) and the exercise price of each such Option.
Any Options that are not exercised in full or surrendered for cancellation
("Remaining Options") will, at the Effective Time, in accordance with the terms
of the Option Plan pursuant to which such Option was issued, be deemed to
constitute an option to acquire, on the same terms and conditions as were
applicable under such Remaining Option immediately prior to the Effective Time,
(A) a number of shares of Parent's common stock, par value $.01 per share
("Parent Common Stock"), equal to the product (rounded up to the nearest whole
number) obtained by multiplying (x) the number of Shares the holder of such
Remaining Option would have been entitled to receive immediately prior to the
Effective Time had such holder exercised such Remaining Option in full
immediately prior to the Effective Time and (y) the quotient obtained by
dividing $25.50 (or such higher price as shall have been paid in the Offer) by
the average of the closing prices per share of Parent Common Stock on the New
York Stock Exchange Composite Transactions tape for the five trading days
immediately preceding the date of the Effective Time, as reported in the Wall
Street Journal, New York City edition, and (B) at a price per share of Parent
Common Stock (rounded down to the nearest whole cent) equal to (x) the aggregate
exercise price for the Shares otherwise purchasable pursuant to such Remaining
Option (assuming for such purposes that such Remaining Option was fully
exercisable at such time) divided by (y) the number of full shares of Parent
Common Stock deemed purchasable pursuant to such Remaining Option in accordance
with clause (A) above. Parent has agreed that at the Effective Time it will file
a registration statement on Form S-8, or, if unavailable, a registration
statement on Form S-3 (or any successor forms), or another
18
appropriate form with respect to the Parent Common Stock subject to Remaining
Options, and has agreed to use its best efforts to cause such registration
statement to become and remain effective, as well as comply with any applicable
state securities or "blue sky" laws, for so long as any Remaining Options remain
outstanding. In addition, prior to the Effective Time, the Board of Directors of
Parent agreed to use reasonable efforts to take all actions necessary to ensure
that the options to purchase Parent Common Stock (resulting from Remaining
Options) held by the officers and directors of the Company shall be exempt for
purposes of Rule 16b-3 under the Exchange Act.
The Merger Agreement contains representations and warranties by the Company
regarding, among other things, its organization, its capitalization, its
authority relative to the Merger Agreement, consents and approvals necessary for
the Offer and the Merger, the Company's filings and reports with and to the
Commission, the absence of certain changes in its business, the absence of
litigation, certain employee matters, compliance with laws, inapplicability of
takeover statutes, environmental matters, taxes, labor matters, intellectual
property, brokers and finders, and year 2000, and by each of Parent and the
Purchaser regarding, among other things, its organization, its authority
relative to the Merger Agreement and the Offer, and consents and approvals
necessary for the Offer and the Merger.
The obligations of the parties to effect the Merger are subject to the
satisfaction or waiver of the following conditions: (i) the Merger Agreement and
the plan of merger having been approved by the requisite vote of the holders of
the Shares; (ii) any waiting period applicable to the consummation of the Merger
under the HSR Act having expired or been earlier terminated; (iii) no court or
governmental entity of competent jurisdiction having enacted, issued,
promulgated, enforced or entered any statute, law, ordinance, rule, regulation,
judgment, decree, injunction or other order ("Order") that is in effect and
permanently enjoins or otherwise prohibits consummation of the Merger; and (iv)
the Purchaser shall have purchased Shares in the Offer.
The Company has agreed that, prior to the Effective Time, the Company and
its subsidiaries will each conduct its operations in the ordinary and usual
course, and to the extent consistent therewith, will each use their respective
best reasonable efforts to preserve its business organization intact and
maintain its existing relations and goodwill with customers, suppliers,
distributors, creditors, lessors, employees and business associates. The Company
further agreed that with respect to itself and its subsidiaries prior to the
Effective Time: (i) it shall not (A) issue, sell, pledge, dispose of or encumber
any capital stock owned by it in any of its subsidiaries; (B) amend its articles
of incorporation or bylaws or the comparable governing instruments of any of its
subsidiaries; (C) split, combine or reclassify its outstanding shares of capital
stock; (D) declare, set aside or pay any dividend payable in cash, stock or
property in respect of any capital stock other than dividends from its direct or
indirect wholly owned subsidiaries to it or a wholly owned subsidiary; or (E)
repurchase, redeem or otherwise acquire any shares of its capital stock or any
securities convertible into or exchangeable or exercisable for any shares of its
capital stock, except, in connection with its Option Plans, or permit any of its
subsidiaries to purchase or otherwise acquire, any shares of its capital stock
or any securities convertible into or exchangeable or exercisable for any shares
of its capital stock; (ii) neither it nor any of its subsidiaries shall (A)
issue, sell, pledge, dispose of or encumber any shares of, or securities
convertible into or exchangeable or exercisable for, or options, warrants,
calls, commitments or rights of any kind to acquire, any shares of its capital
stock of any class or any voting debt or any other property or assets (other
than Shares issuable pursuant to options (whether or not vested) currently
outstanding under the Company's Option Plans); (B) other than in the ordinary
and usual course of business, transfer, lease, license, guarantee, sell,
mortgage, pledge, dispose of or encumber any other property or assets (including
capital stock of any of its subsidiaries) or incur or modify any material
indebtedness for borrowed money or guarantee any such indebtedness; or (C) by
any means, make any significant acquisition of, or investment in, assets or
stock (whether by way of merger, consolidation, tender offer, share exchange or
other activity); (iii) neither it nor any of its subsidiaries shall terminate,
establish, adopt, enter into, make any new grants or awards under, amend or
otherwise modify, any compensation and benefit plans, or increase the salary,
wage, bonus or other compensation of any employees except for
19
grants or awards or increases under existing compensation and benefit plans
occurring in the ordinary and usual course of business (which shall include
normal periodic performance reviews and related compensation and benefit
increases), annual reestablishment of compensation and benefit plans and the
provision of individual compensation or benefit plans and agreements for newly
hired or appointed officers and employees of the Company and its subsidiaries or
except for actions necessary to satisfy existing contractual obligations under
existing compensation and benefit plans or agreements; and (iv) neither it nor
any of its subsidiaries will authorize or enter into an agreement to do anything
prohibited by the foregoing.
The Company has also agreed that neither it nor any of its subsidiaries nor
any of its or its subsidiaries' officers and directors shall, and that it shall
direct and cause its and its subsidiaries' employees, agents and other
representatives (including any investment banker, attorney or accountant
retained by it or any of its subsidiaries) not to, directly or indirectly,
initiate, solicit, encourage or otherwise facilitate any inquiries or the making
of any proposal or offer with respect to a merger, tender offer, reorganization,
share exchange, consolidation or similar transaction involving, or any purchase
of all or substantially all of the assets or any equity securities of, it or any
of its subsidiaries (any such proposal or offer being referred to as an
"Acquisition Proposal"). The Company has further agreed that, except as
otherwise provided in the Merger Agreement, neither it nor any of its
subsidiaries nor any of its or its subsidiaries' officers and directors shall,
and that it shall direct and cause its and its subsidiaries' employees, agents
and representatives not to, directly or indirectly, engage in any negotiations
concerning, or provide any confidential information or data to, or have any
discussions with, any person relating to an Acquisition Proposal, or otherwise
facilitate any effort or attempt to make or implement an Acquisition Proposal.
Notwithstanding any of the foregoing, the Company, its representatives and its
Board of Directors have the right to (i) comply with Rule 14e-2 under the
Exchange Act with regard to an Acquisition Proposal or otherwise comply with the
Exchange Act; (ii) provide information in response to a request therefor by a
person who has made an unsolicited Acquisition Proposal; (iii) engage in any
negotiations or discussions with any person who has made an unsolicited
Acquisition Proposal or otherwise facilitate any effort or attempt to implement
an Acquisition Proposal; and (iv) approve and recommend to its stockholders an
Acquisition Proposal. The Board of Directors may take the action specified in
(ii), (iii) and (iv) above only if and to the extent that it determines either
(i) upon advice of outside legal counsel that the failure to take such action
would constitute a breach of the directors' fiduciary duties under applicable
law or (ii) that such Acquisition Proposal contains terms such that if an
agreement relating to such Acquisition Proposal were entered into, it would be,
in the aggregate, more favorable to the Company than the transactions
contemplated by the Merger Agreement (any such more favorable Acquisition
Proposal being referred to as a "Superior Proposal"), taking into account, at
the sole discretion of the Board of Directors of the Company, any of the matters
described in Section 4.5 of the articles of incorporation of the Company. The
Company also has agreed to notify Parent within 48 hours of receipt of an
Acquisition Proposal that would be reasonably likely to result in a Superior
Proposal (including the terms thereof and the identity of the offeror) and to
keep Parent reasonably informed of the status of any such proposal.
Parent has agreed that all rights to indemnification now existing in favor
of the directors, officers, employees and agents of the Company as provided in
the Company's articles of incorporation or bylaws or otherwise in effect on the
date of the Merger Agreement shall survive the Merger and continue in full force
and effect for a period of six years after the Effective Time. ▇▇▇▇▇▇ has also
agreed to maintain in effect for a period of six years after the Effective Time
the current policies of directors' and officers' liability insurance maintained
by the Company (provided that Parent may substitute policies on materially
similar terms) so long as the annual premium for such insurance is not in excess
of 250% of the most recent annual premium paid (the "Current Premium"). If,
however, the current policies of directors' and officers' liability insurance is
terminated or canceled during such six-year period, Parent has agreed to use its
best efforts to obtain as much insurance as can be obtained for the remainder of
such period for a premium not in excess (on an annualized basis) of 250% of the
Current Premium and indemnify the directors and officers for any costs not
covered by such insurance.
20
The Merger Agreement provides that, if required by applicable law, the
Company will promptly call a meeting of its stockholders for the purpose of
voting upon the Merger Agreement. In connection therewith, except as otherwise
expressly permitted by the Merger Agreement, the Company will, through its Board
of Directors, recommend to its stockholders approval of such matters and take
all lawful action to solicit such approval, including, without limitation,
preparing and filing a proxy statement or information statement under the
Exchange Act.
The parties have also agreed to use their best efforts to take, or cause to
be taken, all actions and to do, or cause to be done, all things necessary,
proper or advisable on its part under the Merger Agreement and applicable laws
and regulations to consummate the Offer and make effective the Merger and the
other transactions contemplated by the Merger Agreement as soon as practicable.
Pursuant to the Merger Agreement, Parent has agreed to maintain for a period
of one year after the Effective Time for the benefit of the employees of the
Company benefits under employee benefit plans that are no less favorable in the
aggregate than those provided under the Company's current benefit plans;
provided, however, that Parent will not be required to maintain any "change of
control" or similar plans with respect to any change of control occurring after
the Effective Time and excluding benefits provided pursuant to any plan covering
one or a select group of current or former employees. Each employee of the
Company as of the Effective Time will, for purposes of determining eligibility
and vesting under any benefit plan of Parent, be given credit for all service
with the Company prior to the Effective Time. In addition, Parent will cause to
be waived any pre-existing condition limitations under the benefit plans of
Parent and its subsidiaries in which the Company's and its subsidiaries'
employees participate and cause to be credited to any deductible or
out-of-pocket expense of Parent's benefit plans any deductibles or out-of-pocket
expenses incurred by such employees and their beneficiaries and dependents
during the portion of the calendar year prior to participation in the benefit
plans provided by Parent. Parent has also agreed to cause the Company to honor
all of the Company's existing employee benefit obligations to current and former
employees under the compensation and benefit plans and all employee severance
plans (or policies) and all employment or severance agreements previously
disclosed to Parent.
The Merger Agreement provides that, if requested by Parent, the Company will
to the extent permissible, promptly following the purchase by the Purchaser of
Shares pursuant to the Offer in accordance with the terms of the Merger
Agreement, take all actions necessary (including calling a special meeting of
the Board of Directors of the Company or the stockholders of the Company for
this purpose) to cause natural persons designated by Parent to become directors
of the Company (including mailing to the Company's stockholders the information
required by Section 14(f) of the Exchange Act and Rule 14f-1 promulgated
thereunder) so that the total number of such natural persons equals that number
of directors, rounded up to the next whole number, which represents the product
of the total number of directors on the Board of Directors multiplied by the
percentage that such number of Shares so accepted for payment plus any Shares
beneficially owned by Parent or its affiliates on the date of the Merger
Agreement bears to the total number of Shares outstanding at the time of such
acceptance for payment. At such time, the Company shall also cause persons
designated by Parent to constitute the same percentage (rounded up to the next
whole number) as is on the Company's Board of Directors of (i) each committee of
the Company's Board of Directors; (ii) each board of directors (or similar body)
of each subsidiary of the Company; and (iii) each committee (or similar body) of
each such board. To implement the foregoing, the Company has agreed to increase
the size of the Board of Directors or use its reasonable efforts to secure the
resignation of directors, or both, as is necessary to permit ▇▇▇▇▇▇'s designees
to be elected to the Board of Directors of the Company; provided, however, that
prior to the Effective Time there shall be at least three members of the Board
of Directors of the Company who are neither officers of Parent nor designees,
stockholders or affiliates of Parent ("Parent Insiders"). In the event that
▇▇▇▇▇▇'s designees are elected to the Board of Directors of the Company after
the acceptance for payment of Shares pursuant to the Offer and prior to the
Effective Time, the affirmative vote of at least a majority of the directors of
the Company who are not Parent Insiders will be required to (a) amend or
terminate the Merger Agreement by the Company, (b) exercise or waive any of the
Company's rights, benefits or remedies under the Merger
21
Agreement, (c) extend the time for performance of Parent's and the Purchaser's
respective obligations under the Merger Agreement, or (d) take any other action
by the Company's Board of Directors under or in connection with the Merger
Agreement which would adversely affect the ability of the Company's stockholders
to receive the Merger Consideration.
The Surviving Corporation will use its best efforts to cause the Shares to
be removed from quotation on the Nasdaq National Market System and deregistered
under the Exchange Act as soon as practicable following the Effective Time.
Unless required by the rules of the NASD, subsequent to the Purchaser's payment
for Shares and prior to the Effective Time, the Company has agreed not to take
any action to cause the Shares to be removed from quotation on the Nasdaq
National Market System and deregistered under the Exchange Act.
TERMINATION. The Merger Agreement may be terminated at any time prior to
the Effective Time, whether prior to or after approval by the stockholders of
the Company of the Merger Agreement: (a) by mutual written consent of the Boards
of Directors of Parent, the Purchaser and the Company; (b) by either the Company
or Parent if any Order permanently restraining, enjoining or otherwise
prohibiting consummation of the Merger shall have become final and
non-appealable after the parties have used their respective best efforts to have
such order removed, repealed or overturned; or (c) by the Company if (i) the
Company's Board of Directors withdraws or adversely modifies its adoption of the
Merger Agreement, its recommendation of the Offer or its recommendation that the
Company's stockholders approve the Merger Agreement (including, without
limitation, taking no position in response to a tender offer by a person other
than Parent), (ii) there has been a material breach by Parent or the Purchaser
of any material covenant or agreement contained in the Merger Agreement that is
not curable or, if curable, is not cured prior to the earlier of (x) 30 days
after written notice of such breach is given by the Company to the party
committing such breach or (y) two business days prior to any date on which the
Offer is scheduled to expire (so long as at such time specified in clause (y)
neither the Company nor Parent has indicated that it intends to request (and has
the right under the Merger Agreement to have such request honored) that the
Offer be extended in accordance with the terms of the Merger Agreement),
provided that Parent shall have been given notice of such breach at least two
business days prior to termination, or (iii) the Purchaser (or any of the Parent
Companies) shall have (x) terminated the Offer, or (y) failed to pay for Shares
pursuant to the Offer on a timely basis following the expiration of the Offer,
if the Offer has not been extended in accordance with the terms of the Merger
Agreement.
The Merger Agreement may be terminated by Parent (a) at any time prior to
the Effective Time, by action of the Board of Directors of Parent if due to an
occurrence or circumstance which resulted in a failure to satisfy any of the
Offer Conditions (as hereinafter defined), and the Purchaser shall have
terminated the Offer in accordance with the terms of the Merger Agreement
(including, without limitation, taking no position in response to a tender offer
by a person other than Parent, the Purchaser or any of their affiliates), (b)
prior to the purchase of Shares by the Purchaser pursuant to the Offer if (i)
the Company's Board of Directors withdraws or adversely modifies its adoption of
the Merger Agreement, its recommendation of the Offer or its recommendation that
the Company's stockholders approve the Merger Agreement (including, without
limitation, taking no position in response to a tender offer by a person other
than Parent, the Purchaser or any of their affiliates), (ii) there has been a
material breach by the Company of any material covenant or agreement contained
in the Merger Agreement that is not curable or, if curable, is not cured prior
to the earlier of (x) 30 days after written notice of such breach is given by
Parent to the party committing such breach or (y) two business days prior to any
date on which the Offer is scheduled to expire; provided, however, that at such
time specified in this clause (y) neither the Company nor Parent has indicated
that it intends to request (and has the right under the Merger Agreement to have
such request honored) that the Offer be extended in accordance with the terms of
the Merger Agreement (provided that the Company shall have been given notice of
such breach at least two business days prior to termination), or (iii) the
Minimum Condition shall not have been satisfied by the expiration of the Offer
(as it may have been extended from time to time), and at or prior to such time
any person (other than Parent or the Purchaser)
22
shall have made a public announcement with respect to a bona fide Acquisition
Proposal that contemplates a per Share consideration in excess of the Merger
Consideration (a "Third Party Offer").
TERMINATION FEES. In the event the Merger Agreement is terminated in
accordance with the terms of the Merger Agreement by Parent as a result of a
material breach by the Company of any material covenant or agreement contained
in the Merger Agreement, then the Company shall promptly, but in no event later
than two days after the date of such termination, pay Parent a termination fee
of $29.4 million (the "Termination Fee"). In the event that (i) (a) an
Acquisition Proposal shall have been made to the Company or any person (other
than Parent, the Purchaser or any of their affiliates) shall have publicly
announced an intention to make an Acquisition Proposal with respect to the
Company and thereafter the Merger Agreement is terminated (x) by the Company as
a result of the termination of the Offer by the Purchaser or (y) by Parent due
to an occurrence or circumstance which resulted in a failure to satisfy any of
the Offer Conditions under circumstances that would have permitted Parent to
terminate the Merger Agreement as a result of a material breach by the Company
or (b) the Merger Agreement is terminated (x) by the Company or Parent as a
result of the Company's Board of Directors withdrawing or adversely modifying
its adoption of the Merger Agreement, its recommendation of the Offer or its
recommendation that the stockholders of the Company approve the Merger Agreement
or (y) by Parent as a result of the Minimum Condition not having been satisfied
by the Expiration Date and at or prior to such time the public announcement of a
Third Party Offer and (ii) (a) the person making the Third Party Offer (the
"Acquiring Party") has acquired, by purchase, merger, consolidation, sale,
assignment, lease, transfer or otherwise, in one transaction or any related
series of transactions within 12 months after a termination of the Merger
Agreement, a majority of the voting power of the outstanding securities of the
Company or all or substantially all of the assets of the Company or (b) there
has been consummated a merger, consolidation or similar business combination
between the Company or one of its subsidiaries and the Acquiring Party within 12
months after the relevant termination of the Merger Agreement, then the Company
shall pay Parent the Termination Fee.
The preceding description of the terms and provisions of the Merger
Agreement is qualified in its entirety by reference to the text of the Merger
Agreement, which is an exhibit to the Tender Offer Statement on Schedule 14D-1
filed by the Purchaser and Parent with the Commission and is available for
inspection and copying at the principal office of the Commission or may be
viewed and printed from the Commission web site at ▇▇▇▇://▇▇▇.▇▇▇.▇▇▇ in the
manner set forth in Section 9.
12. SOURCE AND AMOUNT OF FUNDS. The total amount of funds required by the
Purchaser to purchase all of the outstanding Shares pursuant to the Offer and to
pay fees and expenses related to the Offer and the Merger is expected to be
approximately $763 million. The Offer and Merger are not conditioned on the
ability of the Purchaser or Parent to obtain financing. The Purchaser plans to
obtain all funds needed for the Offer and the Merger through a capital
contribution which will be made by Parent. Parent plans to obtain the funds for
such capital contribution from a combination of cash on hand, funds available to
Parent under its existing Amended and Restated Credit Agreement dated as of
December 12, 1995, as amended and restated as of July 31, 1997, among Parent and
the various lenders specified therein (the "Credit Agreement") and pursuant to a
financing commitment letter (the "Commitment"), dated May 4, 1999, from Bank of
America National Trust and Savings Association ("BA"), and NationsBanc
▇▇▇▇▇▇▇▇▇▇ Securities LLC ("NM Securities") (collectively, the "Commitment
Lenders").
As of March 31, 1999, Parent had approximately $110.3 of cash and cash
equivalents available to it without borrowings. The lenders under the Credit
Agreement are committed to loan Parent up to $250 million minus (a) the
aggregate principal amount of all outstanding committed loans under the Credit
Agreement, (b) the aggregate undrawn face amount under all outstanding letters
available under the Credit Agreement, plus (c) the amount of all unreimbursed
drawings under all outstanding letters of credit available under the Credit
Agreement (the "Credit Agreement Facility"). As of March 31, 1999, because no
loans were outstanding under the Credit Agreement, and letters of credit in the
aggregate undrawn face of amount of approximately $4.9 million were outstanding,
Parent had the ability to borrow up to $245.1 million under the Credit Agreement
Facility.
23
Pursuant to the Commitment, BA has agreed to provide a $450 million
unsecured term loan to use solely for the purpose of capitalizing the Purchaser
to enable it to make any payment required to acquire the Shares in accordance
with the Merger Agreement, to pay transaction fees and expenses required in
connection with the Offer and to invest in cash equivalents until payment for
the foregoing purposes is made. NM Securities has agreed to act as lead arranger
and book manager for the facility available under the Commitment (the
"Commitment Facility"), and if necessary to form a syndicate of financial
institutions for the Commitment Facility.
THE CREDIT AGREEMENT. The parties to the Credit Agreement include Parent
(as borrower), BA as Agent (in such capacity, the "Agent"), BancAmerica
Securities, Inc., as Arranger (the "Arranger"), the Bank of New York and First
Bank National Association, as Co-Agents (the "Co-Agents"), and various other
financial institutions as parties thereto (the "Banks"). The following is a
summary of certain portions of the Credit Agreement, which is qualified in its
entirety by reference to the text of the Credit Agreement, which is an exhibit
to the Tender Offer Statement on Schedule 14D-1 filed by the Purchaser and
Parent with the Commission and is available for inspection and copying at the
principal office of the Commission or may be viewed and printed from the
Commission's web site at ▇▇▇▇://▇▇▇.▇▇▇.▇▇▇ in the manner set forth in Section
9.
The Credit Agreement provides that the borrowings thereunder are subject to
certain conditions precedent, including, among other things: (i) there not
having been a material adverse change in the business or financial condition of
Parent and its subsidiaries taken as a whole, since December 31, 1996; (ii) the
representations and warranties made by Parent in the Credit Agreement being true
and correct on and as of the date any loan thereunder is made as if made on such
date (unless expressly referring to an earlier date, in which case they shall be
true and correct as of such earlier date); and (iii) there not being a Default
or Event of Default (as each term is defined in the Credit Agreement) in
existence or which shall exist from making any loan under the Credit Agreement.
The Credit Agreement provides for customary representations and warranties,
including representations and warranties as to: (i) the due incorporation and
organization of Parent and its subsidiaries and their power to own assets and
carry on their businesses as they are currently being conducted; (ii) Parent's
power to enter into and perform its obligations under the Credit Agreement;
(iii) the enforceability of the Credit Agreement; (iv) the absence of conflicts
related to the execution of and performance by Parent of the Credit Agreement;
(v) the absence of defaults under the Credit Agreement or other material
agreements to which Parent is a party; (vi) any required regulatory approvals
and third party consents; (vii) the audited consolidated financial statements of
Parent; (viii) pending litigation; (ix) obligations under ERISA; (x) compliance
with certain laws of the United States, including those relating to tax and
environmental matters; (xi) the title of Parent and its subsidiaries to their
assets; (xii) whether Parent or any of its affiliates engage in any highly
regulated business activities; (xiii) insurance; (xiv) whether Parent or any of
its subsidiaries are subject to any burdensome contractual or organizational
activities; (xv) labor matters; and (xvi) intellectual property matters.
The Credit Agreement imposes various covenants on Parent, including
covenants as to: (i) reporting of financial information and other notices and
events; (ii) preserving the corporate existence of Parent and its subsidiaries;
(iii) maintaining the properties of Parent and its subsidiaries; (iv) insurance;
(v) payment of the obligations of Parent and its subsidiaries; (vi) compliance
with various laws including those relating to environmental matters; (vii)
inspection rights of the Banks; (viii) liens on assets of Parent or its
subsidiaries; (ix) mergers, consolidations, dispositions and investments; (x)
indebtedness, contingent and lease obligations; and (xi) financial covenants
relating to cash flow and leverage of Parent.
The Credit Agreement provides for various usual and customary events of
default.
The interest rate applicable to borrowings under the Credit Agreement
Facility is determined at Parent's option, at the rate in the offshore interbank
market for U.S. dollars for specified maturities, plus a
24
margin tied to Parent's credit ratings, or a rate equal to the higher of BA's
prime rate, or the applicable federal funds rate plus .50% (the "Base Rate").
Borrowings may be made by written notice from Parent to the Agent not later
than 9:30 a.m. (Chicago time) two (2) business days prior to the date of
borrowing in the case of offshore rate borrowings, or before 10:30 a.m. (Chicago
time) on the business day of the borrowing in the case of Base Rate borrowings.
The loans under the Credit Agreement Facility are due on July 31, 2002, or
earlier upon exercise of the Banks' default remedies, or if Parent determines to
prepay the loans and terminate the commitment under the Credit Agreement
Facility.
THE COMMITMENT. The following is a summary of certain provisions of the
Commitment, which is qualified in its entirety by reference to the text of the
Commitment, which is an exhibit to the Tender Offer Statement on Schedule 14D-1
filed by the Purchaser and Parent with the Commission and is available for
inspection and copying at the principal office of the Commission or may be
viewed and printed from the Commission's web site at ▇▇▇▇://▇▇▇.▇▇▇.▇▇▇ in the
manner set forth in Section 9.
The Commitment is subject to usual and customary conditions for transactions
of this type including: (i) the completion of due diligence with respect to the
Company and Parent satisfactory to the Commitment Lenders; (ii) the negotiation,
execution and delivery of definitive credit documentation satisfactory to the
Commitment Lenders; (iii) the satisfactory review by the Commitment Lenders of
the Merger Agreement and their approval of any changes thereto; (iv)
satisfaction of the Commitment Lenders with Parent's proposed capital and
ownership structure after giving effect to the Merger; (v) receipt and approval
by the Commitment Lenders of the Company's financial statements; (vi) the
absence of any material adverse change in the business, assets, operation,
condition (financial or otherwise) or prospects since December 31, 1998 in the
case of Parent and its subsidiaries, or since January 31, 1999 in the case of
the Company; (vii) satisfactory opinions from Parent's counsel; (viii) receipt
of all governmental and third party consents necessary to consummate the Merger
and the Commitment Facility; (ix) no adverse litigation during the Offer; (x)
Parent and its subsidiaries (including the Company) shall be in compliance with
all existing financial obligations (after giving effect to the Merger); (xi) the
Commitment Lenders determine that Parent shall have sufficient cash and
financing to meet the ongoing financing needs of Parent and its subsidiaries
after giving effect to the Merger; (xii) there not having occurred and be
continuing a material adverse change in financial, banking or capital markets
since May 4, 1999 that in the reasonable judgment of the Commitment Lenders
would have a material adverse effect on the syndication of the Commitment
Facility; and (xiii) the satisfaction of the Commitment Lenders that prior to
and during the syndication of the Commitment Facility, Parent and its
subsidiaries shall not have offered, placed or arranged to be in the process of
offering, placing or arranging any competing issues of debt securities or bank
financing (other than amounts available under the Credit Agreement or the term
financing described below).
Interest rates under the facility will be at Borrower's option: (a) the
London interbank offered rate for specified maturities, plus a margin of 1.00%;
or (b) the Base Rate plus a margin of 0.75% through the 90th day after the
closing of the Commitment Facility, 0.875% through the 120th day after the
closing of the Commitment Facility and 1.00% thereafter.
The definitive agreement entered into pursuant to the Commitment Facility
will contain customary representations and warranties and events of default and
will incorporate by reference the covenants contained in the Credit Agreement.
The definitive agreement will also contain covenants relating to year 2000
compliance and a requirement that the Purchaser merge with the Company by
October 29, 1999.
Parent has agreed to pay BA customary commitment and underwriting fees as
well as certain of the fees and expenses of the Commitment Lenders and their
affiliates arising in connection with the Commitment, the financing thereunder
and any syndication thereof. In addition, ▇▇▇▇▇▇ has agreed to indemnify each of
BA and NM Securities and certain related persons against certain damages and
25
expenses arising out of investigations or litigation relating to the Commitment
Facility and the use of the proceeds of the Commitment Facility.
Parent may borrow funds under the Commitment Facility in not more than three
borrowings within a period after the Commitment Facility is closed to be
specified coincident with the consummation of the transaction.
The Commitment Facility terminates, and all amounts owing thereunder will be
due and payable not later than six months after closing of the Commitment
Facility. Parent is required to prepay the Commitment Facility with 100% of the
net proceeds of the contemplated three to ten year term financing described
below, any equity issuance (other than pursuant to employee stock option
exercises), or of certain to be specified asset dispositions. Optional
prepayments of the Commitment Facility will be permitted.
TERM FINANCING. Parent expects to raise additional funds through the
issuance of long-term debt securities in one or more transactions. Parent has
entered into an engagement letter with NM Securities relating to the issuance of
approximately $450 million of the Company's debt securities with a contemplated
term of three to ten years to be privately placed pursuant to Rule 144A or
pursuant to a registered public offering under the Securities Act of 1933, as
amended.
ALTERNATIVE ARRANGEMENTS. If the above debt securities term financing is
not obtained, ▇▇▇▇▇▇ believes it will be able to obtain necessary financing from
other sources on terms satisfactory to it.
13. CERTAIN CONDITIONS OF THE OFFER. Notwithstanding any other provision
of the Offer, but subject to the terms of the Merger Agreement, the Purchaser
will not be required to accept for payment or, subject to any applicable rules
or regulations of the Commission, pay for any Shares, and may terminate the
Offer (i) if by the expiration of the Offer (or, if extended, by the expiration
of the Offer, as so extended) the Minimum Condition shall not have been
satisfied, (ii) if all applicable waiting periods under the HSR Act shall not
have expired or been terminated, or (iii) if on or after April 30, 1999, and at
any time prior to acceptance for payment for any such Shares, any of the
following events (together with the foregoing events, the "Offer Conditions")
shall occur; provided, that in each such case, the Purchaser shall not be
permitted to terminate the Offer (except pursuant to the condition specified in
paragraph (g) below) if prior to the then scheduled expiration of the Offer, the
Offer shall have been extended:
(a) there shall have occurred (i) a declaration of a banking moratorium or
any suspension of payments in respect of banks in the United States
(whether or not mandatory), (ii) a formal declaration of war or national
or international calamity directly or indirectly involving the United
States (other than any declaration of war resulting from the current
conflict in Yugoslavia), (iii) any limitation (whether or not mandatory)
by any United States governmental authority on the extension of credit by
banks or other financial institutions that materially affects the
extension of credit by banks or other lending institutions, (iv) any
general suspension of, or limitation on prices for, trading in securities
on the Nasdaq National Market or the over the counter market, or (v) in
the case of any of the foregoing existing at the time of the commencement
of the Offer, a material acceleration or worsening thereof;
(b) the Company shall have breached or failed to perform any of its material
obligations, covenants or agreements under the Merger Agreement in a
manner permitting Parent to terminate the Merger Agreement or any
representation or warranty of the Company set forth in the Merger
Agreement shall not be true and correct, provided that such
representations and warranties shall be deemed to be true and correct
unless the failure of such representations and warranties to be so true
and correct would have a Material Adverse Effect (as defined in the
Merger Agreement) or would prevent the Company from consummating the
transactions contemplated by the Merger Agreement in each case as if such
representations and warranties were made at the time of such termination;
26
(c) there shall be instituted or pending any action, litigation, proceeding,
investigation or other application (hereinafter, an "Action") before any
court or other governmental entity: (i) challenging the acquisition by
the Purchaser of Shares, or seeking to restrain or prohibit the
consummation of the transactions contemplated by the Merger Agreement;
(ii) seeking to prohibit, or impose any limitations on, Parent's or the
Purchaser's ownership or operation of all or any portion of their or the
Company's business or assets (including the business or assets of their
respective affiliates and subsidiaries); (iii) seeking to make the
acceptance for payment, purchase of, or payment for, some or all of the
Shares illegal; (iv) seeking to impose limitations on the ability of
Parent or the Purchaser effectively to acquire or hold or to exercise
full rights of ownership of the Shares including, without limitation, the
right to vote the Shares purchased by them on an equal basis with all
other Shares on all matters properly presented to the stockholders; or
(v) that, in any event, would have a Material Adverse Effect on the
Company;
(d) any statute, rule, regulation, order or injunction shall be enacted,
promulgated, entered, enforced or become applicable to the Offer or the
Merger, or any other action shall have been taken by any court or other
governmental entity other than the application to the Offer or the Merger
of the waiting period under the HSR Act, that would result in any of the
effects of, or have any of the consequences sought to be obtained or
achieved in any Action referred to in clauses (i) through (v) of
paragraph (c) above;
(e) any person (as such term is defined in Section 13(d)(3) of the Exchange
Act (other than Parent or any of its affiliates)) commences a tender or
exchange offer for a majority or more of the outstanding Shares at a
price per Share greater than the Merger Consideration, or any such person
shall have become the beneficial owner of more than 20% of the
outstanding Shares (other than for bona fide arbitrage purposes), or any
such person shall have entered into a definitive agreement to acquire all
or substantially all of the Shares or to effect a merger, consolidation
or other business combination with or involving the Company;
(f) there shall have occurred an event which has caused a Material Adverse
Effect;
(g) the Board of Directors of the Company shall have amended, modified or
withdrawn its recommendation of the Offer or the Merger in a manner
adverse to Parent, or shall have endorsed, approved or recommended any
other Acquisition Proposal, or shall have resolved to do any of the
foregoing; or
(h) the Merger Agreement shall have been terminated by the Company or Parent
in accordance with its terms;
which, in the reasonable judgment of Parent, in any such case, and regardless of
the circumstances giving rise to any such conditions, makes it reasonably
inadvisable to proceed with the Offer and/or with such acceptance for payment of
or payment for Shares.
The foregoing conditions, other than the Minimum Condition, are for the sole
benefit of Parent and may be asserted by Parent or the Purchaser regardless of
the circumstances giving rise to such condition or may be waived by Parent,
other than the Minimum Condition, by express and specific action to that effect,
in whole or in part at any time and from time to time in its sole discretion.
Should the Offer be terminated pursuant to the foregoing provisions, all
tendered Shares not theretofore accepted for payment shall forthwith be returned
by the Depositary to the tendering stockholders.
14. DIVIDENDS AND DISTRIBUTIONS. Under the Merger Agreement, the Company
has agreed not to (i) declare, set aside or pay any dividend payable in cash,
stock or property in respect of any capital stock other than dividends from its
direct or indirect wholly owned subsidiaries to it or a wholly owned subsidiary;
(ii) split, combine or reclassify its outstanding shares of capital stock; (iii)
issue, sell, pledge,
27
dispose of or encumber any capital stock owned by it in any of its subsidiaries;
or (iv) repurchase, redeem or otherwise acquire any shares of its capital stock
or any securities convertible into or exchangeable or exercisable for any shares
of its capital stock, except, in connection with the Option Plans, or permit any
of its subsidiaries to purchase or otherwise acquire, any shares of its capital
stock or any securities convertible into or exchangeable or exercisable for any
shares of its capital stock. In the event that the Company changes the number of
Shares or securities convertible or exchangeable into or exercisable for Shares
issued and outstanding prior to the Effective Time as a result of a
reclassification, stock split (including a reverse split), stock dividend or
distribution, recapitalization, merger, subdivision, issuer tender or exchange
offer, or other similar transaction, the Merger Consideration will be equitably
adjusted.
If, on or after May 7, 1999, the Company should declare or pay any cash or
stock dividend or other distribution or issue any rights with respect to the
Shares, payable or distributable to stockholders of record on a date prior to
the transfer to the name of the Purchaser or its nominee or transferee on the
Company's stock transfer records of the Shares accepted for payment pursuant to
the Offer, then, without prejudice to the Purchaser's rights under Sections 1
and 13 and without limiting the rights of the Purchaser described in the
preceding paragraph of this Section 14, any such dividend, distribution or right
to be received by the tendering stockholders will be received and held by the
tendering stockholder for the account of the Purchaser and will be required to
be promptly remitted and transferred by each tendering stockholder to the
Depositary for the account of the Purchaser, accompanied by appropriate
documentation and transfer. Pending such remittance, the Purchaser will be
entitled to all rights and privileges as owner of any such dividend,
distribution or right and may withhold the entire purchase price or deduct from
the purchase price the amount or value thereof, as determined by the Purchaser
in its sole discretion.
15. CERTAIN LEGAL MATTERS. Except as set forth in this Section 15, based
on a review of publicly available filings by the Company with the Commission and
other information concerning the Company provided to Parent, the Purchaser is
not aware of any license or other regulatory permit which appears to be material
to the business of the Company that might be adversely affected by the
Purchaser's acquisition of Shares pursuant to the Offer (and the indirect
acquisition of the stock of the Company's subsidiaries), or of any approval or
other action by any domestic or foreign governmental or administrative agency
that would be required prior to the acquisition of Shares by the Purchaser
pursuant to the Offer. Should any such approval or other action be required, it
is the Purchaser's present intention that such additional approval or action
would be sought. While the Purchaser does not presently intend to delay the
purchase of Shares tendered pursuant to the Offer pending receipt of any such
additional approval or the taking of any such action, there can be no assurance
that any such additional approval or action, if needed, would be obtained
without substantial conditions or that adverse consequences might not result to
the Company's or Parent's business, or that certain parts of the Company's or
Parent's business might not be required to be disposed of or held separate or
other substantial conditions complied with in order to obtain such approval or
action or in the event that such approvals were not obtained or such actions
were not taken. The Purchaser's obligation to purchase and pay for Shares is
subject to certain conditions relating to the legal matters discussed in this
Section 15. See Section 13.
28
ANTITRUST. Under 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 (the "Antitrust Division") and the Federal
Trade Commission ("FTC") and certain waiting period requirements have been
satisfied. The acquisition of Shares pursuant to the Offer and the Merger
Agreement is subject to such requirements. On or about May 7, 1999, Parent
expects to file with the Antitrust Division and the FTC a Notification and
Report Form with respect to the Offer and the Merger.
Under the provisions of the HSR Act applicable to the Offer, the purchase of
Shares pursuant to the Offer may not be consummated prior to the expiration of a
15-calendar day waiting period following the filing by Parent, unless earlier
terminated. Accordingly, Parent expects the waiting period applicable to the
Offer will expire at 11:59 p.m., New York City time, on or about May 22, 1999,
unless ▇▇▇▇▇▇ receives a request from either the FTC or the Antitrust Division
for additional information or documentary material, or the Antitrust Division
and the FTC terminate the waiting period prior thereto. If, within such 15-day
waiting period either the Antitrust Division or the FTC requests additional
information or material from Parent concerning the Offer, the waiting period
will be extended and would expire at 11:59 p.m., New York City time, on the 10th
calendar day after the date of substantial compliance by Parent with such
request. Only one extension of the waiting period pursuant to a request for
additional information is authorized by the rules promulgated under the HSR Act.
Thereafter, the waiting period could be extended only by court order or with the
consent of the Purchaser. The additional 10-calendar-day waiting period may be
terminated sooner by the FTC or the Antitrust Division. In practice, complying
with a request for additional information or material can take a significant
amount of time. In addition, if the Antitrust Division or the FTC raises
substantive issues in connection with a proposed transaction, the parties
frequently engage in negotiations with the relevant governmental agency
concerning possible means of addressing those issues and may agree to delay
consummation of the transaction while such negotiations continue. Although the
Company is required to file certain information and documentary material with
the Antitrust Division and the FTC in connection with the Offer and the Merger,
neither the Company's failure to make such filings nor a request made to the
Company from the Antitrust Division or the FTC for additional information or
documentary material will extend the Offer period with respect to the purchase
of Shares pursuant to the Offer and the Merger Agreement. The Purchaser will not
accept for payment Shares tendered pursuant to the Offer unless and until the
waiting period requirements imposed by the HSR Act with respect to the Offer
have been satisfied. See Section 13.
If the acquisition of Shares is delayed pursuant to a request by the FTC or
the Antitrust Division for additional information or documentary material
pursuant to the HSR Act, the Offer may, at the discretion of the Purchaser, be
extended (for a period not to exceed 10 business days for any particular
extension) and, in any event, the purchase of and payment for Shares will be
deferred until 10 days after the request is substantially complied with by
Parent, unless the 10-day extended period expires on or before the date when the
initial waiting period would otherwise have expired or unless the waiting period
is sooner terminated by the FTC and the Antitrust Division. See Section 2.
Unless the Offer is extended, any extension of the waiting period will not give
rise to any additional withdrawal rights. See Section 3.
The Antitrust Division and the FTC frequently scrutinize the legality under
the antitrust laws of transactions such as the acquisition of Shares by the
Purchaser pursuant to the Offer and the Merger. At any time before or after the
Purchaser's purchase of Shares, the Antitrust Division or the FTC could take
such action under the antitrust laws as either deems necessary or desirable in
the public interest, including seeking to enjoin the purchase of Shares pursuant
to the Offer and the Merger or seeking divestiture of Shares purchased
thereunder or the divestiture of assets of the Company, the Purchaser, Parent or
any of their respective subsidiaries or affiliates. Private parties as well as
state attorneys general may also bring legal actions under the antitrust laws
under certain circumstances. If any such action by the FTC, the Antitrust
Division or any other person should be instituted, the Purchaser could decline
to accept for payment any Shares tendered. See Section 11 and 13 for certain
conditions to the Offer. Based upon an examination of information relating to
the businesses in which Parent and the Company are engaged,
29
Parent believes that the consummation of the Offer would not violate any
antitrust laws. However, there can be no assurance that a challenge to the Offer
on antitrust grounds will not be made or, if a challenge is made, what the
result will be.
The Merger would not require an additional filing under the HSR Act if the
Purchaser owns 50% or more of the outstanding Shares at the time of the Merger
or if the Merger occurs within one year after the HSR Act waiting period
applicable to the Offer expires or is terminated.
STATE TAKEOVER LAWS. The Company is incorporated under the laws of the
State of Florida. The FBCA contains provisions that are intended to defer
hostile takeovers of Florida-based corporations and are informally known as the
"Affiliated Transactions Statute" and the "Control-Share Acquisition Statute."
In general, the Affiliated Transactions Statute requires that any "affiliated
transaction" between a corporation with more than 300 shareholders and any
person who is the beneficial owner of more than 10% of the corporation's
outstanding voting shares (an "interested shareholder"), or any affiliate or
associate of an interested person, must be approved by the holders of two-thirds
of the voting shares of the corporation other than the shares beneficially owned
by the interested shareholder. Absent approval by disinterested shareholders or
an exception, the statute requires that a "fair price" be paid to shareholders
in the transaction. An "affiliated transaction" includes a merger, a sale,
exchange or other transfer of assets or shares of the corporation, and the
benefit of loans, advances, pledges, guarantees, or other financial assistance
or tax credits or advances provided by or through the corporation. The
Affiliated Transaction Statute does not apply to an affiliated transaction if
the transaction is approved in advance by a majority of the corporation's
directors who are not affiliated or associated with the interested shareholder.
Under the Control-Share Acquisition Statute, "control shares" of certain
corporations that are acquired in a "control-share acquisition" will retain
their voting rights only to the extent granted by a resolution that is approved
by a majority of each class of voting securities of the corporation. A "control-
share acquisition" is a direct or indirect acquisition by a person of the
ownership or power to direct the exercise of the voting rights of "control
shares," which is defined as shares that entitle a person to exercise more than
specified proportions of the voting power of a corporation that is subject to
the Control-Share Acquisition Statute (commencing with the acquisition of 20% or
more of the voting shares of such corporation). An acquisition of shares does
not constitute a "control-share acquisition" if the acquisition has been
approved by the board of directors of the issuing corporation or if the
acquisition occurs pursuant to a merger effected in compliance with the FBCA and
the issuing corporation is a party to the agreement of merger or certain other
statutory conditions have been met.
At a meeting held on April 30, 1999, the Company's Board of Directors, none
of whom are affiliated or associated with the Purchaser or Parent, unanimously
approved the Merger Agreement and the transactions contemplated thereby,
including the Offer and the Merger, and determined that each of the Offer and
Merger are fair to and in the best interests of the holders of the Company's
Shares. Accordingly, the Affiliated Transaction Statute and Control-Share
Acquisition Statute will not apply to Parent and the Purchaser in connection
with the Merger Agreement and the transactions contemplated thereby, including
the Offer and the Merger.
A number of states have adopted takeover laws which purport, to varying
degrees, to be applicable to attempts to acquire securities of corporations
which are incorporated in such states or which have substantial assets, security
holders, principal executive offices or principal places of business therein. To
the extent that certain provisions of certain of these state takeover statutes
purport to apply to the Offer or the Merger, the Purchaser believes that such
laws conflict with federal law and constitute an unconstitutional burden on
interstate commerce. In 1982, the Supreme Court of the United States, in ▇▇▇▇▇
▇. MITE CORP., held that the Illinois Business Takeovers Statute, which as a
matter of state securities law made takeovers of corporations meeting certain
requirements more difficult, imposed a substantial burden on interstate commerce
and therefore was unconstitutional. In 1987, however, in CTS CORP. V. DYNAMICS
CORP. OF
30
AMERICA, the Supreme Court of the United States held that the State of Indiana
could, as a matter of corporate law and, in particular, those aspects of
corporate law concerning corporate governance, constitutionally disqualify a
potential acquiror from voting on the affairs of a target corporation without
the prior approval of the remaining stockholders, provided that such laws were
applicable only under certain conditions. The state law before the Supreme Court
was by its terms applicable only to corporations that had a substantial number
of stockholders in the state and were incorporated therein. Subsequently, a
number of federal courts ruled that various state takeover statutes were
unconstitutional insofar as they apply to corporations incorporated outside the
state of enactment.
Except as described herein, the Purchaser does not know whether the Offer is
subject to any state takeover statutes and neither Parent nor the Purchaser has
attempted to comply with any state takeover statutes in connection with the
Offer other than as indicated above. Should any person seek to apply any such
statute to the Offer, Parent and the Purchaser reserve the right to challenge
the validity or applicability of any state law allegedly applicable to the Offer
and nothing in this Offer to Purchase nor any action taken in connection
herewith is intended as a waiver of that right. In the event that any additional
state takeover statute is found applicable to the Offer and an appropriate court
does not determine that such laws are inapplicable or invalid as applied to the
Offer, the Purchaser may be required to file certain information with, or
receive approvals from, the relevant state authorities, or the Purchaser might
be unable to purchase and accept for payment or pay for Shares tendered pursuant
to the Offer or be delayed in continuing or consummating the Offer. In the
circumstances described above, the Purchaser may not be obligated to accept for
purchase and payment or pay for any Shares tendered.
DISSENTERS' RIGHTS. Stockholders of the Company do not have dissenters'
rights as a result of the Offer. In addition, stockholders of the Company will
not have dissenters' rights in connection with the Merger if, on the record date
fixed to determine the stockholders entitled to vote on or consent to the
Merger, the Shares are listed on a national securities exchange or designated as
a national market system security on an interdealer quotation system by the NASD
or are held of record by 2,000 or more stockholders. If, however, the Shares are
not so listed or designated and are not held of record by at least 2,000
stockholders, then holders of Shares who do not vote in favor of the Merger will
have certain rights pursuant to the provisions of Sections 607.1301, 607.1302
and 607.1320 of the FBCA to dissent and demand determination and payment of the
fair value of their Shares. If the statutory procedures are complied with, such
rights could lead to a judicial determination of the fair value required to be
paid to such dissenting holders for their Shares. The fair value of Shares
determined for the purpose of dissenters' rights could be more or less than the
Merger Consideration. Section 607.1301(2) of the FBCA defines "fair value" to
exclude any appreciation or depreciation in anticipation of the transaction
giving rise to dissenters' rights, unless such exclusion would be inequitable.
The Shares of any stockholder who asserts dissenters' rights under the FBCA,
but fails to perfect, or effectively withdraws or loses, his or her dissenters'
rights, as provided in the FBCA, will be converted into the right to receive the
Merger Consideration in accordance with the Merger Agreement. A stockholder may
withdraw his or her notice of election to dissent by delivery to the Company of
a written withdrawal of his or her notice of election to dissent.
THE FOREGOING SUMMARY OF THE RIGHTS OF DISSENTING STOCKHOLDERS DOES NOT
PURPORT TO BE A COMPLETE STATEMENT OF PROCEDURES TO BE FOLLOWED BY STOCKHOLDERS
DESIRING TO EXERCISE THEIR DISSENTERS' RIGHTS. FAILURE TO FOLLOW THE STEPS
REQUIRED BY THE FBCA FOR PERFECTING DISSENTERS' RIGHTS MAY RESULT IN THE LOSS OF
THOSE RIGHTS.
16. EXTENSION OF TENDER PERIOD, TERMINATION AND AMENDMENTS. The Merger
Agreement provides that (i) if any of the Offer Conditions exists at the time of
the scheduled Expiration Date of the Offer, the Purchaser may extend and
reextend the Offer on one or more occasions for periods of time (not to exceed
10 business days for any particular extension) so that the expiration date of
the Offer (as so extended) is as
31
soon as reasonably practicable or advisable after the date on which the
particular Offer Condition no longer exists, and (ii) the Purchaser may extend
or reextend the Offer on one or more occasions for periods of time (not to
exceed 10 business days for any particular extension) for an aggregate period
not to exceed 20 business days if on such expiration date there shall not have
been validly tendered and not withdrawn at least the number of Shares necessary
to permit the Merger to be effected without a meeting of the Company's
stockholders, and, provided, further, that all extensions of the Offer made by
the Purchaser (other than at the request of the Company) shall not extend the
Offer beyond September 5, 1999. Parent and the Purchaser have agreed that until
September 5, 1999 the Purchaser shall from time to time extend the Offer at such
times as the Company may request for five business days for each extension, but
shall in no event extend the Offer beyond September 5, 1999. The Purchaser may
not, without the prior written consent of the Company, decrease the price per
Share offered in the Offer, change the form of consideration offered or payable
in the Offer, decrease the number of Shares sought in the Offer, change the
conditions to the Offer, impose additional conditions to the Offer, amend any
term of the Offer in any manner adverse to the holders of Shares or waive the
Minimum Condition. If the Purchaser shall decide, in its sole discretion, to
increase the consideration offered in the Offer to holders of Shares or make any
other material change in the terms of the Offer to the extent permitted by the
Merger Agreement or the information concerning the Offer to the extent permitted
by the Merger Agreement, the Purchaser will disseminate additional tender offer
materials and extend the Offer to the extent required by Rules 14d-4(c) and
14d-6(d) 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 a change in percentage of
securities sought, will depend upon the facts and circumstances, including the
relative materiality of the terms or information. With respect to a change in
price or a change in percentage of securities sought, a minimum 10-business day
period from the date of announcement thereof is required under the Exchange Act.
If, prior to the Expiration Date, the Purchaser should decide to increase the
price per Share being offered in the Offer, such increase will be applicable to
all stockholders whose Shares are accepted for payment pursuant to the Offer. As
used in this Offer to Purchase, "business day" has the meaning set forth in Rule
14d-1 under the Exchange Act.
The Purchaser also expressly reserves the right (i) to the extent permitted
by the Merger Agreement to delay payment for any Shares, regardless of whether
such Shares were theretofore accepted for payment, or to terminate the Offer and
not accept for payment or pay for any Shares not theretofore accepted or paid
for, upon the occurrence of any of the conditions specified in Section 13 by
giving oral notice thereof to the Depositary; and (ii) subject to the
restrictions set forth in the Merger Agreement, at any time or from time to
time, to amend the Offer in any respect. See Section 13. Any extension, delay,
termination, waiver or amendment of the Offer will be followed, as soon as
practicable, by public announcement thereof; and such announcement in the case
of an extension will be made in accordance with Rule 14e-1(d) no later than 9:00
a.m., New York City time, on the next business day after the previously
scheduled expiration date. Without limiting the manner in which the Purchaser
may choose to make any public announcement, the Purchaser shall have no
obligation to publish, advertise or otherwise communicate any such public
announcement other than by making a release to either the Dow ▇▇▇▇▇ or Reuters
News Services and making any appropriate filings with the Commission.
If the Purchaser extends the Offer, or if the Purchaser (whether before or
after its acceptance for payment of Shares) is delayed in its purchase of or
payment for Shares or is unable to pay for Shares pursuant to the Offer for any
reason, then, without prejudice to the Purchaser's rights under the Offer, the
Depositary may retain tendered shares on behalf of the Purchaser, and such
Shares may not be withdrawn except to the extent tendering stockholders are
entitled to withdrawal rights as described in Section 3. However, the ability of
the Purchaser to delay the payment for Shares which the Purchaser has accepted
for payment is limited by Rule 14e-1(c) under the Exchange Act, which requires
that a bidder pay the consideration offered or return the securities deposited
by or on behalf of holders of securities promptly after the termination or
withdrawal of the Offer.
32
17. CERTAIN FEES AND EXPENSES. ▇▇▇▇ ▇▇▇▇▇▇▇ is acting as Dealer Manager
for the Offer and as financial advisor to Parent in connection with the
transactions described in this Offer to Purchase. Pursuant to an engagement
letter dated April 29, 1999 and a Dealer Manager Agreement dated as of May 7,
1999, Parent has agreed to pay Bear ▇▇▇▇▇▇▇ an aggregate amount of $5.0 million
upon consummation of the Offer and the satisfaction of the Minimum Condition.
▇▇▇▇ ▇▇▇▇▇▇▇ became entitled to a cash fee of $1.5 million upon the rendering to
the Board of Directors of Parent of its opinion as to the fairness from a
financial point of view to Parent of the Offer price which fee will be credited
against the $5.0 million fee referred to in the prior sentence. Parent has
further agreed to reimburse Bear ▇▇▇▇▇▇▇ for its reasonable out-of-pocket
expenses, including fees and disbursements of Bear ▇▇▇▇▇▇▇' legal counsel,
whether or not an acquisition of the Company is consummated, and has agreed to
indemnify Bear ▇▇▇▇▇▇▇ against certain liabilities and expenses in connection
with its engagement, including certain liabilities under the federal securities
laws.
The Purchaser has retained ▇▇▇▇▇▇▇▇▇ & Company Inc. to act as Information
Agent and The Bank of New York to act as Depositary in connection with the
Offer. The Information Agent may contact holders of Shares by mail, telephone,
telex, telegraph and personal interview and may request brokers, dealers and
other nominee stockholders to forward material relating to the Offer to
beneficial owners. The Information Agent and the Depositary will each receive
reasonable and customary compensation for services relating to the Offer in
addition to reimbursement of reasonable out-of-pocket expenses. The Purchaser
has agreed to indemnify each of the Information Agent and the Depositary against
certain liabilities and expenses in connection with the Offer including certain
liabilities under the federal securities laws.
Neither Parent nor the Purchaser will pay any fees or commissions to any
broker, dealer or other person (other than the above-described fees to Bear
▇▇▇▇▇▇▇) for soliciting tenders of Shares pursuant to the Offer. Brokers,
dealers, commercial banks and trust companies will, upon request, be reimbursed
by the Purchaser for reasonable and necessary costs and expenses incurred by
them in forwarding materials to their customers.
18. MISCELLANEOUS. The Purchaser is not aware of any jurisdiction in which
the making of the Offer is not in compliance with applicable law. If the
Purchaser becomes aware of any jurisdiction in which the making of the Offer
would not be in compliance with applicable law, the Purchaser will make a good
faith effort to comply with any such law. If, after good faith effort, the
Purchaser cannot comply with any such law, the Offer will not be made to, nor
will tenders be accepted from or on behalf of, holders of Shares residing in any
jurisdiction in which the making of the Offer or acceptance thereof would not be
in compliance with the securities, blue sky or other laws of such jurisdiction.
In any jurisdiction in which the securities, blue sky or other laws require the
Offer to be made by a licensed broker or dealer, the Offer shall be deemed to be
made on behalf of the Purchaser by the Dealer Manager or by one or more
registered brokers or dealers licensed under the laws of such jurisdiction.
Parent and the Purchaser have filed with the Commission a Tender Offer
Statement on Schedule 14D-1, together with exhibits, pursuant to Rule 14d-3 of
the General Rules and Regulations under the Exchange Act, furnishing certain
additional information with respect to the Offer, and may file amendments
thereto. Such Tender Offer Statement and any amendments thereto, including
exhibits, may be obtained in the manner described in Section 8 with respect to
information concerning the Company, except that such information will not be
available at the regional offices of the Commission.
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATION ON BEHALF OF PARENT OR THE PURCHASER NOT CONTAINED IN THIS OFFER
TO PURCHASE OR IN THE LETTER OF TRANSMITTAL AND, IF GIVEN OR MADE, ANY SUCH
INFORMATION OR REPRESENTATION MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED.
SPRING ACQUISITION CORP.
33
SCHEDULE A
DIRECTORS AND EXECUTIVE OFFICERS OF PARENT AND THE PURCHASER
1. DIRECTORS AND EXECUTIVE OFFICERS OF PARENT. The names, ages, present
principal occupation or employment and five-year employment history of each
director and executive officer of Parent are set forth below. Unless otherwise
indicated, all persons have held their current occupation or employment for at
least the last five years. The business address of each such person is ▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇. All persons listed below are
citizens of the United States of America.
YEAR FIRST
ELECTED OR
APPOINTED AS AN
EXECUTIVE OFFICER
OR DIRECTOR, AS PRESENT PRINCIPAL OCCUPATION OR
NAME (AGE) APPLICABLE EMPLOYMENT; FIVE-YEAR EMPLOYMENT HISTORY
------------------------------- ----------------- -------------------------------------------------------------
EXECUTIVE OFFICERS:
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ (61).......... 1980 Chairman and Chief Executive Officer of Parent.
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ (52).......... 1993 President and Chief Operating Officer of Parent. ▇▇. ▇▇▇▇▇▇
has been President and Chief Operating Officer of Parent
since April 1998. He was Executive Vice President of
Operations of Parent from March 1997 to April 1998; an
Executive Vice President of Parent and President and Chief
Executive Officer of Parent's Computing Devices International
division from January 1996 to March 1997; and Vice President
of Parent and President of Computing Devices International
from January 1993 to January 1996.
▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ (59).......... 1989 Executive Vice President and Chief Financial Officer of
Parent. ▇▇. ▇▇▇▇▇▇▇▇ has been Executive Vice President and
Chief Financial Officer of Parent since May 1995, and was
Vice President and Chief Financial Officer of Parent from
June 1993 to May 1995. ▇▇. ▇▇▇▇▇▇▇▇ was Vice President and
Corporate Controller of Parent from July 1989 to June 1993.
▇▇▇▇▇ ▇. ▇▇▇▇▇ (53)............ 1993 Vice President and Corporate Controller of Parent
▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ (43).......... 1997 Vice President, and President of Comdata, a subsidiary of
Parent. ▇▇. ▇▇▇▇▇▇▇▇ has been Vice President of Parent and
President of Comdata since May 1997. ▇▇. ▇▇▇▇▇▇▇▇ was
President and Chief Executive Officer of National Processing,
Inc., which provides transaction processing services and
customized processing solutions, from October 1994 to March
1997, and was Executive Vice President, Corporate Services
for National Processing from 1991 through 1994.
A-1
YEAR FIRST
ELECTED OR
APPOINTED AS AN
EXECUTIVE OFFICER
OR DIRECTOR, AS PRESENT PRINCIPAL OCCUPATION OR
NAME (AGE) APPLICABLE EMPLOYMENT; FIVE-YEAR EMPLOYMENT HISTORY
------------------------------- ----------------- -------------------------------------------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ (53)......... 1998 Senior Vice President of Human Resources of Parent. ▇▇.
▇▇▇▇▇▇ has been Senior Vice President of Human Resources of
Parent since June 1998. ▇▇. ▇▇▇▇▇▇ was Vice President of
Human Resources of Mercy Health Services from October 1994 to
June 1998. From 1992 to 1994, she served as Vice President of
Human Resources and Administrative Services of Parent, and
from 1991 to 1992, she served as Vice President of Human
Resources for the Information Services Group of Parent.
▇▇▇▇ ▇. ▇▇▇▇ (57).............. 1997 Vice President, and President of Ceridian Employer Services,
a division of Parent. ▇▇. ▇▇▇▇ has been Vice President of
Parent and President of Ceridian Employer Services since
April 1997. ▇▇. ▇▇▇▇ was President and Chief Executive
Officer of EduServ Technologies, Inc., which originates,
services and securitizes student loans, from March 1992 to
January 1997
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ (55)......... 1992 Executive Vice President, and President of Arbitron, a
division of Parent. ▇▇. ▇▇▇▇▇▇ has been Executive Vice
President of Parent and President of Arbitron since January
1996. ▇▇. ▇▇▇▇▇▇ was Vice President of Parent and President
of Arbitron from December 1992 to January 1996.
▇▇▇▇ ▇. ▇▇▇▇▇▇ (47)............ 1997 Vice President, General Counsel and Secretary of Parent. ▇▇.
▇▇▇▇▇▇ has been Vice President and General Counsel of Parent
since July 1997 and Secretary of Parent since October 1998.
From 1983 to July 1997, ▇▇. ▇▇▇▇▇▇ was a partner in the
▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ & ▇▇▇▇▇▇▇▇ LLP law firm.
▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇ (50)........ 1998 Vice President, and President of Ceridian Performance
Partners, a division of Parent. ▇▇. ▇▇▇▇▇▇▇ has been Vice
President of Parent since October 1998 and President of
Ceridian Performance Partners since April 1996. From October
1995 to March 1996, she was Vice President of Business
Integration of Parent. Prior to joining Parent, ▇▇. ▇▇▇▇▇▇▇
spent 15 years at Honeywell, Inc., serving most recently as
Vice President of the Home and Building Control consumer
business group from 1993 to September 1995.
A-2
YEAR FIRST
ELECTED OR
APPOINTED AS AN
EXECUTIVE OFFICER
OR DIRECTOR, AS PRESENT PRINCIPAL OCCUPATION OR
NAME (AGE) APPLICABLE EMPLOYMENT; FIVE-YEAR EMPLOYMENT HISTORY
------------------------------- ----------------- -------------------------------------------------------------
DIRECTORS:
▇▇▇▇▇ ▇. ▇▇▇▇ (52)............. 1998 President and Chief Executive Officer of PictureTel
Corporation, a company that develops, manufactures and
markets video and audio conferencing solutions, since
February 1998. Prior to joining PictureTel, ▇▇. ▇▇▇▇ served
as Chief Executive Officer of ANS Communications, the
networking subsidiary of America Online, Inc., from July 1996
to February 1998. Prior to ANS, ▇▇. ▇▇▇▇ spent seven years
with British Telecom PLC, where he was Managing Director of
British Telecom's national business communications division.
▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ (56)...... 1998 Chairman and Chief Executive Officer of General Dynamics
Corporation. ▇▇. ▇▇▇▇▇▇▇▇ was elected Chairman and Chief
Executive Officer in June 1997. ▇▇. ▇▇▇▇▇▇▇▇ served as Vice
Chairman of General Dynamics from December 1996 to June 1997,
Executive Vice President from 1994 to December 1996, and
Senior Vice President and General Counsel from 1993 to 1994.
▇▇▇▇ ▇. ▇▇▇▇▇ (70)............. 1984 President and Chief Executive Officer of the Pymatuning
Group, Inc.
▇▇▇▇▇▇ ▇. ▇▇▇▇▇ (51)........... 1998 President and Chief Executive Officer of E-Stamp Corporation.
▇▇. ▇▇▇▇▇ was elected President and Chief Executive Officer
in March 1999. From October 1997 to July 1998, ▇▇. ▇▇▇▇▇
served as Executive Vice President and Chief Operating
Officer of Silicon Graphics, Inc., a provider of high
performance workstations, servers and super computers. He was
Executive Vice President, Computer Systems for Silicon
Graphics from April 1997 to October 1997. Prior to the merger
of Cray Research, Inc. with Silicon Graphics, ▇▇. ▇▇▇▇▇
served as President and Chief Operating Officer of Cray from
December 1994 to March 1997; Chief Operating Officer, Super
Computer Operations from January 1994 to December 1994; and
as Executive Vice President and General Manager of Super
Computer Operations from January 1993 to January 1994.
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ (70)......... 1971 Partner in the law firm of ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ & ▇▇▇▇▇▇▇▇ LLP.
A-3
YEAR FIRST
ELECTED OR
APPOINTED AS AN
EXECUTIVE OFFICER
OR DIRECTOR, AS PRESENT PRINCIPAL OCCUPATION OR
NAME (AGE) APPLICABLE EMPLOYMENT; FIVE-YEAR EMPLOYMENT HISTORY
------------------------------- ----------------- -------------------------------------------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇ (53)........... 1997 President and Chief Operating Officer of Sprint Corporation,
a global communications company. ▇▇. ▇▇▇▇▇ returned to this
position in October 1997 after having served as Chairman,
President and Chief Executive Officer of Waste Management,
Inc., a provider of waste management services, from July 1997
to October 1997. ▇▇. ▇▇▇▇▇ was President and Chief Operating
Officer of Sprint from February 1996 to July 1997; Vice
Chairman of Sprint from April 1995 to April 1996; President
of Sprint's Long Distance Division from 1989 to March 1995.
▇▇▇▇▇▇ ▇. ▇▇▇▇▇ (58)........... 1994 President and Chief Executive Officer of ▇▇▇▇▇▇ ▇▇▇▇▇▇
Capital Corporation, a subsidiary of ▇▇▇▇▇▇ ▇▇▇▇▇▇ Companies,
Inc., a consumer packaged goods company. Prior to assuming
his current position in May 1997, ▇▇. ▇▇▇▇▇ served as Vice
President and Treasurer of ▇▇▇▇▇▇ ▇▇▇▇▇▇ Companies Inc. since
1984.
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ (70).......... 1989 Former Vice Chairman of American Telephone and Telegraph
Company, a telecommunications company. ▇▇. ▇▇▇▇▇▇▇▇ served as
Vice Chairman from 1985 until his retirement in April 1989.
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇ (56)...... 1998 Chairman of St. Jude Medical, Inc., a provider of medical
devices for the cardiovascular market. ▇▇. ▇▇▇▇▇▇▇▇▇▇ has
served as Chairman since January 1995 and served as Chief
Executive Officer from April 1993 to May 5, 1999. Prior to
joining St. Jude, ▇▇. ▇▇▇▇▇▇▇▇▇▇ was employed by ▇▇▇ ▇▇▇▇▇
and Company, Inc., a pharmaceutical company, for 23 years,
with his last position having been Executive Vice President
of Lilly's Pharmaceutical Division and President of its North
American operations.
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ (61).......... 1985 Chairman and Chief Executive Officer of Parent.
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ (52).......... 1998 President and Chief Operating Officer of Parent. ▇▇. ▇▇▇▇▇▇
has been President and Chief Operating Officer of Parent
since April 1998. He was Executive Vice President of
Operations of Parent from March 1997 to April 1998; an
Executive Vice President of Parent and President and Chief
Executive Officer of Parent's Computing Devices International
division from January 1996 to March 1997; and Vice President
of Parent and President of Computing Devices International
from January 1993 to January 1996.
A-4
YEAR FIRST
ELECTED OR
APPOINTED AS AN
EXECUTIVE OFFICER
OR DIRECTOR, AS PRESENT PRINCIPAL OCCUPATION OR
NAME (AGE) APPLICABLE EMPLOYMENT; FIVE-YEAR EMPLOYMENT HISTORY
------------------------------- ----------------- -------------------------------------------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ (55).......... 1994 Former Executive Vice President and Assistant Chief Operating
Officer of Polaroid Corporation. ▇▇. ▇▇▇▇▇▇ was employed by
Polaroid from 1966 to 1999, and was Executive Vice President
and Assistant Chief Operating Officer from September 1998 to
April 1999. She was Executive Vice President of Commercial
Imaging from March 1997 to September 1998; Executive Vice
President, Global Products Supply from February 1996 to March
1997; Vice President, Manufacturing and Product Development
from 1992 to February 1996, and prior to that time, served in
a series of manufacturing, corporate quality and market
research positions at Polaroid.
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ (71)......... 1988 Former Chairman, President and Chief Executive Officer of
▇▇▇▇ ▇▇▇▇▇▇▇, Inc. ▇▇. ▇▇▇▇▇▇ served as Chairman, President
and Chief Executive Officer from March 1987 until his
retirement in 1989.
▇▇▇▇ ▇. ▇▇▇▇▇ (43)............. 1991 Chief Executive Officer of The Pillsbury Company.
2. DIRECTORS AND EXECUTIVE OFFICERS OF THE PURCHASER. The names, ages,
present principal occupation or employment and five-year employment history of
each director and executive officer of the Purchaser are set forth below. Unless
otherwise indicated, all persons have held their current occupation or
employment for at least the last five years. The business address of each such
person is ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇. All persons
listed below are citizens of the United States of America.
YEAR FIRST
ELECTED
OR APPOINTED AS
AN
EXECUTIVE OFFICER PRESENT PRINCIPAL OCCUPATION OR
NAME AND AGE OR DIRECTOR EMPLOYMENT; FIVE-YEAR EMPLOYMENT HISTORY
------------------------------- ----------------- -------------------------------------------------------------
▇▇▇▇ ▇. ▇▇▇▇▇▇ (47)............ 1999 President, Chief Executive Officer and a Director of the
Purchaser and Vice President, General Counsel and Secretary
of Parent. ▇▇. ▇▇▇▇▇▇ has been President, Secretary and a
Director of the Purchaser since April 1999 and Vice President
and General Counsel of Parent since July 1997 and Secretary
of Parent since October 1998. From 1983 to July 1997, ▇▇.
▇▇▇▇▇▇ was a partner in the ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ & ▇▇▇▇▇▇▇▇ LLP
law firm.
A-5
YEAR FIRST
ELECTED
OR APPOINTED AS
AN
EXECUTIVE OFFICER PRESENT PRINCIPAL OCCUPATION OR
NAME AND AGE OR DIRECTOR EMPLOYMENT; FIVE-YEAR EMPLOYMENT HISTORY
------------------------------- ----------------- -------------------------------------------------------------
▇. ▇▇▇▇ ▇▇▇▇ (42).............. 1999 Vice President and Secretary of the Purchaser and Vice
President, Associate General Counsel and Assistant Secretary
of Parent. ▇▇. ▇▇▇▇ has been Vice President and Assistant
Secretary of the Purchaser since April 1999 and Vice
President of Parent since 1994, Assistant Secretary since
1993 and Associate General Counsel since 1991.
▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ (52).......... 1999 Vice President and Treasurer of the Purchaser and Vice
President and Treasurer of Parent. ▇▇. ▇▇▇▇▇▇▇▇ has been Vice
President and Treasurer of the Purchaser since April 1999 and
Vice President and Treasurer of Parent since 1994.
▇▇▇▇▇ ▇. ▇▇▇▇▇▇ (55)........... 1999 Vice President of the Purchaser and Vice President of Parent.
▇▇. ▇▇▇▇▇▇ has been Vice President of the Purchaser since
April 1999 and Vice President of Parent since 1991.
A-6
Facsimile copies of the Letter of Transmittal, properly completed and duly
executed, will be accepted. The Letter of Transmittal, certificates for Shares
and any other required documents should be sent or delivered by each stockholder
of the Company or his broker, dealer, commercial bank or other nominee to the
Depositary at one of its addresses set forth below.
THE DEPOSITARY FOR THE OFFER IS:
THE BANK OF NEW YORK
------------------
BY FACSIMILE TRANSMISSION:
(FOR ELIGIBLE INSTITUTIONS
BY MAIL: ONLY) BY HAND OR OVERNIGHT COURIER:
Tender & Exchange (▇▇▇) ▇▇▇-▇▇▇▇ Tender & Exchange
Department Department
P.O. Box 11248 CONFIRM FACSIMILE BY ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇▇ Station TELEPHONE: Receive and Deliver Window
New York, NY 10286-1248 (▇▇▇) ▇▇▇-▇▇▇▇ New York, NY 10286
------------------------
Any questions or requests for assistance or additional copies of this Offer
to Purchase, the Letter of Transmittal, the Notice of Guaranteed Delivery and
other related materials may be directed to the Information Agent or the Dealer
Manager at their respective telephone numbers and locations listed below. You
may also contact your broker, dealer, commercial bank or trust company or
nominee for assistance concerning the Offer.
THE INFORMATION AGENT FOR THE OFFER IS:
[LOGO OF GEORGESON & COMPANY INC.]
Wall Street Plaza
New York, New York 10005
Banks and Brokers Call Collect:
(▇▇▇) ▇▇▇-▇▇▇▇
or
ALL OTHERS CALL TOLL FREE:
(▇▇▇) ▇▇▇-▇▇▇▇
THE DEALER MANAGER FOR THE OFFER IS:
[LOGO OF BEAR, ▇▇▇▇▇▇▇ & CO. INC.]
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Call Toll Free: (▇▇▇) ▇▇▇-▇▇▇▇